KeyCorp. (NYSE:KEY) Q4 2018 Earnings Conference Call Transcript
Jan 18, 2018 • 09:00 am ET
Thank you. (Operator Instructions) First, we have the line of Scott Siefers of Sandler O'Neill & Partners. Your line is open.
Good morning, everybody.
Good morning, Scott.
Beth E. Mooney
Let's see. Don or Beth, I was just hoping you could provide a little more color on the loan growth outlook for next year. Appreciate the commentary about the year ending strong, particularly in C&I, but I guess as I'm looking at things, there's been a couple of quarters of sluggish growth and just to get to the $88.5 billion to $89.5 billion range would require a pretty substantial ramp in growth throughout 2018. So just curious in your view what would generate that kind of acceleration to give you comfort that that's the appropriate range?
Sure, Scott. I'll start with that and then ask Beth or Chris to jump in with any additional color. But I think you hit some of the key points. One is that we are starting up from a point from C&I where the end of period balances were stronger. And what's important to note there was that those were core business relationships that wasn't being influenced by bridge loans or other things that might be more temporary in nature, and so we're feeling positive about that. Our pipelines are strong going into the year. And the other thing to keep in mind too is that throughout 2017, we had a very good year as far as originations and what really changed was a trend in the market, which translated to much stronger capital market fees for us by our company's accessing the capital markets and higher pay downs. And so we would expect those to continue, but probably not at the same pace, and as we've said in our notes, that we expect loan growth to build throughout the year.
Okay. That's perfect. Thank you very much. And then if I could jump to the deposit side for just a second. I'm just curious if you can provide a little color on sort of the nuance in there. You've been holding on really well on pricing for most of the individual categories, but CDs have been your biggest grower in the area that's -- as you would have imagined, have seen the highest rate increases. So just curious what the overall philosophy is. I guess my first inclination was you might have been trying to moderate your rate sensitivity a bit, but based on your comments, Don, it does not sound like that's the case. So just curious your thoughts there.
We're seeing stronger customer preference for time deposits now that rates have come up a little bit. And you're right, what we're seeing is the impact of the new rates coming through with growth in that product and it's translating to an increase in that overall rate on deposits paid for time deposits. Even with that, though, our cumulative beta is only 21% since the first rates started to come through, and I would say that