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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 18, 2018
395389831_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 18, 2018, KeyCorp issued a press release announcing its financial results for the three- and nine-month period ended September 30, 2018 (the “Press Release”), and posted on its website its third quarter 2018 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 18, 2018, announcing financial results for the three- and nine-month period ended September 30, 2018.

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 18, 2018
 
/s/ Douglas M. Schosser
 
 
By: Douglas M. Schosser
 
 
Chief Accounting Officer
 
 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


395389831_keylogoicononlyrgba01.jpg


KEYCORP REPORTS THIRD QUARTER 2018 NET INCOME OF $468 MILLION,
OR $.45 PER COMMON SHARE
Cash efficiency ratio of 58.7%
Return on average tangible common equity of 16.8%

CLEVELAND, October 18, 2018 - KeyCorp (NYSE: KEY) today announced third quarter net income from continuing operations attributable to Key common shareholders of $468 million, or $.45 per common share, compared to $464 million, or $.44 per common share, for the second quarter of 2018 and $349 million, or $.32 per common share, for the third quarter of 2017.

395389831_a3q18bemquotea06.jpg
Selected Financial Highlights
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions, except per share data
 
 
 
 
Change 3Q18 vs.
 
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Income (loss) from continuing operations attributable to Key common shareholders
$
468

$
464

$
349

 
.9
%
34.1
%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution
.45

.44

.32

 
2.3

40.6

Return on average tangible common equity from continuing operations (a)
16.81
%
16.73
%
12.21
%
 
N/A

N/A

Return on average total assets from continuing operations
1.40

1.41

1.07

 
N/A

N/A

Common Equity Tier 1 ratio (b)
9.93

10.13

10.26

 
N/A

N/A

Book value at period end
$
13.33

$
13.29

$
13.18

 
.3
%
1.1
%
Net interest margin (TE) from continuing operations
3.18
%
3.19
%
3.15
%
 
N/A

N/A

 
 
 
 
 
 
 
 
(a)
The table entitled “GAAP to Non-GAAP Reconciliations” in the attached financial supplement presents the computations of certain financial measures related to “Return on average tangible common equity from continuing operations.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.
(b)
9/30/2018 ratio is estimated.
TE = Taxable Equivalent, N/A = Not Applicable




KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 2


INCOME STATEMENT HIGHLIGHTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Net interest income (TE)
$
993

$
987

$
962

 
.6
 %
3.2
%
Noninterest income
609

660

592

 
(7.7
)
2.9

Total revenue
$
1,602

$
1,647

$
1,554

 
(2.7
)%
3.1
%
 
 
 
 
 
 
 
TE = Taxable Equivalent
    
Taxable-equivalent net interest income was $993 million for the third quarter of 2018, and the net interest margin was 3.18%, compared to taxable-equivalent net interest income of $962 million and a net interest margin of 3.15% for the third quarter of 2017, reflecting the benefit from higher interest rates and higher earning asset balances. Third quarter 2018 net interest income included $26 million of purchase accounting accretion, a decline of $22 million from the third quarter of 2017.

Compared to the second quarter of 2018, taxable-equivalent net interest income increased by $6 million, and the net interest margin declined by one basis point. Both net interest income and the net interest margin benefited from higher interest rates. One additional day in the third quarter further benefited net interest income. These benefits were offset by lower loan fees, an expected decline in purchase accounting accretion, and an elevated level of liquidity, reflecting higher short-term and seasonal deposits, as well as commercial loan paydowns.

Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Trust and investment services income
$
117

$
128

$
135

 
(8.6
)%
(13.3
)%
Investment banking and debt placement fees
166

155

141

 
7.1

17.7

Service charges on deposit accounts
85

91

91

 
(6.6
)
(6.6
)
Operating lease income and other leasing gains
35

(6
)
16

 
N/M

118.8

Corporate services income
52

61

54

 
(14.8
)
(3.7
)
Cards and payments income
69

71

75

 
(2.8
)
(8.0
)
Corporate-owned life insurance income
34

32

31

 
6.3

9.7

Consumer mortgage income
9

7

7

 
28.6

28.6

Mortgage servicing fees
19

22

21

 
(13.6
)
(9.5
)
Other income
23

99

21

 
(76.8
)
9.5

Total noninterest income
$
609

$
660

$
592

 
(7.7
)%
2.9
 %
 
 
 
 
 
 
 
N/M = Not meaningful

Key’s noninterest income was $609 million for the third quarter of 2018, compared to $592 million for the year-ago quarter. Growth was primarily driven by a $25 million increase in investment banking and debt placement fees, related to strength in advisory fees, including benefit from the acquisition of Cain Brothers, as well as organic growth. Operating lease and other leasing gains increased $19 million related to higher volume and lease residual losses in the year-ago period. A decline in trust and investment services income, impacted by the sale of Key Insurance and Benefits Services in the second quarter of 2018, partially offset the increases. Cards and payments income and service charges on deposit accounts both declined $6 million, driven by the 2018 adoption of the revenue recognition accounting standard.

Compared to the second quarter of 2018, noninterest income decreased by $51 million. The decline was primarily related to a $78 million gain from the sale of Key Insurance and Benefits Services in the prior quarter, reported in other income. Trust and investment services income declined $11 million, primarily impacted by the sale of Key Insurance and Benefits Services, and corporate services income declined $9 million from lower derivative income. Partially offsetting these items was a $41 million increase in operating lease income and other leasing gains, related to a lease residual loss in the prior quarter. Additionally,



KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 3


investment banking and debt placement fees continue to show momentum, as fees increased $11 million, largely related to strength in advisory and loan syndication fees.

Noninterest Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Personnel expense
$
553

$
586

$
559

 
(5.6
)%
(1.1
)%
Nonpersonnel expense
411

407

433

 
1.0

(5.1
)
Total noninterest expense
$
964

$
993

$
992

 
(2.9
)%
(2.8
)%
 
 
 
 
 
 
 
 
Key’s noninterest expense was $964 million for the third quarter of 2018, compared to $992 million in the year-ago quarter. The third quarter of 2017 included $36 million of merger-related charges. Excluding these charges, the increase in expenses from the year-ago period was largely related to growth from the Cain Brothers acquisition and other investments throughout the year. This growth offset the realization of cost savings efforts across the franchise.

Key’s noninterest expense was $964 million for the third quarter of 2018, compared to $993 million in the prior quarter. The decrease was largely driven by a $33 million decline in personnel expense, including lower severance and incentive compensation expense. Additionally, business services and professional fees declined by $8 million, partially offset by an increase in other expense.

BALANCE SHEET HIGHLIGHTS

Average Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Commercial and industrial (a)
$
44,749

$
45,030

$
41,416

 
(.6
)%
8.0
 %
Other commercial loans
20,471

20,394

21,598

 
.4

(5.2
)
Home equity loans
11,415

11,601

12,314

 
(1.6
)
(7.3
)
Other consumer loans
11,832

11,619

11,486

 
1.8

3.0

Total loans
$
88,467

$
88,644

$
86,814

 
(.2
)%
1.9
 %
 
 
 
 
 
 
 
(a)
Commercial and industrial average loan balances include $128 million, $126 million, and $117 million of assets from commercial credit cards at September 30, 2018, June 30, 2018, and September 30, 2017, respectively.
    
Average loans were $88.5 billion for the third quarter of 2018, an increase of $1.7 billion compared to the third quarter of 2017, reflecting broad-based growth in commercial and industrial loans, partially offset by higher paydowns in commercial real estate balances and home equity lines of credit.

Compared to the second quarter of 2018, average loans decreased by $177 million, driven by continued levels of lower utilization and elevated paydowns. Period-end loan balances grew $1.0 billion compared to the prior quarter, reflecting increased momentum, as growth in commercial and industrial loans and commercial real estate balances increased near the end of the third quarter.




KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 4


Average Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Non-time deposits
$
92,414

$
91,538

$
92,039

 
1.0
%
.4
%
Certificates of deposit ($100,000 or more)
8,186

7,516

6,402

 
8.9

27.9

Other time deposits
5,026

4,949

4,664

 
1.6

7.8

Total deposits
$
105,626

$
104,003

$
103,105

 
1.6
%
2.4
%
 
 
 
 
 
 
 
Cost of total deposits
.53
%
.43
%
.28
%
 
N/A

N/A

 
 
 
 
 
 
 
N/A = Not Applicable

Average deposits totaled $105.6 billion for the third quarter of 2018, an increase of $2.5 billion compared to the year-ago quarter, reflecting growth in higher-yielding deposit products, as well as strength in Key’s retail banking franchise and growth from commercial relationships.

Compared to the second quarter of 2018, average deposits increased by $1.6 billion, reflecting growth from retail and commercial relationships, as well as short-term and seasonal deposit inflows.

ASSET QUALITY
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Net loan charge-offs
$
60

$
60

$
32

 

87.5
%
Net loan charge-offs to average total loans
.27
%
.27
%
.15
%
 
N/A

N/A

Nonperforming loans at period end (a)
$
645

$
545

$
517

 
18.3
 %
24.8

Nonperforming assets at period end (a)
674

571

556

 
18.0

21.2

Allowance for loan and lease losses
887

887

880

 

.8

Allowance for loan and lease losses to nonperforming loans (a)
137.5
%
162.8
%
170.2
%
 
N/A

N/A

Provision for credit losses
$
62

$
64

$
51

 
(3.1
)%
21.6
%
 
 
 
 
 
 
 
(a)
Nonperforming loan balances exclude $606 million, $629 million, and $783 million of purchased credit impaired loans at September 30, 2018, June 30, 2018, and September 30, 2017, respectively.
N/A = Not Applicable

Key’s provision for credit losses was $62 million for the third quarter of 2018, compared to $51 million for the third quarter of 2017 and $64 million for the second quarter of 2018. Key’s allowance for loan and lease losses was $887 million, or .99% of total period-end loans at September 30, 2018, compared to 1.02% at September 30, 2017, and 1.01% at June 30, 2018.

Net loan charge-offs for the third quarter of 2018 totaled $60 million, or .27% of average total loans. These results compare to $32 million, or .15%, for the third quarter of 2017, and $60 million, or .27%, for the second quarter of 2018.

At September 30, 2018, Key’s nonperforming loans totaled $645 million, which represented .72% of period-end portfolio loans. These results compare to .60% at September 30, 2017, and .62% at June 30, 2018. Nonperforming assets at September 30, 2018, totaled $674 million, and represented .75% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .64% at September 30, 2017, and .65% at June 30, 2018.
 
CAPITAL

Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at September 30, 2018.
 



KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 5


Capital Ratios
 
 
 
 
 
 
 
 
9/30/2018
6/30/2018
9/30/2017
Common Equity Tier 1 (a)
9.93
%
10.13
%
10.26
%
Tier 1 risk-based capital (a)
11.09

10.95

11.11

Total risk based capital (a)
12.97

12.83

13.09

Tangible common equity to tangible assets (b)
8.05

8.32

8.49

Leverage (a)
10.05

9.87

9.83

 
 
 
 
(a)
9/30/2018 ratio is estimated.
(b)
The table entitled “GAAP to Non-GAAP Reconciliations” in the attached financial supplement presents the computations of certain financial measures related to “tangible common equity.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. See below for further information on the Regulatory Capital Rules.

Key's capital position remained strong in the third quarter. As shown in the preceding table, at September 30, 2018, Key’s estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.93% and 11.09%, respectively. Key's tangible common equity ratio was 8.05% at September 30, 2018.

As a “standardized approach” banking organization, Key’s mandatory compliance with the final Basel III capital framework for U.S. banking organizations (the “Regulatory Capital Rules”) began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Key’s estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 9.85% at September 30, 2018. This estimate exceeds the fully phased-in required minimum Common Equity Tier 1 and Capital Conservation Buffer of 7.00%.

Summary of Changes in Common Shares Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
in thousands
 
 
 
 
Change 3Q18 vs.
 
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Shares outstanding at beginning of period
1,058,944

1,064,939

1,092,739

 
(.6
)%
(3.1
)%
Open market repurchases and return of shares under employee compensation plans
(25,418
)
(6,259
)
(15,298
)
 
306.1

66.2

Shares issued under employee compensation plans (net of cancellations)
761

264

1,598

 
188.3

(52.4
)
 
Shares outstanding at end of period
1,034,287

1,058,944

1,079,039

 
(2.3
)%
(4.1
)%
 
 
 
 
 
 
 
 
N/M = Not Meaningful

Consistent with Key's 2018 Capital Plan, during the third quarter of 2018, Key declared a dividend of $.17 per common share, reflecting a 42% increase from the prior quarter. Key also completed $542 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.
  



KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 6


Major Business Segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Revenue from continuing operations (TE)
 
 
 
 
 
 
Key Community Bank
$
994

$
997

$
945

 
(.3
)%
5.2
 %
Key Corporate Bank
574

542

561

 
5.9

2.3

Other Segments
24

37

42

 
(35.1
)
(42.9
)
 
Total segments
1,592

1,576

1,548


1.0

2.8

Reconciling Items (a)
10

71

6

 
(85.9
)
66.7

 
Total
$
1,602

$
1,647

$
1,554

 
(2.7
)%
3.1
 %
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key
 
 
 
 
 
 
Key Community Bank
$
241

$
243

$
163

 
(.8
)%
47.9
 %
Key Corporate Bank
199

167

190

 
19.2

4.7

Other Segments
22

25

21

 
(12.0
)
4.8

 
Total segments
462

435

374

 
6.2

23.5

Reconciling Items (b)
20

44

(11
)
 
(54.5
)
N/M

 
Total
$
482

$
479

$
363

 
.6
 %
32.8
 %
 
 
 
 
 
 
 
 
(a)
Reconciling items consists primarily of the gain on the sale of Key Insurance and Benefits Services for the second quarter of 2018.
(b)
Reconciling items consists primarily of the gain on the sale of Key Insurance and Benefits Services for the second quarter of 2018, the unallocated portion of merger-related charges for the third quarter of 2017, and items not allocated to the business segments because they do not reflect their normal operations.
TE = Taxable Equivalent, N/M = Not Meaningful


Key Community Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Summary of operations
 
 
 
 
 
 
Net interest income (TE)
$
726

$
715

$
673

 
1.5
 %
7.9
 %
Noninterest income
268

282

272

 
(5.0
)
(1.5
)
Total revenue (TE)
994

997

945

 
(.3
)
5.2

Provision for credit losses
43

38

59

 
13.2

(27.1
)
Noninterest expense
635

640

626

 
(.8
)
1.4

Income (loss) before income taxes (TE)
316

319

260

 
(.9
)
21.5

Allocated income taxes (benefit) and TE adjustments
75

76

97

 
(1.3
)
(22.7
)
Net income (loss) attributable to Key
$
241

$
243

$
163

 
(.8
)%
47.9
 %
 
 
 
 
 
 
 
Average balances
 
 
 
 
 
 
Loans and leases
$
47,862

$
47,985

$
47,614

 
(.3
)%
.5
 %
Total assets
51,740

51,867

51,642

 
(.2
)
.2

Deposits
82,259

80,930

79,563

 
1.6

3.4

 
 
 
 
 




Assets under management at period end
$
40,575

$
39,663

$
38,660

 
2.3
 %
5.0
 %
 
 
 
 
 
 
 
TE = Taxable Equivalent





KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 7


Additional Key Community Bank Data
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Noninterest income
 
 
 
 
 
 
Trust and investment services income
$
90

$
92

$
85

 
(2.2
)%
5.9
 %
Service charges on deposit accounts
72

77

78

 
(6.5
)
(7.7
)
Cards and payments income
59

59

65

 

(9.2
)
Other noninterest income
47

54

44

 
(13.0
)
6.8

Total noninterest income
$
268

$
282

$
272

 
(5.0
)%
(1.5
)%
 
 
 
 
 




Average deposit balances
 
 
 
 




NOW and money market deposit accounts
$
45,967

$
45,112

$
44,481

 
1.9
 %
3.3
 %
Savings deposits
4,923

5,078

5,165

 
(3.1
)
(4.7
)
Certificates of deposit ($100,000 or more)
5,608

5,232

4,195

 
7.2

33.7

Other time deposits
5,019

4,934

4,657

 
1.7

7.8

Noninterest-bearing deposits
20,742

20,574

21,065

 
.8

(1.5
)
Total deposits
$
82,259

$
80,930

$
79,563

 
1.6
 %
3.4
 %
 
 
 
 
 
 
 
Home equity loans
 
 
 
 
 
 
Average balance
$
11,317

$
11,496

$
12,182

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

60

60

 
 
 
 
 
 
 
 
 
 
Other data
 
 
 
 
 
 
Branches
1,166

1,177

1,208

 
 
 
Automated teller machines
1,518

1,537

1,588

 
 
 
 
 
 
 
 
 
 

Key Community Bank Summary of Operations (3Q18 vs. 3Q17)

Positive operating leverage compared to the prior year
Net income increased $78 million, or 47.9%, from the prior year
Average commercial and industrial loans increased $831 million, or 4.4%, from the prior year

Key Community Bank recorded net income attributable to Key of $241 million for the third quarter of 2018, compared to $163 million for the year-ago quarter, benefiting from momentum in Key's core businesses and a lower tax rate as a result of tax reform.

Taxable-equivalent net interest income increased by $53 million, or 7.9%, from the third quarter of 2017. The increase in net interest income was primarily attributable to the benefit from higher interest rates and balance sheet growth, partially offset by lower purchase accounting accretion. Average loans and leases increased $248 million, or .5%, largely driven by a $831 million, or 4.4%, increase in commercial and industrial loans, partially offset by a continued decline in home equity, in line with industry trends. Additionally, average deposits increased $2.7 billion, or 3.4%, driven by growth across multiple businesses, from the third quarter of 2017.

Noninterest income decreased $4 million, or 1.5%, from the year-ago quarter driven by lower service charges on deposit accounts and cards and payments income, which were impacted by revenue recognition changes. This was partially offset by higher trust and investment services income, which increased primarily due to higher assets under management from market growth.

The provision for credit losses decreased by $16 million, or 27.1%, from the third quarter of 2017. Net loan charge-offs increased $2 million, or 4.9%, from the third quarter of 2017, as overall credit quality remained stable.

Noninterest expense increased $9 million, or 1.4%, from the year-ago quarter. Personnel expense
increased, primarily driven by higher production related incentive compensation and ongoing investments, including residential mortgage.




KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 8



Key Corporate Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Summary of operations
 
 
 
 
 
 
Net interest income (TE)
$
273

$
277

$
292

 
(1.4
)%
(6.5
)%
Noninterest income
301

265

269

 
13.6

11.9

Total revenue (TE)
574

542

561

 
5.9

2.3

Provision for credit losses
20

28

(11
)
 
(28.6
)
N/M

Noninterest expense
316

325

303

 
(2.8
)
4.3

Income (loss) before income taxes (TE)
238

189

269

 
25.9

(11.5
)
Allocated income taxes and TE adjustments
39

22

79

 
77.3

(50.6
)
Net income (loss) attributable to Key
$
199

$
167

$
190

 
19.2
 %
4.7
 %
 
 
 
 
 
 
 
Average balances
 
 
 
 
 
 
Loans and leases
$
39,714

$
39,709

$
38,021

 

4.5
 %
Loans held for sale
1,042

1,299

1,521

 
(19.8
)%
(31.5
)
Total assets
46,860

47,212

45,257

 
(.7
)
3.5

Deposits
21,056

21,057

21,559

 

(2.3
)
 
 
 
 
 
 
 
TE = Taxable Equivalent, N/M = Not Meaningful

Additional Key Corporate Bank Data
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 3Q18 vs.
 
3Q18
2Q18
3Q17
 
2Q18
3Q17
Noninterest income
 
 
 
 
 
 
Trust and investment services income
$
27

$
29

$
34

 
(6.9
)%
(20.6
)%
Investment banking and debt placement fees
162

153

137

 
5.9

18.2

Operating lease income and other leasing gains
34

(10
)
13

 
N/M

161.5

 
 
 
 
 
 
 
Corporate services income
37

44

40

 
(15.9
)
(7.5
)
Service charges on deposit accounts
13

13

13

 


Cards and payments income
10

12

10

 
(16.7
)

Payments and services income
60

69

63

 
(13.0
)
(4.8
)
 
 
 
 
 
 
 
Mortgage servicing fees
15

19

18

 
(21.1
)
(16.7
)
Other noninterest income
3

5

4

 
(40.0
)
(25.0
)
Total noninterest income
$
301

$
265

$
269

 
13.6
 %
11.9
 %
 
 
 
 
 
 
 
N/M = Not Meaningful

Key Corporate Bank Summary of Operations (3Q18 vs. 3Q17)

Commercial and industrial loans up $2.6 billion, or 11.4%, from prior year
Investment banking and debt placement fees up $25 million, or 18.2%, from prior year

            Key Corporate Bank recorded net income attributable to Key of $199 million for the third quarter of 2018, compared to $190 million for the year-ago quarter.
    
Taxable-equivalent net interest income decreased by $19 million, or 6.5%, compared to the third quarter of 2017.  This decline is primarily related to $7 million of lower purchase accounting accretion, as well as loan spread compression. Average loan and lease balances increased $1.7 billion, or 4.5%, from the year-ago quarter, driven by broad-based growth in commercial and industrial loans, partially offset by a continued decline in home equity. Average deposit balances decreased $503 million, or 2.3%, from the year-ago quarter, driven by the managed exit of higher cost corporate and public sector deposits offsetting growth in core deposits.




KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 9


            Noninterest income was up $32 million, or 11.9%, from the prior year. Investment banking and debt placement fees increased $25 million related to the acquisition of Cain Brothers and organic growth. Operating lease income and other leasing gains increased $21 million due to higher volumes, as well as lease residual losses in the year-ago period. These increases were slightly offset by lower trust and investment services income of $7 million, as well as $3 million declines in both mortgage fees due to lower transactional fees and corporate services income due to lower derivatives income.

            During the third quarter of 2018, the provision for credit losses increased $31 million, compared to the third quarter of 2017, mostly due to higher net loan charge-offs.

            Noninterest expense increased by $13 million, or 4.3%, from the third quarter of 2017. The increase from the prior year was largely related to acquisitions and investments made throughout the year driving increases in personnel expense and intangible amortization, as well as higher operating lease expense, driven by increased volume.



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 $22 million for the third quarter of 2018, compared to $21 million for the same period last year.

*****

KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation’s largest bank-based financial services companies, with assets of approximately $138.8 billion at September 30, 2018.

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of over 1,100 branches and more than 1,500 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.



KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 10



CONTACTS:
 
 
 
ANALYSTS
MEDIA
Vernon L. Patterson
Susan Donlan
216.689.0520
216.471.3133
Vernon_Patterson@KeyBank.com
Susan_E_Donlan@KeyBank.com
 
 Twitter: @keybank_news
Kelly L. Dillon
 
216.689.3133
 
Kelly_L_Dillon@KeyBank.com
 
 
 
Melanie S. Kaiser
 
216.689.4545
 
Melanie_S_Kaiser@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, 2017, as well as in KeyCorp’s subsequent SEC filings, all of which have been filed with the Securities and Exchange Commission (the “SEC”) and are available on Key’s website (www.key.com/ir) and on the SEC’s website (www.sec.gov). These factors may include, among others: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive regulation of the U.S. financial services industry. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

Notes to Editors:
A live Internet broadcast of KeyCorp’s conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts’ questions can be accessed through the Investor Relations section at https://www.key.com/ir at 9:00 a.m. ET, on Thursday, October 18, 2018. An audio replay of the call will be available through October 28, 2018.
 
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 2018 Profit     
October 18, 2018
Page 11





KeyCorp
Third Quarter 2018
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 2018 Profit     
October 18, 2018
Page 12


Financial Highlights
(dollars in millions, except per share amounts)
 
 
 
Three months ended
 
 
 
9/30/2018
6/30/2018
9/30/2017
Summary of operations
 
 
 
 
Net interest income (TE)
$
993

$
987

$
962

 
Noninterest income
609

660

592

 
 
Total revenue (TE)
1,602

1,647

1,554

 
Provision for credit losses
62

64

51

 
Noninterest expense
964

993

992

 
Income (loss) from continuing operations attributable to Key
482

479

363

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

3

1

 
Net income (loss) attributable to Key
482

482

364

 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
468

464

349

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

3

1

 
Net income (loss) attributable to Key common shareholders
468

467

350

 
 
 
 
 
 
Per common share
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
$
.45

$
.44

$
.32

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



 
Net income (loss) attributable to Key common shareholders (b)
.45

.44

.32

 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution
.45

.44

.32

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



 
Net income (loss) attributable to Key common shareholders — assuming dilution (b)
.45

.44

.32

 
 
 
 
 
 
 
Cash dividends declared
.17

.12

.095

 
Book value at period end
13.33

13.29

13.18

 
Tangible book value at period end
10.59

10.59

10.52

 
Market price at period end
19.89

19.54

18.82

 
 
 
 
 
 
Performance ratios
 
 
 
 
From continuing operations:
 
 
 
 
Return on average total assets
1.40
%
1.41
%
1.07
%
 
Return on average common equity
13.36

13.29

9.74

 
Return on average tangible common equity (c)
16.81

16.73

12.21

 
Net interest margin (TE)
3.18

3.19

3.15

 
Cash efficiency ratio (c)
58.7

58.8

62.2

 
 
 
 
 
 
 
From consolidated operations:
 
 
 
 
Return on average total assets
1.39
%
1.40
%
1.06
%
 
Return on average common equity
13.36

13.37

9.77

 
Return on average tangible common equity (c)
16.81

16.84

12.25

 
Net interest margin (TE)
3.16

3.17

3.13

 
Loan to deposit (d)
87.0

86.9

86.2

 
 
 
 
 
 
Capital ratios at period end
 
 
 
 
Key shareholders’ equity to assets
10.96
%
10.96
%
11.15
%
 
Key common shareholders’ equity to assets
9.93

10.21

10.40

 
Tangible common equity to tangible assets (c)
8.05

8.32

8.49

 
Common Equity Tier 1 (e)
9.93

10.13

10.26

 
Tier 1 risk-based capital (e)
11.09

10.95

11.11

 
Total risk-based capital (e)
12.97

12.83

13.09

 
Leverage (e)
10.05

9.87

9.83

 
 
 
 
 
 
Asset quality — from continuing operations
 
 
 
 
Net loan charge-offs
$
60

$
60

$
32

 
Net loan charge-offs to average loans
.27
%
.27
%
.15
%
 
Allowance for loan and lease losses
$
887

$
887

$
880

 
Allowance for credit losses
947

945

937

 
Allowance for loan and lease losses to period-end loans
.99
%
1.01
%
1.02
%
 
Allowance for credit losses to period-end loans
1.06

1.07

1.08

 
Allowance for loan and lease losses to nonperforming loans (f)
137.5

162.8

170.2

 
Allowance for credit losses to nonperforming loans (f)
146.8

173.4

181.2

 
Nonperforming loans at period-end (f)
$
645

$
545

$
517

 
Nonperforming assets at period-end (f)
674

571

556

 
Nonperforming loans to period-end portfolio loans (f)
.72
%
.62
%
.60
%
 
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets (f)
.75

.65

.64

 
 
 
 
 
 
Trust assets
 
 
 
 
Assets under management
$
40,575

$
39,663

$
38,660

 
 
 
 
 
 
Other data
 
 
 
 
Average full-time equivalent employees
18,150

18,376

18,548

 
Branches
1,166

1,177

1,208

 
 
 
 
 
 
Taxable-equivalent adjustment
$
7

$
8

$
14





KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 13


Financial Highlights (continued)
(dollars in millions, except per share amounts)
 
 
Nine months ended
 
 
9/30/2018
 
9/30/2017
Summary of operations
 
 
 
 
Net interest income (TE)
$
2,932

 
$
2,878

 
Noninterest income
1,870

 
1,822

 
Total revenue (TE)
4,802

 
4,700

 
Provision for credit losses
187

 
180

 
Noninterest expense
2,963

 
3,000

 
Income (loss) from continuing operations attributable to Key
1,377

 
1,094

 
Income (loss) from discontinued operations, net of taxes (a)
5

 
6

 
Net income (loss) attributable to Key
1,382

 
1,100

 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
$
1,334

 
$
1,038

 
Income (loss) from discontinued operations, net of taxes (a)
5

 
6

 
Net income (loss) attributable to Key common shareholders
1,339

 
1,044

 
 
 
 
 
Per common share
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
$
1.28

 
$
.96

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

 
.01

 
Net income (loss) attributable to Key common shareholders (b)
1.27

 
.97

 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution
1.26

 
.95

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

 
.01

 
Net income (loss) attributable to Key common shareholders — assuming dilution (b)
1.26

 
.96

 
 
 
 
 
 
Cash dividends paid
.395

 
.275

 
 
 
 
 
Performance ratios
 
 
 
 
From continuing operations:
 
 
 
 
Return on average total assets
1.35
%
 
1.10
%
 
Return on average common equity
12.81

 
9.89

 
Return on average tangible common equity (c)
16.16

 
12.36

 
Net interest margin (TE)
3.17

 
3.19

 
Cash efficiency ratio (c)
60.1

 
62.4

 
 
 
 
 
 
From consolidated operations:
 
 
 
 
Return on average total assets
1.35
%
 
1.09
%
 
Return on average common equity
12.86

 
9.95

 
Return on average tangible common equity (c)
16.22

 
12.43

 
Net interest margin (TE)
3.15

 
3.17

 
 
 
 
 
Asset quality — from continuing operations
 
 
 
 
Net loan charge-offs
$
174

 
$
156

 
Net loan charge-offs to average total loans
.26
%
 
.24
%
 
 
 
 
 
Other data
 
 
 
 
Average full-time equivalent employees
18,354

 
18,427

 
 
 
 
 
Taxable-equivalent adjustment
23

 
39

(a)
In September 2009, management decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association.
(b)
Earnings per share may not foot due to rounding.
(c)
The following table entitled “GAAP to Non-GAAP Reconciliations” presents the computations of certain financial measures related to “tangible common equity” and “cash efficiency.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the “Capital” section of this release.
(d)
Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits.
(e)
September 30, 2018, ratio is estimated.
(f)
Nonperforming loan balances exclude $606 million, $629 million, and $783 million of purchased credit impaired loans at September 30, 2018, June 30, 2018, and September 30, 2017, respectively.
 
 
 
 
 
 




KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 14


GAAP to Non-GAAP Reconciliations
(dollars in millions)

The table below presents certain non-GAAP financial measures related to “tangible common equity,” “return on average tangible common equity,” “Common Equity Tier 1,” “pre-provision net revenue,” and “cash efficiency ratio.”

The tangible common equity ratio and the return on average tangible common equity ratio have been a focus for some investors, and management believes these ratios may assist investors in analyzing Key’s capital position without regard to the effects of intangible assets and preferred stock. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. In October 2013, the federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the “Regulatory Capital Rules”). The Regulatory Capital Rules require higher and better-quality capital and introduced a new capital measure, “Common Equity Tier 1,” a non-GAAP financial measure. The mandatory compliance date for Key as a “standardized approach” banking organization began on January 1, 2015, subject to transitional provisions 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.

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
 
9/30/2018
6/30/2018
9/30/2017
 
9/30/2018
9/30/2017
Tangible common equity to tangible assets at period-end
 
 
 
 
 
 
Key shareholders’ equity (GAAP)
$
15,208

$
15,100

$
15,249

 
 
 
Less: Intangible assets (a)
2,838

2,858

2,870

 
 
 
Preferred Stock (b)
1,421

1,009

1,009

 
 
 
Tangible common equity (non-GAAP)
$
10,949

$
11,233

$
11,370

 
 
 
Total assets (GAAP)
$
138,805

$
137,792

$
136,733

 
 
 
Less: Intangible assets (a)
2,838

2,858

2,870

 
 
 
Tangible assets (non-GAAP)
$
135,967

$
134,934

$
133,863

 
 
 
Tangible common equity to tangible assets ratio (non-GAAP)
8.05
%
8.32
%
8.49
%
 
 
 
Pre-provision net revenue
 
 
 
 
 
 
Net interest income (GAAP)
$
986

$
979

$
948

 
$
2,909

$
2,839

Plus: Taxable-equivalent adjustment
7

8

14

 
23

39

Noninterest income
609

660

592

 
1,870

1,822

Less: Noninterest expense
964

993

992

 
2,963

3,000

Pre-provision new revenue from continuing operations (non-GAAP)
$
638

$
654

$
562

 
$
1,839

$
1,700

Average tangible common equity
 
 
 
 
 
 
Average Key shareholders' equity (GAAP)
$
15,210

$
15,032

$
15,241

 
$
15,045

$
15,208

Less: Intangible assets (average) (c)
2,848

2,883

2,878

 
2,882

2,802

Preferred stock (average)
1,316

1,025

1,025

 
1,123

1,175

Average tangible common equity (non-GAAP)
$
11,046

$
11,124

$
11,338

 
$
11,040

$
11,231

Return on average tangible common equity from continuing operations
 
 
 
 
 
 
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)
$
468

$
464

$
349

 
$
1,334

$
1,038

Average tangible common equity (non-GAAP)
11,046

11,124

11,338

 
11,040

11,231

 
 
 
 
 
 
 
Return on average tangible common equity from continuing operations (non-GAAP)
16.81
%
16.73
%
12.21
%
 
16.16
%
12.36
%
Return on average tangible common equity consolidated
 
 
 
 
 
 
Net income (loss) attributable to Key common shareholders (GAAP)
$
468

$
467

$
350

 
$
1,339

$
1,044

Average tangible common equity (non-GAAP)
11,046

11,124

11,338

 
11,040

11,231

 
 
 
 
 
 
 
Return on average tangible common equity consolidated (non-GAAP)
16.81
%
16.84
%
12.25
%
 
16.22
%
12.43
%
Cash efficiency ratio
 
 
 
 
 
 
Noninterest expense (GAAP)
$
964

$
993

$
992

 
$
2,963

$
3,000

Less: Intangible asset amortization
23

25

25

 
77

69

Adjusted noninterest expense (non-GAAP)
$
941

$
968

$
967

 
$
2,886

$
2,931

 
 
 
 
 
 
 
Net interest income (GAAP)
$
986

$
979

$
948

 
$
2,909

$
2,839

Plus: Taxable-equivalent adjustment
7

8

14

 
23

39

Noninterest income
609

660

592

 
1,870

1,822

Total taxable-equivalent revenue (non-GAAP)
$
1,602

$
1,647

$
1,554

 
$
4,802

$
4,700

 
 
 
 
 
 
 
Cash efficiency ratio (non-GAAP)
58.7
%
58.8
%
62.2
%
 
60.1
%
62.4
%

 
 
 
 
 
 
 
 
 



KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 15


GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
 
 
 
Three months ended
 
 
 
9/30/2018
Common Equity Tier 1 under the Regulatory Capital Rules (“RCR”) (estimates)
 
 
Common Equity Tier 1 under current RCR
$
12,197

 
Adjustments from current RCR to the fully phased-in RCR:
 
 
 
Deferred tax assets and other intangible assets (d)

 
 
Common Equity Tier 1 anticipated under the fully phased-in RCR (e)
$
12,197

 
 
 
 
 
Net risk-weighted assets under current RCR
$
122,781

 
Adjustments from current RCR to the fully phased-in RCR:
 
 
 
Mortgage servicing assets (f)
755

 
 
Deferred tax assets
345

 
 
All other assets

 
 
Total risk-weighted assets anticipated under the fully phased-in RCR (e)
$
123,881

 
 
 
 
 
Common Equity Tier 1 ratio under the fully phased-in RCR (e)
9.85
%

(a)
For the three months ended September 30, 2018, June 30, 2018, and September 30, 2017, intangible assets exclude $17 million, $20 million, and $30 million, respectively, of period-end purchased credit card receivables.
(b)
Net of capital surplus.
(c)
For the three months ended September 30, 2018, June 30, 2018, and September 30, 2017, average intangible assets exclude $18 million, $21 million, and $32 million, respectively, of average purchased credit card receivables. For the nine months ended September 30, 2018, and September 30, 2017, average intangible assets exclude $21 million and $36 million, respectively, of average purchased credit card receivables.
(d)
Includes the deferred tax assets subject to future taxable income for realization, primarily tax credit carryforwards, as well as intangible assets (other than goodwill and mortgage servicing assets) subject to the transition provisions of the final rule.
(e)
The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies’ Regulatory Capital Rules (as fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital Rules under the “standardized approach.”
(f)
Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250%.
GAAP = U.S. generally accepted accounting principles
 
 
 
 
 
 
 
 
 




KeyCorp Reports Third Quarter 2018 Profit     
October 18, 2018
Page 16


Consolidated Balance Sheets
(dollars in millions)
 
 
 
 
 
 
 
 
 
9/30/2018

6/30/2018

9/30/2017

Assets
 
 
 
 
Loans
$
89,268

$
88,222

$
86,492

 
Loans held for sale
1,618

1,418

1,341

 
Securities available for sale
18,341

17,367

19,012

 
Held-to-maturity securities
11,869

12,277

10,276

 
Trading account assets
958

833

783

 
Short-term investments
2,272

2,646

3,993

 
Other investments
681

709

728

 
 
Total earning assets
125,007

123,472

122,625

 
Allowance for loan and lease losses
(887
)
(887
)
(880
)
 
Cash and due from banks
319

784

562

 
Premises and equipment
891

892

916

 
Operating lease assets
930

903

736

 
Goodwill
2,516

2,516

2,487

 
Other intangible assets
338

361

412

 
Corporate-owned life insurance
4,156

4,147

4,113

 
Accrued income and other assets
4,378

4,382

4,366

 
Discontinued assets
1,157

1,222

1,396

 
 
Total assets
$
138,805

$
137,792

$
136,733

 
 
 
 
 
 
Liabilities
 
 
 
 
Deposits in domestic offices:
 
 
 
 
 
NOW and money market deposit accounts
$
57,219

$
55,059

$
53,734

 
 
Savings deposits
4,948

6,199