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

Attached files

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EX-99.3 - EXHIBIT 99.3 - KEYCORP /NEW/	a4q19erex993.htm
EX-99.2 - EXHIBIT 99.2 - KEYCORP /NEW/	key4q19confcallslidesvf.htm
8-K - 8-K - KEYCORP /NEW/	a4q19er8-k.htm

KEYCORP REPORTS FOURTH QUARTER 2019 NET INCOME OF $439 MILLION,

OR $.45 PER DILUTED COMMON SHARE

Diluted earnings per common share of $.48^(a), excluding $.03 per diluted common share

related to a previously disclosed fraud and a pension settlement charge

Seventh consecutive year of positive operating leverage

Positive momentum in core businesses: solid growth in loans and deposits

Strong expense management: noninterest expense down 3% from 4Q18

Significant capital return: 9% increase in common share dividend and

$868 million in share repurchases in 2019

CLEVELAND, January 23, 2020 - KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $439 million, or $.45 per diluted common share for the fourth quarter of 2019, compared to $383 million, or $.38 per diluted common share, for the third quarter of 2019 and $459 million, or $.45 per diluted common share, for the fourth quarter of 2018. Key’s fourth quarter 2019 diluted earnings per share was $.48^(a), excluding $.03 per diluted common share related to a previously disclosed fraud and a pension settlement charge. Key's results in the third quarter of 2019 and the fourth quarter of 2018 also included notable items; additional detail can be found on page 24 of this release.

"Key’s fourth quarter results marked a good finish to another strong year for our company. We achieved our seventh consecutive year of positive operating leverage, supported by solid balance sheet growth, continued momentum in our fee-based businesses and strong expense control. Across our company, we continued to add and expand client relationships, which drove growth in loans, deposits and fees.

Our ongoing focus on expense management and continuous improvement resulted in lower expenses for the year and a 140 basis point improvement in our cash efficiency ratio, excluding notable items. While we have continued to reduce costs, we remain committed to making strategic investments that will drive future growth and returns. Our recent investments in talent, products and capabilities, including our Laurel Road acquisition in April of last year, have exceeded our expectations, benefiting our top line growth, improving the client experience and driving efficiency.

Strong risk management and being disciplined with our capital have also remained top priorities. Credit quality trends remained solid this quarter, and we continue to be diligent in our credit underwriting. We have also returned capital to our shareholders throughout the year in the form of share repurchases and a 9% increase in our common stock dividend.

Our CEO transition continues to progress smoothly, and we remain very confident in the way we have positioned Key for the future. We fully expect to continue on the path to achieve our long-term targets and drive improved returns."

- Beth Mooney, Chairman & CEO

(a) Non-GAAP measure; please refer to pages 14-15 of this release for additional detail and reconciliation

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 2



Selected Financial Highlights

dollars in millions, except per share data										Change 4Q19 vs.
	4Q19			3Q19			4Q18			3Q19		4Q18
Income (loss) from continuing operations attributable to Key common shareholders	$	439		$	383		$	459		14.6	%	(4.4	)%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution	.45			.38			.45			18.4		—
Return on average tangible common equity from continuing operations ^(a)	14.09		%	12.38		%	16.40		%	N/A		N/A
Return on average total assets from continuing operations	1.27			1.14			1.37			N/A		N/A
Common Equity Tier 1 ratio ^(b)	9.43			9.48			9.93			N/A		N/A
Book value at period end	$	15.54		$	15.44		$	13.90		.6	%	11.8	%
Net interest margin (TE) from continuing operations	2.98		%	3.00		%	3.16		%	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)	12/31/19 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable



INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions							Change 4Q19 vs.
	4Q19		3Q19		4Q18		3Q19		4Q18
Net interest income (TE)	$	987	$	980	$	1,008	.7	%	(2.1	)%
Noninterest income	651		650		645		.2		.9
Total revenue	$	1,638	$	1,630	$	1,653	.5	%	(.9	)%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $987 million for the fourth quarter of 2019, compared to taxable-equivalent net interest income of $1.0 billion for the fourth quarter of 2018. The decrease in net interest income reflects a lower net interest margin, which was partially offset by an increase in earning asset balances. The net interest margin was impacted by a lag in deposit pricing as interest rates moved lower. Additionally, purchase accounting accretion declined $8 million.

Compared to the third quarter of 2019, taxable-equivalent net interest income increased by $7 million. The increase was driven by higher earning asset balances, partially offset by a slight decline in the net interest margin. The net interest margin reflected lower earning asset yields and the benefit of lower interest-bearing deposit costs.



Noninterest Income

dollars in millions							Change 4Q19 vs.
	4Q19		3Q19		4Q18		3Q19		4Q18
Trust and investment services income	$	120	$	118	$	121	1.7	%	(.8	)%
Investment banking and debt placement fees	181		176		186		2.8		(2.7	)
Service charges on deposit accounts	86		86		84		—		2.4
Operating lease income and other leasing gains	39		42		28		(7.1	)	39.3
Corporate services income	65		63		58		3.2		12.1
Cards and payments income	67		69		68		(2.9	)	(1.5	)
Corporate-owned life insurance income	39		32		39		21.9		—
Consumer mortgage income	14		14		7		—		100.0
Mortgage servicing fees	26		23		21		13.0		23.8
Other income	14		27		33		(48.1	)	(57.6	)
Total noninterest income	$	651	$	650	$	645	.2	%	.9	%

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 3

Key’s noninterest income was $651 million for the fourth quarter of 2019, compared to $645 million for the year-ago quarter. The increase reflects higher operating lease income, as well as growth in corporate services income, driven by higher derivatives income. Investments made in Key's mortgage business continue to drive consumer mortgage income and mortgage servicing fees.

Compared to the third quarter of 2019, noninterest income increased by $1 million, due to growth in investment banking and debt placement fees, related to an increase in commercial mortgage income, as well as seasonally higher corporate-owned life insurance income. The increase was partially offset by lower other income.



Noninterest Expense

dollars in millions							Change 4Q19 vs.
	4Q19		3Q19		4Q18		3Q19		4Q18
Personnel expense	$	551	$	547	$	576	.7	%	(4.3	)%
Nonpersonnel expense	429		392		436		9.4		(1.6	)
Total noninterest expense	$	980	$	939	$	1,012	4.4	%	(3.2	)%

Key’s noninterest expense was $980 million for the fourth quarter of 2019, compared to $1.0 billion in the year-ago quarter and $939 million in the prior quarter. The fourth quarter of 2019 included notable items of $22 million, which consist of a pension settlement charge and professional fees related to a previously disclosed fraud loss. The year-ago period included notable items of $41 million, which were efficiency-related expenses and a pension settlement charge, while no notable items were reported in the prior period.

Excluding notable items, noninterest expense decreased by $13 million from the year-ago period, reflecting the successful implementation of Key's expense initiatives, which drove personnel expenses lower. These expenses were partially offset by additional expenses from Laurel Road, which was acquired in April 2019.

Noninterest expense increased $41 million from the prior quarter. The increase was primarily driven by notable items in the quarter - a pension settlement charge of $18 million and professional fees related to a previously disclosed fraud loss of $4 million, as well as seasonally higher business and professional fees and an increase in incentive compensation, driven by higher stock-based compensation related to a quarterly increase in share price.



BALANCE SHEET HIGHLIGHTS

Average Loans

dollars in millions							Change 4Q19 vs.
	4Q19		3Q19		4Q18		3Q19		4Q18
Commercial and industrial ^(a)	$	48,345	$	48,322	$	45,129	—		7.1	%
Other commercial loans	19,312		19,016		20,899		1.6	%	(7.6	)
Total consumer loans	25,950		24,618		23,260		5.4		11.6
Total loans	$	93,607	$	91,956	$	89,288	1.8	%	4.8	%


(a)	Commercial and industrial average loan balances include $146 million, $144 million, and $132 million of assets from commercial credit cards at December 31, 2019, September 30, 2019, and December 31, 2018, respectively.

Average loans were $93.6 billion for the fourth quarter of 2019, an increase of $4.3 billion compared to the fourth quarter of 2018. Commercial loans increased $1.6 billion, reflecting broad-based growth in commercial and industrial loans, partially offset by declines in commercial mortgage and construction loans. Consumer loans increased $2.7 billion, driven by solid growth from Laurel Road, residential mortgage loans, and indirect auto lending.

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 4

Compared to the third quarter of 2019, average loans increased by $1.7 billion, driven by growth from Laurel Road, residential mortgage, and indirect auto loans. Commercial loans increased $319 million from the prior quarter, reflecting growth in commercial mortgage loans.



Average Deposits

dollars in millions										Change 4Q19 vs.
	4Q19			3Q19			4Q18			3Q19		4Q18
Non-time deposits	$	100,518		$	97,205		$	94,480		3.4	%	6.4	%
Certificates of deposit ($100,000 or more)	6,899			7,625			8,217			(9.5	)	(16.0	)
Other time deposits	5,187			5,449			5,255			(4.8	)	(1.3	)
Total deposits	$	112,604		$	110,279		$	107,952		2.1	%	4.3	%

Cost of total deposits	.71		%	.82		%	.64		%	N/A		N/A

N/A = Not Applicable

Average deposits totaled $112.6 billion for the fourth quarter of 2019, an increase of $4.7 billion compared to the year-ago quarter, reflecting growth from consumer and commercial relationships.

Compared to the third quarter of 2019, average deposits increased by $2.3 billion, primarily driven by short-term and seasonal commercial deposits.



ASSET QUALITY

dollars in millions										Change 4Q19 vs.
	4Q19			3Q19			4Q18			3Q19		4Q18
Net loan charge-offs	$	99		$	196		$	60		(49.5	)%	65.0	%
Net loan charge-offs to average total loans	.42		%	.85		%	.27		%	N/A		N/A
Nonperforming loans at period end ^(a)	$	577		$	585		$	542		(1.4	)	6.5
Nonperforming assets at period end ^(a)	715			711			577			.6		23.9
Allowance for loan and lease losses	900			893			883			.8		1.9
Allowance for loan and lease losses to nonperforming loans ^(a)	156.0		%	152.6		%	162.9		%	N/A		N/A
Provision for credit losses	$	109		$	200		$	59		(45.5	)%	84.7	%


(a)	Nonperforming loan balances exclude $446 million, $497 million, and $575 million of purchased credit impaired loans at December 31, 2019, September 30, 2019, and December 31, 2018, respectively.

N/A = Not Applicable

In the fourth quarter of 2019 and the third quarter of 2019, Key realized pre-tax losses related to a previously disclosed fraud incident of $16 million and $123 million, respectively. Excluding the fraud losses, Key’s provision for credit losses was $93 million for the fourth quarter of 2019, compared to $59 million for the fourth quarter of 2018 and $77 million for the third quarter of 2019. Key’s allowance for loan and lease losses was $900 million, or .95% of total period-end loans at December 31, 2019, compared to .99% at December 31, 2018, and .96% at September 30, 2019.

Excluding the fraud loss, net loan charge-offs for the fourth quarter of 2019 totaled $83 million, or .35% of average total loans. These results compare to $60 million, or .27%, for the fourth quarter of 2018, and $73 million, or .31%, for the third quarter of 2019.

At December 31, 2019, Key’s nonperforming loans totaled $577 million, which represented .61% of period-end portfolio loans. These results compare to .61% at December 31, 2018, and .63% at September 30, 2019. Nonperforming assets at December 31, 2019, totaled $715 million, and represented .75% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .64% at December 31, 2018, and .77% at September 30, 2019.

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 5

CAPITAL

Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at December 31, 2019.



Capital Ratios

	12/31/2019		9/30/2019		12/31/2018
Common Equity Tier 1 ^(a)	9.43	%	9.48	%	9.93	%
Tier 1 risk-based capital ^(a)	10.85		10.91		11.08
Total risk based capital ^(a)	12.77		12.90		12.89
Tangible common equity to tangible assets ^(b)	8.64		8.58		8.30
Leverage ^(a)	9.86		9.93		9.89


(a)	12/31/2019 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 fourth quarter of 2019. As shown in the preceding table, at December 31, 2019, Key’s estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.43% and 10.85%, respectively. Key's tangible common equity ratio was 8.64% at December 31, 2019.

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. Key’s estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 9.35% at December 31, 2019. 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 4Q19 vs.
		4Q19		3Q19		4Q18		3Q19		4Q18
Shares outstanding at beginning of period		988,538		1,003,114		1,034,287		(1.5	)%	(4.4	)%
Open market repurchases and return of shares under employee compensation plans		(12,968	)	(15,076	)	(15,216	)	(14.0	)	(14.8	)
Shares issued under employee compensation plans (net of cancellations)		1,619		500		432		223.8		274.8
	Shares outstanding at end of period	977,189		988,538		1,019,503		(1.1	)%	(4.2	)%

Consistent with Key's 2019 Capital Plan, during the fourth quarter of 2019, Key declared a dividend of $.185 per common share. Key also completed $241 million of common share repurchases during the quarter.

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 Fourth Quarter 2019 Profit

January 23, 2020

Page 6



Major Business Segments

dollars in millions										Change 4Q19 vs.
		4Q19			3Q19			4Q18		3Q19		4Q18
Revenue from continuing operations (TE)
Consumer Bank		$	825		$	833		$	829	(1.0	)%	(.5	)%
Commercial Bank		771			779			771		(1.0	)	—
Other ^(a)		42			18			53		133.3		(20.8	)%
	Total	$	1,638		$	1,630		$	1,653	.5	%	(.9	)%

Income (loss) from continuing operations attributable to Key
Consumer Bank		$	166		$	194		$	177	(14.4	)%	(6.2	)%
Commercial Bank		315			304			302		3.6		4.3
Other ^{(a), (b)}		(12		)	(82		)	5		N/M		N/M
	Total	$	469		$	416		$	484	12.7	%	(3.1	)%

(a)

Other includes other segments that consists of corporate treasury, our principal investing unit, and various exit portfolios as well as reconciling items which primarily represents the unallocated portion of nonearning assets of corporate support functions. Charges related to the funding of these assets are part of net interest income and are allocated to the business segments through noninterest expense. Reconciling items also includes intercompany eliminations and certain items that are not allocated to the business segments because they do not reflect their normal operations.


(b)	Other segments included $12 million and $94 million, after tax, of notable items related to a previously disclosed fraud loss for the third quarter and fourth quarters of 2019, respectively; additional detail can be found on page 24 of this release.

TE = Taxable Equivalent, N/M = Not Meaningful



Consumer Bank


dollars in millions							Change 4Q19 vs.
	4Q19		3Q19		4Q18		3Q19		4Q18
Summary of operations
Net interest income (TE)	$	586	$	595	$	598	(1.5	)%	(2.0	)%
Noninterest income	239		238		231		.4		3.5
Total revenue (TE)	825		833		829		(1.0	)	(.5	)
Provision for credit losses	55		48		43		14.6		27.9
Noninterest expense	552		531		554		4.0		(.4	)
Income (loss) before income taxes (TE)	218		254		232		(14.2	)	(6.0	)
Allocated income taxes (benefit) and TE adjustments	52		60		55		(13.3	)	(5.5	)
Net income (loss) attributable to Key	$	166	$	194	$	177	(14.4	)%	(6.2	)%

Average balances
Loans and leases	$	34,148	$	32,760	$	31,241	4.2	%	9.3	%
Total assets	37,729		36,417		34,450		3.6		9.5
Deposits	73,561		72,995		70,426		.8		4.5

Assets under management at period end	$	40,833	$	39,416	$	36,775	3.6	%	11.0	%

TE = Taxable Equivalent

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 7



Additional Consumer Bank Data

dollars in millions										Change 4Q19 vs.
	4Q19			3Q19			4Q18			3Q19		4Q18
Noninterest income
Trust and investment services income	$	91		$	90		$	89		1.1	%	2.2
Service charges on deposit accounts	58			58			57			—		1.8	%
Cards and payments income	52			52			51			—		2.0
Other noninterest income	38			38			34			—		11.8
Total noninterest income	$	239		$	238		$	231		.4	%	3.5	%

Average deposit balances
NOW and money market deposit accounts	$	44,765		$	43,638		$	41,189		2.6	%	8.7	%
Savings deposits	4,332			4,406			4,579			(1.7	)	(5.4	)
Certificates of deposit ($100,000 or more)	6,065			6,488			5,863			(6.5	)	3.4
Other time deposits	5,164			5,430			5,239			(4.9	)	(1.4	)
Noninterest-bearing deposits	13,235			13,033			13,556			1.5		(2.4	)
Total deposits	$	73,561		$	72,995		$	70,426		.8	%	4.5	%

Home equity loans
Average balance	$	10,295		$	10,413		$	11,144
Combined weighted-average loan-to-value ratio (at date of origination)	70		%	70		%	70		%
Percent first lien positions	61			60			60

Other data
Branches	1,098			1,101			1,159
Automated teller machines	1,420			1,422			1,505

Consumer Bank Summary of Operations (4Q19 vs. 4Q18)


•	Net income attributable to Key of $166 million for the fourth quarter of 2019, compared to $177 million for the year-ago quarter


•	Taxable equivalent net interest income decreased by $12 million, or 2.0%, from the fourth quarter of 2018, with balance sheet growth offset by lower purchase accounting accretion and change in deposit mix


•	Average loans and leases increased $2.9 billion, or 9.3%. This was driven by Laurel Road along with strength in residential mortgage and indirect auto lending


•	Average deposits increased $3.1 billion, or 4.5%, from the fourth quarter of 2018. This was driven by growth in money market deposits, reflecting Key’s relationship strategy


•	Provision for credit losses increased $12 million compared to the fourth quarter of 2018, driven by balance sheet growth. Credit quality remained stable to the year-ago quarter


•	Noninterest income increased $8 million, or 3.5%, from the year ago quarter, driven by growth in consumer mortgage income


•	Noninterest expense decreased $2 million, or 0.4%, from the year ago quarter. The decline reflects the benefit of efficiency initiatives and strong expense discipline. The decline in expense was partially offset by expenses related to the acquisition of Laurel Road

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 8



Commercial Bank


dollars in millions							Change 4Q19 vs.
	4Q19		3Q19		4Q18		3Q19		4Q18
Summary of operations
Net interest income (TE)	$	416	$	399	$	417	4.3	%	(.2	)%
Noninterest income	355		380		354		(6.6	)	.3
Total revenue (TE)	771		779		771		(1.0	)	—
Provision for credit losses	38		32		17		18.8		123.5
Noninterest expense	388		372		401		4.3		(3.2	)
Income (loss) before income taxes (TE)	345		375		353		(8.0	)	(2.3	)
Allocated income taxes and TE adjustments	30		71		51		(57.7	)	(41.2	)
Net income (loss) attributable to Key	$	315	$	304	$	302	3.6	%	4.3	%

Average balances
Loans and leases	$	58,535	$	58,215	$	56,884	.5	%	2.9	%
Loans held for sale	1,465		1,325		2,250		10.6		(34.9	)
Total assets	67,135		66,549		65,603		0.9		2.3
Deposits	38,224		36,204		35,113		5.6	%	8.9	%

TE = Taxable Equivalent, N/M = Not Meaningful



Additional Commercial Bank Data

dollars in millions									Change 4Q19 vs.
	4Q19			3Q19		4Q18			3Q19		4Q18
Noninterest income
Trust and investment services income	$	29		$	28	$	32		3.6	%	(9.4	)%
Investment banking and debt placement fees	179			176		186			1.7		(3.8	)
Operating lease income and other leasing gains	39			40		27			(2.5	)	44.4

Corporate services income	58			56		51			3.6		13.7
Service charges on deposit accounts	27			27		26			—		3.8
Cards and payments income	15			16		17			(6.3	)	(11.8	)
Payments and services income	100			99		94			1.0		6.4

Mortgage servicing fees	19			20		18			(5.0	)	5.6
Other noninterest income	(11		)	17		(3		)	(164.7	)	266.7
Total noninterest income	$	355		$	380	$	354		(6.6	)%	0.3	%

N/M = Not Meaningful

Commercial Bank Summary of Operations (4Q19 vs. 4Q18)


•	Net income attributable to Key of $315 million for the fourth quarter of 2019, compared to $302 million for the year-ago quarter


•	Taxable-equivalent net interest income decreased by $1 million, compared to the fourth quarter of 2018, with balance sheet growth offset by lower loan fees and loan spread compression


•	Average loan and lease balances increased $1.7 billion, or 2.9%, compared to the fourth quarter of 2018, driven by broad-based growth in commercial and industrial loans


•	Average deposit balances increased $3.1 billion, or 8.9%, compared to the fourth quarter of 2018, driven by growth in core deposits


•	Provision for credit losses increased $21 million compared to the fourth quarter of 2018, driven by higher recoveries in the fourth quarter of 2018


•	Noninterest income increased $1 million from the prior year, reflecting stable customer activity


•	Noninterest expense decreased by $13 million, or 3.2%, from the fourth quarter of 2018. The decline reflects the benefit of efficiency initiatives and strong expense discipline

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 9

*******************************************

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 $145.0 billion at December 31, 2019.

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 1,100 branches and more than 1,400 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 Fourth Quarter 2019 Profit

January 23, 2020

Page 10



CONTACTS:

ANALYSTS	MEDIA
Vernon L. Patterson	Susan Donlan
216.689.0520	216.471.3133
Vernon_Patterson@KeyBank.com	Susan_E_Donlan@KeyBank.com

Emily J. Mills	Tracy Pesho
216.689.7781	216.471.2825
emills@key.com	Tracy_Pesho@KeyBank.com

Melanie S. Kaiser	Twitter: @keybank
216.689.4545
Melanie_S_Kaiser@KeyBank.com

INVESTOR RELATIONS:	KEY MEDIA NEWSROOM:
www.key.com/ir	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, 2018, as well as in KeyCorp’s subsequent SEC filings, all of which have been or will be filed with the Securities and Exchange Commission (the “SEC”) and are or will be 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 9:00 a.m. ET, on Thursday, January 23, 2020. An audio replay of the call will be available through February 2, 2020.

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 Fourth Quarter 2019 Profit

January 23, 2020

Page 11

KeyCorp

Fourth Quarter 2019

Financial Supplement



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

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 12



Financial Highlights
(dollars in millions, except per share amounts)
			Three months ended
			12/31/2019			9/30/2019			12/31/2018
Summary of operations
	Net interest income (TE)		$	987		$	980		$	1,008
	Noninterest income		651			650			645
		Total revenue (TE)	1,638			1,630			1,653
	Provision for credit losses		109			200			59
	Noninterest expense		980			939			1,012
	Income (loss) from continuing operations attributable to Key		466			413			482
	Income (loss) from discontinued operations, net of taxes		3			3			2
	Net income (loss) attributable to Key		469			416			484

	Income (loss) from continuing operations attributable to Key common shareholders		439			383			459
	Income (loss) from discontinued operations, net of taxes		3			3			2
	Net income (loss) attributable to Key common shareholders		442			386			461

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.45		$	.39		$	.45
	Income (loss) from discontinued operations, net of taxes		—			—			—
	Net income (loss) attributable to Key common shareholders ^(a)		.45			.39			.45

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.45			.38			.45
	Income (loss) from discontinued operations, net of taxes — assuming dilution		—			—			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)		.45			.39			.45

	Cash dividends declared		.185			.185			.17
	Book value at period end		15.54			15.44			13.90
	Tangible book value at period end		12.56			12.48			11.14
	Market price at period end		20.24			17.84			14.78

Performance ratios
	From continuing operations:
	Return on average total assets		1.27		%	1.14		%	1.37		%
	Return on average common equity		11.40			9.99			13.07
	Return on average tangible common equity ^(b)		14.09			12.38			16.40
	Net interest margin (TE)		2.98			3.00			3.16
	Cash efficiency ratio ^(b)		58.7			56.0			59.9

	From consolidated operations:
	Return on average total assets		1.27		%	1.14		%	1.37		%
	Return on average common equity		11.48			10.07			13.13
	Return on average tangible common equity ^(b)		14.19			12.48			16.47
	Net interest margin (TE)		2.97			2.98			3.14
	Loan to deposit ^(c)		86.6			85.3			85.6

Capital ratios at period end
	Key shareholders’ equity to assets		11.75		%	11.67		%	11.17		%
	Key common shareholders’ equity to assets		10.47			10.40			10.15
	Tangible common equity to tangible assets ^(b)		8.64			8.58			8.30
	Common Equity Tier 1^(d)		9.43			9.48			9.93
	Tier 1 risk-based capital ^(d)		10.85			10.91			11.08
	Total risk-based capital ^(d)		12.77			12.90			12.89
	Leverage ^(d)		9.86			9.93			9.89

Asset quality — from continuing operations
	Net loan charge-offs		$	99		$	196		$	60
	Net loan charge-offs to average loans		.42		%	.85		%	.27		%
	Allowance for loan and lease losses		$	900		$	893		$	883
	Allowance for credit losses		968			958			946
	Allowance for loan and lease losses to period-end loans		.95		%	.96		%	.99		%
	Allowance for credit losses to period-end loans		1.02			1.03			1.06
	Allowance for loan and lease losses to nonperforming loans ^(e)		156.0			152.6			162.9
	Allowance for credit losses to nonperforming loans ^(e)		167.8			163.8			174.5
	Nonperforming loans at period-end ^(e)		$	577		$	585		$	542
	Nonperforming assets at period-end ^(e)		715			711			577
	Nonperforming loans to period-end portfolio loans ^(e)		.61		%	.63		%	.61		%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets ^(e)		.75			.77			.64

Trust assets
	Assets under management		$	40,833		$	39,416		$	36,775

Other data
	Average full-time equivalent employees		16,537			16,898			17,664
	Branches		1,098			1,101			1,159

Taxable-equivalent adjustment			$	8		$	8		$	8

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 13



Financial Highlights (continued)
(dollars in millions, except per share amounts)
		Twelve months ended
		12/31/2019			12/31/2018
Summary of operations
	Net interest income (TE)	$	3,941		$	3,940
	Noninterest income	2,459			2,515
	Total revenue (TE)	6,400			6,455
	Provision for credit losses	445			246
	Noninterest expense	3,901			3,975
	Income (loss) from continuing operations attributable to Key	1,708			1,859
	Income (loss) from discontinued operations, net of taxes	9			7
	Net income (loss) attributable to Key	1,717			1,866

	Income (loss) from continuing operations attributable to Key common shareholders	$	1,611		$	1,793
	Income (loss) from discontinued operations, net of taxes	9			7
	Net income (loss) attributable to Key common shareholders	1,620			1,800

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders	$	1.62		$	1.72
	Income (loss) from discontinued operations, net of taxes	.01			.01
	Net income (loss) attributable to Key common shareholders ^(a)	1.63			1.73

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution	1.61			1.70
	Income (loss) from discontinued operations, net of taxes — assuming dilution	.01			.01
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)	1.62			1.71

	Cash dividends paid	.71			.565

Performance ratios
	From continuing operations:
	Return on average total assets	1.19		%	1.36		%
	Return on average common equity	10.83			12.88
	Return on average tangible common equity ^(b)	13.46			16.22
	Net interest margin (TE)	3.04			3.17
	Cash efficiency ratio ^(b)	59.6			60.0

	From consolidated operations:
	Return on average total assets	1.19		%	1.35		%
	Return on average common equity	10.89			12.93
	Return on average tangible common equity ^(b)	13.53			16.28
	Net interest margin (TE)	3.03			3.15

Asset quality — from continuing operations
	Net loan charge-offs	$	424		$	234
	Net loan charge-offs to average total loans	.46		%	.26		%

Other data
	Average full-time equivalent employees	17,045			18,180

Taxable-equivalent adjustment		32			31


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

(b)

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.


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


(d)	December 31, 2019, ratio is estimated.


(e)	Nonperforming loan balances exclude $446 million, $497 million, and $575 million of purchased credit impaired loans at December 31, 2019, September 30, 2019, and December 31, 2018, respectively.

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 14

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," “cash efficiency ratio," "earnings per common share excluding notable items," "net loan charge-offs to average loans excluding notable items," and "provision for credit losses excluding notable items."

Notable items include certain revenue or expense items that may occur in a reporting period which management does not consider indicative of ongoing financial performance. Management believes it is useful to consider certain financial metrics with and without notable items, in order to enable a better understanding of company results, increase comparability of period-to-period results, and to evaluate and forecast those results.

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.

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									Twelve months ended
	12/31/2019			9/30/2019			12/31/2018			12/31/2019			12/31/2018
Tangible common equity to tangible assets at period-end
Key shareholders’ equity (GAAP)	$	17,038		$	17,116		$	15,595
Less: Intangible assets ^(a)	2,910			2,928			2,818
Preferred Stock ^(b)	1,856			1,856			1,421
Tangible common equity (non-GAAP)	$	12,272		$	12,332		$	11,356
Total assets (GAAP)	$	144,988		$	146,691		$	139,613
Less: Intangible assets ^(a)	2,910			2,928			2,818
Tangible assets (non-GAAP)	$	142,078		$	143,763		$	136,795
Tangible common equity to tangible assets ratio (non-GAAP)	8.64		%	8.58		%	8.30		%
Earnings per common share (EPS) excluding notable items
EPS from continuing operations attributable to Key common shareholders — assuming dilution (GAAP)	$	.45		$	.38		$	.45
Plus: EPS impact of notable items	.03			.10			.03
EPS from continuing operations attributable to Key common shareholders — assuming dilution excluding notable items (non-GAAP)	$	.48		$	.48		$	.48
Pre-provision net revenue
Net interest income (GAAP)	$	979		$	972		$	1,000		$	3,909		$	3,909
Plus: Taxable-equivalent adjustment	8			8			8			32			31
Noninterest income	651			650			645			2,459			2,515
Less: Noninterest expense	980			939			1,012			3,901			3,975
Pre-provision net revenue from continuing operations (non-GAAP)	$	658		$	691		$	641		$	2,499		$	2,480
Average tangible common equity
Average Key shareholders' equity (GAAP)	$	17,178		$	17,113		$	15,384		$	16,636		$	15,131
Less: Intangible assets (average) ^(c)	2,919			2,942			2,828			2,909			2,869
Preferred stock (average)	1,900			1,900			1,450			1,755			1,205
Average tangible common equity (non-GAAP)	$	12,359		$	12,271		$	11,106		$	11,972		$	11,057
Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)	$	439		$	383		$	459		$	1,611		$	1,793
Plus: Notable items, after tax ^(d)	29			94			31			183			31
Net income (loss) from continuing operations attributable to Key common shareholders excluding notable items (non-GAAP)	$	468		$	477		$	490		$	1,794		$	1,824
Average tangible common equity (non-GAAP)	12,359			12,271			11,106			11,972			11,057

Return on average tangible common equity from continuing operations (non-GAAP)	14.09		%	12.38		%	16.40		%	13.46		%	16.22		%
Return on average tangible common equity from continuing operations excluding notable items (non-GAAP)	15.02		%	15.42		%	17.50		%	14.98		%	16.50		%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)	$	442		$	386		$	461		$	1,620		$	1,800
Average tangible common equity (non-GAAP)	12,359			12,271			11,106			11,972			11,057

Return on average tangible common equity consolidated (non-GAAP)	14.19		%	14.19		%	16.47		%	13.53		%	16.28		%

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 15



GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
	Three months ended									Twelve months ended
	12/31/2019			9/30/2019			12/31/2018			12/31/2019			12/31/2018
Cash efficiency ratio
Noninterest expense (GAAP)	$	980		$	939		$	1,012		$	3,901		$	3,975
Less: Intangible asset amortization	19			26			22			89			99
Adjusted noninterest expense (non-GAAP)	$	961		$	913		$	990		$	3,812		$	3,876
Less: Notable items ^(d)	22			—			41			100			41
Adjusted noninterest expense excluding notable items (non-GAAP)	$	939		$	913		$	949		$	3,712		$	3,835

Net interest income (GAAP)	$	979		$	972		$	1,000		$	3,909		$	3,909
Plus: Taxable-equivalent adjustment	8			8			8			32			31
Noninterest income	651			650			645			2,459			2,515
Total taxable-equivalent revenue (non-GAAP)	$	1,638		$	1,630		$	1,653		$	6,400		$	6,455

Cash efficiency ratio (non-GAAP)	58.7		%	56.0		%	59.9		%	59.6		%	60.0		%

Cash efficiency ratio excluding notable items (non-GAAP)	57.3		%	56.0		%	57.4		%	58.0		%	59.4		%
Net loan charge-offs to average total loans excluding notable items
Net loan charge-offs (GAAP)	$	99		$	196		$	60		$	424		$	234
Less: Notable items	16			123			—			139			—
Net loan charge-offs excluding notable items (non-GAAP)	$	83		$	73		$	60		$	285		$	234

Average loans outstanding	$	93,607		$	91,956		$	89,288		$	91,511		$	88,338

Net loan charge-offs to average total loans excluding notable items (non-GAAP)	.35		%	.31		%	.27		%	.31		%	.26		%
Provision for credit losses excluding notable items
Provision for credit losses (GAAP)	$	109		$	200		$	59		$	445		$	246
Less: Notable Items	16			123			—			139			—
Provision for credit loses excluding notable items (non-GAAP)	$	93		$	77		$	59		$	306		$	246



			Three months ended
			12/31/2019
Common Equity Tier 1 under the Regulatory Capital Rules (“RCR”) (estimates)
	Common Equity Tier 1 under current RCR		$	12,353
	Adjustments from current RCR to the fully phased-in RCR:
		Deferred tax assets and other intangible assets ^(e)	—
		Common Equity Tier 1 anticipated under the fully phased-in RCR ^(f)	$	12,353

	Net risk-weighted assets under current RCR		$	131,009
	Adjustments from current RCR to the fully phased-in RCR:
		Mortgage servicing assets ^(g)	878
		Deferred tax assets	201
		All other assets	—
		Total risk-weighted assets anticipated under the fully phased-in RCR ^(f)	$	132,088

	Common Equity Tier 1 ratio under the fully phased-in RCR ^(f)		9.35		%


(a)	For the three months ended December 31, 2019, September 30, 2019, and December 31, 2018, intangible assets exclude $7 million, $9 million, and $14 million, respectively, of period-end purchased credit card receivables.


(b)	Net of capital surplus.

(c)

For the three months ended December 31, 2019, September 30, 2019, and December 31, 2018, average intangible assets exclude $8 million, $9 million, and $15 million, respectively, of average purchased credit card receivables. For the twelve months ended December 31, 2019, and December 31, 2018, average intangible assets exclude $10 million and $20 million, respectively, of average purchase credit card receivables.


(d)	Additional detail provided in Notable Items table on page 24 of this release.


(e)	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.


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


(g)	Item is included in the 25% exceptions bucket calculation and is risk-weighted at 250%.

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 16



Consolidated Balance Sheets
(dollars in millions)

			12/31/2019			9/30/2019			12/31/2018
Assets
	Loans		$	94,646		$	92,760		$	89,552
	Loans held for sale		1,334			1,598			1,227
	Securities available for sale		21,843			22,378			19,428
	Held-to-maturity securities		10,067			10,490			11,519
	Trading account assets		1,040			963			849
	Short-term investments		1,272			3,351			2,562
	Other investments		605			620			666
		Total earning assets	130,807			132,160			125,803
	Allowance for loan and lease losses		(900		)	(893		)	(883		)
	Cash and due from banks		732			636			678
	Premises and equipment		814			815			882
	Goodwill		2,664			2,664			2,516
	Other intangible assets		253			272			316
	Corporate-owned life insurance		4,233			4,216			4,171
	Accrued income and other assets		5,494			5,881			5,030
	Discontinued assets		891			940			1,100
		Total assets	$	144,988		146,691			139,613

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	66,714		$	65,604		$	59,918
		Savings deposits	4,651			4,668			4,854
		Certificates of deposit ($100,000 or more)	6,598			7,194			7,913
		Other time deposits	5,054			5,300			5,332
		Total interest-bearing deposits	83,017			82,766			78,017
		Noninterest-bearing deposits	28,853			28,883			29,292
		Total deposits	111,870			111,649			107,309
	Federal funds purchased and securities sold under repurchase agreements		387			182			319
	Bank notes and other short-term borrowings		705			700			544
	Accrued expense and other liabilities		2,540			2,574			2,113
	Long-term debt		12,448			14,470			13,732
		Total liabilities	127,950			129,575			124,017

Equity
	Preferred stock		1,900			1,900			1,450
	Common shares		1,257			1,257			1,257
	Capital surplus		6,295			6,287			6,331
	Retained earnings		12,469			12,209			11,556
	Treasury stock, at cost		(4,909		)	(4,696		)	(4,181		)
	Accumulated other comprehensive income (loss)		26			159			(818		)
		Key shareholders’ equity	17,038			17,116			15,595
	Noncontrolling interests		—			—			1
		Total equity	17,038			17,116			15,596
Total liabilities and equity			$	144,988		$	146,691		$	139,613

Common shares outstanding (000)			977,189			988,538			1,019,503

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 17



Consolidated Statements of Income
(dollars in millions, except per share amounts)
			Three months ended						Twelve months ended
			12/31/2019		9/30/2019		12/31/2018		12/31/2019		12/31/2018
Interest income
	Loans		$	1,046	$	1,073	$	1,058	$	4,267	$	4,023
	Loans held for sale		17		18		26		63		66
	Securities available for sale		137		136		115		537		409
	Held-to-maturity securities		63		64		71		262		284
	Trading account assets		8		7		8		32		29
	Short-term investments		12		16		15		61		46
	Other investments		2		3		4		13		21
		Total interest income	1,285		1,317		1,297		5,235		4,878
Interest expense
	Deposits		201		227		174		853		517
	Federal funds purchased and securities sold under repurchase agreements		1		—		1		2		11
	Bank notes and other short-term borrowings		4		4		4		17		21
	Long-term debt		100		114		118		454		420
		Total interest expense	306		345		297		1,326		969
Net interest income			979		972		1,000		3,909		3,909
Provision for credit losses			109		200		59		445		246
Net interest income after provision for credit losses			870		772		941		3,464		3,663
Noninterest income
	Trust and investment services income		120		118		121		475		499
	Investment banking and debt placement fees		181		176		186		630		650
	Service charges on deposit accounts		86		86		84		337		349
	Operating lease income and other leasing gains		39		42		28		162		89
	Corporate services income		65		63		58		236		233
	Cards and payments income		67		69		68		275		270
	Corporate-owned life insurance income		39		32		39		136		137
	Consumer mortgage income		14		14		7		46		30
	Mortgage servicing fees		26		23		21		94		82
	Other income ^(a)		14		27		33		68		176
		Total noninterest income	651		650		645		2,459		2,515
Noninterest expense
	Personnel		551		547		576		2,250		2,309
	Net occupancy		76		72		75		293		308
	Computer processing		51		53		55		214		210
	Business services and professional fees		54		43		49		186		184
	Equipment		25		27		26		100		105
	Operating lease expense		32		33		32		123		120
	Marketing		27		26		25		96		102
	FDIC assessment		8		7		9		31		72
	Intangible asset amortization		19		26		22		89		99
	OREO expense, net		3		3		1		13		6
	Other expense		134		102		142		506		460
		Total noninterest expense	980		939		1,012		3,901		3,975
Income (loss) from continuing operations before income taxes			541		483		574		2,022		2,203
	Income taxes		75		70		92		314		344
Income (loss) from continuing operations			466		413		482		1,708		1,859
	Income (loss) from discontinued operations, net of taxes		3		3		2		9		7
Net income (loss)			469		416		484		1,717		1,866
	Less: Net income (loss) attributable to noncontrolling interests		—		—		—		—		—
Net income (loss) attributable to Key			$	469	$	416	$	484	$	1,717	$	1,866

Income (loss) from continuing operations attributable to Key common shareholders			$	439	$	383	$	459	$	1,611	$	1,793
Net income (loss) attributable to Key common shareholders			442		386		461		1,620		1,800
Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.45	$	.39	$	.45	$	1.62	$	1.72
Income (loss) from discontinued operations, net of taxes			—		—		—		.01		.01
Net income (loss) attributable to Key common shareholders ^(b)			.45		.39		.45		1.63		1.73
Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.45	$	.38	$	.45	$	1.61	$	1.70
Income (loss) from discontinued operations, net of taxes			—		—		—		.01		.01
Net income (loss) attributable to Key common shareholders ^(b)			.45		.39		.45		1.62		1.71

Cash dividends declared per common share			$	.185	$	.185	$	.17	$	.710	$	.565

Weighted-average common shares outstanding (000)			973,450		988,319		1,018,614		992,091		1,040,890
	Effect of common share options and other stock awards		10,911		10,009		11,803		10,163		13,792
Weighted-average common shares and potential common shares outstanding (000) ^(c)			984,361		998,328		1,030,417		1,002,254		1,054,682

(a)

For the three and twelve months ended December 31, 2019, net securities gains (losses) totaled $5 million and $20 million, respectively. For the three months ended September 30, 2019, net securities gains (losses) totaled $15 million. For the three and twelve months ended December 31, 2018, net securities gains (losses) totaled less than $1 million. For the three months ended December 31, 2019, September 30, 2019, and December 31, 2018, and the twelve months ended December 31, 2019 and December 31, 2018, 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 Fourth Quarter 2019 Profit

January 23, 2020

Page 18



Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(dollars in millions)
		Fourth Quarter 2019							Third Quarter 2019							Fourth Quarter 2018
		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)	$	48,345		$	522	4.28	%	$	48,322		$	543	4.46	%	$	45,129		$	512	4.51	%
	Real estate — commercial mortgage	13,335			159		4.71		13,056			163		4.95		14,656			185		5.03
	Real estate — construction	1,495			18		4.87		1,463			19		5.22		1,761			23		5.26
	Commercial lease financing	4,482			39		3.52		4,497			42		3.68		4,482			43		3.79
	Total commercial loans	67,657			738		4.33		67,338			767		4.52		66,028			763		4.59
	Real estate — residential mortgage	6,777			65		3.83		6,256			62		3.97		5,496			54		3.97
	Home equity loans	10,362			122		4.69		10,488			132		4.97		11,234			141		4.96
	Consumer direct loans	3,125			51		6.45		2,548			45		6.99		1,806			36		7.87
	Credit cards	1,103			32		11.38		1,100			32		11.59		1,112			33		11.61
	Consumer indirect loans	4,583			46		3.99		4,226			43		4.10		3,612			39		4.28
	Total consumer loans	25,950			316		4.84		24,618			314		5.07		23,260			303		5.16
	Total loans	93,607			1,054		4.47		91,956			1,081		4.67		89,288			1,066		4.74
	Loans held for sale	1,653			17		4.11		1,558			18		4.65		2,319			26		4.50
	Securities available for sale ^{(b), (e)}	22,262			137		2.49		21,867			136		2.52		18,626			115		2.38
	Held-to-maturity securities ^(b)	10,264			63		2.43		10,684			64		2.41		11,683			71		2.42
	Trading account assets	1,103			8		3.08		884			7		3.00		934			8		3.42
	Short-term investments	2,716			12		1.73		2,861			16		2.19		2,795			15		2.12
	Other investments ^(e)	603			2		1.82		624			3		1.82		671			4		2.86
	Total earning assets	132,208			1,293		3.90		130,434			1,325		4.05		126,316			1,305		4.09
	Allowance for loan and lease losses	(882		)					(881		)					(878		)
	Accrued income and other assets	14,402							14,605							13,743
	Discontinued assets	908							957							1,120
	Total assets	$	146,636						$	145,115						$	140,301
Liabilities
	NOW and money market deposit accounts	$	66,412		135		.81		$	64,595		154		.94		$	59,292		110		.74
	Savings deposits	4,660			1		.07		4,709			1		.10		4,915			1		.08
	Certificates of deposit ($100,000 or more)	6,899			40		2.31		7,625			45		2.37		8,217			42		2.02
	Other time deposits	5,187			25		1.92		5,449			27		1.96		5,255			21		1.59
	Total interest-bearing deposits	83,158			201		.96		82,378			227		1.09		77,679			174		.89
	Federal funds purchased and securities sold under repurchase agreements	267			1		.75		187			—		.50		281			1		.12
	Bank notes and other short-term borrowings	801			4		2.02		626			4		2.04		618			4		3.05
	Long-term debt ^{(f), (g)}	12,531			100		3.22		13,347			114		3.51		12,963			118		3.58
	Total interest-bearing liabilities	96,757			306		1.25		96,538			345		1.42		91,541			297		1.28
	Noninterest-bearing deposits	29,446							27,901							30,273
	Accrued expense and other liabilities	2,347							2,605							1,981
	Discontinued liabilities ^(g)	908							957							1,120
	Total liabilities	129,458							128,001							124,915
Equity
	Key shareholders’ equity	17,178							17,113							15,384
	Noncontrolling interests	—							1							2
	Total equity	17,178							17,114							15,386
	Total liabilities and equity	$	146,636						$	145,115						$	140,301
Interest rate spread (TE)							2.65	%						2.63	%						2.81	%
Net interest income (TE) and net interest margin (TE)					987		2.98	%				980		3.00	%				1,008		3.16	%
TE adjustment ^(b)					8							8							8
	Net interest income, GAAP basis				$	979						$	972						$	1,000


(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 December 31, 2019, September 30, 2019, and December 31, 2018.


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


(d)	Commercial and industrial average balances include $146 million, $144 million, and $132 million of assets from commercial credit cards for the three months ended December 31, 2019, September 30, 2019, and December 31, 2018, 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 Fourth Quarter 2019 Profit

January 23, 2020

Page 19



Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(dollars in millions)
		Twelve months ended December 31, 2019							Twelve months ended December 31, 2018
		Average					Yield/		Average					Yield/
		Balance			Interest ^(a)		Rate ^(a)		Balance			Interest ^(a)		Rate ^(a)
Assets
	Loans: ^{(b), (c)}
	Commercial and industrial ^(d)	$	47,482		$	2,144	4.51	%	$	44,418		$	1,926	4.34	%
	Real estate — commercial mortgage	13,641			676		4.95		14,267			698		4.90
	Real estate — construction	1,485			78		5.24		1,816			90		4.97
	Commercial lease financing	4,488			163		3.63		4,534			168		3.70
	Total commercial loans	67,096			3,061		4.56		65,035			2,882		4.43
	Real estate — residential mortgage	6,095			241		3.95		5,473			217		3.97
	Home equity loans	10,634			526		4.95		11,530			547		4.74
	Consumer direct loans	2,475			176		7.11		1,782			137		7.66
	Credit cards	1,100			127		11.51		1,092			125		11.40
	Consumer indirect loans	4,111			168		4.09		3,426			146		4.27
	Total consumer loans	24,415			1,238		5.07		23,303			1,172		5.03
	Total loans	91,511			4,299		4.70		88,338			4,054		4.59
	Loans held for sale	1,411			63		4.48		1,501			66		4.43
	Securities available for sale ^{(b), (e)}	21,362			537		2.51		17,898			409		2.20
	Held-to-maturity securities ^(b)	10,841			262		2.41		12,003			284		2.37
	Trading account assets	1017			32		3.18		893			29		3.25
	Short-term investments	2,876			61		2.11		2,450			46		1.86
	Other investments ^(e)	630			13		2.09		697			21		3.04
	Total earning assets	129,648			5,267		4.06		123,780			4,909		3.94
	Allowance for loan and lease losses	(880		)					(878		)
	Accrued income and other assets	14,411							13,910
	Discontinued assets	984							1,212
	Total assets	$	144,163						$	138,024
Liabilities
	NOW and money market deposit accounts	$	63,731		566		.89		$	56,001		297		.53
	Savings deposits	4,740			4		.09		5,704			14		.24
	Certificates of deposit ($100,000 or more)	7,757			180		2.32		7,728			139		1.80
	Other time deposits	5,426			103		1.90		5,025			67		1.34
	Total interest-bearing deposits	81,654			853		1.04		74,458			517		.69
	Federal funds purchased and securities sold under repurchase agreements	264			2		.66		928			11		1.14
	Bank notes and other short-term borrowings	730			17		2.31		915			21		2.34
	Long-term debt ^{(f), (g)}	13,062			454		3.52		12,715			420		3.27
	Total interest-bearing liabilities	95,710			1,326		1.39		89,016			969		1.09
	Noninterest-bearing deposits	28,376							30,593
	Accrued expense and other liabilities	2,456							2,071
	Discontinued liabilities ^(g)	984							1,212
	Total liabilities	127,526							122,892
Equity
	Key shareholders’ equity	16,636							15,131
	Noncontrolling interests	1							1
	Total equity	16,637							15,132
	Total liabilities and equity	$	144,163						$	138,024
Interest rate spread (TE)							2.67	%						2.85	%
Net interest income (TE) and net interest margin (TE)					3,941		3.04	%				3,940		3.17	%
TE adjustment ^(b)					32							31
	Net interest income, GAAP basis				$	3,909						$	3,909


(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 twelve months ended December 31, 2019, and December 31, 2018, respectively.


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


(d)	Commercial and industrial average balances include $141 million and $126 million of assets from commercial credit cards for the twelve months ended December 31, 2019, and December 31, 2018, 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 Fourth Quarter 2019 Profit

January 23, 2020

Page 20



Noninterest Expense
(dollars in millions)

	Three months ended						Twelve months ended
	12/31/2019		9/30/2019		12/31/2018		12/31/2019		12/31/2018
Personnel ^(a)	$	551	$	547	$	576	$	2,250	$	2,309
Net occupancy	76		72		75		293		308
Computer processing	51		53		55		214		210
Business services and professional fees	54		43		49		186		184
Equipment	25		27		26		100		105
Operating lease expense	32		33		32		123		120
Marketing	27		26		25		96		102
FDIC assessment	8		7		9		31		72
Intangible asset amortization	19		26		22		89		99
OREO expense, net	3		3		1		13		6
Other expense	134		102		142		506		460
Total noninterest expense	$	980	$	939	$	1,012	$	3,901	$	3,975
Average full-time equivalent employees ^(b)	16,537		16,898		17,664		17,045		18,180


(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						Twelve months ended
	12/31/2019		9/30/2019		12/31/2018		12/31/2019		12/31/2018
Salaries and contract labor	$	312	$	314	$	336	$	1,268	$	1,351
Incentive and stock-based compensation	154		143		139		584		569
Employee benefits	85		87		77		348		343
Severance	—		3		24		50		46
Total personnel expense	$	551	$	547	$	576	$	2,250	$	2,309

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 21



Loan Composition
(dollars in millions)

							Percent change 12/31/2019 vs
	12/31/2019		9/30/2019		12/31/2018		9/30/2019		12/31/2018
Commercial and industrial ^(a)	$	48,295	$	48,362	$	45,753	(.1	)%	5.6	%
Commercial real estate:
Commercial mortgage	13,491		13,167		14,285		2.5		(5.6	)
Construction	1,558		1,480		1,666		5.3		(6.5	)
Total commercial real estate loans	15,049		14,647		15,951		2.7		(5.7	)
Commercial lease financing ^(b)	4,688		4,470		4,606		4.9		1.8
Total commercial loans	68,032		67,479		66,310		.8		2.6
Residential — prime loans:
Real estate — residential mortgage	7,023		6,527		5,513		7.6		27.4
Home equity loans	10,274		10,456		11,142		(1.7	)	(7.8	)
Total residential — prime loans	17,297		16,983		16,655		1.8		3.9
Consumer direct loans	3,513		2,789		1,809		26.0		94.2
Credit cards	1,130		1,105		1,144		2.3		(1.2	)
Consumer indirect loans	4,674		4,404		3,634		6.1		28.6
Total consumer loans	26,614		25,281		23,242		5.3		14.5
Total loans ^(c)	$	94,646	$	92,760	$	89,552	2.0	%	5.7	%


(a)	Loan balances include $144 million, $147 million, and $132 million of commercial credit card balances at December 31, 2019, September 30, 2019, and December 31, 2018, respectively.


(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $15 million, $10 million, and $10 million at December 31, 2019, September 30, 2019, and December 31, 2018, respectively. Principal reductions are based on the cash payments received from these related receivables.


(c)	Total loans exclude loans of $865 million at December 31, 2019, $915 million at September 30, 2019, and $1.1 billion at December 31, 2018, related to the discontinued operations of the education lending business.



Loans Held for Sale Composition
(dollars in millions)

							Percent change 12/31/2019 vs
	12/31/2019		9/30/2019		12/31/2018		9/30/2019		12/31/2018
Commercial and industrial	$	367	$	195	$	279	88.2	%	31.5	%
Real estate — commercial mortgage	772		1,123		894		(31.3	)	(13.6	)
Commercial lease financing	2		100		—		(98.0	)	N/M
Real estate — residential mortgage	140		120		54		16.7		159.3
Consumer direct loans	53		60		—		(11.7	)	N/M
Total loans held for sale ^(a)	$	1,334	$	1,598	$	1,227	(16.5	)%	8.7	%


(a)	Total loans held for sale include Real estate — residential mortgage loans held for sale at fair value of $140 million at December 31, 2019, $120 million at September 30, 2019, and $54 million at December 31, 2018.



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

	4Q19			3Q19			2Q19			1Q19			4Q18
Balance at beginning of period	$	1,598		$	1,790		$	894		$	1,227		$	1,618
New originations	3,659			3,222			3,218			1,676			5,057
Transfers from (to) held to maturity, net	26			237			42			6			24
Loan sales	(3,933		)	(3,602		)	(2,358		)	(2,017		)	(5,448		)
Loan draws (payments), net	(18		)	(49		)	(6		)	2			(24		)
Valuation adjustments	2			—			—			—			—
Balance at end of period ^(a)	$	1,334		$	1,598		$	1,790		$	894		$	1,227


(a)	Total loans held for sale include Real estate — residential mortgage loans held for sale at fair value of $140 million at December 31, 2019, $120 million at September 30, 2019, $164 million at June 30, 2019, $71 million at March 31, 2019, and $54 million at December 31, 2018.

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 22



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

	Three months ended									Twelve months ended
	12/31/2019			9/30/2019			12/31/2018			12/31/2019			12/31/2018
Average loans outstanding	$	93,607		$	91,956		$	89,288		$	91,511		$	88,338
Allowance for loan and lease losses at beginning of period	$	893		$	890		$	887		$	883		$	877
Loans charged off:
Commercial and industrial	77			176			45			319			159

Real estate — commercial mortgage	2			—			12			8			21
Real estate — construction	1			—			—			5			—
Total commercial real estate loans	3			—			12			13			21
Commercial lease financing	1			1			1			26			10
Total commercial loans	81			177			58			358			190
Real estate — residential mortgage	—			1			—			3			3
Home equity loans	3			6			7			19			21
Consumer direct loans	11			10			9			41			36
Credit cards	10			11			10			44			44
Consumer indirect loans	10			8			8			34			30
Total consumer loans	34			36			34			141			134
Total loans charged off	115			213			92			499			324
Recoveries:
Commercial and industrial	5			6			19			27			37

Real estate — commercial mortgage	—			—			1			2			3
Real estate — construction	—			—			1			—			2
Total commercial real estate loans	—			—			2			2			5
Commercial lease financing	1			1			1			5			5
Total commercial loans	6			7			22			34			47
Real estate — residential mortgage	1			—			—			2			2
Home equity loans	2			2			2			8			11
Consumer direct loans	2			2			2			7			7
Credit cards	1			2			2			7			7
Consumer indirect loans	4			4			4			17			16
Total consumer loans	10			10			10			41			43
Total recoveries	16			17			32			75			90
Net loan charge-offs	(99		)	(196		)	(60		)	(424		)	(234		)
Provision (credit) for loan and lease losses	106			199			56			441			240
Allowance for loan and lease losses at end of period	$	900		$	893		$	883		$	900		$	883

Liability for credit losses on lending-related commitments at beginning of period	$	65		$	64		$	60		$	64		$	57
Provision (credit) for losses on lending-related commitments	3			1			3			4			6
Liability for credit losses on lending-related commitments at end of period ^(a)	$	68		$	65		$	63		$	68		$	63

Total allowance for credit losses at end of period	$	968		$	958		$	946		$	968		$	946

Net loan charge-offs to average total loans	.42		%	.85		%	.27		%	.46		%	.26		%
Allowance for loan and lease losses to period-end loans	.95			.96			.99			.95			.99
Allowance for credit losses to period-end loans	1.02			1.03			1.06			1.02			1.06
Allowance for loan and lease losses to nonperforming loans	156.0			152.6			162.9			156.0			162.9
Allowance for credit losses to nonperforming loans	167.8			163.8			174.5			167.8			174.5

Discontinued operations — education lending business:
Loans charged off	$	3		$	1		$	4		$	12		$	15
Recoveries	2			1			1			5			5
Net loan charge-offs	$	(1	)	—			$	(3	)	$	(7	)	$	(10	)


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

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 23



Asset Quality Statistics From Continuing Operations
(dollars in millions)
	4Q19			3Q19			2Q19			1Q19			4Q18
Net loan charge-offs	$	99		$	196		$	65		$	64		$	60
Net loan charge-offs to average total loans	.42		%	.85		%	.29		%	.29		%	.27		%
Allowance for loan and lease losses	$	900		$	893		$	890		$	883		$	883
Allowance for credit losses ^(a)	968			958			954			945			946
Allowance for loan and lease losses to period-end loans	.95		%	.96		%	.97		%	.98		%	.99		%
Allowance for credit losses to period-end loans	1.02			1.03			1.04			1.05			1.06
Allowance for loan and lease losses to nonperforming loans ^(b)	156.0			152.6			158.6			161.1			162.9
Allowance for credit losses to nonperforming loans ^(b)	167.8			163.8			170.1			172.4			174.5
Nonperforming loans at period end ^(b)	$	577		$	585		$	561		$	548		$	542
Nonperforming assets at period end ^(b)	715			711			608			597			577
Nonperforming loans to period-end portfolio loans ^(b)	.61		%	.63		%	.61		%	.61		%	.61		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets ^(b)	.75			.77			.66			.66			.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 $446 million, $497 million, $518 million, $551 million, and $575 million of purchased credit impaired loans at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.



Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
(dollars in millions)
	12/31/2019			9/30/2019			6/30/2019			3/31/2019			12/31/2018
Commercial and industrial	$	264		$	238		$	189		$	170		$	152

Real estate — commercial mortgage	83			92			85			82			81
Real estate — construction	2			2			2			2			2
Total commercial real estate loans	85			94			87			84			83
Commercial lease financing	6			7			7			9			9
Total commercial loans	355			339			283			263			244
Real estate — residential mortgage	48			42			62			64			62
Home equity loans	145			179			191			195			210
Consumer direct loans	4			3			3			3			4
Credit cards	3			2			2			3			2
Consumer indirect loans	22			20			20			20			20
Total consumer loans	222			246			278			285			298
Total nonperforming loans ^(a)	577			585			561			548			542
OREO	35			39			38			40			35
Nonperforming loans held for sale	94			78			—			—			—
Other nonperforming assets	9			9			9			9			—
Total nonperforming assets ^(a)	$	715		$	711		$	608		$	597		$	577
Accruing loans past due 90 days or more	101			54			74			118			112
Accruing loans past due 30 through 89 days	389			366			299			290			312
Restructured loans — accruing and nonaccruing ^(b)	347			347			395			365			399
Restructured loans included in nonperforming loans ^(b)	183			176			228			198			247
Nonperforming assets from discontinued operations — education lending business	7			7			7			7			8
Nonperforming loans to period-end portfolio loans ^(a)	.61		%	.63		%	.61		%	.61		%	.61		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets ^(a)	.75			.77			.66			.66			.64


(a)	Nonperforming loan balances exclude $446 million, $497 million, $518 million, $551 million, and $575 million of purchased credit impaired loans at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, 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)
	4Q19			3Q19			2Q19			1Q19			4Q18
Balance at beginning of period	$	585		$	561		$	548		$	542		$	645
Loans placed on nonaccrual status	268			271			189			196			103
Charge-offs	(114		)	(91		)	(84		)	(91		)	(92		)
Loans sold	(1		)	—			(38		)	(18		)	(16		)
Payments	(59		)	(37		)	(23		)	(22		)	(53		)
Transfers to OREO	(3		)	(4		)	(4		)	(8		)	(10		)
Transfers to nonperforming loans held for sale	(47		)	(78		)	—			—			—
Transfers to other nonperforming assets	—			—			—			(13		)	—
Loans returned to accrual status	(52		)	(37		)	(27		)	(38		)	(35		)
Balance at end of period ^(a)	$	577		$	585		$	561		$	548		$	542


(a)	Nonperforming loan balances exclude $446 million, $497 million, $518 million, $551 million, and $575 million of purchased credit impaired loans at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.

KeyCorp Reports Fourth Quarter 2019 Profit

January 23, 2020

Page 24



Line of Business Results
(dollars in millions)

																Percentage change 4Q19 vs.
	4Q19			3Q19			2Q19			1Q19			4Q18			3Q19		4Q18
Consumer Bank
Summary of operations
Total revenue (TE)	$	825		$	833		$	825		$	805		$	829		(1.0	)%	(.5	)%
Provision for credit losses	55			48			40			45			43			14.6		27.9
Noninterest expense	552			531			552			540			554			4.0		(.4	)
Net income (loss) attributable to Key	166			194			177			168			177			(14.4	)	(6.2	)
Average loans and leases	34,148			32,760			31,881			31,321			31,241			4.2		9.3
Average deposits	73,561			72,995			72,303			71,288			70,426			.8		4.5
Net loan charge-offs	43			40			40			34			40			7.5		7.5
Net loan charge-offs to average total loans	.50		%	.48		%	.50		%	.44		%	.51		%	N/A		N/A
Nonperforming assets at period end	$	306		$	354		$	366		$	365		$	364		(13.6	)	(15.9	)
Return on average allocated equity	19.27		%	22.82		%	21.75		%	21.27		%	21.51		%	N/A		N/A

Commercial Bank
Summary of operations
Total revenue (TE)	$	771		$	779		$	760		$	702		$	771		(1.0	)%	—	%
Provision for credit losses	38			32			33			16			17			18.8		123.5
Noninterest expense	388			372			389			373			401			4.3		(3.2	)
Net income (loss) attributable to Key	315			304			277			250			302			3.6		4.3
Average loans and leases	58,535			58,215			57,918			57,267			56,884			.5		2.9
Average loans held for sale	1,465			1,325			1,168			1,066			2,250			10.6		(34.9	)
Average deposits	38,224			36,204			35,960			34,417			35,113			5.6		8.9
Net loan charge-offs	39			35			23			30			19			11.4		105.3
Net loan charge-offs to average total loans	.26		%	.24		%	.16		%	.21		%	.13		%	N/A		N/A
Nonperforming assets at period end	$	402		$	351		$	235		$	225		$	205		14.5		96.1
Return on average allocated equity	26.69		%	26.37		%	24.09		%	22.60		%	26.64		%	N/A		N/A

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



Notable Items
(in millions)

	Three months ended									Twelve months ended
	12/31/2019			9/30/2019			12/31/2018			12/31/2019			12/31/2018
Provision for credit losses	$	(16	)	$	(123	)	—			$	(139	)	—

Professional fees related to fraud loss	(4		)	—			—			(4		)	—
Efficiency initiative expenses	—			—			$	(24	)	(76		)	$	(24	)
Laurel Road acquisition expenses	—			—			—			(2		)	—
Pension settlement charge	(18		)	—			(17		)	(18		)	(17		)
Total notable items	$	(38	)	$	(123	)	$	(41	)	$	(239	)	$	(41	)
Income taxes	(9		)	(29		)	(10		)	(56		)	(10		)
Total notable items, after tax	$	(29	)	$	(94	)	$	(31	)	$	(183	)	$	(31	)

KEYCORP /NEW/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 23, 2020

Attached files

KEYCORP /NEW/ Reports