KEY
$18.32
Keycorp
($.04)
(.22%)
Earnings Details
1st Quarter March 2022
Thursday, April 21, 2022 6:30:00 AM
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Summary

Keycorp Misses

Keycorp (KEY) reported 1st Quarter March 2022 earnings of $0.45 per share on revenue of $1.8 billion. The consensus earnings estimate was $0.48 per share on revenue of $1.8 billion. The Earnings Whisper number was $0.53 per share. Revenue fell 3.8% compared to the same quarter a year ago.

KeyCorp is a bank holding company. The Company through its subsidiaries, provides retail and commercial banking, commercial leasing, investment management, consumer finance and investment banking products and services to its clients.

Results
Reported Earnings
$0.45
Earnings Whisper
$0.53
Consensus Estimate
$0.48
Reported Revenue
$1.76 Bil
Revenue Estimate
$1.75 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

KEYCORP REPORTS FIRST QUARTER 2022 NET INCOME OF $420 MILLION, OR $.45 PER DILUTED COMMON SHARE

Strong loan growth driven by consumer and commercial businesses

Record loan originations from Laurel Road

Net interest income reflects strong loan growth and liquidity deployment

Noninterest income adversely impacted by market conditions late in the quarter

Credit quality remains strong with net charge-offs to average loans of 13 basis points

CLEVELAND, April 21, 2022 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $420 million, or $.45 per diluted common share for the first quarter of 2022. This compared to $601 million, or $.64 per diluted common share, for the fourth quarter of 2021 and $591 million, or $.61 per diluted common share, for the first quarter of 2021.

Our first quarter results reflect the resilience of our distinctive business model, strong risk management, and the impact of dynamic market conditions.

We continue to take market share in both our consumer and commercial businesses, with average loans up 4% quarter-over-quarter. We experienced continued momentum in our consumer business, driven by consumer mortgage, and another record quarter for Laurel Road which generated $820 million of loan originations. Our commercial business delivered broad-based growth across our platform. Our strong loan pipelines position us well for continued growth in 2022. Market uncertainty, resulted in lower-than-expected fee income, which impacted our investment banking business and drove market related adjustments.

The quality of our balance sheet continues to be a strength, as we focus on delivering sound, profitable growth. Credit quality remained strong this quarter, with lower nonperforming loans and net charge-offs as a percent of average loans of 13 basis points.

We remain committed to growing our businesses, making progress against each of our long-term financial targets, and delivering shareholder value through all markets and economic conditions. 

    -  Chris Gorman, Chairman and CEO

 

Selected Financial Highlights















Dollars in millions, except per share data





Change 1Q22 vs.



1Q22

4Q21

1Q21


4Q21

1Q21

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

$      420

$      601

$      591


(30.1) %

(28.9) %

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

.45

.64

.61


(29.7)

(26.2)

Return on average tangible common equity from continuing operations (a)

14.12 %

18.69 %

18.25 %


N/A

N/A

Return on average total assets from continuing operations

.99

1.34

1.44


N/A

N/A

Common Equity Tier 1 ratio (b)

9.4

9.5

9.9


N/A

N/A

Book value at period end

$   14.43

$   16.76

$   16.22


(13.9)

(11.0)

Net interest margin (TE) from continuing operations

2.46 %

2.44 %

2.61 %


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)

March 31, 2022 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

 

INCOME STATEMENT HIGHLIGHTS














Revenue














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Net interest income (TE)

$      1,020

$      1,038

$      1,012


(1.7) %

.8 %

Noninterest income

676

909

738


(25.6)

(8.4)

Total revenue

$      1,696

$      1,947

$      1,750


(12.9) %

(3.1) %








TE = Taxable Equivalent

Taxable-equivalent net interest income was $1.0 billion for the first quarter of 2022 and the net interest margin was 2.46%. Compared to the first quarter of 2021, net interest income increased $8 million, while the net interest margin decreased by 15 basis points. Net interest income and the net interest margin benefited from higher earning asset balances and a favorable balance sheet mix. Net interest income and the net interest margin were negatively impacted by lower reinvestment yields, the exit of the indirect auto loan portfolio, and lower loan fees from the Paycheck Protection Program ("PPP").

Compared to the fourth quarter of 2021, taxable-equivalent net interest income decreased by $18 million and the net interest margin increased by two basis points. Net interest income was negatively impacted by two fewer days in the first quarter of 2022. Additionally, net interest income and the net interest margin benefited from a favorable earning asset mix, including the deployment of liquidity into loans and higher-yielding investments and were negatively impacted by lower loan fees related to the PPP.

 

Noninterest Income














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Trust and investment services income

$        136

$        135

$        133


.7 %

2.3 %

Investment banking and debt placement fees

163

323

162


(49.5)

.6

Service charges on deposit accounts

91

90

73


1.1

24.7

Operating lease income and other leasing gains

32

37

38


(13.5)

(15.8)

Corporate services income

90

73

64


23.3

40.6

Cards and payments income

80

86

105


(7.0)

(23.8)

Corporate-owned life insurance income

31

34

31


(8.8)

Consumer mortgage income

21

25

47


(16.0)

(55.3)

Commercial mortgage servicing fees

36

48

34


(25.0)

5.9

Other income

(4)

58

51


(106.9)

(107.8)

Total noninterest income

$        676

$        909

$        738


(25.6) %

(8.4) %








Compared to the first quarter of 2021, noninterest income decreased by $62 million. The decrease was primarily driven by other income, down $55 million, reflecting market related adjustments. Other drivers for the decrease include consumer mortgage income and cards and payments income, down $26 million and $25 million, respectively, reflecting lower gain on sale margins and lower levels of prepaid card activity. Partially offsetting the decrease was a $26 million increase in corporate services income, driven by higher derivatives trading income and an $18 million increase in service charges on deposit accounts.

Compared to the fourth quarter of 2021, noninterest income decreased by $233 million. The primary driver was investment banking and debt placement fees, which decreased $160 million, reflecting seasonality and slowing capital markets activity late in the quarter. Other income decreased $62 million, reflecting market related adjustments. Partially offsetting the decrease was a $17 million increase in corporate services income, driven by higher derivatives trading income.

Noninterest Expense














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Personnel expense

$        630

$        674

$        624


(6.5) %

1.0 %

Nonpersonnel expense

440

496

447


(11.3)

(1.6)

Total noninterest expense

$      1,070

$      1,170

$      1,071


(8.5) %

(.1) %








 

Key's noninterest expense was $1.1 billion for the first quarter of 2022, a decrease of $1 million from the year-ago period. Nonpersonnel expense decreased $7 million, reflecting a broad-based decline across several expense categories. Personnel expense increased $6 million, driven by higher salaries from merit increases and technology contract labor, partially offset by lower incentive compensation and employee benefits expense.

Compared to the fourth quarter of 2021, noninterest expense decreased $100 million. The decrease was primarily related to a $56 million decrease in nonpersonnel expense, reflecting lower professional fees as well as lower other expense. Additionally, personnel expense decreased $44 million, primarily driven by lower incentive compensation as a result of lower investment banking and debt placement fees.

 

BALANCE SHEET HIGHLIGHTS














Average Loans














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Commercial and industrial (a)

$    51,574

$    49,510

$    52,581


4.2 %

(1.9) %

Other commercial loans

20,556

19,743

18,848


4.1

9.1

Total consumer loans

31,632

30,144

29,299


4.9

8.0

Total loans

$  103,762

$    99,397

$  100,728


4.4 %

3.0 %








(a)

Commercial and industrial average loan balances include $141 million, $141 million, and $126 million of assets from commercial credit cards at March 31, 2022, December 31, 2021, and March 31, 2021, respectively.

Average loans were $103.8 billion for the first quarter of 2022, an increase of $3.0 billion compared to the first quarter of 2021. Consumer loans increased $2.3 billion, reflecting strength from Key's consumer mortgage business and Laurel Road, partly offset by the sale of the indirect auto loan portfolio. Additionally, commercial loans increased by $701 million, reflecting strength in commercial mortgage real estate loans and core commercial and industrial loans, partially offset by a decline in PPP balances.

Compared to the fourth quarter of 2021, average loans increased by $4.4 billion. Commercial loans increased $2.9 billion, reflecting strength in commercial and industrial loans and commercial mortgage real estate loans, partially offset by a decline in PPP balances. Consumer loans increased $1.5 billion, driven by continued strength in Key's consumer mortgage business and record Laurel Road originations.

Average Deposits














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Non-time deposits

$  146,426

$  146,979

$  132,267


(.4) %

10.7 %

Certificates of deposit ($100,000 or more)

1,639

1,793

2,571


(8.6)

(36.3)

Other time deposits

2,098

2,233

2,902


(6.0)

(27.7)

Total deposits

$  150,163

$  151,005

$  137,740


(.6) %

9.0 %








Cost of total deposits

.04 %

.04 %

.06 %


N/A

N/A








N/A = Not Applicable

Average deposits totaled $150.2 billion for the first quarter of 2022, an increase of $12.4 billion compared to the year-ago quarter. The increase reflects growth from consumer and commercial relationships, including higher commercial escrow and retail deposits, partially offset by a decline in time deposits.

Compared to the fourth quarter of 2021, average deposits decreased by $842 million, driven by lower levels of commercial deposits, partly offset by seasonal retail deposit inflows.

 

ASSET QUALITY














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Net loan charge-offs

$        33

$        19

$      114


73.7 %

(71.1) %

Net loan charge-offs to average total loans

.13 %

.08 %

.46 %


N/A

N/A

Nonperforming loans at period end

$      439

$      454

$      728


(3.3)

(39.7)

Nonperforming assets at period end

467

489

790


(4.5)

(40.9)

Allowance for loan and lease losses

1,105

1,061

1,438


4.1

(23.2)

Allowance for credit losses

1,271

1,221

1,616


4.1

(21.3)

Provision for credit losses

83

4

(93)


N/M

189.2








Allowance for loan and lease losses to nonperforming loans

251.7 %

233.7 %

197.5 %


N/A

N/A

Allowance for credit losses to nonperforming loans

289.5

268.9

222.0


N/A

N/A








N/A = Not Applicable

Key's provision for credit losses was $83 million, compared to a net benefit of $93 million in the first quarter of 2021 and provision of $4 million in the fourth quarter of 2021. The increase from prior periods reflects the uncertain economic outlook arising from the Ukraine conflict, risks associated with higher inflation, and loan growth.

Net loan charge-offs for the first quarter of 2022 totaled $33 million, or .13% of average total loans. These results compare to $114 million, or .46%, for the first quarter of 2021 and $19 million, or .08%, for the fourth quarter of 2021. Key's allowance for credit losses was $1.3 billion, or 1.19% of total period-end loans at March 31, 2022, compared to 1.60% at March 31, 2021, and 1.20% at December 31, 2021.

At March 31, 2022, Key's nonperforming loans totaled $439 million, which represented .41% of period-end portfolio loans. These results compare to .72% at March 31, 2021, and .45% at December 31, 2021. Nonperforming assets at March 31, 2022, totaled $467 million, and represented .44% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .78% at March 31, 2021, and .48% at December 31, 2021.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at March 31, 2022.

 

Capital Ratios









3/31/2022

12/31/2021

3/31/2021

Common Equity Tier 1 (a)

9.4 %

9.5 %

9.9 %

Tier 1 risk-based capital (a)

10.7

10.8

11.3

Total risk based capital (a)

12.5

12.5

13.4

Tangible common equity to tangible assets (b)

6.0

6.9

7.5

Leverage (a)

8.7

8.5

8.9





(a)

March 31, 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 first quarter of 2022. As shown in the preceding table, at March 31, 2022, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.4% and 10.7%, respectively. Key's tangible common equity ratio was 6.0% at March 31, 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, with the full impact of the CECL standard being phased-in to regulatory capital over the next three years. On a fully phased-in basis, Key's Common Equity Tier 1 ratio would be reduced by 13 basis points.

Summary of Changes in Common Shares Outstanding













In thousands





Change 1Q22 vs.



1Q22

4Q21

1Q21


4Q21

1Q21

Shares outstanding at beginning of period

928,850

930,544

975,773


(.2) %

(4.8) %

Open market repurchases, repurchases under the accelerated repurchase program, and return of shares under employee compensation plans

(1,707)

(2,482)

(9,277)


(31.2)

(81.6)

Shares issued under employee compensation plans (net of cancellations)

5,255

788

6,091


566.9

(13.7)


Shares outstanding at end of period

932,398

928,850

972,587


.4 %

(4.1) %









N/M = Not Meaningful

During the first quarter of 2022, Key declared a dividend of $.195 per common share.

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 1Q22 vs.



1Q22

4Q21

1Q21


4Q21

1Q21

Revenue from continuing operations (TE)







Consumer Bank

$          799

$          839

$          864


(4.8) %

(7.5) %

Commercial Bank

810

1,028

858


(21.2)

(5.6)

Other (a)

87

80

28


8.7

210.7


Total

$        1,696

$        1,947

$        1,750


(12.9) %

(3.1) %









Income (loss) from continuing operations attributable to Key







Consumer Bank

$            70

$          161

$          217


(56.5) %

(67.7) %

Commercial Bank

283

449

383


(37.0)

(26.1)

Other (a)

94

17

18


452.9

422.2


Total

$          447

$          627

$          618


(28.7) %

(27.7) %









(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 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Summary of operations







Net interest income (TE)

$          543

$          569

$          607


(4.6) %

(10.5) %

Noninterest income

256

270

257


(5.2)

(.4)

Total revenue (TE)

799

839

864


(4.8)

(7.5)

Provision for credit losses

43

14

(23)


207.1

287.0

Noninterest expense

663

613

601


8.2

10.3

Income (loss) before income taxes (TE)

93

212

286


(56.1)

(67.5)

Allocated income taxes (benefit) and TE adjustments

23

51

69


(54.9)

(66.7)

Net income (loss) attributable to Key

$            70

$          161

$          217


(56.5) %

(67.7) %








Average balances







Loans and leases

$      38,637

$      37,792

$      39,249


2.2 %

(1.6) %

Total assets

41,814

41,024

42,476


1.9

(1.6)

Deposits

91,468

90,271

85,033


1.3

7.6








Assets under management at period end

$      53,707

$      55,806

$      48,288


(3.8) %

11.2 %








TE = Taxable Equivalent

 

Additional Consumer Bank Data














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Noninterest income







Trust and investment services income

$       106

$       106

$       101


— %

5.0 %

Service charges on deposit accounts

54

55

39


(1.8)

38.5

Cards and payments income

57

64

54


(10.9)

5.6

Consumer mortgage income

21

26

47


(19.2)

(55.3)

Other noninterest income

18

19

16


(5.3)

12.5

Total noninterest income

$       256

$       270

$       257


(5.2) %

(.4) %








Average deposit balances







NOW and money market deposit accounts

$   58,625

$   57,197

$   54,684


2.5 %

7.2 %

Savings deposits

7,233

6,951

5,878


4.1

23.1

Certificates of deposit ($100,000 or more)

1,520

1,669

2,424


(8.9)

(37.3)

Other time deposits

2,090

2,227

2,888


(6.2)

(27.6)

Noninterest-bearing deposits

22,000

22,227

19,159


(1.0)

14.8

Total deposits

$   91,468

$   90,271

$ 85,033


1.3 %

(35.1) %








Other data







Branches

993

999

1,068




Automated teller machines

1,308

1,317

1,368











 

Consumer Bank Summary of Operations (1Q22 vs. 1Q21)

  • Net income attributable to Key of $70 million for the first quarter of 2022, compared to $217 million for the year-ago quarter
  • Taxable-equivalent net interest income decreased by $64 million, compared to the first quarter of 2021, related to the sale of the indirect auto portfolio, partially offset by strong consumer mortgage and Laurel Road balance sheet growth
  • Average loans and leases decreased $612 million, or 1.6%, from the first quarter of 2021, driven by the sale of the indirect auto loan portfolio, partially offset by growth in consumer mortgage and Laurel Road
  • Average deposits increased $6.4 billion, or 7.6%, from the first quarter of 2021, driven by relationship growth and higher retail deposits
  • Provision for credit losses increased $66 million, compared to the first quarter of 2021, driven by loan growth and uncertainty in the economic environment
  • Noninterest income decreased $1 million, or 0.4%, from the year-ago quarter, driven by a decrease in consumer mortgage income, reflecting lower gain on sale margins. The decrease was partially offset by an increase in service charges on deposit accounts and trust and investment services income
  • Noninterest expense increased $62 million, or 10.3%, from the year-ago quarter, driven by an increased level of digital investments and an increase in employee compensation and benefits related expenses

 

Commercial Bank














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Summary of operations







Net interest income (TE)

$          415

$          417

$          411


(.5) %

1.0 %

Noninterest income

395

611

447


(35.4)

(11.6)

     Total revenue (TE)

810

1,028

858


(21.2)

(5.6)

Provision for credit losses

41

(12)

(67)


441.7

161.2

Noninterest expense

417

501

443


(16.8)

(5.9)

     Income (loss) before income taxes (TE)

352

539

482


(34.7)

(27.0)

Allocated income taxes and TE adjustments

69

90

99


(23.3)

(30.3)

     Net income (loss) attributable to Key

$          283

$          449

$          383


(37.0) %

(26.1) %








Average balances







Loans and leases

$      64,701

$      61,127

$      61,221


5.8 %

5.7 %

Loans held for sale

1,323

1,962

1,237


(32.6)

7.0

Total assets

74,860

71,629

70,448


4.5

6.3

Deposits

57,289

59,537

51,894


(3.8) %

10.4 %








TE = Taxable Equivalent, N/M = Not Meaningful

 

Additional Commercial Bank Data














Dollars in millions





Change 1Q22 vs.


1Q22

4Q21

1Q21


4Q21

1Q21

Noninterest income







Trust and investment services income

$            30

$            29

$            32


3.4 %

(6.3) %

Investment banking and debt placement fees

163

322

162


(49.4)

0.6

Operating lease income and other leasing gains

32

36

38


(11.1)

(15.8)








Corporate services income

82

65

56


26.2

46.4

Service charges on deposit accounts

36

34

33


5.9

9.1

Cards and payments income

22

26

52


(15.4)

(57.7)

     Payments and services income

140

125

141


12.0

(0.7)








Commercial mortgage servicing fees

36

47

34


(23.4)

5.9

Other noninterest income

(6)

52

40


(111.5)

(115.0)

     Total noninterest income

$          395

$          611

$          447


(35.4) %

(11.6) %








N/M = Not Meaningful

 

Commercial Bank Summary of Operations (1Q22 vs. 1Q21)

  • Net income attributable to Key of $283 million for the first quarter of 2022, compared to $383 million for the year-ago quarter
  • Taxable-equivalent net interest income increased by $4 million, compared to the first quarter of 2021, reflecting core loan growth in commercial and industrial and commercial mortgage real estate loans, partially offset by lower loan fees from the PPP
  • Average loan and lease balances increased $3.5 billion, compared to the first quarter of 2021, reflecting growth in core commercial and industrial and commercial mortgage real estate loans, partially offset by a decline in PPP balances
  • Average deposit balances increased $5.4 billion, or 10.4%, compared to the first quarter of 2021, driven by growth in targeted relationships and higher commercial escrow deposits
  • Provision for credit losses increased $108 million, compared to the first quarter of 2021, driven by uncertainty in the economic environment
  • Noninterest income decreased $52 million from the year-ago quarter, largely driven by lower cards and payments income from lower prepaid card activity and other income reflecting market related adjustments
  • Noninterest expense decreased by $26 million, or 5.9%, from the first quarter of 2021, driven by lower operating lease expense and lower incentive compensation

 

*******************************************

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 $181.2 billion at March 31, 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.

CONTACTS:




ANALYSTS

MEDIA

Vernon L. Patterson

Susan Donlan

216.689.0520

216.471.3133

Vernon_Patterson@KeyBank.com

Susan_E_Donlan@KeyBank.com



Melanie S. Kaiser

Tracy Pesho

216.689.4545

216.471.2825

Melanie_S_Kaiser@KeyBank.com

Tracy_Pesho@KeyBank.com



Halle A. Nichols

Twitter: @keybank

216.471.2184


Halle_A_Nichols@KeyBank.com




INVESTOR RELATIONS:

KEY MEDIA NEWSROOM:

www.key.com/ir

www.key.com/newsroom

 

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts.  Forward-looking statements usually can be identified by the use of words such as "goal," "objective," "plan," "expect," "assume," "anticipate," "intend," "project," "believe," "estimate," or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Forward-looking statements, by their nature, are subject to assumptions, risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause Key's actual results to differ from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 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 April 21, 2022. A replay of the call will be available through April 30, 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

First Quarter 2022

Financial Supplement


Page


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

19

Noninterest Expense

19

Personnel Expense

20

Loan Composition

20

Loans Held for Sale Composition

20

Summary of Changes in Loans Held for Sale

20

Summary of Loan and Lease Loss Experience From Continuing Operations

22

Asset Quality Statistics From Continuing Operations

22

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

22

Summary of Changes in Nonperforming Loans From Continuing Operations

23

Line of Business Results

 

 

Financial Highlights

(Dollars in millions, except per share amounts)




Three months ended




3/31/2022

12/31/2021

3/31/2021

Summary of operations





Net interest income (TE)

$          1,020

$          1,038

$          1,012


Noninterest income

676

909

738



Total revenue (TE)

1,696

1,947

1,750


Provision for credit losses

83

4

(93)


Noninterest expense

1,070

1,170

1,071


Income (loss) from continuing operations attributable to Key

447

627

618


Income (loss) from discontinued operations, net of taxes

1

2

4


Net income (loss) attributable to Key

448

629

622








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

420

601

591


Income (loss) from discontinued operations, net of taxes

1

2

4


Net income (loss) attributable to Key common shareholders

421

603

595







Per common share





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

$              .45

$              .65

$              .61


Income (loss) from discontinued operations, net of taxes


Net income (loss) attributable to Key common shareholders (a)

.46

.65

.62








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

.45

.64

.61


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


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

.45

.64

.61








Cash dividends declared

.195

.195

.185


Book value at period end

14.43

16.76

16.22


Tangible book value at period end

11.41

13.72

13.30


Market price at period end

22.38

23.13

19.98







Performance ratios





From continuing operations:





Return on average total assets

.99 %

1.34 %

1.44 %


Return on average common equity

11.45

15.31

14.98


Return on average tangible common equity (b)

14.12

18.69

18.25


Net interest margin (TE)

2.46

2.44

2.61


Cash efficiency ratio (b)

62.4

59.4

60.3








From consolidated operations:





Return on average total assets

.99 %

1.35 %

1.45 %


Return on average common equity

11.47

15.36

15.08


Return on average tangible common equity (b)

14.15

18.75

18.37


Net interest margin (TE)

2.46

2.44

2.60


Loan to deposit (c)

72.9

68.9

73.1







Capital ratios at period end





Key shareholders' equity to assets

8.5 %

9.4 %

10.0 %


Key common shareholders' equity to assets

7.4

8.4

9.0


Tangible common equity to tangible assets (b)

6.0

6.9

7.5


Common Equity Tier 1 (d)

9.4

9.5

9.9


Tier 1 risk-based capital (d)

10.7

10.8

11.3


Total risk-based capital (d)

12.5

12.5

13.4


Leverage (d)

8.7

8.5

8.9







Asset quality — from continuing operations





Net loan charge-offs

$               33

$               19

$             114


Net loan charge-offs to average loans

.13 %

.08 %

.46 %


Allowance for loan and lease losses

$          1,105

$          1,061

$          1,438


Allowance for credit losses

1,271

1,221

1,616


Allowance for loan and lease losses to period-end loans

1.04 %

1.04 %

1.42 %


Allowance for credit losses to period-end loans

1.19

1.20

1.60


Allowance for loan and lease losses to nonperforming loans

251.7

233.7

197.5


Allowance for credit losses to nonperforming loans

289.5

268.9

222.0


Nonperforming loans at period-end

$             439

$             454

$             728


Nonperforming assets at period-end

467

489

790


Nonperforming loans to period-end portfolio loans

.41 %

.45 %

.72 %


Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets

.44

.48

.78







Trust assets





Assets under management

$        53,707

$        55,806

$        48,288







Other data





Average full-time equivalent employees

17,110

16,797

17,086


Branches

993

999

1,068


Taxable-equivalent adjustment

$                6

$                5

$                7



(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)

March 31, 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 provide greater consistency and comparability between Key's results and those of its peer banks. Additionally, this ratio is used by analysts and investors as they develop earnings forecasts and peer bank analysis.


Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

 


Three months ended


3/31/2022

12/31/2021

3/31/2021

Tangible common equity to tangible assets at period-end




     Key shareholders' equity (GAAP)

$   15,308

$   17,423

$   17,634

     Less: Intangible assets (a)

2,810

2,820

2,842

          Preferred Stock (b)

1,856

1,856

1,856

          Tangible common equity (non-GAAP)

$   10,642

$   12,747

$   12,936

          Total assets (GAAP)

$ 181,221

$ 186,346

$ 176,203

     Less: Intangible assets (a)

2,810

2,820

2,842

     Tangible assets (non-GAAP)

$ 178,411

$ 183,526

$ 173,361

          Tangible common equity to tangible assets ratio (non-GAAP)

5.96 %

6.95 %

7.46 %

Pre-provision net revenue




     Net interest income (GAAP)

$    1,014

$    1,033

$    1,005

     Plus: Taxable-equivalent adjustment

6

5

7

          Noninterest income

676

909

738

     Less: Noninterest expense

1,070

1,170

1,071

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

$       626

$       777

$       679

Average tangible common equity




     Average Key shareholders' equity (GAAP)

$   16,780

$   17,471

$   17,769

     Less: Intangible assets (average) (c)

2,814

2,814

2,844

          Preferred stock (average)

1,900

1,900

1,900

     Average tangible common equity (non-GAAP)

$   12,066

$   12,757

$   13,025

Return on average tangible common equity from continuing operations




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

$       420

$       601

$       591

     Average tangible common equity (non-GAAP)

12,066

12,757

13,025





          Return on average tangible common equity from continuing operations (non-GAAP)

14.12 %

18.69 %

18.25 %

Return on average tangible common equity consolidated




     Net income (loss) attributable to Key common shareholders (GAAP)

$       421

$       603

$       595

     Average tangible common equity (non-GAAP)

12,066

12,757

13,025





     Return on average tangible common equity consolidated (non-GAAP)

14.15 %

18.75 %

18.37 %

 

GAAP to Non-GAAP Reconciliations (continued)

(Dollars in millions)


Three months ended


3/31/2022

12/31/2021

3/31/2021

Cash efficiency ratio




Noninterest expense (GAAP)

$    1,070

$    1,170

$    1,071

Less: Intangible asset amortization

11

14

15

     Adjusted noninterest expense (non-GAAP)

$    1,059

$    1,156

$    1,056





Net interest income (GAAP)

$    1,014

$    1,033

$    1,005

Plus: Taxable-equivalent adjustment

6

5

7

     Noninterest income

676

909

738

     Total taxable-equivalent revenue (non-GAAP)

$    1,696

$    1,947

$    1,750





Cash efficiency ratio (non-GAAP)

62.4 %

59.4 %

60.3 %





(a)

For the three months ended March 31, 2022, December 31, 2021, and March 31, 2021, intangible assets exclude $2 million, $3 million, and $4 million, respectively, of period-end purchased credit card receivables. 

(b)

Net of capital surplus.

(c)

For the three months ended March 31, 2022, December 31, 2021, and March 31, 2021, average intangible assets exclude $3 million, $3 million, and $4 million, respectively, of average purchased credit card receivables.

GAAP = U.S. generally accepted accounting principles

 

Consolidated Balance Sheets

(Dollars in millions)










3/31/2022

12/31/2021

3/31/2021

Assets





Loans

$        106,600

$        101,854

$        100,926


Loans held for sale

1,170

2,729

2,296


Securities available for sale

43,681

45,364

33,923


Held-to-maturity securities

6,871

7,539

6,857


Trading account assets

848

701

811


Short-term investments

3,881

11,010

15,376


Other investments

722

639

621



Total earning assets

163,773

169,836

160,810


Allowance for loan and lease losses

(1,105)

(1,061)

(1,438)


Cash and due from banks

684

913

938


Premises and equipment

647

681

737


Goodwill

2,694

2,693

2,673


Other intangible assets

118

130

173


Corporate-owned life insurance

4,340

4,327

4,296


Accrued income and other assets

9,544

8,265

7,347


Discontinued assets

526

562

667



Total assets

$        181,221

$        186,346

$        176,203







Liabilities





Deposits in domestic offices:






NOW and money market deposit accounts

$          86,829

$          89,207

$          82,777



Savings deposits

7,840

7,503

6,655



Certificates of deposit ($100,000 or more)

1,533

1,705

2,437



Other time deposits

2,037

2,153

2,782



Total interest-bearing deposits

98,239

100,568

94,651



Noninterest-bearing deposits

50,424

52,004

47,532



Total deposits

148,663

152,572

142,183


Federal funds purchased and securities sold under repurchase agreements 

599

173

281


Bank notes and other short-term borrowings

2,222

588

744


Accrued expense and other liabilities

3,615

3,548

2,862


Long-term debt

10,814

12,042

12,499



Total liabilities

165,913

168,923

158,569







Equity





Preferred stock

1,900

1,900

1,900


Common shares

1,257

1,257

1,257


Capital surplus

6,214

6,278

6,213


Retained earnings

14,793

14,553

13,166


Treasury stock, at cost

(5,927)

(5,979)

(5,005)


Accumulated other comprehensive income (loss)

(2,929)

(586)

103



Key shareholders' equity

15,308

17,423

17,634

Total liabilities and equity

$        181,221

$        186,346

$        176,203







Common shares outstanding (000)

932,398

928,850

972,587

 

Consolidated Statements of Income

(Dollars in millions, except per share amounts)




Three months ended




3/31/2022

12/31/2021

3/31/2021

Interest income





Loans

$               837

$               873

$               889


Loans held for sale

12

15

11


Securities available for sale

173

148

130


Held-to-maturity securities

46

52

45


Trading account assets

6

5

5


Short-term investments

4

8

5


Other investments

2

2

2



Total interest income

1,080

1,103

1,087

Interest expense





Deposits

14

15

21


Federal funds purchased and securities sold under repurchase agreements


Bank notes and other short-term borrowings

3

2

1


Long-term debt

49

53

60



Total interest expense

66

70

82

Net interest income

1,014

1,033

1,005

Provision for credit losses

83

4

(93)

Net interest income after provision for credit losses

931

1,029

1,098

Noninterest income





Trust and investment services income

136

135

133


Investment banking and debt placement fees

163

323

162


Service charges on deposit accounts

91

90

73


Operating lease income and other leasing gains

32

37

38


Corporate services income

90

73

64


Cards and payments income

80

86

105


Corporate-owned life insurance income

31

34

31


Consumer mortgage income

21

25

47


Commercial mortgage servicing fees

36

48

34


Other income

(4)

58

51



Total noninterest income

676

909

738

Noninterest expense





Personnel

630

674

624


Net occupancy

73

75

76


Computer processing

77

73

73


Business services and professional fees

53

70

50


Equipment

23

25

25


Operating lease expense

28

31

34


Marketing

28

37

26


Other expense

158

185

163



Total noninterest expense

1,070

1,170

1,071

Income (loss) from continuing operations before income taxes

537

768

765


Income taxes

90

141

147

Income (loss) from continuing operations

447

627

618


Income (loss) from discontinued operations, net of taxes

1

2

4

Net income (loss)

448

629

622


Less:  Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to Key

$               448

$               629

$               622







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

$               420

$               601

$               591

Net income (loss) attributable to Key common shareholders

421

603

595

Per common share




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

$                 .45

$                 .65

$                 .61

Income (loss) from discontinued operations, net of taxes

Net income (loss) attributable to Key common shareholders (a)

.46

.65

.62

Per common share — assuming dilution




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

$                 .45

$                 .64

$                 .61

Income (loss) from discontinued operations, net of taxes

Net income (loss) attributable to Key common shareholders (a)

.45

.64

.61







Cash dividends declared per common share

$              .195

$              .195

$              .185







Weighted-average common shares outstanding (000)

922,941

922,970

964,878


Effect of common share options and other stock awards

10,692

11,758

9,419

Weighted-average common shares and potential common shares outstanding (000) (b)

933,634

934,729

974,297

(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)



First Quarter 2022


Fourth Quarter 2021


First 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)

$      51,574

$             410

3.22 %


$      49,510

$             447

3.58 %


$      52,581

$             453

3.48 %


Real estate — commercial mortgage

14,587

121

3.37


13,671

121

3.51


12,658

114

3.67


Real estate — construction

2,027

17

3.37


2,119

19

3.50


2,048

19

3.75


Commercial lease financing

3,942

24

2.41


3,953

26

2.57


4,142

31

2.99


Total commercial loans

72,130

572

3.21


69,253

613

3.51


71,429

617

3.50


Real estate — residential mortgage

16,309

112

2.75


15,017

102

2.72


9,699

76

3.12


Home equity loans

8,345

74

3.61


8,603

79

3.64


9,282

85

3.73


Consumer direct loans

5,954

61

4.16


5,509

60

4.33


4,817

56

4.72


Credit cards

932

24

10.36


941

24

10.13


933

24

10.45


Consumer indirect loans

92


74


4,568

37

3.30


Total consumer loans

31,632

271

3.45


30,144

265

3.49


29,299

278

3.84


     Total loans

103,762

843

3.28


99,397

878

3.50


100,728

895

3.60


Loans held for sale

1,485

12

3.32


2,202

15

2.83


1,531

11

2.89


Securities available for sale (b), (e)

44,923

173

1.50


42,329

148

1.39


30,039

130

1.76


Held-to-maturity securities (b)

7,188

46

2.54


7,991

52

2.61


7,188

46

2.53


Trading account assets

842

6

2.74


853

5

2.48


848

5

2.15


Short-term investments

7,323

4

.25


15,505

8

.20


16,510

5

.13


Other investments (e)

651

2

1.26


634

2

1.15


614

2

1.40


Total earning assets

166,174

1,086

2.62


168,911

1,108

2.60


157,458

1,094

2.81


Allowance for loan and lease losses

(1,056)




(1,081)




(1,623)




Accrued income and other assets

17,471




17,133




16,398




Discontinued assets

539




574




686




     Total assets

$    183,128




$    185,537




$    172,919



Liabilities













NOW and money market deposit accounts

$      88,515

$                11

.05


$      88,110

$                11

.05


$      81,439

$                10

.05


Savings deposits

7,599

.01


7,375

.01


6,203

1

.03


Certificates of deposit ($100,000 or more)

1,639

2

.44


1,793

2

.53


2,571

6

.96


Other time deposits

2,098

1

.15


2,233

2

.21


2,902

4

.57


Total interest-bearing deposits

99,851

14

.06


99,511

15

.06


93,115

21

.09


     Federal funds purchased and securities sold
     under repurchase agreements

287

.13


230

.02


243

.04


Bank notes and other short-term borrowings

705

3

1.94


789

2

1.45


878

1

.64


Long-term debt (f), (g)

10,830

49

1.79


12,159

53

1.74


12,831

60

1.93


Total interest-bearing liabilities

111,673

66

.24


112,689

70

.25


107,067

82

.31


Noninterest-bearing deposits

50,312




51,494




44,625




Accrued expense and other liabilities

3,824




3,309




2,772




Discontinued liabilities (g)

539




574




686




     Total liabilities

$    166,348




$    168,066




$    155,150



Equity













Key shareholders' equity

$      16,780




$      17,471




$      17,769




Noncontrolling interests










     Total equity

16,780




17,471




17,769




     Total liabilities and equity

$    183,128




$    185,537




$    172,919



Interest rate spread (TE)



2.38 %




2.36 %




2.50 %

     Net interest income (TE) and net interest margin
     (TE)


$          1,020

2.46 %



$          1,038

2.44 %



$          1,012

2.61 %

TE adjustment (b)


6




5




7



Net interest income, GAAP basis


$          1,014




$          1,033




$          1,005


(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 March 31, 2022, December 31, 2021, and March 31, 2021.   

(c)

For purposes of these computations, nonaccrual loans are included in average loan balances.

(d)

Commercial and industrial average balances include $141 million, $141 million, and $126 million of assets from commercial credit cards for the three months ended March 31, 2022, December 31, 2021, and March 31, 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


3/31/2022

12/31/2021

3/31/2021

Personnel (a)

$             630

$             674

$             624

Net occupancy

73

75

76

Computer processing

77

73

73

Business services and professional fees

53

70

50

Equipment

23

25

25

Operating lease expense

28

31

34

Marketing

28

37

26

Other expense

158

185

163

     Total noninterest expense

$          1,070

$          1,170

$          1,071

Average full-time equivalent employees (b)

17,110

16,797

17,086

(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


3/31/2022

12/31/2021

3/31/2021

Salaries and contract labor

$              348

$              342

$              320

Incentive and stock-based compensation

183

243

196

Employee benefits

97

89

107

Severance

2

1

     Total personnel expense

$              630

$              674

$              624

 

Loan Composition

(Dollars in millions)











Percent change 3/31/2022 vs


3/31/2022

12/31/2021

3/31/2021


12/31/2021

3/31/2021

Commercial and industrial (a)

$         52,815

$         50,525

$         52,486


4.5 %

.6 %

Commercial real estate:







     Commercial mortgage

15,124

14,244

12,702


6.2

19.1

     Construction

2,065

1,996

2,122


3.5

(2.7)

          Total commercial real estate loans

17,189

16,240

14,824


5.8

16.0

Commercial lease financing (b)

3,916

4,071

4,104


(3.8)

(4.6)

Total commercial loans

73,920

70,836

71,414


4.4

3.5

Residential — prime loans:







     Real estate — residential mortgage

17,181

15,756

10,300


9.0

66.8

     Home equity loans

8,258

8,467

9,158


(2.5)

(9.8)

          Total residential — prime loans

25,439

24,223

19,458


5.0

30.7

Consumer direct loans

6,249

5,753

4,862


8.6

28.5

Credit cards

930

972

909


(4.3)

2.3

Consumer indirect loans

62

70

4,283


(11.4)

(98.6)

     Total consumer loans

32,680

31,018

29,512


5.4

10.7

          Total loans (c), (d)

$       106,600

$       101,854

$       100,926


4.7 %

5.6 %

(a)

Loan balances include $147 million, $139 million, and $126 million of commercial credit card balances at March 31, 2022, December 31, 2021, and March 31, 2021, respectively.

(b)

Commercial lease financing includes receivables held as collateral for a secured borrowing of $14 million, $16 million, and $21 million at March 31, 2022, December 31, 2021, and March 31, 2021, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c)

Total loans exclude loans of $531 million at March 31, 2022, $567 million at December 31, 2021, and $675 million at March 31, 2021, related to the discontinued operations of the education lending business.

(d)

Accrued interest of $193 million, $198 million, and $242 million at March 31, 2022, December 31, 2021, and March 31, 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)













Percent change 3/31/2022 vs


3/31/2022

12/31/2021

3/31/2021


12/31/2021

3/31/2021

Commercial and industrial

$             216

$           1,438

$           1,175


(85.0) %

(81.6) %

Real estate — commercial mortgage

819

1,010

837


(18.9)

(2.2)

Real estate — construction

21


N/M

N/M

Real estate — residential mortgage

114

281

236


(59.4)

(51.7)

Consumer direct loans

48


N/M

N/M

     Total loans held for sale

$           1,170

$           2,729

$           2,296


(57.1) %

(49.0) %








 N/M = Not Meaningful

 

Summary of Changes in Loans Held for Sale

(Dollars in millions)








1Q22

4Q21

3Q21

2Q21

1Q21

Balance at beginning of period

$           2,729

$           1,805

$           1,537

$           2,296

$           1,583

     New originations

2,724

5,704

3,328

3,573

4,010

     Transfers from (to) held to maturity, net

(1)

3,305

(71)

83

     Loan sales

(4,269)

(4,742)

(6,405)

(4,195)

(3,303)

     Loan draws (payments), net

(12)

(12)

8

(27)

(73)

     Valuation and other adjustments

(2)

(25)

32

(39)

(4)

Balance at end of period

$           1,170

$           2,729

$           1,805

$           1,537

$           2,296

 

Summary of Loan and Lease Loss Experience From Continuing Operations

(Dollars in millions)






Three months ended


3/31/2022

12/31/2021

3/31/2021

Average loans outstanding

$ 103,762

$   99,397

$ 100,728

Allowance for loan and lease losses at the beginning of the period

1,061

1,084

1,626

Loans charged off:




     Commercial and industrial

30

33

73





     Real estate — commercial mortgage

4

1

35

     Real estate — construction

          Total commercial real estate loans

4

1

35

     Commercial lease financing

2

1

4

          Total commercial loans

36

35

112

     Real estate — residential mortgage

(1)

(1)

     Home equity loans

1

2

2

     Consumer direct loans

7

7

8

     Credit cards

7

6

6

     Consumer indirect loans

1

1

7

          Total consumer loans

15

15

23

               Total loans charged off

51

50

135

Recoveries:




     Commercial and industrial

11

23

8





     Real estate — commercial mortgage

1

1

1

     Real estate — construction

          Total commercial real estate loans

1

1

1

     Commercial lease financing

1

          Total commercial loans

12

24

10

     Real estate — residential mortgage

1

1

     Home equity loans

1

1

1

     Consumer direct loans

2

2

2

     Credit cards

2

2

2

     Consumer indirect loans

1

1

5

          Total consumer loans

6

7

11

               Total recoveries

18

31

21

Net loan charge-offs

(33)

(19)

(114)

Provision (credit) for loan and lease losses

77

(4)

(74)

Allowance for loan and lease losses at end of period

$    1,105

$    1,061

$    1,438





Liability for credit losses on lending-related commitments at beginning of period

160

152

197

     Provision (credit) for losses on lending-related commitments

6

8

(19)

Liability for credit losses on lending-related commitments at end of period (a)

$       166

$       160

$       178





Total allowance for credit losses at end of period

$    1,271

$    1,221

$    1,616





Net loan charge-offs to average total loans

.13 %

.08 %

.46 %

Allowance for loan and lease losses to period-end loans

1.04

1.04

1.42

Allowance for credit losses to period-end loans

1.19

1.20

1.60

Allowance for loan and lease losses to nonperforming loans

251.7

233.7

197.5

Allowance for credit losses to nonperforming loans

289.5

268.9

222.0





Discontinued operations — education lending business:




     Loans charged off

$           2

1

$           1

     Recoveries

1

          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)


1Q22

4Q21

3Q21

2Q21

1Q21

Net loan charge-offs

$          33

$          19

$          29

$          22

$        114

Net loan charge-offs to average total loans

.13 %

.08 %

.11 %

.09 %

.46 %

Allowance for loan and lease losses

$     1,105

$     1,061

$     1,084

$     1,220

$     1,438

Allowance for credit losses (a)

1,271

1,221

1,236

1,372

1,616

Allowance for loan and lease losses to period-end loans

1.04 %

1.04 %

1.10 %

1.21 %

1.42 %

Allowance for credit losses to period-end loans

1.19

1.20

1.25

1.36

1.60

Allowance for loan and lease losses to nonperforming loans

251.7

233.7

195.7

175.8

197.5

Allowance for credit losses to nonperforming loans

289.5

268.9

223.1

197.7

222.0

Nonperforming loans at period end

$        439

$        454

$        554

$        694

$        728

Nonperforming assets at period end

467

489

599

738

790

Nonperforming loans to period-end portfolio loans

.41 %

.45 %

.56 %

.69 %

.72 %

Nonperforming assets to period-end portfolio loans plus OREO and other
   nonperforming assets

.44

.48

.61

.73

.78

(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)


3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

Commercial and industrial

$        186

$        191

$        253

$        355

$        387







Real estate — commercial mortgage

40

44

49

66

66

Real estate — construction

     Total commercial real estate loans

40

44

49

66

66

Commercial lease financing

3

4

5

7

8

     Total commercial loans

229

239

307

428

461

Real estate — residential mortgage

73

72

93

99

95

Home equity loans

129

135

146

146

148

Consumer direct loans

4

4

4

4

5

Credit cards

3

3

3

3

3

Consumer indirect loans

1

1

1

14

16

     Total consumer loans

210

215

247

266

267

          Total nonperforming loans

439

454

554

694

728

OREO

8

8

8

9

12

Nonperforming loans held for sale

20

24

35

32

47

Other nonperforming assets

3

2

3

3

          Total nonperforming assets

$        467

$        489

$        599

$        738

$        790

Accruing loans past due 90 days or more

55

68

82

74

92

Accruing loans past due 30 through 89 days

122

165

164

190

191

Restructured loans — accruing and nonaccruing (a)

219

220

270

334

376

Restructured loans included in nonperforming loans (a)

98

99

146

177

192

Nonperforming assets from discontinued operations — education lending business 

4

4

4

5

5

Nonperforming loans to period-end portfolio loans

.41 %

.45 %

.56 %

.69 %

.72 %

Nonperforming assets to period-end portfolio loans plus OREO and other
          nonperforming assets

.44

.48

.61

.73

.78

(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)


1Q22

4Q21

3Q21

2Q21

1Q21

Balance at beginning of period

$           454

$           554

$           694

$           728

$           785

     Loans placed on nonaccrual status

87

116

116

186

196

     Charge-offs

(50)

(51)

(66)

(74)

(135)

     Loans sold

(38)

(17)

(10)

(13)

     Payments

(27)

(68)

(136)

(92)

(37)

     Transfers to OREO

(1)

(1)

(1)

(3)

     Transfers to nonperforming loans held for sale

     Loans returned to accrual status

(24)

(58)

(36)

(44)

(65)

Balance at end of period

$           439

$           454

$           554

$           694

$           728

 

Line of Business Results

(Dollars in millions)

















Percentage change 1Q22 vs.


1Q22

4Q21

3Q21

2Q21

1Q21


4Q21

1Q21

Consumer Bank









Summary of operations









Total revenue (TE)

$            799

$            839

$            870

$            852

$            864


(4.8) %

(7.5) %

Provision for credit losses

43

14

(38)

(70)

(23)


207.1

287.0

Noninterest expense

663

613

591

584

601


8.2

10.3

Net income (loss) attributable to Key

70

161

241

257

217


(56.5)

(67.7)

Average loans and leases

38,637

37,792

39,796

40,598

39,249


2.2

(1.6)

Average deposits

91,468

90,271

89,156

88,412

85,033


1.3

7.6

Net loan charge-offs

22

22

35

34

36


(38.9)

Net loan charge-offs to average total loans

.23 %

.23 %

.35 %

.34 %

.37 %


(37.8)

Nonperforming assets at period end

$            217

$            222

$            254

$            274

$            276


(2.3)

(21.4)

Return on average allocated equity

7.91 %

18.05 %

25.81 %

28.53 %

25.74 %


(56.2)

(69.3)










Commercial Bank









Summary of operations









Total revenue (TE)

$            810

$          1,028

$            886

$            871

$            858


(21.2) %

(5.6) %

Provision for credit losses

41

(12)

(69)

(131)

(67)


441.7

161.2

Noninterest expense

417

501

470

451

443


(16.8)

(5.9)

Net income (loss) attributable to Key

283

449

381

432

383


(37.0)

(26.1)

Average loans and leases

64,701

61,127

59,914

59,953

61,221


5.8

5.7

Average loans held for sale

1,323

1,962

1,190

1,341

1,237


(32.6)

7.0

Average deposits

57,289

59,537

56,522

54,814

51,894


(3.8)

10.4

Net loan charge-offs

11

(6)

9

78


N/M

(85.9)

Net loan charge-offs to average total loans

.07 %

— %

(.04) %

.06 %

.52 %


N/M

(86.5)

Nonperforming assets at period end

$            250

$            267

$            345

$            464

$            514


(6.4)

(51.4)

Return on average allocated equity

13.21 %

21.54 %

18.54 %

20.69 %

17.41 %


(38.7)

(24.1)

TE = Taxable Equivalent, N/A = Not Applicable, N/M = Not Meaningful

 

(PRNewsfoto/KeyCorp)

 

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SOURCE KeyCorp