CLEVELAND, July 20, 2017
/PRNewswire/ -- KeyCorp (NYSE: KEY) today announced second
quarter net income from continuing operations attributable to Key
common shareholders of $393 million,
or $.36 per common share, compared to
$296 million or $.27 per common share, for the first quarter of
2017 and $193 million, or
$.23 per common share, for the second
quarter of 2016. During the second quarter of 2017, Key's results
included a number of notable items, including a gain related to our
merchant services business, the finalization of purchase
accounting, merger-related charges, and a charitable contribution.
These notable items had a pre-tax net benefit of $43 million, or $.02 per common share for the second quarter of
2017.
"We were pleased with the strength and quality of our second
quarter results, which reflect Key's continued business momentum
and realization of value from the First Niagara acquisition," said
Chairman and Chief Executive Officer Beth
Mooney. "We also made investments for growth across our
franchise, including the repositioning of our merchant services
business and the recent acquisition of HelloWallet."
"We continued to generate positive operating leverage versus the
prior year and prior quarter, and our cash efficiency ratio
improved to 59.3%, or 59.4%, excluding notable items," Mooney
continued. "Revenue growth was driven by both net interest income
and fee-based businesses, and importantly, we achieved $400 million in annualized cost savings from
First Niagara. We remain on track to achieve an incremental
$50 million in savings by early 2018,
and remain confident in our ability to achieve our targets and
continue to deliver value for our shareholders."
"Our risk and capital positions remained strong in the
second quarter," added Mooney. "We increased our common share
dividend by 12% while also repurchasing $94
million of common shares. We were pleased to receive no
objection from the Federal Reserve on our 2017 Capital Plan, which
includes two additional dividend increases, subject to Board
approval, and an increased common share repurchase
authorization."
Selected Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions, except per share data
|
|
|
|
|
Change 2Q17
vs.
|
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
393
|
|
$
|
296
|
|
$
|
193
|
|
|
|
32.8%
|
103.6%
|
Income (loss) from
continuing operations attributable to Key common shareholders
per
common share — assuming dilution
|
.36
|
|
.27
|
|
.23
|
|
|
33.3
|
|
56.5
|
Return on average
total assets from continuing operations
|
1.23%
|
|
.99%
|
|
.82%
|
|
|
N/A
|
N/A
|
Common Equity Tier 1
ratio (non-GAAP) (a), (b)
|
9.97
|
|
9.91
|
|
11.10
|
|
|
N/A
|
N/A
|
Book value at period
end
|
$
|
13.02
|
|
$
|
12.71
|
|
$
|
13.08
|
|
|
2.4%
|
|
(.5)%
|
Net interest margin
(TE) from continuing operations
|
3.30%
|
|
3.13%
|
|
2.76%
|
|
|
N/A
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The table entitled
"GAAP to Non-GAAP Reconciliations" in the attached financial
supplement presents the computations of certain financial measures
related to "Common Equity Tier 1." The table reconciles the
GAAP performance measures to the corresponding non-GAAP measures,
which provides a basis for period-to-period comparisons. For
further information on the Regulatory Capital Rules, see the
"Capital" section of this release.
|
(b)
|
6/30/2017 ratio is
estimated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/A = Not Applicable
|
|
|
|
|
|
|
INCOME STATEMENT
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Net interest income
(TE)
|
$
|
987
|
|
$
|
929
|
|
$
|
605
|
|
|
6.2
|
%
|
63.1
|
%
|
Noninterest
income
|
653
|
|
577
|
|
473
|
|
|
13.2
|
%
|
38.1
|
%
|
Total
revenue
|
$
|
1,640
|
|
$
|
1,506
|
|
$
|
1,078
|
|
|
8.9
|
%
|
52.1
|
%
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent; N/M = Not Meaningful
|
Second quarter 2017 net interest income included $100 million of purchase accounting accretion
related to the acquisition of First Niagara, including $42 million related to the finalization of
previous purchase accounting estimates. First quarter 2017
results included $53 million of
purchase accounting accretion.
Taxable-equivalent net interest income was $987 million for the second quarter of 2017, and
the net interest margin was 3.30%, compared to taxable-equivalent
net interest income of $605 million
and a net interest margin of 2.76% for the second quarter of 2016,
reflecting benefit from the First Niagara acquisition, including
purchase accounting accretion, as well as higher earning asset
yields and balances.
Compared to the first quarter of 2017, taxable-equivalent net
interest income increased by $58
million, and the net interest margin increased by 17 basis
points. The increase in net interest income and the net interest
margin reflects an increase in purchase accounting accretion and
higher earning asset yields, partly offset by a decline in loan
fees and higher interest-bearing deposit costs, largely the result
of an increase in commercial deposit rates and growth in
higher-yielding deposit products. Net interest income also
benefited from one additional day in the second quarter of
2017.
Excluding purchase accounting accretion, taxable-equivalent net
interest income increased $282
million from the second quarter of 2016 and $11 million from the first quarter of 2017.
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Trust and investment
services income
|
$
|
134
|
|
$
|
135
|
|
$
|
110
|
|
|
(.7)%
|
|
21.8%
|
|
Investment banking
and debt placement fees
|
135
|
|
127
|
|
98
|
|
|
6.3
|
|
37.8
|
|
Service charges on
deposit accounts
|
90
|
|
87
|
|
68
|
|
|
3.4
|
|
32.4
|
|
Operating lease
income and other leasing gains
|
30
|
|
23
|
|
18
|
|
|
30.4
|
|
66.7
|
|
Corporate services
income
|
55
|
|
54
|
|
53
|
|
|
1.9
|
|
3.8
|
|
Cards and payments
income
|
70
|
|
65
|
|
52
|
|
|
7.7
|
|
34.6
|
|
Corporate-owned life
insurance income
|
33
|
|
30
|
|
28
|
|
|
10.0
|
|
17.9
|
|
Consumer mortgage
income
|
6
|
|
6
|
|
3
|
|
|
—
|
|
100.0
|
|
Mortgage servicing
fees
|
15
|
|
18
|
|
10
|
|
|
(16.7)
|
|
50.0
|
|
Net gains (losses)
from principal investing
|
—
|
|
1
|
|
11
|
|
|
N/M
|
|
N/M
|
|
Other
income
|
85
|
|
31
|
|
22
|
|
|
174.2
|
|
286.4
|
|
Total noninterest
income
|
$
|
653
|
|
$
|
577
|
|
$
|
473
|
|
|
13.2%
|
|
38.1%
|
|
|
|
|
|
|
|
|
N/M = Not
Meaningful
|
Key's noninterest income was $653
million for the second quarter of 2017, compared to
$473 million for the year-ago
quarter. Growth was largely driven by the acquisition of First
Niagara, as well as core business momentum and a $64 million one-time gain from acquiring the
remaining ownership interest in a merchant services joint venture.
Investment banking and debt placement fees grew $37 million, related to strong commercial
mortgage banking, underwriting, and advisory fees.
Compared to the first quarter of 2017, noninterest income
increased by $76 million. The largest
driver of the increase was a $64
million one-time gain related to Key's merchant services
business, realized in other income. Investment banking and debt
placement fees continue to be a source of growth, up $8 million from the prior quarter, related to
strong advisory fees. Operating lease income and other leasing
gains grew $7 million, and cards and
payments income increased $5
million.
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Personnel
expense
|
$
|
551
|
|
$
|
556
|
|
$
|
427
|
|
|
(.9)%
|
|
29.0%
|
|
Non-personnel
expense
|
444
|
|
457
|
|
324
|
|
|
(2.8)
|
|
37.0
|
|
Total noninterest
expense
|
$
|
995
|
|
$
|
1,013
|
|
$
|
751
|
|
|
(1.8)
|
|
32.5
|
|
|
|
|
|
|
|
|
Merger-related
charges
|
44
|
|
81
|
|
45
|
|
|
(45.7)
|
|
(2.2)
|
|
Total noninterest expense
excluding merger-related charges
|
$
|
951
|
|
$
|
932
|
|
$
|
706
|
|
|
2.0%
|
|
34.7%
|
|
|
|
|
|
|
|
|
Key's noninterest expense was $995
million for the second quarter of 2017, and included
$44 million of merger-related
charges. Merger-related charges for the quarter were made up of
$31 million of personnel expense and
$13 million of non-personnel expense,
largely reflected in business services and professional fees and
marketing expense.
Excluding merger-related charges, noninterest expense was
$245 million higher than the second
quarter of last year. The increase from the prior year, reflected
in both personnel and non-personnel expense, was primarily driven
by the acquisition of First Niagara. Higher incentive compensation
related to stronger capital markets performance also contributed to
the year-over-year increase.
Excluding merger-related charges, noninterest expense was
$19 million higher than the first
quarter of 2017, mostly related to seasonal trends, including
higher marketing expense. Incentive and stock-based compensation
and salaries expense increased but were more than offset by lower
employee benefits expense. Other notable items which impacted the
second quarter included a $20 million
charitable contribution and $4
million benefit from purchase accounting finalization, both
of which are reflected in other expense.
BALANCE SHEET HIGHLIGHTS
Average
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Commercial and
industrial (a)
|
$
|
40,666
|
|
$
|
40,002
|
|
$
|
32,630
|
|
|
1.7%
|
|
24.6%
|
|
Other commercial
loans
|
21,990
|
|
22,175
|
|
13,222
|
|
|
(.8)
|
|
66.3
|
|
Home equity
loans
|
12,473
|
|
12,611
|
|
10,098
|
|
|
(1.1)
|
|
23.5
|
|
Other consumer
loans
|
11,373
|
|
11,345
|
|
5,198
|
|
|
.2
|
|
118.8
|
|
Total
loans
|
$
|
86,502
|
|
$
|
86,133
|
|
$
|
61,148
|
|
|
.4%
|
|
41.5%
|
|
|
|
|
|
|
|
|
(a)
|
Commercial and
industrial average loan balances include $117 million, $114
million, and $87 million of assets from commercial credit cards at
June 30, 2017, March 31, 2017, and June 30, 2016,
respectively.
|
During the second quarter of 2017, Key finalized the fair value
of the First Niagara acquired loan portfolio, adjusting the
discount from $548 million to $603
million. At June 30, 2017,
$345 million of the fair value
discount remained.
Average loans were $86.5 billion
for the second quarter of 2017, an increase of $25.4 billion compared to the second quarter of
2016, primarily reflecting the impact of the First Niagara
acquisition, as well as growth in commercial and industrial loans
which was broad-based and spread across Key's commercial lines of
business.
Compared to the first quarter of 2017, average loans increased
by $369 million. Commercial and
industrial loans increased $664
million, with strength in middle market lending. Consumer
loans decreased $110 million, mostly
from continued declines in the home equity loan portfolio, largely
the result of paydowns on home equity lines of credit.
Average
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Non-time
deposits
|
$
|
92,018
|
|
$
|
91,745
|
|
$
|
67,419
|
|
|
.3%
|
|
36.5%
|
|
Certificates of
deposit ($100,000 or more)
|
6,111
|
|
5,627
|
|
3,233
|
|
|
8.6
|
|
89.0
|
|
Other time
deposits
|
4,650
|
|
4,706
|
|
3,252
|
|
|
(1.2)
|
|
43.0
|
|
|
Total
deposits
|
$
|
102,779
|
|
$
|
102,078
|
|
$
|
73,904
|
|
|
.7%
|
|
39.1%
|
|
|
|
|
|
|
|
|
|
Cost of total
deposits
|
.26%
|
|
.23%
|
|
.19%
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
N/A = Not
Applicable
|
Average deposits totaled $102.8
billion for the second quarter of 2017, an increase of
$28.9 billion compared to the
year-ago quarter, primarily reflecting the acquisition of First
Niagara and core retail and commercial deposit growth.
Compared to the first quarter of 2017, average deposits
increased by $701 million, driven by
growth in certificates of deposits and NOW and money market deposit
accounts, partly offset by a decline in escrow deposits. During the
quarter, Key also experienced a shift in deposit mix from
noninterest-bearing and low-cost interest-bearing deposits to
higher-yielding deposit products. On a period-end basis, total
deposits decreased $1.1 billion
compared to the linked-quarter, largely the result of seasonal
deposit growth that occurred in the first quarter of 2017.
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Net loan
charge-offs
|
$
|
66
|
|
$
|
58
|
|
$
|
43
|
|
|
13.8%
|
|
53.5%
|
|
Net loan charge-offs
to average total loans
|
.31%
|
|
.27%
|
|
.28%
|
|
|
N/A
|
|
N/A
|
|
Nonperforming loans
at period end (a)
|
$
|
507
|
|
$
|
573
|
|
$
|
619
|
|
|
(11.5)
|
|
(18.1)
|
|
Nonperforming assets
at period end (a)
|
556
|
|
623
|
|
637
|
|
|
(10.8)
|
|
(12.7)
|
|
Allowance for loan
and lease losses
|
870
|
|
870
|
|
854
|
|
|
.0
|
|
1.9
|
|
Allowance for loan
and lease losses to nonperforming loans (a)
|
171.6%
|
|
151.8%
|
|
138.0%
|
|
|
N/A
|
|
N/A
|
|
Provision for credit
losses
|
$
|
66
|
|
$
|
63
|
|
$
|
52
|
|
|
4.8%
|
|
26.9%
|
|
|
|
|
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $835 million, $812 million, and $11 million of
purchased credit impaired loans at June 30, 2017,
March 31, 2017, and June 30, 2016,
respectively.
|
|
|
N/A = Not
Applicable
|
Key's provision for credit losses was $66
million for the second quarter of 2017, compared to
$52 million for the second quarter of
2016 and $63 million for the first
quarter of 2017. Key's allowance for loan and lease losses was
$870 million, or 1.01% of total
period-end loans, at June 30, 2017, compared to 1.38% at
June 30, 2016, and 1.01% at March 31, 2017.
Net loan charge-offs for the second quarter of 2017 totaled
$66 million, or .31% of average total
loans. These results compare to $43
million, or .28%, for the second quarter of 2016, and
$58 million, or .27%, for the first
quarter of 2017.
At June 30, 2017, Key's nonperforming loans totaled
$507 million, which represented .59%
of period-end portfolio loans. These results compare to 1.00% at
June 30, 2016, and .67% at March 31, 2017. Nonperforming
assets at June 30, 2017, totaled $556
million, and represented .64% of period-end portfolio loans
and OREO and other nonperforming assets. These results compare to
1.03% at June 30, 2016, and .72% at March 31,
2017.
CAPITAL
Key's estimated risk-based capital ratios included in the
following table continued to exceed all "well-capitalized"
regulatory benchmarks at June 30, 2017.
Capital
Ratios
|
|
|
|
|
|
|
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
Common Equity Tier 1
(a), (b)
|
9.97%
|
|
9.91%
|
|
11.10%
|
|
Tier 1 risk-based
capital (a)
|
10.79
|
|
10.74
|
|
11.41
|
|
Total risk based
capital (a)
|
12.71
|
|
12.69
|
|
13.63
|
|
Tangible common
equity to tangible assets (b)
|
8.56
|
|
8.51
|
|
9.95
|
|
Leverage
(a)
|
9.96
|
|
9.81
|
|
10.59
|
|
|
|
|
|
(a)
|
6/30/2017 ratio is
estimated.
|
(b)
|
The table entitled
"GAAP to Non-GAAP Reconciliations" in the attached financial
supplement presents the computations of certain financial measures
related to "tangible common equity" and "Common Equity Tier 1." The
table reconciles the GAAP performance measures to the corresponding
non-GAAP measures, which provides a basis for period-to-period
comparisons. See below for further information on the Regulatory
Capital Rules.
|
Key's capital position remained strong throughout the first
quarter. As shown in the preceding table, at June 30, 2017,
Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital
ratios stood at 9.97% and 10.79%, respectively. In addition, the
tangible common equity ratio was 8.56% at June 30, 2017.
As a "standardized approach" banking organization, Key's
mandatory compliance with the final Basel III capital framework for
U.S. banking organizations (the "Regulatory Capital Rules") began
on January 1, 2015, subject to
transitional provisions extending to January
1, 2019. Key's estimated Common Equity Tier 1 ratio as
calculated under the fully phased-in Regulatory Capital Rules was
9.87% at June 30, 2017. This estimate exceeds the fully
phased-in required minimum Common Equity Tier 1 and Capital
Conservation Buffer of 7.00%.
Summary of Changes
in Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
in
thousands
|
|
|
|
|
Change 2Q17
vs.
|
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Shares outstanding at
beginning of period
|
1,097,479
|
|
1,079,314
|
|
842,290
|
|
|
1.7%
|
|
30.3%
|
|
Open market
repurchases and return of shares under employee compensation
plans
|
(5,072)
|
|
(8,673)
|
|
—
|
|
|
(41.5)
|
|
N/M
|
|
Shares issued under
employee compensation plans (net of cancellations)
|
332
|
|
6,270
|
|
413
|
|
|
(94.7)
|
|
(19.6)
|
|
Common shares
exchanged for Series A Preferred Stock
|
—
|
|
20,568
|
|
—
|
|
|
N/M
|
|
N/M
|
|
|
Shares outstanding at
end of period
|
1,092,739
|
|
1,097,479
|
|
842,703
|
|
|
(.4)%
|
|
29.7%
|
|
|
|
|
|
|
|
|
|
N/M = Not
Meaningful
|
Consistent with Key's 2016 Capital Plan, during the second
quarter of 2017, Key declared an increased dividend of $.095 per common share, representing a 12%
increase compared to the first quarter of 2017. Key also completed
$94 million of common share
repurchases during the quarter, including $88 million of common share repurchases in the
open market and $6 million of share
repurchases related to employee equity compensation programs.
Key's 2017 Capital Plan, which received no objection from the
Federal Reserve, includes two common share dividend increases
(subject to Board approval), as well as a common share repurchase
program of up to $800 million. This
authorization includes repurchases to offset issuances of common
shares under our employee compensation plans. Repurchases are
expected to be executed over the next four quarters.
LINE OF BUSINESS RESULTS
The following table shows the contribution made by each major
business segment to Key's taxable-equivalent revenue from
continuing operations and income (loss) from continuing operations
attributable to Key for the periods presented. For more detailed
financial information pertaining to each business segment, see the
tables at the end of this release.
Major Business
Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Revenue from
continuing operations (TE)
|
|
|
|
|
|
|
Key Community
Bank
|
$
|
1,012
|
|
$
|
907
|
|
$
|
598
|
|
|
11.6%
|
|
69.2%
|
|
Key Corporate
Bank
|
596
|
|
579
|
|
451
|
|
|
2.9
|
|
32.2
|
|
Other
Segments
|
35
|
|
29
|
|
31
|
|
|
20.7
|
|
12.9
|
|
|
Total
segments
|
1,643
|
|
1,515
|
|
1,080
|
|
|
8.4
|
|
52.1
|
|
Reconciling
Items
|
(3)
|
|
(9)
|
|
(2)
|
|
|
N/M
|
|
N/M
|
|
|
Total
|
$
|
1,640
|
|
$
|
1,506
|
|
$
|
1,078
|
|
|
8.9%
|
|
52.1%
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key
|
|
|
|
|
|
|
Key Community
Bank
|
$
|
197
|
|
$
|
146
|
|
$
|
80
|
|
|
34.9%
|
|
146.3%
|
|
Key Corporate
Bank
|
222
|
|
182
|
|
135
|
|
|
22.0
|
|
64.4
|
|
Other
Segments
|
28
|
|
21
|
|
25
|
|
|
33.3
|
|
12.0
|
|
|
Total
segments
|
447
|
|
349
|
|
240
|
|
|
28.1
|
|
86.3
|
|
Reconciling Items
(a)
|
(40)
|
|
(25)
|
|
(41)
|
|
|
N/M
|
|
N/M
|
|
|
Total
|
$
|
407
|
|
$
|
324
|
|
$
|
199
|
|
|
25.6%
|
|
104.5%
|
|
|
|
|
|
|
|
|
|
(a)
|
Reconciling items
consists primarily of the unallocated portion of merger-related
charges and items not allocated to the business segments because
they do not reflect their normal operations.
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Key Community
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
676
|
|
$
|
630
|
|
$
|
392
|
|
|
7.3%
|
|
72.4%
|
|
Noninterest
income
|
336
|
|
277
|
|
206
|
|
|
21.3
|
|
63.1
|
|
|
Total revenue
(TE)
|
1,012
|
|
907
|
|
598
|
|
|
11.6
|
|
69.2
|
|
Provision for credit
losses
|
47
|
|
47
|
|
25
|
|
|
—
|
|
88.0
|
|
Noninterest
expense
|
652
|
|
628
|
|
445
|
|
|
3.8
|
|
46.5
|
|
|
Income (loss) before
income taxes (TE)
|
313
|
|
232
|
|
128
|
|
|
34.9
|
|
144.5
|
|
Allocated income
taxes (benefit) and TE adjustments
|
116
|
|
86
|
|
48
|
|
|
34.9
|
|
141.7
|
|
|
Net income (loss)
attributable to Key
|
$
|
197
|
|
$
|
146
|
|
$
|
80
|
|
|
34.9%
|
|
146.3%
|
|
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
47,431
|
|
$
|
47,036
|
|
$
|
30,936
|
|
|
.8%
|
|
53.3%
|
|
Total
assets
|
51,419
|
|
50,963
|
|
32,963
|
|
|
.9
|
|
56.0
|
|
Deposits
|
79,716
|
|
79,393
|
|
53,794
|
|
|
.4
|
|
48.2
|
|
|
|
|
|
|
|
|
|
Assets under
management at period end
|
$
|
37,613
|
|
$
|
37,417
|
|
$
|
34,535
|
|
|
.5%
|
|
8.9%
|
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent
|
Additional Key
Community Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
99
|
|
$
|
98
|
|
$
|
73
|
|
|
1.0%
|
|
35.6%
|
|
Service charges on
deposit accounts
|
77
|
|
75
|
|
56
|
|
|
2.7
|
|
37.5
|
|
Cards and payments
income
|
60
|
|
55
|
|
46
|
|
|
9.1
|
|
30.4
|
|
Other noninterest
income
|
100
|
|
49
|
|
31
|
|
|
104.1
|
|
222.6
|
|
|
Total noninterest
income
|
$
|
336
|
|
$
|
277
|
|
$
|
206
|
|
|
21.3%
|
|
63.1%
|
|
|
|
|
|
|
|
|
|
Average deposit
balances
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
45,243
|
|
$
|
45,027
|
|
$
|
30,144
|
|
|
.5%
|
|
50.1%
|
|
Savings
deposits
|
5,293
|
|
5,268
|
|
2,365
|
|
|
.5
|
|
123.8
|
|
Certificates of
deposit ($100,000 or more)
|
4,016
|
|
3,878
|
|
2,383
|
|
|
3.6
|
|
68.5
|
|
Other time
deposits
|
4,640
|
|
4,692
|
|
3,245
|
|
|
(1.1)
|
|
43.0
|
|
Noninterest-bearing
deposits
|
20,524
|
|
20,528
|
|
15,657
|
|
|
—
|
|
31.1
|
|
|
Total
deposits
|
$
|
79,716
|
|
$
|
79,393
|
|
$
|
53,794
|
|
|
.4%
|
|
48.2%
|
|
|
|
|
|
|
|
|
|
Home equity
loans
|
|
|
|
|
|
|
Average
balance
|
$
|
12,330
|
|
$
|
12,456
|
|
$
|
9,908
|
|
|
|
|
Combined
weighted-average loan-to-value ratio (at date of
origination)
|
71%
|
|
70%
|
|
71%
|
|
|
|
|
Percent first lien
positions
|
60
|
|
60
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
|
|
Branches
|
1,210
|
|
1,216
|
|
949
|
|
|
|
|
Automated teller
machines
|
1,589
|
|
1,594
|
|
1,236
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Community Bank Summary of Operations (2Q17 vs.
2Q16)
- Positive operating leverage compared to prior year
- Net income increased $117
million, or 146.3%, from prior year
- Average commercial and industrial loans increased $5.4 billion, or 41.2%, from the prior year
- Average deposits increased $25.9
billion, or 48.2%, from the prior year
Key Community Bank recorded net income attributable to Key of
$197 million for the second quarter
of 2017, compared to $80 million for
the year-ago quarter, benefiting from momentum in Key's core
businesses, as well as the impact of the First Niagara
acquisition.
Taxable-equivalent net interest income increased by $284 million, or 72.4%, from the second quarter
of 2016. The increase was primarily attributable to the acquisition
of First Niagara, as well as the benefit from higher interest
rates. Average loans and leases increased $16.5 billion, or 53.3%, largely driven by a
$5.4 billion, or 41.2%, increase in
commercial and industrial loans. Additionally, average deposits
increased $25.9 billion, or 48.2%,
from one year ago.
Noninterest income was up $130
million, or 63.1%, from the year-ago quarter, driven by the
acquisition of First Niagara, including the addition of Key
Insurance and Benefits Services. Strength in cards and payments and
higher assets under management from market growth also contributed
to the increase. The increase in other noninterest income was
largely driven by the one-time gain related to Key's merchant
services business.
The provision for credit losses increased by $22 million, or 88.0%, and net loan charge-offs
increased $30 million from the second
quarter of 2016, primarily related to the acquisition of First
Niagara.
Noninterest expense increased by $207
million, or 46.5%, from the year-ago quarter, largely driven
by the acquisition of First Niagara, as well as core business
activity and investments. Personnel expense increased $76 million, while non-personnel expense
increased by $131 million, including
higher intangible amortization expense and higher FDIC assessment
expense.
Key Corporate
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
312
|
|
$
|
304
|
|
$
|
221
|
|
|
2.6%
|
|
41.2%
|
|
Noninterest
income
|
284
|
|
275
|
|
230
|
|
|
3.3
|
|
23.5
|
|
|
Total revenue
(TE)
|
596
|
|
579
|
|
451
|
|
|
2.9
|
|
32.2
|
|
Provision for credit
losses
|
19
|
|
17
|
|
30
|
|
|
11.8
|
|
(36.7)
|
|
Noninterest
expense
|
299
|
|
303
|
|
259
|
|
|
(1.3)
|
|
15.4
|
|
|
Income (loss) before
income taxes (TE)
|
278
|
|
259
|
|
162
|
|
|
7.3
|
|
71.6
|
|
Allocated income
taxes and TE adjustments
|
56
|
|
77
|
|
29
|
|
|
(27.3)
|
|
93.1
|
|
|
Net income
(loss)
|
222
|
|
182
|
|
133
|
|
|
22.0
|
|
66.9
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
(2)
|
|
|
N/M
|
|
N/M
|
|
|
Net income (loss)
attributable to Key
|
$
|
222
|
|
$
|
182
|
|
$
|
135
|
|
|
22.0%
|
|
64.4%
|
|
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
37,750
|
|
$
|
37,737
|
|
$
|
28,607
|
|
|
—
|
|
32.0%
|
|
Loans held for
sale
|
1,000
|
|
1,097
|
|
591
|
|
|
(8.8)%
|
|
69.2
|
|
Total
assets
|
44,177
|
|
44,173
|
|
33,908
|
|
|
—
|
|
30.3
|
|
Deposits
|
21,146
|
|
21,003
|
|
19,129
|
|
|
.7%
|
|
10.5%
|
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Additional Key
Corporate Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q17
vs.
|
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
35
|
|
$
|
37
|
|
$
|
37
|
|
|
(5.4)%
|
|
(5.4)%
|
|
Investment banking
and debt placement fees
|
134
|
|
124
|
|
94
|
|
|
8.1
|
|
42.6
|
|
Operating lease
income and other leasing gains
|
22
|
|
21
|
|
15
|
|
|
4.8
|
|
46.7
|
|
|
|
|
|
|
|
|
|
Corporate services
income
|
38
|
|
38
|
|
40
|
|
|
—
|
|
(5.0)
|
|
Service charges on
deposit accounts
|
13
|
|
12
|
|
12
|
|
|
8.3
|
|
8.3
|
|
Cards and payments
income
|
10
|
|
10
|
|
6
|
|
|
—
|
|
66.7
|
|
|
Payments and services
income
|
61
|
|
60
|
|
58
|
|
|
1.7
|
|
5.2
|
|
|
|
|
|
|
|
|
|
Mortgage servicing
fees
|
12
|
|
16
|
|
10
|
|
|
(25.0)
|
|
20.0
|
|
Other noninterest
income
|
20
|
|
17
|
|
16
|
|
|
17.6
|
|
25.0
|
|
|
Total noninterest
income
|
$
|
284
|
|
$
|
275
|
|
$
|
230
|
|
|
3.3%
|
|
23.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Corporate Bank Summary of Operations (2Q17 vs.
2Q16)
- Positive operating leverage compared to prior year
- Average loan and lease balances up $9.1
billion, or 32%, from the prior year
- Revenue up $145 million, or
32.2%, from the prior year
- Investment banking and debt placement fees up $40 million, or 42.6%, from the prior year
Key Corporate Bank recorded net income attributable to Key of
$222 million for the second quarter
of 2017, compared to $135 million for
the same period one year ago.
Taxable-equivalent net interest income increased by $91 million, or 41.2%, compared to the second
quarter of 2016 driven by higher earning asset yields and
balances. Average loan and lease balances increased
$9.1 billion, or 32%, from the
year-ago quarter, primarily driven by the First Niagara acquisition
as well as growth in commercial and industrial loans. Average
deposit balances increased $2
billion, or 10.5%, from the year-ago quarter, mostly driven
by the First Niagara acquisition.
Noninterest income was up $54
million, or 23.5%, from the prior year. This growth was
mostly due to $40 million of higher
investment banking and debt placement fees related to stronger
commercial mortgage banking, underwriting, and advisory fees, as
well as an increase of $7 million in
operating lease income and other leasing gains related to higher
originations. Additional increases of $4
million in both cards and payments income and other
noninterest income were partially offset by a $2 million decrease in trust and investment
services income.
The provision for credit losses decreased $11 million, or 36.7%, compared to the second
quarter of 2016 due to $8 million of
lower net loan charge-offs and improvement in the oil and gas
portfolio.
Noninterest expense increased by $40
million, or 15.4%, from the second quarter of 2016. The
increase from the prior year, reflected in both personnel and
non-personnel expense, was largely driven by the acquisition of
First Niagara, higher performance-based compensation and various
other items, including operating lease, FDIC, and cards and
payments expenses.
Other Segments
Other Segments consist of Corporate Treasury, Key's Principal
Investing unit, and various exit portfolios. Other Segments
generated net income attributable to Key of $28 million for the second quarter of 2017,
compared to $25 million for the same
period last year, driven by increases in operating lease income and
other leasing gains and corporate-owned life insurance income.
KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in
Cleveland, Ohio, Key is one of the
nation's largest bank-based financial services companies, with
assets of approximately $135.8 billion at June 30,
2017.
Key provides deposit, lending, cash management, insurance, and
investment services to individuals and businesses in 15 states
under the name KeyBank National Association through a network of
more than 1,200 branches and more than 1,500 ATMs. Key also
provides a broad range of sophisticated corporate and investment
banking products, such as merger and acquisition advice, public and
private debt and equity, syndications and derivatives to middle
market companies in selected industries throughout the United States under the KeyBanc Capital
Markets trade name. For more information, visit
https://www.key.com/. KeyBank is Member FDIC.
This earnings
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements do not relate strictly to historical or current
facts. Forward-looking statements usually can be identified
by the use of words such as "goal," "objective," "plan," "expect,"
"assume," "anticipate," "intend," "project," "believe," "estimate,"
or other words of similar meaning. Forward-looking statements
provide our current expectations or forecasts of future events,
circumstances, results, or aspirations. Forward-looking statements,
by their nature, are subject to assumptions, risks and
uncertainties, many of which are outside of our control. Our actual
results may differ materially from those set forth in our
forward-looking statements. There is no assurance that any list of
risks and uncertainties or risk factors is complete. Factors
that could cause Key's actual results to differ from those
described in the forward-looking statements can be found in
KeyCorp's Form 10-K for the year ended December 31, 2016, as well
as in KeyCorp's subsequent SEC filings, all of which have been
filed with the Securities and Exchange Commission (the "SEC") and
are available on Key's website (www.key.com/ir) and on the SEC's
website (www.sec.gov). These factors may include, among
others: deterioration of commercial real estate market
fundamentals, adverse changes in credit quality trends, declining
asset prices, a reversal of the U.S. economic recovery due to
financial, political, or other shocks, and the extensive and
increasing regulation of the U.S. financial services industry. Any
forward-looking statements made by us or on our behalf speak only
as of the date they are made and we do not undertake any obligation
to update any forward-looking statement to reflect the impact of
subsequent events or circumstances.
|
Notes to Editors:
A live Internet broadcast
of KeyCorp's conference call to discuss quarterly results and
currently anticipated earnings trends and to answer analysts'
questions can be accessed through the Investor Relations section at
https://www.key.com/ir at 9:00
a.m. ET, on Thursday, July 20, 2017. An audio
replay of the call will be available through July 30, 2017.
For up-to-date company information, media contacts, and facts
and figures about Key's lines of business, visit our Media Newsroom
at https://www.key.com/newsroom.
Financial
Highlights
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
Summary of
operations
|
|
|
|
|
Net interest income
(TE)
|
$
|
987
|
|
$
|
929
|
|
$
|
605
|
|
|
Noninterest
income
|
653
|
|
577
|
|
473
|
|
|
|
Total revenue
(TE)
|
1,640
|
|
1,506
|
|
1,078
|
|
|
Provision for credit
losses
|
66
|
|
63
|
|
52
|
|
|
Noninterest
expense
|
995
|
|
1,013
|
|
751
|
|
|
Income (loss) from
continuing operations attributable to Key
|
407
|
|
324
|
|
199
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
5
|
|
—
|
|
3
|
|
|
Net income (loss)
attributable to Key
|
412
|
|
324
|
|
202
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
393
|
|
296
|
|
193
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
5
|
|
—
|
|
3
|
|
|
Net income (loss)
attributable to Key common shareholders
|
398
|
|
296
|
|
196
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.36
|
|
$
|
.28
|
|
$
|
.23
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.37
|
|
.28
|
|
.23
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
.36
|
|
.27
|
|
.23
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming dilution
(a)
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(b)
|
.36
|
|
.27
|
|
.23
|
|
|
|
|
|
|
|
|
Cash dividends
declared
|
.095
|
|
.085
|
|
.085
|
|
|
Book value at period
end
|
13.02
|
|
12.71
|
|
13.08
|
|
|
Tangible book value
at period end
|
10.40
|
|
10.21
|
|
11.81
|
|
|
Market price at
period end
|
18.74
|
|
17.78
|
|
11.05
|
|
|
|
|
|
|
|
Performance
ratios
|
|
|
|
|
From continuing
operations:
|
|
|
|
|
Return on average
total assets
|
1.23
|
%
|
.99
|
%
|
.82
|
%
|
|
Return on average
common equity
|
11.12
|
|
8.76
|
|
7.15
|
|
|
Return on average
tangible common equity (c)
|
13.80
|
|
10.98
|
|
7.94
|
|
|
Net interest margin
(TE)
|
3.30
|
|
3.13
|
|
2.76
|
|
|
Cash efficiency ratio
(c)
|
59.3
|
|
65.8
|
|
69.0
|
|
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
|
Return on average
total assets
|
1.23
|
%
|
.98
|
%
|
.82
|
%
|
|
Return on average
common equity
|
11.26
|
|
8.76
|
|
7.26
|
|
|
Return on average
tangible common equity (c)
|
13.98
|
|
10.98
|
|
8.06
|
|
|
Net interest margin
(TE)
|
3.28
|
|
3.11
|
|
2.74
|
|
|
Loan to deposit
(d)
|
87.2
|
|
85.6
|
|
85.3
|
|
|
|
|
|
|
|
Capital ratios at
period end
|
|
|
|
|
Key shareholders'
equity to assets
|
11.23
|
%
|
11.14
|
%
|
11.18
|
%
|
|
Key common
shareholders' equity to assets
|
10.48
|
|
10.37
|
|
10.90
|
|
|
Tangible common
equity to tangible assets (c)
|
8.56
|
|
8.51
|
|
9.95
|
|
|
Common Equity Tier 1
(c), (e)
|
9.97
|
|
9.91
|
|
11.10
|
|
|
Tier 1 risk-based
capital (e)
|
10.79
|
|
10.74
|
|
11.41
|
|
|
Total risk-based
capital (e)
|
12.71
|
|
12.69
|
|
13.63
|
|
|
Leverage
(e)
|
9.96
|
|
9.81
|
|
10.59
|
|
|
|
|
|
|
|
Asset quality —
from continuing operations
|
|
|
|
|
Net loan
charge-offs
|
$
|
66
|
|
$
|
58
|
|
$
|
43
|
|
|
Net loan charge-offs
to average loans
|
.31
|
%
|
.27
|
%
|
.28
|
%
|
|
Allowance for loan
and lease losses
|
$
|
870
|
|
$
|
870
|
|
$
|
854
|
|
|
Allowance for credit
losses
|
918
|
|
918
|
|
904
|
|
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
%
|
1.01
|
%
|
1.38
|
%
|
|
Allowance for credit
losses to period-end loans
|
1.06
|
|
1.07
|
|
1.46
|
|
|
Allowance for loan
and lease losses to nonperforming loans (f)
|
171.6
|
|
151.8
|
|
138.0
|
|
|
Allowance for credit
losses to nonperforming loans (f)
|
181.1
|
|
160.2
|
|
146.0
|
|
|
Nonperforming loans
at period-end (f)
|
$
|
507
|
|
$
|
573
|
|
$
|
619
|
|
|
Nonperforming assets
at period-end (f)
|
556
|
|
623
|
|
637
|
|
|
Nonperforming loans
to period-end portfolio loans (f)
|
.59
|
%
|
.67
|
%
|
1.00
|
%
|
|
Nonperforming assets
to period-end portfolio loans plus OREO and other nonperforming
assets (f)
|
.64
|
|
.72
|
|
1.03
|
|
|
|
|
|
|
|
Trust
assets
|
|
|
|
|
Assets under
management
|
$
|
37,613
|
|
$
|
37,417
|
|
$
|
34,535
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
Average full-time
equivalent employees
|
18,344
|
|
18,386
|
|
13,419
|
|
|
Branches
|
1,210
|
|
1,216
|
|
949
|
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
$
|
14
|
|
$
|
11
|
|
$
|
8
|
|
|
|
|
|
|
Financial
Highlights (continued)
|
(dollars in millions,
except per share amounts)
|
|
|
Six months
ended
|
|
|
6/30/2017
|
|
6/30/2016
|
Summary of
operations
|
|
|
|
|
Net interest income
(TE)
|
$
|
1,916
|
|
|
$
|
1,217
|
|
|
Noninterest
income
|
1,230
|
|
|
904
|
|
|
Total revenue
(TE)
|
3,146
|
|
|
2,121
|
|
|
Provision for credit
losses
|
129
|
|
|
141
|
|
|
Noninterest
expense
|
2,008
|
|
|
1,454
|
|
|
Income (loss) from
continuing operations attributable to Key
|
731
|
|
|
386
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
5
|
|
|
4
|
|
|
Net income (loss)
attributable to Key
|
736
|
|
|
390
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
689
|
|
|
$
|
375
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
5
|
|
|
4
|
|
|
Net income (loss)
attributable to Key common shareholders
|
694
|
|
|
379
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.64
|
|
|
$
|
.45
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.64
|
|
|
.45
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
.63
|
|
|
.44
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming dilution
(a)
|
—
|
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(b)
|
.63
|
|
|
.45
|
|
|
|
|
|
|
|
Cash dividends
paid
|
.18
|
|
|
.16
|
|
|
|
|
|
|
Performance
ratios
|
|
|
|
|
From continuing
operations:
|
|
|
|
|
Return on average
total assets
|
1.11
|
%
|
|
.81
|
%
|
|
Return on average
common equity
|
9.97
|
|
|
7.01
|
|
|
Return on average
tangible common equity (c)
|
12.43
|
|
|
7.79
|
|
|
Net interest margin
(TE)
|
3.21
|
|
|
2.83
|
|
|
Cash efficiency ratio
(c)
|
62.4
|
|
|
67.8
|
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
|
Return on average
total assets
|
1.11
|
%
|
|
.80
|
%
|
|
Return on average
common equity
|
10.04
|
|
|
7.08
|
|
|
Return on average
tangible common equity (c)
|
12.52
|
|
|
7.87
|
|
|
Net interest margin
(TE)
|
3.19
|
|
|
2.80
|
|
|
|
|
|
|
Asset quality —
from continuing operations
|
|
|
|
|
Net loan
charge-offs
|
124
|
|
|
89
|
|
|
Net loan charge-offs
to average total loans
|
.29
|
%
|
|
.30
|
%
|
|
|
|
|
|
Other
data
|
|
|
|
|
Average full-time
equivalent employees
|
18,365
|
|
|
13,411
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
25
|
|
|
16
|
|
|
|
(a)
|
In April 2009,
management decided to wind down the operations of Austin Capital
Management, Ltd., a subsidiary that specialized in managing hedge
fund investments for institutional customers. In September 2009,
management decided to discontinue the education lending business
conducted through Key Education Resources, the education payment
and financing unit of KeyBank National Association.
|
(b)
|
Earnings per share
may not foot due to rounding.
|
(c)
|
The following table
entitled "GAAP to Non-GAAP Reconciliations" presents the
computations of certain financial measures related to "tangible
common equity," "Common Equity Tier 1," and "cash
efficiency." The table reconciles the GAAP performance measures to
the corresponding non-GAAP measures, which provides a basis for
period-to-period comparisons. For further information on the
Regulatory Capital Rules, see the "Capital" section of this
release.
|
(d)
|
Represents period-end
consolidated total loans and loans held for sale divided by
period-end consolidated total deposits (excluding deposits in
foreign office).
|
(e)
|
June 30, 2017,
ratio is estimated.
|
(f)
|
Nonperforming loan
balances exclude $835 million, $812 million, and $11 million of
purchased credit impaired loans at June 30, 2017,
March 31, 2017, and June 30, 2016,
respectively.
|
TE = Taxable
Equivalent, GAAP = U.S. generally accepted accounting
principles
|
GAAP to Non-GAAP
Reconciliations
(dollars in millions)
The table below presents certain non-GAAP financial measures
related to "tangible common equity," "return on average tangible
common equity," "Common Equity Tier 1," "pre-provision net
revenue," certain financial measures excluding merger-related
charges and/or other notable items, and "cash efficiency
ratio."
Notable items include certain revenue or expense items that may
occur in a reporting period which management does not consider
indicative of ongoing financial performance. Management believes it
is useful to consider certain financial metrics with and without
merger-related charges and/or other notable items in order to
enable a better understanding of Company results, increase
comparability of period-to-period results, and to evaluate and
forecast those results.
The tangible common equity ratio and the return on average
tangible common equity ratio have been a focus for some investors,
and management believes these ratios may assist investors in
analyzing Key's capital position without regard to the effects of
intangible assets and preferred stock. Traditionally, the banking
regulators have assessed bank and bank holding company capital
adequacy based on both the amount and the composition of capital,
the calculation of which is prescribed in federal banking
regulations. In October 2013, the
federal banking regulators published the final Basel III capital
framework for U.S. banking organizations (the "Regulatory Capital
Rules"). The Regulatory Capital Rules require higher and
better-quality capital and introduced a new capital measure,
"Common Equity Tier 1," a non-GAAP financial measure. The mandatory
compliance date for Key as a "standardized approach" banking
organization began on January 1,
2015, subject to transitional provisions extending to
January 1, 2019.
Common Equity Tier 1 is not formally defined by GAAP and is
considered to be a non-GAAP financial measure. Since analysts and
banking regulators may assess Key's capital adequacy using tangible
common equity and Common Equity Tier 1, management believes it is
useful to enable investors to assess Key's capital adequacy on
these same bases. The table also reconciles the GAAP performance
measures to the corresponding non-GAAP measures.
The table also shows the computation for pre-provision net
revenue, which is not formally defined by GAAP. Management believes
that eliminating the effects of the provision for credit losses
makes it easier to analyze the results by presenting them on a more
comparable basis.
As previously disclosed, Key completed its purchase of First
Niagara on August 1, 2016. The
definitive agreement and plan of merger to acquire First Niagara
was originally announced on October 30,
2015. As a result of this transaction, Key has recognized
merger-related charges. The table below shows the computation of
noninterest expense excluding merger-related charges, return on
average tangible common equity excluding merger-related charges,
return on average assets from continuing operations excluding
merger-related charges, cash efficiency ratio excluding
merger-related charges, and pre-provision net revenue excluding
merger-related charges. For the second quarter of 2017,
merger-related charges are included in the total for "notable
items," the detail of which is provided below. Management believes
that eliminating the effects of the merger-related charges and
other notable items makes it easier to analyze the results by
presenting them on a more comparable basis.
The cash efficiency ratio is a ratio of two non-GAAP performance
measures. As such, there is no directly comparable GAAP performance
measure. The cash efficiency ratio performance measure removes the
impact of Key's intangible asset amortization from the calculation.
The table below also shows the computation for the cash efficiency
ratio excluding merger-related charges. Management believes these
ratios provide greater consistency and comparability between Key's
results and those of its peer banks. Additionally, these ratios are
used by analysts and investors as they develop earnings forecasts
and peer bank analysis.
Non-GAAP financial measures have inherent limitations, are not
required to be uniformly applied, and are not audited. Although
these non-GAAP financial measures are frequently used by investors
to evaluate a company, they have limitations as analytical tools,
and should not be considered in isolation, or as a substitute for
analyses of results as reported under GAAP.
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
|
6/30/2017
|
6/30/2016
|
Tangible common
equity to tangible assets at period end
|
|
|
|
|
|
|
|
Key shareholders'
equity (GAAP)
|
$
|
15,253
|
|
$
|
14,976
|
|
$
|
11,313
|
|
|
|
|
|
Less:
|
Intangible
assets (a)
|
2,866
|
|
2,751
|
|
1,074
|
|
|
|
|
|
|
Preferred
Stock (b)
|
1,009
|
|
1,009
|
|
281
|
|
|
|
|
|
|
Tangible common
equity (non-GAAP)
|
$
|
11,378
|
|
$
|
11,216
|
|
$
|
9,958
|
|
|
|
|
|
Total assets
(GAAP)
|
$
|
135,824
|
|
$
|
134,476
|
|
$
|
101,150
|
|
|
|
|
|
Less:
|
Intangible
assets (a)
|
2,866
|
|
2,751
|
|
1,074
|
|
|
|
|
|
|
Tangible assets
(non-GAAP)
|
$
|
132,958
|
|
$
|
131,725
|
|
$
|
100,076
|
|
|
|
|
|
Tangible common
equity to tangible assets ratio (non-GAAP)
|
8.56
|
%
|
8.51
|
%
|
9.95
|
%
|
|
|
|
Common Equity Tier
1 at period end
|
|
|
|
|
|
|
|
Key shareholders'
equity (GAAP)
|
$
|
15,253
|
|
$
|
14,976
|
|
$
|
11,313
|
|
|
|
|
|
Less:
|
Preferred Stock
(b)
|
1,009
|
|
1,009
|
|
281
|
|
|
|
|
|
|
Common Equity Tier 1
capital before adjustments and deductions
|
14,244
|
|
13,967
|
|
11,032
|
|
|
|
|
|
Less:
|
Goodwill, net of
deferred taxes
|
2,417
|
|
2,379
|
|
1,031
|
|
|
|
|
|
|
Intangible assets,
net of deferred taxes
|
252
|
|
194
|
|
30
|
|
|
|
|
|
|
Deferred tax
assets
|
11
|
|
11
|
|
1
|
|
|
|
|
|
|
Net unrealized gains
(losses) on available-for-sale securities, net of deferred
taxes
|
(144)
|
|
(179)
|
|
129
|
|
|
|
|
|
|
Accumulated gains
(losses) on cash flow hedges, net of deferred taxes
|
(64)
|
|
(76)
|
|
77
|
|
|
|
|
|
|
Amounts in
accumulated other comprehensive income (loss) attributed
to
|
|
|
|
|
|
|
|
|
|
pension and
postretirement benefit costs, net of deferred taxes
|
(334)
|
|
(335)
|
|
(362)
|
|
|
|
|
|
|
Total Common Equity
Tier 1 capital (c)
|
$
|
12,106
|
|
$
|
11,973
|
|
$
|
10,126
|
|
|
|
|
|
Net risk-weighted
assets (regulatory) (c)
|
$
|
121,484
|
|
$
|
120,852
|
|
$
|
91,195
|
|
|
|
|
|
Common Equity Tier 1
ratio (non-GAAP) (c)
|
9.97
|
%
|
9.91
|
%
|
11.10
|
%
|
|
|
|
Notable
items
|
|
|
|
|
|
|
|
Merger-related
charges
|
$
|
(44)
|
|
$
|
(81)
|
|
$
|
(45)
|
|
|
$
|
(125)
|
|
$
|
(69)
|
|
|
Merchant services
gain
|
64
|
|
—
|
|
—
|
|
|
64
|
|
—
|
|
|
Purchase accounting
finalization, net
|
43
|
|
—
|
|
—
|
|
|
43
|
|
—
|
|
|
Charitable
contribution
|
(20)
|
|
—
|
|
—
|
|
|
(20)
|
|
—
|
|
|
|
Total notable
items
|
$
|
43
|
|
$
|
(81)
|
|
$
|
(45)
|
|
|
$
|
(38)
|
|
$
|
(69)
|
|
|
Income
taxes
|
16
|
|
(30)
|
|
(17)
|
|
|
(14)
|
|
(26)
|
|
|
|
Total notable items
after tax
|
$
|
27
|
|
$
|
(51)
|
|
$
|
(28)
|
|
|
$
|
(24)
|
|
$
|
(43)
|
|
GAAP to Non-GAAP
Reconciliations (continued)
|
(dollars in
millions)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
|
6/30/2017
|
6/30/2016
|
Pre-provision net
revenue
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
973
|
|
$
|
918
|
|
$
|
597
|
|
|
$
|
1,891
|
|
$
|
1,201
|
|
|
Plus:
|
Taxable-equivalent
adjustment
|
14
|
|
11
|
|
8
|
|
|
25
|
|
16
|
|
|
|
Noninterest
income
|
653
|
|
577
|
|
473
|
|
|
1,230
|
|
904
|
|
|
Less:
|
Noninterest
expense
|
995
|
|
1,013
|
|
751
|
|
|
2,008
|
|
1,454
|
|
|
|
Pre-provision net
revenue from continuing operations (non-GAAP)
|
$
|
645
|
|
$
|
493
|
|
$
|
327
|
|
|
$
|
1,138
|
|
$
|
667
|
|
|
Plus:
|
Notable
items
|
(43)
|
|
81
|
|
45
|
|
|
38
|
|
69
|
|
|
|
Pre-provision net
revenue from continuing operations excluding notable items
(non-GAAP)
|
$
|
602
|
|
$
|
574
|
|
$
|
372
|
|
|
$
|
1,176
|
|
$
|
736
|
|
Average tangible
common equity
|
|
|
|
|
|
|
|
Average Key
shareholders' equity (GAAP)
|
$
|
15,200
|
|
$
|
15,184
|
|
$
|
11,147
|
|
|
$
|
15,192
|
|
$
|
11,050
|
|
|
Less:
|
Intangible assets
(average) (d)
|
2,756
|
|
2,772
|
|
1,076
|
|
|
2,764
|
|
1,077
|
|
|
|
Preferred Stock
(average)
|
1,025
|
|
1,480
|
|
290
|
|
|
1,251
|
|
290
|
|
|
|
Average tangible
common equity (non-GAAP)
|
$
|
11,419
|
|
$
|
10,932
|
|
$
|
9,781
|
|
|
$
|
11,177
|
|
$
|
9,683
|
|
Return on average
tangible common equity from continuing operations
|
|
|
|
|
|
|
|
Net income (loss)
from continuing operations attributable to Key common shareholders
(GAAP)
|
$
|
393
|
|
$
|
296
|
|
$
|
193
|
|
|
$
|
689
|
|
$
|
375
|
|
|
Plus:
|
Notable items, after
tax
|
(27)
|
|
51
|
|
28
|
|
|
24
|
|
43
|
|
|
Net income (loss)
from continuing operations attributable to Key common shareholders
excluding
|
|
|
|
|
|
|
|
|
notable items
(non-GAAP)
|
$
|
366
|
|
$
|
347
|
|
$
|
221
|
|
|
$
|
713
|
|
$
|
418
|
|
|
Average tangible
common equity (non-GAAP)
|
11,419
|
|
10,932
|
|
9,781
|
|
|
11,177
|
|
9,683
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity from continuing operations
(non-GAAP)
|
13.80
|
%
|
10.98
|
%
|
7.94
|
%
|
|
12.43
|
%
|
7.79
|
%
|
|
Return on average
tangible common equity from continuing operations excluding notable
items
(non-GAAP)
|
12.86
|
|
12.87
|
|
9.09
|
|
|
12.86
|
|
8.68
|
|
Return on average
tangible common equity consolidated
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Key common shareholders (GAAP)
|
$
|
398
|
|
$
|
296
|
|
$
|
196
|
|
|
$
|
694
|
|
$
|
379
|
|
|
Average tangible
common equity (non-GAAP)
|
11,419
|
|
10,932
|
|
9,781
|
|
|
11,177
|
|
9,683
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity consolidated (non-GAAP)
|
13.98
|
%
|
10.98
|
%
|
8.06
|
%
|
|
12.52
|
%
|
7.87
|
%
|
Cash efficiency
ratio
|
|
|
|
|
|
|
|
Noninterest expense
(GAAP)
|
$
|
995
|
|
$
|
1,013
|
|
$
|
751
|
|
|
$
|
2,008
|
|
$
|
1,454
|
|
|
Less:
|
Intangible asset
amortization
|
22
|
|
22
|
|
7
|
|
|
44
|
|
15
|
|
|
|
Adjusted noninterest
expense (non-GAAP)
|
973
|
|
991
|
|
744
|
|
|
1,964
|
|
1,439
|
|
|
Less:
|
Notable items
(e)
|
60
|
|
81
|
|
45
|
|
|
141
|
|
69
|
|
|
|
Adjusted noninterest
expense excluding notable items (non-GAAP)
|
$
|
913
|
|
$
|
910
|
|
$
|
699
|
|
|
$
|
1,823
|
|
$
|
1,370
|
|
|
Net interest income
(GAAP)
|
$
|
973
|
|
$
|
918
|
|
$
|
597
|
|
|
$
|
1,891
|
|
$
|
1,201
|
|
|
Plus:
|
Taxable-equivalent
adjustment
|
14
|
|
11
|
|
8
|
|
|
25
|
|
16
|
|
|
|
Noninterest
income
|
653
|
|
577
|
|
473
|
|
|
1,230
|
|
904
|
|
|
|
Total
taxable-equivalent revenue (non-GAAP)
|
1,640
|
|
1,506
|
|
1,078
|
|
|
3,146
|
|
2,121
|
|
|
Plus:
|
Notable items
(f)
|
(103)
|
|
—
|
|
—
|
|
|
(103)
|
|
—
|
|
|
|
Adjusted total
taxable-equivalent revenue excluding notable items
(non-GAAP)
|
$
|
1,537
|
|
$
|
1,506
|
|
$
|
1,078
|
|
|
$
|
3,043
|
|
$
|
2,121
|
|
|
|
|
|
|
|
|
|
|
|
Cash efficiency ratio
(non-GAAP)
|
59.3
|
%
|
65.8
|
%
|
69.0
|
%
|
|
62.4
|
%
|
67.8
|
%
|
|
Cash efficiency ratio
excluding notable items (non-GAAP)
|
59.4
|
|
60.4
|
|
64.8
|
|
|
59.9
|
|
64.6
|
|
Return on average
total assets from continuing operations excluding notable
items
|
|
|
|
|
|
|
|
Income from
continuing operations attributable to Key (GAAP)
|
$
|
407
|
|
$
|
324
|
|
$
|
199
|
|
|
$
|
731
|
|
$
|
386
|
|
|
Plus:
|
Notable items, after
tax
|
(27)
|
|
51
|
|
28
|
|
|
24
|
|
43
|
|
|
|
Income from
continuing operations attributable to Key excluding notable items,
after tax
(non-GAAP)
|
$
|
380
|
|
$
|
375
|
|
$
|
227
|
|
|
$
|
755
|
|
$
|
429
|
|
|
|
|
|
|
|
|
|
|
|
Average total assets
from continuing operations (GAAP)
|
$
|
132,491
|
|
$
|
132,741
|
|
$
|
97,413
|
|
|
$
|
132,615
|
|
$
|
95,945
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
total assets from continuing operations excluding notable items
(non-GAAP)
|
1.15
|
%
|
1.15
|
%
|
.94
|
%
|
|
1.15
|
%
|
.90
|
%
|
GAAP to Non-GAAP
Reconciliations (continued)
|
(dollars in
millions)
|
|
Three
months
ended
|
|
|
|
|
|
6/30/2017
|
|
|
Common Equity Tier
1 under the Regulatory Capital Rules ("RCR")
(estimates)
|
|
|
|
|
Common Equity Tier 1
under current RCR
|
$
|
12,106
|
|
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
|
|
Deferred tax assets
and other intangible assets (g)
|
(66)
|
|
|
|
|
|
Common Equity Tier 1
anticipated under the fully phased-in RCR (h)
|
$
|
12,040
|
|
|
|
|
|
|
|
|
|
|
Net risk-weighted
assets under current RCR
|
$
|
121,484
|
|
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
|
|
Mortgage servicing
assets (i)
|
603
|
|
|
|
|
|
Volcker
funds
|
(140)
|
|
|
|
|
|
All other
assets
|
46
|
|
|
|
|
|
Total risk-weighted
assets anticipated under the fully phased-in RCR
(h)
|
$
|
121,993
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
ratio under the fully phased-in RCR (h)
|
9.87
|
%
|
|
|
|
|
|
|
|
Change 2Q17
vs.
|
|
2Q17
|
1Q17
|
2Q16
|
|
1Q17
|
2Q16
|
Operating leverage
excluding notable items
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
1,640
|
|
$
|
1,506
|
|
$
|
1,078
|
|
|
|
|
Less: Notable
items (f)
|
103
|
|
—
|
|
—
|
|
|
|
|
Total revenue
(TE) excluding notable items
|
$
|
1,537
|
|
$
|
1,506
|
|
$
|
1,078
|
|
|
2.1
|
%
|
42.6
|
%
|
|
|
|
|
|
|
|
Noninterest
expense
|
$
|
995
|
|
$
|
1,013
|
|
$
|
751
|
|
|
|
|
Less: Notable
items (e)
|
60
|
|
81
|
|
45
|
|
|
|
|
Noninterest
expense excluding notable items
|
$
|
935
|
|
$
|
932
|
|
$
|
706
|
|
|
.3
|
%
|
32.4
|
%
|
|
|
|
|
|
|
|
Operating
leverage excluding notable items (non-GAAP)
(j)
|
|
|
|
|
1.8
|
%
|
10.2
|
%
|
|
|
(a)
|
For the three months
ended June 30, 2017, March 31, 2017, and June 30,
2016, intangible assets exclude $33 million, $38 million, and $36
million, respectively, of period-end purchased credit card
receivables.
|
(b)
|
Net of capital
surplus.
|
(c)
|
June 30, 2017,
amount is estimated.
|
(d)
|
For the three months
ended June 30, 2017, March 31, 2017, and June 30,
2016, average intangible assets exclude $36 million, $40 million,
and $38 million, respectively, of average purchased credit card
receivables. For the six months ended June 30, 2017, and
June 30, 2016, average intangible assets exclude $38 million
and $40 million, respectively, of average purchased credit card
receivables.
|
(e)
|
Notable items for the
three months ended June 30, 2017, includes $44 million of
merger-related expense, $20 million charitable contribution, and a
credit of $4 million related to purchase accounting
finalization.
|
(f)
|
Notable items for the
three months ended June 30, 2017, includes $64 million related
to the merchant services gain and $39 million related to purchase
accounting finalization.
|
(g)
|
Includes the deferred
tax assets subject to future taxable income for realization,
primarily tax credit carryforwards, as well as intangible assets
(other than goodwill and mortgage servicing assets) subject to the
transition provisions of the final rule.
|
(h)
|
The anticipated
amount of regulatory capital and risk-weighted assets is based upon
the federal banking agencies' Regulatory Capital Rules (as fully
phased-in on January 1, 2019); Key is subject to the Regulatory
Capital Rules under the "standardized approach."
|
(i)
|
Item is included in
the 10%/15% exceptions bucket calculation and is risk-weighted at
250%.
|
(j)
|
Operating leverage
excluding notable items is calculated as the difference in the
change in total revenue (TE) excluding notable items from the
change in noninterest expense excluding notable items.
|
GAAP = U.S. generally
accepted accounting principles
|
Consolidated
Balance Sheets
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
Assets
|
|
|
|
|
Loans
|
$
|
86,503
|
|
$
|
86,125
|
|
$
|
62,098
|
|
|
Loans held for
sale
|
1,743
|
|
1,384
|
|
442
|
|
|
Securities available
for sale
|
18,024
|
|
18,431
|
|
14,552
|
|
|
Held-to-maturity
securities
|
10,638
|
|
10,186
|
|
4,832
|
|
|
Trading account
assets
|
1,081
|
|
921
|
|
965
|
|
|
Short-term
investments
|
2,522
|
|
2,525
|
|
6,599
|
|
|
Other
investments
|
732
|
|
689
|
|
577
|
|
|
|
Total earning
assets
|
121,243
|
|
120,261
|
|
90,065
|
|
|
Allowance for loan
and lease losses
|
(870)
|
|
(870)
|
|
(854)
|
|
|
Cash and due from
banks
|
601
|
|
549
|
|
496
|
|
|
Premises and
equipment
|
919
|
|
935
|
|
742
|
|
|
Operating lease
assets
|
691
|
|
563
|
|
399
|
|
|
Goodwill
|
2,464
|
|
2,427
|
|
1,060
|
|
|
Other intangible
assets
|
435
|
|
362
|
|
50
|
|
|
Corporate-owned life
insurance
|
4,100
|
|
4,087
|
|
3,568
|
|
|
Derivative
assets
|
636
|
|
578
|
|
1,234
|
|
|
Accrued income and
other assets
|
4,147
|
|
4,064
|
|
2,673
|
|
|
Discontinued
assets
|
1,458
|
|
1,520
|
|
1,717
|
|
|
|
Total
assets
|
$
|
135,824
|
|
$
|
134,476
|
|
$
|
101,150
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits in domestic
offices:
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
53,342
|
|
$
|
55,095
|
|
$
|
40,195
|
|
|
|
Savings
deposits
|
7,056
|
|
6,306
|
|
2,355
|
|
|
|
Certificates of
deposit ($100,000 or more)
|
6,286
|
|
5,859
|
|
3,381
|
|
|
|
Other time
deposits
|
4,605
|
|
4,694
|
|
3,267
|
|
|
|
Total
interest-bearing deposits
|
71,289
|
|
71,954
|
|
49,198
|
|
|
|
Noninterest-bearing
deposits
|
31,532
|
|
32,028
|
|
26,127
|
|
|
|
Total
deposits
|
102,821
|
|
103,982
|
|
75,325
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
1,780
|
|
442
|
|
360
|
|
|
Bank notes and other
short-term borrowings
|
924
|
|
943
|
|
687
|
|
|
Derivative
liabilities
|
308
|
|
255
|
|
746
|
|
|
Accrued expense and
other liabilities
|
1,475
|
|
1,552
|
|
1,326
|
|
|
Long-term
debt
|
13,261
|
|
12,324
|
|
11,388
|
|
|
|
Total
liabilities
|
120,569
|
|
119,498
|
|
89,832
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred
stock
|
1,025
|
|
1,025
|
|
290
|
|
|
Common
shares
|
1,257
|
|
1,257
|
|
1,017
|
|
|
Capital
surplus
|
6,310
|
|
6,287
|
|
3,835
|
|
|
Retained
earnings
|
9,878
|
|
9,584
|
|
9,166
|
|
|
Treasury stock, at
cost
|
(2,711)
|
|
(2,623)
|
|
(2,881)
|
|
|
Accumulated other
comprehensive income (loss)
|
(506)
|
|
(554)
|
|
(114)
|
|
|
|
Key shareholders'
equity
|
15,253
|
|
14,976
|
|
11,313
|
|
|
Noncontrolling
interests
|
2
|
|
2
|
|
5
|
|
|
|
Total
equity
|
15,255
|
|
14,978
|
|
11,318
|
|
Total liabilities
and equity
|
$
|
135,824
|
|
$
|
134,476
|
|
$
|
101,150
|
|
|
|
|
|
|
|
Common shares
outstanding (000)
|
1,092,739
|
|
1,097,479
|
|
842,703
|
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
|
6/30/2017
|
6/30/2016
|
Interest
income
|
|
|
|
|
|
|
|
Loans
|
$
|
948
|
|
$
|
877
|
|
$
|
567
|
|
|
$
|
1,825
|
|
$
|
1,129
|
|
|
Loans held for
sale
|
9
|
|
13
|
|
5
|
|
|
22
|
|
13
|
|
|
Securities available
for sale
|
90
|
|
95
|
|
74
|
|
|
185
|
|
149
|
|
|
Held-to-maturity
securities
|
55
|
|
51
|
|
24
|
|
|
106
|
|
48
|
|
|
Trading account
assets
|
7
|
|
7
|
|
6
|
|
|
14
|
|
13
|
|
|
Short-term
investments
|
5
|
|
3
|
|
6
|
|
|
8
|
|
10
|
|
|
Other
investments
|
3
|
|
4
|
|
2
|
|
|
7
|
|
5
|
|
|
|
Total interest
income
|
1,117
|
|
1,050
|
|
684
|
|
|
2,167
|
|
1,367
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
Deposits
|
66
|
|
58
|
|
34
|
|
|
124
|
|
65
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
—
|
|
1
|
|
—
|
|
|
1
|
|
—
|
|
|
Bank notes and other
short-term borrowings
|
4
|
|
5
|
|
3
|
|
|
9
|
|
5
|
|
|
Long-term
debt
|
74
|
|
68
|
|
50
|
|
|
142
|
|
96
|
|
|
|
Total interest
expense
|
144
|
|
132
|
|
87
|
|
|
276
|
|
166
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
973
|
|
918
|
|
597
|
|
|
1,891
|
|
1,201
|
|
Provision for credit
losses
|
66
|
|
63
|
|
52
|
|
|
129
|
|
141
|
|
Net interest income
after provision for credit losses
|
907
|
|
855
|
|
545
|
|
|
1,762
|
|
1,060
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income
|
|
|
|
|
|
|
|
Trust and investment
services income
|
134
|
|
135
|
|
110
|
|
|
269
|
|
219
|
|
|
Investment banking
and debt placement fees
|
135
|
|
127
|
|
98
|
|
|
262
|
|
169
|
|
|
Service charges on
deposit accounts
|
90
|
|
87
|
|
68
|
|
|
177
|
|
133
|
|
|
Operating lease
income and other leasing gains
|
30
|
|
23
|
|
18
|
|
|
53
|
|
35
|
|
|
Corporate services
income
|
55
|
|
54
|
|
53
|
|
|
109
|
|
103
|
|
|
Cards and payments
income
|
70
|
|
65
|
|
52
|
|
|
135
|
|
98
|
|
|
Corporate-owned life
insurance income
|
33
|
|
30
|
|
28
|
|
|
63
|
|
56
|
|
|
Consumer mortgage
income
|
6
|
|
6
|
|
3
|
|
|
12
|
|
5
|
|
|
Mortgage servicing
fees
|
15
|
|
18
|
|
10
|
|
|
33
|
|
22
|
|
|
Net gains (losses)
from principal investing
|
—
|
|
1
|
|
11
|
|
|
1
|
|
11
|
|
|
Other
income (a)
|
85
|
|
31
|
|
22
|
|
|
116
|
|
53
|
|
|
|
Total noninterest
income
|
653
|
|
577
|
|
473
|
|
|
1,230
|
|
904
|
|
|
|
|
|
|
|
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
Personnel
|
551
|
|
556
|
|
427
|
|
|
1,107
|
|
831
|
|
|
Net
occupancy
|
78
|
|
87
|
|
59
|
|
|
165
|
|
120
|
|
|
Computer
processing
|
55
|
|
60
|
|
45
|
|
|
115
|
|
88
|
|
|
Business services and
professional fees
|
45
|
|
46
|
|
40
|
|
|
91
|
|
81
|
|
|
Equipment
|
27
|
|
27
|
|
21
|
|
|
54
|
|
42
|
|
|
Operating lease
expense
|
21
|
|
19
|
|
14
|
|
|
40
|
|
27
|
|
|
Marketing
|
30
|
|
21
|
|
22
|
|
|
51
|
|
34
|
|
|
FDIC
assessment
|
21
|
|
20
|
|
8
|
|
|
41
|
|
17
|
|
|
Intangible asset
amortization
|
22
|
|
22
|
|
7
|
|
|
44
|
|
15
|
|
|
OREO expense,
net
|
3
|
|
2
|
|
2
|
|
|
5
|
|
3
|
|
|
Other
expense
|
142
|
|
153
|
|
106
|
|
|
295
|
|
196
|
|
|
|
Total noninterest
expense
|
995
|
|
1,013
|
|
751
|
|
|
2,008
|
|
1,454
|
|
Income (loss) from
continuing operations before income taxes
|
565
|
|
419
|
|
267
|
|
|
984
|
|
510
|
|
|
Income
taxes
|
158
|
|
94
|
|
69
|
|
|
252
|
|
125
|
|
Income (loss) from
continuing operations
|
407
|
|
325
|
|
198
|
|
|
732
|
|
385
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
5
|
|
—
|
|
3
|
|
|
5
|
|
4
|
|
Net income
(loss)
|
412
|
|
325
|
|
201
|
|
|
737
|
|
389
|
|
|
Less: Net
income (loss) attributable to noncontrolling interests
|
—
|
|
1
|
|
(1)
|
|
|
1
|
|
(1)
|
|
Net income (loss)
attributable to Key
|
$
|
412
|
|
$
|
324
|
|
$
|
202
|
|
|
$
|
736
|
|
$
|
390
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
393
|
|
$
|
296
|
|
$
|
193
|
|
|
$
|
689
|
|
$
|
375
|
|
Net income (loss)
attributable to Key common shareholders
|
398
|
|
296
|
|
196
|
|
|
694
|
|
379
|
|
|
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.36
|
|
$
|
.28
|
|
$
|
.23
|
|
|
$
|
.64
|
|
$
|
.45
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.37
|
|
.28
|
|
.23
|
|
|
.64
|
|
.45
|
|
|
|
|
|
|
|
|
|
|
Per common share —
assuming dilution
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.36
|
|
$
|
.27
|
|
$
|
.23
|
|
|
$
|
.63
|
|
$
|
.44
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key common
shareholders (b)
|
.36
|
|
.27
|
|
.23
|
|
|
.63
|
|
.45
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
$
|
.095
|
|
$
|
.085
|
|
$
|
.085
|
|
|
$
|
.18
|
|
$
|
.16
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding (000)
|
1,076,203
|
|
1,068,609
|
|
831,899
|
|
|
1,083,486
|
|
829,640
|
|
|
Effect of common
share options and other stock awards
|
16,836
|
|
17,931
|
|
6,597
|
|
|
15,808
|
|
7,138
|
|
Weighted-average
common shares and potential common shares outstanding
(000) (c)
|
1,093,039
|
|
1,086,540
|
|
838,496
|
|
|
1,099,294
|
|
836,778
|
|
|
|
|
|
|
|
|
|
|
(a)
|
For the three months
ended June 30, 2017, net securities gains (losses) totaled $1
million. For the three months ended March 31, 2017, net securities
gains (losses) totaled $1 million. For the three months ended June
30, 2016, net securities gains (losses) totaled less than $1
million. For the three months ended June 30, 2017, March 31, 2017,
and June 30, 2016, Key did not have any impairment losses related
to securities.
|
(b)
|
Earnings per share
may not foot due to rounding.
|
(c)
|
Assumes conversion of
common share options and other stock awards and/or convertible
preferred stock, as applicable.
|
Consolidated
Average Balance Sheets, and Net Interest Income and Yields/Rates
From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
2017
|
|
First Quarter
2017
|
|
Second Quarter
2016
|
|
|
Average
|
|
|
|
Average
|
|
|
|
Average
|
|
|
|
|
Balance
|
Interest
(a)
|
Yield/Rate
(a)
|
|
Balance
|
Interest
(a)
|
Yield/Rate
(a)
|
|
Balance
|
Interest
(a)
|
Yield/Rate
(a)
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: (b),
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial (d)
|
$
|
40,666
|
|
$
|
409
|
|
4.04
|
%
|
|
$
|
40,002
|
|
$
|
373
|
|
3.77
|
%
|
|
$
|
32,630
|
|
$
|
270
|
|
3.32
|
%
|
|
Real estate —
commercial mortgage
|
15,096
|
|
187
|
|
4.97
|
|
|
15,187
|
|
164
|
|
4.39
|
|
|
8,404
|
|
80
|
|
3.85
|
|
|
Real estate —
construction
|
2,204
|
|
31
|
|
5.51
|
|
|
2,353
|
|
26
|
|
4.54
|
|
|
869
|
|
8
|
|
3.78
|
|
|
Commercial lease
financing
|
4,690
|
|
50
|
|
4.33
|
|
|
4,635
|
|
44
|
|
3.76
|
|
|
3,949
|
|
37
|
|
3.77
|
|
|
Total commercial
loans
|
62,656
|
|
677
|
|
4.34
|
|
|
62,177
|
|
607
|
|
3.95
|
|
|
45,852
|
|
395
|
|
3.47
|
|
|
Real estate —
residential mortgage
|
5,509
|
|
52
|
|
3.77
|
|
|
5,520
|
|
54
|
|
3.94
|
|
|
2,253
|
|
22
|
|
4.11
|
|
|
Home equity
loans
|
12,473
|
|
135
|
|
4.31
|
|
|
12,611
|
|
131
|
|
4.22
|
|
|
10,098
|
|
102
|
|
4.04
|
|
|
Consumer direct
loans
|
1,743
|
|
31
|
|
7.07
|
|
|
1,762
|
|
30
|
|
6.97
|
|
|
1,599
|
|
26
|
|
6.53
|
|
|
Credit
cards
|
1,044
|
|
29
|
|
11.04
|
|
|
1,067
|
|
29
|
|
11.06
|
|
|
792
|
|
21
|
|
10.58
|
|
|
Consumer indirect
loans
|
3,077
|
|
38
|
|
5.02
|
|
|
2,996
|
|
37
|
|
4.91
|
|
|
554
|
|
9
|
|
6.56
|
|
|
Total consumer
loans
|
23,846
|
|
285
|
|
4.77
|
|
|
23,956
|
|
281
|
|
4.75
|
|
|
15,296
|
|
180
|
|
4.74
|
|
|
Total
loans
|
86,502
|
|
962
|
|
4.46
|
|
|
86,133
|
|
888
|
|
4.17
|
|
|
61,148
|
|
575
|
|
3.78
|
|
|
Loans held for
sale
|
1,082
|
|
9
|
|
3.58
|
|
|
1,188
|
|
13
|
|
4.28
|
|
|
611
|
|
5
|
|
3.18
|
|
|
Securities available
for sale (b), (e)
|
17,997
|
|
90
|
|
1.97
|
|
|
19,181
|
|
95
|
|
1.95
|
|
|
14,268
|
|
74
|
|
2.08
|
|
|
Held-to-maturity
securities (b)
|
10,469
|
|
55
|
|
2.09
|
|
|
9,988
|
|
51
|
|
2.04
|
|
|
4,883
|
|
24
|
|
1.98
|
|
|
Trading account
assets
|
1,042
|
|
7
|
|
3.00
|
|
|
968
|
|
7
|
|
2.75
|
|
|
967
|
|
6
|
|
2.28
|
|
|
Short-term
investments
|
1,970
|
|
5
|
|
.96
|
|
|
1,610
|
|
3
|
|
.79
|
|
|
5,559
|
|
6
|
|
.45
|
|
|
Other investments
(e)
|
687
|
|
3
|
|
1.87
|
|
|
709
|
|
4
|
|
2.26
|
|
|
610
|
|
2
|
|
1.54
|
|
|
Total earning
assets
|
119,749
|
|
1,131
|
|
3.78
|
|
|
119,777
|
|
1,061
|
|
3.57
|
|
|
88,046
|
|
692
|
|
3.16
|
|
|
Allowance for loan
and lease losses
|
(864)
|
|
|
|
|
(855)
|
|
|
|
|
(833)
|
|
|
|
|
Accrued income and
other assets
|
13,606
|
|
|
|
|
13,819
|
|
|
|
|
10,200
|
|
|
|
|
Discontinued
assets
|
1,477
|
|
|
|
|
1,540
|
|
|
|
|
1,738
|
|
|
|
|
Total
assets
|
$
|
133,968
|
|
|
|
|
$
|
134,281
|
|
|
|
|
$
|
99,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
54,416
|
|
34
|
|
.25
|
|
|
$
|
54,295
|
|
32
|
|
.24
|
|
|
$
|
39,687
|
|
16
|
|
.17
|
|
|
Savings
deposits
|
6,854
|
|
4
|
|
.21
|
|
|
6,351
|
|
1
|
|
.10
|
|
|
2,375
|
|
—
|
|
.02
|
|
|
Certificates of
deposit ($100,000 or more)
|
6,111
|
|
19
|
|
1.23
|
|
|
5,627
|
|
16
|
|
1.16
|
|
|
3,233
|
|
11
|
|
1.39
|
|
|
Other time
deposits
|
4,650
|
|
9
|
|
.77
|
|
|
4,706
|
|
9
|
|
.76
|
|
|
3,252
|
|
7
|
|
.85
|
|
|
Total
interest-bearing deposits
|
72,031
|
|
66
|
|
.36
|
|
|
70,979
|
|
58
|
|
.33
|
|
|
48,547
|
|
34
|
|
.29
|
|
|
Federal funds
purchased and securities
sold under repurchase
agreements
|
466
|
|
—
|
|
.23
|
|
|
795
|
|
1
|
|
.32
|
|
|
337
|
|
—
|
|
.01
|
|
|
Bank notes and other
short-term borrowings
|
1,216
|
|
4
|
|
1.43
|
|
|
1,802
|
|
5
|
|
1.06
|
|
|
694
|
|
3
|
|
1.39
|
|
|
Long-term debt
(f), (g)
|
11,046
|
|
74
|
|
2.68
|
|
|
10,833
|
|
68
|
|
2.54
|
|
|
9,294
|
|
50
|
|
2.25
|
|
|
Total
interest-bearing liabilities
|
84,759
|
|
144
|
|
.68
|
|
|
84,409
|
|
132
|
|
.63
|
|
|
58,872
|
|
87
|
|
.60
|
|
|
Noninterest-bearing
deposits
|
30,748
|
|
|
|
|
31,099
|
|
|
|
|
25,357
|
|
|
|
|
Accrued expense and
other liabilities
|
1,782
|
|
|
|
|
2,048
|
|
|
|
|
2,032
|
|
|
|
|
Discontinued
liabilities (g)
|
1,477
|
|
|
|
|
1,540
|
|
|
|
|
1,738
|
|
|
|
|
Total
liabilities
|
118,766
|
|
|
|
|
119,096
|
|
|
|
|
87,999
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
15,200
|
|
|
|
|
15,184
|
|
|
|
|
11,147
|
|
|
|
|
Noncontrolling
interests
|
2
|
|
|
|
|
1
|
|
|
|
|
5
|
|
|
|
|
Total
equity
|
15,202
|
|
|
|
|
15,185
|
|
|
|
|
11,152
|
|
|
|
|
Total liabilities
and equity
|
$
|
133,968
|
|
|
|
|
$
|
134,281
|
|
|
|
|
$
|
99,151
|
|
|
|
Interest rate spread
(TE)
|
|
|
3.10
|
%
|
|
|
|
2.94
|
%
|
|
|
|
2.56
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
987
|
|
3.30
|
%
|
|
|
929
|
|
3.13
|
%
|
|
|
605
|
|
2.76
|
%
|
TE adjustment
(b)
|
|
14
|
|
|
|
|
11
|
|
|
|
|
8
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
973
|
|
|
|
|
$
|
918
|
|
|
|
|
$
|
597
|
|
|
|
|
(a)
|
Results are from
continuing operations. Interest excludes the interest
associated with the liabilities referred to in (g) below,
calculated using a matched funds transfer pricing
methodology.
|
(b)
|
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%.
|
(c)
|
For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d)
|
Commercial and
industrial average balances include $117 million, $114 million, and
$87 million of assets from commercial credit cards for the three
months ended June 30, 2017, March 31, 2017, and
June 30, 2016, respectively.
|
(e)
|
Yield is calculated
on the basis of amortized cost.
|
(f)
|
Rate calculation
excludes basis adjustments related to fair value
hedges.
|
(g)
|
A portion of
long-term debt and the related interest expense is allocated to
discontinued liabilities as a result of applying Key's matched
funds transfer pricing methodology to discontinued
operations.
|
TE = Taxable
Equivalent, GAAP = U.S. generally accepted accounting
principles
|
|
|
|
|
|
|
|
|
|
Consolidated
Average Balance Sheets, and Net Interest Income and
Yields/Rates From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2017
|
|
Six months ended
June 30, 2016
|
|
|
Average
|
|
|
|
Average
|
|
|
|
|
Balance
|
Interest
(a)
|
Yield/Rate
(a)
|
|
Balance
|
Interest
(a)
|
Yield/ Rate
(a)
|
Assets
|
|
|
|
|
|
|
|
|
Loans: (b),
(c)
|
|
|
|
|
|
|
|
|
Commercial and
industrial (d)
|
$
|
40,336
|
|
$
|
782
|
|
3.90
|
%
|
|
$
|
32,110
|
|
$
|
533
|
|
3.33
|
%
|
|
Real estate —
commercial mortgage
|
15,142
|
|
351
|
|
4.68
|
|
|
8,271
|
|
157
|
|
3.81
|
|
|
Real estate —
construction
|
2,278
|
|
57
|
|
5.01
|
|
|
942
|
|
18
|
|
3.96
|
|
|
Commercial lease
financing
|
4,662
|
|
94
|
|
4.04
|
|
|
3,953
|
|
73
|
|
3.71
|
|
|
Total commercial
loans
|
62,418
|
|
1,284
|
|
4.14
|
|
|
45,276
|
|
781
|
|
3.47
|
|
|
Real estate —
residential mortgage
|
5,514
|
|
106
|
|
3.85
|
|
|
2,245
|
|
46
|
|
4.15
|
|
|
Home equity
loans
|
12,542
|
|
266
|
|
4.27
|
|
|
10,169
|
|
205
|
|
4.05
|
|
|
Consumer direct
loans
|
1,752
|
|
61
|
|
7.02
|
|
|
1,596
|
|
52
|
|
6.53
|
|
|
Credit
cards
|
1,055
|
|
58
|
|
11.05
|
|
|
788
|
|
42
|
|
10.65
|
|
|
Consumer indirect
loans
|
3,037
|
|
75
|
|
4.97
|
|
|
578
|
|
19
|
|
6.50
|
|
|
Total consumer
loans
|
23,900
|
|
566
|
|
4.76
|
|
|
15,376
|
|
364
|
|
4.75
|
|
|
Total
loans
|
86,318
|
|
1,850
|
|
4.31
|
|
|
60,652
|
|
1,145
|
|
3.79
|
|
|
Loans held for
sale
|
1,135
|
|
22
|
|
3.95
|
|
|
718
|
|
13
|
|
3.66
|
|
|
Securities available
for sale (b), (e)
|
18,586
|
|
185
|
|
1.96
|
|
|
14,238
|
|
149
|
|
2.10
|
|
|
Held-to-maturity
securities (b)
|
10,230
|
|
106
|
|
2.07
|
|
|
4,850
|
|
48
|
|
2.00
|
|
|
Trading account
assets
|
1,005
|
|
14
|
|
2.88
|
|
|
892
|
|
13
|
|
2.83
|
|
|
Short-term
investments
|
1,791
|
|
8
|
|
.88
|
|
|
4,495
|
|
10
|
|
.45
|
|
|
Other investments
(e)
|
698
|
|
7
|
|
2.07
|
|
|
629
|
|
5
|
|
1.64
|
|
|
Total earning
assets
|
119,763
|
|
2,192
|
|
3.67
|
|
|
86,474
|
|
1,383
|
|
3.21
|
|
|
Allowance for loan
and lease losses
|
(860)
|
|
|
|
|
(818)
|
|
|
|
|
Accrued income and
other assets
|
13,712
|
|
|
|
|
10,289
|
|
|
|
|
Discontinued
assets
|
1,508
|
|
|
|
|
1,771
|
|
|
|
|
Total
assets
|
$
|
134,123
|
|
|
|
|
$
|
97,716
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
54,356
|
|
66
|
|
.24
|
|
|
$
|
38,698
|
|
31
|
|
.16
|
|
|
Savings
deposits
|
6,604
|
|
5
|
|
.16
|
|
|
2,362
|
|
—
|
|
.02
|
|
|
Certificates of
deposit ($100,000 or more)
|
5,871
|
|
35
|
|
1.20
|
|
|
2,997
|
|
21
|
|
1.38
|
|
|
Other time
deposits
|
4,677
|
|
18
|
|
.77
|
|
|
3,226
|
|
13
|
|
.82
|
|
|
Total
interest-bearing deposits
|
71,508
|
|
124
|
|
.35
|
|
|
47,283
|
|
65
|
|
.28
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
629
|
|
1
|
|
.28
|
|
|
387
|
|
—
|
|
.04
|
|
|
Bank notes and other
short-term borrowings
|
1,508
|
|
9
|
|
1.21
|
|
|
643
|
|
5
|
|
1.50
|
|
|
Long-term debt
(f), (g)
|
10,940
|
|
142
|
|
2.61
|
|
|
8,930
|
|
96
|
|
2.22
|
|
|
Total
interest-bearing liabilities
|
84,585
|
|
276
|
|
.66
|
|
|
57,243
|
|
166
|
|
.59
|
|
|
Noninterest-bearing
deposits
|
30,922
|
|
|
|
|
25,468
|
|
|
|
|
Accrued expense and
other liabilities
|
1,914
|
|
|
|
|
2,177
|
|
|
|
|
Discontinued
liabilities (g)
|
1,509
|
|
|
|
|
1,771
|
|
|
|
|
Total
liabilities
|
118,930
|
|
|
|
|
86,659
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
15,192
|
|
|
|
|
11,050
|
|
|
|
|
Noncontrolling
interests
|
1
|
|
|
|
|
7
|
|
|
|
|
Total
equity
|
15,193
|
|
|
|
|
11,057
|
|
|
|
|
Total liabilities
and equity
|
$
|
134,123
|
|
|
|
|
$
|
97,716
|
|
|
|
Interest rate spread
(TE)
|
|
|
3.01
|
%
|
|
|
|
2.62
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
1,916
|
|
3.21
|
%
|
|
|
1,217
|
|
2.83
|
%
|
TE adjustment
(b)
|
|
25
|
|
|
|
|
16
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
1,891
|
|
|
|
|
$
|
1,201
|
|
|
|
|
(a)
|
Results are from
continuing operations. Interest excludes the interest
associated with the liabilities referred to in (g) below,
calculated using a matched funds transfer pricing
methodology.
|
(b)
|
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%.
|
(c)
|
For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d)
|
Commercial and
industrial average balances include $115 million and $86 million of
assets from commercial credit cards for the six months ended June
30, 2017, and June 30, 2016, respectively.
|
(e)
|
Yield is calculated
on the basis of amortized cost.
|
(f)
|
Rate calculation
excludes basis adjustments related to fair value
hedges.
|
(g)
|
A portion of
long-term debt and the related interest expense is allocated to
discontinued liabilities as a result of applying Key's matched
funds transfer pricing methodology to discontinued
operations.
|
TE = Taxable
Equivalent, GAAP = U.S. generally accepted accounting
principles
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
6/30/2017
|
|
3/31/2017
|
|
6/30/2016
|
|
6/30/2017
|
|
6/30/2016
|
Personnel
(a)
|
$
|
551
|
|
|
$
|
556
|
|
|
$
|
427
|
|
|
$
|
1,107
|
|
|
$
|
831
|
|
Net
occupancy
|
78
|
|
|
87
|
|
|
59
|
|
|
165
|
|
|
120
|
|
Computer
processing
|
55
|
|
|
60
|
|
|
45
|
|
|
115
|
|
|
88
|
|
Business services and
professional fees
|
45
|
|
|
46
|
|
|
40
|
|
|
91
|
|
|
81
|
|
Equipment
|
27
|
|
|
27
|
|
|
21
|
|
|
54
|
|
|
42
|
|
Operating lease
expense
|
21
|
|
|
19
|
|
|
14
|
|
|
40
|
|
|
27
|
|
Marketing
|
30
|
|
|
21
|
|
|
22
|
|
|
51
|
|
|
34
|
|
FDIC
assessment
|
21
|
|
|
20
|
|
|
8
|
|
|
41
|
|
|
17
|
|
Intangible asset
amortization
|
22
|
|
|
22
|
|
|
7
|
|
|
44
|
|
|
15
|
|
OREO expense,
net
|
3
|
|
|
2
|
|
|
2
|
|
|
5
|
|
|
3
|
|
Other
expense
|
142
|
|
|
153
|
|
|
106
|
|
|
295
|
|
|
196
|
|
Total noninterest
expense
|
$
|
995
|
|
|
$
|
1,013
|
|
|
$
|
751
|
|
|
$
|
2,008
|
|
|
$
|
1,454
|
|
Merger-related
charges (b)
|
44
|
|
|
81
|
|
|
45
|
|
|
125
|
|
|
69
|
|
Total noninterest
expense excluding merger-related charges
|
$
|
951
|
|
|
$
|
932
|
|
|
$
|
706
|
|
|
$
|
1,883
|
|
|
$
|
1,385
|
|
Average full-time
equivalent employees (c)
|
18,344
|
|
|
18,386
|
|
|
13,419
|
|
|
18,365
|
|
|
13,411
|
|
|
|
(a)
|
Additional detail
provided in Personnel Expense table below.
|
(b)
|
Additional detail
provide in Merger-Related Charges table below.
|
(c)
|
The number of average
full-time equivalent employees has not been adjusted for
discontinued operations.
|
Personnel
Expense
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
6/30/2017
|
|
3/31/2017
|
|
6/30/2016
|
|
6/30/2017
|
|
6/30/2016
|
Salaries and contract
labor
|
$
|
332
|
|
|
$
|
324
|
|
|
$
|
266
|
|
|
$
|
656
|
|
|
$
|
510
|
|
Incentive and
stock-based compensation
|
137
|
|
|
127
|
|
|
101
|
|
|
264
|
|
|
190
|
|
Employee
benefits
|
76
|
|
|
96
|
|
|
58
|
|
|
172
|
|
|
126
|
|
Severance
|
6
|
|
|
9
|
|
|
2
|
|
|
15
|
|
|
5
|
|
Total personnel
expense
|
$
|
551
|
|
|
$
|
556
|
|
|
$
|
427
|
|
|
$
|
1,107
|
|
|
$
|
831
|
|
Merger-related
charges
|
31
|
|
|
30
|
|
|
35
|
|
|
61
|
|
|
51
|
|
Total personnel
expense excluding merger-related charges
|
$
|
520
|
|
|
$
|
526
|
|
|
$
|
392
|
|
|
$
|
1,046
|
|
|
$
|
780
|
|
|
|
|
|
|
|
|
|
|
|
Merger-Related
Charges
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
6/30/2017
|
|
3/31/2017
|
|
6/30/2016
|
|
6/30/2017
|
|
6/30/2016
|
Personnel
|
$
|
31
|
|
|
$
|
30
|
|
|
$
|
35
|
|
|
61
|
|
|
$
|
51
|
|
Net
occupancy
|
(1)
|
|
|
5
|
|
|
—
|
|
|
4
|
|
|
—
|
|
Business services and
professional fees
|
6
|
|
|
5
|
|
|
5
|
|
|
11
|
|
|
12
|
|
Computer
processing
|
2
|
|
|
5
|
|
|
—
|
|
|
7
|
|
|
—
|
|
Marketing
|
6
|
|
|
6
|
|
|
3
|
|
|
12
|
|
|
4
|
|
Other non-personnel
expense
|
—
|
|
|
30
|
|
|
2
|
|
|
30
|
|
|
2
|
|
Noninterest
expense
|
44
|
|
|
81
|
|
|
45
|
|
|
125
|
|
|
69
|
|
Total merger-related
charges
|
$
|
44
|
|
|
$
|
81
|
|
|
$
|
45
|
|
|
$
|
125
|
|
|
$
|
69
|
|
Loan
Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Percent change
6/30/2017 vs.
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
|
3/31/2017
|
6/30/2016
|
Commercial and
industrial (a)
|
$
|
40,914
|
|
$
|
40,112
|
|
$
|
33,376
|
|
|
2.0
|
%
|
22.6
|
%
|
Commercial real
estate:
|
|
|
|
|
|
|
Commercial
mortgage
|
14,813
|
|
15,260
|
|
8,582
|
|
|
(2.9)
|
|
72.6
|
|
Construction
|
2,168
|
|
2,270
|
|
881
|
|
|
(4.5)
|
|
146.1
|
|
Total commercial real
estate loans
|
16,981
|
|
17,530
|
|
9,463
|
|
|
(3.1)
|
|
79.4
|
|
Commercial lease
financing (b)
|
4,737
|
|
4,665
|
|
3,988
|
|
|
1.5
|
|
18.8
|
|
Total commercial
loans
|
62,632
|
|
62,307
|
|
46,827
|
|
|
.5
|
|
33.8
|
|
Residential — prime
loans:
|
|
|
|
|
|
|
Real estate —
residential mortgage
|
5,517
|
|
5,507
|
|
2,285
|
|
|
.2
|
|
141.4
|
|
Home equity
loans
|
12,405
|
|
12,541
|
|
10,062
|
|
|
(1.1)
|
|
23.3
|
|
Total residential —
prime loans
|
17,922
|
|
18,048
|
|
12,347
|
|
|
(.7)
|
|
45.2
|
|
Consumer direct
loans
|
1,755
|
|
1,735
|
|
1,584
|
|
|
1.2
|
|
10.8
|
|
Credit
cards
|
1,049
|
|
1,037
|
|
813
|
|
|
1.2
|
|
29.0
|
|
Consumer indirect
loans
|
3,145
|
|
2,998
|
|
527
|
|
|
4.9
|
|
496.8
|
|
Total consumer
loans
|
23,871
|
|
23,818
|
|
15,271
|
|
|
.2
|
|
56.3
|
|
Total loans (c),
(d)
|
$
|
86,503
|
|
$
|
86,125
|
|
$
|
62,098
|
|
|
.4
|
%
|
39.3
|
%
|
|
|
(a)
|
Loan balances include
$118 million, $114 million, and $88 million of commercial credit
card balances at June 30, 2017, March 31, 2017, and
June 30, 2016, respectively.
|
(b)
|
Commercial lease
financing includes receivables held as collateral for a secured
borrowing of $47 million, $55 million, and $102 million at
June 30, 2017, March 31, 2017, and June 30, 2016,
respectively. Principal reductions are based on the cash payments
received from these related receivables.
|
(c)
|
At June 30,
2017, total loans include purchased loans of $17.8 billion, of
which $835 million were purchased credit impaired. At
March 31, 2017, total loans include purchased loans of $19.0
billion, of which $812 million were purchased credit impaired. At
June 30, 2016, total loans include purchased loans of $104
million, of which $11 million were purchased credit
impaired.
|
(d)
|
Total loans exclude
loans of $1.4 billion at June 30, 2017, $1.5 billion at
March 31, 2017, and $1.7 billion at June 30, 2016,
related to the discontinued operations of the education lending
business.
|
Loans Held for
Sale Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
6/30/2017 vs.
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
|
3/31/2017
|
6/30/2016
|
Commercial and
industrial
|
$
|
338
|
|
$
|
171
|
|
$
|
150
|
|
|
97.7
|
%
|
125.3
|
%
|
Real estate —
commercial mortgage
|
1,332
|
|
1,150
|
|
270
|
|
|
15.8
|
|
393.3
|
|
Commercial lease
financing
|
10
|
|
1
|
|
3
|
|
|
900.0
|
|
233.3
|
|
Real estate —
residential mortgage
|
63
|
|
62
|
|
19
|
|
|
1.6
|
|
231.6
|
|
Total loans held for
sale (a)
|
$
|
1,743
|
|
$
|
1,384
|
|
$
|
442
|
|
|
25.9
|
%
|
294.3
|
%
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $63 million at June 30, 2017, and $62 million
at March 31, 2017.
|
N/M = Not
Meaningful
|
Summary of Changes
in Loans Held for Sale
|
(in
millions)
|
|
|
|
|
|
|
|
2Q17
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
Balance at beginning
of period
|
$
|
1,384
|
|
$
|
1,104
|
|
$
|
1,137
|
|
$
|
442
|
|
$
|
684
|
|
Purchases
|
—
|
|
—
|
|
—
|
|
48
|
|
—
|
|
New
originations
|
2,876
|
|
2,563
|
|
2,846
|
|
2,857
|
|
1,539
|
|
Transfers from (to)
held to maturity, net
|
(7)
|
|
17
|
|
11
|
|
2
|
|
22
|
|
Loan sales
|
(2,507)
|
|
(2,299)
|
|
(2,889)
|
|
(2,180)
|
|
(1,802)
|
|
Loan draws
(payments), net
|
(3)
|
|
(1)
|
|
(1)
|
|
(32)
|
|
(1)
|
|
Balance at end of
period (a)
|
$
|
1,743
|
|
$
|
1,384
|
|
$
|
1,104
|
|
$
|
1,137
|
|
$
|
442
|
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $63 million at June 30, 2017, and $62 million
at March 31, 2017, December 31, 2016, and
September 30, 2016.
|
Summary of Loan
and Lease Loss Experience From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
6/30/2017
|
3/31/2017
|
6/30/2016
|
|
6/30/2017
|
6/30/2016
|
Average loans
outstanding
|
$
|
86,502
|
|
$
|
86,133
|
|
$
|
61,148
|
|
|
$
|
86,318
|
|
$
|
60,652
|
|
Allowance for loan
and lease losses at beginning of period
|
$
|
870
|
|
$
|
858
|
|
$
|
826
|
|
|
$
|
858
|
|
$
|
796
|
|
Loans charged
off:
|
|
|
|
|
|
|
Commercial and
industrial
|
40
|
|
32
|
|
35
|
|
|
72
|
|
61
|
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
3
|
|
—
|
|
2
|
|
|
3
|
|
3
|
|
Real estate —
construction
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Total commercial real
estate loans
|
3
|
|
—
|
|
2
|
|
|
3
|
|
3
|
|
Commercial lease
financing
|
1
|
|
7
|
|
3
|
|
|
8
|
|
6
|
|
Total commercial
loans
|
44
|
|
39
|
|
40
|
|
|
83
|
|
70
|
|
Real estate —
residential mortgage
|
4
|
|
(2)
|
|
1
|
|
|
2
|
|
3
|
|
Home equity
loans
|
9
|
|
8
|
|
7
|
|
|
17
|
|
17
|
|
Consumer direct
loans
|
8
|
|
10
|
|
6
|
|
|
18
|
|
12
|
|
Credit
cards
|
12
|
|
11
|
|
8
|
|
|
23
|
|
16
|
|
Consumer indirect
loans
|
5
|
|
11
|
|
2
|
|
|
16
|
|
6
|
|
Total consumer
loans
|
38
|
|
38
|
|
24
|
|
|
76
|
|
54
|
|
Total loans charged
off
|
82
|
|
77
|
|
64
|
|
|
159
|
|
124
|
|
Recoveries:
|
|
|
|
|
|
|
Commercial and
industrial
|
2
|
|
5
|
|
3
|
|
|
7
|
|
6
|
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
—
|
|
—
|
|
6
|
|
|
—
|
|
8
|
|
Real estate —
construction
|
—
|
|
1
|
|
—
|
|
|
1
|
|
1
|
|
Total commercial real
estate loans
|
—
|
|
1
|
|
6
|
|
|
1
|
|
9
|
|
Commercial lease
financing
|
—
|
|
2
|
|
2
|
|
|
2
|
|
2
|
|
Total commercial
loans
|
2
|
|
8
|
|
11
|
|
|
10
|
|
17
|
|
Real estate —
residential mortgage
|
1
|
|
2
|
|
—
|
|
|
3
|
|
2
|
|
Home equity
loans
|
5
|
|
3
|
|
4
|
|
|
8
|
|
7
|
|
Consumer direct
loans
|
2
|
|
1
|
|
2
|
|
|
3
|
|
3
|
|
Credit
cards
|
2
|
|
1
|
|
1
|
|
|
3
|
|
2
|
|
Consumer indirect
loans
|
4
|
|
4
|
|
3
|
|
|
8
|
|
4
|
|
Total consumer
loans
|
14
|
|
11
|
|
10
|
|
|
25
|
|
18
|
|
Total
recoveries
|
16
|
|
19
|
|
21
|
|
|
35
|
|
35
|
|
Net loan
charge-offs
|
(66)
|
|
(58)
|
|
(43)
|
|
|
(124)
|
|
(89)
|
|
Provision (credit)
for loan and lease losses
|
66
|
|
70
|
|
71
|
|
|
136
|
|
147
|
|
Foreign currency
translation adjustment
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Allowance for loan
and lease losses at end of period
|
$
|
870
|
|
$
|
870
|
|
$
|
854
|
|
|
$
|
870
|
|
$
|
854
|
|
|
|
|
|
|
|
|
Liability for credit
losses on lending-related commitments at beginning of
period
|
$
|
48
|
|
$
|
55
|
|
$
|
69
|
|
|
$
|
55
|
|
$
|
56
|
|
Provision (credit)
for losses on lending-related commitments
|
—
|
|
(7)
|
|
(19)
|
|
|
(7)
|
|
(6)
|
|
Liability for credit
losses on lending-related commitments at end of period
(a)
|
$
|
48
|
|
$
|
48
|
|
$
|
50
|
|
|
$
|
48
|
|
$
|
50
|
|
|
|
|
|
|
|
|
Total allowance for
credit losses at end of period
|
$
|
918
|
|
$
|
918
|
|
$
|
904
|
|
|
$
|
918
|
|
$
|
904
|
|
|
|
|
|
|
|
|
Net loan charge-offs
to average total loans
|
.31
|
%
|
.27
|
%
|
.28
|
%
|
|
.29
|
%
|
.30
|
%
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
|
1.01
|
|
1.38
|
|
|
1.01
|
|
1.38
|
|
Allowance for credit
losses to period-end loans
|
1.06
|
|
1.07
|
|
1.46
|
|
|
1.06
|
|
1.46
|
|
Allowance for loan
and lease losses to nonperforming loans
|
171.6
|
|
151.8
|
|
138.0
|
|
|
171.6
|
|
138.0
|
|
Allowance for credit
losses to nonperforming loans
|
181.1
|
|
160.2
|
|
146.0
|
|
|
181.1
|
|
146.0
|
|
|
|
|
|
|
|
|
Discontinued
operations — education lending business:
|
|
|
|
|
|
|
Loans charged
off
|
$
|
4
|
|
$
|
6
|
|
$
|
6
|
|
|
$
|
10
|
|
$
|
15
|
|
Recoveries
|
2
|
|
2
|
|
2
|
|
|
4
|
|
5
|
|
Net loan
charge-offs
|
$
|
(2)
|
|
$
|
(4)
|
|
$
|
(4)
|
|
|
$
|
(6)
|
|
$
|
(10)
|
|
|
|
(a)
|
Included in "Accrued
expense and other liabilities" on the balance sheet.
|
Asset Quality
Statistics From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
2Q17
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
Net loan
charge-offs
|
$
|
66
|
|
$
|
58
|
|
$
|
72
|
|
$
|
44
|
|
$
|
43
|
|
Net loan charge-offs
to average total loans
|
.31
|
%
|
.27
|
%
|
.34
|
%
|
.23
|
%
|
.28
|
%
|
Allowance for loan
and lease losses
|
$
|
870
|
|
$
|
870
|
|
$
|
858
|
|
$
|
865
|
|
$
|
854
|
|
Allowance for credit
losses (a)
|
918
|
|
918
|
|
913
|
|
918
|
|
904
|
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
%
|
1.01
|
%
|
1.00
|
%
|
1.01
|
%
|
1.38
|
%
|
Allowance for credit
losses to period-end loans
|
1.06
|
|
1.07
|
|
1.06
|
|
1.07
|
|
1.46
|
|
Allowance for loan
and lease losses to nonperforming loans (b)
|
171.6
|
|
151.8
|
|
137.3
|
|
119.6
|
|
138.0
|
|
Allowance for credit
losses to nonperforming loans (b)
|
181.1
|
|
160.2
|
|
146.1
|
|
127.0
|
|
146.0
|
|
Nonperforming loans
at period end (b)
|
$
|
507
|
|
$
|
573
|
|
$
|
625
|
|
$
|
723
|
|
$
|
619
|
|
Nonperforming assets
at period end (b)
|
556
|
|
623
|
|
676
|
|
760
|
|
637
|
|
Nonperforming loans
to period-end portfolio loans (b)
|
.59
|
%
|
.67
|
%
|
.73
|
%
|
.85
|
%
|
1.00
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other nonperforming
assets (b)
|
.64
|
|
.72
|
|
.79
|
|
.89
|
|
1.03
|
|
|
|
(a)
|
Includes the
allowance for loan and lease losses plus the liability for credit
losses on lending-related unfunded commitments.
|
(b)
|
Nonperforming loan
balances exclude $835 million, $812 million, $865 million, $959
million, and $11 million of purchased credit impaired loans at
June 30, 2017, March 31, 2017, December 31, 2016,
September 30, 2016, and June 30, 2016,
respectively.
|
Summary of
Nonperforming Assets and Past Due Loans From Continuing
Operations
|
(dollars in
millions)
|
|
6/30/2017
|
3/31/2017
|
12/31/2016
|
9/30/2016
|
6/30/2016
|
Commercial and
industrial
|
$
|
178
|
|
$
|
258
|
|
$
|
297
|
|
$
|
335
|
|
$
|
321
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
34
|
|
32
|
|
26
|
|
32
|
|
14
|
|
Real estate —
construction
|
4
|
|
2
|
|
3
|
|
17
|
|
25
|
|
Total commercial real
estate loans
|
38
|
|
34
|
|
29
|
|
49
|
|
39
|
|
Commercial lease
financing
|
11
|
|
5
|
|
8
|
|
13
|
|
10
|
|
Total commercial
loans
|
227
|
|
297
|
|
334
|
|
397
|
|
370
|
|
Real estate —
residential mortgage
|
58
|
|
54
|
|
56
|
|
72
|
|
54
|
|
Home equity
loans
|
208
|
|
207
|
|
223
|
|
225
|
|
189
|
|
Consumer direct
loans
|
2
|
|
3
|
|
6
|
|
2
|
|
1
|
|
Credit
cards
|
2
|
|
3
|
|
2
|
|
3
|
|
2
|
|
Consumer indirect
loans
|
10
|
|
9
|
|
4
|
|
24
|
|
3
|
|
Total consumer
loans
|
280
|
|
276
|
|
291
|
|
326
|
|
249
|
|
Total nonperforming
loans (a)
|
507
|
|
573
|
|
625
|
|
723
|
|
619
|
|
OREO
|
48
|
|
49
|
|
51
|
|
35
|
|
15
|
|
Other nonperforming
assets
|
1
|
|
1
|
|
0
|
|
2
|
|
3
|
|
Total nonperforming
assets (a)
|
$
|
556
|
|
$
|
623
|
|
$
|
676
|
|
$
|
760
|
|
$
|
637
|
|
Accruing loans past
due 90 days or more
|
$
|
85
|
|
$
|
79
|
|
$
|
87
|
|
$
|
49
|
|
$
|
70
|
|
Accruing loans past
due 30 through 89 days
|
340
|
|
312
|
|
404
|
|
317
|
|
203
|
|
Restructured loans —
accruing and nonaccruing (b)
|
333
|
|
302
|
|
280
|
|
304
|
|
277
|
|
Restructured loans
included in nonperforming loans (b)
|
193
|
|
161
|
|
141
|
|
149
|
|
133
|
|
Nonperforming assets
from discontinued operations — education lending
business
|
5
|
|
4
|
|
5
|
|
5
|
|
5
|
|
Nonperforming loans
to period-end portfolio loans (a)
|
.59
|
%
|
.67
|
%
|
.73
|
%
|
.85
|
%
|
1.00
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other nonperforming
assets (a)
|
.64
|
|
.72
|
|
.79
|
|
.89
|
|
1.03
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $835 million, $812 million, $865 million, $959
million, and $11 million, of purchased credit impaired loans at
June 30, 2017, March 31, 2017, December 31, 2016,
September 30, 2016, and June 30, 2016,
respectively.
|
(b)
|
Restructured loans
(i.e., troubled debt restructurings) are those for which Key, for
reasons related to a borrower's financial difficulties, grants a
concession to the borrower that it would not otherwise
consider. These concessions are made to improve the
collectability of the loan and generally take the form of a
reduction of the interest rate, extension of the maturity date or
reduction in the principal balance.
|
Summary of Changes
in Nonperforming Loans From Continuing Operations
|
(in
millions)
|
|
2Q17
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
Balance at beginning
of period
|
$
|
573
|
|
$
|
625
|
|
$
|
723
|
|
$
|
619
|
|
$
|
676
|
|
Loans placed on
nonaccrual status
|
143
|
|
218
|
|
170
|
|
78
|
|
124
|
|
Nonperforming loans
acquired from First Niagara (a)
|
—
|
|
—
|
|
(31)
|
|
150
|
|
—
|
|
Charge-offs
|
(82)
|
|
(77)
|
|
(81)
|
|
(53)
|
|
(64)
|
|
Loans sold
|
—
|
|
(8)
|
|
(9)
|
|
—
|
|
—
|
|
Payments
|
(84)
|
|
(59)
|
|
(30)
|
|
(32)
|
|
(75)
|
|
Transfers to
OREO
|
(8)
|
|
(11)
|
|
(21)
|
|
(5)
|
|
(6)
|
|
Transfers to other
nonperforming assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Loans returned to
accrual status
|
(35)
|
|
(115)
|
|
(96)
|
|
(34)
|
|
(36)
|
|
Balance at end of
period (b)
|
$
|
507
|
|
$
|
573
|
|
$
|
625
|
|
$
|
723
|
|
$
|
619
|
|
|
|
(a)
|
During the fourth
quarter of 2016, Key adjusted the estimated fair value of the First
Niagara acquired loan portfolio recorded during the third quarter
of 2016, resulting in a $31 million decrease in the balance of
acquired nonperforming loans.
|
(b)
|
Nonperforming loan
balances exclude $835 million, $812 million, $865 million,
$959 million, and $11 million of purchased credit impaired loans at
June 30, 2017, March 31, 2017, December 31, 2016,
September 30, 2016, and June 30, 2016,
respectively.
|
Line of Business
Results
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
2Q17 vs.
|
|
2Q17
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
|
1Q17
|
2Q16
|
Key Community
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
1,012
|
|
$
|
907
|
|
$
|
902
|
|
$
|
783
|
|
$
|
598
|
|
|
11.6
|
%
|
69.2
|
%
|
Provision for credit
losses
|
47
|
|
47
|
|
48
|
|
37
|
|
25
|
|
|
—
|
|
88.0
|
|
Noninterest
expense
|
652
|
|
628
|
|
682
|
|
589
|
|
445
|
|
|
3.8
|
|
46.5
|
|
Net income (loss)
attributable to Key
|
197
|
|
146
|
|
108
|
|
98
|
|
80
|
|
|
34.9
|
|
146.3
|
|
Average loans and
leases
|
47,431
|
|
47,036
|
|
47,031
|
|
41,548
|
|
30,936
|
|
|
.8
|
|
53.3
|
|
Average
deposits
|
79,716
|
|
79,393
|
|
79,358
|
|
69,397
|
|
53,794
|
|
|
.4
|
|
48.2
|
|
Net loan
charge-offs
|
47
|
|
43
|
|
42
|
|
31
|
|
17
|
|
|
9.3
|
|
176.5
|
|
Net loan charge-offs
to average total loans
|
.40
|
%
|
.37
|
%
|
.36
|
%
|
.30
|
%
|
.22
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
406
|
|
$
|
395
|
|
$
|
412
|
|
$
|
428
|
|
$
|
651
|
|
|
2.8
|
|
(37.6)
|
|
Return on average
allocated equity
|
16.62
|
%
|
12.61
|
%
|
9.05
|
%
|
10.95
|
%
|
11.76
|
%
|
|
N/A
|
|
N/A
|
|
Average full-time
equivalent employees
|
10,899
|
|
10,804
|
|
11,198
|
|
9,805
|
|
7,331
|
|
|
.9
|
|
48.7
|
|
|
|
|
|
|
|
|
|
|
Key Corporate
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
596
|
|
$
|
579
|
|
$
|
630
|
|
$
|
556
|
|
$
|
451
|
|
|
2.9
|
%
|
32.2
|
%
|
Provision for credit
losses
|
19
|
|
17
|
|
20
|
|
25
|
|
30
|
|
|
11.8
|
|
(36.7)
|
|
Noninterest
expense
|
299
|
|
303
|
|
326
|
|
310
|
|
259
|
|
|
(1.3)
|
|
15.4
|
|
Net income (loss)
attributable to Key
|
222
|
|
182
|
|
222
|
|
159
|
|
135
|
|
|
22.0
|
|
64.4
|
|
Average loans and
leases
|
37,750
|
|
37,737
|
|
36,773
|
|
34,561
|
|
28,607
|
|
|
—
|
|
32.0
|
|
Average loans held
for sale
|
1,000
|
|
1,097
|
|
1,223
|
|
1,103
|
|
591
|
|
|
(8.8)
|
|
69.2
|
|
Average
deposits
|
21,146
|
|
21,003
|
|
23,172
|
|
22,708
|
|
19,129
|
|
|
.7
|
|
10.5
|
|
Net loan
charge-offs
|
19
|
|
14
|
|
26
|
|
12
|
|
27
|
|
|
35.7
|
|
(29.6)
|
|
Net loan charge-offs
to average total loans
|
.20
|
%
|
.15
|
%
|
.28
|
%
|
.14
|
%
|
.38
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
119
|
|
$
|
197
|
|
$
|
244
|
|
$
|
318
|
|
$
|
355
|
|
|
(39.6)
|
|
(66.5)
|
|
Return on average
allocated equity
|
31.29
|
%
|
25.06
|
%
|
30.89
|
%
|
26.72
|
%
|
26.23
|
%
|
|
N/A
|
|
N/A
|
|
Average full-time
equivalent employees
|
2,364
|
|
2,384
|
|
2,380
|
|
2,330
|
|
2,138
|
|
|
(.8)
|
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/A = Not Applicable, N/M = Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/keycorp-reports-second-quarter-2017-net-income-of-393-million-or-36-per-common-share-300491409.html
SOURCE KeyCorp