KeyBank 2006 Annual Report Download - page 30

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30
MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES
FIGURE 6. AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND YIELDS/RATES FROM CONTINUING OPERATIONS
Year ended December 31, 2006 2005 2004
Average Yield/ Average Yield/ Average Yield/
dollars in millions Balance Interest Rate Balance Interest Rate Balance Interest Rate
ASSETS
Loans
a,b
Commercial, financial and agricultural
c
$21,679 $1,547 7.13% $19,480 $1,083 5.56% $17,119 $ 762 4.45%
Real estate — commercial mortgage 8,167 628 7.68 8,403 531 6.32 7,032 354 5.03
Real estate — construction 7,802 635 8.14 6,263 418 6.67 4,926 250 5.08
Commercial lease financing
c
9,773 595 6.08 10,122 628 6.21 8,269 487 5.90
Total commercial loans 47,421 3,405 7.18 44,268 2,660 6.01 37,346 1,853 4.96
Real estate — residential 1,430 93 6.49 1,468 90 6.10 1,563 94 6.01
Home equity 10,971 775 7.07 11,094 687 6.20 11,903 625 5.25
Consumer — direct 1,639 152 9.26 1,834 158 8.60 2,048 154 7.52
Consumer — indirect 3,535 238 6.73 3,333 217 6.51 5,366 411 7.66
Total consumer loans 17,575 1,258 7.16 17,729 1,152 6.50 20,880 1,284 6.15
Total loans 64,996 4,663 7.17 61,997 3,812 6.15 58,226 3,137 5.39
Loans held for sale 4,168 325 7.80 3,637 254 6.99 2,509 114 4.55
Investment securities
a
47 3 7.43 76 5 7.30 85 8 8.69
Securities available for sale
d
7,302 347 4.71 7,118 327 4.58 7,214 327 4.55
Short-term investments 1,648 63 3.82 1,860 52 2.79 2,184 35 1.56
Other investments
d
1,362 82 5.78 1,379 54 3.79 1,257 35 2.77
Total earning assets 79,523 5,483 6.88 76,067 4,504 5.92 71,475 3,656 5.11
Allowance for loan losses (952) (1,103) (1,276)
Accrued income and other assets 13,131 12,945 13,090
Total assets $91,702 $87,909 $83,289
LIABILITIES AND SHAREHOLDERS’ EQUITY
NOW and money market deposit accounts
$25,044 710 2.84 $22,696 360 1.59 $20,175 147 .73
Savings deposits 1,728 4 .23 1,941 5 .26 2,007 5 .23
Certificates of deposit ($100,000 or more)
e
5,581 261 4.67 4,957 189 3.82 4,834 178 3.71
Other time deposits 11,592 481 4.14 10,789 341 3.16 10,564 304 2.88
Deposits in foreign office
f
2,305 120 5.22 2,662 81 3.06 1,438 6 .40
Total interest-bearing deposits 46,250 1,576 3.41 43,045 976 2.27 39,018 640 1.64
Federal funds purchased and securities
sold under repurchase agreements
f
2,215 107 4.80 2,577 71 2.74 3,129 22 .71
Bank notes and other short-term borrowings
2,284 94 4.12 2,796 82 2.94 2,631 42 1.59
Long-termdebt
e,f,g,h
13,983 788 5.62 14,094 598 4.32 14,304 402 2.93
Total interest-bearing liabilities 64,732 2,565 3.96 62,512 1,727 2.77 59,082 1,106 1.89
Noninterest-bearing deposits 13,053 12,001 11,172
Accrued expense and other liabilities 6,183 6,073 6,098
Shareholders’ equity 7,734 7,323 6,937
Total liabilities and
shareholders’ equity $91,702 $87,909 $83,289
Interest rate spread (TE) 2.92% 3.15% 3.22%
Net interest income (TE) and net
interest margin (TE) 2,918 3.67% 2,777 3.65% 2,550 3.62%
TE adjustment
a
103 121 94
Net interest income, GAAP basis $2,815 $2,656 $2,456
Capital securities —— — — — —
a
Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutoryfederal income tax rate of 35%.
b
For purposes of these computations, nonaccrual loans are included in average loan balances.
c
During the first quarter of 2006, Key reclassified $760 million of average loans and related interest income from the commercial lease financing portfolio to the commercial, financial
and agricultural portfolio to more accurately reflect the nature of these receivables. Balances presented for prior periods were not reclassified as the historical data was not available.
d
Yield is calculated on the basis of amortized cost.
e
Rate calculation excludes basis adjustments related to fair value hedges. See Note 19 (“Derivatives and Hedging Activities”), which begins on page 100, for an explanation of fair value hedges.
f
Results from continuing operations exclude the dollar amount of liabilities assumed necessaryto supportinterest-earning assets held by the discontinued Champion Mortgage finance business.
The interest expense related to these liabilities, which also is excluded from continuing operations, was calculated using a matched funds transfer pricing methodology.
g
Rate calculation excludes ESOP debt for the year ended December 31, 2001.
h
Long-term debt includes capital securities prior to July 1, 2003. Effective July 1, 2003, the business trusts that issued the capital securities were de-consolidated in accordance with FASB
Revised Interpretation No. 46.
TE = Taxable Equivalent, N/M = Not Meaningful
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