KeyCorp Reports Fourth Quarter 2015 Net Income Of $224 Million, Or $.27 Per Common Share And Full-Year Net Income Of $892 Million, Or $1.05 Per Common Share

Positive operating leverage for 2015, with pre-provision net revenue up 5%

Revenue growth for the quarter and full year

Full-year average loans up 5% from 2014, driven by a 12% increase in commercial, financial and agricultural loans

Credit quality remains strong, with net charge-offs to average loans of .25%

Announced acquisition of First Niagara Financial Group earlier in the quarter

Merger-related costs and pension settlement charge total $10 million, or $.01 per common share, for the quarter

News provided by

KeyCorp

Jan 21, 2016, 06:30 ET

CLEVELAND, Jan. 21, 2016 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced fourth quarter net income from continuing operations attributable to Key common shareholders of $224 million, or $.27 per common share, compared to $216 million, or $.26 per common share, for the third quarter of 2015, and $246 million, or $.28 per common share, for the fourth quarter of 2014. During the fourth quarter of 2015, Key incurred merger-related costs and a pension settlement charge totaling $10 million, or $.01 per common share. Key incurred pension settlement charges of $19 million, or $.01 per common share, during the third quarter of 2015, and $3 million during the fourth quarter of 2014.

For the year ended December 31, 2015, net income from continuing operations attributable to Key common shareholders was $892 million, or $1.05 per common share, compared to $917 million, or $1.04 per common share, for the same period one year ago.

"We were pleased with our fourth quarter and full-year results," said Chairman and Chief Executive Officer Beth Mooney. "Our fourth quarter results reflect continued revenue growth, well-managed expenses, and strong credit quality."

"Full-year results reflect positive operating leverage, driven by a 3% increase in revenue, benefiting from continued loan growth and ongoing momentum in our fee-based businesses. Investment banking and debt placement fees had another record year, and our cards and payments income was up 10%. Expenses reflect the ongoing investments we have made in our businesses to drive revenue growth, including the addition of client-facing personnel across our franchise," continued Mooney. "Capital ratios also remain strong, and reflect $460 million of common share repurchases and a 16% increase in our common share dividend for the year."

"Additionally, we continue to make good progress on our announced acquisition of First Niagara Financial Group. Integration teams, including some of the top talent at both Key and First Niagara, are focused on the approval process and ensuring a smooth transition and sustained momentum," added Mooney.

FOURTH QUARTER 2015 FINANCIAL RESULTS, from continuing operations

Compared to Fourth Quarter of 2014

Average loans up 5%, driven by 14% growth in commercial, financial and agricultural loans
Average deposits, excluding deposits in foreign office, up 3%, due to strength in the commercial mortgage servicing business and inflows from commercial and consumer clients
Net interest income (taxable-equivalent) up $22 million, attributable to higher earning asset balances partially offset by lower earning asset yields
Noninterest income down $5 million, due to lower net gains from principal investing and trust and investment services income, partially offset by increases in cards and payments income, mortgage servicing fees, and other income
Noninterest expense up $32 million, primarily attributable to an increase in personnel expense related to investments made across the business and higher employee benefits expense, along with merger-related costs
Credit quality remained strong, with net loan charge-offs to average loans of .25%

Compared to Third Quarter of 2015

Average loans up .5%, driven by a 2% increase in commercial, financial and agricultural loans
Average deposits, excluding deposits in foreign office, up 2%, due to seasonal and short-term deposit inflows from commercial clients, along with growth in NOW and money market deposit accounts and certificates of deposit
Net interest income (taxable-equivalent) up $12 million, driven by higher earning asset yields and loan fees
Noninterest income up $15 million, primarily due to higher investment banking and debt placement fees
Noninterest expense up $12 million, primarily driven by higher incentive and stock-based compensation, merger-related costs, and increased costs associated with Key's continuous improvement and efficiency efforts, partially offset by lower employee benefits expense
Strong credit quality, with net loan charge-offs to average loans remaining below our targeted range of 40-60 basis points

Selected Financial Highlights

dollars in millions, except per share data											Change 4Q15 vs.
			4Q15			3Q15			4Q14		3Q15		4Q14
Income (loss) from continuing operations attributable to Key common shareholders		$	224		$	216		$	246		3.7	%	(8.9)	%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution			.27			.26			.28		3.8		(3.6)
Return on average total assets from continuing operations			.97	%		.95	%		1.12	%	N/A		N/A
Common Equity Tier 1^{(a), (b)}			10.95			10.47			N/A		N/A		N/A
Tier 1 common equity^(a)			N/A			N/A			11.17	%	N/A		N/A
Book value at period end		$	12.51		$	12.47		$	11.91		.3	%	5.0	%
Net interest margin (TE) from continuing operations			2.87	%		2.87	%		2.94	%	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 "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) and "Tier 1 common equity" (prior to January 1, 2015). 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.

(b)	12-31-15 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions											Change 4Q15 vs.
			4Q15			3Q15			4Q14		3Q15		4Q14
Net interest income (TE)		$	610		$	598		$	588		2.0	%	3.7	%
Noninterest income			485			470			490		3.2		(1.0)
	Total revenue	$	1,095		$	1,068		$	1,078		2.5	%	1.6	%


TE = Taxable Equivalent

Taxable-equivalent net interest income was $610 million for the fourth quarter of 2015, and the net interest margin was 2.87%. These results compare to taxable-equivalent net interest income of $588 million and a net interest margin of 2.94% for the fourth quarter of 2014. The $22 million increase in net interest income reflects higher earning asset balances, partially offset by lower earning asset yields, which also drove the decline in the net interest margin.

Compared to the third quarter of 2015, taxable-equivalent net interest income increased by $12 million, and the net interest margin was unchanged. The increase in net interest income was primarily attributable to higher earning asset yields and loan fees. The net interest margin was stable as the impact of higher earning asset yields and loan fees was offset by higher levels of excess liquidity driven by short-term commercial deposit growth.

Noninterest Income

dollars in millions								Change 4Q15 vs.
			4Q15		3Q15		4Q14	3Q15		4Q14
Trust and investment services income		$	105	$	108	$	112	(2.8)	%	(6.3)	%
Investment banking and debt placement fees			127		109		126	16.5		.8
Service charges on deposit accounts			64		68		64	(5.9)		—
Operating lease income and other leasing gains			15		15		15	—		—
Corporate services income			55		57		53	(3.5)		3.8
Cards and payments income			47		47		43	—		9.3
Corporate-owned life insurance income			36		30		38	20.0		(5.3)
Consumer mortgage income			2		3		3	(33.3)		(33.3)
Mortgage servicing fees			15		11		11	36.4		36.4
Net gains (losses) from principal investing			—		11		18	N/M		N/M
Other income			19		11		7	72.7		171.4
	Total noninterest income	$	485	$	470	$	490	3.2	%	(1.0)	%


N/M = Not Meaningful

Key's noninterest income was $485 million for the fourth quarter of 2015, compared to $490 million for the year-ago quarter. The slight decrease from the prior year was predominantly attributable to a decline in net gains from principal investing of $18 million and $7 million of lower trust and investment services income reflecting market variability. These decreases were partially offset by a $12 million increase in other income and growth in some of Key's other core fee-based businesses, including $4 million of higher cards and payments income due to higher credit card and merchant fees and a $4 million increase in mortgage servicing fees.

Compared to the third quarter of 2015, noninterest income increased by $15 million. The primary driver was $18 million in higher investment banking and debt placement fees, marking a strong finish to a record year. Additionally, there was an $8 million increase in other income and a $6 million increase in corporate-owned life insurance, reflecting normal seasonality. Partially offsetting these increases were a decrease of $11 million in net gains from principal investing and a decline of $4 million in service charges on deposit accounts.

Noninterest Expense

dollars in millions								Change 4Q15 vs.
			4Q15		3Q15		4Q14	3Q15		4Q14
Personnel expense		$	429	$	426	$	409	.7	%	4.9	%
Nonpersonnel expense			307		298		295	3.0		4.1
	Total noninterest expense	$	736	$	724	$	704	1.7	%	4.5	%

Key's noninterest expense was $736 million for the fourth quarter of 2015. During the quarter, Key incurred merger-related costs of $6 million, a pension settlement charge of $4 million, and costs associated with continuous improvement and efficiency efforts of $10 million. These costs impacted both personnel and nonpersonnel expense.

Compared to $704 million for the fourth quarter of last year, the increase in noninterest expense was primarily attributable to a $20 million increase in personnel expense related to investments made across the business, along with an increase in employee benefits expense. Nonpersonnel expense increased $12 million, most notably from higher business services and professional fees, partially due to merger-related costs.

Compared to the third quarter of 2015, noninterest expense increased by $12 million. This increase was primarily attributable to higher incentive and stock-based compensation expense as a result of a strong capital markets performance, partially offset by a decrease in employee benefits expense due to a lower pension settlement charge. Additionally, $6 million in merger-related costs contributed to the increase, largely attributable to higher business services and professional fees. Costs associated with Key's continuous improvement and efficiency efforts also increased $6 million.

BALANCE SHEET HIGHLIGHTS

In the fourth quarter of 2015, Key had average assets of $96.1 billion compared to $91.1 billion in the fourth quarter of 2014 and $94.8 billion in the third quarter of 2015. Compared to the third quarter of 2015, Key experienced more short-term commercial deposit inflows, which contributed to higher levels of liquidity and drove the increase in average earning assets in the fourth quarter of 2015.

Average Loans

dollars in millions								Change 12-31-15 vs.
		12-31-15		9-30-15		12-31-14		9-30-15			12-31-14
Commercial, financial and agricultural^(a)		$	30,884	$	30,374	$	27,188		1.7	%		13.6	%
Other commercial loans			12,996		13,098		13,357		(.8)			(2.7)
Total home equity loans			10,418		10,510		10,639		(.9)			(2.1)
Other consumer loans			5,278		5,299		5,357		(.4)			(1.5)
	Total loans	$	59,576	$	59,281	$	56,541		.5	%		5.4	%


(a)	Commercial, financial and agricultural average loan balances include $87 million, $88 million, and $90 million of assets from commercial credit cards at December 31, 2015, September 30, 2015, and December 31, 2014, respectively.

Average loans were $59.6 billion for the fourth quarter of 2015, an increase of $3 billion compared to the fourth quarter of 2014. The loan growth occurred in the commercial, financial and agricultural portfolio, which increased $3.7 billion and was broad-based across Key's commercial lines of business. Consumer loans declined $300 million as a result of the run-off in Key's consumer exit portfolios.

Compared to the third quarter of 2015, average loans increased by $295 million, driven by commercial, financial and agricultural loans, which grew $510 million.

Average Deposits

dollars in millions											Change 12-31-15 vs.
		12-31-15			9-30-15			12-31-14			9-30-15			12-31-14
Non-time deposits^(a)		$	66,270		$	64,928		$	63,541			2.1	%		4.3	%
Certificates of deposit ($100,000 or more)			2,150			1,985			2,277			8.3			(5.6)
Other time deposits			3,047			3,064			3,306			(.6)			(7.8)
	Total deposits	$	71,467		$	69,977		$	69,124			2.1	%		3.4	%

Cost of total deposits^(a)			.15	%		.15	%		.15	%		N/A			N/A


(a)	Excludes deposits in foreign office.

N/A = Not Applicable

Average deposits, excluding deposits in foreign office, totaled $71.5 billion for the fourth quarter of 2015, an increase of $2.3 billion compared to the year-ago quarter. NOW and money market deposit accounts increased by $2.8 billion, reflecting growth in the commercial mortgage servicing business and inflows from commercial and consumer clients. This increase was partially offset by declines in certificates of deposit and other time deposits.

Compared to the third quarter of 2015, average deposits, excluding deposits in foreign office, increased by $1.5 billion. This increase was driven by both seasonal and short-term deposit inflows from commercial clients, along with growth in NOW and money market deposit accounts and certificates of deposit.

ASSET QUALITY

dollars in millions										Change 4Q15 vs.
		4Q15			3Q15			4Q14		3Q15		4Q14
Net loan charge-offs	$	37		$	41		$	32		(9.8)	%	15.6	%
Net loan charge-offs to average total loans		.25	%		.27	%		.22	%	N/A		N/A
Nonperforming loans at period end^(a)	$	387		$	400		$	418		(3.3)	%	(7.4)	%
Nonperforming assets at period end		403			417			436		(3.4)		(7.6)
Allowance for loan and lease losses		796			790			794		.8		.3
Allowance for loan and lease losses to nonperforming loans		205.7	%		197.5	%		190.0	%	N/A		N/A
Provision for credit losses	$	45		$	45		$	22		—		104.5	%

(a)

Loan balances exclude $11 million, $12 million, and $13 million of purchased credit impaired loans at December 31, 2015, September 30, 2015, and December 31, 2014, respectively.

N/A = Not Applicable

Key's provision for credit losses was $45 million for the fourth quarter of 2015, compared to $22 million for the fourth quarter of 2014 and $45 million for the third quarter of 2015. Key's allowance for loan and lease losses was $796 million, or 1.33% of total period-end loans, at December 31, 2015, compared to 1.38% at December 31, 2014, and 1.31% at September 30, 2015.

Net loan charge-offs for the fourth quarter of 2015 totaled $37 million, or .25% of average total loans. These results compare to $32 million, or .22%, for the fourth quarter of 2014, and $41 million, or .27%, for the third quarter of 2015.

At December 31, 2015, Key's nonperforming loans totaled $387 million and represented .65% of period-end portfolio loans, compared to .73% at December 31, 2014, and .67% at September 30, 2015. Nonperforming assets at December 31, 2015 totaled $403 million and represented .67% of period-end portfolio loans and OREO and other nonperforming assets, compared to .76% at December 31, 2014, and .69% at September 30, 2015.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at December 31, 2015.

Capital Ratios

	12-31-15		9-30-15		12-31-14
Common Equity Tier 1^{(a), (b)}	10.95	%	10.47	%	N/A
Tier 1 common equity^(b)	N/A		N/A		11.17	%
Tier 1 risk-based capital^(a)	11.36	%	10.87	%	11.90
Total risk based capital^(a)	12.98		12.47		13.89
Tangible common equity to tangible assets^(b)	9.98		9.90		9.88
Leverage^(a)	10.71		10.68		11.26


(a)	12-31-15 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 "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) and "Tier 1 common equity" (prior to January 1, 2015). 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.

As shown in the preceding table, at December 31, 2015, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 10.95% and 11.36%, respectively. In addition, the tangible common equity ratio was 9.98% at December 31, 2015.

In October 2013, federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the "Regulatory Capital Rules"). The mandatory compliance date for Key as a "standardized approach" banking organization began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Key's estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 10.85% at December 31, 2015. 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 4Q15 vs.
		4Q15	3Q15	4Q14	3Q15		4Q14
Shares outstanding at beginning of period		835,285	843,608	868,477	(1.0)	%	(3.8)	%
Common shares repurchased		—	(8,386)	(9,786)	N/M		N/M
Shares reissued (returned) under employee benefit plans		466	63	712	639.7		(34.6)
	Shares outstanding at end of period	835,751	835,285	859,403	.1	%	(2.8)	%


N/M = Not Meaningful

During 2015, Key repurchased $460 million of common shares and increased its quarterly common share dividend by 15% in the second quarter.

As previously reported, Key's existing share repurchase program is suspended through the second quarter of 2016. Share repurchases are expected to be included in the upcoming 2016 Comprehensive Capital Analysis and Review submission.

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.

As previously reported, in the third quarter of 2015, Key enhanced the approach used to determine the commercial reserve factors used in estimating the quantitative component of the commercial allowance for loan and lease losses. In addition, Key began utilizing an enhanced framework to quantify commercial allowance for loan and lease loss adjustments resulting from qualitative factors not fully captured within the statistical analysis of incurred loss. These methodology enhancements did not create a significant difference in provisioning between segments.

Major Business Segments

dollars in millions								Change 4Q15 vs.
			4Q15		3Q15		4Q14	3Q15		4Q14
Revenue from continuing operations (TE)
Key Community Bank		$	588	$	579	$	558	1.6	%	5.4	%
Key Corporate Bank			479		454		460	5.5		4.1
Other Segments			32		35		62	(8.6)		(48.4)
	Total segments		1,099		1,068		1,080	2.9		1.8
Reconciling Items			(4)		—		(2)	N/M		N/M
	Total	$	1,095	$	1,068	$	1,078	2.5	%	1.6	%

Income (loss) from continuing operations attributable to Key
Key Community Bank		$	68	$	71	$	62	(4.2)	%	9.7	%
Key Corporate Bank			145		138		149	5.1		(2.7)
Other Segments			23		26		38	(11.5)		(39.5)
	Total segments		236		235		249	.4		(5.2)
Reconciling Items			(6)		(13)		2	N/M		N/M
	Total	$	230	$	222	$	251	3.6	%	(8.4)	%


TE = Taxable Equivalent, N/M = Not Meaningful

Key Community Bank


dollars in millions								Change 4Q15 vs.
			4Q15		3Q15		4Q14	3Q15		4Q14
Summary of operations
Net interest income (TE)		$	388	$	379	$	362	2.4	%	7.2	%
Noninterest income			200		200		196	—		2.0
	Total revenue (TE)		588		579		558	1.6		5.4
Provision for credit losses			20		18		11	11.1		81.8
Noninterest expense			459		448		449	2.5		2.2
	Income (loss) before income taxes (TE)		109		113		98	(3.5)		11.2
Allocated income taxes (benefit) and TE adjustments			41		42		36	(2.4)		13.9
	Net income (loss) attributable to Key	$	68	$	71	$	62	(4.2)	%	9.7	%

Average balances
Loans and leases		$	30,925	$	31,039	$	30,478	(.4)	%	1.5	%
Total assets			32,997		33,090		32,558	(.3)		1.3
Deposits			52,219		51,234		50,851	1.9		2.7

Assets under management at period end		$	33,983	$	35,158	$	39,157	(3.3)	%	(13.2)	%


TE = Taxable Equivalent

Additional Key Community Bank Data

dollars in millions											Change 4Q15 vs.
			4Q15			3Q15			4Q14		3Q15		4Q14
Noninterest income
Trust and investment services income		$	73		$	73		$	75		—		(2.7)	%
Service charges on deposit accounts			54			56			54		(3.6)	%	—
Cards and payments income			44			43			40		2.3		10.0
Other noninterest income			29			28			27		3.6		7.4
	Total noninterest income	$	200		$	200		$	196		—		2.0	%

Average deposit balances
NOW and money market deposit accounts		$	28,861		$	28,568		$	27,691		1.0	%	4.2	%
Savings deposits			2,330			2,362			2,378		(1.4)		(2.0)
Certificates of deposit ($100,000 or more)			1,687			1,560			1,793		8.1		(5.9)
Other time deposits			3,045			3,060			3,301		(.5)		(7.8)
Deposits in foreign office			208			271			332		(23.2)		(37.3)
Noninterest-bearing deposits			16,088			15,413			15,356		4.4		4.8
	Total deposits	$	52,219		$	51,234		$	50,851		1.9	%	2.7	%

Home equity loans
Average balance		$	10,203		$	10,281		$	10,365
Weighted-average loan-to-value ratio (at date of origination)			71	%		71	%		71	%
Percent first lien positions			61			60			60

Other data
Branches			966			972			994
Automated teller machines			1,256			1,259			1,287

Key Community Bank Summary of Operations

Positive operating leverage from prior year
Net income increased to $68 million, up 9.7% from prior year
Commercial, financial and agricultural loan growth of $672 million, or 5.6% from prior year
Average deposits up $1.4 billion, or 2.7% from the prior year

Key Community Bank recorded net income attributable to Key of $68 million for the fourth quarter of 2015, compared to net income attributable to Key of $62 million for the year-ago quarter.

Taxable-equivalent net interest income increased by $26 million, or 7.2%, from the fourth quarter of 2014 due to increases in average loans and leases of 1.5% and average deposits of 2.7% from one year ago. Commercial, financial and agricultural loans grew by $672 million, or 5.6%, from the prior year.

Noninterest income increased $4 million, or 2.0%, from the year-ago quarter. This growth was driven by increases in cards and payments income of $4 million and strong investment banking and debt placement fees, which increased $4 million from one year ago. These increases were partially offset by lower trust and investment services income due to weaker market trends.

The provision for credit losses increased by $9 million, or 82%, from the fourth quarter of 2014. Net loan charge-offs decreased $5 million from the same period one year ago.

Noninterest expense increased by $10 million, or 2.2%, from the year-ago quarter. Personnel expense increased by $8 million, driven by hiring across the franchise as well as higher performance-based compensation, while nonpersonnel expense increased by $2 million.

Key Corporate Bank


dollars in millions								Change 4Q15 vs.
			4Q15		3Q15		4Q14	3Q15		4Q14
Summary of operations
Net interest income (TE)		$	224	$	220	$	219	1.8	%	2.3	%
Noninterest income			255		234		241	9.0		5.8
	Total revenue (TE)		479		454		460	5.5		4.1
Provision for credit losses			26		30		7	(13.3)		271.4
Noninterest expense			254		246		244	3.3		4.1
	Income (loss) before income taxes (TE)		199		178		209	11.8		(4.8)
Allocated income taxes and TE adjustments			52		42		60	23.8		(13.3)
	Net income (loss)		147		136		149	8.1		(1.3)
Less: Net income (loss) attributable to noncontrolling interests			2		(2)		—	N/M		N/M
	Net income (loss) attributable to Key	$	145	$	138	$	149	5.1	%	(2.7)	%

Average balances
Loans and leases		$	26,981	$	26,425	$	23,798	2.1	%	13.4	%
Loans held for sale			820		918		855	(10.7)		(4.1)
Total assets			32,718		32,163		28,997	1.7		12.8
Deposits			19,081		18,809		18,355	1.4		4.0


TE = Taxable Equivalent, N/M = Not Meaningful

Additional Key Corporate Bank Data

dollars in millions								Change 4Q15 vs.
			4Q15		3Q15		4Q14	3Q15		4Q14
Noninterest income
Trust and investment services income		$	32	$	35	$	37	(8.6)	%	(13.5)	%
Investment banking and debt placement fees			125		107		125	16.8		—
Operating lease income and other leasing gains			13		16		17	(18.8)		(23.5)

Corporate services income			44		46		43	(4.3)		2.3
Service charges on deposit accounts			10		11		10	(9.1)		—
Cards and payments income			3		4		3	(25.0)		—
	Payments and services income		57		61		56	(6.6)		1.8

Mortgage servicing fees			15		11		11	36.4		36.4
Other noninterest income			13		4		(5)	225.0		N/M
	Total noninterest income	$	255	$	234	$	241	9.0	%	5.8	%


N/M = Not Meaningful

Key Corporate Bank Summary of Operations

Record year for investment banking and debt placement fees
Revenue up 4.1% from the prior year
Average loan and lease balances up 13.4% from the prior year

Key Corporate Bank recorded net income attributable to Key of $145 million for the fourth quarter of 2015, a decrease of $4 million, or 2.7%, from the same period one year ago.

Taxable-equivalent net interest income increased by $5 million, or 2.3%, compared to the fourth quarter of 2014. Average earning assets increased $3.1 billion, or 12.1%, from the year-ago quarter, primarily driven by growth in commercial, financial and agricultural loans. Average deposit balances increased $726 million, or 4.0%, from the year-ago quarter, driven by commercial mortgage servicing deposits.

Noninterest income was up $14 million, or 5.8% from the prior year. Other noninterest income increased $18 million mostly driven by gains related to the disposition of certain investments held by the Real Estate Capital line of business. Mortgage servicing fees increased $4 million, or 36.4%, due to higher transaction volumes. Partially offsetting these increases were declines in trust and investment services income of $5 million and operating lease income and other leasing gains of $4 million.

The provision for credit losses increased $19 million, or 271.4%, from the same period one year ago, primarily due to higher net loan charge-offs, as well as a 13.4% increase in average loan and lease balances.

Noninterest expense increased by $10 million, or 4.1%, from the fourth quarter of 2014. This increase was primarily driven by higher personnel expense due to new hires across the platform and an increase in business services and professional fees.

Other Segments

Other Segments consist of Corporate Treasury, Key's Principal Investing unit and various exit portfolios. Other Segments generated net income attributable to Key of $23 million for the fourth quarter of 2015, compared to $38 million for the same period last year. This decline was primarily attributable to lower net gains from principal investing.

*****

KeyCorp was organized more than 160 years ago and is headquartered in Cleveland, Ohio. One of the nation's largest bank-based financial services companies, Key had assets of approximately $95.1 billion at December 31, 2015.

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

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, 2014, as well as in KeyCorp's subsequent SEC filings, all of which have been filed with the Securities and Exchange Commission (the "SEC") and are available on Key's website (www.key.com/ir) and on the SEC's website (www.sec.gov). These factors may include, among others: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive and increasing regulation of the U.S. financial services industry. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

Notes to Editors:
A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 10:00 a.m. ET, on Thursday, January 21, 2016. An audio replay of the call will be available through January 28, 2016.

*****

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

			Three months ended
			12-31-15			9-30-15			12-31-14
Summary of operations
	Net interest income (TE)		$	610		$	598		$	588
	Noninterest income			485			470			490
		Total revenue (TE)		1,095			1,068			1,078
	Provision for credit losses			45			45			22
	Noninterest expense			736			724			704
	Income (loss) from continuing operations attributable to Key			230			222			251
	Income (loss) from discontinued operations, net of taxes^(a)			(4)			(3)			2
	Net income (loss) attributable to Key			226			219			253

	Income (loss) from continuing operations attributable to Key common shareholders		$	224		$	216		$	246
	Income (loss) from discontinued operations, net of taxes^(a)			(4)			(3)			2
	Net income (loss) attributable to Key common shareholders			220			213			248

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.27		$	.26		$	.29
	Income (loss) from discontinued operations, net of taxes ^(a)			(.01)			—			—
	Net income (loss) attributable to Key common shareholders ^(b)			.27			.26			.29

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution			.27			.26			.28
	Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)			(.01)			—			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)			.26			.25			.28

	Cash dividends paid			.075			.075			.065
	Book value at period end			12.51			12.47			11.91
	Tangible book value at period end			11.22			11.17			10.65
	Market price at period end			13.19			13.01			13.90

Performance ratios
	From continuing operations:
	Return on average total assets			.97	%		.95	%		1.12	%
	Return on average common equity			8.51			8.30			9.50
	Return on average tangible common equity ^(c)			9.50			9.27			10.64
	Net interest margin (TE)			2.87			2.87			2.94
	Cash efficiency ratio ^(c)			66.4			66.9			64.4

	From consolidated operations:
	Return on average total assets			.93	%		.92	%		1.10	%
	Return on average common equity			8.36			8.19			9.58
	Return on average tangible common equity ^(c)			9.33			9.14			10.72
	Net interest margin (TE)			2.84			2.84			2.93
	Loan to deposit ^(d)			87.8			89.3			84.6

Capital ratios at period end
	Key shareholders' equity to assets			11.30	%		11.22	%		11.22	%
	Key common shareholders' equity to assets			10.99			10.91			10.91
	Tangible common equity to tangible assets ^(c)			9.98			9.90			9.88
	Common Equity Tier 1 ^{(c), (e)}			10.95			10.47			N/A
	Tier 1 common equity ^(c)			N/A			N/A			11.17
	Tier 1 risk-based capital ^(e)			11.36			10.87			11.90
	Total risk-based capital ^(e)			12.98			12.47			13.89
	Leverage ^(e)			10.71			10.68			11.26

Asset quality — from continuing operations
	Net loan charge-offs		$	37		$	41		$	32
	Net loan charge-offs to average loans			.25	%		.27	%		.22	%
	Allowance for loan and lease losses		$	796		$	790		$	794
	Allowance for credit losses			852			844			829
	Allowance for loan and lease losses to period-end loans			1.33	%		1.31	%		1.38	%
	Allowance for credit losses to period-end loans			1.42			1.40			1.44
	Allowance for loan and lease losses to nonperforming loans			205.7			197.5			190.0
	Allowance for credit losses to nonperforming loans			220.2			211.0			198.3
	Nonperforming loans at period end ^(f)		$	387		$	400		$	418
	Nonperforming assets at period end			403			417			436
	Nonperforming loans to period-end portfolio loans			.65	%		.67	%		.73	%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets			.67			.69			.76

Trust and brokerage assets
	Assets under management		$	33,983		$	35,158		$	39,157
	Nonmanaged and brokerage assets			47,681			46,796			49,147

Other data
	Average full-time equivalent employees			13,359			13,555			13,590
	Branches			966			972			994

Taxable-equivalent adjustment			$	8		$	7		$	6

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

			Twelve months ended
			12-31-15			12-31-14
Summary of operations
	Net interest income (TE)		$	2,376		$	2,317
	Noninterest income			1,880			1,797
		Total revenue (TE)		4,256			4,114
	Provision for credit losses			166			57
	Noninterest expense			2,840			2,761
	Income (loss) from continuing operations attributable to Key			915			939
	Income (loss) from discontinued operations, net of taxes ^(a)			1			(39)
	Net income (loss) attributable to Key			916			900

	Income (loss) from continuing operations attributable to Key common shareholders		$	892		$	917
	Income (loss) from discontinued operations, net of taxes ^(a)			1			(39)
	Net income (loss) attributable to Key common shareholders			893			878

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	1.06		$	1.05
	Income (loss) from discontinued operations, net of taxes ^(a)			—			(.04)
	Net income (loss) attributable to Key common shareholders ^(b)			1.06			1.01

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution			1.05			1.04
	Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)			—			(.04)
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)			1.05			.99

	Cash dividends paid			.29			.25

Performance ratios
	From continuing operations:
	Return on average total assets			.99	%		1.08	%
	Return on average common equity			8.63			9.01
	Return on average tangible common equity ^(c)			9.64			10.04
	Net interest margin (TE)			2.88			2.97
	Cash efficiency ratio ^(c)			65.9			66.2

	From consolidated operations:
	Return on average total assets			.97	%		.99	%
	Return on average common equity			8.64			8.63
	Return on average tangible common equity ^(c)			9.65			9.61
	Net interest margin (TE)			2.85			2.94

Asset quality — from continuing operations
	Net loan charge-offs		$	142		$	113
	Net loan charge-offs to average total loans			.24	%		.20	%

Other data
	Average full-time equivalent employees			13,483			13,853

Taxable-equivalent adjustment			$	28		$	24


(a)	In April 2009, management decided to wind down the operations of Austin Capital Management, Ltd., a subsidiary that specialized in managing hedge fund investments for institutional customers. In September 2009, management decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. In February 2013, Key decided to sell its investment subsidiary, Victory Capital Management, and its broker-dealer affiliate, Victory Capital Advisors, to a private equity fund. As a result of these decisions, Key has accounted for these businesses as discontinued operations.

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

(c)	The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity," "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) "Tier 1 common equity" (prior to January 1, 2015), and "cash efficiency." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the "Capital" section of this release.

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

(e)	12-31-15 ratio is estimated.

(f)	Loan balances exclude $11 million, $12 million, and $13 million of purchased credit impaired loans at December 31, 2015, September 30, 2015, and December 31, 2014, respectively.

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

GAAP to Non-GAAP Reconciliations

(dollars in millions)

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

The tangible common equity ratio and the return on tangible common equity ratio have been a focus for some investors, and management believes these ratios may assist investors in analyzing Key's capital position without regard to the effects of intangible assets and preferred stock. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. 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 introduces a new capital measure, "Common Equity Tier 1," a non-GAAP financial measure. The mandatory compliance date for Key as a "standardized approach" banking organization began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Prior to January 1, 2015, the Federal Reserve focused its assessment of capital adequacy on a component of Tier 1 risk-based capital known as Tier 1 common equity, also a non-GAAP financial measure.

Common Equity Tier 1 is not formally defined by GAAP and 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 Common Equity Tier 1, management believes it is useful to enable investors to assess Key's capital adequacy on these same bases. The table also reconciles the GAAP performance measures to the corresponding non-GAAP measures.

The table also shows the computation for pre-provision net revenue, which is not formally defined by GAAP. Management believes that eliminating the effects of the provision for loan and lease losses makes it easier to analyze the results by presenting them on a more comparable basis.

The cash efficiency ratio is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key's intangible asset amortization from the calculation. Management believes this ratio provides greater consistency and comparability between Key's results and those of its peer banks. Additionally, this ratio is used by analysts and investors as they develop earnings forecasts and peer bank analysis.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

				Three months ended
				12-31-15			9-30-15			12-31-14
Tangible common equity to tangible assets at period end
	Key shareholders' equity (GAAP)			$	10,746		$	10,705		$	10,530
	Less:	Intangible assets ^(a)			1,080			1,084			1,090
		Preferred Stock, Series A ^(b)			281			281			282
		Tangible common equity (non-GAAP)		$	9,385		$	9,340		$	9,158

	Total assets (GAAP)			$	95,133		$	95,422		$	93,821
	Less:	Intangible assets ^(a)			1,080			1,084			1,090
		Tangible assets (non-GAAP)		$	94,053		$	94,338		$	92,731

	Tangible common equity to tangible assets ratio (non-GAAP)				9.98	%		9.90	%		9.88	%

Common Equity Tier 1 at period end
	Key shareholders' equity (GAAP)			$	10,746		$	10,705			—
	Less:	Preferred Stock, Series A ^(b)			281			281			—
		Common Equity Tier 1 capital before adjustments and deductions			10,465			10,424			—
	Less:	Goodwill, net of deferred taxes			1,036			1,036			—
		Intangible assets, net of deferred taxes			26			29			—
		Deferred tax assets			1			1			—
		Net unrealized gains (losses) on available-for-sale securities, net of deferred taxes			(58)			54			—
		Accumulated gains (losses) on cash flow hedges, net of deferred taxes			(20)			21			—
		Amounts in accumulated other comprehensive income (loss) attributed to
			pension and postretirement benefit costs, net of deferred taxes		(365)			(385)			—
		Total Common Equity Tier 1 capital ^(c)		$	9,845		$	9,668			—

	Net risk-weighted assets (regulatory) ^(c)			$	89,889		$	92,307			—

	Common Equity Tier 1 ratio (non-GAAP) ^(c)				10.95	%		10.47	%		—

Tier 1 common equity at period end
	Key shareholders' equity (GAAP)				—			—		$	10,530
	Qualifying capital securities				—			—			339
	Less:	Goodwill			—			—			1,057
		Accumulated other comprehensive income (loss) ^(d)			—			—			(395)
		Other assets ^(e)			—			—			83
		Total Tier 1 capital (regulatory)			—			—			10,124
	Less:	Qualifying capital securities			—			—			339
		Preferred Stock, Series A ^(b)			—			—			282
		Total Tier 1 common equity (non-GAAP)			—			—		$	9,503

	Net risk-weighted assets (regulatory)				—			—		$	85,100

	Tier 1 common equity ratio (non-GAAP)				—			—			11.17	%

GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)

			Three months ended
			12-31-15			9-30-15			12-31-14
Pre-provision net revenue
	Net interest income (GAAP)		$	602		$	591		$	582
	Plus:	Taxable-equivalent adjustment		8			7			6
		Noninterest income (GAAP)		485			470			490
	Less:	Noninterest expense (GAAP)		736			724			704
	Pre-provision net revenue from continuing operations (non-GAAP)		$	359		$	344		$	374

Average tangible common equity
	Average Key shareholders' equity (GAAP)		$	10,731		$	10,614		$	10,562
	Less:	Intangible assets (average)^(f)		1,082			1,083			1,096
		Preferred Stock, Series A (average)		290			290			291
		Average tangible common equity (non-GAAP)	$	9,359		$	9,241		$	9,175

Return on average tangible common equity from continuing operations
	Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	224		$	216		$	246
	Average tangible common equity (non-GAAP)			9,359			9,241			9,175

	Return on average tangible common equity from continuing operations (non-GAAP)			9.50	%		9.27	%		10.64	%

Return on average tangible common equity consolidated
	Net income (loss) attributable to Key common shareholders (GAAP)		$	220		$	213		$	248
	Average tangible common equity (non-GAAP)			9,359			9,241			9,175

	Return on average tangible common equity consolidated (non-GAAP)			9.33	%		9.14	%		10.72	%

Cash efficiency ratio
	Noninterest expense (GAAP)		$	736		$	724		$	704
	Less:	Intangible asset amortization (GAAP)		9			9			10
		Adjusted noninterest expense (non-GAAP)	$	727		$	715		$	694

	Net interest income (GAAP)		$	602		$	591		$	582
	Plus:	Taxable-equivalent adjustment		8			7			6
		Noninterest income (GAAP)		485			470			490
		Total taxable-equivalent revenue (non-GAAP)	$	1,095		$	1,068		$	1,078

	Cash efficiency ratio (non-GAAP)			66.4	%		66.9	%		64.4	%

			Three months ended
			12-31-15
Common Equity Tier 1 under the Regulatory Capital Rules ("RCR") (estimates)
	Common Equity Tier 1 under current RCR		$	9,845
	Adjustments from current RCR to the fully phased-in RCR:
		Deferred tax assets and other intangible assets^(g)		(41)
		Common Equity Tier 1 anticipated under the fully phased-in RCR^(h)	$	9,804

	Net risk-weighted assets under current RCR		$	89,889
	Adjustments from current RCR to the fully phased-in RCR:
		Mortgage servicing assets⁽ⁱ⁾		479
		All other assets^(j)		6
		Total risk-weighted assets anticipated under the fully phased-in RCR^(h)	$	90,374

	Common Equity Tier 1 ratio under the fully phased-in RCR^(h)			10.85	%

GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)

			Twelve months ended
			12-31-15			12-31-14
Pre-provision net revenue
	Net interest income (GAAP)		$	2,348		$	2,293
	Plus:	Taxable-equivalent adjustment		28			24
		Noninterest income (GAAP)		1,880			1,797
	Less:	Noninterest expense (GAAP)		2,840			2,761
	Pre-provision net revenue from continuing operations (non-GAAP)		$	1,416		$	1,353

Average tangible common equity
	Average Key shareholders' equity (GAAP)		$	10,626		$	10,467
	Less:	Intangible assets (average)^(k)		1,085			1,039
		Preferred Stock, Series A (average)		290			291
		Average tangible common equity (non-GAAP)	$	9,251		$	9,137

Return on average tangible common equity from continuing operations
	Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	892		$	917
	Average tangible common equity (non-GAAP)			9,251			9,137

	Return on average tangible common equity from continuing operations (non-GAAP)			9.64	%		10.04	%

Return on average tangible common equity consolidated
	Net income (loss) attributable to Key common shareholders (GAAP)		$	893		$	878
	Average tangible common equity (non-GAAP)			9,251			9,137

	Return on average tangible common equity consolidated (non-GAAP)			9.65	%		9.61	%

Cash efficiency ratio
	Noninterest expense (GAAP)		$	2,840		$	2,761
	Less:	Intangible asset amortization (GAAP)		36			39
		Adjusted noninterest expense (non-GAAP)	$	2,804		$	2,722

	Net interest income (GAAP)		$	2,348		$	2,293
	Plus:	Taxable-equivalent adjustment		28			24
		Noninterest income (GAAP)		1,880			1,797
		Total taxable-equivalent revenue (non-GAAP)	$	4,256		$	4,114

	Cash efficiency ratio (non-GAAP)			65.9	%		66.2	%


(a)	For the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, intangible assets exclude $45 million, $50 million, and $68 million, respectively, of period-end purchased credit card receivables.

(b)	Net of capital surplus.

(c)	12-31-15 amount is estimated.

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

(e)	Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed intangible assets (excluding goodwill) and deductible portions of nonfinancial equity investments. There were no disallowed deferred tax assets at December 31, 2014.

(f)	For the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, average intangible assets exclude $47 million, $52 million, and $69 million, respectively, of average purchased credit card receivables.

(g)	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.

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

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

(j)	Includes the phase-in of deferred tax assets arising from temporary differences at 250% risk-weight. Additionally, under the fully implemented rule, certain deferred tax assets and intangible assets subject to the transition provision are no longer required to be risk-weighted because they are deducted directly from capital.

(k)	For the twelve months ended December 31, 2015, and December 31, 2014, average intangible assets exclude $55 million and $79 million, respectively, of average purchased credit card receivables.

GAAP = U.S. generally accepted accounting principles

Consolidated Balance Sheets
(dollars in millions)

			12-31-15		9-30-15		12-31-14
Assets
	Loans		$	59,876	$	60,085	$	57,381
	Loans held for sale			639		916		734
	Securities available for sale			14,218		14,376		13,360
	Held-to-maturity securities			4,897		4,936		5,015
	Trading account assets			788		811		750
	Short-term investments			2,707		1,964		4,269
	Other investments			655		691		760
		Total earning assets		83,780		83,779		82,269
	Allowance for loan and lease losses			(796)		(790)		(794)
	Cash and due from banks			607		470		653
	Premises and equipment			779		771		841
	Operating lease assets			340		315		330
	Goodwill			1,060		1,060		1,057
	Other intangible assets			65		74		101
	Corporate-owned life insurance			3,541		3,516		3,479
	Derivative assets			619		793		609
	Accrued income and other assets			3,292		3,348		2,952
	Discontinued assets			1,846		2,086		2,324
		Total assets	$	95,133	$	95,422	$	93,821

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	37,089	$	37,301	$	34,536
		Savings deposits		2,341		2,338		2,371
		Certificates of deposit ($100,000 or more)		2,392		2,001		2,040
		Other time deposits		3,127		3,020		3,259
		Total interest-bearing deposits		44,949		44,660		42,206
		Noninterest-bearing deposits		26,097		25,985		29,228
	Deposits in foreign office — interest-bearing			—		428		564
		Total deposits		71,046		71,073		71,998
	Federal funds purchased and securities sold under repurchase agreements			372		407		575
	Bank notes and other short-term borrowings			533		677		423
	Derivative liabilities			632		676		784
	Accrued expense and other liabilities			1,605		1,562		1,621
	Long-term debt			10,186		10,310		7,875
	Discontinued liabilities			—		—		3
		Total liabilities		84,374		84,705		83,279

Equity
	Preferred stock, Series A			290		290		291
	Common shares			1,017		1,017		1,017
	Capital surplus			3,922		3,914		3,986
	Retained earnings			8,922		8,764		8,273
	Treasury stock, at cost			(3,000)		(3,008)		(2,681)
	Accumulated other comprehensive income (loss)			(405)		(272)		(356)
		Key shareholders' equity		10,746		10,705		10,530
	Noncontrolling interests			13		12		12
		Total equity		10,759		10,717		10,542
Total liabilities and equity			$	95,133	$	95,422	$	93,821

Common shares outstanding (000)				835,751		835,285		859,403

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

			Three months ended						Twelve months ended
			12-31-15		9-30-15		12-31-14		12-31-15		12-31-14
Interest income
	Loans		$	552	$	542	$	534	$	2,149	$	2,110
	Loans held for sale			8		10		8		37		21
	Securities available for sale			76		75		67		293		277
	Held-to-maturity securities			24		24		23		96		93
	Trading account assets			6		5		6		21		25
	Short-term investments			3		1		2		8		6
	Other investments			4		4		6		18		22
		Total interest income		673		661		646		2,622		2,554

Interest expense
	Deposits			26		27		26		105		117
	Federal funds purchased and securities sold under repurchase agreements			—		—		—		—		2
	Bank notes and other short-term borrowings			3		2		3		9		9
	Long-term debt			42		41		35		160		133
		Total interest expense		71		70		64		274		261

Net interest income				602		591		582		2,348		2,293
Provision for credit losses				45		45		22		166		57
Net interest income after provision for credit losses				557		546		560		2,182		2,236

Noninterest income
	Trust and investment services income			105		108		112		433		403
	Investment banking and debt placement fees			127		109		126		445		397
	Service charges on deposit accounts			64		68		64		256		261
	Operating lease income and other leasing gains			15		15		15		73		96
	Corporate services income			55		57		53		198		178
	Cards and payments income			47		47		43		183		166
	Corporate-owned life insurance income			36		30		38		127		118
	Consumer mortgage income			2		3		3		12		10
	Mortgage servicing fees			15		11		11		48		46
	Net gains (losses) from principal investing			—		11		18		51		78
	Other income ^{(a), (b)}			19		11		7		54		44
		Total noninterest income		485		470		490		1,880		1,797

Noninterest expense
	Personnel			429		426		409		1,652		1,591
	Net occupancy			64		60		63		255		261
	Computer processing			43		41		40		164		158
	Business services and professional fees			44		40		38		159		156
	Equipment			22		22		23		88		96
	Operating lease expense			13		11		11		47		42
	Marketing			17		17		16		57		49
	FDIC assessment			8		8		9		32		30
	Intangible asset amortization			9		9		10		36		39
	OREO expense, net			1		2		2		6		5
	Other expense			86		88		83		344		334
		Total noninterest expense		736		724		704		2,840		2,761
Income (loss) from continuing operations before income taxes				306		292		346		1,222		1,272
	Income taxes			73		72		94		303		326
Income (loss) from continuing operations				233		220		252		919		946
	Income (loss) from discontinued operations, net of taxes			(4)		(3)		2		1		(39)
Net income (loss)				229		217		254		920		907
	Less: Net income (loss) attributable to noncontrolling interests			3		(2)		1		4		7
Net income (loss) attributable to Key			$	226	$	219	$	253	$	916	$	900

Income (loss) from continuing operations attributable to Key common shareholders			$	224	$	216	$	246	$	892	$	917
Net income (loss) attributable to Key common shareholders				220		213		248		893		878

Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.27	$	.26	$	.29	$	1.06	$	1.05
Income (loss) from discontinued operations, net of taxes				(.01)		—		—		—		(.04)
Net income (loss) attributable to Key common shareholders ^(c)				.27		.26		.29		1.06		1.01

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.27	$	.26	$	.28	$	1.05	$	1.04
Income (loss) from discontinued operations, net of taxes				(.01)		—		—		—		(.04)
Net income (loss) attributable to Key common shareholders ^(c)				.26		.25		.28		1.05		.99

Cash dividends declared per common share			$	.075	$	.075	$	.065	$	.29	$	.25

Weighted-average common shares outstanding (000)				828,206		831,430		858,811		836,846		871,464
	Effect of convertible preferred stock			—		—		20,602		—		—
	Effect of common share options and other stock awards			7,733		7,450		6,773		7,643		6,735
Weighted-average common shares and potential common shares outstanding (000) ^(d)				835,939		838,880		886,186		844,489		878,199

(a)

For the three months ended December 31, 2015, net securities gains (losses) totaled $1 million. For the three months ended September 30, 2015, and December 31, 2014, net securities gains (losses) totaled less than $1 million. For the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, Key did not have any impairment losses related to securities.

(b)

For the twelve months ended December 31, 2015, and December 31, 2014, net securities gains (losses) totaled less than $1 million. For the twelve months ended December 31, 2015, and December 31, 2014, Key did not have any impairment losses related to securities.

(c)

Earnings per share may not foot due to rounding.

(d)

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

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

			Fourth Quarter 2015								Third Quarter 2015								Fourth Quarter 2014
			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^(d)		$	30,884	$	253			3.25	%	$	30,374	$	244			3.19	%	$	27,188	$	223			3.24	%
	Real estate — commercial mortgage			8,019		75			3.70			7,988		73			3.65			8,161		77			3.73
	Real estate — construction			1,067		10			3.65			1,164		11			3.78			1,077		10			3.90
	Commercial lease financing			3,910		36			3.68			3,946		35			3.57			4,119		38			3.67
		Total commercial loans		43,880		374			3.38			43,472		363			3.32			40,545		348			3.40
	Real estate — residential mortgage			2,252		24			4.18			2,258		24			4.19			2,223		24			4.28
	Home equity:
		Key Community Bank		10,203		100			3.89			10,281		101			3.88			10,365		103			3.91
		Other		215		5			7.87			229		4			7.87			274		5			7.84
		Total home equity loans		10,418		105			3.97			10,510		105			3.96			10,639		108			4.01
	Consumer other — Key Community Bank			1,605		26			6.48			1,597		26			6.51			1,552		27			6.78
	Credit cards			780		21			10.66			759		21			10.74			728		20			11.02
	Consumer other:
		Marine		600		10			6.40			645		10			6.38			802		13			6.29
		Other		41		—			7.16			40		1			8.00			52		—			7.52
		Total consumer other		641		10			6.45			685		11			6.47			854		13			6.36
		Total consumer loans		15,696		186			4.69			15,809		187			4.69			15,996		192			4.76
		Total loans		59,576		560			3.72			59,281		550			3.69			56,541		540			3.79
	Loans held for sale			841		8			4.13			939		10			3.96			871		8			3.72
	Securities available for sale^{(b), (e)}			14,168		76			2.13			14,247		74			2.11			12,153		67			2.20
	Held-to-maturity securities^(b)			4,908		24			1.99			4,923		24			1.95			4,947		23			1.91
	Trading account assets			822		6			3.31			699		5			2.50			868		6			2.84
	Short-term investments			3,483		3			.28			2,257		1			.26			3,520		2			.27
	Other investments^(e)			674		4			2.71			696		4			2.52			792		6			2.77
		Total earning assets		84,472		681			3.21			83,042		668			3.21			79,692		652			3.27
	Allowance for loan and lease losses			(790)								(790)								(798)
	Accrued income and other assets			10,437								10,399								9,868
	Discontinued assets			1,947								2,118								2,359
		Total assets	$	96,066							$	94,769							$	91,121

Liabilities
	NOW and money market deposit accounts		$	37,640		14			.15		$	36,289		15			.16		$	34,811		13			.14
	Savings deposits			2,338		—			.02			2,371		—			.02			2,388		—			.02
	Certificates of deposit ($100,000 or more)^(f)			2,150		7			1.31			1,985		6			1.27			2,277		7			1.25
	Other time deposits			3,047		5			.72			3,064		6			.70			3,306		6			.76
	Deposits in foreign office			354		—			.24			492		—			.23			543		—			.24
		Total interest-bearing deposits		45,529		26			.24			44,201		27			.24			43,325		26			.24
	Federal funds purchased and securities sold under repurchase agreements			392		—			.02			859		—			.08			621		—			.02
	Bank notes and other short-term borrowings			556		3			1.65			567		2			1.51			772		3			1.17
	Long-term debt^{(f), (g)}			8,318		42			2.05			7,895		41			2.19			5,135		35			2.80
		Total interest-bearing liabilities		54,795		71			.52			53,522		70			.53			49,853		64			.51
	Noninterest-bearing deposits			26,292								26,268								26,342
	Accrued expense and other liabilities			2,289								2,236								1,989
	Discontinued liabilities^(g)			1,947								2,118								2,359
		Total liabilities		85,323								84,144								80,543

Equity
	Key shareholders' equity			10,731								10,614								10,562
	Noncontrolling interests			12								11								16
		Total equity		10,743								10,625								10,578

		Total liabilities and equity	$	96,066							$	94,769							$	91,121

Interest rate spread (TE)									2.69	%							2.68	%							2.76	%

Net interest income (TE) and net interest margin (TE)						610			2.87	%				598			2.87	%				588			2.94	%
TE adjustment^(b)						8								7								6
	Net interest income, GAAP basis				$	602							$	591							$	582


(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.

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

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

(d)	Commercial, financial and agricultural average balances include $87 million, $88 million, and $90 million of assets from commercial credit cards for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, 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

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


			Twelve months ended December 31, 2015								Twelve months ended December 31, 2014
			Average								Average
			Balance		Interest		^(a)	Yield/Rate		^(a)	Balance		Interest		^(a)	Yield/ Rate		^(a)
Assets
	Loans:^{(b), (c)}
	Commercial, financial and agricultural ^(d)		$	29,658	$	953			3.21	%	$	26,375	$	866			3.28	%
	Real estate — commercial mortgage			8,020		295			3.68			7,999		303			3.79
	Real estate — construction			1,143		43			3.73			1,061		43			4.07
	Commercial lease financing			3,976		143			3.60			4,239		156			3.67
		Total commercial loans		42,797		1,434			3.35			39,674		1,368			3.45
	Real estate — residential mortgage			2,244		95			4.21			2,201		96			4.37
	Home equity:
		Key Community Bank		10,266		399			3.89			10,340		405			3.91
		Other		237		19			7.85			299		23			7.80
	Total home equity loans			10,503		418			3.98			10,639		428			4.02
	Consumer other — Key Community Bank			1,580		103			6.54			1,501		104			6.92
	Credit cards			752		81			10.76			712		78			10.95
	Consumer other:
		Marine		675		43			6.36			894		56			6.22
		Other		43		3			7.56			58		4			7.70
	Total consumer other			718		46			6.43			952		60			6.31
	Total consumer loans			15,797		743			4.70			16,005		766			4.79
	Total loans			58,594		2,177			3.71			55,679		2,134			3.83
	Loans held for sale			959		37			3.85			570		21			3.76
	Securities available for sale^{(b), (e)}			13,720		293			2.14			12,210		277			2.27
	Held-to-maturity securities^(b)			4,936		96			1.95			4,949		93			1.88
	Trading account assets			761		21			2.80			932		25			2.70
	Short-term investments			2,843		8			.27			2,886		6			.21
	Other investments^(e)			706		18			2.63			865		22			2.53
	Total earning assets			82,519		2,650			3.21			78,091		2,578			3.30
	Allowance for loan and lease losses			(791)								(818)
	Accrued income and other assets			10,300								9,806
	Discontinued assets			2,132								3,828
	Total assets		$	94,160							$	90,907

Liabilities
	NOW and money market deposit accounts		$	36,258		56			.15		$	34,283		48			.14
	Savings deposits			2,372		—			.02			2,446		1			.02
	Certificates of deposit ($100,000 or more)^(f)			2,041		26			1.28			2,616		35			1.35
	Other time deposits			3,115		22			.71			3,495		32			.91
	Deposits in foreign office			489		1			.23			615		1			.23
		Total interest-bearing deposits		44,275		105			.24			43,455		117			.27

	Federal funds purchased and securities sold under repurchase agreements			632		—			.04			1,182		2			.16
	Bank notes and other short-term borrowings			572		9			1.52			597		9			1.49
	Long-term debt^{(f), (g)}			7,334		160			2.24			5,161		133			2.68
		Total interest-bearing liabilities		52,813		274			.52			50,395		261			.52
	Noninterest-bearing deposits			26,355								24,410
	Accrued expense and other liabilities			2,222								1,791
	Discontinued liabilities^(g)			2,132								3,828
	Total liabilities			83,522								80,424

Equity
	Key shareholders' equity			10,626								10,467
	Noncontrolling interests			12								16
	Total equity			10,638								10,483

	Total liabilities and equity		$	94,160							$	90,907

Interest rate spread (TE)									2.69	%							2.78	%

Net interest income (TE) and net interest margin (TE)						2,376			2.88	%				2,317			2.97	%
TE adjustment^(b)						28								24
	Net interest income, GAAP basis				$	2,348							$	2,293


(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.

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

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

(d)	Commercial, financial and agricultural average balances include $88 million and $93 million of assets from commercial credit cards for the twelve months ended December 31, 2015, and December 31, 2014, 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

Noninterest Expense
(dollars in millions)

	Three months ended						Twelve months ended
	12-31-15		9-30-15		12-31-14		12-31-15		12-31-14
Personnel ^(a)	$	429	$	426	$	409	$	1,652	$	1,591
Net occupancy		64		60		63		255		261
Computer processing		43		41		40		164		158
Business services and professional fees		44		40		38		159		156
Equipment		22		22		23		88		96
Operating lease expense		13		11		11		47		42
Marketing		17		17		16		57		49
FDIC assessment		8		8		9		32		30
Intangible asset amortization		9		9		10		36		39
OREO expense, net		1		2		2		6		5
Other expense		86		88		83		344		334
Total noninterest expense	$	736	$	724	$	704	$	2,840	$	2,761

Average full-time equivalent employees ^(b)		13,359		13,555		13,590		13,483		13,853

(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						Twelve months ended
	12-31-15		9-30-15		12-31-14		12-31-15		12-31-14
Salaries	$	231	$	234	$	224	$	912	$	891
Technology contract labor, net		13		13		13		46		56
Incentive and stock-based compensation		115		103		117		410		380
Employee benefits		64		75		53		266		240
Severance		6		1		2		18		24
Total personnel expense	$	429	$	426	$	409	$	1,652	$	1,591

Loan Composition
(dollars in millions)

									Percent change 12-31-15 vs.
			12-31-15		9-30-15		12-31-14		9-30-15			12-31-14
Commercial, financial and agricultural ^(a)			$	31,240	$	31,095	$	27,982		.5	%		11.6	%
Commercial real estate:
	Commercial mortgage			7,959		8,180		8,047		(2.7)			(1.1)
	Construction			1,053		1,070		1,100		(1.6)			(4.3)
	Total commercial real estate loans			9,012		9,250		9,147		(2.6)			(1.5)
Commercial lease financing ^(b)				4,020		3,929		4,252		2.3			(5.5)
	Total commercial loans			44,272		44,274		41,381		—			7.0
Residential — prime loans:
	Real estate — residential mortgage			2,242		2,267		2,225		(1.1)			.8
	Home equity:
		Key Community Bank		10,127		10,282		10,366		(1.5)			(2.3)
		Other		208		222		267		(6.3)			(22.1)
	Total home equity loans			10,335		10,504		10,633		(1.6)			(2.8)
Total residential — prime loans				12,577		12,771		12,858		(1.5)			(2.2)
Consumer other — Key Community Bank				1,600		1,612		1,560		(.7)			2.6
Credit cards				806		770		754		4.7			6.9
Consumer other:
	Marine			583		620		779		(6.0)			(25.2)
	Other			38		38		49		—			(22.4)
	Total consumer other			621		658		828		(5.6)			(25.0)
	Total consumer loans			15,604		15,811		16,000		(1.3)			(2.5)
	Total loans^{(c), (d)}		$	59,876	$	60,085	$	57,381		(.3)	%		4.3	%



Loans Held for Sale Composition
(dollars in millions)

									Percent change 12-31-15 vs.
			12-31-15		9-30-15		12-31-14		9-30-15			12-31-14
Commercial, financial and agricultural			$	76	$	74	$	63		2.7	%		20.6	%
Real estate — commercial mortgage				532		806		638		(34.0)			(16.6)
Commercial lease financing				14		10		15		40.0			(6.7)
Real estate — residential mortgage				17		26		18		(34.6)			(5.6)
	Total loans held for sale^(e)		$	639	$	916	$	734		(30.2)	%		(12.9)	%



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

			4Q15		3Q15		2Q15		1Q15			4Q14
Balance at beginning of period			$	916	$	835	$	1,649	$	734		$	784
	New originations			1,655		1,673		1,650		2,130			2,465
	Transfers from (to) held to maturity, net			22		24		6		10			2
	Loan sales			(1,943)		(1,616)		(2,466)		(1,204)			(2,516)
	Loan draws (payments), net			(11)		—		(4)		(21)			(1)
Balance at end of period^(e)			$	639	$	916	$	835	$	1,649		$	734


(a)	Loan balances include $85 million, $88 million, and $88 million of commercial credit card balances at December 31, 2015, September 30, 2015, and December 31, 2014, respectively.

(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $134 million, $162 million, and $302 million at December 31, 2015, September 30, 2015, and December 31, 2014, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c)	At December 31, 2015, total loans include purchased loans of $114 million, of which $11 million were purchased credit impaired. At September 30, 2015, total loans include purchased loans of $119 million, of which $12 million were purchased credit impaired. At December 31, 2014, total loans include purchased loans of $138 million, of which $13 million were purchased credit impaired.

(d)	Total loans exclude loans of $1.8 billion at December 31, 2015, $1.9 billion at September 30, 2015, and $2.3 billion at December 31, 2014, related to the discontinued operations of the education lending business.

(e)	Total loans held for sale exclude loans held for sale of $169 million at September 30, 2015, and $179 million at June 30, 2015, related to the discontinued operations of the education lending business.

Exit Loan Portfolio From Continuing Operations
(in millions)

	Balance				Change		Net Loan					Balance on
	Outstanding				12-31-15 vs.		Charge-offs					Nonperforming Status
	12-31-15		9-30-15		9-30-15		4Q15		3Q15		^(c)	12-31-15		9-30-15
Residential properties — homebuilder	$	6	$	6		—		—		—		$	8	$	5
Marine and RV floor plan		1		1		—		—		—			—		—
Commercial lease financing^(a)		765		798	$	(33)		—	$	(1)			1		—
Total commercial loans		772		805		(33)		—		(1)			9		5
Home equity — Other		208		222		(14)	$	2		(1)			8		7
Marine		583		620		(37)		1		3			6		6
RV and other consumer		41		44		(3)		—		(1)			—		1
Total consumer loans		832		886		(54)		3		1			14		14
Total exit loans in loan portfolio	$	1,604	$	1,691	$	(87)	$	3		—		$	23	$	19

Discontinued operations — education lending business (not included in exit loans above)^(b)	$	1,828	$	1,891	$	(63)	$	8	$	7		$	7	$	8


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

(b)	Excludes loans held for sale of $169 million at September 30, 2015. There were no loans held for sale at December 31, 2015.

(c)	Credit amounts indicate recoveries exceeded charge-offs.

Asset Quality Statistics From Continuing Operations
(dollars in millions)

		4Q15			3Q15			2Q15			1Q15			4Q14
Net loan charge-offs	$	37		$	41		$	36		$	28		$	32
Net loan charge-offs to average total loans		.25	%		.27	%		.25	%		.20	%		.22	%
Allowance for loan and lease losses	$	796		$	790		$	796		$	794		$	794
Allowance for credit losses^(a)		852			844			841			835			829
Allowance for loan and lease losses to period-end loans		1.33	%		1.31	%		1.37	%		1.37	%		1.38	%
Allowance for credit losses to period-end loans		1.42			1.40			1.44			1.44			1.44
Allowance for loan and lease losses to nonperforming loans		205.7			197.5			190.0			181.7			190.0
Allowance for credit losses to nonperforming loans		220.2			211.0			200.7			191.1			198.3
Nonperforming loans at period end^(b)	$	387		$	400		$	419		$	437		$	418
Nonperforming assets at period end		403			417			440			457			436
Nonperforming loans to period-end portfolio loans		.65	%		.67	%		.72	%		.75	%		.73	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.67			.69			.75			.79			.76

(a)

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

(b)

Loan balances exclude $11 million, $12 million, $12 million, $12 million, and $13 million of purchased credit impaired loans at December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014, respectively.

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

	Three months ended									Twelve months ended
	12-31-15			9-30-15			12-31-14			12-31-15			12-31-14
Average loans outstanding	$	59,576		$	59,281		$	56,541		$	58,594		$	55,679

Allowance for loan and lease losses at beginning of period	$	790		$	796		$	804		$	794		$	848
Loans charged off:
Commercial, financial and agricultural		18			26			10			77			45

Real estate — commercial mortgage		2			—			3			4			6
Real estate — construction		—			—			1			1			5
Total commercial real estate loans		2			—			4			5			11
Commercial lease financing		6			2			4			11			10
Total commercial loans		26			28			18			93			66
Real estate — residential mortgage		2			1			3			6			10
Home equity:
Key Community Bank		5			6			8			26			37
Other		2			1			1			6			9
Total home equity loans		7			7			9			32			46
Consumer other — Key Community Bank		6			6			7			24			30
Credit cards		7			7			7			30			34
Consumer other:
Marine		3			4			5			17			23
Other		—			—			—			1			2
Total consumer other		3			4			5			18			25
Total consumer loans		25			25			31			110			145
Total loans charged off		51			53			49			203			211
Recoveries:
Commercial, financial and agricultural		3			2			6			16			33

Real estate — commercial mortgage		4			—			—			6			4
Real estate — construction		—			—			1			1			17
Total commercial real estate loans		4			—			1			7			21
Commercial lease financing		—			2			2			7			10
Total commercial loans		7			4			9			30			64
Real estate — residential mortgage		2			—			—			3			2
Home equity:
Key Community Bank		2			2			2			7			9
Other		—			2			1			4			5
Total home equity loans		2			4			3			11			14
Consumer other — Key Community Bank		1			1			2			6			6
Credit cards		—			1			—			2			1
Consumer other:
Marine		2			1			2			8			9
Other		—			1			1			1			2
Total consumer other		2			2			3			9			11
Total consumer loans		7			8			8			31			34
Total recoveries		14			12			17			61			98
Net loan charge-offs		(37)			(41)			(32)			(142)			(113)
Provision (credit) for loan and lease losses		43			36			22			145			59
Foreign currency translation adjustment		—			(1)			—			(1)			—
Allowance for loan and lease losses at end of period	$	796		$	790		$	794		$	796		$	794

Liability for credit losses on lending-related commitments at beginning of period	$	54		$	45		$	35		$	35		$	37
Provision (credit) for losses on lending-related commitments		2			9			—			21			(2)
Liability for credit losses on lending-related commitments at end of period^(a)	$	56		$	54		$	35		$	56		$	35

Total allowance for credit losses at end of period	$	852		$	844		$	829		$	852		$	829

Net loan charge-offs to average total loans		.25	%		.27	%		.22	%		.24	%		.20	%
Allowance for loan and lease losses to period-end loans		1.33			1.31			1.38			1.33			1.38
Allowance for credit losses to period-end loans		1.42			1.40			1.44			1.42			1.44
Allowance for loan and lease losses to nonperforming loans		205.7			197.5			190.0			205.7			190.0
Allowance for credit losses to nonperforming loans		220.2			211.0			198.3			220.2			198.3

Discontinued operations — education lending business:
Loans charged off	$	10		$	9		$	11		$	35		$	45
Recoveries		2			2			3			12			14
Net loan charge-offs	$	(8)		$	(7)		$	(8)		$	(23)		$	(31)

(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)

	12-31-15			9-30-15			6-30-15			3-31-15			12-31-14
Commercial, financial and agricultural	$	82		$	89		$	100		$	98		$	59

Real estate — commercial mortgage		19			23			26			30			34
Real estate — construction		9			9			12			12			13
Total commercial real estate loans		28			32			38			42			47
Commercial lease financing		13			21			18			20			18
Total commercial loans		123			142			156			160			124
Real estate — residential mortgage		64			67			67			72			79
Home equity:
Key Community Bank		182			174			176			182			185
Other		8			7			8			9			10
Total home equity loans		190			181			184			191			195
Consumer other — Key Community Bank		2			1			1			2			2
Credit cards		2			2			2			2			2
Consumer other:
Marine		6			6			8			9			15
Other		—			1			1			1			1
Total consumer other		6			7			9			10			16
Total consumer loans		264			258			263			277			294
Total nonperforming loans^(a)		387			400			419			437			418
OREO		14			17			20			20			18
Other nonperforming assets		2			—			1			—			—
Total nonperforming assets	$	403		$	417		$	440		$	457		$	436

Accruing loans past due 90 days or more	$	72		$	54		$	66		$	111		$	96
Accruing loans past due 30 through 89 days		208			271			181			216			235
Restructured loans — accruing and nonaccruing^(b)		280			287			300			268			270
Restructured loans included in nonperforming loans^(b)		159			160			170			141			157
Nonperforming assets from discontinued operations — education lending business		7			8			6			8			11
Nonperforming loans to period-end portfolio loans		.65	%		.67	%		.72	%		.75	%		.73	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.67			.69			.75			.79			.76


(a)	Loan balances exclude $11 million, $12 million, $12 million, $12 million, and $13 million of purchased credit impaired loans at December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014, respectively.

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

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

	4Q15		3Q15		2Q15		1Q15		4Q14
Balance at beginning of period	$	400	$	419	$	437	$	418	$	401
Loans placed on nonaccrual status		81		81		92		123		103
Charge-offs		(51)		(53)		(52)		(47)		(49)
Loans sold		—		(2)		—		—		(2)
Payments		(21)		(16)		(25)		(9)		(17)
Transfers to OREO		(4)		(4)		(5)		(7)		(6)
Transfers to other nonperforming assets		(1)		—		—		—		—
Loans returned to accrual status		(17)		(25)		(28)		(41)		(12)
Balance at end of period^(a)	$	387	$	400	$	419	$	437	$	418

(a) Loan balances exclude $11 million, $12 million, $12 million, $12 million, and $13 million of purchased credit impaired loans at December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014, respectively.


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

	4Q15		3Q15		2Q15		1Q15		4Q14
Balance at beginning of period	$	17	$	20	$	20	$	18	$	16
Properties acquired — nonperforming loans		4		4		5		7		6
Valuation adjustments		(2)		(2)		(1)		(1)		(2)
Properties sold		(5)		(5)		(4)		(4)		(2)
Balance at end of period	$	14	$	17	$	20	$	20	$	18

Line of Business Results
(dollars in millions)

																Percent change 4Q15 vs.
	4Q15			3Q15			2Q15			1Q15			4Q14			3Q15			4Q14
Key Community Bank
Summary of operations
Total revenue (TE)	$	588		$	579		$	560		$	549		$	558			1.6	%		5.4	%
Provision for credit losses		20			18			3			30			11			11.1			81.8
Noninterest expense		459			448			450			441			449			2.5			2.2
Net income (loss) attributable to Key		68			71			67			49			62			(4.2)			9.7
Average loans and leases		30,925			31,039			30,707			30,662			30,478			(.4)			1.5
Average deposits		52,219			51,234			50,766			50,417			50,851			1.9			2.7
Net loan charge-offs		23			21			20			28			28			9.5			(17.9)
Net loan charge-offs to average total loans		.30	%		.27	%		.26	%		.37	%		.36	%		N/A			N/A
Nonperforming assets at period end	$	303		$	306		$	305		$	328		$	340			(1.0)			(10.9)
Return on average allocated equity		10.11	%		10.49	%		10.05	%		7.27	%		9.15	%		N/A			N/A
Average full-time equivalent employees		7,228			7,326			7,400			7,452			7,414			(1.3)			(2.5)


Key Corporate Bank
Summary of operations
Total revenue (TE)	$	479		$	454		$	477		$	401		$	460			5.5	%		4.1	%
Provision for credit losses		26			30			41			6			7			(13.3)			271.4
Noninterest expense		254			246			252			214			244			3.3			4.1
Net income (loss) attributable to Key		145			138			133			129			149			5.1			(2.7)
Average loans and leases		26,981			26,425			25,298			24,722			23,798			2.1			13.4
Average loans held for sale		820			918			1,234			775			855			(10.7)			(4.1)
Average deposits		19,081			18,809			19,708			18,567			18,355			1.4			4.0
Net loan charge-offs		12			20			12			(4)			(3)			(40.0)			N/M
Net loan charge-offs to average total loans		.18	%		.30	%		.19	%		(.07)	%		(.05)	%		N/A			N/A
Nonperforming assets at period end	$	74		$	85		$	105		$	93		$	50			(12.9)			48.0
Return on average allocated equity		29.61	%		28.65	%		29.62	%		28.04	%		33.63	%		N/A			N/A
Average full-time equivalent employees		2,113			2,173			2,058			2,057			2,043			(2.8)			3.4

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