KeyCorp (KEY) posted double-digit growth in its commercial and industrial loan portfolio and its earnings rose in the first quarter.
The Cleveland company reported profits of $199 million, up more than 2% from a year earlier. Its earnings per share of 22 cents beat analysts' expectations by three cents.
Revenue rose 1% from a year earlier, to $1 billion. Noninterest income fell almost 4% from a year earlier to $425 million. KeyCorp posted declines in income from trust and investment services, operating leases and consumer mortgages.
Net interest income rose more than 5%, to $589 million. Total average loans increased more than 6%, to $52.6 billion, from a year earlier, as commercial, financial and agricultural loans jumped more than 16% to $23.3 billion. Total home equity loans rose about 5%, to $10.2 billion, from a year earlier.
KeyCorp's net interest margin was 3.24%, up from 3.16% a year earlier, primarily because of a change in funding mix from the redemption of certain trust preferred securities and maturity of long-term debt and higher cost certificates of deposit.
"We continued to experience growth in average loans; however, our customers remained cautious regarding the overall strength of the economy and were somewhat restrained in their borrowing during the quarter following a very strong fourth quarter," Beth E. Mooney, KeyCorp's chairman and chief executive, said in a news release. "Credit quality improved once again, and we showed good progress controlling our expenses and improving our cash efficiency ratio to 66% during the quarter."
Through the first quarter, the company has realized $105 million in annualized expense savings. KeyCorp pledged last year to cut between $150 million and $200 million in costs by the end of 2013 and close up to 5% of its branches. Its cash efficiency ratio improved from almost 68% a year earlier to just under 66%.