KeyBank 2007 Annual Report Download - page 30

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28
MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES
FIGURE 8. AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND YIELDS/RATES FROM CONTINUING OPERATIONS
Year ended December 31, 2007 2006 2005
Average Yield/ Average Yield/ Average Yield/
dollars in millions Balance Interest Rate Balance Interest Rate Balance Interest Rate
ASSETS
Loans
a,b
Commercial, financial and agricultural
c
$22,415 $1,622 7.23% $21,679 $1,547 7.13% $19,480 $1,083 5.56%
Real estate — commercial mortgage 8,802 675 7.67 8,167 628 7.68 8,403 531 6.32
Real estate — construction 8,237 653 7.93 7,802 635 8.14 6,263 418 6.67
Commercial lease financing
c
10,154 606 5.97 9,773 595 6.08 10,122 628 6.21
Total commercial loans 49,608 3,556 7.17 47,421 3,405 7.18 44,268 2,660 6.01
Real estate — residential 1,525 101 6.64 1,430 93 6.49 1,468 90 6.10
Home equity 10,815 775 7.17 10,971 775 7.07 11,094 687 6.20
Consumer — direct 1,367 144 10.53 1,639 152 9.26 1,834 158 8.60
Consumer — indirect 4,042 274 6.77 3,535 238 6.73 3,333 217 6.51
Total consumer loans 17,749 1,294 7.29 17,575 1,258 7.16 17,729 1,152 6.50
Total loans 67,357 4,850 7.20 64,996 4,663 7.17 61,997 3,812 6.15
Loans held for sale 4,461 337 7.57 4,168 325 7.80 3,637 254 6.99
Securities available for sale
d
7,757 427 5.52 7,302 347 4.71 7,118 327 4.58
Held-to-maturity securities
a
36 2 6.68 47 3 7.43 76 5 7.30
Trading account assets 917 38 4.10 857 30 3.51 933 27 2.90
Short-term investments 846 37 4.34 791 33 4.15 927 25 2.68
Other investments
d
1,524 52 3.33 1,362 82 5.78 1,379 54 3.79
Total earning assets 82,898 5,743 6.84 79,523 5,483 6.88 76,067 4,504 5.92
Allowance for loan losses (948) (952) (1,103)
Accrued income and other assets 12,934 13,131 12,945
Total assets $94,884 $91,702 $87,909
LIABILITIES AND SHAREHOLDERS’ EQUITY
NOW and money market deposit accounts
$24,070 762 3.17 $25,044 710 2.84 $22,696 360 1.59
Savings deposits 1,591 3 .19 1,728 4 .23 1,941 5 .26
Certificates of deposit ($100,000 or more)
e
6,389 321 5.02 5,581 261 4.67 4,957 189 3.82
Other time deposits 11,767 550 4.68 11,592 481 4.14 10,789 341 3.16
Deposits in foreign office
f
4,287 209 4.87 2,305 120 5.22 2,662 81 3.06
Total interest-bearing deposits 48,104 1,845 3.84 46,250 1,576 3.41 43,045 976 2.27
Federal funds purchased and securities
sold under repurchase agreements
f
4,330 208 4.79 2,215 107 4.80 2,577 71 2.74
Bank notes and other short-term borrowings
2,423 104 4.28 2,284 94 4.12 2,796 82 2.94
Long-term debt
e,f,g
12,537 718 5.84 13,983 788 5.62 14,094 598 4.32
Total interest-bearing liabilities 67,394 2,875 4.28 64,732 2,565 3.96 62,512 1,727 2.77
Noninterest-bearing deposits 13,635 13,053 12,001
Accrued expense and other liabilities 6,133 6,183 6,073
Shareholders’ equity 7,722 7,734 7,323
Total liabilities and
shareholders’ equity $94,884 $91,702 $87,909
Interest rate spread (TE) 2.56% 2.92% 3.15%
Net interest income (TE) and net
interest margin (TE) 2,868 3.46% 2,918 3.67% 2,777 3.65%
TE adjustment
a
99 103 121
Net interest income, GAAP basis $2,769 $2,815 $2,656
Capital securities —— —— ——
a
Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.
b
For purposes of these computations, nonaccrual loans are included in average loan balances.
c
During the first quarter of 2006, Key reclassified $760 million of average loans and related interest income from the commercial lease financing portfolio to the commercial, financial
and agricultural portfolio to more accurately reflect the nature of these receivables. Balances presented for prior periods were not reclassified as the historical data was not available.
d
Yield is calculated on the basis of amortized cost.
e
Rate calculation excludes basis adjustments related to fair value hedges. See Note 19 (“Derivatives and Hedging Activities”), which begins on page 100, for an explanation of fair value hedges.
f
Results from continuing operations exclude the dollar amount of liabilities assumed necessary to support interest-earning assets held by the discontinued Champion Mortgage finance
business. The interest expense related to these liabilities, which also is excluded from continuing operations, was calculated using a matched funds transfer pricing methodology.
g
Long-term debt includes capital securities prior to July 1, 2003. Effective July 1, 2003, the business trusts that issued the capital securities were de-consolidated in accordance with FASB
Revised Interpretation No. 46.
TE = Taxable Equivalent
N/M = Not Meaningful
GAAP = U.S. generally accepted accounting principles