KeyBank 2005 Annual Report Download - page 11

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2005 BUSINESS GROUP RESULTS
Consumer Banking earned $483 million in 2005, up 17 percent from $412
million in 2004. Net income increased in 2005 primarily because of two actions
that effectively depressed earnings in 2004: the fourth quarter 2004 sale of
the broker-originated home equity loan portfolio, and the reclassification of
the indirect automobile loan portfolio to held-for-sale status. These actions
significantly reduced noninterest income and the provision for loan losses, and
substantially increased noninterest expense in 2004. Excluding the effects of
the above actions, 2004 net income for Consumer Banking was $489 million.
In 2006, results for Retail, Small Business, McDonald Financial Group and
Commercial Banking (midsize companies served from the KeyCenter network)
will be reported under Key Community Banking.
Corporate and Investment Banking earned $615 million in 2005, up 16 percent
from $532 million in 2004. The increase in 2005 was the result of significant
growth in net interest income and higher noninterest income. The growth in
net interest income reflected strong growth in average loans and leases, bolstered
by the acquisition of the equipment leasing unit of American Express’ small
business division in the fourth quarter of 2004, and a higher level of deposits.
Letter of credit and loan fees drove the improvement in noninterest income.
In addition to the acquisition mentioned above, we completed over the past two
years several other acquisitions that served to expand our market share
positions and strengthen our business. In the fourth quarter of 2005, we continued
the expansion of our commercial mortgage servicing business by acquiring the
commercial mortgage-backed servicing business of ORIX Capital Markets,
LLC, headquartered in Dallas, Texas. This acquisition increased our commercial
mortgage servicing portfolio from $44 billion at September 30, 2005, to more than
$70 billion. In the prior quarter, we expanded our FHA financing and servicing
capabilities by acquiring Malone Mortgage Company, also based in Dallas.
In 2006, results from Key’s national consumer finance businesses will be
reported with Corporate Banking’s, joining those from Real Estate Capital,
Key Equipment Finance, Institutional Banking, Capital Markets and Victory
Capital Management.
NET INCOME
100% = $1,129 mm (Key)
100% = $483 mm (Group)
REVENUE (TE)
100% = $4,989 mm (Key)
100% = $2,880 mm (Group)
in millions
Revenue
Net interest income (TE)......................... $ 1,943
Noninterest income .............................. 937
Total revenue (TE)................................... 2,880
Net Income............................................. $ 483
Average Balances
Loans.................................................... $29,274
Total assets........................................... 35,870
Deposits ............................................... 42,043
CONSUMER BANKING
45%
78%
30%
70%
13%
22%
13%
30%
in millions
Revenue
Net interest income (TE)......................... $ 1,177
Noninterest income .............................. 954
Total revenue (TE)................................... 2,131
Net Income............................................. $ 615
Average Balances
Loans.................................................... $34,981
Total assets........................................... 41,241
Deposits ............................................... 9,948
NET INCOME
100% = $1,129 mm (Key)
100% = $615 mm (Group)
CORPORATE AND INVESTMENT BANKING
REVENUE (TE)
100% = $4,989 mm (Key)
100% = $2,131 mm (Group)
10%
24%
22%
50%
11%
26%
11%
21%
25%
47%
18%
32%
TE: Taxable Equivalent
Group amounts exclude “other segments,” e.g., income (losses) produced by Corporate Treasury and Key’s Principal Investing unit, and “reconciling items,” e.g., costs
associated with funding unallocated nonearning assets of corporate support functions; Key amounts include them. Consequently, line-of-business results, where
expressed as a percentage of Key’s results, total slightly less than 100 percent.
■Community Banking
■Consumer Finance
%Key
%Group
■Corporate Banking
■KeyBank Real Estate Capital
■Key Equipment Finance
%Key
%Group
10 ᔤKey 2005