On Sep 10, 2013, we reiterated our long-term recommendation on
) at Neutral. Our decision was based on the company's robust
second-quarter earnings and strong balance sheet position.
However, sluggish economic recovery and a stringent regulatory
landscape remain causes of concern.
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KeyCorp's second-quarter adjusted earnings outpaced the Zacks
Consensus Estimate. Results benefited from a rise in net interest
income, partially offset by higher operating expenses and a fall
in fee income. Moreover, continued improvement in asset quality
and strong capital ratios were the other highlights for the
We view KeyCorp as an asset for yield-seeking investors. The
company has been meaningfully deploying capital to boost
investors' confidence. Further, KeyCorp has chalked out an
expense reduction program with the target of generating cost
savings of $200 million by the end of 2013.
The Zacks Consensus Estimate for 2013 increased by a penny to 88
cents per share over the last 60 days. For 2014, the Zacks
Consensus Estimate advanced 3.1% to $1.00 per share over the same
time frame. KeyCorp currently carries a Zacks Rank #3 (Hold).
On the flip side, pressure on net interest margin remains a major
concern for KeyCorp. Additionally, sluggish economic recovery and
stringent regulations could negatively impact the company's
financials going forward. Further, a more rigid capital
requirement will likely hamper the company's flexibility with
respect to its business investments.
Other Banks to Consider
Some better-performing banks include
First Interstate Bancsystem Inc.
East West Bancorp, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).