KEYCORP /NEW/ - FORM 8-K - EX-99.1

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Exhibit 99.1

NEWS

FOR IMMEDIATE RELEASE

KEYCORP REPORTS SECOND QUARTER 2013

NET INCOME OF $193 MILLION, OR $.21 PER COMMON SHARE

Efficiency initiative results in achieved annualized run rate savings of approximately

$171 million through the second quarter of 2013

CLEVELAND, July 18, 2013 – KeyCorp (NYSE: KEY) today announced second quarter net income from continuing operations attributable to Key common shareholders of $193 million, or $.21 per common share, compared to $196 million, or $.21 per common share for the first quarter of 2013, and $217 million, or $.23 per common share for the second quarter of 2012. During the second quarter, Key incurred $37 million, or $.03 per common share of costs associated with its previously announced efficiency initiative.

For the six months ended June 30, 2013, net income from continuing operations attributable to Key common shareholders was $389 million, or $.42 per common share, compared to $412 million, or $.43 per common share for the same period one year ago. During the first half of 2013, Key incurred $52 million, or $.04 per common share of costs related to its efficiency initiative.

CURRENT QUARTER DEVELOPMENTS

Executing on growth initiatives

•

Acquiring a commercial mortgage servicing portfolio and special servicing business, building scale and becoming one of the top three largest named servicers of commercial/multifamily loans in the U.S. and the fifth largest special servicer of CMBS (Initial closing completed in June; final closing expected in July)

•

Expanded mobile offering with the launch of new remote deposit capabilities for both consumer and commercial clients

Continued progress on efficiency initiative

•

Achieved annualized run rate savings of approximately $171 million through the second quarter of 2013

•

Recognized expenses of $37 million, or $.03 per common share associated with efficiency initiative during the second quarter of 2013

•

Cash efficiency ratio of 69.06%, and adjusted cash efficiency ratio net of efficiency initiative charges of 65.42% for the second quarter of 2013

•

Consolidated 33 branches during the second quarter of 2013

•

Realigned Community Bank organization around core relationship strategy to drive profitability

Focused on capital management priorities

•

Repurchased $112 million of common shares during the second quarter of 2013

•

Increased common share dividend by 10% to $.055 per common share

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 2

“During the second quarter, the strength of our business model continued to drive results. Key made clear progress implementing growth initiatives, improving its cost structure and executing capital priorities,” said Chairman and Chief Executive Officer Beth Mooney.

“Compared to the first quarter, cautious client behavior led to slower loan growth, higher levels of liquidity for Key and greater than anticipated pressure on our net interest margin. Despite the challenging economic backdrop, Key was able to produce slight increases in both loans and revenue and control expenses. Further, we stayed true to our commitment of disciplined capital management by repurchasing $112 million in common shares and increasing our dividend by 10%,” continued Mooney.

Mooney added: “To maintain and enhance our growth, we also continued to invest in our businesses. We are in the process of acquiring a commercial mortgage servicing portfolio and special servicing business that will significantly enhance our scale and presence in the market. We also launched new mobile capabilities that add accessibility and functionality for both our consumer and commercial clients. Our efficiency initiative, which began in June 2012, remains on target to reach our goal of $200 million in annualized savings by the end of the year. Through the second quarter of 2013, we have achieved approximately $171 million of the targeted savings.”

SECOND QUARTER 2013 FINANCIAL RESULTS

Compared with Second Quarter of 2012

•

Total revenue increased $14 million

•

Taxable-equivalent net interest income of $586 million, up $42 million, or 7.7%, which included $30 million associated with Key’s third quarter 2012 branch and credit card portfolio acquisitions

•

Noninterest income declined $28 million, or 6.1% primarily due to a gain on the early terminations of leveraged leases one year ago and a reduction in net gains (losses) from principal investing; noninterest income included $14 million associated with Key’s acquisitions noted above

•

Net interest margin of 3.13%, up 7 basis points

•

Continued average loan growth driven by 13.9% increase in commercial, financial and agricultural loans

•

Average deposits increased $4.6 billion, or 7.6%, which included $2 billion of deposits from Key’s third quarter 2012 Western New York branch acquisition

•

Noninterest expense up $18 million, which included $37 million associated with the efficiency initiative and $26 million associated with Key’s acquisitions noted above

•

Net loan charge-offs decreased 41.6% to .34% of average total loans

•

Maintained solid capital position with Tier 1 common equity of 11.25%

Compared with First Quarter of 2013

•

Total revenue relatively stable

•

Taxable-equivalent net interest income down $3 million

•

Noninterest income up $4 million

•

Net interest margin down 11 basis points

•

Average loans remained flat

•

Average deposits increased $1.7 billion, or 2.7%, driven by growth in commercial balances

•

Noninterest expense increased $30 million, which included a $22 million increase in costs associated with the efficiency initiative in the second quarter of 2013

•

Net loan charge-offs decreased 8.2%

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 3

Selected Financial Highlights


dollars in millions, except per share data										Change 2Q13 vs.
	2Q13			1Q13			2Q12			1Q13			2Q12
Income (loss) from continuing operations attributable to Key common shareholders	$	193		$	196		$	217			(1.5	)%		(11.1	)%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution		.21			.21			.23			—			(8.7	)
Return on average total assets from continuing operations		.95	%		.99	%		1.10	%		N/A			N/A
Tier 1 common equity^(a)		11.25			11.40			11.63			N/A			N/A
Book value at period end	$	10.89		$	10.89		$	10.43			—			4.4	%
Net interest margin (TE) from continuing operations		3.13	%		3.24	%		3.06	%		N/A			N/A

(a)

The table entitled “GAAP to Non-GAAP Reconciliations” in the attached financial supplement presents the computations of certain financial measures related to “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.

TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS

Revenue


dollars in millions							Change 2Q13 vs.
	2Q13		1Q13		2Q12		1Q13			2Q12
Net interest income (TE)	$	586	$	589	$	544		(.5	)%		7.7	%
Noninterest income		429		425		457		.9			(6.1	)

Total revenue	$	1,015	$	1,014	$	1,001		.1	%		1.4	%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $586 million for the second quarter of 2013, and the net interest margin was 3.13%. These results compare to taxable-equivalent net interest income of $544 million and a net interest margin of 3.06% for the second quarter of 2012. The increase in the net interest margin was primarily a result of a change in funding mix from the redemption of certain trust preferred securities, maturity of long-term debt, and maturity of higher-costing certificates of deposit over the past year.

Compared to the first quarter of 2013, taxable-equivalent net interest income decreased by $3 million, and the net interest margin declined by 11 basis points. The decrease in net interest income was primarily due to lower replacement yields on new loans and investments as compared to the yield on maturing loans and investments. This decline was partially offset by an increase in average earning asset balances and a higher day count in the second quarter. The decline in the net interest margin was largely attributable to a six basis point impact from lower loan yields and fees as well as a five basis point impact from higher levels of liquidity and securities. The net interest margin was also negatively impacted by approximately two basis points from the termination and maturity of $4.4 billion of interest rate swaps that were not replaced, as Key continues to increase its asset sensitivity to be better positioned for a rise in short-term interest rates.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 4

Noninterest Income


dollars in millions							Change 2Q13 vs.
	2Q13		1Q13		2Q12		1Q13			2Q12
Trust and investment services income	$	100	$	95	$	90		5.3	%		11.1	%
Investment banking and debt placement fees		84		79		73		6.3			15.1
Service charges on deposit accounts		71		69		70		2.9			1.4
Operating lease income and other leasing gains		19		23		58		(17.4	)		(67.2	)
Corporate services income		43		45		44		(4.4	)		(2.3	)
Cards and payments income		42		37		31		13.5			35.5
Corporate-owned life insurance income		31		30		30		3.3			3.3
Consumer mortgage income		6		7		9		(14.3	)		(33.3	)
Net gains (losses) from principal investing		7		8		24		(12.5	)		(70.8	)
Other income		26		32		28		(18.8	)		(7.1	)

Total noninterest income	$	429	$	425	$	457		.9	%		(6.1	)%

Key’s noninterest income was $429 million for the second quarter of 2013, compared to $457 million for the year-ago quarter. Operating lease income and other leasing gains decreased $39 million primarily due to a $31 million gain on the early terminations of leveraged leases one year ago, and net gains (losses) from principal investing decreased by $17 million. These decreases were partially offset by increases in investment banking and debt placement fees and cards and payments income of $11 million each, and trust and investment services income of $10 million.

Compared to the first quarter of 2013, noninterest income increased by $4 million. Trust and investment services income, investment banking and debt placement fees, and cards and payments income each increased $5 million. These increases in noninterest income were partially offset by declines in operating lease income and other leasing gains of $4 million and other income of $6 million.

Noninterest Expense


dollars in millions							Change 2Q13 vs.
	2Q13		1Q13		2Q12		1Q13			2Q12
Personnel expense	$	406	$	391	$	377		3.8	%		7.7	%
Nonpersonnel expense		305		290		316		5.2			(3.5	)

Total noninterest expense	$	711	$	681	$	693		4.4	%		2.6	%

Key’s noninterest expense was $711 million for the second quarter of 2013, compared to $693 million for the same period last year. Excluding the $37 million in expenses related to Key’s efficiency initiative and the $26 million in incremental costs associated with acquisitions, noninterest expense was down $45 million compared to the prior year. Personnel expense increased $29 million due to an increase in severance expense primarily associated with Key’s efficiency initiative and higher incentive compensation expense accruals. Nonpersonnel expense decreased $11 million from one year ago. Business services and professional fees declined $14 million, and marketing expense and other real estate owned (OREO) expense each decreased $6 million. These declines were partially offset by an increase in net occupancy of $10 million primarily due to charges related to the consolidation of 33 branches during the second quarter of 2013. Intangible asset amortization on credit cards and other intangible asset amortization associated with the third quarter 2012 acquisitions of the credit card portfolio and the branches in Western New York also increased $9 million in total.

Compared to the first quarter of 2013, noninterest expense increased by $30 million. Personnel expense increased $15 million as severance expense was $9 million higher; annual merit and incentive compensation also contributed to the increase. Nonpersonnel expense also increased $15 million from the first quarter of 2013. Net occupancy increased $8 million primarily due to charges related to the consolidation of 33 branches during the second quarter of 2013. Marketing expense also increased $5 million.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 5

BALANCE SHEET HIGHLIGHTS

As of June 30, 2013, Key had total assets of $90.6 billion compared to $89.2 billion at March 31, 2013, and $86.5 billion at June 30, 2012.

Average Loans


dollars in millions							Change 6-30-13 vs.
	6-30-13		3-31-13		6-30-12		3-31-13			6-30-12
Commercial, financial and agricultural^(a)	$	23,480	$	23,317	$	20,606		.7	%		13.9	%
Other commercial loans		13,290		13,493		14,055		(1.5	)		(5.4	)
Total home equity loans		10,381		10,200		9,852		1.8			5.4
Other consumer loans		5,545		5,616		4,933		(1.3	)		12.4

Total loans	$	52,696	$	52,626	$	49,446		.1	%		6.6	%

(a)	Commercial, financial and agricultural average balance for the three months ended June 30, 2013 and March 31, 2013 includes $96 million and $91 million, respectively, of assets from commercial credit cards.

Average loans were $52.7 billion for the second quarter of 2013, an increase of $3.3 billion compared to the second quarter of 2012. Commercial, financial and agricultural loans grew by $2.9 billion over the year-ago quarter, with strong growth across Key’s business segments. In addition, the third quarter 2012 credit card portfolio and Western New York branch acquisitions added $1 billion of mostly consumer loans. This growth was partially offset by declines in the commercial real estate portfolio, the equipment lease portfolio, which included the early termination of certain leveraged leases in the exit portfolio in 2012, and run-off of consumer loans in the designated exit portfolio.

Compared to the first quarter of 2013, average loans increased by $70 million. This average loan growth was attributable to an increase in commercial, financial and agricultural loans and home equity loans, which benefitted from Key’s second quarter lending promotion. This growth in loans was partially offset by a decrease in commercial real estate, commercial lease financing, and other consumer loans.

Average Deposits


dollars in millions										Change 6-30-13 vs.
	6-30-13			3-31-13			6-30-12			3-31-13			6-30-12
Non-time deposits^(a)	$	57,691		$	55,819		$	50,801			3.4	%		13.6	%
Certificates of deposits ($100,000 or more)		2,975			2,911			3,858			2.2			(22.9	)
Other time deposits		4,202			4,451			5,645			(5.6	)		(25.6	)

Total deposits	$	64,868		$	63,181		$	60,304			2.7	%		7.6	%

Cost of total deposits^(a)		.26	%		.29	%		.47	%		N/A			N/A

(a)	Excludes deposits in foreign office.

N/A = Not Applicable

Average deposits, excluding deposits in foreign office, totaled $64.9 billion for the second quarter of 2013, an increase of $4.6 billion compared to the year-ago quarter. The growth reflects an increase in demand deposits of $2.7 billion and interest-bearing non-time deposits of $4.2 billion (including the impact of Key’s third quarter 2012 Western New York branch acquisition, which added $2 billion of mostly interest-bearing non-time deposits). This deposit growth was partially offset by $2.3 billion of run-off from one year ago in certificates of deposit and other time deposits.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 6

Compared to the first quarter of 2013, average deposits, excluding deposits in foreign office, increased by $1.7 billion. This deposit growth was primarily due to an increase in business demand and interest-bearing commercial deposits, reflecting deposits made by some of Key’s larger clients.

ASSET QUALITY


dollars in millions										Change 2Q13 vs.
	2Q13			1Q13			2Q12			1Q13			2Q12
Net loan charge-offs	$	45		$	49		$	77			(8.2	)%		(41.6	)%
Net loan charge-offs to average total loans		.34	%		.38	%		.63	%		N/A			N/A
Nonperforming loans at period end^(a)	$	652		$	650		$	657			.3			(.8	)
Nonperforming assets at period end		693			705			751			(1.7	)		(7.7	)
Allowance for loan and lease losses		876			893			888			(1.9	)		(1.4	)
Allowance for loan and lease losses to nonperforming loans		134.36	%		137.38	%		135.16	%		N/A			N/A
Provision (credit) for loan and lease losses	$	28		$	55		$	21			(49.1	)%		33.3	%

(a)	June 30, 2013 and March 31, 2013 amounts exclude $19 million and $22 million, respectively, of purchased credit impaired loans acquired in July 2012.

N/A = Not Applicable

Key’s provision for loan and lease losses was $28 million for the second quarter of 2013, compared to $55 million for the first quarter of 2013 and $21 million for the year-ago quarter. The decline in the provision for loan and lease losses from the prior quarter reflects Key’s current asset quality measures and the quality of its new loan originations.

Key’s allowance for loan and lease losses was $876 million, or 1.65% of total period-end loans at June 30, 2013, compared to 1.70% at March 31, 2013, and 1.79% at June 30, 2012.

Net loan charge-offs for the second quarter of 2013 totaled $45 million, or .34% of average total loans. These results compare to $49 million, or .38% for the first quarter of 2013, and $77 million, or .63% for the same period last year.

At June 30, 2013, Key’s nonperforming loans totaled $652 million and represented 1.23% of period-end portfolio loans, compared to 1.24% at March 31, 2013 and 1.32% at June 30, 2012. Nonperforming assets at June 30, 2013, totaled $693 million and represented 1.30% of period-end portfolio loans and OREO and other nonperforming assets, compared to 1.34% at March 31, 2013, and 1.51% at June 30, 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, 2013.

Capital Ratios


	6-30-13			3-31-13			6-30-12
Tier 1 common equity^{(a), (b)}		11.25	%		11.40	%		11.63	%
Tier 1 risk-based capital^(a)		12.01			12.19			12.45
Total risk based capital^(a)		14.75			15.02			15.83
Tangible common equity to tangible assets^(b)		9.96			10.24			10.44
Leverage^(a)		11.21			11.36			11.35

(a)	6-30-13 ratio is estimated.

(b)

The table entitled “GAAP to Non-GAAP Reconciliations” in the attached financial supplement 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.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 7

As shown in the preceding table, at June 30, 2013, Key’s estimated Tier 1 common equity and Tier 1 risk-based capital ratios stood at 11.25% and 12.01%, respectively. In addition, the tangible common equity ratio was 9.96% at June 30, 2013.

On July 2, 2013 and July 9, 2013, the Federal Reserve and the OCC, respectively, approved a final rule that will implement the Basel III regulatory capital reforms and certain changes required by the Dodd-Frank Act. Consistent with the proposed rule published in August 2012, the final rule increases minimum requirements for both the quantity and quality of capital held by banking organizations and emphasizes Tier 1 common equity. While the final rule becomes effective in January 2014, the mandatory compliance date for Key begins in January 2015 and is subject to transitional provisions extending to January 2019. Key’s estimated Tier 1 common equity as calculated under this final rule was 10.81% at June 30, 2013. This exceeds the fully phased-in required minimum Tier 1 common equity (including capital conservation buffer) of 7.00%.

Summary of Changes in Common Shares Outstanding


in thousands										Change 2Q13 vs.
	2Q13			1Q13			2Q12			1Q13			2Q12
Shares outstanding at beginning of period		922,581			925,769			956,102			(.3	)%		(3.5	)%
Common shares repurchased		(10,786	)		(6,790	)		(10,468	)		58.9			3.0
Shares reissued (returned) under employee benefit plans		1,088			3,602			(161	)		(69.8	)		N/M

Shares outstanding at end of period		912,883			922,581			945,473			(1.1	)%		(3.4	)%

N/M = Not Meaningful

As previously reported and as authorized by Key’s Board of Directors and pursuant to Key’s 2013 capital plan submitted to and not objected to by the Federal Reserve, Key has authority to repurchase up to $426 million of its common shares. Common share repurchases under the 2013 capital plan authorization are expected to be executed through the first quarter of 2014.

The after-tax gain on the previously announced Victory divestiture is now expected to be lower than originally projected and in the range of $100 million to $115 million. The cash portion of this gain will be between $75 million and $90 million, and Key has received no objection from the Federal Reserve to use these cash proceeds for common share repurchases.

During the second quarter of 2013, Key completed $112 million of common share repurchases on the open market under Key’s share repurchase program.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 8

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 2Q13 vs.
	2Q13			1Q13			2Q12			1Q13			2Q12
Revenue from continuing operations (TE)
Key Community Bank	$	555		$	549		$	537			1.1	%		3.4	%
Key Corporate Bank		376			379			371			(.8	)		1.3
Other Segments		86			83			94			3.6			(8.5	)

Total segments		1,017			1,011			1,002			.6			1.5
Reconciling items		(2	)		3			(1	)		N/M			N/M

Total	$	1,015		$	1,014		$	1,001			.1	%		1.4	%

Income (loss) from continuing operations attributable to Key
Key Community Bank	$	36		$	31		$	54			16.1	%		(33.3	)%
Key Corporate Bank		117			105			95			11.4			23.2
Other Segments		70			68			49			2.9			42.9

Total segments		223			204			198			9.3			12.6
Reconciling items		(24	)		(3	)		24			N/M			N/M

Total	$	199		$	201		$	222			(1.0	)%		(10.4	)%

TE = Taxable equivalent, N/M = Not Meaningful

Key Community Bank


dollars in millions								Change 2Q13 vs.
	2Q13		1Q13		2Q12			1Q13			2Q12
Summary of operations
Net interest income (TE)	$	357	$	361	$	356			(1.1	)%		.3	%
Noninterest income		198		188		181			5.3			9.4

Total revenue (TE)		555		549		537			1.1			3.4
Provision (credit) for loan and lease losses		41		59		(4	)		(30.5	)		N/M
Noninterest expense		456		440		455			3.6			.2

Income (loss) before income taxes (TE)		58		50		86			16.0			(32.6	)
Allocated income taxes (benefit) and TE adjustments		22		19		32			15.8			(31.3	)

Net income (loss) attributable to Key	$	36	$	31	$	54			16.1	%		(33.3	)%

Average balances
Loans and leases	$	29,161	$	28,977	$	26,413			.6	%		10.4	%
Total assets		31,570		31,473		28,695			.3			10.0
Deposits		49,473		49,349		47,946			.3			3.2
Assets under management at period end	$	23,213	$	23,867	$	21,116			(2.7	)%		9.9	%

TE = Taxable Equivalent, N/M = Not Meaningful

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 9

Additional Key Community Bank Data


dollars in millions										Change 2Q13 vs.
	2Q13			1Q13			2Q12			1Q13			2Q12
Noninterest income
Trust and investment services income	$	67		$	65		$	60			3.1	%		11.7	%
Service charges on deposit accounts		60			58			59			3.4			1.7
Cards and payments income		37			33			26			12.1			42.3
Other noninterest income		34			32			36			6.3			(5.6	)

Total noninterest income	$	198		$	188		$	181			5.3	%		9.4	%

Average deposit balances
NOW and money market deposit accounts	$	26,341		$	26,109		$	23,824			.9	%		10.6	%
Savings deposits		2,536			2,463			2,074			3.0			22.3
Certificates of deposit ($100,000 or more)		2,443			2,498			3,269			(2.2	)		(25.3	)
Other time deposits		4,195			4,445			5,629			(5.6	)		(25.5	)
Deposits in foreign office		284			270			270			5.2			5.2
Noninterest-bearing deposits		13,674			13,564			12,880			.8			6.2

Total deposits	$	49,473		$	49,349		$	47,946			.3	%		3.2	%

Home equity loans
Average balance	$	9,992		$	9,787		$	9,359
Weighted-average loan-to-value ratio (at date of origination)		71	%		70	%		71	%
Percent first lien positions		57			55			54
Other data
Branches		1,052			1,084			1,062
Automated teller machines		1,359			1,482			1,576

Key Community Bank Summary of Operations

•

Realigned Community Bank structure and organization and closed 33 branches, resulting in expenses of $11 million in the second quarter of 2013

•

Continued credit card penetration and successful integration of branches in Western New York

•

Eight consecutive quarters of average loan growth

•

Core deposits up $3.8 billion, or 9.7% from the prior year

Key Community Bank recorded net income attributable to Key of $36 million for the second quarter of 2013, compared to $54 million for the year-ago quarter.

Taxable-equivalent net interest income increased by $1 million, or .3% from the second quarter of 2012. Average loans and leases grew 10.4% while average deposits increased 3.2% from one year ago. The Western New York branch and credit card portfolio acquisitions contributed $30 million to net interest income, $1 billion to average loans and leases, and $2 billion to deposits. The positive contribution to net interest income from the acquisitions was partially offset by a lower earnings credit applied to deposits in the current period compared to the same period one year ago as a result of the continued low-rate environment.

Noninterest income increased by $17 million, or 9.4% from the year-ago quarter. Cards and payments income increased $11 million as a result of the third quarter 2012 credit card portfolio acquisition. Trust and investment services income increased $7 million, primarily due to an increase in assets under management resulting from strong market performance and increased production.

The provision for loan and lease losses was a charge of $41 million compared to a credit of $4 million for the second quarter of 2012. Net loan charge-offs, including the 2012 credit card portfolio acquisition, decreased $4 million from the same period one year ago.

Noninterest expense increased by $1 million, or .2% from the year-ago quarter. Expense reductions resulting from Key’s efficiency initiative substantially offset the increase in expenses associated with Key’s third quarter 2012 Western New York branch and credit card portfolio acquisitions.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 10

Key Corporate Bank


dollars in millions								Change 2Q13 vs.
	2Q13			1Q13		2Q12		1Q13			2Q12
Summary of operations
Net interest income (TE)	$	189		$	187	$	190		1.1	%		(.5	)%
Noninterest income		187			192		181		(2.6	)		3.3

Total revenue (TE)		376			379		371		(.8	)		1.3
Provision (credit) for loan and lease losses		(10	)		4		4		N/M			N/M
Noninterest expense		202			210		213		(3.8	)		(5.2	)

Income (loss) before income taxes (TE)		184			165		154		11.5			19.5
Allocated income taxes and TE adjustments		67			60		56		11.7			19.6

Net income (loss)		117			105		98		11.4			19.4
Less: Net income (loss) attributable to noncontrolling interests		—			—		3		N/M			N/M

Net income (loss) attributable to Key	$	117		$	105	$	95		11.4	%		23.2	%

Average balances
Loans and leases	$	20,133		$	20,044	$	18,541		.4	%		8.6	%
Loans held for sale		466			409		514		13.9			(9.3	)
Total assets		23,965			23,864		22,709		.4			5.5
Deposits		15,606			13,968		12,414		11.7			25.7
Assets under management at period end	$	12,331		$	11,847	$	14,032		4.1	%		(12.1	)%

TE = Taxable Equivalent, N/M = Not Meaningful

Additional Key Corporate Bank Data


dollars in millions							Change 2Q13 vs.
	2Q13		1Q13		2Q12		1Q13			2Q12
Noninterest income
Trust and investment services income	$	33	$	31	$	31		6.5	%		6.5	%
Investment banking and debt placement fees		82		78		69		5.1			18.8
Operating lease income and other leasing gains		13		17		21		(23.5	)		(38.1	)
Corporate services income		32		30		34		6.7			(5.9	)
Service charges on deposit accounts		11		11		11		—			—
Cards and payments income		5		4		5		25.0			—

Payments and services income		48		45		50		6.7			(4.0	)
Other noninterest income		11		21		10		(47.6	)		10.0

Total noninterest income	$	187	$	192	$	181		(2.6	)%		3.3	%

Key Corporate Bank Summary of Operations

•

Investment banking and debt placement fees were up $13 million, or 18.8% from the prior year

•

Average loan balances up 8.6% from the prior year

•

Average deposits up 25.7% from the prior year

Key Corporate Bank recorded net income attributable to Key of $117 million for the second quarter of 2013, compared to $95 million for the same period one year ago.

Taxable-equivalent net interest income decreased by $1 million, or .5% compared to the second quarter of 2012. Average earning assets increased $1.5 billion, or 7.2% from the year-ago quarter, driving a $2 million increase in earning asset spread. Average deposit balances increased $3.2 billion, or 25.7% from the year-ago quarter, driven by the continued execution of health care strategies and increase in public sector deposits. However, these increases in balances were offset by declines in the deposit spread as a result of the continued low-rate environment.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 11

Noninterest income increased by $6 million, or 3.3% from the second quarter of 2012. Investment banking and debt placement fees increased $13 million, partially offset by a decrease in operating lease income and other leasing gains of $8 million compared to the year-ago quarter.

The provision for loan and lease losses was a credit of $10 million compared to a charge of $4 million for the second quarter of 2012. There were net loan recoveries of $6 million for the second quarter of 2013 compared to net loan charge-offs of $9 million for the same period one year ago.

Noninterest expense decreased by $11 million, or 5.2% from the second quarter of 2012. This decline was driven by decreases in professional fees, operating lease expense, and the provision (credit) for losses on lending-related commitments compared to the second quarter of 2012.

Other Segments

Other Segments consist of Corporate Treasury, Community Development, Key’s Principal Investing unit, and various exit portfolios. Other Segments generated net income attributable to Key of $70 million for the second quarter of 2013, compared to net income attributable to Key of $49 million for the same period last year. These results were primarily attributable to an increase in net interest income of $44 million and a decrease in the provision for loan and lease losses of $25 million. These improvements were partially offset by a decline in noninterest income of $52 million primarily due to decreases in operating lease income and other leasing gains of $32 million and net gains (losses) from principal investing of $17 million.

*****

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 $90.6 billion at June 30, 2013.

Key provides deposit, lending, cash management and investment services to individuals and small and mid-sized businesses in 14 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.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 12


CONTACTS:

ANALYSTS		MEDIA
Vernon L. Patterson		Jack Sparks
216.689.0520		720.904.4554
Vernon_Patterson@KeyBank.com		Jack_Sparks@KeyBank.com
		Twitter: @keybank_news
Kelly L. Dillon 216.689.3133 Kelly_L_Dillon@KeyBank.com

INVESTOR		KEY MEDIA
RELATIONS: www.key.com/ir		NEWSROOM: www.key.com/newsroom


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, and profitability. Forward-looking statements can be identified by words such as “expect,” “believe,” and “anticipate,” and other similar references to future periods. 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 Form 10-K for the year ended December 31, 2012, and its Quarterly Report on Form 10-Q for the period ended March 31, 2013, each of which has been filed with the Securities and Exchange Commission and is available on Key’s website (www.key.com/ir) and on the Securities and Exchange Commission’s website (www.sec.gov). These factors may include, among others: continued strain on the global financial markets as a result of economic slowdowns and concerns; current regulatory initiatives in the U.S., including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended, subjecting us to a variety of new and more stringent legal and regulatory requirements and increased scrutiny from our regulators; adverse behaviors in securities, public debt, and capital markets, including changes in market liquidity and volatility; and our ability to timely and effectively implement our strategic initiatives. 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 18, 2013. An audio replay of the call will be available through July 25, 2013.

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.

*****

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 13

KeyCorp

Second Quarter 2013

Financial Supplement


Page
14		Financial Highlights
16		GAAP to Non-GAAP Reconciliation
19		Consolidated Balance Sheets
20		Consolidated Statements of Income
21		Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
23		Noninterest Expense
23		Personnel Expense
24		Loan Composition
24		Loans Held for Sale Composition
24		Summary of Changes in Loans Held for Sale
25		Exit Loan Portfolio From Continuing Operations
25		Asset Quality Statistics From Continuing Operations
26		Summary of Loan and Lease Loss Experience From Continuing Operations
27		Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
28		Summary of Changes in Nonperforming Loans From Continuing Operations
28		Summary of Changes in Nonperforming Loans Held for Sale From Continuing Operations
28		Summary of Changes in Other Real Estate Owned, Net of Allowance, From Continuing Operations
29		Line of Business Results

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 14

Financial Highlights

(dollars in millions, except per share amounts)


	Three months ended
	6-30-13			3-31-13			6-30-12
Summary of operations
Net interest income (TE)	$	586		$	589		$	544
Noninterest income		429			425			457

Total revenue (TE)		1,015			1,014			1,001
Provision (credit) for loan and lease losses		28			55			21
Noninterest expense		711			681			693
Income (loss) from continuing operations attributable to Key		199			201			222
Income (loss) from discontinued operations, net of taxes^(a)		5			3			14
Net income (loss) attributable to Key		204			204			236
Income (loss) from continuing operations attributable to Key common shareholders	$	193		$	196		$	217
Income (loss) from discontinued operations, net of taxes^(a)		5			3			14
Net income (loss) attributable to Key common shareholders		198			199			231
Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.21		$	.21		$	.23
Income (loss) from discontinued operations, net of taxes^(a)		.01			—			.01
Net income (loss) attributable to Key common shareholders^(b)		.22			.22			.24
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.21			.21			.23
Income (loss) from discontinued operations, net of taxes — assuming dilution^(a)		.01			—			.01
Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)		.22			.21			.24
Cash dividends paid		.055			.05			.05
Book value at period end		10.89			10.89			10.43
Tangible book value at period end		9.77			9.78			9.45
Market price at period end		11.04			9.96			7.74
Performance ratios
From continuing operations:
Return on average total assets		.95	%		.99	%		1.10	%
Return on average common equity		7.72			7.96			8.90
Return on average tangible common equity^(c)		8.60			8.87			9.83
Net interest margin (TE)		3.13			3.24			3.06
Cash efficiency ratio^(c)		69.06			65.98			69.13
From consolidated operations:
Return on average total assets		.92	%		.94	%		1.10	%
Return on average common equity		7.92			8.08			9.47
Return on average tangible common equity^(c)		8.82			9.01			10.46
Net interest margin (TE)		3.07			3.16			2.99
Loan to deposit^(d)		83.63			86.95			86.38
Capital ratios at period end
Key shareholders’ equity to assets		11.29	%		11.59	%		11.74	%
Key common shareholders’ equity to assets		10.96			11.27			11.40
Tangible common equity to tangible assets^(c)		9.96			10.24			10.44
Tier 1 common equity^{(c), (e)}		11.25			11.40			11.63
Tier 1 risk-based capital^(e)		12.01			12.19			12.45
Total risk-based capital^(e)		14.75			15.02			15.83
Leverage^(e)		11.21			11.36			11.35
Asset quality — from continuing operations
Net loan charge-offs	$	45		$	49		$	77
Net loan charge-offs to average loans		.34	%		.38	%		.63	%
Allowance for loan and lease losses to annualized net loan charge-offs		485.33			449.37			286.74
Allowance for loan and lease losses	$	876		$	893		$	888
Allowance for credit losses		913			925			939
Allowance for loan and lease losses to period-end loans		1.65	%		1.70	%		1.79	%
Allowance for credit losses to period-end loans		1.72			1.76			1.89
Allowance for loan and lease losses to nonperforming loans		134.36			137.38			135.16
Allowance for credit losses to nonperforming loans		140.03			142.31			142.92
Nonperforming loans at period end^(f)	$	652		$	650		$	657
Nonperforming assets at period end		693			705			751
Nonperforming loans to period-end portfolio loans		1.23	%		1.24	%		1.32	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.30			1.34			1.51
Trust and brokerage assets
Assets under management	$	35,544		$	35,714		$	35,148
Nonmanaged and brokerage assets		37,759			37,115			33,803
Other data
Average full-time equivalent employees		14,999			15,396			15,455
Branches		1,052			1,084			1,062
Taxable-equivalent adjustment	$	5		$	6		$	6

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 15

Financial Highlights (continued)

(dollars in millions, except per share amounts)


	Six months ended
	6-30-13			6-30-12
Summary of operations
Net interest income (TE)	$	1,175		$	1,103
Noninterest income		854			899

Total revenue (TE)		2,029			2,002
Provision (credit) for loan and lease losses		83			63
Noninterest expense		1,392			1,372
Income (loss) from continuing operations attributable to Key		400			423
Income (loss) from discontinued operations, net of taxes^(a)		8			13
Net income (loss) attributable to Key		408			436
Income (loss) from continuing operations attributable to Key common shareholders	$	389		$	412
Income (loss) from discontinued operations, net of taxes^(a)		8			13
Net income (loss) attributable to Key common shareholders		397			425
Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.42		$	.44
Income (loss) from discontinued operations, net of taxes^(a)		.01			.01
Net income (loss) attributable to Key common shareholders^(b)		.43			.45
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.42			.43
Income (loss) from discontinued operations, net of taxes — assuming dilution^(a)		.01			.01
Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)		.43			.45
Cash dividends paid		.105			.08
Performance ratios
From continuing operations:
Return on average total assets		.97	%		1.05	%
Return on average common equity		7.84			8.49
Return on average tangible common equity ^(c)		8.73			9.39
Net interest margin (TE)		3.18			3.11
Cash efficiency ratio^(c)		67.52			68.43
From consolidated operations:
Return on average total assets		.93	%		1.01	%
Return on average common equity		8.00			8.76
Return on average tangible common equity ^(c)		8.91			9.69
Net interest margin (TE)		3.12			3.03
Asset quality — from continuing operations
Net loan charge-offs	$	94		$	178
Net loan charge-offs to average total loans		.36	%		.72	%
Other data
Average full-time equivalent employees		15,197			15,430
Taxable-equivalent adjustment	$	11		$	12

(a)

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. In February 2013, Key decided to sell its investment subsidiary, Victory Capital Management, and its broker-dealer affiliate, Victory Capital Advisors, to a private equity fund. As a result of these decisions, Key has accounted for these businesses as discontinued operations.

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

(c)

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

(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)	6-30-13 ratio is estimated.

(f)	June 30, 2013 and March 31, 2013 amounts exclude $19 million and $22 million, respectively, of purchased credit impaired loans acquired in July 2012.

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

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 16

GAAP to Non-GAAP Reconciliations

(dollars in millions)

The table below presents certain non-GAAP financial measures related to “tangible common equity,” “return on tangible common equity,” “Tier 1 common equity,” “pre-provision net revenue,” “cash efficiency ratio,” and “adjusted cash efficiency ratio.”

The tangible common equity ratio and the return on tangible common equity ratio have been a focus for some investors, and management believes these ratios 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.

The cash efficiency ratio and the adjusted cash efficiency ratio are ratios of two non-GAAP performance measures. As such, there are no directly comparable GAAP performance measures. The cash efficiency ratio performance measure removes the impact of Key’s intangible asset amortization from the calculation. The adjusted cash efficiency ratio further removes the impact of the efficiency initiative charges. Management believes these ratios provide greater consistency and comparability between Key’s results and those of its peer banks. Additionally, these ratios are used by analysts and investors as they develop earnings forecasts and peer bank analysis.

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
	6-30-13			3-31-13			6-30-12
Tangible common equity to tangible assets at period end
Key shareholders’ equity (GAAP)	$	10,229		$	10,340		$	10,155
Less: Intangible assets ^(a)		1,021			1,024			932
Preferred Stock, Series A^(d)		282			291			291

Tangible common equity (non-GAAP)	$	8,926		$	9,025		$	8,932

Total assets (GAAP)	$	90,639		$	89,198		$	86,523
Less: Intangible assets ^(a)		1,021			1,024			932

Tangible assets (non-GAAP)	$	89,618		$	88,174		$	85,591

Tangible common equity to tangible assets ratio (non-GAAP)		9.96	%		10.24	%		10.44	%
Tier 1 common equity at period end
Key shareholders’ equity (GAAP)	$	10,229		$	10,340		$	10,155
Qualifying capital securities		339			339			339
Less: Goodwill		979			979			917
Accumulated other comprehensive income (loss)^(b)		(359	)		(204	)		(109	)
Other assets^(c)		102			106			71

Total Tier 1 capital (regulatory)		9,846			9,798			9,615
Less: Qualifying capital securities		339			339			339
Preferred Stock, Series A^(d)		282			291			291

Total Tier 1 common equity (non-GAAP)	$	9,225		$	9,168		$	8,985

Net risk-weighted assets (regulatory)^{(c), (e)}	$	81,964		$	80,400		$	77,236
Tier 1 common equity ratio (non-GAAP)^(e)		11.25	%		11.40	%		11.63	%
Pre-provision net revenue
Net interest income (GAAP)	$	581		$	583		$	538
Plus: Taxable-equivalent adjustment		5			6			6
Noninterest income (GAAP)		429			425			457
Less: Noninterest expense (GAAP)		711			681			693

Pre-provision net revenue from continuing operations (non-GAAP)	$	304		$	333		$	308

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 17

GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)


	Three months ended
	6-30-13			3-31-13			6-30-12
Average tangible common equity
Average Key shareholders’ equity (GAAP)	$	10,314		$	10,279		$	10,100
Less: Intangible assets (average)^(f)		1,023			1,027			931
Preferred Stock, Series A (average)		291			291			291

Average tangible common equity (non-GAAP)	$	9,000		$	8,961		$	8,878

Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)	$	193		$	196		$	217
Average tangible common equity (non-GAAP)		9,000			8,961			8,878
Return on average tangible common equity from continuing operations (non-GAAP)		8.60	%		8.87	%		9.83	%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)	$	198		$	199		$	231
Average tangible common equity (non-GAAP)		9,000			8,961			8,878
Return on average tangible common equity consolidated (non-GAAP)		8.82	%		9.01	%		10.46	%
Cash efficiency ratio
Noninterest expense (GAAP)	$	711		$	681		$	693
Less: Intangible asset amortization on credit cards (GAAP)		7			8			—
Other intangible asset amortization (GAAP)		3			4			1

Adjusted noninterest expense (non-GAAP)	$	701		$	669		$	692

Net interest income (GAAP)	$	581		$	583		$	538
Plus: Taxable-equivalent adjustment		5			6			6
Noninterest income (GAAP)		429			425			457

Total taxable-equivalent revenue (non-GAAP)	$	1,015		$	1,014		$	1,001

Cash efficiency ratio (non-GAAP)		69.06	%		65.98	%		69.13	%
Cash efficiency ratio net of efficiency initiative charges
Adjusted noninterest expense (non-GAAP)	$	701		$	669		$	692
Less: Efficiency initiative charges (non-GAAP)		37			15			—

Net adjusted noninterest expense (non-GAAP)	$	664		$	654		$	692

Total taxable-equivalent revenue (non-GAAP)	$	1,015		$	1,014		$	1,001
Cash efficiency ratio net of efficiency initiative charges (non-GAAP)		65.42	%		64.50	%		69.13	%

	Three months ended
	6-30-13
Tier 1 common equity under Basel III (estimates)
Tier 1 common equity under current regulatory rules	$	9,225
Adjustments from current regulatory rules to Basel III:
Deferred tax assets and other^(g)		(62	)

Tier 1 common equity anticipated under Basel III^(h)	$	9,163

Net risk-weighted assets under current regulatory rules	$	81,964
Adjustments from current regulatory rules to Basel III:
Loan commitments less than one year		826
Past due loans		253
Mortgage servicing assets⁽ⁱ⁾		292
Deferred tax assets⁽ⁱ⁾		279
Other		1,151

Total risk-weighted assets under Basel III	$	84,765

Tier 1 common equity ratio under Basel III		10.81	%

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 18

GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)


	Six months ended
	6-30-13			6-30-12
Pre-provision net revenue
Net interest income (GAAP)	$	1,164		$	1,091
Plus: Taxable-equivalent adjustment		11			12
Noninterest income (GAAP)		854			899
Less: Noninterest expense (GAAP)		1,392			1,372

Pre-provision net revenue from continuing operations (non-GAAP)	$	637		$	630

Average tangible common equity
Average Key shareholders’ equity (GAAP)	$	10,297		$	10,046
Less: Intangible assets (average)^(j)		1,025			932
Preferred Stock, Series A (average)		291			291

Average tangible common equity (non-GAAP)	$	8,981		$	8,823

Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)	$	389		$	412
Average tangible common equity (non-GAAP)		8,981			8,823
Return on average tangible common equity from continuing operations (non-GAAP)		8.73	%		9.39	%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)	$	397		$	425
Average tangible common equity (non-GAAP)		8,981			8,823
Return on average tangible common equity consolidated (non-GAAP)		8.91	%		9.69	%
Cash efficiency ratio
Noninterest expense (GAAP)	$	1,392		$	1,372
Less: Intangible asset amortization on credit cards (GAAP)		15			—
Other intangible asset amortization (GAAP)		7			2

Adjusted noninterest expense (non-GAAP)	$	1,370		$	1,370

Net interest income (GAAP)	$	1,164		$	1,091
Plus: Taxable-equivalent adjustment		11			12
Noninterest income (GAAP)		854			899

Total taxable-equivalent revenue (non-GAAP)	$	2,029		$	2,002

Cash efficiency ratio (non-GAAP)		67.52	%		68.43	%
Adjusted cash efficiency ratio net of efficiency initiative charges
Adjusted noninterest expense (non-GAAP)	$	1,370		$	1,370
Less: Efficiency initiative charges (non-GAAP)		52			—

Net adjusted noninterest expense (non-GAAP)	$	1,318		$	1,370

Total taxable-equivalent revenue (non-GAAP)	$	2,029		$	2,002
Adjusted cash efficiency ratio net of efficiency initiative charges (non-GAAP)		64.96	%		68.43	%

(a)	Three months ended June 30, 2013 and March 31, 2013 exclude $107 million and $114 million, respectively, of period end purchased credit card receivable intangible assets.

(b)

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 application of the applicable accounting guidance for defined benefit and other postretirement plans.

(c)	Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed intangible assets (excluding goodwill) and deductible portions of nonfinancial equity investments. There were no disallowed deferred tax assets at June 30, 2013, March 31, 2013, and June 30, 2012.

(d)	Net of capital surplus for the three months ended June 30, 2013.

(e)	6-30-13 amount is estimated.

(f)	Three months ended June 30, 2013 and March 31, 2013 exclude $110 million and $118 million, respectively, of average ending purchased credit card receivable intangible assets.

(g)	Includes the deferred tax asset subject to future taxable income for realization, primarily tax credit carryforwards.

(h)	The amount of regulatory capital and risk-weighted assets estimated under Basel III (as fully phased-in on January 1, 2019) is based upon the federal banking agencies’ final Basel III rule, which implements Basel III under the Standardized Approach.

(i)	Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250%.

(j)	Six months ended June 30, 2013 excludes $114 million of average ending purchased credit card receivable intangible assets.

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 19

Consolidated Balance Sheets

(dollars in millions)


	6-30-13			3-31-13			6-30-12
Assets
Loans	$	53,101		$	52,574		$	49,605
Loans held for sale		402			434			656
Securities available for sale		13,253			13,496			13,205
Held-to-maturity securities		4,750			3,721			4,352
Trading account assets		592			701			679
Short-term investments		3,582			3,081			2,216
Other investments		1,037			1,059			1,186

Total earning assets		76,717			75,066			71,899
Allowance for loan and lease losses		(876	)		(893	)		(888	)
Cash and due from banks		696			621			716
Premises and equipment		900			930			931
Operating lease assets		303			309			318
Goodwill		979			979			917
Other intangible assets		149			159			15
Corporate-owned life insurance		3,362			3,352			3,285
Derivative assets		461			609			818
Accrued income and other assets		2,864			2,884			2,967
Discontinued assets		5,084			5,182			5,545

Total assets	$	90,639		$	89,198		$	86,523

Liabilities
Deposits in domestic offices:
NOW and money market deposit accounts	$	32,689		$	32,700		$	28,957
Savings deposits		2,542			2,546			2,103
Certificates of deposit ($100,000 or more)		2,918			2,998			3,669
Other time deposits		4,089			4,324			5,385

Total interest-bearing deposits		42,238			42,568			40,114
Noninterest-bearing deposits		24,939			21,564			21,435
Deposits in foreign office — interest-bearing		544			522			618

Total deposits		67,721			64,654			62,167
Federal funds purchased and securities sold under repurchase agreements		1,647			1,950			1,716
Bank notes and other short-term borrowings		298			378			362
Derivative liabilities		456			524			763
Accrued expense and other liabilities		1,421			1,352			1,390
Long-term debt		6,666			7,785			7,521
Discontinued liabilities		2,169			2,176			2,428

Total liabilities		80,378			78,819			76,347
Equity
Preferred stock, Series A		291			291			291
Common shares		1,017			1,017			1,017
Capital surplus		4,045			4,059			4,120
Retained earnings		7,214			7,065			6,595
Treasury stock, at cost		(2,020	)		(1,930	)		(1,796	)
Accumulated other comprehensive income (loss)		(318	)		(162	)		(72	)

Key shareholders’ equity		10,229			10,340			10,155
Noncontrolling interests		32			39			21

Total equity		10,261			10,379			10,176

Total liabilities and equity	$	90,639		$	89,198		$	86,523

Common shares outstanding (000)		912,883			922,581			945,473

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 20

Consolidated Statements of Income

(dollars in millions, except per share amounts)


	Three months ended						Six months ended
	6-30-13		3-31-13		6-30-12		6-30-13		6-30-12
Interest income
Loans	$	539	$	548	$	518	$	1,087	$	1,054
Loans held for sale		5		4		5		9		10
Securities available for sale		80		80		105		160		221
Held-to-maturity securities		20		18		17		38		29
Trading account assets		4		6		5		10		11
Short-term investments		1		2		2		3		3
Other investments		8		9		10		17		18

Total interest income		657		667		662		1,324		1,346
Interest expense
Deposits		42		45		71		87		148
Federal funds purchased and securities sold under repurchase agreements		—		1		1		1		2
Bank notes and other short-term borrowings		2		1		2		3		4
Long-term debt		32		37		50		69		101

Total interest expense		76		84		124		160		255

Net interest income		581		583		538		1,164		1,091
Provision (credit) for loan and lease losses		28		55		21		83		63

Net interest income (expense) after provision for loan and lease losses		553		528		517		1,081		1,028
Noninterest income
Trust and investment services income		100		95		90		195		186
Investment banking and debt placement fees		84		79		73		163		134
Service charges on deposit accounts		71		69		70		140		138
Operating lease income and other leasing gains		19		23		58		42		110
Corporate services income		43		45		44		88		88
Cards and payments income		42		37		31		79		60
Corporate-owned life insurance income		31		30		30		61		60
Consumer mortgage income		6		7		9		13		18
Net gains (losses) from principal investing		7		8		24		15		59
Other income^(a)		26		32		28		58		46

Total noninterest income		429		425		457		854		899
Noninterest expense
Personnel		406		391		377		797		749
Net occupancy		72		64		62		136		126
Computer processing		39		39		43		78		84
Business services and professional fees		37		35		51		72		88
Equipment		27		26		27		53		53
Operating lease expense		11		12		15		23		32
Marketing		11		6		17		17		30
FDIC assessment		8		8		8		16		16
Intangible asset amortization on credit cards		7		8		—		15		—
Other intangible asset amortization		3		4		1		7		2
Provision (credit) for losses on lending-related commitments		5		3		6		8		6
OREO expense, net		1		3		7		4		13
Other expense		84		82		79		166		173

Total noninterest expense		711		681		693		1,392		1,372

Income (loss) from continuing operations before income taxes		271		272		281		543		555
Income taxes		72		70		54		142		127

Income (loss) from continuing operations		199		202		227		401		428
Income (loss) from discontinued operations, net of taxes		5		3		14		8		13

Net income (loss)		204		205		241		409		441
Less: Net income (loss) attributable to noncontrolling interests		—		1		5		1		5

Net income (loss) attributable to Key	$	204	$	204	$	236	$	408	$	436

Income (loss) from continuing operations attributable to Key common shareholders	$	193	$	196	$	217	$	389	$	412
Net income (loss) attributable to Key common shareholders		198		199		231		397		425
Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.21	$	.21	$	.23	$	.42	$	.44
Income (loss) from discontinued operations, net of taxes		.01		—		.01		.01		.01
Net income (loss) attributable to Key common shareholders^(b)		.22		.22		.24		.43		.45
Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders	$	.21	$	.21	$	.23	$	.42	$	.43
Income (loss) from discontinued operations, net of taxes		.01		—		.01		.01		.01
Net income (loss) attributable to Key common shareholders^(b)		.22		.21		.24		.43		.45
Cash dividends declared per common share	$	.055	$	.05	$	.05	$	.105	$	.08
Weighted-average common shares outstanding (000)		913,736		920,316		944,648		917,008		946,995
Weighted-average common shares and potential common shares outstanding (000)^(c)		918,628		926,051		948,087		922,319		951,029

(a)	For the three months ended June 30, 2013, March 31, 2013, and June 30, 2012, Key did not have any impairment losses related to securities.

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

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

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 21

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations

(dollars in millions)


	Second Quarter 2013								First Quarter 2013								Second Quarter 2012
	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	$	23,480	^(d)	$	212		3.63	%	$	23,317	^(d)	$	218		3.78	%	$	20,606		$	196		3.82	%
Real estate — commercial mortgage		7,494			78		4.14			7,616			79		4.24			7,613			85		4.50
Real estate — construction		1,049			11		4.30			1,034			11		4.27			1,216			14		4.64
Commercial lease financing		4,747			48		3.96			4,843			47		3.92			5,226			45		3.45

Total commercial loans		36,770			349		3.80			36,810			355		3.92			34,661			340		3.94
Real estate — residential mortgage		2,176			24		4.53			2,173			25		4.58			1,990			24		4.91
Home equity:
Key Community Bank		9,992			98		3.93			9,787			96		3.97			9,359			94		4.04
Other		389			7		7.66			413			8		7.70			493			9		7.66

Total home equity loans		10,381			105		4.07			10,200			104		4.12			9,852			103		4.23
Consumer other — Key Community Bank		1,392			26		7.35			1,343			25		7.58			1,247			29		9.20
Credit cards		697			20		11.91			704			22		12.61			—			—		—
Consumer other:
Marine		1,206			20		6.24			1,311			20		6.29			1,595			26		6.29
Other		74			1		8.58			85			2		7.98			101			2		8.49

Total consumer other		1,280			21		6.37			1,396			22		6.39			1,696			28		6.42

Total consumer loans		15,926			196		4.94			15,816			198		5.00			14,785			184		4.99

Total loans		52,696			545		4.15			52,626			553		4.26			49,446			524		4.26
Loans held for sale		513			5		3.93			469			4		3.27			585			5		3.43
Securities available for sale^(b), (e)		13,296			79		2.47			12,065			81		2.74			13,865			105		3.13
Held-to-maturity securities^(b)		4,144			20		1.87			3,816			18		1.94			3,493			17		1.98
Trading account assets		749			4		2.31			710			6		3.44			768			5		3.01
Short-term investments		2,722			1		.23			2,999			2		.22			2,608			2		.29
Other investments^(e)		1,048			8		2.61			1,059			9		3.59			1,177			10		3.21

Total earning assets		75,168			662		3.54			73,744			673		3.67			71,942			668		3.74
Allowance for loan and lease losses		(890	)							(896	)							(928	)
Accrued income and other assets		9,770								9,867								9,866
Discontinued assets		5,096								5,216								5,673

Total assets	$	89,144							$	87,931							$	86,553

Liabilities
NOW and money market deposit accounts	$	32,849			14		.17		$	31,946			14		.18		$	29,106			13		.18
Savings deposits		2,545			—		.04			2,473			1		.05			2,085			—		.03
Certificates of deposit ($100,000 or more)^(f)		2,975			13		1.79			2,911			14		1.99			3,858			27		2.85
Other time deposits		4,202			14		1.35			4,451			16		1.42			5,645			30		2.13
Deposits in foreign office		573			1		.24			454			—		.25			759			1		.24

Total interest-bearing deposits		43,144			42		.39			42,235			45		.43			41,453			71		.69
Federal funds purchased and securities sold under repurchase agreements		1,845			—		.14			1,913			1		.15			1,880			1		.20
Bank notes and other short-term borrowings		367			2		1.84			387			1		1.75			468			2		1.80
Long-term debt^{(f), (g)}		4,401			32		3.25			4,671			37		3.51			5,463			50		4.01

Total interest-bearing liabilities		49,757			76		.62			49,206			84		.70			49,264			124		1.02

Noninterest-bearing deposits		22,297								21,400								19,610
Accrued expense and other liabilities		1,653								1,799								1,902
Discontinued liabilities^(g)		5,089								5,213								5,658

Total liabilities		78,796								77,618								76,434
Equity
Key shareholders’ equity		10,314								10,279								10,100
Noncontrolling interests		34								34								19

Total equity		10,348								10,313								10,119

Total liabilities and equity	$	89,144							$	87,931							$	86,553

Interest rate spread (TE)							2.92	%							2.97	%							2.72	%

Net interest income (TE) and net interest margin (TE)					586		3.13	%					589		3.24	%					544		3.06	%

TE adjustment^(b)					5								6								6

Net interest income, GAAP basis				$	581							$	583							$	538

(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) 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)	Commercial, financial and agricultural average balance for the three months ended June 30, 2013 and March 31, 2013 includes $96 million and $91 million, respectively, of assets from commercial credit cards.

(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

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 22

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations

(dollars in millions)


	Six months ended June 30, 2013								Six months ended June 30, 2012
	Average								Average
	Balance			Interest^(a)		Yield/Rate^(a)			Balance			Interest^(a)		Yield/ Rate^(a)
Assets
Loans:^{(b), (c)}
Commercial, financial and agricultural	$	23,399	^(d)	$	430		3.71	%	$	20,318		$	394		3.90	%
Real estate — commercial mortgage		7,554			157		4.19			7,803			174		4.49
Real estate — construction		1,042			22		4.28			1,250			30		4.75
Commercial lease financing		4,795			95		3.94			5,340			99		3.70

Total commercial loans		36,790			704		3.86			34,711			697		4.03
Real estate — residential mortgage		2,174			49		4.55			1,970			49		4.98
Home equity:
Key Community Bank		9,890			194		3.95			9,266			187		4.06
Other		401			15		7.68			507			19		7.67

Total home equity loans		10,291			209		4.10			9,773			206		4.25
Consumer other — Key Community Bank		1,368			51		7.46			1,220			57		9.40
Credit cards		700			42		12.26			—			—		—
Consumer other:
Marine		1,258			40		6.27			1,655			53		6.29
Other		80			3		8.26			109			4		8.11

Total consumer other		1,338			43		6.38			1,764			57		6.40

Total consumer loans		15,871			394		4.97			14,727			369		5.03

Total loans		52,661			1,098		4.21			49,438			1,066		4.33
Loans held for sale		491			9		3.61			583			10		3.52
Securities available for sale^{(b), (e)}		12,684			160		2.59			14,562			221		3.14
Held-to-maturity securities^(b)		3,981			38		1.90			2,872			29		2.02
Trading account assets		729			10		2.86			788			11		2.86
Short-term investments		2,860			3		.22			2,253			3		.29
Other investments^(e)		1,054			17		3.10			1,173			18		2.99

Total earning assets		74,460			1,335		3.60			71,669			1,358		3.83
Allowance for loan and lease losses		(893	)							(948	)
Accrued income and other assets		9,818								9,931
Discontinued assets		5,156								5,736

Total assets	$	88,541							$	86,388

Liabilities
NOW and money market deposit accounts	$	32,400			28		.17		$	28,717			28		.20
Savings deposits		2,509			1		.05			2,041			—		.04
Certificates of deposit ($100,000 or more)^(f)		2,943			27		1.89			3,947			56		2.88
Other time deposits		4,326			30		1.39			5,840			63		2.16
Deposits in foreign office		514			1		.25			764			1		.24

Total interest-bearing deposits		42,692			87		.41			41,309			148		.72
Federal funds purchased and securities sold under repurchase agreements		1,879			1		.15			1,865			2		.20
Bank notes and other short-term borrowings		377			3		1.80			479			4		1.66
Long-term debt^{(f), (g)}		4,535			69		3.38			5,812			101		3.80

Total interest-bearing liabilities		49,483			160		.66			49,465			255		1.05

Noninterest-bearing deposits		21,851								19,038
Accrued expense and other liabilities		1,725								2,095
Discontinued liabilities^{(d), (g)}		5,151								5,726

Total liabilities		78,210								76,324
Equity
Key shareholders’ equity		10,297								10,046
Noncontrolling interests		34								18

Total equity		10,331								10,064

Total liabilities and equity	$	88,541							$	86,388

Interest rate spread (TE)							2.94	%							2.78	%

Net interest income (TE) and net interest margin (TE)					1,175		3.18	%					1,103		3.11	%

TE adjustment^(b)					11								12

Net interest income, GAAP basis				$	1,164							$	1,091

(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)	Commercial, financial and agricultural average balance for the six months ended June 30, 2013 includes $94 million of assets from commercial credit cards.

(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

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 23

Noninterest Expense

(dollars in millions)


	Three months ended						Six months ended
	6-30-13		3-31-13		6-30-12		6-30-13		6-30-12
Personnel^(a)	$	406	$	391	$	377	$	797	$	749
Net occupancy		72		64		62		136		126
Computer processing		39		39		43		78		84
Business services and professional fees		37		35		51		72		88
Equipment		27		26		27		53		53
Operating lease expense		11		12		15		23		32
Marketing		11		6		17		17		30
FDIC assessment		8		8		8		16		16
Intangible asset amortization on credit cards		7		8		—		15		—
Other intangible asset amortization		3		4		1		7		2
Provision (credit) for losses on lending-related commitments		5		3		6		8		6
OREO expense, net		1		3		7		4		13
Other expense		84		82		79		166		173

Total noninterest expense	$	711	$	681	$	693	$	1,392	$	1,372

Average full-time equivalent employees^(b)		14,999		15,396		15,455		15,197		15,430

(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
	6-30-13		3-31-13		6-30-12		6-30-13		6-30-12
Salaries	$	227	$	222	$	228	$	449	$	447
Technology contract labor, net		19		18		13		37		25
Incentive compensation		77		73		66		150		126
Employee benefits		56		59		54		115		118
Stock-based compensation		9		10		13		19		26
Severance		18		9		3		27		7

Total personnel expense	$	406	$	391	$	377	$	797	$	749

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 24

Loan Composition

(dollars in millions)


							Percent change 6-30-13 vs.
	6-30-13		3-31-13		6-30-12		3-31-13			6-30-12
Commercial, financial and agricultural ^(a)	$	23,715	$	23,412	$	20,916		1.3	%		13.4	%
Commercial real estate:
Commercial mortgage		7,474		7,544		7,409		(.9	)		.9
Construction		1,060		1,057		1,172		.3			(9.6	)

Total commercial real estate loans		8,534		8,601		8,581		(.8	)		(.5	)
Commercial lease financing		4,774		4,796		5,106		(.5	)		(6.5	)

Total commercial loans		37,023		36,809		34,603		.6			7.0
Residential — prime loans:
Real estate — residential mortgage		2,176		2,176		2,016		—			7.9
Home equity:
Key Community Bank		10,173		9,809		9,601		3.7			6.0
Other		375		401		479		(6.5	)		(21.7	)

Total home equity loans		10,548		10,210		10,080		3.3			4.6

Total residential — prime loans		12,724		12,386		12,096		2.7			5.2
Consumer other — Key Community Bank		1,424		1,353		1,263		5.2			12.7
Credit cards		701		693		—		1.2			N/M
Consumer other:
Marine		1,160		1,254		1,542		(7.5	)		(24.8	)
Other		69		79		101		(12.7	)		(31.7	)

Total consumer other		1,229		1,333		1,643		(7.8	)		(25.2	)

Total consumer loans		16,078		15,765		15,002		2.0			7.2

Total loans^{(b), (c)}	$	53,101	$	52,574	$	49,605		1.0	%		7.0	%

Loans Held for Sale Composition

(dollars in millions)


							Percent change 6-30-13 vs.
	6-30-13		3-31-13		6-30-12		3-31-13			6-30-12
Commercial, financial and agricultural	$	22	$	180	$	18		(87.8	)%		22.2	%
Real estate — commercial mortgage		318		196		523		62.2			(39.2	)
Real estate — construction		—		—		12		N/M			N/M
Commercial lease financing		14		9		13		55.6			7.7
Real estate — residential mortgage		48		49		90		(2.0	)		(46.7	)

Total loans held for sale	$	402	$	434	$	656		(7.4	)%		(38.7	)%

Summary of Changes in Loans Held for Sale

(dollars in millions)


	2Q13			1Q13			4Q12			3Q12			2Q12
Balance at beginning of period	$	434		$	599		$	628		$	656		$	511
New originations		1,241			1,075			1,686			1,280			1,308
Transfers from held to maturity, net		17			19			38			13			7
Loan sales		(1,292	)		(1,257	)		(1,747	)		(1,311	)		(1,165	)
Loan draws (payments), net		—			—			(4	)		(9	)		(4	)
Transfers to OREO / valuation adjustments		2			(2	)		(2	)		(1	)		(1	)

Balance at end of period	$	402		$	434		$	599		$	628		$	656

(a)	June 30, 2013 and March 31, 2013 loan balances include $96 million and $93 million of commercial credit card balances, respectively.

(b)	Excluded at June 30, 2013, March 31, 2013, and June 30, 2012 are loans in the amount of $5.0 billion, $5.1 billion, and $5.5 billion, respectively, related to the discontinued operations of the education lending business.

(c)	June 30, 2013 includes purchased loans of $187 million of which $19 million were purchased credit impaired. March 31, 2013 includes purchased loans of $204 million of which $22 million were purchased credit impaired.

N/M = Not Meaningful

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 25

Exit Loan Portfolio From Continuing Operations

(dollars in millions)


	Balance Outstanding				Change 6-30-13 vs. 3-31-13			Net Loan Charge-offs						Balance on Nonperforming Status
	6-30-13		3-31-13		Change 6-30-13 vs. 3-31-13			2Q13^(c)			1Q13 ^(c)			6-30-13		3-31-13
Residential properties — homebuilder	$	26	$	29	$	(3	)	$	1			—		$	8	$	10
Marine and RV floor plan		28		29		(1	)		—		$	(3	)		7		6
Commercial lease financing^(a)		931		966		(35	)		(2	)		(5	)		1		6

Total commercial loans		985		1,024		(39	)		(1	)		(8	)		16		22
Home equity — Other		375		401		(26	)		5			4			16		18
Marine		1,160		1,254		(94	)		5			3			31		26
RV and other consumer		69		79		(10	)		1			—			—		—

Total consumer loans		1,604		1,734		(130	)		11			7			47		44

Total exit loans in loan portfolio	$	2,589	$	2,758	$	(169	)	$	10		$	(1	)	$	63	$	66

Discontinued operations — education lending business (not included in exit loans above)^(b)	$	4,992	$	5,086	$	(94	)	$	7		$	12		$	19	$	15

(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)


	2Q13			1Q13			4Q12			3Q12			2Q12
Net loan charge-offs	$	45		$	49		$	58		$	109		$	77
Net loan charge-offs to average total loans		.34	%		.38	%		.44	%		.86	%		.63	%
Allowance for loan and lease losses to annualized net loan charge-offs		485.33			449.37			384.85			204.78			286.74
Allowance for loan and lease losses	$	876		$	893		$	888		$	888		$	888
Allowance for credit losses^(a)		913			925			917			931			939
Allowance for loan and lease losses to period-end loans		1.65	%		1.70	%		1.68	%		1.73	%		1.79	%
Allowance for credit losses to period-end loans		1.72			1.76			1.74			1.81			1.89
Allowance for loan and lease losses to nonperforming loans		134.36			137.38			131.75			135.99			135.16
Allowance for credit losses to nonperforming loans		140.03			142.31			136.05			142.57			142.92
Nonperforming loans at period end^(b)	$	652		$	650		$	674		$	653		$	657
Nonperforming assets at period end		693			705			735			718			751
Nonperforming loans to period-end portfolio loans		1.23	%		1.24	%		1.28	%		1.27	%		1.32	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.30			1.34			1.39			1.39			1.51

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

(b)	June 30, 2013, March 31, 2013, December 31, 2012, and September 30, 2012 amounts exclude $19 million, $22 million, $23 million, and $25 million, respectively, of purchased credit impaired loans acquired in July 2012.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 26

Summary of Loan and Lease Loss Experience From Continuing Operations

(dollars in millions)


	Three months ended									Six months ended
	6-30-13			3-31-13			6-30-12			6-30-13			6-30-12
Average loans outstanding	$	52,696		$	52,626		$	49,446		$	52,661		$	49,438

Allowance for loan and lease losses at beginning of period	$	893		$	888		$	944		$	888		$	1,004
Loans charged off:
Commercial, financial and agricultural		15			14			23			29			49
Real estate — commercial mortgage		3			13			23			16			46
Real estate — construction		1			1			5			2			16

Total commercial real estate loans		4			14			28			18			62
Commercial lease financing		2			6			16			8			20

Total commercial loans		21			34			67			55			131
Real estate — residential mortgage		4			6			7			10			13
Home equity:
Key Community Bank		18			18			23			36			48
Other		6			6			9			12			17

Total home equity loans		24			24			32			48			65
Consumer other — Key Community Bank		7			9			10			16			20
Credit cards		8			8			—			16			—
Consumer other:
Marine		9			8			13			17			30
Other		1			1			2			2			4

Total consumer other		10			9			15			19			34

Total consumer loans		53			56			64			109			132

Total loans charged off		74			90			131			164			263
Recoveries:
Commercial, financial and agricultural		7			12			20			19			31
Real estate — commercial mortgage		5			5			14			10			16
Real estate — construction		—			8			1			8			2

Total commercial real estate loans		5			13			15			18			18
Commercial lease financing		4			4			6			8			10

Total commercial loans		16			29			41			45			59
Real estate — residential mortgage		—			—			1			—			2
Home equity:
Key Community Bank		4			2			2			6			4
Other		1			2			2			3			3

Total home equity loans		5			4			4			9			7
Consumer other — Key Community Bank		2			2			2			4			3
Credit cards		2			—			—			2			—
Consumer other:
Marine		4			5			6			9			13
Other		—			1			—			1			1

Total consumer other		4			6			6			10			14

Total consumer loans		13			12			13			25			26

Total recoveries		29			41			54			70			85

Net loan charge-offs		(45	)		(49	)		(77	)		(94	)		(178	)
Provision (credit) for loan and lease losses		28			55			21			83			63
Foreign currency translation adjustment		—			(1	)		—			(1	)		(1	)

Allowance for loan and lease losses at end of period	$	876		$	893		$	888		$	876		$	888

Liability for credit losses on lending-related commitments at beginning of period	$	32		$	29		$	45		$	29		$	45
Provision (credit) for losses on lending-related commitments		5			3			6			8			6

Liability for credit losses on lending-related commitments at end of period^(a)	$	37		$	32		$	51		$	37		$	51

Total allowance for credit losses at end of period	$	913		$	925		$	939		$	913		$	939

Net loan charge-offs to average total loans		.34	%		.38	%		.63	%		.36	%		.72	%
Allowance for loan and lease losses to annualized net loan charge-offs		485.33			449.37			286.74			462.13			248.08
Allowance for loan and lease losses to period-end loans		1.65			1.70			1.79			1.65			1.79
Allowance for credit losses to period-end loans		1.72			1.76			1.89			1.72			1.89
Allowance for loan and lease losses to nonperforming loans		134.36			137.38			135.16			134.36			135.16
Allowance for credit losses to nonperforming loans		140.03			142.31			142.92			140.03			142.92
Discontinued operations — education lending business:
Loans charged off	$	12		$	16		$	16		$	28		$	39
Recoveries		5			4			4			9			8

Net loan charge-offs	$	(7	)	$	(12	)	$	(12	)	$	(19	)	$	(31	)

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

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 27

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

(dollars in millions)


	6-30-13			3-31-13			12-31-12			9-30-12			6-30-12
Commercial, financial and agricultural	$	146		$	142		$	99		$	132		$	141
Real estate — commercial mortgage		106			114			120			134			172
Real estate — construction		26			27			56			53			68

Total commercial real estate loans		132			141			176			187			240
Commercial lease financing		14			12			16			18			18

Total commercial loans		292			295			291			337			399
Real estate — residential mortgage^(a)		94			96			103			83			78
Home equity:
Key Community Bank		205			199			210			171			141
Other		16			18			21			18			17

Total home equity loans^(a)		221			217			231			189			158
Consumer other — Key Community Bank		3			3			2			3			2
Credit cards		11			13			11			8			—
Consumer other:
Marine		30			25			34			31			19
Other		1			1			2			2			1

Total consumer other		31			26			36			33			20

Total consumer loans		360			355			383			316			258

Total nonperforming loans^(b)		652			650			674			653			657
Nonperforming loans held for sale		14			23			25			19			38
OREO		18			21			22			29			28
Other nonperforming assets		9			11			14			17			28

Total nonperforming assets	$	693		$	705		$	735		$	718		$	751

Accruing loans past due 90 days or more	$	80		$	83		$	78		$	89		$	131
Accruing loans past due 30 through 89 days		251			368			424			354			362
Restructured loans — accruing and nonaccruing^(c)		311			294			320			323			274
Restructured loans included in nonperforming loans^(c)		195			178			249			217			163
Nonperforming assets from discontinued operations — education lending business		19			15			20			22			18
Nonperforming loans to period-end portfolio loans		1.23	%		1.24	%		1.28	%		1.27	%		1.32	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.30			1.34			1.39			1.39			1.51

(a)	All of the increase in real estate — residential mortgage and $26 million of the increase in total home equity loans from September 30, 2012 to December 31, 2012 was related to regulatory guidance issued in the second and third quarters of 2012.

(b)	June 30, 2013, March 31, 2013, December 31, 2012, and September 30, 2012 amounts exclude $19 million, $22 million, $23 million, and $25 million, respectively, of purchased credit impaired loans acquired in July 2012.

(c)

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. The majority of the increase in restructured loans included in nonperforming loans during the second half of 2012 was a result of updated regulatory guidance in the third quarter of 2012.

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 28

Summary of Changes in Nonperforming Loans From Continuing Operations

(in millions)


	2Q13			1Q13			4Q12			3Q12			2Q12
Balance at beginning of period	$	650		$	674		$	653		$	657		$	666
Loans placed on nonaccrual status		160			278			288			276			350
Charge-offs		(74	)		(91	)		(104	)		(141	)		(131	)
Loans sold		(5	)		(42	)		(44	)		(43	)		(49	)
Payments		(36	)		(83	)		(78	)		(74	)		(110	)
Transfers to OREO		(7	)		(7	)		(7	)		(10	)		(6	)
Transfers to nonperforming loans held for sale		—			—			(8	)		—			(16	)
Transfers to other nonperforming assets		—			—			(1	)		—			(14	)
Loans returned to accrual status		(36	)		(79	)		(25	)		(12	)		(33	)

Balance at end of period^(a)	$	652		$	650		$	674		$	653		$	657

(a)	June 30, 2013, March 31, 2013, December 31, 2012, and September 30, 2012 amounts exclude $19 million, $22 million, $23 million, and $25 million, respectively, of purchased credit impaired loans acquired in July 2012.

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

(in millions)


	2Q13			1Q13			4Q12			3Q12			2Q12
Balance at beginning of period	$	23		$	25		$	19		$	38		$	24
Transfers in		—			—			8			—			16
Net advances / (payments)		(1	)		—			(1	)		(1	)		—
Loans sold		(8	)		—			(1	)		(17	)		(1	)
Transfers to OREO		—			—			—			(1	)		—
Valuation adjustments		—			(2	)		—			—			(1	)

Balance at end of period	$	14		$	23		$	25		$	19		$	38

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

(in millions)


	2Q13			1Q13			4Q12			3Q12			2Q12
Balance at beginning of period	$	21		$	22		$	29		$	28		$	61
Properties acquired — nonperforming loans		7			7			7			11			6
Valuation adjustments		(2	)		(3	)		(2	)		(2	)		(7	)
Properties sold		(8	)		(5	)		(12	)		(8	)		(32	)

Balance at end of period	$	18		$	21		$	22		$	29		$	28

KeyCorp Reports Second Quarter 2013 Profit

July 18, 2013

Page 29

Line of Business Results

(dollars in millions)


																Percent change 2Q13 vs.
	2Q13			1Q13			4Q12			3Q12			2Q12			1Q13			2Q12
Key Community Bank
Summary of operations
Total revenue (TE)	$	555		$	549		$	580		$	575		$	537			1.1	%		3.4	%
Provision (credit) for loan and lease losses		41			59			26			123			(4	)		(30.5	)		N/M
Noninterest expense		456			440			502			478			455			3.6			.2
Net income (loss) attributable to Key		36			31			32			(16	)		54			16.1			(33.3	)
Average loans and leases		29,161			28,977			28,629			27,764			26,413			.6			10.4
Average deposits		49,473			49,349			49,839			49,269			47,946			.3			3.2
Net loan charge-offs		42			47			12			91			46			(10.6	)		(8.7	)
Net loan charge-offs to average total loans		.58	%		.66	%		.17	%		1.30	%		.70	%		N/A			N/A
Nonperforming assets at period end	$	475		$	495		$	459		$	422		$	401			(4.0	)		18.5
Return on average allocated equity		5.02	%		4.38	%		4.41	%		(2.25	)%		7.82	%		N/A			N/A
Average full-time equivalent employees		8,437			8,830			8,998			9,193			8,742			(4.5	)		(3.5	)
Key Corporate Bank
Summary of operations
Total revenue (TE)	$	376		$	379		$	403		$	370		$	371			(.8	)%		1.3	%
Provision (credit) for loan and lease losses		(10	)		4			11			(3	)		4			N/M			N/M
Noninterest expense		202			210			207			201			213			(3.8	)		(5.2	)
Net income (loss) attributable to Key		117			105			116			109			95			11.4			23.2
Average loans and leases		20,133			20,044			19,481			18,893			18,541			.4			8.6
Average loans held for sale		466			409			538			441			514			13.9			(9.3	)
Average deposits		15,606			13,968			13,681			12,879			12,414			11.7			25.7
Net loan charge-offs		(6	)		(1	)		21			8			9			N/M			N/M
Net loan charge-offs to average total loans		(.12	)%		(.02	)%		.43	%		.17	%		.20	%		N/A			N/A
Nonperforming assets at period end	$	136		$	136		$	175		$	197		$	248			—			(45.2	)
Return on average allocated equity		28.79	%		26.37	%		28.26	%		26.06	%		22.00	%		N/A			N/A
Average full-time equivalent employees		1,950			1,926			1,914			2,003			2,028			1.2			(3.8	)

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

KEYCORP /NEW/ - FORM 8-K - EX-99.1 - July 18, 2013

Attached files

KEYCORP /NEW/ Reports