Keycorp · NYSE:KEY
Keycorp — Keycorp /New/ — Bank of America Merrill Lynch 2013 Banking and Financial Services Conference
30 slides from Keycorp's conference presentation, Nov 12, 2013
Slide 1: Bank of America Merrill Lynch 2013 Banking and Financial Services Conference
EXHIBIT 99.1 Bank of America Merrill Lynch 2013 Banking and Financial Services Conference KeyCorp Don Kimble Chris Gorman Chief Financial Officer President, Key Corporate Bank
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: Key – Who We Are
Key – Who We Are Key is a strong company that is well-positioned to leverage its distinctive capabilities Loans • 15 th largest U.S. bank-based financial services company • Two primary lines of business: Key Community Bank Key Corporate Bank Revenue Noninterest Income • Business diversity across the
Slide 4: Positioned to Win
Positioned to Win Execution of strategic priorities position Key to best deliver for its clients Strategic Priorities Benefit to Key and Clients Executing on distinct capabilities Solutions that meet clients’ needs and business alignment Broad capabilities, including on-balance sheet and capital mar
Slide 5: Business Model: Aligned and Targeted
Business Model: Aligned and Targeted Local delivery of broad product set and industry expertise Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity research banking exchange M&A / Equipment Wealth ma
Slide 6: Key Corporate Bank
Key Corporate Bank Our middle market focus, industry-driven operating model and broad corporate & investment banking capability set are unique…and drive results Capability / Model Boutiques Regional Banks Universal Banks Investment Banking Commercial Banking Industry-driven Model Middle Market Focus
Slide 7: Delivering the Distinctive Platform
Delivering the Distinctive Platform Key can lead transactions across markets -- this breadth and access allow us to match client needs and market conditions to deliver the best execution for our clients • In the twelve months ended 3Q13, Key Corporate Bank raised $57B in capital in > 800 transaction
Slide 8: Growing Our Franchise
Growing Our Franchise We have taken purposeful steps to enhance our ability to acquire and expand targeted client relationships within our industry verticals the result is greater transaction activity and enhanced roles for Key • Key Corporate Bank has raised $46B of capital for our clients during t
Slide 9: Achieving Results
Achieving Results We continue to make solid progress in growing both loans and investment banking & debt placement fees -- demonstrating the power of our model • Since 1Q09, investment banking and debt placement fees have doubled while we focused our balance sheet strategically on a more targeted cl
Slide 10: External Benchmarking
External Benchmarking Our results compare favorably to external benchmarks we are gaining C&I loan share and getting paid for the risks we take Loan Growth Asset Productivity Since our portfolio troughed in 2Q11, Key Corporate Bank has taken …while our broad product capabilities generate peer leadin
Slide 11: Sizing the Opportunity
Sizing the Opportunity We have a substantial opportunity to expand our client base -- targeting middle market companies $50MM to $1.5B within our focus industry verticals • ~5,000 prospects headquartered within Key’s Community Bank franchise that align with the Corporate Bank’s focus industry vertic
Slide 12: Effective Risk Management
Effective Risk Management A clear, focused strategy executed with rigor and discipline over the cycle is the core of our risk management strategy • Net charge-offs of $21MM (10bps) over the last twelve months • Portfolio credit quality is strongest since pre-crisis across all metrics • Industry expe
Slide 13: Financial Review
* * * * * * * * * Financial Review 13
Slide 14: Progress on Targets for Success
Progress on Targets for Success KEY KEY KEY Metrics (a) Targets Focus areas FY11 FY12 3Q13 YTD Improving balance Loan to deposit ratio (b) 87% 86% 84% 90-100% sheet efficiency NCOs to average loans 1.11% .69% .33% Maintaining 40-60 bps moderate risk profile Provision to average loans (.12)% .45% .28
Slide 15: Operating Leverage: Driving Productivity and Efficiency
Operating Leverage: Driving Productivity and Efficiency Achieved cost savings target; focused on further efficiency improvement Driving productivity enhancements: improving annualized revenue per FTE (a) Efficiency initiative charges include pension settlement in 3Q13 (b) Non-GAAP measures: see Appe
Slide 16: Disciplined Capital Management
Disciplined Capital Management Executing on Capital Priorities 1. Organic Growth 2. Dividends 3. Share Repurchases 4. Opportunistic Growth Strong Capital Position is a Competitive Strength Over Time (a) Peer group data source: SNL; 9/30/13 ratios are estimated 16
Slide 17: Focused Forward
Focused Forward Key is well-positioned to grow and improve returns 17
Slide 18: Appendix
* * * * * * * * * * Appendix 18
Slide 19: Outlook and Expectations
Outlook and Expectations Guidance provided during 3Q13 earnings call Loans • Mid-single digit average balance growth • Relatively stable to the 3Q13 level over the next few quarters NIM • Potential downward pressure, dependent upon level of liquidity • Net interest income relatively stable in 2H13 R
Slide 20: Efficient Balance Sheet: Improving Balance Sheet Mix
Efficient Balance Sheet: Improving Balance Sheet Mix Average Loans Continue to Increase, Driven by Commercial, Financial & Agricultural (CF&A) Growth in Non-time Deposits with Improved Funding Cost Note: Loan and deposit figures represent average balances; deposits exclude deposits in foreign office
Slide 21: 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 9/30/13 of 3.8 years compared to 3.2 years at 6/30/13 Unrealized net gain of $3
Slide 22: High Quality Revenue: Diverse Streams
High Quality Revenue: Diverse Streams Net Interest Income & Net Interest Margin (TE) Trend Noninterest Income Noninterest income diversity provides strength; growth in core businesses (a) Continuing Operations TE = Taxable equivalent (a) Excludes gains from the redemption of trust preferred securiti
Slide 23: Moderate Risk Profile: Strong Credit Quality
Moderate Risk Profile: Strong Credit Quality Significant Improvement in Credit Quality Trends Maintaining Moderate Risk Profile (a) Peer group data source: SNL 23
Slide 24: Asset Quality Trends
Asset Quality Trends Delinquencies to Period-end Total Loans Quarterly Change in Criticized Outstandings (a) Metric (b) 3Q13 2Q13 1Q13 4Q12 3Q12 Delinquencies to EOP total loans: 30-89 days .54 % .47 % .70 % .80 % .69 % Delinquencies to EOP total loans: 90+ days .17 .15 .16 .15 .17 NPLs to EOP portf
Slide 25: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan Period- Allowance / Allowance / Average Net loan charge-offs (b) / Nonperforming Ending end period-end NPLs loans charge-offs average loans loans (c) allowance loans loans (d) (%) (%) $ in millions (%) 9/30/13 3Q13 3Q13 2Q13 3Q13 2Q13 9/30/13 6/30/
Slide 26: Home Equity Loans – 9/30/13
Home Equity Loans – 9/30/13 Community Bank – Home Equity $ in millions, except average loan size Vintage (% of Loans) Loan Average Loan Average Average % of Loans 2012 and 2008 and Balances Size ($) FICO LTV (a) LTV>90% later 2011 2010 2009 prior Home equity loans and lines First lien $ 5,932 $ 67,6
Slide 27: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on Balance Outstanding Change Net Loan Charge-offs $ in millions Nonperforming Status 9-30-13 vs. 9-30-13 6-30-13 3Q13 (c) 2Q13 (c) 9-30-13 6-30-13 6-30-13 Residential properties –homebuilder $ 26 $ 26 - - $ 1 $ 8 $ 8 Marine and RV floor plan 25 28 $ (
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 9-30-13 6-30-13 9-30-12 Tangible common equity to tangible assets at period end Key shareholders’equity (GAAP) $ 10,206 $ 10,229 $ 10,251 Less: Intangible assets (a) 1,017 1,021 1,031 Preferred Stock, Series A (b) 282 282 291 Tangible
Slide 29: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three months ended $ in millions 9-30-13 6-30-13 9-30-12 Average tangible common equity Average Key shareholders' equity (GAAP) $ 10,237 $ 10,314 $ 10,222 Less: Intangible assets (average) (a) 1,019 1,023 1,026 Preferred Stock, Series A (average) 291 291 2
Slide 30: Tier 1 Common Equity Under the Regulatory Capital Rules, Incorporating Basel III Guidance (estimated)
Tier 1 Common Equity Under the Regulatory Capital Rules, Incorporating Basel III Guidance (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions Sept. 30, 2013 Tier 1 common equity under current regulatory rules $ 9.3 Adjustments from current regulatory rules to the Regulatory Capital Ru
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