Slide 1: KeyCorp Second Quarter 2022 Earnings Review
KeyCorp Second Quarter 2022 Earnings Review July 21, 2022 Chris Gorman Don Kimble Chairman and Vice Chairman and Chief Executive Officer 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: 2Q22 Results
2Q22 Results Financial Results Strategic Highlights ▪ Committed to serving and $.54 Positive 14% 20.9% supporting our clients through all Earnings per Operating Increase in Return on market conditions diluted common Leverage PPNR(1) vs. PQ average tangible share vs. PY & PQ common equity(1) ▪ Expand
Slide 4: Financial Review
Financial Review
Slide 5: Financial Highlights
Financial Highlights 2Q22 1Q22 2Q21 LQ Δ Y/Y Δ Continuing operations, unless otherwise noted EPS – assuming dilution $ .54 $ .45 $ .72 20 % (25) % Cash efficiency ratio(1) 59.5 % 62.4 % 59.9 % (290) bps (40) bps Return on average tangible common equity(1) 20.9 14.1 21.3 680 (40) Profitability Return
Slide 6: Loans
Loans Total Average Loans Highlights $ in billions PPP $101 $109 $110 $.7 $7.5 ▪ $.7Bn of average PPP loans in 2Q22 $100 40.00% Total average loans ▪ $.5Bn of PPP forgiveness in 2Q22 $90 32% PPP $80 27% 30.00% vs. Prior Year C&I line utilization $70 ▪ Average loans up 8% from 2Q21; up 21%(1) excl. P
Slide 7: Deposits
Deposits Average Deposits Highlights $ in billions ▪ Strong and stable deposit base $144 $147 $150 − 35% noninterest-bearing(1) Commercial $120 Consumer − ~60% stable retail and low-cost escrow $90 x Cost of total interest- − 78% loan to deposit ratio(2) bearing deposits .08% $60 .07% Cost of total
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 Year $1,200 4.0% $1,104 ▪ Net interest income up $81MM (+8%) from 2Q21 $1,100 $1,023 3.5% − Reflects higher interest rates, higher earning asset $1,000 balanc
Slide 9: Noninterest Income
Noninterest Income Noninterest Income Highlights vs. Prior Year $ in millions up / (down) 2Q22 vs. 2Q21 vs. 1Q22 Trust and investment services income $ 137 $ 4 $ 1 ▪ Noninterest income down $62MM (-8%) from 2Q21 Investment banking and debt placement fees 149 (68) (14) − Lower investment banking and
Slide 10: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights vs. Prior Year $ in millions favorable / (unfavorable) 2Q22 vs. 2Q21 vs. 1Q22 Personnel $ 607 $ 16 $ 23 ▪ Noninterest expense relatively stable (+$2MM) from 2Q21 Net occupancy 78 (3) (5) − Higher nonpersonnel expense (+18MM) primarily driven by Comp
Slide 11: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses $ in millions $150 .50% .09% .16% $50 $22 $44 $45 .00% ($50) ($222) (.50)% ($150) ($250) (1.00)% 2Q21 3Q21 4Q21 1Q22 2Q22 NCOs Provision for credit losses NCOs to avg. loans Nonperforming Loans Allowance for Credit Losses (ACL) $ in millio
Slide 12: Capital
Capital Common Equity Tier 1(1) Highlights 11.0% ▪ Strong capital position: CET1 ratio 9.2%(1) at 6/30/2022 9.9% 10.0% − Within targeted range of 9.0% - 9.5% 9.2% 9.0% ▪ Declared quarterly common share dividend of $.195 8.0% 7.0% 6.0% 2Q21 3Q21 4Q21 1Q22 2Q22 Tangible Common Equity to Tangible Asset
Slide 13: Full Year 2022 Outlook
Full Year 2022 Outlook Full Year 2022 (vs. Full Year 2021) Prior Guidance (as of 4/21/22) Updated Guidance (as of 7/21/22) • Loans: up 4% - 6% • Loans: up 9% - 11% Average Balance Sheet • Deposits: up 1% - 3% • Deposits: up 1% - 3% Net Interest Income (TE) • Net interest income: up 6% - 9% • Net int
Slide 14: Appendix
Appendix
Slide 15: Commercial Loan Portfolio Detail
Commercial Loan Portfolio Detail Total Commercial Loans Commercial & Industrial (C&I) $ in billions 6/30/22 % of total loans ▪ Solid middle market portfolio Commercial and industrial $ 55.2 49% ▪ Aligning bankers to areas of market opportunity and growth - investing in strategic hires with industry
Slide 16: Consumer Loan Portfolio Detail
Consumer Loan Portfolio Detail Total Consumer Loans Laurel Road $ in millions Origination Volume $ in billions 6/30/22 % of total loans WA FICO at origination Consumer mortgage $ 19.6 17% 762 $820 $646 Home equity 8.1 7 809 $504 $445 $399 Consumer direct 6.7 6 774 Credit card 1.0 1 791 2Q21 3Q21 4Q2
Slide 17: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions ▪ Portfolio used for funding and liquidity management $60.0 3.00% $50.3 ‒ Portfolio composed primarily of fixed-rate GNMA and GSE-backed MBS and CMOs $40.1 2.50% $40.0 ‒ Portfolio yield excluding short-term Treasury/Ag
Slide 18: Asset & Liability Management Positioning
Asset & Liability Management Positioning Balanced approach to managing interest rate risk provides declining rate protection while maintaining upside to higher rates 2Q22 Balance Sheet Highlights(1) Actively Managing Interest Rate Risk Position Loan Composition Deposit Mix ▪ Given macroeconomic and
Slide 19: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings(1) to Period-end Total Loans Continuing Operations Continuing Operations .50% 6.0% .40% 4.0% 4.0% .30% .19% 2.3% .20% .12% 2.0% .10% .07% .04% .00% .0% 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 30 – 89 days
Slide 20: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan charge- Allowance / Allowance / Period-end Average Net loan Nonperforming Ending offs(3) / average period-end NPLs $ in millions loans loans charge-offs loans allowance loans (%) loans (%) (%) 6/30/22 2Q22 2Q22 2Q22 6/30/22 6/30/22 6/30/22 6/30/22
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three m onths ended Six Months Ended 6/30/2022 3/31/2022 6/30/2021 6/30/2022 6/30/2021 Tangible com m on equity to tangible assets at period end Key shareholders' equity (GAAP) $ 14,427 $ 15,308 $ 17,941 Less: Intangible assets (1) 2,868 2,810 2,828 Pref
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three m onths ended Six Months Ended 6/30/2022 3/31/2022 6/30/2021 6/30/2022 6/30/2021 Return on average tangible com m on equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $ 504