Keycorp · NYSE:KEY
Keycorp — Keycorp /New/ — Q4 2016 Earnings Presentation
23 slides from Keycorp's earnings presentation, Jan 19, 2017
Slide 1: KeyCorp Fourth Quarter 2016 Earnings Review
KeyCorp Fourth Quarter 2016 Earnings Review January 19, 2017 Beth E. Mooney Chairman and Chief Executive Officer Don Kimble Chief Financial Officer
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: 2016: A Successful and Transformational Year
3 2016: A Successful and Transformational Year Positive Operating Leverage(a) Strong Risk Management Disciplined Capital Management First Niagara Successful integration – Branch, system and client conversion in October – Completed >100 planned branch consolidations – Retail deposit growth in all F
Slide 4: Financial Review
4 Financial Review
Slide 5: Financial Highlights
5 Financial Highlights TE = Taxable equivalent; EOP = End of Period (a) Year-over-year average balance growth (b) From consolidated operations (c) 12-31-16 ratios are estimated EPS – assuming dilution $ .20 $ .16 $ .23 $ .22 $ .27 EPS –excl. merger-related charges(d), (e) .31 .30 .27 .24 .27 Cash ef
Slide 6: Loans
$0 $30 $60 $90 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 $10 $20 $30 $40 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 6 Loans $ in billions Average Commercial, Financial & Agricultural Loans Total Average Loans ConsumerCommercial $ in billions vs. Prior Year Highlights Average loans up 43% from 4Q15, wit
Slide 7: Deposits
Average deposit balances up 10% from 3Q16 – Higher balances from one additional month of FNFG – Reduced by the impact of September branch divestitures – Continued momentum with core retail deposits and inflows from commercial clients $32.4 $55.4 $6.5 $10.3 $71 .15% .22% .00% .10% .20% .30% .40% .5
Slide 8: Net Interest Income and Net Interest Margin
2.87% 3.12% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% ($50) $150 $350 $550 $750 $950 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 NIM Change vs. Prior Quarter: 3Q16: 2.85% Purchase accounting accretion .12 Purchase accounting accretion (refinement of 3Q) .11 Lower levels of liquidity .05 All other (.01)
Slide 9: Noninterest Income
9 Noninterest Income Noninterest Income $ in millions Up / (Down) 4Q16 vs. 4Q15 vs. 3Q16 Trust and investment services income $ 123 $ 18 $ 1 Investment banking and debt placement fees 157 30 1 Service charges on deposit accounts 84 20 (1) Operating lease income and other leasing gains 21 6 15 Corpor
Slide 10: Noninterest Expense
66% 65% 63% 0.55 0.6 0.65 0.7 0.75 0.8 0.85 0 200 400 600 800 1000 1200 1400 4Q15 3Q16 4Q16 Expense comparisons reflect: $ in millions Up / (Down) 4Q16 vs. 4Q15 vs. 3Q16 Personnel $ 648 $ 219 $ 54 Net occupancy 112 48 39 Computer processing 97 54 27 Business services, professional fees 78 34 2 Equip
Slide 11: Credit Quality
$37 $72 $45 $66 .25% .34% .00% .20% .40% .60% .80% 1.00% $0 $30 $60 $90 $120 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 $387 .65% .73% .00% .40% .80% 1.20% 1.60% 2.00% $0 $200 $400 $600 $800 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 11 Nonperforming Loans(a) Net Charge-offs & Provision for Credit Losses
Slide 12: Capital
12 Strong capital position with Common Equity Tier 1 ratio of 9.59%(b) at 12/31/16 Repurchased $68 MM in common shares during 4Q16 Common Equity Tier 1 ratio under fully phased-in Regulatory Capital Rules(c): 9.47% at 12/31/16 Tangible Common Equity to Tangible Assets(a) Highlights (a) Non-GAA
Slide 13: Outlook and Expectations
Outlook and Expectations Average Earning Assets • Loans and deposit growth: mid-single digit percentage compared to FY 2016 (with 2016 adjusted for full year impact of First Niagara) Net Interest Income • Outlook includes one additional rate increase in mid-2017 • Net interest income expected to be
Slide 14: Appendix
14 Appendix
Slide 15: FNFG Merger-related Charges
4Q16 3Q16 2Q16 1Q16 4Q15 Net interest income - $ (6) - - - Operating lease income and other leasing gains - $ (2) - - - Other income $ 9 (10) - - - Noninterest income $ 9 $ (12) - - - Personnel expense(a) $ 80 $ 97 $ 35 $ 16 - Net Occupancy $ 29 - - - - Business services and professional fees 22 $ 3
Slide 16: Investment Portfolio
16 Average Total Investment Securities Highlights Average AFS securities Investment Portfolio Portfolio composed primarily of GNMA and GSE- backed MBS and CMOs; primarily fixed rate Growth in portfolio primarily related to: – Full quarter impact of First Niagara acquisition ($9 B acquired at ~1.
Slide 17: Interest Rate Risk Management
Investment Portfolio Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk $15.6 $20.3$8.6 $8.6 Size of swap portfolio Modeled asset sensitivity 1-3% (a) 0%6-8%(b) $8.6 Flexibility to Adjust Rate Sensitivity with Swaps Loans 1-mo. Libor: 41% Fixed: 31% Dep
Slide 18: Credit Quality Trends
18 Credit Quality Trends Criticized Outstandings(a) to Period-end Total LoansDelinquencies to Period-end Total Loans (a) Loan and lease outstandings; excludes purchase credit impaired loans from the First Niagara acquisition (b) From continuing operations (c) Nonperforming loan balances exclude $865
Slide 19: Loan Portfolio Credit Quality by Category
Period- end loans Average loans Net loan charge- offs Net loan charge-offs(b) / average loans (%) Nonperforming loans(c) Ending allowance(d) Allowance / period-end loans(d) (%) Allowance / NPLs (%) 12/31/16 4Q16 4Q16 4Q16 12/31/16 12/31/16 12/31/16 12/31/16 Commercial, financial and agricultural(a)
Slide 20: Home Equity Portfolio
Vintage (% of Loans) Loan Balances Average Loan Size ($) Average FICO Average CLTV(a) % of Loans CLTV>90% 2012 and later 2011 2010 2009 2008 and prior Loans and lines First lien $ 7,222 $ 66,392 773 67 % .5 % 67 % 4 % 2 % 2 % 25 % Second lien 5,452 42,284 769 77 3.3 50 4 3 2 41 Total home equity por
Slide 21: Oil & Gas
Oil & Gas 21 Longstanding history, expertise and relationships Total commitments of $3.2 B, including upstream commitments of $1.7 B Upstream portfolio is primarily secured by proven, developed and producing reserves Total Loans Outstanding, 12/31/16 Portfolio performing in-line with expectati
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation 22 (a) Three months ended 12/31/16, 9/30/16, 6/30/16, 3/31/16, and 12/31/15 exclude $42 million, $51 million, $36 million, $40 million, and $45 million, respectively, of period-end purchased credit card receivables (b) Net of capital surplus (c) 12/31/16 amount is est
Slide 23: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) 23 Three months ended 12-31-16 9-30-16 6-30-16 3-31-16 12-31-15 Average tangible common equity Average Key shareholders' equity (GAAP) 14,901$ 13,552$ 11,147$ 10,953$ 10,731$ Less: Intangible assets (average) (a) 2,874 2,255 1,076 1,079 1,082 Preferred Sto