MANAGEMENTGLYPH<213>S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES FIGURE 7. COMPONENTS OF NET INTEREST INCOME CHANGES 2003 vs 2002 2002 vs 2001 Average Yield/ Net Average Yield/ Net in millions Volume Rate Change Volume Rate Change INTEREST INCOME Loans $ (32) $(378) $(410) $(193) $ (883) $(1,076) Taxable investment securities GLYPH<209> 1 1 GLYPH<209> GLYPH<209> GLYPH<209> Tax-exempt investment securities (7) 1 (6) (9) GLYPH<209> (9) Securities available for sale 81 (114) (33) (18) (48) (66) Short-term investments 3 (3) GLYPH<209> (7) (28) (35) Other investments 4 (1) 3 1 (1) GLYPH<209> Total interest income (taxable equivalent) 49 (494) (445) (226) (960) (1,186) INTEREST EXPENSE NOW and money market deposit accounts 36 (18) 18 16 (148) (132) Savings deposits 1 (4) (3) GLYPH<209> (8) (8) CertiGLYPH<222>cates of deposit ($100,000 or more) 3 (35) (32) (29) (54) (83) Other time deposits (54) (106) (160) (69) (221) (290) Deposits in foreign ofGLYPH<222>ce (7) (10) (17) (13) (55) (68) Total interest-bearing deposits (21) (173) (194) (95) (486) (581) Federal funds purchased and securities sold under repurchase agreements (12) (28) (40) 12 (120) (108) Bank notes and other short-term borrowings (8) (11) (19) (132) (91) (223) Long-term debt, including capital securities (28) (91) (119) 51 (324) (273) Total interest expense (69) (303) (372) (164) (1,021) (1,185) Net interest income (taxable equivalent) $118 $(191) $ (73) $ (62) $ 61 $ (1) Year ended December 31, Change 2003 vs 2002 dollars in millions 2003 2002 2001 Amount Percent Trust and investment services income $ 549 $ 609 $ 651 $(60) (9.9)% Service charges on deposit accounts 364 405 387 (41) (10.1) Investment banking and capital markets income 190 172 88 18 10.5 Letter of credit and loan fees 162 134 124 28 20.9 Corporate-owned life insurance income 114 108 114 6 5.6 Net gains from loan securitizations and sales 90 56 49 34 60.7 Electronic banking fees 80 79 74 1 1.3 Net securities gains 11 6 35 5 83.3 Other income: Insurance income 50 57 56 (7) (12.3) Loan securitization servicing fees 7 9 16 (2) (22.2) Credit card fees 11 9 7 2 22.2 Miscellaneous income 132 125 124 7 5.6 Total other income 200 200 203 GLYPH<209> GLYPH<209> Total noninterest income $1,760 $1,769 $1,725 $ (9) (.5)% In addition, income from investment banking and capital markets activities grew by $18 million, as Key had net principal investing gains in 2003, compared with net losses in 2002. These positive results were offset by a $60 million decrease in income from trust and investment services and a $41 million decline in service charges on deposit accounts. Each of these revenue components is further discussed later in this section. The change in interest not due solely to volume or rate has been allocated in proportion to the absolute dollar amounts of the change in each. Noninterest income for 2003 was $1.8 billion, essentially unchanged from the prior year. In 2002, noninterest income rose by $44 million, or 3%. As shown in Figure 8, noninterest income for 2003 benefited from a $34 million increase in net gains from loan securitizations and sales, and a $28 million rise in letter of credit and non-yield-related loan fees. Noninterest income NEXT PAGE BACK TO CONTENTS SEARCH PREVIOUS PAGE 21 FIGURE 8. NONINTEREST INCOME