KeyBank 2013 Annual Report Download - page 51

taper quantitative easing asset purchases. The taper did not begin as expected, and the October government
shutdown helped to keep rates down in the 2.5-2.6% range for the majority of the fourth quarter, until surprisingly
positive economic data prompted the Federal Reserve to reduce asset purchases by $10 billion at the December
meeting. Rates subsequently rose, and closed the year at 3.0%.
Long-term financial goals
Our long-term financial goals are as follows:
/Target a loan-to-core deposit ratio range of 90% to 100%;
/Maintain a moderate risk profile by targeting a net loan charge-off ratio range of .40% to .60%;
/Grow high quality and diverse revenue streams by targeting a net interest margin in excess of 3.50%, and
ratio of noninterest income to total revenue of greater than 40%;
/Create positive operating leverage and target a cash efficiency ratio in the range of 60% to 65%; and
/Achieve a return on average assets in the range of 1.00% to 1.25%.
Figure 2 shows the evaluation of our long-term financial goals for the fourth quarter of 2013 and the year ended
2013.
Figure 2. Evaluation of Our Long-Term Financial Goals
KEY Business Model Key Metrics (a) 4Q13 2013 Targets Action Plans
Core funded Loan to deposit ratio (b)
84 % 84 % 90 - 100 %
• Use integrated model to grow relationships and
loans
• Improve deposit mix
Maintain a moderate
risk profile
NCOs to average loans .27 % .32 %
.40 - .60 %
• Focus on relationship clients
• Exit noncore portfolios
Provision to average loans .14 % .25 % • Limit concentrations
• Focus on risk-adjusted returns
Growing high quality, diverse
revenue streams
Net interest margin 3.01 % 3.12 % > 3.50 % • Improve funding mix
• Focus on risk-adjusted returns
Noninterest income to
total revenue
43 % 43 % > 40 % • Grow client relationships
• Capitalize on Key’s total client solutions
and cross-selling capabilities
Creating positive
operating leverage
Cash efficiency ratio (c) 67 % 68 % 60 - 65 % • Improve efficiency and effectiveness
• Better utilize technology
Adj. cash efficiency ratio
(ex. efficiency initiative
charges) (c), (d)
65 % 65 % • Change cost base to more variable from
fixed
Executing our strategies Return on average assets 1.08 % 1.03 % 1.00 - 1.25 % • Execute our client insight-driven
relationship model
• Focus on operating leverage
• Improved funding mix with lower cost core
deposits
(a) Calculated from continuing operations, unless otherwise noted.
(b) Represents period-end consolidated total loans and loans held for sale (excluding education loans in the securitization trusts) divided by
period-end consolidated total deposits (excluding deposits in foreign office).
(c) Excludes intangible asset amortization; Non-GAAP measures: see Figure 4 for reconciliation.
(d) Efficiency initiative charges include pension settlement.
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