Keycorp · NYSE:KEY
Keycorp — Debt Investor Presentation (April 2025)
40 slides from Keycorp's debt investor presentation, Apr 29, 2025
Slide 1: KeyCorp U.S. Banks Fixed Income Investor Symposium
KeyCorp U.S. Banks Fixed Income Investor Symposium April 29 - May 1, 2025 Tim Schmidt Brian Mauney Corporate Treasurer Director, Investor Relations
Slide 2: Forward-looking Statements and Additional Information
Forward-looking Statements and Additional Information This document 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 condi
Slide 3: Table of Contents
Table of Contents 04 Business and Financial Update Recent financial results and business conditions 11 Liquidity and Funding Deposit dynamics, liquidity portfolio, credit ratings, and liquidity risk management framework 20 Interest Rate Risk Management IRR management framework, hedging portfolio, an
Slide 4: Business and Financial Update
Business and Financial Update
Slide 5: Our Strategic Framework
Business Update Our Strategic Framework We ground our goals in the company’s strategic framework, playing both offense and defense to achieve these goals. Our Strategy Our Strategic Priorities Relationships and Primacy Grow Fee Revenue Platforms Focusing on deep, full-service relationships that crea
Slide 6: 1Q25 Results
Financial Results 1Q25 Results Growth rates are year-over-year, unless otherwise noted Differentiated Fee Driving New Businesses Focused Relationships Focused Risk Management Strengthening the on Targeted Scale on Primacy Excellence Balance Sheet +6% +4% 9% 11.8% Noninterest Income Growth(1) Client
Slide 7: 1Q25 Highlights
$ in millions, excluding EPS 1Q25 Highlights From continuing operations, unless otherwise noted Reported QoQ YoY ▪ Reported EPS of $0.33 EPS $ 0.33 NM 65.0 % ▪ Net interest income up 4% QoQ and 25% YoY − NIM of 2.58% up 17 basis points QoQ Net Interest Income (TE)(1) $ 1,105 4.1 % 24.7 % ▪ Nonintere
Slide 8: Average Loans
Financial Results Average Loans $ in billions vs. Prior Quarter $111.0 $109.0 $106.2 $104.7 $104.4 ▪ Average loans relatively flat from 4Q24 Consumer $34.6 $33.9 $33.2 − Increase in average commercial loans (+0.4%) $32.6 32.0 primarily driven by an increase in commercial and Commercial $76.4 industr
Slide 9: Noninterest Income
Financial Results Noninterest Income $ in millions; Illustrative, not drawn to scale +3% vs. Prior Year YoY $722(1) $647 $668 ▪ Noninterest income up $21MM (+3%), or 6% excluding operating lease income As reported: $(196) − Commercial mortgage servicing fees (+$20MM), reflects higher active special
Slide 10: Net Interest Income and Margin (TE)
Financial Results Net Interest Income and Margin (TE)(1) 1200 From continuing operations, $ in millions 4.00% $1,105 NII Walk (TE) 1100 $1,061 $20 $11 $42 $1,105 +25% 3.50% $1,061 $(16) $(9) $(5) 1000 $964 +4% $899 3.00% 900 $886 2.58% 800 2.50% 2.41% 4Q24 Securities Swap Fixed Rate Day Count Balanc
Slide 11: Liquidity and Funding
Liquidity and Funding
Slide 12: We Manage Liquidity Risk by a Comprehensive Framework
Liquidity We Manage Liquidity Risk by a Comprehensive Framework Key Points isk ppetite ▪ We have a framework that defines clear rimary ob ective aintain sufficient liquidity to econdary ob ective rudently manage funding meet normal and contingent objectives and principles consistent with our funding
Slide 13: Securities Repositioning
Liquidity Securities Repositioning Repositioning accelerates the timing of expected profitability, liquidity and capital improvements AFS Securities Investment Portfolio ▪ In connection with the Scotiabank investment, we repositioned our As of 3/31/2025 securities portfolio by selling low-yielding,
Slide 14: Remixing Our Securities Portfolio to Enhance Liquidity
Liquidity Remixing Our Securities Portfolio to Enhance Liquidity ABS & Other Key Points 8% US Treasury & Agency 18% 20% 18% • Our combined agency CMBS and agency CMO 14% Muni allocation decreased 23 percentage points from 15% 8% 2Q24 to 4Q24 because of: Agency CMBS 16% 25% 15% − 2H24 securities repo
Slide 15: Our AFS Share Exceeds Most Peers
Liquidity Our AFS Share Exceeds Most Peers Key Points % AFS and HTM Data as of 12/31/2024 ▪ In keeping with our liquidity risk management framework, we classify most securities as AFS and limit our HTM allocation ▪ Our liquidity risk and interest rate risk 48% 44% 52% management frameworks specify o
Slide 16: We Maintain Ample Contingent Liquidity
Liquidity We Maintain Ample Contingent Liquidity Key Points LCR Portfolio Composition by HQLA Categories ▪ Our liquid asset portfolio (LAP) consists of cash and $ in billions, as of 3/31/2025 securities guaranteed by the U.S. Treasury, U.S. Level 1 assets government agency (Level 1 assets) or U.S. g
Slide 17: Growing and Prudently Managing Client Deposits
Funding Growing and Prudently Managing Client Deposits vs. Prior Quarter $ in billions $144.2 $147.8 $149.7 $148.5 $142.9 ▪ Average deposits down 0.8% from 4Q24 Other(1) − Growth in consumer deposits offset by a seasonal $56.3 $57.4 $58.7 $59.7 $57.4 decline in commercial balances Commercial 2.39% −
Slide 18: Core Deposit Growth Replacing Wholesale Funding
Funding Core Deposit Growth Replacing Wholesale Funding Brokered Deposits and Borrowed Funds as % of Total Funding Key Points Key vs. Peers(1) ▪ We have actively improved the quality of our funding base by materially reducing total wholesale funding since the 2023 banking sector stress ▪ We have sha
Slide 19: Issuing Entities and Credit Ratings
Funding Issuing Entities and Credit Ratings Key Points ▪ We have built out our funding curve with recent parent company KeyCorp (parent company) issuance Senior debt ratings oody’s/S& /Fitch): aa2 S)/ S)/ + ) − $1 billion 6.401% 11NC10 issued February 2024 Primary funding uses: − $750 million 5.121%
Slide 20: Interest Rate Risk Management
Interest Rate Risk Management
Slide 21: We Manage Interest Rate Risk by a Comprehensive Framework
IRR Management We Manage Interest Rate Risk by a Comprehensive Framework Key Points isk ppetite ▪ We have a framework that defines clear rimary ob ective objectives and principles consistent with our rudently managing II sensitivity 1) mitigate earnings volatility, and 2) expand net interest margin
Slide 22: We Actively Hedge Our Interest Rate Risk
IRR Management We Actively Hedge Our Interest Rate Risk $ in billions; ending balances 1Q25 ALM Hedge Actions $33.1 ▪ Executed $2.5B of forward-starting receive-fixed swaps with a 4.0% WA receive rate that begin accruing from $28.2 $26.2 3Q25 to 1Q26 $23.5 $18.1 $16.5 Forward Starting Swaps as of 3/
Slide 23: We Have Changed How We Manage Our NII Sensitivity
IRR Management We Have Changed How We Manage Our NII Sensitivity “Up 00” Net Interest Income ensitivity Key Points Key vs. Peers1 ▪ Prior to 2024, our NII sensitivity often ranged outside most peer positions Middle quartiles “Up 200” Test Result ▪ Since adopting a new interest rate risk management f
Slide 24: Balance Sheet Management Detail
IRR Management Balance Sheet Management Detail Fixed-rate Asset Repricing Tailwinds – 2Q25 to 2026 Loan Composition(1) Other $ in billions 2Q25 3Q25 4Q25 2025 2026 1% Projected receive-fixed swaps maturities $1.3 $0.4 $1.3 $3.0 $9.1 1M Weighted-average rate received (%) 2.17% 2.19% 1.96% 2.08% 2.78%
Slide 25: Capital Management
Capital Management
Slide 26: We Have a Strong, High-Quality Capital Base
Capital Management We Have a Strong, High-Quality Capital Base Common Equity Tier 1(1) Marked Common Equity Tier 1(2) ~150bps 11.9% 11.8% ~280bps 10.3% 10.5% 10.8% 9.9% 9.7% 8.6% 7.1% 7.3% 1Q24 2Q24 3Q24 4Q24 1Q25 1Q24 2Q24 3Q24 4Q24 1Q25 Tangible Common Equity Ratio(2) ~240bps 7.0% 7.4% 6.2% 5.0% 5
Slide 27: We Prudently Manage Our Capital
Capital Management We Prudently Manage Our Capital Key Points Current Capital Stack vs. Steady State Composition (% of RWA)1 ▪ Scotiabank’s $2.8 billion investment raised our CET1 ratio well above our interim target before 1.2% the asel III “endgame” rules are finalized 1.4% 1.2% − We will reassess
Slide 28: Our Capital Ratios Compare Favorably to Most Peers
Capital Management Our Capital Ratios Compare Favorably to Most Peers Top quartile ET capital ratios both as reported and on a ‘marked’ basis CET1(1) AOCI-adjusted CET1(1),(2) 1Q25 4Q24, unless otherwise noted CMA 12.1% MTB 11.6% KEY 11.8% (1Q25) KEY 9.9% MTB 11.5% TFC 9.8% TFC 11.3% PNC 9.3% ZION 1
Slide 29: Asset Quality
Asset Quality
Slide 30: Credit Trends Stable to Improved Across the Board
Asset Quality Credit Trends Stable to Improved Across the Board Net Charge-offs & Provision for Credit Losses Delinquencies to Period-end Total Loans $ in millions Continuing Operations 0.26% 0.27% 0.58% 0.43% 0.43% 0.22% 0.34% 0.20% 0.29% 0.17% $154 $101 $114 $110 $118 $81 $91 $100 $95 0.16% 0.13%
Slide 31: Ample Loan Loss Reserves
Asset Quality Ample Loan Loss Reserves Allowance for Credit Losses (ACL) Reserve Highlights $ in millions ▪ Reserves to loans currently near its highest level since 4Q $1,823 $1,833 $1,774 $1,707 2020 $1,699 1.71% ▪ Levels of reserves are in line or above peers when 1.66% 1.68% 1.63% 1.63% measured
Slide 32: C&I Portfolio
Asset Quality C&I Portfolio High quality C&I portfolio that is diversified by product and geography; ~55% investment grade C&I Loans as a % of Total Loans Balance by Industry as a % of C&I Loans Period-end loans Period-end loans Other (1) Finance 15% 20% • ~61% SFL (97% investment grade) Oil & Gas •
Slide 33: Commercial Real Estate Portfolio
Asset Quality Commercial Real Estate Portfolio High-quality CRE portfolio has relatively limited exposure and is diversified by property type and geography CRE Loan Portfolio Composition CRE Portfolio Key Statistics Period-end loans 1Q24 4Q24 1Q25 As a % Total Loans Office Highlights NCO ratio(2) 0.
Slide 34: Consumer Portfolio
Asset Quality Consumer Portfolio High-quality, mostly secured portfolio with low loss history Loan Portfolio Composition Consumer NCO Ratio(3) Period-end loans As a % Total Loans 0.39% 0.41% 0.29% 0.29% 0.27% Residential Mortgage 0.27% 0.21% 0.19% 0.12% 2018-2024 19% Avg. NCO Ratio 2018 2019 2020 20
Slide 35: Appendix
Appendix
Slide 36: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 1Q25 4Q24 1Q24 Tangible common equity to tangible assets at period end Key shareholders’ equity GAA ) $ 19,003 $ 18,176 $ 14,574 Less: Intangible assets 2,774 2,779 2,799 Preferred stock(1) 2,446 2,446 2,446 Tangible common equity (non-GAAP) $ 13,783 $ 1
Slide 37: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 1Q25 4Q24 1Q24 Pre-provision net revenue Net interest income (GAAP) $ 1,096 $ 1,051 $ 875 Plus: Taxable-equivalent adjustment 9 10 11 Noninterest income 668 (196) 647 Less: Noninterest expense 1,131 1,229 1,143 Pre-provision net revenue from continuing o
Slide 38: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 1Q25 4Q24 1Q24 Adjusted taxable-equivalent revenue Noninterest income (GAAP) $ 668 $ (196) $ 647 Plus: Selected Items(1) - 918 - Adjusted noninterest income (non-GAAP) $ 668 $ 722 $ 647 Net interest income TE (non-GAAP) 1,105 1,061 886 Total adjusted tax
Slide 39: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation CET1 – AOCI Impact(1) ($ in millions) 1Q24 2Q24 3Q24 4Q24 1Q25 Common Equity Tier 1 (A) $ 14,821 $ 14,893 $ 15,043 $ 16,488 $ 16,549 Add: AFS and Pension accumulated other Comprehensive income (loss) (4,608) (4,530) (3,118) (3,032) (2,601) Adjusted Common Equity Tier
Slide 40: Selected Items Impact on Earnings
Selected Items Impact on Earnings Selected Items Impact on Earnings $ in millions, except per share amounts Pretax(1) After-tax at marginal rate(1) Quarter to date results Amount Net Income EPS(3)(5) Three months ended March 31, 2025 No items $ - $ - $ - Three months ended December 31, 2024 Loss on