KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy...

25
KeyCorp Presentation to the CFA Society of Cleveland April 29, 2010 Beth E. Mooney Vice Chair – KeyCorp Key Community Banking

Transcript of KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy...

Page 1: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

KeyCorp Presentation to theCFA Society of Cleveland

April 29, 2010

Beth E. MooneyVice Chair – KeyCorpKey Community Banking

Page 2: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

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 Key’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009, and September 30, 2009, and in its Annual Report on Form 10-K for the year ended December 31, 2008, each of which has been filed with the Securities and Exchange Commission and is available on Key’s website (www.key.com) 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

Page 3: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

3

Key Facts

– 14th largest U.S. bank-based financial services company by asset size

– NYSE Symbol: KEY

– Assets: $95 billion

– Market Cap: $8 billion

– Headquarters: Cleveland, Ohio

– Employees: 15,700

– Banking Offices: 14 States

– Web Site: www.key.com

Page 4: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

4

Strong Franchise – Geographically Diverse

$15.5$16.7$16.2Deposits (a)

Citizens BankM&T Bank

TD BanknorthJ.P. Morgan Chase

Fifth ThirdPNC

HuntingtonJ.P. Morgan Chase

Bank of AmericaJ.P. Morgan Chase

U.S. BankWells Fargo

Competitors

$5.8$6.8$10.7Loans (a)

430541530ATMs

304343367Branches

NortheastGreat LakesRocky Mountain and Northwest

WA

OR ID

UT CO

AK

OH

NY

KY

MI

IN

ME

CT

VT

(a) Community Banking average total loans and deposits for the first quarter of 2010

Page 5: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

5

Strategic Update

First quarter 2010 loss narrows

Continued improvement in credit quality

Capital and liquidity positions remain strong

Management transition completed

Continued investment in relationship businesses

Page 6: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

6

Financial Summary ― First Quarter 2010

TE = Taxable Equivalent, EOP = End of Period(a) Ratios are estimated.(b) From consolidated operations, calculated as loans and loans held for sale (excluding securitized loans) to deposits (excluding deposits in foreign office)

1Q10 1Q09Loss from continuing operations attributable to Key common shareholders $ (.11) $(1.03)

Performance – from continuing operationsNet interest margin (TE) 3.19% 2.79%Return on average total assets (.26) (1.87)

CapitalTier 1 common equity (a) 7.53% 5.62%Tier 1 risk-based capital (a) 12.96 11.22Total risk-based capital (a) 17.11 15.18

Asset quality – from continuing operationsAllowance for credit losses to period-end loans 4.55% 2.96%Net loan charge-offs to average loans 3.67 2.60Allowance for loan losses to nonperforming loans 117 116

LiquidityLoan to deposit ratio (b) 93% 115%

Page 7: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

7

2010 Strategic Priorities

Return to sustainable profitability

Sustain strong reserves, capital and liquidity

Continue building a robust risk management culture

Expand and acquire client relationships

Attract and retain a capable, diverse and engaged workforce

Page 8: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

8

Key’s Targets for Success

(a) Continuing operations, unless otherwise noted(b) Consolidated operations(c) Loans & loans HFS (excluding securitized loans) to deposits (excluding foreign branch)

• Leverage Key’s total client solutions and cross-selling capabilities

• Improve funding mix• Focus on risk-adjusted returns

>3.50%3.19%Net Interest MarginGrowing high quality, diverse

revenue streams >40%41.6%Noninterest income/ total revenue

Improve efficiency and effectivenessLeverage technologyChange cost base to more variable from fixed

$300-$375 million

$191 million implementedKeyvolution cost savings

Creating positive

operating leverage

Execute our client insight-driven relationship modelImproved funding mix with lower cost core depositsKeyvolution savings

1.00-1.25%(.26)%Return on average assetsExecuting our strategies

Focus on relationship clientsExit noncore portfoliosLimit concentrationsFocus on risk-adjusted returns

40-50 bps3.67%NCOs to average loansReturning to a moderate risk

profile

Improve risk profile of loan portfolioImprove mix and grow deposit base

90-100%93%Loan to deposit ratio (b) (c)Core funded

Action PlansTargetsKEY1Q10

KEY Metrics (a)KEY Business Model

Page 9: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

9

9%

13%

16%

10%

6%46%

National BankingCommunity Banking

Institutional and Capital MarketsVictory Capital Management

KeyBanc Capital MarketsOther SegmentsCorporate TreasuryPrincipal Investing

Exit Portfolios

Equipment Finance

Real Estate Capital and Corporate Banking Services

Commercial Banking

Regional BankingRetail Banking

Business BankingPrivate Banking

Wealth Management

TE = Taxable Equivalent

Diversified Business Mix

First Quarter 2010 Revenue (TE)

Other Segments

Page 10: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

10

Community Banking – Financial Summary

11.3 10.6 9.8 9.2 9.0

18.819.119.319.720.0

$0

$10

$20

$30

$40

1Q09 2Q09 3Q09 4Q09 1Q10

$31.3 $30.3 $29.1 $28.3 $27.8

Average Loans and Leases $ in billions

14.7 14.9 14.7 13.7 12.6

8.5 9.0 8.9 8.2 7.4

$50.9 $52.1 $52.5 $52.1 $51.0

10.610.59.79.18.6

17.4 17.3 17.4 17.9 18.61.7 1.8 1.8 1.8 1.8

$0

$10

$20

$30

$40

$50

$60

1Q09 2Q09 3Q09 4Q09 1Q10

Average Deposits (a)

$ in billions

DDA

NOW/MMDA

Savings

CDs < $100K

CDs > $100K

(a) Excludes foreign office deposits.

509 529 528 512 490

103 103 104 117 109

$0

$100

$200

$300

$400

$500

$600

$700

1Q09 2Q09 3Q09 4Q09 1Q10

Regional Banking Commercial Banking

$629$612 $632 $632 $599

Total Revenue (TE) $ in millions

57 61 63 46$468

$496 $491 $492 $468

422429430

439411

57

$0

$100

$200

$300

$400

$500

$600

1Q09 2Q09 3Q09 4Q09 1Q108,000

8,250

8,500

8,750

9,000

9,250

9,500

Noninterest Expense $ in millions

Regional Banking Commercial BankingFTE Regional Banking Commercial Banking

Page 11: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

11

Community Banking Model

Leveraging Client Insight

Integrated Delivery Channels

Enhanced Sales/Service Culture

Optimizing to Maintain Efficiency and Effectiveness

Growing and Investing…

Page 12: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

12

Leveraging Client Insight

Client InsightClient Needs/ Preferences/ Attitudes Client Behavior Local Market Conditions and Competitive IntelligenceClient Economics/ Profitability

Acquire & Expand Client Relationships

Sustainable, Profitable RevenueGrowth

Segment Value Propositions

Brand Positioning

Product Development/

Innovation

Delivery Channels

Human Capital

Sales & Service Process

Cul

ture

Exec

utio

n

Client Experience

Page 13: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

13Integrated Delivery ChannelsBranch Strategy

November 2007

+ =

• Create a look distinctly Key

• Condition of outlet lifts performance

Branch Branch Modernization:Modernization:

Repair, Repair, Revitalize & Revitalize &

ReRe--brandbrand

Integrated Integrated Branch Branch StrategyStrategy

Branch Branch Expansion:Expansion:

Market Market Portfolio Portfolio ApproachApproach

• Concentrate investment in select markets

• Align capital investment with return

• Build branch density in growth markets

• Relative outlet share drives client acquisition

• Reintroduce Key into the market in a concentrated “burst”

• Achieve management focus & in-market efficiencies

• Optimize marketing spend

• Create market awareness

• Increase branch density, deposit market share and maximize revenue lift

Introduce Introduce Capabilities:Capabilities:

Differentiate Differentiate the Client the Client

ExperienceExperience

+

• Match service levels, functionality & design with client transaction potential

• Leverage client insight to customize and localize the experience

• Use technology as an accelerator of momentum (e.g., Teller21, Remote ATM, Desktop, etc.)

• Integrate with other channels

Page 14: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

14

128th & Thornton, Colorado North French & Transit, Western NY

Shoppes of Solon, Cleveland

Integrated Delivery ChannelsBranch Expansion

Page 15: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

15Integrated Delivery ChannelsBranch Modernization

Page 16: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

16

Online Banking clients with iPhone or Blackberry phones can:• View accounts balances and transactions• Make payments to existing payees• Transfer money between Key accounts• Locate ATMs and Branches

Introduced in Q1 2010:• Text messaging capabilities for all clients and

phones, including: – Mobile Alerts– Real-time inquiries

Integrated Delivery ChannelsMobile Banking

Convenience is more than a nearby branch or ATM — it’s being able to bank wherever you are when you want, and being convenient is still one of the top reasons why people choose their bank. Key’s Mobile Banking is ideal for clients on the go — it allows them to locate a branch, view account information, pay bills and transfer funds from anywhere at any time.

Page 17: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

17

• In Corporate Insight’s 2010 Bank Monitor Report, Key was cited for enhancements made to its online banking site Key.com for 2009:

• 1 GOLD MEDAL (Online Application capabilities)

• 2 SILVER MEDALS (Online Banking Account Information and Account Transfer Capabilities)

• 2 BRONZE MEDALS (Online Banking Alerts and Help Area)

Integrated Delivery ChannelsOnline Banking

Page 18: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

18

2009 BusinessWeekCustomer Service Champ

2010 American Customer Satisfaction Index Recognition

Enhanced Sales/Service Culture

Page 19: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

19

Optimizing to Maintain Efficiency and Effectiveness

Capital optimization– Exiting unprofitable relationships– Differentiating return thresholds based on risk model

Focus on operating efficiency and effectiveness– Consolidation of regions, branches, management, and headcount

Strong risk management– Net charge-offs at 1st Qtr 2010:

Home Equity 122 bpsCommercial Banking 90 bps

– Balance risk and reward

Enhancing profitability of deposit portfolio

Page 20: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

20

(a) Peer data pulled from 1Q10 earnings releases and the peer calculation represents the median of Key and its 13 peer banks.

Improving Net Interest Margin

Net Interest Margin

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

WFC

PNCZIO

NUSBBBTMTBFITBHBAN

STIKEY

FHNCMA MI

RF

Key = 3.19%Peers (a) = 3.55%Net interest margin increased by 40 bps

compared to the 1Q09

Core funded; loan to deposit ratio improved from 115% in 1st quarter 2009 to 93% in 1st quarter 2010

Continued benefit from improved funding mix as maturing CDs re-price or move into lower cost deposits

First Quarter 2010

109% 101% 95% 91% 88%

0%

25%

50%

75%

100%

125%

1Q09 2Q09 3Q09 4Q09 1Q10

Loan to Deposit Ratio (b)

Continuing operationsDiscontinued operations

115%107%

101% 98% 93%

(b) Ending balances; loans & loans held for sale (excluding securitized loans) to deposits (excluding foreign branch)

Page 21: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

21

KEY - Net Interest Margin KEY - Interest-bearing Deposits

Deposit Repricing Opportunity

Opportunity for continued repricing and improved rates

$23.6$19.2 $19.4 $20.0 $22.6 $23.2 $23.9 $21.9 $20.0

(a) Net interest margin is adjusted to exclude the impact of certain items related to leveraged leases.

3.19%3.04%

2.87%2.77%2.79%2.84%3.13%

3.32%3.29%

1.71%1.84%2.03%

2.15%2.24%2.56%2.57%2.56%

3.10%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10

Community Bank$ in billions

CDs

(a) (a) (a) (a) (a)

Page 22: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

22

Community Banking – Advertising22

Page 23: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

23

Community Banking – Advertising23

Page 24: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

24

Community Banking – Advertising24

Page 25: KeyCorp Presentation to the CFA Society of ClevelandRe-brand Integrated Integrated Branch Strategy Branch Expansion: Market Portfolio Approach • Concentrate investment in select

25

Community Banking – Advertising