Slide 1: KeyCorp Third Quarter 2013 Earnings Review
Exhibit 99.2 KeyCorp Third Quarter 2013 Earnings Review October 16, 2013 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 – 3Q13
Investor Highlights – 3Q13 Grew average loans 5% from the prior year, driven by CF&A up 11% Linked quarter average total loans up 4.4% annualized Optimize and Increased investment banking & debt placement fees; 4 quarter rolling Grow average up 29% from prior year Revenue Completed CRE servicing acq
Slide 4: Financial Review
Financial Review 4
Slide 5: Financial Highlights
Financial Highlights Metrics 3Q13 2Q13 1Q13 4Q12 3Q12 EPS – assuming dilution $ .25 $ .21 $ .21 $ .20 $ .22 Cash efficiency ratio (e) 67.5 % 69.1 % 66.0 % 69.0 % 64.1 % Financial (f) (e) Adj. cash efficiency ratio (ex. initiative charges ) 63.6 65.4 64.5 67.5 63.3 Performance (a) Net interest margin
Slide 6: 3Q13 Significant Items
3Q13 Significant Items $ in millions, except per share amounts Pre-tax After-tax EPS (a) Continuing operations Leveraged lease terminations(b) $ 15 $ 15 $ .02 Net interest income: $(8) million; Net interest margin: (4) bps; Noninterest income: $23 million Efficiency initiative charges (incl. pension
Slide 7: Loan Growth
Loan Growth Highlights Average Commercial, Financial & Agricultural Loans Average loan growth from prior year driven by $ in billions CF&A up 11% – Loan growth benefitted from distinctive business model and client expansion Average loans up 7% from prior year, excluding the exit portfolio High quali
Slide 8: Improving Deposit Mix
Improving Deposit Mix Highlights Funding Cost Overall funding cost continues to improve, with total deposit cost declining to 22 bps Transaction deposit balances up 10% from 3Q12 Total CD maturities and average cost – 2013 Q4: $1.6 billion at .78% – 2014: $3.4 billion at 1.37% – 2015 & beyond: $1.5
Slide 9: Net Interest Income and Margin
Net Interest Income and Margin Highlights Net Interest Income (TE) & Net Interest Margin (TE) Trend $ in millions Net interest income increased 1% from prior year Continuing Operations and down slightly from prior quarter – Early termination of leveraged leases reduced net interest income by $13 MM
Slide 10: Noninterest Income
Noninterest Income Highlights Noninterest Income Continuing Operations Continued strength in core fee income categories $ in millions – Excl. gains from TruPS and leveraged leases(a) , noninterest income is up 3% from prior year and up 7% from prior quarter annualized Investment banking and debt pla
Slide 11: Focused Expense Management
Focused Expense Management Highlights Noninterest Expense $ in millions Achieved expense target, with $207 million in savings – 3Q13 expense included $41 million related to efficiency initiative (c) Focused on further efficiency improvements Expenses excluding pension and efficiency charges: – Down
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 66% from 3Q12 to Includes $45MM for updated regulatory $37MM, or 28 bps of average loans (down 42% guidance NCOs decreased by 66% excluding impact of u
Slide 13: Strong Capital Ratios
Strong Capital Ratios Highlights Tangible Common Equity to Tangible Assets (b) Disciplined execution of capital plan Repurchased $198 million in common shares during 3Q13 Estimated Tier 1 common equity ratio under the Regulatory Capital Rules of 10.6%(a), (b) Book Value per Share Tier 1 Common Equit
Slide 14: Outlook and Expectations
Outlook and Expectations Loans • Mid-single digit average balance growth • Relatively stable to the 3Q13 level over the next few quarters NIM • Potential downward pressure, dependent upon level of liquidity • Net interest income relatively stable in 2H13 Revenue • Continued strength in fee income bu
Slide 15: Appendix
Appendix 15
Slide 16: Progress on Targets for Success
Progress on Targets for Success KEY Business KEY KEY KEY Metrics (a) Targets Action Plans Model 3Q13 2Q13 Use integrated model to grow relationships Efficient balance and loans Loan to deposit ratio (b) 84% 84% 90-100% sheet Improve deposit mix NCOs to average loans .28% .34% Focus on relationship c
Slide 17: High Quality Investment Portfolio
High Quality Investment Portfolio Highlights Average Total Investment Securities $ in billions Portfolio composed of Agency or GSE backed CMOs: Fannie, Freddie & GNMA – No private label MBS or financial paper Average portfolio life at 9/30/13 of 3.8 years compared to 3.2 years at 6/30/13 Unrealized
Slide 18: 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) 3Q13 2Q13 1Q13 4Q12 3Q12 Delinquencies to EOP total loans: 30-89 days .54 % .47 % .70 % .80
Slide 19: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan Period- Allowance / Allowance / Average Net loan charge-offs (b) / Nonperforming Ending end period-end NPLs $ in millions loans loans charge-offs average loans loans (c) allowance (d) loans (d) (%) (%) (%) 9/30/13 3Q13 3Q13 2Q13 3Q13 2Q13 9/30/13 6
Slide 20: Home Equity Loans – 9/30/13
Home Equity Loans – 9/30/13 Community Bank – Home Equity $ in millions, except average loan size Vintage (% of Loans) Loan Average Loan Average Average % of Loans 2012 and 2008 and Balances Size ($) FICO LTV (a) LTV>90% later 2011 2010 2009 prior Home equity loans and lines First lien $ 5,932 $ 67,6
Slide 21: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on Balance Outstanding Change Net Loan Charge-offs $ in millions Nonperforming Status 9-30-13 vs. 9-30-13 6-30-13 3Q13 (c) 2Q13 (c) 9-30-13 6-30-13 6-30-13 Residential properties – homebuilder $ 26 $ 26 - - $ 1 $ 8 $ 8 Marine and RV floor plan 25 28 $
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 9-30-13 6-30-13 9-30-12 Tangible common equity to tangible assets at period end Key shareholders’ equity (GAAP) $ 10,206 $ 10,229 $ 10,251 Less: Intangible assets (a) 1,017 1,021 1,031 Preferred Stock, Series A (b) 282 282 291 Tangible
Slide 23: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three months ended $ in millions 9-30-13 6-30-13 9-30-12 Average tangible common equity Average Key shareholders' equity (GAAP) $ 10,237 $ 10,314 $ 10,222 Less: Intangible assets (average) (a) 1,019 1,023 1,026 Preferred Stock, Series A (average) 291 291 2
Slide 24: Tier 1 Common Equity Under the Regulatory Capital Rules, Incorporating Basel III Guidance (estimated)
Tier 1 Common Equity Under the Regulatory Capital Rules, Incorporating Basel III Guidance (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions Sept. 30, 2013 Tier 1 common equity under current regulatory rules $ 9.3 Adjustments from current regulatory rules to the Regulatory Capital Ru