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<PAGE>
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 18, 1996
[KEY LOGO APPEARS HERE]
KEYCORP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-850 63-0593897
---------------- --------------- -------------------
(State or other Commission File (I.R.S. Employer
jurisdiction of Number 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>
ITEM 5. OTHER EVENTS
------------
On July 18, 1996, the Registrant issued a press release announcing its
earnings results for the three month period and six month period ended
June 30, 1996. 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 18, 1996, press release announcing its
earnings results for the three month period and six month period
ended June 30,
1996.
<PAGE>
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: July 18, 1996 /s/ Lee Irving
----------------
By: Lee Irving
Executive Vice
President and Chief
Accounting Officer
<PAGE>
[KEY 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 SECOND QUARTER 1996 EARNINGS
--------------------------------------------
* SECOND QUARTER EPS OF $0.92 VS. $0.83 A YEAR AGO, UP 11 PERCENT
* NET INTEREST MARGIN INCREASED BY 31 BASIS POINTS COMPARED TO YEAR-AGO QUARTER
* NONINTEREST INCOME UP 18 PERCENT OVER PRIOR YEAR
* ASSET QUALITY REMAINED STABLE THROUGHOUT THE QUARTER
CLEVELAND, July 18, 1996 -- KeyCorp (NYSE: KEY) today reported earnings of
$217 million, or $0.92 per common share, for the 1996 second quarter. This
compares with earnings of $199 million, or $0.83 per common share, for the year-
ago quarter and $208 million, or $0.88 per common share, for the 1996 first
quarter.
Robert W. Gillespie, KeyCorp president and chief executive officer, said,
"Results for the second quarter were consistent with our expectations and
represented another quarter of improved core earnings. We continue to be
pleased with our overall financial performance, especially in light of the
significant strategic investments that have been made in our major lines of
business. The second quarter was positively impacted by a higher net interest
margin, stronger fee income, and stable asset quality."
Gillespie added: "We completed a major regionalization initiative during
the quarter as our banks in the three-state Great Lakes Region were combined to
form KeyBank National Association. This represents an important step in
positioning the company for interstate banking and allows us to leverage
KeyCorp's unique position as a nationwide financial services company."
--more--
<PAGE>
KEYCORP EARNINGS
JULY 18, 1996
PAGE 2
K. Brent Somers, KeyCorp senior executive vice president and chief
financial officer, said, "Contributing to the favorable earnings trend in the
1996 second quarter were the continuing benefits of our balance sheet
management and expense control initiatives. Through the first six months of
1996, we repurchased 5 million shares of KeyCorp common stock and redeemed the
$160 million of Cumulative Preferred Stock on June 30, 1996. We were also
pleased with the continued improvement in KeyCorp's efficiency ratio, which was
60.50 percent in the 1996 second quarter, compared with 63.05 percent in the
year-ago quarter."
Net interest income for the 1996 second quarter totaled $682 million, up
$15 million, or 2 percent, from the year-ago quarter. This increase reflected
a 31 basis point improvement in the net interest margin to 4.80 percent, which
was partially offset by a planned reduction in average earning assets of $2.9
billion, or 5 percent. The net interest margin increase was attributable to
wider loan spreads, in part as a result of the securitization and sale of lower
spread assets, and the reinvestment of funds from maturing securities.
Excluding the impact of securitizations and sales, average loans increased $2.9
billion, or 7 percent, from the year-ago period and 7 percent, on an annualized
basis, from the prior quarter. Compared to the 1996 first quarter, net
interest income was up $13 million, or 2 percent, reflecting a 10 basis point
improvement in the net interest margin, which was partially offset by a planned
$342 million, or 1 percent, reduction in average earning assets.
Noninterest income for the 1996 second quarter totaled $264 million, up
$41 million, or 18 percent, from the year-ago quarter. The increase reflected
higher credit card fees (up 20 percent) and stronger insurance and brokerage
income (up 7 percent). Also favorably impacting noninterest income in the
second quarter were service charges on deposit accounts (up 3 percent), trust
and asset management income (up 3 percent), higher loan securitization income
and an $8 million gain from the previously announced sale of Society First
Federal Savings Bank in early June. Compared to the 1996 first quarter,
noninterest income was up $15 million, reflecting the gain from the sale of the
Florida savings bank, as well as stronger trust and asset management income and
higher credit card fees.
--more--
<PAGE>
KEYCORP EARNINGS
JULY 18, 1996
PAGE 3
Noninterest expense for the 1996 second quarter totaled $579 million, up
$11 million, or 2 percent, from the year-ago quarter. The increase reflected
higher personnel expense and the impact of acquisitions completed since the
1995 first quarter, which more than offset the reduction in FDIC insurance
assessments. Compared to the 1996 first quarter, noninterest expense was up $9
million. This increase was primarily attributable to the impact of company-
wide merit increases which were effective in April.
Asset quality in the 1996 second quarter was relatively unchanged from
1996 first quarter performance. Nonperforming assets ended the second quarter
at $371 million, or 0.77 percent of loans plus other real estate owned and
other nonperforming assets, compared with $389 million, or 0.81 percent, for
the previous quarter. Net loan charge-offs for the 1996 second quarter
continued their gradual move toward more historic levels and totaled $46
million, or 0.38 percent of average loans, up slightly from $43 million, or
0.36 percent, in the 1996 first quarter. The provision for loan losses for the
1996 second quarter was $47 million, and exceeded the quarter's net loan charge-
offs. The allowance for loan losses as a percent of period-end loans remained
stable at 1.82 percent and the nonperforming loan coverage ratio improved from
257 percent at the end of the prior quarter to 267 percent at June 30, 1996.
At June 30, 1996, KeyCorp's assets totaled $64.8 billion and shareholders'
equity totaled $5.0 billion. The Tier 1 Capital ratio was estimated at 7.46
percent and the Total Capital ratio was estimated at 11.51 percent. All of
KeyCorp's banking affiliates continue to receive the FDIC's highest capital
classification.
# # #
<PAGE>
KeyCorp Reports Second Quarter 1996 Earnings
July 18, 1996
Page 4
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
-------------------------------
6-30-96 3-31-96 6-30-95
--------- --------- ---------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (TE) $694 $682 $682
Provision for loan losses 47 44 21
Noninterest income 264 249 223
Noninterest expense 579 570 568
Net income 217 208 199
PER COMMON SHARE
Net income $ .92 $ .88 $ .83
Cash dividends .38 .38 .36
Book value at period-end 21.63 21.43 19.71
Market price at period-end 38.75 38.63 31.38
AT PERIOD-END
Full-time equivalent employees 28,319 28,902 29,233
Full-service banking offices 1,239 1,270 1,308
PERFORMANCE RATIOS
Return on average total assets 1.35 % 1.28 % 1.19 %
Return on average common equity 17.15 16.42 16.86
Return on average total equity 16.93 16.22 16.63
Efficiency 1 60.50 61.22 63.05
Overhead 2 45.53 47.07 51.10
Net interest margin (TE) 4.80 4.70 4.49
CAPITAL RATIOS AT PERIOD-END
Equity to assets 7.71 % 7.88 % 6.93 %
Tangible equity to tangible assets 6.27 6.38 5.75
Tier 1 risk-adjusted capital 3 7.46 7.71 7.45
Total risk-adjusted capital 3 11.51 11.45 10.82
Leverage 3 6.44 6.43 5.88
<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 6-30-96 ratio is estimated.
TE = Taxable Equivalent
</FN>
</TABLE>
<PAGE>
KeyCorp Reports Second Quarter 1996 Earnings
July 18, 1996
Page 5
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
---------------------------
6-30-96 3-31-96 6-30-95
------- ------- -------
<S> <C> <C> <C>
ASSET QUALITY
Net loan charge-offs $ 46 $ 43 $ 21
Net loan charge-offs to average loans .38 % .36 % .17 %
Allowance for loan losses $870 $875 $867
Allowance for loan losses to
period-end loans 1.82 % 1.82 % 1.80 %
Allowance for loan losses to
nonperforming loans 266.87 256.60 278.88
Nonperforming loans at period-end $326 $341 $311
Nonperforming assets at period-end 371 389 366
Nonperforming loans to period-end loans .68 % .71 % .65 %
Nonperforming assets to period-end
loans plus OREO and other nonperforming
assets .77 .81 .76
</TABLE>
<TABLE>
<CAPTION>
Six months ended
------------------
6-30-96 6-30-95
------- -------
<S> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (TE) $1,376 $1,340
Provision for loan losses 91 39
Noninterest income 513 394
Noninterest expense 1,149 1,129
Income before extraordinary item 425 373
Net income 425 409
PER COMMON SHARE
Income before extraordinary item $1.80 $1.54
Net income 1.80 1.69
Cash dividends .76 .72
PERFORMANCE RATIOS
Return on average total assets 1.32 % 1.24 %
Return on average common equity 16.78 17.55
Return on average total equity 16.58 17.30
Efficiency 1 60.86 63.58
Overhead 2 46.29 51.72
Net interest margin (TE) 4.75 4.44
ASSET QUALITY
Net loan charge-offs $89 $38
Net loan charge-offs to average loans .37 % .16 %
</TABLE>
<PAGE>
KeyCorp Reports Second Quarter 1996 Earnings
June 18, 1996
Page 6
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
<TABLE>
<CAPTION>
ASSETS 6-30-96 3-31-96 6-30-95
------- ------- -------
<S> <C> <C> <C>
Loans $47,826 $48,161 $48,093
Mortgage loans held for sale 102 112 698
Investment securities 1,714 1,679 9,919
Securities available for sale 7,251 7,482 1,437
Short-term investments 511 507 799
------- ------- -------
Total earning assets 57,404 57,941 60,946
Allowance for loan losses (870) (875) (867)
Cash and due from banks 3,061 2,975 3,197
Premises and equipment 1,032 1,032 1,018
Goodwill 844 881 660
Other intangible assets 154 160 180
Corporate owned life insurance 1,192 1,177 647
Other assets 1,947 1,761 1,700
------- ------- -------
TOTAL ASSETS $64,764 $65,052 $67,481
======= ======= =======
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,877 $ 8,571 $ 8,604
Interest-bearing 34,448 36,451 37,738
Deposits in foreign offices-interest-bearing 1,092 379 2,330
------- ------- -------
Total deposits 44,417 45,401 48,672
Federal funds purchased and securities
sold under repurchase agreements 6,171 5,820 4,794
Other short-term borrowings 3,408 2,952 4,067
Other liabilities 1,598 1,489 1,254
Long-term debt 4,174 4,266 4,020
------- ------- -------
TOTAL LIABILITIES 59,768 59,928 62,807
SHAREHOLDERS' EQUITY
Preferred stock -- 160 160
Common equity 4,996 4,964 4,514
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 4,996 5,124 4,674
------- ------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $64,764 $65,052 $67,481
======= ======= =======
Common Shares outstanding (000) 230,979 231,670 229,032
</TABLE>
<PAGE>
KeyCorp Reports Second Quarter 1996 Earnings
July 18, 1996
Page 7
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
--------------------------
6-30-96 3-31-96 6-30-95
------- ------- -------
<S> <C> <C> <C>
INTEREST INCOME $1,234 $1,236 $1,299
INTEREST EXPENSE 552 567 632
------- ------- -------
NET INTEREST INCOME 682 669 667
Provision for loan losses 47 44 21
------- ------- -------
635 625 646
NONINTEREST INCOME
Service charges on deposit accounts 72 72 70
Trust and asset management income 61 58 59
Loan securitization income 14 13 --
Credit card fees 24 20 20
Insurance and brokerage income 16 18 15
Mortgage banking income 6 8 7
Net securities gains (losses) 1 -- 3
Other income 70 60 49
------- ------- -------
Total noninterest income 264 249 223
NONINTEREST EXPENSE
Personnel 298 291 271
Net occupancy 54 54 52
Equipment 40 38 39
FDIC insurance assessments 3 2 26
Amortization of intangibles 22 22 19
Professional fees 13 16 17
Marketing 17 21 17
Other expense 132 126 127
------- ------- -------
Total noninterest expense 579 570 568
------- ------- -------
INCOME BEFORE INCOME TAXES 320 304 301
Income taxes 103 96 102
------- ------- -------
NET INCOME $ 217 $ 208 $ 199
======= ======= =======
Net income applicable to Common Shares $213 $204 $195
Net income per Common Share .92 .88 .83
Wtd. avg. Common Shares outstanding (000) 231,341 233,100 235,329
Taxable-equivalent adjustment $12 $13 $15
</TABLE>
<PAGE>
KeyCorp Reports Second Quarter 1996 Earnings
July 18, 1996
Page 8
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Six months ended
-----------------
6-30-96 6-30-95
------- -------
<S> <C> <C>
INTEREST INCOME $2,470 $2,544
INTEREST EXPENSE 1,119 1,234
------- -------
NET INTEREST INCOME 1,351 1,310
Provision for loan losses 91 39
------- -------
1,260 1,271
NONINTEREST INCOME
Service charges on deposit accounts 144 136
Trust and asset management income 119 112
Loan securitization income 27 6
Credit card fees 44 37
Insurance and brokerage income 34 27
Mortgage banking income 14 25
Net securities gains (losses) 1 (42)
Other income 130 93
------- -------
Total noninterest income 513 394
NONINTEREST EXPENSE
Personnel 589 551
Net occupancy 108 106
Equipment 78 79
FDIC insurance assessments 5 51
Amortization of intangibles 44 36
Professional fees 29 30
Marketing 38 33
Other expense 258 243
------- -------
Total noninterest expense 1,149 1,129
------- -------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 624 536
Income taxes 199 163
------- -------
INCOME BEFORE EXTRAORDINARY ITEM 425 373
Extraordinary net gain from the
sales of subsidiaries, net of
income taxes of $25 -- 36
------- -------
NET INCOME $ 425 $ 409
======= =======
Net income applicable to Common Shares $417 $401
Per Common Share:
Income before extraordinary item $1.80 $1.54
Net income 1.80 1.69
Wtd. avg. Common Shares outstanding (000) 232,220 237,651
Taxable-equivalent adjustment $25 $30
</TABLE>
<PAGE>
KeyCorp Reports Second Quarter 1996 Earnings
July 18, 1996
Page 9
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
Three months ended
-------------------------
6-30-96 3-31-96 6-30-95
------- ------- -------
<S> <C> <C> <C>
ASSETS
Loans $48,192 $47,800 $48,305
Mortgage loans held for sale 100 352 195
Investment securities 1,673 1,685 10,138
Securities available for sale 7,410 7,864 1,424
Short-term investments 491 507 727
------- ------- -------
Total earning assets 57,866 58,208 60,789
Allowance for loan losses (877) (875) (869)
Cash and due from banks 2,468 2,662 2,797
Other assets 5,166 5,116 4,233
------- ------- -------
TOTAL ASSETS $64,623 $65,111 $66,950
======= ======= =======
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,202 $ 8,208 $ 8,007
Interest-bearing 35,569 36,603 37,586
Deposits in foreign offices-interest-bearing 1,154 848 2,520
------- ------- -------
Total deposits 44,925 45,659 48,113
Federal funds purchased and securities
sold under repurchase agreements 5,899 5,691 5,037
Other short-term borrowings 2,922 2,950 3,686
Other liabilities 1,571 1,551 1,441
Long-term debt 4,152 4,102 3,875
------- ------- -------
TOTAL LIABILITIES 59,469 59,953 62,152
SHAREHOLDERS' EQUITY
Preferred stock 158 160 160
Common equity 4,996 4,998 4,638
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 5,154 5,158 4,798
------- ------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $64,623 $65,111 $66,950
======= ======= =======
</TABLE>
<PAGE>
KeyCorp Reports Second Quarter 1996 Earnings
July 18, 1996
Page 10
CONSOLIDATED YEAR-TO-DATE AVERAGE BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
Six months ended
----------------
6-30-96 6-30-95
------- -------
<S> <C> <C>
ASSETS
Loans $47,996 $47,601
Mortgage loans held for sale 226 219
Investment securities 1,679 10,184
Securities available for sale 7,637 1,523
Short-term investments 499 998
------- -------
Total earning assets 58,037 60,525
Allowance for loan losses (876) (861)
Cash and due from banks 2,565 2,710
Other assets 5,141 4,332
------- -------
TOTAL ASSETS $64,867 $66,706
======= =======
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,205 $ 7,982
Interest-bearing 36,086 37,182
Deposits in foreign offices-interest-bearing 1,001 2,919
------- -------
Total deposits 45,292 48,083
Federal funds purchased and securities
sold under repurchase agreements 5,795 5,268
Other short-term borrowings 2,936 3,494
Other liabilities 1,561 1,353
Long-term debt 4,127 3,745
------- -------
TOTAL LIABILITIES 59,711 61,943
SHAREHOLDERS' EQUITY
Preferred stock 159 160
Common equity 4,997 4,603
------- -------
TOTAL SHAREHOLDERS' EQUITY 5,156 4,763
TOTAL LIABILITIES AND ------- -------
SHAREHOLDERS' EQUITY $64,867 $66,706
======= =======
</TABLE>
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