Keycorp · NYSE:KEY
Keycorp — Keycorp /New/ — Goldman Sachs US Financial Services Conference 2013
26 slides from Keycorp's conference presentation, Dec 9, 2013
Slide 1: KeyCorp: Focused Forward
EXHIBIT 99.1 Goldman Sachs US Financial Services Conference 2013 KeyCorp Focused Forward Beth E. Mooney Chairman and 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, including statements about our financial condition, results of operations, asset quality trends, capital levels and profitability. Forward-looking statements can often be identifie
Slide 3: Progress Made on 2013 Key Focus Areas
Progress Made on 2013 Key Focus Areas Acquired and expanded commercial relationships CF&A Loans ($) Credit Card Production (#) Optimize and Enhanced core consumer and Grow small business payment products Revenue – Launched self-issuance credit card +11% +58% capabilities – Realigned merchant service
Slide 4: 2013 Performance
2013 Performance Executing on our commitments has driven … but Key remains focused on continuing to PPNR growth and peer leading shareholder close the valuation gap to peers return through the 3rd quarter… Pre-provision Net Revenue (a) Price / Tangible Book Value, as of 11/30/13 $ in millions Median
Slide 5: Focused Forward
Focused Forward Committed to improving returns by driving the business forward, with positive operating leverage and disciplined risk and capital management I • Improve productivity Positive Operating • Deliver solid organic revenue growth Leverage • Drive continuous improvement culture II • Execute
Slide 6: Positive Operating Leverage
I Positive Operating Leverage Key’s culture of continuous improvement is focused on both revenue and expense levers to deliver positive operating leverage Driving Productivity Across the Franchise Infrastructure Products and Capabilities Sales and Service Streamline overall infrastructure while Buil
Slide 7: Effective Risk Management
II Effective Risk Management Enterprise-wide Risk Management Approach Improved Loan Portfolio Targeted areas for strategic growth; reducing non-core assets • Execute rigorous and disciplined sales (66)% Exit approach – Relationship-oriented model 13% Consumer – Clearly defined prospect pools – Stand
Slide 8: Disciplined Capital Management
III Disciplined Capital Management Disciplined capital management allows Key to execute on its strategic priorities and maximize shareholder value Capital Priorities • Franchise investments to drive execution of relationship 1. Organic Growth strategy: product capabilities, client-facing personnel m
Slide 9: Focused Forward
Focused Forward Key is well-positioned to grow and improve returns 9
Slide 10: Appendix
* * * * * * * * * * Appendix 10
Slide 11: Business Model: Aligned and Targeted
Business Model: Aligned and Targeted Local delivery of broad product set and industry expertise Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity research banking exchange M&A / Equipment Wealth ma
Slide 12: Financial Highlights
Financial Highlights Metrics 3Q13 2Q13 1Q13 4Q12 3Q12 EPS – assuming dilution $ .25 $ .21 $ .21 $ .20 $ .22 Cash efficiency ratio (d) 67.5 % 69.1 % 66.0 % 69.0 % 64.1 % Financial Adj. cash efficiency ratio (ex. initiative charges (e) ) (d) 63.6 65.4 64.5 67.5 63.3 Performance (a) Net interest margin
Slide 13: Progress on Targets for Success
Progress on Targets for Success KEY KEY KEY Metrics (a) Targets Focus areas FY11 FY12 3Q13 YTD Improving balance Loan to deposit ratio (b) 87% 86% 84% 90-100% sheet efficiency NCOs to average loans 1.11% .69% .33% Maintaining 40-60 bps moderate risk profile Provision to average loans (.12)% .45% .28
Slide 14: Efficient Balance Sheet: Improving Balance Sheet Mix
Efficient Balance Sheet: Improving Balance Sheet Mix Average Loans Continue to Increase, Driven by Commercial, Financial & Agricultural (CF&A) $ in billions CF&A Loans Cumulative change since 4Q11 Total Commercial Home Equity & Other Exit Portfolios U.S. Commercial Banks (a) Key Growth in Non-time D
Slide 15: High Quality Revenue: Diverse Streams
High Quality Revenue: Diverse Streams Net Interest Income & Net Interest Margin (TE) Trend Noninterest Income Continuing Operations Continuing Operations $ in millions $ in millions Leveraged lease termination gains TruPS gains Net interest income (TE) NIM Noninterest Income Diversity Provides Stren
Slide 16: Operating Leverage: Driving Productivity and Efficiency
Operating Leverage: Driving Productivity and Efficiency Achieved Cost Savings Target; Focused on Further Efficiency Improvement $ in thousands Noninterest Expense Efficiency Ratio (b) Adjusted cash efficiency ratio Efficiency initiative charges (a) Cash efficiency ratio (ex. efficiency initiative ch
Slide 17: Moderate Risk Profile: Strong Credit Quality
Moderate Risk Profile: Strong Credit Quality Significant Improvement in Credit Quality Trends $ in millions NPLs held for sale, Net charge-offs (NCOs) Provision for loan and lease losses NPLs NPLs to period-end loans OREO & other NPAs NCOs to average loans Maintaining Moderate Risk Profile 3Q13 YTD
Slide 18: Outlook and Expectations
Outlook and Expectations Loans • Mid-single digit average balance growth NIM • Downward pressure in 4Q13 as a result of higher liquidity • Net interest income relatively stable in 2H13 Revenue • Continued strength in fee income businesses Expense • $680 - $700 million for 4Q13, including one-time ch
Slide 19: High Quality Investment Portfolio
High Quality Investment Portfolio Highlights Average Total Investment Securities $ in billions • Portfolio composed of Agency or GSE backed CMOs: Fannie, Freddie & GNMA • No private label MBS or financial paper • Average portfolio life at 9/30/13 of 3.8 years compared to 3.2 years at 6/30/13 • Unrea
Slide 20: Asset Quality Trends
Asset Quality Trends Delinquencies to Period-end Total Loans Quarterly Change in Criticized Outstandings (a) Continuing Operations Continuing Operations 30 – 89 days delinquent 90+ days delinquent Metric (b) 3Q13 2Q13 1Q13 4Q12 3Q12 Delinquencies to EOP total loans: 30-89 days .54 % .47 % .70 % .80
Slide 21: Credit Quality
Credit Quality Credit Quality by Portfolio Net loan Period- Allowance / Allowance / Average Net loan charge-offs (b) / Nonperforming Ending end period-end NPLs loans charge-offs average loans loans (c) allowance loans loans (d) (%) (%) $ in millions (%) 9/30/13 3Q13 3Q13 2Q13 3Q13 2Q13 9/30/13 6/30/
Slide 22: Home Equity Loans – 9/30/13
Home Equity Loans – 9/30/13 Community Bank – Home Equity $ in millions, except average loan size Vintage (% of Loans) Loan Average Loan Average Average % of Loans 2012 and 2008 and Balances Size ($) FICO LTV (a) LTV>90% later 2011 2010 2009 prior Home equity loans and lines First lien $ 5,932 $ 67,6
Slide 23: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on Balance Outstanding Change Net Loan Charge-offs $ in millions Nonperforming Status 9-30-13 vs. 9-30-13 6-30-13 3Q13 (c) 2Q13 (c) 9-30-13 6-30-13 6-30-13 Residentialproperties – homebuilder $ 26 $ 26 - - $ 1 $ 8 $ 8 Marine and RV floor plan 25 28 $ (
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ in millions Three months ended 9-30-13 6-30-13 9-30-12 Tangible common equity to tangible assets at period end Key shareholders’ equity (GAAP) $ 10,206 $ 10,229 $ 10,251 Less: Intangible assets (a) 1,017 1,021 1,031 Preferred Stock, Series A (b) 282 282 291 Tangible
Slide 25: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) $ in millions Three months ended 9-30-13 6-30-13 9-30-12 Average tangible common equity Average Key shareholders' equity (GAAP) $ 10,237 $ 10,314 $ 10,222 Less: Intangible assets (average) (a) 1,019 1,023 1,026 Preferred Stock, Series A (average) 291 291 2
Slide 26: Tier 1 Common Equity Under the Regulatory Capital Rules, Incorporating Basel III Guidance (estimated)
Tier 1 Common Equity Under the Regulatory Capital Rules, Incorporating Basel III Guidance (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions Sept. 30, 2013 Tier 1 common equity under current regulatory rules $ 9.3 Adjustments from current regulatory rules to the Regulatory Capital Ru
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