KeyCorp. (NYSE:KEY) Q4 2018 Earnings Conference Call - Final Transcript

Jan 18, 2018 • 09:00 am ET


KeyCorp. (NYSE:KEY) Q4 2018 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the KeyCorp Fourth Quarter 2017 Earnings Conference Call. As a reminder, this conference is being recorded.

I'd now like to turn the conference over to the Chairman and CEO, Beth Mooney. Please go ahead.

Beth E. Mooney

Thank you, Operator. Good morning, and welcome to KeyCorp's fourth quarter 2017 earnings conference call. In the room with me is Don Kimble, our Chief Financial Officer; Chris Gorman, President of Banking; and Bill Hartmann, our Chief Risk Officer. As announced in December, Bill will be retiring, and Mark Midkiff will be joining Key next week as our new Chief Risk Officer. So we want to thank Bill for his years of service to Key and all that he has done for our company.

Slide 2 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 moving to Slide 3. Before I discuss the details of the quarter, I want to make a few observations. First, 2017 was a strong year for Key with continued momentum in our core businesses and the successful integration of our First Niagara acquisition, and I believe our business fundamentals and competitive positioning are more favorable than any point in my tenure with the company. Whether it's the quality of our people at all levels of the organization. The depth and breadth of our client relationships from our retail business up through our large corporate franchise. The quality of our customer offering, including product capabilities, expertise and our commitment to financial wellness. The strength of our balance sheet and our overall risk profile, our strategic focus across every business unit and our reputation within our communities from Maine to Alaska. The fact is we have never been better as a company.

Based on this positioning as well as our positive outlook for general economic conditions that we expect to benefit our consumer and commercial clients, we are pleased this morning to announce increased long-term performance targets for Key. Specifically, we are revising our cash efficiency ratio target to 54% to 56% and increasing our return on tangible common equity target to a range of 15% to 18%. These reflect our confidence in Key's competitive positioning and our ability to continue to deliver positive operating leverage and stronger returns.

With that, let me move to our fourth quarter results, which at the outset, I would acknowledge are somewhat noisy. Some of the moving pieces were environmental and industry wide, including the impact of the Tax Cut and Jobs Act, while others were related to our business model or recent actions we have taken. But importantly, it was a solid finish to a strong year for Key with positive underlying trends. We reported fourth quarter earnings of $0.17 per common share or $0.36 after adjusting for notable items, including merger related charges and the impact from the new tax law, along with other related actions.

Details on the notable items can