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<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): July 20, 1995
KEYCORP
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
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)
Registrant's telephone number, including area code: (216) 689-6300
<PAGE> 2
Item 5. Other Events
------------
On July 20, 1995, the Registrant issued a press release
announcing its earnings results for the three month and
six month periods ended June 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 July 20, 1995 press release announcing
its earnings results for the three month and six
month periods ended June 30, 1995.
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)
/s/ Lee Irving
Date: July 20, 1995 ------------------------
By: Lee Irving
Executive Vice President
and Chief Accounting
Officer
<PAGE> 1
EXHIBIT 99
KEYCORP [KEYCORP LOGO]
NEWS 127 Public Square, Cleveland, Ohio 44114
MEDIA CONTACTS: ANALYST CONTACTS:
Bill Murschel (216) 689-0457 Jay S. Gould (216) 689-4721
W. John Fuller (216) 689-8140 Vernon L. Patterson (216) 689-0520
FOR IMMEDIATE RELEASE
KEYCORP REPORTS SECOND QUARTER 1995 EARNINGS
--------------------------------------------
CLEVELAND, July 20, 1995 -- KeyCorp (NYSE: KEY) today reported
earnings of $199 million, or $0.83 per common share, for the 1995 second
quarter. This compares with operating earnings of $189 million, or $0.77 per
common share, for the 1995 first quarter. Total earnings per common share for
the first quarter were $0.86, including $0.09 of nonrecurring items and tax
benefits.
"Second quarter earnings were solid and marked the return of earnings
growth momentum," said Victor J. Riley, Jr., KeyCorp chairman and chief
executive officer. "Adjusting for the first quarter's nonrecurring items and
tax benefits, second quarter 1995 earnings per common share were up $0.06, or 8
percent, from $0.77 in the first quarter. Second quarter results were
positively impacted by continued strong loan growth, a higher net interest
margin, increased fee income, and excellent asset quality."
Riley continued, "During the second quarter, we also made a number of
significant management announcements to position us for the future. We believe
that we have an excellent management team that will maintain KeyCorp's position
as a leader in the financial services industry. I was personally pleased to
announce that Robert W. Gillespie will assume the role of chief executive
officer, effective September 1, 1995."
-more-
<PAGE> 2
KEYCORP EARNINGS
JULY 20, 1995
PAGE 2
"During the quarter, we made progress on several strategic
initiatives," said Robert W. Gillespie, KeyCorp president. "These included the
creation of a new operating platform for our national consumer finance business
and the implementation of the initial phase of reconfiguring the branch
delivery system in two of our markets. We also announced the appointment of
the executives who will be responsible for managing our four banking regions."
James W. Wert, KeyCorp senior executive vice president and chief
financial officer, said, "Several important activities were undertaken to
enhance shareholder value. During the second quarter, KeyCorp repurchased 11.7
million shares of its common stock for several previously announced purposes,
the most significant being the anticipated closing of the AutoFinance Group,
Inc. acquisition by early October. Also, the corporation initiated its first
securitization of auto loans in the amount of $299 million, which will close in
July. In addition, approximately $500 million of seasoned 15 and 30 year
residential mortgage loans were sold and will settle in July. Neither of these
transactions impacted second quarter earnings. These loan sales and
securitizations, involving lower spread assets, will have the effect of
improving loan spreads and increasing capital flexibility in future periods."
Net interest income in the second quarter totaled $666 million,
compared with $644 million in the first quarter. The improvement from the
prior quarter resulted from a 4 percent annualized increase in average earning
assets and an increase in the net interest margin from 4.38 percent to 4.49
percent. The increase in the net interest margin over the first quarter was
mainly due to wider loan spreads, as well as some benefits from prior period
adjustments. All in all, the margin was somewhat above our expectations.
Average loans, excluding acquisitions, were up $712 million, or 6
percent on an annualized basis, compared with the first quarter. Loan growth
was led by the commercial sector, where annualized growth exceeded 10 percent
for the third consecutive quarter.
-more-
<PAGE> 3
KEYCORP EARNINGS
JULY 20, 1995
PAGE 3
Noninterest income in the 1995 second quarter totaled $223 million,
compared with $171 million in the first quarter. Excluding net securities
transactions and special asset management fees, core noninterest income
increased by $5 million, or 3 percent, compared to the 1995 first quarter,
despite a $10 million reduction in mortgage banking income resulting from the
first quarter sale of KeyCorp's mortgage servicing business. Service charges,
credit card fees and trust income all posted healthy increases over the prior
quarter, with the latter impacted by the acquisition of the investment
management firm of Spears, Benzak, Salomon & Farrell in April.
Noninterest expense in the 1995 second quarter totaled $569 million,
compared with $561 million in the first quarter. During the second quarter,
additional expenses resulting from acquisitions completed during the previous
quarter were largely offset by cost savings realized in connection with the
sale of the mortgage servicing business. The second quarter also included
approximately $7 million of expenses related to the implementation of several
strategic initiatives previously announced.
Asset quality measures remained strong. Nonperforming assets were
essentially unchanged from the prior quarter at 0.76 percent of loans plus
other real estate owned and other nonperforming assets. Net loan charge-offs
in the second quarter remained historically low at $20 million, or 0.17 percent
of average loans. The provision for loan losses for the 1995 second quarter
was $20 million, covering the quarter's net loan charge-offs. At the end of
the second quarter, nonperforming loan and nonperforming asset coverage ratios
were 279 percent and 237 percent, respectively.
At June 30, 1995, KeyCorp's assets totaled $67.5 billion and
shareholders' equity totaled $4.7 billion. The Tier 1 Capital ratio was
estimated at 7.42 percent and the Total Capital ratio was estimated at 10.77
percent.
# # #
<PAGE> 4
<TABLE>
KEYCORP REPORTS SECOND QUARTER 1995 EARNINGS
JULY 20, 1995
PAGE 4
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<CAPTION>
Three months ended
----------------------------------------------
6-30-95 3-31-95 6-30-94
------------- ------------- -------------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (TE) $681.3 $658.8 $695.1
Provision for loan losses 20.3 18.5 35.0
Noninterest income 222.9 171.0 227.4
Noninterest expense 568.6 560.8 538.7
Income before extraordinary item 199.0 173.9 221.8
Net income 199.0 209.7 221.8
PER COMMON SHARE
Income before extraordinary item $0.83 $0.71 $0.89
Net income 0.83 0.86 0.89
Cash dividends 0.36 0.36 0.32
Book value at period-end 19.71 19.57 18.17
Market price at period-end 31.38 28.25 31.88
AT PERIOD-END
Full-time equivalent employees 29,233 30,370 29,810
Full-service banking offices 1,308 1,314 1,275
PERFORMANCE RATIOS
Return on average total assets 1.19 % 1.28 % 1.43 %
Return on average common equity 16.86 18.26 19.77
Return on average total equity 16.63 17.99 19.43
Efficiency (1) 63.05 64.12 58.43
Overhead (2) 51.10 52.36 44.87
Net interest margin 4.49 4.38 4.92
CAPITAL RATIOS AT PERIOD-END
Equity to assets 6.93 % 7.12 % 7.26 %
Tangible equity to tangible assets 5.75 6.02 6.42
Tier 1 risk-adjusted capital (3) 7.42 7.96 8.77
Total risk-adjusted capital (3) 10.77 11.05 12.03
Leverage (3) 5.91 6.24 6.76
<FN>
(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) 6-30-95 ratio is estimated.
TE = Taxable equivalent
</TABLE>
<PAGE> 5
<TABLE>
KEYCORP REPORTS SECOND QUARTER 1995 EARNINGS
JULY 20, 1995
PAGE 5
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<CAPTION>
Three months ended
----------------------------------------------
6-30-95 3-31-95 6-30-94
------------- ------------- -------------
<S> <C> <C> <C>
ASSET QUALITY
Net loan charge-offs $20.0 $17.3 $31.2
Net loan charge-offs to average loans 0.17 % 0.15 % 0.30 %
Allowance for loan losses $867.5 $867.1 $816.4
Allowance for loan losses to
period-end loans 1.80 % 1.81 % 1.89 %
Allowance for loan losses to
nonperforming loans 278.88 285.51 264.21
Nonperforming loans at period-end $311.1 $303.7 $309.0
Nonperforming assets at period-end 366.3 362.5 431.9
Nonperforming loans to period-end loans 0.65 % 0.63 % 0.72 %
Nonperforming assets to period-end loans plus
OREO and other nonperforming assets 0.76 0.75 1.00
Six months ended
-----------------------------
6-30-95 6-30-94
------------- -------------
SUMMARY OF OPERATIONS
Net interest income (TE) $1,340.1 $1,377.8
Provision for loan losses 38.8 71.8
Noninterest income 393.9 454.0
Noninterest expense 1,129.4 1,081.5
Income before extraordinary item 372.9 430.4
Net income 408.7 430.4
PER COMMON SHARE
Income before extraordinary item $1.54 $1.74
Net income 1.69 1.74
Cash dividends 0.72 0.64
PERFORMANCE RATIOS
Return on average total assets 1.24 % 1.42 %
Return on average common equity 17.55 19.49
Return on average total equity 17.30 19.16
Efficiency (1) 63.58 59.27
Overhead (2) 51.72 46.05
Net interest margin 4.44 4.97
ASSET QUALITY
Net loan charge-offs $37.3 $62.5
Net loan charge-offs to average loans 0.16 % 0.30 %
</TABLE>
<PAGE> 6
<TABLE>
KEYCORP REPORTS SECOND QUARTER 1995 EARNINGS
JULY 20, 1995
PAGE 6
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
<CAPTION>
ASSETS 6-30-95 3-31-95 6-30-94
------------- ------------- -------------
<S> <C> <C> <C>
Loans $48,093.2 $48,020.8 $43,157.6
Mortgage loans held for sale 698.3 164.6 529.6
Investment securities 9,918.4 10,395.5 9,311.6
Securities available for sale 1,436.5 1,534.2 4,169.7
Short-term investments 799.3 1,052.0 178.5
------------- ------------- -------------
Total earning assets 60,945.7 61,167.1 57,347.0
Allowance for loan losses (867.5) (867.1) (816.4)
Cash and due from banks 3,197.0 3,303.2 3,132.9
Premises and equipment 1,017.8 1,016.4 933.3
Other real estate owned 50.2 54.1 118.0
Goodwill 660.5 598.0 372.0
Other intangible assets 180.5 196.7 194.7
Other assets 2,297.0 2,240.6 2,078.2
------------- ------------- -------------
TOTAL ASSETS $67,481.2 $67,709.0 $63,359.7
============= ============= =============
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $8,603.9 $8,300.3 $8,414.2
Interest-bearing 37,738.0 37,792.8 35,787.8
Deposits in foreign offices-interest-bearing 2,330.3 2,719.2 3,594.2
------------- ------------- -------------
Total deposits 48,672.2 48,812.3 47,796.2
Federal funds purchased and securities
sold under repurchase agreements 4,793.9 4,980.8 5,509.7
Other short-term borrowings 4,067.4 3,927.3 2,326.4
Other liabilities 1,253.7 1,445.9 1,013.1
Long-term debt 4,019.6 3,725.2 2,123.6
------------- ------------- -------------
TOTAL LIABILITIES 62,806.8 62,891.5 58,769.0
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0 160.0
Common equity 4,514.4 4,657.5 4,430.7
------------- ------------- -------------
TOTAL SHAREHOLDERS' EQUITY 4,674.4 4,817.5 4,590.7
TOTAL LIABILITIES AND ------------- ------------- -------------
SHAREHOLDERS' EQUITY $67,481.2 $67,709.0 $63,359.7
============= ============= =============
Common Shares outstanding (000) 229,032 238,188 244,246
</TABLE>
<PAGE> 7
<TABLE>
KEYCORP REPORTS SECOND QUARTER 1995 EARNINGS
JULY 20, 1995
PAGE 7
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------
6-30-95 3-31-95 6-30-94
------------- ------------- -------------
<S> <C> <C> <C>
INTEREST INCOME $1,298.8 $1,245.4 $1,102.6
INTEREST EXPENSE 632.5 601.6 422.3
------------- ------------- -------------
NET INTEREST INCOME 666.3 643.8 680.3
Provision for loan losses 20.3 18.5 35.0
------------- ------------- -------------
646.0 625.3 645.3
NONINTEREST INCOME
Service charges on deposit accounts 70.1 65.7 68.4
Trust and asset management income 59.5 52.7 55.6
Mortgage banking income 7.5 17.7 22.6
Credit card fees 20.6 16.7 18.9
Insurance and brokerage income 14.6 12.7 15.4
Special asset management fees 1.9 2.7 6.8
Net securities gains (losses) 2.5 (44.9) 0.6
Other income 46.2 47.7 39.1
------------- ------------- -------------
Total noninterest income 222.9 171.0 227.4
NONINTEREST EXPENSE
Personnel 270.6 279.9 264.3
Net occupancy 51.9 54.2 53.2
Equipment 39.2 39.9 39.6
FDIC insurance assessments 25.9 25.5 24.8
Amortization of intangibles 19.6 16.5 13.8
Professional fees 17.8 12.6 11.5
Other expense 143.6 132.2 131.5
------------- ------------- -------------
Total noninterest expense 568.6 560.8 538.7
------------- ------------- -------------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 300.3 235.5 334.0
Income taxes 101.3 61.6 112.2
------------- ------------- -------------
INCOME BEFORE EXTRAORDINARY ITEM 199.0 173.9 221.8
Extraordinary net gain from the
sales of subsidiaries, net of
income taxes of $25.3 --- 35.8 ---
------------- ------------- -------------
NET INCOME $199.0 $209.7 $221.8
============= ============= =============
Net income applicable to Common Shares $195.0 $205.7 $217.8
Per Common Share
Income before extraordinary item 0.83 0.71 0.89
Net income 0.83 0.86 0.89
Wtd. avg. Common Shares outstanding (000) 235,329 239,999 244,823
Taxable-equivalent adjustment $15.0 $15.0 $14.8
</TABLE>
<PAGE> 8
<TABLE>
KEYCORP REPORTS SECOND QUARTER 1995 EARNINGS
JULY 20, 1995
PAGE 8
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<CAPTION>
Six months ended
-----------------------------
6-30-95 6-30-94
------------- -------------
<S> <C> <C>
INTEREST INCOME $2,544.2 $2,147.6
INTEREST EXPENSE 1,234.1 799.2
------------- -------------
NET INTEREST INCOME 1,310.1 1,348.4
Provision for loan losses 38.8 71.8
------------- -------------
1,271.3 1,276.6
NONINTEREST INCOME
Service charges on deposit accounts 135.8 130.7
Trust and asset management income 112.2 112.6
Mortgage banking income 25.2 47.4
Credit card fees 37.3 35.6
Insurance and brokerage income 27.3 31.4
Special asset management fees 4.6 9.0
Net securities gains (losses) (42.4) 7.0
Other income 93.9 80.3
------------- -------------
Total noninterest income 393.9 454.0
NONINTEREST EXPENSE
Personnel 550.5 534.8
Net occupancy 106.1 108.7
Equipment 79.1 79.5
FDIC insurance assessments 51.4 48.8
Amortization of intangibles 36.1 26.5
Professional fees 30.4 24.0
Other expense 275.8 259.2
------------- -------------
Total noninterest expense 1,129.4 1,081.5
------------- -------------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 535.8 649.1
Income taxes 162.9 218.7
------------- -------------
INCOME BEFORE EXTRAORDINARY ITEM 372.9 430.4
Extraordinary net gain from the
sales of subsidiaries, net of
income taxes of $25.3 35.8 ---
------------- -------------
NET INCOME $408.7 $430.4
============= =============
Net income applicable to Common Shares $400.7 $422.4
Per Common Share
Income before extraordinary item 1.54 1.74
Net income 1.69 1.74
Wtd. avg. Common Shares outstanding (000) 237,651 243,383
Taxable-equivalent adjustment $30.0 $29.4
</TABLE>
<PAGE> 9
<TABLE>
KEYCORP REPORTS SECOND QUARTER 1995 EARNINGS
JULY 20, 1995
PAGE 9
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(in millions)
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------
ASSETS 6-30-95 3-31-95 6-30-94
------------- ------------- -------------
<S> <C> <C> <C>
Loans $48,305.4 $46,888.0 $42,092.2
Mortgage loans held for sale 194.5 243.0 866.1
Investment securities 10,138.1 10,231.2 9,189.1
Securities available for sale 1,423.5 1,623.0 4,297.7
Short-term investments 727.6 1,272.2 91.8
------------- ------------- -------------
Total earning assets 60,789.1 60,257.4 56,536.9
Allowance for loan losses (869.1) (853.4) (819.6)
Other assets 7,030.2 7,054.9 6,441.9
------------- ------------- -------------
TOTAL ASSETS $66,950.2 $66,458.9 $62,159.2
============= ============= =============
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $8,007.2 $7,955.9 $8,055.1
Interest-bearing 37,585.3 36,775.8 35,903.6
Deposits in foreign offices-interest-bearing 2,520.4 3,321.2 2,993.7
------------- ------------- -------------
Total deposits 48,112.9 48,052.9 46,952.4
Federal funds purchased and securities
sold under repurchase agreements 5,036.8 5,502.6 6,240.0
Other short-term borrowings 3,686.4 3,298.9 1,363.0
Other liabilities 1,441.6 1,263.8 1,006.0
Long-term debt 3,874.9 3,612.9 2,020.0
------------- ------------- -------------
TOTAL LIABILITIES 62,152.6 61,731.1 57,581.4
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0 160.0
Common equity 4,637.6 4,567.8 4,417.8
------------- ------------- -------------
TOTAL SHAREHOLDERS' EQUITY 4,797.6 4,727.8 4,577.8
TOTAL LIABILITIES AND ------------- ------------- -------------
SHAREHOLDERS' EQUITY $66,950.2 $66,458.9 $62,159.2
============= ============= =============
</TABLE>
<PAGE> 10
<TABLE>
KEYCORP REPORTS SECOND QUARTER 1995 EARNINGS
JULY 20, 1995
PAGE 10
CONSOLIDATED YEAR-TO-DATE AVERAGE BALANCE SHEETS
(in millions)
<CAPTION>
SIX MONTHS ENDED
---------------------------
ASSETS 6-30-95 6-30-94
------------ ------------
<S> <C> <C>
Loans $47,600.6 $41,172.3
Mortgage loans held for sale 218.6 1,001.9
Investment securities 10,184.4 8,470.3
Securities available for sale 1,522.7 4,776.6
Short-term investments 998.4 123.1
------------ ------------
Total earning assets 60,524.7 55,544.2
Allowance for loan losses (861.3) (817.7)
Other assets 7,042.5 6,345.7
------------ ------------
TOTAL ASSETS $66,705.9 $61,072.2
============ ============
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $7,981.7 $7,929.6
Interest-bearing 37,182.8 35,754.8
Deposits in foreign offices-interest-bearing 2,918.6 2,836.7
------------ ------------
Total deposits 48,083.1 46,521.1
Federal funds purchased and securities
sold under repurchase agreements 5,268.4 5,620.1
Other short-term borrowings 3,493.7 1,398.9
Other liabilities 1,353.2 1,112.8
Long-term debt 3,744.6 1,889.2
------------ ------------
TOTAL LIABILITIES 61,943.0 56,542.1
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0
Common equity 4,602.9 4,370.1
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 4,762.9 4,530.1
TOTAL LIABILITIES AND ------------ ------------
SHAREHOLDERS' EQUITY $66,705.9 $61,072.2
============ ============
</TABLE>
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