<PAGE> 1
EXHIBIT 99
MEDIA CONTACT: CHRIS THOMPSON ANALYST CONTACT: VERN PATTERSON
216.689.7811 216.689.0520
KEY MEDIA INVESTOR RELATIONS
NEWSROOM: www.Key.com/newsroom INFORMATION: www.Key.com/ir
FOR IMMEDIATE RELEASE
KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS
-------------------------------------------
- CORE EPS OF $0.57
- COMPETITIVENESS INITIATIVE PROGRESSES
- CONTINUED LOAN GROWTH; STABLE NET INTEREST MARGIN
- CONTINUED EXPENSE REDUCTION
- 25 MILLION SHARE REPURCHASE AUTHORIZATION
CLEVELAND, October 17, 2000 -- KeyCorp (NYSE: KEY) today announced
third quarter core net income of $245 million, or $0.57 per diluted common
share. Core results exclude $0.29 per share of significant nonrecurring charges
recorded during the quarter. These previously announced charges include those
related to the final phase of an initiative undertaken last November to improve
the company's competitiveness. Key's reported earnings for the third quarter
were $121 million, or $0.28 per share. Core results of $0.57 per share were
equal to those of last quarter. Key's core results also represent a 10 percent
improvement from adjusted core earnings of $0.52 per share for the year-ago
quarter. Last year's third quarter adjusted results exclude approximately $.08
per share from significant nonrecurring items, earnings from divested businesses
and gains from Champion Mortgage loan securitizations.
Key anticipates that core earnings per diluted common share will
increase to between $0.58 and $0.64 for the fourth quarter of 2000. This
translates into core earnings per share for the full year of between $2.27 and
$2.33.
"Third quarter core results and the enhanced earnings outlook for the
fourth quarter reflect Key's improving financial performance," said Robert W.
Gillespie, Key's chairman and chief executive officer. "We remain critically
focused on increasing shareholder value. This continues to be our highest
priority.
"We are now well into the process of implementing the many ideas
generated in our competitiveness initiative. These ideas will lead to
improvements in both revenue generation and expense control. Coupled with Key's
continuing loan and deposit growth and progress made to date in reducing
expenses, we are enthusiastic about our ability to continue to improve
profitability in coming quarters."
Results for the third quarter of 2000 include significant nonrecurring
items. Key recorded restructuring charges of $102 million ($64 million after
tax, or $0.15 per diluted common share) in connection with its competitiveness
initiative. Key also recorded losses of $50 million ($32 million after tax, or
$0.07 per diluted common share) from the reconfiguration of its investment
portfolio and
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KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS
OCTOBER 17, 2000
PAGE 2
recorded an additional provision for loan losses of $27 million ($17 million
after tax, or $0.04 per diluted common share). Other special and nonrecurring
charges, which are related primarily to the competitiveness initiative, totaled
$18 million ($11 million after tax, or $0.03 per diluted common share).
Based on core earnings, Key's return on average equity for the third
quarter of 2000 was 14.97 percent and its return on average assets was 1.16
percent. On the same basis, Key's returns on average equity and assets for the
prior quarter were 15.46 percent and 1.20 percent, respectively.
Net interest income for the third quarter of 2000 totaled $684
million, representing an $11 million increase from the prior quarter. This
improvement resulted from a higher level of average earning assets, coupled with
a stable net interest margin. Average earning assets grew by an annualized 5
percent to $74.7 billion, with strong contributions from home equity and middle
market lending.
Core noninterest income was $460 million for the third quarter of 2000
compared with $475 million earned in the second quarter. The decline from the
prior quarter was largely due to a $9 million reduction in net loan
securitization gains. At the same time, revenue derived from trust and
investment services, and service charges on deposit accounts, two of the largest
contributors to Key's noninterest income, was relatively unchanged.
Key's core noninterest expense totaled $672 million for the third
quarter of 2000, representing a $24 million reduction from that reported for the
second quarter. This represents the lowest level of quarterly noninterest
expense achieved by Key in almost two years and marks the third consecutive
quarter in which such expense has declined. The declines are largely due to the
impact of actions taken by Key since last November to improve its
competitiveness. Personnel expenses led the third quarter decline, decreasing by
$19 million. Contributing to this improvement was a further reduction in Key's
workforce stemming from the above actions. At September 30, 2000, the number of
full-time equivalent employees totaled 22,457, compared with 23,005 at June 30,
2000, and 24,568 at the end of 1999.
The provision for loan losses was $131 million for the third quarter of
2000 and exceeded the level of Key's net charge-offs by $27 million. The third
quarter provision of $27 million in excess of net charge-offs was driven
principally by changing conditions within the economy and recorded in accordance
with Key's risk management practices. Net loan charge-offs totaled $104 million
and were 0.63 percent of average loans outstanding for the quarter, compared
with 0.42 percent for the prior quarter when the loan loss provision of $68
million was equal to net charge-offs. Key expects the level of its net
charge-offs to decline in the fourth quarter, and expects that its net loan
charge-off ratio for the full year will be approximately 50 basis points. This
ratio reflects the impact of $21 million of third quarter charge-offs on shared
national credits. At September 30, 2000, the allowance for loan losses was $1.0
billion, or 1.51 percent of loans.
The level of Key's nonperforming loans rose during the third quarter,
consistent with management's earlier projections. At September 30, 2000, Key's
nonperforming loans totaled $592 million, or 0.89 percent of period-end loans,
compared with $545 million, or 0.83 percent, at June 30, 2000.
Key's capital ratios continued to exceed all "well-capitalized"
benchmarks at September 30, 2000. In light of Key's earnings outlook and strong
capital position, in September the Board authorized
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KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS
OCTOBER 17, 2000
PAGE 3
the repurchase of up to 25,000,000 common shares (including the 3,647,200 shares
remaining from the prior authority). During the third quarter, Key repurchased
4,587,800 of its common shares.
Cleveland-based KeyCorp is one of the nation's largest multiline
financial services companies, with assets of approximately $85 billion. Key
companies provide investment management, retail and commercial banking, consumer
finance, and investment banking products and services to individuals and
companies throughout the United States and, for certain businesses,
internationally. The company's businesses deliver their products and services
through facilities located in 46 states; a network of about 2,500 ATMs;
telephone banking centers (1.800.KEY2YOU); and a Web site, Key.com,SM that
provides account access and financial products 24 hours a day.
A live Internet broadcast of KeyCorp's conference call to discuss quarterly
earnings and currently anticipated earnings trends and to answer analysts'
questions can be accessed through the Investor Relations section at
www.Key.com/ir at 10:00 a.m. EDT, on Tuesday, October 17, 2000. A tape of the
call will be available until Tuesday, October 24. For information about Key
lines of business, visit our Media Newsroom at www.Key.com/newsroom.
--------------------------------------------------------------------------------
This news release contains forward-looking statements (such as anticipated
fourth quarter and full-year earnings, anticipated level of net loan
charge-offs, anticipated improvement in profitability and competitiveness, etc.)
that are subject to numerous assumptions, risks and uncertainties. Actual
results could differ materially from those contained in or implied by such
forward-looking statements for a variety of factors including: changes in
interest rates; changes in the economy which could materially change anticipated
credit quality trends and the ability to generate loans; failure of the capital
markets to function consistent with customary levels; delay in or inability to
execute strategic initiatives designed to grow revenues and/or manage expenses;
consummation of significant business combinations or divestitures; changes in
law imposing new legal obligations or restrictions or unfavorable resolution of
litigation; and changes in accounting, tax or regulatory practices or
requirements.
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<PAGE> 4
KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS
OCTOBER 17, 2000
PAGE 4
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
THREE MONTHS ENDED
----------------------------------------------------
9-30-00 6-30-00 9-30-99
------------- ------------- ------------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (taxable equivalent) $691 $680 $709
Provision for loan losses 131 68 78
Noninterest income 405 475 496
Noninterest expense 787 698 708
Net income 121 248 270
Net income - core 245 249 266
PER COMMON SHARE
Net income $ .28 $ .57 $ .60
Net income - core .57 .57 .59
Net income - assuming dilution .28 .57 .60
Net income - assuming dilution - core .57 .57 .59
Cash dividends .28 .28 .26
Book value at period end 15.26 15.09 14.25
Market price at period end 25.31 17.63 25.81
AT PERIOD END
Full-time equivalent employees 22,457 23,005 25,523
Branches 932 938 963
PERFORMANCE RATIOS
Return on average total assets .57 % 1.20 % 1.32 %
Return on average total assets - core 1.16 1.20 1.30
Return on average equity 7.39 15.40 17.06
Return on average equity - core 14.97 15.46 16.81
Efficiency (a) 58.38 60.26 58.91
Overhead (b) 30.68 32.50 31.03
Net interest margin (taxable equivalent) 3.68 3.68 3.92
CAPITAL RATIOS AT PERIOD END
Equity to assets 7.63 % 7.68 % 7.75 %
Tangible equity to tangible assets 6.10 6.12 6.06
Tier 1 risk-adjusted capital (c) 7.63 7.88 7.84
Total risk-adjusted capital (c) 11.38 11.74 11.94
Leverage (c) 7.73 7.90 7.85
ASSET QUALITY
Net loan charge-offs $104 $68 $78
Net loan charge-offs to average loans .63 % .42 % .49 %
Allowance for loan losses $1,001 $979 $930
Allowance for loan losses to period end loans 1.51 % 1.49 % 1.47 %
Allowance for loan losses to nonperforming loans 169.09 179.63 225.73
Nonperforming loans at period end $592 $545 $412
Nonperforming assets at period end 617 577 440
Nonperforming loans to period end loans .89 % .83 % .65 %
Nonperforming assets to period end loans plus
OREO and other nonperforming assets .93 .88 .70
</TABLE>
<PAGE> 5
KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS
OCTOBER 17, 2000
PAGE 5
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
NINE MONTHS ENDED
---------------------------------
9-30-00 9-30-99
------------- -------------
<S> <C> <C>
SUMMARY OF OPERATIONS
Net interest income (taxable equivalent) $2,049 $2,106
Provision for loan losses 382 265
Noninterest income 1,686 1,643
Noninterest expense 2,212 2,185
Net income 736 843
Net income - core 737 787
PER COMMON SHARE
Net income $1.69 $1.88
Net income - core 1.69 1.75
Net income - assuming dilution 1.68 1.86
Net income - assuming dilution - core 1.69 1.74
Cash dividends .84 .78
PERFORMANCE RATIOS
Return on average total assets 1.18 % 1.40 %
Return on average total assets - core 1.18 1.31
Return on average equity 15.12 18.21
Return on average equity - core 15.15 17.00
Efficiency (a) 60.31 59.74
Overhead (b) 32.96 31.91
Net interest margin (taxable equivalent) 3.68 3.95
ASSET QUALITY
Net loan charge-offs $306 $235
Net loan charge-offs to average loans .63 % .50 %
<FN>
(a) Calculated as noninterest expense (excluding significant nonrecurring
items) divided by taxable-equivalent net interest income plus noninterest
income (excluding significant nonrecurring items).
(b) Calculated as noninterest expense (excluding significant nonrecurring
items) less noninterest income (excluding significant nonrecurring items)
divided by taxable-equivalent net interest income.
(c) 9-30-00 ratio is estimated.
</TABLE>
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KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS
OCTOBER 17, 2000
PAGE 6
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
9-30-00 6-30-00 9-30-99
------------- -------------- -------------
ASSETS
<S> <C> <C> <C>
Loans $66,299 $65,612 $63,181
Investment securities 1,253 1,128 989
Securities available for sale 6,664 6,249 6,567
Short-term investments 1,570 1,759 2,094
------------- -------------- -------------
Total earning assets 75,786 74,748 72,831
Allowance for loan losses (1,001) (979) (930)
Cash and due from banks 2,691 3,178 3,018
Premises and equipment 711 726 818
Goodwill 1,339 1,357 1,422
Other intangible assets 48 52 64
Corporate owned life insurance 2,185 2,159 2,080
Other assets 3,741 3,478 3,274
------------- -------------- -------------
TOTAL ASSETS $85,500 $84,719 $82,577
============= ============== =============
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $8,386 $9,057 $9,050
Interest-bearing 35,016 34,733 34,029
Deposits in foreign office-interest-bearing 4,407 5,286 387
------------- -------------- -------------
Total deposits 47,809 49,076 43,466
Federal funds purchased and securities
sold under repurchase agreements 5,324 3,511 3,510
Bank notes and other short-term borrowings 6,407 5,998 8,551
Other liabilities 4,397 4,287 3,595
Long-term debt 13,800 14,097 15,815
Capital securities of subsidiary trusts 1,243 1,243 1,243
------------- -------------- -------------
TOTAL LIABILITIES 78,980 78,212 76,180
SHAREHOLDERS' EQUITY 6,520 6,507 6,397
------------- -------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $85,500 $84,719 $82,577
============= ============== =============
Common shares outstanding (000) 427,260 431,166 448,824
</TABLE>
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KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS
OCTOBER 17, 2000
PAGE 7
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------------------- ------------------------
9-30-00 6-30-00 9-30-99 9-30-00 9-30-99
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME $ 1,596 $ 1,540 $ 1,433 $ 4,625 $ 4,206
INTEREST EXPENSE 912 867 733 2,597 2,124
--------- --------- --------- --------- ---------
NET INTEREST INCOME 684 673 700 2,028 2,082
Provision for loan losses 131 68 78 382 265
--------- --------- --------- --------- ---------
553 605 622 1,646 1,817
NONINTEREST INCOME
Trust and investment services income 148 150 145 458 445
Investment banking and capital markets income 91 98 77 278 243
Service charges on deposit accounts 85 85 83 256 246
Corporate owned life insurance income 28 25 25 78 76
Credit card fees 1 2 16 9 47
Net loan securitization gains (losses) (2) 7 32 7 82
Net securities gains (losses) (50) 2 2 (47) 26
Gains from divestitures -- -- 13 332 161
Other income 104 106 103 315 317
--------- --------- --------- --------- ---------
Total noninterest income 405 475 496 1,686 1,643
NONINTEREST EXPENSE
Personnel 342 361 349 1,085 1,104
Net occupancy 55 56 58 168 175
Computer processing 59 60 60 178 173
Equipment 41 42 48 131 153
Marketing 29 31 35 82 84
Amortization of intangibles 26 25 25 76 79
Professional fees 30 21 18 70 50
Restructuring charges 102 -- 7 109 7
Other expense 103 102 108 313 360
--------- --------- --------- --------- ---------
Total noninterest expense 787 698 708 2,212 2,185
--------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 171 382 410 1,120 1,275
Income taxes 50 134 140 384 432
--------- --------- --------- --------- ---------
NET INCOME $ 121 $ 248 $ 270 $ 736 $ 843
========= ========= ========= ========= =========
Net income per common share $ .28 $ .57 $ .60 $ 1.69 $ 1.88
Net income per common share - assuming dilution .28 .57 .60 1.68 1.86
Wtd. avg. common shares (000) 429,584 434,112 448,742 435,156 448,764
Wtd. avg. common shares and potential
common shares (000) 431,972 436,022 452,886 437,231 453,267
Taxable-equivalent adjustment $ 7 $ 7 $ 9 $ 21 $ 24
</TABLE>
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KEYCORP REPORTS THIRD QUARTER 2000 EARNINGS
OCTOBER 17, 2000
PAGE 8
<TABLE>
<CAPTION>
CONSOLIDATED AVERAGE BALANCE SHEETS
(in millions)
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------------- ------------------------
9-30-00 6-30-00 9-30-99 9-30-00 9-30-99
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Loans $ 65,777 $ 64,817 $ 62,799 $ 64,876 $ 62,036
Investment securities 1,156 1,086 970 1,086 981
Securities available for sale 6,275 6,198 6,359 6,315 6,314
Short-term investments 1,501 1,757 1,836 1,807 1,845
-------- -------- -------- -------- --------
Total earning assets 74,709 73,858 71,964 74,084 71,176
Allowance for loan losses (969) (976) (920) (948) (909)
Cash and due from banks 2,652 2,606 2,589 2,605 2,591
Other assets 7,713 7,917 7,662 7,827 7,540
-------- -------- -------- -------- --------
TOTAL ASSETS $ 84,105 $ 83,405 $ 81,295 $ 83,568 $ 80,398
======== ======== ======== ======== ========
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $ 8,377 $ 8,412 $ 8,534 $ 8,317 $ 8,489
Interest-bearing 34,602 34,392 33,153 34,236 32,507
Deposits in foreign office-interest-bearing 2,860 3,029 776 2,367 794
-------- -------- -------- -------- --------
Total deposits 45,839 45,833 42,463 44,920 41,790
Federal funds purchased and securities
sold under repurchase agreements 5,746 4,096 4,495 4,619 5,015
Bank notes and other short-term borrowings 6,403 6,972 7,428 7,348 7,801
Other liabilities 4,248 4,357 3,561 4,316 3,339
Long-term debt 14,113 14,425 15,864 14,622 15,128
Capital securities of subsidiary trusts 1,243 1,243 1,205 1,243 1,136
-------- -------- -------- -------- --------
TOTAL LIABILITIES 77,592 76,926 75,016 77,068 74,209
SHAREHOLDERS' EQUITY 6,513 6,479 6,279 6,500 6,189
-------- -------- -------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 84,105 $ 83,405 $ 81,295 $ 83,568 $ 80,398
======== ======== ======== ======== ========
</TABLE>
