Line of Business Results |
18. Line of Business Results
The specific lines of business that constitute each of the major
business segments (operating segments) are described below.
Key Community Bank
Key Community Bank serves individuals and small to mid-sized businesses through its
13-state branch
network.
Individuals are provided branch-based deposit and investment
products, personal finance services and loans, including
residential mortgages, home equity, credit card and various types
of installment loans. In addition, financial, estate and retirement
planning, asset management services, and Delaware Trust
capabilities are offered to assist high-net-worth clients with
their banking, trust, portfolio management, insurance, charitable
giving, and related needs.
Small businesses are provided deposit, investment and credit
products, and business advisory services. Mid-sized businesses are provided
products and services that include commercial lending, cash
management, equipment leasing, investment and employee benefit
programs, succession planning, access to capital markets,
derivatives, and foreign exchange.
Key Corporate Bank
Key Corporate Bank is a full-service corporate and investment bank
focused principally on serving the needs of middle market clients
in six industry sectors: consumer, energy, healthcare, industrial,
public sector and real estate. Key Corporate Bank delivers a broad
product suite of banking and capital markets products to its
clients, including syndicated finance, debt and equity capital
markets, commercial payments, equipment finance, commercial
mortgage banking, derivatives, foreign exchange, financial advisory
and public finance. Key Corporate Bank also delivers many of its
product capabilities to clients of Key Community Bank.
Other Segments
Other Segments consist of Corporate Treasury, Community
Development, Principal Investing and various exit portfolios.
Reconciling Items
Total assets included under “Reconciling Items”
primarily represent 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.
The table on the following pages shows selected financial data for
our two major business segments for the three- and six- month periods ended June 30,
2013, and 2012.
The information was derived from the internal financial reporting
system we use to monitor and manage our financial performance. GAAP
guides financial accounting, but there is no authoritative guidance
for “management accounting” — the way we use our
judgment and experience to make reporting decisions. Consequently,
the line of business results we report may not be comparable to
line of business results presented by other companies.
The selected financial data are based on internal accounting
policies designed to compile results on a consistent basis and in a
manner that reflects the underlying economics of the businesses. In
accordance with our policies:
¿ |
|
Net interest income is determined by
assigning a standard cost for funds used or a standard credit for
funds provided based on their assumed maturity, prepayment and/or
repricing characteristics. |
¿ |
|
Indirect expenses, such as computer
servicing costs and corporate overhead, are allocated based on
assumptions regarding the extent to which each line of business
actually uses the services. |
¿ |
|
The consolidated provision for loan
and lease losses is allocated among the lines of business primarily
based on their actual net loan charge-offs, adjusted periodically
for loan growth and changes in risk profile. The amount of the
consolidated provision is based on the methodology that we use to
estimate our consolidated allowance for loan and lease losses. This
methodology is described in Note 1 (“Summary of Significant
Accounting Policies”) under the heading “Allowance for
Loan and Lease Losses” on page 120 of our 2012 Form
10-K. |
¿ |
|
Income taxes are allocated based on
the statutory federal income tax rate of 35% (adjusted for
tax-exempt interest
income, income from corporate-owned life insurance and tax credits
associated with investments in low-income housing projects) and a
blended state income tax rate (net of the federal income tax
benefit) of 2.2%. |
¿ |
|
Capital is assigned to each line of
business based on regulatory requirements. |
Developing and applying 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 allocation drivers,
changes in the risk profile of a particular business, or changes in
our organizational structure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Key Community Bank |
|
|
Key Corporate Bank |
|
dollars in millions |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
SUMMARY OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (TE)
|
|
$ |
357 |
|
|
$ |
356 |
|
|
$ |
189 |
|
|
$ |
190 |
|
Noninterest income
|
|
|
198 |
|
|
|
181 |
|
|
|
187 |
|
|
|
181 |
|
|
|
Total revenue (TE) (a)
|
|
|
555 |
|
|
|
537 |
|
|
|
376 |
|
|
|
371 |
|
Provision (credit) for loan and lease losses
|
|
|
41 |
|
|
|
(4) |
|
|
|
(10) |
|
|
|
4 |
|
Depreciation and amortization expense
|
|
|
19 |
|
|
|
9 |
|
|
|
11 |
|
|
|
15 |
|
Other noninterest expense
|
|
|
437 |
|
|
|
446 |
|
|
|
191 |
|
|
|
198 |
|
|
|
Income (loss) from continuing operations before income taxes
(TE)
|
|
|
58 |
|
|
|
86 |
|
|
|
184 |
|
|
|
154 |
|
Allocated income taxes and TE adjustments
|
|
|
22 |
|
|
|
32 |
|
|
|
67 |
|
|
|
56 |
|
|
|
Income (loss) from continuing operations
|
|
|
36 |
|
|
|
54 |
|
|
|
117 |
|
|
|
98 |
|
Income (loss) from discontinued operations, net of taxes
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Net income (loss)
|
|
|
36 |
|
|
|
54 |
|
|
|
117 |
|
|
|
98 |
|
Less: Net income (loss) attributable to noncontrolling
interests
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
Net income (loss) attributable to Key
|
|
$ |
36 |
|
|
$ |
54 |
|
|
$ |
117 |
|
|
$ |
95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases
|
|
$ |
29,161 |
|
|
$ |
26,413 |
|
|
$ |
20,133 |
|
|
$ |
18,541 |
|
Total assets (a)
|
|
|
31,570 |
|
|
|
28,695 |
|
|
|
23,965 |
|
|
|
22,709 |
|
Deposits
|
|
|
49,473 |
|
|
|
47,946 |
|
|
|
15,606 |
|
|
|
12,414 |
|
|
|
OTHER FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs (b)
|
|
$ |
42 |
|
|
$ |
46 |
|
|
$ |
(6) |
|
|
$ |
9 |
|
Return on average allocated equity (b)
|
|
|
5.02 |
% |
|
|
7.82 |
% |
|
|
28.79 |
% |
|
|
22.00 % |
|
Return on average allocated equity
|
|
|
5.02 |
|
|
|
7.82 |
|
|
|
28.79 |
|
|
|
22.00 |
|
Average full-time equivalent employees (c)
|
|
|
8,437 |
|
|
|
8,742 |
|
|
|
1,950 |
|
|
|
2,028 |
|
|
|
|
|
|
Six months ended June 30, |
|
Key Community Bank |
|
|
Key Corporate Bank |
|
dollars in millions |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
SUMMARY OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (TE)
|
|
$ |
719 |
|
|
$ |
713 |
|
|
$ |
376 |
|
|
$ |
386 |
|
Noninterest income
|
|
|
385 |
|
|
|
356 |
|
|
|
380 |
|
|
|
364 |
|
|
|
Total revenue (TE) (a)
|
|
|
1,104 |
|
|
|
1,069 |
|
|
|
756 |
|
|
|
750 |
|
Provision (credit) for loan and lease losses
|
|
|
99 |
|
|
|
— |
|
|
|
(6) |
|
|
|
17 |
|
Depreciation and amortization expense
|
|
|
39 |
|
|
|
19 |
|
|
|
23 |
|
|
|
31 |
|
Other noninterest expense
|
|
|
858 |
|
|
|
873 |
|
|
|
389 |
|
|
|
405 |
|
|
|
Income (loss) from continuing operations before income taxes
(TE)
|
|
|
108 |
|
|
|
177 |
|
|
|
350 |
|
|
|
297 |
|
Allocated income taxes and TE adjustments
|
|
|
40 |
|
|
|
66 |
|
|
|
128 |
|
|
|
108 |
|
|
|
Income (loss) from continuing operations
|
|
|
68 |
|
|
|
111 |
|
|
|
222 |
|
|
|
189 |
|
Income (loss) from discontinued operations, net of taxes
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Net income (loss)
|
|
|
68 |
|
|
|
111 |
|
|
|
222 |
|
|
|
189 |
|
Less: Net income (loss) attributable to noncontrolling
interests
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
Net income (loss) attributable to Key
|
|
$ |
68 |
|
|
$ |
111 |
|
|
$ |
222 |
|
|
$ |
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases
|
|
$ |
29,069 |
|
|
$ |
26,193 |
|
|
$ |
20,089 |
|
|
$ |
18,568 |
|
Total assets (a)
|
|
|
31,522 |
|
|
|
28,454 |
|
|
|
23,915 |
|
|
|
22,783 |
|
Deposits
|
|
|
49,411 |
|
|
|
47,723 |
|
|
|
14,792 |
|
|
|
11,987 |
|
|
|
OTHER FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs (b)
|
|
$ |
89 |
|
|
$ |
92 |
|
|
$ |
(7) |
|
|
$ |
34 |
|
Return on average allocated equity (b)
|
|
|
4.77 |
% |
|
|
7.93 |
% |
|
|
27.58 |
% |
|
|
20.91 % |
|
Return on average allocated equity
|
|
|
4.77 |
|
|
|
7.93 |
|
|
|
27.58 |
|
|
|
20.91 |
|
Average full-time equivalent employees (c)
|
|
|
8,632 |
|
|
|
8,724 |
|
|
|
1,938 |
|
|
|
2,025 |
|
|
|
(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 has not been adjusted for discontinued
operations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Segments |
|
|
Total Segments |
|
|
Reconciling Items |
|
|
Key |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
40 |
|
|
$ |
(4) |
|
|
$ |
586 |
|
|
$ |
542 |
|
|
|
— |
|
|
$ |
2 |
|
|
$ |
586 |
|
|
$ |
544 |
|
|
46 |
|
|
|
98 |
|
|
|
431 |
|
|
|
460 |
|
|
$ |
(2) |
|
|
|
(3) |
|
|
|
429 |
|
|
|
457 |
|
|
|
|
|
86 |
|
|
|
94 |
|
|
|
1,017 |
|
|
|
1,002 |
|
|
|
(2) |
|
|
|
(1) |
|
|
|
1,015 |
|
|
|
1,001 |
|
|
(4) |
|
|
|
21 |
|
|
|
27 |
|
|
|
21 |
|
|
|
1 |
|
|
|
— |
|
|
|
28 |
|
|
|
21 |
|
|
2 |
|
|
|
2 |
|
|
|
32 |
|
|
|
26 |
|
|
|
33 |
|
|
|
33 |
|
|
|
65 |
|
|
|
59 |
|
|
17 |
|
|
|
23 |
|
|
|
645 |
|
|
|
667 |
|
|
|
1 |
|
|
|
(33) |
|
|
|
646 |
|
|
|
634 |
|
|
|
|
|
71 |
|
|
|
48 |
|
|
|
313 |
|
|
|
288 |
|
|
|
(37) |
|
|
|
(1) |
|
|
|
276 |
|
|
|
287 |
|
|
1 |
|
|
|
(3) |
|
|
|
90 |
|
|
|
85 |
|
|
|
(13) |
|
|
|
(25) |
|
|
|
77 |
|
|
|
60 |
|
|
|
|
|
70 |
|
|
|
51 |
|
|
|
223 |
|
|
|
203 |
|
|
|
(24) |
|
|
|
24 |
|
|
|
199 |
|
|
|
227 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
14 |
|
|
|
5 |
|
|
|
14 |
|
|
|
|
|
70 |
|
|
|
51 |
|
|
|
223 |
|
|
|
203 |
|
|
|
(19) |
|
|
|
38 |
|
|
|
204 |
|
|
|
241 |
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
|
$ |
70 |
|
|
$ |
49 |
|
|
$ |
223 |
|
|
$ |
198 |
|
|
$ |
(19) |
|
|
$ |
38 |
|
|
$ |
204 |
|
|
$ |
236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,348 |
|
|
$ |
4,425 |
|
|
$ |
52,642 |
|
|
$ |
49,379 |
|
|
$ |
54 |
|
|
$ |
67 |
|
|
$ |
52,696 |
|
|
$ |
49,446 |
|
|
27,936 |
|
|
|
28,797 |
|
|
|
83,471 |
|
|
|
80,201 |
|
|
|
577 |
|
|
|
679 |
|
|
|
84,048 |
|
|
|
80,880 |
|
|
758 |
|
|
|
811 |
|
|
|
65,837 |
|
|
|
61,171 |
|
|
|
(396) |
|
|
|
(108) |
|
|
|
65,441 |
|
|
|
61,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9 |
|
|
$ |
22 |
|
|
$ |
45 |
|
|
$ |
77 |
|
|
|
— |
|
|
|
— |
|
|
$ |
45 |
|
|
$ |
77 |
|
|
40.63 |
% |
|
|
24.21 |
% |
|
|
17.22 |
% |
|
|
14.94 |
% |
|
|
(1.88) |
% |
|
|
2.02 |
% |
|
|
7.74 |
% |
|
|
8.84 |
% |
|
40.63 |
|
|
|
24.21 |
|
|
|
17.22 |
|
|
|
14.94 |
|
|
|
(1.49) |
|
|
|
3.20 |
|
|
|
7.93 |
|
|
|
9.40 |
|
|
54 |
|
|
|
54 |
|
|
|
10,441 |
|
|
|
10,824 |
|
|
|
4,558 |
|
|
|
4,631 |
|
|
|
14,999 |
|
|
|
15,455 |
|
|
|
|
|
|
|
|
Other Segments |
|
|
Total Segments |
|
|
Reconciling Items |
|
|
Key |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
79 |
|
|
$ |
(1) |
|
|
$ |
1,174 |
|
|
$ |
1,098 |
|
|
$ |
1 |
|
|
$ |
5 |
|
|
$ |
1,175 |
|
|
$ |
1,103 |
|
|
90 |
|
|
|
189 |
|
|
|
855 |
|
|
|
909 |
|
|
|
(1) |
|
|
|
(10) |
|
|
|
854 |
|
|
|
899 |
|
|
|
|
|
169 |
|
|
|
188 |
|
|
|
2,029 |
|
|
|
2,007 |
|
|
|
— |
|
|
|
(5) |
|
|
|
2,029 |
|
|
|
2,002 |
|
|
(12) |
|
|
|
46 |
|
|
|
81 |
|
|
|
63 |
|
|
|
2 |
|
|
|
— |
|
|
|
83 |
|
|
|
63 |
|
|
3 |
|
|
|
5 |
|
|
|
65 |
|
|
|
55 |
|
|
|
66 |
|
|
|
76 |
|
|
|
131 |
|
|
|
131 |
|
|
36 |
|
|
|
48 |
|
|
|
1,283 |
|
|
|
1,326 |
|
|
|
(22) |
|
|
|
(85) |
|
|
|
1,261 |
|
|
|
1,241 |
|
|
|
|
|
142 |
|
|
|
89 |
|
|
|
600 |
|
|
|
563 |
|
|
|
(46) |
|
|
|
4 |
|
|
|
554 |
|
|
|
567 |
|
|
3 |
|
|
|
(13) |
|
|
|
171 |
|
|
|
161 |
|
|
|
(18) |
|
|
|
(22) |
|
|
|
153 |
|
|
|
139 |
|
|
|
|
|
139 |
|
|
|
102 |
|
|
|
429 |
|
|
|
402 |
|
|
|
(28) |
|
|
|
26 |
|
|
|
401 |
|
|
|
428 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
13 |
|
|
|
8 |
|
|
|
13 |
|
|
|
|
|
139 |
|
|
|
102 |
|
|
|
429 |
|
|
|
402 |
|
|
|
(20) |
|
|
|
39 |
|
|
|
409 |
|
|
|
441 |
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
5 |
|
|
|
|
$ |
138 |
|
|
$ |
100 |
|
|
$ |
428 |
|
|
$ |
397 |
|
|
$ |
(20) |
|
|
$ |
39 |
|
|
$ |
408 |
|
|
$ |
436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,454 |
|
|
$ |
4,624 |
|
|
$ |
52,612 |
|
|
$ |
49,385 |
|
|
$ |
49 |
|
|
$ |
53 |
|
|
$ |
52,661 |
|
|
$ |
49,438 |
|
|
27,369 |
|
|
|
28,676 |
|
|
|
82,806 |
|
|
|
79,913 |
|
|
|
579 |
|
|
|
739 |
|
|
|
83,385 |
|
|
|
80,652 |
|
|
692 |
|
|
|
780 |
|
|
|
64,895 |
|
|
|
60,490 |
|
|
|
(352) |
|
|
|
(143) |
|
|
|
64,543 |
|
|
|
60,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
12 |
|
|
$ |
51 |
|
|
$ |
94 |
|
|
$ |
177 |
|
|
|
— |
|
|
$ |
1 |
|
|
$ |
94 |
|
|
$ |
178 |
|
|
39.64 |
% |
|
|
24.26 |
% |
|
|
16.60 |
% |
|
|
14.70 |
% |
|
|
(1.10) |
% |
|
|
1.13 |
% |
|
|
7.81 |
% |
|
|
8.47 |
% |
|
39.64 |
|
|
|
24.26 |
|
|
|
16.60 |
|
|
|
14.70 |
|
|
|
(.79) |
|
|
|
1.70 |
|
|
|
7.96 |
|
|
|
8.73 |
|
|
52 |
|
|
|
53 |
|
|
|
10,622 |
|
|
|
10,802 |
|
|
|
4,575 |
|
|
|
4,628 |
|
|
|
15,197 |
|
|
|
15,430 |
|
|
|
|
|