<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): April 18, 1996
[KEYCORP LOGO]
KEYCORP
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(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> 2
ITEM 5. OTHER EVENTS
------------
On April 18, 1996, the Registrant issued a press release announcing
its earnings results for the three month period ended March 31,
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 April 18, 1996, press release announcing its
earnings results for the three month period ended March 31, 1996.
<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: April 19, 1996 /s/ Lee Irving
-----------------------------------
By: Lee Irving
Executive Vice President
and Chief Accounting Officer
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[KEYCORP LOGO]
NEWS KEYCORP
127 Public Square Cleveland, Ohio 44114-1306
MEDIA CONTACTS: ANALYST CONTACTS:
Bill Murschel(216)689-0457 Jay S. Gould (216)689- 4721
Janet Gaydosh (216) 689-3636 Vernon L. Patterson (216) 689-0520
FOR IMMEDIATE RELEASE
KEYCORP REPORTS FIRST QUARTER 1996 EARNINGS
-------------------------------------------
CLEVELAND, April 18, 1996 -- KeyCorp (NYSE: KEY) today reported
earnings of $208 million, or $0.88 per common share, for the 1996 first
quarter. This compares with earnings of $210 million, or $0.86 per common
share, for the year-ago quarter. On a comparable basis, core earnings per
common share were up 14 percent from $0.77 per common share in the year-ago
quarter, adjusted to exclude an extraordinary net gain and other nonrecurring
items.
Robert W. Gillespie, KeyCorp president and chief executive officer,
said, "We are pleased to report solid operating results for the first quarter,
which were positively impacted by a higher net interest margin, strong fee
income, continued expense control and aggressive capital management."
Gillespie added: "We continued to make significant investments in our
major business lines and the technology, marketing and human resources
initiatives required to support our transformation to a nationwide bank-based
financial services company." He cited the launch of KeyCorp's first
small-business specialty center in Columbus, Ohio and the significant growth in
telephone banking as examples. KeyCorp has announced plans to transform its
branch network over the next two years into customized KeyCenters targeted
around specific customer segments. KeyCorp's 24-hour telebanking centers
handled nearly 10 million calls in the first quarter and generated new loan
volume which was double that of the same period a year ago.
--more--
<PAGE> 2
KEYCORP EARNINGS
APRIL 18, 1996
PAGE 2
K. Brent Somers, KeyCorp senior executive vice president and chief
financial officer, said, "The results for the first quarter of 1996 were
consistent with our expectations and reflect our focus on managing the balance
sheet to produce superior returns. During the quarter we securitized $38
million of auto loans, sold $500 million of residential mortgage loans and
continued the planned runoff of lower-yielding securities. These actions, are
pursuant to balance sheet management strategies developed in mid-1995 to improve
earning asset yields, increase liquidity, and enhance capital flexibility.
Also, consistent with these strategies, we repurchased 3.4 million shares of
KeyCorp common stock in the first quarter. In addition, the Board of Directors
approved the redemption of the corporation's 10% Cumulative Preferred Stock
effective June 30, 1996."
Net interest income for the 1996 first quarter totaled $669 million, up
$26 million or 4 percent, from the year-ago quarter. This increase reflected a
32 basis point, or 7 percent, improvement in the net interest margin to 4.70
percent, which was partially offset by a planned reduction in average earning
assets of $2.0 billion, or 3 percent. The net interest margin increase was
primarily attributable to wider loan spreads, the securitization and sale of
lower spread assets, and the reinvestment of funds from maturing securities.
Excluding securitizations and sales, average loans increased $3.2 billion, or 7
percent, from the prior-year period. Compared to the 1995 fourth quarter, net
interest income was up $9 million, or 1 percent, reflecting a 17 basis point
increase in the net interest margin, which was partially offset by a planned
$1.3 billion, or 2 percent, decline in average earning assets. During the
quarter, average loans increased 7 percent on an annualized basis, excluding
the impact of loan securitizations and sales.
Noninterest income for the 1996 first quarter totaled $249 million, up
$33 million or 15 percent, from the year-ago quarter, after excluding securities
losses. The improvement in core noninterest income reflected growth in all
major fee-based revenues, with the largest increases coming from loan
securitization income, insurance and brokerage income (up 50 percent), service
charges on deposit accounts (up 9 percent), and trust and asset management
income (up 9 percent). Compared to the 1995 fourth quarter, noninterest income
was down $55 million, primarily due to a $44 million reduction in loan
securitization income resulting from a planned decline in student loan
securitizations. Also contributing to the decline were seasonal fluctuations
in trust and asset management income and credit card fees.
--more--
<PAGE> 3
KEYCORP EARNINGS
APRIL 18, 1996
PAGE 3
Noninterest expense for the 1996 first quarter totaled $570 million, up
$9 million, or 2 percent from the year ago quarter. The increase primarily
reflected higher personnel expenses, an increase in the amortization of
intangibles resulting from 1995 acquisitions, higher marketing expenses and the
growth in loan servicing fees resulting from the March 1995 sale of the
residential mortgage loan servicing business. These items more than offset the
reduction in FDIC insurance assessments. Compared to the 1995 fourth quarter,
noninterest expense was down $52 million. This decrease was primarily
attributable to a $25 million write-off of obsolete software and an $8 million
facilities related charge recorded in the 1995 fourth quarter. Other factors
contributing to the decline in expenses relative to the prior quarter included
lower professional fees, a reduction in FDIC insurance assessments and the
impact of KeyCorp's cost control initiatives.
Asset quality trends in the 1996 first quarter continued the return
toward historical levels. Nonperforming assets ended the first quarter at $389
million, or 0.81 percent of loans plus other real estate owned and other
nonperforming assets, compared with $379 million, or 0.79 percent for the
previous quarter. Net loan charge-offs for the 1996 first quarter were $43
million, or 0.36 percent of average loans. This compares with $34 million, or
0.29 percent in the prior quarter. The modest increase in net charge-offs was
primarily attributable to one large commercial credit, as well as a move toward
historical levels in the credit card and indirect auto areas. The provision
for loan losses for the 1996 first quarter was $44 million, exceeding the
quarter's net loan charge-offs. The allowance for loan losses at March 31,
1996, was $875 million, basically unchanged from December 31, 1995, and
represented 1.82 percent of period-end loans and 257 percent of nonperforming
loans.
At March 31, 1996, KeyCorp's assets totaled $65.1 billion and
shareholders' equity totaled $5.1 billion. The Tier 1 Capital ratio was
estimated at 7.52 percent and the Total Capital ratio was estimated at 11.09
percent. All of KeyCorp's banking affiliates continue to receive the FDIC's
highest capital classification.
# # #
<PAGE> 4
KEYCORP REPORTS FIRST QUARTER 1996 EARNINGS
APRIL 18, 1996
PAGE 4
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
--------------------------------
3-31-96 12-31-95 3-31-95
--------- --------- ---------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (TE) $682 $673 $658
Provision for loan losses 44 34 18
Noninterest income 249 304 171
Noninterest expense 570 622 561
Income before
extraordinary item 208 207 174
Net income 208 207 210
PER COMMON SHARE
Income before
extraordinary item $ .88 $ .86 $ .71
Net income .88 .86 .86
Cash dividends .38 .36 .36
Book value at period-
end 21.43 21.36 19.57
Market price at period-
end 38.63 36.25 28.25
AT PERIOD-END
Full-time equivalent
employees 28,902 29,563 30,370
Full-service banking
offices 1,270 1,284 1,314
PERFORMANCE RATIOS
Return on average
total assets 1.28 % 1.23 % 1.28 %
Return on average
common equity 16.42 16.31 18.26
Return on average
total equity 16.22 16.11 17.99
Efficiency (1) 61.22 63.67 64.12
Overhead (2) 47.07 47.36 52.36
Net interest margin 4.70 4.53 4.38
CAPITAL RATIOS AT PERIOD-END
Equity to assets 7.88 % 7.77 % 7.12 %
Tangible equity to
tangible assets 6.38 6.25 6.02
Tier 1 risk-adjusted
capital (3) 7.52 7.53 7.96
Total risk-adjusted
capital (3) 11.09 10.85 11.05
Leverage (3) 6.46 6.20 6.24
<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) 3-31-96 ratio is estimated.
TE = Taxable equivalent
</FN>
</TABLE>
<PAGE> 5
KEYCORP REPORTS FIRST QUARTER 1996 EARNINGS
APRIL 18, 1996
PAGE 5
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
--------------------------------
3-31-96 12-31-95 3-31-95
--------- --------- ---------
<S> <C> <C> <C>
ASSET QUALITY
Net loan charge-offs $43 $34 $17
Net loan charge-offs
to average loans .36 % .29 % .15 %
Allowance for loan
losses $875 $876 $867
Allowance for loan
losses to
period-end loans 1.82 % 1.84 % 1.81 %
Allowance for loan
losses to
nonperforming loans 256.60 263.15 285.51
Nonperforming loans at
period-end $341 $333 $304
Nonperforming assets
at period-end 389 379 363
Nonperforming loans to
period-end loans .71 % .70 % .63 %
Nonperforming assets
to period-end loans plus
OREO and other
nonperforming assets .81 .79 .75
</TABLE>
<PAGE> 6
KEYCORP REPORTS FIRST QUARTER 1996 EARNINGS
APRIL 18, 1996
PAGE 6
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
<TABLE>
<CAPTION>
ASSETS 3-31-96 12-31-95 3-31-95
--------- --------- ---------
<S> <C> <C> <C>
Loans $48,161 $47,692 $48,021
Mortgage loans held
for sale 112 640 165
Investment securities 1,679 1,688 10,395
Securities available
for sale 7,482 8,060 1,534
Short-term investments 507 682 1,052
-------- -------- --------
Total earnings assets 57,941 58,762 61,167
Allowance for loan losses (875) (876) (867)
Cash and due from
banks 2,975 3,444 3,303
Premises and equipment 1,032 1,030 1,016
Goodwill 881 899 598
Other intangible assets 160 171 197
Corporate owned life
insurance 1,177 1,088 516
Other assets 1,761 1,821 1,779
--------- --------- ---------
TOTAL ASSETS $65,052 $66,339 $67,709
========= ========= =========
LIABILITIES
Deposits in domestic
offices:
Noninterest-bearing $ 8,571 $ 9,281 $ 8,300
Interest-bearing 36,451 36,764 37,793
Deposits in foreign
offices-interest-
bearing 379 1,237 2,719
--------- --------- ---------
Total deposits 45,401 47,282 48,812
Federal funds purchased
and securities sold
under repurchase
agreements 5,820 5,544 4,981
Other short-term
borrowings 2,952 2,880 3,927
Other liabilities 1,489 1,477 1,446
Long-term debt 4,266 4,003 3,725
--------- --------- ---------
TOTAL LIABILITIES 59,928 61,186 62,891
SHAREHOLDERS' EQUITY
Preferred stock 160 160 160
Common equity 4,964 4,993 4,658
--------- --------- ---------
TOTAL SHAREHOLDERS'
EQUITY 5,124 5,153 4,818
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY --------- --------- ---------
$65,052 $66,339 $67,709
========= ========= =========
Common Shares outstanding
(000) 231,670 233,703 238,188
</TABLE>
<PAGE> 7
KEYCORP REPORTS FIRST QUARTER 1996 EARNINGS
APRIL 18, 1996
PAGE 7
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three month ended
--------------------------------
3-31-96 12-31-95 3-31-95
--------- --------- ---------
<S> <C> <C> <C>
INTEREST INCOME $1,236 $1,278 $1,245
INTEREST EXPENSE 567 618 602
--------- --------- ---------
NET INTEREST INCOME 669 660 643
Provision for loan losses 44 34 18
--------- --------- ---------
625 626 625
NONINTEREST INCOME
Service charges on
deposit accounts 72 71 66
Trust and asset
management income 58 62 53
Loan securitization
income 13 57 6
Credit card fees 20 25 17
Insurance and
brokerage income 18 17 12
Mortgage banking
income 8 7 18
Net securities gains
(losses) -- 1 (45)
Other income 60 64 44
--------- --------- ---------
Total noninterest
income 249 304 171
NONINTEREST EXPENSE
Personnel 291 286 280
Net occupancy 54 58 54
Equipment 38 40 40
FDIC insurance
assessments 2 6 25
Amortization of
intangibles 22 23 17
Professional fees 16 24 13
Marketing 21 19 16
Other expense 126 166 116
--------- --------- ---------
Total noninterest
expense 570 622 561
--------- --------- ---------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 304 308 235
Income taxes 96 101 61
--------- --------- ---------
INCOME BEFORE
EXTRAORDINARY ITEM 208 207 174
Extraordinary net gain
from the sales of
subsidiaries, net
of income taxes of $25 -- -- 36
--------- --------- ---------
NET INCOME $ 208 $ 207 $ 210
========= ========= =========
Net income applicable to
Common Shares $204 $203 $206
Per Common Share:
Income before
extraordinary item .88 .86 .71
Net income .88 .86 .86
Wtd. avg. Common Shares
outstanding (000) 233,100 235,753 239,999
Taxable-equivalent
adjustment $13 $13 $15
</TABLE>
<PAGE> 8
KEYCORP REPORTS FIRST QUARTER 1996 EARNINGS
APRIL 18, 1996
PAGE 8
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
Three months ended
--------------------------------
3-31-96 12-31-95 3-31-95
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Loans $47,800 $47,640 $46,888
Mortgage loans held
for sale 352 398 243
Investment securities 1,685 7,011 10,231
Securities available
for sale 7,864 3,890 1,623
Short-term investments 507 540 1,272
--------- --------- ---------
Total earning
assets 58,208 59,479 60,257
Allowance for loan
losses (875) (879) (853)
Cash and due from
banks 2,662 2,883 2,623
Other assets 5,116 5,060 4,432
--------- --------- ---------
TOTAL ASSETS $65,111 $66,543 $66,459
========= ========= =========
LIABILITIES
Deposits in domestic
offices:
Noninterest-bearing $ 8,208 $ 8,392 $ 7,956
Interest-bearing 36,603 37,233 36,776
Deposits in foreign
offices-interest-bearing 848 1,048 3,321
--------- --------- ---------
Total deposits 45,659 46,673 48,053
Federal funds purchased
and securities sold under
repurchase agreements 5,691 6,269 5,502
Other short-term
borrowings 2,950 3,089 3,299
Other liabilities 1,551 1,379 1,264
Long-term debt 4,102 4,042 3,613
--------- --------- ---------
TOTAL LIABILITIES 59,953 61,452 61,731
SHAREHOLDERS' EQUITY
Preferred stock 160 160 160
Common stock 4,998 4,931 4,568
--------- --------- ---------
TOTAL SHAREHOLDERS'
EQUITY 5,158 5,091 4,728
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY --------- --------- ---------
$65,111 $66,543 $66,459
========= ========= =========
</TABLE>
