24. Shareholders' Equity

Comprehensive Capital Plan

As previously reported and as authorized by the Board and pursuant to our 2017 capital plan (which is effective through the second quarter of 2018) submitted to and not objected to by the Federal Reserve, we have authority to repurchase up to $800 million of our Common Shares, which includes repurchases to offset issuances of Common Shares under our employee compensation plans. During 2017, we repurchased $254 million of Common Shares under our 2016 capital plan authorization and $476 million under our 2017 capital plan authorization.

Consistent with our 2016 capital plan, the Board declared a quarterly dividend of $.085 per Common Share for the first quarter of 2017, and $.095 per Common Share for the second quarter of 2017. The Board declared a quarterly dividend of $.095 per Common Share for the third quarter of 2017, and a quarterly dividend of $.105 per Common Share for the fourth quarter of 2017, consistent with our 2017 capital plan. These quarterly dividend payments brought our annual dividend to $.38 per Common Share for 2017. Our 2017 capital plan proposed an increase in our quarterly Common Share dividend, up to $.12 per Common Share, which will be considered by the Board for the second quarter of 2018.

Preferred Stock

On March 9, 2017, we announced that all of our 7.75% Noncumulative Perpetual Convertible Series A Preferred Stock would convert into KeyCorp Common Shares. On March 20, 2017, the conversion date, holders of the Series A Preferred Stock received 7.0922 Common Shares for each share of Series A Preferred Stock. Cash was paid in lieu of fractional shares. Prior to the conversion of the Series A Preferred Stock, we made a dividend payment of $1.9375 per share, or $6 million, on our Series A Preferred Stock during the first quarter of 2017.

Prior to the conversion, we had $290 million of 7.75% Noncumulative Perpetual Convertible Series A Preferred Stock outstanding at December 31, 2016. Our Series A Preferred Stock had a $1 par value and a $100 liquidation preference. There were 7,475,000 shares authorized and 2,900,234 shares outstanding at December 31, 2016.

On January 12, 2017, we provided notice of our intention to redeem all outstanding shares of the Series C Preferred Stock on February 15, 2017. On February 15, 2017, the Series C Preferred Stock was redeemed for cash at a redemption price of $25 per share. The redemption date was also a dividend payment date, and declared dividends of $.539063 per share, or $7 million, were also paid separately on February 15, 2017. The Series C Preferred Stock was initially issued in connection with the First Niagara acquisition to replace First Niagara’s outstanding preferred stock.

Prior to the redemption, we had $350 million of Fixed-to-Floating Rate Perpetual Noncumulative Series C Preferred Stock. Our Series C Preferred Stock had a $1 par value with a $25 liquidation preference. There were 14,000,000 shares authorized and outstanding at December 31, 2016.

We have $525 million of depositary shares, each representing a 1/25^th ownership interest in a share of our Fixed-to-Floating Rate Perpetual Noncumulative Series D Preferred Stock outstanding at December 31, 2017, and December 31, 2016. Our Series D Preferred Stock has a $1 par value with a $25,000 liquidation preference. There are 21,000 shares authorized and 21,000 shares outstanding at December 31, 2017, and December 31, 2016. We made total payments of $50.00 per depositary share on the depositary shares related to our Series D Preferred Stock during 2017 for a total of $26 million.

We have $500 million of depositary shares, each representing a 1/40^th ownership interest in a share of our Fixed-to-Floating Rate Perpetual Noncumulative Series E Preferred Stock outstanding at December 31, 2017, and December 31, 2016. Our Series E Preferred Stock has a $1 par value with a $1,000 liquidation preference. There are 500,000 shares authorized and 500,000 shares outstanding at December 31, 2017, and December 31, 2016. We made total payments of $1.544012 per depositary share on the depositary shares related to our Series E Preferred Stock during 2017 for a total of $31 million.

Capital Adequacy

KeyCorp and KeyBank (consolidated) must meet specific capital requirements imposed by federal banking regulators. Sanctions for failure to meet applicable capital requirements may include regulatory enforcement actions that restrict dividend payments, require the adoption of remedial measures to increase capital, terminate FDIC deposit insurance, and mandate the appointment of a conservator or receiver in severe cases. In addition, failure to maintain a “well capitalized” status affects how regulators evaluate applications for certain endeavors, including acquisitions, continuation and expansion of existing activities, and commencement of new activities, and could make clients and potential investors less confident. As of December 31, 2017, KeyCorp and KeyBank (consolidated) met all regulatory capital requirements.

KeyBank (consolidated) qualified for the “well capitalized” prompt corrective action capital category at December 31, 2017, because its capital and leverage ratios exceeded the prescribed threshold ratios for that capital category and it was not subject to any written agreement, order, or directive to meet and maintain a specific capital level for any capital measure. Since that date, we believe there has been no change in condition or event that has occurred that would cause the capital category for KeyBank (consolidated) to change.

BHCs are not assigned to any of the five prompt corrective action capital categories applicable to insured depository institutions. If, however, those categories applied to BHCs, we believe that KeyCorp would satisfy the criteria for a “well capitalized” institution at December 31, 2017, and since that date, we believe there has been no change in condition or event that has occurred that would cause such capital category to change.

Because the regulatory capital categories under the prompt corrective action regulations serve a limited supervisory function, investors should not use them as a representation of the overall financial condition or prospects of KeyBank or KeyCorp.

At December 31, 2017, Key and KeyBank (consolidated) had regulatory capital in excess of all current minimum risk-based capital (including all adjustments for market risk) and leverage ratio requirements as shown in the following table.



	Actual				To Meet Minimum Capital Adequacy Requirements				To Qualify as Well Capitalized Under Federal Deposit Insurance Act
dollars in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2017
TOTAL CAPITAL TO NET RISK-WEIGHTED ASSETS
Key	$	15,345	12.92	%	$	9,505	8.00	%	N/A		N/A
KeyBank (consolidated)	14,957		12.86		9,306		8.00		$	11,633	10.00	%
TIER 1 CAPITAL TO NET RISK-WEIGHTED ASSETS
Key	$	13,083	11.01	%	$	7,129	6.00	%	N/A		N/A
KeyBank (consolidated)	13,110		11.27		6,980		6.00		$	6,980	6.00	%
TIER 1 CAPITAL TO AVERAGE QUARTERLY TANGIBLE ASSETS
Key	$	13,083	9.73	%	$	5,379	4.00	%	N/A		N/A
KeyBank (consolidated)	13,110		9.91		5,293		4.00		$	6,617	5.00	%
December 31, 2016
TOTAL CAPITAL TO NET RISK-WEIGHTED ASSETS
Key	$	15,638	12.85	%	$	9,734	8.00	%	N/A		N/A
KeyBank (consolidated)	14,291		12.36		9,251		8.00		$	11,564	10.00	%
TIER 1 CAPITAL TO NET RISK-WEIGHTED ASSETS
Key	$	13,249	10.89	%	$	7,300	6.00	%	N/A		N/A
KeyBank (consolidated)	12,439		10.76		6,939		6.00		$	6,939	6.00	%
TIER 1 CAPITAL TO AVERAGE QUARTERLY TANGIBLE ASSETS
Key	$	13,249	9.90	%	$	5,442	4.00	%	N/A		N/A
KeyBank (consolidated)	12,439		9.46		5,353		4.00		$	6,691	5.00	%