KeyCorp. swung to a much bigger-than-expected third-quarter profit as the regional bank slashed its loan-loss provisions sharply and revenue rose.
"With the third quarter's results, Key has returned to profitability on a year-to-date basis," said Chief Executive Henry Meyer III. "Our third-quarter results reflect a higher net interest margin, continued credit quality improvement, well-controlled expenses and improvements in several fee-based businesses."
The Ohio-based regional bank has improved its performance of late, reversing losses by slashing the amount of money it sets aside to cover loan losses--a move many banks have made in order to improve their bottom lines lately. The bank also has cut costs and exposure to higher-risk loans.
Regional banks in the Midwest and Southeast have recently reported improved third-quarter earnings, helped by an ongoing boom in mortgage refinancing and improvement in the health of their loan books.
KeyCorp's loan-loss provisions were $94 million, down from $733 million a year earlier and $228 million in the second quarter. Net charge-offs, or loans lenders don't think are collectible, fell to 2.69% of average loans from 3.59% and 3.18%, respectively. Nonperforming loans, those near default, dropped to 2.67% from 3.68% and 3.19%.
Total loans declined 17%.
KeyCorp reported a third-quarter profit of $178 million, or 20 cents a share, compared with a year-earlier loss of $438 million, or 52 cents a share. Revenue jumped 15% to $1.13 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 3 cents on $1.1 billion in revenue.
Shares closed at $8.34 Thursday and were inactive premarket. The stock has risen 50% so far this year.