Slide 1: Investor Meetings: May – June 2016
Investor Meetings: May – June 2016 KeyCorp Focused Forward
Slide 2: Forward-Looking Statements and Additional Information Disclosure
FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION DISCLOSURE 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 and First Niagara’s expectations or predictions of future financ
Slide 3: Key: Who We Are
Key: Who We Are A relationship-focused bank with scale and adaptability Top 20 U.S. bank-based financial services company Loans Deposits - Assets: $96 B 3% 1% - Deposits: $72 B 25% - Market capitalization: $9 B - Strong footprint with 961 branches and 46% 51% 74% 1,249 ATMs - Approximately 2 million
Slide 4: Leveraging our Geographic Diversity
Leveraging our Geographic Diversity Delivering a consistent strategy across our franchise while also leveraging market- specific opportunities Western Markets Eastern Markets • Deposits: $18 B • Deposits: $35 B • Branches: 369 • Branches: 592 • Demographic: younger with high growth potential • Demog
Slide 5: Business Model: Aligned and Targeted
Business Model: Aligned and Targeted Local delivery of broad product set and industry expertise Differentiated platform with depth and maturity Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity res
Slide 6: Business Model: Growing and Taking Share
Business Model: Growing and Taking Share Key’s business model creates a competitive advantage with targeted clients and has enabled us to take market share Winning with Clients 2015 2015 2015 Commercial and Investment Banking and Industrial Loans(a): Debt Placement Fees(b): % change vs. 2Q11 LTM; $
Slide 7: Driving Positive Operating Leverage
Driving Positive Operating Leverage Executing action plans across our organization to improve efficiency Revenue Growth Expense Savings Acquiring and expanding relationships to grow revenue in our Continuous improvement efforts enable identification and businesses execution of expense savings Improv
Slide 8: Maintaining a Moderate Risk Profile
Maintaining a Moderate Risk Profile Enterprise-wide risk management approach Targeted, Relationship-based Approach • Target specific segments and sectors where we • Clearly defined and well understood risk appetite have expertise and tolerances • Execute rigorous and disciplined sales approach • Ris
Slide 9: Progress on Targets for Success: Key Stand-alone
Progress on Targets for Success: Key Stand-alone Metrics (a) Targets 1Q16 4Q15 Balance Sheet Loan to deposit ratio (b) 90% -100% 86% 88% Efficiency NCOs to average loans .31% .25% Moderate Risk Profile 40 - 60 bps Provision for credit losses .60% .30% to average loans Net interest margin 3.00% -3.25
Slide 10: Outlook and Expectations
Outlook and Expectations FY 2016: Key Stand-alone Average Loans • Mid-single digit growth vs. FY 2015 • Up low to mid-single digit percentage without the benefit from higher interest rates Net Interest Income • Mid-single digit growth with the benefit of higher interest rates Noninterest Income • Lo
Slide 11: First Niagara Financial Group Acquisition
First Niagara Financial Group Acquisition 11
Slide 12: A Compelling Strategic Opportunity
A Compelling Strategic Opportunity Shelby_Sales-Presentation_150928_v5.pptx\28 SEP 2015\6:59 PM\11 Powerful combination creates high-performing regional bank with compelling shareholder returns 13th Largest U.S. Commercial Bank $135 billion assets $100 billion deposits Strengthens core operating and
Slide 13: Combined Company Uniquely Positioned to Unlock Value
Combined Company Uniquely Positioned to Unlock Value Three Million Clients Attractive Geographic Footprint Complementary Product Offering High Density Markets Broad, Complementary Product Capabilities Retail banking (branch; card; auto; etc.) Private banking Residential mortgage Indirect auto lendin
Slide 14: Strengthens Position in Attractive Northeast Markets
Strengthens Position in Attractive Northeast Markets Leading Position from Leading Position Shared Market Presence Accelerates Toledo to Albany Banks Outperform Value Realization Pro Forma Branch Footprint Leading Retail Presence in Upstate NY (a) $ in billions Buffalo, NY (b) Albany, NY 6.3 4.7 3.9
Slide 15: First Niagara: Significant Progress Being Made
First Niagara: Significant Progress Being Made Acquisition Attractive Financial Significant Revenue Complementary More Balanced Drives Value Returns Opportunities Business Model Franchise Recent Updates Executing against comprehensive pre-merger integration plan Continued confidence in value attainm
Slide 16: KeyCorp Financial Review
KeyCorp Financial Review 16
Slide 17: Investor Highlights – 1Q16
Investor Highlights – 1Q16 Generated positive operating leverage and grew pre-provision net revenue 6% (a) from 1Q15, excluding merger-related expense of $24 MM (b) Revenue up 3% from 1Q15, driven by 6% growth in net interest income Positive Total average loans up 5% from prior year; CF&A loans up 1
Slide 18: Financial Highlights
Financial Highlights Metrics 1Q16 4Q15 3Q15 2Q15 1Q15 EPS – assuming dilution $ .22 $ .27 $ .26 $ .27 $ .26 EPS –excl. merger-related expense (d), (e) .24 .27 Financial Cash efficiency ratio (d) 66.6 % 66.4 % 66.9 % 65.1 % 65.1 % Performance (a) Cash efficiency –excl. merger-related expense (d), (e)
Slide 19: Loans
Loans Total Average Loans Highlights $ in billions Total average loans up 5% Average Loans $60 Average total loans up 5% in 1Q16 from 1Q15, driven by CF&A loans up 12% $40 – Broad-based growth across Key’s commercial lines of business – Consumer loan decline related to paydowns $20 in the home equit
Slide 20: Deposits
Deposits Average Deposits (a) Highlights $ in billions Total average deposits up 4% Deposit cost remains relatively stable, up 2 bps $75 .50% from both 4Q15 and 1Q15 $65 .40% vs. Prior Year $55 .30% Deposit growth of 4% from 1Q15 related to: $45 .20% – Growth in commercial mortgage servicing .17% $3
Slide 21: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions $20.0 $19.0 5.00% Portfolio composed primarily of GNMA and GSE- $18.0 backed MBS and CMOs 4.00% $15.0 Continue to position portfolio for regulatory 3.00% $10.0 liquidity requirements: 2.00% 2.10% 2.09% – Reinvesting ca
Slide 22: 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 $620 $612 4.00% Net interest income up $35 MM, or 6%, from 1Q15, reflecting higher earning asset balances 3.50% and yields $580 $577 3.00% vs. Prior Quar
Slide 23: Interest Rate Risk Management
Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk • Maintained moderate asset sensitive position of ~2-3% Loan Portfolio Deposits (a) - Assumes 200 basis point increase in short and intermediate- 1Q16 1Q16 term rates over a 12-month period CDs: • Utili
Slide 24: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 1Q16 vs. 4Q15 vs. 1Q15 vs. Prior Year Trust and investment services income $ 109 $ 4 $ - Noninterest income down 1% from 1Q15 Investment banking and debt 71 (56) 3 placement fees ‒ Principal investing down $29 MM Service char
Slide 25: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights vs. Prior Year $ in millions Up / (Down) 1Q16 vs. 4Q15 vs. 1Q15 1Q16 noninterest expense up 5% from 1Q15 Personnel $ 404 $ (25) $ 15 Net occupancy 61 (3) (4) – Increase primarily driven by merger-related expense Computer processing 43 - 5 – Excl. me
Slide 26: FNFG Merger-related Expense
FNFG Merger-related Expense Expenses related to the acquisition and integration of First Niagara Financial Group $ in millions Increase / (Decrease) 1Q16 4Q15 Personnel expense (a) $ 16 - Business services and professional fees $ 7 $ 5 Marketing 1 - Other - 1 Total nonpersonnel expense $ 8 $ 6 Total
Slide 27: Capital
Capital Common Equity Tier 1 (a) Highlights 12.00% 11.07% Maintained strong capital position 10.64% 10.00% Common Equity Tier 1 ratio of 11.07% at 3/31/16 Planned common share dividend increase of 8.00% 13% in 2Q16 (subject to Board approval) 6.00% Common share repurchases and an increased 1Q15 2Q15
Slide 28: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Highlights $ in millions Credit quality measures impacted by migration in $120 .60% the oil and gas portfolio, reflecting market $89 conditions $90 .40% Net loan charge-offs remain below targeted range, .31% $60 at 31 basis points of avera
Slide 29: 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 (%) 3/31/16 1Q16 1Q16 1Q16 3/31/16 3/31/16 3/31/16 3/
Slide 30: Credit Quality Trends
Credit Quality Trends Delinquencies to Period-end Total Loans Criticized Outstandings (a) to Period-end Total Loans Continuing operations Continuing operations .75% 6.0% .50% 4.0% 3.6% .39% .37% 2.6% .25% .19% 2.0% .12% .00% .0% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4
Slide 31: Oil & Gas
Oil & Gas Longstanding history, expertise and relationships Total commitments of $3.1 B, including upstream Credit migration reflects recent regulatory guidance, commitments of $1.6 B which was applied to the entire portfolio Upstream portfolio is primarily secured by proven, Reserve coverage: 8% of
Slide 32: Home Equity Portfolio
Home Equity Portfolio Highlights High quality portfolio $4.0 billion of the total portfolio are fixed rate loans that require Community bank loans and lines: 98% of total portfolio; branch- principal and interest payments; $6.1 billion are lines originated $1.0 billion in lines outstanding (10% of t
Slide 33: Exit Loan Portfolio
Exit Loan Portfolio Exit Loan Portfolio Balance on Balance Outstanding Change Net Loan Charge-offs $ in millions Nonperforming Status 3-31-16 vs. 3-31-16 12-31-15 1Q16 4Q15 3-31-16 12-31-15 12-31-15 Residential properties – homebuilder - $ 6 $ (6) - - $ 3 $ 8 Marine and RV floor plan - 1 (1) - - - -
Slide 34: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three m onths ended $ in millions 3-31-16 12-31-15 9-30-15 6-30-15 3-31-15 Tangible com m on equity to tangible assets at period end Key shareholders' equity (GAAP) $ 11,066 $ 10,746 $ 10,705 $ 10,590 $ 10,603 Less: Intangible assets (a) 1,077 1,080 1,084 1,085 1,088
Slide 35: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three months ended $ in millions 3-31-16 12-31-15 9-30-15 6-30-15 3-31-15 Pre-provision net revenue excluding m erger-related expense Net interest income (GAAP) $ 604 $ 602 $ 591 $ 584 $ 571 Plus: Taxable-equivalent adjustment 8 8 7 6 6 Noninterest income
Slide 36: Common Equity Tier 1 Under the Regulatory Capital Rules (estimated)
Common Equity Tier 1 Under the Regulatory Capital Rules (RCR) (estimated) (a) KeyCorp & Subsidiaries Quarter ended $ in billions March 31, 2016 Common Equity Tier 1 under current RCR $ 10.0 Adjustments from current RCR to the fully phased-in RCR: Deferred tax assets and other intangible assets (b) -