Printer Friendly

KEYCORP FIRST QUARTER 1993 EARNINGS EXCEED PLAN

    ALBANY, N.Y., April 15 /PRNewswire/ -- KeyCorp (NYSE: KEY) reported record earnings in the first quarter of 1993, as net income rose 29.7 percent to $94.9 million, up from $73.2 million in the first quarter of 1992.  Earnings per common share were $.91, up 28.2 percent over the $.71 reported in last year's first quarter.
    "When 1992 fourth quarter results were released, we publicly indicated 1993 goals of 1.20 percent for return on assets (ROA) and between 17 percent and 18 percent for return on common equity (ROCE)," said Victor J. Riley, Jr., chairman, president and chief executive officer of KeyCorp.  "To have achieved an ROA of 1.28 percent and an ROCE of 18.89 percent in the first quarter is very gratifying, and sets a strong base for the remainder of the year."
    KeyCorp's first quarter 1992 results have been restated to reflect the acquisition of Puget Sound Bancorp, a pooling-of-interests transaction consummated on January 15, 1993.  In the first quarter of 1992, Puget Sound Bancorp recorded a positive $6.6 million cumulative effect of accounting change resulting from the adoption of SFAS 109. That extraordinary gain was excluded from 1992 results in computing the percentage changes in net income and earnings per share shown at the beginning of this news release.
    William H. Dougherty, group executive vice president and chief financial officer, commented on important factors influencing first quarter results.  "The net yield on average earning assets continued to rise, equalling 5.38 percent, up from 5.32 percent earned in the fourth quarter of 1992 and 5.22 percent recorded in the first quarter of last year.  Average earning assets rose to $27.0 billion, an 8.6 percent increase over last year's first quarter. Both factors combined to generate an 11.4 percent growth in tax-equivalent net interest income.
    "KeyCorp's average loans equalled $20.3 billion in the first quarter of 1993, 9.2 percent above the same period last year.  Excluding acquisitions, the internal growth rate in loans approximated 3.5 percent.  Loan expansion in the western part of our franchise continued to outpace that in the eastern part.  Our Rocky Mountain banks enjoyed average internal loan growth of 6.9 percent over the first quarter of 1992, while the Pacific Northwest banks experienced a 5.8 percent internal growth rate.  Our Eastern banks, still shaking off the effects of that region's recession, saw average internal loans expand by 1.4 percent.  Excluding run-off of out-of-market loans acquired through our regulatory-assisted transactions in the state of New York, Eastern internal loan growth approximated 4 percent.
    "Generally, the first quarter of any year exhibits modest growth in the snowbelt markets we serve.  Our expectation is for improved loan growth during the remaining quarters of the year, with internal growth for KeyCorp as a whole approximating 5 percent for all of 1993. Including acquisitions, growth in the average loan portfolio is estimated to be in the range of 13 percent to 14 percent in the current year.
    "Fee income increased to $111.6 million, 16.5 percent over the $95.8 million earned in the first quarter of 1992.  The growth in income was led by a banner quarter at Niagara Portfolio Management, one of our two companies managing assets under contract with the FDIC.  Many people expect that this, the third year of these companies' contractual lives, will be their most profitable year.  It certainly is starting out that way.  These companies provided $16.3 million of fee income in the first three months of this year, up significantly from the $1.2 million last year in the first quarter. While the extraordinary quarter at Niagara Portfolio Management provided an extra boost to fee income in the first quarter, we expect noninterest income growth for all of 1993 in accordance with our plan of between 11 percent and 12 percent.
    "The balance sheet was strengthened in two ways during the quarter. Our mortgage servicing portfolio grew in the first quarter to $22.8 billion.  But in response to yet another wave of mortgage refinancings, we accelerated our amortization of mortgage servicing rights by $5.0 million.  The total purchased and excess servicing rights on our balance sheet is now $208.9 million.  Despite the charge to first quarter income, we still expect our mortgage banking company's contribution to KeyCorp's net income to be on plan for the year.  Secondly, even though credit-related OREO expenses rose by $4.1 million over 1992's first quarter, we provided enough for future possible OREO disposal losses to grow the allowance for loss on disposal of OREO from $14.5 million at December 31, 1992 to $17.5 million at March 31, 1993."
    Dougherty added, "During the first quarter, noninterest expenses rose to $286.4 million, $29.0 million above the $257.4 million incurred in the first quarter of 1992, an increase of 11.3 percent.  This increase was affected by operating expenses related to the purchase of 48 former Security Pacific branches on September 3 of last year as well as two first quarter 1993 acquisitions by our New York bank: National Savings Bank of Albany and First American Bank of New York.  Excluding the effects of these acquisitions, the rise in noninterest expenses approximated 4.5 percent, a level we expect to continue over the remainder of the year.
    "Even with the 11.3 percent growth in expenses, the efficiency ratio showed improvement, since revenues grew at a 12.5 percent rate.  The efficiency ratio was 60.63 percent in the first quarter of 1993, compared to 61.33 percent in the same period last year.  KeyCorp expects the trend to continue, as the objective with regard to the efficiency ratio for all of 1993 is 59 percent to 60 percent."
    Dougherty continued, "The downward trend in KeyCorp's nonperforming assets continued for the fourth consecutive quarter, despite the addition of $7.6 million from the National Savings and First American acquisitions.  Nonperforming assets equalled $388.6 million at the end of March, versus $403.2 million at year-end.  The March figure represented 1.80 percent of loans plus ORE, down from 1.99 percent reported on December 31 and down substantially from the year ago March 31 figure of 2.39 percent.
    "Net charge-offs showed dramatic improvement in the first quarter, falling to .58 percent of average loans, down from .90 percent in the same period last year and the 1.19 percent experienced in the fourth quarter of 1992.  At March 31, the allowance for loan losses totalled $298.2 million, which covered 157.9 percent of nonperforming loans, up from 137.1 percent at December 31.
    "The substantial decline in charge-offs allowed the provision for loan losses to be reduced to $31.9 million, a 28.9 percent improvement compared to the $44.8 million accrued in the first quarter of 1992.  The lowered provision still exceeded net charge-offs by $2.8 million for the quarter.  We expect net charge-offs to fall to our more traditional range over the course of 1993, but to experience these reduced rates during the first quarter is very encouraging."
    Riley concluded, "While the near-term outlook appears outstanding, we must also keep a focus on the long-term.  We have just completed the development of a five-year strategic plan which helps make KeyCorp's future even more promising.  The entire management team put the plan together, evaluating all of our options and thinking creatively about KeyCorp's prospects.  Although elements of the plan offer us new opportunities and present new challenges, we will remain faithful to the management principles which have brought us success while we maintain our course as an independent company."
    KeyCorp consummated three previously announced acquisitions during the first quarter of 1993.  The merger with the $4.7 billion-asset Puget Sound Bancorp of Tacoma, Washington closed on January 15, and the National Savings Bank of Albany, with $671 million in assets, was acquired on February 26.  In addition, $624 million in loans, $1 billion in deposits, and 40 branches of the First American Bank of New York were purchased on March 25.  Two further transactions are pending.  On March 30, 1993 the shareholders of $250 million-asset Home Federal Savings Bank of Fort Collins, Colorado approved its merger with KeyCorp.  The second pending transaction is with Northwestern National Bank, a $46 million-asset institution headquartered in Port Angeles, Washington. Both acquisitions are expected to close by the end of this year's second quarter.
    KeyCorp, with assets of $31.9 billion at March 31, 1993, is a multi-regional bank holding company headquartered in Albany, New York. It has focused its banking expansion activities in the Northeast and Northwest.  As "America's neighborhood bank", KeyCorp pursues 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
                                 Three Months Ended
    Summary of Operations             March 31
    (in thousands except
       per share data)               1993      1992
    Interest Income
      (Taxable-Equivalent Basis) $578,700  $588,785
    Interest Expense              217,966   264,939
    Net Interest Income           360,734   323,846
    Less: Taxable-Equivalent
      Adjustment                    9,941    11,420
    Provision for Loan Losses      31,850    44,766
    Net Interest Income After
      Provision for Loan Losses   318,943   267,660
    Noninterest Income:
      Service Charges on Deposit
        Accounts                   36,808    32,781
      Mortgage Banking Income      12,980    18,703
      Trust Service Fees            9,545    10,361
      Other Service Charges
        and Fees                   12,542    12,604
      Insurance and Brokerage       8,967     7,113
      Special Asset Management
        Fees                       16,291     1,163
      Other                        14,469    13,105
      Total Fee Income            111,602    95,830
      Gains on Sales of Loans           -     1,561
      Trading Account Gains
        (Losses)                        -       (14)
      Investment Securities
        Gains (Losses)               (464)      817
      Gains on Securities
        Available for Sale            567         -
      Total Noninterest Income    111,705    98,194
    Noninterest Expense:
      Personnel Expense           138,751   123,297
      Net Occupancy Expense        27,690    27,950
      FDIC Insurance               14,754    12,842
      OREO Expense                  8,037     3,954
      Other                        97,142    89,354
      Total Noninterest Expense   286,374   257,397
    Income Before Taxes           144,274   108,457
    Income Taxes                   49,387    35,296
        Net Income Before
          Accounting Change        94,887    73,161
    Cumulative Effect of
      Accounting Change                 -     6,613
        Net Income               $ 94,887  $ 79,774
                                 Three Months Ended
                                        March 31
                                     1993      1992
    Preferred Stock Dividends    $  4,451  $  4,451
    Net Income Applicable to
      Common Shares After
      Preferred Dividends        $ 90,436  $ 75,323
    Net Income Per Common Share
      Before Cumulative Effect
      of Accounting Change          $ .91     $ .71
    Net Income Per Common Share
      After Cumulative Effect
      of Accounting Change          $ .91     $ .78
    Average Common Shares
      Outstanding                  99,256    96,821
    All 1992 amounts have been restated to give effect to the January 15, 1993 merger with Puget Sound Bancorp.
    Significant Ratios
    Return on Average Assets (pct)   1.28      1.17
    Return on Average
      Common Equity (pct)           18.89     17.64
    Efficiency Ratio (pct)          60.63     61.33
    Efficiency Ratio
      excluding OREO Expenses (pct) 58.93     60.39
    Net Yield on Average
      Earning Assets (pct)           5.38      5.22
    Equity to Assets
     (Period-End) (pct)              6.83      6.94
    Nonperforming Loans to
      Period-End Loans (pct)          .88      1.23
    Nonperforming Assets to
      Period-End Loans
      Plus OREO (pct)                1.80      2.39
    Allowance for Loan Losses
      to Period-End Loans (pct)      1.40      1.47
    Allowance for Loan Losses
      to Nonperforming Loans (pct) 157.88    119.05
    Net Charge-Offs to Average
      Loans (pct)                     .58       .90
    Credit Quality
    (dollars in thousands)
                 March 31  December 31  September 30   June 30  March 31
                   1993       1992          1992         1992     1992
    Loans on
     Nonaccrual  $187,326     $202,743     $194,208  $210,758  $225,918
    Renegotiated
     Loans          1,541        1,446        1,252     1,264     1,624
    Nonperforming
     Loans        188,867      204,189      195,460   212,022   227,542
    Other Real
     Estate Owned 217,207      213,548      230,753   241,262   231,983
    Allowance for
     Loss on
     Disposal     (17,492)     (14,538)     (14,081)  (12,295)  (11,597)
    Other Real
     Estate
     Owned (net)  199,715      199,010      216,672   228,967   220,386
    Nonperforming
     Assets      $388,582     $403,199     $412,132  $440,989  $447,928
    Accruing Loans
     Past Due
     90+ Days    $ 39,615     $ 36,532     $ 45,784  $ 50,866  $ 57,692
                                  Three Months Ended
    Summary of Loan Loss Experience    March 31
    (in thousands)                   1993      1992
    Allowance for Loan Losses
      at Beginning of Period     $279,905  $267,603
    Losses Charged to the
      Allowance                   (37,383)  (47,943)
    Recoveries Credited to the
      Allowance                     8,292     6,458
      Net Charge-Offs             (29,091)  (41,485)
    Provision for Loan Losses      31,850    44,766
    Allowance Acquired in
      Banks Purchases              15,520         -
    Allowance for Loan Losses
      at End of Period           $298,184  $270,884
    Condensed Period-End Balance Sheet
    At March 31
    (in millions except per share data)              1993        1992
    Loans Net of Unearned Income                 $ 21,359    $ 18,487
    Less: Allowance for Loan Losses                  (298)       (271)
    Net Loans                                      21,061      18,216
    Investment Securities                           5,037       5,602
    Short-Term Investments                            337          97
    Loans Held for Sale/Putback                       522         679
    Securities Available for Sale                   1,258           -
    Cash and Due from Banks                         1,748       1,367
    Intangible Assets                                 352         300
    Other Assets                                    1,602       1,467
      Total                                      $ 31,917    $ 27,728
    Interest-Bearing Deposits                    $ 21,518    $ 19,016
    Noninterest-Bearing Deposits                    4,666       3,370
      Total Deposits                               26,184      22,386
    Short-Term Borrowings                           2,153       2,183
    Long-Term Debt                                    907         812
    Other Liabilities                                 492         421
      Total Liabilities                            29,736      25,802
    Shareholders' Equity:
    Preferred                                         184         184
    Common                                          1,997       1,742
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Apr 15, 1993
Words:2248
Previous Article:DELTA AIR LINES TO WRITE OFF $82.5 MILLION IN RESTRUCTURING CHARGES IN MARCH 1993 QUARTER
Next Article:RJR NABISCO TO REPLICATE SUCCESSFUL SCHOOL REFORMS
Topics:


Related Articles
RECORD 1991 EARNINGS SET STAGE FOR FUTURE GROWTH
KEYCORP EXCEEDS PERFORMANCE OBJECTIVES IN THE SECOND QUARTER AND FIRST SIX MONTHS OF 1992
KEYCORP CONTINUES TO EXCEED PERFORMANCE OBJECTIVES IN THE THIRD QUARTER AND FIRST NINE MONTHS OF 1992
KEYCORP SECOND QUARTER 1993 EARNINGS CONTINUE AT RECORD LEVELS
KEYCORP REPORTS RECORD QUARTERLY NET EARNINGS
KEYCORP REPORTS RECORD NET EARNINGS
KEYCORP REPORTS RECORD QUARTERLY EARNINGS
KEYCORP REPORTS RECORD QUARTERLY EARNINGS
KEYCORP REPORTS RECORD QUARTERLY EARNINGS
KEYCORP EARNINGS UPDATE

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters