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

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Exhibit 99.1


				NEWS
		FOR IMMEDIATE RELEASE

KEYCORP REPORTS THIRD QUARTER 2014

NET INCOME OF $197 MILLION, OR $.23 PER COMMON SHARE

Average loans up 5% from prior year, driven by an

11% increase in commercial, financial and agricultural loans

Credit quality remains strong, with net loan charge-offs to average loans of .22%

Disciplined capital management with common share repurchases of $119 million

CLEVELAND, October 15, 2014 – KeyCorp (NYSE: KEY) today announced third quarter net income from continuing operations attributable to Key common shareholders of $197 million, or $.23 per common share, compared to $242 million, or $.27 per common share, for the second quarter of 2014, and $229 million, or $.25 per common share, for the third quarter of 2013. During the third quarter of 2014, Key incurred $35 million, or $.03 per common share, of costs related to both its efficiency initiative and a pension settlement charge, compared to $41 million, or $.03 per common share, during the third quarter of 2013.

For the nine months ended September 30, 2014, net income from continuing operations attributable to Key common shareholders was $671 million, or $.76 per common share, compared to $618 million, or $.67 per common share, for the same period one year ago. During the nine months ended September 30, 2014, Key incurred $69 million, or $.05 per common share, of costs related to both its efficiency initiative and a pension settlement charge, compared to $93 million, or $.06 per common share, during the nine months ended September 30, 2013.

“Key’s third quarter reflects solid results in our core businesses as we continue to execute on our relationship strategy, while remaining disciplined in managing risk and our strong capital position,” said Chairman and Chief Executive Officer Beth Mooney. “Compared with the same period last year, average loans increased 5%, driven by growth in commercial, financial and agricultural loans. We saw positive trends in several of our fee-based businesses, while we realized lower gains from principal investing and leveraged lease terminations. In the third quarter, the number of retail clients grew and we improved sales productivity across both the Community Bank and Corporate Bank. We also closed the acquisition of Pacific Crest Securities during the quarter, adding an important new industry vertical and underscoring our commitment to be the leading corporate and investment bank serving middle market clients.”

“Core expenses remained well-controlled and, excluding pension-related charges, were down from both the prior year and last quarter,” added Mooney. “Third quarter expenses also included efficiency-related charges, costs from the Pacific Crest Securities acquisition, and ongoing investments that we are making in our businesses.”

“Our focus on risk management continues to be reflected in our strong credit quality trends, as well as the quality of loans that we are generating,” continued Mooney. “Year-to-date net charge-offs are at historically low levels. Capital also remains a strength of our company. In the third quarter, our Tier 1 common equity ratio remained above 11%, while we continued to execute on our commitment to return capital to our shareholders through dividends and share repurchases. During the third quarter, we repurchased $119 million in common shares.”

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 2

THIRD QUARTER 2014 FINANCIAL RESULTS, from continuing operations

Compared to Third Quarter of 2013

•

Average loans up 4.7%, driven by a 10.9% growth in commercial, financial and agricultural loans

•

Average deposits up 3.6% due to commercial mortgage servicing acquisitions and growth in commercial deposits offsetting declines in certificates of deposit

•

Net interest income (taxable-equivalent) down $3 million, primarily due to lower earning asset yields

•

Noninterest income down $42 million, due to $27 million in lower operating lease income and other leasing gains mostly due to an early termination of a leveraged lease in the prior year, $8 million in lower principal investing gains, and a decline of $6 million in mortgage servicing fees due to lower special servicing fees, slightly offset by increases in noninterest income related to the recently-acquired Pacific Crest Securities

•

Noninterest expense down $12 million, reflecting $6 million in lower efficiency and pension-related charges, and a decrease in the provision for losses on lending-related commitments, slightly offset by expenses related to the recently-acquired Pacific Crest Securities

•

Asset quality improved, with net loan charge-offs to average loans declining from .28% to .22%

•

Disciplined capital management, repurchasing $119 million of common shares during the third quarter of 2014 and maintaining a top tier capital position with Tier 1 common equity of 11.26%

Compared to Second Quarter of 2014

•

Average loans up .3%, primarily driven by increases in real estate commercial mortgage loans

•

Average deposits up 1.9% due to the growth in commercial mortgage servicing and commercial client inflows offsetting declines in certificates of deposit

•

Net interest income (taxable-equivalent) up $2 million due to an increase in earning asset levels, higher loan fees, and more days in the quarter, which offset lower asset yields

•

Noninterest income down $38 million, primarily due to $18 million in lower principal investing gains, a decrease of $18 million in operating lease income and other leasing gains mostly due to the early termination of a leveraged lease in the prior quarter, and an $11 million reduction in investment banking and debt placement fees, slightly offset by increases in noninterest income related to the recently-acquired Pacific Crest Securities

•

Noninterest expense up $15 million, primarily due to $11 million in higher efficiency and pension-related charges, and expenses related to the recently-acquired Pacific Crest Securities

•

Asset quality remains strong, with net loan charge-offs to average loans flat to prior quarter and remaining well below the targeted range

Selected Financial Highlights


dollars in millions, except per share data										Change 3Q14 vs.
	3Q14			2Q14			3Q13			2Q14			3Q13
Income (loss) from continuing operations attributable to Key common shareholders	$	197		$	242		$	229			(18.6	)%		(14.0	)%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution		.23			.27			.25			(14.8	)		(8.0	)
Return on average total assets from continuing operations		.92	%		1.14	%		1.12	%		N/A			N/A
Tier 1 common equity^(a)		11.26			11.25			11.17			N/A			N/A
Book value at period end	$	11.77		$	11.65		$	11.05			1.0	%		6.5	%
Net interest margin (TE) from continuing operations		2.96	%		2.98	%		3.11	%		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

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 3

INCOME STATEMENT HIGHLIGHTS

Revenue


dollars in millions							Change 3Q14 vs.
	3Q14		2Q14		3Q13		2Q14			3Q13
Net interest income (TE)	$	581	$	579	$	584		.3	%		(.5	)%
Noninterest income		417		455		459		(8.4	)		(9.2	)

Total revenue	$	998	$	1,034	$	1,043		(3.5	)%		(4.3	)%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $581 million for the third quarter of 2014, and the net interest margin was 2.96%. These results compare to taxable-equivalent net interest income of $584 million and a net interest margin of 3.11% for the third quarter of 2013. The decreases in net interest income and net interest margin were largely attributable to lower earning asset yields. The net interest margin was additionally impacted by higher levels of excess liquidity driven by commercial deposit growth. The decrease in net interest income was partially offset by higher loan levels, a more favorable mix of lower-cost deposits, and higher loan fees as the prior year had an early termination of a leveraged lease.

Compared to the second quarter of 2014, taxable-equivalent net interest income increased by $2 million, and the net interest margin declined by two basis points. The increase in net interest income was primarily due to higher asset levels and loan fees, a lower cost of funds as higher-rate certificates of deposit matured, and more days in the third quarter. The net interest margin was negatively impacted by higher levels of excess liquidity, and lower earning asset yields.

Noninterest Income


dollars in millions							Change 3Q14 vs.
	3Q14		2Q14		3Q13		2Q14			3Q13
Trust and investment services income	$	99	$	94	$	100		5.3	%		(1.0	)%
Investment banking and debt placement fees		88		99		86		(11.1	)		2.3
Service charges on deposit accounts		68		66		73		3.0			(6.8	)
Operating lease income and other leasing gains		17		35		44		(51.4	)		(61.4	)
Corporate services income		42		41		44		2.4			(4.5	)
Cards and payments income		42		43		43		(2.3	)		(2.3	)
Corporate-owned life insurance income		26		28		26		(7.1	)		—
Consumer mortgage income		3		2		3		50.0			—
Mortgage servicing fees		9		11		15		(18.2	)		(40.0	)
Net gains (losses) from principal investing		9		27		17		(66.7	)		(47.1	)
Other income		14		9		8		55.6			75.0

Total noninterest income	$	417	$	455	$	459		(8.4	)%		(9.2	)%

Key’s noninterest income was $417 million for the third quarter of 2014, compared to $459 million for the year-ago quarter. Operating lease income and other leasing gains decreased $27 million as the prior year included the benefit of an early termination of a leveraged lease. Net gains from principal investing declined $8 million. Mortgage servicing fees decreased $6 million due to lower special servicing fees. These decreases were partially offset by an increase of $6 million in fee income related to the recently-acquired Pacific Crest Securities.

Compared to the second quarter of 2014, noninterest income decreased by $38 million. Operating lease income and other leasing gains declined $18 million, primarily due to a gain from the early termination of a leveraged lease in the second quarter. Net gains from principal investing decreased $18 million. Investment banking and debt placement fees decreased $11 million from the strong performance in the prior quarter. These decreases were partially offset by increases in trust and investment services income and in

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 4

other income of $5 million each. The current period included $6 million in fee income related to the recently-acquired Pacific Crest Securities.

Noninterest Expense


dollars in millions							Change 3Q14 vs.
	3Q14		2Q14		3Q13		2Q14			3Q13
Personnel expense	$	405	$	389	$	414		4.1	%		(2.2	)%
Nonpersonnel expense		299		300		302		(.3	)		(1.0	)

Total noninterest expense	$	704	$	689	$	716		2.2	%		(1.7	)%

Key’s noninterest expense was $704 million for the third quarter of 2014, compared to $716 million for the same period last year. This decline reflects lower efficiency- and pension-related charges of $6 million. This decrease was slightly offset by $6 million of costs associated with the recently-acquired Pacific Crest Securities.

Compared to the second quarter of 2014, noninterest expense increased by $15 million. The increase in expenses reflected $11 million in higher efficiency- and pension-related charges. Other expense increased $4 million due to expenses related to low-income housing tax credit investments. The third quarter of 2014 included $6 million of expenses related to the recently-acquired Pacific Crest Securities.

BALANCE SHEET HIGHLIGHTS

As of September 30, 2014, Key had total assets of $89.8 billion compared to $91.8 billion at June 30, 2014, and $90.7 billion at September 30, 2013.

Average Loans


dollars in millions							Change 9-30-14 vs.
	9-30-14		6-30-14		9-30-13		6-30-14			9-30-13
Commercial, financial and agricultural^(a)	$	26,456	$	26,444	$	23,864		—			10.9	%
Other commercial loans		13,317		13,186		13,281		1.0	%		.3
Total home equity loans		10,658		10,627		10,611		.3			.4
Other consumer loans		5,365		5,354		5,515		.2			(2.7	)

Total loans	$	55,796	$	55,611	$	53,271		.3	%		4.7	%

(a)	Commercial, financial and agricultural average loan balances include $92 million, $95 million, and $96 million of assets from commercial credit cards at September 30, 2014, June 30, 2014, and September 30, 2013, respectively.

Average loans were $55.8 billion for the third quarter of 2014, an increase of $2.5 billion compared to the third quarter of 2013. The loan growth occurred primarily in the commercial, financial and agricultural portfolio, which increased $2.6 billion and was broad-based across Key’s commercial lines of business. Consumer loans remained relatively stable, as modest increases across Key’s core consumer loan portfolio, primarily home equity loans and direct term loans, were more than offset by run-off in Key’s designated consumer exit portfolio.

Compared to the second quarter of 2014, average loans increased by $185 million. Commercial loans increased $143 million with growth in real estate commercial mortgage loans offsetting decreases in commercial lease financing. Commercial, financial and agricultural loans were relatively flat to the linked quarter as most of the balance growth occurred towards the latter part of the third quarter, resulting in a larger increase in period-end loans. Modest consumer loan growth reflects growth in the core consumer loan portfolio during the third quarter, which offset a decrease in Key’s consumer exit portfolio.

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 5

Average Deposits


dollars in millions										Change 9-30-14 vs.
	9-30-14			6-30-14			9-30-13			6-30-14			9-30-13
Non-time deposits^(a)	$	61,699		$	60,066		$	58,620			2.7	%		5.3	%
Certificates of deposit ($100,000 or more)		2,629			2,808			2,785			(6.4	)		(5.6	)
Other time deposits		3,413			3,587			3,957			(4.9	)		(13.7	)

Total deposits	$	67,741		$	66,461		$	65,362			1.9	%		3.6	%

Cost of total deposits^(a)		.16	%		.18	%		.22	%		N/A			N/A

(a)	Excludes deposits in foreign office.

N/A = Not Applicable

Average deposits, excluding deposits in foreign office, totaled $67.7 billion for the third quarter of 2014, an increase of $2.4 billion compared to the year-ago quarter. Demand deposits increased by $1.9 billion, and NOW and money market deposit accounts increased $1.2 billion, mostly due to growth related to commercial client inflows as well as increases related to the commercial mortgage servicing business. These increases were partially offset by run-off in certificates of deposit.

Compared to the second quarter of 2014, average deposits, excluding deposits in foreign office, increased by $1.3 billion. Demand deposits were up $2.0 billion, driven by increases in escrow deposits in the commercial mortgage servicing business and inflows related to commercial clients. Interest-bearing deposits decreased $732 million from lower NOW and money market deposit accounts as a result of a decline in public deposits, and run-off in certificates of deposit.

ASSET QUALITY


dollars in millions										Change 3Q14 vs.
	3Q14			2Q14			3Q13			2Q14			3Q13
Net loan charge-offs	$	31		$	30		$	37			3.3	%		(16.2	)%
Net loan charge-offs to average total loans		.22	%		.22	%		.28	%		N/A			N/A
Nonperforming loans at period end^(a)	$	401		$	396		$	541			1.3			(25.9	)
Nonperforming assets at period end		418			410			579			2.0			(27.8	)
Allowance for loan and lease losses		804			814			868			(1.2	)		(7.4	)
Allowance for loan and lease losses to nonperforming loans		200.5	%		205.6	%		160.4	%		N/A			N/A
Provision (credit) for loan and lease losses	$	21		$	10		$	28			110.0	%		(25.0	)%

(a)	Loan balances exclude $14 million, $15 million, and $18 million of purchased credit impaired loans at September 30, 2014, June 30, 2014, and September 30, 2013, respectively.

N/A = Not Applicable

Key’s provision for loan and lease losses was $21 million for the third quarter of 2014, compared to $10 million for the second quarter of 2014 and $28 million for the year-ago quarter. Key’s allowance for loan and lease losses was $804 million, or 1.43%, of total period-end loans at September 30, 2014, compared to 1.46% at June 30, 2014, and 1.62% at September 30, 2013.

Net loan charge-offs for the third quarter of 2014 totaled $31 million, or .22%, of average total loans. These results compare to $30 million, or .22%, for the second quarter of 2014, and $37 million, or .28%, for the same period last year.

At September 30, 2014, Key’s nonperforming loans totaled $401 million and represented .71% of period-end portfolio loans, compared to .71% at June 30, 2014, and 1.01% at September 30, 2013. Nonperforming assets at September 30, 2014, totaled $418 million and represented .74% of period-end portfolio loans and OREO and other nonperforming assets, compared to .74% at June 30, 2014, and 1.08% at September 30, 2013.

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 6

CAPITAL

Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at September 30, 2014.

Capital Ratios


	9-30-14			6-30-14			9-30-13
Tier 1 common equity^{(a), (b)}		11.26	%		11.25	%		11.17	%
Tier 1 risk-based capital^(a)		12.00			11.99			11.92
Total risk based capital^(a)		14.09			14.14			14.37
Tangible common equity to tangible assets^(b)		10.29			10.15			9.93
Leverage^(a)		11.18			11.24			11.33

(a)	9-30-14 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.

As shown in the preceding table, at September 30, 2014, Key’s estimated Tier 1 common equity and Tier 1 risk-based capital ratios stood at 11.26% and 12.00%, respectively. In addition, the tangible common equity ratio was 10.29% at September 30, 2014.

In October 2013, federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the “Regulatory Capital Rules”). While the Regulatory Capital Rules became effective January 1, 2014, the mandatory compliance date for Key as a “standardized approach” banking organization begins on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Key’s estimated Common Equity Tier 1 as calculated under the Regulatory Capital Rules was 10.71% at September 30, 2014. This estimate exceeds the fully phased-in required minimum Common Equity Tier 1 and Capital Conservation Buffer of 7.00%.

Summary of Changes in Common Shares Outstanding


in thousands										Change 3Q14 vs.
	3Q14			2Q14			3Q13			2Q14			3Q13
Shares outstanding at beginning of period		876,823			884,869			912,883			(.9	)%		(4.0	)%
Common shares repurchased		(8,830	)		(7,824	)		(16,364	)		12.9			(46.0	)
Shares reissued (returned) under employee benefit plans		484			(222	)		1,302			N/M			(62.8	)

Shares outstanding at end of period		868,477			876,823			897,821			(1.0	)%		(3.3	)%

As previously reported, Key’s 2014 CCAR capital plan includes common share repurchases of up to $542 million, which are expected to be executed through the first quarter of 2015. During the third quarter of 2014, Key completed $119 million of common share repurchases.

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 7

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 3Q14 vs.
	3Q14			2Q14			3Q13			2Q14			3Q13
Revenue from continuing operations (TE)
Key Community Bank	$	559		$	554		$	584			.9	%		(4.3	)%
Key Corporate Bank		395			390			379			1.3			4.2
Other Segments		47			91			80			(48.4	)		(41.3	)

Total segments		1,001			1,035			1,043			(3.3	)		(4.0	)
Reconciling Items		(3	)		(1	)		—			N/M			N/M

Total	$	998		$	1,034		$	1,043			(3.5	)%		(4.3	)%

Income (loss) from continuing operations attributable to Key
Key Community Bank	$	57		$	54		$	67			5.6	%		(14.9	)%
Key Corporate Bank		119			119			106			—			12.3
Other Segments		48			72			65			(33.3	)		(26.2	)

Total segments		224			245			238			(8.6	)		(5.9	)
Reconciling Items		(21	)		2			(3	)		N/M			N/M

Total	$	203		$	247		$	235			(17.8	)%		(13.6	)%

TE = Taxable equivalent, N/M = Not Meaningful

Key Community Bank


dollars in millions							Change 3Q14 vs.
	3Q14		2Q14		3Q13		2Q14			3Q13
Summary of operations
Net interest income (TE)	$	360	$	362	$	385		(.6	)%		(6.5	)%
Noninterest income		199		192		199		3.6			—

Total revenue (TE)		559		554		584		.9			(4.3	)
Provision (credit) for loan and lease losses		31		23		24		34.8			29.2
Noninterest expense		437		445		453		(1.8	)		(3.5	)

Income (loss) before income taxes (TE)		91		86		107		5.8			(15.0	)
Allocated income taxes (benefit) and TE adjustments		34		32		40		6.3			(15.0	)

Net income (loss) attributable to Key	$	57	$	54	$	67		5.6	%		(14.9	)%

Average balances
Loans and leases	$	30,103	$	30,034	$	29,498		.2	%		2.1	%
Total assets		32,209		32,157		31,685		.2			1.7
Deposits		50,302		50,230		49,732		.1			1.1

Assets under management at period end	$	39,249	$	39,632	$	35,982		(1.0	)%		9.1	%

TE = Taxable Equivalent

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 8

Additional Key Community Bank Data


dollars in millions										Change 3Q14 vs.
	3Q14			2Q14			3Q13			2Q14			3Q13
Noninterest income
Trust and investment services income	$	74		$	70		$	74			5.7	%		—
Service charges on deposit accounts		57			55			62			3.6			(8.1	)%
Cards and payments income		38			38			36			—			5.6
Other noninterest income		30			29			27			3.4			11.1	%

Total noninterest income	$	199		$	192		$	199			3.6	%		—

Average deposit balances
NOW and money market deposit accounts	$	27,403		$	27,577		$	26,568			(.6	)%		3.1	%
Savings deposits		2,418			2,483			2,509			(2.6	)		(3.6	)
Certificates of deposit ($100,000 or more)		2,072			2,169			2,264			(4.5	)		(8.5	)
Other time deposits		3,406			3,580			3,950			(4.9	)		(13.8	)
Deposits in foreign office		320			294			278			8.8			15.1
Noninterest-bearing deposits		14,683			14,127			14,163			3.9			3.7

Total deposits	$	50,302		$	50,230		$	49,732			.1	%		1.1	%

Home equity loans
Average balance	$	10,368		$	10,321		$	10,247
Weighted-average loan-to-value ratio (at date of origination)		71	%		71	%		71	%
Percent first lien positions		59			59			58
Other data
Branches		997			1,009			1,044
Automated teller machines		1,290			1,311			1,350

Key Community Bank Summary of Operations

•

Average loan and lease balances up 2.1% from prior year

•

Average core deposits up 1.5% from prior year

•

Net income attributable to Key Community Bank down 14.9% from the prior year

Key Community Bank recorded net income attributable to Key of $57 million for the third quarter of 2014, compared to net income attributable to Key of $67 million for the year-ago quarter.

Taxable-equivalent net interest income decreased by $25 million, or 6.5%, from the third quarter of 2013. Average loans and leases grew 2.1% while average core deposits increased 1.5% from one year ago. However, these volume-related increases were offset by declines in the deposit spread as a result of the continued low-rate environment.

Noninterest income was flat at $199 million from the year-ago quarter. Service charges on deposit accounts declined $5 million due to lower maintenance fees and overdraft charges. This decrease was offset by increases of $2 million in cards and payments income and $3 million in other noninterest income.

The provision for loan and lease losses increased by $7 million, or 29.2%, from the third quarter of 2013. Net loan charge-offs increased $1 million from the same period one year ago.

Noninterest expense declined by $16 million, or 3.5%, from the year-ago quarter as a result of Key’s efficiency initiative. Personnel expense remained flat compared to the third quarter of 2013. Nonpersonnel expense decreased $16 million primarily due to a credit to the provision for unfunded commitments and declines in outside loan servicing and internally-allocated costs.

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 9

Key Corporate Bank


dollars in millions								Change 3Q14 vs.
	3Q14			2Q14		3Q13		2Q14			3Q13
Summary of operations
Net interest income (TE)	$	212		$	207	$	196		2.4	%		8.2	%
Noninterest income		183			183		183		—			—

Total revenue (TE)		395			390		379		1.3			4.2
Provision (credit) for loan and lease losses		(5	)		—		12		N/M			N/M
Noninterest expense		212			203		203		4.4			4.4

Income (loss) before income taxes (TE)		188			187		164		.5			14.6
Allocated income taxes and TE adjustments		69			66		58		4.5			19.0

Net income (loss)		119			121		106		(1.7	)%		12.3
Less: Net income (loss) attributable to noncontrolling interests		—			2		—		N/M			N/M

Net income (loss) attributable to Key	$	119		$	119	$	106		—			12.3	%

Average balances
Loans and leases	$	22,700		$	22,353	$	19,946		1.6	%		13.8	%
Loans held for sale		481			429		422		12.1			14.0
Total assets		26,460			26,182		23,739		1.1			11.5
Deposits		17,310			16,042		16,044		7.9			7.9
Assets under management at period end	$	34		$	37	$	128		(8.1	)%		(73.4	)%

TE = Taxable Equivalent, N/M = Not Meaningful

Additional Key Corporate Bank Data


dollars in millions									Change 3Q14 vs.
	3Q14		2Q14			3Q13			2Q14			3Q13
Noninterest income
Trust and investment services income	$	25	$	24		$	26			4.2	%		(3.8	)%
Investment banking and debt placement fees		86		97			85			(11.3	)		1.2
Operating lease income and other leasing gains		14		11			13			27.3			7.7

Corporate services income		30		30			32			—			(6.3	)
Service charges on deposit accounts		11		11			11			—			—
Cards and payments income		4		5			7			(20.0	)		(42.9	)

Payments and services income		45		46			50			(2.2	)		(10.0	)
Mortgage servicing fees		9		11			15			(18.2	)%		(40.0	)%
Other noninterest income		4		(6	)		(6	)		N/M			N/M

Total noninterest income	$	183	$	183		$	183			—			—

N/M = Not Meaningful

Key Corporate Bank Summary of Operations

•

Completed the acquisition of Pacific Crest Securities, adding an important new industry vertical

•

Average loan and lease balances up 13.8% from the prior year

•

Average deposits up 7.9% from the prior year

Key Corporate Bank recorded net income attributable to Key of $119 million for the third quarter of 2014, compared to $106 million for the same period one year ago.

Taxable-equivalent net interest income increased by $16 million, or 8.2%, compared to the third quarter of 2013. Average earning assets increased $3.0 billion, or 13.8%, from the year-ago quarter, primarily driven by loan growth in commercial, financial and agricultural and real estate commercial mortgage. This growth in earning assets drove an increase of $9 million in earning asset spread. Average deposit balances increased $1.3 billion, or 7.9%, from the year-ago quarter, driven by commercial mortgage servicing acquisitions and other

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 10

commercial client inflows. This growth in deposit balances drove an increase of $3 million in deposit and borrowing spread.

Noninterest income was flat from the prior year. The recently-acquired Pacific Crest Securities added $6 million. Other noninterest income increased $10 million due to higher trading income and miscellaneous gains on sale. Offsetting these increases were declines in mortgage servicing fees due to lower special servicing fees, and decreases in cards and payments income, corporate services income, and other noninterest income items.

The provision for loan and lease losses decreased $17 million compared to the third quarter of 2013. Net loan recoveries were less than $1 million for the third quarter of 2014 compared to net loan charge-offs of $6 million for the same period one year ago.

Noninterest expense increased by $9 million, or 4.4%, from the third quarter of 2013. There were $6 million in costs related to the recently-acquired Pacific Crest Securities, and higher expenses related to low-income housing tax credit investments.

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 $48 million for the third quarter of 2014, compared to net income attributable to Key of $65 million for the same period last year. These results were primarily attributable to a decrease of $27 million in operating lease income and other leasing gains due to the early termination of a leveraged lease in the prior year. Net gains (losses) from principal investing also decreased $8 million from the prior year.

Discontinued Operations

Discontinued Operations consists of Education Lending, Victory Capital Management and Victory Capital Advisors, and Austin Capital Management, Ltd. During the third quarter of 2014, Key sold the residual interests in its nine education loan securitization trusts to a third party and retained the servicing for the loans associated with these securitization trusts. For the three months ended September 30, 2014, net income from discontinued operations for Education Lending was $4 million, which included the impact of the sale of the residual interests.

*****

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 $89.8 billion at September 30, 2014.

Key provides deposit, lending, cash management and investment services to individuals and small and mid-sized businesses in 12 states under the name KeyBank National Association. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 11


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

Matt Gardner
216.689.8334
Matt_Gardner@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 “outlook,” “goal,” “objective,” “plan,” “expect,” “anticipate,” “intend,” “project,” “believe,” or “estimate.” Forward-looking statements represent management’s current expectations and forecasts regarding future events. If underlying assumptions prove to be inaccurate or unknown risks or uncertainties arise, actual results could vary materially from these projections or expectations. Factors that could cause Key’s actual results to differ from those described in the forward-looking statements can be found in KeyCorp’s Form 10-K for the year ended December 31, 2013, 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: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, changes in local, regional and international business, economic or political conditions, and the extensive and increasing regulation of the U.S. financial services industry. Forward looking statements speak only as of the date they are made and Key does not undertake any obligation to update the forward-looking statements to reflect new information or future events.

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 Wednesday, October 15, 2014. An audio replay of the call will be available through October 22, 2014.

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 Third Quarter 2014 Profit

October 15, 2014

Page 12

KeyCorp

Third Quarter 2014

Financial Supplement


Page

13		Financial Highlights

15		GAAP to Non-GAAP Reconciliation

18		Consolidated Balance Sheets

19		Consolidated Statements of Income

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

22		Noninterest Expense

22		Personnel Expense

23		Loan Composition

23		Loans Held for Sale Composition

23		Summary of Changes in Loans Held for Sale

24		Exit Loan Portfolio From Continuing Operations

24		Asset Quality Statistics From Continuing Operations

25		Summary of Loan and Lease Loss Experience From Continuing Operations

26		Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

27		Summary of Changes in Nonperforming Loans From Continuing Operations

27		Summary of Changes in Nonperforming Loans Held for Sale From Continuing Operations

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

28		Line of Business Results

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Page 13

Financial Highlights

(dollars in millions, except per share amounts)


	Three months ended
	9-30-14			6-30-14			9-30-13

Summary of operations
Net interest income (TE)	$	581		$	579		$	584
Noninterest income		417			455			459

Total revenue (TE)		998			1,034			1,043
Provision (credit) for loan and lease losses		21			10			28
Noninterest expense		704			689			716
Income (loss) from continuing operations attributable to Key		203			247			235
Income (loss) from discontinued operations, net of taxes^(a)		7			(28	)		37
Net income (loss) attributable to Key		210			219			272

Income (loss) from continuing operations attributable to Key common shareholders	$	197		$	242		$	229
Income (loss) from discontinued operations, net of taxes^(a)		7			(28	)		37
Net income (loss) attributable to Key common shareholders		204			214			266

Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.28		$	.25
Income (loss) from discontinued operations, net of taxes ^(a)		.01			(.03	)		.04
Net income (loss) attributable to Key common shareholders ^(b)		.24			.24			.29

Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.23			.27			.25
Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)		.01			(.03	)		.04
Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)		.23			.24			.29

Cash dividends paid		.065			.065			.055
Book value at period end		11.77			11.65			11.05
Tangible book value at period end		10.49			10.50			9.92
Market price at period end		13.33			14.33			11.40

Performance ratios
From continuing operations:
Return on average total assets		.92	%		1.14	%		1.12	%
Return on average common equity		7.68			9.55			9.13
Return on average tangible common equity ^(c)		8.55			10.60			10.18
Net interest margin (TE)		2.96			2.98			3.11
Cash efficiency ratio ^(c)		69.5			65.8			67.5

From consolidated operations:
Return on average total assets		.91	%		.96	%		1.22	%
Return on average common equity		7.95			8.44			10.61
Return on average tangible common equity ^(c)		8.85			9.37			11.82
Net interest margin (TE)		2.94			2.94			3.06
Loan to deposit ^(d)		87.4			87.1			83.8

Capital ratios at period end
Key shareholders’ equity to assets		11.71	%		11.44	%		11.25	%
Key common shareholders’ equity to assets		11.38			11.13			10.94
Tangible common equity to tangible assets ^(c)		10.29			10.15			9.93
Tier 1 common equity ^{(c), (e)}		11.26			11.25			11.17
Tier 1 risk-based capital ^(e)		12.00			11.99			11.92
Total risk-based capital ^(e)		14.09			14.14			14.37
Leverage ^(e)		11.18			11.24			11.33

Asset quality — from continuing operations
Net loan charge-offs	$	31		$	30		$	37
Net loan charge-offs to average loans		.22	%		.22	%		.28	%
Allowance for loan and lease losses	$	804		$	814		$	868
Allowance for credit losses		839			851			908
Allowance for loan and lease losses to period-end loans		1.43	%		1.46	%		1.62	%
Allowance for credit losses to period-end loans		1.49			1.53			1.69
Allowance for loan and lease losses to nonperforming loans		200.5			205.6			160.4
Allowance for credit losses to nonperforming loans		209.2			214.9			167.8
Nonperforming loans at period end ^(f)	$	401		$	396		$	541
Nonperforming assets at period end		418			410			579
Nonperforming loans to period-end portfolio loans		.71	%		.71	%		1.01	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.74			.74			1.08

Trust and brokerage assets
Assets under management	$	39,283		$	39,669		$	36,110
Nonmanaged and brokerage assets		48,273			48,728			38,525

Other data
Average full-time equivalent employees		13,905			13,867			14,555
Branches		997			1,009			1,044

Taxable-equivalent adjustment	$	6		$	6		$	6

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Page 14

Financial Highlights (continued)

(dollars in millions, except per share amounts)


	Nine months ended
	9-30-14			9-30-13
Summary of operations
Net interest income (TE)	$	1,729		$	1,759
Noninterest income		1,307			1,313

Total revenue (TE)		3,036			3,072
Provision (credit) for loan and lease losses		37			111
Noninterest expense		2,055			2,108
Income (loss) from continuing operations attributable to Key		688			635
Income (loss) from discontinued operations, net of taxes ^(a)		(17	)		45
Net income (loss) attributable to Key		671			680

Income (loss) from continuing operations attributable to Key common shareholders	$	671		$	618
Income (loss) from discontinued operations, net of taxes ^(a)		(17	)		45
Net income (loss) attributable to Key common shareholders		654			663

Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.77		$	.68
Income (loss) from discontinued operations, net of taxes ^(a)		(.02	)		.05
Net income (loss) attributable to Key common shareholders ^(b)		.75			.73

Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.76			.67
Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)		(.02	)		.05
Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)		.74			.72

Cash dividends paid		.185			.16

Performance ratios
From continuing operations:
Return on average total assets		1.06	%		1.02	%
Return on average common equity		8.84			8.27
Return on average tangible common equity ^(c)		9.83			9.22
Net interest margin (TE)		2.98			3.16
Cash efficiency ratio ^(c)		66.7			67.5

From consolidated operations:
Return on average total assets		.99	%		1.03	%
Return on average common equity		8.62			8.88
Return on average tangible common equity ^(c)		9.58			9.89
Net interest margin (TE)		2.94			3.10

Asset quality — from continuing operations
Net loan charge-offs	$	81		$	131
Net loan charge-offs to average total loans		.20	%		.33	%

Other data
Average full-time equivalent employees		13,942			14,980

Taxable-equivalent adjustment	$	18		$	17

(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 for periods prior to September 30, 2014) divided by period-end consolidated total deposits (excluding deposits in foreign office).

(e)	9-30-14 ratio is estimated.

(f)	Loan balances exclude $14 million, $15 million, and $18 million of purchased credit impaired loans at September 30, 2014, June 30, 2014, and September 30, 2013, respectively.

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

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October 15, 2014

Page 15

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,” and “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 is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key’s intangible asset amortization from the calculation. Management believes this ratio provides greater consistency and comparability between Key’s results and those of its peer banks. Additionally, this ratio is 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
			9-30-14			6-30-14			9-30-13
Tangible common equity to tangible assets at period end
	Key shareholders’ equity (GAAP)		$	10,509		$	10,504		$	10,206
	Less:	Intangible assets ^(a)		1,105			1,008			1,017
		Preferred Stock, Series A ^(b)		282			282			282

		Tangible common equity (non-GAAP)	$	9,122		$	9,214		$	8,907

	Total assets (GAAP)		$	89,770		$	91,798		$	90,708
	Less:	Intangible assets ^(a)		1,105			1,008			1,017

		Tangible assets (non-GAAP)	$	88,665		$	90,790		$	89,691

	Tangible common equity to tangible assets ratio (non-GAAP)			10.29	%		10.15	%		9.93	%

Tier 1 common equity at period end
	Key shareholders’ equity (GAAP)		$	10,509		$	10,504		$	10,206
	Qualifying capital securities			340			339			340
	Less:	Goodwill		1,051			979			979
		Accumulated other comprehensive income (loss) ^(c)		(366	)		(328	)		(409	)
		Other assets ^(d)		110			86			96

		Total Tier 1 capital (regulatory)		10,054			10,106			9,880
	Less:	Qualifying capital securities		340			339			340
		Preferred Stock, Series A ^(b)		282			282			282

		Total Tier 1 common equity (non-GAAP)	$	9,432		$	9,485		$	9,258

	Net risk-weighted assets (regulatory) ^(e)		$	83,787		$	84,287		$	82,913

	Tier 1 common equity ratio (non-GAAP) ^(e)			11.26	%		11.25	%		11.17	%

Pre-provision net revenue
	Net interest income (GAAP)		$	575		$	573		$	578
	Plus:	Taxable-equivalent adjustment		6			6			6
		Noninterest income (GAAP)		417			455			459
	Less:	Noninterest expense (GAAP)		704			689			716

	Pre-provision net revenue from continuing operations (non-GAAP)		$	294		$	345		$	327

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GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)


			Three months ended
			9-30-14			6-30-14			9-30-13
Average tangible common equity
	Average Key shareholders’ equity (GAAP)		$	10,473		$	10,459		$	10,237
	Less:	Intangible assets (average)^(f)		1,037			1,010			1,019
		Preferred Stock, Series A (average)		291			291			291

		Average tangible common equity (non-GAAP)	$	9,145		$	9,158		$	8,927

Return on average tangible common equity from continuing operations
	Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	197		$	242		$	229
	Average tangible common equity (non-GAAP)			9,145			9,158			8,927

	Return on average tangible common equity from continuing operations (non-GAAP)			8.55	%		10.60	%		10.18	%

Return on average tangible common equity consolidated
	Net income (loss) attributable to Key common shareholders (GAAP)		$	204		$	214		$	266
	Average tangible common equity (non-GAAP)			9,145			9,158			8,927

	Return on average tangible common equity consolidated (non-GAAP)			8.85	%		9.37	%		11.82	%

Cash efficiency ratio
	Noninterest expense (GAAP)		$	704		$	689		$	716
	Less:	Intangible asset amortization (GAAP)		10			9			12

		Adjusted noninterest expense (non-GAAP)	$	694		$	680		$	704

	Net interest income (GAAP)		$	575		$	573		$	578
	Plus:	Taxable-equivalent adjustment		6			6			6
		Noninterest income (GAAP)		417			455			459

		Total taxable-equivalent revenue (non-GAAP)	$	998		$	1,034		$	1,043

	Cash efficiency ratio (non-GAAP)			69.5	%		65.8	%		67.5	%

			Three months ended
			9-30-14			6-30-14
Common Equity Tier 1 under the Regulatory Capital Rules (estimates)
	Tier 1 common equity under current regulatory rules		$	9,432		$	9,485
	Adjustments from current regulatory rules to the Regulatory Capital Rules:
		Deferred tax assets and other^(g)		(99	)		(108	)

		Common Equity Tier 1 anticipated under the Regulatory Capital Rules^(h)	$	9,333		$	9,377

	Net risk-weighted assets under current regulatory rules		$	83,787		$	84,287
	Adjustments from current regulatory rules to the Regulatory Capital Rules:
		Loan commitments less than one year		1,018			1,004
		Past due loans		128			128
		Mortgage servicing assets⁽ⁱ⁾		470			484
		Deferred tax assets⁽ⁱ⁾		252			177
		Other		1,519			1,519

		Total risk-weighted assets anticipated under the Regulatory Capital Rules^(h)	$	87,174		$	87,599

	Common Equity Tier 1 ratio under the Regulatory Capital Rules			10.71	%		10.70	%

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October 15, 2014

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GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)


			Nine months ended
			9-30-14			9-30-13
Pre-provision net revenue
	Net interest income (GAAP)		$	1,711		$	1,742
	Plus:	Taxable-equivalent adjustment		18			17
		Noninterest income (GAAP)		1,307			1,313
	Less:	Noninterest expense (GAAP)		2,055			2,108

	Pre-provision net revenue from continuing operations (non-GAAP)		$	981		$	964

Average tangible common equity
	Average Key shareholders’ equity (GAAP)		$	10,435		$	10,277
	Less:	Intangible assets (average)^(j)		1,020			1,023
		Preferred Stock, Series A (average)		291			291

		Average tangible common equity (non-GAAP)	$	9,124		$	8,963

Return on average tangible common equity from continuing operations
	Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	671		$	618
	Average tangible common equity (non-GAAP)			9,124			8,963
	Return on average tangible common equity from continuing operations (non-GAAP)			9.83	%		9.22	%

Return on average tangible common equity consolidated
	Net income (loss) attributable to Key common shareholders (GAAP)		$	654		$	663
	Average tangible common equity (non-GAAP)			9,124			8,963

	Return on average tangible common equity consolidated (non-GAAP)			9.58	%		9.89	%

Cash efficiency ratio
	Noninterest expense (GAAP)		$	2,055		$	2,108
	Less:	Intangible asset amortization (GAAP)		29			34

		Adjusted noninterest expense (non-GAAP)	$	2,026		$	2,074

	Net interest income (GAAP)		$	1,711		$	1,742
	Plus:	Taxable-equivalent adjustment		18			17
		Noninterest income (GAAP)		1,307			1,313

		Total taxable-equivalent revenue (non-GAAP)	$	3,036		$	3,072

	Cash efficiency ratio (non-GAAP)			66.7	%		67.5	%

(a)	For the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, intangible assets exclude $72 million, $79 million, and $99 million, respectively, of period-end purchased credit card receivables.

(b)	Net of capital surplus.

(c)

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.

(d)	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 September 30, 2014, June 30, 2014, and September 30, 2013.

(e)	9-30-14 amount is estimated.

(f)	For the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, average intangible assets exclude $76 million, $82 million, and $103 million, respectively, of average purchased credit card receivables.

(g)	Includes the deferred tax asset subject to future taxable income for realization, primarily tax credit carryforwards, as well as the deductible portion of purchased credit card receivables.

(h)	The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies’ Regulatory Capital Rules (as fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital Rules under the “standardized approach.”

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

(j)	For the nine months ended September 30, 2014, and September 30, 2013, average intangible assets exclude $82 million and $110 million, respectively, of average purchased credit card receivables.

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 18

Consolidated Balance Sheets

(dollars in millions)


	9-30-14			6-30-14			9-30-13
Assets
Loans	$	56,155		$	55,600		$	53,597
Loans held for sale		784			435			699
Securities available for sale		12,245			12,224			12,606
Held-to-maturity securities		4,997			5,233			4,835
Trading account assets		965			890			806
Short-term investments		2,342			3,176			3,535
Other investments		822			899			1,007

Total earning assets		78,310			78,457			77,085
Allowance for loan and lease losses		(804	)		(814	)		(868	)
Cash and due from banks		651			604			748
Premises and equipment		832			844			890
Operating lease assets		304			306			293
Goodwill		1,051			979			979
Other intangible assets		126			108			137
Corporate-owned life insurance		3,456			3,438			3,384
Derivative assets		413			549			475
Accrued income and other assets		3,010			3,090			2,747
Discontinued assets		2,421			4,237			4,838

Total assets	$	89,770		$	91,798		$	90,708

Liabilities
Deposits in domestic offices:
NOW and money market deposit accounts	$	33,941		$	33,637		$	33,132
Savings deposits		2,390			2,450			2,489
Certificates of deposit ($100,000 or more)		2,533			2,743			2,698
Other time deposits		3,338			3,505			3,833

Total interest-bearing deposits		42,202			42,335			42,152
Noninterest-bearing deposits		25,697			24,781			25,778
Deposits in foreign office — interest-bearing		557			683			605

Total deposits		68,456			67,799			68,535
Federal funds purchased and securities sold under repurchase agreements		657			1,213			1,455
Bank notes and other short-term borrowings		996			521			466
Derivative liabilities		384			451			450
Accrued expense and other liabilities		1,537			1,400			1,375
Long-term debt		7,172			8,213			6,154
Discontinued liabilities		42			1,680			2,037

Total liabilities		79,244			81,277			80,472

Equity
Preferred stock, Series A		291			291			291
Common shares		1,017			1,017			1,017
Capital surplus		3,984			3,987			4,029
Retained earnings		8,105			7,950			7,431
Treasury stock, at cost		(2,563	)		(2,452	)		(2,193	)
Accumulated other comprehensive income (loss)		(325	)		(289	)		(369	)

Key shareholders’ equity		10,509			10,504			10,206
Noncontrolling interests		17			17			30

Total equity		10,526			10,521			10,236

Total liabilities and equity	$	89,770		$	91,798		$	90,708

Common shares outstanding (000)		868,477			876,823			897,821

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 19

Consolidated Statements of Income

(dollars in millions, except per share amounts)


	Three months ended									Nine months ended
	9-30-14			6-30-14			9-30-13			9-30-14			9-30-13
Interest income
Loans	$	531		$	526		$	532		$	1,576		$	1,619
Loans held for sale		4			5			5			13			14
Securities available for sale		67			71			76			210			236
Held-to-maturity securities		25			23			22			70			60
Trading account assets		6			7			5			19			15
Short-term investments		2			1			1			4			4
Other investments		4			6			6			16			23

Total interest income		639			639			647			1,908			1,971

Interest expense
Deposits		28			31			37			91			124
Federal funds purchased and securities sold under repurchase agreements		1			—			1			2			2
Bank notes and other short-term borrowings		2			2			2			6			5
Long-term debt		33			33			29			98			98

Total interest expense		64			66			69			197			229

Net interest income		575			573			578			1,711			1,742
Provision (credit) for loan and lease losses		21			10			28			37			111

Net interest income (expense) after provision for loan and lease losses		554			563			550			1,674			1,631

Noninterest income
Trust and investment services income		99			94			100			291			295
Investment banking and debt placement fees		88			99			86			271			249
Service charges on deposit accounts		68			66			73			197			213
Operating lease income and other leasing gains		17			35			44			81			91
Corporate services income		42			41			44			125			132
Cards and payments income		42			43			43			123			122
Corporate-owned life insurance income		26			28			26			80			87
Consumer mortgage income		3			2			3			7			16
Mortgage servicing fees		9			11			15			35			36
Net gains (losses) from principal investing		9			27			17			60			32
Other income ^(a)		14			9			8			37			40

Total noninterest income		417			455			459			1,307			1,313

Noninterest expense
Personnel		405			389			414			1,182			1,211
Net occupancy		66			68			66			198			202
Computer processing		39			41			38			118			116
Business services and professional fees		36			41			37			118			109
Equipment		25			24			25			73			78
Operating lease expense		11			10			14			31			37
Marketing		15			13			16			33			33
FDIC assessment		9			6			7			21			23
Intangible asset amortization		10			9			12			29			34
Provision (credit) for losses on lending-related commitments		(2	)		2			3			(2	)		11
OREO expense, net		1			1			1			3			5
Other expense		89			85			83			251			249

Total noninterest expense		704			689			716			2,055			2,108

Income (loss) from continuing operations before income taxes		267			329			293			926			836
Income taxes		64			76			59			232			201

Income (loss) from continuing operations		203			253			234			694			635
Income (loss) from discontinued operations, net of taxes		7			(28	)		37			(17	)		45

Net income (loss)		210			225			271			677			680
Less: Net income (loss) attributable to noncontrolling interests		—			6			(1	)		6			—

Net income (loss) attributable to Key	$	210		$	219		$	272		$	671		$	680

Income (loss) from continuing operations attributable to Key common shareholders	$	197		$	242		$	229		$	671		$	618
Net income (loss) attributable to Key common shareholders		204			214			266			654			663

Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.28		$	.25		$	.77		$	.68
Income (loss) from discontinued operations, net of taxes		.01			(.03	)		.04			(.02	)		.05
Net income (loss) attributable to Key common shareholders ^(b)		.24			.24			.29			.75			.73

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.27		$	.25		$	.76		$	.67
Income (loss) from discontinued operations, net of taxes		.01			(.03	)		.04			(.02	)		.05
Net income (loss) attributable to Key common shareholders ^(b)		.23			.24			.29			.74			.72

Cash dividends declared per common share	$	.065		$	.065		$	.055		$	.185		$	.16

Weighted-average common shares outstanding (000)		867,350			875,298			901,904			875,728			911,918
Effect of convertible preferred stock		—			20,602			—			—			—
Effect of common share options and other stock awards		6,772			6,237			6,349			6,723			5,661

Weighted-average common shares and potential common shares outstanding (000) ^(c)		874,122			902,137			908,253			882,451			917,579

(a)

For each of the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, net securities gains (losses) totaled less than $1 million. For the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, Key did not have any impairment losses related to securities.

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

(c)	Assumes conversion of common share options and other stock awards and/or convertible preferred stock, as applicable.

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 20

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

(dollars in millions)


	Third Quarter 2014								Second Quarter 2014								Third Quarter 2013
	Average Balance			Interest ^(a)		Yield/Rate ^(a)			Average Balance			Interest ^(a)		Yield/Rate ^(a)			Average Balance			Interest ^(a)		Yield/Rate ^(a)
Assets
Loans:^{(b), (c)}

Commercial, financial and agricultural^(d)	$	26,456		$	218		3.28	%	$	26,444		$	219		3.31	%	$	23,864		$	213		3.54	%
Real estate — commercial mortgage		8,142			78		3.79			7,880			74		3.79			7,575			77		4.06
Real estate — construction		1,030			10		3.78			1,049			11		4.03			1,073			12		4.24
Commercial lease financing		4,145			38		3.66			4,257			38		3.54			4,633			36		3.14

Total commercial loans		39,773			344		3.44			39,630			342		3.45			37,145			338		3.61
Real estate — residential mortgage		2,204			24		4.35			2,189			24		4.41			2,193			25		4.43
Home equity:
Key Community Bank		10,368			102		3.91			10,321			100		3.92			10,247			101		3.92
Other		290			6		7.80			306			6		7.80			364			7		7.72

Total home equity loans		10,658			108		4.01			10,627			106		4.03			10,611			108		4.05
Consumer other — Key Community Bank		1,534			26		6.87			1,479			26		6.97			1,435			26		7.24
Credit cards		716			20		11.12			702			18		10.39			700			21		11.77
Consumer other:
Marine		856			13		6.23			926			15		6.18			1,120			17		6.26
Other		55			2		7.63			58			1		8.09			67			2		8.72

Total consumer other		911			15		6.32			984			16		6.29			1,187			19		6.40

Total consumer loans		16,023			193		4.78			15,981			190		4.77			16,126			199		4.93

Total loans		55,796			537		3.82			55,611			532		3.83			53,271			537		4.00
Loans held for sale		502			4		3.87			458			5		4.14			456			5		4.06
Securities available for sale^{(b), (e)}		11,939			67		2.25			12,408			71		2.30			12,926			77		2.37
Held-to-maturity securities^(b)		5,108			25		1.90			4,973			23		1.87			4,796			22		1.84
Trading account assets		893			6		2.68			985			7		2.80			747			5		2.52
Short-term investments		3,048			2		.19			2,475			1		.17			1,615			1		.20
Other investments^(e)		847			4		2.12			888			6		2.64			1,022			6		2.67

Total earning assets		78,133			645		3.30			77,798			645		3.31			74,833			653		3.49
Allowance for loan and lease losses		(809	)							(824	)							(873	)
Accrued income and other assets		9,799								9,767								9,549
Discontinued assets		4,138								4,341								5,061

Total assets	$	91,261							$	91,082							$	88,570

Liabilities
NOW and money market deposit accounts	$	33,969			12		.14		$	34,283			11		.14		$	32,736			13		.15
Savings deposits		2,428			1		.02			2,493			—		.03			2,520			—		.04
Certificates of deposit ($100,000 or more)^(f)		2,629			8		1.23			2,808			10		1.39			2,785			12		1.67
Other time deposits		3,413			7		.83			3,587			9		.98			3,957			12		1.24
Deposits in foreign office		595			—		.23			662			1		.23			621			—		.20

Total interest-bearing deposits		43,034			28		.26			43,833			31		.28			42,619			37		.35
Federal funds purchased and securities sold under repurchase agreements		1,176			1		.19			1,470			—		.19			1,837			1		.08
Bank notes and other short-term borrowings		484			2		1.79			545			2		1.54			383			2		1.98
Long-term debt^{(f), (g)}		4,868			33		2.88			5,476			33		2.51			3,504			29		3.41

Total interest-bearing liabilities		49,562			64		.52			51,324			66		.52			48,343			69		.56

Noninterest-bearing deposits		25,302								23,290								23,364
Accrued expense and other liabilities		1,768								1,654								1,626
Discontinued liabilities^(g)		4,138								4,341								4,968

Total liabilities		80,770								80,609								78,301
Equity
Key shareholders’ equity		10,473								10,459								10,237
Noncontrolling interests		18								14								32

Total equity		10,491								10,473								10,269

Total liabilities and equity	$	91,261							$	91,082							$	88,570

Interest rate spread (TE)							2.78	%							2.79	%							2.93	%

Net interest income (TE) and net interest margin (TE)					581		2.96	%					579		2.98	%					584		3.11	%

TE adjustment^(b)					6								6								6

Net interest income, GAAP basis				$	575							$	573							$	578

(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 balances include $92 million, $95 million, and $96 million of assets from commercial credit cards for the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, respectively.

(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 Third Quarter 2014 Profit

October 15, 2014

Page 21

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

(dollars in millions)


	Nine months ended September 30, 2014								Nine months ended September 30, 2013
	Average Balance			Interest ^(a)		Yield/Rate ^(a)			Average Balance			Interest ^(a)		Yield/Rate ^(a)
Assets
Loans:^{(b), (c)}

Commercial, financial and agricultural ^(d)	$	26,100		$	643		3.29	%	$	23,556		$	643		3.65	%
Real estate — commercial mortgage		7,944			226		3.81			7,561			234		4.15
Real estate — construction		1,056			33		4.13			1,053			34		4.27
Commercial lease financing		4,280			118		3.67			4,740			131		3.68

Total commercial loans		39,380			1,020		3.46			36,910			1,042		3.77
Real estate — residential mortgage		2,193			72		4.40			2,181			74		4.51
Home equity:
Key Community Bank		10,332			302		3.92			10,011			295		3.94
Other		307			18		7.79			388			22		7.69

Total home equity loans		10,639			320		4.03			10,399			317		4.08
Consumer other — Key Community Bank		1,484			77		6.96			1,390			77		7.38
Credit cards		706			58		10.93			700			63		12.10
Consumer other:
Marine		926			43		6.20			1,212			57		6.27
Other		60			4		7.75			75			5		8.40

Total consumer other		986			47		6.29			1,287			62		6.39

Total consumer loans		16,008			574		4.79			15,957			593		4.95

Total loans		55,388			1,594		3.85			52,867			1,635		4.14
Loans held for sale		469			13		3.79			479			14		3.75
Securities available for sale^{(b), (e)}		12,229			210		2.29			12,766			237		2.52
Held-to-maturity securities^(b)		4,950			70		1.87			4,256			60		1.88
Trading account assets		953			19		2.66			735			15		2.74
Short-term investments		2,672			4		.18			2,440			4		.22
Other investments^(e)		890			16		2.45			1,043			23		2.96

Total earning assets		77,551			1,926		3.31			74,586			1,988		3.56
Allowance for loan and lease losses		(825	)							(886	)
Accrued income and other assets		9,786								9,727
Discontinued assets		4,323								5,124

Total assets	$	90,835							$	88,551

Liabilities
NOW and money market deposit accounts	$	34,105			35		.14		$	32,513			41		.17
Savings deposits		2,466			1		.03			2,513			1		.05
Certificates of deposit ($100,000 or more)^(f)		2,731			28		1.38			2,890			39		1.82
Other time deposits		3,558			26		.96			4,202			42		1.34
Deposits in foreign office		639			1		.23			550			1		.23

Total interest-bearing deposits		43,499			91		.28			42,668			124		.39
Federal funds purchased and securities sold under repurchase agreements		1,371			2		.18			1,865			2		.12
Bank notes and other short-term borrowings		538			6		1.65			379			5		1.86
Long-term debt^{(f), (g)}		5,169			98		2.65			4,187			98		3.39

Total interest-bearing liabilities		50,577			197		.52			49,099			229		.63

Noninterest-bearing deposits		23,760								22,361
Accrued expense and other liabilities		1,724								1,692
Discontinued liabilities^(g)		4,323								5,089

Total liabilities		80,384								78,241
Equity
Key shareholders’ equity		10,435								10,277
Noncontrolling interests		16								33

Total equity		10,451								10,310

Total liabilities and equity	$	90,835							$	88,551

Interest rate spread (TE)							2.79	%							2.93	%

Net interest income (TE) and net interest margin (TE)					1,729		2.98	%					1,759		3.16	%

TE adjustment^(b)					18								17

Net interest income, GAAP basis				$	1,711							$	1,742

(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 balances include $94 million and $95 million of assets from commercial credit cards for the nine months ended September 30, 2014, and September 30, 2013, respectively.

(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 Third Quarter 2014 Profit

October 15, 2014

Page 22

Noninterest Expense

(dollars in millions)


	Three months ended							Nine months ended
	9-30-14			6-30-14		9-30-13		9-30-14			9-30-13
Personnel ^(a)	$	405		$	389	$	414	$	1,182		$	1,211
Net occupancy		66			68		66		198			202
Computer processing		39			41		38		118			116
Business services and professional fees		36			41		37		118			109
Equipment		25			24		25		73			78
Operating lease expense		11			10		14		31			37
Marketing		15			13		16		33			33
FDIC assessment		9			6		7		21			23
Intangible asset amortization		10			9		12		29			34
Provision (credit) for losses on lending-related commitments		(2	)		2		3		(2	)		11
OREO expense, net		1			1		1		3			5
Other expense		89			85		83		251			249

Total noninterest expense	$	704		$	689	$	716	$	2,055		$	2,108

Average full-time equivalent employees ^(b)		13,905			13,867		14,555		13,942			14,980

(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						Nine months ended
	9-30-14		6-30-14		9-30-13		9-30-14		9-30-13
Salaries	$	226	$	224	$	222	$	670	$	671
Technology contract labor, net		12		14		19		43		56
Incentive compensation		79		81		81		232		231
Employee benefits		71		50		78		184		193
Stock-based compensation		10		10		8		31		27
Severance		7		10		6		22		33

Total personnel expense	$	405	$	389	$	414	$	1,182	$	1,211

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 23

Loan Composition

(dollars in millions)


							Percent change 9-30-14 vs.
	9-30-14		6-30-14		9-30-13		6-30-14			9-30-13
Commercial, financial and agricultural ^(a)	$	26,683	$	26,327	$	24,317		1.4	%		9.7	%
Commercial real estate:
Commercial mortgage		8,276		7,946		7,544		4.2			9.7
Construction		1,036		1,047		1,058		(1.1	)		(2.1	)

Total commercial real estate loans		9,312		8,993		8,602		3.5			8.3
Commercial lease financing ^(b)		4,135		4,241		4,550		(2.5	)		(9.1	)

Total commercial loans		40,130		39,561		37,469		1.4			7.1
Residential — prime loans:
Real estate — residential mortgage		2,213		2,189		2,198		1.1			.7
Home equity:
Key Community Bank		10,380		10,379		10,285		—			.9
Other		283		300		353		(5.7	)		(19.8	)

Total home equity loans		10,663		10,679		10,638		(.1	)		.2

Total residential — prime loans		12,876		12,868		12,836		.1			.3
Consumer other — Key Community Bank		1,546		1,514		1,440		2.1			7.4
Credit cards		724		718		698		.8			3.7
Consumer other:
Marine		828		888		1,083		(6.8	)		(23.5	)
Other		51		51		71		—			(28.2	)

Total consumer other		879		939		1,154		(6.4	)		(23.8	)

Total consumer loans		16,025		16,039		16,128		(.1	)		(.6	)

Total loans^{(c), (d)}	$	56,155	$	55,600	$	53,597		1.0	%		4.8	%

Loans Held for Sale Composition

(dollars in millions)


							Percent change 9-30-14 vs.
	9-30-14		6-30-14		9-30-13		6-30-14			9-30-13
Commercial, financial and agricultural	$	30	$	181	$	68		(83.4	)%		(55.9	)%
Real estate — commercial mortgage		725		221		608		228.1			19.2
Commercial lease financing		10		10		—		—			N/M
Real estate — residential mortgage		19		23		23		(17.4	)		(17.4	)

Total loans held for sale	$	784	$	435	$	699		80.2	%		12.2	%

Summary of Changes in Loans Held for Sale

(in millions)


	3Q14			2Q14			1Q14			4Q13			3Q13
Balance at beginning of period	$	435		$	401		$	611		$	699		$	402
New originations		1,593			978			645			1,669			1,467
Transfers from (to) held to maturity, net		—			(8	)		3			1			15
Loan sales		(1,243	)		(934	)		(596	)		(1,750	)		(1,181	)
Loan draws (payments), net		(1	)		(2	)		(262	)		(8	)		(4	)

Balance at end of period	$	784		$	435		$	401		$	611		$	699

(a)	Loan balances include $90 million, $94 million, and $96 million of commercial credit card balances at September 30, 2014, June 30, 2014, and September 30, 2013, respectively.

(b)	Commercial lease financing includes receivables of $367 million and $375 million held as collateral for a secured borrowing at September 30, 2014, and June 30, 2014, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c)

At September 30, 2014, total loans include purchased loans of $143 million, of which $14 million were purchased credit impaired. At June 30, 2014, total loans include purchased loans of $151 million, of which $15 million were purchased credit impaired. At September 30, 2013, total loans include purchased loans of $176 million, of which $18 million were purchased credit impaired.

(d)	Total loans exclude loans of $2.4 billion at September 30, 2014, $4.2 billion at June 30, 2014, and $4.7 billion at September 30, 2013, related to the discontinued operations of the education lending business.

N/M = Not Meaningful

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 24

Exit Loan Portfolio From Continuing Operations

(in millions)


	Balance Outstanding				Change 9-30-14 vs. 6-30-14			Net Loan Charge-offs						Balance on Nonperforming Status
	9-30-14		6-30-14		Change 9-30-14 vs. 6-30-14			3Q14^(c)			2Q14^(c)			9-30-14		6-30-14
Residential properties — homebuilder	$	11	$	19	$	(8	)	$	1			—		$	10	$	7
Marine and RV floor plan		7		23		(16	)		—			—			5		6
Commercial lease financing^(a)		1,046		1,154		(108	)		(1	)	$	(5	)		1		3

Total commercial loans		1,064		1,196		(132	)		—			(5	)		16		16
Home equity — Other		283		300		(17	)		1			1			10		11
Marine		828		888		(60	)		2			5			16		15
RV and other consumer		57		61		(4	)		1			(1	)		1		1

Total consumer loans		1,168		1,249		(81	)		4			5			27		27

Total exit loans in loan portfolio	$	2,232	$	2,445	$	(213	)	$	4		$	—		$	43	$	43

Discontinued operations — education lending business (not included in exit loans above)^(b)	$	2,375	$	4,162	$	(1,787	)	$	7		$	7		$	9	$	19

(a)

Includes (1) the business aviation, commercial vehicle, office products, construction, and industrial leases; (2) Canadian lease financing portfolios; (3) European lease financing portfolios; and (4) all remaining balances related to lease in, lease out; sale in, lease out; service contract leases; and qualified technological equipment leases.

(b)	June 30, 2014, balance 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)


	3Q14			2Q14			1Q14			4Q13			3Q13
Net loan charge-offs	$	31		$	30		$	20		$	37		$	37
Net loan charge-offs to average total loans		.22	%		.22	%		.15	%		.27	%		.28	%
Allowance for loan and lease losses	$	804		$	814		$	834		$	848		$	868
Allowance for credit losses^(a)		839			851			869			885			908
Allowance for loan and lease losses to period-end loans		1.43	%		1.46	%		1.50	%		1.56	%		1.62	%
Allowance for credit losses to period-end loans		1.49			1.53			1.57			1.63			1.69
Allowance for loan and lease losses to nonperforming loans		200.5			205.6			185.7			166.9			160.4
Allowance for credit losses to nonperforming loans		209.2			214.9			193.5			174.2			167.8
Nonperforming loans at period end^(b)	$	401		$	396		$	449		$	508		$	541
Nonperforming assets at period end		418			410			469			531			579
Nonperforming loans to period-end portfolio loans		.71	%		.71	%		.81	%		.93	%		1.01	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.74			.74			.85			.97			1.08

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

(b)	Loan balances exclude $14 million, $15 million, $16 million, $16 million, and $18 million of purchased credit impaired loans at September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, and September 30, 2013, respectively.

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 25

Summary of Loan and Lease Loss Experience From Continuing Operations

(dollars in millions)


	Three months ended									Nine months ended
	9-30-14			6-30-14			9-30-13			9-30-14			9-30-13
Average loans outstanding	$	55,796		$	55,611		$	53,271		$	55,388		$	52,867

Allowance for loan and lease losses at beginning of period	$	814		$	834		$	876		$	848		$	888
Loans charged off:
Commercial, financial and agricultural		12			11			15			35			44

Real estate — commercial mortgage		—			1			2			3			18
Real estate — construction		2			—			—			4			2

Total commercial real estate loans		2			1			2			7			20
Commercial lease financing		1			2			17			6			25

Total commercial loans		15			14			34			48			89
Real estate — residential mortgage		2			2			3			7			13
Home equity:
Key Community Bank		9			10			14			29			50
Other		2			3			4			8			16

Total home equity loans		11			13			18			37			66
Consumer other — Key Community Bank		7			8			8			23			24
Credit cards		9			12			9			27			25
Consumer other:
Marine		4			7			5			18			22
Other		1			—			1			2			3

Total consumer other		5			7			6			20			25

Total consumer loans		34			42			44			114			153

Total loans charged off		49			56			78			162			242
Recoveries:
Commercial, financial and agricultural		6			11			11			27			30

Real estate — commercial mortgage		2			1			10			4			20
Real estate — construction		1			1			6			16			14

Total commercial real estate loans		3			2			16			20			34
Commercial lease financing		2			4			2			8			10

Total commercial loans		11			17			29			55			74
Real estate — residential mortgage		—			1			1			2			1
Home equity:
Key Community Bank		3			1			2			7			8
Other		1			2			2			4			5

Total home equity loans		4			3			4			11			13
Consumer other — Key Community Bank		1			1			1			4			5
Credit cards		—			1			1			1			3
Consumer other:
Marine		2			2			4			7			13
Other		—			1			1			1			2

Total consumer other		2			3			5			8			15

Total consumer loans		7			9			12			26			37

Total recoveries		18			26			41			81			111

Net loan charge-offs		(31	)		(30	)		(37	)		(81	)		(131	)
Provision (credit) for loan and lease losses		21			10			28			37			111
Foreign currency translation adjustment		—			—			1			—			—

Allowance for loan and lease losses at end of period	$	804		$	814		$	868		$	804		$	868

Liability for credit losses on lending-related commitments at beginning of period	$	37		$	35		$	37		$	37		$	29
Provision (credit) for losses on lending-related commitments		(2	)		2			3			(2	)		11

Liability for credit losses on lending-related commitments at end of period^(a)	$	35		$	37		$	40		$	35		$	40

Total allowance for credit losses at end of period	$	839		$	851		$	908		$	839		$	908

Net loan charge-offs to average total loans		.22	%		.22	%		.28	%		.20	%		.33	%
Allowance for loan and lease losses to period-end loans		1.43			1.46			1.62			1.43			1.62
Allowance for credit losses to period-end loans		1.49			1.53			1.69			1.49			1.69
Allowance for loan and lease losses to nonperforming loans		200.5			205.6			160.4			200.5			160.4
Allowance for credit losses to nonperforming loans		209.2			214.9			167.8			209.2			167.8
Discontinued operations — education lending business:
Loans charged off	$	10		$	11		$	14		$	34		$	42
Recoveries		3			4			5			11			14

Net loan charge-offs	$	(7	)	$	(7	)	$	(9	)	$	(23	)	$	(28	)

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

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 26

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

(dollars in millions)


	9-30-14			6-30-14			3-31-14			12-31-13			9-30-13
Commercial, financial and agricultural	$	47		$	37		$	60		$	77		$	102

Real estate — commercial mortgage		41			38			37			37			58
Real estate — construction		14			9			11			14			17

Total commercial real estate loans		55			47			48			51			75
Commercial lease financing		14			15			18			19			22

Total commercial loans		116			99			126			147			199
Real estate — residential mortgage		81			89			105			107			98
Home equity:
Key Community Bank		174			178			188			205			198
Other		10			11			11			15			13

Total home equity loans		184			189			199			220			211
Consumer other — Key Community Bank		2			2			2			3			2
Credit cards		1			1			1			4			4
Consumer other:
Marine		16			15			15			26			25
Other		1			1			1			1			2

Total consumer other		17			16			16			27			27

Total consumer loans		285			297			323			361			342

Total nonperforming loans^(a)		401			396			449			508			541
Nonperforming loans held for sale		—			1			1			1			13
OREO		16			12			12			15			15
Other nonperforming assets		1			1			7			7			10

Total nonperforming assets	$	418		$	410		$	469		$	531		$	579

Accruing loans past due 90 days or more	$	71		$	83		$	89		$	71		$	90
Accruing loans past due 30 through 89 days		340			274			267			318			288
Restructured loans — accruing and nonaccruing^(b)		264			266			294			338			349
Restructured loans included in nonperforming loans^(b)		136			142			178			214			228
Nonperforming assets from discontinued operations — education lending business		9			19			20			25			23
Nonperforming loans to period-end portfolio loans		.71	%		.71	%		.81	%		.93	%		1.01	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.74			.74			.85			.97			1.08

(a)	Loan balances exclude $14 million, $15 million, $16 million, $16 million, and $18 million of purchased credit impaired loans at September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, and September 30, 2013, respectively.

(b)

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.

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 27

Summary of Changes in Nonperforming Loans From Continuing Operations

(in millions)


	3Q14			2Q14			1Q14			4Q13			3Q13
Balance at beginning of period	$	396		$	449		$	508		$	541		$	652
Loans placed on nonaccrual status		109			79			98			129			161
Charge-offs		(49	)		(56	)		(57	)		(66	)		(78	)
Loans sold		—			(21	)		(3	)		(19	)		(61	)
Payments		(13	)		(17	)		(21	)		(46	)		(43	)
Transfers to OREO		(7	)		(4	)		(3	)		(5	)		(2	)
Loans returned to accrual status		(35	)		(34	)		(73	)		(26	)		(88	)

Balance at end of period^(a)	$	401		$	396		$	449		$	508		$	541

(a)	Loan balances exclude $14 million, $15 million, $16 million, $16 million, and $18 million of purchased credit impaired loans at September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, and September 30, 2013, respectively.

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

(in millions)


	3Q14			2Q14		1Q14		4Q13			3Q13
Balance at beginning of period	$	1		$	1	$	1	$	13		$	14
Net advances / (payments)		—			—		—		(1	)		(1	)
Loans sold		(2	)		—		—		(11	)		—
Valuation adjustments		1			—		—		—			—

Balance at end of period		—		$	1	$	1	$	1		$	13

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

(in millions)


	3Q14			2Q14			1Q14			4Q13			3Q13
Balance at beginning of period	$	12		$	12		$	15		$	15		$	18
Properties acquired — nonperforming loans		7			4			3			5			2
Valuation adjustments		(1	)		(1	)		(1	)		—			(1	)
Properties sold		(2	)		(3	)		(5	)		(5	)		(4	)

Balance at end of period	$	16		$	12		$	12		$	15		$	15

KeyCorp Reports Third Quarter 2014 Profit

October 15, 2014

Page 28

Line of Business Results

(dollars in millions)


																Percent change 3Q14 vs.
	3Q14			2Q14			1Q14			4Q13			3Q13			2Q14			3Q13
Key Community Bank
Summary of operations
Total revenue (TE)	$	559		$	554		$	546		$	567		$	584			.9	%		(4.3	)%
Provision (credit) for loan and lease losses		31			23			9			32			24			34.8			29.2
Noninterest expense		437			445			440			468			453			(1.8	)		(3.5	)
Net income (loss) attributable to Key		57			54			61			42			67			5.6			(14.9	)
Average loans and leases		30,103			30,034			29,797			29,597			29,498			.2			2.1
Average deposits		50,302			50,230			49,910			50,493			49,732			.1			1.1
Net loan charge-offs		28			33			28			31			27			(15.2	)		3.7
Net loan charge-offs to average total loans		.37	%		.44	%		.38	%		.42	%		.36	%		N/A			N/A
Nonperforming assets at period end	$	338		$	331		$	357		$	396		$	383			2.1			(11.7	)
Return on average allocated equity		8.45	%		7.97	%		8.83	%		5.78	%		9.02	%		N/A			N/A
Average full-time equivalent employees		7,573			7,569			7,698			7,845			8,029			.1			(5.7	)

Key Corporate Bank
Summary of operations
Total revenue (TE)	$	395		$	390		$	386		$	405		$	379			1.3	%		4.2	%
Provision (credit) for loan and lease losses		(5	)		—			(1	)		(10	)		12			N/M			N/M
Noninterest expense		212			203			194			210			203			4.4			4.4
Net income (loss) attributable to Key		119			119			122			133			106			—			12.3
Average loans and leases		22,700			22,353			21,440			20,334			19,946			1.6			13.8
Average loans held for sale		481			429			429			668			422			12.1			14.0
Average deposits		17,310			16,042			15,714			17,286			16,044			7.9			7.9
Net loan charge-offs		—			(2	)		(14	)		2			6			N/M			N/M
Net loan charge-offs to average total loans		—			(.04	)%		(.26	)%		.04	%		.12	%		N/A			N/A
Nonperforming assets at period end	$	20		$	22		$	53		$	55		$	111			(9.1	)		(82.0	)
Return on average allocated equity		29.71	%		33.45	%		34.12	%		34.15	%		26.89	%		N/A			N/A
Average full-time equivalent employees		1,945			1,888			1,866			1,842			1,891			3.0			2.9

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

KEYCORP /NEW/ - FORM 8-K - EX-99.1 - October 15, 2014

Attached files

KEYCORP /NEW/ Reports