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KeyCorp 8-K Report, Financial Results (Jan 18, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed January 18, 2024
Period End
January 18, 2024
In the record · 2016–202610-K1110-Q348-K141

KEY filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 141 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’16Aug ’16
  2. Leadership change8-K · Dec ’21Dec ’21
  3. Leadership change8-K · May ’26May ’26

01—Abstract

Summary

Summary of the 8-K filed January 18, 2024. Cited figures are marked; the original filing is the authoritative source.

KeyCorp reported fourth-quarter 2023 net income from continuing operations attributable to Key common shareholders of $30 milliona, or $.03 per diluted common share, compared with $266 million, or $.29 per diluted share, in the third quarter of 2023 and $356 million, or $.38 per diluted share, in the fourth quarter of 2022.

The quarter included $209 millionb, or $.22 per diluted share, of after-tax selected items: a $190 million pretax FDIC special assessment, $67 million of pretax efficiency-related expenses, and an $18 million pretax pension settlement charge. Total noninterest expense rose to $1.372 billion, and the cash efficiency ratio was 88.6%, versus 70.3% in the prior quarter. Core operating trends were mixed.

Taxable-equivalent net interest income was $928 millionc and the net interest margin was 2.07%, both up slightly from the third quarter but down from the year-ago quarter. Average loans fell to $113.9 billion, reflecting planned balance sheet optimization, while average deposits were $145.1 billion. Net loan charge-offs were 0.26% of average total loans, and nonperforming loans rose to $574 million from $455 million in the third quarter.

The estimated Common Equity Tier 1 ratio was 10.0%, above the company's stated target range, and KeyCorp declared a first-quarter 2024 dividend of $.205 per common share. The filing states that the company exceeded its 2023 goal of reducing risk-weighted assets by about $14 billiond.

The filing furnishes the earnings press release, a supplemental information package reviewed on the earnings call, and the consolidated balance sheets and income statements as filed Exhibit 99.3. The supplement also includes 2024 outlook guidance, including average loan declines of 5% to 7%, net interest income down 2% to 5%, and noninterest income up 5% or more.

02—Key points

Key Highlights

  1. Fourth-quarter 2023 net income from continuing operations to common shareholders was $30 million, or $.03 per diluted share, down from $266 million ($.29) in the third quarter and $356 million ($.38) in the fourth quarter of 2022.
  2. Selected items reduced fourth-quarter earnings by $209 million, or $.22 per diluted share, including a $190 million FDIC special assessment, $67 million of efficiency-related expenses, and an $18 million pension settlement charge.
  3. Noninterest expense was $1.372 billion, up $262 million from the third quarter, and the cash efficiency ratio rose to 88.6% from 70.3%.
  4. Taxable-equivalent net interest income was $928 million with a 2.07% net interest margin, versus a 2.73% margin in the fourth quarter of 2022.
  5. Average loans declined to $113.9 billion, reflecting planned balance sheet optimization, and nonperforming loans increased to $574 million from $455 million in the prior quarter.
  6. Estimated Common Equity Tier 1 ratio was 10.0% at December 31, 2023, above the company's targeted range, and the company reduced risk-weighted assets by about $14 billion in 2023.
  7. KeyCorp declared a first-quarter 2024 dividend of $.205 per common share.

03—Questions

Frequently Asked Questions

  1. How did KeyCorp perform in the fourth quarter of 2023?

    KeyCorp reported net income from continuing operations attributable to common shareholders of $30 million, or $.03 per diluted share. This compares with $266 million ($.29) in the third quarter of 2023 and $356 million ($.38) in the fourth quarter of 2022. Results included $209 million of after-tax selected items.

  2. What drove the drop in fourth-quarter earnings?

    The filing attributes the decline mainly to noninterest expense, which rose to $1.372 billion. Expense increases included a $190 million FDIC special assessment, $67 million of efficiency-related expenses, and an $18 million pension settlement charge. Noninterest income also fell to $610 million from $671 million a year earlier.

  3. How strong is KeyCorp's capital position?

    The estimated Common Equity Tier 1 ratio was 10.0% at December 31, 2023, up from 9.8% at September 30, 2023 and 9.1% at December 31, 2022. The filing says this reflects the election of the CECL optional transition provision and is above the company's targeted range.

  4. What is the outlook for 2024?

    The supplemental information package provides 2024 guidance versus 2023, including average loans down 5% to 7%, net interest income (TE) down 2% to 5%, noninterest income up 5% or more, and net charge-offs of 30 to 40 basis points of average loans. Noninterest expense is guided to be relatively stable, excluding the 2023 selected items.

  5. Is the dividend changing?

    KeyCorp declared a dividend of $.205 per common share for the first quarter of 2024, the same amount it declared in each quarter of 2023.

04—Continue

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