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10 Bank Stocks You Need to Watch During Earnings Season (Update 1)

8. KeyCorp
Shares of KeyCorp (KEY) of Cleveland closed at $7.74 Friday, returning 2% year-to-date, following a 12% decline during 2011.

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Based on a quarterly payout of five cents, the shares have a dividend yield of 2.58%.

The shares trade for 0.9 times tangible book value, and for 9.6 times the consensus 2013 EPS estimate of 81 cents. The consensus 2012 EPS estimate is 77 cents.

The company during the first quarter authorized up to $344 million in share repurchases, beginning in the second quarter.

KeyCorp will report its second-quarter results on July 19, with a consensus estimate of 19 cents a share, declining from EPS 20 cents the previous quarter and 25 cents a year earlier, when the company transferred $8 million from loan loss reserves, rather than simply allowing them to decline in the improving credit environment.

The company stands out as being one of the few among large-cap industry players that analysts see being well-positioned for an increase in its net interest margin over coming quarters.

UBS analyst Stephen Scinicariello rates KeyCorp a "Buy" with a $10 price target, matching the second-quarter consensus EPS estimate, while estimating the company will earn 83 cents a share for all of 2012 and 95 cents a share in 2013. The analyst said on June 25 that "KEY has opportunities to increase its [net interest margin] as higher costing CDs and liabilities are further reduced." For the second quarter, UBS "conservatively" projects "a flat NIM at 3.16% but 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% [loan] growth for 2012," and Scinicariello said "outperformance in this area would be a significant positive, in our view."

The analyst expects "$127.5MM of buybacks this quarter."

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