Slide 1: Investor Meetings: May – June 2018
Investor Meetings: May – June 2018 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: Business Overview
Key: Business Overview Aligned around client needs and building enduring relationships Community Bank Corporate Bank Client Continuum High Net Worth Individuals & Small Commercial Individuals & Corporations Families Businesses Businesses Families $500 MM+ Commercial Client Revenue: < $10 MM $10 MM -
Slide 4: Strong Franchise with Distinctive Capabilities
Strong Franchise with Distinctive Capabilities Market Presence Western Markets Eastern Markets strong market share top 5 in >20 MSAs(a) Leading market presence across the I-90 corridor Strong growth and presence in attractive markets from Toledo, OH to Albany, NY First Niagara acquisition strengthen
Slide 5: Commercial Capabilities and Expertise
Commercial Capabilities and Expertise Competitive advantage with targeted clients Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity research banking exchange $103 B average deposits #3 commercial m
Slide 6: Levers to Improve Efficiency and Returns
Levers to Improve Efficiency and Returns Delivering positive operating leverage with opportunities across our businesses Accelerating Revenue Momentum Continuing Expense Discipline Executing on First Niagara revenue synergies Full $450 MM (annual run rate) First Niagara cost savings to be reflected
Slide 7: Attractive Growth Opportunities
Attractive Growth Opportunities Well-positioned to execute strategy and drive growth across the franchise Residential Mortgage Commercial & Corporate Banking Payments Investing in People Leveraging distinctive model for Delivering targeted offering for clients, profitable growth focused on the full
Slide 8: Risk Management
Risk Management Maintaining a strong risk culture and moderate risk profile Business Discipline Strong Asset Quality(a) Enterprise-wide approach to managing risks and Net Charge-offs to Average Loans concentrations 1.50% Key Peer median(a) Maintaining enhanced underwriting standards 1.25% Focus on s
Slide 9: Capital Management
Capital Management Disciplined in how we manage, invest, deploy and return our strong capital position Strong Capital Position Focus on Dividends Common Equity Tier 1 Cash Dividends Per Common Share 10.26% 10.16% 25% CAGR $0.465(a) 9.91% 9.91% 9.99% 9.0% - 9.5% Target $0.10 1Q17 2Q17 3Q17 4Q17 1Q18
Slide 10: Outlook and Expectations
Outlook and Expectations FY 2018 Average Balance • Loans: average balances in the range of $88.5 B - $89.5 B Sheet • Deposits: average balances in the range of $104.5 B - $105.5 B Net Interest • Net interest income expected to be in the range of $3.95 B - $4.05 B Income (TE) • Outlook includes rate
Slide 11: Financial Review
Financial Review 11
Slide 12: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 1Q18 4Q17 1Q17 LQ ∆ Y/Y ∆ EPS – assuming dilution .38 .17 .27 124 % 41 % EPS – excl. notable items(a), (b) .38 .36 .32 6 19 Cash efficiency ratio(a) 62.9 % 66.7 % 65.8 % (376) bps (289) bps Profitability Cash efficiency –excl. notabl
Slide 13: Loans
Loans Total Average Loans Highlights $ in billions $90 $86 $87 vs. Prior Year Average loans up 1% from 1Q17 $60 – Broad-based C&I growth with middle-market clients $30 – Expansion of auto lending into existing geographies and dealer relationships $0 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 vs. Prior
Slide 14: Loan Portfolio Detail, at 3/31/18
Loan Portfolio Detail, at 3/31/18 Total Loans Commercial Loans $ in billions 3/31/18 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Agriculture Commercial and industrial $ 44.3 50 Transportation Automotive Business Products Commercial real estate 15.9 18 Technol
Slide 15: Deposits
Deposits Average Deposits Highlights $ in billions $102 $103 Deposit cost up 5 bps from 4Q17, reflecting: $105 .70% – Higher interest rates .60% $85 – Continued migration of portfolio into higher- .50% yielding products .40% $65 Strong and stable deposit base .30% .36% .20% – 30% noninterest-bearing
Slide 16: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $29.2 $29.9 $30.0 2.50% backed MBS and CMOs 2.16% 2.25% ‒ Primarily fixed rate $20.0 1.98% ‒ GNMA 47% of 1Q18 average balances 2.00% Portfolio used for funding and liquidit
Slide 17: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations Excluding PAA, 1Q18 net interest income was $919 MM $33 $1,000 $929 $952 4.0% and net interest margin was 3.04% $53 – NII up 5% from prior year and up 1% from prior qua
Slide 18: Interest Rate Risk Management
Interest Rate Risk Management The strength and diversity of our franchise positions Key to benefit from economic growth and a rising rate environment Business and Balance Sheet Highlights Net Interest Income Sensitivities (FY18) ($MM) • Strong, low-cost deposit base March Rate Hike embedded – $72 B
Slide 19: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 1Q18 vs. 1Q17 vs. 4Q17 vs. Prior Year Trust and investment services income $ 133 $ (2) $ 2 Noninterest income up $24 MM from 1Q17 Investment banking and debt 143 16 (57) placement fees Continued momentum in many fee-based Ser
Slide 20: Noninterest Expense
Noninterest Expense Noninterest Expense Linked Quarter Change $ in millions; excludes notable items(a) $ in millions Up / (Down) 1Q18 vs. 1Q17 vs. 4Q17 Personnel $ 594 $ 38 $ (14) $11 Net occupancy 78 (9) (14) $(24) Computer processing 52 (8) (2) $10 $31 $(35) Business services, professional fees 41
Slide 21: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 1Q18 allowance for loan losses to $100 1.00% period-end loans of 1.00% $900 $870 $881 250% .80% $75 $63 $61 200% $58 $54 .60% $800 $50 150% 163% .40% 152% 100% $700 $25 .27% .25% .20% 50% $
Slide 22: 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 offs loans (%) (%) $ in millions (%) 3/31/18 1Q18 1Q18 1Q18 3/31/18 3/31/18 3/31/18 3/31
Slide 23: Capital
Capital Common Equity Tier 1 Highlights 12.00% Strong capital position with Common Equity Tier 1 ratio of 9.99% at 3/31/18 9.91% 9.99% 10.00% Repurchased $199 MM(b) in common shares during 1Q18 8.00% 6.00% 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Tangible Common Equity to Tangible Assets(a) 10.00% 8.
Slide 24: 2017 FNFG Merger-related Charges
2017 FNFG Merger-related Charges $ in millions Increase / (Decrease) 4Q17 3Q17 2Q17 1Q17 Personnel expense $ 26 $ 25 $ 31 $ 30 Net Occupancy $ 12 $ (2) $ (1) $ 5 Business services and professional fees 3 2 6 5 Computer processing 1 4 2 5 Marketing 5 5 6 6 All other non-personnel 9 2 - 30 Total non-p
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 3/31/2018 12/31/2017 3/31/2017 Notable Items Merger-related charges - $ (56) $ (81) Impacts of tax reform and related actions - $ (30) - Total notable items - $ (86) $ (81) Income taxes - (26) (30) Revaluation of certain tax related as
Slide 26: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) $ in millions Three months ended Twelve months ended 3/31/2018 12/31/17 9/30/17 6/30/17 3/31/17 12/31/2017 12/31/2016 Average tangible common equity Average Key shareholders' equity (GAAP) $ 14,889 $ 15,268 $ 15,241 $ 15,200 $ 15,184 $ 15,224 $ 12,647 Less