Keycorp · NYSE:KEY
Keycorp — Non-Deal Roadshow (June 2019)
31 slides from Keycorp's roadshow presentation, June 2019
Slide 1: Investor Meetings: Europe - June 2019
Investor Meetings: Europe - June 2019 KeyCorp
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: Key: A Relationship-Focused Regional Bank
Key: A Relationship-Focused Regional Bank Delivering Shareholder Value Strong franchise with differentiated business model − Broad product offering for targeted clients − Focus on financial wellness for consumers $142 billion $108 billion $16 billion − Uniquely positioned for middle-market clients
Slide 4: Key Overview
Key Overview Serving targeted clients by leveraging broad capabilities, insights and expertise Consumer Commercial Continuum Client Private Small Retail Banking Business Commercial Corporate $500 MM+ Commercial Client Revenue: < $10 MM $10 MM - $500 MM >$500 MM Lending Deposits Financial Wealth & In
Slide 5: Differentiated Consumer Value Proposition
Differentiated Consumer Value Proposition Deliver ease, value, and expertise to clients across 15 state footprint Products and Capabilities Wealth management & Mortgage and Home Deposit Auto Lending Business Advisory private banking Equity Personal Financial Lending Credit Card Treasury Services Inv
Slide 6: Distinctive Commercial Offering
Distinctive Commercial Offering Relationship model, paired with expertise and broad capabilities, delivers results Traditional Bank Products Capital Markets Capabilities Deposits Commercial Derivatives & Equity Equity Loans & payments mortgage banking foreign exchange capital markets research $108 B
Slide 7: Winning with Targeted Scale
Winning with Targeted Scale Focused on building targeted scale by providing clients a differentiated service offering Types of Scale Examples: KEY Businesses Largest players in a given market as $65B of low-cost deposits defined by resources within the Historical Top 5 market share in 20 MSAs(a)
Slide 8: Targeted Technology Investments
Targeted Technology Investments Strengthening our offering and maximizing client impact Optimizing Systems & Processes; Enabling Business Growth Platform and process enhancements support and drive business momentum Ongoing modernization of core systems and simplification of end-to-end processes
Slide 9: Simplification and Digitization
Simplification and Digitization Strategic investments are simplifying and digitizing the client and employee experience driving growth and operating leverage Simplified Business Process & Systems Results of our Strategic Investments Physical Presence Branch Count(a) New digital portals for all con
Slide 10: Strategic Acquisition: Laurel Road Finance
Strategic Acquisition: Laurel Road Finance Acquisition of online lending platform focused on super prime professionals Transaction Overview Positioned to Outperform Revisiting 2018 Investor Day Themes Acquisition of leading national, digital-first consumer lending platform • Leading digital origin
Slide 11: Improving Profitability and Returns
Improving Profitability and Returns Efforts to improve productivity and efficiency have resulted in six consecutive years of positive operating leverage Accelerating Revenue Momentum Continuing Expense Discipline Growing and expanding relationships Targeting 5% cost savings in 2019 ($200MM) Ex
Slide 12: Strong Risk Management
Strong Risk Management Maintaining a strong risk culture and moderate risk profile Positioned to Outperform Through the Cycle Net Charge-offs to Average Loans $ in millions Significantly enhanced risk profile: focused on $100 1.00% soundness, profitability, and growth .80% $75 $64 $62 $61 Mainta
Slide 13: Disciplined Capital Management
Disciplined Capital Management Disciplined in how we manage, invest, deploy, and return our capital Consistent Dividend Growth Capital Plan (3Q19 – 2Q20) Cash Dividends Per Common Share 20% CAGR $0.71(a) 9% common share dividend increase from $.17 to $.185 in 3Q19 (subject to Board approval) $0.29 u
Slide 14: Delivering Results
Delivering Results Differentiated value proposition for consumer and middle market clients, while continuing to improve efficiency, manage risk and increase returns Why KEY? Executing on LT Targets Transformed company, with distinctive business model and offering − Leading commercial and investment
Slide 15: Appendix
Appendix 15
Slide 16: FY2019 Outlook & Long-term Targets
FY2019 Outlook & Long-term Targets FY 2019 Average Balance • Loans: average balances in the range of $90 B - $91 B Sheet • Deposits: average balances in the range of $108 B - $109 B Net Interest Income • Net interest income expected to be in the range of $4.0 B - $4.1 B (TE) • Outlook assumes intere
Slide 17: Positioning for Continued Growth
Positioning for Continued Growth Strategic actions accelerate momentum and support execution of relationship strategy Acquisitions: Strategic partnerships: − Cain Brothers® - investment bank (healthcare) Acquisitions: − HelloWallet® (financial wellness) − APTEXX™ (commercial − Laurel Road® real esta
Slide 18: Corporate Governance and Responsibility
Corporate Governance and Responsibility Strong Corporate Governance Strong Corporate Citizen Committed to high standards of corporate governance, ethical Invest in underserved & low-to-moderate income Helping communities behavior, and business conduct, with shareholder interests at the Clients cen
Slide 19: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 1Q19 4Q18 1Q18 LQ ∆ Y/Y ∆ EPS – assuming dilution $ .38 $ .45 $ .38 (16) % - EPS – excl. notable items(a), (b) .40 .48 .38 (17) 5 % Cash efficiency ratio(a) 61.9 % 59.9 % 62.9 % 200 bps (100) bps Cash efficiency –excl. notable items(
Slide 20: Loans
Loans Total Average Loans Highlights $ in billions vs. Prior Year $90 $90 $87 Average loans up 3% from 1Q18 – C&I balances up 8% driven by broad-based growth with middle-market clients $80 – Home equity continues to be impacted by market trends vs. Prior Quarter $70 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4
Slide 21: Loan Portfolio Detail, at 3/31/19
Loan Portfolio Detail, at 3/31/19 Total Loans Commercial Loans $ in billions 3/31/19 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Agriculture Automotive Commercial and industrial $ 46.5 52 Transportation Business Products Commercial real estate 15.8 17 Busines
Slide 22: Deposits
Deposits Average Deposits Highlights $ in billions Deposit cost up 12 bps from 4Q18, reflecting: $110 $108 1.00% – Higher interest rates $103 .80% – Continued migration of portfolio into higher-yielding products $100 .76% .60% Strong and stable deposit base .40% – 26% noninterest-bearing $90 – ~
Slide 23: Asset & Liability Management Positioning
Asset & Liability Management Positioning Balanced positioning supports strong, stable net interest margin Business and Balance Sheet Highlights Positioning • Strong, low-cost deposit base • Actively hedging to reduce current and future – $79 B interest-bearing deposits at 103 bps exposure to declini
Slide 24: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $31.6 $32.0 $29.9 2.75% backed MBS and CMOs $24.0 2.47% 2.50% ‒ Primarily fixed rate ‒ GNMA 45% of 1Q19 average balances $16.0 2.16% 2.25% Portfolio used for funding an
Slide 25: 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, 1Q19 net interest income was $33 $952 $22 $985 $1,000 4.0% $963 MM and net interest margin was 3.06% $800 vs. Prior Year 3.5% $600 Net interest incom
Slide 26: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 1Q19 vs. 1Q18 vs. 4Q18 Trust and investment services income $ 115 $ (18) $ (6) Noninterest income down $65 MM (-11%) from 1Q18 Investment banking and debt 110 (33) (76) Lower investment banking and debt pla
Slide 27: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions up / (down) 1Q19 vs. 1Q18 vs. 4Q18 vs. Prior Year Personnel $ 563 $ (31) $ (13) Noninterest expense excl. notable items down Net occupancy 72 (6) (3) $69 MM, or 7%(a) Computer processing 54 2 (1) Business services, professional 44 3
Slide 28: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 1Q19 allowance for loan losses to period-end loans of .98% $100 1.00% $900 $881 $883 250% .80% $75 $64 $62 200% $61 $54 .60% $800 $50 150% 163% 161% .40% 100% $700 $25 .29% .20% 50% .25% $0
Slide 29: Capital
Capital Common Equity Tier 1 Highlights 12.00% Strong capital position: CET1 ratio of 9.81% at 3/31/2019 9.99% 9.81% 10.00% Declared dividend of $0.17 per common share and repurchased $199 MM(b) in common shares in 1Q19 8.00% Announced planned capital actions for 3Q19-2Q20 9% common share di
Slide 30: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 3/31/2019 12/31/2018 3/31/2018 Notable Items Efficiency iniative expenses $ 26 $ 24 - Pension settlement charge - 17 - Impacts of tax reform and related actions - - - Total notable items $ 26 $ 41 - Income taxes 6 10 - Total notable it
Slide 31: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended 3/31/2019 12/31/2018 3/31/2018 $ in millions Average tangible common equity Average Key shareholders' equity (GAAP) $ 15,702 $ 15,384 $ 14,889 Less: Intangible assets (average) (a) 2,813 2,828 2,916 Preferred Stock (average) 1,450 1,450 1,025 Averag