KeyCorp. (NYSE:KEY) Q4 2015 Earnings Conference Call - Final Transcript

Jan 21, 2016 • 10:00 am ET


KeyCorp. (NYSE:KEY) Q4 2015 Earnings Conference Call - Final Transcript


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Good morning and welcome to the KeyCorp's Fourth Quarter 2015 Earnings Conference Call. This call is being recorded. At this time, I'd like to turn the conference over to Beth Mooney, Chairman and CEO. Please go ahead, ma'am.

Beth Mooney

Thank you, operator. Good morning and welcome to KeyCorp's fourth quarter 2015 earnings conference call. Joining me for today's presentation is Don Kimble, our Chief Financial Officer. And available for the Q&A portion of the call is Chris Gorman, President of our Corporate Bank; EJ Burke and Dennis Devine, Co-Presidents of our Community Bank; and Bill Hartmann, our Chief Risk Officer. Slide 2 is our statement on forward-looking disclosure and non-GAAP financial measures. It covers our presentation materials and comments as well as the question-and-answer segment of our call.

I'm now turning to slide 3. Our fourth quarter closes out what has been a very significant year for our Company. We improved our operating performance, continued our credit discipline, maintained our strong capital position, and made investments that will drive future growth and profitability. For the year, Key generated positive operating leverage that we believe was among the strongest in our peer group. Our revenues were up 3% and our pre-provision net revenue was up 5%, both compared to the prior year. These results reflect our success in continuing to grow and expand client relationships in both the Community Bank and the Corporate Bank and these new clients contributed to our 5% growth in average loans and 12% growth in CF&A balances.

We also increased our core fee based income including investment banking and debt placement fees which were up 12%, another record year for us. Corporate services and cards and payments were both up over 10%. And I think it's worth noting that these are areas where we have made recent investments that are generating growth and positive returns. Expense management also remained an area of focus. During the year we continued to execute on opportunities to right size our business, reduce occupancy costs, and improve operational efficiencies. Expense trends reflect our investment to drive future growth and profitability as well as merger related charges and those related to our continuous improvement in efficiency efforts.

Investments during the year included remixing our headcount to increase client facing roles in both the Corporate Bank and the Community Bank. We also enhanced our payments capabilities, which have driven strong growth in purchase and prepaid cards as well as a 13% increase year-over-year in credit card sales. And we continue to invest in our digital and mobile offerings as well as ongoing enhancements to our compliance and regulatory processes. These were good investments that helped drive our revenue growth in 2015 and they will make an even larger contribution in the future as they fully mature.

While these investments including the addition of 60 senior bankers in our Corporate and Community Bank as well as Pacific Crest Securities position us for growth, they offset some of the efficiency improvements made in other areas of our