KeyBank 2006 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2006 KeyBank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 106

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106

44
MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES
Figure 24 below shows activities that caused the change in Key’s outstanding common shares over the past two years.
2006 Quarters
in thousands 2006 Fourth Third Second First 2005
SHARES OUTSTANDING AT
BEGINNING OF PERIOD 406,624 402,748 402,672 405,273 406,624 407,570
Issuance of shares under employee benefit
and dividend reinvestment plans 10,029 1,405 2,576 1,399 4,649 6,054
Repurchase of common shares (17,500) (5,000) (2,500) (4,000) (6,000) (7,000)
SHARES OUTSTANDING AT
END OF PERIOD 399,153 399,153 402,748 402,672 405,273 406,624
FIGURE 24. CHANGES IN COMMON SHARES OUTSTANDING
Key repurchases its common shares periodically under a repurchase
program authorized by the Board of Directors. Key repurchased 17.5
million shares during 2006, leaving 5.0 million shares remaining for
repurchase as of December 31, 2006. Key’s repurchase activity for
each of the three months ended December 31, 2006, is summarized in
Figure 25.
At December 31, 2006, Key had 92.7 million treasury shares.
Management expects to reissue those shares as needed in connection
with the employee stock purchase and dividend reinvestment plans,
stock-based compensation awards and other corporate purposes. During
2006, Key reissued 10.0 million treasury shares.
Capital adequacy. Capital adequacy is an important indicator of
financial stability and performance. Overall, Key’s capital position
remains strong: the ratio of total shareholders’ equity to total assets was
8.34% at December 31, 2006, compared to 8.16% at December 31,
2005. Key’s ratio of tangible equity to tangible assets was 7.01% at
December 31, 2006, compared to 6.68% at December 31, 2005.
Management believes that Key’s capital position provides the flexibility
to take advantage of investment opportunities, to repurchase shares when
appropriate and to pay dividends.
Banking industry regulators prescribe minimum capital ratios for bank
holding companies and their banking subsidiaries. Note 14 (“Shareholders’
Equity”), which begins on page 88, explains the implications of failing
to meet these specific capital requirements.
Risk-based capital guidelines require a minimum level of capital as a
percent of “risk-weighted assets,” which is total assets plus certain
off-balance sheet items, both adjusted for predefined credit risk factors.
Currently, banks and bank holding companies must maintain, at a
minimum, Tier 1 capital as a percent of risk-weighted assets of 4.00%,
and total capital as a percent of risk-weighted assets of 8.00%. As of
December 31, 2006, Key’s Tier 1 capital ratio was 8.24%, and its
total capital ratio was 12.43%.
Another indicator of capital adequacy, the leverage ratio, is defined as
Tier 1 capital as a percentage of average quarterly tangible assets.
Leverage ratio requirements vary with the condition of the financial
institution. Bank holding companies that either have the highest
supervisory rating or have implemented the Federal Reserve’s risk-
adjusted measure for market risk — as KeyCorp has — must maintain
aminimum leverage ratio of 3.00%. All other bank holding companies
must maintain a minimum ratio of 4.00%. As of December 31, 2006,
Key had a leverage ratio of 8.98%.
Number of Remaining Number
Shares Purchased of Shares That May
Number of Average Under a Publicly be Purchased Under
Shares Price Paid Announced the Program as
in thousands, except per share data Purchased per Share Program
a
of Each Month-End
a
October 1-31, 2006 1,725 $37.53 1,725 8,236
November 1-30, 2006 275 37.19 275 7,961
December 1-31, 2006 3,000 37.39 3,000 4,961
Total 5,000 $37.43 5,000
a
In January 2007, the Board of Directors authorized the repurchase of 25.0 million common shares, in addition to the shares remaining from a repurchase program authorized in July 2004.
This action brought the total repurchase authorization to 30.0 million shares. These shares may be repurchased in the open market or through privately-negotiated transactions. The program
does not have an expiration date.
FIGURE 25. SHARE REPURCHASES
Previous Page
Search
Next Page
Contents