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KEYCORP EXCEEDS PERFORMANCE OBJECTIVES IN THE SECOND QUARTER AND FIRST SIX MONTHS OF 1992

 KEYCORP EXCEEDS PERFORMANCE OBJECTIVES IN THE SECOND
 QUARTER AND FIRST SIX MONTHS OF 1992
 ALBANY, N.Y., July 14 /PRNewswire/ -- KeyCorp (NYSE: KEY) reported record net income of $59.6 million for the second quarter of the year, an increase of 35.6 percent over net income of $44.0 million for the same period in 1991. Earnings per common share were $.77 for the quarter, an increase of 26.2 percent over the $.61 reported in the second quarter of 1991.
 Net income for the first six months of 1992 rose 40.9 percent to $116.8 million, up from $82.9 million during the same period in 1991. This equalled $1.51 per common share, up 24.8 percent from $1.21 reported a year earlier.
 All per share amounts have been restated to give effect to KeyCorp's three-for-two common stock split distributed on April 15, 1992.
 Key performance ratios for the second quarter and first six months were as follows:
 2nd Qtr. 1st Qtr. 2nd Qtr.
 1992 1992 1991
 Return on Assets (ROA) 1.05 pct. 1.01 pct. .82 pct.
 Return on Common Equity (ROCE) 16.43 pct. 16.05 pct 14.28 pct.
 Efficiency Ratio 61.7 pct. 62.2 pct. 62.5 pct.
 1st Half 1st Half
 1992 1991
 ROA 1.03 pct. .83 pct.
 ROCE 16.24 pct 14.29 pct.
 Efficiency Ratio 61.9 pct. 64.1 pct.
 "As stated since the beginning of the current year, KeyCorp's objectives with regard to these performance statistics for the full year 1992 included a 1 percent ROA, 16 percent ROCE, and 62 percent efficiency ratio," said Victor J. Riley, Jr., chairman, president and chief executive officer of KeyCorp. "We have already exceeded these percentages during the first six months of the year, with only minor amounts of security gains and nonrecurring transactions."
 The second-quarter net income rose at a faster rate than earnings per common share due to dividends paid on its Series B Preferred Stock issued at the end of the second quarter of last year. The effect of these dividends, as well as KeyCorp's issuance of 4.6 million common shares at the end of the first quarter in 1991, caused net income to rise faster than earnings per share for the first six months of 1992 as compared to the first six months of 1991.
 William H. Dougherty, group executive vice president and chief financial officer of KeyCorp, commented on important aspects of second quarter and six month performance. "As has been the case for the last few quarters, the most notable achievement was the continued improvement in our net yield on average earning assets. This ratio stood at 5.36 percent for the period, a 13 basis point improvement over the 5.23 percent recorded in the first quarter of 1992. Recent Federal Reserve actions to further reduce interest rates might be expected to impact this measure at some point in the future, but KeyCorp's net yield should continue near its current level throughout the remainder of 1992."
 Dougherty continued, "Total fee income expanded by $13.1 million, or 20.4 percent above the amount earned during the same quarter of 1991. Compared to this year's first quarter, fees grew by $4.0 million, or 5.4 percent. While all fee-oriented line items reported revenue growth, mortgage banking continued to enjoy the greatest proportional increase. Within our mortgage banking business, an agreement to acquire approximately $3 billion in additional servicing was recently signed. When combined with our existing portfolio and that of our pending merger partner Puget Sound Bancorp, KeyCorp's total residential mortgage servicing portfolio will approximate $23 billion. This will place us squarely among the leaders in this industry.
 "Total revenues (defined as tax-equivalent net interest income plus fee revenues) for the second quarter of 1992 expanded by 23.4 percent versus the same quarter last year. Noninterest expense rose by a lower amount, equal to 21.7 percent over the same time period (excluding the increases due to Goldome, FDIC insurance and ORE, core expenses grew by about 7 percent). As a result, the efficiency ratio improved to 61.7 percent, compared to 62.5 percent in the second quarter of 1991 and 62.2 percent in the first quarter of 1992. For 1993, our objective is to drive this ratio below the 60 percent level.
 "Loan demand indicated a modest economic rebound, as June 30 outstandings rose to $15.2 billion, an annualized rate of 1.6 percent above the $15.1 billion reported at the end of 1991. A factor influencing loan growth was our policy of not replacing out-of-market loans acquired in the Empire and Goldome transactions. Adhering to this policy offset approximately $180 million of internal growth. The acquisition of Valley Bancorporation in Idaho added $115 million of loans to KeyCorp's second-quarter portfolio. We still expect period- end to period-end loan growth of approximately 4 percent for all of 1992.
 "As we anticipated when reporting in April, nonperforming assets peaked at the end of the first quarter. On June 30, nonperforming loans fell to $170.4 million, equal to 1.12 percent of loans, down from $185.2 million, or 1.25 percent recorded on March 31. Although ORE rose by $13.8 million, total nonperforming assets decreased slightly versus those of the prior quarter. The rise in ORE reflects the movement of problem assets to the final stage of resolution.
 "At the end of June, total nonperformers stood at 2.45 percent of loans plus ORE, down from 2.52 percent reported on March 31. Net charge-offs in the second quarter fell to 1.00 percent of average loans, down substantially from 1.23 percent in the same period last year, but above the .93 percent experienced in the first quarter of 1992. Second-quarter charge-offs at Key Bank of Maine created the increase from the March quarter. Maine's charge-offs should moderate during the final six months of the year. Our second quarter 1992 loan loss provision exceeded net charge-offs by $1.9 million, and the June 30 allowance of $212.1 million covered 124.5 percent of nonperforming loans, up from 111.9 percent at March 31."
 Dougherty stated that, "We remain encouraged by the underlying trend in overall asset quality, as the level of 90-day delinquent accounts contracted by $5.0 million, or 9.2 percent, in addition to the modest decline in nonperforming assets. The New York State bank (the largest in our system) showed continued signs of strength, and we expect a significant reduction in ORE properties in Alaska during the last six months of the current year. KeyCorp's positive asset-quality trend seen in the June quarter is in line with our projections and supports our expectation for continued improvement in future quarters."
 Concluding the review of the quarter, Riley said, "In addition to the record earnings performance, a number of events positively impacted KeyCorp during the second quarter. As mentioned earlier, Valley Bancorporation of Idaho Falls, Idaho, with $221 million in assets, was merged into Key Bank of Idaho in early June. On June 29, KeyCorp issued $125 million of 8 percent 12-year Subordinated Notes. The proceeds were used to fund the early retirement (without premium) of approximately $50 million of 11.25 percent Senior Notes, as well as to provide low-priced capital for Key Bank of Washington in preparation for the expected closing in September on the purchase of 48 former Security Pacific branches from BankAmerica. The previously- announced merger with Puget Sound Bancorp of Tacoma, Washington should close late this year or in early January, 1993. Finally, on July 1, an agreement in principle for KeyCorp to acquire National Savings Bank of Albany was approved by both boards of directors. National Savings Bank, headquartered in Albany, N.Y., has $637 million in assets and nine branch offices in the Capital and Adirondack regions."
 KeyCorp, with assets of $23.1 billion, is a multi-regional bank holding company headquartered in Albany, N.Y. It has focused its banking expansion activities in the Northeast and Northwest. As "America's neighborhood bank", KeyCorp has pursued a middle-market target, concentrating its resources in cities and smaller communities of the northern tier of states, thus avoiding overcrowded marketplaces and single industry loan exposure.
 KeyCorp
 Summary of Operating Results
 Summary of Operations Three Months Ended Six Months Ended
 (in thousands except June 30 June 30
 per share data) 1992 1991 1992 1991
 Interest Income
 (Taxable-Equivalent Basis) $479,922 $493,721 $965,929 $944,671
 Interest Expense 203,308 271,139 422,452 523,734
 Net Interest Income 276,614 222,582 543,477 420,937
 Less: Taxable-Equivalent
 Adjustment 8,805 8,671 17,878 16,841
 Provision for Possible
 Loan Losses 39,258 43,451 74,374 73,967
 Net Interest Income After
 Provision for Possible
 Loan Losses 228,551 170,460 451,225 330,129
 Noninterest Income:
 Service Charges on Deposit
 Accounts 25,466 22,597 50,911 44,143
 Mortgage Banking Income 17,001 9,573 32,235 14,864
 Other Service Charges
 and Fees 8,047 7,958 15,744 14,466
 Trust Service Fees 9,082 8,141 17,770 15,510
 Other 17,526 15,783 33,628 31,971
 Total Fee Income 77,122 64,052 150,288 120,954
 Gain on Sale of Loans 1,271 5,873 2,832 8,347
 Investment Securities
 Gains 1,420 2,242 2,220 6,822
 Total Noninterest Income 79,813 72,167 155,340 136,123
 Noninterest Expense:
 Personnel Expense 100,134 82,413 199,846 160,820
 Net Occupancy Expense 21,818 19,975 43,451 39,080
 FDIC Insurance 10,776 7,941 21,533 15,521
 OREO Expense 8,312 3,827 13,650 5,836
 Other 77,088 65,028 151,221 125,844
 Total Noninterest Expense 218,128 179,184 429,701 347,101
 Income Before Taxes 90,236 63,443 176,864 119,151
 Income Taxes 34,592 19,460 60,064 36,241
 Net Income $ 59,644 $ 43,983 $116,800 $ 82,910
 Preferred Stock Dividends $ 4,450 $ 617 $ 8,901 $ 1,068
 Net Income Applicable to
 Common Shares After
 Preferred Dividends $ 55,194 $ 43,366 $107,899 $ 81,842
 Net Income Per Common Share $ .77 $ .61 $1.51 $1.21
 Average Common Shares
 Outstanding 71,590 70,723 71,415 67,460
 KeyCorp
 Three Months Ended Six Months Ended
 June 30 June 30
 1992 1991 1992 1991
 Significant Ratios
 Return on Average
 Assets (pct) 1.05 .82 1.03 .83
 Return on Average
 Common Equity 16.43 14.28 16.24 14.29
 Net Yield on Average
 Earning Assets 5.36 4.64 5.29 4.65
 Equity to Assets
 (Period-End) 6.79 5.60 6.79 5.60
 Nonperforming Loans to
 Period-End Loans (pct) 1.12 1.08 1.12 1.08
 Nonperforming Assets to
 Period-End Loans
 Plus OREO 2.45 2.34 2.45 2.34
 Allowance for Possible Loan
 Losses to Period-End
 Loans 1.39 1.34 1.39 1.34
 Allowance for Possible Loan
 Losses to Nonperforming
 Loans (pct) 124.48 124.38 124.48 124.38
 Net Charge-Offs to Average
 Loans (pct) 1.00 1.23 .96 1.13
 Efficiency Ratio (pct) 61.7 62.5 61.9 64.1
 Credit Quality
 (dollars in thousands)
 June 30 March 31 December 31 September 30 June 30
 1992 1992 1991 1991 1991
 Loans on
 Nonaccrual $169,121 $183,566 $191,176 $174,758 $160,949
 Renegotiated
 Loans 1,264 1,601 2,213 2,565 2,485
 Nonperforming
 Loans 170,385 185,167 193,389 177,323 163,434
 Other Real
 Estate
 Owned 207,316 193,560 176,309 191,590 196,182
 Nonperforming
 Assets $377,701 $378,727 $369,698 $368,913 $359,616
 Loans Past
 Due 90 plus
 Days $ 48,608 $ 53,559 $ 56,037 $ 51,427 $ 47,172
 KeyCorp
 Three Months Ended Six Months Ended
 Summary of Loan Loss Experience June 30 June 30
 (in thousands) 1992 1991 1992 1991
 Allowance for Possible Loan
 Losses at Beginning of
 Period $207,276 $160,519 $206,684 $162,669
 Losses Charged to the
 Allowance (43,053) (47,411) (82,950) (84,362)
 Recoveries Credited to the
 Allowance 5,650 4,713 11,023 8,998
 Net Charge-Offs (37,403) (42,698) (71,927) (75,364)
 Provision for Possible
 Loan Losses 39,258 43,451 74,374 73,967
 Allowance Acquired in Banks
 Merged 2,969 42,009 2,969 42,009
 Allowance for Possible Loan
 Losses at End of Period $212,100 $203,281 $212,100 $203,281
 KeyCorp
 Condensed Period-End Balance Sheet
 At June 30
 (in millions except per share data) 1992 1991
 Loans Net of Unearned Income $ 15,207 $ 15,172
 Less: Allowance for Possible
 Loan Losses (212) (203)
 Net Loans 14,995 14,969
 Investment Securities 5,082 3,698
 Short-Term Investments 16 429
 Loans Held for Sale/Putback 344 681
 Securities Held for Sale -- 2,375
 Cash and Due from Banks 1,184 1,325
 Intangible Assets 259 324
 Other Assets 1,238 1,349
 Total $ 23,118 $ 25,150
 Interest-Bearing Deposits $ 16,002 $ 16,343
 Noninterest-Bearing Deposits 2,881 2,848
 Total Deposits 18,883 19,191
 Short-Term Borrowings 1,678 3,601
 Long-Term Debt 671 515
 Other Liabilities 316 435
 Total Liabilities 21,548 23,742
 Shareholders' Equity:
 Preferred 184 174
 Common 1,386 1,234
 Total Shareholders' Equity 1,570 1,408
 Total $ 23,118 $ 25,150
 Common Shares Outstanding (thousands) 72,126 70,808
 Book Value per Common Share $ 19.22 $ 17.42
 Three Months Ended Six Months Ended
 Condensed Average Balance Sheet June 30 June 30
 (in millions) 1992 1991 1992 1991
 Loans Net of Unearned
 Income $ 15,028 $ 13,959 $ 15,002 $ 13,484
 Investment Securities 5,018 4,676 4,896 4,293
 Loans Held for Sale/Putback 617 275 622 169
 Securities Held for Sale - - - 45
 Short-Term Investments 40 306 59 172
 Earning Assets 20,703 19,216 20,579 18,163
 Allowance for Loan Losses (214) (169) (212) (164)
 Cash and Due from Banks 935 1,001 978 961
 Other Assets 1,517 1,392 1,493 1,297
 Total $ 22,941 $ 21,440 $ 22,838 $20,257
 Interest-Bearing Deposits $ 16,112 $ 14,529 $ 16,136 $ 14,017
 Noninterest-Bearing
 Deposits 2,590 2,543 2,579 2,433
 Total Deposits 18,702 17,072 18,715 16,450
 Short-Term Borrowings 1,782 2,313 1,692 1,890
 Long-Term Debt 549 429 539 421
 Other Liabilities 373 375 372 314
 Total Liabilities 21,406 20,189 21,318 19,075
 Shareholders' Equity 1,535 1,251 1,520 1,182
 Total $ 22,941 $ 21,440 $ 22,838 $ 20,257
 KeyCorp
 Summary of Operating Results
 Summary of Operations Three Months Ended
 (in thousands except June 30 March 31 Dec 31 Sept 30
 per share data) 1992 1992 1991 1991
 Interest Income
 (Taxable-Equivalent
 Basis) $479,922 $486,007 $507,813 $548,960
 Interest Expense 203,308 219,144 253,484 299,903
 Net Interest Income 276,614 266,863 254,329 249,057
 Less: Taxable-Equivalent
 Adjustment 8,805 9,073 8,312 8,288
 Provision for Possible
 Loan Losses 39,258 35,116 34,496 43,758
 Net Interest Income After
 Provision for Possible
 Loan Losses 228,551 222,674 211,521 197,011
 Noninterest Income:
 Service Charges on Deposit
 Accounts 25,466 25,445 25,992 23,834
 Mortgage Banking Income 17,001 15,234 19,202 19,036
 Other Service Charges
 and Fees 8,047 7,697 7,832 8,911
 Trust Service Fees 9,082 8,688 8,890 8,253
 Other 17,526 16,102 17,619 18,575
 Total Fee Income 77,122 73,166 79,535 78,609
 Gain on Sale of Loans 1,271 1,561 2,035 13,593
 Investment Securities
 Gains 1,420 800 3,307 1,541
 Total Noninterest Income 79,813 75,527 84,877 93,743
 Noninterest Expense:
 Personnel Expense 100,134 99,712 99,252 95,169
 Net Occupancy Expense 21,818 21,633 22,333 21,929
 FDIC Insurance 10,776 10,757 9,824 9,870
 OREO Expense 8,312 5,338 9,162 6,230
 Other 77,088 74,133 78,144 78,560
 Total Noninterest Expense 218,128 211,573 218,715 211,758
 Income Before Taxes 90,236 86,628 77,683 78,996
 Income Taxes 30,592 29,472 24,582 26,934
 Net Income $ 59,644 $ 57,156 $ 53,101 $ 52,062
 Preferred Stock Dividends $ 4,450 $ 4,451 $ 4,451 $ 4,455
 Net Income Applicable to
 Common Shares After
 Preferred Dividends $ 55,194 $ 52,705 $ 48,650 $ 47,607
 Net Income Per Common Share $ .77 $ .74 $ .68 $ .67
 Average Common Shares
 Outstanding 71,590 71,241 71,072 70,875
 Three Months Ended
 June 30 March 31 Dec 31 Sept 30
 1992 1992 1991 1991
 Significant Ratios
 Return on Average
 Assets (pct) 1.05 1.01 .93 .85
 Return on Average
 Common Equity (pct) 16.43 16.05 15.09 15.09
 Net Yield on Average
 Earning Assets (pct) 5.36 5.23 5.04 4.67
 Equity to Assets
 (Period-End) (pct) 6.79 6.66 6.42 6.21
 Nonperforming Loans to
 Period-End Loans 1.12 1.25 1.28 1.20
 Nonperforming Assets to
 Period-End Loans Plus
 OREO (pct) 2.45 2.52 2.42 2.47
 Allowance for Possible Loan
 Losses to Period-End
 Loans (pct) 1.39 1.40 1.37 1.42
 Allowance for Possible Loan
 Losses to Nonperforming
 Loans (pct) 124.48 111.94 106.87 117.64
 Net Charge-Offs to Average
 Loans (pct) 1.00 .93 .97 1.02
 Efficiency Ratio (pct) 61.7 62.2 65.5 64.6
 -0- 7/14/92
 /CONTACT: Lee Irving (treasurer), 518-486-8579 or 518-479-3273 after hours; or Don Kauth (investor), 518-487-4491 or 518-583-1608 after hours, both of KeyCorp/
 (KEY) CO: KeyCorp ST: New York IN: FIN SU: ERN


KK -- CL021 -- 9222 07/14/92 15:40 EDT
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