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3 'Quite Attractive' Regional Bank Value Plays from UBS

KeyCorp
Shares of KeyCorp (KEY - Get Report) of Cleveland closed at $7.46 Monday, down 2% year-to-date, following a 12% decline during 2011.

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Based on a five-cent quarterly payout, the shares have a dividend yield of 2.68%.

The shares trade for 0.8 times their reported March 31 tangible book value of $9.28, and for nine times the consensus 2013 earnings estimate of 81 cents. The consensus 2012 EPS estimate is 77 cents.

UBS's price target for KeyCorp is $10, and the firm on Monday left unchanged its 2012 EPS estimate of 83 cents and its 2013 estimate of 95 cents.

In contrast to many regional banks facing declining net interest margins as short-term rates remain near zero and long-term rates for new loans and investment securities continue to decline, Scinicariello said that "KEY has opportunities to increase its NIM as higher costing CDs and liabilities are further reduced." For the second quarter, UBS "conservatively" projects "a flat NIM at 3.16% but forecasts a ramp to 3.23% by 4Q12." Expected redemptions of $700 million in trust preferred shares during the third quarter should "be 5% accretive on an annualized basis."

UBS projects roughly "4% growth for 2012 and outperformance in this area would be a significant positive, in our view."

KeyCorp's board of directors authorized a $344 million stock buyback plan in March, and Scinicariello expects "$127.5MM of buybacks this quarter."

Interested in more on KeyCorp? See TheStreet Ratings' report card for this stock.

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SYM TRADE IT LAST %CHG
BAC $16.54 0.58%
C $53.92 -0.46%
CMA $48.41 0.31%
FITB $20.54 0.49%
KEY $14.78 1.10%

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