KEYCORP REPORTS THIRD QUARTER 2022 NET INCOME OF $513 MILLION, OR $.55 PER DILUTED COMMON SHARE
Revenue up from the prior quarter and year-ago period
Continued loan growth driven by commercial and consumer businesses
Strong credit quality with net charge-offs to average loans of 15 basis points
Positive operating leverage compared to the prior quarter and year-ago period
CLEVELAND, Oct. 20, 2022 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $513 million, or $.55 per diluted common share for the third quarter of 2022. This compared to $504 million, or $.54 per diluted common share, for the second quarter of 2022 and $616 million, or $.65 per diluted common share, for the third quarter of 2021.
Key's results this quarter reflect the strength of our business model and disciplined risk management. Key's revenue was up 5% quarter-over-quarter, driven by loan growth across our commercial and consumer businesses, as we continue to add and deepen relationships with our clients.
We delivered positive operating leverage compared to both the prior quarter and year-ago period and remain on track to do so for the full year.
Credit quality remains strong with net charge-offs to average loans at historically low levels and nonperforming loans declining again this quarter. We remain focused on delivering sound, profitable growth by maintaining our disciplined underwriting practices.
We are committed to serving and supporting our clients through all market conditions while concurrently making progress against each of our long-term financial targets.
- Chris Gorman, Chairman and CEO
Selected Financial Highlights | |||||||
Dollars in millions, except per share data | Change 3Q22 vs. | ||||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | |||
Income (loss) from continuing operations attributable to Key common shareholders | $ 513 | $ 504 | $ 616 | 1.8 % | (16.7) % | ||
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution | .55 | .54 | .65 | 1.9 | (15.4) | ||
Return on average tangible common equity from continuing operations (a) | 21.19 % | 20.90 % | 18.55 % | N/A | N/A | ||
Return on average total assets from continuing operations | 1.14 | 1.16 | 1.41 | N/A | N/A | ||
Common Equity Tier 1 ratio (b) | 9.1 | 9.2 | 9.6 | N/A | N/A | ||
Book value at period end | $ 11.62 | $ 13.48 | $ 16.82 | (13.8) | (30.9) | ||
Net interest margin (TE) from continuing operations | 2.74 % | 2.61 % | 2.47 % | 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) | September 30, 2022 ratio is estimated. |
TE | = Taxable Equivalent, N/A = Not Applicable |
INCOME STATEMENT HIGHLIGHTS | ||||||
Revenue | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Net interest income (TE) | $ 1,203 | $ 1,104 | $ 1,025 | 9.0 % | 17.4 % | |
Noninterest income | 683 | 688 | 797 | (.7) | (14.3) | |
Total revenue | $ 1,886 | $ 1,792 | $ 1,822 | 5.2 % | 3.5 % | |
TE | = Taxable Equivalent |
Taxable-equivalent net interest income was $1.2 billion for the third quarter of 2022 and the net interest margin was 2.74%. Compared to the third quarter of 2021, net interest income increased $178 million and the net interest margin increased by 27 basis points. Net interest income benefited from higher earning asset balances, a favorable balance sheet mix, and higher interest rates. Net interest income and the net interest margin were negatively impacted by the sale of the indirect auto loan portfolio in the third quarter of 2021 and lower loan fees from the Paycheck Protection Program ("PPP").
Compared to the second quarter of 2022, taxable-equivalent net interest income increased by $99 million and the net interest margin increased by 13 basis points. Net interest income and the net interest margin benefited from higher interest rates and loan growth, partly offset by higher interest-bearing deposit costs and a decline in deposit balances. Net interest income also benefited from one additional day in the quarter.
Noninterest Income | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Trust and investment services income | $ 127 | $ 137 | $ 129 | (7.3) % | (1.6) % | |
Investment banking and debt placement fees | 154 | 149 | 235 | 3.4 | (34.5) | |
Service charges on deposit accounts | 92 | 96 | 91 | (4.2) | 1.1 | |
Operating lease income and other leasing gains | 19 | 28 | 37 | (32.1) | (48.6) | |
Corporate services income | 96 | 96 | 74 | — | 29.7 | |
Cards and payments income | 91 | 85 | 111 | 7.1 | (18.0) | |
Corporate-owned life insurance income | 33 | 35 | 33 | (5.7) | — | |
Consumer mortgage income | 14 | 14 | 33 | — | (57.6) | |
Commercial mortgage servicing fees | 44 | 45 | 34 | (2.2) | 29.4 | |
Other income | 13 | 3 | 20 | 333.3 | (35.0) | |
Total noninterest income | $ 683 | $ 688 | $ 797 | (.7) % | (14.3) % | |
Compared to the third quarter of 2021, noninterest income decreased by $114 million. The decrease was largely driven by investment banking and debt placement fees, down $81 million, reflecting a slowdown in capital markets activity. Cards and payments income decreased $20 million as a result of lower levels of prepaid card activity. Additionally, consumer mortgage income decreased $19 million, reflecting lower gain on sale margins. Partially offsetting the decrease were increases in corporate services income and commercial mortgage servicing fees, which increased $22 million and $10 million, respectively.
Compared to the second quarter of 2022, noninterest income decreased by $5 million. The decline was driven by trust and investment services income, which decreased $10 million, primarily reflecting the decline in the equity markets, and operating lease income, which declined $9 million. Partially offsetting the decrease were increases in cards and payments income and investment banking and debt placement fees, which increased $6 million and $5 million, respectively.
Noninterest Expense | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Personnel expense | $ 655 | $ 607 | $ 640 | 7.9 % | 2.3 % | |
Nonpersonnel expense | 451 | 471 | 472 | (4.2) | (4.4) | |
Total noninterest expense | $ 1,106 | $ 1,078 | $ 1,112 | 2.6 % | (.5) % | |
Key's noninterest expense was $1.1 billion for the third quarter of 2022, a decrease of $6 million from the year-ago period. Nonpersonnel expense decreased $21 million, driven by a decline in other expense and business services and professional fees, down $10 million and $9 million, respectively. Personnel expense increased $15 million, reflecting the impact of higher contract labor related to technology initiatives and a decline in deferred salaries due to lower loan originations. This was partly offset by a decrease in incentive and stock-based compensation as a result of lower production-related incentives, and a decline in employee benefits expense.
Compared to the second quarter of 2022, noninterest expense increased $28 million, driven by personnel expense, which increased $48 million. The increase in personnel expense reflects seasonal staffing levels, an increase in incentive compensation related to the relative share price change, and a decline in deferred salaries due to lower loan originations. Partly offsetting the increase in noninterest expense was a $20 million decrease in nonpersonnel expense, related to a broad-based decline across expense categories.
BALANCE SHEET HIGHLIGHTS | ||||||
Average Loans | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Commercial and industrial (a) | $ 56,151 | $ 53,858 | $ 49,868 | 4.3 % | 12.6 % | |
Other commercial loans | 22,200 | 21,173 | 19,362 | 4.9 | 14.7 | |
Total consumer loans | 36,067 | 34,107 | 30,908 | 5.7 | 16.7 | |
Total loans | $ 114,418 | $ 109,138 | $ 100,138 | 4.8 % | 14.3 % | |
(a) | Commercial and industrial average loan balances include $162 million, $153 million, and $137 million of assets from commercial credit cards at September 30, 2022, June 30, 2022, and September 30, 2021, respectively. |
Average loans were $114.4 billion for the third quarter of 2022, an increase of $14.3 billion compared to the third quarter of 2021. Commercial loans increased by $9.1 billion, reflecting core commercial and industrial loan growth, which mitigated the impact of a $4.0 billion decline in PPP balances, and an increase in commercial mortgage real estate loans. Consumer loans increased $5.2 billion, largely driven by Key's consumer mortgage business and Laurel Road, partly offset by the sale of the indirect auto loan portfolio in the third quarter of 2021.
Compared to the second quarter of 2022, average loans increased by $5.3 billion. Commercial loans increased $3.3 billion, reflecting growth in commercial and industrial loans and commercial mortgage real estate loans. Consumer loans increased $2.0 billion, driven by Key's consumer mortgage business.
Average Deposits | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Non-time deposits | $ 140,169 | $ 144,012 | $ 142,537 | (2.7) % | (1.7) % | |
Certificates of deposit ($100,000 or more) | 1,347 | 1,487 | 1,975 | (9.4) | (31.8) | |
Other time deposits | 2,713 | 1,972 | 2,404 | 37.6 | 12.9 | |
Total deposits | $ 144,229 | $ 147,471 | $ 146,916 | (2.2) % | (1.8) % | |
Cost of total deposits | .16 % | .06 % | .04 % | N/A | N/A | |
N/A | = Not Applicable |
Average deposits totaled $144.2 billion for the third quarter of 2022, a decrease of $2.7 billion compared to the year-ago quarter. The decrease reflects declines in non-operating commercial deposit balances, partially offset by an increase in retail deposits.
Compared to the second quarter of 2022, average deposits decreased by $3.2 billion, reflecting declines in retail balances and declines in non-operating commercial deposit balances relative to the prior quarter.
ASSET QUALITY | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Net loan charge-offs | $ 43 | $ 44 | $ 29 | (2.3) % | 48.3 % | |
Net loan charge-offs to average total loans | .15 % | .16 % | .11 % | N/A | N/A | |
Nonperforming loans at period end | $ 390 | $ 429 | $ 554 | (9.1) | (29.6) | |
Nonperforming assets at period end | 419 | 463 | 599 | (9.5) | (30.1) | |
Allowance for loan and lease losses | 1,144 | 1,099 | 1,084 | 4.1 | 5.5 | |
Allowance for credit losses | 1,338 | 1,272 | 1,236 | 5.2 | 8.3 | |
Provision for credit losses | 109 | 45 | (107) | 142.2 | 201.9 | |
Allowance for loan and lease losses to nonperforming loans | 293.3 % | 256.2 % | 195.7 % | N/A | N/A | |
Allowance for credit losses to nonperforming loans | 343.1 | 296.5 | 223.1 | N/A | N/A | |
N/A | = Not Applicable |
Key's provision for credit losses was $109 million, compared to a net benefit of $107 million in the third quarter of 2021 and provision of $45 million in the second quarter of 2022. The increase from prior periods reflects the change in the economic outlook.
Net loan charge-offs for the third quarter of 2022 totaled $43 million, or 0.15% of average total loans. These results compare to $29 million, or 0.11%, for the third quarter of 2021 and $44 million, or 0.16%, for the second quarter of 2022. Key's allowance for credit losses was $1.3 billion, or 1.15% of total period-end loans at September 30, 2022, compared to 1.25% at September 30, 2021, and 1.13% at June 30, 2022.
At September 30, 2022, Key's nonperforming loans totaled $390 million, which represented 0.34% of period-end portfolio loans. These results compare to 0.56% at September 30, 2021, and 0.38% at June 30, 2022. Nonperforming assets at September 30, 2022, totaled $419 million, and represented 0.36% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to 0.61% at September 30, 2021, and 0.41% at June 30, 2022.
Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at September 30, 2022.
Capital Ratios | |||
9/30/2022 | 6/30/2022 | 9/30/2021 | |
Common Equity Tier 1 (a) | 9.1 % | 9.2 % | 9.6 % |
Tier 1 risk-based capital (a) | 10.6 | 10.4 | 10.9 |
Total risk-based capital (a) | 12.7 | 12.0 | 12.7 |
Tangible common equity to tangible assets (b) | 4.3 | 5.3 | 7.0 |
Leverage (a) | 8.9 | 8.6 | 8.4 |
(a) | September 30, 2022 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 capital position remained strong in the third quarter of 2022. As shown in the preceding table, at September 30, 2022, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.1% and 10.6%, respectively. Key's tangible common equity ratio was 4.3% at September 30, 2022.
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 12 basis points.
Summary of Changes in Common Shares Outstanding | |||||||
In thousands | Change 3Q22 vs. | ||||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | |||
Shares outstanding at beginning of period | 932,643 | 932,398 | 960,276 | — % | (2.9) % | ||
Open market repurchases, repurchases under the accelerated repurchase program, and return of shares under employee compensation plans | (3) | (24) | (29,923) | (87.5) | (100.0) | ||
Shares issued under employee compensation plans (net of cancellations) | 298 | 269 | 191 | 10.8 | 56.0 | ||
Shares outstanding at end of period | 932,938 | 932,643 | 930,544 | — % | .3 % | ||
During the third quarter of 2022, Key declared a dividend of $.195 per common share. Additionally, the KeyCorp Board of Directors approved an extension of the remaining $790 million existing share repurchase authorization through the third quarter of 2023.
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 3Q22 vs. | ||||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | |||
Revenue from continuing operations (TE) | |||||||
Consumer Bank | $ 891 | $ 824 | $ 870 | 8.1 % | 2.4 % | ||
Commercial Bank | 889 | 842 | 884 | 5.6 | .6 | ||
Other (a) | 106 | 126 | 68 | (15.9) | 55.9 | ||
Total | $ 1,886 | $ 1,792 | $ 1,822 | 5.2 % | 3.5 % | ||
Income (loss) from continuing operations attributable to Key | |||||||
Consumer Bank | $ 142 | $ 107 | $ 241 | 32.7 % | (41.1) % | ||
Commercial Bank | 295 | 317 | 379 | (6.9) | (22.2) | ||
Other (a) | 103 | 106 | 23 | (2.8) | 347.8 | ||
Total | $ 540 | $ 530 | $ 643 | 1.9 % | (16.0) % | ||
(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 |
Consumer Bank | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Summary of operations | ||||||
Net interest income (TE) | $ 632 | $ 570 | $ 582 | 10.9 % | 8.6 % | |
Noninterest income | 259 | 254 | 288 | 2.0 | (10.1) | |
Total revenue (TE) | 891 | 824 | 870 | 8.1 | 2.4 | |
Provision for credit losses | 37 | 8 | (38) | 362.5 | 197.4 | |
Noninterest expense | 667 | 676 | 591 | (1.3) | 12.9 | |
Income (loss) before income taxes (TE) | 187 | 140 | 317 | 33.6 | (41.0) | |
Allocated income taxes (benefit) and TE adjustments | 45 | 33 | 76 | 36.4 | (40.8) | |
Net income (loss) attributable to Key | $ 142 | $ 107 | $ 241 | 32.7 % | (41.1) % | |
Average balances | ||||||
Loans and leases | $ 42,568 | $ 40,827 | $ 39,854 | 4.3 % | 6.8 % | |
Total assets | 45,638 | 43,877 | 43,039 | 4.0 | 6.0 | |
Deposits | 90,044 | 91,273 | 89,278 | (1.3) | .9 | |
Assets under management at period end | $ 47,846 | $ 49,003 | $ 52,867 | (2.4) % | (9.5) % | |
TE | = Taxable Equivalent |
Additional Consumer Bank Data | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Noninterest income | ||||||
Trust and investment services income | $ 99 | $ 104 | $ 105 | (4.8) % | (5.7) % | |
Service charges on deposit accounts | 56 | 59 | 56 | (5.1) | — | |
Cards and payments income | 64 | 62 | 62 | 3.2 | 3.2 | |
Consumer mortgage income | 13 | 14 | 33 | (7.1) | (60.6) | |
Other noninterest income | 27 | 15 | 32 | 80.0 | (15.6) | |
Total noninterest income | $ 259 | $ 254 | $ 288 | 2.0 % | (10.1) % | |
Average deposit balances | ||||||
NOW and money market deposit accounts | $ 56,696 | $ 57,891 | $ 56,402 | (2.1) % | .5 % | |
Savings deposits | 7,556 | 7,515 | 6,749 | .5 | 12.0 | |
Certificates of deposit ($100,000 or more) | 1,238 | 1,375 | 1,846 | (10.0) | (32.9) | |
Other time deposits | 1,838 | 1,966 | 2,398 | (6.5) | (23.4) | |
Noninterest-bearing deposits | 22,716 | 22,526 | 21,883 | .8 | 3.8 | |
Total deposits | $ 90,044 | $ 91,273 | $ 89,278 | (1.3) % | .9 % | |
Other data | ||||||
Branches | 976 | 978 | 1,000 | |||
Automated teller machines | 1,270 | 1,284 | 1,316 | |||
- Net income attributable to Key of $142 million for the third quarter of 2022, compared to $241 million for the year-ago quarter
- Taxable-equivalent net interest income increased by $50 million, or 8.6%, compared to the third quarter of 2021, driven by higher earning assets, partially offset by the sale of the indirect auto loan portfolio
- Average loans and leases increased $2.7 billion, or 6.8%, from the third quarter of 2021, driven by loan growth in consumer mortgage and Laurel Road, partly offset by the sale of the indirect auto loan portfolio
- Average deposits increased $766 million, or 0.9%, from the third quarter of 2021, driven by higher retail deposits
- Provision for credit losses increased $75 million compared to the third quarter of 2021, due to an increase in the provision in the current quarter, reflecting the change in the economic outlook, as well as a reserve release in the year-ago period as uncertainty caused by the pandemic subsided
- Noninterest income decreased $29 million from the year-ago quarter, driven by lower consumer mortgage income, reflecting lower gain on sale margins, as well as a decline in trust and investment services, reflecting lower equity markets
- Noninterest expense increased $76 million, or 12.9%, from the year-ago quarter, primarily driven by an increase in personnel expense
Commercial Bank | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Summary of operations | ||||||
Net interest income (TE) | $ 495 | $ 438 | $ 407 | 13.0 % | 21.6 % | |
Noninterest income | 394 | 404 | 477 | (2.5) | (17.4) | |
Total revenue (TE) | 889 | 842 | 884 | 5.6 | .6 | |
Provision for credit losses | 74 | 37 | (69) | 100.0 | 207.2 | |
Noninterest expense | 450 | 410 | 470 | 9.8 | (4.3) | |
Income (loss) before income taxes (TE) | 365 | 395 | 483 | (7.6) | (24.4) | |
Allocated income taxes and TE adjustments | 70 | 78 | 104 | (10.3) | (32.7) | |
Net income (loss) attributable to Key | $ 295 | $ 317 | $ 379 | (6.9) % | (22.2) % | |
Average balances | ||||||
Loans and leases | $ 71,464 | $ 67,825 | $ 59,856 | 5.4 % | 19.4 % | |
Loans held for sale | 1,036 | 1,016 | 1,190 | 2.0 | (12.9) | |
Total assets | 81,898 | 78,815 | 69,227 | 3.9 | 18.3 | |
Deposits | 52,272 | 54,846 | 56,401 | (4.7) % | (7.3) % | |
TE | = Taxable Equivalent |
Additional Commercial Bank Data | ||||||
Dollars in millions | Change 3Q22 vs. | |||||
3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||
Noninterest income | ||||||
Trust and investment services income | $ 29 | $ 33 | $ 24 | (12.1) % | 20.8 % | |
Investment banking and debt placement fees | 153 | 150 | 234 | 2.0 | (34.6) | |
Operating lease income and other leasing gains | 19 | 27 | 37 | (29.6) | (48.6) | |
Corporate services income | 89 | 87 | 67 | 2.3 | 32.8 | |
Service charges on deposit accounts | 36 | 36 | 34 | — | 5.9 | |
Cards and payments income | 19 | 23 | 44 | (17.4) | (56.8) | |
Payments and services income | 144 | 146 | 145 | (1.4) | (0.7) | |
Commercial mortgage servicing fees | 44 | 45 | 34 | (2.2) | 29.4 | |
Other noninterest income | 5 | 3 | 3 | 66.7 | 66.7 | |
Total noninterest income | $ 394 | $ 404 | $ 477 | (2.5) % | (17.4) % | |
Commercial Bank Summary of Operations (3Q22 vs. 3Q21)
- Net income attributable to Key of $295 million for the third quarter of 2022 compared to $379 million for the year-ago quarter
- Taxable-equivalent net interest income increased by $88 million, or 21.6%, compared to the third quarter of 2021, reflecting growth in commercial and industrial loans and commercial real estate loans, as well as higher interest rates
- Average loan and lease balances increased $11.6 billion, or 19.4%, compared to the third quarter of 2021, due to growth in commercial and industrial loans and commercial mortgage real estate loans
- Average deposit balances decreased $4.1 billion compared to the third quarter of 2021, driven by a decline in non-operating deposits
- Provision for credit losses increased $143 million compared to the third quarter of 2021, due to an increase in the provision in the current quarter, reflecting the change in the economic outlook, as well as a reserve release in the year-ago period as uncertainty caused by the pandemic subsided
- Noninterest income decreased $83 million from the year-ago quarter, driven by lower investment banking and debt placement fees and lower cards and payments income, partially offset by an increase in corporate services income
- Noninterest expense decreased $20 million from the third quarter of 2021, driven by lower incentive compensation and lower operating lease expense
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 $190.1 billion at September 30, 2022.
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 1,300 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, 2021, as well as in KeyCorp's subsequent SEC filings, all of which have been or will be filed with the Securities and Exchange Commission (the "SEC") and are or will be available on Key's website (www.key.com/ir) and on the SEC's website (www.sec.gov). These factors may include, among others, deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a worsening of the U.S. economy due to financial, political, or other shocks, the extensive regulation of the U.S. financial services industry, and the impact of the COVID-19 global pandemic on us, our clients, our third-party service providers, and the markets. 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 8:00 a.m. ET, on October 20, 2022. A replay of the call will be available through October 29, 2022.
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 | |
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12 | Financial Highlights |
14 | GAAP to Non-GAAP Reconciliation |
16 | Consolidated Balance Sheets |
17 | Consolidated Statements of Income |
18 | Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations |
20 | Noninterest Expense |
20 | Personnel Expense |
21 | Loan Composition |
21 | Loans Held for Sale Composition |
21 | Summary of Changes in Loans Held for Sale |
21 | Summary of Loan and Lease Loss Experience From Continuing Operations |
23 | Asset Quality Statistics From Continuing Operations |
23 | Summary of Nonperforming Assets and Past Due Loans From Continuing Operations |
23 | Summary of Changes in Nonperforming Loans From Continuing Operations |
24 | Line of Business Results |
Financial Highlights | |||||
(Dollars in millions, except per share amounts) | |||||
Three months ended | |||||
9/30/2022 | 6/30/2022 | 9/30/2021 | |||
Summary of operations | |||||
Net interest income (TE) | $ 1,203 | $ 1,104 | $ 1,025 | ||
Noninterest income | 683 | 688 | 797 | ||
Total revenue (TE) | 1,886 | 1,792 | 1,822 | ||
Provision for credit losses | 109 | 45 | (107) | ||
Noninterest expense | 1,106 | 1,078 | 1,112 | ||
Income (loss) from continuing operations attributable to Key | 540 | 530 | 643 | ||
Income (loss) from discontinued operations, net of taxes | 2 | 3 | 2 | ||
Net income (loss) attributable to Key | 542 | 533 | 645 | ||
Income (loss) from continuing operations attributable to Key common shareholders | 513 | 504 | 616 | ||
Income (loss) from discontinued operations, net of taxes | 2 | 3 | 2 | ||
Net income (loss) attributable to Key common shareholders | 515 | 507 | 618 | ||
Per common share | |||||
Income (loss) from continuing operations attributable to Key common shareholders | $ .55 | $ .54 | $ .65 | ||
Income (loss) from discontinued operations, net of taxes | — | — | — | ||
Net income (loss) attributable to Key common shareholders (a) | .55 | .55 | .66 | ||
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution | .55 | .54 | .65 | ||
Income (loss) from discontinued operations, net of taxes — assuming dilution | — | — | — | ||
Net income (loss) attributable to Key common shareholders — assuming dilution (a) | .55 | .54 | .65 | ||
Cash dividends declared | .195 | .195 | .185 | ||
Book value at period end | 11.62 | 13.48 | 16.82 | ||
Tangible book value at period end | 8.56 | 10.40 | 13.80 | ||
Market price at period end | 16.02 | 17.23 | 21.62 | ||
Performance ratios | |||||
From continuing operations: | |||||
Return on average total assets | 1.14 % | 1.16 % | 1.41 % | ||
Return on average common equity | 16.33 | 16.17 | 15.28 | ||
Return on average tangible common equity (b) | 21.19 | 20.90 | 18.55 | ||
Net interest margin (TE) | 2.74 | 2.61 | 2.47 | ||
Cash efficiency ratio (b) | 58.0 | 59.5 | 60.2 | ||
From consolidated operations: | |||||
Return on average total assets | 1.14 % | 1.16 % | 1.41 % | ||
Return on average common equity | 16.39 | 16.27 | 15.33 | ||
Return on average tangible common equity (b) | 21.28 | 21.03 | 18.61 | ||
Net interest margin (TE) | 2.73 | 2.60 | 2.46 | ||
Loan to deposit (c) | 81.3 | 78.3 | 66.5 | ||
Capital ratios at period end | |||||
Key shareholders' equity to assets | 7.0 % | 7.7 % | 9.4 % | ||
Key common shareholders' equity to assets | 5.7 | 6.7 | 8.4 | ||
Tangible common equity to tangible assets (b) | 4.3 | 5.3 | 7.0 | ||
Common Equity Tier 1 (d) | 9.1 | 9.2 | 9.6 | ||
Tier 1 risk-based capital (d) | 10.6 | 10.4 | 10.9 | ||
Total risk-based capital (d) | 12.7 | 12.0 | 12.7 | ||
Leverage (d) | 8.9 | 8.6 | 8.4 | ||
Asset quality — from continuing operations | |||||
Net loan charge-offs | $ 43 | $ 44 | $ 29 | ||
Net loan charge-offs to average loans | .15 % | .16 % | .11 % | ||
Allowance for loan and lease losses | $ 1,144 | $ 1,099 | $ 1,084 | ||
Allowance for credit losses | 1,338 | 1,272 | 1,236 | ||
Allowance for loan and lease losses to period-end loans | .98 % | .98 % | 1.10 % | ||
Allowance for credit losses to period-end loans | 1.15 | 1.13 | 1.25 | ||
Allowance for loan and lease losses to nonperforming loans | 293.3 | 256.2 | 195.7 | ||
Allowance for credit losses to nonperforming loans | 343.1 | 296.5 | 223.1 | ||
Nonperforming loans at period-end | $ 390 | $ 429 | $ 554 | ||
Nonperforming assets at period-end | 419 | 463 | 599 | ||
Nonperforming loans to period-end portfolio loans | .34 % | .38 % | .56 % | ||
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets | .36 | .41 | .61 | ||
Trust assets | |||||
Assets under management | $ 47,846 | $ 49,003 | $ 52,867 | ||
Other data | |||||
Average full-time equivalent employees | 17,907 | 17,414 | 17,009 | ||
Branches | 976 | 978 | 1,000 | ||
Taxable-equivalent adjustment | $ 7 | $ 7 | $ 9 | ||
Financial Highlights (continued) | |||
(Dollars in millions, except per share amounts) | |||
Nine months ended | |||
9/30/2022 | 9/30/2021 | ||
Summary of operations | |||
Net interest income (TE) | $ 3,327 | $ 3,060 | |
Noninterest income | 2,047 | 2,285 | |
Total revenue (TE) | 5,374 | 5,345 | |
Provision for credit losses | 237 | (422) | |
Noninterest expense | 3,254 | 3,259 | |
Income (loss) from continuing operations attributable to Key | 1,517 | 1,985 | |
Income (loss) from discontinued operations, net of taxes | 6 | 11 | |
Net income (loss) attributable to Key | 1,523 | 1,996 | |
Income (loss) from continuing operations attributable to Key common shareholders | 1,437 | 1,905 | |
Income (loss) from discontinued operations, net of taxes | 6 | 11 | |
Net income (loss) attributable to Key common shareholders | 1,443 | 1,916 | |
Per common share | |||
Income (loss) from continuing operations attributable to Key common shareholders | $ 1.55 | $ 1.99 | |
Income (loss) from discontinued operations, net of taxes | .01 | .01 | |
Net income (loss) attributable to Key common shareholders (a) | 1.56 | 2.00 | |
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution | 1.54 | 1.98 | |
Income (loss) from discontinued operations, net of taxes — assuming dilution | .01 | .01 | |
Net income (loss) attributable to Key common shareholders — assuming dilution (a) | 1.55 | 1.99 | |
Cash dividends paid | .59 | .56 | |
Performance ratios | |||
From continuing operations: | |||
Return on average total assets | 1.10 % | 1.50 % | |
Return on average common equity | 14.48 | 15.98 | |
Return on average tangible common equity (b) | 18.41 | 19.43 | |
Net interest margin (TE) | 2.60 | 2.53 | |
Cash efficiency ratio (b) | 59.9 | 60.1 | |
From consolidated operations: | |||
Return on average total assets | 1.10 % | 1.50 % | |
Return on average common equity | 14.54 | 16.07 | |
Return on average tangible common equity (b) | 18.49 | 19.54 | |
Net interest margin (TE) | 2.60 | 2.52 | |
Asset quality — from continuing operations | |||
Net loan charge-offs | $ 120 | $ 165 | |
Net loan charge-offs to average total loans | .15 % | .22 % | |
Other data | |||
Average full-time equivalent employees | 17,477 | 17,034 | |
Taxable-equivalent adjustment | 20 | 22 | |
(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) | September 30, 2022, 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 | Nine months ended | |||||
9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||
Tangible common equity to tangible assets at period-end | ||||||
Key shareholders' equity (GAAP) | $ 13,290 | $ 14,427 | $ 17,510 | |||
Less: Intangible assets (a) | 2,856 | 2,868 | 2,814 | |||
Preferred Stock (b) | 2,446 | 1,856 | 1,856 | |||
Tangible common equity (non-GAAP) | $ 7,988 | $ 9,703 | $ 12,840 | |||
Total assets (GAAP) | $ 190,051 | $ 187,008 | $ 187,035 | |||
Less: Intangible assets (a) | 2,856 | 2,868 | 2,814 | |||
Tangible assets (non-GAAP) | $ 187,195 | $ 184,140 | $ 184,221 | |||
Tangible common equity to tangible assets ratio (non-GAAP) | 4.27 % | 5.27 % | 6.97 % | |||
Pre-provision net revenue | ||||||
Net interest income (GAAP) | $ 1,196 | $ 1,097 | $ 1,016 | $ 3,307 | $ 3,038 | |
Plus: Taxable-equivalent adjustment | 7 | 7 | 9 | 20 | 22 | |
Noninterest income | 683 | 688 | 797 | 2,047 | 2,285 | |
Less: Noninterest expense | 1,106 | 1,078 | 1,112 | 3,254 | 3,259 | |
Pre-provision net revenue from continuing operations (non-GAAP) | $ 780 | $ 714 | $ 710 | $ 2,120 | $ 2,086 | |
Average tangible common equity | ||||||
Average Key shareholders' equity (GAAP) | $ 14,614 | $ 14,398 | $ 17,899 | $ 15,256 | $ 17,843 | |
Less: Intangible assets (average) (c) | 2,863 | 2,827 | 2,823 | 2,835 | 2,834 | |
Preferred stock (average) | 2,148 | 1,900 | 1,900 | 1,984 | 1,900 | |
Average tangible common equity (non-GAAP) | $ 9,603 | $ 9,671 | $ 13,176 | $ 10,437 | $ 13,109 | |
Return on average tangible common equity from continuing operations | ||||||
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) | $ 513 | $ 504 | $ 616 | $ 1,437 | $ 1,905 | |
Average tangible common equity (non-GAAP) | 9,603 | 9,671 | 13,176 | 10,437 | 13,109 | |
Return on average tangible common equity from continuing operations (non-GAAP) | 21.19 % | 20.90 % | 18.55 % | 18.41 % | 19.43 % | |
Return on average tangible common equity consolidated | ||||||
Net income (loss) attributable to Key common shareholders (GAAP) | $ 515 | $ 507 | $ 618 | $ 1,443 | $ 1,916 | |
Average tangible common equity (non-GAAP) | 9,603 | 9,671 | 13,176 | 10,437 | 13,109 | |
Return on average tangible common equity consolidated (non-GAAP) | 21.28 % | 21.03 % | 18.61 % | 18.49 % | 19.54 % | |
GAAP to Non-GAAP Reconciliations (continued) | ||||||
(Dollars in millions) | ||||||
Three months ended | Nine months ended | |||||
9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||
Cash efficiency ratio | ||||||
Noninterest expense (GAAP) | $ 1,106 | $ 1,078 | $ 1,112 | $ 3,254 | $ 3,259 | |
Less: Intangible asset amortization | 12 | 12 | 15 | 35 | 44 | |
Adjusted noninterest expense (non-GAAP) | $ 1,094 | $ 1,066 | $ 1,097 | $ 3,219 | $ 3,215 | |
Net interest income (GAAP) | $ 1,196 | $ 1,097 | $ 1,016 | $ 3,307 | $ 3,038 | |
Plus: Taxable-equivalent adjustment | 7 | 7 | 9 | 20 | 22 | |
Noninterest income | 683 | 688 | 797 | 2,047 | 2,285 | |
Total taxable-equivalent revenue (non-GAAP) | $ 1,886 | $ 1,792 | $ 1,822 | $ 5,374 | $ 5,345 | |
Cash efficiency ratio (non-GAAP) | 58.0 % | 59.5 % | 60.2 % | 59.9 % | 60.1 % | |
(a) | For the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, intangible assets exclude $2 million, $2 million, and $3 million, respectively, of period-end purchased credit card receivables. |
(b) | Net of capital surplus. |
(c) | For the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, average intangible assets exclude $2 million, $2 million, and $3 million, respectively, of average purchased credit card receivables. For the nine months ended September 30, 2022, and September 30, 2021, average intangible assets exclude $2 million, and $4 million, respectively, of average purchased credit card receivables. |
GAAP | = U.S. generally accepted accounting principles |
Consolidated Balance Sheets | |||||
(Dollars in millions) | |||||
9/30/2022 | 6/30/2022 | 9/30/2021 | |||
Assets | |||||
Loans | $ 116,191 | $ 112,390 | $ 98,609 | ||
Loans held for sale | 1,048 | 1,306 | 1,805 | ||
Securities available for sale | 40,000 | 42,437 | 40,594 | ||
Held-to-maturity securities | 8,163 | 8,186 | 8,423 | ||
Trading account assets | 1,068 | 809 | 902 | ||
Short-term investments | 4,896 | 2,456 | 19,608 | ||
Other investments | 1,272 | 969 | 607 | ||
Total earning assets | 172,638 | 168,553 | 170,548 | ||
Allowance for loan and lease losses | (1,144) | (1,099) | (1,084) | ||
Cash and due from banks | 717 | 678 | 763 | ||
Premises and equipment | 629 | 638 | 678 | ||
Goodwill | 2,752 | 2,752 | 2,673 | ||
Other intangible assets | 106 | 118 | 144 | ||
Corporate-owned life insurance | 4,351 | 4,343 | 4,312 | ||
Accrued income and other assets | 9,535 | 10,529 | 8,404 | ||
Discontinued assets | 467 | 496 | 597 | ||
Total assets | $ 190,051 | $ 187,008 | $ 187,035 | ||
Liabilities | |||||
Deposits in domestic offices: | |||||
NOW and money market deposit accounts | $ 84,168 | $ 83,628 | $ 87,242 | ||
Savings deposits | 7,860 | 7,934 | 7,259 | ||
Certificates of deposit ($100,000 or more) | 1,269 | 1,421 | 1,890 | ||
Other time deposits | 4,578 | 1,909 | 2,315 | ||
Total interest-bearing deposits | 97,875 | 94,892 | 98,706 | ||
Noninterest-bearing deposits | 46,980 | 50,973 | 53,225 | ||
Total deposits | 144,855 | 145,865 | 151,931 | ||
Federal funds purchased and securities sold under repurchase agreements | 4,224 | 3,234 | 228 | ||
Bank notes and other short-term borrowings | 4,576 | 2,809 | 767 | ||
Accrued expense and other liabilities | 4,849 | 4,056 | 3,434 | ||
Long-term debt | 18,257 | 16,617 | 13,165 | ||
Total liabilities | 176,761 | 172,581 | 169,525 | ||
Equity | |||||
Preferred stock | 2,500 | 1,900 | 1,900 | ||
Common shares | 1,257 | 1,257 | 1,257 | ||
Capital surplus | 6,257 | 6,241 | 6,141 | ||
Retained earnings | 15,450 | 15,118 | 14,133 | ||
Treasury stock, at cost | (5,917) | (5,923) | (5,876) | ||
Accumulated other comprehensive income (loss) | (6,257) | (4,166) | (45) | ||
Key shareholders' equity | 13,290 | 14,427 | 17,510 | ||
Total liabilities and equity | $ 190,051 | $ 187,008 | $ 187,035 | ||
Common shares outstanding (000) | 932,938 | 932,643 | 930,544 | ||
Consolidated Statements of Income | ||||||||
(Dollars in millions, except per share amounts) | ||||||||
Three months ended | Nine months ended | |||||||
9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||||
Interest income | ||||||||
Loans | $ 1,134 | $ 923 | $ 882 | $ 2,894 | $ 2,659 | |||
Loans held for sale | 14 | 10 | 13 | 36 | 35 | |||
Securities available for sale | 196 | 188 | 135 | 557 | 398 | |||
Held-to-maturity securities | 55 | 48 | 43 | 149 | 133 | |||
Trading account assets | 8 | 7 | 4 | 21 | 14 | |||
Short-term investments | 32 | 13 | 9 | 49 | 20 | |||
Other investments | 5 | 4 | 1 | 11 | 5 | |||
Total interest income | 1,444 | 1,193 | 1,087 | 3,717 | 3,264 | |||
Interest expense | ||||||||
Deposits | 59 | 20 | 15 | 93 | 52 | |||
Federal funds purchased and securities sold under repurchase agreements | 19 | 6 | — | 25 | — | |||
Bank notes and other short-term borrowings | 24 | 9 | 2 | 36 | 6 | |||
Long-term debt | 146 | 61 | 54 | 256 | 168 | |||
Total interest expense | 248 | 96 | 71 | 410 | 226 | |||
Net interest income | 1,196 | 1,097 | 1,016 | 3,307 | 3,038 | |||
Provision for credit losses | 109 | 45 | (107) | 237 | (422) | |||
Net interest income after provision for credit losses | 1,087 | 1,052 | 1,123 | 3,070 | 3,460 | |||
Noninterest income | ||||||||
Trust and investment services income | 127 | 137 | 129 | 400 | 395 | |||
Investment banking and debt placement fees | 154 | 149 | 235 | 466 | 614 | |||
Service charges on deposit accounts | 92 | 96 | 91 | 279 | 247 | |||
Operating lease income and other leasing gains | 19 | 28 | 37 | 79 | 111 | |||
Corporate services income | 96 | 96 | 74 | 283 | 212 | |||
Cards and payments income | 91 | 85 | 111 | 256 | 329 | |||
Corporate-owned life insurance income | 33 | 35 | 33 | 99 | 94 | |||
Consumer mortgage income | 14 | 14 | 33 | 49 | 106 | |||
Commercial mortgage servicing fees | 44 | 45 | 34 | 125 | 112 | |||
Other income | 13 | 3 | 20 | 11 | 65 | |||
Total noninterest income | 683 | 688 | 797 | 2,047 | 2,285 | |||
Noninterest expense | ||||||||
Personnel | 655 | 607 | 640 | 1,892 | 1,887 | |||
Net occupancy | 72 | 78 | 74 | 223 | 225 | |||
Computer processing | 77 | 78 | 67 | 232 | 211 | |||
Business services and professional fees | 47 | 52 | 56 | 152 | 157 | |||
Equipment | 23 | 26 | 25 | 72 | 75 | |||
Operating lease expense | 24 | 27 | 30 | 79 | 95 | |||
Marketing | 30 | 34 | 32 | 92 | 89 | |||
Other expense | 178 | 176 | 188 | 512 | 520 | |||
Total noninterest expense | 1,106 | 1,078 | 1,112 | 3,254 | 3,259 | |||
Income (loss) from continuing operations before income taxes | 664 | 662 | 808 | 1,863 | 2,486 | |||
Income taxes | 124 | 132 | 165 | 346 | 501 | |||
Income (loss) from continuing operations | 540 | 530 | 643 | 1,517 | 1,985 | |||
Income (loss) from discontinued operations, net of taxes | 2 | 3 | 2 | 6 | 11 | |||
Net income (loss) | 542 | 533 | 645 | 1,523 | 1,996 | |||
Less: Net income (loss) attributable to noncontrolling interests | — | — | — | — | — | |||
Net income (loss) attributable to Key | $ 542 | $ 533 | $ 645 | $ 1,523 | 1,996 | |||
Income (loss) from continuing operations attributable to Key common shareholders | $ 513 | $ 504 | $ 616 | $ 1,437 | $ 1,905 | |||
Net income (loss) attributable to Key common shareholders | 515 | 507 | 618 | 1,443 | 1,916 | |||
Per common share | ||||||||
Income (loss) from continuing operations attributable to Key common shareholders | $ .55 | $ .54 | $ .65 | $ 1.55 | $ 1.99 | |||
Income (loss) from discontinued operations, net of taxes | — | — | — | .01 | .01 | |||
Net income (loss) attributable to Key common shareholders (a) | .55 | .55 | .66 | 1.56 | 2.00 | |||
Per common share — assuming dilution | ||||||||
Income (loss) from continuing operations attributable to Key common shareholders | $ .55 | $ .54 | $ .65 | $ 1.54 | $ 1.98 | |||
Income (loss) from discontinued operations, net of taxes | — | — | — | .01 | .01 | |||
Net income (loss) attributable to Key common shareholders (a) | .55 | .54 | .65 | 1.55 | 1.99 | |||
Cash dividends declared per common share | $ .195 | $ .195 | $ .185 | $ .585 | $ .555 | |||
Weighted-average common shares outstanding (000) | 924,594 | 924,302 | 942,446 | 924,085 | 955,069 | |||
Effect of common share options and other stock awards | 7,861 | 7,506 | 10,077 | 8,679 | 9,712 | |||
Weighted-average common shares and potential common shares outstanding (000) (b) | 932,455 | 931,808 | 952,523 | 932,764 | 964,781 | |||
(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) | ||||||||||||
Third Quarter 2022 | Second Quarter 2022 | Third Quarter 2021 | ||||||||||
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) | $ 56,151 | $ 578 | 4.09 % | $ 53,858 | $ 449 | 3.34 % | $ 49,868 | $ 445 | 3.54 % | |||
Real estate — commercial mortgage | 16,002 | 168 | 4.18 | 15,231 | 136 | 3.58 | 13,306 | 120 | 3.56 | |||
Real estate — construction | 2,306 | 27 | 4.58 | 2,125 | 20 | 3.81 | 2,134 | 19 | 3.53 | |||
Commercial lease financing | 3,892 | 25 | 2.58 | 3,817 | 24 | 2.47 | 3,922 | 27 | 2.80 | |||
Total commercial loans | 78,351 | 798 | 4.05 | 75,031 | 629 | 3.36 | 69,230 | 611 | 3.50 | |||
Real estate — residential mortgage | 20,256 | 152 | 3.00 | 18,383 | 131 | 2.85 | 13,168 | 92 | 2.78 | |||
Home equity loans | 8,024 | 91 | 4.51 | 8,208 | 78 | 3.83 | 8,894 | 84 | 3.75 | |||
Consumer direct loans | 6,766 | 72 | 4.25 | 6,514 | 68 | 4.19 | 5,175 | 59 | 4.55 | |||
Credit cards | 969 | 28 | 11.63 | 943 | 24 | 10.20 | 917 | 23 | 10.07 | |||
Consumer indirect loans | 52 | — | — | 59 | — | — | 2,754 | 22 | 3.15 | |||
Total consumer loans | 36,067 | 343 | 3.80 | 34,107 | 301 | 3.53 | 30,908 | 280 | 3.60 | |||
Total loans | 114,418 | 1,141 | 3.97 | 109,138 | 930 | 3.41 | 100,138 | 891 | 3.53 | |||
Loans held for sale | 1,102 | 14 | 5.22 | 1,107 | 10 | 3.49 | 1,447 | 13 | 3.66 | |||
Securities available for sale (b), (e) | 42,271 | 196 | 1.69 | 43,023 | 188 | 1.60 | 36,923 | 135 | 1.48 | |||
Held-to-maturity securities (b) | 7,933 | 55 | 2.79 | 7,291 | 48 | 2.65 | 6,507 | 43 | 2.66 | |||
Trading account assets | 841 | 8 | 3.65 | 854 | 7 | 3.45 | 743 | 4 | 2.19 | |||
Short-term investments | 3,043 | 32 | 4.13 | 3,591 | 13 | 1.45 | 19,274 | 9 | .18 | |||
Other investments (e) | 1,054 | 5 | 1.78 | 800 | 4 | 2.27 | 614 | 1 | 0.99 | |||
Total earning assets | 170,662 | 1,451 | 3.30 | 165,804 | 1,200 | 2.83 | 165,646 | 1,096 | 2.64 | |||
Allowance for loan and lease losses | (1,099) | (1,103) | (1,222) | |||||||||
Accrued income and other assets | 18,629 | 18,826 | 16,947 | |||||||||
Discontinued assets | 478 | 505 | 618 | |||||||||
Total assets | $ 188,670 | $ 184,032 | $ 181,989 | |||||||||
Liabilities | ||||||||||||
NOW and money market deposit accounts | $ 83,050 | $ 50 | .24 | $ 85,389 | $ 18 | .08 | $ 85,333 | $ 10 | .05 | |||
Savings deposits | 7,904 | — | .01 | 7,891 | — | .01 | 7,117 | — | .01 | |||
Certificates of deposit ($100,000 or more) | 1,347 | 2 | .47 | 1,487 | 1 | .44 | 1,975 | 3 | .59 | |||
Other time deposits | 2,713 | 7 | .97 | 1,972 | 1 | .13 | 2,404 | 2 | .26 | |||
Total interest-bearing deposits | 95,014 | 59 | .25 | 96,739 | 20 | .08 | 96,829 | 15 | .06 | |||
Federal funds purchased and securities sold under repurchase agreements | 3,562 | 19 | 2.10 | 2,792 | 6 | .88 | 231 | — | .02 | |||
Bank notes and other short-term borrowings | 3,725 | 24 | 2.53 | 1,943 | 9 | 1.77 | 671 | 2 | 1.11 | |||
Long-term debt (f), (g) | 17,704 | 146 | 3.32 | 12,662 | 61 | 1.92 | 12,601 | 54 | 1.73 | |||
Total interest-bearing liabilities | 120,005 | 248 | .82 | 114,136 | 96 | .34 | 110,332 | 71 | .26 | |||
Noninterest-bearing deposits | 49,215 | 50,732 | 50,087 | |||||||||
Accrued expense and other liabilities | 4,358 | 4,261 | 3,053 | |||||||||
Discontinued liabilities (g) | 478 | 505 | 618 | |||||||||
Total liabilities | $ 174,056 | $ 169,634 | $ 164,090 | |||||||||
Equity | ||||||||||||
Key shareholders' equity | $ 14,614 | $ 14,398 | $ 17,899 | |||||||||
Noncontrolling interests | — | — | — | |||||||||
Total equity | 14,614 | 14,398 | 17,899 | |||||||||
Total liabilities and equity | $ 188,670 | $ 184,032 | $ 181,989 | |||||||||
Interest rate spread (TE) | 2.48 % | 2.50 % | 2.38 % | |||||||||
Net interest income (TE) and net interest margin (TE) | $ 1,203 | 2.74 % | $ 1,104 | 2.61 % | $ 1,025 | 2.47 % | ||||||
TE adjustment (b) | 7 | 7 | 9 | |||||||||
Net interest income, GAAP basis | $ 1,196 | $ 1,097 | $ 1,016 | |||||||||
(a) | Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology. |
(b) | Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 21% for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021. |
(c) | For purposes of these computations, nonaccrual loans are included in average loan balances. |
(d) | Commercial and industrial average balances include $162 million, $153 million, and $137 million of assets from commercial credit cards for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. |
(e) | Yield is calculated on the basis of amortized cost. |
(f) | Rate calculation excludes basis adjustments related to fair value hedges. |
(g) | A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying Key's matched funds transfer pricing methodology to discontinued operations. |
TE | = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles |
Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations | |||||||||
(Dollars in millions) | |||||||||
Nine months ended September 30, 2022 | Nine months ended September 30, 2021 | ||||||||
Average | Yield/ | Average | Yield/ | ||||||
Balance | Interest (a) | Rate (a) | Balance | Interest (a) | Rate (a) | ||||
Assets | |||||||||
Loans: (b), (c) | |||||||||
Commercial and industrial (d) | $ 53,878 | $ 1,437 | 3.57 % | $ 51,410 | $ 1,347 | 3.50 % | |||
Real estate — commercial mortgage | 15,278 | 425 | 3.72 | 12,932 | 351 | 3.63 | |||
Real estate — construction | 2,154 | 64 | 3.95 | 2,111 | 58 | 3.65 | |||
Commercial lease financing | 3,883 | 72 | 2.48 | 4,041 | 89 | 2.93 | |||
Total commercial loans | 75,193 | 1,998 | 3.55 | 70,494 | 1,845 | 3.50 | |||
Real estate — residential mortgage | 18,331 | 395 | 2.87 | 11,320 | 246 | 2.89 | |||
Home equity loans | 8,191 | 244 | 3.98 | 9,089 | 257 | 3.78 | |||
Consumer direct loans | 6,414 | 201 | 4.20 | 4,969 | 173 | 4.65 | |||
Credit cards | 948 | 76 | 10.75 | 919 | 69 | 10.10 | |||
Consumer indirect loans | 67 | — | — | 3,771 | 91 | 3.22 | |||
Total consumer loans | 33,951 | 916 | 3.60 | 30,068 | 836 | 3.71 | |||
Total loans | 109,144 | 2,914 | 3.57 | 100,562 | 2,681 | 3.56 | |||
Loans held for sale | 1,230 | 36 | 3.94 | 1,531 | 35 | 3.03 | |||
Securities available for sale (b), (e) | 43,396 | 557 | 1.60 | 33,553 | 398 | 1.60 | |||
Held-to-maturity securities (b) | 7,473 | 149 | 2.66 | 6,713 | 133 | 2.64 | |||
Trading account assets | 846 | 21 | 3.28 | 809 | 14 | 2.30 | |||
Short-term investments | 4,636 | 49 | 1.42 | 18,211 | 20 | .15 | |||
Other investments (e) | 836 | 11 | 1.80 | 616 | 5 | 1.14 | |||
Total earning assets | 167,561 | 3,737 | 2.92 | 161,995 | 3,286 | 2.71 | |||
Allowance for loan and lease losses | (1,087) | (1,427) | |||||||
Accrued income and other assets | 18,315 | 16,626 | |||||||
Discontinued assets | 507 | 651 | |||||||
Total assets | $ 185,296 | $ 177,845 | |||||||
Liabilities | |||||||||
NOW and money market deposit accounts | $ 85,632 | $ 79 | .12 | $ 83,599 | $ 30 | .05 | |||
Savings deposits | 7,799 | 1 | .01 | 6,730 | 1 | .02 | |||
Certificates of deposit ($100,000 or more) | 1,490 | 5 | .45 | 2,250 | 13 | .77 | |||
Other time deposits | 2,263 | 8 | .48 | 2,644 | 8 | .41 | |||
Total interest-bearing deposits | 97,184 | 93 | .13 | 95,223 | 52 | .07 | |||
Federal funds purchased and securities sold under repurchase agreements | 2,226 | 25 | 1.51 | 242 | — | .03 | |||
Bank notes and other short-term borrowings | 2,135 | 36 | 2.24 | 764 | 6 | .96 | |||
Long-term debt (f), (g) | 13,757 | 256 | 2.49 | 12,469 | 168 | 1.80 | |||
Total interest-bearing liabilities | 115,302 | 410 | .48 | 108,698 | 226 | .28 | |||
Noninterest-bearing deposits | 50,082 | 47,800 | |||||||
Accrued expense and other liabilities | 4,149 | 2,853 | |||||||
Discontinued liabilities (g) | 507 | 651 | |||||||
Total liabilities | $ 170,040 | $ 160,002 | |||||||
Equity | |||||||||
Key shareholders' equity | $ 15,256 | $ 17,843 | |||||||
Noncontrolling interests | — | — | |||||||
Total equity | 15,256 | 17,843 | |||||||
Total liabilities and equity | $ 185,296 | $ 177,845 | |||||||
Interest rate spread (TE) | 2.45 % | 2.44 % | |||||||
Net interest income (TE) and net interest margin (TE) | $ 3,327 | 2.60 % | $ 3,060 | 2.53 % | |||||
TE adjustment (b) | 20 | 22 | |||||||
Net interest income, GAAP basis | $ 3,307 | $ 3,038 | |||||||
(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 nine months ended September 30, 2022, and September 30, 2021, respectively. |
(c) | For purposes of these computations, nonaccrual loans are included in average loan balances. |
(d) | Commercial and industrial average balances include $152 million and $131 million of assets from commercial credit cards for the nine months ended September 30, 2022, and September 30, 2021, respectively. |
(e) | Yield is calculated on the basis of amortized cost. |
(f) | Rate calculation excludes basis adjustments related to fair value hedges. |
(g) | A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying Key's matched funds transfer pricing methodology to discontinued operations. |
TE | = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles |
Noninterest Expense | ||||||
(Dollars in millions) | ||||||
Three months ended | Nine months ended | |||||
9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||
Personnel (a) | $ 655 | $ 607 | $ 640 | $ 1,892 | $ 1,887 | |
Net occupancy | 72 | 78 | 74 | 223 | 225 | |
Computer processing | 77 | 78 | 67 | 232 | 211 | |
Business services and professional fees | 47 | 52 | 56 | 152 | 157 | |
Equipment | 23 | 26 | 25 | 72 | 75 | |
Operating lease expense | 24 | 27 | 30 | 79 | 95 | |
Marketing | 30 | 34 | 32 | 92 | 89 | |
Other expense | 178 | 176 | 188 | 512 | 520 | |
Total noninterest expense | $ 1,106 | $ 1,078 | $ 1,112 | $ 3,254 | $ 3,259 | |
Average full-time equivalent employees (b) | 17,907 | 17,414 | 17,009 | 17,477 | 17,034 | |
(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 | Nine months ended | |||||
9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||
Salaries and contract labor | $ 388 | $ 357 | $ 328 | $ 1,093 | $ 969 | |
Incentive and stock-based compensation | 176 | 163 | 212 | 522 | 618 | |
Employee benefits | 89 | 83 | 100 | 269 | 299 | |
Severance | 2 | 4 | — | 8 | 1 | |
Total personnel expense | $ 655 | $ 607 | $ 640 | $ 1,892 | $ 1,887 | |
Loan Composition | ||||||
(Dollars in millions) | ||||||
Change 9/30/2022 vs | ||||||
9/30/2022 | 6/30/2022 | 9/30/2021 | 6/30/2022 | 9/30/2021 | ||
Commercial and industrial (a) | $ 56,971 | $ 55,245 | $ 49,553 | 3.1 % | 15.0 % | |
Commercial real estate: | ||||||
Commercial mortgage | 16,400 | 15,636 | 13,674 | 4.9 | 19.9 | |
Construction | 2,349 | 2,144 | 2,120 | 9.6 | 10.8 | |
Total commercial real estate loans | 18,749 | 17,780 | 15,794 | 5.4 | 18.7 | |
Commercial lease financing (b) | 3,877 | 3,956 | 3,982 | (2.0) | (2.6) | |
Total commercial loans | 79,597 | 76,981 | 69,329 | 3.4 | 14.8 | |
Residential — prime loans: | ||||||
Real estate — residential mortgage | 20,838 | 19,588 | 14,204 | 6.4 | 46.7 | |
Home equity loans | 7,926 | 8,134 | 8,747 | (2.6) | (9.4) | |
Total residential — prime loans | 28,764 | 27,722 | 22,951 | 3.8 | 25.3 | |
Consumer direct loans | 6,803 | 6,665 | 5,324 | 2.1 | 27.8 | |
Credit cards | 977 | 967 | 928 | 1.0 | 5.3 | |
Consumer indirect loans | 50 | 55 | 77 | (9.1) | (35.1) | |
Total consumer loans | 36,594 | 35,409 | 29,280 | 3.3 | 25.0 | |
Total loans (c), (d) | $ 116,191 | $ 112,390 | $ 98,609 | 3.4 % | 17.8 % | |
(a) | Loan balances include $166 million, $161 million, and $139 million of commercial credit card balances at September 30, 2022, June 30, 2022, and September 30, 2021, respectively. |
(b) | Commercial lease financing includes receivables held as collateral for a secured borrowing of $10 million, $12 million, and $16 million at September 30, 2022, June 30, 2022, and September 30, 2021, respectively. Principal reductions are based on the cash payments received from these related receivables. |
(c) | Total loans exclude loans of $467 million at September 30, 2022, $498 million at June 30, 2022, and $602 million at September 30, 2021, related to the discontinued operations of the education lending business. |
(d) | Accrued interest of $274 million, $233 million, and $212 million at September 30, 2022, June 30, 2022, and September 30, 2021, 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 9/30/2022 vs | ||||||
9/30/2022 | 6/30/2022 | 9/30/2021 | 6/30/2022 | 9/30/2021 | ||
Commercial and industrial | $ 292 | $ 213 | $ 122 | 37.1 % | 139.3 % | |
Real estate — commercial mortgage | 693 | 1,004 | 1,446 | (31.0) | (52.1) | |
Real estate — construction | — | 6 | — | N/M | N/M | |
Commercial lease financing | 2 | — | — | N/M | N/M | |
Real estate — residential mortgage | 61 | 83 | 237 | (26.5) | (74.3) | |
Total loans held for sale | $ 1,048 | $ 1,306 | $ 1,805 | (19.8) % | (41.9) % | |
N/M | = Not Meaningful |
Summary of Changes in Loans Held for Sale | |||||
(Dollars in millions) | |||||
3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | |
Balance at beginning of period | $ 1,306 | $ 1,170 | $ 2,729 | $ 1,805 | $ 1,537 |
New originations | 2,157 | 2,837 | 2,724 | 5,704 | 3,328 |
Transfers from (to) held to maturity, net | — | (57) | — | (1) | 3305 |
Loan sales | (2,446) | (2,506) | (4,269) | (4,742) | (6,405) |
Loan draws (payments), net | 26 | (133) | (12) | (12) | 8 |
Valuation and other adjustments | 5 | (5) | (2) | (25) | 32 |
Balance at end of period | $ 1,048 | $ 1,306 | $ 1,170 | $ 2,729 | $ 1,805 |
Summary of Loan and Lease Loss Experience From Continuing Operations | ||||||
(Dollars in millions) | ||||||
Three months ended | Nine months ended | |||||
9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||
Average loans outstanding | $ 114,418 | $ 109,138 | $ 100,138 | $ 109,144 | $ 100,562 | |
Allowance for loan and lease losses at the beginning of the period | 1,099 | 1,105 | 1,220 | 1,061 | 1,626 | |
Loans charged off: | ||||||
Commercial and industrial | 49 | 39 | 27 | 118 | 141 | |
Real estate — commercial mortgage | 3 | 3 | — | 10 | 39 | |
Real estate — construction | — | — | — | — | — | |
Total commercial real estate loans | 3 | 3 | — | 10 | 39 | |
Commercial lease financing | — | — | 1 | 2 | 5 | |
Total commercial loans | 52 | 42 | 28 | 130 | 185 | |
Real estate — residential mortgage | 1 | (2) | (2) | (2) | (1) | |
Home equity loans | — | — | 1 | 1 | 7 | |
Consumer direct loans | 8 | 10 | 7 | 25 | 22 | |
Credit cards | 7 | 8 | 6 | 22 | 21 | |
Consumer indirect loans | — | 1 | 26 | 2 | 38 | |
Total consumer loans | 16 | 17 | 38 | 48 | 87 | |
Total loans charged off | 68 | 59 | 66 | 178 | 272 | |
Recoveries: | ||||||
Commercial and industrial | 13 | 8 | 20 | 32 | 60 | |
Real estate — commercial mortgage | 2 | 1 | 1 | 4 | 8 | |
Real estate — construction | — | 1 | — | 1 | — | |
Total commercial real estate loans | 2 | 2 | 1 | 5 | 8 | |
Commercial lease financing | 1 | 1 | 6 | 2 | 7 | |
Total commercial loans | 16 | 11 | 27 | 39 | 75 | |
Real estate — residential mortgage | 1 | 1 | 1 | 2 | 2 | |
Home equity loans | 1 | 1 | 2 | 3 | 4 | |
Consumer direct loans | 4 | 1 | 2 | 7 | 6 | |
Credit cards | 2 | 1 | 1 | 5 | 6 | |
Consumer indirect loans | 1 | — | 4 | 2 | 14 | |
Total consumer loans | 9 | 4 | 10 | 19 | 32 | |
Total recoveries | 25 | 15 | 37 | 58 | 107 | |
Net loan charge-offs | (43) | (44) | (29) | (120) | (165) | |
Provision (credit) for loan and lease losses | 88 | 38 | (107) | 203 | (377) | |
Allowance for loan and lease losses at end of period | $ 1,144 | $ 1,099 | $ 1,084 | $ 1,144 | $ 1,084 | |
Liability for credit losses on lending-related commitments at beginning of period | 173 | 166 | 152 | 160 | 197 | |
Provision (credit) for losses on lending-related commitments | 21 | 7 | — | 34 | (45) | |
Liability for credit losses on lending-related commitments at end of period (a) | $ 194 | $ 173 | $ 152 | $ 194 | $ 152 | |
Total allowance for credit losses at end of period | $ 1,338 | $ 1,272 | $ 1,236 | $ 1,338 | $ 1,236 | |
Net loan charge-offs to average total loans | .15 % | .16 % | .11 % | .15 % | .22 % | |
Allowance for loan and lease losses to period-end loans | .98 | .98 | 1.10 | .98 | 1.10 | |
Allowance for credit losses to period-end loans | 1.15 | 1.13 | 1.25 | 1.15 | 1.25 | |
Allowance for loan and lease losses to nonperforming loans | 293.3 | 256.2 | 195.7 | 293.3 | 195.7 | |
Allowance for credit losses to nonperforming loans | 343.1 | 296.5 | 223.1 | 343.1 | 223.1 | |
Discontinued operations — education lending business: | ||||||
Loans charged off | $ 1 | $ 1 | $ 1 | $ 4 | $ 3 | |
Recoveries | 1 | 1 | 1 | 2 | 2 | |
Net loan charge-offs | $ — | $ — | $ — | $ (2) | $ (1) | |
(a) | Included in "Accrued expense and other liabilities" on the balance sheet. |
Asset Quality Statistics From Continuing Operations | |||||
(Dollars in millions) | |||||
3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | |
Net loan charge-offs | $ 43 | $ 44 | $ 33 | $ 19 | $ 29 |
Net loan charge-offs to average total loans | .15 % | .16 % | .13 % | .08 % | .11 % |
Allowance for loan and lease losses | $ 1,144 | $ 1,099 | $ 1,105 | $ 1,061 | $ 1,084 |
Allowance for credit losses (a) | 1,338 | 1,272 | 1,271 | 1,221 | 1,236 |
Allowance for loan and lease losses to period-end loans | .98 % | .98 % | 1.04 % | 1.04 % | 1.10 % |
Allowance for credit losses to period-end loans | 1.15 | 1.13 | 1.19 | 1.20 | 1.25 |
Allowance for loan and lease losses to nonperforming loans | 293.3 | 256.2 | 251.7 | 233.7 | 195.7 |
Allowance for credit losses to nonperforming loans | 343.1 | 296.5 | 289.5 | 268.9 | 223.1 |
Nonperforming loans at period end | $ 390 | $ 429 | $ 439 | $ 454 | $ 554 |
Nonperforming assets at period end | 419 | 463 | 467 | 489 | 599 |
Nonperforming loans to period-end portfolio loans | .34 % | .38 % | .41 % | .45 % | .56 % |
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets | .36 | .41 | .44 | .48 | .61 |
(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) | |||||
9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | |
Commercial and industrial | $ 169 | $ 197 | $ 186 | $ 191 | $ 253 |
Real estate — commercial mortgage | 34 | 35 | 40 | 44 | 49 |
Real estate — construction | — | — | — | — | — |
Total commercial real estate loans | 34 | 35 | 40 | 44 | 49 |
Commercial lease financing | 2 | 2 | 3 | 4 | 5 |
Total commercial loans | 205 | 234 | 229 | 239 | 307 |
Real estate — residential mortgage | 66 | 67 | 73 | 72 | 93 |
Home equity loans | 112 | 120 | 129 | 135 | 146 |
Consumer direct loans | 3 | 3 | 4 | 4 | 4 |
Credit cards | 3 | 3 | 3 | 3 | 3 |
Consumer indirect loans | 1 | 2 | 1 | 1 | 1 |
Total consumer loans | 185 | 195 | 210 | 215 | 247 |
Total nonperforming loans | 390 | 429 | 439 | 454 | 554 |
OREO | 12 | 9 | 8 | 8 | 8 |
Nonperforming loans held for sale | 17 | 25 | 20 | 24 | 35 |
Other nonperforming assets | — | — | — | 3 | 2 |
Total nonperforming assets | $ 419 | $ 463 | $ 467 | $ 489 | $ 599 |
Accruing loans past due 90 days or more | 47 | 41 | 55 | 68 | 82 |
Accruing loans past due 30 through 89 days | 187 | 137 | 122 | 165 | 164 |
Restructured loans — accruing and nonaccruing (a) | 254 | 216 | 219 | 220 | 270 |
Restructured loans included in nonperforming loans (a) | 134 | 94 | 98 | 99 | 146 |
Nonperforming assets from discontinued operations — education lending business | 3 | 3 | 4 | 4 | 4 |
Nonperforming loans to period-end portfolio loans | .34 % | .38 % | .41 % | .45 % | .56 % |
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets | .36 | .41 | .44 | .48 | .61 |
(a) | Restructured loans (i.e., troubled debt restructuring) are those for which Key, for reasons related to a borrower's financial difficulties, grants a concession to the borrower that it would not otherwise consider. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance. |
Summary of Changes in Nonperforming Loans From Continuing Operations | |||||
(Dollars in millions) | |||||
3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | |
Balance at beginning of period | $ 429 | $ 439 | $ 454 | $ 554 | $ 694 |
Loans placed on nonaccrual status | 80 | 118 | 87 | 116 | 116 |
Charge-offs | (68) | (59) | (50) | (51) | (66) |
Loans sold | (3) | (8) | — | (38) | (17) |
Payments | (29) | (35) | (27) | (68) | (136) |
Transfers to OREO | (1) | (2) | (1) | (1) | (1) |
Loans returned to accrual status | (18) | (24) | (24) | (58) | (36) |
Balance at end of period | $ 390 | $ 429 | $ 439 | $ 454 | $ 554 |
Line of Business Results | ||||||||
(Dollars in millions) | ||||||||
Change 3Q22 vs. | ||||||||
3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | ||
Consumer Bank | ||||||||
Summary of operations | ||||||||
Total revenue (TE) | $ 891 | $ 824 | $ 799 | $ 839 | $ 870 | 8.1 % | 2.4 % | |
Provision for credit losses | 37 | 8 | 43 | 14 | (38) | 362.5 | 197.4 | |
Noninterest expense | 667 | 676 | 663 | 613 | 591 | (1.3) | 12.9 | |
Net income (loss) attributable to Key | 142 | 107 | 71 | 161 | 241 | 32.7 | (41.1) | |
Average loans and leases | 42,568 | 40,827 | 38,654 | 37,841 | 39,854 | 4.3 | 6.8 | |
Average deposits | 90,044 | 91,273 | 91,516 | 90,385 | 89,278 | (1.3) | .9 | |
Net loan charge-offs | 17 | 23 | 22 | 22 | 35 | (26.1) | (51.4) | |
Net loan charge-offs to average total loans | .16 % | .23 % | .23 % | .23 % | .35 % | (30.4) | (54.3) | |
Nonperforming assets at period end | $ 195 | $ 203 | $ 217 | $ 222 | $ 254 | (3.9) | (23.2) | |
Return on average allocated equity | 16.20 % | 11.66 % | 8.02 % | 18.05 % | 25.81 % | 38.9 | (37.2) | |
Commercial Bank | ||||||||
Summary of operations | ||||||||
Total revenue (TE) | $ 889 | $ 842 | $ 808 | $ 1027 | $ 884 | 5.6 % | .6 % | |
Provision for credit losses | 74 | 37 | 41 | (12) | (69) | 100.0 | 207.2 | |
Noninterest expense | 450 | 410 | 413 | 501 | 470 | 9.8 | (4.3) | |
Net income (loss) attributable to Key | 295 | 317 | 284 | 448 | 379 | (6.9) | (22.2) | |
Average loans and leases | 71,464 | 67,825 | 64,684 | 61,078 | 59,856 | 5.4 | 19.4 | |
Average loans held for sale | 1,036 | 1,016 | 1,323 | 1,962 | 1,190 | 2.0 | (12.9) | |
Average deposits | 52,272 | 54,846 | 57,241 | 59,423 | 56,401 | (4.7) | (7.3) | |
Net loan charge-offs | 27 | 21 | 11 | — | (6) | 28.6 | N/M | |
Net loan charge-offs to average total loans | .15 % | .12 % | .07 % | — % | (.04) % | 25.0 | N/M | |
Nonperforming assets at period end | $ 224 | $ 260 | $ 250 | $ 267 | $ 345 | (13.8) | (35.1) | |
Return on average allocated equity | 12.63 % | 14.26 % | 13.26 % | 20.94 % | 18.02 % | (11.4) | (29.9) | |
TE | = Taxable Equivalent |
SOURCE KeyCorp
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