KeyBank 2005 Annual Report Download - page 9

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where we do business, we are building on
the resulting opportunities.
In another example of focusing on
certain client segments, our KeyBanc
Capital Markets unit targets seven distinct
industry segments with teams of com-
mercial and investment bankers. Among
them is the Energy Group, which focuses
on utilities, power generation, domestic
oil and gas production, and energy-
related master limited partnerships. These
clients place particularly high value on
Key’s deep industry knowledge and inte-
grated solutions.
Our focus on the energy sector has
contributed to a compounded annual
growth rate of 24.8 percent since the
capital-markets unit was launched in
2003. The majority of that revenue has
been fee income for bond and equity
underwriting. Moreover, Key has now
achieved leading underwriting rankings in
the energy categories.
RESPONDING TO REGULATORY CHANGE
While we made considerable headway
during the year in strengthening our
financial performance, we also dedicated
ourselves to exceeding new compliance
standards put in place by industry regu-
lators.
The government standards for banks
place heavy emphasis on maintaining a
comprehensive anti-money-laundering
program and demonstrating consistently
that the program is effective.
After a review in 2005, regulators
concluded that Key needed to improve its
compliance programs. As a result, in
October, KeyBank N.A., our bank sub-
sidiary, entered into a consent agreement
with the OCC, and KeyCorp signed a
memorandum of understanding with the
Federal Reserve Bank of Cleveland (FRB).
As part of those agreements, we have
agreed to improve specific aspects of our
Anti-Money Laundering/Bank Secrecy
Act program.
Neither the OCC nor the FRB
imposed a fine or other penalties on Key,
and we do not expect these actions to
have a material impact or affect our daily
business activities, operating results or
financial condition.
We have redoubled our efforts to meet
the more stringent standards by, for exam-
ple, enhancing our training, upgrading our
client due diligence procedures and
installing advanced detection technologies.
BOARD CHANGES
In 2005 Key welcomed to its board of
directors two highly accomplished leaders.
Among their many attributes, they possess
expertise in technology and retailing, areas
of great importance to our company.
The first to join, in May, was H. James
Dallas. He recently retired as vice presi-
dent of Information Technology and chief
information officer of Georgia-Pacific
Corporation. James brings to us a wealth
of experience in technology and infor-
mation systems.
Ralph Alvarez, president of
McDonald’s North America, was elected
in September. Ralph’s experience in
building brand loyalty, operating a
national consumer business and applying
sophisticated consumer marketing tech-
niques is a significant asset for Key.
I also want to acknowledge the con-
tributions of two long-time directors who
will retire from the board at our next
annual meeting: Henry S. Hemingway,
president of Hemingway Enterprises, Inc.,
and Steven A. Minter, retired president
and executive director of The Cleveland
Foundation. Both men have served ably
on our board since 1987. We have valued
their contributions and counsel during
their lengthy tenure, and we thank them
for their service to our company.
LOOKING FORWARD TO TOMORROW
Key is making solid progress in build-
ing its presence in its markets and maxi-
mizing its financial performance. I have
great confidence that our best days lie
ahead. Our board of directors agrees
and, in January 2006, increased Key’s
dividend for the 41st consecutive year, an
enviable achievement for any publicly
owned institution.
We expect the economic environment in
2006 to be more challenging than in the
year past, which may restrict growth in
our industry’s per-share earnings.
Nonetheless, we will continue to drive
for even better overall performance by
pursuing these clear priorities:
• Grow profitable revenue,
• institutionalize a culture of compliance
and accountability,
• maintain a strong credit culture and
• improve operating leverage to ensure
that revenue growth outpaces expense
growth.
Along with the strong foundation we
have put in place over the past few years,
I firmly believe that these priorities will put
us in a position to achieve a sustainable com-
petitive advantage in the marketplace. 
Key 2005 ᔤ7
KEY’S
STRONG DIVIDEND HISTORY
dividend amounts in dollars
“Creating great experiences for our clients– serving as their
trusted advisor and providing them with comprehensive
financial solutions– is at the heart of our relationship strategy.”