KeyCorp
June 30, 2011 – 4:07 pm
Business Profile
KeyCorp is a bank and financial holding firm and was established in 1958 under the State of Ohio laws. The Company is headquartered in Cleveland, Ohio. The Company’s stock is listed on the New York Stock Exchange under the ticker KEY. The Company had total assets of $92.3 billion as of December 31, 2006. The bank provides a wide variety of financial services and products through its subsidiaries. Key services include commercial and retail banking, investment management, commercial leasing, investment banking, and consumer finance services and products to corporate, individual, and institutional clients.
The Company provides all these products through a network of 950 banking centers, telephone banking center and 2,050 Automated Teller Machines in sixteen US states. The company along with its subsidiaries employs approximately 20,000 people.
The Company also offers corporate and personal trust services, personalized financial services, mutual funds, capital market and investment banking products, cash management services, and international banking services. The Company’s investment management clients include public retirement plans, large corporate, endowments and foundations, and high net worth (HNIs).
The Company’s non bank subsidiaries offers other services such as health, credit-life and accident insurance, principal investing, financing for community development, merchant services, securities brokerage and underwriting and other financial products. Merchant services are offered by its joint venture company, Key Merchant Services, LLC.
KeyCorp aims to achieve 16%-18% annual return on equity and to grow EPS at an annual rate of 8%-10%. The Company’s corporate strategy includes six elements which includes
• Core businesses focus. The Company concentrates only in the regions where it has banking centers that serve small businesses, individuals and mid-market companies. Additionally, the bank focuses on commercial real estate loans, equipment leasing and investment management across the country.
• Relationship building. The bank focuses on developing existing relationships and building relationships with new customers that can potentially purchase multiple financial services and products.
• Business enhancement. The Company looks for continual improvement in all its area of operations including increasing revenues, reducing expenses and improving credit quality.
• Build a competent team by attracting and retaining high quality people, developing leadership qualities, and building positive environment.
• Performance enhancement. Maximize shareholder’s return by refining and relying on an effective performance measurement and enhancement tools.
• Effective capital management. Effective manage the Company’s capital through share repurchase and by investing in core businesses.
The Company’s net interest income increased 6.0% to $2,815 million in 2006 from $2,656 million in 2005. The Company’s non interest income also increased 2.9% to $2,127 million in 2006 from $2,067 million in 2005. However, the Company’s net income declined 6.6% to $1,055 million in 2006 from $1,129 million in 2005.
KeyCorp’s total assets also declined 0.8% to $92,337 million as of December 31, 2006 compared with $93,126 million as of December 31, 2005. During the same period, the Company’s total earning assets declined 0.1% to $80,090 million as of December 31, 2006 from $80,143 million as of December 31, 2005. KeyCorp’s total loans also declined 1.0% to $65,826 million as of December 31, 2006 compared with $66,478 million as of December 31, 2005. The Company’s total deposit grew 0.6% to $59,116 million as of December 31, 2006 compared with $58,765 million as of December 31, 2005. The Company’s total equity increased 1.4% to $7.7 billion as of December 31, 2006 from $7.6 billion as of December 31, 2005.
The Company operates through two primary business groups – National Banking and Community Banking.
Community Banking. Net income of Community Banking increased 1.7% to $427 million in 2006, from $420 million in 2005 primarily driven by increase in net interest income, a marginal increase in non interest income and reduction in provision for loan losses, partly offset by an increase in non interest expense.
McDonald Investments, a fully-owned subsidiary of the Company, sold its banking branches including about 570 financial advisors and support staff to UBS Financial Services, a UBS AG subsidiary. Through this transaction executed in February 2007, the Company earned cash proceeds of about $219 million. Earlier, in 2004, the bank gained market share through acquisition of EverTrust Financial Group having assets and deposits of approximately $780 million and $570 million, respectively. The Company has also acquired Sterling Bank & Trust’s 10 branches and about $380 million of deposits.
National Banking. Income from continuing business of the segment increased 10.7% to $701 million in 2006 from $633 million in 2005 primarily driven by growth in net interest and non interest income and partly offset by higher loan loss provision and rise in non interest expense.
The Company completed a number of acquisitions in the last three years gaining market share and strengthening its business position. In 2006, the Company expanded its asset management services with acquisition of Austin Capital Management. In 2005, KeyCorp acquired Malone Mortgage Company and ORIX Capital Markets’ commercial mortgage servicing business.