KeyCorp. (NYSE:KEY) Q1 2017 Earnings Conference Call - Final Transcript

Apr 20, 2017 • 09:00 am ET

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KeyCorp. (NYSE:KEY) Q1 2017 Earnings Conference Call - Final Transcript

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Presentation
Executive
Beth Mooney

our work to decommission nearly all of the targeted application and servers.

From a strategic perspective, our confirmation with First Niagara has truly transformed our market presence particularly in Upstate New York where our history days back nearly 200 years. We now have leading market share in a number of important markets and have improved our scale but deposits per branch are approximately 70%. We have also made broad-based progress in strengthening the relationships with our 1 million new clients. Retail deposits have grown from the conversion dates in every First Niagara market. We are also seeing strength in areas like commercial mortgage banking, payments and residential mortgage as we continue to build out that platform.

Critical to our success with First Niagara is our ability to deliver on our financial targets and the commitments we have made. As I said, we remain on track to achieve our initial $400 million in cost savings by the second quarter and we expect to reach $450 million by early 2018. This would represent 46% of First Niagara's full year 2015 expense base. With our first quarter results, we are operating at a level consistent with or better than the financial targets we announced with the acquisition. And while not included in our financial targets, revenue synergies from our acquisition provide significant upside. We have been very pleased with our early wins and remain confident in our ability to deliver a broad range of products and services to our new client.

I will close my portion of the call by restating, that it was a strong quarter for Key and also the third consecutive quarter that we have shown value creation from our First Niagara acquisition. During each of these quarters, we have grown our business by expanding client relationships and delivered on our cost saving commitments and this is translating into enhanced operating results. As evidenced by our 60% cash efficiency ratio, and 13% return on tangible common equity both of which improved by 400 basis points from the year ago period. While we are reporting results that reflect the value of the acquisition, we believe they have not yet been fully recognized in our stock valuation.

With that, I will turn the call over to Don for more detailed look at the quarter. Don?

Executive
Don Kimble

Thanks Beth. I'm on slide six. First quarter net income from continuing operations was $0.32 per common share after excluding $0.05 of merger-related charges as compared to $0.24 per share in the year ago period and $0.31 in the fourth quarter which excludes $0.11 of merger-related charges. As Beth mentioned, we generated positive operating leverage for the quarter. Excluding merger-related charges, our cash efficiency ratio was 60.4% and we had a return on tangible common equity of 12.9%. I'll cover many of these items on this slide in the rest of my presentation so I'm now turning to slide seven.

Total average loan balances of $86 billion were up $26 billion or 43% compared to the year