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Wed, Feb. 3, 10:25 AM
- This just in: The financial sector is having a worse go it this year than energy, with the XLF lower by 13.6% YTD vs. the XLE's 9% decline.
- Leading a big reversal from this morning higher open is the XLF's 2% decline. The S&P 500 is now off 1%, and the XLE "just" 0.85%.
- Among the issues for the financials are two items: 1) Hopes for a sustained rate hike cycle have been dashed, with the 10-year yield tumbling all the way to 1.82% currently from about 2.30% when the Fed hiked in mid-December. Fed speakers are all-of-a-sudden sounding very dovish (Dudley is the latest), and short-term rate futures are now pricing in just a 50% chance of even one Fed rate increase this year; 2) For lenders specifically, there's worry over their exposure to the crashing energy sector. No doubt better capitalized today than 10 years ago, losses are still losses even if they don't threaten the viability of the bank.
- JPMorgan (JPM -2.6%), Wells Fargo (WFC -3.6%), Morgan Stanley (MS -3.5%), KeyCorp (KEY -3.1%), PNC Financial (PNC -2%), Comerica (CMA -2.7%), Schwab (SCHW -3.8%), MetLife (MET -2.5%)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, PSCF, FINZ, KRS, XLFS
Thu, Jan. 21, 8:16 AM
- Q4 income from continuing operations of $224M down 8.9% from a year ago, though not directly comparable as this year's Q included $10M in merger-related (First Niagara) costs, and last year's Q included charges as well.
- CET 1 ratio of 10.95% vs. 10.47% at end of Q3. Book value per share of $12.51 vs. $12.47 in Q3, $11.91 a year ago.
- Net interest income of $610M up 3.7% Y/Y, with NIM of 2.87% down seven basis points. Deposit growth of 3%.
- Noninterest income of $485M down 1% Y/Y. Trust and investment services income of $10.5M down 6.3%. Mortgage and servicing fees of $15M up 36.4%. Corporate services income of $55M up 3.8%.
- Noninterest expense of $736M up 4.5% Y/Y, with personnel expenses of $429M up 4.9%.
- Total loans of $59.576B up 5.4% Y/Y, with commercial, financial, and ag loans up 13.6%, home equity loans down 2.1%, and other consumer loans down 1.5%.
- Net loan charge-offs of $37M vs. $32M a year ago. Charge-off ratio of 0.25% up three basis points. NPLs of $387M down 7.4%. Credit loss provisions of $45M up from $22M.
- Previously: KeyCorp EPS of $0.27 (Jan. 21)
- KEY flat premarket
Thu, Jan. 21, 6:46 AM
Wed, Jan. 20, 5:30 PM
Thu, Jan. 14, 4:38 PM
Nov. 19, 2015, 4:46 PM
Nov. 9, 2015, 10:28 AM
- After nice moves higher of late, the stocks of both KeyCorp (KEY -1.9%) and Regions Financial (RF -1.2%) have priced in several rate increases next year, says analyst Matt O'Connor, downgrading the two to Hold from Buy.
- In addition, there are risks to KeyCorp's deal to buy First Niagara Financial, like disruption from large expense cuts, regulatory issues, and more tangible book dilution.
- There may be more upside to be found in Citizens Financial Group (CFG -0.4%), says O'Connor, as that lender is earlier in its turnaround, trades at a 10% discount to Regions, and has less energy-related credit risk.
Nov. 2, 2015, 8:40 AM
- KeyCorp's (NYSE:KEY) move on Friday to buy First Niagara Financial (NASDAQ:FNFG) for $4.1B in stock and cash was greeted with a "Bronx cheer" by the market - its stock closed more than 10% lower.
- KBW and Citigroup buy the dip, with KBW upgrading to Outperform from Market Perform and Citigroup boosting to Buy from Neutral.
- Also tumbling on Friday, First Niagara catches an upgrade to Neutral from Sell at Goldman Sachs.
- KEY +1.8%, FNFG +0.5% premarket
- Previously: Investors not impressed as animal spirits return to bank M&A (Oct. 31)
- Previously: KeyCorp buying First Niagara Financial for $4.1B (Oct. 30)
Oct. 31, 2015, 2:04 PM
- Sizable bank mergers were supposed to be no-brainers as lenders - weighed down by a sluggish lending environment, overlapping branch networks, and high regulatory costs - sought operating synergies. Unfortunately, regulators since the financial crisis have had different ideas about what banks should be doing with their capital (namely, storing it for a rainy day).
- The M&T/Hudson City merger finally getting approval (after a three-year delay), along with quick green lights for a couple of BB&T purchases began to give investors hope, and this week they got KeyCorp (NYSE:KEY) agreeing to buy First Niagara (NASDAQ:FNFG), and New York Community Bancorp's (NYSE:NYCB) deal for Astoria Financial (NYSE:AF).
- The reaction: KeyCorp is lower by more than 10% since the news was announced, and First Niagara by more than 6%; NYCB is off nearly 14%, and Astoria 11%.
- "This level of selloff is not typical," says Sterne Agee's Peter Winter. "Early reactions to bank transactions often are bumpy," says KeyCorp CEO Beth Mooney.
- CLSA's Mike Mayo calls Key's purchase "strategically good," but isn't a fan of the bank's plan to fund a major portion of the deal with stock. NYCB is also funding much of its buy with stock, and the deal includes a cut in the dividend - maybe not the greatest move considering the income-oriented lean of the bank's investor base, says Winter.
- Previously: More losses for NYCB as secondary prices; Astoria lower too (Oct. 30)
- Previously: KeyCorp not expecting M&T-like deal hold-up (Oct. 30)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, FINZ, KRS, XLFS
Oct. 30, 2015, 10:06 AM
- Speaking on a post-deal conference call, KeyCorp (KEY -6.9%) CEO Beth Mooney says the purchase of First Niagara (FNFG +0.2%) has been discussed with regulators, and she's not expecting it to get held up the way M&T Bancorp's acquisition of Hudson City was.
- Presentation slides
- The combined bank will be tops in market share in the Buffalo region and other areas in Upstate New York (M&T is currently #1 in Western NY). It also establishes Key in areas like Pittsburgh, Philadelphia, Hartford, and New Haven.
- Expect jobs cuts/branch closures, mostly in the Buffalo area as cost savings are hoped to be $400M annually, helping to boost ROTCE by 200 basis points and improve the cash efficiency ratio by 300 bps.
- Previously: KeyCorp buying First Niagara Financial for $4.1B (Oct. 30)
- Previously: Fed approves M&T's purchase of Hudson City; HCBK +5.4% (Sept. 30)
Oct. 30, 2015, 9:12 AM
Oct. 30, 2015, 7:25 AM
- First Niagara (NASDAQ:FNFG) owners will receive 0.68 shares of KeyCorp (NYSE:KEY) and $2.30 in cash for each share of FNFG they hold. Based on KeyCorp's close of $13.39 yesterday, it works out to $11.40 per share for First Niagara vs. its close last night of $10.38, and $9 in September when the bank put itself on the block.
- The combined bank will have about $135B in assets, making it the 13th biggest in the U.S.
- Annual cost savings are expected to be north of $400M. KeyCorp sees the deal as being accretive to EPS in 2017 and providing IRR of roughly 15%.
- Needless to say, regulators must first give their approval, but the deal is hoped to close in Q3 of 2016.
- A conference call is set for 8 ET
- FNFG +2.9% to $10.68, KEY -0.9% to $13.26 premarket
Oct. 29, 2015, 12:01 PM
- The deal could value First Niagara Financial (FNFG -2.2%) at modest premium to its current market cap of just under $4B, reports the WSJ, which says we could see an official announcement as soon as tomorrow.
- Before First Niagara owners are too disappointed, they should be reminded the stock is higher by about 18% since reports of the bank being on the block first hit one month ago.
- KeyCorp (KEY -1.4%)
Oct. 16, 2015, 8:50 AM
- Yesterday's earnings miss was due to higher compensation expense and higher provisions, says Compass Point analyst Jesus Bruno, reiterating his Buy rating and $17.50 price target on KeyCorp (NYSE:KEY). The compensation expense, though, was from the hiring of loan officers which should benefit growth next year.
- "KEY has managed to generate operating leverage in a difficult environment as the bank continues to manage its cost base while expanding its fee revenue streams," he says. The bank also isn't being given credit for its large commercial swap book which offers protection against lower rates, but masks the lender's ability to benefit from higher rates by letting the swaps roll off.
- "KEY remains one of a handful of names in the regional bank space with the ability to generate positive operating leverage and double digit earnings growth without the need for higher rates," and also screens as cheap vs. peers.
- He boosts his Q4 EPS estimate to $0.29 from $0.27 and full-year 2016 to $1.26 from $1.22. 2017 is expected at $1.45.
- Previously: Banks lead the way higher as earnings roll in (Oct. 15)
- Previously: Strong gains in noninterest income at KeyCorp (Oct. 15)
Oct. 15, 2015, 2:49 PM
- The financial sector was pretty roughed-up during the August declines and hasn't really bounced a whole lot - in other words primed to rally on anything but the worst Q3 earnings results. Among those reporting today, Citigroup is up 4.7% and Goldman 3%. In regional banks, KeyCorp (KEY +4.8%), BB&T (BBT +2.9%), and U.S. Bancorp (USB +1%).
- The FInancial SPDR ETF (XLF +2.2%) is outperforming the S&P 500 by about 100 basis points on the session.
- The KBW Bank ETF (KBE +1.4%) and the KBW Regional Bank ETF (KRE +1.3%).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KBWR, KRU, RWW, RYF, FINZ, KRS, XLFS
Oct. 15, 2015, 7:23 AM
- Q3 income of $216M or $0.26 per share vs. $197M and $0.23 one year ago. Bank incurred pension settlement charge costs of $19M or $0.01 per share vs. $20M and $0.01 one year ago.
- Average loans up 6%, with commercial, financial and ag loans up 15%.
- $123M of stock bought back during quarter. CET 1 ratio of 10.51%. Book value of $12.47 per share vs. $11.74 one year ago. Last night's close was $12.71.
- Net interest income of $598M up 2.9% Y/Y, with NIM of 2.87% down nine basis points.
- Noninterest income of $470M up 12.7% Y/Y. Trust and investment services income of $108M up 9.1%. Investment banking of $109M up 23.9%. Corporate services income of $57M up 35.7%. Cards and payment income of $47M up 11.9%.
- Noninterest expense of $724M up 2.5% Y/Y, with personnel expense of $426M up 5.2%.
- Previously: KeyCorp misses by $0.01, beats on revenue (Oct. 15)
- KEY flat premarket
KeyCorp is a bank holding company. The Company through its subsidiaries, provides retail and commercial banking, commercial leasing, investment management, consumer finance and investment banking products and services to its clients.
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