KeyBank 2014 Annual Report Download - page 47

Long-term financial goals
Our long-term financial goals are as follows:
/Improve balance sheet efficiency by targeting a loan-to-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 a
ratio of noninterest income to total revenue of greater than 40%;
/Generate positive operating leverage and target a cash efficiency ratio of less than 60%; and
/Strengthen returns by executing our strategy and target 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 three and twelve months ended
December 31, 2014.
Figure 2. Evaluation of Our Long-Term Financial Goals
KEY Business Model Key Metrics (a) 4Q14
Year ended
December 31, 2014 Targets
Balance sheet efficiency Loan-to-deposit ratio (b) 85 % 85 % 90 - 100 %
Moderate risk profile NCOs to average loans .22 % .20 % .40 - .60 %
Provision to average loans .15 % .11 %
High quality, diverse
revenue streams
Net interest margin 2.94 % 2.97 % > 3.50 %
Noninterest income to total revenue 45 % 44 % > 40 %
Positive operating leverage Cash efficiency ratio (c) 64.4 % 66.1 % < 60 %
Execution of strategy Return on average assets 1.12 % 1.08 % 1.00 - 1.25 %
(a) Calculated from continuing operations, unless otherwise noted.
(b) Represents period-end consolidated total loans and loans held for sale 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.
Corporate strategy
We remain committed to enhancing long-term shareholder value by continuing to execute our relationship
business model, growing our franchise, and being disciplined in our management of capital. Our 2014/2015
strategic focus is to add new clients and to expand our relationships with existing clients. We intend to pursue
this strategy by continuing to control and reduce expenses; being more productive from the front office to the
back office; effectively balancing risk and rewards within our moderate risk profile; and engaging, retaining and
inspiring our diverse and high performing workforce. Our strategic priorities for enhancing long-term
shareholder value are described below.
/Grow profitably — We will continue to focus on growing revenue and creating a more efficient operating
environment. We expect our relationship business model to keep generating organic growth as it helps us
expand engagement with existing clients and attract new customers. We will leverage our continuous
improvement culture to create a more efficient cost structure that is aligned, sustainable, and consistent with
the current operating environment and supports our relationship business model.
/Acquire and expand targeted relationships — We have taken purposeful steps to enhance our ability to
acquire and expand targeted relationships. Our local delivery of a broad product set and industry expertise
allows us to match client needs and market conditions to deliver the best solutions.
/Effectively manage risk and rewards — Our risk management activities are focused on ensuring we
properly identify, measure, and manage risks across the entire company to maintain safety and soundness
and maximize profitability.
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