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): December 20, 2001
[KEYCORP LOGO]
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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 Commission File Number (I.R.S. Employer Identification No.)
of incorporation or
organization)
127 Public Square, Cleveland, Ohio 44114-1306
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (216) 689-6300
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
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On December 20, 2001, the Registrant issued a press release announcing actions
taken to build the loan loss reserve and strengthen the balance sheet. The
Registrant also announced that its Board of Directors increased the cash
dividend on its common stock. This press release, dated December 20, 2001, is
attached as Exhibit 99.1 to this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(c) Exhibits
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99.1 The Registrant's December 20, 2001, press release announcing:
(a) actions taken to build the loan loss reserve and strengthen
the balance sheet and (b) that its Board of Directors increased
the cash dividend on its common stock.
ITEM 9. REGULATION FD DISCLOSURE
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On December 20, 2001, the Registrant conducted a conference call/webcast to
discuss the press release. The slide presentation reviewed by the Registrant in
the conference call/webcast follows as Annex A to this Item 9.
1
Annex A
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DECEMBER 20, 2001
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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 fourth quarter and full-year 2001 earnings, anticipated levels of
net loan charge-offs and nonperforming assets and anticipated improvements 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; changes in law imposing new
legal obligations or restrictions or unfavorable resolution of litigation;
disruption in the economy or business operations or activities as a result of
terrorist activities or military actions; and changes in accounting, tax or
regulatory practices or requirements.
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TODAY'S ANNOUNCEMENT
- Builds loan loss reserve
- Decisive response to economic environment
- Improves Key's position relative to its peers
- Strengthens balance sheet
- Addresses impact of September 11 events on principal investing
portfolio
- Creates reserve for customer derivative losses
- Increases dividend 1.7% - 37th consecutive year
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ANTICIPATED EARNINGS CHARGES
IN MILLIONS, EXCEPT PER SHARE DATA
PRE-TAX AFTER-TAX EPS
------- --------- ---
Loan Loss Provision (Continuing) $425 $268 $0.63
Loan Loss Provision (Run-off/ 165 104 0.24
loan sales/non-replenishing reserve)
Principal Investing Write-downs 45 28 0.07
Customer Derivatives 15 10 0.02
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Total Charges $650 $410 $0.96
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STRENGTHENING THE LOAN LOSS RESERVE
CONTINUING PORTFOLIO RUNOFF PORTFOLIO TOTAL PORTFOLIO
DOLLARS IN MILLIONS 3Q01 4Q01 EST. 3Q01 4Q01 EST. 3Q01 4Q01 EST.
---- --------- ---- --------- ---- ---------
EST.
Allowance $1,002 $1,428 $172 $242 $1,174 $1,670
to Total Loans 1.58% 2.29% 14.63% 22.88% 1.82% 2.64%
to Nonperforming Loans 154% 217% 74% 96% 133% 183%
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STRENGTHENING THE LOAN LOSS RESERVE
Pro Forma
3Q01 * 3Q01 *
Peer Rank Peer Rank
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Reserve/Total Loans #5 #2
Reserve/NPLs #11 #6
Reserve/NCOs #11 #7
* Rankings are based on 12 bank peer group as of 9/30/01
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STRONG CAPITAL POSITION
Tangible Common Equity Ratio
[CHART]
4Q00 1Q01 2Q01 3Q01 4Q01
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Tangible Common Equity Ratio 6.12% 6.29% 6.25% 6.51% 6.89%
Tangible Common Equity Ratio
With Special Charges 6.43%
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SUMMARY OF SIGNIFICANT
STRATEGIC ACTIONS - 2001
- Accelerated downsizing of auto business
- Reduced auto leases and indirect loans by $1.2 billion
- Exit non-relationship corporate lending
- Runoff portfolio reduced by $490 million
- Sold $3.6 billion of loans
- Reduced dependence on wholesale funding by $2.1 billion
- Added $669 million to loan loss reserve
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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: December 20, 2001 /s/ Lee Irving
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By: Lee Irving
Executive Vice President
and Chief Accounting Officer