<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 18, 1996
KEYCORP
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-850 63-0593897
- ----------------------------- ---------------------- -------------------
(State or other jurisdiction Commission File Number (I.R.S. Employer
of incorporation or organization) 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 Janaury 18, 1996, the Registrant issued a press release announcing
its earnings results for the three month period and twelve month
period ended December 31, 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 January 18, 1996, press release announcing
its earnings results for the three month period and twelve
month period ended December 31, 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: January 19, 1996 /s/ Lee Irving
---------------------------------
By: Lee Irving
Executive Vice President
and Chief Accounting
Officer
<PAGE> 4
[KEYCORP LOGO APPEARS HERE]
NEWS
KEYCORP
127 Public Square
Cleveland, Ohio 44114-1306
MEDIA CONTACTS: ANALYST CONTACTS:
John Fuller (216) 689-8140 Jay S. Gould (216) 689-4721
Bill Murschel (216) 689-0457 Vernon L. Patterson (216) 689-0520
FOR IMMEDIATE RELEASE
KEYCORP REPORTS FOURTH QUARTER 1995 EARNINGS;
ANNOUNCES DIVIDEND INCREASE AND
STOCK REPURCHASE PROGRAM
- - FOURTH QUARTER EPS OF $0.86 VS. $0.79 A YEAR AGO, UP 9%
- - DIVIDEND INCREASED 5.6 PERCENT, 31ST CONSECUTIVE YEAR
- - NEW SHARE REPURCHASE PROGRAM AUTHORIZATION UP TO 12 MILLION SHARES
CLEVELAND, January 18, 1996 -- KeyCorp (NYSE: KEY) today reported
earnings of $207 million, or $0.86 per common share, for the 1995 fourth
quarter. This compares with earnings of $194 million, or $0.79 per common
share, for the 1994 fourth quarter. For the full-year 1995, earnings were $825
million, or $3.45 per common share, compared with $853 million, or $3.45 per
common share, for the prior year.
Robert W. Gillespie, KeyCorp president and chief executive officer,
said, "While earnings per share in both years were the same at $3.45, the
earnings outlook at the end of 1995 is vastly improved compared to a year ago.
We were pleased with our overall financial performance in 1995, especially in
light of the significant strategic investments that have been made to position
KeyCorp as one of the premier bank-based financial services companies in the
country. We anticipate significant earnings growth in 1996 and beyond as these
strategic investments generate higher returns in our core businesses."
Gillespie continued, "Reflecting confidence in the company's
underlying financial strength and earnings outlook, the Board of Directors
declared a 5.6 percent increase in the quarterly common stock dividend. This
makes 1996 the 31st consecutive year in which the dividend has increased."
-- more --
<PAGE> 5
KEYCORP EARNINGS
JANUARY 18, 1996
PAGE 2
"As we continue to focus on maximizing the utilization of capital,
assets not meeting our return on equity requirements will remain candidates for
securitization and/or sale. This discipline was reflected in the
securitization and sale of $820 million of student and auto loans and the sale
of $510 million of residential mortgage loans in the 1995 fourth quarter and is
anticipated to result in additional loan sales and securitizations in 1996.
This philosophy also led us to the sale of our Florida savings bank, a
transaction expected to close in the second quarter of 1996," Gillespie said.
Gillespie concluded, "To give us the flexibility needed to continue
our aggressive management of capital, the Board of Directors approved a new
share repurchase program. This program, similar to the 1995 action, authorizes
the repurchase of up to an additional 12 million shares, representing
approximately 5 percent of the common shares outstanding. This is a one-year
authorization and the shares will be repurchased from time to time in the open
market or through negotiated transactions. Repurchased shares will be placed
in treasury and subsequently reissued in connection with the employee stock
purchase, 401(k), stock option, and dividend reinvestment plans, as well as for
other corporate purposes."
FOURTH QUARTER 1995 EARNINGS REVIEW AND ANALYSIS
Earnings in the 1995 fourth quarter included a positive pre-tax
adjustment of $18 million ($12 million after tax) resulting from
better-than-expected performance of student loan securitizations completed in
prior periods and a pre-tax write-off of $25 million ($15 million after tax) of
obsolete software.
James W. Wert, KeyCorp senior executive vice president, said, "The
results for the fourth quarter of 1995 were consistent with our expectations
and represented the third consecutive quarter of improved core earnings.
During the quarter we also executed a number of balance sheet strategies
designed to optimize our return on capital. In addition to loan sales and
securitizations, KeyCorp completed the repurchase of 4 million shares remaining
under the 1995 authorization. This brings the total number of shares
repurchased in 1995 to 24 million, with 17 million shares reissued, primarily
in connection with acquisitions. Average common shares increased to 236
million shares in the fourth quarter from 228 million shares in the third
quarter. This reflected the 9.6 million shares reissued on September 27, 1995,
to acquire AutoFinance Group, Inc.."
-- more --
<PAGE> 6
KEYCORP EARNINGS
JANUARY 18, 1996
PAGE 3
Given the focus on improving portfolio yields, the company continued
to dispose of lower spread assets through loan sales, securitizations, and a
reduction in securities. Reflecting these actions, the 1995 fourth quarter net
interest margin was 4.53 percent, up 3 basis points from the previous quarter
and average earning assets declined $815 million. Net interest income in the
1995 fourth quarter totaled $661 million, down $6 million from the 1995 third
quarter. Excluding securitizations, loan sales and the impact of acquisitions,
average loans increased $846 million, or 7 percent, on an annualized basis.
During the 1995 fourth quarter, $8.0 billion of securities were
reclassified from the held-to-maturity to the available-for-sale portfolio in
conjunction with an opportunity provided by the Financial Accounting Standards
Board. This reclassification, which had no impact on earnings, provides
additional balance sheet flexibility.
Noninterest income in the 1995 fourth quarter totaled $304 million, up
$69 million from the $235 million reported in the 1995 third quarter. The
increase was partially attributable to a positive adjustment of $18 million
from better-than-expected performance of student loan securitizations completed
in prior periods. Of this adjustment, $13 million related to student loan
securitization transactions entered into in 1993 and 1994 and $5 million
related to a transaction completed earlier in 1995. Excluding this item,
noninterest income increased by $51 million, or 22 percent, compared to the
third quarter. Loan securitization income in the 1995 fourth quarter was $38
million excluding the $18 million adjustment. Trust and asset management
income, service charges on deposit accounts, credit card fees and insurance and
brokerage income all posted increases over the 1995 third quarter.
Noninterest expense in the 1995 fourth quarter totaled $622 million,
up $62 million from the $560 million in the 1995 third quarter. The increase
reflected a $25 million write-off of obsolete software and the third quarter
1995 retroactive reduction in FDIC insurance assessment, which reduced that
quarter's expense by $7 million. Excluding the above items, core noninterest
expense was $596 million, up $29 million from the prior quarter. In the fourth
quarter core noninterest expense included $20 million of expenses related to
strategic initiatives, up from $11 million in the previous quarter.
-- more --
<PAGE> 7
KEYCORP EARNINGS
JANUARY 18, 1996
PAGE 4
Asset quality trends in the 1995 fourth quarter were consistent with
expectations. Nonperforming assets ended the fourth quarter at $379 million,
up $11 million from the previous quarter, and represented only 0.79 percent of
loans plus other real estate owned and other nonperforming assets at December
31, 1995. Net loan charge-offs in the 1995 fourth quarter were $34 million, or
0.29 percent of average loans. This compares with $28 million, or 0.23 percent
of average loans in the previous quarter. The modest increase in net
charge-offs was primarily attributable to the acquisition of AutoFinance Group,
Inc. and the continued slowdown in the rate of recoveries. For the full-year
1995 net charge-offs were $99 million, or 0.21 percent of average loans, down
from $109 million, or 0.26 percent of average loans, in 1994. The provision
for loan losses for the 1995 fourth quarter was $34 million, covering the
quarter's net loan charge-offs. The allowance for loan losses as a percent of
period-end loans remained stable at 1.84 percent. At the end of the fourth
quarter, the nonperforming loan coverage ratio was 263 percent, down from 281
percent in the prior quarter.
At December 31, 1995, KeyCorp's assets totaled $66.3 billion and
shareholders' equity totaled $5.2 billion. The Tier 1 Capital ratio was
estimated at 7.48 percent and the Total Capital ratio was estimated at 10.73
percent.
# # #
<PAGE> 8
KEYCORP REPORTS FOURTH QUARTER 1995 EARNINGS
JANUARY 18, 1996
PAGE 5
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
--------------------------------
12-31-95 9-30-95 12-31-94
--------- --------- --------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (TE) $674.2 $679.7 $680.3
Provision for loan losses 34.2 27.5 26.2
Noninterest income 304.1 235.0 205.3
Noninterest expense 621.9 560.3 555.6
Net income 206.7 209.6 193.8
PER COMMON SHARE
Net income $ .86 $ .90 $ .79
Cash dividends .36 .36 .32
Book value at period-end 21.36 20.74 18.88
Market price at period-end 36.25 34.25 25.00
AT PERIOD-END
Full-time equivalent employees 29,563 29,560 29,211
Full-service banking offices 1,284 1,293 1,272
PERFORMANCE RATIOS
Return on average total assets 1.23 % 1.25 % 1.19 %
Return on average common equity 16.31 18.07 16.61
Return on average total equity 16.11 17.79 16.38
Efficiency (1) 63.67 61.27 61.10
Overhead (2) 47.36 47.89 48.01
Net interest margin 4.53 4.50 4.60
CAPITAL RATIOS AT PERIOD-END
Equity to assets 7.77 % 7.48 % 7.03 %
Tangible equity to tangible assets 6.25 5.98 6.19
Tier 1 risk-adjusted capital (3) 7.48 7.55 8.48
Total risk-adjusted capital (3) 10.73 10.84 11.62
Leverage (3) 6.22 6.19 6.63
<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) 12-31-95 ratio is estimated.
TE = Taxable equivalent
</FN>
</TABLE>
<PAGE> 9
KEYCORP REPORTS FOURTH QUARTER 1995 EARNINGS
JANUARY 18, 1996
PAGE 6
Financial Highlights
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
---------------------------------
12-31-95 9-30-95 12-31-94
--------- --------- ---------
<S> <C> <C> <C>
ASSET QUALITY
Net loan charge-offs $34.3 $27.6 $20.8
Net loan charge-offs to average loans .29 % .23 % .19 %
Allowance for loan losses $876.0 $879.2 $830.3
Allowance for loan losses to
period-end loans 1.84 % 1.82 % 1.80 %
Allowance for loan losses to
nonperforming loans 263.15 280.53 324.27
Nonperforming loans at period-end $332.9 $313.4 $256.0
Nonperforming assets at period-end 378.6 367.3 339.8
Nonperforming loans to period-end loans .70 % .65 % .55 %
Nonperforming assets to period-end loans plus
OREO and other nonperforming assets .79 .76 .73
</TABLE>
<TABLE>
<CAPTION>
Twelve months ended
---------------------
12-31-95 12-31-94
--------- ---------
<S> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (TE) $2,694.0 $2,752.1
Provision for loan losses 100.5 125.2
Noninterest income 933.0 882.6
Noninterest expense 2,311.6 2,167.2
Income before extraordinary item 789.2 853.5
Net income 825.0 853.5
PER COMMON SHARE
Income before extraordinary item $3.30 $3.45
Net income 3.45 3.45
Cash dividends 1.44 1.28
PERFORMANCE RATIOS
Return on average total assets 1.24 % 1.36 %
Return on average common equity 17.35 18.87
Return on average total equity 17.10 18.56
Effeciency (1) 63.03 59.39
Overhead (2) 49.66 46.14
Net interest margin 4.47 4.83
ASSET QUALITY
Net loan charge-offs $99.2 $109.2
Net loan charge-offs to average loans .21 % .26 %
</TABLE>
<PAGE> 10
KEYCORP REPORTS FOURTH QUARTER 1995 EARNINGS
JANUARY 18, 1996
PAGE 7
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
<TABLE>
<CAPTION>
ASSETS 12-31-95 9-30-95 12-31-94
--------- --------- ---------
<S> <C> <C> <C>
Loans $47,691.7 $48,409.7 $46,224.7
Mortgage loans held for sale 640.5 659.1 355.2
Investment securities 1,687.7 9,660.7 10,275.6
Securities available for sale 8,060.0 1,595.9 2,521.0
Short-term investments 682.4 522.0 670.0
--------- --------- ---------
Total earnings assets 58,762.3 60,847.4 60,046.5
Allowance for loan losses (876.0) (879.2) (830.3)
Cash and due from banks 3,443.8 3,344.4 3,511.4
Premises and equipment 1,029.8 1,023.1 987.2
Goodwill 899.3 907.1 418.5
Other intangible assets 171.0 173.5 180.4
Other assets 2,908.9 2,550.8 2,487.5
--------- --------- ---------
TOTAL ASSETS $66,339.1 $67,967.1 $66,801.2
========= ========= =========
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 9,281.0 $ 8,610.4 $ 9,135.7
Interest-bearing 36,763.9 37,279.3 36,003.4
Deposits in foreign offices-interest-
bearing 1,237.0 2,015.3 3,425.1
--------- --------- ---------
Total deposits 47,281.9 47,905.0 48,564.2
Federal funds purchased and securities
sold under repurchase agreements 5,544.1 5,908.3 5,499.1
Other short-term borrowings 2,880.3 3,632.5 3,277.6
Other liabilities 1,476.7 1,390.0 1,200.1
Long-term debt 4,003.6 4,047.9 3,569.8
--------- --------- ---------
TOTAL LIABILITIES 61,186.6 62,883.7 62,110.8
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0 160.0
Common equity 4,992.5 4,923.4 4,530.4
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY 5,152.5 5,083.4 4,690.4
TOTAL LIABILITIES AND --------- --------- ---------
SHAREHOLDERS' EQUITY $66,339.1 $67,967.1 $66,801.2
========= ========= =========
Common Shares outstanding (000) 233,703 237,390 240,362
</TABLE>
<PAGE> 11
KEYCORP REPORTS FOURTH QUARTER 1995 EARNINGS
JANUARY 18, 1996
PAGE 8
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
---------------------------------
12-31-95 9-30-95 12-31-94
--------- --------- ---------
<S> <C> <C> <C>
INTEREST INCOME $1,278.0 $1,298.8 $1,191.8
INTEREST EXPENSE 617.4 632.8 526.5
--------- --------- ---------
NET INTEREST INCOME 660.6 666.0 665.3
Provision for loan losses 34.2 27.5 26.2
--------- --------- ---------
626.4 638.5 639.1
NONINTEREST INCOME
Service charges on deposit accounts 71.5 70.7 64.6
Trust and asset management income 62.0 58.2 53.3
Loan securitization income 56.2 3.0 --
Credit card fees 24.5 22.6 20.1
Insurance and brokerage income 16.7 16.5 12.3
Mortgage banking income 6.9 9.1 21.3
Net securities gains (losses) 1.6 .2 (23.7)
Other expense 64.7 54.7 57.4
--------- --------- ---------
Total noninterest income 304.1 235.0 205.3
NONINTEREST EXPENSE
Personnel 285.6 278.7 267.5
Net occupancy 58.5 53.5 54.3
Equipment 39.5 37.3 39.2
FDIC insurance assessments 6.8 .2 24.6
Amortization of intangibles 22.3 19.0 18.2
Professional fees 24.7 18.0 14.8
Other expense 184.5 153.6 137.0
--------- --------- ---------
Total noninterest expense 621.9 560.3 555.6
--------- --------- ---------
INCOME BEFORE INCOME TAXES 308.6 313.2 288.8
Income taxes 101.9 103.6 95.0
--------- --------- ---------
NET INCOME $ 206.7 $ 209.6 $ 193.8
========= ========= =========
Net income applicable to Common Shares $202.7 $205.6 $189.8
Net income per Common Share .86 .90 .79
Wtd. avg. Common Shares outstanding (000) 235,753 228,187 241,385
Taxable-equivalent adjustment $13.6 $13.7 $15.0
</TABLE>
<PAGE> 12
KEYCORP REPORTS FOURTH QUARTER 1995 EARNINGS
JANUARY 18, 1996
PAGE 9
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Twelve months ended
---------------------
12-31-95 12-31-94
--------- ---------
<S> <C> <C>
INTEREST INCOME $5,121.0 $4,490.1
INTEREST EXPENSE 2,484.3 1,796.8
--------- ---------
NET INTEREST INCOME 2,636.7 2,693.3
Provision for loan losses 100.5 125.2
--------- ---------
2,536.2 2,568.1
NONINTEREST INCOME
Service charges on deposit accounts 278.0 263.2
Trust and asset management income 232.4 219.8
Loan securitization income 65.6 3.5
Credit card fees 84.4 76.2
Insurance and brokerage income 60.5 58.6
Mortgage banking income 41.2 88.0
Net securities losses (40.6) (14.7)
Other income 211.5 188.0
--------- ---------
Total noninterest income 933.0 882.6
NONINTEREST EXPENSE
Personnel 1,114.8 1,059.9
Net occupancy 218.1 216.9
Equipment 155.9 158.0
FDIC insurance assessments 58.4 98.7
Amortization of intangibles 77.4 58.5
Professional fees 73.1 50.0
Other expense 613.9 525.2
--------- ---------
Total noninterest expense 2,311.6 2,167.2
--------- ---------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 1,157.6 1,283.5
Income taxes 368.4 430.0
--------- ---------
INCOME BEFORE EXTRAORDINARY ITEM 789.2 853.5
Extraordinary net gain from the
sales of subsidiaries, net of
income taxes of $25.3 35.8 --
--------- ---------
NET INCOME $ 825.0 $ 853.5
========= =========
Net income applicable to Common Shares $809.0 $837.5
Per Common Share
Income before extraordinary item 3.30 3.45
Net income 3.45 3.45
Wtd. avg. Common Shares outstanding (000) 234,787 243,067
Taxable-equivalent adjustment $57.3 $58.8
</TABLE>
<PAGE> 13
KEYCORP REPORTS FOURTH QUARTER 1995 EARNINGS
JANUARY 18, 1996
PAGE 10
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
Three months ended
---------------------------------
12-31-95 9-30-95 12-31-94
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Loans $47,640.1 $48,195.7 $44,970.1
Mortgage loans held for sale 398.2 168.1 412.3
Investment securities 7,010.6 9,807.2 10,390.1
Securities available for sale 3,889.8 1,457.2 2,844.0
Short-term investments 540.1 665.9 191.9
--------- --------- ---------
Total earning assets 59,478.8 60,294.1 58,808.4
Allowance for loan losses (878.8) (870.4) (827.1)
Other assets 7,942.7 7,191.9 6,632.0
--------- --------- ---------
TOTAL ASSETS $66,542.7 $66,615.6 $64,613.3
========= ========= =========
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,391.6 $ 8,156.8 $ 8,238.9
Interest-bearing 37,232.8 37,416.5 35,904.1
Deposits in foreign offices-interest-
bearing 1,048.1 1,867.1 2,972.2
--------- --------- ---------
Total deposits 46,672.5 47,440.4 47,115.2
Federal funds purchased and securities
sold under repurchase agreements 6,269.6 5,672.0 5,857.9
Other short-term borrowings 3,089.0 3,374.7 2,850.6
Other liabilities 1,378.8 1,406.8 1,095.2
Long-term debt 4,041.7 4,046.3 3,001.6
--------- --------- ---------
TOTAL LIABILITIES 61,451.6 61,940.2 59,920.5
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0 160.0
Common stock 4,931.1 4,515.4 4,532.8
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY 5,091.1 4,675.4 4,692.8
TOTAL LIABILITIES AND --------- --------- ---------
SHAREHOLDERS' EQUITY $66,542.7 $66,615.6 $64,613.3
========= ========= =========
</TABLE>
<PAGE> 14
KEYCORP REPORTS FOURTH QUARTER 1995 EARNINGS
JANUARY 18, 1996
PAGE 11
CONSOLIDATED YEAR-TO-DATE AVERAGE BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
Twelve months ended
---------------------
12-31-95 12-31-94
--------- ---------
<S> <C> <C>
ASSETS
Loans $47,760.6 $42,745.5
Mortgage loans held for sale 251.1 717.6
Investment securities 9,289.4 9,243.2
Securities available for sale 2,102.9 4,066.1
Short-term investments 799.0 143.8
--------- ---------
Total earning assets 60,203.0 56,916.2
Allowance for loan losses (868.0) (821.2)
Other assets 7,307.0 6,466.2
--------- ---------
TOTAL ASSETS $66,642.0 $62,561.2
========= =========
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,129.2 $ 8,046.2
Interest-bearing 37,254.3 35,783.3
Deposits in foreign offices-interest-
bearing 2,182.1 3,014.7
--------- ---------
Total deposits 47,565.6 46,844.2
Federal funds purchased and securities
sold under repurchase agreements 5,622.5 5,850.4
Other short-term borrowings 3,361.7 1,929.6
Other liabilities 1,373.1 1,103.9
Long-term debt 3,895.5 2,233.9
--------- ---------
TOTAL LIABILITIES 61,818.4 57,962.0
SHAREHOLDERS' EQUITY
Preferred stock 160.0 160.0
Common stock 4,663.6 4,439.2
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 4,823.6 4,599.2
TOTAL LIABILITIES AND --------- ---------
SHAREHOLDERS' EQUITY $66,642.0 $62,561.2
========= =========
</TABLE>
