Slide 1: KeyCorp Fourth Quarter 2022 Earnings Review
KeyCorp Fourth Quarter 2022 Earnings Review January 19, 2023 Chris Gorman Don Kimble Clark Khayat Chairman and Vice Chairman and Executive Vice President and Chief Executive Officer Chief Financial Officer Chief Strategy 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: 2022 Results and Outlook
2022 Results and Outlook 2022 Results Outlook and Priorities ✓ Grew and expanded client relationships ✓ Executing on our differentiated business model ▪ Focused on targeted client segments with targeted growth opportunities ▪ Supported clients; record capital raised ▪ Focus on targeted growth opport
Slide 4: Financial Review
Financial Review
Slide 5: Financial Highlights
Financial Highlights 4Q22 3Q22 4Q21 LQ Δ Y/Y Δ Continuing operations, unless otherwise noted EPS – assuming dilution $ .38 $ .55 $ .64 (30.9) % (40.6) % Cash efficiency ratio(1) 60.3 % 58.0 % 59.4 % 230 bps 90 bps Return on average tangible common equity(1) 18.1 21.2 18.7 (310) (60) Profitability Re
Slide 6: Loans
Loans Total Average Loans Highlights $ in billions vs. Prior Year $120 $117.7 ▪ Average loans up 18% from 4Q21 40.00% $110 $99.4 32% Total average loans − Growth in C&I and commercial mortgage real estate loans, $100 PPP: $2.3 partially offset by a decline in PPP balances 30.00% PPP $90 29% − Growth
Slide 7: Deposits
Deposits Average Deposits Highlights $ in billions ▪ Strong and stable deposit base $160 $151.0 $145.7 − 32% noninterest-bearing(1) Commercial $120 Consumer − ~60% stable retail and low-cost escrow 19% Cumulative total interest- − 85% loan to deposit ratio(2) $80 bearing deposit beta(3) ▪ Cumulative
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 $1,300 4.0% $1,227 $1,200 ▪ Net interest income up $189MM (+18%) and the net interest 3.5% margin increased 29 basis points from 4Q21 $1,100 $1,038 − Ref
Slide 9: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 4Q22 vs. 4Q21 vs. 3Q22 Trust and investment services income $ 126 $ (9) $ (1) ▪ Noninterest income down $238MM (-26%) from 4Q21 Investment banking and debt placement fees 172 (151) 18 − Lower investment banking
Slide 10: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions favorable / (unfavorable) 4Q22 vs. 4Q21 vs. 3Q22 vs. Prior Year Personnel $ 674 $ - $ (19) ▪ Noninterest expense down $14MM (-1%) from 4Q21 Net occupancy 72 3 - − Lower nonpersonnel expense (-$14MM) driven by a decline in Computer proc
Slide 11: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses $ in millions $300 .18% $265 $250 .14% $200 .12% .08% $150 $100 .06% $41 $50 $19 $4 $0 .00% 4Q21 1Q22 2Q22 3Q22 4Q22 NCOs Provision for credit losses NCOs to avg. loans Nonperforming Loans Allowance for Credit Losses (ACL) $ in millions $
Slide 12: Capital
Capital Common Equity Tier 1(1) Highlights 11.0% ▪ Strong capital position: CET1 ratio 9.1%(1) at 12/31/2022 10.0% 9.5% − Within targeted range of 9.0% - 9.5% 9.1% 9.0% ▪ Increased dividend 5% to $.205 per common share in 4Q22 8.0% ▪ Last quarter, the Board of Directors approved extension of existin
Slide 13: 2023 Outlook
2023 Outlook FY 2023 (vs. FY 2022) • Loans: up 6% - 9% Average Balance Sheet • Deposits: flat to down 2% Net Interest Income (TE) • Net interest income: up 6% - 9% Noninterest Income • Noninterest income: down 1% - 3% Noninterest Expense • Noninterest expense: relatively stable Credit Quality • Net
Slide 14: Appendix
Appendix
Slide 15: Commercial Loan Portfolio Detail
Commercial Loan Portfolio Detail Total Commercial Loans Commercial & Industrial (C&I) $ in billions 12/31/22 % of total loans ▪ Solid middle market portfolio Commercial and industrial $ 59,647 50% ▪ Aligning bankers to areas of market opportunity and growth - investing in strategic hires with indust
Slide 16: Consumer Loan Portfolio Detail
Consumer Loan Portfolio Detail Total Consumer Loans Laurel Road $ in millions Origination Volume $ in billions 12/31/22 % of total loans WA FICO at origination Consumer mortgage $ 21,401 18% 761 $820 Home equity 7,951 7 807 $646 $445 Consumer direct 6,508 5 746 $194 $118 Credit card 1,026 1 792 4Q21
Slide 17: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions ▪ Portfolio used for funding and liquidity management $60.0 3.00% ‒ Portfolio composed primarily of fixed-rate GNMA and GSE-backed MBS $50.3 $47.4 and CMOs 2.50% $40.0 ‒ Portfolio yield excluding short-term Treasury/Ag
Slide 18: 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 4Q22 Balance Sheet Highlights Actively Managing Interest Rate Risk Position Loan Composition(1) Deposit Mix(2) ▪ Given mac
Slide 19: Net Interest Income Opportunities
Net Interest Income Opportunities ALM Interest Rate Swap Maturities Future Net Interest Income Drivers $ in billions WA Received fixed rate (4Q22-4Q24): 0.88% ▪ Organic Growth $2.5 $2.3 $2.4 − Focus on relationship banking expected to drive continued $1.9 $1.9 loan growth and relatively stable depos
Slide 20: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings(1) to Period-end Total Loans Continuing Operations Continuing Operations .50% 6.0% .40% 4.0% .30% 2.6% 2.5% .20% .16% .15% 2.0% .10% .07% .05% .00% .0% 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 30 – 89 days
Slide 21: Credit Quality by Portfolio
Credit Quality Credit Quality by Portfolio Net loan charge- Allowance / Allowance / Period-end Average Net loan Nonperforming Ending offs(3) / average period-end NPLs $ in millions loans loans charge-offs loans allowance loans (%) loans (%) (%) 12/31/22 4Q22 4Q22 4Q22 12/31/22 12/31/22 12/31/22 12/3
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three m onths ended Tw elve Months Ended 12/31/2022 9/30/2022 12/31/2021 12/31/2022 12/31/2021 Tangible com m on equity to tangible assets at period end Key shareholders' equity (GAAP) $ 13,454 $ 13,290 $ 17,423 Less: Intangible assets (1) 2,844 2,856 2,
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three m onths ended Tw elve Months Ended 12/31/2022 9/30/2022 12/31/2021 12/31/2022 12/31/2021 Return on average tangible com m on equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAA