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KEYCORP REPORTS SECOND QUARTER 2024 NET INCOME OF $237 MILLION, OR $.25 PER DILUTED COMMON SHARE

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KeyCorp (NYSE: KEY) reported net income of $237 million or $0.25 per diluted share for Q2 2024, up from $183 million or $0.20 per share in Q1 2024. However, net income was down 5.2% year-over-year from $250 million or $0.27 per share in Q2 2023.

Average deposits increased by $1.3 billion compared to both last quarter and the same period last year, with client deposits up 5% year-over-year.

Total revenue decreased by 4.3% year-over-year to $1.53 billion, reflecting an 8.8% drop in net interest income and a 3.0% rise in noninterest income.

Expenses declined roughly 6% from Q1 2024. The Common Equity Tier 1 ratio improved to 10.5%, up 20 basis points from the previous quarter.

Net charge-offs as a percentage of average loans were 0.34%, up from 0.29% in Q1 but a significant increase from 0.17% in Q2 2023. The allowance for credit losses was $1.83 billion, or 1.71% of total loans.

Positive
  • Net income increased 29.5% sequentially to $237 million.
  • Average deposits rose by $1.3 billion compared to Q1 2024 and Q2 2023.
  • Expenses declined 6% from the prior quarter.
  • Common Equity Tier 1 ratio improved to 10.5%.
  • Noninterest income grew 3% year-over-year.
Negative
  • Net income decreased 5.2% year-over-year.
  • Total revenue decreased by 4.3% compared to Q2 2023.
  • Net interest income fell 8.8% year-over-year.
  • Net charge-offs increased to 0.34% from 0.17% in Q2 2023.
  • Provision for credit losses decreased to $100 million from $167 million in Q2 2023.

Insights

KeyCorp reported a $237 million net income for Q2 2024, translating to $0.25 per diluted common share. This is a notable increase from the $183 million net income in Q1 2024, but a slight decrease from the $250 million in Q2 2023. Net interest income benefited from the reinvestment of maturing securities into higher-yielding assets and better interest rate swaps. However, the year-over-year decline of $87 million in net interest income points to ongoing challenges from higher deposit costs and lower loan balances. The increase in client deposits by 5% YoY is promising, indicating improved customer confidence.

From a cost perspective, noninterest expenses saw a quarterly decline by 5.6%, reflecting disciplined expense management, although there was a minor year-over-year increase driven by higher personnel costs. The Common Equity Tier 1 (CET1) ratio at 10.5% is a positive indicator of financial health. Overall, while KeyCorp shows solid short-term performance, concerns about long-term loan demand and interest margin pressures remain.

For retail investors, it's important to note the mix of positive deposit growth and cautious loan demand. This combination signals potential stability but also underscores the need to monitor interest rate trends and their impacts on the bank's profitability.

KeyCorp's report highlights several positive trends, particularly in the Wealth Management and Commercial Payments sectors. The $13 million increase in trust and investment services income, coupled with a 22% increase in commercial mortgage servicing fees, demonstrate strong market positioning and growth. Meanwhile, the dip in investment banking and debt placement fees by 25.9% from Q1 2024 could indicate a temporary slowdown in M&A activities and syndications, areas typically sensitive to economic cycles.

The bank's focus on growing deposits, both retail and commercial, is evident with total deposits up 0.9% YoY. This growth can be seen as a strategic move to secure more stable funding sources in a potentially volatile interest rate environment. However, with noninterest income slightly decreasing by 3.1% from Q1 2024, monitoring the performance of non-core banking services is essential as they become increasingly significant for revenue diversification.

Retail investors should be aware of the mixed signals from these sectors, balancing the strong deposit and fee income growth against the fluctuations in investment banking revenues.

Average deposits up $1.3 billion compared to the prior quarter and the second quarter of 2023, with client deposits up 5% year-over-year

Disciplined expense management: expenses declined approximately 6% from the prior quarter and were stable versus the year-ago period

Common Equity Tier 1 ratio rose 20 basis points to 10.5%(a)

Credit quality remains solid: net charge-offs to average loans of 34 basis points

CLEVELAND, July 18, 2024 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $237 million, or $.25 per diluted common share, for the second quarter of 2024. Net income from continuing operations attributable to Key common shareholders was $183 million, or $.20 per diluted common share, for the first quarter of 2024 and $250 million, or $.27 per diluted common share, for the second quarter of 2023.

Comments from Chairman and CEO, Chris Gorman

"This was a solid quarter for Key as we continued to execute on our clearly defined path to enhanced profitability. Sequentially, net interest income grew as we benefited from fixed asset repricing and continued to grow client deposits while the pace of deposit repricing slowed. Client deposits were up 5% from the prior year. Loan demand remained tepid, however, we are optimistic that we will begin to see growth in the second half of the year.

We continued to make progress against our most important strategic fee-based initiatives where we benefit from a differentiated value proposition. We demonstrated momentum in Wealth Management and Commercial Payments. Additionally, our Investment Banking pipelines are meaningfully higher from prior periods.  

Expenses continue to be well-managed, and net charge-offs remained low. We built our Common Equity Tier 1 ratio another 23 basis points to 10.5%, bringing our organic capital build to approximately 120 basis points over the past twelve months. 

I am excited for our path forward and energized by our momentum which positions us to deliver sound, profitable growth."

(a)

June 30, 2024 ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.

 

Selected Financial Highlights















Dollars in millions, except per share data





Change 2Q24 vs.



2Q24

1Q24

2Q23


1Q24

2Q23

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

$      237

$      183

$      250


29.5 %

(5.2) %

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

.25

.20

.27


25.0

(7.4)

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

10.39 %

7.87 %

11.04 %


N/A

N/A

Return on average total assets from continuing operations

.59

.47

.58


N/A

N/A

Common Equity Tier 1 ratio (b)

10.5

10.3

9.3


N/A

N/A

Book value at period end

$   13.09

$   12.84

$   12.18


1.9

7.5

Net interest margin (TE) from continuing operations

2.04 %

2.02 %

2.12 %


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 "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.

(b)

June 30, 2024 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

 

INCOME STATEMENT HIGHLIGHTS














Revenue














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Net interest income (TE)

$        899

$        886

$        986


1.5 %

(8.8) %

Noninterest income

627

647

609


(3.1)

3.0

Total revenue (TE)

$      1,526

$      1,533

$      1,595


(.5) %

(4.3) %








TE = Taxable Equivalent

Taxable-equivalent net interest income was $899 million for the second quarter of 2024 and the net interest margin was 2.04%. Compared to the second quarter of 2023, net interest income decreased by $87 million, and the net interest margin decreased by eight basis points. Both net interest income and the net interest margin benefited from the reinvestment of proceeds from maturing investment securities into higher yielding but still liquid investments, and the replacement of low-yielding interest rate swaps with higher-yield interest rate swaps. Net interest income and the net interest margin declined year-over-year, however, reflecting lower loan balances from Key's balance sheet optimization actions during 2023 and higher deposit costs in the higher interest rate environment relative to a year ago. Additionally, the balance sheet experienced a shift in funding mix from noninterest-bearing deposits to higher-cost deposits and borrowings. 

Compared to the first quarter of 2024, taxable-equivalent net interest income increased by $13 million, and the net interest margin increased by two basis points for the second quarter of 2024. Both net interest income and the net interest margin benefited from the reinvestment of proceeds from maturing investment securities into higher yielding but still liquid investments, and the replacement of low-yielding interest rate swaps with higher-yield interest rate swaps. Lower loan balances, higher funding costs, and an unfavorable funding mix partly offset the increase in net interest income and the net interest margin from higher yielding reinvestments.

Noninterest Income














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Trust and investment services income

$        139

$        136

$        126


2.2 %

10.3 %

Investment banking and debt placement fees

126

170

120


(25.9)

5.0

Cards and payments income

85

77

85


10.4

—

Service charges on deposit accounts

66

63

69


4.8

(4.3)

Corporate services income

68

69

86


(1.4)

(20.9)

Commercial mortgage servicing fees

61

56

50


8.9

22.0

Corporate-owned life insurance income

34

32

32


6.3

6.3

Consumer mortgage income

16

14

14


14.3

14.3

Operating lease income and other leasing gains

21

24

23


(12.5)

(8.7)

Other income

11

6

4


83.3

175.0

Total noninterest income

$        627

$        647

$        609


(3.1) %

3.0 %








N/M = Not Meaningful

Compared to the second quarter of 2023, noninterest income increased by $18 million. The increase was driven by trust and investment services, up $13 million, reflective of strong market performance as well as an increase in commercial mortgage servicing fees, which increased $11 million.

Compared to the first quarter of 2024, noninterest income decreased by $20 million. The decrease was driven by investment banking and debt placement fees, down $44 million, reflective of strong merger and acquisition advisory fees and syndication fees in the first quarter. The decline was partly offset by an $8 million increase in cards and payments income due to higher seasonal transactions in debit and credit cards and a $5 million increase in commercial mortgage servicing fees.

Noninterest Expense














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Personnel expense

$        636

$        674

$        622


(5.6) %

2.3 %

Net occupancy

66

67

65


(1.5)

1.5

Computer processing

101

102

95


(1.0)

6.3

Business services and professional fees

37

41

41


(9.8)

(9.8)

Equipment

20

20

22


—

(9.1)

Operating lease expense

17

17

21


—

(19.0)

Marketing

21

19

29


10.5

(27.6)

Other expense

181

203

181


(10.8)

.0

Total noninterest expense

$      1,079

$      1,143

$      1,076


(5.6) %

.3 %








Compared to the second quarter of 2023, noninterest expense increased $3 million, driven by a $14 million increase in personnel expense, reflective of a higher stock price compared to the year-ago period. The increase was partly offset by lower marketing expense and lower business services and professional fees.

Compared to the first quarter of 2024, noninterest expense decreased by $64 million. The decrease was driven by a $38 million decline in personnel expense, related to lower incentive compensation and lower employee benefits. The decline in noninterest expense was also reflective of a higher FDIC special assessment in the prior quarter. For more information on the FDIC special assessment, see the Selected Items Impact on Earnings table on page 25.

BALANCE SHEET HIGHLIGHTS














Average Loans














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Commercial and industrial (a)

$    54,599

$    55,220

$    61,426


(1.1) %

(11.1) %

Other commercial loans

20,500

21,222

22,623


(3.4)

(9.4)

Total consumer loans

33,862

34,592

36,623


(2.1)

(7.5)

Total loans

$  108,961

$  111,034

$  120,672


(1.9) %

(9.7) %








(a)

Commercial and industrial average loan balances include $218 million, $211 million, and $194 million of assets from commercial credit cards at June 30, 2024, March 31, 2024, and June 30, 2023, respectively.

Average loans were $109.0 billion for the second quarter of 2024, a decrease of $11.7 billion compared to the second quarter of 2023, reflective of Key's planned balance sheet optimization efforts in 2023. The decline in average loans was mostly driven by a $9.0 billion decline in average commercial loans, driven by lower commercial and industrial loans and commercial mortgage real estate loans. Additionally, average consumer loans declined by $2.8 billion, driven by declines across all consumer loan categories.

Compared to the first quarter of 2024, average loans decreased by $2.1 billion. Average commercial loans declined by $1.3 billion, primarily driven by a decrease in commercial and industrial loans and commercial mortgage real estate loans. Additionally, average consumer loans declined $730 million, driven by declines across all consumer loan categories.

Average Deposits














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Non-time deposits

$  128,161

$  128,448

$  127,687


(.2) %

0.4 %

Time deposits

16,019

14,430

15,216


11.0

5.3

Total deposits

$  144,180

$  142,878

$  142,903


.9 %

.9 %








Cost of total deposits

2.28 %

2.20 %

1.49 %


N/A

N/A








N/A = Not Applicable

Average deposits totaled $144.2 billion for the second quarter of 2024, an increase of $1.3 billion compared to the year-ago quarter. The increase was reflective of growth in retail deposit balances and our focus on growing deposits across our commercial businesses.

Compared to the first quarter of 2024, average deposits increased by $1.3 billion. The increase was reflective of growth in retail certificate of deposit balances and stronger commercial deposit balances.

ASSET QUALITY














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Net loan charge-offs

$       91

$       81

$       52


12.3 %

75.0 %

Net loan charge-offs to average total loans

.34 %

.29 %

.17 %


N/A

N/A

Nonperforming loans at period end

$      710

$      658

$      431


7.9

64.7

Nonperforming assets at period end

727

674

462


7.9

57.4

Allowance for loan and lease losses

1,547

1,542

1,480


0.3

4.5

Allowance for credit losses

1,833

1,823

1,771


0.5

3.5

Provision for credit losses

100

101

167


(1.0)

(40.1)








Allowance for loan and lease losses to nonperforming loans

218 %

234 %

343 %


N/A

N/A

Allowance for credit losses to nonperforming loans

258

277

411


N/A

N/A








N/A = Not Applicable

Key's provision for credit losses was $100 million, compared to $167 million in the second quarter of 2023 and $101 million in the first quarter of 2024. The decline from the year-ago period reflects a more stable economic outlook and the impact of balance sheet optimization efforts, partly offset by credit portfolio migration.

Net loan charge-offs for the second quarter of 2024 totaled $91 million, or 0.34% of average total loans. These results compare to $52 million, or 0.17%, for the second quarter of 2023 and $81 million, or 0.29%, for the first quarter of 2024. Key's allowance for credit losses was $1.8 billion, or 1.71% of total period-end loans at June 30, 2024, compared to 1.49% at June 30, 2023, and 1.66% at March 31, 2024.

At June 30, 2024, Key's nonperforming loans totaled $710 million, which represented 0.66% of period-end portfolio loans. These results compare to 0.36% at June 30, 2023, and 0.60% at March 31, 2024. Nonperforming assets at June 30, 2024, totaled $727 million, and represented 0.68% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to 0.39% at June 30, 2023, and 0.61% at March 31, 2024.

CAPITAL

Key's estimated risk-based capital ratios, included in the following table, continued to exceed all "well-capitalized" regulatory benchmarks at June 30, 2024.

Capital Ratios









6/30/2024

3/31/2024

6/30/2023

Common Equity Tier 1 (a)

10.5 %

10.3 %

9.3 %

Tier 1 risk-based capital (a)

12.2

12.0

10.8

Total risk-based capital (a)

14.7

14.5

13.1

Tangible common equity to tangible assets (b)

5.2

5.0

4.5

Leverage (a)

9.1

9.1

8.7





(a)

June 30, 2024 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 regulatory capital position remained strong in the second quarter of 2024. As shown in the preceding table, at June 30, 2024, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 10.5% and 12.2%, respectively. Key's tangible common equity ratio was 5.2% at June 30, 2024.

Key elected the CECL phase-in option provided by regulatory guidance which delayed for two years the estimated impact of CECL on regulatory capital and phases it in over three years beginning in 2022. Effective for the first quarter 2022, Key is now in the three-year transition period. On a fully phased-in basis, Key's Common Equity Tier 1 ratio would be reduced by four basis points.

Summary of Changes in Common Shares Outstanding













In thousands





Change 2Q24 vs.



2Q24

1Q24

2Q23


1Q24

2Q23

Shares outstanding at beginning of period

942,776

936,564

935,229


.7 %

.8 %

Shares issued under employee compensation plans (net of cancellations and returns)

424

6,212

504


(93.2)

(16)


Shares outstanding at end of period

943,200

942,776

935,733


— %

.8 %









Key declared a dividend of $.205 per common share for the third quarter of 2024.

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 2Q24 vs.



2Q24

1Q24

2Q23


1Q24

2Q23

Revenue from continuing operations (TE)







Consumer Bank

$         769

$         757

$         787


1.6 %

(2.3) %

Commercial Bank

769

799

823


(3.8)

(6.6)

Other (a)

(12)

(23)

(15)


47.8

20.0

          Total

$       1,526

$       1,533

$       1,595


(.5) %

(4.3) %









Income (loss) from continuing operations attributable to Key







Consumer Bank

$           67

$           41

$           71


63.4 %

(5.6) %

Commercial Bank

207

205

227


1.0

(8.8)

Other (a)

(1)

(27)

(12)


96.3

91.7

          Total

$         273

$         219

$         286


24.7 %

(4.5) %









(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 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Summary of operations







Net interest income (TE)

$         535

$         532

$         544


.6 %

(1.7) %

Noninterest income

234

225

243


4.0

(3.7)

Total revenue (TE)

769

757

787


1.6

(2.3)

Provision for credit losses

33

(2)

32


N/M

3.1

Noninterest expense

648

704

662


(8.0)

(2.1)

Income (loss) before income taxes (TE)

88

55

93


60.0

(5.4)

Allocated income taxes (benefit) and TE adjustments

21

14

22


50.0

(4.5)

Net income (loss) attributable to Key

$           67

$           41

$           71


63.4 %

(5.6) %








Average balances







Loans and leases

$     39,174

$     39,919

$     42,297


(1.9) %

(7.4) %

Total assets

42,008

42,710

45,116


(1.6)

(6.9)

Deposits

85,397

84,075

81,406


1.6

4.9








Assets under management at period end

$     57,602

$     57,305

$     53,952


.5 %

6.8 %








TE = Taxable Equivalent

N/M = Not Meaningful

 

Additional Consumer Bank Data














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Noninterest income







Trust and investment services income

$       112

$       110

$       101


1.8 %

10.9 %

Service charges on deposit accounts

34

33

40


3.0

(15.0)

Cards and payments income

61

57

65


7.0

(6.2)

Consumer mortgage income

16

14

14


14.3

14.3

Other noninterest income

11

11

23


—

(52.2)

Total noninterest income

$       234

$       225

$       243


4.0 %

(3.7) %








Average deposit balances







Money market deposits

$  30,229

$  29,875

$  27,217


1.2 %

11.1 %

Demand deposits

22,292

22,213

23,322


.4

(4.4)

Savings deposits

4,791

4,986

6,294


(3.9)

(23.9)

Time deposits

13,039

11,808

6,413


10.4

103.3

Noninterest-bearing deposits

15,047

15,193

18,160


(1.0)

(17.1)

Total deposits

$  85,398

$  84,075

$  81,406


1.6 %

4.9 %








Other data







Branches

946

957

965




Automated teller machines

1,199

1,214

1,255











Consumer Bank Summary of Operations (2Q24 vs. 2Q23)

  • Key's Consumer Bank recorded net income attributable to Key of $67 million for the second quarter of 2024, compared to $71 million for the year-ago quarter
  • Taxable-equivalent net interest income decreased by $9 million, or 1.7%, compared to the second quarter of 2023, primarily reflective of a decline in loan spreads as a result of lower loan balances
  • Average loans and leases decreased $3.1 billion, or 7.4%, from the second quarter of 2023, driven by broad-based declines across loan categories
  • Average deposits increased $4.0 billion, or 4.9%, from the second quarter of 2023, driven by strong retail deposit growth
  • Provision for credit losses increased $1 million compared to the second quarter of 2023
  • Noninterest income decreased $9 million from the year-ago quarter, driven by declines in service charges on deposit accounts and cards and payments income
  • Noninterest expense decreased $14 million from the year-ago quarter, reflective of lower marketing expense

 

Commercial Bank














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Summary of operations







Net interest income (TE)

$         411

$         397

$         475


3.5 %

(13.5) %

Noninterest income

358

402

348


(10.9)

2.9

Total revenue (TE)

769

799

823


(3.8)

(6.6)

Provision for credit losses

87

102

134


(14.7)

(35.1)

Noninterest expense

431

443

406


(2.7)

6.2

Income (loss) before income taxes (TE)

251

254

283


(1.2)

(11.3)

Allocated income taxes and TE adjustments

44

49

56


(10.2)

(21.4)

Net income (loss) attributable to Key

$         207

$         205

$         227


1.0 %

(8.8) %








Average balances







Loans and leases

$     69,248

$     70,633

$     77,922


(2.0) %

(11.1) %

Loans held for sale

522

840

1,014


(37.9)

(48.5)

Total assets

78,328

80,000

87,759


(2.1)

(10.7)

Deposits

57,360

56,331

52,512


1.8 %

9.2 %








TE = Taxable Equivalent

 

Additional Commercial Bank Data














Dollars in millions





Change 2Q24 vs.


2Q24

1Q24

2Q23


1Q24

2Q23

Noninterest income







Trust and investment services income

$           27

$           26

$           25


3.8 %

8.0 %

Investment banking and debt placement fees

126

170

120


(25.9)

5.0

Cards and payments income

21

20

23


5.0

(8.7)

Service charges on deposit accounts

31

29

28


6.9

10.7

Corporate services income

61

63

77


(3.2)

(20.8)

Commercial mortgage servicing fees

61

56

50


8.9

22.0

Operating lease income and other leasing gains

21

24

24


(12.5)

(12.5)

Other noninterest income

10

13

1


(23.1)

900.0

Total noninterest income

$         358

$         401

$         348


(10.7) %

2.9 %








Commercial Bank Summary of Operations (2Q24 vs. 2Q23)

  • Key's Commercial Bank recorded net income attributable to Key of $207 million for the second quarter of 2024 compared to $227 million for the year-ago quarter
  • Taxable-equivalent net interest income decreased by $64 million, or 13.5%, compared to the second quarter of 2023, primarily reflecting higher interest-bearing deposit costs and a shift in funding mix to higher-cost deposits, as well as a decline in loan balances
  • Average loan and lease balances decreased $8.7 billion, or 11.1%, compared to the second quarter of 2023, driven by a decline in commercial and industrial loans
  • Average deposit balances increased $4.8 billion compared to the second quarter of 2023, driven by our focus on growing deposits across our commercial businesses
  • Provision for credit losses decreased $47 million compared to the second quarter of 2023, driven by a more stable economic outlook and the impact of balance sheet optimization efforts, partly offset by credit portfolio migration
  • Noninterest income increased $10 million from the year-ago quarter, primarily driven by an increase in investment banking and debt placement fees and commercial mortgage servicing fees
  • Noninterest expense increased $25 million compared to the second quarter of 2023, driven by higher business services and professional fees and broad-based increases across other expense categories

KeyCorp's roots trace back nearly 200 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $187 billion at June 30, 2024.

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 1,000 branches and approximately 1,200 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, 2023 and 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, the soundness of other financial institutions and the impact of changes in the interest rate environment. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

Notes to Editors:

A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 9:00 a.m. ET, on July 18, 2024. A replay of the call will be available on our website through July 18, 2025.

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
Second Quarter 2024
Financial Supplement

Page


13

Basis of Presentation

14

Financial Highlights

16

GAAP to Non-GAAP Reconciliation

18

Consolidated Balance Sheets

19

Consolidated Statements of Income

20

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

22

Noninterest Expense

22

Personnel Expense

23

Loan Composition

23

Loans Held for Sale Composition

23

Summary of Changes in Loans Held for Sale

23

Summary of Loan and Lease Loss Experience From Continuing Operations

25

Asset Quality Statistics From Continuing Operations

25

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

25

Summary of Changes in Nonperforming Loans From Continuing Operations

26

Line of Business Results

26

Selected Items Impact on Earnings

Basis of Presentation

Use of Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Key's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this document, the financial supplement, or conference call slides related to this document, all of which can be found on Key's website (www.key.com/ir).

Annualized Data
Certain returns, yields, performance ratios, or quarterly growth rates are presented on an "annualized" basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts.

Taxable Equivalent
Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at the federal statutory rate. This adjustment puts all earning assets, most notably tax-exempt municipal securities, and certain lease assets, on a common basis that facilitates comparison of results to results of peers.

Earnings Per Share Equivalent
Certain income or expense items may be expressed on a per common share basis. This is done for analytical and decision-making purposes to better discern underlying trends in total consolidated earnings per share performance excluding the impact of such items. When the impact of certain income or expense items is disclosed separately, the after-tax amount is computed using the marginal tax rate, with this then being the amount used to calculate the earnings per share equivalent.

Financial Highlights

(Dollars in millions, except per share amounts)




Three months ended




6/30/2024

3/31/2024

6/30/2023

Summary of operations





Net interest income (TE)

$           899

$           886

$           986


Noninterest income

627

647

609



Total revenue (TE)

1,526

1,533

1,595


Provision for credit losses

100

101

167


Noninterest expense

1,079

1,143

1,076


Income (loss) from continuing operations attributable to Key

273

219

286


Income (loss) from discontinued operations, net of taxes

1

—

1


Net income (loss) attributable to Key

274

219

287








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

237

183

250


Income (loss) from discontinued operations, net of taxes

1

—

1


Net income (loss) attributable to Key common shareholders

238

183

251







Per common share





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

$            .25

$            .20

$            .27


Income (loss) from discontinued operations, net of taxes

—

—

—


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

.25

.20

.27








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

.25

.20

.27


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

—

—

—


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

.25

.20

.27








Cash dividends declared

.205

.205

.205


Book value at period end

13.09

12.84

12.18


Tangible book value at period end

10.13

9.87

9.16


Market price at period end

14.21

15.81

9.24







Performance ratios





From continuing operations:





Return on average total assets

.59 %

.47 %

.58 %


Return on average common equity

7.96

6.06

8.42


Return on average tangible common equity (b)

10.39

7.87

11.04


Net interest margin (TE)

2.04

2.02

2.12


Cash efficiency ratio (b)

70.2

74.0

66.8








From consolidated operations:





Return on average total assets

.59 %

.47 %

.58 %


Return on average common equity

7.99

6.06

8.45


Return on average tangible common equity (b)

10.43

7.87

11.09


Net interest margin (TE)

2.04

2.02

2.12


Loan to deposit (c)

74.0

76.6

83.0







Capital ratios at period end





Key shareholders' equity to assets

7.9 %

7.8 %

7.1 %


Key common shareholders' equity to assets

6.6

6.5

5.8


Tangible common equity to tangible assets (b)

5.2

5.0

4.5


Common Equity Tier 1 (d)

10.5

10.3

9.3


Tier 1 risk-based capital (d)

12.2

12.0

10.8


Total risk-based capital (d)

14.7

14.5

13.1


Leverage (d)

9.1

9.1

8.7







Asset quality — from continuing operations





Net loan charge-offs

$             91

$             81

$             52


Net loan charge-offs to average loans

.34 %

.29 %

.17 %


Allowance for loan and lease losses

$        1,547

$        1,542

$        1,480


Allowance for credit losses

1,833

1,823

1,771


Allowance for loan and lease losses to period-end loans

1.44 %

1.40 %

1.24 %


Allowance for credit losses to period-end loans

1.71

1.66

1.49


Allowance for loan and lease losses to nonperforming loans

218

234

343


Allowance for credit losses to nonperforming loans

258

277

411


Nonperforming loans at period-end

$           710

$           658

$           431


Nonperforming assets at period-end

727

674

462


Nonperforming loans to period-end portfolio loans

.66 %

.60 %

.36 %


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

.68

.61

.39







Trust assets





Assets under management

$       57,602

$       57,305

$       53,952

Other data





Average full-time equivalent employees

16,646

16,752

17,754


Branches

946

957

965


Taxable-equivalent adjustment

$             12

$             11

$              8

 





Financial Highlights (continued)

(Dollars in millions, except per share amounts)



Six months ended



6/30/2024

6/30/2023

Summary of operations




Net interest income (TE)

$                  1,785

$                  2,092


Noninterest income

1,274

1,217


Total revenue (TE)

3,059

3,309


Provision for credit losses

201

306


Noninterest expense

2,222

2,252


Income (loss) from continuing operations attributable to Key

492

597


Income (loss) from discontinued operations, net of taxes

1

2


Net income (loss) attributable to Key

493

599






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

420

525


Income (loss) from discontinued operations, net of taxes

1

2


Net income (loss) attributable to Key common shareholders

421

527





Per common share




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

$                     .45

$                     .57


Income (loss) from discontinued operations, net of taxes

—

—


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

.45

.57






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

.45

.56


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

—

—


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

.45

.57






Cash dividends paid

.41

.41





Performance ratios




From continuing operations:




Return on average total assets

.53 %

.62 %


Return on average common equity

7.00

9.11


Return on average tangible common equity (b)

9.12

12.06


Net interest margin (TE)

2.03

2.29


Cash efficiency ratio (b)

72.1

67.5






From consolidated operations:




Return on average total assets

.53 %

.62 %


Return on average common equity

7.02

9.15


Return on average tangible common equity (b)

9.14

12.10


Net interest margin (TE)

2.03

2.29





Asset quality — from continuing operations




Net loan charge-offs

$                     172

$                      97


Net loan charge-offs to average total loans

.31 %

.16 %





Other data




Average full-time equivalent employees

16,699

17,987





Taxable-equivalent adjustment

23

15

(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)

June 30, 2024, ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.

GAAP to Non-GAAP Reconciliations
(Dollars in millions)

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

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

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

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

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


Three months ended


Six months ended


6/30/2024

3/31/2024

6/30/2023


6/30/2024

6/30/2023

Tangible common equity to tangible assets at period-end







Key shareholders' equity (GAAP)

$   14,789

$   14,547

$   13,844




Less: Intangible assets (a)

2,793

2,799

2,826




Preferred Stock (b)

2,446

2,446

2,446




Tangible common equity (non-GAAP)

$     9,550

$     9,302

$     8,572




Total assets (GAAP)

$ 187,450

$ 187,485

$ 195,037




Less: Intangible assets (a)

2,793

2,799

2,826




Tangible assets (non-GAAP)

$ 184,657

$ 184,686

$ 192,211




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

5.17 %

5.04 %

4.46 %




Pre-provision net revenue







Net interest income (GAAP)

$        887

$        875

$        978


$    1,762

$    2,077

Plus: Taxable-equivalent adjustment

12

11

8


23

15

Noninterest income

627

647

609


1,274

1,217

Less: Noninterest expense

1,079

1,143

1,076


2,222

2,252

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

$        447

$        390

$        519


$       837

$    1,679

Average tangible common equity







Average Key shareholders' equity (GAAP)

$   14,474

$   14,649

$   14,412


$  14,561

$  14,116

Less: Intangible assets (average) (c)

2,796

2,802

2,831


2,798

2,836

Preferred stock (average)

2,500

2,500

2,500


2,500

2,500

Average tangible common equity (non-GAAP)

$     9,178

$     9,347

$     9,081


$    9,263

$    8,780

Return on average tangible common equity from continuing operations







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

$        237

$        183

$        250


$       420

$       525

Average tangible common equity (non-GAAP)

9,178

9,347

9,081


9,263

8,780








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

10.39 %

7.87 %

11.04 %


9.12 %

12.06 %

Return on average tangible common equity consolidated







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

$        238

$        183

$        251


$       421

$       527

Average tangible common equity (non-GAAP)

9,178

9,347

9,081


9,263

8,780








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

10.43 %

7.87 %

11.09 %


9.14 %

12.10 %

 

GAAP to Non-GAAP Reconciliations (continued)

(Dollars in millions)


Three months ended


Six months ended


6/30/2024

3/31/2024

6/30/2023


6/30/2024

6/30/2023

Cash efficiency ratio







Noninterest expense (GAAP)

$     1,079

$     1,143

$     1,076


$    2,222

$    2,252

Less: Intangible asset amortization

7

8

10


15

20

Adjusted noninterest expense (non-GAAP)

$     1,072

$     1,135

$     1,066


$    2,207

$    2,232








Net interest income (GAAP)

$       887

$       875

$       978


$    1,762

$    2,077

Plus: Taxable-equivalent adjustment

12

11

8


23

15

Net interest income TE (non-GAAP)

899

886

986


1,785

2,092

Noninterest income (GAAP)

627

647

609


1,274

1,217

Total taxable-equivalent revenue (non-GAAP)

$     1,526

$     1,533

$     1,595


$    3,059

$    3,309








Cash efficiency ratio (non-GAAP)

70.2 %

74.0 %

66.8 %


72.1 %

67.5 %








(a)

For the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, intangible assets exclude less than $1 million, $1 million, and $1 million, respectively, of period-end purchased credit card receivables. 

(b)

Net of capital surplus.

(c)

For the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, average intangible assets exclude less than $1 million, $1 million, and $1 million, respectively, of average purchased credit card receivables.

GAAP = U.S. generally accepted accounting principles

 

Consolidated Balance Sheets

(Dollars in millions)










6/30/2024

3/31/2024

6/30/2023

Assets





Loans

$       107,078

$       109,885

$       119,011


Loans held for sale

517

228

1,130


Securities available for sale

37,460

37,298

37,908


Held-to-maturity securities

7,968

8,272

9,189


Trading account assets

1,219

1,171

1,177


Short-term investments

15,536

13,205

8,959


Other investments

1,259

1,247

1,474



Total earning assets

171,037

171,306

178,848


Allowance for loan and lease losses

(1,547)

(1,542)

(1,480)


Cash and due from banks

1,326

1,247

758


Premises and equipment

631

650

652


Goodwill

2,752

2,752

2,752


Other intangible assets

41

48

75


Corporate-owned life insurance

4,382

4,392

4,378


Accrued income and other assets

8,532

8,314

8,668


Discontinued assets

296

318

386



Total assets

$       187,450

$       187,485

$       195,037







Liabilities





Deposits in domestic offices:






Interest-bearing deposits

$       117,570

$       114,593

$       111,766



Noninterest-bearing deposits

28,150

29,638

33,366



Total deposits

145,720

144,231

145,132


Federal funds purchased and securities sold under repurchase agreements 

25

27

1,702


Bank notes and other short-term borrowings

5,292

2,896

6,949


Accrued expense and other liabilities

4,755

5,008

5,339


Long-term debt

16,869

20,776

22,071



Total liabilities

172,661

172,938

181,193







Equity





Preferred stock

2,500

2,500

2,500


Common shares

1,257

1,257

1,257


Capital surplus

6,185

6,164

6,231


Retained earnings

15,706

15,662

15,759


Treasury stock, at cost

(5,715)

(5,722)

(5,859)


Accumulated other comprehensive income (loss)

(5,144)

(5,314)

(6,044)



Key shareholders' equity

14,789

14,547

13,844

Total liabilities and equity

$       187,450

$       187,485

$       195,037







Common shares outstanding (000)

943,200

942,776

935,733

 

Consolidated Statements of Income

(Dollars in millions, except per share amounts)





Three months ended


Six months ended




6/30/2024

3/31/2024

6/30/2023


6/30/2024

6/30/2023

Interest income








Loans

$             1,524

$             1,538

$             1,576


$             3,062

$             3,052


Loans held for sale

8

14

17


22

30


Securities available for sale

259

232

194


491

388


Held-to-maturity securities

73

75

81


148

155


Trading account assets

16

14

15


30

27


Short-term investments

192

142

111


334

153


Other investments

16

17

16


33

29



Total interest income

2,088

2,032

2,010


4,120

3,834

Interest expense








Deposits

817

782

531


1,599

881


Federal funds purchased and securities sold under repurchase agreements

1

1

48


2

70


Bank notes and other short-term borrowings

51

46

104


97

182


Long-term debt

332

328

349


660

624



Total interest expense

1,201

1,157

1,032


2,358

1,757

Net interest income

887

875

978


1,762

2,077

Provision for credit losses

100

101

167


201

306

Net interest income after provision for credit losses

787

774

811


1,561

1,771

Noninterest income








Trust and investment services income

139

136

126


275

254


Investment banking and debt placement fees

126

170

120


296

265


Cards and payments income

85

77

85


162

166


Service charges on deposit accounts

66

63

69


129

136


Corporate services income

68

69

86


137

162


Commercial mortgage servicing fees

61

56

50


117

96


Corporate-owned life insurance income

34

32

32


66

61


Consumer mortgage income

16

14

14


30

25


Operating lease income and other leasing gains

21

24

23


45

48


Other income

11

6

4


17

4



Total noninterest income

627

647

609


1,274

1,217

Noninterest expense








Personnel

636

674

622


1,310

1,323


Net occupancy

66

67

65


133

135


Computer processing

101

102

95


203

187


Business services and professional fees

37

41

41


78

86


Equipment

20

20

22


40

44


Operating lease expense

17

17

21


34

41


Marketing

21

19

29


40

50


Other expense

181

203

181


384

386



Total noninterest expense

1,079

1,143

1,076


2,222

2,252

Income (loss) from continuing operations before income taxes

335

278

344


613

736


Income taxes

62

59

58


121

139

Income (loss) from continuing operations

273

219

286


492

597


Income (loss) from discontinued operations, net of taxes

1

—

1


1

2

Net income (loss)

274

219

287


493

599

Net income (loss) attributable to Key

$                274

$                219

$                287


$                493

$                599










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

$                237

$                183

$                250


$                420

$                525

Net income (loss) attributable to Key common shareholders

238

183

251


421

527

Per common share







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

$                 .25

$                 .20

$                 .27


$                 .45

$                 .57

Income (loss) from discontinued operations, net of taxes

—

—

—


—

—

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

.25

.20

.27


.45

.57

Per common share — assuming dilution







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

$                 .25

$                 .20

$                 .27


$                 .45

$                 .56

Income (loss) from discontinued operations, net of taxes

—

—

—


—

—

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

.25

.20

.27


.45

.57










Cash dividends declared per common share

$               .205

$               .205

$               .205


$               .410

$               .410










Weighted-average common shares outstanding (000)

931,726

929,692

926,741


930,776

926,807


Effect of common share options and other stock awards

6,761

7,319

3,713


7,040

5,513

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

938,487

937,011

930,454


937,816

932,320

(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)




Second Quarter 2024


First Quarter 2024


Second Quarter 2023



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)

$       54,599

$              860

6.34 %


$       55,220

$              853

6.22 %


$       61,426

$              881

5.76 %


Real estate — commercial mortgage

14,287

217

6.10


14,837

229

6.21


16,226

235

5.80


Real estate — construction

3,020

56

7.51


3,039

57

7.50


2,641

44

6.64


Commercial lease financing

3,193

28

3.46


3,346

27

3.23


3,756

29

3.07


Total commercial loans

75,099

1,161

6.22


76,442

1,166

6.14


84,049

1,189

5.67


Real estate — residential mortgage

20,515

169

3.30


20,814

171

3.29


21,659

176

3.25


Home equity loans

6,817

102

5.98


7,024

104

5.97


7,620

109

5.75


Other consumer loans

5,597

70

5.00


5,800

72

4.99


6,360

77

4.86


Credit cards

933

34

14.63


954

36

14.93


984

33

13.49


Total consumer loans

33,862

375

4.44


34,592

383

4.44


36,623

395

4.33


Total loans

108,961

1,536

5.66


111,034

1,549

5.61


120,672

1,584

5.26


Loans held for sale

599

8

5.42


888

14

6.15


1,087

17

6.16


Securities available for sale (b), (e)

36,764

259

2.42


37,089

232

2.17


38,899

194

1.74


Held-to-maturity securities (b)

8,123

73

3.59


8,423

75

3.57


9,371

81

3.47


Trading account assets

1,231

16

5.38


1,110

14

5.21


1,244

15

4.64


Short-term investments

13,729

192

5.62


10,243

142

5.59


7,798

111

5.73


Other investments (e)

1,234

16

5.19


1,236

17

5.39


1,566

16

4.03


Total earning assets

170,641

2,100

4.77


170,023

2,043

4.67


180,637

2,018

4.34


Allowance for loan and lease losses

(1,534)




(1,505)




(1,379)




Accrued income and other assets

17,476




17,350




17,202




Discontinued assets

305




329




394




Total assets

$    186,888




$    186,197




$    196,854



Liabilities













Money market deposits

$       39,364

$              290

2.97 %


$       37,659

$              264

2.82 %


$       32,419

$              123

1.53 %


Demand deposits

54,629

340

2.50


56,137

357

2.56


53,569

256

1.91


Savings deposits

5,189

2

.19


5,253

1

.07


6,592

1

.04


Time deposits

16,019

185

4.64


14,430

160

4.45


15,216

151

3.99


Total interest-bearing deposits

115,201

817

2.85


113,479

782

2.77


107,796

531

1.98


Federal funds purchased and securities sold under repurchase agreements

124

1

4.76


106

1

4.03


3,767

48

5.07


Bank notes and other short-term borrowings

3,617

51

5.57


3,325

46

5.63


7,982

104

5.22


Long-term debt (f)

19,219

332

6.91


19,537

328

6.72


22,284

349

6.26


Total interest-bearing liabilities

138,161

1,201

3.49


136,447

1,157

3.41


141,829

1,032

2.91


Noninterest-bearing deposits

28,979




29,399




35,107




Accrued expense and other liabilities

4,969




5,373




5,112




Discontinued liabilities (f)

305




329




394




Total liabilities

$    172,414




$    171,548




$    182,442



Equity













Key shareholders' equity

$      14,474




$      14,649




$      14,412




Noncontrolling interests

—




—




—




Total equity

14,474




14,649




14,412




Total liabilities and equity

$    186,888




$    186,197




$    196,854



Interest rate spread (TE)



1.28 %




1.26 %




1.43 %

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


$              899

2.04 %



$              886

2.02 %



$              986

2.12 %

TE adjustment (b)


12




11




8



Net interest income, GAAP basis


$              887




$              875




$              978


(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 June 30, 2024, March 31, 2024, and June 30, 2023.   

(c)

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

(d)

Commercial and industrial average balances include $218 million, $211 million, and $194 million of assets from commercial credit cards for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively.

(e)

Yield presented is calculated on the basis of amortized cost. The average amortized cost for securities available for sale was $42.8 billion, $42.7 billion, and $44.6 billion for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Yield based on the fair value of securities available for sale was 2.82%, 2.50%, and 2.00% for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively.

(f)

A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying Key's matched funds transfer pricing methodology to discontinued operations.

TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles.

 

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

(Dollars in millions)




Six months ended June 30, 2024


Six months ended June 30, 2023



Average


Yield/


Average


Yield/



Balance

Interest (a)

Rate (a)


Balance

Interest (a)

Rate (a)

Assets









Loans: (b), (c)









Commercial and industrial (d)

$        54,909

$          1,714

6.28 %


$         60,857

$           1,688

5.59 %


Real estate — commercial mortgage

14,562

446

6.16


16,347

459

5.66


Real estate — construction

3,030

113

7.51


2,583

83

6.47


Commercial lease financing

3,269

55

3.34


3,770

56

2.97


Total commercial loans

75,770

2,328

6.18


83,557

2,286

5.51


Real estate — residential mortgage

20,664

340

3.30


21,548

348

3.23


Home equity loans

6,921

206

5.98


7,749

215

5.61


Other consumer loans

5,699

142

5.00


6,419

153

4.78


Credit cards

943

69

14.78


984

65

13.43


Total consumer loans

34,227

757

4.44


36,700

781

4.28


Total loans

109,997

3,085

5.64


120,257

3,067

5.14


Loans held for sale

744

22

5.86


997

30

6.02


Securities available for sale (b), (e)

36,926

491

2.29


39,034

388

1.73


Held-to-maturity securities (b)

8,273

148

3.58


9,152

155

3.40


Trading account assets

1,171

30

5.30


1,123

27

4.74


Short-term investments

11,986

334

5.61


5,677

153

5.44


Other investments (e)

1,235

33

5.29


1,438

29

4.02


Total earning assets

170,332

4,143

4.72


177,678

3,849

4.22


Allowance for loan and lease losses

(1,519)




(1,357)




Accrued income and other assets

17,412




17,351




Discontinued assets

317




406




Total assets

$      186,542




$       194,078



Liabilities









Money market deposits

$        38,512

$              554

2.89


$         33,110

$               201

1.23


Other demand deposits

55,383

697

2.53


52,993

440

1.67


Savings deposits

5,221

3

.13


6,967

1

.04


Time deposits

15,225

345

4.55


12,870

239

3.75


Total interest-bearing deposits

114,341

1,599

2.81


105,940

881

1.68


Federal funds purchased and securities sold under repurchase agreements

115

2

4.42


2,932

70

4.81


Bank notes and other short-term borrowings

3,471

97

5.60


7,293

182

5.03


Long-term debt (f)

19,378

660

6.81


21,218

624

5.88


Total interest-bearing liabilities

137,305

2,358

3.45


137,383

1,757

2.57


Noninterest-bearing deposits

29,189




37,213




Accrued expense and other liabilities

5,170




4,960




Discontinued liabilities (f)

317




406




Total liabilities

$      171,981




$       179,962



Equity









Key shareholders' equity

$        14,561




$         14,116




Noncontrolling interests

—




—




Total equity

14,561




14,116




Total liabilities and equity

$      186,542




$       194,078



Interest rate spread (TE)



1.27 %




1.65 %

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


$          1,785

2.03 %



$           2,092

2.29 %

TE adjustment (b)


23




15



Net interest income, GAAP basis


$          1,762




$           2,077











(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 six months ended June 30, 2024, and June 30, 2023, respectively.  

(c)

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

(d)

Commercial and industrial average balances include $214 million and $186 million of assets from commercial credit cards for the six months ended June 30, 2024, and June 30, 2023, respectively.

(e)

Yield presented is calculated on the basis of amortized cost. The average amortized cost for securities available for sale was $42.8 billion and $45.0 billion for the six months ended June 30, 2024, and June 30, 2023, respectively. Yield based on the fair value of securities available for sale was 2.66% and 1.99% for the six months ended June 30, 2024, and June 30, 2023, respectively.

(f)

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


Six months ended


6/30/2024

3/31/2024

6/30/2023


6/30/2024

6/30/2023

Personnel (a)

$            636

$            674

$            622


$         1,310

$         1,323

Net occupancy

66

67

65


133

135

Computer processing

101

102

95


203

187

Business services and professional fees

37

41

41


78

86

Equipment

20

20

22


40

44

Operating lease expense

17

17

21


34

41

Marketing

21

19

29


40

50

Other expense

181

203

181


384

386

Total noninterest expense

$         1,079

$         1,143

$         1,076


$         2,222

$         2,252

Average full-time equivalent employees (b)

16,646

16,752

17,754


16,699

17,987

(a)

Additional detail provided in Personnel Expense table below.

(b)

The number of average full-time equivalent employees has not been adjusted for discontinued operations.

 

Personnel Expense

(Dollars in millions)









Three months ended


Six months ended


6/30/2024

3/31/2024

6/30/2023


6/30/2024

6/30/2023

Salaries and contract labor

$            394

$            389

$           416


$            783

$            835

Incentive and stock-based compensation

143

159

93


302

245

Employee benefits

98

126

103


224

202

Severance

1

—

10


1

41

Total personnel expense

$            636

$            674

$           622


$         1,310

$         1,323

 

Loan Composition

(Dollars in millions)











Change 6/30/2024 vs.


6/30/2024

3/31/2024

6/30/2023


3/31/2024

6/30/2023

Commercial and industrial (a)(b)

$        53,129

$        54,793

$        60,059


(3.0) %

(11.5) %

Commercial real estate:







Commercial mortgage

14,218

14,540

16,048


(2.2)

(11.4)

Construction

3,077

3,013

2,646


2.1

16.3

Total commercial real estate loans

17,295

17,553

18,694


(1.5)

(7.5)

Commercial lease financing (b)

3,101

3,305

3,801


(6.2)

(18.4)

Total commercial loans

73,525

75,651

82,554


(2.8)

(10.9)

Residential — prime loans:







Real estate — residential mortgage

20,380

20,704

21,637


(1.6)

(5.8)

Home equity loans

6,729

6,905

7,529


(2.5)

(10.6)

Total residential — prime loans

27,109

27,609

29,166


(1.8)

(7.1)

Other consumer loans

5,514

5,690

6,290


(3.1)

(12.3)

Credit cards

930

935

1,001


(.5)

(7.1)

Total consumer loans

33,553

34,234

36,457


(2.0)

(8.0)

Total loans (c), (d)

$      107,078

$      109,885

$      119,011


(2.6) %

(10.0) %

(a)

Loan balances include $217 million, $214 million, and $200 million of commercial credit card balances at June 30, 2024, March 31, 2024, and June 30, 2023, respectively.

(b)

Commercial and industrial includes receivables held as collateral for a secured borrowing of $285 million at June 30, 2024, $349 million at March 31, 2024 and no amounts held as collateral for a secured borrowing at June 30, 2023. Commercial lease financing includes receivables held as collateral for a secured borrowing of $5 million, $6 million, and $5 million at June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c)

Total loans exclude loans of $291 million at June 30, 2024, $313 million at March 31, 2024, and $381 million at June 30, 2023, related to the discontinued operations of the education lending business.

(d)

Accrued interest of $502 million, $522 million, and $500 million at June 30, 2024, March 31, 2024, and June 30, 2023, respectively, presented in "other assets" on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

 

Loans Held for Sale Composition

(Dollars in millions)













Change 6/30/2024 vs.


6/30/2024

3/31/2024

6/30/2023


3/31/2024

6/30/2023

Commercial and industrial

$              72

$              —

$            221


N/M

(67.4) %

Real estate — commercial mortgage

354

155

829


128.4

(57.3)

Commercial lease financing

—

—

13


—

(100.0)

Real estate — residential mortgage

91

73

67


24.7

35.8

Total loans held for sale

$            517

$            228

$         1,130


126.8 %

(54.2) %

 N/M = Not Meaningful

 

Summary of Changes in Loans Held for Sale

(Dollars in millions)








2Q24

1Q24

4Q23

3Q23

2Q23

Balance at beginning of period

$            228

$            483

$            730

$         1,130

$         1,211

New originations

1,532

1,738

1,879

3,035

1,798

Transfers from (to) held to maturity, net

(1)

(105)

(31)

(94)

(52)

Loan sales

(1,234)

(1,893)

(2,095)

(3,312)

(1,798)

Loan draws (payments), net

(7)

4

—

(29)

(28)

Valuation and other adjustments

(1)

1

—

—

(1)

Balance at end of period

$            517

$            228

$            483

$            730

$         1,130

 

Summary of Loan and Lease Loss Experience From Continuing Operations

(Dollars in millions)









Three months ended


Six months ended


6/30/2024

3/31/2024

6/30/2023


6/30/2024

6/30/2023

Average loans outstanding

$ 108,961

$ 111,034

$ 120,672


$ 109,997

$ 120,257

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

$     1,542

$     1,508

$     1,380


1,508

1,337

Loans charged off:







Commercial and industrial

86

62

42


148

77








Real estate — commercial mortgage

10

5

9


15

14

Real estate — construction

—

—

—


—

—

Total commercial real estate loans

10

5

9


15

14

Commercial lease financing

6

—

1


6

—

Total commercial loans

102

67

52


169

91

Real estate — residential mortgage

1

1

1


2

1

Home equity loans

—

1

2


1

3

Other consumer loans

16

16

12


32

23

Credit cards

12

12

9


24

18

Total consumer loans

29

30

24


59

45

Total loans charged off

131

97

76


228

136

Recoveries:







Commercial and industrial

31

8

15


39

23








Real estate — commercial mortgage

1

—

1


1

1

Real estate — construction

—

—

—


—

—

Total commercial real estate loans

1

—

1


1

1

Commercial lease financing

3

2

2


5

3

Total commercial loans

35

10

18


45

27

Real estate — residential mortgage

1

2

1


3

2

Home equity loans

—

1

1


1

2

Other consumer loans

2

2

2


4

5

Credit cards

2

1

2


3

3

Total consumer loans

5

6

6


11

12

Total recoveries

40

16

24


56

39

Net loan charge-offs

(91)

(81)

(52)


(172)

(97)

Provision (credit) for loan and lease losses

96

115

152


211

240

Allowance for loan and lease losses at end of period

$     1,547

$     1,542

$     1,480


$    1,547

$    1,480








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

$       281

$       296

$       276


$       296

$       225

Provision (credit) for losses on lending-related commitments

4

(14)

15


(10)

66

Other

1

(1)

—


—

—

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

$       286

$       281

$       291


$       286

$       291








Total allowance for credit losses at end of period

$     1,833

$     1,823

$     1,771


$    1,833

$    1,771








Net loan charge-offs to average total loans

.34 %

.29 %

.17 %


.31 %

.16 %

Allowance for loan and lease losses to period-end loans

1.44

1.40

1.24


1.44

1.24

Allowance for credit losses to period-end loans

1.71

1.66

1.49


1.71

1.49

Allowance for loan and lease losses to nonperforming loans

218

234

343


218

343

Allowance for credit losses to nonperforming loans

258

277

411


258

411








Discontinued operations — education lending business:







Loans charged off

$           1

$           1

$           2


$          2

$          3

Recoveries

1

—

1


1

1

Net loan charge-offs

$         —

$         (1)

$         (1)


$         (1)

$         (2)

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

 

Asset Quality Statistics From Continuing Operations

(Dollars in millions)



2Q24

1Q24

4Q23

3Q23

2Q23

Net loan charge-offs

$         91

$         81

$         76

$         71

$         52

Net loan charge-offs to average total loans

.34 %

.29 %

.26 %

.24 %

.17 %

Allowance for loan and lease losses

$    1,547

$    1,542

$    1,508

$    1,488

$    1,480

Allowance for credit losses (a)

1,833

1,823

1,804

1,778

1,771

Allowance for loan and lease losses to period-end loans

1.44 %

1.40 %

1.34 %

1.29 %

1.24 %

Allowance for credit losses to period-end loans

1.71

1.66

1.60

1.54

1.49

Allowance for loan and lease losses to nonperforming loans

218

234

263

327

343

Allowance for credit losses to nonperforming loans

258

277

314

391

411

Nonperforming loans at period end

$       710

$       658

$       574

$       455

$       431

Nonperforming assets at period end

727

674

591

471

462

Nonperforming loans to period-end portfolio loans

.66 %

.60 %

.51 %

.39 %

.36 %

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

.68

.61

.52

.41

.39

(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)



6/30/2024

3/31/2024

12/31/2023

9/30/2023

6/30/2023

Commercial and industrial

$       358

$       360

$       297

$       214

$       188







Real estate — commercial mortgage

173

113

100

63

65

Real estate — construction

—

—

—

—

—

Total commercial real estate loans

173

113

100

63

65

Commercial lease financing

1

1

—

1

1

Total commercial loans

532

474

397

278

254

Real estate — residential mortgage

77

79

71

72

73

Home equity loans

91

95

97

97

97

Other Consumer loans

4

4

4

4

4

Credit cards

6

6

5

4

3

Total consumer loans

178

184

177

177

177

Total nonperforming loans (a)

710

658

574

455

431

OREO

17

16

17

16

15

Nonperforming loans held for sale

—

—

—

—

16

Other nonperforming assets

—

—

—

—

—

Total nonperforming assets

$       727

$       674

$       591

$       471

$       462

Accruing loans past due 90 days or more

$       137

$       119

$       107

$         52

$         73

Accruing loans past due 30 through 89 days

282

242

222

178

139

Nonperforming assets from discontinued operations — education lending business 

3

2

3

2

2

Nonperforming loans to period-end portfolio loans

.66 %

.60 %

.51 %

.39 %

.36 %

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

.68

.61

.52

.41

.39

 

Summary of Changes in Nonperforming Loans From Continuing Operations

(Dollars in millions)



2Q24

1Q24

4Q23

3Q23

2Q23

Balance at beginning of period

$          658

$          574

$          455

$          431

$          416

Loans placed on nonaccrual status

317

243

297

159

169

Charge-offs

(131)

(97)

(95)

(87)

(76)

Loans sold

(22)

(5)

(9)

(4)

(23)

Payments

(76)

(35)

(56)

(25)

(20)

Transfers to OREO

(1)

(2)

(2)

(3)

(2)

Loans returned to accrual status

(35)

(20)

(16)

(16)

(33)

Balance at end of period

$          710

$          658

$          574

$          455

$          431

 

Line of Business Results

(Dollars in millions)

















Change 2Q24 vs.


2Q24

1Q24

4Q23

3Q23

2Q23


1Q24

2Q23

Consumer Bank









Summary of operations









Total revenue (TE)

$             769

$             757

$             770

$             775

$             787


1.6 %

(2.3) %

Provision for credit losses

33

(2)

5

14

32


N/M

3.1

Noninterest expense

648

704

779

676

662


(8.0)

(2.1)

Net income (loss) attributable to Key

67

41

(11)

65

71


63.4

(5.6)

Average loans and leases

39,174

39,919

40,763

41,610

42,297


(1.9)

(7.4)

Average deposits

85,397

84,075

83,557

82,683

81,406


1.6

4.9

Net loan charge-offs

45

44

40

36

32


2.3

40.6

Net loan charge-offs to average total loans

.46 %

.44 %

.39 %

.34 %

.30 %


4.5

53.3

Nonperforming assets at period end

$             190

$             196

$             190

$             190

$             193


(3.1)

(1.6)

Return on average allocated equity

7.93 %

4.69 %

(1.28) %

7.42 %

8.00 %


69.1

(.9)










Commercial Bank









Summary of operations









Total revenue (TE)

$             769

$             799

$             804

$             809

$             823


(3.8) %

(6.6) %

Provision for credit losses

87

102

96

68

134


(14.7)

(35.1)

Noninterest expense

431

443

526

433

406


(2.7)

6.2

Net income (loss) attributable to Key

207

205

150

240

227


1.0

(8.8)

Average loans and leases

69,248

70,633

72,713

75,598

77,922


(2.0)

(11.1)

Average loans held for sale

522

840

635

1,268

1,014


(37.9)

(48.5)

Average deposits

57,360

56,331

58,196

56,078

52,512


1.8

9.2

Net loan charge-offs

64

37

35

35

20


73.0

220.0

Net loan charge-offs to average total loans

.37 %

.21 %

.19 %

.18 %

.10 %


76.2

270.0

Nonperforming assets at period end

$             537

$             479

$             401

$             281

$             269


12.1

99.6

Return on average allocated equity

8.31 %

8.24 %

5.88 %

9.11 %

8.61 %


.8

(3.5)

TE = Taxable Equivalent; N/M = Not Meaningful

 

Selected Items Impact on Earnings(a)

(Dollars in millions, except per share amounts)



Pretax(b)


After-tax at marginal rate(b)

Quarter to date results

Amount


Net Income

EPS(c)

Three months ended June 30, 2024





FDIC special assessment (other expense)(d)

$                  (5)


$                 (4)

$                 —

Three months ended March 31, 2024





FDIC special assessment (other expense)(d)

(29)


(22)

(0.02)

Three months ended June 30, 2023





No items

—


—

—






(a)

Includes items impacting results or trends during the period but are not considered non-GAAP adjustments.

(b)

Favorable (unfavorable) impact.

(c)

Impact to EPS reflected on a fully diluted basis.

(d)

In November 2023, the FDIC issued a final rule implementing a special assessment on insured depository institutions to recover the loss to the FDIC's deposit insurance fund (DIF) associated with protecting uninsured depositors following the 2023 closures of Silicon Valley Bank and Signature Bank. KeyCorp recorded the initial loss estimate related to the special assessment during the fourth quarter of 2023. In late February 2024, the FDIC provided updated estimates on the uninsured deposit losses and recoverable assets related to the 2023 closures of Silicon Valley Bank and Signature Bank. KeyCorp recorded the additional expense related to the revised special assessment during the first quarter of 2024. In June 2024, Key received its quarterly invoice from the FDIC which included amounts due under the special assessment. As such, Key recorded an additional expense in the second quarter of 2024 to true-up initial estimates to the invoiced amount.

 

(PRNewsfoto/KeyCorp)

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/keycorp-reports-second-quarter-2024-net-income-of-237-million-or-25-per-diluted-common-share-302200544.html

SOURCE KeyCorp

FAQ

What was KeyCorp's net income for Q2 2024?

KeyCorp reported net income of $237 million for Q2 2024.

What was KeyCorp's earnings per share for Q2 2024?

KeyCorp reported earnings per diluted share of $0.25 for Q2 2024.

How did KeyCorp's average deposits change in Q2 2024?

Average deposits increased by $1.3 billion in Q2 2024 compared to both the prior quarter and the same period last year.

What was KeyCorp's Common Equity Tier 1 ratio for Q2 2024?

KeyCorp's Common Equity Tier 1 ratio was 10.5% for Q2 2024.

How did KeyCorp's net interest income change year-over-year?

Net interest income fell by 8.8% year-over-year in Q2 2024.

What was KeyCorp's total revenue for Q2 2024?

KeyCorp's total revenue for Q2 2024 was $1.53 billion.

How did KeyCorp's net charge-offs change in Q2 2024?

Net charge-offs increased to 0.34% of average loans in Q2 2024, up from 0.17% in Q2 2023.

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United States of America
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