KEYCORP NEW
For the period ended Dec 31, 2023. Filed Feb 22, 2024.
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FY2023 · Filed Feb 22, 2024
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Loans and loans held for sale
Figure 7. Breakdown of Loans as of December 31, 2023
(a)Other consumer loans include Consumer direct loans, Credit cards, and Consumer indirect loans. See Note 4 (“Loan Portfolio”) Item 8. Financial Statements of this report.
Figure 8 shows the composition of our loan portfolio at December 31 for each of the past two years.
Figure 8. Composition of Loans
| 2023 | 2022 | |||
|---|---|---|---|---|
| December 31,Dollars in millions | Amount | Percent of Total | Amount | Percent of Total |
| COMMERCIAL | ||||
| Commercial and industrial (a) | $55,815 | 49.6% | $59,647 | 50.0% |
| Commercial real estate: | ||||
| Commercial mortgage | 15,187 | 13.5 | 16,352 | 13.7 |
| Construction | 3,066 | 2.7 | 2,530 | 2.1 |
| Total commercial real estate loans | 18,253 | 16.2 | 18,882 | 15.8 |
| Commercial lease financing (b) | 3,523 | 3.1 | 3,936 | 3.3 |
| Total commercial loans | 77,591 | 68.9 | 82,465 | 69.1 |
| CONSUMER | ||||
| Real estate — residential mortgage | 20,958 | 18.6 | 21,401 | 17.9 |
| Home equity loans | 7,139 | 6.4 | 7,951 | 6.6 |
| Consumer direct loans | 5,890 | 5.2 | 6,508 | 5.4 |
| Credit cards | 1,002 | 0.9 | 1,026 | 0.9 |
| Consumer indirect loans | 26 | — | 43 | 0.1 |
| Total consumer loans | 35,015 | 31.1 | 36,929 | 30.9 |
| Total loans (c) | $112,606 | 100.0% | $119,394 | 100.0% |
(a)Loan balances include $207 million and $172 million, of commercial credit card balances at December 31, 2023, and December 31, 2022, respectively.
(b)Commercial lease financing includes receivables held as collateral for a secured borrowing of $7 million and $8 million at December 31, 2023, and December 31, 2022, respectively. Principal reductions are based on the cash payments received from these related receivables. Additional information pertaining to this secured borrowing is included in Note 20 (“Long-Term Debt”).
(c)Total loans exclude loans of $339 million at December 31, 2023, and $434 million at December 31, 2022, related to the discontinued operations of the education lending business.
At December 31, 2023, total loans outstanding from continuing operations were $112.6 billion, compared to $119.4 billion at the end of 2022. For more information on balance sheet carrying value, see Note 1 (“Summary of Significant Accounting Policies”) under the headings “Loans” and “Loans Held for Sale.”
Commercial loan portfolio
Commercial loans outstanding were $77.6 billion at December 31, 2023, a decrease of $4.9 billion, or 5.9%, compared to December 31, 2022. The decrease was across all major commercial loan categories as a result of our planned balance sheet optimization efforts.
Figure 9 provides our commercial loan portfolio by industry classification as of December 31, 2023, and December 31, 2022.
Figure 9. Commercial Loans by Industry
| December 31, 2023 | Commercial and industrial | Commercialreal estate | Commerciallease financing | Total commercialloans | Percent oftotal |
|---|---|---|---|---|---|
| Dollars in millions | |||||
| Industry classification: | |||||
| Agriculture | $925 | $114 | $74 | $1,113 | 1.4% |
| Automotive | 2,153 | 833 | 4 | 2,990 | 3.9 |
| Business services | 3,387 | 243 | 112 | 3,742 | 4.8 |
| Commercial real estate | 8,229 | 13,113 | 8 | 21,350 | 27.5 |
| Construction materials and contractors | 2,311 | 292 | 265 | 2,868 | 3.7 |
| Consumer goods | 3,851 | 622 | 268 | 4,741 | 6.1 |
| Consumer services | 4,568 | 774 | 327 | 5,669 | 7.3 |
| Equipment | 2,405 | 171 | 168 | 2,744 | 3.5 |
| Finance | 8,908 | 104 | 284 | 9,296 | 12.0 |
| Healthcare | 3,222 | 1,456 | 303 | 4,981 | 6.4 |
| Materials and extraction | 2,402 | 304 | 152 | 2,858 | 3.7 |
| Oil and gas | 2,212 | 37 | 12 | 2,261 | 2.9 |
| Public exposure | 2,241 | 8 | 513 | 2,762 | 3.6 |
| Technology, media, and telecom | 807 | 11 | 78 | 896 | 1.2 |
| Transportation | 988 | 97 | 466 | 1,551 | 2.0 |
| Utilities | 6,418 | 6 | 459 | 6,883 | 8.9 |
| Other | 788 | 68 | 30 | 886 | 1.1 |
| Total | $55,815 | $18,253 | $3,523 | $77,591 | 100.0% |
| December 31, 2022 | Commercial and industrial | Commercialreal estate | Commerciallease financing | Total commercialloans | Percent oftotal |
| Dollars in millions | |||||
| Industry classification: | |||||
| Agriculture | $829 | $110 | $83 | $1,022 | 1.2% |
| Automotive | 1,678 | 751 | 12 | 2,441 | 2.9 |
| Business services | 3,514 | 246 | 148 | 3,908 | 4.7 |
| Commercial real estate | 8,883 | 13,919 | 10 | 22,812 | 27.7 |
| Construction materials and contractors | 2,649 | 318 | 322 | 3,289 | 4.0 |
| Consumer goods | 4,643 | 576 | 288 | 5,507 | 6.7 |
| Consumer services | 5,009 | 900 | 346 | 6,255 | 7.6 |
| Equipment | 2,584 | 180 | 161 | 2,925 | 3.5 |
| Finance | 8,805 | 112 | 461 | 9,378 | 11.4 |
| Healthcare | 3,589 | 1,372 | 330 | 5,291 | 6.4 |
| Materials and extraction | 3,128 | 240 | 145 | 3,513 | 4.3 |
| Oil and gas | 2,399 | 33 | 20 | 2,452 | 3.0 |
| Public exposure | 2,534 | 9 | 580 | 3,123 | 3.8 |
| Technology, media, and telecom | 1,082 | 12 | 89 | 1,183 | 1.4 |
| Transportation | 1,092 | 137 | 477 | 1,706 | 2.1 |
| Utilities | 6,725 | 5 | 450 | 7,180 | 8.7 |
| Other | 504 | (38) | 14 | 480 | .6 |
| Total | $59,647 | $18,882 | $3,936 | $82,465 | 100.0% |
Commercial and industrial. Commercial and industrial loans are the largest component of our loan portfolio, representing 50% of our total loan portfolio at December 31, 2023, and 50% at December 31, 2022. This portfolio is approximately 88% variable rate and consists of loans primarily to large corporate, middle market, and small business clients.
Commercial and industrial loans totaled $55.8 billion at December 31, 2023, a decrease of $3.8 billion, or 6.4%, compared to December 31, 2022. The decrease was broad-based and spread across most industry categories, reflecting our planned balance sheet optimization efforts.
Commercial real estate loans. Our commercial real estate portfolio includes project loans primarily focused in market-rate and affordable multi-family housing loans, owner-occupied commercial and industrial operating company buildings, and community center grocer-anchored retail centers. These three commercial real estate segments make up 75% of our commercial real estate portfolio. Our non-owner-occupied portfolio is focused on operators of commercial real estate who not only utilize our loan products, but also our broader industry-focused products and services and provide consistent pipelines into our agency, CMBS, and other long-term market take out products. This focus ensures our relationship clients foster and build portfolios with stable, recurring cash flows, with adequate, balanced cash reserves to support our balance sheet exposures through the economic cycle.
At December 31, 2023, commercial real estate loans totaled $18.3 billion, comprised of $15.2 billion of mortgage loans and $3.1 billion of construction loans. Compared to December 31, 2022, this portfolio decreased $629 million driven by our planned balance sheet optimization efforts.
Since the global financial crisis in 2008, we have limited our construction business and reduced our overall construction loans from 42% to 17% of commercial real estate loans as of December 31, 2023. Construction loans provide a stream of funding for properties not fully leased at origination to support debt service payments over the term of the contract or project. As of December 31, 2023, 78% of our construction portfolio are multi-family project loans. Our office exposure only represents 5% of commercial real estate loans at period end.
As shown in Figure 10, our commercial real estate loan portfolio includes various property types and geographic locations of the underlying collateral. These loans include commercial mortgage and construction loans in both Consumer Bank and Commercial Bank.
Figure 10. Commercial Real Estate Loans
| Geographic Region | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in millions | West | Southwest | Central | Midwest | Southeast | Northeast | National | Total | Percent of Total | Construction | CommercialMortgage |
| Nonowner-occupied: | |||||||||||
| Diversified | $3 | $— | $— | $3 | $— | $16 | $164 | $186 | 1.0% | $— | $186 |
| Industrial | 58 | 24 | 80 | 110 | 230 | 280 | 20 | 802 | 4.4 | 168 | 634 |
| Land & Residential | 5 | 3 | 3 | 5 | 3 | 21 | — | 40 | .2 | 18 | 22 |
| Lodging | 48 | — | 3 | 4 | 46 | 66 | 55 | 222 | 1.2 | 5 | 217 |
| Medical Office | 37 | — | 42 | 1 | 21 | 97 | 75 | 273 | 1.5 | 27 | 246 |
| Multifamily | 1,237 | 552 | 1,271 | 1,272 | 2,707 | 1,370 | 444 | 8,853 | 48.5 | 2,389 | 6,464 |
| Office | 142 | — | 153 | 76 | 118 | 285 | 50 | 824 | 4.5 | — | 824 |
| Retail | 213 | 6 | 84 | 183 | 102 | 297 | 213 | 1,098 | 6.0 | 75 | 1,023 |
| Self Storage | 62 | — | 45 | 15 | 72 | 32 | 171 | 397 | 2.2 | 4 | 393 |
| Senior Housing | 124 | 22 | 143 | 88 | 65 | 120 | 213 | 775 | 4.2 | 126 | 649 |
| Skilled Nursing | — | — | — | 66 | — | 202 | 215 | 483 | 2.6 | — | 483 |
| Student Housing | — | — | — | 27 | 158 | — | — | 185 | 1.0 | 59 | 126 |
| Other | 1 | 12 | 8 | 35 | 37 | 67 | 160 | 320 | 1.8 | — | 320 |
| Total nonowner-occupied | 1,930 | 619 | 1,832 | 1,885 | 3,559 | 2,853 | 1,780 | 14,458 | 79.2 | 2,871 | 11,587 |
| Owner-occupied | 1,141 | 1 | 414 | 720 | 167 | 1,352 | — | 3,795 | 20.8 | 195 | 3,600 |
| Total | $3,071 | $620 | $2,246 | $2,605 | $3,726 | $4,205 | $1,780 | $18,253 | 100.0% | $3,066 | $15,187 |
| Nonowner-occupied: | |||||||||||
| Nonperforming loans | $1 | $— | $46 | $1 | $9 | $5 | $38 | $100 | N/M | $— | $100 |
| Accruing loans past due 90 days or more | 1 | — | — | 6 | — | 3 | — | 10 | N/M | — | 10 |
| Accruing loans past due 30 through 89 days | 3 | — | 12 | — | 7 | 7 | — | 29 | N/M | — | 29 |
| Nonowner-occupied: | |||||||||||
| Diversified | $9 | $— | $— | $4 | $— | $24 | $231 | $268 | 1.4% | $— | $268 |
| Industrial | 75 | 25 | 101 | 135 | 220 | 284 | 52 | 892 | 4.7 | 203 | 689 |
| Land & Residential | 1 | 3 | 3 | 3 | 3 | 24 | — | 37 | .2 | 15 | 22 |
| Lodging | 58 | — | 10 | 4 | 20 | 72 | 41 | 205 | 1.1 | 22 | 183 |
| Medical Office | 47 | — | 43 | 9 | 19 | 98 | 25 | 241 | 1.3 | 64 | 177 |
| Multifamily | 1,083 | 533 | 1,388 | 1,264 | 2,813 | 1,370 | 438 | 8,889 | 47.1 | 1,705 | 7,184 |
| Office | 189 | 1 | 173 | 113 | 128 | 300 | 95 | 999 | 5.3 | — | 999 |
| Retail | 282 | 35 | 112 | 183 | 69 | 395 | 235 | 1,311 | 6.9 | 106 | 1,205 |
| Self Storage | 85 | 13 | 50 | 20 | 79 | 37 | 202 | 486 | 2.6 | 4 | 482 |
| Senior Housing | 150 | 57 | 144 | 76 | 118 | 120 | 235 | 900 | 4.8 | 194 | 706 |
| Skilled Nursing | — | — | — | 52 | — | 239 | 143 | 434 | 2.3 | — | 434 |
| Student Housing | — | — | — | 53 | 199 | 13 | — | 265 | 1.4 | 39 | 226 |
| Other | 24 | 4 | 9 | 79 | 42 | 83 | 195 | 436 | 2.3 | 2 | 434 |
| Total nonowner-occupied | 2,003 | 671 | 2,033 | 1,995 | 3,710 | 3,059 | 1,892 | 15,363 | 81.4 | 2,354 | 13,009 |
| Owner-occupied | 1,149 | 5 | 364 | 580 | 128 | 1,293 | — | 3,519 | 18.6 | 176 | 3,343 |
| Total | $3,152 | $676 | $2,397 | $2,575 | $3,838 | $4,352 | $1,892 | $18,882 | 100.0% | $2,530 | $16,352 |
| Nonperforming loans | $— | $— | $— | $2 | $— | $7 | $12 | $21 | N/M | $— | $21 |
| Accruing loans past due 90 days or more | — | — | — | — | — | 8 | — | 8 | N/M | — | 8 |
| Accruing loans past due 30 through 89 days | — | — | 1 | 11 | — | 6 | — | 18 | N/M | — | 18 |
| West – | Alaska, California, Hawaii, Idaho, Montana, Oregon, Washington, and Wyoming |
|---|---|
| Southwest – | Arizona, Nevada, and New Mexico |
| Central – | Arkansas, Colorado, Oklahoma, Texas, and Utah |
| Midwest – | Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin |
| Southeast – | Alabama, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Washington, D.C., and West Virginia |
| Northeast – | Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont |
| National – | Accounts in three or more regions |
Consumer loan portfolio
Consumer loans outstanding at December 31, 2023, totaled $35.0 billion, a decrease of $1.9 billion, or 5.2%, from one year ago. This decrease reflects lower residential and consumer direct loans.
The residential mortgage portfolio is comprised of loans originated by our Consumer Bank and is the largest segment of our consumer loan portfolio as of December 31, 2023, representing approximately 60% of consumer loans. This is followed by our home equity portfolio comprising approximately 20% of consumer loans outstanding at year end.
We held the first lien position for approximately 64% of the home equity portfolio at December 31, 2023, and 66% at December 31, 2022. For loans with real estate collateral, we track borrower performance monthly. Regardless of the lien position, credit metrics are refreshed quarterly, including recent FICO scores as well as updated loan-to-value ratios. This information is used in establishing the ALLL. Our methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan and Lease Losses.”
Figure 11 presents our consumer loans by geography.
Figure 11. Consumer Loans by State
| Dollars in millions | Real estate — residential mortgage | Home equity loans | Consumer direct loans | Credit cards | Consumer indirect loans | Total |
|---|---|---|---|---|---|---|
| Washington | $4,520 | $1,020 | $226 | $88 | $1 | $5,855 |
| Ohio | 2,704 | 1,029 | 250 | 203 | 1 | 4,187 |
| New York | 805 | 1,993 | 774 | 347 | 1 | 3,920 |
| Colorado | 3,001 | 277 | 149 | 32 | — | 3,459 |
| California | 2,294 | 14 | 496 | 3 | 4 | 2,811 |
| Oregon | 1,269 | 585 | 108 | 43 | — | 2,005 |
| Pennsylvania | 445 | 517 | 377 | 63 | 2 | 1,404 |
| Florida | 782 | 42 | 412 | 14 | 4 | 1,254 |
| Utah | 851 | 252 | 64 | 18 | — | 1,185 |
| Connecticut | 765 | 255 | 112 | 29 | 1 | 1,162 |
| Other | 3,522 | 1,155 | 2,922 | 162 | 12 | 7,773 |
| Total | $20,958 | $7,139 | $5,890 | $1,002 | $26 | $35,015 |
| Washington | $4,621 | $1,100 | $253 | $87 | $2 | $6,063 |
| Ohio | 2,766 | 1,173 | 347 | 214 | 5 | 4,505 |
| New York | 840 | 2,256 | 770 | 359 | 1 | 4,226 |
| Colorado | 3,006 | 301 | 171 | 32 | — | 3,510 |
| California | 2,357 | 16 | 538 | 4 | 6 | 2,921 |
| Oregon | 1,268 | 630 | 117 | 43 | — | 2,058 |
| Pennsylvania | 459 | 580 | 403 | 61 | 3 | 1,506 |
| Florida | 851 | 45 | 453 | 14 | 6 | 1,369 |
| Texas | 336 | 3 | 397 | 4 | 3 | 743 |
| Illinois | 134 | 3 | 212 | 2 | 1 | 352 |
| Other | 4,763 | 1,844 | 2,847 | 206 | 16 | 9,676 |
| Total | $21,401 | $7,951 | $6,508 | $1,026 | $43 | $36,929 |
Loan sales
As shown in Figure 12, during 2023, we sold $8.9 billion of our loans. Sales of loans classified as held for sale generated net gains of $135 million during 2023.
Figure 12 summarizes our loan sales during 2023 and 2022.
Figure 12. Loans Sold (Including Loans Held for Sale)
| Dollars in millions | Commercial | CommercialReal Estate | CommercialLeaseFinancing | ResidentialReal Estate | Total |
|---|---|---|---|---|---|
| Fourth quarter | $35 | $1,735 | $21 | $339 | $2,130 |
| Third quarter | 85 | 2,861 | 49 | 345 | 3,340 |
| Second quarter | 118 | 1,431 | 28 | 283 | 1,860 |
| First quarter | 125 | 1,121 | 164 | 135 | 1,545 |
| Total | $362 | $7,148 | $262 | $1,103 | $8,875 |
| Fourth quarter | $33 | $2,774 | $114 | $235 | $3,156 |
| Third quarter | 211 | 1,882 | 43 | 353 | 2,489 |
| Second quarter | 41 | 1,851 | 150 | 496 | 2,538 |
| First quarter | 1,469 | 1,909 | 39 | 901 | 4,318 |
| Total | $1,754 | $8,416 | $346 | $1,985 | $12,501 |
Figure 13 shows loans that are either administered or serviced by us but not recorded on the balance sheet; this includes loans that were sold.
Figure 13. Loans Administered or Serviced
| December 31,Dollars in millions | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|
| Commercial real estate loans | $499,449 | $488,478 | $444,131 | $371,016 | $347,186 |
| Residential mortgage | 11,193 | 11,026 | 10,312 | 8,311 | 6,146 |
| Education loans | 248 | 312 | 415 | 516 | 625 |
| Commercial lease financing | 1,946 | 1,646 | 1,236 | 1,359 | 1,047 |
| Commercial loans | 667 | 723 | 750 | 684 | 591 |
| Consumer direct | 408 | 509 | 699 | 1,711 | 2,243 |
| Consumer indirect | 792 | 1,536 | 2,714 | — | — |
| Total | $514,703 | $504,230 | $460,257 | $383,597 | $357,838 |
In the event of default by a borrower, we are subject to recourse with respect to approximately $7.5 billion of the $514.7 billion of loans administered or serviced at December 31, 2023. These are primarily associated with commercial real estate loans administered or serviced. Additional information about this recourse arrangement is included in Note 22 (“Commitments, Contingent Liabilities, and Guarantees”) under the heading “Recourse agreement with FNMA.”
We derive income from several sources when retaining the right to administer or service loans that are sold. We earn noninterest income (recorded as “Consumer mortgage income” and “Commercial mortgage servicing fees”) from fees for servicing or administering loans. This fee income is reduced by the amortization of related servicing assets. In addition, we earn interest income from investing funds generated by escrow deposits collected in connection with the servicing loans. Additional information about our mortgage servicing assets is included in Note 9 (“Mortgage Servicing Assets”).
Maturities and sensitivity of certain loans to changes in interest rates
Figure 14 shows the remaining maturities of our loan portfolio and the sensitivity of certain loans to changes in interest rates as of December 31, 2023.
Figure 14. Remaining Maturities and Sensitivity of Certain Loans to Changes in Interest Rates(a)
| Dollars in millions · Within One Year · One - Five Years · Five - Fifteen Years · Over Fifteen Years · Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Commercial | |||||||||
| Commercial and industrial | $13,086 | $37,501 | $5,058 | $170 | $55,815 | ||||
| Commercial Mortgage | 5,261 | 6,553 | 3,025 | 348 | 15,187 | ||||
| Real estate — construction | 1,283 | 1,299 | 135 | 349 | 3,066 | ||||
| Commercial lease financing | 388 | 1,857 | 1,278 | — | 3,523 | ||||
| Total commercial loans | $20,018 | $47,210 | $9,496 | $867 | $77,591 | ||||
| Consumer | |||||||||
| Real estate - residential mortgage | $180 | $40 | $769 | $19,969 | $20,958 | ||||
| Home equity loans | 96 | 250 | 2,135 | 4,658 | 7,139 | ||||
| Consumer direct loans | 497 | 946 | 2,395 | 2,052 | 5,890 | ||||
| Credit Cards | 1,002 | — | — | — | 1,002 | ||||
| Consumer indirect loans | — | 20 | 5 | 1 | 26 | ||||
| Total consumer loans | 1,775 | 1,256 | 5,304 | 26,680 | 35,015 | ||||
| Total loans | $21,793 | $48,466 | $14,800 | $27,547 | $112,606 | ||||
| Loans with floating or adjustable interest rates (b) | $41,916 | $4,428 | $13,153 | $59,497 | |||||
| Loans with predetermined interest rates (c) | 6,550 | 10,372 | 14,394 | 31,316 | |||||
| Total | $48,466 | $14,800 | $27,547 | $90,813 | |||||
(a)Accrued interest of $522 million at December 31, 2023, is presented in "Accrued income and other assets" on the Consolidated Balance Sheets and is excluded from the amortized cost basis disclosed in this table.
(b)Floating and adjustable rates vary in relation to other interest rates (such as the base lending rate) or a variable index that may change during the term of the loan.
(c)Predetermined interest rates either are fixed or may change during the term of the loan according to a specific formula or schedule.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.