KeyCorp posts 3Q profit of $178M

AP News
Posted: Oct 22, 2010 7:03 PM
KeyCorp posts 3Q profit of $178M

KeyCorp reported a profit for the third quarter on Friday in contrast to a loss a year ago, citing improved credit quality across its loan portfolios.

CEO Henry L. Meyer III said the bank has been working to lower its risk profile.

"Our balance sheet continues to reflect strong capital, liquidity and reserve levels," Meyer said. "I believe the trends that we've reported today in pre-provision net revenue demonstrate the progress we have made."

The regional banking company based in Cleveland said its net income available to shareholders amounted to $178 million, or 20 cents per share, in the three months ended Sept. 30. That easily beat Wall Street estimates of 3 cents per share.

A year ago, it reported a net loss of $438 million, or 52 cents per share.

The provision for loan losses was $94 million in the most recent quarter, a huge drop from $733 million in the third quarter of 2009 and down from $228 million from the second quarter of 2010.

Net charge-offs, or loans that were written off as uncollectable, dropped to $357 million in the third quarter from $587 million a year ago. Nonperforming loans, or loans considered past due and in danger of default, decreased to $1.4 billion from $1.7 billion, dropping for the fourth consecutive quarter.

The latest results represent Keycorp's second consecutive profitable quarter.

Meyer said the company has focused on "bringing Wall Street to Main Street" through outreach to small businesses, designating 225 branches as business-intensive.

"We're not trying to be what the trillion-dollar companies are," he said. "We're trying to service companies in our backyard better than others."

But the borrowing rate among small businesses is still slower than KeyCorp had hoped it would be, Meyer said.

"We haven't seen appreciation in asset values, which will be a clear sign that it will be easier to borrow," he said.

KeyCorp has opened 34 new branches this year and expects to open five more during the fourth quarter of 2010. Next year, the bank plans to open an additional 35 to 40 branches, Meyer said.

KeyCorp has more than 1,000 community bank branches across a 14-state region.

The bank has not yet set a time table for paying back the money it received from the Treasury Department under the Troubled Asset Relief Program, Meyer said.

Its shares couldn't hold onto early morning gains, dropping four cents Friday to close at $8.30.


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