Slide 1: KeyCorp Second Quarter 2016 Earnings Review
KeyCorp Second Quarter 2016 Earnings Review July 26, 2016 Beth E. Mooney Chairman and Chief Executive Officer Don Kimble Chief Financial Officer Exhibit 99.2
Slide 2: Forward-Looking Statements and Additional Information Disclosure
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION DISCLOSURE 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 and First Niagara’s expectations or predictions of future financ
Slide 3: Investor Highlights – 2Q16
Non-GAAP measure: see Appendix for reconciliations Merger-related expense detail provided in Appendix, on slide 17 6-30-16 ratio is estimated Disciplined Capital Management Generated positive operating leverage and grew pre-provision net revenue (a) from 2Q15, excluding merger-related expense of $45
Slide 4: First Niagara: Positioned to Complete Acquisition
0 First Niagara: Positioned to Complete Acquisition Acquisition Drives Value 2Q16 Updates Transaction scheduled to close on or about August 1, 2016 Federal Reserve approval received July 12, 2016 Announced combined branch network plans Includes consolidation of 106 FNFG and KEY branches Plans to inv
Slide 5: Financial Review
Financial Review
Slide 6: Financial Highlights
Financial Highlights TE = Taxable equivalent; EOP = End of Period From continuing operations Year-over-year average balance growth (c) From consolidated operations (d) 6-30-16 ratios are estimated Non-GAAP measure: see Appendix for reconciliation Merger-related expense detail available in Appendix,
Slide 7: Loans
Loans $ in billions Average Commercial, Financial & Agricultural Loans Total Average Loans Exit Portfolios Home Equity & Other Commercial $ in billions Period-end total loans up 7% in 2Q16 from 2Q15, driven by CF&A loans up 14% Utilization remains relatively stable Average Loans CF&A loans up 12% Hi
Slide 8: Deposits
Deposit balances up 3% from 1Q16, reflecting: Growth in escrow deposits from the commercial mortgage servicing business Short-term inflows from commercial clients Core deposit growth in retail banking 2Q16 Average Deposit Mix Deposit growth of 5% from 2Q15 related to: Core deposit growth in retail b
Slide 9: Net Interest Income and Margin
Net interest income down $7 MM, or 1%, from 1Q16 Lower reinvestment yields and a decline in loan fees Higher earning asset balances TE = Taxable equivalent Net interest income (TE) NIM (TE) NIM Change (bps): vs. 1Q16 Short-term deposit growth/ higher levels of excess liquidity (0.07) Lower asset yie
Slide 10: Noninterest Income
Noninterest Income Noninterest Income $ in millions Up / (Down) 2Q16 vs. 2Q15 vs. 1Q16 Trust and investment services income $ 110 $ (1) $ 1 Investment banking and debt placement fees 98 (43) 27 Service charges on deposit accounts 68 5 3 Operating lease income and other leasing gains 18 (6) 1 Corpora
Slide 11: Noninterest Expense
Noninterest expense, excl. merger-related expense (b) $ in millions Up / (Down) 2Q16 vs. 2Q15 vs. 1Q16 Personnel $ 427 $ 19 $ 23 Net occupancy 59 (7) (2) Computer processing 45 3 2 Business services, professional fees 40 (2) (1) Equipment 21 (1) - Operating lease expense 14 2 1 Marketing 22 7 10 FDI
Slide 12: Credit Quality Highlights
Nonperforming Assets Net Charge-offs & Provision for Credit Losses NPLs NPLs to period-end loans NCOs Provision for credit losses NCOs to average loans $ in millions NPLs held for sale, OREO & other NPAs Credit Quality Highlights Net loan charge-offs remain below targeted range, at 28 basis points o
Slide 13: Capital
Maintained strong capital position Common Equity Tier 1 ratio of 11.12% (b) at 6/30/16 Increased quarterly common share dividend by 13% in 2Q16 to $.085 per share No objection to 2016 capital plan from Federal Reserve, including: Share repurchase program of up to $350 MM 12% increase in the quarterl
Slide 14: Outlook and Expectations
Outlook and Expectations Average Loans Mid-single digit growth vs. FY 2015 Net Interest Income Up low to mid-single digit percentage without the benefit from higher interest rates Mid-single digit growth with the benefit of higher interest rates Noninterest Income Relatively stable to up low single-
Slide 15: Appendix
Appendix
Slide 16: Progress on Targets for Success: Key Stand-alone
Progress on Targets for Success: Key Stand-alone (a) Continuing operations, unless otherwise noted Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits (excluding deposits in foreign office) Non-GAAP measure: see slides 25-26 for re
Slide 17: FNFG Merger-related Expense
2Q16 1Q16 4Q15 Personnel expense (a) $ 35 $ 16 - Business services and professional fees $ 5 $ 7 $ 5 Marketing 3 1 - All other nonpersonnel 2 - 1 Total nonpersonnel expense $ 10 $ 8 $ 6 Total merger-related expense (b) $ 45 $ 24 $ 6 EPS impact $ (.04) $ (.02) - FNFG Merger-related Expense Expenses r
Slide 18: Investment Portfolio
Average Total Investment Securities Highlights Average AFS securities Investment Portfolio Portfolio composed primarily of GNMA and GSE-backed MBS and CMOs Continue to position portfolio for regulatory liquidity requirements: Reinvesting cash flows into High Quality Liquid Assets, including GNMA sec
Slide 19: Interest Rate Risk Management
Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk High quality Fixed rate agency MBS and CMOs Average maturity: 3.6 years GNMAs total 52% of portfolio Reinvesting cash flows into HQLAs, including GNMAs $14.6 $19.3 $8.1 $8.1 Size of swap portfolio Model
Slide 20: Credit Quality Trends
Credit Quality Trends Criticized Outstandings (a) to Period-end Total Loans Delinquencies to Period-end Total Loans Loan and lease outstandings From continuing operations 30 – 89 days delinquent 90+ days delinquent Metric (b) 2Q16 1Q16 4Q15 3Q15 2Q15 Delinquencies to EOP total loans: 30-89 days .33
Slide 21: Loan Credit Quality by Portfolio
Period-end loans Average loans Net loan charge-offs Net loan charge-offs (b) / average loans (%) Nonperforming loans (c) Ending allowance (d) Allowance / period-end loans (d) (%) Allowance / NPLs (%) 6/30/16 2Q16 2Q16 2Q16 6/30/16 6/30/16 6/30/16 6/30/16 Commercial, financial and agricultural (a) $
Slide 22: Oil & Gas
Oil & Gas Longstanding history, expertise and relationships Total commitments of $3.1 B, including upstream commitments of $1.6 B Upstream portfolio is primarily secured by proven, developed and producing reserves Total Loans Outstanding, 6/30/16 Portfolio performing in-line with expectations Reserv
Slide 23: Home Equity Portfolio
Vintage (% of Loans) Loan Balances Average Loan Size ($) Average FICO Average CLTV (a) % of Loans CLTV>90% 2012 and later 2011 2010 2009 2008 and prior Loans and lines First lien $ 6,015 $ 70,349 772 67 % .5 % 61 % 4 % 2 % 2 % 31 % Second lien 3,864 45674 769 77 - 44 4 2 3 47 Community Bank $ 9,879
Slide 24: Exit Portfolios
Balance Outstanding Change Net Loan Charge-offs Balance on Nonperforming Status 6-30-16 3-31-16 6-30-16 vs. 3-31-16 2Q16 1Q16 6-30-16 3-31-16 Residential properties – homebuilder - - - - - $ 4 $ 3 Commercial lease financing (a) $ 731 $ 743 $ (12) $ 1 $ 1 - - Total commercial loans 731 743 (12) 1 1 4
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 6/30/16, 3/31/16, 12/31/15, 9/30/15, and 6/30/15, exclude $36 million, $40 million, $45 million, $50 million, and $55 million, respectively, of period-end purchased credit card receivables Net of capital surplus 6-30-16 amount is estim
Slide 26: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) The months ended 6/30/16, 3/31/16, 12/31/15, 9/30/15, and 6/30/15, exclude $38 million, $42 million, $47 million, $52 million, and $58 million, respectively, of average purchased credit card receivables $ in millions Three months ended 6-30-16 3-31-16 12-3
Slide 27: Common Equity Tier 1 under fully phased-in RCR
$ in billions Quarter ended June 30, 2016 Common Equity Tier 1 under current RCR $ 10.1 Adjustments from current RCR to the fully phased-in RCR: Deferred tax assets and other intangible assets (b) - Common Equity Tier 1 anticipated under the fully phased-in RCR (c) $ 10.1 Net risk-weighted assets un