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KeyCorp Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed February 28, 2006
Period End
December 31, 2005
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, 2006. Cited figures are marked; the original filing is the authoritative source.

KeyCorp (KEY) reported record 2005 net income of $1.129 billiona, or $2.73 per diluted common share, up from $954 million, or $2.30 per share, in 2004.

Return on average equity was 15.42% for 2005, compared with 13.75% for 2004. Total revenue rose by $334 millionb, or 7%, driven by growth in net interest income, fee-based businesses and higher net gains from loan sales. Average commercial loans grew 19%, and the net interest margin improved 6 basis points to 3.69%.

Total assets were $93.1 billionc at December 31, 2005, and the company operated 947 KeyCenters across sixteen states. Asset quality improved during the year. Nonperforming loans and nonperforming assets each fell to their lowest level in eleven years, and net loan charge-offs were $315 million, or .49% of average loans.

Noninterest expense grew 6% to $3.137 billiond, reflecting expanded business activity, compliance spending and a $30 million lease accounting charge. Tier 1 risk-based capital was 7.59% and total risk-based capital was 11.47% at year end, and KeyBank National Association qualified as well capitalized. The filing also discloses regulatory and compliance matters.

In October 2005, KBNA entered a consent order with the OCC, and KeyCorp entered a memorandum of understanding with the Federal Reserve Bank of Cleveland, both concerning Bank Secrecy Act compliance. Neither regulator imposed a fine or civil money penalty. The filing also describes an ongoing residual value insurance litigation against Swiss Re and an IRS challenge to lease financing deductions for tax years 1995 through 2000.

02—Key points

Key Highlights

  1. Record 2005 net income of $1.129 billion, or $2.73 per diluted share, versus $954 million, or $2.30 per share, in 2004
  2. Return on average equity of 15.42% for 2005, compared with 13.75% for 2004
  3. Net interest margin rose 6 basis points to 3.69%, with average commercial loans up 19%
  4. Nonperforming loans and nonperforming assets fell to their lowest level in eleven years; net loan charge-offs were $315 million, or .49% of average loans
  5. Noninterest expense rose 6% to $3.137 billion; total assets were $93.1 billion at December 31, 2005
  6. Bank Secrecy Act consent order with the OCC and MOU with the Federal Reserve Bank of Cleveland, with no fine or civil money penalty imposed
  7. Quarterly dividend increased 6.2% to $.345 per share effective March 2006; year-end closing price was $32.93

03—Questions

Frequently Asked Questions

  1. How did KeyCorp perform financially in 2005?

    Net income reached $1.129 billion, or $2.73 per diluted share, the highest in the company's history according to the filing. This compares with $954 million, or $2.30 per share, in 2004. Return on average equity was 15.42%, and return on average total assets was 1.24%.

  2. What drove revenue growth in 2005?

    Total revenue rose $334 million, or 7%, driven by growth in net interest income, stronger fee-based businesses and higher net gains from loan sales. Average commercial loans grew 19%, and the net interest margin improved to 3.69%.

  3. What regulatory actions does the filing disclose?

    In October 2005, KBNA consented to an OCC consent order and KeyCorp entered a memorandum of understanding with the Federal Reserve Bank of Cleveland. Both relate to Bank Secrecy Act anti-money laundering compliance. Neither regulator imposed a fine or civil money penalty, and management expects no material effect on operating results.

  4. How is KeyCorp's capital position?

    At December 31, 2005, the Tier 1 risk-based capital ratio was 7.59%, total risk-based capital was 11.47%, and the leverage ratio was 8.53%. The tangible equity to tangible assets ratio was 6.68%, within the company's targeted range of 6.25% to 6.75%. KBNA was classified as well capitalized.

  5. What legal and tax matters could affect future results?

    The filing describes residual value insurance litigation in which KBNA seeks recovery of insured residual value losses of approximately $342 million to $357 million from Swiss Re, and the IRS proposes to disallow lease financing deductions for 1995 through 2000. Management believes its reserves are adequate, but an adverse determination could have a material effect on results of operations in the period incurred.

04—Continue

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