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KeyCorp Reports First Quarter Net Income of $250 Million
CLEVELAND -- KeyCorp recently reported first quarter net income of $250 million, or 59 cents per diluted common share. These results compare with net income of $217 million, or 51 cents per share, for the first quarter of 2003."Relative to the year-ago quarter, revenue grew, expenses were stable and asset quality improved significantly," says Chairman and Chief Executive Officer Henry L. Meyer III. "We are particularly pleased with the improved performance of Key's market-sensitive businesses, including trust and investment services, and principal investing. These businesses contributed to a 9% increase in total noninterest income from that reported one year ago. They have benefited not only from strengthening equity markets, but also from the integration of our banking, investments and trust businesses, and our focus on targeted client segments. The improvement in asset quality continues a trend that has been in place for well over a year. Nonperforming loans fell for the sixth consecutive quarter, and net loan charge-offs declined to their lowest level since the first quarter of 2001."Taxable-equivalent net interest income was $685 million for the first quarter of 2004, compared with $703 million for the year-ago quarter. A 12 basis point reduction in Key's net interest margin drove the decrease, as the level of Key's average earning assets was essentially unchanged. Declines in commercial real estate lending and indirect automobile lease financing were offset by the growth in commercial lease financing and home equity lending.Key's noninterest income was $431 million for the first quarter of 2004, up from $397 million for the first three months of 2003. Stronger financial markets contributed to a $14 million increase in income from trust and investment services. In addition, Key recorded net gains of $10 million from principal investing in the first quarter of 2004, compared with net losses of $3 million for the year-ago quarter. Noninterest income also benefited from a $14 million decrease in losses incurred on the residual values of leased vehicles and equipment, and a $10 million increase in net gains from loan sales. These positive results were partially offset by lower income from trading activities and from service charges on deposit accounts.Key's provision for loan losses was $81 million for the first quarter of 2004, down from $123 million for the fourth quarter of 2003 and $130 million for the year-ago quarter.Key's allowance for loan losses stood at $1.3 billion, or 2.09% of loans outstanding at March 31, compared with $1.4 billion, or 2.24% at Dec. 31, 2003, and $1.4 billion, or 2.27% at March 31, 2003. At March 31, the allowance for loan losses represented 222% of nonperforming loans, compared with 203% at Dec. 31, 2003, and 157% a year ago. Key's capital ratios continued to exceed all well-capitalized regulatory benchmarks at March 31. In addition, Key's tangible equity to tangible assets ratio was 6.98% at quarter end, compared with 6.94% at Dec. 31, 2003, and 6.71% at March 31, 2003.During the first quarter of 2004, Key repurchased eight million of its common shares under an authorization that allows for the repurchase of up to 25 million shares. At March 31, there were 13 million shares remaining for repurchase under that authorization.Net income for Consumer Banking was $109 million for the first quarter of 2004, representing a $9 million increase from the year-ago quarter. The increase was attributable to a significant reduction in the provision for loan losses and growth in noninterest income. The positive effects of these factors were offset in part by a decrease in taxable-equivalent net interest income and an increase in noninterest expense.Noninterest income increased by $8 million, or 7%, due largely to a $13 million reduction in net losses incurred on the residual values of leased vehicles and a $10 million increase in net gains from the sales of loans (primarily those in the home equity portfolio), both in the Consumer Finance line of business. These improvements were offset in part by a $7 million reduction in service charges on deposit accounts (primarily those generated in the Retail Banking line of business), which resulted from lower overdraft and maintenance fees. Maintenance fees were lower because a higher proportion of Key's clients have elected to use Key's free checking products.Net income for Corporate and Investment Banking was $115 million for the first quarter of 2004, up from $95 million for the same period last year. A significant reduction in the provision for loan losses and an increase in noninterest income drove the improvement, and more than offset a decrease in taxable-equivalent net interest income and a slight increase in noninterest expense.The provision for loan losses decreased by $29 million, or 58%, as a result of improved asset quality, primarily in the Corporate Banking line of business.Visit KeyCorp: http://www.key.com/ "