KeyCorp Reports First Quarter 2010 Results

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Apr 21, 2010, 06:19 ET

CLEVELAND, April 21 /PRNewswire-FirstCall/ --

Net loss from continuing operations narrows to $.11 per common share
Net interest margin increases to 3.19%
Nonperforming loans decrease by $122 million from fourth quarter of 2009 to 3.69% of portfolio loans
Net charge-offs decline $186 million from fourth quarter of 2009
Loan loss reserve at $2.4 billion, or 4.34% of total loans
Capital and liquidity positions remain strong
Tier 1 common equity and Tier 1 risk-based capital ratios of 7.53% and 12.96%, respectively
$5.3 billion in new or renewed lending commitments originated

KeyCorp (NYSE: KEY) today announced a first quarter net loss from continuing operations attributable to Key common shareholders of $98 million, or $.11 per common share. These results compare to a net loss from continuing operations attributable to Key common shareholders of $507 million, or $1.03 per common share, for the first quarter of 2009. The first quarter of 2009 was negatively impacted by an $847 million loan loss provision and a $196 million ($164 million after tax) intangible assets impairment charge.

A lower provision for loan losses and continued expense control resulted in a narrowing of Key’s first-quarter loss when compared to the fourth quarter of 2009. Net charge-offs declined by $186 million, and nonperforming loans showed continued improvement decreasing by $122 million from December 31, 2009. Key also experienced reduced expenses due to lower personnel expense and efficiency initiative efforts as well as a decrease in the provision for losses on lending-related commitments.

“These results are encouraging and reflect our persistent focus over recent quarters to ensure that Key emerges strong and ready to grow as the economic recovery continues to take hold,” said Chief Executive Officer Henry L. Meyer III. “Particularly notable in the results is the improvement in net interest margin, a decrease in nonperforming loans for the second quarter in a row, and good expense control.”

Meyer continued: “We are positioning Key for an improving economy. We have reduced our risk, continue to emphasize our core relationship businesses, and our balance sheet reflects strong capital, liquidity and loan loss reserve levels.”

At March 31, 2010, Key’s estimated Tier 1 common equity and Tier 1 risk-based capital ratios were 7.53% and 12.96%, respectively.

The Company originated approximately $5.3 billion in new or renewed lending commitments to consumers and businesses during the quarter.

Key continues to invest in its relationship businesses, including its 14-state branch network. Meyer noted that Key opened eight new branches in the first quarter, expects to open an additional 32 new branches during the remainder of 2010, and continues to modernize its existing branches. The new and modernized branches underscore Key’s relationship strategy by leveraging its branch network to offer the full breadth of solutions, expertise, services and products that Key has to offer. Additionally, Key received recognition from Corporate Insight’s 2009 Bank Monitor which highlights firms that excel in key areas of the online banking experience. Key had previously been named a Customer Service Champion by BusinessWeek in its March 2009 edition. The Company is positioning its branch and online capabilities to enhance growth as the economy turns.

During the quarter, Christopher M. Gorman was promoted to senior executive vice president and head of Key’s National Banking business. He also became vice chairman of KeyBank National Association. Mr. Gorman has been with Key for the past 19 years and was most recently president of KeyBanc Capital Markets. In his new role, Gorman is responsible for Key's corporate, investment banking, capital markets, commercial real estate and equipment finance businesses.

The following table shows Key’s continuing and discontinued operating results for the three-month periods ended March 31, 2010, December 31, 2009, and March 31, 2009.

Results of Operations
		Three months ended
in millions, except per share amounts		3-31-10	12-31-09	3-31-09
Summary of operations
Income (loss) from continuing operations attributable to Key		$ (57)	$ (217)	$ (459)
Income (loss) from discontinued operations, net of taxes ^(a)		2	(7)	(29)
Net income (loss) attributable to Key		$ (55)	$ (224)	$ (488)

Income (loss) from continuing operations attributable to Key		$ (57)	$ (217)	$ (459)
Less:	Dividends on Series A Preferred Stock	6	5	12
	Cash dividends on Series B Preferred Stock	31	31	32
	Amortization of discount on Series B Preferred Stock	4	5	4
Income (loss) from continuing operations attributable to Key common shareholders		(98)	(258)	(507)
Income (loss) from discontinued operations, net of taxes ^(a)		2	(7)	(29)
Net income (loss) attributable to Key common shareholders		$ (96)	$ (265)	$ (536)

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders		$ (.11)	$ (.30)	$ (1.03)
Income (loss) from discontinued operations, net of taxes ^(a)		^--	(.01)	(.06)
Net income (loss) attributable to Key common shareholders ^(b)		$ (.11)	$ (.30)	$ (1.09)

(a) In September 2009, management made the decision to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. In April 2009, management made the decision to curtail the operations of Austin Capital Management, Ltd., an investment subsidiary that specializes in managing hedge fund investments for its institutional customer base. As a result of these decisions, Key has accounted for these businesses as discontinued operations. Included in the loss from discontinued operations for the three-month period ended March 31, 2009, is a $23 million after tax, or $.05 per common share, charge for intangible assets impairment related to Austin Capital Management.
(b) Earnings per share may not foot due to rounding.

As shown in the following table, the comparability of Key’s earnings for the current, prior and year-ago quarters is affected by several significant items.

Significant Items Affecting the Comparability of Earnings

	First Quarter 2010			Fourth Quarter 2009			First Quarter 2009
in millions, except per share amounts	Pre-tax Amount	After-tax Amount	Impact on EPS	Pre-tax Amount	After-tax Amount	Impact on EPS	Pre-tax Amount		After-tax Amount		Impact on EPS
Provision for loan losses less (in excess of) net charge-offs	$ 109	$ 68	$.08	$ (48)	$ (31)	$ (.04)	$ (387)		$ (242)		$ (.49)
Net gains (losses) from principal investing ^(a)	21	13	.02	44	28	.03	(63)		(39)		(.08)
Realized and unrealized gains (losses) on loan and securities portfolios held for sale or trading	(11)	(7)	(.01)	(92)	(58)	(.07)	^--		^--		^--
Credits related to IRS audits and leveraged lease tax litigation	^--	^--	^--	^--	106	.12	^--		^--		^--
(Provision) credit for losses on lending-related commitments	2	1	^--	(27)	(17)	(.02)	^--		^--		^--
Noncash charge for intangible assets impairment	^--	^--	^--	^--	^--	^--	(196)	^(b)	(164)	^(b)	(.33)	^(b)
Gain from sale/redemption of Visa Inc. shares	^--	^--	^--	^--	^--	^--	105		65		.13

(a) Excludes principal investing results attributable to noncontrolling interests.
(b) Excludes a $27 million ($23 million after tax, or $.05 per common share) charge for intangible assets impairment related to the discontinued operations of Austin Capital Management, Ltd.
EPS = Earnings per common share

SUMMARY OF CONTINUING OPERATIONS

Taxable-equivalent net interest income was $632 million for the first quarter of 2010, and the net interest margin was 3.19%. These results compare to taxable-equivalent net interest income of $595 million and a net interest margin of 2.79% for the first quarter of 2009. The improvement in the net interest margin is primarily attributable to lower funding costs and improved yields on loans. During the past year the Company has experienced an improvement in the mix of deposits, resulting in a lower level of higher costing certificates of deposit and an increase in lower costing transaction accounts. The Company expects this change in funding mix to continue as higher costing certificates of deposit mature and are repriced to current market rates. This repricing and changing the mix of deposits should continue to benefit the Company’s net interest margin for the remaining quarters of 2010. Funding costs were also reduced by maturities of long-term debt and the 2009 exchanges of retail trust preferred securities for Key common shares.

Compared to the fourth quarter of 2009, taxable-equivalent net interest income decreased by $5 million, and the net interest margin rose by 15 basis points. The increase in the net interest margin resulting from the improved funding mix was mostly offset by the lower day count and reduced average earning assets in the first quarter of 2010 compared to the fourth quarter of 2009.

Key’s noninterest income was $450 million for the first quarter of 2010, compared to $478 million for the year-ago quarter. The decrease reflects a $105 million gain from the sale of Visa Inc. shares during the first quarter of 2009. In addition, operating lease income and gains on leased equipment decreased by $14 million and $18 million, respectively, compared to the first quarter of 2009 due to a lower level of leasing activity. Net gains of $37 million in the first quarter of 2010 from principal investing (including results attributable to noncontrolling interests), compared to net losses of $72 million for the same period last year, partially offset this decline in noninterest income.

The major components of Key’s fee-based income for the past five quarters are shown in the following table.

Fee-based Income – Major Components
in millions	1Q10	4Q09	3Q09	2Q09	1Q09
Trust and investment services income	$114	$117	$113	$119	$110
Service charges on deposit accounts	76	82	83	83	82
Operating lease income	47	52	55	59	61
Letter of credit and loan fees	40	52	46	44	38
Corporate-owned life insurance income	28	36	26	25	27
Electronic banking fees	27	27	27	27	24
Insurance income	18	16	18	16	18
Net gains (losses) from principal investing	37	80	(6)	(6)	(72)
Investment banking and capital markets income (loss)	9	(47)	(26)	14	17

Compared to the fourth quarter of 2009, noninterest income decreased by $19 million. This lower noninterest income resulted from a decrease of $43 million in principal investing results (including results attributable to noncontrolling interests), a $12 million decrease in letter of credit and loan fees, an $8 million decrease in income from corporate owned life insurance as well as decreases in various other miscellaneous income components. The negative effect of these factors was partially offset by a $56 million increase in results from investment banking and capital markets activities that was primarily attributable to changes in the fair values of certain commercial real estate related investments in the fourth quarter of 2009.

Key’s noninterest expense was $785 million for the first quarter of 2010, compared to $927 million for the same period last year. Noninterest expense for the first quarter of 2009 was adversely affected by an intangible assets impairment charge of $196 million. Excluding this charge, noninterest expense for the current quarter was up $54 million, or 7%, from the year-ago quarter. Personnel expense increased by $3 million while nonpersonnel expense rose by $51 million, reflecting increases of $26 million in costs associated with OREO, including write-downs and losses on sales, and various other expense categories.

Compared to the fourth quarter of 2009, noninterest expense decreased by $86 million. Personnel expense decreased by $38 million, due largely to lower incentive compensation. Nonpersonnel expense decreased by $48 million, reflecting a decrease in the provision for losses on lending-related commitments of $29 million, a $25 million reduction in professional fees and a decrease in operating lease expense of $11 million. These items were partially offset by a $22 million increase in various other expense categories.

ASSET QUALITY

Key’s provision for loan losses was $413 million for the first quarter of 2010, compared to $847 million for the year-ago quarter and $756 million for the fourth quarter of 2009. Key’s allowance for loan losses was $2.4 billion, or 4.34% of total loans, at March 31, 2010, compared to 4.31% at December 31, 2009, and 2.88% at March 31, 2009.

Selected asset quality statistics for Key for each of the past five quarters are presented in the following table.

Selected Asset Quality Statistics from Continuing Operations

dollars in millions	1Q10		4Q09		3Q09		2Q09		1Q09
Net loan charge-offs	$522		$708		$587		$502		$460
Net loan charge-offs to average loans	3.67	%	4.64	%	3.59	%	2.93	%	2.60	%
Allowance for loan losses	$2,425		$2,534		$2,485		$2,339		$2,016
Allowance for credit losses^(a)	2,544		2,655		2,579		2,404		2,070
Allowance for loan losses to period-end loans	4.34	%	4.31	%	4.00	%	3.48	%	2.88	%
Allowance for credit losses to period-end loans	4.55		4.52		4.15		3.58		2.96
Allowance for loan losses to nonperforming loans	117.43		115.87		108.52		107.05		116.20
Allowance for credit losses to nonperforming loans	123.20		121.40		112.62		110.02		119.31
Nonperforming loans at period end	$2,065		$2,187		$2,290		$2,185		$1,735
Nonperforming assets at period end	2,428		2,510		2,799		2,548		1,994
Nonperforming loans to period-end portfolio loans	3.69	%	3.72	%	3.68	%	3.25	%	2.48	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	4.31		4.25		4.46		3.77		2.84
(a) Includes the allowance for loan losses plus the liability for credit losses on lending-related commitments.

Net loan charge-offs for the quarter totaled $522 million, or 3.67% of average loans. These results compare to $460 million, or 2.60%, for the same period last year and $708 million, or 4.64%, for the previous quarter.

Key’s net loan charge-offs by loan type for each of the past five quarters are shown in the following table.

Net Loan Charge-offs from Continuing Operations

dollars in millions	1Q10		4Q09		3Q09		2Q09		1Q09
Commercial, financial and agricultural	$126		$218		$168		$168		$232
Real estate - commercial mortgage	106		165		81		87		21
Real estate - construction	157		181		216		133		104
Commercial lease financing	21		39		27		22		18
Total commercial loans	410		603		492		410		375
Home equity - Community Banking	30		27		25		24		17
Home equity - Other	17		19		20		18		15
Marine	38		33		25		29		32
Other	27		26		25		21		21
Total consumer loans	112		105		95		92		85
Total net loan charge-offs	$522		$708		$587		$502		$460

Net loan charge-offs to average loans from continuing operations	3.67	%	4.64	%	3.59	%	2.93	%	2.6	%

Net loan charge-offs from discontinued operations - education lending business	$36		$36		$38		$37		$32

Compared to the fourth quarter of 2009, net loan charge-offs in the commercial loan portfolio decreased by $193 million. The decrease was attributable to declines in both the commercial, financial and agricultural and real estate commercial mortgage and construction lines of business. The level of net charge-offs in the consumer portfolio rose by $7 million. As shown in the table on page 6, Key’s exit loan portfolio accounted for $153 million, or 29%, of Key’s total net loan charge-offs for the first quarter of 2010. Net charge-offs in the exit portfolio increased by $12 million from the fourth quarter of 2009. Management expects net charge-offs to remain elevated in 2010, but to continue to improve from the first quarter level in future quarters.

At March 31, 2010, Key’s nonperforming loans totaled $2.1 billion and represented 3.69% of period-end portfolio loans, compared to 3.72% at December 31, 2009, and 2.48% at March 31, 2009. Nonperforming assets at March 31, 2010, totaled $2.4 billion and represented 4.31% of portfolio loans, OREO and other nonperforming assets, compared to 4.25% at December 31, 2009, and 2.84% at March 31, 2009. The following table illustrates the trend in Key’s nonperforming assets by loan type over the past five quarters.

Nonperforming Assets from Continuing Operations
dollars in millions	1Q10		4Q09		3Q09		2Q09		1Q09
Commercial, financial and agricultural	$558		$586		$679		$700		$595
Real estate - commercial mortgage	579		614		566		454		310
Real estate - construction	607		641		702		716		546
Commercial lease financing	99		113		131		122		109
Total consumer loans	222		233		212		193		175
Total nonperforming loans	2,065		2,187		2,290		2,185		1,735
Nonperforming loans held for sale	195		116		304		145		72
OREO and other nonperforming assets	168		207		205		218		187
Total nonperforming assets	$2,428		$2,510		$2,799		$2,548		$1,994

Restructured loans included in nonperforming loans (a)	$226		$364		$65		$7		--
Nonperforming assets from discontinued operations - education lending business	43		14		12		3		3
Nonperforming loans to period-end portfolio loans	3.69	%	3.72	%	3.68	%	3.25	%	2.48	%
Nonperforming assets to period-end portfolio loans, plus OREO and other nonperforming assets	4.31		4.25		4.46		3.77		2.84
(a) Restructured loans (i.e. troubled debt restructurings) are those for which Key, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance.

Nonperforming assets decreased during the first quarter of 2010 which represents the second quarterly decline. Most of the reduction came from nonperforming loans and OREO in the commercial real estate line of business. These reductions were offset in part by an increase in nonperforming loans held for sale. As shown in the following table, Key’s exit loan portfolio accounted for $499 million, or 21%, of Key’s total nonperforming assets at March 31, 2010, compared to $599 million, or 24%, at December 31, 2009.

The composition of Key’s exit loan portfolio at March 31, 2010, and December 31, 2009, the net charge-offs recorded on this portfolio for the first quarter of 2010 and the fourth quarter of 2009, and the nonperforming status of these loans at March 31, 2010, and December 31, 2009, are shown in the following table.

Exit Loan Portfolio from Continuing Operations
							Balance on
	Balance			Change	Net Loan		Nonperforming
	Outstanding			3-31-10 vs.	Charge-offs		Status
in millions	3-31-10		12-31-09	12-31-09	1Q10	4Q09	3-31-10	12-31-09
Residential properties ^-- homebuilder	$269		$379	$(110)	$44	$53	$167	$211
Residential properties ^-- held for sale	40		52	(12)	^--	^--	40	52
Total residential properties	309		431	(122)	44	53	207	263
Marine and RV floor plan	339		427	(88)	28	16	66	93
Commercial lease financing ^(a)	2,685		2,875	(190)	22	17	191	195
Total commercial loans	3,333		3,733	(400)	94	86	464	551
Home equity ^-- Other	795		838	(43)	17	19	18	20
Marine	2,636		2,787	(151)	38	33	16	26
RV and other consumer	201		216	(15)	4	3	1	2
Total consumer loans	3,632		3,841	(209)	59	55	35	48
Total exit loans in loan portfolio	$6,965		$7,574	$(609)	$153	$141	$499	$599

Discontinued operations -- education lending business	$6,268	(b)	$3,957	$2,311	$36	$36	$42	$13
(a) Includes the business aviation, commercial vehicle, office products, construction and industrial leases, and Canadian lease financing portfolios; and all remaining balances related to lease in, lease out; sale in, sale out; service contract leases and qualified technological equipment leases.
(b) Includes loans in Key’s education loan securitization trusts consolidated upon the adoption of new consolidation accounting guidance on January 1, 2010.

CAPITAL

Key’s risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at March 31, 2010.

Capital Ratios
	3-31-10		12-31-09		9-30-09		6-30-09		3-31-09
Tier 1 common equity ^(a)	7.53	%	7.50	%	7.64	%	7.36	%	5.62	%
Tier 1 risk-based capital ^(a)	12.96		12.75		12.61		12.57		11.22
Total risk-based capital^(a)	17.11		16.95		16.65		16.67		15.18
Tangible common equity to tangible assets	7.37		7.56		7.58		7.35		6.06

(a) March 31, 2010 ratio is estimated.

As shown in the preceding table, at March 31, 2010, Key had a Tier 1 common equity ratio of 7.53%, a Tier 1 risk-based capital ratio of 12.96%, and a tangible common equity ratio of 7.37%.

Transactions that caused the change in Key’s outstanding common shares over the past five quarters are summarized in the following table.

Summary of Changes in Common Shares Outstanding
in thousands	1Q10	4Q09	3Q09	2Q09	1Q09
Shares outstanding at beginning of period	878,535	878,559	797,246	498,573	495,002
Common shares exchanged for capital securities	^--	^--	81,278	46,338	^--
Common shares exchanged for Series A Preferred Stock	^--	^--	^--	46,602	^--
Common shares issued	^--	^--	^--	205,439	^--
Shares reissued (returned) under employee benefit plans	517	(24)	35	294	3,571
Shares outstanding at end of period	879,052	878,535	878,559	797,246	498,573

During the first quarter of 2010, Key made a $31 million cash dividend payment to the U.S. Treasury Department. During 2009, Key made four quarterly dividend payments aggregating $125 million to the U.S. Treasury Department as a participant in the U.S. Treasury’s Capital Purchase Program.

LINE OF BUSINESS RESULTS

The following table shows the contribution made by each major business group to Key’s taxable-equivalent revenue from continuing operations and income (loss) from continuing operations attributable to Key for the periods presented. The specific lines of business that comprise each of the major business groups are described under the heading “Line of Business Descriptions.” During the first quarter of 2010, Key re-aligned its reporting structure for its business groups. Previously, Consumer Finance consisted mainly of portfolios which were identified as exit or run-off portfolios and were included in Key’s National Banking segment. Effective for all periods presented, Key is reflecting the results of these exit portfolios in Other Segments. The automobile dealer floor plan business, previously included in Consumer Finance, has been re-aligned with the Commercial Banking line of business within the Community Banking segment. In addition, other previously identified exit portfolios included in the National Banking segment, including $309 million of homebuilder loans from the Real Estate Capital line of business and $2.685 billion of commercial leases from the Equipment Finance line of business, have been moved to Other Segments. For more detailed financial information pertaining to each business group and its respective lines of business, see the tables at the end of this release.

Major Business Groups

				Percent change 1Q10 vs.
dollars in millions	1Q10	4Q09	1Q09	4Q09		1Q09
Revenue from continuing operations (TE)
Community Banking	$599	$629	$612	(4.8)	%	(2.1)	%
National Banking ^(a)	376	342	423	9.9		(11.1)
Other Segments	96	128	(39)	(25.0)		N/M
Total Segments	1,071	1,099	996	(2.5)		7.5
Reconciling Items^(b)	11	7	77	57.1		(85.7)
Total	$1,082	$1,106	$1,073	(2.2)	%	.8	%

Income (loss) from continuing operations attributable to Key
Community Banking	$5	$(41)	$12	N/M		(58.3)	%
National Banking ^(a)	(33)	(211)	(394)	84.4	%	91.6
Other Segments	(46)	(58)	(162)	20.7		71.6
Total Segments	(74)	(310)	(544)	76.1		86.4
Reconciling Items^(b)	17	93	85	(81.7)		(80.0)
Total	$(57)	$(217)	$(459)	73.7	%	87.6	%


(a) National Banking’s results for the first quarter of 2009 include a noncash charge for intangible assets impairment of $196 million ($164 million after tax).
(b) Reconciling Items for the first quarter of 2009 included a $105 million ($65 million after tax) gain from the sale of Key’s remaining equity interest in Visa Inc.
TE = Taxable Equivalent, N/M = Not Meaningful

Community Banking
				Percent change 1Q10 vs.
dollars in millions	1Q10	4Q09	1Q09	4Q09		1Q09
Summary of operations
Net interest income (TE)	$412	$431	$423	(4.4)	%	(2.6)	%
Noninterest income	187	198	189	(5.6)		(1.1)
Total revenue (TE)	599	629	612	(4.8)		(2.1)
Provision for loan losses	142	230	141	(38.3)		.7
Noninterest expense	468	492	468	(4.9)		^--
Income (loss) before income taxes (TE)	(11)	(93)	3	88.2		N/M
Allocated income taxes and TE adjustments	(16)	(52)	(9)	69.2	%	(77.8)
Net income (loss) attributable to Key	$5	$(41)	$12	N/M		(58.3)	%

Average balances
Loans and leases	$27,769	$28,321	$31,275	(1.9)	%	(11.2)	%
Total assets	30,873	31,048	34,171	(.6)		(9.7)
Deposits	51,459	52,640	51,655	(2.2)		(.4)

Assets under management at period end	$18,248	$17,709	$14,205	3.0	%	28.5	%
TE = Taxable Equivalent, N/M = Not Meaningful

Additional Community Banking Data							Percent change 1Q10 vs.
dollars in millions	1Q10		4Q09		1Q09		4Q09		1Q09
Average deposits outstanding
NOW and money market deposit accounts	$18,650		$17,930		$17,376		4.0	%	7.3	%
Savings deposits	1,814		1,785		1,721		1.6		5.4
Certificates of deposit ($100,000 or more)	7,363		8,165		8,491		(9.8)		(13.3)
Other time deposits	12,559		13,708		14,723		(8.4)		(14.7)
Deposits in foreign office	502		529		714		(5.1)		(29.7)
Noninterest-bearing deposits	10,571		10,523		8,630		.5		22.5
Total deposits	$51,459		$52,640		$51,655		(2.2)	%	(.4)	%

Home equity loans
Average balance	$9,967		$10,101		$10,277
Weighted-average loan-to-value ratio (at date of origination)	70	%	70	%	70	%
Percent first lien positions	53		53		53
Other data
Branches	1,014		1,007		989
Automated teller machines	1,501		1,495		1,479

Community Banking Summary of Operations

Community Banking recorded net income attributable to Key of $5 million for the first quarter of 2010, compared to net income attributable to Key of $12 million for the year-ago quarter. Decreases in net interest income and noninterest income caused the decline.

Taxable-equivalent net interest income declined by $11 million, or 3%, from the first quarter of 2009, due to a reduction in average earning assets which declined by $4 billion or 11%, from the year-ago quarter. Average deposits declined slightly from the first quarter of 2009. The mix of deposits has changed reflecting strong growth in noninterest-bearing deposits and negotiable order of withdrawal (“NOW”) accounts, as higher-costing certificates of deposit originated in prior years mature and reprice to current market rates.

Noninterest income decreased by $2 million, or 1%, from the year-ago quarter, due to lower service charges on deposits and an increase in the reserve for credit losses from client derivatives. These factors were partially offset by higher income from trust and investment services, letter of credit fees and electronic banking fees. Assets under management have increased 29% from the same period one year ago.

The provision for loan losses increased slightly compared to the first quarter of 2009. Community Banking’s provision for loan losses for the first quarter of 2010 exceeded its net loan charge-offs by $26 million as consumer and business clients continue to experience lingering effects from the economic downturn and elevated unemployment levels.

Noninterest expense remained flat from the year-ago quarter. Lower personnel costs, marketing, office supplies and printing, and a reduction in the provision for losses on lending-related commitments were offset by increases in FDIC deposit insurance, occupancy cost, and various other expense categories.

National Banking
				Percent change 1Q10 vs.
dollars in millions	1Q10	4Q09	1Q09	4Q09		1Q09
Summary of operations
Net interest income (TE)	$197	$210	$224	(6.2)	%	(12.1)	%
Noninterest income	179	132	199	35.6		(10.1)
Total revenue (TE)	376	342	423	9.9		(11.1)
Provision for loan losses	161	382	511	(57.9)		(68.5)
Noninterest expense ^(a)	270	299	428	(9.7)		(36.9)
Income (loss) before income taxes (TE)	(55)	(339)	(516)	83.8		89.3
Allocated income taxes and TE adjustments	(22)	(128)	(121)	82.8		81.8
Net income (loss)	(33)	(211)	(395)	84.4		91.6
Less: Net income (loss) attributable to noncontrolling interests	^--	^--	(1)	^--		N/M
Net income (loss) attributable to Key	$(33)	$(211)	$(394)	84.4	%	91.6	%

Average balances
Loans and leases	$22,440	$24,011	$29,697	(6.5)	%	(24.4)	%
Loans held for sale	240	431	482	(44.3)		(50.2)
Total assets	26,269	28,253	37,208	(7.0)		(29.4)
Deposits	12,398	13,241	11,945	(6.4)		3.8

Assets under management at period end	$47,938	$49,230	$45,959	(2.6)	%	4.3	%
(a) National Banking’s results for the first quarter of 2009 include a noncash charge for intangible assets impairment of $196 million ($164 million after tax).
TE = Taxable Equivalent, N/M = Not Meaningful

National Banking Summary of Operations

National Banking recorded a net loss attributable to Key of $33 million for the first quarter of 2010, compared to a $394 million net loss attributable to Key for the same period one year ago. During the first quarter of 2009, results were adversely affected by an intangible assets impairment charge of $196 million ($164 million after tax). Also contributing to the improvement in the first quarter of 2010 was a substantial decrease in the provision for loan losses, partially offset by lower net interest income and noninterest income.

Taxable-equivalent net interest income decreased by $27 million, or 12%, from the first quarter of 2009, primarily due to lower earning assets, partially offset by improved earning asset spreads. Average earning assets decreased by $8 billion, or 24%, from the year-ago quarter, reflecting reductions in the commercial and held-for-sale portfolios.

Noninterest income declined by $20 million, or 10%, from the first quarter of 2009. Dealer trading and derivatives income decreased $26 million, primarily due to an increase in the reserve for credit losses from client derivatives of $21 million. Operating lease revenue was also $8 million lower than the first quarter of 2009.

The provision for loan losses in the first quarter of 2010 was $161 million compared to $511 million for the same period one year ago. For the second quarter in a row, National Banking experienced an improvement in nonperforming assets.

Excluding the intangible assets impairment charge in the first quarter of 2009, noninterest expense increased by $38 million, or 16%, from the first quarter of 2009, caused primarily by higher costs associated with OREO.

Other Segments

Other Segments consist of Corporate Treasury, Key’s Principal Investing unit and various exit portfolios which were previously included within the National Banking segment. These exit portfolios were moved to Other Segments during the first quarter of 2010. Prior periods have been adjusted to conform with the current reporting of the financial information for each segment. Other Segments generated a net loss attributable to Key of $46 million for the first quarter of 2010, compared to a net loss attributable to Key of $162 million for the same period last year. These results reflect net gains from principal investing attributable to Key of $21 million during the current quarter, compared to net losses of $63 million in the year-ago quarter as well as a reduction in the loan loss provision for the exit portfolios.

Line of Business Descriptions

Community Banking

Regional Banking provides individuals with branch-based deposit and investment products, personal finance services and loans, including residential mortgages, home equity and various types of installment loans. This line of business also provides small businesses with deposit, investment and credit products, and business advisory services.

Regional Banking also offers financial, estate and retirement planning, and asset management services to assist high-net-worth clients with their banking, trust, portfolio management, insurance, charitable giving and related needs.

Commercial Banking provides midsize businesses with products and services that include commercial lending, cash management, equipment leasing, investment and employee benefit programs, succession planning, access to capital markets, derivatives and foreign exchange.

National Banking

Real Estate Capital and Corporate Banking Services consists of two business units, Real Estate Capital and Corporate Banking Services.

Real Estate Capital is a national business that provides construction and interim lending, permanent debt placements and servicing, equity and investment banking, and other commercial banking products and services to developers, brokers and owner-investors. This unit deals primarily with nonowner-occupied properties (i.e., generally properties in which at least 50% of the debt service is provided by rental income from nonaffiliated third parties). Real Estate Capital emphasizes providing clients with finance solutions through access to the capital markets.

Corporate Banking Services provides cash management, interest rate derivatives, and foreign exchange products and services to clients served by both the Community Banking and National Banking groups. Through its Public Sector and Financial Institutions businesses, Corporate Banking Services also provides a full array of commercial banking products and services to government and not-for-profit entities, and to community banks. A variety of cash management services, including the processing of tuition payments for private schools, are provided through the Global Treasury Management unit.

Equipment Finance meets the equipment leasing needs of companies worldwide and provides equipment manufacturers, distributors and resellers with financing options for their clients. Lease financing receivables and related revenues are assigned to other lines of business (primarily Institutional and Capital Markets, and Commercial Banking) if those businesses are principally responsible for maintaining the relationship with the client.

Institutional and Capital Markets, through its KeyBanc Capital Markets unit, provides commercial lending, treasury management, investment banking, derivatives, foreign exchange, equity and debt underwriting and trading, and syndicated finance products and services to large corporations and middle-market companies.

Through its Victory Capital Management unit, Institutional and Capital Markets also manages or offers advice regarding investment portfolios for a national client base, including corporations, labor unions, not-for-profit organizations, governments and individuals. These portfolios may be managed in separate accounts, common funds or the Victory family of mutual funds.

Cleveland-based KeyCorp (NYSE: KEY) is one of the nation’s largest bank-based financial services companies, with assets of approximately $95 billion at March 31, 2010. Key companies provide investment management, retail and commercial banking, and investment banking products and services to individuals and companies throughout the United States and, for certain businesses, internationally. In 2009, KeyBank was awarded its seventh consecutive “Outstanding” rating for economic development achievements under the Community Reinvestment Act, the only national bank among the 50 largest in the United States to achieve this distinction from the Office of the Comptroller of the Currency. Key has also been recognized for excellence in numerous areas of the multi-channel customer banking experience, including Corporate Insight's 2009 Bank Monitor for online service. For more information about Key, visit https://www.key.com/.

Notes to Editors:

A live Internet broadcast of KeyCorp’s conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 9:00 a.m. ET, on Wednesday, April 21, 2010. An audio replay of the call will be available through April 28, 2010.

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.

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Key’s financial condition, results of operations, earnings outlook, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent only management’s current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Key’s control. Key’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause Key’s actual results to differ materially from those described in the forward-looking statements can be found in Key’s Annual Report on Form 10-K for the year ended December 31, 2009, which has been filed with the Securities and Exchange Commission and is available on Key’s website (www.key.com) and on the Securities and Exchange Commission’s website (www.sec.gov). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management's views as of any subsequent date. Key does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.


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

				Three months ended
				3-31-10		12-31-09		3-31-09
Summary of operations
	Net interest income (TE)			$ 632		$ 637		$ 595	(a)
	Noninterest income			450		469		478
			Total revenue (TE)	1,082		1,106		1,073
	Provision for loan losses			413		756		847
	Noninterest expense			785		871		927
	Loss from continuing operations attributable to Key			(57)		(217)		(459)
	Income (loss) from discontinued operations, net of taxes (b)			2		(7)		(29)
	Net loss attributable to Key			(55)		(224)		(488)	(a)

	Loss from continuing operations attributable to Key common shareholders			$ (98)		$ (258)		$ (507)
	Income (loss) from discontinued operations, net of taxes (b)			2		(7)		(29)
	Net loss attributable to Key common shareholders			(96)		(265)		(536)	(a)

Per common share
	Loss from continuing operations attributable to Key common shareholders			$ (.11)		$ (.30)		$ (1.03)
	Income (loss) from discontinued operations, net of taxes (b)			--		(.01)		(.06)
	Net loss attributable to Key common shareholders			(.11)		(.30)		(1.09)

	Loss from continuing operations attributable to Key common shareholders — assuming dilution			(.11)		(.30)		(1.03)
	Income (loss) from discontinued operations, net of taxes — assuming dilution (b)			--		(.01)		(.06)
	Net loss attributable to Key common shareholders — assuming dilution			(.11)		(.30)		(1.09)	(a)

	Cash dividends paid			.01		.01		.0625
	Book value at period end			9.01		9.04		13.82
	Tangible book value at period end			7.91		7.94		11.76
	Market price at period end			7.75		5.55		7.87

Performance ratios
	From continuing operations:
	Return on average total assets			(.26)	%	(.94)	%	(1.87)	%
	Return on average common equity			(4.95)		(12.60)		(28.26)
	Net interest margin (TE)			3.19		3.04		2.79	(a)

	From consolidated operations:
	Return on average total assets			(.23)	%	(.93)	%	(1.91)	% (a)
	Return on average common equity			(4.85)		(12.94)		(29.87)	(a)
	Net interest margin (TE)			3.13		3.00		2.77

Capital ratios at period end
	Key shareholders' equity to assets			11.17	%	11.43	%	10.19	%
	Tangible Key shareholders' equity to tangible assets			10.26		10.50		9.23
	Tangible common equity to tangible assets			7.37		7.56		6.06
	Tier 1 common equity (c)			7.53		7.50		5.62
	Tier 1 risk-based capital (c)			12.96		12.75		11.22
	Total risk-based capital (c)			17.11		16.95		15.18
	Leverage (c)			11.56		11.72		11.19

Asset quality — from continuing operations
	Net loan charge-offs			$ 522		$ 708		$ 460
	Net loan charge-offs to average loans			3.67	%	4.64	%	2.60	%
	Allowance for loan losses			$ 2,425		$ 2,534		$ 2,016
	Allowance for credit losses			2,544		2,655		2,070
	Allowance for loan losses to period-end loans			4.34	%	4.31	%	2.88	%
	Allowance for credit losses to period-end loans			4.55		4.52		2.96
	Allowance for loan losses to nonperforming loans			117.43		115.87		116.20
	Allowance for credit losses to nonperforming loans			123.20		121.40		119.31
	Nonperforming loans at period end			$ 2,065		$ 2,187		$ 1,735
	Nonperforming assets at period end			2,428		2,510		1,994
	Nonperforming loans to period-end portfolio loans			3.69	%	3.72	%	2.48%	%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets			4.31		4.25		2.84
				4.31		4.25		2.84

Trust and brokerage assets
	Assets under management			$ 66,186		$ 66,939		$ 60,164
	Nonmanaged and brokerage assets			19,201		27,190		21,786

Other data
	Average full-time equivalent employees			15,772		15,973		17,468
	Branches			1,014		1,007		989

Taxable-equivalent adjustment				$ 7		$ 7		$ 6

(a)		The following table entitled "GAAP to Non-GAAP Reconciliations" presents certain earnings data and performance ratios, excluding charges related to intangible assets impairment, and the tax treatment of certain leveraged lease financing transactions disallowed by the IRS. The table also shows the computations of certain financial measures related to "tangible common equity" and "Tier 1 common equity." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

(b)		In September 2009, management made the decision to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. In April 2009, management made the decision to curtail the operations of Austin Capital Management, Ltd., an investment subsidiary that specializes in managing hedge fund investments for its institutional customer base. As a result of these decisions, Key has accounted for these businesses as discontinued operations.

(c)		3-31-10 ratio is estimated.

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


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

The table below presents certain earnings data and performance ratios, excluding (credits) charges related to intangible assets impairment and the tax treatment of certain leveraged lease financing transactions disallowed by the IRS. Management believes that eliminating the effects of significant items that are generally nonrecurring facilitates the analysis of results by presenting them on a more comparable basis. The table also shows the computations of certain financial measures related to “tangible common equity” and “Tier 1 common equity.” The tangible common equity ratio has become a focus of some investors and management believes that this ratio may assist investors in analyzing Key’s capital position absent 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 composition of capital, the calculation of which is prescribed in federal banking regulations. As a result of the Supervisory Capital Assessment Program, the Federal Reserve has focused its assessment of capital adequacy on a component of Tier 1 capital, known as Tier 1 common equity. Because the Federal Reserve has long indicated that voting common shareholders’ equity (essentially Tier 1 capital less preferred stock, qualifying capital securities and noncontrolling interests in subsidiaries) generally should be the dominant element in Tier 1 capital, such a focus is consistent with existing capital adequacy guidelines and does not imply a new or ongoing capital standard. Because the Tier 1 common equity is neither formally defined by GAAP nor prescribed in amount by federal banking regulations, this measure is considered to be a non-GAAP financial measure. Since analysts and banking regulators may assess Key’s capital adequacy using tangible common equity and Tier 1 common equity, management believes it is useful to provide investors the ability to assess Key’s capital adequacy on these same bases. The table also reconciles the GAAP performance measures to the corresponding non-GAAP measures. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. To mitigate these limitations, Key has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components and to ensure that Key’s performance is properly reflected to facilitate period-to-period comparisons. Although these non-GAAP financial measures are frequently used by investors in the evaluation of 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
		3-31-10		12-31-09		3-31-09
Net income (loss)
	Net income (loss) attributable to Key (GAAP)	$ (55)		$ (224)		$ (488)
	Charges (credits) related to intangible assets impairment, after tax	--		--		164
	Charges (credits) related to leveraged lease tax litigation, after tax	--		(80)		--
	Net income (loss) attributable to Key, excluding charges (credits) related to intangible assets impairment and leveraged lease tax litigation (non-GAAP)	$ (55)		$ (304)		$ (324)

	Preferred dividends and amortization of discount on preferred stock	$ 41		$ 41		$ 48

	Net income (loss) attributable to Key common shareholders (GAAP)	$ (96)		$ (265)		$ (536)
	Net income (loss) attributable to Key common shareholders, excluding charges (credits) related to intangible assets impairment and leveraged lease tax litigation (non-GAAP)	(96)		(345)		(372)

Per common share
	Net income (loss) attributable to Key common shareholders — assuming dilution (GAAP)	$ (.11)		$ (.30)		$ (1.09)
	Net income (loss) attributable to Key common shareholders, excluding charges (credits) related to intangible assets impairment and leveraged lease tax litigation — assuming dilution (non-GAAP)	(.11)		(.39)		(.76)

Performance ratios from consolidated operations
	Return on average total assets: (a)
	Average total assets	$ 95,578		$ 95,975		$ 103,815
	Return on average total assets (GAAP)	(.23)	%	(.93)	%	(1.91)	%
	Return on average total assets, excluding charges (credits) related to intangible assets impairment and leveraged lease tax litigation (non-GAAP)	(.23)		(1.26)		(1.27)

	Return on average common equity: (a)
	Average common equity	$ 8,024		$ 8,125		$ 7,277
	Return on average common equity (GAAP)	(4.85)	%	(12.94)	%	(29.87)	%
	Return on average common equity, excluding charges (credits) related to intangible assets impairment and leveraged lease tax litigation (non-GAAP)	(4.85)		(16.85)		(20.73)




			Three months ended
			3-31-10		12-31-09		3-31-09
Tangible common equity to tangible assets at period end
	Key shareholders’ equity (GAAP)		$ 10,641		$ 10,663		$ 9,968
	Less:	Intangible assets	963		967		1,029	(d)
		Preferred Stock, Series B	2,434		2,430		2,418
		Preferred Stock, Series A	291		291		658
		Tangible common equity (non-GAAP)	$ 6,953		$ 6,975		$ 5,863

	Total assets (GAAP)		$ 95,303		$ 93,287		$ 97,834
	Less:	Intangible assets	963		967		1,029	(d)
		Tangible assets (non-GAAP)	$ 94,340		$ 92,320		$ 96,805

	Tangible common equity to tangible assets ratio (non-GAAP)		7.37	%	7.56	%	6.06	%

Tier 1 common equity at period end
	Key shareholders' equity (GAAP)		$ 10,641		$ 10,663		$ 9,968
	Qualifying capital securities		1,791		1,791		2,582
	Less:	Goodwill	917		917		917
		Accumulated other comprehensive income (loss) (b)	(25)		(48)		111
		Other assets (c)	765		632		184
		Total Tier 1 capital (regulatory)	10,775		10,953		11,338
	Less:	Qualifying capital securities	1,791		1,791		2,582
		Preferred Stock, Series B	2,434		2,430		2,418
		Preferred Stock, Series A	291		291		658
		Total Tier 1 common equity (non-GAAP)	$ 6,259		$ 6,441		$ 5,680

	Net risk-weighted assets (regulatory) (c), (e)		$ 83,171		$ 85,881		$ 101,077

	Tier 1 common equity ratio (non-GAAP) (e)		7.53	%	7.50	%	5.62	%

(a)	Income statement amount has been annualized in calculation of percentage.

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

(c)	Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed deferred tax assets of $651 million at March 31, 2010, and $514 million at December 31, 2009, disallowed intangible assets (excluding goodwill), and deductible portions of nonfinancial equity investments.

(d)	Includes $2 million of other intangible assets classified as “discontinued assets” on the balance sheet.

(e)	3-31-10 amount or ratio is estimated.

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


Consolidated Balance Sheets (dollars in millions)


			3-31-10	12-31-09	3-31-09
Assets
	Loans		$ 55,913	$ 58,770	$ 70,003
	Loans held for sale		556	443	671
	Securities available for sale		16,553	16,641	8,363
	Held-to-maturity securities		22	24	25
	Trading account assets		1,034	1,209	1,279
	Short-term investments		4,345	1,743	2,917
	Other investments		1,525	1,488	1,464
		Total earning assets	79,948	80,318	84,722
	Allowance for loan losses		(2,425)	(2,534)	(2,016)
	Cash and due from banks		619	471	624
	Premises and equipment		872	880	847
	Operating lease assets		652	716	889
	Goodwill		917	917	917
	Other intangible assets		46	50	110
	Corporate-owned life insurance		3,087	3,071	2,994
	Derivative assets		1,063	1,094	1,707
	Accrued income and other assets		4,150	4,096	2,615
	Discontinued assets		6,374	4,208	4,425
		Total assets	$ 95,303	$ 93,287	$ 97,834

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$ 25,068	$ 24,341	$ 23,599
		Savings deposits	1,873	1,807	1,795
		Certificates of deposit ($100,000 or more)	10,188	10,954	13,250
		Other time deposits	12,010	13,286	14,791
		Total interest-bearing deposits	49,139	50,388	53,435
		Noninterest-bearing deposits	15,364	14,415	11,641
	Deposits in foreign office — interest-bearing		646	768	801
		Total deposits	65,149	65,571	65,877
	Federal funds purchased and securities sold under repurchase agreements		1,927	1,742	1,565
	Bank notes and other short-term borrowings		446	340	2,285
	Derivative liabilities		1,103	1,012	927
	Accrued expense and other liabilities		2,089	2,007	1,891
	Long-term debt		11,177	11,558	14,978
	Discontinued liabilities		2,490	124	137
		Total liabilities	84,381	82,354	87,660

Equity
	Preferred stock, Series A		291	291	658
	Preferred stock, Series B		2,434	2,430	2,418
	Common shares		946	946	584
	Common stock warrant		87	87	87
	Capital surplus		3,724	3,734	2,464
	Retained earnings		5,098	5,158	6,160
	Treasury stock, at cost		(1,958)	(1,980)	(2,500)
	Accumulated other comprehensive income (loss)		19	(3)	97
		Key shareholders' equity	10,641	10,663	9,968
	Noncontrolling interests		281	270	206
		Total equity	10,922	10,933	10,174
Total liabilities and equity			$ 95,303	$ 93,287	$ 97,834

Common shares outstanding (000)			879,052	878,535	498,573


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

			Three months ended
			3-31-10		12-31-09		3-31-09
Interest income
	Loans		$ 710		$ 749		$ 840
	Loans held for sale		4		6		8
	Securities available for sale		150		150		100
	Held-to-maturity securities		1		--		1
	Trading account assets		11		12		13
	Short-term investments		2		3		3
	Other investments		14		13		12
		Total interest income	892		933		977

Interest expense
	Deposits		212		246		300
	Federal funds purchased and securities sold under repurchase agreements		1		1		1
	Bank notes and other short-term borrowings		3		3		6
	Long-term debt		51		53		81
		Total interest expense	267		303		388

Net interest income			625		630		589
Provision for loan losses			413		756		847
Net interest income (expense) after provision for loan losses			212		(126)		(258)

Noninterest income
	Trust and investment services income		114		117		110
	Service charges on deposit accounts		76		82		82
	Operating lease income		47		52		61
	Letter of credit and loan fees		40		52		38
	Corporate-owned life insurance income		28		36		27
	Net securities gains (losses)		3	(a)	1	(a)	(14)
	Electronic banking fees		27		27		24
	Gains on leased equipment		8		15		26
	Insurance income		18		16		18
	Net gains (losses) from loan sales		4		(5)		7
	Net gains (losses) from principal investing		37		80		(72)
	Investment banking and capital markets income (loss)		9		(47)		17
	Gain from sale/redemption of Visa Inc. shares		--		--		105
	Gain (loss) related to exchange of common shares for capital securities		--		--		--
	Other income		39		43		49
		Total noninterest income	450		469		478

Noninterest expense
	Personnel		362		400		359
	Net occupancy		66		67		66
	Operating lease expense		39		50		50
	Computer processing		47		49		47
	Professional fees		38		63		34
	FDIC assessment		37		37		30
	OREO expense, net		32		25		6
	Equipment		24		25		22
	Marketing		13		22		14
	Provision (credit) for losses on lending-related commitments		(2)		27		--
	Intangible assets impairment		--		--		196
	Other expense		129		106		103
		Total noninterest expense	785		871		927
Income (loss) from continuing operations before income taxes			(123)		(528)		(707)
	Income taxes		(82)		(347)		(238)
Income (loss) from continuing operations			(41)		(181)		(469)
	Income (loss) from discontinued operations, net of taxes		2		(7)		(29)
Net income (loss)			(39)		(188)		(498)
	Less: Net income (loss) attributable to noncontrolling interests		16		36		(10)
Net income (loss) attributable to Key			$ (55)		$ (224)		$ (488)

Income (loss) from continuing operations attributable to Key common shareholders			$ (98)		$ (258)		$ (507)
Net income (loss) attributable to Key common shareholders			(96)		(265)		(536)

Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$ (.11)		$ (.30)		$ (1.03)
Income (loss) from discontinued operations, net of taxes			--		(.01)		(.06)
Net income (loss) attributable to Key common shareholders			(.11)		(.30)		(1.09)

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$ (.11)		$ (.30)		$ (1.03)
Income (loss) from discontinued operations, net of taxes			--		(.01)		(.06)
Net income (loss) attributable to Key common shareholders			(.11)		(.30)		(1.09)

Cash dividends declared per common share			$ .01		$ .01		$ .0625

Weighted-average common shares outstanding (000)			874,386		873,268		492,813
Weighted-average common shares and potential common shares outstanding (000)			874,386		873,268		492,813

(a)	For the three months ended March 31, 2010, and December 31, 2009, Key did not have impairment losses related to securities.

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

			First Quarter 2010					Fourth Quarter 2009					First Quarter 2009
			Average					Average					Average
			Balance	Interest	(a)	Yield/Rate	(a)	Balance	Interest	(a)	Yield/Rate	(a)	Balance		Interest	(a)	Yield/Rate	(a)
Assets
	Loans: (b), (c)
	Commercial, financial and agricultural		$ 18,796	$ 222		4.78	%	$ 19,817	$ 232		4.63	%	$ 26,427		$ 278		4.26	%
	Real estate — commercial mortgage		10,430	128		4.98		10,853	132		4.84		10,965	(g)	140		5.20
	Real estate — construction		4,537	45		4.07		5,246	62		4.70		7,511	(g)	84		4.54
	Commercial lease financing		7,195	93		5.19		7,598	97		5.10		8,790		94		4.28
		Total commercial loans	40,958	488		4.82		43,514	523		4.77		53,693		596		4.50
	Real estate — residential mortgage		1,803	26		5.65		1,781	26		5.80		1,776		27		6.00
	Home equity:
		Community Banking	9,967	105		4.26		10,101	109		4.28		10,277		114		4.49
		Other	816	15		7.57		862	16		7.54		1,036		19		7.55
		Total home equity loans	10,783	120		4.51		10,963	125		4.53		11,313		133		4.77
	Consumer other — Community Banking		1,162	36		12.63		1,185	32		11.06		1,225		32		10.56
	Consumer other:
		Marine	2,713	42		6.15		2,866	44		6.16		3,331		52		6.24
		Other	209	4		7.76		224	5		7.81		274		5		7.97
		Total consumer other	2,922	46		6.27		3,090	49		6.28		3,605		57		6.37
		Total consumer loans	16,670	228		5.51		17,019	232		5.44		17,919		249		5.61
		Total loans	57,628	716		5.02		60,533	755		4.96		71,612		845		4.77
	Loans held for sale		390	4		4.43		618	6		3.35		686		8		4.89
	Securities available for sale (b), (e)		16,312	151		3.73		15,937	151		3.82		8,127		101		5.05
	Held-to-maturity securities (b)		23	1		8.20		24	--		3.34		25		1		9.84
	Trading account assets		1,186	11		3.86		1,315	12		3.72		1,348		13		3.97
	Short-term investments		2,806	2		.28		3,682	3		.23		2,450		3		.47
	Other investments (e)		1,498	14		3.32		1,465	13		3.21		1,523		12		2.80
		Total earning assets	79,843	899		4.54		83,574	940		4.47		85,771		983		4.63
	Allowance for loan losses		(2,603)					(2,525)					(1,895)
	Accrued income and other assets		11,454					10,785					15,448
	Discontinued assets — education lending business		6,884					4,141					4,491
		Total assets	$ 95,578					$ 95,975					$ 103,815

Liabilities
	NOW and money market deposit accounts		$ 24,722	$ 23		.37		$ 24,910	25		.39		$ 23,957		38		.65
	Savings deposits		1,828	--		.06		1,801	1		.06		1,744		--		.09
	Certificates of deposit ($100,000 or more) (f)		10,538	88		3.39		11,675	103		3.49		12,455		121		3.93
	Other time deposits		12,611	100		3.23		13,753	117		3.39		14,737		140		3.85
	Deposits in foreign office		693	1		.30		711	--		.31		1,259		1		.21
		Total interest-bearing deposits	50,392	212		1.71		52,850	246		1.84		54,152		300		2.24
	Federal funds purchased and securities sold under repurchase agreements		1,790	1		.32		1,657	1		.31		1,545		1		.31
	Bank notes and other short-term borrowings		490	3		2.41		418	3		3.03		4,405		6		.58
	Long-term debt (f)		7,001	51		3.16		8,092	53		2.91		10,431		81		3.39
		Total interest-bearing liabilities	59,673	267		1.83		63,017	303		1.94		70,533		388		2.25
	Noninterest-bearing deposits		14,941					14,655					11,094
	Accrued expense and other liabilities		3,064					3,097					7,139
	Discontinued liabilities — education lending business (d)		6,884					4,141					4,491
		Total liabilities	84,562					84,910					93,257

Equity
	Key shareholders' equity		10,747					10,843					10,352
	Noncontrolling interests		269					222					206
		Total equity	11,016					11,065					10,558

		Total liabilities and equity	$ 95,578					$ 95,975					$ 103,815

Interest rate spread (TE)						2.71	%				2.53	%					2.38	%

Net interest income (TE) and net interest margin (TE)				632		3.19	%		637		3.04	%			595		2.79	%
TE adjustment (b)				7					7						6
	Net interest income, GAAP basis			$ 625					$ 630						$ 589


Average balances have not been adjusted prior to the third quarter of 2009 to reflect Key’s January 1, 2008, adoption of the applicable accounting guidance related to the offsetting of certain derivative contracts on the consolidated balance sheet.
(a) Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (e) below, calculated using a matched funds transfer pricing methodology.

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

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

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

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

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

(g) In late March 2009, Key transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines pertaining to the classification of loans that have reached a completed status.

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


Noninterest Income (in millions)

	Three months ended
	3-31-10	12-31-09	3-31-09
Trust and investment services income (a)	$ 114	$ 117	$ 110
Service charges on deposit accounts	76	82	82
Operating lease income	47	52	61
Letter of credit and loan fees	40	52	38
Corporate-owned life insurance income	28	36	27
Net securities gains (losses)	3	1	(14)
Electronic banking fees	27	27	24
Gains on leased equipment	8	15	26
Insurance income	18	16	18
Net gains (losses) from loan sales	4	(5)	7
Net gains (losses) from principal investing	37	80	(72)
Investment banking and capital markets income (loss) (a)	9	(47)	17
Gain from sale/redemption of Visa Inc. shares	--	--	105
Other income:
Credit card fees	3	2	3
Miscellaneous income	36	41	46
Total other income	39	43	49
Total noninterest income	$ 450	$ 469	$ 478

(a) Additional detail provided in tables below.

Trust and Investment Services Income (in millions)

	Three months ended
	3-31-10	12-31-09	3-31-09
Brokerage commissions and fee income	$ 33	$ 31	$ 38
Personal asset management and custody fees	37	37	33
Institutional asset management and custody fees	44	49	39
Total trust and investment services income	$ 114	$ 117	$ 110

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

	Three months ended
	3-31-10	12-31-09	3-31-09
Investment banking income	$ 16	$ 29	$ 11
Income (loss) from other investments	1	(66)	(8)
Dealer trading and derivatives income (loss)	(16)	(21)	1
Foreign exchange income	8	11	13
Total investment banking and capital markets income (loss)	$ 9	$ (47)	$ 17


Noninterest Expense (dollars in millions)

	Three months ended
	3-31-10	12-31-09	3-31-09
Personnel (a)	$ 362	$ 400	$ 359
Net occupancy	66	67	66
Operating lease expense	39	50	50
Computer processing	47	49	47
Professional fees	38	63	34
FDIC assessment	37	37	30
OREO expense, net	32	25	6
Equipment	24	25	22
Marketing	13	22	14
Provision (credit) for losses on lending-related commitments	(2)	27	--
Intangible assets impairment	--	--	196
Other expense:
Postage and delivery	7	8	8
Franchise and business taxes	7	5	9
Telecommunications	6	6	7
Miscellaneous expense	109	87	79
Total other expense	129	106	103
Total noninterest expense	$ 785	$ 871	$ 927

Average full-time equivalent employees (b)	15,772	15,973	17,468

(a) Additional detail provided in table below.

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

Personnel Expense (in millions)

	Three months ended
	3-31-10	12-31-09	3-31-09
Salaries	$ 222	$ 229	$ 223
Incentive compensation	47	76	36
Employee benefits	74	75	83
Stock-based compensation	14	15	9
Severance	5	5	8
Total personnel expense	$ 362	$ 400	$ 359


Loan Composition (dollars in millions)

						Percent change 3-31-10 vs.
		3-31-10	12-31-09	3-31-09		12-31-09		3-31-09
Commercial, financial and agricultural		$ 18,015	$ 19,248	$ 25,405		(6.4)	%	(29.1)	%
Commercial real estate:
	Commercial mortgage	10,467	10,457	12,057	(a)	.1		(13.2)
	Construction	3,990	4,739	6,208	(a)	(15.8)		(35.7)
	Total commercial real estate loans	14,457	15,196	18,265		(4.9)		(20.8)
Commercial lease financing		6,964	7,460	8,553		(6.6)		(18.6)
	Total commercial loans	39,436	41,904	52,223		(5.9)		(24.5)
Real estate — residential mortgage		1,812	1,796	1,759		.9		3.0
Home equity:
	Community Banking	9,892	10,048	10,281		(1.6)		(3.8)
	Other	795	838	1,007		(5.1)		(21.1)
	Total home equity loans	10,687	10,886	11,288		(1.8)		(5.3)
Consumer other — Community Banking		1,141	1,181	1,215		(3.4)		(6.1)
Consumer other:
	Marine	2,636	2,787	3,256		(5.4)		(19.0)
	Other	201	216	262		(6.9)		(23.3)
	Total consumer other	2,837	3,003	3,518		(5.5)		(19.4)
	Total consumer loans	16,477	16,866	17,780		(2.3)		(7.3)
	Total loans (b)	$ 55,913	$ 58,770	$ 70,003		(4.9)	%	(20.1)	%

Loans Held for Sale Composition (dollars in millions)

								Percent change 3-31-10 vs.
			3-31-10		12-31-09		3-31-09	12-31-09		3-31-09
Commercial, financial and agricultural			$ 25		$ 14		$ 24	78.6	%	4.2	%
Real estate — commercial mortgage			265		171		301	55.0		(12.0)
Real estate — construction			147		92		151	59.8		(2.6)
Commercial lease financing			27		27		10	--		170.0
Real estate — residential mortgage			92		139		183	(33.8)		(49.7)
Automobile			--		--		2	--		(100.0)
	Total loans held for sale (c)		$ 556	(d)	$ 443	(d)	$ 671	25.5	%	(17.1)	%

(a )		In late March 2009, Key transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines pertaining to the classification of loans that have reached a completed status.

(b)		Excluded at March 31, 2010, December 31, 2009, and March 31, 2009, are loans in the amount of $6.0 billion, $3.5 billion and $3.7 billion, respectively, related to the discontinued operations of the education lending business.

(c)		Excluded at March 31, 2010, December 31, 2009, and March 31, 2009, are loans held for sale in the amount of $246 million, $434 million, and $453 million, respectively, related to the discontinued operations of the education lending business.

(d)		The beginning balance at December 31, 2009 of $443 million increased by new originations in the amount of $509 million, net transfers from held to maturity in the amount of $109 million and decreased by loan sales of $488 million, transfers to OREO/valuation adjustments of $11 million, and loan payments of $6 million for an ending balance of $556 million at March 31, 2010.


Summary of Loan Loss Experience from Continuing Operations (dollars in millions)

	Three months ended
	3-31-10		12-31-09		3-31-09
Average loans outstanding	$ 57,628		$ 60,533		$ 71,612

Allowance for loan losses at beginning of period	$ 2,534		$ 2,485		$ 1,629
Loans charged off:
Commercial, financial and agricultural	139		232		244

Real estate -- commercial mortgage	109		166		22
Real estate -- construction	157		187		104
Total commercial real estate loans	266		353		126
Commercial lease financing	25		45		22
Total commercial loans	430		630		392
Real estate -- residential mortgage	7		9		3
Home equity:
Community Banking	31		28		18
Other	18		20		15
Total home equity loans	49		48		33
Consumer other -- Community Banking	18		17		14
Consumer other:
Marine	48		41		39
Other	5		5		6
Total consumer other	53		46		45
Total consumer loans	127		120		95
Total loans charged off	557		750		487
Recoveries:
Commercial, financial and agricultural	13		14		12

Real estate -- commercial mortgage	3		1		1
Real estate -- construction	-		6		-
Total commercial real estate loans	3		7		1
Commercial lease financing	4		6		4
Total commercial loans	20		27		17
Real estate -- residential mortgage	-		1		-
Home equity:
Community Banking	1		1		1
Other	1		1		-
Total home equity loans	2		2		1
Consumer other -- Community Banking	2		2		1
Consumer other:
Marine	10		8		7
Other	1		2		1
Total consumer other	11		10		8
Total consumer loans	15		15		10
Total recoveries	35		42		27
Net loan charge-offs	(522)		(708)		(460)
Provision for loan losses	413		756		847
Foreign currency translation adjustment	-		1		-
Allowance for loan losses at end of period	$ 2,425		$ 2,534		$ 2,016

Liability for credit losses on lending-related commitments at beginning of period	$ 121		$ 94		$ 54
Provision (credit) for losses on lending-related commitments	(2)		27		-
Liability for credit losses on lending-related commitments at end of period (a)	$ 119		$ 121		$ 54

Total allowance for credit losses at end of period	$ 2,544		$ 2,655		$ 2,070

Net loan charge-offs to average loans	3.67	%	4.64	%	2.60	%
Allowance for loan losses to period-end loans	4.34		4.31		2.88
Allowance for credit losses to period-end loans	4.55		4.52		2.96
Allowance for loan losses to nonperforming loans	117.43		115.87		116.20
Allowance for credit losses to nonperforming loans	123.20		121.40		119.31

Discontinued operations -- education lending business:
Loans charged off	$ 37		$ 37		$ 33
Recoveries	1		1		1
Net loan charge-offs	$ (36)		$ (36)		$ (32)

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


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

	3-31-10	12-31-09	9-30-09	6-30-09	3-31-09
Commercial, financial and agricultural	$ 558	$ 586	$ 679	$ 700	$ 595

Real estate -- commercial mortgage	579	614	566	454	310
Real estate -- construction	607	641	702	716	546
Total commercial real estate loans	1,186	1,255	1,268	1,170	856
Commercial lease financing	99	113	131	122	109
Total commercial loans	1,843	1,954	2,078	1,992	1,560
Real estate -- residential mortgage	72	73	68	46	39
Home equity:
Community Banking	111	107	103	101	91
Other	18	21	21	20	19
Total home equity loans	129	128	124	121	110
Consumer other -- Community Banking	4	4	4	5	3
Consumer other:
Marine	16	26	15	19	21
Other	1	2	1	2	2
Total consumer other	17	28	16	21	23
Total consumer loans	222	233	212	193	175
Total nonperforming loans	2,065	2,187	2,290	2,185	1,735

Nonperforming loans held for sale	195	116	304	145	72

OREO	175	191	187	182	147
Allowance for OREO losses	(45)	(23)	(40)	(11)	(4)
OREO, net of allowance	130	168	147	171	143

Other nonperforming assets	38	39	58	47	44
Total nonperforming assets	$ 2,428	$ 2,510	$ 2,799	$ 2,548	$ 1,994

Accruing loans past due 90 days or more	$ 434	$ 331	$ 375	$ 552	$ 435
Accruing loans past due 30 through 89 days	639	933	1,071	1,081	1,313
Restructured loans included in nonperforming loans (a)	226	364	65	7	-
Nonperforming assets from discontinued operations -- education lending business	43	14	12	3	3
Nonperforming loans to period-end portfolio loans	3.69%	3.72%	3.68%	3.25%	2.48%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	4.31	4.25	4.46	3.77	2.84

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


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

	1Q10	4Q09	3Q09	2Q09	1Q09
Balance at beginning of period	$ 2,187	$ 2,290	$ 2,185	$ 1,735	$ 1,221
Loans placed on nonaccrual status	746	1,141	1,160	1,227	1,166
Charge-offs	(557)	(750)	(619)	(540)	(487)
Loans sold	(15)	(70)	(4)	(12)	(15)
Payments	(102)	(237)	(294)	(142)	(105)
Transfers to OREO	(20)	(98)	(91)	(45)	(32)
Transfers to nonperforming loans held for sale	(59)	(23)	(5)	(30)	--
Transfers to other nonperforming assets	(3)	(4)	(29)	--	--
Loans returned to accrual status	(112)	(62)	(13)	(8)	(13)
Balance at end of period	$ 2,065	$ 2,187	$ 2,290	$ 2,185	$ 1,735

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

	1Q10	4Q09	3Q09	2Q09	1Q09
Balance at beginning of period	$ 116	$ 304	$ 145	$ 72	$ 88
Transfers in	129	71	216	79	2
Loans sold	(38)	(228)	(45)	(1)	-
Transfers to OREO	(6)	-	-	(1)	(12)
Valuation adjustments	(6)	(15)	(10)	(4)	(6)
Loans returned to accrual status/other	-	(16)	(2)	-	-
Balance at end of period	$ 195	$ 116	$ 304	$ 145	$ 72

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

	1Q10	4Q09	3Q09	2Q09	1Q09
Balance at beginning of period	$ 168	$ 147	$ 171	$ 143	$ 107
Properties acquired -- nonperforming loans	26	98	91	46	44
Valuation adjustments	(28)	(12)	(36)	(9)	(3)
Properties sold	(36)	(65)	(79)	(9)	(5)
Balance at end of period	$ 130	$ 168	$ 147	$ 171	$ 143

(a) Properties acquired consist of those related to performing and nonperforming loans.

Line of Business Results (dollars in millions)

Community Banking
											Percent change 1Q10 vs.
	1Q10		4Q09		3Q09		2Q09		1Q09		4Q09		1Q09
Summary of operations
Total revenue (TE)	$ 599		$ 629		$ 632		$ 632		$ 612		(4.8)	%	(2.1)	%
Provision for loan losses	142		230		160		199		141		(38.3)		.7
Noninterest expense	468		492		491		496		468		(4.9)		--
Net income (loss) attributable to Key	5		(41)		(1)		(29)		12		N/M		(58.3)
Average loans and leases	27,769		28,321		29,126		30,305		31,275		(1.9)		(11.2)
Average deposits	51,459		52,640		53,068		52,786		51,655		(2.2)		(.4)
Net loan charge-offs	116		148		103		114		89		(21.6)		30.3
Net loan charge-offs to average loans	1.69	%	2.07	%	1.40	%	1.51	%	1.15	%	N/A		N/A
Nonperforming assets at period end	$ 597		$ 544		$ 559		$ 512		$ 499		9.7		19.6
Return on average allocated equity	.54	%	(4.52)	%	(.11)	%	(3.18)	%	1.37	%	N/A		N/A
Average full-time equivalent employees	8,187		8,227		8,472		8,709		8,939		(.5)		(8.4)


Supplementary information (lines of business)
Regional Banking
Total revenue (TE)	$ 490		$ 512		$ 528		$ 529		$ 509		(4.3)	%	(3.7)	%
Provision for loan losses	115		139		93		166		68		(17.3)		69.1
Noninterest expense	422		429		430		439		411		(1.6)		2.7
Net income (loss) attributable to Key	(18)		(18)		14		(37)		29		--		N/M
Average loans and leases	18,753		19,076		19,347		19,745		20,004		(1.7)		(6.3)
Average deposits	46,197		47,569		48,551		48,717		47,784		(2.9)		(3.3)
Net loan charge-offs	96		82		78		72		52		17.1		84.6
Net loan charge-offs to average loans	2.08	%	1.71	%	1.60	%	1.46	%	1.05	%	N/A		N/A
Nonperforming assets at period end	$ 327		$ 319		$ 289		$ 245		$ 205		2.5		59.5
Return on average allocated equity	(2.99)	%	(3.07)	%	2.40	%	(6.41)	%	5.22	%	N/A		N/A
Average full-time equivalent employees	7,836		7,877		8,120		8,339		8,565		(.5)		(8.5)

Commercial Banking
Total revenue (TE)	$ 109		$ 117		$ 104		$ 103		$ 103		(6.8)	%	5.8	%
Provision for loan losses	27		91		67		33		73		(70.3)		(63.0)
Noninterest expense	46		63		61		57		57		(27.0)		(19.3)
Net income (loss) attributable to Key	23		(23)		(15)		8		(17)		N/M		N/M
Average loans and leases	9,016		9,245		9,779		10,560		11,271		(2.5)		(20.0)
Average deposits	5,262		5,071		4,517		4,069		3,871		3.8		35.9
Net loan charge-offs	20		66		25		42		37		(69.7)		(45.9)
Net loan charge-offs to average loans	.90	%	2.83	%	1.01	%	1.60	%	1.33	%	N/A		N/A
Nonperforming assets at period end	$ 270		$ 225		$ 270		$ 267		$ 294		20.0		(8.2)
Return on average allocated equity	7.29	%	(7.19)	%	(4.54)	%	2.39	%	(5.28)	%	N/A		N/A
Average full-time equivalent employees	351		350		352		370		374		.3		(6.1)



National Banking
											Percent change 1Q10 vs.
	1Q10		4Q09		3Q09		2Q09		1Q09		4Q09		1Q09
Summary of operations
Total revenue (TE)	$ 376		$ 342		$ 383		$ 447		$ 423		9.9	%	(11.1)	%
Provision for loan losses	161		382		439		494		511		(57.9)		(68.5)
Noninterest expense	270		299		323		292		428		(9.7)		(36.9)
Net income (loss) attributable to Key	(33)		(211)		(234)		(210)		(394)		84.4		91.6
Average loans and leases	22,440		24,011		26,715		28,586		29,697		(6.5)		(24.4)
Average loans held for sale	240		431		368		393		482		(44.3)		(50.2)
Average deposits	12,398		13,241		13,289		13,004		11,945		(6.4)		3.8
Net loan charge-offs	251		411		357		252		239		(38.9)		5.0
Net loan charge-offs to average loans	4.54	%	6.79	%	5.30	%	3.54	%	3.26	%	N/A		N/A
Nonperforming assets at period end	$ 1,285		$ 1,326		$ 1,510		$ 1,217		$ 770		(3.1)		66.9
Return on average allocated equity	(3.89)	%	(22.66)	%	(23.90)	%	(21.41)	%	(40.22)	%	N/A		N/A
Average full-time equivalent employees	2,409		2,434		2,508		2,581		2,661		(1.0)		(9.5)


Supplementary information (lines of business)
Real Estate Capital and Corporate Banking Services
Total revenue (TE)	$ 144		$ 93		$ 136		$ 192		$ 185		54.8	%	(22.2)	%
Provision for loan losses	145		304		336		414		438		(52.3)		(66.9)
Noninterest expense	114		112		96		111		190		1.8		(40.0)
Net income (loss) attributable to Key	(72)		(202)		(183)		(207)		(320)		64.4		77.5
Average loans and leases	12,340		13,256		14,321		15,144		15,717		(6.9)		(21.5)
Average loans held for sale	115		228		201		182		206		(49.6)		(44.2)
Average deposits	9,817		10,587		10,833		10,663		10,163		(7.3)		(3.4)
Net loan charge-offs	207		381		276		212		173		(45.7)		19.7
Net loan charge-offs to average loans	6.80	%	11.40	%	7.65	%	5.61	%	4.46	%	N/A		N/A
Nonperforming assets at period end	$ 1,067		$ 1,094		$ 1,184		$ 1,023		$ 622		(2.5)		71.5
Return on average allocated equity	(14.08)	%	(35.45)	%	(30.49)	%	(34.17)	%	(56.11)	%	N/A		N/A
Average full-time equivalent employees	1,074		1,088		1,103		1,118		1,160		(1.3)		(7.4)

Equipment Finance
Total revenue (TE)	$ 61		$ 66		$ 59		$ 65		$ 66		(7.6)	%	(7.6)	%
Provision for loan losses	4		65		75		42		41		(93.8)		(90.2)
Noninterest expense	48		59		88		61		56		(18.6)		(14.3)
Net income (loss) attributable to Key	6		(36)		(65)		(24)		(19)		N/M		N/M
Average loans and leases	4,574		4,610		5,010		5,051		5,031		(.8)		(9.1)
Average loans held for sale	1		--		20		18		8		100.0		(87.5)
Average deposits	6		7		6		9		9		(14.3)		(33.3)
Net loan charge-offs	18		21		30		29		22		(14.3)		(18.2)
Net loan charge-offs to average loans	1.60	%	1.81	%	2.38	%	2.30	%	1.77	%	N/A		N/A
Nonperforming assets at period end	$ 111		$ 122		$ 118		$ 105		$ 89		(9.0)		24.7
Return on average allocated equity	6.59	%	(39.02)	%	(66.98)	%	(26.09)	%	(16.94)	%	N/A		N/A
Average full-time equivalent employees	605		626		661		679		688		(3.4)		(12.1)

Institutional and Capital Markets
Total revenue (TE)	$ 171		$ 183		$ 188		$ 190		$ 172		(6.6)	%	(.6)	%
Provision for loan losses	12		13		28		38		32		(7.7)		(62.5)
Noninterest expense	108		128		139		120		182		(15.6)		(40.7)
Net income (loss) attributable to Key	33		27		14		21		(55)		22.2		N/M
Average loans and leases	5,526		6,145		7,384		8,391		8,949		(10.1)		(38.3)
Average loans held for sale	124		203		147		193		268		(38.9)		(53.7)
Average deposits	2,575		2,647		2,450		2,332		1,773		(2.7)		45.2
Net loan charge-offs	26		9		51		11		44		188.9		(40.9)
Net loan charge-offs to average loans	1.91	%	.58	%	2.74	%	.53	%	1.99	%	N/A		N/A
Nonperforming assets at period end	$ 107		$ 110		$ 208		$ 89		$ 59		(2.7)		81.4
Return on average allocated equity	13.38	%	10.03	%	4.97	%	7.41	%	(18.51)	%	N/A		N/A
Average full-time equivalent employees	730		720		744		784		813		1.4		(10.2)

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