KeyCorp (KEY)

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KeyCorp (KEY)

Barclays Global Financial Services Conference Call

September 9, 2013 12:00 pm ET


Donald R. Kimble – Chief Financial Officer

Clark H. I. Khayat – Head-Corporate Strategy


Jason M. Goldberg – Barclays Capital, Inc.


Jason M. Goldberg – Barclays Capital, Inc.

Moving right along, I am very pleased to have KeyCorp up next. While KeyCorp has been a consistent presenter at this conference, there is a couple of some familiar faces maybe in new roles at the podium.

Presenting for KeyCorp is Don Kimble, relatively new CFO. You guys probably remember him from each of last nine years as CFO at Huntington, but earlier this year decided to take the 150 or so mile drive up north and switch over to KeyCorp. Also present is Vern Patterson from Investor Relations. I mentioned earlier that [indiscernible] was kind of in the business as long as I have in this current role, I puts in that category as well and also we have Clark Khayat from Corporate Strategy.

And with that let me just turn over to Don.

Donald R. Kimble

Great and thanks Jason and thank you all for being here, it’s great to be back at conference again this year. As Jason said, also at the podium here is Clark Khayat, who heads up our Corporate Strategy and Vern Patterson. I am not sure if that was a compliment yet now Vern as far been a long senior IR person that I certainly enjoyed, Clark and Vern ever since I had been here. So our forward-looking disclosure statement can be found on Slide 2. This covers my presentation as well as the Q&A that follows.

I will move on to Slide 3; having been to my role key for all of the three months, again a much better appreciation for the amount of change that have taken place with the new organization under Beth’s leadership. And with the opportunities still ripe way ahead of us. Let me make a few observations.

First, Key has made significant progress over the past few years by consistently executing on its strategy, improving efficiency, derisking the balance sheet and remaining disciplined as for as managing our capital. These are actions that differentiate Key in the market place and have enabled the company to grow.

One of the drivers has been a consistent focus on our target plan segments in both our community and corporate banks, with a clear emphasis on acquiring new clients and expanding relationships. Specifically, the corporate bank has added over 700 new clients and expanded more than 400 relationships over the past year, which has resulted in both loan balances and also fee-based business. Key has also made investments in the geographic footprint, our payment product offerings and human capital. The branch in critical acquisitions has performed at or above our expectations and the company has been able to attract some top talent because of our unique platform.

Key’s most recent investment acquiring Commercial Mortgage Servicing was also continued to leverage our strong commercial real estate platform and provide stable low cost funding for us as well. Efficiency has also improved and by growing revenues and reducing and verbalizing our expenses and I’ll comment more on this later in the presentation. Additionally, a lot of work has been done to improve the overall risk profile. You can see the evidence of that with the decline in our net charge off ratio which is now below our long-term targeted range of 40 to 60 basis points.

Finally, peer-leading capital position remains a competitive advantage for us over time. And this position of strength has been maintained while coming through the way of CCAR process with one of the highest payout ratios among peers. We have been and will continue to be disciplined in the way that we deploy, invest and returning that capital over time.

Now, turning to Slide 4, although relationship banking has been over used today from all of our competitors. It has been a cornerstone on which this Company has been built.

Well, we are in pursuing indirect businesses or buying deals that supplement loan growth, Key is committed to building and growing target relationships. Our Community and Corporate Banks are aligned with one another and our strategy and value proposition are centered on three pillars.

First, we gain insight by understanding our clients. We do this by having a local presence and a full picture of client needs through insights and industry expertise. Next, we use this insight to deliver client-specific products and services, which address those needs in differentiated ways. And finally, we deliver these products and services to our clients when, where, and how they choose.

For consumer and small business clients, this may include using the online or mobile capabilities. For our commercial clients, this could be having a local relationship and also access to dedicated product specialists. This alignment of our businesses and intersection with these three pillars makes us distinctive and provides the basis for how we go-to-market, which brings us to the next slide, maybe not, we are trying to advance the slide.

Here we go, I apologize. On Slide 5, you can see how our commercial clients have access to a broad product set, which is delivered locally and ranges from traditional bank products to capital market capabilities. Our focus is targeted against specific industry verticals where we had deep knowledge and expertise.

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