- Third-quarter EPS of 25 cents beats consensus estimate 22 cents.
- Return on average tangible common equity rises to 10.18%.
- Net interest margin, income, decline slightly from Q2.
- Average portfolio loans grow 1% sequentially, 5% year-over-year.
Updated from 10:17 a.m. ET with midday market action and comment from Sterne analyst Todd Hagerman.
NEW YORK ( TheStreet) -- KeyCorp (KEY) of Cleveland on Wednesday said it had achieved its goals for expense reduction, although the company continued to report extraordinary expenses tied to its cost-cutting program.
The bank reported third-quarter earnings from continuing operations of $229 million, or 25 cents a share, increasing significantly from $193 million, or 21 cents a share, in the second quarter, and $211 million, or 22 cents a share, in the third quarter of 2012.The third-quarter results came in ahead of the consensus EPS estimate of 22 cents, among analysts polled by Thomson Reuters. KeyCorp said it had "Achieved annualized run rate savings of $207 million, focused on further efficiency improvements." The company also said that it recognized extraordinary expenses of $41 million, or 3 cents a share, "associated with the efficiency initiative and a pension settlement charge." Third-quarter net interest income on a taxable equivalent basis came to $584 million, compared to $586 million the previous quarter and $578 million a year earlier. The net interest margin -- the spread between the average yield on loans and investments and the average cost for deposits and borrowings -- held up well, narrowing to 3.11% in the third quarter from 3.13% the previous quarter and 3.23% in the third quarter of 2012. Noninterest income totaled $459 million in the third quarter, compared to $429 million in the second quarter and $518 million in the third quarter of 2012. The sequential increase mainly reflected higher lease income and gains, while the year-over-year decline reflected the prior period's securities gains. Noninterest expense totaled $716 million in the third quarter, increasing from $711 million the previous quarter and $712 million a year earlier, however, the significant expense savings was apparent if the extraordinary third-quarter expenses of $41 million were netted out. KeyCorp's average portfolio loans grew 1% sequentially and 5% year-over-year, to $53.271 billion during the third quarter. Average commercial loans grew at a strong pace of 2% quarter-over-quarter and 11% year-over-year, to $23.864 billion. U.S. Bancorp (USB) of Minneapolis also announced its results on Wednesday, reporting even stronger core loan growth of 2.2% quarter-over-quarter and 7.5% year-over-year. Meanwhile, Comerica (CMA) of Dallas reported a 2% sequential decline in average loans , with year-over-year loan growth of just 1%. KeyCorp CEO Beth Mooney in a press release said the company's "results reflect another quarter of improved performance as we continued to grow our businesses, improve efficiency and execute on our capital priorities." She added that reaching the cost-cutting goal was "an important milestone for us, and we believe that our cost discipline is now embedded within our culture, which will allow us to drive further efficiency improvements."
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