8-K 1 l88470ae8-k.txt KEYCORP 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): May 17, 2001 [LOGO] KEYCORP -------------------------------------------------- (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 AND REGULATION FD DISCLOSURE On May 17, 2001, the Registrant issued a press release announcing: (a) the election of Henry L. Meyer III to the post of chairman, (b) the election of Thomas C. Stevens to the Board of Directors and (c) the Board's approval of a business plan to sharpen the Registrant's strategic focus and business performance. This press release, dated May 17, 2001, is attached as Exhibit 99.1 to this report. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (C) Exhibits -------- 99.1 The Registrant's May 17, 2001, press release announcing: (a) the election of Henry L. Meyer III to the post of chairman, (b) the election of Thomas C. Stevens to the Board of Directors and (c) the Board's approval of a business plan to sharpen the Registrant's strategic focus and business performance. ITEM 9. REGULATION FD DISCLOSURE On May 17, 2001, the Registrant conducted a conference call/webcast to discuss a newly-approved business plan to sharpen the Registrant's strategic focus and business performance. The slide presentation reviewed by the Registrant in the conference call/webcast follows as Annex A to this Item 9. 3 1 Annex A to Item 9 STRATEGIC ANNOUNCEMENTS [LOGO] MAY 17, 2001 4 2 PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 FORWARD-LOOKING STATEMENT DISCLOSURE The conference call and discussion, including related questions and answers, and presentation materials, contain forward-looking statements about issues like anticipated second quarter and full-year 2001 earnings, anticipated level of net loan charge-offs and nonperforming assets and anticipated improvement in profitability and competitiveness. Forward-looking statements by their nature are subject to 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; continued softening in the economy which could materially impact 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. [LOGO] 5 3 TODAY'S STRATEGIC ANNOUNCEMENT - ACCELERATE DOWNSIZING OF AUTO LENDING BUSINESSES - Exit leasing and de-emphasize indirect lending - Write down goodwill - Establish reserve for residual value insurance dispute - EXIT NON-RELATIONSHIP CORPORATE LENDING - Structured finance - Nationally syndicated, credit only relationships [LOGO] 6 4 ACCELERATE AUTO STRATEGY - DISCONTINUE NEW LEASE ORIGINATIONS - RESTRICT INDIRECT PRIME LENDING TO "FOOTPRINT" STATES - FOCUS ON EFFICIENCY ENHANCEMENTS - AUTO PORTFOLIO SHRINKS FROM $7 BILL. TO $3 BILL. [LOGO] 7 5 EXIT NON-RELATIONSHIP COMMERCIAL CREDITS - CREATE RUN-OFF PORTFOLIO - Non-relationship leveraged credits $ 815 - Non-relationship nationally syndicated credits 1,633 - Other 252 ------ - Total portfolio (commitments) $2,700 mill. - PROVIDE SPECIAL RESERVE - Approximately $300 mill. ($189 mill. after tax) - UTILIZE SPECIAL PROVISION TO LIQUIDATE PORTFOLIO - No replenishment of special reserve - COMPOSITION OF RUN-OFF POOL - Non-performing loans $ 257 mill. [LOGO] 8 6 ANTICIPATED ALLOWANCE FOR LOAN LOSSES AND NET CHARGE-OFFS DOLLARS IN MILLIONS
RUN-OFF PORTFOLIO CONTINUING PORTFOLIO TOTAL PORTFOLIO ----------------- -------------------- --------------- ALLOWANCE ALLOWANCE NET C/O ALLOWANCE NET C/O BALANCE BALANCE TO LOANS BALANCE TO LOANS ------- ------- -------- ------- -------- BAU - June 30 - - - $1,001 .85 - .90 Today's Actions 300 - - 1,301 - Revised June 30 233 1,001 .60 - .65 1,234 .85 - .90
[LOGO] 9 7 ANTICIPATED 2Q01 EARNINGS CHARGES IN MILLIONS Pre-Tax After-Tax ------- --------- Increase loan loss provision $300 $189 Residual value insurance reserve 40 25 Increase litigation reserve 20 13 Other 3 2 Accounting Change (securitization valuations) 37 23 ---- ---- 400 252 Goodwill write-down 150 150 ---- ---- Total $550 $402 ==== ==== [LOGO] 10 8 EARNINGS IMPACT OF CHARGES
FORECAST EPS --------------------------------------- SECOND QUARTER FULL YEAR 2001 2001 ---- ---- PRE-PROVISION, PRE-CHARGES $ .70 - $ .74 $2.95 - $3.05 % CHANGE/PRIOR YEAR 6% - 12% 5% - 9% LOAN LOSS PROVISION - CONTINUING (.14) (.60) CORE CHARGES: LOAN LOSS PROVISION - RUN-OFF (.44) (.44) OTHER (.06) (.04) ------ ------ NET INCOME - CORE $ .06 - $ .10 $1.87 - $1.97 OTHER CHARGES - NON CORE (.44) (.44) ------ ------ NET INCOME - REPORTED $(.34) - $(.38) $1.43 - $1.53
[LOGO] 11 9 SUMMARY - ACCELERATES DOWNSIZING OF AUTO BUSINESS - SHARPENS FOCUS ON RELATIONSHIP BUSINESSES - ADDRESSES CREDIT ISSUES AND IMPROVES EARNINGS OUTLOOK - MINOR IMPACT ON CAPITAL [LOGO] 12 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: May 17, 2001 /s/ Lee Irving -------------------------------------- By: Lee Irving Executive Vice President and Chief Accounting Officer