CLEVELAND, July 19, 2018 /PRNewswire/ -- KeyCorp (NYSE:
KEY) today announced second quarter net income from continuing
operations attributable to Key common shareholders of $464 million, or $.44 per common share, compared to $402 million, or $.38 per common share, for the first quarter of
2018 and $393 million, or
$.36 per common share, for the second
quarter of 2017. Key's results in the second quarter of 2018 and
the second quarter of 2017 included a number of notable items;
additional detail can be found on page 24 of this release.
"Second quarter results were
strong, driven by broad-based growth and momentum in our commercial
and consumer businesses. Continued loan growth, higher fees, and
expense discipline drove positive operating leverage for the
quarter. Importantly, our cash efficiency ratio improved to 58.8%
and our return on tangible common equity was 16.7%. Across our
franchise, we are benefitting from efforts to do more for our new
and existing clients, while also increasing the productivity and
efficiency of our businesses. Key's improved profitability and
returns in the second quarter mark meaningful progress as we
deliver on our commitments and work to achieve our long-term
targets.
During the quarter, we also
announced a 42% increase in our common share dividend along with a
$1.2 billion share repurchase
program, as part of our 2018 capital plan. Our plan marks a
significant increase in shareholder payout as we move toward
targeted levels of capital and common dividend payout, all to
maximize long-term shareholder value."
-
Beth Mooney, Chairman and
CEO
Selected Financial
Highlights
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|
|
|
dollars in
millions, except per share data
|
|
|
|
|
Change 2Q18
vs.
|
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
464
|
|
$
|
402
|
|
$
|
393
|
|
|
15.4
|
%
|
18.1
|
%
|
Income (loss) from
continuing operations attributable to Key common shareholders
per
common share — assuming
dilution
|
.44
|
|
.38
|
|
.36
|
|
|
15.8
|
|
22.2
|
|
Return on average
tangible common equity from continuing operations
(a)
|
16.73
|
%
|
14.89
|
%
|
13.80
|
%
|
|
N/A
|
|
N/A
|
|
Return on average
total assets from continuing operations
|
1.41
|
|
1.25
|
|
1.23
|
|
|
N/A
|
|
N/A
|
|
Common Equity Tier 1
ratio (b)
|
10.12
|
|
9.99
|
|
9.91
|
|
|
N/A
|
|
N/A
|
|
Book value at period
end
|
$
|
13.29
|
|
$
|
13.07
|
|
$
|
13.02
|
|
|
1.7
|
%
|
2.1
|
%
|
Net interest margin
(TE) from continuing operations
|
3.19
|
%
|
3.15
|
%
|
3.30
|
%
|
|
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
"Return on
average
tangible common equity from continuing operations." The table
reconciles the GAAP performance measures to the corresponding
non-GAAP measures, which provides
a basis
for period-to-period comparisons.
|
(b) 6/30/2018 ratio is
estimated.
|
TE = Taxable
Equivalent, N/A = Not Applicable
|
INCOME STATEMENT
HIGHLIGHTS
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Revenue
|
|
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|
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|
|
|
|
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|
dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Net interest income
(TE)
|
$
|
987
|
|
$
|
952
|
|
$
|
987
|
|
|
3.7
|
%
|
—
|
|
Noninterest
income
|
660
|
|
601
|
|
653
|
|
|
9.8
|
|
1.1
|
%
|
Total
revenue
|
$
|
1,647
|
|
$
|
1,553
|
|
$
|
1,640
|
|
|
6.1
|
%
|
.4
|
%
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent
|
Taxable-equivalent net interest income was $987 million for the second quarter of 2018, and
the net interest margin was 3.19%, compared to taxable-equivalent
net interest income of $987 million
and a net interest margin of 3.30% for the second quarter of 2017.
Second quarter 2018 net interest income included $28 million of purchase accounting accretion, a
decline of $72 million from the
second quarter of 2017. Excluding purchase accounting
accretion, taxable-equivalent net interest income increased
$72 million from the second quarter
of 2017, and the net interest margin increased 13 basis points,
reflecting the benefit from higher interest rates and higher
earning asset balances.
Compared to the first quarter of 2018, taxable-equivalent net
interest income increased by $35
million, and the net interest margin increased by four basis
points. Both net interest income and the net interest margin
benefited from higher interest rates and strong commercial loan
growth. One additional day in the quarter further benefited net
interest income. These benefits were partially offset by continued
expected declines in purchase accounting accretion. Excluding
purchase accounting accretion, taxable-equivalent net interest
income increased $40 million from the
first quarter of 2018 and the net interest margin increased six
basis points.
Noninterest
Income
|
|
|
|
|
|
|
|
|
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|
dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Trust and investment
services income
|
$
|
128
|
|
$
|
133
|
|
$
|
134
|
|
|
(3.8)%
|
|
(4.5)%
|
|
Investment banking
and debt placement fees
|
155
|
|
143
|
|
135
|
|
|
8.4
|
|
14.8
|
|
Service charges on
deposit accounts
|
91
|
|
89
|
|
90
|
|
|
2.2
|
|
1.1
|
|
Operating lease
income and other leasing gains
|
(6)
|
|
32
|
|
30
|
|
|
N/M
|
|
N/M
|
|
Corporate services
income
|
61
|
|
62
|
|
55
|
|
|
(1.6)
|
|
10.9
|
|
Cards and payments
income
|
71
|
|
62
|
|
70
|
|
|
14.5
|
|
1.4
|
|
Corporate-owned life
insurance income
|
32
|
|
32
|
|
33
|
|
|
—
|
|
(3.0)
|
|
Consumer mortgage
income
|
7
|
|
7
|
|
6
|
|
|
—
|
|
16.7
|
|
Mortgage servicing
fees
|
22
|
|
20
|
|
15
|
|
|
10.0
|
|
46.7
|
|
Other
income
|
99
|
|
21
|
|
85
|
|
|
371.4
|
|
16.5
|
|
Total noninterest
income
|
$
|
660
|
|
$
|
601
|
|
$
|
653
|
|
|
9.8
|
%
|
1.1
|
%
|
|
|
|
|
|
|
|
N/M = Not
meaningful
|
Key's noninterest income was $660
million for the second quarter of 2018, compared to
$653 million for the year-ago
quarter. Growth was driven by an increase in investment banking and
debt placement fees, related to strength in advisory fees,
including benefit from the acquisition of Cain Brothers. Mortgage servicing fees also
increased, benefiting from portfolio growth and increases in
special servicing fees. Other income increased compared to the
year-ago quarter, largely due to a gain on the sale of Key
Insurance and Benefits Services. These increases were partially
offset by a decline in operating lease income and other leasing
gains, driven by a $42 million lease
residual loss in the second quarter of 2018. Trust and investment
services income also declined, impacted by the sale of Key
Insurance and Benefits Services.
Compared to the first quarter of 2018, noninterest income
increased by $59 million. The primary
driver of the quarter-over-quarter increase was a $78 million gain related to the sale of Key
Insurance and Benefits Services, reported in other income.
Additionally, investment banking and debt placement fees and cards
and payments income, which increased $12
million and $9 million,
respectively, benefited from ongoing investments and momentum
across the franchise. These increases were partially offset by a
decline in operating lease income related to a lease residual loss,
as well as trust and investment services income, which was impacted
by the sale of Key Insurance and Benefits Services.
Noninterest
Expense
|
|
|
|
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dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Personnel
expense
|
$
|
586
|
|
$
|
594
|
|
$
|
553
|
|
|
(1.3)%
|
|
6.0
|
%
|
Nonpersonnel
expense
|
407
|
|
412
|
|
442
|
|
|
(1.2)
|
|
(7.9)
|
|
Total noninterest
expense
|
$
|
993
|
|
$
|
1,006
|
|
$
|
995
|
|
|
(1.3)
|
|
(.2)
|
|
|
|
|
|
|
|
|
N/M = Not
meaningful
|
Key's noninterest expense was $993
million for the second quarter of 2018, compared to
$995 million in the year-ago quarter.
Growth from acquisitions and investments, including Cain Brothers and HelloWallet, as well as the
addition of client-facing bankers and continued investment in our
residential mortgage business, contributed to both personnel and
nonpersonnel expense in the second quarter of 2018.
Efficiency-related expenses of $22
million (largely severance) and $5
million of costs related to the sale of Key Insurance and
Benefits Services also impacted the current quarter's results. The
current quarter also benefited from the realization of
merger-related cost savings. In the second quarter of 2017, Key
incurred $44 million of
merger-related charges and a $20
million charitable contribution.
Key's noninterest expense was $993
million for the second quarter of 2018, compared to
$1 billion in the prior quarter. This
quarter's decrease was largely driven by expected seasonal trends,
including lower employee benefits expense, which declined
$23 million, and lower occupancy and
intangible asset amortization. Partially offsetting these declines
were $22 million related to
efficiency efforts (largely severance) and $5 million related to the sale of Key Insurance
and Benefits Services.
BALANCE SHEET HIGHLIGHTS
Average
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Commercial and
industrial (a)
|
$
|
45,030
|
|
$
|
42,733
|
|
$
|
40,666
|
|
|
5.4
|
%
|
10.7
|
%
|
Other commercial
loans
|
20,394
|
|
20,705
|
|
21,990
|
|
|
(1.5)
|
|
(7.3)
|
|
Home equity
loans
|
11,601
|
|
11,877
|
|
12,473
|
|
|
(2.3)
|
|
(7.0)
|
|
Other consumer
loans
|
11,619
|
|
11,612
|
|
11,373
|
|
|
.1
|
|
2.2
|
|
Total
loans
|
$
|
88,644
|
|
$
|
86,927
|
|
$
|
86,502
|
|
|
2.0
|
%
|
2.5
|
%
|
|
|
|
|
|
|
|
(a) Commercial and industrial
average loan balances include $126 million, $120 million, and
$117 million of assets
from commercial credit cards at June 30, 2018,
March 31, 2018, and June 30, 2017,
respectively.
|
Average loans were $88.6 billion
for the second quarter of 2018, an increase of $2.1 billion compared to the second quarter of
2017, reflecting broad-based growth in commercial and industrial
loans, partially offset by a decline in commercial real estate
balances related to higher paydowns.
Compared to the first quarter of 2018, average loans increased
by $1.7 billion, largely the result
of growth in commercial and industrial loans. Key realized growth
across commercial client segments, with commercial and industrial
loans up 3% in the Community Bank and 7% in the Corporate Bank,
unannualized.
Average
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Non-time
deposits
|
$
|
91,538
|
|
$
|
90,719
|
|
$
|
92,018
|
|
|
.9
|
%
|
(.5)
|
%
|
Certificates of
deposit ($100,000 or more)
|
7,516
|
|
6,972
|
|
6,111
|
|
|
7.8
|
|
23.0
|
|
Other time
deposits
|
4,949
|
|
4,865
|
|
4,650
|
|
|
1.7
|
|
6.4
|
|
Total
deposits
|
$
|
104,003
|
|
$
|
102,556
|
|
$
|
102,779
|
|
|
1.4
|
%
|
1.2
|
%
|
|
|
|
|
|
|
|
Cost of total
deposits
|
.43
|
%
|
.36
|
%
|
.26
|
%
|
|
N/A
|
N/A
|
|
|
|
|
|
|
|
N/A = Not
Applicable
|
Average deposits totaled $104
billion for the second quarter of 2018, an increase of
$1.2 billion compared to the year-ago
quarter, reflecting a shift to higher-yielding deposit products, as
well as strength in Key's retail banking franchise and growth from
commercial relationships. Growth was partially offset by the
managed exit of certain higher cost corporate and public sector
deposits.
Compared to the first quarter of 2018, average deposits
increased by $1.4 billion. NOW and
money market deposit accounts increased $1.2
billion and certificates of deposit and other time deposits
increased $628 million, partly offset
by a $471 million decline in
noninterest-bearing deposits, as clients shift to higher-yielding
deposit products. The linked quarter deposit growth continues to
reflect strong retail deposit growth and growth from commercial
relationships.
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Net loan
charge-offs
|
$
|
60
|
|
$
|
54
|
|
$
|
66
|
|
|
11.1
|
%
|
(9.1)
|
%
|
Net loan charge-offs
to average total loans
|
.27
|
%
|
.25
|
%
|
.31
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming loans
at period end (a)
|
$
|
545
|
|
$
|
541
|
|
$
|
507
|
|
|
.7
|
|
7.5
|
|
Nonperforming assets
at period end (a)
|
571
|
|
569
|
|
556
|
|
|
.4
|
|
2.7
|
|
Allowance for loan
and lease losses
|
887
|
|
881
|
|
870
|
|
|
.7
|
|
2.0
|
|
Allowance for loan
and lease losses to nonperforming loans (a)
|
162.8
|
%
|
162.8
|
%
|
171.6
|
%
|
|
N/A
|
|
N/A
|
|
Provision for credit
losses
|
$
|
64
|
|
$
|
61
|
|
$
|
66
|
|
|
4.9
|
%
|
(3.0)
|
%
|
|
|
|
|
|
|
|
(a) Nonperforming
loan balances exclude $629 million, $690 million, and $835 million
of purchased credit impaired loans at
June 30, 2018, March 31, 2018, and June 30,
2017, respectively.
|
N/A = Not
Applicable
|
Key's provision for credit losses was $64
million for the second quarter of 2018, compared to
$66 million for the second quarter of
2017 and $61 million for the first
quarter of 2018. Key's allowance for loan and lease losses was
$887 million, or 1.01% of total
period-end loans, at June 30, 2018, compared to 1.01% at
June 30, 2017, and 1.00% at March 31, 2018.
Net loan charge-offs for the second quarter of 2018 totaled
$60 million, or .27% of average total
loans. These results compare to $66
million, or .31%, for the second quarter of 2017, and
$54 million, or .25%, for the first
quarter of 2018.
At June 30, 2018, Key's nonperforming loans totaled
$545 million, which represented .62%
of period-end portfolio loans. These results compare to .59% at
June 30, 2017, and .61% at March 31, 2018. Nonperforming
assets at June 30, 2018, totaled $571
million, and represented .65% of period-end portfolio loans
and OREO and other nonperforming assets. These results compare to
.64% at June 30, 2017, and .65% at March 31, 2018.
CAPITAL
Key's estimated risk-based capital ratios included in the
following table continued to exceed all "well-capitalized"
regulatory benchmarks at June 30, 2018.
Capital
Ratios
|
|
|
|
|
|
|
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
Common Equity Tier 1
(a)
|
10.12
|
%
|
9.99
|
%
|
9.91
|
%
|
Tier 1 risk-based
capital (a)
|
10.94
|
|
10.82
|
|
10.73
|
|
Total risk based
capital (a)
|
12.83
|
|
12.73
|
|
12.64
|
|
Tangible common
equity to tangible assets (b)
|
8.32
|
|
8.22
|
|
8.56
|
|
Leverage
(a)
|
9.91
|
|
9.76
|
|
9.95
|
|
|
|
|
|
(a) 6/30/2018
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." 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 in the second quarter. As
shown in the preceding table, at June 30, 2018, Key's
estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios
stood at 10.12% and 10.94%, respectively. Key's tangible common
equity ratio was 8.32% at June 30, 2018.
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
10.03% at June 30, 2018. 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 2Q18
vs.
|
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Shares outstanding at
beginning of period
|
1,064,939
|
|
1,069,084
|
|
1,097,479
|
|
|
(.4)
|
%
|
(3.0)
|
%
|
Open market
repurchases and return of shares under employee
compensation plans
|
(6,259)
|
|
(9,399)
|
|
(5,072)
|
|
|
(33.4)
|
|
23.4
|
|
Shares issued under
employee compensation plans (net of cancellations)
|
264
|
|
5,254
|
|
332
|
|
|
(95.0)
|
|
(20.5)
|
|
Shares outstanding at end of
period
|
1,058,944
|
|
1,064,939
|
|
1,092,739
|
|
|
(.6)
|
%
|
(3.1)
|
%
|
|
|
|
|
|
|
|
|
N/M = Not
Meaningful
|
Consistent with Key's 2017 Capital Plan, during the second
quarter of 2018, Key declared a dividend of $.12 per common share, and completed $126 million of common share repurchases during
the quarter. These repurchases included $123
million of common share repurchases in the open market and
$3 million of share repurchases
related to employee equity compensation programs.
Key's 2018 Capital Plan received no objection from the Federal
Reserve. The plan includes a 42% increase in the quarterly common
share dividend from $0.12 per share
to $0.17 per share, which is payable
in the third quarter of 2018. Also included in the plan is a common
share repurchase program of up to $1.225
billion. 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 2Q18
vs.
|
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Revenue from
continuing operations (TE)
|
|
|
|
|
|
|
Key Community
Bank
|
$
|
996
|
|
$
|
958
|
|
$
|
998
|
|
|
4.0
|
%
|
(.2)
|
%
|
Key Corporate
Bank
|
542
|
|
559
|
|
597
|
|
|
(3.0)
|
|
(9.2)
|
|
Other
Segments
|
38
|
|
37
|
|
46
|
|
|
2.7
|
|
(17.4)
|
|
Total segments
|
1,576
|
|
1,554
|
|
1,641
|
|
|
1.4
|
|
(4.0)
|
|
Reconciling Items
(a)
|
71
|
|
(1)
|
|
(1)
|
|
|
N/M
|
|
N/M
|
|
Total
|
$
|
1,647
|
|
$
|
1,553
|
|
$
|
1,640
|
|
|
6.1
|
%
|
.4
|
%
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key
|
|
|
|
|
|
|
Key Community
Bank
|
$
|
244
|
|
$
|
197
|
|
$
|
198
|
|
|
23.9
|
%
|
23.2
|
%
|
Key Corporate
Bank
|
167
|
|
207
|
|
224
|
|
|
(19.3)
|
|
(25.4)
|
|
Other
Segments
|
25
|
|
18
|
|
24
|
|
|
38.9
|
|
4.2
|
|
Total segments
|
436
|
|
422
|
|
446
|
|
|
3.3
|
|
(2.2)
|
|
Reconciling Items
(b)
|
43
|
|
(6)
|
|
(39)
|
|
|
N/M
|
|
N/M
|
|
Total
|
$
|
479
|
|
$
|
416
|
|
$
|
407
|
|
|
15.1
|
%
|
17.7
|
%
|
|
|
|
|
|
|
|
|
(a) Reconciling items
consists primarily of the gain on the sale of Key Insurance and
Benefits Services for the second quarter of
2018.
|
(b) Reconciling items
consists primarily of the gain on the sale of Key Insurance and
Benefits Services for the second quarter of
2018, the
unallocated portion of merger-related charges for the
second quarter of 2017, 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 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
715
|
|
$
|
688
|
|
$
|
676
|
|
|
3.9
|
%
|
5.8
|
%
|
Noninterest
income
|
281
|
|
270
|
|
322
|
|
|
4.1
|
|
(12.7)
|
|
Total revenue
(TE)
|
996
|
|
958
|
|
998
|
|
|
4.0
|
|
(.2)
|
|
Provision for credit
losses
|
38
|
|
48
|
|
47
|
|
|
(20.8)
|
|
(19.1)
|
|
Noninterest
expense
|
639
|
|
652
|
|
635
|
|
|
(2.0)
|
|
.6
|
|
Income (loss) before
income taxes (TE)
|
319
|
|
258
|
|
316
|
|
|
23.6
|
|
.9
|
|
Allocated income
taxes (benefit) and TE adjustments
|
75
|
|
61
|
|
118
|
|
|
23.0
|
|
(36.4)
|
|
Net income (loss)
attributable to Key
|
$
|
244
|
|
$
|
197
|
|
$
|
198
|
|
|
23.9
|
%
|
23.2
|
%
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
47,984
|
|
$
|
47,680
|
|
$
|
47,477
|
|
|
.6
|
%
|
1.1
|
%
|
Total
assets
|
51,866
|
|
51,605
|
|
51,441
|
|
|
.5
|
|
.8
|
|
Deposits
|
80,930
|
|
79,945
|
|
79,601
|
|
|
1.2
|
|
1.7
|
|
|
|
|
|
|
|
|
Assets under
management at period end
|
$
|
39,663
|
|
$
|
39,003
|
|
$
|
37,613
|
|
|
1.7
|
%
|
5.5
|
%
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent
|
Additional Key
Community Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
92
|
|
$
|
89
|
|
$
|
86
|
|
|
3.4
|
%
|
7.0
|
%
|
Service charges on
deposit accounts
|
77
|
|
76
|
|
77
|
|
|
1.3
|
|
—
|
|
Cards and payments
income
|
59
|
|
51
|
|
60
|
|
|
15.7
|
|
(1.7)
|
|
Other noninterest
income
|
53
|
|
54
|
|
99
|
|
|
(1.9)
|
|
(46.5)
|
|
Total noninterest
income
|
$
|
281
|
|
$
|
270
|
|
$
|
322
|
|
|
4.1
|
%
|
(12.7)
|
%
|
|
|
|
|
|
|
|
Average deposit
balances
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
45,112
|
|
$
|
44,291
|
|
$
|
45,127
|
|
|
1.9
|
%
|
—
|
|
Savings
deposits
|
5,078
|
|
5,056
|
|
5,293
|
|
|
.4
|
|
(4.1)
|
%
|
Certificates of
deposit ($100,000 or more)
|
5,232
|
|
4,961
|
|
4,016
|
|
|
5.5
|
|
30.3
|
|
Other time
deposits
|
4,934
|
|
4,856
|
|
4,640
|
|
|
1.6
|
|
6.3
|
|
Noninterest-bearing
deposits
|
20,574
|
|
20,781
|
|
20,525
|
|
|
(1.0)
|
|
.2
|
|
Total
deposits
|
$
|
80,930
|
|
$
|
79,945
|
|
$
|
79,601
|
|
|
1.2
|
%
|
1.7
|
%
|
|
|
|
|
|
|
|
Home equity
loans
|
|
|
|
|
|
|
Average
balance
|
$
|
11,496
|
|
$
|
11,763
|
|
$
|
12,330
|
|
|
|
|
Combined
weighted-average loan-to-value ratio (at date of
origination)
|
70
|
%
|
70
|
%
|
71
|
%
|
|
|
|
Percent first lien
positions
|
60
|
|
60
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
|
|
Branches
|
1,177
|
|
1,192
|
|
1,210
|
|
|
|
|
Automated teller
machines
|
1,537
|
|
1,569
|
|
1,589
|
|
|
|
|
|
|
|
|
|
|
|
Key Community Bank Summary of Operations (2Q18 vs.
2Q17)
- Net income increased $46 million,
or 23.2%, from prior year
- Average commercial and industrial loans increased $1.1 billion, or 5.8%, from the prior year
Key Community Bank recorded net income attributable to Key of
$244 million for the second quarter
of 2018, compared to $198 million for
the year-ago quarter, benefiting from momentum across Key's
businesses, as well as a lower tax rate as a result of tax
reform.
Taxable-equivalent net interest income increased by $39 million, or 5.8%, from the second quarter of
2017. The increase in net interest income was primarily
attributable to the benefit from higher interest rates and growth
in loans, partially offset by lower purchase accounting accretion.
Average loans and leases increased $507
million, or 1.1%, largely driven by a $1.1 billion, or 5.8%, increase in commercial and
industrial loans. Additionally, average deposits increased
$1.3 billion, or 1.7%, from one year
ago.
Noninterest income decreased $41
million, or 12.7%, from the year-ago quarter driven by a
merchant services gain in the second quarter of 2017. Noninterest
income, excluding the merchant services gain in the year-ago
period, increased primarily due to higher assets under management
from market growth.
The provision for credit losses decreased by $9 million, or 19.1%, from the second quarter of
2017. Net loan charge-offs decreased $13
million, or 27.7%, from the second quarter of 2017, as
overall credit quality remained favorable.
Noninterest expense increased $4
million, or 0.6%, from the year-ago quarter. Personnel
expense increased $11 million,
primarily driven by recent acquisitions and ongoing investments,
including residential mortgage and HelloWallet. Nonpersonnel
expense decreased by $7 million,
driven by a charitable contribution in the second quarter of 2017,
which was partially offset by higher technology development
costs.
Key Corporate
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
277
|
$
|
272
|
$
|
312
|
|
|
1.8
|
%
|
(11.2)
|
%
|
Noninterest
income
|
265
|
|
287
|
|
285
|
|
|
(7.7)
|
|
(7.0)
|
|
Total revenue
(TE)
|
542
|
|
559
|
|
597
|
|
|
(3.0)
|
|
(9.2)
|
|
Provision for credit
losses
|
28
|
|
14
|
|
19
|
|
|
100.0
|
|
47.4
|
|
Noninterest
expense
|
326
|
|
314
|
|
297
|
|
|
3.8
|
|
9.8
|
|
Income (loss) before
income taxes (TE)
|
188
|
|
231
|
|
281
|
|
|
(18.6)
|
|
(33.1)
|
|
Allocated income
taxes and TE adjustments
|
21
|
|
24
|
|
57
|
|
|
(12.5)
|
|
(63.2)
|
|
Net income (loss)
attributable to Key
|
$
|
167
|
$
|
207
|
$
|
224
|
|
(19.3)
|
%
|
(25.4)
|
%
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
39,710
|
$
|
38,260
|
$
|
37,704
|
|
3.8
|
%
|
5.3
|
%
|
Loans held for
sale
|
1,299
|
|
1,118
|
|
1,000
|
|
|
16.2
|
|
29.9
|
|
Total
assets
|
47,213
|
|
45,549
|
|
44,131
|
|
|
3.7
|
|
7.0
|
|
Deposits
|
21,057
|
20,815
|
21,145
|
|
1.2
|
|
(.4)
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Additional Key
Corporate Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 2Q18
vs.
|
|
2Q18
|
1Q18
|
2Q17
|
|
1Q18
|
2Q17
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
29
|
$
|
29
|
$
|
35
|
|
—
|
|
(17.1)
|
%
|
Investment banking
and debt placement fees
|
153
|
141
|
134
|
|
8.5
|
%
|
14.2
|
|
Operating lease
income and other leasing gains
|
(10)
|
27
|
22
|
|
N/M
|
|
N/M
|
|
|
|
|
|
|
|
|
Corporate services
income
|
44
|
44
|
38
|
|
—
|
|
15.8
|
|
Service charges on
deposit accounts
|
13
|
13
|
13
|
|
—
|
|
—
|
|
Cards and payments
income
|
12
|
11
|
10
|
|
9.1
|
|
20.0
|
|
Payments and services
income
|
69
|
68
|
61
|
|
1.5
|
|
13.1
|
|
|
|
|
|
|
|
|
Mortgage servicing
fees
|
19
|
17
|
12
|
|
11.8
|
|
58.3
|
|
Other noninterest
income
|
5
|
5
|
21
|
|
—
|
|
(76.2)
|
|
Total noninterest
income
|
$
|
265
|
$
|
287
|
$
|
285
|
|
(7.7)
|
%
|
(7.0)
|
%
|
|
|
|
|
|
|
|
N/M = Not
Meaningful
|
Key Corporate Bank Summary of Operations (2Q18 vs.
2Q17)
- Commercial and industrial loans up $3.3
billion, or 15%, from prior year
- Investment banking and debt placement fees up $19 million, or 14.2%, from prior year
Key Corporate Bank recorded net income attributable to Key of
$167 million for the second quarter
of 2018, compared to $224 million for
the same period one year ago.
Taxable-equivalent net interest income decreased by $35 million, or 11.2%, compared to the second
quarter of 2017. The decline is primarily related to $33 million of lower purchase accounting
accretion, as well as loan spread compression. Average loan and
lease balances increased $2 billion,
or 5.3%, from the year-ago quarter, driven by broad-based growth in
commercial and industrial loans. Average deposit balances decreased
$88 million, or 0.4%, from the
year-ago quarter, due to the managed exit of higher cost corporate
and public sector deposits offsetting growth in core deposits.
Noninterest income was down $20
million, or 7.0%, from the prior year. This decrease was
largely due to a $32 million decline
in operating lease income and other leasing gains, driven by a
lease residual loss in the second quarter of 2018. Other declines
included other noninterest income down $16
million, mostly due to a merchant services gain in the
year-ago period. These decreases were slightly offset by
higher investment banking and debt placement fees of $19 million, related to strength in advisory
fees, including benefit from the acquisition of Cain Brothers, as well as a $6 million increase in corporate services income
from higher derivatives revenue.
During the second quarter of 2018, the provision for credit
losses increased $9 million, or
47.8%, compared to the second quarter of 2017, mostly due to higher
net loan charge-offs.
Noninterest expense increased by $29
million, or 9.8%, from the second quarter of 2017. The
increase from the prior year was largely related to acquisitions
and investments throughout the year, which drove an increase in
personnel expense and intangible asset amortization. Operating
lease expense also increased compared to the year-ago period.
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 $25 million for the second quarter of 2018,
compared to $24 million for the same
period last year.
*****
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 $137.8 billion at June 30,
2018.
Key provides deposit, lending, cash management, and investment
services to individuals and businesses in 15 states under the name
KeyBank National Association through a network of approximately
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, 2017, 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 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 10:00 a.m. ET, on Thursday, July 19,
2018. An audio replay of the call will be available through
July 29, 2018.
*****
Financial
Highlights
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
Summary of
operations
|
|
|
|
|
Net interest income
(TE)
|
$
|
987
|
|
$
|
952
|
|
$
|
987
|
|
|
Noninterest
income
|
660
|
|
601
|
|
653
|
|
|
Total revenue
(TE)
|
1,647
|
|
1,553
|
|
1,640
|
|
|
Provision for credit
losses
|
64
|
|
61
|
|
66
|
|
|
Noninterest
expense
|
993
|
|
1,006
|
|
995
|
|
|
Income (loss) from
continuing operations attributable to Key
|
479
|
|
416
|
|
407
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
3
|
|
2
|
|
5
|
|
|
Net income (loss)
attributable to Key
|
482
|
|
418
|
|
412
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
464
|
|
402
|
|
393
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
3
|
|
2
|
|
5
|
|
|
Net income (loss)
attributable to Key common shareholders
|
467
|
|
404
|
|
398
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.44
|
|
$
|
.38
|
|
$
|
.36
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.44
|
|
.38
|
|
.37
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
.44
|
|
.38
|
|
.36
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming dilution
(a)
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(b)
|
.44
|
|
.38
|
|
.36
|
|
|
|
|
|
|
|
|
Cash dividends
declared
|
.12
|
|
.105
|
|
.095
|
|
|
Book value at period
end
|
13.29
|
|
13.07
|
|
13.02
|
|
|
Tangible book value
at period end
|
10.59
|
|
10.35
|
|
10.40
|
|
|
Market price at
period end
|
19.54
|
|
19.55
|
|
18.74
|
|
|
|
|
|
|
|
Performance
ratios
|
|
|
|
|
From continuing
operations:
|
|
|
|
|
Return on average
total assets
|
1.41
|
%
|
1.25
|
%
|
1.23
|
%
|
|
Return on average
common equity
|
13.29
|
|
11.76
|
|
11.12
|
|
|
Return on average
tangible common equity (c)
|
16.73
|
|
14.89
|
|
13.80
|
|
|
Net interest margin
(TE)
|
3.19
|
|
3.15
|
|
3.30
|
|
|
Cash efficiency ratio
(c)
|
58.8
|
|
62.9
|
|
59.3
|
|
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
|
Return on average
total assets
|
1.40
|
%
|
1.24
|
%
|
1.23
|
%
|
|
Return on average
common equity
|
13.37
|
|
11.82
|
|
11.26
|
|
|
Return on average
tangible common equity (c)
|
16.84
|
|
14.97
|
|
13.98
|
|
|
Net interest margin
(TE)
|
3.17
|
|
3.13
|
|
3.28
|
|
|
Loan to deposit
(d)
|
86.9
|
|
86.9
|
|
87.2
|
|
|
|
|
|
|
|
Capital ratios at
period end
|
|
|
|
|
Key shareholders'
equity to assets
|
10.96
|
%
|
10.90
|
%
|
11.23
|
%
|
|
Key common
shareholders' equity to assets
|
10.21
|
|
10.16
|
|
10.48
|
|
|
Tangible common
equity to tangible assets (c)
|
8.32
|
|
8.22
|
|
8.56
|
|
|
Common Equity Tier
1 (e)
|
10.12
|
|
9.99
|
|
9.91
|
|
|
Tier 1 risk-based
capital (e)
|
10.94
|
|
10.82
|
|
10.73
|
|
|
Total risk-based
capital (e)
|
12.83
|
|
12.73
|
|
12.64
|
|
|
Leverage
(e)
|
9.91
|
|
9.76
|
|
9.95
|
|
|
|
|
|
|
|
Asset quality —
from continuing operations
|
|
|
|
|
Net loan
charge-offs
|
$
|
60
|
|
$
|
54
|
|
$
|
66
|
|
|
Net loan charge-offs
to average loans
|
.27
|
%
|
.25
|
%
|
.31
|
%
|
|
Allowance for loan
and lease losses
|
$
|
887
|
|
$
|
881
|
|
$
|
870
|
|
|
Allowance for credit
losses
|
945
|
|
941
|
|
918
|
|
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
%
|
1.00
|
%
|
1.01
|
%
|
|
Allowance for credit
losses to period-end loans
|
1.07
|
|
1.07
|
|
1.06
|
|
|
Allowance for loan
and lease losses to nonperforming loans (f)
|
162.8
|
|
162.8
|
|
171.6
|
|
|
Allowance for credit
losses to nonperforming loans (f)
|
173.4
|
|
173.9
|
|
181.1
|
|
|
Nonperforming loans
at period-end (f)
|
$
|
545
|
|
$
|
541
|
|
$
|
507
|
|
|
Nonperforming assets
at period-end (f)
|
571
|
|
569
|
|
556
|
|
|
Nonperforming loans
to period-end portfolio loans (f)
|
.62
|
%
|
.61
|
%
|
.59
|
%
|
|
Nonperforming assets
to period-end portfolio loans plus OREO and other nonperforming
assets (f)
|
.65
|
|
.65
|
|
.64
|
|
|
|
|
|
|
|
Trust
assets
|
|
|
|
|
Assets under
management
|
$
|
39,663
|
|
$
|
39,003
|
|
$
|
37,613
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
Average full-time
equivalent employees
|
18,376
|
|
18,540
|
|
18,344
|
|
|
Branches
|
1,177
|
|
1,192
|
|
1,210
|
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
$
|
8
|
|
$
|
8
|
|
$
|
14
|
|
Financial
Highlights (continued)
|
(dollars in millions,
except per share amounts)
|
|
|
Six months
ended
|
|
|
6/30/2018
|
|
6/30/2017
|
Summary of
operations
|
|
|
|
|
Net interest income
(TE)
|
$
|
1,939
|
|
|
$
|
1,916
|
|
|
Noninterest
income
|
1,261
|
|
|
1,230
|
|
|
Total
revenue (TE)
|
3,200
|
|
|
3,146
|
|
|
Provision for credit
losses
|
125
|
|
|
129
|
|
|
Noninterest
expense
|
1,999
|
|
|
2,008
|
|
|
Income (loss) from
continuing operations attributable to Key
|
895
|
|
|
731
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
5
|
|
|
5
|
|
|
Net income (loss)
attributable to Key
|
900
|
|
|
736
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
866
|
|
|
$
|
689
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
5
|
|
|
5
|
|
|
Net income (loss)
attributable to Key common shareholders
|
871
|
|
|
694
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.82
|
|
|
$
|
.64
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.82
|
|
|
.64
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
.81
|
|
|
.63
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming dilution
(a)
|
—
|
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(b)
|
.81
|
|
|
.63
|
|
|
|
|
|
|
|
Cash dividends
paid
|
.225
|
|
|
.18
|
|
|
|
|
|
|
Performance
ratios
|
|
|
|
|
From continuing
operations:
|
|
|
|
|
Return on average
total assets
|
1.33
|
%
|
|
1.11
|
%
|
|
Return on average
common equity
|
12.53
|
|
|
9.97
|
|
|
Return on average
tangible common equity (c)
|
15.82
|
|
|
12.43
|
|
|
Net interest margin
(TE)
|
3.17
|
|
|
3.21
|
|
|
Cash efficiency ratio
(c)
|
60.8
|
|
|
62.4
|
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
|
Return on average
total assets
|
1.33
|
%
|
|
1.11
|
%
|
|
Return on average
common equity
|
12.60
|
|
|
10.04
|
|
|
Return on average
tangible common equity (c)
|
15.91
|
|
|
12.52
|
|
|
Net interest margin
(TE)
|
3.15
|
|
|
3.19
|
|
|
|
|
|
|
Asset quality —
from continuing operations
|
|
|
|
|
Net loan
charge-offs
|
114
|
|
|
124
|
|
|
Net loan charge-offs
to average total loans
|
.26
|
%
|
|
.29
|
%
|
|
|
|
|
|
Other
data
|
|
|
|
|
Average full-time
equivalent employees
|
18,458
|
|
|
18,365
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
16
|
|
|
25
|
|
|
(a) 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" 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.
|
(e) June 30, 2018,
ratio is estimated.
|
(f) Nonperforming
loan balances exclude $629 million, $690 million, and $835 million
of purchased credit impaired loans at June
30,
2018, March 31, 2018, and June 30,
2017, respectively.
|
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," and "cash efficiency
ratio."
|
|
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.
|
|
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.
|
|
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. Management
believes this ratio provide greater consistency and comparability
between Key's results and those of its peer banks. Additionally,
this ratio is 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
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
6/30/2018
|
6/30/2017
|
Tangible common
equity to tangible assets at period-end
|
|
|
|
|
|
|
Key shareholders'
equity (GAAP)
|
$
|
15,100
|
|
$
|
14,944
|
|
$
|
15,253
|
|
|
|
|
Less: Intangible
assets (a)
|
2,858
|
|
2,902
|
|
2,866
|
|
|
|
|
Preferred
Stock (b)
|
1,009
|
|
1,009
|
|
1,009
|
|
|
|
|
Tangible common
equity (non-GAAP)
|
$
|
11,233
|
|
$
|
11,033
|
|
$
|
11,378
|
|
|
|
|
Total assets
(GAAP)
|
$
|
137,792
|
|
$
|
137,049
|
|
$
|
135,824
|
|
|
|
|
Less: Intangible
assets (a)
|
2,858
|
|
2,902
|
|
2,866
|
|
|
|
|
Tangible assets
(non-GAAP)
|
$
|
134,934
|
|
$
|
134,147
|
|
$
|
132,958
|
|
|
|
|
Tangible common
equity to tangible assets ratio (non-GAAP)
|
8.32
|
%
|
8.22
|
%
|
8.56
|
%
|
|
|
|
Pre-provision net
revenue
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
979
|
|
$
|
944
|
|
$
|
973
|
|
|
$
|
1,923
|
|
$
|
1,891
|
|
Plus:
Taxable-equivalent adjustment
|
8
|
|
8
|
|
14
|
|
|
16
|
|
25
|
|
Noninterest
income
|
660
|
|
601
|
|
653
|
|
|
1,261
|
|
1,230
|
|
Less: Noninterest
expense
|
993
|
|
1,006
|
|
995
|
|
|
1,999
|
|
2,008
|
|
Pre-provision new
revenue from continuing operations (non-GAAP)
|
$
|
654
|
|
$
|
547
|
|
$
|
645
|
|
|
$
|
1,201
|
|
$
|
1,138
|
|
Average tangible
common equity
|
|
|
|
|
|
|
Average Key
shareholders' equity (GAAP)
|
$
|
15,032
|
|
$
|
14,889
|
|
$
|
15,200
|
|
|
$
|
14,961
|
|
$
|
15,192
|
|
Less: Intangible
assets (average) (c)
|
2,883
|
|
2,916
|
|
2,756
|
|
|
2,899
|
|
2,764
|
|
Preferred stock
(average)
|
1,025
|
|
1,025
|
|
1,025
|
|
|
1,025
|
|
1,251
|
|
Average tangible
common equity (non-GAAP)
|
$
|
11,124
|
|
$
|
10,948
|
|
$
|
11,419
|
|
|
$
|
11,037
|
|
$
|
11,177
|
|
Return on average
tangible common equity from continuing operations
|
|
|
|
|
|
|
Net income (loss)
from continuing operations attributable to Key common
shareholders
(GAAP)
|
$
|
464
|
|
$
|
402
|
|
$
|
393
|
|
|
$
|
866
|
|
$
|
689
|
|
Average tangible
common equity (non-GAAP)
|
11,124
|
|
10,948
|
|
11,419
|
|
|
11,037
|
|
11,177
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity from continuing operations
(non-GAAP)
|
16.73
|
%
|
14.89
|
%
|
13.80
|
%
|
|
15.82
|
%
|
12.43
|
%
|
Return on average
tangible common equity consolidated
|
|
|
|
|
|
|
Net income (loss)
attributable to Key common shareholders (GAAP)
|
$
|
467
|
|
$
|
404
|
|
$
|
398
|
|
|
$
|
871
|
|
$
|
694
|
|
Average tangible
common equity (non-GAAP)
|
11,124
|
|
10,948
|
|
11,419
|
|
|
11,037
|
|
11,177
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity consolidated (non-GAAP)
|
16.84
|
%
|
14.97
|
%
|
13.98
|
%
|
|
15.91
|
%
|
12.52
|
%
|
Cash efficiency
ratio
|
|
|
|
|
|
|
Noninterest expense
(GAAP)
|
$
|
993
|
|
$
|
1,006
|
|
$
|
995
|
|
|
$
|
1,999
|
|
$
|
2,008
|
|
Less: Intangible
asset amortization
|
25
|
|
29
|
|
22
|
|
|
54
|
|
44
|
|
Adjusted noninterest
expense (non-GAAP)
|
$
|
968
|
|
$
|
977
|
|
$
|
973
|
|
|
$
|
1,945
|
|
$
|
1,964
|
|
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
979
|
|
$
|
944
|
|
$
|
973
|
|
|
$
|
1,923
|
|
$
|
1,891
|
|
Plus:
Taxable-equivalent adjustment
|
8
|
|
8
|
|
14
|
|
|
16
|
|
25
|
|
Noninterest
income
|
660
|
|
601
|
|
653
|
|
|
1,261
|
|
1,230
|
|
Total
taxable-equivalent revenue (non-GAAP)
|
$
|
1,647
|
|
$
|
1,553
|
|
$
|
1,640
|
|
|
$
|
3,200
|
|
$
|
3,146
|
|
|
|
|
|
|
|
|
Cash efficiency ratio
(non-GAAP)
|
58.8
|
%
|
62.9
|
%
|
59.3
|
%
|
|
60.8
|
%
|
62.4
|
%
|
GAAP to Non-GAAP
Reconciliations (continued)
|
(dollars in
millions)
|
|
|
|
Three
months
ended
|
|
|
|
6/30/2018
|
Common Equity Tier
1 under the Regulatory Capital Rules ("RCR")
(estimates)
|
|
|
Common Equity Tier 1
under current RCR
|
$
|
12,378
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
Deferred tax assets
and other intangible assets (d)
|
—
|
|
|
|
Common Equity Tier 1
anticipated under the fully phased-in RCR (e)
|
$
|
12,378
|
|
|
|
|
|
|
Net risk-weighted
assets under current RCR
|
$
|
122,352
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
Mortgage servicing
assets (f)
|
727
|
|
|
|
Deferred tax
assets
|
319
|
|
|
|
All other
assets
|
—
|
|
|
|
Total risk-weighted
assets anticipated under the fully phased-in RCR
(e)
|
$
|
123,398
|
|
|
|
|
|
|
Common Equity Tier 1
ratio under the fully phased-in RCR (e)
|
10.03
|
%
|
|
(a) For the three months
ended June 30, 2018, March 31, 2018, and June 30,
2017, intangible assets
exclude $20
million, $23 million, and $33 million, respectively, of
period-end purchased credit card
receivables.
|
(b) Net of capital
surplus.
|
(c) For the three months
ended June 30, 2018, March 31, 2018, and June 30,
2017, average intangible
assets
exclude $21 million, $24 million, and $36 million, respectively,
of average purchased credit
card
receivables. For the six months ended June 30, 2018, and
June 30, 2017, average intangible
assets
exclude $23 million and $38 million, respectively, of average
purchased credit card
receivables.
|
(d) 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.
|
(e) 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."
|
(f) Item is included in
the 10%/15% exceptions bucket calculation and is risk-weighted at
250%.
|
GAAP = U.S. generally
accepted accounting principles
|
Consolidated
Balance Sheets
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
Assets
|
|
|
|
|
Loans
|
$
|
88,222
|
|
$
|
88,089
|
|
$
|
86,503
|
|
|
Loans held for
sale
|
1,418
|
|
1,667
|
|
1,743
|
|
|
Securities available
for sale
|
17,367
|
|
17,888
|
|
18,024
|
|
|
Held-to-maturity
securities
|
12,277
|
|
12,189
|
|
10,638
|
|
|
Trading account
assets
|
833
|
|
769
|
|
1,081
|
|
|
Short-term
investments
|
2,646
|
|
1,644
|
|
2,522
|
|
|
Other
investments
|
709
|
|
715
|
|
732
|
|
|
|
Total earning
assets
|
123,472
|
|
122,961
|
|
121,243
|
|
|
Allowance for loan
and lease losses
|
(887)
|
|
(881)
|
|
(870)
|
|
|
Cash and due from
banks
|
784
|
|
643
|
|
601
|
|
|
Premises and
equipment
|
892
|
|
916
|
|
919
|
|
|
Operating lease
assets
|
903
|
|
838
|
|
691
|
|
|
Goodwill
|
2,516
|
|
2,538
|
|
2,464
|
|
|
Other intangible
assets
|
361
|
|
387
|
|
435
|
|
|
Corporate-owned life
insurance
|
4,147
|
|
4,142
|
|
4,100
|
|
|
Accrued income and
other assets
|
4,382
|
|
4,216
|
|
4,783
|
|
|
Discontinued
assets
|
1,222
|
|
1,289
|
|
1,458
|
|
|
|
Total
assets
|
$
|
137,792
|
|
$
|
137,049
|
|
$
|
135,824
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits in domestic
offices:
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
55,059
|
|
$
|
54,606
|
|
$
|
53,342
|
|
|
|
Savings
deposits
|
6,199
|
|
6,321
|
|
7,056
|
|
|
|
Certificates of
deposit ($100,000 or more)
|
7,547
|
|
7,295
|
|
6,286
|
|
|
|
Other time
deposits
|
4,943
|
|
4,928
|
|
4,605
|
|
|
|
Total
interest-bearing deposits
|
73,748
|
|
73,150
|
|
71,289
|
|
|
|
Noninterest-bearing
deposits
|
30,800
|
|
31,601
|
|
31,532
|
|
|
|
Total
deposits
|
104,548
|
|
104,751
|
|
102,821
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
1,667
|
|
616
|
|
1,780
|
|
|
Bank notes and other
short-term borrowings
|
639
|
|
1,133
|
|
924
|
|
|
Accrued expense and
other liabilities
|
1,983
|
|
1,854
|
|
1,783
|
|
|
Long-term
debt
|
13,853
|
|
13,749
|
|
13,261
|
|
|
|
Total
liabilities
|
122,690
|
|
122,103
|
|
120,569
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred
stock
|
1,025
|
|
1,025
|
|
1,025
|
|
|
Common
shares
|
1,257
|
|
1,257
|
|
1,257
|
|
|
Capital
surplus
|
6,315
|
|
6,289
|
|
6,310
|
|
|
Retained
earnings
|
10,970
|
|
10,624
|
|
9,878
|
|
|
Treasury stock, at
cost
|
(3,382)
|
|
(3,260)
|
|
(2,711)
|
|
|
Accumulated other
comprehensive income (loss)
|
(1,085)
|
|
(991)
|
|
(506)
|
|
|
|
Key shareholders'
equity
|
15,100
|
|
14,944
|
|
15,253
|
|
|
Noncontrolling
interests
|
2
|
|
2
|
|
2
|
|
|
|
Total
equity
|
15,102
|
|
14,946
|
|
15,255
|
|
Total liabilities
and equity
|
$
|
137,792
|
|
$
|
137,049
|
|
$
|
135,824
|
|
|
|
|
|
|
|
Common shares
outstanding (000)
|
1,058,944
|
|
1,064,939
|
|
1,092,739
|
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
6/30/2018
|
6/30/2017
|
Interest
income
|
|
|
|
|
|
|
|
Loans
|
$
|
1,000
|
|
$
|
940
|
|
$
|
948
|
|
|
$
|
1,940
|
|
$
|
1,825
|
|
|
Loans held for
sale
|
16
|
|
12
|
|
9
|
|
|
28
|
|
22
|
|
|
Securities available
for sale
|
97
|
|
95
|
|
90
|
|
|
192
|
|
185
|
|
|
Held-to-maturity
securities
|
72
|
|
69
|
|
55
|
|
|
141
|
|
106
|
|
|
Trading account
assets
|
7
|
|
7
|
|
7
|
|
|
14
|
|
14
|
|
|
Short-term
investments
|
8
|
|
8
|
|
5
|
|
|
16
|
|
8
|
|
|
Other
investments
|
5
|
|
6
|
|
3
|
|
|
11
|
|
7
|
|
|
|
Total interest
income
|
1,205
|
|
1,137
|
|
1,117
|
|
|
2,342
|
|
2,167
|
|
Interest
expense
|
|
|
|
|
|
|
|
Deposits
|
112
|
|
91
|
|
66
|
|
|
203
|
|
124
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
5
|
|
4
|
|
—
|
|
|
9
|
|
1
|
|
|
Bank notes and other
short-term borrowings
|
7
|
|
6
|
|
4
|
|
|
13
|
|
9
|
|
|
Long-term
debt
|
102
|
|
92
|
|
74
|
|
|
194
|
|
142
|
|
|
|
Total interest
expense
|
226
|
|
193
|
|
144
|
|
|
419
|
|
276
|
|
Net interest
income
|
979
|
|
944
|
|
973
|
|
|
1,923
|
|
1,891
|
|
Provision for credit
losses
|
64
|
|
61
|
|
66
|
|
|
125
|
|
129
|
|
Net interest income
after provision for credit losses
|
915
|
|
883
|
|
907
|
|
|
1,798
|
|
1,762
|
|
Noninterest
income
|
|
|
|
|
|
|
|
Trust and investment
services income
|
128
|
|
133
|
|
134
|
|
|
261
|
|
269
|
|
|
Investment banking
and debt placement fees
|
155
|
|
143
|
|
135
|
|
|
298
|
|
262
|
|
|
Service charges on
deposit accounts
|
91
|
|
89
|
|
90
|
|
|
180
|
|
177
|
|
|
Operating lease
income and other leasing gains
|
(6)
|
|
32
|
|
30
|
|
|
26
|
|
53
|
|
|
Corporate services
income
|
61
|
|
62
|
|
55
|
|
|
123
|
|
109
|
|
|
Cards and payments
income
|
71
|
|
62
|
|
70
|
|
|
133
|
|
135
|
|
|
Corporate-owned life
insurance income
|
32
|
|
32
|
|
33
|
|
|
64
|
|
63
|
|
|
Consumer mortgage
income
|
7
|
|
7
|
|
6
|
|
|
14
|
|
12
|
|
|
Mortgage servicing
fees
|
22
|
|
20
|
|
15
|
|
|
42
|
|
33
|
|
|
Other
income (a)
|
99
|
|
21
|
|
85
|
|
|
120
|
|
117
|
|
|
|
Total noninterest
income
|
660
|
|
601
|
|
653
|
|
|
1,261
|
|
1,230
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
Personnel
|
586
|
|
594
|
|
553
|
|
|
1,180
|
|
1,110
|
|
|
Net
occupancy
|
79
|
|
78
|
|
78
|
|
|
157
|
|
165
|
|
|
Computer
processing
|
51
|
|
52
|
|
55
|
|
|
103
|
|
115
|
|
|
Business services and
professional fees
|
51
|
|
41
|
|
45
|
|
|
92
|
|
91
|
|
|
Equipment
|
26
|
|
26
|
|
27
|
|
|
52
|
|
54
|
|
|
Operating lease
expense
|
30
|
|
27
|
|
21
|
|
|
57
|
|
40
|
|
|
Marketing
|
26
|
|
25
|
|
30
|
|
|
51
|
|
51
|
|
|
FDIC
assessment
|
21
|
|
21
|
|
21
|
|
|
42
|
|
41
|
|
|
Intangible asset
amortization
|
25
|
|
29
|
|
22
|
|
|
54
|
|
44
|
|
|
OREO expense,
net
|
—
|
|
2
|
|
3
|
|
|
2
|
|
5
|
|
|
Other
expense
|
98
|
|
111
|
|
140
|
|
|
209
|
|
292
|
|
|
|
Total noninterest
expense
|
993
|
|
1,006
|
|
995
|
|
|
1,999
|
|
2,008
|
|
Income (loss) from
continuing operations before income taxes
|
582
|
|
478
|
|
565
|
|
|
1,060
|
|
984
|
|
|
Income
taxes
|
103
|
|
62
|
|
158
|
|
|
165
|
|
252
|
|
Income (loss) from
continuing operations
|
479
|
|
416
|
|
407
|
|
|
895
|
|
732
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
3
|
|
2
|
|
5
|
|
|
5
|
|
5
|
|
Net income
(loss)
|
482
|
|
418
|
|
412
|
|
|
900
|
|
737
|
|
|
Less: Net
income (loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
|
—
|
|
1
|
|
Net income (loss)
attributable to Key
|
$
|
482
|
|
$
|
418
|
|
$
|
412
|
|
|
$
|
900
|
|
$
|
736
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
464
|
|
$
|
402
|
|
$
|
393
|
|
|
$
|
866
|
|
$
|
689
|
|
Net income (loss)
attributable to Key common shareholders
|
467
|
|
404
|
|
398
|
|
|
871
|
|
694
|
|
Per common
share
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.44
|
|
$
|
.38
|
|
$
|
.36
|
|
|
$
|
.82
|
|
$
|
.64
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.44
|
|
.38
|
|
.37
|
|
|
.82
|
|
.64
|
|
Per common share —
assuming dilution
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.44
|
|
$
|
.38
|
|
$
|
.36
|
|
|
$
|
.81
|
|
$
|
.63
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key common
shareholders (b)
|
.44
|
|
.38
|
|
.36
|
|
|
.81
|
|
.63
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
$
|
.12
|
|
$
|
.105
|
|
$
|
.095
|
|
|
$
|
.225
|
|
$
|
.18
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding (000)
|
1,052,652
|
|
1,056,037
|
|
1,076,203
|
|
|
1,054,378
|
|
1,083,486
|
|
|
Effect of common
share options and other stock awards
|
13,141
|
|
15,749
|
|
16,836
|
|
|
14,561
|
|
15,808
|
|
Weighted-average
common shares and potential common shares outstanding
(000) (c)
|
1,065,793
|
|
1,071,786
|
|
1,093,039
|
|
|
1,068,939
|
|
1,099,294
|
|
|
|
|
|
|
|
|
|
|
(a) For the three months
ended June 30, 2018, and March 31, 2018, net securities
gains (losses) totaled less than $1 million. For the three months
ended
June 30, 2017, net securities gains totaled $1
million. For the three months ended June 30, 2018,
March 31, 2018, and June 30, 2017, 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, as
applicable.
|
Consolidated
Average Balance Sheets, and Net Interest Income and Yields/Rates
From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
2018
|
|
First Quarter
2018
|
|
Second Quarter
2017
|
|
|
Average
|
|
Yield/
|
|
Average
|
|
Yield/
|
|
Average
|
|
Yield/
|
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: (b),
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial (d)
|
$
|
45,030
|
|
$
|
485
|
|
4.32
|
%
|
|
$
|
42,733
|
|
$
|
434
|
|
4.11
|
%
|
|
$
|
40,666
|
|
$
|
409
|
|
4.04
|
%
|
|
Real estate —
commercial mortgage
|
14,055
|
|
172
|
|
4.89
|
|
|
14,085
|
|
165
|
|
4.76
|
|
|
15,096
|
|
187
|
|
4.97
|
|
|
Real estate —
construction
|
1,789
|
|
23
|
|
4.97
|
|
|
1,957
|
|
22
|
|
4.64
|
|
|
2,204
|
|
31
|
|
5.51
|
|
|
Commercial lease
financing
|
4,550
|
|
41
|
|
3.61
|
|
|
4,663
|
|
41
|
|
3.53
|
|
|
4,690
|
|
50
|
|
4.33
|
|
|
Total commercial
loans
|
65,424
|
|
721
|
|
4.41
|
|
|
63,438
|
|
662
|
|
4.23
|
|
|
62,656
|
|
677
|
|
4.34
|
|
|
Real estate —
residential mortgage
|
5,451
|
|
54
|
|
3.97
|
|
|
5,479
|
|
54
|
|
3.95
|
|
|
5,509
|
|
52
|
|
3.77
|
|
|
Home equity
loans
|
11,601
|
|
135
|
|
4.67
|
|
|
11,877
|
|
134
|
|
4.56
|
|
|
12,473
|
|
135
|
|
4.31
|
|
|
Consumer direct
loans
|
1,768
|
|
33
|
|
7.54
|
|
|
1,766
|
|
33
|
|
7.53
|
|
|
1,743
|
|
31
|
|
7.07
|
|
|
Credit
cards
|
1,080
|
|
30
|
|
11.21
|
|
|
1,080
|
|
30
|
|
11.32
|
|
|
1,044
|
|
29
|
|
11.04
|
|
|
Consumer indirect
loans
|
3,320
|
|
35
|
|
4.26
|
|
|
3,287
|
|
35
|
|
4.29
|
|
|
3,077
|
|
38
|
|
5.02
|
|
|
Total consumer
loans
|
23,220
|
|
287
|
|
4.97
|
|
|
23,489
|
|
286
|
|
4.91
|
|
|
23,846
|
|
285
|
|
4.77
|
|
|
Total
loans
|
88,644
|
|
1,008
|
|
4.56
|
|
|
86,927
|
|
948
|
|
4.41
|
|
|
86,502
|
|
962
|
|
4.46
|
|
|
Loans held for
sale
|
1,375
|
|
16
|
|
4.50
|
|
|
1,187
|
|
12
|
|
4.10
|
|
|
1,082
|
|
9
|
|
3.58
|
|
|
Securities available
for sale (b), (e)
|
17,443
|
|
97
|
|
2.13
|
|
|
17,889
|
|
95
|
|
2.06
|
|
|
17,997
|
|
90
|
|
1.97
|
|
|
Held-to-maturity
securities (b)
|
12,226
|
|
72
|
|
2.36
|
|
|
12,041
|
|
69
|
|
2.30
|
|
|
10,469
|
|
55
|
|
2.09
|
|
|
Trading account
assets
|
943
|
|
7
|
|
3.21
|
|
|
907
|
|
7
|
|
2.99
|
|
|
1,042
|
|
7
|
|
3.00
|
|
|
Short-term
investments
|
2,015
|
|
8
|
|
1.76
|
|
|
2,048
|
|
8
|
|
1.51
|
|
|
1,970
|
|
5
|
|
.96
|
|
|
Other investments
(e)
|
710
|
|
5
|
|
3.08
|
|
|
723
|
|
6
|
|
2.96
|
|
|
687
|
|
3
|
|
1.87
|
|
|
Total earning
assets
|
123,356
|
|
1,213
|
|
3.92
|
|
|
121,722
|
|
1,145
|
|
3.78
|
|
|
119,749
|
|
1,131
|
|
3.78
|
|
|
Allowance for loan
and lease losses
|
(875)
|
|
|
|
|
(875)
|
|
|
|
|
(864)
|
|
|
|
|
Accrued income and
other assets
|
13,897
|
|
|
|
|
14,068
|
|
|
|
|
13,606
|
|
|
|
|
Discontinued
assets
|
1,241
|
|
|
|
|
1,304
|
|
|
|
|
1,477
|
|
|
|
|
Total
assets
|
$
|
137,619
|
|
|
|
|
$
|
136,219
|
|
|
|
|
$
|
133,968
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
54,749
|
|
59
|
|
.44
|
|
|
$
|
53,503
|
|
46
|
|
.34
|
|
|
$
|
54,416
|
|
34
|
|
.25
|
|
|
Savings
deposits
|
6,276
|
|
5
|
|
.35
|
|
|
6,232
|
|
5
|
|
.29
|
|
|
6,854
|
|
4
|
|
.21
|
|
|
Certificates of
deposit ($100,000 or more)
|
7,516
|
|
32
|
|
1.70
|
|
|
6,972
|
|
27
|
|
1.58
|
|
|
6,111
|
|
19
|
|
1.23
|
|
|
Other time
deposits
|
4,949
|
|
16
|
|
1.22
|
|
|
4,865
|
|
13
|
|
1.12
|
|
|
4,650
|
|
9
|
|
.77
|
|
|
Total
interest-bearing deposits
|
73,490
|
|
112
|
|
.61
|
|
|
71,572
|
|
91
|
|
.51
|
|
|
72,031
|
|
66
|
|
.36
|
|
|
Federal funds
purchased and securities
sold under repurchase
agreements
|
1,475
|
|
5
|
|
1.41
|
|
|
1,421
|
|
4
|
|
1.11
|
|
|
466
|
|
—
|
|
.23
|
|
|
Bank notes and other
short-term borrowings
|
1,116
|
|
7
|
|
2.27
|
|
|
1,342
|
|
6
|
|
1.87
|
|
|
1,216
|
|
4
|
|
1.43
|
|
|
Long-term debt
(f), (g)
|
12,748
|
|
102
|
|
3.20
|
|
|
12,465
|
|
92
|
|
2.95
|
|
|
11,046
|
|
74
|
|
2.68
|
|
|
Total
interest-bearing liabilities
|
88,829
|
|
226
|
|
1.02
|
|
|
86,800
|
|
193
|
|
.90
|
|
|
84,759
|
|
144
|
|
.68
|
|
|
Noninterest-bearing
deposits
|
30,513
|
|
|
|
|
30,984
|
|
|
|
|
30,748
|
|
|
|
|
Accrued expense and
other liabilities
|
2,002
|
|
|
|
|
2,241
|
|
|
|
|
1,782
|
|
|
|
|
Discontinued
liabilities (g)
|
1,241
|
|
|
|
|
1,304
|
|
|
|
|
1,477
|
|
|
|
|
Total
liabilities
|
122,585
|
|
|
|
|
121,329
|
|
|
|
|
118,766
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
15,032
|
|
|
|
|
14,889
|
|
|
|
|
15,200
|
|
|
|
|
Noncontrolling
interests
|
2
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
Total
equity
|
15,034
|
|
|
|
|
14,890
|
|
|
|
|
15,202
|
|
|
|
|
Total liabilities
and equity
|
$
|
137,619
|
|
|
|
|
$
|
136,219
|
|
|
|
|
$
|
133,968
|
|
|
|
Interest rate spread
(TE)
|
|
|
2.90
|
%
|
|
|
|
2.88
|
%
|
|
|
|
3.10
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
987
|
|
3.19
|
%
|
|
|
952
|
|
3.15
|
%
|
|
|
987
|
|
3.30
|
%
|
TE adjustment
(b)
|
|
8
|
|
|
|
|
8
|
|
|
|
|
14
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
979
|
|
|
|
|
$
|
944
|
|
|
|
|
$
|
973
|
|
|
|
(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 21% for the three
months ended June 30, 2018, and March 31, 2018,
and 35% for the three months ended June 30, 2017.
|
(c) For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d) Commercial and industrial
average balances include $126 million, $120 million, and $117
million of assets from commercial credit cards for the three months
ended
June 30, 2018, March 31, 2018, and June 30,
2017, 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, 2018
|
|
Six months ended
June 30, 2017
|
|
|
Average
|
|
|
|
Average
|
|
|
|
|
Balance
|
Interest
(a)
|
Yield/Rate
(a)
|
|
Balance
|
Interest
(a)
|
Yield/ Rate
(a)
|
Assets
|
|
|
|
|
|
|
|
|
Loans: (b),
(c)
|
|
|
|
|
|
|
|
|
Commercial and
industrial (d)
|
$
|
43,888
|
|
$
|
919
|
|
4.22
|
%
|
|
$
|
40,336
|
|
$
|
782
|
|
3.90
|
%
|
|
Real estate —
commercial mortgage
|
14,070
|
|
337
|
|
4.83
|
|
|
15,142
|
|
351
|
|
4.68
|
|
|
Real estate —
construction
|
1,872
|
|
45
|
|
4.80
|
|
|
2,278
|
|
57
|
|
5.01
|
|
|
Commercial lease
financing
|
4,607
|
|
82
|
|
3.57
|
|
|
4,662
|
|
94
|
|
4.04
|
|
|
Total commercial
loans
|
64,437
|
|
1,383
|
|
4.32
|
|
|
62,418
|
|
1,284
|
|
4.14
|
|
|
Real estate —
residential mortgage
|
5,465
|
|
108
|
|
3.96
|
|
|
5,514
|
|
106
|
|
3.85
|
|
|
Home equity
loans
|
11,738
|
|
269
|
|
4.61
|
|
|
12,542
|
|
266
|
|
4.27
|
|
|
Consumer direct
loans
|
1,767
|
|
66
|
|
7.53
|
|
|
1,752
|
|
61
|
|
7.02
|
|
|
Credit
cards
|
1,080
|
|
60
|
|
11.27
|
|
|
1,055
|
|
58
|
|
11.05
|
|
|
Consumer indirect
loans
|
3,303
|
|
70
|
|
4.28
|
|
|
3,037
|
|
75
|
|
4.97
|
|
|
Total consumer
loans
|
23,353
|
|
573
|
|
4.94
|
|
|
23,900
|
|
566
|
|
4.76
|
|
|
Total
loans
|
87,790
|
|
1,956
|
|
4.49
|
|
|
86,318
|
|
1,850
|
|
4.31
|
|
|
Loans held for
sale
|
1,282
|
|
28
|
|
4.31
|
|
|
1,135
|
|
22
|
|
3.95
|
|
|
Securities available
for sale (b), (e)
|
17,665
|
|
192
|
|
2.09
|
|
|
18,586
|
|
185
|
|
1.96
|
|
|
Held-to-maturity
securities (b)
|
12,134
|
|
141
|
|
2.33
|
|
|
10,230
|
|
106
|
|
2.07
|
|
|
Trading account
assets
|
925
|
|
14
|
|
3.11
|
|
|
1,005
|
|
14
|
|
2.88
|
|
|
Short-term
investments
|
2,032
|
|
16
|
|
1.64
|
|
|
1,791
|
|
8
|
|
.88
|
|
|
Other investments
(e)
|
716
|
|
11
|
|
3.02
|
|
|
698
|
|
7
|
|
2.07
|
|
|
Total earning
assets
|
122,544
|
|
2,358
|
|
3.85
|
|
|
119,763
|
|
2,192
|
|
3.67
|
|
|
Allowance for loan
and lease losses
|
(875)
|
|
|
|
|
(860)
|
|
|
|
|
Accrued income and
other assets
|
13,982
|
|
|
|
|
13,712
|
|
|
|
|
Discontinued
assets
|
1,272
|
|
|
|
|
1,508
|
|
|
|
|
Total
assets
|
$
|
136,923
|
|
|
|
|
$
|
134,123
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
54,129
|
|
105
|
|
.39
|
|
|
$
|
54,356
|
|
66
|
|
.24
|
|
|
Savings
deposits
|
6,254
|
|
10
|
|
.32
|
|
|
6,604
|
|
5
|
|
.16
|
|
|
Certificates of
deposit ($100,000 or more)
|
7,246
|
|
59
|
|
1.64
|
|
|
5,871
|
|
35
|
|
1.20
|
|
|
Other time
deposits
|
4,907
|
|
29
|
|
1.17
|
|
|
4,677
|
|
18
|
|
.77
|
|
|
Total
interest-bearing deposits
|
72,536
|
|
203
|
|
.56
|
|
|
71,508
|
|
124
|
|
.35
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
1,448
|
|
9
|
|
1.26
|
|
|
629
|
|
1
|
|
.28
|
|
|
Bank notes and other
short-term borrowings
|
1,228
|
|
13
|
|
2.05
|
|
|
1,508
|
|
9
|
|
1.21
|
|
|
Long-term debt
(f), (g)
|
12,608
|
|
194
|
|
3.08
|
|
|
10,940
|
|
142
|
|
2.61
|
|
|
Total
interest-bearing liabilities
|
87,820
|
|
419
|
|
.96
|
|
|
84,585
|
|
276
|
|
.66
|
|
|
Noninterest-bearing
deposits
|
30,747
|
|
|
|
|
30,922
|
|
|
|
|
Accrued expense and
other liabilities
|
2,121
|
|
|
|
|
1,914
|
|
|
|
|
Discontinued
liabilities (g)
|
1,272
|
|
|
|
|
1,509
|
|
|
|
|
Total
liabilities
|
121,960
|
|
|
|
|
118,930
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
14,961
|
|
|
|
|
15,192
|
|
|
|
|
Noncontrolling
interests
|
2
|
|
|
|
|
1
|
|
|
|
|
Total
equity
|
14,963
|
|
|
|
|
15,193
|
|
|
|
|
Total liabilities
and equity
|
$
|
136,923
|
|
|
|
|
$
|
134,123
|
|
|
|
Interest rate spread
(TE)
|
|
|
2.89
|
%
|
|
|
|
3.01
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
1,939
|
|
3.17
|
%
|
|
|
1,916
|
|
3.21
|
%
|
TE adjustment
(b)
|
|
16
|
|
|
|
|
25
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
1,923
|
|
|
|
|
$
|
1,891
|
|
|
|
(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 21% and 35% for the six
months
ended June 30, 2018, and June 30, 2017,
respectively.
|
(c) For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d) Commercial and industrial
average balances include $123 million and $115 million of assets
from commercial credit cards for the six months ended June 30,
2018, and June 30,
2017,
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
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
6/30/2018
|
6/30/2017
|
Personnel
(a)
|
$
|
586
|
|
$
|
594
|
|
$
|
553
|
|
|
$
|
1,180
|
|
$
|
1,110
|
|
Net
occupancy
|
79
|
|
78
|
|
78
|
|
|
157
|
|
165
|
|
Computer
processing
|
51
|
|
52
|
|
55
|
|
|
103
|
|
115
|
|
Business services and
professional fees
|
51
|
|
41
|
|
45
|
|
|
92
|
|
91
|
|
Equipment
|
26
|
|
26
|
|
27
|
|
|
52
|
|
54
|
|
Operating lease
expense
|
30
|
|
27
|
|
21
|
|
|
57
|
|
40
|
|
Marketing
|
26
|
|
25
|
|
30
|
|
|
51
|
|
51
|
|
FDIC
assessment
|
21
|
|
21
|
|
21
|
|
|
42
|
|
41
|
|
Intangible asset
amortization
|
25
|
|
29
|
|
22
|
|
|
54
|
|
44
|
|
OREO expense,
net
|
—
|
|
2
|
|
3
|
|
|
2
|
|
5
|
|
Other
expense
|
98
|
|
111
|
|
140
|
|
|
209
|
|
292
|
|
Total noninterest
expense
|
$
|
993
|
|
$
|
1,006
|
|
$
|
995
|
|
|
$
|
1,999
|
|
$
|
2,008
|
|
Average full-time
equivalent employees (b)
|
18,376
|
|
18,540
|
|
18,344
|
|
|
18,458
|
|
18,365
|
|
|
(a) Additional detail
provided in Personnel Expense table below.
|
(b) 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
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
6/30/2018
|
6/30/2017
|
Salaries and contract
labor
|
$
|
341
|
|
$
|
339
|
|
$
|
332
|
|
|
$
|
680
|
|
$
|
656
|
|
Incentive and
stock-based compensation
|
147
|
|
145
|
|
137
|
|
|
292
|
|
264
|
|
Employee
benefits
|
82
|
|
105
|
|
78
|
|
|
187
|
|
175
|
|
Severance
|
16
|
|
5
|
|
6
|
|
|
21
|
|
15
|
|
Total personnel
expense
|
$
|
586
|
|
$
|
594
|
|
$
|
553
|
|
|
$
|
1,180
|
|
$
|
1,110
|
|
Merger-Related
Charges
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
6/30/2018
|
6/30/2017
|
Personnel
|
—
|
|
—
|
|
$
|
31
|
|
|
—
|
|
$
|
61
|
|
Net
occupancy
|
—
|
|
—
|
|
(1)
|
|
|
—
|
|
4
|
|
Business services and
professional fees
|
—
|
|
—
|
|
6
|
|
|
—
|
|
11
|
|
Computer
processing
|
—
|
|
—
|
|
2
|
|
|
—
|
|
7
|
|
Marketing
|
—
|
|
—
|
|
6
|
|
|
—
|
|
12
|
|
Other nonpersonnel
expense
|
—
|
|
—
|
|
—
|
|
|
—
|
|
30
|
|
Total merger-related
charges
|
—
|
|
—
|
|
$
|
44
|
|
|
—
|
|
$
|
125
|
|
Loan
Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Percent change
6/30/2018 vs.
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
3/31/2018
|
6/30/2017
|
Commercial and
industrial (a)
|
$
|
44,569
|
|
$
|
44,313
|
|
$
|
40,914
|
|
|
.6
|
%
|
8.9
|
%
|
Commercial real
estate:
|
|
|
|
|
|
|
Commercial
mortgage
|
14,162
|
|
13,997
|
|
14,813
|
|
|
1.2
|
|
(4.4)
|
|
Construction
|
1,736
|
|
1,871
|
|
2,168
|
|
|
(7.2)
|
|
(19.9)
|
|
Total
commercial real estate loans
|
15,898
|
|
15,868
|
|
16,981
|
|
|
.2
|
|
(6.4)
|
|
Commercial lease
financing (b)
|
4,509
|
|
4,598
|
|
4,737
|
|
|
(1.9)
|
|
(4.8)
|
|
Total
commercial loans
|
64,976
|
|
64,779
|
|
62,632
|
|
|
.3
|
|
3.7
|
|
Residential — prime
loans:
|
|
|
|
|
|
|
Real estate —
residential mortgage
|
5,452
|
|
5,473
|
|
5,517
|
|
|
(.4)
|
|
(1.2)
|
|
Home equity
loans
|
11,519
|
|
11,720
|
|
12,405
|
|
|
(1.7)
|
|
(7.1)
|
|
Total
residential — prime loans
|
16,971
|
|
17,193
|
|
17,922
|
|
|
(1.3)
|
|
(5.3)
|
|
Consumer direct
loans
|
1,785
|
|
1,758
|
|
1,755
|
|
|
1.5
|
|
1.7
|
|
Credit
cards
|
1,094
|
|
1,068
|
|
1,049
|
|
|
2.4
|
|
4.3
|
|
Consumer indirect
loans
|
3,396
|
|
3,291
|
|
3,145
|
|
|
3.2
|
|
8.0
|
|
Total
consumer loans
|
23,246
|
|
23,310
|
|
23,871
|
|
|
(.3)
|
|
(2.6)
|
|
Total loans
(c)
|
$
|
88,222
|
|
$
|
88,089
|
|
$
|
86,503
|
|
|
.2
|
%
|
2.0
|
%
|
|
(a) Loan balances include
$128 million, $121 million, and $118 million of commercial credit
card balances at
June 30, 2018, March 31, 2018, and June 30,
2017, respectively.
|
(b) Commercial lease
financing includes receivables held as collateral for a secured
borrowing of $16 million,
$16
million, and $47 million at June 30, 2018, March 31,
2018, and June 30, 2017, respectively. Principal
reductions
are based on the cash payments received from these related
receivables.
|
(c) Total loans exclude loans
of $1.2 billion at June 30, 2018, $1.3 billion at
March 31, 2018, and $1.4 billion
at
June 30, 2017, related to the discontinued operations of
the education lending business.
|
Loans Held for
Sale Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
6/30/2018 vs.
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
3/31/2018
|
6/30/2017
|
Commercial and
industrial
|
$
|
217
|
|
$
|
194
|
|
$
|
338
|
|
|
11.9
|
%
|
(35.8)
|
%
|
Real estate —
commercial mortgage
|
1,139
|
|
1,426
|
|
1,332
|
|
|
(20.1)
|
|
(14.5)
|
|
Commercial lease
financing
|
4
|
|
—
|
|
10
|
|
|
N/M
|
|
(60.0)
|
|
Real estate —
residential mortgage
|
58
|
|
47
|
|
63
|
|
|
23.4
|
|
(7.9)
|
|
Total loans held for
sale (a)
|
$
|
1,418
|
|
$
|
1,667
|
|
$
|
1,743
|
|
|
(14.9)
|
%
|
(18.6)
|
%
|
|
(a) Total loans held for sale
include Real estate — residential mortgage loans held for sale at
fair value of $58 million at
June 30, 2018, $47 million at March 31, 2018,
and $63 million at June 30, 2017.
|
N/M = Not
Meaningful
|
Summary of Changes
in Loans Held for Sale
|
(in
millions)
|
|
|
|
|
|
|
|
2Q18
|
1Q18
|
4Q17
|
3Q17
|
2Q17
|
Balance at beginning
of period
|
$
|
1,667
|
|
$
|
1,107
|
|
$
|
1,341
|
|
$
|
1,743
|
|
$
|
1,384
|
|
New
originations
|
2,665
|
|
3,280
|
|
3,566
|
|
2,855
|
|
2,876
|
|
Transfers from (to)
held to maturity, net
|
(4)
|
|
(14)
|
|
(10)
|
|
(63)
|
|
(7)
|
|
Loan sales
|
(2,909)
|
|
(2,705)
|
|
(3,783)
|
|
(3,191)
|
|
(2,507)
|
|
Loan draws
(payments), net
|
(1)
|
|
(1)
|
|
(7)
|
|
(3)
|
|
(3)
|
|
Balance at end of
period (a)
|
$
|
1,418
|
|
$
|
1,667
|
|
$
|
1,107
|
|
$
|
1,341
|
|
$
|
1,743
|
|
|
(a) Total loans held for sale
include Real estate — residential mortgage loans held for sale at
fair value of $58
million
at June 30, 2018, $47 million at March 31, 2018, $71
million at December 31, 2017, $60 million at
September 30, 2017, and $63 million at June 30,
2017.
|
Summary of Loan
and Lease Loss Experience From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
6/30/2018
|
6/30/2017
|
Average loans
outstanding
|
$
|
88,644
|
|
$
|
86,927
|
|
$
|
86,502
|
|
|
$
|
87,790
|
|
$
|
86,318
|
|
Allowance for loan
and lease losses at beginning of period
|
$
|
881
|
|
$
|
877
|
|
$
|
870
|
|
|
$
|
877
|
|
$
|
858
|
|
Loans charged
off:
|
|
|
|
|
|
|
Commercial and
industrial
|
39
|
|
37
|
|
40
|
|
|
76
|
|
72
|
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
2
|
|
1
|
|
3
|
|
|
3
|
|
3
|
|
Real estate —
construction
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Total
commercial real estate loans
|
2
|
|
1
|
|
3
|
|
|
3
|
|
3
|
|
Commercial lease
financing
|
4
|
|
1
|
|
1
|
|
|
5
|
|
8
|
|
Total
commercial loans
|
45
|
|
39
|
|
44
|
|
|
84
|
|
83
|
|
Real estate —
residential mortgage
|
—
|
|
1
|
|
4
|
|
|
1
|
|
2
|
|
Home equity
loans
|
6
|
|
4
|
|
9
|
|
|
10
|
|
17
|
|
Consumer direct
loans
|
9
|
|
8
|
|
8
|
|
|
17
|
|
18
|
|
Credit
cards
|
12
|
|
12
|
|
12
|
|
|
24
|
|
23
|
|
Consumer indirect
loans
|
7
|
|
8
|
|
5
|
|
|
15
|
|
16
|
|
Total
consumer loans
|
34
|
|
33
|
|
38
|
|
|
67
|
|
76
|
|
Total loans charged
off
|
79
|
|
72
|
|
82
|
|
|
151
|
|
159
|
|
Recoveries:
|
|
|
|
|
|
|
Commercial and
industrial
|
7
|
|
6
|
|
2
|
|
|
13
|
|
7
|
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
1
|
|
—
|
|
—
|
|
|
1
|
|
—
|
|
Real estate —
construction
|
—
|
|
1
|
|
—
|
|
|
1
|
|
1
|
|
Total
commercial real estate loans
|
1
|
|
1
|
|
—
|
|
|
2
|
|
1
|
|
Commercial lease
financing
|
—
|
|
1
|
|
—
|
|
|
1
|
|
2
|
|
Total commercial loans
|
8
|
|
8
|
|
2
|
|
|
16
|
|
10
|
|
Real estate —
residential mortgage
|
—
|
|
—
|
|
1
|
|
|
—
|
|
3
|
|
Home equity
loans
|
3
|
|
3
|
|
5
|
|
|
6
|
|
8
|
|
Consumer direct
loans
|
2
|
|
2
|
|
2
|
|
|
4
|
|
3
|
|
Credit
cards
|
2
|
|
1
|
|
2
|
|
|
3
|
|
3
|
|
Consumer indirect
loans
|
4
|
|
4
|
|
4
|
|
|
8
|
|
8
|
|
Total
consumer loans
|
11
|
|
10
|
|
14
|
|
|
21
|
|
25
|
|
Total recoveries
|
19
|
|
18
|
|
16
|
|
|
37
|
|
35
|
|
Net loan
charge-offs
|
(60)
|
|
(54)
|
|
(66)
|
|
|
(114)
|
|
(124)
|
|
Provision (credit)
for loan and lease losses
|
66
|
|
58
|
|
66
|
|
|
124
|
|
136
|
|
Allowance for loan
and lease losses at end of period
|
$
|
887
|
|
$
|
881
|
|
$
|
870
|
|
|
$
|
887
|
|
$
|
870
|
|
|
|
|
|
|
|
|
Liability for credit
losses on lending-related commitments at beginning of
period
|
$
|
60
|
|
$
|
57
|
|
$
|
48
|
|
|
$
|
57
|
|
$
|
55
|
|
Provision (credit)
for losses on lending-related commitments
|
(2)
|
|
3
|
|
—
|
|
|
1
|
|
(7)
|
|
Liability for credit
losses on lending-related commitments at end of period
(a)
|
$
|
58
|
|
$
|
60
|
|
$
|
48
|
|
|
$
|
58
|
|
$
|
48
|
|
|
|
|
|
|
|
|
Total allowance for
credit losses at end of period
|
$
|
945
|
|
$
|
941
|
|
$
|
918
|
|
|
$
|
945
|
|
$
|
918
|
|
|
|
|
|
|
|
|
Net loan charge-offs
to average total loans
|
.27
|
%
|
.25
|
%
|
.31
|
%
|
|
.26
|
%
|
.29
|
%
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
|
1.00
|
|
1.01
|
|
|
1.01
|
|
1.01
|
|
Allowance for credit
losses to period-end loans
|
1.07
|
|
1.07
|
|
1.06
|
|
|
1.07
|
|
1.06
|
|
Allowance for loan
and lease losses to nonperforming loans
|
162.8
|
|
162.8
|
|
171.6
|
|
|
162.8
|
|
171.6
|
|
Allowance for credit
losses to nonperforming loans
|
173.4
|
|
173.9
|
|
181.1
|
|
|
173.4
|
|
181.1
|
|
|
|
|
|
|
|
|
Discontinued
operations — education lending business:
|
|
|
|
|
|
|
Loans charged
off
|
$
|
3
|
|
$
|
4
|
|
$
|
4
|
|
|
$
|
7
|
|
$
|
10
|
|
Recoveries
|
1
|
|
2
|
|
2
|
|
|
3
|
|
4
|
|
Net loan
charge-offs
|
$
|
(2)
|
|
$
|
(2)
|
|
$
|
(2)
|
|
|
$
|
(4)
|
|
$
|
(6)
|
|
|
(a) Included in "Accrued
expense and other liabilities" on the balance sheet.
|
Asset Quality
Statistics From Continuing Operations
|
(dollars in
millions)
|
|
2Q18
|
1Q18
|
4Q17
|
3Q17
|
2Q17
|
Net loan
charge-offs
|
$
|
60
|
|
$
|
54
|
|
$
|
52
|
|
$
|
32
|
|
$
|
66
|
|
Net loan charge-offs
to average total loans
|
.27
|
%
|
.25
|
%
|
.24
|
%
|
.15
|
%
|
.31
|
%
|
Allowance for loan
and lease losses
|
$
|
887
|
|
$
|
881
|
|
$
|
877
|
|
$
|
880
|
|
$
|
870
|
|
Allowance for credit
losses (a)
|
945
|
|
941
|
|
934
|
|
937
|
|
918
|
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
%
|
1.00
|
%
|
1.01
|
%
|
1.02
|
%
|
1.01
|
%
|
Allowance for credit
losses to period-end loans
|
1.07
|
|
1.07
|
|
1.08
|
|
1.08
|
|
1.06
|
|
Allowance for loan
and lease losses to nonperforming loans (b)
|
162.8
|
|
162.8
|
|
174.4
|
|
170.2
|
|
171.6
|
|
Allowance for credit
losses to nonperforming loans (b)
|
173.4
|
|
173.9
|
|
185.7
|
|
181.2
|
|
181.1
|
|
Nonperforming loans
at period end (b)
|
$
|
545
|
|
$
|
541
|
|
$
|
503
|
|
$
|
517
|
|
$
|
507
|
|
Nonperforming assets
at period end (b)
|
571
|
|
569
|
|
534
|
|
556
|
|
556
|
|
Nonperforming loans
to period-end portfolio loans (b)
|
.62
|
%
|
.61
|
%
|
.58
|
%
|
.60
|
%
|
.59
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming
assets (b)
|
.65
|
|
.65
|
|
.62
|
|
.64
|
|
.64
|
|
|
(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
$629 million, $690 million, $738 million, $783 million, and $835
million of purchased credit impaired loans at
June 30, 2018, March 31, 2018, December 31,
2017, September 30, 2017, and June 30, 2017,
respectively.
|
Summary of
Nonperforming Assets and Past Due Loans From Continuing
Operations
|
(dollars in
millions)
|
|
6/30/2018
|
3/31/2018
|
12/31/2017
|
9/30/2017
|
6/30/2017
|
Commercial and
industrial
|
$
|
178
|
|
$
|
189
|
|
$
|
153
|
|
$
|
169
|
|
$
|
178
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
42
|
|
33
|
|
30
|
|
30
|
|
34
|
|
Real estate —
construction
|
2
|
|
2
|
|
2
|
|
2
|
|
4
|
|
Total commercial real
estate loans
|
44
|
|
35
|
|
32
|
|
32
|
|
38
|
|
Commercial lease
financing
|
21
|
|
5
|
|
6
|
|
11
|
|
11
|
|
Total commercial
loans
|
243
|
|
229
|
|
191
|
|
212
|
|
227
|
|
Real estate —
residential mortgage
|
55
|
|
59
|
|
58
|
|
57
|
|
58
|
|
Home equity
loans
|
222
|
|
229
|
|
229
|
|
227
|
|
208
|
|
Consumer direct
loans
|
4
|
|
4
|
|
4
|
|
3
|
|
2
|
|
Credit
cards
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
Consumer indirect
loans
|
19
|
|
18
|
|
19
|
|
16
|
|
10
|
|
Total consumer
loans
|
302
|
|
312
|
|
312
|
|
305
|
|
280
|
|
Total nonperforming
loans (a)
|
545
|
|
541
|
|
503
|
|
517
|
|
507
|
|
OREO
|
26
|
|
28
|
|
31
|
|
39
|
|
48
|
|
Other nonperforming
assets
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
Total nonperforming
assets (a)
|
$
|
571
|
|
$
|
569
|
|
$
|
534
|
|
$
|
556
|
|
$
|
556
|
|
Accruing loans past
due 90 days or more
|
$
|
103
|
|
$
|
82
|
|
$
|
89
|
|
$
|
86
|
|
$
|
85
|
|
Accruing loans past
due 30 through 89 days
|
429
|
|
305
|
|
359
|
|
329
|
|
340
|
|
Restructured loans —
accruing and nonaccruing (b)
|
347
|
|
317
|
|
317
|
|
315
|
|
333
|
|
Restructured loans
included in nonperforming loans (b)
|
184
|
|
179
|
|
189
|
|
187
|
|
193
|
|
Nonperforming assets
from discontinued operations — education lending
business
|
6
|
|
6
|
|
7
|
|
8
|
|
5
|
|
Nonperforming loans
to period-end portfolio loans (a)
|
.62
|
%
|
.61
|
%
|
.58
|
%
|
.60
|
%
|
.59
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming assets
(a)
|
.65
|
|
.65
|
|
.62
|
|
.64
|
|
.64
|
|
|
(a) Nonperforming loan
balances exclude $629 million, $690 million, $738 million, $783
million, and $835 million of purchased credit impaired loans at
June 30,
2018,
March 31, 2018, December 31, 2017,
September 30, 2017, and June 30, 2017,
respectively.
|
(b) Restructured loans (i.e.,
troubled debt restructuring) 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)
|
|
2Q18
|
1Q18
|
4Q17
|
3Q17
|
2Q17
|
Balance at beginning
of period
|
$
|
541
|
|
$
|
503
|
|
$
|
517
|
|
$
|
507
|
|
$
|
573
|
|
Loans placed on
nonaccrual status
|
175
|
|
182
|
|
137
|
|
181
|
|
143
|
|
Charge-offs
|
(78)
|
|
(70)
|
|
(67)
|
|
(71)
|
|
(82)
|
|
Loans sold
|
(1)
|
|
—
|
|
—
|
|
(1)
|
|
—
|
|
Payments
|
(33)
|
|
(29)
|
|
(52)
|
|
(32)
|
|
(84)
|
|
Transfers to
OREO
|
(5)
|
|
(4)
|
|
(8)
|
|
(10)
|
|
(8)
|
|
Transfers to other
nonperforming assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Loans returned to
accrual status
|
(54)
|
|
(41)
|
|
(24)
|
|
(57)
|
|
(35)
|
|
Balance at end of
period (a)
|
$
|
545
|
|
$
|
541
|
|
$
|
503
|
|
$
|
517
|
|
$
|
507
|
|
|
(a) Nonperforming loan
balances exclude $629 million, $690 million, $738 million,
$783 million, and $835 million of purchased credit
impaired
loans at June 30, 2018,
March 31, 2018,
December 31, 2017, September 30, 2017, and June 30,
2017, respectively.
|
Line of Business
Results
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
2Q18 vs.
|
|
2Q18
|
1Q18
|
4Q17
|
3Q17
|
2Q17
|
|
1Q18
|
2Q17
|
Key Community
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
996
|
|
$
|
958
|
|
$
|
961
|
|
$
|
945
|
|
$
|
998
|
|
|
4.0
|
%
|
(.2)
|
%
|
Provision for credit
losses
|
38
|
|
48
|
|
57
|
|
59
|
|
47
|
|
|
(20.8)
|
|
(19.1)
|
|
Noninterest
expense
|
639
|
|
652
|
|
661
|
|
623
|
|
635
|
|
|
(2.0)
|
|
.6
|
|
Net income (loss)
attributable to Key
|
244
|
|
197
|
|
154
|
|
165
|
|
198
|
|
|
23.9
|
|
23.2
|
|
Average loans and
leases
|
47,984
|
|
47,680
|
|
47,405
|
|
47,611
|
|
47,477
|
|
|
.6
|
|
1.1
|
|
Average
deposits
|
80,930
|
|
79,945
|
|
80,352
|
|
79,563
|
|
79,601
|
|
|
1.2
|
|
1.7
|
|
Net loan
charge-offs
|
34
|
|
42
|
|
35
|
|
41
|
|
47
|
|
|
(19.0)
|
|
(27.7)
|
|
Net loan charge-offs
to average total loans
|
.28
|
%
|
.36
|
%
|
.29
|
%
|
.34
|
%
|
.40
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
468
|
|
$
|
425
|
|
$
|
405
|
|
$
|
427
|
|
$
|
406
|
|
|
10.1
|
|
15.3
|
|
Return on average
allocated equity
|
20.22
|
%
|
16.61
|
%
|
12.62
|
%
|
13.55
|
%
|
16.59
|
%
|
|
N/A
|
|
N/A
|
|
Average full-time
equivalent employees
|
10,619
|
|
10,666
|
|
10,629
|
|
10,696
|
|
10,558
|
|
|
(.4)
|
|
.6
|
|
|
|
|
|
|
|
|
|
|
Key Corporate
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
542
|
|
$
|
559
|
|
$
|
605
|
|
$
|
561
|
|
$
|
597
|
|
|
(3.0)
|
%
|
(9.2)
|
%
|
Provision for credit
losses
|
28
|
|
14
|
|
(6)
|
|
(11)
|
|
19
|
|
|
100.0
|
|
47.4
|
|
Noninterest
expense
|
326
|
|
314
|
|
353
|
|
305
|
|
297
|
|
|
3.8
|
|
9.8
|
|
Net income (loss)
attributable to Key
|
167
|
|
207
|
|
222
|
|
189
|
|
224
|
|
|
(19.3)
|
|
(25.4)
|
|
Average loans and
leases
|
39,710
|
|
38,260
|
|
37,460
|
|
38,024
|
|
37,704
|
|
|
3.8
|
|
5.3
|
|
Average loans held
for sale
|
1,299
|
|
1,118
|
|
1,345
|
|
1,521
|
|
1,000
|
|
|
16.2
|
|
29.9
|
|
Average
deposits
|
21,057
|
|
20,815
|
|
21,558
|
|
21,559
|
|
21,145
|
|
|
1.2
|
|
(.4)
|
|
Net loan
charge-offs
|
26
|
|
11
|
|
16
|
|
(9)
|
|
19
|
|
|
136.4
|
|
36.8
|
|
Net loan charge-offs
to average total loans
|
.26
|
%
|
.12
|
%
|
.17
|
%
|
(.09)
|
%
|
.20
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
91
|
|
$
|
127
|
|
$
|
109
|
|
$
|
106
|
|
$
|
119
|
|
|
(28.3)
|
|
(23.5)
|
|
Return on average
allocated equity
|
23.07
|
%
|
29.46
|
%
|
31.33
|
%
|
26.90
|
%
|
31.66
|
%
|
|
N/A
|
|
N/A
|
|
Average full-time
equivalent employees
|
2,537
|
|
2,543
|
|
2,418
|
|
2,460
|
|
2,364
|
|
|
(.2)
|
|
7.3
|
|
|
TE = Taxable
Equivalent, N/A = Not Applicable, N/M = Not Meaningful
|
Notable
Items
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
6/30/2018
|
3/31/2018
|
6/30/2017
|
|
6/30/2018
|
6/30/2017
|
Gain on sale of Key
Insurance and Benefits Services
|
$
|
78
|
|
—
|
|
—
|
|
|
$
|
78
|
|
—
|
|
Expenses related to
the sale of Key Insurance and Benefits Services
|
5
|
|
—
|
|
—
|
|
|
5
|
|
—
|
|
Net gain on sale of
Key Insurance and Benefits Services
|
73
|
|
—
|
|
—
|
|
|
73
|
|
—
|
|
|
|
|
|
|
|
|
Efficiency
efforts
|
(22)
|
|
—
|
|
—
|
|
|
(22)
|
|
—
|
|
Lease residual
loss
|
(42)
|
|
—
|
|
—
|
|
|
(42)
|
|
—
|
|
Merger-related
charges
|
—
|
|
—
|
|
$
|
(44)
|
|
|
—
|
|
$
|
(125)
|
|
Merchant services
gain
|
—
|
|
—
|
|
64
|
|
|
—
|
|
64
|
|
Purchase accounting
finalization, net
|
—
|
|
—
|
|
43
|
|
|
—
|
|
43
|
|
Charitable
contribution
|
—
|
|
—
|
|
(20)
|
|
|
—
|
|
(20)
|
|
Total notable
items
|
9
|
|
—
|
|
$
|
43
|
|
|
9
|
|
$
|
(38)
|
|
Income
taxes
|
7
|
|
—
|
|
16
|
|
|
7
|
|
(14)
|
|
Total notable items,
after tax
|
$
|
2
|
|
—
|
|
$
|
27
|
|
|
$
|
2
|
|
$
|
(24)
|
|
View original
content:http://www.prnewswire.com/news-releases/keycorp-reports-second-quarter-2018-net-income-of-464-million-or-44-per-common-share-300683554.html
SOURCE KeyCorp