-----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, MkGi4stgEmyXPEqwjMVIoQ+h561HcA1XG9eXbyPz63MLp0GFBn3dgN43LdYw/ZQx qhSyj19OjSyJIZpsGlK90A== 0000950152-98-008208.txt : 19981019 0000950152-98-008208.hdr.sgml : 19981019 ACCESSION NUMBER: 0000950152-98-008208 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981015 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981016 SROS: NYSE 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: 98726649 BUSINESS ADDRESS: STREET 1: 127 PUBLIC SQ CITY: CLEVELAND STATE: OH ZIP: 44114-1306 BUSINESS PHONE: 2166893000 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 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 15, 1998 [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 15, 1998, the Registrant issued a press release announcing its earnings results for the three-month and nine-month periods ended September 30, 1998. This press release, dated October 15, 1998, is attached as Exhibit 99 to this report. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS --------------------------------- (C) Exhibits -------- 99 The Registrant's October 15, 1998, press release announcing its earnings results for the three-month and nine-month periods ended September 30, 1998. 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 16, 1998 /s/ Lee Irving ------------------------------------ By: Lee Irving Executive Vice President and Chief Accounting Officer EX-99 2 EXHIBIT 99 1 EXHIBIT 99 MEDIA CONTACTS: ANALYST CONTACTS: Bill Murschel (216) 689-0457 Lee Irving (216) 689-3564 Mary Lou Ringle (216) 689-0456 Vern Patterson (216) 689-0520 WEB SITE: www.Key.com FOR IMMEDIATE RELEASE KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS ------------------------------------------- - - FEE INCOME UP 25 PERCENT FROM THE YEAR-AGO QUARTER - - CONTINUED STRONG COMMERCIAL LOAN GROWTH - - STRONG ASSET QUALITY; NO EXPOSURE IN RUSSIA OR IN HEDGE FUNDS CLEVELAND, October 15, 1998 -- KeyCorp (NYSE: KEY) today reported third-quarter earnings of $252 million, or $0.57 per diluted common share, up from $236 million, or $0.53, recorded in the third quarter of 1997. This represents an 8 percent increase in earnings per diluted common share from the year-ago quarter. For the first nine months of 1998, earnings were $736 million, up 10 percent from $671 million for the first nine months of 1997. On a diluted per common share basis, Key's year-to-date earnings were $1.65, amounting to a 9 percent increase from $1.51 for the same period last year. Key's return on average equity was 18.1 percent, and return on average total assets was 1.32 percent for the third quarter of 1998, compared with 19.4 percent and 1.34 percent, respectively, for the third quarter of last year. For the first nine months of 1998, Key's returns on average equity and assets were 18.3 percent and 1.33 percent, respectively, compared with 18.8 percent and 1.32 percent for the first nine months of 1997. "Strong growth in fee income continued to drive Key's earnings improvement in the third quarter," said Robert W. Gillespie, KeyCorp chairman and chief executive officer. "Noninterest income was up 25 percent from the year-ago third quarter, after excluding 1997 branch divestiture gains. Asset quality continues to be strong; our minimal emerging markets exposure relates predominantly to self-liquidating trade finance transactions. That fact and the absence of hedge fund exposure have contributed to the stability of our provision for loan losses and net charge-off levels. 2 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 2 Especially in light of recent foreign economic deterioration, we are gratified by our success in growing and diversifying Key's revenue stream with a disciplined credit culture. "We continue to implement strategies that will significantly alter Key's revenue mix in 1999 and beyond by expanding into fee-generating businesses outside of traditional banking. Along those lines, we are pleased that the planning for the integration of McDonald & Company Investments, Inc. has been progressing well, and we anticipate that depending upon the timing of the receipt of certain regulatory approvals, the acquisition of McDonald may close as early as October 23. Through the integration process, we have become even more convinced that this partnership will create new benefits for clients and increased opportunities for growth in fee-generating businesses," Gillespie said. Net interest income in the third quarter of 1998 totaled $700 million, up $20 million, or an annualized 12 percent from the prior quarter and relatively unchanged from the third quarter of last year. The improvement from the second quarter of 1998 reflected a $1.7 billion increase in average earning assets, while the net interest margin of 4.19 percent was level with the prior quarter. The growth in earning assets was attributable primarily to an annualized 21 percent increase in commercial loans. The small decrease in net interest income from the third quarter of 1997 reflected a 39 basis point reduction in the net interest margin, which more than offset an 8 percent increase in average earning assets to $67.5 billion. Noninterest income for the third quarter of 1998 was $392 million. Excluding branch divestiture gains of $79 million recorded in the third quarter of 1997, noninterest income increased by $78 million, or 25 percent from the year-ago quarter, and comprised 36 percent of total revenue, compared with 31 percent a year ago. This growth reflected the continuation of broad-based strength with the largest increases coming from investment banking and capital markets activities and trust and asset management. Excluding branch divestiture gains, noninterest income for the first nine months of 1998 was up $238 million, or 28 percent, from the same period last year. Noninterest expense totaled $647 million for the third quarter of 1998, compared to $648 million in the year-ago quarter. Included in last year's expense was a $50 million real estate impairment charge recorded in connection with Key's nationalization and related centralization efforts. Excluding this charge, noninterest expense increased by $49 million, or 8 percent. The increase came largely from the impact of acquisitions completed in the third quarter of 1997 and higher personnel costs associated with various incentive programs, including those related to investment banking and capital markets activities. Compared with the second quarter of 1998, noninterest expense increased by $31 million. For the first nine months of 1998, noninterest expense (excluding the real estate 3 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 3 impairment charge) rose $108 million, or 6 percent, from the comparable 1997 period. This included an $8 million increase in costs incurred to be Year 2000 compliant. The provision for loan losses for the 1998 third quarter was $71 million and equal to the level of net charge-offs. The provision was essentially unchanged from the prior quarter and $31 million lower than that reported in the third quarter of 1997. Net loan charge-offs were 0.48 percent of average loans outstanding for the quarter, compared with 0.51 percent for the prior quarter and 0.64 percent for the year-ago quarter. Key's capital ratios continue to exceed all "well-capitalized" benchmarks. The tangible equity to tangible assets ratio (including capital securities receiving Tier 1 treatment) was 6.76 percent as of September 30, 1998, compared with 6.91 percent last quarter and 6.16 percent a year earlier. The decline from the prior quarter reflected Key's third quarter 1998 repurchase of 4.6 million of its common shares in connection with the anticipated closing of the McDonald transaction in the fourth quarter. - -------------------------------------------------------------------------------- This news release contains forward-looking statements which 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: sharp and/or rapid changes in interest rates; significant changes in the economy which could materially change anticipated credit quality trends and the ability to generate loans; significant delay in or inability to execute strategic initiatives designed to grow revenues and/or manage expenses; consummation of significant business combinations or divestitures; unforeseen business risks related to Year 2000 computer systems issues; and significant changes in accounting, tax, or regulatory practices or requirements. - -------------------------------------------------------------------------------- # # # 4 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 4 FINANCIAL HIGHLIGHTS (dollars in millions, except per share amounts)
Three months ended --------------------------------------------------------------- 09-30-98 06-30-98 09-30-97 --------------- ---------------- ---------------- SUMMARY OF OPERATIONS Net interest income (TE) $ 708 $ 689 $ 715 Provision for loan losses 71 72 102 Noninterest income 392 380 393 Noninterest expense 647 616 648 Net income 252 249 236 PER COMMON SHARE Net income $ .57 $ .57 $ .54 Net income - assuming dilution .57 .56 .53 Cash dividends .235 .235 .21 Book value at period end 12.73 12.55 11.55 Market price at period end 28.88 35.63 31.82 AT PERIOD END Full-time equivalent employees 24,586 24,711 25,622 Full-service banking offices 961 962 1,088 PERFORMANCE RATIOS Return on average total assets 1.32% 1.35% 1.34% Return on average equity 18.14 18.47 19.41 Efficiency 1 57.09 58.22 56.75 Overhead 2 33.33 37.30 37.76 Net interest margin (TE) 4.19 4.19 4.58 CAPITAL RATIOS AT PERIOD END Equity to assets 3 8.11% 8.28% 7.74% Tangible equity to tangible assets 3 6.76 6.91 6.16 Tier 1 risk-adjusted capital 4 6.72 7.15 6.73 Total risk-adjusted capital 4 11.12 11.86 11.10 Leverage 4 6.88 7.04 6.33
1 Calculated as noninterest expense (excluding certain nonrecurring charges and distributions on capital securities) divided by taxable-equivalent net interest income plus noninterest income (excluding net securities transactions and gains from bank and branch divestitures). 2 Calculated as noninterest expense (excluding certain nonrecurring charges and distributions on capital securities) less noninterest income (excluding net securities transactions and gains from bank and branch divestitures) divided by taxable-equivalent net interest income. 3 Excluding capital securities receiving Tier 1 treatment, these ratios at 9-30-98 are 7.15% and 5.79%, respectively; at 6-30-98 are 7.29% and 5.91%, respectively; and at 9-30-97 are 7.04% and 5.46%, respectively. 4 9-30-98 ratio is estimated. TE = Taxable Equivalent 5 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 5 FINANCIAL HIGHLIGHTS (dollars in millions, except per share amounts)
Three months ended ------------------------------------------------------ 09-30-98 06-30-98 09-30-97 --------------- ---------------- ---------------- ASSET QUALITY Net loan charge-offs $ 71 $ 72 $ 85 Net loan charge-offs to average loans .48% .51% .64% Allowance for loan losses $ 900 $ 900 $ 900 Allowance for loan losses to period end loans 1.51% 1.56% 1.68% Allowance for loan losses to nonperforming loans 250.00 240.64 247.25 Nonperforming loans at period end $ 360 $ 374 $ 364 Nonperforming assets at period end 402 417 411 Nonperforming loans to period end loans .61% .65% .68% Nonperforming assets to period end loans plus OREO and other nonperforming assets .68 .72 .77
Nine months ended -------------------------------------- SUMMARY OF OPERATIONS 09-30-98 09-30-97 ---------------- ---------------- Net interest income (TE) $ 2,070 $ 2,122 Provision for loan losses 220 244 Noninterest income 1,128 940 Noninterest expense 1,863 1,805 Net income 736 671 PER COMMON SHARE Net income $ 1.68 $ 1.53 Net income - assuming dilution 1.65 1.51 Cash dividends .705 .63 PERFORMANCE RATIOS Return on average total assets 1.33% 1.32% Return on average equity 18.29 18.78 Efficiency 1 57.56 57.75 Overhead 2 35.31 40.81 Net interest margin (TE) 4.20 4.67 ASSET QUALITY Net loan charge-offs $ 220 $ 217 Net loan charge-offs to average loans .52% .57%
6 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 6 CONSOLIDATED BALANCE SHEETS (dollars in millions)
ASSETS 09-30-98 06-30-98 09-30-97 --------------- ---------------- ---------------- Loans $59,444 $57,769 $53,676 Investment securities 984 1,038 1,344 Securities available for sale 5,928 6,482 7,563 Short-term investments 2,212 1,652 1,217 --------------- ---------------- ---------------- Total earning assets 68,568 66,941 63,800 Allowance for loan losses (900) (900) (900) Cash and due from banks 2,750 3,050 2,940 Premises and equipment 876 894 993 Goodwill 1,038 1,028 1,095 Other intangible assets 83 88 112 Corporate owned life insurance 1,974 1,945 1,583 Other assets 3,302 2,732 2,454 --------------- ---------------- ---------------- TOTAL ASSETS $77,691 $75,778 $72,077 =============== ================ ================ LIABILITIES Deposits in domestic offices: Noninterest-bearing $ 8,732 $ 8,967 $ 8,965 Interest-bearing 31,841 31,262 32,733 Deposits in foreign offices-interest-bearing 2,024 1,565 2,172 --------------- ---------------- ---------------- Total deposits 42,597 41,794 43,870 Federal funds purchased and securities sold under repurchase agreements 6,652 6,828 6,662 Bank notes and other short-term borrowings 7,576 7,855 6,053 Other liabilities 2,963 2,583 2,099 Long-term debt 11,353 10,196 7,567 --------------- ---------------- ---------------- TOTAL LIABILITIES 71,141 69,256 66,251 Capital securities of subsidiary trusts 997 997 750 SHAREHOLDERS' EQUITY 5,553 5,525 5,076 TOTAL LIABILITIES, CAPITAL SECURITIES OF SUBSIDIARY TRUSTS AND --------------- ---------------- ---------------- SHAREHOLDERS' EQUITY $77,691 $75,778 $72,077 =============== ================ ================ Common Shares outstanding (000) 436,092 1 440,352 1 219,666
1 Adjusted to reflect the impact of a two-for-one stock split declared January 15, 1998, effected by means of a 100% stock dividend paid March 6, 1998. 7 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 7 CONSOLIDATED STATEMENTS OF INCOME (dollars in millions, except per share amounts)
Three months ended ----------------------------------------------------- 09-30-98 06-30-98 09-30-97 --------------- ---------------- ---------------- INTEREST INCOME $1,415 $1,372 $1,347 INTEREST EXPENSE 715 692 643 --------------- ---------------- ---------------- NET INTEREST INCOME 700 680 704 Provision for loan losses 71 72 102 --------------- ---------------- ---------------- 629 608 602 NONINTEREST INCOME Service charges on deposit accounts 77 75 77 Trust and asset management income 82 80 66 Investment banking and capital markets income 62 50 38 Credit card fees 18 17 25 Insurance and brokerage income 22 24 22 Corporate owned life insurance income 25 24 20 Loan securitization income 14 8 15 Net securities gains -- 2 -- Gains from sales of branches/subsidiaries -- 33 79 Other income 92 67 51 ----------------------------------------------------- Total noninterest income 392 380 393 NONINTEREST EXPENSE Personnel 317 302 299 Net occupancy 58 56 54 Equipment 46 45 44 Amortization of intangibles 22 22 23 Marketing 25 28 22 Professional fees 14 15 10 Other expense 165 148 196 --------------- ---------------- ---------------- Total noninterest expense 647 616 648 --------------- ---------------- ---------------- INCOME BEFORE INCOME TAXES 374 372 347 Income taxes 122 123 111 --------------- ---------------- ---------------- NET INCOME $ 252 $ 249 $ 236 =============== ================ ================ Net income per Common Share $ .57 $ .57 $ .54 Net income per Common Share - assuming dilution .57 .56 .53 Wtd. avg. Common Shares (000) 438,856 440,092 436,214 Wtd. avg. Common Shares and potential Common Shares (000) 443,750 446,568 442,050 Taxable-equivalent adjustment $8 $9 $11
8 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 8 CONSOLIDATED STATEMENTS OF INCOME (dollars in millions, except per share amounts)
Nine months ended ----------------------------------- 09-30-98 09-30-97 ---------------- ---------------- INTEREST INCOME $4,114 $3,897 INTEREST EXPENSE 2,070 1,808 ---------------- ---------------- NET INTEREST INCOME 2,044 2,089 Provision for loan losses 220 244 ---------------- ---------------- 1,824 1,845 NONINTEREST INCOME Service charges on deposit accounts 230 222 Trust and asset management income 239 194 Investment banking and capital markets income 159 77 Credit card fees 50 73 Insurance and brokerage income 68 64 Corporate owned life insurance income 72 60 Loan securitization income 32 19 Net securities gains 4 -- Gains from sales of branches/subsidiaries 62 89 Other income 212 142 ---------------- ---------------- Total noninterest income 1,128 940 NONINTEREST EXPENSE Personnel 913 872 Net occupancy 170 164 Equipment 134 131 Amortization of intangibles 67 65 Marketing 81 65 Professional fees 46 34 Other expense 452 474 ---------------- ---------------- Total noninterest expense 1,863 1,805 ---------------- ---------------- INCOME BEFORE INCOME TAXES 1,089 980 Income taxes 353 309 ---------------- ---------------- NET INCOME $ 736 $ 671 ================ ================ Net income per Common Share $1.68 $1.53 Net income per Common Share - assuming dilution 1.65 1.51 Wtd. avg. Common Shares (000) 439,180 439,140 Wtd. avg. Common Shares and potential Common Shares (000) 445,047 444,340 Taxable-equivalent adjustment $26 $33
9 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 9 CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS (in millions)
Three months ended ----------------------------------------------------- ASSETS 09-30-98 06-30-98 09-30-97 --------------- ---------------- ---------------- Loans $58,559 $56,441 $52,708 Investment securities 995 1,141 1,413 Securities available for sale 6,175 6,765 7,399 Short-term investments 1,728 1,422 807 --------------- ---------------- ---------------- Total earning assets 67,457 65,769 62,327 Allowance for loan losses (888) (888) (873) Cash and due from banks 2,481 2,574 2,633 Other assets 6,836 6,611 6,025 --------------- ---------------- ---------------- TOTAL ASSETS $75,886 $74,066 $70,112 =============== ================ ================ LIABILITIES Deposits in domestic offices: Noninterest-bearing $ 8,485 $ 8,328 $ 8,551 Interest-bearing 31,425 31,928 32,977 Deposits in foreign offices-interest-bearing 954 1,095 2,065 --------------- ---------------- ---------------- Total deposits 40,864 41,351 43,593 Federal funds purchased and securities sold under repurchase agreements 7,456 6,773 6,939 Bank notes and other short-term borrowings 7,305 7,710 5,001 Other liabilities 2,724 2,547 2,125 Long-term debt 11,029 9,511 6,879 --------------- ---------------- ---------------- TOTAL LIABILITIES 69,378 67,892 64,537 Capital securities of subsidiary trusts 997 766 750 SHAREHOLDERS' EQUITY 5,511 5,408 4,825 TOTAL LIABILITIES, CAPITAL SECURITIES OF SUBSIDIARY TRUSTS AND --------------- ---------------- ---------------- SHAREHOLDERS' EQUITY $75,886 $74,066 $70,112 =============== ================ ================
10 KEYCORP REPORTS THIRD QUARTER 1998 EARNINGS OCTOBER 15, 1998 PAGE 10 CONSOLIDATED YEAR-TO-DATE AVERAGE BALANCE SHEETS (in millions)
Nine months ended ----------------------------------- ASSETS 09-30-98 09-30-97 ---------------- ---------------- Loans $56,332 $50,778 Investment securities 1,110 1,543 Securities available for sale 6,794 7,672 Short-term investments 1,502 573 ---------------- ---------------- Total earning assets 65,738 60,566 Allowance for loan losses (888) (869) Cash and due from banks 2,558 2,584 Other assets 6,631 5,814 ---------------- ---------------- TOTAL ASSETS $74,039 $68,095 ================ ================ LIABILITIES Deposits in domestic offices: Noninterest-bearing $ 8,408 $ 8,464 Interest-bearing 31,775 33,760 Deposits in foreign offices-interest-bearing 1,097 1,862 ---------------- ---------------- Total deposits 41,280 44,086 Federal funds purchased and securities sold under repurchase agreements 7,117 6,809 Bank notes and other short-term borrowings 7,235 4,425 Other liabilities 2,555 1,998 Long-term debt 9,632 5,388 ---------------- ---------------- TOTAL LIABILITIES 67,819 62,706 Capital securities of subsidiary trusts 839 613 SHAREHOLDERS' EQUITY 5,381 4,776 TOTAL LIABILITIES, CAPITAL SECURITIES OF SUBSIDIARY TRUSTS AND ---------------- ---------------- SHAREHOLDERS' EQUITY $74,039 $68,095 ================ ================
-----END PRIVACY-ENHANCED MESSAGE-----