KeyCorp Reports First Quarter 2001 Earnings

Apr 18, 2001, 01:00 ET from KeyCorp

    CLEVELAND, April 18 /PRNewswire/ -- KeyCorp (NYSE:   KEY) today announced
 first quarter net income of $217 million, or $0.51 per diluted common share,
 compared with adjusted core earnings of $234 million or $0.53 per share for
 the first quarter of 2000.  Last year's adjusted core earnings exclude $0.28
 per share of significant nonrecurring items and $0.02 per share from the
 divested credit card business.  On a reported basis, Key's net income for the
 first quarter of 2000 was $367 million or $0.83 per diluted common share.
     "Our results in the first quarter were affected adversely by a weakening
 economy," said Henry L. Meyer III, Key's chief executive officer.  "The impact
 was particularly noticeable in our more capital markets-sensitive businesses,
 such as brokerage and equity investing, both within Key Capital Partners.
 While the economic slowdown will impact our loan portfolio generally, the
 erosion in credit quality that we are experiencing is disproportionately
 concentrated in two distinct portfolios of limited size in our Specialty
 Lending area.
     "Despite the unfavorable operating conditions, we were encouraged by
 continued strong growth in our home equity lending business and Retail Banking
 deposits.  We also were pleased with the continued reduction in our
 noninterest expense, reflecting the immediate and lasting benefits of Key's
 comprehensive, corporate-wide competitiveness initiative, which we began
 implementing last fall.  We remain confident that we will capture 100 percent
 of the initiative's cost savings potential; more than half of our projects
 have been implemented, and we remain on schedule.  The accumulating benefits
 of this initiative provide Key with a distinct advantage; the ability to
 reduce costs substantially is critical in an economic environment in which
 revenue growth is under pressure."
 
     SUMMARY OF CONSOLIDATED RESULTS
 
     The following table summarizes net income contributed by each of Key's
 major lines of business in the first quarter of 2001 and the fourth and first
 quarters of 2000.
 
      Net Income by Line of Business (a)
 
                                                             Percent Change vs.
      dollars in millions                 1Q01   4Q00   1Q00     4Q00    1Q00
      Key Consumer Banking:
        Retail Banking                     $73    $72    $60      1.4%   21.7%
        Home Equity and
          Consumer Finance                  20     18     18     11.1    11.1
      Key Corporate Finance                112    142    110    (21.1)    1.8
      Key Capital Partners(b)                2     34     22    (94.1)  (90.9)
      Treasury                              19     14     12     35.7    58.3
        Total segments                     226    280    222    (19.3)    1.8
      Reconciling items(c)                  (9)   (14)   145    (35.7) (106.2)
        Total net income                  $217   $266   $367    (18.4)  (40.9)
 
 
     (a) Key's management accounting system utilizes a methodology for loan
         loss provisioning by line of business that reflects credit quality
         expectations within each line of business over a normal business
         cycle.  The "normalized provision for loan losses" assigned to each
         line as a result of this methodology does not necessarily track with
         net loan charge-offs at any given point in the cycle.
 
     (b) Noninterest income and expense attributable to Key Capital Partners is
         assigned to Retail Banking, Home Equity and Consumer Finance or Key
         Corporate Finance if one of those businesses is principally
         responsible for maintaining the relationship with the client that used
         Key Capital Partners' products and services.  Key Capital Partners had
         net income of $15 million in the first quarter of 2001, $45 million in
         the fourth quarter of 2000 and $31 million in the first quarter of
         2000 before its income and expense were reassigned.
 
     (c) Reconciling items include certain nonrecurring items such as the first
         quarter 2000 gain from the sale of Key's credit card business, charges
         related to unallocated nonearning assets of corporate support
         functions and the results of divested businesses.
 
     Net interest income for the first quarter of 2001 totaled $688 million,
 representing a $17 million increase from the year-ago quarter.  This
 improvement resulted from a 4 percent increase in average earning assets
 (primarily loans), offset in part by a lower net interest margin.  The decline
 in the net interest margin was largely attributable to the divestiture of
 Key's credit card business in January 2000.
     Noninterest income was $455 million for the first quarter of 2001,
 compared with core noninterest income of $476 million earned in the first
 three months of 2000.  Weaker conditions in the securities markets led to
 declines in revenue derived from various capital markets activities.  For
 example, first quarter results include net equity capital losses of $16
 million (including $21 million of unrealized mark-to-market adjustments),
 compared with net equity capital gains of $15 million in the year-ago quarter.
 At the same time, brokerage fees, which are included in trust and investment
 services income, declined by $19 million.  These decreases were partially
 offset by an increase in net gains from sales of securities and higher loan
 fees.
     Key's noninterest expense totaled $698 million for the first quarter of
 2001, down from core noninterest expense of $718 million for the same period
 last year.  Marketing expense rose by $5 million, due in part to the launch of
 Key's "Achieve anything" brand line, but this was more than offset by
 decreases in costs associated with personnel and equipment.  Personnel expense
 improved by $18 million, largely due to the reduction in Key's workforce that
 resulted from Key's competitiveness initiative.  At March 31, 2001, the number
 of full-time equivalent employees totaled 21,882, compared with 22,142 at
 December 31, 2000, and 23,474 at March 31, 2000.
     Key's return on average equity for the first quarter of 2001 was 13.28
 percent and its return on average assets was 1.02 percent.  On a core basis,
 Key's returns on average equity and assets for the first quarter of 2000 were
 15.02 percent and 1.17 percent, respectively.
 
     ASSET QUALITY
 
     Key's provision for loan losses was $110 million for the first quarter of
 2001, compared with a core provision of $62 million for the first quarter of
 last year.  The core provision in the year-ago quarter excludes $121 million,
 which represents an additional amount added to the provision for an
 enhancement in Key's methodology for assessing credit risk.  Net loan charge-
 offs totaled $109 million and were 0.66 percent of average loans outstanding
 for the quarter, compared with core net charge-offs of $62 million and 0.39
 percent, respectively, for the first three months of 2000.  Core net charge-
 offs a year ago exclude $15 million of credit card net charge-offs, including
 holdbacks and putbacks related to the January 2000 sale of Key's credit card
 portfolio.  Also excluded are $57 million of accelerated consumer loan charge-
 offs resulting from the implementation of new Federal charge-off guidelines
 applicable to all banking companies.  At March 31, 2001, the allowance for
 loan losses was $1.0 billion, or 1.49 percent of loans.
     The level of Key's nonperforming loans rose by $63 million during the
 first quarter, reflecting the effect of continued economic weakness,
 particularly in the commercial sector.  At March 31, 2001, Key's nonperforming
 loans totaled $713 million, or 1.06 percent of period-end loans, compared with
 $650 million, or 0.97 percent, at December 31, 2000, and $473 million, or
 0.74 percent, at March 31, 2000.
 
     CAPITAL
 
     Key's capital ratios continued to exceed all "well-capitalized" benchmarks
 at March 31, 2001.  During the first quarter, Key did not repurchase any of
 its common shares under an authorization that allows for the repurchase of up
 to 25 million shares.  There were 18.8 million shares remaining for repurchase
 under this authorization as of March 31, 2001.
 
     LINE OF BUSINESS RESULTS
 
     Key Consumer Banking
     Retail Banking (a division of Key Consumer Banking)
 
     Net income for Retail Banking was $73 million for the first quarter of
 2001, up from $60 million for the same period in 2000.  The increase in net
 income is attributable to growth in total revenue and a reduction in
 noninterest expense.
     Net interest income improved slightly from the first quarter of 2000,
 reflecting the positive effects of a 3 percent increase in average loans
 outstanding and a 7 percent increase in deposits.  The positive effects of
 this growth were substantially offset by the effect of narrower interest rate
 spreads used in determining the profit contribution from deposits generated by
 Retail Banking.  Noninterest income rose 8 percent from the year-ago quarter,
 while noninterest expense decreased 5 percent, largely due to lower costs
 associated with personnel, depreciation and amortization expense, and various
 indirect charges.
 
     Home Equity and Consumer Finance (a division of Key Consumer Banking)
 
     Net income for Home Equity and Consumer Finance was $20 million in the
 first quarter of 2001, compared with $18 million for the same period last
 year.  Total revenue rose slightly from the year-ago quarter, reflecting
 growth in net interest income that was largely offset by a decrease in
 noninterest income.  At the same time, the level of noninterest expense
 declined.
     Although total revenue grew only slightly from the first quarter of 2000,
 its composition changed due to our decision to cease securitizing and selling
 our home equity loans.  These assets have an attractive risk/reward profile
 and retaining them was a significant factor in contributing to an 8 percent
 increase in average loans outstanding and a $14 million, or 11 percent,
 increase in net interest income.  This decision also contributed to a decline
 in noninterest income due to lower fee income from the servicing of
 securitized assets.  Also adding to the decline in noninterest income was an
 increase in losses on leased vehicle residual values.  The slight decrease in
 noninterest expense was primarily due to lower personnel costs.
 
     Key Corporate Finance
 
     Net income for Key Corporate Finance was $112 million for the first three
 months of 2001, compared with $110 million for the same period last year and
 $142 million for the fourth quarter of 2000.  The improvement from the year-
 ago quarter was driven by revenue growth, but was substantially offset by a
 rise in noninterest expense and a higher normalized provision for loan losses.
     In comparison with the first quarter of 2000, total average loans grew by
 6 percent, resulting in a $21 million, or 7 percent, improvement in net
 interest income.  The growth in loans was distributed among most major
 business units.  At the same time, noninterest income rose 6 percent primarily
 due to higher income from loan fees and various investment banking and capital
 markets activities.  These increases in revenue were largely offset by higher
 costs associated with investment banking and capital markets activities,
 credit extensions and collections, and personnel.
     The decline in earnings from the preceding quarter was due to a decrease
 in total revenue (primarily noninterest income) and an increase in noninterest
 expense.  The decrease in noninterest income was largely attributable to
 declines in loan fees and investment banking fees, an area in which the volume
 of business is typically higher in the fourth quarter of the year.
 
     Key Capital Partners
 
     Net income for Key Capital Partners was $2 million in the first quarter of
 2001, compared with $22 million for the same period last year.  Prior to
 assigning revenue and expense to other business lines whose customers utilize
 products and services offered by Key Capital Partners, net income was $15
 million in the first quarter of 2001, compared with $31 million in the first
 quarter of 2000.
     Total revenue for Key Capital Partners decreased by $36 million, or
 14 percent, ($32 million, or 10 percent, prior to revenue sharing) from the
 year-ago quarter.  The primary factors contributing to the decrease were
 declines in net gains from equity capital investments and revenue derived from
 brokerage services (principally in our Private Client Group).  The reduction
 in each of these revenue components reflects the effect of a slower economy
 and related weakness in the securities markets.  These declines were partially
 offset by a $6 million, or 3 percent decrease in noninterest expense, due
 primarily to lower personnel costs.
 
     Cleveland-based KeyCorp is one of the nation's largest multiline financial
 services companies, with assets of approximately $86 billion.  Key companies
 provide investment management, retail and commercial banking, retirement,
 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 facilities located in 46 states; a network of approximately 2,400
 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.
 
     NOTE 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
 www.Key.com/ir at 9:00 a.m. ET, on Wednesday, April 18, 2001.  A tape of the
 call will be available until Wednesday, April 25.
     For more information about Key's lines of business, visit our Media
 Newsroom at www.Key.com/newsroom .
 
     This news release contains forward-looking statements that 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: changes in interest rates; continued softening
 in the economy which could materially impact credit quality trends and the
 ability to generate loans; failure of the capital markets to function
 consistent with customary levels; delay in or inability to execute strategic
 initiatives designed to grow revenues and/or manage expenses; consummation of
 significant business combinations or divestitures; changes in law imposing new
 legal obligations or restrictions or unfavorable resolution of litigation; and
 changes in accounting, tax or regulatory practices or requirements.
 
 
                               Financial Highlights
                  (dollars in millions, except per share amounts)
 
                                                  Three months ended
                                           3-31-01     12-31-00    3-31-00
     Summary of operations
       Net interest income (taxable
        equivalent)                            $695        $709        $678
       Noninterest income                       455         508         806
         Total revenue (taxable equivalent)   1,150       1,217       1,484
       Provision for loan losses                110         108         183
       Noninterest expense                      698         705         727
       Net income                               217         266         367
       Net income - core                        217         272         243
 
     Per common share
       Net income                              $.51        $.63        $.83
       Net income - core                        .51         .64         .55
       Net income - assuming dilution           .51         .62         .83
       Net income - assuming dilution -
        core                                    .51         .63         .55
       Cash dividends                          .295         .28         .28
       Book value at period end               15.79       15.65       14.84
       Market price at period end             25.80       28.00       19.00
 
     At period end
       Full-time equivalent employees        21,882      22,142      23,474
       Branches                                 922         922         937
 
     Performance ratios
       Return on average total assets          1.02%       1.24%       1.77%
       Return on average total assets -
        core                                   1.02        1.27        1.17
       Return on average equity               13.28       16.16       22.68
       Return on average equity - core        13.28       16.53       15.02
       Net interest margin (taxable
        equivalent)                            3.63        3.71        3.68
 
     Capital ratios at period end
       Equity to assets                        7.75%       7.59%       7.78%
       Tangible equity to tangible assets      6.29        6.12        6.16
       Tier 1 risk-adjusted capital (a)        7.54        7.72        7.98
       Total risk-adjusted capital (a)        11.39       11.48       12.04
       Leverage (a)                            7.62        7.71        7.89
 
     Asset quality
       Net loan charge-offs                    $109        $108        $134
       Net loan charge-offs to average
        loans                                   .66%        .64%        .84%
       Allowance for loan losses             $1,001      $1,001        $979
       Allowance for loan losses to period
        end loans                              1.49%       1.50%       1.53%
       Allowance for loan losses to
        nonperforming loans                  140.39      154.00      206.98
       Nonperforming loans at period end       $713        $650        $473
       Nonperforming assets at period end       740         672         497
       Nonperforming loans to period end
        loans                                  1.06%        .97%        .74%
       Nonperforming assets to period end
        loans plus
         OREO and other nonperforming
          assets                               1.10        1.00         .78
 
      (a) 3-31-01 ratio is estimated.
 
 
                              Line of Business Results
                               (dollars in millions)
 
     Key Consumer Banking
     Retail Banking (a division of Key Consumer Banking)
                                                            Percent Change vs.
                                   1Q01      4Q00     1Q00     4Q00     1Q00
     Summary of operations
          Net interest income
           (taxable equivalent)    $228      $232     $226     (1.7)%     .9%
          Noninterest income         98        91       87      7.7     12.6
          Revenue sharing            13        17       16    (23.5)   (18.8)
          Total revenue             339       340      329      (.3)     3.0
          Provision for loan
           losses (a)                12        13       12     (7.7)      --
          Noninterest expense       197       197      205       --     (3.9)
          Expense sharing            10        12       13    (16.7)   (23.1)
          Income before income taxes
           (taxable equivalent)     120       118       99      1.7     21.2
          Allocated income taxes
           and taxable equivalent
           adjustments               47        46       39      2.2     20.5
          Net income                $73       $72      $60      1.4     21.7
 
          Percent of consolidated
           net income                34%       27%      16%      --       --
 
          Net loan charge-offs (a)  $13       $16      $12    (18.8)%    8.3%
 
     Average balances
          Loans                  $7,843    $7,929   $7,631     (1.1)%    2.8%
          Total assets            9,211     9,331    9,131     (1.3)      .9
          Deposits               32,570    32,522   30,427       .1      7.0
 
     Other financial data
          Efficiency ratio        60.88%    61.59%   66.28%      --       --
 
 
     Home Equity and Consumer Finance (a division of Key Consumer Banking)
 
                                                             Percent Change vs.
                                 1Q01       4Q00      1Q00     4Q00     1Q00
     Summary of operations
          Net interest income
           (taxable equivalent)  $142       $137      $128      3.6%    10.9%
          Noninterest income        5          9        17    (44.4)   (70.6)
          Revenue sharing           1          1         1       --       --
          Total revenue           148        147       146       .7      1.4
          Provision for loan
           losses (a)              33         33        33       --       --
          Noninterest expense      80         83        82     (3.6)    (2.4)
          Expense sharing          --         --        --       --       --
          Income before income
           taxes (taxable
           equivalent)             35         31        31     12.9     12.9
          Allocated income
           taxes and taxable
           equivalent
           adjustments             15         13        13     15.4     15.4
          Net income              $20        $18       $18     11.1     11.1
 
          Percent of
           consolidated net
           income                   9%         7%        5%      --       --
 
          Net loan charge-
           offs (a)               $46        $49       $24     (6.1)%   91.7%
 
     Average balances
          Loans               $15,868    $15,234   $14,662      4.2%     8.2%
          Total assets         16,960     16,325    15,915      3.9      6.6
          Deposits                144        154       130     (6.5)    10.8
 
 
                        Line of Business Results (continued)
                               (dollars in millions)
 
     Key Corporate Finance
                                                            Percent Change vs.
                                 1Q01       4Q00      1Q00     4Q00     1Q00
     Summary of operations
          Net interest income
           (taxable
           equivalent)           $340       $354      $319     (4.0)%    6.6%
          Noninterest income       70         94        71    (25.5)    (1.4)
          Revenue sharing          36         34        29      5.9     24.1
          Total revenue           446        482       419     (7.5)     6.4
          Provision for loan
           losses (a)              52         52        48       --      8.3
          Noninterest expense     192        180       175      6.7      9.7
          Expense sharing          21         21        18       --     16.7
          Income before income
           taxes (taxable
           equivalent)            181        229       178    (21.0)     1.7
          Allocated income
           taxes and taxable
           equivalent
           adjustments             69         87        68    (20.7)     1.5
          Net income             $112       $142      $110    (21.1)     1.8
 
          Percent of
           consolidated net
           income                  52%        53%       30%      --       --
 
          Net loan charge-
           offs (a)               $50        $42       $25     19.0%   100.0%
 
     Average balances
          Loans               $35,629    $35,658   $33,691      (.1)%    5.8%
          Total assets         37,222     37,372    35,437      (.4)     5.0
          Deposits              6,484      6,704     6,144     (3.3)     5.5
 
 
     Key Capital Partners
                                                             Percent Change vs.
                                    1Q01      4Q00     1Q00     4Q00     1Q00
     Summary of operations
          Net interest income
           (taxable equivalent)     $50       $57      $45    (12.3)%   11.1%
          Noninterest income        228       263      265    (13.3)   (14.0)
          Revenue sharing           (50)      (52)     (46)    (3.8)     8.7
          Total revenue             228       268      264    (14.9)   (13.6)
          Provision for loan
           losses (a)                 3         3        2       --     50.0
          Noninterest expense       249       241      255      3.3     (2.4)
          Expense sharing           (31)      (33)     (31)    (6.1)      --
          Income before income
           taxes (taxable
           equivalent)                7        57       38    (87.7)   (81.6)
          Allocated income taxes
           and taxable
           equivalent
           adjustments                5        23       16    (78.3)   (68.8)
          Net income                 $2       $34      $22    (94.1)   (90.9)
 
          Percent of
           consolidated net
           income                     1%       13%       6%      --       --
 
          Net loan charge-offs (a)   $1        $1       $1       --%      --%
 
     Average balances
          Loans                  $5,567    $5,464   $5,051      1.9%    10.2%
          Total assets            9,848     9,389    9,595      4.9      2.6
          Deposits                3,916     3,657    3,374      7.1     16.1
 
      (a)  Key's management accounting system utilizes a methodology for loan
           loss provisioning by line of business that reflects credit quality
           expectations within each line of business over a normal business
           cycle.  The "normalized provision for loan losses" assigned to each
           line as a result of this methodology does not necessarily track with
           net loan charge-offs at any given point in the cycle.
 
 
                            Consolidated Balance Sheets
                               (dollars in millions)
 
                                              3-31-01     12-31-00    3-31-00
     Assets
       Loans                                  $67,027     $66,905     $64,064
       Investment securities                    1,208       1,198       1,053
       Securities available for sale            6,900       7,329       6,269
       Short-term investments                   1,892       1,884       2,567
         Total earning assets                  77,027      77,316      73,953
       Allowance for loan losses               (1,001)     (1,001)       (979)
       Cash and due from banks                  2,484       3,189       2,757
       Premises and equipment                     703         717         761
       Goodwill                                 1,311       1,324       1,378
       Other intangible assets                     40          44          56
       Corporate-owned life insurance           2,241       2,215       2,132
       Accrued income and other assets          3,652       3,466       3,446
         Total assets                         $86,457     $87,270     $83,504
 
     Liabilities
       Deposits in domestic offices:
         Noninterest-bearing                   $8,329      $9,076      $8,283
         Interest-bearing                      36,152      35,519      34,718
       Deposits in foreign office-
        interest-bearing                        1,484       4,054       3,035
         Total deposits                        45,965      48,649      46,036
       Federal funds purchased and
        securities sold under repurchase
        agreements                              4,463       4,936       2,621
       Bank notes and other short-term
        borrowings                              8,721       6,957       8,015
       Accrued expense and other
        liabilities                             4,803       4,701       4,312
       Long-term debt                          14,495      14,161      14,784
       Capital securities of subsidiary
        trusts                                  1,308       1,243       1,243
         Total liabilities                     79,755      80,647      77,011
 
 
     Shareholders' equity                       6,702       6,623       6,493
 
     Total liabilities and shareholders'
      equity                                  $86,457     $87,270     $83,504
 
     Common shares outstanding (000)          424,414     423,254     437,590
 
 
                        Consolidated Statements of Income
                 (dollars in millions, except per share amounts)
 
                                                  Three months ended
                                             3-31-01     12-31-00    3-31-00
 
     Interest income                          $1,570      $1,652      $1,489
 
     Interest expense                            882         950         818
 
     Net interest income                         688         702         671
     Provision for loan losses                   110         108         183
                                                 578         594         488
     Noninterest income
      Trust and investment services income       141         150         160
      Investment banking and capital
       markets income                             65          94          89
      Service charges on deposit accounts         84          85          86
      Corporate-owned life insurance income       27          31          25
      Letter of credit and loan fees              29          34          23
      Net securities gains                        26          19           1
      Gains from divestitures                     --          --         332
      Other income                                83          95          90
        Total noninterest income                 455         508         806
     Noninterest expense
      Personnel                                  364         360         382
      Net occupancy                               57          55          57
      Computer processing                         62          62          59
      Equipment                                   38          42          48
      Marketing                                   27          28          22
      Amortization of intangibles                 26          25          25
      Professional fees                           18          19          19
      Restructuring charges                       (4)         (7)          7
      Other expense                              110         121         108
        Total noninterest expense                698         705         727
 
     Income before income taxes and
      cumulative effect of accounting
      change                                     335         397         567
      Income taxes                               117         131         200
 
     Income before cumulative effect of
      accounting change                          218         266         367
     Cumulative effect of accounting
      change, net of tax                          (1)         --          --
     Net income                                 $217        $266        $367
 
     Per Common Share
     Income before cumulative effect of
      accounting change                         $.51        $.63        $.83
     Net income                                  .51         .63         .83
 
     Per Common Share-assuming dilution
     Income before cumulative effect of
      accounting change                         $.51        $.62        $.83
     Net income                                  .51         .62         .83
 
     Weighted average common shares
      outstanding (000)                      424,024     425,054     441,834
     Weighted average common shares and
      potential common shares
      outstanding (000)                      429,917     430,634     443,757
 
     Taxable-equivalent adjustment                $7          $7          $7
 
 
           Consolidated Average Balance Sheets, Net Interest Income and
                                   Yields/Rates
                              (dollars in millions)
 
                                                        First Quarter 2001
                                                Average
                                                Balance     Interest Yield/Rate
     Assets
       Loans: (a)(b)
       Commercial, financial and
         agricultural                           $20,025       $406       8.22%
       Real estate -                  -                   -                   -
 commercial mortgage         6,897        147       8.63
       Real estate -                  -                   -                   -
 construction                5,273        117       9.03
       Commercial lease financing                 7,102        125       7.07
         Total commercial loans                  39,297        795       8.19
       Real estate -                  -                   -                   -
 residential                 4,172         81       7.74
       Home equity                               10,086        233       9.38
       Consumer - direct                          2,480         64      10.43
       Consumer - indirect lease financing        2,936         59       8.02
       Consumer - indirect other                  5,673        136       9.58
         Total consumer loans                    25,347        573       9.10
       Loans held for sale                        2,389         54       9.09
         Total loans                             67,033      1,422       8.57
       Taxable investment securities                892          7       3.24
       Tax-exempt investment securities(a)          317          8       8.83
         Total investment securities              1,209         15       4.70
       Securities available for sale(a,c)         7,026        120       6.87
       Short-term investments                     1,604         20       5.00
         Total earning assets                    76,872      1,577       8.28
       Allowance for loan losses                 (1,006)        --         --
       Accrued income and other assets           10,458         --         --
         Total assets                           $86,324         --         --
 
     Liabilities
       Money market deposit accounts            $12,070         95       3.17
       Savings deposits                           1,993          7       1.34
       NOW accounts                                 602          2       1.54
       Certificates of deposit
         ($100,000 or more)(d)                    5,994         92       6.25
       Other time deposits                       15,011        224       6.06
       Deposits in foreign office                 2,869         40       5.64
         Total interest-bearing deposits         38,539        460       4.84
       Federal funds purchased and
         securities sold under repurchase
         agreements                               5,263         70       5.39
       Bank notes and other short-
         term borrowings(d)                       7,532        105       5.67
       Long-term debt, including
         capital securities(d,e)                 15,412        247       6.58
         Total interest-bearing
           liabilities                           66,746        882       5.38
       Noninterest-bearing deposits               8,185         --         --
       Accrued expense and other liabilities      4,766         --         --
         Total liabilities                       79,697         --         --
 
     Shareholders' equity                         6,627         --         --
 
       Total liabilities and
         shareholders' equity                   $86,324         --         --
 
     Interest rate spread (TE)                       --         --       2.90%
     Net interest income (TE) and net
       interest margin (TE)                          --       $695       3.63%
     Capital securities                          $1,307        $24         --
     Taxable-equivalent adjustment(a)                --          7         --
 
                                                       Fourth Quarter 2000
                                                Average
                                                Balance     Interest Yield/Rate
     Assets
       Loans(a,b)
       Commercial, financial and
         agricultural                           $20,093       $451       8.92%
       Real estate -                  -                   -                   -
 commercial mortgage         6,855        162       9.42
       Real estate -                  -                   -                   -
 construction                5,164        129       9.97
       Commercial lease financing                 6,965        125       7.20
         Total commercial loans                  39,077        867       8.84
       Real estate -                  -                   -                   -
 residential                 4,232         81       7.68
       Home equity                                9,591        228       9.45
       Consumer - direct                          2,582         69      10.57
       Consumer - indirect lease financing        3,023         62       8.16
       Consumer - indirect other                  5,813        141       9.72
         Total consumer loans                    25,241        581       9.18
       Loans held for sale                        2,220         51       9.13
         Total loans                             66,538      1,499       8.98
       Taxable investment securities                898          8       3.73
       Tax-exempt investment securities(a)          344          8       8.73
         Total investment securities              1,242         16       5.12
       Securities available for sale(a,c)         6,807        121       7.02
       Short-term investments                     1,449         23       6.20
         Total earning assets                    76,036      1,659       8.69
       Allowance for loan losses                   (989)        --         --
       Accrued income and other assets           10,380         --         --
         Total assets                           $85,427         --         --
 
     Liabilities
       Money market deposit accounts            $11,873        103       3.44
       Savings deposits                           2,045          7       1.32
       NOW accounts                                 600          2       1.55
       Certificates of deposit
         ($100,000 or more)(d)                    5,789         94       6.44
       Other time deposits                       15,037        232       6.15
       Deposits in foreign office                 3,265         54       6.60
         Total interest-bearing deposits         38,609        492       5.07
       Federal funds purchased and
         securities sold under repurchase
         agreements                               5,859         93       6.33
       Bank notes and other short-
         term borrowings(d)                       6,446        101       6.22
       Long-term debt, including
         capital securities(d,e)                 15,235        264       6.91
         Total interest-bearing
           liabilities                           66,149        950       5.72
       Noninterest-bearing deposits               8,363         --         --
       Accrued expense and other liabilities      4,368         --         --
         Total liabilities                       78,880         --         --
 
     Shareholders' equity                         6,547         --         --
 
       Total liabilities and
         shareholders' equity                   $85,427         --         --
 
     Interest rate spread (TE)                       --         --       2.97%
     Net interest income (TE) and net
       interest margin (TE)                          --       $709       3.71%
     Capital securities                          $1,243        $24         --
     Taxable-equivalent adjustment(a)                --          7         --
 
                                                    First Quarter 2000
                                                Average
                                                Balance     Interest Yield/Rate
     Assets
       Loans:(a,b)
       Commercial, financial and
         agricultural                           $18,677       $379       8.17%
       Real estate -                  -                   -                   -
 commercial
         mortgage                                 6,891        150       8.74
       Real estate -                  -                   -                   -
 construction                4,601        104       9.12
       Commercial lease financing                 6,684        122       7.28
         Total commercial loans                  36,853        755       8.23
       Real estate -                  -                   -                   -
 residential                 4,318         81       7.48
       Home equity                                8,129        179       8.85
       Consumer - direct                          2,572         62       9.72
       Consumer - indirect lease financing        3,174         63       7.93
       Consumer - indirect other                  6,286        145       9.22
         Total consumer loans                    24,479        530       8.67
       Loans held for sale                        2,692         65       9.80
         Total loans                             64,024      1,350       8.47
       Taxable investment securities                580          4       2.94
       Tax-exempt investment securities(a)          436         10       8.74
         Total investment securities              1,016         14       5.43
       Securities available for sale(a,c)         6,475        112       6.81
       Short-term investments                     2,164         20       3.66
         Total earning assets                    73,679      1,496       8.15
       Allowance for loan losses                   (899)        --         --
       Accrued income and other assets           10,407         --         --
         Total assets                           $83,187         --         --
 
     Liabilities
       Money market deposit accounts            $12,617        104       3.32
       Savings deposits                           2,357          9       1.61
       NOW accounts                                 627          3       1.62
       Certificates of deposit
         ($100,000 or more)(d)                    5,555         80       5.78
       Other time deposits                       12,552        164       5.25
       Deposits in foreign office                 1,206         17       5.76
         Total interest-bearing deposits         34,914        377       4.34
       Federal funds purchased and
         securities sold under repurchase
         agreements                               4,003         48       4.85
       Bank notes and other short-
         term borrowings(d)                       8,680        126       5.83
       Long-term debt, including
         capital securities(d,e)                 16,577        267       6.49
         Total interest-bearing
           liabilities                           64,174        818       5.13
       Noninterest-bearing deposits               8,160         --         --
       Accrued expense and other liabilities      4,344         --         --
         Total liabilities                       76,678         --         --
 
     Shareholders' equity                         6,509         --         --
 
       Total liabilities and
         shareholders' equity                   $83,187         --         --
 
     Interest rate spread (TE)                       --         --       3.02%
     Net interest income (TE) and net
       interest margin (TE)                          --       $678       3.68%
     Capital securities                          $1,243        $23         --
     Taxable-equivalent adjustment(a)                --          7         --
 
     (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.
     (e) Rate calculation excludes ESOP debt.
 
     TE = Taxable Equivalent
 
 

SOURCE KeyCorp
    CLEVELAND, April 18 /PRNewswire/ -- KeyCorp (NYSE:   KEY) today announced
 first quarter net income of $217 million, or $0.51 per diluted common share,
 compared with adjusted core earnings of $234 million or $0.53 per share for
 the first quarter of 2000.  Last year's adjusted core earnings exclude $0.28
 per share of significant nonrecurring items and $0.02 per share from the
 divested credit card business.  On a reported basis, Key's net income for the
 first quarter of 2000 was $367 million or $0.83 per diluted common share.
     "Our results in the first quarter were affected adversely by a weakening
 economy," said Henry L. Meyer III, Key's chief executive officer.  "The impact
 was particularly noticeable in our more capital markets-sensitive businesses,
 such as brokerage and equity investing, both within Key Capital Partners.
 While the economic slowdown will impact our loan portfolio generally, the
 erosion in credit quality that we are experiencing is disproportionately
 concentrated in two distinct portfolios of limited size in our Specialty
 Lending area.
     "Despite the unfavorable operating conditions, we were encouraged by
 continued strong growth in our home equity lending business and Retail Banking
 deposits.  We also were pleased with the continued reduction in our
 noninterest expense, reflecting the immediate and lasting benefits of Key's
 comprehensive, corporate-wide competitiveness initiative, which we began
 implementing last fall.  We remain confident that we will capture 100 percent
 of the initiative's cost savings potential; more than half of our projects
 have been implemented, and we remain on schedule.  The accumulating benefits
 of this initiative provide Key with a distinct advantage; the ability to
 reduce costs substantially is critical in an economic environment in which
 revenue growth is under pressure."
 
     SUMMARY OF CONSOLIDATED RESULTS
 
     The following table summarizes net income contributed by each of Key's
 major lines of business in the first quarter of 2001 and the fourth and first
 quarters of 2000.
 
      Net Income by Line of Business (a)
 
                                                             Percent Change vs.
      dollars in millions                 1Q01   4Q00   1Q00     4Q00    1Q00
      Key Consumer Banking:
        Retail Banking                     $73    $72    $60      1.4%   21.7%
        Home Equity and
          Consumer Finance                  20     18     18     11.1    11.1
      Key Corporate Finance                112    142    110    (21.1)    1.8
      Key Capital Partners(b)                2     34     22    (94.1)  (90.9)
      Treasury                              19     14     12     35.7    58.3
        Total segments                     226    280    222    (19.3)    1.8
      Reconciling items(c)                  (9)   (14)   145    (35.7) (106.2)
        Total net income                  $217   $266   $367    (18.4)  (40.9)
 
 
     (a) Key's management accounting system utilizes a methodology for loan
         loss provisioning by line of business that reflects credit quality
         expectations within each line of business over a normal business
         cycle.  The "normalized provision for loan losses" assigned to each
         line as a result of this methodology does not necessarily track with
         net loan charge-offs at any given point in the cycle.
 
     (b) Noninterest income and expense attributable to Key Capital Partners is
         assigned to Retail Banking, Home Equity and Consumer Finance or Key
         Corporate Finance if one of those businesses is principally
         responsible for maintaining the relationship with the client that used
         Key Capital Partners' products and services.  Key Capital Partners had
         net income of $15 million in the first quarter of 2001, $45 million in
         the fourth quarter of 2000 and $31 million in the first quarter of
         2000 before its income and expense were reassigned.
 
     (c) Reconciling items include certain nonrecurring items such as the first
         quarter 2000 gain from the sale of Key's credit card business, charges
         related to unallocated nonearning assets of corporate support
         functions and the results of divested businesses.
 
     Net interest income for the first quarter of 2001 totaled $688 million,
 representing a $17 million increase from the year-ago quarter.  This
 improvement resulted from a 4 percent increase in average earning assets
 (primarily loans), offset in part by a lower net interest margin.  The decline
 in the net interest margin was largely attributable to the divestiture of
 Key's credit card business in January 2000.
     Noninterest income was $455 million for the first quarter of 2001,
 compared with core noninterest income of $476 million earned in the first
 three months of 2000.  Weaker conditions in the securities markets led to
 declines in revenue derived from various capital markets activities.  For
 example, first quarter results include net equity capital losses of $16
 million (including $21 million of unrealized mark-to-market adjustments),
 compared with net equity capital gains of $15 million in the year-ago quarter.
 At the same time, brokerage fees, which are included in trust and investment
 services income, declined by $19 million.  These decreases were partially
 offset by an increase in net gains from sales of securities and higher loan
 fees.
     Key's noninterest expense totaled $698 million for the first quarter of
 2001, down from core noninterest expense of $718 million for the same period
 last year.  Marketing expense rose by $5 million, due in part to the launch of
 Key's "Achieve anything" brand line, but this was more than offset by
 decreases in costs associated with personnel and equipment.  Personnel expense
 improved by $18 million, largely due to the reduction in Key's workforce that
 resulted from Key's competitiveness initiative.  At March 31, 2001, the number
 of full-time equivalent employees totaled 21,882, compared with 22,142 at
 December 31, 2000, and 23,474 at March 31, 2000.
     Key's return on average equity for the first quarter of 2001 was 13.28
 percent and its return on average assets was 1.02 percent.  On a core basis,
 Key's returns on average equity and assets for the first quarter of 2000 were
 15.02 percent and 1.17 percent, respectively.
 
     ASSET QUALITY
 
     Key's provision for loan losses was $110 million for the first quarter of
 2001, compared with a core provision of $62 million for the first quarter of
 last year.  The core provision in the year-ago quarter excludes $121 million,
 which represents an additional amount added to the provision for an
 enhancement in Key's methodology for assessing credit risk.  Net loan charge-
 offs totaled $109 million and were 0.66 percent of average loans outstanding
 for the quarter, compared with core net charge-offs of $62 million and 0.39
 percent, respectively, for the first three months of 2000.  Core net charge-
 offs a year ago exclude $15 million of credit card net charge-offs, including
 holdbacks and putbacks related to the January 2000 sale of Key's credit card
 portfolio.  Also excluded are $57 million of accelerated consumer loan charge-
 offs resulting from the implementation of new Federal charge-off guidelines
 applicable to all banking companies.  At March 31, 2001, the allowance for
 loan losses was $1.0 billion, or 1.49 percent of loans.
     The level of Key's nonperforming loans rose by $63 million during the
 first quarter, reflecting the effect of continued economic weakness,
 particularly in the commercial sector.  At March 31, 2001, Key's nonperforming
 loans totaled $713 million, or 1.06 percent of period-end loans, compared with
 $650 million, or 0.97 percent, at December 31, 2000, and $473 million, or
 0.74 percent, at March 31, 2000.
 
     CAPITAL
 
     Key's capital ratios continued to exceed all "well-capitalized" benchmarks
 at March 31, 2001.  During the first quarter, Key did not repurchase any of
 its common shares under an authorization that allows for the repurchase of up
 to 25 million shares.  There were 18.8 million shares remaining for repurchase
 under this authorization as of March 31, 2001.
 
     LINE OF BUSINESS RESULTS
 
     Key Consumer Banking
     Retail Banking (a division of Key Consumer Banking)
 
     Net income for Retail Banking was $73 million for the first quarter of
 2001, up from $60 million for the same period in 2000.  The increase in net
 income is attributable to growth in total revenue and a reduction in
 noninterest expense.
     Net interest income improved slightly from the first quarter of 2000,
 reflecting the positive effects of a 3 percent increase in average loans
 outstanding and a 7 percent increase in deposits.  The positive effects of
 this growth were substantially offset by the effect of narrower interest rate
 spreads used in determining the profit contribution from deposits generated by
 Retail Banking.  Noninterest income rose 8 percent from the year-ago quarter,
 while noninterest expense decreased 5 percent, largely due to lower costs
 associated with personnel, depreciation and amortization expense, and various
 indirect charges.
 
     Home Equity and Consumer Finance (a division of Key Consumer Banking)
 
     Net income for Home Equity and Consumer Finance was $20 million in the
 first quarter of 2001, compared with $18 million for the same period last
 year.  Total revenue rose slightly from the year-ago quarter, reflecting
 growth in net interest income that was largely offset by a decrease in
 noninterest income.  At the same time, the level of noninterest expense
 declined.
     Although total revenue grew only slightly from the first quarter of 2000,
 its composition changed due to our decision to cease securitizing and selling
 our home equity loans.  These assets have an attractive risk/reward profile
 and retaining them was a significant factor in contributing to an 8 percent
 increase in average loans outstanding and a $14 million, or 11 percent,
 increase in net interest income.  This decision also contributed to a decline
 in noninterest income due to lower fee income from the servicing of
 securitized assets.  Also adding to the decline in noninterest income was an
 increase in losses on leased vehicle residual values.  The slight decrease in
 noninterest expense was primarily due to lower personnel costs.
 
     Key Corporate Finance
 
     Net income for Key Corporate Finance was $112 million for the first three
 months of 2001, compared with $110 million for the same period last year and
 $142 million for the fourth quarter of 2000.  The improvement from the year-
 ago quarter was driven by revenue growth, but was substantially offset by a
 rise in noninterest expense and a higher normalized provision for loan losses.
     In comparison with the first quarter of 2000, total average loans grew by
 6 percent, resulting in a $21 million, or 7 percent, improvement in net
 interest income.  The growth in loans was distributed among most major
 business units.  At the same time, noninterest income rose 6 percent primarily
 due to higher income from loan fees and various investment banking and capital
 markets activities.  These increases in revenue were largely offset by higher
 costs associated with investment banking and capital markets activities,
 credit extensions and collections, and personnel.
     The decline in earnings from the preceding quarter was due to a decrease
 in total revenue (primarily noninterest income) and an increase in noninterest
 expense.  The decrease in noninterest income was largely attributable to
 declines in loan fees and investment banking fees, an area in which the volume
 of business is typically higher in the fourth quarter of the year.
 
     Key Capital Partners
 
     Net income for Key Capital Partners was $2 million in the first quarter of
 2001, compared with $22 million for the same period last year.  Prior to
 assigning revenue and expense to other business lines whose customers utilize
 products and services offered by Key Capital Partners, net income was $15
 million in the first quarter of 2001, compared with $31 million in the first
 quarter of 2000.
     Total revenue for Key Capital Partners decreased by $36 million, or
 14 percent, ($32 million, or 10 percent, prior to revenue sharing) from the
 year-ago quarter.  The primary factors contributing to the decrease were
 declines in net gains from equity capital investments and revenue derived from
 brokerage services (principally in our Private Client Group).  The reduction
 in each of these revenue components reflects the effect of a slower economy
 and related weakness in the securities markets.  These declines were partially
 offset by a $6 million, or 3 percent decrease in noninterest expense, due
 primarily to lower personnel costs.
 
     Cleveland-based KeyCorp is one of the nation's largest multiline financial
 services companies, with assets of approximately $86 billion.  Key companies
 provide investment management, retail and commercial banking, retirement,
 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 facilities located in 46 states; a network of approximately 2,400
 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.
 
     NOTE 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
 www.Key.com/ir at 9:00 a.m. ET, on Wednesday, April 18, 2001.  A tape of the
 call will be available until Wednesday, April 25.
     For more information about Key's lines of business, visit our Media
 Newsroom at www.Key.com/newsroom .
 
     This news release contains forward-looking statements that 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: changes in interest rates; continued softening
 in the economy which could materially impact credit quality trends and the
 ability to generate loans; failure of the capital markets to function
 consistent with customary levels; delay in or inability to execute strategic
 initiatives designed to grow revenues and/or manage expenses; consummation of
 significant business combinations or divestitures; changes in law imposing new
 legal obligations or restrictions or unfavorable resolution of litigation; and
 changes in accounting, tax or regulatory practices or requirements.
 
 
                               Financial Highlights
                  (dollars in millions, except per share amounts)
 
                                                  Three months ended
                                           3-31-01     12-31-00    3-31-00
     Summary of operations
       Net interest income (taxable
        equivalent)                            $695        $709        $678
       Noninterest income                       455         508         806
         Total revenue (taxable equivalent)   1,150       1,217       1,484
       Provision for loan losses                110         108         183
       Noninterest expense                      698         705         727
       Net income                               217         266         367
       Net income - core                        217         272         243
 
     Per common share
       Net income                              $.51        $.63        $.83
       Net income - core                        .51         .64         .55
       Net income - assuming dilution           .51         .62         .83
       Net income - assuming dilution -
        core                                    .51         .63         .55
       Cash dividends                          .295         .28         .28
       Book value at period end               15.79       15.65       14.84
       Market price at period end             25.80       28.00       19.00
 
     At period end
       Full-time equivalent employees        21,882      22,142      23,474
       Branches                                 922         922         937
 
     Performance ratios
       Return on average total assets          1.02%       1.24%       1.77%
       Return on average total assets -
        core                                   1.02        1.27        1.17
       Return on average equity               13.28       16.16       22.68
       Return on average equity - core        13.28       16.53       15.02
       Net interest margin (taxable
        equivalent)                            3.63        3.71        3.68
 
     Capital ratios at period end
       Equity to assets                        7.75%       7.59%       7.78%
       Tangible equity to tangible assets      6.29        6.12        6.16
       Tier 1 risk-adjusted capital (a)        7.54        7.72        7.98
       Total risk-adjusted capital (a)        11.39       11.48       12.04
       Leverage (a)                            7.62        7.71        7.89
 
     Asset quality
       Net loan charge-offs                    $109        $108        $134
       Net loan charge-offs to average
        loans                                   .66%        .64%        .84%
       Allowance for loan losses             $1,001      $1,001        $979
       Allowance for loan losses to period
        end loans                              1.49%       1.50%       1.53%
       Allowance for loan losses to
        nonperforming loans                  140.39      154.00      206.98
       Nonperforming loans at period end       $713        $650        $473
       Nonperforming assets at period end       740         672         497
       Nonperforming loans to period end
        loans                                  1.06%        .97%        .74%
       Nonperforming assets to period end
        loans plus
         OREO and other nonperforming
          assets                               1.10        1.00         .78
 
      (a) 3-31-01 ratio is estimated.
 
 
                              Line of Business Results
                               (dollars in millions)
 
     Key Consumer Banking
     Retail Banking (a division of Key Consumer Banking)
                                                            Percent Change vs.
                                   1Q01      4Q00     1Q00     4Q00     1Q00
     Summary of operations
          Net interest income
           (taxable equivalent)    $228      $232     $226     (1.7)%     .9%
          Noninterest income         98        91       87      7.7     12.6
          Revenue sharing            13        17       16    (23.5)   (18.8)
          Total revenue             339       340      329      (.3)     3.0
          Provision for loan
           losses (a)                12        13       12     (7.7)      --
          Noninterest expense       197       197      205       --     (3.9)
          Expense sharing            10        12       13    (16.7)   (23.1)
          Income before income taxes
           (taxable equivalent)     120       118       99      1.7     21.2
          Allocated income taxes
           and taxable equivalent
           adjustments               47        46       39      2.2     20.5
          Net income                $73       $72      $60      1.4     21.7
 
          Percent of consolidated
           net income                34%       27%      16%      --       --
 
          Net loan charge-offs (a)  $13       $16      $12    (18.8)%    8.3%
 
     Average balances
          Loans                  $7,843    $7,929   $7,631     (1.1)%    2.8%
          Total assets            9,211     9,331    9,131     (1.3)      .9
          Deposits               32,570    32,522   30,427       .1      7.0
 
     Other financial data
          Efficiency ratio        60.88%    61.59%   66.28%      --       --
 
 
     Home Equity and Consumer Finance (a division of Key Consumer Banking)
 
                                                             Percent Change vs.
                                 1Q01       4Q00      1Q00     4Q00     1Q00
     Summary of operations
          Net interest income
           (taxable equivalent)  $142       $137      $128      3.6%    10.9%
          Noninterest income        5          9        17    (44.4)   (70.6)
          Revenue sharing           1          1         1       --       --
          Total revenue           148        147       146       .7      1.4
          Provision for loan
           losses (a)              33         33        33       --       --
          Noninterest expense      80         83        82     (3.6)    (2.4)
          Expense sharing          --         --        --       --       --
          Income before income
           taxes (taxable
           equivalent)             35         31        31     12.9     12.9
          Allocated income
           taxes and taxable
           equivalent
           adjustments             15         13        13     15.4     15.4
          Net income              $20        $18       $18     11.1     11.1
 
          Percent of
           consolidated net
           income                   9%         7%        5%      --       --
 
          Net loan charge-
           offs (a)               $46        $49       $24     (6.1)%   91.7%
 
     Average balances
          Loans               $15,868    $15,234   $14,662      4.2%     8.2%
          Total assets         16,960     16,325    15,915      3.9      6.6
          Deposits                144        154       130     (6.5)    10.8
 
 
                        Line of Business Results (continued)
                               (dollars in millions)
 
     Key Corporate Finance
                                                            Percent Change vs.
                                 1Q01       4Q00      1Q00     4Q00     1Q00
     Summary of operations
          Net interest income
           (taxable
           equivalent)           $340       $354      $319     (4.0)%    6.6%
          Noninterest income       70         94        71    (25.5)    (1.4)
          Revenue sharing          36         34        29      5.9     24.1
          Total revenue           446        482       419     (7.5)     6.4
          Provision for loan
           losses (a)              52         52        48       --      8.3
          Noninterest expense     192        180       175      6.7      9.7
          Expense sharing          21         21        18       --     16.7
          Income before income
           taxes (taxable
           equivalent)            181        229       178    (21.0)     1.7
          Allocated income
           taxes and taxable
           equivalent
           adjustments             69         87        68    (20.7)     1.5
          Net income             $112       $142      $110    (21.1)     1.8
 
          Percent of
           consolidated net
           income                  52%        53%       30%      --       --
 
          Net loan charge-
           offs (a)               $50        $42       $25     19.0%   100.0%
 
     Average balances
          Loans               $35,629    $35,658   $33,691      (.1)%    5.8%
          Total assets         37,222     37,372    35,437      (.4)     5.0
          Deposits              6,484      6,704     6,144     (3.3)     5.5
 
 
     Key Capital Partners
                                                             Percent Change vs.
                                    1Q01      4Q00     1Q00     4Q00     1Q00
     Summary of operations
          Net interest income
           (taxable equivalent)     $50       $57      $45    (12.3)%   11.1%
          Noninterest income        228       263      265    (13.3)   (14.0)
          Revenue sharing           (50)      (52)     (46)    (3.8)     8.7
          Total revenue             228       268      264    (14.9)   (13.6)
          Provision for loan
           losses (a)                 3         3        2       --     50.0
          Noninterest expense       249       241      255      3.3     (2.4)
          Expense sharing           (31)      (33)     (31)    (6.1)      --
          Income before income
           taxes (taxable
           equivalent)                7        57       38    (87.7)   (81.6)
          Allocated income taxes
           and taxable
           equivalent
           adjustments                5        23       16    (78.3)   (68.8)
          Net income                 $2       $34      $22    (94.1)   (90.9)
 
          Percent of
           consolidated net
           income                     1%       13%       6%      --       --
 
          Net loan charge-offs (a)   $1        $1       $1       --%      --%
 
     Average balances
          Loans                  $5,567    $5,464   $5,051      1.9%    10.2%
          Total assets            9,848     9,389    9,595      4.9      2.6
          Deposits                3,916     3,657    3,374      7.1     16.1
 
      (a)  Key's management accounting system utilizes a methodology for loan
           loss provisioning by line of business that reflects credit quality
           expectations within each line of business over a normal business
           cycle.  The "normalized provision for loan losses" assigned to each
           line as a result of this methodology does not necessarily track with
           net loan charge-offs at any given point in the cycle.
 
 
                            Consolidated Balance Sheets
                               (dollars in millions)
 
                                              3-31-01     12-31-00    3-31-00
     Assets
       Loans                                  $67,027     $66,905     $64,064
       Investment securities                    1,208       1,198       1,053
       Securities available for sale            6,900       7,329       6,269
       Short-term investments                   1,892       1,884       2,567
         Total earning assets                  77,027      77,316      73,953
       Allowance for loan losses               (1,001)     (1,001)       (979)
       Cash and due from banks                  2,484       3,189       2,757
       Premises and equipment                     703         717         761
       Goodwill                                 1,311       1,324       1,378
       Other intangible assets                     40          44          56
       Corporate-owned life insurance           2,241       2,215       2,132
       Accrued income and other assets          3,652       3,466       3,446
         Total assets                         $86,457     $87,270     $83,504
 
     Liabilities
       Deposits in domestic offices:
         Noninterest-bearing                   $8,329      $9,076      $8,283
         Interest-bearing                      36,152      35,519      34,718
       Deposits in foreign office-
        interest-bearing                        1,484       4,054       3,035
         Total deposits                        45,965      48,649      46,036
       Federal funds purchased and
        securities sold under repurchase
        agreements                              4,463       4,936       2,621
       Bank notes and other short-term
        borrowings                              8,721       6,957       8,015
       Accrued expense and other
        liabilities                             4,803       4,701       4,312
       Long-term debt                          14,495      14,161      14,784
       Capital securities of subsidiary
        trusts                                  1,308       1,243       1,243
         Total liabilities                     79,755      80,647      77,011
 
 
     Shareholders' equity                       6,702       6,623       6,493
 
     Total liabilities and shareholders'
      equity                                  $86,457     $87,270     $83,504
 
     Common shares outstanding (000)          424,414     423,254     437,590
 
 
                        Consolidated Statements of Income
                 (dollars in millions, except per share amounts)
 
                                                  Three months ended
                                             3-31-01     12-31-00    3-31-00
 
     Interest income                          $1,570      $1,652      $1,489
 
     Interest expense                            882         950         818
 
     Net interest income                         688         702         671
     Provision for loan losses                   110         108         183
                                                 578         594         488
     Noninterest income
      Trust and investment services income       141         150         160
      Investment banking and capital
       markets income                             65          94          89
      Service charges on deposit accounts         84          85          86
      Corporate-owned life insurance income       27          31          25
      Letter of credit and loan fees              29          34          23
      Net securities gains                        26          19           1
      Gains from divestitures                     --          --         332
      Other income                                83          95          90
        Total noninterest income                 455         508         806
     Noninterest expense
      Personnel                                  364         360         382
      Net occupancy                               57          55          57
      Computer processing                         62          62          59
      Equipment                                   38          42          48
      Marketing                                   27          28          22
      Amortization of intangibles                 26          25          25
      Professional fees                           18          19          19
      Restructuring charges                       (4)         (7)          7
      Other expense                              110         121         108
        Total noninterest expense                698         705         727
 
     Income before income taxes and
      cumulative effect of accounting
      change                                     335         397         567
      Income taxes                               117         131         200
 
     Income before cumulative effect of
      accounting change                          218         266         367
     Cumulative effect of accounting
      change, net of tax                          (1)         --          --
     Net income                                 $217        $266        $367
 
     Per Common Share
     Income before cumulative effect of
      accounting change                         $.51        $.63        $.83
     Net income                                  .51         .63         .83
 
     Per Common Share-assuming dilution
     Income before cumulative effect of
      accounting change                         $.51        $.62        $.83
     Net income                                  .51         .62         .83
 
     Weighted average common shares
      outstanding (000)                      424,024     425,054     441,834
     Weighted average common shares and
      potential common shares
      outstanding (000)                      429,917     430,634     443,757
 
     Taxable-equivalent adjustment                $7          $7          $7
 
 
           Consolidated Average Balance Sheets, Net Interest Income and
                                   Yields/Rates
                              (dollars in millions)
 
                                                        First Quarter 2001
                                                Average
                                                Balance     Interest Yield/Rate
     Assets
       Loans: (a)(b)
       Commercial, financial and
         agricultural                           $20,025       $406       8.22%
       Real estate -                  -                   -                   -
 commercial mortgage         6,897        147       8.63
       Real estate -                  -                   -                   -
 construction                5,273        117       9.03
       Commercial lease financing                 7,102        125       7.07
         Total commercial loans                  39,297        795       8.19
       Real estate -                  -                   -                   -
 residential                 4,172         81       7.74
       Home equity                               10,086        233       9.38
       Consumer - direct                          2,480         64      10.43
       Consumer - indirect lease financing        2,936         59       8.02
       Consumer - indirect other                  5,673        136       9.58
         Total consumer loans                    25,347        573       9.10
       Loans held for sale                        2,389         54       9.09
         Total loans                             67,033      1,422       8.57
       Taxable investment securities                892          7       3.24
       Tax-exempt investment securities(a)          317          8       8.83
         Total investment securities              1,209         15       4.70
       Securities available for sale(a,c)         7,026        120       6.87
       Short-term investments                     1,604         20       5.00
         Total earning assets                    76,872      1,577       8.28
       Allowance for loan losses                 (1,006)        --         --
       Accrued income and other assets           10,458         --         --
         Total assets                           $86,324         --         --
 
     Liabilities
       Money market deposit accounts            $12,070         95       3.17
       Savings deposits                           1,993          7       1.34
       NOW accounts                                 602          2       1.54
       Certificates of deposit
         ($100,000 or more)(d)                    5,994         92       6.25
       Other time deposits                       15,011        224       6.06
       Deposits in foreign office                 2,869         40       5.64
         Total interest-bearing deposits         38,539        460       4.84
       Federal funds purchased and
         securities sold under repurchase
         agreements                               5,263         70       5.39
       Bank notes and other short-
         term borrowings(d)                       7,532        105       5.67
       Long-term debt, including
         capital securities(d,e)                 15,412        247       6.58
         Total interest-bearing
           liabilities                           66,746        882       5.38
       Noninterest-bearing deposits               8,185         --         --
       Accrued expense and other liabilities      4,766         --         --
         Total liabilities                       79,697         --         --
 
     Shareholders' equity                         6,627         --         --
 
       Total liabilities and
         shareholders' equity                   $86,324         --         --
 
     Interest rate spread (TE)                       --         --       2.90%
     Net interest income (TE) and net
       interest margin (TE)                          --       $695       3.63%
     Capital securities                          $1,307        $24         --
     Taxable-equivalent adjustment(a)                --          7         --
 
                                                       Fourth Quarter 2000
                                                Average
                                                Balance     Interest Yield/Rate
     Assets
       Loans(a,b)
       Commercial, financial and
         agricultural                           $20,093       $451       8.92%
       Real estate -                  -                   -                   -
 commercial mortgage         6,855        162       9.42
       Real estate -                  -                   -                   -
 construction                5,164        129       9.97
       Commercial lease financing                 6,965        125       7.20
         Total commercial loans                  39,077        867       8.84
       Real estate -                  -                   -                   -
 residential                 4,232         81       7.68
       Home equity                                9,591        228       9.45
       Consumer - direct                          2,582         69      10.57
       Consumer - indirect lease financing        3,023         62       8.16
       Consumer - indirect other                  5,813        141       9.72
         Total consumer loans                    25,241        581       9.18
       Loans held for sale                        2,220         51       9.13
         Total loans                             66,538      1,499       8.98
       Taxable investment securities                898          8       3.73
       Tax-exempt investment securities(a)          344          8       8.73
         Total investment securities              1,242         16       5.12
       Securities available for sale(a,c)         6,807        121       7.02
       Short-term investments                     1,449         23       6.20
         Total earning assets                    76,036      1,659       8.69
       Allowance for loan losses                   (989)        --         --
       Accrued income and other assets           10,380         --         --
         Total assets                           $85,427         --         --
 
     Liabilities
       Money market deposit accounts            $11,873        103       3.44
       Savings deposits                           2,045          7       1.32
       NOW accounts                                 600          2       1.55
       Certificates of deposit
         ($100,000 or more)(d)                    5,789         94       6.44
       Other time deposits                       15,037        232       6.15
       Deposits in foreign office                 3,265         54       6.60
         Total interest-bearing deposits         38,609        492       5.07
       Federal funds purchased and
         securities sold under repurchase
         agreements                               5,859         93       6.33
       Bank notes and other short-
         term borrowings(d)                       6,446        101       6.22
       Long-term debt, including
         capital securities(d,e)                 15,235        264       6.91
         Total interest-bearing
           liabilities                           66,149        950       5.72
       Noninterest-bearing deposits               8,363         --         --
       Accrued expense and other liabilities      4,368         --         --
         Total liabilities                       78,880         --         --
 
     Shareholders' equity                         6,547         --         --
 
       Total liabilities and
         shareholders' equity                   $85,427         --         --
 
     Interest rate spread (TE)                       --         --       2.97%
     Net interest income (TE) and net
       interest margin (TE)                          --       $709       3.71%
     Capital securities                          $1,243        $24         --
     Taxable-equivalent adjustment(a)                --          7         --
 
                                                    First Quarter 2000
                                                Average
                                                Balance     Interest Yield/Rate
     Assets
       Loans:(a,b)
       Commercial, financial and
         agricultural                           $18,677       $379       8.17%
       Real estate -                  -                   -                   -
 commercial
         mortgage                                 6,891        150       8.74
       Real estate -                  -                   -                   -
 construction                4,601        104       9.12
       Commercial lease financing                 6,684        122       7.28
         Total commercial loans                  36,853        755       8.23
       Real estate -                  -                   -                   -
 residential                 4,318         81       7.48
       Home equity                                8,129        179       8.85
       Consumer - direct                          2,572         62       9.72
       Consumer - indirect lease financing        3,174         63       7.93
       Consumer - indirect other                  6,286        145       9.22
         Total consumer loans                    24,479        530       8.67
       Loans held for sale                        2,692         65       9.80
         Total loans                             64,024      1,350       8.47
       Taxable investment securities                580          4       2.94
       Tax-exempt investment securities(a)          436         10       8.74
         Total investment securities              1,016         14       5.43
       Securities available for sale(a,c)         6,475        112       6.81
       Short-term investments                     2,164         20       3.66
         Total earning assets                    73,679      1,496       8.15
       Allowance for loan losses                   (899)        --         --
       Accrued income and other assets           10,407         --         --
         Total assets                           $83,187         --         --
 
     Liabilities
       Money market deposit accounts            $12,617        104       3.32
       Savings deposits                           2,357          9       1.61
       NOW accounts                                 627          3       1.62
       Certificates of deposit
         ($100,000 or more)(d)                    5,555         80       5.78
       Other time deposits                       12,552        164       5.25
       Deposits in foreign office                 1,206         17       5.76
         Total interest-bearing deposits         34,914        377       4.34
       Federal funds purchased and
         securities sold under repurchase
         agreements                               4,003         48       4.85
       Bank notes and other short-
         term borrowings(d)                       8,680        126       5.83
       Long-term debt, including
         capital securities(d,e)                 16,577        267       6.49
         Total interest-bearing
           liabilities                           64,174        818       5.13
       Noninterest-bearing deposits               8,160         --         --
       Accrued expense and other liabilities      4,344         --         --
         Total liabilities                       76,678         --         --
 
     Shareholders' equity                         6,509         --         --
 
       Total liabilities and
         shareholders' equity                   $83,187         --         --
 
     Interest rate spread (TE)                       --         --       3.02%
     Net interest income (TE) and net
       interest margin (TE)                          --       $678       3.68%
     Capital securities                          $1,243        $23         --
     Taxable-equivalent adjustment(a)                --          7         --
 
     (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.
     (e) Rate calculation excludes ESOP debt.
 
     TE = Taxable Equivalent
 
 SOURCE  KeyCorp

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