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EX-99.3 - EX-99.3 - KEYCORP /NEW/ | l39426exv99w3.htm |
EX-99.2 - EX-99.2 - KEYCORP /NEW/ | l39426exv99w2.htm |
8-K - FORM 8-K - KEYCORP /NEW/ | l39426e8vk.htm |
Exhibit 99.1
News |
||
KeyCorp 127 Public Square Cleveland, OH 44114 |
CONTACTS:
|
ANALYSTS | MEDIA | ||
Vernon L. Patterson | William C. Murschel | |||
216.689.0520 | 216.828.7416 | |||
Vernon_Patterson@KeyBank.com | William_C_Murschel@KeyBank.com | |||
Christopher F. Sikora | ||||
216.689.3133 | ||||
Chris_F_Sikora@KeyBank.com | ||||
INVESTOR
|
KEY MEDIA | |||
RELATIONS: | www.key.com/ir | NEWSROOM: www.key.com/newsroom |
FOR IMMEDIATE RELEASE
KEYCORP REPORTS FIRST QUARTER 2010 RESULTS
¨ | Net loss from continuing operations narrows to $.11 per common share | |
¨ | Net interest margin increases to 3.19% | |
¨ | Nonperforming loans decrease by $122 million from fourth quarter of 2009 to 3.69% of portfolio loans | |
¨ | Net charge-offs decline $186 million from fourth quarter 2009 | |
¨ | Loan loss reserve at $2.4 billion, or 4.34% of total loans | |
¨ | Capital and liquidity positions remain strong | |
¨ | Tier 1 common equity and Tier 1 risk-based capital ratios of 7.53% and 12.96%, respectively | |
¨ | $5.3 billion in new or renewed lending commitments originated |
CLEVELAND, April 21, 2010 KeyCorp (NYSE: KEY) today announced a first quarter net loss from
continuing operations attributable to Key common shareholders of $98 million, or $.11 per common
share. These results compare to a net loss from continuing operations attributable to Key common
shareholders of $507 million, or $1.03 per common share, for the first quarter of 2009. The first quarter of
2009 was negatively impacted by an $847 million loan loss provision and a $196 million ($164 million after tax)
intangible assets impairment charge.
A lower provision for loan losses and continued expense control
resulted in a narrowing of Keys first-quarter loss when compared to the fourth quarter of 2009.
Net charge-offs declined by $186 million, and nonperforming loans showed continued improvement
decreasing by $122 million from December 31, 2009. Key also experienced reduced expenses due to
lower personnel expense and efficiency initiative efforts as well as a decrease in the provision
for losses on lending-related commitments.
These results are encouraging and reflect our persistent focus over recent quarters to ensure
that Key emerges strong and ready to grow as the economic recovery continues to take hold, said
Chief Executive Officer Henry L. Meyer III. Particularly notable in the results is the
improvement in net interest margin, a decrease in nonperforming loans for the second quarter in a
row, and good expense control.
Meyer continued: We are positioning Key for an improving economy. We have reduced our risk,
continue to emphasize our core relationship businesses, and our balance sheet reflects strong
capital, liquidity and loan loss reserve levels.
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 2
April 21, 2010
Page 2
At March 31, 2010, Keys estimated Tier 1 common equity and Tier 1 risk-based capital ratios
were 7.53% and 12.96%, respectively.
The Company originated approximately $5.3 billion in new or renewed lending commitments to
consumers and businesses during the quarter.
Key continues to invest in its relationship businesses, including its 14-state branch network.
Meyer noted that Key opened eight new branches in the first quarter, expects to open an additional
32 new branches during the remainder of 2010, and continues to modernize its existing branches.
The new and modernized branches underscore Keys relationship strategy by leveraging its branch
network to offer the full breadth of solutions, expertise, services and products that Key has to
offer. Additionally, Key received recognition from Corporate Insights 2009 Bank Monitor which
highlights firms that excel in key areas of the online banking
experience. Key had previously been named a Customer Service Champion by BusinessWeek in its March 2009 edition. The Company is positioning its
branch and online capabilities to enhance growth as the economy turns.
During the quarter, Christopher M. Gorman was promoted to senior executive vice president and
head of Keys National Banking business. He also became vice chairman of KeyBank National
Association. Mr. Gorman has been with Key for the past 19 years and was most recently president of
KeyBanc Capital Markets. In his new role, Gorman is responsible for Keys corporate, investment
banking, capital markets, commercial real estate and equipment finance businesses.
The following table shows Keys continuing and discontinued operating results for the
three-month periods ended March 31, 2010, December 31, 2009, and March 31, 2009.
Results of Operations
Three months ended | ||||||||||||
in millions, except per share amounts | 3-31-10 | 12-31-09 | 3-31-09 | |||||||||
Summary of operations |
||||||||||||
Income (loss) from continuing operations attributable to Key |
$ | (57 | ) | $ | (217 | ) | $ | (459 | ) | |||
Income
(loss) from discontinued operations, net of taxes
(a) |
2 | (7 | ) | (29 | ) | |||||||
Net income (loss) attributable to Key |
$ | (55 | ) | $ | (224 | ) | $ | (488 | ) | |||
Income (loss) from continuing operations attributable to Key |
$ | (57 | ) | $ | (217 | ) | $ | (459 | ) | |||
Less: Dividends on Series A Preferred Stock |
6 | 5 | 12 | |||||||||
Cash dividends on Series B Preferred Stock |
31 | 31 | 32 | |||||||||
Amortization of discount on Series B Preferred Stock |
4 | 5 | 4 | |||||||||
Income (loss) from continuing operations attributable to Key common shareholders |
(98 | ) | (258 | ) | (507 | ) | ||||||
Income
(loss) from discontinued operations, net of taxes
(a) |
2 | (7 | ) | (29 | ) | |||||||
Net income (loss) attributable to Key common shareholders |
$ | (96 | ) | $ | (265 | ) | $ | (536 | ) | |||
Per common share assuming dilution |
||||||||||||
Income (loss) from continuing operations attributable to Key common shareholders |
$ | (.11 | ) | $ | (.30 | ) | $ | (1.03 | ) | |||
Income
(loss) from discontinued operations, net of taxes
(a) |
| (.01 | ) | (.06 | ) | |||||||
Net income
(loss) attributable to Key common shareholders
(b) |
$ | (.11 | ) | $ | (.30 | ) | $ | (1.09 | ) | |||
(a) | In September 2009, management made the decision to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. In April 2009, management made the decision to curtail the operations of Austin Capital Management, Ltd., an investment subsidiary that specializes in managing hedge fund investments for its institutional customer base. As a result of these decisions, Key has accounted for these businesses as discontinued operations. Included in the loss from discontinued operations for the three-month period ended March 31, 2009, is a $23 million after tax, or $.05 per common share, charge for intangible assets impairment related to Austin Capital Management. | |
(b) | Earnings per share may not foot due to rounding. |
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 3
April 21, 2010
Page 3
As shown in the following table, the comparability of Keys earnings for the current,
prior and year-ago quarters is affected by several significant items.
Significant Items Affecting the Comparability of Earnings
First Quarter 2010 | Fourth Quarter 2009 | First Quarter 2009 | ||||||||||||||||||||||||||||||||||
Pre-tax | After-tax | Impact | Pre-tax | After-tax | Impact | Pre-tax | After-tax | Impact | ||||||||||||||||||||||||||||
in millions, except per share amounts | Amount | Amount | on EPS | Amount | Amount | on EPS | Amount | Amount | on EPS | |||||||||||||||||||||||||||
Provision for loan losses less (in excess of) net charge-offs |
$ | 109 | $ | 68 | $ | .08 | $ | (48 | ) | $ | (31 | ) | $ | (.04 | ) | $ | (387 | ) | $ | (242 | ) | $ | (.49 | ) | ||||||||||||
Net gains (losses) from principal investing (a) |
21 | 13 | .02 | 44 | 28 | .03 | (63 | ) | (39 | ) | (.08 | ) | ||||||||||||||||||||||||
Realized and unrealized gains (losses) on loan
and securities
portfolios held for sale or trading |
(11 | ) | (7 | ) | (.01 | ) | (92 | ) | (58 | ) | (.07 | ) | | | | |||||||||||||||||||||
Credits related to IRS audits and leveraged
lease tax litigation |
| | | | 106 | .12 | | | | |||||||||||||||||||||||||||
(Provision) credit for losses on lending-related commitments |
2 | 1 | | (27 | ) | (17 | ) | (.02 | ) | | | | ||||||||||||||||||||||||
Noncash charge for intangible assets impairment |
| | | | | | (196 | ) (b) | (164 | ) (b) | (.33 | ) (b) | ||||||||||||||||||||||||
Gain from sale/redemption of Visa Inc. shares |
| | | | | | 105 | 65 | .13 | |||||||||||||||||||||||||||
(a) | Excludes principal investing results attributable to noncontrolling interests. | |
(b) | Excludes a $27 million ($23 million after tax, or $.05 per common share) charge for intangible assets impairment related to the discontinued operations of Austin Capital Management, Ltd. |
EPS = Earnings per common share
SUMMARY OF CONTINUING OPERATIONS
Taxable-equivalent net interest income was $632 million for the first quarter of 2010, and the
net interest margin was 3.19%. These results compare to taxable-equivalent net interest income of
$595 million and a net interest margin of 2.79% for the first quarter of 2009. The improvement in
the net interest margin is primarily attributable to lower funding costs and improved yields on
loans. During the past year the Company has experienced an improvement in the mix of deposits,
resulting in a lower level of higher costing certificates of deposit and an increase in lower
costing transaction accounts. The Company expects this change in funding mix to continue as higher
costing certificates of deposit mature and are repriced to current market rates. This repricing
and changing the mix of deposits should continue to benefit the Companys net interest margin for
the remaining quarters of 2010. Funding costs were also reduced by maturities of long-term debt and
the 2009 exchanges of retail trust preferred securities for Key common shares.
Compared to the fourth quarter of 2009, taxable-equivalent net interest income decreased by $5
million, and the net interest margin rose by 15 basis points. The increase in the net interest
margin resulting from the improved funding mix was mostly offset by the lower day count and reduced
average earning assets in the first quarter of 2010 compared to the fourth quarter of 2009.
Keys noninterest income was $450 million for the first quarter of 2010, compared to $478
million for the year-ago quarter. The decrease reflects a $105 million gain from the sale of Visa
Inc. shares during the first quarter of 2009. In addition, operating lease income and gains on
leased equipment decreased by $14 million and $18 million, respectively, compared to the first
quarter of 2009 due to a lower level of leasing activity. Net gains of $37 million in the first
quarter of 2010 from principal investing (including results attributable to noncontrolling
interests), compared to net losses of $72 million for the same period last year, partially offset
this decline in noninterest income.
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 4
April 21, 2010
Page 4
The major components of Keys fee-based income for the past five quarters are shown in the
following table.
Fee-based Income Major Components
in millions | 1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | |||||||||||||||
Trust and investment services income |
$ | 114 | $ | 117 | $ | 113 | $ | 119 | $ | 110 | ||||||||||
Service charges on deposit accounts |
76 | 82 | 83 | 83 | 82 | |||||||||||||||
Operating lease income |
47 | 52 | 55 | 59 | 61 | |||||||||||||||
Letter of credit and loan fees |
40 | 52 | 46 | 44 | 38 | |||||||||||||||
Corporate-owned life insurance income |
28 | 36 | 26 | 25 | 27 | |||||||||||||||
Electronic banking fees |
27 | 27 | 27 | 27 | 24 | |||||||||||||||
Insurance income |
18 | 16 | 18 | 16 | 18 | |||||||||||||||
Net gains (losses) from principal investing |
37 | 80 | (6 | ) | (6 | ) | (72 | ) | ||||||||||||
Investment banking and capital markets income (loss) |
9 | (47 | ) | (26 | ) | 14 | 17 | |||||||||||||
Compared to the fourth quarter of 2009, noninterest income decreased by $19 million.
This lower noninterest income resulted from a decrease of $43 million in principal investing
results (including results attributable to noncontrolling interests), a $12 million decrease in
letter of credit and loan fees, an $8 million decrease in income from corporate owned life
insurance as well as decreases in various other miscellaneous income components. The negative
effect of these factors was partially offset by a $56 million increase in results from investment
banking and capital markets activities that was primarily attributable to changes in the fair
values of certain commercial real estate related investments in the fourth quarter of 2009.
Keys noninterest expense was $785 million for the first quarter of 2010, compared to $927
million for the same period last year. Noninterest expense for the first quarter of 2009 was
adversely affected by an intangible assets impairment charge of $196 million. Excluding this
charge, noninterest expense for the current quarter was up $54 million, or 7%, from the year-ago
quarter. Personnel expense increased by $3 million while nonpersonnel expense rose by $51 million,
reflecting increases of $26 million in costs associated with OREO, including write-downs and losses
on sales, and various other expense categories.
Compared to the fourth quarter of 2009, noninterest expense decreased by $86 million.
Personnel expense decreased by $38 million, due largely to lower incentive compensation.
Nonpersonnel expense decreased by $48 million, reflecting a decrease in the provision for losses on
lending-related commitments of $29 million, a $25 million reduction in professional fees and a
decrease in operating lease expense of $11 million. These items were partially offset by a $22
million increase in various other expense categories.
ASSET QUALITY
Keys provision for loan losses was $413 million for the first quarter of 2010, compared to
$847 million for the year-ago quarter and $756 million for the fourth quarter of 2009. Keys
allowance for loan losses was $2.4 billion, or 4.34% of total loans, at March 31, 2010, compared to
4.31% at December 31, 2009, and 2.88% at March 31, 2009.
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 5
April 21, 2010
Page 5
Selected asset quality statistics for Key for each of the past five quarters are presented in
the following table.
Selected Asset Quality Statistics from Continuing Operations
dollars in millions | 1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | |||||||||||||||
Net loan charge-offs |
$ | 522 | $ | 708 | $ | 587 | $ | 502 | $ | 460 | ||||||||||
Net loan charge-offs to average loans |
3.67 | % | 4.64 | % | 3.59 | % | 2.93 | % | 2.60 | % | ||||||||||
Allowance for loan losses |
$ | 2,425 | $ | 2,534 | $ | 2,485 | $ | 2,339 | $ | 2,016 | ||||||||||
Allowance for credit losses (a) |
2,544 | 2,655 | 2,579 | 2,404 | 2,070 | |||||||||||||||
Allowance for loan losses to period-end loans |
4.34 | % | 4.31 | % | 4.00 | % | 3.48 | % | 2.88 | % | ||||||||||
Allowance for credit losses to period-end loans |
4.55 | 4.52 | 4.15 | 3.58 | 2.96 | |||||||||||||||
Allowance for loan losses to nonperforming loans |
117.43 | 115.87 | 108.52 | 107.05 | 116.20 | |||||||||||||||
Allowance for credit losses to nonperforming loans |
123.20 | 121.40 | 112.62 | 110.02 | 119.31 | |||||||||||||||
Nonperforming loans at period end |
$ | 2,065 | $ | 2,187 | $ | 2,290 | $ | 2,185 | $ | 1,735 | ||||||||||
Nonperforming assets at period end |
2,428 | 2,510 | 2,799 | 2,548 | 1,994 | |||||||||||||||
Nonperforming loans to period-end portfolio loans |
3.69 | % | 3.72 | % | 3.68 | % | 3.25 | % | 2.48 | % | ||||||||||
Nonperforming assets to period-end portfolio loans plus
OREO and other nonperforming assets |
4.31 | 4.25 | 4.46 | 3.77 | 2.84 | |||||||||||||||
(a) | Includes the allowance for loan losses plus the liability for credit losses on lending-related commitments. |
Net loan charge-offs for the quarter totaled $522 million, or 3.67% of average loans.
These results compare to $460 million, or 2.60%, for the same period last year and $708 million, or
4.64%, for the previous quarter.
Keys net loan charge-offs by loan type for each of the past five quarters are shown in the
following table.
Net Loan Charge-offs from Continuing Operations
dollars in millions | 1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | |||||||||||||||
Commercial, financial and agricultural |
$ | 126 | $ | 218 | $ | 168 | $ | 168 | $ | 232 | ||||||||||
Real estate commercial mortgage |
106 | 165 | 81 | 87 | 21 | |||||||||||||||
Real estate construction |
157 | 181 | 216 | 133 | 104 | |||||||||||||||
Commercial lease financing |
21 | 39 | 27 | 22 | 18 | |||||||||||||||
Total commercial loans |
410 | 603 | 492 | 410 | 375 | |||||||||||||||
Home equity Community Banking |
30 | 27 | 25 | 24 | 17 | |||||||||||||||
Home equity Other |
17 | 19 | 20 | 18 | 15 | |||||||||||||||
Marine |
38 | 33 | 25 | 29 | 32 | |||||||||||||||
Other |
27 | 26 | 25 | 21 | 21 | |||||||||||||||
Total consumer loans |
112 | 105 | 95 | 92 | 85 | |||||||||||||||
Total net loan charge-offs |
$ | 522 | $ | 708 | $ | 587 | $ | 502 | $ | 460 | ||||||||||
Net loan charge-offs to average loans from
continuing operations |
3.67 | % | 4.64 | % | 3.59 | % | 2.93 | % | 2.60 | % | ||||||||||
Net loan charge-offs from discontinued
operations education
lending business |
$ | 36 | $ | 36 | $ | 38 | $ | 37 | $ | 32 | ||||||||||
Compared to the fourth quarter of 2009, net loan charge-offs in the commercial loan
portfolio decreased by $193 million. The decrease was attributable to declines in both the
commercial, financial and agricultural and real estate commercial mortgage and construction lines
of business. The level of net charge-offs in the consumer portfolio rose by $7 million. As shown
in the table on page 6, Keys exit loan portfolio accounted for $153 million, or 29%, of Keys
total net loan charge-offs for the first quarter of 2010. Net charge-offs in the exit portfolio
increased by $12 million from the fourth quarter of 2009. Management expects net charge-offs to
remain elevated in 2010, but to continue to improve from the first quarter level in future
quarters.
At March 31, 2010, Keys nonperforming loans totaled $2.1 billion and represented 3.69% of
period-end portfolio loans, compared to 3.72% at December 31, 2009, and 2.48% at March 31, 2009.
Nonperforming assets at March 31, 2010, totaled $2.4 billion and represented
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 6
April 21, 2010
Page 6
4.31% of portfolio loans, OREO and other nonperforming assets, compared to 4.25% at December 31,
2009, and 2.84% at March 31, 2009. The following table illustrates the trend in Keys
nonperforming assets by loan type over the past five quarters.
Nonperforming Assets from Continuing Operations
dollars in millions | 1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | |||||||||||||||
Commercial, financial and agricultural |
$ | 558 | $ | 586 | $ | 679 | $ | 700 | $ | 595 | ||||||||||
Real estate commercial mortgage |
579 | 614 | 566 | 454 | 310 | |||||||||||||||
Real estate construction |
607 | 641 | 702 | 716 | 546 | |||||||||||||||
Commercial lease financing |
99 | 113 | 131 | 122 | 109 | |||||||||||||||
Total consumer loans |
222 | 233 | 212 | 193 | 175 | |||||||||||||||
Total nonperforming loans |
2,065 | 2,187 | 2,290 | 2,185 | 1,735 | |||||||||||||||
Nonperforming loans held for sale |
195 | 116 | 304 | 145 | 72 | |||||||||||||||
OREO and other nonperforming assets |
168 | 207 | 205 | 218 | 187 | |||||||||||||||
Total nonperforming assets |
$ | 2,428 | $ | 2,510 | $ | 2,799 | $ | 2,548 | $ | 1,994 | ||||||||||
Restructured loans included in nonperforming
loans (a) |
$ | 226 | $ | 364 | $ | 65 | $ | 7 | | |||||||||||
Nonperforming assets from discontinued operations
education lending business |
43 | 14 | 12 | 3 | $ | 3 | ||||||||||||||
Nonperforming loans to period-end portfolio loans |
3.69 | % | 3.72 | % | 3.68 | % | 3.25 | % | 2.48 | % | ||||||||||
Nonperforming assets to period-end portfolio loans,
plus OREO and other nonperforming assets |
4.31 | 4.25 | 4.46 | 3.77 | 2.84 | |||||||||||||||
(a) | Restructured loans (i.e. troubled debt restructurings) are those for which Key, for reasons related to a borrowers financial difficulties, grants a concession to the borrower that it would not otherwise consider. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance. |
Nonperforming assets decreased during the first quarter of 2010 which represents the
second quarterly decline. Most of the reduction came from nonperforming loans and OREO in the
commercial real estate line of business. These reductions were offset in part by an increase in
nonperforming loans held for sale. As shown in the following table, Keys exit loan portfolio
accounted for $499 million, or 21%, of Keys total nonperforming assets at March 31, 2010, compared
to $599 million, or 24%, at December 31, 2009.
The composition of Keys exit loan portfolio at March 31, 2010, and December 31, 2009, the net
charge-offs recorded on this portfolio for the first quarter of 2010 and the fourth quarter of
2009, and the nonperforming status of these loans at March 31, 2010, and December 31, 2009, are
shown in the following table.
Exit Loan Portfolio from Continuing Operations
Balance on | ||||||||||||||||||||||||||||
Balance | Change | Net Loan | Nonperforming | |||||||||||||||||||||||||
Outstanding | 3-31-10 vs. | Charge-offs | Status | |||||||||||||||||||||||||
in millions | 3-31-10 | 12-31-09 | 12-31-09 | 1Q10 | 4Q09 | 3-31-10 | 12-31-09 | |||||||||||||||||||||
Residential properties homebuilder |
$ | 269 | $ | 379 | $ | (110 | ) | $ | 44 | $ | 53 | $ | 167 | $ | 211 | |||||||||||||
Residential properties held for sale |
40 | 52 | (12 | ) | | | 40 | 52 | ||||||||||||||||||||
Total residential properties |
309 | 431 | (122 | ) | 44 | 53 | 207 | 263 | ||||||||||||||||||||
Marine and RV floor plan |
339 | 427 | (88 | ) | 28 | 16 | 66 | 93 | ||||||||||||||||||||
Commercial lease financing (a) |
2,685 | 2,875 | (190 | ) | 22 | 17 | 191 | 195 | ||||||||||||||||||||
Total commercial loans |
3,333 | 3,733 | (400 | ) | 94 | 86 | 464 | 551 | ||||||||||||||||||||
Home equity Other |
795 | 838 | (43 | ) | 17 | 19 | 18 | 20 | ||||||||||||||||||||
Marine |
2,636 | 2,787 | (151 | ) | 38 | 33 | 16 | 26 | ||||||||||||||||||||
RV and other consumer |
201 | 216 | (15 | ) | 4 | 3 | 1 | 2 | ||||||||||||||||||||
Total consumer loans |
3,632 | 3,841 | (209 | ) | 59 | 55 | 35 | 48 | ||||||||||||||||||||
Total exit loans in loan portfolio |
$ | 6,965 | $ | 7,574 | $ | (609 | ) | $ | 153 | $ | 141 | $ | 499 | $ | 599 | |||||||||||||
Discontinued operations education
lending business |
$ | 6,268 | (b) | $ | 3,957 | $ | 2,311 | $ | 36 | $ | 36 | $ | 42 | $ | 13 | |||||||||||||
(a) | Includes the business aviation, commercial vehicle, office products, construction and industrial leases, and Canadian lease financing portfolios; and all remaining balances related to lease in, lease out; sale in, sale out; service contract leases and qualified technological equipment leases. | |
(b) | Includes loans in Keys education loan securitization trusts consolidated upon the adoption of new consolidation accounting guidance on January 1, 2010. |
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 7
April 21, 2010
Page 7
CAPITAL
Keys risk-based capital ratios included in the following table continued to exceed all
well-capitalized regulatory benchmarks at March 31, 2010.
Capital Ratios
3-31-10 | 12-31-09 | 9-30-09 | 6-30-09 | 3-31-09 | ||||||||||||||||
Tier 1 common equity (a) |
7.53 | % | 7.50 | % | 7.64 | % | 7.36 | % | 5.62 | % | ||||||||||
Tier 1 risk-based capital (a) |
12.96 | 12.75 | 12.61 | 12.57 | 11.22 | |||||||||||||||
Total risk-based capital (a) |
17.11 | 16.95 | 16.65 | 16.67 | 15.18 | |||||||||||||||
Tangible common equity to tangible assets |
7.37 | 7.56 | 7.58 | 7.35 | 6.06 | |||||||||||||||
(a) March 31, 2010 ratio is estimated.
As shown in the preceding table, at March 31, 2010, Key had a Tier 1 common equity ratio
of 7.53%, a Tier 1 risk-based capital ratio of 12.96%, and a tangible common equity ratio of 7.37%.
Transactions that caused the change in Keys outstanding common shares over the past five
quarters are summarized in the following table.
Summary of Changes in Common Shares Outstanding
in thousands | 1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | |||||||||||||||
Shares outstanding at beginning of period |
878,535 | 878,559 | 797,246 | 498,573 | 495,002 | |||||||||||||||
Common shares exchanged for capital securities |
| | 81,278 | 46,338 | | |||||||||||||||
Common shares exchanged for Series A Preferred Stock |
| | | 46,602 | | |||||||||||||||
Common shares issued |
| | | 205,439 | | |||||||||||||||
Shares reissued (returned) under employee benefit plans |
517 | (24 | ) | 35 | 294 | 3,571 | ||||||||||||||
Shares outstanding at end of period |
879,052 | 878,535 | 878,559 | 797,246 | 498,573 | |||||||||||||||
During the first quarter of 2010, Key made a $31 million cash dividend payment to the
U.S. Treasury Department. During 2009, Key made four quarterly dividend payments aggregating $125
million to the U.S. Treasury Department as a participant in the U.S. Treasurys Capital Purchase
Program.
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 8
April 21, 2010
Page 8
LINE OF BUSINESS RESULTS
The following table shows the contribution made by each major business group to Keys
taxable-equivalent revenue from continuing operations and income (loss) from continuing operations
attributable to Key for the periods presented. The specific lines of business that comprise each
of the major business groups are described under the heading Line of Business Descriptions.
During the first quarter of 2010, Key re-aligned its reporting structure for its business groups.
Previously, Consumer Finance consisted mainly of portfolios which were identified as exit or
run-off portfolios and were included in Keys National Banking segment. Effective for all periods
presented, Key is reflecting the results of these exit portfolios in Other Segments. The
automobile dealer floor plan business, previously included in Consumer Finance, has been re-aligned
with the Commercial Banking line of business within the Community Banking segment. In addition,
other previously identified exit portfolios included in the National Banking segment, including
$309 million of homebuilder loans from the Real Estate Capital line of business and $2.685 billion
of commercial leases from the Equipment Finance line of business, have been moved to Other
Segments. For more detailed financial information pertaining to each business group and its
respective lines of business, see the tables at the end of this release.
Major Business Groups
Percent change 1Q10 vs. | ||||||||||||||||||||
dollars in millions | 1Q10 | 4Q09 | 1Q09 | 4Q09 | 1Q09 | |||||||||||||||
Revenue from continuing
operations (TE) |
||||||||||||||||||||
Community Banking |
$ | 599 | $ | 629 | $ | 612 | (4.8 | )% | (2.1 | )% | ||||||||||
National Banking (a) |
376 | 342 | 423 | 9.9 | (11.1 | ) | ||||||||||||||
Other Segments |
96 | 128 | (39 | ) | (25.0 | ) | N/M | |||||||||||||
Total Segments |
1,071 | 1,099 | 996 | (2.5 | ) | 7.5 | ||||||||||||||
Reconciling Items (b) |
11 | 7 | 77 | 57.1 | (85.7 | ) | ||||||||||||||
Total |
$ | 1,082 | $ | 1,106 | $ | 1,073 | (2.2 | )% | .8 | % | ||||||||||
Income (loss) from continuing
operations
attributable to Key |
||||||||||||||||||||
Community Banking |
$ | 5 | $ | (41 | ) | $ | 12 | N/M | (58.3 | )% | ||||||||||
National Banking (a) |
(33 | ) | (211 | ) | (394 | ) | 84.4 | % | 91.6 | |||||||||||
Other Segments |
(46 | ) | (58 | ) | (162 | ) | 20.7 | 71.6 | ||||||||||||
Total Segments |
(74 | ) | (310 | ) | (544 | ) | 76.1 | 86.4 | ||||||||||||
Reconciling Items (b) |
17 | 93 | 85 | (81.7 | ) | (80.0 | ) | |||||||||||||
Total |
$ | (57 | ) | $ | (217 | ) | $ | (459 | ) | 73.7 | % | 87.6 | % | |||||||
(a) | National Bankings results for the first quarter of 2009 include a noncash charge for intangible assets impairment of $196 million ($164 million after tax). | |
(b) | Reconciling Items for the first quarter of 2009 included a $105 million ($65 million after tax) gain from the sale of Keys remaining equity interest in Visa Inc. | |
TE = Taxable Equivalent, N/M = Not Meaningful |
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 9
April 21, 2010
Page 9
Community Banking
Percent change 1Q10 vs. | ||||||||||||||||||||
dollars in millions | 1Q10 | 4Q09 | 1Q09 | 4Q09 | 1Q09 | |||||||||||||||
Summary of operations |
||||||||||||||||||||
Net interest income (TE) |
$ | 412 | $ | 431 | $ | 423 | (4.4 | )% | (2.6 | )% | ||||||||||
Noninterest income |
187 | 198 | 189 | (5.6 | ) | (1.1 | ) | |||||||||||||
Total revenue (TE) |
599 | 629 | 612 | (4.8 | ) | (2.1 | ) | |||||||||||||
Provision for loan losses |
142 | 230 | 141 | (38.3 | ) | .7 | ||||||||||||||
Noninterest expense |
468 | 492 | 468 | (4.9 | ) | | ||||||||||||||
Income (loss) before income taxes (TE) |
(11 | ) | (93 | ) | 3 | 88.2 | N/M | |||||||||||||
Allocated income taxes and TE adjustments |
(16 | ) | (52 | ) | (9 | ) | 69.2 | % | (77.8 | ) | ||||||||||
Net income (loss) attributable to Key |
$ | 5 | $ | (41 | ) | $ | 12 | N/M | (58.3 | )% | ||||||||||
Average balances |
||||||||||||||||||||
Loans and leases |
$ | 27,769 | $ | 28,321 | $ | 31,275 | (1.9 | )% | (11.2 | )% | ||||||||||
Total assets |
30,873 | 31,048 | 34,171 | (.6 | ) | (9.7 | ) | |||||||||||||
Deposits |
51,459 | 52,640 | 51,655 | (2.2 | ) | (.4 | ) | |||||||||||||
Assets under management at period end |
$ | 18,248 | $ | 17,709 | $ | 14,205 | 3.0 | % | 28.5 | % | ||||||||||
TE = Taxable Equivalent, N/M = Not Meaningful
Additional Community Banking Data
Percent change 1Q10 vs. | ||||||||||||||||||||
dollars in millions | 1Q10 | 4Q09 | 1Q09 | 4Q09 | 1Q09 | |||||||||||||||
Average deposits outstanding |
||||||||||||||||||||
NOW and money market deposit accounts |
$ | 18,650 | $ | 17,930 | $ | 17,376 | 4.0 | % | 7.3 | % | ||||||||||
Savings deposits |
1,814 | 1,785 | 1,721 | 1.6 | 5.4 | |||||||||||||||
Certificates of deposit ($100,000 or more) |
7,363 | 8,165 | 8,491 | (9.8 | ) | (13.3 | ) | |||||||||||||
Other time deposits |
12,559 | 13,708 | 14,723 | (8.4 | ) | (14.7 | ) | |||||||||||||
Deposits in foreign office |
502 | 529 | 714 | (5.1 | ) | (29.7 | ) | |||||||||||||
Noninterest-bearing deposits |
10,571 | 10,523 | 8,630 | .5 | 22.5 | |||||||||||||||
Total deposits |
$ | 51,459 | $ | 52,640 | $ | 51,655 | (2.2 | )% | (.4 | )% | ||||||||||
Home equity loans |
||||||||||||||||||||
Average balance |
$ | 9,967 | $ | 10,101 | $ | 10,277 | ||||||||||||||
Weighted-average loan-to-value ratio (at date of origination) |
70 | % | 70 | % | 70 | % | ||||||||||||||
Percent first lien positions |
53 | 53 | 53 | |||||||||||||||||
Other data |
||||||||||||||||||||
Branches |
1,014 | 1,007 | 989 | |||||||||||||||||
Automated teller machines |
1,501 | 1,495 | 1,479 | |||||||||||||||||
Community Banking Summary of Operations
Community Banking recorded net income attributable to Key of $5 million for the first quarter
of 2010, compared to net income attributable to Key of $12 million for the year-ago quarter.
Decreases in net interest income and noninterest income caused the decline.
Taxable-equivalent net interest income declined by $11 million, or 3%, from the first quarter
of 2009, due to a reduction in average earning assets which declined by $4 billion or 11%, from the
year-ago quarter. Average deposits declined slightly from the first quarter of 2009. The mix of
deposits has changed reflecting strong growth in noninterest-bearing deposits and negotiable order
of withdrawal (NOW) accounts, as higher-costing certificates of deposit originated in prior years
mature and reprice to current market rates.
Noninterest income decreased by $2 million, or 1%, from the year-ago quarter, due to lower
service charges on deposits and an increase in the reserve for credit losses from client
derivatives. These factors were partially offset by higher income from trust and investment
services, letter of credit fees and electronic banking fees. Assets under management have
increased 29% from the same period one year ago.
The provision for loan losses increased slightly compared to the first quarter of 2009.
Community Bankings provision for loan losses for the first quarter of 2010 exceeded its net
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 10
April 21, 2010
Page 10
loan
charge-offs by $26 million as consumer and business clients continue to experience lingering
effects from the economic downturn and elevated unemployment levels.
Noninterest expense remained flat from the year-ago quarter. Lower personnel costs,
marketing, office supplies and printing, and a reduction in the provision for losses on
lending-related commitments were offset by increases in FDIC deposit insurance, occupancy cost, and
various other expense categories.
National Banking
Percent change 1Q10 vs. | ||||||||||||||||||||
dollars in millions | 1Q10 | 4Q09 | 1Q09 | 4Q09 | 1Q09 | |||||||||||||||
Summary of operations |
||||||||||||||||||||
Net interest income (TE) |
$ | 197 | $ | 210 | $ | 224 | (6.2 | )% | (12.1 | )% | ||||||||||
Noninterest income |
179 | 132 | 199 | 35.6 | (10.1 | ) | ||||||||||||||
Total revenue (TE) |
376 | 342 | 423 | 9.9 | (11.1 | ) | ||||||||||||||
Provision for loan losses |
161 | 382 | 511 | (57.9 | ) | (68.5 | ) | |||||||||||||
Noninterest expense (a) |
270 | 299 | 428 | (9.7 | ) | (36.9 | ) | |||||||||||||
Income (loss) before income taxes (TE) |
(55 | ) | (339 | ) | (516 | ) | 83.8 | 89.3 | ||||||||||||
Allocated income taxes and TE adjustments |
(22 | ) | (128 | ) | (121 | ) | 82.8 | 81.8 | ||||||||||||
Net income (loss) |
(33 | ) | (211 | ) | (395 | ) | 84.4 | 91.6 | ||||||||||||
Less: Net income (loss) attributable to noncontrolling interests |
| | (1 | ) | | N/M | ||||||||||||||
Net income (loss) attributable to Key |
$ | (33 | ) | $ | (211 | ) | $ | (394 | ) | 84.4 | % | 91.6 | % | |||||||
Average balances |
||||||||||||||||||||
Loans and leases |
$ | 22,440 | $ | 24,011 | $ | 29,697 | (6.5 | )% | (24.4 | )% | ||||||||||
Loans held for sale |
240 | 431 | 482 | (44.3 | ) | (50.2 | ) | |||||||||||||
Total assets |
26,269 | 28,253 | 37,208 | (7.0 | ) | (29.4 | ) | |||||||||||||
Deposits |
12,398 | 13,241 | 11,945 | (6.4 | ) | 3.8 | ||||||||||||||
Assets under management at period end |
$ | 47,938 | $ | 49,230 | $ | 45,959 | (2.6 | )% | 4.3 | % | ||||||||||
(a) | National Bankings results for the first quarter of 2009 include a noncash charge for intangible assets impairment of $196 million ($164 million after tax). | |
TE = Taxable Equivalent, N/M = Not Meaningful |
National Banking Summary of Operations
National Banking recorded a net loss attributable to Key of $33 million
for the first quarter of 2010, compared to a $394 million net loss attributable to Key for the same period one year ago. During the first quarter of 2009, results
were adversely affected by an intangible assets impairment charge of $196 million ($164 million
after tax). Also contributing to the improvement in the first quarter of 2010 was a substantial
decrease in the provision for loan losses, partially offset by lower net interest income and
noninterest income.
Taxable-equivalent net interest income decreased by $27 million, or 12%, from the first
quarter of 2009, primarily due to lower earning assets, partially offset by improved earning asset
spreads. Average earning assets decreased by $8 billion, or 24%, from the year-ago quarter,
reflecting reductions in the commercial and held-for-sale portfolios.
Noninterest income declined by $20 million, or 10%, from the first quarter of 2009. Dealer
trading and derivatives income decreased $26 million, primarily due to an increase in the reserve
for credit losses from client derivatives of $21 million. Operating lease revenue was also $8
million lower than the first quarter of 2009.
The provision for loan losses in the first quarter of 2010 was $161 million compared to $511
million for the same period one year ago. For the second quarter in a row, National Banking
experienced an improvement in nonperforming assets.
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 11
April 21, 2010
Page 11
Excluding the intangible assets impairment charge in the first quarter of 2009, noninterest
expense increased by $38 million, or 16%, from the first quarter of 2009, caused primarily by
higher costs associated with OREO.
Other Segments
Other Segments consist of Corporate Treasury, Keys Principal Investing unit and various exit
portfolios which were previously included within the National Banking segment. These exit
portfolios were moved to Other Segments during the first quarter of 2010. Prior periods have been
adjusted to conform with the current reporting of the financial information for each segment.
Other Segments generated a net loss attributable to Key of $46 million for the first quarter of
2010, compared to a net loss attributable to Key of $162 million for the same period last year.
These results reflect net gains from principal investing attributable to Key of $21 million during
the current quarter, compared to net losses of $63 million in the year-ago quarter as well as a
reduction in the loan loss provision for the exit portfolios.
Line of Business Descriptions
Community Banking
Regional Banking provides individuals with branch-based deposit and investment products, personal
finance services and loans, including residential mortgages, home equity and various types of
installment loans. This line of business also provides small businesses with deposit, investment
and credit products, and business advisory services.
Regional Banking also offers financial, estate and retirement planning, and asset management
services to assist high-net-worth clients with their banking, trust, portfolio management,
insurance, charitable giving and related needs.
Commercial Banking provides midsize businesses with products and services that include commercial
lending, cash management, equipment leasing, investment and employee benefit programs, succession
planning, access to capital markets, derivatives and foreign exchange.
National Banking
Real Estate Capital and Corporate Banking Services consists of two business units, Real Estate
Capital and Corporate Banking Services.
Real Estate Capital is a national business that provides construction and interim lending,
permanent debt placements and servicing, equity and investment banking, and other commercial
banking products and services to developers, brokers and owner-investors. This unit deals
primarily with nonowner-occupied properties (i.e., generally properties in which at least 50% of
the debt service is provided by rental income from nonaffiliated third parties). Real Estate
Capital emphasizes providing clients with finance solutions through access to the capital markets.
Corporate Banking Services provides cash management, interest rate derivatives, and foreign
exchange products and services to clients served by both the Community Banking and National Banking
groups. Through its Public Sector and Financial Institutions businesses, Corporate Banking
Services also provides a full array of commercial banking products and services to government and
not-for-profit entities, and to community banks. A variety of cash management services, including
the processing of tuition payments for private schools, are provided through the Global Treasury
Management unit.
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 12
April 21, 2010
Page 12
Equipment Finance meets the equipment leasing needs of companies worldwide and provides equipment
manufacturers, distributors and resellers with financing options for their clients. Lease
financing receivables and related revenues are assigned to other lines of business (primarily
Institutional and Capital Markets, and Commercial Banking) if those businesses are principally
responsible for maintaining the relationship with the client.
Institutional and Capital Markets, through its KeyBanc Capital Markets unit, provides commercial
lending, treasury management, investment banking, derivatives, foreign exchange, equity and debt
underwriting and trading, and syndicated finance products and services to large corporations and
middle-market companies.
Through its Victory Capital Management unit, Institutional and Capital Markets also manages or
offers advice regarding investment portfolios for a national client base, including corporations,
labor unions, not-for-profit organizations, governments and individuals. These portfolios may be
managed in separate accounts, common funds or the Victory family of mutual funds.
Cleveland-based KeyCorp (NYSE: KEY) is one of the nations largest bank-based financial
services companies, with assets of approximately $95 billion at March 31, 2010. Key companies
provide investment management, retail and commercial banking, and investment banking products and
services to individuals and companies throughout the United States and, for certain businesses,
internationally. In 2009, KeyBank was awarded its seventh consecutive Outstanding rating for
economic development achievements under the Community Reinvestment Act, the only national bank
among the 50 largest in the United States to achieve this distinction from the Office of the
Comptroller of the Currency. Key has also been recognized for excellence in numerous areas of the
multi-channel customer banking experience, including Corporate Insights 2009 Bank Monitor for
online service. For more information about Key, visit https://www.key.com/.
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 13
April 21, 2010
Page 13
Notes to Editors:
A live Internet broadcast of KeyCorps conference call to discuss quarterly results and currently
anticipated earnings trends and to answer analysts questions can be accessed through the Investor
Relations section at https://www.key.com/ir at 9:00 a.m. ET, on Wednesday, April 21, 2010.
An audio replay of the call will be available through April 28, 2010.
For up-to-date company information, media contacts and facts and figures about Keys lines of
business visit our Media Newsroom at https://www.key.com/newsroom.
This earnings release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements about Keys financial condition,
results of operations, earnings outlook, asset quality trends and profitability. Forward-looking
statements are not historical facts but instead represent only managements current expectations
and forecasts regarding future events, many of which, by their nature, are inherently uncertain and
outside of Keys control. Keys actual results and financial condition may differ, possibly
materially, from the anticipated results and financial condition indicated in these forward-looking
statements. Factors that could cause Keys actual results to differ materially from those
described in the forward-looking statements can be found in Keys Annual Report on Form 10-K for
the year ended December 31, 2009, which has been filed with the Securities and Exchange Commission
and is available on Keys website (www.key.com) and on the Securities and Exchange Commissions
website (www.sec.gov). Forward-looking statements are not guarantees of future performance and
should not be relied upon as representing managements views as of any subsequent date. Key does
not undertake any obligation to update the forward-looking statements to reflect the impact of
circumstances or events that may arise after the date of the forward-looking statements.
###
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 14
April 21, 2010
Page 14
Financial Highlights
(dollars in millions, except per share amounts)
(dollars in millions, except per share amounts)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Summary of operations |
||||||||||||
Net interest income (TE) |
$ | 632 | $ | 637 | $ | 595 | (a) | |||||
Noninterest income |
450 | 469 | 478 | |||||||||
Total revenue (TE) |
1,082 | 1,106 | 1,073 | |||||||||
Provision for loan losses |
413 | 756 | 847 | |||||||||
Noninterest expense |
785 | 871 | 927 | |||||||||
Loss from continuing operations attributable to Key |
(57 | ) | (217 | ) | (459 | ) | ||||||
Income (loss) from discontinued operations, net of taxes (b) |
2 | (7 | ) | (29 | ) | |||||||
Net loss attributable to Key |
(55 | ) | (224 | ) | (488 | ) (a) | ||||||
Loss from continuing operations attributable to Key common shareholders |
$ | (98 | ) | $ | (258 | ) | $ | (507 | ) | |||
Income (loss) from discontinued operations, net of taxes (b) |
2 | (7 | ) | (29 | ) | |||||||
Net loss attributable to Key common shareholders |
(96 | ) | (265 | ) | (536 | ) (a) | ||||||
Per common share |
||||||||||||
Loss from continuing operations attributable to Key common shareholders |
$ | (.11 | ) | $ | (.30 | ) | $ | (1.03 | ) | |||
Income (loss) from discontinued operations, net of taxes (b) |
| (.01 | ) | (.06 | ) | |||||||
Net loss attributable to Key common shareholders |
(.11 | ) | (.30 | ) | (1.09 | ) | ||||||
Loss from continuing operations attributable to Key common shareholders assuming dilution |
(.11 | ) | (.30 | ) | (1.03 | ) | ||||||
Income (loss) from discontinued operations, net of taxes assuming dilution (b) |
| (.01 | ) | (.06 | ) | |||||||
Net loss attributable to Key common shareholders assuming dilution |
(.11 | ) | (.30 | ) | (1.09 | ) (a) | ||||||
Cash dividends paid |
.01 | .01 | .0625 | |||||||||
Book value at period end |
9.01 | 9.04 | 13.82 | |||||||||
Tangible book value at period end |
7.91 | 7.94 | 11.76 | |||||||||
Market price at period end |
7.75 | 5.55 | 7.87 | |||||||||
Performance ratios From continuing operations: |
||||||||||||
Return on average total assets |
(.26 | )% | (.94 | )% | (1.87 | )% | ||||||
Return on average common equity |
(4.95 | ) | (12.60 | ) | (28.26 | ) | ||||||
Net interest margin (TE) |
3.19 | 3.04 | 2.79 | (a) | ||||||||
Performance ratios From consolidated operations: |
||||||||||||
Return on average total assets |
(.23 | )% | (.93 | )% | (1.91 | )% (a) | ||||||
Return on average common equity |
(4.85 | ) | (12.94 | ) | (29.87 | ) (a) | ||||||
Net interest margin (TE) |
3.13 | 3.00 | 2.77 | |||||||||
Capital ratios at period end |
||||||||||||
Key shareholders equity to assets |
11.17 | % | 11.43 | % | 10.19 | % | ||||||
Tangible Key shareholders equity to tangible assets |
10.26 | 10.50 | 9.23 | |||||||||
Tangible common equity to tangible assets |
7.37 | 7.56 | 6.06 | |||||||||
Tier 1 common equity (c) |
7.53 | 7.50 | 5.62 | |||||||||
Tier 1 risk-based capital (c) |
12.96 | 12.75 | 11.22 | |||||||||
Total risk-based capital (c) |
17.11 | 16.95 | 15.18 | |||||||||
Leverage (c) |
11.56 | 11.72 | 11.19 | |||||||||
Asset quality from continuing operations |
||||||||||||
Net loan charge-offs |
$ | 522 | $ | 708 | $ | 460 | ||||||
Net loan charge-offs to average loans |
3.67 | % | 4.64 | % | 2.60 | % | ||||||
Allowance for loan losses |
$ | 2,425 | $ | 2,534 | $ | 2,016 | ||||||
Allowance for credit losses |
2,544 | 2,655 | 2,070 | |||||||||
Allowance for loan losses to period-end loans |
4.34 | % | 4.31 | % | 2.88 | % | ||||||
Allowance for credit losses to period-end loans |
4.55 | 4.52 | 2.96 | |||||||||
Allowance for loan losses to nonperforming loans |
117.43 | 115.87 | 116.20 | |||||||||
Allowance for credit losses to nonperforming loans |
123.20 | 121.40 | 119.31 | |||||||||
Nonperforming loans at period end |
$ | 2,065 | $ | 2,187 | $ | 1,735 | ||||||
Nonperforming assets at period end |
2,428 | 2,510 | 1,994 | |||||||||
Nonperforming loans to period-end portfolio loans |
3.69 | % | 3.72 | % | 2.48 | % | ||||||
Nonperforming assets to period-end portfolio loans plus |
||||||||||||
OREO and other nonperforming assets |
4.31 | 4.25 | 2.84 | |||||||||
Trust and brokerage assets |
||||||||||||
Assets under management |
$ | 66,186 | $ | 66,939 | $ | 60,164 | ||||||
Nonmanaged and brokerage assets |
19,201 | 27,190 | 21,786 | |||||||||
Other data |
||||||||||||
Average full-time equivalent employees |
15,772 | 15,973 | 17,468 | |||||||||
Branches |
1,014 | 1,007 | 989 | |||||||||
Taxable-equivalent adjustment |
$ | 7 | $ | 7 | $ | 6 | ||||||
(a) | The following table entitled GAAP to Non-GAAP Reconciliations presents certain earnings data and performance ratios, excluding charges related to intangible assets impairment, and the tax treatment of certain leveraged lease financing transactions disallowed by the IRS. The table also shows the computations of certain financial measures related to tangible common equity and Tier 1 common equity. The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. | |
(b) | In September 2009, management made the decision to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. In April 2009, management made the decision to curtail the operations of Austin Capital Management, Ltd., an investment subsidiary that specializes in managing hedge fund investments for its institutional customer base. As a result of these decisions, Key has accounted for these businesses as discontinued operations. | |
(c) | 3-31-10 ratio is estimated. | |
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles |
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 15
April 21, 2010
Page 15
GAAP to Non-GAAP Reconciliations
(dollars in millions, except per share amounts)
(dollars in millions, except per share amounts)
The table below presents certain earnings data and performance ratios, excluding (credits) charges
related to intangible assets impairment and the tax treatment of certain leveraged lease financing
transactions disallowed by the IRS. Management believes that eliminating the effects of
significant items that are generally nonrecurring facilitates the analysis of results by presenting
them on a more comparable basis.
The table also shows the computations of certain financial measures related to tangible common
equity and Tier 1 common equity. The tangible common equity ratio has become a focus of some
investors and management believes that this ratio may assist investors in analyzing Keys capital
position absent the effects of intangible assets and preferred stock. Traditionally, the banking
regulators have assessed bank and bank holding company capital adequacy based on both the amount
and composition of capital, the calculation of which is prescribed in federal banking regulations.
As a result of the Supervisory Capital Assessment Program, the Federal Reserve has focused its
assessment of capital adequacy on a component of Tier 1 capital, known as Tier 1 common equity.
Because the Federal Reserve has long indicated that voting common shareholders equity (essentially
Tier 1 capital less preferred stock, qualifying capital securities and noncontrolling interests in
subsidiaries) generally should be the dominant element in Tier 1 capital, such a focus is
consistent with existing capital adequacy guidelines and does not imply a new or ongoing capital
standard.
Because the Tier 1 common equity is neither formally defined by GAAP nor prescribed in amount by
federal banking regulations, this measure is considered to be a non-GAAP financial measure. Since
analysts and banking regulators may assess Keys capital adequacy using tangible common equity and
Tier 1 common equity, management believes it is useful to provide investors the ability to assess
Keys capital adequacy on these same bases. The table also reconciles the GAAP performance
measures to the corresponding non-GAAP measures.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and
are not audited. To mitigate these limitations, Key has procedures in place to ensure that these
measures are calculated using the appropriate GAAP or regulatory components and to ensure that
Keys performance is properly reflected to facilitate period-to-period comparisons. Although these
non-GAAP financial measures are frequently used by investors in the evaluation of a company, they
have limitations as analytical tools, and should not be considered in isolation, or as a substitute
for analyses of results as reported under GAAP.
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Net income (loss) |
||||||||||||
Net income (loss) attributable to Key (GAAP) |
$ | (55 | ) | $ | (224 | ) | $ | (488 | ) | |||
Charges (credits) related to intangible assets impairment, after tax |
| | 164 | |||||||||
Charges (credits) related to leveraged lease tax litigation, after tax |
| (80 | ) | | ||||||||
Net income (loss) attributable to Key, excluding charges (credits) related to intangible
assets impairment and leveraged lease tax litigation (non-GAAP) |
$ | (55 | ) | $ | (304 | ) | $ | (324 | ) | |||
Preferred dividends and amortization of discount on preferred stock |
$ | 41 | $ | 41 | $ | 48 | ||||||
Net income (loss) attributable to Key common shareholders (GAAP) |
$ | (96 | ) | $ | (265 | ) | $ | (536 | ) | |||
Net income (loss) attributable to Key common shareholders, excluding charges (credits) related to
intangible assets impairment and leveraged lease tax litigation (non-GAAP) |
(96 | ) | (345 | ) | (372 | ) | ||||||
Per common share |
||||||||||||
Net income (loss) attributable to Key common shareholders assuming dilution (GAAP) |
$ | (.11 | ) | $ | (.30 | ) | $ | (1.09 | ) | |||
Net income (loss) attributable to Key common shareholders, excluding charges (credits) related to intangible
assets impairment and leveraged lease tax litigation assuming dilution
(non-GAAP) |
(.11 | ) | (.39 | ) | (.76 | ) | ||||||
Performance ratios from consolidated operations |
||||||||||||
Return on average total assets: (a) |
||||||||||||
Average total assets |
$ | 95,578 | $ | 95,975 | $ | 103,815 | ||||||
Return on average total assets (GAAP) |
(.23 | )% | (.93 | )% | (1.91 | )% | ||||||
Return on average total assets, excluding charges (credits) related to intangible assets impairment
and leveraged lease tax litigation (non-GAAP) |
(.23 | ) | (1.26 | ) | (1.27 | ) | ||||||
Return on average common equity: (a) |
||||||||||||
Average common equity |
$ | 8,024 | $ | 8,125 | $ | 7,277 | ||||||
Return on average common equity (GAAP) |
(4.85 | )% | (12.94 | )% | (29.87 | )% | ||||||
Return on average common equity, excluding charges (credits) related to intangible assets
impairment and leveraged lease tax litigation (non-GAAP) |
(4.85 | ) | (16.85 | ) | (20.73 | ) | ||||||
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 16
April 21, 2010
Page 16
GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions, except per share amounts)
(dollars in millions, except per share amounts)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Tangible common equity to tangible assets at period end |
||||||||||||
Key shareholders equity (GAAP) |
$ | 10,641 | $ | 10,663 | $ | 9,968 | ||||||
Less: Intangible assets |
963 | 967 | 1,029 | (d) | ||||||||
Preferred Stock, Series B |
2,434 | 2,430 | 2,418 | |||||||||
Preferred Stock, Series A |
291 | 291 | 658 | |||||||||
Tangible common equity (non-GAAP) |
$ | 6,953 | $ | 6,975 | $ | 5,863 | ||||||
Total assets (GAAP) |
$ | 95,303 | $ | 93,287 | $ | 97,834 | ||||||
Less: Intangible assets |
963 | 967 | 1,029 | (d) | ||||||||
Tangible assets (non-GAAP) |
$ | 94,340 | $ | 92,320 | $ | 96,805 | ||||||
Tangible common equity to tangible assets ratio (non-GAAP) |
7.37 | % | 7.56 | % | 6.06 | % | ||||||
Tier 1 common equity at period end |
||||||||||||
Key shareholders equity (GAAP) |
$ | 10,641 | $ | 10,663 | $ | 9,968 | ||||||
Qualifying capital securities |
1,791 | 1,791 | 2,582 | |||||||||
Less: Goodwill |
917 | 917 | 917 | |||||||||
Accumulated other comprehensive income (loss) (b) |
(25 | ) | (48 | ) | 111 | |||||||
Other assets (c) |
765 | 632 | 184 | |||||||||
Total Tier 1 capital (regulatory) |
10,775 | 10,953 | 11,338 | |||||||||
Less: Qualifying capital securities |
1,791 | 1,791 | 2,582 | |||||||||
Preferred Stock, Series B |
2,434 | 2,430 | 2,418 | |||||||||
Preferred Stock, Series A |
291 | 291 | 658 | |||||||||
Total Tier 1 common equity (non-GAAP) |
$ | 6,259 | $ | 6,441 | $ | 5,680 | ||||||
Net risk-weighted assets (regulatory) (c),(e) |
$ | 83,171 | $ | 85,881 | $ | 101,077 | ||||||
Tier 1 common equity ratio (non-GAAP) (e) |
7.53 | % | 7.50 | % | 5.62 | % | ||||||
(a) | Income statement amount has been annualized in calculation of percentage. | |
(b) | Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities), net gains or losses on cash flow hedges, and amounts resulting from the December 31, 2006, adoption and subsequent application of the applicable accounting guidance for defined benefit and other postretirement plans. | |
(c) | Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed deferred tax assets of $651 million at March 31, 2010, and $514 million at December 31, 2009, disallowed intangible assets (excluding goodwill), and deductible portions of nonfinancial equity investments. | |
(d) | Includes $2 million of other intangible assets classified as discontinued assets on the balance sheet. | |
(e) | 3-31-10 amount or ratio is estimated. |
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 17
April 21, 2010
Page 17
Consolidated Balance Sheets
(dollars in millions)
(dollars in millions)
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
ASSETS |
||||||||||||
Loans |
$ | 55,913 | $ | 58,770 | $ | 70,003 | ||||||
Loans held for sale |
556 | 443 | 671 | |||||||||
Securities available for sale |
16,553 | 16,641 | 8,363 | |||||||||
Held-to-maturity securities |
22 | 24 | 25 | |||||||||
Trading account assets |
1,034 | 1,209 | 1,279 | |||||||||
Short-term investments |
4,345 | 1,743 | 2,917 | |||||||||
Other investments |
1,525 | 1,488 | 1,464 | |||||||||
Total earning assets |
79,948 | 80,318 | 84,722 | |||||||||
Allowance for loan losses |
(2,425 | ) | (2,534 | ) | (2,016 | ) | ||||||
Cash and due from banks |
619 | 471 | 624 | |||||||||
Premises and equipment |
872 | 880 | 847 | |||||||||
Operating lease assets |
652 | 716 | 889 | |||||||||
Goodwill |
917 | 917 | 917 | |||||||||
Other intangible assets |
46 | 50 | 110 | |||||||||
Corporate-owned life insurance |
3,087 | 3,071 | 2,994 | |||||||||
Derivative assets |
1,063 | 1,094 | 1,707 | |||||||||
Accrued income and other assets |
4,150 | 4,096 | 2,615 | |||||||||
Discontinued assets |
6,374 | 4,208 | 4,425 | |||||||||
Total assets |
$ | 95,303 | $ | 93,287 | $ | 97,834 | ||||||
LIABILITIES |
||||||||||||
Deposits in domestic offices: |
||||||||||||
NOW and money market deposit accounts |
$ | 25,068 | $ | 24,341 | $ | 23,599 | ||||||
Savings deposits |
1,873 | 1,807 | 1,795 | |||||||||
Certificates of deposit ($100,000 or more) |
10,188 | 10,954 | 13,250 | |||||||||
Other time deposits |
12,010 | 13,286 | 14,791 | |||||||||
Total interest-bearing deposits |
49,139 | 50,388 | 53,435 | |||||||||
Noninterest-bearing deposits |
15,364 | 14,415 | 11,641 | |||||||||
Deposits in foreign office interest-bearing |
646 | 768 | 801 | |||||||||
Total deposits |
65,149 | 65,571 | 65,877 | |||||||||
Federal funds purchased and securities
sold under repurchase agreements |
1,927 | 1,742 | 1,565 | |||||||||
Bank notes and other short-term borrowings |
446 | 340 | 2,285 | |||||||||
Derivative liabilities |
1,103 | 1,012 | 927 | |||||||||
Accrued expense and other liabilities |
2,089 | 2,007 | 1,891 | |||||||||
Long-term debt |
11,177 | 11,558 | 14,978 | |||||||||
Discontinued liabilities |
2,490 | 124 | 137 | |||||||||
Total liabilities |
84,381 | 82,354 | 87,660 | |||||||||
EQUITY |
||||||||||||
Preferred stock, Series A |
291 | 291 | 658 | |||||||||
Preferred stock, Series B |
2,434 | 2,430 | 2,418 | |||||||||
Common shares |
946 | 946 | 584 | |||||||||
Common stock warrant |
87 | 87 | 87 | |||||||||
Capital surplus |
3,724 | 3,734 | 2,464 | |||||||||
Retained earnings |
5,098 | 5,158 | 6,160 | |||||||||
Treasury stock, at cost |
(1,958 | ) | (1,980 | ) | (2,500 | ) | ||||||
Accumulated other comprehensive income (loss) |
19 | (3 | ) | 97 | ||||||||
Key shareholders equity |
10,641 | 10,663 | 9,968 | |||||||||
Noncontrolling interests |
281 | 270 | 206 | |||||||||
Total equity |
10,922 | 10,933 | 10,174 | |||||||||
Total liabilities and equity |
$ | 95,303 | $ | 93,287 | $ | 97,834 | ||||||
Common shares outstanding (000) |
879,052 | 878,535 | 498,573 | |||||||||
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 18
April 21, 2010
Page 18
Consolidated Statements of Income
(dollars in millions, except per share amounts)
(dollars in millions, except per share amounts)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Interest income |
||||||||||||
Loans |
$ | 710 | $ | 749 | $ | 840 | ||||||
Loans held for sale |
4 | 6 | 8 | |||||||||
Securities available for sale |
150 | 150 | 100 | |||||||||
Held-to-maturity securities |
1 | | 1 | |||||||||
Trading account assets |
11 | 12 | 13 | |||||||||
Short-term investments |
2 | 3 | 3 | |||||||||
Other investments |
14 | 13 | 12 | |||||||||
Total interest income |
892 | 933 | 977 | |||||||||
Interest expense |
||||||||||||
Deposits |
212 | 246 | 300 | |||||||||
Federal funds purchased and securities sold
under repurchase agreements |
1 | 1 | 1 | |||||||||
Bank notes and other short-term borrowings |
3 | 3 | 6 | |||||||||
Long-term debt |
51 | 53 | 81 | |||||||||
Total interest expense |
267 | 303 | 388 | |||||||||
Net interest income |
625 | 630 | 589 | |||||||||
Provision for loan losses |
413 | 756 | 847 | |||||||||
Net interest income (expense) after provision for loan losses |
212 | (126 | ) | (258 | ) | |||||||
Noninterest income |
||||||||||||
Trust and investment services income |
114 | 117 | 110 | |||||||||
Service charges on deposit accounts |
76 | 82 | 82 | |||||||||
Operating lease income |
47 | 52 | 61 | |||||||||
Letter of credit and loan fees |
40 | 52 | 38 | |||||||||
Corporate-owned life insurance income |
28 | 36 | 27 | |||||||||
Net securities gains (losses) |
3 | (a) | 1 | (a) | (14 | ) | ||||||
Electronic banking fees |
27 | 27 | 24 | |||||||||
Gains on leased equipment |
8 | 15 | 26 | |||||||||
Insurance income |
18 | 16 | 18 | |||||||||
Net gains (losses) from loan sales |
4 | (5 | ) | 7 | ||||||||
Net gains (losses) from principal investing |
37 | 80 | (72 | ) | ||||||||
Investment banking and capital markets income (loss) |
9 | (47 | ) | 17 | ||||||||
Gain from sale/redemption of Visa Inc. shares |
| | 105 | |||||||||
Gain (loss) related to exchange of common shares
for capital securities |
| | | |||||||||
Other income |
39 | 43 | 49 | |||||||||
Total noninterest income |
450 | 469 | 478 | |||||||||
Noninterest expense |
||||||||||||
Personnel |
362 | 400 | 359 | |||||||||
Net occupancy |
66 | 67 | 66 | |||||||||
Operating lease expense |
39 | 50 | 50 | |||||||||
Computer processing |
47 | 49 | 47 | |||||||||
Professional fees |
38 | 63 | 34 | |||||||||
FDIC assessment |
37 | 37 | 30 | |||||||||
OREO expense, net |
32 | 25 | 6 | |||||||||
Equipment |
24 | 25 | 22 | |||||||||
Marketing |
13 | 22 | 14 | |||||||||
Provision (credit) for losses on lending-related commitments |
(2 | ) | 27 | | ||||||||
Intangible assets impairment |
| | 196 | |||||||||
Other expense |
129 | 106 | 103 | |||||||||
Total noninterest expense |
785 | 871 | 927 | |||||||||
Income (loss) from continuing operations before income taxes |
(123 | ) | (528 | ) | (707 | ) | ||||||
Income taxes |
(82 | ) | (347 | ) | (238 | ) | ||||||
Income (loss) from continuing operations |
(41 | ) | (181 | ) | (469 | ) | ||||||
Income (loss) from discontinued operations, net of taxes |
2 | (7 | ) | (29 | ) | |||||||
Net
income (loss) |
(39 | ) | (188 | ) | (498 | ) | ||||||
Less: Net income (loss) attributable to noncontrolling interests |
16 | 36 | (10 | ) | ||||||||
Net income (loss) attributable to Key |
$ | (55 | ) | $ | (224 | ) | $ | (488 | ) | |||
Income (loss) from continuing operations attributable to Key common shareholders |
$ | (98 | ) | $ | (258 | ) | $ | (507 | ) | |||
Net income (loss) attributable to Key common shareholders |
(96 | ) | (265 | ) | (536 | ) | ||||||
Per common share |
||||||||||||
Income (loss) from continuing operations attributable to Key common shareholders |
$ | (.11 | ) | $ | (.30 | ) | $ | (1.03 | ) | |||
Income (loss) from discontinued operations, net of taxes |
| (.01 | ) | (.06 | ) | |||||||
Net income (loss) attributable to Key common shareholders |
(.11 | ) | (.30 | ) | (1.09 | ) | ||||||
Per common share assuming dilution |
||||||||||||
Income (loss) from continuing operations attributable to Key common shareholders |
$ | (.11 | ) | $ | (.30 | ) | $ | (1.03 | ) | |||
Income (loss) from discontinued operations, net of taxes |
| (.01 | ) | (.06 | ) | |||||||
Net income (loss) attributable to Key common shareholders |
(.11 | ) | (.30 | ) | (1.09 | ) | ||||||
Cash dividends declared per common share |
$ | .01 | $ | .01 | $ | .0625 | ||||||
Weighted-average common shares outstanding (000) |
874,386 | 873,268 | 492,813 | |||||||||
Weighted-average common shares and potential
common shares outstanding (000) |
874,386 | 873,268 | 492,813 | |||||||||
(a) | For the three months ended March 31, 2010, and December 31, 2009, Key did not have impairment losses related to securities. |
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 19
April 21, 2010
Page 19
Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates
From Continuing Operations
(dollars in millions)
From Continuing Operations
(dollars in millions)
First Quarter 2010 | Fourth Quarter 2009 | First Quarter 2009 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||||||||||||||
Balance | Interest (a) | Yield/Rate (a) | Balance | Interest (a) | Yield/Rate (a) | Balance | Interest (a) | Yield/Rate (a) | ||||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||
Loans: (b),(c) |
||||||||||||||||||||||||||||||||||||
Commercial, financial and agricultural |
$ | 18,796 | $ | 222 | 4.78 | % | $ | 19,817 | $ | 232 | 4.63 | % | $ | 26,427 | $ | 278 | 4.26 | % | ||||||||||||||||||
Real estate commercial mortgage |
10,430 | 128 | 4.98 | 10,853 | 132 | 4.84 | 10,965 | g | 140 | 5.20 | ||||||||||||||||||||||||||
Real estate construction |
4,537 | 45 | 4.07 | 5,246 | 62 | 4.70 | 7,511 | g | 84 | 4.54 | ||||||||||||||||||||||||||
Commercial lease financing |
7,195 | 93 | 5.19 | 7,598 | 97 | 5.10 | 8,790 | 94 | 4.28 | |||||||||||||||||||||||||||
Total commercial loans |
40,958 | 488 | 4.82 | 43,514 | 523 | 4.77 | 53,693 | 596 | 4.50 | |||||||||||||||||||||||||||
Real estate residential mortgage |
1,803 | 26 | 5.65 | 1,781 | 26 | 5.80 | 1,776 | 27 | 6.00 | |||||||||||||||||||||||||||
Home equity: |
||||||||||||||||||||||||||||||||||||
Community Banking |
9,967 | 105 | 4.26 | 10,101 | 109 | 4.28 | 10,277 | 114 | 4.49 | |||||||||||||||||||||||||||
Other |
816 | 15 | 7.57 | 862 | 16 | 7.54 | 1,036 | 19 | 7.55 | |||||||||||||||||||||||||||
Total home equity loans |
10,783 | 120 | 4.51 | 10,963 | 125 | 4.53 | 11,313 | 133 | 4.77 | |||||||||||||||||||||||||||
Consumer other Community Banking |
1,162 | 36 | 12.63 | 1,185 | 32 | 11.06 | 1,225 | 32 | 10.56 | |||||||||||||||||||||||||||
Consumer other: |
||||||||||||||||||||||||||||||||||||
Marine |
2,713 | 42 | 6.15 | 2,866 | 44 | 6.16 | 3,331 | 52 | 6.24 | |||||||||||||||||||||||||||
Other |
209 | 4 | 7.76 | 224 | 5 | 7.81 | 274 | 5 | 7.97 | |||||||||||||||||||||||||||
Total consumer other |
2,922 | 46 | 6.27 | 3,090 | 49 | 6.28 | 3,605 | 57 | 6.37 | |||||||||||||||||||||||||||
Total consumer loans |
16,670 | 228 | 5.51 | 17,019 | 232 | 5.44 | 17,919 | 249 | 5.61 | |||||||||||||||||||||||||||
Total loans |
57,628 | 716 | 5.02 | 60,533 | 755 | 4.96 | 71,612 | 845 | 4.77 | |||||||||||||||||||||||||||
Loans held for sale |
390 | 4 | 4.43 | 618 | 6 | 3.35 | 686 | 8 | 4.89 | |||||||||||||||||||||||||||
Securities available for sale (b),(e) |
16,312 | 151 | 3.73 | 15,937 | 151 | 3.82 | 8,127 | 101 | 5.05 | |||||||||||||||||||||||||||
Held-to-maturity securities (b) |
23 | 1 | 8.20 | 24 | | 3.34 | 25 | 1 | 9.84 | |||||||||||||||||||||||||||
Trading account assets |
1,186 | 11 | 3.86 | 1,315 | 12 | 3.72 | 1,348 | 13 | 3.97 | |||||||||||||||||||||||||||
Short-term investments |
2,806 | 2 | .28 | 3,682 | 3 | .23 | 2,450 | 3 | .47 | |||||||||||||||||||||||||||
Other investments (e) |
1,498 | 14 | 3.32 | 1,465 | 13 | 3.21 | 1,523 | 12 | 2.80 | |||||||||||||||||||||||||||
Total earning assets |
79,843 | 899 | 4.54 | 83,574 | 940 | 4.47 | 85,771 | 983 | 4.63 | |||||||||||||||||||||||||||
Allowance for loan losses |
(2,603 | ) | (2,525 | ) | (1,895 | ) | ||||||||||||||||||||||||||||||
Accrued income and other assets |
11,454 | 10,785 | 15,448 | |||||||||||||||||||||||||||||||||
Discontinued assets education lending business |
6,884 | 4,141 | 4,491 | |||||||||||||||||||||||||||||||||
Total assets |
$ | 95,578 | $ | 95,975 | $ | 103,815 | ||||||||||||||||||||||||||||||
Liabilities |
||||||||||||||||||||||||||||||||||||
NOW and money market deposit accounts |
$ | 24,722 | $ | 23 | .37 | $ | 24,910 | 25 | .39 | $ | 23,957 | 38 | .65 | |||||||||||||||||||||||
Savings deposits |
1,828 | | .06 | 1,801 | 1 | .06 | 1,744 | | .09 | |||||||||||||||||||||||||||
Certificates of deposit ($100,000 or more) (f) |
10,538 | 88 | 3.39 | 11,675 | 103 | 3.49 | 12,455 | 121 | 3.93 | |||||||||||||||||||||||||||
Other time deposits |
12,611 | 100 | 3.23 | 13,753 | 117 | 3.39 | 14,737 | 140 | 3.85 | |||||||||||||||||||||||||||
Deposits in foreign office |
693 | 1 | .30 | 711 | | .31 | 1,259 | 1 | .21 | |||||||||||||||||||||||||||
Total interest-bearing deposits |
50,392 | 212 | 1.71 | 52,850 | 246 | 1.84 | 54,152 | 300 | 2.24 | |||||||||||||||||||||||||||
Federal funds purchased and securities
sold under repurchase agreements |
1,790 | 1 | .32 | 1,657 | 1 | .31 | 1,545 | 1 | .31 | |||||||||||||||||||||||||||
Bank notes and other short-term borrowings |
490 | 3 | 2.41 | 418 | 3 | 3.03 | 4,405 | 6 | .58 | |||||||||||||||||||||||||||
Long-term debt (f) |
7,001 | 51 | 3.16 | 8,092 | 53 | 2.91 | 10,431 | 81 | 3.39 | |||||||||||||||||||||||||||
Total interest-bearing liabilities |
59,673 | 267 | 1.83 | 63,017 | 303 | 1.94 | 70,533 | 388 | 2.25 | |||||||||||||||||||||||||||
Noninterest-bearing deposits |
14,941 | 14,655 | 11,094 | |||||||||||||||||||||||||||||||||
Accrued expense and other liabilities |
3,064 | 3,097 | 7,139 | |||||||||||||||||||||||||||||||||
Discontinued liabilities education lending business (d) |
6,884 | 4,141 | 4,491 | |||||||||||||||||||||||||||||||||
Total liabilities |
84,562 | 84,910 | 93,257 | |||||||||||||||||||||||||||||||||
Equity |
||||||||||||||||||||||||||||||||||||
Key shareholders equity |
10,747 | 10,843 | 10,352 | |||||||||||||||||||||||||||||||||
Noncontrolling interests |
269 | 222 | 206 | |||||||||||||||||||||||||||||||||
Total equity |
11,016 | 11,065 | 10,558 | |||||||||||||||||||||||||||||||||
Total liabilities and equity |
$ | 95,578 | $ | 95,975 | $ | 103,815 | ||||||||||||||||||||||||||||||
Interest rate spread (TE) |
2.71 | % | 2.53 | % | 2.38 | % | ||||||||||||||||||||||||||||||
Net interest income (TE) and net interest margin (TE) |
632 | 3.19 | % | 637 | 3.04 | % | 595 | 2.79 | % | |||||||||||||||||||||||||||
TE adjustment (b) |
7 | 7 | 6 | |||||||||||||||||||||||||||||||||
Net interest income, GAAP basis |
$ | 625 | $ | 630 | $ | 589 | ||||||||||||||||||||||||||||||
Average balances have not been adjusted prior to the third quarter of 2009 to reflect Keys
January 1, 2008, adoption of the applicable accounting guidance related to the offsetting of
certain derivative contracts on the consolidated balance sheet.
(a) | Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (e) below, calculated using a matched funds transfer pricing methodology. | |
(b) | 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%. | |
(c) | For purposes of these computations, nonaccrual loans are included in average loan balances. | |
(d) | Discontinued liabilities include the liabilities of the education lending business and the dollar amount of any additional liabilities assumed necessary to support the assets associated with this business. | |
(e) | Yield is calculated on the basis of amortized cost. | |
(f) | Rate calculation excludes basis adjustments related to fair value hedges. | |
(g) | In late March 2009, Key transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines pertaining to the classification of loans that have reached a completed status. |
TE = Taxable Equivalent,
GAAP = U.S. generally accepted accounting principles
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 20
April 21, 2010
Page 20
Noninterest Income
(in millions)
(in millions)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Trust and investment services income (a) |
$ | 114 | $ | 117 | $ | 110 | ||||||
Service charges on deposit accounts |
76 | 82 | 82 | |||||||||
Operating lease income |
47 | 52 | 61 | |||||||||
Letter of credit and loan fees |
40 | 52 | 38 | |||||||||
Corporate-owned life insurance income |
28 | 36 | 27 | |||||||||
Net securities gains (losses) |
3 | 1 | (14 | ) | ||||||||
Electronic banking fees |
27 | 27 | 24 | |||||||||
Gains on leased equipment |
8 | 15 | 26 | |||||||||
Insurance income |
18 | 16 | 18 | |||||||||
Net gains (losses) from loan sales |
4 | (5 | ) | 7 | ||||||||
Net gains (losses) from principal investing |
37 | 80 | (72 | ) | ||||||||
Investment banking and capital markets income (loss) (a) |
9 | (47 | ) | 17 | ||||||||
Gain from sale/redemption of Visa Inc. shares |
| | 105 | |||||||||
Other income: |
||||||||||||
Credit card fees |
3 | 2 | 3 | |||||||||
Miscellaneous income |
36 | 41 | 46 | |||||||||
Total other income |
39 | 43 | 49 | |||||||||
Total noninterest income |
$ | 450 | $ | 469 | $ | 478 | ||||||
(a) | Additional detail provided in tables below. |
Trust and Investment Services Income
(in millions)
(in millions)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Brokerage commissions and fee income |
$ | 33 | $ | 31 | $ | 38 | ||||||
Personal asset management and custody fees |
37 | 37 | 33 | |||||||||
Institutional asset management and custody fees |
44 | 49 | 39 | |||||||||
Total trust and investment services income |
$ | 114 | $ | 117 | $ | 110 | ||||||
Investment Banking and Capital Markets Income (Loss)
(in millions)
(in millions)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Investment banking income |
$ | 16 | $ | 29 | $ | 11 | ||||||
Income (loss) from other investments |
1 | (66 | ) | (8 | ) | |||||||
Dealer trading and derivatives income (loss) |
(16 | ) | (21 | ) | 1 | |||||||
Foreign exchange income |
8 | 11 | 13 | |||||||||
Total investment banking and capital markets income (loss) |
$ | 9 | $ | (47 | ) | $ | 17 | |||||
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 21
April 21, 2010
Page 21
Noninterest Expense
(dollars in millions)
(dollars in millions)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Personnel (a) |
$ | 362 | $ | 400 | $ | 359 | ||||||
Net occupancy |
66 | 67 | 66 | |||||||||
Operating lease expense |
39 | 50 | 50 | |||||||||
Computer processing |
47 | 49 | 47 | |||||||||
Professional fees |
38 | 63 | 34 | |||||||||
FDIC assessment |
37 | 37 | 30 | |||||||||
OREO expense, net |
32 | 25 | 6 | |||||||||
Equipment |
24 | 25 | 22 | |||||||||
Marketing |
13 | 22 | 14 | |||||||||
Provision (credit) for losses on lending-related commitments |
(2 | ) | 27 | | ||||||||
Intangible assets impairment |
| | 196 | |||||||||
Other expense: |
||||||||||||
Postage and delivery |
7 | 8 | 8 | |||||||||
Franchise and business taxes |
7 | 5 | 9 | |||||||||
Telecommunications |
6 | 6 | 7 | |||||||||
Miscellaneous expense |
109 | 87 | 79 | |||||||||
Total other expense |
129 | 106 | 103 | |||||||||
Total noninterest expense |
$ | 785 | $ | 871 | $ | 927 | ||||||
Average full-time equivalent employees (b) |
15,772 | 15,973 | 17,468 | |||||||||
(a) | Additional detail provided in table below. | |
(b) | The number of average full-time equivalent employees has not been adjusted for discontinued operations. |
Personnel Expense
(in millions)
(in millions)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Salaries |
$ | 222 | $ | 229 | $ | 223 | ||||||
Incentive compensation |
47 | 76 | 36 | |||||||||
Employee benefits |
74 | 75 | 83 | |||||||||
Stock-based compensation |
14 | 15 | 9 | |||||||||
Severance |
5 | 5 | 8 | |||||||||
Total personnel expense |
$ | 362 | $ | 400 | $ | 359 | ||||||
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 22
April 21, 2010
Page 22
Loan Composition
(dollars in millions)
(dollars in millions)
Percent change 3-31-10 vs. | ||||||||||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | 12-31-09 | 3-31-09 | ||||||||||||||||
Commercial, financial and agricultural |
$ | 18,015 | $ | 19,248 | $ | 25,405 | (6.4 | )% | (29.1 | )% | ||||||||||
Commercial real estate: |
||||||||||||||||||||
Commercial mortgage |
10,467 | 10,457 | 12,057 | a | .1 | (13.2 | ) | |||||||||||||
Construction |
3,990 | 4,739 | 6,208 | a | (15.8 | ) | (35.7 | ) | ||||||||||||
Total commercial real estate loans |
14,457 | 15,196 | 18,265 | (4.9 | ) | (20.8 | ) | |||||||||||||
Commercial lease financing |
6,964 | 7,460 | 8,553 | (6.6 | ) | (18.6 | ) | |||||||||||||
Total commercial loans |
39,436 | 41,904 | 52,223 | (5.9 | ) | (24.5 | ) | |||||||||||||
Real estate residential mortgage |
1,812 | 1,796 | 1,759 | .9 | 3.0 | |||||||||||||||
Home equity: |
||||||||||||||||||||
Community Banking |
9,892 | 10,048 | 10,281 | (1.6 | ) | (3.8 | ) | |||||||||||||
Other |
795 | 838 | 1,007 | (5.1 | ) | (21.1 | ) | |||||||||||||
Total home equity loans |
10,687 | 10,886 | 11,288 | (1.8 | ) | (5.3 | ) | |||||||||||||
Consumer other Community Banking |
1,141 | 1,181 | 1,215 | (3.4 | ) | (6.1 | ) | |||||||||||||
Consumer other: |
||||||||||||||||||||
Marine |
2,636 | 2,787 | 3,256 | (5.4 | ) | (19.0 | ) | |||||||||||||
Other |
201 | 216 | 262 | (6.9 | ) | (23.3 | ) | |||||||||||||
Total consumer other |
2,837 | 3,003 | 3,518 | (5.5 | ) | (19.4 | ) | |||||||||||||
Total consumer loans |
16,477 | 16,866 | 17,780 | (2.3 | ) | (7.3 | ) | |||||||||||||
Total loans b |
$ | 55,913 | $ | 58,770 | $ | 70,003 | (4.9 | )% | (20.1 | )% | ||||||||||
Loans Held for Sale Composition
(dollars in millions)
(dollars in millions)
Percent change 3-31-10 vs. | ||||||||||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | 12-31-09 | 3-31-09 | ||||||||||||||||
Commercial, financial and agricultural |
$ | 25 | $ | 14 | $ | 24 | 78.6 | % | 4.2 | % | ||||||||||
Real estate commercial mortgage |
265 | 171 | 301 | 55.0 | (12.0 | ) | ||||||||||||||
Real estate construction |
147 | 92 | 151 | 59.8 | (2.6 | ) | ||||||||||||||
Commercial lease financing |
27 | 27 | 10 | | 170.0 | |||||||||||||||
Real estate residential mortgage |
92 | 139 | 183 | (33.8 | ) | (49.7 | ) | |||||||||||||
Automobile |
| | 2 | | (100.0 | ) | ||||||||||||||
Total loans held for sale (c) |
$ | 556 | (d) | $ | 443 | (d) | $ | 671 | 25.5 | % | (17.1 | )% | ||||||||
(a) | In late March 2009, Key transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines pertaining to the classification of loans that have reached a completed status. | |
(b) | Excluded at March 31, 2010, December 31, 2009, and March 31, 2009, are loans in the amount of $6.0 billion, $3.5 billion and $3.7 billion, respectively, related to the discontinued operations of the education lending business. | |
(c) | Excluded at March 31, 2010, December 31, 2009, and March 31, 2009, are loans held for sale in the amount of $246 million, $434 million, and $453 million, respectively, related to the discontinued operations of the education lending business. | |
(d) | The beginning balance at December 31, 2009 of $443 million increased by new originations in the amount of $509 million, net transfers from held to maturity in the amount of $109 million and decreased by loan sales of $488 million, transfers to OREO/valuation adjustments of $11 million, and loan payments of $6 million for an ending balance of $556 million at March 31, 2010. |
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 23
April 21, 2010
Page 23
Summary of Loan Loss Experience from Continuing Operations
(dollars in millions)
(dollars in millions)
Three months ended | ||||||||||||
3-31-10 | 12-31-09 | 3-31-09 | ||||||||||
Average loans outstanding |
$ | 57,628 | $ | 60,533 | $ | 71,612 | ||||||
Allowance for loan losses at beginning of period |
$ | 2,534 | $ | 2,485 | $ | 1,629 | ||||||
Loans charged off: |
||||||||||||
Commercial, financial and agricultural |
139 | 232 | 244 | |||||||||
Real estate commercial mortgage |
109 | 166 | 22 | |||||||||
Real estate construction |
157 | 187 | 104 | |||||||||
Total commercial real estate loans |
266 | 353 | 126 | |||||||||
Commercial lease financing |
25 | 45 | 22 | |||||||||
Total commercial loans |
430 | 630 | 392 | |||||||||
Real estate residential mortgage |
7 | 9 | 3 | |||||||||
Home equity: |
||||||||||||
Community Banking |
31 | 28 | 18 | |||||||||
Other |
18 | 20 | 15 | |||||||||
Total home equity loans |
49 | 48 | 33 | |||||||||
Consumer other Community Banking |
18 | 17 | 14 | |||||||||
Consumer other: |
||||||||||||
Marine |
48 | 41 | 39 | |||||||||
Other |
5 | 5 | 6 | |||||||||
Total consumer other |
53 | 46 | 45 | |||||||||
Total consumer loans |
127 | 120 | 95 | |||||||||
Total loans charged off |
557 | 750 | 487 | |||||||||
Recoveries: |
||||||||||||
Commercial, financial and agricultural |
13 | 14 | 12 | |||||||||
Real estate commercial mortgage |
3 | 1 | 1 | |||||||||
Real estate construction |
| 6 | | |||||||||
Total commercial real estate loans |
3 | 7 | 1 | |||||||||
Commercial lease financing |
4 | 6 | 4 | |||||||||
Total commercial loans |
20 | 27 | 17 | |||||||||
Real estate residential mortgage |
| 1 | | |||||||||
Home equity: |
||||||||||||
Community Banking |
1 | 1 | 1 | |||||||||
Other |
1 | 1 | | |||||||||
Total home equity loans |
2 | 2 | 1 | |||||||||
Consumer other Community Banking |
2 | 2 | 1 | |||||||||
Consumer other: |
||||||||||||
Marine |
10 | 8 | 7 | |||||||||
Other |
1 | 2 | 1 | |||||||||
Total consumer other |
11 | 10 | 8 | |||||||||
Total consumer loans |
15 | 15 | 10 | |||||||||
Total recoveries |
35 | 42 | 27 | |||||||||
Net loan charge-offs |
(522 | ) | (708 | ) | (460 | ) | ||||||
Provision for loan losses |
413 | 756 | 847 | |||||||||
Foreign currency translation adjustment |
| 1 | | |||||||||
Allowance for loan losses at end of period |
$ | 2,425 | $ | 2,534 | $ | 2,016 | ||||||
Liability for credit losses on lending-related commitments at beginning of period |
$ | 121 | $ | 94 | $ | 54 | ||||||
Provision (credit) for losses on lending-related commitments |
(2 | ) | 27 | | ||||||||
Liability for credit losses on lending-related commitments at end of period (a) |
$ | 119 | $ | 121 | $ | 54 | ||||||
Total allowance for credit losses at end of period |
$ | 2,544 | $ | 2,655 | $ | 2,070 | ||||||
Net loan charge-offs to average loans |
3.67 | % | 4.64 | % | 2.60 | % | ||||||
Allowance for loan losses to period-end loans |
4.34 | 4.31 | 2.88 | |||||||||
Allowance for credit losses to period-end loans |
4.55 | 4.52 | 2.96 | |||||||||
Allowance for loan losses to nonperforming loans |
117.43 | 115.87 | 116.20 | |||||||||
Allowance for credit losses to nonperforming loans |
123.20 | 121.40 | 119.31 | |||||||||
Discontinued operations education lending business: |
||||||||||||
Loans charged off |
$ | 37 | $ | 37 | $ | 33 | ||||||
Recoveries |
1 | 1 | 1 | |||||||||
Net loan charge-offs |
$ | (36 | ) | $ | (36 | ) | $ | (32 | ) | |||
(a) | Included in accrued expense and other liabilities on the balance sheet. |
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 24
April 21, 2010
Page 24
Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
(dollars in millions)
(dollars in millions)
3-31-10 | 12-31-09 | 9-30-09 | 6-30-09 | 3-31-09 | ||||||||||||||||
Commercial, financial and agricultural |
$ | 558 | $ | 586 | $ | 679 | $ | 700 | $ | 595 | ||||||||||
Real estate commercial mortgage |
579 | 614 | 566 | 454 | 310 | |||||||||||||||
Real estate construction |
607 | 641 | 702 | 716 | 546 | |||||||||||||||
Total commercial real estate loans |
1,186 | 1,255 | 1,268 | 1,170 | 856 | |||||||||||||||
Commercial lease financing |
99 | 113 | 131 | 122 | 109 | |||||||||||||||
Total commercial loans |
1,843 | 1,954 | 2,078 | 1,992 | 1,560 | |||||||||||||||
Real estate residential mortgage |
72 | 73 | 68 | 46 | 39 | |||||||||||||||
Home equity: |
||||||||||||||||||||
Community Banking |
111 | 107 | 103 | 101 | 91 | |||||||||||||||
Other |
18 | 21 | 21 | 20 | 19 | |||||||||||||||
Total home equity loans |
129 | 128 | 124 | 121 | 110 | |||||||||||||||
Consumer other Community Banking |
4 | 4 | 4 | 5 | 3 | |||||||||||||||
Consumer other: |
||||||||||||||||||||
Marine |
16 | 26 | 15 | 19 | 21 | |||||||||||||||
Other |
1 | 2 | 1 | 2 | 2 | |||||||||||||||
Total consumer other |
17 | 28 | 16 | 21 | 23 | |||||||||||||||
Total consumer loans |
222 | 233 | 212 | 193 | 175 | |||||||||||||||
Total nonperforming loans |
2,065 | 2,187 | 2,290 | 2,185 | 1,735 | |||||||||||||||
Nonperforming loans held for sale |
195 | 116 | 304 | 145 | 72 | |||||||||||||||
OREO |
175 | 191 | 187 | 182 | 147 | |||||||||||||||
Allowance for OREO losses |
(45 | ) | (23 | ) | (40 | ) | (11 | ) | (4 | ) | ||||||||||
OREO, net of allowance |
130 | 168 | 147 | 171 | 143 | |||||||||||||||
Other nonperforming assets |
38 | 39 | 58 | 47 | 44 | |||||||||||||||
Total nonperforming assets |
$ | 2,428 | $ | 2,510 | $ | 2,799 | $ | 2,548 | $ | 1,994 | ||||||||||
Accruing loans past due 90 days or more |
$ | 434 | $ | 331 | $ | 375 | $ | 552 | $ | 435 | ||||||||||
Accruing loans past due 30 through 89 days |
639 | 933 | 1,071 | 1,081 | 1,313 | |||||||||||||||
Restructured loans included in nonperforming loans (a) |
226 | 364 | 65 | 7 | | |||||||||||||||
Nonperforming assets from discontinued operations
education lending business |
43 | 14 | 12 | 3 | 3 | |||||||||||||||
Nonperforming loans to period-end portfolio loans |
3.69 | % | 3.72 | % | 3.68 | % | 3.25 | % | 2.48 | % | ||||||||||
Nonperforming assets to period-end portfolio loans
plus OREO and other nonperforming assets |
4.31 | 4.25 | 4.46 | 3.77 | 2.84 | |||||||||||||||
(a) | Restructured loans (i.e. troubled debt restructurings) are those for which Key, for reasons related to a borrowers financial difficulties, grants a concession to the borrower that it would not otherwise consider. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance. |
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 25
April 21, 2010
Page 25
Summary of Changes in Nonperforming Loans From Continuing Operations
(in millions)
(in millions)
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | ||||||||||||||||
Balance at beginning of period |
$ | 2,187 | $ | 2,290 | $ | 2,185 | $ | 1,735 | $ | 1,221 | ||||||||||
Loans placed on nonaccrual status |
746 | 1,141 | 1,160 | 1,227 | 1,166 | |||||||||||||||
Charge-offs |
(557 | ) | (750 | ) | (619 | ) | (540 | ) | (487 | ) | ||||||||||
Loans sold |
(15 | ) | (70 | ) | (4 | ) | (12 | ) | (15 | ) | ||||||||||
Payments |
(102 | ) | (237 | ) | (294 | ) | (142 | ) | (105 | ) | ||||||||||
Transfers to OREO |
(20 | ) | (98 | ) | (91 | ) | (45 | ) | (32 | ) | ||||||||||
Transfers to nonperforming loans held for sale |
(59 | ) | (23 | ) | (5 | ) | (30 | ) | | |||||||||||
Transfers to other nonperforming assets |
(3 | ) | (4 | ) | (29 | ) | | | ||||||||||||
Loans returned to accrual status |
(112 | ) | (62 | ) | (13 | ) | (8 | ) | (13 | ) | ||||||||||
Balance at end of period |
$ | 2,065 | $ | 2,187 | $ | 2,290 | $ | 2,185 | $ | 1,735 | ||||||||||
Summary of Changes in Nonperforming Loans Held For Sale From Continuing Operations
(in millions)
(in millions)
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | ||||||||||||||||
Balance at beginning of period |
$ | 116 | $ | 304 | $ | 145 | $ | 72 | $ | 88 | ||||||||||
Transfers in |
129 | 71 | 216 | 79 | 2 | |||||||||||||||
Loans sold |
(38 | ) | (228 | ) | (45 | ) | (1 | ) | | |||||||||||
Transfers to OREO |
(6 | ) | | | (1 | ) | (12 | ) | ||||||||||||
Valuation adjustments |
(6 | ) | (15 | ) | (10 | ) | (4 | ) | (6 | ) | ||||||||||
Loans returned to accrual status / other |
| (16 | ) | (2 | ) | | | |||||||||||||
Balance at end of period |
$ | 195 | $ | 116 | $ | 304 | $ | 145 | $ | 72 | ||||||||||
Summary of Changes in Other Real Estate Owned, Net of Allowance, From Continuing Operations
(in millions)
(in millions)
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | ||||||||||||||||||||
Balance at beginning of period |
$ | 168 | $ | 147 | $ | 171 | $ | 143 | $ | 107 | ||||||||||||||
Properties acquired
nonperforming loans |
26 | 98 | 91 | 46 | 44 | |||||||||||||||||||
Valuation adjustments |
(28 | ) | (12 | ) | (36 | ) | (9 | ) | (3 | ) | ||||||||||||||
Properties sold |
(36 | ) | (65 | ) | (79 | ) | (9 | ) | (5 | ) | ||||||||||||||
Balance at end of period |
$ | 130 | $ | 168 | $ | 147 | $ | 171 | $ | 143 | ||||||||||||||
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 26
April 21, 2010
Page 26
Line of Business Results
(dollars in millions)
(dollars in millions)
Community Banking
Percent change 1Q10 vs. | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
Summary of operations |
||||||||||||||||||||||||||||
Total revenue (TE) |
$ | 599 | $ | 629 | $ | 632 | $ | 632 | $ | 612 | (4.8 | )% | (2.1) | % | ||||||||||||||
Provision for loan losses |
142 | 230 | 160 | 199 | 141 | (38.3 | ) | .7 | ||||||||||||||||||||
Noninterest expense |
468 | 492 | 491 | 496 | 468 | (4.9 | ) | | ||||||||||||||||||||
Net income (loss) attributable to Key |
5 | (41 | ) | (1 | ) | (29 | ) | 12 | N/M | (58.3 | ) | |||||||||||||||||
Average loans and leases |
27,769 | 28,321 | 29,126 | 30,305 | 31,275 | (1.9 | ) | (11.2 | ) | |||||||||||||||||||
Average deposits |
51,459 | 52,640 | 53,068 | 52,786 | 51,655 | (2.2 | ) | (.4 | ) | |||||||||||||||||||
Net loan charge-offs |
116 | 148 | 103 | 114 | 89 | (21.6 | ) | 30.3 | ||||||||||||||||||||
Net loan charge-offs to average loans |
1.69 | % | 2.07 | % | 1.40 | % | 1.51 | % | 1.15 | % | N/A | N/A | ||||||||||||||||
Nonperforming assets at period end |
$ | 597 | $ | 544 | $ | 559 | $ | 512 | $ | 499 | 9.7 | 19.6 | ||||||||||||||||
Return on average allocated equity |
.54 | % | (4.52 | )% | (.11 | )% | (3.18 | )% | 1.37 | % | N/A | N/A | ||||||||||||||||
Average full-time equivalent employees |
8,187 | 8,227 | 8,472 | 8,709 | 8,939 | (.5 | ) | (8.4 | ) | |||||||||||||||||||
Supplementary information (lines of business) |
||||||||||||||||||||||||||||
Regional Banking |
||||||||||||||||||||||||||||
Total revenue (TE) |
$ | 490 | $ | 512 | $ | 528 | $ | 529 | $ | 509 | (4.3 | )% | (3.7) | % | ||||||||||||||
Provision for loan losses |
115 | 139 | 93 | 166 | 68 | (17.3 | ) | 69.1 | ||||||||||||||||||||
Noninterest expense |
422 | 429 | 430 | 439 | 411 | (1.6 | ) | 2.7 | ||||||||||||||||||||
Net income (loss) attributable to Key |
(18 | ) | (18 | ) | 14 | (37 | ) | 29 | | N/M | ||||||||||||||||||
Average loans and leases |
18,753 | 19,076 | 19,347 | 19,745 | 20,004 | (1.7 | ) | (6.3 | ) | |||||||||||||||||||
Average deposits |
46,197 | 47,569 | 48,551 | 48,717 | 47,784 | (2.9 | ) | (3.3 | ) | |||||||||||||||||||
Net loan charge-offs |
96 | 82 | 78 | 72 | 52 | 17.1 | 84.6 | |||||||||||||||||||||
Net loan charge-offs to average loans |
2.08 | % | 1.71 | % | 1.60 | % | 1.46 | % | 1.05 | % | N/A | N/A | ||||||||||||||||
Nonperforming assets at period end |
$ | 327 | $ | 319 | $ | 289 | $ | 245 | $ | 205 | 2.5 | 59.5 | ||||||||||||||||
Return on average allocated equity |
(2.99 | )% | (3.07 | )% | 2.40 | % | (6.41 | )% | 5.22 | % | N/A | N/A | ||||||||||||||||
Average full-time equivalent employees |
7,836 | 7,877 | 8,120 | 8,339 | 8,565 | (.5 | ) | (8.5 | ) | |||||||||||||||||||
Commercial Banking |
||||||||||||||||||||||||||||
Total revenue (TE) |
$ | 109 | $ | 117 | $ | 104 | $ | 103 | $ | 103 | (6.8 | )% | 5.8 | % | ||||||||||||||
Provision for loan losses |
27 | 91 | 67 | 33 | 73 | (70.3 | ) | (63.0 | ) | |||||||||||||||||||
Noninterest expense |
46 | 63 | 61 | 57 | 57 | (27.0 | ) | (19.3 | ) | |||||||||||||||||||
Net income (loss) attributable to Key |
23 | (23 | ) | (15 | ) | 8 | (17 | ) | N/M | N/M | ||||||||||||||||||
Average loans and leases |
9,016 | 9,245 | 9,779 | 10,560 | 11,271 | (2.5 | ) | (20.0 | ) | |||||||||||||||||||
Average deposits |
5,262 | 5,071 | 4,517 | 4,069 | 3,871 | 3.8 | 35.9 | |||||||||||||||||||||
Net loan charge-offs |
20 | 66 | 25 | 42 | 37 | (69.7 | ) | (45.9 | ) | |||||||||||||||||||
Net loan charge-offs to average loans |
.90 | % | 2.83 | % | 1.01 | % | 1.60 | % | 1.33 | % | N/A | N/A | ||||||||||||||||
Nonperforming assets at period end |
$ | 270 | $ | 225 | $ | 270 | $ | 267 | $ | 294 | 20.0 | (8.2 | ) | |||||||||||||||
Return on average allocated equity |
7.29 | % | (7.19 | )% | (4.54 | )% | 2.39 | % | (5.28 | )% | N/A | N/A | ||||||||||||||||
Average full-time equivalent employees |
351 | 350 | 352 | 370 | 374 | .3 | (6.1 | ) | ||||||||||||||||||||
KeyCorp Reports First Quarter 2010 Results
April 21, 2010
Page 27
April 21, 2010
Page 27
Line of Business Results (continued)
(dollars in millions)
(dollars in millions)
National Banking
Percent change 1Q10 vs. | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
Summary of operations |
||||||||||||||||||||||||||||
Total revenue (TE) |
$ | 376 | $ | 342 | $ | 383 | $ | 447 | $ | 423 | 9.9 | % | (11.1) | % | ||||||||||||||
Provision for loan losses |
161 | 382 | 439 | 494 | 511 | (57.9 | ) | (68.5 | ) | |||||||||||||||||||
Noninterest expense |
270 | 299 | 323 | 292 | 428 | (9.7 | ) | (36.9 | ) | |||||||||||||||||||
Net income (loss) attributable to Key |
(33 | ) | (211 | ) | (234 | ) | (210 | ) | (394 | ) | 84.4 | 91.6 | ||||||||||||||||
Average loans and leases |
22,440 | 24,011 | 26,715 | 28,586 | 29,697 | (6.5 | ) | (24.4 | ) | |||||||||||||||||||
Average loans held for sale |
240 | 431 | 368 | 393 | 482 | (44.3 | ) | (50.2 | ) | |||||||||||||||||||
Average deposits |
12,398 | 13,241 | 13,289 | 13,004 | 11,945 | (6.4 | ) | 3.8 | ||||||||||||||||||||
Net loan charge-offs |
251 | 411 | 357 | 252 | 239 | (38.9 | ) | 5.0 | ||||||||||||||||||||
Net loan charge-offs to average loans |
4.54 | % | 6.79 | % | 5.30 | % | 3.54 | % | 3.26 | % | N/A | N/A | ||||||||||||||||
Nonperforming assets at period end |
$ | 1,285 | $ | 1,326 | $ | 1,510 | $ | 1,217 | $ | 770 | (3.1 | ) | 66.9 | |||||||||||||||
Return on average allocated equity |
(3.89 | )% | (22.66 | )% | (23.90 | )% | (21.41 | )% | (40.22 | )% | N/A | N/A | ||||||||||||||||
Average full-time equivalent employees |
2,409 | 2,434 | 2,508 | 2,581 | 2,661 | (1.0 | ) | (9.5 | ) | |||||||||||||||||||
Supplementary information (lines of business) |
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Real Estate Capital and Corporate Banking Services |
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Total revenue (TE) |
$ | 144 | $ | 93 | $ | 136 | $ | 192 | $ | 185 | 54.8 | % | (22.2) | % | ||||||||||||||
Provision for loan losses |
145 | 304 | 336 | 414 | 438 | (52.3 | ) | (66.9 | ) | |||||||||||||||||||
Noninterest expense |
114 | 112 | 96 | 111 | 190 | 1.8 | (40.0 | ) | ||||||||||||||||||||
Net income (loss) attributable to Key |
(72 | ) | (202 | ) | (183 | ) | (207 | ) | (320 | ) | 64.4 | 77.5 | ||||||||||||||||
Average loans and leases |
12,340 | 13,256 | 14,321 | 15,144 | 15,717 | (6.9 | ) | (21.5 | ) | |||||||||||||||||||
Average loans held for sale |
115 | 228 | 201 | 182 | 206 | (49.6 | ) | (44.2 | ) | |||||||||||||||||||
Average deposits |
9,817 | 10,587 | 10,833 | 10,663 | 10,163 | (7.3 | ) | (3.4 | ) | |||||||||||||||||||
Net loan charge-offs |
207 | 381 | 276 | 212 | 173 | (45.7 | ) | 19.7 | ||||||||||||||||||||
Net loan charge-offs to average loans |
6.80 | % | 11.40 | % | 7.65 | % | 5.61 | % | 4.46 | % | N/A | N/A | ||||||||||||||||
Nonperforming assets at period end |
$ | 1,067 | $ | 1,094 | $ | 1,184 | $ | 1,023 | $ | 622 | (2.5 | ) | 71.5 | |||||||||||||||
Return on average allocated equity |
(14.08 | )% | (35.45 | )% | (30.49 | )% | (34.17 | )% | (56.11 | )% | N/A | N/A | ||||||||||||||||
Average full-time equivalent employees |
1,074 | 1,088 | 1,103 | 1,118 | 1,160 | (1.3 | ) | (7.4 | ) | |||||||||||||||||||
Equipment Finance |
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Total revenue (TE) |
$ | 61 | $ | 66 | $ | 59 | $ | 65 | $ | 66 | (7.6 | )% | (7.6 | )% | ||||||||||||||
Provision for loan losses |
4 | 65 | 75 | 42 | 41 | (93.8 | ) | (90.2 | ) | |||||||||||||||||||
Noninterest expense |
48 | 59 | 88 | 61 | 56 | (18.6 | ) | (14.3 | ) | |||||||||||||||||||
Net income (loss) attributable to Key |
6 | (36 | ) | (65 | ) | (24 | ) | (19 | ) | N/M | N/M | |||||||||||||||||
Average loans and leases |
4,574 | 4,610 | 5,010 | 5,051 | 5,031 | (.8 | ) | (9.1 | ) | |||||||||||||||||||
Average loans held for sale |
1 | | 20 | 18 | 8 | 100.0 | (87.5 | ) | ||||||||||||||||||||
Average deposits |
6 | 7 | 6 | 9 | 9 | (14.3 | ) | (33.3 | ) | |||||||||||||||||||
Net loan charge-offs |
18 | 21 | 30 | 29 | 22 | (14.3 | ) | (18.2 | ) | |||||||||||||||||||
Net loan charge-offs to average loans |
1.60 | % | 1.81 | % | 2.38 | % | 2.30 | % | 1.77 | % | N/A | N/A | ||||||||||||||||
Nonperforming assets at period end |
$ | 111 | $ | 122 | $ | 118 | $ | 105 | $ | 89 | (9.0 | ) | 24.7 | |||||||||||||||
Return on average allocated equity |
6.59 | % | (39.02 | )% | (66.98 | )% | (26.09 | )% | (16.94 | )% | N/A | N/A | ||||||||||||||||
Average full-time equivalent employees |
605 | 626 | 661 | 679 | 688 | (3.4 | ) | (12.1 | ) | |||||||||||||||||||
Institutional and Capital Markets |
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Total revenue (TE) |
$ | 171 | $ | 183 | $ | 188 | $ | 190 | $ | 172 | (6.6 | )% | (.6 | )% | ||||||||||||||
Provision for loan losses |
12 | 13 | 28 | 38 | 32 | (7.7 | ) | (62.5 | ) | |||||||||||||||||||
Noninterest expense |
108 | 128 | 139 | 120 | 182 | (15.6 | ) | (40.7 | ) | |||||||||||||||||||
Net income (loss) attributable to Key |
33 | 27 | 14 | 21 | (55 | ) | 22.2 | N/M | ||||||||||||||||||||
Average loans and leases |
5,526 | 6,145 | 7,384 | 8,391 | 8,949 | (10.1 | ) | (38.3 | ) | |||||||||||||||||||
Average loans held for sale |
124 | 203 | 147 | 193 | 268 | (38.9 | ) | (53.7 | ) | |||||||||||||||||||
Average deposits |
2,575 | 2,647 | 2,450 | 2,332 | 1,773 | (2.7 | ) | 45.2 | ||||||||||||||||||||
Net loan charge-offs |
26 | 9 | 51 | 11 | 44 | 188.9 | (40.9 | ) | ||||||||||||||||||||
Net loan charge-offs to average loans |
1.91 | % | .58 | % | 2.74 | % | .53 | % | 1.99 | % | N/A | N/A | ||||||||||||||||
Nonperforming assets at period end |
$ | 107 | $ | 110 | $ | 208 | $ | 89 | $ | 59 | (2.7 | ) | 81.4 | |||||||||||||||
Return on average allocated equity |
13.38 | % | 10.03 | % | 4.97 | % | 7.41 | % | (18.51 | )% | N/A | N/A | ||||||||||||||||
Average full-time equivalent employees |
730 | 720 | 744 | 784 | 813 | 1.4 | (10.2 | ) | ||||||||||||||||||||
TE = Taxable Equivalent, N/A = Not Applicable, N/M = Not Meaningful