Restructuring costs weigh on KeyCorp 2Q profit
Expenses of cost-cutting program, acquisitions drive down KeyCorp profit by 14 percent
CLEVELAND (AP) -- Costs related to job cuts and acquisitions shaved KeyCorp's net income by 14 percent in the second quarter, the bank said Thursday.
The owner of KeyBank also said that its customers were cautious in the April-June period, slowing loan growth from the start of the year.
Shares of Cleveland-based KeyCorp fell 21 cents, or 1.8 percent, to $11.45 in premarket trading.
KeyCorp posted a profit, after paying preferred dividends, of $198 million, or 22 cents per share, down from $231 million, or 24 cents per share, in the same quarter of 2012.
Higher expenses for employee severance connected with the company's restructuring program and acquisitions drove up costs by $63 million. Excluding restructuring charges and businesses KeyCorp is selling or winding down, profit came to 24 cents per share.
Analysts, on average, expected a profit of 20 cents per share, according to FactSet.
Net interest income, or earnings from deposits and loans, rose 8 percent to $586 million, helped by contributions from acquisitions. Total loans grew nearly 7 percent, to $52.7 billion, while deposits grew nearly 8 percent, to $64.9 million.
"Compared to the first quarter, cautious client behavior led to slower loan growth," said CEO Beth Mooney in a statement.
Noninterest income, or income from fees and other sources, fell 6 percent to $429 million.
Revenue increased about 1 percent to $1.02 billion, matching analyst predictions.
Non-interest expense increased 3 percent to $711 million.
