Slide 1: Third Quarter 2012 Earnings Review
Exhibit 99.2 KeyCorp Third Quarter 2012 Earnings Review October 18, 2012 Beth E. Mooney Jeffrey B. Weeden 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 and we may, from time to time, make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Key’s financial condition, results of oper
Slide 3: Investor Highlights – Third Quarter 2012
Investor Highlights – Third Quarter 2012 Net interest income up 6% from prior quarter Net interest margin up 17 bps from 2Q12 due to improved mix of earning Execution of assets and lower funding cost Business Plan On track for expense reductions of $150 million to $200 million by December 2013 Conti
Slide 4: Positioned for Growth
Positioned for Growth Industry Challenges Key Focus Areas Slow growth economy Low rate environment Optimize and Grow Revenue Regulatory change Key: Refocused and Realigned Improve Efficiency Improved balance sheet mix and risk profile Distinctive business model Disciplined Capital Targeted client se
Slide 5: Financial Review
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Slide 6: Financial Summary – Third Quarter 2012
Financial Summary – Third Quarter 2012 Metrics 3Q12 2Q12 3Q11 Income from continuing operations attributable to Key $.23 $.23 $.24 Financial common shareholders Performance (a) Net interest margin (TE) 3.23% 3.06% 3.09% Return on average total assets 1.08 1.12 1.14 Tier 1 common equity (c), (d) 11.4
Slide 7: Loan Growth
Loan Growth Highlights Average Commercial & Industrial Loans Average loan growth driven by C&I, while the exit portfolio continues to run-off Branch acquisition added $223 million in mostly consumer loans to 3Q12 Acquired credit card portfolio Aug. 1; added $473 million to 3Q12 average loans Origina
Slide 8: Improving Deposit Mix
Improving Deposit Mix Highlights Funding Cost Overall funding cost continues to improve, with 2.50% total deposit cost declining 26 bps from 3Q11 2.00% 1.94% Western NY branch acquisition added $1.6 1.50% 1.46% billion of mostly non-time consumer deposits to 1.21% 3Q12 average balances 1.00% .83% .6
Slide 9: Total Revenue
Total Revenue Highlights Net Interest Margin (TE) Trend Net interest income improved, with net interest margin up 17 bps from 2Q12 benefiting from: – Asset and funding mix improvement – Continued growth in C&I loans – Redemption of trust preferred securities – Maturities of higher cost CDs and debt
Slide 10: Focused Expense Management
Focused Expense Management Highlights Noninterest Expense $ in millions $871 Noninterest expense increased $20 million from $900 2Q12 $692 $734 – Elevated expenses from the acquisition of $600 $471 $323 branches and the credit card portfolio $310 • Onetime expenses of $8 million $300 • Intangible as
Slide 11: Continued Improvement in Asset Quality
Continued Improvement in Asset Quality Highlights Underlying credit trends continue to improve Provision increased, primarily due to: – Acquisition of credit card portfolios and branch loans (+$32 MM) – Updated regulatory guidance on consumer loans (+$45 MM) Net loan charge-offs increased $32 millio
Slide 12: Strong Capital Ratios
Strong Capital Ratios Highlights Tangible Common Equity to Tangible Assets (b) Strong capital position supports growth 12.0% 10.4% 9.8% Disciplined capital management process 9.0% – Repurchased 9.6 million common shares 7.6% in 3Q12 6.0% – Redeemed $707 million in trust preferred securities during 3
Slide 13: Appendix
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Slide 14: Progress on Targets for Success
Progress on Targets for Success KEY Business KEY KEY KEY Metrics (a) Targets Action Plans Model 3Q12 2Q12 Leverage integrated model to grow Core funded Loan to deposit ratio(b) 86% 86% 90-100% relationships and loans Improve deposit mix Focus on relationship clients Returning to a Exit noncore portf
Slide 15: High Quality Investment Portfolio
High Quality Investment Portfolio Highlights Average Total Investment Securities $ in billions Portfolio composed of Agency or GSE backed: $25 5.00% GNMA, Fannie & Freddie 3.82% $20 $18.5 4.00% – No private label MBS or financial paper $16.0 $16.9 $15 3.00% 3.15% Average portfolio life at 9/30/12: 2
Slide 16: Credit Quality
Credit Quality Credit Quality by Portfolio N/M = Not Meaningful (a) Ending and average loans for third quarter 2012 include commercial credit card balances of $88 million and $54 million, respectively (b) Net loan charge-off amounts are annualized in calculation. NCO ratios for discontinued operatio
Slide 17: Home Equity Loans – 9/30/12
Home Equity Loans – 9/30/12 Community Bank – Home Equity Vintage (% of Loans) $ in millions, except average loan size Average Loan Average Average % of Loans 2011 and 2007 and Loan Balances Size ($) FICO LTV (a) LTV>90% later 2010 2009 2008 prior Home equity loans and lines First lien $ 5,293 $ 62,8
Slide 18: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on $ in millions Balance Change Net Loan Nonperforming Outstanding 9-30-12 vs. Charge-offs Status 9-30-12 6-30-12 6-30-12 3Q12(c) 2Q12 9-30-12 6-30-12 Residential properties – homebuilder $31 $33 $(2) - - $6 $14 Marine and RV floor plan 35 39 (4) $(1)
Slide 19: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Quarterly Change in Criticized Outstandings (a) 2.50% 0% (1.0)% 2.00% -4% 1.59% -8% (6.8)% 1.50% 1.29% (8.1)% 1.14% 1.14% (10.2)% -12% (11.2)% (10.9)% .95% .98% .97% .99% .89% .85% (12.8)% (12.3)% 1.00% .78% (13.6)% .73% .69% (14.3)% (14.
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (a) September 30, 2012 number excludes $130 million of purchased credit card receivable intangible assets that are not fully excludable for capital purposes. (b) Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses
Slide 21: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) $ in millions Three months ended 9-30-12 6-30-12 9-30-11 Return on tangible common equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders $ 214 $ 221 $ 229 Tangible common equity (non-GAAP) 8,
Slide 22: Tier 1 Common Equity under Basel III (estimated)
Tier 1 Common Equity under Basel III (estimated) KeyCorp & Subsidiaries TIER 1 COMMON EQUTIY UNDER BASEL III (ESTIMATES) (1) Quarter ended Sept 30, (#039;s in billions) 2012 Tier 1 Common Equity under Basel I $9.0 Adjustments from Basel I to Basel III: Cumulative Other Comprehensive Income(2) (0.1) Def