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KeyCorp Annual Report, Year Ended Dec 31, 1995

Filing Date
Filed March 28, 1996
Period End
December 31, 1995
In the record · 2016–202610-K1110-Q348-K141

KEY filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 141 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’16Aug ’16
  2. FY2018 annual report10-K · Feb ’19Feb ’19
  3. Leadership change8-K · Dec ’21Dec ’21
  4. Leadership change8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 10-K filed March 28, 1996. Cited figures are marked; the original filing is the authoritative source.

KeyCorp (KEY), a Cleveland, Ohio bank holding company with consolidated total assets of approximately $66.3 billiona at December 31, 1995, reported 1995 net income of $825.0 million, or $3.45 per Common Share, essentially flat with $853.5 million, or $3.45 per share, in 1994.

The return on average common equity was 17.35% in 1995 versus 18.87% in 1994, and the return on average total assets was 1.24% versus 1.36%. Management described 1995 as a transition year: net interest income fell $58.1 millionb, or 2%, as the net interest margin declined to 4.47% from 4.83%, while noninterest income rose $50.4 million, or 6%, and noninterest expense rose $144.4 million, or 7%. Results included an extraordinary net gain of $35.8 million after tax from the sale of the residential mortgage servicing business, and net securities losses of $40.6 million for the year, largely tied to a balance sheet reconfiguration.

The filing describes a strategic plan launched in 1994 organized around four lines of business: Corporate Banking, National Consumer Finance, Community Banking and Key PrivateBank. During 1995 the company acquired AutoFinance Group, Inc. and Spears, Benzak, Salomon & Farrell, Inc., completed three bank acquisitions, and agreed to sell Society First Federal Savings Bank, expected to close in the second quarter of 1996. Capital remained above regulatory minimums, with a Tier I risk-adjusted capital ratio of 7.53%c, a total risk-adjusted ratio of 10.85%, and a leverage ratio of 6.20% at December 31, 1995.

The board approved a new repurchase program of up to 12 million Common Shares in January 1996, and the quarterly dividend was raised 5.6% to $.38 per share. Credit quality was stable, with net loan charge-offs of $99.2 milliond in 1995 (0.21% of average loans) versus $109.2 million in 1994, and a provision for loan losses of $100.5 million, down from $125.2 million.

Nonperforming assets totaled $378.6 million, or 0.79% of loans, OREO and other nonperforming assets, compared with $339.8 million, or 0.73%, a year earlier. The filing states that management does not believe pending legal actions will have a material adverse effect on consolidated financial condition.

02—Key points

Key Highlights

  1. Net income of $825.0 million, or $3.45 per Common Share, in 1995, unchanged per share from 1994 ($853.5 million, $3.45 per share).
  2. Return on average common equity fell to 17.35% in 1995 from 18.87% in 1994; return on average total assets was 1.24% versus 1.36%.
  3. Net interest margin declined to 4.47% from 4.83%, reducing net interest income by $58.1 million, or 2%, to $2.7 billion.
  4. Noninterest income rose $50.4 million, or 6%, to $933.0 million, while noninterest expense increased $144.4 million, or 7%, to $2.3 billion.
  5. Sale of the residential mortgage loan servicing business produced a $72.3 million gain ($41.6 million after tax), contributing to a $35.8 million after-tax extraordinary net gain.
  6. Capital ratios remained above minimums: Tier I risk-adjusted 7.53%, total risk-adjusted 10.85%, leverage 6.20%; a new repurchase program of up to 12 million shares was approved in January 1996.
  7. Nonperforming assets were $378.6 million, or 0.79% of loans, OREO and other nonperforming assets, up from $339.8 million, or 0.73%, while net charge-offs declined to $99.2 million.

03—Questions

Frequently Asked Questions

  1. Why did earnings per share stay flat in 1995 despite a lower share count?

    Net income was $825.0 million in 1995, compared with $853.5 million in 1994, a decline offset by fewer weighted average shares outstanding, leaving earnings at $3.45 per Common Share in both years. The filing attributes the flat result to strategic investments of more than $41 million, a $25.4 million software write-off, and a $58.1 million decline in net interest income, partly offset by higher noninterest income and a lower provision for loan losses.

  2. What drove the decline in net interest margin?

    The filing attributes the drop to growth in earning assets at reduced spreads, greater reliance on market-priced funding with higher interest rates, and balance sheet reconfiguration actions taken in late 1994 and early 1995, including securities sales and fixed-rate swaps. The net interest margin was 4.47% for 1995, down from 4.83% in 1994 and 5.31% in 1993.

  3. What major portfolio and business changes did KeyCorp make in 1995?

    KeyCorp sold its residential mortgage loan servicing operations in March 1995, acquired AutoFinance Group, Inc. (a subprime auto finance company) and Spears, Benzak, Salomon & Farrell, Inc., and completed three bank acquisitions in early 1995. It also securitized and sold $1.0 billion of student loans and $395 million of indirect auto loans, and agreed in November 1995 to sell Society First Federal Savings Bank, with closing expected in the second quarter of 1996.

  4. How strong is KeyCorp's capital position and what are its share repurchase plans?

    At December 31, 1995, the Tier I risk-adjusted capital ratio was 7.53%, the total risk-adjusted ratio was 10.85%, and the leverage ratio was 6.20%, all above regulatory minimums and the well-capitalized thresholds. During 1995 the company repurchased 23,975,450 shares at a total cost of $723.6 million. In January 1996 the board approved a new program to repurchase up to 12,000,000 Common Shares during 1996, and the quarterly dividend was increased 5.6% to $.38 per share.

04—Continue

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