KEY
$19.19
Keycorp
$.43
2.29%
Earnings Details
Quarter December 2022
Thursday, January 19, 2023 6:35:00 AM
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Summary

Keycorp (KEY) Recent Earnings

Keycorp (KEY) reported Quarter December 2022 earnings of $0.38 per share on revenue of $2.4 billion. The consensus earnings estimate was $0.55 per share on revenue of $2.0 billion. Revenue grew 17.6% on a year-over-year basis.

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
$0.38
Earnings Whisper
-
Consensus Estimate
$0.55
Reported Revenue
$2.37 Bil
Revenue Estimate
$1.96 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

KEYCORP REPORTS FOURTH QUARTER 2022 NET INCOME OF $356 MILLION, OR $.38 PER DILUTED COMMON SHARE

Results reflect provision for credit losses of $265 million, which exceeded net charge-offs by $224 million, or $.20 per share

Loan and deposit growth across commercial and consumer businesses

Solid credit quality with net charge-offs to average loans of 14 basis points

Annual positive operating leverage for the ninth time in the last ten years

CLEVELAND, Jan. 19, 2023 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $356 million, or $.38 per diluted common share for the fourth quarter of 2022. This compared to $513 million, or $.55 per diluted common share, for the third quarter of 2022 and $601 million, or $.64 per diluted common share, for the fourth quarter of 2021.

Our fourth quarter results marked a solid finish to another successful year for Key. We continued to leverage our distinctive business model to add clients and deepen relationships in both our consumer and commercial businesses. Additionally, we are seeing substantial traction from recent investments we have made in niche businesses, digital, analytics, and importantly, our teammates.

The quality of our balance sheet continues to be a strength, as we focus on delivering sound, profitable growth. Credit quality remained strong with net charge-offs to average loans near historically low levels. Our results include a significant build in our allowance for credit losses, primarily reflecting a change in our economic outlook.

Looking forward, we will continue to unlock the value of our differentiated business model by delivering revenue growth while maintaining our expense discipline. We are focused on creating additional capacity to make investments in our targeted scale strategy and in businesses and capabilities that will propel future growth.

I am very proud of all we accomplished this year. I want to thank our teammates for their dedication and commitment to serving our clients, our communities, and our shareholders, while growing our business.

Chris Gorman, Chairman and CEO

 

Selected Financial Highlights















Dollars in millions, except per share data





Change 4Q22 vs.



4Q22

3Q22

4Q21


3Q22

4Q21

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

$     356

$     513

$     601


(30.6) %

(40.8) %

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

.38

.55

.64


(30.9)

(40.6)

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

18.07 %

21.19 %

18.69 %


N/A

N/A

Return on average total assets from continuing operations

.83

1.14

1.34


N/A

N/A

Common Equity Tier 1 ratio (b)

9.1

9.1

9.5


N/A

N/A

Book value at period end

$   11.79

$   11.62

$   16.76


1.5

(29.7)

Net interest margin (TE) from continuing operations

2.73 %

2.74 %

2.44 %


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)

December 31, 2022 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

 

INCOME STATEMENT HIGHLIGHTS














Revenue














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Net interest income (TE)

$      1,227

$      1,203

$      1,038


2.0 %

18.2 %

Noninterest income

671

683

909


(1.8)

(26.2)

Total revenue

$      1,898

$      1,886

$      1,947


.6 %

(2.5) %








TE = Taxable Equivalent

Taxable-equivalent net interest income was $1.2 billion for the fourth quarter of 2022 and the net interest margin was 2.73%. Compared to the fourth quarter of 2021, net interest income increased $189 million and the net interest margin increased by 29 basis points. Net interest income and net interest margin benefited from higher earning asset balances and higher interest rates. Net interest income and the net interest margin were negatively impacted by higher interest-bearing deposit costs and lower loan fees from the Paycheck Protection Program ("PPP").

Compared to the third quarter of 2022, taxable-equivalent net interest income increased by $24 million, while the net interest margin decreased by one basis point. Both net interest income and the net interest margin reflect the impact of strong loan growth and higher interest rates, offset by higher interest-bearing deposit costs, and a shift in funding mix.

Noninterest Income














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Trust and investment services income

$        126

$        127

$        135


(.8) %

(6.7) %

Investment banking and debt placement fees

172

154

323


11.7

(46.7)

Service charges on deposit accounts

71

92

90


(22.8)

(21.1)

Operating lease income and other leasing gains

24

19

37


26.3

(35.1)

Corporate services income

89

96

76


(7.3)

17.1

Cards and payments income

85

91

86


(6.6)

(1.2)

Corporate-owned life insurance income

33

33

34


(2.9)

Consumer mortgage income

9

14

25


(35.7)

(64.0)

Commercial mortgage servicing fees

42

44

48


(4.5)

(12.5)

Other income

20

13

55


53.8

(63.6)

Total noninterest income

$        671

$        683

$        909


(1.8) %

(26.2) %








Compared to the fourth quarter of 2021, noninterest income decreased by $238 million. The decrease was largely driven by investment banking and debt placement fees, down $151 million, reflecting a slowdown in capital markets activity. Other income decreased $35 million as a result of market-related gains in the year-ago period. Service charges on deposit accounts decreased $19 million, primarily reflecting a planned reduction in overdraft and non sufficient funds fees. The decline also reflected lower account analysis fees related to the interest rate environment. Additionally, consumer mortgage income decreased $16 million, reflecting lower saleable volume and gain on sale margins, while operating lease income decreased $13 million, reflecting a continued decline in operating lease balances. Trust and investment services income decreased $9 million, primarily reflecting the decline in the equity markets. Partially offsetting the decrease was an increase in corporate services income of $13 million, primarily reflecting higher derivatives income.

Compared to the third quarter of 2022, noninterest income decreased by $12 million. The decline was driven partly by service charges on deposit accounts, which decreased $21 million, primarily reflecting a planned reduction in overdraft and non sufficient funds fees. It was also driven by corporate services income, which decreased $7 million, primarily reflecting a valuation adjustment benefit in the prior quarter. Partially offsetting the decline was an increase in investment banking and debt placement fees of $18 million due to seasonality.

Noninterest Expense














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Personnel expense

$        674

$        655

$        674


2.9 %

- %

Nonpersonnel expense

482

451

496


6.9

(2.8)

Total noninterest expense

$      1,156

$      1,106

$      1,170


4.5 %

(1.2) %








Key's noninterest expense was $1.2 billion for the fourth quarter of 2022, a decrease of $14 million from the year-ago period. The decline was driven by a decrease of $14 million in nonpersonnel expense reflecting lower professional fees and operating lease expenses, down $10 million and $9 million, respectively. Personnel expense remained flat compared to the year-ago period, reflecting higher salaries and employee benefits, offset by lower incentive and stock based compensation.

Compared to the third quarter of 2022, noninterest expense increased $50 million. The increase was primarily driven by nonpersonnel expense, which increased $31 million, reflecting a $17 million increase in other expense related primarily to a pension settlement charge and a $13 million increase in professional fees. Personnel expense was also up $19 million, reflecting lower deferred costs from slower loan originations.

BALANCE SHEET HIGHLIGHTS














Average Loans














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Commercial and industrial (a)

$    58,212

$    56,151

$    49,510


3.7 %

17.6 %

Other commercial loans

22,720

22,200

19,743


2.3

15.1

Total consumer loans

36,770

36,067

30,144


1.9

22.0

Total loans

$  117,702

$  114,418

$    99,397


2.9 %

18.4 %








(a)

Commercial and industrial average loan balances include $171 million, $162 million, and $141 million of assets from commercial credit cards at December 31, 2022, September 30, 2022, and December 31, 2021, respectively.

Average loans were $117.7 billion for the fourth quarter of 2022, an increase of $18.3 billion compared to the fourth quarter of 2021. Commercial loans increased by $11.7 billion, reflecting core commercial and industrial loan growth and an increase in commercial mortgage real estate loans, which mitigated the impact of a $2.2 billion decline in PPP balances. Consumer loans increased $6.6 billion, largely driven by Key's consumer mortgage business and student loan originations from Laurel Road.

Compared to the third quarter of 2022, average loans increased by $3.3 billion. Commercial loans increased $2.6 billion, reflecting growth in commercial and industrial loans and commercial mortgage real estate loans. Consumer loans increased $703 million, driven by Key's consumer mortgage business.

Average Deposits














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Non-time deposits

$  139,558

$  140,169

$  146,979


(.4) %

(5.0) %

Certificates of deposit ($100,000 or more)

1,351

1,347

1,793


.3

(24.7)

Other time deposits

4,757

2,713

2,233


75.3

113.0

Total deposits

$  145,666

$  144,229

$  151,005


1.0 %

(3.5) %








Cost of total deposits

.51 %

.16 %

.04 %


N/A

N/A








N/A = Not Applicable

Average deposits totaled $145.7 billion for the fourth quarter of 2022, a decrease of $5.3 billion compared to the year-ago quarter. The decrease reflects declines in non-operating commercial deposit balances and retail balances.

Compared to the third quarter of 2022, average deposits increased by $1.4 billion, reflecting higher commercial balances, and a shift in mix from noninterest-bearing to interest-bearing balances, partly offset by declines in retail balances.


ASSET QUALITY














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Net loan charge-offs

$       41

$       43

$       19


(4.7) %

115.8 %

Net loan charge-offs to average total loans

.14 %

.15 %

.08 %


N/A

N/A

Nonperforming loans at period end

$      387

$      390

$      454


(.8)

(14.8)

Nonperforming assets at period end

420

419

489


.2

(14.1)

Allowance for loan and lease losses

1,337

1,144

1,061


16.9

26.0

Allowance for credit losses

1,562

1,338

1,221


16.7

27.9

Provision for credit losses

265

109

4


143.1

N/M








Allowance for loan and lease losses to nonperforming loans

345 %

293 %

234 %


N/A

N/A

Allowance for credit losses to nonperforming loans

404

343

269


N/A

N/A








N/A = Not Applicable

Key's provision for credit losses was $265 million, compared to $4 million in the fourth quarter of 2021 and provision of $109 million in the third quarter of 2022. The increase from prior periods primarily reflects the change in the economic outlook as well as growth in loans.

Net loan charge-offs for the fourth quarter of 2022 totaled $41 million, or 0.14% of average total loans. These results compare to $19 million, or 0.08%, for the fourth quarter of 2021 and $43 million, or 0.15%, for the third quarter of 2022. Key's allowance for credit losses was $1.6 billion, or 1.31% of total period-end loans at December 31, 2022, compared to 1.20% at December 31, 2021, and 1.15% at September 30, 2022.

At December 31, 2022, Key's nonperforming loans totaled $387 million, which represented 0.32% of period-end portfolio loans. These results compare to 0.45% at December 31, 2021, and 0.34% at September 30, 2022. Nonperforming assets at December 31, 2022, totaled $420 million, and represented 0.35% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to 0.48% at December 31, 2021, and 0.36% at September 30, 2022.

CAPITAL

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

Capital Ratios









12/31/2022

9/30/2022

12/31/2021

Common Equity Tier 1 (a)

9.1 %

9.1 %

9.5 %

Tier 1 risk-based capital (a)

10.6

10.7

10.8

Total risk-based capital (a)

12.8

12.7

12.5

Tangible common equity to tangible assets (b)

4.4

4.3

6.9

Leverage (a)

8.9

8.9

8.5





(a)

December 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 fourth quarter of 2022. As shown in the preceding table, at December 31, 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 increased ten basis points to 4.4% at December 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. 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 4Q22 vs.



4Q22

3Q22

4Q21


3Q22

4Q21

Shares outstanding at beginning of period

932,938

932,643

930,544


— %

.3 %

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

(2)

(3)

(2,482)


(33.3)

(99.9)

Shares issued under employee compensation plans (net of cancellations)

389

298

788


30.5

(50.6)


Shares outstanding at end of period

933,325

932,938

928,850


— %

.5 %









During the fourth quarter of 2022, Key declared a dividend of $.205 per common share, representing a 5% increase from the prior quarter. In the third quarter of 2022, the KeyCorp Board of Directors approved an extension of the remaining $790 million existing share repurchase authorization through the third quarter of 2023.

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 4Q22 vs.



4Q22

3Q22

4Q21


3Q22

4Q21

Revenue from continuing operations (TE)







Consumer Bank

$         900

$         891

$         839


1.0 %

7.3 %

Commercial Bank

928

889

1,027


4.4

(9.6)

Other (a)

70

106

81


(34.0)

(13.6)


Total

$       1,898

$       1,886

$       1,947


.6 %

(2.5) %









Income (loss) from continuing operations attributable to Key







Consumer Bank

$           73

$         142

$         161


(48.6) %

(54.7) %

Commercial Bank

250

295

448


(15.3)

(44.2)

Other (a)

71

103

18


(31.1)

294.4


Total

$         394

$         540

$         627


(27.0) %

(37.2) %









(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 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Summary of operations







Net interest income (TE)

$         674

$         632

$         570


6.6 %

18.2 %

Noninterest income

226

259

269


(12.7)

(16.0)

Total revenue (TE)

900

891

839


1.0

7.3

Provision for credit losses

105

37

14


183.8

650.0

Noninterest expense

699

667

613


4.8

14.0

Income (loss) before income taxes (TE)

96

187

212


(48.7)

(54.7)

Allocated income taxes (benefit) and TE adjustments

23

45

51


(48.9)

(54.9)

Net income (loss) attributable to Key

$           73

$         142

$         161


(48.6) %

(54.7) %








Average balances







Loans and leases

$     43,149

$     42,568

$     37,841


1.4 %

14.0 %

Total assets

46,214

45,638

41,072


1.3

12.5

Deposits

87,243

90,044

90,385


(3.1)

(3.5)








Assets under management at period end

$     51,282

$     47,846

$     55,806


7.2 %

(8.1) %








TE = Taxable Equivalent

 

Additional Consumer Bank Data














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Noninterest income







Trust and investment services income

$        97

$        99

$       107


(2.0) %

(9.3) %

Service charges on deposit accounts

40

56

55


(28.6)

(27.3)

Cards and payments income

62

64

64


(3.1)

(3.1)

Consumer mortgage income

9

13

26


(30.8)

(65.4)

Other noninterest income

18

27

17


(33.3)

5.9

Total noninterest income

$       226

$       259

$       269


(12.7) %

(16.0) %








Average deposit balances







NOW and money market deposit accounts

$  54,650

$  56,696

$  57,242


(3.6) %

(4.5) %

Savings deposits

7,439

7,556

6,951


(1.5)

7.0

Certificates of deposit ($100,000 or more)

1,227

1,238

1,669


(.9)

(26.5)

Other time deposits

1,763

1,838

2,228


(4.1)

(20.9)

Noninterest-bearing deposits

22,164

22,716

22,295


(2.4)

(.6)

Total deposits

$  87,243

$  90,044

$  90,385


(3.1) %

(3.5) %








Other data







Branches

972

976

999




Automated teller machines

1,265

1,270

1,317











Consumer Bank Summary of Operations (4Q22 vs. 4Q21)

  • Key's Consumer Bank recorded net income attributable to Key of $73 million for the fourth quarter of 2022, compared to $161 million for the year-ago quarter
  • Taxable-equivalent net interest income increased by $104 million, or 18.2%, compared to the fourth quarter of 2021, driven by higher earning assets and interest rates
  • Average loans and leases increased $5.3 billion, or 14.0%, from the fourth quarter of 2021, driven by loan growth in consumer mortgage and Laurel Road, partly offset by a decline in home equity loans
  • Average deposits decreased $3.1 billion, or 3.5%, from the fourth quarter of 2021, driven by lower retail deposits
  • Provision for credit losses increased $91 million compared to the fourth quarter of 2021, due to an increase in the provision in the current quarter, reflecting the change in the economic outlook, as well as growth in the consumer loan portfolio
  • Noninterest income decreased $43 million from the year-ago quarter, driven by lower consumer mortgage income, reflecting lower saleable volume and gain on sale margins, lower service charges on deposit accounts reflecting a planned reduction in overdraft and non sufficient funds fees, and a decline in trust and investment services, reflecting lower equity markets
  • Noninterest expense increased $86 million, or 14.0%, from the year-ago quarter, primarily driven by continued investments in technology and cybersecurity capabilities

 

Commercial Bank














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Summary of operations







Net interest income (TE)

$         521

$         495

$         415


5.3 %

25.5 %

Noninterest income

407

394

612


3.3

(33.5)

Total revenue (TE)

928

889

1027


4.4

(9.6)

Provision for credit losses

165

74

(12)


123.0

N/M

Noninterest expense

460

450

501


2.2

(8.2)

Income (loss) before income taxes (TE)

303

365

538


(17.0)

(43.7)

Allocated income taxes and TE adjustments

53

70

90


(24.3)

(41.1)

Net income (loss) attributable to Key

$         250

$         295

$         448


(15.3) %

(44.2) %








Average balances







Loans and leases

$     74,100

$     71,464

$     61,078


3.7 %

21.3 %

Loans held for sale

1,377

1,036

1,962


32.9

(29.8)

Total assets

84,614

81,898

71,581


3.3

18.2

Deposits

54,385

52,272

59,423


4.0 %

(8.5) %








TE = Taxable Equivalent

 

Additional Commercial Bank Data














Dollars in millions





Change 4Q22 vs.


4Q22

3Q22

4Q21


3Q22

4Q21

Noninterest income







Trust and investment services income

$           30

$           29

$           29


3.4 %

3.4 %

Investment banking and debt placement fees

172

153

322


12.4

(46.6)

Operating lease income and other leasing gains

23

19

36


21.1

(36.1)








Corporate services income

81

89

68


(9.0)

19.1

Service charges on deposit accounts

30

36

34


(16.7)

(11.8)

Cards and payments income

19

19

26


(26.9)

Payments and services income

130

144

128


(9.7)

1.6








Commercial mortgage servicing fees

41

44

47


(6.8)

(12.8)

Other noninterest income

11

5

50


120.0

(78.0)

Total noninterest income

$         407

$         394

$         612


3.3 %

(33.5) %








 

Commercial Bank Summary of Operations (4Q22 vs. 4Q21)

  • Key's Commercial Bank recorded net income attributable to Key of $250 million for the fourth quarter of 2022 compared to $448 million for the year-ago quarter
  • Taxable-equivalent net interest income increased by $106 million, or 25.5%, compared to the fourth 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 $13.0 billion, or 21.3%, compared to the fourth quarter of 2021, due to growth in commercial and industrial loans and commercial mortgage real estate loans
  • Average deposit balances decreased $5.0 billion compared to the fourth quarter of 2021, driven by a decline in non-operating deposits
  • Provision for credit losses increased $177 million compared to the fourth quarter of 2021, due to an increase in the provision in the current quarter, primarily reflecting the change in the economic outlook, as well as growth in the commercial loan portfolio and a reserve release in the year-ago period as uncertainty caused by the pandemic subsided
  • Noninterest income decreased $205 million from the year-ago quarter, primarily driven by lower investment banking and debt placement fees and market-related gains in the year-ago period, partially offset by an increase in corporate services income primarily reflecting higher derivatives income
  • Noninterest expense decreased $41 million from the fourth quarter of 2021, primarily 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 $189.8 billion at December 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.

 

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 changes in the interest rate environment. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

Notes to Editors:
A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 10:00 a.m. ET, on January 19, 2023. A replay of the call will be available through January 28, 2023.

 

           

KeyCorp

Fourth 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

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




12/31/2022

9/30/2022

12/31/2021

Summary of operations





Net interest income (TE)

$         1,227

$         1,203

$         1,038


Noninterest income

671

683

909



Total revenue (TE)

1,898

1,886

1,947


Provision for credit losses

265

109

4


Noninterest expense

1,156

1,106

1,170


Income (loss) from continuing operations attributable to Key

394

540

627


Income (loss) from discontinued operations, net of taxes

2

2


Net income (loss) attributable to Key

394

542

629








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

356

513

601


Income (loss) from discontinued operations, net of taxes

2

2


Net income (loss) attributable to Key common shareholders

356

515

603







Per common share





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

$            .38

$            .55

$            .65


Income (loss) from discontinued operations, net of taxes


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

.38

.55

.65








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

.38

.55

.64


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


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

.38

.55

.64








Cash dividends declared

.205

.195

.195


Book value at period end

11.79

11.62

16.76


Tangible book value at period end

8.75

8.56

13.72


Market price at period end

17.42

16.02

23.13







Performance ratios





From continuing operations:





Return on average total assets

.83 %

1.14 %

1.34 %


Return on average common equity

13.24

16.33

15.31


Return on average tangible common equity (b)

18.07

21.19

18.69


Net interest margin (TE)

2.73

2.74

2.44


Cash efficiency ratio (b)

60.3

58.0

59.4








From consolidated operations:





Return on average total assets

.82 %

1.14 %

1.35 %


Return on average common equity

13.24

16.39

15.36


Return on average tangible common equity (b)

18.07

21.28

18.75


Net interest margin (TE)

2.73

2.73

2.44


Loan to deposit (c)

84.7

81.3

68.9







Capital ratios at period end





Key shareholders' equity to assets

7.1 %

7.0 %

9.4 %


Key common shareholders' equity to assets

5.8

5.7

8.4


Tangible common equity to tangible assets (b)

4.4

4.3

6.9


Common Equity Tier 1 (d)

9.1

9.1

9.5


Tier 1 risk-based capital (d)

10.6

10.7

10.8


Total risk-based capital (d)

12.8

12.7

12.5


Leverage (d)

8.9

8.9

8.5







Asset quality — from continuing operations





Net loan charge-offs

$             41

$             43

$             19


Net loan charge-offs to average loans

.14 %

.15 %

.08 %


Allowance for loan and lease losses

$         1,337

$         1,144

$         1,061


Allowance for credit losses

1,562

1,338

1,221


Allowance for loan and lease losses to period-end loans

1.12 %

.98 %

1.04 %


Allowance for credit losses to period-end loans

1.31

1.15

1.20


Allowance for loan and lease losses to nonperforming loans

345

293

234


Allowance for credit losses to nonperforming loans

404

343

269


Nonperforming loans at period-end

$           387

$           390

$           454


Nonperforming assets at period-end

420

419

489


Nonperforming loans to period-end portfolio loans

.32 %

.34 %

.45 %


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

.35

.36

.48







Trust assets





Assets under management

$       51,282

$       47,846

$       55,806







Other data





Average full-time equivalent employees

18,210

17,907

16,797


Branches

972

976

999


Taxable-equivalent adjustment

$              7

$              7

$              5

 

Financial Highlights (continued)

(Dollars in millions, except per share amounts)



Twelve months ended



12/31/2022

12/31/2021

Summary of operations




Net interest income (TE)

$                  4,554

$                  4,098


Noninterest income

2,718

3,194


Total revenue (TE)

7,272

7,292


Provision for credit losses

502

(418)


Noninterest expense

4,410

4,429


Income (loss) from continuing operations attributable to Key

1,911

2,612


Income (loss) from discontinued operations, net of taxes

6

13


Net income (loss) attributable to Key

1,917

2,625






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

1,793

2,506


Income (loss) from discontinued operations, net of taxes

6

13


Net income (loss) attributable to Key common shareholders

1,799

2,519





Per common share




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

$                    1.94

$                    2.64


Income (loss) from discontinued operations, net of taxes

.01

.01


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

1.94

2.65






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

1.92

2.62


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

.01

.01


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

1.93

2.63






Cash dividends paid

.79

.75





Performance ratios




From continuing operations:




Return on average total assets

1.03 %

1.46 %


Return on average common equity

14.21

15.90


Return on average tangible common equity (b)

18.34

19.37


Net interest margin (TE)

2.64

2.50


Cash efficiency ratio (b)

60.0

59.9






From consolidated operations:




Return on average total assets

1.03 %

1.46 %


Return on average common equity

14.26

15.98


Return on average tangible common equity (b)

18.40

19.47


Net interest margin (TE)

2.63

2.50





Asset quality — from continuing operations




Net loan charge-offs

$                     161

$                     184


Net loan charge-offs to average total loans

.14 %

.18 %





Other data




Average full-time equivalent employees

17,660

16,974





Taxable-equivalent adjustment

$                       27

$                       27

(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)

December 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 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


Twelve months ended


12/31/2022

9/30/2022

12/31/2021


12/31/2022

12/31/2021

Tangible common equity to tangible assets at period-end







Key shareholders' equity (GAAP)

$  13,454

$  13,290

$  17,423




Less: Intangible assets (a)

2,844

2,856

2,820




Preferred Stock (b)

2,446

2,446

1,856




Tangible common equity (non-GAAP)

$    8,164

$    7,988

$  12,747




Total assets (GAAP)

$ 189,813

$ 190,051

$ 186,346




Less: Intangible assets (a)

2,844

2,856

2,820




Tangible assets (non-GAAP)

$ 186,969

$ 187,195

$ 183,526




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

4.37 %

4.27 %

6.95 %




Pre-provision net revenue







Net interest income (GAAP)

$    1,220

$    1,196

$    1,033


$    4,527

$    4,071

Plus: Taxable-equivalent adjustment

7

7

5


27

27

Noninterest income

671

683

909


2,718

3,194

Less: Noninterest expense

1,156

1,106

1,170


4,410

4,429

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

$       742

$       780

$       777


$    2,862

$    2,863

Average tangible common equity







Average Key shareholders' equity (GAAP)

$  13,168

$  14,614

$  17,471


$  14,730

$  17,665

Less: Intangible assets (average) (c)

2,851

2,863

2,814


2,839

2,829

Preferred stock (average)

2,500

2,148

1,900


2,114

1,900

Average tangible common equity (non-GAAP)

$    7,817

$    9,603

$  12,757


$    9,777

$  12,936

Return on average tangible common equity from continuing operations







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

$       356

$       513

$       601


$    1,793

$    2,506

Average tangible common equity (non-GAAP)

7,817

9,603

12,757


9,777

12,936








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

18.07 %

21.19 %

18.69 %


18.34 %

19.37 %

Return on average tangible common equity consolidated







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

$       356

$       515

$       603


$    1,799

$    2,519

Average tangible common equity (non-GAAP)

7,817

9,603

12,757


9,777

12,936








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

18.07 %

21.28 %

18.75 %


18.40 %

19.47 %

 

GAAP to Non-GAAP Reconciliations (continued)

(Dollars in millions)


Three months ended


Twelve months ended


12/31/2022

9/30/2022

12/31/2021


12/31/2022

12/31/2021

Cash efficiency ratio







Noninterest expense (GAAP)

$    1,156

$    1,106

$    1,170


$    4,410

$    4,429

Less: Intangible asset amortization

12

12

14


47

58

Adjusted noninterest expense (non-GAAP)

$    1,144

$    1,094

$    1,156


$    4,363

$    4,371








Net interest income (GAAP)

$    1,220

$    1,196

$    1,033


$    4,527

$    4,071

Plus: Taxable-equivalent adjustment

7

7

5


27

27

Noninterest income

671

683

909


2,718

3,194

Total taxable-equivalent revenue (non-GAAP)

$    1,898

$    1,886

$    1,947


$    7,272

$    7,292








Cash efficiency ratio (non-GAAP)

60.3 %

58.0 %

59.4 %


60.0 %

59.9 %








(a)

For the three months ended December 31, 2022, September 30, 2022, and December 31, 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 December 31, 2022, September 30, 2022, and December 31, 2021, average intangible assets exclude $2 million, $2 million, and $3 million, respectively, of average purchased credit card receivables. For the twelve months ended December 31, 2022, and December 31, 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)










12/31/2022

9/30/2022

12/31/2021

Assets





Loans

$       119,394

$       116,191

$       101,854


Loans held for sale

963

1,048

2,729


Securities available for sale

39,117

40,000

45,364


Held-to-maturity securities

8,710

8,163

7,539


Trading account assets

829

1,068

701


Short-term investments

2,432

4,896

11,010


Other investments

1,308

1,272

639



Total earning assets

172,753

172,638

169,836


Allowance for loan and lease losses

(1,337)

(1,144)

(1,061)


Cash and due from banks

887

717

913


Premises and equipment

636

629

681


Goodwill

2,752

2,752

2,693


Other intangible assets

94

106

130


Corporate-owned life insurance

4,369

4,351

4,327


Accrued income and other assets

9,223

9,535

8,265


Discontinued assets

436

467

562



Total assets

$       189,813

$       190,051

$       186,346







Liabilities





Deposits in domestic offices:






NOW and money market deposit accounts

$         86,707

$         84,168

$         89,207



Savings deposits

7,681

7,860

7,503



Certificates of deposit ($100,000 or more)

1,708

1,269

1,705



Other time deposits

5,665

4,578

2,153



Total interest-bearing deposits

101,761

97,875

100,568



Noninterest-bearing deposits

40,834

46,980

52,004



Total deposits

142,595

144,855

152,572


Federal funds purchased and securities sold under repurchase agreements 

4,077

4,224

173


Bank notes and other short-term borrowings

5,386

4,576

588


Accrued expense and other liabilities

4,994

4,849

3,548


Long-term debt

19,307

18,257

12,042



Total liabilities

176,359

176,761

168,923







Equity





Preferred stock

2,500

2,500

1,900


Common shares

1,257

1,257

1,257


Capital surplus

6,286

6,257

6,278


Retained earnings

15,616

15,450

14,553


Treasury stock, at cost

(5,910)

(5,917)

(5,979)


Accumulated other comprehensive income (loss)

(6,295)

(6,257)

(586)



Key shareholders' equity

13,454

13,290

17,423

Total liabilities and equity

$       189,813

$       190,051

$       186,346







Common shares outstanding (000)

933,325

932,938

928,850

 

Consolidated Statements of Income

(Dollars in millions, except per share amounts)




Three months ended


Twelve months ended




12/31/2022

9/30/2022

12/31/2021


12/31/2022

12/31/2021

Interest income








Loans

$             1,347

$             1,134

$                873


$             4,241

$             3,532


Loans held for sale

20

14

15


56

50


Securities available for sale

195

196

148


752

546


Held-to-maturity securities

64

55

52


213

185


Trading account assets

10

8

5


31

19


Short-term investments

48

32

8


97

28


Other investments

11

5

2


22

7



Total interest income

1,695

1,444

1,103


5,412

4,367

Interest expense








Deposits

186

59

15


279

67


Federal funds purchased and securities sold under repurchase agreements

16

19


41


Bank notes and other short-term borrowings

54

24

2


90

8


Long-term debt

219

146

53


475

221



Total interest expense

475

248

70


885

296

Net interest income

1,220

1,196

1,033


4,527

4,071

Provision for credit losses

265

109

4


502

(418)

Net interest income after provision for credit losses

955

1,087

1,029


4,025

4,489

Noninterest income








Trust and investment services income

126

127

135


526

530


Investment banking and debt placement fees

172

154

323


638

937


Service charges on deposit accounts

71

92

90


350

337


Operating lease income and other leasing gains

24

19

37


103

148


Corporate services income

89

96

76


372

288


Cards and payments income

85

91

86


341

415


Corporate-owned life insurance income

33

33

34


132

128


Consumer mortgage income

9

14

25


58

131


Commercial mortgage servicing fees

42

44

48


167

160


Other income

20

13

55


31

120



Total noninterest income

671

683

909


2,718

3,194

Noninterest expense








Personnel

674

655

674


2,566

2,561


Net occupancy

72

72

75


295

300


Computer processing

82

77

73


314

284


Business services and professional fees

60

47

70


212

227


Equipment

20

23

25


92

100


Operating lease expense

22

24

31


101

126


Marketing

31

30

37


123

126


Other expense

195

178

185


707

705



Total noninterest expense

1,156

1,106

1,170


4,410

4,429

Income (loss) from continuing operations before income taxes

470

664

768


2,333

3,254


Income taxes

76

124

141


422

642

Income (loss) from continuing operations

394

540

627


1,911

2,612


Income (loss) from discontinued operations, net of taxes

2

2


6

13

Net income (loss)

394

542

629


1,917

2,625

Net income (loss) attributable to Key

$                394

$                542

$                629


$             1,917

2,625










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

$                356

$                513

$                601


$             1,793

$              2506

Net income (loss) attributable to Key common shareholders

356

515

603


1,799

2519

Per common share







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

$                 .38

$                 .55

$                 .65


$               1.94

$               2.64

Income (loss) from discontinued operations, net of taxes


0.01

.01

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

.38

.55

.65


1.94

2.65

Per common share — assuming dilution







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

$                 .38

$                 .55

$                 .64


$               1.92

$               2.62

Income (loss) from discontinued operations, net of taxes


0.01

.01

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

.38

.55

.64


1.93

2.63










Cash dividends declared per common share

$               .205

$               .195

$               .195


$               .790

$               .750










Weighted-average common shares outstanding (000)

924,974

924,594

922,970


924,363

947,065


Effect of common share options and other stock awards

8,750

7,861

11,758


8,696

10,349

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

933,724

932,455

934,729


933,059

957,414

(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)



Fourth Quarter 2022


Third Quarter 2022


Fourth 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)

$       58,212

$              712

4.85 %


$       56,151

$              578

4.09 %


$       49,510

$              447

3.58 %


Real estate — commercial mortgage

16,445

208

5.01


16,002

168

4.18


13,671

121

3.51


Real estate — construction

2,450

35

5.70


2,306

27

4.58


2,119

19

3.50


Commercial lease financing

3,825

26

2.71


3,892

25

2.58


3,953

26

2.57


Total commercial loans

80,932

981

4.81


78,351

798

4.05


69,253

613

3.51


Real estate — residential mortgage

21,128

164

3.11


20,256

152

3.00


15,017

102

2.72


Home equity loans

7,890

103

5.18


8,024

91

4.51


8,603

79

3.64


Consumer direct loans

6,713

75

4.45


6,766

72

4.25


5,509

60

4.33


Credit cards

993

31

12.61


969

28

11.63


941

24

10.13


Consumer indirect loans

46


52


74


Total consumer loans

36,770

373

4.05


36,067

343

3.80


30,144

265

3.49


Total loans

117,702

1,354

4.57


114,418

1,141

3.97


99,397

878

3.50


Loans held for sale

1,421

20

5.63


1,102

14

5.22


2,202

15

2.83


Securities available for sale (b), (e)

39,149

195

1.70


42,271

196

1.69


42,329

148

1.39


Held-to-maturity securities (b)

8,278

64

3.07


7,933

55

2.79


7,991

52

2.61


Trading account assets

863

10

4.57


841

8

3.65


853

5

2.48


Short-term investments

3,159

48

6.02


3,043

32

4.13


15,505

8

.20


Other investments (e)

1,294

11

3.15


1054

5

1.78


634

2

1.15


Total earning assets

171,866

1,702

3.79


170,662

1,451

3.30


168,911

1,108

2.60


Allowance for loan and lease losses

(1,145)




(1,099)




(1,081)




Accrued income and other assets

18,421




18,629




17,133




Discontinued assets

447




478




574




Total assets

$    189,589




$    188,670




$    185,537



Liabilities













NOW and money market deposit accounts

$       85,798

$              154

.71


$       83,050

$                50

.24


$       88,110

$                11

.05


Savings deposits

7,795

1

.03


7,904

.01


7,375

.01


Certificates of deposit ($100,000 or more)

1,351

3

.93


1,347

2

.47


1,793

2

.53


Other time deposits

4,757

28

2.33


2,713

7

.97


2,233

2

.21


Total interest-bearing deposits

99,701

186

.74


95,014

59

.25


99,511

15

.06


Federal funds purchased and securities sold
under repurchase agreements

1,752

16

3.52


3,562

19

2.10


230

.02


Bank notes and other short-term borrowings

5,420

54

3.94


3,725

24

2.53


789

2

1.45


Long-term debt (f), (g)

18,351

219

4.77


17,704

146

3.32


12,159

53

1.74


Total interest-bearing liabilities

125,224

475

1.50


120,005

248

.82


112,689

70

.25


Noninterest-bearing deposits

45,965




49,215




51,494




Accrued expense and other liabilities

4,785




4,358




3,309




Discontinued liabilities (g)

447




478




574




Total liabilities

$    176,421




$    174,056




$    168,066



Equity













Key shareholders' equity

$       13,168




$       14,614




$       17,471




Noncontrolling interests










Total equity

13,168




14,614




17,471




Total liabilities and equity

$    189,589




$    188,670




$    185,537



Interest rate spread (TE)



2.28 %




2.48 %




2.36 %

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


$           1,227

2.73 %



$           1,203

2.74 %



$           1,038

2.44 %

TE adjustment (b)


7




7




5



Net interest income, GAAP basis


$           1,220




$           1,196




$           1,033


(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 December 31, 2022, September 30, 2022, and December 31, 2021.   

(c)

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

(d)

Commercial and industrial average balances include $171 million, $162 million, and $141 million of assets from commercial credit cards for the three months ended December 31, 2022, September 30, 2022, and December 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

 

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates  From Continuing Operations

(Dollars in millions)



Twelve months ended December 31, 2022



Twelve months ended December 31, 2021



Average


Yield/



Average


Yield/



Balance

Interest (a)

Rate (a)



Balance

Interest (a)

Rate (a)

Assets










Loans: (b), (c)










Commercial and industrial (d)

$         54,970

$           2,148

3.91 %



$         50,931

$           1,795

3.52 %


Real estate — commercial mortgage

15,572

633

4.07



13,118

472

3.60


Real estate — construction

2,229

99

4.44



2,113

77

3.61


Commercial lease financing

3,869

98

2.54



4,019

114

2.84


Total commercial loans

76,640

2,978

3.89



70,181

2,458

3.50


Real estate — residential mortgage

19,036

559

2.94



12,252

348

2.84


Home equity loans

8,115

347

4.28



8,967

336

3.74


Consumer direct loans

6,490

277

4.27



5,105

233

4.56


Credit cards

959

107

11.23



925

94

10.11


Consumer indirect loans

62



2,839

90

3.19


Total consumer loans

34,662

1,290

3.72



30,088

1,101

3.66


  Total loans

111,302

4,268

3.84



100,269

3,559

3.55


Loans held for sale

1,278

56

4.41



1,700

50

2.96


Securities available for sale (b), (e)

42,325

752

1.62



35,765

546

1.53


Held-to-maturity securities (b)

7,676

213

2.77



7,035

185

2.63


Trading account assets

850

31

3.61



820

19

2.35


Short-term investments

4,264

97

2.28



17,529

28

.16


Other investments (e)

952

22

2.26



621

7

1.14


Total earning assets

168,647

5,439

3.15



163,739

4,394

2.69


Allowance for loan and lease losses

(1,101)





(1,340)




Accrued income and other assets

18,340





16,520




Discontinued assets

492





632




Total assets

$       186,378





$       179,551



Liabilities










NOW and money market deposit accounts

$         85,673

$               234

.27



$         84,736

$                 41

.05


Savings deposits

7,798

1

.01



6,893

1

.02


Certificates of deposit ($100,000 or more)

1,455

8

.56



2,135

16

.72


Other time deposits

2,892

36

1.25



2,540

9

.37


Total interest-bearing deposits

97,818

279

.29



96,304

67

.07


Federal funds purchased and securities sold under repurchase agreements

2,107

41

1.93



239

.02


Bank notes and other short-term borrowings

2,963

90

3.02



770

8

1.08


Long-term debt (f), (g)

14,915

475

3.19



12,391

221

1.79


Total interest-bearing liabilities

117,803

885

.75



109,704

296

.27


Noninterest-bearing deposits

49,044





48,731




Accrued expense and other liabilities

4,309





2,819




Discontinued liabilities (g)

492





632




Total liabilities

$       171,648





$       161,886



Equity










Key shareholders' equity

$         14,730





$         17,665




Noncontrolling interests








Total equity

14,730





17,665




Total liabilities and equity

$       186,378





$       179,551



Interest rate spread (TE)



2.40 %





2.42 %

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


$           4,554

2.64 %




$           4,098

2.50 %

TE adjustment (b)


27





27



Net interest income, GAAP basis


$           4,527





$           4,071












(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 twelve months ended December 31, 2022, and December 31, 2021.   

(c)

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

(d)

Commercial and industrial average balances include $157 million and $134 million of assets from commercial credit cards for the twelve months ended December 31, 2022, and December 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


Twelve months ended


12/31/2022

9/30/2022

12/31/2021


12/31/2022

12/31/2021

Personnel (a)

$            674

$            655

$            674


$         2,566

$         2,561

Net occupancy

72

72

75


295

300

Computer processing

82

77

73


314

284

Business services and professional fees

60

47

70


212

227

Equipment

20

23

25


92

100

Operating lease expense

22

24

31


101

126

Marketing

31

30

37


123

126

Other expense

195

178

185


707

705

Total noninterest expense

$         1,156

$         1,106

$         1,170


$         4,410

$         4,429

Average full-time equivalent employees (b)

18,210

17,907

16,797


17,660

16,974

(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


Twelve months ended


12/31/2022

9/30/2022

12/31/2021


12/31/2022

12/31/2021

Salaries and contract labor

$            407

$            388

$           342


$         1,500

$         1,311

Incentive and stock-based compensation

171

176

243


693

861

Employee benefits

94

89

89


363

388

Severance

2

2


10

1

Total personnel expense

$            674

$            655

$           674


$         2,566

$         2,561

 

Loan Composition

(Dollars in millions)











Change 12/31/2022 vs.


12/31/2022

9/30/2022

12/31/2021


9/30/2022

12/31/2021

Commercial and industrial (a)

$        59,647

$        56,971

$        50,525


4.7 %

18.1 %

Commercial real estate:







Commercial mortgage

16,352

16,400

14,244


(.3)

14.8

Construction

2,530

2,349

1,996


7.7

26.8

  Total commercial real estate loans

18,882

18,749

16,240


.7

16.3

Commercial lease financing (b)

3,936

3,877

4,071


1.5

(3.3)

Total commercial loans

82,465

79,597

70,836


3.6

16.4

Residential — prime loans:







Real estate — residential mortgage

21,401

20,838

15,756


2.7

35.8

Home equity loans

7,951

7,926

8,467


.3

(6.1)

  Total residential — prime loans

29,352

28,764

24,223


2.0

21.2

Consumer direct loans

6,508

6,803

5,753


(4.3)

13.1

Credit cards

1,026

977

972


5.0

5.6

Consumer indirect loans

43

50

70


(14.0)

(38.6)

Total consumer loans

36,929

36,594

31,018


.9

19.1

Total loans (c), (d)

$      119,394

$      116,191

$      101,854


2.8 %

17.2 %

(a)

Loan balances include $172 million, $166 million, and $139 million of commercial credit card balances at December 31, 2022, September 30, 2022, and December 31, 2021, respectively.

(b)

Commercial lease financing includes receivables held as collateral for a secured borrowing of $8 million, $10 million, and $16 million at December 31, 2022, September 30, 2022, and December 31, 2021, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c)

Total loans exclude loans of $434 million at December 31, 2022, $467 million at September 30, 2022, and $567 million at December 31, 2021, related to the discontinued operations of the education lending business.

(d)

Accrued interest of $417 million, $274 million, and $198 million at December 31, 2022, September 30, 2022, and December 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)













Change 12/31/2022 vs.


12/31/2022

9/30/2022

12/31/2021


9/30/2022

12/31/2021

Commercial and industrial

$            477

$            292

$         1,438


63.4 %

(66.8) %

Real estate — commercial mortgage

427

693

1,010


(38.4)

(57.7)

Commercial lease financing

35

2


N/M

N/M

Real estate — residential mortgage

24

61

281


(60.7)

(91.5)

Total loans held for sale

$            963

$         1,048

$         2,729


(8.1) %

(64.7) %








 N/M = Not Meaningful

 

Summary of Changes in Loans Held for Sale

(Dollars in millions)








4Q22

3Q22

2Q22

1Q22

4Q21

Balance at beginning of period

$          1,048

$         1,306

$         1,170

$         2,729

$         1,805

New originations

3,158

2,157

2,837

2,724

5,704

Transfers from (to) held to maturity, net

(48)

(57)

(1)

Loan sales

(3,124)

(2,446)

(2,506)

(4,269)

(4,742)

Loan draws (payments), net

(71)

26

(133)

(12)

(12)

Valuation and other adjustments

5

(5)

(2)

(25)

Balance at end of period

$            963

$         1,048

$         1,306

$         1,170

$         2,729

 

Summary of Loan and Lease Loss Experience From Continuing Operations

(Dollars in millions)









Three months ended


Twelve months ended


12/31/2022

9/30/2022

12/31/2021


12/31/2022

12/31/2021

Average loans outstanding

$ 117,702

$ 114,418

$  99,397


$ 111,302

$ 100,269

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

1,144

1,099

1,084


1,061

1,626

Loans charged off:







Commercial and industrial

35

49

33


153

174








Real estate — commercial mortgage

13

3

1


23

40

Real estate — construction


  Total commercial real estate loans

13

3

1


23

40

Commercial lease financing

1


2

6

  Total commercial loans

48

52

35


178

220

Real estate — residential mortgage

1

(1)


(2)

(2)

Home equity loans

2


1

9

Consumer direct loans

9

8

7


34

29

Credit cards

8

7

6


30

27

Consumer indirect loans

2

1


4

39

  Total consumer loans

19

16

15


67

102

  Total loans charged off

67

68

50


245

322

Recoveries:







Commercial and industrial

18

13

23


50

83








Real estate — commercial mortgage

1

2

1


5

9

Real estate — construction


1

  Total commercial real estate loans

1

2

1


6

9

Commercial lease financing

2

1


4

7

  Total commercial loans

21

16

24


60

99

Real estate — residential mortgage

3

1

1


5

3

Home equity loans

1

1


3

5

Consumer direct loans

1

4

2


8

8

Credit cards

1

2

2


6

8

Consumer indirect loans

1

1


2

15

  Total consumer loans

5

9

7


24

39

  Total recoveries

26

25

31


84

138

Net loan charge-offs

(41)

(43)

(19)


(161)

(184)

Provision (credit) for loan and lease losses

234

88

(4)


437

(381)

Allowance for loan and lease losses at end of period

$    1,337

$    1,144

$    1,061


$    1,337

$    1,061








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

194

173

152


160

197

Provision (credit) for losses on lending-related commitments

31

21

8


65

(37)

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

$       225

$       194

$       160


$       225

$       160








Total allowance for credit losses at end of period

$    1,562

$    1,338

$    1,221


$    1,562

$    1,221








Net loan charge-offs to average total loans

.14 %

.15 %

.08 %


.14 %

.18 %

Allowance for loan and lease losses to period-end loans

1.12

.98

1.04


1.12

1.04

Allowance for credit losses to period-end loans

1.31

1.15

1.20


1.31

1.20

Allowance for loan and lease losses to nonperforming loans

345

293

234


345

234

Allowance for credit losses to nonperforming loans

404

343

269


404

269








Discontinued operations — education lending business:







Loans charged off

$          2

$          1

$          1


$          6

$          4

Recoveries

1


2

2

  Net loan charge-offs

$         (2)

$         —

$         (1)


$         (4)

$         (2)

(a)  Included in "Accrued expense and other liabilities" on the balance sheet.

 

Asset Quality Statistics From Continuing Operations

(Dollars in millions)


4Q22

3Q22

2Q22

1Q22

4Q21

Net loan charge-offs

$         41

$         43

$         44

$         33

$         19

Net loan charge-offs to average total loans

.14 %

.15 %

.16 %

.13 %

.08 %

Allowance for loan and lease losses

$    1,337

$    1,144

$    1,099

$    1,105

$    1,061

Allowance for credit losses (a)

1,562

1,338

1,272

1,271

1,221

Allowance for loan and lease losses to period-end loans

1.12 %

.98 %

.98 %

1.04 %

1.04 %

Allowance for credit losses to period-end loans

1.31

1.15

1.13

1.19

1.20

Allowance for loan and lease losses to nonperforming loans

345

293

256

252

234

Allowance for credit losses to nonperforming loans

404

343

297

290

269

Nonperforming loans at period end

$       387

$       390

$       429

$       439

$       454

Nonperforming assets at period end

420

419

463

467

489

Nonperforming loans to period-end portfolio loans

.32 %

.34 %

.38 %

.41 %

.45 %

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

.35

.36

.41

.44

.48

(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)


12/31/2022

9/30/2022

6/30/2022

3/31/2022

12/31/2021

Commercial and industrial

$       174

$       169

$       197

$       186

$       191







Real estate — commercial mortgage

21

34

35

40

44

Real estate — construction

Total commercial real estate loans

21

34

35

40

44

Commercial lease financing

1

2

2

3

4

Total commercial loans

196

205

234

229

239

Real estate — residential mortgage

77

66

67

73

72

Home equity loans

107

112

120

129

135

Consumer direct loans

3

3

3

4

4

Credit cards

3

3

3

3

3

Consumer indirect loans

1

1

2

1

1

Total consumer loans

191

185

195

210

215

Total nonperforming loans

387

390

429

439

454

OREO

13

12

9

8

8

Nonperforming loans held for sale

20

17

25

20

24

Other nonperforming assets

3

Total nonperforming assets

$       420

$       419

$       463

$       467

$       489

Accruing loans past due 90 days or more

60

47

41

55

68

Accruing loans past due 30 through 89 days

180

187

137

122

165

Restructured loans — accruing and nonaccruing (a)

236

254

216

219

220

Restructured loans included in nonperforming loans (a)

118

134

94

98

99

Nonperforming assets from discontinued operations — education lending business 

3

3

3

4

4

Nonperforming loans to period-end portfolio loans

.32 %

.34 %

.38 %

.41 %

.45 %

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

.35

.36

.41

.44

.48

(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)


4Q22

3Q22

2Q22

1Q22

4Q21

Balance at beginning of period

$          390

$          429

$          439

$          454

$          554

Loans placed on nonaccrual status

113

80

118

87

116

Charge-offs

(67)

(68)

(59)

(50)

(51)

Loans sold

(4)

(3)

(8)

(38)

Payments

(22)

(29)

(35)

(27)

(68)

Transfers to OREO

(1)

(1)

(2)

(1)

(1)

Loans returned to accrual status

(22)

(18)

(24)

(24)

(58)

Balance at end of period

$          387

$          390

$          429

$          439

$          454

 

Line of Business Results

(Dollars in millions)

















Change 4Q22 vs.


4Q22

3Q22

2Q22

1Q22

4Q21


3Q22

4Q21

Consumer Bank









Summary of operations









Total revenue (TE)

$             900

$             891

$             824

$             799

$             839


1.0 %

7.3 %

Provision for credit losses

105

37

8

43

14


183.8

650.0

Noninterest expense

699

667

676

663

613


4.8

14.0

Net income (loss) attributable to Key

73

142

107

71

161


(48.6)

(54.7)

Average loans and leases

43,149

42,568

40,827

38,654

37,841


1.4

14.0

Average deposits

87,243

90,044

91,273

91,516

90,385


(3.1)

(3.5)

Net loan charge-offs

21

17

23

22

22


23.5

(4.5)

Net loan charge-offs to average total loans

.19 %

.16 %

.23 %

.23 %

.23 %


18.8

(17.4)

Nonperforming assets at period end

$             202

$             195

$             203

$             217

$             222


3.6

(9.0)

Return on average allocated equity

8.66 %

16.20 %

11.66 %

8.02 %

18.05 %


(46.5)

(52.0)










Commercial Bank









Summary of operations









Total revenue (TE)

$             928

$             889

$             842

$             808

$           1027


4.4 %

(9.6) %

Provision for credit losses

165

74

37

41

(12)


123.0

N/M

Noninterest expense

460

450

410

413

501


2.2

(8.2)

Net income (loss) attributable to Key

250

295

317

284

448


(15.3)

(44.2)

Average loans and leases

74,100

71,464

67,825

64,684

61,078


3.7

21.3

Average loans held for sale

1,377

1,036

1,016

1,323

1,962


32.9

(29.8)

Average deposits

54,385

52,272

54,846

57,241

59,423


4.0

(8.5)

Net loan charge-offs

25

27

21

11


(7.4)

N/M

Net loan charge-offs to average total loans

.13 %

.15 %

.12 %

.07 %

— %


(13.3)

N/M

Nonperforming assets at period end

$             218

$             224

$             260

$             250

$             267


(2.7)

(18.4)

Return on average allocated equity

10.40 %

12.63 %

14.26 %

13.26 %

20.94 %


(17.7)

(50.3)

TE = Taxable Equivalent

 

(PRNewsfoto/KeyCorp)

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/keycorp-reports-fourth-quarter-2022-net-income-of-356-million-or-38-per-diluted-common-share-301725771.html

SOURCE KeyCorp