-----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, UgfB1bDGT+FYtZQsnTOIsdg76AnQbaU6VcjV4BRIwG5hdR5XC1DvdEejwKUqe35/ awTRf4CN4y7KTONExn3Wyw== 0000950152-99-003312.txt : 19990419 0000950152-99-003312.hdr.sgml : 19990419 ACCESSION NUMBER: 0000950152-99-003312 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990415 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990416 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: 99595592 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 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): April 15, 1999 [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 of incorporation or Identification No.) 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 April 15, 1999, the Registrant issued a press release announcing its earnings results for the three-month period ended March 31, 1999. This press release, dated April 15, 1999, is attached as Exhibit 99 to this report. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits -------- 99 The Registrant's April 15, 1999, press release announcing its earnings results for the three-month period ended March 31, 1999. 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: April 16, 1999 /s/ Lee Irving -------------------------------------- By: Lee Irving Executive Vice President and Chief Accounting Officer EX-99 2 EXHIBIT 99 1 EXHIBIT 99 MEDIA CONTACTS: ANALYST CONTACT: John Fuller (216) 689-8140 Vern Patterson (216) 689-0520 Bill Murschel (216) 689-0457 WEB SITE: www.Key.com FOR IMMEDIATE RELEASE KEYCORP REPORTS FIRST QUARTER 1999 EARNINGS ------------------------------------------- - - EARNINGS PER SHARE $0.65, INCLUDING GAIN RECOGNIZED FROM SALE OF INTEREST IN ELECTRONIC PAYMENT SERVICES, INC. - - FEE INCOME RISES 36 PERCENT FROM THE YEAR-AGO QUARTER - - CONTINUED STRONG LOAN GROWTH - - 5.5 MILLION SHARES REPURCHASED DURING THE QUARTER CLEVELAND, April 15, 1999 -- KeyCorp (NYSE: KEY) today reported first-quarter earnings of $293 million, or $0.65 per diluted common share, up from $235 million, or $0.53 in the first quarter of 1998. Earnings per diluted common share were $0.57 for the first quarter of 1999, after excluding an aggregate $0.08 impact of a gain from the sale of Key's 20 percent interest in Electronic Payment Services, Inc., certain nonrecurring charges and the provision for loan losses in excess of net charge-offs. Key's return on average equity was 19.5 percent (approximately 27.9 percent on a cash earnings basis) for the first quarter of 1999, compared with 18.3 percent (approximately 25.4 percent on a cash earnings basis) for the first quarter of last year. Return on average total assets was 1.49 percent (approximately 1.64 percent on a cash earnings basis) for the first quarter of 1999, compared with 1.32 percent (approximately 1.45 percent on a cash earnings basis) in the first quarter of 1998. "First quarter results were highlighted by growth in fee income, strong consumer loan demand, and continued growth in commercial lending. Driven by revenues from such areas as asset management, brokerage and loan securitizations, core noninterest income increased 36 percent from the year-ago quarter," said Robert W. Gillespie, KeyCorp chairman and chief executive officer. "Our home equity loans, excluding the impact of sales, were up an annualized 22 percent from the prior quarter and our commercial loan growth exceeded 10 percent for the eighth consecutive quarter. At the same time, we were able to maintain a high level of asset quality. 2 KEYCORP REPORTS FIRST QUARTER 1999 EARNINGS APRIL 15, 1999 PAGE 2 "In our first full quarter of operation since the acquisition of McDonald & Company, we are pleased with the smooth integration process, and plans are in place to further leverage client relationships in the months ahead," Gillespie said. "From a strategic perspective, Key is aggressively moving toward its long-term goal of generating 50 percent of its revenue from investment advisory and other noninterest income generating activities. In the first quarter, 41 percent of Key's total revenue was provided by these activities, up from 39 percent last quarter and 35 percent a year ago." In the first quarter, Key reclassified the distributions on its capital securities from noninterest expense to interest expense and restated prior quarters. As measured using the new classification, net interest income in the first quarter of 1999 totaled $685 million, up 5 percent from $650 million in the first quarter of last year. This improvement reflected a 10 percent increase in average earning assets (primarily commercial loans) to $70.7 billion, which more than offset a 19 basis point reduction in the net interest margin to 3.95 percent. Compared with the prior quarter, net interest income was relatively unchanged as an annualized 7 percent increase in average earning assets was offset by a 4 basis point decline in the net interest margin. During the first quarter, the growth in earning assets was moderated by the securitization and sale of approximately $1.8 billion of consumer loans. Noninterest income for the first quarter of 1999 was $609 million, significantly higher than the $356 million reported a year ago. Included in first quarter 1999 results was a $134 million gain from the sale of Key's interest in Electronic Payment Services. Excluding this gain and branch divestiture gains of $6 million recorded in the first quarter of last year, noninterest income grew by $125 million, or 36 percent, and comprised 41 percent of total revenue, compared to 35 percent a year ago. Strong increases in income from insurance and brokerage (up $35 million), trust and asset management (up $29 million) and investment banking and capital markets (up $19 million) reflected the impact of the October 1998 acquisition of McDonald. In addition, net loan securitization income rose by $29 million. Noninterest expense totaled $748 million for the first quarter of 1999, compared to $586 million in the year-ago quarter. Included in first quarter 1999 expense was a $20 million contribution to Key's charitable foundation made in light of the gain realized from the sale of Electronic Payment Services. Excluding this contribution and $27 million of other nonrecurring charges, noninterest expense increased by $115 million, or 20 percent. On the same basis, noninterest expense was $34 million, or 5 percent, above the fourth quarter of 1998. The increases came largely from the impact of the McDonald acquisition and higher personnel costs associated with various incentive programs. 3 KEYCORP REPORTS FIRST QUARTER 1999 EARNINGS APRIL 15, 1999 PAGE 3 The provision for loan losses was $111 million for the first quarter of 1999 and exceeded the level of net charge-offs by $30 million. The increase from the $77 million provision recorded in both the prior quarter and the first quarter of 1998 reflected a number of factors, including Key's continuing commercial loan growth and an enhancement in the allowance for loan losses allocation methodology pertaining to the credit card portfolio. Net loan charge-offs were 0.53 percent of average loans outstanding for the quarter, compared to 0.50 percent for the prior quarter and 0.58 percent for the year-ago quarter. Key's nonperforming assets ended the first quarter at $430 million, or 0.70 percent of loans, plus other real estate owned and other nonperforming assets, compared to $404 million, or 0.65 percent, at December 31, 1998. Key's capital ratios continue to exceed all "well-capitalized" benchmarks. The tangible equity to tangible assets ratio was 5.86 percent as of March 31, 1999, compared with 5.93 percent last quarter and 5.81 percent a year earlier. The decline from the prior quarter reflected Key's first quarter 1999 repurchase of 5.5 million of its common shares. This included the repurchase of 3.9 million shares to complete the authorization to repurchase up to 60 percent of the shares issued in the McDonald transaction. The remaining shares were repurchased under a separate authorization that provides for the repurchase of up to 10 million common shares. - -------------------------------------------------------------------------------- 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; failure of the capital markets to function consistent with customary levels; 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 FIRST QUARTER 1999 EARNINGS APRIL 15, 1999 PAGE 4 FINANCIAL HIGHLIGHTS (dollars in millions, except per share amounts)
Three months ended ------------------------------------------------------- 3-31-99 12-31-98 3-31-98 ------------- ------------ -------------- SUMMARY OF OPERATIONS Net interest income (TE) $ 693 $ 695 $ 659 Provision for loan losses 111 77 77 Noninterest income 609 447 356 Noninterest expense 748 667 586 Net income 293 260 235 PER COMMON SHARE Net income $ .65 $ .58 $ .53 Net income - assuming dilution .65 .57 .53 Cash dividends .26 .235 .235 Book value at period end 13.63 13.63 12.15 Market price at period end 30.31 32.00 37.81 AT PERIOD END Full-time equivalent employees 25,650 25,862 24,650 Full-service banking offices 969 968 1,006 PERFORMANCE RATIOS Return on average total assets 1.49 % 1.31 % 1.32 % Return on average equity 19.48 17.12 18.25 Efficiency 1 60.22 58.66 58.19 Overhead 2 33.19 32.37 36.12 Net interest margin (TE) 3.95 3.99 4.14 CAPITAL RATIOS AT PERIOD END Equity to assets 7.63 % 7.71 % 7.29 % Tangible equity to tangible assets 5.86 5.93 5.81 Tier 1 risk-adjusted capital 3 7.30 7.21 6.81 Total risk-adjusted capital 3 11.68 11.69 11.38 Leverage 3 7.21 6.95 6.61 1 Calculated as noninterest expense (excluding certain nonrecurring charges) divided by taxable-equivalent net interest income plus noninterest income (excluding net securities transactions and gains from certain divestitures). 2 Calculated as noninterest expense (excluding certain nonrecurring charges) less noninterest income (excluding net securities transactions and gains from certain divestitures) divided by taxable-equivalent net interest income. 3 3-31-99 ratio is estimated. TE = Taxable Equivalent
5 KEYCORP REPORTS FIRST QUARTER 1999 EARNINGS APRIL 15, 1999 PAGE 5 FINANCIAL HIGHLIGHTS (dollars in millions, except per share amounts)
Three months ended ------------------------------------------------------ 3-31-99 12-31-98 3-31-98 ------------ ------------- --------------- ASSET QUALITY Net loan charge-offs $ 81 $ 77 $ 77 Net loan charge-offs to average loans .53 % .50 % .58 % Allowance for loan losses $930 $900 $900 Allowance for loan losses to period end loans 1.52 % 1.45 % 1.64 % Allowance for loan losses to nonperforming loans 235.44 246.58 241.29 Nonperforming loans at period end $395 $365 $373 Nonperforming assets at period end 430 404 421 Nonperforming loans to period end loans .65 % .59 % .68 % Nonperforming assets to period end loans plus OREO and other nonperforming assets .70 .65 .77
6 KEYCORP REPORTS FIRST QUARTER 1999 EARNINGS APRIL 15, 1999 PAGE 6 CONSOLIDATED BALANCE SHEETS (dollars in millions)
ASSETS 3-31-99 12-31-98 3-31-98 ----------- ------------ ----------- Loans $ 61,045 $ 62,012 $ 54,900 Investment securities 1,005 976 1,182 Securities available for sale 6,778 5,278 7,115 Short-term investments 1,630 1,974 1,171 --------- --------- --------- Total earning assets 70,458 70,240 64,368 Allowance for loan losses (930) (900) (900) Cash and due from banks 2,981 3,296 3,287 Premises and equipment 863 902 924 Goodwill 1,435 1,430 1,052 Other intangible assets 72 79 99 Corporate owned life insurance 2,032 2,008 1,921 Other assets 3,081 2,965 2,447 --------- --------- --------- TOTAL ASSETS $ 79,992 $ 80,020 $ 73,198 ========= ========= ========= LIABILITIES Deposits in domestic offices: Noninterest-bearing $ 8,601 $ 9,540 $ 9,083 Interest-bearing 32,555 32,091 32,253 Deposits in foreign offices-interest-bearing 167 952 325 --------- --------- --------- Total deposits 41,323 42,583 41,661 Federal funds purchased and securities sold under repurchase agreements 4,336 4,468 6,468 Bank notes and other short-term borrowings 8,242 9,728 7,442 Other liabilities 3,285 3,110 2,498 Long-term debt 15,457 12,967 9,041 Capital securities of subsidiary trusts 1,244 997 750 --------- --------- --------- TOTAL LIABILITIES 73,887 73,853 67,860 SHAREHOLDERS' EQUITY 6,105 6,167 5,338 --------- --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 79,992 $ 80,020 $ 73,198 ========= ========= ========= Common Shares outstanding (000) 447,822 452,452 439,315
7 KEYCORP REPORTS FIRST QUARTER 1999 EARNINGS APRIL 15, 1999 PAGE 7 CONSOLIDATED STATEMENTS OF INCOME (dollars in millions, except per share amounts)
Three months ended ------------------------------------------------- 3-31-99 12-31-98 3-31-98 --------- --------- --------- INTEREST INCOME $ 1,381 $ 1,411 $ 1,327 INTEREST EXPENSE 696 724 677 -------- -------- -------- NET INTEREST INCOME 685 687 650 Provision for loan losses 111 77 77 -------- -------- -------- 574 610 573 NONINTEREST INCOME Trust and asset management income 106 96 77 Service charges on deposit accounts 81 76 78 Investment banking and capital markets income 66 80 47 Insurance and brokerage income 57 43 22 Corporate owned life insurance income 24 32 23 Credit card fees 10 18 15 Net loan securitization income 39 3 10 Net securities gains 4 5 2 Gains from divestitures 148 27 29 Other income 74 67 53 -------- -------- -------- Total noninterest income 609 447 356 NONINTEREST EXPENSE Personnel 372 343 294 Net occupancy 59 56 56 Equipment 56 51 43 Computer processing 54 49 40 Marketing 25 19 28 Amortization of intangibles 28 24 23 Professional fees 15 16 17 Other expense 139 109 85 -------- -------- -------- Total noninterest expense 748 667 586 -------- -------- -------- INCOME BEFORE INCOME TAXES 435 390 343 Income taxes 142 130 108 -------- -------- -------- NET INCOME $ 293 $ 260 $ 235 ======== ======== ======== Net income per Common Share $ .65 $ .58 $ .53 Net income per Common Share - assuming dilution .65 .57 .53 Wtd. avg. Common Shares (000) 449,520 449,949 438,589 Wtd. avg. Common Shares and potential Common Shares (000) 454,197 454,527 444,836 Taxable-equivalent adjustment $ 8 $ 8 $ 9
8 KEYCORP REPORTS FIRST QUARTER 1999 EARNINGS APRIL 15, 1999 PAGE 8 CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS (in millions)
Three months ended -------------------------------------------------- ASSETS 3-31-99 12-31-98 3-31-98 --------- --------- --------- Loans $ 61,693 $ 60,656 $ 53,946 Investment securities 990 1,002 1,196 Securities available for sale 6,004 6,066 7,457 Short-term investments 1,975 1,747 1,350 -------- -------- -------- Total earning assets 70,662 69,471 63,949 Allowance for loan losses (888) (888) (889) Cash and due from banks 2,613 2,655 2,621 Other assets 7,471 7,730 6,441 -------- -------- -------- TOTAL ASSETS $ 79,858 $ 78,968 $ 72,122 ======== ======== ======== LIABILITIES Deposits in domestic offices: Noninterest-bearing $ 8,495 $ 8,810 $ 8,409 Interest-bearing 32,109 32,072 31,980 Deposits in foreign offices-interest-bearing 509 366 1,245 -------- -------- -------- Total deposits 41,113 41,248 41,634 Federal funds purchased and securities sold under repurchase agreements 5,077 5,205 7,117 Bank notes and other short-term borrowings 9,208 10,171 6,683 Other liabilities 3,188 3,057 2,390 Long-term debt 14,133 12,265 8,326 Capital securities of subsidiary trusts 1,039 997 750 -------- -------- -------- TOTAL LIABILITIES 73,758 72,943 66,900 SHAREHOLDERS' EQUITY 6,100 6,025 5,222 -------- -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 79,858 $ 78,968 $ 72,122 ======== ======== ========
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