Slide 1: KeyCorp Third Quarter 2024 Earnings Review
KeyCorp Third Quarter 2024 Earnings Review October 17, 2024 Chris Gorman Chairman and Chief Executive Officer Clark Khayat Chief Financial Officer
Slide 2: 3Q24 Results
3Q24 Results Received initial tranche +9% (2)% +4% $821MM YoY increase in organic growth Criticized Loans QoQ YoY Client Deposit Growth strategic minority investment from areas (Investment Banking, Wealth Scotiabank and Payments) 70bps NPAs / Period-end Loans +3.5% 10.8% $61Bn Net New Relationship H
Slide 3: Financial Review
Financial Review
Slide 4: 3Q24 Highlights
3Q24 Highlights $ in millions, excluding EPS From continuing operations, unless otherwise noted +3% YoY ex. loss on sale of securities(1) Reported QoQ YoY ▪ Reported EPS of $(0.47), with $(0.77) impact from loss on sale of securities(1) EPS $(0.47) N/M N/M ‒ Adjusted EPS of $0.30(3) Net Interest Inc
Slide 5: Average Loans
Average Loans $ in billions vs. Prior Quarter $117.6 $113.9 ▪ Average loans down 2.5% from 2Q24 $111.0 $109.0 $106.2 EOP Loans: $105.3Bn Consumer $36.1 $35.3 $34.6 $33.9 $33.2 − Decline in commercial loans (-$2Bn), due to lower commercial and industrial loans and commercial $81.6 $78.6 mortgage real
Slide 6: Average Deposits
Average Deposits vs. Prior Quarter $ in billions $144.8 $145.1 $142.9 $144.2 $147.8 $6.0 $3.3 $2.5 $1.4 $2.7 ▪ Average deposits were up 2.5% from 2Q24 Other(1) $57.4 $58.7 $56.3 $56.1 $58.2 − Growth in consumer and commercial deposits Commercial 2.39% 2.28% 2.06% 2.20% − Included ~$1Bn increase in b
Slide 7: Net Interest Income and Margin (TE)
Net Interest Income and Margin (TE) From continuing operations, $ in millions NII Walk (TE) +7% $964 $923 $928 $899 $886 $10 day count & NPL payoff 2.17% Swap & UST Securities Earning Deposit Other Other 2Q24 rolloff repositioning & asset yields cost & mix funding 3Q24 2.07% 2.04% BNS investment & m
Slide 8: Noninterest Income
Noninterest Income % change $ in millions; Illustrative, not drawn to scale Includes $918MM loss vs. Prior Year on sale of securities(2) YoY QoQ Total Noninterest ▪ Noninterest income included a $918MM pre- $643 $627 $(269) N/M N/M tax loss from the sale of securities(2) Income Commercial Mortgage S
Slide 9: Noninterest Expense
Noninterest Expense vs. Prior Year $ in millions % change YoY QoQ ▪ Noninterest expense down $16MM (-1.4%) − A reduction in an estimated FDIC special assessment (-$6MM), and lower marketing Total Noninterest Expense $1,110 $1,079 $1,094 (1.4)% 1.4% expenses (-$7MM) − Partly offset by an increase in
Slide 10: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Delinquencies to Period-end Total Loans $ in millions Continuing Operations 0.58% 0.34% 0.26% 0.29% 0.24% $154 0.26% 0.15% 0.20% 0.22% $102 $101 $91 $100 $95 0.17% $71 $81 $76 $81 0.16% 0.09% 0.11% 0.13% 0.04% 3Q23 4Q23 1Q24 2Q24 3Q24 3Q23
Slide 11: Capital
Capital Common Equity Tier 1(1) Projected AOCI Impacts (Flat and Forward Curve)(3) $ in billions 10.5% 10.8% 10.0% 10.3% 9.8% AOCI Position Forward Rates 8.6% 7.1% 7.3% 7.0% 9/30/24 12/31/24 12/31/25 12/31/26 6.2% $(1.9) $(1.7) 3Q23 4Q23 1Q24 2Q24 3Q24 AFS AOCI $(2.8) $(2.7) Adjusted for unrealized
Slide 12: 2024 Outlook
2024 Outlook 2023 FY2024 (vs. FY2023) $ in millions Average Loans $118,004 down 7 – 8% Ending Loans $112,606 down 5 – 6% (previously down 4 – 5%) up 1 – 2%, with client deposits up 3 – 4% Average Deposits $144,059 (previously relatively stable, with client deposits up) down 2 – 5% Net Interest Incom
Slide 13: NII Opportunity From Swaps and Treasuries
NII Opportunity From Swaps and Treasuries $ in millions; cumulative view ~$830MM expected annualized NII opportunity (of which ~80% realized to date) ~$208 ~$164 ~$118 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Benefit Realized Swaps Treasuries Note: Prior quarters used a simplifying assumption that any ben
Slide 14: Net Interest Income Opportunity
Net Interest Income Opportunity Achieving 4Q24 Exit Rate NII Target Other Key Inputs & Assumptions Change to NII ($ in millions); Illustrative, not drawn to scale ▪ Loan Balances − Commercial loans up ~$1Bn off 3Q average (includes held for investment and held for sale) − Consumer loans decline ~$80
Slide 15: Appendix
Appendix
Slide 16: Balance Sheet Management Detail
Balance Sheet Management Detail Fixed-rate Asset Repricing Tailwinds – 4Q24 to 2026 Loan Composition(1) $ in billions 4Q24 2025 2026 Other Projected receive-fixed swaps(5) maturities 0.0 $5.2 $9.1 1% Weighted-average rate received (%) n/a 1.80% 2.78% 1M SOFR Fixed 20% Projected fixed rate loans cash
Slide 17: Hedging Strategy Summary
Hedging Strategy Summary 3Q24 ALM Hedge Actions $ in billions; ending balances ▪ Executed $3.7Bn of forward-starting receive-fixed swaps – WA receive rate: 3.55% (May 2025 start date) $23.3 ▪ Executed $2.7Bn of spot-starting pay-fixed swaps to hedge securities – WA pay rate: 4.23% $18.8 $18.8 $18.1
Slide 18: Commercial Real Estate
Commercial Real Estate High-quality CRE portfolio has relatively limited exposure and is diversified by property type and geography Nonowner-occupied CRE Loan Portfolio Composition As a % Total Loans As a % Total Loans Office Highlights All banks >$10Bn assets • $0 nonowner-occupied construction All
Slide 19: Credit Quality by Portfolio
Credit Quality by Portfolio Allowance for Credit Losses (ACL) Net Loan Charge-offs(1) to Average Loans (%)(2) $ in millions $1,778 $1,804 $1,823 $1,833 $1,774 4.33% 1.60% 1.66% 1.71% 1.68% 1.54% 0.93% 1.10% 0.14% 0.00% (0.02)% 3Q23 4Q23 1Q24 2Q24 3Q24 (3), (4) C&I CRE Resi Mtg Home Equity Credit Car
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 3Q24 2Q24 3Q23 Tangible common equity to tangible assets at period end Key shareholders’ equity (GAAP) $ 16,852 $ 14,789 $ 13,356 Less: Intangible assets(1) 2,786 2,793 2,816 Preferred stock(2) 2,446 2,446 2,446 Tangible common equity (non-GAAP) $ 11,620
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 3Q24 2Q24 3Q23 Return on average tangible common equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $ (447) $ 237 $ 266 Average tangible common equity (non-GAAP) 10,470 9,178 8,51
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 3Q24 2Q24 3Q23 Adjusted income (loss) available from continuing operations attributable to Key common shareholders Income (loss) from continuing operations attributable to Key common shareholders $ (447) $ 237 $ 266 (GAAP) Plus: Loss on sale of securitie
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation CET1 – AOCI Impact(1) ($ in millions) 3Q23 4Q23 1Q24 2Q24 3Q24 Common Equity Tier 1 (A) $ 15,007 $ 14,894 $ 14,821 $ 14,901 $ 15.,045 Add: AFS and Pension accumulated other Comprehensive income (loss) (5,581) (4,573) (4,608) (4,530) (3,118) Adjusted Common Equity Tier
Slide 24: Selected Items Impact on Earnings
Selected Items Impact on Earnings Selected Items Impact on Earnings(1) $ in millions, except per share amounts Pretax(2) After-tax at marginal rate(2)(3) Quarter to date results Amount Net Income EPS(4) Three months ended September 30, 2024 Loss on sale of securities (other income) $ (918) $ (737) $
Slide 25: 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