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KEY Reports Net Income of $0.54 vs. $0.76 in Q3-06 PRNewsWire 10-16 KeyCorp announced Q3-07 income from continuing operations of $224 million [$0.57/share] compared to $305 million [$0.74/share] for Q3-06, and $337 million [$0.85/share] for Q2-07. Net income totaled $210 million, or $0.54 per diluted common share, for the third quarter of 2007, compared to net income of $312 million, or $0.76 per share, for the third quarter of 2006 and $334 million, or $0.84 per share, for the second quarter of 2007. In Q3-07 ROA from continuing operations was .93% compared to 1.31% in Q3-06. ROE in Q3-07 was 11.50% compared to 15.52% in Q3-06. Book value at the end of Q3-07 was $20.12 compared to $19.78 at the end of Q2-07 and $19.73 at the end of Q3-06. During the third quarter, Key recorded net losses of $53 million from loan sales and write-downs, $2 million from dealer trading and derivatives, and $22 million from other investments for a total of $77 million in net losses. This compares to net gains of $26 million and $51 million from these activities in the third quarter of 2006 and the second quarter of 2007, respectively. FTE net interest income was $712 million in Q3-07 compared to $726 million for Q3-06. Average earning assets grew by $3.6 billion, or 4%, while the net interest margin declined to 3.40% from 3.61% for Q3-06. Key's noninterest income was $438 million for the third quarter of 2007, compared to $543 million for the year-ago quarter. The decrease was attributable to the impact of market volatility on several of Key's capital markets-driven businesses, as well as the sale of the McDonald Investments branch network completed in the first quarter of this year. Results for the current quarter included $53 million in net losses from the sales and write- downs of primarily commercial real estate loans held for sale, compared to net gains of $14 million for the same period last year. Income from investment banking and capital markets activities decreased by $35 million, due primarily to a $25 million decline in the fair values of two real estate-related investments held by the Private Equity unit within the Real Estate Capital line of business. Key's nonperforming assets rose by $241 million from the third quarter of 2006. The increase was due primarily to deteriorating market conditions in the residential real estate segment of our Real Estate Capital line of business, principally in Florida and California. Our total net loan charge- offs were $59 million or 0.35% of average total loans for the current quarter. From the Conference Call: Jonh McDonald - losses of 77 millin form capital market activities - we expect rebound in Q4. Some of the spreads have tightened in Q4. We expect normal activity Private equity - 9 million in gains in Q3 - difficult to forecast Q4 - but should be better than Q3 Terry Macavoy - provision of 69 million vs charge-offs of 59 million. We increased commercial real estate lines - the CNI loan book looks good right now Marine portfolio - we increased credit scores - quality of portfolio is good - exposure to Florida and California Tony Davis with Stephil Nicholas - loan to value for CRE - exposusure to Florida condos do not have LTV with us - Florida - 360 million Paul Delaney with Morgan Stanley - construction nonperformers ratio went down there are times when allowance goes down - not indicating massive loss content - you reserve for the entire portfolio and not just for non-performing. We actively reappraise home builders - do not have to wait for spring selling season Ed Nagerian with Merill - residential real estate - how will it impact net interest income - could you reverse past interest revenue NIM impacted Q3 - reduced margin by a basis point due to non-performing. Very little refersals. CMBS revenus going forward? out adjustment in Q3 was extraordinary. CMBS origination has slowed. We are optimistic that profitability will return in Q4. It is a core business - has always been profitable. About 25% in our warehouse - it is hedged and profit is locked in. As we look into 2008 - we will have less activity due to lack of originations. So you will have less volume and less in spreads? Correct 360 million in condos in Florida. What are NPAs? NPAs in condos - no nonperformers in Florida 2 billion in retail properties - how much in strip malls vs larger properties? strip center total 390 million acquisitions - small regional banks more interested in selling due to challenges on horizon we hope that starts - 2008 more difficult year. Market disruption will take time to work through. But no increase yet Sonovia Capital - allowance to total loans - what is comfort level we are building loan loss reserves. As nonperformers increase and charge offs go up the provision goes up. Provision rose higher than charge offs. That trend should continue Jonh bowling with Maple Capital Managment - loan loss provisions - looks like you have been even more aggresive - are you seeing trands moderating? When we look at charge offs - we have been able to sell some - others marked down. As to provisions - other than real estate the portfolios look fine. Even commercial real estate is performing well. So no need to increase provision on those. Jump in non-perfromers - but those loans are current. Our Reseve to total loans ratio is strongest in industry - but you appear to focus on only one ratio - the reserve to nonperforming. Buy backs to moderate? It will be comporable to Q3. Gary Townsend with FBR - deposit growth good. What helped your success - are you doing anything different We had focused marketing activity. they were successful. Inc money market accoutns and NOW accounts. Geograpchi stenths - the western markets weaker in great lakes where there is touger competition loan growth due to CNI eral estate and corporate - clients who had capital market access used credit lines. That future activity will be flat to down. Commerical real estate book up - how much would have been securitized? substantial reduction of expenses - will that repeat in Q4 reduction due to incentive compensation - reduction of litigation reserve - not repeatable. Expenses tied to revenues will go up in Q4. Ratings & Dividend Changes On 9-21 Lehman Brothers reiterated their ratings on several banks: BAC at Equal-weight; BBT at Underweight; C at Overweight; CBH at Equal-weight; FITB at Equal-weight; FHN at Equal-weight; JPM at Overweight; MI at Equal-weight; RF at Underweight; USB at Overweight; WB at Overweight, and ZION at Equal-weight. Home Page Factoids Previous Update |