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KeyCorp Reports First Quarter 2018 Net Income Of $402 Million, Or $.38 Per Common Share

First quarter results reflect solid underlying trends in core businesses and ongoing benefits from recent investments

Company Release - 4/19/2018 6:30 AM ET

CLEVELAND, April 19, 2018 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced first quarter net income from continuing operations attributable to Key common shareholders of $402 million, or $.38 per common share, compared to $181 million, or $.17 per common share, for the fourth quarter of 2017 and $296 million, or $.27 per common share, for the first quarter of 2017. Key's reported results in the fourth quarter of 2017 included merger-related charges and the estimated impact of tax reform and related actions, resulting in a net impact of $.19 per common share. Key's results in the first quarter of 2017 included merger-related charges, resulting in an impact of $.05 per common share.

"First quarter was a good start to the year, with continuing momentum in our core businesses, as we grew and expanded relationships with our targeted clients. Revenue increased over 3% from the same period last year, driven by a higher net interest income, solid loan growth and stronger fee income. The growth in average loans this quarter was broad-based and primarily in commercial and industrial balances, which were up in excess of 3% linked quarter, as we continue to grow and expand our middle-market relationships. 

Our fee-based businesses continue to demonstrate our ability to offer a full range of solutions to our clients, including off-balance sheet financing alternatives that helped drive our investment banking and debt placement business to a record first quarter level. Expenses this quarter reflect expected seasonality, the acceleration of certain technology costs, and investments. Given our outlook for revenue growth and lower expenses for the rest of this year, we expect to make meaningful progress toward our long term efficiency ratio target of 54% to 56%."       

-       Beth Mooney, Chairman and CEO

 

Selected Financial Highlights















dollars in millions, except per share data





Change 1Q18 vs.



1Q18

4Q17

1Q17


4Q17

1Q17

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

$

402


$

181


$

296



122.1

%

35.8

%

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

.38


.17


.27



123.5


40.7


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

14.89

%

6.35

%

10.98

%


N/A


N/A


Return on average total assets from continuing operations

1.25


.57


.99



N/A


N/A


Common Equity Tier 1 ratio (b)

10.03


10.16


9.91



N/A


N/A


Book value at period end

$

13.07


$

13.09


$

12.71



(.2)

%

2.8

%

Net interest margin (TE) from continuing operations

3.15

%

3.09

%

3.13

%


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)

3/31/2018 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

 

INCOME STATEMENT HIGHLIGHTS














Revenue














dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Net interest income (TE)

$

952


$

952


$

929




2.5

%

Noninterest income

601


656


577



(8.4)

%

4.2


Total revenue

$

1,553


$

1,608


$

1,506



(3.4)

%

3.1

%








 TE = Taxable Equivalent

Taxable-equivalent net interest income was $952 million for the first quarter of 2018, and the net interest margin was 3.15%, compared to taxable-equivalent net interest income of $929 million and a net interest margin of 3.13% for the first quarter of 2017, reflecting the benefit from higher interest rates and low deposit betas. First quarter 2018 net interest income included $33 million of purchase accounting accretion, a decline of $20 million from the first quarter of 2017. 

Compared to the fourth quarter of 2017, taxable-equivalent net interest income was stable, and the net interest margin increased by six basis points. Both net interest income and the net interest margin benefited from higher interest rates and Key's asset sensitive balance sheet position, as well as an expected reduction from elevated liquidity levels in the fourth quarter. These benefits were offset by two fewer days in the first quarter of 2018, a lower taxable-equivalent adjustment resulting from the Tax Cuts and Jobs Act, and a decline in purchase accounting accretion.

Excluding purchase accounting accretion, taxable-equivalent net interest income increased $43 million from the first quarter of 2017 and increased $5 million compared to the fourth quarter of 2017.

Noninterest Income














dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Trust and investment services income

$

133


$

131


$

135



1.5

%

(1.5)

%

Investment banking and debt placement fees

143


200


127



(28.5)


12.6


Service charges on deposit accounts

89


89


87




2.3


Operating lease income and other leasing gains

32


27


23



18.5


39.1


Corporate services income

62


56


54



10.7


14.8


Cards and payments income

62


77


65



(19.5)


(4.6)


Corporate-owned life insurance income

32


37


30



(13.5)


6.7


Consumer mortgage income

7


7


6




16.7


Mortgage servicing fees

20


17


18



17.6


11.1


Other income

21


15


32



40.0


(34.4)


Total noninterest income

$

601


$

656


$

577



(8.4)

%

4.2

%








N/M = Not meaningful

Key's noninterest income was $601 million for the first quarter of 2018, compared to $577 million for the year-ago quarter. In the first quarter of 2018, Key benefited from investments in several fee-based businesses. The largest driver year-over-year was an increase in investment banking and debt placement fees, related to the Cain Brothers acquisition, as well as strength across the company's capital markets platform. In the first quarter of 2018, commercial mortgage banking and mergers and acquisitions advisory fees contributed to the strong performance. Operating lease income and other leasing gains also contributed to the increase, up $9 million from the year-ago period, driven by higher originations, and corporate services income grew $8 million related to higher loan and derivative trading income. These increases were partially offset by a decline in other income.

Compared to the fourth quarter of 2017, noninterest income decreased by $55 million. The decline was largely due to seasonal impacts in several fee income categories, including investment banking and debt placement fees, cards and payments income, and corporate-owned life insurance. Investment banking and debt placement fees declined from record results in the fourth quarter of 2017, though still reported a record first quarter for the business. These declines were partially offset by increases in other income, as well as operating lease income and other leasing gains related to higher originations.

Noninterest Expense














dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Personnel expense

$

594


$

608


$

556



(2.3)

%

6.8

%

Nonpersonnel expense

412


490


457



(15.9)


(9.8)


Total noninterest expense

$

1,006


$

1,098


$

1,013



(8.4)


(.7)









Notable items (a)


85


81



N/M

N/M

Total noninterest expense excluding notable items

$

1,006


$

1,013


$

932



(.7)

%

7.9

%








N/M = Not meaningful

(a)

Notable items for the fourth quarter of 2017 includes $56 million of merger-related charges and $29 million of estimated impacts of tax reform and related actions. Notable items for the first quarter of 2017 includes $81 million of merger-related charges. See the table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement which presents the computations of certain financial measures related to "notable items."

Key's noninterest expense was $1 billion for the first quarter of 2018, compared to $932 million, excluding notable items in the year-ago period. The year-over-year increase was primarily related to higher personnel costs, largely due to recent acquisitions, as well as accelerated technology investments and higher performance-based compensation. Higher marketing expense, operating lease expense, and intangible amortization expense drove the increase in nonpersonnel expense, but was partially offset by lower occupancy and other expense.

Noninterest expense decreased $7 million from the fourth quarter of 2017, excluding notable items in the prior period. Personnel expense reflected seasonally high employee benefits expense, as well as the aforementioned accelerated technology investments. These increases were more than offset by lower incentive compensation compared to the prior quarter, as well as lower nonpersonnel expense related to lower business services and professional fees, a seasonal decline in marketing expense, and a continued reduction in net occupancy expense.

 BALANCE SHEET HIGHLIGHTS

Average Loans














dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Commercial and industrial (a)

$

42,733


$

41,289


$

40,002



3.5

%

6.8

%

Other commercial loans

20,705


21,040


22,175



(1.6)


(6.6)


Home equity loans

11,877


12,128


12,611



(2.1)


(5.8)


Other consumer loans

11,612


11,549


11,345



.5


2.4


Total loans

$

86,927


$

86,006


$

86,133



1.1

%

.9

%








(a)

Commercial and industrial average loan balances include $120 million, $119 million, and $114 million of assets from commercial credit cards at March 31, 2018, December 31, 2017, and March 31, 2017, respectively.

Average loans were $86.9 billion for the first quarter of 2018, an increase of $794 million compared to the first quarter of 2017, reflecting broad-based growth in commercial and industrial loans with middle-market clients, as well as strength in auto lending, as the company expands into existing geographies and dealer relationships. In addition, reductions in commercial real estate loans over the past year reflect significantly higher debt placements and paydowns.

Compared to the fourth quarter of 2017, average loans increased by $921 million, largely the result of growth in commercial and industrial loans. Key realized growth across commercial client segments, with commercial and industrial loans up 2% in the Community Bank and 5% in the Corporate Bank, unannualized.

Average Deposits














dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Non-time deposits

$

90,719


$

92,251


$

91,745



(1.7)

%

(1.1)

%

Certificates of deposit ($100,000 or more)

6,972


6,776


5,627



2.9


23.9


Other time deposits

4,865


4,771


4,706



2.0


3.4


Total deposits

$

102,556


$

103,798


$

102,078



(1.2)

%

.5

%








Cost of total deposits

.36

%

.31

%

.23

%


N/A

N/A








N/A = Not Applicable

Average deposits totaled $102.6 billion for the first quarter of 2018, an increase of $478 million compared to the year-ago quarter. Certificates of deposits and other time deposits increased $1.5 billion, reflecting strength in Key's retail banking franchise and growth from commercial relationships. Additionally, consumer noninterest-bearing balances grew 10% from the prior year. NOW and money-market deposit accounts declined $792 million, partially driven by a shift to higher-yielding deposit products and the managed exit of certain higher cost corporate and public sector deposits.

Compared to the fourth quarter of 2018, average deposits decreased by $1.2 billion, driven by a decline in noninterest-bearing deposits, which were elevated during the fourth quarter of 2017 due to short-term escrows and seasonal deposit inflows. This decline was partially offset by growth in consumer noninterest-bearing deposits.

ASSET QUALITY














dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Net loan charge-offs

$

54


$

52


$

58



3.8

%

(6.9)

%

Net loan charge-offs to average total loans

.25

%

.24

%

.27

%


N/A

N/A

Nonperforming loans at period end (a)

$

541


$

503


$

573



7.6


(5.6)


Nonperforming assets at period end (a)

569


534


623



6.6


(8.7)


Allowance for loan and lease losses

881


877


870



.5


1.3


Allowance for loan and lease losses to nonperforming loans (a)

162.8

%

174.4

%

151.8

%


N/A

N/A

Provision for credit losses

$

61


$

49


$

63



24.5

%

(3.2)

%








(a)

Nonperforming loan balances exclude $690 million, $738 million, and $812 million of purchased credit impaired loans at March 31, 2018, December 31, 2017, and March 31, 2017, respectively.

N/A = Not Applicable

Key's provision for credit losses was $61 million for the first quarter of 2018, compared to $63 million for the first quarter of 2017 and $49 million for the fourth quarter of 2017. Key's allowance for loan and lease losses was $881 million, or 1.00% of total period-end loans, at March 31, 2018, compared to 1.01% at March 31, 2017, and 1.01% at December 31, 2017.

Net loan charge-offs for the first quarter of 2018 totaled $54 million, or .25% of average total loans. These results compare to $58 million, or .27%, for the first quarter of 2017, and $52 million, or .24%, for the fourth quarter of 2018.

At March 31, 2018, Key's nonperforming loans totaled $541 million, which represented .61% of period-end portfolio loans. These results compare to .67% at March 31, 2017, and .58% at December 31, 2017. Nonperforming assets at March 31, 2018, totaled $569 million, and represented .65% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .72% at March 31, 2017, and .62% at December 31, 2017.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at March 31, 2018.

Capital Ratios









3/31/2018


12/31/2017


3/31/2017


Common Equity Tier 1 (a)

10.03

%

10.16

%

9.91

%

Tier 1 risk-based capital (a)

10.84


11.01


10.74


Total risk based capital (a)

12.75


12.92


12.69


Tangible common equity to tangible assets (b)

8.22


8.23


8.51


Leverage (a)

9.84


9.73


9.81






(a)

3/31/2018 ratio is estimated.

(b)

The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "tangible common equity." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. See below for further information on the Regulatory Capital Rules.

Key's capital position remained strong in the first quarter. As shown in the preceding table, at March 31, 2018, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 10.03% and 10.84%, respectively. Key's tangible common equity ratio was 8.22% at March 31, 2018.

As a "standardized approach" banking organization, Key's mandatory compliance with the final Basel III capital framework for U.S. banking organizations (the "Regulatory Capital Rules") began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Key's estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 9.88% at March 31, 2018.  This estimate exceeds the fully phased-in required minimum Common Equity Tier 1 and Capital Conservation Buffer of 7.00%.

Summary of Changes in Common Shares Outstanding













in thousands





Change 1Q18 vs.



1Q18

4Q17

1Q17


4Q17

1Q17

Shares outstanding at beginning of period

1,069,084


1,079,039


1,079,314



(.9)

%

(.9)

%

Open market repurchases and return of shares under employee 
     compensation plans

(9,399)


(10,617)


(8,673)



(11.5)


8.4


Shares issued under employee compensation plans (net of cancellations)

5,254


662


6,270



693.7


(16.2)


Common Shares exchanged for Series A Preferred Stock



20,568



N/M


N/M



Shares outstanding at end of period

1,064,939


1,069,084


1,097,479



(.4)

%

(3.0)

%









N/M = Not Meaningful

Consistent with Key's 2017 Capital Plan, during the first quarter of 2018, Key declared a dividend of $.105 per common share, and completed $199 million of common share repurchases during the quarter. These repurchases included $156 million of common share repurchases in the open market and $43 million of share repurchases related to employee equity compensation programs.

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 1Q18 vs.



1Q18

4Q17

1Q17


4Q17

1Q17

Revenue from continuing operations (TE)







Key Community Bank

$

973


$

972


$

905



.1

%

7.5

%

Key Corporate Bank

559


605


578



(7.6)


(3.3)


Other Segments

22


30


29



(26.7)


(24.1)



Total segments

1,554


1,607


1,512



(3.3)


2.8


Reconciling Items

(1)


1


(6)



N/M


N/M



Total

$

1,553


$

1,608


$

1,506



(3.4)

%

3.1

%









Income (loss) from continuing operations attributable to Key







Key Community Bank

$

196


$

151


$

147



29.8

%

33.3

%

Key Corporate Bank

207


222


180



(6.8)


15.0


Other Segments

19


50


21



(62.0)


(9.5)



Total segments

422


423


348



(.2)


21.3


Reconciling Items (a)

(6)


(228)


(24)



N/M


N/M



Total

$

416


$

195


$

324



113.3

%

28.4

%









(a)

Reconciling items consists primarily of the unallocated portion of merger-related charges, certain estimated impacts of tax reform, and items not allocated to the business segments because they do not reflect their normal operations.

TE = Taxable Equivalent, N/M = Not Meaningful

 

 

Key Community Bank





















dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Summary of operations







Net interest income (TE)

$

688


$

674


$

628



2.1

%

9.6

%

Noninterest income

285


298


277



(4.4)


2.9


Total revenue (TE)

973


972


905



.1


7.5


Provision for credit losses

48


57


46



(15.8)


4.3


Noninterest expense

668


677


625



(1.3)


6.9


Income (loss) before income taxes (TE)

257


238


234



8.0


9.8


Allocated income taxes (benefit) and TE adjustments

61


87


87



(29.9)


(29.9)


Net income (loss) attributable to Key

$

196


$

151


$

147



29.8

%

33.3

%








Average balances







Loans and leases

$

47,680


$

47,405


$

47,085



.6

%

1.3

%

Total assets

51,681


51,471


51,063



.4


1.2


Deposits

79,945


80,352


79,148



(.5)


1.0









Assets under management at period end

$

39,003


$

39,588


$

37,417



(1.5)

%

4.2

%








TE = Taxable Equivalent

 

 

Additional Key Community Bank Data














dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Noninterest income







Trust and investment services income

$

104


$

98


$

98



6.1

%

6.1

%

Service charges on deposit accounts

76


76


75




1.3


Cards and payments income

51


67


55



(23.9)


(7.3)


Other noninterest income

54


57


49



(5.3)


10.2


Total noninterest income

$

285


$

298


$

277



(4.4)

%

2.9

%








Average deposit balances







NOW and money market deposit accounts

$

44,291


$

44,415


$

44,780



(.3)

%

(1.1)

%

Savings deposits

5,056


5,090


5,268



(.7)


(4.0)


Certificates of deposit ($100,000 or more)

4,961


4,628


3,879



7.2


27.9


Other time deposits

4,856


4,765


4,692



1.9


3.5


Noninterest-bearing deposits

20,781


21,454


20,529



(3.1)


1.2


Total deposits

$

79,945


$

80,352


$

79,148



(.5)

%

1.0

%








Home equity loans







Average balance

$

11,763


$

12,005


$

12,456





Combined weighted-average loan-to-value ratio (at date of origination)

70

%

70

%

70

%




Percent first lien positions

60


60


60












Other data







Branches

1,192


1,197


1,216





Automated teller machines

1,569


1,572


1,594












 

Key Community Bank Summary of Operations (1Q18 vs. 1Q17)

  • Positive operating leverage compared to prior year
  • Net income increased $49 million, or 33.3%, from prior year
  • Average commercial and industrial loans increased $1.1 billion, or 6.1%, from the prior year

Key Community Bank recorded net income attributable to Key of $196 million for the first quarter of 2018, compared to $147 million for the year-ago quarter, benefiting from momentum in Key's core businesses, First Niagara related synergies, and a lower tax rate as a result of tax reform.

Taxable-equivalent net interest income increased by $60 million, or 9.6%, from the first quarter of 2017. The increase was primarily attributable to the benefit from higher interest rates and growth in loans. Average loans and leases increased $595 million, or 1.3%, largely driven by a $1.1 billion, or 6.1%, increase in commercial and industrial loans. Additionally, average deposits increased $797 million, or 1.0%, from one year ago.

Noninterest income increased $8 million, or 2.9%, from the year-ago quarter, driven by higher assets under management from market growth, as well as increases across several fee categories.

The provision for credit losses increased by $2 million, or 4.3%, from the first quarter of 2017. Net loan charge-offs were flat from the first quarter of 2017, as overall credit quality was stable.

Noninterest expense increased $43 million, or 6.9%, from the year-ago quarter. Personnel expense increased $17 million, primarily driven by recent acquisitions and ongoing investments, including residential mortgage and HelloWallet. Nonpersonnel expense increased by $26 million, driven by technology development costs, marketing expenses, higher volume-related expenses, and the impact of recent acquisitions, including HelloWallet and merchant services.

Key Corporate Bank





















dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Summary of operations







Net interest income (TE)

$

272


$

284


$

304



(4.2)

%

(10.5)

%

Noninterest income

287


321


274



(10.6)


4.7


Total revenue (TE)

559


605


578



(7.6)


(3.3)


Provision for credit losses

14


(6)


18



N/M

(22.2)


Noninterest expense

314


354


304



(11.3)


3.3


Income (loss) before income taxes (TE)

231


257


256



(10.1)


(9.8)


Allocated income taxes and TE adjustments

24


35


76



(31.4)


(68.4)


Net income (loss) attributable to Key

$

207


$

222


$

180



(6.8)

%

15.0

%








Average balances







Loans and leases

$

38,260


$

37,460


$

37,688



2.1

%

1.5

%

Loans held for sale

1,118


1,345


1,097



(16.9)


1.9


Total assets

45,549


44,504


44,124



2.3


3.2


Deposits

20,815


21,558


21,002



(3.4)


(.9)









TE = Taxable Equivalent, N/M = Not Meaningful

 

 

Additional Key Corporate Bank Data














dollars in millions





Change 1Q18 vs.


1Q18

4Q17

1Q17


4Q17

1Q17

Noninterest income







Trust and investment services income

$

29


$

33


$

37



(12.1)

%

(21.6)

%

Investment banking and debt placement fees

141


195


124



(27.7)


13.7


Operating lease income and other leasing gains

27


25


21



8.0


28.6









Corporate services income

43


40


38



7.5


13.2


Service charges on deposit accounts

13


13


12




8.3


Cards and payments income

11


10


9



10.0


22.2


Payments and services income

67


63


59



6.3


13.6









Mortgage servicing fees

17


14


16



21.4


6.3


Other noninterest income

6


(9)


17



N/M


(64.7)


Total noninterest income

$

287


$

321


$

274



(10.6)

%

4.7

%








N/M = Not Meaningful

 

Key Corporate Bank Summary of Operations (1Q18 vs. 1Q17)

  • Commercial and industrial loans up $1.7 billion, or 7.9%, from prior year
  • Investment banking and debt placement fees up $17 million, or 14%, from prior year
  • Net income up $27 million, or 15.0%, from prior year

Key Corporate Bank recorded net income attributable to Key of $207 million for the first quarter of 2018, compared to $180 million for the same period one year ago.

Taxable-equivalent net interest income decreased by $32 million, or 10.5%, compared to the first quarter of 2017, $7 million of which was related to lower purchase accounting accretion, with the remaining due to lower spreads on earning assets. Average loan and lease balances increased $572 million, or 1.5%, from the year-ago quarter, driven by growth in commercial and industrial loans. Average deposit balances decreased $187 million, or .9%, from the year-ago quarter, driven by the managed exit of higher cost corporate and public sector deposits.

Noninterest income was up $13 million, or 4.7%, from the prior year. This increase was largely due to higher investment banking and debt placement fees, which were up $17 million, related to the acquisition of Cain Brothers, as well as continued growth in the core Key franchise. Operating lease income and other leasing gains increased $6 million due higher originations, and corporate services income increased $5 million, mostly due to higher derivatives revenue. These increases were partially offset by a decline in other noninterest income of $11 million, related to lower gains from certain real estate investments.

During the first quarter of 2018, the provision for credit losses decreased $4 million, or 22.2%, and net loan charge-offs declined $3 million, compared to the first quarter of 2017, related to improving credit quality in the overall portfolio.

Noninterest expense increased by $10 million, or 3.3%, from the first quarter of 2017. The increase from the prior year was largely driven by higher operating lease expense and intangible asset amortization.

Other Segments

Other Segments consist of Corporate Treasury, Key's Principal Investing unit, and various exit portfolios. Other Segments generated net income attributable to Key of $19 million for the first quarter of 2018, compared to $21 million for the same period last year.

*****

KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $137.0 billion at March 31, 2018.

Key provides deposit, lending, cash management, insurance, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 1,200 branches and more than 1,500 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.

 

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts.  Forward-looking statements usually can be identified by the use of words such as "goal," "objective," "plan," "expect," "assume," "anticipate," "intend," "project," "believe," "estimate," or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Forward-looking statements, by their nature, are subject to assumptions, risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete.  Factors that could cause Key's actual results to differ from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 2017, as well as in KeyCorp's subsequent SEC filings, all of which have been filed with the Securities and Exchange Commission (the "SEC") and are available on Key's website (www.key.com/ir) and on the SEC's website (www.sec.gov).  These factors may include, among others: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive regulation of the U.S. financial services industry. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

 

Notes to Editors:
A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 9:00 a.m. ET, on Thursday, April 19, 2018.  An audio replay of the call will be available through April 29, 2018.

*****

 

Financial Highlights

(dollars in millions, except per share amounts)




Three months ended




3/31/2018

12/31/2017

3/31/2017

Summary of operations





Net interest income (TE)

$

952


$

952


$

929



Noninterest income

601


656


577




Total revenue (TE)

1,553


1,608


1,506



Provision for credit losses

61


49


63



Noninterest expense

1,006


1,098


1,013



Income (loss) from continuing operations attributable to Key

416


195


324



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

2


1




Net income (loss) attributable to Key

418


196


324









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

402


181


296



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

2


1




Net income (loss) attributable to Key common shareholders

404


182


296








Per common share





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

$

.38


$

.17


$

.28



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





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

.38


.17


.28









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

.38


.17


.27



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





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

.38


.17


.27









Cash dividends declared

.105


.105


.085



Book value at period end

13.07


13.09


12.71



Tangible book value at period end

10.35


10.35


10.21



Market price at period end

19.55


20.17


17.78








Performance ratios





From continuing operations:





Return on average total assets

1.25

%

.57

%

.99

%


Return on average common equity

11.76


5.04


8.76



Return on average tangible common equity (c)

14.89


6.35


10.98



Net interest margin (TE)

3.15


3.09


3.13



Cash efficiency ratio (c)

62.9


66.7


65.8









From consolidated operations:





Return on average total assets

1.24

%

.57

%

.98

%


Return on average common equity

11.82


5.07


8.76



Return on average tangible common equity (c)

14.97


6.39


10.98



Net interest margin (TE)

3.13


3.07


3.11



Loan to deposit (d)

86.9


84.4


85.6








Capital ratios at period end





Key shareholders' equity to assets

10.90

%

10.91

%

11.14

%


Key common shareholders' equity to assets

10.16


10.17


10.37



Tangible common equity to tangible assets (c)

8.22


8.23


8.51



Common Equity Tier 1 (e)

10.03


10.16


9.91



Tier 1 risk-based capital (e)

10.84


11.01


10.74



Total risk-based capital (e)

12.75


12.92


12.69



Leverage (e)

9.84


9.73


9.81








 

 







Financial Highlights (continued)

(dollars in millions)




Three months ended




3/31/2018

12/31/2017

3/31/2017

Asset quality — from continuing operations




     Net loan charge-offs

$

54


$

52


$

58


     Net loan charge-offs to average loans

.25

%

.24

%

.27

%

     Allowance for loan and lease losses

$

881


$

877


$

870