KeyCorp.’s KEY fourth-quarter 2016 adjusted earnings of 31 cents per share outpaced the Zacks Consensus Estimate of 29 cents. The figure was up 14.8% from the prior-year quarter.
KeyCorp’s shares rose nearly 1% in pre-market trading, reflecting impressive organic growth and easing margin pressure. Notably, the price reaction during the full trading session will provide a better idea about how investors have accepted the results.
Better-than-expected quarterly results indicate revenue synergies from the First Niagara Financial Group acquisition deal (completed in Aug 2016). Further, the company reported impressive growth in loans and deposits. However, higher operating expenses and a rise in provision for credit losses were the downsides.
Including non-recurring merger-related charges of $198 million, Keycorp’s net income from continuing operations came in at $213 million, down 4.9% from the prior-year quarter.
FindTheCompany | Graphiq
For 2016, earnings of 80 cents per share lagged the Zacks Consensus Estimate of $1.11. Also, it was down 23.8% year over year. Net income from continuing operations was $753 million, down 15.6% from 2015.
Revenues Surge on First Niagara Deal, Expenses Increase
Total revenue for the quarter surged 43% year over year to $1.57 billion. Also, this compared favorably with the Zacks Consensus Estimate of $1.45 billion.
For 2016, revenues increased 18% year over year to $5.0 billion. Also, this was above the Zacks Consensus Estimate of $4.9 billion.
Tax-equivalent net interest income jumped 55.4% year over year to $948 million. The rise was attributable to benefits from the First Niagara acquisition and ongoing business activities. Also, taxable-equivalent net interest margin from continuing operations grew 25 basis points (bps) year over year to 3.12%.
Non-interest income (excluding merger related charges) was $609 million, an increase of 25.6% from the year-ago quarter. A rise in all fee income components drove the surge.
Non-interest expense (excluding merger related charges) jumped 38.8% year over year to $1.01 billion due to a rise in both personnel as well as non-personnel expenses. Also, the quarter recorded higher merger-related charges.
Healthy Balance Sheet
As of Dec. 31, 2016, average total deposits were $104.7 billion, up 10.3% from the prior quarter. Further, average total loans were $85.4 billion, up 9.9% from Jun. 30, 2016.
