Keycorp · NYSE:KEY
Keycorp — Goldman Sachs US Financial Services Conference 2019
22 slides from Keycorp's conference presentation, Dec 10, 2019
Slide 1: Goldman Sachs US Financial Services Conference 2019
Goldman Sachs US Financial Services Conference 2019 December 10, 2019 KeyCorp Beth Mooney Chris Gorman Chairman and President and Chief Executive Officer Chief Operating Officer Don Kimble 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: Delivering Results and Investing for the Future
Delivering Results and Investing for the Future Delivering on Our Commitments Achieved 6th consecutive year of Continued to build out digital capabilities positive operating leverage: poised for 7th in 2019 across the franchise: new digital portals for all consumer & business clients Reached t
Slide 4: Positioned to Outperform
Positioned to Outperform Clear and consistent strategic priorities Distinctive & Proven Business Model Leveraging relationship-based strategy to grow franchise Targeted Scale Aligning businesses against points of differentiation Leveraging our distinctive Strategic Investments Supporting business gr
Slide 5: Appendix
Appendix
Slide 6: 4Q Outlook and Long-term Targets
4Q Outlook and Long-term Targets 4Q19 (vs. 3Q19) Long-term Targets Average Loans: Up low single digit Positive operating leverage Average Deposits: Relatively stable Net Interest Income (TE): Relatively stable Cash efficiency ratio: 54% - 56% Noninterest Income: Up low single digit Moderate risk pro
Slide 7: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 3Q19 2Q19 3Q18 LQ ∆ Y/Y ∆ EPS – assuming dilution $ .38 $ .40 $ .45 (5) % (16) % EPS – excl. fraud loss & notable items(a), (b) .48 .44 .45 9 7 Cash efficiency ratio(a) 56.0 % 61.9 % 58.7 % (588) bps (269) bps Cash efficiency – excl.
Slide 8: Loans
Loans Total Average Loans Highlights $ in billions vs. Prior Year $95 6.00% $92 Average loans up 4% from 3Q18 $90 $88 5.50% − Commercial balances reflect strong C&I growth (+8%) driven by broad-based growth with $85 5.00% middle-market clients, partially offset by a 4.67% decline in commercial rea
Slide 9: Loan Portfolio Detail, at 9/30/19
Loan Portfolio Detail, at 9/30/19 Total Loans Commercial Loans $ in billions 9/30/19 % of total Diversified Portfolio by Industry loans Total commercial loans: Agriculture Automotive Utilities Commercial and industrial $ 48.4 52 Business Products Transportation Commercial real estate 14.6 16 Busines
Slide 10: Deposits
Deposits Average Deposits Highlights $ in billions $120 $110 1.40% Deposit costs flat from 2Q19, reflecting: $106 $100 1.09% 1.20% − Impact of lower interest rates and deposit pricing lag 1.00% $80 Strong and stable deposit base .74% 34% 0.80% $60 .82% − 26% noninterest-bearing(a) 0.60% − ~65% s
Slide 11: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions $32.6 Portfolio used for funding and liquidity $32.0 $29.7 2.75% management: 2.49% − Composed primarily of Fixed Rate GNMA and GSE- $24.0 2.50% backed MBS and CMOs 2.30% − GNMA 43% of 3Q19 average balances $16.0 2.25
Slide 12: Moderate Risk Profile Guides Balance Sheet Positioning
Moderate Risk Profile Guides Balance Sheet Positioning Active asset/liability management positions Key to succeed in various economic environments A/LM Philosophy 3Q19 Core Balance Sheet Highlights Key maintains a Moderate Risk Profile Loan Composition Deposit Mix − Operating with moderate exposur
Slide 13: Asset & Liability Management: Tools and Positioning
Asset & Liability Management: Tools and Positioning Hedging activities moderate interest rate risk: reduce current and future exposure to changes in interest rates Discretionary Tools A/LM Positioning Total hedges of $33.2 B at 9/30/2019 Market Implied -100bps Parallel Forwards (9/30) Shift (12 mo
Slide 14: 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, 3Q19 net interest income was $26 $993 $17 $980 $1,000 4.0% $963 MM and net interest margin was 2.95% $800 vs. Prior Year 3.5% $600 Net interest incom
Slide 15: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 3Q19 vs. 3Q18 vs. 2Q19 Trust and investment services income $ 118 $ 1 $ (4) Noninterest income up $41 MM (+7%) from 3Q18, reflecting continued momentum across fee-based Investment banking and debt 176 10 13 p
Slide 16: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions up / (down) 3Q19 vs. 3Q18 vs. 2Q19 vs. Prior Year Personnel $ 547 $ (6) $ (42) Noninterest expense down $25 MM, or 3% Net occupancy 72 (4) (1) Computer processing 53 1 (3) − Reflects the successful implementation of expense initiativ
Slide 17: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions $ in millions 3Q19 allowance for loan losses to $200 $200 $196 1.00% period-end loans of .96% 3Q19 reflects $123 MM impact from previously disclosed fraud loss $887 $893 .85% $900 250% .80%
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% .41% 3.3% .39% .40% 2.7% 2.0% .20% .10% .06% .00% .0% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q17 1Q18 2Q18 3Q18 4Q18 1Q
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 offs loans (%) (%) $ in millions (%) 9/30/19 3Q19 3Q19 3Q19 9/30/19 9/30/19 9/30/19 9/30
Slide 20: Capital
Capital Common Equity Tier 1 Highlights 11.00% Strong capital position: CET1 ratio of 9.48% at 9/30/2019 9.95% 10.00% 9.48% Increased common share dividend 9% ($.17 to 9.00% $.185 per share) Completed $248 MM(b) of common share 8.00% repurchases in 3Q19 7.00% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 9/30/2019 6/30/2019 9/30/2018 Notable Items Provision for credit losses $ (123) - - Efficiency initiative expenses - $ (50) - Laurel Road acquisition expenses - (2) - Total notable items $ (123) $ (52) - Income taxes (29) (12) - Total
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation PAGE TWO: Nine months $ in millions Three months ended ended 9/30/2019 6/30/2019 9/30/2018 9/30/2019 Return on average tangible common equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $ 383 $
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