KeyCorp (KEY) Q4 2022 Earnings Call Transcript

KeyCorp (NYSE:KEY.PK) Q4 2022 Earnings Conference Call January 19, 2023 10:00 AM ET

Company Participants

Chris Gorman - Chairman and Chief Executive Officer

Don Kimble - Chief Financial Officer

Clark Khayat - Chief Strategy Officer

Mark Midkiff - Chief Risk Officer

Conference Call Participants

John Pancari - Evercore

Manan Gosalia - Morgan Stanley

Ebrahim Poonawala - Bank of America

Steven Alexopoulos - JPMorgan

Gerard Cassidy - RBC

Scott Siefers - Piper Sandler

Mike Mayo - Wells Fargo

Ken Usdin - Jefferies

Matt O'Connor - Deutsche Bank

Peter Winter - D.A. Davidson

Operator

Good morning and welcome to KeyCorp's Fourth Quarter 2022 Earnings Conference Call. As a reminder, this conference is being recorded.

I would now like to turn the conference over to the Chairman and CEO, Chris Gorman. Please go ahead.

Chris Gorman

Well, thank you for joining us for KeyCorp's fourth quarter 2022 earnings conference call. Joining me on the call today are Don Kimble, our Chief Financial Officer; Clark Khayat, our Chief Strategy Officer. Upon Don's planned retirement, Clark will assume the CFO role and also Mark Midkiff, our Chief Risk Officer.

On slide two, you will find our statement on forward-looking disclosure and non-GAAP financial measures. It covers our presentation materials and comments as well as the question-and-answer segment of our call.

I'm now moving to slide three. This morning, we reported earnings of $356 million or $0.38 per common share. Our results included $265 million of provision for credit losses, which exceeded net charge-offs by $224 million or $0.20 a share. The additional provision builds our allowance for credit losses, adjusting our credit models to reflect a more cautious economic outlook.

Our results reflect continued growth in both our consumer and commercial businesses. In our consumer business, we have added new households with younger clients being our fastest-growing segment. Our commercial business also has continued to add and expand relationships.

In 2022, we raised a record level of capital for our clients. Net interest income was up 2% from the third quarter, reflecting continued relationship-based loan growth supported by stable deposits. Deposit costs continued to move higher with a step-up in deposit rates late in the quarter. At the end of the fourth quarter, nearly 60% of our deposits were in low-cost retail and escrow balances.

In our commercial businesses, over 80% of our deposits are from core operating accounts. Our average loan balances increased 3% from the prior quarter as we continue to add relationships and offer the best execution with both on and off-balance sheet solutions.