UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15d of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 15, 2003
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(Exact name of registrant as specified in its charter)
Ohio 0-850 34-6542451
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(State or other jurisdiction of Commission File Number (I.R.S. Employer Identification No.)
incorporation or organization)
127 Public Square, Cleveland, Ohio 44114-1306
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 689-6300
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
On January 15, 2003, the Registrant issued a press release announcing its
earnings results for the three- and twelve-month period ended December 31, 2002.
This press release, dated January 15, 2003, is attached as Exhibit 99.1 to this
report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) Exhibits
99.1 The Registrant's January 15, 2003, press release announcing its
earnings results for the three- and twelve-month period ended
December 31, 2002.
ITEM 9. REGULATION FD DISCLOSURE
On January 15, 2003, the Registrant conducted a conference call/webcast to
discuss its quarterly earnings and currently anticipated earnings trends. The
slide presentation reviewed by the Registrant in the conference call/webcast
follows as Annex A to this Item 9.
Annex A
1
FOURTH QUARTER 2002 REVIEW
JANUARY 15, 2003
SPEAKERS: HENRY MEYER
JEFF WEEDEN
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2
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
FORWARD-LOOKING STATEMENT DISCLOSURE
The conference call and discussion, including related questions and answers, and
presentation materials, contain forward-looking statements about issues like
anticipated first quarter and full-year 2003 earnings, anticipated level of net
loan charge-offs and nonperforming assets and anticipated improvement in
profitability and competitiveness. Forward-looking statements by their nature
are subject to assumptions, risks and uncertainties. Actual results could differ
materially from those contained in or implied by such forward-looking statements
for a variety of factors including: changes in interest rates; continued
weakness 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; new legal obligations or
restrictions or unfavorable resolution of litigation; further disruption in the
economy or the general business climate as a result of terrorist activities or
military actions; and changes in accounting, tax or regulatory practices or
requirements.
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3
STRATEGIC OVERVIEW
- DEPOSIT GROWTH
- EXPENSE MANAGEMENT
- CREDIT QUALITY
- UNION BANKSHARES ACQUISITION
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4
FINANCIAL SUMMARY - 4Q02
- EPS OF $0.57
- TOTAL REVENUE UP $26 MILLION
- NONPERFORMING LOANS DECLINED
- REPURCHASED 1.2 MILLION SHARES
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5
NET INTEREST INCOME & MARGIN (TE)
$ IN MILLIONS
[BAR GRAPH]
4Q01 1Q02 2Q02 3Q02 4Q02
---- ---- ---- ---- ----
NET INTEREST
INCOME $726 $702 $721 $722 $724
NET INTEREST
MARGIN 3.98% 3.93% 3.98% 3.99% 3.98%
AVG. EARNING
ASSETS $ 72,706 $ 71,981 $ 72,579 $ 72,083 $ 72,554
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6
NONINTEREST INCOME 4Q02 VS. 3Q02
IN MILLIONS
NONINTEREST INCOME 3Q02 $ 432
Investment Banking & Capital Markets 8
Net Securities Gains 5
Trust & Investment Services (9)
All other-net 10
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Total 14
NONINTEREST INCOME 4Q02 $ 446
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7
NONINTEREST EXPENSE 4Q02 VS. 3Q02
IN MILLIONS
NONINTEREST EXPENSE 3Q02 $ 659
Personnel (4)
Professional Fees 8
All other 5
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Total 9
NONINTEREST EXPENSE 4Q02 $ 668
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8
NET CHARGE-OFFS BY LOAN TYPE
IN MILLIONS 4Q01 1Q02 2Q02 3Q02 4Q02
----------- ---- ---- ---- ---- ----
CONTINUING PORTFOLIO
Commercial $ 62 $ 69 $ 76 $ 84 $ 84
Consumer 71 67 59 51 63
---- ---- ---- ---- ----
133 136 135 135 147
RUN-OFF PORTFOLIO &
LOAN SALES 87 70 68 50 39
---- ---- ---- ---- ----
TOTAL NET C/O $220 $206 $203 $185 $186
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9
ASSET QUALITY INDICATORS
$ IN MILLIONS 4Q01 1Q02 2Q02 3Q02 4Q02
------------- ---- ---- ---- ---- ----
Nonperforming Loans $ 910 $ 973 $ 957 $ 987 $ 943
to EOP Loans 1.44% 1.52% 1.50% 1.57% 1.51%
Nonperforming Assets $ 947 $1,012 $ 995 $1,017 $ 993
to EOP Loans + OREO 1.49% 1.58% 1.56% 1.61% 1.59%
Net C/O $ 220 $ 206 $ 203 $ 185 $ 186
to Average Loans 1.37% 1.32% 1.27% 1.16% 1.18%
Allowance $1,677 $1,607 $1,539 $1,489 $1,452
to Total Loans 2.65% 2.51% 2.41% 2.37% 2.32%
to Nonperforming Loans 184% 165% 161% 151% 154%
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10
RUN-OFF PORTFOLIO &
NONREPLENISHING RESERVES
IN MILLIONS
12/31/01 3/31/02 6/30/02 9/30/02 12/31/02
-------- ------- ------- ------- --------
COMMITMENTS $ 1,694 $ 1,532 $ 1,143 $ 1,005 $ 940
OUTSTANDINGS 1,023 941 724 662 599
ALLOWANCE FOR
LOAN LOSSES 275 205 137 87 48
NPLs 231 208 132 91 85
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11
FIRST QUARTER 2003 OUTLOOK
(COMPARED WITH 4Q02)
COMMENTS
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REVENUE NIM pressure due to rate environment
Seasonal decline in noninterest income
EXPENSES Higher employee benefits cost
Continued focus on expense control
CREDIT QUALITY
NPLs Stable to down
Net Charge-offs Stable to down
Watch List Stable to down
EPS Down from 4Q02
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KEYCORP
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(Registrant)
Date: January 15, 2003 /s/ Lee Irving
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By: Lee Irving
Executive Vice President
and Chief Accounting Officer