Slide 1: Fourth Quarter 2012 Earnings Review
Exhibit 99.2 KeyCorp Fourth Quarter 2012 Earnings Review January 24, 2013 Beth E. Mooney Jeffrey B. Weeden Chairman and Chief Financial Officer Chief Executive Officer
Slide 2: Forward-Looking Statements and Additional Information Disclosure
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION DISCLOSURE This presentation contains and we may, from time to time, make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Key’s financial condition, results of oper
Slide 3: 2012 Investor Highlights
2012 Investor Highlights Increased revenue 4% from 2011 Optimize and Improved net interest margin, up 24 bps in 4Q12 compared to the prior year Grow Grew average C&I loans by 21% in 2012 Revenue Invested in growth opportunities: payments, healthcare and technology Continued progress on efficiency in
Slide 4: 2013 Focus Areas
2013 Focus Areas Execute Strategy with Distinctive Business Model Maintain Moderate Risk Profile Accelerate Revenue Growth with Opportunistic Investing Align Cost Structure with Operating Environment Leverage Strong Capital Position to Maximize Value 4
Slide 5: Financial Review
Financial Review 5
Slide 6: Financial Summary – Fourth Quarter 2012
Financial Summary – Fourth Quarter 2012 Metrics 4Q12 3Q12 4Q11 Income from continuing operations attributable to Key $.21 $.23 $.21 Financial common shareholders Performance (a) Net interest margin (TE) 3.37% 3.23% 3.13% Return on average total assets .97 1.08 1.01 Tier 1 common equity (c), (d) 11.2
Slide 7: Loan Growth
Loan Growth Highlights Average Commercial & Industrial Loans Average loan growth driven by C&I, while the exit $ in billions portfolio continues to run-off $25 $22.4 60% $20 $18.6 Branch and credit card portfolio acquisitions $16.3 49.1% 50% contributed $1 billion to 4Q12 average loans $15 46.3% 43.
Slide 8: Improving Deposit Mix
Improving Deposit Mix Highlights Funding Cost Overall funding cost continues to improve, with 1.60% total deposit cost declining to 31 bps 1.24% 1.20% 1.12% Branch acquisition contributed $2 billion to 4Q12 average deposit balances .75% .73% .80% .57% Total CD maturities and average cost – 2013: $5.
Slide 9: Total Revenue
Total Revenue Highlights Net Interest Margin (TE) Trend Net interest income increased Continuing Operations – Net interest margin up 14 bps from 3Q12 3.50% 3.30% and up 24 bps from 4Q11 3.19% 3.13% – Benefit from improved funding mix and 3.00% loan growth 3.25% 3.37% 3.19% 3.13% 3.16% 3.23% 2.50% 3.
Slide 10: Focused Expense Management
Focused Expense Management Highlights Noninterest Expense $ in millions Expenses elevated from prior year, driven by: $900 – Acquisitions $717 $756 $701 – Technology investments $600 $323 – Efficiency initiatives (Fit for Growth) $330 $330 – Employee benefits $300 $387 $433 $371 Acquisition of branc
Slide 11: Continued Improvement in Asset Quality
* Continued Improvement in Asset Quality Highlights Net Charge-offs & Provision for Loan and Lease Losses $ in millions Net loan charge-offs decreased $51 million from $300 3.00% elevated 3Q12 $193 $200 Net charge-offs to average loans of 44 bps, within targeted range of 40 bps – 60 bps 1.59% $105 $
Slide 12: Strong Capital Ratios
Strong Capital Ratios Highlights Tangible Common Equity to Tangible Assets (b) Strong capital position supports growth 12.0% 9.9% 10.2% Disciplined capital management process 9.2% 9.0% – Repurchased $89 million in common shares during 4Q12; $256 million YTD 6.0% – Remaining repurchase authority of u
Slide 13: Appendix
Appendix 13
Slide 14: Progress on Targets for Success
Progress on Targets for Success KEY Business KEY KEY KEY Metrics (a) Targets Action Plans Model 4Q12 3Q12 Leverage integrated model to grow Core funded Loan to deposit ratio (b) 86% 86% 90-100% relationships and loans Improve deposit mix NCOs to average loans .44% .86% Focus on relationship clients
Slide 15: High Quality Investment Portfolio
High Quality Investment Portfolio Highlights Average Total Investment Securities $ in billions Portfolio composed of Agency or GSE backed: $25 5.00% GNMA, Fannie & Freddie $21.2 $20 $18.4 4.00% – No private label MBS or financial paper $16.0 $15 3.00% 3.21% 3.07% Average portfolio life at 12/31/12:
Slide 16: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan Allowance / $ in millions Net loan Nonperforming Ending Period-end Average charge-offs (b) / (c) (d) period-end Allowance / loans loans charge-offs loans allowance (d) NPLs average loans loans 12/31/12 4Q12 4Q12 3Q12 4Q12 3Q12 12/31/12 9/30/12 12/3
Slide 17: Home Equity Loans – 12/31/12
Home Equity Loans – 12/31/12 Community Bank – Home Equity Vintage (% of Loans) $ in millions, except average loan size Average Loan Average Average % of Loans 2011 and 2007 and (a) Loan Balances Size ($) FICO LTV LTV>90% later 2010 2009 2008 prior Home equity loans and lines First lien $ 5,364 $ 63,
Slide 18: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio $ in millions Balance on Balance Change Net Loan Nonperforming Outstanding 12-31-12 vs. Charge-offs Status (c) 12-31-12 9-30-12 9-30-12 4Q12 3Q12 12-31-12 9-30-12 Residential properties – homebuilder $24 $31 $(7) $1 - $10 $6 Marine and RV floor plan 33 35 (2)
Slide 19: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Quarterly Change in Criticized Outstandings (a) 2.00% 1.87% 44% 35% 34% 1.50% 24% 14% 1.00% .80% 4% (6)% .50% .62% (8)% .15% (16)% .00% 30 – 89 days delinquent 90+ days delinquent (a) Loan and Lease Outstandings 19
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 12-31-12 9-30-12 12-31-11 Tangible common equity to tangible assets at period end Key shareholders’equity (GAAP) $ 10,271 $ 10,251 $ 9,905 Less: Intangible assets (a) 1,027 1,031 934 Preferred Stock, Series A 291 291 291 Tangible commo
Slide 21: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) $ in millions Three months ended 12-31-12 9-30-12 12-31-11 Average tangible common equity Average Key shareholders' equity (GAAP) $ 10,261 $ 10,222 $ 9,943 Less: Intangible assets (average) (a) 1,030 1,026 934 Preferred Stock, Series A (average) 291 291 29
Slide 22: Tier 1 Common Equity under Basel III (estimated)
Tier 1 Common Equity under Basel III (estimated) KeyCorp & Subsidiaries (a) TIER 1 COMMON EQUITY UNDER BASEL III (ESTIMATES) Quarter ended Dec 31, $ in billions 2012 Tier 1 Common Equity under Basel I $9.1 Adjustments from Basel I to Basel III: Cumulative Other Comprehensive Income (b) (0.2) (c) Def