Slide 1: Investor Meetings: Europe - May 2018
Investor Meetings: Europe - May 2018 KeyCorp Focused Forward
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 − Acquisition of First Niagara ($40 B assets; $29 B deposits) $137 billion $105 billion $21 billion accelerated performance total a
Slide 4: Key: Business Overview
Key: Business Overview Aligned around client needs and building enduring relationships Community Bank Corporate Bank Client Continuum High Net Worth Individuals & Small Commercial Individuals & Corporations Families Businesses Businesses Families $500 MM+ Commercial Client Revenue: < $10 MM $10 MM -
Slide 5: Strong Franchise with Distinctive Capabilities
Strong Franchise with Distinctive Capabilities Market Presence Western Markets Eastern Markets strong market share top 5 in >20 MSAs(a) First Niagara Acquisition: Added one million clients Enhanced market share with attractive, core & contiguous markets Accelerated performance, with improved profita
Slide 6: Distinctive Business Model
Distinctive Business Model Competitive advantage with targeted clients Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity research banking exchange #3 commercial mortgage Rates, commodity & >75 tran
Slide 7: First Niagara Acquisition Accelerates Momentum
First Niagara Acquisition Accelerates Momentum A powerful combination that drove a step change in performance First Niagara(a) A Compelling Acquisition Good use of capital with strong returns HQ: Buffalo, NY Execution and integration exceeded expectations Branches: ~400 Strengthened Key’s brand and
Slide 8: Improving Profitability and Returns
Improving Profitability and Returns Efforts to improve productivity and efficiency have resulted in five consecutive years of positive operating leverage Accelerating Revenue Momentum Continuing Expense Discipline Executing on First Niagara revenue synergies Full $450 MM (annual run rate) First Niag
Slide 9: Targeted Technology Investments
Targeted Technology Investments Strengthening our offering and maximizing client impact Optimizing Systems & Processes; Recent Enhancements Enabling Business Growth Platform and process enhancements support and drive business momentum New and improved consumer digital platforms Ongoing modernization
Slide 10: Strong Risk Culture and Moderate Risk Profile
Strong Risk Culture and Moderate Risk Profile Enterprise-wide approach to managing risks and concentrations Targeted, Relationship-based Approach Strong Asset Quality Net charge-offs to • Target specific segments and sectors where we average loans have expertise 1.00% • Maintaining enhanced underwri
Slide 11: Disciplined Capital Management
Disciplined Capital Management Disciplined in how we manage, invest, deploy and return our strong capital position Strong Capital Position Consistent Dividend Growth Cash Dividends Per Common Share 3/31/18 36% CAGR $0.47(a) Common Equity Tier 1 10.0% Tier 1 risk-based capital 10.8% Total risk-based
Slide 12: 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 Positive operating leverage − Succes
Slide 13: Appendix
Appendix 13
Slide 14: Outlook and Expectations
Outlook and Expectations FY 2018 Average Balance • Loans: average balances in the range of $88.5 B - $89.5 B Sheet • Deposits: average balances in the range of $104.5 B - $105.5 B Net Interest • Net interest income expected to be in the range of $3.95 B - $4.05 B Income (TE) • Outlook includes rate
Slide 15: Community Bank
Community Bank A local relationship bank serving retail, private banking and business clients Key’s Community Bank Key 2017 Revenue Business Description Clients Provides deposit, investment, • Individuals and Retail and and loan products to clients families 2% Business through our 1,100+ branches •
Slide 16: Corporate Bank
Corporate Bank A full-service corporate and investment bank serving middle market clients in seven targeted industry verticals Key’s Corporate Bank Key 2017 Revenue Business Description Provides leading commercial real estate finance services, 2% Real Estate including construction and interim financ
Slide 17: Positioning for Continued Growth
Positioning for Continued Growth Strategic actions accelerate momentum and execution of relationship-based strategy • Strategic partnerships: • Apple Pay® available to clients • Strategic Billtrust® • Zelle® launched • Victory Capital partnership with (accounts (P2P payments) • Strategic partnership
Slide 18: Key: Well Positioned for an Improving Economic and Operating Environment
Key: Well Positioned for an Improving Economic and Operating Environment Balanced franchise with strong value propositions for consumer and commercial clients Economic Growth Positioned to benefit from investments in talent, products and capabilities First Niagara acquisition added clients, new busi
Slide 19: 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 Responsible communities behavior, and business conduct, with shareholder interests at the center of
Slide 20: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 1Q18 4Q17 1Q17 LQ ∆ Y/Y ∆ EPS – assuming dilution .38 .17 .27 124 % 41 % EPS – excl. notable items(a), (b) .38 .36 .32 6 19 Cash efficiency ratio(a) 62.9 % 66.7 % 65.8 % (376) bps (289) bps Profitability Cash efficiency – excl. notab
Slide 21: Loans
Loans Total Average Loans Highlights $ in billions $90 $86 $87 vs. Prior Year Average loans up 1% from 1Q17 $60 – Broad-based C&I growth with middle-market clients $30 – Expansion of auto lending into existing geographies and dealer relationships $0 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 vs. Prior
Slide 22: Loan Portfolio Detail, at 3/31/18
Loan Portfolio Detail, at 3/31/18 Total Loans Commercial Loans $ in billions 3/31/18 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Agriculture Commercial and industrial $ 44.3 50 Transportation Automotive Business Products Commercial real estate 15.9 18 Technol
Slide 23: Deposits
Deposits Average Deposits Highlights $ in billions $102 $103 Deposit cost up 5 bps from 4Q17, reflecting: $105 .70% – Higher interest rates .60% $85 – Continued migration of portfolio into higher- .50% yielding products .40% $65 Strong and stable deposit base .30% .36% .20% – 30% noninterest-bearing
Slide 24: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $29.2 $29.9 $30.0 2.50% backed MBS and CMOs 2.16% 2.25% ‒ Primarily fixed rate $20.0 1.98% ‒ GNMA 47% of 1Q18 average balances 2.00% Portfolio used for funding and liquidit
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, 1Q18 net interest income was $919 MM $33 $1,000 $929 $952 4.0% and net interest margin was 3.04% $53 – NII up 5% from prior year and up 1% from prior qua
Slide 26: Interest Rate Risk Management
Interest Rate Risk Management The strength and diversity of our franchise positions Key to benefit from economic growth and a rising rate environment Business and Balance Sheet Highlights Net Interest Income Sensitivities (FY18) ($MM) • Strong, low-cost deposit base March Rate Hike embedded – $72 B
Slide 27: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 1Q18 vs. 1Q17 vs. 4Q17 vs. Prior Year Trust and investment services income $ 133 $ (2) $ 2 Noninterest income up $24 MM from 1Q17 Investment banking and debt 143 16 (57) placement fees Continued momentum in many fee-based Ser
Slide 28: Noninterest Expense
Noninterest Expense Noninterest Expense Linked Quarter Change $ in millions; excludes notable items(a) $ in millions Up / (Down) 1Q18 vs. 1Q17 vs. 4Q17 Personnel $ 594 $ 38 $ (14) $11 Net occupancy 78 (9) (14) $(24) Computer processing 52 (8) (2) $10 $31 $(35) Business services, professional fees 41
Slide 29: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 1Q18 allowance for loan losses to $100 1.00% period-end loans of 1.00% $900 $870 $881 250% .80% $75 $63 $61 200% $58 $54 .60% $800 $50 150% 163% .40% 152% 100% $700 $25 .27% .25% .20% 50% $
Slide 30: 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 (%) 3/31/18 1Q18 1Q18 1Q18 3/31/18 3/31/18 3/31/18 3/31
Slide 31: Capital
Capital Common Equity Tier 1 Highlights 12.00% Strong capital position with Common Equity Tier 1 ratio of 9.99% at 3/31/18 9.91% 9.99% 10.00% Repurchased $199 MM(b) in common shares during 1Q18 8.00% 6.00% 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Tangible Common Equity to Tangible Assets(a) 10.00% 8.
Slide 32: 2017 FNFG Merger-related Charges
2017 FNFG Merger-related Charges $ in millions 4Q17 3Q17 2Q17 1Q17 Increase / (Decrease) Personnel expense $ 26 $ 25 $ 31 $ 30 Net Occupancy $ 12 $ (2) $ (1) $ 5 Business services and professional fees 3 2 6 5 Computer processing 1 4 2 5 Marketing 5 5 6 6 All other non-personnel 9 2 - 30 Total non-p
Slide 33: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended $ in millions 3/31/2018 12/31/2017 3/31/2017 Notable Items Merger-related charges - $ (56) $ (81) Impacts of tax reform and related actions - $ (30) - Total notable items - $ (86) $ (81) Income taxes - (26) (30) Revaluation of certain tax related as
Slide 34: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) $ in millions Three months ended Twelve months ended 3/31/2018 12/31/17 9/30/17 6/30/17 3/31/17 12/31/2017 12/31/2016 Average tangible common equity Average Key shareholders' equity (GAAP) $ 14,889 $ 15,268 $ 15,241 $ 15,200 $ 15,184 $ 15,224 $ 12,647 Less