KeyCorp Remains Cautious About M&A

KeyCorp (KEY) Chairman and Chief Executive Beth Mooney is not swearing off acquisitions, but she made clear Tuesday that they remain low on her list of priorities.

Cleveland-based Key is one the nation's best-capitalized banks, reporting a tangible common equity-to-assets ratio of 10.26% at March 31.

Asked during an investor presentation in New York if the $86.5 billion-asset Key might use excess capital to pursue deals, Mooney reiterated that the company is more interested in growing organically, increasing its dividend and buying back shares. Acquisitions are in the mix — the company is in the process of buying 37 branches in upstate New York from First Niagara Financial Group (FNFG) — but are less of a priority, Mooney said at a conference hosted by Morgan Stanley.

"The word I often use when we talk about capital is not aggressive but is disciplined and I think as you look at those priorities, you also have to have a view that capital is something that is going to be managed over time for shareholder value," Mooney said, echoing previous comments she has made on the topic.

Still, achieving those objectives could be easier said than done. Mooney acknowledged that organic growth has been challenged by a difficult economic environment and historically low interest rates, while stock buybacks and dividend increases remain limited as the Federal Reserve cautions banks against returning too much capital to shareholders.