Slide 1: Second Quarter 2009 Review
Second Quarter 2009 Review July 22, 2009 Speakers: Henry Meyer Jeff Weeden
Slide 2: Forward-Looking Statement Disclosure
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 FORWARD-LOOKING STATEMENT DISCLOSURE This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Key's financial condition, results of operations, earning
Slide 3: Second Quarter 2009 Strategic Update
Raised $1.8 billion in new Tier 1 common equity Continued to build loan loss reserve, reduce exposures and improve liquidity Focusing on client relationships and maintaining expense discipline Originated $8.2 billion of new or renewed loans and commitments Second Quarter 2009 Strategic Update
Slide 4: Capital Raise Summary
Capital Raise Summary $ in millions Announced on 7/8/09 that Key was commencing an offer to exchange common shares for outstanding retail capital securities. For purposes of the SCAP, the pretax impact was used to match the same basis of the more adverse scenario which included a disallowed deferred
Slide 5: Keyvolution: Improving Efficiency and Effectiveness
Keyvolution ^ Improving Efficiency and Effectiveness $- $100 $200 $300 $400 Implemented In-flight Additional targeted benefits Total $ in millions Keyvolution - Cost Savings by 2012 (before one-time costs and investments) $63 $72 $375 $165 $240 $300
Slide 6: Financial Summary: Second Quarter 2009
Financial Summary ^ Second Quarter 2009 (a) 06-30-09 ratios are estimated. Net loss per common share from continuing operations $ (.69) Significant Items Included in Net Loss Provision for loan losses in excess of net charge-offs $ (.34) Noncash deemed dividend (.20) FDIC special assessment (.05) Ne
Slide 7: Net Interest Income and Net Interest Margin
$738 $705 $664 $620 $614 2.31% 2.35% 2.41% 2.88% 2.67% 3.13% 2.84% 3.32% 2.77% 2.74% $- $100 $200 $300 $400 $500 $600 $700 $800 $900 2Q08 3Q08 4Q08 1Q09 2Q09 2.00% 2.50% 3.00% 3.50% 4.00% $ in millions TE = Taxable Equivalent During the second quarter of 2008, Key's taxable-equivalent net interest i
Slide 8: Average Loans
$76.7 $76.2 $76.9 $75.3 $72.4 $0 $20 $40 $60 $80 2Q08 3Q08 4Q08 1Q09 2Q09 CF&A CRE - Comml Mtg CRE - Construction Leasing Home Equity Other Consumer Exit Portfolios Total Loans Loans Held for Sale Total Loans and Loans Held for Sale $10.7 $9.9 $9.6 $9.3 $8.4 $0 $3 $6 $9 $12 2Q08 3Q08 4Q08 1Q09 2Q09
Slide 9: Average Deposits
$10.6 27.2 1.8 12.7 8.7 $61.0 $10.7 26.7 1.8 13.1 9.5 $61.8 $10.9 24.9 1.7 14.5 11.3 $63.3 $11.2 24.0 1.7 14.7 12.5 $64.1 $12.6 24.1 1.8 14.9 13.5 $66.9 $61.0 $61.8 $63.3 $64.1 $66.9 $0 $10 $20 $30 $40 $50 $60 $70 2Q08 3Q08 4Q08 1Q09 2Q09 (a) Excludes foreign office deposits DDA NOW/MMDA Savings CDs
Slide 10: Nonperforming Asset Trends
Nonperforming Asset Trends 2.36% 2.03% 1.87% 2.97% 3.53% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 2Q08 3Q08 4Q08 1Q09 2Q09 Allowance to Period-End Loans 114.21% 125.78% 174.57% 160.70% 147.18% 75% 100% 125% 150% 175% 200% 2Q08 3Q08 4Q08 1Q09 2Q09 Allowance to NPLs Peer Median NPA to Loa
Slide 11: Asset Quality Summary by Loan Type
Period-end loans Average loans 6/30/09 2Q09 2Q09 1Q09 6/30/09 3/31/09 Commercial, financial and agricultural $23,542 $24,468 $168 $232 2.75 % 3.56 % $700 $595 $769 3.27 % 109.86 % Real estate - commercial mortgage 11,761 11,892 87 21 2.93 ..78 454 310 465 3.95 102.42 Real estate - construction 6,119
Slide 12: Commercial Real Estate Loans
Commercial Real Estate Loans June 30, 2009 $ in millions (a) Nonresidential land and development loans N/M = Not Meaningful Geographic Region % of Commercial West Southwest Central Midwest Southeast Northeast Total Total CRE Mortgage Construction Nonowner-occupied: Retail properties $476 $236 $427 $
Slide 13: Exit Loan Portfolio
Exit Loan Portfolio $ in millions Total exit portfolio loans represent 11.8% of total period-end loans and loans held for sale at June 30, 2009. Net charge-offs on exit portfolio loans represented 28.9% of total net charge-offs for the 2nd quarter. Exit portfolio nonperforming assets represent 21.9%
Slide 14: Capital Ratios
Fed-defined minimum for a "well capitalized" bank 6.00% 5.60% 5.58% 5.62% 5.62% 7.27% 0.59% 2.26% 2.39% 2.49% 2.34% 2.37% 2.42% 2.56% 2.36% 8.53% 8.55% 10.92% 11.22% 12.42% 0.62% 0.65% 0.30% 0.60% 0.00% 3.00% 6.00% 9.00% 12.00% 15.00% 2Q08 3Q08 4Q08 1Q09 2Q09 7.35% 6.06% 6.32% 6.29% 5.95% 0.00% 2.00
Slide 15: Appendix
Appendix
Slide 16: Significant Items Impacting 2Q09 Results
Pre-tax Amount After-tax Amount Impact on EPS Provision for loan losses in excess of net charge-offs $ (311) $ (195) $ (.34) Noncash deemed dividend - common shares exchanged for Series A Preferred Stock - - - - (.20) FDIC special assessment (44) (27) (.05) Realized and unrealized losses on loan and
Slide 17: Noninterest Income
2Q09 1Q09 2Q08 1Q09 2Q08 Trust and investment services income $119 $110 $130 $9 $(11) Service charges on deposit accounts 83 82 93 1 (10) Operating lease income 59 61 68 (2) (9) Letter of credit and loan fees 45 38 51 7 (6) Corporate-owned life insurance income 25 27 28 (2) (3) Electronic banking fe
Slide 18: Noninterest Expense
2Q09 1Q09 2Q08 1Q09 2Q08 Salaries $226 $224 $234 $2 $(8) Incentive compensation 52 37 78 15 (26) Employee benefits 70 83 65 (13) 5 Stock-based compensation 15 9 17 6 (2) Severance 14 8 8 6 6 Total personnel expense 377 361 402 16 (25) Net occupancy 63 66 62 (3) 1 Operating lease expense 49 50 55 (1)
Slide 19: Geographically Diverse Community Banking
Great Lakes Core Deposits: 34% Commercial Loans: 28% Home Equity Loans: 29% Northwest/Rocky Mtn Core Deposits: 32% Commercial Loans: 42% Home Equity Loans: 44% Northeast Core Deposits: 31% Commercial Loans: 21% Home Equity Loans: 26% Note: Percentages are based on quarterly average balances and excl
Slide 20: Community Banking Summary of Operations
TE = Taxable Equivalent, N/A = Not Applicable, N/M = Not Meaningful Community Banking Summary of Operations $ in millions Percent Change 2Q09 vs. 2Q09 1Q09 2Q08 1Q09 2Q08 Total revenue (TE) $592 $599 $654 (1.2) % (9.5) % Provision for loan losses 187 81 44 130.9 325.0 Noninterest expense 497 470 445
Slide 21: Community Banking Supplementary Information
Community Banking Supplementary Information (Lines of Business) $ in millions TE = Taxable Equivalent, N/A = Not Applicable, N/M = Not Meaningful Percent Change 2Q09 vs. 2Q09 1Q09 2Q08 1Q09 2Q08 Regional Banking Total revenue (TE) $502 $507 $552 (1.0) % (9.1) % Provision for loan losses 165 69 25 13
Slide 22: National Banking Summary of Operations
National Banking Summary of Operations (a) From continuing operations (b) National Banking results for the first quarter of 2009 include a noncash charge for intangible assets impairment of $196 million. The breakout of the intangible assets impairment was $37 million in Real Estate Capital and Corp
Slide 23: Real Estate Capital and Equipment Finance
Percent Change 2Q09 vs. 2Q09 1Q09 2Q08 1Q09 2Q08 Real Estate Capital and Corporate Banking Services Total revenue (TE) $183 $174 $236 5.2 % (22.5) % Provision for loan losses 462 470 366 (1.7) 26.2 Noninterest expense 106 114 70 (7.0) 51.4 Net loss attributable to Key (239) (269) (125) 11.2 (91.2) A
Slide 24: Institutional and Capital Markets, Consumer Finance
Percent Change 2Q09 vs. 2Q09 1Q09 2Q08 1Q09 2Q08 Institutional and Capital Markets Total revenue (TE) $185 $171 $223 8.2 % (17.0) % Provision for loan losses 37 31 36 19.4 2.8 Noninterest expense 120 205 124 (41.5) (3.2) Income (loss) from continuing operations attributable to Key 18 (78) 39 N/M (53
Slide 25: Average Loans
Average Loans $ in millions (a) In late March 2009, Key transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines pertaining to the classification of loans that have reached a completed status. Percent Change 2Q09
Slide 26: Commercial Loans by Business Unit
Regional Banking Commercial Banking Real Estate Capital & Corp. Bank Srvs. Equipment Finance Institutional & Capital Markets Consumer Finance Total Average Loans Commercial, financial and agricultural $3,470 $5,307 $4,196 $2,117 $7,295 $2,083 $24,468 Commercial real estate 2,994 2,398 11,211 - 746 8
Slide 27: Residential Properties: $1.64 Billion
Residential Properties: $1.64 Billion Commercial Real Estate June 30, 2009 53 $ in millions Loan Balances Condo $61 $13 $5 $33 $187 $109 $408 $33 $110 Land, Acquisition & Development 242 47 92 37 171 266 855 79 84 1-4, Single Family 150 1 84 49 66 28 378 65 30 Residential properties $453 $61 $181 $1
Slide 28: Retail Properties: $2.87 Billion
Retail Properties: $2.87 Billion Commercial Real Estate June 30, 2009 55 $ in millions Loan Balances Power Center $170 $100 $238 $288 $278 $55 $1,129 $98 $155 Community Center 113 81 37 270 183 67 751 48 74 Regional Mall 74 32 44 34 33 3 220 24 - - Single Tenant 32 17 5 66 77 38 235 8 10 Strip Cente
Slide 29: Home Equity Loans
Home Equity Loans June 30, 2009 $ in millions Loan Balances Average Loan Size ($) Average FICO Average LTV % of Loans LTV>90% 2009 2008 2007 2006 2005 and prior Regional Banking Home Equity loans and lines First Lien 5,436 $ 57,365 $ 748 66 % ..5 % 11 % 13 % 10 % 10 % 56 % Second Lien 4,820 42,209 7
Slide 30: Net Charge-Offs to Average Loans
Net Charge-Offs to Average Loans 2Q09 1Q09 4Q08 3Q08 2Q08 Commercial, financial and agricultural 2.75 % 3.56 % 1.71 % ..94 % ..94 % Real estate - commercial mortgage 2.93 ..78 1.60 ..74 ..57 Real estate - construction 8.52 5.62 2.54 4.03 16.07 Commercial lease financing 1.05 ..83 ..91 ..79 ..57 Tota
Slide 31: Nonperforming Loans
2Q09 1Q09 4Q08 3Q08 2Q08 Commercial, financial and agricultural $700 $595 $415 $309 $259 Real estate - commercial mortgage 454 310 128 119 107 Real estate - construction 716 546 436 334 256 Total commercial real estate loans 1,170 856 564 453 363 (b) Commercial lease financing 122 109 81 55 57 Total