Slide 1: KeyCorp First Quarter 2024 Earnings Review
KeyCorp First Quarter 2024 Earnings Review April 18, 2024 Chris Gorman Chairman and Chief Executive Officer Clark Khayat Chief Financial Officer
Slide 2: 1Q24 Results
1Q24 Results Driving New Relationships Focused on ✓Enhanced+6% Strengthening the 29bps underwrite-to- YoY Increase in noninterest Balance Sheet NCOs / Average Loans Primacy income, driven by record 1Q distribute Investment Banking fees platform through partnership with +6% Expanded underwrite-to-dis
Slide 3: Financial Review
Financial Review
Slide 4: 1Q24 Highlights
1Q24 Highlights $ in millions, excluding EPS From continuing operations, unless otherwise noted ▪ EPS of $0.20, with $0.02 impact from FDIC special Reported QoQ YoY assessment of $29MM pre-tax(1) Includes $0.02 impact EPS from special assessment(1) $0.20 N/M (33)% ▪ Net interest income down 4.5% seq
Slide 5: Average Loans
Average Loans $ in billions vs. Prior Quarter $119.8 $120.7 $117.6 $113.9 EOP Loans: ▪ Average loans down 2.6% from 4Q23 $111.0 $109.9Bn Consumer $36.8 $36.6 $36.1 Down 2% QoQ − Decline in commercial loans (-$2.2Bn), mostly driven $35.3 $34.6 by C&I 5.26% 5.41% 5.51% 5.61% Loan Yield 5.01% − Decline
Slide 6: Average Deposits
Average Deposits vs. Prior Quarter $ in billions $143.4 $142.9 $144.8 $145.1 $142.9 ▪ Average deposits were down 1.5% from from 4Q23 Other(1) $6.6 $9.0 $6.1 $3.3 $2.5 $56.1 $54.9 $56.9 − Included ~$1Bn decline in brokered CDs Commercial $52.2 $51.4 2.20% 2.06% 1.88% − Client deposits down slightly r
Slide 7: Net Interest Income and Margin (TE)
Net Interest Income and Margin (TE) From continuing operations, $ in millions NII Walk (TE) $1,106 $986 $923 $928 $886 2.47% 4Q23 Swap & Other Fixed Lower Loan Deposit Other, 1Q24 UST Roll-off Rate Assets Volumes Costs & Mix Primarily Day 2.12% 2.07% Repricing Count 2.01% 2.02% NIM Walk (TE) 9bps 2b
Slide 8: Noninterest Income
Noninterest Income % change $ in millions vs. Prior Year YoY QoQ $647 +6% +6% ▪ Noninterest income up $39MM (+6%) from $608 $610 1Q23 $76 +17% (3)% Other(1) $65 $78 $56 +22% +17% − Higher Investment Banking and Debt Commercial Mortgage Servicing $46 $48 Placement fees (+$25MM) related to Service Cha
Slide 9: Noninterest Expense
Noninterest Expense $ in millions % change vs. Prior Year YoY QoQ (3)% (17)% ▪ Noninterest expense down $33MM (-3%) $1,372 from 1Q23 Selected Items Efficiency Related $1,176 Impact on $275 $1,143 − 1Q24 Noninterest expense included Earnings(1) Expenses(1) $64 FDIC Special $29 $29M pre-tax, from the
Slide 10: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Delinquencies to Period-end Total Loans $ in millions Continuing Operations 0.24% 0.26% 0.29% 0.15% 0.17% 0.15% 0.20% 0.22% 0.14% 0.12% $167 $102 $101 0.11% $139 $71 $81 $76 $81 0.06% $45 $52 0.05% 0.04% 0.09% 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23
Slide 11: Drivers of Allowance for Credit Losses
Drivers of Allowance for Credit Losses Allowance for Credit Losses (ACL) Allowance for Credit Losses Walk $ in millions $ in millions $1,804 $1,823 $1,771 $1,778 1,804 1,823 $1,656 4Q23 Portfolio Economic 1Q24 1.66% 1.54% 1.60% Drivers Drivers 1.49% 1.38% Allowance for Loan Losses as % Period-end Lo
Slide 12: Capital
Capital Common Equity Tier 1(1) Projected AOCI Impacts(3) Target operating range: 9% - 9.5% $ in billions 10.0% 10.3% 9.8% 9.1% 9.3% AOCI Position AOCI Forward Rates AOCI Flat Rates 3/31/2024 12/31/2024 12/31/2025 12/31/2024 12/31/2025 7.0% 7.1% 6.3% 6.2% 6.2% 7.0 7.0 7.0 7.0 7.0 $(3.3) $(3.3) $(3.8
Slide 13: 2024 Outlook
2024 Outlook 2023 FY2024 (vs. FY2023) $ in millions Average Loans $118,004 down 5 - 7% Ending Loans $112,606 relatively stable vs. YE23 balance Average Deposits $144,059 flat to down 2% down 2 - 5% Net Interest Income (TE) $3,943 up low-single digits vs. 4Q23 annualized exit rate 10%+ 4Q24 vs. 4Q23
Slide 14: NII Opportunity From Swaps and Treasuries
NII Opportunity From Swaps and Treasuries Tailwinds from Short-term Swaps & Treasuries Maturities(1) Maturities Schedule $ in millions; cumulative view $ in billions $244 $4.8 $4.5 $198 $149 $3.1 $2.8 $2.6 $2.9 $2.7 $117 ~$80 $1.7 $1.5 $1.1 0.54% 0.50% 0.49% $1.3 $1.9 $1.9 2Q23 3Q23 4Q23 1Q24 2Q24 3
Slide 15: NII Opportunity From Swaps and Treasuries
NII Opportunity From Swaps and Treasuries Achieving 4Q24 Exit Rate NII Target – Forward Curve(1) Other Key Inputs & Assumptions Change to NII ($ in millions ); Illustrative, not drawn to scale $1Bn+ ▪ Loan Balances $886 − Period-end loans relatively stable (12/31/24 vs. 2.40 – 2.50% 12/31/23), impli
Slide 16: Appendix
Appendix
Slide 17: Positioned for the Future
Positioned for the Future Wholesale Funding(1) Repositioned Company in 2023 $in billions ▪ Proactive balance sheet management 31% − Right-sized the balance sheet $34 − Significantly increased CET1 through RWA optimization $24 − Vastly improved liquidity and funding profile ▪ Targeted expense reducti
Slide 18: Commercial Real Estate
Commercial Real Estate High-quality CRE portfolio has relatively limited exposure and is diversified by property type and geography Nonowner-Occupied CRE Loan Portfolio Composition As a % Total Loans As a % Total Loans Office Highlights All banks >$10Bn assets • $0 nonowner-occupied construction All
Slide 19: Commercial Real Estate: Multifamily
Commercial Real Estate: Multifamily Business leverages our originate-to-distribute model and is a mixture of market rate and affordable housing Multifamily Portfolio Highlights Affordable Housing Loan Portfolio Highlights ▪ Diversified - no more than ~4% of Multifamily Loans concentrated in any mark
Slide 20: Credit Quality by Portfolio
Credit Quality by Portfolio Net Loan Charge-offs(1) to Average Loans (%)(2) 4.64% 0.97% 0.39% 0.14% 0.00% (0.02)% (3), (4) C&I CRE Resi Mtg Home Equity Credit Cards Other Consumer Allowance to NPLs (%)(2) Criticized Outstandings to Period-end Loans (%)(2) 398% 13.5% 7.1% 182% 152% 83% 1.5% 1.8% N/M
Slide 21: Balance Sheet Management Detail
Balance Sheet Management Detail Balance Sheet Mix and Trends Existing Securities Portfolio Repricing Characteristics Loan Composition(1) Earning Asset Mix(2) $ in billions $22.7 Other 2% 2% Other(3) ST Investments $16.7 $15.8 HTM Securities 8% $10.4 5% $4.9 $4.7 1M SOFR Fixed 21% 38% 3M SOFR AFS 22%
Slide 22: Hedging Strategy
Hedging Strategy Opportunistically locking in future benefit while managing downside risk 4Q22 – 1Q24 ALM Hedge Actions(1) Hedge Portfolio $ in billions $9.0 $9.0 $9.0 $ in billions 3/31/2024 $8.0 $8.0 ALM Hedges(2) $ 17.3 $6.2 ALM Forward Hedges(2) 5.3 Debt Swaps 11.3 $3.3 $3.5 $3.5 $3.1 Securities
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 1Q24 4Q23 1Q23 Tangible common equity to tangible assets at period end Key shareholders’ equity (GAAP) $ 14,547 $ 14,637 $ 14,322 Less: Intangible assets(1) 2,799 2,806 2,836 Preferred stock(2) 2,446 2,446 2,446 Tangible common equity (non-GAAP) 9,302 $
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 1Q24 4Q23 1Q23 Return on average tangible common equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $ 183 $ 30 $ 275 Average tangible common equity (non-GAAP) 9,347 8,160 8,476 Re
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation CET1 – AOCI Impact(1) ($ in millions) 1Q23 2Q23 3Q23 4Q23 1Q24 Common Equity Tier 1 (A) $ 14,781 $ 14,887 $ 15,007 $ 14,894 $ 14,837 Add: accumulated other Comprehensive income (loss) (4,559) (4,961) (5,581) (4,573) (4,608) Adjusted Common Equity Tier 1 (B) $ 10,223 $
Slide 26: Selected Items Impact on Earnings
Selected Items Impact on Earnings Selected Items Impact on Earnings(1) $ in millions, except per share amounts Pretax(2) After-tax at marginal rate(2) Quarter to date results Amount Net Income EPS(3) Three months ended March 31, 2024 FDIC special assessment (other expense)(4) $ (29) $ (22) $ (0.02)
Slide 27: 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