Slide 1: KeyCorp Third Quarter 2021 Earnings Review
KeyCorp Third Quarter 2021 Earnings Review October 21, 2021 Chris Gorman Don Kimble Chairman and Vice Chairman and Chief Executive Officer Chief Financial Officer
Slide 2: Forward-Looking Statements and Additional Information
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, KeyCorp’s expectations or predictions of future financial or business performance or
Slide 3: 3Q21 Highlights
3Q21 Highlights Positive operating leverage Record third quarter revenue, up 8% YoY Record third quarter noninterest income, up 17% YoY − Record third quarter investment banking fees of $235MM Financial Record consumer loan originations of $4.2Bn from consumer mortgage and Laurel Road Result
Slide 4: Financial Review
Financial Review 4
Slide 5: Financial Highlights
Financial Highlights 3Q21 2Q21 3Q20 LQ ∆ Y/Y ∆ Continuing operations, unless otherwise noted EPS – assuming dilution $ .65 $ .72 $ .41 (9.7) % 58.5 % Cash efficiency ratio(a) 60.2 % 59.9 % 60.6 % 30 bps (40) bps Profitability Return on average tangible common equity(a) 18.6 21.3 12.2 (270) 640 Retur
Slide 6: Loans
Loans Total Average Loans Highlights $ in billions $110 Sold indirect auto loan portfolio on 9/10/21 $105 $100 $8 − Reduced 3Q21 average loans by $.8Bn $100 40.00% $8 $4 − Reduced 3Q21 period-end loans by $3.3Bn $90 33% vs. Prior Year $80 28% 30.00% Average loans down 5% from 3Q20 $70 − Balances
Slide 7: Deposits
Deposits Average Deposits Highlights $ in billions $160 $147 Strong and stable deposit base $140 $135 − 35% noninterest-bearing(a) $120 .23% − ~60% stable retail and low-cost escrow $100 − 67% loan to deposit ratio(b) $80 .16% .06% vs. Prior Year $60 $40 .04% Average deposits up 9% from 3Q20 $20
Slide 8: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations vs. Prior Year $1,100 4.0% $1,006 $1,025 Net interest income up $19MM (+2%) compared $1,000 3.5% to 3Q20 $900 − Largely driven by higher earning asset $800 3.0% balan
Slide 9: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 3Q21 vs. 3Q20 vs. 2Q21 Trust and investment services income $ 129 $ 1 ($4) Noninterest income up $116MM (+17%) from 3Q20 Investment banking and debt placement 235 89 18 − Record third quarter of investment ba
Slide 10: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions favorable / (unfavorable) 3Q21 vs. 3Q20 vs. 2Q21 vs. Prior Year Personnel $ 640 $ (52) $ (17) Noninterest expense up $75MM (+7%) from 3Q20 Net occupancy 74 2 1 Computer processing 67 (8) 4 − Expenses reflect investments across franch
Slide 11: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses $ in millions $600 3Q21 includes .80% $22MM related to $450 the sale of Key’s .60% .49% indirect auto portfolio $300 .40% $160 $128 .11% $150 .20% $29 $0 .00% ($150) $(107) (.20)% ($300) (.40)% 3Q20 4Q20 1Q21 2Q21 3Q21 NCOs Provision for c
Slide 12: Capital
Capital Common Equity Tier 1(a) Highlights 11.0% Strong capital position: CET1 ratio 9.6%(a) at 9/30/2021 – above targeted range 10.0% 9.6% 9.5% Strong capital return: 9.0% − Repurchased $593MM common shares in 3Q21, including $468MM(c) from ASR and 8.0% $125MM from the open market 7.0% − Mainta
Slide 13: 4Q Outlook and Long-term Targets
4Q Outlook and Long-term Targets 4Q21 (vs. 3Q21) Average Loans: Up low-single digit (excluding the impact of sale of the indirect auto portfolio) Average Deposits: Relatively stable Net Interest Income (TE): Down low-single digit Reflects lower PPP forgiveness in 4Q Noninterest Income: Relatively st
Slide 14: Appendix
Appendix 14
Slide 15: Commercial Loan Portfolio Detail
Commercial Loan Portfolio Detail Total Commercial Loans Commercial & Industrial (C&I) Solid middle market portfolio $ in billions 9/30/21 % of total loans Aligning bankers to areas of market opportunity and growth - Commercial and industrial $ 49.5 50 investing in strategic hires with industry v
Slide 16: Consumer Loan Portfolio Detail
Consumer Loan Portfolio Detail Laurel Road Total Consumer Loans $ in millions Origination Volume $ in billions 9/30/21 % of total WA FICO at loans origination $590 $475 $504 $419 $399 Consumer mortgage 14.2 15 765 Home equity C&I 8.7 9 CRE 801 3Q20 4Q20 1Q21 2Q21 3Q21 Consumer direct $40 5.3 $18 5 7
Slide 17: Indirect Auto Sale Transaction
Indirect Auto Sale Transaction The sale of the indirect auto loan portfolio coupled with the purchase of senior notes from a securitization collateralized by the sold loans Positive Economics for Shareholders 3Q21 Financial Statement Impact Resulted in modest benefit to net income for 3Q21 Balance
Slide 18: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions $43.4 Portfolio used for funding and liquidity management $40.0 2.50% ‒ Portfolio composed primarily of fixed-rate GNMA and $33.6 GSE-backed MBS and CMOs $32.0 2.00% ‒ Portfolio yield excluding short-term Treasuries:
Slide 19: Asset & Liability Management Positioning
Asset & Liability Management Positioning Balanced approach to managing interest rate risk provides declining rate protection while maintaining significant upside to higher rates 3Q21 Balance Sheet Highlights(a) Actively Managing Interest Rate Risk Position Loan Composition Deposit Mix Modest expos
Slide 20: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings(a) to Period-end Total Loans Continuing operations Continuing operations .80% 6.0% .60% 3.9% 4.0% 3.3% .40% .33% 2.0% .17% .20% .07% .08% .00% .0% 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 4Q20 1Q21 2Q21 3Q21 30 – 89 days deli
Slide 21: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan Net loan Allowance / Allowance / Period- Average charge-offs(b) / Nonperforming Ending charge- period-end NPLs end loans loans average loans loans allowance offs loans (%) (%) $ in millions (%) 9/30/21 3Q21 3Q21 3Q21 9/30/21 9/30/21 9/30/21 9/30/21
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three m onths ended 9/30/2021 6/30/2021 9/30/2020 Tangible com m on equity to tangible assets at period end Key shareholders' equity (GAAP) $ 17,510 $ 17,941 $ 17,722 Less: Intangible assets (a) 2,814 2,828 2,862 Preferred Stock (b) 1,856 1,856 1,856 Tan
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three m onths ended 9/30/2021 6/30/2021 9/30/2020 Return on average tangible com m on equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $ 616 $ 698 $ 397 Average tangible common