CLEVELAND, April 18, 2019
/PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from
continuing operations attributable to Key common shareholders of
$386 million, or $.38 per common share for the first quarter of
2019, compared to $459 million, or
$.45 per common share, for the fourth
quarter of 2018 and $402 million, or
$.38 per common share, for the first
quarter of 2018. Key's first quarter of 2019 results included a net
impact of $.02 per common share
relating to efficiency initiative expenses. Notable items resulting
in a net impact of $.03 per common
share were reported in the fourth quarter of 2018, and no notable
items were reported in the first quarter of 2018.
"Our results this quarter reflect solid underlying trends in
our core businesses, strong expense management and continued
strength in credit quality. Revenue benefitted from continued
balance sheet growth, including an 8% increase in commercial and
industrial loans from the same period last year, and a 5% increase
in average deposits. Fee income this quarter declined, primarily
due to lower capital markets income, driven by both seasonality and
the timing in closing certain transactions. We continued to execute
against our continuous improvement plans across the company,
driving a meaningful reduction in our expenses, down 7%, excluding
notable items, from the year-ago period. Importantly, we remain
confident in reaching our targeted cash efficiency ratio of 54% to
56% in the second half of 2019.
We have also continued to use our strong capital position to
support organic growth and return capital to our shareholders. This
morning, we announced our capital plans, beginning in third quarter
of 2019. These plans include a 9% increase in our common share
dividend, from $.17 to $.185, in the third quarter of this year, subject
to approval of our Board of Directors. We plan to repurchase up to
$1 billion in common shares over the
same period.
Additionally, we completed our acquisition of Laurel Road
Bank's digital business earlier this month. Laurel Road's platform
enhances our digital capabilities and aligns well with our
relationship strategy, to build broad-based relationships with
targeted clients and prospects. We are excited to have found a firm
that so clearly matches our business and cultural approach to
serving clients."
-
Beth Mooney, Chairman and
CEO
Selected Financial
Highlights
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|
dollars in
millions, except per share data
|
|
|
|
|
Change 1Q19
vs.
|
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
386
|
|
$
|
459
|
|
$
|
402
|
|
|
(15.9)
|
%
|
(4.0)
|
%
|
Income (loss) from
continuing operations attributable to Key common shareholders
per
common share — assuming
dilution
|
.38
|
|
.45
|
|
.38
|
|
|
(15.6)
|
|
—
|
|
Return on average
tangible common equity from continuing operations
(a)
|
13.69
|
%
|
16.40
|
%
|
14.89
|
%
|
|
N/A
|
|
N/A
|
|
Return on average
total assets from continuing operations
|
1.18
|
|
1.37
|
|
1.25
|
|
|
N/A
|
|
N/A
|
|
Common Equity Tier 1
ratio (b)
|
9.84
|
|
9.93
|
|
9.99
|
|
|
N/A
|
|
N/A
|
|
Book value at period
end
|
$
|
14.31
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|
$
|
13.90
|
|
$
|
13.07
|
|
|
2.9
|
%
|
9.5
|
%
|
Net interest margin
(TE) from continuing operations
|
3.13
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%
|
3.16
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%
|
3.15
|
%
|
|
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)
|
3/31/19 ratio is
estimated.
|
TE = Taxable
Equivalent, N/A = Not Applicable
|
INCOME STATEMENT
HIGHLIGHTS
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Revenue
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dollars in
millions
|
|
|
|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Net interest income
(TE)
|
$
|
985
|
|
$
|
1,008
|
|
$
|
952
|
|
|
(2.3)
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%
|
3.5
|
%
|
Noninterest
income
|
536
|
|
645
|
|
601
|
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|
(16.9)
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|
(10.8)
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|
Total
revenue
|
$
|
1,521
|
|
$
|
1,653
|
|
$
|
1,553
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|
|
(8.0)
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%
|
(2.1)
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%
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Taxable-equivalent net interest income was $985 million for the first quarter of 2019,
compared to taxable-equivalent net interest income of $952 million for the first quarter of 2018. The
increase in net interest income reflects the benefit from higher
interest rates and higher earning asset balances, partially offset
by a decline in purchase accounting accretion and lower loan fees.
First quarter 2019 net interest income included $22 million of purchase accounting accretion, a
decline of $11 million from the first
quarter of 2018.
Compared to the fourth quarter of 2018, taxable-equivalent net
interest income decreased by $23
million. The decline was driven by two fewer days in the
first quarter of 2019 and a decline in loan fees.
Noninterest
Income
|
|
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|
dollars in
millions
|
|
|
|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Trust and investment
services income
|
$
|
115
|
|
$
|
121
|
|
$
|
133
|
|
|
(5.0)
|
%
|
(13.5)
|
%
|
Investment banking
and debt placement fees
|
110
|
|
186
|
|
143
|
|
|
(40.9)
|
|
(23.1)
|
|
Service charges on
deposit accounts
|
82
|
|
84
|
|
89
|
|
|
(2.4)
|
|
(7.9)
|
|
Operating lease
income and other leasing gains
|
37
|
|
28
|
|
32
|
|
|
32.1
|
|
15.6
|
|
Corporate services
income
|
55
|
|
58
|
|
62
|
|
|
(5.2)
|
|
(11.3)
|
|
Cards and payments
income
|
66
|
|
68
|
|
62
|
|
|
(2.9)
|
|
6.5
|
|
Corporate-owned life
insurance income
|
32
|
|
39
|
|
32
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|
|
(17.9)
|
|
—
|
|
Consumer mortgage
income
|
8
|
|
7
|
|
7
|
|
|
14.3
|
|
14.3
|
|
Mortgage servicing
fees
|
21
|
|
21
|
|
20
|
|
|
—
|
|
5.0
|
|
Other
income
|
10
|
|
33
|
|
21
|
|
|
(69.7)
|
|
(52.4)
|
|
Total noninterest
income
|
$
|
536
|
|
$
|
645
|
|
$
|
601
|
|
|
(16.9)
|
%
|
(10.8)
|
%
|
|
|
|
|
|
|
|
Key's noninterest income was $536
million for the first quarter of 2019, compared to
$601 million for the year-ago
quarter. The decline was largely due to lower investment banking
and debt placement fees of $33
million, reflecting market disruption from the government
shutdown early in the quarter, as well as the timing of closing
certain transactions. Trust and investment services income
declined, primarily related to the sale of Key Insurance and
Benefits Services in May of 2018, which contributed $15 million in the first quarter of 2018.
Partially offsetting these declines were increases in cards and
payments income and operating lease income and other leasing
gains.
Compared to the fourth quarter of 2018, noninterest income
decreased by $109 million, largely
due to expected seasonality, as well as the timing of closing
certain transactions. Both of these factors primarily impacted
investment banking and debt placement fees, which declined
$76 million from the prior quarter.
Other income decreased $23 million,
primarily related to market-related gains in the prior period,
compared to market-related losses in the current quarter. Seasonal
factors drove declines in corporate-owned life insurance and cards
and payments income. Partially offsetting these declines was an
increase of $9 million in operating
lease income and other leasing gains.
Noninterest
Expense
|
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dollars in
millions
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|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Personnel
expense
|
$
|
563
|
|
$
|
576
|
|
$
|
594
|
|
|
(2.3)
|
%
|
(5.2)
|
%
|
Nonpersonnel
expense
|
400
|
|
436
|
|
412
|
|
|
(8.3)
|
|
(2.9)
|
|
Total noninterest
expense
|
$
|
963
|
|
$
|
1,012
|
|
$
|
1,006
|
|
|
(4.8)
|
%
|
(4.3)
|
%
|
|
|
|
|
|
|
|
Key's noninterest expense was $963
million for the first quarter of 2019, compared to
$1.0 billion in the year-ago quarter.
The decline was largely the result of Key's efficiency initiative
efforts across the franchise. Personnel expense declined
$31 million compared to the year-ago
period, driven by lower salaries expense, incentive compensation,
and employee benefits costs, and was partially offset by higher
severance expense related to efficiency initiative actions taken
during the quarter. Nonpersonnel expense declined, largely related
to lower FDIC assessment expense, which reflected the elimination
of the FDIC quarterly surcharge.
Compared to the fourth quarter of 2018, noninterest expense
decreased by $49 million. Lower
personnel expense reflected declines in salaries expense and
incentive compensation, partially offset by a seasonal increase in
employee benefits expense. Lower nonpersonnel expense was driven by
a $13 million decline in other
expense, as well as lower operating lease expense and seasonally
lower marketing costs. Both reporting periods included notable
items impacting noninterest expense. The fourth quarter of 2018
included efficiency initiative expenses of $24 million and a $17
million pension settlement charge (reported in other
expense), while notable items for the first quarter of 2019
included $26 million of efficiency
initiative expenses.
BALANCE SHEET
HIGHLIGHTS
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Average
Loans
|
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dollars in
millions
|
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|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Commercial and
industrial (a)
|
$
|
45,998
|
|
$
|
45,129
|
|
$
|
42,733
|
|
|
1.9
|
%
|
7.6
|
%
|
Other commercial
loans
|
20,383
|
|
20,899
|
|
20,705
|
|
|
(2.5)
|
|
(1.6)
|
|
Home equity
loans
|
10,995
|
|
11,234
|
|
11,877
|
|
|
(2.1)
|
|
(7.4)
|
|
Other consumer
loans
|
12,273
|
|
12,026
|
|
11,612
|
|
|
2.1
|
|
5.7
|
|
Total
loans
|
$
|
89,649
|
|
$
|
89,288
|
|
$
|
86,927
|
|
|
.4
|
%
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
(a)
|
Commercial and
industrial average loan balances include $133 million, $132
million, and $120 million of assets from commercial credit cards at
March 31, 2019, December 31, 2018, and March 31,
2018, respectively.
|
Average loans were $89.6 billion
for the first quarter of 2019, an increase of $2.7 billion compared to the first quarter of
2018, reflecting broad-based growth in commercial and industrial
loans and growth in indirect auto lending, partially offset by
continued paydowns in home equity lines of credit.
Compared to the fourth quarter of 2018, average loans increased
by $361 million, driven by growth in
commercial and industrial loans, partly offset by declines in
commercial mortgage and construction loans. Consumer loans
were relatively stable from the prior quarter, as growth in auto
lending offset the decline in home equity lines of credit.
Average
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Non-time
deposits
|
$
|
93,699
|
|
$
|
94,480
|
|
$
|
90,719
|
|
|
(.8)
|
%
|
3.3
|
%
|
Certificates of
deposit ($100,000 or more)
|
8,376
|
|
8,217
|
|
6,972
|
|
|
1.9
|
|
20.1
|
|
Other time
deposits
|
5,501
|
|
5,255
|
|
4,865
|
|
|
4.7
|
|
13.1
|
|
Total
deposits
|
$
|
107,576
|
|
$
|
107,952
|
|
$
|
102,556
|
|
|
(.3)
|
%
|
4.9
|
%
|
|
|
|
|
|
|
|
Cost of total
deposits
|
.76
|
%
|
.64
|
%
|
.36
|
%
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
Average deposits totaled $107.6
billion for the first quarter of 2019, an increase of
$5 billion compared to the year-ago
quarter, reflecting growth in higher-yielding deposit products, as
well as strength in Key's retail banking franchise and growth from
commercial relationships.
Compared to the fourth quarter of 2018, average deposits
decreased by $376 million, primarily
driven by short-term and seasonal deposit outflows, which more than
offset growth from the penetration of existing retail and
commercial relationships.
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Net loan
charge-offs
|
$
|
64
|
|
$
|
60
|
|
$
|
54
|
|
|
6.7
|
%
|
18.5
|
%
|
Net loan charge-offs
to average total loans
|
.29
|
%
|
.27
|
%
|
.25
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming loans
at period end (a)
|
$
|
548
|
|
$
|
542
|
|
$
|
541
|
|
|
1.1
|
|
1.3
|
|
Nonperforming assets
at period end (a)
|
597
|
|
577
|
|
569
|
|
|
3.5
|
|
4.9
|
|
Allowance for loan
and lease losses
|
883
|
|
883
|
|
881
|
|
|
—
|
|
.2
|
|
Allowance for loan
and lease losses to nonperforming loans (a)
|
161.1
|
%
|
162.9
|
%
|
162.8
|
%
|
|
N/A
|
|
N/A
|
|
Provision for credit
losses
|
$
|
62
|
|
$
|
59
|
|
$
|
61
|
|
|
5.1
|
%
|
1.6
|
%
|
|
|
|
|
|
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $551 million, $575 million, and $690 million of
purchased credit impaired loans at March 31, 2019,
December 31, 2018, and March 31, 2018,
respectively.
|
N/A = Not
Applicable
|
Key's provision for credit losses was $62
million for the first quarter of 2019, compared to
$61 million for the first quarter of
2018 and $59 million for the fourth
quarter of 2018. Key's allowance for loan and lease losses was
$883 million, or .98% of total
period-end loans at March 31, 2019, compared to 1.00% at
March 31, 2018, and .99% at December 31, 2018.
Net loan charge-offs for the first quarter of 2019 totaled
$64 million, or .29% of average total
loans. These results compare to $54
million, or .25%, for the first quarter of 2018, and
$60 million, or .27%, for the fourth
quarter of 2018.
At March 31, 2019, Key's nonperforming loans totaled
$548 million, which represented .61%
of period-end portfolio loans. These results compare to .61% at
March 31, 2018, and .61% at December 31, 2018.
Nonperforming assets at March 31, 2019, totaled $597 million, and represented .66% of period-end
portfolio loans and OREO and other nonperforming assets. These
results compare to .65% at March 31, 2018, and .64% at
December 31, 2018.
CAPITAL
Key's estimated risk-based capital ratios included in the
following table continued to exceed all "well-capitalized"
regulatory benchmarks at March 31, 2019.
Capital
Ratios
|
|
|
|
|
|
|
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Common Equity Tier 1
(a)
|
9.84
|
%
|
9.93
|
%
|
9.99
|
%
|
Tier 1 risk-based
capital (a)
|
10.97
|
|
11.08
|
|
10.82
|
|
Total risk based
capital (a)
|
13.01
|
|
12.89
|
|
12.73
|
|
Tangible common
equity to tangible assets (b)
|
8.43
|
|
8.30
|
|
8.22
|
|
Leverage
(a)
|
9.92
|
|
9.89
|
|
9.76
|
|
|
|
|
|
|
|
(a)
|
3/31/2019 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 first quarter of
2019. As shown in the preceding table, at March 31, 2019,
Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital
ratios stood at 9.84% and 10.97%, respectively. Key's tangible
common equity ratio was 8.43% at March 31, 2019.
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. Key's estimated Common Equity Tier 1
ratio as calculated under the fully phased-in Regulatory Capital
Rules was 9.75% at March 31, 2019. 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 1Q19
vs.
|
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Shares outstanding at
beginning of period
|
1,019,503
|
|
1,034,287
|
|
1,069,084
|
|
|
(1.4)
|
%
|
(4.6)
|
%
|
Open market
repurchases and return of shares under employee
compensation plans
|
(11,791)
|
|
(15,216)
|
|
(9,399)
|
|
|
(22.5)
|
|
25.4
|
|
Shares issued under
employee compensation plans (net of cancellations)
|
5,474
|
|
432
|
|
5,254
|
|
|
N/M
|
|
4.2
|
|
|
Shares outstanding at
end of period
|
1,013,186
|
|
1,019,503
|
|
1,064,939
|
|
|
(.6)
|
%
|
(4.9)
|
%
|
|
|
|
|
|
|
|
|
Consistent with Key's 2018 Capital Plan, during the first
quarter of 2019, Key declared a dividend of $.17 per common share and completed $199 million of common share repurchases. Key's
remaining share repurchase authorization consistent with the 2018
Capital Plan (which continues through the second quarter of 2019)
is $206 million.
Key also announced 2019 planned capital actions (3Q19-2Q20).
Plans include a common share repurchase program of up to
$1 billion, as well as a 9% increase
in the common share dividend, from $.17 to $.185 per
common share, in the third quarter of 2019, subject to Board
approval.
LINE OF BUSINESS RESULTS
In early 2019, Key underwent a company-wide organizational
change, resulting in the realignment of its businesses into
Consumer and Commercial segments (which were historically reported
as Key Community Bank and Key Corporate Bank segments). The
business realignment has now been reflected in segment reporting as
of the first quarter of 2019, and prior periods presented have been
restated to conform to this realignment. The Consumer Bank includes
Key's Retail, Home Lending, Business Banking, and Private Banking
businesses and primarily serves clients in Key's 15-state branch
footprint. The Commercial Bank includes footprint-based middle
market clients (previously reported in Key Community Bank), Real
Estate Capital, Institutional Bank and Key Equipment Finance
business. These businesses primarily focus on serving the needs of
middle market clients in Key's geographies, as well as seven
industry sectors: consumer, energy,
healthcare, industrial, public sector, real estate, and technology.
For more information, a detailed discussion of the business
segments will be included in Key's forthcoming First Quarter 2019
Form 10-Q.
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 1Q19
vs.
|
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Revenue from
continuing operations (TE)
|
|
|
|
|
|
|
Consumer
Bank
|
$
|
808
|
|
$
|
830
|
|
$
|
782
|
|
|
(2.7)
|
%
|
3.3
|
%
|
Commercial
Bank
|
699
|
|
770
|
|
730
|
|
|
(9.2)
|
|
(4.2)
|
|
Other
(a)
|
14
|
|
53
|
|
41
|
|
|
(73.6)
|
|
(65.9)
|
%
|
Total
|
$
|
1,521
|
|
$
|
1,653
|
|
$
|
1,553
|
|
|
(8.0)
|
%
|
(2.1)
|
%
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key
|
|
|
|
|
|
|
Consumer
Bank
|
$
|
164
|
|
$
|
175
|
|
$
|
131
|
|
|
(6.3)
|
%
|
25.2
|
%
|
Commercial
Bank
|
253
|
|
304
|
|
276
|
|
|
(16.8)
|
|
(8.3)
|
|
Other
(a)
|
(10)
|
|
5
|
|
11
|
|
|
(300.0)
|
|
(190.9)
|
|
Total
|
$
|
407
|
|
$
|
484
|
|
$
|
418
|
|
|
(15.9)
|
%
|
(2.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Other includes other
segments that consists of corporate treasury, our principal
investing unit, and various exit portfolios as well as reconciling
items which primarily represents the unallocated portion of
nonearning assets of corporate support functions. Charges related
to the funding of these assets are part of net interest income and
are allocated to the business segments through noninterest expense.
Reconciling items also includes intercompany eliminations and
certain items that are not allocated to the business segments
because they do not reflect their normal operations.
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Consumer
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
594
|
|
$
|
599
|
|
$
|
553
|
|
|
(.8)
|
%
|
7.4
|
%
|
Noninterest
income
|
214
|
|
231
|
|
229
|
|
|
(7.4)
|
|
(6.6)
|
|
Total revenue
(TE)
|
808
|
|
830
|
|
782
|
|
|
(2.7)
|
|
3.3
|
|
Provision for credit
losses
|
45
|
|
43
|
|
34
|
|
|
4.7
|
|
32.4
|
|
Noninterest
expense
|
547
|
|
558
|
|
576
|
|
|
(2.0)
|
|
(5.0)
|
|
Income (loss) before
income taxes (TE)
|
216
|
|
229
|
|
172
|
|
|
(5.7)
|
|
25.6
|
|
Allocated income
taxes (benefit) and TE adjustments
|
52
|
|
54
|
|
41
|
|
|
(3.7)
|
|
26.8
|
|
Net income (loss)
attributable to Key
|
$
|
164
|
|
$
|
175
|
|
$
|
131
|
|
|
(6.3)
|
%
|
25.2
|
%
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
31,403
|
|
$
|
31,313
|
|
$
|
31,647
|
|
|
.3
|
%
|
(.8)
|
%
|
Total
assets
|
34,814
|
|
34,438
|
|
34,802
|
|
|
1.1
|
|
-
|
|
Deposits
|
71,289
|
|
70,427
|
|
67,421
|
|
|
1.2
|
|
5.7
|
|
|
|
|
|
|
|
|
Assets under
management at period end
|
$
|
38,742
|
|
$
|
36,775
|
|
$
|
39,003
|
|
|
5.3
|
%
|
(.7)
|
%
|
|
|
|
|
|
|
|
Additional
Consumer Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
85
|
|
$
|
89
|
|
$
|
87
|
|
|
(4.5)
|
%
|
(2.3)
|
%
|
Service charges on
deposit accounts
|
53
|
|
57
|
|
60
|
|
|
(7.0)
|
|
(11.7)
|
|
Cards and payments
income
|
48
|
|
51
|
|
45
|
|
|
(5.9)
|
|
6.7
|
|
Other noninterest
income
|
28
|
|
34
|
|
37
|
|
|
(17.6)
|
|
(24.3)
|
|
Total noninterest
income
|
$
|
214
|
|
$
|
231
|
|
$
|
229
|
|
|
(7.4)
|
%
|
(6.6)
|
%
|
|
|
|
|
|
|
|
Average deposit
balances
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
42,262
|
|
$
|
41,189
|
|
$
|
39,814
|
|
|
2.6
|
%
|
6.1
|
%
|
Savings
deposits
|
4,524
|
|
4,579
|
|
4,851
|
|
|
(1.2)
|
|
(6.7)
|
|
Certificates of
deposit ($100,000 or more)
|
6,393
|
|
5,863
|
|
4,758
|
|
|
9.0
|
|
34.4
|
|
Other time
deposits
|
5,484
|
|
5,239
|
|
4,850
|
|
|
4.7
|
|
13.1
|
|
Noninterest-bearing
deposits
|
12,626
|
|
13,557
|
|
13,148
|
|
|
(6.9)
|
|
(4.0)
|
|
Total
deposits
|
$
|
71,289
|
|
$
|
70,427
|
|
$
|
67,421
|
|
|
1.2
|
%
|
5.7
|
%
|
|
|
|
|
|
|
|
Home equity
loans
|
|
|
|
|
|
|
Average
balance
|
$
|
10,905
|
|
$
|
11,144
|
|
$
|
11,763
|
|
|
|
|
Combined
weighted-average loan-to-value ratio (at date of
origination)
|
70
|
%
|
70
|
%
|
70
|
%
|
|
|
|
Percent first lien
positions
|
60
|
|
60
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
|
|
Branches
|
1,158
|
|
1,159
|
|
1,192
|
|
|
|
|
Automated teller
machines
|
1,502
|
|
1,505
|
|
1,569
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Bank Summary of Operations (1Q19 vs. 1Q18)
- Net income of $164 million for
the first quarter of 2019 is an increase of $33 million, or 25.2%, from the year-ago
quarter
- Taxable-equivalent net interest income increased by
$41 million, or 7.4%, from the first
quarter of 2018. The increase in net interest income was primarily
driven by strong growth in deposits
- Average loans and leases decreased $244
million, or 0.8%. This is largely driven by a $854 million, or 7.3%, decline in home equity
balances, which is in line with industry trends. This decline in
home equity balances was partially offset by growth in indirect
auto loans
- Average deposits increased $3.9
billion, or 5.7%, driven by growth in money market and
certificates of deposit, reflecting strength in Key's relationship
strategy
- Net loan charge-offs decreased $1
million, or 2.9%, from the first quarter of 2018, as overall
credit quality remained stable
- Noninterest income decreased $15
million, or 6.6%, from the year-ago quarter driven by lower
service charges on deposit accounts
- Noninterest expense decreased $29
million, or 5.0%, from the year-ago quarter demonstrating
strong expense management and the elimination of the FDIC quarterly
surcharge
Commercial
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
399
|
|
$
|
416
|
|
$
|
405
|
|
|
(4.1)
|
%
|
(1.5)
|
%
|
Noninterest
income
|
300
|
|
354
|
|
325
|
|
|
(15.3)
|
|
(7.7)
|
|
Total revenue
(TE)
|
699
|
|
770
|
|
730
|
|
|
(9.2)
|
|
(4.2)
|
|
Provision for credit
losses
|
15
|
|
17
|
|
28
|
|
|
(11.8)
|
|
(46.4)
|
|
Noninterest
expense
|
367
|
|
398
|
|
381
|
|
|
(7.8)
|
|
(3.7)
|
|
Income (loss) before
income taxes (TE)
|
317
|
|
355
|
|
321
|
|
|
(10.7)
|
|
(1.2)
|
|
Allocated income
taxes and TE adjustments
|
64
|
|
51
|
|
45
|
|
|
25.5
|
|
42.2
|
|
Net income (loss)
attributable to Key
|
$
|
253
|
|
$
|
304
|
|
$
|
276
|
|
|
(16.8)
|
%
|
(8.3)
|
%
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
57,210
|
|
$
|
56,843
|
|
$
|
54,131
|
|
|
.6
|
%
|
5.7
|
%
|
Loans held for
sale
|
1,066
|
|
2,250
|
|
1,124
|
|
|
(52.6)
|
|
(5.2)
|
|
Total
assets
|
64,817
|
|
65,647
|
|
61,750
|
|
|
(1.3)
|
|
5.0
|
|
Deposits
|
34,418
|
|
35,113
|
|
32,794
|
|
|
(2.0)
|
%
|
5.0
|
%
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Additional
Commercial Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q19
vs.
|
|
1Q19
|
4Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
30
|
|
$
|
32
|
|
$
|
31
|
|
|
(6.3)
|
%
|
(3.2)
|
%
|
Investment banking
and debt placement fees
|
110
|
|
186
|
|
143
|
|
|
(40.9)
|
|
(23.1)
|
|
Operating lease
income and other leasing gains
|
37
|
|
27
|
|
29
|
|
|
37.0
|
|
27.6
|
|
|
|
|
|
|
|
|
Corporate services
income
|
48
|
|
51
|
|
53
|
|
|
(5.9)
|
|
(9.4)
|
|
Service charges on
deposit accounts
|
27
|
|
26
|
|
28
|
|
|
3.8
|
|
(3.6)
|
|
Cards and payments
income
|
18
|
|
17
|
|
17
|
|
|
5.9
|
|
5.9
|
|
Payments and services
income
|
93
|
|
94
|
|
98
|
|
|
(1.1)
|
|
(5.1)
|
|
|
|
|
|
|
|
|
Mortgage servicing
fees
|
17
|
|
18
|
|
17
|
|
|
(5.6)
|
|
—
|
|
Other noninterest
income
|
13
|
|
(3)
|
|
7
|
|
|
N/M
|
|
85.7
|
|
Total noninterest
income
|
$
|
300
|
|
$
|
354
|
|
$
|
325
|
|
|
(15.3)
|
%
|
(7.7)
|
%
|
|
|
|
|
|
|
|
Commercial Bank Summary of Operations (1Q19 vs. 1Q18)
- Net income attributable to Key of $253
million for the first quarter of 2019, compared to
$276 million for the year-ago
quarter
- Taxable-equivalent net interest income decreased by
$6 million, or 1.5%, compared to the
first quarter of 2018, driven by lower purchase accounting
accretion and loan spread compression
- Average loan and lease balances increased $3.1 billion, or 5.7%, compared to the first
quarter of 2018 driven by broad-based growth in commercial and
industrial loans
- Average deposit balances increased $1.6
billion, or 5.0%, compared to the first quarter of 2018,
driven by growth in core deposits
- Noninterest income decreased $25
million, or 7.7%, from the prior year. The decline was
largely due to lower investment banking and debt placement fees and
corporate services income, which reflected less favorable market
conditions. This decrease was partially offset by higher core
business growth
- Provision for credit losses decreased $13 million compared to the first quarter of
2018, as credit quality remained stable
- Noninterest expense decreased by $14
million, or 3.7%, from the first quarter of 2019. The
decline reflects the benefit of efficiency initiatives, strong
expense discipline, and the elimination of the FDIC quarterly
surcharge
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 $141.5
billion at March 31, 2019.
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 over 1,100
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, 2018, as well
as in KeyCorp's subsequent SEC filings, all of which have been or
will be filed with the Securities and Exchange Commission (the
"SEC") and are or will be 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, April 18,
2019. An audio replay of the call will be available through
April 28, 2019.
KeyCorp
First Quarter
2019
Financial Supplement
Financial
Highlights
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Summary of
operations
|
|
|
|
|
Net interest income
(TE)
|
$
|
985
|
|
$
|
1,008
|
|
$
|
952
|
|
|
Noninterest
income
|
536
|
|
645
|
|
601
|
|
|
|
Total revenue
(TE)
|
1,521
|
|
1,653
|
|
1,553
|
|
|
Provision for credit
losses
|
62
|
|
59
|
|
61
|
|
|
Noninterest
expense
|
963
|
|
1,012
|
|
1,006
|
|
|
Income (loss) from
continuing operations attributable to Key
|
406
|
|
482
|
|
416
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
1
|
|
2
|
|
2
|
|
|
Net income (loss)
attributable to Key
|
407
|
|
484
|
|
418
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
386
|
|
459
|
|
402
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
1
|
|
2
|
|
2
|
|
|
Net income (loss)
attributable to Key common shareholders
|
387
|
|
461
|
|
404
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.38
|
|
$
|
.45
|
|
$
|
.38
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.38
|
|
.45
|
|
.38
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
.38
|
|
.45
|
|
.38
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming dilution
(a)
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(b)
|
.38
|
|
.45
|
|
.38
|
|
|
|
|
|
|
|
|
Cash dividends
declared
|
.17
|
|
.17
|
|
.105
|
|
|
Book value at period
end
|
14.31
|
|
13.90
|
|
13.07
|
|
|
Tangible book value
at period end
|
11.55
|
|
11.14
|
|
10.35
|
|
|
Market price at
period end
|
15.75
|
|
14.78
|
|
19.55
|
|
|
|
|
|
|
|
Performance
ratios
|
|
|
|
|
From continuing
operations:
|
|
|
|
|
Return on average
total assets
|
1.18
|
%
|
1.37
|
%
|
1.25
|
%
|
|
Return on average
common equity
|
10.98
|
|
13.07
|
|
11.76
|
|
|
Return on average
tangible common equity (c)
|
13.69
|
|
16.40
|
|
14.89
|
|
|
Net interest margin
(TE)
|
3.13
|
|
3.16
|
|
3.15
|
|
|
Cash efficiency ratio
(c)
|
61.9
|
|
59.9
|
|
62.9
|
|
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
|
Return on average
total assets
|
1.17
|
%
|
1.37
|
%
|
1.24
|
%
|
|
Return on average
common equity
|
11.01
|
|
13.13
|
|
11.82
|
|
|
Return on average
tangible common equity (c)
|
13.72
|
|
16.47
|
|
14.97
|
|
|
Net interest margin
(TE)
|
3.12
|
|
3.14
|
|
3.13
|
|
|
Loan to deposit
(d)
|
85.1
|
|
85.6
|
|
86.9
|
|
|
|
|
|
|
|
Capital ratios at
period end
|
|
|
|
|
Key shareholders'
equity to assets
|
11.25
|
%
|
11.17
|
%
|
10.90
|
%
|
|
Key common
shareholders' equity to assets
|
10.25
|
|
10.15
|
|
10.16
|
|
|
Tangible common
equity to tangible assets (c)
|
8.43
|
|
8.30
|
|
8.22
|
|
|
Common Equity Tier 1
(e)
|
9.84
|
|
9.93
|
|
9.99
|
|
|
Tier 1 risk-based
capital (e)
|
10.97
|
|
11.08
|
|
10.82
|
|
|
Total risk-based
capital (e)
|
13.01
|
|
12.89
|
|
12.73
|
|
|
Leverage
(e)
|
9.92
|
|
9.89
|
|
9.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Highlights (continued)
|
(dollars in
millions)
|
|
|
|
Three months
ended
|
|
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Asset quality —
from continuing operations
|
|
|
|
Net loan
charge-offs
|
$
|
64
|
|
$
|
60
|
|
$
|
54
|
|
Net loan charge-offs to
average loans
|
.29
|
%
|
.27
|
%
|
.25
|
%
|
Allowance for loan and
lease losses
|
$
|
883
|
|
$
|
883
|
|
$
|
881
|
|
Allowance for credit
losses
|
945
|
|
946
|
|
941
|
|
Allowance for loan and
lease losses to period-end loans
|
.98
|
%
|
.99
|
%
|
1.00
|
%
|
Allowance for credit
losses to period-end loans
|
1.05
|
|
1.06
|
|
1.07
|
|
Allowance for loan and
lease losses to nonperforming loans (f)
|
161.1
|
|
162.9
|
|
162.8
|
|
Allowance for credit
losses to nonperforming loans (f)
|
172.4
|
|
174.5
|
|
173.9
|
|
Nonperforming loans at
period end (f)
|
$
|
548
|
|
$
|
542
|
|
$
|
541
|
|
Nonperforming assets at
period end (f)
|
597
|
|
577
|
|
569
|
|
Nonperforming loans to
period-end portfolio loans (f)
|
.61
|
%
|
.61
|
%
|
.61
|
%
|
Nonperforming assets to
period-end portfolio loans plus OREO and other nonperforming assets
(f)
|
.66
|
|
.64
|
|
.65
|
|
|
|
|
|
|
|
Trust
assets
|
|
|
|
Assets under
management
|
$
|
38,742
|
|
$
|
36,775
|
|
$
|
39,003
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
Average full-time
equivalent employees
|
17,554
|
|
17,664
|
|
18,540
|
|
Branches
|
1,158
|
|
1,159
|
|
1,192
|
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
$
|
8
|
|
$
|
8
|
|
$
|
8
|
|
|
|
(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)
|
March 31, 2019,
ratio is estimated.
|
(f)
|
Nonperforming loan
balances exclude $551 million, $575 million, and $690 million of
purchased credit impaired loans at March 31, 2019,
December 31, 2018, and March 31, 2018,
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.
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
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Tangible common
equity to tangible assets at period-end
|
|
|
|
Key shareholders'
equity (GAAP)
|
$
|
15,924
|
|
$
|
15,595
|
|
$
|
14,944
|
|
Less: Intangible
assets (a)
|
2,804
|
|
2,818
|
|
2,902
|
|
Preferred
Stock (b)
|
1,421
|
|
1,421
|
|
1,009
|
|
Tangible common
equity (non-GAAP)
|
$
|
11,699
|
|
$
|
11,356
|
|
$
|
11,033
|
|
Total assets
(GAAP)
|
$
|
141,515
|
|
$
|
139,613
|
|
$
|
137,049
|
|
Less: Intangible
assets (a)
|
2,804
|
|
2,818
|
|
2,902
|
|
Tangible assets
(non-GAAP)
|
$
|
138,711
|
|
$
|
136,795
|
|
$
|
134,147
|
|
Tangible common
equity to tangible assets ratio (non-GAAP)
|
8.43
|
%
|
8.30
|
%
|
8.22
|
%
|
Pre-provision net
revenue
|
|
|
|
Net interest income
(GAAP)
|
$
|
977
|
|
$
|
1,000
|
|
$
|
944
|
|
Plus:
Taxable-equivalent adjustment
|
8
|
|
8
|
|
8
|
|
Noninterest
income
|
536
|
|
645
|
|
601
|
|
Less: Noninterest
expense
|
963
|
|
1,012
|
|
1,006
|
|
Pre-provision net
revenue from continuing operations (non-GAAP)
|
$
|
558
|
|
$
|
641
|
|
$
|
547
|
|
Average tangible
common equity
|
|
|
|
Average Key
shareholders' equity (GAAP)
|
$
|
15,702
|
|
$
|
15,384
|
|
$
|
14,889
|
|
Less: Intangible
assets (average) (c)
|
2,813
|
|
2,828
|
|
2,916
|
|
Preferred stock
(average)
|
1,450
|
|
1,450
|
|
1,025
|
|
Average tangible
common equity (non-GAAP)
|
$
|
11,439
|
|
$
|
11,106
|
|
$
|
10,948
|
|
Return on average
tangible common equity from continuing operations
|
|
|
|
Net income (loss)
from continuing operations attributable to Key common shareholders
(GAAP)
|
$
|
386
|
|
$
|
459
|
|
$
|
402
|
|
Average tangible
common equity (non-GAAP)
|
11,439
|
|
11,106
|
|
10,948
|
|
|
|
|
|
Return on average
tangible common equity from continuing operations
(non-GAAP)
|
13.69
|
%
|
16.40
|
%
|
14.89
|
%
|
Return on average
tangible common equity consolidated
|
|
|
|
Net income (loss)
attributable to Key common shareholders (GAAP)
|
$
|
387
|
|
$
|
461
|
|
$
|
404
|
|
Average tangible
common equity (non-GAAP)
|
11,439
|
|
11,106
|
|
10,948
|
|
|
|
|
|
Return on average
tangible common equity consolidated (non-GAAP)
|
13.72
|
%
|
16.47
|
%
|
14.97
|
%
|
Cash efficiency
ratio
|
|
|
|
Noninterest expense
(GAAP)
|
$
|
963
|
|
$
|
1,012
|
|
$
|
1,006
|
|
Less: Intangible
asset amortization
|
22
|
|
22
|
|
29
|
|
Adjusted noninterest
expense (non-GAAP)
|
$
|
941
|
|
$
|
990
|
|
$
|
977
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
977
|
|
$
|
1,000
|
|
$
|
944
|
|
Plus:
Taxable-equivalent adjustment
|
8
|
|
8
|
|
8
|
|
Noninterest
income
|
536
|
|
645
|
|
601
|
|
Total
taxable-equivalent revenue (non-GAAP)
|
$
|
1,521
|
|
$
|
1,653
|
|
$
|
1,553
|
|
|
|
|
|
Cash efficiency ratio
(non-GAAP)
|
61.9
|
%
|
59.9
|
%
|
62.9
|
%
|
Noninterest
expense excluding notable items
|
|
|
|
Noninterest expense
(GAAP)
|
$
|
963
|
|
$
|
1,012
|
|
$
|
1,006
|
|
Less: Notable
items
|
26
|
|
41
|
|
—
|
|
Noninterest expense
excluding notable items (non-GAAP)
|
$
|
937
|
|
$
|
971
|
|
$
|
1,006
|
|
GAAP to Non-GAAP
Reconciliations (continued)
|
(dollars in
millions)
|
|
|
|
Three
months
ended
|
|
|
|
3/31/2019
|
Common Equity Tier
1 under the Regulatory Capital Rules ("RCR")
(estimates)
|
|
|
Common Equity Tier 1
under current RCR
|
$
|
12,349
|
|
|
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)
|
$
|
12,349
|
|
|
|
|
|
|
Net risk-weighted
assets under current RCR
|
$
|
125,540
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
Mortgage servicing
assets (f)
|
803
|
|
|
|
Deferred tax
assets
|
312
|
|
|
|
All other
assets
|
—
|
|
|
|
Total risk-weighted
assets anticipated under the fully phased-in RCR
(e)
|
$
|
126,655
|
|
|
|
|
|
|
Common Equity Tier 1
ratio under the fully phased-in RCR (e)
|
9.75
|
%
|
|
|
(a)
|
For the three months
ended March 31, 2019, December 31, 2018, and
March 31, 2018, intangible assets exclude $12 million, $14
million, and $23 million, respectively, of period-end purchased
credit card receivables.
|
(b)
|
Net of capital
surplus.
|
(c)
|
For the three months
ended March 31, 2019, December 31, 2018, and
March 31, 2018, average intangible assets exclude $13 million,
$15 million, and $24 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 (fully
phased-in); 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)
|
|
|
|
|
|
|
|
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Assets
|
|
|
|
|
Loans
|
$
|
90,178
|
|
$
|
89,552
|
|
$
|
88,089
|
|
|
Loans held for
sale
|
894
|
|
1,227
|
|
1,667
|
|
|
Securities available
for sale
|
20,854
|
|
19,428
|
|
17,888
|
|
|
Held-to-maturity
securities
|
11,234
|
|
11,519
|
|
12,189
|
|
|
Trading account
assets
|
979
|
|
849
|
|
769
|
|
|
Short-term
investments
|
2,511
|
|
2,562
|
|
1,644
|
|
|
Other
investments
|
646
|
|
666
|
|
715
|
|
|
|
Total earning
assets
|
127,296
|
|
125,803
|
|
122,961
|
|
|
Allowance for loan
and lease losses
|
(883)
|
|
(883)
|
|
(881)
|
|
|
Cash and due from
banks
|
611
|
|
678
|
|
643
|
|
|
Premises and
equipment
|
849
|
|
882
|
|
916
|
|
|
Goodwill
|
2,516
|
|
2,516
|
|
2,538
|
|
|
Other intangible
assets
|
300
|
|
316
|
|
387
|
|
|
Corporate-owned life
insurance
|
4,184
|
|
4,171
|
|
4,142
|
|
|
Accrued income and
other assets
|
5,596
|
|
5,030
|
|
5,054
|
|
|
Discontinued
assets
|
1,046
|
|
1,100
|
|
1,289
|
|
|
|
Total
assets
|
$
|
141,515
|
|
139,613
|
|
137,049
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits in domestic
offices:
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
61,380
|
|
$
|
59,918
|
|
$
|
54,606
|
|
|
|
Savings
deposits
|
4,839
|
|
4,854
|
|
6,321
|
|
|
|
Certificates of
deposit ($100,000 or more)
|
8,396
|
|
7,913
|
|
7,295
|
|
|
|
Other time
deposits
|
5,573
|
|
5,332
|
|
4,928
|
|
|
|
Total
interest-bearing deposits
|
80,188
|
|
78,017
|
|
73,150
|
|
|
|
Noninterest-bearing
deposits
|
27,987
|
|
29,292
|
|
31,601
|
|
|
|
Total
deposits
|
108,175
|
|
107,309
|
|
104,751
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
266
|
|
319
|
|
616
|
|
|
Bank notes and other
short-term borrowings
|
679
|
|
544
|
|
1,133
|
|
|
Accrued expense and
other liabilities
|
2,301
|
|
2,113
|
|
1,854
|
|
|
Long-term
debt
|
14,168
|
|
13,732
|
|
13,749
|
|
|
|
Total
liabilities
|
125,589
|
|
124,017
|
|
122,103
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred
stock
|
1,450
|
|
1,450
|
|
1,025
|
|
|
Common
shares
|
1,257
|
|
1,257
|
|
1,257
|
|
|
Capital
surplus
|
6,259
|
|
6,331
|
|
6,289
|
|
|
Retained
earnings
|
11,771
|
|
11,556
|
|
10,624
|
|
|
Treasury stock, at
cost
|
(4,283)
|
|
(4,181)
|
|
(3,260)
|
|
|
Accumulated other
comprehensive income (loss)
|
(530)
|
|
(818)
|
|
(991)
|
|
|
|
Key shareholders'
equity
|
15,924
|
|
15,595
|
|
14,944
|
|
|
Noncontrolling
interests
|
2
|
|
1
|
|
2
|
|
|
|
Total
equity
|
15,926
|
|
15,596
|
|
14,946
|
|
Total liabilities
and equity
|
$
|
141,515
|
|
$
|
139,613
|
|
$
|
137,049
|
|
|
|
|
|
|
|
Common shares
outstanding (000)
|
1,013,186
|
|
1,019,503
|
|
1,064,939
|
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Interest
income
|
|
|
|
|
Loans
|
$
|
1,066
|
|
$
|
1,058
|
|
$
|
940
|
|
|
Loans held for
sale
|
13
|
|
26
|
|
12
|
|
|
Securities available
for sale
|
129
|
|
115
|
|
95
|
|
|
Held-to-maturity
securities
|
68
|
|
71
|
|
69
|
|
|
Trading account
assets
|
8
|
|
8
|
|
7
|
|
|
Short-term
investments
|
16
|
|
15
|
|
8
|
|
|
Other
investments
|
4
|
|
4
|
|
6
|
|
|
|
Total interest
income
|
1,304
|
|
1,297
|
|
1,137
|
|
Interest
expense
|
|
|
|
|
Deposits
|
202
|
|
174
|
|
91
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
1
|
|
1
|
|
4
|
|
|
Bank notes and other
short-term borrowings
|
4
|
|
4
|
|
6
|
|
|
Long-term
debt
|
120
|
|
118
|
|
92
|
|
|
|
Total interest
expense
|
327
|
|
297
|
|
193
|
|
Net interest
income
|
977
|
|
1,000
|
|
944
|
|
Provision for credit
losses
|
62
|
|
59
|
|
61
|
|
Net interest income
after provision for credit losses
|
915
|
|
941
|
|
883
|
|
Noninterest
income
|
|
|
|
|
Trust and investment
services income
|
115
|
|
121
|
|
133
|
|
|
Investment banking
and debt placement fees
|
110
|
|
186
|
|
143
|
|
|
Service charges on
deposit accounts
|
82
|
|
84
|
|
89
|
|
|
Operating lease
income and other leasing gains
|
37
|
|
28
|
|
32
|
|
|
Corporate services
income
|
55
|
|
58
|
|
62
|
|
|
Cards and payments
income
|
66
|
|
68
|
|
62
|
|
|
Corporate-owned life
insurance income
|
32
|
|
39
|
|
32
|
|
|
Consumer mortgage
income
|
8
|
|
7
|
|
7
|
|
|
Mortgage servicing
fees
|
21
|
|
21
|
|
20
|
|
|
Other
income (a)
|
10
|
|
33
|
|
21
|
|
|
|
Total noninterest
income
|
536
|
|
645
|
|
601
|
|
Noninterest
expense
|
|
|
|
|
Personnel
|
563
|
|
576
|
|
594
|
|
|
Net
occupancy
|
72
|
|
75
|
|
78
|
|
|
Computer
processing
|
54
|
|
55
|
|
52
|
|
|
Business services and
professional fees
|
44
|
|
49
|
|
41
|
|
|
Equipment
|
24
|
|
26
|
|
26
|
|
|
Operating lease
expense
|
26
|
|
32
|
|
27
|
|
|
Marketing
|
19
|
|
25
|
|
25
|
|
|
FDIC
assessment
|
7
|
|
9
|
|
21
|
|
|
Intangible asset
amortization
|
22
|
|
22
|
|
29
|
|
|
OREO expense,
net
|
3
|
|
1
|
|
2
|
|
|
Other
expense
|
129
|
|
142
|
|
111
|
|
|
|
Total noninterest
expense
|
963
|
|
1,012
|
|
1,006
|
|
Income (loss) from
continuing operations before income taxes
|
488
|
|
574
|
|
478
|
|
|
Income
taxes
|
82
|
|
92
|
|
62
|
|
Income (loss) from
continuing operations
|
406
|
|
482
|
|
416
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
1
|
|
2
|
|
2
|
|
Net income
(loss)
|
407
|
|
484
|
|
418
|
|
|
Less: Net
income (loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key
|
$
|
407
|
|
$
|
484
|
|
$
|
418
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
386
|
|
$
|
459
|
|
$
|
402
|
|
Net income (loss)
attributable to Key common shareholders
|
387
|
|
461
|
|
404
|
|
Per common
share
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.38
|
|
$
|
.45
|
|
$
|
.38
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.38
|
|
.45
|
|
.38
|
|
Per common share —
assuming dilution
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.38
|
|
$
|
.45
|
|
$
|
.38
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key common
shareholders (b)
|
.38
|
|
.45
|
|
.38
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
$
|
.17
|
|
$
|
.17
|
|
$
|
.105
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding (000)
|
1,006,717
|
|
1,018,614
|
|
1,056,037
|
|
|
Effect of common
share options and other stock awards
|
9,787
|
|
11,803
|
|
15,749
|
|
Weighted-average
common shares and potential common shares outstanding
(000) (c)
|
1,016,504
|
|
1,030,417
|
|
1,071,786
|
|
|
|
|
|
|
|
|
|
(a)
|
For the three months
ended March 31, 2019, December 31, 2018, and
March 31, 2018, net securities gains (losses) totaled less
than $1 million. For the three months ended March 31, 2019,
December 31, 2018, and March 31, 2018, 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)
|
|
|
First Quarter
2019
|
|
Fourth Quarter
2018
|
|
First Quarter
2018
|
|
|
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)
|
$
|
45,998
|
|
$
|
532
|
|
4.68
|
%
|
|
$
|
45,129
|
|
$
|
512
|
|
4.51
|
%
|
|
$
|
42,733
|
|
$
|
434
|
|
4.11
|
%
|
|
Real estate —
commercial mortgage
|
14,325
|
|
179
|
|
5.07
|
|
|
14,656
|
|
185
|
|
5.03
|
|
|
14,085
|
|
165
|
|
4.76
|
|
|
Real estate —
construction
|
1,561
|
|
21
|
|
5.48
|
|
|
1,761
|
|
23
|
|
5.26
|
|
|
1,957
|
|
22
|
|
4.64
|
|
|
Commercial lease
financing
|
4,497
|
|
41
|
|
3.66
|
|
|
4,482
|
|
43
|
|
3.79
|
|
|
4,663
|
|
41
|
|
3.53
|
|
|
Total commercial
loans
|
66,381
|
|
773
|
|
4.71
|
|
|
66,028
|
|
763
|
|
4.59
|
|
|
63,438
|
|
662
|
|
4.23
|
|
|
Real estate —
residential mortgage
|
5,543
|
|
56
|
|
4.02
|
|
|
5,496
|
|
54
|
|
3.97
|
|
|
5,479
|
|
54
|
|
3.95
|
|
|
Home equity
loans
|
10,995
|
|
137
|
|
5.07
|
|
|
11,234
|
|
141
|
|
4.96
|
|
|
11,877
|
|
134
|
|
4.56
|
|
|
Consumer direct
loans
|
1,862
|
|
37
|
|
8.06
|
|
|
1,806
|
|
36
|
|
7.87
|
|
|
1,766
|
|
33
|
|
7.53
|
|
|
Credit
cards
|
1,105
|
|
32
|
|
11.80
|
|
|
1,112
|
|
33
|
|
11.61
|
|
|
1,080
|
|
30
|
|
11.32
|
|
|
Consumer indirect
loans
|
3,763
|
|
39
|
|
4.13
|
|
|
3,612
|
|
39
|
|
4.28
|
|
|
3,287
|
|
35
|
|
4.29
|
|
|
Total consumer
loans
|
23,268
|
|
301
|
|
5.23
|
|
|
23,260
|
|
303
|
|
5.16
|
|
|
23,489
|
|
286
|
|
4.91
|
|
|
Total
loans
|
89,649
|
|
1,074
|
|
4.85
|
|
|
89,288
|
|
1,066
|
|
4.74
|
|
|
86,927
|
|
948
|
|
4.41
|
|
|
Loans held for
sale
|
1,121
|
|
13
|
|
4.74
|
|
|
2,319
|
|
26
|
|
4.50
|
|
|
1,187
|
|
12
|
|
4.10
|
|
|
Securities available
for sale (b), (e)
|
20,206
|
|
129
|
|
2.51
|
|
|
18,626
|
|
115
|
|
2.38
|
|
|
17,889
|
|
95
|
|
2.06
|
|
|
Held-to-maturity
securities (b)
|
11,369
|
|
68
|
|
2.41
|
|
|
11,683
|
|
71
|
|
2.42
|
|
|
12,041
|
|
69
|
|
2.30
|
|
|
Trading account
assets
|
957
|
|
8
|
|
3.36
|
|
|
934
|
|
8
|
|
3.42
|
|
|
907
|
|
7
|
|
2.99
|
|
|
Short-term
investments
|
2,728
|
|
16
|
|
2.28
|
|
|
2,795
|
|
15
|
|
2.12
|
|
|
2,048
|
|
8
|
|
1.51
|
|
|
Other investments
(e)
|
654
|
|
4
|
|
2.69
|
|
|
671
|
|
4
|
|
2.86
|
|
|
723
|
|
6
|
|
2.96
|
|
|
Total earning
assets
|
126,684
|
|
1,312
|
|
4.17
|
|
|
126,316
|
|
1,305
|
|
4.09
|
|
|
121,722
|
|
1,145
|
|
3.78
|
|
|
Allowance for loan
and lease losses
|
(878)
|
|
|
|
|
(878)
|
|
|
|
|
(875)
|
|
|
|
|
Accrued income and
other assets
|
14,314
|
|
|
|
|
13,743
|
|
|
|
|
14,068
|
|
|
|
|
Discontinued
assets
|
1,066
|
|
|
|
|
1,120
|
|
|
|
|
1,304
|
|
|
|
|
Total
assets
|
$
|
141,186
|
|
|
|
|
$
|
140,301
|
|
|
|
|
$
|
136,219
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
60,773
|
|
130
|
|
.87
|
|
|
$
|
59,292
|
|
110
|
|
.74
|
|
|
$
|
53,503
|
|
46
|
|
.34
|
|
|
Savings
deposits
|
4,811
|
|
1
|
|
.08
|
|
|
4,915
|
|
1
|
|
.08
|
|
|
6,232
|
|
5
|
|
.29
|
|
|
Certificates of
deposit ($100,000 or more)
|
8,376
|
|
47
|
|
2.25
|
|
|
8,217
|
|
42
|
|
2.02
|
|
|
6,972
|
|
27
|
|
1.58
|
|
|
Other time
deposits
|
5,501
|
|
24
|
|
1.79
|
|
|
5,255
|
|
21
|
|
1.59
|
|
|
4,865
|
|
13
|
|
1.12
|
|
|
Total
interest-bearing deposits
|
79,461
|
|
202
|
|
1.03
|
|
|
77,679
|
|
174
|
|
.89
|
|
|
71,572
|
|
91
|
|
.51
|
|
|
Federal funds
purchased and securities sold
under repurchase agreements
|
409
|
|
1
|
|
.89
|
|
|
281
|
|
1
|
|
.12
|
|
|
1,421
|
|
4
|
|
1.11
|
|
|
Bank notes and other
short-term borrowings
|
649
|
|
4
|
|
2.75
|
|
|
618
|
|
4
|
|
3.05
|
|
|
1,342
|
|
6
|
|
1.87
|
|
|
Long-term debt
(f), (g)
|
13,160
|
|
120
|
|
3.67
|
|
|
12,963
|
|
118
|
|
3.58
|
|
|
12,465
|
|
92
|
|
2.95
|
|
|
Total
interest-bearing liabilities
|
93,679
|
|
327
|
|
1.42
|
|
|
91,541
|
|
297
|
|
1.28
|
|
|
86,800
|
|
193
|
|
.90
|
|
|
Noninterest-bearing
deposits
|
28,115
|
|
|
|
|
30,273
|
|
|
|
|
30,984
|
|
|
|
|
Accrued expense and
other liabilities
|
2,622
|
|
|
|
|
1,981
|
|
|
|
|
2,241
|
|
|
|
|
Discontinued
liabilities (g)
|
1,066
|
|
|
|
|
1,120
|
|
|
|
|
1,304
|
|
|
|
|
Total
liabilities
|
125,482
|
|
|
|
|
124,915
|
|
|
|
|
121,329
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
15,702
|
|
|
|
|
15,384
|
|
|
|
|
14,889
|
|
|
|
|
Noncontrolling
interests
|
2
|
|
|
|
|
2
|
|
|
|
|
1
|
|
|
|
|
Total
equity
|
15,704
|
|
|
|
|
15,386
|
|
|
|
|
14,890
|
|
|
|
|
Total liabilities
and equity
|
$
|
141,186
|
|
|
|
|
$
|
140,301
|
|
|
|
|
$
|
136,219
|
|
|
|
Interest rate spread
(TE)
|
|
|
2.75
|
%
|
|
|
|
2.81
|
%
|
|
|
|
2.88
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
985
|
|
3.13
|
%
|
|
|
1,008
|
|
3.16
|
%
|
|
|
952
|
|
3.15
|
%
|
TE adjustment
(b)
|
|
8
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
977
|
|
|
|
|
$
|
1,000
|
|
|
|
|
$
|
944
|
|
|
|
|
(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 March 31, 2019,
December 31, 2018, and March 31, 2018.
|
(c)
|
For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d)
|
Commercial and
industrial average balances include $133 million, $132 million, and
$120 million of assets from commercial credit cards for the three
months ended March 31, 2019, December 31, 2018, and
March 31, 2018, 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
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Personnel
(a)
|
$
|
563
|
|
$
|
576
|
|
$
|
594
|
|
Net
occupancy
|
72
|
|
75
|
|
78
|
|
Computer
processing
|
54
|
|
55
|
|
52
|
|
Business services and
professional fees
|
44
|
|
49
|
|
41
|
|
Equipment
|
24
|
|
26
|
|
26
|
|
Operating lease
expense
|
26
|
|
32
|
|
27
|
|
Marketing
|
19
|
|
25
|
|
25
|
|
FDIC
assessment
|
7
|
|
9
|
|
21
|
|
Intangible asset
amortization
|
22
|
|
22
|
|
29
|
|
OREO expense,
net
|
3
|
|
1
|
|
2
|
|
Other
expense
|
129
|
|
142
|
|
111
|
|
Total noninterest
expense
|
$
|
963
|
|
$
|
1,012
|
|
$
|
1,006
|
|
Average full-time
equivalent employees (b)
|
17,554
|
|
17,664
|
|
18,540
|
|
|
|
(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
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Salaries and contract
labor
|
$
|
320
|
|
$
|
336
|
|
$
|
339
|
|
Incentive and
stock-based compensation
|
132
|
|
139
|
|
145
|
|
Employee
benefits
|
93
|
|
77
|
|
105
|
|
Severance
|
18
|
|
24
|
|
5
|
|
Total personnel
expense
|
$
|
563
|
|
$
|
576
|
|
$
|
594
|
|
Loan
Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Percent change
3/31/2019 vs
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
|
12/31/2018
|
3/31/2018
|
Commercial and
industrial (a)
|
$
|
46,474
|
|
$
|
45,753
|
|
$
|
44,313
|
|
|
1.6
|
%
|
4.9
|
%
|
Commercial real
estate:
|
|
|
|
|
|
|
Commercial
mortgage
|
14,344
|
|
14,285
|
|
13,997
|
|
|
.4
|
|
2.5
|
|
Construction
|
1,420
|
|
1,666
|
|
1,871
|
|
|
(14.8)
|
|
(24.1)
|
|
Total commercial real
estate loans
|
15,764
|
|
15,951
|
|
15,868
|
|
|
(1.2)
|
|
(.7)
|
|
Commercial lease
financing (b)
|
4,507
|
|
4,606
|
|
4,598
|
|
|
(2.1)
|
|
(2.0)
|
|
Total commercial
loans
|
66,745
|
|
66,310
|
|
64,779
|
|
|
.7
|
|
3.0
|
|
Residential — prime
loans:
|
|
|
|
|
|
|
Real estate —
residential mortgage
|
5,615
|
|
5,513
|
|
5,473
|
|
|
1.9
|
|
2.6
|
|
Home equity
loans
|
10,846
|
|
11,142
|
|
11,720
|
|
|
(2.7)
|
|
(7.5)
|
|
Total residential —
prime loans
|
16,461
|
|
16,655
|
|
17,193
|
|
|
(1.2)
|
|
(4.3)
|
|
Consumer direct
loans
|
2,165
|
|
1,809
|
|
1,758
|
|
|
19.7
|
|
23.2
|
|
Credit
cards
|
1,086
|
|
1,144
|
|
1,068
|
|
|
(5.1)
|
|
1.7
|
|
Consumer indirect
loans
|
3,721
|
|
3,634
|
|
3,291
|
|
|
2.4
|
|
13.1
|
|
Total consumer
loans
|
23,433
|
|
23,242
|
|
23,310
|
|
|
.8
|
|
.5
|
|
Total loans
(c)
|
$
|
90,178
|
|
$
|
89,552
|
|
$
|
88,089
|
|
|
.7
|
%
|
2.4
|
%
|
|
|
(a)
|
Loan balances include
$135 million, $132 million, and $120 million of commercial credit
card balances at March 31, 2019, December 31, 2018, and
March 31, 2018, respectively.
|
(b)
|
Commercial lease
financing includes receivables held as collateral for a secured
borrowing of $12 million, $10 million, and $16 million at
March 31, 2019, December 31, 2018, and March 31,
2018, respectively. Principal reductions are based on the cash
payments received from these related receivables.
|
(c)
|
Total loans exclude
loans of $1.0 billion at March 31, 2019, $1.1 billion at
December 31, 2018, and $1.3 billion at March 31, 2018,
related to the discontinued operations of the education lending
business.
|
Loans Held for
Sale Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
3/31/2019 vs
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
|
12/31/2018
|
3/31/2018
|
Commercial and
industrial
|
$
|
99
|
|
$
|
279
|
|
$
|
194
|
|
|
(64.5)
|
%
|
(49.0)
|
%
|
Real estate —
commercial mortgage
|
724
|
|
894
|
|
1,426
|
|
|
(19.0)
|
|
(49.2)
|
|
Real estate —
residential mortgage
|
71
|
|
54
|
|
47
|
|
|
31.5
|
|
51.1
|
|
Total loans held for
sale (a)
|
$
|
894
|
|
$
|
1,227
|
|
$
|
1,667
|
|
|
(27.1)
|
%
|
(46.4)
|
%
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $71 million at March 31, 2019, $54 million at
December 31, 2018, and $47 million at March 31,
2018.
|
Summary of Changes
in Loans Held for Sale
|
(in
millions)
|
|
|
|
|
|
|
|
1Q19
|
4Q18
|
3Q18
|
2Q18
|
1Q18
|
Balance at beginning
of period
|
$
|
1,227
|
|
$
|
1,618
|
|
$
|
1,418
|
|
$
|
1,667
|
|
$
|
1,107
|
|
New
originations
|
1,676
|
|
5,057
|
|
2,976
|
|
2,665
|
|
3,280
|
|
Transfers from (to)
held to maturity, net
|
6
|
|
24
|
|
4
|
|
(4)
|
|
(14)
|
|
Loan sales
|
(2,017)
|
|
(5,448)
|
|
(2,491)
|
|
(2,909)
|
|
(2,705)
|
|
Loan draws
(payments), net
|
2
|
|
(24)
|
|
(289)
|
|
(1)
|
|
(1)
|
|
Balance at end of
period (a)
|
$
|
894
|
|
$
|
1,227
|
|
$
|
1,618
|
|
$
|
1,418
|
|
$
|
1,667
|
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $71 million at March 31, 2019, $54 million at
December 31, 2018, $87 million at September 30, 2018, $58
million at June 30, 2018, and $47 million at March 31,
2018.
|
Summary of Loan
and Lease Loss Experience From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
Three months
ended
|
|
3/31/2019
|
12/31/2018
|
3/31/2018
|
Average loans
outstanding
|
$
|
89,649
|
|
$
|
89,288
|
|
$
|
86,927
|
|
Allowance for loan
and lease losses at beginning of period
|
$
|
883
|
|
$
|
887
|
|
$
|
877
|
|
Loans charged
off:
|
|
|
|
Commercial and
industrial
|
36
|
|
45
|
|
37
|
|
|
|
|
|
Real estate —
commercial mortgage
|
5
|
|
12
|
|
1
|
|
Real estate —
construction
|
4
|
|
—
|
|
—
|
|
Total commercial real
estate loans
|
9
|
|
12
|
|
1
|
|
Commercial lease
financing
|
8
|
|
1
|
|
1
|
|
Total commercial
loans
|
53
|
|
58
|
|
39
|
|
Real estate —
residential mortgage
|
1
|
|
—
|
|
1
|
|
Home equity
loans
|
4
|
|
7
|
|
4
|
|
Consumer direct
loans
|
10
|
|
9
|
|
8
|
|
Credit
cards
|
11
|
|
10
|
|
12
|
|
Consumer indirect
loans
|
8
|
|
8
|
|
8
|
|
Total consumer
loans
|
34
|
|
34
|
|
33
|
|
Total loans charged
off
|
87
|
|
92
|
|
72
|
|
Recoveries:
|
|
|
|
Commercial and
industrial
|
10
|
|
19
|
|
6
|
|
|
|
|
|
Real estate —
commercial mortgage
|
1
|
|
1
|
|
—
|
|
Real estate —
construction
|
—
|
|
1
|
|
1
|
|
Total commercial real
estate loans
|
1
|
|
2
|
|
1
|
|
Commercial lease
financing
|
1
|
|
1
|
|
1
|
|
Total commercial
loans
|
12
|
|
22
|
|
8
|
|
Real estate —
residential mortgage
|
1
|
|
—
|
|
—
|
|
Home equity
loans
|
2
|
|
2
|
|
3
|
|
Consumer direct
loans
|
1
|
|
2
|
|
2
|
|
Credit
cards
|
2
|
|
2
|
|
1
|
|
Consumer indirect
loans
|
5
|
|
4
|
|
4
|
|
Total consumer
loans
|
11
|
|
10
|
|
10
|
|
Total
recoveries
|
23
|
|
32
|
|
18
|
|
Net loan
charge-offs
|
(64)
|
|
(60)
|
|
(54)
|
|
Provision (credit)
for loan and lease losses
|
64
|
|
56
|
|
58
|
|
Allowance for loan
and lease losses at end of period
|
$
|
883
|
|
$
|
883
|
|
$
|
881
|
|
|
|
|
|
Liability for credit
losses on lending-related commitments at beginning of
period
|
$
|
64
|
|
$
|
60
|
|
$
|
57
|
|
Provision (credit)
for losses on lending-related commitments
|
(2)
|
|
3
|
|
3
|
|
Liability for credit
losses on lending-related commitments at end of period
(a)
|
$
|
62
|
|
$
|
63
|
|
$
|
60
|
|
|
|
|
|
Total allowance for
credit losses at end of period
|
$
|
945
|
|
$
|
946
|
|
$
|
941
|
|
|
|
|
|
Net loan charge-offs
to average total loans
|
.29
|
%
|
.27
|
%
|
.25
|
%
|
Allowance for loan
and lease losses to period-end loans
|
.98
|
|
.99
|
|
1.00
|
|
Allowance for credit
losses to period-end loans
|
1.05
|
|
1.06
|
|
1.07
|
|
Allowance for loan
and lease losses to nonperforming loans
|
161.1
|
|
162.9
|
|
162.8
|
|
Allowance for credit
losses to nonperforming loans
|
172.4
|
|
174.5
|
|
173.9
|
|
|
|
|
|
Discontinued
operations — education lending business:
|
|
|
|
Loans charged
off
|
$
|
4
|
|
$
|
4
|
|
$
|
4
|
|
Recoveries
|
1
|
|
1
|
|
2
|
|
Net loan
charge-offs
|
$
|
(3)
|
|
$
|
(3)
|
|
$
|
(2)
|
|
|
|
(a)
|
Included in "Accrued
expense and other liabilities" on the balance sheet.
|
Asset Quality
Statistics From Continuing Operations
|
(dollars in
millions)
|
|
1Q19
|
4Q18
|
3Q18
|
2Q18
|
1Q18
|
Net loan
charge-offs
|
$
|
64
|
|
$
|
60
|
|
$
|
60
|
|
$
|
60
|
|
$
|
54
|
|
Net loan charge-offs
to average total loans
|
.29
|
%
|
.27
|
%
|
.27
|
%
|
.27
|
%
|
.25
|
%
|
Allowance for loan
and lease losses
|
$
|
883
|
|
$
|
883
|
|
$
|
887
|
|
$
|
887
|
|
$
|
881
|
|
Allowance for credit
losses (a)
|
945
|
|
946
|
|
947
|
|
945
|
|
941
|
|
Allowance for loan
and lease losses to period-end loans
|
.98
|
%
|
.99
|
%
|
.99
|
%
|
1.01
|
%
|
1.00
|
%
|
Allowance for credit
losses to period-end loans
|
1.05
|
|
1.06
|
|
1.06
|
|
1.07
|
|
1.07
|
|
Allowance for loan
and lease losses to nonperforming loans (b)
|
161.1
|
|
162.9
|
|
137.5
|
|
162.8
|
|
162.8
|
|
Allowance for credit
losses to nonperforming loans (b)
|
172.4
|
|
174.5
|
|
146.8
|
|
173.4
|
|
173.9
|
|
Nonperforming loans
at period end (b)
|
$
|
548
|
|
$
|
542
|
|
$
|
645
|
|
$
|
545
|
|
$
|
541
|
|
Nonperforming assets
at period end (b)
|
597
|
|
577
|
|
674
|
|
571
|
|
569
|
|
Nonperforming loans
to period-end portfolio loans (b)
|
.61
|
%
|
.61
|
%
|
.72
|
%
|
.62
|
%
|
.61
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming
assets (b)
|
.66
|
|
.64
|
|
.75
|
|
.65
|
|
.65
|
|
|
|
(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 $551 million, $575 million, $606 million, $629
million, and $690 million of purchased credit impaired loans at
March 31, 2019, December 31, 2018, September 30,
2018, June 30, 2018, and March 31, 2018,
respectively.
|
Summary of
Nonperforming Assets and Past Due Loans From Continuing
Operations
|
(dollars in
millions)
|
|
3/31/2019
|
12/31/2018
|
9/30/2018
|
6/30/2018
|
3/31/2018
|
Commercial and
industrial
|
$
|
170
|
|
$
|
152
|
|
$
|
227
|
|
$
|
178
|
|
$
|
189
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
82
|
|
81
|
|
98
|
|
42
|
|
33
|
|
Real estate —
construction
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
Total commercial real
estate loans
|
84
|
|
83
|
|
100
|
|
44
|
|
35
|
|
Commercial lease
financing
|
9
|
|
9
|
|
10
|
|
21
|
|
5
|
|
Total commercial
loans
|
263
|
|
244
|
|
337
|
|
243
|
|
229
|
|
Real estate —
residential mortgage
|
64
|
|
62
|
|
62
|
|
55
|
|
59
|
|
Home equity
loans
|
195
|
|
210
|
|
221
|
|
222
|
|
229
|
|
Consumer direct
loans
|
3
|
|
4
|
|
4
|
|
4
|
|
4
|
|
Credit
cards
|
3
|
|
2
|
|
2
|
|
2
|
|
2
|
|
Consumer indirect
loans
|
20
|
|
20
|
|
19
|
|
19
|
|
18
|
|
Total consumer
loans
|
285
|
|
298
|
|
308
|
|
302
|
|
312
|
|
Total nonperforming
loans (a)
|
548
|
|
542
|
|
645
|
|
545
|
|
541
|
|
OREO
|
40
|
|
35
|
|
28
|
|
26
|
|
28
|
|
Other nonperforming
assets
|
9
|
|
—
|
|
1
|
|
—
|
|
—
|
|
Total nonperforming
assets (a)
|
$
|
597
|
|
$
|
577
|
|
$
|
674
|
|
$
|
571
|
|
$
|
569
|
|
Accruing loans past
due 90 days or more
|
118
|
|
112
|
|
87
|
|
103
|
|
82
|
|
Accruing loans past
due 30 through 89 days
|
290
|
|
312
|
|
368
|
|
429
|
|
305
|
|
Restructured loans —
accruing and nonaccruing (b)
|
365
|
|
399
|
|
366
|
|
347
|
|
317
|
|
Restructured loans
included in nonperforming loans (b)
|
198
|
|
247
|
|
211
|
|
184
|
|
179
|
|
Nonperforming assets
from discontinued operations — education lending
business
|
7
|
|
8
|
|
6
|
|
6
|
|
6
|
|
Nonperforming loans
to period-end portfolio loans (a)
|
.61
|
%
|
.61
|
%
|
.72
|
%
|
.62
|
%
|
.61
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming assets
(a)
|
.66
|
|
.64
|
|
.75
|
|
.65
|
|
.65
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $551 million, $575 million, $606 million, $629
million, and $690 million of purchased credit impaired loans at
March 31, 2019, December 31, 2018, September 30,
2018, June 30, 2018, and March 31, 2018,
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)
|
|
1Q19
|
4Q18
|
3Q18
|
2Q18
|
1Q18
|
Balance at beginning
of period
|
$
|
542
|
|
$
|
645
|
|
$
|
545
|
|
$
|
541
|
|
$
|
503
|
|
Loans placed on
nonaccrual status
|
196
|
|
103
|
|
263
|
|
175
|
|
182
|
|
Charge-offs
|
(91)
|
|
(92)
|
|
(81)
|
|
(78)
|
|
(70)
|
|
Loans sold
|
(18)
|
|
(16)
|
|
—
|
|
(1)
|
|
—
|
|
Payments
|
(22)
|
|
(53)
|
|
(57)
|
|
(33)
|
|
(29)
|
|
Transfers to
OREO
|
(8)
|
|
(10)
|
|
(5)
|
|
(5)
|
|
(4)
|
|
Transfers to other
nonperforming assets
|
(13)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Loans returned to
accrual status
|
(38)
|
|
(35)
|
|
(20)
|
|
(54)
|
|
(41)
|
|
Balance at end of
period (a)
|
$
|
548
|
|
$
|
542
|
|
$
|
645
|
|
$
|
545
|
|
$
|
541
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $551 million, $575 million, $606 million, $629
million, and $690 million of purchased credit impaired loans at
March 31, 2019, December 31, 2018, September 30,
2018, June 30, 2018, and March 31, 2018,
respectively.
|
Line of Business
Results
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change
1Q19 vs.
|
|
1Q19
|
4Q18
|
3Q18
|
2Q18
|
1Q18
|
|
4Q18
|
1Q18
|
Consumer
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
808
|
|
$
|
830
|
|
$
|
811
|
|
$
|
815
|
|
$
|
782
|
|
|
(2.7)
|
%
|
3.3
|
%
|
Provision for credit
losses
|
45
|
|
43
|
|
31
|
|
39
|
|
34
|
|
|
4.7
|
|
32.4
|
|
Noninterest
expense
|
547
|
|
558
|
|
562
|
|
565
|
|
576
|
|
|
(2.0)
|
|
(5.0)
|
|
Net income (loss)
attributable to Key
|
164
|
|
175
|
|
167
|
|
161
|
|
131
|
|
|
(6.3)
|
|
25.2
|
|
Average loans and
leases
|
31,403
|
|
31,313
|
|
31,251
|
|
31,364
|
|
31,647
|
|
|
.3
|
|
(.8)
|
|
Average
deposits
|
71,289
|
|
70,427
|
|
69,125
|
|
68,280
|
|
67,421
|
|
|
1.2
|
|
5.7
|
|
Net loan
charge-offs
|
34
|
|
40
|
|
35
|
|
39
|
|
35
|
|
|
(15.0)
|
|
(2.9)
|
|
Net loan charge-offs
to average total loans
|
.44
|
%
|
.51
|
%
|
.44
|
%
|
.50
|
%
|
.45
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
365
|
|
$
|
364
|
|
$
|
380
|
|
$
|
371
|
|
$
|
382
|
|
|
.3
|
|
(4.5)
|
|
Return on average
allocated equity
|
19.83
|
%
|
21.79
|
%
|
20.73
|
%
|
20.05
|
%
|
16.41
|
%
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Commercial
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
699
|
|
$
|
770
|
|
$
|
751
|
|
$
|
716
|
|
$
|
730
|
|
|
(9.2)
|
%
|
(4.2)
|
%
|
Provision for credit
losses
|
15
|
|
17
|
|
32
|
|
26
|
|
28
|
|
|
(11.8)
|
|
(46.4)
|
|
Noninterest
expense
|
367
|
|
398
|
|
381
|
|
393
|
|
381
|
|
|
(7.8)
|
|
(3.7)
|
|
Net income (loss)
attributable to Key
|
253
|
|
304
|
|
275
|
|
250
|
|
276
|
|
|
(16.8)
|
|
(8.3)
|
|
Average loans and
leases
|
57,210
|
|
56,843
|
|
56,056
|
|
56,086
|
|
54,131
|
|
|
.6
|
|
5.7
|
|
Average loans held
for sale
|
1,066
|
|
2,250
|
|
1,042
|
|
1,301
|
|
1,124
|
|
|
(52.6)
|
|
(5.2)
|
|
Average
deposits
|
34,418
|
|
35,113
|
|
33,603
|
|
33,168
|
|
32,794
|
|
|
(2.0)
|
|
5.0
|
|
Net loan
charge-offs
|
30
|
|
19
|
|
26
|
|
22
|
|
19
|
|
|
57.9
|
|
57.9
|
|
Net loan charge-offs
to average total loans
|
.21
|
%
|
.13
|
%
|
.18
|
%
|
.16
|
%
|
.14
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
225
|
|
$
|
205
|
|
$
|
280
|
|
$
|
187
|
|
$
|
171
|
|
|
9.8
|
|
31.6
|
|
Return on average
allocated equity
|
23.66
|
%
|
26.64
|
%
|
24.12
|
%
|
22.10
|
%
|
25.31
|
%
|
|
N/A
|
|
N/A
|
|
|
TE = Taxable
Equivalent, N/A = Not Applicable, N/M = Not Meaningful
|
View original
content:http://www.prnewswire.com/news-releases/keycorp-reports-first-quarter-2019-net-income-of-386-million-or-38-per-common-share-300834511.html
SOURCE KeyCorp