Recommendations forRecommendations for

Recommendations By:

~ 2Team ~

Seth AxthelmJill CremeansRyan Ellis

Eric HedrickKelly Jones

BIG RED KEY CONSULTING BIG RED KEY CONSULTING

!Stock is Low !Stock is Low

•No consistent revenue growth•Low efficiency•Fee income not fully realized

Two Options Two Options

•Decide to sell Key•Decide to remain independent

Selling Key Selling Key•Responsible

–Less job loss–Value for stockholders will increase

: Selling Key : Selling Key What Must Be Done What Must Be Done

•Key must stand out from other undervalued banks–Sell off branches and divisions

Maintaining Independence Maintaining Independence

•Entails a massive overhaul of three areas–Structure–Expansion–Technology

StructureStructure

•Revenue Growth– More money coming in, less spent

•Spin off less profitable branches•Evaluate McDonald

•Fee Income– You have a large customer base of potential Capital Markets

customers•Bring in private placement loan personnel

– Must have a greater overall focus on fee income

( .)Structure Cont( .)Structure Cont

•Spotlight Positives–Wide range of services–Excellent credit quality

ExpansionExpansion• Key has close to 1,000 branches throughout 14 states

• Pacific Northwest, Midwest• NY and Ohio contain about half the branches• Alaska, Florida, New Hampshire = 3% of branches

• South and Southwest are the largest expanding regions with an 80% population growth in the last 15 years

?Why Not Expand Then ?Why Not Expand Then• Alaska and New Hampshire are growing at a slow rate (only 20%) over the last 15 years

• Key could spin off these branches and begin to expand down south

• Kentucky, Tennessee, Georgia and Carolinas have a combined population growth rate of about 50% over last 15 years

•Bricks ‘n’ mortar branches need to be strategically placed in growing cities such as Atlanta, Charlotte and Columbia

What Expanding Will Do What Expanding Will Do

•Deposit base will grow

•Profit will flourish

•Thus, stock prices will escalate for Key

Supermarket Banking Supermarket Banking•Combines consumers’ two main pocketbook destinations in one location

•They both are intimately associated with home, family and future

•It is a new, innovative approach that banks need to take to compete

•Increase customer base and give more Key more exposure to the public

TechnologyTechnology

Expand Services Already OnlineVs.

Pure Play

Expand Services Online Expand Services Online

• You already offer many services online, but there are still many services not offered

Recommendations:• Add online trading, insurance, loans, and taxes all fully accessible

online to apply for and use

Other Services for the Future Other Services for the Future• Interactive meetings with financial advisors via online

chats, emails, or video conferencing

• Pager or email service that notifies customers of deposits and when they are in danger of bouncing checks

• Increase speed of transactions being posted to online register

Pure Play Pure PlayBenefits:• Offer more attractive rates on savings, checking, loans and other

interest bearing accounts

• Target a younger customer base

• Opportunity to help expand globally

Pure Play Pure PlayNegatives:• Expensive

• Better off merging or acquiring a internet-only bank that is already stable

Not the best step for Key at the present time

Innovative Technology Innovative Technology•Merge or partnership with Internet Service

Provider–Offer free internet access–Possibly offer free personal computer with every new

account

-E Wallet-E Wallet

• Separate account which a user can deposit digital cash and use for online shopping

–Possibly explore companies like Passport.com or Flooz.com

Smart Card Smart Card

•Download cash onto a credit card with a special computer chip

•Offers a replacement for cash•Used with a personal computer, smart card

becomes a personal ATM

- Palm Held Computers- Palm Held Computers

• Offers real-time banking on a wireless network• Check balances, be notified of deposits, pay bills,

invest online, and all other services banks can offer on the internet

“ - Banks need to be open minded about their partners and creative in their desire to offer

. services Not all proposals will look good in the cold light of the boardroom but they may still

’ contain the idea that will conquer the world s .banking market ”

- , William Forster IBM