Line of Business Results

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

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 12-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 seven industry sectors: consumer, energy, healthcare, industrial, public sector, real estate, and technology. 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 is also a significant servicer of commercial mortgage loans and a significant special servicer of CMBS. Key Corporate Bank also delivers many of its product capabilities to clients of Key Community Bank.

Other Segments

Other Segments consist of Corporate Treasury, 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 major business segments for the three-month periods ended March 31, 2015, and March 31, 2014.

The information was derived from the internal financial reporting system that 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 is 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 credit 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 ALLL. This methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan and Lease Losses” beginning on page 117 of our 2014 Form 10-K.

• Income taxes are allocated based on the statutory federal income tax rate of 35% 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 economic equity.

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 March 31,	Key Community Bank						Key Corporate Bank
dollars in millions	2015			2014			2015			2014
SUMMARY OF OPERATIONS
Net interest income (TE)	$	358		$	363		$	213		$	196
Noninterest income		191			183			188			196
Total revenue (TE) (a)		549			546			401			392
Provision for credit losses		29			11			8			(3	)
Depreciation and amortization expense		15			17			10			7
Other noninterest expense		425			419			207			195
Income (loss) from continuing operations before income taxes (TE)		80			99			176			193
Allocated income taxes and TE adjustments		30			37			49			57
Income (loss) from continuing operations		50			62			127			136
Income (loss) from discontinued operations, net of taxes		—			—			—			—
Net income (loss)		50			62			127			136
Less: Net income (loss) attributable to noncontrolling interests		—			—			1			—
Net income (loss) attributable to Key	$	50		$	62		$	126		$	136
AVERAGE BALANCES (b)
Loans and leases	$	30,662		$	29,797		$	24,722		$	21,991
Total assets (a)		32,716			31,918			30,297			27,171
Deposits		50,417			49,910			18,567			15,993
OTHER FINANCIAL DATA
Net loan charge-offs (b)	$	28		$	28		$	(4	)	$	(12	)
Return on average allocated equity (b)		7.38	%		8.97	%		27.44	%		35.65	%
Return on average allocated equity		7.38			8.97			27.44			35.65
Average full-time equivalent employees (c)		7,475			7,698			2,064			1,916

(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
2015			2014			2015			2014			2015			2014			2015			2014
$	4		$	10		$	575		$	569		$	2			—		$	577		$	569
	63			55			442			434			(5	)	$	1			437			435
	67			65			1,017			1,003			(3	)		1			1,014			1,004
	(3	)		(4	)		34			4			1			2			35			6
	2			3			27			27			37			38			64			65
	13			22			645			636			(40	)		(39	)		605			597
	55			44			311			336			(1	)		—			310			336
	9			7			88			101			(8	)		(3	)		80			98
	46			37			223			235			7			3			230			238
	—			—			—			—			5			4			5			4
	46			37			223			235			12			7			235			242
	1			—			2			—			—			—			2			—
$	45		$	37		$	221		$	235		$	12		$	7		$	233		$	242
$	2,044		$	2,913		$	57,428		$	54,701		$	84		$	45		$	57,512		$	54,746
	25,938			25,908			88,951			84,997			678			660			89,629			85,657
	466			575			69,450			66,478			(81	)		(184	)		69,369			66,294
$	4		$	4		$	28		$	20			—			—		$	28		$	20
	43.98	%		29.14	%		17.84	%		19.59	%		.51	%		.22	%		8.75	%		9.31	%
	43.98			29.14			17.84			19.59			.88			.52			8.94			9.46
	16			72			9,555			9,686			4,036			4,369			13,591			14,055