KeyCorp reports second quarter net loss, dividends announced

first_imgKeyCorp (NYSE: KEY) today announced a second quarternet loss from continuing operations attributable to Key of $236 million, or $.69 per common share. Per share results for the current quarter are after cash and deemed preferred stock dividends of $164 million, or $.28 per common share. These dividends include a noncash deemed dividend of $114 million related to the exchange of Key common shares for Key s Series A Preferred Stock as part of the company s efforts to raise an additional $1.8 billion of Tier 1 common equity, and a cash dividend payment of $31 million made to the U.S. Treasury Department under the Capital Purchase Program. Results for the current quarter compare to a net loss from continuing operations of $1.128 billion, or $2.71 per common share, for the second quarter of 2008.The loss for the current quarter is largely the result of an increase in the provision for loan losses. During the second quarter, Key continued to build its loan loss reserves by taking an $850 million provision for loan losses, which exceeded net charge-offs by $311 million. As of the end of the quarter, Key s allowance for loan losses was $2.5 billion, or 3.53% of total loans, up from $1.4 billion, or 1.87% one year ago. The loss for the year-ago quarter was largely attributable to a $1.011 billion after-tax charge recorded as a result of an adverse federal tax court ruling that impacted Key s accounting for certain lease financing transactions. Our results continue to reflect the weak economic environment and the aggressive steps we ve taken to address credit quality, strengthen our capital position and control costs as we manage through this difficult credit cycle, said Chief Executive Officer Henry L. Meyer III.During the second quarter, Key successfully raised more than $1.8 billion in new Tier 1 common equity as required by the Supervisory Capital Assessment Program ( SCAP ) initiated by the U.S. Treasury and, as of today, is well on its way to further supplement that amount through an additional offer to exchange common shares for retail capital securities, which is currently in progress. The additional capital will serve as a buffer in the event the U.S. economy worsens considerably through 2010. Throughout the current financial crisis, Key s capital ratios have remained in excess of the well-capitalized levels established by the federal regulators. At June 30, 2009, Key had a Tier 1 risk-based capital ratio of 12.42% and a Tier 1 common equity ratio of7.27%.Meyer continued: Key s fortified capital position will also enable us to support our clients borrowing needs and benefit from other business opportunities when the economy recovers. During the second quarter, Key originated approximately $8.2 billion in new or renewed loans and commitments to consumers and businesses. In conjunction with our efforts to improve Key s competitive position, late last year we initiated a process known as Keyvolution, a corporate-wide initiative designed to build a consistently superior experience for clients, simplify processes, improve speed to market and enhance Key s ability to seize growth and profit opportunities, Meyer said. Through this initiative, we expect to achieve annualized cost savings of $300 million to $375 million by 2012.Over the past fifteen months, we have been addressing certain noncore businesses, such as retailmarine and private student lending activities. We have also deployed new teller platform technology throughout our company. These and other efforts have resulted in a reduction in our employee workforce of approximately 8%, or 1,500 positions, over the fifteen month period.Compared to the year-ago quarter, our personnel costs are down 6%. Additionally, we have continued to build upon our relationship-based, client-focused business model. Our Community Banking business continues to benefit from these efforts as evidenced by a $2.7 billion, or 5%, increase in deposits compared to the second quarter of 2008.DIVIDENDSKeyCorp (NYSE: KEY) announced July 20, 2009, that its Board of Directors approved the following dividends for the third quarter, 2009:– A regular cash dividend of $0.01 per share of its common shares, or $0.04 per share on an annualized basis. The dividend is payable September 15, 2009 to shareholders of record on September 1, 2009.– A cash dividend of $1.9375 per share on the Corporation’s outstanding 7.750% Non-cumulative Perpetual Convertible Preferred Stock, Series A. The dividend is payable September 15, 2009 to holders of record on August 28, 2009, for the dividend period commencing on June 15, 2009.Cleveland-based KeyCorp is one of the nation’s largest bank-based financial services companies, with assets of approximately $98 billion. BusinessWeek Magazine named Key the top bank in its Customer Service Champ 2009 edition, ranking Key 11th out of the top-25 companies that include many known for their customer service acumen. Key companies provide investment management, retail and commercial banking, consumer finance, and investment banking products and services to individuals and companies throughout the United States and, for certain businesses, internationally. For more information, visit https://www.key.com/(link is external). INVESTOR KEY MEDIA RELATIONS: www.key.com/ir(link is external) NEWSROOM : www.key.com/newsroom(link is external)SOURCE KeyCorp.last_img

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