KeyCorp (NYSE:KEY) stock rose 3.95% (As on January 20, 11:12:00 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the fourth quarter of FY 22. Net income from continuing operations attributable to common shareholders was $356 million, down 40.7% year over year. NII (on a tax-equivalent basis) grew 18.2% to $1.23 billion. The increase was mainly driven by higher earning asset balances and a rise in rates. Our estimate for NII was $1.24 billion. Taxable-equivalent net interest margin from continuing operations increased 29 basis points (bps) to 2.73%. At the fourth-quarter end, average total deposits were $145.7 billion, up 1% from the prior quarter. Average total loans were $117.7 billion, up 2.9%. The growth was primarily driven by robust strength in commercial loan portfolios. Net loan charge-offs, as a percentage of average loans, rose 6 bps year over year to 0.14%. Provision for credit losses was $265 million compared with $4 million in the prior-year quarter. This mainly reflected the uncertain economic outlook and loan growth. Non-performing assets, as a percentage of period-end portfolio loans, other real estate-owned properties assets and other non-performing assets were 0.35%, down 13 bps.

Moreover, Commercial loans increased by $11.7 billion, reflecting core commercial and industrial loan growth and an increase in commercial mortgage real estate loans, which mitigated the impact of a $2.2 billion decline in PPP balances. Consumer loans increased $6.6 billion, largely driven by Key’s consumer mortgage business and student loan originations from Laurel Road.

KEY in the fourth quarter of FY 22 has reported the adjusted earnings per share of 38 cents, missing the analysts’ estimates for the adjusted earnings per share of 55 cents, according to the Zacks Consensus Estimate. The company had reported 2.5 percent fall in the adjusted revenue to $1.89 billion in the fourth quarter of FY 22, missing the analysts’ estimates for revenue of $1.92 billion. KeyCorp’s tangible common equity to tangible assets ratio was 4.4% as of Dec 31, 2022, down from 6.9% in the corresponding period of 2021. Tier 1 risk-based capital ratio was 10.6%, declining from 10.8%. Common Equity Tier 1 ratio was 9.1%, down from 9.5% as of Dec 31, 2021.

Additionally, during the fourth quarter of 2022, Key declared a dividend of $.205 per common share, representing a 5% increase from the prior quarter. In the third quarter of 2022, the KeyCorp Board of Directors approved an extension of the remaining $790 million existing share repurchase authorization through the third quarter of 2023