Keycorp · NYSE:KEY
Keycorp — BancAnalysts Association of Boston Conference 2017
32 slides from Keycorp's conference presentation, Nov 3, 2017
Slide 1: BancAnalysts Association of Boston Conference
BancAnalysts Association of Boston Conference November 3, 2017 KeyCorp Key Community Bank Dennis Devine Co-President, Key Community Bank Consumer & Business Banking
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: Key Community Bank
Key Community Bank A full-service relationship bank serving retail, private banking and business clients Key’s Community Bank Franchise Serving individuals and families through commercial clients (generally those Retail and Key YTD 2017 Revenue <$500 MM annual revenue) Other Business Banking Broad c
Slide 4: Key Community Bank: Significant Transformation
Key Community Bank: Significant Transformation Significant transformation created a strong franchise and differentiated model well-positioned for growth Results of our Transformation 3 million clients Significantly improved productivity, efficiency and profitability and growing strong market share t
Slide 5: Transforming the Franchise
Transforming the Franchise Multi-year effort to transform the franchise Optimizing Channels Improved Efficiency Changing Client Behavior Community Bank Revenue (TE) 3-year CAGR: +20% 4x (12)% digital interactions vs. branch transactions branch transactions 2013-2016(a) 2016(a) Physical Presence Decr
Slide 6: First Niagara
First Niagara Transformative acquisition unique opportunity to accelerate our performance Acquisition Transformed Key Community Bank Added 1 million new clients Converted >300 branches Strengthened market share Onboarded >3,000 team members Achieving merger synergies Enhanced capabilities (Community
Slide 7: Strong Consumer Deposit Base
Strong Consumer Deposit Base Core deposits provide strong source of funding Strong Core Deposit Base Deposit Management and Pricing Relationship Pricing Capability Key: 3Q17 Avg. Deposits Optimized Portfolio Rates 40% 60% Commercial Consumer(a) Market Dynamics and corporate Strengthened Likelihood t
Slide 8: Strong, Balanced Franchise
Strong, Balanced Franchise Key benefits from franchise balance each market provides unique value Leading market presence across the I-90 corridor Eastern Markets from Toledo, OH to Albany, NY Syracuse Albany Buffalo Rochester Toledo Cleveland Western Markets Strong growth and presence in attractive
Slide 9: Competitive Positioning
Competitive Positioning Well-positioned to compete and win in our markets Competitive Environment How We Compete Retail Deposit Share in Key’s Footprint Markets(a) Investments and strategic partnerships enable strong technical and digital capabilities Trillionaires Smaller Banks 22% & Credit Unions
Slide 10: Differentiated Model: Fulfilling Client's Primary Banking Needs
Differentiated Model Relationship-based strategy, providing clients with ease, value and expertise Targeting and Building Full Relationships Hassle Free Checking Product KeyBank Fulfilling Client’s Primary Primary Payments/ development Relationship Rate Deposits 3x KeySaver Banking Needs Full relati
Slide 11: Digital Investments: Strengthening Relationships
Digital Investments: Strengthening Relationships
Slide 12: Financial Wellness
Financial Wellness Core component of our relationship strategy Providing Insight, Expertise and Advice to Our Clients Acquisition of HelloWallet Clients Leveraging Wellness Platform: creates proprietary financial 46% Higher Annual Revenue(a) wellness offering − Strengthens ability to acquire and dee
Slide 13: Financial Wellness
Financial Wellness Insights and analysis leads to recommendations 13
Slide 14: Investing in Growth: Fee Businesses
Investing in Growth: Fee Businesses Cards & payments: investments have driven record levels of fees Cards & Payments: Broad, Comprehensive Offering Business Momentum Community Bank Individuals & Cards & Payments Income Families ATM 3-year CAGR: +16% Debit High Net Worth Credit card Individuals & Fam
Slide 15: Investing in Growth: Residential Mortgage
Investing in Growth: Residential Mortgage Growth opportunity resulting from enhanced capabilities and renewed focus Investing in Talent & Capabilities Opportunity for Growth Investing in Talent: Significant opportunity within our existing markets Mortgage Loan Officers (MLOs) 800 700 Relationship-ba
Slide 16: Key Community Bank: Significant Transformation
Key Community Bank: Significant Transformation Significant transformation created a strong franchise and differentiated model well-positioned for growth Results of our Transformation 3 million clients Significantly improved productivity, efficiency and profitability and growing strong market share t
Slide 17: Appendix
Appendix 17
Slide 18: Outlook and Expectations
Outlook and Expectations FY 2017(a) Average Balance • Loans: 4Q17 average balances in the range of $87.0 B - $87.5 B Sheet • Deposits: FY17 average balances in the range of $102.5 B - $103.0 B • Net interest income expected to be in the range of $3.8 B - $3.9 B Net Interest Income • Outlook includes
Slide 19: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 3Q17 2Q17 3Q16 LQ ∆ Y/Y ∆ EPS – assuming dilution $ .32 $ .36 $ .16 (11) % 100 % EPS – excl. notable items(a), (b) .35 .34 .30 3 17 Cash efficiency ratio(a) 62.2 % 59.3 % 80.0 % 290 bps (1,773) bps Profitability Cash efficiency –excl
Slide 20: Loans
Loans Total Average Loans Highlights $ in billions $90 $87 vs. Prior Year $78 Average loans up 12% from 3Q16 $60 – Growth reflects a full-quarter impact of FNFG (vs. 2 months in 3Q16) $30 – Broad-based C&I growth vs. Prior Quarter $0 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Average loans up .4% from
Slide 21: Loan Portfolio Detail, at 9/30/17
Loan Portfolio Detail, at 9/30/17 Total Loans Commercial Loans $ in billions 9/30/17 % of total Diversified Portfolio by Industry loans Total commercial loans: Agriculture Commercial and industrial $ 41.1 48 Automotive Transportation Business Products Technology Utilities Commercial real estate 16.9
Slide 22: Deposits
Deposits Average Deposits(a) Highlights $ in billions $103 Deposit cost up 2 bps from 2Q17 $105 .70% $95 – Largely driven by contractual commercial .60% $85 rate increases and deposit mix .50% 3Q17 beta of 17% (total interest-bearing deposits) .40% $65 .30% .28% vs. Prior Year $45 .20% .21% .10% Ave
Slide 23: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations $1,000 $962 4.0% Excluding impact of PAA, 3Q17 net interest income $100 $48 was $914 MM and net interest margin was 2.99% $788 $800 $19 3.5% 3.15% vs. Prior Year $600 2
Slide 24: Interest Rate Risk Management
Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Utilize Swaps to Achieve and with Relatively Short Duration(a) Adjust Modest Asset Sensitivity Loans Deposits Investment • A/LM hedges aligned to floating rate LIBOR-based loans $88 B $103 B Portfolio • Short weighted average matu
Slide 25: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 3Q17 vs. 3Q16 vs. 2Q17 vs. Prior Year Trust and investment services income $ 135 $ 13 $ 1 Investment banking and debt 141 (15) 6 Noninterest income up $36 MM from 3Q16, excl. placement fees notable items(a),(b) Service charge
Slide 26: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions Up / (Down) 3Q17 vs. 3Q16 vs. 2Q17 Notable items: Personnel $ 558 $ (36) $ 7 $ in millions 3Q17 3Q16 2Q17 Net occupancy 74 1 (4) Merger-related charges $36 $189 $44 Computer processing 56 (14) 1 Charitable contribution(b) - - 20 Busine
Slide 27: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 3Q17 NCOs reflect continued portfolio 3Q17 allowance for loan losses $100 strength and large C&I recovery 1.00% to period-end loans of 1.02% $900 $865 $880 250% .80% $75 200% $59 $51 .60% $
Slide 28: Capital
Capital Common Equity Tier 1(a) Highlights 12.00% Strong capital position with Common Equity Tier 1 ratio of 10.26%(a) at 9/30/17 10.26% 10.00% 9.56% − Increase in 9/30/17 capital measures primarily reflects a change in methodology for multipurpose facilities(c) 8.00% Repurchased $277 MM(d) in commo
Slide 29: Line of Business Reconciliation
Line of Business Reconciliation Nine months ended September 30, 2017 Community Corporate Other Total Reconciling $ in millions Bank Bank Segments Segments Items Key Net interest income (TE)(a) $ 1,973 $ 907 $ (15) $ 2,865 $ 13 $ 2,878 Noninterest income 901 827 109 1,837 (15) 1,822 Total Revenue 2,8
Slide 30: FNFG Merger-related Charges
FNFG Merger-related Charges $ in millions 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 Increase / (Decrease) Net interest income - - - $ (6) - - - Operating lease income and other - - - $ (2) - - - leasing gains Other income - - $ 9 (10) - - - Noninterest income - - $ 9 $ (12) - - - Personnel expense $ 2
Slide 31: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 9/30/17 6/30/17 9/30/16 Tangible common equity to tangible assets at period end Key shareholders' equity (GAAP) $15,249 $15,253 $ 14,996 Less: Intangible assets (a) 2,870 2,866 2,855 Preferred Stock (b) 1,009 1,009 1,150 Tangible commo
Slide 32: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three months ended $ in millions 9/30/17 6/30/17 3/31/17 12/31/16 9/30/16 Average tangible common equity Average Key shareholders' equity (GAAP) $ 15,241 $ 15,200 $ 15,184 $ 14,901 $ 13,552 Less: Intangible assets (average) (a) 2,878 2,756 2,772 2,874 2,25
KeyCorp — BancAnalysts Association of Boston Conference 2017 on 6ix