Slide 1: KeyCorp First Quarter 2021 Earnings Review
KeyCorp First Quarter 2021 Earnings Review April 20, 2021 Chris Gorman 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: 1Q21 Highlights
1Q21 Highlights Broad-based growth across the franchise − Continued growth in retail households and commercial clients − Raised $13 B capital for commercial clients in 1Q21; <20% retained on balance sheet Strategy Successful launch of national digital bank: Laurel Road for Doctors Execution Ac
Slide 4: Laurel Road for Doctors: Launch of National Digital Healthcare Bank
Laurel Road for Doctors: Launch of National Digital Healthcare Bank Laurel Road National Digital Bank Existing foundation Launched March 30th, 2021 ■ $4.6 billion of loan originations since ■ Bringing together a full set of solutions, acquisition in April 2019 expertise, and services to drive valu
Slide 5: Financial Review
Financial Review 5
Slide 6: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 1Q21 4Q20 1Q20 LQ ∆ Y/Y ∆ EPS – assuming dilution $ .61 $ .56 $ .12 9 % 408 % Cash efficiency ratio(a) 60.3 % 60.3 % 62.3 % - (200) bps Return on average tangible common equity(a) 18.2 16.6 3.8 160 bps 1,440 Profitability Return on a
Slide 7: Loans
Loans Total Average Loans Highlights $ in billions vs. Prior Year $110 6.00% $105 PPP $6 $102 $101 Average loans up 5% from 1Q20 $100 $8 $96 $7.5 $7.0 − Balances reflect $7 B of average PPP balances 5.00% $90 in 1Q21 − Commercial balances reflect decreased $80 4.32% 4.00% utilization 3.60% $70 − C
Slide 8: Deposits
Deposits Average Deposits Highlights $ in billions $138 $140 1.50% Interest-bearing deposit costs down 3 bps from 4Q20, reflecting the ongoing impact of deposit $120 $110 1.25% pricing actions $100 1.00% Strong and stable deposit base $80 − 33% noninterest-bearing(a) 0.82% 0.75% $60 − ~60% stabl
Slide 9: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations vs. Prior Year $1,100 4.0% $1,012 Net interest income up $23 MM (+2%) from 1Q20 $989 $1,000 3.5% − Largely driven by higher earning asset $900 balances and loan fees
Slide 10: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 1Q21 vs. 1Q20 vs. 4Q20 Noninterest income up $261 MM (+55%) from 1Q20 Trust and investment services income $ 133 $ - $ 10 Investment banking and debt 162 46 (81) − Record first quarter of investment banking a
Slide 11: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions favorable / (unfavorable) 1Q21 vs. 1Q20 vs. 4Q20 vs. Prior Year Personnel $ 624 $ (109) $ 37 Noninterest expense up $140 MM (+15%) from Net occupancy 76 - (1) 1Q20 Computer processing 73 (18) (11) − Higher personnel expense primarily
Slide 12: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses $ in millions $500 1.00% $400 $359 .80% $300 .60% .46% $200 .35% $84 $114 .40% $100 $(93) .20% $0 ($100) .00% 1Q20 2Q20 3Q20 4Q20 1Q21 NCOs Provision for credit losses NCOs to avg loans Nonperforming Loans Allowance for Credit Losses (ACL)
Slide 13: Capital
Capital Common Equity Tier 1(a) Highlights 11.0% Strong capital position: CET1 ratio 9.8%(a) at 3/31/2021 – above targeted range 10.0% 9.8% Strong capital return: 8.9% 9.0% − Repurchased $135 MM common shares (under share repurchase authorization of up 8.0% to $900 MM for 1Q21-3Q21) 7.0% − Maint
Slide 14: FY2021 Outlook & Long-term Targets
FY2021 Outlook & Long-term Targets FY 2021 (vs. FY 2020) Prior Guidance (as of 1/21/21) Updated Guidance (as of 4/20/21) Average • Loans: relatively stable • Loans: relatively stable Balance Sheet • Deposits: up low-single digit • Deposits: up mid-single digit Net Interest • Net interest income: rel
Slide 15: Appendix
Appendix 15
Slide 16: Commercial Loan Portfolio Detail
Commercial Loan Portfolio Detail Total Commercial Loans Commercial & Industrial (C&I) Solid middle market portfolio $ in billions 3/31/21 % of total loans Aligning bankers to areas of market opportunity and growth - Commercial and industrial $ 52.5 52 investing in strategic hires with industry v
Slide 17: Consumer Loan Portfolio Detail
Consumer Loan Portfolio Detail Laurel Road Total Consumer Loans $ in millions Origination Volume $ in billions 3/31/21 % of total WA FICO at loans origination $611 $706 $590 Consumer mortgage 10.3 10 770 $419 $475 Home equity C&I 9.1 9 CRE 808 1Q20 2Q20 3Q20 4Q20 1Q21 Consumer direct $40 4.9 $18 5 7
Slide 18: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio used for funding and liquidity management $40.0 $37.2 3.00% ‒ Portfolio composed primarily of fixed-rate GNMA and $31.0 GSE-backed MBS and CMOs $32.0 2.50% 2.51% ‒ Portfolio yield excluding short-term Treas
Slide 19: Asset & Liability Management Positioning
Asset & Liability Management Positioning Balanced approach to managing interest rate risk provides declining rate protection while maintaining significant upside to higher rates 1Q21 Balance Sheet Highlights(a) Actively Managing Interest Rate Risk Position Loan Composition Deposit Mix Other 7% Nom
Slide 20: Select Commercial Portfolio
Select Commercial Portfolio Active Portfolio Surveillance Portfolios in Focus 3/31/21 12/31/20 % of Total Ongoing portfolio reviews Outstandings Outstandings Loans as of 3/31 $ in millions Monitoring ratings migration Consumer behavior(a) $ 5,112 $ 5,083 5.1% Education 1,557 1,541 1.5 Central
Slide 21: 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% 4.2% 4.0% .38% .40% 2.7% .19% 2.0% .20% .12% .09% .00% .0% 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 30 – 89 days deli
Slide 22: 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 allowance offs loans (%) (%) $ in millions (%) 3/31/21 1Q21 1Q21 1Q21 3/31/21 3/31/21 3/31/21 3/31/21
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 3/31/2021 12/31/2020 3/31/2020 Tangible common equity to tangible assets at period end Key shareholders' equity (GAAP) $ 17,634 $ 17,981 $ 17,411 (a) Less: Intangible assets 2,842 2,848 2,894 (b) Preferred Stock 1,856 1,856 1,856 Tangi
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 3/31/2021 12/31/2020 3/31/2020 Return on average tangible common equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $ 591 $ 549 $ 118 Average tangible common eq