KeyCorp Reports Record First Quarter 2021 Net Income Of $591 Million, Or $.61 Per Diluted Common Share

Rhea-AI Summary

KeyCorp (NYSE: KEY) reported a net income of $591 million, or $0.61 per diluted share for Q1 2021, up from $549 million in Q4 2020 and significantly higher than $118 million in Q1 2020. Strong credit quality and record revenues were highlighted, driven by investment banking and consumer banking growth. The Common Equity Tier 1 ratio stood at 9.8%. The company launched Laurel Road for Doctors, enhancing its digital reach. A $900 million share repurchase program is underway, with $135 million executed in Q1. Overall, KeyCorp is positioned for growth as economic recovery progresses.

Positive

• Net income increased to $591 million in Q1 2021, a 7.7% rise from Q4 2020.
• Common Equity Tier 1 ratio at 9.8%, above target range of 9.0% to 9.5%.
• Launch of Laurel Road for Doctors expands digital financial services for healthcare professionals.
• Share repurchase program of $900 million authorized, with $135 million executed in Q1.

Negative

• Total revenue decreased by 5.1% from Q4 2020 to $1.75 billion.
• Net interest margin declined to 2.61%, reduced from 2.70% in Q4 2020.
• Noninterest income dropped 8.0% compared to Q4 2020 due to lower investment banking fees.

CLEVELAND, April 20, 2021 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $591 million, or $.61 per diluted common share for the first quarter of 2021. This compared to $549 million, or $.56 per diluted common share, for the fourth quarter of 2020 and $118 million, or $.12 per diluted common share, for the first quarter of 2020. 

This was a strong start to the year for Key as we executed our strategy, grew and expanded client relationships, and delivered positive operating leverage. Our results reflect strong credit quality as well as record first quarter revenues, with strength in our investment banking business and ongoing momentum from our consumer growth engines.

We have continued to make investments in our business to position the company for success. In March, we successfully launched Laurel Road for Doctors, a digital platform tailored to the unique financial needs of healthcare professionals. Additionally, this platform expands our digital reach nationally, for this targeted client segment. Laurel Road for Doctors underscores our commitment to both targeted scale and digital transformation.

Credit quality continued to be a strength this quarter. Our strong risk management practices contributed to broad-based improvement in our credit metrics. 

Maintaining our strong capital position also remains a priority. Our Common Equity Tier 1 ratio at the end of the first quarter was 9.8%, which is above our targeted range of 9.0% to 9.5%. In January, our Board of Directors authorized a $900 million share repurchase program of which we executed $135 million in the first quarter. 

I remain optimistic about the future as we emerge from the pandemic and the economic recovery continues. Key is well-positioned to grow and deliver on our commitments to all of our stakeholders.

     -  Chris Gorman, Chairman and CEO

Selected Financial Highlights
dollars in millions, except per share data												Change 1Q21 vs.
		1Q21			4Q20			1Q20				4Q20		1Q20
Income (loss) from continuing operations attributable to Key common shareholders		$	591		$	549		$	118			7.7	%	400.8	%
Income (loss) from continuing operations attributable to Key common shareholders per      common share — assuming dilution		.61			.56			.12				8.9		408.3
Return on average tangible common equity from continuing operations (a)		18.25		%	16.61		%	3.82		%		N/A		N/A
Return on average total assets from continuing operations		1.44			1.35			.40				N/A		N/A
Common Equity Tier 1 ratio (b)		9.8			9.7			8.9				N/A		N/A
Book value at period end		$	16.22		$	16.53		$	15.95			(1.9)	%	1.7	%
Net interest margin (TE) from continuing operations		2.61		%	2.70		%	3.01		%		N/A		N/A

(a)	The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "Return on average tangible common equity from continuing operations." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.
(b)	March 31, 2021 ratio is estimated.
TE = Taxable Equivalent, N/A = Not Applicable

 

INCOME STATEMENT HIGHLIGHTS
Revenue
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Net interest income (TE)	$	1,012		$	1,043		$	989			(3.0)	%	2.3	%
Noninterest income	738			802			477				(8.0)		54.7
Total revenue	$	1,750		$	1,845		$	1,466			(5.1)	%	19.4	%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $1.0 billion for the first quarter of 2021, compared to taxable-equivalent net interest income of $989 million for the first quarter of 2020. The increase in net interest income reflects higher earning asset balances and loan fees, partially offset by a lower net interest margin. The net interest margin was impacted by lower interest rates and a change in balance sheet mix, including elevated levels of liquidity. 

Compared to the fourth quarter of 2020, taxable-equivalent net interest income decreased by $31 million and the net interest margin decreased by 9 basis points. The decrease in both net interest income and the net interest margin reflects lower reinvestment yields, lower loan fees, and an unfavorable balance sheet mix, including elevated levels of liquidity, partly offset by lower interest-bearing deposit costs. Net interest income was also impacted by two fewer days in the first quarter of 2021.

Noninterest Income
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Trust and investment services income	$	133		$	123		$	133			8.1	%	—	%
Investment banking and debt placement fees	162			243			116				(33.3)		39.7
Service charges on deposit accounts	73			82			84				(11.0)		(13.1)
Operating lease income and other leasing gains	38			39			30				(2.6)		26.7
Corporate services income	64			63			62				1.6		3.2
Cards and payments income	105			97			66				8.2		59.1
Corporate-owned life insurance income	31			38			36				(18.4)		(13.9)
Consumer mortgage income	47			43			20				9.3		135.0
Commercial mortgage servicing fees	34			32			18				6.3		88.9
Other income	51			42			(88)				21.4		(158.0)
Total noninterest income	$	738		$	802		$	477			(8.0)	%	54.7	%

Compared to the first quarter of 2020, noninterest income increased by $261 million, primarily driven by a $139 million increase in other income including $92 million of market-related valuation adjustments in the year-ago quarter. Investment banking and debt placement fees increased $46 million from the year-ago period, due to strength in the debt and equity markets. Cards and payments income increased $39 million, due to heightened prepaid card activity. Additionally, investments made in Key's mortgage business continue to drive consumer mortgage income and commercial mortgage servicing fees, which increased $27 million and $16 million, respectively, from the year-ago quarter.

Compared to the fourth quarter of 2020, noninterest income decreased by $64 million. The largest driver of the quarter-over-quarter decrease was a $81 million decrease in investment banking and debt placement fees, partially driven by expected seasonality. Partially offsetting the decrease was a $10 million increase in trust and investment services income and a $8 million increase in cards and payments income. 

Noninterest Expense
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Personnel expense	$	624		$	661		$	515			(5.6)	%	21.2	%
Nonpersonnel expense	447			467			416				(4.3)		7.5
Total noninterest expense	$	1,071		$	1,128		$	931			(5.1)	%	15.0	%

Key's noninterest expense was $1.1 billion for the first quarter of 2021, an increase of $140 million from the year-ago period. The increase is primarily related to higher personnel costs of $109 million, reflecting higher incentive and stock-based compensation, attributed to an increase in revenue and stock performance and an increase in employee benefits. Other drivers for the year-over-year increases include payments-related expenses from prepaid card activity incurred in the current period, as well as computer processing expenses.

Compared to the fourth quarter of 2020, noninterest expense decreased $57 million. This was largely due to decreases in severance, incentive and stock-based compensation, and salaries and contract labor. Additionally, other expense decreased $22 million, partially due to lower charitable contributions.

BALANCE SHEET HIGHLIGHTS
Average Loans
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Commercial and industrial (a)	$	52,581		$	53,562		$	49,466			(1.8)	%	6.3	%
Other commercial loans	18,848			19,174			19,779				(1.7)		(4.7)
Total consumer loans	29,299			28,974			26,929				1.1		8.8
Total loans	$	100,728		$	101,710		$	96,174			(1.0)	%	4.7	%

(a)	Commercial and industrial average loan balances include $126 million, $129 million, and $145 million of assets from commercial credit cards at March 31, 2021, December 31, 2020, and March 31, 2020, respectively.

Average loans were $100.7 billion for the first quarter of 2021, an increase of $4.6 billion compared to the first quarter of 2020. Commercial loans increased $2.2 billion, reflecting Key's participation in the Paycheck Protection Program ("PPP"), partially offset by decreased utilization versus the year-ago period. Consumer loans increased $2.4 billion, driven by strength from Laurel Road and Key's consumer mortgage business.

Compared to the fourth quarter of 2020, average loans decreased by $1.0 billion. Commercial loans declined due to the forgiveness of a portion of PPP loans and lower commercial utilization rates. Consumer loans continue to reflect strength from Key's consumer mortgage business, as well as Laurel Road.

Average Deposits
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Non-time deposits	$	132,267		$	129,529		$	99,117			2.1	%	33.4	%
Certificates of deposit ($100,000 or more)	2,571			2,983			6,310				(13.8)		(59.3)
Other time deposits	2,902			3,209			4,901				(9.6)		(40.8)
Total deposits	$	137,740		$	135,721		$	110,328			1.5	%	24.8	%
Cost of total deposits	.06		%	.08		%	.62		%		N/A		N/A

N/A = Not Applicable

Average deposits totaled $137.7 billion for the first quarter of 2021, an increase of $27.4 billion compared to the year-ago quarter, reflecting growth from consumer and commercial relationships, partially offset by a decline in time deposits as a result of lower interest rates.

Compared to the fourth quarter of 2020, average deposits increased by $2.0 billion, primarily driven by broad-based commercial growth and higher consumer balances.

ASSET QUALITY
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Net loan charge-offs	$	114		$	135		$	84			(15.6)	%	35.7	%
Net loan charge-offs to average total loans	.46		%	.53		%	.35		%		N/A		N/A
Nonperforming loans at period end	$	728		$	785		$	632			(7.3)		15.2
Nonperforming assets at period end	790			937			844				(15.7)		(6.4)
Allowance for loan and lease losses	1,438			1,626			1,359				(11.6)		5.8
Allowance for credit losses	1,616			1,823			1,520				(11.4)		6.3
Allowance for loan and lease losses to nonperforming loans	197.5		%	207.1		%	215.0		%		N/A		N/A
Allowance for credit losses to nonperforming loans	222.0			232.2			240.5				N/A		N/A
Provision for credit losses	$	(93)		$	20		$	359			(565.0)	%	(125.9)	%

N/A = Not Applicable

Key's provision for credit losses was a net benefit of $93 million, including a $207 million reserve release for the first quarter of 2021, compared to an expense of $359 million in the first quarter of 2020 and an expense of $20 million in the fourth quarter of 2020. The reserve release was largely driven by expected improvement in the economic outlook.

Net loan charge-offs for the first quarter of 2021 totaled $114 million, or .46% of average total loans. These results compare to $84 million, or .35%, for the first quarter of 2020 and $135 million, or .53%, for the fourth quarter of 2020. Key's allowance for credit losses was $1.6 billion, or 1.60% of total period-end loans at March 31, 2021, compared to 1.47% at March 31, 2020, and 1.80% at December 31, 2020.

At March 31, 2021, Key's nonperforming loans totaled $728 million, which represented .72% of period-end portfolio loans. These results compare to .61% at March 31, 2020, and .78% at December 31, 2020. Nonperforming assets at March 31, 2021, totaled $790 million, and represented .78% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .82% at March 31, 2020, and .92% at December 31, 2020.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at March 31, 2021.

Capital Ratios
	3/31/2021		12/31/2020		3/31/2020
Common Equity Tier 1 (a)	9.8	%	9.7	%	8.9	%
Tier 1 risk-based capital (a)	11.2		11.1		10.2
Total risk-based capital (a)	13.4		13.4		12.2
Tangible common equity to tangible assets (b)	7.5		7.9		8.3
Leverage (a)	8.9		8.9		9.8

(a)	March 31, 2021 ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.
(b)	The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "tangible common equity." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

Key's capital position remained strong in the first quarter of 2021. As shown in the preceding table, at March 31, 2021, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.8% and 11.2%, respectively. Key's tangible common equity ratio was 7.5% at March 31, 2021.

Key has elected the CECL phase-in option provided by regulatory guidance which delays for two years the estimated impact of CECL on regulatory capital and phases it in over three years beginning in 2022. On a fully phased-in basis, Key's Common Equity Tier 1 ratio would be reduced by 25 basis points.

Summary of Changes in Common Shares Outstanding
in thousands									Change 1Q21 vs.
		1Q21		4Q20		1Q20			4Q20		1Q20
Shares outstanding at beginning of period		975,773		976,205		977,189			—		(.1)	%
Open market repurchases and return of shares under employee compensation      plans		(9,277)		(1,092)		(7,862)			749.5		18.0
Shares issued under employee compensation plans (net of cancellations)		6,091		660		5,992			822.9	%	1.7
	Shares outstanding at end of period	972,587		975,773		975,319			(.3)		(.3)	%

N/M = Not Meaningful

Consistent with Key's 2020 Capital Plan, during the first quarter of 2021, Key declared a dividend of $.185 per common share. In January, Key announced a new share repurchase authorization program of up to $900 million, applicable through September 30, 2021. During the first quarter, Key completed $135 million of common share repurchases.

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 1Q21 vs.
		1Q21			4Q20			1Q20				4Q20		1Q20
Revenue from continuing operations (TE)
Consumer Bank		$	864		$	896		$	810			(3.6)	%	6.7	%
Commercial Bank		858			922			641				(6.9)		33.9
Other (a)		28			27			15				3.7		86.7
	Total	$	1,750		$	1,845		$	1,466			(5.1)	%	19.4	%
Income (loss) from continuing operations attributable to Key
Consumer Bank		$	217		$	225		$	103			(3.6)	%	110.7	%
Commercial Bank		383			310			66				23.5		480.3
Other (a)		18			40			(24)				(55.0)		N/M
	Total	$	618		$	575		$	145			7.5	%	326.2	%

(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, N/M = Not Meaningful

 

Consumer Bank
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Summary of operations
Net interest income (TE)	$	607		$	638		$	581			(4.9)	%	4.5	%
Noninterest income	257			258			229				(.4)		12.2
Total revenue (TE)	864			896			810				(3.6)		6.7
Provision for credit losses	(23)			(5)			136				(360.0)		(116.9)
Noninterest expense	601			606			539				(.8)		11.5
Income (loss) before income taxes (TE)	286			295			135				(3.1)		111.9
Allocated income taxes (benefit) and TE adjustments	69			70			32				(1.4)		115.6
Net income (loss) attributable to Key	$	217		$	225		$	103			(3.6)	%	110.7	%
Average balances
Loans and leases	$	39,249		$	39,448		$	33,175			(.5)	%	18.3	%
Total assets	42,476			42,666			36,415				(.4)		16.6
Deposits	85,033			82,845			73,133				2.6		16.3
Assets under management at period end	$	45,218		$	44,140		$	36,189			2.4	%	24.9	%

TE = Taxable Equivalent

 

Additional Consumer Bank Data
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Noninterest income
Trust and investment services income	$	101		$	95		$	93			6.3	%	8.6	%
Service charges on deposit accounts	39			49			55				(20.4)		(29.1)
Cards and payments income	54			54			49				—		10.2
Consumer mortgage income	47			43			20				9.3		135.0
Other noninterest income	16			17			12				(5.9)		33.3
Total noninterest income	$	257		$	258		$	229			(.4)	%	12.2	%
Average deposit balances
NOW and money market deposit accounts	$	54,684		$	53,045		$	45,569			3.1	%	20.0	%
Savings deposits	5,878			5,407			4,345				8.7		35.3
Certificates of deposit ($100,000 or more)	2,424			2,801			5,587				(13.5)		(56.6)
Other time deposits	2,888			3,187			4,869				(9.4)		(40.7)
Noninterest-bearing deposits	19,159			18,406			12,763				4.1		50.1
Total deposits	$	85,033		$	82,845		$	73,133			2.6		16.3	%
Home equity loans
Average balance	$	9,234		$	9,360		$	10,093
Combined weighted-average loan-to-value ratio (at date of origination)	69		%	69		%	70		%
Percent first lien positions	68			66			62
Other data
Branches	1,068			1,073			1,082
Automated teller machines	1,368			1,386			1,398

Consumer Bank Summary of Operations (1Q21 vs. 1Q20)

• Net income attributable to Key of $217 million for the first quarter of 2021, compared to $103 million for the year-ago quarter
• Taxable-equivalent net interest income increased by $26 million, or 4.5%, compared to the first quarter of 2020, driven by strong balance sheet growth and fees related to PPP loans, partially offset by the lower interest rate environment
• Average loans and leases increased $6.1 billion, or 18.3%, driven by benefit from the PPP, as well as growth from Laurel Road and consumer mortgage
• Average deposits increased $11.9 billion, or 16.3%, from the first quarter of 2020. This was driven by consumer stimulus payments and relationship growth
• Provision for credit losses decreased $159 million compared to the first quarter of 2020. The provision for credit losses was a net benefit and was driven by expected improvements in economic conditions and continued strength in client credit quality
• Noninterest income increased $28 million, or 12.2%, from the year ago quarter, due to higher trust and investment services income, and strength in consumer mortgage income
• Noninterest expense increased $62 million, or 11.5%, from the year ago quarter, driven by higher variable compensation from significantly favorable revenue and higher variable expenses related to higher loan volumes

 

Commercial Bank
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Summary of operations
Net interest income (TE)	$	411		$	420		$	421			(2.1)	%	(2.4)	%
Noninterest income	447			502			220				(11.0)		103.2
Total revenue (TE)	858			922			641				(6.9)		33.9
Provision for credit losses	(67)			44			222				(252.3)		(130.2)
Noninterest expense	443			498			362				(11.0)		22.4
Income (loss) before income taxes (TE)	482			380			57				26.8		745.6
Allocated income taxes and TE adjustments	99			70			(9)				41.4		N/M
Net income (loss) attributable to Key	$	383		$	310		$	66			23.5	%	480.3	%
Average balances
Loans and leases	$	60,885		$	61,680		$	62,104			(1.3)	%	(2.0)	%
Loans held for sale	1,237			1,285			1,607				(3.7)		(23.0)
Total assets	70,114			70,969			71,410				(1.2)		(1.8)
Deposits	51,894			52,489			36,443				(1.1)	%	42.4	%

TE = Taxable Equivalent, N/M = Not Meaningful

 

Additional Commercial Bank Data
dollars in millions											Change 1Q21 vs.
	1Q21			4Q20			1Q20				4Q20		1Q20
Noninterest income
Trust and investment services income	$	32		$	28		$	39			14.3	%	(17.9)
Investment banking and debt placement fees	162			243			116				(33.3)		39.7	%
Operating lease income and other leasing gains	38			39			30				(2.6)		26.7
Corporate services income	56			55			58				1.8		(3.4)
Service charges on deposit accounts	33			32			29				3.1		13.8
Cards and payments income	51			43			17				18.6		200.0
Payments and services income	140			130			104				7.7		34.6
Commercial mortgage servicing fees	34			32			18				6.3		88.9
Other noninterest income	41			30			(87)				36.7		147.1
Total noninterest income	$	447		$	502		$	220			(11.0)	%	103.2	%

N/M = Not Meaningful

Commercial Bank Summary of Operations (1Q21 vs. 1Q20)

• Net income attributable to Key of $383 million for the first quarter of 2021, compared to $66 million for the year-ago quarter
• Taxable-equivalent net interest income decreased by $10 million, compared to the first quarter of 2020, as the lower interest rate environment offset fees related to PPP loans
• Average loan and lease balances decreased $1.2 billion, compared to the first quarter of 2020 as lower utilization offset PPP loans
• Average deposit balances increased $15.5 billion, or 42.4%, compared to the first quarter of 2020, driven by growth in targeted relationships and the impact of government programs
• Provision for credit losses decreased $289 million compared to the first quarter of 2020. The provision for credit losses was a net benefit and was driven by expected improvements in economic conditions
• Noninterest income increased $227 million, from the year-ago quarter, driven by favorable market-related adjustments to customer derivatives compared to detriments in 2020, increased investment banking client activity, and higher cards and payments income related to prepaid card revenue
• Noninterest expense increased by $81 million, or 22.4%, from the first quarter of 2020, driven by higher variable compensation from significantly favorable revenue and elevated variable expenses related to prepaid card

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

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 $176.2 billion at March 31, 2021.

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 more than 1,000 branches and approximately 1,400 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.

INVESTOR RELATIONS:	KEY MEDIA NEWSROOM:
www.key.com/ir	www.key.com/newsroom

 

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts.  Forward-looking statements usually can be identified by the use of words such as "goal," "objective," "plan," "expect," "assume," "anticipate," "intend," "project," "believe," "estimate," or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Forward-looking statements, by their nature, are subject to assumptions, risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause Key's actual results to differ from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 2020, as well as in KeyCorp's subsequent SEC filings, all of which have been or will be filed with the Securities and Exchange Commission (the "SEC") and are or will be available on Key's website (www.key.com/ir) and on the SEC's website (www.sec.gov). These factors may include, among others, deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a worsening of the U.S. economy due to financial, political, or other shocks, the extensive regulation of the U.S. financial services industry, and the impact of the COVID-19 global pandemic on us, our clients, our third-party service providers, and the markets. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

Notes to Editors:
A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 10:00 a.m. ET, on Tuesday, April 20, 2021. A replay of the call will be available through April 29, 2021.

For up-to-date company information, media contacts, and facts and figures about Key's lines of business, visit our Media Newsroom at https://www.key.com/newsroom.

*****

KeyCorp
First Quarter 2021
Financial Supplement
Page
14	Financial Highlights
15	GAAP to Non-GAAP Reconciliation
17	Consolidated Balance Sheets
18	Consolidated Statements of Income
19	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
22	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
			3/31/2021			12/31/2020			3/31/2020
Summary of operations
	Net interest income (TE)		$	1,012		$	1,043		$	989
	Noninterest income		738			802			477
		Total revenue (TE)	1,750			1,845			1,466
	Provision for credit losses		(93)			20			359
	Noninterest expense		1,071			1,128			931
	Income (loss) from continuing operations attributable to Key		618			575			145
	Income (loss) from discontinued operations, net of taxes		4			7			1
	Net income (loss) attributable to Key		622			582			146
	Income (loss) from continuing operations attributable to Key common shareholders		591			549			118
	Income (loss) from discontinued operations, net of taxes		4			7			1
	Net income (loss) attributable to Key common shareholders		595			556			119
Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.61		$	.57		$	.12
	Income (loss) from discontinued operations, net of taxes		—			.01			—
	Net income (loss) attributable to Key common shareholders (a)		.62			.57			.12
	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.61			.56			.12
	Income (loss) from discontinued operations, net of taxes — assuming dilution		—			.01			—
	Net income (loss) attributable to Key common shareholders — assuming dilution (a)		.61			.57			.12
	Cash dividends declared		.185			.185			.185
	Book value at period end		16.22			16.53			15.95
	Tangible book value at period end		13.30			13.61			12.98
	Market price at period end		19.98			16.41			10.37
Performance ratios
	From continuing operations:
	Return on average total assets		1.44		%	1.35		%	.40		%
	Return on average common equity		14.98			13.65			3.10
	Return on average tangible common equity (b)		18.25			16.61			3.82
	Net interest margin (TE)		2.61			2.70			3.01
	Cash efficiency ratio (b)		60.3			60.3			62.3
	From consolidated operations:
	Return on average total assets		1.45		%	1.36		%	.40		%
	Return on average common equity		15.08			13.82			3.12
	Return on average tangible common equity (b)		18.37			16.82			3.86
	Net interest margin (TE)		2.60			2.69			3.00
	Loan to deposit (c)		73.1			76.5			92.1
Capital ratios at period end
	Key shareholders' equity to assets		10.0		%	10.6		%	11.1		%
	Key common shareholders' equity to assets		9.0			9.5			10.0
	Tangible common equity to tangible assets (b)		7.5			7.9			8.3
	Common Equity Tier 1 (d)		9.8			9.7			8.9
	Tier 1 risk-based capital (d)		11.2			11.1			10.2
	Total risk-based capital (d)		13.4			13.4			12.2
	Leverage (d)		8.9			8.9			9.8
Asset quality — from continuing operations
	Net loan charge-offs		$	114		$	135		$	84
	Net loan charge-offs to average loans		.46		%	.53		%	.35		%
	Allowance for loan and lease losses		$	1,438		$	1,626		$	1,359
	Allowance for credit losses		1,616			1,823			1,520
	Allowance for loan and lease losses to period-end loans		1.42		%	1.61		%	1.32		%
	Allowance for credit losses to period-end loans		1.60			1.80			1.47
	Allowance for loan and lease losses to nonperforming loans		197.5			207.1			215.0
	Allowance for credit losses to nonperforming loans		222.0			232.2			240.5
	Nonperforming loans at period-end		$	728		$	785		$	632
	Nonperforming assets at period-end		790			937			844
	Nonperforming loans to period-end portfolio loans		.72		%	.78		%	.61		%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.78			.92			.82
Trust assets
	Assets under management		$	45,218		$	44,140		$	36,189
Other data
	Average full-time equivalent employees		17,086			17,029			16,529
	Branches		1,068			1,073			1,082
	Taxable-equivalent adjustment		$	7		$	8		$	8

(a)	Earnings per share may not foot due to rounding.
(b)	The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity" and "cash efficiency." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.
(c)	Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits.
(d)	March 31, 2021, ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.

 

GAAP to Non-GAAP Reconciliations

(dollars in millions)

The table below presents certain non-GAAP financial measures related to "tangible common equity," "return on average tangible common equity," "pre-provision net revenue," and "cash efficiency ratio."

The tangible common equity ratio and the return on average tangible common equity ratio have been a focus for some investors, and management believes these ratios may assist investors in analyzing Key's capital position without regard to the effects of intangible assets and preferred stock.

The table also shows the computation for pre-provision net revenue, which is not formally defined by GAAP. Management believes that eliminating the effects of the provision for credit losses makes it easier to analyze the results by presenting them on a more comparable basis.

The cash efficiency ratio is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key's intangible asset amortization from the calculation. Management believes this ratio provide greater consistency and comparability between Key's results and those of its peer banks. Additionally, this ratio is used by analysts and investors as they develop earnings forecasts and peer bank analysis.

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

 

	Three months ended
	3/31/2021			12/31/2020			3/31/2020
Tangible common equity to tangible assets at period-end
Key shareholders' equity (GAAP)	$	17,634		$	17,981		$	17,411
Less: Intangible assets (a)	2,842			2,848			2,894
Preferred Stock (b)	1,856			1,856			1,856
Tangible common equity (non-GAAP)	$	12,936		$	13,277		$	12,661
Total assets (GAAP)	$	176,203		$	170,336		$	156,197
Less: Intangible assets (a)	2,842			2,848			2,894
Tangible assets (non-GAAP)	$	173,361		$	167,488		$	153,303
Tangible common equity to tangible assets ratio (non-GAAP)	7.46		%	7.93		%	8.26		%
Pre-provision net revenue
Net interest income (GAAP)	$	1,005		$	1,035		$	981
Plus: Taxable-equivalent adjustment	7			8			8
Noninterest income	738			802			477
Less: Noninterest expense	1,071			1,128			931
Pre-provision net revenue from continuing operations (non-GAAP)	$	679		$	717		$	535
Average tangible common equity
Average Key shareholders' equity (GAAP)	$	17,769		$	17,905		$	17,216
Less: Intangible assets (average) (c)	2,844			2,855			2,902
Preferred stock (average)	1,900			1,900			1,900
Average tangible common equity (non-GAAP)	$	13,025		$	13,150		$	12,414
Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)	$	591		$	549		$	118
Average tangible common equity (non-GAAP)	13,025			13,150			12,414
Return on average tangible common equity from continuing operations (non-GAAP)	18.25		%	16.61		%	3.82		%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)	$	595		$	556		$	119
Average tangible common equity (non-GAAP)	13,025			13,150			12,414
Return on average tangible common equity consolidated (non-GAAP)	18.37		%	16.82		%	3.86		%

 

GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
	Three months ended
	3/31/2021			12/31/2020			3/31/2020
Cash efficiency ratio
Noninterest expense (GAAP)	$	1,071		$	1,128		$	931
Less: Intangible asset amortization	15			15			17
Adjusted noninterest expense (non-GAAP)	$	1,056		$	1,113		$	914
Net interest income (GAAP)	$	1,005		$	1,035		$	981
Plus: Taxable-equivalent adjustment	7			8			8
Noninterest income	738			802			477
Total taxable-equivalent revenue (non-GAAP)	$	1,750		$	1,845		$	1,466
Cash efficiency ratio (non-GAAP)	60.3		%	60.3		%	62.3		%

(a)	For the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, intangible assets exclude $4 million, $4 million, and $6 million, respectively, of period-end purchased credit card receivables.
(b)	Net of capital surplus.
(c)	For the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, average intangible assets exclude $4 million, $5 million, and $7 million, respectively, of average purchased credit card receivables.
GAAP = U.S. generally accepted accounting principles

 

Consolidated Balance Sheets
(dollars in millions)
			3/31/2021			12/31/2020			3/31/2020
Assets
	Loans		$	100,926		$	101,185		$	103,198
	Loans held for sale		2,296			1,583			2,143
	Securities available for sale		33,923			27,556			20,807
	Held-to-maturity securities		6,857			7,595			9,638
	Trading account assets		811			735			795
	Short-term investments		15,376			16,194			4,073
	Other investments		621			621			679
		Total earning assets	160,810			155,469			141,333
	Allowance for loan and lease losses		(1,438)			(1,626)			(1,359)
	Cash and due from banks		938			1,091			865
	Premises and equipment		737			753			791
	Goodwill		2,673			2,664			2,664
	Other intangible assets		173			188			236
	Corporate-owned life insurance		4,296			4,286			4,243
	Accrued income and other assets		7,347			6,812			6,604
	Discontinued assets		667			699			820
		Total assets	$	176,203		170,336			156,197
Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	82,777		$	80,427		$	71,005
		Savings deposits	6,655			5,913			4,753
		Certificates of deposit ($100,000 or more)	2,437			2,733			5,630
		Other time deposits	2,782			3,010			4,623
		Total interest-bearing deposits	94,651			92,083			86,011
		Noninterest-bearing deposits	47,532			43,199			29,293
		Total deposits	142,183			135,282			115,304
	Federal funds purchased and securities sold under repurchase agreements		281			220			2,444
	Bank notes and other short-term borrowings		744			759			4,606
	Accrued expense and other liabilities		2,862			2,385			2,700
	Long-term debt		12,499			13,709			13,732
		Total liabilities	158,569			152,355			138,786
Equity
	Preferred stock		1,900			1,900			1,900
	Common shares		1,257			1,257			1,257
	Capital surplus		6,213			6,281			6,222
	Retained earnings		13,166			12,751			12,174
	Treasury stock, at cost		(5,005)			(4,946)			(4,956)
	Accumulated other comprehensive income (loss)		103			738			814
		Key shareholders' equity	17,634			17,981			17,411
	Noncontrolling interests		—			—			—
		Total equity	17,634			17,981			17,411
Total liabilities and equity			$	176,203		$	170,336		$	156,197
Common shares outstanding (000)			972,587			975,773			975,319

 

Consolidated Statements of Income
(dollars in millions, except per share amounts)
			Three months ended
			3/31/2021			12/31/2020			3/31/2020
Interest income
	Loans		$	889		$	933		$	1,026
	Loans held for sale		11			11			19
	Securities available for sale		130			119			129
	Held-to-maturity securities		45			51			62
	Trading account assets		5			4			8
	Short-term investments		5			4			6
	Other investments		2			3			1
		Total interest income	1,087			1,125			1,251
Interest expense
	Deposits		21			28			169
	Federal funds purchased and securities sold under repurchase agreements		—			—			6
	Bank notes and other short-term borrowings		1			1			5
	Long-term debt		60			61			90
		Total interest expense	82			90			270
Net interest income			1,005			1,035			981
Provision for credit losses			(93)			20			359
Net interest income after provision for credit losses			1,098			1,015			622
Noninterest income
	Trust and investment services income		133			123			133
	Investment banking and debt placement fees		162			243			116
	Service charges on deposit accounts		73			82			84
	Operating lease income and other leasing gains		38			39			30
	Corporate services income		64			63			62
	Cards and payments income		105			97			66
	Corporate-owned life insurance income		31			38			36
	Consumer mortgage income		47			43			20
	Commercial mortgage servicing fees		34			32			18
	Other income		51			42			(88)
		Total noninterest income	738			802			477
Noninterest expense
	Personnel		624			661			515
	Net occupancy		76			75			76
	Computer processing		73			62			55
	Business services and professional fees		50			54			44
	Equipment		25			26			24
	Operating lease expense		34			35			36
	Marketing		26			30			21
	Intangible asset amortization		15			15			17
	Other expense		148			170			143
		Total noninterest expense	1,071			1,128			931
Income (loss) from continuing operations before income taxes			765			689			168
	Income taxes		147			114			23
Income (loss) from continuing operations			618			575			145
	Income (loss) from discontinued operations, net of taxes		4			7			1
Net income (loss)			622			582			146
	Less:  Net income (loss) attributable to noncontrolling interests		—			—			—
Net income (loss) attributable to Key			$	622		$	582		$	146
Income (loss) from continuing operations attributable to Key common shareholders			$	591		$	549		$	118
Net income (loss) attributable to Key common shareholders			595			556			119
Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.61		$	.57		$	.12
Income (loss) from discontinued operations, net of taxes			—			.01			—
Net income (loss) attributable to Key common shareholders (a)			.62			.57			.12
Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.61		$	.56		$	.12
Income (loss) from discontinued operations, net of taxes			—			.01			—
Net income (loss) attributable to Key common shareholders (a)			.61			.57			.12
Cash dividends declared per common share			$	.185		$	.185		$	.185
Weighted-average common shares outstanding (000)			964,878			967,987			967,446
	Effect of common share options and other stock awards		9,419			8,473			8,664
Weighted-average common shares and potential common shares outstanding (000) (b)			974,297			976,460			976,110

(a)	Earnings per share may not foot due to rounding.
(b)	Assumes conversion of common share options and other stock awards, as applicable.

 

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(dollars in millions)
		First Quarter 2021									Fourth Quarter 2020									First Quarter 2020
		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)	$	52,581		$	453		3.48	%		$	53,562		$	477		3.54	%		$	49,466		$	508		4.13	%
	Real estate — commercial mortgage	12,658			114			3.67			12,862			121			3.74			13,548			155			4.60
	Real estate — construction	2,048			19			3.75			1,959			19			3.79			1,666			20			4.75
	Commercial lease financing	4,142			31			2.99			4,353			32			2.92			4,565			39			3.39
	Total commercial loans	71,429			617			3.50			72,736			649			3.55			69,245			722			4.19
	Real estate — residential mortgage	9,699			76			3.12			8,968			74			3.29			7,215			68			3.75
	Home equity loans	9,282			85			3.73			9,410			91			3.81			10,155			113			4.49
	Consumer direct loans	4,817			56			4.72			4,583			56			4.93			3,709			54			5.91
	Credit cards	933			24			10.45			973			26			10.57			1,082			31			11.50
	Consumer indirect loans	4,568			37			3.30			5,040			45			3.56			4,768			46			3.86
	Total consumer loans	29,299			278			3.84			28,974			292			4.01			26,929			312			4.66
	Total loans	100,728			895			3.60			101,710			941			3.68			96,174			1,034			4.32
	Loans held for sale	1,531			11			2.89			1,621			11			2.76			1,885			19			3.99
	Securities available for sale (b), (e)	30,039			130			1.76			28,046			119			1.75			21,172			129			2.49
	Held-to-maturity securities (b)	7,188			45			2.53			7,939			51			2.56			9,820			62			2.51
	Trading account assets	848			5			2.15			744			4			2.21			1,065			8			2.95
	Short-term investments	16,510			5			.13			14,111			4			0.14			1,764			6			1.42
	Other investments (e)	614			2			1.40			615			3			1.31			614			1			0.40
	Total earning assets	157,458			1,094			2.81			154,786			1,133			2.93			132,494			1,259			3.82
	Allowance for loan and lease losses	(1,623)									(1,715)									(1,097)
	Accrued income and other assets	16,398									15,861									14,831
	Discontinued assets	686									717									838
	Total assets	$	172,919								$	169,649								$	147,066
Liabilities
	NOW and money market deposit accounts	$	81,439		10			.05			$	80,636		12			.06			$	66,721		112			.67
	Savings deposits	6,203			1			.03			5,737			—			.03			4,655			1			.05
	Certificates of deposit ($100,000 or more)	2,571			6			.96			2,983			9			1.20			6,310			34			2.20
	Other time deposits	2,902			4			.57			3,209			7			.80			4,901			22			1.81
	Total interest-bearing deposits	93,115			21			.09			92,565			28			.12			82,587			169			.82
	Federal funds purchased and securities sold under repurchase agreements	243			—			.04			220			—			.04			2,002			6			1.17
	Bank notes and other short-term borrowings	878			1			.64			791			1			.73			1,401			5			1.58
	Long-term debt (f), (g)	12,831			60			1.93			12,118			61			2.05			12,443			90			2.96
	Total interest-bearing liabilities	107,067			82			.31			105,694			90			.34			98,433			270			1.10
	Noninterest-bearing deposits	44,625									43,156									27,741
	Accrued expense and other liabilities	2,772									2,177									2,838
	Discontinued liabilities (g)	686									717									838
	Total liabilities	155,150									151,744									129,850
Equity
	Key shareholders' equity	17,769									17,905									17,216
	Noncontrolling interests	—									—									—
	Total equity	17,769									17,905									17,216
	Total liabilities and equity	$	172,919								$	169,649								$	147,066
Interest rate spread (TE)								2.50	%								2.59	%								2.72	%
Net interest income (TE) and net interest margin (TE)					1,012			2.61	%					1,043			2.70	%					989			3.01	%
TE adjustment (b)					7									8									8
	Net interest income, GAAP basis				$	1,005								$	1,035								$	981

(a)	Results are from continuing operations.  Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.
(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 21% for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial and industrial average balances include $126 million, $129 million, and $145 million of assets from commercial credit cards for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively.
(e)	Yield is calculated on the basis of amortized cost.
(f)	Rate calculation excludes basis adjustments related to fair value hedges.
(g)	A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying Key's matched funds transfer pricing methodology to discontinued operations.
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles

 

Noninterest Expense
(dollars in millions)
	Three months ended
	3/31/2021			12/31/2020			3/31/2020
Personnel (a)	$	624		$	661		$	515
Net occupancy	76			75			76
Computer processing	73			62			55
Business services and professional fees	50			54			44
Equipment	25			26			24
Operating lease expense	34			35			36
Marketing	26			30			21
Intangible asset amortization	15			15			17
Other expense	148			170			143
Total noninterest expense	$	1,071		$	1,128		$	931
Average full-time equivalent employees (b)	17,086			17,029			16,529

(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
(in millions)
	Three months ended
	3/31/2021			12/31/2020			3/31/2020
Salaries and contract labor	$	320		$	342		$	316
Incentive and stock-based compensation	196			208			102
Employee benefits	107			89			92
Severance	1			22			5
Total personnel expense	$	624		$	661		$	515

 

Loan Composition
(dollars in millions)
											Percent change 3/31/2021 vs
	3/31/2021			12/31/2020			3/31/2020				12/31/2020		3/31/2020
Commercial and industrial (a)	$	52,486		$	52,907		$	55,983			(.8)	%	(6.2)	%
Commercial real estate:
Commercial mortgage	12,702			12,687			13,548				.1		(6.2)
Construction	2,122			1,987			1,710				6.8		24.1
Total commercial real estate loans	14,824			14,674			15,258				1.0		(2.8)
Commercial lease financing (b)	4,104			4,399			4,677				(6.7)		(12.3)
Total commercial loans	71,414			71,980			75,918				(.8)		(5.9)
Residential — prime loans:
Real estate — residential mortgage	10,300			9,298			7,498				10.8		37.4
Home equity loans	9,158			9,360			10,103				(2.2)		(9.4)
Total residential — prime loans	19,458			18,658			17,601				4.3		10.6
Consumer direct loans	4,862			4,714			3,833				3.1		26.8
Credit cards	909			989			1,041				(8.1)		(12.7)
Consumer indirect loans	4,283			4,844			4,805				(11.6)		(10.9)
Total consumer loans	29,512			29,205			27,280				1.1		8.2
Total loans (c), (d)	$	100,926		$	101,185		$	103,198			(.3)	%	(2.2)	%

(a)	Loan balances include $126 million, $127 million, and $143 million of commercial credit card balances at March 31, 2021, December 31, 2020, and March 31, 2020, respectively.
(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $21 million, $23 million, and $14 million at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. Principal reductions are based on the cash payments received from these related receivables.
(c)	Total loans exclude loans of $675 million at March 31, 2021, $710 million at December 31, 2020, and $821 million at March 31, 2020, related to the discontinued operations of the education lending business.
(d)	Accrued interest of $242 million, $241 million, and $241 million at March 31, 2021, December 31, 2020, and March 31, 2020, respectively, presented in "other assets" on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

 

Loans Held for Sale Composition
(dollars in millions)
											Percent change 3/31/2021 vs
	3/31/2021			12/31/2020			3/31/2020				12/31/2020		3/31/2020
Commercial and industrial	$	1,175		$	249		$	446			371.9	%	163.5	%
Real estate — commercial mortgage	837			1,014			1,284				(17.5)		(34.8)
Commercial lease financing	—			—			8				N/M		N/M
Real estate — residential mortgage	236			264			152				(10.6)		55.3
Consumer direct loans	48			56			253				(14.3)		(81.0)
Total loans held for sale	$	2,296		$	1,583		$	2,143			45.0	%	7.1	%

N/M = Not Meaningful

 

Summary of Changes in Loans Held for Sale
(in millions)
	1Q21			4Q20			3Q20			2Q20			1Q20
Balance at beginning of period	$	1,583		$	1,724		$	2,007		$	2,143		$	1,334
New originations	4,010			3,835			3,282			3,621			3,333
Transfers from (to) held to maturity, net	83			(24)			75			(15)			200
Loan sales	(3,303)			(3,932)			(3,583)			(3,679)			(2,649)
Loan draws (payments), net	(73)			(19)			(57)			(61)			(77)
Valuation adjustments	(4)			—			—			(2)			2
Balance at end of period	$	2,296		$	1,583		$	1,724		$	2,007		$	2,143

 

Summary of Loan and Lease Loss Experience From Continuing Operations
(dollars in millions)
	Three months ended
	3/31/2021			12/31/2020			3/31/2020
Average loans outstanding	$	100,728		$	101,710		$	96,174
Allowance for loan and lease losses at the end of the prior period	$	1,626		$	1,730		$	900
Cumulative effect from change in accounting principle (a)	—			—			204
Allowance for loan and lease losses at the beginning of the period	1,626			1,730			1,104
Loans charged off:
Commercial and industrial	73			119			60
Real estate — commercial mortgage	35			1			3
Real estate — construction	—			—			—
Total commercial real estate loans	35			1			3
Commercial lease financing	4			19			2
Total commercial loans	112			139			65
Real estate — residential mortgage	—			—			—
Home equity loans	2			1			4
Consumer direct loans	8			7			12
Credit cards	6			7			11
Consumer indirect loans	7			6			9
Total consumer loans	23			21			36
Total loans charged off	135			160			101
Recoveries:
Commercial and industrial	8			15			5
Real estate — commercial mortgage	1			—			1
Real estate — construction	—			—			—
Total commercial real estate loans	1			—			1
Commercial lease financing	1			—			—
Total commercial loans	10			15			6
Real estate — residential mortgage	1			—			—
Home equity loans	1			1			2
Consumer direct loans	2			1			2
Credit cards	2			2			2
Consumer indirect loans	5			6			5
Total consumer loans	11			10			11
Total recoveries	21			25			17
Net loan charge-offs	(114)			(135)			(84)
Provision (credit) for loan and lease losses	(74)			31			339
Allowance for loan and lease losses at end of period	$	1,438		$	1,626		$	1,359
Liability for credit losses on lending-related commitments at the end of the prior period	$	197		$	208		$	68
Liability for credit losses on contingent guarantees at the end of the prior period	—			—			7
Cumulative effect from change in accounting principle (a), (b)	—			—			66
Liability for credit losses on lending-related commitments at beginning of period	197			208			141
Provision (credit) for losses on lending-related commitments	(19)			(11)			20
Liability for credit losses on lending-related commitments at end of period (c)	$	178		$	197		$	161
Total allowance for credit losses at end of period	$	1,616		$	1,823		$	1,520
Net loan charge-offs to average total loans	.46		%	.53		%	.35		%
Allowance for loan and lease losses to period-end loans	1.42			1.61			1.32
Allowance for credit losses to period-end loans	1.60			1.80			1.47
Allowance for loan and lease losses to nonperforming loans	197.5			207.1			215.0
Allowance for credit losses to nonperforming loans	222.0			232.2			240.5
Discontinued operations — education lending business:
Loans charged off	$	1		1			$	2
Recoveries	1			2			1
Net loan charge-offs	$	—		1			$	(1)

(a)	The cumulative effect from change in accounting principle relates to the January 1, 2020, adoption of ASU 2016-13.
(b)	Three months ended March 31, 2020, excludes $4 million related to the provision for other financial assets as a result of the change in accounting principle.
(c)	Included in "Accrued expense and other liabilities" on the balance sheet.

 

Asset Quality Statistics From Continuing Operations
(dollars in millions)
	1Q21			4Q20			3Q20			2Q20			1Q20
Net loan charge-offs	$	114		$	135		$	128		$	96		$	84
Net loan charge-offs to average total loans	.46		%	.53		%	.49		%	.36		%	.35		%
Allowance for loan and lease losses	$	1,438		$	1,626		$	1,730		$	1,708		$	1,359
Allowance for credit losses (a)	1,616			1,823			1,938			1,906			1,520
Allowance for loan and lease losses to period-end loans	1.42		%	1.61		%	1.68		%	1.61		%	1.32		%
Allowance for credit losses to period-end loans	1.60			1.80			1.88			1.80			1.47
Allowance for loan and lease losses to nonperforming loans	197.5			207.1			207.4			224.7			215.0
Allowance for credit losses to nonperforming loans	222.0			232.2			232.4			250.8			240.5
Nonperforming loans at period end	$	728		$	785		$	834		$	760		$	632
Nonperforming assets at period end	790			937			1,003			951			844
Nonperforming loans to period-end portfolio loans	.72		%	.78		%	.81		%	.72		%	.61		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	.78			.92			.97			.89			.82

(a)	Includes the allowance for loan and lease losses plus the liability for credit losses on lending-related commitments.

 

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
(dollars in millions)
	3/31/2021			12/31/2020			9/30/2020			6/30/2020			3/31/2020
Commercial and industrial	$	387		$	385		$	459		$	404		$	277
Real estate — commercial mortgage	66			104			104			91			87
Real estate — construction	—			—			1			1			2
Total commercial real estate loans	66			104			105			92			89
Commercial lease financing	8			8			6			9			5
Total commercial loans	461			497			570			505			371
Real estate — residential mortgage	95			110			96			89			89
Home equity loans	148			154			146			141			143
Consumer direct loans	5			5			3			3			4
Credit cards	3			2			2			2			3
Consumer indirect loans	16			17			17			20			22
Total consumer loans	267			288			264			255			261
Total nonperforming loans	728			785			834			760			632
OREO	12			100			105			112			119
Nonperforming loans held for sale	47			49			61			75			89
Other nonperforming assets	3			3			3			4			4
Total nonperforming assets	$	790		$	937		$	1,003		$	951		$	844
Accruing loans past due 90 days or more	92			86			73			87			128
Accruing loans past due 30 through 89 days	191			241			336			419			393
Restructured loans — accruing and nonaccruing (a)	376			363			306			310			340
Restructured loans included in nonperforming loans (a)	192			229			168			166			172
Nonperforming assets from discontinued operations — education lending business	5			5			6			7			7
Nonperforming loans to period-end portfolio loans	.72		%	.78		%	.81		%	.72		%	.61		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	.78			.92			.97			.89			.82

(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
(in millions)
	1Q21			4Q20			3Q20			2Q20			1Q20
Balance at beginning of period	$	785		$	834		$	760		$	632		$	577
Loans placed on nonaccrual status	196			300			387			293			219
Charge-offs	(135)			(160)			(150)			(111)			(100)
Loans sold	(13)			(9)			(6)			(5)			(4)
Payments	(37)			(83)			(83)			(29)			(31)
Transfers to OREO	(3)			(3)			—			—			(3)
Transfers to nonperforming loans held for sale	—			—			—			—			—
Loans returned to accrual status	(65)			(94)			(74)			(20)			(26)
Balance at end of period	$	728		$	785		$	834		$	760		$	632

 

Line of Business Results
(dollars in millions)
																	Percentage change 1Q21 vs.
	1Q21			4Q20			3Q20			2Q20			1Q20				4Q20		1Q20
Consumer Bank
Summary of operations
Total revenue (TE)	$	864		$	896		$	864		$	832		$	810			(3.6)	%	6.7	%
Provision for credit losses	(23)			(5)			(3)			155			136				(360.0)		(103.7)
Noninterest expense	601			606			567			552			539				(.8)		11.5
Net income (loss) attributable to Key	217			225			229			96			103				(3.6)		110.7
Average loans and leases	39,249			39,448			38,468			37,291			33,175				(.5)		18.3
Average deposits	85,033			82,845			82,829			79,233			73,133				2.6		16.3
Net loan charge-offs	36			28			23			40			43				28.6		(16.3)
Net loan charge-offs to average total loans	.37		%	.28		%	.24		%	.43		%	.52		%		N/A		N/A
Nonperforming assets at period end	$	345		$	374		$	353		$	332		$	342			(7.8)		.9
Return on average allocated equity	25.76		%	25.61		%	26.22		%	11.28		%	12.30		%		N/A		N/A
Commercial Bank
Summary of operations
Total revenue (TE)	$	858		$	922		$	811		$	867		$	641			(6.9)	%	33.9	%
Provision for credit losses	(67)			44			150			326			222				(252.3)		(80.2)
Noninterest expense	443			498			447			441			362				(11.0)		22.4
Net income (loss) attributable to Key	383			310			173			96			66				23.5		480.3
Average loans and leases	60,885			61,680			65,928			69,945			62,104				(1.3)		(2.0)
Average loans held for sale	1,237			1,285			1,383			2,012			1,607				(3.7)		(23.0)
Average deposits	51,894			52,489			51,585			47,954			36,443				(1.1)		42.4
Net loan charge-offs	78			108			104			57			40				(27.8)		95.0
Net loan charge-offs to average total loans	.52		%	.70		%	.63		%	.33		%	.26		%		N/A		N/A
Nonperforming assets at period end	$	441		$	558		$	645		$	616		$	407			(21.0)		8.4
Return on average allocated equity	17.47		%	23.87		%	13.40		%	7.87		%	5.57		%		N/A		N/A

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

 

 

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FAQ

What was KeyCorp's net income for Q1 2021?

KeyCorp reported a net income of $591 million for Q1 2021.

How does KeyCorp's Q1 2021 performance compare to Q1 2020?

Net income increased significantly from $118 million in Q1 2020 to $591 million in Q1 2021.

What is the Common Equity Tier 1 ratio for KeyCorp?

KeyCorp's Common Equity Tier 1 ratio is 9.8% as of Q1 2021.

What actions has KeyCorp taken regarding share repurchases in 2021?

KeyCorp has authorized a $900 million share repurchase program and executed $135 million in Q1 2021.

What new service did KeyCorp launch for healthcare professionals?

KeyCorp launched Laurel Road for Doctors, a digital platform tailored to healthcare professionals.