Slide 1: Investor Meetings: August 2016 - KeyCorp Focused Forward
Investor Meetings: August 2016 KeyCorp Focused Forward
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 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 conditions. Forward-looking
Slide 3: Key: Who We Are
Key: Who We Are A relationship-focused bank with scale and adaptability Top 20 U.S. bank-based financial services company (a) Loans (a) Deposits (a) - Assets: $99 B 3% 1% - Deposits: $74 B 26% - Strong footprint with 949 branches and 1,236 ATMs 47% 50% 73% Acquisition of First Niagara Financial Grou
Slide 4: Leveraging our Geographic Diversity
Leveraging our Geographic Diversity Delivering a consistent strategy across our franchise while also leveraging market- specific opportunities Western Markets Eastern Markets (a) • Deposits: $18 B • Deposits: $34 B • Branches: 363 • Branches: 586 • Demographic: younger with high growth potential • D
Slide 5: 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 6: 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 2015 2015 2015 Commercial and Investment Banking and Industrial Loans(a): Debt Placement Fees(b): % change vs. 2Q11 LTM; $
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: Maintaining a Moderate Risk Profile
Maintaining a Moderate Risk Profile Enterprise-wide risk management approach Targeted, Relationship-based Approach • Target specific segments and sectors where we • Clearly defined and well understood risk appetite have expertise and tolerances • Execute rigorous and disciplined sales approach • Ris
Slide 9: Progress on Targets for Success: Key Stand-alone
Progress on Targets for Success: Key Stand-alone Metrics (a) Targets 2Q16 1Q16 Balance Sheet Loan to deposit ratio (b) 90% -100% 85% 86% Efficiency NCOs to average loans .28% .31% Moderate Risk Profile 40 - 60 bps Provision for credit losses .34% .60% to average loans Net interest margin 3.00% -3.25
Slide 10: Outlook and Expectations
Outlook and Expectations FY 2016: Key Stand-alone (a) Average Loans • Mid-single digit growth vs. FY 2015 • Up low to mid-single digit percentage without the benefit from higher interest rates Net Interest Income • Mid-single digit growth with the benefit of higher interest rates Noninterest Income
Slide 11: First Niagara Financial Group Acquisition
First Niagara Financial Group Acquisition 11
Slide 12: First Niagara
First Niagara Acquisition closed; integration efforts on track with conversion expected in 4Q16 Acquisition Attractive Financial Significant Revenue Complementary More Balanced Drives Value Returns Opportunities Business Model Franchise Recent Updates Continued confidence in value attainment, financ
Slide 13: A Compelling Strategic Opportunity
A Compelling Strategic Opportunity Shelby_Sales-Presentation_150928_v5.pptx\28 SEP 2015\6:59 PM\11 Powerful combination creates high-performing regional bank with compelling shareholder returns 13th Largest U.S. Commercial Bank (a) $135 billion assets (a) $100 billion deposits (a) Strengthens core o
Slide 14: Combined Company Uniquely Positioned to Unlock Value
Combined Company Uniquely Positioned to Unlock Value Three Million Clients Attractive Geographic Footprint Complementary Product Offering High Density Markets Broad, Complementary Product Capabilities Retail banking (branch; card; auto; etc.) Private banking Residential mortgage Indirect auto lendin
Slide 15: Strengthens Position in Attractive Northeast Markets
Strengthens Position in Attractive Northeast Markets Leading Position from Leading Position Shared Market Presence Accelerates Toledo to Albany Banks Outperform Value Realization Pro Forma Branch Footprint Leading Retail Presence in Upstate NY (a) $ in billions Buffalo, NY (b) Albany, NY 6.3 4.7 3.9
Slide 16: KeyCorp Financial Review
KeyCorp Financial Review 16
Slide 17: Investor Highlights – 2Q16
Investor Highlights – 2Q16 Generated positive operating leverage and grew pre-provision net revenue (a) from 2Q15, excluding merger-related expense of $45 MM (b) Revenue stable with prior year and up 3% from prior quarter Positive Total average loans up 5% from prior year; CF&A loans up 12% Operatin
Slide 18: Financial Highlights
Financial Highlights Metrics 2Q16 1Q16 4Q15 3Q15 2Q15 EPS – assuming dilution $ .23 $ .22 $ .27 $ .26 $ .27 EPS –excl. merger-related expense (d), (e) .27 .24 .27 Financial Cash efficiency ratio (d) 69.0 % 66.6 % 66.4 % 66.9 % 65.1 % Performance (a) Cash efficiency –excl. merger-related expense (d),
Slide 19: Loans
Loans Total Average Loans Highlights $ in billions Total average loans up 5% Average Loans $60 Average total loans up 5% in 2Q16 from 2Q15, driven by CF&A loans up 12% $40 – Broad-based growth across Key’s commercial lines of business $20 – Consumer loan decline related to paydowns in the home equit
Slide 20: Deposits
Deposits Average Deposits (a) Highlights $ in billions Total average deposits up 5% vs. Prior Year $75 .50% Deposit growth of 5% from 2Q15 related to: $65 .40% – Core deposit growth in retail banking $55 .30% – Growth in escrow deposits from the commercial mortgage servicing business $45 .20% .19% –
Slide 21: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions $20.0 $19.2 5.00% Portfolio composed primarily of GNMA and GSE- $18.3 backed MBS and CMOs 4.00% $15.0 Continue to position portfolio for regulatory 3.00% $10.0 liquidity requirements: 2.00% 2.10% 2.06% – Reinvesting ca
Slide 22: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations vs. Prior Year Net interest income up $14 MM, or 2%, from 2Q15 $620 4.00% $605 – Higher earning asset balances and yields $591 3.50% – Lower reinvestment yields in the
Slide 23: Interest Rate Risk Management
Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk • Maintained moderate asset sensitive position of ~2% Loan Portfolio Deposits - Assumes 200 basis point increase in short-term rates over a 2Q16 2Q16 12-month period CDs: • Utilize swaps for debt hedgin
Slide 24: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 2Q16 vs. 2Q15 vs. 1Q16 vs. Prior Year Trust and investment services income $ 110 $ (1) $ 1 Noninterest income down 3% from 2Q15 Investment banking and debt 98 (43) 27 placement fees ‒ Investment banking and debt placement Ser
Slide 25: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights Expense comparisons reflect merger-related expense $ in millions Up / (Down) 2Q16 vs. 2Q15 vs. 1Q16 of $45 MM in 2Q16, compared to $24 MM in 1Q16 (no Personnel $ 427 $ 19 $ 23 merger-related expense in 2Q15) Net occupancy 59 (7) (2) vs. Prior Year C
Slide 26: FNFG Merger-related Expense
FNFG Merger-related Expense Expenses related to the acquisition and integration of First Niagara Financial Group $ in millions Increase / (Decrease) 2Q16 1Q16 4Q15 Personnel expense (a) $ 35 $ 16 - Business services and professional fees $ 5 $ 7 $ 5 Marketing 3 1 - All other nonpersonnel 2 - 1 Total
Slide 27: Capital
Capital Common Equity Tier 1 (a) Highlights 12.00% 11.10% Maintained strong capital position 10.71% Common Equity Tier 1 ratio of 11.10% at 6/30/16 10.00% Increased quarterly common share dividend by 13% in 2Q16 to $.085 per share 8.00% No objection to 2016 capital plan from Federal Reserve, includi
Slide 28: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Highlights $ in millions Net loan charge-offs remain below targeted range, $120 .60% at 28 basis points of average loans $90 Nonperforming loans decreased $57 MM .40% from 1Q16 and represented 1.00% of period-end .28% $60 .25% $52 loans $4
Slide 29: 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 offs loans (%) (%) $ in millions (%) 6/30/16 2Q16 2Q16 2Q16 6/30/16 6/30/16 6/30/16 6/
Slide 30: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings (a) to Period-end Total Loans Continuing operations Continuing operations .75% 6.0% .50% 4.0% 3.6% 3.0% .33% .25% .31% 2.0% .11% .11% .00% .0% 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1
Slide 31: Oil & Gas
Oil & Gas Longstanding history, expertise and relationships Total commitments of $3.1 B, including upstream Portfolio performing in-line with expectations commitments of $1.6 B Reserve coverage: 8% of outstanding oil and gas loans Upstream portfolio is primarily secured by proven, at period-end deve
Slide 32: 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: 98% of total portfolio; branch- principal and interest payments; $6.1 billion are lines originated $0.9 billion in lines outstanding (9% of th
Slide 33: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on $ in millions Balance Outstanding Change Net Loan Charge-offs Nonperforming Status 6-30-16 vs. 6-30-16 3-31-16 2Q16 1Q16 6-30-16 3-31-16 3-31-16 Residential properties – homebuilder - - - - - $ 4 $ 3 Commercial lease financing (a) $ 731 $ 743 $ (12)
Slide 34: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three m onths ended $ in millions 6-30-16 3-31-16 12-31-15 9-30-15 6-30-15 Tangible com m on equity to tangible assets at period end Key shareholders' equity (GAAP) $ 11,313 $ 11,066 $ 10,746 $ 10,705 $ 10,590 Less: Intangible assets (a) 1,074 1,077 1,080 1,084 1,085
Slide 35: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three months ended $ in millions 6-30-16 3-31-16 12-31-15 9-30-15 6-30-15 Pre-provision net revenue excluding m erger-related expense Net interest income (GAAP) $ 597 $ 604 $ 602 $ 591 $ 584 Plus: Taxable-equivalent adjustment 8 8 8 7 6 Noninterest income
Slide 36: Common Equity Tier 1 Under the Regulatory Capital Rules (estimated)
Common Equity Tier 1 Under the Regulatory Capital Rules (RCR) (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions June 30, 2016 Common Equity Tier 1 under current RCR $ 10.1 Adjustments from current RCR to the fully phased-in RCR: Deferred tax assets and other intangible assets (b) -