Keycorp · NYSE:KEY
Keycorp — Non-Deal Roadshow (May 2017)
33 slides from Keycorp's roadshow presentation, May 2017
Slide 1: Investor Meetings: Europe - May 2017
Investor Meetings: Europe - May 2017 KeyCorp Focused Forward
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: A Relationship-Focused Regional Bank
Key: A Relationship-Focused Regional Bank Delivering shareholder value Strong franchise with differentiated business model Stock Price Performance as of 4/30/17 − Broad product offering for targeted clients 127% − Acquisition of First Niagara accelerates performance Engaged management team with inde
Slide 4: Leveraging our Geographic Diversity
Leveraging our Geographic Diversity Delivering a consistent strategy across our franchise, while also capturing market- specific opportunities First Niagara Acquisition: Added approximately one million clients Attractive, core & contiguous markets • Created leading market share in Upstate NY markets
Slide 5: Distinctive Business Model
Distinctive Business Model Broad product offering creates a competitive advantage with targeted clients Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity research banking exchange 43% Y-o-Y average
Slide 6: Driving Positive Operating Leverage
Driving Positive Operating Leverage Three consecutive years of positive operating leverage(a) Core Business Momentum Investing in People, Products and Capabilities • Adding and expanding relationships • Adding new bankers; remixing staff - >45,000 net retail household growth in 2016(b) - Commercial
Slide 7: First Niagara Acquisition
First Niagara Acquisition Powerful combination creates high-performing regional bank with compelling shareholder returns Company Overview October 2015: Announced acquisition Headquarters: Buffalo, NY March 2016: Received shareholder approval Branches: +300 Company(a) ATMs: +400 July 2016: Received a
Slide 8: Key and First Niagara: Better Together
Key and First Niagara: Better Together A Compelling Strategic Opportunity Broad, Complementary Product Capabilities Strengthens core operating and financial metrics Retail banking (branch; card; auto; etc.) Creates leading market share in Upstate New York Private banking Builds on Key’s brand and pr
Slide 9: First Niagara: 1Q17 Update
First Niagara: 1Q17 Update Broad-based Progress Achieving Targets Execution of detailed merger plans Delivering value through cost savings - Completed 106 planned branch consolidations - Achieved 85% of $400 million initial target - Reduced nonbranch space by 225k sq. ft. (~45%) • Expect remaining s
Slide 10: Maintaining a Moderate Risk Profile
Maintaining a Moderate Risk Profile Enterprise-wide risk management approach drives quality 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
Slide 11: Disciplined Capital Management
Disciplined Capital Management Disciplined in how we manage, invest, deploy and return our strong capital position Capital Share Opportunistic Organic Growth Dividends Priorities Repurchases Growth Strong Capital Position Consistent Dividend Growth Quarterly Common Share Dividend 3/31/17 5-year CAGR
Slide 12: Outlook and Expectations
Outlook and Expectations FY 2017(a) • Loans: mid-single digit growth from 4Q16, which translates to $87 B - $88 B for FY17 average balances Average Earning – Loan growth (%) to exceed deposit growth, with FY17 average deposits expected to be in the range of Assets $104 B - $105 B • Outlook includes
Slide 13: Appendix
Appendix 13
Slide 14: Community Bank
Community Bank A local relationship bank serving retail, private banking and business clients Key’s Community Bank Franchise Key 2016 Revenue Business Description Clients Provides deposit, investment, • Individuals and Retail and and loan products to clients families 2% Business through our 1,200+ b
Slide 15: Corporate Bank
Corporate Bank A full-service corporate and investment bank serving middle market clients in seven targeted industry verticals Key’s Corporate Bank Key 2016 Revenue Business Description Provides leading commercial real estate finance services, 2% Real Estate including construction and interim financ
Slide 16: Key: Well Positioned to Leverage Competitive Strengths
Key: Well Positioned to Leverage Competitive Strengths Balanced franchise with strong value propositions for consumer and commercial clients Economic Growth Positioned to benefit from investments in people, products and capabilities Acquisition added clients, new businesses and strengthened market s
Slide 17: Corporate Governance and Responsibility
Corporate Governance and Responsibility Strong Corporate Governance Strong Corporate Citizen Committed to high standards of corporate governance, ethical Invest in underserved & low-to-moderate income behavior, and business conduct, with shareholder interests at the Responsible communities center of
Slide 18: Financial Highlights
Financial Highlights Results in 3Q16 and after reflect the impact of the FNFG acquisition, which became effective on 8/1/2016 Continuing operations, Metrics 1Q17 4Q16 3Q16 2Q16 1Q16 unless otherwise noted EPS – assuming dilution $ .27 $ .20 $ .16 $ .23 $ .22 EPS –excl. merger-related charges(c), (d)
Slide 19: Loans
Loans Total Average Loans Highlights $ in billions $90 $86 vs. Prior Year Average loans up 43% from 1Q16 $60 $60 – Growth primarily reflects impact of FNFG – C&I continues to be a driver $30 vs. Prior Quarter $0 Average loans up 1% from 4Q16 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 – Commercial loan
Slide 20: Loan Portfolio Detail, at 3/31/17
Loan Portfolio Detail, at 3/31/17 Total Loans Commercial Loans $ in billions 3/31/17 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Automotive Commercial and industrial $ 40.1 47 Agriculture Transportation Business Commercial real estate 17.5 20 Technology Produ
Slide 21: Deposits
Deposits Average Deposits(a) Highlights $ in billions Relatively stable deposit costs in 1Q17 and beta $105 $102 .70% below 10%(c) .60% $85 .50% $72 vs. Prior Year .40% $65 Average deposit growth of 43% from 1Q16 .30% .20% – Growth primarily reflects impact of FNFG $45 .23% .17% .10% – Continued mom
Slide 22: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $29.2 $30.0 5.00% backed MBS and CMOs; primarily fixed rate 4.00% $19.0 Continue to position portfolio for regulatory $20.0 3.00% liquidity requirements: 1.98% 2.00% – Rein
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 1Q17 net interest income includes $53 MM, or 18 bps, $34 MM of $92 MM $929 from PAA $950 related to 3Q refinement 4.0% $92 $53 Excluding impact of PAA, 1Q17 net interes
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 • Short weighted average maturity of A/LM swaps $86 B $104 B Portfolio - Provides flexibility to reprice and
Slide 25: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 1Q17 vs. 1Q16 vs. 4Q16 Solid first quarter results, with strength in trust Trust and investment services income $ 135 $ 26 $ 12 and investments services, and investment banking and debt placement (IBDP) Investment banking and
Slide 26: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions Up / (Down) 1Q17 vs. 1Q16 vs. 4Q16 1Q17 noninterest expense of $1,013 MM included $81 MM of merger-related charges (compared to $24 MM of merger- Personnel $ 556 $ 152 $ 92 related charges in 1Q16 and $207 MM in 4Q16) Net occupancy 87
Slide 27: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Highlights $ in millions Portfolios continue to perform well $120 1.00% Net loan charge-offs of $58 MM $89 .80% $90 – 27 basis points of average loans, below $63 .60% targeted range $60 $58 $46 .40% Nonperforming loans down 8% from 4Q16 an
Slide 28: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings(a) to Period-end Total Loans Continuing operations Continuing operations .50% 6.0% 0.39% 0.36% 4.0% 3.6% 3.0% .25% 0.12% 2.0% 0.09% .00% .0% 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q1
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 (%) 3/31/17 1Q17 1Q17 1Q17 3/31/17 3/31/17 3/31/17 3/31
Slide 30: Capital
Capital Common Equity Tier 1(a) Highlights 12.00% 11.07% Strong capital position with Common Equity Tier 1 ratio of 9.91% at 3/31/17 9.91% 10.00% Repurchased $160 MM(b) in common shares during 1Q17 8.00% Redeemed Preferred Stock Series C ($350 MM) in February 6.00% Converted all shares of 7.75% Pref
Slide 31: FNFG Merger-related Charges
FNFG Merger-related Charges $ in millions 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 Increase / (Decrease) Net interest income - - $ (6) - - - Operating lease income and other leasing - - $ (2) - - - gains Other income - $ 9 (10) - - - Noninterest income - $ 9 $ (12) - - - Personnel expense $ 30 $ 80 $ 97 $ 35 $
Slide 32: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three m onths ended $ in millions 3-31-17 12-31-16 9-30-16 6-30-16 3-31-16 Tangible com m on equity to tangible assets at period end Key shareholders' equity (GAAP) $14,976 $ 15,240 $ 14,996 $ 11,313 $ 11,066 Less: Intangible assets (a) 2,751 2,788 2,855 1,074 1,077 P
Slide 33: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three m onths ended $ in millions 3-31-17 12-31-16 9-30-16 6-30-16 3-31-16 Average tangible com m on equity Average Key shareholders' equity (GAAP) $ 15,184 $ 14,901 $ 13,552 $ 11,147 $ 10,953 (a) Less: Intangible assets (average) (a) 2,772 2,874 2,255 1,0