KeyCorp (NYSE: KEY) today announced fourth quarter net income from continuing operations attributable to Key common shareholders of $201 million, or $.21 per common share. Key's fourth quarter 2011 results compare to net income from continuing operations attributable to Key common shareholders of $292 million, or $.33 per common share, for the fourth quarter of 2010. The results for the fourth quarter of 2011 were negatively impacted by a $24 million charge resulting from VISA's late fourth quarter announcement of a planned litigation escrow deposit. In addition, Key recorded a $28 million gain on the sale of Tuition Management Systems during the fourth quarter of 2010. Fourth quarter 2011 net income attributable to Key common shareholders was $194 million compared to net income attributable to Key common shareholders of $279 million for the same quarter one year ago.
Net income from continuing operations of$201 million, or$.21per common share, for the fourth quarter of 2011
Full year net income from continuing operations of$857 million, or$.92per common share
Net interest margin of 3.13%, up four basis points from the third quarter of 2011
Average total loans increased$656 millionfrom the third quarter of 2011
Net charge-offs declined to$105 million, or .86% of average loan balances for the fourth quarter of 2011
Nonperforming loans declined to$727 million, or 1.47% of period-end loans, and nonperforming assets decreased to$859 million
Loan loss reserve at 2.03% of total period-end loans and 138% of nonperforming loans atDecember 31, 2011
VISA planned litigation escrow deposit resulted in a$24 millioncharge during the fourth quarter of 2011
Tier 1 common equity and Tier 1 risk-based capital ratios estimated at 11.28% and 13.01%, respectively, atDecember 31, 2011
For 2011, net income from continuing operations attributable to Key common shareholders was $857 million, or $.92 per common share, compared to net income from continuing operations attributable to Key common shareholders of $413 million, or $.47 per common share, for 2010. The results for 2011 reflect lower credit costs and an improvement in noninterest expense as compared to 2010. Net income attributable to Key common shareholders for the year ended December 31, 2011, was $813 million compared to net income attributable to Key common shareholders of $390 million for 2010.
During the fourth quarter of 2011, the Company continued to benefit from improved asset quality. Nonperforming loans decreased by $341 million and nonperforming assets declined by $479 million from the year-ago quarter to $727 million and $859 million, respectively. Net charge-offs declined to $105 million, or .86% of average loan balances for the fourth quarter of 2011, compared to $256 million, or 2.00% of average loan balances for the same period one year ago.
Chairman and Chief Executive Officer Beth Mooney stated, "Key's fourth quarter results reflect continued improvement in credit quality and the third consecutive quarter of growth in our commercial, financial and agricultural loan portfolio. We are encouraged by this growth and believe it demonstrates our ability to leverage the alignment of our franchise across business lines to support the needs of our clients. Further, these results confirm our belief that the inflection point for loan growth was reached in the third quarter of 2011."
The Company originated new or renewed lending commitments to consumers and businesses of approximately $10.5 billion during the quarter and $36.6 billion for 2011. This annual amount compares to approximately $29.5 billion in 2010, an increase of 24%.
Mooney continued: "We are pleased by the positive survey results that tell us that Key's customer satisfaction, loyalty and retention scores continue to exceed those of other large U.S. banks. This includes the customer satisfaction survey by American Customer Satisfaction Index showing that Key is one of only two large banks that improved its overall customer satisfaction score for two consecutive years. This accomplishment, in the face of an extremely difficult operating environment, demonstrates the success of our client-focused relationship strategy. Key also ranked fifth nationwide in overall customer satisfaction in the J.D. Power and Associates 2011 Small Business Banking Satisfaction Survey."
Results of Operations
Three months ended
Twelve months ended
in millions, except per share amounts
12-31-11
9-30-11
12-31-10
12-31-11
12-31-10
Summary of operations
Income (loss) from continuing operations attributable to Key
$
207
$
234
$
333
$
964
$
577
Income (loss) from discontinued operations, net of taxes (a)
(7)
(17)
(13)
(44)
(23)
Net income (loss) attributable to Key
$
200
$
217
$
320
$
920
$
554
Income (loss) from continuing operations attributable to Key
$
207
$
234
$
333
$
964
$
577
Less:
Dividends on Series A Preferred Stock
6
5
6
23
23
Cash dividends on Series B Preferred Stock(b)
‘
‘
31
31
125
Amortization of discount on Series B Preferred Stock (b)
‘
‘
4
53
16
Income (loss) from continuing operations attributable to Key common shareholders
201
229
292
857
413
Income (loss) from discontinued operations, net of taxes (a)
(7)
(17)
(13)
(44)
(23)
Net income (loss) attributable to Key common shareholders
$
194
$
212
$
279
$
813
$
390
Per common share ‘ assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders
$
.21
$
.24
$
.33
$
.92
$
.47
Income (loss) from discontinued operations, net of taxes(a)
(.01)
(.02)
(.02)
(.05)
(.03)
Net income (loss) attributable to Key common shareholders (c)
$
.20
$
.22
$
.32
$
.87
$
.44
(a) InSeptember 2009, management decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. InApril 2009, management decided to wind down the operations of Austin Capital Management, Ltd., a subsidiary that specialized in managing hedge fund investments for institutional customers. As a result of these decisions, Key has accounted for these businesses as discontinued operations. The loss from discontinued operations for the year endedDecember 31, 2011, was primarily attributable to fair value adjustments related to the education lending securitization trusts.
(b) The year endedDecember 31, 2011, includes a$49 milliondeemed dividend recorded in the first quarter of 2011 related to the repurchase of the$2.5 billionSeries B Preferred Stock.
(c) Earnings per share may not foot due to rounding.
CLEVELAND, January 24, 2012