CLEVELAND, Oct. 17, 2019 /PRNewswire/ -- KeyCorp (NYSE: KEY)
today announced net income from continuing operations attributable
to Key common shareholders of $383
million, or $.38 per diluted
common share for the third quarter of 2019, compared to
$403 million, or $.40 per diluted common share, for the second
quarter of 2019 and $468 million, or
$.45 per diluted common share, for
the third quarter of 2018. Key's third quarter 2019 diluted
earnings per share was $.48(a), excluding $.10 per diluted common share related to a
previously disclosed fraud loss. Key's results in the second
quarter of 2019 included notable items; additional detail can be
found on page 24 of this release.
"Our results this quarter reflect positive
revenue momentum and strong expense management that drove our cash
efficiency ratio to its lowest level in over a decade. This places
us within our targeted cash efficiency ratio range of 54% to 56%
and reflects the successful execution of our cost initiatives and
ongoing commitment to continuous improvement. While expenses
declined 3% from the year-ago period, we have continued to invest a
portion of our cost savings back in to the business to drive future
growth.
We generated positive operating leverage
compared to the prior year and previous quarter, supported by
strong balance sheet growth, as well as continued momentum in our
fee-based businesses, including record third quarter investment
banking and debt placement fees. We produced another quarter of
strong, broad-based growth in commercial and industrial loans and
saw higher consumer loan balances, driven by Laurel Road and
residential mortgage lending.
We have remained disciplined with credit
underwriting and managing our strong capital position. In the third
quarter, we increased our quarterly common stock dividend by 9% −
from $.17 to $.185. We remain committed to delivering results
for our shareholders, while maintaining our moderate risk profile
as we move through different parts of the business cycle."
- Beth Mooney,
Chairman and CEO
(a) Non-GAAP measure; please refer to page 14 of this release
for additional detail and reconciliation
Selected Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions, except per share data
|
|
|
|
|
Change 3Q19
vs.
|
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
383
|
|
$
|
403
|
|
$
|
468
|
|
|
(5.0)
|
%
|
(18.2)
|
%
|
Income (loss) from
continuing operations attributable to Key common shareholders
per
common share — assuming dilution
|
.38
|
|
.40
|
|
.45
|
|
|
(5.0)
|
|
(15.6)
|
|
Return on average
tangible common equity from continuing operations
(a)
|
12.38
|
%
|
13.69
|
%
|
16.81
|
%
|
|
N/A
|
|
N/A
|
|
Return on average
total assets from continuing operations
|
1.14
|
|
1.19
|
|
1.40
|
|
|
N/A
|
|
N/A
|
|
Common Equity Tier 1
ratio (b)
|
9.52
|
|
9.57
|
|
9.95
|
|
|
N/A
|
|
N/A
|
|
Book value at period
end
|
$
|
15.44
|
|
$
|
15.07
|
|
$
|
13.33
|
|
|
2.5
|
%
|
15.8
|
%
|
Net interest margin
(TE) from continuing operations
|
3.00
|
%
|
3.06
|
%
|
3.18
|
%
|
|
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)
|
9/30/19 ratio is
estimated.
|
TE = Taxable
Equivalent, N/A = Not Applicable
|
INCOME STATEMENT
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Net interest income
(TE)
|
$
|
980
|
|
$
|
989
|
|
$
|
993
|
|
|
(.9)
|
%
|
(1.3)
|
%
|
Noninterest
income
|
650
|
|
622
|
|
609
|
|
|
4.5
|
|
6.7
|
|
Total
revenue
|
$
|
1,630
|
|
$
|
1,611
|
|
$
|
1,602
|
|
|
1.2
|
%
|
1.7
|
%
|
|
TE = Taxable
Equivalent
|
Taxable-equivalent net interest income was $980 million for the third quarter of 2019,
compared to taxable-equivalent net interest income of $993 million for the third quarter of 2018. The
decrease in net interest income reflects a lower net interest
margin, driven by higher interest-bearing deposit costs, and lower
loan fees. Additionally, purchase accounting accretion declined
$9 million. These declines were
partially offset by higher earning asset balances.
Compared to the second quarter of 2019, taxable-equivalent net
interest income decreased by $9
million. The decrease was driven by a lower net interest
margin, resulting from a decline in interest rates, and lower loan
fees. These declines were partially offset by higher earning asset
balances, driven by solid consumer and commercial loan growth, and
one additional day in the quarter.
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Trust and investment
services income
|
$
|
118
|
|
$
|
122
|
|
$
|
117
|
|
|
(3.3)
|
%
|
.9
|
%
|
Investment banking
and debt placement fees
|
176
|
|
163
|
|
166
|
|
|
8.0
|
|
6.0
|
|
Service charges on
deposit accounts
|
86
|
|
83
|
|
85
|
|
|
3.6
|
|
1.2
|
|
Operating lease
income and other leasing gains
|
42
|
|
44
|
|
35
|
|
|
(4.5)
|
|
20.0
|
|
Corporate services
income
|
63
|
|
53
|
|
52
|
|
|
18.9
|
|
21.2
|
|
Cards and payments
income
|
69
|
|
73
|
|
69
|
|
|
(5.5)
|
|
—
|
|
Corporate-owned life
insurance income
|
32
|
|
33
|
|
34
|
|
|
(3.0)
|
|
(5.9)
|
|
Consumer mortgage
income
|
14
|
|
10
|
|
9
|
|
|
40.0
|
|
55.6
|
|
Mortgage servicing
fees
|
23
|
|
24
|
|
19
|
|
|
(4.2)
|
|
21.1
|
|
Other
income
|
27
|
|
17
|
|
23
|
|
|
58.8
|
|
17.4
|
|
Total noninterest
income
|
$
|
650
|
|
$
|
622
|
|
$
|
609
|
|
|
4.5
|
%
|
6.7
|
%
|
|
Key's noninterest income was $650
million for the third quarter of 2019, compared to
$609 million for the year-ago
quarter. The increase reflects growth in investment banking and
debt placement fees, which reached a record third quarter level, as
well as growth in corporate services income, due to higher
derivatives income. Investments made in Key's mortgage business
continue to drive consumer mortgage income and mortgage servicing
fees.
Compared to the second quarter of 2019, noninterest income
increased by $28 million, due to
growth in investment banking and debt placement fees and corporate
services income, due to higher derivatives income, as well as
consumer mortgage income.
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Personnel
expense
|
$
|
547
|
|
$
|
589
|
|
$
|
553
|
|
|
(7.1)
|
%
|
(1.1)
|
%
|
Nonpersonnel
expense
|
392
|
|
430
|
|
411
|
|
|
(8.8)
|
|
(4.6)
|
|
Total noninterest
expense
|
$
|
939
|
|
$
|
1,019
|
|
$
|
964
|
|
|
(7.9)
|
%
|
(2.6)
|
%
|
|
|
|
|
|
|
|
Key's noninterest expense was $939
million for the third quarter of 2019, compared to
$964 million in the year-ago quarter
and $1.0 billion in the prior
quarter. The prior quarter included notable items of $52 million, primarily efficiency-related
expenses, while no notable items were reported in the current
quarter or the year-ago period.
Noninterest expense decreased by $25
million from the year-ago period, reflecting the successful
implementation of Key's expense initiatives and the elimination of
the FDIC surcharge. These expenses were partially offset by Laurel
Road acquisition expenses.
Excluding notable items, noninterest expense decreased
$28 million from the prior quarter,
reflecting the successful implementation of Key's expense
initiatives, which drove lower salaries and declines across most
non-personnel expenses.
BALANCE SHEET
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Commercial and
industrial (a)
|
$
|
48,322
|
|
$
|
47,227
|
|
$
|
44,749
|
|
|
2.3
|
%
|
8.0
|
%
|
Other commercial
loans
|
19,016
|
|
19,765
|
|
20,471
|
|
|
(3.8)
|
|
(7.1)
|
|
Total consumer
loans
|
24,618
|
|
23,793
|
|
23,247
|
|
|
3.5
|
|
5.9
|
|
Total
loans
|
$
|
91,956
|
|
$
|
90,785
|
|
$
|
88,467
|
|
|
1.3
|
%
|
3.9
|
%
|
|
|
|
|
|
|
|
(a)
|
Commercial and
industrial average loan balances include $144 million, $141
million, and $128 million of assets from commercial
credit cards at September 30, 2019, June 30, 2019, and September
30, 2018, respectively.
|
Average loans were $92.0 billion
for the third quarter of 2019, an increase of $3.5 billion compared to the third quarter of
2018. Commercial loans increased $2.1
billion, reflecting broad-based growth in commercial and
industrial loans, partially offset by declines in commercial
mortgage and construction loans. Consumer loans increased
$1.4 billion, driven by solid growth
from Laurel Road, residential mortgage loans, and indirect auto
lending. Home equity loans declined $927
million, largely the result of continued paydowns in home
equity lines of credit.
Compared to the second quarter of 2019, average loans increased
by $1.2 billion, driven by solid
growth in commercial and industrial loans, partially offset by a
decline in commercial mortgage loans. Consumer loans increased
$825 million from the prior quarter,
as growth from Laurel Road, residential mortgage, and indirect auto
more than offset the decline in home equity loans. Laurel Road
originations were $500 million in the
current quarter.
Average
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Non-time
deposits
|
$
|
97,205
|
|
$
|
95,885
|
|
$
|
92,414
|
|
|
1.4
|
%
|
5.2
|
%
|
Certificates of
deposit ($100,000 or more)
|
7,625
|
|
8,147
|
|
8,186
|
|
|
(6.4)
|
|
(6.9)
|
|
Other time
deposits
|
5,449
|
|
5,569
|
|
5,026
|
|
|
(2.2)
|
|
8.4
|
|
Total
deposits
|
$
|
110,279
|
|
$
|
109,601
|
|
$
|
105,626
|
|
|
.6
|
%
|
4.4
|
%
|
|
|
|
|
|
|
|
Cost of total
deposits
|
.82
|
%
|
.82
|
%
|
.53
|
%
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
N/A = Not
Applicable
|
Average deposits totaled $110.3
billion for the third quarter of 2019, an increase of
$4.7 billion compared to the year-ago
quarter, reflecting growth from consumer and commercial
relationships.
Compared to the second quarter of 2019, average deposits
increased by $678 million, primarily
driven by continued growth from consumer relationships, as well as
short-term commercial deposits.
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Net loan
charge-offs
|
$
|
196
|
|
$
|
65
|
|
$
|
60
|
|
|
201.5
|
%
|
226.7
|
%
|
Net loan charge-offs
to average total loans
|
.85
|
%
|
.29
|
%
|
.27
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming loans
at period end (a)
|
$
|
585
|
|
$
|
561
|
|
$
|
645
|
|
|
4.3
|
|
(9.3)
|
|
Nonperforming assets
at period end (a)
|
711
|
|
608
|
|
674
|
|
|
16.9
|
|
5.5
|
|
Allowance for loan
and lease losses
|
893
|
|
890
|
|
887
|
|
|
.3
|
|
.7
|
|
Allowance for loan
and lease losses to nonperforming loans (a)
|
152.6
|
%
|
158.6
|
%
|
137.5
|
%
|
|
N/A
|
|
N/A
|
|
Provision for credit
losses
|
$
|
200
|
|
$
|
74
|
|
$
|
62
|
|
|
170.3
|
%
|
222.6
|
%
|
|
|
|
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $497 million, $518 million, and $606 million of
purchased credit impaired loans at September 30, 2019, June 30,
2019, and
September 30, 2018, respectively.
|
N/A = Not
Applicable
|
In the third quarter of 2019, Key realized a $123 million pre-tax loss related to a previously
disclosed fraud incident. Excluding the fraud loss, Key's provision
for credit losses was $77 million for
the third quarter of 2019, compared to $62
million for the third quarter of 2018 and $74 million for the second quarter of 2019. Key's
allowance for loan and lease losses was $893
million, or .96% of total period-end loans at September 30, 2019, compared to .99% at
September 30, 2018, and .97% at
June 30, 2019.
Excluding the fraud loss, net loan charge-offs for the third
quarter of 2019 totaled $73 million,
or .31% of average total loans. These results compare to
$60 million, or .27%, for the third
quarter of 2018, and $65 million, or
.29%, for the second quarter of 2019.
At September 30, 2019, Key's
nonperforming loans totaled $585
million, which represented .63% of period-end portfolio
loans. These results compare to .72% at September 30, 2018, and .61% at June 30, 2019. Nonperforming assets at
September 30, 2019, totaled
$711 million, and represented .77% of
period-end portfolio loans and OREO and other nonperforming assets.
These results compare to .75% at September
30, 2018, and .66% at June 30,
2019.
CAPITAL
Key's estimated risk-based capital ratios included in the
following table continued to exceed all "well-capitalized"
regulatory benchmarks at September 30,
2019.
Capital
Ratios
|
|
|
|
|
|
|
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
Common Equity Tier 1
(a)
|
9.52
|
%
|
9.57
|
%
|
9.95
|
%
|
Tier 1 risk-based
capital (a)
|
10.96
|
|
11.01
|
|
11.11
|
|
Total risk based
capital (a)
|
12.96
|
|
13.03
|
|
12.99
|
|
Tangible common
equity to tangible assets (b)
|
8.58
|
|
8.59
|
|
8.05
|
|
Leverage
(a)
|
9.92
|
|
10.00
|
|
10.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
9/30/2019 ratio is
estimated.
|
(b)
|
The table entitled
"GAAP to Non-GAAP Reconciliations" in the attached financial
supplement presents the computations of certain financial measures
related to "tangible common equity." The table reconciles the GAAP
performance measures to the corresponding non-GAAP measures, which
provides a basis for period-to-period comparisons. See below for
further information on the Regulatory Capital Rules.
|
Key's capital position remained strong in the third quarter of
2019. As shown in the preceding table, at September 30, 2019, Key's estimated Common Equity
Tier 1 and Tier 1 risk-based capital ratios stood at 9.52% and
10.96%, respectively. Key's tangible common equity ratio was 8.58%
at September 30, 2019.
As a "standardized approach" banking organization, Key's
mandatory compliance with the final Basel III capital framework for
U.S. banking organizations (the "Regulatory Capital Rules") began
on January 1, 2015, subject to
transitional provisions. Key's estimated Common Equity Tier 1 ratio
as calculated under the fully phased-in Regulatory Capital Rules
was 9.44% at September 30, 2019. This
estimate exceeds the fully phased-in required minimum Common Equity
Tier 1 and Capital Conservation Buffer of 7.00%.
Summary of Changes
in Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
in
thousands
|
|
|
|
|
Change 3Q19
vs.
|
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Shares outstanding at
beginning of period
|
1,003,114
|
|
1,013,186
|
|
1,058,944
|
|
|
(1.0)
|
%
|
(5.3)
|
%
|
Open market
repurchases and return of shares under employee
compensation plans
|
(15,076)
|
|
(10,412)
|
|
(25,418)
|
|
|
44.8
|
|
(40.7)
|
|
Shares issued under
employee compensation plans (net of cancellations)
|
500
|
|
340
|
|
761
|
|
|
47.1
|
|
(34.3)
|
|
Shares outstanding at
end of period
|
988,538
|
|
1,003,114
|
|
1,034,287
|
|
|
(1.5)
|
%
|
(4.4)
|
%
|
|
|
|
|
|
|
|
Consistent with Key's 2019 Capital Plan, during the third
quarter of 2019, Key declared a dividend of $.185 per common share, representing a 9%
increase from the prior quarter. Key also completed $248 million of common share repurchases during
the quarter.
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 3Q19
vs.
|
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Revenue from
continuing operations (TE)
|
|
|
|
|
|
|
Consumer
Bank
|
$
|
833
|
|
$
|
825
|
|
$
|
809
|
|
|
1.0
|
%
|
3.0
|
%
|
Commercial
Bank
|
779
|
|
760
|
|
753
|
|
|
2.5
|
|
3.5
|
|
Other
(a)
|
18
|
|
26
|
|
40
|
|
|
(30.8)
|
|
(55.0)
|
%
|
Total
|
$
|
1,630
|
|
$
|
1,611
|
|
$
|
1,602
|
|
|
1.2
|
%
|
1.7
|
%
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key
|
|
|
|
|
|
|
Consumer
Bank
|
$
|
194
|
|
$
|
177
|
|
$
|
168
|
|
|
9.6
|
%
|
15.5
|
%
|
Commercial
Bank
|
304
|
|
277
|
|
274
|
|
|
9.7
|
|
10.9
|
|
Other (a),
(b)
|
(82)
|
|
(29)
|
|
40
|
|
|
N/M
|
|
N/M
|
|
Total
|
$
|
416
|
|
$
|
425
|
|
$
|
482
|
|
|
(2.1)
|
%
|
(13.7)
|
%
|
|
|
|
|
|
|
|
|
(a)
|
Other includes other
segments that consists of corporate treasury, our principal
investing unit, and various exit portfolios as well as reconciling
items which primarily represents the unallocated portion of
nonearning assets of corporate support functions. Charges related
to the funding of these assets are part of net interest income and
are allocated to the business segments through noninterest expense.
Reconciling items also includes intercompany eliminations and
certain items that are not allocated to the business segments
because they do not reflect their normal operations.
|
(b)
|
Other segments
included $94 million, after tax, of notable items related to a
previously disclosed fraud loss for the third quarter of 2019;
additional detail can be found on page 24 of this
release.
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Consumer
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
595
|
|
$
|
594
|
|
$
|
583
|
|
|
.2
|
%
|
2.1
|
%
|
Noninterest
income
|
238
|
|
231
|
|
226
|
|
|
3.0
|
|
5.3
|
|
Total revenue
(TE)
|
833
|
|
825
|
|
809
|
|
|
1.0
|
|
3.0
|
|
Provision for credit
losses
|
48
|
|
40
|
|
32
|
|
|
20.0
|
|
50.0
|
|
Noninterest
expense
|
531
|
|
552
|
|
557
|
|
|
(3.8)
|
|
(4.7)
|
|
Income (loss) before
income taxes (TE)
|
254
|
|
233
|
|
220
|
|
|
9.0
|
|
15.5
|
|
Allocated income
taxes (benefit) and TE adjustments
|
60
|
|
56
|
|
52
|
|
|
7.1
|
|
15.4
|
|
Net income (loss)
attributable to Key
|
$
|
194
|
|
$
|
177
|
|
$
|
168
|
|
|
9.6
|
%
|
15.5
|
%
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
32,760
|
|
$
|
31,881
|
|
$
|
31,172
|
|
|
2.8
|
%
|
5.1
|
%
|
Total
assets
|
36,417
|
|
35,469
|
|
34,368
|
|
|
2.7
|
|
6.0
|
|
Deposits
|
72,995
|
|
72,303
|
|
69,124
|
|
|
1.0
|
|
5.6
|
|
|
|
|
|
|
|
|
Assets under
management at period end
|
$
|
39,416
|
|
$
|
38,942
|
|
$
|
40,575
|
|
|
1.2
|
%
|
(2.9)
|
%
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent
|
Additional
Consumer Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
90
|
|
$
|
91
|
|
$
|
89
|
|
|
(1.1)
|
%
|
1.1
|
|
Service charges on
deposit accounts
|
58
|
|
56
|
|
57
|
|
|
3.6
|
|
1.8
|
%
|
Cards and payments
income
|
52
|
|
54
|
|
52
|
|
|
(3.7)
|
|
.0
|
|
Other noninterest
income
|
38
|
|
30
|
|
28
|
|
|
26.7
|
|
35.7
|
|
Total noninterest
income
|
$
|
238
|
|
$
|
231
|
|
$
|
226
|
|
|
3.0
|
%
|
5.3
|
%
|
|
|
|
|
|
|
|
Average deposit
balances
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
43,638
|
|
$
|
42,800
|
|
$
|
40,540
|
|
|
2.0
|
%
|
7.6
|
%
|
Savings
deposits
|
4,406
|
|
4,506
|
|
4,749
|
|
|
(2.2)
|
|
(7.2)
|
|
Certificates of
deposit ($100,000 or more)
|
6,488
|
|
6,644
|
|
5,384
|
|
|
(2.3)
|
|
20.5
|
|
Other time
deposits
|
5,430
|
|
5,549
|
|
5,014
|
|
|
(2.1)
|
|
8.3
|
|
Noninterest-bearing
deposits
|
13,033
|
|
12,804
|
|
13,437
|
|
|
1.8
|
|
(3.0)
|
|
Total
deposits
|
$
|
72,995
|
|
$
|
72,303
|
|
$
|
69,124
|
|
|
1.0
|
%
|
5.6
|
%
|
|
|
|
|
|
|
|
Home equity
loans
|
|
|
|
|
|
|
Average
balance
|
$
|
10,413
|
|
$
|
10,618
|
|
$
|
11,317
|
|
|
|
|
Combined
weighted-average loan-to-value ratio (at date of
origination)
|
70
|
%
|
70
|
%
|
70
|
%
|
|
|
|
Percent first lien
positions
|
60
|
|
60
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
|
|
Branches
|
1,101
|
|
1,102
|
|
1,166
|
|
|
|
|
Automated teller
machines
|
1,422
|
|
1,430
|
|
1,518
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Bank Summary of Operations (3Q19 vs. 3Q18)
- Net income attributable to Key of $194
million for the third quarter of 2019, compared to
$168 million for the year-ago
quarter
- Taxable equivalent net interest income increased by
$12 million, or 2.1%, from the third
quarter of 2018. The increase in net interest income was primarily
driven by balance sheet growth
- Average loans and leases increased $1.6
billion, or 5.1%. This was driven by Laurel Road along with
strength in residential mortgage and indirect auto lending. This
growth was partially offset by a $904
million, or 8.0%, decrease in home equity balances
- Average deposits increased $3.9
billion, or 5.6%, from the third quarter of 2018. This was
driven by growth in money market and certificates of deposit,
reflecting Key's relationship strategy
- Provision for credit losses increased $16 million compared to the third quarter of
2018, driven by balance sheet growth. Credit quality remained
stable to the year-ago quarter
- Noninterest income increased $12
million, or 5.3%, from the year ago quarter. This was
primarily driven by growth in consumer mortgage income which
increased $5 million, or 55.6%
- Noninterest expense decreased $26
million, or 4.7%, from the year ago quarter. The decline
reflects the benefit of efficiency initiatives, strong expense
discipline, and the elimination of the FDIC quarterly surcharge.
The decline in expense was partially offset by expenses related to
the acquisition of Laurel Road
Commercial
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Summary of
operations
|
|
|
|
|
|
|
Net interest income
(TE)
|
$
|
399
|
|
$
|
405
|
|
$
|
415
|
|
|
(1.5)
|
%
|
(3.9)
|
%
|
Noninterest
income
|
380
|
|
355
|
|
338
|
|
|
7.0
|
|
12.4
|
|
Total revenue
(TE)
|
779
|
|
760
|
|
753
|
|
|
2.5
|
|
3.5
|
|
Provision for credit
losses
|
32
|
|
33
|
|
31
|
|
|
(3.0)
|
|
3.2
|
|
Noninterest
expense
|
372
|
|
389
|
|
385
|
|
|
(4.4)
|
|
(3.4)
|
|
Income (loss) before
income taxes (TE)
|
375
|
|
338
|
|
337
|
|
|
10.9
|
|
11.3
|
|
Allocated income
taxes and TE adjustments
|
71
|
|
61
|
|
63
|
|
|
16.4
|
|
12.7
|
|
Net income (loss)
attributable to Key
|
$
|
304
|
|
$
|
277
|
|
$
|
274
|
|
|
9.7
|
%
|
10.9
|
%
|
|
|
|
|
|
|
|
Average
balances
|
|
|
|
|
|
|
Loans and
leases
|
$
|
58,215
|
|
$
|
57,918
|
|
$
|
56,096
|
|
|
.5
|
%
|
3.8
|
%
|
Loans held for
sale
|
1,325
|
|
1,168
|
|
1,042
|
|
|
13.4
|
|
27.2
|
|
Total
assets
|
66,549
|
|
65,901
|
|
63,488
|
|
|
1.0
|
|
4.8
|
|
Deposits
|
36,204
|
|
35,960
|
|
33,603
|
|
|
0.7
|
%
|
7.7
|
%
|
|
|
|
|
|
|
|
TE = Taxable
Equivalent, N/M = Not Meaningful
|
Additional
Commercial Bank Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dollars in
millions
|
|
|
|
|
Change 3Q19
vs.
|
|
3Q19
|
2Q19
|
3Q18
|
|
2Q19
|
3Q18
|
Noninterest
income
|
|
|
|
|
|
|
Trust and investment
services income
|
$
|
28
|
|
$
|
31
|
|
$
|
28
|
|
|
(9.7)
|
%
|
—
|
%
|
Investment banking
and debt placement fees
|
176
|
|
163
|
|
165
|
|
|
8.0
|
|
6.7
|
|
Operating lease
income and other leasing gains
|
40
|
|
43
|
|
36
|
|
|
(7.0)
|
|
11.1
|
|
|
|
|
|
|
|
|
Corporate services
income
|
56
|
|
50
|
|
46
|
|
|
12.0
|
|
21.7
|
|
Service charges on
deposit accounts
|
27
|
|
27
|
|
28
|
|
|
—
|
|
(3.6)
|
|
Cards and payments
income
|
16
|
|
17
|
|
17
|
|
|
(5.9)
|
|
(5.9)
|
|
Payments and services
income
|
99
|
|
94
|
|
91
|
|
|
5.3
|
|
8.8
|
|
|
|
|
|
|
|
|
Mortgage servicing
fees
|
20
|
|
20
|
|
15
|
|
|
—
|
|
33.3
|
|
Other noninterest
income
|
17
|
|
4
|
|
3
|
|
|
325.0
|
|
466.7
|
|
Total noninterest
income
|
$
|
380
|
|
$
|
355
|
|
$
|
338
|
|
|
7.0
|
%
|
12.4
|
%
|
|
|
|
|
|
|
|
N/M = Not
Meaningful
|
Commercial Bank Summary of Operations (3Q19 vs. 3Q18)
- Net income attributable to Key of $304
million for the third quarter of 2019, compared to
$274 million for the year-ago
quarter
- Taxable-equivalent net interest income decreased by
$16 million, or 3.9%, compared to the
third quarter of 2018, driven by lower purchase accounting
accretion and loan spread compression
- Average loan and lease balances increased $2.1 billion, or 3.8%, compared to the third
quarter of 2018 driven by broad-based growth in commercial and
industrial loans
- Average deposit balances increased $2.6
billion, or 7.7%, compared to the third quarter of 2018,
driven by growth in core deposits
- Provision for credit losses increased $1
million compared to the third quarter of 2018. Credit
quality remained relatively stable compared to the third quarter of
2018
- Noninterest income increased $42
million, or 12.4%, from the prior year. Investment banking
and debt placement fees increased $11
million, or 6.7%, from the prior year, primarily related to
strength in commercial mortgage fees. Corporate services income
increased $10 million, or 21.7%,
driven by increased client activity related to derivatives
- Noninterest expense decreased by $13
million, or 3.4%, from the third quarter of 2018. The
decline reflects the benefit of efficiency initiatives, strong
expense discipline, and the elimination of the FDIC quarterly
surcharge
KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in
Cleveland, Ohio, Key is one of the
nation's largest bank-based financial services companies, with
assets of approximately $146.7
billion at September 30,
2019.
Key provides deposit, lending, cash management, and investment
services to individuals and businesses in 15 states under the name
KeyBank National Association through a network of over 1,100
branches and more than 1,400 ATMs. Key also provides a broad range
of sophisticated corporate and investment banking products, such as
merger and acquisition advice, public and private debt and equity,
syndications and derivatives to middle market companies in selected
industries throughout the United
States under the KeyBanc Capital Markets trade name. For
more information, visit https://www.key.com/. KeyBank is Member
FDIC.
This earnings
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements do not relate strictly to historical or current facts.
Forward-looking statements usually can be identified by the use of
words such as "goal," "objective," "plan," "expect," "assume,"
"anticipate," "intend," "project," "believe," "estimate," or other
words of similar meaning. Forward-looking statements provide our
current expectations or forecasts of future events, circumstances,
results, or aspirations. Forward-looking statements, by their
nature, are subject to assumptions, risks and uncertainties, many
of which are outside of our control. Our actual results may differ
materially from those set forth in our forward-looking statements.
There is no assurance that any list of risks and uncertainties or
risk factors is complete. Factors that could cause Key's actual
results to differ from those described in the forward-looking
statements can be found in KeyCorp's Form 10-K for the year ended
December 31, 2018, as well as in KeyCorp's subsequent SEC filings,
all of which have been or will be filed with the Securities and
Exchange Commission (the "SEC") and are or will be available on
Key's website (www.key.com/ir) and on the SEC's website
(www.sec.gov). These factors may include, among others:
deterioration of commercial real estate market fundamentals,
adverse changes in credit quality trends, declining asset prices, a
reversal of the U.S. economic recovery due to financial, political,
or other shocks, and the extensive regulation of the U.S. financial
services industry. Any forward-looking statements made by us or on
our behalf speak only as of the date they are made and we do not
undertake any obligation to update any forward-looking statement to
reflect the impact of subsequent events or
circumstances.
|
Notes to Editors:
A live Internet broadcast of
KeyCorp's conference call to discuss quarterly results and
currently anticipated earnings trends and to answer analysts'
questions can be accessed through the Investor Relations section at
https://www.key.com/ir at 9:00 a.m.
ET, on Thursday, October 17,
2019. An audio replay of the call will be available through
October 27, 2019.
KeyCorp
Third Quarter
2019
Financial Supplement
Financial
Highlights
|
(dollars in millions,
except per share amounts)
|
|
|
|
Three months
ended
|
|
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
Summary of
operations
|
|
|
|
|
Net interest income
(TE)
|
$
|
980
|
|
$
|
989
|
|
$
|
993
|
|
|
Noninterest
income
|
650
|
|
622
|
|
609
|
|
|
|
Total revenue
(TE)
|
1,630
|
|
1,611
|
|
1,602
|
|
|
Provision for credit
losses
|
200
|
|
74
|
|
62
|
|
|
Noninterest
expense
|
939
|
|
1,019
|
|
964
|
|
|
Income (loss) from
continuing operations attributable to Key
|
413
|
|
423
|
|
482
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
3
|
|
2
|
|
—
|
|
|
Net income (loss)
attributable to Key
|
416
|
|
425
|
|
482
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
383
|
|
403
|
|
468
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
3
|
|
2
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders
|
386
|
|
405
|
|
468
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.39
|
|
$
|
.40
|
|
$
|
.45
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders (a)
|
.39
|
|
.40
|
|
.45
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
.38
|
|
.40
|
|
.45
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming
dilution
|
—
|
|
—
|
|
—
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(a)
|
.39
|
|
.40
|
|
.45
|
|
|
|
|
|
|
|
|
Cash dividends
declared
|
.185
|
|
.17
|
|
.17
|
|
|
Book value at period
end
|
15.44
|
|
15.07
|
|
13.33
|
|
|
Tangible book value
at period end
|
12.48
|
|
12.12
|
|
10.59
|
|
|
Market price at
period end
|
17.84
|
|
17.75
|
|
19.89
|
|
|
|
|
|
|
|
Performance
ratios
|
|
|
|
|
From continuing
operations:
|
|
|
|
|
Return on average
total assets
|
1.14
|
%
|
1.19
|
%
|
1.40
|
%
|
|
Return on average
common equity
|
9.99
|
|
10.94
|
|
13.36
|
|
|
Return on average
tangible common equity (b)
|
12.38
|
|
13.69
|
|
16.81
|
|
|
Net interest margin
(TE)
|
3.00
|
|
3.06
|
|
3.18
|
|
|
Cash efficiency ratio
(b)
|
56.0
|
|
61.9
|
|
58.7
|
|
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
|
Return on average
total assets
|
1.14
|
%
|
1.19
|
%
|
1.39
|
%
|
|
Return on average
common equity
|
10.07
|
|
11.00
|
|
13.36
|
|
|
Return on average
tangible common equity (b)
|
12.48
|
|
13.75
|
|
16.81
|
|
|
Net interest margin
(TE)
|
2.98
|
|
3.05
|
|
3.16
|
|
|
Loan to deposit
(c)
|
85.3
|
|
86.1
|
|
87.0
|
|
|
|
|
|
|
|
Capital ratios at
period end
|
|
|
|
|
Key shareholders'
equity to assets
|
11.67
|
%
|
11.74
|
%
|
10.96
|
%
|
|
Key common
shareholders' equity to assets
|
10.40
|
|
10.46
|
|
9.93
|
|
|
Tangible common
equity to tangible assets (b)
|
8.58
|
|
8.59
|
|
8.05
|
|
|
Common Equity Tier 1
(d)
|
9.52
|
|
9.57
|
|
9.95
|
|
|
Tier 1 risk-based
capital (d)
|
10.96
|
|
11.01
|
|
11.11
|
|
|
Total risk-based
capital (d)
|
12.96
|
|
13.03
|
|
12.99
|
|
|
Leverage
(d)
|
9.92
|
|
10.00
|
|
10.03
|
|
|
|
|
|
|
|
Asset quality —
from continuing operations
|
|
|
|
|
Net loan
charge-offs
|
$
|
196
|
|
$
|
65
|
|
$
|
60
|
|
|
Net loan charge-offs
to average loans
|
.85
|
%
|
.29
|
%
|
.27
|
%
|
|
Allowance for loan
and lease losses
|
$
|
893
|
|
$
|
890
|
|
$
|
887
|
|
|
Allowance for credit
losses
|
958
|
|
954
|
|
947
|
|
|
Allowance for loan
and lease losses to period-end loans
|
.96
|
%
|
.97
|
%
|
0.99
|
%
|
|
Allowance for credit
losses to period-end loans
|
1.03
|
|
1.04
|
|
1.06
|
|
|
Allowance for loan
and lease losses to nonperforming loans (e)
|
152.6
|
|
158.6
|
|
137.5
|
|
|
Allowance for credit
losses to nonperforming loans (e)
|
163.8
|
|
170.1
|
|
146.8
|
|
|
Nonperforming loans
at period-end (e)
|
$
|
585
|
|
$
|
561
|
|
$
|
645
|
|
|
Nonperforming assets
at period-end (e)
|
711
|
|
608
|
|
674
|
|
|
Nonperforming loans
to period-end portfolio loans (e)
|
.63
|
%
|
.61
|
%
|
.72
|
%
|
|
Nonperforming assets
to period-end portfolio loans plus OREO and other nonperforming
assets (e)
|
.77
|
|
.66
|
|
.75
|
|
|
|
|
|
|
|
Trust
assets
|
|
|
|
|
Assets under
management
|
$
|
39,416
|
|
$
|
38,942
|
|
$
|
40,575
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
Average full-time
equivalent employees
|
16,898
|
|
17,206
|
|
18,150
|
|
|
Branches
|
1,101
|
|
1,102
|
|
1,166
|
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
$
|
8
|
|
$
|
8
|
|
$
|
7
|
|
Financial
Highlights (continued)
|
(dollars in millions,
except per share amounts)
|
|
|
Nine months
ended
|
|
|
9/30/2019
|
9/30/2018
|
Summary of
operations
|
|
|
|
Net interest income
(TE)
|
$
|
2,954
|
|
$
|
2,932
|
|
|
Noninterest
income
|
1,808
|
|
1,870
|
|
|
Total revenue
(TE)
|
4,762
|
|
4,802
|
|
|
Provision for credit
losses
|
336
|
|
187
|
|
|
Noninterest
expense
|
2,921
|
|
2,963
|
|
|
Income (loss) from
continuing operations attributable to Key
|
1,242
|
|
1,377
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
6
|
|
5
|
|
|
Net income (loss)
attributable to Key
|
1,248
|
|
1,382
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
1,172
|
|
$
|
1,334
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
6
|
|
5
|
|
|
Net income (loss)
attributable to Key common shareholders
|
1,178
|
|
1,339
|
|
|
|
|
|
Per common
share
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
1.17
|
|
$
|
1.27
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
.01
|
|
.01
|
|
|
Net income (loss)
attributable to Key common shareholders (a)
|
1.18
|
|
1.28
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common shareholders —
assuming dilution
|
1.16
|
|
1.26
|
|
|
Income (loss) from
discontinued operations, net of taxes — assuming
dilution
|
.01
|
|
.01
|
|
|
Net income (loss)
attributable to Key common shareholders — assuming dilution
(a)
|
1.17
|
|
1.26
|
|
|
|
|
|
|
Cash dividends
paid
|
.525
|
|
.395
|
|
|
|
|
|
Performance
ratios
|
|
|
|
From
continuing operations:
|
|
|
|
Return on average
total assets
|
1.17
|
%
|
1.35
|
%
|
|
Return on average
common equity
|
10.62
|
|
12.81
|
|
|
Return on average
tangible common equity (b)
|
13.23
|
|
16.16
|
|
|
Net interest margin
(TE)
|
3.06
|
|
3.17
|
|
|
Cash efficiency ratio
(b)
|
59.9
|
|
60.1
|
|
|
|
|
|
|
From consolidated
operations:
|
|
|
|
Return on average
total assets
|
1.16
|
%
|
1.35
|
%
|
|
Return on average
common equity
|
10.68
|
|
12.86
|
|
|
Return on average
tangible common equity (b)
|
13.30
|
|
16.22
|
|
|
Net interest margin
(TE)
|
3.05
|
|
3.15
|
|
|
|
|
|
Asset quality —
from continuing operations
|
|
|
|
Net loan
charge-offs
|
$
|
325
|
|
$
|
174
|
|
|
Net loan charge-offs
to average total loans
|
.48
|
%
|
.26
|
%
|
|
|
|
|
Other
data
|
|
|
|
Average full-time
equivalent employees
|
17,217
|
|
18,354
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
24
|
|
23
|
|
|
|
(a)
|
Earnings per share
may not foot due to rounding.
|
(b)
|
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.
|
(c)
|
Represents period-end
consolidated total loans and loans held for sale divided by
period-end consolidated total deposits.
|
(d)
|
September 30, 2019,
ratio is estimated.
|
(e)
|
Nonperforming loan
balances exclude $497 million, $518 million, and $606 million of
purchased credit impaired loans at September 30, 2019, June 30,
2019, and September 30, 2018, respectively.
|
GAAP to Non-GAAP
Reconciliations
(dollars in millions)
The table below presents certain non-GAAP financial measures
related to "tangible common equity," "return on average tangible
common equity," "Common Equity Tier 1," "pre-provision net
revenue," "cash efficiency ratio," "earnings per common share
excluding notable items," "net loan charge-offs to average loans
excluding notable items," and "provision for credit losses
excluding notable items."
Notable items include certain revenue or expense items that may
occur in a reporting period which management does not consider
indicative of ongoing financial performance. Management believes it
is useful to consider certain financial metrics with and without
notable items, in order to enable a better understanding of company
results, increase comparability of period-to-period results, and to
evaluate and forecast those results.
The tangible common equity ratio and the return on average
tangible common equity ratio have been a focus for some investors,
and management believes these ratios may assist investors in
analyzing Key's capital position without regard to the effects of
intangible assets and preferred stock. Traditionally, the banking
regulators have assessed bank and bank holding company capital
adequacy based on both the amount and the composition of capital,
the calculation of which is prescribed in federal banking
regulations. In October 2013, the
federal banking regulators published the final Basel III capital
framework for U.S. banking organizations (the "Regulatory Capital
Rules"). The Regulatory Capital Rules require higher and
better-quality capital and introduced a new capital measure,
"Common Equity Tier 1," a non-GAAP financial measure. The mandatory
compliance date for Key as a "standardized approach" banking
organization began on January 1,
2015, subject to transitional provisions.
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
|
|
Nine months
ended
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
9/30/2019
|
9/30/2018
|
Tangible common
equity to tangible assets at period-end
|
|
|
|
|
|
|
Key shareholders'
equity (GAAP)
|
$
|
17,116
|
|
$
|
16,969
|
|
$
|
15,208
|
|
|
|
|
Less: Intangible
assets (a)
|
2,928
|
|
2,952
|
|
2,838
|
|
|
|
|
Preferred Stock
(b)
|
1,856
|
|
1,856
|
|
1,421
|
|
|
|
|
Tangible common
equity (non-GAAP)
|
$
|
12,332
|
|
$
|
12,161
|
|
$
|
10,949
|
|
|
|
|
Total assets
(GAAP)
|
$
|
146,691
|
|
$
|
144,545
|
|
$
|
138,805
|
|
|
|
|
Less: Intangible
assets (a)
|
2,928
|
|
2,952
|
|
2,838
|
|
|
|
|
Tangible assets
(non-GAAP)
|
$
|
143,763
|
|
$
|
141,593
|
|
$
|
135,967
|
|
|
|
|
Tangible common
equity to tangible assets ratio (non-GAAP)
|
8.58
|
%
|
8.59
|
%
|
8.05
|
%
|
|
|
|
Earnings per
common share (EPS) excluding notable items
|
|
|
|
|
|
|
EPS from continuing
operations attributable to Key common shareholders —
assuming dilution (GAAP)
|
$
|
.38
|
|
$
|
.40
|
|
$
|
.45
|
|
|
|
|
Plus: EPS impact of
notable items
|
.10
|
|
.04
|
|
—
|
|
|
|
|
EPS from continuing
operations attributable to Key common shareholders —
assuming dilution excluding notable items (non-GAAP)
|
$
|
.48
|
|
$
|
.44
|
|
$
|
.45
|
|
|
|
|
Pre-provision net
revenue
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
972
|
|
$
|
981
|
|
$
|
986
|
|
|
$
|
2,930
|
|
$
|
2,909
|
|
Plus:
Taxable-equivalent adjustment
|
8
|
|
8
|
|
7
|
|
|
24
|
|
23
|
|
Noninterest
income
|
650
|
|
622
|
|
609
|
|
|
1,808
|
|
1,870
|
|
Less: Noninterest
expense
|
939
|
|
1,019
|
|
964
|
|
|
2,921
|
|
2,963
|
|
Pre-provision net
revenue from continuing operations (non-GAAP)
|
$
|
691
|
|
$
|
592
|
|
$
|
638
|
|
|
$
|
1,841
|
|
$
|
1,839
|
|
Average tangible
common equity
|
|
|
|
|
|
|
Average Key
shareholders' equity (GAAP)
|
$
|
17,113
|
|
$
|
16,531
|
|
$
|
15,210
|
|
|
$
|
16,454
|
|
$
|
15,045
|
|
Less: Intangible
assets (average) (c)
|
2,942
|
|
2,959
|
|
2,848
|
|
|
2,905
|
|
2,882
|
|
Preferred stock
(average)
|
1,900
|
|
1,762
|
|
1,316
|
|
|
1,705
|
|
1,123
|
|
Average tangible
common equity (non-GAAP)
|
$
|
12,271
|
|
$
|
11,810
|
|
$
|
11,046
|
|
|
$
|
11,844
|
|
$
|
11,040
|
|
Return on average
tangible common equity from continuing operations
|
|
|
|
|
|
|
Net income (loss)
from continuing operations attributable to Key common
shareholders (GAAP)
|
$
|
383
|
|
$
|
403
|
|
$
|
468
|
|
|
$
|
1,172
|
|
$
|
1,334
|
|
Average tangible
common equity (non-GAAP)
|
12,271
|
|
11,810
|
|
11,046
|
|
|
11,844
|
|
11,040
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity from continuing operations
(non-GAAP)
|
12.38
|
%
|
13.69
|
%
|
16.81
|
%
|
|
13.23
|
%
|
16.16
|
%
|
Return on average
tangible common equity consolidated
|
|
|
|
|
|
|
Net income (loss)
attributable to Key common shareholders (GAAP)
|
$
|
386
|
|
$
|
405
|
|
$
|
468
|
|
|
$
|
1,178
|
|
$
|
1,339
|
|
Average tangible
common equity (non-GAAP)
|
12,271
|
|
11,810
|
|
11,046
|
|
|
11,844
|
|
11,040
|
|
|
|
|
|
|
|
|
Return on average
tangible common equity consolidated (non-GAAP)
|
12.48
|
%
|
13.75
|
%
|
16.81
|
%
|
|
13.30
|
%
|
16.22
|
%
|
GAAP to Non-GAAP
Reconciliations (continued)
|
(dollars in
millions)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
9/30/2019
|
9/30/2018
|
Cash efficiency
ratio
|
|
|
|
|
|
|
Noninterest expense
(GAAP)
|
$
|
939
|
|
$
|
1,019
|
|
$
|
964
|
|
|
$
|
2,921
|
|
$
|
2,963
|
|
Less: Intangible
asset amortization
|
26
|
|
22
|
|
23
|
|
|
70
|
|
77
|
|
Adjusted noninterest
expense (non-GAAP)
|
$
|
913
|
|
$
|
997
|
|
$
|
941
|
|
|
$
|
2,851
|
|
$
|
2,886
|
|
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
$
|
972
|
|
$
|
981
|
|
$
|
986
|
|
|
$
|
2,930
|
|
$
|
2,909
|
|
Plus:
Taxable-equivalent adjustment
|
8
|
|
8
|
|
7
|
|
|
24
|
|
23
|
|
Noninterest
income
|
650
|
|
622
|
|
609
|
|
|
1,808
|
|
1,870
|
|
Total
taxable-equivalent revenue (non-GAAP)
|
$
|
1,630
|
|
$
|
1,611
|
|
$
|
1,602
|
|
|
$
|
4,762
|
|
$
|
4,802
|
|
|
|
|
|
|
|
|
Cash efficiency ratio
(non-GAAP)
|
56.0
|
%
|
61.9
|
%
|
58.7
|
%
|
|
59.9
|
%
|
60.1
|
%
|
Net loan
charge-offs to average total loans excluding notable
items
|
|
|
|
|
|
|
Net loan charge-offs
(GAAP)
|
$
|
196
|
|
$
|
65
|
|
$
|
60
|
|
|
$
|
325
|
|
$
|
174
|
|
Less: Notable
items
|
123
|
|
—
|
|
—
|
|
|
123
|
|
—
|
|
Net loan charge-offs
excluding notable items (non-GAAP)
|
$
|
73
|
|
$
|
65
|
|
$
|
60
|
|
|
$
|
202
|
|
$
|
174
|
|
|
|
|
|
|
|
|
Average loans
outstanding
|
$
|
91,956
|
|
$
|
90,785
|
|
$
|
88,467
|
|
|
$
|
90,805
|
|
$
|
88,018
|
|
|
|
|
|
|
|
|
Net loan charge-offs
to average total loans excluding notable items
(non-GAAP)
|
.31
|
%
|
.29
|
%
|
.27
|
%
|
|
.30
|
%
|
.26
|
%
|
Provision for
credit losses excluding notable items
|
|
|
|
|
|
|
Provision for credit
losses (GAAP)
|
$
|
200
|
|
$
|
74
|
|
$
|
62
|
|
|
$
|
336
|
|
$
|
187
|
|
Less: Notable
Items
|
123
|
|
—
|
|
—
|
|
|
123
|
|
—
|
|
Provision for credit
loses excluding notable items (non-GAAP)
|
$
|
77
|
|
$
|
74
|
|
$
|
62
|
|
|
$
|
213
|
|
$
|
187
|
|
|
|
|
Three
months
ended
|
|
|
|
9/30/2019
|
Common Equity Tier
1 under the Regulatory Capital Rules ("RCR")
(estimates)
|
|
|
Common Equity Tier 1
under current RCR
|
$
|
12,288
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
Deferred tax assets
and other intangible assets (e)
|
—
|
|
|
|
Common Equity Tier 1
anticipated under the fully phased-in RCR (f)
|
$
|
12,288
|
|
|
|
|
|
|
Net risk-weighted
assets under current RCR
|
$
|
129,099
|
|
|
Adjustments from
current RCR to the fully phased-in RCR:
|
|
|
|
Mortgage servicing
assets (g)
|
838
|
|
|
|
Deferred tax
assets
|
201
|
|
|
|
All other
assets
|
—
|
|
|
|
Total risk-weighted
assets anticipated under the fully phased-in RCR
(f)
|
$
|
130,138
|
|
|
|
|
|
|
Common Equity Tier 1
ratio under the fully phased-in RCR (f)
|
9.44
|
%
|
|
|
|
|
(a)
|
For the three months
ended September 30, 2019, June 30, 2019, and September 30, 2018,
intangible assets exclude $9 million, $10 million, and $17 million,
respectively, of period-end purchased credit card
receivables.
|
(b)
|
Net of capital
surplus.
|
(c)
|
For the three months
ended September 30, 2019, June 30, 2019, and September 30, 2018,
average intangible assets exclude $9 million, $11 million, and $18
million, respectively, of average purchased credit card
receivables. For the nine months ended September 30, 2019, and
September 30, 2018, average intangible assets exclude $11 million
and $21 million, respectively, of average purchase credit card
receivables.
|
(d)
|
Additional detail
provided in Notable Items table on page 24 of this
release.
|
(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 (fully
phased-in); Key is subject to the Regulatory Capital Rules under
the "standardized approach."
|
(g)
|
Item is included in
the 25% exceptions bucket calculation and is risk-weighted at
250%.
|
GAAP = U.S. generally
accepted accounting principles
|
Consolidated
Balance Sheets
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
Assets
|
|
|
|
|
Loans
|
$
|
92,760
|
|
$
|
91,937
|
|
$
|
89,268
|
|
|
Loans held for
sale
|
1,598
|
|
1,790
|
|
1,618
|
|
|
Securities available
for sale
|
22,378
|
|
21,528
|
|
18,341
|
|
|
Held-to-maturity
securities
|
10,490
|
|
10,878
|
|
11,869
|
|
|
Trading account
assets
|
963
|
|
1,005
|
|
958
|
|
|
Short-term
investments
|
3,351
|
|
2,443
|
|
2,272
|
|
|
Other
investments
|
620
|
|
632
|
|
681
|
|
|
|
Total earning
assets
|
132,160
|
|
130,213
|
|
125,007
|
|
|
Allowance for loan
and lease losses
|
(893)
|
|
(890)
|
|
(887)
|
|
|
Cash and due from
banks
|
636
|
|
607
|
|
319
|
|
|
Premises and
equipment
|
815
|
|
829
|
|
891
|
|
|
Goodwill
|
2,664
|
|
2,664
|
|
2,516
|
|
|
Other intangible
assets
|
272
|
|
298
|
|
338
|
|
|
Corporate-owned life
insurance
|
4,216
|
|
4,201
|
|
4,156
|
|
|
Accrued income and
other assets
|
5,881
|
|
5,633
|
|
5,308
|
|
|
Discontinued
assets
|
940
|
|
990
|
|
1,157
|
|
|
|
Total
assets
|
$
|
146,691
|
|
144,545
|
|
138,805
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits in domestic
offices:
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
65,604
|
|
$
|
63,619
|
|
$
|
57,219
|
|
|
|
Savings
deposits
|
4,668
|
|
4,747
|
|
4,948
|
|
|
|
Certificates of
deposit ($100,000 or more)
|
7,194
|
|
8,084
|
|
8,453
|
|
|
|
Other time
deposits
|
5,300
|
|
5,524
|
|
5,130
|
|
|
|
Total
interest-bearing deposits
|
82,766
|
|
81,974
|
|
75,750
|
|
|
|
Noninterest-bearing
deposits
|
28,883
|
|
27,972
|
|
30,030
|
|
|
|
Total
deposits
|
111,649
|
|
109,946
|
|
105,780
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
182
|
|
161
|
|
1,285
|
|
|
Bank notes and other
short-term borrowings
|
700
|
|
720
|
|
637
|
|
|
Accrued expense and
other liabilities
|
2,574
|
|
2,435
|
|
2,044
|
|
|
Long-term
debt
|
14,470
|
|
14,312
|
|
13,849
|
|
|
|
Total
liabilities
|
129,575
|
|
127,574
|
|
123,595
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred
stock
|
1,900
|
|
1,900
|
|
1,450
|
|
|
Common
shares
|
1,257
|
|
1,257
|
|
1,257
|
|
|
Capital
surplus
|
6,287
|
|
6,266
|
|
6,315
|
|
|
Retained
earnings
|
12,209
|
|
12,005
|
|
11,262
|
|
|
Treasury stock, at
cost
|
(4,696)
|
|
(4,457)
|
|
(3,910)
|
|
|
Accumulated other
comprehensive income (loss)
|
159
|
|
(2)
|
|
(1,166)
|
|
|
|
Key shareholders'
equity
|
17,116
|
|
16,969
|
|
15,208
|
|
|
Noncontrolling
interests
|
—
|
|
2
|
|
2
|
|
|
|
Total
equity
|
17,116
|
|
16,971
|
|
15,210
|
|
Total liabilities
and equity
|
$
|
146,691
|
|
$
|
144,545
|
|
$
|
138,805
|
|
|
|
|
|
|
|
Common shares
outstanding (000)
|
988,538
|
|
1,003,114
|
|
1,034,287
|
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts)
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
9/30/2019
|
9/30/2018
|
Interest
income
|
|
|
|
|
|
|
|
Loans
|
$
|
1,073
|
|
$
|
1,082
|
|
$
|
1,025
|
|
|
$
|
3,221
|
|
$
|
2,965
|
|
|
Loans held for
sale
|
18
|
|
15
|
|
12
|
|
|
46
|
|
40
|
|
|
Securities available
for sale
|
136
|
|
135
|
|
102
|
|
|
400
|
|
294
|
|
|
Held-to-maturity
securities
|
64
|
|
67
|
|
72
|
|
|
199
|
|
213
|
|
|
Trading account
assets
|
7
|
|
9
|
|
7
|
|
|
24
|
|
21
|
|
|
Short-term
investments
|
16
|
|
17
|
|
15
|
|
|
49
|
|
31
|
|
|
Other
investments
|
3
|
|
4
|
|
6
|
|
|
11
|
|
17
|
|
|
|
Total interest
income
|
1,317
|
|
1,329
|
|
1,239
|
|
|
3,950
|
|
3,581
|
|
Interest
expense
|
|
|
|
|
|
|
|
Deposits
|
227
|
|
223
|
|
140
|
|
|
652
|
|
343
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
—
|
|
—
|
|
1
|
|
|
1
|
|
10
|
|
|
Bank notes and other
short-term borrowings
|
4
|
|
5
|
|
4
|
|
|
13
|
|
17
|
|
|
Long-term
debt
|
114
|
|
120
|
|
108
|
|
|
354
|
|
302
|
|
|
|
Total interest
expense
|
345
|
|
348
|
|
253
|
|
|
1,020
|
|
672
|
|
Net interest
income
|
972
|
|
981
|
|
986
|
|
|
2,930
|
|
2,909
|
|
Provision for credit
losses
|
200
|
|
74
|
|
62
|
|
|
336
|
|
187
|
|
Net interest income
after provision for credit losses
|
772
|
|
907
|
|
924
|
|
|
2,594
|
|
2,722
|
|
Noninterest
income
|
|
|
|
|
|
|
|
Trust and investment
services income
|
118
|
|
122
|
|
117
|
|
|
355
|
|
378
|
|
|
Investment banking
and debt placement fees
|
176
|
|
163
|
|
166
|
|
|
449
|
|
464
|
|
|
Service charges on
deposit accounts
|
86
|
|
83
|
|
85
|
|
|
251
|
|
265
|
|
|
Operating lease
income and other leasing gains
|
42
|
|
44
|
|
35
|
|
|
123
|
|
61
|
|
|
Corporate services
income
|
63
|
|
53
|
|
52
|
|
|
171
|
|
175
|
|
|
Cards and payments
income
|
69
|
|
73
|
|
69
|
|
|
208
|
|
202
|
|
|
Corporate-owned life
insurance income
|
32
|
|
33
|
|
34
|
|
|
97
|
|
98
|
|
|
Consumer mortgage
income
|
14
|
|
10
|
|
9
|
|
|
32
|
|
23
|
|
|
Mortgage servicing
fees
|
23
|
|
24
|
|
19
|
|
|
68
|
|
61
|
|
|
Other income
(a)
|
27
|
|
17
|
|
23
|
|
|
54
|
|
143
|
|
|
|
Total noninterest
income
|
650
|
|
622
|
|
609
|
|
|
1,808
|
|
1,870
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
Personnel
|
547
|
|
589
|
|
553
|
|
|
1,699
|
|
1,733
|
|
|
Net
occupancy
|
72
|
|
73
|
|
76
|
|
|
217
|
|
233
|
|
|
Computer
processing
|
53
|
|
56
|
|
52
|
|
|
163
|
|
155
|
|
|
Business services and
professional fees
|
43
|
|
45
|
|
43
|
|
|
132
|
|
135
|
|
|
Equipment
|
27
|
|
24
|
|
27
|
|
|
75
|
|
79
|
|
|
Operating lease
expense
|
33
|
|
32
|
|
31
|
|
|
91
|
|
88
|
|
|
Marketing
|
26
|
|
24
|
|
26
|
|
|
69
|
|
77
|
|
|
FDIC
assessment
|
7
|
|
9
|
|
21
|
|
|
23
|
|
63
|
|
|
Intangible asset
amortization
|
26
|
|
22
|
|
23
|
|
|
70
|
|
77
|
|
|
OREO expense,
net
|
3
|
|
4
|
|
3
|
|
|
10
|
|
5
|
|
|
Other
expense
|
102
|
|
141
|
|
109
|
|
|
372
|
|
318
|
|
|
|
Total noninterest
expense
|
939
|
|
1,019
|
|
964
|
|
|
2,921
|
|
2,963
|
|
Income (loss) from
continuing operations before income taxes
|
483
|
|
510
|
|
569
|
|
|
1,481
|
|
1,629
|
|
|
Income
taxes
|
70
|
|
87
|
|
87
|
|
|
239
|
|
252
|
|
Income (loss) from
continuing operations
|
413
|
|
423
|
|
482
|
|
|
1,242
|
|
1,377
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
3
|
|
2
|
|
—
|
|
|
6
|
|
5
|
|
Net income
(loss)
|
416
|
|
425
|
|
482
|
|
|
1,248
|
|
1,382
|
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Net income (loss)
attributable to Key
|
$
|
416
|
|
$
|
425
|
|
$
|
482
|
|
|
$
|
1,248
|
|
$
|
1,382
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
383
|
|
$
|
403
|
|
$
|
468
|
|
|
$
|
1,172
|
|
$
|
1,334
|
|
Net income (loss)
attributable to Key common shareholders
|
386
|
|
405
|
|
468
|
|
|
1,178
|
|
1,339
|
|
Per common
share
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.39
|
|
$
|
.40
|
|
$
|
.45
|
|
|
$
|
1.17
|
|
$
|
1.27
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
.01
|
|
.01
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.39
|
|
.40
|
|
.45
|
|
|
1.18
|
|
1.28
|
|
Per common share —
assuming dilution
|
|
|
|
|
|
|
Income (loss) from
continuing operations attributable to Key common
shareholders
|
$
|
.38
|
|
$
|
.40
|
|
$
|
.45
|
|
|
$
|
1.16
|
|
$
|
1.26
|
|
Income (loss) from
discontinued operations, net of taxes
|
—
|
|
—
|
|
—
|
|
|
.01
|
|
.01
|
|
Net income (loss)
attributable to Key common shareholders (b)
|
.39
|
|
.40
|
|
.45
|
|
|
1.17
|
|
1.26
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
$
|
.185
|
|
$
|
.17
|
|
$
|
.17
|
|
|
$
|
.525
|
|
$
|
.395
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding (000)
|
988,319
|
|
999,163
|
|
1,036,479
|
|
|
998,268
|
|
1,048,397
|
|
|
Effect of common
share options and other stock awards
|
10,009
|
|
8,801
|
|
13,497
|
|
|
9,632
|
|
14,419
|
|
Weighted-average
common shares and potential common shares outstanding (000)
(c)
|
998,328
|
|
1,007,964
|
|
1,049,976
|
|
|
1,007,900
|
|
1,062,816
|
|
(a)
|
For the three and
nine months ended September 30, 2019, net securities gains (losses)
totaled $15 million. For the three months ended June 30, 2019, and
September 30, 2018, and the nine months ended September 30, 2018,
net securities gains (losses) totaled less than $1 million. For the
three months ended September 30, 2019, June 30, 2019, and September
30, 2018, and the nine months ended September 30, 2019 and
September 30, 2018, Key did not have any impairment losses related
to securities.
|
(b)
|
Earnings per share
may not foot due to rounding.
|
(c)
|
Assumes conversion of
common share options and other stock awards, as
applicable.
|
Consolidated
Average Balance Sheets, and Net Interest Income and Yields/Rates
From Continuing Operations
|
(dollars in
millions)
|
|
|
|
Third Quarter
2019
|
|
Second Quarter
2019
|
|
Third Quarter
2018
|
|
|
Average
|
|
Yield/
|
|
Average
|
|
Yield/
|
|
Average
|
|
Yield/
|
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: (b),
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial (d)
|
$
|
48,322
|
|
$
|
543
|
|
4.46
|
%
|
|
$
|
47,227
|
|
$
|
547
|
|
4.65
|
%
|
|
$
|
44,749
|
|
$
|
495
|
|
4.39
|
%
|
|
Real estate —
commercial mortgage
|
13,056
|
|
163
|
|
4.95
|
|
|
13,866
|
|
175
|
|
5.06
|
|
|
14,268
|
|
176
|
|
4.89
|
|
|
Real estate —
construction
|
1,463
|
|
19
|
|
5.22
|
|
|
1,423
|
|
20
|
|
5.41
|
|
|
1,759
|
|
22
|
|
5.05
|
|
|
Commercial lease
financing
|
4,497
|
|
42
|
|
3.68
|
|
|
4,476
|
|
41
|
|
3.65
|
|
|
4,444
|
|
43
|
|
3.88
|
|
|
Total commercial
loans
|
67,338
|
|
767
|
|
4.52
|
|
|
66,992
|
|
783
|
|
4.69
|
|
|
65,220
|
|
736
|
|
4.49
|
|
|
Real estate —
residential mortgage
|
6,256
|
|
62
|
|
3.97
|
|
|
5,790
|
|
58
|
|
4.03
|
|
|
5,466
|
|
55
|
|
3.99
|
|
|
Home equity
loans
|
10,488
|
|
132
|
|
4.97
|
|
|
10,701
|
|
135
|
|
5.05
|
|
|
11,415
|
|
137
|
|
4.80
|
|
|
Consumer direct
loans
|
2,548
|
|
45
|
|
6.99
|
|
|
2,352
|
|
43
|
|
7.39
|
|
|
1,789
|
|
35
|
|
7.71
|
|
|
Credit
cards
|
1,100
|
|
32
|
|
11.59
|
|
|
1,091
|
|
31
|
|
11.26
|
|
|
1,095
|
|
32
|
|
11.43
|
|
|
Consumer indirect
loans
|
4,226
|
|
43
|
|
4.10
|
|
|
3,859
|
|
40
|
|
4.15
|
|
|
3,482
|
|
37
|
|
4.25
|
|
|
Total consumer
loans
|
24,618
|
|
314
|
|
5.07
|
|
|
23,793
|
|
307
|
|
5.17
|
|
|
23,247
|
|
296
|
|
5.06
|
|
|
Total
loans
|
91,956
|
|
1,081
|
|
4.67
|
|
|
90,785
|
|
1,090
|
|
4.81
|
|
|
88,467
|
|
1,032
|
|
4.64
|
|
|
Loans held for
sale
|
1,558
|
|
18
|
|
4.65
|
|
|
1,302
|
|
15
|
|
4.56
|
|
|
1,117
|
|
12
|
|
4.59
|
|
|
Securities available
for sale (b), (e)
|
21,867
|
|
136
|
|
2.52
|
|
|
21,086
|
|
135
|
|
2.54
|
|
|
17,631
|
|
102
|
|
2.22
|
|
|
Held-to-maturity
securities (b)
|
10,684
|
|
64
|
|
2.41
|
|
|
11,058
|
|
67
|
|
2.41
|
|
|
12,065
|
|
72
|
|
2.40
|
|
|
Trading account
assets
|
884
|
|
7
|
|
3.00
|
|
|
1,124
|
|
9
|
|
3.28
|
|
|
787
|
|
7
|
|
3.37
|
|
|
Short-term
investments
|
2,861
|
|
16
|
|
2.19
|
|
|
3,200
|
|
17
|
|
2.23
|
|
|
2,928
|
|
15
|
|
1.93
|
|
|
Other investments
(e)
|
624
|
|
3
|
|
1.82
|
|
|
640
|
|
4
|
|
2.00
|
|
|
685
|
|
6
|
|
3.27
|
|
|
Total earning
assets
|
130,434
|
|
1,325
|
|
4.05
|
|
|
129,195
|
|
1,337
|
|
4.14
|
|
|
123,680
|
|
1,246
|
|
3.98
|
|
|
Allowance for loan
and lease losses
|
(881)
|
|
|
|
|
(881)
|
|
|
|
|
(886)
|
|
|
|
|
Accrued income and
other assets
|
14,605
|
|
|
|
|
14,321
|
|
|
|
|
13,935
|
|
|
|
|
Discontinued
assets
|
957
|
|
|
|
|
1,009
|
|
|
|
|
1,186
|
|
|
|
|
Total
assets
|
$
|
145,115
|
|
|
|
|
$
|
143,644
|
|
|
|
|
$
|
137,915
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
64,595
|
|
154
|
|
.94
|
|
|
$
|
63,071
|
|
147
|
|
.93
|
|
|
$
|
56,391
|
|
82
|
|
.58
|
|
|
Savings
deposits
|
4,709
|
|
1
|
|
.10
|
|
|
4,781
|
|
1
|
|
.09
|
|
|
5,413
|
|
3
|
|
.20
|
|
|
Certificates of
deposit ($100,000 or more)
|
7,625
|
|
45
|
|
2.37
|
|
|
8,147
|
|
48
|
|
2.37
|
|
|
8,186
|
|
38
|
|
1.86
|
|
|
Other time
deposits
|
5,449
|
|
27
|
|
1.96
|
|
|
5,569
|
|
27
|
|
1.93
|
|
|
5,026
|
|
17
|
|
1.40
|
|
|
Total
interest-bearing deposits
|
82,378
|
|
227
|
|
1.09
|
|
|
81,568
|
|
223
|
|
1.10
|
|
|
75,016
|
|
140
|
|
.74
|
|
|
Federal funds
purchased and securities sold
under repurchase agreements
|
187
|
|
—
|
|
.50
|
|
|
194
|
|
—
|
|
.20
|
|
|
552
|
|
1
|
|
1.00
|
|
|
Bank notes and other
short-term borrowings
|
626
|
|
4
|
|
2.04
|
|
|
842
|
|
5
|
|
2.46
|
|
|
596
|
|
4
|
|
2.76
|
|
|
Long-term debt
(f), (g)
|
13,347
|
|
114
|
|
3.51
|
|
|
13,213
|
|
120
|
|
3.67
|
|
|
12,678
|
|
108
|
|
3.34
|
|
|
Total
interest-bearing liabilities
|
96,538
|
|
345
|
|
1.42
|
|
|
95,817
|
|
348
|
|
1.46
|
|
|
88,842
|
|
253
|
|
1.13
|
|
|
Noninterest-bearing
deposits
|
27,901
|
|
|
|
|
28,033
|
|
|
|
|
30,610
|
|
|
|
|
Accrued expense and
other liabilities
|
2,605
|
|
|
|
|
2,253
|
|
|
|
|
2,065
|
|
|
|
|
Discontinued
liabilities (g)
|
957
|
|
|
|
|
1,009
|
|
|
|
|
1,186
|
|
|
|
|
Total
liabilities
|
128,001
|
|
|
|
|
127,112
|
|
|
|
|
122,703
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
17,113
|
|
|
|
|
16,531
|
|
|
|
|
15,210
|
|
|
|
|
Noncontrolling
interests
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
Total
equity
|
17,114
|
|
|
|
|
16,532
|
|
|
|
|
15,212
|
|
|
|
|
Total liabilities
and equity
|
$
|
145,115
|
|
|
|
|
$
|
143,644
|
|
|
|
|
$
|
137,915
|
|
|
|
Interest rate spread
(TE)
|
|
|
2.63
|
%
|
|
|
|
2.68
|
%
|
|
|
|
2.85
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
980
|
|
3.00
|
%
|
|
|
989
|
|
3.06
|
%
|
|
|
993
|
|
3.18
|
%
|
TE adjustment
(b)
|
|
8
|
|
|
|
|
8
|
|
|
|
|
7
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
972
|
|
|
|
|
$
|
981
|
|
|
|
|
$
|
986
|
|
|
(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 September 30, 2019, June 30,
2019, and September 30, 2018.
|
(c)
|
For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d)
|
Commercial and
industrial average balances include $144 million, $141 million, and
$128 million of assets from commercial credit cards for the three
months ended September 30, 2019, June 30, 2019, and September 30,
2018, respectively.
|
(e)
|
Yield is calculated
on the basis of amortized cost.
|
(f)
|
Rate calculation
excludes basis adjustments related to fair value hedges.
|
(g)
|
A portion of
long-term debt and the related interest expense is allocated to
discontinued liabilities as a result of applying Key's matched
funds transfer pricing methodology to discontinued
operations.
|
TE = Taxable
Equivalent, GAAP = U.S. generally accepted accounting
principles
|
Consolidated
Average Balance Sheets, and Net Interest Income and Yields/Rates
From Continuing Operations
|
(dollars in
millions)
|
|
|
|
Nine months ended
September 30, 2019
|
|
Nine months ended
September 30, 2018
|
|
|
Average
|
|
Yield/
|
|
Average
|
|
Yield/
|
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
|
Balance
|
Interest
(a)
|
Rate
(a)
|
Assets
|
|
|
|
|
|
|
|
|
Loans: (b),
(c)
|
|
|
|
|
|
|
|
|
Commercial and
industrial (d)
|
$
|
47,191
|
|
$
|
1,622
|
|
4.59
|
%
|
|
$
|
44,178
|
|
$
|
1,414
|
|
4.28
|
%
|
|
Real estate —
commercial mortgage
|
13,744
|
|
517
|
|
5.03
|
|
|
14,137
|
|
513
|
|
4.85
|
|
|
Real estate —
construction
|
1,482
|
|
60
|
|
5.37
|
|
|
1,834
|
|
67
|
|
4.88
|
|
|
Commercial lease
financing
|
4,490
|
|
124
|
|
3.66
|
|
|
4,552
|
|
125
|
|
3.67
|
|
|
Total commercial
loans
|
66,907
|
|
2,323
|
|
4.64
|
|
|
64,701
|
|
2,119
|
|
4.38
|
|
|
Real estate —
residential mortgage
|
5,866
|
|
176
|
|
4.00
|
|
|
5,466
|
|
163
|
|
3.97
|
|
|
Home equity
loans
|
10,726
|
|
404
|
|
5.03
|
|
|
11,629
|
|
406
|
|
4.67
|
|
|
Consumer direct
loans
|
2,256
|
|
125
|
|
7.42
|
|
|
1,774
|
|
101
|
|
7.59
|
|
|
Credit
cards
|
1,099
|
|
95
|
|
11.55
|
|
|
1,085
|
|
92
|
|
11.32
|
|
|
Consumer indirect
loans
|
3,951
|
|
122
|
|
4.13
|
|
|
3,363
|
|
107
|
|
4.27
|
|
|
Total consumer
loans
|
23,898
|
|
922
|
|
5.15
|
|
|
23,317
|
|
869
|
|
4.98
|
|
|
Total
loans
|
90,805
|
|
3,245
|
|
4.77
|
|
|
88,018
|
|
2,988
|
|
4.54
|
|
|
Loans held for
sale
|
1,329
|
|
46
|
|
4.64
|
|
|
1,226
|
|
40
|
|
4.40
|
|
|
Securities available
for sale (b), (e)
|
21,059
|
|
400
|
|
2.52
|
|
|
17,653
|
|
294
|
|
2.14
|
|
|
Held-to-maturity
securities (b)
|
11,035
|
|
199
|
|
2.41
|
|
|
12,111
|
|
213
|
|
2.35
|
|
|
Trading account
assets
|
988
|
|
24
|
|
3.22
|
|
|
879
|
|
21
|
|
3.19
|
|
|
Short-term
investments
|
2,930
|
|
49
|
|
2.23
|
|
|
2,334
|
|
31
|
|
1.76
|
|
|
Other investments
(e)
|
639
|
|
11
|
|
2.18
|
|
|
706
|
|
17
|
|
3.10
|
|
|
Total earning
assets
|
128,785
|
|
3,974
|
|
4.12
|
|
|
122,927
|
|
3,604
|
|
3.90
|
|
|
Allowance for loan
and lease losses
|
(880)
|
|
|
|
|
(879)
|
|
|
|
|
Accrued income and
other assets
|
14,414
|
|
|
|
|
13,966
|
|
|
|
|
Discontinued
assets
|
1,010
|
|
|
|
|
1,243
|
|
|
|
|
Total
assets
|
$
|
143,329
|
|
|
|
|
$
|
137,257
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
NOW and money market
deposit accounts
|
$
|
62,827
|
|
431
|
|
.92
|
|
|
$
|
54,891
|
|
187
|
|
.46
|
|
|
Savings
deposits
|
4,767
|
|
3
|
|
.09
|
|
|
5,971
|
|
13
|
|
.28
|
|
|
Certificates of
deposit ($100,000 or more)
|
8,046
|
|
140
|
|
2.33
|
|
|
7,563
|
|
97
|
|
1.72
|
|
|
Other time
deposits
|
5,506
|
|
78
|
|
1.90
|
|
|
4,947
|
|
46
|
|
1.25
|
|
|
Total
interest-bearing deposits
|
81,146
|
|
652
|
|
1.07
|
|
|
73,372
|
|
343
|
|
.63
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
262
|
|
1
|
|
.63
|
|
|
1,146
|
|
10
|
|
1.22
|
|
|
Bank notes and other
short-term borrowings
|
706
|
|
13
|
|
2.43
|
|
|
1,015
|
|
17
|
|
2.19
|
|
|
Long-term debt
(f), (g)
|
13,241
|
|
354
|
|
3.62
|
|
|
12,631
|
|
302
|
|
3.17
|
|
|
Total
interest-bearing liabilities
|
95,355
|
|
1,020
|
|
1.43
|
|
|
88,164
|
|
672
|
|
1.02
|
|
|
Noninterest-bearing
deposits
|
28,016
|
|
|
|
|
30,701
|
|
|
|
|
Accrued expense and
other liabilities
|
2,493
|
|
|
|
|
2,102
|
|
|
|
|
Discontinued
liabilities (g)
|
1,010
|
|
|
|
|
1,243
|
|
|
|
|
Total
liabilities
|
126,874
|
|
|
|
|
122,210
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Key shareholders'
equity
|
16,454
|
|
|
|
|
15,045
|
|
|
|
|
Noncontrolling
interests
|
1
|
|
|
|
|
2
|
|
|
|
|
Total
equity
|
16,455
|
|
|
|
|
15,047
|
|
|
|
|
Total liabilities
and equity
|
$
|
143,329
|
|
|
|
|
$
|
137,257
|
|
|
|
Interest rate spread
(TE)
|
|
|
2.69
|
%
|
|
|
|
2.88
|
%
|
Net interest income
(TE) and net interest margin (TE)
|
|
2,954
|
3.06
|
%
|
|
|
2,932
|
|
3.17
|
%
|
TE adjustment
(b)
|
|
24
|
|
|
|
23
|
|
|
|
Net interest income,
GAAP basis
|
|
$
|
2,930
|
|
|
|
$
|
2,909
|
|
|
(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 nine months ended September 30, 2019,
and September 30, 2018, respectively.
|
(c)
|
For purposes of these
computations, nonaccrual loans are included in average loan
balances.
|
(d)
|
Commercial and
industrial average balances include $139 million and $125 million
of assets from commercial credit cards for the nine months ended
September 30, 2019, and September 30, 2018,
respectively.
|
(e)
|
Yield is calculated
on the basis of amortized cost.
|
(f)
|
Rate calculation
excludes basis adjustments related to fair value hedges.
|
(g)
|
A portion of
long-term debt and the related interest expense is allocated to
discontinued liabilities as a result of applying Key's matched
funds transfer pricing methodology to discontinued
operations.
|
TE = Taxable
Equivalent, GAAP = U.S. generally accepted accounting
principles
|
Noninterest
Expense
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
9/30/2019
|
9/30/2018
|
Personnel
(a)
|
$
|
547
|
|
$
|
589
|
|
$
|
553
|
|
|
$
|
1,699
|
|
$
|
1,733
|
|
Net
occupancy
|
72
|
|
73
|
|
76
|
|
|
217
|
|
233
|
|
Computer
processing
|
53
|
|
56
|
|
52
|
|
|
163
|
|
155
|
|
Business services and
professional fees
|
43
|
|
45
|
|
43
|
|
|
132
|
|
135
|
|
Equipment
|
27
|
|
24
|
|
27
|
|
|
75
|
|
79
|
|
Operating lease
expense
|
33
|
|
32
|
|
31
|
|
|
91
|
|
88
|
|
Marketing
|
26
|
|
24
|
|
26
|
|
|
69
|
|
77
|
|
FDIC
assessment
|
7
|
|
9
|
|
21
|
|
|
23
|
|
63
|
|
Intangible asset
amortization
|
26
|
|
22
|
|
23
|
|
|
70
|
|
77
|
|
OREO expense,
net
|
3
|
|
4
|
|
3
|
|
|
10
|
|
5
|
|
Other
expense
|
102
|
|
141
|
|
109
|
|
|
372
|
|
318
|
|
Total noninterest
expense
|
$
|
939
|
|
$
|
1,019
|
|
$
|
964
|
|
|
$
|
2,921
|
|
$
|
2,963
|
|
Average full-time
equivalent employees (b)
|
16,898
|
|
17,206
|
|
18,150
|
|
|
17,217
|
|
18,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
Nine months
ended
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
9/30/2019
|
9/30/2018
|
Salaries and contract
labor
|
$
|
314
|
|
$
|
322
|
|
$
|
335
|
|
|
$
|
956
|
|
$
|
1,015
|
|
Incentive and
stock-based compensation
|
143
|
|
155
|
|
138
|
|
|
430
|
|
430
|
|
Employee
benefits
|
87
|
|
83
|
|
79
|
|
|
263
|
|
266
|
|
Severance
|
3
|
|
29
|
|
1
|
|
|
50
|
|
22
|
|
Total personnel
expense
|
$
|
547
|
|
$
|
589
|
|
$
|
553
|
|
|
$
|
1,699
|
|
$
|
1,733
|
|
Loan
Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Percent change
9/30/2019 vs
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
6/30/2019
|
9/30/2018
|
Commercial and
industrial (a)
|
$
|
48,362
|
|
$
|
48,544
|
|
$
|
45,023
|
|
|
(.4)
|
%
|
7.4
|
%
|
Commercial real
estate:
|
|
|
|
|
|
|
Commercial
mortgage
|
13,167
|
|
13,299
|
|
14,716
|
|
|
(1.0)
|
|
(10.5)
|
|
Construction
|
1,480
|
|
1,439
|
|
1,763
|
|
|
2.8
|
|
(16.1)
|
|
Total commercial real
estate loans
|
14,647
|
|
14,738
|
|
16,479
|
|
|
(.6)
|
|
(11.1)
|
|
Commercial lease
financing (b)
|
4,470
|
|
4,578
|
|
4,470
|
|
|
(2.4)
|
|
—
|
|
Total commercial
loans
|
67,479
|
|
67,860
|
|
65,972
|
|
|
(.6)
|
|
2.3
|
|
Residential — prime
loans:
|
|
|
|
|
|
|
Real estate —
residential mortgage
|
6,527
|
|
6,053
|
|
5,497
|
|
|
7.8
|
|
18.7
|
|
Home equity
loans
|
10,456
|
|
10,575
|
|
11,339
|
|
|
(1.1)
|
|
(7.8)
|
|
Total residential —
prime loans
|
16,983
|
|
16,628
|
|
16,836
|
|
|
2.1
|
|
.9
|
|
Consumer direct
loans
|
2,789
|
|
2,350
|
|
1,807
|
|
|
18.7
|
|
54.3
|
|
Credit
cards
|
1,105
|
|
1,096
|
|
1,098
|
|
|
.8
|
|
.6
|
|
Consumer indirect
loans
|
4,404
|
|
4,003
|
|
3,555
|
|
|
10.0
|
|
23.9
|
|
Total consumer
loans
|
25,281
|
|
24,077
|
|
23,296
|
|
|
5.0
|
|
8.5
|
|
Total loans
(c)
|
$
|
92,760
|
|
$
|
91,937
|
|
$
|
89,268
|
|
|
.9
|
%
|
3.9
|
%
|
|
|
(a)
|
Loan balances include
$147 million, $143 million, and $128 million of commercial credit
card balances at September 30, 2019, June 30, 2019, and September
30, 2018, respectively.
|
(b)
|
Commercial lease
financing includes receivables held as collateral for a secured
borrowing of $10 million, $11 million, and $12 million at September
30, 2019, June 30, 2019, and September 30, 2018, respectively.
Principal reductions are based on the cash payments received from
these related receivables.
|
(c)
|
Total loans exclude
loans of $915 million at September 30, 2019, $964 million at June
30, 2019, and $1.1 billion at September 30, 2018, related to the
discontinued operations of the education lending
business.
|
Loans Held for
Sale Composition
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
9/30/2019 vs
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
6/30/2019
|
9/30/2018
|
Commercial and
industrial
|
$
|
195
|
|
$
|
255
|
|
$
|
97
|
|
|
(23.5)
|
%
|
101.0
|
%
|
Real estate —
commercial mortgage
|
1,123
|
|
1,123
|
|
1,433
|
|
|
—
|
|
(21.6)
|
|
Commercial lease
financing
|
100
|
|
—
|
|
1
|
|
|
N/M
|
|
N/M
|
|
Real estate —
residential mortgage
|
120
|
|
164
|
|
87
|
|
|
(26.8)
|
|
37.9
|
|
Consumer direct
loans
|
60
|
|
248
|
|
—
|
|
|
(75.8)
|
|
N/M
|
|
Total loans held for
sale (a)
|
$
|
1,598
|
|
$
|
1,790
|
|
$
|
1,618
|
|
|
(10.7)
|
%
|
(1.2)
|
%
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $120 million at September 30, 2019, $164 million
at June 30, 2019, and $87 million at September 30, 2018.
|
Summary of Changes
in Loans Held for Sale
|
(in
millions)
|
|
|
|
|
|
|
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
3Q18
|
Balance at beginning
of period
|
$
|
1,790
|
|
$
|
894
|
|
$
|
1,227
|
|
$
|
1,618
|
|
$
|
1,418
|
|
New
originations
|
3,222
|
|
3,218
|
|
1,676
|
|
5,057
|
|
2,976
|
|
Transfers from (to)
held to maturity, net
|
237
|
|
42
|
|
6
|
|
24
|
|
4
|
|
Loan sales
|
(3,602)
|
|
(2,358)
|
|
(2,017)
|
|
(5,448)
|
|
(2,491)
|
|
Loan draws
(payments), net
|
(49)
|
|
(6)
|
|
2
|
|
(24)
|
|
(289)
|
|
Balance at end of
period (a)
|
$
|
1,598
|
|
$
|
1,790
|
|
$
|
894
|
|
$
|
1,227
|
|
$
|
1,618
|
|
|
|
(a)
|
Total loans held for
sale include Real estate — residential mortgage loans held for sale
at fair value of $120 million at September 30, 2019, $164 million
at June 30, 2019, $71 million at March 31, 2019, $54 million at
December 31, 2018, and $87 million at September 30,
2018.
|
Summary of Loan
and Lease Loss Experience From Continuing Operations
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
9/30/2019
|
9/30/2018
|
Average loans
outstanding
|
$
|
91,956
|
|
$
|
90,785
|
|
$
|
88,467
|
|
|
$
|
90,805
|
|
$
|
88,018
|
|
Allowance for loan
and lease losses at beginning of period
|
$
|
890
|
|
$
|
883
|
|
$
|
887
|
|
|
$
|
883
|
|
$
|
877
|
|
Loans charged
off:
|
|
|
|
|
|
|
Commercial and
industrial
|
176
|
|
30
|
|
38
|
|
|
242
|
|
114
|
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
—
|
|
1
|
|
6
|
|
|
6
|
|
9
|
|
Real estate —
construction
|
—
|
|
—
|
|
—
|
|
|
4
|
|
—
|
|
Total commercial real
estate loans
|
—
|
|
1
|
|
6
|
|
|
10
|
|
9
|
|
Commercial lease
financing
|
1
|
|
16
|
|
4
|
|
|
25
|
|
9
|
|
Total commercial
loans
|
177
|
|
47
|
|
48
|
|
|
277
|
|
132
|
|
Real estate —
residential mortgage
|
1
|
|
1
|
|
2
|
|
|
3
|
|
3
|
|
Home equity
loans
|
6
|
|
6
|
|
4
|
|
|
16
|
|
14
|
|
Consumer direct
loans
|
10
|
|
10
|
|
10
|
|
|
30
|
|
27
|
|
Credit
cards
|
11
|
|
12
|
|
10
|
|
|
34
|
|
34
|
|
Consumer indirect
loans
|
8
|
|
8
|
|
7
|
|
|
24
|
|
22
|
|
Total consumer
loans
|
36
|
|
37
|
|
33
|
|
|
107
|
|
100
|
|
Total loans charged
off
|
213
|
|
84
|
|
81
|
|
|
384
|
|
232
|
|
Recoveries:
|
|
|
|
|
|
|
Commercial and
industrial
|
6
|
|
6
|
|
5
|
|
|
22
|
|
18
|
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
—
|
|
1
|
|
1
|
|
|
2
|
|
2
|
|
Real estate —
construction
|
—
|
|
—
|
|
—
|
|
|
—
|
|
1
|
|
Total commercial real
estate loans
|
—
|
|
1
|
|
1
|
|
|
2
|
|
3
|
|
Commercial lease
financing
|
1
|
|
2
|
|
3
|
|
|
4
|
|
4
|
|
Total commercial
loans
|
7
|
|
9
|
|
9
|
|
|
28
|
|
25
|
|
Real estate —
residential mortgage
|
—
|
|
—
|
|
2
|
|
|
1
|
|
2
|
|
Home equity
loans
|
2
|
|
2
|
|
3
|
|
|
6
|
|
9
|
|
Consumer direct
loans
|
2
|
|
2
|
|
1
|
|
|
5
|
|
5
|
|
Credit
cards
|
2
|
|
2
|
|
2
|
|
|
6
|
|
5
|
|
Consumer indirect
loans
|
4
|
|
4
|
|
4
|
|
|
13
|
|
12
|
|
Total consumer
loans
|
10
|
|
10
|
|
12
|
|
|
31
|
|
33
|
|
Total
recoveries
|
17
|
|
19
|
|
21
|
|
|
59
|
|
58
|
|
Net loan
charge-offs
|
(196)
|
|
(65)
|
|
(60)
|
|
|
(325)
|
|
(174)
|
|
Provision (credit)
for loan and lease losses
|
199
|
|
72
|
|
60
|
|
|
335
|
|
184
|
|
Allowance for loan
and lease losses at end of period
|
$
|
893
|
|
$
|
890
|
|
$
|
887
|
|
|
$
|
893
|
|
$
|
887
|
|
|
|
|
|
|
|
|
Liability for credit
losses on lending-related commitments at beginning of
period
|
$
|
64
|
|
$
|
62
|
|
$
|
58
|
|
|
$
|
64
|
|
$
|
57
|
|
Provision (credit)
for losses on lending-related commitments
|
1
|
|
2
|
|
2
|
|
|
1
|
|
3
|
|
Liability for credit
losses on lending-related commitments at end of period
(a)
|
$
|
65
|
|
$
|
64
|
|
$
|
60
|
|
|
$
|
65
|
|
$
|
60
|
|
|
|
|
|
|
|
|
Total allowance for
credit losses at end of period
|
$
|
958
|
|
$
|
954
|
|
$
|
947
|
|
|
$
|
958
|
|
$
|
947
|
|
|
|
|
|
|
|
|
Net loan charge-offs
to average total loans
|
.85
|
%
|
.29
|
%
|
.27
|
%
|
|
.48
|
%
|
.26
|
%
|
Allowance for loan
and lease losses to period-end loans
|
.96
|
|
.97
|
|
.99
|
|
|
.96
|
|
.99
|
|
Allowance for credit
losses to period-end loans
|
1.03
|
|
1.04
|
|
1.06
|
|
|
1.03
|
|
1.06
|
|
Allowance for loan
and lease losses to nonperforming loans
|
152.6
|
|
158.6
|
|
137.5
|
|
|
152.6
|
|
137.5
|
|
Allowance for credit
losses to nonperforming loans
|
163.8
|
|
170.1
|
|
146.8
|
|
|
163.8
|
|
146.8
|
|
|
|
|
|
|
|
|
Discontinued
operations — education lending business:
|
|
|
|
|
|
|
Loans charged
off
|
$
|
1
|
|
$
|
4
|
|
$
|
4
|
|
|
$
|
9
|
|
$
|
11
|
|
Recoveries
|
1
|
|
1
|
|
1
|
|
|
3
|
|
4
|
|
Net loan
charge-offs
|
—
|
|
$
|
(3)
|
|
$
|
(3)
|
|
|
$
|
(6)
|
|
$
|
(7)
|
|
|
|
(a)
|
Included in "Accrued
expense and other liabilities" on the balance sheet.
|
Asset Quality
Statistics From Continuing Operations
|
(dollars in
millions)
|
|
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
3Q18
|
Net loan
charge-offs
|
$
|
196
|
|
$
|
65
|
|
$
|
64
|
|
$
|
60
|
|
$
|
60
|
|
Net loan charge-offs
to average total loans
|
.85
|
%
|
.29
|
%
|
.29
|
%
|
.27
|
%
|
.27
|
%
|
Allowance for loan
and lease losses
|
$
|
893
|
|
$
|
890
|
|
$
|
883
|
|
$
|
883
|
|
$
|
887
|
|
Allowance for credit
losses (a)
|
958
|
|
954
|
|
945
|
|
946
|
|
947
|
|
Allowance for loan
and lease losses to period-end loans
|
.96
|
%
|
.97
|
%
|
.98
|
%
|
.99
|
%
|
.99
|
%
|
Allowance for credit
losses to period-end loans
|
1.03
|
|
1.04
|
|
1.05
|
|
1.06
|
|
1.06
|
|
Allowance for loan
and lease losses to nonperforming loans (b)
|
152.6
|
|
158.6
|
|
161.1
|
|
162.9
|
|
137.5
|
|
Allowance for credit
losses to nonperforming loans (b)
|
163.8
|
|
170.1
|
|
172.4
|
|
174.5
|
|
146.8
|
|
Nonperforming loans
at period end (b)
|
$
|
585
|
|
$
|
561
|
|
$
|
548
|
|
$
|
542
|
|
$
|
645
|
|
Nonperforming assets
at period end (b)
|
711
|
|
608
|
|
597
|
|
577
|
|
674
|
|
Nonperforming loans
to period-end portfolio loans (b)
|
.63
|
%
|
.61
|
%
|
.61
|
%
|
.61
|
%
|
.72
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming assets (b)
|
.77
|
|
.66
|
|
.66
|
|
.64
|
|
.75
|
|
|
|
(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 $497 million, $518 million, $551 million, $575
million, and $606 million of purchased credit impaired loans at
September 30, 2019, June 30, 2019, March 31, 2019, December 31,
2018, and September 30, 2018, respectively.
|
Summary of
Nonperforming Assets and Past Due Loans From Continuing
Operations
|
(dollars in
millions)
|
|
9/30/2019
|
6/30/2019
|
3/31/2019
|
12/31/2018
|
9/30/2018
|
Commercial and
industrial
|
$
|
238
|
|
$
|
189
|
|
$
|
170
|
|
$
|
152
|
|
$
|
227
|
|
|
|
|
|
|
|
Real estate —
commercial mortgage
|
92
|
|
85
|
|
82
|
|
81
|
|
98
|
|
Real estate —
construction
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
Total commercial real
estate loans
|
94
|
|
87
|
|
84
|
|
83
|
|
100
|
|
Commercial lease
financing
|
7
|
|
7
|
|
9
|
|
9
|
|
10
|
|
Total commercial
loans
|
339
|
|
283
|
|
263
|
|
244
|
|
337
|
|
Real estate —
residential mortgage
|
42
|
|
62
|
|
64
|
|
62
|
|
62
|
|
Home equity
loans
|
179
|
|
191
|
|
195
|
|
210
|
|
221
|
|
Consumer direct
loans
|
3
|
|
3
|
|
3
|
|
4
|
|
4
|
|
Credit
cards
|
2
|
|
2
|
|
3
|
|
2
|
|
2
|
|
Consumer indirect
loans
|
20
|
|
20
|
|
20
|
|
20
|
|
19
|
|
Total consumer
loans
|
246
|
|
278
|
|
285
|
|
298
|
|
308
|
|
Total nonperforming
loans (a)
|
585
|
|
561
|
|
548
|
|
542
|
|
645
|
|
OREO
|
39
|
|
38
|
|
40
|
|
35
|
|
28
|
|
Nonperforming loans
held for sale
|
78
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other nonperforming
assets
|
9
|
|
9
|
|
9
|
|
—
|
|
1
|
|
Total nonperforming
assets (a)
|
$
|
711
|
|
$
|
608
|
|
$
|
597
|
|
$
|
577
|
|
$
|
674
|
|
Accruing loans past
due 90 days or more
|
54
|
|
74
|
|
118
|
|
112
|
|
87
|
|
Accruing loans past
due 30 through 89 days
|
366
|
|
299
|
|
290
|
|
312
|
|
368
|
|
Restructured loans —
accruing and nonaccruing (b)
|
347
|
|
395
|
|
365
|
|
399
|
|
366
|
|
Restructured loans
included in nonperforming loans (b)
|
176
|
|
228
|
|
198
|
|
247
|
|
211
|
|
Nonperforming assets
from discontinued operations — education lending
business
|
7
|
|
7
|
|
7
|
|
8
|
|
6
|
|
Nonperforming loans
to period-end portfolio loans (a)
|
.63
|
%
|
.61
|
%
|
.61
|
%
|
.61
|
%
|
.72
|
%
|
Nonperforming assets
to period-end portfolio loans plus OREO and other
nonperforming assets (a)
|
.77
|
|
.66
|
|
.66
|
|
.64
|
|
.75
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $497 million, $518 million, $551 million, $575
million, and $606 million of purchased credit impaired loans at
September 30, 2019, June 30, 2019, March 31, 2019, December 31,
2018, and September 30, 2018, respectively.
|
(b)
|
Restructured loans
(i.e., troubled debt restructuring) are those for which Key, for
reasons related to a borrower's financial difficulties, grants a
concession to the borrower that it would not otherwise consider.
These concessions are made to improve the collectability of the
loan and generally take the form of a reduction of the interest
rate, extension of the maturity date or reduction in the principal
balance.
|
Summary of Changes
in Nonperforming Loans From Continuing Operations
|
(in
millions)
|
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
3Q18
|
Balance at beginning
of period
|
$
|
561
|
|
$
|
548
|
|
$
|
542
|
|
$
|
645
|
|
$
|
545
|
|
Loans placed on
nonaccrual status
|
271
|
|
189
|
|
196
|
|
103
|
|
263
|
|
Charge-offs
|
(91)
|
|
(84)
|
|
(91)
|
|
(92)
|
|
(81)
|
|
Loans sold
|
—
|
|
(38)
|
|
(18)
|
|
(16)
|
|
—
|
|
Payments
|
(37)
|
|
(23)
|
|
(22)
|
|
(53)
|
|
(57)
|
|
Transfers to
OREO
|
(4)
|
|
(4)
|
|
(8)
|
|
(10)
|
|
(5)
|
|
Transfers to
nonperforming loans held for sale
|
(78)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Transfers to other
nonperforming assets
|
—
|
|
—
|
|
(13)
|
|
—
|
|
—
|
|
Loans returned to
accrual status
|
(37)
|
|
(27)
|
|
(38)
|
|
(35)
|
|
(20)
|
|
Balance at end of
period (a)
|
$
|
585
|
|
$
|
561
|
|
$
|
548
|
|
$
|
542
|
|
$
|
645
|
|
|
|
(a)
|
Nonperforming loan
balances exclude $497 million, $518 million, $551 million, $575
million, and $606 million of purchased credit impaired loans at
September 30, 2019, June 30, 2019, March 31, 2019, December 31,
2018, and September 30, 2018, respectively.
|
Line of Business
Results
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change
3Q19 vs.
|
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
3Q18
|
|
2Q19
|
3Q18
|
Consumer
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
833
|
|
$
|
825
|
|
$
|
805
|
|
$
|
829
|
|
$
|
809
|
|
|
1.0
|
%
|
3.0
|
%
|
Provision for credit
losses
|
48
|
|
40
|
|
45
|
|
43
|
|
32
|
|
|
20.0
|
|
50.0
|
|
Noninterest
expense
|
531
|
|
552
|
|
540
|
|
554
|
|
557
|
|
|
(3.8)
|
|
(4.7)
|
|
Net income (loss)
attributable to Key
|
194
|
|
177
|
|
168
|
|
177
|
|
168
|
|
|
9.6
|
|
15.5
|
|
Average loans and
leases
|
32,760
|
|
31,881
|
|
31,321
|
|
31,241
|
|
31,172
|
|
|
2.8
|
|
5.1
|
|
Average
deposits
|
72,995
|
|
72,303
|
|
71,288
|
|
70,426
|
|
69,124
|
|
|
1.0
|
|
5.6
|
|
Net loan
charge-offs
|
40
|
|
40
|
|
34
|
|
40
|
|
36
|
|
|
—
|
|
11.1
|
|
Net loan charge-offs
to average total loans
|
.48
|
%
|
.50
|
%
|
.44
|
%
|
.51
|
%
|
.46
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
354
|
|
$
|
366
|
|
$
|
365
|
|
$
|
364
|
|
$
|
380
|
|
|
(3.3)
|
|
(6.8)
|
|
Return on average
allocated equity
|
22.82
|
%
|
21.75
|
%
|
21.27
|
%
|
21.51
|
%
|
20.38
|
%
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Commercial
Bank
|
|
|
|
|
|
|
|
|
Summary of
operations
|
|
|
|
|
|
|
|
|
Total revenue
(TE)
|
$
|
779
|
|
$
|
760
|
|
$
|
702
|
|
$
|
771
|
|
$
|
753
|
|
|
2.5
|
%
|
3.5
|
%
|
Provision for credit
losses
|
32
|
|
33
|
|
16
|
|
17
|
|
31
|
|
|
(3.0)
|
|
3.2
|
|
Noninterest
expense
|
372
|
|
389
|
|
373
|
|
401
|
|
385
|
|
|
(4.4)
|
|
(3.4)
|
|
Net income (loss)
attributable to Key
|
304
|
|
277
|
|
250
|
|
302
|
|
274
|
|
|
9.7
|
|
10.9
|
|
Average loans and
leases
|
58,215
|
|
57,918
|
|
57,267
|
|
56,884
|
|
56,096
|
|
|
.5
|
|
3.8
|
|
Average loans held
for sale
|
1,325
|
|
1,168
|
|
1,066
|
|
2,250
|
|
1,042
|
|
|
13.4
|
|
27.2
|
|
Average
deposits
|
36,204
|
|
35,960
|
|
34,417
|
|
35,113
|
|
33,603
|
|
|
.7
|
|
7.7
|
|
Net loan
charge-offs
|
35
|
|
23
|
|
30
|
|
19
|
|
26
|
|
|
52.2
|
|
34.6
|
|
Net loan charge-offs
to average total loans
|
.24
|
%
|
.16
|
%
|
.21
|
%
|
.13
|
%
|
.18
|
%
|
|
N/A
|
|
N/A
|
|
Nonperforming assets
at period end
|
$
|
351
|
|
$
|
235
|
|
$
|
225
|
|
$
|
205
|
|
$
|
280
|
|
|
49.4
|
|
25.4
|
|
Return on average
allocated equity
|
26.37
|
%
|
24.09
|
%
|
22.60
|
%
|
26.64
|
%
|
24.46
|
%
|
|
N/A
|
|
N/A
|
|
|
TE = Taxable
Equivalent, N/A = Not Applicable, N/M = Not Meaningful
|
Notable
Items
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
9/30/2019
|
6/30/2019
|
9/30/2018
|
|
9/30/2019
|
9/30/2018
|
Provision for credit
losses
|
$
|
(123)
|
|
—
|
|
—
|
|
|
$
|
(123)
|
|
—
|
|
|
|
|
|
|
|
|
Gain on sale of Key
Insurance and Benefits Services
|
—
|
|
—
|
|
—
|
|
|
—
|
|
$
|
78
|
|
Expenses related to
the sale of Key Insurance and Benefits Services
|
—
|
|
—
|
|
—
|
|
|
—
|
|
5
|
|
Net gain on sale of
Key Insurance and Benefits Services
|
—
|
|
—
|
|
—
|
|
|
—
|
|
73
|
|
|
|
|
|
|
|
|
Efficiency initiative
expenses
|
—
|
|
$
|
(50)
|
|
—
|
|
|
(76)
|
|
(22)
|
|
Laurel Road
acquisition expenses
|
—
|
|
(2)
|
|
—
|
|
|
(2)
|
|
—
|
|
Lease residual
loss
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(42)
|
|
Total notable
items
|
$
|
(123)
|
|
$
|
(52)
|
|
—
|
|
|
$
|
(201)
|
|
$
|
9
|
|
Income
taxes
|
(29)
|
|
(12)
|
|
—
|
|
|
(47)
|
|
7
|
|
Total notable items,
after tax
|
$
|
(94)
|
|
$
|
(40)
|
|
—
|
|
|
$
|
(154)
|
|
$
|
2
|
|
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SOURCE KeyCorp