<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): October 17, 1995
KEYCORP
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-850 63-0593897
--------------- ---------------------- ------------------
(State or other Commission File Number (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
127 Public Square, Cleveland, Ohio 44114-1306
- ---------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 689-6300
<PAGE> 2
ITEM 5. OTHER EVENTS
------------
On October 17, 1995, the Registrant issued a press release announcing
its earnings results for the three month period and nine month period
ended September 30, 1995. This press release is attached as Exhibit
99 to this report and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
-----------------------------------------------------------------
(C) Exhibits
--------
99. The Registrant's October 17, 1995, press release announcing its
earnings results for the three month period and nine month period ended
September 30, 1995.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KEYCORP
------------------
(Registrant)
Date: October 17, 1995
/s/ Lee Irving
------------------
By: Lee Irving
Executive Vice President
and Chief Accounting Officer
<PAGE> 4
KEYCORP REPORTS THIRD QUARTER 1995 EARNINGS
OCTOBER 17, 1995
PAGE 4
<TABLE>
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<CAPTION>
Three months ended
-------------------------------------------------
9-30-95 6-30-95 9-30-94
-------------- ------------- --------------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (TE) $679.7 $681.3 $694.0
Provision for loan losses 27.5 20.3 27.2
Noninterest income 235.0 222.9 223.3
Noninterest expense 560.3 568.6 530.1
Net income 209.6 199.0 229.3
PER COMMON SHARE
Net income $ .90 $ .83 $ .92
Cash dividends .36 .36 .32
Book value at period-end 20.74 19.71 18.65
Market price at period-end 34.25 31.38 30.50
AT PERIOD-END
Full-time equivalent employees 29,560 29,233 29,411
Full-service banking offices 1,301 1,308 1,279
PERFORMANCE RATIOS
Return on average total assets 1.25 % 1.19 % 1.43 %
Return on average common equity 18.07 16.86 19.95
Return on average total equity 17.79 16.63 19.60
Efficiency (1) 61.27 63.05 57.90
Overhead (2) 47.89 51.10 44.48
Net interest margin 4.50 4.49 4.79
CAPITAL RATIOS AT PERIOD-END
Equity to assets 7.48 % 6.93 % 7.29 %
Tangible equity to tangible assets 5.98 5.75 6.45
Tier 1 risk-adjusted capital (3) 7.58 7.45 8.86
Total risk-adjusted capital (3) 10.84 10.82 12.07
Leverage (3) 6.21 5.88 6.79
(1) Calculated as noninterest expense divided by taxable-equivalent net interest income
plus noninterest income (excluding net securities transactions).
(2) Calculated as noninterest expense less noninterest income (excluding net securities
transactions) divided by taxable-equivalent net interest income.
(3) 9-30-95 ratio is estimated.
TE = Taxable equivalent
</TABLE>
<PAGE> 5
KEYCORP REPORTS THIRD QUARTER 1995 EARNINGS
OCTOBER 17, 1995
PAGE 5
<TABLE>
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<CAPTION>
Three months ended
------------------------------------------------------
9-30-95 6-30-95 9-30-94
-------------- ----------------- ---------------
<S> <C> <C> <C>
ASSET QUALITY
Net loan charge-offs $27.6 $20.0 $25.9
Net loan charge-offs to average loans .23 % .17 % .24 %
Allowance for loan losses $879.2 $867.5 $820.2
Allowance for loan losses to
period-end loans 1.82 % 1.80 % 1.84 %
Allowance for loan losses to
nonperforming loans 280.53 278.88 286.62
Nonperforming loans at period-end $313.4 $311.1 $286.1
Nonperforming assets at period-end 367.3 366.3 398.5
Nonperforming loans to period-end loans .65 % .65 % .64 %
Nonperforming assets to period-end loans plus
OREO and other nonperforming assets .76 .76 .89
Nine months ended
--------------------------------------
9-30-95 9-30-94
----------------- -----------------
SUMMARY OF OPERATIONS
Net interest income (TE) $2,019.8 $2,071.8
Provision for loan losses 66.3 99.0
Noninterest income 628.9 677.3
Noninterest expense 1,689.7 1,611.6
Income before extraordinary item 582.5 659.7
Net income 618.3 659.7
PER COMMON SHARE
Income before extraordinary item $ 2.44 $ 2.66
Net income 2.59 2.66
Cash dividends 1.08 0.96
PERFORMANCE RATIOS
Return on average total assets 1.24 % 1.43 %
Return on average common equity 17.72 19.65
Return on average total equity 17.46 19.31
Efficiency (1) 62.79 58.81
Overhead (2) 50.43 45.53
Net interest margin 4.46 4.91
ASSET QUALITY
Net loan charge-offs $ 64.9 $ 88.4
Net loan charge-offs to average loans .18 % .28 %
</TABLE>
<PAGE> 6
KEYCORP REPORTS THIRD QUARTER 1995 EARNINGS
OCTOBER 17, 1995
PAGE 6
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
<TABLE>
<CAPTION>
9-30-95 6-30-95 9-30-94
---------------- ------------- ---------------
<S> <C> <C> <C>
ASSETS
Loans $48,409.7 $48,093.2 $44,608.8
Mortgage loans held for sale 659.1 698.3 418.3
Investment securities 9,660.7 9,918.4 10,524.0
Securities available for sale 1,595.9 1,436.5 2,960.3
Short-term investments 522.0 799.3 126.7
---------------- ------------- ---------------
Total earning assets 60,847.4 60,945.7 58,638.1
Allowance for loan losses (879.2) (867.5) (820.2)
Cash and due from banks 3,344.4 3,197.0 3,006.7
Premises and equipment 1,023.1 1,017.8 947.3
Other real estate owned 49.2 50.2 107.5
Goodwill 907.1 660.5 387.9
Other intangible assets 173.5 180.5 188.6
Other assets 2,501.6 2,297.0 2,047.5
---------------- --------------- ------------------
TOTAL ASSETS $67,967.1 $67,481.2 $64,503.4
================ =============== ==================
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,610.4 $ 8,603.9 $ 8,531.3
Interest-bearing 37,279.3 37,738.0 35,945.7
Deposits in foreign offices-interest-bearing 2,015.3 2,330.3 3,339.5
---------------- --------------- ------------------
Total deposits 47,905.0 48,672.2 47,816.5
Federal funds purchased and securities
sold under repurchase agreements 5,908.3 4,793.9 5,514.8
Other short-term borrowings 3,632.5 4,067.4 3,172.7
Other liabilities 1,390.0 1,253.7 1,127.7
Long-term debt 4,047.9 4,019.6 2,177.8
---------------- --------------- ------------------
TOTAL LIABILITIES 62,883.7 62,806.8 59,809.5
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0 160.0
Common equity 4,923.4 4,514.4 4,533.9
---------------- --------------- -----------------
TOTAL SHAREHOLDERS' EQUITY 5,083.4 4,674.4 4,693.9
TOTAL LIABILITIES AND ---------------- --------------- -----------------
SHAREHOLDERS' EQUITY $67,967.1 $67,481.2 $64,503.4
================ =============== =================
Common Shares outstanding (000) 237,390 229,032 243,542
</TABLE>
<PAGE> 7
KEYCORP REPORTS THIRD QUARTER 1995 EARNINGS
OCTOBER 17, 1995
PAGE 7
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<CAPTION>
Three months ended
---------------------------------------------
9-30-95 6-30-95 9-30-94
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME $1,298.8 $1,298.8 $1,150.7
INTEREST EXPENSE 632.8 632.5 471.1
----------- ----------- -----------
NET INTEREST INCOME 666.0 666.3 679.6
Provision for loan losses 27.5 20.3 27.2
----------- ----------- -----------
638.5 646.0 652.4
NONINTEREST INCOME
Service charges on deposit accounts 70.7 70.1 67.9
Trust and asset management income 58.2 59.5 53.9
Credit card fees 22.6 20.6 20.5
Insurance and brokerage income 16.5 14.6 14.9
Mortgage banking income 9.1 7.5 19.3
Net securities gains .2 2.5 2.0
Other income 57.7 48.1 44.8
----------- ----------- -----------
Total noninterest income 235.0 222.9 223.3
NONINTEREST EXPENSE
Personnel 278.7 270.6 257.7
Net occupancy 53.5 51.9 53.9
Equipment 37.3 39.2 39.3
FDIC insurance assessments .2 25.9 25.3
Amortization of intangibles 19.0 19.6 14.0
Professional fees 18.0 17.8 11.2
Other expense 153.6 143.6 128.7
----------- ----------- -----------
Total noninterest expense 560.3 568.6 530.1
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 313.2 300.3 345.6
Income taxes 103.6 101.3 116.3
----------- ----------- -----------
NET INCOME $ 209.6 $ 199.0 $ 229.3
=========== =========== ===========
Net income applicable to Common Shares $205.6 $195.0 $225.3
Net income per Common Share .90 .83 .92
Wtd. avg. Common Shares outstanding (000) 228,187 235,329 244,132
Taxable-equivalent adjustment $13.7 $15.0 $14.4
</TABLE>
<PAGE> 8
KEYCORP REPORTS THIRD QUARTER 1995 EARNINGS
OCTOBER 17, 1995
PAGE 8
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<CAPTION>
Nine months ended
-------------------------
9-30-95 9-30-94
-------- --------
<S> <C> <C>
INTEREST INCOME $3,843.0 $3,298.3
INTEREST EXPENSE 1,866.9 1,270.3
-------- --------
NET INTEREST INCOME 1,976.1 2,028.0
Provision for loan losses 66.3 99.0
-------- --------
1,909.8 1,929.0
NONINTEREST INCOME
Service charges on deposit accounts 206.5 198.6
Trust and asset management income 170.4 166.5
Credit card fees 59.9 56.1
Insurance and brokerage income 43.8 46.3
Mortgage banking income 34.3 66.7
Net securities gains (losses) (42.2) 9.0
Other income 156.2 134.1
-------- --------
Total noninterest income 628.9 677.3
NONINTEREST EXPENSE
Personnel 829.2 792.4
Net occupancy 159.6 162.6
Equipment 116.4 118.8
FDIC insurance assessments 51.6 74.1
Amortization of intangibles 55.1 40.3
Professional fees 48.4 35.2
Other expense 429.4 388.2
-------- --------
Total noninterest expense 1,689.7 1,611.6
-------- --------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 849.0 994.7
Income taxes 266.5 335.0
-------- --------
INCOME BEFORE EXTRAORDINARY ITEM 582.5 659.7
Extraordinary net gain from the
sales of subsidiaries, net of
income taxes of $25.3 35.8 --
-------- --------
NET INCOME $ 618.3 $ 659.7
======== ========
Net income applicable to Common Shares $606.3 $647.7
Per Common Share
Income before extraordinary item 2.44 2.66
Net Income 2.59 2.66
Wtd. avg. Common Shares outstanding (000) 234,462 243,635
Taxable-equivalent adjustment $43.7 $43.8
</TABLE>
<PAGE> 9
KEYCORP REPORTS THIRD QUARTER 1995 EARNINGS
OCTOBER 17, 1995
PAGE 9
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
Three months ended
---------------------------------
9-30-95 6-30-95 9-30-94
---------- --------- ----------
<S> <C> <C> <C>
ASSETS
Loans $48,195.7 $48,305.4 $43,616.2
Mortgage loans held for sale 168.1 194.5 463.5
Investment securities 9,807.2 10,138.1 9,617.0
Securities available for sale 1,457.2 1,423.5 3,890.5
Short-term investments 665.9 727.6 136.2
---------- --------- ----------
Total earning assets 60,294.1 60,789.1 57,723.4
Allowance for loan losses (870.4) (869.1) (822.2)
Other assets 7,191.9 7,030.2 6,537.4
---------- --------- ----------
TOTAL ASSETS $66,615.6 $66,950.2 $63,438.6
========== ========= ==========
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,156.8 $ 8,007.2 $ 8,083.0
Interest-bearing 37,416.5 37,585.3 35,718.6
Deposits in foreign offices-interest-bearings 1,867.1 2,520.4 3,407.3
---------- --------- ----------
Total deposits 47,440.4 48,112.9 47,208.9
Federal funds purchased and securities
sold under repurchase agreements 5,672.0 5,036.8 6,295.9
Other short-term borrowings 3,374.7 3,686.4 2,052.9
Other liabilities 1,406.8 1,441.6 1,094.9
Long-term debt 4,046.3 3,874.9 2,144.3
---------- --------- ----------
TOTAL LIABILITIES 61,940.2 62,152.6 58,796.9
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0 160.0
Common equity 4,515.4 4,637.6 4,481.7
---------- --------- ----------
TOTAL SHAREHOLDERS' EQUITY 4,675.4 4,797.6 4,641.7
TOTAL LIABILITIES AND ---------- --------- ----------
SHAREHOLDERS' EQUITY $66,615.6 $66,950.2 $63,438.6
========== ========= ==========
</TABLE>
<PAGE> 10
KEYCORP REPORTS THIRD QUARTER 1995 EARNINGS
OCTOBER 17, 1995
PAGE 10
CONSOLIDATED YEAR-TO-DATE AVERAGE BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
Nine months ended
---------------------
9-30-95 9-30-94
---------- ---------
<S> <C> <C>
ASSETS
Loans $47,801.1 $41,995.9
Mortgage loans held for sale 201.6 820.5
Investment securities 10,057.3 8,856.7
Securities available for sale 1,500.7 4,478.0
Short-term investments 886.3 127.5
--------- ---------
Total earning assets 60,447.0 56,278.6
Allowance for loan losses (864.4) (819.2)
Other assets 7,092.9 6,410.3
--------- ---------
TOTAL ASSETS $66,675.5 $61,869.7
========= =========
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,040.7 $ 7,981.3
Interest-bearing 37,261.5 35,742.6
Deposits in foreign offices-interest-bearing 2,564.3 3,029.0
--------- ---------
Total deposits 47,866.5 46,752.9
Federal funds purchased and securities
sold under repurchase agreements 5,404.5 5,847.9
Other short-term borrowings 3,453.6 1,619.3
Other liabilities 1,371.3 1,106.8
Long-term debt 3,846.2 1,975.1
--------- ---------
TOTAL LIABILITIES 61,942.1 57,302.0
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0
Common equity 4,573.4 4,407.7
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 4,733.4 4,567.7
TOTAL LIABILITIES AND --------- ---------
SHAREHOLDERS' EQUITY $66,675.5 $61,869.7
</TABLE> ========= =========
<PAGE> 1
[KEYCORP LOGO]
NEWS KEYCORP
127 Public Square
Cleveland, Ohio 44114-1306
Tel: 216 689-0234
Fax: 216 689-5115
MEDIA CONTACTS: ANALYST CONTACTS:
Bill Murschel (216) 689-0457 Jay S. Gould (216) 689-4721
John Fuller (216) 689-8140 Vernon L. Patterson (216) 689-0520
FOR IMMEDIATE RELEASE
KEYCORP REPORTS THIRD QUARTER 1995 EARNINGS
-------------------------------------------
CLEVELAND, October 17, 1995 -- KeyCorp (NYSE: KEY) today reported
earnings of $210 million, or $0.90 per common share, for the 1995 third
quarter. This was up from $199 million, or $0.83 per common share, for the
1995 second quarter. Earnings in the 1994 third quarter were $229 million, or
$0.92 per common share.
"We are pleased to report another quarter of solid earnings improvement
concurrent with excellent progress in implementing several previously announced
strategic initiatives," said Robert W. Gillespie, KeyCorp president and chief
executive officer. "Loan volume was good and credit quality remained strong.
We were also encouraged by continued growth in revenues from our fee-based
businesses. The reduction in FDIC insurance premiums also positively impacted
the quarter, bringing consumer deposit costs more in line with historical
experience."
Gillespie continued, "The most important strategic event of the quarter
was the formalization of our national consumer finance business. KeyBank USA
(Ohio) was established and will serve as the national platform for all of our
non-branch related consumer finance businesses including automotive financing,
marine and recreational vehicle lending, student loans, and credit cards. We
also completed the AutoFinance Group, Inc. acquisition, giving us a nationwide
presence in the non-prime auto finance market and making KeyCorp a full-service
lender to our dealer relationships across the country. This was an important
step in fulfilling our commitment to be one of the nation's top consumer
lenders."
-- more --
AMERICA'S FIRST CHOICE
<PAGE> 2
KEYCORP EARNINGS
OCTOBER 17, 1995
PAGE 2
Gillespie concluded, "During the fourth quarter, we plan to complete
the share repurchase program announced for 1995. There are approximately 4.1
million shares remaining in that 12 million share program."
James W. Wert, KeyCorp senior executive vice president, said, "The
corporation continued to exhibit good core earnings momentum in the third
quarter with a return on average total assets of 1.25% and a return on average
common equity of 18.07%. Average common shares declined from 235 million
shares in the second quarter to 228 million shares in the third quarter,
reflecting the impact of KeyCorp's share repurchase program. Total shares
repurchased through the first nine months of 1995 were 19.9 million. On
September 27, 1995, 9.6 million shares were reissued in connection with the
AutoFinance Group, Inc. acquisition."
Wert continued, "Consistent with our focus on managing the balance
sheet to generate superior returns on capital, during the third quarter we
completed a $299 million securitization of auto loans, our first, and sold $500
million of residential mortgage loans. These loan sales and securitizations,
involving lower spread assets, had the positive effects of improving the net
interest margin, increasing liquidity and enhancing capital flexibility."
Net interest income in the third quarter totaled $666 million,
unchanged from the second quarter. Average earning assets declined by $495
million, primarily due to the securitization of auto loans, the sale of
residential mortgage loans, and the continued runoff of investment securities.
Excluding these items, average earning assets would have increased modestly
from the prior quarter and average loans would have increased $638 million, or
5% on an annualized basis. The net interest margin in the 1995 third quarter
was 4.50 percent, up slightly from the previous quarter, reflecting stable loan
and deposit spreads.
-more-
<PAGE> 3
KEYCORP EARNINGS
OCTOBER 17, 1995
PAGE 3
Noninterest income in the 1995 third quarter totaled $235 million,
compared with $223 million in the second quarter. Excluding net securities
transactions, noninterest income increased by $14 million, or 7 percent,
compared to the 1995 second quarter. Service charges on deposit accounts,
credit card fees, insurance and brokerage income and mortgage banking income
all posted increases over the prior quarter, while trust and asset management
revenues were down slightly from a strong 1995 second quarter, but up 8% from
the prior year quarter. Other income was up $10 million from the prior
quarter, reflecting $4 million in gains from loan sales and securitizations,
with the remainder of the increase spread over a number of activities.
Noninterest expense in the 1995 third quarter totaled $560 million,
compared with $569 million in the second quarter. The decrease reflected a
retroactive reduction in the Bank Insurance Fund assessment rate, resulting in
a $25 million return of insurance premiums for the period covering June 1 to
September 30, 1995, with $18 million of this amount applicable to the current
quarter. This insurance premium decrease was partially offset by a $16
milllion increase in expenses, largely due to spending in support of our
strategic initiatives. Total noninterest expense in the third quarter included
$11 milllion of strategic expenses, up from $7 million in the previous quarter.
Asset quality measures remained strong. Nonperforming assets remained
stable in the quarter and represented 0.76 percent of loans plus other real
estate owned and other nonperforming assets at September 30, 1995. Net loan
charge-offs in the third quarter remained low at only $28 million, or 0.23
percent of average loans. The provision for loan losses for the 1995 third
quarter was $28 million, covering the quarter's net loan charge-offs. The
allowance for loan losses as a percent of period-end loans remained stable at
1.82 perecent. At the end of the third quarter, the nonperforming loan
coverage ratio was 281 percent, up from 279 percent in the prior quarter.
At September 30, 1995, KeyCorp's assets totaled $68.0 billion and
shareholders' equity totaled $5.1 billion. The Tier 1 Capital ratio was
estimated at 7.58 percent and the Total Capital ratio was estimated at 10.84
percent.
###
