- KeyCorp reports first-quarter earnings per share of 21 cents.
- Analysts were expecting EPS of 19 cents.
- Average commercial loans grew 7% during the first quarter; 20% year-over-year.
|KeyCorp CEO Beth E. Mooney|
The return on average common equity was 8.25% during the first quarter, compared to 8.26% the previous quarter, and 8.75% a year earlier. KeyCorp has a deal in place to acquire 37 branches in Buffalo and Rochester, N.Y., as part of First Niagara Financial Group's ( FNFG) planned divestiture of overlapping branches after it acquires about 200 branches from HSBC ( HBC). KeyCorp will pick up about $2.4 billion in deposits and $400 million in loans, when the branch deal closes, which is expected to happen in the third quarter. KeyCorp's shares closed at $7.99 Wednesday, returning 4% year-to-date, following a 12% decline during 2011.The shares trade for 10 times the consensus 2013 EPS estimate of 81 cents. The consensus 2012 EPS estimate is 77 cents. The company announced in March that its board of directors had authorized up to $344 million in common share repurchases, and would consider raising its quarterly dividend by two cents to five cents, at its May meeting. Based on the current three-cent quarterly payout, the shares have a dividend yield of 1.50%. Jefferies analyst Ken Usdin rates KeyCorp a "Hold," with a $9 price target, and said on Thursday that the quality of the earnings "beat may be called into question, as a leveraged lease gain, higher principal investing gains, and a lower tax rate helped. " Usdin added that "core EPS is in the $0.18 range, excluding the net impact from the early termination of a leveraged lease (+$14mm pre-tax; or -$0.01 EPS) and normalizing the tax rate (-$0.01 EPS)," and viewed the first-quarter results as "in-line, as
overall loan growth was a little weak (-0.7% Q-Q), but core pre-provision income of $314mm was better than expected." Jeffferies estimates that KeyCorp will earn 70 cents a share for all of 2012, followed by 2013 EPS of 77 cents. Interested in more on KeyCorp? See TheStreet Ratings' report card for this stock. -- Written by Philip van Doorn in Jupiter, Fla. To contact the writer, click here: Philip van Doorn. To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.