KeyBank 2014 Annual Report Download - page 49

deposit ratio of 85%. We believe our strong capital position provides us with the flexibility to support our
clients and our business needs, and to evaluate other appropriate capital deployment opportunities.
Highlights of Our 2014 Performance
Financial performance
For 2014, we announced net income from continuing operations attributable to Key common shareholders of
$917 million, or $1.04 per common share. These results compare to net income from continuing operations
attributable to Key common shareholders of $847 million, or $.93 per common share, for 2013.
Figure 3 shows our continuing and discontinued operating results for the past three years.
Figure 3. Results of Operations
Year ended December 31,
in millions, except per share amounts 2014 2013 2012
SUMMARY OF OPERATIONS
Income (loss) from continuing operations attributable to Key $ 939 $ 870 $ 835
Income (loss) from discontinued operations, net of taxes (a) (39) 40 23
Net income (loss) attributable to Key $ 900 $ 910 $ 858
Income (loss) from continuing operations attributable to Key $ 939 $ 870 $ 835
Less: Dividends on Series A Preferred Stock 22 23 22
Income (loss) from continuing operations attributable to Key common shareholders 917 847 813
Income (loss) from discontinued operations, net of taxes (a) (39) 40 23
Net income (loss) attributable to Key common shareholders $ 878 $ 887 $ 836
PER COMMON SHARE — ASSUMING DILUTION
Income (loss) from continuing operations attributable to Key common shareholders $ 1.04 $ .93 $ .86
Income (loss) from discontinued operations, net of taxes (a) (.04) .04 .02
Net income (loss) attributable to Key common shareholders (b) $ .99 $ .97 $ .89
(a) In April 2009, we decided to wind down the operations of Austin, a subsidiary that specialized in managing hedge fund investments for
institutional customers. In September 2009, we decided to discontinue the education lending business conducted through Key Education
Resources, the education payment and financing unit of KeyBank. In February 2013, we decided to sell Victory to a private equity fund.
As a result of these decisions, we have accounted for these businesses as discontinued operations. For further discussion regarding the
income (loss) from discontinued operations, see Note 13 (“Acquisitions and Discontinued Operations”).
(b) EPS may not foot due to rounding.
Our 2014 full-year results reflect success in executing our strategy by generating positive operating leverage and
maintaining strong risk management and disciplined capital management. We continued to invest in our
businesses to accelerate growth. During the third quarter of 2014, we acquired Pacific Crest Securities, a leading
technology-focused investment bank and capital markets firm. We added bankers across our franchise, expanded
our payment capabilities, and enhanced technology in areas such as mobile, online, and cyber security. In
addition, as part of our actions to drive efficiency, we closed 34 branches and exited nonstrategic assets that were
not consistent with our relationship strategy, such as international leasing. We remain committed to generating
positive operating leverage and delivering on our long-term goal of achieving a cash efficiency ratio below 60%.
Our taxable-equivalent net interest income for 2014 was $2.3 billion, and the net interest margin was 2.97%.
These results compare to taxable-equivalent net interest income of $2.3 billion and a net interest margin of 3.12%
for the prior year. The decreases in net interest income, which declined $31 million, and the net interest margin
were attributable to lower earning asset yields. These decreases were partially offset by loan growth, the maturity
of higher-rate certificates of deposit, and a more favorable mix of lower-cost deposits. In 2015, we expect net
interest income and net interest margin to benefit from anticipated higher rates, with net interest income growth
in the low- to mid-single-digit percentage range compared to 2014 and net interest margin to be stable to slightly
higher later in 2015.
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