8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 30, 2015

(Exact name of registrant as specified in charter)

Ohio	001-11302	34-6542451
(State or other jurisdiction of incorporation)	Commission File Number	(I.R.S. Employer Identification No.)
127 Public Square, Cleveland, Ohio		44114-1306
(Address of principal executive offices)		(Zip Code)

(216) 689-3000

Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 Other Events.

On October 30, 2015, KeyCorp and First Niagara Financial Group, Inc. (“First Niagara”) issued a joint press release announcing the signing of a definitive merger agreement pursuant to which, on the terms and subject to the conditions set forth therein, First Niagara will merge with and into KeyCorp, with KeyCorp as the surviving corporation in the merger. A copy of the joint press release announcing the transaction is attached hereto as Exhibit 99.1.

In addition, KeyCorp intends to provide supplemental information regarding the proposed transaction in connection with presentations to analysts and investors. A copy of the slides that will be made available in connection with the presentations is attached hereto as Exhibit 99.2.

*    *    *

Forward-Looking Statements

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.

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.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1	Joint Press Release, dated October 30, 2015.
99.2	Investor Presentation, dated October 30, 2015.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	KEYCORP
	(Registrant)
Date: October 30, 2015	/s/ Donald R. Kimble
	By:	Donald R. Kimble
		Chief Financial Officer

EX-99.1

Exhibit 99.1

KeyCorp to Acquire First Niagara Financial Group

Powerful Combination Creates High-Performing Regional Bank With Compelling Shareholder Returns

Significant Synergies Provide for Stronger Financial Performance and Improved Efficiency

Becomes 13^th Largest U.S. Commercial Bank with Enhanced Presence in Northeast and Mid-Atlantic

Expects Acquisition to be Accretive to EPS in 2017

October 30, 2015 – Cleveland, Ohio — KeyCorp (NYSE: KEY) and First Niagara Financial Group (NASDAQ: FNFG) announced today that they have entered into a definitive agreement under which KeyCorp will acquire First Niagara in a cash and stock transaction for total consideration valued at approximately $4.1 billion.

First Niagara headquartered in Buffalo, N.Y., has $39 billion in assets and $29 billion in deposits and 394 banking offices in New York, Pennsylvania, Connecticut and Massachusetts. With approximately $135 billion of assets, the combined bank will be the 13^th largest commercial bank headquartered in the U.S.

The combination will create a leading regional bank with enhanced scale to serve three million clients across diverse markets in the Northeast, Mid-Atlantic, Midwest and Pacific Northwest. The acquisition will make KeyCorp a leading bank in Upstate New York, with a strong market presence in Buffalo, Albany, Syracuse and Rochester. KeyCorp will also expand its operations to attractive markets throughout Pennsylvania, Massachusetts and Connecticut.

Under the terms of the agreement, which was unanimously approved by the Boards of Directors of each company, the merger consideration will be approximately $4.1 billion. First Niagara shareholders will receive 0.68 KeyCorp shares and $2.30 in cash for each First Niagara common share. The per share consideration is valued at $11.40 per share based on the closing price of KeyCorp common stock on October 29, 2015. In conjunction with the closing of the transaction, three members of the First Niagara Board of Directors are expected to join the KeyCorp Board, which will be expanded accordingly.

“Key and First Niagara are a powerful combination, driven by a shared commitment to the clients and to the communities we serve,” said KeyCorp Chairman and CEO Beth Mooney. “This transformational opportunity will bring compelling and complementary capabilities to our shared 3 million clients, while driving meaningful synergies and enhancing shareholder value. KeyBank and First Niagara both have values-based cultures and a long-term commitment to and experience with the region”

“I am confident that the combination of First Niagara and Key will benefit our shareholders, customers and the communities we serve and will build off the great progress that the First Niagara team has made,” said Nathaniel D. Woodson, Chairman of the Board of Directors of First Niagara. “We believe that this partnership provides significant value for our shareholders and allows them to participate in the upside potential of the combined Key and First Niagara.”

1

“I am incredibly proud of all that my team has accomplished to put our customers at the center of all we do,” said Gary M. Crosby, President and CEO of First Niagara. “Combining our strengths with those of Key will enable us to even better serve customers with a broader set of product features and functionality, while providing our team members with expanded opportunities as part of a larger, more-diversified organization. Key shares our values and our culture of diversity, inclusion and community service – I look forward to working with their team to ensure a seamless integration of our businesses for the benefit of all of our stakeholders.”

“We have known First Niagara for a long time and have always been impressed by the quality of their people and their commitment to the community. We look forward to welcoming First Niagara clients and employees to Key,” said Mooney.

Importantly, the compelling financial rationale for the transaction provides significant upside potential for shareholders of both companies. The acquisition diversifies KeyCorp’s loan portfolio, strengthens its core retail deposit franchise and provides expanded scale. Upon completion of the transaction, the combined company will have approximately $99.8 billion in deposits, $83.6 billion in loans and 1,366 branches across 15 states. The combined company will have approximately $135 billion of pro forma assets providing increased operating leverage to deliver improved financial performance.

Shareholders of both companies will benefit from annual cost savings in excess of $400 million from maximizing efficiencies of technology infrastructure, procurement savings across the combined organization, and optimizing overlapping branches. The combined bank will be better positioned to generate attractive financial returns for shareholders through improved efficiency, strong returns on capital and earnings accretion. Finally KeyCorp will maintain its strong capital position, enabling the company to continue to return capital to shareholders.

KeyCorp expects the acquisition to be accretive to earnings per share in 2017, excluding one-time charges, and expects the transaction to deliver an attractive Internal Rate of Return of approximately 15%.

KeyCorp and First Niagara have built a legacy of philanthropy and civic involvement and will continue this commitment to the markets the combined company will serve. Together, the combined companies have nearly $5 billion in lending and investments supporting underserved individuals and communities. Additionally, Key will make a $20 million contribution to the First Niagara Foundation to continue its important community initiatives.

Upon closing the transaction, KeyCorp expects to successfully integrate First Niagara into its business. KeyCorp and First Niagara have the shared expertise, the culture and the capital to ensure a successful transition. Christopher M. Gorman, President of Key Corporate Bank, will lead the merger integration team which will be comprised of both KeyCorp and First Niagara team members. “Chris is a dynamic, client-centric leader who is credited with successfully leading, integrating, transforming, and growing businesses throughout his 30-year career in financial services,” said Mooney.

The acquisition is subject to customary closing conditions, including regulatory approvals and approval by KeyCorp and First Niagara shareholders. The transaction is expected to close in the third quarter of 2016.

2

Advisors

Morgan Stanley & Co. LLC served as lead financial advisor and KeyBanc Capital Markets as financial advisor to KeyCorp. Simpson Thacher & Bartlett LLP served as legal counsel to KeyCorp.

J.P. Morgan Securities LLC served as financial advisor to First Niagara, and Sullivan & Cromwell served as legal counsel to First Niagara.

Conference Call

A conference call will be held at 8:00 a.m. ET on Friday, October 30, 2015. The live audio webcast of the conference call and presentation materials will be available at www.key.com/ir. If you are unable to join the live conference call, or wish to hear a re-broadcast, access www.key.com/ir and select Presentations & Webcasts.

About Key

KeyCorp was organized more than 160 years ago and is headquartered in Cleveland, Ohio. One of the nation’s largest bank-based financial services companies, Key had assets of approximately $95.4 billion at September 30, 2015. Key provides deposit, lending, cash management and investment services to individuals and small and mid-sized businesses in 12 states under the name KeyBank National Association. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 390 branches, $39 billion in assets, $29 billion in deposits, and approximately 5,400 employees providing financial services to individuals, families and businesses across New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com.

KeyCorp Contacts:
ANALYSTS	MEDIA
Vernon L. Patterson	Jack Sparks
216.689.0520	720.904.4554
Vernon_Patterson@KeyBank.com	Jack_Sparks@KeyBank.com
First Niagara Contacts:
ANALYSTS	MEDIA
Ram Shankar	David Lanzillo
716.270.8623	716.819.5780
Ram.Shankar@fnfg.com	David.Lanzillo@fnfg.com

***

3

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 are 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 are 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.

FORWARD-LOOKING STATEMENTS

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;

4

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.

###

5

EX-99.2

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

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

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