CLEVELAND, April 20, 2017
/PRNewswire/ -- KeyCorp (NYSE: KEY) today announced first
quarter net income from continuing operations attributable to Key
common shareholders of $296 million,
or $.27 per common share, compared to
$213 million or $.20 per common share, for the fourth quarter of
2016, and $182 million, or
$.22 per common share, for the first
quarter of 2016. During the first quarter of 2017, Key incurred
merger-related charges totaling $81
million, or $.05 per common
share, compared to $198 million, or
$.11 per common share, in the fourth
quarter of 2016, and $24 million, or
$.02 per common share, in the first
quarter of 2016. Excluding merger-related charges, earnings per
common share were $.32 for the first
quarter of 2017, $.31 for the fourth
quarter of 2016, and $.24 for the
first quarter of 2016.
"Key's strong first quarter results reflect continued business
momentum and our success in realizing value from our First Niagara
acquisition," said Chairman and Chief Executive Officer
Beth Mooney. "We generated positive
operating leverage compared to both the prior year and previous
quarter. Revenue relative to the year-ago period benefited from
higher net interest income, positive momentum in our fee-based
businesses and the addition of over one million newly acquired
consumer and business clients. We have been successfully growing
and expanding client relationships in both our Community Bank and
Corporate Bank, and we remain on a path to deliver revenue
synergies from our acquisition."
"Expenses reflect our continued focus on managing costs
throughout the Key franchise, as well as realizing the targeted
savings from First Niagara," Mooney continued. "We remain on track
to achieve our initial $400 million
cost savings target by the end of the second quarter and expect to
reach $450 million by early 2018. In
the first quarter, our cash efficiency ratio, excluding
merger-related charges, improved to 60.4%."
"Our capital position remains strong, and this quarter, we
generated a return on average tangible common equity of 12.9%,
excluding merger-related charges," Mooney added.
Selected Financial
Highlights
|
|
|
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|
|
|
|
|
|
|
|
|
|
dollars in
millions, except per share data
|
|
|
|
|
Change 1Q17
vs.
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
296
|
|
$
|
213
|
|
$
|
182
|
|
|
39.0%
|
|
62.6%
|
|
Income (loss)
from continuing operations attributable to Key common shareholders
per common share — assuming
dilution
|
.27
|
|
.20
|
|
.22
|
|
|
35.0
|
|
22.7
|
|
Return on average
total assets from continuing operations
|
.99%
|
|
.69%
|
|
.80%
|
|
|
N/A
|
|
N/A
|
|
Common Equity
Tier 1 ratio (non-GAAP) (a), (b)
|
9.87
|
|
9.54
|
|
11.07
|
|
|
N/A
|
|
N/A
|
|
Book value at period
end
|
$
|
12.71
|
|
$
|
12.58
|
|
$
|
12.79
|
|
|
1.0%
|
%
|
(.6)%
|
|
Net interest margin
(TE) from continuing operations
|
3.13%
|
|
3.12%
|
|
2.89%
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
(a)
|
The table entitled
"GAAP to Non-GAAP Reconciliations" in the attached financial
supplement presents the computations of certain financial measures
related to "Common Equity Tier 1." The table reconciles the
GAAP performance measures to the corresponding non-GAAP measures,
which provides a basis for period-to-period comparisons. For
further information on the Regulatory Capital Rules, see the
"Capital" section of this release.
|
|
|
(b)
|
3/31/2017 ratio
is estimated.
|
|
|
|
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/A = Not Applicable
|
|
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|
INCOME STATEMENT
HIGHLIGHTS
|
|
|
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|
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Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Net interest income
(TE)
|
$
|
929
|
|
$
|
948
|
|
$
|
612
|
|
|
(2.0)%
|
|
51.8%
|
|
Noninterest
income
|
577
|
|
618
|
|
431
|
|
|
(6.6)%
|
|
33.9%
|
|
Total
revenue
|
$
|
1,506
|
|
$
|
1,566
|
|
$
|
1,043
|
|
|
(3.8)%
|
|
44.4%
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent
|
First quarter 2017 net interest income included $53 million of purchase accounting accretion
related to the acquisition of First Niagara. This compares to
$92 million of purchase accounting
accretion in the fourth quarter of 2016, which included
$34 million related to the refinement
of third quarter 2016 purchase accounting estimates.
Taxable-equivalent net interest income was $929 million for the first quarter of 2017, and
the net interest margin was 3.13%, compared to taxable-equivalent
net interest income of $612 million
and a net interest margin of 2.89% for the first quarter of 2016,
reflecting the benefit from the First Niagara acquisition,
including purchase accounting accretion, as well as higher earning
asset yields and balances.
Compared to the fourth quarter of 2016, taxable-equivalent net
interest income decreased by $19
million, and the net interest margin increased by one basis
point. The decline in net interest income reflects a decline in
purchase accounting accretion and two fewer days in the quarter,
partly offset by higher earning asset yields. The net
interest margin benefited from higher earning asset yields and
lower levels of liquidity, offset by a decline in purchase
accounting accretion.
Excluding purchase accounting accretion, taxable-equivalent net
interest income increased $20 million
from the fourth quarter of 2016 and $264
million from the first quarter of 2016.
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Trust and investment
services income
|
$
|
135
|
|
$
|
123
|
|
$
|
109
|
|
|
9.8%
|
|
23.9%
|
|
Investment banking
and debt placement fees
|
127
|
|
157
|
|
71
|
|
|
(19.1)
|
|
78.9
|
|
Service charges on
deposit accounts
|
87
|
|
84
|
|
65
|
|
|
3.6
|
|
33.8
|
|
Operating lease
income and other leasing gains
|
23
|
|
21
|
|
17
|
|
|
9.5
|
|
35.3
|
|
Corporate services
income
|
54
|
|
61
|
|
50
|
|
|
(11.5)
|
|
8.0
|
|
Cards and payments
income
|
65
|
|
69
|
|
46
|
|
|
(5.8)
|
|
41.3
|
|
Corporate-owned life
insurance income
|
30
|
|
40
|
|
28
|
|
|
(25.0)
|
|
7.1
|
|
Consumer mortgage
income
|
6
|
|
6
|
|
2
|
|
|
—
|
|
200.0
|
|
Mortgage servicing
fees
|
18
|
|
20
|
|
12
|
|
|
(10.0)
|
|
50.0
|
|
Net gains (losses)
from principal investing
|
1
|
|
4
|
|
—
|
|
|
(75.0)
|
|
N/M
|
|
Other
income
|
31
|
|
33
|
|
31
|
|
|
(6.1)
|
|
—
|
|
Total noninterest
income
|
$
|
577
|
|
$
|
618
|
|
$
|
431
|
|
|
(6.6)%
|
|
33.9%
|
|
Merger-related
charges
|
—
|
|
9
|
|
—
|
|
|
N/M
|
|
N/M
|
|
Total noninterest
income excluding merger-related charges
|
$
|
577
|
|
$
|
609
|
|
$
|
431
|
|
|
(5.3)%
|
|
33.9%
|
|
|
|
|
|
|
|
|
N/M = Not
Meaningful
|
Key's noninterest income was $577
million for the first quarter of 2017, compared to
$431 million for the year-ago
quarter. The most notable increase was in investment banking and
debt placement fees, which increased $56
million, related to improved capital markets conditions and
activity from the year-ago period. Trust and investment services
income, cards and payments income, and service charges on deposit
accounts also contributed to the growth, largely related to the
First Niagara acquisition.
Compared to the fourth quarter of 2016, noninterest income
decreased by $41 million. The
decrease was primarily attributable to lower investment banking and
debt placement fees, as well as a decline in corporate-owned life
insurance income, which is seasonally lower in the first quarter.
Corporate services income also decreased $7
million related to lower loan and derivative trading income.
An increase of $12 million in trust
and investment services income related to higher insurance revenue
and fixed income trading volume slightly offset these declines.
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Personnel
expense
|
$
|
556
|
|
$
|
648
|
|
$
|
404
|
|
|
(14.2)%
|
|
37.6%
|
|
Nonpersonnel
expense
|
457
|
|
572
|
|
299
|
|
|
(20.1)
|
|
52.8
|
|
Total noninterest
expense
|
$
|
1,013
|
|
$
|
1,220
|
|
$
|
703
|
|
|
(17.0)
|
|
44.1
|
|
|
|
|
|
|
|
|
Merger-related
charges
|
81
|
|
207
|
|
24
|
|
|
(60.9)
|
|
237.5
|
|
Total noninterest expense
excluding merger-related charges
|
$
|
932
|
|
$
|
1,013
|
|
$
|
679
|
|
|
(8.0)%
|
|
37.3%
|
|
|
|
|
|
|
|
|
N/M = Not
Meaningful
|
Key's noninterest expense was $1.0
billion for the first quarter of 2017, which included
$81 million of merger-related
charges. The merger-related charges were primarily made up of
$51 million of nonpersonnel expense,
largely recognized in marketing, net occupancy, business services
and professional fees, and other expense reflecting a $20 million philanthropic contribution related to
First Niagara. The remaining $30
million was personnel expense, related to ongoing
integration activities. In the fourth quarter of 2016, noninterest
expense included $207 million of
merger-related charges, while $24
million of merger-related charges were incurred in the first
quarter of 2016.
Excluding merger-related charges, noninterest expense was
$253 million higher than the first
quarter of last year. The increase from the prior year, reflected
in both personnel and nonpersonnel expense, was primarily driven by
the acquisition of First Niagara. Higher incentive compensation
related to stronger capital markets performance also contributed to
the year-over-year increase.
Compared to the fourth quarter of 2016, noninterest expense,
excluding merger-related charges, decreased by $81 million. The decrease primarily reflects cost
savings related to the First Niagara acquisition, reflected in both
personnel and nonpersonnel expense. Lower incentive and stock-based
compensation and the absence of a pension settlement charge also
contributed to the decline. These decreases were partially offset
by seasonally higher employee benefits expenses.
BALANCE SHEET HIGHLIGHTS
Average
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Commercial and
industrial (a)
|
$
|
40,002
|
|
$
|
39,495
|
|
$
|
31,590
|
|
|
1.3%
|
|
26.6%
|
|
Other commercial
loans
|
22,175
|
|
21,617
|
|
13,111
|
|
|
2.6
|
|
69.1
|
|
Home equity
loans
|
12,611
|
|
12,812
|
|
10,240
|
|
|
(1.6)
|
|
23.2
|
|
Other consumer
loans
|
11,345
|
|
11,436
|
|
5,215
|
|
|
(.8)
|
|
117.5
|
|
Total
loans
|
$
|
86,133
|
|
$
|
85,360
|
|
$
|
60,156
|
|
|
.9%
|
|
43.2%
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Commercial and
industrial average loan balances include $114 million, $119
million, and $85 million of assets from commercial credit cards at
March 31, 2017, December 31, 2016, and March 31,
2016, respectively.
|
Average loans were $86.1 billion
for the first quarter of 2017, an increase of $26 billion compared to the first quarter of
2016, primarily reflecting the impact of the First Niagara
acquisition and growth in commercial and industrial loans.
Compared to the fourth quarter of 2016, average loans increased
by $773 million, driven by a
$507 million increase in commercial
and industrial loans, and a $416
million increase in commercial mortgage loans. The growth
reflects overall business activity and lower payoffs in Key's
Commercial Real Estate line of business. Consumer loans decreased
$292 million, mostly related to
continued decline in the home equity loan portfolio, largely the
result of paydowns on home equity lines of credit.
Average
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Non-time
deposits
|
$
|
91,745
|
|
$
|
94,414
|
|
$
|
65,637
|
|
|
(2.8)%
|
|
39.8%
|
|
Certificates of
deposit ($100,000 or more)
|
5,627
|
|
5,428
|
|
2,761
|
|
|
3.7
|
|
103.8
|
|
Other time
deposits
|
4,706
|
|
4,849
|
|
3,200
|
|
|
(2.9)
|
|
47.1
|
|
|
Total
deposits
|
$
|
102,078
|
|
$
|
104,691
|
|
$
|
71,598
|
|
|
(2.5)%
|
|
42.6%
|
|
|
|
|
|
|
|
|
|
Cost of total
deposits
|
.23%
|
|
.22%
|
|
.17%
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
N/A = Not
Applicable
|
Average deposits totaled $102.1
billion for the first quarter of 2017, an increase of
$30.5 billion compared to the
year-ago quarter, primarily reflecting the acquisition of First
Niagara and core deposit growth in Key's retail banking
franchise.
Compared to the fourth quarter of 2016, average deposits
decreased by $2.6 billion, largely
driven by a decline in escrow deposits and a targeted reduction in
certain short-term commercial deposits. On a period-end basis,
total deposits decreased $105 million
compared to the linked-quarter, as core deposit growth in Key's
retail banking franchise largely offset the decline in escrow
deposits.
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Net loan
charge-offs
|
$
|
58
|
|
$
|
72
|
|
$
|
46
|
|
|
(19.4)%
|
|
26.1%
|
|
Net loan charge-offs
to average total loans
|
.27%
|
|
.34%
|
|
.31%
|
|
|
N/A
|
|
N/A
|
|
Nonperforming loans
at period end (a)
|
$
|
573
|
|
$
|
625
|
|
$
|
676
|
|
|
(8.3)
|
|
(15.2)
|
|
Nonperforming assets
at period end (a)
|
623
|
|
676
|
|
692
|
|
|
(7.8)
|
|
(10.0)
|
|
Allowance for loan
and lease losses
|
870
|
|
858
|
|
826
|
|
|
1.4
|
|
5.3
|
|
Allowance for loan
and lease losses to nonperforming loans (a)
|
151.8%
|
|
137.3%
|
|
122.2%
|
|
|
N/A
|
|
N/A
|
|
Provision for credit
losses
|
$
|
63
|
|
$
|
66
|
|
$
|
89
|
|
|
(4.5)%
|
|
(29.2)%
|
|
|
|
|
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $812 million, $865 million, and $11 million of
purchased credit impaired loans at March 31, 2017,
December 31, 2016, and March 31, 2016,
respectively.
|
|
|
N/A = Not
Applicable
|
Key's provision for credit losses was $63
million for the first quarter of 2017, compared to
$89 million for the first quarter of
2016 and $66 million for the fourth
quarter of 2016. Key's allowance for loan and lease losses was
$870 million, or 1.01% of total
period-end loans, at March 31, 2017, compared to 1.37% at
March 31, 2016, and 1.00% at December 31, 2016.
Net loan charge-offs for the first quarter of 2017 totaled
$58 million, or .27% of average total
loans. These results compare to $46
million, or .31%, for the first quarter of 2016, and
$72 million, or .34%, for the fourth
quarter of 2016.
At March 31, 2017, Key's nonperforming loans totaled
$573 million, which represented .67%
of period-end portfolio loans. These results compare to 1.12% at
March 31, 2016, and .73% at December 31, 2016.
Nonperforming assets at March 31, 2017, totaled $623 million, and represented .72% of period-end
portfolio loans and OREO and other nonperforming assets. These
results compare to 1.14% at March 31, 2016, and .79% at
December 31, 2016.
CAPITAL
Key's estimated risk-based capital ratios included in the
following table continued to exceed all "well-capitalized"
regulatory benchmarks at March 31, 2017.
Capital
Ratios
|
|
|
|
|
|
|
|
|
3/31/2017
|
12/31/2016
|
3/31/2016
|
Common Equity Tier 1
(a), (b)
|
9.87%
|
|
9.54%
|
|
11.07%
|
|
Tier 1 risk-based
capital (a)
|
10.70
|
|
10.89
|
|
11.38
|
|
Total risk based
capital (a)
|
12.64
|
|
12.85
|
|
13.12
|
|
Tangible common
equity to tangible assets (b)
|
8.51
|
|
8.09
|
|
9.97
|
|
Leverage
(a)
|
9.81
|
|
9.90
|
|
10.73
|
|
|
|
|
|
(a)
|
3/31/2017 ratio is
estimated.
|
|
|
(b)
|
The table entitled
"GAAP to Non-GAAP Reconciliations" in the attached financial
supplement presents the computations of certain financial measures
related to "tangible common equity" and "Common Equity Tier 1." The
table reconciles the GAAP performance measures to the corresponding
non-GAAP measures, which provides a basis for period-to-period
comparisons. See below for further information on the Regulatory
Capital Rules.
|
Key's capital position remained strong throughout the first
quarter. As shown in the preceding table, at March 31, 2017,
Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital
ratios stood at 9.87% and 10.70%, respectively. In addition, the
tangible common equity ratio was 8.51% at March 31, 2017.
As a "standardized approach" banking organization, Key's
mandatory compliance with the final Basel III capital framework for
U.S. banking organizations (the "Regulatory Capital Rules") began
on January 1, 2015, subject to
transitional provisions extending to January
1, 2019. Key's estimated Common Equity Tier 1 ratio as
calculated under the fully phased-in Regulatory Capital Rules was
9.80% at March 31, 2017. This estimate exceeds the fully
phased-in required minimum Common Equity Tier 1 and Capital
Conservation Buffer of 7.00%.
Summary of Changes
in Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
in
thousands
|
|
|
|
|
Change 1Q17
vs.
|
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Shares outstanding at
beginning of period
|
1,079,314
|
|
1,082,055
|
|
835,751
|
|
|
(.3)%
|
|
29.1%
|
|
Open market
repurchases and return of shares under employee compensation
plans
|
(8,673)
|
|
(4,380)
|
|
—
|
|
|
98.0
|
|
N/M
|
|
Shares issued under
employee compensation plans (net of cancellations)
|
6,270
|
|
1,642
|
|
6,539
|
|
|
281.9
|
|
(4.1)
|
|
Common shares exchanged
for Series A Preferred Stock
|
20,568
|
|
—
|
|
—
|
|
|
N/M
|
|
N/M
|
|
Common shares issued to
acquire First Niagara
|
—
|
|
(3)
|
|
—
|
|
|
N/M
|
|
N/M
|
|
|
Shares outstanding at
end of period
|
1,097,479
|
|
1,079,314
|
|
842,290
|
|
|
1.7%
|
|
30.3%
|
|
|
|
|
|
|
|
|
|
N/M = Not
Meaningful
|
On March 20, 2017, Key converted
all outstanding shares of its outstanding 7.75% Non-Cumulative
Perpetual Convertible Preferred Stock, Series A (NYSE: KEY.G)
shares into common shares, adding approximately 21 million common
shares outstanding.
Consistent with Key's 2016 Capital Plan, during the first
quarter of 2017, Key declared a dividend of $.085 per common share and completed $160 million of common share repurchases,
including $107 million of common
share repurchases in the open market and $53
million of share repurchases related to employee equity
compensation programs.
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 1Q17
vs.
|
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Revenue from
continuing operations (TE)
|
|
|
|
|
|
|
Key Community
Bank
|
$
|
908
|
|
$
|
902
|
|
$
|
595
|
|
|
.7%
|
|
52.6%
|
|
Key Corporate
Bank
|
579
|
|
630
|
|
425
|
|
|
(8.1)
|
|
36.2
|
|
Other
Segments
|
28
|
|
38
|
|
21
|
|
|
(26.3)
|
|
33.3
|
|
|
Total
segments
|
1,515
|
|
1,570
|
|
1,041
|
|
|
(3.5)
|
|
45.5
|
|
Reconciling
Items
|
(9)
|
|
(4)
|
|
2
|
|
|
N/M
|
|
N/M
|
|
|
Total
|
$
|
1,506
|
|
$
|
1,566
|
|
$
|
1,043
|
|
|
(3.8)%
|
|
44.4%
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key
|
|
|
|
|
|
|
Key Community
Bank
|
$
|
147
|
|
$
|
108
|
|
$
|
74
|
|
|
36.1%
|
|
98.6%
|
|
Key Corporate
Bank
|
181
|
|
222
|
|
118
|
|
|
(18.5)
|
|
53.4
|
|
Other
Segments
|
21
|
|
34
|
|
15
|
|
|
(38.2)
|
|
40.0
|
|
|
Total
segments
|
349
|
|
364
|
|
207
|
|
|
(4.1)
|
|
68.6
|
|
Reconciling Items
(a)
|
(25)
|
|
(131)
|
|
(20)
|
|
|
N/M
|
|
N/M
|
|
|
Total
|
$
|
324
|
|
$
|
233
|
|
$
|
187
|
|
|
39.1%
|
|
73.3%
|
|
|
|
|
|
|
|
|
|
(a)
|
Reconciling items
consists primarily of the unallocated portion of merger-related
charges and items not allocated to the business segments because
they do not reflect their normal operations.
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Key Community
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
631
|
$
|
629
|
$
|
399
|
|
.3%
|
|
58.1%
|
|
Noninterest
income
|
277
|
273
|
196
|
|
1.5
|
|
41.3
|
|
|
Total revenue
(TE)
|
908
|
902
|
595
|
|
.7
|
|
52.6
|
|
Provision for credit
losses
|
47
|
48
|
42
|
|
(2.1)
|
|
11.9
|
|
Noninterest
expense
|
627
|
682
|
436
|
|
(8.1)
|
|
43.8
|
|
|
Income (loss) before
income taxes (TE)
|
234
|
172
|
117
|
|
36.0
|
|
100.0
|
|
Allocated income
taxes (benefit) and TE adjustments
|
87
|
64
|
43
|
|
35.9
|
|
102.3
|
|
|
Net income (loss)
attributable to Key
|
$
|
147
|
$
|
108
|
$
|
74
|
|
36.1%
|
|
98.6%
|
|
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
47,036
|
$
|
47,031
|
$
|
30,789
|
|
—
|
|
52.8%
|
|
Total
assets
|
50,962
|
50,939
|
32,856
|
|
—
|
|
55.1
|
|
Deposits
|
79,393
|
79,358
|
52,803
|
|
—
|
|
50.4
|
|
|
|
|
|
|
|
|
|
Assets under
management at period end
|
$
|
37,417
|
$
|
36,592
|
$
|
34,107
|
|
2.3%
|
%
|
9.7%
|
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent
|
Additional Key
Community Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
98
|
|
$
|
88
|
|
$
|
73
|
|
|
11.4%
|
|
34.2%
|
|
Service charges on
deposit accounts
|
75
|
|
71
|
|
54
|
|
|
5.6
|
|
38.9
|
|
Cards and payments
income
|
55
|
|
59
|
|
43
|
|
|
(6.8)
|
|
27.9
|
|
Other noninterest
income
|
49
|
|
55
|
|
26
|
|
|
(10.9)
|
|
88.5
|
|
|
Total noninterest
income
|
$
|
277
|
|
$
|
273
|
|
$
|
196
|
|
|
1.5%
|
|
41.3%
|
|
|
|
|
|
|
|
|
|
Average deposit
balances
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
45,027
|
|
$
|
44,368
|
|
$
|
29,432
|
|
|
1.5%
|
|
53.0%
|
|
Savings
deposits
|
5,268
|
|
5,326
|
|
2,340
|
|
|
(1.1)
|
|
125.1
|
|
Certificates of
deposit ($100,000 or more)
|
3,878
|
|
3,659
|
|
2,120
|
|
|
6.0
|
|
82.9
|
|
Other time
deposits
|
4,692
|
|
4,836
|
|
3,197
|
|
|
(3.0)
|
|
46.8
|
|
Noninterest-bearing
deposits
|
20,528
|
|
21,169
|
|
15,714
|
|
|
(3.0)%
|
|
30.6
|
|
|
Total
deposits
|
$
|
79,393
|
|
$
|
79,358
|
|
$
|
52,803
|
|
|
—
|
|
50.4%
|
|
|
|
|
|
|
|
|
|
Home equity
loans
|
|
|
|
|
|
|
Average
balance
|
$
|
12,456
|
|
$
|
12,560
|
|
$
|
10,037
|
|
|
|
|
Combined
weighted-average loan-to-value ratio (at date of
origination)
|
70%
|
|
71%
|
|
71%
|
|
|
|
|
Percent first lien
positions
|
60
|
|
57
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
|
|
Branches
|
1,216
|
|
1,217
|
|
961
|
|
|
|
|
Automated teller
machines
|
1,594
|
|
1,593
|
|
1,249
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Community Bank Summary of Operations (1Q17 vs.
1Q16)
- Positive operating leverage compared to prior year
- Net income increased $73 million,
or 98.6%, from prior year
- Average commercial and industrial loans increased $5.1 billion, or 39.3%, from the prior year
- Average deposits increased $26.6
billion, or 50.4%, from the prior year
Key Community Bank recorded net income attributable to Key of
$147 million for the first quarter of
2017, compared to $74 million for the
year-ago quarter, benefiting from momentum in Key's core
businesses, as well as the impact of the First Niagara
acquisition.
Taxable-equivalent net interest income increased by $232 million, or 58.1%, from the first quarter of
2016. The increase was primarily attributable to the acquisition of
First Niagara, as well as the benefit from the Federal Reserve rate
increase. Average loans and leases increased $16.2 billion, or 52.8%, largely driven by a
$5.1 billion, or 39.3%, increase in
commercial and industrial loans. Additionally, average deposits
increased $26.6 billion, or 50.4%
from one year ago.
Noninterest income was up $81
million, or 41.3%, from the year-ago quarter, driven by the
acquisition of First Niagara, including the addition of Key
Insurance and Benefits Services. Strength in derivatives and higher
assets under management balances from market growth also
contributed to the increase.
The provision for credit losses increased by $5 million, or 11.9%, and net loan charge-offs
increased $20 million, from the first
quarter of 2016, primarily related to the acquisition of First
Niagara.
Noninterest expense increased by $191
million, or 43.8%, from the year-ago quarter, largely driven
by the acquisition of First Niagara, as well as core business
activity and investments. Personnel expense increased $75 million, while non-personnel expense
increased by $116 million, including
higher intangible amortization expense and higher FDIC assessment
expense.
Key Corporate
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
304
|
|
$
|
333
|
|
$
|
218
|
|
|
(8.7)%
|
|
39.4%
|
|
Noninterest
income
|
275
|
|
297
|
|
207
|
|
|
(7.4)
|
|
32.9
|
|
|
Total revenue
(TE)
|
579
|
|
630
|
|
425
|
|
|
(8.1)
|
|
36.2
|
|
Provision for credit
losses
|
17
|
|
20
|
|
43
|
|
|
(15.0)
|
|
(60.5)
|
|
Noninterest
expense
|
303
|
|
326
|
|
237
|
|
|
(7.1)
|
|
27.8
|
|
|
Income (loss) before
income taxes (TE)
|
259
|
|
284
|
|
145
|
|
|
(8.8)
|
|
78.6
|
|
Allocated income
taxes and TE adjustments
|
78
|
|
63
|
|
27
|
|
|
23.8
|
|
188.9
|
|
|
Net income
(loss)
|
181
|
|
221
|
|
118
|
|
|
(18.1)
|
|
53.4
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
—
|
|
(1)
|
|
—
|
|
|
N/M
|
|
N/M
|
|
|
Net income (loss)
attributable to Key
|
$
|
181
|
|
$
|
222
|
|
$
|
118
|
|
|
(18.5)%
|
|
53.4%
|
|
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
37,737
|
|
$
|
36,770
|
|
$
|
27,722
|
|
|
2.6%
|
|
36.1%
|
|
Loans held for
sale
|
1,097
|
|
1,223
|
|
811
|
|
|
(10.3)
|
|
35.3
|
|
Total
assets
|
44,167
|
|
43,210
|
|
33,413
|
|
|
2.2
|
|
32.2
|
|
Deposits
|
21,003
|
|
23,172
|
|
18,074
|
|
|
(9.4)%
|
|
16.2%
|
|
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Additional Key
Corporate Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 1Q17
vs.
|
|
|
1Q17
|
4Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
37
|
|
$
|
35
|
|
$
|
36
|
|
|
5.7%
|
|
2.8%
|
|
Investment banking
and debt placement fees
|
124
|
|
154
|
|
70
|
|
|
(19.5)
|
|
77.1
|
|
Operating lease
income and other leasing gains
|
21
|
|
18
|
|
13
|
|
|
16.7
|
|
61.5
|
|
|
|
|
|
|
|
|
|
Corporate services
income
|
38
|
|
43
|
|
38
|
|
|
(11.6)
|
|
—
|
|
Service charges on
deposit accounts
|
12
|
|
12
|
|
11
|
|
|
—
|
|
9.1
|
|
Cards and payments
income
|
10
|
|
9
|
|
3
|
|
|
11.1
|
|
233.3
|
|
|
Payments and services
income
|
60
|
|
64
|
|
52
|
|
|
(6.3)
|
|
15.4
|
|
|
|
|
|
|
|
|
|
Mortgage servicing
fees
|
16
|
|
18
|
|
12
|
|
|
(11.1)
|
|
33.3
|
|
Other noninterest
income
|
17
|
|
8
|
|
24
|
|
|
112.5
|
|
(29.2)
|
|
|
Total noninterest
income
|
$
|
275
|
|
$
|
297
|
|
$
|
207
|
|
|
(7.4)%
|
|
32.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Corporate Bank Summary of Operations (1Q17 vs.
1Q16)
- Average loan and lease balances up $10
billion, or 36.1%, from the prior year
- Revenue up $154 million, or
36.2%, from the prior year
- Noninterest income up $68
million, or 32.9%, from the prior year
Key Corporate Bank recorded net income attributable to Key of
$181 million for the first quarter of
2017, compared to $118 million for
the same period one year ago.
Taxable-equivalent net interest income increased by $86 million, or 39.4%, compared to the first
quarter of 2016. Average loan and lease balances increased
$10 billion, or 36.1%, from the
year-ago quarter, primarily driven by the First Niagara acquisition
as well as growth in commercial and industrial loans. Average
deposit balances increased $2.9
billion, or 16.2%, from the year-ago quarter, mostly driven
by the First Niagara acquisition.
Noninterest income was up $68
million, or 32.9%, from the prior year. This growth was
mostly due to $54 million of higher
investment banking and debt placement fees related to improved
capital markets conditions and activity from the year-ago period,
as well as an increase of $8 million
in operating lease income and other leasing gains related to higher
originations. Additional increases of $7
million in cards and payments income and $4 million in mortgage servicing fees were
partially offset by a $7 million
decrease in other noninterest income.
The provision for credit losses decreased $26 million, or 60.5%, compared to the first
quarter of 2016 due to $4 million of
lower net loan charge-offs and improvement in the oil and gas
portfolio.
Noninterest expense increased by $66
million, or 27.8%, from the first quarter of 2016. The
increase from the prior year, reflected in both personnel and
nonpersonnel expense, was largely driven by the acquisition of
First Niagara, higher performance-based compensation and various
other items, including operating lease and cards and payments
expenses.
Other Segments
Other Segments consist of Corporate Treasury, Key's Principal
Investing unit, and various exit portfolios. Other Segments
generated net income attributable to Key of $21 million for the first quarter of 2017,
compared to $15 million for the same
period last year, driven by increases in corporate-owned life
insurance income, net gains on principal investing, and other
income.
*****
KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in
Cleveland, Ohio, Key is one of the
nation's largest bank-based financial services companies, with
assets of approximately $134.5 billion at March 31,
2017.
Key provides deposit, lending, cash management, insurance, and
investment services to individuals and businesses in 15 states
under the name KeyBank National Association through a network of
more than 1,200 branches and more than 1,500 ATMs. Key also
provides a broad range of sophisticated corporate and investment
banking products, such as merger and acquisition advice, public and
private debt and equity, syndications and derivatives to middle
market companies in selected industries throughout the United States under the KeyBanc Capital
Markets trade name. For more information, visit
https://www.key.com/. KeyBank is Member FDIC.
This earnings
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements do not relate strictly to historical or current
facts. Forward-looking statements usually can be identified
by the use of words such as "goal," "objective," "plan," "expect,"
"assume," "anticipate," "intend," "project," "believe," "estimate,"
or other words of similar meaning. Forward-looking statements
provide our current expectations or forecasts of future events,
circumstances, results, or aspirations. Forward-looking statements,
by their nature, are subject to assumptions, risks and
uncertainties, many of which are outside of our control. Our actual
results may differ materially from those set forth in our
forward-looking statements. There is no assurance that any list of
risks and uncertainties or risk factors is complete. Factors
that could cause Key's actual results to differ from those
described in the forward-looking statements can be found in
KeyCorp's Form 10-K for the year ended December 31, 2016, as well
as in KeyCorp's subsequent SEC filings, all of which have been
filed with the Securities and Exchange Commission (the "SEC") and
are available on Key's website (www.key.com/ir) and on the SEC's
website (www.sec.gov). These factors may include, among
others: deterioration of commercial real estate market
fundamentals, adverse changes in credit quality trends, declining
asset prices, a reversal of the U.S. economic recovery due to
financial, political, or other shocks, and the extensive and
increasing regulation of the U.S. financial services industry. Any
forward-looking statements made by us or on our behalf speak only
as of the date they are made and we do not undertake any obligation
to update any forward-looking statement to reflect the impact of
subsequent events or circumstances.
|
Notes to Editors:
A live Internet broadcast of KeyCorp's conference call to
discuss quarterly results and currently anticipated earnings trends
and to answer analysts' questions can be accessed through the
Investor Relations section at https://www.key.com/ir at
9:00 a.m. ET, on Thursday,
April 20, 2017. An audio replay of the call will be
available through April 30,
2017.
For up-to-date company information, media contacts, and facts
and figures about Key's lines of business, visit our Media Newsroom
at https://www.key.com/newsroom.
Financial
Highlights
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
|
|
3/31/2017
|
|
12/31/2016
|
|
3/31/2016
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
929
|
|
|
$
|
948
|
|
|
$
|
612
|
|
|
Noninterest
income
|
577
|
|
|
618
|
|
|
431
|
|
|
|
Total revenue
(TE)
|
1,506
|
|
|
1,566
|
|
|
1,043
|
|
|
Provision for credit
losses
|
63
|
|
|
66
|
|
|
89
|
|
|
Noninterest
expense
|
1,013
|
|
|
1,220
|
|
|
703
|
|
|
Income (loss) from
continuing operations attributable to Key
|
324
|
|
|
233
|
|
|
187
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
|
(4)
|
|
|
1
|
|
|
Net income (loss)
attributable to Key
|
324
|
|
|
229
|
|
|
188
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
296
|
|
|
213
|
|
|
182
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
|
(4)
|
|
|
1
|
|
|
Net income (loss)
attributable to Key common shareholders
|
296
|
|
|
209
|
|
|
183
|
|
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.28
|
|
|
$
|
.20
|
|
|
$
|
.22
|
|
|
Income (loss) from
discontinued operations, net of taxes (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.28
|
|
|
.20
|
|
|
.22
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
.27
|
|
|
.20
|
|
|
.22
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming dilution
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(b)
|
.27
|
|
|
.19
|
|
|
.22
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
.085
|
|
|
.085
|
|
|
.075
|
|
|
Book value at period
end
|
12.71
|
|
|
12.58
|
|
|
12.79
|
|
|
Tangible book value
at period end
|
10.21
|
|
|
9.99
|
|
|
11.52
|
|
|
Market price at
period end
|
17.78
|
|
|
18.27
|
|
|
11.04
|
|
|
|
|
|
|
|
|
|
Performance
ratios
|
|
|
|
|
|
|
From continuing
operations:
|
|
|
|
|
|
|
Return on average
total assets
|
.99
|
%
|
|
.69
|
%
|
|
.80
|
%
|
|
Return on average
common equity
|
8.76
|
|
|
6.22
|
|
|
6.86
|
|
|
Return on average
tangible common equity (c)
|
10.98
|
|
|
7.88
|
|
|
7.64
|
|
|
Net interest margin
(TE)
|
3.13
|
|
|
3.12
|
|
|
2.89
|
|
|
Cash efficiency ratio
(c)
|
65.8
|
|
|
76.2
|
|
|
66.6
|
|
|
|
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
|
|
|
Return on average
total assets
|
.98
|
%
|
|
.67
|
%
|
|
.79
|
%
|
|
Return on average
common equity
|
8.76
|
|
|
6.10
|
|
|
6.90
|
|
|
Return on average
tangible common equity (c)
|
10.98
|
|
|
7.73
|
|
|
7.68
|
|
|
Net interest margin
(TE)
|
3.11
|
|
|
3.09
|
|
|
2.83
|
|
|
Loan to deposit
(d)
|
85.6
|
|
|
85.2
|
|
|
85.7
|
|
|
|
|
|
|
|
|
|
Capital ratios at
period end
|
|
|
|
|
|
|
Key shareholders'
equity to assets
|
11.14
|
%
|
|
11.17
|
%
|
|
11.25
|
%
|
|
Key common
shareholders' equity to assets
|
10.37
|
|
|
9.95
|
|
|
10.95
|
|
|
Tangible common
equity to tangible assets (c)
|
8.51
|
|
|
8.09
|
|
|
9.97
|
|
|
Common Equity Tier 1
(c), (e)
|
9.87
|
|
|
9.54
|
|
|
11.07
|
|
|
Tier 1 risk-based
capital (e)
|
10.70
|
|
|
10.89
|
|
|
11.38
|
|
|
Total risk-based
capital (e)
|
12.64
|
|
|
12.85
|
|
|
13.12
|
|
|
Leverage
(e)
|
9.81
|
|
|
9.90
|
|
|
10.73
|
|
|
|
|
|
|
|
|
|
Financial
Highlights (continued)
|
(dollars in
millions)
|
|
|
|
Three months
ended
|
|
|
|
3/31/2017
|
|
12/31/2016
|
|
3/31/2016
|
Asset quality —
from continuing operations
|
|
|
|
|
|
|
Net loan
charge-offs
|
$
|
58
|
|
|
$
|
72
|
|
|
$
|
46
|
|
|
Net loan charge-offs
to average loans
|
.27
|
%
|
|
.34
|
%
|
|
.31
|
%
|
|
Allowance for loan
and lease losses
|
$
|
870
|
|
|
$
|
858
|
|
|
$
|
826
|
|
|
Allowance for credit
losses
|
918
|
|
|
913
|
|
|
895
|
|
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
%
|
|
1.00
|
%
|
|
1.37
|
%
|
|
Allowance for credit
losses to period-end loans
|
1.07
|
|
|
1.06
|
|
|
1.48
|
|
|
Allowance for loan
and lease losses to nonperforming loans (f)
|
151.8
|
|
|
137.3
|
|
|
122.2
|
|
|
Allowance for credit
losses to nonperforming loans (f)
|
160.2
|
|
|
146.1
|
|
|
132.4
|
|
|
Nonperforming loans
at period end (f)
|
$
|
573
|
|
|
$
|
625
|
|
|
$
|
676
|
|
|
Nonperforming assets
at period end (f)
|
623
|
|
|
676
|
|
|
692
|
|
|
Nonperforming loans
to period-end portfolio loans (f)
|
.67
|
%
|
|
.73
|
%
|
|
1.12
|
%
|
|
Nonperforming assets
to period-end portfolio loans plus OREO and other nonperforming
assets (f)
|
.72
|
|
|
.79
|
|
|
1.14
|
|
|
|
|
|
|
|
|
|
Trust
assets
|
|
|
|
|
|
|
Assets under
management
|
$
|
37,417
|
|
|
$
|
36,592
|
|
|
$
|
34,107
|
|
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
|
|
Average full-time
equivalent employees
|
18,386
|
|
|
18,849
|
|
|
13,403
|
|
|
Branches
|
1,216
|
|
|
1,217
|
|
|
961
|
|
|
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
$
|
11
|
|
|
$
|
10
|
|
|
$
|
8
|
|
(a)
|
In April 2009,
management decided to wind down the operations of Austin Capital
Management, Ltd., a subsidiary that specialized in managing hedge
fund investments for institutional customers. In September 2009,
management decided to discontinue the education lending business
conducted through Key Education Resources, the education payment
and financing unit of KeyBank National Association.
|
|
|
(b)
|
Earnings per share
may not foot due to rounding.
|
|
|
(c)
|
The following table
entitled "GAAP to Non-GAAP Reconciliations" presents the
computations of certain financial measures related to "tangible
common equity," "Common Equity Tier 1," and "cash
efficiency." The table reconciles the GAAP performance measures to
the corresponding non-GAAP measures, which provides a basis for
period-to-period comparisons. For further information on the
Regulatory Capital Rules, see the "Capital" section of this
release.
|
|
|
(d)
|
Represents period-end
consolidated total loans and loans held for sale divided by
period-end consolidated total deposits (excluding deposits in
foreign office).
|
|
|
(e)
|
3/31/2017 ratio is
estimated.
|
|
|
(f)
|
Nonperforming loan
balances exclude $812 million, $865 million, and $11 million of
purchased credit impaired loans at March 31, 2017,
December 31, 2016, and March 31, 2016,
respectively.
|
|
|
TE = Taxable
Equivalent, GAAP = U.S. generally accepted accounting
principles
|
GAAP to Non-GAAP
Reconciliations
(dollars in millions)
The table below presents certain non-GAAP financial measures
related to "tangible common equity," "return on average tangible
common equity," "Common Equity Tier 1," "pre-provision net
revenue," certain financial measures excluding merger-related
charges, and "cash efficiency ratio."
The tangible common equity ratio and the return on average
tangible common equity ratio have been a focus for some investors,
and management believes these ratios may assist investors in
analyzing Key's capital position without regard to the effects of
intangible assets and preferred stock. Traditionally, the banking
regulators have assessed bank and bank holding company capital
adequacy based on both the amount and the composition of capital,
the calculation of which is prescribed in federal banking
regulations. In October 2013, the
federal banking regulators published the final Basel III capital
framework for U.S. banking organizations (the "Regulatory Capital
Rules"). The Regulatory Capital Rules require higher and
better-quality capital and introduced a new capital measure,
"Common Equity Tier 1," a non-GAAP financial measure. The mandatory
compliance date for Key as a "standardized approach" banking
organization began on January 1,
2015, subject to transitional provisions extending to
January 1, 2019.
Common Equity Tier 1 is not formally defined by GAAP and is
considered to be a non-GAAP financial measure. Since analysts and
banking regulators may assess Key's capital adequacy using tangible
common equity and Common Equity Tier 1, management believes it is
useful to enable investors to assess Key's capital adequacy on
these same bases. The table also reconciles the GAAP performance
measures to the corresponding non-GAAP measures.
The table also shows the computation for pre-provision net
revenue, which is not formally defined by GAAP. Management believes
that eliminating the effects of the provision for credit losses
makes it easier to analyze the results by presenting them on a more
comparable basis.
As previously disclosed, Key completed its purchase of First
Niagara on August 1, 2016. The
definitive agreement and plan of merger to acquire First Niagara
was originally announced on October 30,
2015. As a result of this transaction, Key has recognized
merger-related charges. The table below shows the computation of
noninterest expense excluding merger-related charges, earnings per
common share excluding merger-related charges, return on average
tangible common equity excluding merger-related charges, return on
average assets from continuing operations excluding merger-related
charges, cash efficiency ratio excluding merger-related charges,
and pre-provision net revenue excluding merger-related charges.
Management believes that eliminating the effects of the
merger-related charges makes it easier to analyze the results by
presenting them on a more comparable basis.
The cash efficiency ratio is a ratio of two non-GAAP performance
measures. As such, there is no directly comparable GAAP performance
measure. The cash efficiency ratio performance measure removes the
impact of Key's intangible asset amortization from the calculation.
The table below also shows the computation for the cash efficiency
ratio excluding merger-related charges. Management believes these
ratios provide greater consistency and comparability between Key's
results and those of its peer banks. Additionally, these ratios are
used by analysts and investors as they develop earnings forecasts
and peer bank analysis.
Non-GAAP financial measures have inherent limitations, are not
required to be uniformly applied, and are not audited. Although
these non-GAAP financial measures are frequently used by investors
to evaluate a company, they have limitations as analytical tools,
and should not be considered in isolation, or as a substitute for
analyses of results as reported under GAAP.
|
|
|
|
Three months
ended
|
|
|
|
|
3/31/2017
|
12/31/2016
|
3/31/2016
|
Tangible common
equity to tangible assets at period end
|
|
|
|
|
Key shareholders'
equity (GAAP)
|
$
|
14,976
|
|
$
|
15,240
|
|
$
|
11,066
|
|
|
Less:
|
Intangible
assets (a)
|
2,751
|
|
2,788
|
|
1,077
|
|
|
|
Preferred
Stock (b)
|
1,009
|
|
1,640
|
|
281
|
|
|
|
Tangible common
equity (non-GAAP)
|
$
|
11,216
|
|
$
|
10,812
|
|
$
|
9,708
|
|
|
|
|
|
|
|
|
|
Total assets
(GAAP)
|
$
|
134,476
|
|
$
|
136,453
|
|
$
|
98,402
|
|
|
Less:
|
Intangible
assets (a)
|
2,751
|
|
2,788
|
|
1,077
|
|
|
|
Tangible assets
(non-GAAP)
|
$
|
131,725
|
|
$
|
133,665
|
|
$
|
97,325
|
|
|
|
|
|
|
|
|
|
Tangible common
equity to tangible assets ratio (non-GAAP)
|
8.51
|
%
|
8.09
|
%
|
9.97
|
%
|
|
|
|
|
|
|
|
Common Equity Tier
1 at period end
|
|
|
|
|
Key shareholders'
equity (GAAP)
|
$
|
14,976
|
|
$
|
15,240
|
|
$
|
11,066
|
|
|
Less:
|
Preferred Stock
(b)
|
1,009
|
|
1,640
|
|
281
|
|
|
|
Common Equity Tier 1
capital before adjustments and deductions
|
13,967
|
|
13,600
|
|
10,785
|
|
|
Less:
|
Goodwill, net of
deferred taxes
|
2,386
|
|
2,405
|
|
1,033
|
|
|
|
Intangible assets,
net of deferred taxes
|
189
|
|
155
|
|
35
|
|
|
|
Deferred tax
assets
|
6
|
|
4
|
|
1
|
|
|
|
Net unrealized gains
(losses) on available-for-sale securities, net of deferred
taxes
|
(179)
|
|
(185)
|
|
70
|
|
|
|
Accumulated gains
(losses) on cash flow hedges, net of deferred taxes
|
(75)
|
|
(52)
|
|
46
|
|
|
|
Amounts in
accumulated other comprehensive income (loss) attributed
to
|
|
|
|
|
|
|
pension and
postretirement benefit costs, net of deferred taxes
|
(336)
|
|
(339)
|
|
(365)
|
|
|
|
Total Common Equity
Tier 1 capital (c)
|
$
|
11,976
|
|
$
|
11,612
|
|
$
|
9,965
|
|
|
|
|
|
|
|
|
|
Net risk-weighted
assets (regulatory) (c)
|
$
|
121,305
|
|
$
|
121,671
|
|
$
|
90,014
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
ratio (non-GAAP) (c)
|
9.87
|
%
|
9.54
|
%
|
11.07
|
%
|
|
|
|
|
|
|
|
Pre-provision net
revenue
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
918
|
|
$
|
938
|
|
$
|
604
|
|
|
Plus:
|
Taxable-equivalent
adjustment
|
11
|
|
10
|
|
8
|
|
|
|
Noninterest
income
|
577
|
|
618
|
|
431
|
|
|
Less:
|
Noninterest
expense
|
1,013
|
|
1,220
|
|
703
|
|
|
|
Pre-provision net
revenue from continuing operations (non-GAAP)
|
$
|
493
|
|
$
|
346
|
|
$
|
340
|
|
|
Plus:
|
Merger-related
charges
|
81
|
|
198
|
|
24
|
|
|
|
Pre-provision net
revenue from continuing operations excluding merger-related charges
(non-GAAP)
|
$
|
574
|
|
$
|
544
|
|
$
|
364
|
|
GAAP to Non-GAAP
Reconciliations (continued)
|
(dollars in
millions)
|
|
|
|
Three months
ended
|
|
|
|
3/31/2017
|
12/31/2016
|
3/31/2016
|
Average tangible
common equity
|
|
|
|
|
Average Key
shareholders' equity (GAAP)
|
$
|
15,184
|
|
$
|
14,901
|
|
$
|
10,953
|
|
|
Less:
|
Intangible assets
(average) (d)
|
2,772
|
|
2,874
|
|
1,079
|
|
|
|
Preferred Stock
(average)
|
1,480
|
|
1,274
|
|
290
|
|
|
|
Average tangible
common equity (non-GAAP)
|
$
|
10,932
|
|
$
|
10,753
|
|
$
|
9,584
|
|
|
|
|
|
|
|
Return on average
tangible common equity from continuing operations
|
|
|
|
|
Net income (loss)
from continuing operations attributable to Key common shareholders
(GAAP)
|
$
|
296
|
|
$
|
213
|
|
$
|
182
|
|
|
Add:
|
Merger-related
charges, after tax
|
51
|
|
124
|
|
15
|
|
|
Net income (loss)
from continuing operations attributable to Key common shareholders
excluding
|
|
|
|
|
|
merger-related
charges (non-GAAP)
|
$
|
347
|
|
$
|
337
|
|
$
|
197
|
|
|
|
|
|
|
|
|
Average tangible
common equity (non-GAAP)
|
10,932
|
|
10,753
|
|
9,584
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity from continuing operations
(non-GAAP)
|
10.98
|
%
|
7.88
|
%
|
7.64
|
%
|
|
|
|
|
|
|
|
Return on average
tangible common equity from continuing operations excluding
merger-related charges (non-GAAP)
|
12.87
|
%
|
12.47
|
%
|
8.27
|
%
|
|
|
|
|
|
|
Return on average
tangible common equity consolidated
|
|
|
|
|
Net income (loss)
attributable to Key common shareholders (GAAP)
|
$
|
296
|
|
$
|
209
|
|
$
|
183
|
|
|
Average tangible
common equity (non-GAAP)
|
10,932
|
|
10,753
|
|
9,584
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity consolidated (non-GAAP)
|
10.98
|
%
|
7.73
|
%
|
7.68
|
%
|
|
|
|
|
|
|
Noninterest
expense excluding merger-related charges
|
|
|
|
|
Noninterest expense
(GAAP)
|
$
|
1,013
|
|
$
|
1,220
|
|
$
|
703
|
|
|
Less:
|
Merger-related
charges
|
81
|
|
207
|
|
24
|
|
|
|
Noninterest expense
excluding merger-related charges (non-GAAP)
|
$
|
932
|
|
$
|
1,013
|
|
$
|
679
|
|
|
|
|
|
|
|
Earnings per
common share (EPS) excluding merger-related charges
|
|
|
|
|
EPS from continuing
operations attributable to Key common shareholders — assuming
dilution
|
$
|
.27
|
|
$
|
.20
|
|
$
|
.22
|
|
|
Add:
|
EPS impact of
merger-related charges
|
.05
|
|
.11
|
|
.02
|
|
|
|
EPS from continuing
operations attributable to Key common shareholders
|
|
|
|
|
|
excluding
merger-related charges (non-GAAP)
|
$
|
.32
|
|
$
|
.31
|
|
$
|
.24
|
|
|
|
|
|
|
|
Cash efficiency
ratio
|
|
|
|
|
Noninterest expense
(GAAP)
|
$
|
1,013
|
|
$
|
1,220
|
|
$
|
703
|
|
|
Less:
|
Intangible asset
amortization
|
22
|
|
27
|
|
8
|
|
|
|
Adjusted noninterest
expense (non-GAAP)
|
991
|
|
1,193
|
|
695
|
|
|
Less:
|
Merger-related
charges
|
81
|
|
207
|
|
24
|
|
|
|
Adjusted noninterest
expense excluding merger-related charges (non-GAAP)
|
$
|
910
|
|
$
|
986
|
|
$
|
671
|
|
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
918
|
|
$
|
938
|
|
$
|
604
|
|
|
Plus:
|
Taxable-equivalent
adjustment
|
11
|
|
10
|
|
8
|
|
|
|
Noninterest
income
|
577
|
|
618
|
|
431
|
|
|
|
Total
taxable-equivalent revenue (non-GAAP)
|
1,506
|
|
1,566
|
|
1,043
|
|
|
Add:
|
Merger-related
charges
|
—
|
|
(9)
|
|
—
|
|
|
|
Adjusted total
taxable-equivalent revenue excluding merger-related charges
(non-GAAP)
|
$
|
1,506
|
|
$
|
1,557
|
|
$
|
1,043
|
|
|
|
|
|
|
|
|
Cash efficiency ratio
(non-GAAP)
|
65.8
|
%
|
76.2
|
%
|
66.6
|
%
|
|
|
|
|
|
|
|
Cash efficiency ratio
excluding merger-related charges (non-GAAP)
|
60.4
|
%
|
63.3
|
%
|
64.3
|
%
|
|
|
|
|
|
|
Return on average
total assets from continuing operations excluding merger-related
charges
|
|
|
|
|
Income from
continuing operations attributable to Key (GAAP)
|
$
|
324
|
|
$
|
233
|
|
$
|
187
|
|
|
Add:
|
Merger-related
charges, after tax
|
51
|
|
124
|
|
15
|
|
|
|
Income from
continuing operations attributable to Key excluding
merger-related
|
|
|
|
|
|
charges, after tax
(non-GAAP)
|
$
|
375
|
|
$
|
357
|
|
$
|
202
|
|
|
|
|
|
|
|
|
Average total assets
from continuing operations (GAAP)
|
$
|
132,741
|
|
$
|
134,428
|
|
$
|
94,477
|
|
|
|
|
|
|
|
|
Return on average
total assets from continuing operations excluding merger-related
charges (non-GAAP)
|
1.15
|
%
|
1.06
|
%
|
.86
|
%
|
|
|
|
|
|
|
GAAP to Non-GAAP
Reconciliations (continued)
|
(dollars in
millions)
|
|
|
|
Three months
ended
|
|
|
|
|
|
3/31/2017
|
|
|
Common Equity Tier 1
under the Regulatory Capital Rules ("RCR") (estimates)
|
|
|
|
|
Common Equity Tier 1
under current RCR
|
$
|
11,976
|
|
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
|
|
Deferred tax assets
and other intangible assets (e)
|
(50)
|
|
|
|
|
|
Common Equity Tier 1
anticipated under the fully phased-in RCR (f)
|
$
|
11,926
|
|
|
|
|
|
|
|
|
|
|
Net risk-weighted
assets under current RCR
|
$
|
121,305
|
|
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
|
|
Mortgage servicing
assets (g)
|
597
|
|
|
|
|
|
Deferred tax
assets
|
92
|
|
|
|
|
|
Volcker
funds
|
(172)
|
|
|
|
|
|
All other
assets
|
(72)
|
|
|
|
|
|
Total risk-weighted
assets anticipated under the fully phased-in RCR
(f)
|
$
|
121,750
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
ratio under the fully phased-in RCR (f)
|
9.80
|
%
|
|
|
(a)
|
For the three months
ended March 31, 2017, December 31, 2016, and
March 31, 2016, intangible assets exclude $38 million, $42
million, and $40 million, respectively, of period-end purchased
credit card receivables.
|
|
|
(b)
|
Net of capital
surplus.
|
|
|
(c)
|
3/31/17 amount is
estimated.
|
|
|
(d)
|
For the three months
ended March 31, 2017, December 31, 2016, and
March 31, 2016, average intangible assets exclude $40 million,
$46 million, and $42 million, respectively, of average purchased
credit card receivables.
|
|
|
(e)
|
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.
|
|
|
(f)
|
The anticipated
amount of regulatory capital and risk-weighted assets is based upon
the federal banking agencies' Regulatory Capital Rules (as fully
phased-in on January 1, 2019); Key is subject to the Regulatory
Capital Rules under the "standardized approach."
|
|
|
(g)
|
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)
|
|
|
|
|
|
|
|
|
|
3/31/2017
|
12/31/2016
|
3/31/2016
|
Assets
|
|
|
|
|
Loans
|
$
|
86,125
|
|
$
|
86,038
|
|
$
|
60,438
|
|
|
Loans held for
sale
|
1,384
|
|
1,104
|
|
684
|
|
|
Securities available
for sale
|
18,431
|
|
20,212
|
|
14,304
|
|
|
Held-to-maturity
securities
|
10,186
|
|
10,232
|
|
5,003
|
|
|
Trading account
assets
|
921
|
|
867
|
|
765
|
|
|
Short-term
investments
|
2,525
|
|
2,775
|
|
5,436
|
|
|
Other
investments
|
689
|
|
738
|
|
643
|
|
|
|
Total earning
assets
|
120,261
|
|
121,966
|
|
87,273
|
|
|
Allowance for loan
and lease losses
|
(870)
|
|
(858)
|
|
(826)
|
|
|
Cash and due from
banks
|
549
|
|
677
|
|
474
|
|
|
Premises and
equipment
|
935
|
|
978
|
|
750
|
|
|
Operating lease
assets
|
563
|
|
540
|
|
362
|
|
|
Goodwill
|
2,427
|
|
2,446
|
|
1,060
|
|
|
Other intangible
assets
|
362
|
|
384
|
|
57
|
|
|
Corporate-owned life
insurance
|
4,087
|
|
4,068
|
|
3,557
|
|
|
Derivative
assets
|
578
|
|
803
|
|
1,065
|
|
|
Accrued income and
other assets
|
4,064
|
|
3,864
|
|
2,849
|
|
|
Discontinued
assets
|
1,520
|
|
1,585
|
|
1,781
|
|
|
|
Total
assets
|
$
|
134,476
|
|
$
|
136,453
|
|
$
|
98,402
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits in domestic
offices:
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
55,095
|
|
$
|
54,590
|
|
$
|
38,946
|
|
|
|
Savings
deposits
|
6,306
|
|
6,491
|
|
2,385
|
|
|
|
Certificates of
deposit ($100,000 or more)
|
5,859
|
|
5,483
|
|
3,095
|
|
|
|
Other time
deposits
|
4,694
|
|
4,698
|
|
3,259
|
|
|
|
Total
interest-bearing deposits
|
71,954
|
|
71,262
|
|
47,685
|
|
|
|
Noninterest-bearing
deposits
|
32,028
|
|
32,825
|
|
25,697
|
|
|
|
Total
deposits
|
103,982
|
|
104,087
|
|
73,382
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
442
|
|
1,502
|
|
374
|
|
|
Bank notes and other
short-term borrowings
|
943
|
|
808
|
|
615
|
|
|
Derivative
liabilities
|
255
|
|
636
|
|
790
|
|
|
Accrued expense and
other liabilities
|
1,552
|
|
1,796
|
|
1,410
|
|
|
Long-term
debt
|
12,324
|
|
12,384
|
|
10,760
|
|
|
|
Total
liabilities
|
119,498
|
|
121,213
|
|
87,331
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred
stock
|
1,025
|
|
1,665
|
|
290
|
|
|
Common
shares
|
1,257
|
|
1,257
|
|
1,017
|
|
|
Capital
surplus
|
6,287
|
|
6,385
|
|
3,818
|
|
|
Retained
earnings
|
9,584
|
|
9,378
|
|
9,042
|
|
|
Treasury stock, at
cost
|
(2,623)
|
|
(2,904)
|
|
(2,888)
|
|
|
Accumulated other
comprehensive income (loss)
|
(554)
|
|
(541)
|
|
(213)
|
|
|
|
Key shareholders'
equity
|
14,976
|
|
15,240
|
|
11,066
|
|
|
Noncontrolling
interests
|
2
|
|
—
|
|
5
|
|
|
|
Total
equity
|
14,978
|
|
15,240
|
|
11,071
|
|
Total liabilities
and equity
|
$
|
134,476
|
|
$
|
136,453
|
|
$
|
98,402
|
|
|
|
|
|
|
|
Common shares
outstanding (000)
|
1,097,479
|
|
1,079,314
|
|
842,290
|
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
|
|
3/31/2017
|
12/31/2016
|
3/31/2016
|
Interest
income
|
|
|
|
|
Loans
|
$
|
877
|
|
$
|
898
|
|
$
|
562
|
|
|
Loans held for
sale
|
13
|
|
11
|
|
8
|
|
|
Securities available
for sale
|
95
|
|
92
|
|
75
|
|
|
Held-to-maturity
securities
|
51
|
|
44
|
|
24
|
|
|
Trading account
assets
|
7
|
|
6
|
|
7
|
|
|
Short-term
investments
|
3
|
|
5
|
|
4
|
|
|
Other
investments
|
4
|
|
6
|
|
3
|
|
|
|
Total interest
income
|
1,050
|
|
1,062
|
|
683
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
Deposits
|
58
|
|
57
|
|
31
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
1
|
|
1
|
|
—
|
|
|
Bank notes and other
short-term borrowings
|
5
|
|
3
|
|
2
|
|
|
Long-term
debt
|
68
|
|
63
|
|
46
|
|
|
|
Total interest
expense
|
132
|
|
124
|
|
79
|
|
|
|
|
|
|
|
Net interest
income
|
918
|
|
938
|
|
604
|
|
Provision for credit
losses
|
63
|
|
66
|
|
89
|
|
Net interest income
after provision for credit losses
|
855
|
|
872
|
|
515
|
|
|
|
|
|
|
|
Noninterest
income
|
|
|
|
|
Trust and investment
services income
|
135
|
|
123
|
|
109
|
|
|
Investment banking
and debt placement fees
|
127
|
|
157
|
|
71
|
|
|
Service charges on
deposit accounts
|
87
|
|
84
|
|
65
|
|
|
Operating lease
income and other leasing gains
|
23
|
|
21
|
|
17
|
|
|
Corporate services
income
|
54
|
|
61
|
|
50
|
|
|
Cards and payments
income
|
65
|
|
69
|
|
46
|
|
|
Corporate-owned life
insurance income
|
30
|
|
40
|
|
28
|
|
|
Consumer mortgage
income
|
6
|
|
6
|
|
2
|
|
|
Mortgage servicing
fees
|
18
|
|
20
|
|
12
|
|
|
Net gains (losses)
from principal investing
|
1
|
|
4
|
|
—
|
|
|
Other
income (a)
|
31
|
|
33
|
|
31
|
|
|
|
Total noninterest
income
|
577
|
|
618
|
|
431
|
|
|
|
|
|
|
|
Noninterest
expense
|
|
|
|
|
Personnel
|
556
|
|
648
|
|
404
|
|
|
Net
occupancy
|
87
|
|
112
|
|
61
|
|
|
Computer
processing
|
60
|
|
97
|
|
43
|
|
|
Business services and
professional fees
|
46
|
|
78
|
|
41
|
|
|
Equipment
|
27
|
|
30
|
|
21
|
|
|
Operating lease
expense
|
19
|
|
17
|
|
13
|
|
|
Marketing
|
21
|
|
35
|
|
12
|
|
|
FDIC
assessment
|
20
|
|
23
|
|
9
|
|
|
Intangible asset
amortization
|
22
|
|
27
|
|
8
|
|
|
OREO expense,
net
|
2
|
|
3
|
|
1
|
|
|
Other
expense
|
153
|
|
150
|
|
90
|
|
|
|
Total noninterest
expense
|
1,013
|
|
1,220
|
|
703
|
|
Income (loss) from
continuing operations before income taxes
|
419
|
|
270
|
|
243
|
|
|
Income
taxes
|
94
|
|
38
|
|
56
|
|
Income (loss) from
continuing operations
|
325
|
|
232
|
|
187
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
(4)
|
|
1
|
|
Net income
(loss)
|
325
|
|
228
|
|
188
|
|
|
Less: Net
income (loss) attributable to noncontrolling interests
|
1
|
|
(1)
|
|
—
|
|
Net income (loss)
attributable to Key
|
$
|
324
|
|
$
|
229
|
|
$
|
188
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
296
|
|
$
|
213
|
|
$
|
182
|
|
Net income (loss)
attributable to Key common shareholders
|
296
|
|
209
|
|
183
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.28
|
|
$
|
.20
|
|
$
|
.22
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.28
|
|
.20
|
|
.22
|
|
|
|
|
|
|
|
Per common share —
assuming dilution
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.27
|
|
$
|
.20
|
|
$
|
.22
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key common
shareholders (b)
|
.27
|
|
.19
|
|
.22
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
$
|
.085
|
|
$
|
.085
|
|
$
|
.075
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding (000)
|
1,068,609
|
|
1,067,771
|
|
827,381
|
|
|
Effect of common
share options and other stock awards
|
17,931
|
|
15,946
|
|
7,679
|
|
Weighted-average
common shares and potential common shares outstanding
(000) (c)
|
1,086,540
|
|
1,083,717
|
|
835,060
|
|
|
|
|
|
|
|
(a)
|
For the three months
ended March 31, 2017, net securities gains (losses) totaled $1
million. For the three months ended December 31, 2016, net
securities gains (losses) totaled $6 million. For the three months
ended March 31, 2016, net securities gains (losses) totaled less
than $1 million. For the three months ended March 31, 2017,
December 31, 2016, and March 31, 2016, Key did not have any
impairment losses related to securities.
|
|
|
(b)
|
Earnings per share
may not foot due to rounding.
|
|
|
(c)
|
Assumes conversion of
common share options and other stock awards and/or convertible
preferred stock, as applicable.
|
Consolidated
Average Balance Sheets, and Net Interest Income and Yields/Rates
From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
2017
|
|
Fourth Quarter
2016
|
|
First Quarter
2016
|
|
|
|
Average
|
|
|
|
Average
|
|
|
|
Average
|
|
|
|
|
|
Balance
|
Interest
(a)
|
Yield/Rate
(a)
|
|
Balance
|
Interest
(a)
|
Yield/Rate
(a)
|
|
Balance
|
Interest
(a)
|
Yield/Rate
(a)
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: (b),
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial (d)
|
$
|
40,002
|
|
$
|
373
|
|
3.77
|
%
|
|
$
|
39,495
|
|
$
|
365
|
|
3.68
|
%
|
|
$
|
31,590
|
|
$
|
263
|
|
3.35
|
%
|
|
Real estate —
commercial mortgage
|
15,187
|
|
164
|
|
4.39
|
|
|
14,771
|
|
168
|
|
4.50
|
|
|
8,138
|
|
77
|
|
3.78
|
|
|
Real estate —
construction
|
2,353
|
|
26
|
|
4.54
|
|
|
2,222
|
|
37
|
|
6.72
|
|
|
1,016
|
|
10
|
|
4.11
|
|
|
Commercial lease
financing
|
4,635
|
|
44
|
|
3.76
|
|
|
4,624
|
|
50
|
|
4.34
|
|
|
3,957
|
|
36
|
|
3.65
|
|
|
|
Total commercial
loans
|
62,177
|
|
607
|
|
3.95
|
|
|
61,112
|
|
620
|
|
4.04
|
|
|
44,701
|
|
386
|
|
3.47
|
|
|
Real estate —
residential mortgage
|
5,520
|
|
54
|
|
3.94
|
|
|
5,554
|
|
57
|
|
4.17
|
|
|
2,236
|
|
24
|
|
4.18
|
|
|
Home equity
loans
|
12,611
|
|
131
|
|
4.22
|
|
|
12,812
|
|
129
|
|
3.99
|
|
|
10,240
|
|
103
|
|
4.06
|
|
|
Consumer direct
loans
|
1,762
|
|
30
|
|
6.97
|
|
|
1,785
|
|
31
|
|
6.84
|
|
|
1,593
|
|
26
|
|
6.53
|
|
|
Credit
cards
|
1,067
|
|
29
|
|
11.06
|
|
|
1,088
|
|
29
|
|
10.78
|
|
|
784
|
|
21
|
|
10.72
|
|
|
Consumer indirect
loans
|
2,996
|
|
37
|
|
4.91
|
|
|
3,009
|
|
42
|
|
5.50
|
|
|
602
|
|
10
|
|
6.44
|
|
|
|
Total consumer
loans
|
23,956
|
|
281
|
|
4.75
|
|
|
24,248
|
|
288
|
|
4.73
|
|
|
15,455
|
|
184
|
|
4.76
|
|
|
|
Total
loans
|
86,133
|
|
888
|
|
4.17
|
|
|
85,360
|
|
908
|
|
4.24
|
|
|
60,156
|
|
570
|
|
3.80
|
|
|
Loans held for
sale
|
1,188
|
|
13
|
|
4.28
|
|
|
1,323
|
|
11
|
|
3.39
|
|
|
826
|
|
8
|
|
4.02
|
|
|
Securities available
for sale (b), (e)
|
19,181
|
|
95
|
|
1.95
|
|
|
20,145
|
|
92
|
|
1.82
|
|
|
14,207
|
|
75
|
|
2.12
|
|
|
Held-to-maturity
securities (b)
|
9,988
|
|
51
|
|
2.04
|
|
|
9,121
|
|
44
|
|
1.95
|
|
|
4,817
|
|
24
|
|
2.01
|
|
|
Trading account
assets
|
968
|
|
7
|
|
2.75
|
|
|
892
|
|
6
|
|
2.54
|
|
|
817
|
|
7
|
|
3.50
|
|
|
Short-term
investments
|
1,610
|
|
3
|
|
.79
|
|
|
3,717
|
|
5
|
|
.49
|
|
|
3,432
|
|
4
|
|
.46
|
|
|
Other investments
(e)
|
709
|
|
4
|
|
2.26
|
|
|
741
|
|
6
|
|
3.23
|
|
|
647
|
|
3
|
|
1.73
|
|
|
|
Total earning
assets
|
119,777
|
|
1,061
|
|
3.57
|
|
|
121,299
|
|
1,072
|
|
3.52
|
|
|
84,902
|
|
691
|
|
3.27
|
|
|
Allowance for loan
and lease losses
|
(855)
|
|
|
|
|
(855)
|
|
|
|
|
(803)
|
|
|
|
|
Accrued income and
other assets
|
13,819
|
|
|
|
|
13,984
|
|
|
|
|
10,378
|
|
|
|
|
Discontinued
assets
|
1,540
|
|
|
|
|
1,610
|
|
|
|
|
1,804
|
|
|
|
|
|
Total
assets
|
$
|
134,281
|
|
|
|
|
$
|
136,038
|
|
|
|
|
$
|
96,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
54,295
|
|
32
|
|
.24
|
|
|
$
|
55,444
|
|
31
|
|
.22
|
|
|
$
|
37,708
|
|
15
|
|
.16
|
|
|
Savings
deposits
|
6,351
|
|
1
|
|
.10
|
|
|
6,546
|
|
2
|
|
.10
|
|
|
2,349
|
|
—
|
|
.02
|
|
|
Certificates of
deposit ($100,000 or more) (f)
|
5,627
|
|
16
|
|
1.16
|
|
|
5,428
|
|
15
|
|
1.11
|
|
|
2,761
|
|
10
|
|
1.37
|
|
|
Other time
deposits
|
4,706
|
|
9
|
|
.76
|
|
|
4,849
|
|
9
|
|
.77
|
|
|
3,200
|
|
6
|
|
.79
|
|
|
|
Total
interest-bearing deposits
|
70,979
|
|
58
|
|
.33
|
|
|
72,267
|
|
57
|
|
.32
|
|
|
46,018
|
|
31
|
|
.27
|
|
|
Federal funds
purchased and securities
sold under repurchase
agreements
|
795
|
|
1
|
|
.32
|
|
|
592
|
|
1
|
|
.11
|
|
|
437
|
|
—
|
|
.07
|
|
|
Bank notes and other
short-term borrowings
|
1,802
|
|
5
|
|
1.06
|
|
|
934
|
|
3
|
|
1.11
|
|
|
591
|
|
2
|
|
1.63
|
|
|
Long-term debt
(f), (g)
|
10,833
|
|
68
|
|
2.54
|
|
|
10,914
|
|
63
|
|
2.38
|
|
|
8,566
|
|
46
|
|
2.19
|
|
|
|
Total
interest-bearing liabilities
|
84,409
|
|
132
|
|
.63
|
|
|
84,707
|
|
124
|
|
.58
|
|
|
55,612
|
|
79
|
|
.57
|
|
|
Noninterest-bearing
deposits
|
31,099
|
|
|
|
|
32,424
|
|
|
|
|
25,580
|
|
|
|
|
Accrued expense and
other liabilities
|
2,048
|
|
|
|
|
2,394
|
|
|
|
|
2,322
|
|
|
|
|
Discontinued
liabilities (g)
|
1,540
|
|
|
|
|
1,610
|
|
|
|
|
1,804
|
|
|
|
|
|
Total
liabilities
|
119,096
|
|
|
|
|
121,135
|
|
|
|
|
85,318
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
15,184
|
|
|
|
|
14,901
|
|
|
|
|
10,953
|
|
|
|
|
Noncontrolling
interests
|
1
|
|
|
|
|
2
|
|
|
|
|
10
|
|
|
|
|
|
Total
equity
|
15,185
|
|
|
|
|
14,903
|
|
|
|
|
10,963
|
|
|
|
|
|
Total liabilities
and equity
|
$
|
134,281
|
|
|
|
|
$
|
136,038
|
|
|
|
|
$
|
96,281
|
|
|
|
Interest rate spread
(TE)
|
|
|
2.94
|
%
|
|
|
|
2.94
|
%
|
|
|
|
2.70
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
929
|
|
3.13
|
%
|
|
|
948
|
|
3.12
|
%
|
|
|
612
|
|
2.89
|
%
|
TE adjustment
(b)
|
|
11
|
|
|
|
|
10
|
|
|
|
|
8
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
918
|
|
|
|
|
$
|
938
|
|
|
|
|
$
|
604
|
|
|
|
|
(a)
|
Results are from
continuing operations. Interest excludes the interest
associated with the liabilities referred to in (g) below,
calculated using a matched funds transfer pricing
methodology.
|
|
|
(b)
|
Interest income on
tax-exempt securities and loans has been adjusted to a
taxable-equivalent basis using the statutory federal income tax
rate of 35%.
|
|
|
(c)
|
For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
|
|
(d)
|
Commercial and
industrial average balances include $114 million, $119 million, and
$85 million of assets from commercial credit cards for the three
months ended March 31, 2017, December 31, 2016, and
March 31, 2016, respectively.
|
|
|
(e)
|
Yield is calculated
on the basis of amortized cost.
|
|
|
(f)
|
Rate calculation
excludes basis adjustments related to fair value
hedges.
|
|
|
(g)
|
A portion of
long-term debt and the related interest expense is allocated to
discontinued liabilities as a result of applying Key's matched
funds transfer pricing methodology to discontinued
operations.
|
|
|
TE = Taxable
Equivalent, GAAP = U.S. generally accepted accounting
principles
|
|
|
|
|
|
|
Noninterest
Expense
|
(dollars in
millions)
|
|
|
|
|
|
|
|
Three months
ended
|
|
3/31/2017
|
|
12/31/2016
|
|
3/31/2016
|
Personnel
(a)
|
$
|
556
|
|
|
$
|
648
|
|
|
$
|
404
|
|
Net
occupancy
|
87
|
|
|
112
|
|
|
61
|
|
Computer
processing
|
60
|
|
|
97
|
|
|
43
|
|
Business services and
professional fees
|
46
|
|
|
78
|
|
|
41
|
|
Equipment
|
27
|
|
|
30
|
|
|
21
|
|
Operating lease
expense
|
19
|
|
|
17
|
|
|
13
|
|
Marketing
|
21
|
|
|
35
|
|
|
12
|
|
FDIC
assessment
|
20
|
|
|
23
|
|
|
9
|
|
Intangible asset
amortization
|
22
|
|
|
27
|
|
|
8
|
|
OREO expense,
net
|
2
|
|
|
3
|
|
|
1
|
|
Other
expense
|
153
|
|
|
150
|
|
|
90
|
|
Total noninterest
expense
|
$
|
1,013
|
|
|
$
|
1,220
|
|
|
$
|
703
|
|
Merger-related
charges (b)
|
81
|
|
|
207
|
|
|
24
|
|
Total noninterest
expense excluding merger-related charges
|
$
|
932
|
|
|
$
|
1,013
|
|
|
$
|
679
|
|
Average full-time
equivalent employees (c)
|
18,386
|
|
|
18,849
|
|
|
13,403
|
|
|
|
(a)
|
Additional detail
provided in Personnel Expense table below.
|
|
|
(b)
|
Additional detail
provide in Merger-Related Charges table below.
|
|
|
(c)
|
The number of average
full-time equivalent employees has not been adjusted for
discontinued operations.
|
|
Personnel
Expense
|
(in
millions)
|
|
|
|
|
|
|
|
Three months
ended
|
|
3/31/2017
|
|
12/31/2016
|
|
3/31/2016
|
Salaries and contract
labor
|
$
|
324
|
|
|
$
|
352
|
|
|
$
|
244
|
|
Incentive and
stock-based compensation
|
127
|
|
|
185
|
|
|
89
|
|
Employee
benefits
|
96
|
|
|
98
|
|
|
68
|
|
Severance
|
9
|
|
|
13
|
|
|
3
|
|
Total personnel
expense
|
$
|
556
|
|
|
$
|
648
|
|
|
$
|
404
|
|
Merger-related
charges
|
30
|
|
|
80
|
|
|
16
|
|
Total personnel
expense excluding merger-related charges
|
$
|
526
|
|
|
$
|
568
|
|
|
$
|
388
|
|
|
|
|
|
|
|
|
Merger-Related
Charges
|
(in
millions)
|
|
|
|
|
|
|
|
Three months
ended
|
|
3/31/2017
|
|
12/31/2016
|
|
3/31/2016
|
Other
income
|
—
|
|
|
$
|
9
|
|
|
—
|
|
Noninterest
income
|
—
|
|
|
9
|
|
|
—
|
|
|
|
|
|
|
|
Personnel
|
$
|
30
|
|
|
80
|
|
|
$
|
16
|
|
Net
occupancy
|
5
|
|
|
29
|
|
|
—
|
|
Business services and
professional fees
|
5
|
|
|
22
|
|
|
7
|
|
Computer
processing
|
5
|
|
|
38
|
|
|
—
|
|
Marketing
|
6
|
|
|
13
|
|
|
1
|
|
Other nonpersonnel
expense
|
30
|
|
|
25
|
|
|
—
|
|
Noninterest
expense
|
81
|
|
|
207
|
|
|
24
|
|
Total merger-related
charges
|
$
|
81
|
|
|
$
|
198
|
|
|
$
|
24
|
|
Loan
Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Percent change
3/31/2017 vs.
|
|
3/31/2017
|
12/31/2016
|
3/31/2016
|
|
12/31/2016
|
3/31/2016
|
Commercial and
industrial (a), (b)
|
$
|
40,112
|
|
$
|
39,768
|
|
$
|
31,976
|
|
|
.9
|
%
|
25.4
|
%
|
Commercial real
estate:
|
|
|
|
|
|
|
Commercial
mortgage
|
15,260
|
|
15,111
|
|
8,364
|
|
|
1.0
|
|
82.4
|
|
Construction
|
2,270
|
|
2,345
|
|
841
|
|
|
(3.2)
|
|
169.9
|
|
Total commercial real
estate loans
|
17,530
|
|
17,456
|
|
9,205
|
|
|
.4
|
|
90.4
|
|
Commercial lease
financing (c)
|
4,665
|
|
4,685
|
|
3,934
|
|
|
(.4)
|
|
18.6
|
|
Total commercial
loans
|
62,307
|
|
61,909
|
|
45,115
|
|
|
.6
|
|
38.1
|
|
Residential — prime
loans:
|
|
|
|
|
|
|
Real estate —
residential mortgage
|
5,507
|
|
5,547
|
|
2,234
|
|
|
(.7)
|
|
146.5
|
|
Home equity
loans
|
12,541
|
|
12,674
|
|
10,149
|
|
|
(1.0)
|
|
23.6
|
|
Total residential —
prime loans
|
18,048
|
|
18,221
|
|
12,383
|
|
|
(.9)
|
|
45.7
|
|
Consumer direct
loans
|
1,735
|
|
1,788
|
|
1,579
|
|
|
(3.0)
|
|
9.9
|
|
Credit
cards
|
1,037
|
|
1,111
|
|
782
|
|
|
(6.7)
|
|
32.6
|
|
Consumer indirect
loans
|
2,998
|
|
3,009
|
|
579
|
|
|
(.4)
|
|
417.8
|
|
Total consumer
loans
|
23,818
|
|
24,129
|
|
15,323
|
|
|
(1.3)
|
|
55.4
|
|
Total loans (d),
(e)
|
$
|
86,125
|
|
$
|
86,038
|
|
$
|
60,438
|
|
|
.1
|
%
|
42.5
|
%
|
|
|
(a)
|
Loan balances include
$114 million, $116 million, and $85 million of commercial credit
card balances at March 31, 2017, December 31, 2016, and
March 31, 2016, respectively.
|
|
|
(b)
|
"Commercial,
financial and agricultural" was renamed to "Commercial and
industrial" in the first quarter of 2017 to better reflect the
composition of our loan portfolios. There was no reclassification
of previously reported balances.
|
|
|
(c)
|
Commercial lease
financing includes receivables held as collateral for a secured
borrowing of $55 million, $68 million, and $115 million at
March 31, 2017, December 31, 2016, and March 31,
2016, respectively. Principal reductions are based on the cash
payments received from these related receivables.
|
|
|
(d)
|
At March 31,
2017, total loans include purchased loans of $19.0 billion, of
which $812 million were purchased credit impaired. At
December 31, 2016, total loans include purchased loans of
$21.0 billion, of which $865 million were purchased credit
impaired. At March 31, 2016, total loans include purchased
loans of $109 million, of which $11 million were purchased credit
impaired.
|
|
|
(e)
|
Total loans exclude
loans of $1.5 billion at March 31, 2017, $1.6 billion at
December 31, 2016, and $1.8 billion at March 31, 2016,
related to the discontinued operations of the education lending
business.
|
|
Loans Held for
Sale Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
3/31/2017 vs.
|
|
3/31/2017
|
12/31/2016
|
3/31/2016
|
|
12/31/2016
|
3/31/2016
|
Commercial and
industrial
|
$
|
171
|
|
$
|
19
|
|
$
|
103
|
|
|
800.0
|
%
|
66.0
|
%
|
Real estate —
commercial mortgage
|
1,150
|
|
1,022
|
|
562
|
|
|
12.5
|
|
104.6
|
|
Commercial lease
financing
|
1
|
|
—
|
|
—
|
|
|
N/M
|
|
N/M
|
|
Real estate —
residential mortgage
|
62
|
|
62
|
|
19
|
|
|
—
|
|
226.3
|
|
Real estate —
construction
|
—
|
|
1
|
|
—
|
|
|
N/M
|
|
N/M
|
|
Total loans held for
sale (a)
|
$
|
1,384
|
|
$
|
1,104
|
|
$
|
684
|
|
|
25.4
|
%
|
102.3
|
%
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $62 million at March 31, 2017 and
December 31, 2016.
|
|
|
N/M = Not
Meaningful
|
|
Summary of Changes
in Loans Held for Sale
|
(in
millions)
|
|
|
|
|
|
|
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
Balance at beginning
of period
|
$
|
1,104
|
|
$
|
1,137
|
|
$
|
442
|
|
$
|
684
|
|
$
|
639
|
|
Purchases
|
—
|
|
—
|
|
48
|
|
—
|
|
—
|
|
New
originations
|
2,563
|
|
2,846
|
|
2,857
|
|
1,539
|
|
1,114
|
|
Transfers from (to)
held to maturity, net
|
17
|
|
11
|
|
2
|
|
22
|
|
—
|
|
Loan sales
|
(2,299)
|
|
(2,889)
|
|
(2,180)
|
|
(1,802)
|
|
(1,108)
|
|
Loan draws
(payments), net
|
(1)
|
|
(1)
|
|
(32)
|
|
(1)
|
|
39
|
|
Balance at end of
period (a)
|
$
|
1,384
|
|
$
|
1,104
|
|
$
|
1,137
|
|
$
|
442
|
|
$
|
684
|
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $62 million at March 31, 2017,
December 31, 2016, and September 30, 2016.
|
Asset Quality
Statistics From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
Net loan
charge-offs
|
$
|
58
|
|
$
|
72
|
|
$
|
44
|
|
$
|
43
|
|
$
|
46
|
|
Net loan charge-offs
to average total loans
|
.27
|
%
|
.34
|
%
|
.23
|
%
|
.28
|
%
|
.31
|
%
|
Allowance for loan
and lease losses
|
$
|
870
|
|
$
|
858
|
|
$
|
865
|
|
$
|
854
|
|
$
|
826
|
|
Allowance for credit
losses (a)
|
918
|
|
913
|
|
918
|
|
904
|
|
895
|
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
%
|
1.00
|
%
|
1.01
|
%
|
1.38
|
%
|
1.37
|
%
|
Allowance for credit
losses to period-end loans
|
1.07
|
|
1.06
|
|
1.07
|
|
1.46
|
|
1.48
|
|
Allowance for loan
and lease losses to nonperforming loans (b)
|
151.8
|
|
137.3
|
|
119.6
|
|
138.0
|
|
122.2
|
|
Allowance for credit
losses to nonperforming loans (b)
|
160.2
|
|
146.1
|
|
127.0
|
|
146.0
|
|
132.4
|
|
Nonperforming loans
at period end (b)
|
$
|
573
|
|
$
|
625
|
|
$
|
723
|
|
$
|
619
|
|
$
|
676
|
|
Nonperforming assets
at period end (b)
|
623
|
|
676
|
|
760
|
|
637
|
|
692
|
|
Nonperforming loans
to period-end portfolio loans (b)
|
.67
|
%
|
.73
|
%
|
.85
|
%
|
1.00
|
%
|
1.12
|
%
|
Nonperforming assets
to period-end portfolio loans plus
OREO and other
nonperforming assets (b)
|
.72
|
|
.79
|
|
.89
|
|
1.03
|
|
1.14
|
|
|
|
(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 $812 million, $865 million, $959 million, $11
million, and $11 million of purchased credit impaired loans at
March 31, 2017, December 31, 2016, September 30,
2016, June 30, 2016, and March 31, 2016,
respectively.
|
|
|
|
|
Summary of Loan
and Lease Loss Experience From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
Three months
ended
|
|
3/31/2017
|
12/31/2016
|
3/31/2016
|
Average loans
outstanding
|
$
|
86,133
|
|
$
|
85,360
|
|
$
|
60,156
|
|
Allowance for loan
and lease losses at beginning of period
|
$
|
858
|
|
$
|
865
|
|
$
|
796
|
|
Loans charged
off:
|
|
|
|
Commercial and
industrial
|
32
|
|
40
|
|
26
|
|
|
|
|
|
Real estate —
commercial mortgage
|
—
|
|
2
|
|
1
|
|
Real estate —
construction
|
—
|
|
—
|
|
—
|
|
Total commercial real
estate loans
|
—
|
|
2
|
|
1
|
|
Commercial lease
financing
|
7
|
|
1
|
|
3
|
|
Total commercial
loans
|
39
|
|
43
|
|
30
|
|
Real estate —
residential mortgage
|
(2)
|
|
—
|
|
2
|
|
Home equity
loans
|
8
|
|
8
|
|
10
|
|
Consumer direct
loans
|
10
|
|
9
|
|
6
|
|
Credit
cards
|
11
|
|
10
|
|
8
|
|
Consumer indirect
loans
|
11
|
|
12
|
|
4
|
|
Total consumer
loans
|
38
|
|
39
|
|
30
|
|
Total loans charged
off
|
77
|
|
82
|
|
60
|
|
Recoveries:
|
|
|
|
Commercial and
industrial
|
5
|
|
3
|
|
3
|
|
|
|
|
|
Real estate —
commercial mortgage
|
—
|
|
—
|
|
2
|
|
Real estate —
construction
|
1
|
|
—
|
|
1
|
|
Total commercial real
estate loans
|
1
|
|
—
|
|
3
|
|
Commercial lease
financing
|
2
|
|
1
|
|
—
|
|
Total commercial
loans
|
8
|
|
4
|
|
6
|
|
Real estate —
residential mortgage
|
2
|
|
(2)
|
|
2
|
|
Home equity
loans
|
3
|
|
4
|
|
3
|
|
Consumer direct
loans
|
1
|
|
1
|
|
1
|
|
Credit
cards
|
1
|
|
1
|
|
1
|
|
Consumer indirect
loans
|
4
|
|
2
|
|
1
|
|
Total consumer
loans
|
11
|
|
6
|
|
8
|
|
Total
recoveries
|
19
|
|
10
|
|
14
|
|
Net loan
charge-offs
|
(58)
|
|
(72)
|
|
(46)
|
|
Provision (credit)
for loan and lease losses
|
70
|
|
64
|
|
76
|
|
Foreign currency
translation adjustment
|
—
|
|
1
|
|
—
|
|
Allowance for loan
and lease losses at end of period
|
$
|
870
|
|
$
|
858
|
|
$
|
826
|
|
|
|
|
|
Liability for credit
losses on lending-related commitments at beginning of
period
|
$
|
55
|
|
$
|
53
|
|
$
|
56
|
|
Provision (credit)
for losses on lending-related commitments
|
(7)
|
|
2
|
|
13
|
|
Liability for credit
losses on lending-related commitments at end of period
(a)
|
$
|
48
|
|
$
|
55
|
|
$
|
69
|
|
|
|
|
|
Total allowance for
credit losses at end of period
|
$
|
918
|
|
$
|
913
|
|
$
|
895
|
|
|
|
|
|
Net loan charge-offs
to average total loans
|
.27
|
%
|
.34
|
%
|
.31
|
%
|
Allowance for loan
and lease losses to period-end loans
|
1.01
|
|
1.00
|
|
1.37
|
|
Allowance for credit
losses to period-end loans
|
1.07
|
|
1.06
|
|
1.48
|
|
Allowance for loan
and lease losses to nonperforming loans
|
151.8
|
|
137.3
|
|
122.2
|
|
Allowance for credit
losses to nonperforming loans
|
160.2
|
|
146.1
|
|
132.4
|
|
|
|
|
|
Discontinued
operations — education lending business:
|
|
|
|
Loans charged
off
|
$
|
6
|
|
$
|
7
|
|
$
|
9
|
|
Recoveries
|
2
|
|
3
|
|
3
|
|
Net loan
charge-offs
|
$
|
(4)
|
|
$
|
(4)
|
|
$
|
(6)
|
|
|
|
(a)
|
Included in "Accrued
expense and other liabilities" on the balance sheet.
|
Summary of
Nonperforming Assets and Past Due Loans From Continuing
Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
3/31/2017
|
12/31/2016
|
9/30/2016
|
6/30/2016
|
3/31/2016
|
Commercial and
industrial
|
$
|
258
|
|
$
|
297
|
|
$
|
335
|
|
$
|
321
|
|
$
|
380
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
32
|
|
26
|
|
32
|
|
14
|
|
16
|
|
Real estate —
construction
|
2
|
|
3
|
|
17
|
|
25
|
|
12
|
|
Total
commercial real estate loans
|
34
|
|
29
|
|
49
|
|
39
|
|
28
|
|
Commercial lease
financing
|
5
|
|
8
|
|
13
|
|
10
|
|
11
|
|
Total
commercial loans
|
297
|
|
334
|
|
397
|
|
370
|
|
419
|
|
Real estate —
residential mortgage
|
54
|
|
56
|
|
72
|
|
54
|
|
59
|
|
Home equity
loans
|
207
|
|
223
|
|
225
|
|
189
|
|
191
|
|
Consumer direct
loans
|
3
|
|
6
|
|
2
|
|
1
|
|
1
|
|
Credit
cards
|
3
|
|
2
|
|
3
|
|
2
|
|
2
|
|
Consumer indirect
loans
|
9
|
|
4
|
|
24
|
|
3
|
|
4
|
|
Total consumer
loans
|
276
|
|
291
|
|
326
|
|
249
|
|
257
|
|
Total nonperforming loans (a)
|
573
|
|
625
|
|
723
|
|
619
|
|
676
|
|
OREO
|
49
|
|
51
|
|
35
|
|
15
|
|
14
|
|
Other nonperforming
assets
|
1
|
|
—
|
|
2
|
|
3
|
|
2
|
|
Total nonperforming assets
(a)
|
$
|
623
|
|
$
|
676
|
|
$
|
760
|
|
$
|
637
|
|
$
|
692
|
|
Accruing loans past
due 90 days or more
|
$
|
79
|
|
$
|
87
|
|
$
|
49
|
|
$
|
70
|
|
$
|
70
|
|
Accruing loans past
due 30 through 89 days
|
312
|
|
404
|
|
317
|
|
203
|
|
237
|
|
Restructured loans —
accruing and nonaccruing (b)
|
302
|
|
280
|
|
304
|
|
277
|
|
283
|
|
Restructured loans
included in nonperforming loans (b)
|
161
|
|
141
|
|
149
|
|
133
|
|
151
|
|
Nonperforming assets
from discontinued operations — education
lending business
|
4
|
|
5
|
|
5
|
|
5
|
|
6
|
|
Nonperforming loans
to period-end portfolio loans (a)
|
.67
|
%
|
.73
|
%
|
.85
|
%
|
1.00
|
%
|
1.12
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming assets (a)
|
.72
|
|
.79
|
|
.89
|
|
1.03
|
|
1.14
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $812 million, $865 million, $959 million, $11
million, and $11 million, of purchased credit impaired loans at
March 31, 2017, December 31, 2016, September 30,
2016, June 30, 2016, and March 31, 2016,
respectively.
|
|
|
(b)
|
Restructured loans
(i.e., troubled debt restructurings) are those for which Key, for
reasons related to a borrower's financial difficulties, grants a
concession to the borrower that it would not otherwise
consider. These concessions are made to improve the
collectability of the loan and generally take the form of a
reduction of the interest rate, extension of the maturity date or
reduction in the principal balance.
|
Summary of Changes
in Nonperforming Loans From Continuing Operations
|
(in
millions)
|
|
|
|
|
|
|
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
Balance at beginning
of period
|
$
|
625
|
|
$
|
723
|
|
$
|
619
|
|
$
|
676
|
|
$
|
387
|
|
Loans placed on
nonaccrual status
|
218
|
|
170
|
|
78
|
|
124
|
|
406
|
|
Nonperforming loans
acquired from First Niagara (a)
|
—
|
|
(31)
|
|
150
|
|
—
|
|
—
|
|
Charge-offs
|
(77)
|
|
(81)
|
|
(53)
|
|
(64)
|
|
(60)
|
|
Loans sold
|
(8)
|
|
(9)
|
|
—
|
|
—
|
|
(11)
|
|
Payments
|
(59)
|
|
(30)
|
|
(32)
|
|
(75)
|
|
(8)
|
|
Transfers to
OREO
|
(11)
|
|
(21)
|
|
(5)
|
|
(6)
|
|
(4)
|
|
Transfers to other
nonperforming assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Loans returned to
accrual status
|
(115)
|
|
(96)
|
|
(34)
|
|
(36)
|
|
(34)
|
|
Balance at end of
period (b)
|
$
|
573
|
|
$
|
625
|
|
$
|
723
|
|
$
|
619
|
|
$
|
676
|
|
|
|
(a)
|
During the fourth
quarter of 2016, Key adjusted the estimated fair value of the First
Niagara acquired loan portfolio recorded during the third quarter
of 2016, resulting in a $31 million decrease in the balance of
acquired nonperforming loans.
|
|
|
(b)
|
Nonperforming loan
balances exclude $812 million, 865 million, $959 million,
$11 million, and $11 million of purchased credit impaired loans at
March 31, 2017, December 31, 2016, September 30,
2016, June 30, 2016, and March 31, 2016,
respectively.
|
|
Summary of Changes
in Other Real Estate Owned, Net of Allowance, From Continuing
Operations
|
(in
millions)
|
|
|
|
|
|
|
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
Balance at beginning
of period
|
$
|
51
|
|
$
|
35
|
|
$
|
15
|
|
$
|
14
|
|
$
|
14
|
|
Properties acquired —
First Niagara
|
—
|
|
—
|
|
19
|
|
—
|
|
—
|
|
Properties acquired —
nonperforming loans
|
11
|
|
21
|
|
5
|
|
6
|
|
4
|
|
Valuation
adjustments
|
(2)
|
|
(2)
|
|
(2)
|
|
(2)
|
|
(1)
|
|
Properties
sold
|
(11)
|
|
(3)
|
|
(2)
|
|
(3)
|
|
(3)
|
|
Balance at end of
period
|
$
|
49
|
|
$
|
51
|
|
$
|
35
|
|
$
|
15
|
|
$
|
14
|
|
Line of Business
Results
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
1Q17 vs.
|
|
1Q17
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
|
4Q16
|
1Q16
|
Key Community
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
908
|
|
$
|
902
|
|
$
|
783
|
|
$
|
598
|
|
$
|
595
|
|
|
.7
|
%
|
52.6
|
%
|
Provision for credit
losses
|
47
|
|
48
|
|
37
|
|
25
|
|
42
|
|
|
(2.1)
|
|
11.9
|
|
Noninterest
expense
|
627
|
|
682
|
|
589
|
|
445
|
|
436
|
|
|
(8.1)
|
|
43.8
|
|
Net income (loss)
attributable to Key
|
147
|
|
108
|
|
98
|
|
80
|
|
74
|
|
|
36.1
|
|
98.6
|
|
Average loans and
leases
|
47,036
|
|
47,031
|
|
41,548
|
|
30,936
|
|
30,789
|
|
|
—
|
|
52.8
|
|
Average
deposits
|
79,393
|
|
79,358
|
|
69,397
|
|
53,794
|
|
52,803
|
|
|
—
|
|
50.4
|
|
Net loan
charge-offs
|
43
|
|
42
|
|
31
|
|
17
|
|
23
|
|
|
2.4
|
|
87.0
|
|
Net loan charge-offs
to average total loans
|
.37
|
%
|
.36
|
%
|
.30
|
%
|
.22
|
%
|
.30
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
395
|
|
$
|
412
|
|
$
|
428
|
|
$
|
300
|
|
$
|
303
|
|
|
(4.1)
|
|
30.4
|
|
Return on average
allocated equity
|
12.60
|
%
|
9.07
|
%
|
10.95
|
%
|
11.76
|
%
|
11.10
|
%
|
|
N/A
|
|
N/A
|
|
Average full-time
equivalent employees
|
10,804
|
|
11,198
|
|
9,805
|
|
7,331
|
|
7,376
|
|
|
(3.5)
|
|
46.5
|
|
|
|
|
|
|
|
|
|
|
Key Corporate
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
579
|
|
$
|
630
|
|
$
|
556
|
|
$
|
451
|
|
$
|
425
|
|
|
(8.1)
|
%
|
36.2
|
%
|
Provision for credit
losses
|
17
|
|
20
|
|
25
|
|
30
|
|
43
|
|
|
(15.0)
|
|
(60.5)
|
|
Noninterest
expense
|
303
|
|
326
|
|
310
|
|
259
|
|
237
|
|
|
(7.1)
|
|
27.8
|
|
Net income (loss)
attributable to Key
|
181
|
|
222
|
|
159
|
|
135
|
|
118
|
|
|
(18.5)
|
|
53.4
|
|
Average loans and
leases
|
37,737
|
|
36,770
|
|
34,561
|
|
28,607
|
|
27,722
|
|
|
2.6
|
|
36.1
|
|
Average loans held
for sale
|
1,097
|
|
1,223
|
|
1,103
|
|
591
|
|
811
|
|
|
(10.3)
|
|
35.3
|
|
Average
deposits
|
21,003
|
|
23,172
|
|
22,708
|
|
19,129
|
|
18,074
|
|
|
(9.4)
|
|
16.2
|
|
Net loan
charge-offs
|
14
|
|
26
|
|
12
|
|
27
|
|
18
|
|
|
(46.2)
|
|
(22.2)
|
|
Net loan charge-offs
to average total loans
|
.15
|
%
|
.28
|
%
|
.14
|
%
|
.38
|
%
|
.26
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
197
|
|
$
|
244
|
|
$
|
318
|
|
$
|
323
|
|
$
|
375
|
|
|
(19.3)
|
|
(47.5)
|
|
Return on average
allocated equity
|
24.86
|
%
|
31.09
|
%
|
26.72
|
%
|
26.23
|
%
|
22.92
|
%
|
|
N/A
|
|
N/A
|
|
Average full-time
equivalent employees
|
2,384
|
|
2,380
|
|
2,330
|
|
2,138
|
|
2,126
|
|
|
.2
|
|
12.1
|
|
|
TE = Taxable
Equivalent, N/A = Not Applicable, N/M = Not Meaningful
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/keycorp-reports-first-quarter-2017-net-income-of-296-million-or-27-per-common-share-earnings-per-common-share-of-32-excluding-05-of-merger-related-charges-300442587.html
SOURCE KeyCorp