KeyCorp. (NYSE:KEY) Q3 2019 Earnings Conference Call - Final Transcript

Oct 17, 2019 • 09:00 am ET


KeyCorp. (NYSE:KEY) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning. And welcome to KeyCorp's Third Quarter 2019 Earnings Conference call. As a reminder, this conference is being recorded. I would now like to turn the conference over to the Chairman and CEO, Beth Mooney. Please go ahead.

Beth Mooney

Thank you, operator. Good morning. And welcome to KeyCorp's third quarter 2019 earnings conference call. Joining me for the call is Don Kimble, our Chief Financial Officer; Chris Gorman, our newly appointed President and Chief Operating Officer; and Mark Midkiff, our Chief Risk Officer.

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. And before I review our quarterly results, I want to comment on our leadership transition that we announced last month. In keeping with our thorough and robust succession planning process developed by our Board of Directors, I announced my upcoming retirement effective May 1st of next year. And Chris Gorman was appointed President and Chief Operating Officer, and a member of our Board of Directors.

Chris will succeed me as Chairman and CEO next May. And I will have opportunities to speak with you over the next several quarters. But I just want to say that my time at Key has represented some of my most rewarding years of my 40 years in banking. I am proud of what this team has accomplished as we have transformed this company, our culture, our strategy and our performance. And importantly, I will remain fully engaged over the next seven months and I'm committed to working with Chris for a seamless leadership transition. I look forward to Key's continued success under Chris with our diverse and talented leadership team and I have every confidence in our future success.

Now moving on to the results we reported this morning. My remarks will adjust for our previously reported fraud loss, and notable items in prior periods. So let me start with a few headlines. Earnings per share grew 7% from the year ago period, and 9% from the second quarter. We reached the top end of our targeted cash efficiency ratio range of 54% to 56% with a reported 56%, which is low -- our lowest level in over a decade.

We delivered another quarter of positive operating leverage, driven by both revenue growth and a 3% sequential quarter decline in expenses. And we saw a solid balance sheet growth and strong fee income, with a record third quarter for investment banking and debt placement fees.

On the revenue side, we saw good momentum across our company. We grew both loans and deposits 4% from the prior year, driven by activity in both our commercial and consumer businesses. We generated another quarter of strong broad-based growth in commercial and industrial loans, and saw higher consumer loan balances driven by Laurel Road and strength in our consumer mortgage lending.

Non-interest income was up 7% from the year ago period, benefiting