<PAGE> 1
EXHIBIT 99
MEDIA CONTACT: ANALYST CONTACT:
Bill Murschel (216) 689-0457 Vern Patterson (216) 689-0520
WEB SITE: www.Key.com
FOR IMMEDIATE RELEASE
KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
--------------------------------------------
- REPORTED AND CORE EPS OF $0.57
- STABLE NET INTEREST MARGIN
- CONTINUED EXPENSE REDUCTION
- 6.7 MILLION SHARES REPURCHASED DURING THE QUARTER
CLEVELAND, July 18, 2000 -- KeyCorp (NYSE: KEY) today announced second
quarter core net income (which excludes significant nonrecurring items) of $249
million, or $0.57 per diluted common share. On a per share basis, this result
represents an 8 percent improvement over adjusted core net income of $244
million, or $0.53 per share, for the same quarter last year. Last year's second
quarter adjusted results exclude earnings from Key's Long Island district
branches and the credit card business, both of which have been sold, and
Champion Mortgage loan securitizations. Key's second quarter 2000 core earnings
also improved from comparable first quarter 2000 results of $243 million, or
$0.55 per share.
On a reported basis, Key's earnings for the second quarter of 2000 were
$248 million, or $0.57 per diluted common share, compared with $280 million, or
$0.62 for the second quarter of 1999. For the first six months of the year,
Key's reported net income was $615 million, up 7 percent from $573 million for
the first half of 1999. This represents $1.40 per diluted common share, which
amounts to a 10 percent increase from $1.27 reported for the same period last
year.
"Second quarter results reflect the impact of aggressive actions we
have taken over the past year to facilitate our continued development as an
integrated, multiline financial services company," said Robert W. Gillespie,
Key's chairman and chief executive officer.
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KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
JULY 18, 2000
PAGE 2
"Moreover, we are confident that these actions are having their
intended strategic effect. Core earnings per share are growing on the strength
of a stable net interest margin, strong commercial and home equity loan growth,
13 percent annualized growth in our Retail Bank's deposits and a $22 million, or
annualized 12 percent, decrease in core noninterest expense. Such strong
underlying trends are representative of the type of financial performance that
we must achieve."
Key's returns on average equity and average assets for the second
quarters of 2000 and 1999 are presented below. Ratios shown on a core basis
exclude the effects of significant nonrecurring items. Ratios presented on a
cash basis exclude only the effects of goodwill and other intangibles that do
not qualify as Tier 1 capital, as well as the related amortization of those
assets.
<TABLE>
<CAPTION>
Core Basis Cash Basis
------------------------------ -----------------------------
2Q00 2Q99 2Q00 2Q99
---- ---- ---- ----
<S> <C> <C> <C> <C>
Return on average equity 15.5% 17.7% 21.6% 25.9%
Return on average assets 1.20% 1.37% 1.33% 1.54%
</TABLE>
Net interest income for the second quarter of 2000 totaled $673
million, up $2 million from the first quarter. The net interest margin was
stable from quarter-to-quarter at 3.68 percent, despite a challenging interest
rate environment and the January sale of the low-growth, but higher-yielding
credit card business. Compared with the second quarter of 1999, net interest
income declined by $24 million, largely due to approximately $45 million of net
interest income contributed to the year-ago quarter by the divested Long Island
branches and credit card business.
Core noninterest income was $475 million for the second quarter of
2000, nearly identical to the $476 million earned in the first quarter. Income
from investment banking and capital markets activities grew by $9 million, but
was offset by an $11 million reduction in brokerage commissions. Core
noninterest income in last year's second quarter was $517 million and included
$19 million from the divested Long Island branches and credit card business, as
well as $21 million resulting from the securitization and sale of Champion home
equity loans. The remaining $477 million of core noninterest income was nearly
equaled by the $475 million of core noninterest income in the second quarter of
2000. Increases in income from trust and asset management (up $6 million) and
service charges on deposit accounts (up $3 million) were
<PAGE> 3
KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
JULY 18, 2000
PAGE 3
substantially offset by an $8 million reduction in brokerage commissions due to
a lower volume of activity.
Reflecting early progress made on Key's productivity improvement
initiatives, core noninterest expense totaled $696 million for the second
quarter of 2000, representing a $22 million reduction from that reported for the
first quarter. Personnel expenses led the decline, decreasing by $21 million.
Core noninterest expense was down $24 million from $720 million for the year-ago
quarter. This improvement came from lower costs related to personnel (down $22
million) and equipment (down $7 million) that were largely the result of the
strategic sales mentioned earlier and the impact of Key's productivity
improvement initiative. These factors contributed to a reduction in Key's
workforce of more than 2,700 positions from June 30, 1999, to June 30, 2000.
The core provision for loan losses was $68 million for the second
quarter of 2000, up $6 million from the prior quarter and down $8 million from
that reported for the second quarter of 1999. On a comparable basis, net loan
charge-offs totaled $68 million and were 0.42 percent of average loans
outstanding for the quarter, compared with 0.39 percent for the prior quarter
and 0.49 percent a year ago. The decrease in both the provision for loan losses
and the level of net loan charge-offs relative to the second quarter of 1999
reflected, among other factors, the sale of Key's credit card portfolio.
Key's nonperforming loans ended the second quarter at $489 million, or
0.75 percent of period-end loans, compared with $423 million, or 0.66 percent,
at March 31, 2000. The increase of $66 million was nearly evenly distributed
between commercial and consumer loans. Key experienced a modest increase in
commercial nonperforming loans as these continue to trend to more normal levels
after a lengthy period of exceptional performance. In addition, consumer
nonperforming loans rose at June 30 to more customary levels after reaching
unusually low levels at March 31.
Key's capital ratios continue to exceed all "well-capitalized"
benchmarks. At June 30, 2000, Key's estimated Tier 1 and total risk-adjusted
capital ratios were 7.78 percent and 11.58 percent, respectively, and the
estimated leverage ratio was 7.91 percent. The tangible equity to tangible
assets ratio was 6.12 percent at June 30, 2000, compared with 6.16 percent last
quarter and 5.95 percent a year ago. The decline from the first quarter reflects
Key's second quarter 2000 repurchase of 6,700,000 of its common shares under an
authorization that allows for the
<PAGE> 4
KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
JULY 18, 2000
PAGE 4
repurchase of up to 20,000,000 shares. There were 6,935,000 shares remaining for
repurchase under this authorization as of June 30, 2000.
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 robust Web site, Key.com,(SM)
that provide account access and financial products 24 hours a day.
--------------------------------------------------------------------------------
This news release contains forward-looking statements 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: sharp and/or rapid changes in interest
rates; significant 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; significant
delay in or inability to execute strategic initiatives designed to grow revenues
and/or manage expenses; consummation of significant business combinations or
divestitures; significant changes in law imposing new legal obligations or
restrictions or unfavorable resolution of litigation; and significant changes in
accounting, tax or regulatory practices or requirements.
--------------------------------------------------------------------------------
NOTE TO EDITORS: SOME OF THE FINANCIAL TABLES THAT FOLLOW INCLUDE QUARTERLY DATA
FOR THREE PERIODS -- JUNE 30, 2000, MARCH 31, 2000 (THE PREVIOUS QUARTER), AND
JUNE 30, 1999. PLEASE BE SURE TO USE THE APPROPRIATE COLUMN OF FIGURES FOR YOUR
DESIRED COMPARISONS, SINCE ONE OF THE PRIOR PERIOD COLUMNS ALLOWS FOR CURRENT
QUARTER VS. PRIOR YEAR COMPARISONS AND THE OTHER ALLOWS FOR CURRENT QUARTER
COMPARISONS TO THE IMMEDIATELY PRECEDING QUARTER.
###
<PAGE> 5
KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
JULY 18, 2000
PAGE 5
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
THREE MONTHS ENDED
----------------------------------------------------
6-30-00 3-31-00 6-30-99
------------- ------------- ------------
SUMMARY OF OPERATIONS
<S> <C> <C> <C>
Net interest income (taxable equivalent) $680 $678 $704
Provision for loan losses 68 183 76
Noninterest income 475 806 532
Noninterest expense 698 727 723
Net income 248 367 280
Net income - core 249 243 273
PER COMMON SHARE
Net income $ .57 $ .83 $ .63
Net income - core .57 .55 .61
Net income - assuming dilution .57 .83 .62
Net income - assuming dilution - core .57 .55 .60
Cash dividends .28 .28 .26
Book value at period end 15.09 14.84 13.90
Market price at period end 17.63 19.00 32.13
AT PERIOD END
Full-time equivalent employees 23,005 23,474 25,758
Branches 938 937 965
PERFORMANCE RATIOS
Return on average total assets 1.20 % 1.77 % 1.40 %
Return on average total assets - core 1.20 1.17 1.37
Return on average equity 15.40 22.68 18.16
Return on average equity - core 15.46 15.02 17.70
Efficiency (1) 60.26 62.27 59.21
Overhead (2) 32.50 35.75 29.97
Net interest margin (taxable equivalent) 3.68 3.68 3.97
CAPITAL RATIOS AT PERIOD END
Equity to assets 7.68 % 7.78 % 7.71 %
Tangible equity to tangible assets 6.12 6.16 5.95
Tier 1 risk-adjusted capital (3) 7.78 7.98 7.48
Total risk-adjusted capital (3) 11.58 12.04 11.74
Leverage (3) 7.91 7.89 7.41
ASSET QUALITY
Net loan charge-offs $68 $134 $76
Net loan charge-offs to average loans .42 % .84 % .49 %
Allowance for loan losses $979 $979 $930
Allowance for loan losses to period end loans 1.49 % 1.53 % 1.50 %
Allowance for loan losses to nonperforming loans 200.20 231.44 247.34
Nonperforming loans at period end $489 $423 $376
Nonperforming assets at period end 521 447 412
Nonperforming loans to period end loans .75 % .66 % .61 %
Nonperforming assets to period end loans plus
OREO and other nonperforming assets .79 .70 .66
</TABLE>
<PAGE> 6
KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
JULY 18, 2000
PAGE 6
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(dollars in millions, except per share amounts)
SIX MONTHS ENDED
---------------------------------
6-30-00 6-30-99
------------- -------------
SUMMARY OF OPERATIONS
<S> <C> <C>
Net interest income (taxable equivalent) $1,358 $1,397
Provision for loan losses 251 187
Noninterest income 1,281 1,147
Noninterest expense 1,425 1,477
Net income 615 573
Net income - core 492 521
PER COMMON SHARE
Net income $1.40 $1.28
Net income - core 1.12 1.16
Net income - assuming dilution 1.40 1.27
Net income - assuming dilution - core 1.12 1.15
Cash dividends .56 .52
PERFORMANCE RATIOS
Return on average total assets 1.48 % 1.45 %
Return on average total assets - core 1.19 1.31
Return on average equity 19.04 18.81
Return on average equity - core 15.24 17.10
Efficiency (1) 61.27 60.16
Overhead (2) 34.12 31.57
Net interest margin (taxable equivalent) 3.68 3.96
ASSET QUALITY
Net loan charge-offs $202 $157
Net loan charge-offs to average loans .63 % .51 %
</TABLE>
1 Calculated as noninterest expense (excluding certain nonrecurring charges)
divided by taxable-equivalent net interest income plus noninterest income
(excluding gains from certain divestitures and certain nonrecurring
charges).
2 Calculated as noninterest expense (excluding certain nonrecurring charges)
less noninterest income (excluding gains from certain divestitures and
certain nonrecurring charges) divided by taxable-equivalent net interest
income.
3 6-30-00 ratio is estimated.
<PAGE> 7
KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
JULY 18, 2000
PAGE 7
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
6-30-00 3-31-00 6-30-99
------------- -------------- -------------
ASSETS
<S> <C> <C> <C>
Loans $65,612 $64,064 $61,971
Investment securities 1,128 1,053 967
Securities available for sale 6,249 6,269 6,404
Short-term investments 1,759 2,567 1,755
------------- -------------- -------------
Total earning assets 74,748 73,953 71,097
Allowance for loan losses (979) (979) (930)
Cash and due from banks 3,178 2,757 3,060
Premises and equipment 726 761 846
Goodwill 1,357 1,378 1,446
Other intangible assets 52 56 68
Corporate owned life insurance 2,159 2,132 2,056
Other assets 3,478 3,446 3,246
------------- -------------- -------------
TOTAL ASSETS $84,719 $83,504 $80,889
============= ============== =============
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $9,057 $8,283 $9,058
Interest-bearing 34,733 34,718 31,948
Deposits in foreign office-interest-bearing 5,286 3,035 2,010
------------- -------------- -------------
Total deposits 49,076 46,036 43,016
Federal funds purchased and securities
sold under repurchase agreements 3,511 2,621 4,727
Bank notes and other short-term borrowings 5,998 8,015 7,344
Other liabilities 4,287 4,312 3,405
Long-term debt 14,097 14,784 15,168
Capital securities of subsidiary trusts 1,243 1,243 994
------------- -------------- -------------
TOTAL LIABILITIES 78,212 77,011 74,654
SHAREHOLDERS' EQUITY 6,507 6,493 6,235
------------- -------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $84,719 $83,504 $80,889
============= ============== =============
Common shares outstanding (000) 431,166 437,590 448,641
</TABLE>
<PAGE> 8
KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
JULY 18, 2000
PAGE 8
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------------- ------------------------
6-30-00 3-31-00 6-30-99 6-30-00 6-30-99
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME $1,540 $1,489 $1,392 $3,029 $2,773
INTEREST EXPENSE 867 818 695 1,685 1,391
-------- -------- -------- -------- --------
NET INTEREST INCOME 673 671 697 1,344 1,382
Provision for loan losses 68 183 76 251 187
-------- -------- -------- -------- --------
605 488 621 1,093 1,195
NONINTEREST INCOME
Trust and asset management income 116 115 110 231 216
Investment banking and capital markets income 98 89 100 187 166
Service charges on deposit accounts 85 86 82 171 163
Brokerage commission income 34 45 42 79 84
Corporate owned life insurance income 25 25 27 50 51
Credit card fees 2 6 21 8 31
Net loan securitization gains 7 2 18 9 50
Net securities gains 2 1 20 3 24
Gains from divestitures -- 332 -- 332 148
Other income 106 105 112 211 214
-------- -------- -------- -------- --------
Total noninterest income 475 806 532 1,281 1,147
NONINTEREST EXPENSE
Personnel 361 382 383 743 755
Net occupancy 56 57 58 113 117
Computer processing 60 59 59 119 113
Equipment 42 48 49 90 105
Marketing 31 22 24 53 49
Amortization of intangibles 25 25 26 50 54
Professional fees 21 19 17 40 32
Restructuring charges -- 7 -- 7 --
Other expense 102 108 107 210 252
-------- -------- -------- -------- --------
Total noninterest expense 698 727 723 1,425 1,477
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES 382 567 430 949 865
Income taxes 134 200 150 334 292
-------- -------- -------- -------- --------
NET INCOME $248 $367 $280 $615 $573
======== ======== ======== ======== ========
Net income per common share $.57 $.83 $.63 $1.40 $1.28
Net income per common share - assuming dilution .57 .83 .62 1.40 1.27
Wtd. avg. common shares (000) 434,112 441,834 448,037 437,973 448,774
Wtd. avg. common shares and potential
common shares (000) 436,022 443,757 452,733 439,889 453,461
Taxable-equivalent adjustment $7 $7 $7 $14 $15
</TABLE>
<PAGE> 9
KEYCORP REPORTS SECOND QUARTER 2000 EARNINGS
JULY 18, 2000
PAGE 9
<TABLE>
<CAPTION>
CONSOLIDATED AVERAGE BALANCE SHEETS
(in millions)
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------------------- -----------------------
6-30-00 3-31-00 6-30-99 6-30-00 6-30-99
--------- --------- --------- --------- ---------
ASSETS
<S> <C> <C> <C> <C> <C>
Loans $64,817 $64,024 $61,604 $64,420 $61,648
Investment securities 1,086 1,016 984 1,051 987
Securities available for sale 6,198 6,475 6,575 6,336 6,291
Short-term investments 1,757 2,164 1,725 1,961 1,849
-------- -------- -------- -------- --------
Total earning assets 73,858 73,679 70,888 73,768 70,775
Allowance for loan losses (976) (899) (919) (938) (904)
Cash and due from banks 2,606 2,557 2,571 2,582 2,592
Other assets 7,917 7,850 7,485 7,884 7,479
-------- -------- -------- -------- --------
TOTAL ASSETS $83,405 $83,187 $80,025 $83,296 $79,942
======== ======== ======== ======== ========
LIABILITIES
Deposits in domestic offices:
Noninterest-bearing $8,412 $8,160 $8,438 $8,286 $8,466
Interest-bearing 34,392 33,708 32,247 34,051 32,179
Deposits in foreign office-interest-bearing 3,029 1,206 1,096 2,117 804
-------- -------- -------- -------- --------
Total deposits 45,833 43,074 41,781 44,454 41,449
Federal funds purchased and securities
sold under repurchase agreements 4,096 4,003 5,479 4,050 5,279
Bank notes and other short-term borrowings 6,972 8,680 6,786 7,826 7,991
Other liabilities 4,357 4,344 3,264 4,350 3,226
Long-term debt 14,425 15,334 15,368 14,879 14,754
Capital securities of subsidiary trusts 1,243 1,243 1,162 1,243 1,100
-------- -------- -------- -------- --------
TOTAL LIABILITIES 76,926 76,678 73,840 76,802 73,799
SHAREHOLDERS' EQUITY 6,479 6,509 6,185 6,494 6,143
-------- -------- -------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $83,405 $83,187 $80,025 $83,296 $79,942
======== ======== ======== ======== ========
</TABLE>
