KeyCorp (KEY) reported a decline in second-quarter earnings, citing additional expenses from a cost-cutting initiative.
The Cleveland company reported a profit of $198 million, down less than 1% from the first quarter and roughly 14% from a year earlier. Earnings per share totaled 22 cents, beating analysts' estimates by 2 cents.
During the second quarter, KeyCorp, which has $90.6 billion of assets, recorded $37 million, or 3 cents per share, in costs tied to an efficiency effort, which included the closure of 33 branches. It announced last year a plan to improve its efficiency ratio to between 60% and 65%, including the elimination of up to 5% of its branches and efforts to raise revenue. So far it has cut roughly $171 million of its targeted $200 million in expenses.
At June 30 its cash efficiency ratio was 69.06%, compared with 65.98% in the first quarter. But its adjusted ratio which excludes the cost-cutting charges was 65.42%, the company said in its earnings release Thursday.
Revenue totaled about $1 billion, up more than 1% year over year. Net interest income climbed almost 8%, to $586 million. Its net interest margin rose seven basis points, to 3.13%, from a year earlier. Noninterest income fell roughly 6%, to $429 million.
KeyCorp's average loan balance increased more than 6%, to $52.7 billion, year over year. Its commercial, financial and agricultural and consumer portfolios expanded, the company said.