Slide 1: KeyCorp Second Quarter 2021 Earnings Review
KeyCorp Second Quarter 2021 Earnings Review July 20, 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: 2Q21 Highlights
2Q21 Highlights Positive operating leverage YTD; on track to achieve positive operating leverage for FY2021 Record second quarter revenue, driven by an 8% YoY increase in noninterest income Financial Record second quarter and second all-time high investment banking and debt placement fees Resu
Slide 4: Financial Review
Financial Review 4
Slide 5: Financial Highlights
Financial Highlights 2Q21 1Q21 2Q20 LQ ∆ Y/Y ∆ Continuing operations, unless otherwise noted EPS – assuming dilution $ .72 $ .61 $ .16 18 % 350 % Cash efficiency ratio(a) 59.9 % 60.3 % 57.9 % (40) bps 200 bps Profitability Return on average tangible common equity(a) 22.3 18.2 5.0 410 N/M Return on a
Slide 6: Loans
Loans Total Average Loans Highlights $ in billions vs. Prior Year $110 $108 $6 $101 $101 Average loans down 7% from 2Q20 $100 40.00% $7 $8 − Balances reflect $7.5Bn of average PPP $90 33% balances in 2Q21 − Commercial balances reflect decreased $80 27% 30.00% utilization, partially offset by an in
Slide 7: Deposits
Deposits Average Deposits Highlights $ in billions $160 $144 1.50% Interest-bearing deposit costs down 2 bps from $140 1Q21, reflecting the ongoing impact of deposit $128 1.25% pricing actions $120 1.00% Strong and stable deposit base $100 − 34% noninterest-bearing(a) $80 0.75% − ~60% stable ret
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% $1,025 $1,023 Net interest income relatively stable compared $1,000 3.5% to 2Q20 $900 − Largely driven by higher earning asset $800 3.0% ba
Slide 9: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 2Q21 vs. 2Q20 vs. 1Q21 Trust and investment services income $ 133 $ 10 $ 0 Noninterest income up $58MM (+8%) from 2Q20 Investment banking and debt placement 217 61 55 − Record second quarter of investment ban
Slide 10: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions favorable / (unfavorable) 2Q21 vs. 2Q20 vs. 1Q21 vs. Prior Year Personnel $ 623 $ (51) $ 1 Noninterest expense up $63MM (+6%) from 2Q20 Net occupancy 75 (4) 1 Computer processing 71 (15) 2 − Expenses reflect investments across franch
Slide 11: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses $ in millions $600 .80% $482 $450 .60% $300 .36% .40% $150 $96 .09% .20% $22 $0 .00% ($150) (.20)% ($300) $(222) (.40)% 2Q20 3Q20 4Q20 1Q21 2Q21 NCOs Provision for credit losses NCOs to avg loans Nonperforming Loans Allowance for Credit Lo
Slide 12: Capital
Capital Common Equity Tier 1(a) Highlights 11.0% Strong capital position: CET1 ratio 9.9%(a) at 9.9% 6/30/2021 – above targeted range 10.0% 9.1% Strong capital return: 9.0% − Repurchased $300MM common shares (under previous share repurchase 8.0% authorization) 7.0% − Maintained dividend of $.185
Slide 13: FY2021 Outlook & Long-term Targets
FY2021 Outlook & Long-term Targets FY 2021 (vs. FY 2020) Prior Guidance (as of 4/20/21) Updated Guidance (as of 7/20/21) Average • Loans: relatively stable • Loans: relatively stable Balance Sheet • Deposits: up mid-single digit • Deposits: up high-single digit Net Interest • Net interest income: up
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 6/30/21 % of total loans Aligning bankers to areas of market opportunity and growth - Commercial and industrial $ 50.7 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 6/30/21 % of total WA FICO at $706 loans origination $590 $419 $475 $399 Consumer mortgage 12.1 12 768 Home equity C&I 9.0 9 CRE 809 2Q20 3Q20 4Q20 1Q21 2Q21 Consumer direct $40 5.0 $18 5 7
Slide 17: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions $40.1 Portfolio used for funding and liquidity management $40.0 3.00% ‒ Portfolio composed primarily of fixed-rate GNMA and $31.0 GSE-backed MBS and CMOs $32.0 2.50% ‒ Portfolio yield excluding short-term Treasury in
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 2Q21 Balance Sheet Highlights(a) Actively Managing Interest Rate Risk Position Loan Composition Deposit Mix Modest expos
Slide 19: Select Commercial Portfolio
Select Commercial Portfolio Active Portfolio Surveillance Portfolios in Focus 6/30/21 3/31/21 % of Total Ongoing portfolio reviews Outstandings Outstandings Loans as of 6/30 $ in millions Monitoring ratings migration Consumer behavior(a) $ 5,150 $ 5,112 5.1% Education 1,645 1,557 1.6 Central r
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% 4.0% 4.0% 3.3% .39% .40% .19% 2.0% .20% .08% .07% .00% .0% 2Q20 3Q20 4Q20 1Q21 2Q21 2Q20 3Q20 4Q20 1Q21 2Q21 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 (%) 6/30/21 2Q21 2Q21 2Q21 6/30/21 6/30/21 6/30/21 6/30/21
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three m onths ended 6/30/2021 3/31/2021 6/30/2020 Tangible com m on equity to tangible assets at period end Key shareholders' equity (GAAP) $ 17,941 $ 17,634 $ 17,542 Less: Intangible assets (a) 2,828 2,842 2,877 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 6/30/2021 3/31/2021 6/30/2020 Return on average tangible com m on equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $ 698 $ 591 $ 159 Average tangible common