KeyCorp. (NYSE:KEY) Q2 2016 Earnings Conference Call - Preliminary Transcript

Jul 26, 2016 • 09:00 am ET

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KeyCorp. (NYSE:KEY) Q2 2016 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good morning and welcome to KeyCorp Second Quarter 2016 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 mam.

Executive
Beth E. Mooney

Thank you, operator.Good morning, and welcome to Key Crop Second 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 Hartman, 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 starting to slide 3. Our second quarter results reflect continued momentum and our core businesses and the progress we have made to complete the acquisition of first Niagara on August 1st. Excluding merger really the charges. we generated positive operating leverage and grew pre provision net revenue relative to the year ago period.

Revenue was stable with the same period last year and up 3% from the last quarter. Despite low interest rates and challenging market conditions. loan growth was solid again this quarter, driven by a 12% increase in average commercial, financial and agricultural loans.

Our core fee based businesses continue to perform well with Corporate Services and card and payments, both posting double digit year-over-year gain. Market sensitive businesses, including investment banking and debt placement fee improved from last quarter, but are below the record pace of the year ago period.

Commercial mortgage banking continues to generate strong growth or other areas are being impacted by challenging market conditions. Don will provide more detail and outlook for a fee based business to his comments, expenses have remained well controlled, and our ongoing efficiency efforts have allowed us to continue to invest to drive growth.

Credit quality was a good story once again, but our net charge off to average loans remaining below are targeted level and Capital Management remains an area of focus. We increased our quarterly common dividends to 8 and $0.15 per share, or 13% during the quarter, and we were pleased to receive no objection from the Federal Reserve on our 2016 capital plan.

We expect to resume common share repurchases. After we complete our acquisition and subject to board approval, we plan to increase our common share dividends to $9.15 per share next year.

Now I'm turning to slide 4 we are very excited to be on a path to close our first Niagara acquisition which is Expected on August 1, the merger of Key Bank and first Niagara bank, its plans to the fourth quarter subject to the approval by the OCC. We would also expect systems and clients conversions to take place during the fourth quarter.

Additionally, we recently announced the plans for a combined branch network, including the consolidation of over 100 existing first Niagara and key branches. We also plan to continue to invest and grow in New