KEYCORP REPORTS SECOND QUARTER 2024 NET INCOME OF $237 MILLION, OR $.25 PER DILUTED COMMON SHARE
Average deposits up $1.3 billion compared to the prior quarter and the second quarter of 2023, with client deposits up 5% year-over-year
Disciplined expense management: expenses declined approximately 6% from the prior quarter and were stable versus the year-ago period
Common Equity Tier 1 ratio rose 20 basis points to 10.5%(a)
Credit quality remains solid: net charge-offs to average loans of 34 basis points
CLEVELAND, July 18, 2024 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $237 million, or $.25 per diluted common share, for the second quarter of 2024. Net income from continuing operations attributable to Key common shareholders was $183 million, or $.20 per diluted common share, for the first quarter of 2024 and $250 million, or $.27 per diluted common share, for the second quarter of 2023.
Comments from Chairman and CEO, Chris Gorman
"This was a solid quarter for Key as we continued to execute on our clearly defined path to enhanced profitability. Sequentially, net interest income grew as we benefited from fixed asset repricing and continued to grow client deposits while the pace of deposit repricing slowed. Client deposits were up 5% from the prior year. Loan demand remained tepid, however, we are optimistic that we will begin to see growth in the second half of the year.
We continued to make progress against our most important strategic fee-based initiatives where we benefit from a differentiated value proposition. We demonstrated momentum in Wealth Management and Commercial Payments. Additionally, our Investment Banking pipelines are meaningfully higher from prior periods.
Expenses continue to be well-managed, and net charge-offs remained low. We built our Common Equity Tier 1 ratio another 23 basis points to 10.5%, bringing our organic capital build to approximately 120 basis points over the past twelve months.
I am excited for our path forward and energized by our momentum which positions us to deliver sound, profitable growth."
(a) | June 30, 2024 ratio is estimated and reflects Key's election to adopt the CECL optional transition provision. |
Selected Financial Highlights | |||||||
Dollars in millions, except per share data | Change 2Q24 vs. | ||||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | |||
Income (loss) from continuing operations attributable to Key common shareholders | $ 237 | $ 183 | $ 250 | 29.5 % | (5.2) % | ||
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution | .25 | .20 | .27 | 25.0 | (7.4) | ||
Return on average tangible common equity from continuing operations (a) | 10.39 % | 7.87 % | 11.04 % | N/A | N/A | ||
Return on average total assets from continuing operations | .59 | .47 | .58 | N/A | N/A | ||
Common Equity Tier 1 ratio (b) | 10.5 | 10.3 | 9.3 | N/A | N/A | ||
Book value at period end | $ 13.09 | $ 12.84 | $ 12.18 | 1.9 | 7.5 | ||
Net interest margin (TE) from continuing operations | 2.04 % | 2.02 % | 2.12 % | 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 "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. |
(b) | June 30, 2024 ratio is estimated. |
TE = Taxable Equivalent, N/A = Not Applicable | |
INCOME STATEMENT HIGHLIGHTS | ||||||
Revenue | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Net interest income (TE) | $ 899 | $ 886 | $ 986 | 1.5 % | (8.8) % | |
Noninterest income | 627 | 647 | 609 | (3.1) | 3.0 | |
Total revenue (TE) | $ 1,526 | $ 1,533 | $ 1,595 | (.5) % | (4.3) % | |
TE = Taxable Equivalent |
Taxable-equivalent net interest income was $899 million for the second quarter of 2024 and the net interest margin was 2.04%. Compared to the second quarter of 2023, net interest income decreased by $87 million, and the net interest margin decreased by eight basis points. Both net interest income and the net interest margin benefited from the reinvestment of proceeds from maturing investment securities into higher yielding but still liquid investments, and the replacement of low-yielding interest rate swaps with higher-yield interest rate swaps. Net interest income and the net interest margin declined year-over-year, however, reflecting lower loan balances from Key's balance sheet optimization actions during 2023 and higher deposit costs in the higher interest rate environment relative to a year ago. Additionally, the balance sheet experienced a shift in funding mix from noninterest-bearing deposits to higher-cost deposits and borrowings.
Compared to the first quarter of 2024, taxable-equivalent net interest income increased by $13 million, and the net interest margin increased by two basis points for the second quarter of 2024. Both net interest income and the net interest margin benefited from the reinvestment of proceeds from maturing investment securities into higher yielding but still liquid investments, and the replacement of low-yielding interest rate swaps with higher-yield interest rate swaps. Lower loan balances, higher funding costs, and an unfavorable funding mix partly offset the increase in net interest income and the net interest margin from higher yielding reinvestments.
Noninterest Income | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Trust and investment services income | $ 139 | $ 136 | $ 126 | 2.2 % | 10.3 % | |
Investment banking and debt placement fees | 126 | 170 | 120 | (25.9) | 5.0 | |
Cards and payments income | 85 | 77 | 85 | 10.4 | — | |
Service charges on deposit accounts | 66 | 63 | 69 | 4.8 | (4.3) | |
Corporate services income | 68 | 69 | 86 | (1.4) | (20.9) | |
Commercial mortgage servicing fees | 61 | 56 | 50 | 8.9 | 22.0 | |
Corporate-owned life insurance income | 34 | 32 | 32 | 6.3 | 6.3 | |
Consumer mortgage income | 16 | 14 | 14 | 14.3 | 14.3 | |
Operating lease income and other leasing gains | 21 | 24 | 23 | (12.5) | (8.7) | |
Other income | 11 | 6 | 4 | 83.3 | 175.0 | |
Total noninterest income | $ 627 | $ 647 | $ 609 | (3.1) % | 3.0 % | |
N/M = Not Meaningful |
Compared to the second quarter of 2023, noninterest income increased by $18 million. The increase was driven by trust and investment services, up $13 million, reflective of strong market performance as well as an increase in commercial mortgage servicing fees, which increased $11 million.
Compared to the first quarter of 2024, noninterest income decreased by $20 million. The decrease was driven by investment banking and debt placement fees, down $44 million, reflective of strong merger and acquisition advisory fees and syndication fees in the first quarter. The decline was partly offset by an $8 million increase in cards and payments income due to higher seasonal transactions in debit and credit cards and a $5 million increase in commercial mortgage servicing fees.
Noninterest Expense | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Personnel expense | $ 636 | $ 674 | $ 622 | (5.6) % | 2.3 % | |
Net occupancy | 66 | 67 | 65 | (1.5) | 1.5 | |
Computer processing | 101 | 102 | 95 | (1.0) | 6.3 | |
Business services and professional fees | 37 | 41 | 41 | (9.8) | (9.8) | |
Equipment | 20 | 20 | 22 | — | (9.1) | |
Operating lease expense | 17 | 17 | 21 | — | (19.0) | |
Marketing | 21 | 19 | 29 | 10.5 | (27.6) | |
Other expense | 181 | 203 | 181 | (10.8) | .0 | |
Total noninterest expense | $ 1,079 | $ 1,143 | $ 1,076 | (5.6) % | .3 % | |
Compared to the second quarter of 2023, noninterest expense increased $3 million, driven by a $14 million increase in personnel expense, reflective of a higher stock price compared to the year-ago period. The increase was partly offset by lower marketing expense and lower business services and professional fees.
Compared to the first quarter of 2024, noninterest expense decreased by $64 million. The decrease was driven by a $38 million decline in personnel expense, related to lower incentive compensation and lower employee benefits. The decline in noninterest expense was also reflective of a higher FDIC special assessment in the prior quarter. For more information on the FDIC special assessment, see the Selected Items Impact on Earnings table on page 25.
BALANCE SHEET HIGHLIGHTS | ||||||
Average Loans | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Commercial and industrial (a) | $ 54,599 | $ 55,220 | $ 61,426 | (1.1) % | (11.1) % | |
Other commercial loans | 20,500 | 21,222 | 22,623 | (3.4) | (9.4) | |
Total consumer loans | 33,862 | 34,592 | 36,623 | (2.1) | (7.5) | |
Total loans | $ 108,961 | $ 111,034 | $ 120,672 | (1.9) % | (9.7) % | |
(a) | Commercial and industrial average loan balances include $218 million, $211 million, and $194 million of assets from commercial credit cards at June 30, 2024, March 31, 2024, and June 30, 2023, respectively. |
Average loans were $109.0 billion for the second quarter of 2024, a decrease of $11.7 billion compared to the second quarter of 2023, reflective of Key's planned balance sheet optimization efforts in 2023. The decline in average loans was mostly driven by a $9.0 billion decline in average commercial loans, driven by lower commercial and industrial loans and commercial mortgage real estate loans. Additionally, average consumer loans declined by $2.8 billion, driven by declines across all consumer loan categories.
Compared to the first quarter of 2024, average loans decreased by $2.1 billion. Average commercial loans declined by $1.3 billion, primarily driven by a decrease in commercial and industrial loans and commercial mortgage real estate loans. Additionally, average consumer loans declined $730 million, driven by declines across all consumer loan categories.
Average Deposits | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Non-time deposits | $ 128,161 | $ 128,448 | $ 127,687 | (.2) % | 0.4 % | |
Time deposits | 16,019 | 14,430 | 15,216 | 11.0 | 5.3 | |
Total deposits | $ 144,180 | $ 142,878 | $ 142,903 | .9 % | .9 % | |
Cost of total deposits | 2.28 % | 2.20 % | 1.49 % | N/A | N/A | |
N/A = Not Applicable |
Average deposits totaled $144.2 billion for the second quarter of 2024, an increase of $1.3 billion compared to the year-ago quarter. The increase was reflective of growth in retail deposit balances and our focus on growing deposits across our commercial businesses.
Compared to the first quarter of 2024, average deposits increased by $1.3 billion. The increase was reflective of growth in retail certificate of deposit balances and stronger commercial deposit balances.
ASSET QUALITY | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Net loan charge-offs | $ 91 | $ 81 | $ 52 | 12.3 % | 75.0 % | |
Net loan charge-offs to average total loans | .34 % | .29 % | .17 % | N/A | N/A | |
Nonperforming loans at period end | $ 710 | $ 658 | $ 431 | 7.9 | 64.7 | |
Nonperforming assets at period end | 727 | 674 | 462 | 7.9 | 57.4 | |
Allowance for loan and lease losses | 1,547 | 1,542 | 1,480 | 0.3 | 4.5 | |
Allowance for credit losses | 1,833 | 1,823 | 1,771 | 0.5 | 3.5 | |
Provision for credit losses | 100 | 101 | 167 | (1.0) | (40.1) | |
Allowance for loan and lease losses to nonperforming loans | 218 % | 234 % | 343 % | N/A | N/A | |
Allowance for credit losses to nonperforming loans | 258 | 277 | 411 | N/A | N/A | |
N/A = Not Applicable |
Key's provision for credit losses was $100 million, compared to $167 million in the second quarter of 2023 and $101 million in the first quarter of 2024. The decline from the year-ago period reflects a more stable economic outlook and the impact of balance sheet optimization efforts, partly offset by credit portfolio migration.
Net loan charge-offs for the second quarter of 2024 totaled $91 million, or 0.34% of average total loans. These results compare to $52 million, or 0.17%, for the second quarter of 2023 and $81 million, or 0.29%, for the first quarter of 2024. Key's allowance for credit losses was $1.8 billion, or 1.71% of total period-end loans at June 30, 2024, compared to 1.49% at June 30, 2023, and 1.66% at March 31, 2024.
At June 30, 2024, Key's nonperforming loans totaled $710 million, which represented 0.66% of period-end portfolio loans. These results compare to 0.36% at June 30, 2023, and 0.60% at March 31, 2024. Nonperforming assets at June 30, 2024, totaled $727 million, and represented 0.68% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to 0.39% at June 30, 2023, and 0.61% at March 31, 2024.
CAPITAL
Key's estimated risk-based capital ratios, included in the following table, continued to exceed all "well-capitalized" regulatory benchmarks at June 30, 2024.
Capital Ratios | |||
6/30/2024 | 3/31/2024 | 6/30/2023 | |
Common Equity Tier 1 (a) | 10.5 % | 10.3 % | 9.3 % |
Tier 1 risk-based capital (a) | 12.2 | 12.0 | 10.8 |
Total risk-based capital (a) | 14.7 | 14.5 | 13.1 |
Tangible common equity to tangible assets (b) | 5.2 | 5.0 | 4.5 |
Leverage (a) | 9.1 | 9.1 | 8.7 |
(a) | June 30, 2024 ratio is estimated and reflects Key's election to adopt the CECL optional transition provision. |
(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. |
Key's regulatory capital position remained strong in the second quarter of 2024. As shown in the preceding table, at June 30, 2024, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 10.5% and 12.2%, respectively. Key's tangible common equity ratio was 5.2% at June 30, 2024.
Key elected the CECL phase-in option provided by regulatory guidance which delayed for two years the estimated impact of CECL on regulatory capital and phases it in over three years beginning in 2022. Effective for the first quarter 2022, Key is now in the three-year transition period. On a fully phased-in basis, Key's Common Equity Tier 1 ratio would be reduced by four basis points.
Summary of Changes in Common Shares Outstanding | |||||||
In thousands | Change 2Q24 vs. | ||||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | |||
Shares outstanding at beginning of period | 942,776 | 936,564 | 935,229 | .7 % | .8 % | ||
Shares issued under employee compensation plans (net of cancellations and returns) | 424 | 6,212 | 504 | (93.2) | (16) | ||
Shares outstanding at end of period | 943,200 | 942,776 | 935,733 | — % | .8 % | ||
Key declared a dividend of $.205 per common share for the third quarter of 2024.
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 2Q24 vs. | ||||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | |||
Revenue from continuing operations (TE) | |||||||
Consumer Bank | $ 769 | $ 757 | $ 787 | 1.6 % | (2.3) % | ||
Commercial Bank | 769 | 799 | 823 | (3.8) | (6.6) | ||
Other (a) | (12) | (23) | (15) | 47.8 | 20.0 | ||
Total | $ 1,526 | $ 1,533 | $ 1,595 | (.5) % | (4.3) % | ||
Income (loss) from continuing operations attributable to Key | |||||||
Consumer Bank | $ 67 | $ 41 | $ 71 | 63.4 % | (5.6) % | ||
Commercial Bank | 207 | 205 | 227 | 1.0 | (8.8) | ||
Other (a) | (1) | (27) | (12) | 96.3 | 91.7 | ||
Total | $ 273 | $ 219 | $ 286 | 24.7 % | (4.5) % | ||
(a) | Other includes other segments that consists of corporate treasury, our principal investing unit, and various exit portfolios as well as reconciling items which primarily represents the unallocated portion of nonearning assets of corporate support functions. Charges related to the funding of these assets are part of net interest income and are allocated to the business segments through noninterest expense. Reconciling items also includes intercompany eliminations and certain items that are not allocated to the business segments because they do not reflect their normal operations. |
TE = Taxable Equivalent | |
N/M = Not Meaningful | |
Consumer Bank | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Summary of operations | ||||||
Net interest income (TE) | $ 535 | $ 532 | $ 544 | .6 % | (1.7) % | |
Noninterest income | 234 | 225 | 243 | 4.0 | (3.7) | |
Total revenue (TE) | 769 | 757 | 787 | 1.6 | (2.3) | |
Provision for credit losses | 33 | (2) | 32 | N/M | 3.1 | |
Noninterest expense | 648 | 704 | 662 | (8.0) | (2.1) | |
Income (loss) before income taxes (TE) | 88 | 55 | 93 | 60.0 | (5.4) | |
Allocated income taxes (benefit) and TE adjustments | 21 | 14 | 22 | 50.0 | (4.5) | |
Net income (loss) attributable to Key | $ 67 | $ 41 | $ 71 | 63.4 % | (5.6) % | |
Average balances | ||||||
Loans and leases | $ 39,174 | $ 39,919 | $ 42,297 | (1.9) % | (7.4) % | |
Total assets | 42,008 | 42,710 | 45,116 | (1.6) | (6.9) | |
Deposits | 85,397 | 84,075 | 81,406 | 1.6 | 4.9 | |
Assets under management at period end | $ 57,602 | $ 57,305 | $ 53,952 | .5 % | 6.8 % | |
TE = Taxable Equivalent |
N/M = Not Meaningful |
Additional Consumer Bank Data | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Noninterest income | ||||||
Trust and investment services income | $ 112 | $ 110 | $ 101 | 1.8 % | 10.9 % | |
Service charges on deposit accounts | 34 | 33 | 40 | 3.0 | (15.0) | |
Cards and payments income | 61 | 57 | 65 | 7.0 | (6.2) | |
Consumer mortgage income | 16 | 14 | 14 | 14.3 | 14.3 | |
Other noninterest income | 11 | 11 | 23 | — | (52.2) | |
Total noninterest income | $ 234 | $ 225 | $ 243 | 4.0 % | (3.7) % | |
Average deposit balances | ||||||
Money market deposits | $ 30,229 | $ 29,875 | $ 27,217 | 1.2 % | 11.1 % | |
Demand deposits | 22,292 | 22,213 | 23,322 | .4 | (4.4) | |
Savings deposits | 4,791 | 4,986 | 6,294 | (3.9) | (23.9) | |
Time deposits | 13,039 | 11,808 | 6,413 | 10.4 | 103.3 | |
Noninterest-bearing deposits | 15,047 | 15,193 | 18,160 | (1.0) | (17.1) | |
Total deposits | $ 85,398 | $ 84,075 | $ 81,406 | 1.6 % | 4.9 % | |
Other data | ||||||
Branches | 946 | 957 | 965 | |||
Automated teller machines | 1,199 | 1,214 | 1,255 | |||
Consumer Bank Summary of Operations (2Q24 vs. 2Q23)
- Key's Consumer Bank recorded net income attributable to Key of $67 million for the second quarter of 2024, compared to $71 million for the year-ago quarter
- Taxable-equivalent net interest income decreased by $9 million, or 1.7%, compared to the second quarter of 2023, primarily reflective of a decline in loan spreads as a result of lower loan balances
- Average loans and leases decreased $3.1 billion, or 7.4%, from the second quarter of 2023, driven by broad-based declines across loan categories
- Average deposits increased $4.0 billion, or 4.9%, from the second quarter of 2023, driven by strong retail deposit growth
- Provision for credit losses increased $1 million compared to the second quarter of 2023
- Noninterest income decreased $9 million from the year-ago quarter, driven by declines in service charges on deposit accounts and cards and payments income
- Noninterest expense decreased $14 million from the year-ago quarter, reflective of lower marketing expense
Commercial Bank | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Summary of operations | ||||||
Net interest income (TE) | $ 411 | $ 397 | $ 475 | 3.5 % | (13.5) % | |
Noninterest income | 358 | 402 | 348 | (10.9) | 2.9 | |
Total revenue (TE) | 769 | 799 | 823 | (3.8) | (6.6) | |
Provision for credit losses | 87 | 102 | 134 | (14.7) | (35.1) | |
Noninterest expense | 431 | 443 | 406 | (2.7) | 6.2 | |
Income (loss) before income taxes (TE) | 251 | 254 | 283 | (1.2) | (11.3) | |
Allocated income taxes and TE adjustments | 44 | 49 | 56 | (10.2) | (21.4) | |
Net income (loss) attributable to Key | $ 207 | $ 205 | $ 227 | 1.0 % | (8.8) % | |
Average balances | ||||||
Loans and leases | $ 69,248 | $ 70,633 | $ 77,922 | (2.0) % | (11.1) % | |
Loans held for sale | 522 | 840 | 1,014 | (37.9) | (48.5) | |
Total assets | 78,328 | 80,000 | 87,759 | (2.1) | (10.7) | |
Deposits | 57,360 | 56,331 | 52,512 | 1.8 % | 9.2 % | |
TE = Taxable Equivalent |
Additional Commercial Bank Data | ||||||
Dollars in millions | Change 2Q24 vs. | |||||
2Q24 | 1Q24 | 2Q23 | 1Q24 | 2Q23 | ||
Noninterest income | ||||||
Trust and investment services income | $ 27 | $ 26 | $ 25 | 3.8 % | 8.0 % | |
Investment banking and debt placement fees | 126 | 170 | 120 | (25.9) | 5.0 | |
Cards and payments income | 21 | 20 | 23 | 5.0 | (8.7) | |
Service charges on deposit accounts | 31 | 29 | 28 | 6.9 | 10.7 | |
Corporate services income | 61 | 63 | 77 | (3.2) | (20.8) | |
Commercial mortgage servicing fees | 61 | 56 | 50 | 8.9 | 22.0 | |
Operating lease income and other leasing gains | 21 | 24 | 24 | (12.5) | (12.5) | |
Other noninterest income | 10 | 13 | 1 | (23.1) | 900.0 | |
Total noninterest income | $ 358 | $ 401 | $ 348 | (10.7) % | 2.9 % | |
Commercial Bank Summary of Operations (2Q24 vs. 2Q23)
- Key's Commercial Bank recorded net income attributable to Key of $207 million for the second quarter of 2024 compared to $227 million for the year-ago quarter
- Taxable-equivalent net interest income decreased by $64 million, or 13.5%, compared to the second quarter of 2023, primarily reflecting higher interest-bearing deposit costs and a shift in funding mix to higher-cost deposits, as well as a decline in loan balances
- Average loan and lease balances decreased $8.7 billion, or 11.1%, compared to the second quarter of 2023, driven by a decline in commercial and industrial loans
- Average deposit balances increased $4.8 billion compared to the second quarter of 2023, driven by our focus on growing deposits across our commercial businesses
- Provision for credit losses decreased $47 million compared to the second quarter of 2023, driven by a more stable economic outlook and the impact of balance sheet optimization efforts, partly offset by credit portfolio migration
- Noninterest income increased $10 million from the year-ago quarter, primarily driven by an increase in investment banking and debt placement fees and commercial mortgage servicing fees
- Noninterest expense increased $25 million compared to the second quarter of 2023, driven by higher business services and professional fees and broad-based increases across other expense categories
KeyCorp's roots trace back nearly 200 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 $187 billion at June 30, 2024.
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 approximately 1,000 branches and approximately 1,200 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as "goal," "objective," "plan," "expect," "assume," "anticipate," "intend," "project," "believe," "estimate," or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Forward-looking statements, by their nature, are subject to assumptions, risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause Key's actual results to differ from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 2023 and in KeyCorp's subsequent SEC filings, all of which have been or will be filed with the Securities and Exchange Commission (the "SEC") and are or will be available on Key's website (www.key.com/ir) and on the SEC's website (www.sec.gov). These factors may include, among others, deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a worsening of the U.S. economy due to financial, political, or other shocks, the extensive regulation of the U.S. financial services industry, the soundness of other financial institutions and the impact of changes in the interest rate environment. 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 July 18, 2024. A replay of the call will be available on our website through July 18, 2025.
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
Second Quarter 2024
Financial Supplement
Page | |
13 | Basis of Presentation |
14 | Financial Highlights |
16 | GAAP to Non-GAAP Reconciliation |
18 | Consolidated Balance Sheets |
19 | Consolidated Statements of Income |
20 | Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations |
22 | Noninterest Expense |
22 | Personnel Expense |
23 | Loan Composition |
23 | Loans Held for Sale Composition |
23 | Summary of Changes in Loans Held for Sale |
23 | Summary of Loan and Lease Loss Experience From Continuing Operations |
25 | Asset Quality Statistics From Continuing Operations |
25 | Summary of Nonperforming Assets and Past Due Loans From Continuing Operations |
25 | Summary of Changes in Nonperforming Loans From Continuing Operations |
26 | Line of Business Results |
26 | Selected Items Impact on Earnings |
Basis of Presentation
Use of Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Key's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this document, the financial supplement, or conference call slides related to this document, all of which can be found on Key's website (www.key.com/ir).
Annualized Data
Certain returns, yields, performance ratios, or quarterly growth rates are presented on an "annualized" basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts.
Taxable Equivalent
Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at the federal statutory rate. This adjustment puts all earning assets, most notably tax-exempt municipal securities, and certain lease assets, on a common basis that facilitates comparison of results to results of peers.
Earnings Per Share Equivalent
Certain income or expense items may be expressed on a per common share basis. This is done for analytical and decision-making purposes to better discern underlying trends in total consolidated earnings per share performance excluding the impact of such items. When the impact of certain income or expense items is disclosed separately, the after-tax amount is computed using the marginal tax rate, with this then being the amount used to calculate the earnings per share equivalent.
Financial Highlights | |||||
(Dollars in millions, except per share amounts) | |||||
Three months ended | |||||
6/30/2024 | 3/31/2024 | 6/30/2023 | |||
Summary of operations | |||||
Net interest income (TE) | $ 899 | $ 886 | $ 986 | ||
Noninterest income | 627 | 647 | 609 | ||
Total revenue (TE) | 1,526 | 1,533 | 1,595 | ||
Provision for credit losses | 100 | 101 | 167 | ||
Noninterest expense | 1,079 | 1,143 | 1,076 | ||
Income (loss) from continuing operations attributable to Key | 273 | 219 | 286 | ||
Income (loss) from discontinued operations, net of taxes | 1 | — | 1 | ||
Net income (loss) attributable to Key | 274 | 219 | 287 | ||
Income (loss) from continuing operations attributable to Key common shareholders | 237 | 183 | 250 | ||
Income (loss) from discontinued operations, net of taxes | 1 | — | 1 | ||
Net income (loss) attributable to Key common shareholders | 238 | 183 | 251 | ||
Per common share | |||||
Income (loss) from continuing operations attributable to Key common shareholders | $ .25 | $ .20 | $ .27 | ||
Income (loss) from discontinued operations, net of taxes | — | — | — | ||
Net income (loss) attributable to Key common shareholders (a) | .25 | .20 | .27 | ||
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution | .25 | .20 | .27 | ||
Income (loss) from discontinued operations, net of taxes — assuming dilution | — | — | — | ||
Net income (loss) attributable to Key common shareholders — assuming dilution (a) | .25 | .20 | .27 | ||
Cash dividends declared | .205 | .205 | .205 | ||
Book value at period end | 13.09 | 12.84 | 12.18 | ||
Tangible book value at period end | 10.13 | 9.87 | 9.16 | ||
Market price at period end | 14.21 | 15.81 | 9.24 | ||
Performance ratios | |||||
From continuing operations: | |||||
Return on average total assets | .59 % | .47 % | .58 % | ||
Return on average common equity | 7.96 | 6.06 | 8.42 | ||
Return on average tangible common equity (b) | 10.39 | 7.87 | 11.04 | ||
Net interest margin (TE) | 2.04 | 2.02 | 2.12 | ||
Cash efficiency ratio (b) | 70.2 | 74.0 | 66.8 | ||
From consolidated operations: | |||||
Return on average total assets | .59 % | .47 % | .58 % | ||
Return on average common equity | 7.99 | 6.06 | 8.45 | ||
Return on average tangible common equity (b) | 10.43 | 7.87 | 11.09 | ||
Net interest margin (TE) | 2.04 | 2.02 | 2.12 | ||
Loan to deposit (c) | 74.0 | 76.6 | 83.0 | ||
Capital ratios at period end | |||||
Key shareholders' equity to assets | 7.9 % | 7.8 % | 7.1 % | ||
Key common shareholders' equity to assets | 6.6 | 6.5 | 5.8 | ||
Tangible common equity to tangible assets (b) | 5.2 | 5.0 | 4.5 | ||
Common Equity Tier 1 (d) | 10.5 | 10.3 | 9.3 | ||
Tier 1 risk-based capital (d) | 12.2 | 12.0 | 10.8 | ||
Total risk-based capital (d) | 14.7 | 14.5 | 13.1 | ||
Leverage (d) | 9.1 | 9.1 | 8.7 | ||
Asset quality — from continuing operations | |||||
Net loan charge-offs | $ 91 | $ 81 | $ 52 | ||
Net loan charge-offs to average loans | .34 % | .29 % | .17 % | ||
Allowance for loan and lease losses | $ 1,547 | $ 1,542 | $ 1,480 | ||
Allowance for credit losses | 1,833 | 1,823 | 1,771 | ||
Allowance for loan and lease losses to period-end loans | 1.44 % | 1.40 % | 1.24 % | ||
Allowance for credit losses to period-end loans | 1.71 | 1.66 | 1.49 | ||
Allowance for loan and lease losses to nonperforming loans | 218 | 234 | 343 | ||
Allowance for credit losses to nonperforming loans | 258 | 277 | 411 | ||
Nonperforming loans at period-end | $ 710 | $ 658 | $ 431 | ||
Nonperforming assets at period-end | 727 | 674 | 462 | ||
Nonperforming loans to period-end portfolio loans | .66 % | .60 % | .36 % | ||
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets | .68 | .61 | .39 | ||
Trust assets | |||||
Assets under management | $ 57,602 | $ 57,305 | $ 53,952 | ||
Other data | |||||
Average full-time equivalent employees | 16,646 | 16,752 | 17,754 | ||
Branches | 946 | 957 | 965 | ||
Taxable-equivalent adjustment | $ 12 | $ 11 | $ 8 | ||
Financial Highlights (continued) | |||
(Dollars in millions, except per share amounts) | |||
Six months ended | |||
6/30/2024 | 6/30/2023 | ||
Summary of operations | |||
Net interest income (TE) | $ 1,785 | $ 2,092 | |
Noninterest income | 1,274 | 1,217 | |
Total revenue (TE) | 3,059 | 3,309 | |
Provision for credit losses | 201 | 306 | |
Noninterest expense | 2,222 | 2,252 | |
Income (loss) from continuing operations attributable to Key | 492 | 597 | |
Income (loss) from discontinued operations, net of taxes | 1 | 2 | |
Net income (loss) attributable to Key | 493 | 599 | |
Income (loss) from continuing operations attributable to Key common shareholders | 420 | 525 | |
Income (loss) from discontinued operations, net of taxes | 1 | 2 | |
Net income (loss) attributable to Key common shareholders | 421 | 527 | |
Per common share | |||
Income (loss) from continuing operations attributable to Key common shareholders | $ .45 | $ .57 | |
Income (loss) from discontinued operations, net of taxes | — | — | |
Net income (loss) attributable to Key common shareholders (a) | .45 | .57 | |
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution | .45 | .56 | |
Income (loss) from discontinued operations, net of taxes — assuming dilution | — | — | |
Net income (loss) attributable to Key common shareholders — assuming dilution (a) | .45 | .57 | |
Cash dividends paid | .41 | .41 | |
Performance ratios | |||
From continuing operations: | |||
Return on average total assets | .53 % | .62 % | |
Return on average common equity | 7.00 | 9.11 | |
Return on average tangible common equity (b) | 9.12 | 12.06 | |
Net interest margin (TE) | 2.03 | 2.29 | |
Cash efficiency ratio (b) | 72.1 | 67.5 | |
From consolidated operations: | |||
Return on average total assets | .53 % | .62 % | |
Return on average common equity | 7.02 | 9.15 | |
Return on average tangible common equity (b) | 9.14 | 12.10 | |
Net interest margin (TE) | 2.03 | 2.29 | |
Asset quality — from continuing operations | |||
Net loan charge-offs | $ 172 | $ 97 | |
Net loan charge-offs to average total loans | .31 % | .16 % | |
Other data | |||
Average full-time equivalent employees | 16,699 | 17,987 | |
Taxable-equivalent adjustment | 23 | 15 | |
(a) | Earnings per share may not foot due to rounding. |
(b) | The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity" and "cash efficiency." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. |
(c) | Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits. |
(d) | June 30, 2024, ratio is estimated and reflects Key's election to adopt the CECL optional transition provision. |
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," "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.
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 provides 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 | Six months ended | |||||
6/30/2024 | 3/31/2024 | 6/30/2023 | 6/30/2024 | 6/30/2023 | ||
Tangible common equity to tangible assets at period-end | ||||||
Key shareholders' equity (GAAP) | $ 14,789 | $ 14,547 | $ 13,844 | |||
Less: Intangible assets (a) | 2,793 | 2,799 | 2,826 | |||
Preferred Stock (b) | 2,446 | 2,446 | 2,446 | |||
Tangible common equity (non-GAAP) | $ 9,550 | $ 9,302 | $ 8,572 | |||
Total assets (GAAP) | $ 187,450 | $ 187,485 | $ 195,037 | |||
Less: Intangible assets (a) | 2,793 | 2,799 | 2,826 | |||
Tangible assets (non-GAAP) | $ 184,657 | $ 184,686 | $ 192,211 | |||
Tangible common equity to tangible assets ratio (non-GAAP) | 5.17 % | 5.04 % | 4.46 % | |||
Pre-provision net revenue | ||||||
Net interest income (GAAP) | $ 887 | $ 875 | $ 978 | $ 1,762 | $ 2,077 | |
Plus: Taxable-equivalent adjustment | 12 | 11 | 8 | 23 | 15 | |
Noninterest income | 627 | 647 | 609 | 1,274 | 1,217 | |
Less: Noninterest expense | 1,079 | 1,143 | 1,076 | 2,222 | 2,252 | |
Pre-provision net revenue from continuing operations (non-GAAP) | $ 447 | $ 390 | $ 519 | $ 837 | $ 1,679 | |
Average tangible common equity | ||||||
Average Key shareholders' equity (GAAP) | $ 14,474 | $ 14,649 | $ 14,412 | $ 14,561 | $ 14,116 | |
Less: Intangible assets (average) (c) | 2,796 | 2,802 | 2,831 | 2,798 | 2,836 | |
Preferred stock (average) | 2,500 | 2,500 | 2,500 | 2,500 | 2,500 | |
Average tangible common equity (non-GAAP) | $ 9,178 | $ 9,347 | $ 9,081 | $ 9,263 | $ 8,780 | |
Return on average tangible common equity from continuing operations | ||||||
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) | $ 237 | $ 183 | $ 250 | $ 420 | $ 525 | |
Average tangible common equity (non-GAAP) | 9,178 | 9,347 | 9,081 | 9,263 | 8,780 | |
Return on average tangible common equity from continuing operations (non-GAAP) | 10.39 % | 7.87 % | 11.04 % | 9.12 % | 12.06 % | |
Return on average tangible common equity consolidated | ||||||
Net income (loss) attributable to Key common shareholders (GAAP) | $ 238 | $ 183 | $ 251 | $ 421 | $ 527 | |
Average tangible common equity (non-GAAP) | 9,178 | 9,347 | 9,081 | 9,263 | 8,780 | |
Return on average tangible common equity consolidated (non-GAAP) | 10.43 % | 7.87 % | 11.09 % | 9.14 % | 12.10 % | |
GAAP to Non-GAAP Reconciliations (continued) | ||||||
(Dollars in millions) | ||||||
Three months ended | Six months ended | |||||
6/30/2024 | 3/31/2024 | 6/30/2023 | 6/30/2024 | 6/30/2023 | ||
Cash efficiency ratio | ||||||
Noninterest expense (GAAP) | $ 1,079 | $ 1,143 | $ 1,076 | $ 2,222 | $ 2,252 | |
Less: Intangible asset amortization | 7 | 8 | 10 | 15 | 20 | |
Adjusted noninterest expense (non-GAAP) | $ 1,072 | $ 1,135 | $ 1,066 | $ 2,207 | $ 2,232 | |
Net interest income (GAAP) | $ 887 | $ 875 | $ 978 | $ 1,762 | $ 2,077 | |
Plus: Taxable-equivalent adjustment | 12 | 11 | 8 | 23 | 15 | |
Net interest income TE (non-GAAP) | 899 | 886 | 986 | 1,785 | 2,092 | |
Noninterest income (GAAP) | 627 | 647 | 609 | 1,274 | 1,217 | |
Total taxable-equivalent revenue (non-GAAP) | $ 1,526 | $ 1,533 | $ 1,595 | $ 3,059 | $ 3,309 | |
Cash efficiency ratio (non-GAAP) | 70.2 % | 74.0 % | 66.8 % | 72.1 % | 67.5 % | |
(a) | For the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, intangible assets exclude less than $1 million, $1 million, and $1 million, respectively, of period-end purchased credit card receivables. |
(b) | Net of capital surplus. |
(c) | For the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, average intangible assets exclude less than $1 million, $1 million, and $1 million, respectively, of average purchased credit card receivables. |
GAAP = U.S. generally accepted accounting principles | |
Consolidated Balance Sheets | |||||
(Dollars in millions) | |||||
6/30/2024 | 3/31/2024 | 6/30/2023 | |||
Assets | |||||
Loans | $ 107,078 | $ 109,885 | $ 119,011 | ||
Loans held for sale | 517 | 228 | 1,130 | ||
Securities available for sale | 37,460 | 37,298 | 37,908 | ||
Held-to-maturity securities | 7,968 | 8,272 | 9,189 | ||
Trading account assets | 1,219 | 1,171 | 1,177 | ||
Short-term investments | 15,536 | 13,205 | 8,959 | ||
Other investments | 1,259 | 1,247 | 1,474 | ||
Total earning assets | 171,037 | 171,306 | 178,848 | ||
Allowance for loan and lease losses | (1,547) | (1,542) | (1,480) | ||
Cash and due from banks | 1,326 | 1,247 | 758 | ||
Premises and equipment | 631 | 650 | 652 | ||
Goodwill | 2,752 | 2,752 | 2,752 | ||
Other intangible assets | 41 | 48 | 75 | ||
Corporate-owned life insurance | 4,382 | 4,392 | 4,378 | ||
Accrued income and other assets | 8,532 | 8,314 | 8,668 | ||
Discontinued assets | 296 | 318 | 386 | ||
Total assets | $ 187,450 | $ 187,485 | $ 195,037 | ||
Liabilities | |||||
Deposits in domestic offices: | |||||
Interest-bearing deposits | $ 117,570 | $ 114,593 | $ 111,766 | ||
Noninterest-bearing deposits | 28,150 | 29,638 | 33,366 | ||
Total deposits | 145,720 | 144,231 | 145,132 | ||
Federal funds purchased and securities sold under repurchase agreements | 25 | 27 | 1,702 | ||
Bank notes and other short-term borrowings | 5,292 | 2,896 | 6,949 | ||
Accrued expense and other liabilities | 4,755 | 5,008 | 5,339 | ||
Long-term debt | 16,869 | 20,776 | 22,071 | ||
Total liabilities | 172,661 | 172,938 | 181,193 | ||
Equity | |||||
Preferred stock | 2,500 | 2,500 | 2,500 | ||
Common shares | 1,257 | 1,257 | 1,257 | ||
Capital surplus | 6,185 | 6,164 | 6,231 | ||
Retained earnings | 15,706 | 15,662 | 15,759 | ||
Treasury stock, at cost | (5,715) | (5,722) | (5,859) | ||
Accumulated other comprehensive income (loss) | (5,144) | (5,314) | (6,044) | ||
Key shareholders' equity | 14,789 | 14,547 | 13,844 | ||
Total liabilities and equity | $ 187,450 | $ 187,485 | $ 195,037 | ||
Common shares outstanding (000) | 943,200 | 942,776 | 935,733 | ||
Consolidated Statements of Income | ||||||||
(Dollars in millions, except per share amounts) | ||||||||
Three months ended | Six months ended | |||||||
6/30/2024 | 3/31/2024 | 6/30/2023 | 6/30/2024 | 6/30/2023 | ||||
Interest income | ||||||||
Loans | $ 1,524 | $ 1,538 | $ 1,576 | $ 3,062 | $ 3,052 | |||
Loans held for sale | 8 | 14 | 17 | 22 | 30 | |||
Securities available for sale | 259 | 232 | 194 | 491 | 388 | |||
Held-to-maturity securities | 73 | 75 | 81 | 148 | 155 | |||
Trading account assets | 16 | 14 | 15 | 30 | 27 | |||
Short-term investments | 192 | 142 | 111 | 334 | 153 | |||
Other investments | 16 | 17 | 16 | 33 | 29 | |||
Total interest income | 2,088 | 2,032 | 2,010 | 4,120 | 3,834 | |||
Interest expense | ||||||||
Deposits | 817 | 782 | 531 | 1,599 | 881 | |||
Federal funds purchased and securities sold under repurchase agreements | 1 | 1 | 48 | 2 | 70 | |||
Bank notes and other short-term borrowings | 51 | 46 | 104 | 97 | 182 | |||
Long-term debt | 332 | 328 | 349 | 660 | 624 | |||
Total interest expense | 1,201 | 1,157 | 1,032 | 2,358 | 1,757 | |||
Net interest income | 887 | 875 | 978 | 1,762 | 2,077 | |||
Provision for credit losses | 100 | 101 | 167 | 201 | 306 | |||
Net interest income after provision for credit losses | 787 | 774 | 811 | 1,561 | 1,771 | |||
Noninterest income | ||||||||
Trust and investment services income | 139 | 136 | 126 | 275 | 254 | |||
Investment banking and debt placement fees | 126 | 170 | 120 | 296 | 265 | |||
Cards and payments income | 85 | 77 | 85 | 162 | 166 | |||
Service charges on deposit accounts | 66 | 63 | 69 | 129 | 136 | |||
Corporate services income | 68 | 69 | 86 | 137 | 162 | |||
Commercial mortgage servicing fees | 61 | 56 | 50 | 117 | 96 | |||
Corporate-owned life insurance income | 34 | 32 | 32 | 66 | 61 | |||
Consumer mortgage income | 16 | 14 | 14 | 30 | 25 | |||
Operating lease income and other leasing gains | 21 | 24 | 23 | 45 | 48 | |||
Other income | 11 | 6 | 4 | 17 | 4 | |||
Total noninterest income | 627 | 647 | 609 | 1,274 | 1,217 | |||
Noninterest expense | ||||||||
Personnel | 636 | 674 | 622 | 1,310 | 1,323 | |||
Net occupancy | 66 | 67 | 65 | 133 | 135 | |||
Computer processing | 101 | 102 | 95 | 203 | 187 | |||
Business services and professional fees | 37 | 41 | 41 | 78 | 86 | |||
Equipment | 20 | 20 | 22 | 40 | 44 | |||
Operating lease expense | 17 | 17 | 21 | 34 | 41 | |||
Marketing | 21 | 19 | 29 | 40 | 50 | |||
Other expense | 181 | 203 | 181 | 384 | 386 | |||
Total noninterest expense | 1,079 | 1,143 | 1,076 | 2,222 | 2,252 | |||
Income (loss) from continuing operations before income taxes | 335 | 278 | 344 | 613 | 736 | |||
Income taxes | 62 | 59 | 58 | 121 | 139 | |||
Income (loss) from continuing operations | 273 | 219 | 286 | 492 | 597 | |||
Income (loss) from discontinued operations, net of taxes | 1 | — | 1 | 1 | 2 | |||
Net income (loss) | 274 | 219 | 287 | 493 | 599 | |||
Net income (loss) attributable to Key | $ 274 | $ 219 | $ 287 | $ 493 | $ 599 | |||
Income (loss) from continuing operations attributable to Key common shareholders | $ 237 | $ 183 | $ 250 | $ 420 | $ 525 | |||
Net income (loss) attributable to Key common shareholders | 238 | 183 | 251 | 421 | 527 | |||
Per common share | ||||||||
Income (loss) from continuing operations attributable to Key common shareholders | $ .25 | $ .20 | $ .27 | $ .45 | $ .57 | |||
Income (loss) from discontinued operations, net of taxes | — | — | — | — | — | |||
Net income (loss) attributable to Key common shareholders (a) | .25 | .20 | .27 | .45 | .57 | |||
Per common share — assuming dilution | ||||||||
Income (loss) from continuing operations attributable to Key common shareholders | $ .25 | $ .20 | $ .27 | $ .45 | $ .56 | |||
Income (loss) from discontinued operations, net of taxes | — | — | — | — | — | |||
Net income (loss) attributable to Key common shareholders (a) | .25 | .20 | .27 | .45 | .57 | |||
Cash dividends declared per common share | $ .205 | $ .205 | $ .205 | $ .410 | $ .410 | |||
Weighted-average common shares outstanding (000) | 931,726 | 929,692 | 926,741 | 930,776 | 926,807 | |||
Effect of common share options and other stock awards | 6,761 | 7,319 | 3,713 | 7,040 | 5,513 | |||
Weighted-average common shares and potential common shares outstanding (000) (b) | 938,487 | 937,011 | 930,454 | 937,816 | 932,320 | |||
(a) | Earnings per share may not foot due to rounding. |
(b) | Assumes conversion of common share options and other stock awards, as applicable. |
Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations | ||||||||||||
(Dollars in millions) | ||||||||||||
Second Quarter 2024 | First Quarter 2024 | Second Quarter 2023 | ||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||
Balance | Interest (a) | Rate (a) | Balance | Interest (a) | Rate (a) | Balance | Interest (a) | Rate (a) | ||||
Assets | ||||||||||||
Loans: (b), (c) | ||||||||||||
Commercial and industrial (d) | $ 54,599 | $ 860 | 6.34 % | $ 55,220 | $ 853 | 6.22 % | $ 61,426 | $ 881 | 5.76 % | |||
Real estate — commercial mortgage | 14,287 | 217 | 6.10 | 14,837 | 229 | 6.21 | 16,226 | 235 | 5.80 | |||
Real estate — construction | 3,020 | 56 | 7.51 | 3,039 | 57 | 7.50 | 2,641 | 44 | 6.64 | |||
Commercial lease financing | 3,193 | 28 | 3.46 | 3,346 | 27 | 3.23 | 3,756 | 29 | 3.07 | |||
Total commercial loans | 75,099 | 1,161 | 6.22 | 76,442 | 1,166 | 6.14 | 84,049 | 1,189 | 5.67 | |||
Real estate — residential mortgage | 20,515 | 169 | 3.30 | 20,814 | 171 | 3.29 | 21,659 | 176 | 3.25 | |||
Home equity loans | 6,817 | 102 | 5.98 | 7,024 | 104 | 5.97 | 7,620 | 109 | 5.75 | |||
Other consumer loans | 5,597 | 70 | 5.00 | 5,800 | 72 | 4.99 | 6,360 | 77 | 4.86 | |||
Credit cards | 933 | 34 | 14.63 | 954 | 36 | 14.93 | 984 | 33 | 13.49 | |||
Total consumer loans | 33,862 | 375 | 4.44 | 34,592 | 383 | 4.44 | 36,623 | 395 | 4.33 | |||
Total loans | 108,961 | 1,536 | 5.66 | 111,034 | 1,549 | 5.61 | 120,672 | 1,584 | 5.26 | |||
Loans held for sale | 599 | 8 | 5.42 | 888 | 14 | 6.15 | 1,087 | 17 | 6.16 | |||
Securities available for sale (b), (e) | 36,764 | 259 | 2.42 | 37,089 | 232 | 2.17 | 38,899 | 194 | 1.74 | |||
Held-to-maturity securities (b) | 8,123 | 73 | 3.59 | 8,423 | 75 | 3.57 | 9,371 | 81 | 3.47 | |||
Trading account assets | 1,231 | 16 | 5.38 | 1,110 | 14 | 5.21 | 1,244 | 15 | 4.64 | |||
Short-term investments | 13,729 | 192 | 5.62 | 10,243 | 142 | 5.59 | 7,798 | 111 | 5.73 | |||
Other investments (e) | 1,234 | 16 | 5.19 | 1,236 | 17 | 5.39 | 1,566 | 16 | 4.03 | |||
Total earning assets | 170,641 | 2,100 | 4.77 | 170,023 | 2,043 | 4.67 | 180,637 | 2,018 | 4.34 | |||
Allowance for loan and lease losses | (1,534) | (1,505) | (1,379) | |||||||||
Accrued income and other assets | 17,476 | 17,350 | 17,202 | |||||||||
Discontinued assets | 305 | 329 | 394 | |||||||||
Total assets | $ 186,888 | $ 186,197 | $ 196,854 | |||||||||
Liabilities | ||||||||||||
Money market deposits | $ 39,364 | $ 290 | 2.97 % | $ 37,659 | $ 264 | 2.82 % | $ 32,419 | $ 123 | 1.53 % | |||
Demand deposits | 54,629 | 340 | 2.50 | 56,137 | 357 | 2.56 | 53,569 | 256 | 1.91 | |||
Savings deposits | 5,189 | 2 | .19 | 5,253 | 1 | .07 | 6,592 | 1 | .04 | |||
Time deposits | 16,019 | 185 | 4.64 | 14,430 | 160 | 4.45 | 15,216 | 151 | 3.99 | |||
Total interest-bearing deposits | 115,201 | 817 | 2.85 | 113,479 | 782 | 2.77 | 107,796 | 531 | 1.98 | |||
Federal funds purchased and securities sold under repurchase agreements | 124 | 1 | 4.76 | 106 | 1 | 4.03 | 3,767 | 48 | 5.07 | |||
Bank notes and other short-term borrowings | 3,617 | 51 | 5.57 | 3,325 | 46 | 5.63 | 7,982 | 104 | 5.22 | |||
Long-term debt (f) | 19,219 | 332 | 6.91 | 19,537 | 328 | 6.72 | 22,284 | 349 | 6.26 | |||
Total interest-bearing liabilities | 138,161 | 1,201 | 3.49 | 136,447 | 1,157 | 3.41 | 141,829 | 1,032 | 2.91 | |||
Noninterest-bearing deposits | 28,979 | 29,399 | 35,107 | |||||||||
Accrued expense and other liabilities | 4,969 | 5,373 | 5,112 | |||||||||
Discontinued liabilities (f) | 305 | 329 | 394 | |||||||||
Total liabilities | $ 172,414 | $ 171,548 | $ 182,442 | |||||||||
Equity | ||||||||||||
Key shareholders' equity | $ 14,474 | $ 14,649 | $ 14,412 | |||||||||
Noncontrolling interests | — | — | — | |||||||||
Total equity | 14,474 | 14,649 | 14,412 | |||||||||
Total liabilities and equity | $ 186,888 | $ 186,197 | $ 196,854 | |||||||||
Interest rate spread (TE) | 1.28 % | 1.26 % | 1.43 % | |||||||||
Net interest income (TE) and net interest margin (TE) | $ 899 | 2.04 % | $ 886 | 2.02 % | $ 986 | 2.12 % | ||||||
TE adjustment (b) | 12 | 11 | 8 | |||||||||
Net interest income, GAAP basis | $ 887 | $ 875 | $ 978 | |||||||||
(a) | Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology. |
(b) | Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 21% for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023. |
(c) | For purposes of these computations, nonaccrual loans are included in average loan balances. |
(d) | Commercial and industrial average balances include $218 million, $211 million, and $194 million of assets from commercial credit cards for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. |
(e) | Yield presented is calculated on the basis of amortized cost. The average amortized cost for securities available for sale was $42.8 billion, $42.7 billion, and $44.6 billion for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Yield based on the fair value of securities available for sale was 2.82%, 2.50%, and 2.00% for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. |
(f) | A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying Key's matched funds transfer pricing methodology to discontinued operations. |
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles. | |
Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations | ||||||||
(Dollars in millions) | ||||||||
Six months ended June 30, 2024 | Six months ended June 30, 2023 | |||||||
Average | Yield/ | Average | Yield/ | |||||
Balance | Interest (a) | Rate (a) | Balance | Interest (a) | Rate (a) | |||
Assets | ||||||||
Loans: (b), (c) | ||||||||
Commercial and industrial (d) | $ 54,909 | $ 1,714 | 6.28 % | $ 60,857 | $ 1,688 | 5.59 % | ||
Real estate — commercial mortgage | 14,562 | 446 | 6.16 | 16,347 | 459 | 5.66 | ||
Real estate — construction | 3,030 | 113 | 7.51 | 2,583 | 83 | 6.47 | ||
Commercial lease financing | 3,269 | 55 | 3.34 | 3,770 | 56 | 2.97 | ||
Total commercial loans | 75,770 | 2,328 | 6.18 | 83,557 | 2,286 | 5.51 | ||
Real estate — residential mortgage | 20,664 | 340 | 3.30 | 21,548 | 348 | 3.23 | ||
Home equity loans | 6,921 | 206 | 5.98 | 7,749 | 215 | 5.61 | ||
Other consumer loans | 5,699 | 142 | 5.00 | 6,419 | 153 | 4.78 | ||
Credit cards | 943 | 69 | 14.78 | 984 | 65 | 13.43 | ||
Total consumer loans | 34,227 | 757 | 4.44 | 36,700 | 781 | 4.28 | ||
Total loans | 109,997 | 3,085 | 5.64 | 120,257 | 3,067 | 5.14 | ||
Loans held for sale | 744 | 22 | 5.86 | 997 | 30 | 6.02 | ||
Securities available for sale (b), (e) | 36,926 | 491 | 2.29 | 39,034 | 388 | 1.73 | ||
Held-to-maturity securities (b) | 8,273 | 148 | 3.58 | 9,152 | 155 | 3.40 | ||
Trading account assets | 1,171 | 30 | 5.30 | 1,123 | 27 | 4.74 | ||
Short-term investments | 11,986 | 334 | 5.61 | 5,677 | 153 | 5.44 | ||
Other investments (e) | 1,235 | 33 | 5.29 | 1,438 | 29 | 4.02 | ||
Total earning assets | 170,332 | 4,143 | 4.72 | 177,678 | 3,849 | 4.22 | ||
Allowance for loan and lease losses | (1,519) | (1,357) | ||||||
Accrued income and other assets | 17,412 | 17,351 | ||||||
Discontinued assets | 317 | 406 | ||||||
Total assets | $ 186,542 | $ 194,078 | ||||||
Liabilities | ||||||||
Money market deposits | $ 38,512 | $ 554 | 2.89 | $ 33,110 | $ 201 | 1.23 | ||
Other demand deposits | 55,383 | 697 | 2.53 | 52,993 | 440 | 1.67 | ||
Savings deposits | 5,221 | 3 | .13 | 6,967 | 1 | .04 | ||
Time deposits | 15,225 | 345 | 4.55 | 12,870 | 239 | 3.75 | ||
Total interest-bearing deposits | 114,341 | 1,599 | 2.81 | 105,940 | 881 | 1.68 | ||
Federal funds purchased and securities sold under repurchase agreements | 115 | 2 | 4.42 | 2,932 | 70 | 4.81 | ||
Bank notes and other short-term borrowings | 3,471 | 97 | 5.60 | 7,293 | 182 | 5.03 | ||
Long-term debt (f) | 19,378 | 660 | 6.81 | 21,218 | 624 | 5.88 | ||
Total interest-bearing liabilities | 137,305 | 2,358 | 3.45 | 137,383 | 1,757 | 2.57 | ||
Noninterest-bearing deposits | 29,189 | 37,213 | ||||||
Accrued expense and other liabilities | 5,170 | 4,960 | ||||||
Discontinued liabilities (f) | 317 | 406 | ||||||
Total liabilities | $ 171,981 | $ 179,962 | ||||||
Equity | ||||||||
Key shareholders' equity | $ 14,561 | $ 14,116 | ||||||
Noncontrolling interests | — | — | ||||||
Total equity | 14,561 | 14,116 | ||||||
Total liabilities and equity | $ 186,542 | $ 194,078 | ||||||
Interest rate spread (TE) | 1.27 % | 1.65 % | ||||||
Net interest income (TE) and net interest margin (TE) | $ 1,785 | 2.03 % | $ 2,092 | 2.29 % | ||||
TE adjustment (b) | 23 | 15 | ||||||
Net interest income, GAAP basis | $ 1,762 | $ 2,077 | ||||||
(a) | Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology. |
(b) | Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 21% for the six months ended June 30, 2024, and June 30, 2023, respectively. |
(c) | For purposes of these computations, nonaccrual loans are included in average loan balances. |
(d) | Commercial and industrial average balances include $214 million and $186 million of assets from commercial credit cards for the six months ended June 30, 2024, and June 30, 2023, respectively. |
(e) | Yield presented is calculated on the basis of amortized cost. The average amortized cost for securities available for sale was $42.8 billion and $45.0 billion for the six months ended June 30, 2024, and June 30, 2023, respectively. Yield based on the fair value of securities available for sale was 2.66% and 1.99% for the six months ended June 30, 2024, and June 30, 2023, respectively. |
(f) | A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying Key's matched funds transfer pricing methodology to discontinued operations. |
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles | |
Noninterest Expense | ||||||
(Dollars in millions) | ||||||
Three months ended | Six months ended | |||||
6/30/2024 | 3/31/2024 | 6/30/2023 | 6/30/2024 | 6/30/2023 | ||
Personnel (a) | $ 636 | $ 674 | $ 622 | $ 1,310 | $ 1,323 | |
Net occupancy | 66 | 67 | 65 | 133 | 135 | |
Computer processing | 101 | 102 | 95 | 203 | 187 | |
Business services and professional fees | 37 | 41 | 41 | 78 | 86 | |
Equipment | 20 | 20 | 22 | 40 | 44 | |
Operating lease expense | 17 | 17 | 21 | 34 | 41 | |
Marketing | 21 | 19 | 29 | 40 | 50 | |
Other expense | 181 | 203 | 181 | 384 | 386 | |
Total noninterest expense | $ 1,079 | $ 1,143 | $ 1,076 | $ 2,222 | $ 2,252 | |
Average full-time equivalent employees (b) | 16,646 | 16,752 | 17,754 | 16,699 | 17,987 | |
(a) | Additional detail provided in Personnel Expense table below. |
(b) | The number of average full-time equivalent employees has not been adjusted for discontinued operations. |
Personnel Expense | ||||||
(Dollars in millions) | ||||||
Three months ended | Six months ended | |||||
6/30/2024 | 3/31/2024 | 6/30/2023 | 6/30/2024 | 6/30/2023 | ||
Salaries and contract labor | $ 394 | $ 389 | $ 416 | $ 783 | $ 835 | |
Incentive and stock-based compensation | 143 | 159 | 93 | 302 | 245 | |
Employee benefits | 98 | 126 | 103 | 224 | 202 | |
Severance | 1 | — | 10 | 1 | 41 | |
Total personnel expense | $ 636 | $ 674 | $ 622 | $ 1,310 | $ 1,323 | |
Loan Composition | ||||||
(Dollars in millions) | ||||||
Change 6/30/2024 vs. | ||||||
6/30/2024 | 3/31/2024 | 6/30/2023 | 3/31/2024 | 6/30/2023 | ||
Commercial and industrial (a)(b) | $ 53,129 | $ 54,793 | $ 60,059 | (3.0) % | (11.5) % | |
Commercial real estate: | ||||||
Commercial mortgage | 14,218 | 14,540 | 16,048 | (2.2) | (11.4) | |
Construction | 3,077 | 3,013 | 2,646 | 2.1 | 16.3 | |
Total commercial real estate loans | 17,295 | 17,553 | 18,694 | (1.5) | (7.5) | |
Commercial lease financing (b) | 3,101 | 3,305 | 3,801 | (6.2) | (18.4) | |
Total commercial loans | 73,525 | 75,651 | 82,554 | (2.8) | (10.9) | |
Residential — prime loans: | ||||||
Real estate — residential mortgage | 20,380 | 20,704 | 21,637 | (1.6) | (5.8) | |
Home equity loans | 6,729 | 6,905 | 7,529 | (2.5) | (10.6) | |
Total residential — prime loans | 27,109 | 27,609 | 29,166 | (1.8) | (7.1) | |
Other consumer loans | 5,514 | 5,690 | 6,290 | (3.1) | (12.3) | |
Credit cards | 930 | 935 | 1,001 | (.5) | (7.1) | |
Total consumer loans | 33,553 | 34,234 | 36,457 | (2.0) | (8.0) | |
Total loans (c), (d) | $ 107,078 | $ 109,885 | $ 119,011 | (2.6) % | (10.0) % | |
(a) | Loan balances include $217 million, $214 million, and $200 million of commercial credit card balances at June 30, 2024, March 31, 2024, and June 30, 2023, respectively. |
(b) | Commercial and industrial includes receivables held as collateral for a secured borrowing of $285 million at June 30, 2024, $349 million at March 31, 2024 and no amounts held as collateral for a secured borrowing at June 30, 2023. Commercial lease financing includes receivables held as collateral for a secured borrowing of $5 million, $6 million, and $5 million at June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Principal reductions are based on the cash payments received from these related receivables. |
(c) | Total loans exclude loans of $291 million at June 30, 2024, $313 million at March 31, 2024, and $381 million at June 30, 2023, related to the discontinued operations of the education lending business. |
(d) | Accrued interest of $502 million, $522 million, and $500 million at June 30, 2024, March 31, 2024, and June 30, 2023, respectively, presented in "other assets" on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table. |
Loans Held for Sale Composition | ||||||
(Dollars in millions) | ||||||
Change 6/30/2024 vs. | ||||||
6/30/2024 | 3/31/2024 | 6/30/2023 | 3/31/2024 | 6/30/2023 | ||
Commercial and industrial | $ 72 | $ — | $ 221 | N/M | (67.4) % | |
Real estate — commercial mortgage | 354 | 155 | 829 | 128.4 | (57.3) | |
Commercial lease financing | — | — | 13 | — | (100.0) | |
Real estate — residential mortgage | 91 | 73 | 67 | 24.7 | 35.8 | |
Total loans held for sale | $ 517 | $ 228 | $ 1,130 | 126.8 % | (54.2) % | |
N/M = Not Meaningful |
Summary of Changes in Loans Held for Sale | |||||
(Dollars in millions) | |||||
2Q24 | 1Q24 | 4Q23 | 3Q23 | 2Q23 | |
Balance at beginning of period | $ 228 | $ 483 | $ 730 | $ 1,130 | $ 1,211 |
New originations | 1,532 | 1,738 | 1,879 | 3,035 | 1,798 |
Transfers from (to) held to maturity, net | (1) | (105) | (31) | (94) | (52) |
Loan sales | (1,234) | (1,893) | (2,095) | (3,312) | (1,798) |
Loan draws (payments), net | (7) | 4 | — | (29) | (28) |
Valuation and other adjustments | (1) | 1 | — | — | (1) |
Balance at end of period | $ 517 | $ 228 | $ 483 | $ 730 | $ 1,130 |
Summary of Loan and Lease Loss Experience From Continuing Operations | ||||||
(Dollars in millions) | ||||||
Three months ended | Six months ended | |||||
6/30/2024 | 3/31/2024 | 6/30/2023 | 6/30/2024 | 6/30/2023 | ||
Average loans outstanding | $ 108,961 | $ 111,034 | $ 120,672 | $ 109,997 | $ 120,257 | |
Allowance for loan and lease losses at the beginning of the period | $ 1,542 | $ 1,508 | $ 1,380 | 1,508 | 1,337 | |
Loans charged off: | ||||||
Commercial and industrial | 86 | 62 | 42 | 148 | 77 | |
Real estate — commercial mortgage | 10 | 5 | 9 | 15 | 14 | |
Real estate — construction | — | — | — | — | — | |
Total commercial real estate loans | 10 | 5 | 9 | 15 | 14 | |
Commercial lease financing | 6 | — | 1 | 6 | — | |
Total commercial loans | 102 | 67 | 52 | 169 | 91 | |
Real estate — residential mortgage | 1 | 1 | 1 | 2 | 1 | |
Home equity loans | — | 1 | 2 | 1 | 3 | |
Other consumer loans | 16 | 16 | 12 | 32 | 23 | |
Credit cards | 12 | 12 | 9 | 24 | 18 | |
Total consumer loans | 29 | 30 | 24 | 59 | 45 | |
Total loans charged off | 131 | 97 | 76 | 228 | 136 | |
Recoveries: | ||||||
Commercial and industrial | 31 | 8 | 15 | 39 | 23 | |
Real estate — commercial mortgage | 1 | — | 1 | 1 | 1 | |
Real estate — construction | — | — | — | — | — | |
Total commercial real estate loans | 1 | — | 1 | 1 | 1 | |
Commercial lease financing | 3 | 2 | 2 | 5 | 3 | |
Total commercial loans | 35 | 10 | 18 | 45 | 27 | |
Real estate — residential mortgage | 1 | 2 | 1 | 3 | 2 | |
Home equity loans | — | 1 | 1 | 1 | 2 | |
Other consumer loans | 2 | 2 | 2 | 4 | 5 | |
Credit cards | 2 | 1 | 2 | 3 | 3 | |
Total consumer loans | 5 | 6 | 6 | 11 | 12 | |
Total recoveries | 40 | 16 | 24 | 56 | 39 | |
Net loan charge-offs | (91) | (81) | (52) | (172) | (97) | |
Provision (credit) for loan and lease losses | 96 | 115 | 152 | 211 | 240 | |
Allowance for loan and lease losses at end of period | $ 1,547 | $ 1,542 | $ 1,480 | $ 1,547 | $ 1,480 | |
Liability for credit losses on lending-related commitments at beginning of period | $ 281 | $ 296 | $ 276 | $ 296 | $ 225 | |
Provision (credit) for losses on lending-related commitments | 4 | (14) | 15 | (10) | 66 | |
Other | 1 | (1) | — | — | — | |
Liability for credit losses on lending-related commitments at end of period (a) | $ 286 | $ 281 | $ 291 | $ 286 | $ 291 | |
Total allowance for credit losses at end of period | $ 1,833 | $ 1,823 | $ 1,771 | $ 1,833 | $ 1,771 | |
Net loan charge-offs to average total loans | .34 % | .29 % | .17 % | .31 % | .16 % | |
Allowance for loan and lease losses to period-end loans | 1.44 | 1.40 | 1.24 | 1.44 | 1.24 | |
Allowance for credit losses to period-end loans | 1.71 | 1.66 | 1.49 | 1.71 | 1.49 | |
Allowance for loan and lease losses to nonperforming loans | 218 | 234 | 343 | 218 | 343 | |
Allowance for credit losses to nonperforming loans | 258 | 277 | 411 | 258 | 411 | |
Discontinued operations — education lending business: | ||||||
Loans charged off | $ 1 | $ 1 | $ 2 | $ 2 | $ 3 | |
Recoveries | 1 | — | 1 | 1 | 1 | |
Net loan charge-offs | $ — | $ (1) | $ (1) | $ (1) | $ (2) | |
(a) Included in "Accrued expense and other liabilities" on the balance sheet. |
Asset Quality Statistics From Continuing Operations | |||||
(Dollars in millions) | |||||
2Q24 | 1Q24 | 4Q23 | 3Q23 | 2Q23 | |
Net loan charge-offs | $ 91 | $ 81 | $ 76 | $ 71 | $ 52 |
Net loan charge-offs to average total loans | .34 % | .29 % | .26 % | .24 % | .17 % |
Allowance for loan and lease losses | $ 1,547 | $ 1,542 | $ 1,508 | $ 1,488 | $ 1,480 |
Allowance for credit losses (a) | 1,833 | 1,823 | 1,804 | 1,778 | 1,771 |
Allowance for loan and lease losses to period-end loans | 1.44 % | 1.40 % | 1.34 % | 1.29 % | 1.24 % |
Allowance for credit losses to period-end loans | 1.71 | 1.66 | 1.60 | 1.54 | 1.49 |
Allowance for loan and lease losses to nonperforming loans | 218 | 234 | 263 | 327 | 343 |
Allowance for credit losses to nonperforming loans | 258 | 277 | 314 | 391 | 411 |
Nonperforming loans at period end | $ 710 | $ 658 | $ 574 | $ 455 | $ 431 |
Nonperforming assets at period end | 727 | 674 | 591 | 471 | 462 |
Nonperforming loans to period-end portfolio loans | .66 % | .60 % | .51 % | .39 % | .36 % |
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets | .68 | .61 | .52 | .41 | .39 |
(a) Includes the allowance for loan and lease losses plus the liability for credit losses on lending-related commitments. |
Summary of Nonperforming Assets and Past Due Loans From Continuing Operations | |||||
(Dollars in millions) | |||||
6/30/2024 | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | |
Commercial and industrial | $ 358 | $ 360 | $ 297 | $ 214 | $ 188 |
Real estate — commercial mortgage | 173 | 113 | 100 | 63 | 65 |
Real estate — construction | — | — | — | — | — |
Total commercial real estate loans | 173 | 113 | 100 | 63 | 65 |
Commercial lease financing | 1 | 1 | — | 1 | 1 |
Total commercial loans | 532 | 474 | 397 | 278 | 254 |
Real estate — residential mortgage | 77 | 79 | 71 | 72 | 73 |
Home equity loans | 91 | 95 | 97 | 97 | 97 |
Other Consumer loans | 4 | 4 | 4 | 4 | 4 |
Credit cards | 6 | 6 | 5 | 4 | 3 |
Total consumer loans | 178 | 184 | 177 | 177 | 177 |
Total nonperforming loans (a) | 710 | 658 | 574 | 455 | 431 |
OREO | 17 | 16 | 17 | 16 | 15 |
Nonperforming loans held for sale | — | — | — | — | 16 |
Other nonperforming assets | — | — | — | — | — |
Total nonperforming assets | $ 727 | $ 674 | $ 591 | $ 471 | $ 462 |
Accruing loans past due 90 days or more | $ 137 | $ 119 | $ 107 | $ 52 | $ 73 |
Accruing loans past due 30 through 89 days | 282 | 242 | 222 | 178 | 139 |
Nonperforming assets from discontinued operations — education lending business | 3 | 2 | 3 | 2 | 2 |
Nonperforming loans to period-end portfolio loans | .66 % | .60 % | .51 % | .39 % | .36 % |
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets | .68 | .61 | .52 | .41 | .39 |
Summary of Changes in Nonperforming Loans From Continuing Operations | |||||
(Dollars in millions) | |||||
2Q24 | 1Q24 | 4Q23 | 3Q23 | 2Q23 | |
Balance at beginning of period | $ 658 | $ 574 | $ 455 | $ 431 | $ 416 |
Loans placed on nonaccrual status | 317 | 243 | 297 | 159 | 169 |
Charge-offs | (131) | (97) | (95) | (87) | (76) |
Loans sold | (22) | (5) | (9) | (4) | (23) |
Payments | (76) | (35) | (56) | (25) | (20) |
Transfers to OREO | (1) | (2) | (2) | (3) | (2) |
Loans returned to accrual status | (35) | (20) | (16) | (16) | (33) |
Balance at end of period | $ 710 | $ 658 | $ 574 | $ 455 | $ 431 |
Line of Business Results | ||||||||
(Dollars in millions) | ||||||||
Change 2Q24 vs. | ||||||||
2Q24 | 1Q24 | 4Q23 | 3Q23 | 2Q23 | 1Q24 | 2Q23 | ||
Consumer Bank | ||||||||
Summary of operations | ||||||||
Total revenue (TE) | $ 769 | $ 757 | $ 770 | $ 775 | $ 787 | 1.6 % | (2.3) % | |
Provision for credit losses | 33 | (2) | 5 | 14 | 32 | N/M | 3.1 | |
Noninterest expense | 648 | 704 | 779 | 676 | 662 | (8.0) | (2.1) | |
Net income (loss) attributable to Key | 67 | 41 | (11) | 65 | 71 | 63.4 | (5.6) | |
Average loans and leases | 39,174 | 39,919 | 40,763 | 41,610 | 42,297 | (1.9) | (7.4) | |
Average deposits | 85,397 | 84,075 | 83,557 | 82,683 | 81,406 | 1.6 | 4.9 | |
Net loan charge-offs | 45 | 44 | 40 | 36 | 32 | 2.3 | 40.6 | |
Net loan charge-offs to average total loans | .46 % | .44 % | .39 % | .34 % | .30 % | 4.5 | 53.3 | |
Nonperforming assets at period end | $ 190 | $ 196 | $ 190 | $ 190 | $ 193 | (3.1) | (1.6) | |
Return on average allocated equity | 7.93 % | 4.69 % | (1.28) % | 7.42 % | 8.00 % | 69.1 | (.9) | |
Commercial Bank | ||||||||
Summary of operations | ||||||||
Total revenue (TE) | $ 769 | $ 799 | $ 804 | $ 809 | $ 823 | (3.8) % | (6.6) % | |
Provision for credit losses | 87 | 102 | 96 | 68 | 134 | (14.7) | (35.1) | |
Noninterest expense | 431 | 443 | 526 | 433 | 406 | (2.7) | 6.2 | |
Net income (loss) attributable to Key | 207 | 205 | 150 | 240 | 227 | 1.0 | (8.8) | |
Average loans and leases | 69,248 | 70,633 | 72,713 | 75,598 | 77,922 | (2.0) | (11.1) | |
Average loans held for sale | 522 | 840 | 635 | 1,268 | 1,014 | (37.9) | (48.5) | |
Average deposits | 57,360 | 56,331 | 58,196 | 56,078 | 52,512 | 1.8 | 9.2 | |
Net loan charge-offs | 64 | 37 | 35 | 35 | 20 | 73.0 | 220.0 | |
Net loan charge-offs to average total loans | .37 % | .21 % | .19 % | .18 % | .10 % | 76.2 | 270.0 | |
Nonperforming assets at period end | $ 537 | $ 479 | $ 401 | $ 281 | $ 269 | 12.1 | 99.6 | |
Return on average allocated equity | 8.31 % | 8.24 % | 5.88 % | 9.11 % | 8.61 % | .8 | (3.5) | |
TE = Taxable Equivalent; N/M = Not Meaningful |
Selected Items Impact on Earnings(a) | ||||
(Dollars in millions, except per share amounts) | ||||
Pretax(b) | After-tax at marginal rate(b) | |||
Quarter to date results | Amount | Net Income | EPS(c) | |
Three months ended June 30, 2024 | ||||
FDIC special assessment (other expense)(d) | $ (5) | $ (4) | $ — | |
Three months ended March 31, 2024 | ||||
FDIC special assessment (other expense)(d) | (29) | (22) | (0.02) | |
Three months ended June 30, 2023 | ||||
No items | — | — | — | |
(a) | Includes items impacting results or trends during the period but are not considered non-GAAP adjustments. |
(b) | Favorable (unfavorable) impact. |
(c) | Impact to EPS reflected on a fully diluted basis. |
(d) | In November 2023, the FDIC issued a final rule implementing a special assessment on insured depository institutions to recover the loss to the FDIC's deposit insurance fund (DIF) associated with protecting uninsured depositors following the 2023 closures of Silicon Valley Bank and Signature Bank. KeyCorp recorded the initial loss estimate related to the special assessment during the fourth quarter of 2023. In late February 2024, the FDIC provided updated estimates on the uninsured deposit losses and recoverable assets related to the 2023 closures of Silicon Valley Bank and Signature Bank. KeyCorp recorded the additional expense related to the revised special assessment during the first quarter of 2024. In June 2024, Key received its quarterly invoice from the FDIC which included amounts due under the special assessment. As such, Key recorded an additional expense in the second quarter of 2024 to true-up initial estimates to the invoiced amount. |
SOURCE KeyCorp
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