Keycorp · NYSE:KEY
Keycorp — Investor Presentation (February 2018)
29 slides from Keycorp's investor presentation, Feb 28, 2018
Slide 1: Investor Meetings: February – March 2018
Investor Meetings: February – March 2018 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: Business Overview
Key: Business Overview Aligned around client needs and building enduring relationships Community Bank Corporate Bank Client Continuum High Net Worth Individuals & Small Commercial Individuals & Corporations Families Businesses Businesses Families $500 MM+ Commercial Client Revenue: < $10 MM $10 MM -
Slide 4: Strong Franchise with Distinctive Capabilities
Strong Franchise with Distinctive Capabilities Market Presence Western Markets Eastern Markets strong market share top 5 in >20 MSAs(a) Leading market presence across the I-90 corridor Strong growth and presence in attractive markets from Toledo, OH to Albany, NY First Niagara acquisition strengthen
Slide 5: Commercial Capabilities and Expertise
Commercial Capabilities and Expertise Competitive advantage with targeted clients Traditional Bank Products Capital Markets Capabilities Commercial mortgage Derivatives & foreign Loans Deposits & payments Equity capital markets Equity research banking exchange $104 B average deposits #3 commercial m
Slide 6: Levers to Improve Efficiency and Returns
Levers to Improve Efficiency and Returns Delivering positive operating leverage with opportunities across our businesses Executing Strategic Priorities Growing Relationships Taking Share Accelerating Revenue Momentum Continuing Expense Discipline Continued momentum with core relationship strategy Ac
Slide 7: Focused Forward
Focused Forward Investing in our franchise to enhance capabilities, improve the client experience and accelerate growth Hire Acquire & Partner Recent Acquisitions Retail Sales 92% growth in digital and Cain Brothers Financial Wellness Reviews +63% (30)% analytics team since Monthly Avg. / Sales FTE
Slide 8: Attractive Growth Opportunities
Attractive Growth Opportunities Well-positioned to execute strategy and drive growth across the franchise Residential Mortgage Commercial & Corporate Banking Payments Leveraging distinctive model for Delivering targeted offering for clients, Investing in People profitable growth focused on the full
Slide 9: Risk Management
Risk Management Maintaining a strong risk culture and moderate risk profile Business Discipline Strong Asset Quality(a) Enterprise-wide approach to managing risks and Net Charge-offs to Average Loans concentrations 1.50% Key Peer median(a) Maintaining enhanced underwriting standards 1.25% Focus on s
Slide 10: Capital Management
Capital Management Disciplined in how we manage, invest, deploy and return our strong capital position Strong Capital Position Focus on Dividends Common Equity Tier 1 Cash Dividends Per Common Share $0.38 10.26% 25% CAGR 9.91% 9.91% 10.16% 9.54% $0.10 4Q16 1Q17 2Q17 3Q17 4Q17 2011 2012 2013 2014 201
Slide 11: Outlook and Expectations
Outlook and Expectations FY 2018 Average Balance • Loans: average balances in the range of $88.5 B - $89.5 B Sheet • Deposits: average balances in the range of $104.5 B - $105.5 B • Net interest income expected to be in the range of $3.9 B - $4.0 B Net Interest Income • Outlook includes one rate inc
Slide 12: Financial Review
Financial Review 12
Slide 13: Financial Highlights
Financial Highlights Continuing operations, unless otherwise noted 4Q17 3Q17 4Q16 LQ ∆ Y/Y ∆ EPS – assuming dilution .17 $ .32 .20 (47) % (15) % EPS – excl. notable items(a), (b) .36 .35 .31 3 16 Cash efficiency ratio(a) 66.7 % 62.2 % 76.2 % 450 bps (950) bps Profitability Cash efficiency –excl. not
Slide 14: Loans
Loans Total Average Loans Highlights $ in billions $90 $85 $86 vs. Prior Year Average loans up 1% from 4Q16 $60 – Broad-based C&I growth – Strength in indirect auto lending $30 – Partially offset by higher levels of paydowns, primarily in CRE, and continued decline in home equity $0 1Q16 2Q16 3Q16 4
Slide 15: Loan Portfolio Detail, at 12/31/17
Loan Portfolio Detail, at 12/31/17 Total Loans Commercial Loans $ in billions 12/31/17 % of total Diversified Portfolio by Industry loans Total commercial loans: Utilities Agriculture Commercial and industrial $ 41.9 48 Transportation Automotive Business Products Commercial real estate 16.0 19 Techn
Slide 16: Deposits
Deposits Average Deposits Highlights $ in billions $105 $104 Deposit cost up 3 bps from 3Q17 $105 .70% – Cumulative beta of 21% since December 2015 .60% (contractual commercial rates and relationship rates) $85 .50% – Continued migration of portfolio into time deposits .40% $65 Deposit mix: 31% noni
Slide 17: Investment Portfolio
Investment Portfolio Average Total Investment Securities Highlights $ in billions Portfolio composed primarily of GNMA and GSE- $29.3 $29.6 $30.0 3.00% backed MBS and CMOs 2.50% ‒ Primarily fixed rate $20.0 2.06% ‒ GNMA 45% of 4Q17 average balances 1.87% 2.00% Portfolio used for funding and liquidit
Slide 18: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations Excluding impact of PAA, 4Q17 net interest income $38 $1,000 $948 $952 4.0% was $914 MM and net interest margin was 2.97% $92 $800 vs. Prior Year 3.5% $600 3.12% 3.09%
Slide 19: Interest Rate Risk Management
Interest Rate Risk Management The strength and diversity of our franchise positions Key to benefit from economic growth and a rising rate environment Business and Balance Sheet Highlights Net Interest Income Sensitivities (FY18) ($MM) • Strong, low-cost deposit base (change vs. FY 2018 outlook)(a) –
Slide 20: Noninterest Income
Noninterest Income Noninterest Income Highlights $ in millions Up / (Down) 4Q17 vs. 4Q16 vs. 3Q17 vs. Prior Year Trust and investment services income $ 131 $ 8 $ (4) Noninterest income up $47 MM from 4Q16, excl. Investment banking and debt 200 43 59 placement fees notable items(a),(b) Service charge
Slide 21: Noninterest Expense
Noninterest Expense Noninterest Expense Highlights $ in millions Up / (Down) 4Q17 vs. 4Q16 vs. 3Q17 Notable items: Personnel $ 608 $ (40) $ 50 $ in millions 4Q17 4Q16 3Q17 Net occupancy 92 (20) 18 Merger-related charges $56 $207 $36 Computer processing 54 (43) (2) Impact of tax reform and related ac
Slide 22: Credit Quality
Credit Quality Net Charge-offs & Provision for Credit Losses Allowance for Loan and Lease Losses $ in millions 4Q17 allowance for loan losses to $100 1.00% period-end loans of 1.01% $900 $877 250% .80% $858 $75 $72 $66 200% $52 $49 .60% $800 $50 174% 150% .40% 137% 100% $700 $25 .34% .20% 50% .24% $
Slide 23: 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% .47% 6.0% .42% 4.0% 3.4% 3.2% .25% 2.0% .10% .10% .00% .0% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q
Slide 24: 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 (%) 12/31/17 4Q17 4Q17 4Q17 12/31/17 12/31/17 12/31/17
Slide 25: Capital
Capital Common Equity Tier 1 Highlights 12.00% Strong capital position with Common Equity Tier 1 ratio of 10.16% at 12/31/17 10.16% 10.00% 9.54% Repurchased $199 MM(a) in common shares during 4Q17 8.00% Increased common share dividend to $.105 per common share in 4Q17; 11% increase from PQ and 24% i
Slide 26: FNFG Merger-related Charges
FNFG Merger-related Charges $ in millions 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 Increase / (Decrease) Net interest income - - - - - $ (6) - - - Operating lease income and other - - - - - $ (2) - - - leasing gains Other income - - - - $ 9 (10) - - - Noninterest income - - - - $ 9 $ (12) - - -
Slide 27: Estimated Impact of Tax Reform and Related Actions
Estimated Impact of Tax Reform and Related Actions Estimated Federal Tax Reform Total Estimated Tax Reform Impact Related Actions Tax Reform Impact $ in millions Net interest income (TE) - - - (a) Noninterest income $ (1) - $ (1) Noninterest expense 29 (c) Personnel expense - $ 16 16 (a) Nonpersonne
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three months ended Twelve months ended $ in millions 12/31/2017 9/30/2017 12/31/2016 12/31/2017 12/31/2016 Notable Items Merger-related charges $ (56) $ (36) $ (198) $ (217) $ (474) Impacts of tax reform and related actions (30) - - (30) - Merchant services gain - (5)
Slide 29: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) Three months ended Twelve months ended $ in millions 12/31/2017 9/30/17 6/30/17 3/31/17 12/31/16 12/31/2017 12/31/2016 Average tangible common equity Average Key shareholders' equity (GAAP) $ 15,268 $ 15,241 $ 15,200 $ 15,184 $ 14,901 $ 15,224 $ 12,647 Les