KeyCorp reported a strong increase in its third-quarter profits, and its top executive says its Buffalo market is bolstering those results.
Cleveland-based KeyCorp, KeyBank’s holding company, recorded net income of $229 million in the quarter, up 24 percent from a year ago.
Beth Mooney, KeyCorp’s chairman and chief executive officer, described the integration of the 37 former HSBC branches it acquired in the Buffalo and Rochester areas as a success that has contributed to KeyCorp’s overall results.
“We have considered that a significant win for us,” Mooney told The Buffalo News on Wednesday. “We have retained the clients and employees ahead of what we would have projected at the time.” Mooney said that deal’s “significance exceeded its size,” by allowing KeyBank to beef up its presence in the Buffalo and Rochester markets.
Reflecting on the U.S. economy, Mooney said she feels the business community’s general sentiment about the economy is “cautious to cautiously optimistic,” but larger companies seem more inclined to take out loans than medium-sized and smaller companies.
That could be due to smaller businesses’ level of confidence about the economy, or that in a slow-growing economy, opportunities which lead to investing and borrowing money are fewer and farther between, she said.
“So I don’t see any businesses getting out ahead of themselves to invest ahead of growth,” Mooney said. “I think they wait until it’s realized and then find a way to finance it or accommodate it. I think in previous recoveries, where expectations for growth would be more robust, I think you’d see businesses borrowing ahead of the need, and this is not one of those recoveries.”
The uncertainty that has hovered over Washington, D.C. – between the partial shutdown and the specter of a default – is not healthy for business, she said. “This constant situation in Washington where there isn’t real clarity on taxes, affordable health care, what is going to be the budget, monetary policy, all of these are overhangs to business confidence.”
The latest figures from the Federal Deposit Insurance Corp. ranked KeyCorp No. 3 in Buffalo-area market share as measured by deposits, behind leader M&T Bank Corp. and No. 2 First Niagara Financial Group. “There’s that old wisdom in banking that being No. 1, 2 or 3 in market is the sweet spot,” Mooney said. “And we are obviously No. 3 in share, and we’re behind some significant players in terms of market share.”
But Mooney said there is more to KeyCorp’s market presence than its branch count, “because that is the base upon which you do business with small businesses, medium-sized businesses, our private banking clients, the public sector.”
During the third quarter, KeyCorp’s net interest income – from loans and deposits – increased 1 percent from the year before, to $584 million from $578 million. Its noninterest net income – from sources such as fees – was $459 million, down 11 percent from $518 million the year before.
KeyCorp also reported it had met its target of $200 million in annualized savings, through branch closings, reduced staffing and other cost-saving steps.