Keycorp · NYSE:KEY
Keycorp — Keycorp /New/ — Q1 2011 Earnings Presentation
25 slides from Keycorp's earnings presentation, Apr 18, 2011
Slide 1: First Quarter 2011 Review
First Quarter 2011 Review April 18, 2011 Speakers: Henry Meyer Beth Mooney Jeff Weeden
Slide 2: Private Securities Litigation Reform Act of 1995 Forward-Looking Statement Disclosure
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Key's financial condition, results of operations, earnings outlook, asset quality trends and profitability. Forward-looking statements are not
Slide 3: Capital Actions - First Quarter 2011
Capital Actions - First Quarter 2011 Repurchased TARP Capital (CPP Preferred): $2.5 billion Eliminates $125 million of annual preferred dividends Successful completion of capital issuance $625 million common equity (25% of CPP Preferred) $1.0 billion senior unsecured debt offering Notified U.S. Trea
Slide 4: Significant Progress on Keyvolution
Savings through 1Q11 Savings Goal PPNR Net interest Income 317 300 360 Noninterest Income 75 Significant Progress on Keyvolution Keyvolution Cost Savings (a) Highlights Keyvolution focused on business simplification, process improvement & demand management From 4Q08 to 1Q11, $317 million in annual r
Slide 5: Investor Highlights - First Quarter 2011
Improved credit quality (1Q11 vs. 4Q10) NPLs down $183 million (1.82% of period-end loans) NPAs down $249 million (61% decrease from peak level in 3Q09) NCOs declined to $193 million (decreased 5 consecutive quarters) Asset sales continue near Key's carrying values Risk management Capital remains st
Slide 6: Financial Summary - First Quarter 2011
Financial Summary - First Quarter 2011 Capital (b) Asset Quality (a) Financial Performance (a) Metrics Income (loss) from continuing operations attributable to Key common shareholders $.21 $.33 $(.11) Net interest margin (TE) 3.25% 3.31% 3.19% Return on average total assets 1.32 1.53 (.26) TE = Taxa
Slide 7: Key's Targets for Success
(a) Continuing operations, unless otherwise noted. (b) Ending balances; loans & loans held for sale (excluding education loans in the securitization trusts) to deposits (excluding deposits in foreign office). (c) Consolidated operations. Key's Targets for Success (a) KEY Business Model KEY Metrics K
Slide 8: Deposits and Loans Trend
2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Foreign Deposits DDA 12.4 13.604 14.655 14.941 15.644 15.949 16.841 16.479 NOW/Money Market 24.1 24.444 24.91 24.722 25.27 25.783 27.047 27.004 Savings 1.8 1.799 1.801 1.828 1.883 1.885 1.873 1.907 CD's < $100K 14.9 14.749 13.753 12.611 11.309 9.648 8.664 7.98
Slide 9: Substantial Reduction in Net Charge-offs
CF&A CRE - mtg CRE - const Leasing Home equity Other consumer Exit Exit Portfolios 126 106 157 21 47 65 29.5 CF&A 24% CRE - mortgage 20% CRE - construction 30% Other consumer 13% Home equity 9% Net Charge-offs by Loan Type Net Charge-offs 1Q10 = $522 million Net Charge-offs 1Q11 = $193 million Subst
Slide 10: Nonperforming Assets, Net Charge-offs and Provision for Loan Losses
Nonperforming Assets Net Charge-offs & Provision for Loan Losses NPLs NPLs to period-end loans 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Net Loan Charge-offs 502 587 708 522 435 357 256.2 193 NCO to Avg Loans 0.0293 0.0359 0.0464 0.0367 0.0318 0.0269 0.02 0.0159 Provision for Loan Losses 823 733 756 4
Slide 11: Net Interest Margin (TE)
Net Interest Margin (TE) TE = Taxable equivalent (a) Average balances, excludes time deposits and deposits in foreign office. 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Net Interest Income 689 692 716 722 726 726 744 700 70
Slide 12: Enhancing Noninterest Income
Enhancing Noninterest Income Areas of Focus Noninterest Income and % of Total Revenue 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Noninterest Income 706 382 469 450 492 486 526 457 Noninterest Income / Total Revenue 0.55 0.3894 0.424 0.4158 0.4413 0.4289 0.453 0.431 Noninterest income Noninterest Income
Slide 13: Focused Expense Management
Focused Expense Management Noninterest Expense and Average FTEs 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Noninterest Expense 855 901 871 785 769 736 744 701 Average FTEs 16937 16436 15973 15772 15665 15584 15424 15301 Noninterest expense Average FTEs $ in millions Highlights Implemented $317 million
Slide 14: 1Q11 Pre-Provision Net Revenue
1Q11 Pre-Provision Net Revenue Pre-Provision Net Revenue Trend Pre-Provision Net Revenue (a) and ROAA (b) (a) Net interest income plus taxable-equivalent adjustment and noninterest income less noninterest expense. (b) From continuing operations. 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 ROA -0.0162 -0.0094
Slide 15: Tangible Common Equity and Capital Composition
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Tangible Common Equity 0.0658 0.0685 0.0632 0.0629 0.0595 0.0606 0.0735 0.0758 0.0756 0.0737 0.0765 0.08 0.0819 0.0916 Capital Raise Total Tangible Common Equity - Peer Median 0.0559 0.0568 0.0575 0.0574 0.0487 0.0518 0.0632 0.061
Slide 16: Appendix
Appendix
Slide 17: Available for Sale Securities Highlights
Available for Sale Securities Highlights 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Avg. Securities Available for Sale 8.36 12.154 15.937 16.312 17.285 20.276 21.257 21.159 Average Yield 0.0437 0.04 0.0382 0.0373 0.0363 0.0343 0.0327 0.0318 Average AFS securities Average yield $ in billions High Qualit
Slide 18: Credit Quality by Portfolio
N/M = Not Meaningful (a) Net charge-off amounts are annualized in calculation. NCO ratios for discontinued operations and consolidated Key exclude education loans in the securitization trusts since valued at fair-market value. (b) 3-31-11 allowance by portfolio is estimated. Allowance/period loans r
Slide 19: 1Q11 Loan Activity
12/31 loans Exit port. runoff / paydown Loans charged off Net decrease 3/31 loans 1 50.107 49.808 49.509 48.552 48.552 2 0.299 0 0 3 0.232 0.95 CF&A and Leasing Total Loans Total Consumer Total Commercial Real Estate 1Q11 Loan Activity $50.1 $48.6 $(.2) $(.3) $(1.0) 12/31 loans Exit port. runoff / p
Slide 20: Commercial Real Estate by Property Type and Geography
Commercial Real Estate by Property Type and Geography (a) Nonresidential land and development loans. N/M = Not Meaningful Commercial Real Estate Loans - 3/31/11 $ in millions (a)
Slide 21: Commercial Real Estate Transformation
NOO Cons NOO Mort OO Real Estate 8154 4311 5267 NOO Cons NOO Mort OO Real Estate 1581 5559 3511 Owner-occupied 30% Nonowner-occupied construction 46% Total Outstanding Balances at 3/31/11 = $10.7 billion Total Outstanding Balances at 12/31/07 = $17.7 billion Commercial Real Estate loan balances decr
Slide 22: Commercial Real Estate Credit Quality
(a) Nonresidential land and development loans. Commercial Real Estate Commercial Real Estate Credit Quality $ in millions (a)
Slide 23: Home Equity Loans - 3/31/11
(a) Average LTVs are at origination. Current average LTVs for Community Bank total home equity loans and lines is approximately 79%, which compares to 76% at the end of the fourth quarter of 2010. Community Bank - Home Equity Exit Portfolio - Home Equity $ in millions, except average loan size $ in
Slide 24: Exit Loan Portfolio Trend
Exit Loan Portfolio Trend (Excluding Discontinued Operations) Exit Loan Portfolio $ in millions (a) Includes the business aviation, commercial vehicle, office products, construction and industrial leases, Canadian lease financing portfolios; and all remaining balances related to lease in, lease out;
Slide 25: Credit Quality Trends
Credit Quality Trends Quarterly Change in Criticized Outstandings (a) Delinquencies to Period-end Total Loans 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 30 - 89 Day % 0.014927407 0.010743022 0.011673193 0.016884342 0.018746125 0.016097161 0.017222806 0.015882968 0.011420314 0.0