KeyBank 2015 Annual Report Download - page 51

/Acquire and expand targeted client 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.
/Maintain financial strength — With the foundation of a strong balance sheet, we will remain focused on
sustaining strong reserves, liquidity and capital. We will work closely with our Board and regulators to
manage capital to support our clients’ needs and drive long-term shareholder value. Our capital remains a
competitive advantage for us.
/Engage a high-performing, talented, and diverse workforce — Every day our employees provide our
clients with great ideas, extraordinary service, and smart solutions. We will continue to engage our high-
performing, talented, and diverse workforce to create an environment where they can make a difference,
own their careers, be respected, and feel a sense of pride.
Strategic developments
We initiated the following actions during 2015 to support our corporate strategy:
/We continue to focus on growing our businesses and remain committed to improving productivity and
efficiency. During 2015, we generated positive operating leverage, with pre-provision net revenue up 4.7%
from 2014. Net interest income benefited from solid loan growth, driven by a 12% increase in average
commercial, financial and agricultural loans. Noninterest income benefited from increases in several of our
core fee-based businesses: investment banking and debt placement fees, which had record high fees in 2015
due to stronger financial advisory fees and loan syndications, trust and investment services income,
corporate services income, and cards and payments income. Although noninterest expense increased from
prior year, this increase was primarily due to the ongoing investments we have made in our businesses to
drive revenue growth, including the addition of client-facing personnel across our franchise.
/Our strong risk management practices and a more favorable credit environment resulted in another year of
solid credit quality trends. For 2015, net loan charge-offs were .24% of average loans and the provision for
credit losses was .28% of average loans, both well below our targeted range.
/We also made progress on other strategic initiatives. On October 30, 2015, we announced that KeyCorp
entered into a definitive agreement and plan of merger to acquire all of the outstanding capital stock of First
Niagara. The merger is currently expected to be completed during the third quarter of 2016 and is subject to
customary closing conditions including the approval of regulators and the shareholders of both KeyCorp and
First Niagara. This merger is expected to accelerate our transformation into a high-performing regional
bank, generate attractive financial returns, provide significant revenue opportunities, and create a
complementary business mix and a more balanced franchise.
/Capital management remained a priority in 2015. On March 11, 2015, the Federal Reserve announced that it
did not object to our 2015 capital plan submitted as part of the annual CCAR process. The 2015 capital plan
included a common share repurchase program of up to $725 million, including repurchases to offset
issuances of common shares under our employee compensation plans. Common share repurchases under the
2015 capital plan began in the second quarter of 2015. During the second and third quarters of 2015, we
completed $252 million of common share repurchases under this authorization. In addition, we completed
$208 million of common share repurchases in the first quarter of 2015 under our 2014 capital plan for a total
of $460 million of open market common share repurchases during 2015. We suspended our existing share
repurchase program in the fourth quarter of 2015 due to the pending merger with First Niagara. We plan to
include share repurchases in the upcoming 2016 CCAR submission.
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