KeyCorp Reports Fourth Quarter 2013 Net Income of $229 Million, or $.26 per Common Share and Full Year Net Income of $847 Million, or $.93 per Common Share

By PR Newswire,  January 23, 2014, 06:45:00 AM EDT


Average loans up 5% for the full year, driven by a 12% increase in commercial, financial and agricultural

Credit quality remains strong, with net loan charge-offs to average loans of .27%

Disciplined capital management, returning 76% of net income to shareholders in 2013

CLEVELAND, Jan. 23, 2014 /PRNewswire/ -- KeyCorp (NYSE:KEY) today announced fourth quarter net income from continuing operations attributable to Key common shareholders of $229 million, or $.26 per common share, compared to $229 million, or $.25 per common share for the third quarter of 2013, and $190 million, or $.20 per common share for the fourth quarter of 2012.   During the fourth quarter of 2013, Key incurred $24 million, or $.02 per common share of costs related to both its previously announced efficiency initiative and a pension settlement charge.

For the twelve months ended December 31, 2013, net income from continuing operations attributable to Key common shareholders was $847 million, or $.93 per common share, compared to $813 million, or $.86 per common share for the same period one year ago.  During 2013, Key incurred $117 million, or $.08 per common share of costs related to both its efficiency initiative and pension settlement charge.

"2013 was a significant year for Key," said Chairman and Chief Executive Officer Beth Mooney.  "We executed our strategy, acquired relationships, successfully invested in our businesses and returned peer-leading capital to shareholders." 

"Reflecting the success of our distinctive business model, average loans were up 5% in 2013 compared to the prior year, driven by a 12% increase in commercial, financial and agricultural loans, and our credit quality improved to levels not seen since 2007," Mooney added.  "Both commercial and consumer loans grew relative to the full year and fourth quarter of 2012.  Fee income benefitted from the investments we have made in several of our businesses.  Cards and payments income was up 20% from 2012, and mortgage servicing fees more than doubled.  We also had a record year for investment banking and debt placement fees, with five consecutive years of growth.  We achieved the goal we set in June 2012, by implementing annualized cost savings of $241 million.  With increased cost discipline embedded in our culture, we are poised to drive further improvements in efficiency and productivity."

"We have also maintained our disciplined approach to capital management by investing in our businesses and returning 76% of our net income to our shareholders through dividends and common share repurchases in 2013.  At year end our capital remained in the top tier of our peer group, positioning us well for the future," continued Mooney.

FOURTH QUARTER 2013 FINANCIAL RESULTS, from continuing operations

Compared with Fourth Quarter of 2012

  • Average loans up 3.4% (5% excluding impact of exit portfolios), driven by growth in commercial, financial and agricultural loans; period ending loans up 3.1%
  • Average deposits up 7.5% due to commercial mortgage servicing acquisition and growth in commercial and consumer deposits
  • Net interest income (taxable-equivalent) down $18 million, primarily due to yield pressure on new loans and reinvestment yields on securities
  • Noninterest income up $14 million, reflecting higher principal investing gains and benefits from investments in payments and commercial mortgage servicing
  • Noninterest expense down $22 million, reflecting successful execution of efficiency initiative
  • Asset quality improved, with net loan charge-offs to average loans declining from .44% to .27%
  • Disciplined capital management, with total shareholder payout of 76% of net income attributable to Key common shareholders in 2013, including the repurchase of $474 million of common shares for the year

Compared with Third Quarter of 2013

  • Average loans up .6%, driven by growth in commercial, financial and agricultural loans; period ending loans up 1.6%
  • Average deposits up 3.7% due to growth in commercial mortgage escrow deposits and continued client inflows
  • Net interest income (taxable-equivalent) up $5 million, with growth in average earning assets and lower net interest margin
  • Noninterest income down $6 million, including decline of $19 million in gains related to leveraged lease terminations
  • Noninterest expense down $4 million, which included higher efficiency-related charges, a lower pension settlement adjustment and higher expenses from incentives and business services and professional fees
  • Asset quality remains strong and stable with net loan charge-offs to average loans of .27%
  • Disciplined capital management, repurchasing $99 million of common shares during the fourth quarter of 2013 and maintaining top tier capital position with Tier 1 common equity of 11.23%

 

Selected Financial Highlights































































dollars in millions, except per share data





















Change 4Q13 vs.









4Q13





3Q13





4Q12





3Q13





4Q12



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

$

229



$

229



$

190









20.5

%

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

     common share — assuming dilution



.26





.25





.20





4.0

%



30.0



Return on average total assets from continuing operations



1.08

%



1.12

%



.96

%



N/A





N/A



Tier 1 common equity (a)



11.23





11.17





11.36





N/A





N/A



Book value at period end

$

11.25



$

11.05



$

10.78





1.8

%



4.4

%

Net interest margin (TE) from continuing operations



3.01

%



3.11

%



3.37

%



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 "Tier 1 common equity."  The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.





































TE = Taxable Equivalent, N/A = Not Applicable

































































 

 

 

 

INCOME STATEMENT HIGHLIGHTS

































































Revenue

































































dollars in millions





















Change 4Q13 vs.









4Q13





3Q13





4Q12





3Q13





4Q12



Net interest income (TE)

$

589



$

584



$

607





.9

%



(3.0)

%

Noninterest income



453





459





439





(1.3)





3.2





Total revenue

$

1,042



$

1,043



$

1,046





(.1)

%



(.4)

%





































































TE = Taxable Equivalent































 

Taxable-equivalent net interest income was $589 million for the fourth quarter of 2013, and the net interest margin was 3.01%.  These results compare to taxable-equivalent net interest income of $607 million and a net interest margin of 3.37% for the fourth quarter of 2012.  The decrease in net interest income and net interest margin is attributable to the impact of lower interest rates on asset yields combined with a significant increase in liquidity levels resulting from strong deposit inflows.  The decreases were partially offset by the maturity of higher-rate certificates of deposit and a more favorable mix of lower-cost deposits. 

Compared to the third quarter of 2013, taxable-equivalent net interest income increased by $5 million, and the net interest margin declined by 10 basis points.  The increase in net interest income was primarily due to $5 million less of amortized lease origination costs recognized in the fourth quarter of 2013 compared to the third quarter of 2013 in connection with the early termination of leveraged leases.  The decrease in the net interest margin was largely attributable to higher levels of liquidity, which were deployed in lower-yielding short-term investments. 

 

Noninterest Income





































































dollars in millions























Change 4Q13 vs.











4Q13 





3Q13 





4Q12 





3Q13 





4Q12 



Trust and investment services income



$

98



$

100



$

95





(2.0)

%



3.2

%

Investment banking and debt placement fees





84





86





110





(2.3)





(23.6)



Service charges on deposit accounts





68





73





75





(6.8)





(9.3)



Operating lease income and other leasing gains





23





43





19





(46.5)





21.1



Corporate services income





40





44





41





(9.1)





(2.4)



Cards and payments income





40





43





38





(7.0)





5.3



Corporate-owned life insurance income





33





26





36





26.9





(8.3)



Consumer mortgage income





3





3





11









(72.7)



Mortgage servicing fees





22





15





7





46.7





214.3



Net gains (losses) from principal investing





20





17





2





17.6





900.0



Other income





22





9





5





144.4





340.0





Total noninterest income



$

453



$

459



$

439





(1.3)

%



3.2

%









































































 

Key's noninterest income was $453 million for the fourth quarter of 2013, compared to $439 million for the year-ago quarter.  The fourth quarter reflects the benefits from Key's recent investments in payments and commercial mortgage servicing, with cards and payments income up $2 million and mortgage servicing fees up $15 million.  In addition, net gains from principal investing increased $18 million.  These increases were partially offset by decreases in investment banking and debt placement fees of $26 million and consumer mortgage income of $8 million. 

Compared to the third quarter of 2013, noninterest income decreased by $6 million.  Operating lease income and other leasing gains decreased $20 million primarily due to a $19 million decrease in gains on the early termination of leveraged leases.  This decrease was partially offset by increases in other income of $13 million and mortgage servicing fees of $7 million primarily due to higher special servicing fees.

 

 

Noninterest Expense





































































dollars in millions























Change 4Q13 vs.











4Q13





3Q13





4Q12





3Q13





4Q12



Personnel expense



$

398



$

414



$

422





(3.9)

%



(5.7)

%

Nonpersonnel expense





314





302





312





4.0





.6





Total noninterest expense



$

712



$

716



$

734





(.6)

%



(3.0)

%









































































 

Key's noninterest expense was $712 million for the fourth quarter of 2013, compared to $734 million for the same period last year.  Excluding the $22 million in expenses related to Key's efficiency initiative and the pension settlement charge of $2 million in the fourth quarter of 2013 and the $16 million in efficiency initiative expenses one year ago, noninterest expense was down $30 million from the prior year.  Personnel expense decreased $24 million, due to the realization of expense efficiencies.  Nonpersonnel expense increased $2 million.  The provision (credit) for losses on lending-related commitments increased $11 million, offset by a $12 million decrease in business services and professional fees.

Compared to the third quarter of 2013, noninterest expense decreased by $4 million.  The reduction in expenses reflected $17 million in lower expenses related to Key's efficiency initiative and pension settlement charges.  This reduction was partially offset by increases in incentive compensation of $6 million and business services and professional fees of $5 million. 

BALANCE SHEET HIGHLIGHTS

As of December 31, 2013, Key had total assets of $92.9 billion compared to $90.7 billion at September 30, 2013, and $89.2 billion at December 31, 2012.

 

Average Loans





































































dollars in millions





















Change 12-31-13 vs.









12-31-13



9-30-13



12-31-12



9-30-13



12-31-12



Commercial, financial and agricultural (a)



$

24,218



$

23,864



$

22,436





1.5

%



7.9

%

Other commercial loans





13,266





13,281





13,494





(.1)





(1.7)



Total home equity loans





10,653





10,611





10,218





.4





4.3



Other consumer loans





5,471





5,515





5,711





(.8)





(4.2)





Total loans



$

53,608



$

53,271



$

51,859





.6

%



3.4

%





































 

(a) Commercial, financial and agricultural average balance for the three months ended December 31, 2013, September 30, 2013, and December 31, 2012, includes $97 million, $96 million, and $90 million, respectively, of assets from commercial credit cards.





 

Average loans were $53.6 billion for the fourth quarter of 2013, an increase of $1.7 billion compared to the fourth quarter of 2012.  Total commercial loans increased $1.6 billion, mostly due to commercial, financial and agricultural loan growth across Key's business lending segments, which was modestly offset by leveraged lease terminations occurring in 2013. Consumer loans grew modestly, as growth in Key's home equity portfolio was partially offset by exit portfolio run-off.    

Compared to the third quarter of 2013, average loans increased by $337 million.  The loan growth occurred primarily in commercial lending within our commercial, financial and agricultural and commercial mortgage portfolios.  Much of the growth occurred toward the latter part of the fourth quarter, resulting in a larger increase in period end loans than average loans.  Consumer loans remained relatively unchanged for the fourth quarter.

 

 

 

 

Average Deposits





































































dollars in millions























Change 12-31-13 vs.









12-31-13



9-30-13



12-31-12



9-30-13



12-31-12



Non-time deposits (a)



$

61,394



$

58,620



$

55,355





4.7

%



10.9

%

Certificates of deposits ($100,000 or more)





2,649





2,785





2,992





(4.9)





(11.5)



Other time deposits





3,736





3,957





4,714





(5.6)





(20.7)





Total deposits



$

67,779



$

65,362



$

63,061





3.7

%



7.5

%





































Cost of total deposits (a)





.20

%



.22

%



.31

%



N/A





N/A











































































(a)  Excludes deposits in foreign office.





























































N/A = Not Applicable

































 

Average deposits, excluding deposits in foreign office, totaled $67.8 billion for the fourth quarter of 2013, an increase of $4.7 billion compared to the year-ago quarter.  The growth was driven by corporate clients and the addition of escrow demand deposits from the commercial mortgage servicing acquisition completed earlier in 2013.  Demand deposits were up $3.2 billion, and interest-bearing non-time deposits were up $2.9 billion. This deposit growth was partially offset by $1.3 billion of run-off of certificates of deposit and other time deposits. 

Compared to the third quarter of 2013, average deposits, excluding deposits in foreign office, increased by $2.4 billion.  Demand deposits increased by $1.7 billion mostly due to average escrow deposits and interest-bearing non-time deposits growth of $1.1 billion associated with deposits from business and public sector clients. This growth was partially offset by run-off in certificates of deposit.

 

ASSET QUALITY



































































dollars in millions























Change 4Q13 vs.









4Q13





3Q13





4Q12





3Q13





4Q12



Net loan charge-offs



$

37



$

37



$

58









(36.2)

%

Net loan charge-offs to average total loans





.27

%



.28

%



.44

%



N/A





N/A



Nonperforming loans at period end (a)



$

508



$

541



$

674





(6.1)

%



(24.6)



Nonperforming assets at period end





531





579





735





(8.3)





(27.8)



Allowance for loan and lease losses





848





868





888





(2.3)





(4.5)



Allowance for loan and lease losses to nonperforming loans





166.9

%



160.4

%



131.8

%



N/A





N/A



Provision (credit) for loan and lease losses



$

19



$

28



$

57





(32.1)

%



(66.7)

%





































































(a)  December 31, 2013, September 30, 2013, and December 31, 2012 amounts exclude $16 million, $18 million, and $23 million, respectively, of purchased credit impaired loans acquired in July 2012.



































N/A = Not Applicable



















 

Key's provision for loan and lease losses was $19 million for the fourth quarter of 2013, compared to $28 million for the third quarter of 2013 and $57 million for the year-ago quarter.  Key's allowance for loan and lease losses was $848 million, or 1.56% of total period-end loans at December 31, 2013, compared to 1.62% at September 30, 2013, and 1.68% at December 31, 2012. 

Net loan charge-offs for the fourth quarter of 2013 totaled $37 million, or .27% of average total loans.  These results compare to $37 million, or .28% for the third quarter of 2013, and $58 million, or .44% for the same period last year.  

At December 31, 2013, Key's nonperforming loans totaled $508 million and represented .93% of period-end portfolio loans, compared to 1.01% at September 30, 2013, and 1.28% at December 31, 2012.  Nonperforming assets at December 31, 2013 totaled $531 million and represented .97% of period-end portfolio loans and OREO and other nonperforming assets, compared to 1.08% at September 30, 2013, and 1.39% at December 31, 2012.  

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at December 31, 2013.

 

Capital Ratios











































12-31-13





9-30-13





12-31-12



Tier 1 common equity (a), (b)



11.23

%



11.17

%



11.36

%

Tier 1 risk-based capital (a)



11.97





11.92





12.15



Total risk based capital (a)



14.34





14.37





15.13



Tangible common equity to tangible assets (b)



9.80





9.93





10.15



Leverage (a)



11.09





11.33





11.41























 

(a)  12-31-13 ratio is estimated.



(b)  The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "tangible common equity" and "Tier 1 common equity."  The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

As shown in the preceding table, at December 31, 2013, Key's estimated Tier 1 common equity and Tier 1 risk-based capital ratios stood at 11.23% and 11.97%, respectively.  In addition, the tangible common equity ratio was 9.80% at December 31, 2013.

In July 2013, the Federal banking regulators approved the final Basel III capital framework for U.S. banking organizations (the "Regulatory Capital Rules").  While the Regulatory Capital Rules are effective January 1, 2014, the mandatory compliance date for Key as a "standardized approach" banking organization begins on January 1, 2015, and is subject to transitional provisions extending to January 1, 2019.  Key's estimated Tier 1 common equity as calculated under the Regulatory Capital Rules was 10.63% at December 31, 2013.  This exceeds the fully phased-in required minimum Tier 1 common equity (including capital conservation buffer) of 7.00%.

 

Summary of Changes in Common Shares Outstanding

























































in thousands























Change 4Q13 vs.











4Q13





3Q13





4Q12





3Q13





4Q12



Shares outstanding at beginning of period





897,821





912,883





936,195





(1.6)

%



(4.1)

%

Common shares repurchased





(7,659)





(16,364)





(10,530)





(53.2)





(27.3)



Shares reissued (returned) under employee benefit plans





562





1,302





104





(56.8)





440.4





Shares outstanding at end of period





890,724





897,821





925,769





(.8)

%



(3.8)

%









































































 

Key completed $474 million of common share repurchases during calendar year 2013, including $99 million of repurchases in the fourth quarter of 2013.  Common share repurchases under Key's 2013 CCAR capital plan are expected to be executed through the first quarter of 2014.

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 4Q13 vs.











4Q13





3Q13





4Q12





3Q13





4Q12



Revenue from continuing operations (TE)

































Key Community Bank



$

534



$

551



$

580





(3.1)

%



(7.9)

%

Key Corporate Bank





407





377





402





8.0





1.2



Other Segments





103





114





69





(9.6)





49.3





Total segments





1,044





1,042





1,051





.2





(.7)



Reconciling Items





(2)





1





(5)





N/M





N/M





Total



$

1,042



$

1,043



$

1,046





(.1)

%



(.4)

%





































Income (loss) from continuing operations attributable to Key

































Key Community Bank



$

28



$

54



$

33





(48.1)

%



(15.2)

%

Key Corporate Bank





127





96





115





32.3





10.4



Other Segments





84





92





53





(8.7)





58.5





Total segments





239





242





201





(1.2)

%



18.9



Reconciling Items





(4)





(7)





(5)





N/M





N/M





Total



$

235



$

235



$

196









19.9

%









































































TE = Taxable equivalent, N/M = Not Meaningful





















 

Key Community Bank









































































































dollars in millions























Change 4Q13 vs.











4Q13





3Q13





4Q12





3Q13





4Q12



Summary of operations

































Net interest income (TE)



$

350



$

357



$

383





(2.0)

%



(8.6)

%

Noninterest income





184





194





197





(5.2)





(6.6)





Total revenue (TE)





534





551





580





(3.1)





(7.9)



Provision (credit) for loan and lease losses





33





24





26





37.5





26.9



Noninterest expense





456





441





502





3.4





(9.2)





Income (loss) before income taxes (TE)





45





86





52





(47.7)





(13.5)



Allocated income taxes (benefit) and TE adjustments





17





32





19





(46.9)





(10.5)





Net income (loss) attributable to Key



$

28



$

54



$

33





(48.1)

%



(15.2)

%





































Average balances

































Loans and leases



$

29,596



$

29,495



$

28,629





.3

%



3.4

%

Total assets





31,784





31,679





31,224





.3





1.8



Deposits





50,409





49,652





49,839





1.5





1.1







































Assets under management at period end



$

26,664



$

25,574



$

23,638





4.3

%



12.8

%









































































TE = Taxable Equivalent

































 

 

 

 

Additional Key Community Bank Data





































































dollars in millions























Change 4Q13 vs.











4Q13





3Q13





4Q12





3Q13





4Q12



Noninterest income 

































Trust and investment services income 



$

67



$

68



$

66





(1.5)

%



1.5

%

Service charges on deposit accounts 





58





61





61





(4.9)





(4.9)



Cards and payments income 





37





36





34





2.8





8.8



Other noninterest income 





22





29





36





(24.1)





(38.9)





Total noninterest income 



$

184



$

194



$

197





(5.2)

%



(6.6)

%





































Average deposit balances

































NOW and money market deposit accounts



$

27,438



$

26,564



$

25,697





3.3

%



6.8

%

Savings deposits





2,472





2,510





2,399





(1.5)





3.0



Certificates of deposit ($100,000 or more)





2,124





2,264





2,619





(6.2)





(18.9)



Other time deposits





3,731





3,949





4,702





(5.5)





(20.7)



Deposits in foreign office





285





278





287





2.5





(.7)



Noninterest-bearing deposits





14,359





14,087





14,135





1.9





1.6





Total deposits 



$

50,409



$

49,652



$

49,839





1.5

%



1.1

%





































Home equity loans 

































Average balance



$

10,310



$

10,247



$

9,807















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





71

%



71

%



70

%













Percent first lien positions





58





58





55



















































Other data

































Branches





1,028





1,044





1,088















Automated teller machines





1,335





1,350





1,611



















































 

Key Community Bank Summary of Operations

  • Successfully completed integrations of credit card and Western New York branches
  • Loan growth of $967 million, or 3.4% from prior year
  • Core deposits up $2.0 billion, or 4.8% from the prior year

Key Community Bank recorded net income attributable to Key of $28 million for the fourth quarter of 2013, compared to net income attributable to Key of $33 million for the year-ago quarter.

Taxable-equivalent net interest income decreased by $33 million, or 8.6% from the fourth quarter of 2012 due to declines in the deposit spread in the current period as a result of the continued low-rate environment.  Average loans and leases grew 3.4% while average deposits increased 1.1% from one year ago. 

Noninterest income declined by $13 million, or 6.6% from the year-ago quarter.  Consumer mortgage income decreased $8 million, service charges on deposit accounts declined $3 million, and other income declined by $4 million. These decreases were partially offset by increases in cards and payments income of $3 million.

The provision for loan and lease losses increased by $7 million, or 26.9% from the fourth quarter of 2012.  Net loan charge-offs increased $20 million from the same period one year ago.

Noninterest expense declined by $46 million, or 9.2 % from the year-ago quarter as a result of Key's efficiency initiative.  Personnel expense decreased $15 million primarily due to declines in salaries and employee benefits.  Nonpersonnel expense declined $31 million primarily due to declines in business services and professional fees, computer processing, and other support costs.

 

 

 

Key Corporate Bank









































































































dollars in millions























Change 4Q13 vs.











4Q13





3Q13





4Q12





3Q13





4Q12



Summary of operations

































Net interest income (TE)



$

192



$

188



$

195





2.1

%



(1.5)

%

Noninterest income





215





189





207





13.8





3.9





Total revenue (TE)





407





377





402





8.0





1.2



Provision (credit) for loan and lease losses





(13)





13





11





N/M





N/M



Noninterest expense





225





217





207





3.7





8.7





Income (loss) before income taxes (TE)





195





147





184





32.7





6.0



Allocated income taxes and TE adjustments





68





51





69





33.3





(1.4)





Net income (loss) attributable to Key



$

127



$

96



$

115





32.3

%



10.4

%





































Average balances

































Loans and leases   



$

21,013



$

20,586



$

19,481





2.1

%



7.9

%

Loans held for sale   





668





422





538





58.3





24.2



Total assets





25,114





24,487





23,450





2.6





7.1



Deposits





17,372





16,125





13,681





7.7





27.0







































Assets under management at period end



$

10,241



$

10,536



$

11,106





(2.8)

%



(7.8)

%









































































TE = Taxable Equivalent, N/M = Not Meaningful

































 

Additional Key Corporate Bank Data





































































dollars in millions























Change 4Q13 vs.











4Q13





3Q13





4Q12





3Q13





4Q12



Noninterest income

































Trust and investment services income



$

32



$

31



$

30





3.2

%



6.7

%

Investment banking and debt placement fees





84





85





109





(1.2)





(22.9)



Operating lease income and other leasing gains





19





14





18





35.7





5.6







































Corporate services income





30





34





31





(11.8)





(3.2)



Service charges on deposit accounts





11





11





14









(21.4)



Cards and payments income





3





6





4





(50.0)





(25.0)





Payments and services income





44





51





49





(13.7)





(10.2)







































Mortgage servicing fees





21





16





7





31.3





200.0



Other noninterest income





15





(8)





(6)





N/M





N/M





Total noninterest income



$

215



$

189



$

207





13.8

%



3.9

%









































































N/M = Not Meaningful

































 

Key Corporate Bank Summary of Operations

  • Average loan balances up 7.9% from the prior year
  • Average deposits up 27% from the prior year
  • Total revenue increased 1.2% from prior year
  • Investment banking and debt placement fees declined 22.9% from the prior year, but increased 3.1% for the full year

Key Corporate Bank recorded net income attributable to Key of $127 million for the fourth quarter of 2013, compared to $115 million for the same period one year ago. 

Taxable-equivalent net interest income decreased by $3 million, or 1.5% compared to the fourth quarter of 2012.  Average earning assets increased $1.9 billion, or 9% from the year-ago quarter, driving an $8 million increase in earning asset spread.  Average deposit balances increased $3.7 billion, or 27% from the year-ago quarter, driven by the commercial mortgage servicing acquisition and increases in other business flows.  However, these increases in balances were offset by declines in the deposit spread as a result of the continued low-rate environment.   

Noninterest income increased by $8 million, or 3.9% from the fourth quarter of 2012.  Mortgage servicing fees increased $14 million due to higher levels of core servicing fees, special servicing fees, and the impact of the previously announced acquisition of a commercial mortgage servicing portfolio.   Other noninterest income increased $21 million mostly driven by gains related to the disposition of certain investments held by the Real Estate Capital line of business.  Offsetting these increases was a $25 million decrease in investment banking and debt placement fees from the fourth quarter of 2012 as a result of a business mix shift in Key's real estate business. 

The provision for loan and lease losses decreased $24 million compared to the fourth quarter of 2012 due to improved credit quality within the portfolio.

Noninterest expense increased by $18 million, or 8.7% from the fourth quarter of 2012, mostly due to an increase of $14 million in the provision (credit) for losses on lending-related commitments.  There was a credit of $2 million in the provision (credit) for losses on lending-related commitments in the fourth quarter of 2013 compared to a credit of $16 million for the fourth quarter of 2012. 

Other Segments

Other Segments consist of Corporate Treasury, Community Development, Key's Principal Investing unit, and various exit portfolios.  Other Segments generated net income attributable to Key of $84 million for the fourth quarter of 2013, compared to net income attributable to Key of $53 million for the same period last year.  These results were primarily attributable to an increase in net gains (losses) from principal investing of $18 million, and an increase in net interest income of $17 million. 

KeyCorp was organized more than 160 years ago and is headquartered in Cleveland, Ohio.  One of the nation's largest bank-based financial services companies, Key had assets of approximately$92.9 billion at December 31, 2013.

Key provides deposit, lending, cash management and investment services to individuals and small and mid-sized businesses in 12 states under the name KeyBank National Association.  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: www.key.com/ir

KEY MEDIA NEWSROOM: www.key.com/newsroom

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Key's financial condition, results of operations, and profitability.  Forward-looking statements can be identified by words such as "expect," "believe," and "anticipate," and other similar references to future periods.  Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Key's control.  Key's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.  Factors that could cause Key's actual results to differ materially from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 2012, and its Quarterly Reports on Form 10-Q for the periods ended March 31, 2013, June 30, 2013, and September 30, 2013, each of which has been filed with the Securities and Exchange Commission and is available on Key's website (www.key.com/ir) and on the Securities and Exchange Commission's website (www.sec.gov).  These factors may include, among others: economic, political or other shocks to financial markets in the United States and abroad; current reform initiatives in the U.S., including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended, subjecting us to a variety of new and more stringent legal and regulatory requirements and increased scrutiny from our regulators;adverse behaviors in securities, public debt, and capital markets, including changes in market liquidity and volatility; and our ability to timely and effectively implement our strategic initiatives.  Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management's views as of any subsequent date.  Key does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

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/irat 9:00 a.m. ET, on Thursday, January 23, 2014.  An audio replay of the call will be available through January 30, 2014.

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

Fourth Quarter 2013

Financial Supplement









Page    



13

Financial Highlights

15

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

24

Exit Loan Portfolio From Continuing Operations

24

Asset Quality Statistics From Continuing Operations

25

Summary of Loan and Lease Loss Experience From Continuing Operations

26

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

27

Summary of Changes in Nonperforming Loans From Continuing Operations

27

Summary of Changes in Nonperforming Loans Held for Sale From Continuing Operations

27

Summary of Changes in Other Real Estate Owned, Net of Allowance, From Continuing Operations

28

Line of Business Results

 



Financial Highlights 



(dollars in millions, except per share amounts)





































Three months ended









12-31-13





9-30-13





12-31-12



Summary of operations 

























Net interest income (TE)

$

589





$

584





$

607





Noninterest income



453







459







439







Total revenue (TE) 



1,042







1,043







1,046





Provision (credit) for loan and lease losses



19







28







57





Noninterest expense



712







716







734





Income (loss) from continuing operations attributable to Key



235







235







196





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



(5)







37







7





Net income (loss) attributable to Key 



230







272







203

































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

$

229





$

229





$

190





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



(5)







37







7





Net income (loss) attributable to Key common shareholders



224







266







197































Per common share 

























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

$

.26





$

.25





$

.21





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



(.01)







.04







.01





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



.25







.29







.21

































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



.26







.25







.20





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



(.01)







.04







.01





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



.25







.29







.21

































Cash dividends paid 



.055







.055







.05





Book value at period end 



11.25







11.05







10.78





Tangible book value at period end 



10.11







9.92







9.67





Market price at period end 



13.42







11.40







8.42































Performance ratios 

























From continuing operations: 

























Return on average total assets 



1.08

%





1.12

%





.96

%



Return on average common equity 



9.10







9.13







7.58





Return on average tangible common equity  (c)



10.13







10.18







8.45





Net interest margin (TE) 



3.01







3.11







3.37





Cash efficiency ratio  (c)



67.4







67.5







69.0

































From consolidated operations: 

























Return on average total assets 



1.00

%





1.22

%





.93

%



Return on average common equity 



8.90







10.61







7.86





Return on average tangible common equity  (c)



9.91







11.82







8.77





Net interest margin (TE) 



2.91







3.06







3.29





Loan to deposit  (d)



83.8







83.8







85.8































Capital ratios at period end 

























Key shareholders' equity to assets  



11.09

%





11.25

%





11.51

%



Key common shareholders' equity to assets 



10.78







10.94







11.18





Tangible common equity to tangible assets  (c)



9.80







9.93







10.15





Tier 1 common equity  (c), (e)



11.23







11.17







11.36





Tier 1 risk-based capital  (e)



11.97







11.92







12.15





Total risk-based capital  (e)



14.34







14.37







15.13





Leverage  (e)



11.09







11.33







11.41































Asset quality — from continuing operations 

























Net loan charge-offs 

$

37





$

37





$

58





Net loan charge-offs to average loans  



.27

%





.28

%





.44

%



Allowance for loan and lease losses 

$

848





$

868





$

888





Allowance for credit losses



885







908







917





Allowance for loan and lease losses to period-end loans 



1.56

%





1.62

%





1.68

%



Allowance for credit losses to period-end loans 



1.63







1.69







1.74





Allowance for loan and lease losses to nonperforming loans 



166.9







160.4







131.8





Allowance for credit losses to nonperforming loans  



174.2







167.8







136.1





Nonperforming loans at period end  (f)

$

508





$

541





$

674





Nonperforming assets at period end 



531







579







735





Nonperforming loans to period-end portfolio loans 



.93

%





1.01

%





1.28

%



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



.97







1.08







1.39































Trust and brokerage assets 

























Assets under management 

$

36,905





$

36,110





$

34,744





Nonmanaged and brokerage assets  



47,418







38,525







35,550































Other data 

























Average full-time equivalent employees 



14,197







14,555







15,589





Branches 



1,028







1,044







1,088































Taxable-equivalent adjustment 

$

6





$

6





$

6



 

Financial Highlights (continued) 

(dollars in millions, except per share amounts) 



























Twelve months ended









12-31-13





12-31-12



Summary of operations 

















Net interest income (TE) 

$

2,348





$

2,288





Noninterest income 



1,766







1,856







Total revenue (TE) 



4,114







4,144





Provision (credit) for loan and lease losses 



130







229





Noninterest expense 



2,820







2,818





Income (loss) from continuing operations attributable to Key 



870







835





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



40







23





Net income (loss) attributable to Key   



910







858

























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

$

847





$

813





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



40







23





Net income (loss) attributable to Key common shareholders 



887







836























Per common share 

















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

$

.93





$

.87





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



.04







.02





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



.98







.89

























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



.93







.86





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



.04







.02





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



.97







.89

























Cash dividends paid 



.215







.18























Performance ratios  

















From continuing operations:  

















Return on average total assets  



1.03

%





1.03

%



Return on average common equity  



8.48







8.25





Return on average tangible common equity   (c)



9.45







9.16





Net interest margin (TE)  



3.12







3.21





Cash efficiency ratio  (c)



67.5







67.4

























From consolidated operations: 

















Return on average total assets 



1.02

%





.99

%



Return on average common equity 



8.88







8.48





Return on average tangible common equity   (c)



9.90







9.42





Net interest margin (TE) 



3.02







3.13























Asset quality — from continuing operations 

















Net loan charge-offs 

$

168





$

345





Net loan charge-offs to average total loans  



.32

%





.69

%





















Other data 

















Average full-time equivalent employees 



14,783







15,589























Taxable-equivalent adjustment 

$

23





$

24



 



(a)  In April 2009, management decided to wind down the operations of Austin Capital Management, Ltd., a subsidiary that specialized in managing hedge fund investments for institutional customers.  In September 2009, management decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association.  In February 2013, Key decided to sell its investment subsidiary, Victory Capital Management, and its broker-dealer affiliate, Victory Capital Advisors, to a private equity fund.  As a result of these decisions, Key has accounted for these businesses as discontinued operations.



(b)  Earnings per share may not foot due to rounding.



(c)  The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity,"  "Tier 1 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.



(d)  Represents period-end consolidated total loans and loans held for sale (excluding education loans in the securitization trusts) divided by period-end consolidated total deposits (excluding deposits in foreign office).



(e)  12-31-13 ratio is estimated.



(f)   December 31, 2013, September 30, 2013, and December 31, 2012 amounts exclude $16 million, $18 million, and $23 million, respectively, of purchased credit impaired loans acquired in July 2012.



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

 

GAAP to Non-GAAP Reconciliations

(dollars in millions)

The table below presents certain non-GAAP financial measures related to "tangible common equity," "return on tangible common equity," "Tier 1 common equity," "pre-provision net revenue," "cash efficiency ratio," and "adjusted cash efficiency ratio." 

The tangible common equity ratio and the return on 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.  Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations.  Since the commencement of the Comprehensive Capital Analysis and Review process in early 2009, the Federal Reserve has focused its assessment of capital adequacy on a component of Tier 1 risk-based capital known as Tier 1 common equity, a non-GAAP financial measure.  Because the Federal Reserve has long indicated that voting common shareholders' equity (essentially Tier 1 risk-based capital less preferred stock, qualifying capital securities and noncontrolling interests in subsidiaries) generally should be the dominant element in Tier 1 risk-based capital, this focus on Tier 1 common equity is consistent with existing capital adequacy categories. 

Tier 1 common equity is neither formally defined by GAAP nor prescribed in amount by federal banking regulations; this measure is considered to be a non-GAAP financial measure.  Since analysts and banking regulators may assess Key's capital adequacy using tangible common equity and Tier 1 common equity, management believes it is useful to enable investors to assess Key's capital adequacy on these same bases.  The table also reconciles the GAAP performance measures to the corresponding non-GAAP measures.

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 loan and lease losses makes it easier to analyze the results by presenting them on a more comparable basis.

The cash efficiency ratio and the adjusted cash efficiency ratio are ratios of two non-GAAP performance measures. As such, there are no directly comparable GAAP performance measures.  The cash efficiency ratio performance measure removes the impact of Key's intangible asset amortization from the calculation.  The adjusted cash efficiency ratio further removes the impact of the efficiency initiative charges.  Management believes these ratios provide greater consistency and comparability between Key's results and those of its peer banks.  Additionally, these ratios are 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  









12-31-13





9-30-13





12-31-12



Tangible common equity to tangible assets at period end 

























Key shareholders' equity (GAAP) 

$

10,303





$

10,206





$

10,271





Less:  

Intangible assets   (a)



1,014







1,017







1,027







Preferred Stock, Series A   (b)



282







282







291







Tangible common equity (non-GAAP)   

$

9,007





$

8,907





$

8,953

































Total assets (GAAP) 

$

92,934





$

90,708





$

89,236





Less:  

Intangible assets   (a)



1,014







1,017







1,027







Tangible assets (non-GAAP) 

$

91,920





$

89,691





$

88,209

































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



9.80

%





9.93

%





10.15

%





























Tier 1 common equity at period end 

























Key shareholders' equity (GAAP)  

$

10,303





$

10,206





$

10,271





Qualifying capital securities  



339







340







339





Less: 

Goodwill  



979







979







979







Accumulated other comprehensive income (loss)  (c)



(394)







(409)







(172)







Other assets  (d)



91







96







114







Total Tier 1 capital (regulatory) 



9,966







9,880







9,689





Less:  

Qualifying capital securities  



339







340







339







Preferred Stock, Series A  (b)



282







282







291







Total Tier 1 common equity (non-GAAP)   

$

9,345





$

9,258





$

9,059

































Net risk-weighted assets (regulatory)  (d), (e)

$

83,251





$

82,913





$

79,734

































Tier 1 common equity ratio (non-GAAP)  (e)



11.23

%





11.17

%





11.36

%





























Pre-provision net revenue 

























Net interest income (GAAP) 

$

583





$

578





$

601





Plus: 

Taxable-equivalent adjustment 



6







6







6







Noninterest income (GAAP) 



453







459







439





Less: 

Noninterest expense (GAAP) 



712







716







734





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

$

330





$

327





$

312



 



GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)



































Three months ended









12-31-13





9-30-13





12-31-12



Average tangible common equity

























Average Key shareholders' equity (GAAP)

$

10,272





$

10,237





$

10,261





Less:

Intangible assets (average) (f)



1,016







1,019







1,030







Preferred Stock, Series A (average)



291







291







291







Average tangible common equity (non-GAAP)

$

8,965





$

8,927





$

8,940































Return on average tangible common equity from continuing operations

























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

$

229





$

229





$

190





Average tangible common equity (non-GAAP)



8,965







8,927







8,940

































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



10.13

%





10.18

%





8.45

%





























Return on average tangible common equity consolidated

























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

$

224





$

266





$

197





Average tangible common equity (non-GAAP)



8,965







8,927







8,940

































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



9.91

%





11.82

%





8.77

%





























Cash efficiency ratio

























Noninterest expense (GAAP)

$

712





$

716





$

734





Less:

Intangible asset amortization on credit cards (GAAP)



7







8







8







Other intangible asset amortization (GAAP)



3







4







4







Adjusted noninterest expense (non-GAAP)

$

702





$

704





$

722

































Net interest income (GAAP)

$

583





$

578





$

601





Plus:

Taxable-equivalent adjustment



6







6







6







Noninterest income (GAAP)



453







459







439







Total taxable-equivalent revenue (non-GAAP)

$

1,042





$

1,043





$

1,046

































Cash efficiency ratio (non-GAAP)



67.4

%





67.5

%





69.0

%





























Adjusted cash efficiency ratio net of efficiency initiative charges

























Adjusted noninterest expense (non-GAAP)

$

702





$

704





$

722





Less:

Efficiency initiative and pension settlement charges (non-GAAP)



24







41







16







Net adjusted noninterest expense (non-GAAP)

$

678





$

663





$

706

































Total taxable-equivalent revenue (non-GAAP)

$

1,042





$

1,043





$

1,046

































Adjusted cash efficiency ratio net of efficiency initiative charges (non-GAAP)



65.1

%





63.6

%





67.5

%



































Three months ended

















12-31-13





9-30-13











Tier 1 common equity under the Regulatory Capital Rules (estimates)

























Tier 1 common equity under current regulatory rules

$

9,345





$

9,258













Adjustments from current regulatory rules to the Regulatory Capital Rules:



























Deferred tax assets and other (g)



(130)







(140)















Tier 1 common equity anticipated under the Regulatory Capital Rules (h)

$

9,215





$

9,118









































Net risk-weighted assets under current regulatory rules

$

83,251





$

82,913













Adjustments from current regulatory rules to the Regulatory Capital Rules:



























Loan commitments less than one year



891







496















Past due loans



206







244















Mortgage servicing assets (i)



576







576















Deferred tax assets (i)



240







240















Other



1,490







1,451















Total risk-weighted assets anticipated under the Regulatory Capital Rules

$

86,654





$

85,920









































Tier 1 common equity ratio under the Regulatory Capital Rules (h)



10.63

%





10.61

%









 

GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)











































Twelve months ended

















12-31-13





12-31-12



Pre-provision net revenue

























Net interest income (GAAP)









$

2,325





$

2,264





Plus:

Taxable-equivalent adjustment











23







24







Noninterest income (GAAP)











1,766







1,856





Less:

Noninterest expense (GAAP)











2,820







2,818





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









$

1,294





$

1,326































Average tangible common equity

























Average Key shareholders' equity (GAAP)









$

10,276





$

10,144





Less:

Intangible assets (average) (j)











1,021







978







Preferred Stock, Series A (average)











291







291







Average tangible common equity (non-GAAP)









$

8,964





$

8,875































Return on average tangible common equity from continuing operations

























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









$

847





$

813





Average tangible common equity (non-GAAP)











8,964







8,875

































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











9.45

%





9.16

%





























Return on average tangible common equity consolidated

























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









$

887





$

836





Average tangible common equity (non-GAAP)











8,964







8,875

































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











9.90

%





9.42

%





























Cash efficiency ratio

























Noninterest expense (GAAP)









$

2,820





$

2,818





Less:

Intangible asset amortization on credit cards (GAAP)











30







14







Other intangible asset amortization (GAAP)











14







9







Adjusted noninterest expense (non-GAAP)









$

2,776





$

2,795

































Net interest income (GAAP)









$

2,325





$

2,264





Plus:

Taxable-equivalent adjustment











23







24







Noninterest income (GAAP)











1,766







1,856







Total taxable-equivalent revenue (non-GAAP)









$

4,114





$

4,144

































Cash efficiency ratio (non-GAAP)











67.5

%





67.4

%





























Adjusted cash efficiency ratio net of efficiency initiative charges

























Adjusted noninterest expense (non-GAAP)









$

2,776





$

2,795





Less:

Efficiency initiative and pension settlement charges (non-GAAP)











117







25







Net adjusted noninterest expense (non-GAAP)









$

2,659





$

2,770

































Total taxable-equivalent revenue (non-GAAP)









$

4,114





$

4,144

































Adjusted cash efficiency ratio net of efficiency initiative charges (non-GAAP)











64.6

%





66.8

%

 



(a)   Three months ended December 31, 2013, September 30, 2013, and December 31, 2012 exclude $92 million, $99 million, and $123 million, respectively, of period end purchased credit card receivable intangible assets. 



(b)   Net of capital surplus for the three months ended December 31, 2013 and September 30, 2013.



(c)   Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities), net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance for defined benefit and other postretirement plans.  



(d)  Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed intangible assets (excluding goodwill) and deductible portions of nonfinancial equity investments.  There were no disallowed deferred tax assets at December 31, 2013, September 30, 2013, and December 31, 2012.



(e)  12-31-13 amount is estimated.



(f)   Three months ended December 31, 2013, September 30, 2013, and December 31, 2012 exclude $96 million, $103 million, and $126 million, respectively, of average ending purchased credit card receivable intangible assets. 



(g)  Includes the deferred tax asset subject to future taxable income for realization, primarily tax credit carryforwards, as well as the deductible potion of purchased credit card receivables.



(h)  The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies' Regulatory Capital Rules (as fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital Rules under the "standardized approach."



(i)   Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250%.



(j)   Twelve months ended December 31, 2013 and December 31, 2012 exclude $107 million and $55 million, respectively, of average ending purchased credit card receivable intangible assets.



GAAP = U.S. generally accepted accounting principles

 



Consolidated Balance Sheets 

(dollars in millions) 





































12-31-13





9-30-13





12-31-12

Assets 

























Loans 



$

54,457





$

53,597





$

52,822



Loans held for sale 





611







699







599



Securities available for sale 





12,346







12,606







12,094



Held-to-maturity securities  





4,756







4,835







3,931



Trading account assets 





738







806







605



Short-term investments 





5,590







3,535







3,940



Other investments 





969







1,007







1,064





Total earning assets 





79,467







77,085







75,055



Allowance for loan and lease losses 





(848)







(868)







(888)



Cash and due from banks 





617







748







584



Premises and equipment 





885







890







965



Operating lease assets 





305







293







288



Goodwill 





979







979







979



Other intangible assets 





127







137







171



Corporate-owned life insurance 





3,408







3,384







3,333



Derivative assets 





407







475







693



Accrued income and other assets 





3,015







2,747







2,774



Discontinued assets 





4,572







4,838







5,282





Total assets 



$

92,934





$

90,708





$

89,236





























Liabilities 

























Deposits in domestic offices: 



























NOW and money market deposit accounts 



$

33,952





$

33,132





$

32,380





Savings deposits 





2,472







2,489







2,433





Certificates of deposit ($100,000 or more) 





2,631







2,698







2,879





Other time deposits 





3,648







3,833







4,575





     Total interest-bearing deposits 





42,703







42,152







42,267





Noninterest-bearing deposits 





26,001







25,778







23,319



Deposits in foreign office — interest-bearing 





558







605







407





     Total deposits 





69,262







68,535







65,993



Federal funds purchased and securities

       sold under repurchase agreements 





1,534







1,455







1,609



Bank notes and other short-term borrowings 





343







466







287



Derivative liabilities 





414







450







584



Accrued expense and other liabilities 





1,557







1,375







1,387



Long-term debt 





7,650







6,154







6,847



Discontinued liabilities  





1,854







2,037







2,220





Total liabilities 





82,614







80,472







78,927





























Equity 

























Preferred stock, Series A 





291







291







291



Common shares 





1,017







1,017







1,017



Capital surplus 





4,022







4,029







4,126



Retained earnings 





7,606







7,431







6,913



Treasury stock, at cost 





(2,281)







(2,193)







(1,952)



Accumulated other comprehensive income (loss) 





(352)







(369)







(124)





Key shareholders' equity 





10,303







10,206







10,271



Noncontrolling interests 





17







30







38





Total equity 





10,320







10,236







10,309

Total liabilities and equity 



$

92,934





$

90,708





$

89,236





























Common shares outstanding (000) 





890,724







897,821







925,769

 



Consolidated Statements of Income   

(dollars in millions, except per share amounts) 













































Three months ended 





Twelve months ended 







12-31-13



9-30-13



12-31-12





12-31-13





12-31-12

Interest income 



































Loans 

$

532



$

532



$

563





$

2,151





$

2,155



Loans held for sale 



6





5





5







20







20



Securities available for sale 



75





76





85







311







399



Held-to-maturity securities  



22





22





19







82







69



Trading account assets 



6





5





3







21







18



Short-term investments 



2





1





2







6







6



Other investments 



6





6





11







29







38





Total interest income 



649





647





688







2,620







2,705







































Interest expense 



































Deposits 



34





37





49







158







257



Federal funds purchased and securities sold under repurchase agreements 







1





1







2







4



Bank notes and other short-term borrowings 



3





2





2







8







7



Long-term debt 



29





29





35







127







173





Total interest expense 



66





69





87







295







441







































Net interest income 



583





578





601







2,325







2,264

Provision (credit) for loan and lease losses 



19





28





57







130







229

Net interest income (expense) after provision for loan and lease losses 



564





550





544







2,195







2,035







































Noninterest income 



































Trust and investment services income  



98





100





95







393







375



Investment banking and debt placement fees 



84





86





110







333







327



Service charges on deposit accounts 



68





73





75







281







287



Operating lease income and other leasing gains 



23





43





19







108







195



Corporate services income 



40





44





41







172







168



Cards and payments income 



40





43





38







162







135



Corporate-owned life insurance income 



33





26





36







120







122



Consumer mortgage income 



3





3





11







19







40



Mortgage servicing fees 



22





15





7







58







24



Net gains (losses) from principal investing 



20





17





2







52