BancAnalyst
Association of Boston
November 7, 2003
Michael Orsino
National Sales Manager
Retail Banking, KeyCorp
Jack L. Kopnisky
President
Key Consumer Bank
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
FORWARD-LOOKING STATEMENT DISCLOSURE
The presentation and discussion, including related questions and answers, and
presentation materials, contain forward-looking statements about issues like
anticipated fourth quarter and full-year 2003 earnings, anticipated level of net
loan charge-offs and nonperforming assets and anticipated improvement in
profitability and competitiveness. Forward-looking statements by their nature are
subject to assumptions, risks and uncertainties. Actual results could differ
materially from those contained in or implied by such forward-looking
statements for a variety of factors including: changes in interest rates; continued
weakness in the economy, which could materially impact credit quality trends
and the ability to generate loans; failure of the capital markets to function
consistent with customary levels; delay in or inability to execute strategic
initiatives designed to grow revenues and/or manage expenses; consummation of
significant business combinations or divestitures; new legal obligations or
restrictions or unfavorable resolution of litigation; further disruption in the
economy or the general business climate as a result of terrorist activities or
military actions; and changes in accounting, tax or regulatory practices or
requirements.
1
Net Income by Line of Business
Net Income - 3Q03
• Corporate Banking
• KeyBank Real Estate Capital
• Key Equipment Finance
Investment
Management Services
Corporate &
Investment Banking
40%
10%
Consumer
Banking
50%
• Retail Banking
• Small Business
• Consumer Finance
2
Consumer Banking
Business Scale
900 KeyCenters - 2,200 ATMs
On-line Clients: 722,000 (37% Penetration)
Small Business: 10th largest in loan balances
Business Initiatives
 Deposit growth
 Increase cross-sell
 New client acquisition
• Adding new KeyCenters and RMs
 Consumer Finance: reposition and improve cross-sell
 Business Banking: focus on business development
Retail Banking
Small Business
Consumer Finance
3
Consumer Bank Financial Performance
Financial Performance ($ millions)
Q2’03
Q3’02
% Growth
Q3’03 vs. Q3’02
616,102
Provision for Loan Losses 69,857
580,997
64,754
576,864
70,171
6.8%
-0.4%
Expenses (Incl Ovhd)
354,578
353,093
336,343
5.4%
Net Income
119,791
101,969
106,605
12.4%
Loans
29,100
28,874
28,243
3.0%
Deposits
34,999
10,367
10,913
13,719
34,780
9,902
10,697
14,182
33,580
9,054
8,949
15,577
4.2%
14.5%
21.9%
-11.9%
Q3’03
Revenue
Transaction
MM/Savings
CD’s
4
Progress on Relationship Development
Relationship Development and Client Acquisition
Q3’03
Q2’03
Q3’02
%
Retail Banking
$6,871
$6,707
$6,074
13%
Business Banking
$3,116
$2,865
$2,652
17.5%
30,174
10,071
(9,336)
NM
(469)
(556)
(738)
57%
Retail Banking
$9,687
$9,531
$8,029
21%
Business Banking
$1,217
$1,160
$916
33%
$7,900
$7,614
$6,956
14%
10,766
3,480
(16,047)
NM
1,030
1,103
820
26%
Retail Banking
3.05
3.03
3.00
2%
Business Banking
2.88
2.84
2.70
7%
Checking Balances ($ in Millions)
Net New Checking Accounts
Retail Banking
Business Banking
MM/Savings Balances ($ in Millions)
Home Equity Balances ($ in Millions)
Retail Banking
Net New Clients
Retail Banking
Business Banking
Accounts per Customer
Key’s Relationship Approach
Foundation
Elements
Distinctive
Elements
Future State
Geography
Client
Knowledge
Segmentation
Channels
+
Service
& Advice
Products
Human Capital
Multiple
Solutions
Unique Client
Experience
=
Consistent
Shareholder
Return
5
Key’s Relationship Approach
Foundation
Elements
Geography
Segmentation
Channels
Products
Human Capital
6
7
Key’s Relationship Approach
Geography
Foundation Elements
• Market Share Objective: Top 4 Market Share Position
• Retail Infrastructure Investments 2000-2005 - $162 Million
• Acquisition Strategy
Market Share
District
* KeyBank
Deposits
(in billions)
*KeyBank
Deposit Market
Share
1
1
2
2
3
3
3
3
3
3
4
4
4
$16.2
$1.8
$1.9
$1.4
$2.3
$2.0
$1.8
$1.6
$0.9
$0.6
$1.6
$0.8
$0.4
$33.3
78%
36%
12%
13%
10%
9%
12%
12%
7%
12%
7%
6%
8%
8%
15%
68
59
62
38
42
62
46
36
33
30
42
24
12
554
62%
5
5
5
6
6
6
6
8
9
9
10
$2.0
$0.8
$0.4
$1.2
$0.8
$0.8
$0.6
$0.3
$1.0
$0.5
$0.6
$9.3
22%
$42.5
7%
5%
6%
7%
5%
6%
2%
3%
2%
4%
1%
3%
66
32
17
38
32
25
23
14
41
21
37
346
38%
900
* Deposit Market
Position
Cleveland OH
Central New York
Maine
Toledo OH
Western New York
South Puget Sound WA
Albany NY
Hudson Valley NY
Northern Indiana
Idaho
Seattle WA
Dayton OH
Vermont
Total (Key Position 1-4)
% of KeyBank's Total
Oregon
Trans Mountain WA
Alaska
Akron/Canton OH
Central Indiana
Columbus OH
Cincinnati OH
Rochester NY
Coloroado
Michigan
Utah
Total (Key Position 5-10)
% of KeyBank's Total
KeyBank Totals
• Measures of Success
 Market Share Growth
 Market Earnings Growth
# of KeyCenters
8
Key’s Relationship Approach
Segmentation
Foundation Elements
• Profit Tier Segmentation
• Movement to Life Stage Segmentation
Customers
June
P1
P2
P3
P4
Dec
1998 1999
3.4%
4.0%
9.2%
4.0%
6.8%
Dec
Dec
Dec
2000 2001 2002
5.0%
5.3%
5.4%
6.1%
Sept
June
Dec
Dec
Dec
Dec
Sept
2003
1998
1999
2000
2001
2002
2003
$394
$458
$532
$618
$679
$727
6.1%
6.1%
6.4%
6.3%
11.2% 11.7% 13.1%
13.5% 13.2%
28.0%
28.6%
30.1%
33.9%
P5
Profitability/Customers
55.4%
49.4%
47.8%
34.6%
41.5%
39.5%
31.2%
43.1%
($121) ($104)($111) ($143) ($133) ($129)
• Measures of Success
 Profitability/Client
 Profitability/Segment
 Net Client Growth
9
Key’s Relationship Approach
Channels
Foundation Elements
• Client Choice of Channel
• Key Centers / McDonald Offices
• ATM
• Call Center
Client Satisfaction
Current Scale
• Key.com
9.03
8.92
2002
• Measures of Success
 Productivity
 Service Levels
 Client Satisfaction
Q3 2003
The scale is 1-10:
1 = Very Dissatisfied
10 = Very Satisfied
10
Key’s Relationship Approach
Products
Foundation Elements
• Broad Product Solutions for Consumers and Institutions
• Loan, Deposit, Investments, Fee-Based Services
• Relationship Pricing and Packaging
48%
Increase
this year
New DDA Account Opening
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1st Qtr
• Measures of Success
 Profitable Balance & Fee Growth
 Product Economic Value Added (EPA)
2nd Qtr
2002
2003
3rd Qtr
11
Key’s Relationship Approach
Human Capital
Foundation Elements
• Competency-Based Hiring
• Significant, Continuous Learning and Training Environment
• Differentiating for High Performance
Retail Turnover Ratio
• Meritocracy
-- Financial Objectives
-- Behavior Expectations
-- EPA Driven Rewards
40.0%
30.0%
20.0%
10.0%
• Measures of Success
 Employee Satisfaction
 Retention/Turnover
 Diversity
Year End 2001
All Positions
Year End 2002
Q3 2003
Client Relations Representatives
Key’s Relationship Approach
Foundation
Elements
Distinctive
Elements
Geography
Client
Knowledge
Segmentation
Channels
+
Service
& Advice
Products
Human Capital
Multiple
Solutions
12
13
Key’s Relationship Approach
Client Knowledge
Distinctive Elements
• Investments in Enterprise
• Turn Data to Actionable Information
• CRM System
60,000
Retail Profit Production
50,000
40,000
30,000
3Q’02
• Measures of Success
 Sales Productivity
 Conversion Metrics
3Q’03
22%
Increase
During 3rd
Quarter
14
Key’s Relationship Approach
Service & Advice
Distinctive Elements
• Defined Service Behaviors
• Relentless Consistency
• Proactive Advice
Annualized Attrition/Acquisition Grows
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Year End 2002
1st Qtr 2003
Attrition
• Measures of Success
 Client Acquisition/Attrition
 Client Satisfaction
2nd Qtr 2003
Acquisition
3rd Qtr 2003
15
Key’s Relationship Approach
Multiple Solutions
Distinctive Elements
• Aggressive, Results Oriented
• Proactively Acquire Major Share of Wallet
Cross Sell Ratio
5.00
4.00
3.00
2.00
Year End
2001
Accounts/Customer
• Measures of Success
 Defined Sales Activities
 Cross Sell Ratio
 Share of Wallet
Year End
2002
Q3 2003
Accounts/Household
Key’s Relationship Approach
Foundation
Elements
Distinctive
Elements
Future State
Geography
Client
Knowledge
Segmentation
Channels
+
Service
& Advice
Products
Human Capital
Multiple
Solutions
Unique Client
Experience
=
Consistent
Shareholder
Return
16
17
Key’s Relationship Approach
Future State
• Consistent & Distinctive Service Experience
• Aggressive, Unrelenting Sales Culture
• Consumer Banking Growth Supporting
Consistent Shareholder Returns
• 3-5% Revenue Growth
• 10%+ Earnings Growth
• ROE 21%+
BancAnalyst
Association of Boston
November 7, 2003
Michael Orsino
National Sales Manager
Retail Banking, KeyCorp
18
Retain Expand Acquire
• Relentless Accountability - Daily reports
• Leaner more efficient structure
 More one-on-one coaching
• Retain/Recruit High Performers
19
KeyCorp Central New York
Results
DDA
Growth
5X
Bank Avg.
Loan
Growth
2.9X
Bank Avg.
12%
Net
Income
Growth
Question & Answer
Session
Michael Orsino
National Sales Manager
Retail Banking, KeyCorp
Jack L. Kopnisky
President
Key Consumer Bank