EX-99.3 4 a4q18erex993classic.htm EXHIBIT 99.3
Exhibit 99.3

Consolidated Balance Sheets
(dollars in millions)
|  |  | 12/31/2018 |  | 9/30/2018 |  | 12/31/2017 |
Assets |  |  |
| Loans | $ | 89,552 |  | $ | 89,268 |  | $ | 86,405 |
| Loans held for sale | 1,227 |  | 1,618 |  | 1,107 |
| Securities available for sale | 19,428 |  | 18,341 |  | 18,139 |
| Held-to-maturity securities | 11,519 |  | 11,869 |  | 11,830 |
| Trading account assets | 849 |  | 958 |  | 836 |
| Short-term investments | 2,562 |  | 2,272 |  | 4,447 |
| Other investments | 666 |  | 681 |  | 726 |
|  | Total earning assets | 125,803 |  | 125,007 |  | 123,490 |
| Allowance for loan and lease losses | (883 | ) | (887 | ) | (877 | )
| Cash and due from banks | 678 |  | 319 |  | 671 |
| Premises and equipment | 882 |  | 891 |  | 930 |
| Operating lease assets | 993 |  | 930 |  | 821 |
| Goodwill | 2,516 |  | 2,516 |  | 2,538 |
| Other intangible assets | 316 |  | 338 |  | 416 |
| Corporate-owned life insurance | 4,171 |  | 4,156 |  | 4,132 |
| Accrued income and other assets | 4,037 |  | 4,378 |  | 4,237 |
| Discontinued assets | 1,100 |  | 1,157 |  | 1,340 |
|  | Total assets | $ | 139,613 |  | $ | 138,805 |  | $ | 137,698 |
Liabilities |  |  |
| Deposits in domestic offices: |  |  |
|  | NOW and money market deposit accounts | $ | 59,918 |  | $ | 57,219 |  | $ | 53,627 |
|  | Savings deposits | 4,854 |  | 4,948 |  | 6,296 |
|  | Certificates of deposit ($100,000 or more) | 7,913 |  | 8,453 |  | 6,849 |
|  | Other time deposits | 5,332 |  | 5,130 |  | 4,798 |
|  | Total interest-bearing deposits | 78,017 |  | 75,750 |  | 71,570 |
|  | Noninterest-bearing deposits | 29,292 |  | 30,030 |  | 33,665 |
|  | Total deposits | 107,309 |  | 105,780 |  | 105,235 |
| Federal funds purchased and securities sold under repurchase agreements | 319 |  | 1,285 |  | 377 |
| Bank notes and other short-term borrowings | 544 |  | 637 |  | 634 |
| Accrued expense and other liabilities | 2,113 |  | 2,044 |  | 2,094 |
| Long-term debt | 13,732 |  | 13,849 |  | 14,333 |
|  | Total liabilities | 124,017 |  | 123,595 |  | 122,673 |
Equity |  |  |
| Preferred stock | 1,450 |  | 1,450 |  | 1,025 |
| Common shares | 1,257 |  | 1,257 |  | 1,257 |
| Capital surplus | 6,331 |  | 6,315 |  | 6,335 |
| Retained earnings | 11,556 |  | 11,262 |  | 10,335 |
| Treasury stock, at cost | (4,181 | ) | (3,910 | ) | (3,150 | )
| Accumulated other comprehensive income (loss) | (818 | ) | (1,166 | ) | (779 | )
|  | Key shareholders’ equity | 15,595 |  | 15,208 |  | 15,023 |
| Noncontrolling interests | 1 |  | 2 |  | 2 |
|  | Total equity | 15,596 |  | 15,210 |  | 15,025 |
Total liabilities and equity | $ | 139,613 |  | $ | 138,805 |  | $ | 137,698 |
Common shares outstanding (000) | 1,019,503 |  | 1,034,287 |  | 1,069,084 |

Consolidated Statements of Income
(dollars in millions, except per share amounts)
|  |  | Three months ended |  | Twelve months ended
|  |  | 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 12/31/2018 | 12/31/2017
Interest income |  |  |  |  |  |
| Loans | $ | 1,058 |  | $ | 1,025 |  | $ | 924 |  |  | $ | 4,023 |  | $ | 3,677 |
| Loans held for sale | 26 |  | 12 |  | 13 |  |  | 66 |  | 52 |
| Securities available for sale | 115 |  | 102 |  | 93 |  |  | 409 |  | 369 |
| Held-to-maturity securities | 71 |  | 72 |  | 61 |  |  | 284 |  | 222 |
| Trading account assets | 8 |  | 7 |  | 6 |  |  | 29 |  | 27 |
| Short-term investments | 15 |  | 15 |  | 12 |  |  | 46 |  | 26 |
| Other investments | 4 |  | 6 |  | 5 |  |  | 21 |  | 17 |
|  | Total interest income | 1,297 |  | 1,239 |  | 1,114 |  |  | 4,878 |  | 4,390 |
Interest expense |  |  |  |  |  |
| Deposits | 174 |  | 140 |  | 82 |  |  | 517 |  | 278 |
| Federal funds purchased and securities sold under repurchase agreements | 1 |  | 1 |  | — |  |  | 11 |  | 1 |
| Bank notes and other short-term borrowings | 4 |  | 4 |  | 3 |  |  | 21 |  | 15 |
| Long-term debt | 118 |  | 108 |  | 91 |  |  | 420 |  | 319 |
|  | Total interest expense | 297 |  | 253 |  | 176 |  |  | 969 |  | 613 |
Net interest income | 1,000 |  | 986 |  | 938 |  |  | 3,909 |  | 3,777 |
Provision for credit losses | 59 |  | 62 |  | 49 |  |  | 246 |  | 229 |
Net interest income after provision for credit losses | 941 |  | 924 |  | 889 |  |  | 3,663 |  | 3,548 |
Noninterest income |  |  |  |  |  |
| Trust and investment services income | 121 |  | 117 |  | 131 |  |  | 499 |  | 535 |
| Investment banking and debt placement fees | 186 |  | 166 |  | 200 |  |  | 650 |  | 603 |
| Service charges on deposit accounts | 84 |  | 85 |  | 89 |  |  | 349 |  | 357 |
| Operating lease income and other leasing gains | 28 |  | 35 |  | 27 |  |  | 89 |  | 96 |
| Corporate services income | 58 |  | 52 |  | 56 |  |  | 233 |  | 219 |
| Cards and payments income | 68 |  | 69 |  | 77 |  |  | 270 |  | 287 |
| Corporate-owned life insurance income | 39 |  | 34 |  | 37 |  |  | 137 |  | 131 |
| Consumer mortgage income | 7 |  | 9 |  | 7 |  |  | 30 |  | 26 |
| Mortgage servicing fees | 21 |  | 19 |  | 17 |  |  | 82 |  | 71 |
| Other income (a) | 33 |  | 23 |  | 15 |  |  | 176 |  | 153 |
|  | Total noninterest income | 645 |  | 609 |  | 656 |  |  | 2,515 |  | 2,478 |
Noninterest expense |  |  |  |  |  |
| Personnel | 576 |  | 553 |  | 609 |  |  | 2,309 |  | 2,278 |
| Net occupancy | 75 |  | 76 |  | 92 |  |  | 308 |  | 331 |
| Computer processing | 55 |  | 52 |  | 54 |  |  | 210 |  | 225 |
| Business services and professional fees | 49 |  | 43 |  | 52 |  |  | 184 |  | 192 |
| Equipment | 26 |  | 27 |  | 31 |  |  | 105 |  | 114 |
| Operating lease expense | 32 |  | 31 |  | 28 |  |  | 120 |  | 92 |
| Marketing | 25 |  | 26 |  | 35 |  |  | 102 |  | 120 |
| FDIC assessment | 9 |  | 21 |  | 20 |  |  | 72 |  | 82 |
| Intangible asset amortization | 22 |  | 23 |  | 26 |  |  | 99 |  | 95 |
| OREO expense, net | 1 |  | 3 |  | 3 |  |  | 6 |  | 11 |
| Other expense | 142 |  | 109 |  | 148 |  |  | 460 |  | 558 |
|  | Total noninterest expense | 1,012 |  | 964 |  | 1,098 |  |  | 3,975 |  | 4,098 |
Income (loss) from continuing operations before income taxes | 574 |  | 569 |  | 447 |  |  | 2,203 |  | 1,928 |
| Income taxes | 92 |  | 87 |  | 251 |  |  | 344 |  | 637 |
Income (loss) from continuing operations | 482 |  | 482 |  | 196 |  |  | 1,859 |  | 1,291 |
| Income (loss) from discontinued operations, net of taxes | 2 |  | — |  | 1 |  |  | 7 |  | 7 |
Net income (loss) | 484 |  | 482 |  | 197 |  |  | 1,866 |  | 1,298 |
| Less: Net income (loss) attributable to noncontrolling interests | — |  | — |  | 1 |  |  | — |  | 2 |
Net income (loss) attributable to Key | $ | 484 |  | $ | 482 |  | $ | 196 |  |  | $ | 1,866 |  | $ | 1,296 |
Income (loss) from continuing operations attributable to Key common shareholders | $ | 459 |  | $ | 468 |  | $ | 181 |  |  | $ | 1,793 |  | $ | 1,219 |
Net income (loss) attributable to Key common shareholders | 461 |  | 468 |  | 182 |  |  | 1,800 |  | 1,226 |
Per common share |  |  |  |  |  |
Income (loss) from continuing operations attributable to Key common shareholders | $ | .45 |  | $ | .45 |  | $ | .17 |  |  | $ | 1.72 |  | $ | 1.13 |
Income (loss) from discontinued operations, net of taxes | — |  | — |  | — |  |  | .01 |  | .01 |
Net income (loss) attributable to Key common shareholders (b) | .45 |  | .45 |  | .17 |  |  | 1.73 |  | 1.14 |
Per common share — assuming dilution |  |  |  |  |  |
Income (loss) from continuing operations attributable to Key common shareholders | $ | .45 |  | $ | .45 |  | $ | .17 |  |  | $ | 1.70 |  | $ | 1.12 |
Income (loss) from discontinued operations, net of taxes | — |  | — |  | — |  |  | .01 |  | .01 |
Net income (loss) attributable to Key common shareholders (b) | .45 |  | .45 |  | .17 |  |  | 1.71 |  | 1.13 |
Cash dividends declared per common share | $ | .17 |  | $ | .17 |  | $ | .105 |  |  | $ | .565 |  | $ | .38 |
Weighted-average common shares outstanding (000) | 1,018,614 |  | 1,036,480 |  | 1,062,348 |  |  | 1,040,890 |  | 1,072,077 |
| Effect of common share options and other stock awards | 11,803 |  | 13,497 |  | 16,982 |  |  | 13,792 |  | 16,515 |
Weighted-average common shares and potential common shares outstanding (000) (c) | 1,030,417 |  | 1,049,976 |  | 1,079,330 |  |  | 1,054,682 |  | 1,088,593 |

(a) | For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, net securities gains (losses) totaled less than $1 million. For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, Key did not have any impairment losses related to securities.

(b) | Earnings per share may not foot due to rounding.

(c) | Assumes conversion of common share options and other stock awards and/or convertible preferred stock, as applicable.