Keycorp · NYSE:KEY
Keycorp — Non-Deal Roadshow (March 2015)
29 slides from Keycorp's roadshow presentation, Mar 31, 2015
Slide 1: First Quarter 2015 Investor Meetings
First Quarter 2015 Investor Meetings KeyCorp Focused Forward
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: Key – Who We Are
Key – Who We Are Key is relationship-focused with distinctive capabilities Top 20 U.S. bank-based financial services company Loans Deposits 1% - Assets: $91B 5% - Deposits: $70B 26% - Market capitalization: $11B 41% 54% 73% - Strong footprint with approximately 1,000 branches and 1,300 ATMs - Approx
Slide 4: Business Model: Aligned and Targeted
Business Model: Aligned and Targeted Local delivery of broad product set and industry expertise Differentiated platform with depth and maturity Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity res
Slide 5: Business Model: Growing and Taking Share
Business Model: Growing and Taking Share Key’s business model creates a competitive advantage with targeted clients and has enabled us to take market share Winning with Clients 2014 2014 2014 Commercial and Investment Banking and Industrial Loans(a): Debt Placement Fees(b): % change vs. 2Q11 LTM; $
Slide 6: Acquiring and Expanding Retail Relationships
Acquiring and Expanding Retail Relationships Well-designed and delivered products build engaged client relationships What We Provide Recent Investments and New Products Hassle-Free Checking Growth in new Ease • Drives client acquisition, opportunity for expansion • Early results: solid demand and sa
Slide 7: Driving Positive Operating Leverage
Driving Positive Operating Leverage Executing action plans across our organization to improve efficiency Revenue Growth Expense Savings Acquiring and expanding relationships to grow revenue in our Continuous improvement efforts enable identification and businesses execution of expense savings Improv
Slide 8: 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 70% 65% 2-3 year outlook: 60% 60% 55% 50% (b) 4Q14 Business Growth, Expense Savings Rising Rate Benefit Long-term Target: <60% Net of
Slide 9: Investing in our Businesses
Investing in our Businesses Reinvesting cost savings in our businesses to drive growth Adding senior bankers: existing Community Bank: Retail industry expertise and relationships Corporate Dec. ’12 vs. Dec’14 Bank RMs Client-facing FTE: 16% Bankers Remixing: increasing client-facing 25% (a) Total FT
Slide 10: Disciplined Capital Management
Disciplined Capital Management Allows Key to execute on its strategic priorities and maximize shareholder value Capital Priorities Franchise investments to drive execution of relationship strategy: product 1. Organic Growth capabilities, client-facing personnel mix 2. Dividends 18% increase in commo
Slide 11: 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 • Up low-to-mid single digit percentage vs. FY 2014 Net Interest Income slight downward pressure from (low single-digits without the bene
Slide 12: Financial Review
Financial Review 12
Slide 13: 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 14: 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 15: Improving Balance Sheet Efficiency
Improving Balance Sheet Efficiency Average Loans Avg. Commercial, Financial & Agricultural Loans $ in billions $ in billions $60.0 $56.5 $28.0 $27.2 $53.6 $24.2 $50.0 $21.0 $40.0 $30.0 $14.0 $20.0 $7.0 $10.0 $0.0 $0.0 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 To
Slide 16: High Quality Investment Portfolio
High Quality Investment Portfolio Highlights Average Total Investment Securities $ in billions Portfolio composed primarily of GNMA and GSE- $20.0 5.00% $17.2 $17.1 backed MBS and CMOs $15.0 4.00% Currently reinvesting cash flows into GNMA 3.00% $10.0 securities in preparation for upcoming 2.00% reg
Slide 17: High Quality and Diverse Revenue
High Quality and Diverse Revenue Net Interest Income & Net Interest Margin Trend (TE) Noninterest Income $ in millions; continuing operations $ in millions; continuing operations $620 4.00% $525 $490 $453 $589 $588 $450 3.50% $580 $375 3.00% 3.01% $300 $540 2.94% 2.50% $225 $500 2.00% $150 1Q13 2Q13
Slide 18: 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 19: 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 $800 efficiency charges offsetting growth related to $712 $704 Pacific Crest acquisition $700 Expenses down 2% from 2013, achieving
Slide 20: Continued Improvement in Credit Quality
Continued Improvement in Credit Quality Highlights Net Charge-offs & Provision for Loan and Lease Losses $ in millions Net loan charge-offs decreased 14% from 4Q13 to $60 .60% $32 MM, or 22 bps of average loans Total gross charge-offs down 26% from 4Q13 and $40 $37 .40% flat with 3Q14 $32 .27% $22 N
Slide 21: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan Net loan Allowance / Allowance / Period- Average charge-offs (b) / Nonperforming Ending charge- period-end NPLs end loans loans average loans loans (c) allowance (d) offs loans (d) (%) (%) $ in millions (%) 12/31/14 4Q14 4Q14 4Q14 12/31/14 12/31/14
Slide 22: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Quarterly Change in Criticized Outstandings (a) Continuing operations Continuing operations .75% 0% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 .58% (2)% .50% (3)% .41% (4)% (6)% .25% .17% .13% (8)% .00% (10)% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q
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: 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 25: 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 Residential properties – homebuilder $ 10 $ 11 $ (1) - $ 1 $ 9 $ 10 Marine and RV floor plan
Slide 26: Strong Capital
Strong Capital Highlights Tangible Common Equity to Tangible Assets (a) Disciplined capital management 11.00% – Repurchased $128 MM of common shares 9.80% 9.88% 10.00% in 4Q14 9.00% Total common share repurchases of $496 MM in 2014, contributing to shareholder payout of 82% 8.00% including the impac
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
Slide 28: 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 Pr
Slide 29: 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 1,0