BancAnalyst

Association of Boston

November 7, 2003

Michael Orsino Jack L. Kopnisky

National Sales Manager President
Retail Banking, KeyCorp 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
Investment
• Key Equipment Finance Management Services

Corporate & 10%

Investment Banking
40%

Consumer
Banking
50%

• Retail Banking
• Small Business
• Consumer Finance
 2

Consumer Banking
Retail Banking
Small Business
Business Scale Consumer Finance

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
 3

Consumer Bank Financial Performance

Financial Performance ($ millions)
% Growth
Q3’03 Q2’03 Q3’02 Q3’03 vs. Q3’02

Revenue 616,102 580,997 576,864 6.8%

Provision for Loan Losses 69,857 64,754 70,171 -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 34,780 33,580 4.2%
Transaction 10,367 9,902 9,054 14.5%
MM/Savings 10,913 10,697 8,949 21.9%
CD’s 13,719 14,182 15,577 -11.9%
 4

Progress on Relationship Development

Relationship Development and Client Acquisition
Q3’03 Q2’03 Q3’02 %
Checking Balances ($ in Millions)
Retail Banking $6,871 $6,707 $6,074 13%
Business Banking $3,116 $2,865 $2,652 17.5%
Net New Checking Accounts
Retail Banking 30,174 10,071 (9,336) NM

Business Banking (469) (556) (738) 57%

MM/Savings Balances ($ in Millions)
Retail Banking $9,687 $9,531 $8,029 21%

Business Banking $1,217 $1,160 $916 33%

Home Equity Balances ($ in Millions)
Retail Banking $7,900 $7,614 $6,956 14%
Net New Clients
10,766 3,480 (16,047) NM
Retail Banking
1,030 1,103 820 26%
Business Banking
Accounts per Customer
3.05 3.03 3.00 2%
Retail Banking
2.88 2.84 2.70 7%
Business Banking
 5

Key’s Relationship Approach

Foundation Distinctive
Elements Elements Future State

Geography
Client
Knowledge Unique Client
Segmentation Experience

Channels + Service
& Advice
=
Consistent
Products Shareholder
Return
Multiple
Solutions
Human Capital
 6

Key’s Relationship Approach

Foundation
Elements

Geography

Segmentation

Channels

Products

Human Capital
 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
* KeyBank *KeyBank
* Deposit Market Deposits Deposit Market
District Position (in billions) Share # of KeyCenters
Cleveland OH 1 $16.2 36% 68
Central New York 1 $1.8 12% 59
Maine 2 $1.9 13% 62
Toledo OH 2 $1.4 10% 38
Western New York 3 $2.3 9% 42
South Puget Sound WA 3 $2.0 12% 62
Albany NY 3 $1.8 12% 46
Hudson Valley NY 3 $1.6 7% 36
Northern Indiana 3 $0.9 12% 33
Idaho 3 $0.6 7% 30
Seattle WA 4 $1.6 6% 42
Dayton OH 4 $0.8 8% 24
Vermont 4 $0.4 8% 12
Total (Key Position 1-4) $33.3 15% 554
% of KeyBank's Total 78% 62%

Oregon 5 $2.0 7% 66
Trans Mountain WA 5 $0.8 5% 32
Alaska 5 $0.4 6% 17
Akron/Canton OH 6 $1.2 7% 38
Central Indiana 6 $0.8 5% 32
Columbus OH 6 $0.8 6% 25
Cincinnati OH 6 $0.6 2% 23
Rochester NY 8 $0.3 3% 14
Coloroado 9 $1.0 2% 41
Michigan 9 $0.5 4% 21
Utah 10 $0.6 1% 37
Total (Key Position 5-10) $9.3 3% 346
% of KeyBank's Total 22% 38%
KeyBank Totals $42.5 900

• Measures of Success
 Market Share Growth
 Market Earnings Growth
 8

Key’s Relationship Approach

Segmentation Foundation Elements
• Profit Tier Segmentation
• Movement to Life Stage Segmentation
Customers Profitability/Customers
June Dec Dec Dec Dec Sept June Dec Dec Dec Dec Sept
1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003
P1 3.4% 4.0% 5.0% 5.4% 6.1% 6.1%
P2 4.0%
6.8% 5.3% 6.1% 6.4% 6.3%
P3 9.2%
11.2% 11.7% 13.1%
13.5% 13.2%

P4 28.0% $394 $458 $532 $618 $679 $727

28.6% 30.1%
33.9% 31.2%
34.6%

P5 55.4%
49.4% 47.8% 41.5% 43.1%
39.5%

($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
Client Satisfaction
• Call Center Current Scale
• Key.com

9.03

8.92

2002 Q3 2003
The scale is 1-10:
1 = Very Dissatisfied
• Measures of Success
10 = Very Satisfied
 Productivity
 Service Levels
 Client Satisfaction
 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%
New DDA Account Opening Increase
70,000
this year
60,000

50,000

40,000

30,000

20,000

10,000

0
1st Qtr 2nd Qtr 3rd Qtr

• Measures of Success 2002 2003

 Profitable Balance & Fee Growth

 Product Economic Value Added (EPA)
 11

Key’s Relationship Approach

Human Capital Foundation Elements
• Competency-Based Hiring
• Significant, Continuous Learning and Training Environment
• Differentiating for High Performance
• Meritocracy Retail Turnover Ratio
40.0%
-- Financial Objectives
-- Behavior Expectations
-- EPA Driven Rewards
30.0%

20.0%

10.0%
Year End 2001 Year End 2002 Q3 2003
• Measures of Success
All Positions Client Relations Representatives
 Employee Satisfaction
 Retention/Turnover
 Diversity
 12

Key’s Relationship Approach

Foundation Distinctive
Elements Elements

Geography
Client
Knowledge
Segmentation

Channels + Service
& Advice

Products
Multiple
Solutions
Human Capital
 13

Key’s Relationship Approach

Client Knowledge Distinctive Elements
• Investments in Enterprise
• Turn Data to Actionable Information 22%
• CRM System Increase
Retail Profit Production
60,000 During 3rd
Quarter

50,000

40,000

30,000
3Q’02 3Q’03
• Measures of Success
 Sales Productivity
 Conversion Metrics
 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 2nd Qtr 2003 3rd Qtr 2003

Attrition Acquisition

• Measures of Success
 Client Acquisition/Attrition
 Client Satisfaction
 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 Year End Q3 2003
2001 2002
Accounts/Customer Accounts/Household

• Measures of Success
 Defined Sales Activities
 Cross Sell Ratio
 Share of Wallet
 16

Key’s Relationship Approach

Foundation Distinctive
Elements Elements Future State

Geography
Client
Knowledge Unique Client
Segmentation Experience

Channels + Service
& Advice
=
Consistent
Products Shareholder
Return
Multiple
Solutions
Human Capital
 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 Loan 12%

Growth Growth Net
5X 2.9X Income
Bank Avg. Bank Avg. Growth
 Question & Answer
Session

Michael Orsino Jack L. Kopnisky

National Sales Manager President
Retail Banking, KeyCorp Key Consumer Bank