Slide 1: Investor Meetings: May - June 2019
Investor Meetings: May - June 2019 KeyCorp
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 Overview
Key Overview Serving targeted clients by leveraging broad capabilities, insights and expertise Client Continuum Retail Private Banking Small Business Commercial Corporate $500 MM+ Commercial Client Revenue: < $10 MM $10 MM - $500 MM >$500 MM Lending Deposits Financial Wealth & Investment Payments In
Slide 4: Consumer Capabilities and Expertise
Consumer Capabilities and Expertise Transformation has created a strong franchise & differentiated offering: positioned for growth Current State Positioned for Growth 3.5 Million Clients 5 Consecutive Years Ease Value Expertise of Organic Growth Enabling simple and Knowing the client and Providing i
Slide 5: Commercial Capabilities and Expertise
Commercial Capabilities and Expertise Relationship model, paired with expertise and broad capabilities, delivers results Differentiated Product Set Traditional Bank Products Capital Markets Capabilities Deposits Commercial Derivatives & Equity Equity Loans & payments mortgage banking foreign exchang
Slide 6: Targeted Technology Investments
Targeted Technology Investments Technology remains foundational to Key’s strategy of building enduring client relationships Technology Strategy Business Enablement Optimization Digitize the Support Business Insights and Cyber/ Modernize/ Enterprise Growth Strategies Analytics Fraud Operating Efficie
Slide 7: Delivering on Efficiency Commitments
Delivering on Efficiency Commitments Focused on reaching our long-term efficiency commitment Growing and expanding relationships Targeting 5% cost savings in 2019 ($200MM) Expense Discipline Extending scale segments Revenue Momentum Branch reduction: ↓ 38 in FY 2018, Enhancing products and
Slide 8: Strong Risk Management
Strong Risk Management Maintaining a strong risk culture and moderate risk profile Positioned to Outperform Through the Cycle Net Charge-offs to Average Loans $ in millions Significantly enhanced risk profile: focused on $100 1.00% soundness, profitability, and growth .80% $75 $64 $62 $61 Mainta
Slide 9: Disciplined Capital Management
Disciplined Capital Management Disciplined in how we manage, invest, deploy, and return our capital Consistent Dividend Growth Capital Plan (3Q19 – 2Q20) Cash Dividends Per Common Share 20% CAGR $0.71(a) 9% common share dividend increase from $.17 to $.185 in 3Q19 (subject to Board approval) $0.29 u
Slide 10: FY2019 Outlook & Long-term Targets
FY2019 Outlook & Long-term Targets FY 2019 Average Balance • Loans: average balances in the range of $90 B - $91 B Sheet • Deposits: average balances in the range of $108 B - $109 B Net Interest Income • Net interest income expected to be in the range of $4.0 B - $4.1 B (TE) • Outlook assumes intere
Slide 11: Appendix
Appendix 11
Slide 12: Strategic Acquisition: Laurel Road Finance
Strategic Acquisition: Laurel Road Finance Acquisition of online lending platform focused on super prime professionals Transaction Overview Positioned to Outperform Revisiting 2018 Investor Day Themes Acquisition of leading national, digital-first consumer lending platform • Leading digital origin
Slide 13: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 1Q19 4Q18 1Q18 LQ ∆ Y/Y ∆ EPS – assuming dilution $ .38 $ .45 $ .38 (16) % - EPS – excl. notable items(a), (b) .40 .48 .38 (17) 5 % Cash efficiency ratio(a) 61.9 % 59.9 % 62.9 % 200 bps (100) bps Cash efficiency –excl. notable items(
Slide 14: Loans
Loans Total Average Loans Highlights $ in billions vs. Prior Year $90 $90 $87 Average loans up 3% from 1Q18 – C&I balances up 8% driven by broad-based growth with middle-market clients $80 – Home equity continues to be impacted by market trends vs. Prior Quarter $70 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4
Slide 15: Loan Portfolio Detail, at 3/31/19
Loan Portfolio Detail, at 3/31/19 Total Loans Commercial Loans $ in billions 3/31/19 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Agriculture Automotive Commercial and industrial $ 46.5 52 Transportation Business Products Commercial real estate 15.8 17 Busines
Slide 16: Deposits
Deposits Average Deposits Highlights $ in billions Deposit cost up 12 bps from 4Q18, reflecting: $110 $108 1.00% – Higher interest rates $103 .80% – Continued migration of portfolio into higher-yielding products $100 .76% .60% Strong and stable deposit base .40% – 26% noninterest-bearing $90 – ~
Slide 17: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $31.6 $32.0 $29.9 2.75% backed MBS and CMOs $24.0 2.47% 2.50% ‒ Primarily fixed rate ‒ GNMA 45% of 1Q19 average balances $16.0 2.16% 2.25% Portfolio used for funding an
Slide 18: Asset & Liability Management Positioning
Asset & Liability Management Positioning Balanced positioning supports strong, stable net interest margin Business and Balance Sheet Highlights Positioning • Strong, low-cost deposit base • Actively hedging to reduce current and future – $79 B interest-bearing deposits at 103 bps exposure to declini
Slide 19: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations Excluding PAA, 1Q19 net interest income was $33 $952 $22 $985 $1,000 4.0% $963 MM and net interest margin was 3.06% $800 vs. Prior Year 3.5% $600 Net interest incom
Slide 20: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 1Q19 vs. 1Q18 vs. 4Q18 Trust and investment services income $ 115 $ (18) $ (6) Noninterest income down $65 MM (-11%) from 1Q18 Investment banking and debt 110 (33) (76) Lower investment banking and debt pla
Slide 21: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions up / (down) 1Q19 vs. 1Q18 vs. 4Q18 vs. Prior Year Personnel $ 563 $ (31) $ (13) Noninterest expense excl. notable items down Net occupancy 72 (6) (3) $69 MM, or 7%(a) Computer processing 54 2 (1) Business services, professional 44 3
Slide 22: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 1Q19 allowance for loan losses to period-end loans of .98% $100 1.00% $900 $881 $883 250% .80% $75 $64 $62 200% $61 $54 .60% $800 $50 150% 163% 161% .40% 100% $700 $25 .29% .20% 50% .25% $0
Slide 23: 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% 3.6% .35% 2.9% .40% .32% 2.0% .20% .13% .09% .00% .0% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q17 3Q17 4Q17 1Q18 2Q18 3Q
Slide 24: Capital
Capital Common Equity Tier 1(a) Highlights 12.00% Strong capital position: CET1 ratio of 9.84%(a) at 3/31/2019 9.99% 9.84% 10.00% Declared dividend of $0.17 per common share and repurchased $199 MM(c) in common shares in 1Q19 8.00% Announced planned capital actions for 3Q19-2Q20 9% common sh
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 3/31/2019 12/31/2018 3/31/2018 Notable Items Efficiency iniative expenses $ 26 $ 24 - Pension settlement charge - 17 - Total notable items $ 26 $ 41 - Income taxes 6 10 - Total notable items after tax $ 20 $ 31 - Earnings per common sh
Slide 26: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 3/31/2019 12/31/2018 3/31/2018 Average tangible common equity Average Key shareholders' equity (GAAP) $ 15,702 $ 15,384 $ 14,889 Less: Intangible assets (average) (a) 2,813 2,828 2,916 Preferred Stock (average) 1,450 1,450 1,025 Averag