Slide 1: KeyCorp First Quarter 2019 Earnings Review
KeyCorp First Quarter 2019 Earnings Review April 18, 2019 Beth E. Mooney 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: 1Q19 Investor Highlights
1Q19 Investor Highlights Revenue reflects solid balance sheet growth − Average loan growth of 3% vs. PY; driven by commercial relationships − Average deposit growth of 5% vs. PY; reflecting growth in core retail relationships Fee income reflects expected seasonality and lower capital markets rel
Slide 4: Financial Review
Financial Review 4
Slide 5: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 1Q19 4Q18 1Q18 LQ ∆ Y/Y ∆ EPS – assuming dilution $ .38 $ .45 $ .38 (16) % - EPS – excl. notable items(a), (b) .40 .48 .38 (17) 5 % Cash efficiency ratio(a) 61.9 % 59.9 % 62.9 % 200 bps (100) bps Cash efficiency –excl. notable items(
Slide 6: Loans
Loans Total Average Loans Highlights $ in billions vs. Prior Year $90 $90 $87 Average loans up 3% from 1Q18 – C&I balances up 8% driven by broad-based growth with middle-market clients $80 – Home equity continues to be impacted by market trends vs. Prior Quarter $70 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4
Slide 7: Deposits
Deposits Average Deposits Highlights $ in billions Deposit cost up 12 bps from 4Q18, reflecting: $110 $108 1.00% – Higher interest rates $103 .80% – Continued migration of portfolio into higher-yielding products $100 .76% .60% Strong and stable deposit base .40% – 26% noninterest-bearing $90 – ~
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 Excluding PAA, 1Q19 net interest income was $33 $952 $22 $985 $1,000 4.0% $963 MM and net interest margin was 3.06% $800 vs. Prior Year 3.5% $600 Net interest incom
Slide 9: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 1Q19 vs. 1Q18 vs. 4Q18 Trust and investment services income $ 115 $ (18) $ (6) Noninterest income down $65 MM (-11%) from 1Q18 Investment banking and debt 110 (33) (76) Lower investment banking and debt pla
Slide 10: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions up / (down) 1Q19 vs. 1Q18 vs. 4Q18 vs. Prior Year Personnel $ 563 $ (31) $ (13) Noninterest expense excl. notable items down Net occupancy 72 (6) (3) $69 MM, or 7%(a) Computer processing 54 2 (1) Business services, professional 44 3
Slide 11: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 1Q19 allowance for loan losses to period-end loans of .98% $100 1.00% $900 $881 $883 250% .80% $75 $64 $62 200% $61 $54 .60% $800 $50 150% 163% 161% .40% 100% $700 $25 .29% .20% 50% .25% $0
Slide 12: Capital
Capital Common Equity Tier 1(a) Highlights 12.00% Strong capital position: CET1 ratio of 9.84%(a) at 3/31/2019 9.99% 9.84% 10.00% Declared dividend of $0.17 per common share and repurchased $199 MM(c) in common shares in 1Q19 8.00% Announced planned capital actions for 3Q19-2Q20 9% common sh
Slide 13: FY2019 Outlook & Long-term Targets
FY2019 Outlook & Long-term Targets FY 2019 Average Balance • Loans: average balances in the range of $90 B - $91 B Sheet • Deposits: average balances in the range of $108 B - $109 B Net Interest Income • Net interest income expected to be in the range of $4.0 B - $4.1 B (TE) • Outlook assumes intere
Slide 14: Appendix
Appendix 14
Slide 15: Loan Portfolio Detail, at 3/31/19
Loan Portfolio Detail, at 3/31/19 Total Loans Commercial Loans $ in billions 3/31/19 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Agriculture Automotive Commercial and industrial $ 46.5 52 Transportation Business Products Commercial real estate 15.8 17 Busines
Slide 16: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $31.6 $32.0 $29.9 2.75% backed MBS and CMOs $24.0 2.47% 2.50% ‒ Primarily fixed rate ‒ GNMA 45% of 1Q19 average balances $16.0 2.16% 2.25% Portfolio used for funding an
Slide 17: Asset & Liability Management Positioning
Asset & Liability Management Positioning Balanced positioning supports strong, stable net interest margin Business and Balance Sheet Highlights Positioning • Strong, low-cost deposit base • Actively hedging to reduce current and future – $79 B interest-bearing deposits at 103 bps exposure to declini
Slide 18: 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% 4.0% 3.6% .35% 2.9% .40% .32% 2.0% .20% .13% .09% .00% .0% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q17 3Q17 4Q17 1Q18 2Q18 3Q
Slide 19: 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(d) offs loans(d) (%) (%) $ in millions (%) 3/31/19 1Q19 1Q19 1Q19 3/31/19 3/31/19 3/31/1
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 3/31/2019 12/31/2018 3/31/2018 Notable Items Efficiency iniative expenses $ 26 $ 24 - Pension settlement charge - 17 - Total notable items $ 26 $ 41 - Income taxes 6 10 - Total notable items after tax $ 20 $ 31 - Earnings per common sh
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 3/31/2019 12/31/2018 3/31/2018 Average tangible common equity Average Key shareholders' equity (GAAP) $ 15,702 $ 15,384 $ 14,889 Less: Intangible assets (average) (a) 2,813 2,828 2,916 Preferred Stock (average) 1,450 1,450 1,025 Averag