Slide 1: Investor Meetings: August – September 2018
Investor Meetings: August – September 2018 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 Overview
Key Overview Serving targeted clients by leveraging broad capabilities, insights and expertise 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
Slide 4: A Transformed Franchise
A Transformed Franchise Sustained discipline and focused execution have improved market positioning, enhanced productivity and resulted in strong business growth Five-year 2012 2017 Growth Clients +48% 2.3 MM 3.4 MM Presence Market # Top 5 markets(a) +29% 17 22 Deposits per branch +44% $61 MM $88 MM
Slide 5: Strong, Targeted Presence
Strong, Targeted Presence Market Presence Western Markets Eastern Markets strong market share First Niagara Acquisition: top 5 in >20 MSAs(a) Added one million clients Enhanced market share with attractive, core & contiguous markets Accelerated performance, with improved profitability and returns Le
Slide 6: Distinctive Offering
Distinctive Offering Delivering ease, value and expertise to build enduring client relationships Consumer Commercial Regional Universal Boutiques Banks Banks Wellness tools Active dialogue and Capital and insight wellness conversations Markets Financial Wellness: Commercial Banking Understanding our
Slide 7: Improving Profitability and Returns
Improving Profitability and Returns Efforts to improve productivity and efficiency have resulted in five consecutive years of positive operating leverage Accelerating Revenue Momentum Continuing Expense Discipline Executing on First Niagara revenue synergies Reducing costs across the franchise with
Slide 8: Targeted Technology Investments
Targeted Technology Investments Strengthening our offering and maximizing client impact Optimizing Systems & Processes; Recent Enhancements Enabling Business Growth Platform and process enhancements support and drive business momentum New and improved consumer digital platforms Ongoing modernization
Slide 9: Risk Management
Risk Management Maintaining a strong risk culture and moderate risk profile Business Discipline Strong Asset Quality(a) Enterprise-wide approach to managing risks and Net Charge-offs to Average Loans concentrations 1.50% Key Peer median(a) Maintaining enhanced underwriting standards 1.25% Focus on s
Slide 10: Capital Management
Capital Management Disciplined in how we manage, invest, deploy and return our strong capital position Strong Capital Position Focus on Dividends Common Equity Tier 1(a) Cash Dividends Per Common Share $0.565(b) 10.26% 10.16% 10.12% 9.91% 9.99% 28% CAGR 9.0% - 9.5% Target $0.10 2Q17 3Q17 4Q17 1Q18 2
Slide 11: Outlook and Expectations
Outlook and Expectations FY 2018 Average Balance • Loans: average balances in the range of $88.5 B - $89.5 B Sheet • Deposits: average balances in the range of $104.5 B - $105.5 B Net Interest • Net interest income expected to be in the range of $3.95 B - $4.05 B Income (TE) • Outlook includes rate
Slide 12: Financial Review
Financial Review 12
Slide 13: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 2Q18 1Q18 2Q17 LQ ∆ Y/Y ∆ EPS – assuming dilution .44 .38 .36 16 % 22 % Profitability Cash efficiency ratio(a) 58.8 % 62.9 % 59.3 % (414) bps (56) bps Return on average tangible common equity(a) 16.7 14.9 13.8 184 293 Common Equity T
Slide 14: Loans
Loans Total Average Loans Highlights $ in billions $87 $89 vs. Prior Year $90 Average loans up 2% from 2Q17 $60 – C&I balances up 11% – Broad-based growth with middle-market $30 clients – CRE and home equity continue to be impacted by market trends $0 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 vs. Prio
Slide 15: Loan Portfolio Detail, at 6/30/18
Loan Portfolio Detail, at 6/30/18 Total Loans Commercial Loans $ in billions 6/30/18 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Agriculture Commercial and industrial $ 44.6 51 Automotive Transportation Business Products Commercial real estate 15.9 18 Technol
Slide 16: Deposits
Deposits Average Deposits Highlights $ in billions $103 $104 Deposit cost up 7 bps from 1Q18, reflecting: $105 .70% – Higher interest rates and beta .60% $85 – Continued migration of portfolio into higher- .50% yielding products .40% $65 .43% Strong and stable deposit base .30% .20% – 29% noninteres
Slide 17: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $28.5 $29.7 $30.0 2.50% backed MBS and CMOs 2.22% ‒ Primarily fixed rate 2.25% $20.0 2.02% ‒ GNMA 46% of 2Q18 average balances 2.00% Portfolio used for funding and liquidit
Slide 18: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations Excluding PAA, 2Q18 net interest income was $959 MM $987 $987 $1,000 $28 4.0% and net interest margin was 3.10% $100 $800 vs. Prior Year 3.5% $600 3.30% Net interest in
Slide 19: Asset & Liability Management Positioning
Asset & Liability Management Positioning The strength and diversity of our franchise positions Key to benefit from economic growth and a rising rate environment Business and Balance Sheet Highlights Net Interest Income Sensitivities (FY18) ($MM) • Strong, low-cost deposit base (change vs. FY 2018 ou
Slide 20: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions up / (down) 2Q18 vs. 2Q17 vs. 1Q18 vs. Prior Year Trust and investment services income $ 128 $ (6) $ (5) Noninterest income up $7 MM (+1%) from 2Q17 Investment banking and debt 155 20 12 − Excluding notable items up $32 MM, or 5%(a) plac
Slide 21: Noninterest Expense
Noninterest Expense Noninterest Expense Notable items ($ MM) 2Q18 2Q17 1Q18 $ in millions up / (down) 2Q18 vs. 2Q17 vs. 1Q18 Efficiency-related expenses ($18 MM personnel / $4 MM nonpersonnel) 22 - - Personnel $ 586 $ 33 $ (8) Sale of insurance business Net occupancy 79 1 1 ($1 MM personnel / $4 MM
Slide 22: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 2Q18 allowance for loan losses to $100 1.00% period-end loans of 1.01% $887 $900 $870 250% .80% $75 $66 $66 $64 200% $60 .60% $800 $50 172% 150% 163% .40% 100% $700 $25 .31% .27% .20% 50% $
Slide 23: Credit Quality
Credit Quality Delinquencies to Period-end Total Loans Criticized Outstandings(a) to Period-end Total Loans Continuing operations Continuing operations .80% 6.0% .60% .49% 4.0% 3.5% 3.1% .40% .39% 2.0% .20% .12% .10% .00% .0% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
Slide 24: 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 (%) 6/30/18 2Q18 2Q18 2Q18 6/30/18 6/30/18 6/30/1
Slide 25: Capital
Capital Common Equity Tier 1(a) Highlights 12.00% Strong capital position with Common Equity Tier 1 ratio of 10.12%(a) at 6/30/18 9.91% 10.12% 10.00% Increased common share dividend by 14% (to $0.12 per quarter) and repurchased $126 MM(c) in common shares during 2Q18 8.00% 2018 Capital Plan 6.00% 3Q
Slide 26: 2Q18 Notable Items
2Q18 Notable Items $ in millions Sale of Efficiency- Lease increase / (decrease) insurance related residual Total business expenses loss Net interest income - - - - Operating lease income and other leasing gains - - $ (42) $ (42) Other income $ 78 - - 78 Noninterest income $ 78 - $ (42) $ 36 Personn
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 6/30/2018 3/31/2018 6/30/17 Average tangible common equity Average Key shareholders' equity (GAAP) $ 15,032 $ 14,889 $ 15,200 Less: Intangible assets (average) (a) 2,883 2,916 2,756 Preferred Stock (average) 1,025 1,025 1,025 Average t