KeyCorp Reports Second Quarter Net Income Of $221 Million

07/19/2012

CLEVELAND, July 19, 2012 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced second quarter net income from continuing operations attributable to Key common shareholders of $221 million, or $.23 per common share, compared to $199 million, or $.21 per common share for the first quarter of 2012, and $243 million, or $.26 per common share for the second quarter of 2011. For the six months ended June 30, 2012, net income from continuing operations attributable to Key common shareholders was $420 million, or $.44 per common share, compared to $427 million, or $.46 per common share for the same period one year ago.

SIGNIFICANT EVENTS

Company-wide initiatives to improve efficiency

Expense reduction of $150-$200 million targeted by December 2013 – full benefit in 2014
Changing cost structure to be more variable and aligned with operating environment
Focused on organizational design, strategic sourcing, and branch rationalization

Completed acquisition of 37 branches in Upstate New York on July 13, 2012

Seamless conversion adding $2.1 billion in deposits and $260 million in loans
Credit card receivables of approximately $70 million to be added in September
Strengthens market share and positions Key to acquire and deepen client relationships
Liquidity used for debt maturities and to fund organic growth opportunities

Early termination of leveraged leases

Opportunity to realize economic benefits in current low interest rate environment
Gains are nontaxable pursuant to previous settlement with the IRS
Accelerates reduction in exit portfolio

Executing on capital management priorities

Repurchased 10.5 million shares at an average cost of $7.83 per share in the second quarter
Increased common share dividend for the second quarter from $.03 to $.05 per share
Redeemed $707 million of trust preferred securities on July 12, 2012

"Key's second quarter results reflect continued loan growth, improvement in credit quality, and disciplined expense control," said Chairman and Chief Executive Officer Beth Mooney. "We continue to benefit from the successful execution of our relationship strategy, which is driving client acquisition and engagement. We have seen five consecutive quarters of growth in commercial and industrial loans. Credit quality improved again this quarter as we continue to reduce our exit portfolio and add high quality new loan originations."

Mooney added: "To maintain our positive momentum, we are launching new efficiency initiatives and identifying opportunities to leverage our strong capital position to make attractive investments in our business, such as our recent branch acquisition in Upstate New York. These actions represent exciting new opportunities for Key to improve profitability by leveraging our brand, growing client relationships, and aligning our cost structure with the current operating environment."

SECOND QUARTER 2012 FINANCIAL RESULTS

Net income up 11% from first quarter of 2012
Maintained solid balance sheet with Tier 1 common equity of 11.7%
Continued loan growth driven by commercial, financial and agricultural loan portfolio
Further improvement in credit quality with net loan charge-offs to average loans ratio of .63% approaching long-term target and improving 19 basis points from prior quarter

Selected Financial Highlights

dollars in millions, except per share data											Change 2Q12 vs.
			2Q12			1Q12			2Q11		1Q12		2Q11
Income (loss) from continuing operations attributable to Key common shareholders		$	221		$	199		$	243		11.1	%	(9.1)	%
Income (loss) from continuing operations attributable to Key common shareholders per common share			.23			.21			.26		9.5		(11.5)
Return on average total assets from continuing operations			1.12	%		1.02	%		1.23	%	N/A		N/A
Tier 1 common equity			11.68			11.55			11.14		N/A		N/A
Book value at period end		$	10.43		$	10.26		$	9.88		1.7	%	5.6	%
Net interest margin (TE) from continuing operations			3.06	%		3.16	%		3.19	%	N/A		N/A


N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions											Change 2Q12 vs.
			2Q12			1Q12			2Q11		1Q12		2Q11
Net interest income (TE)		$	544		$	559		$	570		(2.7)	%	(4.6)	%
Noninterest income			485			472			454		2.8		6.8
	Total revenue	$	1,029		$	1,031		$	1,024		(.2)	%	.5	%

Taxable-equivalent net interest income was $544 million for the second quarter of 2012, and the net interest margin was 3.06%. These results compare to taxable-equivalent net interest income of $570 million and a net interest margin of 3.19% for the second quarter of 2011. The second quarter of 2012 included a $13 million reduction to net interest income from the write-off of fees as well as capitalized loan origination costs due to the early termination of leveraged leases, resulting in a seven (7) basis point decline in the net interest margin. In addition, the decrease in net interest income and net interest margin resulted from the continuation of the low-rate environment contracting the spread between lending rates and funding costs.

Compared to the first quarter of 2012, taxable-equivalent net interest income decreased by $15 million, and the net interest margin declined by ten (10) basis points. The write-off of fees and capitalized loan origination costs from the early termination of leveraged leases was $7 million higher than in the first quarter of 2012, resulting in four (4) basis points of margin contraction. In addition, lower reinvestment yields on investment securities and loans coupled with an increase in short-term investment in anticipation of debt maturities pressured asset yields. This impact was partially offset by the maturity of higher rate certificates of deposit and an increase in demand and lower-cost liquid deposits, which reduced the overall cost of funds. The maturities of debt in the second quarter and the redemption of trust preferred securities on July 12 will benefit the net interest margin during the third quarter.

Noninterest Income

dollars in millions								Change 2Q12 vs.
			2Q12		1Q12		2Q11	1Q12		2Q11
Trust and investment services income		$	102	$	109	$	113	(6.4)	%	(9.7)	%
Service charges on deposit accounts			70		68		69	2.9		1.4
Operating lease income			20		22		32	(9.1)		(37.5)
Letter of credit and loan fees			56		54		47	3.7		19.1
Corporate-owned life insurance income			30		30		28	—		7.1
Net securities gains (losses)			—		—		2	N/M		N/M
Electronic banking fees			19		17		33	11.8		(42.4)
Gains on leased equipment			36		27		5	33.3		620.0
Insurance income			11		12		14	(8.3)		(21.4)
Net gains (losses) from loan sales			32		22		11	45.5		190.9
Net gains (losses) from principal investing			24		35		17	(31.4)		41.2
Investment banking and capital markets income (loss)			37		43		42	(14.0)		(11.9)
Other income			48		33		41	45.5		17.1
	Total noninterest income	$	485	$	472	$	454	2.8	%	6.8	%


N/M = Not Meaningful

Key's noninterest income was $485 million for the second quarter of 2012, compared to $454 million for the year-ago quarter. Gains on leased equipment increased $31 million compared to the same period one year ago, primarily related to the early terminations of leveraged leases. Net gains (losses) from loan sales also increased $21 million from the year-ago quarter. These increases in noninterest income were partially offset by a $14 million decrease in electronic banking fees as a result of government pricing controls on debit transactions that went into effect October 1, 2011, and a $12 million decline in operating lease income.

Compared to the first quarter of 2012, noninterest income increased by $13 million. Gains on leased equipment increased $9 million, primarily related to the early terminations of leveraged leases in the second quarter of 2012. Net gains (losses) from loan sales also increased $10 million compared to the first quarter of 2012. These increases in noninterest income were partially offset by a decline in net gains (losses) from principal investing (including results attributable to noncontrolling interests) of $11 million.

Noninterest Expense

dollars in millions								Change 2Q12 vs.
			2Q12		1Q12		2Q11	1Q12		2Q11
Personnel expense		$	389	$	385	$	380	1.0	%	2.4	%
Net occupancy			62		64		62	(3.1)		—
Other expense			263		254		238	3.5		10.5
	Total noninterest expense	$	714	$	703	$	680	1.6	%	5.0	%

Key's noninterest expense was $714 million for the second quarter of 2012, compared to $680 million for the same period last year. The provision (credit) for losses on lending-related commitments was an expense of $6 million compared to a credit of $12 million for the same period one year ago. Other real estate owned ("OREO") expense increased $10 million, and personnel expense increased $9 million due to increased hiring of client-facing personnel and annual merit increases. Business services and professional fees also increased $7 million, partially related to the company-wide efficiency initiatives, and marketing expense was $7 million higher as a result of the spring home equity loan campaign and Key's acquisition of 37 branches in Upstate New York, which closed on July 13. These increases in noninterest expenses were partially offset by a $10 million decrease in operating lease expense compared to the same period one year ago.

Compared to the first quarter of 2012, noninterest expense increased by $11 million. Business services and professional fees increased $13 million partially due to the company-wide efficiency initiatives discussed above, and the provision (credit) for losses on lending-related commitments increased $6 million.

BALANCE SHEET HIGHLIGHTS

As of June 30, 2012, Key had total assets of $86.5 billion compared to $87.4 billion at March 31, 2012, and $88.8 billion at June 30, 2011.

Average Loans

dollars in millions								Change 6-30-12 vs.
			6-30-12		3-31-12		6-30-11	3-31-12		6-30-11
Commercial, financial and agricultural		$	20,132	$	19,638	$	16,922	2.5	%	19.0	%
Other commercial loans			14,529		15,123		16,314	(3.9)		(10.9)
Total home equity loans			9,852		9,694		10,052	1.6		(2.0)
Other consumer loans			4,933		4,975		5,166	(.8)	%	(4.5)
	Total loans	$	49,446	$	49,430	$	48,454	—		2.0	%

Average loans were $49.4 billion for the second quarter of 2012, an increase of $992 million compared to the second quarter of 2011. Commercial, financial and agricultural loans grew by $3.2 billion over the year-ago quarter, with nearly half of the growth originating in Key's Institutional Banking line of business. This growth was partially offset by declines in the commercial real estate portfolio, the equipment lease portfolios resulting from the early termination of certain leveraged leases in the exit portfolio, and run-off of consumer loans in the designated exit portfolio.

Compared to the first quarter of 2012, the balance of average loans was essentially unchanged. Commercial, financial and agricultural loans grew $494 million, and home equity loans also increased as a result of Key's spring home equity loan campaign. These increases were offset by declines in the real estate – commercial mortgage, and the equipment lease portfolios resulting from the early termination of certain leveraged leases in the exit portfolio.

Key originated approximately $10.3 billion in new or renewed lending commitments to consumers and businesses during the second quarter of 2012, which is up $2 billion from the first quarter of 2012.

Average Deposits

dollars in millions											Change 6-30-12 vs.
			6-30-12			3-31-12			6-30-11		3-31-12		6-30-11
Nontime deposits		$	51,560			49,560			46,136		4.0	%	11.8	%
Certificates of deposits ($100,000 or more)			3,858			4,036			5,075		(4.4)		(24.0)
Other time deposits			5,645			6,035			7,330		(6.5)		(23.0)
	Total deposits	$	61,063		$	59,631		$	58,541		2.4	%	4.3	%

Cost of interest-bearing deposits			.69	%		.76	%		.97	%	N/A		N/A


N/A = Not Applicable

Average deposits totaled $61.1 billion for the second quarter of 2012, an increase of $2.5 billion compared to the year-ago quarter. Most of the growth came from demand deposits, as increases in interest-bearing liquid deposits were largely offset by reductions in time deposit balances.

Compared to the first quarter of 2012, average deposits increased by $1.4 billion. Business demand deposits grew by $883 million, and interest-bearing demand deposits grew by $750 million. This increase in average deposits was partially offset by declines in certificates of deposit ($100,000 or more) and other time deposits.

ASSET QUALITY

dollars in millions										Change 2Q12 vs.
		2Q12			1Q12			2Q11		1Q12		2Q11
Net loan charge-offs	$	77		$	101		$	134		(23.8)	%	(42.5)	%
Net loan charge-offs to average loans		.63	%		.82	%		1.11	%	N/A		N/A
Nonperforming loans at period end	$	657		$	666		$	842		(1.4)		(22.0)
Nonperforming assets at period end		751			767			950		(2.1)		(20.9)
Allowance for loan and lease losses		888			944			1,230		(5.9)		(27.8)	%
Allowance for loan and lease losses to nonperforming loans		135	%		142	%		146	%	N/A		N/A
Provision for loan and lease losses	$	21		$	42		$	(8)		(50.0)	%	N/M


N/A = Not Applicable, N/M = Not Meaningful

Key's provision for loan and lease losses was a charge of $21 million for the second quarter of 2012, compared to a charge of $42 million for the first quarter of 2012 and a credit of $8 million for the year-ago quarter. Key's allowance for loan and lease losses was $888 million, or 1.79% of total period-end loans at June 30, 2012, compared to 1.92% at March 31, 2012, and 2.57% at June 30, 2011.

Net loan charge-offs for the second quarter of 2012 totaled $77 million, or .63% of average loans. These results compare to $101 million, or .82% for the first quarter of 2012, and $134 million, or 1.11% for the same period last year.

Compared to the first quarter of 2012, net loan charge-offs declined $24 million primarily due to stronger recoveries in the commercial loan portfolio. Key's exit loan portfolio accounted for $19 million, or 24.68% of Key's total net loan charge-offs for the second quarter of 2012. Net loan charge-offs in the exit loan portfolio decreased by $7 million from the first quarter of 2012 due to declines in net loan charge-offs in both the commercial and consumer loan portfolios.

At June 30, 2012, Key's nonperforming loans totaled $657 million and represented 1.32% of period-end portfolio loans, compared to 1.35% at March 31, 2012, and 1.76% at June 30, 2011. Nonperforming assets at June 30, 2012, totaled $751 million and represented 1.51% of portfolio loans and OREO and other nonperforming assets, compared to 1.55% at March 31, 2012, and 1.98% at June 30, 2011.

Nonperforming assets continued to decrease during the second quarter of 2012, representing the eleventh consecutive quarterly decline. OREO balances declined to $28 million at June 30, 2012, a decrease of $33 million from March 31, 2012.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at June 30, 2012.

Capital Ratios

	6-30-12		3-31-12		6-30-11
Tier 1 common equity (a), (b)	11.68	%	11.55	%	11.14	%
Tier 1 risk-based capital (a)	12.50		13.29		13.93
Total risk based capital (a)	15.89		16.68		17.88
Tangible common equity to tangible assets (b)	10.44		10.26		9.67

(a)	6-30-12 ratio is estimated.

(b)	The table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity" and "Tier 1 common equity." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

As shown in the preceding table, at June 30, 2012, Key's estimated Tier 1 common equity and Tier 1 risk-based capital ratios stood at 11.7% and 12.5%, respectively. In addition, the tangible common equity ratio was 10.4% at June 30, 2012.

Summary of Changes in Common Shares Outstanding

in thousands					Change 2Q12 vs.
		2Q12	1Q12	2Q11	1Q12		2Q11
Shares outstanding at beginning of period		956,102	953,008	953,926	.3	%	.2	%
Common shares repurchased		(10,468)	—	—	N/M		N/M
Shares reissued (returned) under employee benefit plans		(161)	3,094	(104)	N/M		N/M
	Shares outstanding at end of period	945,473	956,102	953,822	(1.1)	%	(.9)	%


N/M = Not Meaningful

As previously announced, the Board of Directors authorized a common share repurchase program of up to $344 million to begin in the second quarter of this year through the first quarter of 2013. During the second quarter of 2012, Key repurchased 10,467,988 common shares at an average cost of $7.83 per share.

LINE OF BUSINESS RESULTS

The following table shows the contribution made by each major business segment to Key's taxable-equivalent revenue from continuing operations and income (loss) from continuing operations attributable to Key for the periods presented. For more detailed financial information pertaining to each business segment, see the tables at the end of this release.

Major Business Segments

dollars in millions								Change 2Q12 vs.
			2Q12		1Q12		2Q11	1Q12		2Q11
Revenue from continuing operations (TE)
Key Community Bank		$	537	$	528	$	559	1.7	%	(3.9)	%
Key Corporate Bank			392		401		391	(2.2)		.3
Other segments			99		105		68	(5.7)		45.6
	Total segments		1,028		1,034		1,018	(.6)		1.0
Reconciling items			1		(3)		6	N/M		(83.3)
	Total	$	1,029	$	1,031	$	1,024	(.2)	%	.5	%

Income (loss) from continuing operations attributable to Key
Key Community Bank		$	41	$	57	$	34	(28.1)	%	20.6	%
Key Corporate Bank			105		100		164	5.0		(36.0)
Other segments			54		45		42	20.0		28.6
	Total segments		200		202		240	(1.0)		(16.7)
Reconciling items			26		3		9	766.7		188.9
	Total	$	226	$	205	$	249	10.2	%	(9.2)	%


TE = Taxable equivalent, N/M = Not Meaningful


Key Community Bank


dollars in millions								Change 2Q12 vs.
			2Q12		1Q12		2Q11	1Q12		2Q11
Summary of operations
Net interest income (TE)		$	348	$	353	$	374	(1.4)	%	(7.0)	%
Noninterest income			189		175		185	8.0		2.2
	Total revenue (TE)		537		528		559	1.7		(3.9)
Provision (credit) for loan and lease losses			11		2		79	450.0		(86.1)
Noninterest expense			476		456		447	4.4		6.5
	Income (loss) before income taxes (TE)		50		70		33	(28.6)		51.5
Allocated income taxes and TE adjustments			9		13		(1)	(30.8)		N/M
	Net income (loss) attributable to Key	$	41	$	57	$	34	(28.1)	%	20.6	%

Average balances
Loans and leases			27,043		26,617		26,242	1.6	%	3.1	%
Total assets			30,638		30,194		29,687	1.5		3.2
Deposits			48,253		47,768		47,719	1.0		1.1

Assets under management at period end			21,116		21,939		19,787	(3.8)	%	6.7	%


	TE = Taxable Equivalent, N/M = Not Meaningful


Additional Key Community Bank Data

dollars in millions											Change 2Q12 vs.
			2Q12			1Q12			2Q11		1Q12		2Q11
Noninterest income
Trust and investment services income		$	47		$	48		$	46		(2.1)	%	2.2	%
Service charges on deposit accounts			59			56			59		5.4		—
Electronic banking fees			19			17			33		11.8		(42.4)
Other noninterest income			64			54			47		18.5		36.2
	Total noninterest income	$	189		$	175		$	185		8.0	%	2.2	%

Average deposit balances
NOW and money market deposit accounts		$	23,919		$	23,161		$	21,864		3.3	%	9.4	%
Savings deposits			2,078			1,992			1,975		4.3		5.2
Certificates of deposit ($100,000 or more)			3,275			3,447			4,081		(5.0)		(19.8)
Other time deposits			5,630			6,023			7,315		(6.5)		(23.0)
Deposits in foreign office			361			370			411		(2.4)		(12.2)
Noninterest-bearing deposits			12,990			12,775			12,073		1.7		7.6
	Total deposits	$	48,253		$	47,768		$	47,719		1.0	%	1.1	%

Home equity loans
Average balance		$	9,359		$	9,173		$	9,441
Weighted-average loan-to-value ratio (at date of origination)			71	%		70	%		70	%
Percent first lien positions			54			53			53

Other data
Branches			1,062			1,059			1,048
Automated teller machines			1,576			1,572			1,564

Key Community Bank Summary of Operations

Four consecutive quarters of average loan growth
Strong spring borrowing campaign drove home equity balances 5% higher during second quarter
Continued improvement in deposit mix
Net loan charge-offs of 74 basis points at lowest level in four years

Key Community Bank recorded net income attributable to Key of $41 million for the second quarter of 2012, compared to net income attributable to Key of $34 million for the year-ago quarter.

Taxable-equivalent net interest income declined by $26 million, or 7% from the second quarter of 2011. Average loans and leases grew 3% while average deposits increased 1% from one year ago. Given the continued low-rate environment, the value derived from deposits was less in the current period compared to the same period one year ago.

Noninterest income increased by $4 million, or 2.2% from the year-ago quarter. Net gains (losses) from loan sales increased $9 million, and various other miscellaneous items increased $12 million. These increases in noninterest income were partially offset by a $14 million decline in electronic banking fees resulting from government pricing controls on debit transactions that went into effect October 1, 2011.

The provision for loan and lease losses declined by $68 million, or 86.1% compared to the second quarter of 2011, due to lower net loan charge-offs from the same period one year ago. Net loan charge-offs were $50 million for the second quarter of 2012, down $29 million from the same period one year ago.

Noninterest expense increased by $29 million, or 6.5% from the year-ago quarter. Key's acquisition of 37 branches in Upstate New York and the spring home equity loan campaign resulted in increases to marketing and technology expenses. Personnel expense also increased due to the hiring of client-facing personnel and annual merit increases. These increases in noninterest expense were partially offset by decreases in deferred loan origination expense and FDIC deposit insurance assessments from one year ago.

Key Corporate Bank


dollars in millions								Change 2Q12 vs.
			2Q12		1Q12		2Q11	1Q12		2Q11
Summary of operations
Net interest income (TE)		$	182	$	187	$	176	(2.7)	%	3.4	%
Noninterest income			210		214		215	(1.9)		(2.3)
	Total revenue (TE)		392		401		391	(2.2)		.3
Provision (credit) for loan and lease losses			4		13		(76)	(69.2)		N/M
Noninterest expense			218		231		207	(5.6)		5.3
	Income (loss) before income taxes (TE)		170		157		260	8.3		(34.6)
Allocated income taxes and TE adjustments			62		57		95	8.8		(34.7)
	Net income (loss)		108		100		165	8.0		(34.5)
Less: Net income (loss) attributable to noncontrolling interests			3		—		1	N/M		200.0
	Net income (loss) attributable to Key	$	105	$	100	$	164	5.0	%	(36.0)	%

Average balances
Loans and leases		$	18,532	$	18,584	$	17,168	(.3)	%	7.9	%
Loans held for sale			514		509		302	1.0		70.2
Total assets			22,715		22,863		21,468	(.6)		5.8
Deposits			12,409		11,556		10,195	7.4		21.7

Assets under management at period end		$	28,033	$	30,694	$	39,466	(8.7)	%	(29.0)	%


N/M = Not Meaningful


Additional Key Corporate Bank Data

dollars in millions								Change 2Q12 vs.
			2Q12		1Q12		2Q11	1Q12		2Q11
Noninterest income
Trust and investment services income		$	55	$	61	$	66	(9.8)	%	(16.7)	%
Investment banking and debt placement fees (a)			69		59		57	16.9		21.1
Operating lease income and other leasing gains (b)			20		23		28	(13.0)		(28.6)
Corporate services income (c)			30		34		27	(11.8)		11.1
Other noninterest income			36		37		37	(2.7)		(2.7)
	Total noninterest income	$	210	$	214	$	215	(1.9)	%	(2.3)	%


(a)	Included in "Investment banking and capital markets income (loss)," "Net gains (losses) from loan sales," and "Letter of credit and loan fees" on the Consolidated Statements of Income.

(b)	Included in "Operating lease income" and "Gains on leased equipment" on the Consolidated Statements of Income.

(c)	Included in "Service charges on deposit accounts," "Letter of credit and loan fees," and "Investment banking and capital markets income (loss)" on the Consolidated Statements of Income.

Key Corporate Bank Summary of Operations

Acquired 166 new clients in the second quarter, up 41% from the first quarter
Investment banking and debt placement fees were $69 million, up 17% from the first quarter
Average loans up 8% from the prior year and flat to the prior quarter
Average deposits up 22% from the prior year and 7% from the prior quarter

Key Corporate Bank recorded net income attributable to Key of $105 million for the second quarter of 2012, compared to net income attributable to Key of $164 million for the same period one year ago.

Taxable-equivalent net interest income increased by $6 million, or 3.4% compared to the second quarter of 2011. Average earning assets increased $1.3 billion, or 7% from the year-ago quarter, resulting in an increase in earning asset spread of $9 million. This increase was partially offset by a decrease in interest-related loan fees.

Noninterest income decreased by $5 million, or 2.3% from the second quarter of 2011. Decreases in trust and investment services income, operating lease income, and investment banking and capital markets income were partially offset by increases in net gains (losses) from loan sales and letter of credit and loan fees compared to the year-ago quarter.

The provision for loan and lease losses in the second quarter of 2012 was a charge of $4 million compared to a credit of $76 million for the same period one year ago. The charge in the second quarter of 2012 related to the increase in loans and leases, partially offset by continued improvement in the portfolio's asset quality for the eleventh consecutive quarter. Net loan charge-offs in the second quarter of 2012 were $9 million compared to $29 million for the same period one year ago.

Noninterest expense increased by $11 million, or 5.3% from the second quarter of 2011. The provision (credit) for losses on lending-related commitments was an expense of $6 million compared to a credit of $13 million one year ago. OREO expense also increased $10 million. These increases in noninterest expense were partially offset by decreases in operating lease expense of $5 million, personnel expense of $4 million, and other operating expenses.

Other Segments

Other Segments consist of Corporate Treasury, Key's Principal Investing unit, and various exit portfolios. Other Segments generated net income attributable to Key of $54 million for the second quarter of 2012, compared to net income attributable to Key of $42 million for the same period last year. These results were primarily attributable to a $21 million net gain resulting from the early terminations of leveraged leases in the second quarter of 2012 (a $31 million gain on leased equipment less a $10 million charge for the write-off of capitalized loan origination costs). These results were partially offset by an increase in the provision (credit) for loan and lease losses of $16 million compared to one year ago.

*****

Key traces its history back more than 160 years and is headquartered in Cleveland, Ohio. One of the nation's largest bank-based financial services companies, Key has assets of approximately $86.5 billion at June 30, 2012.

Key provides deposit, lending, cash management and investment services to individuals and small businesses through its 14-state branch network 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.

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Key's financial condition, results of operations, earnings outlook, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Key's control. Key's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause Key's actual results to differ materially from those described in the forward-looking statements can be found in KeyCorp's Annual Report on Form 10-K for the year ended December 31, 2011, and its Quarterly Report on Form 10-Q for the period ended March 31, 2012, each of which have been filed with the Securities and Exchange Commission and are available on Key's website (www.key.com/ir) and on the Securities and Exchange Commission's website (www.sec.gov). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management's views as of any subsequent date. Key does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

Notes to Editors:

A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 9:00 a.m. ET, on Thursday, July 19, 2012. An audio replay of the call will be available through July 26, 2012.

For up-to-date company information, media contacts, and facts and figures about Key's lines of business, visit our Media Newsroom at https://www.key.com/newsroom.

*****

Financial Highlights
(dollars in millions, except per share amounts)

			Three months ended
			6-30-12			3-31-12			6-30-11
Summary of operations
	Net interest income (TE)		$	544		$	559		$	570
	Noninterest income			485			472			454
		Total revenue (TE)		1,029			1,031			1,024
	Provision (credit) for loan and lease losses			21			42			(8)
	Noninterest expense			714			703			680
	Income (loss) from continuing operations attributable to Key			226			205			249
	Income (loss) from discontinued operations, net of taxes (b)			10			(5)			(9)
	Net income (loss) attributable to Key			236			200			240

	Income (loss) from continuing operations attributable to Key common shareholders		$	221		$	199		$	243
	Income (loss) from discontinued operations, net of taxes (b)			10			(5)			(9)
	Net income (loss) attributable to Key common shareholders			231			194			234

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.23		$	.21		$	.26
	Income (loss) from discontinued operations, net of taxes (b)			.01			(.01)			(.01)
	Net income (loss) attributable to Key common shareholders (e)			.24			.20			.25

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution			.23			.21			.26
	Income (loss) from discontinued operations, net of taxes — assuming dilution (b)			.01			(.01)			(.01)
	Net income (loss) attributable to Key common shareholders — assuming dilution (e)			.24			.20			.25

	Cash dividends paid			.05			.03			.03
	Book value at period end			10.43			10.26			9.88
	Tangible book value at period end			9.45			9.28			8.90
	Market price at period end			7.74			8.50			8.33

Performance ratios
	From continuing operations:
	Return on average total assets			1.12	%		1.02	%		1.23	%
	Return on average common equity			9.06			8.25			10.51
	Net interest margin (TE)			3.06			3.16			3.19

	From consolidated operations:
	Return on average total assets			1.10	%		.93	%		1.10	%
	Return on average common equity			9.47			8.04			10.12
	Net interest margin (TE)			2.99			3.08			3.11
	Loan to deposit (d)			86.38			86.97			86.10

Capital ratios at period end
	Key shareholders' equity to assets			11.74	%		11.55	%		10.95	%
	Tangible Key shareholders' equity to tangible assets			10.78			10.60			10.00
	Tangible common equity to tangible assets (a)			10.44			10.26			9.67
	Tier 1 common equity (a), (c)			11.68			11.55			11.14
	Tier 1 risk-based capital (c)			12.50			13.29			13.93
	Total risk-based capital (c)			15.89			16.68			17.88
	Leverage (c)			11.29			12.12			12.13

Asset quality — from continuing operations
	Net loan charge-offs		$	77		$	101		$	134
	Net loan charge-offs to average loans			.63	%		.82	%		1.11	%
	Allowance for loan and lease losses to annualized net loan charge-offs			286.74			232.39			228.85
	Allowance for loan and lease losses		$	888		$	944		$	1,230
	Allowance for credit losses			939			989			1,287
	Allowance for loan and lease losses to period-end loans			1.79	%		1.92	%		2.57	%
	Allowance for credit losses to period-end loans			1.89			2.01			2.69
	Allowance for loan and lease losses to nonperforming loans			135.16			141.74			146.08
	Allowance for credit losses to nonperforming loans			142.92			148.50			152.85
	Nonperforming loans at period end		$	657		$	666		$	842
	Nonperforming assets at period end			751			767			950
	Nonperforming loans to period-end portfolio loans			1.32	%		1.35	%		1.76	%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets			1.51			1.55			1.98

Trust and brokerage assets
	Assets under management		$	49,149		$	52,633		$	59,253
	Nonmanaged and brokerage assets			23,912			33,021			29,472

Other data
	Average full-time equivalent employees			15,455			15,404			15,349
	Branches			1,062			1,059			1,048

Taxable-equivalent adjustment			$	6		$	6		$	6



Financial Highlights (continued)
(dollars in millions, except per share amounts)

			Six months ended
			6-30-12			6-30-11
Summary of operations
	Net interest income (TE)		$	1,103		$	1,174
	Noninterest income			957			911
		Total revenue (TE)		2,060			2,085
	Provision (credit) for loan and lease losses			63			(48)
	Noninterest expense			1,417			1,381
	Income (loss) from continuing operations attributable to Key			431			523
	Income (loss) from discontinued operations, net of taxes (b)			5			(20)
	Net income (loss) attributable to Key			436			503

	Income (loss) from continuing operations attributable to Key common shareholders		$	420		$	427
	Income (loss) from discontinued operations, net of taxes (b)			5			(20)
	Net income (loss) attributable to Key common shareholders			425			407

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.44		$	.47
	Income (loss) from discontinued operations, net of taxes (b)			.01			(.02)
	Net income (loss) attributable to Key common shareholders (e)			.45			.44

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution			.44			.46
	Income (loss) from discontinued operations, net of taxes — assuming dilution (b)			.01			(.02)
	Net income (loss) attributable to Key common shareholders — assuming dilution (e)			.45			.44

	Cash dividends paid			.08			.04

Performance ratios
	From continuing operations:
	Return on average total assets			1.07	%		1.27	%
	Return on average common equity			8.66			9.67
	Net interest margin (TE)			3.11			3.22

	From consolidated operations:
	Return on average total assets			1.01	%		1.14	%
	Return on average common equity			8.76			9.22
	Net interest margin (TE)			3.03			3.14

Asset quality — from continuing operations
	Net loan charge-offs		$	178		$	327
	Net loan charge-offs to average loans			.72	%		1.35	%

Other data
	Average full-time equivalent employees			15,430			15,326

Taxable-equivalent adjustment			$	12		$	13


(a)	The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity" and "Tier 1 common equity." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

(b)	In April 2009, management decided to wind down the operations of Austin Capital Management, Ltd., a subsidiary that specialized in managing hedge fund investments for institutional customers. In September 2009, management decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. As a result of these decisions, Key has accounted for these businesses as discontinued operations.

(c)	6-30-12 ratio is estimated.

(d)	Represents period-end consolidated total loans and loans held for sale (excluding education loans in the securitization trusts) divided by period-end consolidated total deposits (excluding deposits in foreign office).

(e)	Earnings per share may not foot due to rounding.

TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles

GAAP to Non-GAAP Reconciliations
(dollars in millions, except per share amounts)

The table below presents certain non-GAAP financial measures related to "tangible common equity," "Tier 1 common equity" and "pre-provision net revenue."

The tangible common equity ratio has been a focus for some investors, and management believes this ratio may assist investors in analyzing Key's capital position without regard to the effects of intangible assets and preferred stock. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. Since the commencement of the Comprehensive Capital Analysis and Review process in early 2009, the Federal Reserve has focused its assessment of capital adequacy on a component of Tier 1 risk-based capital known as Tier 1 common equity, a non-GAAP financial measure. Because the Federal Reserve has long indicated that voting common shareholders' equity (essentially Tier 1 risk-based capital less preferred stock, qualifying capital securities and noncontrolling interests in subsidiaries) generally should be the dominant element in Tier 1 risk-based capital, this focus on Tier 1 common equity is consistent with existing capital adequacy categories.

Tier 1 common equity is neither formally defined by GAAP nor prescribed in amount by federal banking regulations; this measure is considered to be a non-GAAP financial measure. Since analysts and banking regulators may assess Key's capital adequacy using tangible common equity and Tier 1 common equity, management believes it is useful to enable investors to assess Key's capital adequacy on these same bases. The table also reconciles the GAAP performance measures to the corresponding non-GAAP measures.

The table also shows the computation for pre-provision net revenue, which is not formally defined by GAAP. Management believes that eliminating the effects of the provision for loan and lease losses makes it easier to analyze the results by presenting them on a more comparable basis.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

			Three months ended
			6-30-12			3-31-12			6-30-11
Tangible common equity to tangible assets at period end
	Key shareholders' equity (GAAP)		$	10,155		$	10,099		$	9,719
	Less:	Intangible assets		932			932			936
		Preferred Stock, Series A		291			291			291
		Tangible common equity (non-GAAP)	$	8,932		$	8,876		$	8,492

	Total assets (GAAP)		$	86,523		$	87,431		$	88,782
	Less:	Intangible assets		932			932			936
		Tangible assets (non-GAAP)	$	85,591		$	86,499		$	87,846

	Tangible common equity to tangible assets ratio (non-GAAP)			10.44	%		10.26	%		9.67	%

Tier 1 common equity at period end
	Key shareholders' equity (GAAP)		$	10,155		$	10,099		$	9,719
	Qualifying capital securities			339			1,046			1,791
	Less:	Goodwill		917			917			917
		Accumulated other comprehensive income (loss) (a)		(113)			(70)			47
		Other assets (b)		69			69			157
		Total Tier 1 capital (regulatory)		9,621			10,229			10,389
	Less:	Qualifying capital securities		339			1,046			1,791
		Preferred Stock, Series A		291			291			291
		Total Tier 1 common equity (non-GAAP)	$	8,991		$	8,892		$	8,307

	Net risk-weighted assets (regulatory) (b), (c)		$	76,984		$	76,956		$	74,578

	Tier 1 common equity ratio (non-GAAP) (c)			11.68	%		11.55	%		11.14	%

Pre-provision net revenue
	Net interest income (GAAP)		$	538		$	553		$	564
	Plus:	Taxable-equivalent adjustment		6			6			6
		Noninterest income		485			472			454
	Less:	Noninterest expense		714			703			680
	Pre-provision net revenue from continuing operations (non-GAAP)		$	315		$	328		$	344


(a)	Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities), net gains or losses on cash flow hedges, and amounts resulting from the December 31, 2006, adoption and subsequent application of the applicable accounting guidance for defined benefit and other postretirement plans.

(b)	Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed deferred tax assets of $75 million at June 30, 2011, disallowed intangible assets (excluding goodwill) and deductible portions of nonfinancial equity investments. There were no disallowed deferred tax assets at June 30, 2012 and March 31, 2012.

(c)	6-30-12 amount is estimated.

GAAP = U.S. generally accepted accounting principles



Consolidated Balance Sheets
(dollars in millions)

			6-30-12		3-31-12		6-30-11
Assets
	Loans		$	49,605	$	49,226	$	47,840
	Loans held for sale			656		511		381
	Securities available for sale			13,205		14,633		18,680
	Held-to-maturity securities			4,352		3,019		19
	Trading account assets			679		614		769
	Short-term investments			2,216		3,605		4,563
	Other investments			1,186		1,188		1,195
		Total earning assets		71,899		72,796		73,447
	Allowance for loan and lease losses			(888)		(944)		(1,230)
	Cash and due from banks			717		416		853
	Premises and equipment			931		937		919
	Operating lease assets			318		335		453
	Goodwill			917		917		917
	Other intangible assets			15		15		19
	Corporate-owned life insurance			3,285		3,270		3,208
	Derivative assets			818		830		900
	Accrued income and other assets			2,978		3,091		2,968
	Discontinued assets			5,533		5,768		6,328
		Total assets	$	86,523	$	87,431	$	88,782

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	28,957	$	29,124	$	26,277
		Savings deposits		2,103		2,075		1,973
		Certificates of deposit ($100,000 or more)		3,669		3,984		4,939
		Other time deposits		5,385		5,848		7,167
		Total interest-bearing deposits		40,114		41,031		40,356
		Noninterest-bearing deposits		21,435		19,606		19,318
	Deposits in foreign office — interest-bearing			618		857		736
		Total deposits		62,167		61,494		60,410
	Federal funds purchased and securities sold under repurchase agreements			1,716		1,846		1,668
	Bank notes and other short-term borrowings			362		324		511
	Derivative liabilities			763		754		991
	Accrued expense and other liabilities			1,417		1,450		1,518
	Long-term debt			7,521		8,898		10,997
	Discontinued liabilities			2,401		2,549		2,950
		Total liabilities		76,347		77,315		79,045

Equity
	Preferred stock, Series A			291		291		291
	Common shares			1,017		1,017		1,017
	Capital surplus			4,120		4,116		4,191
	Retained earnings			6,595		6,411		5,926
	Treasury stock, at cost			(1,796)		(1,717)		(1,815)
	Accumulated other comprehensive income (loss)			(72)		(19)		109
		Key shareholders' equity		10,155		10,099		9,719
	Noncontrolling interests			21		17		18
		Total equity		10,176		10,116		9,737
Total liabilities and equity			$	86,523	$	87,431	$	88,782

Common shares outstanding (000)				945,473		956,102		953,822



Consolidated Statements of Income
(dollars in millions, except per share amounts)

			Three months ended						Six months ended
			6-30-12		3-31-12		6-30-11		6-30-12		6-30-11
Interest income
	Loans		$	518	$	536	$	551	$	1,054	$	1,121
	Loans held for sale			5		5		3		10		7
	Securities available for sale			105		116		149		221		315
	Held-to-maturity securities			17		12		1		29		1
	Trading account assets			5		6		9		11		16
	Short-term investments			2		1		1		3		2
	Other investments			10		8		12		18		24
		Total interest income		662		684		726		1,346		1,486

Interest expense
	Deposits			71		77		100		148		210
	Federal funds purchased and securities sold under repurchase agreements			1		1		2		2		3
	Bank notes and other short-term borrowings			2		2		3		4		6
	Long-term debt			50		51		57		101		106
		Total interest expense		124		131		162		255		325

Net interest income				538		553		564		1,091		1,161
Provision (credit) for loan and lease losses				21		42		(8)		63		(48)
Net interest income (expense) after provision for loan and lease losses				517		511		572		1,028		1,209

Noninterest income
	Trust and investment services income			102		109		113		211		223
	Service charges on deposit accounts			70		68		69		138		137
	Operating lease income			20		22		32		42		67
	Letter of credit and loan fees			56		54		47		110		102
	Corporate-owned life insurance income			30		30		28		60		55
	Net securities gains (losses) (a)			—		—		2		—		1
	Electronic banking fees			19		17		33		36		63
	Gains on leased equipment			36		27		5		63		9
	Insurance income			11		12		14		23		29
	Net gains (losses) from loan sales			32		22		11		54		30
	Net gains (losses) from principal investing			24		35		17		59		52
	Investment banking and capital markets income (loss)			37		43		42		80		85
	Other income			48		33		41		81		58
		Total noninterest income		485		472		454		957		911

Noninterest expense
	Personnel			389		385		380		774		751
	Net occupancy			62		64		62		126		127
	Operating lease expense			15		17		25		32		53
	Computer processing			43		41		42		84		84
	Business services and professional fees			51		38		44		89		82
	FDIC assessment			8		8		9		16		38
	OREO expense, net			7		6		(3)		13		7
	Equipment			27		26		26		53		52
	Marketing			17		13		10		30		20
	Provision (credit) for losses on lending-related commitments			6		—		(12)		6		(16)
	Other expense			89		105		97		194		183
		Total noninterest expense		714		703		680		1,417		1,381
Income (loss) from continuing operations before income taxes				288		280		346		568		739
	Income taxes			57		75		94		132		205
Income (loss) from continuing operations				231		205		252		436		534
	Income (loss) from discontinued operations, net of taxes			10		(5)		(9)		5		(20)
Net income (loss)				241		200		243		441		514
	Less: Net income (loss) attributable to noncontrolling interests			5		—		3		5		11
Net income (loss) attributable to Key			$	236	$	200	$	240	$	436	$	503

Income (loss) from continuing operations attributable to Key common shareholders			$	221	$	199	$	243	$	420	$	427
Net income (loss) attributable to Key common shareholders				231		194		234		425		407

Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.23	$	.21	$	.26	$	.44	$	.47
Income (loss) from discontinued operations, net of taxes				.01		(.01)		(.01)		.01		(.02)
Net income (loss) attributable to Key common shareholders				.24		.20		.25		.45		.44

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.23	$	.21	$	.26	$	.44	$	.46
Income (loss) from discontinued operations, net of taxes				.01		(.01)		(.01)		.01		(.02)
Net income (loss) attributable to Key common shareholders (c)				.24		.20		.25		.45		.44

Cash dividends declared per common share			$	.05	$	.03	$	.03	$	.08	$	.04

Weighted-average common shares outstanding (000)				944,648		949,342		947,565		946,995		914,911
Weighted-average common shares and potential common shares outstanding (000) (b)				948,087		953,971		952,133		951,029		920,162


(a)	For the three months ended June 30, 2012, March 31, 2012, and June 30, 2011, Key did not have any impairment losses related to securities.

(b)	Assumes conversion of stock options and/or Preferred Series A shares, as applicable.

(c)	Earnings per share may not foot due to rounding.



Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(dollars in millions)

			Second Quarter 2012								First Quarter 2012								Second Quarter 2011
			Average								Average								Average
			Balance		Interest		(a)	Yield/Rate		(a)	Balance		Interest		(a)	Yield/Rate		(a)	Balance		Interest		(a)	Yield/Rate		(a)
Assets
	Loans: (b), (c)
	Commercial, financial and agricultural		$	20,132	$	190			3.80	%	$	19,638	$	194			3.98	%	$	16,922	$	174			4.13	%
	Real estate — commercial mortgage			7,613		85			4.50			7,993		89			4.48			8,460		95			4.47
	Real estate — construction			1,216		14			4.64			1,284		16			4.86			1,760		19			4.44
	Commercial lease financing			5,700		51			3.55			5,846		58			3.97			6,094		75			4.93
		Total commercial loans		34,661		340			3.94			34,761		357			4.12			33,236		363			4.38
	Real estate — residential mortgage			1,990		24			4.91			1,950		25			5.04			1,818		24			5.33
	Home equity:
		Key Community Bank		9,359		94			4.04			9,173		93			4.08			9,441		97			4.13
		Other		493		9			7.66			521		10			7.68			611		12			7.66
		Total home equity loans		9,852		103			4.23			9,694		103			4.27			10,052		109			4.35
	Consumer other — Key Community Bank			1,247		29			9.20			1,193		28			9.61			1,151		27			9.39
	Consumer other:
		Marine		1,595		26			6.29			1,714		27			6.28			2,051		32			6.20
		Other		101		2			8.49			118		2			7.79			146		3			7.81
		Total consumer other		1,696		28			6.42			1,832		29			6.38			2,197		35			6.31
		Total consumer loans		14,785		184			4.99			14,669		185			5.07			15,218		195			5.13
		Total loans		49,446		524			4.26			49,430		542			4.41			48,454		558			4.61
	Loans held for sale			585		5			3.43			581		5			3.62			376		3			3.72
	Securities available for sale (b), (e)			13,865		105			3.13			15,259		116			3.15			19,005		149			3.19
	Held-to-maturity securities (b)			3,493		17			1.98			2,251		12			2.08			19		—			10.72
	Trading account assets			768		5			3.01			808		6			2.72			893		9			3.96
	Short-term investments			2,608		2			.29			1,898		1			.29			1,913		1			.23
	Other investments (e)			1,177		10			3.21			1,169		8			2.78			1,328		12			3.24
		Total earning assets		71,942		668			3.74			71,396		690			3.91			71,988		732			4.09
	Allowance for loan and lease losses			(928)								(968)								(1,279)
	Accrued income and other assets			9,906								10,038								10,677
	Discontinued assets — education lending business			5,633								5,757								6,350
		Total assets	$	86,553							$	86,223							$	87,736

Liabilities
	NOW and money market deposit accounts		$	29,106		13			.18		$	28,328		15			.21		$	26,354		19			.29
	Savings deposits			2,085		—			.03			1,997		—			.06			1,981		1			.06
	Certificates of deposit ($100,000 or more) (f)			3,858		27			2.85			4,036		29			2.91			5,075		38			3.02
	Other time deposits			5,645		30			2.13			6,035		33			2.19			7,330		42			2.31
	Deposits in foreign office			759		1			.24			769		—			.25			869		—			.34
		Total interest-bearing deposits		41,453		71			.69			41,165		77			.76			41,609		100			.97
	Federal funds purchased and securities sold under repurchase agreements			1,880		1			.20			1,850		1			.21			2,089		2			.27
	Bank notes and other short-term borrowings			468		2			1.80			490		2			1.53			672		3			1.96
	Long-term debt (f), (g)			5,463		50			4.01			6,161		51			3.61			7,576		57			3.26
		Total interest-bearing liabilities		49,264		124			1.02			49,666		131			1.07			51,946		162			1.27
	Noninterest-bearing deposits			19,610								18,466								16,932
	Accrued expense and other liabilities			1,927								2,325								2,767
	Discontinued liabilities — education lending business (d), (g)			5,633								5,757								6,350
		Total liabilities		76,434								76,214								77,995

Equity
	Key shareholders' equity			10,100								9,992								9,561
	Noncontrolling interests			19								17								180
		Total equity		10,119								10,009								9,741

		Total liabilities and equity	$	86,553							$	86,223							$	87,736

Interest rate spread (TE)									2.72	%							2.84	%							2.82	%

Net interest income (TE) and net interest margin (TE)						544			3.06	%				559			3.16	%				570			3.19	%
TE adjustment (b)						6								6								6
	Net interest income, GAAP basis				$	538							$	553							$	564


(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (d) below, calculated using a matched funds transfer pricing methodology.

(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.

(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.

(d)	Discontinued liabilities include the liabilities of the education lending business and the dollar amount of any additional liabilities assumed necessary to support the assets associated with this business.

(e)	Yield is calculated on the basis of amortized cost.

(f)	Rate calculation excludes basis adjustments related to fair value hedges.

(g)	A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying our matched funds transfer pricing methodology to discontinued operations.

TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(dollars in millions)


			Six months ended June 30, 2012								Six months ended June 30, 2011
			Average								Average
			Balance		Interest		(a)	Yield/Rate		(a)	Balance		Interest		(a)	Yield/ Rate		(a)
Assets
	Loans: (b), (c)
	Commercial, financial and agricultural		$	19,885	$	384			3.89	%	$	16,618	$	348			4.23	%
	Real estate — commercial mortgage			7,803		174			4.49			8,847		199			4.52
	Real estate — construction			1,250		30			4.75			1,895		39			4.20
	Commercial lease financing			5,773		109			3.76			6,214		155			4.98
		Total commercial loans		34,711		697			4.03			33,574		741			4.44
	Real estate — residential mortgage			1,970		49			4.98			1,814		48			5.32
	Home equity:
		Key Community Bank		9,266		187			4.06			9,447		194			4.14
		Other		507		19			7.67			629		24			7.63
	Total home equity loans			9,773		206			4.25			10,076		218			4.36
	Consumer other — Key Community Bank			1,220		57			9.40			1,154		55			9.64
	Consumer other:
		Marine		1,655		53			6.29			2,112		66			6.23
		Other		109		4			8.11			151		6			7.86
		Total consumer other		1,764		57			6.40			2,263		72			6.34
	Total consumer loans			14,727		369			5.03			15,307		393			5.16
	Total loans			49,438		1,066			4.33			48,881		1,134			4.67
	Loans held for sale			583		10			3.52			383		7			3.62
	Securities available for sale (b), (e)			14,562		221			3.14			20,076		315			3.19
	Held-to-maturity securities (b)			2,872		29			2.02			19		1			11.12
	Trading account assets			788		11			2.86			955		16			3.31
	Short-term investments			2,253		3			.29			1,938		2			.24
	Other investments (e)			1,173		18			2.99			1,344		24			3.29
	Total earning assets			71,669		1,358			3.83			73,596		1,499			4.10
	Allowance for loan and lease losses			(948)								(1,386)
	Accrued income and other assets			9,972								10,622
	Discontinued assets — education lending business			5,695								6,414
	Total assets		$	86,388							$	89,246

Liabilities
	NOW and money market deposit accounts		$	28,717		28			.20		$	26,677		38			.29
	Savings deposits			2,041		—			.04			1,944		1			.06
	Certificates of deposit ($100,000 or more) (f)			3,947		56			2.88			5,350		81			3.04
	Other time deposits			5,840		63			2.16			7,654		89			2.35
	Deposits in foreign office			764		1			.24			954		1			.33
		Total interest-bearing deposits		41,309		148			.72			42,579		210			.99
	Federal funds purchased and securities sold under repurchase agreements			1,865		2			.20			2,231		3			.27
	Bank notes and other short-term borrowings			479		4			1.66			705		6			1.83
	Long-term debt (f), (g)			5,812		101			3.80			7,186		106			3.18
		Total interest-bearing liabilities		49,465		255			1.05			52,701		325			1.26
	Noninterest-bearing deposits			19,038								16,707
	Accrued expense and other liabilities			2,126								2,822
	Discontinued liabilities — education lending business (d), (g)			5,695								6,414
	Total liabilities			76,324								78,644

Equity
	Key shareholders' equity			10,046								10,383
	Noncontrolling interests			18								219
	Total equity			10,064								10,602

	Total liabilities and equity		$	86,388							$	89,246

Interest rate spread (TE)									2.78	%							2.84	%

Net interest income (TE) and net interest margin (TE)						1,103			3.11	%				1,174			3.22	%
TE adjustment (b)						12								13
	Net interest income, GAAP basis				$	1,091							$	1,161


(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (d) below, calculated using a matched funds transfer pricing methodology.

(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.

(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.

(d)	Discontinued liabilities include the liabilities of the education lending business and the dollar amount of any additional liabilities assumed necessary to support the assets associated with this business.

(e)	Yield is calculated on the basis of amortized cost.

(f)	Rate calculation excludes basis adjustments related to fair value hedges.

(g)	A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying our matched funds transfer pricing methodology to discontinued operations.

TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles

Noninterest Income
(in millions)

		Three months ended						Six months ended
		6-30-12		3-31-12		6-30-11		6-30-12		6-30-11
Trust and investment services income (a)		$	102	$	109	$	113	$	211	$	223
Service charges on deposit accounts			70		68		69		138		137
Operating lease income			20		22		32		42		67
Letter of credit and loan fees			56		54		47		110		102
Corporate-owned life insurance income			30		30		28		60		55
Net securities gains (losses)			—		—		2		—		1
Electronic banking fees			19		17		33		36		63
Gains on leased equipment			36		27		5		63		9
Insurance income			11		12		14		23		29
Net gains (losses) from loan sales			32		22		11		54		30
Net gains (losses) from principal investing			24		35		17		59		52
Investment banking and capital markets income (loss) (a)			37		43		42		80		85
Other income			48		33		41		81		58
	Total noninterest income	$	485	$	472	$	454	$	957	$	911

(a)	Additional detail provided in tables below.


Trust and Investment Services Income
(in millions)

		Three months ended						Six months ended
		6-30-12		3-31-12		6-30-11		6-30-12		6-30-11
Brokerage commissions and fee income		$	32	$	36	$	33	$	68	$	65
Personal asset management and custody fees			39		39		40		78		78
Institutional asset management and custody fees			31		34		40		65		80
	Total trust and investment services income	$	102	$	109	$	113	$	211	$	223


Investment Banking and Capital Markets Income (Loss)
(in millions)

		Three months ended						Six months ended
		6-30-12		3-31-12		6-30-11		6-30-12		6-30-11
Investment banking income		$	25	$	20	$	25	$	45	$	51
Income (loss) from other investments			4		5		10		9		12

Dealer trading and derivatives income (loss), proprietary (a), (b)			(8)		3		(6)		(5)		(8)
Dealer trading and derivatives income (loss), nonproprietary (b)			6		6		3		12		9
	Total dealer trading and derivatives income (loss)		(2)		9		(3)		7		1

Foreign exchange income			10		9		10		19		21
	Total investment banking and capital markets income (loss)	$	37	$	43	$	42	$	80	$	85

(a)	For the quarters ended June 30, 2012, March 31, 2012, and June 30, 2011, fixed income and equity securities trading comprised the vast majority of this amount. For the quarter ended June 30, 2012, income related to foreign exchange derivative trading, interest rate derivative trading, and credit portfolio management was less than $1 million. For the quarters ended March 31, 2012, and June 30, 2011, income related to foreign exchange and interest rate derivative trading was less than $1 million and was offset by losses from Key's credit portfolio management activities.

(b)	The allocation between proprietary and nonproprietary is made based upon whether the trade is conducted for the benefit of Key or Key's clients rather than based upon the proposed rulemakings under the Volcker Rule. The prohibitions and restrictions on proprietary trading activities contemplated by the Volcker Rule and the rules proposed thereunder are not yet final. Therefore, the ultimate impact of the rules proposed under the Volcker Rule is not yet known.



Noninterest Expense
(dollars in millions)

	Three months ended						Six months ended
	6-30-12		3-31-12		6-30-11		6-30-12		6-30-11
Personnel (a)	$	389	$	385	$	380	$	774	$	751
Net occupancy		62		64		62		126		127
Operating lease expense		15		17		25		32		53
Computer processing		43		41		42		84		84
Business services and professional fees		51		38		44		89		82
FDIC assessment		8		8		9		16		38
OREO expense, net		7		6		(3)		13		7
Equipment		27		26		26		53		52
Marketing		17		13		10		30		20
Provision (credit) for losses on lending-related commitments		6		—		(12)		6		(16)
Other expense		89		105		97		194		183
Total noninterest expense	$	714	$	703	$	680	$	1,417	$	1,381

Average full-time equivalent employees (b)		15,455		15,404		15,349		15,430		15,326

(a) Additional detail provided in table below.

(b) The number of average full-time equivalent employees has not been adjusted for discontinued operations.


Personnel Expense
(in millions)

	Three months ended						Six months ended
	6-30-12		3-31-12		6-30-11		6-30-12		6-30-11
Salaries	$	245	$	236	$	228	$	481	$	452
Incentive compensation		71		66		73		137		146
Employee benefits		56		65		58		121		120
Stock-based compensation		13		14		16		27		21
Severance		4		4		5		8		12
Total personnel expense	$	389	$	385	$	380	$	774	$	751



Loan Composition
(dollars in millions)

									Percent change 6-30-12 vs.
			6-30-12		3-31-12		6-30-11		3-31-12			6-30-11
Commercial, financial and agricultural			$	20,386	$	19,787	$	16,883		3.0	%		20.7	%
Commercial real estate:
	Commercial mortgage			7,409		7,807		8,069		(5.1)			(8.2)
	Construction			1,172		1,273		1,631		(7.9)			(28.1)
	Total commercial real estate loans			8,581		9,080		9,700		(5.5)			(11.5)
Commercial lease financing				5,636		5,755		6,105		(2.1)			(7.7)
	Total commercial loans			34,603		34,622		32,688		(.1)			5.9
Residential — prime loans:
	Real estate — residential mortgage			2,016		1,967		1,838		2.5			9.7
	Home equity:
		Key Community Bank		9,601		9,153		9,431		4.9			1.8
		Other		479		507		595		(5.5)			(19.5)
	Total home equity loans			10,080		9,660		10,026		4.3			.5
Total residential — prime loans				12,096		11,627		11,864		4.0			2.0
Consumer other — Key Community Bank				1,263		1,212		1,157		4.2			9.2
Consumer other:
	Marine			1,542		1,654		1,989		(6.8)			(22.5)
	Other			101		111		142		(9.0)			(28.9)
	Total consumer — indirect loans			1,643		1,765		2,131		(6.9)			(22.9)
	Total consumer loans			15,002		14,604		15,152		2.7			(1.0)
	Total loans (a)		$	49,605	$	49,226	$	47,840		.8	%		3.7	%



Loans Held for Sale Composition
(dollars in millions)

									Percent change 6-30-12 vs.
			6-30-12		3-31-12		6-30-11		3-31-12			6-30-11
Commercial, financial and agricultural			$	18	$	28	$	80		(35.7)	%		(77.5)	%
Real estate — commercial mortgage				523		362		198		44.5			164.1
Real estate — construction				12		15		39		(20.0)			(69.2)
Commercial lease financing				13		30		6		(56.7)			116.7
Real estate — residential mortgage				90		76		58		18.4			55.2
	Total loans held for sale		$	656	$	511	$	381		28.4	%		72.2	%



Summary of Changes in Loans Held for Sale
(dollars in millions)

			2Q12		1Q12		4Q11		3Q11			2Q11
Balance at beginning of period			$	511	$	728	$	479	$	381		$	426
	New originations			1,308		935		1,235		853			914
	Transfers from held to maturity, net			7		19		19		23			16
	Loan sales			(1,165)		(1,168)		(932)		(759)			(1,039)
	Loan draws (payments), net			(4)		(3)		(72)		1			73
	Transfers to OREO / valuation adjustments			(1)		—		(1)		(20)			(9)
Balance at end of period			$	656	$	511	$	728	$	479		$	381


(a)	Excluded at June 30, 2012, March 31, 2012, and June 30, 2011, are loans in the amount of $5.5 billion, $5.7 billion, and $6.3 billion, respectively, related to the discontinued operations of the education lending business.



Exit Loan Portfolio From Continuing Operations
(dollars in millions)

	Balance				Change		Net Loan					Balance on
	Outstanding				6-30-12 vs.		Charge-offs					Nonperforming Status
	6-30-12		3-31-12		3-31-12		2Q12		1Q12		(c)	6-30-12		3-31-12
Residential properties— homebuilder	$	33	$	34	$	(1)		—	$	2		$	14	$	17
Marine and RV floor plan		39		59		(20)	$	2		7			15		32
Commercial lease financing (a)		1,237		1,534		(297)		1		(1)			9		11
Total commercial loans		1,309		1,627		(318)		3		8			38		60
Home equity — Other		479		507		(28)		7		7			17		12
Marine		1,542		1,654		(112)		7		10			19		31
RV and other consumer		101		111		(10)		2		1			1		—
Total consumer loans		2,122		2,272		(150)		16		18			37		43
Total exit loans in loan portfolio	$	3,431	$	3,899	$	(468)	$	19	$	26		$	75	$	103

Discontinued operations — education lending business (not included in exit loans above) (b)	$	5,483	$	5,715	$	(232)	$	12	$	19		$	18	$	19


(a)	Includes (1) the business aviation, commercial vehicle, office products, construction and industrial leases; (2) Canadian lease financing portfolios; and (3) all remaining balances related to lease in, lease out; sale in, lease out; service contract leases; and qualified technological equipment leases.

(b)	Includes loans in Key's consolidated education loan securitization trusts.

(c)	Credit amounts indicate recoveries exceeded charge-offs.

Asset Quality Statistics From Continuing Operations
(dollars in millions)

		2Q12			1Q12			4Q11			3Q11			2Q11
Net loan charge-offs	$	77		$	101		$	105		$	109		$	134
Net loan charge-offs to average loans		.63	%		.82	%		.86	%		.90	%		1.11	%
Allowance for loan and lease losses to annualized net loan charge-offs		286.74			232.39			241.01			261.54			228.85
Allowance for loan and lease losses	$	888		$	944		$	1,004		$	1,131		$	1,230
Allowance for credit losses (a)		939			989			1,049			1,187			1,287
Allowance for loan and lease losses to period-end loans		1.79	%		1.92	%		2.03	%		2.35	%		2.57	%
Allowance for credit losses to period-end loans		1.89			2.01			2.12			2.46			2.69
Allowance for loan and lease losses to nonperforming loans		135.16			141.74			138.10			143.53			146.08
Allowance for credit losses to nonperforming loans		142.92			148.50			144.29			150.63			152.85
Nonperforming loans at period end	$	657		$	666		$	727		$	788		$	842
Nonperforming assets at period end		751			767			859			914			950
Nonperforming loans to period-end portfolio loans		1.32	%		1.35	%		1.47	%		1.64	%		1.76	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.51			1.55			1.73			1.89			1.98

(a)

Includes the allowance for loan and lease losses plus the liability for credit losses on lending-related commitments.



Summary of Loan and Lease Loss Experience From Continuing Operations
(dollars in millions)

	Three months ended									Six months ended
	6-30-12			3-31-12			6-30-11			6-30-12			6-30-11
Average loans outstanding	$	49,446		$	49,430		$	48,454		$	49,438		$	48,881

Allowance for loan and lease losses at beginning of period	$	944		$	1,004		$	1,372		$	1,004		$	1,604
Loans charged off:
Commercial, financial and agricultural		23			26			51			49			93

Real estate — commercial mortgage		23			23			16			46			62
Real estate — construction		5			11			27			16			62
Total commercial real estate loans		28			34			43			62			124
Commercial lease financing		16			4			9			20			26
Total commercial loans		67			64			103			131			243
Real estate — residential mortgage		7			6			7			13			17
Home equity:
Key Community Bank		23			25			28			48			53
Other		9			8			11			17			26
Total home equity loans		32			33			39			65			79
Consumer other — Key Community Bank		10			10			11			20			23
Consumer other:
Marine		13			17			15			30			42
Other		2			2			2			4			5
Total consumer other		15			19			17			34			47
Total consumer loans		64			68			74			132			166
Total loans charged off		131			132			177			263			409
Recoveries:
Commercial, financial and agricultural		20			11			15			31			25

Real estate — commercial mortgage		14			2			4			16			7
Real estate — construction		1			1			3			2			8
Total commercial real estate loans		15			3			7			18			15
Commercial lease financing		6			4			5			10			11
Total commercial loans		41			18			27			59			51
Real estate — residential mortgage		1			1			1			2			2
Home equity:
Key Community Bank		2			2			1			4			2
Other		2			1			1			3			2
Total home equity loans		4			3			2			7			4
Consumer other — Key Community Bank		2			1			2			3			4
Consumer other:
Marine		6			7			11			13			19
Other		—			1			—			1			2
Total consumer other		6			8			11			14			21
Total consumer loans		13			13			16			26			31
Total recoveries		54			31			43			85			82
Net loan charge-offs		(77)			(101)			(134)			(178)			(327)
Provision (credit) for loan and lease losses		21			42			(8)			63			(48)
Foreign currency translation adjustment		—			(1)			—			(1)			1
Allowance for loan and lease losses at end of period	$	888		$	944		$	1,230		$	888		$	1,230

Liability for credit losses on lending-related commitments at beginning of period	$	45		$	45		$	69		$	45		$	73
Provision (credit) for losses on lending-related commitments		6			—			(12)			6			(16)
Liability for credit losses on lending-related commitments at end of period (a)	$	51		$	45		$	57		$	51		$	57

Total allowance for credit losses at end of period	$	939		$	989		$	1,287		$	939		$	1,287

Net loan charge-offs to average loans		.63	%		.82	%		1.11	%		.72	%		1.35	%
Allowance for loan and lease losses to annualized net loan charge-offs		286.74			232.39			228.85			248.08			186.53
Allowance for loan and lease losses to period-end loans		1.79			1.92			2.57			1.79			2.57
Allowance for credit losses to period-end loans		1.89			2.01			2.69			1.89			2.69
Allowance for loan and lease losses to nonperforming loans		135.16			141.74			146.08			135.16			146.08
Allowance for credit losses to nonperforming loans		142.92			148.50			152.85			142.92			152.85

Discontinued operations — education lending business:
Loans charged off	$	16		$	23		$	35		$	39		$	73
Recoveries		4			4			3			8			6
Net loan charge-offs	$	(12)		$	(19)		$	(32)		$	(31)		$	(67)

(a) Included in "accrued expense and other liabilities" on the balance sheet.



Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
(dollars in millions)

	6-30-12			3-31-12			12-31-11			9-30-11			6-30-11
Commercial, financial and agricultural	$	141		$	168		$	188		$	188		$	213

Real estate — commercial mortgage		172			175			218			237			230
Real estate — construction		68			66			54			93			131
Total commercial real estate loans		240			241			272			330			361
Commercial lease financing		18			22			27			31			41
Total commercial loans		399			431			487			549			615
Real estate — residential mortgage		78			82			87			88			79
Home equity:
Key Community Bank		141			109			108			102			101
Other		17			12			12			12			11
Total home equity loans		158			121			120			114			112
Consumer other — Key Community Bank		2			1			1			4			3
Consumer other:
Marine		19			30			31			32			32
Other		1			1			1			1			1
Total consumer other		20			31			32			33			33
Total consumer loans		258			235			240			239			227
Total nonperforming loans		657			666			727			788			842
Nonperforming loans held for sale		38			24			46			42			42
OREO		28			61			65			63			52
Other nonperforming assets		28			16			21			21			14
Total nonperforming assets	$	751		$	767		$	859		$	914		$	950

Accruing loans past due 90 days or more	$	131		$	169		$	164		$	118		$	118
Accruing loans past due 30 through 89 days		362			420			441			478			465
Restructured loans — accruing and nonaccruing (a)		274			293			276			277			252
Restructured loans included in nonperforming loans (a)		163			184			191			178			144
Nonperforming assets from discontinued operations — education lending business		18			19			23			22			21
Nonperforming loans to period-end portfolio loans		1.32	%		1.35	%		1.47	%		1.64	%		1.76	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.51			1.55			1.73			1.89			1.98

(a)

Restructured loans (i.e., troubled debt restructurings) are those for which Key, for reasons related to a borrower's financial difficulties, grants a concession to the borrower that it would not otherwise consider. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance.



Summary of Changes in Nonperforming Loans From Continuing Operations
(in millions)

	2Q12		1Q12		4Q11		3Q11		2Q11
Balance at beginning of period	$	666	$	727	$	788	$	842	$	885
Loans placed on nonaccrual status		350		214		230		292		410
Charge-offs		(131)		(132)		(149)		(157)		(177)
Loans sold		(49)		(27)		(28)		(16)		(11)
Payments		(110)		(65)		(70)		(125)		(156)
Transfers to OREO		(6)		(15)		(12)		(11)		(6)
Transfers to nonperforming loans held for sale		(16)		—		(19)		(24)		(15)
Transfers to other nonperforming assets		(14)		—		(4)		(3)		—
Loans returned to accrual status		(33)		(36)		(9)		(10)		(88)
Balance at end of period	$	657	$	666	$	727	$	788	$	842




Summary of Changes in Nonperforming Loans Held For Sale From Continuing Operations
(in millions)

	2Q12		1Q12		4Q11		3Q11		2Q11
Balance at beginning of period	$	24	$	46	$	42	$	42	$	86
Transfers in		16		—		19		24		15
Net advances / (payments)		—		(1)		(3)		(5)		(13)
Loans sold		(1)		(1)		(11)		(5)		(37)
Transfers to OREO		—		—		(1)		(19)		(5)
Valuation adjustments		(1)		(1)		—		(1)		(4)
Loans returned to accrual status / other		—		(19)		—		6		—
Balance at end of period	$	38	$	24	$	46	$	42	$	42




Summary of Changes in Other Real Estate Owned, Net of Allowance, From Continuing Operations
(in millions)

	2Q12		1Q12		4Q11		3Q11		2Q11
Balance at beginning of period	$	61	$	65	$	63	$	52	$	97
Properties acquired — nonperforming loans		6		15		13		30		11
Valuation adjustments		(7)		(7)		(4)		(3)		(7)
Properties sold		(32)		(12)		(7)		(16)		(49)
Balance at end of period	$	28	$	61	$	65	$	63	$	52



Line of Business Results
(dollars in millions)

																Percent change 2Q12 vs.
	2Q12			1Q12			4Q11			3Q11			2Q11			1Q12			2Q11
Key Community Bank
Summary of operations
Total revenue (TE)	$	537		$	528		$	546		$	565		$	559			1.7	%		(3.9)	%
Provision (credit) for loan and lease losses		11			2			30			39			79			450.0			(86.1)
Noninterest expense		476			456			477			457			447			4.4			6.5
Net income (loss) attributable to Key		41			57			40			57			34			(28.1)			20.6
Average loans and leases		27,043			26,617			26,406			26,270			26,242			1.6			3.1
Average deposits		48,253			47,768			48,076			47,672			47,719			1.0			1.1
Net loan charge-offs		50			49			71			60			79			2.0			(36.7)
Net loan charge-offs to average loans		.74	%		.74	%		1.07	%		.91	%		1.21	%		N/A			N/A
Nonperforming assets at period end	$	401		$	402		$	415		$	439		$	455			(.2)			(11.9)
Return on average allocated equity		5.73	%		7.74	%		5.07	%		7.19	%		4.22	%		N/A			N/A
Average full-time equivalent employees		8,757			8,719			8,633			8,641			8,504			.4			3.0





Key Corporate Bank
Summary of operations
Total revenue (TE)	$	392		$	401		$	413		$	370		$	391			(2.2)	%		.3	%
Provision (credit) for loan and lease losses		4			13			(61)			(40)			(76)			(69.2)			N/M
Noninterest expense		218			231			228			216			207			(5.6)			5.3
Net income (loss) attributable to Key		105			100			157			123			164			5.0			(36.0)
Average loans and leases		18,532			18,584			17,783			16,985			17,168			(.3)			7.9
Average loans held for sale		514			509			356			273			302			1.0			70.2
Average deposits		12,409			11,556			11,162			10,544			10,195			7.4			21.7
Net loan charge-offs		9			25			12			22			29			(64.0)			(69.0)
Net loan charge-offs to average loans		.20	%		.54	%		.27	%		.51	%		.68	%		N/A			N/A
Nonperforming assets at period end	$	248		$	237		$	294		$	326		$	339			4.6			(26.8)
Return on average allocated equity		23.61	%		21.07	%		30.02	%		22.52	%		28.26	%		N/A			N/A
Average full-time equivalent employees		2,257			2,254			2,286			2,288			2,191			.1			3.0

Key Corporate Bank supplementary information (lines of business)
Real Estate Capital and Corporate Banking Services
Total revenue (TE)	$	176		$	161		$	176		$	147		$	156			9.3	%		12.8	%
Provision (credit) for loan and lease losses		5			—			(31)			(38)			(49)			N/M			N/M
Noninterest expense		63			59			62			65			50			6.8			26.0
Net income (loss) attributable to Key		65			64			92			76			97			1.6			(33.0)
Average loans and leases		7,343			7,699			7,445			7,088			7,713			(4.6)			(4.8)
Average loans held for sale		337			291			216			173			229			15.8			47.2
Average deposits		9,190			8,221			7,643			7,286			7,371			11.8			24.7
Net loan charge-offs		7			16			10			19			26			(56.3)			(73.1)
Net loan charge-offs to average loans		.38	%		.84	%		.53	%		1.06	%		1.35	%		N/A			N/A
Nonperforming assets at period end	$	186		$	173		$	209		$	240		$	245			7.5			(24.1)
Return on average allocated equity		30.90	%		27.56	%		35.13	%		26.83	%		31.13	%		N/A			N/A
Average full-time equivalent employees		950			951			953			942			902			(.1)			5.3

Equipment Finance
Total revenue (TE)	$	57		$	64		$	62		$	68		$	63			(10.9)	%		(9.5)	%
Provision (credit) for loan and lease losses		6			(2)			(15)			(8)			(30)			N/M			N/M
Noninterest expense		37			37			48			45			45			—			(17.8)
Net income (loss) attributable to Key		9			18			18			19			30			(50.0)			(70.0)
Average loans and leases		4,886			4,779			4,680			4,619			4,545			2.2			7.5
Average loans held for sale		23			24			10			7			—			(4.2)			N/M
Average deposits		7			8			9			11			12			(12.5)			(41.7)
Net loan charge-offs		4			5			(1)			(1)			2			(20.0)			100.0
Net loan charge-offs to average loans		.33	%		.42	%		(.08)	%		(.09)	%		.18	%		N/A			N/A
Nonperforming assets at period end	$	33		$	28		$	41		$	31		$	39			17.9			(15.4)
Return on average allocated equity		14.48	%		26.71	%		23.19	%		23.05	%		35.81	%		N/A			N/A
Average full-time equivalent employees		464			469			517			511			511			(1.1)			(9.2)

Institutional and Capital Markets
Total revenue (TE)	$	159		$	176		$	175		$	155		$	172			(9.7)	%		(7.6)	%
Provision (credit) for loan and lease losses		(7)			15			(15)			6			3			N/M			N/M
Noninterest expense		118			135			118			106			112			(12.6)			5.4
Net income (loss) attributable to Key		31			18			47			28			37			72.2			(16.2)
Average loans and leases		6,303			6,106			5,658			5,278			4,910			3.2			28.4
Average loans held for sale		154			194			130			93			73			(20.6)			111.0
Average deposits		3,212			3,327			3,510			3,247			2,812			(3.5)			14.2
Net loan charge-offs		(2)			4			3			4			1			N/M			N/M
Net loan charge-offs to average loans		(.13)	%		.26	%		.21	%		.30	%		.08	%		N/A			N/A
Nonperforming assets at period end	$	29		$	36		$	44		$	55		$	55			(19.4)			(47.3)
Return on average allocated equity		17.99	%		10.28	%		25.61	%		15.51	%		20.00	%		N/A			N/A
Average full-time equivalent employees		843			834			816			835			778			1.1			8.4

TE = Taxable Equivalent, N/A = Not Applicable, N/M = Not Meaningful

SOURCE KeyCorp

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KeyCorp Reports Second Quarter Net Income Of $221 Million