Slide 1: KeyCorp Fourth Quarter 2014 Earnings Review
Exhibit 99.2 KeyCorp Fourth Quarter 2014 Earnings Review January 22, 2015 Beth E. Mooney Don Kimble Chairman and Chief Financial Officer Chief Executive Officer
Slide 2: Forward-Looking Statements and Additional Information Disclosure
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION DISCLOSURE This presentation contains forward-looking statements, including statements about our financial condition, results of operations, asset quality trends, capital levels and profitability. Forward-looking statements can often be identifie
Slide 3: Investor Highlights – 4Q14 vs. prior year
Investor Highlights – 4Q14 vs. prior year EPS up 8% reflecting successful business model and investments to grow Positive operating leverage, with revenue growth of 4% and expenses down 1% Positive - Cash efficiency ratio of 64.4% Operating Leverage Total average loans up 5%, driven by CF&A balances
Slide 4: Investor Highlights – 2014
Investor Highlights – 2014 EPS up 12%; generated positive operating leverage Business model and strategic investments drove core business activity Total average loans up 5% from prior year Positive - Grew both commercial and consumer loan balances Operating Leverage Noninterest income up 2% with pos
Slide 5: Financial Review
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Slide 6: Financial Highlights
Financial Highlights Metrics 4Q14 3Q14 2Q14 1Q14 4Q13 EPS – assuming dilution $ .28 $ .23 $ .27 $ .26 $ .26 Cash efficiency ratio (e) 64.4 % 69.5 % 65.8 % 64.9 % 67.4 % Financial Performance (a) excl. efficiency and pension charges 63.4 66.0 63.4 63.9 65.1 Net interest margin (TE) 2.94 2.96 2.98 3.0
Slide 7: Loan Growth
Loan Growth Highlights Average Commercial, Financial & Agricultural Loans $ in billions Average total loans up 5% in 4Q14 from prior year, driven by CF&A up 12% Achieved guidance with FY 2014 average loan balances up 5% – Both commercial and consumer loans up Total commitments continue to grow with
Slide 8: Improving Deposit Mix
Improving Deposit Mix Highlights Funding Cost Funding cost continues to improve Transaction deposit balances up 4% from 4Q13 Deposit growth from prior year (+2%) reflects inflows from commercial clients as well as commercial mortgage servicing Large commercial client inflows drove balances 2% higher
Slide 9: Net Interest Income and Margin
Net Interest Income and Margin Highlights Net Interest Income & Net Interest Margin Trend (TE) $ in millions; continuing operations Net interest income relatively stable with prior year, as loan growth and a more favorable mix of lower- cost deposits mostly offset lower earning asset yields Modest g
Slide 10: Noninterest Income
Noninterest Income Highlights Noninterest Income Noninterest income up 8% from prior year and up $ in millions; continuing operations 18% from prior quarter, benefitting from: $490 – Momentum in core businesses $453 – Record quarter and year for investment banking and debt placement fees – Strategic
Slide 11: Focused Expense Management
Focused Expense Management Highlights Noninterest Expense $ in millions 4Q expenses down 1% from prior year, with benefit from continuous improvement efforts and lower efficiency charges offsetting growth related to $712 $704 Pacific Crest acquisition Expenses down 2% from 2013, achieving full year
Slide 12: Continued Improvement in Asset Quality
Continued Improvement in Asset Quality Highlights Net Charge-offs & Provision for Loan and Lease Losses $ in millions Net loan charge-offs decreased 14% from 4Q13 to $32 MM, or 22 bps of average loans Total gross charge-offs down 26% from 4Q13 and flat with 3Q14 Nonperforming assets down 18% from pr
Slide 13: Strong Capital
Strong Capital Highlights Tangible Common Equity to Tangible Assets (a) Disciplined capital management – Repurchased $128 MM of common shares in 4Q14 Total common share repurchases of $496 MM in 2014, contributing to shareholder payout of 82% including the impact of dividends Book Value per Share Ti
Slide 14: Outlook and Expectations
Outlook and Expectations FY 2014 FY 2015 Average Loans Mid-single digit growth vs. FY 2013 • Mid-single digit growth vs. FY 2014 Relatively stable from 2013, with slight • Up low-to-mid single digit percentage vs. FY 2014 (low Net Interest Income downward pressure from competitive single-digits with
Slide 15: Appendix
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Slide 16: Progress on Targets for Success
Progress on Targets for Success Metrics (a) 4Q14 3Q14 Targets Balance Sheet Loan to deposit ratio (b) 90% -100% 85% 87% Efficiency NCOs to average loans .22% .22% Moderate Risk 40 - 60 bps Profile Provision to average loans .15% .15% High Quality, Net interest margin 2.94% 2.96% LT: >3.50% Diverse R
Slide 17: Efficiency Ratio: Driving to 60% and Below
Efficiency Ratio: Driving to 60% and Below Business plans and macroeconomic environment provide path to an efficiency ratio below 60% Cash Efficiency Ratio (a) Outlook 2-3 year outlook: 60% (b) Long-term, committed to moving below 60% (a) Non-GAAP measure: see Appendix for reconciliation 17 (b) Assu
Slide 18: Oil & Gas
Oil & Gas Longstanding history, expertise and relationships Strong Portfolio Characteristics >10 years of experience in energy lending with >20 >40% of clients’ 2015 production is hedged specialists dedicated to oil & gas Relationships contribute to noninterest income; ~5% of Focused on middle marke
Slide 19: High Quality Investment Portfolio
High Quality Investment Portfolio Highlights Average Total Investment Securities $ in billions Portfolio composed primarily of GNMA and GSE- $17.2 $17.1 backed MBS and CMOs Currently reinvesting cash flows into GNMA securities in preparation for upcoming regulatory liquidity requirements 2.25% – 42%
Slide 20: Interest Rate Risk Management
Interest Rate Risk Management Actively managing a naturally asset sensitive balance sheet Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk • Maintaining moderate asset sensitive position of ~3% (b) Loan Portfolio Deposits (a) - Assumes 200 basis point increase in short-term rates
Slide 21: Asset Quality Trends
Asset Quality Trends Delinquencies to Period-end Total Loans Quarterly Change in Criticized Outstandings (a) Continuing operations Continuing operations 30 – 89 days delinquent 90+ days delinquent Metric (b) 4Q14 3Q14 2Q14 1Q14 4Q13 Delinquencies to EOP total loans: 30-89 days .41 % .61 % .49 % .48
Slide 22: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan Allowance / Allowance / Period- Average Net loan charge-offs (b) / Nonperforming Ending period-end NPLs end loans loans charge-offs average loans loans (c) allowance (d) loans (d) (%) (%) $ in millions (%) 12/31/14 4Q14 4Q14 4Q14 12/31/14 12/31/14
Slide 23: Home Equity Portfolio
Home Equity Portfolio Highlights High quality portfolio $4.0 billion of the total portfolio are fixed rate loans that require Community bank loans and lines: 97% of total portfolio; branch- principal and interest payments; $6.5 billion are lines originated $1.5 billion in lines outstanding (14% of t
Slide 24: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on Balance Outstanding Change Net Loan Charge-offs $ in millions Nonperforming Status 12-31-14 vs. 12-31-14 9-30-14 4Q14 (b) 3Q14 (b) 12-31-14 9-30-14 9-30-14 Residentialproperties – homebuilder $ 10 $ 11 $ (1) - $ 1 $ 9 $ 10 Marine and RV floor plan 7
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 12-31-14 9-30-14 6-30-14 3-31-14 12-31-13 Tangible common equity to tangible assets at period end Key shareholders’equity (GAAP) $ 10,530 $ 10,486 $ 10,504 $ 10,403 $ 10,303 Less: Intangible assets (a) 1,090 1,105 1,008 1,012 1,014 Pre
Slide 26: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) $ in millions Three months ended 12-31-14 9-30-14 6-30-14 3-31-14 12-31-13 Average tangible common equity Average Key shareholders’equity (GAAP) $ 10,562 $ 10,473 $ 10,459 $ 10,371 $ 10,272 Less: Intangible assets (average) (a) 1,096 1,037 1,010 1,013 1,01
Slide 27: Common Equity Tier 1 Under the Regulatory Capital Rules (estimated)
Common Equity Tier 1 Under the Regulatory Capital Rules (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions December 31, 2014 Tier 1 common equity under current regulatory rules $ 9.5 Adjustments from current regulatory rules to the Regulatory Capital Rules: Deferred tax assets and PC