Slide 1: Second Quarter 2011 Review
Exhibit 99.2 Second Quarter 2011 Review July 19, 2011 Speakers: Beth Mooney Jeff Weeden
Slide 2: Private Securities Litigation Reform Act of 1995 Forward-Looking Statement Disclosure
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, earni
Slide 3: Investor Highlights – Second Quarter 2011
3 Investor Highlights – Second Quarter 2011 Leadership team in place Execution of Continued improvement in credit quality Business Plan Well controlled expenses - driving to create positive operating leverage Momentum in the business – new client acquisition and growth Growing the Leveraging strong
Slide 4: Executing Business Plan: Progress on Targets for Success
4 Executing Business Plan: Progress on Targets for Success KEY Business KEY KEY Metrics (a) Targets Action Plans Model 2Q11 Improve risk profile of loan portfolio and grow Core funded Loan to deposit ratio (b) 86% 90-100% relationships Improve deposit mix and grow deposit base Focus on relationship
Slide 5: Financial Summary – Second Quarter 2011
5 Financial Summary – Second Quarter 2011 Metrics 2Q11 1Q11 2Q10 Income from continuing operations attributable to Key $.26 $.21 $.06 Financial common shareholders Performance (a) Net interest margin (TE) 3.19% 3.25% 3.17% Return on average total assets 1.23 1.32 .44 Tier 1 common equity (c) 11.01%
Slide 6: Stabilizing Loan Portfolio
6 Stabilizing Loan Portfolio Highlights Average Commercial, Financial & Agricultural Loans $ in billions Commercial, Financial and Agricultural loans increased by 3.7% in 2Q11 compared to 1Q11 $20 60% $17.7 $16.9 – Modest growth in Commercial Banking and $16.6 $16.3 $16.9 industrial vertical of Corp
Slide 7: Improving Deposit Mix
7 Improving Deposit Mix Highlights Average Non-time Deposits (a) Higher cost CDs continue to decline, while $ in billions lower cost deposits have remained strong $50 0.5% $45.8 $45.4 $45.3 Improved funding mix has reduced the cost $42.8 $43.6 0.4% of deposits $40 0.3% 0.2% $30 .23% Total CD maturit
Slide 8: Continued Improvement in Asset Quality
8 Continued Improvement in Asset Quality Net Charge-offs & Provision for Loan Losses Nonperforming Assets $ in millions $ in millions $600 8.00% $3,000 6.00% $435 5.00% 6.00% $400 $357 $2,086 $256 $2,000 $1,801 4.00% $228 4.00% $193 $200 $134 $1,338 3.00% 3.18% 2.69% 3.19% 2.00% $1,089 2.00% 1.59% $
Slide 9: Total Revenue
9 Total Revenue Highlights Net Interest Margin (TE) Trend Net interest income and NIM impacted by: $ in millions Continuing Operations – Decline in earnings assets related to TARP $800 6.00% $647 – Movement of escrow deposits $623 $635 $604 $570 $600 – Hedge maturities 3.17% 3.35% 3.31% 3.25% 3.19%
Slide 10: Focused Expense Management
10 Focused Expense Management Highlights Noninterest Expense $ in millions Noninterest expense declined by $21 million compared to 1Q11 $1,000 – Sales of OREO properties resulted in net gains $769 $736 $744 $701 $750 $680 – Reduction in FDIC assessment expense $384 $377 $379 $500 $330 $300 Continuin
Slide 11: Pre-Provision Net Revenue and ROAA
11 Pre-Provision Net Revenue (a) and ROAA (b) 2Q11 Pre-Provision Net Revenue Pre-Provision Net Revenue Trend $ in millions $ in millions $1,024 $500 $417 Noninterest $397 income $400 $360 $344 $680 $346 44% Personnel $300 expense Net interest 56% $344 $200 income Non-personnel 56% expense $100 44% $
Slide 12: Strong Capital Ratios
12 Strong Capital Ratios Highlights Tangible Common Equity to Tangible Assets Peer leading capital position supports growth 12.00% 9.67% 10.00% 9.16% Positioned for successful transition to Basel III 7.65% 8.00% 8.19% 8.00% Continued capital generation through 6.00% execution of strategy 4.00% 2.00%
Slide 13: Appendix
13 Appendix
Slide 14: High Quality Investment Portfolio
14 High Quality Investment Portfolio Highlights Available for Sale Securities $ in billions Portfolio composed of Agency or GSE backed: GNMA, Fannie & Freddie $25 5.00% $20.3 $21.3 $21.2 – No private label MBS or financial paper $20 $19.0 $17.3 4.00% $15 Average portfolio maturity at June 30, 2011:
Slide 15: Credit Quality
15 Credit Quality Credit Quality by Portfolio $ in millions Net loan Allowance / Period-end Average Net loan Nonperforming Ending charge-offs (a)/ period-end Allowance / loans loans charge-offs loans allowance (b) NPLs average loans loans (b) 6/30/11 2Q11 2Q11 1Q11 2Q11 1Q11 6/30/11 3/31/11 6/30/11
Slide 16: Commercial Real Estate Loans – 6/30/11
16 Commercial Real Estate Loans – 6/30/11 Commercial Real Estate by Property Type and Geography $ in millions Geographic Region % of Commercial West Southwest Central Midwest Southeast Northeast Total Total CRE Mortgage Construction Nonowner-occupied: Retail properties $330 $169 $215 $241 $393 $230
Slide 17: Commercial Real Estate
17 Commercial Real Estate Commercial Real Estate Credit Quality $ in millions Period-end Nonperforming Net loan loans loans charge-offs 6-30-11 3-31-11 6-30-11 3-31-11 2Q11 1Q11 Retail properties $1,578 $1,907 $66 $69 $6 $24 Multifamily properties 1,321 1,518 47 21 (1) 11 Health facilities 967 1,056
Slide 18: Home Equity Loans – 6/30/11
18 Home Equity Loans – 6/30/11 Community Bank – Home Equity $ in millions, except average loan size Vintage (% of Loans) Loan Average Loan Average Average % of Loans 2010 and 2006 and Balances Size ($) FICO LTV (a) LTV>90% 2011 2009 2008 2007 prior Home equity loans and lines First lien $ 4,968 $ 58
Slide 19: Exit Loan Portfolio
19 Exit Loan Portfolio Exit Loan Portfolio $ in millions Balance on Balance Change Net Loan Nonperforming Outstanding 6-30-11 vs. Charge-offs Status 6-30-11 3-31-11 3-31-11 2Q11 1Q11 6-30-11 3-31-11 Residentialproperties – homebuilder $62 $87 $(25) $1 $2 $33 $44 Marine and RV floor plan 122 150 (28)
Slide 20: Credit Quality Trends
20 Credit Quality Trends Delinquencies to Period-end Total Loans Quarterly Change in Criticized Outstandings (a) 2.50% 50% 41.7% 41.5% 40% 1.87% 35.1% 2.00% 1.69% 1.72% 30% 1.59% 1.49% 1.50% 1.61% 20% 1.29% 17.1% 1.17% 1.14% .95% .98% 10% 1.00% .82% 1.14% 2.8% 1.07% .78% .62% .60%.56% .97% 0% .57% (