Attached files
| file | filename |
|---|---|
| 8-K - 8-K - KEYCORP /NEW/ | d8k.htm |
| EX-99.3 - EX-99.3 - KEYCORP /NEW/ | dex993.htm |
| EX-99.1 - EX-99.1 - KEYCORP /NEW/ | dex991.htm |
 Second Quarter 2011 Review
July 19, 2011
Speakers:
Beth Mooney
Jeff Weeden
Exhibit 99.2 |
 2
This presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements about
Key’s financial condition, results of operations, earnings outlook, asset quality trends
and profitability. Forward-looking statements are not historical facts
but instead represent only management’s current expectations and
forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside
of Key’s control. Key’s actual results and financial condition may
differ, possibly materially, from the anticipated results and financial
condition indicated in these forward-looking statements. Factors that could cause Key’s actual results to
differ materially from those described in the forward-looking statements can be
found in KeyCorp’s Annual Report on Form
10-K
for
the
year
ended
December
31,
2010,
and
its
Quarterly
Report
on
Form
10-Q
for
the
period
ended
March
31,
2011,
which
have
been
filed
with
the
Securities
and
Exchange
Commission
and
are
available
on
Key’s
website
(www.key.com/ir) and on the Securities and Exchange Commission’s website
(www.sec.gov). Forward-looking statements are not guarantees of future
performance and should not be relied upon as representing management’s
views as of any subsequent date. Key does not undertake any obligation to
update the forward-looking statements to reflect the impact of
circumstances or events that may arise after the date of the forward-looking statements.
PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 FORWARD-LOOKING STATEMENT DISCLOSURE |
 3
Momentum
in
the
business
–
new
client
acquisition
and
growth
Leveraging strong balance sheet; growth in C&I loans
Investing in the business
Growing the
Franchise
Increased quarterly dividend to $.03 per common share
Repurchased warrant issued to U.S. Treasury under TARP
Positioned to meet Basel III requirements
Leadership team in place
Continued improvement in credit quality
Well
controlled
expenses
-
driving
to
create
positive
operating
leverage
Execution of
Business Plan
Investor
Highlights
–
Second
Quarter
2011
Strategic statement: Key grows by building enduring relationships
through client-focused solutions and extraordinary service
Disciplined
Capital
Management |
 4
(a)
Continuing operations, unless otherwise noted
(b)
Represents period-end consolidated total loans and loans held for sale
(excluding education loans in the securitization trusts) divided by period-end
consolidated total deposits (excluding deposits in foreign office)
Executing Business Plan: Progress on Targets for Success
Improve funding mix
Focus on risk-adjusted returns
Grow client relationships
Leverage Key’s total client solutions and cross-
selling capabilities
>3.50%
3.19%
Net interest margin
Growing high
quality, diverse
revenue streams
>40%
44%
Noninterest income
to total revenue
Improve efficiency and effectiveness
Leverage technology
Change cost base to more variable from fixed
$300-$375
million
$320 million
implemented
Keyvolution cost savings
Creating positive
operating
leverage
Execute our client insight-driven relationship model
Lower credit costs
Improved funding mix with lower cost core deposits
Keyvolution savings
1.00-1.25%
1.23%
Return on average assets
Executing our
strategies
Focus on relationship clients
Exit noncore portfolios
Limit concentrations
Focus on risk-adjusted returns
40-50 bps
1.11%
NCOs to average loans
Returning to a
moderate risk
profile
Improve risk profile of loan portfolio and grow
relationships
Improve deposit mix and grow deposit base
90-100%
86%
Loan to deposit ratio
(b)
Core funded
Action Plans
Targets
KEY
2Q11
KEY Metrics
(a)
KEY Business
Model |
 5
Financial Summary –
Second Quarter 2011
Capital
(b)
Asset Quality
(a)
Financial
Performance
(a)
Metrics
TE = Taxable equivalent, EOP = End of Period
(a) From continuing operations
(b) From consolidated operations
(c) 6-30-11 ratios are estimated
2Q11
1Q11
2Q10
Income from continuing operations attributable to Key
$.26
$.21
$.06
common shareholders
Net interest margin (TE)
3.19%
3.25%
3.17%
Return on average total assets
1.23
1.32
.44
Tier 1 common equity
(c)
11.01%
10.74%
8.07%
Tier 1 risk-based capital
(c)
13.76
13.48
13.62
Tangible common equity to tangible assets
9.67
9.16
7.65
Book value per common share
$9.88
$9.58
$9.19
Net loan charge-offs to average loans
1.11%
1.59%
3.18%
NPLs to EOP portfolio loans
1.76
1.82
3.19
NPAs to EOP portfolio loans + OREO + Other NPAs
1.98
2.23
3.88
Allowance for loan losses to period-end loans
2.57
2.83
4.16
Allowance for loan losses to NPLs
146.08
155.03
130.30 |
 6
Stabilizing Loan Portfolio
$16.9
$16.3
$16.6
$16.9
$17.7
43.4%
43.2%
42.9%
42.7%
42.9%
$0
$5
$10
$15
$20
2Q10
3Q10
4Q10
1Q11
2Q11
30%
40%
50%
60%
$ in billions
Highlights
Average Commercial, Financial & Agricultural Loans
Commercial, Financial and Agricultural loans
increased by 3.7% in 2Q11 compared to 1Q11
–
Modest growth in Commercial Banking and
industrial vertical of Corporate Bank
Commercial Real Estate loans continued to
decline, but at a slower pace
Slower run-off in exit portfolio and focus on
targeted segments positions Key for future
loan growth
CF&A loans
Utilization rate
(4.4)%
3.7%
(1.5)%
(2.3)%
(5.7)%
(5.2)%
(10.3)%
(9.7)%
(7.4)%
-15%
-10%
-5%
0%
5%
10%
15%
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
Quarterly % Change in Average CF&A Loans
Average Loans
$0
$10
$20
$30
$40
$50
$60
2Q10
3Q10
4Q10
1Q11
2Q11
Exit Portfolios
Home Equity & Other
CF&A & Leasing
Commercial Real Estate
$55.0
$ in billions
$52.6
$50.8
$49.3
$48.5 |
 7
Improving Deposit Mix
Highlights
Average Non-time Deposits
(a)
Higher cost CDs continue to decline, while
lower cost deposits have remained strong
Improved funding mix has reduced the cost
of deposits
Total CD maturities and average cost
–
2011: $4.3 billion at 1.51%
–
2012: $5.1 billion at 2.69%
–
2013 & beyond: $2.7 billion at 4.08%
Average
CD Balances
$42.8
$43.6
$45.8
$45.4
$45.3
.17%
.18%
.23%
.18%
.21%
$20
$30
$40
$50
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
$ in billions
$ in billions
$12.4
$13.6
$15.0
$17.3
$20.8
2.82%
2.69%
3.13%
2.66%
2.60%
$0
$5
$10
$15
$20
$25
2Q10
3Q10
4Q10
1Q11
2Q11
0.00%
2.00%
4.00%
6.00%
(a) Excludes time deposits and deposits in foreign office
(b) Represents period-end consolidated total loans and loans held for
sale (excluding education loans in the securitization trusts) divided by period-end
consolidated total deposits (excluding deposits in foreign office)
Loan to Deposit Ratio
(b)
88%
86%
85%
85%
81%
0%
25%
50%
75%
100%
125%
2Q10
3Q10
4Q10
1Q11
2Q11
Continuing operations
Discontinued operations
90%
93%
92%
91%
Cost of non-time deposits
Non-time deposits
Average rate on CDs
Total average CDs
86% |
 8
$950
$1,089
$1,338
$1,801
1.76%
1.82%
2.13%
2.67%
3.19%
$0
$1,000
$2,000
$3,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
$2,086
Nonperforming Assets
Net Charge-offs & Provision for Loan Losses
NPLs
NPLs to period-end loans
$435
$357
$256
$193
$134
$228
$94
$(97)
$(40)
$(8)
3.18%
2.69%
1.59%
1.11%
2.00%
-$200
$0
$200
$400
$600
2Q10
3Q10
4Q10
1Q11
2Q11
-2.00%
.00%
2.00%
4.00%
6.00%
8.00%
NCOs
Provision for loan losses
NCOs to average loans
Allowance for Loan Losses
Allowance to Nonperforming Loans
$1,230
$1,372
$1,604
$1,957
$2,219
3.81%
3.20%
4.16%
2.83%
2.57%
$0
$1,000
$2,000
$3,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.00%
2.00%
4.00%
6.00%
Allowance for loan losses
ALLL to period-end loans
146.1%
155.0%
150.2%
142.6%
130.3%
0%
50%
100%
150%
200%
2Q10
3Q10
4Q10
1Q11
2Q11
$ in millions
$ in millions
$ in millions
NPLs held for sale,
OREO & other NPAs
Key expects NCOs and NPAs to continue to decline in 2011
Continued Improvement in Asset Quality |
 9
Total Revenue
TE = Taxable equivalent
$570
$604
$635
$647
$623
3.35%
3.31%
3.17%
3.25%
3.19%
$0
$200
$400
$600
$800
2Q10
3Q10
4Q10
1Q11
2Q11
0.00%
2.00%
4.00%
6.00%
$ in millions
Continuing Operations
Net interest margin
Net interest income
Highlights
Net Interest Margin (TE) Trend
Net interest income and NIM impacted by:
–
Decline in earnings assets related to TARP
–
Movement of escrow deposits
–
Hedge maturities
Excess liquidity and low-rate environment
pressuring net interest margin
New client acquisition and execution of
relationship-based model provide opportunities
to grow noninterest income
Noninterest Income and % of Total Revenue
$492
$486
$526
$457
$454
44.3%
43.1%
44.1%
45.3%
42.9%
$0
$200
$400
$600
2Q10
3Q10
4Q10
1Q11
2Q11
30.0%
40.0%
50.0%
60.0%
Noninterest income
Noninterest income to
total revenue
$ in millions |
 10
Focused Expense Management
Noninterest Expense
Personnel expense
$ in millions
Highlights
Noninterest expense declined by $21 million
compared to 1Q11
–
Sales of OREO properties resulted in net gains
–
Reduction in FDIC assessment expense
Continuing to seek additional cost savings,
having achieved Keyvolution target
Average FTEs
16,436
15,301
15,973
16,937
15,772
15,665
15,584
15,424
15,349
$14,000
$15,000
$16,000
$17,000
$18,000
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
$385
$359
$365
$371
$380
$384
$377
$379
$330
$300
$0
$250
$500
$750
$1,000
2Q10
3Q10
4Q10
1Q11
2Q11
Non-personnel expense
$680
$701
$744
$736
$769 |
 11
2Q11 Pre-Provision Net Revenue
Pre-Provision Net Revenue Trend
Pre-Provision
Net
Revenue
(a)
and
ROAA
(b)
(a) Net interest income plus taxable-equivalent adjustment and
noninterest income less noninterest expense (b) From continuing
operations 1.23%
1.32%
1.53%
.93%
.44%
.0%
.5%
1.0%
1.5%
2.0%
2Q10
3Q10
4Q10
1Q11
2Q11
Return on Average Assets
$346
$397
$417
$360
$344
$0
$100
$200
$300
$400
$500
2Q10
3Q10
4Q10
1Q11
2Q11
$ in millions
$1,024
$680
$344
Total revenue
Noninterest
expense
PPNR
$ in millions
Net interest
income
56%
Noninterest
income
44%
Personnel
expense
56%
Non-personnel
expense
44% |
 12
9.67%
9.16%
7.65%
8.00%
8.19%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2Q10
3Q10
4Q10
1Q11
2Q11
Tier 1 Common Equity
Tangible Common Equity to Tangible Assets
Strong Capital Ratios
11.01%
10.74%
8.07%
8.61%
9.34%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2Q10
3Q10
4Q10
1Q11
2Q11
Peer leading capital position supports growth
Positioned for successful transition to Basel III
Continued capital generation through
execution of strategy
Increased quarterly common stock dividend
Highlights
$9.88
$9.58
$9.19
$9.54
$9.52
$8.00
$8.50
$9.00
$9.50
$10.00
2Q10
3Q10
4Q10
1Q11
2Q11
Book Value per Share |
 13
Appendix |
 14
Available for Sale Securities
Highlights
$17.3
$20.3
$21.3
$21.2
$19.0
3.19%
3.18%
3.63%
3.27%
3.43%
$0
$5
$10
$15
$20
$25
2Q10
3Q10
4Q10
1Q11
2Q11
2.00%
3.00%
4.00%
5.00%
Average AFS securities
Average yield
$ in billions
High Quality Investment Portfolio
Portfolio composed of Agency or GSE backed:
GNMA, Fannie & Freddie
–
No private label MBS or financial paper
Average portfolio maturity at June 30,
2011: 3.0 years
Unrealized net gain of $563 million on
available-for-sale securities portfolio at 6/30/11
Mortgage
paydowns
in
2Q11
were
$942
million vs. $1,462 million in 1Q11
Securities to Total Assets
(a)
21.1%
21.6%
21.0%
22.6%
23.9%
0%
5%
10%
15%
20%
25%
30%
2Q10
3Q10
4Q10
1Q11
2Q11
(a) Includes end of period held-to-maturity and available-for-sale
securities |
 15
N/M = Not Meaningful
(a)
Net charge-off amounts are annualized in calculation. NCO ratios for
discontinued operations and consolidated Key exclude education loans in the securitization
trusts since valued at fair-market value
(b)
6-30-11 allowance by portfolio is estimated. Allowance/period loans ratios
for discontinued operations and consolidated Key exclude education loans in the
securitization trusts since valued at fair-market value
Credit Quality
Credit Quality by Portfolio
$ in millions
Period-end
loans
Average
loans
6/30/11
2Q11
2Q11
1Q11
2Q11
1Q11
6/30/11
3/31/11
6/30/11
6/30/11
6/30/11
Commercial, financial and agricultural
$16,883
$16,922
$36
$32
.85
%
.80
%
$213
$221
$395
2.34
%
185.45
%
Commercial real estate:
Commercial mortgage
8,069
8,460
12
43
.57
1.89
230
245
343
4.25
149.13
Construction
1,631
1,760
24
30
5.47
5.99
131
146
106
6.50
80.92
Commercial lease financing
6,105
6,094
4
11
.26
.70
41
42
107
1.75
260.98
Real
estate
-
residential
mortgage
1,838
1,818
6
9
1.32
2.02
79
84
41
2.23
51.90
Home equity:
Key Community Bank
9,431
9,441
27
24
1.15
1.03
101
99
99
1.05
98.02
Other
595
611
10
14
6.56
8.78
11
13
37
6.22
336.36
Consumer
—
Key
Community
Bank
1,157
1,151
9
10
3.14
3.51
3
3
47
4.06
N/M
Consumer other:
Marine
1,989
2,051
4
19
.78
3.54
32
31
52
2.61
162.50
Other
142
146
2
1
5.49
2.60
1
1
3
2.11
300.00
Continuing total
$47,840
$48,454
$134
$193
1.11
%
1.59
%
$842
$885
$1,230
2.57
%
146.08
%
Discontinued operations -
education
lending business
6,261
6,240
32
35
4.02
4.33
21
22
109
3.45
N/M
Consolidated total
$54,101
$54,694
$166
$228
1.29
%
1.76
%
$863
$907
$1,339
2.63
%
155.16
%
Allowance /
period-end
loans
(b)
Allowance /
NPLs
Net loan
charge-offs
Net
loan
charge-offs
(a)
/
average loans
Nonperforming
loans
Ending
allowance
(b) |
 16
Commercial Real Estate by Property Type and Geography
(a) Nonresidential land and development loans
N/M = Not Meaningful
Commercial
Real
Estate
Loans
–
6/30/11
$ in millions
(a)
Geographic Region
% of
Commercial
West
Southwest
Central
Midwest
Southeast
Northeast
Total
Total CRE
Mortgage
Construction
Nonowner-occupied:
Retail properties
$330
$169
$215
$241
$393
$230
$1,578
16.3
%
$1,262
$316
Multifamily properties
146
143
263
220
289
260
1,321
13.6
950
371
Health facilities
194
6
149
217
202
199
967
10.0
916
51
Office buildings
142
74
109
115
51
265
756
7.8
617
139
Warehouses
229
-
43
78
74
87
511
5.3
483
28
Residential properties
85
20
56
80
67
80
388
4.0
104
284
Hotels/motels
59
-
24
5
146
33
267
2.8
225
42
Land and development
21
13
36
7
54
67
198
2.0
14
184
Manufacturing facilities
2
-
5
8
-
6
21
.2
20
1
Other
68
2
12
45
86
101
314
3.2
300
14
Total nonowner-occupied
1,276
427
912
1,016
1,362
1,328
6,321
65.2
4,891
1,430
Owner-occupied
1,398
37
315
732
139
758
3,379
34.8
3,178
201
Total
$2,674
$464
$1,227
$1,748
$1,501
$2,086
$9,700
100.0
%
$8,069
$1,631
Nonowner-occupied: June 30, 2011
Nonperforming loans
$53
$56
$6
$50
$51
$54
$270
N/M
$149
$121
90+ days past due
22
-
-
2
-
12
36
N/M
8
28
30-89 days past due
15
4
1
16
36
26
98
N/M
65
33
Nonowner-occupied: March 31, 2011
Nonperforming loans
$68
$27
$49
$40
$64
$54
$302
N/M
$166
$136
90+ days past due
6
-
10
2
-
29
47
N/M
24
23
30-89 days past due
30
-
28
9
18
11
96
N/M
53
43
|
 17
(a) Nonresidential land and development loans
Commercial Real Estate
Commercial Real Estate Credit Quality
$ in millions
(a)
Period-end
loans
6-30-11
3-31-11
6-30-11
3-31-11
2Q11
1Q11
Retail properties
$1,578
$1,907
$66
$69
$6
$24
Multifamily properties
1,321
1,518
47
21
(1)
11
Health facilities
967
1,056
11
35
3
-
Office builldings
756
865
25
30
4
8
Warehouses
511
498
10
12
-
-
Residential properties
388
425
69
100
9
14
Hotels/motels
267
307
5
1
-
-
Land and development
198
209
18
12
6
10
Other CRE
335
355
19
22
4
4
Total nonowner-occupied
6,321
7,140
270
302
31
71
Owner-occupied
3,379
3,511
91
89
5
2
Total
$9,700
$10,651
$361
$391
$36
$73
Nonperforming
loans
charge-offs
Net loan |
 18
(a)
Average LTVs are at origination. Current average LTVs for Community Bank
total home equity loans and lines is approximately 79%, which compares to
79% at the end of the first quarter of 2011 Community Bank –
Home Equity
Exit Portfolio –
Home Equity
$ in millions, except average loan size
$ in millions, except average loan size
(a)
(a)
Home Equity Loans –
6/30/11
Vintage (% of Loans)
Loan
Balances
Average Loan
Size ($)
Average
FICO
Average
LTV
% of Loans
LTV>90%
2010 and
2011
2009
2008
2007
2006 and
prior
Home equity loans and lines
First lien
4,968
$
58,019
$
751
66
%
.6
%
17
11
11
8
53
%
Second lie
4,463
44,671
750
75
3.4
13
8
18
17
44
Total home equity loans and lines
9,431
$
50,831
$
750
70
1.9
15
9
15
12
49
Nonaccrual loans
First lien
56
$
72,987
$
716
73
%
.6
%
1
%
3
%
6
%
15
%
75
%
Second lie
46
55,757
706
77
3.3
-
4
11
26
59
Total home equity nonaccrual loans
102
$
64,053
$
712
75
1.7
1
4
8
19
68
Second quarter net charge-offs
27
$
-
1
%
23
%
28
%
48
%
Net loan charge-offs to average loans
1.15
%
Vintage (% of Loans)
Loan
Balances
Average Loan
Size ($)
Average
FICO
Average
LTV
% of Loans
LTV>90%
2010 and
2011
2009
2008
2007
2006 and
prior
Home equity loans
First lien
26
$
23,056
$
747
32
%
.4
%
-
-
1
%
24
%
75
%
Second lie
569
25,404
731
82
32.6
-
-
2
40
58
Total home equity loans
595
$
25,292
$
731
80
31.2
-
-
1
40
59
Nonaccrual loans
First lien
1
$
20,612
$
724
31
%
-
-
-
-
9
%
91
%
Second lie
10
28,655
705
83
33.2
%
-
-
2
%
36
62
Total home equity nonaccrual loans
11
$
27,969
$
706
81
31.1
-
-
2
34
64
Second quarter net charge-offs
10
$
-
-
1
%
50
%
49
%
Net loan charge-offs to average loans
6.56
% |
 19
Exit Loan Portfolio Trend (Excluding Discontinued Operations)
Exit Loan Portfolio
$ in millions
(a)
Includes the business aviation, commercial vehicle, office products, construction
and industrial leases, Canadian lease financing portfolios; and all remaining
balances related to lease in, lease out; sale in, sale out; service contract
leases; and qualified technological equipment leases (b)
Includes loans in Key’s consolidated education loan securitization
trusts $4,736
$5,048
$6,357
$5,846
$5,388
$0
$2,000
$4,000
$6,000
$8,000
2Q10
3Q10
4Q10
1Q11
2Q11
$ in millions
Exit Loan Portfolio
Change
6-30-11 vs.
6-30-11
3-31-11
3-31-11
2Q11
1Q11
6-30-11
3-31-11
Residential
properties
–
homebuilder
$62
$87
$(25)
$1
$2
$33
$44
Marine and RV floor plan
122
150
(28)
1
3
31
35
Commercial lease financing
(a)
1,826
1,922
(96)
7
2
19
21
Total commercial loans
2,010
2,159
(149)
9
7
83
100
Home
equity
–
Other
595
627
(32)
10
14
11
13
Marine
1,989
2,112
(123)
4
19
32
31
RV and other consumer
142
150
(8)
2
1
-
1
Total consumer loans
2,726
2,889
(163)
16
34
43
45
Total exit loans in loan portfolio
$4,736
$5,048
$(312)
$25
$41
$126
$145
Discontinued
operations
-
education
lending business (not included in exit loans above)
(b)
$6,261
$6,318
$(57)
$32
$35
$21
$22
Balance on
Nonperforming
Status
Balance
Outstanding
Charge-offs
Net Loan |
 20
Credit Quality Trends
Quarterly Change in Criticized Outstandings
(a)
Delinquencies to Period-end Total Loans
(12.3)%
(11.2)%
(16.7)%
(14.3)%
(12.8)%
(1.0)%
(8.1)%
(2.0)%
2.8%
35.1%
41.5%
17.1%
(8.4)%
41.7%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
30 –
89 days delinquent
90+ days delinquent
(a)
Loans and leases outstanding
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
.97%
.98%
.95%
1.29%
1.14%
1.14%
1.59%
1.72%
1.61%
1.87%
1.69%
1.17%
1.07%
1.49%
.25%
.32%
.48%
.30%
.45%
.78%
.56%
.60%
.82%
.62%
.57%
.42%
.47%
.36%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50% |