MANAGEMENTGLYPH<213>S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES FIGURE 6. AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND YIELDS/RATES Year ended December 31, 2003 2002 2001 Average Yield/ Average Yield/ Average Yield/ dollars in millions Balance Interest Rate Balance Interest Rate Balance Interest Rate ASSETS Loans a,b Commercial, GLYPH<222>nancial and agricultural $17,161 $ 824 4.80% $17,767 $ 907 5.10% $19,459 $1,362 7.00% Real estate GLYPH<209> commercial mortgage 5,909 315 5.32 6,345 373 5.87 6,821 511 7.50 Real estate GLYPH<209> construction 5,335 274 5.14 5,851 315 5.38 5,654 411 7.27 Commercial lease GLYPH<222>nancing 7,961 482 6.05 7,263 491 6.76 7,049 490 6.95 Total commercial loans 36,366 1,895 5.21 37,226 2,086 5.60 38,983 2,774 7.12 Real estate GLYPH<209> residential 1,762 115 6.50 2,126 149 7.00 3,607 275 7.64 Home equity 14,578 863 5.92 13,028 889 6.82 10,595 906 8.55 Credit card GLYPH<209> GLYPH<209> GLYPH<209> GLYPH<209> GLYPH<209> GLYPH<209> GLYPH<209> GLYPH<209> GLYPH<209> Consumer GLYPH<209> direct 2,141 157 7.35 2,206 183 8.29 2,427 232 9.55 Consumer GLYPH<209> indirect lease GLYPH<222>nancing 545 52 9.51 1,405 126 8.96 2,618 217 8.27 Consumer GLYPH<209> indirect other 5,040 423 8.38 5,155 471 9.15 5,529 530 9.58 Total consumer loans 24,066 1,610 6.69 23,920 1,818 7.60 24,776 2,160 8.72 Loans held for sale 2,447 112 4.60 2,247 123 5.52 2,217 169 7.64 Total loans 62,879 3,617 5.75 63,393 4,027 6.35 65,976 5,103 7.73 Taxable investment securities 9 1 4.75 1 GLYPH<209> 8.59 2 GLYPH<209> 8.60 Tax-exempt investment securities a 103 10 9.43 180 16 8.67 277 25 8.76 Total investment securities 112 11 9.03 181 16 8.67 279 25 8.76 Securities available for sale a,c 7,865 356 4.55 6,359 389 6.14 6,625 455 6.89 Short-term investments 1,650 30 1.84 1,496 30 1.99 1,712 65 3.81 Other investments c 1,023 27 2.62 871 24 2.57 849 24 2.86 Total earning assets 73,529 4,041 5.49 72,300 4,486 6.20 75,441 5,672 7.52 Allowance for loan losses (1,410) (1,553) (1,090) Accrued income and other assets 12,229 11,034 10,552 $84,348 $81,781 $84,903 LIABILITIES AND SHAREHOLDERSGLYPH<213> EQUITY NOW and money market deposit accounts $17,913 149 .83 $13,761 131 .95 $12,942 263 2.03 Savings deposits 2,072 10 .50 1,986 13 .67 1,952 21 1.05 CertiGLYPH<222>cates of deposit ($100,000 or more) d 4,796 186 3.93 4,741 218 4.63 5,284 301 5.71 Other time deposits 11,330 336 2.96 12,859 496 3.86 14,208 786 5.53 Deposits in foreign ofGLYPH<222>ce 1,885 22 1.13 2,336 39 1.67 2,715 107 3.94 Total interest-bearing deposits 37,996 703 1.85 35,683 897 2.52 37,101 1,478 3.98 Federal funds purchased and securities sold under repurchase agreements 4,739 50 1.06 5,527 90 1.63 5,197 198 3.80 Bank notes and other short-term borrowings 2,612 60 2.29 2,943 79 2.67 6,829 302 4.43 Long-term debt, including capital securities d,e 16,049 432 2.79 16,961 551 3.29 15,911 824 5.20 Total interest-bearing liabilities 61,396 1,245 2.05 61,114 1,617 2.66 65,038 2,802 4.31 Noninterest-bearing deposits 10,347 9,098 8,354 Accrued expense and other liabilities 5,702 5,045 4,939 Common shareholdersGLYPH<213> equity 6,903 6,524 6,572 $84,348 $81,781 $84,903 Interest rate spread (TE) 3.44% 3.54% 3.21% Net interest income (TE) and net interest margin (TE) 2,796 3.80% 2,869 3.97% 2,870 3.81% TE adjustment a 71 120 45 Net interest income, GAAP basis $2,725 $2,749 $2,825 Capital securities $629 $36 $1,254 $78 $1,309 $89 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 Yield is calculated on the basis of amortized cost. d Rate calculation excludes basis adjustments related to fair value hedges. See Note 19 (GLYPH<210>Derivatives and Hedging ActivitiesGLYPH<211>), which begins on page 80, for an explanation of fair value hedges. TE = Taxable Equivalent, N/M = Not Meaningful 18 NEXT PAGE PREVIOUS PAGE SEARCH BACK TO CONTENTS e Rate calculation excludes ESOP debt.