<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15d of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 20, 1994
SOCIETY CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Ohio 0-850 34-6542451
- --------------------------------- ------------ ---------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
127 Public Square, Cleveland, Ohio 44114-1306
- ---------------------------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (216) 689-3000
<PAGE> 2
Item 5. Other Events
On January 20, 1994, the Registrant issued a press release announcing
the declaration of a 14.3 percent increase in its quarterly common
share dividend and its earnings results for the three and twelve-month
periods ended December 31, 1993. This press release is attached as
Exhibit 99 to this report.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) Exhibits
99. January 20, 1994, press release of the Registrant announcing
the declaration of a 14.3 percent increase in its quarterly common share
dividend and its earnings results for the three and twelve-month periods ended
December 31, 1993.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
SOCIETY CORPORATION
-----------------------------
(Registrant)
Date: January 20, 1994 /s/ Thomas M. Neel
-----------------------------
By: Thomas M. Neel
Senior Vice President
and Corporate Controller
</TABLE>
<PAGE> 3
CONTACT: John Fuller (216) 689-8140 (media)
Jay Gould (216) 689-4721 (analysts)
FOR IMMEDIATE RELEASE
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE
AND RECORD ANNUAL EARNINGS
CLEVELAND, January 20, 1994 -- Society Corporation (NYSE: SCY)
today declared a 14.3 percent increase in its quarterly common share
dividend from $0.28 per share to $0.32 per share, payable March 15, 1994, to
shareholders of record on February 28, 1994, with an ex-dividend date of
February 21, 1994.
"This increase marks the 29th consecutive year we have
increased the dividend," said Robert W. Gillespie, chairman and chief
executive officer, "and reflects a combination of strong operating
performance in 1993 as well as confidence in the 1994 outlook as we approach
the merger with KeyCorp."
The Board of Directors of KeyCorp is scheduled to meet for the
last time before the merger on February 17, 1994. At that meeting,
KeyCorp's board is expected to consider a dividend recommendation that,
considering the merger exchange ratio of 1.205 shares of stock in the new
company for each common share of KeyCorp, would be comparable to the
indicated Society dividend, and would have the same record and payable
dates. Such a dividend by KeyCorp would represent a 24.4 percent increase
over its 1993 dividend.
Society's dividend action was reviewed and approved by KeyCorp
(NYSE: KEY) as required by the Merger Agreement between Society and KeyCorp.
1993 FOURTH QUARTER AND ANNUAL EARNINGS REVIEW
Society Corporation also reported fourth quarter operating
earnings
- more -
<PAGE> 4
Society Corporation Declares Dividend, Reports Record Earnings
January 20, 1994
Page 2
before a restructuring charge of $96.6 million or $0.82 per common share,
up 14 percent from the year-ago quarter. On the same basis, 1993 earnings
were a record $386.7 million or $3.26 per common share, up 21 percent. The
1993 fourth quarter's restructuring charge which related to the pending
merger with KeyCorp totaled $39.6 million after-tax, or $0.33 per common
share. Including the impact of this restructuring charge, Society reported
fourth quarter and record full-year 1993 earnings of $57.0 million and
$347.2 million, respectively, or $0.49 and $2.93 per common share.
"Obviously, the announced merger with KeyCorp represented the
most significant event of the quarter and is a major milestone in the
history of both companies," said Gillespie. "I am happy to report that
integration planning for the merger, which will expand the franchise and
product delivery capabilities for both companies, is proceeding ahead of
schedule. The new management team has been announced. Working together
they have already completed a plan for 1994, confirming preliminary
merger-related expense reduction estimates. Victor J. Riley, Jr., chairman
and chief executive officer of KeyCorp, and I have been very much involved
throughout this process and could not be more pleased with the teamwork and
results we have seen. Shareholder meetings to approve the merger have been
scheduled for February 16, 1994, and we expect to close the transaction in
early March."
Commenting on financial performance, James W. Wert, vice
chairman and chief financial officer, noted, "The high level of financial
performance continued in the fourth quarter. On an operating earnings
basis, the fourth quarter return on average assets was 1.47 percent and
return on average common equity was 18.8 percent. For the full-year 1993,
our operating return on average assets and on average common equity were
1.51 percent and 19.8 percent, respectively. These profitability measures
continued to place Society at or near the top of industry performance
rankings. During the fourth quarter, average loans increased 3 percent from
- more -
<PAGE> 5
Society Corporation Declares Dividend, Reports Record Earnings
January 20, 1994
Page 3
the 1993 third quarter level reflecting growth in a number of loan
portfolios. In addition, credit quality measures continued to improve with
non-performing assets declining $80 million or 26 percent during the
quarter, representing 0.83 percent of assets. Similarly, net charge-offs
declined from 1993 third quarter levels and totaled $17.5 million during the
fourth quarter, representing 0.41 percent of average loans."
Continuing, Wert said, "When we announced the agreement to
merge with KeyCorp, it was noted that a one-time restructuring charge
representing the estimated costs of consolidating the operations of the two
companies would be taken in the 1993 fourth quarter. At that time, the
restructuring charge was estimated at $90-$110 million pre-tax, which would
be split between the two companies. Detailed analyses, completed recently
and representing the work of some 40 task forces, indicated a somewhat
higher charge of $118.7 million due largely to increased relocation and
severance costs. Society's portion of the charge was $53.9 million before
taxes and, as was the case at KeyCorp, was taken in the 1993 fourth quarter."
Net interest income in the fourth quarter was up $6.7 million
or 2.3 percent from the year-ago quarter reflecting a $1.4 billion or 6
percent increase in the level of average earning assets which was slightly
offset by a decline in the net interest margin to 5.10 percent from 5.33
percent in the 1992 fourth quarter. Compared with the 1993 third quarter,
net interest income was up slightly reflecting the favorable impact of an
$896 million or 4 percent increase in average earning assets, which included
a $541 million or 3 percent increase in average loans. This favorable impact
was partially offset by a decline in the net interest margin from 5.25
percent in the 1993 third quarter to 5.10 percent in the current quarter.
The decline was consistent with expectations and reflected primarily the
narrowing of spreads available on the replacement of maturing securities and
interest rate swaps.
- more -
<PAGE> 6
Society Corporation Declares Dividend, Reports Record Earnings
January 20, 1994
Page 4
Noninterest income in the 1993 fourth quarter was $113.6
million, little changed from the year-ago quarter but down $57.3 million
from the 1993 third quarter. When non-recurring items are excluded from the
1993 third quarter results, fourth quarter noninterest income was down $5.7
million. This decline reflected a $9.5 million decrease in trust income
related to a full-quarter's impact from the 1993 third quarter sale of
Ameritrust Texas. Fourth quarter noninterest income was up about $6.5
million from the 1993 third quarter, after adjusting for the impact of the
Ameritrust Texas sale.
Noninterest expense totaled $257.5 million, up $10.3 million
or 4 percent from the year-ago quarter after excluding the current quarter's
$53.9 million restructuring charge. On the same basis, fourth quarter
noninterest expense was up $7.1 million from comparable third quarter
expenses, reflecting increased compensation costs as well as higher real
estate owned expense and increases spread over a number of other categories.
The provision for loan losses in the 1993 fourth quarter was
$13.2 million, down from $17.0 million in the 1993 third quarter. This
decrease reflected the continued decline in net charge-offs during the
current quarter to $17.5 million, or 0.41 percent of average loans, from
$21.1 million, or 0.51 percent, in the prior quarter.
Nonperforming loans at December 31, 1993, were $162.8 million
and represented 0.91 percent of loans, down $36.9 million or 18 percent from
the end of the 1993 third quarter when nonperforming loans represented 1.17
percent of loans. Compared with the year-ago quarter, nonperforming loans
were down $185.9 million or 53 percent. Coverage of nonperforming loans by
the allowance for loan losses increased during the fourth quarter to 295
percent from 243 percent at September 30, 1993, and 144 percent at December
31, 1992.
- more -
<PAGE> 7
Society Corporation Declares Dividend, Reports Record Earnings
January 20, 1994
Page 5
Nonperforming assets at the end of the fourth quarter totaled
$224.4 million, down $79.9 million or 26 percent from September 30, 1993,
and down $272.6 million or 55 percent from the end of the prior year.
Nonperforming assets at December 31, 1993, represented 1.25 percent of total
loans plus other real estate owned and other nonperforming assets compared
with 1.78 percent at September 30, 1993, and 3.07 percent at December 31,
1992.
At December 31, 1993, assets totaled $27.0 billion and equity
capital $2.0 billion. The December 31, 1993, Tier 1 capital ratio was
estimated at 8.44 percent and the Total Capital ratio was estimated at 12.60
percent.
1993 PRO-FORMA RESULTS HIGHLIGHTS
On October 4, 1993, Society Corporation and KeyCorp of Albany,
New York, announced the signing of a definitive agreement to merge. The
transaction, which requires approval of shareholders of both Society and
KeyCorp, as well as the receipt of regulatory approvals, is expected to
close in March 1994. The new company will be called Key Bancshares Inc. and
will be headquartered in Cleveland. As of December 31, 1993, the new
company would have ranked as the 11th-largest bank holding company in the
nation with $59.7 billion in total assets and nearly 1,400 branch and
affiliate offices in 18 states.
Commenting on 1993 pro-forma results, Wert noted, "One of the
strengths of the pending merger is the fact that based on 1993 performance
both KeyCorp and Society are high performing companies. On a pro-forma
basis, 1993 earnings for the new company were $790.6 million. The return on
average assets and return on average total equity were 1.39 percent and 18.9
percent, respectively. The restructuring charge taken in the fourth quarter
of 1993 by both companies totaled $118.7 million ($80.7 million after-tax or
$0.34 per common share), slightly in excess of the $110 million upper-end
of the previously announced expected charge. Personnel costs including
- more -
<PAGE> 8
Society Corporation Declares Dividend, Reports Record Earnings
January 20, 1994
Page 6
severance, relocation, and other employee costs ($49.6 million); systems
and facilities costs ($35.7 million), and merger costs ($20.5 million)
comprised the majority of the restructuring charge. Net charge-offs in 1993
totaled $212.8 million, representing 0.56 percent of average loans. The
December 31, 1993 allowance for loan losses was 2.00 percent of period-end
loans and covered 239 percent of nonperforming loans which totaled $336.3
million and represented 0.84 percent of year-end loans."
# # #
<PAGE> 9
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE AND
RECORD ANNUAL EARNINGS
JANUARY 20, 1994
PAGE 7
<TABLE>
FINANCIAL HIGHLIGHTS
(amounts in thousands, except per share amounts)
<CAPTION>
Three months ended
---------------------------------------
12-31-93 9-30-93 12-31-92
-------- ------- --------
<S> <C> <C> <C>
QUARTERLY DATA
PERFORMANCE MEASURES
Net income $57,013 $98,220 $86,506
Earnings per Common Share 0.49 0.83 0.72
Dividends per Common Share 0.28 0.28 0.245
Return on assets 0.87 % 1.55 % 1.40 %
Return on total equity 11.09 19.81 18.79
Return on common equity 11.09 19.81 19.08
Net interest margin 5.10 5.25 5.33
Efficiency ratio (1) 61.92 59.94 60.15
Overhead ratio (1) 47.54 44.13 44.90
ASSET QUALITY
Net charge-offs $17,518 $21,089 $41,101
Provision for loan losses 13,160 17,037 31,109
Net charge-offs to average loans 0.41 % 0.51 % 1.04 %
</TABLE>
<TABLE>
<CAPTION>
Twelve months ended
------------------------------
12-31-93 12-31-92
-------- --------
<S> <C> <C>
YEAR-TO-DATE DATA
PERFORMANCE MEASURES
Net income $347,159 $301,210
Earnings per Common Share 2.93 2.51
Dividends per Common Share 1.12 0.98
Return on assets 1.36 % 1.26 %
Return on total equity 17.84 17.28
Return on common equity 17.87 17.52
Net interest margin 5.26 5.33
Efficiency ratio (1) 60.41 61.11
Overhead ratio (1) 45.57 45.27
ASSET QUALITY
Net charge-offs $ 95,199 $171,566
Provision for loan losses 72,240 147,366
Net charge-offs to average loans 0.56 % 1.06 %
<FN>
(1) Excludes non-recurring items (e.g., securities gains, gain on sale of branch offices and loans, gain
on sale of subsidiary, restructuring charges, and other non-recurring items).
</TABLE>
<PAGE> 10
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE AND
RECORD ANNUAL EARNINGS
JANUARY 20, 1994
PAGE 8
<TABLE>
FINANCIAL HIGHLIGHTS
(amounts in thousands, except per share amounts)
<CAPTION>
12-31-93 9-30-93 12-31-92
-------- ------- --------
<S> <C> <C> <C>
ASSET QUALITY DATA
Nonaccrual loans $162,448 $199,351 $347,779
Restructured loans 370 402 934
------- ------- --------
Nonperforming loans 162,818 199,753 348,713
Other real estate owned 48,095 90,897 133,341
Other nonperforming assets 13,462 13,633 14,903
-------- -------- --------
Nonperforming assets $224,375 $304,283 $496,957
======== ======== ========
Nonperforming loans to total loans 0.91 % 1.17 % 2.18 %
Nonperforming assets to loans plus OREO
and other nonperforming assets 1.25 1.78 3.07
Nonperforming assets to total assets 0.83 1.18 1.99
Allowance for loan losses $480,634 $484,992 $502,744
Allowance for loan losses to loans 2.69 % 2.85 % 3.14 %
Allowance for loan losses to
nonperforming loans 295.20 242.80 144.17
INTANGIBLE ASSETS
Goodwill $180,992 $171,322 $161,573
Other intangibles 33,146 35,446 132,752
COMMON SHARE DATA
Book value per share $ 17.37 $17.15 $15.49
Stock price 29.75 32.00 32.13
Shares outstanding 117,377 117,086 116,726
CAPITAL ADEQUACY RATIOS
Tier 1 risk-based capital (2) 8.44 % 8.71 % 8.53 %
Total risk-based capital (2) 12.60 12.99 12.39
Leverage (2) 7.17 7.34 6.98
Tangible equity to tangible assets 6.81 7.05 6.38
Total equity to total assets 7.55 7.79 7.48
<FN>
(2) 12-31-93 ratio is estimated.
</TABLE>
<PAGE> 11
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE AND
RECORD ANNUAL EARNINGS
JANUARY 20, 1994
PAGE 9
<TABLE>
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
<CAPTION>
12-31-93 9-30-93 12-31-92
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,375,645 $ 979,703 $ 1,345,085
Interest-bearing deposits with banks 30,469 252,191 677,794
Federal funds sold and security
resale agreements 2,000 526,200 98,047
Trading account assets 35,462 13,188 3,034
Mortgage loans held for sale 321,703 280,878 170,300
Securities available for sale 738,078 737,053 1,122,224
Investment securities 5,653,227 4,906,794 4,484,381
Loans, net of unearned income 17,897,647 17,019,340 16,031,488
Allowance for loan losses (480,634) (484,992) (502,744)
----------- ------------ -------------
Net loans 17,417,013 16,534,348 15,528,744
Premises and equipment 421,765 430,253 406,560
Customers' liability on acceptances 10,612 16,327 29,428
Other assets 1,001,353 1,083,698 1,112,705
----------- ----------- -------------
Total assets $27,007,327 $25,760,633 $ 24,978,302
=========== =========== =============
</TABLE>
<TABLE>
<CAPTION>
12-31-93 9-30-93 12-31-92
----------- ----------- -----------
<S> <C> <C> <C>
LIABILITIES
Noninterest-bearing deposits $ 3,803,677 $ 3,090,748 $ 3,658,878
Interest-bearing deposits 16,077,027 14,674,240 14,999,122
----------- ----------- -----------
Total deposits 19,880,704 17,764,988 18,658,000
Federal funds purchased 1,013,800 1,601,535 1,316,567
Securities sold under repurchase agreements 1,339,940 1,529,235 1,517,538
Other short-term borrowings 1,175,752 1,161,099 276,357
Acceptances outstanding 10,612 16,327 29,428
Other liabilities 595,276 601,621 426,257
Long-term debt 952,657 1,077,832 886,052
----------- ----------- -----------
Total liabilities 24,968,741 23,752,637 23,110,199
SHAREHOLDERS' EQUITY
Preferred stock 60,000
Common shareholders' equity 2,038,586 2,007,996 1,808,103
----------- ----------- -----------
Total liabilities and
shareholders' equity $27,007,327 $25,760,633 $24,978,302
=========== =========== ===========
</TABLE>
<PAGE> 12
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE AND
RECORD ANNUAL EARNINGS
JANUARY 20, 1994
PAGE 10
<TABLE>
CONSOLIDATED QUARTERLY INCOME STATEMENT
(amounts in thousands, except per share amounts)
<CAPTION>
Three months ended
----------------------------------------
12-31-93 9-30-93 12-31-92
-------- -------- --------
<S> <C> <C> <C>
INTEREST AND FEE INCOME
Loans $337,816 $334,093 $327,400
Securities 115,686 114,528 126,327
Short-term investments and
assets held for sale 6,601 9,243 10,014
-------- --------- --------
Total interest and fee income 460,103 457,864 463,741
INTEREST EXPENSE
Deposits 116,367 118,708 132,293
Short-term borrowings 27,855 26,029 26,677
Long-term debt 18,286 19,048 13,887
-------- -------- --------
Total interest expense 162,508 163,785 172,857
-------- -------- --------
NET INTEREST INCOME 297,595 294,079 290,884
PROVISION FOR LOAN LOSSES 13,160 17,037 31,109
------- -------- --------
Net interest income after
provision for loan losses 284,435 277,042 259,775
NONINTEREST INCOME
Trust income 44,108 53,640 50,524
Service charges on deposit accounts 24,384 25,118 25,282
Credit card fees 12,254 12,390 13,258
Net securities gains (losses) (321) 25,102 142
Gain on sale of subsidiary 0 29,410 0
Other income 33,212 25,229 24,676
------- ------- -------
Total noninterest income 113,637 170,889 113,882
NONINTEREST EXPENSE
Salaries and employee benefits 134,172 131,688 116,634
Net occupancy 22,060 24,743 23,673
Equipment 20,032 19,867 19,965
FDIC insurance 9,659 9,808 10,629
Professional fees 5,473 4,531 10,269
Restructuring charges 53,906 0 0
Other expense 66,095 94,215 65,988
------- ------- -------
Total noninterest expense 311,397 284,852 247,158
------- ------- -------
Income before income taxes 86,675 163,079 126,499
PROVISION FOR INCOME TAXES 29,662 64,859 39,993
------- ------- -------
NET INCOME $57,013 $98,220 $86,506
======= ======= =======
Net income applicable to Common Shares $57,013 $98,220 $84,950
Net income per Common Share 0.49 0.83 0.72
Weighted average outstanding shares (primary) 18,169 118,497 117,791
Memo: Taxable equivalent adjustment $4,325 $5,495 $6,279
</TABLE>
<PAGE> 13
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE
AND RECORD ANNUAL EARNINGS
JANUARY 20, 1994
PAGE 11
<TABLE>
CONSOLIDATED YEAR-TO-DATE INCOME STATEMENT
(amounts in thousands, except per share amounts)
<CAPTION>
Twelve months ended
---------------------------
12-31-93 12-31-92
-------- --------
<S> <C> <C>
INTEREST AND FEE INCOME
Loans $ 1,356,007 $1,402,680
Securities 481,041 462,635
Short-term investments and
assets held for sale 34,248 38,119
----------- ----------
Total interest and fee income 1,871,296 1,903,434
INTEREST EXPENSE
Deposits 492,161 642,944
Short-term borrowings 107,906 89,504
Long-term debt 72,239 40,599
----------- ----------
Total interest expense 672,306 773,047
----------- ----------
NET INTEREST INCOME 1,198,990 1,130,387
PROVISION FOR LOAN LOSSES 72,240 147,366
----------- ----------
Net interest income after
provision for loan losses 1,126,750 983,021
NONINTEREST INCOME
Trust income 204,852 209,952
Service charges on deposit accounts 97,970 99,610
Credit card fees 48,032 54,771
Net securities gains 26,078 9,775
Gain on sale of branch offices and loans 0 20,074
Gain on sale of subsidiary 29,410 0
Other income 103,442 107,352
----------- ----------
Total noninterest income 509,784 501,534
NONINTEREST EXPENSE
Salaries and employee benefits 506,716 491,718
Net occupancy 92,635 89,109
Equipment 78,950 76,958
FDIC insurance 40,691 43,803
Professional fees 20,371 31,370
Restructuring charges 53,906 50,016
Other expense 308,633 262,977
----------- ----------
Total noninterest expense 1,101,902 1,045,951
----------- ---------
Income before income taxes 534,632 438,604
PROVISION FOR INCOME TAXES 187,473 137,394
----------- ---------
NET INCOME $ 347,159 $ 301,210
=========== =========
Net income applicable to Common Shares $ 346,121 $ 294,984
Net income per Common Share 2.93 2.51
Weighted average outstanding shares (primary) 118,323 117,349
Memo: Taxable equivalent adjustment $ 21,071 $ 27,558
</TABLE>
<PAGE> 14
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE AND
RECORD ANNUAL EARNINGS
JANUARY 20, 1994
PAGE 12
<TABLE>
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET
(dollars in thousands)
<CAPTION>
THREE MONTHS ENDED
---------------------------------------
ASSETS 12-31-93 9-30-93 12-31-92
----------- ----------- -----------
<S> <C> <C> <C>
Interest-bearing deposits with banks $ 38,489 $ 387,255 $ 671,997
Federal funds sold and security
resale agreements 18,917 84,899 37,308
Trading account assets 13,814 15,634 18,441
Mortgage loans held for sale 322,036 277,264 175,830
Securities available for sale 737,744 872,873 0
Investment securities 5,265,021 4,402,584 5,542,813
Loans, net of unearned income 17,241,631 16,700,937 15,830,681
----------- ----------- -----------
Total earning assets 23,637,652 22,741,446 22,277,070
Allowance for loan losses (486,755) (491,479) (512,830)
Cash and due from banks 1,344,890 1,263,471 1,263,981
Premises and equipment 430,969 438,453 412,689
Customers' liability on acceptances 15,656 19,297 61,298
Other assets 1,104,631 1,185,944 1,111,930
----------- ----------- -----------
Total assets $26,047,043 $25,157,132 $24,614,138
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES
Noninterest-bearing deposits $ 3,247,267 $ 3,148,712 $ 3,266,767
Interest-bearing deposits 15,294,733 14,947,576 14,507,387
----------- ----------- -----------
Total deposits 18,542,000 18,096,288 17,774,154
Federal funds purchased 1,001,912 875,700 1,440,550
Securities sold under repurchase agreements 1,718,609 1,493,117 1,841,615
Other short-term borrowings 910,058 990,029 282,422
Acceptances outstanding 15,656 19,297 61,298
Other liabilities 768,776 624,099 568,384
Long-term debt 1,050,869 1,091,383 814,332
----------- ----------- -----------
Total liabilities 24,007,880 23,189,913 22,782,755
SHAREHOLDERS' EQUITY
Preferred stock 60,000
Common shareholders' equity 2,039,163 1,967,219 1,771,383
----------- ----------- -----------
Total liabilities and
shareholders' equity $26,047,043 $25,157,132 $24,614,138
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<PAGE> 15
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE AND
RECORD ANNUAL EARNINGS
JANUARY 20, 1994
PAGE 13
<TABLE>
CONSOLIDATED YEAR-TO-DATE AVERAGE BALANCE SHEET
(dollars in thousands)
<CAPTION>
TWELVE MONTHS ENDED
---------------------------
ASSETS 12-31-93 12-31-92
----------- ------------
<S> <C> <C>
Interest-bearing deposits with banks $ 409,864 $ 409,630
Federal funds sold and security
resale agreements 45,371 168,863
Trading account assets 16,778 20,559
Mortgage loans held for sale 243,421 148,855
Securities available for sale 911,146 0
Investment securities 4,622,370 4,834,621
Loans, net of unearned income 16,952,094 16,148,612
----------- ------------
Total earning assets 23,201,044 21,731,140
Allowance for loan losses (496,304) (522,185)
Cash and due from banks 1,298,115 1,232,573
Premises and equipment 433,705 383,842
Customers' liability on acceptances 21,923 89,767
Other assets 1,134,481 951,383
----------- ------------
Total assets $25,592,964 $23,866,520
----------- ------------
----------- ------------
lIABILITIES
Noninterest-bearing deposits $ 3,152,758 $ 3,062,851
Interest-bearing deposits 15,286,024 15,190,636
----------- ------------
Total deposits 18,438,782 18,253,487
Federal funds purchased 1,063,530 807,654
Securities sold under repurchase agreements 1,665,644 1,504,562
Other short-term borrowings 817,953 360,575
Acceptances outstanding 21,923 89,767
Other liabilities 610,134 497,874
Long-term debt 1,028,646 609,312
----------- ------------
Total liabilities 23,646,612 22,123,231
SHAREHOLDERS' EQUITY
Preferred stock 9,863 60,000
Common shareholders' equity 1,936,489 1,683,289
----------- ------------
Total liabilities and
shareholders' equity $25,592,964 $23,866,520
----------- ------------
----------- ------------
</TABLE>
<PAGE> 16
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE AND RECORD ANNUAL
EARNINGS
JANUARY 20, 1994
PAGE 14
KEY BANCSHARES INC. (PRO FORMA)
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31, 1993
--------------------------------------------------
Key Bancshares
SUMMARY OF OPERATIONS Society KeyCorp (Pro Forma)
-------- -------- --------------
<S> <C> <C> <C>
Net income before restructuring charges(1) $386,712 $403,851 $790,563
Earnings per common share before restructuring charges(1) 3.26 3.84 3.22
SELECTED FINANCIAL RATIOS
Return on average total assets (1) 1.51 % 1.28 % 1.39 %
Return on average total shareholders' equity(1) 19.87 18.01 18.87
Net interest margin 5.26 5.36 5.31
Net charge-offs to average loans .56 .55 .56
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1993
--------------------------------------------------
Key Bancshares
BALANCE SHEET DATA Society KeyCorp (Pro Forma)
------- -------- --------------
<S> <C> <C> <C>
Total assets $27,007,327 $32,647,832 $59,655,159
Loans, net of unearned income 17,897,647 22,197,605 40,095,252
Allowance for loan losses 480,634 322,078 802,712
Deposits 19,880,704 26,618,444 46,499,148
Total shareholders' equity 2,038,586 2,370,586 4,409,172
Book value per common share 17.37 21.45 17.59
SELECTED FINANCIAL RATIOS
Total shareholders' equity to total assets 7.55 % 7.26 % 7.39 %
Allowance for loan losses to nonperforming loans 295.20 185.64 238.68
Allowance for loan losses to loans 2.69 1.45 2.00
Nonperforming loans to loans .91 .78 .84
Nonperforming assets to loans+other real estate
owned+other nonperforming assets 1.25 1.24 1.24
</TABLE>
NOTES TO PRO FORMA FINANCIAL HIGHLIGHTS
(1) The pro forma combined summary of operations does not reflect per-tax
restructuring charges, including one-time merger expenses, of $118.7 million
(as categorized below). These charges were recognized by Society and KeyCorp
in the fourth quarter of 1993. Reported net income including restructuring
charges was $347.2 million, or $2.93 per share, for Society and $362.8
million, or $3.43 per share, for KeyCorp. On a pro forma basis, the net
income for the new company was $709.9 million, or $2.89 per share. The pro
forma balance sheet data and the summary of operations prior to the
effective time of the merger may not be indicative of the results that
actually would have occurred if the merger had been in effect during the
periods presented or which may be attained in the future.
<TABLE>
<CAPTION>
TYPE OF COST (in millions)
------------ -------------
<S> <C>
Merger expense $ 20.5
Restructuring charges:
Severance, relocation, and other employee costs 49.6
Systems and facilities costs 35.7
Other restructuring costs 12.9
------
Total restructuring charges $118.7
======
</TABLE>
<PAGE> 17
SOCIETY CORPORATION DECLARES 14 PERCENT DIVIDEND INCREASE AND RECORD ANNUAL
EARNINGS
JANUARY 20, 1994
PAGE 15
KEY BANCSHARES INC. (PRO FORMA)
NOTES TO PRO FORMA FINANCIAL HIGHLIGHTS (CONTINUED)
(2) Although no assurance can be given, KeyCorp and Society also expect that
cost savings will be achieved by Key Bancshares Inc. at an annual rate of
$80 to $105 million by the end of the first quarter of 1995 as a result of
steps to be taken to integrate their operations and to achieve efficiencies
in certain combined lines of business. Merger integration task forces, made
up of representatives of both companies, have confirmed these preliminary
estimates. It is presently expected that approximately 50% of the
anticipated annualized savings will be achieved in 1994. The pro forma
financial highlights do not give effect to these expected cost savings.
(3) Pro forma financial highlights reflect the combination of KeyCorp and
Society, accounted for as a pooling of interests, through the exchange of
124,169,748 shares of Key Bancshares Inc. Common Stock for all outstanding
shares of KeyCorp Common Stock at an Exchange Ratio of 1.205 shares of Key
Bancshares Inc. Common Stock for each share of KeyCorp Common Stock. In
addition, 1,280,000 shares of Key Bancshares Inc. Preferred Stock will be
exchanged for all outstanding shares of KeyCorp Preferred Stock on a
share-for-share basis.
(4) The pro forma financial highlights do not give effect to the pending
acquisitions by KeyCorp of Commercial Bancorporation of Colorado and the
Greeley Bank (Colorado) due to immateriality. During the fourth quarter,
KeyCorp completed its previously announced acquisition of Jackson Bank and
Society completed its previously announced acquisition of Schaenen Wood and
Associates.
