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

Jan 21, 2016 • 10:00 am ET

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

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Q & A
Operator
operator

Thank you. (Operator Instructions) Ken Usdin, Jefferies.

Analyst
Josh Cohen

This is Josh in for Ken. Can you just talk about what rate assumptions you're including with that NII guidance rates?

Executive
Don Kimble

Our assumption would be to have two additional rate increases for 2016, both of which in the second half of the year and then the last of which toward the end of the year.

Analyst
Josh Cohen

And then secondly, can you just talk to the IB pipeline and what you're seeing here in the outlook?

Executive
Chris Gorman

Josh, it's Chris. As we look at our pipelines kind of across the Corporate Bank, our pipelines are very much in line with where they were a year ago. And as Don mentioned, we had a record year last year so we actually feel very good about our pipelines.

Operator
operator

Erika Najarian, Bank of America Merrill Lynch.

Analyst
Erika Najarian

Beth, just wanted to ask a question on something you mentioned during your prepared remarks. You mentioned that you're even more confident about the First Niagara deal in terms of extracting cost savings. Could you give us a little bit of color in terms of the conversations or the progress that you have made after announcing the deal in terms of thinking about the future impact and also what the progress is in terms of getting First Niagara ready to be embedded into your CCAR process?

Executive
Beth Mooney

Erika, I'd be glad to discuss that and I'll let Don address the CCAR portion because he is closer to that work than I am. And you're correct that I'm even more confident and we feel even stronger about the path and quality of what will be the value of this combined company. On the cost savings, as you know we had targeted $400 million or approximately 40% of their cost. And while it is early days, the integration teams have been identified and are working two by two to map out those plans. And as we really understand the underlying cost structure particularly in technology, operations, vendor expense; there are significant savings in all of those areas that probably contribute to over 40% of that $400 million.

So out of the gates as we look for the path while nothing is ever easy, we also see very real savings that are easy to garner and will also be realized fairly early within the time after our acquisition. We're also looking at complementary business capabilities and revenue synergies that we continue to gain confidence about the value that will be created there. So in all, I do think you hear a continued tone of confidence as well as a path forward that we feel strongly about.

Executive
Don Kimble

As far as the CCAR process, will be including First Niagara with an assumed acquisition date in the third quarter as we talked about before for the CCAR submission. We'll be relying primarily on Key models in the past and using the First Niagara information on where we can to run through our existing models as well. And so we will show