Keycorp · NYSE:KEY
Keycorp — Bernstein Annual Strategic Decisions Conference 2017
25 slides from Keycorp's conference presentation, June 2017
Slide 1: Investor Meetings: May - June 2017
Investor Meetings: May - June 2017 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 Stock Price Performance as of 4/30/17 − Broad product offering for targeted clients 127% − Acquisition of First Niagara accelerates performance Engaged management team with inde
Slide 4: Distinctive Business Model Drives Growth
Distinctive Business Model Drives Growth Balanced, diverse franchise with broad capabilities for targeted clients Delivering a consistent strategy across the franchise, while also capturing market-specific opportunities Western Markets Eastern Markets First Niagara Acquisition: • Created leading mar
Slide 5: First Niagara Acquisition
First Niagara Acquisition October 2015: Announced acquisition Significant Progress, Achieving Targets March 2016: Received shareholder approval Execution of detailed merger plans July 2016: Received regulatory approval - Completed 106 planned branch consolidations - Reduced nonbranch space by 225k s
Slide 6: Delivering on Commitments
Delivering on Commitments Results reflect success in delivering on what we said we would do Continued growth in clients and activity +35% Grow our Enhanced products and capabilities Growth in Commercial & businesses Increased bankers and client-facing FTE Corporate Bank RMs(a) 2013 vs. 2016 Successf
Slide 7: Positioned for Continued Growth
Positioned for Continued Growth Strengthened by more bankers, products, capabilities, and clients than any other time in our history Executing Strategic Priorities for Growth Add and Expand Relationships Value Attainment Leverage increase in client-facing bankers and Exceed financial targets for Fir
Slide 8: Financial Review
Financial Review 8
Slide 9: Financial Highlights
Financial Highlights Results in 3Q16 and after reflect the impact of the FNFG acquisition, which became effective on 8/1/2016 Continuing operations, Metrics 1Q17 4Q16 3Q16 2Q16 1Q16 unless otherwise noted EPS – assuming dilution $ .27 $ .20 $ .16 $ .23 $ .22 EPS –excl. merger-related charges(c), (d)
Slide 10: Outlook and Expectations
Outlook and Expectations FY 2017 (a) • Loans: mid-single digit growth from 4Q16, which translates to $87 B - $88 B for FY17 average balances Average Earning – Loan growth (%) to exceed deposit growth, with FY17 average deposits expected to be in the range of Assets $104 B - $105 B • Outlook includes
Slide 11: Loans
Loans Total Average Loans Highlights $ in billions $90 $86 vs. Prior Year Average loans up 43% from 1Q16 $60 $60 – Growth primarily reflects impact of FNFG – C&I continues to be a driver $30 vs. Prior Quarter $0 Average loans up 1% from 4Q16 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 – Commercial loan
Slide 12: Loan Portfolio Detail, at 3/31/17
Loan Portfolio Detail, at 3/31/17 Total Loans Commercial Loans $ in billions 3/31/17 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Agriculture Commercial and industrial $ 40.1 47 Automotive Business Transportation Products Commercial real estate 17.5 20 Technol
Slide 13: Deposits
Deposits Average Deposits(a) Highlights $ in billions Relatively stable deposit costs in 1Q17 and beta $105 $102 .70% below 10%(c) .60% $85 .50% $72 vs. Prior Year .40% $65 Average deposit growth of 43% from 1Q16 .30% .20% – Growth primarily reflects impact of FNFG $45 .23% .17% .10% – Continued mom
Slide 14: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $29.2 $30.0 5.00% backed MBS and CMOs; primarily fixed rate 4.00% $19.0 Continue to position portfolio for regulatory $20.0 3.00% liquidity requirements: 1.98% 2.00% – Rein
Slide 15: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations 1Q17 net interest income includes $53 MM, or 18 bps, $34 MM of $92 MM $929 from PAA $950 related to 3Q refinement 4.0% $92 $53 Excluding impact of PAA, 1Q17 net interes
Slide 16: Interest Rate Risk Management
Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Utilize Swaps to Achieve and with Relatively Short Duration(a) Adjust Modest Asset Sensitivity Loans Deposits Investment • Short weighted average maturity of A/LM swaps $86 B $104 B Portfolio - Provides flexibility to reprice and
Slide 17: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 1Q17 vs. 1Q16 vs. 4Q16 Solid first quarter results, with strength in trust Trust and investment services income $ 135 $ 26 $ 12 and investments services, and investment banking and debt placement (IBDP) Investment banking and
Slide 18: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions Up / (Down) 1Q17 vs. 1Q16 vs. 4Q16 1Q17 noninterest expense of $1,013 MM included $81 MM of merger-related charges (compared to $24 MM of merger- Personnel $ 556 $ 152 $ 92 related charges in 1Q16 and $207 MM in 4Q16) Net occupancy 87
Slide 19: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Highlights $ in millions Portfolios continue to perform well $120 1.00% Net loan charge-offs of $58 MM $89 .80% $90 – 27 basis points of average loans, below $63 .60% targeted range $60 $58 $46 .40% Nonperforming loans down 8% from 4Q16 an
Slide 20: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings(a) to Period-end Total Loans Continuing operations Continuing operations .50% 6.0% 0.39% 0.36% 4.0% 3.6% 3.0% .25% 0.12% 2.0% 0.09% .00% .0% 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q1
Slide 21: 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 (%) 3/31/17 1Q17 1Q17 1Q17 3/31/17 3/31/17 3/31/17 3/31
Slide 22: Capital
Capital Common Equity Tier 1(a) Highlights 12.00% 11.07% Strong capital position with Common Equity Tier 1 ratio of 9.91% at 3/31/17 9.91% 10.00% Repurchased $160 MM(b) in common shares during 1Q17 8.00% Redeemed Preferred Stock Series C ($350 MM) in February 6.00% Converted all shares of 7.75% Pref
Slide 23: FNFG Merger-related Charges
FNFG Merger-related Charges $ in millions 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 Increase / (Decrease) Net interest income - - $ (6) - - - Operating lease income and other leasing - - $ (2) - - - gains Other income - $ 9 (10) - - - Noninterest income - $ 9 $ (12) - - - Personnel expense $ 30 $ 80 $ 97 $ 35 $
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three m onths ended $ in millions 3-31-17 12-31-16 9-30-16 6-30-16 3-31-16 Tangible com m on equity to tangible assets at period end Key shareholders' equity (GAAP) $14,976 $ 15,240 $ 14,996 $ 11,313 $ 11,066 Less: Intangible assets (a) 2,751 2,788 2,855 1,074 1,077 P
Slide 25: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three m onths ended $ in millions 3-31-17 12-31-16 9-30-16 6-30-16 3-31-16 Average tangible com m on equity Average Key shareholders' equity (GAAP) $ 15,184 $ 14,901 $ 13,552 $ 11,147 $ 10,953 Less: Intangible assets (average) (a) (a) 2,772 2,874 2,255 1,0
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