KeyCorp Expenses, Provision Lower 1Q Earnings

KeyCorp in Cleveland reported a drop in first-quarter earnings as expenses and its provision for loan losses crept up.

The $94.2 billion-asset company said Thursday that it earned $227 million, down almost 4% from a year earlier. Earnings per share of 27 cent, which met the expectations of analysts surveyed by Bloomberg, remained flat from a year earlier. 

Noninterest expenses totaled $669 million, up almost 1% from a year earlier. The increase related to the third-quarter acquisition of Pacific Crest Securities, a technology-focused investment bank, and higher employee-benefits costs, KeyCorp said. Those costs were partially offset by lower business services and professional fees paid by the company.

KeyCorp's $35 million provision for credit losses was more than eight times higher than a year earlier. The increase related to loan growth, the company said.

Total revenue increased by 1%, to $1 billion, from a year earlier. Net interest income was up more than 1%, to $577 million.

Noninterest income rose half a percent, to $437 million, as cards and payments income increased more than 10%, to $42 million, and trust and investment service fees climbed roughly 11%, to $109 million. This was partially offset by a 19% drop in investment banking and debt placement fees and a 13% decline in mortgage servicing fees.

Total average loans rose more than 5%, to $57.5 billion, year over year. This was driven by an 11% increase, to $28.3 billion, in the commercial, financial and agricultural portfolio.