CLEVELAND, Jan. 17, 2019
/PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income
from continuing operations attributable to Key common shareholders
of $459 million, or $.45 per common share for the fourth quarter of
2018, compared to $468 million, or
$.45 per common share, for the third
quarter of 2018 and $181 million, or
$.17 per common share, for the fourth
quarter of 2017. During the fourth quarter of 2018, Key's results
included notable items resulting in a net impact of $.03 per common share, consisting of a pension
settlement charge and efficiency initiative expenses. No notable
items were reported in the third quarter of 2018, however, notable
items resulting in a net impact of $.19 per common share were reported in the fourth
quarter of 2017.
For the year ended December 31,
2018, net income from continuing operations attributable to
Key common shareholders was $1.8
billion, or $1.70 per common
share, compared to $1.2 billion, or
$1.12 per common share, for the same
period one year ago.
"Key's fourth quarter results marked a strong finish to a
successful year for our company, as we continued to grow, invest
for our future, and deliver on our financial commitments. We
achieved our sixth consecutive year of positive operating leverage,
with a record $6.4 billion of total
revenue and all-time highs in several of our fee-based businesses,
including investment banking and debt placement fees. Our expenses
remain well-managed, as we maintain our focus on efficiency, while
continuing to invest in our businesses. We remain committed to
reducing expenses in 2019 and achieving our $200 million cost savings target.
"Importantly, our credit quality remains strong, driven by
our commitment to maintain a moderate risk profile and disciplined
underwriting standards. In the fourth quarter, net charge-offs to
average loans were .27%, below our targeted range, and
nonperforming loans declined over $100
million from the prior quarter.
"We have also delivered on our capital priorities, including
returning capital to our shareholders. Throughout 2018, we
increased our common share dividend 62%, and repurchased over
$1.1 billion of common shares.
Despite the decline in the market and continued volatility, we
remain focused on delivering profitable growth and driving improved
returns."
-
Beth Mooney, Chairman and
CEO
Selected Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions, except per share data
|
|
|
|
|
Change 4Q18
vs.
|
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
459
|
|
$
|
468
|
|
$
|
181
|
|
|
(1.9)
|
%
|
153.6
|
%
|
Income (loss) from
continuing operations attributable to Key common shareholders
per
common share — assuming
dilution
|
.45
|
|
.45
|
|
.17
|
|
|
—
|
|
164.7
|
|
Return on average
tangible common equity from continuing operations
(a)
|
16.40
|
%
|
16.81
|
%
|
6.35
|
%
|
|
N/A
|
|
N/A
|
|
Return on average
total assets from continuing operations
|
1.37
|
|
1.40
|
|
.57
|
|
|
N/A
|
|
N/A
|
|
Common Equity Tier 1
ratio (b)
|
9.92
|
|
9.95
|
|
10.16
|
|
|
N/A
|
|
N/A
|
|
Book value at period
end
|
$
|
13.90
|
|
$
|
13.33
|
|
$
|
13.09
|
|
|
4.3
|
%
|
6.2
|
%
|
Net interest margin
(TE) from continuing operations
|
3.16
|
%
|
3.18
|
%
|
3.09
|
%
|
|
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)
|
12/31/18 ratio is
estimated.
|
TE = Taxable
Equivalent, N/A = Not Applicable
|
INCOME STATEMENT
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Net interest income
(TE)
|
$
|
1,008
|
|
$
|
993
|
|
$
|
952
|
|
|
1.5
|
%
|
5.9
|
%
|
Noninterest
income
|
645
|
|
609
|
|
656
|
|
|
5.9
|
|
(1.7)
|
|
Total
revenue
|
$
|
1,653
|
|
$
|
1,602
|
|
$
|
1,608
|
|
|
3.2
|
%
|
2.8
|
%
|
|
|
|
|
|
|
|
Taxable-equivalent net interest income was $1.0 billion for the fourth quarter of 2018, and
the net interest margin was 3.16%, compared to taxable-equivalent
net interest income of $952 million
and a net interest margin of 3.09% for the fourth quarter of 2017,
reflecting the benefit from higher interest rates and higher
earning asset balances. Fourth quarter 2018 net interest income
included $23 million of purchase
accounting accretion, a decline of $15
million from the fourth quarter of 2017.
Compared to the third quarter of 2018, taxable-equivalent net
interest income increased by $15
million, and the net interest margin declined by two basis
points. Net interest income benefited from higher earning asset
balances, while the overall decline in the net interest margin
reflects the impact of lower purchase accounting accretion.
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Trust and investment
services income
|
$
|
121
|
|
$
|
117
|
|
$
|
131
|
|
|
3.4
|
%
|
(7.6)
|
%
|
Investment banking
and debt placement fees
|
186
|
|
166
|
|
200
|
|
|
12.0
|
|
(7.0)
|
|
Service charges on
deposit accounts
|
84
|
|
85
|
|
89
|
|
|
(1.2)
|
|
(5.6)
|
|
Operating lease
income and other leasing gains
|
28
|
|
35
|
|
27
|
|
|
(20.0)
|
|
3.7
|
|
Corporate services
income
|
58
|
|
52
|
|
56
|
|
|
11.5
|
|
3.6
|
|
Cards and payments
income
|
68
|
|
69
|
|
77
|
|
|
(1.4)
|
|
(11.7)
|
|
Corporate-owned life
insurance income
|
39
|
|
34
|
|
37
|
|
|
14.7
|
|
5.4
|
|
Consumer mortgage
income
|
7
|
|
9
|
|
7
|
|
|
(22.2)
|
|
—
|
|
Mortgage servicing
fees
|
21
|
|
19
|
|
17
|
|
|
10.5
|
|
23.5
|
|
Other
income
|
33
|
|
23
|
|
15
|
|
|
43.5
|
|
120.0
|
|
Total noninterest
income
|
$
|
645
|
|
$
|
609
|
|
$
|
656
|
|
|
5.9
|
%
|
(1.7)
|
%
|
|
|
|
|
|
|
|
Key's noninterest income was $645
million for the fourth quarter of 2018, compared to
$656 million for the year-ago
quarter. Trust and investment services income declined $10 million, related to the sale of Key Insurance
and Benefits Services in the second quarter of 2018. Cards and
payments income and service charges on deposit accounts were
impacted by the 2018 adoption of the revenue recognition accounting
standard. Excluding the revenue recognition changes, both of these
line items grew from the prior year. Investment banking and debt
placement fees were lower, following a record fourth quarter in
2017. Partially offsetting these declines were increases in other
income and mortgage servicing fees.
Compared to the third quarter of 2018, noninterest income
increased by $36 million, driven by
momentum in many of Key's core fee-based businesses. Investment
banking and debt placement fees increased $20 million, largely related to strength in
commercial mortgage banking and advisory fees. Corporate services
income reflected higher derivatives and trading income, and trust
and investment services income grew, largely due to stronger
brokerage commissions.
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Personnel
expense
|
$
|
576
|
|
$
|
553
|
|
$
|
609
|
|
|
4.2
|
%
|
(5.4)
|
%
|
Nonpersonnel
expense
|
436
|
|
411
|
|
489
|
|
|
6.1
|
|
(10.8)
|
|
Total noninterest
expense
|
$
|
1,012
|
|
$
|
964
|
|
$
|
1,098
|
|
|
5.0
|
%
|
(7.8)
|
%
|
|
|
|
|
|
|
|
Key's noninterest expense was $1.0
billion for the fourth quarter of 2018, compared to
$1.1 billion in the year-ago quarter.
Personnel expense declined year-over-year, driven by lower
incentive compensation and employee benefits costs, partially
offset by increased severance expense related to Key's efficiency
initiative. Net occupancy and marketing expenses also declined,
largely related to merger-related charges in the fourth quarter of
2017. In the fourth quarter of 2018, Key's FDIC assessment costs
decreased, due to the elimination of the FDIC quarterly
surcharge.
Compared to the third quarter of 2018, noninterest expense
increased by $48 million. The
increase was primarily driven by notable items in the quarter -
efficiency initiative expenses of $24
million and a $17 million
pension settlement charge (reported in other expense). Business
services and professional fees and other expense increased, but
were partially offset by the benefit from the FDIC surcharge
elimination.
BALANCE SHEET HIGHLIGHTS
Average
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Commercial and
industrial (a)
|
$
|
45,129
|
|
$
|
44,749
|
|
$
|
41,289
|
|
|
.8
|
%
|
9.3
|
%
|
Other commercial
loans
|
20,899
|
|
20,471
|
|
21,040
|
|
|
2.1
|
|
(.7)
|
|
Home equity
loans
|
11,234
|
|
11,415
|
|
12,128
|
|
|
(1.6)
|
|
(7.4)
|
|
Other consumer
loans
|
12,026
|
|
11,832
|
|
11,549
|
|
|
1.6
|
|
4.1
|
|
Total
loans
|
$
|
89,288
|
|
$
|
88,467
|
|
$
|
86,006
|
|
|
.9
|
%
|
3.8
|
%
|
|
|
|
|
|
|
|
|
|
(a)
|
Commercial and
industrial average loan balances include $132 million, $128
million, and $119 million of assets from commercial credit cards at
December 31, 2018, September 30, 2018, and
December 31, 2017, respectively.
|
Average loans were $89.3 billion
for the fourth quarter of 2018, an increase of $3.3 billion compared to the fourth quarter of
2017, reflecting broad-based growth in commercial and industrial
loans, partially offset by higher paydowns in home equity lines of
credit.
Compared to the third quarter of 2018, average loans increased
by $821 million, driven by growth in
commercial real estate and commercial and industrial loans.
Average
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Non-time
deposits
|
$
|
94,480
|
|
$
|
92,414
|
|
$
|
92,251
|
|
|
2.2
|
%
|
2.4
|
%
|
Certificates of
deposit ($100,000 or more)
|
8,217
|
|
8,186
|
|
6,776
|
|
|
.4
|
|
21.3
|
|
Other time
deposits
|
5,255
|
|
5,026
|
|
4,771
|
|
|
4.6
|
|
10.1
|
|
Total
deposits
|
$
|
107,952
|
|
$
|
105,626
|
|
$
|
103,798
|
|
|
2.2
|
%
|
4.0
|
%
|
|
|
|
|
|
|
|
Cost of total
deposits
|
.64
|
%
|
.53
|
%
|
.31
|
%
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
Average deposits totaled $108.0
billion for the fourth quarter of 2018, an increase of
$4.2 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 third quarter of 2018, average deposits
increased by $2.3 billion, driven
primarily by the penetration of existing retail and commercial
relationships, as well as short-term and seasonal deposit
inflows.
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Net loan
charge-offs
|
$
|
60
|
|
$
|
60
|
|
$
|
52
|
|
|
—
|
|
15.4
|
%
|
Net loan charge-offs
to average total loans
|
.27
|
%
|
.27
|
%
|
.24
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming loans
at period end (a)
|
$
|
542
|
|
$
|
645
|
|
$
|
503
|
|
|
(16.0)
|
%
|
7.8
|
|
Nonperforming assets
at period end (a)
|
577
|
|
674
|
|
534
|
|
|
(14.4)
|
|
8.1
|
|
Allowance for loan
and lease losses
|
883
|
|
887
|
|
877
|
|
|
(.5)
|
|
.7
|
|
Allowance for loan
and lease losses to nonperforming loans (a)
|
162.9
|
%
|
137.5
|
%
|
174.4
|
%
|
|
N/A
|
|
N/A
|
|
Provision for credit
losses
|
$
|
59
|
|
$
|
62
|
|
$
|
49
|
|
|
(4.8)
|
%
|
20.4
|
%
|
|
|
|
|
|
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $575 million, $606 million, and $738 million of
purchased credit impaired loans at December 31, 2018,
September 30, 2018, and December 31, 2017,
respectively.
|
N/A = Not
Applicable
|
Key's provision for credit losses was $59
million for the fourth quarter of 2018, compared to
$49 million for the fourth quarter of
2017 and $62 million for the third
quarter of 2018. Key's allowance for loan and lease losses was
$883 million, or .99% of total
period-end loans at December 31, 2018, compared to 1.01% at
December 31, 2017, and .99% at September 30, 2018.
Net loan charge-offs for the fourth quarter of 2018 totaled
$60 million, or .27% of average total
loans. These results compare to $52
million, or .24%, for the fourth quarter of 2017, and
$60 million, or .27%, for the third
quarter of 2018.
At December 31, 2018, Key's nonperforming loans totaled
$542 million, a decline of
$103 million from the prior quarter,
which represented .61% of period-end portfolio loans. These results
compare to .58% at December 31, 2017, and .72% at
September 30, 2018. Nonperforming assets at December 31,
2018, totaled $577 million, and
represented .64% of period-end portfolio loans and OREO and other
nonperforming assets. These results compare to .62% at
December 31, 2017, and .75% at September 30, 2018.
CAPITAL
Key's estimated risk-based capital ratios included in the
following table continued to exceed all "well-capitalized"
regulatory benchmarks at December 31, 2018.
Capital
Ratios
|
|
|
|
|
|
|
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
Common Equity Tier 1
(a)
|
9.92
|
%
|
9.95
|
%
|
10.16
|
%
|
Tier 1 risk-based
capital (a)
|
11.07
|
|
11.11
|
|
11.01
|
|
Total risk based
capital (a)
|
12.88
|
|
12.99
|
|
12.92
|
|
Tangible common
equity to tangible assets (b)
|
8.30
|
|
8.05
|
|
8.23
|
|
Leverage
(a)
|
9.93
|
|
10.03
|
|
9.73
|
|
|
|
|
|
|
|
(a)
|
12/31/2018 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 fourth quarter of
2018. As shown in the preceding table, at December 31, 2018,
Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital
ratios stood at 9.92% and 11.07%, respectively. Key's tangible
common equity ratio was 8.30% at December 31, 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. Key's estimated Common Equity Tier 1
ratio as calculated under the fully phased-in Regulatory Capital
Rules was 9.83% at December 31, 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 4Q18
vs.
|
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Shares outstanding at
beginning of period
|
1,034,287
|
|
1,058,944
|
|
1,079,039
|
|
|
(2.3)
|
%
|
(4.1)
|
%
|
Open market
repurchases and return of shares under employee
compensation plans
|
(15,216)
|
|
(25,418)
|
|
(10,617)
|
|
|
(40.1)
|
|
43.3
|
|
Shares issued under
employee compensation plans (net of cancellations)
|
432
|
|
761
|
|
662
|
|
|
(43.2)
|
|
(34.7)
|
|
|
Shares outstanding at
end of period
|
1,019,503
|
|
1,034,287
|
|
1,069,084
|
|
|
(1.4)
|
%
|
(4.6)
|
%
|
|
|
|
|
|
|
|
|
Consistent with Key's 2018 Capital Plan, during the fourth
quarter of 2018, Key declared a dividend of $.17 per common share and completed $278 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 $405 million.
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 4Q18
vs.
|
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Revenue from
continuing operations (TE)
|
|
|
|
|
|
|
Key Community
Bank
|
$
|
1,022
|
|
$
|
994
|
|
$
|
961
|
|
|
2.8
|
%
|
6.3
|
%
|
Key Corporate
Bank
|
581
|
|
574
|
|
605
|
|
|
1.2
|
|
(4.0)
|
|
Other
Segments
|
53
|
|
24
|
|
41
|
|
|
120.8
|
|
29.3
|
|
|
Total
segments
|
1,656
|
|
1,592
|
|
1,607
|
|
|
4.0
|
|
3.0
|
|
Reconciling
Items
|
(3)
|
|
10
|
|
1
|
|
|
N/M
|
|
N/M
|
|
|
Total
|
$
|
1,653
|
|
$
|
1,602
|
|
$
|
1,608
|
|
|
3.2
|
%
|
2.8
|
%
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key
|
|
|
|
|
|
|
Key Community
Bank
|
$
|
261
|
|
$
|
241
|
|
$
|
152
|
|
|
8.3
|
%
|
71.7
|
%
|
Key Corporate
Bank
|
215
|
|
199
|
|
223
|
|
|
8.0
|
|
(3.6)
|
|
Other
Segments
|
45
|
|
22
|
|
48
|
|
|
104.5
|
|
(6.3)
|
|
|
Total
segments
|
521
|
|
462
|
|
423
|
|
|
12.8
|
%
|
23.2
|
|
Reconciling
Items
|
(39)
|
|
20
|
|
(228)
|
|
|
N/M
|
|
N/M
|
|
|
Total
|
$
|
482
|
|
$
|
482
|
|
$
|
195
|
|
|
—
|
|
147.2
|
%
|
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Key Community
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
744
|
|
$
|
726
|
|
$
|
674
|
|
|
2.5
|
%
|
10.4
|
%
|
Noninterest
income
|
278
|
|
268
|
|
287
|
|
|
3.7
|
|
(3.1)
|
|
Total revenue
(TE)
|
1,022
|
|
994
|
|
961
|
|
|
2.8
|
|
6.3
|
|
Provision for credit
losses
|
48
|
|
43
|
|
57
|
|
|
11.6
|
|
(15.8)
|
|
Noninterest
expense
|
633
|
|
635
|
|
665
|
|
|
(.3)
|
|
(4.8)
|
|
Income (loss) before
income taxes (TE)
|
341
|
|
316
|
|
239
|
|
|
7.9
|
|
42.7
|
|
Allocated income
taxes (benefit) and TE adjustments
|
80
|
|
75
|
|
87
|
|
|
6.7
|
|
(8.0)
|
|
Net income (loss)
attributable to Key
|
$
|
261
|
|
$
|
241
|
|
$
|
152
|
|
|
8.3
|
%
|
71.7
|
%
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
47,976
|
|
$
|
47,862
|
|
$
|
47,408
|
|
|
.2
|
%
|
1.2
|
%
|
Total
assets
|
51,881
|
|
51,740
|
|
51,398
|
|
|
.3
|
|
.9
|
|
Deposits
|
84,288
|
|
82,259
|
|
80,352
|
|
|
2.5
|
|
4.9
|
|
|
|
|
|
|
|
|
Assets under
management at period end
|
$
|
36,775
|
|
$
|
40,575
|
|
$
|
39,588
|
|
|
(9.4)
|
%
|
(7.1)
|
%
|
|
|
|
|
|
|
|
Additional Key
Community Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
90
|
|
$
|
90
|
|
$
|
87
|
|
|
—
|
|
3.4
|
%
|
Service charges on
deposit accounts
|
72
|
|
72
|
|
77
|
|
|
—
|
|
(6.5)
|
|
Cards and payments
income
|
61
|
|
59
|
|
67
|
|
|
3.4
|
%
|
(9.0)
|
|
Other noninterest
income
|
55
|
|
47
|
|
56
|
|
|
17.0
|
|
(1.8)
|
|
Total noninterest
income
|
$
|
278
|
|
$
|
268
|
|
$
|
287
|
|
|
3.7
|
%
|
(3.1)
|
%
|
|
|
|
|
|
|
|
Average deposit
balances
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
47,310
|
|
$
|
45,967
|
|
$
|
44,415
|
|
|
2.9
|
%
|
6.5
|
%
|
Savings
deposits
|
4,777
|
|
4,923
|
|
5,090
|
|
|
(3.0)
|
|
(6.1)
|
|
Certificates of
deposit ($100,000 or more)
|
6,169
|
|
5,608
|
|
4,628
|
|
|
10.0
|
|
33.3
|
|
Other time
deposits
|
5,244
|
|
5,019
|
|
4,765
|
|
|
4.5
|
|
10.1
|
|
Noninterest-bearing
deposits
|
20,788
|
|
20,742
|
|
21,454
|
|
|
.2
|
|
(3.1)
|
|
Total
deposits
|
$
|
84,288
|
|
$
|
82,259
|
|
$
|
80,352
|
|
|
2.5
|
%
|
4.9
|
%
|
|
|
|
|
|
|
|
Home equity
loans
|
|
|
|
|
|
|
Average
balance
|
$
|
11,144
|
|
$
|
11,317
|
|
$
|
12,005
|
|
|
|
|
Combined
weighted-average loan-to-value ratio (at date of
origination)
|
70
|
%
|
70
|
%
|
70
|
%
|
|
|
|
Percent first lien
positions
|
60
|
|
60
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
|
|
Branches
|
1,159
|
|
1,166
|
|
1,197
|
|
|
|
|
Automated teller
machines
|
1,505
|
|
1,518
|
|
1,572
|
|
|
|
|
|
|
|
|
|
|
|
Key Community Bank Summary of Operations (4Q18 vs.
4Q17)
- Positive operating leverage compared to the prior year
- Net income increased $109
million, or 71.7%, from the prior year
- Average commercial and industrial loans increased $1.0 billion, or 5.6%, from the prior year
Key Community Bank recorded net income attributable to Key of
$261 million for the fourth quarter
of 2018, compared to $152 million for
the year-ago quarter, benefiting from momentum in Key's core
businesses, expense discipline, and a lower tax rate as a result of
tax reform.
Taxable-equivalent net interest income increased by $70 million, or 10.4%, from the fourth quarter of
2017. The increase in net interest income was primarily
attributable to the benefit from higher interest rates and loan
growth, partially offset by lower purchase accounting accretion.
Average loans and leases increased $568
million, or 1.2%, largely driven by a $1.0 billion, or 5.6%, increase in commercial and
industrial loans. Additionally, average deposits increased
$3.9 billion, or 4.9%, from the
fourth quarter of 2017 due to strength in our relationship
strategy.
Noninterest income decreased $9
million, or 3.1%, from the year-ago quarter driven by lower
service charges on deposit accounts and cards and payments income,
which were impacted by revenue recognition changes. Excluding
the impact of the accounting change, both businesses grew from the
prior period, related to continued household growth.
The provision for credit losses decreased by $9 million, or 15.8%, from the fourth quarter of
2017. Net loan charge-offs increased $7
million from the fourth quarter of 2017 driven by a larger
balance sheet.
Noninterest expense decreased by $32
million, or 4.8%, from the year-ago quarter. Both personnel
and nonpersonnel expense declined, driven by strong expense
discipline across the businesses while continuing to invest
strategically for growth.
Key Corporate
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
272
|
|
$
|
273
|
|
$
|
284
|
|
|
(.4)
|
%
|
(4.2)
|
%
|
Noninterest
income
|
309
|
|
301
|
|
321
|
|
|
2.7
|
|
(3.7)
|
|
Total revenue
(TE)
|
581
|
|
574
|
|
605
|
|
|
1.2
|
|
(4.0)
|
|
Provision for credit
losses
|
12
|
|
20
|
|
(6)
|
|
|
(40.0)
|
|
N/M
|
|
Noninterest
expense
|
329
|
|
316
|
|
352
|
|
|
4.1
|
|
(6.5)
|
|
Income (loss) before
income taxes (TE)
|
240
|
|
238
|
|
259
|
|
|
.8
|
|
(7.3)
|
|
Allocated income
taxes and TE adjustments
|
25
|
|
39
|
|
36
|
|
|
(35.9)
|
|
(30.6)
|
|
Net income (loss)
attributable to Key
|
$
|
215
|
|
$
|
199
|
|
$
|
223
|
|
|
8.0
|
%
|
(3.6)
|
%
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
40,438
|
|
$
|
39,714
|
|
$
|
37,457
|
|
|
1.8
|
%
|
8.0
|
%
|
Loans held for
sale
|
2,249
|
|
1,042
|
|
1,345
|
|
|
115.8
|
|
67.2
|
|
Total
assets
|
48,853
|
|
46,860
|
|
44,501
|
|
|
4.3
|
|
9.8
|
|
Deposits
|
21,793
|
|
21,056
|
|
21,558
|
|
|
3.5
|
%
|
1.1
|
%
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Additional Key
Corporate Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 4Q18
vs.
|
|
4Q18
|
3Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
30
|
|
$
|
27
|
|
$
|
33
|
|
|
11.1
|
%
|
(9.1)
|
%
|
Investment banking
and debt placement fees
|
178
|
|
162
|
|
195
|
|
|
9.9
|
|
(8.7)
|
|
Operating lease
income and other leasing gains
|
24
|
|
34
|
|
25
|
|
|
(29.4)
|
|
(4.0)
|
|
|
|
|
|
|
|
|
Corporate services
income
|
43
|
|
37
|
|
40
|
|
|
16.2
|
|
7.5
|
|
Service charges on
deposit accounts
|
12
|
|
13
|
|
12
|
|
|
(7.7)
|
|
—
|
|
Cards and payments
income
|
7
|
|
10
|
|
10
|
|
|
(30.0)
|
|
(30.0)
|
|
Payments and services
income
|
62
|
|
60
|
|
62
|
|
|
3.3
|
|
—
|
|
|
|
|
|
|
|
|
Mortgage servicing
fees
|
18
|
|
15
|
|
15
|
|
|
20.0
|
|
20.0
|
|
Other noninterest
income
|
(3)
|
|
3
|
|
(9)
|
|
|
N/M
|
|
N/M
|
|
Total noninterest
income
|
$
|
309
|
|
$
|
301
|
|
$
|
321
|
|
|
2.7
|
%
|
(3.7)
|
%
|
|
|
|
|
|
|
|
Key Corporate Bank Summary of Operations (4Q18 vs.
4Q17)
- Record year for investment banking and debt placement fees
- Commercial and industrial loans up $2.8
billion, or 12.7%, from prior year
Key Corporate Bank recorded net income attributable to Key of
$215 million for the fourth quarter
of 2018, compared to $223 million for
the year-ago quarter.
Taxable-equivalent net interest income decreased by $12 million, or 4.2%, compared to the fourth
quarter of 2017. This decline is related to lower purchase
accounting accretion, as well as loan spread compression.
Average loan and lease balances increased $3
billion, or 8%, from the year-ago quarter, driven by
broad-based growth in commercial and industrial loans. Average
deposit balances increased $235
million, or 1.1%, from the year-ago quarter, driven by
growth in core deposits.
Noninterest income was down $12
million, or 3.7%, from the prior year. Investment
banking and debt placement fees decreased $17 million, or 8.7%, from a record quarter in
the year-ago period. This decrease was partially offset by
increases in other noninterest income of $6
million related to higher gains on certain tax-advantaged
assets, as well as higher mortgage servicing fees of $3 million.
During the fourth quarter of 2018, the provision for credit
losses increased $18 million compared
to the fourth quarter of 2017, mostly related to loan growth.
Noninterest expense decreased by $23
million, or 6.5%, from the fourth quarter of 2017. The
decrease from the prior year was largely driven by lower personnel
expense. The prior year also had higher impairments on certain
tax-advantaged assets related to tax reform. These decreases are
slightly offset by higher volumes driving increased operating lease
expense.
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 $45 million for the fourth quarter of 2018,
compared to $48 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 $139.6
billion at December 31, 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 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, 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 9:00 a.m.
ET, on Thursday, January 17, 2019. An audio
replay of the call will be available through January 27, 2019.
*****
KeyCorp
Fourth Quarter
2018
Financial Supplement
Financial
Highlights
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
Summary of
operations
|
|
|
|
|
Net interest income
(TE)
|
$
|
1,008
|
|
$
|
993
|
|
$
|
952
|
|
|
Noninterest
income
|
645
|
|
609
|
|
656
|
|
|
|
Total revenue
(TE)
|
1,653
|
|
1,602
|
|
1,608
|
|
|
Provision for credit
losses
|
59
|
|
62
|
|
49
|
|
|
Noninterest
expense
|
1,012
|
|
964
|
|
1,098
|
|
|
Income (loss) from
continuing operations attributable to Key
|
482
|
|
482
|
|
195
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
2
|
|
—
|
|
1
|
|
|
Net income (loss)
attributable to Key
|
484
|
|
482
|
|
196
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
459
|
|
468
|
|
181
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
2
|
|
—
|
|
1
|
|
|
Net income (loss)
attributable to Key common shareholders
|
461
|
|
468
|
|
182
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.45
|
|
$
|
.45
|
|
$
|
.17
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.45
|
|
.45
|
|
.17
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
.45
|
|
.45
|
|
.17
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming dilution
(a)
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(b)
|
.45
|
|
.45
|
|
.17
|
|
|
|
|
|
|
|
|
Cash dividends
declared
|
.17
|
|
.17
|
|
.105
|
|
|
Book value at period
end
|
13.90
|
|
13.33
|
|
13.09
|
|
|
Tangible book value
at period end
|
11.14
|
|
10.59
|
|
10.35
|
|
|
Market price at
period end
|
14.78
|
|
19.89
|
|
20.17
|
|
|
|
|
|
|
|
Performance
ratios
|
|
|
|
|
From continuing
operations:
|
|
|
|
|
Return on average
total assets
|
1.37
|
%
|
1.40
|
%
|
.57
|
%
|
|
Return on average
common equity
|
13.07
|
|
13.36
|
|
5.04
|
|
|
Return on average
tangible common equity (c)
|
16.40
|
|
16.81
|
|
6.35
|
|
|
Net interest margin
(TE)
|
3.16
|
|
3.18
|
|
3.09
|
|
|
Cash efficiency ratio
(c)
|
59.9
|
|
58.7
|
|
66.7
|
|
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
|
Return on average
total assets
|
1.37
|
%
|
1.39
|
%
|
.57
|
%
|
|
Return on average
common equity
|
13.13
|
|
13.36
|
|
5.07
|
|
|
Return on average
tangible common equity (c)
|
16.47
|
|
16.81
|
|
6.39
|
|
|
Net interest margin
(TE)
|
3.14
|
|
3.16
|
|
3.07
|
|
|
Loan to deposit
(d)
|
85.6
|
|
87.0
|
|
84.4
|
|
|
|
|
|
|
|
Capital ratios at
period end
|
|
|
|
|
Key shareholders'
equity to assets
|
11.17
|
%
|
10.96
|
%
|
10.91
|
%
|
|
Key common
shareholders' equity to assets
|
10.15
|
|
9.93
|
|
10.17
|
|
|
Tangible common
equity to tangible assets (c)
|
8.30
|
|
8.05
|
|
8.23
|
|
|
Common Equity Tier 1
(e)
|
9.92
|
|
9.95
|
|
10.16
|
|
|
Tier 1 risk-based
capital (e)
|
11.07
|
|
11.11
|
|
11.01
|
|
|
Total risk-based
capital (e)
|
12.88
|
|
12.99
|
|
12.92
|
|
|
Leverage
(e)
|
9.93
|
|
10.03
|
|
9.73
|
|
|
|
|
|
|
|
Asset quality —
from continuing operations
|
|
|
|
|
Net loan
charge-offs
|
$
|
60
|
|
$
|
60
|
|
$
|
52
|
|
|
Net loan charge-offs
to average loans
|
.27
|
%
|
.27
|
%
|
.24
|
%
|
|
Allowance for loan
and lease losses
|
$
|
883
|
|
$
|
887
|
|
$
|
877
|
|
|
Allowance for credit
losses
|
946
|
|
947
|
|
934
|
|
|
Allowance for loan
and lease losses to period-end loans
|
.99
|
%
|
.99
|
%
|
1.01
|
%
|
|
Allowance for credit
losses to period-end loans
|
1.06
|
|
1.06
|
|
1.08
|
|
|
Allowance for loan
and lease losses to nonperforming loans (f)
|
162.9
|
|
137.5
|
|
174.4
|
|
|
Allowance for credit
losses to nonperforming loans (f)
|
174.5
|
|
146.8
|
|
185.7
|
|
|
Nonperforming loans
at period-end (f)
|
$
|
542
|
|
$
|
645
|
|
$
|
503
|
|
|
Nonperforming assets
at period-end (f)
|
577
|
|
674
|
|
534
|
|
|
Nonperforming loans
to period-end portfolio loans (f)
|
.61
|
%
|
.72
|
%
|
.58
|
%
|
|
Nonperforming assets
to period-end portfolio loans plus OREO and other nonperforming
assets (f)
|
.64
|
|
.75
|
|
.62
|
|
|
|
|
|
|
|
Trust
assets
|
|
|
|
|
Assets under
management
|
$
|
36,775
|
|
$
|
40,575
|
|
$
|
39,588
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
Average full-time
equivalent employees
|
17,664
|
|
18,150
|
|
18,379
|
|
|
Branches
|
1,159
|
|
1,166
|
|
1,197
|
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
$
|
8
|
|
$
|
7
|
|
$
|
14
|
|
Financial
Highlights (continued)
|
(dollars in millions,
except per share amounts)
|
|
|
Twelve months
ended
|
|
|
12/31/2018
|
12/31/2017
|
Summary of
operations
|
|
|
|
Net interest income
(TE)
|
$
|
3,940
|
|
$
|
3,830
|
|
|
Noninterest
income
|
2,515
|
|
2,478
|
|
|
Total revenue
(TE)
|
6,455
|
|
6,308
|
|
|
Provision for credit
losses
|
246
|
|
229
|
|
|
Noninterest
expense
|
3,975
|
|
4,098
|
|
|
Income (loss) from
continuing operations attributable to Key
|
1,859
|
|
1,289
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
7
|
|
7
|
|
|
Net income (loss)
attributable to Key
|
1,866
|
|
1,296
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
1,793
|
|
$
|
1,219
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
7
|
|
7
|
|
|
Net income (loss)
attributable to Key common shareholders
|
1,800
|
|
1,226
|
|
|
|
|
|
Per common
share
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
1.72
|
|
$
|
1.13
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
.01
|
|
.01
|
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
1.73
|
|
1.14
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
1.70
|
|
1.12
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming dilution
(a)
|
.01
|
|
.01
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(b)
|
1.71
|
|
1.13
|
|
|
|
|
|
|
Cash dividends
paid
|
.565
|
|
.38
|
|
|
|
|
|
Performance
ratios
|
|
|
|
From continuing
operations:
|
|
|
|
Return on average
total assets
|
1.36
|
%
|
.96
|
%
|
|
Return on average
common equity
|
12.88
|
|
8.65
|
|
|
Return on average
tangible common equity (c)
|
16.22
|
|
10.84
|
|
|
Net interest margin
(TE)
|
3.17
|
|
3.17
|
|
|
Cash efficiency ratio
(c)
|
60.0
|
|
63.5
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
Return on average
total assets
|
1.35
|
%
|
.96
|
%
|
|
Return on average
common equity
|
12.93
|
|
8.70
|
|
|
Return on average
tangible common equity (c)
|
16.28
|
|
10.90
|
|
|
Net interest margin
(TE)
|
3.15
|
|
3.15
|
|
|
|
|
|
Asset quality —
from continuing operations
|
|
|
|
Net loan
charge-offs
|
$
|
234
|
|
$
|
208
|
|
|
Net loan charge-offs
to average total loans
|
.26
|
%
|
.24
|
%
|
|
|
|
|
Other
data
|
|
|
|
Average full-time
equivalent employees
|
18,180
|
|
18,415
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
31
|
|
53
|
|
|
|
(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)
|
December 31,
2018, ratio is estimated.
|
(f)
|
Nonperforming loan
balances exclude $575 million, $606 million, and $738 million of
purchased credit impaired loans at December 31, 2018,
September 30, 2018, and December 31, 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.
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
|
|
Twelve months
ended
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
|
12/31/2018
|
12/31/2017
|
Tangible common
equity to tangible assets at period-end
|
|
|
|
|
|
|
Key shareholders'
equity (GAAP)
|
$
|
15,595
|
|
$
|
15,208
|
|
$
|
15,023
|
|
|
|
|
Less: Intangible
assets (a)
|
2,818
|
|
2,838
|
|
2,928
|
|
|
|
|
Preferred
Stock (b)
|
1,421
|
|
1,421
|
|
1,009
|
|
|
|
|
Tangible common
equity (non-GAAP)
|
$
|
11,356
|
|
$
|
10,949
|
|
$
|
11,086
|
|
|
|
|
Total assets
(GAAP)
|
$
|
139,613
|
|
$
|
138,805
|
|
$
|
137,698
|
|
|
|
|
Less: Intangible
assets (a)
|
2,818
|
|
2,838
|
|
2,928
|
|
|
|
|
Tangible assets
(non-GAAP)
|
$
|
136,795
|
|
$
|
135,967
|
|
$
|
134,770
|
|
|
|
|
Tangible common
equity to tangible assets ratio (non-GAAP)
|
8.30
|
%
|
8.05
|
%
|
8.23
|
%
|
|
|
|
Pre-provision net
revenue
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
1,000
|
|
$
|
986
|
|
$
|
938
|
|
|
$
|
3,909
|
|
$
|
3,777
|
|
Plus:
Taxable-equivalent adjustment
|
8
|
|
7
|
|
14
|
|
|
31
|
|
53
|
|
Noninterest
income
|
645
|
|
609
|
|
656
|
|
|
2,515
|
|
2,478
|
|
Less: Noninterest
expense
|
1,012
|
|
964
|
|
1,098
|
|
|
3,975
|
|
4,098
|
|
Pre-provision net
revenue from continuing operations (non-GAAP)
|
$
|
641
|
|
$
|
638
|
|
$
|
510
|
|
|
$
|
2,480
|
|
$
|
2,210
|
|
Average tangible
common equity
|
|
|
|
|
|
|
Average Key
shareholders' equity (GAAP)
|
$
|
15,384
|
|
$
|
15,210
|
|
$
|
15,268
|
|
|
$
|
15,131
|
|
$
|
15,224
|
|
Less: Intangible
assets (average) (c)
|
2,828
|
|
2,848
|
|
2,939
|
|
|
2,869
|
|
2,837
|
|
Preferred stock
(average)
|
1,450
|
|
1,316
|
|
1,025
|
|
|
1,205
|
|
1,137
|
|
Average tangible
common equity (non-GAAP)
|
$
|
11,106
|
|
$
|
11,046
|
|
$
|
11,304
|
|
|
$
|
11,057
|
|
$
|
11,250
|
|
Return on average
tangible common equity from continuing operations
|
|
|
|
|
|
|
Net income (loss)
from continuing operations attributable to Key common
shareholders (GAAP)
|
$
|
459
|
|
$
|
468
|
|
$
|
181
|
|
|
$
|
1,793
|
|
$
|
1,219
|
|
Average tangible
common equity (non-GAAP)
|
11,106
|
|
11,046
|
|
11,304
|
|
|
11,057
|
|
11,250
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity from continuing operations
(non-GAAP)
|
16.40
|
%
|
16.81
|
%
|
6.35
|
%
|
|
16.22
|
%
|
10.84
|
%
|
Return on average
tangible common equity consolidated
|
|
|
|
|
|
|
Net income (loss)
attributable to Key common shareholders (GAAP)
|
$
|
461
|
|
$
|
468
|
|
$
|
182
|
|
|
$
|
1,800
|
|
$
|
1,226
|
|
Average tangible
common equity (non-GAAP)
|
11,106
|
|
11,046
|
|
11,304
|
|
|
11,057
|
|
11,250
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity consolidated (non-GAAP)
|
16.47
|
%
|
16.81
|
%
|
6.39
|
%
|
|
16.28
|
%
|
10.90
|
%
|
Cash efficiency
ratio
|
|
|
|
|
|
|
Noninterest expense
(GAAP)
|
$
|
1,012
|
|
$
|
964
|
|
$
|
1,098
|
|
|
$
|
3,975
|
|
$
|
4,098
|
|
Less: Intangible
asset amortization
|
22
|
|
23
|
|
26
|
|
|
99
|
|
95
|
|
Adjusted noninterest
expense (non-GAAP)
|
$
|
990
|
|
$
|
941
|
|
$
|
1,072
|
|
|
$
|
3,876
|
|
$
|
4,003
|
|
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
1,000
|
|
$
|
986
|
|
$
|
938
|
|
|
$
|
3,909
|
|
$
|
3,777
|
|
Plus:
Taxable-equivalent adjustment
|
8
|
|
7
|
|
14
|
|
|
31
|
|
53
|
|
Noninterest
income
|
645
|
|
609
|
|
656
|
|
|
2,515
|
|
2,478
|
|
Total
taxable-equivalent revenue (non-GAAP)
|
$
|
1,653
|
|
$
|
1,602
|
|
$
|
1,608
|
|
|
$
|
6,455
|
|
$
|
6,308
|
|
|
|
|
|
|
|
|
Cash efficiency ratio
(non-GAAP)
|
59.9
|
%
|
58.7
|
%
|
66.7
|
%
|
|
60.0
|
%
|
63.5
|
%
|
GAAP to Non-GAAP
Reconciliations (continued)
|
(dollars in
millions)
|
|
|
|
Three
months
ended
|
|
|
|
12/31/2018
|
Common Equity Tier
1 under the Regulatory Capital Rules ("RCR")
(estimates)
|
|
|
Common Equity Tier 1
under current RCR
|
$
|
12,273
|
|
|
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)
|
$
|
12,273
|
|
|
|
|
|
|
Net risk-weighted
assets under current RCR
|
$
|
123,719
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
Mortgage servicing
assets (f)
|
809
|
|
|
|
Deferred tax
assets
|
276
|
|
|
|
All other
assets
|
—
|
|
|
|
Total risk-weighted
assets anticipated under the fully phased-in RCR
(e)
|
$
|
124,804
|
|
|
|
|
|
|
Common Equity Tier 1
ratio under the fully phased-in RCR (e)
|
9.83
|
%
|
|
|
(a)
|
For the three months
ended December 31, 2018, September 30, 2018, and
December 31, 2017, intangible assets exclude $14 million, $17
million, and $26 million, respectively, of period-end purchased
credit card receivables.
|
(b)
|
Net of capital
surplus.
|
(c)
|
For the three months
ended December 31, 2018, September 30, 2018, and
December 31, 2017, average intangible assets exclude $15
million, $18 million, and $28 million, respectively, of average
purchased credit card receivables. For the twelve months ended
December 31, 2018, and December 31, 2017, average
intangible assets exclude $20 million and $34 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)
|
|
|
|
|
|
|
|
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
Assets
|
|
|
|
|
Loans
|
$
|
89,552
|
|
$
|
89,268
|
|
$
|
86,405
|
|
|
Loans held for
sale
|
1,227
|
|
1,618
|
|
1,107
|
|
|
Securities available
for sale
|
19,428
|
|
18,341
|
|
18,139
|
|
|
Held-to-maturity
securities
|
11,519
|
|
11,869
|
|
11,830
|
|
|
Trading account
assets
|
849
|
|
958
|
|
836
|
|
|
Short-term
investments
|
2,562
|
|
2,272
|
|
4,447
|
|
|
Other
investments
|
666
|
|
681
|
|
726
|
|
|
|
Total earning
assets
|
125,803
|
|
125,007
|
|
123,490
|
|
|
Allowance for loan
and lease losses
|
(883)
|
|
(887)
|
|
(877)
|
|
|
Cash and due from
banks
|
678
|
|
319
|
|
671
|
|
|
Premises and
equipment
|
882
|
|
891
|
|
930
|
|
|
Operating lease
assets
|
993
|
|
930
|
|
821
|
|
|
Goodwill
|
2,516
|
|
2,516
|
|
2,538
|
|
|
Other intangible
assets
|
316
|
|
338
|
|
416
|
|
|
Corporate-owned life
insurance
|
4,171
|
|
4,156
|
|
4,132
|
|
|
Accrued income and
other assets
|
4,037
|
|
4,378
|
|
4,237
|
|
|
Discontinued
assets
|
1,100
|
|
1,157
|
|
1,340
|
|
|
|
Total
assets
|
$
|
139,613
|
|
138,805
|
|
137,698
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits in domestic
offices:
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
59,918
|
|
$
|
57,219
|
|
$
|
53,627
|
|
|
|
Savings
deposits
|
4,854
|
|
4,948
|
|
6,296
|
|
|
|
Certificates of
deposit ($100,000 or more)
|
7,913
|
|
8,453
|
|
6,849
|
|
|
|
Other time
deposits
|
5,332
|
|
5,130
|
|
4,798
|
|
|
|
Total
interest-bearing deposits
|
78,017
|
|
75,750
|
|
71,570
|
|
|
|
Noninterest-bearing
deposits
|
29,292
|
|
30,030
|
|
33,665
|
|
|
|
Total
deposits
|
107,309
|
|
105,780
|
|
105,235
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
319
|
|
1,285
|
|
377
|
|
|
Bank notes and other
short-term borrowings
|
544
|
|
637
|
|
634
|
|
|
Accrued expense and
other liabilities
|
2,113
|
|
2,044
|
|
2,094
|
|
|
Long-term
debt
|
13,732
|
|
13,849
|
|
14,333
|
|
|
|
Total
liabilities
|
124,017
|
|
123,595
|
|
122,673
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred
stock
|
1,450
|
|
1,450
|
|
1,025
|
|
|
Common
shares
|
1,257
|
|
1,257
|
|
1,257
|
|
|
Capital
surplus
|
6,331
|
|
6,315
|
|
6,335
|
|
|
Retained
earnings
|
11,556
|
|
11,262
|
|
10,335
|
|
|
Treasury stock, at
cost
|
(4,181)
|
|
(3,910)
|
|
(3,150)
|
|
|
Accumulated other
comprehensive income (loss)
|
(818)
|
|
(1,166)
|
|
(779)
|
|
|
|
Key shareholders'
equity
|
15,595
|
|
15,208
|
|
15,023
|
|
|
Noncontrolling
interests
|
1
|
|
2
|
|
2
|
|
|
|
Total
equity
|
15,596
|
|
15,210
|
|
15,025
|
|
Total liabilities
and equity
|
$
|
139,613
|
|
$
|
138,805
|
|
$
|
137,698
|
|
|
|
|
|
|
|
Common shares
outstanding (000)
|
1,019,503
|
|
1,034,287
|
|
1,069,084
|
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
|
12/31/2018
|
12/31/2017
|
Interest
income
|
|
|
|
|
|
|
|
Loans
|
$
|
1,058
|
|
$
|
1,025
|
|
$
|
924
|
|
|
$
|
4,023
|
|
$
|
3,677
|
|
|
Loans held for
sale
|
26
|
|
12
|
|
13
|
|
|
66
|
|
52
|
|
|
Securities available
for sale
|
115
|
|
102
|
|
93
|
|
|
409
|
|
369
|
|
|
Held-to-maturity
securities
|
71
|
|
72
|
|
61
|
|
|
284
|
|
222
|
|
|
Trading account
assets
|
8
|
|
7
|
|
6
|
|
|
29
|
|
27
|
|
|
Short-term
investments
|
15
|
|
15
|
|
12
|
|
|
46
|
|
26
|
|
|
Other
investments
|
4
|
|
6
|
|
5
|
|
|
21
|
|
17
|
|
|
|
Total interest
income
|
1,297
|
|
1,239
|
|
1,114
|
|
|
4,878
|
|
4,390
|
|
Interest
expense
|
|
|
|
|
|
|
|
Deposits
|
174
|
|
140
|
|
82
|
|
|
517
|
|
278
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
1
|
|
1
|
|
—
|
|
|
11
|
|
1
|
|
|
Bank notes and other
short-term borrowings
|
4
|
|
4
|
|
3
|
|
|
21
|
|
15
|
|
|
Long-term
debt
|
118
|
|
108
|
|
91
|
|
|
420
|
|
319
|
|
|
|
Total interest
expense
|
297
|
|
253
|
|
176
|
|
|
969
|
|
613
|
|
Net interest
income
|
1,000
|
|
986
|
|
938
|
|
|
3,909
|
|
3,777
|
|
Provision for credit
losses
|
59
|
|
62
|
|
49
|
|
|
246
|
|
229
|
|
Net interest income
after provision for credit losses
|
941
|
|
924
|
|
889
|
|
|
3,663
|
|
3,548
|
|
Noninterest
income
|
|
|
|
|
|
|
|
Trust and investment
services income
|
121
|
|
117
|
|
131
|
|
|
499
|
|
535
|
|
|
Investment banking
and debt placement fees
|
186
|
|
166
|
|
200
|
|
|
650
|
|
603
|
|
|
Service charges on
deposit accounts
|
84
|
|
85
|
|
89
|
|
|
349
|
|
357
|
|
|
Operating lease
income and other leasing gains
|
28
|
|
35
|
|
27
|
|
|
89
|
|
96
|
|
|
Corporate services
income
|
58
|
|
52
|
|
56
|
|
|
233
|
|
219
|
|
|
Cards and payments
income
|
68
|
|
69
|
|
77
|
|
|
270
|
|
287
|
|
|
Corporate-owned life
insurance income
|
39
|
|
34
|
|
37
|
|
|
137
|
|
131
|
|
|
Consumer mortgage
income
|
7
|
|
9
|
|
7
|
|
|
30
|
|
26
|
|
|
Mortgage servicing
fees
|
21
|
|
19
|
|
17
|
|
|
82
|
|
71
|
|
|
Other
income (a)
|
33
|
|
23
|
|
15
|
|
|
176
|
|
153
|
|
|
|
Total noninterest
income
|
645
|
|
609
|
|
656
|
|
|
2,515
|
|
2,478
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
Personnel
|
576
|
|
553
|
|
609
|
|
|
2,309
|
|
2,278
|
|
|
Net
occupancy
|
75
|
|
76
|
|
92
|
|
|
308
|
|
331
|
|
|
Computer
processing
|
55
|
|
52
|
|
54
|
|
|
210
|
|
225
|
|
|
Business services and
professional fees
|
49
|
|
43
|
|
52
|
|
|
184
|
|
192
|
|
|
Equipment
|
26
|
|
27
|
|
31
|
|
|
105
|
|
114
|
|
|
Operating lease
expense
|
32
|
|
31
|
|
28
|
|
|
120
|
|
92
|
|
|
Marketing
|
25
|
|
26
|
|
35
|
|
|
102
|
|
120
|
|
|
FDIC
assessment
|
9
|
|
21
|
|
20
|
|
|
72
|
|
82
|
|
|
Intangible asset
amortization
|
22
|
|
23
|
|
26
|
|
|
99
|
|
95
|
|
|
OREO expense,
net
|
1
|
|
3
|
|
3
|
|
|
6
|
|
11
|
|
|
Other
expense
|
142
|
|
109
|
|
148
|
|
|
460
|
|
558
|
|
|
|
Total noninterest
expense
|
1,012
|
|
964
|
|
1,098
|
|
|
3,975
|
|
4,098
|
|
Income (loss) from
continuing operations before income taxes
|
574
|
|
569
|
|
447
|
|
|
2,203
|
|
1,928
|
|
|
Income
taxes
|
92
|
|
87
|
|
251
|
|
|
344
|
|
637
|
|
Income (loss) from
continuing operations
|
482
|
|
482
|
|
196
|
|
|
1,859
|
|
1,291
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
2
|
|
—
|
|
1
|
|
|
7
|
|
7
|
|
Net income
(loss)
|
484
|
|
482
|
|
197
|
|
|
1,866
|
|
1,298
|
|
|
Less: Net
income (loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
1
|
|
|
—
|
|
2
|
|
Net income (loss)
attributable to Key
|
$
|
484
|
|
$
|
482
|
|
$
|
196
|
|
|
$
|
1,866
|
|
$
|
1,296
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
459
|
|
$
|
468
|
|
$
|
181
|
|
|
$
|
1,793
|
|
$
|
1,219
|
|
Net income (loss)
attributable to Key common shareholders
|
461
|
|
468
|
|
182
|
|
|
1,800
|
|
1,226
|
|
Per common
share
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.45
|
|
$
|
.45
|
|
$
|
.17
|
|
|
$
|
1.72
|
|
$
|
1.13
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
.01
|
|
.01
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.45
|
|
.45
|
|
.17
|
|
|
1.73
|
|
1.14
|
|
Per common share —
assuming dilution
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.45
|
|
$
|
.45
|
|
$
|
.17
|
|
|
$
|
1.70
|
|
$
|
1.12
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
.01
|
|
.01
|
|
Net income (loss)
attributable to Key common
shareholders (b)
|
.45
|
|
.45
|
|
.17
|
|
|
1.71
|
|
1.13
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
$
|
.17
|
|
$
|
.17
|
|
$
|
.105
|
|
|
$
|
.565
|
|
$
|
.38
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding (000)
|
1,018,614
|
|
1,036,480
|
|
1,062,348
|
|
|
1,040,890
|
|
1,072,077
|
|
|
Effect of common
share options and other stock awards
|
11,803
|
|
13,497
|
|
16,982
|
|
|
13,792
|
|
16,515
|
|
Weighted-average
common shares and potential common shares outstanding
(000) (c)
|
1,030,417
|
|
1,049,976
|
|
1,079,330
|
|
|
1,054,682
|
|
1,088,593
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
For the three months
ended December 31, 2018, September 30, 2018, and
December 31, 2017, net securities gains (losses) totaled less
than $1 million. For the three months ended December 31, 2018,
September 30, 2018, and December 31, 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)
|
|
|
Fourth Quarter
2018
|
|
Third Quarter
2018
|
|
Fourth 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)
|
$
|
45,129
|
|
512
|
|
4.51
|
%
|
|
$
|
44,749
|
|
495
|
|
4.39
|
%
|
|
$
|
41,289
|
|
417
|
|
4.01
|
%
|
|
Real estate —
commercial mortgage
|
14,656
|
|
185
|
|
5.03
|
|
|
14,268
|
|
176
|
|
4.89
|
|
|
14,386
|
|
167
|
|
4.60
|
|
|
Real estate —
construction
|
1,761
|
|
23
|
|
5.26
|
|
|
1,759
|
|
22
|
|
5.05
|
|
|
1,967
|
|
23
|
|
4.55
|
|
|
Commercial lease
financing
|
4,482
|
|
43
|
|
3.79
|
|
|
4,444
|
|
43
|
|
3.88
|
|
|
4,687
|
|
45
|
|
3.86
|
|
|
Total commercial
loans
|
66,028
|
|
763
|
|
4.59
|
|
|
65,220
|
|
736
|
|
4.49
|
|
|
62,329
|
|
652
|
|
4.15
|
|
|
Real estate —
residential mortgage
|
5,496
|
|
54
|
|
3.97
|
|
|
5,466
|
|
55
|
|
3.99
|
|
|
5,474
|
|
54
|
|
3.95
|
|
|
Home equity
loans
|
11,234
|
|
141
|
|
4.96
|
|
|
11,415
|
|
137
|
|
4.80
|
|
|
12,128
|
|
134
|
|
4.39
|
|
|
Consumer direct
loans
|
1,806
|
|
36
|
|
7.87
|
|
|
1,789
|
|
35
|
|
7.71
|
|
|
1,782
|
|
32
|
|
7.15
|
|
|
Credit
cards
|
1,112
|
|
33
|
|
11.61
|
|
|
1,095
|
|
32
|
|
11.43
|
|
|
1,061
|
|
30
|
|
11.14
|
|
|
Consumer indirect
loans
|
3,612
|
|
39
|
|
4.28
|
|
|
3,482
|
|
37
|
|
4.25
|
|
|
3,232
|
|
36
|
|
4.42
|
|
|
Total consumer
loans
|
23,260
|
|
303
|
|
5.16
|
|
|
23,247
|
|
296
|
|
5.06
|
|
|
23,677
|
|
286
|
|
4.80
|
|
|
Total
loans
|
89,288
|
|
1,066
|
|
4.74
|
|
|
88,467
|
|
1,032
|
|
4.64
|
|
|
86,006
|
|
938
|
|
4.33
|
|
|
Loans held for
sale
|
2,319
|
|
26
|
|
4.50
|
|
|
1,117
|
|
12
|
|
4.59
|
|
|
1,420
|
|
13
|
|
3.81
|
|
|
Securities available
for sale (b), (e)
|
18,626
|
|
115
|
|
2.38
|
|
|
17,631
|
|
102
|
|
2.22
|
|
|
18,447
|
|
93
|
|
1.97
|
|
|
Held-to-maturity
securities (b)
|
11,683
|
|
71
|
|
2.42
|
|
|
12,065
|
|
72
|
|
2.40
|
|
|
11,121
|
|
61
|
|
2.20
|
|
|
Trading account
assets
|
934
|
|
8
|
|
3.42
|
|
|
787
|
|
7
|
|
3.37
|
|
|
898
|
|
6
|
|
2.72
|
|
|
Short-term
investments
|
2,795
|
|
15
|
|
2.12
|
|
|
2,928
|
|
15
|
|
1.93
|
|
|
3,684
|
|
12
|
|
1.29
|
|
|
Other investments
(e)
|
671
|
|
4
|
|
2.86
|
|
|
685
|
|
6
|
|
3.27
|
|
|
725
|
|
5
|
|
2.80
|
|
|
Total earning
assets
|
126,316
|
|
1,305
|
|
4.09
|
|
|
123,680
|
|
1,246
|
|
3.98
|
|
|
122,301
|
|
1,128
|
|
3.66
|
|
|
Allowance for loan
and lease losses
|
(878)
|
|
|
|
|
(886)
|
|
|
|
|
(871)
|
|
|
|
|
Accrued income and
other assets
|
13,743
|
|
|
|
|
13,935
|
|
|
|
|
13,825
|
|
|
|
|
Discontinued
assets
|
1,120
|
|
|
|
|
1,186
|
|
|
|
|
1,358
|
|
|
|
|
Total
assets
|
$
|
140,301
|
|
|
|
|
$
|
137,915
|
|
|
|
|
$
|
136,613
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
59,292
|
|
110
|
|
.74
|
|
|
$
|
56,391
|
|
82
|
|
.58
|
|
|
$
|
53,601
|
|
40
|
|
.29
|
|
|
Savings
deposits
|
4,915
|
|
1
|
|
.08
|
|
|
5,413
|
|
3
|
|
.20
|
|
|
6,372
|
|
3
|
|
.24
|
|
|
Certificates of
deposit ($100,000 or more)
|
8,217
|
|
42
|
|
2.02
|
|
|
8,186
|
|
38
|
|
1.86
|
|
|
6,776
|
|
26
|
|
1.50
|
|
|
Other time
deposits
|
5,255
|
|
21
|
|
1.59
|
|
|
5,026
|
|
17
|
|
1.40
|
|
|
4,771
|
|
13
|
|
1.05
|
|
|
Total
interest-bearing deposits
|
77,679
|
|
174
|
|
.89
|
|
|
75,016
|
|
140
|
|
.74
|
|
|
71,520
|
|
82
|
|
.45
|
|
|
Federal funds
purchased and securities sold
under repurchase
agreements
|
281
|
|
1
|
|
.12
|
|
|
552
|
|
1
|
|
1.00
|
|
|
360
|
|
—
|
|
.08
|
|
|
Bank notes and other
short-term borrowings
|
618
|
|
4
|
|
3.05
|
|
|
596
|
|
4
|
|
2.76
|
|
|
693
|
|
3
|
|
1.72
|
|
|
Long-term debt
(f), (g)
|
12,963
|
|
118
|
|
3.58
|
|
|
12,678
|
|
108
|
|
3.34
|
|
|
13,140
|
|
91
|
|
2.76
|
|
|
Total
interest-bearing liabilities
|
91,541
|
|
297
|
|
1.28
|
|
|
88,842
|
|
253
|
|
1.13
|
|
|
85,713
|
|
176
|
|
.81
|
|
|
Noninterest-bearing
deposits
|
30,273
|
|
|
|
|
30,610
|
|
|
|
|
32,278
|
|
|
|
|
Accrued expense and
other liabilities
|
1,981
|
|
|
|
|
2,065
|
|
|
|
|
1,994
|
|
|
|
|
Discontinued
liabilities (g)
|
1,120
|
|
|
|
|
1,186
|
|
|
|
|
1,359
|
|
|
|
|
Total
liabilities
|
124,915
|
|
|
|
|
122,703
|
|
|
|
|
121,344
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
15,384
|
|
|
|
|
15,210
|
|
|
|
|
15,268
|
|
|
|
|
Noncontrolling
interests
|
2
|
|
|
|
|
2
|
|
|
|
|
1
|
|
|
|
|
Total
equity
|
15,386
|
|
|
|
|
15,212
|
|
|
|
|
15,269
|
|
|
|
|
Total liabilities
and equity
|
$
|
140,301
|
|
|
|
|
$
|
137,915
|
|
|
|
|
$
|
136,613
|
|
|
|
Interest rate spread
(TE)
|
|
|
2.81
|
%
|
|
|
|
2.85
|
%
|
|
|
|
2.85
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
1,008
|
|
3.16
|
%
|
|
|
993
|
|
3.18
|
%
|
|
|
952
|
|
3.09
|
%
|
TE adjustment
(b)
|
|
8
|
|
|
|
|
7
|
|
|
|
|
14
|
|
|
|
Net interest income,
GAAP basis
|
|
1,000
|
|
|
|
|
986
|
|
|
|
|
938
|
|
|
|
|
(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 December 31, 2018, and
September 30, 2018, and 35% for the three months ended
December 31, 2017.
|
(c)
|
For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d)
|
Commercial and
industrial average balances include $132 million, $128 million, and
$119 million of assets from commercial credit cards for the three
months ended December 31, 2018, September 30, 2018, and
December 31, 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)
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended December 31, 2018
|
|
Twelve months
ended December 31, 2017
|
|
|
Average
|
|
Yield/
|
|
Average
|
|
Yield/
|
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
Assets
|
|
|
|
|
|
|
|
|
Loans: (b),
(c)
|
|
|
|
|
|
|
|
|
Commercial and
industrial (d)
|
$
|
44,418
|
|
$
|
1,926
|
|
4.34
|
%
|
|
$
|
40,848
|
|
$
|
1,613
|
|
3.95
|
%
|
|
Real estate —
commercial mortgage
|
14,267
|
|
698
|
|
4.90
|
|
|
14,878
|
|
687
|
|
4.62
|
|
|
Real estate —
construction
|
1,816
|
|
90
|
|
4.97
|
|
|
2,143
|
|
103
|
|
4.78
|
|
|
Commercial lease
financing
|
4,534
|
|
168
|
|
3.70
|
|
|
4,677
|
|
185
|
|
3.96
|
|
|
Total commercial
loans
|
65,035
|
|
2,882
|
|
4.43
|
|
|
62,546
|
|
2,588
|
|
4.14
|
|
|
Real estate —
residential mortgage
|
5,473
|
|
217
|
|
3.97
|
|
|
5,499
|
|
214
|
|
3.89
|
|
|
Home equity
loans
|
11,530
|
|
547
|
|
4.74
|
|
|
12,380
|
|
536
|
|
4.33
|
|
|
Consumer direct
loans
|
1,782
|
|
137
|
|
7.66
|
|
|
1,765
|
|
126
|
|
7.12
|
|
|
Credit
cards
|
1,092
|
|
125
|
|
11.40
|
|
|
1,055
|
|
118
|
|
11.15
|
|
|
Consumer indirect
loans
|
3,426
|
|
146
|
|
4.27
|
|
|
3,120
|
|
148
|
|
4.75
|
|
|
Total consumer
loans
|
23,303
|
|
1,172
|
|
5.03
|
|
|
23,819
|
|
1,142
|
|
4.79
|
|
|
Total
loans
|
88,338
|
|
4,054
|
|
4.59
|
|
|
86,365
|
|
3,730
|
|
4.32
|
|
|
Loans held for
sale
|
1,501
|
|
66
|
|
4.43
|
|
|
1,325
|
|
52
|
|
3.96
|
|
|
Securities available
for sale (b), (e)
|
17,898
|
|
409
|
|
2.20
|
|
|
18,548
|
|
369
|
|
1.96
|
|
|
Held-to-maturity
securities (b)
|
12,003
|
|
284
|
|
2.37
|
|
|
10,515
|
|
222
|
|
2.11
|
|
|
Trading account
assets
|
893
|
|
29
|
|
3.25
|
|
|
949
|
|
27
|
|
2.81
|
|
|
Short-term
investments
|
2,450
|
|
46
|
|
1.86
|
|
|
2,363
|
|
26
|
|
1.11
|
|
|
Other investments
(e)
|
697
|
|
21
|
|
3.04
|
|
|
712
|
|
17
|
|
2.35
|
|
|
Total earning
assets
|
123,780
|
|
4,909
|
|
3.94
|
|
|
120,777
|
|
4,443
|
|
3.67
|
|
|
Allowance for loan
and lease losses
|
(878)
|
|
|
|
|
(865)
|
|
|
|
|
Accrued income and
other assets
|
13,910
|
|
|
|
|
13,807
|
|
|
|
|
Discontinued
assets
|
1,212
|
|
|
|
|
1,448
|
|
|
|
|
Total
assets
|
$
|
138,024
|
|
|
|
|
$
|
135,167
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
56,001
|
|
297
|
|
.53
|
|
|
$
|
54,032
|
|
143
|
|
.26
|
|
|
Savings
deposits
|
5,704
|
|
14
|
|
.24
|
|
|
6,569
|
|
13
|
|
.20
|
|
|
Certificates of
deposit ($100,000 or more)
|
7,728
|
|
139
|
|
1.80
|
|
|
6,233
|
|
82
|
|
1.31
|
|
|
Other time
deposits
|
5,025
|
|
67
|
|
1.34
|
|
|
4,698
|
|
40
|
|
.85
|
|
|
Total
interest-bearing deposits
|
74,458
|
|
517
|
|
.69
|
|
|
71,532
|
|
278
|
|
.39
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
928
|
|
11
|
|
1.14
|
|
|
517
|
|
1
|
|
.24
|
|
|
Bank notes and other
short-term borrowings
|
915
|
|
21
|
|
2.34
|
|
|
1,140
|
|
15
|
|
1.34
|
|
|
Long-term debt
(f), (g)
|
12,715
|
|
420
|
|
3.27
|
|
|
11,921
|
|
319
|
|
2.69
|
|
|
Total
interest-bearing liabilities
|
89,016
|
|
969
|
|
1.09
|
|
|
85,110
|
|
613
|
|
.72
|
|
|
Noninterest-bearing
deposits
|
30,593
|
|
|
|
|
31,414
|
|
|
|
|
Accrued expense and
other liabilities
|
2,071
|
|
|
|
|
1,970
|
|
|
|
|
Discontinued
liabilities (g)
|
1,212
|
|
|
|
|
1,448
|
|
|
|
|
Total
liabilities
|
122,892
|
|
|
|
|
119,942
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
15,131
|
|
|
|
|
15,224
|
|
|
|
|
Noncontrolling
interests
|
1
|
|
|
|
|
1
|
|
|
|
|
Total
equity
|
15,132
|
|
|
|
|
15,225
|
|
|
|
|
Total liabilities
and equity
|
$
|
138,024
|
|
|
|
|
$
|
135,167
|
|
|
|
Interest rate spread
(TE)
|
|
|
2.85
|
%
|
|
|
|
2.95
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
3,940
|
|
3.17
|
%
|
|
|
3,830
|
|
3.17
|
%
|
TE adjustment
(b)
|
|
31
|
|
|
|
|
53
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
3,909
|
|
|
|
|
$
|
3,777
|
|
|
|
|
(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 twelve months ended December 31, 2018,
and December 31, 2017, respectively.
|
(c)
|
For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d)
|
Commercial and
industrial average balances include $126 million and $117 million
of assets from commercial credit cards for the twelve months ended
December 31, 2018, and December 31, 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
|
|
Twelve months
ended
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
|
12/31/2018
|
12/31/2017
|
Personnel
|
$
|
576
|
|
$
|
553
|
|
$
|
609
|
|
|
$
|
2,309
|
|
$
|
2,278
|
|
Net
occupancy
|
75
|
|
76
|
|
92
|
|
|
308
|
|
331
|
|
Computer
processing
|
55
|
|
52
|
|
54
|
|
|
210
|
|
225
|
|
Business services and
professional fees
|
49
|
|
43
|
|
52
|
|
|
184
|
|
192
|
|
Equipment
|
26
|
|
27
|
|
31
|
|
|
105
|
|
114
|
|
Operating lease
expense
|
32
|
|
31
|
|
28
|
|
|
120
|
|
92
|
|
Marketing
|
25
|
|
26
|
|
35
|
|
|
102
|
|
120
|
|
FDIC
assessment
|
9
|
|
21
|
|
20
|
|
|
72
|
|
82
|
|
Intangible asset
amortization
|
22
|
|
23
|
|
26
|
|
|
99
|
|
95
|
|
OREO expense,
net
|
1
|
|
3
|
|
3
|
|
|
6
|
|
11
|
|
Other
expense
|
142
|
|
109
|
|
148
|
|
|
460
|
|
558
|
|
Total noninterest
expense
|
$
|
1,012
|
|
$
|
964
|
|
$
|
1,098
|
|
|
$
|
3,975
|
|
$
|
4,098
|
|
Average full-time
equivalent employees (b)
|
17,664
|
|
18,150
|
|
18,379
|
|
|
18,180
|
|
18,415
|
|
|
|
(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
|
|
Twelve months
ended
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
|
12/31/2018
|
12/31/2017
|
Salaries and contract
labor
|
$
|
336
|
|
$
|
335
|
|
$
|
346
|
|
|
$
|
1,351
|
|
$
|
1,341
|
|
Incentive and
stock-based compensation
|
139
|
|
138
|
|
168
|
|
|
569
|
|
566
|
|
Employee
benefits
|
77
|
|
79
|
|
91
|
|
|
343
|
|
347
|
|
Severance
|
24
|
|
1
|
|
4
|
|
|
46
|
|
24
|
|
Total personnel
expense
|
$
|
576
|
|
$
|
553
|
|
$
|
609
|
|
|
$
|
2,309
|
|
$
|
2,278
|
|
Merger-Related
Charges
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
|
12/31/2018
|
12/31/2017
|
Personnel
|
—
|
|
—
|
|
$
|
26
|
|
|
—
|
|
$
|
112
|
|
Net
occupancy
|
—
|
|
—
|
|
12
|
|
|
—
|
|
14
|
|
Business services and
professional fees
|
—
|
|
—
|
|
3
|
|
|
—
|
|
16
|
|
Computer
processing
|
—
|
|
—
|
|
1
|
|
|
—
|
|
12
|
|
Marketing
|
—
|
|
—
|
|
5
|
|
|
—
|
|
22
|
|
Other nonpersonnel
expense
|
—
|
|
—
|
|
9
|
|
|
—
|
|
41
|
|
Total merger-related
charges
|
—
|
|
—
|
|
$
|
56
|
|
|
—
|
|
$
|
217
|
|
Loan
Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Percent change
12/31/2018 vs
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
|
9/30/2018
|
12/31/2017
|
Commercial and
industrial (a)
|
$
|
45,753
|
|
$
|
45,023
|
|
$
|
41,859
|
|
|
1.6
|
%
|
9.3
|
%
|
Commercial real
estate:
|
|
|
|
|
|
|
Commercial
mortgage
|
14,285
|
|
14,716
|
|
14,088
|
|
|
(2.9)
|
|
1.4
|
|
Construction
|
1,666
|
|
1,763
|
|
1,960
|
|
|
(5.5)
|
|
(15.0)
|
|
Total commercial real
estate loans
|
15,951
|
|
16,479
|
|
16,048
|
|
|
(3.2)
|
|
(.6)
|
|
Commercial lease
financing (b)
|
4,606
|
|
4,470
|
|
4,826
|
|
|
3.0
|
|
(4.6)
|
|
Total commercial
loans
|
66,310
|
|
65,972
|
|
62,733
|
|
|
.5
|
|
5.7
|
|
Residential — prime
loans:
|
|
|
|
|
|
|
Real estate —
residential mortgage
|
5,513
|
|
5,497
|
|
5,483
|
|
|
.3
|
|
.5
|
|
Home equity
loans
|
11,142
|
|
11,339
|
|
12,028
|
|
|
(1.7)
|
|
(7.4)
|
|
Total residential —
prime loans
|
16,655
|
|
16,836
|
|
17,511
|
|
|
(1.1)
|
|
(4.9)
|
|
Consumer direct
loans
|
1,809
|
|
1,807
|
|
1,794
|
|
|
.1
|
|
.8
|
|
Credit
cards
|
1,144
|
|
1,098
|
|
1,106
|
|
|
4.2
|
|
3.4
|
|
Consumer indirect
loans
|
3,634
|
|
3,555
|
|
3,261
|
|
|
2.2
|
|
11.4
|
|
Total consumer
loans
|
23,242
|
|
23,296
|
|
23,672
|
|
|
(.2)
|
|
(1.8)
|
|
Total loans
(c)
|
$
|
89,552
|
|
$
|
89,268
|
|
$
|
86,405
|
|
|
.3
|
%
|
3.6
|
%
|
|
|
(a)
|
Loan balances include
$132 million, $129 million, and $119 million of commercial credit
card balances at December 31, 2018, September 30, 2018,
and December 31, 2017, respectively.
|
(b)
|
Commercial lease
financing includes receivables held as collateral for a secured
borrowing of $10 million, $12 million, and $24 million at
December 31, 2018, September 30, 2018, and
December 31, 2017, respectively. Principal reductions are
based on the cash payments received from these related
receivables.
|
(c)
|
Total loans exclude
loans of $1.1 billion at December 31, 2018, $1.1 billion at
September 30, 2018, and $1.3 billion at December 31,
2017, related to the discontinued operations of the education
lending business.
|
Loans Held for
Sale Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
12/31/2018 vs
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
|
9/30/2018
|
12/31/2017
|
Commercial and
industrial
|
$
|
279
|
|
$
|
97
|
|
$
|
139
|
|
|
187.6
|
%
|
100.7
|
%
|
Real estate —
commercial mortgage
|
894
|
|
1,433
|
|
897
|
|
|
(37.6)
|
|
(0.3)
|
|
Commercial lease
financing
|
—
|
|
1
|
|
—
|
|
|
N/M
|
|
N/M
|
|
Real estate —
residential mortgage
|
54
|
|
87
|
|
71
|
|
|
(37.9)
|
|
(23.9)
|
|
Total loans held for
sale (a)
|
$
|
1,227
|
|
$
|
1,618
|
|
$
|
1,107
|
|
|
(24.2)
|
%
|
10.8
|
%
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $54 million at December 31, 2018, $87 million
at September 30, 2018, and $71 million at December 31,
2017.
|
N/M = Not
Meaningful
|
Summary of Changes
in Loans Held for Sale
|
(in
millions)
|
|
|
|
|
|
|
|
4Q18
|
3Q18
|
2Q18
|
1Q18
|
4Q17
|
Balance at beginning
of period
|
$
|
1,618
|
|
$
|
1,418
|
|
$
|
1,667
|
|
$
|
1,107
|
|
$
|
1,341
|
|
New
originations
|
5,057
|
|
2,976
|
|
2,665
|
|
3,280
|
|
3,566
|
|
Transfers from (to)
held to maturity, net
|
24
|
|
4
|
|
(4)
|
|
(14)
|
|
(10)
|
|
Loan sales
|
(5,448)
|
|
(2,491)
|
|
(2,909)
|
|
(2,705)
|
|
(3,783)
|
|
Loan draws
(payments), net
|
(24)
|
|
(289)
|
|
(1)
|
|
(1)
|
|
(7)
|
|
Balance at end of
period (a)
|
$
|
1,227
|
|
$
|
1,618
|
|
$
|
1,418
|
|
$
|
1,667
|
|
$
|
1,107
|
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $54 million at December 31, 2018, $87 million
at September 30, 2018, $58 million at June 30, 2018, $47
million at March 31, 2018, and $71 million at
December 31, 2017.
|
Summary of Loan
and Lease Loss Experience From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
12/31/2018
|
9/30/2018
|
12/31/2017
|
|
12/31/2018
|
12/31/2017
|
Average loans
outstanding
|
$
|
89,288
|
|
$
|
88,467
|
|
$
|
86,006
|
|
|
$
|
88,338
|
|
$
|
86,365
|
|
Allowance for loan
and lease losses at beginning of period
|
$
|
887
|
|
$
|
887
|
|
$
|
880
|
|
|
$
|
877
|
|
$
|
858
|
|
Loans charged
off:
|
|
|
|
|
|
|
Commercial and
industrial
|
45
|
|
38
|
|
32
|
|
|
159
|
|
133
|
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
12
|
|
6
|
|
2
|
|
|
21
|
|
11
|
|
Real estate —
construction
|
—
|
|
—
|
|
—
|
|
|
—
|
|
2
|
|
Total commercial real
estate loans
|
12
|
|
6
|
|
2
|
|
|
21
|
|
13
|
|
Commercial lease
financing
|
1
|
|
4
|
|
5
|
|
|
10
|
|
14
|
|
Total commercial
loans
|
58
|
|
48
|
|
39
|
|
|
190
|
|
160
|
|
Real estate —
residential mortgage
|
—
|
|
2
|
|
1
|
|
|
3
|
|
3
|
|
Home equity
loans
|
7
|
|
4
|
|
7
|
|
|
21
|
|
30
|
|
Consumer direct
loans
|
9
|
|
10
|
|
8
|
|
|
36
|
|
34
|
|
Credit
cards
|
10
|
|
10
|
|
10
|
|
|
44
|
|
44
|
|
Consumer indirect
loans
|
8
|
|
7
|
|
7
|
|
|
30
|
|
31
|
|
Total consumer
loans
|
34
|
|
33
|
|
33
|
|
|
134
|
|
142
|
|
Total loans charged
off
|
92
|
|
81
|
|
72
|
|
|
324
|
|
302
|
|
Recoveries:
|
|
|
|
|
|
|
Commercial and
industrial
|
19
|
|
5
|
|
8
|
|
|
37
|
|
40
|
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
1
|
|
1
|
|
1
|
|
|
3
|
|
2
|
|
Real estate —
construction
|
1
|
|
—
|
|
—
|
|
|
2
|
|
1
|
|
Total commercial real
estate loans
|
2
|
|
1
|
|
1
|
|
|
5
|
|
3
|
|
Commercial lease
financing
|
1
|
|
3
|
|
1
|
|
|
5
|
|
6
|
|
Total commercial
loans
|
22
|
|
9
|
|
10
|
|
|
47
|
|
49
|
|
Real estate —
residential mortgage
|
—
|
|
2
|
|
—
|
|
|
2
|
|
4
|
|
Home equity
loans
|
2
|
|
3
|
|
3
|
|
|
11
|
|
15
|
|
Consumer direct
loans
|
2
|
|
1
|
|
2
|
|
|
7
|
|
6
|
|
Credit
cards
|
2
|
|
2
|
|
1
|
|
|
7
|
|
5
|
|
Consumer indirect
loans
|
4
|
|
4
|
|
4
|
|
|
16
|
|
15
|
|
Total consumer
loans
|
10
|
|
12
|
|
10
|
|
|
43
|
|
45
|
|
Total
recoveries
|
32
|
|
21
|
|
20
|
|
|
90
|
|
94
|
|
Net loan
charge-offs
|
(60)
|
|
(60)
|
|
(52)
|
|
|
(234)
|
|
(208)
|
|
Provision (credit)
for loan and lease losses
|
56
|
|
60
|
|
49
|
|
|
240
|
|
227
|
|
Allowance for loan
and lease losses at end of period
|
$
|
883
|
|
$
|
887
|
|
$
|
877
|
|
|
$
|
883
|
|
$
|
877
|
|
|
|
|
|
|
|
|
Liability for credit
losses on lending-related commitments at beginning of
period
|
$
|
60
|
|
$
|
58
|
|
$
|
57
|
|
|
$
|
57
|
|
$
|
55
|
|
Provision (credit)
for losses on lending-related commitments
|
3
|
|
2
|
|
—
|
|
|
6
|
|
2
|
|
Liability for credit
losses on lending-related commitments at end of period
(a)
|
$
|
63
|
|
$
|
60
|
|
$
|
57
|
|
|
$
|
63
|
|
$
|
57
|
|
|
|
|
|
|
|
|
Total allowance for
credit losses at end of period
|
$
|
946
|
|
$
|
947
|
|
$
|
934
|
|
|
$
|
946
|
|
$
|
934
|
|
|
|
|
|
|
|
|
Net loan charge-offs
to average total loans
|
.27
|
%
|
.27
|
%
|
.24
|
%
|
|
.26
|
%
|
.24
|
%
|
Allowance for loan
and lease losses to period-end loans
|
.99
|
|
.99
|
|
1.01
|
|
|
.99
|
|
1.01
|
|
Allowance for credit
losses to period-end loans
|
1.06
|
|
1.06
|
|
1.08
|
|
|
1.06
|
|
1.08
|
|
Allowance for loan
and lease losses to nonperforming loans
|
162.9
|
|
137.5
|
|
174.4
|
|
|
162.9
|
|
174.4
|
|
Allowance for credit
losses to nonperforming loans
|
174.5
|
|
146.8
|
|
185.7
|
|
|
174.5
|
|
185.7
|
|
|
|
|
|
|
|
|
Discontinued
operations — education lending business:
|
|
|
|
|
|
|
Loans charged
off
|
$
|
4
|
|
$
|
4
|
|
$
|
6
|
|
|
$
|
15
|
|
$
|
26
|
|
Recoveries
|
1
|
|
1
|
|
2
|
|
|
5
|
|
8
|
|
Net loan
charge-offs
|
$
|
(3)
|
|
$
|
(3)
|
|
$
|
(4)
|
|
|
$
|
(10)
|
|
$
|
(18)
|
|
|
|
(a)
|
Included in "Accrued
expense and other liabilities" on the balance sheet.
|
Asset Quality
Statistics From Continuing Operations
|
(dollars in
millions)
|
|
4Q18
|
3Q18
|
2Q18
|
1Q18
|
4Q17
|
Net loan
charge-offs
|
$
|
60
|
|
$
|
60
|
|
$
|
60
|
|
$
|
54
|
|
$
|
52
|
|
Net loan charge-offs
to average total loans
|
.27
|
%
|
.27
|
%
|
.27
|
%
|
.25
|
%
|
.24
|
%
|
Allowance for loan
and lease losses
|
$
|
883
|
|
$
|
887
|
|
$
|
887
|
|
$
|
881
|
|
$
|
877
|
|
Allowance for credit
losses (a)
|
946
|
|
947
|
|
945
|
|
941
|
|
934
|
|
Allowance for loan
and lease losses to period-end loans
|
.99
|
%
|
.99
|
%
|
1.01
|
%
|
1.00
|
%
|
1.01
|
%
|
Allowance for credit
losses to period-end loans
|
1.06
|
|
1.06
|
|
1.07
|
|
1.07
|
|
1.08
|
|
Allowance for loan
and lease losses to nonperforming loans (b)
|
162.9
|
|
137.5
|
|
162.8
|
|
162.8
|
|
174.4
|
|
Allowance for credit
losses to nonperforming loans (b)
|
174.5
|
|
146.8
|
|
173.4
|
|
173.9
|
|
185.7
|
|
Nonperforming loans
at period end (b)
|
$
|
542
|
|
$
|
645
|
|
$
|
545
|
|
$
|
541
|
|
$
|
503
|
|
Nonperforming assets
at period end (b)
|
577
|
|
674
|
|
571
|
|
569
|
|
534
|
|
Nonperforming loans
to period-end portfolio loans (b)
|
.61
|
%
|
.72
|
%
|
.62
|
%
|
.61
|
%
|
.58
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming
assets (b)
|
.64
|
|
.75
|
|
.65
|
|
.65
|
|
.62
|
|
|
|
(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 $575 million, $606 million, $629 million, $690
million, and $738 million of purchased credit impaired loans at
December 31, 2018, September 30, 2018, June 30,
2018, March 31, 2018, and December 31, 2017,
respectively.
|
Summary of
Nonperforming Assets and Past Due Loans From Continuing
Operations
|
(dollars in
millions)
|
|
12/31/2018
|
9/30/2018
|
6/30/2018
|
3/31/2018
|
12/31/2017
|
Commercial and
industrial
|
$
|
152
|
|
$
|
227
|
|
$
|
178
|
|
$
|
189
|
|
$
|
153
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
81
|
|
98
|
|
42
|
|
33
|
|
30
|
|
Real estate —
construction
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
Total commercial real
estate loans
|
83
|
|
100
|
|
44
|
|
35
|
|
32
|
|
Commercial lease
financing
|
9
|
|
10
|
|
21
|
|
5
|
|
6
|
|
Total commercial
loans
|
244
|
|
337
|
|
243
|
|
229
|
|
191
|
|
Real estate —
residential mortgage
|
62
|
|
62
|
|
55
|
|
59
|
|
58
|
|
Home equity
loans
|
210
|
|
221
|
|
222
|
|
229
|
|
229
|
|
Consumer direct
loans
|
4
|
|
4
|
|
4
|
|
4
|
|
4
|
|
Credit
cards
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
Consumer indirect
loans
|
20
|
|
19
|
|
19
|
|
18
|
|
19
|
|
Total consumer
loans
|
298
|
|
308
|
|
302
|
|
312
|
|
312
|
|
Total nonperforming
loans (a)
|
542
|
|
645
|
|
545
|
|
541
|
|
503
|
|
OREO
|
35
|
|
28
|
|
26
|
|
28
|
|
31
|
|
Other nonperforming
assets
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
Total nonperforming
assets (a)
|
$
|
577
|
|
$
|
674
|
|
$
|
571
|
|
$
|
569
|
|
$
|
534
|
|
Accruing loans past
due 90 days or more
|
112
|
|
87
|
|
103
|
|
82
|
|
89
|
|
Accruing loans past
due 30 through 89 days
|
312
|
|
368
|
|
429
|
|
305
|
|
359
|
|
Restructured loans —
accruing and nonaccruing (b)
|
399
|
|
366
|
|
347
|
|
317
|
|
317
|
|
Restructured loans
included in nonperforming loans (b)
|
247
|
|
211
|
|
184
|
|
179
|
|
189
|
|
Nonperforming assets
from discontinued operations — education lending
business
|
8
|
|
6
|
|
6
|
|
6
|
|
7
|
|
Nonperforming loans
to period-end portfolio loans (a)
|
.61
|
%
|
.72
|
%
|
.62
|
%
|
.61
|
%
|
.58
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming assets
(a)
|
.64
|
|
.75
|
|
.65
|
|
.65
|
|
.62
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $575 million, $606 million, $629 million, $690
million, and $738 million of purchased credit impaired loans at
December 31, 2018, September 30, 2018, June 30,
2018, March 31, 2018, and December 31, 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)
|
|
4Q18
|
3Q18
|
2Q18
|
1Q18
|
4Q17
|
Balance at beginning
of period
|
$
|
645
|
|
$
|
545
|
|
$
|
541
|
|
$
|
503
|
|
$
|
517
|
|
Loans placed on
nonaccrual status
|
103
|
|
263
|
|
175
|
|
182
|
|
137
|
|
Charge-offs
|
(92)
|
|
(81)
|
|
(78)
|
|
(70)
|
|
(67)
|
|
Loans sold
|
(16)
|
|
—
|
|
(1)
|
|
—
|
|
—
|
|
Payments
|
(53)
|
|
(57)
|
|
(33)
|
|
(29)
|
|
(52)
|
|
Transfers to
OREO
|
(10)
|
|
(5)
|
|
(5)
|
|
(4)
|
|
(8)
|
|
Loans returned to
accrual status
|
(35)
|
|
(20)
|
|
(54)
|
|
(41)
|
|
(24)
|
|
Balance at end of
period (a)
|
$
|
542
|
|
$
|
645
|
|
$
|
545
|
|
$
|
541
|
|
$
|
503
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $575 million, $606 million, $629 million, $690
million, and $738 million of purchased credit impaired loans at
December 31, 2018, September 30, 2018, June 30,
2018, March 31, 2018, and December 31, 2017,
respectively.
|
Line of Business
Results
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change
4Q18
vs.
|
|
4Q18
|
3Q18
|
2Q18
|
1Q18
|
4Q17
|
|
3Q18
|
4Q17
|
Key Community
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
1,022
|
|
$
|
994
|
|
$
|
997
|
|
$
|
959
|
|
$
|
961
|
|
|
2.8
|
%
|
6.3
|
%
|
Provision for credit
losses
|
48
|
|
43
|
|
38
|
|
48
|
|
57
|
|
|
11.6
|
|
(15.8)
|
|
Noninterest
expense
|
633
|
|
635
|
|
640
|
|
653
|
|
665
|
|
|
(.3)
|
|
(4.8)
|
|
Net income (loss)
attributable to Key
|
261
|
|
241
|
|
243
|
|
197
|
|
152
|
|
|
8.3
|
|
71.7
|
|
Average loans and
leases
|
47,976
|
|
47,862
|
|
47,985
|
|
47,683
|
|
47,408
|
|
|
.2
|
|
1.2
|
|
Average
deposits
|
84,288
|
|
82,259
|
|
80,930
|
|
79,945
|
|
80,352
|
|
|
2.5
|
|
4.9
|
|
Net loan
charge-offs
|
42
|
|
43
|
|
34
|
|
42
|
|
35
|
|
|
(2.3)
|
|
20.0
|
|
Net loan charge-offs
to average total loans
|
.35
|
%
|
.36
|
%
|
.28
|
%
|
.36
|
%
|
.29
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
408
|
|
$
|
467
|
|
$
|
468
|
|
$
|
425
|
|
$
|
405
|
|
|
(12.6)
|
|
.7
|
|
Return on average
allocated equity
|
21.55
|
%
|
19.80
|
%
|
20.05
|
%
|
16.51
|
%
|
12.46
|
%
|
|
N/A
|
|
N/A
|
|
Average full-time
equivalent employees
|
10,195
|
|
10,529
|
|
10,619
|
|
10,666
|
|
10,629
|
|
|
(3.2)
|
|
(4.1)
|
|
|
|
|
|
|
|
|
|
|
Key Corporate
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
581
|
|
$
|
574
|
|
$
|
542
|
|
$
|
558
|
|
$
|
605
|
|
|
1.2
|
%
|
(4.0)
|
%
|
Provision for credit
losses
|
12
|
|
20
|
|
28
|
|
14
|
|
(6)
|
|
|
(40.0)
|
|
N/M
|
|
Noninterest
expense
|
329
|
|
316
|
|
325
|
|
312
|
|
352
|
|
|
4.1
|
|
(6.5)
|
|
Net income (loss)
attributable to Key
|
215
|
|
199
|
|
167
|
|
208
|
|
223
|
|
|
8.0
|
|
(3.6)
|
|
Average loans and
leases
|
40,438
|
|
39,714
|
|
39,709
|
|
38,257
|
|
37,457
|
|
|
1.8
|
|
8.0
|
|
Average loans held
for sale
|
2,249
|
|
1,042
|
|
1,299
|
|
1,118
|
|
1,345
|
|
|
115.8
|
|
67.2
|
|
Average
deposits
|
21,793
|
|
21,056
|
|
21,057
|
|
20,815
|
|
21,558
|
|
|
3.5
|
|
1.1
|
|
Net loan
charge-offs
|
16
|
|
19
|
|
26
|
|
11
|
|
16
|
|
|
(15.8)
|
|
—
|
|
Net loan charge-offs
to average total loans
|
.16
|
%
|
.19
|
%
|
.26
|
%
|
.12
|
%
|
.17
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
161
|
|
$
|
196
|
|
$
|
91
|
|
$
|
127
|
|
$
|
109
|
|
|
(17.9)
|
|
47.7
|
|
Return on average
allocated equity
|
28.91
|
%
|
26.91
|
%
|
22.80
|
%
|
29.49
|
%
|
31.51
|
%
|
|
N/A
|
|
N/A
|
|
Average full-time
equivalent employees
|
2,486
|
|
2,546
|
|
2,537
|
|
2,543
|
|
2,418
|
|
|
(2.4)
|
|
2.8
|
|
|
TE = Taxable
Equivalent, N/A = Not Applicable, N/M = Not Meaningful
|
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SOURCE KeyCorp