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KEYCORP REPORTS RECORD QUARTERLY NET EARNINGS

 ALBANY, N.Y., Oct. 14 /PRNewswire/ -- KeyCorp (NYSE: KEY) today reported record quarterly net income of $102.6 million for the third quarter of 1993. This represents an increase of 31.4 percent over net income of $78.1 million for the same period in 1992. Earnings per common share were $.97 for the quarter, up 29.3 percent over the $.75 reported in the third quarter of 1992.
 Net income for the first nine months of 1993 rose 31.0 percent to $297.4 million, up from $227.0 million during the same period in 1992. This equalled $2.83 per common share, up 29.2 percent from $2.19 reported a year earlier. In the first nine months of 1992, KeyCorp recorded a positive $6.6 million cumulative effect of accounting change resulting from the adoption of SFAS 109. The comparative figures discussed above exclude that nonrecurring gain from the 1992 nine-month results.
 Ten days ago, KeyCorp announced that it had entered into a definitive agreement with Society Corporation of Cleveland (NYSE: SCY), for a merger of equals which would create the 10th-largest bank holding company in the United States. The KeyCorp - Society Corporation merger is expected to close early in 1994. Financial results for the third quarter and nine months 1993 reported today are unaffected by the merger announcement.
 Key performance ratios for the third quarter and first nine months were as follows:
 3rd Qtr. 2nd Qtr. 3rd Qtr.
 1993 1993 1992
 Return on Assets (ROA) 1.28 pct. 1.27 pct. 1.09 pct.
 Return on Common Equity (ROCE) 18.44 pct. 18.99 pct. 16.01 pct.
 Efficiency Ratio 60.29 pct. 60.46 pct. 61.32 pct.
 Efficiency Ratio (excl. ORE) 58.03 pct. 58.91 pct. 58.76 pct.
 9 Mos. 9 Mos.
 1993 1992
 ROA 1.27 pct. 1.12 pct.
 ROCE 18.76 pct. 16.63 pct.
 Efficiency Ratio 60.45 pct. 61.20 pct.
 Efficiency Ratio (excl. ORE) 58.62 pct. 59.38 pct.
 "As stated at the very start of 1993, KeyCorp's objectives for the full year 1993 include a 1.20 percent ROA, between 17 percent and 18 percent ROCE, and an efficiency ratio of 60 percent or better," said Victor J. Riley, Jr., chairman, president and chief executive officer of KeyCorp. "Given the results of the first nine months, we appear well on our way to exceed those objectives."
 William H. Dougherty, group executive vice president and chief financial officer, commented on important aspects of the third quarter and nine-month performance. "The reported net yield on average earning assets rose to 5.38 percent. The core yield equalled 5.33 percent during the quarter, down only one basis point from the 5.34 percent generated in the second quarter of 1993. Two items affected the margin in the third quarter which were not present in previous quarters. First, KeyCorp entered into interest rate swap transactions with an aggregate notional value of $2 billion. The swaps added 4 basis points to the net yield on earning assets in the third quarter of 1993. Second, an increase in the marginal Federal tax rate impacted the tax-equivalent adjustment and added 1 basis point to the reported yield.
 "Assisted by acquisitions of Home Federal Savings Bank of Fort Collins, Colorado and Northwestern National Bank of Port Angeles, Washington, average earning assets climbed to $28.9 billion, a $.4 billion increase over the second quarter's level of $28.5 billion. As a result of the increase in average earning assets, interest-rate swap revenues of $2.5 million, and the change in the tax rate, taxable- equivalent net interest income grew by $9.7 million in the third quarter compared to the second quarter of the current year.
 "KeyCorp enjoyed a continuation of modest loan growth during the most recent quarter. Excluding acquisitions and run-off of out-of- market loans acquired through our regulator-assisted transactions in the state of New York, average loans in the third quarter were 5.0 percent more than average loans in the third quarter of 1992. As has been the case for a number of quarters, loan expansion in the Western portion of our franchise outpaced that in the Eastern part. Our Rocky Mountain banks enjoyed average internal loan growth of 9.4 percent in the third quarter, and in our Pacific Northwest banks the rate was 6.0 percent. Excluding the run-off of out-of-market loans, our Eastern banks experienced internal loan growth of approximately 3.3 percent.
 "We expect internal loan growth for KeyCorp as a whole to approach 5 percent for all of 1993. Including acquisitions, growth in the average loan portfolio is estimated to be close to 11 percent in the current year.
 "Fee income increased to $117.6 million, 8.8 percent over the $108.1 million earned in the third quarter of 1992 but 14.3 percent below the $137.2 million reported in the second quarter of 1993. A number of nonrecurring items affected fee income in this year's second quarter, including $7.7 million in settlements related to our May 31, 1991 acquisition of Goldome Savings Bank. KeyCorp also realized a $10.2 million gain on the sale of mortgage servicing rights in the second quarter, compared to $5.0 million of such gains in the third quarter. Special asset management fees earned by our Niagara companies generated $7.7 million in the second quarter, compared to $4.3 million in the most recent quarter. Excluding the change in nonrecurring items, core fee income rose by $2.3 million in the third versus the second quarter of 1993, an annualized rate of increase equal to 9.0 percent.
 The $5.0 million gain on the sale of mortgage servicing mitigated a similar amount of accelerated write-downs of purchased mortgage servicing rights. As in the two previous quarters of 1993, we accelerated the amortization of mortgage servicing rights in response to continued record levels of mortgage loan refinancings. Our mortgage servicing portfolio stood at $22.0 billion on September 30, 1993 versus $22.1 billion at the end of June."
 Dougherty added, "During the third quarter, noninterest expenses rose to $305.9 million, $29.1 million or 10.5 percent above the $276.8 million incurred in the third quarter of 1992. The increase is largely attributable to operating expenses related to five acquisitions, all completed after the beginning of the third quarter of 1992. Excluding operating expenses related to those acquisitions, the rise in core noninterest expenses was 3.3 percent. This strong control over expenses, combined with revenue growth of 12.4 percent, improved the efficiency ratio (excluding ORE expenses) to 58.03 percent in the third quarter, compared to 58.76 percent in the same period last year and 58.91 percent in the second quarter of this year."
 Dougherty also said, "The improvement in KeyCorp's nonperforming assets was significant, enhancing a trend now exhibited for six consecutive quarters. Nonperforming assets equalled $318.4 million at the end of September 1993, versus $366.1 million at the end of the second quarter of this year - a decline of 13.0 percent. The September figure represented 1.43 percent of loans plus ORE, down substantially from both the year ago September 30 figure of 2.03 percent and the June 30, 1993 figure of 1.68 percent. Most of the improvement compared to the second quarter of 1993 came from sales of ORE. At September 30, 1993 ORE stood at $138.5 million, $40.2 million below the $178.7 million reported at the end of June. Reflecting our active ORE disposition program, ORE expenses rose to $11.5 million in the third quarter versus $8.0 million in the second quarter 1993.
 "Consistent with the pattern in the level of nonperforming assets, loan losses continue to trend downward. Net charge-offs for third quarter 1993 fell to .48 percent of average loans, down from .90 percent in the same period last year and .67 percent experienced in the second quarter of 1993. The decline in charge-offs allowed the third quarter provision for loan losses to be reduced to $32.8 million, a 35.4 percent improvement compared to the $50.8 million reported in the third quarter of 1992. The provision, although lowered, still exceeded net charge- offs by $6.7 million for the quarter. We expect net charge-offs for the full year to fall within a range of .55 percent to .60 percent of average loans.
 "Finally with respect to asset quality, the allowance for loan losses at September 30 totalled $314.4 million, which covered 174.7 percent of nonperforming loans, up from 163.7 percent at June 30."
 In addition to the definitive agreement with Society Corporation, KeyCorp has two other merger transactions pending. On June 23, KeyCorp announced that a definitive agreement had been signed to acquire Jackson County Federal Bank (JCF) in Medford, Oregon. JCF has $351 million of assets and $319 million of deposits in eight branches and three loan production offices in southern Oregon. It is currently expected to be merged into Key Bank of Oregon on or before December 31, 1993. On September 13, KeyCorp agreed to purchase Commercial Bancorporation of Colorado (CBC), a holding company with ten locations in four Colorado markets. CBC, with $356 million of assets and $316 million of deposits, is expected to merge into Key Bank of Colorado within the first six months of 1994.
 In conclusion, Riley commented, "KeyCorp's planned merger with Society Corporation is expected to extend and enhance both companies' already excellent financial performance over the long term. Both companies bring individual areas of expertise to the combination, and the prospect of delivering Society's investment management products through KeyCorp's extensive branch system makes us particularly excited about cross-sell opportunities."
 The KeyCorp - Society combination, announced on October 4, 1993 will be one of the largest mergers in U.S. banking history. It will create a $58 billion bank holding company with almost 1,400 offices spanning 18 states.
 KeyCorp
 Summary of Operating Results
 Summary of Operations Three Months Ended Nine Months Ended
 (in thousands except September 30 September 30
 per share data) 1993 1992 1993 1992
 Interest Income
 (Taxable-Equivalent
 Basis) $604,722 $578,255 $1,783,789 $1,748,036
 Interest Expense 214,807 234,931 652,920 746,291
 Net Interest Income 389,915 343,324 1,130,869 1,001,745
 Less: Taxable-Equivalent
 Adjustment 11,627 11,104 31,610 33,699
 Provision for Loan Losses 32,842 50,817 106,226 144,841
 Net Interest Income After
 Provision for Loan Losses 345,446 281,403 993,033 823,205
 Noninterest Income:
 Service Charges on Deposit
 Accounts 39,823 34,507 116,083 100,414
 Mortgage Banking Income 24,786 19,368 66,501 58,625
 Trust Service Fees 9,826 10,339 29,486 30,710
 Other Service Charges
 and Fees 14,543 14,685 43,733 40,614
 Insurance and Brokerage 12,278 8,748 33,335 23,222
 Special Asset Management
 Fees 4,317 986 28,292 2,862
 Other 11,979 19,486 48,965 47,317
 Total Fee Income 117,552 108,119 366,395 303,764
 Gains on Sales of Loans - - - 2,832
 Trading Account Gains - 78 - 118
 Investment Securities
 Gains (Losses) - - (464) 2,243
 Gains on Securities
 Available for Sale 301 2,547 2,484 2,547
 Total Noninterest Income 117,853 110,744 368,415 311,504
 Noninterest Expense:
 Personnel Expense 152,296 128,514 442,632 373,889
 Net Occupancy Expense 27,327 28,010 84,009 84,140
 FDIC Insurance 14,245 12,851 43,606 38,590
 OREO Expense 11,478 11,529 27,508 23,802
 Other 100,600 95,914 307,411 278,576
 Total Noninterest Expense 305,946 276,818 905,166 798,997
 Income Before Taxes 157,353 115,329 456,282 335,712
 Income Taxes 54,771 37,252 158,864 108,684
 Net Income Before
 Accounting Change 102,582 78,077 297,418 227,028
 Cumulative Effect of
 Accounting Change - - - 6,613
 Net Income $102,582 $ 78,077 $ 297,418 $ 233,641
 KeyCorp
 Three Months Ended Nine Months Ended
 September 30 September 30
 1993 1992 1993 1992
 Preferred Stock Dividends $ 4,158 $ 4,451 $ 13,059 $ 13,352
 Net Income Applicable to
 Common Shares After
 Preferred Dividends $ 98,424 $ 73,626 $ 284,359 $ 220,289
 Net Income Per Common Share
 Before Cumulative Effect
 of Accounting Change $ .97 $ .75 $2.83 $2.19
 Net Income Per Common Share
 After Cumulative Effect
 of Accounting Change $ .97 $ .75 $2.83 $2.26
 Average Common Shares
 Outstanding 101,514 98,089 100,466 97,393
 Significant Ratios
 Return on Average Assets (pct) 1.28 1.09 1.27 1.12
 Return on Average
 Common Equity (pct) 18.44 16.01 18.76 16.63
 Efficiency Ratio (pct) 60.29 61.32 60.45 61.20
 Efficiency Ratio excluding
 OREO Expenses (pct) 58.03 58.76 58.62 59.38
 Net Yield on Average
 Earning Assets (pct) 5.38 5.30 5.37 5.29
 Equity to Assets
 (Period-End)(pct) 7.15 6.81 7.15 6.81
 Nonperforming Loans to
 Period-End Loans (pct) .82 .97 .82 .97
 Nonperforming Assets to
 Period-End Loans
 Plus OREO (pct) 1.43 2.03 1.43 2.03
 Allowance for Loan Losses
 to Period-End Loans (pct) 1.42 1.47 1.42 1.47
 Allowance for Loan Losses
 to Nonperforming Loans (pct) 174.72 150.46 174.72 150.46
 Net Charge-Offs to Average
 Loans (pct) .48 .90 .57 .91
 KeyCorp
 Credit Quality
 (dollars in thousands)
 September 30 June 30 March 31 December 31 September 30
 1993 1993 1993 1992 1992
 Loans on
 Nonaccrual $174,711 $180,794 $187,326 $202,743 $194,208
 Renegotiated
 Loans 5,240 6,568 1,541 1,446 1,252
 Nonperforming
 Loans 179,951 187,362 188,867 204,189 195,460
 Other Real
 Estate Owned 156,716 192,890 217,207 213,548 230,753
 Allowance for
 Loss on
 Disposal (18,239) (14,169) (17,492) (14,538) (14,081)
 Other Real
 Estate
 Owned (net) 138,477 178,721 199,715 199,010 216,672
 Nonperforming
 Assets $318,428 $366,083 $388,582 $403,199 $412,132
 Accruing Loans
 Past Due
 90+ Days $ 45,106 $ 39,916 $ 39,615 $ 36,532 $ 45,784
 Three Months Ended Nine Months Ended
 Summary of Loan Loss Experience September 30 September 30
 (in thousands) 1993 1992 1993 1992
 Allowance for Loan Losses
 at Beginning of Period $306,701 $279,465 $279,905 $267,603
 Losses Charged to the
 Allowance (35,828) (50,001) (119,371) (148,274)
 Recoveries Credited to the
 Allowance 9,648 6,538 28,523 19,680
 Net Charge-Offs (26,180) (43,463) (90,848) (128,594)
 Provision for Loan Losses 32,842 50,817 106,226 144,841
 Allowance Related to
 Acquisitions 1,039 7,262 19,119 10,231
 Allowance for Loan Losses
 at End of Period $314,402 $294,081 $314,402 $294,081
 KeyCorp
 Condensed Period-End Balance Sheet
 At September 30
 (in millions except per share data) 1993 1992
 Loans Net of Unearned Income $ 22,075 $ 20,060
 Less: Allowance for Loan Losses (314) (294)
 Net Loans 21,761 19,766
 Investment Securities 5,151 4,391
 Short-Term Investments 88 302
 Loans Held for Sale/Putback 841 499
 Securities Available for Sale 1,069 1,687
 Cash and Due from Banks 1,676 1,493
 Intangible Assets 345 333
 Other Assets 1,502 1,557
 Total $ 32,433 $ 30,028
 Interest-Bearing Deposits $ 21,605 $ 20,129
 Noninterest-Bearing Deposits 4,970 4,231
 Total Deposits 26,575 24,360
 Short-Term Borrowings 2,278 2,313
 Long-Term Debt 831 918
 Other Liabilities 431 394
 Total Liabilities 30,115 27,985
 Shareholders' Equity:
 Preferred 160 184
 Common 2,158 1,859
 Total Shareholders' Equity 2,318 2,043
 Total $ 32,433 $ 30,028
 Common Shares Outstanding (thousands) 101,656 98,275
 Book Value per Common Share $ 21.23 $ 18.92
 KeyCorp
 Three Months Ended Nine Months Ended
 Condensed Average Balance Sheet September 30 September 30
 (in millions) 1993 1992 1993 1992
 Loans Net of Unearned Income $ 21,730 $ 19,258 $ 21,150 $ 18,842
 Investment Securities 4,964 4,486 4,876 5,253
 Loans Held for Sale/Putback 878 395 745 546
 Securities Available for Sale 1,114 1,488 1,200 500
 Short-Term Investments 184 193 162 135
 Earning Assets 28,870 25,820 28,133 25,276
 Allowance for Loan Losses (315) (285) (303) (279)
 Cash and Due from Banks 1,488 1,262 1,487 1,225
 Other Assets 1,852 1,767 1,877 1,729
 Total $ 31,895 $ 28,564 $ 31,194 $ 27,951
 Interest-Bearing Deposits $ 21,416 $ 19,612 $ 21,145 $ 19,288
 Noninterest-Bearing Deposits 4,785 3,577 4,537 3,373
 Total Deposits 26,201 23,189 25,682 22,661
 Short-Term Borrowings 2,162 2,065 2,009 2,085
 Long-Term Debt 840 893 878 834
 Other Liabilities 406 404 420 417
 Total Liabilities 29,609 26,551 28,989 25,997
 Shareholders' Equity 2,286 2,013 2,205 1,954
 Total $ 31,895 $ 28,564 $ 31,194 $ 27,951
 KeyCorp
 Summary of Operating Results
 Summary of Operations Three Months Ended
 (in thousands except Sept 30 June 30 March 31 Dec 31
 per share data) 1993 1993 1993 1992
 Interest Income
 (Taxable-Equivalent Basis) $604,722 $600,367 $578,700 $591,931
 Interest Expense 214,807 220,147 217,966 230,780
 Net Interest Income 389,915 380,220 360,734 361,151
 Less: Taxable-Equivalent
 Adjustment 11,627 10,042 9,941 10,911
 Provision for Loan Losses 32,842 41,534 31,850 46,130
 Net Interest Income After
 Provision for Loan Losses 345,446 328,644 318,943 304,110
 Noninterest Income:
 Service Charges on Deposit
 Accounts 39,823 39,452 36,808 36,549
 Mortgage Banking Income 24,786 28,735 12,980 20,056
 Trust Service Fees 9,826 10,115 9,545 10,126
 Other Service Charges
 and Fees 14,543 16,648 12,542 14,999
 Insurance and Brokerage 12,278 12,090 8,967 8,760
 Special Asset Management
 Fees 4,317 7,684 16,291 3,007
 Other 11,979 22,517 14,469 18,573
 Total Fee Income 117,552 137,241 111,602 112,070
 Gains on Sales of Loans - - - -
 Trading Account Gains - - - 23
 Investment Securities
 Losses - - (464) -
 Gains on Securities
 Available for Sale 301 1,616 567 62
 Total Noninterest Income 117,853 138,857 111,705 112,155
 Noninterest Expense:
 Personnel Expense 152,296 151,585 138,751 148,663
 Net Occupancy Expense 27,327 28,992 27,690 30,484
 FDIC Insurance 14,245 14,607 14,754 13,786
 OREO Expense 11,478 7,993 8,037 13,578
 Other 100,600 109,669 97,142 118,953
 Total Noninterest Expense 305,946 312,846 286,374 325,464
 Income Before Taxes 157,353 154,655 144,274 90,801
 Income Taxes 54,771 54,706 49,387 33,554
 Net Income $102,582 $ 99,949 $ 94,887 $ 57,247
 Preferred Stock Dividends $ 4,158 $ 4,450 $ 4,451 $ 4,451
 Net Income Applicable to
 Common Shares After
 Preferred Dividends $ 98,424 $ 95,499 $ 90,436 $ 52,796
 Net Income Per Common Share $ .97 $ .95 $ .91 $ .54
 Average Common Shares
 Outstanding 101,514 100,603 99,256 98,375
 KeyCorp
 Three Months Ended
 Sept 30 June 30 March 31 Dec 31
 1993 1993 1993 1992
 Significant Ratios
 Return on Average Assets (pct) 1.28 1.27 1.28 .76
 Return on Average
 Common Equity (pct) 18.44 18.99 18.89 11.22
 Efficiency Ratio (pct) 60.29 60.46 60.63 68.78
 Efficiency Ratio excluding
 OREO Expenses (pct) 58.03 58.91 58.93 65.91
 Net Yield on Average
 Earning Assets (pct) 5.38 5.34 5.38 5.32
 Equity to Assets
 (Period-End)(pct) 7.15 7.05 6.83 6.89
 Nonperforming Loans to
 Period-End Loans (pct) .82 .87 .88 1.02
 Nonperforming Assets to
 Period-End Loans
 Plus OREO (pct) 1.43 1.68 1.80 1.99
 Allowance for Loan Losses
 to Period-End Loans (pct) 1.42 1.42 1.40 1.40
 Allowance for Loan Losses
 to Nonperforming Loans (pct)174.72 163.69 157.88 137.08
 Net Charge-Offs to Average
 Loans (pct) .48 .67 .58 1.19
 -0- 10/14/93
 /CONTACT: Lee Irving, treasurer, 518-486-8579, or after hours, 518-479-3273; or Don Kauth, investor relations, 518-487-4491, or after hours, 518-584-5644; both of KeyCorp/
 (KEY)


CO: KeyCorp ST: New York IN: FIN SU: ERN

BM -- CL004 -- 2010 10/14/93 08:27 EDT
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