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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): January 17, 2019
396396349_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 January 17, 2019, KeyCorp issued a press release announcing its financial results for the three- and twelve-month period ended December 31, 2018 (the “Press Release”), and posted on its website its fourth 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 January 17, 2019, announcing financial results for the three- and twelve-month period ended December 31, 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: January 17, 2019
 
/s/ Douglas M. Schosser
 
 
By: Douglas M. Schosser
 
 
Chief Accounting Officer
 
 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Document




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KEYCORP REPORTS FOURTH QUARTER 2018 NET INCOME OF $459 MILLION,
OR $.45 PER COMMON SHARE

4Q18 results included a net impact of $.03 per common share related to notable items: a pension settlement charge and efficiency initiative expenses

Sixth consecutive year of positive operating leverage with record full-year revenue of $6.4 billion

Cash efficiency ratio and return on average tangible common equity improved
over 300 basis points vs. the prior year
Strong credit quality: 4Q18 net charge-offs to average loans of .27%

Significant capital return: 62% increase in common share dividend and over $1.1 billion share repurchases in 2018

CLEVELAND, January 17, 2019 - KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $459 million, or $.45 per common share for the fourth quarter of 2018, compared to $468 million, or $.45 per common share, for the third quarter of 2018 and $181 million, or $.17 per common share, for the fourth quarter of 2017. During the fourth quarter of 2018, Key’s results included notable items resulting in a net impact of $.03 per common share, consisting of a pension settlement charge and efficiency initiative expenses. No notable items were reported in the third quarter of 2018, however, notable items resulting in a net impact of $.19 per common share were reported in the fourth quarter of 2017.

For the year ended December 31, 2018, net income from continuing operations attributable to Key common shareholders was $1.8 billion, or $1.70 per common share, compared to $1.2 billion, or $1.12 per common share, for the same period one year ago.

396396349_a4q18erquotea03.jpg

Selected Financial Highlights
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions, except per share data
 
 
 
 
Change 4Q18 vs.
 
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Income (loss) from continuing operations attributable to Key common shareholders
$
459

$
468

$
181

 
(1.9
)%
153.6
%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution
.45

.45

.17

 

164.7

Return on average tangible common equity from continuing operations (a)
16.40
%
16.81
%
6.35
%
 
N/A

N/A

Return on average total assets from continuing operations
1.37

1.40

.57

 
N/A

N/A

Common Equity Tier 1 ratio (b)
9.92

9.95

10.16

 
N/A

N/A

Book value at period end
$
13.90

$
13.33

$
13.09

 
4.3
 %
6.2
%
Net interest margin (TE) from continuing operations
3.16
%
3.18
%
3.09
%
 
N/A

N/A

 
 
 
 
 
 
 
 
(a)
The table entitled “GAAP to Non-GAAP Reconciliations” in the attached financial supplement presents the computations of certain financial measures related to “Return on average tangible common equity from continuing operations.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.
(b)
12/31/18 ratio is estimated.
TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Net interest income (TE)
$
1,008

$
993

$
952

 
1.5
%
5.9
 %
Noninterest income
645

609

656

 
5.9

(1.7
)
Total revenue
$
1,653

$
1,602

$
1,608

 
3.2
%
2.8
 %
 
 
 
 
 
 
 
TE = Taxable Equivalent
    
Taxable-equivalent net interest income was $1.0 billion for the fourth quarter of 2018, and the net interest margin was 3.16%, compared to taxable-equivalent net interest income of $952 million and a net interest margin of 3.09% for the fourth quarter of 2017, reflecting the benefit from higher interest rates and higher earning asset balances. Fourth quarter 2018 net interest income included $23 million of purchase accounting accretion, a decline of $15 million from the fourth quarter of 2017.

Compared to the third quarter of 2018, taxable-equivalent net interest income increased by $15 million, and the net interest margin declined by two basis points. Net interest income benefited from higher earning asset balances, while the overall decline in the net interest margin reflects the impact of lower purchase accounting accretion.


Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Trust and investment services income
$
121

$
117

$
131

 
3.4
 %
(7.6
)%
Investment banking and debt placement fees
186

166

200

 
12.0

(7.0
)
Service charges on deposit accounts
84

85

89

 
(1.2
)
(5.6
)
Operating lease income and other leasing gains
28

35

27

 
(20.0
)
3.7

Corporate services income
58

52

56

 
11.5

3.6

Cards and payments income
68

69

77

 
(1.4
)
(11.7
)
Corporate-owned life insurance income
39

34

37

 
14.7

5.4

Consumer mortgage income
7

9

7

 
(22.2
)

Mortgage servicing fees
21

19

17

 
10.5

23.5

Other income
33

23

15

 
43.5

120.0

Total noninterest income
$
645

$
609

$
656

 
5.9
 %
(1.7
)%
 
 
 
 
 
 
 




KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 2


Key’s noninterest income was $645 million for the fourth quarter of 2018, compared to $656 million for the year-ago quarter. Trust and investment services income declined $10 million, related to the sale of Key Insurance and Benefits Services in the second quarter of 2018. Cards and payments income and service charges on deposit accounts were impacted by the 2018 adoption of the revenue recognition accounting standard. Excluding the revenue recognition changes, both of these line items grew from the prior year. Investment banking and debt placement fees were lower, following a record fourth quarter in 2017. Partially offsetting these declines were increases in other income and mortgage servicing fees.

Compared to the third quarter of 2018, noninterest income increased by $36 million, driven by momentum in many of Key's core fee-based businesses. Investment banking and debt placement fees increased $20 million, largely related to strength in commercial mortgage banking and advisory fees. Corporate services income reflected higher derivatives and trading income, and trust and investment services income grew, largely due to stronger brokerage commissions.

Noninterest Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Personnel expense
$
576

$
553

$
609

 
4.2
%
(5.4
)%
Nonpersonnel expense
436

411

489

 
6.1

(10.8
)
Total noninterest expense
$
1,012

$
964

$
1,098

 
5.0
%
(7.8
)%
 
 
 
 
 
 
 
 
Key’s noninterest expense was $1.0 billion for the fourth quarter of 2018, compared to $1.1 billion in the year-ago quarter. Personnel expense declined year-over-year, driven by lower incentive compensation and employee benefits costs, partially offset by increased severance expense related to Key's efficiency initiative. Net occupancy and marketing expenses also declined, largely related to merger-related charges in the fourth quarter of 2017. In the fourth quarter of 2018, Key's FDIC assessment costs decreased, due to the elimination of the FDIC quarterly surcharge.

Compared to the third quarter of 2018, noninterest expense increased by $48 million. The increase was primarily driven by notable items in the quarter - efficiency initiative expenses of $24 million and a $17 million pension settlement charge (reported in other expense). Business services and professional fees and other expense increased, but were partially offset by the benefit from the FDIC surcharge elimination.


BALANCE SHEET HIGHLIGHTS

Average Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Commercial and industrial (a)
$
45,129

$
44,749

$
41,289

 
.8
 %
9.3
 %
Other commercial loans
20,899

20,471

21,040

 
2.1

(.7
)
Home equity loans
11,234

11,415

12,128

 
(1.6
)
(7.4
)
Other consumer loans
12,026

11,832

11,549

 
1.6

4.1

Total loans
$
89,288

$
88,467

$
86,006

 
.9
 %
3.8
 %
 
 
 
 
 
 
 
(a)
Commercial and industrial average loan balances include $132 million, $128 million, and $119 million of assets from commercial credit cards at December 31, 2018, September 30, 2018, and December 31, 2017, respectively.
    
Average loans were $89.3 billion for the fourth quarter of 2018, an increase of $3.3 billion compared to the fourth quarter of 2017, reflecting broad-based growth in commercial and industrial loans, partially offset by higher paydowns in home equity lines of credit.




KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 3


Compared to the third quarter of 2018, average loans increased by $821 million, driven by growth in commercial real estate and commercial and industrial loans.

Average Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Non-time deposits
$
94,480

$
92,414

$
92,251

 
2.2
%
2.4
%
Certificates of deposit ($100,000 or more)
8,217

8,186

6,776

 
.4

21.3

Other time deposits
5,255

5,026

4,771

 
4.6

10.1

Total deposits
$
107,952

$
105,626

$
103,798

 
2.2
%
4.0
%
 
 
 
 
 
 
 
Cost of total deposits
.64
%
.53
%
.31
%
 
N/A

N/A

 
 
 
 
 
 
 
N/A = Not Applicable

Average deposits totaled $108.0 billion for the fourth quarter of 2018, an increase of $4.2 billion compared to the year-ago quarter, reflecting growth in higher-yielding deposit products, as well as strength in Key’s retail banking franchise and growth from commercial relationships.

Compared to the third quarter of 2018, average deposits increased by $2.3 billion, driven primarily by the penetration of existing retail and commercial relationships, as well as short-term and seasonal deposit inflows.

ASSET QUALITY
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Net loan charge-offs
$
60

$
60

$
52

 

15.4
%
Net loan charge-offs to average total loans
.27
%
.27
%
.24
%
 
N/A

N/A

Nonperforming loans at period end (a)
$
542

$
645

$
503

 
(16.0
)%
7.8

Nonperforming assets at period end (a)
577

674

534

 
(14.4
)
8.1

Allowance for loan and lease losses
883

887

877

 
(.5
)
.7

Allowance for loan and lease losses to nonperforming loans (a)
162.9
%
137.5
%
174.4
%
 
N/A

N/A

Provision for credit losses
$
59

$
62

$
49

 
(4.8
)%
20.4
%
 
 
 
 
 
 
 
(a)
Nonperforming loan balances exclude $575 million, $606 million, and $738 million of purchased credit impaired loans at December 31, 2018, September 30, 2018, and December 31, 2017, respectively.
N/A = Not Applicable

Key’s provision for credit losses was $59 million for the fourth quarter of 2018, compared to $49 million for the fourth quarter of 2017 and $62 million for the third quarter of 2018. Key’s allowance for loan and lease losses was $883 million, or .99% of total period-end loans at December 31, 2018, compared to 1.01% at December 31, 2017, and .99% at September 30, 2018.

Net loan charge-offs for the fourth quarter of 2018 totaled $60 million, or .27% of average total loans. These results compare to $52 million, or .24%, for the fourth quarter of 2017, and $60 million, or .27%, for the third quarter of 2018.

At December 31, 2018, Key’s nonperforming loans totaled $542 million, a decline of $103 million from the prior quarter, which represented .61% of period-end portfolio loans. These results compare to .58% at December 31, 2017, and .72% at September 30, 2018. Nonperforming assets at December 31, 2018, totaled $577 million, and represented .64% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .62% at December 31, 2017, and .75% at September 30, 2018.
 
CAPITAL

Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at December 31, 2018.
 



KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 4


Capital Ratios
 
 
 
 
 
 
 
 
12/31/2018
9/30/2018
12/31/2017
Common Equity Tier 1 (a)
9.92
%
9.95
%
10.16
%
Tier 1 risk-based capital (a)
11.07

11.11

11.01

Total risk based capital (a)
12.88

12.99

12.92

Tangible common equity to tangible assets (b)
8.30

8.05

8.23

Leverage (a)
9.93

10.03

9.73

 
 
 
 
(a)
12/31/2018 ratio is estimated.
(b)
The table entitled “GAAP to Non-GAAP Reconciliations” in the attached financial supplement presents the computations of certain financial measures related to “tangible common equity.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. See below for further information on the Regulatory Capital Rules.

Key's capital position remained strong in the fourth quarter of 2018. As shown in the preceding table, at December 31, 2018, Key’s estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.92% and 11.07%, respectively. Key's tangible common equity ratio was 8.30% at December 31, 2018.

As a “standardized approach” banking organization, Key’s mandatory compliance with the final Basel III capital framework for U.S. banking organizations (the “Regulatory Capital Rules”) began on January 1, 2015, subject to transitional provisions. Key’s estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 9.83% at December 31, 2018. This estimate exceeds the fully phased-in required minimum Common Equity Tier 1 and Capital Conservation Buffer of 7.00%.

Summary of Changes in Common Shares Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
in thousands
 
 
 
 
Change 4Q18 vs.
 
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Shares outstanding at beginning of period
1,034,287

1,058,944

1,079,039

 
(2.3
)%
(4.1
)%
Open market repurchases and return of shares under employee compensation plans
(15,216
)
(25,418
)
(10,617
)
 
(40.1
)
43.3

Shares issued under employee compensation plans (net of cancellations)
432

761

662

 
(43.2
)
(34.7
)
 
Shares outstanding at end of period
1,019,503

1,034,287

1,069,084

 
(1.4
)%
(4.6
)%
 
 
 
 
 
 
 
 

Consistent with Key's 2018 Capital Plan, during the fourth quarter of 2018, Key declared a dividend of $.17 per common share and completed $278 million of common share repurchases. Key's remaining share repurchase authorization consistent with the 2018 Capital Plan (which continues through the second quarter of 2019) is $405 million.

LINE OF BUSINESS RESULTS

The following table shows the contribution made by each major business segment to Key’s taxable-equivalent revenue from continuing operations and income (loss) from continuing operations attributable to Key for the periods presented. For more detailed financial information pertaining to each business segment, see the tables at the end of this release.
  
Major Business Segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Revenue from continuing operations (TE)
 
 
 
 
 
 
Key Community Bank
$
1,022

$
994

$
961

 
2.8
%
6.3
 %
Key Corporate Bank
581

574

605

 
1.2

(4.0
)
Other Segments
53

24

41

 
120.8

29.3

 
Total segments
1,656

1,592

1,607

 
4.0

3.0

Reconciling Items
(3
)
10

1

 
N/M

N/M

 
Total
$
1,653

$
1,602

$
1,608

 
3.2
%
2.8
 %
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key
 
 
 
 
 
 
Key Community Bank
$
261

$
241

$
152

 
8.3
%
71.7
 %
Key Corporate Bank
215

199

223

 
8.0

(3.6
)
Other Segments
45

22

48

 
104.5

(6.3
)
 
Total segments
521

462

423

 
12.8
%
23.2

Reconciling Items
(39
)
20

(228
)
 
N/M

N/M

 
Total
$
482

$
482

$
195

 

147.2
 %
 
 
 
 
 
 
 
 
TE = Taxable Equivalent, N/M = Not Meaningful





KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 5


Key Community Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Summary of operations
 
 
 
 
 
 
Net interest income (TE)
$
744

$
726

$
674

 
2.5
 %
10.4
 %
Noninterest income
278

268

287

 
3.7

(3.1
)
Total revenue (TE)
1,022

994

961

 
2.8

6.3

Provision for credit losses
48

43

57

 
11.6

(15.8
)
Noninterest expense
633

635

665

 
(.3
)
(4.8
)
Income (loss) before income taxes (TE)
341

316

239

 
7.9

42.7

Allocated income taxes (benefit) and TE adjustments
80

75

87

 
6.7

(8.0
)
Net income (loss) attributable to Key
$
261

$
241

$
152

 
8.3
 %
71.7
 %
 
 
 
 
 
 
 
Average balances
 
 
 
 
 
 
Loans and leases
$
47,976

$
47,862

$
47,408

 
.2
 %
1.2
 %
Total assets
51,881

51,740

51,398

 
.3

.9

Deposits
84,288

82,259

80,352

 
2.5

4.9

 
 
 
 
 
 
 
Assets under management at period end
$
36,775

$
40,575

$
39,588

 
(9.4
)%
(7.1
)%
 
 
 
 
 
 
 
TE = Taxable Equivalent





KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 6


Additional Key Community Bank Data
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Noninterest income
 
 
 
 
 
 
Trust and investment services income
$
90

$
90

$
87

 

3.4
 %
Service charges on deposit accounts
72

72

77

 

(6.5
)
Cards and payments income
61

59

67

 
3.4
 %
(9.0
)
Other noninterest income
55

47

56

 
17.0

(1.8
)
Total noninterest income
$
278

$
268

$
287

 
3.7
 %
(3.1
)%
 
 
 
 
 
 
 
Average deposit balances
 
 
 
 
 
 
NOW and money market deposit accounts
$
47,310

$
45,967

$
44,415

 
2.9
 %
6.5
 %
Savings deposits
4,777

4,923

5,090

 
(3.0
)
(6.1
)
Certificates of deposit ($100,000 or more)
6,169

5,608

4,628

 
10.0

33.3

Other time deposits
5,244

5,019

4,765

 
4.5

10.1

Noninterest-bearing deposits
20,788

20,742

21,454

 
.2

(3.1
)
Total deposits
$
84,288

$
82,259

$
80,352

 
2.5
 %
4.9
 %
 
 
 
 
 
 
 
Home equity loans
 
 
 
 
 
 
Average balance
$
11,144

$
11,317

$
12,005

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

60

60

 
 
 
 
 
 
 
 
 
 
Other data
 
 
 
 
 
 
Branches
1,159

1,166

1,197

 
 
 
Automated teller machines
1,505

1,518

1,572

 
 
 
 
 
 
 
 
 
 

Key Community Bank Summary of Operations (4Q18 vs. 4Q17)

Positive operating leverage compared to the prior year
Net income increased $109 million, or 71.7%, from the prior year
Average commercial and industrial loans increased $1.0 billion, or 5.6%, from the prior year

Key Community Bank recorded net income attributable to Key of $261 million for the fourth quarter of 2018, compared to $152 million for the year-ago quarter, benefiting from momentum in Key's core businesses, expense discipline, and a lower tax rate as a result of tax reform.

Taxable-equivalent net interest income increased by $70 million, or 10.4%, from the fourth quarter of 2017. The increase in net interest income was primarily attributable to the benefit from higher interest rates and loan growth, partially offset by lower purchase accounting accretion. Average loans and leases increased $568 million, or 1.2%, largely driven by a $1.0 billion, or 5.6%, increase in commercial and industrial loans. Additionally, average deposits increased $3.9 billion, or 4.9%, from the fourth quarter of 2017 due to strength in our relationship strategy.

Noninterest income decreased $9 million, or 3.1%, from the year-ago quarter driven by lower service charges on deposit accounts and cards and payments income, which were impacted by revenue recognition changes. Excluding the impact of the accounting change, both businesses grew from the prior period, related to continued household growth.

The provision for credit losses decreased by $9 million, or 15.8%, from the fourth quarter of 2017. Net loan charge-offs increased $7 million from the fourth quarter of 2017 driven by a larger balance sheet.

Noninterest expense decreased by $32 million, or 4.8%, from the year-ago quarter. Both personnel and nonpersonnel expense declined, driven by strong expense discipline across the businesses while continuing to invest strategically for growth.





KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 7


Key Corporate Bank
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Summary of operations
 
 
 
 
 
 
Net interest income (TE)
$
272

$
273

$
284

 
(.4
)%
(4.2
)%
Noninterest income
309

301

321

 
2.7

(3.7
)
Total revenue (TE)
581

574

605

 
1.2

(4.0
)
Provision for credit losses
12

20

(6
)
 
(40.0
)
N/M

Noninterest expense
329

316

352

 
4.1

(6.5
)
Income (loss) before income taxes (TE)
240

238

259

 
.8

(7.3
)
Allocated income taxes and TE adjustments
25

39

36

 
(35.9
)
(30.6
)
Net income (loss) attributable to Key
$
215

$
199

$
223

 
8.0
 %
(3.6
)%
 
 
 
 
 
 
 
Average balances
 
 
 
 
 
 
Loans and leases
$
40,438

$
39,714

$
37,457

 
1.8
 %
8.0
 %
Loans held for sale
2,249

1,042

1,345

 
115.8

67.2

Total assets
48,853

46,860

44,501

 
4.3

9.8

Deposits
21,793

21,056

21,558

 
3.5
 %
1.1
 %
 
 
 
 
 
 
 
TE = Taxable Equivalent, N/M = Not Meaningful




KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 8


Additional Key Corporate Bank Data
 
 
 
 
 
 
 
 
 
 
 
 
 
dollars in millions
 
 
 
 
Change 4Q18 vs.
 
4Q18
3Q18
4Q17
 
3Q18
4Q17
Noninterest income
 
 
 
 
 
 
Trust and investment services income
$
30

$
27

$
33

 
11.1
 %
(9.1
)%
Investment banking and debt placement fees
178

162

195

 
9.9

(8.7
)
Operating lease income and other leasing gains
24

34

25

 
(29.4
)
(4.0
)
 
 
 
 
 
 
 
Corporate services income
43

37

40

 
16.2

7.5

Service charges on deposit accounts
12

13

12

 
(7.7
)

Cards and payments income
7

10

10

 
(30.0
)
(30.0
)
Payments and services income
62

60

62

 
3.3


 
 
 
 
 
 
 
Mortgage servicing fees
18

15

15

 
20.0

20.0

Other noninterest income
(3
)
3

(9
)
 
N/M

N/M

Total noninterest income
$
309

$
301

$
321

 
2.7
 %
(3.7
)%
 
 
 
 
 
 
 
N/M = Not Meaningful

Key Corporate Bank Summary of Operations (4Q18 vs. 4Q17)

Record year for investment banking and debt placement fees
Commercial and industrial loans up $2.8 billion, or 12.7%, from prior year

            Key Corporate Bank recorded net income attributable to Key of $215 million for the fourth quarter of 2018, compared to $223 million for the year-ago quarter.

Taxable-equivalent net interest income decreased by $12 million, or 4.2%, compared to the fourth quarter of 2017.  This decline is related to lower purchase accounting accretion, as well as loan spread compression. Average loan and lease balances increased $3 billion, or 8%, from the year-ago quarter, driven by broad-based growth in commercial and industrial loans. Average deposit balances increased $235 million, or 1.1%, from the year-ago quarter, driven by growth in core deposits.

            Noninterest income was down $12 million, or 3.7%, from the prior year. Investment banking and debt placement fees decreased $17 million, or 8.7%, from a record quarter in the year-ago period. This decrease was partially offset by increases in other noninterest income of $6 million related to higher gains on certain tax-advantaged assets, as well as higher mortgage servicing fees of $3 million.

            During the fourth quarter of 2018, the provision for credit losses increased $18 million compared to the fourth quarter of 2017, mostly related to loan growth.

            Noninterest expense decreased by $23 million, or 6.5%, from the fourth quarter of 2017. The decrease from the prior year was largely driven by lower personnel expense. The prior year also had higher impairments on certain tax-advantaged assets related to tax reform. These decreases are slightly offset by higher volumes driving increased operating lease expense.


Other Segments

Other Segments consist of Corporate Treasury, Key’s Principal Investing unit, and various exit portfolios. Other Segments generated net income attributable to Key of $45 million for the fourth quarter of 2018, compared to $48 million for the same period last year.

*****

KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation’s largest bank-based financial services companies, with assets of approximately $139.6 billion at December 31, 2018.

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



KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 9



CONTACTS:
 
 
 
ANALYSTS
MEDIA
Vernon L. Patterson
Susan Donlan
216.689.0520
216.471.3133
 
 Twitter: @keybank_news
Melanie S. Kaiser
 
216.689.4545
 
 
 
 
Emily J. Mills
 
216.689.7781
 
 
 
 
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, January 17, 2019. An audio replay of the call will be available through January 27, 2019.
 
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 Fourth Quarter 2018 Profit     
January 17, 2019
Page 10





KeyCorp
Fourth 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 Fourth Quarter 2018 Profit     
January 17, 2019
Page 11


Financial Highlights
(dollars in millions, except per share amounts)
 
 
 
Three months ended
 
 
 
12/31/2018
9/30/2018
12/31/2017
Summary of operations
 
 
 
 
Net interest income (TE)
$
1,008

$
993

$
952

 
Noninterest income
645

609

656

 
 
Total revenue (TE)
1,653

1,602

1,608

 
Provision for credit losses
59

62

49

 
Noninterest expense
1,012

964

1,098

 
Income (loss) from continuing operations attributable to Key
482

482

195

 
Income (loss) from discontinued operations, net of taxes (a)
2


1

 
Net income (loss) attributable to Key
484

482

196

 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
459

468

181

 
Income (loss) from discontinued operations, net of taxes (a)
2


1

 
Net income (loss) attributable to Key common shareholders
461

468

182

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

$
.45

$
.17

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



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

.45

.17

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

.45

.17

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



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

.45

.17

 
 
 
 
 
 
 
Cash dividends declared
.17

.17

.105

 
Book value at period end
13.90

13.33

13.09

 
Tangible book value at period end
11.14

10.59

10.35

 
Market price at period end
14.78

19.89

20.17

 
 
 
 
 
 
Performance ratios
 
 
 
 
From continuing operations:
 
 
 
 
Return on average total assets
1.37
%
1.40
%
.57
%
 
Return on average common equity
13.07

13.36

5.04

 
Return on average tangible common equity (c)
16.40

16.81

6.35

 
Net interest margin (TE)
3.16

3.18

3.09

 
Cash efficiency ratio (c)
59.9

58.7

66.7

 
 
 
 
 
 
 
From consolidated operations:
 
 
 
 
Return on average total assets
1.37
%
1.39
%
.57
%
 
Return on average common equity
13.13

13.36

5.07

 
Return on average tangible common equity (c)
16.47

16.81

6.39

 
Net interest margin (TE)
3.14

3.16

3.07

 
Loan to deposit (d)
85.6

87.0

84.4

 
 
 
 
 
 
Capital ratios at period end
 
 
 
 
Key shareholders’ equity to assets
11.17
%
10.96
%
10.91
%
 
Key common shareholders’ equity to assets
10.15

9.93

10.17

 
Tangible common equity to tangible assets (c)
8.30

8.05

8.23

 
Common Equity Tier 1 (e)
9.92

9.95

10.16

 
Tier 1 risk-based capital (e)
11.07

11.11

11.01

 
Total risk-based capital (e)
12.88

12.99

12.92

 
Leverage (e)
9.93

10.03

9.73

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

$
60

$
52

 
Net loan charge-offs to average loans
.27
%
.27
%
.24
%
 
Allowance for loan and lease losses
$
883

$
887

$
877

 
Allowance for credit losses
946

947

934

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

1.06

1.08

 
Allowance for loan and lease losses to nonperforming loans (f)
162.9

137.5

174.4

 
Allowance for credit losses to nonperforming loans (f)
174.5

146.8

185.7

 
Nonperforming loans at period-end (f)
$
542

$
645

$
503

 
Nonperforming assets at period-end (f)
577

674

534

 
Nonperforming loans to period-end portfolio loans (f)
.61
%
.72
%
.58
%
 
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets (f)
.64

.75

.62

 
 
 
 
 
 
Trust assets
 
 
 
 
Assets under management
$
36,775

$
40,575

$
39,588

 
 
 
 
 
 
Other data
 
 
 
 
Average full-time equivalent employees
17,664

18,150

18,379

 
Branches
1,159

1,166

1,197

 
 
 
 
 
 
Taxable-equivalent adjustment
$
8

$
7

$
14





KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 12


Financial Highlights (continued)
(dollars in millions, except per share amounts)
 
 
Twelve months ended
 
 
12/31/2018
12/31/2017
Summary of operations
 
 
 
Net interest income (TE)
$
3,940

$
3,830

 
Noninterest income
2,515

2,478

 
Total revenue (TE)
6,455

6,308

 
Provision for credit losses
246

229

 
Noninterest expense
3,975

4,098

 
Income (loss) from continuing operations attributable to Key
1,859

1,289

 
Income (loss) from discontinued operations, net of taxes (a)
7

7

 
Net income (loss) attributable to Key
1,866

1,296

 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
$
1,793

$
1,219

 
Income (loss) from discontinued operations, net of taxes (a)
7

7

 
Net income (loss) attributable to Key common shareholders
1,800

1,226

 
 
 
 
Per common share
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders
$
1.72

$
1.13

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

.01

 
Net income (loss) attributable to Key common shareholders (b)
1.73

1.14

 
 
 
 
 
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution
1.70

1.12

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

.01

 
Net income (loss) attributable to Key common shareholders — assuming dilution (b)
1.71

1.13

 
 
 
 
 
Cash dividends paid
.565

.38

 
 
 
 
Performance ratios
 
 
 
From continuing operations:
 
 
 
Return on average total assets
1.36
%
.96
%
 
Return on average common equity
12.88

8.65

 
Return on average tangible common equity (c)
16.22

10.84

 
Net interest margin (TE)
3.17

3.17

 
Cash efficiency ratio (c)
60.0

63.5

 
 
 
 
 
From consolidated operations:
 
 
 
Return on average total assets
1.35
%
.96
%
 
Return on average common equity
12.93

8.70

 
Return on average tangible common equity (c)
16.28

10.90

 
Net interest margin (TE)
3.15

3.15

 
 
 
 
Asset quality — from continuing operations
 
 
 
Net loan charge-offs
$
234

$
208

 
Net loan charge-offs to average total loans
.26
%
.24
%
 
 
 
 
Other data
 
 
 
Average full-time equivalent employees
18,180

18,415

 
 
 
 
Taxable-equivalent adjustment
31

53

(a)
In September 2009, management decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association.
(b)
Earnings per share may not foot due to rounding.
(c)
The following table entitled “GAAP to Non-GAAP Reconciliations” presents the computations of certain financial measures related to “tangible common equity” and “cash efficiency.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the “Capital” section of this release.
(d)
Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits.
(e)
December 31, 2018, ratio is estimated.
(f)
Nonperforming loan balances exclude $575 million, $606 million, and $738 million of purchased credit impaired loans at December 31, 2018, September 30, 2018, and December 31, 2017, respectively.
 
 
 
 
 
 




KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 13


GAAP to Non-GAAP Reconciliations
(dollars in millions)

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

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

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

The cash efficiency ratio is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key’s intangible asset amortization from the calculation. Management believes this ratio provide greater consistency and comparability between Key’s results and those of its peer banks. Additionally, this ratio is used by analysts and investors as they develop earnings forecasts and peer bank analysis.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.
 
Three months ended
 
Twelve months ended
 
12/31/2018
9/30/2018
12/31/2017
 
12/31/2018
12/31/2017
Tangible common equity to tangible assets at period-end
 
 
 
 
 
 
Key shareholders’ equity (GAAP)
$
15,595

$
15,208

$
15,023

 
 
 
Less: Intangible assets (a)
2,818

2,838

2,928

 
 
 
Preferred Stock (b)
1,421

1,421

1,009

 
 
 
Tangible common equity (non-GAAP)
$
11,356

$
10,949

$
11,086

 
 
 
Total assets (GAAP)
$
139,613

$
138,805

$
137,698

 
 
 
Less: Intangible assets (a)
2,818

2,838

2,928

 
 
 
Tangible assets (non-GAAP)
$
136,795

$
135,967

$
134,770

 
 
 
Tangible common equity to tangible assets ratio (non-GAAP)
8.30
%
8.05
%
8.23
%
 
 
 
Pre-provision net revenue
 
 
 
 
 
 
Net interest income (GAAP)
$
1,000

$
986

$
938

 
$
3,909

$
3,777

Plus: Taxable-equivalent adjustment
8

7

14

 
31

53

Noninterest income
645

609

656

 
2,515

2,478

Less: Noninterest expense
1,012

964

1,098

 
3,975

4,098

Pre-provision net revenue from continuing operations (non-GAAP)
$
641

$
638

$
510

 
$
2,480

$
2,210

Average tangible common equity
 
 
 
 
 
 
Average Key shareholders' equity (GAAP)
$
15,384

$
15,210

$
15,268

 
$
15,131

$
15,224

Less: Intangible assets (average) (c)
2,828

2,848

2,939

 
2,869

2,837

Preferred stock (average)
1,450

1,316

1,025

 
1,205

1,137

Average tangible common equity (non-GAAP)
$
11,106

$
11,046

$
11,304

 
$
11,057

$
11,250

Return on average tangible common equity from continuing operations
 
 
 
 

 
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)
$
459

$
468

$
181

 
$
1,793

$
1,219

Average tangible common equity (non-GAAP)
11,106

11,046

11,304

 
11,057

11,250

 
 
 
 
 
 
 
Return on average tangible common equity from continuing operations (non-GAAP)
16.40
%
16.81
%
6.35
%
 
16.22
%
10.84
%
Return on average tangible common equity consolidated
 
 
 
 
 
 
Net income (loss) attributable to Key common shareholders (GAAP)
$
461

$
468

$
182

 
$
1,800

$
1,226

Average tangible common equity (non-GAAP)
11,106

11,046

11,304

 
11,057

11,250

 
 
 
 
 
 
 
Return on average tangible common equity consolidated (non-GAAP)
16.47
%
16.81
%
6.39
%
 
16.28
%
10.90
%
Cash efficiency ratio
 
 
 
 
 
 
Noninterest expense (GAAP)
$
1,012

$
964

$
1,098

 
$
3,975

$
4,098

Less: Intangible asset amortization
22

23

26

 
99

95

Adjusted noninterest expense (non-GAAP)
$
990

$
941

$
1,072

 
$
3,876

$
4,003

 
 
 
 
 
 
 
Net interest income (GAAP)
$
1,000

$
986

$
938

 
$
3,909

$
3,777

Plus: Taxable-equivalent adjustment
8

7

14

 
31

53

Noninterest income
645

609

656

 
2,515

2,478

Total taxable-equivalent revenue (non-GAAP)
$
1,653

$
1,602

$
1,608

 
$
6,455

$
6,308

 
 
 
 
 
 
 
Cash efficiency ratio (non-GAAP)
59.9
%
58.7
%
66.7
%
 
60.0
%
63.5
%




KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 14


GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
 
 
 
Three months ended
 
 
 
12/31/2018
Common Equity Tier 1 under the Regulatory Capital Rules (“RCR”) (estimates)
 
 
Common Equity Tier 1 under current RCR
$
12,273

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

 
 
Common Equity Tier 1 anticipated under the fully phased-in RCR (e)
$
12,273

 
 
 
 
 
Net risk-weighted assets under current RCR
$
123,719

 
Adjustments from current RCR to the fully phased-in RCR:
 
 
 
Mortgage servicing assets (f)
809

 
 
Deferred tax assets
276

 
 
All other assets

 
 
Total risk-weighted assets anticipated under the fully phased-in RCR (e)
$
124,804

 
 
 
 
 
Common Equity Tier 1 ratio under the fully phased-in RCR (e)
9.83
%

(a)
For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, intangible assets exclude $14 million, $17 million, and $26 million, respectively, of period-end purchased credit card receivables.
(b)
Net of capital surplus.
(c)
For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, average intangible assets exclude $15 million, $18 million, and $28 million, respectively, of average purchased credit card receivables. For the twelve months ended December 31, 2018, and December 31, 2017, average intangible assets exclude $20 million and $34 million, respectively, of average purchased credit card receivables.
(d)
Includes the deferred tax assets subject to future taxable income for realization, primarily tax credit carryforwards, as well as intangible assets (other than goodwill and mortgage servicing assets) subject to the transition provisions of the final rule.
(e)
The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies’ Regulatory Capital Rules (fully phased-in); Key is subject to the Regulatory Capital Rules under the “standardized approach.”
(f)
Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250%.
GAAP = U.S. generally accepted accounting principles




KeyCorp Reports Fourth Quarter 2018 Profit     
January 17, 2019
Page 15


Consolidated Balance Sheets
(dollars in millions)
 
 
 
 
 
 
 
 
 
12/31/2018

9/30/2018

12/31/2017

Assets
 
 
 
 
Loans
$
89,552

$
89,268

$
86,405

 
Loans held for sale
1,227

1,618

1,107

 
Securities available for sale
19,428

18,341

18,139

 
Held-to-maturity securities
11,519

11,869

11,830

 
Trading account assets
849

958

836

 
Short-term investments
2,562

2,272

4,447

 
Other investments
666

681

726

 
 
Total earning assets
125,803

125,007

123,490

 
Allowance for loan and lease losses
(883
)
(887
)
(877
)
 
Cash and due from banks
678

319

671

 
Premises and equipment
882

891

930

 
Operating lease assets
993

930

821

 
Goodwill
2,516

2,516

2,538

 
Other intangible assets
316

338

416

 
Corporate-owned life insurance
4,171

4,156

4,132

 
Accrued income and other assets
4,037

4,378

4,237

 
Discontinued assets
1,100

1,157

1,340

 
 
Total assets
$
139,613

138,805

137,698

 
 
 
 
 
 
Liabilities
 
 
 
 
Deposits in domestic offices:
 
 
 
 
 
NOW and money market deposit accounts
$
59,918

$
57,219

$
53,627

 
 
Savings deposits
4,854

4,948

6,296

 
 
Certificates of deposit ($100,000 or more)
7,913

8,453

6,849

 
 
Other time deposits
5,332

5,130

4,798

 
 
Total interest-bearing deposits
78,017

75,750

71,570

 
 
Noninterest-bearing deposits
29,292

30,030

33,665

 
 
Total deposits
107,309

105,780

105,235

 
Federal funds purchased and securities sold under repurchase agreements 
319

1,285

377

 
Bank notes and other short-term borrowings
544

637

634

 
Accrued expense and other liabilities
2,113

2,044

2,094

 
Long-term debt
13,732

13,849

14,333

 
 
Total liabilities
124,017

123,595

122,673

 
 
 
 
 
 
Equity
 
 
 
 
Preferred stock
1,450

1,450

1,025

 
Common shares
1,257

1,257

1,257

 
Capital surplus
6,331

6,315

6,335

 
Retained earnings
11,556

11,262