-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RCR1O1MtYU3mXfoKBm0fQEkncHe6LtfP3vU9NBXIE7oXlLKfWwEM5Zg9WZD8Gnn9 gXme5cVDLtIYaaWmfso3Sw== /in/edgar/work/0000950152-00-007325/0000950152-00-007325.txt : 20001019 0000950152-00-007325.hdr.sgml : 20001019 ACCESSION NUMBER: 0000950152-00-007325 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001017 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001018 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEYCORP /NEW/ CENTRAL INDEX KEY: 0000091576 STANDARD INDUSTRIAL CLASSIFICATION: [6021 ] IRS NUMBER: 346542451 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11302 FILM NUMBER: 741792 BUSINESS ADDRESS: STREET 1: 127 PUBLIC SQ CITY: CLEVELAND STATE: OH ZIP: 44114-1306 BUSINESS PHONE: 2166896300 MAIL ADDRESS: STREET 1: 127 PUBLIC SQ CITY: CLEVELAND STATE: OH ZIP: 44114-1306 FORMER COMPANY: FORMER CONFORMED NAME: SOCIETY CORP DATE OF NAME CHANGE: 19920703 8-K 1 l84401ae8-k.txt KEYCORP FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15d of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 17, 2000 [KEYCORP LOGO] ------------------------------------------------------ (Exact name of registrant as specified in its charter) Ohio 0-850 34-6542451 - ------------------------------- ------------------------------------ ------------------------------------- (State or other jurisdiction Commission File Number (I.R.S. Employer Identification No.) of incorporation or organization) 127 Public Square, Cleveland, Ohio 44114-1306 - ---------------------------------------- ------------------------------------- (Address of principal executive (Zip Code) offices)
Registrant's telephone number, including area code: (216) 689-6300 2 ITEM 5. OTHER EVENTS On October 17, 2000, the Registrant issued a press release announcing its earnings results for the three-month and nine-month periods ended September 30, 2000. This press release, dated October 17, 2000, is attached as Exhibit 99 to this report. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits -------- 99 The Registrant's October 17, 2000, press release announcing its earnings results for the three-month and nine-month periods ended September 30, 2000. 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KEYCORP -------------------------------------- (Registrant) Date: October 18, 2000 /s/ Lee Irving -------------------------------------- By: Lee Irving Executive Vice President and Chief Accounting Officer EX-99 2 l84401aex99.txt EXHIBIT 99 1 EXHIBIT 99 MEDIA CONTACT: CHRIS THOMPSON ANALYST CONTACT: VERN PATTERSON 216.689.7811 216.689.0520 KEY MEDIA INVESTOR RELATIONS NEWSROOM: www.Key.com/newsroom INFORMATION: www.Key.com/ir FOR IMMEDIATE RELEASE KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS ------------------------------------------- - - CORE EPS OF $0.57 - - COMPETITIVENESS INITIATIVE PROGRESSES - - CONTINUED LOAN GROWTH; STABLE NET INTEREST MARGIN - - CONTINUED EXPENSE REDUCTION - - 25 MILLION SHARE REPURCHASE AUTHORIZATION CLEVELAND, October 17, 2000 -- KeyCorp (NYSE: KEY) today announced third quarter core net income of $245 million, or $0.57 per diluted common share. Core results exclude $0.29 per share of significant nonrecurring charges recorded during the quarter. These previously announced charges include those related to the final phase of an initiative undertaken last November to improve the company's competitiveness. Key's reported earnings for the third quarter were $121 million, or $0.28 per share. Core results of $0.57 per share were equal to those of last quarter. Key's core results also represent a 10 percent improvement from adjusted core earnings of $0.52 per share for the year-ago quarter. Last year's third quarter adjusted results exclude approximately $.08 per share from significant nonrecurring items, earnings from divested businesses and gains from Champion Mortgage loan securitizations. Key anticipates that core earnings per diluted common share will increase to between $0.58 and $0.64 for the fourth quarter of 2000. This translates into core earnings per share for the full year of between $2.27 and $2.33. "Third quarter core results and the enhanced earnings outlook for the fourth quarter reflect Key's improving financial performance," said Robert W. Gillespie, Key's chairman and chief executive officer. "We remain critically focused on increasing shareholder value. This continues to be our highest priority. "We are now well into the process of implementing the many ideas generated in our competitiveness initiative. These ideas will lead to improvements in both revenue generation and expense control. Coupled with Key's continuing loan and deposit growth and progress made to date in reducing expenses, we are enthusiastic about our ability to continue to improve profitability in coming quarters." Results for the third quarter of 2000 include significant nonrecurring items. Key recorded restructuring charges of $102 million ($64 million after tax, or $0.15 per diluted common share) in connection with its competitiveness initiative. Key also recorded losses of $50 million ($32 million after tax, or $0.07 per diluted common share) from the reconfiguration of its investment portfolio and 2 KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS OCTOBER 17, 2000 PAGE 2 recorded an additional provision for loan losses of $27 million ($17 million after tax, or $0.04 per diluted common share). Other special and nonrecurring charges, which are related primarily to the competitiveness initiative, totaled $18 million ($11 million after tax, or $0.03 per diluted common share). Based on core earnings, Key's return on average equity for the third quarter of 2000 was 14.97 percent and its return on average assets was 1.16 percent. On the same basis, Key's returns on average equity and assets for the prior quarter were 15.46 percent and 1.20 percent, respectively. Net interest income for the third quarter of 2000 totaled $684 million, representing an $11 million increase from the prior quarter. This improvement resulted from a higher level of average earning assets, coupled with a stable net interest margin. Average earning assets grew by an annualized 5 percent to $74.7 billion, with strong contributions from home equity and middle market lending. Core noninterest income was $460 million for the third quarter of 2000 compared with $475 million earned in the second quarter. The decline from the prior quarter was largely due to a $9 million reduction in net loan securitization gains. At the same time, revenue derived from trust and investment services, and service charges on deposit accounts, two of the largest contributors to Key's noninterest income, was relatively unchanged. Key's core noninterest expense totaled $672 million for the third quarter of 2000, representing a $24 million reduction from that reported for the second quarter. This represents the lowest level of quarterly noninterest expense achieved by Key in almost two years and marks the third consecutive quarter in which such expense has declined. The declines are largely due to the impact of actions taken by Key since last November to improve its competitiveness. Personnel expenses led the third quarter decline, decreasing by $19 million. Contributing to this improvement was a further reduction in Key's workforce stemming from the above actions. At September 30, 2000, the number of full-time equivalent employees totaled 22,457, compared with 23,005 at June 30, 2000, and 24,568 at the end of 1999. The provision for loan losses was $131 million for the third quarter of 2000 and exceeded the level of Key's net charge-offs by $27 million. The third quarter provision of $27 million in excess of net charge-offs was driven principally by changing conditions within the economy and recorded in accordance with Key's risk management practices. Net loan charge-offs totaled $104 million and were 0.63 percent of average loans outstanding for the quarter, compared with 0.42 percent for the prior quarter when the loan loss provision of $68 million was equal to net charge-offs. Key expects the level of its net charge-offs to decline in the fourth quarter, and expects that its net loan charge-off ratio for the full year will be approximately 50 basis points. This ratio reflects the impact of $21 million of third quarter charge-offs on shared national credits. At September 30, 2000, the allowance for loan losses was $1.0 billion, or 1.51 percent of loans. The level of Key's nonperforming loans rose during the third quarter, consistent with management's earlier projections. At September 30, 2000, Key's nonperforming loans totaled $592 million, or 0.89 percent of period-end loans, compared with $545 million, or 0.83 percent, at June 30, 2000. Key's capital ratios continued to exceed all "well-capitalized" benchmarks at September 30, 2000. In light of Key's earnings outlook and strong capital position, in September the Board authorized 3 KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS OCTOBER 17, 2000 PAGE 3 the repurchase of up to 25,000,000 common shares (including the 3,647,200 shares remaining from the prior authority). During the third quarter, Key repurchased 4,587,800 of its common shares. Cleveland-based KeyCorp is one of the nation's largest multiline financial services companies, with assets of approximately $85 billion. Key companies provide investment management, retail and commercial banking, consumer finance, and investment banking products and services to individuals and companies throughout the United States and, for certain businesses, internationally. The company's businesses deliver their products and services through facilities located in 46 states; a network of about 2,500 ATMs; telephone banking centers (1.800.KEY2YOU); and a Web site, Key.com,SM that provides account access and financial products 24 hours a day. A live Internet broadcast of KeyCorp's conference call to discuss quarterly earnings and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at www.Key.com/ir at 10:00 a.m. EDT, on Tuesday, October 17, 2000. A tape of the call will be available until Tuesday, October 24. For information about Key lines of business, visit our Media Newsroom at www.Key.com/newsroom. - -------------------------------------------------------------------------------- This news release contains forward-looking statements (such as anticipated fourth quarter and full-year earnings, anticipated level of net loan charge-offs, anticipated improvement in profitability and competitiveness, etc.) that are subject to numerous assumptions, risks and uncertainties. Actual results could differ materially from those contained in or implied by such forward-looking statements for a variety of factors including: changes in interest rates; changes in the economy which could materially change anticipated credit quality trends and the ability to generate loans; failure of the capital markets to function consistent with customary levels; delay in or inability to execute strategic initiatives designed to grow revenues and/or manage expenses; consummation of significant business combinations or divestitures; changes in law imposing new legal obligations or restrictions or unfavorable resolution of litigation; and changes in accounting, tax or regulatory practices or requirements. - -------------------------------------------------------------------------------- ### 4 KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS OCTOBER 17, 2000 PAGE 4
FINANCIAL HIGHLIGHTS (dollars in millions, except per share amounts) THREE MONTHS ENDED ---------------------------------------------------- 9-30-00 6-30-00 9-30-99 ------------- ------------- ------------ SUMMARY OF OPERATIONS Net interest income (taxable equivalent) $691 $680 $709 Provision for loan losses 131 68 78 Noninterest income 405 475 496 Noninterest expense 787 698 708 Net income 121 248 270 Net income - core 245 249 266 PER COMMON SHARE Net income $ .28 $ .57 $ .60 Net income - core .57 .57 .59 Net income - assuming dilution .28 .57 .60 Net income - assuming dilution - core .57 .57 .59 Cash dividends .28 .28 .26 Book value at period end 15.26 15.09 14.25 Market price at period end 25.31 17.63 25.81 AT PERIOD END Full-time equivalent employees 22,457 23,005 25,523 Branches 932 938 963 PERFORMANCE RATIOS Return on average total assets .57 % 1.20 % 1.32 % Return on average total assets - core 1.16 1.20 1.30 Return on average equity 7.39 15.40 17.06 Return on average equity - core 14.97 15.46 16.81 Efficiency (a) 58.38 60.26 58.91 Overhead (b) 30.68 32.50 31.03 Net interest margin (taxable equivalent) 3.68 3.68 3.92 CAPITAL RATIOS AT PERIOD END Equity to assets 7.63 % 7.68 % 7.75 % Tangible equity to tangible assets 6.10 6.12 6.06 Tier 1 risk-adjusted capital (c) 7.63 7.88 7.84 Total risk-adjusted capital (c) 11.38 11.74 11.94 Leverage (c) 7.73 7.90 7.85 ASSET QUALITY Net loan charge-offs $104 $68 $78 Net loan charge-offs to average loans .63 % .42 % .49 % Allowance for loan losses $1,001 $979 $930 Allowance for loan losses to period end loans 1.51 % 1.49 % 1.47 % Allowance for loan losses to nonperforming loans 169.09 179.63 225.73 Nonperforming loans at period end $592 $545 $412 Nonperforming assets at period end 617 577 440 Nonperforming loans to period end loans .89 % .83 % .65 % Nonperforming assets to period end loans plus OREO and other nonperforming assets .93 .88 .70
5 KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS OCTOBER 17, 2000 PAGE 5
FINANCIAL HIGHLIGHTS (dollars in millions, except per share amounts) NINE MONTHS ENDED --------------------------------- 9-30-00 9-30-99 ------------- ------------- SUMMARY OF OPERATIONS Net interest income (taxable equivalent) $2,049 $2,106 Provision for loan losses 382 265 Noninterest income 1,686 1,643 Noninterest expense 2,212 2,185 Net income 736 843 Net income - core 737 787 PER COMMON SHARE Net income $1.69 $1.88 Net income - core 1.69 1.75 Net income - assuming dilution 1.68 1.86 Net income - assuming dilution - core 1.69 1.74 Cash dividends .84 .78 PERFORMANCE RATIOS Return on average total assets 1.18 % 1.40 % Return on average total assets - core 1.18 1.31 Return on average equity 15.12 18.21 Return on average equity - core 15.15 17.00 Efficiency (a) 60.31 59.74 Overhead (b) 32.96 31.91 Net interest margin (taxable equivalent) 3.68 3.95 ASSET QUALITY Net loan charge-offs $306 $235 Net loan charge-offs to average loans .63 % .50 % (a) Calculated as noninterest expense (excluding significant nonrecurring items) divided by taxable-equivalent net interest income plus noninterest income (excluding significant nonrecurring items). (b) Calculated as noninterest expense (excluding significant nonrecurring items) less noninterest income (excluding significant nonrecurring items) divided by taxable-equivalent net interest income. (c) 9-30-00 ratio is estimated.
6 KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS OCTOBER 17, 2000 PAGE 6
CONSOLIDATED BALANCE SHEETS (dollars in millions) 9-30-00 6-30-00 9-30-99 ------------- -------------- ------------- ASSETS Loans $66,299 $65,612 $63,181 Investment securities 1,253 1,128 989 Securities available for sale 6,664 6,249 6,567 Short-term investments 1,570 1,759 2,094 ------------- -------------- ------------- Total earning assets 75,786 74,748 72,831 Allowance for loan losses (1,001) (979) (930) Cash and due from banks 2,691 3,178 3,018 Premises and equipment 711 726 818 Goodwill 1,339 1,357 1,422 Other intangible assets 48 52 64 Corporate owned life insurance 2,185 2,159 2,080 Other assets 3,741 3,478 3,274 ------------- -------------- ------------- TOTAL ASSETS $85,500 $84,719 $82,577 ============= ============== ============= LIABILITIES Deposits in domestic offices: Noninterest-bearing $8,386 $9,057 $9,050 Interest-bearing 35,016 34,733 34,029 Deposits in foreign office-interest-bearing 4,407 5,286 387 ------------- -------------- ------------- Total deposits 47,809 49,076 43,466 Federal funds purchased and securities sold under repurchase agreements 5,324 3,511 3,510 Bank notes and other short-term borrowings 6,407 5,998 8,551 Other liabilities 4,397 4,287 3,595 Long-term debt 13,800 14,097 15,815 Capital securities of subsidiary trusts 1,243 1,243 1,243 ------------- -------------- ------------- TOTAL LIABILITIES 78,980 78,212 76,180 SHAREHOLDERS' EQUITY 6,520 6,507 6,397 ------------- -------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $85,500 $84,719 $82,577 ============= ============== ============= Common shares outstanding (000) 427,260 431,166 448,824
7 KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS OCTOBER 17, 2000 PAGE 7
CONSOLIDATED STATEMENTS OF INCOME (dollars in millions, except per share amounts) THREE MONTHS ENDED NINE MONTHS ENDED -------------------------------------- ------------------------ 9-30-00 6-30-00 9-30-99 9-30-00 9-30-99 --------- --------- --------- --------- --------- INTEREST INCOME $ 1,596 $ 1,540 $ 1,433 $ 4,625 $ 4,206 INTEREST EXPENSE 912 867 733 2,597 2,124 --------- --------- --------- --------- --------- NET INTEREST INCOME 684 673 700 2,028 2,082 Provision for loan losses 131 68 78 382 265 --------- --------- --------- --------- --------- 553 605 622 1,646 1,817 NONINTEREST INCOME Trust and investment services income 148 150 145 458 445 Investment banking and capital markets income 91 98 77 278 243 Service charges on deposit accounts 85 85 83 256 246 Corporate owned life insurance income 28 25 25 78 76 Credit card fees 1 2 16 9 47 Net loan securitization gains (losses) (2) 7 32 7 82 Net securities gains (losses) (50) 2 2 (47) 26 Gains from divestitures -- -- 13 332 161 Other income 104 106 103 315 317 --------- --------- --------- --------- --------- Total noninterest income 405 475 496 1,686 1,643 NONINTEREST EXPENSE Personnel 342 361 349 1,085 1,104 Net occupancy 55 56 58 168 175 Computer processing 59 60 60 178 173 Equipment 41 42 48 131 153 Marketing 29 31 35 82 84 Amortization of intangibles 26 25 25 76 79 Professional fees 30 21 18 70 50 Restructuring charges 102 -- 7 109 7 Other expense 103 102 108 313 360 --------- --------- --------- --------- --------- Total noninterest expense 787 698 708 2,212 2,185 --------- --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 171 382 410 1,120 1,275 Income taxes 50 134 140 384 432 --------- --------- --------- --------- --------- NET INCOME $ 121 $ 248 $ 270 $ 736 $ 843 ========= ========= ========= ========= ========= Net income per common share $ .28 $ .57 $ .60 $ 1.69 $ 1.88 Net income per common share - assuming dilution .28 .57 .60 1.68 1.86 Wtd. avg. common shares (000) 429,584 434,112 448,742 435,156 448,764 Wtd. avg. common shares and potential common shares (000) 431,972 436,022 452,886 437,231 453,267 Taxable-equivalent adjustment $ 7 $ 7 $ 9 $ 21 $ 24
8 KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS OCTOBER 17, 2000 PAGE 8
CONSOLIDATED AVERAGE BALANCE SHEETS (in millions) THREE MONTHS ENDED NINE MONTHS ENDED --------------------------------------- ------------------------ 9-30-00 6-30-00 9-30-99 9-30-00 9-30-99 --------- --------- --------- --------- --------- ASSETS Loans $ 65,777 $ 64,817 $ 62,799 $ 64,876 $ 62,036 Investment securities 1,156 1,086 970 1,086 981 Securities available for sale 6,275 6,198 6,359 6,315 6,314 Short-term investments 1,501 1,757 1,836 1,807 1,845 -------- -------- -------- -------- -------- Total earning assets 74,709 73,858 71,964 74,084 71,176 Allowance for loan losses (969) (976) (920) (948) (909) Cash and due from banks 2,652 2,606 2,589 2,605 2,591 Other assets 7,713 7,917 7,662 7,827 7,540 -------- -------- -------- -------- -------- TOTAL ASSETS $ 84,105 $ 83,405 $ 81,295 $ 83,568 $ 80,398 ======== ======== ======== ======== ======== LIABILITIES Deposits in domestic offices: Noninterest-bearing $ 8,377 $ 8,412 $ 8,534 $ 8,317 $ 8,489 Interest-bearing 34,602 34,392 33,153 34,236 32,507 Deposits in foreign office-interest-bearing 2,860 3,029 776 2,367 794 -------- -------- -------- -------- -------- Total deposits 45,839 45,833 42,463 44,920 41,790 Federal funds purchased and securities sold under repurchase agreements 5,746 4,096 4,495 4,619 5,015 Bank notes and other short-term borrowings 6,403 6,972 7,428 7,348 7,801 Other liabilities 4,248 4,357 3,561 4,316 3,339 Long-term debt 14,113 14,425 15,864 14,622 15,128 Capital securities of subsidiary trusts 1,243 1,243 1,205 1,243 1,136 -------- -------- -------- -------- -------- TOTAL LIABILITIES 77,592 76,926 75,016 77,068 74,209 SHAREHOLDERS' EQUITY 6,513 6,479 6,279 6,500 6,189 -------- -------- -------- -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 84,105 $ 83,405 $ 81,295 $ 83,568 $ 80,398 ======== ======== ======== ======== ========
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