Acquisitions, Divestiture, and Discontinued Operations

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Acquisitions, Divestiture, and Discontinued Operations

15. Acquisitions, Divestiture, and Discontinued Operations

Acquisitions

Laurel Road Digital Lending Business. On April 3, 2019, KeyBank acquired Laurel Road's digital lending business from Laurel Road Bank. Laurel Road Bank's three bank branches located in southeast Connecticut were 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 is accounted for as a business combination. During the second quarter of 2019, we recognized provisional identifiable intangible assets with an estimated fair value of $37 million. We also recognized provisional goodwill of $148 million in connection with this acquisition. These fair value estimates represent our best estimate of fair value and are expected to be finalized over a period of up to one year from the acquisition date.

Divestitures

Key Insurance & Benefits Services, Inc. On May 4, 2018, we completed the sale of KIBS to USI Insurance Services. We acquired KIBS as a part of the 2016 merger with First Niagara. At the close of the sale to USI Insurance Services, 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 net working capital.

Discontinued operations

Discontinued operations includes our government-guaranteed and private education lending business.  At December 31, 2019, and December 31, 2018, approximately $865 million 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.