Souring commercial loans largely drove a $1.5 billion net loss for 2008 for KeyCorp, which entered the new year bracing for even more tumult in its lending portfolio.
The Cleveland bank holding company posted Thursday its third consecutive net loss, with the fourth quarter’s loss coming in at $524 million. Those mounting losses contributed to the year’s billion-and-a-half hit, which marked a stark reversal from the $919 million net income the KeyBank parent reported for 2007.
KeyCorp Chief Executive Officer Henry Meyer III said the annual results “reflect actions to manage risk and to fortify the balance sheet for an extremely challenging operating environment.”
Those fortifications included KeyCorp’s acceptance of $2.5 billion from the U.S. Department of Treasury’s $700 billion Troubled Asset Relief Program plus a capital campaign that saw it raise $4.2 billion. The company during the fourth quarter also shored up its provision for loan losses, which over the year rose to $594 million from $119 million.
The jump in the loan loss provision came as KeyCorp was trying to keep ahead of rising bad loans. It recorded $342 million in loan charge-offs during the fourth quarter, almost triple the $119 million charge offs from a year earlier. Its non-performing loans also shot up over the same period, almost doubling to $1.2 billion.
KeyCorp, which in the Capital Region has 51 branches and 1,450 employees, also was hurt by a revaluation of its national banking unit. An annual test for goodwill impairment in national bank, which include the company’s investment banking and financing businesses, resulted in a $420 million charge.
By year’s end, KeyCorp had $65.3 billion, up 3.4 percent from a year earlier. During the same period, loans rose 8 percent from a year earlier.
By late Thursday morning, KeyCorp’s stock price was flat at $6.69 per share.