Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - KEYCORP /NEW/ | d803929dex991.htm |
| EX-99.3 - EX-99.3 - KEYCORP /NEW/ | d803929dex993.htm |
| 8-K - FORM 8-K - KEYCORP /NEW/ | d803929d8k.htm |
 KeyCorp
Third Quarter 2014 Earnings Review
October 15, 2014
Beth E. Mooney
Chairman and
Chief Executive Officer
Don Kimble
Chief Financial Officer
Exhibit 99.2 |
 2
FORWARD-LOOKING STATEMENTS AND ADDITIONAL
INFORMATION DISCLOSURE
This presentation contains forward-looking statements, including statements
about our financial condition, results of operations, asset quality trends,
capital levels and profitability. Forward-looking statements can often be
identified by words such as “outlook,” “goal,”
“objective,”
“plan,”
“expect,”
“anticipate,”
“assume,”
“intend,”
“project,”
“believe,”
or “estimate.”
Forward-looking statements represent management’s current
expectations and forecasts regarding future events. If underlying assumptions prove
to be inaccurate or unknown risks or uncertainties arise, actual results
could vary materially from these projections or expectations. Risks and
uncertainties include but are not limited to: (1) deterioration of commercial real estate market fundamentals; (2) declining asset prices; (3)
adverse changes in credit quality trends; (4) changes in local, regional and
international business, economic or political conditions; (5) the extensive
and increasing regulation of the U.S. financial services industry; (6) increasing
capital and liquidity standards under applicable regulatory rules; (7)
unanticipated changes in our liquidity position, including but not limited to,
changes in the cost of liquidity, our ability to enter the financial markets and
to secure alternative funding sources; (8) our ability to receive dividends from
our subsidiary, KeyBank; (9) downgrades in our credit ratings or those of
KeyBank; (10) operational or risk management failures by us or critical third-parties; (11) breaches of security or failures of our technology
systems
due to technological or other factors and cybersecurity threats;
(12) adverse judicial proceedings; (13) the occurrence of natural or man-made
disasters or conflicts or terrorist attacks; (14) a reversal of the U.S.
economic recovery due to economic, political or other shocks; (15) our ability to
anticipate interest rate changes and manage interest rate risk; (16) deterioration
of economic conditions in the geographic regions where we operate; (17) the
soundness of other financial institutions; (18) our ability to attract and retain talented executives and employees, to
effectively sell additional
products or services to new or existing customers, and to manage
our reputational risks; (19) our ability to timely and effectively implement our
strategic initiatives; (20) increased competitive pressure due to industry
consolidation; (21) unanticipated adverse effects of acquisitions and
dispositions of assets or businesses; and (22) our ability to develop and
effectively use the quantitative models we rely upon in our business planning.
We provide greater detail regarding these factors in our 2013 Form 10-K and
subsequent filings, which are available online at www.key.com/ir and
www.sec.gov. Forward-looking statements speak only as of the date they are made
and Key does not undertake any obligation to update the forward- looking
statements to reflect new information or future events. This presentation
also includes certain Non-GAAP financial measures related to “tangible common equity,”
“Tier 1 common equity,”
“pre-provision net
revenue,”
and “cash efficiency ratio.”
Management believes these ratios may assist investors, analysts
and regulators in analyzing Key’s financials.
Although Key has procedures in place to ensure that these measures are calculated
using the appropriate GAAP or regulatory components, they have limitations
as analytical tools and should not be considered in isolation, or as a substitute for analysis of results under
GAAP. For more
information on these calculations and to view the reconciliations to the most
comparable GAAP measures, please refer to the Appendix to this presentation
and to page 99 of our 2013 Form 10-K. |
 3
Core revenue trends stable
-
Lower gains from principal investing and leveraged lease terminations
Total average loans up 5% from prior year
-
Linked quarter average impacted by seasonality, capital markets and strategic
exits Positive trends in several fee-based businesses
Expenses well-controlled
-
Down from prior year and previous quarter (excl. Pacific Crest and pension
charges) Asset quality remains strong, with NCOs below targeted range
NPAs down 28% from prior year
New business originations are higher quality than overall book
Remaining disciplined with structure and relationship focus
Strong Risk
Management
Committed to capital priorities: organic growth, dividends, repurchases,
opportunistic growth
Continuing to invest in and grow our businesses
-
Completed acquisition of Pacific Crest Securities, within 60 days of
announcement Repurchased $119 million in common shares in 3Q14
Positive
Operating
Leverage
Investor Highlights –
3Q14
Disciplined
Capital
Management |
 4
Financial Review |
 5
Financial Highlights
TE = Taxable equivalent, EOP = End of Period
(a)
From continuing operations
(b)
Year-over-year average balance growth
(c)
From consolidated operations
(d)
9-30-14 ratios are estimated
(e)
Non-GAAP measure: see Appendix for reconciliation
EPS –
assuming dilution
$ .23
$ .27
$ .26
$ .26
$ .25
Cash efficiency ratio
(e)
69.5
%
65.8
%
64.9
%
67.4
%
67.5
%
excl. efficiency and pension charges
66.0
63.4
63.9
65.1
63.6
Net interest margin (TE)
2.96
2.98
3.00
3.01
3.11
Return on average total assets
.92
1.14
1.13
1.08
1.12
Total loans and leases
5
%
6
%
4
%
3
%
5
%
CF&A loans
11
13
9
8
11
Deposits (excl. foreign deposits)
4
2
4
8
5
Tier 1 common equity
(d), (e)
11.3
%
11.3
%
11.3
%
11.2
%
11.2
%
Tier 1 risk-based capital
(d)
12.0
12.0
12.0
12.0
11.9
Tangible common equity to tangible assets
(e)
10.3
10.2
10.1
9.8
9.9
NCOs to average loans
.22
%
.22
%
.15
%
.27
%
.28
%
NPLs to EOP portfolio loans
.71
.71
.81
.93
1.01
Allowance for loan losses to EOP loans
1.43
1.46
1.50
1.56
1.62
Balance
Sheet
Growth
(a),
(b)
Capital
(c)
Asset
Quality
(a)
Financial
Performance
(a) |
 6
Average total loans up 5% from prior year, driven
by CF&A up 11%
Linked quarter average balances impacted by
seasonality, capital markets and strategic exits
Total commitments continue to grow with
utilization relatively stable
High quality new loan originations: consistent with
moderate risk profile
Loan Growth
$ in billions
Highlights
Average Commercial, Financial & Agricultural Loans
Average Loans
Exit Portfolios
Home Equity & Other
Total Commercial
$ in billions
$55.8
$53.3 |
 7
Improving Deposit Mix
Highlights
Funding Cost
Funding cost continues to improve
Transaction deposit balances up 6% from 3Q13
Growth from prior year reflects inflows from
commercial clients as well as commercial
mortgage servicing
Total CD maturities and average cost
–
2014 Q4: $1.5 billion at .46%
–
2015: $2.3 billion at .73%
–
2016 and beyond: $2.1 billion at 1.47%
Average
Deposits
(a)
$ in billions
Note: Transaction deposits include noninterest-bearing, as well as NOW and
MMDA (a)
Excludes deposits in foreign office
Cost of total deposits
(a)
Interest-bearing liability cost
CDs and other time deposits
Savings
Noninterest-bearing
NOW and MMDA
$67.7
$65.4 |
 8
Net Interest Income and Margin
TE = Taxable equivalent
Highlights
Net Interest Income & Net Interest Margin Trend (TE)
Net interest income down 1% from prior year,
primarily due to lower asset yields
Modest growth from prior quarter reflects asset
growth, higher loan fees, improved funding cost
and more days in the quarter, which all offset lower
asset yields
Maintaining moderate asset sensitive position
–
Naturally asset sensitive balance sheet flows:
approximately 70% of loans variable rate
–
High quality investment portfolio with average
life of 3.6 years
–
Flexibility to quickly adjust interest rate risk
position
NIM Change (bps):
vs. 2Q14
Earnings asset mix / higher levels of liquidity
(.02)
Loan yield
(.02)
CD maturities / repricing
.02
Total Change
(.02)
Net interest income (TE)
NIM (TE)
$ in millions; continuing operations |
 9
Noninterest Income
TE = Taxable equivalent
Highlights
Noninterest Income
Noninterest income down $42 MM from prior year:
–
Gains from leveraged lease termination and
principal investing $31 MM higher in 3Q13
–
Special servicing fees $6 MM lower
–
Posting order change in 4Q13 reduced service
charges by ~$5 MM vs. one year ago
Positive trends in several fee-based businesses
–
Trust and investment services and deposit
service charges up vs. 2Q14
Change from prior quarter (down $38 MM) reflects:
–
Gains from leveraged lease termination and
principal investing $35 MM higher in 2Q14
3Q14 Noninterest Income Diversity
$ in millions; continuing operations
(a)
Other includes corporate-owned life insurance, principal investing, etc.
Leveraged lease termination gains
$417
$459
(a) |
 10
Focused Expense Management
Noninterest Expense
$ in millions
Highlights
3Q14 Expense Detail
Expenses down 2% from prior year, benefitting
from continuous improvement efforts
Increase from prior quarter reflects:
–
Pension settlement charge and expenses
related to Pacific Crest Securities
FY 2014 expenses expected to be down a low-to-
mid single digit percentage from 2013
Focused on improving efficiency by growing
revenue and continuing to control expenses
Efficiency charges:
Pension charges:
$15
$37
$16
$22
$10
$ 2
$25
$24
$ in millions
$704
Efficiency charges $
15 All remaining expense 663
$ 678
2H14 expense guidance:
$680 -
$690 / quarter
$15
$20
Pension settlement
Efficiency charges
All remaining expense
Pacific Crest
$716
$689
Not included in guidance:
Pacific
Crest $ 6
Pension
settlement 20
$ 26
(a)
Non-GAAP measure: see Appendix for reconciliation
(b)
Excludes one-time gains of $54 million related to the
redemption of trust preferred securities
Cash Efficiency Ratio
(a)
Efficiency and pension charges, as a
% of revenue:
1.5%
1.5%
3.6%
3.9%
2.3%
1.0%
Cash efficiency ratio,
excluding efficiency
and pension charges
2.3%
3.5%
(b)
.8%
$704
$716 |
 11
Efficiency Ratio: Driving to 60% and Below
Business plans and macroeconomic environment provide path to an
efficiency ratio below 60%
Cash
Efficiency
Ratio
(a)
Outlook
(a)
Non-GAAP measure: see Appendix for reconciliation
(b)
Assumes implied forward curve
2-3 year outlook: 60%
Long-term, committed to moving below 60%
(b) |
 12
Nonperforming Assets
Net Charge-offs & Provision for Loan and Lease Losses
NPLs
NPLs to period-end loans
NCOs
Provision for loan and
lease losses
NCOs to average loans
$ in millions
$ in millions
NPLs held for sale,
OREO & other NPAs
Continued Improvement in Asset Quality
Highlights
Net loan charge-offs decreased 16% from 3Q13 to
$31 MM, or 22 bps of average loans
Total gross charge-offs down 37% from 3Q13 and
down 13% from 2Q14
Nonperforming assets down 28% from prior year
Net charge-offs expected to continue below the
targeted range for the remainder of the year
Allowance for Loan and Lease Losses
Allowance for loan and
lease losses to NPLs
Allowance for loan
and lease losses
$ in millions
$579
$418 |
 13
Disciplined capital management
–
Continuing to invest in and grow
businesses
–
Repurchased $119 MM in common shares
Ratios reflect the acquisition of Pacific Crest
Securities and the sale of residual interests in
education loan securitization trusts
Tangible Common Equity to Tangible Assets
(a)
Strong Capital
Highlights
Book Value per Share
(a)
Non-GAAP measure: see Appendix for reconciliations
(b)
9-30-14 ratio is estimated
Tier 1 Common Equity
(a), (b) |
 2014
Outlook and Expectations Average Loans
•
LQA: mid-single digit growth, driven by
commercial loans
•
Mid-single digit growth vs. FY 2013
Net Interest Income
•
Relatively stable with 3Q14
•
Relatively stable from 2013, with slight
downward pressure from competitive
environment
Noninterest Income
•
Low double-digit percentage growth
from 3Q14, supported by stronger
market-related revenue and a full
quarter of Pacific Crest
•
Low single-digit growth compared to
prior year
Expense
•
Relatively stable with 3Q14 reported,
including Pacific Crest, pension,
seasonality and efficiency charges
•
Low to mid-single digit percentage
decline from 2013
Efficiency / Productivity
•
Positive operating leverage
•
Positive operating leverage
Asset Quality
•
Continued strong credit quality trends,
consistent with 3Q14 levels
•
Net charge-offs to average loans below
targeted
range
of
40
–
60
bps
Capital
•
Continued execution of capital plan
•
Disciplined execution of 2014 capital
plan, including dividends and share
repurchases
14
Guidance
ranges:
relatively
stable:
+/-
2%;
low
single-digit:
<5%;
mid-single
digit:
4%
-
6%;
low
double-digit:
10%
-
13%
4Q14
FY 2014 |
 15
Appendix |
 Progress on Targets for Success
(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 for periods prior to third quarter
of 2014) divided by period-end consolidated total deposits (excluding
deposits in foreign office) (c)
Excludes intangible asset amortization; non-GAAP measure: see Appendix for
reconciliation 16
Balance Sheet
Efficiency
Moderate Risk
Profile
High Quality,
Diverse
Revenue Streams
Positive
Operating
Leverage
Disciplined
Capital
Management
Metrics
(a)
3Q14
2Q14
Targets
Loan
to
deposit
ratio
(b)
NCOs to average loans
Provision to average loans
Net interest margin
Noninterest income to total revenue
Cash
efficiency
ratio
(c)
Return on average assets
87%
87%
.22%
.22%
69.5%
65.8%
.92%
1.14%
.15%
.07%
2.96%
2.98%
42%
44%
90% -100%
40 -
60 bps
LT: >3.50%
LT: <60%
1.00% -1.25%
>40% |
 •
Supporting businesses with
technology development
•
Driving talent management to
improve productivity
Focused on Driving Positive Operating Leverage
Revenue Growth
Expense Savings
Community
Bank
Corporate
Bank
•
Improving sales productivity
•
Strengthening product offering:
Hassle-Free
•
Enhancing online and mobile
channels
•
Optimizing branch channel
•
Driving greater efficiencies through
back and middle-office processes
Enterprise
•
Adding senior bankers:
existing
industry expertise and relationships
•
Strengthening commercial payment
product capabilities
•
Added technology vertical:
completed
Pacific Crest acquisition
•
Exiting international leasing
originations and reducing related cost
structure
•
Variablizing
cost:
utilization
of
third-
party partners
•
Rationalization of fixed income trading
platform
•
Improving operational effectiveness:
Lean Six Sigma, variablizing costs
•
Reducing occupancy costs
•
Right-sizing support activities
17
Executing action plans across our organization
Driving consumer sales
per
FTE
per
day:
up
>30% from prior year
Aggressive campaign to
add
bankers:
relationship
managers up ~15% from
prior year
(a)
Data as of 3Q14 unless otherwise noted
(a)
Includes impact of the acquisition of Pacific Crest Securities
Reducing occupancy:
plans to remove >15% of
corporate square footage
by 2016 |
 Focused
Expense Management $2.82 B
$117 MM
$2.70 B
Low to mid-
single digit
decline year-
over-year
Continued cost savings enable investments and offset normal expense growth
(4) % –
(6) %
1 % –
2.5 %
1 % -
2%
(a)
(a)
Operating cost increase includes inflationary adjustments, annual merit increases,
etc. 2 % –
2.5 %
18
Note: Percentage ranges based upon 2014 expense plans and calculated from 2013
reported NIE |
 19
Average Total Investment Securities
Highlights
Average AFS securities
$ in billions
High Quality Investment Portfolio
Portfolio composed primarily of GNMA and GSE-
backed MBS and CMOs
–
No private label MBS or financial paper
Currently reinvesting cash flows into GNMA
securities in preparation for upcoming
regulatory liquidity requirements
–
35% of total portfolio was GNMA at 9/30/14
Securities cash flows of $.9 billion in both 3Q14
and 2Q14
Average portfolio life at 9/30/14 of 3.6 years,
unchanged from 6/30/14
Securities to Total Assets
(b)
(a) Yield is calculated on the basis of amortized cost
(b) Includes end of period held-to-maturity and
available-for-sale securities Average yield
(a)
Average HTM securities
$17.7
2.23%
$17.0 |
 Interest Rate Risk Management
Naturally Asset Sensitive Balance Sheet
Actively Managing Rate Risk
•
High quality
•
Fixed rate agency MBS and CMOs
•
Average maturity: 3.6 years
•
GNMAs total 35% of total portfolio
•
Reinvesting cash flows into GNMAs
$9
$15
$5
$5
Size of swap
portfolio
Modeled asset
sensitivity
~3%
0%
7%
$5
Flexibility to Adjust Rate
Sensitivity with Swaps
Loan Portfolio
Variable:
69%
Fixed:
31%
Deposits
Flexibility to adjust rate sensitivity for changes in balance
sheet growth/mix as well as interest rate outlook
Debt
hedges
A/LM
hedges
Investment Portfolio
Noninterest-
bearing: 37%
Interest-
bearing, non-
time: 54%
CDs:
9%
•
Maintaining
moderate
asset
sensitive
position
of
~3%
(a)
-
Assumes 200 basis point increase in short-term rates over a
12-month period
•
Utilize swaps for debt hedging and asset liability management
-
Fairly even pace of A/LM swap maturities
3Q14
Swaps
($ in B)
9/30/14
Notional Amt.
Wtd. Avg.
Maturity (Yrs.)
Receive
Rate
Pay
Rate
A/L Management
$ 9.3
1.8
.8%
.2%
Debt
4.5
4.0
2.5
.2
$ 13.8
1.3%
.2%
3Q14
$17 B
AFS: $12 B
HTM: $5 B
Balance sheet has relatively short duration and is
more impacted by the short-end of the curve
$14 B
20
Actively managing a naturally asset sensitive balance sheet
(a) Preliminary estimate |
 21
Asset Quality Trends
Quarterly
Change
in
Criticized
Outstandings
(a)
Delinquencies to Period-end Total Loans
(a)
Loan and lease outstandings
(b)
From continuing operations
30 –
89 days delinquent
90+ days delinquent
Metric
(b)
3Q14
2Q14
1Q14
4Q13
3Q13
Delinquencies to EOP total loans: 30-89 days
.61
%
.49
%
.48
%
.58
%
.54
%
Delinquencies to EOP total loans: 90+ days
.13
.15
.16
.13
.17
NPLs to EOP portfolio loans
.71
.71
.81
.93
1.01
NPAs to EOP portfolio loans + OREO + Other NPAs
.74
.74
.85
.97
1.08
Allowance for loan losses to period-end loans
1.43
1.46
1.50
1.56
1.62
Allowance for loan losses to NPLs
200.5
205.6
185.7
166.9
160.4
Continuing operations
Continuing operations |
 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
(%)
9/30/14
3Q14
3Q14
3Q14
9/30/14
9/30/14
9/30/14
9/30/14
Commercial,
financial
and
agricultural
(a)
$ 26,683
$ 26,456
$
6 .09
$
47
$ 385
1.44
819.15
Commercial real estate:
Commercial Mortgage
8,276
8,142
(2)
(.10)
41
159
1.92
387.80
Construction
1,036
1,030
1
.39
14
28
2.70
200.00
Commercial lease financing
4,135
4,145
(1)
(.10)
14
55
1.33
392.86
Real estate –
residential mortgage
2,213
2,204
2
.36
81
22
.99
27.16
Home equity
10,663
10,658
7
.26
184
78
.73
42.39
Credit cards
724
716
9
4.99
1
32
4.42
N/M
Consumer other –
Key Community Bank
1,546
1,534
6
1.55
2
24
1.55
N/M
Consumer other –
Exit Portfolio
879
911
3
1.31
17
21
2.39
123.53
Continuing
total
(e)
$ 56,155
$ 55,796
$ 31
.22
$
401
$ 804
1.43
200.50
Discontinued operations
2,375
4,080
7
1.15
9
31
1.31
344.44
Consolidated total
$ 58,530
$ 59,876
$ 38
.26
$
410
$ 836
1.43
203.90
Credit Quality by Portfolio
Credit Quality
$ in millions
22
(a)
9-30-14
ending
loan
balances
include
$90
million
of
commercial
credit
card
balances;
9-30-14
average
loan
balances
include
$92
million
of
assets
from commercial credit cards
(b)
Net loan charge-off amounts are annualized in calculation
(c)
9-30-14 NPL amount excludes $14 million of purchased credit impaired
loans (d)
9-30-14 allowance by portfolio is estimated
(e)
9-30-14 ending loan balances include purchased loans of $143
million, of which $14 million were purchased credit impaired
N/M = Not meaningful |
 Vintage (% of Loans)
Loan
Balances
Average
Loan
Size ($)
Average
FICO
Average
LTV
(a)
% of
Loans
LTV>90%
2012 and
later
2011
2010
2009
2008 and
prior
Loans and lines
First lien
$
6,180 $ 65,817
772
67
%
.6
%
50
%
5%
3%
3%
39
%
Second lien
4,200
54,759
766
76
3.7
33
5
3
4
55
Community Bank
$ 10,380
60,443
770
70
1.8
43
5
3
4
45
Exit portfolio
283
17,253
729
80
31.6
1
-
-
-
99
Total home equity portfolio
$ 10,663
Nonaccrual loans and lines
First lien
$
94 $
61,645 720
73
%
1.0%
5
%
4%
3%
5%
83
%
Second lien
81
48,222
711
80
2.1
2
2
2
4
90
Community Bank
$
175 54,590
716
77
1.5
4
3
2
5
86
Exit portfolio
10
23,844
700
77
29.2
-
-
-
-
100
Total home equity nonaccruals
$
185 Third quarter net charge-offs (NCOs)
Community Bank
$
6 3
%
2%
4%
2%
89
%
% of average loans
.23
%
Exit Portfolio
$
1 -
-
-
-
100
% of average loans
1.37
%
(a) Average LTVs are at origination. Current average LTVs for Community Bank total
home equity loans and lines is approximately 71%, which compares to 71% at
the end of the second quarter of 2014. Home Equity Portfolio –
9/30/14
$ in millions, except average loan size
Home Equity Portfolio
Highlights
High quality portfolio
Community bank loans and lines: 97% of total portfolio; branch-
originated
–
60% first lien position
–
Average FICO score of 770
–
Average LTV at origination: 70%
$4.0 billion of the total portfolio are fixed rate loans that require
principal and interest payments; $6.7 billion are lines
$1.5 billion in lines outstanding (14% of the total portfolio)
come to end of draw period in the next four years
–
Proactive communication and client outreach initiated
near end of draw period
23 |
 Balance Outstanding
Change
Net Loan Charge-offs
Balance on
Nonperforming Status
9-30-14
6-30-14
9-30-14
vs.
6-30-14
3Q14
(c)
2Q14
(c)
9-30-14
6-30-14
Residential properties –
homebuilder
$ 11
$ 19
$ (8)
$ 1
-
$
10 $ 7
Marine and RV floor plan
7
23
(16)
-
-
5
6
Commercial
lease
financing
(a)
1,046
1,154
(108)
(1)
$ (5)
1
3
Total commercial loans
1,064
1,196
(132)
-
(5)
16
16
Home equity –
Other
283
300
(17)
1
1
10
11
Marine
828
888
(60)
2
5
16
15
RV and other consumer
57
61
(4)
1
(1)
1
1
Total consumer loans
1,168
1,249
(81)
4
$ 5
27
27
Total exit loans in loan portfolio
$ 2,232
$ 2,445
$ (213)
$ 4
-
$ 43
$ 43
Discontinued operations –
education lending
business (not included in exit loans above)
(b)
$ 2,375
$ 4,162
$ (1,787)
$ 7
$ 7
$ 9
$ 19
$ in millions; average balances
(a)
Includes (1) the business aviation, commercial vehicle, office products,
construction and industrial leases; (2) Canadian lease financing portfolios;
(3) European lease financing portfolios; and (4) all remaining balances related to
lease in, lease out; sale in, lease out; service contract leases; and
qualified technological equipment leases.
(b)
June 30, 2014 balance includes loans in Key’s consolidated education loan
securitization trusts (c)
Credit amounts indicate recoveries exceeded charge-offs
$ in millions
Exit Loan Portfolio
Exit Loan Portfolio
24 |
 Three months ended
9-30-14
6-30-14
3-31-14
12-31-13
9-30-13
Tangible common equity to tangible assets at period end
Key shareholders’
equity (GAAP)
$
10,509
$
10,504
$
10,403
$
10,303
$
10,206
Less:
Intangible assets
(a)
1,105
1,008
1,012
1,014
1,017
Preferred Stock, Series A
(b)
282
282
282
282
282
Tangible common equity (non-GAAP)
$
9,122
$
9,214
$
9,109
$
9,007
$
8,907
Total assets (GAAP)
$
89,770
$
91,798
$
90,802
$
92,934
$
90,708
Less:
Intangible assets
(a)
1,105
1,008
1,012
1,014
1,017
Tangible assets (non-GAAP)
$
88,665
$
90,790
$
89,790
$
91,920
$
89,691
Tangible common equity to tangible assets ratio (non-GAAP)
10.29
%
10.15
%
10.14
%
9.80
%
9.93
%
Tier 1 common equity at period end
Key shareholders’
equity (GAAP)
$
10,509
$
10,504
$
10,403
$
10,303
$
10,206
Qualifying capital securities
340
339
339
339
340
Less:
Goodwill
1,051
979
979
979
979
Accumulated
other
comprehensive
income
(loss)
(c)
(366)
(328)
(367)
(394)
(409)
Other assets
(d)
110
86
84
89
96
Total Tier 1 capital (regulatory)
10,054
10,106
10,046
9,968
9,880
Less:
Qualifying capital securities
340
339
339
339
340
Preferred Stock, Series A
(b)
282
282
282
282
282
Total Tier 1 common equity (non-GAAP)
$
9,432
$
9,485
$
9,425
$
9,347
$
9,258
Net risk-weighted assets (regulatory)
(e)
$
83,787
$
84,287
$
83,637
$
83,328
$
82,913
Tier 1 common equity ratio (non-GAAP)
(e)
11.26
%
11.25
%
11.27
%
11.22
%
11.17
%
Pre-provision net revenue
Net interest income (GAAP)
$
575
$
573
$
563
$
583
$
578
Plus:
Taxable-equivalent adjustment
6
6
6
6
6
Noninterest income (GAAP)
417
455
435
453
459
Less:
Noninterest expense (GAAP)
704
689
662
712
716
Pre-provision net revenue from continuing operations (non-GAAP)
$
294
$
345
$
342
$
330
$
327
GAAP to Non-GAAP Reconciliation
$ in millions
25
a)
Three months ended September 30, 2014, June 30, 2014, March 31, 2014, December 31,
2013, and September 30, 2013 exclude $72 million, $79 million, $84 million,
$92 million, and $99 million of period-end purchased credit card receivable intangible assets, respectively
b)
Net of capital surplus
c)
Includes net unrealized gains or losses on securities available for sale (except
for net unrealized losses on marketable equity securities), net gains or losses on cash
flow hedges, and amounts resulting from the application of the applicable
accounting guidance for defined benefit and other postretirement plans
d)
Other assets deducted from Tier 1 capital and net risk-weighted assets consist
of disallowed intangible assets (excluding goodwill) and deductible portions of
nonfinancial equity investments. There were no disallowed deferred tax
assets at September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, and
September 30, 2013
e)
9-30-14 amount is estimated |
 Three months ended
9-30-14
6-30-14
3-31-14
12-31-13
9-30-13
Average tangible common equity
Average
Key
shareholders’
equity
(GAAP)
$
10,473
$
10,459
$
10,371
$
10,272
$
10,237
Less:
Intangible assets (average)
(a)
1,037
1,010
1,013
1,016
1,019
Preferred Stock, Series A (average)
291
291
291
291
291
Average tangible common equity (non-GAAP)
$
9,145
$
9,158
$
9,067
$
8,965
$
8,927
Return on average tangible common equity from continuing operations
Net
income
(loss)
from
continuing
operations
attributable
to
Key
common
shareholders (GAAP)
$
197
$
242
$
232
$
229
$
229
Average tangible common equity (non-GAAP)
9,145
9,158
9,067
8,965
8,927
Return on average tangible common equity from continuing operations
(non-GAAP) 8.55
%
10.60
%
10.38
%
10.13
%
10.18
%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)
$
204
$
214
$
236
$
224
$
266
Average tangible common equity (non-GAAP)
9,145
9,158
9,067
8,965
8,927
Return on average tangible common equity consolidated (non-GAAP)
8.85
%
9.37
%
10.56
%
9.91
%
11.82
%
Cash efficiency ratio
Noninterest expense (GAAP)
$
704
$
689
$
662
$
712
$
716
Less:
Intangible asset amortization (GAAP)
10
9
10
10
12
Adjusted noninterest expense (non-GAAP)
$
694
$
680
$
652
$
702
$
704
Net interest income (GAAP)
$
575
$
573
$
563
$
583
$
578
Plus:
Taxable-equivalent adjustment
6
6
6
6
6
Noninterest income (GAAP)
417
455
435
453
459
Total taxable-equivalent revenue (non-GAAP)
$
998
$
1,034
$
1,004
$
1,042
$
1,043
Cash efficiency ratio (non-GAAP)
69.5
%
65.8
%
64.9
%
67.4
%
67.5
%
GAAP to Non-GAAP Reconciliation
(continued)
$ in millions
(a)
Three months ended September 30, 2014, June 30, 2014, March 31, 2014, December 31,
2013, and September 30, 2013 exclude $76 million, $82 million, $89 million,
$96 million, and $103 million of average purchased credit card receivable intangible assets, respectively
26 |
 KeyCorp & Subsidiaries
$ in billions
Quarter ended
September 30, 2014
Tier 1 common equity under current regulatory rules
$
9.4 Adjustments from current regulatory rules
to the Regulatory Capital Rules: Deferred tax assets and PCCRs
(b)
(.1)
Common
equity
Tier
1
anticipated
under
the
Regulatory
Capital
Rules
(c)
$
9.3 Total risk-weighted assets under
current regulatory rules
$
83.8 Adjustments from current regulatory rules to the
Regulatory Capital Rules: Loan commitments <1 year
1.0
Past Due Loans
.1
Mortgage servicing assets
(d)
.5
Deferred tax assets
(d)
.3
Other
1.5
Total risk-weighted assets anticipated under the Regulatory Capital
Rules
$
87.2 Common Equity Tier 1 ratio under the Regulatory Capital
Rules 10.7
%
(a)
Common
equity
Tier
1
capital
is
a
non-generally
accepted
accounting
principle
(GAAP)
financial
measure
that
is
used
by
investors,
analysts
and
bank regulatory agencies to assess the capital position of financial services
companies. Management reviews Common Equity Tier 1 along with other
measures of capital as part of its financial analyses (b)
Includes the deferred tax asset subject to future taxable income
for realization, primarily tax credit carryforwards, as well as
the deductible portion
of purchased credit card receivables
(c)
The
anticipated
amount
of
regulatory
capital
and
risk-weighted
assets
is
based
upon
the
federal
banking
agencies’
Regulatory
Capital
Rules
(as
fully phased-in on January 1, 2019); Key is subject to the Regulatory
Capital Rules under the “standardized approach”
(d)
Item is included in the 10%/15% exceptions bucket calculation and is
risk-weighted at 250% Table may not foot due to rounding
27
Common Equity Tier 1 Under the Regulatory Capital
Rules (estimated)
(a) |