Slide 1: KeyCorp Third Quarter 2015 Earnings Review
Exhibit 99.2 KeyCorp Third Quarter 2015 Earnings Review October 15, 2015 Beth E. Mooney Don Kimble Chairman and Chief Financial Officer Chief Executive Officer
Slide 2: Forward-Looking Statements and Additional Information Disclosure
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION DISCLOSURE This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts. Forward-looking statements usuall
Slide 3: Investor Highlights – 3Q15
Investor Highlights – 3Q15 Generated positive operating leverage from prior year Revenue up 7% from 3Q14: higher net interest income and noninterest income - Average loans increased 6%, driven by a 15% increase in CF&A loans Positive Operating - Strong fee-based income from corporate services, inves
Slide 4: Financial Review
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Slide 5: Financial Highlights
Financial Highlights Metrics 3Q15 2Q15 1Q15 4Q14 3Q14 EPS – assuming dilution $ .26 $ .27 $ .26 $ .28 $ .23 Financial Cash efficiency ratio (e) 66.9 % 65.1 % 65.1 % 64.4 % 69.7 % Performance (a) Net interest margin (TE) 2.87 2.88 2.91 2.94 2.96 Return on average total assets .95 1.03 1.03 1.12 .92 T
Slide 6: Loans
Loans Total Average Loans Highlights $ in billions Average Loans Total average loans up 6% Average total loans up 6% in 3Q15 from prior year, driven by CF&A loans up 15% – Average total loans up in both the Community Bank and the Corporate Bank Period-End Loans Period-end total loans up 7% in 3Q15 f
Slide 7: Deposits
Deposits Average Deposits (a) Highlights $ in billions Total average deposits up 3% vs. Prior Quarter Deposits down slightly from 2Q15 reflecting: – Decline in short-term noninterest-bearing deposit balances from commercial clients and lower certificates of deposit – Partially offset by increases in
Slide 8: 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 Quarter NII up $7 MM, or 1%, from the prior quarter, primarily due to improvement in the earning asset mix, partially offset by lower earning asset yields and
Slide 9: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions 3Q15 vs. 2Q15 vs. 3Q14 vs. Prior Quarter Trust and investment services income $ 108 $ (3) $ 9 Noninterest income down 4% from 2Q15: Investment banking and debt 109 (32) 21 placement fees – Lower investment banking and debt Service charge
Slide 10: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions 3Q15 vs. 2Q15 vs. 3Q14 vs. Prior Quarter Personnel (a) $ 426 $ 18 $ 21 Net occupancy 60 (6) (6) Expense growth of 2% from 2Q15 Computer processing 41 (1) 2 – Pension settlement charge of $19 MM in 3Q15 Business services, professional f
Slide 11: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Highlights $ in millions Net loan charge-offs remain below targeted range, at 27 basis points of average loans Nonperforming loans represented 67 basis points of period-end loans Allowance for loan and lease losses represented 1.31% of per
Slide 12: Capital
Capital Common Equity Tier 1 Common Equity (a) Tier 1 (a), (b), (c) Highlights Disciplined capital management – Executing on capital priorities: organic growth, dividends, share repurchases and opportunistic growth 2015 Capital Plan includes share repurchases of up to $725 million in common shares (
Slide 13: Outlook and Expectations
Outlook and Expectations FY 2015 Average Loans • Mid-single digit growth vs. FY 2014 • Up low single-digits without the benefit of higher rates Net Interest Income • NIM: down from FY 2014, reflecting continued elevated levels of liquidity; relatively stable with 2Q15 reported level Noninterest Inco
Slide 14: Appendix
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Slide 15: Progress on Targets for Success
Progress on Targets for Success Metrics (a) 3Q15 2Q15 Targets Balance Sheet Loan to deposit ratio (b) 89% 87% 90% -100% Efficiency NCOs to average loans .27% .25% Moderate Risk Profile 40 - 60 bps Provision for credit losses .30% .28% to average loans Net interest margin 2.87% 2.88% LT: >3.50% High
Slide 16: Efficiency Ratio: Driving to 60% and Below
Efficiency Ratio: Driving to 60% and Below Business plans and macroeconomic environment provide path to an efficiency ratio below 60% Cash Efficiency Ratio (a),(b) Outlook 2-3 year outlook: 60% (c) Long-term, committed to moving below 60% (a) Non-GAAP measure: see Appendix for reconciliation (b) 3Q1
Slide 17: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions $19.2 Portfolio composed primarily of GNMA and GSE- $17.0 backed MBS and CMOs Continue to position portfolio for upcoming regulatory liquidity requirements: 2.15% – 2015 average balance growth reflects actions taken to
Slide 18: Interest Rate Risk Management
Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk • Maintained moderate asset sensitive position of ~3% (b) Loan Portfolio Deposits (a) - Assumes 200 basis point increase in short and intermediate- 3Q15 3Q15 term rates over a 12-month period CDs: • Uti
Slide 19: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings(a) to Period-end Total Loans Continuing operations Continuing operations 30 – 89 days delinquent 90+ days delinquent Metric (b) 3Q15 2Q15 1Q15 4Q14 3Q14 Delinquencies to EOP total loans: 30-89 days .45 % .31 % .37
Slide 20: 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 (d) offs loans (d) (%) (%) $ in millions (%) 9/30/15 3Q15 3Q15 3Q15 9/30/15 9/30/15 9/
Slide 21: Oil & Gas
Oil & Gas Longstanding history, expertise and relationships Strong Portfolio Characteristics >10 years of experience in energy lending with >20 >40% of clients’ 2015 production is hedged specialists dedicated to oil & gas Relationships contribute to noninterest income; ~5% of Focused on middle marke
Slide 22: Home Equity Portfolio
Home Equity Portfolio Highlights High quality portfolio $3.9 billion of the total portfolio are fixed rate loans that require Community bank loans and lines: 98% of total portfolio; branch- principal and interest payments; $6.3 billion are lines originated $1.2 billion in lines outstanding (12% of t
Slide 23: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on Balance Outstanding Change Net Loan Charge-offs $ in millions Nonperforming Status 9-30-15 vs. 9-30-15 6-30-15 3Q15 (b) 2Q15 9-30-15 6-30-15 6-30-15 Residential properties – homebuilder $ 6 $ 6 - - - $ 5 $ 8 Marine and RV floor plan 1 2 $ (1) - - -
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 9-30-15 6-30-15 3-31-15 12-31-14 9-30-14 Tangible common equity to tangible assets at period end Key shareholders’ equity (GAAP) $ 10,705 $ 10,590 $ 10,603 $ 10,530 $ 10,486 Less: Intangible assets (a) 1,084 1,085 1,088 1,090 1,105 Pre
Slide 25: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) $ in millions Three months ended 9-30-15 6-30-15 3-31-15 12-31-14 9-30-14 Pre-provision net revenue Net interest income (GAAP) $ 591 $ 584 $ 571 $ 582 $ 575 Plus: Taxable-equivalent adjustment 7 7 6 6 6 Noninterest income (GAAP) 470 488 437 490 417 Less: N
Slide 26: Common Equity Tier 1 Under the Regulatory Capital Rules (RCR) (estimated)
Common Equity Tier 1 Under the Regulatory Capital Rules (RCR) (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions September 30, 2015 Common Equity Tier 1 under current RCR $ 9.7 Adjustments from current RCR to the fully phased-in RCR: Deferred tax assets and other intangible assets (b