Printer Friendly

KEYCORP 'A' SENIOR DEBT AFFIRMED BY FITCH AFTER PUGET PACT -- FITCH FINANCIAL WIRE --

 KEYCORP 'A' SENIOR DEBT AFFIRMED BY FITCH AFTER PUGET PACT
 -- FITCH FINANCIAL WIRE --
 NEW YORK, March 12 /PRNewswire/ -- KeyCorp's "A" senior debt rating is affirmed by Fitch after the bank holding company's announcement that it will acquire Puget Sound Bancorp, Wash. The proposed pooling combination is expected to further strengthen KeyCorp's position as a superregional player. The credit trend remains stable. Fitch does not rate Puget Sound securities.
 KeyCorp's diversification strategy has proven to be a positive approach, as demonstrated during the recent national recession. The bid for the $4.9 billion-asset Puget Sound fits strongly with ongoing strategies. In addition to cost savings which will drive the efficiency ratio lower (62 percent in 1992), KeyCorp's pro forma capital ratios will be bolstered. The pro forma Tier 1 ratio would increase to 7.96 percent from 7.36 percent, and the total risk-adjusted capital ratio would rise to 9.88 percent from 9.42 percent. Fitch believes KeyCorp's active expansion plans will continue to demand healthy capital.
 Credit risks are not expected to be a significant issue in this acquisition, although Puget Sound does have a fairly large loan concentration to the commercial real estate sector. Collectively, construction lending and commercial real estate loans would increase by 1 percent, to 4 percent and 19 percent, respectively, when compared with KeyCorp's ratios at Dec. 31, 1991. Combined consumer loans and residential mortgages will still be over 50 percent of total loans. Both KeyCorp's and Puget Sound's nonperforming assets (NPAs) appear to have peaked, and reserve levels provide 100 percent protection against nonperforming loans. The pro forma ratio of NPAs to loans and foreclosed assets is estimated to be 2.4 percent.
 More importantly, the acquisition will allow KeyCorp to further reduce its geographic loan dependence on New York State, which currently represents 56 percent of total loans. New York will decrease to 45 percent of total loans and Washington would grow to 25 percent from 7 percent. This in turn will diversify KeyCorp's profitability, resulting in a 56 percent and 44 percent contribution from the East and West, respectively, compared with 68 percent and 32 percent pre-merger. With a larger presence in Washington, KeyCorp becomes the state's third largest player measured by deposit share, controlling approximately 8 percent of deposits. This will add flexibility to managing liability costs, and enable KeyCorp to improve its net interest margin.
 Prospectively, as KeyCorp continues to expand through acquisitions, management will be faced with the challenges of managing a larger entity, integrating target companies, and balancing profitability against new credit and market risks. Fitch believes that KeyCorp is making steady progress in meeting profitability goals without increasing its credit risk profile. Fitch will closely monitor the integration of Puget Sound since it is likely to have positive implications for KeyCorp's rating.
 -0- 3/12/92
 /CONTACT: Fay Y. Wong of Fitch, 212-908-0531/
 (KEY) CO: KeyCorp ST: Washington, New York IN: FIN SU: RTG


GK -- NY025 -- 7694 03/12/92 10:24 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Mar 12, 1992
Words:497
Previous Article:ATHEY PRODUCTS ANNOUNCES EARNINGS
Next Article:DIMPLES GROUP ANNOUNCES CORPORATE UPDATE
Topics:


Related Articles
PUGET SOUND P&L $200 MILLION PREFERRED SHELF RATED 'BBB+' BY FITCH -- FITCH FINANCIAL WIRE --
RJR NABISCO $1.2 BILLION NEW SENIOR DEBT RATED 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --
ALLIED-SIGNAL 'A' SENIOR DEBT, 'F-1' COMMERCIAL PAPER AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --
BROWNSVILLE (TEXAS) UTILITIES SYSTEM PRIORITY BONDS RATED 'A' BY FITCH -- FITCH FINANCIAL WIRE --
TRANSAMERICA FINANCE CREDIT TREND UPGRADED TO STABLE BY FITCH -- FITCH FINANCIAL WIRE --
FITCH AFFIRMS CONTINENTAL BANK 'BBB' SENIOR DEBT, TREND STABLE -- FITCH FINANCIAL WIRE --
NATIONSBANK 'A+' SENIOR DEBT AFFIRMED BY FITCH AFTER MNC ANNOUNCEMENT --FITCH FINANCIAL WIRE (FFW)--
FITCH SETS COLLABORATION PACT WITH NEW MEXICAN RATING AGENCY -- FITCH FINANCIAL WIRE --
UNION OIL OF CALIFORNIA 'BBB+' SENIOR DEBT AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --
Norwest Bank, Wells Fargo Bank Units Rated AA+ by Fitch IBCA Fitch IBCA.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters