Keycorp · NYSE:KEY
Keycorp — Keycorp /New/ — Q3 2022 Earnings Presentation
22 slides from Keycorp's earnings presentation, Oct 20, 2022
Slide 1: KeyCorp Third Quarter 2022 Earnings Review
KeyCorp Third Quarter 2022 Earnings Review October 20, 2022 Don Kimble Vice Chairman and Chief Financial Officer Chris Gorman Chairman and Chief Executive Officer
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: 3Q22 Results
3Q22 Results 3 Revenue up +5% QoQ: driven by growth in net interest income and the net interest margin; reflects strong loan growth and positioning for higher rates Loan growth: adding and deepening client relationships across the franchise with continued growth in both commercial and consumer
Slide 4: Financial Review
Financial Review
Slide 5: Financial Highlights
EOP = End of Period; (1) Non-GAAP measure: see appendix for reconciliation; (2) 9/30/2022 ratios are estimated and reflect Key's election to adopt the CECL optional transition provision Financial Highlights 5 EPS – assuming dilution $ .55 $ .54 $ .65 1.9 % (15.4) % Cash efficiency ratio(1) 58.0 % 59
Slide 6: Total Average Loans
Total Average Loans 3Q21 2Q22 3Q22 Highlights Average Loan Detail 6 28% 31% 10.00% 20.00% 30.00% 40.00% $60 $70 $80 $90 $100 $110 $120 3Q21 4Q21 1Q22 2Q22 3Q22 PPP: $.3 C&I line utilization Total average loans PPP $ in billions 3Q21 2Q22 3Q22 PPP Average loans up 14% from 3Q21 − Broad-based commer
Slide 7: Deposits
(1) Based on period-end balances; (2) Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits; (3) Cumulative beta indexed to 4Q21 Deposits 7 $ in billions vs. Prior Quarter Average deposit balances down 2% from 2Q22 − Lower non-oper
Slide 8: Net Interest Income and Margin
Net Interest Income and Margin $ in millions, continuing operations vs. Prior Quarter TE = Taxable equivalent 2.47% 2.74% 2.0% 2.5% 3.0% 3.5% 4.0% $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 3Q21 4Q21 1Q22 2Q22 3Q22 Net Interest Income (TE) Net Interest Margin (TE)x NIM Change vs. Prior Quarter
Slide 9: Noninterest Income
Noninterest Income 9 Noninterest income down $114MM (-14%) from 3Q21 − Lower investment banking and debt placement fees (-$81MM) reflecting slowdown in capital markets activity − Lower cards and payments income (-$20MM) largely driven by lower prepaid card revenue, partially offset by core growth
Slide 10: Noninterest Expense
Noninterest Expense 10 vs. Prior Quarter vs. Prior Year$ in millions favorable / (unfavorable) 3Q22 vs. 3Q21 vs. 2Q22 Personnel $ 655 $ (15) $ (48) Net occupancy 72 2 6 Computer processing 77 (10) 1 Business services and professional fees 47 9 5 Equipment 23 2 3 Operating lease expense 24 6 3 Market
Slide 11: Credit Quality
NCO = Net charge-off NPL = Nonperforming Loans Credit Quality 11 $554 $390 .56% .00% .40% .80% 1.20% 1.60% 2.00% $0 $300 $600 $900 3Q21 4Q21 1Q22 2Q22 3Q22 NPLs NPLs to period-end loans $1,236 $1,337 223% 343% 100% 150% 200% 250% 300% 350% 400% $0 $500 $1,000 $1,500 $2,000 $2,500 3Q21 4Q21 1Q22 2Q22
Slide 12: Capital
(1) 9/30/22 ratio is estimated and reflects Key's election to adopt the CECL optional transition provision Capital 12 Strong capital position: CET1 ratio 9.1%(1) at 9/30/2022 − Within targeted range of 9.0% - 9.5% Declared quarterly common share dividend of $.195 Board of Directors approved ex
Slide 13: 4Q22 Outlook
4Q22 Outlook 4Q22 (vs. 3Q22) 13 Average Balance Sheet • Loans: up 2% - 4% • Deposits: up 1% - 3% Net Interest Income (TE) • Net interest income: up 4% - 6% Noninterest Income • Noninterest income: up 1% - 3% Noninterest Expense • Noninterest expense: up 1% - 3% Credit Quality • Net charge-offs to av
Slide 14: Appendix
Appendix
Slide 15: Commercial Loan Portfolio Detail
Commercial Loan Portfolio Detail vs. Prior Year Target specific client segments focused in seven industry verticals Experienced bankers with deep industry expertise Focused on high quality clients Credit quality metrics remain strong and stable − Disciplined, consistent underwriting − Active
Slide 16: Consumer Loan Portfolio Detail
Consumer Loan Portfolio Detail Portfolio Highlights Prime & super prime client base focused on relationships Continuing to invest in digital to drive future growth 772 weighted average FICO at origination $504 $646 $820 $445 $194 3Q21 4Q21 1Q22 2Q22 3Q22 Origination Volume$ in millions $ in bill
Slide 17: Securities Portfolio
17 $ in billions 1.66% 1.85% 1.00% 1.50% 2.00% 2.50% 3.00% $0.0 $20.0 $40.0 $60.0 3Q21 4Q21 1Q22 2Q22 3Q22 Average AFS securities Average yield(1)Average HTM securities Projected Cash Flows & Maturities (under implied forward rates) Floating Rate (including hedges) Portfolio used for funding and l
Slide 18: Balanced approach to managing interest rate risk
Balanced approach to managing interest rate risk provides declining rate protection while maintaining upside to higher rates (1) Loan and deposit statistics based on 9/30/2022 ending balances; (2) Non-zero loan floors Loan Composition Deposit Mix Prime 8% 1M LIBOR 18% 3M LIBOR 4% Other 13% SOFR 26%
Slide 19: Credit Quality Trends
Credit Quality Trends (1) Loan and lease outstandings; (2) From continuing operations 19 Delinquencies to Period-end Total Loans Criticized Outstandings(1) to Period-end Total Loans Continuing Operations Continuing Operations .17% .16% .08% .04% .00% .10% .20% .30% .40% .50% 3Q21 4Q21 1Q22 2Q22 3Q22
Slide 20: Credit Quality by Portfolio
Credit Quality by Portfolio 20 Period-end loans Average loans Net loan charge-offs Net loan charge- offs(3) / average loans (%) Nonperforming loans Ending allowance Allowance / period-end loans (%) Allowance / NPLs (%) 9/30/22 3Q22 3Q22 3Q22 9/30/22 9/30/22 9/30/22 9/30/22 Commercial and industrial(
Slide 21: GAAP to Non-GAAP Reconciliation
21 $ in millions (1) For the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, intangible assets exclude $2 million, $2 million, and $3 million, respectively, of period-end purchased credit card receivables; (2) Net of capital surplus; (3) For the three months ended Septe
Slide 22: GAAP to Non-GAAP Reconciliation
22 GAAP to Non-GAAP Reconciliation $ in millions