-----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, EG15jnjDxJnB/q20qiF2KmcozmbVF2xk2IvKo5nPSLzKBV5wGbOVgiNharuKs80j 5zFOpBjDlOZTNU2Y6YnYFA== 0000950152-01-503249.txt : 20010718 0000950152-01-503249.hdr.sgml : 20010718 ACCESSION NUMBER: 0000950152-01-503249 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010717 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEYCORP /NEW/ CENTRAL INDEX KEY: 0000091576 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [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: 1683270 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 l89393ae8-k.txt KEYCORP 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): July 17, 2001 [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 AND REGULATION FD DISCLOSURE On July 17, 2001, the Registrant issued a press release announcing its earnings results for the three- and six-month period ended June 30, 2001. This press release, dated July 17, 2001, is attached as Exhibit 99.1 to this report. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits -------- 99.1 The Registrant's July 17, 2001, press release announcing its earnings results for the three- and six-month period ended June 30, 2001. ITEM 9. REGULATION FD DISCLOSURE On July 17, 2001, the Registrant conducted a conference call/webcast to discuss its quarterly earnings and currently anticipated earnings trends. The slide presentation reviewed by the Registrant in the conference call/webcast follows as Annex A to this Item 9. 3 1 Annex A SECOND QUARTER 2001 REVIEW [KEYCORP LOGO] JULY 17, 2001 [KEYCORP LOGO] 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 third 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. [KEYCORP LOGO] 5 3 SECOND QUARTER REVIEW OUTLINE - - INTRODUCTION B. SOMERS - - OVERVIEW H. MEYER - - FINANCIAL REVIEW L. IRVING - - ASSET QUALITY K. BLAKELY - - WRAP UP / Q&A B. SOMERS [KEYCORP LOGO] 6 4 STRATEGIC ANNOUNCEMENTS MAY 17, 2001 - - ACCELERATED DOWNSIZING OF AUTO BUSINESS - - SHARPENED FOCUS ON RELATIONSHIP BUSINESS - - ADDRESSED CREDIT ISSUES 7 5 COMPETITIVENESS INITIATIVE - PEG FTE REDUCTIONS FTE IN THOUSANDS NET REDUCTION: 16% 1998 1999 2000 MAR-01 JUN-01 25.9 24.6 22.1 21.9 21.7 [KEYCORP LOGO] 8 6 FINANCIAL HIGHLIGHTS - 2Q01 - - NET INTEREST MARGIN INCREASE 14BP - - NET INTEREST INCOME (TE) UP $24 MM - - STRONG GROWTH IN HOME EQUITY LOANS - - CONTINUED EXPENSE REDUCTION [KEYCORP LOGO] 9 7 LINE OF BUSINESS PERFORMANCE RETAIL BANKING (A DIVISION OF KEY CONSUMER BANKING) (GRAPH) IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 REVENUE $344 $356 $340 $339 $338 NET INCOME $66 $78 $72 $73 $71 KEY CORPORATE FINANCE (GRAPH) IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 REVENUE $442 $438 $482 $445 $473 NET INCOME $116 $115 $142 $111 $130 HOME EQUITY & CONSUMER FINANCE (A DIVISION OF KEY CONSUMER BANKING) (GRAPH) IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 REVENUE $146 $137 $147 $148 $147 NET INCOME $20 $16 $18 $20 $18* *EXCLUDES ONE-TIME CHARGE FOR RETAINED INTERESTS IN SECURITIZED ASSETS KEY CAPITAL PARTNERS* (GRAPH) IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 REVENUE $257 $260 $268 $228 $229 NET INCOME $28 $38 $34 $2 $4 * NONINTEREST INCOME AND EXPENSE ATTRIBUTABLE TO KEY CAPITAL PARTNERS IS ASSIGNED TO RETAIL BANKING, HOME EQUITY AND CONSUMER FINANCE OR KEY CORPORATE FINANCE IF ONE OF THOSE BUSINESSES IS PRINCIPALLY RESPONSIBLE FOR MAINTAINING THE RELATIONSHIP WITH THE CLIENT THAT USED KEY CAPITAL PARTNERS' PRODUCTS AND SERVICES. [KEYCORP LOGO] 10 8 NET INTEREST INCOME & MARGIN (TE) IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 NET INTEREST INCOME $680 $691 $709 $695 $719 NET INTEREST 3.68% 3.68% 3.71% 3.63% 3.77% MARGIN AVG. EARNING $73,858 $74,709 $76,036 $76,872 $76,546 ASSETS [KEYCORP LOGO] 11 9 NET INTEREST MARGIN (TE) 1Q01 VS. 2Q01 Net Interest Margin 1Q01 3.63% Loan Spreads & Fees .05 Deposit Spreads .04 Accounting Adjustment .03 Balance Sheet Management .02 --- Total 14bp Net Interest Margin 2Q01 3.77% [KEYCORP LOGO] 12 10 CORE NONINTEREST INCOME 1Q01 VS. 2Q01 IN MILLIONS Noninterest Income 1Q01 $455 Residual Losses- Leased Vehicles (40) Net Securities Gains (18) Trust & Investment Services (9) Investment Banking & Capital Markets 7 Other components 3 ---- Noninterest Income 2Q01 $398 [KEYCORP LOGO] 13 11 CORE NONINTEREST EXPENSE 1Q01 VS. 2Q01 IN MILLIONS Noninterest Expense 1Q01 $698 Personnel Expense (19) Other 7 --- Noninterest Expense 2Q01 $686 [KEYCORP LOGO] 14 12 NET CHARGE-OFFS BY LOAN TYPE IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 CONTINUING PORTFOLIO Commercial $36.3 $60.6 $43.0 $51.0 $39.9 Consumer 31.5 43.8 64.8 58.2 59.6 ---- ---- ---- ---- ---- 67.8 104.4 107.8 109.2 99.5 RUN-OFF PORTFOLIO 71.3 ---- TOTAL NET C/O $67.8 $104.4 $107.8 $109.2 $170.8 [KEYCORP LOGO] 15 13 PROVISION VS. NET CHARGE-OFFS IN MILLIONS [BAR GRAPH] 2Q00 3Q00 4Q00 1Q01 2Q01 TOTAL LOAN LOSS PROVISION $68 $131 $108 $110 $401 STRATEGIC PROVISION 300 CONTINUING PROVISION 101 NET CHARGE-OFFS - TOTAL 68 104 108 109 171 NET CHARGE-OFFS - NON-CORE 13 NET CHARGE-OFFS - CORE 95 NET CHARGE-OFFS - RUNOFF 71 NET CHARGE-OFFS - CONTINUING 100 [KEYCORP LOGO] 16 14 ASSET QUALITY INDICATORS CONTINUING TOTAL PORTFOLIO PORTFOLIO IN MILLIONS 1Q01 2Q01 2Q01 ---- ---- ---- Nonperforming Loans $ 713 $ 555 $ 797 to EOP Loans 1.06% 0.85% 1.20% Nonperforming Assets $ 740 $ 581 $ 823 to EOP Loans + OREO 1.10% 0.89% 1.23% Net C/O $ 109 $ 100 $ 171 to Average Loans 0.66% 0.61% 1.02% Allowance $1,001 $1,002 $1,231 to Total Loans 1.49% 1.54% 1.85% to Nonperforming Loans 140% 181% 154% [KEYCORP LOGO] 17 15 RUN-OFF PORTFOLIO IN MILLIONS 5/17/01 6/30/01 ------- ------- Loan Commitments $2,648 $2,393 Allowance for Loan Loss 300 229 Nonperforming Loans 257 242 [KEYCORP LOGO] 18 16 NONPERFORMING LOANS: 2Q01 - 2Q01 Increase: $84MM or 11.8% - Largest Addition: $32MM (Healthcare-CP) - Second Largest Addition: $24MM (Leasing-ROP) CP: CONTINUING PORTFOLIO ROP: RUN-OFF PORTFOLIO [KEYCORP LOGO] 19 17 NONPERFORMING LOANS: 2Q01 LARGEST NPL: $ 32MM (HEALTHCARE-CP) 2(ND) LARGEST: $ 24MM (LEASING-ROP) 3(RD) LARGEST: $ 21MM (MEDIA-ROP) 10(TH) LARGEST $ 12MM (STRUCTURED FINANCE-ROP) 20(TH) LARGEST $ 7MM (LARGE CORPORATE-ROP) TOTAL/ TOP 20 NPLS: $271MM (CP: $95MM ROP: $176MM) CP: CONTINUING PORTFOLIO ROP: RUN-OFF PORTFOLIO [KEYCORP LOGO] 20 18 NONPERFORMING LOANS: 2Q01 Composition of Top 20 NPLs: IN MILLIONS CP ROP TP -- --- -- Structured Finance $23 $70 $93 Middle Market 8 43 51 Healthcare 40 - 40 Leasing - 24 24 Media - 21 21 Large Corporate - 18 18 Key Capital Partners 13 - 13 Commercial Real Estate 11 - 11 CP: Continuing Portfolio ROP: Run-off Portfolio TP: Total Portfolio [KEYCORP LOGO] 21 19 THIRD QUARTER 2001 OUTLOOK (CORE) (COMPARED TO 2Q01) REVENUE MID TO UPPER SINGLE DIGIT GROWTH SUPPORTED BY MODEST LOAN GROWTH, A SLIGHTLY LOWER NET INTEREST MARGIN AND GROWTH IN FEE INCOME FROM THIRD QUARTER 2000 LEVEL. EXPENSE SLIGHT INCREASE - DEPENDENT UPON GROWTH IN FEE INCOME BUSINESSES CREDIT QUALITY NONPERFORMING ASSETS ARE EXPECTED TO INCREASE. NET CHARGE-OFFS ARE EXPECTED TO STABILIZE OR DECLINE. LOAN LOSS PROVISION SHOULD APPROXIMATE THAT OF FIRST QUARTER 2001. [KEYCORP LOGO] 22 20 APPENDIX [KEYCORP LOGO] 23 21 NONINTEREST INCOME IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 ---- ---- ---- ---- ---- RECURRING ITEMS 1. Trust & Invest Services Inc. $ 150 $ 148 $ 150 $ 141 $ 132 2. Inv. Banking & Cap. Mkts. Inc. 98 91 94 65 72 3. Service Charges on Deposits 85 85 85 84 90 4. COLI Income 25 28 31 27 27 5. L/C & Loan Fees 24 26 34 29 30 6. Electronic Banking Fees 17 18 18 17 18 7. Other Income 76 64 96 92 29 ---- ---- ---- ---- ---- CORE NONINTEREST INCOME 475 460 508 455 398 NON-CORE ITEMS -- (55) -- -- -- ---- ---- ---- ---- ---- TOTAL NONINTEREST INCOME $ 475 $ 405 $ 508 $ 455 $ 398 [KEYCORP LOGO] 24 22 NONINTEREST EXPENSE IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 ---- ---- ---- ---- ---- RECURRING ITEMS 1. Personnel $ 361 $ 342 $ 360 $ 364 $ 345 2. Net Occupancy & Equipment 98 96 97 95 96 3. Computer Processing 60 59 62 62 63 4. Marketing 31 29 28 27 29 5. Amortization of Intangibles 25 26 25 26 24 6. Professional Fees 21 18 19 18 19 7. Postage & Delivery 17 15 16 17 16 8. Telecommunications 13 12 12 11 12 9. Other Expense 70 75 89 78 82 ---- ---- ---- ---- ---- CORE NONINTEREST EXPENSE 696 672 708 698 686 NON-CORE ITEMS 2 115 (3) -- 172 ---- ---- ---- ---- ---- TOTAL NONINTEREST EXPENSE $ 698 $ 787 $ 705 $ 698 $ 858 [KEYCORP LOGO] 25 23 STATEMENT OF INCOME-REPORTED -------- IN MILLIONS, EXCEPT PER SHARE DATA 2Q00 3Q00 4Q00 1Q01 2Q01 ---- ---- ---- ---- ---- Net Interest Income (TE) $ 680 $ 691 $ 709 $ 695 $ 719 Loan Loss Provision 68 131 108 110 401 Noninterest Income 475 405 508 455 398 Noninterest Expense 698 787 705 698 858 ----- ----- ----- ----- ----- 389 178 404 342 (142) Income Taxes & TE adj. 141 57 138 124 (6) Accounting Change, Net of Tax -- -- -- (1) (24) ----- ----- ----- ----- ----- Net Income $ 248 $ 121 $ 266 $ 217 $ (160) EPS - Assuming Dilution $0.57 $0.28 $0.62 $0.51 $(0.38) Avg. Common Shares O/S Assuming Dilution 436.0 432.0 430.6 429.9 424.7 [KEYCORP LOGO] 26 24 SIGNIFICANT NON-CORE ITEMS IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 ---- ---- ---- ---- ---- Net Interest Income (TE) -- -- -- -- -- Loan Loss Provision -- $ 27 $ 13 -- -- Noninterest Income -- (55) -- -- -- Noninterest Expense $ 2 $ 115 $ (3) -- $ 172 ----- ----- ----- ----- (2) (197) (10) -- (172) Income Taxes and TE adj. (1) (73) (4) -- (8) Acct. Change, Net of Tax -- -- -- -- (24) ----- ----- ----- ----- ----- Net Loss $ (1) $(124) $ (6) -- $(188) 2Q00 Software write-off 3Q00 Investment portfolio reconfiguration, additional loan loss provision, restructuring and other one-time charges 4Q00 Adjustment to loan loss provision (FFIEC), restructuring credit and other one-time charges 2Q01 Goodwill writedown, additional litigation reserves, restructuring and other one-time net charges, accounting change for retained interests [KEYCORP LOGO] 27 25 STATEMENT OF INCOME-CORE ---- IN MILLIONS, EXCEPT PER SHARE DATA 2Q00 3Q00 4Q00 1Q01 2Q01 ----- ----- ----- ----- ----- Net Interest Income (TE) $ 680 $ 691 $ 709 $ 695 $ 719 Loan Loss Provision 68 104 95 110 401 Noninterest Income 475 460 508 455 398 Noninterest Expense 696 672 708 698 686 ----- ----- ----- ----- ----- 391 375 414 342 30 Income Taxes & TE adj 142 130 142 124 2 Accounting Change, Net of Tax -- -- -- (1) -- ----- ----- ----- ----- ----- Net Income $ 249 $ 245 $ 272 $ 217 $ 28 Avg. Common Shares O/S Assuming Dilution 436.0 432.0 430.6 429.9 424.7 EPS - Core $0.57 $0.57 $0.63 $0.51 $0.07 [KEYCORP LOGO] 28 26 ASSET QUALITY INDICATORS CP: CONTINUING PORTFOLIO TP: TOTAL PORTFOLIO
CP TP IN MILLIONS 2Q00 3Q00 4Q00 1Q01 2Q01 2Q01 ---- ---- ---- ---- ---- ---- Nonperforming Loans $ 545 $ 592 $ 650 $ 713 $ 555 $ 797 to EOP Loans 0.83% 0.89% 0.97% 1.06% 0.85% 1.20% Nonperforming Assets $ 577 $ 617 $ 672 $ 740 $ 581 $ 823 to EOP Loans + OREO 0.83% 0.93% 1.00% 1.10% 0.89% 1.23% Net C/O $ 70 $ 105 $ 95(*) $ 109 $ 100 $ 171 to Average Loans 0.43% 0.63% 0.57%(*) 0.66% 0.61% 1.02% Allowance $ 979 $1,001 $1,001 $1,001 $1,002 $1,231 to Total Loans 1.49% 1.51% 1.50% 1.49% 1.54% 1.85% to Nonperforming Loans 180% 169% 154% 140% 181% 154%
(*) EXCLUDES FFIEC AND ONE-TIME ITEMS [KEYCORP LOGO] 29 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: July 17, 2001 /s/ Lee Irving ------------------------------------ By: Lee Irving Executive Vice President and Chief Accounting Officer EX-99.1 2 l89393aex99-1.txt EXHIBIT 99.1 1 Exhibit 99.1 MEDIA CONTACT: CHRISTINE A. THOMPSON ANALYST CONTACT: VERNON L. 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 SECOND QUARTER 2001 RESULTS ------------------------------------------- - - STRATEGIC PLANS IMPACT SECOND QUARTER RESULTS - - NET INTEREST MARGIN IMPROVES 14 BASIS POINTS - - EXPENSE DISCIPLINE CONTINUES CLEVELAND, July 17, 2001 - KeyCorp (NYSE: KEY) today announced second quarter core net income of $28 million, or $0.07 per diluted common share, compared with net income of $217 million, or $0.51 per share, for the first quarter of 2001. On a reported basis, Key's second quarter results amounted to a net loss of $160 million, or $0.38 per share. As shown in the following table, the difference between reported and core results is attributable to several significant nonrecurring charges, most associated with the implementation of strategic plans announced in May by Henry L. Meyer III, KeyCorp's new chairman and chief executive officer.
SECOND QUARTER 2001 RESULTS PRE-TAX AFTER-TAX EPS dollars in millions, except per share data AMOUNT AMOUNT IMPACT* - ---------------------------------------------------------------------------------------------------------- Second quarter results as reported $ (172) $ (160) $ (.38) Significant nonrecurring charges: Goodwill write-down (auto finance business) 150 150 .35 Accounting change (retained interests) 39 24 .06 Additional litigation reserves and other charges 22 14 .03 -------------- -------------- ------------- CORE EARNINGS $ 39 $ 28 $.07 ============== ============== ============= - ----------------------------------------------------------------------------------------------------------
*Earnings per share components may not foot due to rounding. Key's second quarter results also reflect two large core charges associated with the new strategic plans. These charges include an additional provision for loan losses of $300 million ($189 million after tax) and a $40 million ($25 million after tax) charge recorded for losses incurred on the residual values of leased vehicles. 2 KeyCorp Reports Second Quarter 2001 Results July 17, 2001 Page 2 "Second quarter results reflect the implementation of strategies announced upon my May election as chairman of the Board of Directors," said Meyer. "The actions are designed to sharpen our strategic focus and strengthen our financial performance. Important elements include exiting the auto leasing business, reducing our indirect auto lending activities and eliminating commercial non-relationship credit-only transactions. These efforts will help us build on progress already made in streamlining the company. "Core earnings, in fact, include several positive performance trends. Relative to the first quarter, these include a $25 million increase in Key's net interest income, which benefited from a 14 basis point improvement in the net interest margin and continued strong demand for home equity loans. At the same time, noninterest income from investment banking and capital markets activities rose by $7 million, despite ongoing weakness in the economy. I'm especially pleased that core noninterest expense fell by $12 million. The main reason for this reduction is the continuing benefits of PEG, our competitiveness initiative." SUMMARY OF CONSOLIDATED RESULTS The following table summarizes the results of each of Key's major lines of business in the second and first quarters of 2001 and the second quarter of 2000.
RESULTS BY LINE OF BUSINESS(a) PERCENT CHANGE 2Q01 VS. ------------------------ dollars in millions 2Q01 1Q01 2Q00 1Q01 2Q00 - ------------------------------------------------------------------------------------------------------------------------------ Key Consumer Banking: Retail Banking $71 $73 $66 (2.7)% 7.6 % Home Equity and Consumer Finance(b) 18 20 20 (10.0) (10.0) Key Corporate Finance 130 111 116 17.1 12.1 Key Capital Partners(c) 4 2 28 100.0 (85.7) Treasury 7 20 8 (65.0) (12.5) ----------- --------- ---------- ------------- ---------- Total segments 230 226 238 1.8 (3.4) Reconciling items(d) (390) (9) 10 N/M N/M ----------- --------- ---------- ------------- ---------- Total net income (loss) $(160) $217 $248 N/M N/M =========== ========= ========== - ------------------------------------------------------------------------------------------------------------------------------
(a) Key's management accounting system utilizes a methodology for loan loss provisioning by line of business that reflects credit quality expectations within each line of business over a normal business cycle. The "normalized provision for loan losses" assigned to each line as a result of this methodology does not necessarily coincide with net loan charge-offs at any given point in the cycle. (b) Second quarter 2001 results exclude a one-time cumulative charge of $39 million ($24 million after tax) resulting from a prescribed change, applicable to all companies, in the accounting for retained interests in securitized assets (See note (d) below). (c) Noninterest income and expense attributable to Key Capital Partners is assigned to Retail Banking, Home Equity and Consumer Finance or Key Corporate Finance if one of those businesses is principally responsible for maintaining the relationship with the client that used Key Capital Partners' products and services. Key Capital Partners had net income of $16 million in the second quarter of 2001, $15 million in the first quarter of 2001 and $39 million in the second quarter of 2000 before its income and expense were reassigned. (d) Reconciling items include certain strategic and nonrecurring items such as the second quarter 2001 additional provision for loan losses recorded in connection with Key's decision to eliminate non-relationship credit-only transactions and the write-down of goodwill associated with Key's decision to downsize its auto finance business. Also included are charges related to unallocated nonearning assets of corporate support functions and the effect of the accounting change described in note (b) above. N/M = Not Meaningful 3 KeyCorp Reports Second Quarter 2001 Results July 17, 2001 Page 3 Net interest income for the second quarter of 2001 totaled $713 million, representing a $25 million increase from the previous quarter. This improvement resulted from a higher net interest margin. The increase in the net interest margin was largely attributable to improved loan and deposit spreads, and balance sheet management activities. Excluding the $40 million charge associated with the decline in leased vehicle residual values, Key's noninterest income was $438 million for the second quarter of 2001, compared with $455 million for the first three months of the year. An $18 million decrease in net gains from sales of securities was the primary reason for the quarter-to-quarter decline. Noninterest income benefited from increases in income from service charges on deposit accounts and investment banking activities, and a reduction in net losses from equity capital investments. However, these positive results were reduced by the effects of continued weakness in the economy on Key's market-sensitive revenues. Key's core noninterest expense totaled $686 million for the second quarter of 2001, down from $698 million for the prior quarter. The reduction was attributable to a $19 million decrease in personnel expense, achieved despite the fact that annual merit increases are effective on April 1 for the vast majority of Key's salaried employees. Benefits of Key's competitiveness initiative known as PEG (Perform, Excel, Grow) became increasingly evident in second quarter noninterest expense totals. ASSET QUALITY Key's provision for loan losses was $401 million for the second quarter of 2001, compared with $110 million for the first quarter. Included in the second quarter amount is an additional provision recorded in connection with Key's decision to eliminate non-relationship lending in the leveraged financing and nationally syndicated lending businesses. The added provision will be used to exit and resolve approximately $2.7 billion in related commitments that were moved to a separate loan run-off portfolio. Approximately $2.4 billion of these commitments were remaining as of June 30. As charge-offs or write-downs on the run-off portfolio occur over time, the related allowance will not be replenished. The following table summarizes certain asset quality data, segregated between Key's continuing and run-off loan portfolios.
SELECTED ASSET QUALITY DATA JUNE 30, 2001 SECOND QUARTER 2001 ------------------------------------------------------------------- ----------------------------- Allowance for Loan Losses Net Loan Charge-offs Loans ------------------------------------ Nonperforming ----------------------------- dollars in millions Outstanding Amount % of Loans Loans Amount % of Loans - ---------------------------------------------------------------------------------------------------------------------------------- Continuing loan portfolio $65,270 $1,002 1.54 % $555 $100 .61 % Loan run-off portfolio 1,423 229 N/M 242 71 N/M --------------- -------------- -------------- -------------- Total loan portfolio $66,693 $1,231 1.85 % $797 $171 1.02 % =============== ============== ============== ============== - ----------------------------------------------------------------------------------------------------------------------------------
N/M= Not Meaningful Net loan charge-offs rose by $62 million from the prior quarter as a result of aggressive efforts to resolve credits within the run-off portfolio. At the same time, nonperforming loans increased by $84 million, reflecting the impact of continued economic weakness, particularly in the middle market, healthcare and structured finance portfolios. 4 KeyCorp Reports Second Quarter 2001 Results July 17, 2001 Page 4 CAPITAL Key's capital ratios continued to exceed all "well-capitalized" benchmarks at June 30, 2001. During the first half of the year, Key has not repurchased any of its common shares under an authorization that allows for the repurchase of up to 25 million shares. There were 18.8 million shares remaining for repurchase under this authorization as of June 30, 2001. LINE OF BUSINESS RESULTS KEY CONSUMER BANKING Retail Banking (a division of Key Consumer Banking) - --------------------------------------------------- Net income for Retail Banking was $71 million for the second quarter of 2001, slightly lower than the $73 million earned in the previous quarter. The decline from quarter to quarter was primarily attributable to an increase in noninterest expense; total revenue was essentially unchanged. Net interest income improved by $4 million from the first quarter of 2001. This was largely the result of lower interest rates paid for deposits, which more than offset the effects of declines in both average loans and deposits outstanding. Noninterest income declined by $5 million from the prior quarter, principally due to a first quarter gain on the sale of our equity interest in the TransAlliance ATM network. At the same time, noninterest expense increased by $2 million, reflecting higher costs associated with computer processing and various indirect charges, including those related to collections. Home Equity and Consumer Finance (a division of Key Consumer Banking) - --------------------------------------------------------------------- Excluding the one-time charge pertaining to a prescribed change in the accounting for retained interests in securitized assets, Home Equity and Consumer Finance had net income of $18 million for the second quarter, representing a $2 million decrease from the first quarter of 2001. Total revenue declined slightly from the prior quarter, as growth in net interest income was more than offset by a decrease in noninterest income. The decline in noninterest income was driven by losses associated with capital markets and securitization activities. Also contributing to the decline in second quarter results was a $3 million increase in noninterest expense, including higher costs associated with marketing and collections. KEY CORPORATE FINANCE Net income for Key Corporate Finance was $130 million for the second quarter of 2001, up from $111 million in the previous quarter. The improvement was driven by revenue growth, but also reflected a reduction in noninterest expense. Net interest income rose by $12 million, or an annualized 14 percent, from the prior quarter because of improved interest rate spreads and slight increases in both loans and deposits. At the same time, noninterest income rose by $16 million due to higher income from capital markets activities, service charges on deposit accounts and loan sale gains. The $3 million decline in noninterest expense was primarily a result of lower costs associated with personnel. 5 KeyCorp Reports Second Quarter 2001 Results July 17, 2001 Page 5 KEY CAPITAL PARTNERS Net income for Key Capital Partners was $4 million in the second quarter of 2001, up from $2 million in the first quarter of this year. Prior to assigning revenue and expense to other business lines whose clients utilize products and services offered by Key Capital Partners, net income was $16 million in the second quarter of 2001, compared with $15 million last quarter. Total revenue for Key Capital Partners increased by $1 million from the prior quarter. Behind this small improvement are offsetting developments, such as higher revenue from investment banking services and declines in revenue derived from brokerage services, derivatives and foreign exchange activities. The reduction in income from brokerage services reflects the continuing effect of a slower economy and related weakness in the securities markets. Revenue generated by both derivatives and foreign exchange activities returned to more normalized levels, following an exceptionally strong performance in the first quarter of 2001. Noninterest expense decreased by $2 million from the first quarter, largely due to lower personnel costs. Cleveland-based KeyCorp is one of the nation's largest multiline financial services companies, with assets of approximately $86 billion. Key companies provide investment management, retail and commercial banking, retirement, 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 KeyCenters and offices; a network of approximately 2,400 ATMs; telephone banking centers (1.800.KEY2YOU); and a Web site, Key.com(R) that provides account access and financial products 24 hours a day. NOTES TO EDITORS: 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 11:00 a.m. ET, on Tuesday, July 17, 2001. A tape of the call will be available until Tuesday, July 24. For up-to-date company information, media contacts and facts and figures about Key's lines of business visit our Media Newsroom at www.key.com/newsroom. - -------------------------------------------------------------------------------- This news release contains forward-looking statements that 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. - -------------------------------------------------------------------------------- ### 6 KEYCORP REPORTS SECOND QUARTER 2001 RESULTS JULY 17, 2001 PAGE 6
FINANCIAL HIGHLIGHTS (dollars in millions, except per share amounts) THREE MONTHS ENDED ---------------------------------------------------- 6-30-01 3-31-01 6-30-00 ------------- ------------- ------------ SUMMARY OF OPERATIONS Net interest income (taxable equivalent) $ 719 $ 695 $ 680 Noninterest income 398 455 475 ------------- ------------- ------------ Total revenue (taxable equivalent) 1,117 1,150 1,155 Provision for loan losses 401 110 68 Noninterest expense 858 698 698 Net income (loss) (160) 217 248 Net income - core 28 217 249 PER COMMON SHARE Net income (loss) $ (.38) $ .51 $ .57 Net income - core .07 .51 .57 Net income (loss) - assuming dilution (.38) .51 .57 Net income - assuming dilution - core .07 .51 .57 Cash dividends .295 .295 .28 Book value at period end 15.02 15.79 15.09 Market price at period end 26.05 25.80 17.63 AT PERIOD END Full-time equivalent employees 21,742 21,882 23,005 Branches 926 922 938 PERFORMANCE RATIOS Return on average total assets (.75)% 1.02 % 1.20 % Return on average total assets - core .13 1.02 1.20 Return on average equity (9.67) 13.28 15.40 Return on average equity - core 1.69 13.28 15.46 Net interest margin (taxable equivalent) 3.77 3.63 3.68 CAPITAL RATIOS AT PERIOD END Equity to assets 7.53 % 7.75 % 7.68 % Tangible equity to tangible assets 6.25 6.29 6.12 Tier 1 risk-adjusted capital (a) 7.84 7.99 7.88 Total risk-adjusted capital (a) 12.00 12.32 11.74 Leverage (a) 7.68 7.79 7.90 ASSET QUALITY Net loan charge-offs $171 $109 $68 Net loan charge-offs to average loans 1.02 % .66 % .42 % Allowance for loan losses $1,231 $1,001 $979 Allowance for loan losses to period-end loans 1.85 % 1.49 % 1.49 % Allowance for loan losses to nonperforming loans 154.45 140.39 179.63 Nonperforming loans at period end $797 $713 $545 Nonperforming assets at period end 823 740 577 Nonperforming loans to period-end loans 1.20 % 1.06 % .83 % Nonperforming assets to period-end loans plus OREO and other nonperforming assets 1.23 1.10 .88 (a) 6-30-01 ratio is estimated.
7 KEYCORP REPORTS SECOND QUARTER 2001 RESULTS JULY 17, 2001 PAGE 7
FINANCIAL HIGHLIGHTS (dollars in millions, except per share amounts) SIX MONTHS ENDED --------------------------------- 6-30-01 6-30-00 ------------- ------------- SUMMARY OF OPERATIONS Net interest income (taxable equivalent) $1,414 $1,358 Noninterest income 853 1,281 ------------- ------------- Total revenue (taxable equivalent) 2,267 2,639 Provision for loan losses 511 251 Noninterest expense 1,556 1,425 Net income 57 615 Net income - core 245 492 PER COMMON SHARE Net income .14 1.40 Net income - core .58 1.12 Net income - assuming dilution .13 1.40 Net income - assuming dilution - core .57 1.12 Cash dividends .59 .56 PERFORMANCE RATIOS Return on average total assets .13 % 1.48 % Return on average total assets - core .57 1.19 Return on average equity 1.73 19.04 Return on average equity - core 7.45 15.24 Net interest margin (taxable equivalent) 3.70 3.68 ASSET QUALITY Net loan charge-offs $280 $202 Net loan charge-offs to average loans .84 % .63 %
8 KEYCORP REPORTS SECOND QUARTER 2001 RESULTS JULY 17, 2001 PAGE 8
LINE OF BUSINESS RESULTS (dollars in millions) KEY CONSUMER BANKING Retail Banking (a division of Key Consumer Banking) PERCENT CHANGE 2Q01 VS. ----------------------- 2Q01 1Q01 2Q00 1Q01 2Q00 ------- ------- ------- ------- ------- SUMMARY OF OPERATIONS Net interest income (taxable equivalent) $ 232 $ 228 $ 232 1.8 % -- % Noninterest income 93 98 93 (5.1) -- Revenue sharing 13 13 19 -- (31.6) ------- ------- ------- ------- ------- Total revenue 338 339 344 (.3) (1.7) Provision for loan losses (a) 12 12 13 -- (7.7) Noninterest expense 200 197 207 1.5 (3.4) Expense sharing 9 10 16 (10.0) (43.8) ------- ------- ------- ------- ------- Income (loss) before income taxes (taxable equivalent) 117 120 108 (2.5) 8.3 Allocated income taxes and taxable equivalent adjustments 46 47 42 (2.1) 9.5 ------- ------- ------- ------- ------- Net income (loss) $ 71 $ 73 $ 66 (2.7) 7.6 ======= ======= ======= Percent of consolidated net income N/M 34 % 27 % Net loan charge-offs (a) $ 16 $ 13 $ 9 23.1 % 77.8 % AVERAGE BALANCES Loans $ 7,766 $ 7,818 $ 7,773 (.7)% (.1)% Total assets 9,125 9,186 9,241 (.7) (1.3) Deposits 32,000 32,572 31,500 (1.8) 1.6 OTHER FINANCIAL DATA Efficiency ratio 50.18 % 49.38 % 53.43 % Home Equity and Consumer Finance (a division of Key Consumer Banking) PERCENT CHANGE 2Q01 VS. ----------------------- 2Q01 1Q01 2Q00 1Q01 2Q00 ------- ------- ------- ------- ------- SUMMARY OF OPERATIONS Net interest income (taxable equivalent) $ 148 $ 142 $ 126 4.2 % 17.5 % Noninterest income (2) 5 19 N/M N/M Revenue sharing 1 1 1 -- -- ------- ------- ------- ------- ------- Total revenue 147 148 146 (.7) .7 Provision for loan losses (a) 33 33 32 -- 3.1 Noninterest expense 83 80 79 3.8 5.1 Expense sharing -- -- -- -- -- ------- ------- ------- ------- ------- Income (loss) before income taxes (taxable equivalent) and accounting change 31 35 35 (11.4) (11.4) Allocated income taxes and taxable equivalent adjustments 13 15 15 (13.3) (13.3) ------- ------- ------- ------- ------- Income (loss) before accounting change 18 20 20 (10.0) (10.0) Cumulative effect of accounting change (24) -- -- N/M N/M ------- ------- ------- ------- ------- Net income (loss) $ (6) $ 20 $ 20 N/M N/M ======= ======= ======= Percent of consolidated net income N/M 9 % 8 % Net loan charge-offs (a) $ 56 $ 46 $ 21 21.7 % 166.7 % AVERAGE BALANCES Loans $15,775 $15,868 $14,911 (.6)% 5.8 % Total assets 16,815 16,960 16,051 (.9) 4.8 Deposits 135 144 122 (6.3) 10.7
9 KEYCORP REPORTS SECOND QUARTER 2001 RESULTS JULY 17, 2001 PAGE 9
LINE OF BUSINESS RESULTS (CONTINUED) (dollars in millions) KEY CORPORATE FINANCE PERCENT CHANGE 2Q01 VS. ----------------------- 2Q01 1Q01 2Q00 1Q01 2Q00 -------- -------- -------- -------- -------- SUMMARY OF OPERATIONS Net interest income (taxable equivalent) $ 352 $ 340 $ 330 3.5 % 6.7 % Noninterest income 86 69 77 24.6 11.7 Revenue sharing 35 36 35 (2.8) -- -------- -------- -------- -------- -------- Total revenue 473 445 442 6.3 7.0 Provision for loan losses (a) 52 52 50 -- 4.0 Noninterest expense 189 192 180 (1.6) 5.0 Expense sharing 21 21 22 -- (4.5) -------- -------- -------- -------- -------- Income (loss) before income taxes (taxable equivalent) 211 180 190 17.2 11.1 Allocated income taxes and taxable equivalent adjustments 81 69 74 17.4 9.5 -------- -------- -------- -------- -------- Net income (loss) $ 130 $ 111 $ 116 17.1 12.1 ======== ======== ======== Percent of consolidated net income N/M 51 % 47 % Net loan charge-offs (a) $ 86 $ 50 $ 36 72.0 % 138.9 % AVERAGE BALANCES Loans $ 35,888 $ 35,647 $ 34,369 .7 % 4.4 % Total assets 37,577 37,240 36,344 .9 3.4 Deposits 6,508 6,481 6,351 .4 2.5 KEY CAPITAL PARTNERS PERCENT CHANGE 2Q01 VS. ----------------------- 2Q01 1Q01 2Q00 1Q01 2Q00 -------- -------- -------- -------- -------- SUMMARY OF OPERATIONS Net interest income (taxable equivalent) $ 50 $ 50 $ 53 -- % (5.7)% Noninterest income 228 228 259 -- (12.0) Revenue sharing (49) (50) (55) (2.0) (10.9) -------- -------- -------- -------- -------- Total revenue 229 228 257 .4 (10.9) Provision for loan losses (a) 3 3 3 -- -- Noninterest expense 246 249 244 (1.2) .8 Expense sharing (30) (31) (38) (3.2) (21.1) -------- -------- -------- -------- -------- Income (loss) before income taxes (taxable equivalent) 10 7 48 42.9 (79.2) Allocated income taxes and taxable equivalent adjustments 6 5 20 20.0 (70.0) -------- -------- -------- -------- -------- Net income (loss) $ 4 $ 2 $ 28 100.0 (85.7) ======== ======== ======== Percent of consolidated net income N/M 1 % 11 % Net loan charge-offs (a) $ 7 $ 1 -- 600.0 % N/M % AVERAGE BALANCES Loans $ 5,496 $ 5,570 $ 5,326 (1.3)% 3.2 % Total assets 10,009 9,850 9,450 1.6 5.9 Deposits 3,805 3,917 3,382 (2.9) 12.5
(a) Key's management accounting system utilizes a methodology for loan loss provisioning by line of business that reflects credit quality expectations within each line of business over a normal business cycle. The "normalized provision for loan losses" assigned to each line as a result of this methodology does not necessarily coincide with net loan charge-offs at any given point in the cycle. N/M = Not Meaningful 10 KEYCORP REPORTS SECOND QUARTER 2001 RESULTS JULY 17, 2001 PAGE 10
CONSOLIDATED BALANCE SHEETS (dollars in millions) 6-30-01 3-31-01 6-30-00 ------------- -------------- ------------- ASSETS Loans $66,693 $67,027 $65,612 Investment securities 1,171 1,208 1,128 Securities available for sale 6,706 6,900 6,249 Short-term investments 1,961 1,892 1,759 ------------- -------------- ------------- Total earning assets 76,531 77,027 74,748 Allowance for loan losses (1,231) (1,001) (979) Cash and due from banks 2,781 2,484 3,178 Premises and equipment 694 703 726 Goodwill 1,141 1,311 1,357 Other intangible assets 36 40 52 Corporate-owned life insurance 2,265 2,241 2,159 Accrued income and other assets 3,621 3,652 3,478 ------------- -------------- ------------- TOTAL ASSETS $85,838 $86,457 $84,719 ============= ============== ============= LIABILITIES Deposits in domestic offices: Noninterest-bearing $8,376 $8,329 $9,057 Interest-bearing 33,986 36,152 34,733 Deposits in foreign office-interest-bearing 3,381 1,484 5,286 ------------- -------------- ------------- Total deposits 45,743 45,965 49,076 Federal funds purchased and securities sold under repurchase agreements 5,919 4,463 3,511 Bank notes and other short-term borrowings 7,128 8,721 5,998 Accrued expense and other liabilities 4,627 4,803 4,287 Long-term debt 14,675 14,495 14,097 Capital securities of subsidiary trusts 1,279 1,308 1,243 ------------- -------------- ------------- TOTAL LIABILITIES 79,371 79,755 78,212 SHAREHOLDERS' EQUITY 6,467 6,702 6,507 ------------- -------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $85,838 $86,457 $84,719 ============= ============== ============= Common shares outstanding (000) 424,958 424,414 431,166
11 KEYCORP REPORTS SECOND QUARTER 2001 RESULTS JULY 17, 2001 PAGE 11
CONSOLIDATED STATEMENTS OF INCOME (dollars in millions, except per share amounts) THREE MONTHS ENDED SIX MONTHS ENDED ----------------------------------- ---------------------- 6-30-01 3-30-01 6-30-00 6-30-01 6-30-00 --------- --------- --------- --------- --------- INTEREST INCOME $ 1,467 $ 1,570 $ 1,540 $ 3,037 $ 3,029 INTEREST EXPENSE 754 882 867 1,636 1,685 --------- --------- --------- --------- --------- NET INTEREST INCOME 713 688 673 1,401 1,344 Provision for loan losses 401 110 68 511 251 --------- --------- --------- --------- --------- 312 578 605 890 1,093 NONINTEREST INCOME Trust and investment services income 132 141 150 273 310 Investment banking and capital markets income 72 65 98 137 187 Service charges on deposit accounts 90 84 85 174 171 Corporate-owned life insurance income 27 27 25 54 50 Letter of credit and loan fees 30 29 24 59 47 Net securities gains 8 26 2 34 3 Gains from divestitures -- -- -- -- 332 Other income 39 83 91 122 181 --------- --------- --------- --------- --------- Total noninterest income 398 455 475 853 1,281 NONINTEREST EXPENSE Personnel 345 364 361 709 743 Net occupancy 56 57 56 113 113 Computer processing 63 62 60 125 119 Equipment 40 38 42 78 90 Marketing 29 27 31 56 53 Amortization of intangibles 174 26 25 200 50 Professional fees 19 18 21 37 40 Restructuring charges -- (4) -- (4) 7 Other expense 132 110 102 242 210 --------- --------- --------- --------- --------- Total noninterest expense 858 698 698 1,556 1,425 --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES (148) 335 382 187 949 Income taxes (12) 117 134 105 334 --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES (136) 218 248 82 615 Cumulative effect of accounting changes, net of tax (24) (1) -- (25) -- --------- --------- --------- --------- --------- NET INCOME (LOSS) $ (160) $ 217 $ 248 $ 57 $ 615 ========= ========= ========= ========= ========= Per common share - ---------------- Income (loss) before cumulative effect of accounting changes $ (.32) $ .51 $ .57 $ .19 $ 1.40 Net income (loss) (.38) .51 .57 .14 1.40 Per common share-assuming dilution - ---------------------------------- Income (loss) before cumulative effect of accounting changes $ (.32) $ .51 $ .57 $ .19 $ 1.40 Net income (loss) (.38) .51 .57 .13 1.40 Weighted average common shares outstanding (000) 424,675 424,024 434,112 424,352 437,973 Weighted average common shares and potential common shares outstanding (000) 424,675 429,917 436,022 429,838 439,889 Taxable-equivalent adjustment $ 6 $ 7 $ 7 $ 13 $ 14
12 KEYCORP REPORTS SECOND QUARTER 2001 RESULTS JULY 17, 2001 PAGE 12
CONSOLIDATED AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND YIELDS/RATES (DOLLARS IN MILLIONS) SECOND QUARTER 2001 FIRST QUARTER 2001 ------------------------------------- --------------------------------------- AVERAGE YIELD AVERAGE YIELD/ BALANCE INTEREST /RATE BALANCE INTEREST RATE ------------------------------------ ------------------------------------ Assets Loans:(a,b) Commercial, financial and agricultural $ 20,030 $ 361 7.24 % $ 20,025 $ 406 8.22 % Real estate-- commercial mortgage 6,837 135 7.91 6,897 147 8.63 Real estate-- construction 5,504 108 7.81 5,273 117 9.03 Commercial lease financing 6,990 120 6.86 7,102 125 7.07 ---------- ---------- ---------- ---------- --------- --------- Total commercial loans 39,361 724 7.37 39,297 795 8.19 Real estate-- residential 4,065 79 7.81 4,172 81 7.74 Home equity 10,459 228 8.74 10,086 233 9.38 Consumer - direct 2,458 60 9.74 2,480 64 10.43 Consumer - indirect lease financing 2,778 57 8.27 2,936 59 8.02 Consumer - indirect other 5,593 134 9.61 5,673 136 9.58 ---------- ---------- ---------- ---------- --------- --------- Total consumer loans 25,353 558 8.83 25,347 573 9.10 Loans held for sale 2,240 43 7.69 2,389 54 9.09 ---------- ---------- ---------- ---------- --------- --------- Total loans 66,954 1,325 7.93 67,033 1,422 8.57 Taxable investment securities 911 8 3.41 892 7 3.24 Tax-exempt investment securities(a) 297 6 8.79 317 8 8.83 ---------- ---------- ---------- ---------- --------- --------- Total investment securities 1,208 14 4.74 1,209 15 4.70 Securities available for sale(a,c) 6,572 115 6.99 7,026 120 6.87 Short-term investments 1,812 19 4.19 1,604 20 5.00 ---------- ---------- ---------- ---------- --------- --------- Total earning assets 76,546 1,473 7.71 76,872 1,577 8.28 Allowance for loan losses (988) (1,006) Accrued income and other assets 10,429 10,458 ---------- ---------- TOTAL ASSETS $ 85,987 $ 86,324 ========== ========== Liabilities Money market deposit accounts $ 12,296 67 2.22 $ 12,070 95 3.17 Savings deposits 1,969 5 1.06 1,993 7 1.34 NOW accounts 610 3 1.50 602 2 1.54 Certificates of deposit ($100,000 or more)(d) 5,571 81 5.85 5,994 92 6.25 Other time deposits 14,479 209 5.77 15,011 224 6.06 Deposits in foreign office 2,173 23 4.27 2,869 40 5.64 ---------- ---------- ---------- ---------- --------- --------- Total interest-bearing deposits 37,098 388 4.20 38,539 460 4.84 Federal funds purchased and securities sold under repurchase agreements 5,177 52 4.06 5,263 70 5.39 Bank notes and other short-term borrowings(d) 8,016 94 4.67 7,532 105 5.67 Long-term debt, including capital securities(d,e) 16,068 220 5.49 15,412 247 6.58 ---------- ---------- ---------- ---------- --------- --------- Total interest-bearing liabilities 66,359 754 4.56 66,746 882 5.38 ---------- ---------- ---------- ---------- --------- --------- Noninterest-bearing deposits 8,213 8,185 Accrued expense and other liabilities 4,779 4,766 ---------- ---------- Total liabilities 79,351 79,697 Shareholders' equity 6,636 6,627 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 85,987 $ 86,324 ========== ========== Interest rate spread (TE) 3.15 % 2.90 % ========== ========== Net interest income (TE) and net interest margin (TE) $ 719 3.77 % $ 695 3.63 % ========== ========== ========= ========== Capital securities $ 1,292 $ 23 $ 1,307 $ 24 Taxable-equivalent adjustment(a) 6 7 SECOND QUARTER 2000 ------------------------------------- AVERAGE YIELD BALANCE INTEREST /RATE ------------------------------------ Assets Loans:(a,b) Commercial, financial and agricultural $ 19,046 $ 405 8.56 % Real estate-- commercial mortgage 6,967 156 9.03 Real estate-- construction 4,625 110 9.51 Commercial lease financing 6,773 124 7.30 ---------- ---------- ---------- Total commercial loans 37,411 795 8.53 Real estate-- residential 4,276 83 7.80 Home equity 8,600 196 9.16 Consumer - direct 2,620 66 10.09 Consumer - indirect lease financing 3,107 62 7.97 Consumer - indirect other 6,078 142 9.33 ---------- ---------- ---------- Total consumer loans 24,681 549 8.92 Loans held for sale 2,725 58 8.52 ---------- ---------- ---------- Total loans 64,817 1,402 8.68 Taxable investment securities 671 6 3.63 Tax-exempt investment securities(a) 415 9 8.77 ---------- ---------- ---------- Total investment securities 1,086 15 5.60 Securities available for sale(a,c) 6,198 107 6.73 Short-term investments 1,757 23 5.29 ---------- ---------- ---------- Total earning assets 73,858 1,547 8.40 Allowance for loan losses (976) Accrued income and other assets 10,523 ---------- TOTAL ASSETS $ 83,405 ========== Liabilities Money market deposit accounts $ 12,403 105 3.41 Savings deposits 2,275 8 1.44 NOW accounts 628 3 1.61 Certificates of deposit ($100,000 or more)(d) 5,430 82 6.06 Other time deposits 13,656 190 5.61 Deposits in foreign office 3,029 48 6.39 ---------- ---------- ---------- Total interest-bearing deposits 37,421 436 4.69 Federal funds purchased and securities sold under repurchase agreements 4,096 58 5.64 Bank notes and other short-term borrowings(d) 6,972 103 5.96 Long-term debt, including capital securities(d,e) 15,668 270 6.92 ---------- ---------- ---------- Total interest-bearing liabilities 64,157 867 5.43 ---------- ---------- ---------- Noninterest-bearing deposits 8,412 Accrued expense and other liabilities 4,357 ---------- Total liabilities 76,926 Shareholders' equity 6,479 ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 83,405 ========== Interest rate spread (TE) 2.97 % ========== Net interest income (TE) and net interest margin (TE) $ 680 3.68 % ========== ========== Capital securities $ 1,243 $ 24 Taxable-equivalent adjustment(a) 7
(a) Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory Federal income tax rate of 35%. (b) For purposes of these computations, nonaccrual loans are included in average loan balances. (c) Yield is calculated on the basis of amortized cost. (d) Rate calculation excludes basis adjustments related to fair value hedges. (e) Rate calculation excludes ESOP debt. TE = Taxable Equivalent -----END PRIVACY-ENHANCED MESSAGE-----