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KeyCorp Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed February 28, 2005
Period End
December 31, 2004
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 February 28, 2005. Cited figures are marked; the original filing is the authoritative source.

KeyCorp, headquartered in Cleveland, Ohio, reported consolidated total assets of $90.7 billiona at December 31, 2004, and described itself as one of the nation's largest bank-based financial services companies.

It operated 935 KeyCenters and 2,194 ATMs in seventeen states, with an average of 19,576 full-time equivalent employees in 2004. Net income for 2004 was $954 millionb, or $2.30 per diluted common share, compared with $903 million, or $2.12 per share, in 2003. Return on average equity was 13.75%, compared with 13.08% in 2003.

Net interest income fell to $2.64 billionc, reflecting a 16 basis point decline in the net interest margin to 3.64%. Noninterest income was $1.75 billion, roughly flat year over year. Results were affected by a fourth-quarter 2004 loss of $46 million on the sale of the broker-originated home equity loan portfolio and the reclassification of the indirect automobile loan portfolio to held-for-sale status, and by a $55 million goodwill write-off tied to the decision to exit the nonprime indirect automobile business.

Those actions reduced 2004 results by $78 milliond ($77 million after tax), or $.19 per common share. Asset quality improved, with nonperforming loans at their lowest level since September 30, 1995, and net loan charge-offs of $431 million, or .67% of average loans. The company repurchased 16.5 million common shares in 2004 and raised its quarterly dividend to $.325 in January 2005.

Acquisitions completed in 2004 included American Express Business Finance Corporation, EverTrust Financial Group and ten branch offices of Sterling Bank & Trust FSB. Tier 1 risk-based capital was 7.22% and total risk-based capital was 11.47% at year end, and KeyBank National Association was classified as well capitalized. Management also disclosed an ongoing residual value insurance lawsuit against Swiss Re, in which total claims filed were approximately $379 million.

02—Key points

Key Highlights

  1. Net income of $954 million, or $2.30 per diluted share, in 2004, up from $903 million, or $2.12 per share, in 2003
  2. Return on average equity of 13.75% in 2004, compared with 13.08% in 2003
  3. Total assets of $90.7 billion at December 31, 2004; total deposits of $57.8 billion
  4. Net interest margin (taxable equivalent) declined 16 basis points to 3.64%, and net interest income decreased to $2.64 billion
  5. Fourth-quarter 2004 actions (sale of broker-originated home equity loans and held-for-sale reclassification of indirect auto loans) reduced 2004 results by $78 million ($77 million after tax), or $.19 per share
  6. Nonperforming loans declined for nine consecutive quarters to their lowest level since September 30, 1995; net loan charge-offs were .67% of average loans
  7. Repurchased 16.5 million common shares in 2004; quarterly dividend raised to $.325 in January 2005 from $.31

03—Questions

Frequently Asked Questions

  1. How profitable was KeyCorp in 2004 and what drove the change from 2003?

    Net income was $954 million, or $2.30 per diluted share, versus $903 million, or $2.12 per share, in 2003. The filing attributes the improvement largely to a significant reduction in the provision for loan losses and growth in noninterest income, partly offset by higher noninterest expense, with the fourth-quarter actions weighing on results.

  2. What were the main one-time charges in 2004?

    The company recorded a $46 million loss on the sale of its broker-originated home equity loan portfolio and the reclassification of its indirect automobile loan portfolio to held-for-sale status, and a $55 million goodwill write-off tied to the decision to sell its nonprime indirect automobile loan business. Together these reduced 2004 results by $78 million ($77 million after tax), or $.19 per common share.

  3. How did credit quality and the loan portfolio change?

    Total loans rose to $68.5 billion from $62.7 billion, with commercial loans up $7.1 billion, or 20%. Nonperforming assets were $379 million, or .55% of loans, OREO and other nonperforming assets, down from $753 million, or 1.20%, in 2003. The allowance for loan losses was $1.138 billion, or 1.66% of loans.

  4. How strong is KeyCorp's capital position?

    At December 31, 2004, the Tier 1 risk-based capital ratio was 7.22% and the total risk-based capital ratio was 11.47%, versus minimums of 4.00% and 8.00%. The leverage ratio was 7.96%. The tangible equity to tangible assets ratio was 6.35%, within the company's targeted range of 6.25% to 6.75%. KeyBank National Association met the well-capitalized standard.

  5. What is the status of the residual value insurance litigation?

    KeyCorp's bank subsidiary is pursuing claims against Reliance Insurance Company's successors, Swiss Re and North American Specialty Insurance Company, over automobile residual value policies. On August 4, 2004, the court ruled that Swiss Re breached its Letter Agreement, but damages remain unresolved. Claims filed through December 31, 2004 totaled approximately $379 million, and the filing estimates that approximately $9 million of additional claims may be filed through year-end 2006. Management does not expect an adverse decision.

04—Continue

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