UPDATE: KeyCorp (KEY) Posts Q3 GAAP EPS of 23c

(Updated - October 15, 2014 6:37 AM EDT)

KeyCorp (NYSE: KEY) reported Q3 EPS of $0.23, which may not compare with the analyst estimate of $0.26. Revs were $998 million, versus $1.04 billion expected.

During the third quarter of 2014, Key incurred $35 million, or $.03 per common share, of costs related to both its efficiency initiative and a pension settlement charge, compared to $41 million, or $.03 per common share, during the third quarter of 2013.

Q3 operating results comparisons:

Compared to Third Quarter of 2013

• Average loans up 4.7%, driven by a 10.9% growth in commercial, financial and agricultural loans
• Average deposits up 3.6% due to commercial mortgage servicing acquisitions and growth in commercial deposits offsetting declines in certificates of deposit
• Net interest income (taxable-equivalent) down $3 million, primarily due to lower earning asset yields
• Noninterest income down $42 million, due to $27 million in lower operating lease income and other leasing gains mostly due to an early termination of a leveraged lease in the prior year, $8 million in lower principal investing gains, and a decline of $6 million in mortgage servicing fees due to lower special servicing fees, slightly offset by increases in noninterest income related to the recently-acquired Pacific Crest Securities
• Noninterest expense down $12 million, reflecting $6 million in lower efficiency and pension-related charges, and a decrease in the provision for losses on lending-related commitments, slightly offset by expenses related to the recently-acquired Pacific Crest Securities
• Asset quality improved, with net loan charge-offs to average loans declining from .28% to .22%
• Disciplined capital management, repurchasing $119 million of common shares during the third quarter of 2014 and maintaining a top tier capital position with Tier 1 common equity of 11.26%

Compared to Second Quarter of 2014

• Average loans up .3%, primarily driven by increases in real estate commercial mortgage loans
• Average deposits up 1.9% due to the growth in commercial mortgage servicing and commercial client inflows offsetting declines in certificates of deposit
• Net interest income (taxable-equivalent) up $2 million due to an increase in earning asset levels, higher loan fees, and more days in the quarter, which offset lower asset yields
• Noninterest income down $38 million, primarily due to $18 million in lower principal investing gains, a decrease of $18 million in operating lease income and other leasing gains mostly due to the early termination of a leveraged lease in the prior quarter, and an $11 million reduction in investment banking and debt placement fees, slightly offset by increases in noninterest income related to the recently-acquired Pacific Crest Securities
• Noninterest expense up $15 million, primarily due to $11 million in higher efficiency and pension-related charges, and expenses related to the recently-acquired Pacific Crest Securities
• Asset quality remains strong, with net loan charge-offs to average loans flat to prior quarter and remaining well below the targeted range

For earnings history and earnings-related data on KeyCorp (KEY) click here.

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