Slide 1: KeyCorp Fourth Quarter 2020 Earnings Review
KeyCorp Fourth Quarter 2020 Earnings Review January 21, 2021 Chris Gorman Don Kimble Chairman and Vice Chairman and Chief Executive Officer Chief Financial 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: 4Q20 & FY2020 Highlights
4Q20 & FY2020 Highlights Record 4Q20 earnings per share of $.56 up 37% from 3Q20 and 24% from 4Q19 All-time high revenue for both 4Q20 and FY2020 − Record investment banking and debt placement fees of $243 MM in 4Q20 (FY2020: $661 MM) − Consumer mortgage fees of $176 MM in 2020, up 179% from 201
Slide 4: Financial Review
Financial Review 4
Slide 5: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 4Q20 3Q20 4Q19 LQ ∆ Y/Y ∆ EPS – assuming dilution $ .56 $ .41 $ .45 37 % 24 % Cash efficiency ratio(a) 60.3 % 60.6 % 58.7 % (30) bps 160 bps Return on average tangible common equity(a) 16.6 12.2 14.1 440 250 Profitability Return on a
Slide 6: Loans
Loans Total Average Loans Highlights $ in billions vs. Prior Year $110 6.00% $105 PPP $6 $102 Average loans up 9% from 4Q19 $100 $8 $94 $7.5 − Balances reflect $7.5 B of average PPP 5.00% $90 balances in 4Q20 − Commercial balances reflect broad-based core $80 4.47% 4.00% C&I growth partially offse
Slide 7: Deposits
Deposits Average Deposits Highlights $ in billions $140 $136 1.50% Interest-bearing deposit costs down 11 bps from 3Q20, reflecting impact of lower interest rates $120 $113 1.25% Strong and stable deposit base $100 1.00% − 32% noninterest-bearing(a) $80 0.96% 0.75% − ~60% stable retail and low-c
Slide 8: 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 Year $1,100 $1,043 4.0% $987 Net interest income up $56 MM (+6%) from 4Q19 $1,000 3.5% − Largely driven by higher earning asset $900 balances and loan fees
Slide 9: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 4Q20 vs. 4Q19 vs. 3Q20 Noninterest income up $151 MM (+23%) from 4Q19 Trust and investment services income $ 123 $ 3 $ (5) Investment banking and debt 243 62 97 − Record quarter of investment banking and debt
Slide 10: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions favorable / (unfavorable) 4Q20 vs. 4Q19 vs. 3Q20 vs. Prior Year Personnel $ 661 $ (110) $ (73) Noninterest expense up $148 MM (+15%) from Net occupancy 75 1 1 4Q19 Computer processing 62 (11) (3) − Higher personnel expense (+$110 MM)
Slide 11: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses $ in millions CECL Implementation $500 1.00% $400 .80% $300 .53% .60% .42% $200 .40% $135 $109 $99 $100 .20% $20 $0 .00% 4Q19 1Q20 2Q20 3Q20 4Q20 NCOs Provision for credit losses NCOs to avg loans Nonperforming Loans Allowance for Credit L
Slide 12: Select Commercial Portfolio
Select Commercial Portfolio Active Portfolio Surveillance Portfolios in Focus 12/31/20 9/30/20 % of Total Ongoing portfolio reviews Outstandings Outstandings Loans as of 12/31 $ in millions Monitoring ratings migration Consumer behavior(a) $ 5,083 $ 5,020 5.0% Education 1,541 1,568 1.5 Central
Slide 13: Capital
Capital Common Equity Tier 1(a) Highlights 11.0% Strong capital position: CET1 ratio up 30 bps from 3Q20 to 9.8%(a) at 12/31/2020 – above 10.0% 9.8% 9.4% targeted range 9.0% Stress test results support strong credit profile and loss-absorbing capital: 8.0% − Announced new share repurchase author
Slide 14: FY2021 Outlook & Long-term Targets
FY2021 Outlook & Long-term Targets FY 2021 (vs. FY 2020) Average Balance • Loans: relatively stable Sheet • Deposits: up low-single digit Net Interest Income • Net interest income: relatively stable (includes ongoing participation in PPP) (TE) Noninterest Income • Noninterest income: up low-single d
Slide 15: Appendix
Appendix 15
Slide 16: Commercial Loan Portfolio Detail
Commercial Loan Portfolio Detail Total Commercial Loans Commercial & Industrial (C&I) Solid middle market portfolio $ in billions 12/31/20 % of total loans Aligning bankers to areas of market opportunity and growth - Commercial and industrial $ 52.9 52 investing in strategic hires with industry
Slide 17: Consumer Loan Portfolio Detail
Consumer Loan Portfolio Detail Laurel Road Total Consumer Loans $ in millions Origination Volume $ in billions 12/31/20 % of total WA FICO at loans origination $801 $706 $611 $590 Consumer mortgage 9.3 9 769 $419 Home equity C&I 9.4 9 CRE 812 4Q19 1Q20 2Q20 3Q20 4Q20 Consumer direct $40 4.7 $18 5 76
Slide 18: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions $32.5 $36.0 Portfolio used for funding and liquidity management $32.0 3.00% ‒ Portfolio composed primarily of fixed-rate GNMA and 2.47% GSE-backed MBS and CMOs 2.50% $24.0 1.93% ‒ Portfolio yield excluding short-term
Slide 19: Asset & Liability Management Positioning
Asset & Liability Management Positioning Balanced approach to managing interest rate risk provides declining rate protection while maintaining significant upside to higher rates 4Q20 Balance Sheet Highlights(a) Actively Managing Interest Rate Risk Position Loan Composition Deposit Mix Nominal expo
Slide 20: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings(a) to Period-end Total Loans Continuing operations Continuing operations .80% 6.0% .60% 4.3% 4.0% .40% .35% 2.6% .24% 2.0% .20% .10% .08% .00% .0% 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 30 – 89 days deli
Slide 21: 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 allowance offs loans (%) (%) $ in millions (%) 12/31/20 4Q20 4Q20 4Q20 12/31/20 12/31/20 12/31/20 12/
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended Twelve months ended 12/31/2020 9/30/2020 12/31/2019 12/31/2020 12/31/2019 Tangible common equity to tangible assets at period end Key shareholders' equity (GAAP) $ 17,981 $ 17,722 $ 17,038 Less: Intangible assets (a) 2,848 2,862 2,910
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended Twelve months ended $ in millions 12/31/2020 9/30/2020 12/30/2019 12/31/2020 12/31/2019 Return on average tangible common equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $