Acquisition, Divestiture, and Discontinued Operations

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisition, Divestiture, and Discontinued Operations

12. Acquisitions, Divestiture, and Discontinued Operations

Acquisitions

Laurel Road Digital Lending Business. On January 16, 2019, we announced that KeyBank entered into a definitive agreement with Laurel Road Bank to acquire Laurel Road's digital lending business. Laurel Road's three bank branches located in southeast Connecticut are not part of this transaction. Through the acquisition, KeyBank expects to enhance its digital capabilities with state-of-the-art, customer-centric technology and to leverage Laurel Road's proven ability to attract and serve professional millennial clients. The acquisition, which will be accounted for as a business combination, closed on April 3, 2019. Accordingly, we will begin consolidating Laurel Road’s financial results in our consolidated financial statements in the second quarter of 2019.

Divestiture

Key Insurance & Benefits Services, Inc. On March 29, 2018, we announced that we had entered into a definitive agreement to sell KIBS to USI Insurance Services. We acquired KIBS as a part of the 2016 merger with First Niagara. We completed the sale to USI Insurance Services on May 4, 2018. At the close of the sale, we recognized a $73 million net gain on sale. In the third quarter of 2018, we recognized an additional $5 million gain upon the finalization of the purchase price.

Discontinued operations

Discontinued operations primarily includes our government-guaranteed education lending business. At March 31, 2019, and December 31, 2018, approximately $1.0 billion and $1.1 billion, respectively, of education loans are included in discontinued assets on the consolidated balance sheets. Net interest income after provision for credit losses for this business is not material and is included in income (loss) from discontinued operations, net of taxes on the consolidated statements of income.