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KeyCorp net income jumps in Q2

By Adam Rombel

Date:

KeyBank’s branch office on West Genesee Street in Camillus. (ADAM ROMBEL/CNYBJ FILE PHOTO)

KeyCorp (NYSE: KEY) reported that its net income in the second quarter jumped to $698 million, or 72 cents per share, from $159 million, or 16 cents, in the year-prior period, boosted primarily by strong growth in its fee-based businesses.

KeyCorp — based in Cleveland, Ohio — is parent of KeyBank, which ranks No. 2 in deposit market share in the 16-county Central New York region.

Key’s earnings per share this quarter easily beat the consensus analyst estimate of 55 cents, according to Zacks Equity Research.

The banking company generated total revenue of $1.77 billion in the second quarter, up more than 3 percent from the year-ago quarter. That topped the Zacks estimate of $1.73 billion.

Key’s noninterest income grew faster, up more than 8 percent year-over-year to $750 million. This was led by rising investment banking and debt-placement fees (up 39 percent), commercial-mortgage servicing fees, and credit card and payments income.

“The key to the quarter was growth,” Chris Gorman, chairman, CEO, and president of Cleveland, Ohio–based Key, says in a July 20 phone interview with CNYBJ. “Our investment-banking business continues to grow. We had the best second quarter ever and we had the second-best quarter ever in investment banking.”

Gorman says the growth extended to Key’s consumer-banking business as well.

“In the first six months of the year, we brought on more new households [as customers] than we have in any year in the last decade,” he says.

Key’s consumer loans increased by $2.4 billion, or 8.6 percent, from the year-ago period, reflecting strength from its Laurel Road digital-lending business unit and its consumer-mortgage business, partly offset by Key’s exit from the indirect auto-lending business.

Gorman says Laurel Road had produced “incredible growth” since KeyCorp acquired the small digital company in April 2019.

Key’s Central New York business

When asked about Key’s Central New York market business picture, Gorman says, “We often talk about the I-90 corridor as being one of the real strengths of Key. What’s interesting is Key was a significant player in Syracuse and in other places like Binghamton, Utica, and Carthage… even before we bought First Niagara in 2016. Then when we put Key and First Niagara together in 2016, all of those markets are very important to us and very strong markets for us, including Syracuse.” 

Key has been ranked No. 2 in deposit market share in the Central New York region, behind M&T Bank, for a while now. When asked if Key is looking to get to No. 1, Gorman says, “We aspire to be No. 1 in every market we’re in.”

He says Key will continue to take a business approach to growth that it calls “targeted scale.” 

“You won’t see us going out with sort of blanket marketing. What we’ll figure out is for example, what companies in the Syracuse area we can be particularly impactful for and we’ll focus on those companies,” he explains. “And then in a very targeted way, we’ll focus on consumers where we think we’re uniquely qualified to serve them.”

KeyCorp, which says its roots trace back nearly 200 years to Albany, has assets of $181 billion. KeyBank has more than 1,000 branches in 15 states.               

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