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

Attached files

file	filename
EX-99.3 - EXHIBIT 99.3 - KEYCORP /NEW/	a2q18erex993.htm
EX-99.2 - EXHIBIT 99.2 - KEYCORP /NEW/	key2q18confcallslidesvf.htm
8-K - 8-K - KEYCORP /NEW/	a2q18er8-k.htm

KEYCORP REPORTS SECOND QUARTER 2018 NET INCOME OF $464 MILLION,

OR $.44 PER COMMON SHARE

Strong results driven by loan growth, fee momentum, and expense discipline

Cash efficiency ratio of 58.8%

Return on average tangible common equity of 16.7%

CLEVELAND, July 19, 2018 - KeyCorp (NYSE: KEY) today announced second quarter net income from continuing operations attributable to Key common shareholders of $464 million, or $.44 per common share, compared to $402 million, or $.38 per common share, for the first quarter of 2018 and $393 million, or $.36 per common share, for the second quarter of 2017. Key’s results in the second quarter of 2018 and the second

quarter of 2017 included a number of notable items; additional detail can be found on page 24 of this release.



Selected Financial Highlights

dollars in millions, except per share data										Change 2Q18 vs.
	2Q18			1Q18			2Q17			1Q18		2Q17
Income (loss) from continuing operations attributable to Key common shareholders	$	464		$	402		$	393		15.4	%	18.1	%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution	.44			.38			.36			15.8		22.2
Return on average tangible common equity from continuing operations ^(a)	16.73		%	14.89		%	13.80		%	N/A		N/A
Return on average total assets from continuing operations	1.41			1.25			1.23			N/A		N/A
Common Equity Tier 1 ratio ^(b)	10.12			9.99			9.91			N/A		N/A
Book value at period end	$	13.29		$	13.07		$	13.02		1.7	%	2.1	%
Net interest margin (TE) from continuing operations	3.19		%	3.15		%	3.30		%	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 “Return on average tangible common equity from continuing operations.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.


(b)	6/30/2018 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 2



INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions							Change 2Q18 vs.
	2Q18		1Q18		2Q17		1Q18		2Q17
Net interest income (TE)	$	987	$	952	$	987	3.7	%	—
Noninterest income	660		601		653		9.8		1.1	%
Total revenue	$	1,647	$	1,553	$	1,640	6.1	%	.4	%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $987 million for the second quarter of 2018, and the net interest margin was 3.19%, compared to taxable-equivalent net interest income of $987 million and a net interest margin of 3.30% for the second quarter of 2017. Second quarter 2018 net interest income included $28 million of purchase accounting accretion, a decline of $72 million from the second quarter of 2017. Excluding purchase accounting accretion, taxable-equivalent net interest income increased $72 million from the second quarter of 2017, and the net interest margin increased 13 basis points, reflecting the benefit from higher interest rates and higher earning asset balances.

Compared to the first quarter of 2018, taxable-equivalent net interest income increased by $35 million, and the net interest margin increased by four basis points. Both net interest income and the net interest margin benefited from higher interest rates and strong commercial loan growth. One additional day in the quarter further benefited net interest income. These benefits were partially offset by continued expected declines in purchase accounting accretion. Excluding purchase accounting accretion, taxable-equivalent net interest income increased $40 million from the first quarter of 2018 and the net interest margin increased six basis points.



Noninterest Income

dollars in millions								Change 2Q18 vs.
	2Q18			1Q18		2Q17		1Q18		2Q17
Trust and investment services income	$	128		$	133	$	134	(3.8	)%	(4.5	)%
Investment banking and debt placement fees	155			143		135		8.4		14.8
Service charges on deposit accounts	91			89		90		2.2		1.1
Operating lease income and other leasing gains	(6		)	32		30		N/M		N/M
Corporate services income	61			62		55		(1.6	)	10.9
Cards and payments income	71			62		70		14.5		1.4
Corporate-owned life insurance income	32			32		33		—		(3.0	)
Consumer mortgage income	7			7		6		—		16.7
Mortgage servicing fees	22			20		15		10.0		46.7
Other income	99			21		85		371.4		16.5
Total noninterest income	$	660		$	601	$	653	9.8	%	1.1	%

N/M = Not meaningful

Key’s noninterest income was $660 million for the second quarter of 2018, compared to $653 million for the year-ago quarter. Growth was driven by an increase in investment banking and debt placement fees, related to strength in advisory fees, including benefit from the acquisition of Cain Brothers. Mortgage servicing fees also increased, benefiting from portfolio growth and increases in special servicing fees. Other income increased compared to the year-ago quarter, largely due to a gain on the sale of Key Insurance and Benefits Services. These increases were partially offset by a decline in operating lease income and other leasing gains, driven by a $42 million lease residual loss in the second quarter of 2018. Trust and investment services income also declined, impacted by the sale of Key Insurance and Benefits Services.

Compared to the first quarter of 2018, noninterest income increased by $59 million. The primary driver of the quarter-over-quarter increase was a $78 million gain related to the sale of Key Insurance and Benefits Services, reported in other income. Additionally, investment banking and debt placement fees and

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 3

cards and payments income, which increased $12 million and $9 million, respectively, benefited from ongoing investments and momentum across the franchise. These increases were partially offset by a decline in operating lease income related to a lease residual loss, as well as trust and investment services income, which was impacted by the sale of Key Insurance and Benefits Services.



Noninterest Expense

dollars in millions							Change 2Q18 vs.
	2Q18		1Q18		2Q17		1Q18		2Q17
Personnel expense	$	586	$	594	$	553	(1.3	)%	6.0	%
Nonpersonnel expense	407		412		442		(1.2	)	(7.9	)
Total noninterest expense	$	993	$	1,006	$	995	(1.3	)	(.2	)

N/M = Not meaningful

Key’s noninterest expense was $993 million for the second quarter of 2018, compared to $995 million in the year-ago quarter. Growth from acquisitions and investments, including Cain Brothers and HelloWallet, as well as the addition of client-facing bankers and continued investment in our residential mortgage business, contributed to both personnel and nonpersonnel expense in the second quarter of 2018. Efficiency-related expenses of $22 million (largely severance) and $5 million of costs related to the sale of Key Insurance and Benefits Services also impacted the current quarter’s results. The current quarter also benefited from the realization of merger-related cost savings. In the second quarter of 2017, Key incurred $44 million of merger-related charges and a $20 million charitable contribution.

Key’s noninterest expense was $993 million for the second quarter of 2018, compared to $1 billion in the prior quarter. This quarter’s decrease was largely driven by expected seasonal trends, including lower employee benefits expense, which declined $23 million, and lower occupancy and intangible asset amortization. Partially offsetting these declines were $22 million related to efficiency efforts (largely severance) and $5 million related to the sale of Key Insurance and Benefits Services.

BALANCE SHEET HIGHLIGHTS



Average Loans

dollars in millions							Change 2Q18 vs.
	2Q18		1Q18		2Q17		1Q18		2Q17
Commercial and industrial ^(a)	$	45,030	$	42,733	$	40,666	5.4	%	10.7	%
Other commercial loans	20,394		20,705		21,990		(1.5	)	(7.3	)
Home equity loans	11,601		11,877		12,473		(2.3	)	(7.0	)
Other consumer loans	11,619		11,612		11,373		.1		2.2
Total loans	$	88,644	$	86,927	$	86,502	2.0	%	2.5	%


(a)	Commercial and industrial average loan balances include $126 million, $120 million, and $117 million of assets from commercial credit cards at June 30, 2018, March 31, 2018, and June 30, 2017, respectively.

Average loans were $88.6 billion for the second quarter of 2018, an increase of $2.1 billion compared to the second quarter of 2017, reflecting broad-based growth in commercial and industrial loans, partially offset by a decline in commercial real estate balances related to higher paydowns.

Compared to the first quarter of 2018, average loans increased by $1.7 billion, largely the result of growth in commercial and industrial loans. Key realized growth across commercial client segments, with commercial and industrial loans up 3% in the Community Bank and 7% in the Corporate Bank, unannualized.

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 4



Average Deposits

dollars in millions										Change 2Q18 vs.
	2Q18			1Q18			2Q17			1Q18		2Q17
Non-time deposits	$	91,538		$	90,719		$	92,018		.9	%	(.5	)%
Certificates of deposit ($100,000 or more)	7,516			6,972			6,111			7.8		23.0
Other time deposits	4,949			4,865			4,650			1.7		6.4
Total deposits	$	104,003		$	102,556		$	102,779		1.4	%	1.2	%

Cost of total deposits	.43		%	.36		%	.26		%	N/A		N/A

N/A = Not Applicable

Average deposits totaled $104 billion for the second quarter of 2018, an increase of $1.2 billion compared to the year-ago quarter, reflecting a shift to higher-yielding deposit products, as well as strength in Key’s retail banking franchise and growth from commercial relationships. Growth was partially offset by the managed exit of certain higher cost corporate and public sector deposits.

Compared to the first quarter of 2018, average deposits increased by $1.4 billion. NOW and money market deposit accounts increased $1.2 billion and certificates of deposit and other time deposits increased $628 million, partly offset by a $471 million decline in noninterest-bearing deposits, as clients shift to higher-yielding deposit products. The linked quarter deposit growth continues to reflect strong retail deposit growth and growth from commercial relationships.



ASSET QUALITY

dollars in millions										Change 2Q18 vs.
	2Q18			1Q18			2Q17			1Q18		2Q17
Net loan charge-offs	$	60		$	54		$	66		11.1	%	(9.1	)%
Net loan charge-offs to average total loans	.27		%	.25		%	.31		%	N/A		N/A
Nonperforming loans at period end ^(a)	$	545		$	541		$	507		.7		7.5
Nonperforming assets at period end ^(a)	571			569			556			.4		2.7
Allowance for loan and lease losses	887			881			870			.7		2.0
Allowance for loan and lease losses to nonperforming loans ^(a)	162.8		%	162.8		%	171.6		%	N/A		N/A
Provision for credit losses	$	64		$	61		$	66		4.9	%	(3.0	)%


(a)	Nonperforming loan balances exclude $629 million, $690 million, and $835 million of purchased credit impaired loans at June 30, 2018, March 31, 2018, and June 30, 2017, respectively.

N/A = Not Applicable

Key’s provision for credit losses was $64 million for the second quarter of 2018, compared to $66 million for the second quarter of 2017 and $61 million for the first quarter of 2018. Key’s allowance for loan and lease losses was $887 million, or 1.01% of total period-end loans, at June 30, 2018, compared to 1.01% at June 30, 2017, and 1.00% at March 31, 2018.

Net loan charge-offs for the second quarter of 2018 totaled $60 million, or .27% of average total loans. These results compare to $66 million, or .31%, for the second quarter of 2017, and $54 million, or .25%, for the first quarter of 2018.

At June 30, 2018, Key’s nonperforming loans totaled $545 million, which represented .62% of period-end portfolio loans. These results compare to .59% at June 30, 2017, and .61% at March 31, 2018. Nonperforming assets at June 30, 2018, totaled $571 million, and represented .65% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .64% at June 30, 2017, and .65% at March 31, 2018.

CAPITAL

Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at June 30, 2018.

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 5



Capital Ratios

	6/30/2018		3/31/2018		6/30/2017
Common Equity Tier 1 ^(a)	10.12	%	9.99	%	9.91	%
Tier 1 risk-based capital ^(a)	10.94		10.82		10.73
Total risk based capital ^(a)	12.83		12.73		12.64
Tangible common equity to tangible assets ^(b)	8.32		8.22		8.56
Leverage ^(a)	9.91		9.76		9.95


(a)	6/30/2018 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.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. See below for further information on the Regulatory Capital Rules.

Key's capital position remained strong in the second quarter. As shown in the preceding table, at June 30, 2018, Key’s estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 10.12% and 10.94%, respectively. Key's tangible common equity ratio was 8.32% at June 30, 2018.

As a “standardized approach” banking organization, Key’s mandatory compliance with the final Basel III capital framework for U.S. banking organizations (the “Regulatory Capital Rules”) began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Key’s estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 10.03% at June 30, 2018. 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 2Q18 vs.
		2Q18		1Q18		2Q17		1Q18		2Q17
Shares outstanding at beginning of period		1,064,939		1,069,084		1,097,479		(.4	)%	(3.0	)%
Open market repurchases and return of shares under employee compensation plans		(6,259	)	(9,399	)	(5,072	)	(33.4	)	23.4
Shares issued under employee compensation plans (net of cancellations)		264		5,254		332		(95.0	)	(20.5	)
	Shares outstanding at end of period	1,058,944		1,064,939		1,092,739		(.6	)%	(3.1	)%

N/M = Not Meaningful

Consistent with Key's 2017 Capital Plan, during the second quarter of 2018, Key declared a dividend of $.12 per common share, and completed $126 million of common share repurchases during the quarter. These repurchases included $123 million of common share repurchases in the open market and $3 million of share repurchases related to employee equity compensation programs.

Key's 2018 Capital Plan received no objection from the Federal Reserve. The plan includes a 42% increase in the quarterly common share dividend from $0.12 per share to $0.17 per share, which is payable in the third quarter of 2018. Also included in the plan is a common share repurchase program of up to $1.225 billion. This authorization includes repurchases to offset issuances of common shares under our employee compensation plans. Repurchases are expected to be executed over the next four quarters.

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.

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 6



Major Business Segments

dollars in millions										Change 2Q18 vs.
		2Q18		1Q18			2Q17			1Q18		2Q17
Revenue from continuing operations (TE)
Key Community Bank		$	996	$	958		$	998		4.0	%	(.2	)%
Key Corporate Bank		542		559			597			(3.0	)	(9.2	)
Other Segments		38		37			46			2.7		(17.4	)
	Total segments	1,576		1,554			1,641			1.4		(4.0	)
Reconciling Items ^(a)		71		(1		)	(1		)	N/M		N/M
	Total	$	1,647	$	1,553		$	1,640		6.1	%	.4	%

Income (loss) from continuing operations attributable to Key
Key Community Bank		$	244	$	197		$	198		23.9	%	23.2	%
Key Corporate Bank		167		207			224			(19.3	)	(25.4	)
Other Segments		25		18			24			38.9		4.2
	Total segments	436		422			446			3.3		(2.2	)
Reconciling Items ^(b)		43		(6		)	(39		)	N/M		N/M
	Total	$	479	$	416		$	407		15.1	%	17.7	%


(a)	Reconciling items consists primarily of the gain on the sale of Key Insurance and Benefits Services for the second quarter of 2018.


(b)	Reconciling items consists primarily of the gain on the sale of Key Insurance and Benefits Services for the second quarter of 2018, the unallocated portion of merger-related charges for the second quarter of 2017, and items not allocated to the business segments because they do not reflect their normal operations.

TE = Taxable Equivalent, N/M = Not Meaningful



Key Community Bank


dollars in millions							Change 2Q18 vs.
	2Q18		1Q18		2Q17		1Q18		2Q17
Summary of operations
Net interest income (TE)	$	715	$	688	$	676	3.9	%	5.8	%
Noninterest income	281		270		322		4.1		(12.7	)
Total revenue (TE)	996		958		998		4.0		(.2	)
Provision for credit losses	38		48		47		(20.8	)	(19.1	)
Noninterest expense	639		652		635		(2.0	)	.6
Income (loss) before income taxes (TE)	319		258		316		23.6		.9
Allocated income taxes (benefit) and TE adjustments	75		61		118		23.0		(36.4	)
Net income (loss) attributable to Key	$	244	$	197	$	198	23.9	%	23.2	%

Average balances
Loans and leases	$	47,984	$	47,680	$	47,477	.6	%	1.1	%
Total assets	51,866		51,605		51,441		.5		.8
Deposits	80,930		79,945		79,601		1.2		1.7

Assets under management at period end	$	39,663	$	39,003	$	37,613	1.7	%	5.5	%

TE = Taxable Equivalent

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 7



Additional Key Community Bank Data

dollars in millions										Change 2Q18 vs.
	2Q18			1Q18			2Q17			1Q18		2Q17
Noninterest income
Trust and investment services income	$	92		$	89		$	86		3.4	%	7.0	%
Service charges on deposit accounts	77			76			77			1.3		—
Cards and payments income	59			51			60			15.7		(1.7	)
Other noninterest income	53			54			99			(1.9	)	(46.5	)
Total noninterest income	$	281		$	270		$	322		4.1	%	(12.7	)%

Average deposit balances
NOW and money market deposit accounts	$	45,112		$	44,291		$	45,127		1.9	%	—
Savings deposits	5,078			5,056			5,293			.4		(4.1	)%
Certificates of deposit ($100,000 or more)	5,232			4,961			4,016			5.5		30.3
Other time deposits	4,934			4,856			4,640			1.6		6.3
Noninterest-bearing deposits	20,574			20,781			20,525			(1.0	)	.2
Total deposits	$	80,930		$	79,945		$	79,601		1.2	%	1.7	%

Home equity loans
Average balance	$	11,496		$	11,763		$	12,330
Combined weighted-average loan-to-value ratio (at date of origination)	70		%	70		%	71		%
Percent first lien positions	60			60			60

Other data
Branches	1,177			1,192			1,210
Automated teller machines	1,537			1,569			1,589

Key Community Bank Summary of Operations (2Q18 vs. 2Q17)


•	Net income increased $46 million, or 23.2%, from prior year


•	Average commercial and industrial loans increased $1.1 billion, or 5.8%, from the prior year

Key Community Bank recorded net income attributable to Key of $244 million for the second quarter of 2018, compared to $198 million for the year-ago quarter, benefiting from momentum across Key's businesses, as well as a lower tax rate as a result of tax reform.

Taxable-equivalent net interest income increased by $39 million, or 5.8%, from the second quarter of 2017. The increase in net interest income was primarily attributable to the benefit from higher interest rates and growth in loans, partially offset by lower purchase accounting accretion. Average loans and leases increased $507 million, or 1.1%, largely driven by a $1.1 billion, or 5.8%, increase in commercial and industrial loans. Additionally, average deposits increased $1.3 billion, or 1.7%, from one year ago.

Noninterest income decreased $41 million, or 12.7%, from the year-ago quarter driven by a merchant services gain in the second quarter of 2017. Noninterest income, excluding the merchant services gain in the year-ago period, increased primarily due to higher assets under management from market growth.

The provision for credit losses decreased by $9 million, or 19.1%, from the second quarter of 2017. Net loan charge-offs decreased $13 million, or 27.7%, from the second quarter of 2017, as overall credit quality remained favorable.

Noninterest expense increased $4 million, or 0.6%, from the year-ago quarter. Personnel expense

increased $11 million, primarily driven by recent acquisitions and ongoing investments, including residential mortgage and HelloWallet. Nonpersonnel expense decreased by $7 million, driven by a charitable contribution in the second quarter of 2017, which was partially offset by higher technology development costs.

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 8



Key Corporate Bank


dollars in millions							Change 2Q18 vs.
	2Q18		1Q18		2Q17		1Q18		2Q17
Summary of operations
Net interest income (TE)	$	277	$	272	$	312	1.8	%	(11.2	)%
Noninterest income	265		287		285		(7.7	)	(7.0	)
Total revenue (TE)	542		559		597		(3.0	)	(9.2	)
Provision for credit losses	28		14		19		100.0		47.4
Noninterest expense	326		314		297		3.8		9.8
Income (loss) before income taxes (TE)	188		231		281		(18.6	)	(33.1	)
Allocated income taxes and TE adjustments	21		24		57		(12.5	)	(63.2	)
Net income (loss) attributable to Key	$	167	$	207	$	224	(19.3	)%	(25.4	)%

Average balances
Loans and leases	$	39,710	$	38,260	$	37,704	3.8	%	5.3	%
Loans held for sale	1,299		1,118		1,000		16.2		29.9
Total assets	47,213		45,549		44,131		3.7		7.0
Deposits	21,057		20,815		21,145		1.2		(.4	)

TE = Taxable Equivalent, N/M = Not Meaningful



Additional Key Corporate Bank Data

dollars in millions								Change 2Q18 vs.
	2Q18			1Q18		2Q17		1Q18		2Q17
Noninterest income
Trust and investment services income	$	29		$	29	$	35	—		(17.1	)%
Investment banking and debt placement fees	153			141		134		8.5	%	14.2
Operating lease income and other leasing gains	(10		)	27		22		N/M		N/M

Corporate services income	44			44		38		—		15.8
Service charges on deposit accounts	13			13		13		—		—
Cards and payments income	12			11		10		9.1		20.0
Payments and services income	69			68		61		1.5		13.1

Mortgage servicing fees	19			17		12		11.8		58.3
Other noninterest income	5			5		21		—		(76.2	)
Total noninterest income	$	265		$	287	$	285	(7.7	)%	(7.0	)%

N/M = Not Meaningful

Key Corporate Bank Summary of Operations (2Q18 vs. 2Q17)


•	Commercial and industrial loans up $3.3 billion, or 15%, from prior year


•	Investment banking and debt placement fees up $19 million, or 14.2%, from prior year

Key Corporate Bank recorded net income attributable to Key of $167 million for the second quarter of 2018, compared to $224 million for the same period one year ago.

Taxable-equivalent net interest income decreased by $35 million, or 11.2%, compared to the second quarter of 2017. The decline is primarily related to $33 million of lower purchase accounting accretion, as well as loan spread compression. Average loan and lease balances increased $2 billion, or 5.3%, from the year-ago quarter, driven by broad-based growth in commercial and industrial loans. Average deposit balances decreased $88 million, or 0.4%, from the year-ago quarter, due to the managed exit of higher cost corporate and public sector deposits offsetting growth in core deposits.

Noninterest income was down $20 million, or 7.0%, from the prior year. This decrease was largely due to a $32 million decline in operating lease income and other leasing gains, driven by a lease residual loss in the second quarter of 2018. Other declines included other noninterest income down $16 million, mostly due to a merchant services gain in the year-ago period. These decreases were slightly offset by higher investment banking and debt placement fees of $19 million, related to strength in advisory fees, including benefit from the acquisition of Cain Brothers, as well as a $6 million increase in corporate services income from higher derivatives revenue.

During the second quarter of 2018, the provision for credit losses increased $9 million, or 47.8%, compared to the second quarter of 2017, mostly due to higher net loan charge-offs.

Noninterest expense increased by $29 million, or 9.8%, from the second quarter of 2017. The increase from the prior year was largely related to acquisitions and investments throughout the year, which drove an increase in personnel expense and intangible asset amortization. Operating lease expense also increased compared to the year-ago period.

Other Segments

Other Segments consist of Corporate Treasury, Key’s Principal Investing unit, and various exit portfolios. Other Segments generated net income attributable to Key of $25 million for the second quarter of 2018, compared to $24 million for the same period last year.

*****

KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation’s largest bank-based financial services companies, with assets of approximately $137.8 billion at June 30, 2018.

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 1,200 branches and more than 1,500 ATMs. 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 2018 Profit

July 19, 2018

Page 9



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

Melanie S. Misconish
216.689.4545
Melanie_S_Misconish@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. These statements do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as “goal,” “objective,” “plan,” “expect,” “assume,” “anticipate,” “intend,” “project,” “believe,” “estimate,” or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Forward-looking statements, by their nature, are subject to assumptions, risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. 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, 2017, as well as in KeyCorp’s subsequent SEC filings, all of which have been filed with the Securities and Exchange Commission (the “SEC”) and are available on Key’s website (www.key.com/ir) and on the SEC’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, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive regulation of the U.S. financial services industry. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

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 10:00 a.m. ET, on Thursday, July 19, 2018. An audio replay of the call will be available through July 29, 2018.

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 2018 Profit

July 19, 2018

Page 10

KeyCorp

Second Quarter 2018

Financial Supplement



Page
11	Financial Highlights
13	GAAP to Non-GAAP Reconciliation
15	Consolidated Balance Sheets
16	Consolidated Statements of Income
17	Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
19	Noninterest Expense
19	Personnel Expense
20	Loan Composition
20	Loans Held for Sale Composition
20	Summary of Changes in Loans Held for Sale
21	Summary of Loan and Lease Loss Experience From Continuing Operations
22	Asset Quality Statistics From Continuing Operations
22	Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
22	Summary of Changes in Nonperforming Loans From Continuing Operations
23	Line of Business Results

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 11



Financial Highlights
(dollars in millions, except per share amounts)
			Three months ended
			6/30/2018			3/31/2018			6/30/2017
Summary of operations
	Net interest income (TE)		$	987		$	952		$	987
	Noninterest income		660			601			653
		Total revenue (TE)	1,647			1,553			1,640
	Provision for credit losses		64			61			66
	Noninterest expense		993			1,006			995
	Income (loss) from continuing operations attributable to Key		479			416			407
	Income (loss) from discontinued operations, net of taxes ^(a)		3			2			5
	Net income (loss) attributable to Key		482			418			412

	Income (loss) from continuing operations attributable to Key common shareholders		464			402			393
	Income (loss) from discontinued operations, net of taxes ^(a)		3			2			5
	Net income (loss) attributable to Key common shareholders		467			404			398

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.44		$	.38		$	.36
	Income (loss) from discontinued operations, net of taxes ^(a)		—			—			—
	Net income (loss) attributable to Key common shareholders ^(b)		.44			.38			.37

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.44			.38			.36
	Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)		—			—			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)		.44			.38			.36

	Cash dividends declared		.12			.105			.095
	Book value at period end		13.29			13.07			13.02
	Tangible book value at period end		10.59			10.35			10.40
	Market price at period end		19.54			19.55			18.74

Performance ratios
	From continuing operations:
	Return on average total assets		1.41		%	1.25		%	1.23		%
	Return on average common equity		13.29			11.76			11.12
	Return on average tangible common equity ^(c)		16.73			14.89			13.80
	Net interest margin (TE)		3.19			3.15			3.30
	Cash efficiency ratio ^(c)		58.8			62.9			59.3

	From consolidated operations:
	Return on average total assets		1.40		%	1.24		%	1.23		%
	Return on average common equity		13.37			11.82			11.26
	Return on average tangible common equity ^(c)		16.84			14.97			13.98
	Net interest margin (TE)		3.17			3.13			3.28
	Loan to deposit ^(d)		86.9			86.9			87.2

Capital ratios at period end
	Key shareholders’ equity to assets		10.96		%	10.90		%	11.23		%
	Key common shareholders’ equity to assets		10.21			10.16			10.48
	Tangible common equity to tangible assets ^(c)		8.32			8.22			8.56
	Common Equity Tier 1^(e)		10.12			9.99			9.91
	Tier 1 risk-based capital ^(e)		10.94			10.82			10.73
	Total risk-based capital ^(e)		12.83			12.73			12.64
	Leverage ^(e)		9.91			9.76			9.95

Asset quality — from continuing operations
	Net loan charge-offs		$	60		$	54		$	66
	Net loan charge-offs to average loans		.27		%	.25		%	.31		%
	Allowance for loan and lease losses		$	887		$	881		$	870
	Allowance for credit losses		945			941			918
	Allowance for loan and lease losses to period-end loans		1.01		%	1.00		%	1.01		%
	Allowance for credit losses to period-end loans		1.07			1.07			1.06
	Allowance for loan and lease losses to nonperforming loans ^(f)		162.8			162.8			171.6
	Allowance for credit losses to nonperforming loans ^(f)		173.4			173.9			181.1
	Nonperforming loans at period-end ^(f)		$	545		$	541		$	507
	Nonperforming assets at period-end ^(f)		571			569			556
	Nonperforming loans to period-end portfolio loans ^(f)		.62		%	.61		%	.59		%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets ^(f)		.65			.65			.64

Trust assets
	Assets under management		$	39,663		$	39,003		$	37,613

Other data
	Average full-time equivalent employees		18,376			18,540			18,344
	Branches		1,177			1,192			1,210

Taxable-equivalent adjustment			$	8		$	8		$	14

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 12



Financial Highlights (continued)
(dollars in millions, except per share amounts)
		Six months ended
		6/30/2018			6/30/2017
Summary of operations
	Net interest income (TE)	$	1,939		$	1,916
	Noninterest income	1,261			1,230
	Total revenue (TE)	3,200			3,146
	Provision for credit losses	125			129
	Noninterest expense	1,999			2,008
	Income (loss) from continuing operations attributable to Key	895			731
	Income (loss) from discontinued operations, net of taxes ^(a)	5			5
	Net income (loss) attributable to Key	900			736

	Income (loss) from continuing operations attributable to Key common shareholders	$	866		$	689
	Income (loss) from discontinued operations, net of taxes ^(a)	5			5
	Net income (loss) attributable to Key common shareholders	871			694

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders	$	.82		$	.64
	Income (loss) from discontinued operations, net of taxes ^(a)	—			—
	Net income (loss) attributable to Key common shareholders ^(b)	.82			.64

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution	.81			.63
	Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)	—			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)	.81			.63

	Cash dividends paid	.225			.18

Performance ratios
	From continuing operations:
	Return on average total assets	1.33		%	1.11		%
	Return on average common equity	12.53			9.97
	Return on average tangible common equity ^(c)	15.82			12.43
	Net interest margin (TE)	3.17			3.21
	Cash efficiency ratio ^(c)	60.8			62.4

	From consolidated operations:
	Return on average total assets	1.33		%	1.11		%
	Return on average common equity	12.60			10.04
	Return on average tangible common equity ^(c)	15.91			12.52
	Net interest margin (TE)	3.15			3.19

Asset quality — from continuing operations
	Net loan charge-offs	114			124
	Net loan charge-offs to average total loans	.26		%	.29		%

Other data
	Average full-time equivalent employees	18,458			18,365

Taxable-equivalent adjustment		16			25


(a)	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.


(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” 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. For further information on the Regulatory Capital Rules, see the “Capital” section of this release.


(d)	Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits.


(e)	June 30, 2018, ratio is estimated.


(f)	Nonperforming loan balances exclude $629 million, $690 million, and $835 million of purchased credit impaired loans at June 30, 2018, March 31, 2018, and June 30, 2017, respectively.

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 13

GAAP to Non-GAAP Reconciliations

(dollars in millions)

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

The tangible common equity ratio and the return on average 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. In October 2013, the federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the “Regulatory Capital Rules”). The Regulatory Capital Rules require higher and better-quality capital and introduced a new capital measure, “Common Equity Tier 1,” a non-GAAP financial measure. The mandatory compliance date for Key as a “standardized approach” banking organization began on January 1, 2015, subject to transitional provisions extending to January 1, 2019.

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 credit 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 provide 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									Six months ended
	6/30/2018			3/31/2018			6/30/2017			6/30/2018			6/30/2017
Tangible common equity to tangible assets at period-end
Key shareholders’ equity (GAAP)	$	15,100		$	14,944		$	15,253
Less: Intangible assets ^(a)	2,858			2,902			2,866
Preferred Stock ^(b)	1,009			1,009			1,009
Tangible common equity (non-GAAP)	$	11,233		$	11,033		$	11,378
Total assets (GAAP)	$	137,792		$	137,049		$	135,824
Less: Intangible assets ^(a)	2,858			2,902			2,866
Tangible assets (non-GAAP)	$	134,934		$	134,147		$	132,958
Tangible common equity to tangible assets ratio (non-GAAP)	8.32		%	8.22		%	8.56		%
Pre-provision net revenue
Net interest income (GAAP)	$	979		$	944		$	973		$	1,923		$	1,891
Plus: Taxable-equivalent adjustment	8			8			14			16			25
Noninterest income	660			601			653			1,261			1,230
Less: Noninterest expense	993			1,006			995			1,999			2,008
Pre-provision new revenue from continuing operations (non-GAAP)	$	654		$	547		$	645		$	1,201		$	1,138
Average tangible common equity
Average Key shareholders' equity (GAAP)	$	15,032		$	14,889		$	15,200		$	14,961		$	15,192
Less: Intangible assets (average) ^(c)	2,883			2,916			2,756			2,899			2,764
Preferred stock (average)	1,025			1,025			1,025			1,025			1,251
Average tangible common equity (non-GAAP)	$	11,124		$	10,948		$	11,419		$	11,037		$	11,177
Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)	$	464		$	402		$	393		$	866		$	689
Average tangible common equity (non-GAAP)	11,124			10,948			11,419			11,037			11,177

Return on average tangible common equity from continuing operations (non-GAAP)	16.73		%	14.89		%	13.80		%	15.82		%	12.43		%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)	$	467		$	404		$	398		$	871		$	694
Average tangible common equity (non-GAAP)	11,124			10,948			11,419			11,037			11,177

Return on average tangible common equity consolidated (non-GAAP)	16.84		%	14.97		%	13.98		%	15.91		%	12.52		%
Cash efficiency ratio
Noninterest expense (GAAP)	$	993		$	1,006		$	995		$	1,999		$	2,008
Less: Intangible asset amortization	25			29			22			54			44
Adjusted noninterest expense (non-GAAP)	$	968		$	977		$	973		$	1,945		$	1,964

Net interest income (GAAP)	$	979		$	944		$	973		$	1,923		$	1,891
Plus: Taxable-equivalent adjustment	8			8			14			16			25
Noninterest income	660			601			653			1,261			1,230
Total taxable-equivalent revenue (non-GAAP)	$	1,647		$	1,553		$	1,640		$	3,200		$	3,146

Cash efficiency ratio (non-GAAP)	58.8		%	62.9		%	59.3		%	60.8		%	62.4		%

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 14



GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
			Three months ended
			6/30/2018
Common Equity Tier 1 under the Regulatory Capital Rules (“RCR”) (estimates)
	Common Equity Tier 1 under current RCR		$	12,378
	Adjustments from current RCR to the fully phased-in RCR:
		Deferred tax assets and other intangible assets ^(d)	—
		Common Equity Tier 1 anticipated under the fully phased-in RCR ^(e)	$	12,378

	Net risk-weighted assets under current RCR		$	122,352
	Adjustments from current RCR to the fully phased-in RCR:
		Mortgage servicing assets ^(f)	727
		Deferred tax assets	319
		All other assets	—
		Total risk-weighted assets anticipated under the fully phased-in RCR ^(e)	$	123,398

	Common Equity Tier 1 ratio under the fully phased-in RCR ^(e)		10.03		%


(a)	For the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, intangible assets exclude $20 million, $23 million, and $33 million, respectively, of period-end purchased credit card receivables.


(b)	Net of capital surplus.


(c)	For the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, average intangible assets exclude $21 million, $24 million, and $36 million, respectively, of average purchased credit card receivables. For the six months ended June 30, 2018, and June 30, 2017, average intangible assets exclude $23 million and $38 million, respectively, of average purchased credit card receivables.


(d)	Includes the deferred tax assets subject to future taxable income for realization, primarily tax credit carryforwards, as well as intangible assets (other than goodwill and mortgage servicing assets) subject to the transition provisions of the final rule.


(e)	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.”


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

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 15



Consolidated Balance Sheets
(dollars in millions)

			6/30/2018			3/31/2018			6/30/2017
Assets
	Loans		$	88,222		$	88,089		$	86,503
	Loans held for sale		1,418			1,667			1,743
	Securities available for sale		17,367			17,888			18,024
	Held-to-maturity securities		12,277			12,189			10,638
	Trading account assets		833			769			1,081
	Short-term investments		2,646			1,644			2,522
	Other investments		709			715			732
		Total earning assets	123,472			122,961			121,243
	Allowance for loan and lease losses		(887		)	(881		)	(870		)
	Cash and due from banks		784			643			601
	Premises and equipment		892			916			919
	Operating lease assets		903			838			691
	Goodwill		2,516			2,538			2,464
	Other intangible assets		361			387			435
	Corporate-owned life insurance		4,147			4,142			4,100
	Accrued income and other assets		4,382			4,216			4,783
	Discontinued assets		1,222			1,289			1,458
		Total assets	$	137,792		$	137,049		$	135,824

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	55,059		$	54,606		$	53,342
		Savings deposits	6,199			6,321			7,056
		Certificates of deposit ($100,000 or more)	7,547			7,295			6,286
		Other time deposits	4,943			4,928			4,605
		Total interest-bearing deposits	73,748			73,150			71,289
		Noninterest-bearing deposits	30,800			31,601			31,532
		Total deposits	104,548			104,751			102,821
	Federal funds purchased and securities sold under repurchase agreements		1,667			616			1,780
	Bank notes and other short-term borrowings		639			1,133			924
	Accrued expense and other liabilities		1,983			1,854			1,783
	Long-term debt		13,853			13,749			13,261
		Total liabilities	122,690			122,103			120,569

Equity
	Preferred stock		1,025			1,025			1,025
	Common shares		1,257			1,257			1,257
	Capital surplus		6,315			6,289			6,310
	Retained earnings		10,970			10,624			9,878
	Treasury stock, at cost		(3,382		)	(3,260		)	(2,711		)
	Accumulated other comprehensive income (loss)		(1,085		)	(991		)	(506		)
		Key shareholders’ equity	15,100			14,944			15,253
	Noncontrolling interests		2			2			2
		Total equity	15,102			14,946			15,255
Total liabilities and equity			$	137,792		$	137,049		$	135,824

Common shares outstanding (000)			1,058,944			1,064,939			1,092,739

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 16



Consolidated Statements of Income
(dollars in millions, except per share amounts)
			Three months ended							Six months ended
			6/30/2018			3/31/2018		6/30/2017		6/30/2018		6/30/2017
Interest income
	Loans		$	1,000		$	940	$	948	$	1,940	$	1,825
	Loans held for sale		16			12		9		28		22
	Securities available for sale		97			95		90		192		185
	Held-to-maturity securities		72			69		55		141		106
	Trading account assets		7			7		7		14		14
	Short-term investments		8			8		5		16		8
	Other investments		5			6		3		11		7
		Total interest income	1,205			1,137		1,117		2,342		2,167
Interest expense
	Deposits		112			91		66		203		124
	Federal funds purchased and securities sold under repurchase agreements		5			4		—		9		1
	Bank notes and other short-term borrowings		7			6		4		13		9
	Long-term debt		102			92		74		194		142
		Total interest expense	226			193		144		419		276
Net interest income			979			944		973		1,923		1,891
Provision for credit losses			64			61		66		125		129
Net interest income after provision for credit losses			915			883		907		1,798		1,762
Noninterest income
	Trust and investment services income		128			133		134		261		269
	Investment banking and debt placement fees		155			143		135		298		262
	Service charges on deposit accounts		91			89		90		180		177
	Operating lease income and other leasing gains		(6		)	32		30		26		53
	Corporate services income		61			62		55		123		109
	Cards and payments income		71			62		70		133		135
	Corporate-owned life insurance income		32			32		33		64		63
	Consumer mortgage income		7			7		6		14		12
	Mortgage servicing fees		22			20		15		42		33
	Other income ^(a)		99			21		85		120		117
		Total noninterest income	660			601		653		1,261		1,230
Noninterest expense
	Personnel		586			594		553		1,180		1,110
	Net occupancy		79			78		78		157		165
	Computer processing		51			52		55		103		115
	Business services and professional fees		51			41		45		92		91
	Equipment		26			26		27		52		54
	Operating lease expense		30			27		21		57		40
	Marketing		26			25		30		51		51
	FDIC assessment		21			21		21		42		41
	Intangible asset amortization		25			29		22		54		44
	OREO expense, net		—			2		3		2		5
	Other expense		98			111		140		209		292
		Total noninterest expense	993			1,006		995		1,999		2,008
Income (loss) from continuing operations before income taxes			582			478		565		1,060		984
	Income taxes		103			62		158		165		252
Income (loss) from continuing operations			479			416		407		895		732
	Income (loss) from discontinued operations, net of taxes		3			2		5		5		5
Net income (loss)			482			418		412		900		737
	Less: Net income (loss) attributable to noncontrolling interests		—			—		—		—		1
Net income (loss) attributable to Key			$	482		$	418	$	412	$	900	$	736

Income (loss) from continuing operations attributable to Key common shareholders			$	464		$	402	$	393	$	866	$	689
Net income (loss) attributable to Key common shareholders			467			404		398		871		694
Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.44		$	.38	$	.36	$	.82	$	.64
Income (loss) from discontinued operations, net of taxes			—			—		—		—		—
Net income (loss) attributable to Key common shareholders ^(b)			.44			.38		.37		.82		.64
Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.44		$	.38	$	.36	$	.81	$	.63
Income (loss) from discontinued operations, net of taxes			—			—		—		—		—
Net income (loss) attributable to Key common shareholders ^(b)			.44			.38		.36		.81		.63

Cash dividends declared per common share			$	.12		$	.105	$	.095	$	.225	$	.18

Weighted-average common shares outstanding (000)			1,052,652			1,056,037		1,076,203		1,054,378		1,083,486
	Effect of common share options and other stock awards		13,141			15,749		16,836		14,561		15,808
Weighted-average common shares and potential common shares outstanding (000) ^(c)			1,065,793			1,071,786		1,093,039		1,068,939		1,099,294


(a)	For the three months ended June 30, 2018, and March 31, 2018, net securities gains (losses) totaled less than $1 million. For the three months ended June 30, 2017, net securities gains totaled $1 million. For the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, 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, as applicable.

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 17



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

		Second Quarter 2018							First Quarter 2018							Second Quarter 2017
		Average					Yield/		Average					Yield/		Average					Yield/
		Balance			Interest ^(a)		Rate ^(a)		Balance			Interest ^(a)		Rate ^(a)		Balance			Interest ^(a)		Rate ^(a)
Assets
	Loans: ^{(b), (c)}
	Commercial and industrial ^(d)	$	45,030		$	485	4.32	%	$	42,733		$	434	4.11	%	$	40,666		$	409	4.04	%
	Real estate — commercial mortgage	14,055			172		4.89		14,085			165		4.76		15,096			187		4.97
	Real estate — construction	1,789			23		4.97		1,957			22		4.64		2,204			31		5.51
	Commercial lease financing	4,550			41		3.61		4,663			41		3.53		4,690			50		4.33
	Total commercial loans	65,424			721		4.41		63,438			662		4.23		62,656			677		4.34
	Real estate — residential mortgage	5,451			54		3.97		5,479			54		3.95		5,509			52		3.77
	Home equity loans	11,601			135		4.67		11,877			134		4.56		12,473			135		4.31
	Consumer direct loans	1,768			33		7.54		1,766			33		7.53		1,743			31		7.07
	Credit cards	1,080			30		11.21		1,080			30		11.32		1,044			29		11.04
	Consumer indirect loans	3,320			35		4.26		3,287			35		4.29		3,077			38		5.02
	Total consumer loans	23,220			287		4.97		23,489			286		4.91		23,846			285		4.77
	Total loans	88,644			1,008		4.56		86,927			948		4.41		86,502			962		4.46
	Loans held for sale	1,375			16		4.50		1,187			12		4.10		1,082			9		3.58
	Securities available for sale ^{(b), (e)}	17,443			97		2.13		17,889			95		2.06		17,997			90		1.97
	Held-to-maturity securities ^(b)	12,226			72		2.36		12,041			69		2.30		10,469			55		2.09
	Trading account assets	943			7		3.21		907			7		2.99		1,042			7		3.00
	Short-term investments	2,015			8		1.76		2,048			8		1.51		1,970			5		.96
	Other investments ^(e)	710			5		3.08		723			6		2.96		687			3		1.87
	Total earning assets	123,356			1,213		3.92		121,722			1,145		3.78		119,749			1,131		3.78
	Allowance for loan and lease losses	(875		)					(875		)					(864		)
	Accrued income and other assets	13,897							14,068							13,606
	Discontinued assets	1,241							1,304							1,477
	Total assets	$	137,619						$	136,219						$	133,968
Liabilities
	NOW and money market deposit accounts	$	54,749		59		.44		$	53,503		46		.34		$	54,416		34		.25
	Savings deposits	6,276			5		.35		6,232			5		.29		6,854			4		.21
	Certificates of deposit ($100,000 or more)	7,516			32		1.70		6,972			27		1.58		6,111			19		1.23
	Other time deposits	4,949			16		1.22		4,865			13		1.12		4,650			9		.77
	Total interest-bearing deposits	73,490			112		.61		71,572			91		.51		72,031			66		.36
	Federal funds purchased and securities sold under repurchase agreements	1,475			5		1.41		1,421			4		1.11		466			—		.23
	Bank notes and other short-term borrowings	1,116			7		2.27		1,342			6		1.87		1,216			4		1.43
	Long-term debt ^{(f), (g)}	12,748			102		3.20		12,465			92		2.95		11,046			74		2.68
	Total interest-bearing liabilities	88,829			226		1.02		86,800			193		.90		84,759			144		.68
	Noninterest-bearing deposits	30,513							30,984							30,748
	Accrued expense and other liabilities	2,002							2,241							1,782
	Discontinued liabilities ^(g)	1,241							1,304							1,477
	Total liabilities	122,585							121,329							118,766
Equity
	Key shareholders’ equity	15,032							14,889							15,200
	Noncontrolling interests	2							1							2
	Total equity	15,034							14,890							15,202
	Total liabilities and equity	$	137,619						$	136,219						$	133,968
Interest rate spread (TE)							2.90	%						2.88	%						3.10	%
Net interest income (TE) and net interest margin (TE)					987		3.19	%				952		3.15	%				987		3.30	%
TE adjustment ^(b)					8							8							14
	Net interest income, GAAP basis				$	979						$	944						$	973


(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 21% for the three months ended June 30, 2018, and March 31, 2018, and 35% for the three months ended June 30, 2017.


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


(d)	Commercial and industrial average balances include $126 million, $120 million, and $117 million of assets from commercial credit cards for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, 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 Key’s matched funds transfer pricing methodology to discontinued operations.

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

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 18




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

		Six months ended June 30, 2018							Six months ended June 30, 2017
		Average							Average
		Balance			Interest ^(a)		Yield/Rate ^(a)		Balance			Interest ^(a)		Yield/ Rate ^(a)
Assets
	Loans: ^{(b), (c)}
	Commercial and industrial ^(d)	$	43,888		$	919	4.22	%	$	40,336		$	782	3.90	%
	Real estate — commercial mortgage	14,070			337		4.83		15,142			351		4.68
	Real estate — construction	1,872			45		4.80		2,278			57		5.01
	Commercial lease financing	4,607			82		3.57		4,662			94		4.04
	Total commercial loans	64,437			1,383		4.32		62,418			1,284		4.14
	Real estate — residential mortgage	5,465			108		3.96		5,514			106		3.85
	Home equity loans	11,738			269		4.61		12,542			266		4.27
	Consumer direct loans	1,767			66		7.53		1,752			61		7.02
	Credit cards	1,080			60		11.27		1,055			58		11.05
	Consumer indirect loans	3,303			70		4.28		3,037			75		4.97
	Total consumer loans	23,353			573		4.94		23,900			566		4.76
	Total loans	87,790			1,956		4.49		86,318			1,850		4.31
	Loans held for sale	1,282			28		4.31		1,135			22		3.95
	Securities available for sale ^{(b), (e)}	17,665			192		2.09		18,586			185		1.96
	Held-to-maturity securities ^(b)	12,134			141		2.33		10,230			106		2.07
	Trading account assets	925			14		3.11		1,005			14		2.88
	Short-term investments	2,032			16		1.64		1,791			8		.88
	Other investments ^(e)	716			11		3.02		698			7		2.07
	Total earning assets	122,544			2,358		3.85		119,763			2,192		3.67
	Allowance for loan and lease losses	(875		)					(860		)
	Accrued income and other assets	13,982							13,712
	Discontinued assets	1,272							1,508
	Total assets	$	136,923						$	134,123
Liabilities
	NOW and money market deposit accounts	$	54,129		105		.39		$	54,356		66		.24
	Savings deposits	6,254			10		.32		6,604			5		.16
	Certificates of deposit ($100,000 or more)	7,246			59		1.64		5,871			35		1.20
	Other time deposits	4,907			29		1.17		4,677			18		.77
	Total interest-bearing deposits	72,536			203		.56		71,508			124		.35
	Federal funds purchased and securities sold under repurchase agreements	1,448			9		1.26		629			1		.28
	Bank notes and other short-term borrowings	1,228			13		2.05		1,508			9		1.21
	Long-term debt ^{(f), (g)}	12,608			194		3.08		10,940			142		2.61
	Total interest-bearing liabilities	87,820			419		.96		84,585			276		.66
	Noninterest-bearing deposits	30,747							30,922
	Accrued expense and other liabilities	2,121							1,914
	Discontinued liabilities ^(g)	1,272							1,509
	Total liabilities	121,960							118,930
Equity
	Key shareholders’ equity	14,961							15,192
	Noncontrolling interests	2							1
	Total equity	14,963							15,193
	Total liabilities and equity	$	136,923						$	134,123
Interest rate spread (TE)							2.89	%						3.01	%
Net interest income (TE) and net interest margin (TE)					1,939		3.17	%				1,916		3.21	%
TE adjustment ^(b)					16							25
	Net interest income, GAAP basis				$	1,923						$	1,891


(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 21% and 35% for the six months ended June 30, 2018, and June 30, 2017, respectively.


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


(d)	Commercial and industrial average balances include $123 million and $115 million of assets from commercial credit cards for the six months ended June 30, 2018, and June 30, 2017, 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 Key’s matched funds transfer pricing methodology to discontinued operations.

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

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 19



Noninterest Expense
(dollars in millions)

	Three months ended						Six months ended
	6/30/2018		3/31/2018		6/30/2017		6/30/2018		6/30/2017
Personnel ^(a)	$	586	$	594	$	553	$	1,180	$	1,110
Net occupancy	79		78		78		157		165
Computer processing	51		52		55		103		115
Business services and professional fees	51		41		45		92		91
Equipment	26		26		27		52		54
Operating lease expense	30		27		21		57		40
Marketing	26		25		30		51		51
FDIC assessment	21		21		21		42		41
Intangible asset amortization	25		29		22		54		44
OREO expense, net	—		2		3		2		5
Other expense	98		111		140		209		292
Total noninterest expense	$	993	$	1,006	$	995	$	1,999	$	2,008
Average full-time equivalent employees ^(b)	18,376		18,540		18,344		18,458		18,365


(a)	Additional detail provided in Personnel Expense 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
	6/30/2018		3/31/2018		6/30/2017		6/30/2018		6/30/2017
Salaries and contract labor	$	341	$	339	$	332	$	680	$	656
Incentive and stock-based compensation	147		145		137		292		264
Employee benefits	82		105		78		187		175
Severance	16		5		6		21		15
Total personnel expense	$	586	$	594	$	553	$	1,180	$	1,110



Merger-Related Charges
(in millions)

	Three months ended					Six months ended
	6/30/2018	3/31/2018	6/30/2017			6/30/2018	6/30/2017
Personnel	—	—	$	31		—	$	61
Net occupancy	—	—	(1		)	—	4
Business services and professional fees	—	—	6			—	11
Computer processing	—	—	2			—	7
Marketing	—	—	6			—	12
Other nonpersonnel expense	—	—	—			—	30
Total merger-related charges	—	—	$	44		—	$	125

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 20



Loan Composition
(dollars in millions)

							Percent change 6/30/2018 vs.
	6/30/2018		3/31/2018		6/30/2017		3/31/2018		6/30/2017
Commercial and industrial ^(a)	$	44,569	$	44,313	$	40,914	.6	%	8.9	%
Commercial real estate:
Commercial mortgage	14,162		13,997		14,813		1.2		(4.4	)
Construction	1,736		1,871		2,168		(7.2	)	(19.9	)
Total commercial real estate loans	15,898		15,868		16,981		.2		(6.4	)
Commercial lease financing ^(b)	4,509		4,598		4,737		(1.9	)	(4.8	)
Total commercial loans	64,976		64,779		62,632		.3		3.7
Residential — prime loans:
Real estate — residential mortgage	5,452		5,473		5,517		(.4	)	(1.2	)
Home equity loans	11,519		11,720		12,405		(1.7	)	(7.1	)
Total residential — prime loans	16,971		17,193		17,922		(1.3	)	(5.3	)
Consumer direct loans	1,785		1,758		1,755		1.5		1.7
Credit cards	1,094		1,068		1,049		2.4		4.3
Consumer indirect loans	3,396		3,291		3,145		3.2		8.0
Total consumer loans	23,246		23,310		23,871		(.3	)	(2.6	)
Total loans^(c)	$	88,222	$	88,089	$	86,503	.2	%	2.0	%


(a)	Loan balances include $128 million, $121 million, and $118 million of commercial credit card balances at June 30, 2018, March 31, 2018, and June 30, 2017, respectively.


(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $16 million, $16 million, and $47 million at June 30, 2018, March 31, 2018, and June 30, 2017, respectively. Principal reductions are based on the cash payments received from these related receivables.


(c)	Total loans exclude loans of $1.2 billion at June 30, 2018, $1.3 billion at March 31, 2018, and $1.4 billion at June 30, 2017, related to the discontinued operations of the education lending business.



Loans Held for Sale Composition
(dollars in millions)

							Percent change 6/30/2018 vs.
	6/30/2018		3/31/2018		6/30/2017		3/31/2018		6/30/2017
Commercial and industrial	$	217	$	194	$	338	11.9	%	(35.8	)%
Real estate — commercial mortgage	1,139		1,426		1,332		(20.1	)	(14.5	)
Commercial lease financing	4		—		10		N/M		(60.0	)
Real estate — residential mortgage	58		47		63		23.4		(7.9	)
Total loans held for sale ^(a)	$	1,418	$	1,667	$	1,743	(14.9	)%	(18.6	)%


(a)	Total loans held for sale include Real estate — residential mortgage loans held for sale at fair value of $58 million at June 30, 2018, $47 million at March 31, 2018, and $63 million at June 30, 2017.

N/M = Not Meaningful



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

	2Q18			1Q18			4Q17			3Q17			2Q17
Balance at beginning of period	$	1,667		$	1,107		$	1,341		$	1,743		$	1,384
New originations	2,665			3,280			3,566			2,855			2,876
Transfers from (to) held to maturity, net	(4		)	(14		)	(10		)	(63		)	(7		)
Loan sales	(2,909		)	(2,705		)	(3,783		)	(3,191		)	(2,507		)
Loan draws (payments), net	(1		)	(1		)	(7		)	(3		)	(3		)
Balance at end of period ^(a)	$	1,418		$	1,667		$	1,107		$	1,341		$	1,743


(a)	Total loans held for sale include Real estate — residential mortgage loans held for sale at fair value of $58 million at June 30, 2018, $47 million at March 31, 2018, $71 million at December 31, 2017, $60 million at September 30, 2017, and $63 million at June 30, 2017.

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 21



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

	Three months ended									Six months ended
	6/30/2018			3/31/2018			6/30/2017			6/30/2018			6/30/2017
Average loans outstanding	$	88,644		$	86,927		$	86,502		$	87,790		$	86,318
Allowance for loan and lease losses at beginning of period	$	881		$	877		$	870		$	877		$	858
Loans charged off:
Commercial and industrial	39			37			40			76			72

Real estate — commercial mortgage	2			1			3			3			3
Real estate — construction	—			—			—			—			—
Total commercial real estate loans	2			1			3			3			3
Commercial lease financing	4			1			1			5			8
Total commercial loans	45			39			44			84			83
Real estate — residential mortgage	—			1			4			1			2
Home equity loans	6			4			9			10			17
Consumer direct loans	9			8			8			17			18
Credit cards	12			12			12			24			23
Consumer indirect loans	7			8			5			15			16
Total consumer loans	34			33			38			67			76
Total loans charged off	79			72			82			151			159
Recoveries:
Commercial and industrial	7			6			2			13			7

Real estate — commercial mortgage	1			—			—			1			—
Real estate — construction	—			1			—			1			1
Total commercial real estate loans	1			1			—			2			1
Commercial lease financing	—			1			—			1			2
Total commercial loans	8			8			2			16			10
Real estate — residential mortgage	—			—			1			—			3
Home equity loans	3			3			5			6			8
Consumer direct loans	2			2			2			4			3
Credit cards	2			1			2			3			3
Consumer indirect loans	4			4			4			8			8
Total consumer loans	11			10			14			21			25
Total recoveries	19			18			16			37			35
Net loan charge-offs	(60		)	(54		)	(66		)	(114		)	(124		)
Provision (credit) for loan and lease losses	66			58			66			124			136
Allowance for loan and lease losses at end of period	$	887		$	881		$	870		$	887		$	870

Liability for credit losses on lending-related commitments at beginning of period	$	60		$	57		$	48		$	57		$	55
Provision (credit) for losses on lending-related commitments	(2		)	3			—			1			(7		)
Liability for credit losses on lending-related commitments at end of period ^(a)	$	58		$	60		$	48		$	58		$	48

Total allowance for credit losses at end of period	$	945		$	941		$	918		$	945		$	918

Net loan charge-offs to average total loans	.27		%	.25		%	.31		%	.26		%	.29		%
Allowance for loan and lease losses to period-end loans	1.01			1.00			1.01			1.01			1.01
Allowance for credit losses to period-end loans	1.07			1.07			1.06			1.07			1.06
Allowance for loan and lease losses to nonperforming loans	162.8			162.8			171.6			162.8			171.6
Allowance for credit losses to nonperforming loans	173.4			173.9			181.1			173.4			181.1

Discontinued operations — education lending business:
Loans charged off	$	3		$	4		$	4		$	7		$	10
Recoveries	1			2			2			3			4
Net loan charge-offs	$	(2	)	$	(2	)	$	(2	)	$	(4	)	$	(6	)


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

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 22



Asset Quality Statistics From Continuing Operations
(dollars in millions)
	2Q18			1Q18			4Q17			3Q17			2Q17
Net loan charge-offs	$	60		$	54		$	52		$	32		$	66
Net loan charge-offs to average total loans	.27		%	.25		%	.24		%	.15		%	.31		%
Allowance for loan and lease losses	$	887		$	881		$	877		$	880		$	870
Allowance for credit losses ^(a)	945			941			934			937			918
Allowance for loan and lease losses to period-end loans	1.01		%	1.00		%	1.01		%	1.02		%	1.01		%
Allowance for credit losses to period-end loans	1.07			1.07			1.08			1.08			1.06
Allowance for loan and lease losses to nonperforming loans ^(b)	162.8			162.8			174.4			170.2			171.6
Allowance for credit losses to nonperforming loans ^(b)	173.4			173.9			185.7			181.2			181.1
Nonperforming loans at period end ^(b)	$	545		$	541		$	503		$	517		$	507
Nonperforming assets at period end ^(b)	571			569			534			556			556
Nonperforming loans to period-end portfolio loans ^(b)	.62		%	.61		%	.58		%	.60		%	.59		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets ^(b)	.65			.65			.62			.64			.64


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


(b)	Nonperforming loan balances exclude $629 million, $690 million, $738 million, $783 million, and $835 million of purchased credit impaired loans at June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, respectively.



Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
(dollars in millions)
	6/30/2018			3/31/2018			12/31/2017			9/30/2017			6/30/2017
Commercial and industrial	$	178		$	189		$	153		$	169		$	178

Real estate — commercial mortgage	42			33			30			30			34
Real estate — construction	2			2			2			2			4
Total commercial real estate loans	44			35			32			32			38
Commercial lease financing	21			5			6			11			11
Total commercial loans	243			229			191			212			227
Real estate — residential mortgage	55			59			58			57			58
Home equity loans	222			229			229			227			208
Consumer direct loans	4			4			4			3			2
Credit cards	2			2			2			2			2
Consumer indirect loans	19			18			19			16			10
Total consumer loans	302			312			312			305			280
Total nonperforming loans ^(a)	545			541			503			517			507
OREO	26			28			31			39			48
Other nonperforming assets	—			—			—			—			1
Total nonperforming assets ^(a)	$	571		$	569		$	534		$	556		$	556
Accruing loans past due 90 days or more	$	103		$	82		$	89		$	86		$	85
Accruing loans past due 30 through 89 days	429			305			359			329			340
Restructured loans — accruing and nonaccruing ^(b)	347			317			317			315			333
Restructured loans included in nonperforming loans ^(b)	184			179			189			187			193
Nonperforming assets from discontinued operations — education lending business	6			6			7			8			5
Nonperforming loans to period-end portfolio loans ^(a)	.62		%	.61		%	.58		%	.60		%	.59		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets ^(a)	.65			.65			.62			.64			.64


(a)	Nonperforming loan balances exclude $629 million, $690 million, $738 million, $783 million, and $835 million of purchased credit impaired loans at June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, respectively.

(b)

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



Summary of Changes in Nonperforming Loans From Continuing Operations
(in millions)
	2Q18			1Q18			4Q17			3Q17			2Q17
Balance at beginning of period	$	541		$	503		$	517		$	507		$	573
Loans placed on nonaccrual status	175			182			137			181			143
Charge-offs	(78		)	(70		)	(67		)	(71		)	(82		)
Loans sold	(1		)	—			—			(1		)	—
Payments	(33		)	(29		)	(52		)	(32		)	(84		)
Transfers to OREO	(5		)	(4		)	(8		)	(10		)	(8		)
Transfers to other nonperforming assets	—			—			—			—			—
Loans returned to accrual status	(54		)	(41		)	(24		)	(57		)	(35		)
Balance at end of period^(a)	$	545		$	541		$	503		$	517		$	507


(a)	Nonperforming loan balances exclude $629 million, $690 million, $738 million, $783 million, and $835 million of purchased credit impaired loans at June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, respectively.

KeyCorp Reports Second Quarter 2018 Profit

July 19, 2018

Page 23



Line of Business Results
(dollars in millions)

																Percent change 2Q18 vs.
	2Q18			1Q18			4Q17			3Q17			2Q17			1Q18		2Q17
Key Community Bank
Summary of operations
Total revenue (TE)	$	996		$	958		$	961		$	945		$	998		4.0	%	(.2	)%
Provision for credit losses	38			48			57			59			47			(20.8	)	(19.1	)
Noninterest expense	639			652			661			623			635			(2.0	)	.6
Net income (loss) attributable to Key	244			197			154			165			198			23.9		23.2
Average loans and leases	47,984			47,680			47,405			47,611			47,477			.6		1.1
Average deposits	80,930			79,945			80,352			79,563			79,601			1.2		1.7
Net loan charge-offs	34			42			35			41			47			(19.0	)	(27.7	)
Net loan charge-offs to average total loans	.28		%	.36		%	.29		%	.34		%	.40		%	N/A		N/A
Nonperforming assets at period end	$	468		$	425		$	405		$	427		$	406		10.1		15.3
Return on average allocated equity	20.22		%	16.61		%	12.62		%	13.55		%	16.59		%	N/A		N/A
Average full-time equivalent employees	10,619			10,666			10,629			10,696			10,558			(.4	)	.6

Key Corporate Bank
Summary of operations
Total revenue (TE)	$	542		$	559		$	605		$	561		$	597		(3.0	)%	(9.2	)%
Provision for credit losses	28			14			(6		)	(11		)	19			100.0		47.4
Noninterest expense	326			314			353			305			297			3.8		9.8
Net income (loss) attributable to Key	167			207			222			189			224			(19.3	)	(25.4	)
Average loans and leases	39,710			38,260			37,460			38,024			37,704			3.8		5.3
Average loans held for sale	1,299			1,118			1,345			1,521			1,000			16.2		29.9
Average deposits	21,057			20,815			21,558			21,559			21,145			1.2		(.4	)
Net loan charge-offs	26			11			16			(9		)	19			136.4		36.8
Net loan charge-offs to average total loans	.26		%	.12		%	.17		%	(.09		)%	.20		%	N/A		N/A
Nonperforming assets at period end	$	91		$	127		$	109		$	106		$	119		(28.3	)	(23.5	)
Return on average allocated equity	23.07		%	29.46		%	31.33		%	26.90		%	31.66		%	N/A		N/A
Average full-time equivalent employees	2,537			2,543			2,418			2,460			2,364			(.2	)	7.3

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



Notable Items
(in millions)

	Three months ended							Six months ended
	6/30/2018			3/31/2018	6/30/2017			6/30/2018			6/30/2017
Gain on sale of Key Insurance and Benefits Services	$	78		—	—			$	78		—
Expenses related to the sale of Key Insurance and Benefits Services	5			—	—			5			—
Net gain on sale of Key Insurance and Benefits Services	73			—	—			73			—

Efficiency efforts	(22		)	—	—			(22		)	—
Lease residual loss	(42		)	—	—			(42		)	—
Merger-related charges	—			—	$	(44	)	—			$	(125	)
Merchant services gain	—			—	64			—			64
Purchase accounting finalization, net	—			—	43			—			43
Charitable contribution	—			—	(20		)	—			(20		)
Total notable items	9			—	$	43		9			$	(38	)
Income taxes	7			—	16			7			(14		)
Total notable items, after tax	$	2		—	$	27		$	2		$	(24	)

KEYCORP /NEW/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 19, 2018

Attached files

KEYCORP /NEW/ Reports