Slide 1: KeyCorp Fourth Quarter 2013 Earnings Review
Exhibit 99.2 KeyCorp Fourth Quarter 2013 Earnings Review January 23, 2014 Beth E. Mooney Don Kimble Chairman and Chief Financial Officer Chief Executive Officer
Slide 2: Forward-Looking Statements and Additional Information Disclosure
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION DISCLOSURE This presentation contains forward-looking statements, including statements about our financial condition, results of operations, asset quality trends, capital levels and profitability. Forward-looking statements can often be identifie
Slide 3: Investor Highlights – 2013
Investor Highlights – 2013 Grew commercial and consumer loans Total average loans up 5% from 2012, driven by CF&A up 12% Optimize and Net interest income up 3% from prior year Grow Fifth straight year of growth for investment banking and debt placement fees Revenue Benefitted from investments: cards
Slide 4: Financial Review
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Slide 5: Financial Highlights
Financial Highlights Metrics 4Q13 3Q13 2Q13 1Q13 4Q12 EPS – assuming dilution $ .26 $ .25 $ .21 $ .21 $ .20 Cash efficiency ratio (e) 67.4 % 67.5 % 69.1 % 66.0 % 69.0 % Financial Adj. cash efficiency ratio (ex. initiative charges (f) ) (e) 65.1 63.6 65.4 64.5 67.5 Performance (a) Net interest margin
Slide 6: Loan Growth
Loan Growth Highlights Average Commercial, Financial & Agricultural Loans 4Q13 total average loans up 3% from the prior year; up 5% excluding the exit portfolio – Driven by CF&A up 8% in 4Q13 from 4Q12 Average loans up 1% unannualized from 3Q13 with period-end loans up 2% Total commitments up, with
Slide 7: Improving Deposit Mix
Improving Deposit Mix Highlights Funding Cost Overall funding cost continues to improve, with total deposit cost declining to 20 bps Transaction deposit balances up 11% from 4Q12 Total CD maturities and average cost – 2014 Q1: $1.6 billion at .65% – 2014 Q2: $1.2 billion at 1.36% – 2014 Q3: $1.0 bil
Slide 8: Net Interest Income and Margin
Net Interest Income and Margin Highlights Net Interest Income (TE) & Net Interest Margin (TE) Trend $ in millions Net interest income up 1% from 3Q13 Continuing Operations – Relatively stable excl. the impact of leveraged lease terminations, which reduced net interest income by $8 MM in 3Q13 and $2
Slide 9: Noninterest Income
Noninterest Income Highlights Noninterest Income Continuing Operations Core fee income businesses showing strength $ in millions – Excl. gains from leveraged lease terminations(a) , noninterest income is up 2% from prior year and up 3% from prior quarter Benefitting from investments – Five consecuti
Slide 10: Focused Expense Management
Focused Expense Management Highlights Noninterest Expense $ in millions Expenses down 3% from prior year and 1% from prior quarter Compared to prior quarter, expenses impacted by: – Lower efficiency initiative and pension settlement charges (down $17 MM) – Increased incentives and business services
Slide 11: Continued Improvement in Asset Quality
Continued Improvement in Asset Quality Highlights Net Charge-offs & Provision for Loan and Lease Losses $ in millions Net loan charge-offs decreased 36% from 4Q12 to $37MM, or 27 bps of average loans 4Q13 commercial loan net charge-offs were $2MM or 2 bps of average loans Gross charge-offs down $12M
Slide 12: Strong Capital Ratios
Strong Capital Ratios Highlights Tangible Common Equity to Tangible Assets (b) Disciplined execution of capital plan Repurchased $99 million in common shares during 4Q13 Estimated Tier 1 common equity ratio under the Regulatory Capital Rules of 10.6%(a), (b) Book Value per Share Tier 1 Common Equity
Slide 13: 2014 Outlook and Expectations
2014 Outlook and Expectations Loans • Mid-single digit average balance growth Net Interest • Relatively stable from 2013 Income Noninterest • Low single-digit growth compared to prior year Income Expense • Low single-digit percentage decline from 2013 Efficiency / • Positive operating leverage Produ
Slide 14: Appendix
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Slide 15: Progress on Targets for Success
Progress on Targets for Success Metrics (a) 4Q13 3Q13 Targets Focus areas Improving balance Loan to deposit ratio (b) 84% 84% 90-100% sheet efficiency Maintaining NCOs to average loans .27% .28% moderate risk 40-60 bps profile Provision to average loans .14% .21% Net interest margin 3.01% 3.11% >3.5
Slide 16: High Quality Investment Portfolio
High Quality Investment Portfolio Highlights Average Total Investment Securities Portfolio composed of Agency or GSE backed CMOs: Fannie, Freddie & GNMA – No private label MBS or financial paper Average portfolio life at 12/31/13 of 3.6 years compared to 3.8 years at 9/30/13 Securities cash flows of
Slide 17: Asset Quality Trends
Asset Quality Trends Delinquencies to Period-end Total Loans Quarterly Change in Criticized Outstandings (a) Continuing Operations Continuing Operations 30 – 89 days delinquent 90+ days delinquent Metric (b) 4Q13 3Q13 2Q13 1Q13 4Q12 Delinquencies to EOP total loans: 30-89 days .58 % .54 % .47 % .70
Slide 18: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan Allowance / Allowance / Period- Average Net loan charge-offs (b) / Nonperforming Ending period-end NPLs end loans loans charge-offs average loans loans (c) allowance (d) loans (d) (%) (%) $ in millions (%) 12/31/13 4Q13 4Q13 4Q13 12/31/13 12/31/13
Slide 19: Home Equity Portfolio
Home Equity Portfolio Highlights High quality portfolio $3.9 billion of the total portfolio are fixed rate loans that require Community bank loans and lines: 97% of total portfolio; branch- principal and interest payments; $6.8 billion are lines originated $1.3 billion in lines outstanding (12% of t
Slide 20: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on Balance Outstanding Change Net Loan Charge-offs $ in millions Nonperforming Status 12-31-13 vs. 12-31-13 9-30-13 4Q13 (c) 3Q13 (c) 12-31-13 9-30-13 9-30-13- Residential properties – homebuilder $ 20 $ 26 $ (6) - - $ 7 $ 8 Marine and RV floor plan 24
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (a) $ in millions Three months ended 12-31-13 9-30-13 12-31-12 Tangible common equity to tangible assets at period end Key shareholders’equity (GAAP) $ 10,303 $ 10,206 $ 10,271 Less: Intangible assets (b) 1,014 1,017 1,027 Preferred Stock, Series A (c) 282 282 291 Tan
Slide 22: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (a) (continued) $ in millions Three months ended 12-31-13 9-30-13 12-31-12 Average tangible common equity Average Key shareholders' equity (GAAP) $ 10,272 $ 10,237 $ 10,261 Less: Intangible assets (average)(b) 1,016 1,019 1,030 Preferred Stock, Series A (average) 291
Slide 23: Tier 1 Common Equity Under the Regulatory Capital Rules (estimated)
Tier 1 Common Equity Under the Regulatory Capital Rules (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions Dec. 31, 2013 Tier 1 common equity under current regulatory rules $ 9.3 Adjustments from current regulatory rules to the Regulatory Capital Rules: Deferred tax assets and PCCRs