Goodwill

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

10. Goodwill

Our annual goodwill impairment testing is performed as of October 1 each year, or more frequently as events occur or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Additional information pertaining to our accounting policy for goodwill and other intangible assets is summarized in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Goodwill and Other Intangible Assets” beginning on page 145 of our 2019 Form 10-K.

Due to continued deterioration in the market and length of disruption resulting from the COVID-19 pandemic, which impacted Key’s market capitalization, we determined a triggering event occurred in the three months ended September 30, 2020. We conducted a quantitative interim impairment test as of September 30, 2020, and concluded goodwill was not impaired.

Through the quantitative interim impairment test as of September 30, 2020, we determined that the estimated fair value of each of Key’s reporting units was greater than its carrying amount. The estimated fair value of the Consumer Bank reporting unit was 11% greater than its carrying amount, the estimated fair value of the Commercial Bank reporting unit was 17% greater than its carrying amount, and the estimated fair value of the Institutional Bank reporting unit, which is aggregated in the Commercial Bank reporting segment, was 11% greater than its carrying amount. The fair values of each reporting unit were estimated using a combination of income and market approaches. The income approach, which was weighted at 75%, utilized discounted cash flow projections for each reporting unit. The market approach, which was weighted at 25%, consisted primarily of public company metrics but also considered recent transactions in the financial services industry. The carrying amounts of Key’s reporting units represent the average equity based on risk-weighted regulatory capital for goodwill impairment testing and management reporting purposes.

We will continue to monitor and review for impairment indicators that could impact goodwill.