KeyBank 2007 Annual Report Download - page 55

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53
MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES
Net loan charge-offs. Net loan charge-offs for 2007 were $275 million,
or .41% of average loans from continuing operations. These results
compare to net charge-offs of $170 million, or .26%, for 2006, and $315
million, or .51%, for 2005. The composition of Key’s loan charge-offs
and recoveries by type of loan is shown in Figure 34. In 2007, the largest
increases in net charge-offs occurred in the commercial, financial and
agricultural portfolio, and in the homebuilder segment of the real
estate construction portfolio. These two portfolios accounted for almost
80% of the increase in Key’s total net loan charge-offs for 2007.
Year ended December 31,
dollars in millions 2007 2006 2005 2004 2003
Average loans outstanding from
continuing operations $67,357 $64,996 $61,997 $58,226 $57,386
Allowance for loan losses at beginning of year $ 944 $ 966 $1,138 $1,406 $1,452
Loans charged off:
Commercial, financial and agricultural 128 92 80 145 280
Real estate — commercial mortgage 16 24 19 35 42
Real estate — construction 54 4557
Total commercial real estate loans
a
70 28 24 40 49
Commercial lease financing 51 40 183 52 60
Total commercial loans 249 160 287 237 389
Real estate — residential mortgage 67 7 17 11
Home equity 37 30 26 63 60
Consumer — direct 31 33 38 42 47
Consumer — indirect 47 38 51 224 171
Total consumer loans 121 108 122 346 289
370 268 409 583 678
Recoveries:
Commercial, financial and agricultural 37 34 21 41 36
Real estate — commercial mortgage 653811
Real estate — construction 11343
Total commercial real estate loans
a
76 6 12 14
Commercial lease financing 22 27 35 14 13
Total commercial loans 66 67 62 67 63
Real estate — residential mortgage 11111
Home equity 47565
Consumer — direct 87899
Consumer — indirect 16 16 18 69 52
Total consumer loans 29 31 32 85 67
95 98 94 152 130
Net loans charged off (275) (170) (315) (431) (548)
Provision for loan losses from continuing operations 529 150 143 185 498
(Credit) provision for loan losses from
discontinued operations —(3) — — 3
Reclassification of allowance for credit losses
on lending-related commitments
b
—— — (70) —
Allowance related to loans acquired, net —— — 48 —
Foreign currency translation adjustment 21—— 1
Allowance for loan losses at end of year $1,200 $ 944 $ 966 $1,138 $1,406
Net loan charge-offs to average loans from
continuing operations .41% .26% .51% .74% .95%
Allowance for loan losses to year-end loans 1.69 1.43 1.45 1.80 2.35
Allowance for loan losses to nonperforming loans 174.67 439.07 348.74 369.48 202.59
a
See Figure 17 and the accompanying discussion on page 36 for more information related to Key’s commercial real estate portfolio.
b
Included in “accrued expenses and other liabilities” on the consolidated balance sheet.
FIGURE 34. SUMMARY OF LOAN LOSS EXPERIENCE