retail banking at key financial services analysts association newport, rhode island june 18, 2003

Retail Banking at KeyRetail Banking at Key

Financial Services Analysts AssociationNewport, Rhode Island

June 18, 2003

Patrick J. Swanick,President, Retail Banking & Electronic Services

Retail Banking InitiativesRetail Banking InitiativesRevenue, Revenue, Revenue, Revenue, Revenue, Revenue,

• Deposit growth– Rolled out Free Checking Nationwide– Offering competitive deposit rates– Introduced KeyMiles Continental Airlines Debit Card

Retail BankingRetail Banking

(Expense)(Expense)

Free Checking, with KeyMiles Debit Card


$0

$10

$20

$30

$40

$50

$60

1996 1997 1998 1999 2000 2001 2002 2003Forecast

Debit Card Revenue GrowthDebit Card Revenue Growth

• #4 Small Business and #8 Consumer MasterCard Debit Issuer Nationwide

• Percentage of Active Users and Transactions per Cardholder Exceed National Averages


$ in millions$ in millions

Retail Banking InitiativesRetail Banking InitiativesRevenue, Revenue, Revenue, (Expense)Revenue, Revenue, Revenue, (Expense)

• Deposit growth– Rolled out Free Checking Nationwide– Offering competitive deposit rates– Introduced KeyMiles Continental Airlines Debit Card


• New client acquisition – Added new RMs and BDOs– Adding new KeyCenters and ATMs– Identifying acquisition opportunities

• Increase cross-sell– Licensing RMs to sell investments– Certifying RMs to handle small business clients

Total Revenue (TE) by Line of BusinessTotal Revenue (TE) by Line of Business

1Q02 1Q03

$ in millions

1Q02 1Q03 $ %

Retail Banking $ 311 $ 320 $ 9 +3%Small Business 90 94 4 4Consumer Finance 150 150 - - Corporate Banking 249 234 (15) (6)Real Estate Capital 90 84 ( 6) (7)Equipment Finance 66 71 5 8Investment Mgmt Services213 192 ( 21) (10)

InvestmentMgmt Services

18%

Consumer Banking

47%

Corporate & Investment

Banking35%

Change

InvestmentMgmt Services

17%

Consumer Banking

49%


Banking34%


1Q02 1Q03 $ %

Retail Banking $ 54 $ 62 $ 8 +15%Small Business 21 22 1 5Consumer Finance 6 12 6 100Corporate Banking 59 51 (8) (14)Real Estate Capital 36 30 (6) (17)Equipment Finance 19 25 6 32Investment Mgmt Services23 20 (3) (13)

Net Income by Line of BusinessNet Income by Line of Business

1Q02 1Q03Corporate & Investment

Banking48%

Consumer Banking

43%

Investment Mgmt Services

9%

Investment Mgmt Services

11%

Consumer Banking

37%


Banking52%

Change

$ in millions


% Change 1Q03 vs.

1Q024Q02 1Q03 1Q02 4Q02*

Noninterest Bearing $8.6 $9.9 $9.8 14% (6)%

NOW & MMDA 13.4 15.2 16.8 25 43

Savings Deposits 1.9 2.0 2.0 5 13

CDs Under 100k 13.4 12.2 11.8 (12) (14)

Total Core Deposits $37.3 $39.3 $40.4 +8% +12%

$ in billions

Average Core Deposit GrowthAverage Core Deposit Growth

*Annualized


1Q03 vs. 1Q02

Commercial $37,140 $37,088 $36,497 $36,367 $36,463 (1.8)% Consumer 22,908 23,967 24,591 24,308 24,683 7.7%

Exit Portfolios Auto 2,499 2,041 1,705 1,371 1,135 (54.6) Commercial 941 832 693 631 564 (40.1)

1Q02 2Q02 3Q02 4Q02 1Q03

Average LoansAverage Loans$ in millions $63,488 $63,928 $63,486 $62,677 $62,845

% Change


OverviewOverview

902 KeyCenters2,179 ATMs1-800-KEY-2-YOUKey.com

12 State Footprint2.2 Million Clients6,100+ Employees$1.3+ Billion Revenues



Strategic Priorities for 2003Strategic Priorities for 2003

RETENTION• Retain All Clients/Relationships• Keep All High Performing Employees

EXPANSION• Drive Deeper Cross-Selling• Foster 1Key Leadership

ACQUISITION• Attract New Relationship Clients & COIs• Actively Recruit New High Potential Employees

KeyCenter Network SummaryKeyCenter Network Summary

District

* Deposit Market Position

* KeyBank Deposits

(in billions)

* KeyBank Deposit

Market Share# of

KeyCenters

CLEVELAND OH 1 $16.2 36% 68CENTRAL NEW YORK 1 $1.8 12% 59MAINE 2 $1.9 13% 62TOLEDO OH 2 $1.4 10% 38WESTERN NEW YORK 3 $2.3 9% 42SOUTH PUGET SOUND WA 3 $2.0 12% 62ALBANY NY 3 $1.8 12% 46HUDSON VALLEY NY 3 $1.6 7% 36NORTHERN INDIANA 3 $0.9 12% 34IDAHO 3 $0.6 7% 30SEATTLE WA 4 $1.6 6% 41DAYTON OH 4 $0.8 8% 24VERMONT 4 $0.4 8% 12TOTAL (KEY POSITION 1-4) $33.3 15% 554% OF KEYBANK'S TOTAL 78% 61%

OREGON 5 $2.0 7% 65TRANS MOUNTAIN WA 5 $0.8 5% 32ALASKA 5 $0.4 6% 17AKRON/CANTON OH 6 $1.2 7% 38CENTRAL INDIANA 6 $0.8 5% 32COLUMBUS OH 6 $0.8 6% 25CINCINNATI OH 6 $0.6 2% 23ROCHESTER NY 8 $0.3 3% 14COLORADO 9 $1.0 2% 44MICHIGAN 9 $0.5 4% 21UTAH 10 $0.6 1% 37TOTAL (KEY POSITION 5-10) $9.3 3% 348% OF KEYBANK'S TOTAL 22% 39%KEYBANK TOTALS $42.5 902



New Customer AcquisitionNew Customer Acquisition(M

illio

ns)

Average Number of Retail Clients

2,000

2,100

2,200

2,300

2,400

2,500

2000 2001 2002 2003 2004Forecast

2005Forecast

Projected OrganicCustomer Growth

Projected CustomerGrowth with Acquisitions

Selected Initiatives Supporting Acquisition:• Multiple new product introductions (Free Checking, Continental/Key Miles Debit Card, Relationship Mortgage, Home Loan First, Student Checking, etc.)• Increased marketing spend, with clear, forceful messages• More KeyCenters & ATMs; “Grand Re-Openings” of newer KeyCenters• Added sales capacity – More RMs, SSAs, BDOs, COIs & TeleSales staff• Additional strategic bank acquisitions (like UBT)


Client RetentionClient Retention

Selected Initiatives Supporting Retention:• Enhanced client contact strategy through KeyCenter and Outbound TeleSales Staffs and Direct Mail• Harland Modeling – “Likely to Attrite” scores • Fee changes/modifications• Expanded KeyCenter hours

An

nu

al A

ttri

tion

Rate

0%

5%

10%

15%

20%

2000 2001 2002 First Quarter,2003

(Annualized)

2004Forecast

2005Forecast

Client Satisfaction GrowsClient Satisfaction Grows

4.354.43

4.60

1999 2000 2001

Aggregate hospitality scores for Key’s branch network. The scale is 1-5:1 = Strongly Disagree5 = Strongly Agree

8.92

1Q 2003

The scale is 1-10: 1 = Very Dissatisfied10 = Very Satisfied

8.99

Historical Scale Current Scale


Relationship BuildingRelationship Building

Profit Contribution per Customer


$320$304

$235

2000 2001 2002

Retail Services per Household

Focus on Cross-SellFocus on Cross-Sell

1999 2000 2001 2002 1Q03

2.592.63

2.812.86

2.92



Transaction Migration ContinuesTransaction Migration ContinuesP

erc

en

tag

e o

f Tra

nsacti

on

s

0%10%20%30%40%50%60%70%

1995 1996 1997 1998 1999 2000 2001 2002 2003

KeyCenters ATMs Call Centers Internet

31%

37%

11%

21%


Revenue Generation Through TeleSalesRevenue Generation Through TeleSales

0

200

400

600

800

1000

2000 2001 2002 2003Forecast

2004Forecast

2005Forecast

Deposit Credit

$ B

ooke

d (

Mill

ions)

Growing Online Banking PenetrationGrowing Online Banking Penetration


0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

Nov-

00De

c-00

Jan-

01Fe

b-01

Mar-0

1Ap

r-01

May-

01Ju

n-01

Jul-0

1

Aug-

01Se

p-01

Oct-0

1No

v-01

Dec-

01Ja

n-02

Feb-

02Ma

r-02

Apr-0

2Ma

y-02

Jun-

02Ju

l-02

Aug-

02Se

p-02

Oct-0

2

Nov-

02De

c-02

Jan-

03Fe

b-03

Mar-0

3Ap

r-03

Key Employees Key Client Households


Key.com ReviewsKey.com Reviews Third parties continue to rate Key.com highlyThird parties continue to rate Key.com highly

Key was rated as one of the best bank websites Key was rated as one of the best bank websites that effectively communicates its commitment to that effectively communicates its commitment to diversity.diversity. (DiversityInc. Dec. 2002)(DiversityInc. Dec. 2002)

EvaluatorRanking & Number of

Companies Rated Rating Category DateSpeer & Associates #1/10 Transactional Capabilities Q1 ‘03

Gomez #1/15 Small Business Ease of Use Q3 '02

Speer & Associates #2/10 Business Development Q1 ‘03

Gomez #2/15 Small Business Overall Score Q3 '02

Speer & Associates #2/10 Small Business Internet Banking Q2 ‘03

Gomez #5/30 Consumer Overall Score Q2 '03

Gomez #4/30 Consumer Ease of Use Q2 '03

Gomez #6/30 Consumer Relationship Services Q2 '03

$912$849

$661

2000 2001 2002

Revenue per Sales FTE (Thousands)

Relationship BuildingRelationship Building


SummarySummary


• Key’s Retail Bank is positioned for growth…

Retention, expansion & acquisition initiatives are working.

Strategic acquisitions and DeNovo expansion will supplement organic growth.

Service quality and convenience, delivered by the best people, provide the foundation for our distinctiveness in the marketplace.

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995FORWARD-LOOKING STATEMENT DISCLOSURE

The presentation and discussion, including related questions and answers, and presentation materials, contain forward-looking statements about issues like anticipated second 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.


Question & Answer SessionQuestion & Answer Session

Patrick J. SwanickPresident,

Retail Banking & Electronic Services

KeyBank127 Public Square

Cleveland, Ohio 44114USA

Phone: (216) 689-1201 Fax: (216) 689-4095

eMail: [email protected]


retail banking at key financial services analysts association newport, rhode island june 18, 2003

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