Line of Business Results

9 Months Ended

Sep. 30, 2018

18. Line of Business Results

The specific lines of business that constitute each of the major business segments (operating segments) align with how management reviews performance and makes business decisions. We have two major business segments, Key Community Bank and Key Corporate Bank. We also have Other Segments that consists of corporate treasury, our principal investing unit, and various exit portfolios. Total assets included under “Reconciling Items” 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. For more information on our business segments, see Note 25 ("Line of Business Results") on page 183 of our 2017 Form 10-K.

The development and application of the methodologies that we use to allocate items among our lines of business is a dynamic process. Accordingly, financial results may be revised periodically to reflect enhanced alignment of expense base allocations drivers, changes in the risk profile of a particular business, or changes in our organizational structure.

The table on the following pages shows selected financial data for our major business segments for the three- and nine-month periods ended September 30, 2018, and September 30, 2017.




Three months ended September 30,	Key Community Bank						Key Corporate Bank
dollars in millions	2018			2017			2018			2017
SUMMARY OF OPERATIONS
Net interest income (TE)	$	726		$	673		$	273		$	292
Noninterest income	268			272			301			269
Total revenue (TE) ^(a)	994			945			574			561
Provision for credit losses	43			59			20			(11		)
Depreciation and amortization expense	27			30			34			25
Other noninterest expense	608			596			282			278
Income (loss) from continuing operations before income taxes (TE)	316			260			238			269
Allocated income taxes and TE adjustments	75			97			39			79
Income (loss) from continuing operations	241			163			199			190
Income (loss) from discontinued operations, net of taxes	—			—			—			—
Net income (loss)	241			163			199			190
Less: Net income (loss) attributable to noncontrolling interests	—			—			—			—
Net income (loss) attributable to Key	$	241		$	163		$	199		$	190

AVERAGE BALANCES ^(b)
Loans and leases	$	47,862		$	47,614		$	39,714		$	38,021
Total assets ^(a)	51,740			51,642			46,860			45,257
Deposits	82,259			79,563			21,056			21,559
OTHER FINANCIAL DATA
Net loan charge-offs ^(b)	$	43		$	41		$	19		$	(9	)
Return on average allocated equity ^(b)	19.80		%	13.39		%	26.91		%	27.08		%
Return on average allocated equity	19.80			13.39			26.91			27.08
Average full-time equivalent employees ^(c)	10,529			10,696			2,546			2,460




Nine months ended September 30,	Key Community Bank						Key Corporate Bank
dollars in millions	2018			2017			2018			2017
SUMMARY OF OPERATIONS
Net interest income (TE)	$	2,129		$	1,978		$	822		$	909
Noninterest income	820			856			852			827
Total revenue (TE) ^(a)	2,949			2,834			1,674			1,736
Provision for credit losses	128			152			62			26
Depreciation and amortization expense	84			86			101			68
Other noninterest expense	1,844			1,790			852			834
Income (loss) from continuing operations before income taxes (TE)	893			806			659			808
Allocated income taxes and TE adjustments	212			300			85			213
Income (loss) from continuing operations	681			506			574			595
Income (loss) from discontinued operations, net of taxes	—			—			—			—
Net income (loss)	681			506			574			595
Less: Net income (loss) attributable to noncontrolling interests	—			—			—			—
Net income (loss) attributable to Key	$	681		$	506		$	574		$	595

AVERAGE BALANCES^(b)
Loans and leases	$	47,844		$	47,396		$	39,232		$	37,804
Total assets ^(a)	51,739			51,361			46,544			44,506
Deposits	81,053			79,439			20,977			21,237
OTHER FINANCIAL DATA
Net loan charge-offs ^(b)	$	119		$	131		$	56		$	24
Return on average allocated equity ^(b)	18.80		%	14.14		%	26.36		%	27.93		%
Return on average allocated equity	18.80			14.14			26.36			27.93
Average full-time equivalent employees ^(c)	10,604			10,573			2,542			2,403


(a)	Substantially all revenue generated by our major business segments is derived from clients that reside in the United States. Substantially all long-lived assets, including premises and equipment, capitalized software, and goodwill held by our major business segments, are located in the United States.


(b)	From continuing operations.


(c)	The number of average full-time equivalent employees was not adjusted for discontinued operations.




Other Segments						Total Segments						Reconciling Items						Key
2018			2017			2018			2017			2018			2017			2018			2017

$	(13	)	$	(10	)	$	986		$	955		$	7		$	7		$	993		$	962
37			52			606			593			3			(1		)	609			592
24			42			1,592			1,548			10			6			1,602			1,554
(2		)	2			61			50			1			1			62			51
—			1			61			56			37			41			98			97
7			25			897			899			(31		)	(4		)	866			895
19			14			573			543			3			(32		)	576			511
(3		)	(6		)	111			170			(17		)	(22		)	94			148
22			20			462			373			20			(10		)	482			363
—			—			—			—			—			1			—			1
22			20			462			373			20			(9		)	482			364
—			(1		)	—			(1		)	—			1			—			—
$	22		$	21		$	462		$	374		$	20		$	(10	)	$	482		$	364


$	888		$	1,175		$	88,464		$	86,810		$	3		$	4		$	88,467		$	86,814
37,769			36,895			136,369			133,794			360			562			136,729			134,356
2,292			2,010			105,607			103,132			19			(27		)	105,626			103,105

(1)			—			$	62		$	32		(1		)	$	—		$	60		$	32
73.35		%	55.54		%	23.26		%	19.11		%	1.08		%	(.58		)%	12.57		%	9.45		%
73.35			55.54			23.26			19.11			1.08			(0.53		)	12.57			9.48
2			337			13,077			13,493			5,073			5,055			18,150			18,548




Other Segments						Total Segments						Reconciling Items						Key
2018			2017			2018			2017			2018			2017			2018			2017

$	(40	)	$	(22	)	$	2,911		$	2,865		$	21		$	13		$	2,932		$	2,878
139			154			1,811			1,837			59			(15		)	1,870			1,822
99			132			4,722			4,702			80			(2		)	4,802			4,700
(4		)	2			186			180			1			—			187			180
1			2			186			156			114			127			300			283
47			77			2,743			2,701			(80		)	16			2,663			2,717
55			51			1,607			1,665			45			(145		)	1,652			1,520
(10		)	(16		)	287			497			(12		)	(72		)	275			425
65			67			1,320			1,168			57			(73		)	1,377			1,095
—			—			—			—			5			6			5			6
65			67			1,320			1,168			62			(67		)	1,382			1,101
—			1			—			1			—			—			—			1
$	65		$	66		$	1,320		$	1,167		$	62		$	(67	)	$	1,382		$	1,100


$	938		$	1,263		$	88,014		$	86,463		$	4		$	22		$	88,018		$	86,485
37,345			36,569			135,628			132,436			386			766			136,014			133,202
1,992			2,030			104,022			102,706			51			(47		)	104,073			102,659

—			$	1		$	175		$	156		(1)			—			$	174		$	156
67.37		%	56.20		%	22.39		%	20.03		%	1.06		%	(1.32		)%	12.24		%	9.62		%
67.37			56.20			22.39			20.03			1.16			(1.21		)	12.28			9.67
173			341			13,319			13,317			5,035			5,110			18,354			18,427