01—Abstract
Summary
Summary of the 10-K filed February 22, 2023. Cited figures are marked; the original filing is the authoritative source.
KeyCorp reported consolidated total assets of approximately $189.8 billiona at December 31, 2022, and operates through KeyBank National Association across two business segments, Consumer Bank and Commercial Bank, with 972 full-service retail branches in 15 states.
For 2022, the company reported net income attributable to Key of $1.917 billionb, compared with $2.625 billion in 2021, and income from continuing operations of $1.911 billion. Net interest income was $4.527 billion on a GAAP basis, and noninterest income was $2.718 billion, down from $3.194 billion, with investment banking and debt placement fees falling by $299 million, or 31.9%, as capital markets activity slowed. The provision for credit losses was a net charge of $502 million, compared with a net benefit of $418 million in 2021, driven mainly by reserve increases tied to the economic outlook and loan growth.
Loan growth was the main driver of the balance sheet. Total loans from continuing operations reached $119.4 billionc, up from $101.9 billion, while deposits declined by $10.0 billion to $142.6 billion. Wholesale funding rose to $28.8 billion from $12.8 billion.
Shareholders' equity fell to $13.454 billiond from $17.423 billion, largely due to a $5.709 billion decline in other comprehensive income from unrealized losses on securities and derivatives. Common Equity Tier 1 and Tier 1 risk-based capital ratios were 9.10% and 10.60%, respectively, and all regulatory capital ratios exceeded requirements. Management stated it expects positive operating leverage in 2023, expects noninterest expense to be relatively stable, and expects noninterest income to decline 1% to 3%.
The annual dividend increased to $.79 per common share for 2022, reflecting a quarterly rate of $.205 in the fourth quarter. No common shares were repurchased during 2022 under the existing authorization, and approximately $790 million remained available under the authorization through the third quarter of 2023. The filing also notes that net loan charge-offs fell to 0.14% of average loans, with 2023 guidance of 25 to 30 basis points.
02—Key points
Key Highlights
- Total assets of $189.8 billion at December 31, 2022, with loans of $119.4 billion (up from $101.9 billion) and deposits of $142.6 billion (down $10.0 billion).
- Net income attributable to Key of $1.917 billion in 2022, down from $2.625 billion in 2021; net interest income of $4.527 billion on a GAAP basis.
- Noninterest income fell to $2.718 billion from $3.194 billion, with investment banking and debt placement fees down $299 million, or 31.9%, due to slower capital markets activity.
- Provision for credit losses was a net charge of $502 million in 2022, versus a net benefit of $418 million in 2021, reflecting reserve increases tied to the economic outlook and loan growth.
- Common Equity Tier 1 ratio of 9.10% and Tier 1 risk-based ratio of 10.60% at year-end 2022; shareholders' equity declined to $13.454 billion, largely due to a $5.709 billion decline in accumulated other comprehensive income.
- Annual common dividend increased to $.79 per share for 2022, and no shares were repurchased in 2022 under the existing authorization.
- Management guides to positive operating leverage in 2023, net charge-offs of 25 to 30 basis points, a 20% GAAP tax rate, and noninterest income down 1% to 3%.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 22, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $7.27B$7.29B | −0.3% |
| Operating Income | $1.91B$2.61B | −26.8% |
| Interest Expense | $885.00M$296.00M | +199.0% |
| Net Income | $1.92B$2.63B | −27.0% |
| EPS (Basic) | $1.94$2.65 | −26.8% |
| EPS (Diluted) | $1.93$2.63 | −26.6% |
| Shares Outstanding (Basic) | 924.36M947.07M | −2.4% |
| Shares Outstanding (Diluted) | 933.06M957.41M | −2.5% |
05—Questions
Frequently Asked Questions
How did KeyCorp's profitability change in 2022?
Net income attributable to Key fell to $1.917 billion from $2.625 billion. The decline was driven mainly by a swing to a $502 million provision for credit losses from a $418 million net benefit in 2021, along with lower noninterest income of $2.718 billion versus $3.194 billion. Net interest income rose to $4.527 billion from $4.071 billion.
What drove the decline in noninterest income?
Investment banking and debt placement fees decreased $299 million, or 31.9%, reflecting the slowdown in capital markets activity. Cards and payments income fell $74 million, or 17.8%, as prepaid card activity declined, and other noninterest income dropped $112 million, or 11.5%, mainly from lower consumer mortgage income.
How strong is KeyCorp's capital position?
All capital ratios exceeded regulatory requirements at December 31, 2022. The Common Equity Tier 1 ratio was 9.10%, the Tier 1 risk-based ratio was 10.60%, and the total risk-based ratio was 12.79%. KeyBank was considered well capitalized. Shareholders' equity was $13.454 billion, down from $17.423 billion, mainly due to unrealized losses in accumulated other comprehensive income.
What is management's outlook for 2023?
Management expects to generate positive operating leverage in 2023, expects noninterest expense to be relatively stable compared with 2022, and expects noninterest income to decline 1% to 3%. It also expects net charge-offs to average loans of 25 to 30 basis points and a GAAP tax rate of approximately 20%.
What did KeyCorp return to shareholders in 2022?
The company paid a full-year dividend of $.79 per common share, including a quarterly dividend of $.205 in the fourth quarter. No common shares were repurchased in 2022 under the authorization. Approximately $790 million remained available for repurchase under the authorization, which runs through the third quarter of 2023.
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