KeyCorp (KEY) 8-K KeyCorp to Acquire First Niagara Financial Group

KeyCorp

Acquisition of First Niagara Financial Group

October 30, 2015

Better Together

Exhibit 99.2

FORWARD-LOOKING STATEMENTS AND ADDITIONAL

INFORMATION DISCLOSURE

This

communication

contains

forward-looking

statements

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act

of

1995

including,

but

not

limited

to,

KeyCorp’s

and

First

Niagara’s

expectations

or

predictions

of

future

financial

or

business

performance

or

conditions.

Forward-looking

statements

are

typically

identified

by

words

such

as

“believe,”

“expect,”

“anticipate,”

“intend,”

“target,”

“estimate,”

“continue,”

“positions,”

“plan,”

“predict,”

“project,”

“forecast,”

“guidance,”

“goal,”

“objective,”

“prospects,”

“possible”

or

“potential,”

by

future

conditional

verbs

such

as

“assume,”

“will,”

“would,”

“should,”

“could”

or

“may”,

or

by

variations

of

such

words

or

by

similar

expressions.

These

forward-looking

statements

are

subject

to

numerous

assumptions,

risks

and

uncertainties,

which

change

over

time.

Forward-looking

statements

speak

only

as

of

the

date

they

are

made

and

we

assume

no

duty

to

update

forward-looking

statements.

Actual

results

may

differ

materially

from

current

projections.

In

addition

to

factors

previously

disclosed

in

KeyCorp’s

and

First

Niagara’s

reports

filed

with

the

SEC

and

those

identified

elsewhere

in

this

communication,

the

following

factors,

among

others,

could

cause

actual

results

to

differ

materially

from

forward-looking

statements

or

historical

performance:

ability

to

obtain

regulatory

approvals

and

meet

other

closing

conditions

to

the

merger,

including

approval

by

KeyCorp

and

First

Niagara

shareholders

on

the

expected

terms

and

schedule,

including

the

risk

that

regulatory

approvals

required

for

the

merger

are

not

obtained

or

are

obtained

subject

to

conditions

that

are

not

anticipated;

delay

in

closing

the

merger;

difficulties

and

delays

in

integrating

the

First

Niagara

business

or

fully

realizing

cost

savings

and

other

benefits;

business

disruption

following

the

merger;

changes

in

asset

quality

and

credit

risk;

the

inability

to

sustain

revenue

and

earnings

growth;

changes

in

interest

rates

and

capital

markets;

inflation;

customer

acceptance

of

KeyCorp’s

products

and

services;

customer

borrowing,

repayment,

investment

and

deposit

practices;

customer

disintermediation;

the

introduction,

withdrawal,

success

and

timing

of

business

initiatives;

competitive

conditions;

the

inability

to

realize

cost

savings

or

revenues

or

to

implement

integration

plans

and

other

consequences

associated

with

mergers,

acquisitions

and

divestitures;

economic

conditions;

and

the

impact,

extent

and

timing

of

technological

changes,

capital

management

activities,

and

other

actions

of

the

Federal

Reserve

Board

and

legislative

and

regulatory

actions

and

reforms.

Annualized,

pro

forma,

projected

and

estimated

numbers

are

used

for

illustrative

purpose

only,

are

not

forecasts

and

may

not

reflect

actual

results.

This

presentation

also

includes

certain

non-GAAP

financial

measures

related

to

“tangible

common

equity,”

“Common

Equity

Tier

1,”

“Tier

1

common

equity,”

“pre-provision

net

revenue,”

and

“cash

efficiency

ratio.”

Management

believes

these

ratios

may

assist

investors,

analysts

and

regulators

in

analyzing

Key’s

financials.

Although

Key

has

procedures

in

place

to

ensure

that

these

measures

are

calculated

using

the

appropriate

GAAP

or

regulatory

components,

they

have

limitations

as

analytical

tools

and

should

not

be

considered

in

isolation,

or

as

a

substitute

for

analysis

of

results

under

GAAP.

For

more

information

on

these

calculations

and

to

view

the

reconciliations

to

the

most

comparable

GAAP

measures,

please

refer

to

our

most

recent

earnings

press

release.

2

Better

Together

3

Shelby_Sales-Presentation_150928_v5.pptx\28 SEP 2015\6:59 PM\11

A Compelling Strategic Opportunity

(a)

Upon full realization of cost savings (FY2018); no revenue synergies assumed

(b)

MSA denotes Metropolitan Statistical Area

Better

Together

Strengthens

Franchise

Strengthens

Franchise

Leverages

Complementary

Business Models

Leverages

Complementary

Business Models

Generates

Attractive

Financial

Returns

Generates

Attractive

Financial

Returns

Strengthens core operating and financial metrics

(a)

Creates leading bank in Upstate New York with a strong presence across the Northeast, Midwest and Pacific Northwest

Builds on Key’s brand and presence in shared markets with complementary new markets

–

Leading position in MSAs

(b)

of Buffalo, Albany, Syracuse and Rochester

–

Establishes Key’s presence in attractive MSAs

(Pittsburgh, Philadelphia, Hartford, New Haven)

EPS accretion of 5%

(a)

IRR approximates 15% and ROIC exceeds 10%

Expected cost savings of $400 million create $2.8 billion of shareholder value

Drives revenue synergies by deploying stronger combined product set into existing client relationships

Efficient use of capital –

capital ratios remain strong

Significant revenue opportunity by delivering broader suite of products to new and existing clients

–

KEY:  commercial payments; capital markets; commercial mortgage; private banking and investments

–

FNFG:  residential mortgage; indirect auto lending; retail and commercial insurance brokerage

Complementary business mix creates a more balanced franchise across consumer and commercial businesses

Powerful combination creates high-performing regional bank with compelling shareholder returns

13   Largest U.S. Commercial Bank

$135 billion assets

$100 billion deposits

–

Increases ROTCE by ~200 bps

–

Cash efficiency ratio improves by ~300 bps

–

Adds one million clients and $25 billion of core deposits

th

(b)

•

Operates similar businesses in attractive,

core and contiguous markets to Key

–

Banking segment is 95% of FNFG

revenue

–

~65% of First Niagara’s core deposits

are in its New York markets --

all known

and core to Key

–

One million clients and more than $14B

in commercial loan balances

–

Strong risk culture

•

Compatible culture with Key

–

Focused on clients and communities

Company Overview (3Q15)

Company Overview (3Q15)

Branch Footprint

Branch Footprint

Loan Portfolio (3Q15)

Loan Portfolio (3Q15)

394 Branches | $29B Deposits

43 | $2.1B

58 | $2.8B

52 | $10.3B

20 | $1.4B

31 | $2.2B

35 | $1.9B

27 | $1.8B

Better

Together

Company

Company

Financial

Financial

Business

Profile

Business

Profile

•

Headquarters: Buffalo, NY

•

Employees: 5,397

•

Branches: 394

•

Revenue (LTM)

(a)

: $1.4B

•

Assets: $39B

•

Loans: $23B

•

Deposits: $29B

4

Overview of First Niagara

(a) LTM denotes last twelve months

$23.4B

$ in billions

Commercial &

Industrial

($6.0)

Residential

Real Estate

($6.3)

Other

Consumer

($2.8)

Commercial

Real Estate

($8.3)

5

Attractive Transaction Economics

Better

Together

•

$4.1 billion in aggregate consideration

–

First Niagara shareholders receive 0.68 Key shares and $2.30 in cash for each FNFG common share

–

Implied value of $11.40

per FNFG common share, based on Key’s closing share price as of October 29

•

Transaction metrics in-line with precedent transactions

–

P / TBV: 1.7x

Core deposit premium: 6.7%

P / 2016E EPS: 18.7x

P / 2016E EPS (with synergies):  8.5x

Key Transaction

Terms

Key Transaction

Terms

Financial

Impact

Financial

Impact

•

Generates compelling financial metrics

–

Increases ROTCE by ~200 bps

–

Cash efficiency ratio improves by ~300 bps, driven by $400 million in annual cost savings

–

EPS accretion of 5%

–

IRR approximates 15% and ROIC exceeds 10%

–

Tangible book value dilution of ~12%

•

Drives revenue synergies by deploying stronger combined product set to existing clients

•

Efficient use of capital –

capital ratios remain strong

•

Increases scale of Key by ~40% in loans; deposits; total assets

(a) Upon full realization of cost savings (FY2018); no revenue synergies assumed

Financial

Assumptions

Financial

Assumptions

•

Cost savings of $400 million pre-tax, or ~40% of FNFG’s current noninterest expense

•

Meaningful revenue synergies identified, but not included in financial analysis

•

Merger and integration costs of approximately $550 million pre-tax

•

Purchase accounting adjustments include ~3% loan mark and ~1.5% core deposit intangible

•

Key’s existing share repurchase program suspended until closing of transaction; no change to

Key’s dividend plans, including anticipated increase to $0.085 per share in 2Q16

–

Key anticipates requesting resumption of share repurchase activity in our 2016 CCAR submission

•

Expected closing in 3Q16, subject to shareholder approval from Key and First Niagara and

customary regulatory approvals

(a)

Combined Company Uniquely Positioned to Unlock Value

6

High Growth Markets

High Growth Markets

Three Million Clients

Three Million Clients

High Density Markets

High Density Markets

Commercial payments

Retail banking (branch; card; auto; etc.)

Private banking

Residential mortgage

Indirect auto lending

Insurance brokerage

Small business banking

Business banking

Commercial banking

Asset-based lending

Equipment finance

Commercial mortgage banking & servicing

Investment banking (mid market/industry focus)

Leading market presence across the I-90 corridor from

Toledo, OH to Albany, NY

Top 5 branch share in Seattle, Denver, Portland, Salt Lake

City and Boise –

all growing faster than national average

Broad, Complementary Product Capabilities

Broad, Complementary Product Capabilities

Complementary products provide extensive client cross-sell and

revenue growth opportunities

Compelling Franchise and Capabilities

Attractive Geographic Footprint

Attractive Geographic Footprint

Complementary Product Offering

Complementary Product Offering

Better

Together

Strengthens Position in Attractive Northeast Markets

7

Source: SNL Financial; data as of June 2015

(a)

Excludes any potential deposit divestiture; all figures cap all branches at $250MM to adjust for commercial and headquarters deposits; MSA rankings reflect

total deposit rankings

(b)

Northeast region defined as Connecticut, Maine, Massachusetts, New York, Pennsylvania and Vermont

Better

Together

Pro Forma Branch Footprint

Pro Forma Branch Footprint

Leading Retail Presence in Upstate NY

(a)

Leading Retail Presence in Upstate NY

(a)

3.3

4.7

8.0

KEY

FNFG

Pro Forma

1.7

2.2

3.9

KEY

FNFG

Pro Forma

1.1

1.4

2.5

KEY

FNFG

Pro Forma

$ in billions

Buffalo, NY

Buffalo, NY

Albany, NY

Albany, NY

Rochester, NY

Rochester, NY

Syracuse, NY

Syracuse, NY

KEY

FNFG

#3

#2

#1

#4

#2

#1

#6

#5

#1

#4

#6

#1

Leading Position from

Toledo to Albany

Leading Market Share

Banks Outperform

Shared Market Presence Accelerates

Value Realization

•

Combination creates the 13

largest U.S. commercial bank

•

Approximately $50 billion in deposits and nearly 700

branches in the Northeast, representing approximately half

of the combined national franchise

(b)

1.1

0.8

1.9

KEY

FNFG

Pro Forma

th

8

Enhanced Product Capabilities Drive Value

Traditional Bank Products

Traditional Bank Products

Capital Markets Capabilities

Capital Markets Capabilities

Deposits & payments

Loans

Wealth management &

private banking

Equipment

finance

Commercial mortgage

banking

Derivatives & foreign

exchange

Equity capital markets

Equity research

M&A /

financial sponsors /

leveraged finance

Investment grade &

high-yield debt

Loan syndications

Public finance

Consumer          Energy          Healthcare         Industrial         Public Sector         Real Estate        Technology

Consumer          Energy          Healthcare         Industrial         Public Sector         Real Estate        Technology

…as well as deep industry expertise…

Key has broad product capabilities…

4% Y-o-Y average loan

growth

$39 B in AUM

$70 B deposits at 15 bps

#3 bank-owned equipment

finance co. by new business

volume

(a)

#3 commercial mortgage  

servicer (master/primary)

(b)

>125 M&A deals completed

since 2011

106 transactions, raising

$96 B YTD15

Rates, commodity &

currency solutions

144 transactions, raising $

49 B YTD15

55 transactions, raising

$22 B YTD15

759 companies under

coverage

>140 transactions, raising

$27 B YTD15

1

2

…that can be deployed against our common targeted client and prospect base (middle market businesses and their

owners)…

3

…Driving Meaningful Opportunities to Acquire and Expand Client Relationships

Note: Data as of 3Q15 unless otherwise noted

(a)

Source: Monitor Bank 100; ranking based on new business volume as of FY14

(b)

Source: Mortgage Bankers Association year-end 2014 rankings

Better

Together

$10

$50

$1,500

$2,000

Commercial client revenue size ($MM)

$25

$100

$250

$500

KEY Focus

FNFG

Focus

9

Significant Value Created from Cost Savings

Unlocked value from cost synergies provides strong upside for shareholders

•

High degree of market overlap accelerates benefit realization

–

> 30% of FNFG branches within two miles of a Key branch

•

FNFG’s technology infrastructure largely outsourced

Key has opportunity to

efficiently

scale our existing platform

Summary

Summary

Note:  Analysis assumes effective tax rate of 35%

Better

Together

KEY / First

Niagara

-Tax

$260

12x

3,120

-tax Restructuring Charges

(358)

$2,762

67%

Total Deal Value

Synergies

~67%

$2.8B

$4.1B

Substantial Revenue Growth Potential

Comparative Revenue Productivity (Key’s Business Bank, Middle Market & Commercial Real Estate vs. FNFG)

Comparative Revenue Productivity (Key’s Business Bank, Middle Market & Commercial Real Estate vs. FNFG)

Commercial Deposits /

Loan Commitments

Commercial Deposits /

Loan Commitments

Payments Fee Income /

Loan Commitments

Payments Fee Income /

Loan Commitments

Investment Management Fees

/  Consumer Household

Investment Management Fees

/  Consumer Household

Insurance Revenue / Client

Insurance Revenue / Client

~3x

~2x

~3x

~50x

Better

Together

Opportunity to drive revenue growth by delivering broader suite of products to new and

existing clients

•

All transaction return metrics presented herein exclude the benefit of revenue synergies

10

Complementary products provide significant potential to expand revenue across our collective client base

Better

Together

FY18 Financial Performance Metrics

FY18 Financial Performance Metrics

Key

Pro

Forma

Key

Pro

Forma

Key

Pro

Forma

> 300 bps

> 200 bps

~5%

11

Attractive Financial Impact

The First Niagara acquisition generates compelling financial returns for Key

•

IRR approximates 15% and ROIC exceeds 10%

•

Meaningful improvement in efficiency and profitability metrics

Note:  Above figures depict consensus International Brokers’ Estimate System estimates (I/B/E/S) FY18 estimates for Key and First Niagara, adjusted for the

transaction and $400MM in annual cost savings.  No revenue synergies assumed

12

Strong Pro Forma Capital Position

The acquisition is an efficient use of capital –

Key’s capital ratios remain strong

•

Key is well-positioned for 2016 CCAR submission and additional capital actions

CET1 Ratio (%)

(a)(b)(c)

CET1 Ratio (%)

(a)(b)(c)

Tier 1 Ratio (%)

(a)(b)

Tier 1 Ratio (%)

(a)(b)

Leverage Ratio (%)

(a)(b)

Leverage Ratio (%)

(a)(b)

10.5

~9.5

KEY

Current

Pro Forma

Est. at Close

10.9

~10.0

KEY

Current

Pro Forma

Est. at Close

10.7

~9.5

KEY

Current

Pro Forma

Est. at Close

Better

Together

(a)

Non-GAAP measure

(b)

9-30-15 ratio is estimated

(c)

The final Basel III capital framework rules, effective January 1, 2015 for Key, introduced a new capital measure, “Common Equity Tier 1”(CET1)

Disciplined Diligence and Integration Approach

Thorough Due

Diligence Process

Thorough Due

Diligence Process

•

-Comprehensive, executive-led due diligence process involving more than 300 employees of

both Key and First Niagara

•

-Organized teams across focus diligence areas led by senior leaders with support from

functional experts and external advisors

•

--Extensive credit diligence, including thorough loan file review

–

Reviewed loans to more than 1,100 borrowers representing ~50% of First Niagara’s total

commitments

–

Balanced review of commercial and consumer loan portfolios, including top credit relationships

and all substandard loans > $250k

•

Holistic risk assessment across all major risk categories, including compliance and legal;

operational; model; market; credit; rate; and strategic risks

Disciplined Integration

Approach

Disciplined Integration

Approach

•

Key has the management resources and infrastructure to acquire and integrate First Niagara

seamlessly into our Company

•

Familiarity with First Niagara’s businesses and markets will accelerate Key’s ability to

integrate successfully

•

Key’s technology and operations infrastructure is scalable and can efficiently leverage the

incremental volume and activity generated by the transaction

•

Core integration leadership team has significant prior M&A integration experience

–

Integration team will be led by Chris Gorman, President of Key Corporate Bank, and staffed with

representatives from both Key and First Niagara

Better

Together

13

14

Our Mission: Helping Clients and Communities Thrive

Strong commitment to our communities

Key and FNFG have award winning cultures of philanthropy,

community development and civic service

–

$30 million dollars given annually to nonprofit organizations

–

Nearly $5 billion combined in lending and investments supporting

underserved individuals and communities

–

Over 500,000 employee volunteer hours in the past three years

One of America’s Most Community-minded Companies

(The Civic 50)

Diversity Inc. “Top 50” company

7x winner: “One of the Best Places to Work”

(Corporate Equality Index, Human Rights Campaign)

FNFG selected as “Best Bank in the Northeast” by Money

magazine

Corporate Responsibility is Important to the Communities That We So Proudly Serve

Corporate Responsibility is Important to the Communities That We So Proudly Serve

Better

Together

15

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A Compelling Strategic Opportunity

Better

Together

Strengthens Franchise

Strengthens Franchise

Leverages Complementary

Business Models

Leverages Complementary

Business Models

Generates Attractive Financial

Returns

Generates Attractive Financial

Returns

Powerful combination creates high-performing regional bank with compelling shareholder returns

Better Together

Appendix

Better

Together

CRE 22%

Cost of Deposits = 0.18%

Cost of Deposits = 0.18%

Cost of Deposits = 0.24%

Cost of Deposits = 0.24%

Cost of Deposits = 0.15%

Cost of Deposits = 0.15%

Pro Forma Loan and Deposit Summary

17

Source: KEY & FNFG 3Q earnings releases

Summary (3Q15)

Summary (3Q15)

Key

First Niagara

Pro Forma

Total Average Loans = $23.4 B

Total Average Loans = $82.7 B

C&I 51%

Residential

Real Estate

22%

Other Consumer

5%

CRE 36%

C&I 25%

Residential

Real Estate

27%

Other Consumer

12%

C&I 44%

CRE 26%

Residential

Real Estate

23%

Other Consumer

7%

Commercial = 73%

Consumer = 27%

Commercial = 61%

Consumer = 39%

Commercial = 70%

Consumer = 30%

Yield on Loans = 3.7%

Yield on Loans = 3.6%

Yield on Loans = 3.7%

Better

Together

Total Average Deposits = $70.5 B

Total Average Deposits = $28.6 B

Total Average Deposits = $99.1 B

Noninterest-

Bearing

37%

Checking/

Savings/ MMDA

55%

CDs

8%

Noninterest-

Bearing

20%

CDs

14%

CDs

10%

Checking/

Savings/ MMDA

66%

Checking/

Savings/ MMDA

58%

Noninterest-

Bearing

32%

Total Average Loans = $59.3 B

Non-Time = 92%

Time = 8%

Non-Time = 86%

Time = 14%

Non-Time = 90%

Time = 10%

IMPORTANT ADDITIONAL INFORMATION AND WHERE

TO FIND IT

In

connection

with

the

proposed

merger,

KeyCorp

will

file

with

the

SEC

a

Registration

Statement

on

Form

S-4

that

will

include

the

Joint

Proxy

Statement

of

KeyCorp

and

First

Niagara

and

a

Prospectus

of

KeyCorp,

as

well

as

other

relevant

documents

concerning

the

proposed

transaction.

This

communication

does

not

constitute

an

offer

to

sell

or

the

solicitation

of

an

offer

to

buy

any

securities

or

a

solicitation

of

any

vote

or

approval.

INVESTORS

AND

SHAREHOLDERS

ARE

URGED

TO

READ

THE

REGISTRATION

STATEMENT

AND

THE

JOINT

PROXY

STATEMENT/PROSPECTUS

REGARDING

THE

MERGER

WHEN

IT

BECOMES

AVAILABLE

AND

ANY

OTHER

RELEVANT

DOCUMENTS

FILED

WITH

THE

SEC,

AS

WELL

AS

ANY

AMENDMENTS

OR

SUPPLEMENTS

TO

THOSE

DOCUMENTS,

BECAUSE

THEY

WILL

CONTAIN

IMPORTANT

INFORMATION.

A

free

copy

of

the

Joint

Proxy

Statement/Prospectus,

as

well

as

other

filings

containing

information

about

KeyCorp

and

First

Niagara,

may

be

obtained

at

the

SEC’s

Internet

site

(http://www.sec.gov).

You

will

also

be

able

to

obtain

these

documents,

free

of

charge,

from

KeyCorp

at

investor.key.com

or

from

First

Niagara

by

accessing

First

Niagara’s

website

at

www.firstniagara.com.

Copies

of

the

Joint

Proxy

Statement/Prospectus

can

also

be

obtained,

free

of

charge,

by

directing

a

request

to

KeyCorp

Investor

Relations

at

Investor

Relations,

KeyCorp,

127

Public

Square,

Mailcode

OH-01-27-0737,

Cleveland,

Ohio

44114-1306,

by

calling

(216)

689-3000,

or

by

sending

an

e-mail

to

investor_relations@keybank.com

or

to

First

Niagara

Investor

Relations

at

726

Exchange

Street,

Suite

618,

Buffalo,

New

York

14210,

by

calling

(716)

819-5669

or

by

sending

an

e-mail

to

investor@fnfg.com.

In

addition,

KeyCorp

and

First

Niagara

use

their

respective

Investor

Relations

websites

and

social

media

outlets

as

channels

of

distribution

of

material

company

information.

Such

information

is

accessible

on

KeyCorp’s

and

First

Niagara’s

Investor

Relations

websites,

as

well

as

on

their

respective

Facebook

pages

and

through

their

Twitter

accounts

and

LinkedIn

accounts.

KeyCorp

and

First

Niagara

and

certain

of

their

respective

directors

and

executive

officers

may

be

deemed

to

be

participants

in

the

solicitation

of

proxies

from

the

respective

shareholders

of

KeyCorp

and

First

Niagara

in

respect

of

the

transaction

described

in

the

Joint

Proxy

Statement/Prospectus.

Information

regarding

KeyCorp’s

directors

and

executive

officers

is

contained

in

KeyCorp’s

Proxy

Statement

on

Schedule

14A,

dated

April

7,

2015,

which

is

filed

with

the

SEC.

Information

regarding

First

Niagara’s

directors

and

executive

officers

is

contained

in

First

Niagara’s

Proxy

Statement

on

Schedule

14A,

dated

March

23,

2015,

which

is

filed

with

the

SEC.

Additional

information

regarding

the

interests

of

those

participants

and

other

persons

who

may

be

deemed

participants

in

the

transaction

may

be

obtained

by

reading

the

Joint

Proxy

Statement/Prospectus

regarding

the

proposed

merger

when

it

becomes

available.

Free

copies

of

this

document

may

be

obtained

as

described

in

the

preceding

paragraph.

18

Better

Together