How did KeyCorp's second-quarter 2024 earnings compare with prior periods?

Net income from continuing operations attributable to Key common shareholders was $237 million, or $.25 per diluted share, up from $183 million ($.20) in the first quarter of 2024 but down from $250 million ($.27) in the second quarter of 2023.

What drove the change in net interest income?

Taxable-equivalent net interest income rose $13 million sequentially, benefiting from reinvestment of maturing securities and replacement of low-yielding swaps. Year over year it fell $87 million, reflecting lower loan balances, higher deposit costs, and a funding mix shift toward higher-cost deposits and borrowings.

Where did capital stand at quarter end?

The estimated Common Equity Tier 1 ratio was 10.5% at June 30, 2024, which reflects KeyCorp's election to adopt the CECL optional transition provision. Tier 1 risk-based capital was an estimated 12.2%, and the company declared a dividend of $.205 per common share for the third quarter of 2024.

KeyCorp 8-K: Earnings & Results

Q: How did credit quality trend?

The provision for credit losses was $100 million, versus $167 million a year earlier. Net loan charge-offs rose to $91 million, or 0.34% of average total loans, and nonperforming loans increased to $710 million at June 30, 2024, from $431 million at June 30, 2023.

01—Abstract

Summary

Summary of the 8-K filed July 18, 2024. Cited figures are marked; the original filing is the authoritative source.

KeyCorp reported second-quarter 2024 net income from continuing operations attributable to Key common shareholders of $237 million^a, or $.25 per diluted common share, compared with $183 million, or $.20 per diluted share, in the first quarter of 2024 and $250 million, or $.27 per diluted share, in the second quarter of 2023.

Taxable-equivalent net interest income was $899 million^b, up $13 million sequentially but down $87 million year over year, and the net interest margin was 2.04%. Total noninterest income was $627 million and noninterest expense was $1.079 billion, down from $1.143 billion in the prior quarter. Provision for credit losses was $100 million, and net loan charge-offs rose to $91 million, or 0.34% of average total loans, from $81 million in the first quarter.

Average loans were $109.0 billion^c, down $11.7 billion from the second quarter of 2023, reflecting balance sheet optimization in 2023. Average deposits were $144.2 billion, up $1.3 billion year over year. Nonperforming loans rose to $710 million at June 30, 2024, from $431 million a year earlier, and the Common Equity Tier 1 ratio, estimated as of June 30, 2024, was 10.5%, up from 10.3% at March 31, 2024.

Book value per share was $13.09^d. The company's 2024 outlook in the supplemental package calls for average deposits to be relatively stable, up or down 2%, and for net interest income to benefit from swap and Treasury maturities.

The filing furnishes the earnings press release (Exhibit 99.1) and a supplemental information package (Exhibit 99.2) and files the consolidated balance sheets and income statements (Exhibit 99.3). Investors should weigh the sequential improvement in earnings and expense control against the year-over-year decline in net interest income, lower loan balances, and rising nonperforming loans.

02—Key points

Key Highlights

Net income from continuing operations attributable to Key common shareholders was $237 million, or $.25 per diluted share, versus $183 million ($.20) in 1Q24 and $250 million ($.27) in 2Q23.
Taxable-equivalent net interest income was $899 million with a 2.04% net interest margin, up $13 million and two basis points from the first quarter but down $87 million from the second quarter of 2023.
Total noninterest expense fell to $1.079 billion from $1.143 billion in the first quarter, driven by a $38 million decline in personnel expense.
Net loan charge-offs were $91 million, or 0.34% of average total loans, compared with 0.29% in the first quarter and 0.17% a year earlier.
Nonperforming loans were $710 million at June 30, 2024, up from $431 million at June 30, 2023.
Common Equity Tier 1 ratio was an estimated 10.5% at June 30, 2024, up from 10.3% at March 31, 2024 and 9.3% at June 30, 2023.
Average loans were $109.0 billion, down $11.7 billion year over year, while average deposits were $144.2 billion, up $1.3 billion.

03—Questions

Frequently Asked Questions

How did KeyCorp's second-quarter 2024 earnings compare with prior periods?
Net income from continuing operations attributable to Key common shareholders was $237 million, or $.25 per diluted share, up from $183 million ($.20) in the first quarter of 2024 but down from $250 million ($.27) in the second quarter of 2023.
What drove the change in net interest income?
Taxable-equivalent net interest income rose $13 million sequentially, benefiting from reinvestment of maturing securities and replacement of low-yielding swaps. Year over year it fell $87 million, reflecting lower loan balances, higher deposit costs, and a funding mix shift toward higher-cost deposits and borrowings.
How did credit quality trend?
The provision for credit losses was $100 million, versus $167 million a year earlier. Net loan charge-offs rose to $91 million, or 0.34% of average total loans, and nonperforming loans increased to $710 million at June 30, 2024, from $431 million at June 30, 2023.
Where did capital stand at quarter end?
The estimated Common Equity Tier 1 ratio was 10.5% at June 30, 2024, which reflects KeyCorp's election to adopt the CECL optional transition provision. Tier 1 risk-based capital was an estimated 12.2%, and the company declared a dividend of $.205 per common share for the third quarter of 2024.

04—Continue

← View all 8-K filings