Updated from 8:53 a.m. with afternoon market action and comment from Jefferies analyst Ken Usdin.
- First-quarter net income from continuing operations of $196 million, or 21 cents a share.
- Earnings beat the consensus EPS estimate of 20 cents.
- $15 million, or a penny a share, in Q1 costs for efficiency initiative.
- Noninterest expense down 7% quarter-over-quarter.
NEW YORK (
(KEY - Get Report)
on Thursday reported a significant decline in overhead expenses during the first quarter.
The Cleveland-based regional lender reported first-quarter net income from continuing operations attributable to common shareholders of $196 million, or 21 cents a share, increasing from $190 million, or 20 cents a share, in the fourth quarter, and $195 million, or 20 cents a share, in the first quarter of 2012.
First-quarter earnings came in ahead of the 20-cent EPS estimate among analysts polled by
The first-quarter results included $15 million, or a penny a share, in charges related to the company's expense reduction initiative. KeyCorp said it expected to see its expense run rate decline by about $105 million on an annualized basis.
When discussing the company's "Fit for Growth" plan for lowering expenses, KeyCorp CEO Beth Money said in a statement that the company had made "significant progress toward our $200 million goal by the end of 2013," adding that "during the second quarter we expect to make further progress on our efficiency efforts as we consolidate branch locations and continue to work toward creating a variable cost base."
The company also said that when it completes the previously announced sale of Victory Capital Management and Victory Capital Advisors in the third quarter, it will book an after-tax gain of between $145 million and $155 million.
KeyCorp's first-quarter noninterest expense totaled $681 million, declining from $734 million in the fourth quarter, but increasing slightly from $679 million in the first quarter. First-quarter personnel expense totaled $391 million, declining from $422 million in the fourth quarter, but increasing from $372 million a year earlier.
Personnel costs declined from the fourth quarter because of higher severance costs in the prior period, and also because of declines in technology contract labor expenses and employee benefit expenses during the first quarter. Personnel costs were up year over year, because many of the same items, including technology contract labor and severance costs, increased from the first-quarter of 2012.
First-quarter net interest income was $583 million, declining from $601 million in the fourth quarter, but increasing from $553 million in the first quarter of 2012. The sequential decline in net interest income reflected a lower number of days in the quarter, but also a narrowing net interest margin, which is the spread between the average yield on loans and investments and the average cost for deposits and borrowings.