Slide 1: Investor Meetings: October – November 2015
Investor Meetings: October – November 2015 KeyCorp Focused Forward
Slide 2: Forward-Looking Statements and Additional Information Disclosure
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION DISCLOSURE This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts. Forward-looking statements usuall
Slide 3: Key: Who We Are
Key: Who We Are A relationship-focused bank with scale and adaptability Top 20 U.S. bank-based financial services company Loans Deposits - Assets: $95B 3% - Deposits: $70B 27% - Market capitalization: $11B 45% 52% 73% - Strong footprint with approximately 972 branches and 1,259 ATMs - Approximately
Slide 4: Key: Delivering Shareholder Value
Key: Delivering Shareholder Value Driving growth with focused execution, discipline, and accountability Strong, diverse, and independent Board of Directors – 43% of Board members new since 2011 New leadership team – New Chairman and CEO in May 2011 – 9 of 10 CEO direct reports new since 2011 Dividen
Slide 5: Leveraging our Geographic Diversity
Leveraging our Geographic Diversity Delivering a consistent strategy across our franchise while also leveraging market- specific opportunities Western Markets Eastern Markets • Deposits: $17 B • Deposits: $32 B • Branches: 374 • Branches: 598 • Demographic: younger with high growth potential • Demog
Slide 6: Business Model: Aligned and Targeted
Business Model: Aligned and Targeted Local delivery of broad product set and industry expertise Differentiated platform with depth and maturity Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity res
Slide 7: Business Model: Growing and Taking Share
Business Model: Growing and Taking Share Key’s business model creates a competitive advantage with targeted clients and has enabled us to take market share Winning with Clients 2015 2015 2015 Commercial and Investment Banking and Industrial Loans(a): Debt Placement Fees(b): % change vs. 2Q11 LTM; $
Slide 8: Driving Positive Operating Leverage
Driving Positive Operating Leverage Executing action plans across our organization to improve efficiency Revenue Growth Expense Savings Acquiring and expanding relationships to grow revenue in our Continuous improvement efforts enable identification and businesses execution of expense savings Improv
Slide 9: Efficiency Ratio: Driving to 60% and Below
Efficiency Ratio: Driving to 60% and Below Business plans and macroeconomic environment provide path to an efficiency ratio below 60% Cash Efficiency Ratio(a) 70% 65% 2-3 year outlook: 60% 60% 55% 50% 2012 FY 2013 FY 2014 FY 3Q15 YTD Business Expense Rising Rate Long-term Growth, Savings Benefit (b)
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 Allows Key to execute on its strategic priorities and maximize shareholder value Capital Priorities Franchise investments to drive execution of relationship strategy: product 1. Organic Growth capabilities, client-facing personnel mix 15% increase in common share divid
Slide 12: Progress on Targets for Success
Progress on Targets for Success Metrics (a) 3Q15 2014 2013 2012 Targets Balance Sheet Loan to deposit ratio (b) 90% -100% 89% 85% 84% 86% Efficiency NCOs to average loans .27% .20% .32% .69% Moderate Risk 40 - 60 bps Profile Provision for credit losses .30% .10% .26% .42% to average loans High Quali
Slide 13: Outlook and Expectations
Outlook and Expectations FY 2015 Average Loans • Mid-single digit growth vs. FY 2014 • Up low single-digits without the benefit of higher rates Net Interest Income • NIM: down from FY 2014, reflecting continued elevated levels of liquidity; relatively stable with 2Q15 reported level Noninterest Inco
Slide 14: Why KEY?
Why KEY? Key is focused forward with distinctive capabilities Differentiated business model with broad capabilities Uniquely positioned to serve middle market clients Driving positive operating leverage while continuing to invest for growth Moderate risk profile Strong capital with disciplined appro
Slide 15: Financial Review
Financial Review 15
Slide 16: Financial Highlights
Financial Highlights Metrics 3Q15 2Q15 1Q15 4Q14 3Q14 EPS – assuming dilution $ .26 $ .27 $ .26 $ .28 $ .23 Financial Cash efficiency ratio (e) 66.9 % 65.1 % 65.1 % 64.4 % 69.7 % Performance (a) Net interest margin (TE) 2.87 2.88 2.91 2.94 2.96 Return on average total assets .95 1.03 1.03 1.12 .92 T
Slide 17: Loans
Loans Total Average Loans Highlights $ in billions Average Loans Total average loans up 6% $60.0 Average total loans up 6% in 3Q15 from prior year, $50.0 driven by CF&A loans up 15% – Average total loans up in both the $40.0 Community Bank and the Corporate Bank $30.0 Period End Loans $20.0 4Q13 1Q1
Slide 18: Deposits
Deposits Average Deposits (a) Highlights $ in billions Total average deposits up 3% vs. Prior Quarter $70.0 0.50% Deposits down slightly from 2Q15 reflecting: $60.0 0.40% – Decline in short-term noninterest-bearing deposit balances from commercial clients and $50.0 0.30% lower certificates of deposi
Slide 19: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions $20.0 $19.2 5.00% Portfolio composed primarily of GNMA and GSE- $17.0 backed MBS and CMOs 4.00% $15.0 Continue to position portfolio for upcoming 3.00% $10.0 regulatory liquidity requirements: 2.00% 2.15% 2.07% – 2015
Slide 20: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations vs. Prior Quarter $620 4.00% NII up $7 MM, or 1%, from the prior quarter, $598 primarily due to improvement in the earning $581 3.50% asset mix, offset by lower earning
Slide 21: Interest Rate Risk Management
Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk • Maintained moderate asset sensitive position of ~3% (b) Loan Portfolio Deposits (a) - Assumes 200 basis point increase in short and intermediate- 3Q15 3Q15 term rates over a 12-month period CDs: • Uti
Slide 22: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions 3Q15 vs. 2Q15 vs. 3Q14 vs. Prior Quarter Trust and investment services income $ 108 $ (3) $ 9 Noninterest income down 4% from 2Q15: Investment banking and debt 109 (32) 21 placement fees – Lower investment banking and debt Service charge
Slide 23: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions 3Q15 vs. 2Q15 vs. 3Q14 vs. Prior Quarter Personnel (a) $ 426 $ 18 $ 21 Net occupancy 60 (6) (6) Expense growth of 2% from 2Q15 Computer processing 41 (1) 2 – Pension settlement charge of $19 MM in 3Q15 Business services, professional f
Slide 24: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Highlights $ in millions Net loan charge-offs remain below targeted range, $50 .60% $45 at 27 basis points of average loans $41 $40 $31 .40% Nonperforming loans represented 67 basis points $30 of period-end loans .22% $20 $19 .27% .20% All
Slide 25: 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 (%) 9/30/15 3Q15 3Q15 3Q15 9/30/15 9/30/15 9/
Slide 26: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings(a) to Period-end Total Loans Continuing operations Continuing operations .75% 4.0% .61% 3.0% 3.0% .45% 2.6% .50% 2.0% .25% .13% 1.0% .09% .00% 0.0% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q13 1Q14 2Q14 3Q14 4Q14 1
Slide 27: Home Equity Portfolio
Home Equity Portfolio Highlights High quality portfolio $3.9 billion of the total portfolio are fixed rate loans that require Community bank loans and lines: 98% of total portfolio; branch- principal and interest payments; $6.3 billion are lines originated $1.2 billion in lines outstanding (12% of t
Slide 28: Oil & Gas
Oil & Gas Longstanding history, expertise and relationships Strong Portfolio Characteristics >10 years of experience in energy lending with >20 >40% of clients’ 2015 production is hedged specialists dedicated to oil & gas Relationships contribute to noninterest income; ~5% of Focused on middle marke
Slide 29: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on Balance Outstanding Change Net Loan Charge-offs $ in millions Nonperforming Status 9-30-15 vs. 9-30-15 6-30-15 3Q15 (b) 2Q15 9-30-15 6-30-15 6-30-15 Residential properties – homebuilder $ 6 $ 6 - - - $ 5 $ 8 Marine and RV floor plan 1 2 $ (1) - - -
Slide 30: Capital
Capital Common Equity Tier 1 Common Equity (a) Tier 1 (a), (b), (c) Highlights 12.00% 11.26% Disciplined capital management 10.51% – Executing on capital priorities: organic 10.00% growth, dividends, share repurchases and opportunistic growth 8.00% 2015 Capital Plan includes share repurchases of up
Slide 31: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 9-30-15 6-30-15 3-31-15 12-31-14 9-30-14 Tangible common equity to tangible assets at period end Key shareholders’ equity (GAAP) $ 10,705 $ 10,590 $ 10,603 $ 10,530 $ 10,486 Less: Intangible assets (a) 1,084 1,085 1,088 1,090 1,105 Pre
Slide 32: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) $ in millions Three months ended 9-30-15 6-30-15 3-31-15 12-31-14 9-30-14 Pre-provision net revenue Net interest income (GAAP) $ 591 $ 584 $ 571 $ 582 $ 575 Plus: Taxable-equivalent adjustment 7 7 6 6 6 Noninterest income (GAAP) 470 488 437 490 417 Less: N
Slide 33: Common Equity Tier 1 Under the Regulatory Capital Rules (estimated)
Common Equity Tier 1 Under the Regulatory Capital Rules (RCR) (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions September 30, 2015 Common Equity Tier 1 under current RCR $ 9.7 Adjustments from current RCR to the fully phased-in RCR: Deferred tax assets and other intangible assets (b