CLEVELAND (AP) — Regional bank KeyCorp said Thursday its second-quarter net income dipped slightly, but results beat Wall Street forecasts as it wrote off fewer unpaid loans, and loans and deposits increased.
KeyCorp, said it will trim up to 5 percent, or more than 50, of its nearly 1,100 braches, as its tries to cut costs $150 million to $200 million by the end of 2013.
KeyCorp said it would achieve the full benefit of the cuts in 2014.
Wall Street welcomed the cost-cutting announcement and shares rose 19 cents, or 2.4 percent, to $8.02 in morning trading. KeyCorp shares have changed hands between $5.59 and $8.82 in the past 52 weeks.
The cuts will include closing “stranded” branches away from the bank’s customer concentrations, executives told analysts in a conference call.
Jeff Weeden, chief financial officer, said decisions on specific locations would be announced over the coming months.
Chairman and CEO Beth Mooney said the cost-cutting reflects an environment including slow growth, low interest rates, a cautious mood by businesses and increased regulatory expenses.
“We are in an environment that should last for several years, call it a ‘new normal,’ and that we should re-align our business plans, strategies and expenses to reflect that,” she told analysts during a conference call to discuss the quarterly results.
For the quarter ended in June, KeyCorp’s net income slipped to $231 million, or 24 cents per share, from $234 million, or 25 cents per share, in the year-ago period.
Total revenue edged up to $1.03 billion, from $1.02 billion last year.
Analysts, on average, were expecting profit of 18 cents per share and total revenue of $998.1 million, according to data provider FactSet.
Net interest income, or money earned from traditional banking activities like deposits and loans, slid 5 percent to $544 million for the quarter. Noninterest income, or earnings from fees and other charges, rose 7 percent to $485 million.
KeyCorp, with branches in 14 states, said its loan writeoffs dropped by 43 percent, to $77 million, from $134 million last year.
Meanwhile, average loans increased 2 percent to $49.4 billion and deposits increased 4 percent to $61.06 billion.
