KeyCorp. (NYSE:KEY) Q1 2016 Earnings Conference Call - Final Transcript

Apr 21, 2016 • 10:00 am ET


KeyCorp. (NYSE:KEY) Q1 2016 Earnings Conference Call - Final Transcript


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Good morning and welcome to KeyCorp's First Quarter 2016 Earnings Call.

(Operator Instructions)

As a reminder, today's call is being recorded.

At this time, I would 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 first quarter 2016 earnings conference call. Joining me for today's presentation is, Don Kimble, our Chief Financial Officer and available for our Q&A portion of the call is Bill Hartmann, our Chief Risk Officer.

Slide two 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 three. Our first quarter results reflect momentum in our core businesses and continued progress on our strategic initiatives, despite a more challenging operating environment. Excluding merger-related expense, we generated positive operating leverage relative to the year-ago quarter and grew pre-provision net revenue by 6%. We also lowered our cash efficiency ratio for the first quarter to 64%.

Revenue was up 3% from last year, driven by a 6% growth in net interest income. Average loans were up 5% from the year-ago period with a 12% increase in commercial, financial, and agricultural loans.

In our non-interest income, we saw year-over-year improvement in areas such as corporate services, and cards and payments, reflecting investments that we have made in these businesses. Market sensitive businesses such as investment banking and debt placement fees, were impacted by the weak capital markets environment. Don will provide more detail and our outlook for our fee-based businesses in his comments.

Credit quality measures this quarter were impacted by migration in our oil and gas portfolio, reflecting current market conditions. The rest of the loan portfolio continue to perform well and within our expectations with overall net charge-offs remaining below our targeted range. We maintained our strong capital position and subject to Board approval, we expect an increase in our quarterly common stock dividend to $0.085 per share in May of this year.

Slide four is an update on our First Niagara acquisition. We were very pleased that the shareholders of both companies approved the merger last month. This was an important step in the process and we appreciate the support of our shareholders.

We also announced our Community Benefits Plan, which is a comprehensive blueprint for the community investments that we will be making over the next five years. This underscores our commitment to the areas we serve across our footprint.

I have commented before about the cultural fit between Key and First Niagara and that continues to be evident in the way our two teams are working together. We have made significant progress in developing detailed business plans and our target environment, including talent assessment and selection.

As we move forward, I'm even more confident in achieving our cost savings and revenue synergies and ultimately delivering on our commitments for value creation for our shareholders. We continue to expect