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Section 1: 8-K (8-K)

Document


UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 19, 2017
390700858_keylogoa05.jpg
 
(Exact name of registrant as specified in charter)
 
 
 
 
 
 
Ohio
 
001-11302
 
34-6542451
(State or other jurisdiction of incorporation)
 
Commission File Number
 
(I.R.S. Employer Identification No.)
 
 
 
127 Public Square, Cleveland, Ohio
 
44114-1306
(Address of principal executive offices)
 
(Zip Code)
 
(216) 689-3000
Registrant’s telephone number, including area code
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐





Item 2.02
Results of Operations and Financial Condition.

On October 19, 2017, KeyCorp issued a press release announcing its financial results for the three- and nine-month periods ended September 30, 2017 (the “Press Release”), and posted on its website its third quarter 2017 Supplemental Information Package (the “Supplemental Information Package”). The Press Release and Supplemental Information Package are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively.

The information in the preceding paragraph, as well as Exhibit 99.1 and Exhibit 99.2 referenced therein, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”).

KeyCorp’s Consolidated Balance Sheets and Consolidated Statements of Income (collectively, the “Financial Statements”), included as part of the Press Release, are filed as Exhibit 99.3 to this report. Exhibit 99.3 is deemed “filed” for purposes of Section 18 of the Exchange Act and, therefore, may be incorporated by reference in filings under the Securities Act.

Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits

The following exhibits are furnished, or filed in the case of Exhibit 99.3, herewith:

99.1
Press Release, dated October 19, 2017, announcing financial results for the three- and nine-month periods ended September 30, 2017.

99.2
Supplemental Information Package reviewed during the conference call and webcast.

99.3
Financial Statements.






SIGNATURE
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
KEYCORP
 
 
(Registrant)
 
 
 
 
 
 
Date: October 19, 2017
 
/s/ Douglas M. Schosser
 
 
By: Douglas M. Schosser
 
 
Chief Accounting Officer
 
 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
390700858_keylogosmaller.jpg


KEYCORP REPORTS THIRD QUARTER 2017 NET INCOME OF $349 MILLION,
OR $.32 PER COMMON SHARE

3Q17 results included a net impact of $.03 per common share related to merger-related charges and a merchant services gain adjustment

3Q17 results reflected year-over-year positive operating leverage, momentum in fee-based businesses and strong returns

                         Return on Tangible
Earnings Per Share     Cash Efficiency(a)     Common Equity(a)
390700858_jstableimage3a01.jpg
(a) Non-GAAP measure; see pages 15-17 for reconciliation
(b) Excludes notable items; see page 15 for detail

 

CLEVELAND, October 19, 2017 - KeyCorp (NYSE: KEY) today announced third quarter net income from continuing operations attributable to Key common shareholders of $349 million, or $.32 per common share, compared to $393 million or $.36 per common share, for the second quarter of 2017 and $165 million, or $.16 per common share, for the third quarter of 2016. During the third quarter of 2017, Key’s results included $36 million of merger-related charges and a $5 million merchant services gain adjustment, resulting in a pre-tax net impact of $41 million, or $.03 per common share.

390700858_a3q17erquotemm101717a01.jpg



KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 2


Selected Financial Highlights
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions, except per share data
 
 
 
 
Change 3Q17 vs.
 
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Income (loss) from continuing operations attributable to Key common shareholders
$
349

$
393

$
165

 
(11.2
)%
111.5
%
 Income (loss) from continuing operations attributable to Key common shareholders per
common share — assuming dilution
.32

.36

.16

 
(11.1
)
100.0

Return on average total assets from continuing operations
1.07
%
1.23
%
.55
%
 
N/A

N/A

 Common Equity Tier 1 ratio (a)
10.26

9.91

9.56

 
N/A

N/A

Book value at period end
$
13.18

$
13.02

$
12.78

 
1.2
 %
3.1
%
Net interest margin (TE) from continuing operations
3.15
%
3.30
%
2.85
%
 
N/A

N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
9/30/2017 ratio is estimated.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TE = Taxable Equivalent, N/A = Not Applicable
 
 
 
 
 
 

INCOME STATEMENT HIGHLIGHTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Net interest income (TE)
$
962

$
987

$
788

 
(2.5
)%
22.1
%
Noninterest income
592

653

549

 
(9.3
)
7.8

Total revenue
$
1,554

$
1,640

$
1,337

 
(5.2
)%
16.2
%
 
 
 
 
 
 
 
TE = Taxable Equivalent; N/M = Not Meaningful


Third quarter 2017 net interest income included $48 million of purchase accounting accretion related to the acquisition of First Niagara.

Taxable-equivalent net interest income was $962 million for the third quarter of 2017, and the net interest margin was 3.15%, compared to taxable-equivalent net interest income of $788 million and a net interest margin of 2.85% for the third 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 second quarter of 2017, taxable-equivalent net interest income decreased by $25 million, and the net interest margin decreased by 15 basis points. The decrease in net interest income and the net interest margin reflects a decline in purchase accounting accretion of $52 million, including $42 million from the finalization of previous estimates recognized in the second quarter. Lower purchase accounting accretion was partially offset by higher earning asset yields and balances.

Excluding purchase accounting accretion, taxable-equivalent net interest income increased $145 million from the third quarter of 2016 and $27 million from the second quarter of 2017.




KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 3


Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Trust and investment services income
$
135

$
134

$
122

 
.7
 %
10.7
 %
Investment banking and debt placement fees
141

135

156

 
4.4

(9.6
)
Service charges on deposit accounts
91

90

85

 
1.1

7.1

Operating lease income and other leasing gains
16

30

6

 
(46.7
)
166.7

Corporate services income
54

55

51

 
(1.8
)
5.9

Cards and payments income
75

70

66

 
7.1

13.6

Corporate-owned life insurance income
31

33

29

 
(6.1
)
6.9

Consumer mortgage income
7

6

6

 
16.7

16.7

Mortgage servicing fees
21

15

15

 
40.0

40.0

Net gains (losses) from principal investing
3


5

 
N/M

(40.0
)
Other income
18

85

8

 
(78.8
)
125.0

Total noninterest income
$
592

$
653

$
549

 
(9.3
)%
7.8
 %
 
 
 
 
 
 
 
N/M = Not Meaningful


Key’s noninterest income was $592 million for the third quarter of 2017, compared to $549 million for the year-ago quarter. Growth was largely driven by a full-quarter impact of the First Niagara acquisition, as well as ongoing momentum in Key's core businesses. Broad-based growth across many fee income categories more than offset a decline in investment banking and debt placement fees, related to strong market conditions in the year-ago period.

Compared to the second quarter of 2017, noninterest income decreased by $61 million. The largest driver of this decrease was a $64 million one-time gain related to Key’s merchant services business in the second quarter of 2017, recognized in other income. Excluding the one-time merchant services gain, noninterest income grew on a linked-quarter basis, driven by momentum in fee-based businesses, including growth in investment banking and debt placement fees, mortgage servicing fees, and cards and payments income, which also benefited from the recent merchant services acquisition. Operating lease income and other leasing gains decreased $14 million, related to lease residual losses in the third quarter of 2017.

Noninterest Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Personnel expense
$
558

$
551

$
594

 
1.3
 %
(6.1
)%
Non-personnel expense
434

444

488

 
(2.3
)
(11.1
)
     Total noninterest expense
$
992

$
995

$
1,082

 
(.3
)
(8.3
)
 
 
 
 
 


 
Merger-related charges
36

44

189

 
(18.2
)
(81.0
)
     Total noninterest expense excluding merger-related charges
$
956

$
951

$
893

 
.5
 %
7.1
 %
 
 
 
 
 
 
 

 
Key’s noninterest expense was $992 million for the third quarter of 2017, and included $36 million of merger-related charges. Merger-related charges for the quarter were made up of $25 million of personnel expense and $11 million of non-personnel expense, mostly reflected in marketing and computer processing expense.

Excluding merger-related charges, noninterest expense was $63 million higher than the third quarter of last year. The increase from the prior year, reflected in both personnel and non-personnel expense, was primarily driven by a full-quarter impact of the First Niagara acquisition, as well as ongoing business investments and recent acquisitions, partially offset by merger cost savings.

Excluding merger-related charges, noninterest expense increased $5 million from the second quarter of 2017. Key incurred a number of notable items in the second quarter of 2017, including a $20 million



KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 4


charitable contribution and a $4 million credit related to purchase accounting finalization. Excluding these notable items as well as merger-related charges, noninterest expense increased $21 million from the second quarter of 2017. The increase represents recent business acquisitions, including HelloWallet and merchant services, as well as seasonal trends in marketing and personnel. Business services and professional fees were also higher in the third quarter, related to short-term initiatives.

BALANCE SHEET HIGHLIGHTS

Average Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Commercial and industrial (a)
$
41,416

$
40,666

$
37,318

 
1.8
 %
11.0
%
Other commercial loans
21,598

21,990

19,110

 
(1.8
)
13.0

Home equity loans
12,314

12,473

11,968

 
(1.3
)
2.9

Other consumer loans
11,486

11,373

9,301

 
1.0

23.5

Total loans
$
86,814

$
86,502

$
77,697

 
.4
 %
11.7
%
 
 
 
 
 
 
 

(a)
Commercial and industrial average loan balances include $117 million, $117 million, and $107 million of assets from commercial credit cards at September 30, 2017, June 30, 2017, and September 30, 2016, respectively.

    
Average loans were $86.8 billion for the third quarter of 2017, an increase of $9.1 billion compared to the third quarter of 2016, primarily reflecting a full-quarter impact of the First Niagara acquisition, as well as growth in commercial and industrial loans, which was broad-based and spread across Key's commercial lines of business.

Compared to the second quarter of 2017, average loans increased by $312 million, driven primarily by growth in commercial and industrial loans. Commercial real estate loans declined as a result of paydowns and clients taking advantage of attractive capital markets alternatives. Consumer loans were relatively stable, as the home equity portfolio continued to decline, largely the result of paydowns.

At September 30, 2017, the remaining fair value discount on the First Niagara acquired loan portfolio was $302 million, compared to $345 million at June 30, 2017.

Average Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Non-time deposits
$
92,039

$
92,018

$
85,683

 

7.4
 %
Certificates of deposit ($100,000 or more)
6,402

6,111

4,204

 
4.8
%
52.3

Other time deposits
4,664

4,650

5,031

 
.3

(7.3
)
 
Total deposits
$
103,105

$
102,779

$
94,918

 
.3
%
8.6
 %
 
 
 
 
 
 
 
 
Cost of total deposits
.28
%
.26
%
.21
%
 
N/A

N/A

 
 
 
 
 
 
 
 

N/A = Not Applicable

Average deposits totaled $103.1 billion for the third quarter of 2017, an increase of $8.2 billion compared to the year-ago quarter, primarily reflecting a full-quarter impact of the First Niagara acquisition, and core retail and commercial deposit growth.

Compared to the second quarter of 2017, average deposits increased by $326 million, driven by growth in noninterest-bearing deposits from commercial deposit inflows and short-term escrows. Certificates of deposit balances also grew and helped offset the managed exit of certain public sector relationships.




KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 5


ASSET QUALITY
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Net loan charge-offs
$
32

$
66

$
44

 
(51.5
)%
(27.3
)%
Net loan charge-offs to average total loans
.15
%
.31
%
.23
%
 
N/A

N/A

Nonperforming loans at period end (a)
$
517

$
507

$
723

 
2.0

(28.5
)
Nonperforming assets at period end (a)
556

556

760

 

(26.8
)
Allowance for loan and lease losses
880

870

865

 
1.1

1.7

Allowance for loan and lease losses to nonperforming loans (a)
170.2
%
171.6
%
119.6
%
 
N/A

N/A

Provision for credit losses
$
51

$
66

$
59

 
(22.7
)%
(13.6
)%
 
 
 
 
 
 
 
(a)
Nonperforming loan balances exclude $783 million, $835 million, and $959 million of purchased credit impaired loans at September 30, 2017, June 30, 2017, and September 30, 2016, respectively.

N/A = Not Applicable

Key’s provision for credit losses was $51 million for the third quarter of 2017, compared to $59 million for the third quarter of 2016 and $66 million for the second quarter of 2017. The third quarter 2017 provision reflects a large recovery in the commercial and industrial portfolio. Key’s allowance for loan and lease losses was $880 million, or 1.02% of total period-end loans, at September 30, 2017, compared to 1.01% at September 30, 2016, and 1.01% at June 30, 2017.

Net loan charge-offs for the third quarter of 2017 totaled $32 million, or .15% of average total loans, reflecting a large recovery in the commercial and industrial portfolio. These results compare to $44 million, or .23%, for the third quarter of 2016, and $66 million, or .31%, for the second quarter of 2017.

At September 30, 2017, Key’s nonperforming loans totaled $517 million, which represented .60% of period-end portfolio loans. These results compare to .85% at September 30, 2016, and .59% at June 30, 2017. Nonperforming assets at September 30, 2017, totaled $556 million, and represented .64% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .89% at September 30, 2016, and .64% at June 30, 2017.
 
CAPITAL

Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at September 30, 2017.
 
Capital Ratios
 
 
 
 
 
 
 
 
9/30/2017
6/30/2017
9/30/2016
Common Equity Tier 1 (a)
10.26
%
9.91
%
9.56
%
Tier 1 risk-based capital (a)
11.11

10.73

10.53

Total risk based capital (a)
13.09

12.64

12.63

Tangible common equity to tangible assets (b)
8.49

8.56

8.27

Leverage (a)
9.83

9.95

10.22

 
 
 
 
(a)
9/30/2017 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.” 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 third quarter. As shown in the preceding table, at September 30, 2017, Key’s estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 10.26% and 11.11%, respectively. The increase in these ratios was primarily driven by a change in methodology for multipurpose facilities. Key's tangible common equity ratio was 8.49% at September 30, 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,



KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 6


2015, subject to transitional provisions extending to January 1, 2019. Key’s estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 10.15% at September 30, 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 3Q17 vs.
 
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Shares outstanding at beginning of period
1,092,739

1,097,479

842,703

 
(.4
)%
29.7
 %
Open market repurchases and return of shares under employee compensation plans
(15,298
)
(5,072
)
(5,240
)
 
201.6

191.9

Shares issued under employee compensation plans (net of cancellations)
1,598

332

4,857

 
381.3

(67.1
)
Common shares issued to acquire First Niagara



239,735

 
N/M

NM

 
Shares outstanding at end of period
1,079,039

1,092,739

1,082,055

 
(1.3
)%
(.3
)%
 
 
 
 
 
 
 
 
N/M = Not Meaningful

Consistent with Key's 2017 Capital Plan, during the third quarter of 2017, Key declared a dividend of $.095 per common share. Key also completed $277 million of common share repurchases during the quarter, including $271 million of common share repurchases in the open market and $6 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 3Q17 vs.
 
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Revenue from continuing operations (TE)
 
 
 
 
 
 
Key Community Bank
$
959

$
1,010

$
783

 
(5.0
)%
22.5
%
Key Corporate Bank
560

596

556

 
(6.0
)
.7

Other Segments
30

35

16

 
(14.3
)
87.5

 
Total segments
1,549

1,641

1,355


(5.6
)
14.3

Reconciling Items
5

(1
)
(18
)
 
N/M

N/M

 
Total
$
1,554

$
1,640

$
1,337

 
(5.2
)%
16.2
%
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key
 
 
 
 
 
 
Key Community Bank
$
161

$
196

$
97

 
(17.9
)%
66.0
%
Key Corporate Bank
190

222

160

 
(14.4
)
18.8

Other Segments
23

28

16

 
(17.9
)
43.8

 
Total segments
374

446

273

 
(16.1
)
37.0

Reconciling Items (a)
(11
)
(39
)
(102
)
 
N/M

N/M

 
Total
$
363

$
407

$
171

 
(10.8
)%
112.3
%
 
 
 
 
 
 
 
 
(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





KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 7


Key Community Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Summary of operations
 
 
 
 
 
 
Net interest income (TE)
$
670

$
674

$
533

 
(.6
)%
25.7
%
Noninterest income
289

336

250

 
(14.0
)
15.6

 
Total revenue (TE)
959

1,010

783

 
(5.0
)
22.5

Provision for credit losses
59

47

39

 
25.5

51.3

Noninterest expense
643

651

590

 
(1.2
)
9.0

 
Income (loss) before income taxes (TE)
257

312

154

 
(17.6
)
66.9

Allocated income taxes (benefit) and TE adjustments
96

116

57

 
(17.2
)
68.4

 
Net income (loss) attributable to Key
$
161

$
196

$
97

 
(17.9
)%
66.0
%
 
 
 
 
 
 
 
 
Average balances
 
 
 
 
 
 
Loans and leases
$
47,595

$
47,461

$
41,548

 
.3
 %
14.6
%
Total assets
51,708

51,502

44,218

 
.4

16.9

Deposits
79,563

79,601

69,397

 

14.6

 
 
 
 
 
 




Assets under management at period end
$
38,660

$
37,613

$
36,752

 
2.8
 %
5.2
%
 
 
 
 
 
 
 
 
TE = Taxable Equivalent


Additional Key Community Bank Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Noninterest income
 
 
 
 
 
 
Trust and investment services income
$
101

$
99

$
86

 
2.0
 %
17.4
 %
Service charges on deposit accounts
78

77

70

 
1.3

11.4

Cards and payments income
65

60

54

 
8.3

20.4

Other noninterest income
45

100

40

 
(55.0
)
12.5

 
Total noninterest income
$
289

$
336

$
250

 
(14.0
)%
15.6
 %
 
 
 
 
 
 




Average deposit balances
 
 
 
 




NOW and money market deposit accounts
$
44,481

$
45,127

$
38,417

 
(1.4
)%
15.8
 %
Savings deposits
5,165

5,293

4,369

 
(2.4
)
18.2

Certificates of deposit ($100,000 or more)
4,195

4,016

2,606

 
4.5

61.0

Other time deposits
4,657

4,640

4,944

 
.4

(5.8
)
Noninterest-bearing deposits
21,065

20,525

19,061

 
2.6
 %
10.5

 
Total deposits
$
79,563

$
79,601

$
69,397

 

14.6
 %
 
 
 
 
 
 
 
 
Home equity loans
 
 
 
 
 
 
Average balance
$
12,182

$
12,330

$
11,703

 
 
 
Combined weighted-average loan-to-value ratio (at date of origination)
69
%
71
%
70
%
 
 
 
Percent first lien positions
60

60

55

 
 
 
 
 
 
 
 
 
 
 
Other data
 
 
 
 
 
 
Branches
1,208

1,210

1,322

 
 
 
Automated teller machines
1,588

1,589

1,701

 
 
 
 
 
 
 
 
 
 
 

Key Community Bank Summary of Operations (3Q17 vs. 3Q16)

Positive operating leverage compared to prior year
Net income increased $64 million, or 66%, from prior year
Average commercial and industrial loans increased $2.7 billion, or 17.2%, from the prior year
Average deposits increased $10.2 billion, or 14.6%, from the prior year




KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 8


Key Community Bank recorded net income attributable to Key of $161 million for the third quarter of 2017, compared to $97 million for the year-ago quarter, benefiting from momentum in Key's core businesses, as well as the full-quarter impact of the First Niagara acquisition.
Taxable-equivalent net interest income increased by $137 million, or 25.7%, from the third quarter of 2016. The increase was primarily attributable to the full-quarter impact of the First Niagara acquisition, as well as the benefit from higher interest rates. Average loans and leases increased $6 billion, or 14.6%, largely driven by a $2.7 billion, or 17.2%, increase in commercial and industrial loans. Additionally, average deposits increased $10.2 billion, or 14.6%, from one year ago.
Noninterest income was up $39 million, or 15.6%, from the year-ago quarter, driven by the full quarter impact of the First Niagara acquisition, including the addition of Key Insurance and Benefits Services. Strength in cards and payments, which includes the full-quarter impact of Key’s merchant services acquisition in the second quarter of 2017, and higher assets under management from market growth also contributed to the increase.
The provision for credit losses increased by $20 million, or 51.3%, and net loan charge-offs increased $10 million from the third quarter of 2016, primarily related to the acquisition of First Niagara.
Noninterest expense increased by $53 million, or 9%, from the year-ago quarter, largely driven by the full-quarter impact of the First Niagara acquisition, as well as core business activity, ongoing investments, recent acquisitions and seasonal trends. Personnel expense increased $29 million, while non-personnel expense increased by $24 million, including higher marketing expense and higher intangible amortization expense.



Key Corporate Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Summary of operations
 
 
 
 
 
 
Net interest income (TE)
$
291

$
312

$
278

 
(6.7
)%
4.7
 %
Noninterest income
269

284

278

 
(5.3
)
(3.2
)
 
Total revenue (TE)
560

596

556

 
(6.0
)
.7

Provision for credit losses
(11
)
19

23

 
(157.9
)
(147.8
)
Noninterest expense
303

299

310

 
1.3

(2.3
)
 
Income (loss) before income taxes (TE)
268

278

223

 
(3.6
)
20.2

Allocated income taxes and TE adjustments
78

56

63

 
39.3

23.8

 
Net income (loss)
190

222

160

 
(14.4
)
18.8

Less: Net income (loss) attributable to noncontrolling interests



 
N/M

N/M

 
Net income (loss) attributable to Key
$
190

$
222

$
160

 
(14.4
)%
18.8
 %
 
 
 
 
 
 
 
 
Average balances
 
 
 
 
 
 
Loans and leases
$
38,040

$
37,721

$
34,561

 
.8
 %
10.1
 %
Loans held for sale
1,521

1,000

1,103

 
52.1

37.9

Total assets
45,276

44,148

40,584

 
2.6

11.6

Deposits
21,559

21,145

22,708

 
2.0
 %
(5.1
)%
 
 
 
 
 
 
 
 
TE = Taxable Equivalent, N/M = Not Meaningful




KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 9


Additional Key Corporate Bank Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q17 vs.
 
 
3Q17
2Q17
3Q16
 
2Q17
3Q16
Noninterest income
 
 
 
 
 
 
Trust and investment services income
$
34

$
35

$
36

 
(2.9
)%
(5.6
)%
Investment banking and debt placement fees
137

134

153

 
2.2

(10.5
)
Operating lease income and other leasing gains
13

22

10

 
(40.9
)
30.0

 
 
 
 
 
 
 
 
Corporate services income
41

38

36

 
7.9

13.9

Service charges on deposit accounts
13

13

15

 

(13.3
)
Cards and payments income
10

10

10

 


 
Payments and services income
64

61

61

 
4.9

4.9

 
 
 
 
 
 
 
 
Mortgage servicing fees
18

12

13

 
50.0

38.5

Other noninterest income
3

20

5

 
(85.0
)
(40.0
)
 
Total noninterest income
$
269

$
284

$
278

 
(5.3
)%
(3.2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Key Corporate Bank Summary of Operations (3Q17 vs. 3Q16)

Positive operating leverage compared to prior year
Net income up $30 million, or 18.8%, from prior year
Average loan and lease balances up $3.5 billion, or 10.1%, from the prior year

Key Corporate Bank recorded net income attributable to Key of $190 million for the third quarter of 2017, compared to $160 million for the same period one year ago.

Taxable-equivalent net interest income increased by $13 million, or 4.7%, compared to the third quarter of 2016. Average loan and lease balances increased $3.5 billion, or 10.1%, from the year-ago quarter, driven by growth in commercial and industrial and commercial mortgage loans. Average deposit balances decreased $1.1 billion, or 5.1%, from the year-ago quarter, driven by the managed exit of higher cost corporate and public sector deposits.

Noninterest income was down $9 million, or 3.2%, from the prior year. This decline was mostly due to lower investment banking and debt placement fees, resulting from strong market conditions and activity in the third quarter of 2016. This decrease was partially offset by growth in mortgage servicing fees and corporate services income compared to the prior year.

During the third quarter of 2017, Key Corporate Bank benefited from a large recovery in the commercial and industrial portfolio, as well as improving credit quality in the overall portfolio. Accordingly, the provision for credit losses decreased $34 million, or 147.8%, compared to the third quarter of 2016, with $21 million less of net loan charge-offs.

Noninterest expense decreased by $7 million, or 2.3%, from the third quarter of 2016. The decrease from the prior year was largely driven by lower performance-based compensation. Slightly offsetting this decrease were higher levels of operating lease expense, business services and professional fees, and cards and payments expense.



Other Segments

Other Segments consist of Corporate Treasury, Key’s Principal Investing unit, and various exit portfolios. Other Segments generated net income attributable to Key of $23 million for the third quarter of 2017, compared to $16 million for the same period last year, driven by increases in operating lease income and other leasing gains and corporate-owned life insurance income.



KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 10



*****

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 $136.7 billion at September 30, 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.



KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 11



CONTACTS:
 
 
 
ANALYSTS
MEDIA
Vernon L. Patterson
Jack Sparks
216.689.0520
720.904.4554
Vernon_Patterson@KeyBank.com
Jack_Sparks@KeyBank.com
 
 Twitter: @keybank_news
Kelly L. Dillon
 
216.689.3133
 
Kelly_L_Dillon@KeyBank.com
 
 
 
Melanie S. Misconish
 
216.689.4545
 
Melanie_S_Misconish@KeyBank.com
 
 
 
INVESTOR
KEY MEDIA
RELATIONS: www.key.com/ir
NEWSROOM: www.key.com/newsroom
  
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, October 19, 2017. An audio replay of the call will be available through October 29, 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.

*****




KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 12





KeyCorp
Third Quarter 2017
Financial Supplement


    
Page
 
Financial Highlights
GAAP to Non-GAAP Reconciliation
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
Noninterest Expense
Personnel Expense
Loan Composition
Loans Held for Sale Composition
Summary of Changes in Loans Held for Sale
Summary of Loan and Lease Loss Experience From Continuing Operations
Asset Quality Statistics From Continuing Operations
Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
Summary of Changes in Nonperforming Loans From Continuing Operations
Line of Business Results



KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 13


Financial Highlights
(dollars in millions, except per share amounts)
 
 
 
Three months ended
 
 
 
9/30/2017
6/30/2017
9/30/2016
Summary of operations
 
 
 
 
Net interest income (TE)
$
962

$
987

$
788

 
Noninterest income
592

653

549

 
 
Total revenue (TE)
1,554

1,640

1,337

 
Provision for credit losses
51

66

59

 
Noninterest expense
992

995

1,082

 
Income (loss) from continuing operations attributable to Key
363

407

171

 
Income (loss) from discontinued operations, net of taxes (a)
1

5

1

 
Net income (loss) attributable to Key
364

412

172

 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
349

393

165

 
Income (loss) from discontinued operations, net of taxes (a)
1

5

1

 
Net income (loss) attributable to Key common shareholders
350

398

166

 
 
 
 
 
 
Per common share
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
$
.32

$
.36

$
.17

 
Income (loss) from discontinued operations, net of taxes (a)



 
Net income (loss) attributable to Key common shareholders (b)
.32

.37

.17

 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution
.32

.36

.16

 
Income (loss) from discontinued operations, net of taxes — assuming dilution (a)



 
Net income (loss) attributable to Key common shareholders — assuming dilution (b)
.32

.36

.17

 
 
 
 
 
 
 
Cash dividends declared
.095

.095

.085

 
Book value at period end
13.18

13.02

12.78

 
Tangible book value at period end
10.52

10.40

10.14

 
Market price at period end
18.82

18.74

12.17

 
 
 
 
 
 
Performance ratios
 
 
 
 
From continuing operations:
 
 
 
 
Return on average total assets
1.07
%
1.23
%
.55
%
 
Return on average common equity
9.74

11.12

5.09

 
Return on average tangible common equity (c)
12.21

13.80

6.16

 
Net interest margin (TE)
3.15

3.30

2.85

 
Cash efficiency ratio (c)
62.2

59.3

80.0

 
 
 
 
 
 
 
From consolidated operations:
 
 
 
 
Return on average total assets
1.06
%
1.23
%
.55
%
 
Return on average common equity
9.77

11.26

5.12

 
Return on average tangible common equity (c)
12.25

13.98

6.20

 
Net interest margin (TE)
3.13

3.28

2.83

 
Loan to deposit (d)
86.2

87.2

84.7

 
 
 
 
 
 
Capital ratios at period end
 
 
 
 
Key shareholders’ equity to assets
11.15
%
11.23
%
11.04
%
 
Key common shareholders’ equity to assets
10.40

10.48

10.18

 
Tangible common equity to tangible assets (c)
8.49

8.56

8.27

 
Common Equity Tier 1 (e)
10.26

9.91

9.56

 
Tier 1 risk-based capital (e)
11.11

10.73

10.53

 
Total risk-based capital (e)
13.09

12.64

12.63

 
Leverage (e)
9.83

9.95

10.22

 
 
 
 
 
 
Asset quality — from continuing operations
 
 
 
 
Net loan charge-offs
$
32

$
66

$
44

 
Net loan charge-offs to average loans
.15
%
.31
%
.23
%
 
Allowance for loan and lease losses
$
880

$
870

$
865

 
Allowance for credit losses
937

918

918

 
Allowance for loan and lease losses to period-end loans
1.02
%
1.01
%
1.01
%
 
Allowance for credit losses to period-end loans
1.08

1.06

1.07

 
Allowance for loan and lease losses to nonperforming loans (f)
170.2

171.6

119.6

 
Allowance for credit losses to nonperforming loans (f)
181.2

181.1

127.0

 
Nonperforming loans at period-end (f)
$
517

$
507

$
723

 
Nonperforming assets at period-end (f)
556

556

760

 
Nonperforming loans to period-end portfolio loans (f)
.60
%
.59
%
.85
%
 
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets (f)
.64

.64

.89

 
 
 
 
 
 
Trust assets
 
 
 
 
Assets under management
$
38,660

$
37,613

$
36,752

 
 
 
 
 
 
Other data
 
 
 
 
Average full-time equivalent employees
18,548

18,344

17,079

 
Branches
1,208

1,210

1,322

 
 
 
 
 
 
Taxable-equivalent adjustment
$
14

$
14

$
8




KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 14



 
 
 
 
 
Financial Highlights (continued)
(dollars in millions, except per share amounts)
 
 
Nine months ended
 
 
9/30/2017
 
9/30/2016
Summary of operations
 
 
 
 
Net interest income (TE)
$
2,878

 
$
2,005

 
Noninterest income
1,822

 
1,453

 
Total revenue (TE)
4,700

 
3,458

 
Provision for credit losses
180

 
200

 
Noninterest expense
3,000

 
2,536

 
Income (loss) from continuing operations attributable to Key
1,094

 
557

 
Income (loss) from discontinued operations, net of taxes (a)
6

 
5

 
Net income (loss) attributable to Key
1,100

 
562

 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
$
1,038

 
$
540

 
Income (loss) from discontinued operations, net of taxes (a)
6

 
5

 
Net income (loss) attributable to Key common shareholders
1,044

 
545

 
 
 
 
 
Per common share
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
$
.96

 
$
.61

 
Income (loss) from discontinued operations, net of taxes (a)
.01

 
.01

 
Net income (loss) attributable to Key common shareholders (b)
.97

 
.62

 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution
.95

 
.60

 
Income (loss) from discontinued operations, net of taxes — assuming dilution (a)
.01

 
.01

 
Net income (loss) attributable to Key common shareholders — assuming dilution (b)
.96

 
.61

 
 
 
 
 
 
Cash dividends paid
.275

 
.245

 
 
 
 
 
Performance ratios
 
 
 
 
From continuing operations:
 
 
 
 
Return on average total assets
1.10
%
 
.71
%
 
Return on average common equity
9.89

 
6.28

 
Return on average tangible common equity (c)
12.36

 
7.21

 
Net interest margin (TE)
3.19

 
2.84

 
Cash efficiency ratio (c)
62.4

 
72.5

 
 
 
 
 
 
From consolidated operations:
 
 
 
 
Return on average total assets
1.09
%
 
.70
%
 
Return on average common equity
9.95

 
6.34

 
Return on average tangible common equity (c)
12.43

 
7.27

 
Net interest margin (TE)
3.17

 
2.81

 
 
 
 
 
Asset quality — from continuing operations
 
 
 
 
Net loan charge-offs
156

 
133

 
Net loan charge-offs to average total loans
.24
%
 
.27
%
 
 
 
 
 
Other data
 
 
 
 
Average full-time equivalent employees
18,427

 
14,642

 
 
 
 
 
Taxable-equivalent adjustment
39

 
24

(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” and “cash efficiency.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the “Capital” section of this release.
(d)
Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits.
(e)
September 30, 2017, ratio is estimated.
(f)
Nonperforming loan balances exclude $783 million, $835 million, and $959 million of purchased credit impaired loans at September 30, 2017, June 30, 2017, and September 30, 2016, respectively.
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles
 
 
 
 
 
 



KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 15


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/or other notable items, and “cash efficiency ratio.”

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 merger-related charges and/or other 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 extending to January 1, 2019.

The table also shows the computation for pre-provision net revenue, which is not formally defined by GAAP. Management believes that eliminating the effects of the provision for credit losses makes it easier to analyze the results by presenting them on a more comparable basis.

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. For the second and third quarters of 2017, merger-related charges are included in the total for "notable items." The table below shows the computation of earnings per share excluding notable items, return on average tangible common equity excluding notable items, return on average assets from continuing operations excluding notable items, cash efficiency ratio excluding notable items, and pre-provision net revenue excluding notable items. Management believes that eliminating the effects of the merger-related charges and other notable items 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
 
Nine months ended
 
9/30/2017
6/30/2017
9/30/2016
 
9/30/2017
9/30/2016
Tangible common equity to tangible assets at period-end
 
 
 
 
 
 
Key shareholders’ equity (GAAP)
$
15,249

$
15,253

$
14,996

 
 
 
Less: Intangible assets (a)
2,870

2,866

2,855

 
 
 
Preferred Stock (b)
1,009

1,009

1,150

 
 
 
Tangible common equity (non-GAAP)
$
11,370.140566

$
11,378

$
10,991

 
 
 
Total assets (GAAP)
$
136,733

$
135,824

$
135,805

 
 
 
Less: Intangible assets (a)
2,870

2,866

2,855

 
 
 
Tangible assets (non-GAAP)
$
133,863

$
132,958

$
132,950

 
 
 
Tangible common equity to tangible assets ratio (non-GAAP)
8.49
%
8.56
%
8.27
%
 
 
 
Earnings per common share (EPS) excluding notable items
 
 
 
 
 
 
EPS from continuing operations attributable to Key common shareholders — assuming dilution
$
.32

$
.36

$
.16

 
 
 
Plus: EPS impact of notable items
.03

(.02
)
.14

 
 
 
EPS from continuing operations attributable to Key common shareholders excluding notable items (non-GAAP)
$
.35

$
.34

$
.30

 
 
 
Notable items
 
 
 
 
 
 
Merger-related charges
$
(36
)
$
(44
)
$
(207
)
 
$
(161
)
$
(276
)
Merchant services gain
(5
)
64


 
59


Purchase accounting finalization, net

43


 
43


Charitable contribution

(20
)

 
(20
)

Total notable items
$
(41
)
$
43

$
(207
)
 
$
(79
)
$
(276
)
Income taxes
(13
)
16

(75
)
 
(27
)
(101
)
Total notable items after tax
$
(28
)
$
27

$
(132
)
 
$
(52
)
$
(175
)



KeyCorp Reports Third Quarter 2017 Profit     
October 19, 2017
Page 16


GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
 
 
 
Three months ended
 
Nine months ended
 
 
 
9/30/2017
6/30/2017
9/30/2016
 
9/30/2017
9/30/2016
Pre-provision net revenue
 
 
 
 
 
 
Net interest income (GAAP)
$
948

$
973

$
780

 
$
2,839

$
1,981

 
Plus:
Taxable-equivalent adjustment
14

14

8

 
39

24

 
 
Noninterest income
592

653

549

 
1,822

1,453

 
Less:
Noninterest expense
992

995

1,082

 
3,000

2,536

 
 
Pre-provision net revenue from continuing operations (non-GAAP)
$
562

$
645

$
255

 
$
1,700

$
922

 
Plus:
Notable items
41

(43
)
207

 
79

276

 
 
Pre-provision net revenue from continuing operations excluding notable items (non-GAAP)
$
603

$
602

$
462

 
$
1,779

$
1,198

Average tangible common equity
 
 
 
 
 
 
 
Average Key shareholders’ equity (GAAP)
$
15,241

$
15,200

$
13,552

 
$
15,208

$
11,890

 
Less:
Intangible assets (average) (c)
2,878

2,756

2,255

 
2,802

1,473

 
 
Preferred Stock (average)
1,025

1,025

648

 
1,175

410

 
 
Average tangible common equity (non-GAAP)
$
11,338

$
11,419

$
10,649

 
$
11,231

$
10,007

Return on average tangible common equity from continuing operations
 
 
 
 
 
 
 
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)
$
349

$
393

$
165

 
$
1,038

$
540

 
Plus:
Notable items, after tax
28

(27
)
132

 
52

175

 
Net income (loss) from continuing operations attributable to Key common shareholders
 
 
 
 
 
 
 
 
excluding notable items (non-GAAP)
$
377

$
366

$
297

 
$
1,090

$
715

 
Average tangible common equity (non-GAAP)
11,338

11,419

10,649

 
11,231

10,007

 
 
 
 
 
 
 
 
 
 
Return on average tangible common equity from continuing operations (non-GAAP)
12.21
%
13.80
%
6.16
%
 
12.36
%
7.21
%
 
Return on average tangible common equity from continuing operations excluding notable items (non-GAAP)
13.19

12.86

11.10

 
12.98

9.54

Return on average tangible common equity consolidated
 
 
 
 
 
 
 
Net income (loss) attributable to Key common shareholders (GAAP)
$
350

$
398

$
166

 
$
1,044

$
545

 
Average tangible common equity (non-GAAP)
11,338

11,419

10,649

 
11,231

10,007

 
 
 
 
 
 
 
 
 
 
Return on average tangible common equity consolidated (non-GAAP)
12.25
%
13.98
%
6.20
%
 
12.43
%