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KeyCorp Reports Second Quarter Net Income Of $221 Million

Net Income Up 11% from First Quarter of 2012  Efficiency Initiatives Underway 
Company Release - 07/19/2012 06:30

CLEVELAND, July 19, 2012 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced second quarter net income from continuing operations attributable to Key common shareholders of $221 million, or $.23 per common share, compared to $199 million, or $.21 per common share for the first quarter of 2012, and $243 million, or $.26 per common share for the second quarter of 2011. For the six months ended June 30, 2012, net income from continuing operations attributable to Key common shareholders was $420 million, or $.44 per common share, compared to $427 million, or $.46 per common share for the same period one year ago.

SIGNIFICANT EVENTS

Company-wide initiatives to improve efficiency

  • Expense reduction of $150-$200 million targeted by December 2013 – full benefit in 2014
  • Changing cost structure to be more variable and aligned with operating environment
  • Focused on organizational design, strategic sourcing, and branch rationalization

Completed acquisition of 37 branches in Upstate New York on July 13, 2012

  • Seamless conversion adding $2.1 billion in deposits and $260 million in loans
  • Credit card receivables of approximately $70 million to be added in September
  • Strengthens market share and positions Key to acquire and deepen client relationships
  • Liquidity used for debt maturities and to fund organic growth opportunities

Early termination of leveraged leases

  • Opportunity to realize economic benefits in current low interest rate environment
  • Gains are nontaxable pursuant to previous settlement with the IRS
  • Accelerates reduction in exit portfolio

Executing on capital management priorities

  • Repurchased 10.5 million shares at an average cost of $7.83 per share in the second quarter
  • Increased common share dividend for the second quarter from $.03 to $.05 per share
  • Redeemed $707 million of trust preferred securities on July 12, 2012

"Key's second quarter results reflect continued loan growth, improvement in credit quality, and disciplined expense control," said Chairman and Chief Executive Officer Beth Mooney. "We continue to benefit from the successful execution of our relationship strategy, which is driving client acquisition and engagement. We have seen five consecutive quarters of growth in commercial and industrial loans. Credit quality improved again this quarter as we continue to reduce our exit portfolio and add high quality new loan originations."

Mooney added: "To maintain our positive momentum, we are launching new efficiency initiatives and identifying opportunities to leverage our strong capital position to make attractive investments in our business, such as our recent branch acquisition in Upstate New York. These actions represent exciting new opportunities for Key to improve profitability by leveraging our brand, growing client relationships, and aligning our cost structure with the current operating environment."

SECOND QUARTER 2012 FINANCIAL RESULTS

  • Net income up 11% from first quarter of 2012
  • Maintained solid balance sheet with Tier 1 common equity of 11.7%
  • Continued loan growth driven by commercial, financial and agricultural loan portfolio
  • Further improvement in credit quality with net loan charge-offs to average loans ratio of .63% approaching long-term target and improving 19 basis points from prior quarter

Selected Financial Highlights

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