Keycorp · NYSE:KEY
Keycorp — Investor Presentation (February 2017)
26 slides from Keycorp's investor presentation, Feb 28, 2017
Slide 1: Investor Meetings: February – March 2017
Investor Meetings: February – March 2017 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: Who We Are
Key: Who We Are A Relationship-focused Bank Business Broad Product Set and Targeted Diversity Industry Expertise Clients Key Community Consumers Bank Deposits Payments Wealth Mgmt. Advice & Expertise Small businesses Middle market Key Corporate Lending Investments Capital Markets Large corporate Ban
Slide 4: Leading Market Share
Strengthening our Geographic Presence FNFG acquisition strengthens Key’s brand and presence in shared markets while adding complementary new markets Leading market share in Albany, Buffalo, Rochester, and Syracuse(b) Top 5 market New markets share MSA within of Pittsburgh, Key’s footprint Philadelph
Slide 5: Business Model: Winning with Clients
Business Model: Winning with Clients Broad product offering creates a competitive advantage with targeted clients and has enabled us to take market share Compelling Value Proposition for Consumers Uniquely Positioned for Middle Market Clients Client-centric approach, providing ease, value and expert
Slide 6: Driving Positive Operating Leverage
Driving Positive Operating Leverage Executing action plans across our organization to improve efficiency Core Business • Solid loan growth, continued to be driven by CF&A loans three • Positive trends in fee based businesses consecutive years of Momentum positive operating leverage • Expenses remain
Slide 7: Acquisition Accelerates Momentum
Acquisition Accelerates Momentum Continued Confidence in Value Attainment and Financial Targets Executing on cost savings of $400 MM Cost savings of $400 MM Other: ~15% Cash efficiency improves ~300 bps Technology & Third Party Vendors: ~40% ROTCE ~200 0 bps higher Branch Consolidation: ~15% IRR of
Slide 8: Outlook and Expectations
Outlook and Expectations FY 2017(a) Average Earning • Loans and deposit growth: mid-single digit percentage compared to FY 2016 (with 2016 adjusted for full year Assets impact of First Niagara) • Outlook includes one additional rate increase in mid-2017 Net Interest Income • Net interest income expe
Slide 9: Financial Review
Financial Review 9
Slide 10: Financial Highlights
Financial Highlights 4Q16 & 3Q16 reflect the impact of the FNFG acquisition, which became effective on 8/1/2016 Continuing operations, Metrics 4Q16 3Q16 2Q16 1Q16 4Q15 unless otherwise noted EPS – assuming dilution $ .20 $ .16 $ .23 $ .22 $ .27 EPS –excl. merger-related charges(d), (e) .31 .30 .27 .
Slide 11: Loans
Loans Total Average Loans Highlights $ in billions $90 $85 Loan growth reflects acquisition and core business performance $60 Period-end loans up 1% from 9/30/16 $60 Fair value mark on acquired FNFG loan portfolio adjusted from $686 MM to $548 MM during 4Q16 $30 vs. Prior Year Average loans up 43% f
Slide 12: Deposits
Deposits Average Deposits(a) Highlights $ in billions $105 Deposit growth reflects continued momentum in $105 .70% core businesses as well as the FNFG acquisition .60% $85 Retail deposit growth in all First Niagara markets .50% $71 since conversion .40% $65 4Q16: 31% noninterest bearing; 47% retail
Slide 13: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $29.3 $30.0 5.00% backed MBS and CMOs; primarily fixed rate 4.00% $19.1 Growth in portfolio primarily related to: $20.0 3.00% – Full quarter impact of First Niagara 1.87% 2
Slide 14: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations $948 $950 6.00% 4Q16 net interest income includes $92 MM from $92 MM from PAA in 4Q; $19 MM in 3Q purchase accounting accretion ($19 MM in 3Q16) 5.00% $750 – $34 MM of
Slide 15: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 4Q16 vs. 4Q15 vs. 3Q16 Growth reflects continued momentum in core Trust and investment services income $ 123 $ 18 $ 1 businesses as well as the FNFG acquisition Investment banking and debt 157 30 1 Record quarter and year for
Slide 16: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions Up / (Down) 4Q16 vs. 4Q15 vs. 3Q16 4Q16 noninterest expense of $1.2 B included $207 MM of merger-related charges, a full quarter impact of First Personnel $ 648 $ 219 $ 54 Niagara (~$70 MM/month(c)) and an $18 MM pension Net occupancy
Slide 17: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Highlights $ in millions Net loan charge-offs of $72 MM $120 1.00% – Reflects regulatory guidance on consumer $90 .80% bankruptcies and conforming FNFG $72 charge-off policies to Key’s policies $66 .60% $60 – 34 basis points of average loa
Slide 18: Credit Quality
Credit Quality Delinquencies to Period-end Total Loans Criticized Outstandings(a) to Period-end Total Loans Continuing operations Continuing operations .50% .47% 6.0% .39% 4.0% 3.1% 3.2% .25% .12% 2.0% .10% .00% .0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 30 –
Slide 19: 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 (%) 12/31/16 4Q16 4Q16 4Q16 12/31/16 12/31/16 12/
Slide 20: Capital
Capital Common Equity Tier 1(a), (b) Highlights 12.00% Strong capital position with Common Equity 10.94% Tier 1 ratio of 9.59%(b) at 12/31/16 10.00% 9.59% Repurchased $68 MM in common shares during 4Q16 8.00% Common Equity Tier 1 ratio under fully phased-in Regulatory Capital Rules(c): 9.47% at 12/3
Slide 21: Interest Rate Risk Management
Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk • Modest asset sensitive position of 1% - 3%(a) Loans Deposits - Assumes 200 basis point increase over a 12-month period 12/31/16 12/31/16 • Utilize swaps for debt hedging and asset liability management
Slide 22: FNFG Merger-related Charges
FNFG Merger-related Charges $ in millions 4Q16 3Q16 2Q16 1Q16 4Q15 Increase / (Decrease) Net interest income - $ (6) - - - Operating lease income and other leasing gains - $ (2) - - - Other income $ 9 (10) - - - Noninterest income $ 9 $ (12) - - - Personnel expense(a) $ 80 $ 97 $ 35 $ 16 - Net Occup
Slide 23: Home Equity Portfolio
Home Equity Portfolio Highlights High quality portfolio $5.3 billion of the total portfolio are fixed rate loans that require principal and interest payments; $7.4 billion are lines 57% first lien position $1.3 billion in lines outstanding (10% of the total portfolio) Average FICO score of 772 come
Slide 24: Oil & Gas
Oil & Gas Longstanding history, expertise and relationships Total commitments of $3.2 B, including upstream Portfolio performing in-line with expectations commitments of $1.7 B Nonperforming loans down 19% from 3Q16 Upstream portfolio is primarily secured by proven, Reserve coverage: 6% of outstandi
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three m onths e nded $ in millions 12-31-16 9-30-16 6-30-16 3-31-16 12-31-15 Tangible com m on e quity to tangible as se ts at pe riod end Key shareholders' equity (GAAP) $ 15,240 $ 14,996 $ 11,313 $ 11,066 $ 10,746 Less: Intangible assets (a) 2,788 2,855 1,074 1,077
Slide 26: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three m onths ended $ in millions 12-31-16 9-30-16 6-30-16 3-31-16 12-31-15 Average tangible com m on equity Average Key shareholders' equity (GAAP) $ 14,901 $ 13,552 $ 11,147 $ 10,953 $ 10,731 Less: Intangible assets (average) (a) 2,874 2,255 1,076 1,079