- Second quarter EPS of $0.70, up 21% from the year-ago quarter
- Return on average equity of 16.15%, compared with 13.97% one year ago
- Strength in net interest margin; solid commercial loan growth
- Continued improvement in asset quality
- Average core deposits up 8% from the second quarter of 2004
CLEVELAND, July 19 /PRNewswire-FirstCall/ -- KeyCorp (NYSE: KEY) today
announced second quarter net income of $291 million, or $0.70 per diluted
common share, compared with $239 million, or $0.58 per share, for the second
quarter of 2004. For the first quarter of 2005, net income was $264 million,
or $0.64 per diluted common share. For the first six months of 2005, net
income was $555 million, or $1.34 per diluted common share, compared with
$489 million, or $1.17 per share, for the first half of 2004.
Return on average equity reached 16.15% for the second quarter of 2005,
compared with 13.97% for the same period last year and 15.09% for the first
quarter of 2005.
"Key's solid second quarter results reflect continued improvement in the
company's operating fundamentals and the positive effects of our longer-term
strategic activities," said Chairman and Chief Executive Officer Henry L.
Meyer III. "Taxable-equivalent net interest income increased $72 million from
the second quarter of last year, benefiting from a better net interest margin,
substantial commercial loan growth and an increase in core deposits. Once
again, we saw improvements in asset quality; nonperforming loans decreased for
the 11th consecutive quarter and net loan charge-offs, as a percentage of
average loans, remained at their lowest level since the fourth quarter of
1995.
"During the second quarter, we completed the sale of the nonprime segment
of our indirect automobile loan portfolio and the integration of American
Express Business Finance Corporation into Key Equipment Finance, our leasing
line of business. These and other strategic actions we have taken to improve
our business mix and credit risk profile clearly are contributing to our
improving performance."
The company expects earnings to be in the range of $0.64 to $0.68 per
share for the third quarter of 2005 and $2.60 to $2.70 per share for the full
year.
SUMMARY OF CONSOLIDATED RESULTS
Taxable-equivalent net interest income was $723 million for the second
quarter of 2005, compared with $714 million for the previous quarter and
$651 million for the same period one year ago. This growth was attributable
to a higher net interest margin, which improved to 3.71% from 3.66% for the
previous quarter and 3.56% for the second quarter of 2004. During the second
quarter of 2005, the net interest margin benefited from a principal investing
distribution of $15 million received in the form of dividends and interest.
This distribution added approximately 8 basis points to the net interest
margin for the current quarter. Key's average earning assets for the second
quarter of 2005 declined slightly from the prior quarter, due largely to the
sale of the nonprime segment of the indirect automobile loan portfolio
completed in April and the sale of the prime segment in March. Compared with
the same period last year, average earning assets increased by 7%, due
primarily to strong commercial loan growth.
In light of recent changes in industry reporting practice, during the
second quarter of 2005, Key reclassified its operating leases from "Loans" to
"Accrued income and other assets" for all periods presented. The rental
income and depreciation expense associated with these leases were similarly
reclassified from "Net interest income" to "Other income" and to "Other
expense," respectively. The reclassification of these leases, which have
historically represented less than 1 percent of Key's total earning assets,
had no effect on net income in any of the periods for which the
reclassification was made.
Key's noninterest income was $486 million for the second quarter of 2005,
compared with $500 million for the first quarter. The decrease reflected a
$15 million decline in income from investment banking and capital markets
activities, due to a reduction in net gains from principal investing
activities, and lower revenue from dealer trading and derivatives. During the
first quarter, Key recorded $11 million of derivative income in connection
with the anticipated sale of the indirect automobile loan portfolio. In
addition, net gains from loan securitizations and sales declined by $9 million
from the prior quarter. Included in Key's results for the first quarter of
2005 was a $19 million gain that resulted from the sale of the prime segment
of the indirect automobile loan portfolio. These decreases were offset, in
part, by growth in service charges on deposit accounts, higher letter of
credit and loan fees, and net gains from the sales of securities, compared
with net losses incurred for the prior quarter.
Compared with the year-ago quarter, noninterest income decreased by
$5 million, due largely to declines of $21 million in income from investment
banking and capital markets activities, and $10 million in service charges on
deposit accounts. These reductions were partially offset by increases in
letter of credit and loan fees, and net gains from loan securitizations and
sales.
Key's noninterest expense was $753 million for the second quarter of 2005,
compared with $769 million for the previous quarter. The reduction was due to
a $30 million net occupancy charge recorded during the first quarter of 2005
to adjust the accounting for rental expense associated with operating leases
from an escalating to a straight-line basis, and a $20 million contribution
(included in miscellaneous expense) to the Key Foundation, also recorded
during the first quarter, to fund future contributions. The overall reduction
in noninterest expense was moderated by increases in marketing and a variety
of other expense components.
Compared with the second quarter of 2004, noninterest expense rose by
$36 million, with the single largest factor being a $15 million increase in
personnel expense.
ASSET QUALITY
Key's provision for loan losses was $20 million for the second quarter of
2005, down from $44 million for the first quarter of 2005 and $74 million for
the year-ago quarter.
Net loan charge-offs for the quarter totaled $48 million, or 0.29% of
average loans, compared with $54 million, or 0.32%, for the previous quarter
and $104 million, or 0.67%, for the same period last year.
During the second quarter of 2005, Key's nonperforming loans decreased by
$12 million to $293 million and represented 0.43% of period-end loans at
June 30, 2005, compared with 0.45% at March 31, 2005, and 0.72% at June 30,
2004.
Key's allowance for loan losses stood at $1.100 billion, or 1.62% of loans
outstanding at June 30, 2005, compared with $1.128 billion, or 1.67% at
March 31, 2005, and $1.276 billion, or 2.01% at June 30, 2004. At June 30,
2005, the allowance for loan losses represented 375% of nonperforming loans,
compared with 370% at March 31, 2005, and 281% a year ago.
CAPITAL
Key's capital ratios continued to exceed all "well-capitalized" regulatory
benchmarks at June 30, 2005. Key's tangible equity to tangible assets ratio
was 6.60% at quarter end, compared with 6.43% at March 31, 2005, and 6.64% at
June 30, 2004. The ratio is currently within management's targeted range of
6.25% to 6.75%.
Key's capital position provides it with the flexibility to take advantage
of future investment opportunities, to repurchase shares when appropriate and
to pay dividends. During the second quarter of 2005, Key did not repurchase
any of its common shares. At June 30, 2005, there were 26,961,248 shares
remaining for repurchase under the current authorization. Share repurchases
and other activities that caused the change in Key's outstanding common shares
over the past five quarters are summarized in the table below.
Summary of Changes in Common Shares Outstanding
in thousands 2Q05 1Q05 4Q04 3Q04 2Q04
Shares outstanding at
beginning of period 407,297 407,570 405,723 407,243 412,153
Issuance of shares
under employee benefit
and dividend reinvestment
plans 934 2,227 1,847 980 1,128
Repurchase of common shares -- (2,500) -- (2,500) (6,038)
Shares outstanding at end of
period 408,231 407,297 407,570 405,723 407,243
LINE OF BUSINESS RESULTS
The following table shows the contribution made by each major business
group to Key's taxable-equivalent revenue and net income for the periods
presented. The specific lines of business that comprise each of the major
business groups are described under the heading "Line of Business
Descriptions." For more detailed financial information pertaining to each
business group and its respective lines of business, see the last two pages of
this release.
Major Business Groups
Percent change
2Q05 vs.
dollars in millions 2Q05 1Q05 2Q04 1Q05 2Q04
Revenue (taxable equivalent)
Consumer Banking $706 $728 $690 (3.0)% 2.3 %
Corporate and Investment Banking 523 489 453 7.0 15.5
Other Segments 8 12 15 (33.3) (46.7)
Total segments 1,237 1,229 1,158 .7 6.8
Reconciling Items (28) (15) (16) (86.7) (75.0)
Total $1,209 $1,214 $1,142 (.4)% 5.9 %
Net income (loss)
Consumer Banking $125 $127 $104 (1.6)% 20.2 %
Corporate and Investment Banking 157 150 118 4.7 33.1
Other Segments 10 13 15 (23.1) (33.3)
Total segments 292 290 237 .7 23.2
Reconciling Items (1) (26)(a) 2 96.2 N/M
Total $291 $264 $239 10.2 % 21.8 %
(a) Includes a $30 million ($19 million after tax) charge to adjust the
accounting for rental expense associated with operating leases from
an escalating to a straight-line basis.
N/M = Not Meaningful
Consumer Banking
Percent change
2Q05 vs.
dollars in millions 2Q05 1Q05 2Q04 1Q05 2Q04
Summary of operations
Net interest
income (TE) $473 $498 $470 (5.0)% .6 %
Noninterest income 233 230 220 1.3 5.9
Total revenue (TE) 706 728 690 (3.0) 2.3
Provision for loan
losses 22 48 49 (54.2) (55.1)
Noninterest expense 484 477 475 1.5 1.9
Income before
income taxes (TE) 200 203 166 (1.5) 20.5
Allocated income
taxes and TE
adjustments 75 76 62 (1.3) 21.0
Net income $125 $127 $104 (1.6)% 20.2 %
Percent of
consolidated net
income 43 % 48 % 44 % N/A N/A
Average balances
Loans $32,105 $33,354 $33,813 (3.7)% (5.1)%
Total assets 35,369 36,928 37,420 (4.2) (5.5)
Deposits 41,567 41,063 39,305 1.2 5.8
TE = Taxable Equivalent, N/A = Not Applicable
Additional Consumer Banking Data Percent change
2Q05 vs.
dollars in millions 2Q05 1Q05 2Q04 1Q05 2Q04
Average deposits
outstanding
Noninterest-bearing $6,816 $6,607 $6,394 3.2 % 6.6 %
Money market deposit
accounts and other
savings 20,323 20,290 18,923 .2 7.4
Time 14,428 14,166 13,988 1.8 3.1
Total deposits $41,567 $41,063 $39,305 1.2 % 5.8 %
Home equity loans
Community Banking:
Average balance $10,397 $10,475 $10,102
Average loan-to-value
ratio 71 % 72 % 72 %
Percent first lien
positions 61 61 60
National Home Equity:
Average balance $3,498 $3,504 $4,504
Average loan-to-value
ratio 65 % 66 % 72 %
Percent first lien
positions 67 69 78
Other data
On-line households /
household penetration 595,411/47% 581,737/47% 524,150/42%
KeyCenters 945 940 902
Automated teller machines 2,205 2,211 2,166
Net income for Consumer Banking was $125 million for the second quarter of
2005, up from $104 million for the year-ago quarter. Increases in both net
interest income and noninterest income, along with a significant reduction in
the provision for loan losses drove the improvement and more than offset an
increase in noninterest expense.
Taxable-equivalent net interest income increased by $3 million, or 1%,
from the second quarter of 2004, due to growth in, and a more favorable
interest rate spread on, average deposits. The positive effects of these
factors were moderated by a less favorable interest rate spread on earning
assets and a decline in average loans, due largely to the sale of the higher-
yielding broker-originated home equity and indirect automobile loan portfolios
within the Consumer Finance line.
Noninterest income increased by $13 million, or 6%, due primarily to net
gains of $5 million from loan securitizations and sales in the current year,
compared with net losses of $5 million in the year-ago quarter.
The provision for loan losses decreased by $27 million, or 55%, as a
result of improved asset quality.
Noninterest expense increased by $9 million, or 2%, due primarily to
higher costs associated with loan servicing, reserves established to absorb
potential noncredit-related losses from our education lending business, and
various indirect charges. These adverse changes were partially offset by
decreases in both personnel and net occupancy expenses.
Corporate & Investment Banking
Percent change
2Q05 vs.
dollars in millions 2Q05 1Q05 2Q04 1Q05 2Q04
Summary of operations
Net interest
income (TE) $292 $273 $231 7.0 % 26.4 %
Noninterest income 231 216 222 6.9 4.1
Total revenue (TE) 523 489 453 7.0 15.5
Provision for loan
losses (2) (4) 25 50.0 N/M
Noninterest
expense 274 252 240 8.7 14.2
Income before
income taxes (TE) 251 241 188 4.1 33.5
Allocated income
taxes and TE
adjustments 94 91 70 3.3 34.3
Net income $157 $150 $118 4.7 % 33.1 %
Percent of
consolidated net
income 54 % 57 % 49 % N/A N/A
Average balances
Loans $34,943 $34,170 $28,012 2.3 % 24.7 %
Total assets 40,684 39,889 33,917 2.0 20.0
Deposits 9,691 8,781 7,867 10.4 23.2
TE = Taxable Equivalent, N/M = Not Meaningful, N/A = Not Applicable
Percent change
Additional Corporate and Investment Banking Data 2Q05 vs.
dollars in millions 2Q05 1Q05 2Q04 1Q05 2Q04
Average lease financing
receivables managed by
Key Equipment Finance(a)
Receivables held in Key
Equipment Finance portfolio $7,950 $8,026 $6,209 (.9)% 28.0 %
Receivables assigned to other
lines of business 2,034 2,029 1,901 .2 7.0
Total lease financing
receivables managed $9,984 $10,055 $8,110 (.7)% 23.1 %
(a) Includes lease financing receivables held in portfolio and those
assigned to other lines of business (primarily Corporate Banking)
if those businesses are principally responsible for maintaining the
relationship with the client.
Net income for Corporate and Investment Banking was $157 million for the
second quarter of 2005, up from $118 million for the same period last year.
Increases in both net interest income and noninterest income, along with a
significant reduction in the provision for loan losses drove the improvement.
These positive changes were offset, in part, by an increase in noninterest
expense.
Taxable-equivalent net interest income increased by $61 million, or 26%,
from the second quarter of 2004, due primarily to strong growth in average
loans and leases, as well as deposits. Average loans and leases rose by
$6.9 billion, or 25%, reflecting improvements in each of the primary lines of
business. The increase in lease financing receivables in the Key Equipment
Finance line was bolstered by the acquisition of American Express Business
Finance Corporation during the fourth quarter of 2004.
Noninterest income rose by $9 million, or 4%, due largely to an increase
in non-yield-related loan fees. This growth was moderated by a decrease in
income from investment banking and capital markets activities.
The provision for loan losses was a credit of $2 million for the second
quarter of 2005, compared with expense of $25 million for the year-ago
quarter. The reduction from the second quarter of 2004 reflected improved
asset quality in the Corporate Banking and KeyBank Real Estate Capital lines
of business.
Noninterest expense rose by $34 million, or 14%, as expansion of the
business and improved profitability led to increases in personnel and various
other expense categories. During the second quarter of 2005, we completed the
integration of American Express Business Finance Corporation into Key
Equipment Finance, our leasing line of business.
In June 2005, we announced plans to further expand our FHA financing and
servicing capabilities by acquiring Malone Mortgage Company, based in Dallas,
Texas. This is one in a series of acquisitions that we have initiated over
the past several years to build upon the success we have experienced in our
commercial mortgage origination and servicing area.
Other Segments
Other segments consist primarily of Corporate Treasury and Key's Principal
Investing unit. These segments generated net income of $10 million for the
second quarter of 2005, compared with net income of $15 million for the same
period last year. Declines in net gains from principal investing and the
sales of securities drove the decrease.
Line of Business Descriptions
Consumer Banking
Community Banking includes Retail Banking, Small Business and McDonald
Financial Group.
Retail Banking provides individuals with branch-based deposit and
investment products, personal finance services and loans, including
residential mortgages, home equity and various types of installment loans.
Small Business provides businesses that typically have annual sales
revenues of $10 million or less with deposit, investment and credit products,
and business advisory services.
McDonald Financial Group offers financial, estate and retirement planning,
and asset management services to assist high-net-worth clients with their
banking, brokerage, trust, portfolio management, insurance, charitable giving
and related needs.
Consumer Finance includes Indirect Lending and National Home Equity.
Indirect Lending offers loans to consumers through dealers and finances
inventory for automobile and marine dealers. This business unit also provides
federal and private education loans to students and their parents and
processes payments on loans that private schools make to parents.
National Home Equity provides both prime and nonprime mortgage and home
equity loan products to individuals. These products originate outside of
Key's retail branch system. This business unit also works with home
improvement contractors to provide home equity and home improvement solutions.
Corporate and Investment Banking
Corporate Banking provides products and services to large corporations,
middle-market companies, financial institutions and government organizations.
These products and services include commercial lending, treasury management,
investment banking, derivatives and foreign exchange, equity and debt
underwriting and trading, and syndicated finance.
Through its Victory Capital Management unit, Corporate Banking also
manages or gives advice regarding investment portfolios for a national client
base, including corporations, labor unions, not-for-profit organizations,
governments and individuals. These portfolios may be managed in separate
accounts, common funds or the Victory family of mutual funds.
KeyBank Real Estate Capital provides construction and interim lending,
permanent debt placements and servicing, and equity and investment banking
services to developers, brokers and owner-investors. This line of business
deals exclusively with nonowner-occupied properties (i.e., generally
properties for which the owner occupies less than 60% of the premises).
Key Equipment Finance meets the equipment leasing needs of companies
worldwide and provides equipment manufacturers, distributors and resellers
with financing options for their clients. Lease financing receivables and
related revenues are assigned to other lines of business (primarily Corporate
Banking) if those businesses are principally responsible for maintaining the
relationship with the client.
Cleveland-based KeyCorp is one of the nation's largest bank-based
financial services companies, with assets of approximately $91 billion. Key
companies provide investment management, retail and commercial banking,
consumer finance, and investment banking products and services to individuals
and companies throughout the United States and, for certain businesses,
internationally. The company's businesses deliver their products and services
through 945 KeyCenters and offices; a network of 2,205 ATMs; telephone banking
centers (1.800.KEY2YOU); and a Web site, Key.com,(R) that provides account
access and financial products 24 hours a day.
Notes to Editors:
A live Internet broadcast of KeyCorp's conference call to discuss
quarterly earnings and currently anticipated earnings trends and to answer
analysts' questions can be accessed through the Investor Relations section at
http://www.Key.com/ir at 9:00 a.m. ET, on Tuesday July 19, 2005. A tape of
the call will be available through July 26.
For up-to-date company information, media contacts and facts and figures
about Key's lines of business visit our Media Newsroom at
http://www.Key.com/newsroom.
This news release contains forward-looking statements about issues such as
anticipated earnings outlook, asset quality trends and anticipated improvement
in the profitability of KeyCorp. Forward-looking statements by their nature
are subject to assumptions, risks and uncertainties. Actual results could
differ materially from those contained in or implied by such forward-looking
statements for a variety of factors including: (1) changes in interest rates;
(2) failure of the economy to continue to improve, which could materially
impact credit quality trends and our ability to generate loans; (3) increased
competitive pressure among financial services companies; (4) inability to
successfully execute strategic initiatives designed to grow revenues and/or
manage expenses; (5) consummation of significant business combinations or
divestitures; (6) operational or risk management failures due to technological
or other factors; (7) new legal obligations or restrictions or unfavorable
resolution of litigation; (8) disruption in the economy and general business
climate as a result of terrorist activities or military actions; and (9)
changes in accounting, tax or regulatory practices or requirements. For
further information regarding KeyCorp, please read the KeyCorp reports filed
with the SEC that are available at http://www.sec.gov.
Financial Highlights
(dollars in millions, except per share amounts)
Three months ended
6-30-05 3-31-05 6-30-04
Summary of operations
Net interest income (TE) $723 $714 $651
Noninterest income 486 500 491
Total revenue (TE) 1,209 1,214 1,142
Provision for loan losses 20 44 74
Noninterest expense 753 769 717
Net income 291 264 239
Per common share
Net income $.71 $.65 $.58
Net income -- assuming dilution .70 .64 .58
Cash dividends paid .325 .325 .31
Book value at period end 18.01 17.58 16.77
Market price at period end 33.15 32.45 29.89
Performance ratios
Return on average total assets 1.30 % 1.18 % 1.13 %
Return on average equity 16.15 15.09 13.97
Net interest margin (TE) 3.71 3.66 3.56
Capital ratios at period end
Equity to assets 8.08 % 7.93 % 7.92 %
Tangible equity to tangible assets 6.60 6.43 6.64
Tier 1 risk-based capital (a) 7.71 7.34 7.93
Total risk-based capital (a) 11.84 11.58 12.07
Leverage (a) 8.49 7.91 8.34
Asset quality
Net loan charge-offs $48 $54 $104
Net loan charge-offs to average loans .29 % .32 % .67 %
Allowance for loan losses $1,100 $1,128 $1,276
Allowance for loan losses to period-
end loans 1.62 % 1.67 % 2.01 %
Allowance for loan losses to
nonperforming loans 375.43 369.84 281.06
Nonperforming loans at period end $293 $305 $454
Nonperforming assets at period end 338 371 540
Nonperforming loans to period-end
loans .43 % .45 % .72 %
Nonperforming assets to period-end
loans plus OREO and other
nonperforming assets .50 .55 .85
Trust and brokerage assets
Assets under management $76,807 $76,334 $70,000
Nonmanaged and brokerage assets 57,006 61,375 68,127
Other data
Average full-time equivalent
employees 19,429 19,571 19,514
KeyCenters 945 940 902
Taxable-equivalent adjustment $30 $28 $22
Financial Highlights (continued)
(dollars in millions, except per share amounts)
Six months ended
6-30-05 6-30-04
Summary of operations
Net interest income (TE) $1,437 $1,328
Noninterest income 986 968
Total revenue (TE) 2,423 2,296
Provision for loan losses 64 155
Noninterest expense 1,522 1,414
Net income 555 489
Per common share
Net income $1.36 $1.18
Net income -- assuming dilution 1.34 1.17
Cash dividends paid .65 .62
Performance ratios
Return on average total assets 1.24 % 1.16 %
Return on average equity 15.63 14.22
Net interest margin (TE) 3.69 3.64
Asset quality
Net loan charge-offs $102 $215
Net loan charge-offs to average
loans .31 % .69 %
Other data
Average full-time equivalent
employees 19,534 19,548
Taxable-equivalent adjustment $58 $46
(a) 6-30-05 ratio is estimated.
TE = Taxable Equivalent
Consolidated Balance Sheets
(dollars in millions)
6-30-05 3-31-05 6-30-04
Assets
Loans $67,964 $67,549 $63,390
Investment securities 59 68 81
Securities available for sale 7,271 7,123 7,023
Short-term investments 1,845 1,763 2,639
Other investments 1,409 1,434 1,231
Total earning assets 78,548 77,937 74,364
Allowance for loan losses (1,100) (1,128) (1,276)
Cash and due from banks 2,968 2,991 2,313
Premises and equipment 576 587 600
Goodwill 1,342 1,341 1,150
Other intangible assets 101 105 31
Corporate-owned life insurance 2,639 2,623 2,550
Accrued income and other assets 5,941 5,820 6,499
Total assets $91,015 $90,276 $86,231
Liabilities
Deposits in domestic offices:
NOW and money market deposit
accounts $22,071 $22,692 $19,956
Savings deposits 2,022 2,011 2,014
Certificates of deposit ($100,000
or more) 5,094 4,809 4,630
Other time deposits 10,794 10,750 10,342
Total interest-bearing 39,981 40,262 36,942
Noninterest-bearing 12,158 11,891 10,940
Deposits in foreign office --
interest-bearing 5,924 4,974 4,541
Total deposits 58,063 57,127 52,423
Federal funds purchased and
securities sold under repurchase
agreements 2,824 3,220 3,794
Bank notes and other short-term
borrowings 3,315 2,820 2,598
Accrued expense and other
liabilities 5,873 5,847 5,979
Long-term debt 13,588 14,100 14,608
Total liabilities 83,663 83,114 79,402
Shareholders' equity
Preferred stock -- -- --
Common shares 492 492 492
Capital surplus 1,504 1,481 1,469
Retained earnings 7,574 7,416 7,072
Treasury stock (2,132) (2,156) (2,121)
Accumulated other comprehensive
loss (86) (71) (83)
Total shareholders' equity 7,352 7,162 6,829
Total liabilities and shareholders'
equity $91,015 $90,276 $86,231
Common shares outstanding (000) 408,231 407,297 407,243
Consolidated Statements of Income
(dollars in millions, except per share amounts)
Three months ended Six months ended
6-30-05 3-31-05 6-30-04 6-30-05 6-30-04
Interest income
Loans $999 $966 $809 $1,965 $1,634
Investment securities 1 1 1 2 2
Securities available for
sale 80 80 78 160 166
Short-term investments 12 10 9 22 18
Other investments 24 8 8 32 16
Total interest income 1,116 1,065 905 2,181 1,836
Interest expense
Deposits 238 206 161 444 322
Federal funds purchased and
securities sold under
repurchase agreements 25 25 10 50 20
Bank notes and other short-
term borrowings 19 17 9 36 21
Long-term debt 141 131 96 272 191
Total interest expense 423 379 276 802 554
Net interest income 693 686 629 1,379 1,282
Provision for loan losses 20 44 74 64 155
673 642 555 1,315 1,127
Noninterest income
Trust and investment
services income 135 138 141 273 286
Service charges on deposit
accounts 76 70 86 146 170
Investment banking and
capital markets income 52 67 73 119 119
Letter of credit and loan
fees 47 40 37 87 70
Corporate-owned life
insurance income 24 28 25 52 52
Electronic banking fees 24 22 22 46 40
Net gains from loan
securitizations and sales 10 19 1 29 26
Net securities gains
(losses) 1 (6) 7 (5) 7
Other income 117 122 99 239 198
Total noninterest income 486 500 491 986 968
Noninterest expense
Personnel 386 390 371 776 744
Net occupancy 55 91 61 146 119
Computer processing 50 51 48 101 92
Equipment 28 28 30 56 61
Professional fees 30 28 29 58 54
Marketing 34 25 30 59 53
Other expense 170 156 148 326 291
Total noninterest expense 753 769 717 1,522 1,414
Income before income taxes 406 373 329 779 681
Income taxes 115 109 90 224 192
Net income $291 $264 $239 $555 $489
Net income per common share $.71 $.65 $.58 $1.36 $1.18
Net income per common share
-- assuming dilution .70 .64 .58 1.34 1.17
Weighted-average common
shares outstanding (000) 408,754 408,264 410,292 408,510 413,486
Weighted-average common
shares and potential
common shares outstanding
(000) 414,309 413,762 414,908 414,037 418,240
Consolidated Average Balance Sheets, Net Interest Income and
Yields/Rates
(dollars in millions)
Second Quarter 2005
Average
Balance Interest Yield/Rate
Assets
Loans: (a,b)
Commercial, financial and
agricultural $20,019 $266 5.32 %
Real estate -- commercial
mortgage 7,845 120 6.15
Real estate -- construction 6,116 98 6.45
Commercial lease financing 9,984 158 6.33
Total commercial loans 43,964 642 5.86
Real estate -- residential 1,460 22 6.04
Home equity 13,904 225 6.49
Consumer -- direct 1,835 36 7.93
Consumer -- indirect lease
financing 53 1 10.76
Consumer -- indirect other 3,275 50 6.07
Total consumer loans 20,527 334 6.53
Loans held for sale 3,169 53 6.61
Total loans 67,660 1,029 6.09
Investment securities (a) 65 1 8.42
Securities available for sale (c) 7,081 80 4.54
Short-term investments 1,799 12 2.58
Other investments (c) 1,455 24 6.42
Total earning assets 78,060 1,146 5.88
Allowance for loan losses (1,124)
Accrued income and other assets 12,979
Total assets $89,915
Liabilities
NOW and money market deposit
accounts $22,301 77 1.39
Savings deposits 1,999 1 .26
Certificates of deposit
($100,000 or more) (d) 4,999 46 3.70
Other time deposits 10,806 82 3.05
Deposits in foreign office 4,314 32 2.96
Total interest-bearing
deposits 44,419 238 2.16
Federal funds purchased and
securities sold under repurchase
agreements 3,830 25 2.67
Bank notes and other short-term
borrowings 2,792 19 2.72
Long-term debt (d) 13,929 141 4.11
Total interest-bearing
liabilities 64,970 423 2.62
Noninterest-bearing deposits 11,717
Accrued expense and other
liabilities 6,000
Total liabilities 82,687
Shareholders' equity 7,228
Total liabilities and
shareholders' equity $89,915
Interest rate spread (TE) 3.26 %
Net interest income (TE) and net
interest margin (TE) 723 3.71 %
TE adjustment (a) 30
Net interest income, GAAP basis $693
Consolidated Average Balance Sheets, Net Interest Income and
Yields/Rates
(dollars in millions)
First Quarter 2005
Average
Balance Interest Yield/Rate
Assets
Loans: (a,b)
Commercial, financial and
agricultural $19,796 $238 4.88 %
Real estate -- commercial
mortgage 7,602 108 5.74
Real estate -- construction 5,633 81 5.81
Commercial lease financing 10,055 158 6.31
Total commercial loans 43,086 585 5.49
Real estate -- residential 1,449 22 5.99
Home equity 13,986 213 6.19
Consumer -- direct 1,932 38 7.88
Consumer -- indirect lease
financing 77 2 10.26
Consumer -- indirect other 3,248 52 6.42
Total consumer loans 20,692 327 6.39
Loans held for sale 4,281 81 7.64
Total loans 68,059 993 5.90
Investment securities (a) 70 2 8.66
Securities available for sale (c) 7,226 80 4.43
Short-term investments 1,679 10 2.43
Other investments (c) 1,423 8 2.25
Total earning assets 78,457 1,093 5.62
Allowance for loan losses (1,133)
Accrued income and other assets 13,634
Total assets $90,958
Liabilities
NOW and money market deposit
accounts $21,619 55 1.03
Savings deposits 1,957 1 .24
Certificates of deposit
($100,000 or more) (d) 4,895 44 3.65
Other time deposits 10,589 76 2.90
Deposits in foreign office 4,963 30 2.45
Total interest-bearing
deposits 44,023 206 1.90
Federal funds purchased and
securities sold under repurchase
agreements 4,475 25 2.24
Bank notes and other short-term
borrowings 2,947 17 2.38
Long-term debt (d) 14,785 131 3.77
Total interest-bearing
liabilities 66,230 379 2.34
Noninterest-bearing deposits 11,534
Accrued expense and other
liabilities 6,100
Total liabilities 83,864
Shareholders' equity 7,094
Total liabilities and
shareholders' equity $90,958
Interest rate spread (TE) 3.28 %
Net interest income (TE) and net
interest margin (TE) 714 3.66 %
TE adjustment (a) 28
Net interest income, GAAP basis $686
Consolidated Average Balance Sheets, Net Interest Income and
Yields/Rates
(dollars in millions)
Second Quarter 2004
Average
Balance Interest Yield/Rate
Assets
Loans: (a,b)
Commercial, financial and
agricultural $17,392 $189 4.36 %
Real estate -- commercial
mortgage 6,071 74 4.94
Real estate -- construction 4,716 56 4.79
Commercial lease financing 8,110 120 5.90
Total commercial loans 36,289 439 4.86
Real estate -- residential 1,568 24 6.09
Home equity 14,631 201 5.53
Consumer -- direct 2,058 38 7.41
Consumer -- indirect lease
financing 199 5 9.74
Consumer -- indirect other 5,137 95 7.39
Total consumer loans 23,593 363 6.17
Loans held for sale 2,602 28 4.28
Total loans 62,484 830 5.33
Investment securities (a) 90 2 8.72
Securities available for sale (c) 7,130 78 4.37
Short-term investments 2,384 9 1.44
Other investments (c) 1,167 8 2.79
Total earning assets 73,255 927 5.07
Allowance for loan losses (1,237)
Accrued income and other assets 13,305
Total assets $85,323
Liabilities
NOW and money market deposit
accounts $19,753 33 .67
Savings deposits 2,040 1 .23
Certificates of deposit
($100,000 or more) (d) 4,727 44 3.77
Other time deposits 10,591 76 2.87
Deposits in foreign office 2,635 7 1.05
Total interest-bearing
deposits 39,746 161 1.63
Federal funds purchased and
securities sold under repurchase
agreements 4,483 10 .93
Bank notes and other short-term
borrowings 2,512 9 1.43
Long-term debt (d) 14,465 96 2.74
Total interest-bearing
liabilities 61,206 276 1.82
Noninterest-bearing deposits 11,010
Accrued expense and other
liabilities 6,228
Total liabilities 78,444
Shareholders' equity 6,879
Total liabilities and
shareholders' equity $85,323
Interest rate spread (TE) 3.25 %
Net interest income (TE) and net
interest margin (TE) 651 3.56 %
TE adjustment (a) 22
Net interest income, GAAP basis $629
(a) Interest income on tax-exempt securities and loans has been adjusted
to a taxable-equivalent basis using the statutory federal income tax
rate of 35%.
(b) For purposes of these computations, nonaccrual loans are included in
average loan balances.
(c) Yield is calculated on the basis of amortized cost.
(d) Rate calculation excludes basis adjustments related to fair value
hedges.
TE = Taxable Equivalent
GAAP = U.S. generally accepted accounting principles
Consolidated Average Balance Sheets, Net Interest Income and
Yields/Rates
(dollars in millions)
Six months ended June 30, 2005
Average
Balance Interest Yield/Rate
Assets
Loans: (a,b)
Commercial, financial and
agricultural $19,908 $504 5.10 %
Real estate -- commercial
mortgage 7,724 228 5.95
Real estate -- construction 5,876 179 6.15
Commercial lease financing 10,019 316 6.32
Total commercial loans 43,527 1,227 5.67
Real estate -- residential 1,455 44 6.01
Home equity 13,945 438 6.34
Consumer -- direct 1,883 74 7.91
Consumer -- indirect lease
financing 65 3 10.47
Consumer -- indirect other 3,261 102 6.25
Total consumer loans 20,609 661 6.46
Loans held for sale 3,722 134 7.21
Total loans 67,858 2,022 6.00
Investment securities (a) 67 3 8.61
Securities available for sale (c) 7,153 160 4.49
Short-term investments 1,740 22 2.51
Other investments (c) 1,439 32 4.36
Total earning assets 78,257 2,239 5.75
Allowance for loan losses (1,129)
Accrued income and other assets 13,306
Total assets $90,434
Liabilities
NOW and money market deposit
accounts $21,962 132 1.21
Savings deposits 1,978 2 .25
Certificates of deposit
($100,000 or more) (d) 4,947 90 3.68
Other time deposits 10,698 158 2.98
Deposits in foreign office 4,636 62 2.69
Total interest-bearing
deposits 44,221 444 2.03
Federal funds purchased and
securities sold under repurchase
agreements 4,151 50 2.44
Bank notes and other short-term
borrowings 2,869 36 2.55
Long-term debt (d) 14,355 272 3.94
Total interest-bearing
liabilities 65,596 802 2.48
Noninterest-bearing deposits 11,626
Accrued expense and other
liabilities 6,051
Total liabilities 83,273
Shareholders' equity 7,161
Total liabilities and
shareholders' equity $90,434
Interest rate spread (TE) 3.27 %
Net interest income (TE) and net
interest margin (TE) 1,437 3.69 %
TE adjustment (a) 58
Net interest income, GAAP basis $1,379
Consolidated Average Balance Sheets, Net Interest Income and
Yields/Rates
(dollars in millions)
Six months ended June 30, 2004
Average
Balance Interest Yield/Rate
Assets
Loans: (a,b)
Commercial, financial and
agricultural $17,215 $379 4.43 %
Real estate -- commercial
mortgage 5,911 146 4.97
Real estate -- construction 4,785 114 4.79
Commercial lease financing 8,031 239 5.96
Total commercial loans 35,942 878 4.91
Real estate -- residential 1,578 49 6.15
Home equity 14,797 411 5.59
Consumer -- direct 2,071 78 7.55
Consumer -- indirect lease
financing 232 11 9.73
Consumer -- indirect other 5,263 200 7.59
Total consumer loans 23,941 749 6.27
Loans held for sale 2,464 51 4.18
Total loans 62,347 1,678 5.40
Investment securities (a) 93 4 8.76
Securities available for sale (c) 7,323 166 4.53
Short-term investments 2,122 18 1.66
Other investments (c) 1,140 16 2.79
Total earning assets 73,025 1,882 5.17
Allowance for loan losses (1,307)
Accrued income and other assets 13,211
Total assets $84,929
Liabilities
NOW and money market deposit
accounts $19,318 62 .64
Savings deposits 2,046 2 .23
Certificates of deposit
($100,000 or more) (d) 4,805 90 3.79
Other time deposits 10,774 156 2.91
Deposits in foreign office 2,401 12 1.01
Total interest-bearing
deposits 39,344 322 1.65
Federal funds purchased and
securities sold under repurchase
agreements 4,275 20 .94
Bank notes and other short-term
borrowings 2,558 21 1.62
Long-term debt (d) 14,847 191 2.69
Total interest-bearing
liabilities 61,024 554 1.84
Noninterest-bearing deposits 10,835
Accrued expense and other
liabilities 6,157
Total liabilities 78,016
Shareholders' equity 6,913
Total liabilities and
shareholders' equity $84,929
Interest rate spread (TE) 3.33 %
Net interest income (TE) and net
interest margin (TE) 1,328 3.64 %
TE adjustment (a) 46
Net interest income, GAAP basis $1,282
(a) Interest income on tax-exempt securities and loans has been adjusted
to a taxable-equivalent basis using the statutory federal income tax
rate of 35%.
(b) For purposes of these computations, nonaccrual loans are included in
average loan balances.
(c) Yield is calculated on the basis of amortized cost.
(d) Rate calculation excludes basis adjustments related to fair value
hedges.
TE = Taxable Equivalent
GAAP = U.S. generally accepted accounting principles
Noninterest Income
(in millions)
Three months ended Six months ended
6-30-05 3-31-05 6-30-04 6-30-05 6-30-04
Trust and investment services
income (a) $135 $138 $141 $273 $286
Service charges on deposit
accounts 76 70 86 146 170
Investment banking and capital
markets income (a) 52 67 73 119 119
Letter of credit and loan fees 47 40 37 87 70
Corporate-owned life insurance
income 24 28 25 52 52
Electronic banking fees 24 22 22 46 40
Net gains from loan
securitizations and sales 10 19 1 29 26
Net securities gains (losses) 1 (6) 7 (5) 7
Other income:
Operating lease income 48 46 45 94 91
Insurance income 10 11 14 21 25
Loan securitization
servicing fees 5 5 1 10 2
Credit card fees 5 3 3 8 6
Miscellaneous income 49 57 36 106 74
Total other income 117 122 99 239 198
Total noninterest
income $486 $500 $491 $986 $968
(a) Additional detail provided in tables below.
Trust and Investment Services Income
(in millions)
Three months ended Six months ended
6-30-05 3-31-05 6-30-04 6-30-05 6-30-04
Brokerage commissions and fee
income $62 $63 $66 $125 $136
Personal asset management and
custody fees 38 38 39 76 79
Institutional asset management
and custody fees 35 37 36 72 71
Total trust and investment
services income $135 $138 $141 $273 $286
Investment Banking and Capital Markets Income
(in millions)
Three months ended Six months ended
6-30-05 3-31-05 6-30-04 6-30-05 6-30-04
Investment banking income $19 $17 $29 $36 $51
Net gains from principal
investing 1 12 19 13 29
Foreign exchange income 9 9 11 18 24
Dealer trading and derivatives
income 10 19 7 29 2
Income from other investments 13 10 7 23 13
Total investment banking
and capital markets
income $52 $67 $73 $119 $119
Noninterest Expense
(dollars in millions)
Three months ended Six months ended
6-30-05 3-31-05 6-30-04 6-30-05 6-30-04
Personnel (a) $386 $390 $371 $776 $744
Net occupancy 55 91 (b) 61 146 119
Computer processing 50 51 48 101 92
Equipment 28 28 30 56 61
Professional fees 30 28 29 58 54
Marketing 34 25 30 59 53
Other expense:
Operating lease expense 40 38 38 78 76
Postage and delivery 12 13 13 25 26
Telecommunications 8 7 7 15 14
Franchise and business
taxes 9 8 9 17 8
OREO expense, net 2 2 7 4 11
Miscellaneous expense 99 88 74 187 156
Total other expense 170 156 148 326 291
Total noninterest
expense $753 $769 $717 $1,522 $1,414
Average full-time equivalent
employees 19,429 19,571 19,514 19,534 19,548
(a) Additional detail provided in table below.
(b) Includes a charge of $30 million to adjust the accounting for rental
expense associated with operating leases from an escalating to a
straight-line basis.
Personnel Expense
(in millions)
Three months ended Six months ended
6-30-05 3-31-05 6-30-04 6-30-05 6-30-04
Salaries $218 $218 $210 $436 $419
Incentive compensation 92 80 92 172 177
Employee benefits 65 75 59 140 130
Stock-based compensation 9 11 8 20 15
Severance 2 6 2 8 3
Total personnel expense $386 $390 $371 $776 $744
Loan Composition
(dollars in millions)
Percent change
6-30-05 vs.
6-30-05 3-31-05 6-30-04 3-31-05 6-30-04
Commercial, financial and
agricultural $19,849 $19,852 $17,721 -- 12.0 %
Commercial real estate:
Commercial mortgage 7,999 7,696 6,312 3.9 % 26.7
Construction 6,239 5,836 4,863 6.9 28.3
Total commercial real
estate loans 14,238 13,532 11,175 5.2 27.4
Commercial lease financing 10,113 10,048 8,166 .6 23.8
Total commercial
loans 44,200 43,432 37,062 1.8 19.3
Real estate -- residential
mortgage 1,449 1,474 1,542 (1.7) (6.0)
Home equity 13,921 13,936 14,753 (.1) (5.6)
Consumer -- direct 1,797 1,859 2,074 (3.3) (13.4)
Consumer -- indirect:
Automobile lease financing 43 64 170 (32.8) (74.7)
Automobile loans -- -- 1,910 N/M (100.0)
Marine 2,665 2,641 2,640 .9 .9
Other 615 612 598 .5 2.8
Total consumer --
indirect loans 3,323 3,317 5,318 .2 (37.5)
Total consumer loans 20,490 20,586 23,687 (.5) (13.5)
Loans held for sale:
Real estate -- commercial
mortgage 519 248 369 109.3 40.7
Real estate -- residential
mortgage 23 22 22 4.5 4.5
Home equity 1 1 13 -- (92.3)
Education 2,586 2,514 2,237 2.9 15.6
Automobile 145 746 -- (80.6) N/M
Total loans held for
sale 3,274 3,531 2,641 (7.3) 24.0
Total loans $67,964 $67,549 $63,390 .6% 7.2%
N/M = Not Meaningful
Summary of Loan Loss Experience
(dollars in millions)
Three months ended Six months ended
6-30-05 3-31-05 6-30-04 6-30-05 6-30-04
Average loans outstanding
during the period $67,660 $68,059 $62,484 $67,858 $62,347
Allowance for loan
losses at beginning
of period $1,128 $1,138 $1,306 $1,138 $1,406
Loans charged off:
Commercial, financial
and agricultural 20 25 43 45 95
Real estate -- commercial
mortgage 9 3 10 12 18
Real estate -- construction -- 5 5 5 5
Total commercial real
estate loans 9 8 15 17 23
Commercial lease financing 13 12 15 25 25
Total commercial loans 42 45 73 87 143
Real estate -- residential
mortgage 1 2 4 3 6
Home equity 7 6 11 13 28
Consumer -- direct 10 8 11 18 23
Consumer -- indirect lease
financing 1 1 2 2 5
Consumer -- indirect other 14 16 47 30 92
Total consumer loans 33 33 75 66 154
75 78 148 153 297
Recoveries:
Commercial, financial and
agricultural 5 5 13 10 26
Real estate -- commercial
mortgage -- 1 1 1 2
Real estate -- construction 2 -- 4 2 4
Total commercial
real estate loans 2 1 5 3 6
Commercial lease financing 10 10 4 20 7
Total commercial loans 17 16 22 33 39
Real estate -- residential
mortgage 1 -- 1 1 1
Home equity 2 1 1 3 2
Consumer -- direct 2 2 2 4 4
Consumer -- indirect lease
financing -- 1 1 1 2
Consumer -- indirect other 5 4 17 9 34
Total consumer loans 10 8 22 18 43
27 24 44 51 82
Net loans charged off (48) (54) (104) (102) (215)
Provision for loan losses 20 44 74 64 155
Reclassification of allowance
for credit losses on lending-
related commitments (a) -- -- -- -- (70)
Allowance for loan losses
at end of period $1,100 $1,128 $1,276 $1,100 $1,276
Net loan charge-offs to
average loans .29 % .32 % .67 % .31 % .69 %
Allowance for loan losses
to period-end loans 1.62 1.67 2.01 1.62 2.01
Allowance for loan losses to
nonperforming loans 375.43 369.84 281.06 375.43 281.06
(a) Included in accrued expenses and other liabilities on the consolidated
balance sheet.
Summary of Nonperforming Assets and Past Due Loans
(dollars in millions)
6-30-05 3-31-05 12-31-04 9-30-04 6-30-04
Commercial, financial and
agricultural $61 $51 $43 $61 $114
Real estate -- commercial
mortgage 33 36 31 49 61
Real estate -- construction 3 5 20 1 1
Total commercial real
estate loans 36 41 51 50 62
Commercial lease financing 73 75 84 74 59
Total commercial loans 170 167 178 185 235
Real estate -- residential
mortgage 38 43 39 36 38
Home equity 74 76 80 149 151
Consumer -- direct 4 3 3 4 13
Consumer -- indirect lease
financing 1 5 1 1 2
Consumer -- indirect other 6 11 15 15 15
Total consumer loans 123 138 138 205 219
Total nonperforming
loans 293 305 316 390 454
OREO 33 58 53 60 71
Allowance for OREO losses (2) (4) (4) (5) (8)
OREO, net of allowance 31 54 49 55 63
Other nonperforming assets 14 12 14 15 23
Total nonperforming
assets $338 $371 $379 $460 $540
Accruing loans past due 90
days or more $74 $79 $122 $139 $114
Accruing loans past due 30
through 89 days 475 495 491 602 622
Nonperforming loans to
period-end loans .43 % .45 % .47 % .61 % .72 %
Nonperforming assets to
period-end loans plus OREO
and other nonperforming
assets .50 .55 .56 .71 .85
Summary of Changes in Nonperforming Loans
(in millions)
2Q05 1Q05 4Q04 3Q04 2Q04
Balance at beginning of period $305 $316 $390 $454 $587
Loans placed on nonaccrual
status 53 69 95 94 68
Charge-offs (48) (54) (91) (76) (104)
Loans acquired (sold), net -- (5) (66) (35) (33)
Payments (13) (9) (11) (32) (62)
Transfers to OREO (4) (12) -- -- --
Loans returned to accrual
status -- -- (1) (15) (2)
Balance at end of period $293 $305 $316 $390 $454
Line of Business Results
(dollars in millions)
Consumer Banking
2Q05 1Q05 4Q04 3Q04 2Q04
Summary of operations
Total revenue (TE) $706 $728 $690 $723 $690
Provision for loan
losses 22 48 9 52 49
Noninterest expense 484 477 553 470 475
Net income 125 127 59 126 104
Average loans 32,105 33,354 34,065 33,821 33,813
Average deposits 41,567 41,063 40,925 40,034 39,305
Net loan charge-
offs 32 39 118 53 64
Return on average
allocated equity 20.76 % 20.53 % 9.15 % 20.42 % 16.99 %
Average full-time
equivalent
employees 9,976 10,140 10,392 10,508 10,415
Supplementary information
(lines of business)
Community Banking
Total revenue (TE) $566 $556 $581 $550 $547
Provision for loan
losses 18 20 21 28 25
Noninterest expense 392 399 405 386 391
Net income 97 86 97 85 82
Average loans 19,791 19,935 20,114 19,681 19,487
Average deposits 41,128 40,661 40,518 39,623 38,940
Net loan charge-
offs 21 25 23 28 27
Return on average
allocated equity 25.36 % 22.75 % 25.03 % 23.73 % 23.51 %
Average full-time
equivalent
employees 8,438 8,520 8,754 8,914 8,833
Consumer Finance
Total revenue (TE) $140 $172 $109 $173 $143
Provision for loan
losses 4 28 (12) 24 24
Noninterest expense 92 78 148 84 84
Net income 28 41 (38) 41 22
Average loans 12,314 13,419 13,951 14,140 14,326
Average deposits 439 402 407 411 365
Net loan charge-
offs 11 14 95 25 37
Return on average
allocated equity 12.81 % 17.01 % (14.47)% 15.83 % 8.29 %
Average full-time
equivalent
employees 1,538 1,620 1,638 1,594 1,582
Line of Business Results
(dollars in millions)
Consumer Banking
Percent change 2Q05 vs.
1Q05 2Q04
Summary of operations
Total revenue (TE) (3.0)% 2.3 %
Provision for loan losses (54.2) (55.1)
Noninterest expense 1.5 1.9
Net income (1.6) 20.2
Average loans (3.7) (5.1)
Average deposits 1.2 5.8
Net loan charge-offs (17.9) (50.0)
Return on average allocated
equity N/A N/A
Average full-time equivalent
employees (1.6) (4.2)
Supplementary information
(lines of business)
Community Banking
Total revenue (TE) 1.8 % 3.5 %
Provision for loan losses (10.0) (28.0)
Noninterest expense (1.8) .3
Net income 12.8 18.3
Average loans (.7) 1.6
Average deposits 1.1 5.6
Net loan charge-offs (16.0) (22.2)
Return on average allocated
equity N/A N/A
Average full-time equivalent
employees (1.0) (4.5)
Consumer Finance
Total revenue (TE) (18.6)% (2.1)%
Provision for loan losses (85.7) (83.3)
Noninterest expense 17.9 9.5
Net income (31.7) 27.3
Average loans (8.2) (14.0)
Average deposits 9.2 20.3
Net loan charge-offs (21.4) (70.3)
Return on average allocated
equity N/A N/A
Average full-time equivalent
employees (5.1) (2.8)
Line of Business Results (continued)
(dollars in millions)
Corporate and Investment Banking
2Q05 1Q05 4Q04 3Q04 2Q04
Summary of operations
Total revenue (TE) $523 $489 $515 $456 $453
Provision for loan
losses (2) (4) (30) (1) 25
Noninterest expense 274 252 267 259 240
Net income 157 150 175 124 118
Average loans 34,943 34,170 31,308 29,237 28,012
Average deposits 9,691 8,781 8,793 7,800 7,867
Net loan charge-
offs 16 15 22 23 40
Return on average
allocated equity 17.87 % 17.26 % 21.45 % 15.55 % 14.95 %
Average full-time
equivalent
employees 3,250 3,302 3,028 2,875 2,828
Supplementary information
(lines of business)
Corporate Banking
Total revenue (TE) $258 $259 $272 $255 $262
Provision for loan
losses (6) (5) (32) (7) 25
Noninterest expense 144 133 159 149 141
Net income 75 81 91 71 60
Average loans 15,089 15,100 13,872 13,703 13,150
Average deposits 7,952 7,256 7,266 6,421 6,651
Net loan charge-
offs 11 10 12 13 36
Return on average
allocated equity 17.75 % 19.33 % 21.14 % 16.37 % 13.73 %
Average full-time
equivalent
employees 1,513 1,527 1,558 1,555 1,523
KeyBank Real Estate
Capital
Total revenue (TE) $139 $104 $133 $103 $91
Provision for loan
losses (7) 5 (4) -- (4)
Noninterest expense 55 46 50 45 43
Net income 57 33 55 36 33
Average loans 10,962 10,119 9,570 8,286 7,752
Average deposits 1,728 1,514 1,520 1,366 1,202
Net loan charge-
offs (recoveries) 3 4 2 3 (1)
Return on average
allocated equity 21.33 % 12.48 % 21.60 % 15.32 % 14.49 %
Average full-time
equivalent
employees 774 758 702 678 673
Key Equipment Finance
Total revenue (TE) $126 $126 $110 $98 $100
Provision for loan
losses 11 (4) 6 6 4
Noninterest expense 75 73 58 65 56
Net income 25 36 29 17 25
Average loans 8,892 8,951 7,866 7,248 7,110
Average deposits 11 11 7 13 14
Net loan charge-
offs 2 1 8 7 5
Return on average
allocated equity 13.23 % 19.36 % 22.19 % 13.21 % 20.03 %
Average full-time
equivalent
employees 963 1,017 768 642 632
Line of Business Results (continued)
(dollars in millions)
Corporate and Investment Banking
Percent change 2Q05 vs.
1Q05 2Q04
Summary of operations
Total revenue (TE) 7.0 % 15.5 %
Provision for loan losses 50.0 N/M
Noninterest expense 8.7 14.2
Net income 4.7 33.1
Average loans 2.3 24.7
Average deposits 10.4 23.2
Net loan charge-offs 6.7 (60.0)
Return on average allocated
equity N/A N/A
Average full-time equivalent
employees (1.6) 14.9
Supplementary information (lines of
business)
Corporate Banking
Total revenue (TE) (.4)% (1.5)%
Provision for loan losses (20.0) N/M
Noninterest expense 8.3 2.1
Net income (7.4) 25.0
Average loans (.1) 14.7
Average deposits 9.6 19.6
Net loan charge-offs 10.0 (69.4)
Return on average allocated
equity N/A N/A
Average full-time equivalent
employees (.9) (.7)
KeyBank Real Estate Capital
Total revenue (TE) 33.7 % 52.7 %
Provision for loan losses N/M (75.0)
Noninterest expense 19.6 27.9
Net income 72.7 72.7
Average loans 8.3 41.4
Average deposits 14.1 43.8
Net loan charge-offs
(recoveries) (25.0) N/M
Return on average allocated
equity N/A N/A
Average full-time equivalent
employees 2.1 15.0
Key Equipment Finance
Total revenue (TE) -- 26.0 %
Provision for loan losses N/M 175.0
Noninterest expense 2.7 % 33.9
Net income (30.6) --
Average loans (.7) 25.1
Average deposits -- (21.4)
Net loan charge-offs 100.0 (60.0)
Return on average allocated
equity N/A N/A
Average full-time equivalent
employees (5.3) 52.4
TE = Taxable Equivalent
N/A = Not Applicable
N/M = Not Meaningful
SOURCE KeyCorp
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Related links:
http://www.key.com
http://www.key.com/newsroom http://www.Key.com/ir
CONTACT:
Analyst, Vernon L. Patterson,
+1-216-689-0520, or Media, Gary Cavano, +1-216-689-0517, both of
KeyCorp
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