Slide 1: KeyCorp Second Quarter 2024 Earnings Review
KeyCorp Second Quarter 2024 Earnings Review July 18, 2024 Chris Gorman Chairman and Chief Executive Officer Clark Khayat Chief Financial Officer
Slide 2: 2Q24 Results
2Q24 Results Driving New Relationships ✓Enhanced +3% Strengthening the 34bps Focused on YoY Increase in noninterest underwrite-to- income Balance Sheet NCOs / Average Loans Primacy distribute Momentum across Wealth platformPayments, Management, through and Commercial Mortgage partnership Servicing w
Slide 3: Financial Review
Financial Review
Slide 4: 2Q24 Highlights
2Q24 Highlights $ in millions, excluding EPS From continuing operations, unless otherwise noted ▪ EPS of $0.25, up 25% sequentially Reported QoQ YoY ▪ Net interest income up 1.5% QoQ driven by fixed-rate asset EPS $0.25 25.0% (7.4)% repricing, partly offset by higher funding costs and impact of forw
Slide 5: Average Loans
Average Loans $ in billions vs. Prior Quarter $120.7 $117.6 ▪ Average loans down 1.9% from 1Q24 $113.9 $111.0 $109.0 EOP Loans: $107.1Bn Consumer $36.6 $36.1 − Decline in commercial loans (-$1.3Bn), driven by lower $35.3 $34.6 $33.9 C&I and commercial real estate loans 5.41% 5.51% 5.61% 5.66% 5.26%
Slide 6: Average Deposits
Average Deposits vs. Prior Quarter $ in billions $142.9 $144.8 $145.1 $142.9 $144.2 ▪ Average deposits were up 1% from from 1Q24 Other(1) $9.0 $6.0 $3.3 $2.5 $1.4 $56.3 $57.4 $58.2 − Growth in retail CD balances and commercial deposits Commercial $52.5 $56.1 2.28% 2.20% 2.06% − Included ~$200MM decl
Slide 7: Net Interest Income and Margin (TE)
Net Interest Income and Margin (TE) From continuing operations, $ in millions NII Walk (TE) ~$39 $9 $(18) $986 +1.5% $(9) $923 $928 $886 $899 1Q24 Swaps & Deposit Lower Loans Forward- Other 2Q24 UST Roll-off Cost & Mix (remixed into starting Swaps 2.12% 2.07% 2.04% ST investments) 2.01% 2.02% NIM Wa
Slide 8: Noninterest Income
Noninterest Income % change $ in millions vs. Prior Year YoY QoQ Total Noninterest $609 $647 $627 +3% (3)% ▪ Noninterest income up $18MM (+3%) from Income 2Q23 $76 $82 +12% +8% Other(1) $73 − Trust & Investment Services growth $56 Commercial Mortgage $61 (+$13MM) driven by strong market $50 +22% +9%
Slide 9: Noninterest Expense
Noninterest Expense $ in millions % change vs. Prior Year YoY QoQ ▪ Noninterest expense up $3MM (0.3%) from 2Q23 Total Noninterest 0.3% (6)% Expense $1,076 $1,143 $1,079 − 2Q24 Noninterest expense included (2) $5MM pre-tax, from the FDIC special $29 (2) assessment(2) $5 $440 ▪ Higher personnel expen
Slide 10: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Delinquencies to Period-end Total Loans $ in millions Continuing Operations 0.26% 0.29% 0.34% 0.17% 0.24% 0.26% 0.15% 0.20% 0.22% $167 $102 $101 $91 $100 0.12% $71 $81 $76 $81 $52 0.13% 0.06% 0.04% 0.09% 0.11% 2Q23 3Q23 4Q23 1Q24 2Q24 2Q23
Slide 11: Capital
Capital Common Equity Tier 1(1) Projected AOCI Impacts(3) Target operating range: 9% - 9.5% $ in billions 10.3% 10.5% 9.8% 10.0% 9.3% AOCI Position AOCI Forward Rates AOCI Flat Rates YE YE YE YE YE YE 6/30/2024 7.1% 7.3% 2024 2025 2026 2024 2025 2026 7.0% 6.2% 6.2% ($2.9) ($2.9) ($3.4) ($3.9) ($3.4)
Slide 12: 2024 Outlook
2024 Outlook 2023 FY2024 (vs. FY2023) $ in millions Average Loans $118,004 down 7 – 8% (previously down 5 – 7%) Ending Loans $112,606 down 4 – 5% (previously relatively stable) relatively stable, with client deposits up Average Deposits $144,059 (previously flat to down 2%) down 2 – 5% Net Interest
Slide 13: NII Opportunity From Swaps and Treasuries
NII Opportunity From Swaps and Treasuries Tailwinds from Short-term Swaps & Treasuries Maturities(1) Maturities Schedule $ in millions; cumulative view $ in billions $238 $4.8 $4.5 $198 $151 $3.1 $2.8 $2.6 $2.9 $2.7 ~$118 ~$79 $1.7 0.49% 0.50% $1.1 $1.9 $1.9 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2
Slide 14: Net Interest Income Opportunity
Net Interest Income Opportunity Achieving 4Q24 Exit Rate NII Target – One December Fed Rate Cut(1) Other Key Inputs & Assumptions Change to NII ($ in millions); Illustrative, not drawn to scale +~$130MM ▪ Loan Balances $1Bn+ − Loans flat / up slightly vs 6/30/24 levels $899 Impact nets 2.40 – 2.50%
Slide 15: Appendix
Appendix
Slide 16: Positioned for the Future
Positioned for the Future Wholesale Funding(1) Repositioned Company in 2023 $in billions ▪ Proactive balance sheet management 28% − Right-sized the balance sheet $31 − Significantly increased CET1 through RWA optimization $22 − Vastly improved liquidity and funding profile ▪ Targeted expense reducti
Slide 17: Commercial Real Estate
Commercial Real Estate High-quality CRE portfolio has relatively limited exposure and is diversified by property type and geography Nonowner-occupied CRE Loan Portfolio Composition As a % Total Loans As a % Total Loans Office Highlights All banks >$10Bn assets • $0 nonowner-occupied construction All
Slide 18: Commercial Real Estate: Multifamily
Commercial Real Estate: Multifamily Business leverages our originate-to-distribute model and is a mixture of market rate and affordable housing Multifamily Portfolio Highlights Affordable Housing Loan Portfolio Highlights ▪ Diversified - no more than ~4% of Multifamily loans concentrated in any mark
Slide 19: Credit Quality by Portfolio
Credit Quality by Portfolio Allowance for Credit Losses (ACL) Net Loan Charge-offs(1) to Average Loans (%)(2) $ in millions $1,771 $1,778 1,804 1,823 1,833 4.31% 1.54% 1.60% 1.66% 1.71% 1.01% 1.49% 0.41% 0.21% 0.00% 0.00% 2Q23 3Q23 4Q23 1Q24 2Q24 (3), (4) C&I CRE Resi Mtg Home Equity Credit Cards Ot
Slide 20: Balance Sheet Management Detail
Balance Sheet Management Detail Balance Sheet Mix and Trends Fixed-rate Asset Repricing Tailwinds – 2H24 to 2026 Loan Composition(1) Earning Asset Mix(2) $ in billions 2H24 2025 2026 Projected receive fixed swaps(5) maturities $0.0 $5.2 $9.1 Other 2% 2% Other(3) n/a 1.80% 2.78% ST Investments Weight
Slide 21: Hedging Strategy Opportunity
Hedging Strategy Opportunity $ in billions; ending balances 2Q24 ALM Hedge Actions $19.6 ▪ Executed $5.75Bn of forward-starting receive-fixed swaps – $18.5 $18.8 $18.8 $18.8 WA receive rate: 4.06% (March 2025 start date) ▪ Executed $1.35Bn of spot pay-fixed swaps to hedge securities $10.8 – WA pay r
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 2Q24 1Q24 2Q23 Tangible common equity to tangible assets at period end Key shareholders’ equity (GAAP) $ 14,789 $ 14,547 $ 13,844 Less: Intangible assets(1) 2,793 2,799 2,826 Preferred stock(2) 2,446 2,446 2,446 Tangible common equity (non-GAAP) $ 9,550
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions 2Q24 1Q24 2Q23 Return on average tangible common equity from continuing operations Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) $ 237 $ 183 $ 250 Average tangible common equity (non-GAAP) 9,178 9,347 9,081 R
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation CET1 – AOCI Impact(1) ($ in millions) 2Q23 3Q23 4Q23 1Q24 2Q24 Common Equity Tier 1 (A) $ 14,887 $ 15,007 $ 14,894 $ 14,821 $ 14,901 Add: AFS and Pension accumulated other Comprehensive income (loss) (4,961) (5,581) (4,573) (4,608) (4,530) Adjusted Common Equity Tier
Slide 25: Selected Items Impact on Earnings
Selected Items Impact on Earnings Selected Items Impact on Earnings(1) $ in millions, except per share amounts Pretax(2) After-tax at marginal rate(2) Quarter to date results Amount Net Income EPS(3) Three months ended June 30, 2024 FDIC special assessment (other expense)(4) $ (5) $ (4) $ - Three mo
Slide 26: 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