Keycorp · NYSE:KEY
Keycorp — Bank of America Merrill Lynch Future of Financials 2017 Conference
24 slides from Keycorp's conference presentation, Nov 14, 2017
Slide 1: Bank of America Merrill Lynch Future of Financials 2017 Conference
Bank of America Merrill Lynch Future of Financials 2017 Conference November 14, 2017 KeyCorp Chris Gorman President, Banking
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: Business Overview
Key: Business Overview Aligned around client needs and building enduring relationships Community Bank Corporate Bank Client Continuum High Net Worth Individuals & Small Commercial Individuals & Corporations Families Businesses Businesses Families $500 MM+ Commercial Client Revenue: < $10 MM $10 MM -
Slide 4: Distinctive Offering
Distinctive Offering Points of differentiation create value for clients across the franchise Consumer Commercial Regional Universal Attractive market share and positioning Boutiques Banks Banks Capital Markets Commercial strong market share Banking top 5 in >20 MSAs(a) Industry- driven Model Middle
Slide 5: Disciplined Business Execution
Disciplined Business Execution Consistent focus on growing relationships, a moderate risk profile and collaboration across all of our businesses 1. 2. 3. Relationship-based Strategy Moderate Risk Profile Commitment to Collaboration Delivering ease, value and Rigorous enterprise-wide approach Leverag
Slide 6: Bank Relationship Model in Practice
Model in Practice Relationship strategy and differentiated capabilities enable us to acquire and expand targeted relationships Long-standing Relationship New Client; Opportunity to Expand Healthcare System Middle Market: ~$200 MM in annual revenue Middle Market, in-footprint, core industry vertical
Slide 7: Focused Forward
Focused Forward Investing in our franchise to enhance capabilities, improve the client experience and accelerate growth Hire Acquire & Partner Recent Acquisitions Retail Sales 90% growth in digital and Cain Brothers Financial Wellness Reviews +65% (24)% analytics team since Monthly Avg. / Sales FTE
Slide 8: Attractive Growth Opportunities
Attractive Growth Opportunities Well-positioned to execute strategy and drive growth across the franchise Residential Mortgage Commercial & Corporate Banking Payments Leveraging distinctive model for Delivering targeted offering for clients, Investing in People profitable growth focused on the full
Slide 9: Appendix
Appendix 9
Slide 10: Outlook and Expectations
Outlook and Expectations FY 2017(a) Average Balance • Loans: 4Q17 average balances in the range of $87.0 B - $87.5 B Sheet • Deposits: FY17 average balances in the range of $102.5 B - $103.0 B • Net interest income expected to be in the range of $3.8 B - $3.9 B Net Interest Income • Outlook includes
Slide 11: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 3Q17 2Q17 3Q16 LQ ∆ Y/Y ∆ EPS – assuming dilution $ .32 $ .36 $ .16 (11) % 100 % EPS – excl. notable items(a), (b) .35 .34 .30 3 17 Cash efficiency ratio(a) 62.2 % 59.3 % 80.0 % 290 bps (1,773) bps Profitability Cash efficiency –excl
Slide 12: Loans
Loans Total Average Loans Highlights $ in billions $90 $87 vs. Prior Year $78 Average loans up 12% from 3Q16 $60 – Growth reflects a full-quarter impact of FNFG (vs. 2 months in 3Q16) $30 – Broad-based C&I growth vs. Prior Quarter $0 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Average loans up .4% from
Slide 13: Loan Portfolio Detail, at 9/30/17
Loan Portfolio Detail, at 9/30/17 Total Loans Commercial Loans $ in billions 9/30/17 % of total Diversified Portfolio by Industry loans Total commercial loans: Agriculture Commercial and industrial $ 41.1 48 Automotive Transportation Business Products Technology Utilities Commercial real estate 16.9
Slide 14: Deposits
Deposits Average Deposits(a) Highlights $ in billions $103 Deposit cost up 2 bps from 2Q17 $105 .70% $95 – Largely driven by contractual commercial .60% $85 rate increases and deposit mix .50% 3Q17 beta of 17% (total interest-bearing deposits) .40% $65 .30% .28% vs. Prior Year $45 .20% .21% .10% Ave
Slide 15: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations $1,000 $962 4.0% Excluding impact of PAA, 3Q17 net interest income $100 $48 was $914 MM and net interest margin was 2.99% $788 $800 $19 3.5% 3.15% vs. Prior Year $600 2
Slide 16: 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 • A/LM hedges aligned to floating rate LIBOR-based loans $88 B $103 B Portfolio • Short weighted average matu
Slide 17: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 3Q17 vs. 3Q16 vs. 2Q17 vs. Prior Year Trust and investment services income $ 135 $ 13 $ 1 Investment banking and debt 141 (15) 6 Noninterest income up $36 MM from 3Q16, excl. placement fees notable items(a),(b) Service charge
Slide 18: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions Up / (Down) 3Q17 vs. 3Q16 vs. 2Q17 Notable items: Personnel $ 558 $ (36) $ 7 $ in millions 3Q17 3Q16 2Q17 Net occupancy 74 1 (4) Merger-related charges $36 $189 $44 Computer processing 56 (14) 1 Charitable contribution(b) - - 20 Busine
Slide 19: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 3Q17 NCOs reflect continued portfolio 3Q17 allowance for loan losses $100 strength and large C&I recovery 1.00% to period-end loans of 1.02% $900 $865 $880 250% .80% $75 200% $59 $51 .60% $
Slide 20: Capital
Capital Common Equity Tier 1 Highlights 12.00% Strong capital position with Common Equity Tier 1 ratio of 10.26% at 9/30/17 10.26% 10.00% 9.56% − Increase in 9/30/17 capital measures primarily reflects a change in methodology for multipurpose facilities(b) 8.00% Repurchased $277 MM(c) in common shar
Slide 21: Line of Business Reconciliation
Line of Business Reconciliation Nine months ended September 30, 2017 Community Corporate Other Total Reconciling $ in millions Bank Bank Segments Segments Items Key Net interest income (TE)(a) $ 1,973 $ 907 $ (15) $ 2,865 $ 13 $ 2,878 Noninterest income 901 827 109 1,837 (15) 1,822 Total Revenue 2,8
Slide 22: FNFG Merger-related Charges
FNFG Merger-related Charges $ in millions 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 Increase / (Decrease) Net interest income - - - $ (6) - - - Operating lease income and other - - - $ (2) - - - leasing gains Other income - - $ 9 (10) - - - Noninterest income - - $ 9 $ (12) - - - Personnel expense $ 2
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 9/30/17 6/30/17 9/30/16 Tangible common equity to tangible assets at period end Key shareholders' equity (GAAP) $15,249 $15,253 $ 14,996 Less: Intangible assets (a) 2,870 2,866 2,855 Preferred Stock (b) 1,009 1,009 1,150 Tangible commo
Slide 24: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three months ended $ in millions 9/30/17 6/30/17 3/31/17 12/31/16 9/30/16 Average tangible common equity Average Key shareholders' equity (GAAP) $ 15,241 $ 15,200 $ 15,184 $ 14,901 $ 13,552 Less: Intangible assets (average) (a) 2,878 2,756 2,772 2,874 2,25
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