KeyCorp Reports Record Fourth Quarter 2020 Net Income Of $549 Million, Or $.56 Per Diluted Common Share

Record revenue for the fourth quarter and full year 2020

All-time high level of investment banking and debt placement fees for the fourth quarter and full year

Strong credit quality: net charge-offs to average loans of 53 basis points

Return on average tangible common equity of 16.6%, up 440 basis points from the prior quarter

Strong capital position with Common Equity Tier 1 Capital of 9.8%, above targeted range

Announced new common share repurchase authorization of up to $900 million

News provided by

KeyCorp

Jan 21, 2021, 06:30 ET

CLEVELAND, Jan. 21, 2021 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $549 million, or $.56 per diluted common share for the fourth quarter of 2020. This compared to $397 million, or $.41 per diluted common share, for the third quarter of 2020 and $439 million, or $.45 per diluted common share, for the fourth quarter of 2019.

Key's record fourth quarter results marked a great finish to the year. I was extremely proud of the way our dedicated and resilient team came together to support our clients when they needed us most, while concurrently delivering strong results across our company.

We achieved a record level of revenue for both the fourth quarter and the full year. Fee income was up 23% from the year-ago period, with growth coming from consumer mortgage and investment banking.

Credit quality remained strong this quarter, with net charge-offs of 53 basis points. Our provision for credit losses reflects our strong credit metrics and our outlook for the economy. We have continued to support our clients while maintaining our moderate risk profile through the business cycle.

We have maintained our discipline in managing our strong capital position. At the end of the quarter, our Common Equity Tier 1 ratio was 9.8%, which was above our targeted range. Last week, our Board of Directors approved a new share repurchase authorization of up to $900 million and announced our first quarter dividend of $.185 per common share.

While 2020 presented many challenges, we remained focused on serving our clients, growing our business, and maintaining strong risk practices. Our success is due to our dedicated team, the strength of our business model, and our targeted relationship strategy. We have positioned our company to succeed and I remain confident in our ability to grow and to deliver on our commitments.

- Chris Gorman, Chairman and CEO

Selected Financial Highlights

dollars in millions, except per share data										Change 4Q20 vs.
	4Q20			3Q20			4Q19			3Q20		4Q19
Income (loss) from continuing operations attributable to Key common shareholders	$	549		$	397		$	439		38.3	%	25.1	%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution	.56			.41			.45			36.6		24.4
Return on average tangible common equity from continuing operations ^(a)	16.61		%	12.19		%	14.09		%	N/A		N/A
Return on average total assets from continuing operations	1.35			1.00			1.27			N/A		N/A
Common Equity Tier 1 ratio ^(b)	9.8			9.5			9.4			N/A		N/A
Book value at period end	$	16.53		$	16.25		$	15.54		1.7	%	6.4	%
Net interest margin (TE) from continuing operations	2.70		%	2.62		%	2.98		%	N/A		N/A

(a) The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "Return on average tangible common equity from continuing operations." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

(b) 12/31/20 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions							Change 4Q20 vs.
	4Q20		3Q20		4Q19		3Q20		4Q19
Net interest income (TE)	$	1,043	$	1,006	$	987	3.7	%	5.7	%
Noninterest income	802		681		651		17.8		23.2
Total revenue	$	1,845	$	1,687	$	1,638	9.4	%	12.6	%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $1.043 billion for the fourth quarter of 2020, compared to taxable-equivalent net interest income of $987 million for the fourth quarter of 2019. The increase in net interest income reflects higher earning asset balances and loan fees, partially offset by a lower net interest margin. The net interest margin was impacted by lower interest rates and a change in balance sheet mix, including elevated levels of liquidity and Key's participation in the Paycheck Protection Program ("PPP").

Compared to the third quarter of 2020, taxable-equivalent net interest income increased by $37 million and the net interest margin increased by 8 basis points. The increase in both net interest income and the net interest margin reflects lower interest-bearing deposit costs and higher loan fees related to PPP, partly offset by elevated levels of liquidity.

Noninterest Income

dollars in millions							Change 4Q20 vs.
	4Q20		3Q20		4Q19		3Q20		4Q19
Trust and investment services income	$	123	$	128	$	120	(3.9)	%	2.5	%
Investment banking and debt placement fees	243		146		181		66.4		34.3
Service charges on deposit accounts	82		77		86		6.5		(4.7)
Operating lease income and other leasing gains	39		38		39		2.6		—
Corporate services income	63		51		65		23.5		(3.1)
Cards and payments income	97		114		67		(14.9)		44.8
Corporate-owned life insurance income	38		30		39		26.7		(2.6)
Consumer mortgage income	43		51		21		(15.7)		104.8
Commercial mortgage servicing fees	32		18		19		77.8		68.4
Other income	42		28		14		50.0		200.0
Total noninterest income	$	802	$	681	$	651	17.8	%	23.2	%

Compared to the fourth quarter of 2019, noninterest income increased by $151 million, primarily driven by a $62 million increase in investment banking and debt placement fees. The record fourth quarter of 2020 for investment banking and debt placement fees was largely related to strong M&A activity. Cards and payments income increased $30 million from the year-ago period, driven by higher prepaid card activity. Additionally, investments made in Key's mortgage business continue to drive consumer mortgage income and commercial mortgage servicing fees, which increased $22 million and $13 million, respectively, from the year-ago quarter.

Compared to the third quarter of 2020, noninterest income increased by $121 million. The largest driver of the quarter-over-quarter increase was a $97 million increase in investment banking and debt placement fees, largely driven by strong M&A activity and higher loan syndication. Commercial mortgage servicing fees were also strong, up $14 million compared to prior quarter and corporate services income increased $12 million, primarily driven by higher derivatives income. Partially offsetting these increases were a $17 million decrease in cards and payments income related to lower prepaid card activity and a $8 million decrease in consumer mortgage income.

Noninterest Expense

dollars in millions							Change 4Q20 vs.
	4Q20		3Q20		4Q19		3Q20		4Q19
Personnel expense	$	661	$	588	$	551	12.4	%	20.0	%
Nonpersonnel expense	467		449		429		4.0		8.9
Total noninterest expense	$	1,128	$	1,037	$	980	8.8	%	15.1	%

Key's noninterest expense was $1.128 billion for the fourth quarter of 2020, an increase of $148 million from the year-ago period. The increase is primarily related to higher personnel costs of $110 million, reflecting higher production-related incentives and higher salaries due to merit increases. Other drivers for the year-over-year increases include payments-related expenses from prepaid card activity incurred in the current period, as well as COVID-19-related costs related to steps that Key has taken to ensure the health and safety of teammates.

Compared to the third quarter of 2020, noninterest expense increased $91 million. The increase was largely due to incentive-related costs following a strong quarter for investment banking revenue, higher severance, as well as higher related stock-based compensation which drove the increase in personnel costs quarter-over-quarter.

BALANCE SHEET HIGHLIGHTS

Average Loans

dollars in millions							Change 4Q20 vs.
	4Q20		3Q20		4Q19		3Q20		4Q19
Commercial and industrial ^(a)	$	53,562	$	57,067	$	48,345	(6.1)	%	10.8	%
Other commercial loans	19,174		19,677		19,312		(2.6)		(.7)
Total consumer loans	28,974		28,175		25,950		2.8		11.7
Total loans	$	101,710	$	104,919	$	93,607	(3.1)	%	8.7	%


(a)	Commercial and industrial average loan balances include $129 million, $129 million, and $146 million of assets from commercial credit cards at December 31, 2020, September 30, 2020, and December 31, 2019, respectively.

Average loans were $101.7 billion for the fourth quarter of 2020, an increase of $8.1 billion compared to the fourth quarter of 2019. Commercial loans increased $5.1 billion, reflecting Key's participation in the PPP, partially offset by decreased utilization versus the year-ago period. Consumer loans increased $3.0 billion, driven by strength from Laurel Road and Key's consumer mortgage business.

Compared to the third quarter of 2020, average loans decreased by $3.2 billion. Commercial loans declined as clients paid down elevated line draws from earlier in the year. Consumer loans continue to reflect strength from Laurel Road, as well as Key's consumer mortgage business.

Average Deposits

dollars in millions										Change 4Q20 vs.
	4Q20			3Q20			4Q19			3Q20		4Q19
Non-time deposits	$	129,529		$	127,347		$	100,518		1.7	%	28.9	%
Certificates of deposit ($100,000 or more)	2,983			3,862			6,899			(22.8)		(56.8)
Other time deposits	3,209			3,735			5,187			(14.1)		(38.1)
Total deposits	$	135,721		$	134,944		$	112,604		.6	%	20.5	%

Cost of total deposits	.08		%	.16		%	.71		%	N/A		N/A

N/A = Not Applicable

Average deposits totaled $135.7 billion for the fourth quarter of 2020, an increase of $23.1 billion compared to the year-ago quarter, reflecting growth from consumer and commercial relationships, partially offset by a decline in time deposits as a result of lower interest rates.

Compared to the third quarter of 2020, average deposits increased by $777 million, primarily driven by broad-based commercial growth and higher consumer balances. This growth was offset by a continued decline in time deposits.

ASSET QUALITY

dollars in millions										Change 4Q20 vs.
	4Q20			3Q20			4Q19			3Q20		4Q19
Net loan charge-offs	$	135		$	128		$	99		5.5	%	36.4	%
Net loan charge-offs to average total loans	.53		%	.49		%	.42		%	N/A		N/A
Nonperforming loans at period end	$	785		$	834		$	577		(5.9)		36.0
Nonperforming assets at period end	937			1,003			715			(6.6)		31.0
Allowance for loan and lease losses	1,626			1,730			900			(6.0)		80.7
Allowance for credit losses	1,823			1,938			968			(5.9)		88.3
Allowance for loan and lease losses to nonperforming loans	207.1		%	207.4		%	156.0		%	N/A		N/A
Allowance for credit losses to nonperforming loans	232.2			232.4			167.8			N/A		N/A
Provision for credit losses	$	20		$	160		$	109		(87.5)	%	(81.7)	%

N/A = Not Applicable

Key's provision for credit losses was $20 million for the fourth quarter of 2020, compared to $109 million for the fourth quarter of 2019 and $160 million for the third quarter of 2020. The provision for credit losses reflects the adoption of the accounting standard, often referred to as Current Expected Credit Losses ("CECL"), beginning in the first quarter of 2020. This framework requires that management estimate credit losses over the full remaining expected life and consider expected future changes in macroeconomic conditions.

Net loan charge-offs for the fourth quarter of 2020 totaled $135 million, or .53% of average total loans. These results compare to $99 million, or .42%, for the fourth quarter of 2019 and $128 million, or .49%, for the third quarter of 2020. Key's allowance for credit losses was $1.8 billion, or 1.80% of total period-end loans at December 31, 2020, compared to 1.02% at December 31, 2019, and 1.88% at September 30, 2020.

At December 31, 2020, Key's nonperforming loans totaled $785 million, which represented .78% of period-end portfolio loans. These results compare to .61% at December 31, 2019, and .81% at September 30, 2020. Nonperforming assets at December 31, 2020, totaled $937 million, and represented .92% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .75% at December 31, 2019, and .97% at September 30, 2020.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at December 31, 2020.

Capital Ratios

	12/31/2020		9/30/2020		12/31/2019
Common Equity Tier 1 ^(a)	9.8	%	9.5	%	9.4	%
Tier 1 risk-based capital ^(a)	11.1		10.9		10.9
Total risk based capital ^(a)	13.4		13.3		12.8
Tangible common equity to tangible assets ^(b)	7.9		7.8		8.6
Leverage ^(a)	8.9		8.7		9.9


(a)	12/31/2020 ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.
(b)	The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "tangible common equity." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

Key's capital position remained strong in the fourth quarter of 2020. As shown in the preceding table, at December 31, 2020, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.8% and 11.1%, respectively. Key's tangible common equity ratio was 7.9% at December 31, 2020.

Key has elected the CECL phase-in option provided by regulatory guidance which delays for two years the estimated impact of CECL on regulatory capital and phases it in over three years beginning in 2022. On a fully phased-in basis, Key's Common Equity Tier 1 ratio would be reduced by 29 basis points.

Summary of Changes in Common Shares Outstanding

in thousands					Change 4Q20 vs.
		4Q20	3Q20	4Q19	3Q20		4Q19
Shares outstanding at beginning of period		976,205	975,947	988,538	—		(1.2)	%
Open market repurchases and return of shares under employee compensation plans		(1,092)	(1)	(12,968)	N/M		(91.6)
Shares issued under employee compensation plans (net of cancellations)		660	259	1,619	154.8	%	(59.2)
	Shares outstanding at end of period	975,773	976,205	977,189	—		(.1)	%

N/M = Not Meaningful

Consistent with Key's 2020 Capital Plan, during the fourth quarter of 2020, Key declared a dividend of $.185 per common share. Key announced a new share repurchase authorization program of up to $900 million, applicable through September 30, 2021.

LINE OF BUSINESS RESULTS

The following table shows the contribution made by each major business segment to Key's taxable-equivalent revenue from continuing operations and income (loss) from continuing operations attributable to Key for the periods presented. For more detailed financial information pertaining to each business segment, see the tables at the end of this release.

Major Business Segments

dollars in millions								Change 4Q20 vs.
		4Q20		3Q20		4Q19		3Q20		4Q19
Revenue from continuing operations (TE)
Consumer Bank		$	905	$	871	$	825	3.9	%	9.7	%
Commercial Bank		913		804		771		13.6		18.4
Other ^(a)		27		12		42		125.0		(35.7)
	Total	$	1,845	$	1,687	$	1,638	9.4	%	12.6	%

Income (loss) from continuing operations attributable to Key
Consumer Bank		$	228	$	241	$	168	(5.4)	%	35.7	%
Commercial Bank		308		160		311		92.5		(1.0)
Other ^(a)		39		23		(13)		69.6		N/M
	Total	$	575	$	424	$	466	35.6	%	23.4	%


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

Consumer Bank


dollars in millions							Change 4Q20 vs.
	4Q20		3Q20		4Q19		3Q20		4Q19
Summary of operations
Net interest income (TE)	$	645	$	604	$	587	6.8	%	9.9	%
Noninterest income	260		267		238		(2.6)		9.2
Total revenue (TE)	905		871		825		3.9		9.7
Provision for credit losses	(4)		(16)		55		(75.0)		(129.1)
Noninterest expense	611		571		550		7.0		11.1
Income (loss) before income taxes (TE)	298		316		220		(5.7)		35.5
Allocated income taxes (benefit) and TE adjustments	70		75		52		(6.7)		34.6
Net income (loss) attributable to Key	$	228	$	241	$	168	(5.4)	%	35.7	%

Average balances
Loans and leases	$	41,137	$	41,471	$	34,148	(.8)	%	20.5	%
Total assets	44,357		44,888		37,709		(1.2)		17.6
Deposits	83,171		83,175		73,561		—		13.1

Assets under management at period end	$	44,140	$	41,312	$	40,833	6.8	%	8.1	%

TE = Taxable Equivalent

Additional Consumer Bank Data

dollars in millions										Change 4Q20 vs.
	4Q20			3Q20			4Q19			3Q20		4Q19
Noninterest income
Trust and investment services income	$	95		$	100		$	91		(5.0)	%	4.4	%
Service charges on deposit accounts	50			44			58			13.6		(13.8)
Cards and payments income	54			55			53			(1.8)		1.9
Consumer mortgage income	43			51			20			(15.7)		115.0
Other noninterest income	18			17			16			5.9		12.5
Total noninterest income	$	260		$	267		$	238		(2.6)	%	9.2	%

Average deposit balances
NOW and money market deposit accounts	$	53,055		$	52,550		$	44,765		1.0	%	18.5	%
Savings deposits	5,408			5,169			4,332			4.6		24.8
Certificates of deposit ($100,000 or more)	2,801			3,550			6,065			(21.1)		(53.8)
Other time deposits	3,187			3,701			5,164			(13.9)		(38.3)
Noninterest-bearing deposits	18,720			18,205			13,235			2.8		41.4
Total deposits	$	83,171		$	83,175		$	73,561		—		13.1	%

Home equity loans
Average balance	$	9,360		$	9,528		$	10,295
Combined weighted-average loan-to-value ratio (at date of origination)	69		%	70		%	70		%
Percent first lien positions	66			64			61

Other data
Branches	1,073			1,077			1,098
Automated teller machines	1,386			1,388			1,420

Consumer Bank Summary of Operations (4Q20 vs. 4Q19)

Net income attributable to Key of $228 million for the fourth quarter of 2020, compared to $168 million for the year-ago quarter
Taxable-equivalent net interest income increased by $58 million, or 9.9%, compared to the fourth quarter of 2019, driven by strong balance sheet growth and fees related to PPP loans, partially offset by the lower interest rate environment
Average loans and leases increased $7.0 billion, or 20.5%, driven by benefit from the PPP, as well as growth from Laurel Road and consumer mortgage
Average deposits increased $9.6 billion, or 13.1%, from the fourth quarter of 2019. This was driven by consumer stimulus payments, lower spend activity, and relationship growth
Provision for credit losses decreased $59 million compared to the fourth quarter of 2019. The decrease in provision for credit losses is attributable to lower net charge-offs and a reduced allowance from the third quarter of 2020, driven by continued strength in client credit quality
Noninterest income increased $22 million, or 9.2%, from the year ago quarter, driven by strength in consumer mortgage income and higher trust and investment services income
Noninterest expense increased $61 million, or 11.1%, from the year ago quarter driven by higher variable compensation from strong revenue growth and higher variable expenses related to higher loan volumes

Commercial Bank


dollars in millions							Change 4Q20 vs.
	4Q20		3Q20		4Q19		3Q20		4Q19
Summary of operations
Net interest income (TE)	$	413	$	421	$	416	(1.9)	%	(.7)	%
Noninterest income	500		383		355		30.5		40.8
Total revenue (TE)	913		804		771		13.6		18.4
Provision for credit losses	42		163		38		(74.2)		10.5
Noninterest expense	494		443		393		11.5		25.7
Income (loss) before income taxes (TE)	377		198		340		90.4		10.9
Allocated income taxes and TE adjustments	69		38		29		81.6		137.9
Net income (loss) attributable to Key	$	308	$	160	$	311	92.5	%	(1.0)	%

Average balances
Loans and leases	$	59,992	$	62,925	$	58,535	(4.7)	%	2.5	%
Loans held for sale	1,285		1,383		1,465		(7.1)		(12.3)
Total assets	69,277		72,613		67,135		(4.6)		3.2
Deposits	52,163		51,238		38,224		1.8	%	36.5	%

TE = Taxable Equivalent, N/M = Not Meaningful

Additional Commercial Bank Data

dollars in millions							Change 4Q20 vs.
	4Q20		3Q20		4Q19		3Q20		4Q19
Noninterest income
Trust and investment services income	$	28	$	27	$	29	3.7	%	(3.4)
Investment banking and debt placement fees	243		146		179		66.4		35.8	%
Operating lease income and other leasing gains	39		38		39		2.6		—

Corporate services income	55		44		58		25.0		(5.2)
Service charges on deposit accounts	31		32		27		(3.1)		14.8
Cards and payments income	43		60		15		(28.3)		186.7
Payments and services income	129		136		100		(5.1)		29.0

Commercial mortgage servicing fees	32		18		19		77.8		68.4
Other noninterest income	29		18		(11)		61.1		N/M
Total noninterest income	$	500	$	383	$	355	30.5	%	40.8	%

N/M = Not Meaningful

Commercial Bank Summary of Operations (4Q20 vs. 4Q19)

Net income attributable to Key of $308 million for the fourth quarter of 2020, compared to $311 million for the year-ago quarter
Taxable-equivalent net interest income decreased by $3.0 million, compared to the fourth quarter of 2019, as the lower interest rate environment offset balance sheet growth and fees related to PPP loans
Average loan and lease balances increased $1.5 billion, or 2.5%, compared to the fourth quarter of 2019 as PPP loans offset lower utilization
Average deposit balances increased $14 billion, or 36.5%, compared to the fourth quarter of 2019, driven by growth in targeted relationships and the impact of government programs
Provision for credit losses increased $4.0 million compared to the fourth quarter of 2019
Noninterest income increased $145 million, from the fourth quarter of 2019, driven by a record quarter in investment banking income, benefit from market-related adjustments to customer derivatives, and higher cards and payments income related to prepaid card revenue
Noninterest expense increased by $101 million, or 25.7%, from the fourth quarter of 2019, driven by elevated variable expenses related to prepaid card and higher variable compensation from strong revenue growth

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

KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $170.3 billion at December 31, 2020.

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of more than 1,000 branches and approximately 1,400 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.

INVESTOR RELATIONS:	KEY MEDIA NEWSROOM:
www.key.com/ir	www.key.com/newsroom

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as "goal," "objective," "plan," "expect," "assume," "anticipate," "intend," "project," "believe," "estimate," or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Forward-looking statements, by their nature, are subject to assumptions, risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause Key's actual results to differ from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 2019, as well as in KeyCorp's subsequent SEC filings, all of which have been or will be filed with the Securities and Exchange Commission (the "SEC") and are or will be available on Key's website (www.key.com/ir) and on the SEC's website (www.sec.gov). These factors may include, among others: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive regulation of the U.S. financial services industry. In addition to the aforementioned factors, the COVID–19 global pandemic is adversely affecting us, our clients, and third–party service providers, among others, and its impact may adversely affect our business and results of operations over a period of time. 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, 2021. A replay of the call will be available through January 30, 2021.

*****

KeyCorp
Fourth Quarter 2020
Financial Supplement
Page
14	Financial Highlights
16	GAAP to Non-GAAP Reconciliation
18	Consolidated Balance Sheets
19	Consolidated Statements of Income
20	Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
22	Noninterest Expense
22	Personnel Expense
23	Loan Composition
23	Loans Held for Sale Composition
23	Summary of Changes in Loans Held for Sale
24	Summary of Loan and Lease Loss Experience From Continuing Operations
25	Asset Quality Statistics From Continuing Operations
25	Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
25	Summary of Changes in Nonperforming Loans From Continuing Operations
26	Line of Business Results

Financial Highlights
(dollars in millions, except per share amounts)
			Three months ended
			12/31/2020			9/30/2020			12/31/2019
Summary of operations
	Net interest income (TE)		$	1,043		$	1,006		$	987
	Noninterest income		802			681			651
		Total revenue (TE)	1,845			1,687			1,638
	Provision for credit losses		20			160			109
	Noninterest expense		1,128			1,037			980
	Income (loss) from continuing operations attributable to Key		575			424			466
	Income (loss) from discontinued operations, net of taxes		7			4			3
	Net income (loss) attributable to Key		582			428			469

	Income (loss) from continuing operations attributable to Key common shareholders		549			397			439
	Income (loss) from discontinued operations, net of taxes		7			4			3
	Net income (loss) attributable to Key common shareholders		556			401			442

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.57		$	.41		$	.45
	Income (loss) from discontinued operations, net of taxes		.01			—			—
	Net income (loss) attributable to Key common shareholders ^(a)		.57			.41			.45

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.56			.41			.45
	Income (loss) from discontinued operations, net of taxes — assuming dilution		.01			—			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)		.57			.41			.45

	Cash dividends declared		.185			.185			.185
	Book value at period end		16.53			16.25			15.54
	Tangible book value at period end		13.61			13.32			12.56
	Market price at period end		16.41			11.93			20.24

Performance ratios
	From continuing operations:
	Return on average total assets		1.35		%	1.00		%	1.27		%
	Return on average common equity		13.65			9.98			11.40
	Return on average tangible common equity ^(b)		16.61			12.19			14.09
	Net interest margin (TE)		2.70			2.62			2.98
	Cash efficiency ratio ^(b)		60.3			60.6			58.7

	From consolidated operations:
	Return on average total assets		1.36		%	1.00		%	1.27		%
	Return on average common equity		13.82			10.08			11.48
	Return on average tangible common equity ^(b)		16.82			12.31			14.19
	Net interest margin (TE)		2.69			2.62			2.97
	Loan to deposit ^(c)		76.5			77.2			86.6

Capital ratios at period end
	Key shareholders' equity to assets		10.6		%	10.4		%	11.8		%
	Key common shareholders' equity to assets		9.5			9.3			10.5
	Tangible common equity to tangible assets ^(b)		7.9			7.8			8.6
	Common Equity Tier 1^(d)		9.8			9.5			9.4
	Tier 1 risk-based capital ^(d)		11.1			10.9			10.9
	Total risk-based capital ^(d)		13.4			13.3			12.8
	Leverage ^(d)		8.9			8.7			9.9

Asset quality — from continuing operations
	Net loan charge-offs		$	135		$	128		$	99
	Net loan charge-offs to average loans		.53		%	.49		%	.42		%
	Allowance for loan and lease losses		$	1,626		$	1,730		$	900
	Allowance for credit losses		1,823			1,938			968
	Allowance for loan and lease losses to period-end loans		1.61		%	1.68		%	.95		%
	Allowance for credit losses to period-end loans		1.80			1.88			1.02
	Allowance for loan and lease losses to nonperforming loans ^(e)		207.1			207.4			156.0
	Allowance for credit losses to nonperforming loans ^(e)		232.2			232.4			167.8
	Nonperforming loans at period-end ^(e)		$	785		$	834		$	577
	Nonperforming assets at period-end ^(e)		937			1,003			715
	Nonperforming loans to period-end portfolio loans ^(e)		.78		%	.81		%	.61		%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets ^(e)		.92			.97			.75

Trust assets
	Assets under management		$	44,140		$	41,312		$	40,833

Other data
	Average full-time equivalent employees		17,029			17,097			16,537
	Branches		1,073			1,077			1,098

Taxable-equivalent adjustment			$	8		$	6		$	8


Financial Highlights (continued)
(dollars in millions, except per share amounts)
		Twelve months ended
		12/31/2020			12/31/2019
Summary of operations
	Net interest income (TE)	$	4,063		$	3,941
	Noninterest income	2,652			2,459
	Total revenue (TE)	6,715			6,400
	Provision for credit losses	1,021			445
	Noninterest expense	4,109			3,901
	Income (loss) from continuing operations attributable to Key	1,329			1,708
	Income (loss) from discontinued operations, net of taxes	14			9
	Net income (loss) attributable to Key	1,343			1,717

	Income (loss) from continuing operations attributable to Key common shareholders	$	1,223		$	1,611
	Income (loss) from discontinued operations, net of taxes	14			9
	Net income (loss) attributable to Key common shareholders	1,237			1,620

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders	$	1.26		$	1.62
	Income (loss) from discontinued operations, net of taxes	.01			.01
	Net income (loss) attributable to Key common shareholders ^(a)	1.28			1.63

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution	1.26			1.61
	Income (loss) from discontinued operations, net of taxes — assuming dilution	.01			.01
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)	1.27			1.62

	Cash dividends paid	.74			.71

Performance ratios
	From continuing operations:
	Return on average total assets	.82		%	1.19		%
	Return on average common equity	7.77			10.83
	Return on average tangible common equity ^(b)	9.51			13.46
	Net interest margin (TE)	2.77			3.04
	Cash efficiency ratio ^(b)	60.2			59.6

	From consolidated operations:
	Return on average total assets	.82		%	1.19		%
	Return on average common equity	7.86			10.89
	Return on average tangible common equity ^(b)	9.62			13.53
	Net interest margin (TE)	2.76			3.03

Asset quality — from continuing operations
	Net loan charge-offs	$	443		$	424
	Net loan charge-offs to average total loans	.43		%	.46		%

Other data
	Average full-time equivalent employees	16,826			17,045

Taxable-equivalent adjustment		29			32


(a)	Earnings per share may not foot due to rounding.
(b)	The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity" and "cash efficiency." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.
(c)	Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits.
(d)	December 31, 2020, ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.

GAAP to Non-GAAP Reconciliations

(dollars in millions)

The table below presents certain non-GAAP financial measures related to "tangible common equity," "return on average tangible common equity," "pre-provision net revenue," and "cash efficiency ratio" and certain ratios excluding notable items.

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

The tangible common equity ratio and the return on average tangible common equity ratio have been a focus for some investors, and management believes these ratios may assist investors in analyzing Key's capital position without regard to the effects of intangible assets and preferred stock.

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

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

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

	Three months ended									Twelve months ended
	12/31/2020			9/30/2020			12/31/2019			12/31/2020			12/31/2019
Tangible common equity to tangible assets at period-end
Key shareholders' equity (GAAP)	$	17,981		$	17,722		$	17,038
Less: Intangible assets ^(a)	2,848			2,862			2,910
Preferred Stock ^(b)	1,856			1,856			1,856
Tangible common equity (non-GAAP)	$	13,277		$	13,004		$	12,272
Total assets (GAAP)	$	170,336		$	170,540		$	144,988
Less: Intangible assets ^(a)	2,848			2,862			2,910
Tangible assets (non-GAAP)	$	167,488		$	167,678		$	142,078
Tangible common equity to tangible assets ratio (non-GAAP)	7.9		%	7.8		%	8.6		%
Pre-provision net revenue
Net interest income (GAAP)	$	1,035		$	1,000		$	979		$	4,034		$	3,909
Plus: Taxable-equivalent adjustment	8			6			8			29			32
Noninterest income	802			681			651			2,652			2,459
Less: Noninterest expense	1,128			1,037			980			4,109			3,901
Pre-provision net revenue from continuing operations (non-GAAP)	$	717		$	650		$	658		$	2,606		$	2,499
Average tangible common equity
Average Key shareholders' equity (GAAP)	$	17,905		$	17,730		$	17,178		$	17,636		$	16,636
Less: Intangible assets (average) ^(c)	2,855			2,870			2,919			2,878			2,909
Preferred stock (average)	1,900			1,900			1,900			1,900			1,755
Average tangible common equity (non-GAAP)	$	13,150		$	12,960		$	12,359		$	12,858		$	11,972
Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)	$	549		$	397		$	439		$	1,223		$	1,611
Plus: Notable items, after tax ^(d)	—			—			29			—			183
Net income (loss) from continuing operations attributable to Key common shareholders excluding notable items (non-GAAP)	$	549		$	397		$	468		$	1,223		$	1,794
Average tangible common equity (non-GAAP)	13,150			12,960			12,359			12,858			11,972

Return on average tangible common equity from continuing operations (non-GAAP)	16.61		%	12.19		%	14.09		%	9.51		%	13.46		%
Return on average tangible common equity from continuing operations excluding notable items (non-GAAP)	16.61		%	12.19		%	15.02		%	9.51		%	14.98		%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)	$	556		$	401		$	442		$	1,237		$	1,620
Average tangible common equity (non-GAAP)	13,150			12,960			12,359			12,858			11,972

Return on average tangible common equity consolidated (non-GAAP)	16.82		%	12.31		%	14.19		%	9.62		%	13.53		%

GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
	Three months ended									Twelve months ended
	12/31/2020			9/30/2020			12/31/2019			12/31/2020			12/31/2019
Cash efficiency ratio
Noninterest expense (GAAP)	$	1,128		$	1,037		$	980		$	4,109		$	3,901
Less: Intangible asset amortization	15			15			19			65			89
Adjusted noninterest expense (non-GAAP)	$	1,113		$	1,022		$	961		$	4,044		$	3,812
Less: Notable items ^(d)	—			—			22			—			100
Adjusted noninterest expense excluding notable items (non-GAAP)	$	1,113		$	1,022		$	939		$	4,044		$	3,712

Net interest income (GAAP)	$	1,035		$	1,000		$	979		$	4,034		$	3,909
Plus: Taxable-equivalent adjustment	8			6			8			29			32
Noninterest income	802			681			651			2,652			2,459
Total taxable-equivalent revenue (non-GAAP)	$	1,845		$	1,687		$	1,638		$	6,715		$	6,400

Cash efficiency ratio (non-GAAP)	60.3		%	60.6		%	58.7		%	60.2		%	59.6		%

Cash efficiency ratio excluding notable items (non-GAAP)	60.3		%	60.6		%	57.3		%	60.2		%	58.0		%


(a)	For the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, intangible assets exclude $4 million, $5 million, and $7 million, respectively, of period-end purchased credit card receivables.
(b)	Net of capital surplus.
(c)	For the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, average intangible assets exclude $5 million, $5 million, and $8 million, respectively, of average purchased credit card receivables. For the twelve months ended December 31, 2020, and December 31, 2019, average intangible assets exclude $6 million and $10 million, respectively, of average purchase credit card receivables.
(d)	Additional detail provided in Notable Items table on page 24 of this release.
GAAP = U.S. generally accepted accounting principles

Consolidated Balance Sheets
(dollars in millions)

			12/31/2020		9/30/2020		12/31/2019
Assets
	Loans		$	101,185	$	103,081	$	94,646
	Loans held for sale		1,583		1,724		1,334
	Securities available for sale		27,556		26,895		21,843
	Held-to-maturity securities		7,595		8,384		10,067
	Trading account assets		735		733		1,040
	Short-term investments		16,194		14,148		1,272
	Other investments		621		620		605
		Total earning assets	155,469		155,585		130,807
	Allowance for loan and lease losses		(1,626)		(1,730)		(900)
	Cash and due from banks		1,091		956		732
	Premises and equipment		753		765		814
	Goodwill		2,664		2,664		2,664
	Other intangible assets		188		203		253
	Corporate-owned life insurance		4,286		4,274		4,233
	Accrued income and other assets		6,812		7,084		5,494
	Discontinued assets		699		739		891
		Total assets	$	170,336	170,540		144,988

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	80,427	$	80,791	$	66,714
		Savings deposits	5,913		5,585		4,651
		Certificates of deposit ($100,000 or more)	2,733		3,345		6,598
		Other time deposits	3,010		3,450		5,054
		Total interest-bearing deposits	92,083		93,171		83,017
		Noninterest-bearing deposits	43,199		43,575		28,853
		Total deposits	135,282		136,746		111,870
	Federal funds purchased and securities sold under repurchase agreements		220		213		387
	Bank notes and other short-term borrowings		759		818		705
	Accrued expense and other liabilities		2,385		2,356		2,540
	Long-term debt		13,709		12,685		12,448
		Total liabilities	152,355		152,818		127,950

Equity
	Preferred stock		1,900		1,900		1,900
	Common shares		1,257		1,257		1,257
	Capital surplus		6,281		6,263		6,295
	Retained earnings		12,751		12,375		12,469
	Treasury stock, at cost		(4,946)		(4,940)		(4,909)
	Accumulated other comprehensive income (loss)		738		867		26
		Key shareholders' equity	17,981		17,722		17,038
	Noncontrolling interests		—		—		—
		Total equity	17,981		17,722		17,038
Total liabilities and equity			$	170,336	$	170,540	$	144,988

Common shares outstanding (000)			975,773		976,205		977,189

Consolidated Statements of Income
(dollars in millions, except per share amounts)
			Three months ended						Twelve months ended
			12/31/2020		9/30/2020		12/31/2019		12/31/2020		12/31/2019
Interest income
	Loans		$	933	$	927	$	1,046	$	3,866	$	4,267
	Loans held for sale		11		18		17		69		63
	Securities available for sale		119		115		137		484		537
	Held-to-maturity securities		51		53		63		222		262
	Trading account assets		4		3		8		20		32
	Short-term investments		4		1		12		18		61
	Other investments		3		2		2		6		13
		Total interest income	1,125		1,119		1,285		4,685		5,235
Interest expense
	Deposits		28		54		201		347		853
	Federal funds purchased and securities sold under repurchase agreements		—		—		1		6		2
	Bank notes and other short-term borrowings		1		1		4		12		17
	Long-term debt		61		64		100		286		454
		Total interest expense	90		119		306		651		1326
Net interest income			1,035		1,000		979		4,034		3,909
Provision for credit losses			20		160		109		1,021		445
Net interest income after provision for credit losses			1015		840		870		3,013		3,464
Noninterest income
	Trust and investment services income		123		128		120		507		475
	Investment banking and debt placement fees		243		146		181		661		630
	Service charges on deposit accounts		82		77		86		311		337
	Operating lease income and other leasing gains		39		38		39		167		162
	Corporate services income		63		51		65		228		236
	Cards and payments income		97		114		67		368		275
	Corporate-owned life insurance income		38		30		39		139		136
	Consumer mortgage income		43		51		21		176		63
	Commercial mortgage servicing fees		32		18		19		80		77
	Other income		42		28		14		15		68
		Total noninterest income	802		681		651		2,652		2,459
Noninterest expense
	Personnel		661		588		551		2,336		2,250
	Net occupancy		75		76		76		298		293
	Computer processing		62		59		51		232		214
	Business services and professional fees		54		49		54		196		186
	Equipment		26		25		25		100		100
	Operating lease expense		35		33		32		138		123
	Marketing		30		22		27		97		96
	FDIC assessment		9		6		8		32		31
	Intangible asset amortization		15		15		19		65		89
	OREO expense, net		—		(1)		3		8		13
	Other expense		161		165		134		607		506
		Total noninterest expense	1,128		1,037		980		4,109		3,901
Income (loss) from continuing operations before income taxes			689		484		541		1,556		2,022
	Income taxes		114		60		75		227		314
Income (loss) from continuing operations			575		424		466		1,329		1,708
	Income (loss) from discontinued operations, net of taxes		7		4		3		14		9
Net income (loss)			582		428		469		1,343		1,717
	Less: Net income (loss) attributable to noncontrolling interests		—		—		—		—		—
Net income (loss) attributable to Key			$	582	$	428	$	469	$	1,343	$	1,717

Income (loss) from continuing operations attributable to Key common shareholders			$	549	$	397	$	439	$	1,223	$	1,611
Net income (loss) attributable to Key common shareholders			556		401		442		1,237		1,620
Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.57	$	.41	$	.45	$	1.26	$	1.62
Income (loss) from discontinued operations, net of taxes			0.01		—		—		.01		.01
Net income (loss) attributable to Key common shareholders ^(a)			.57		.41		.45		1.28		1.63
Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.56	$	.41	$	.45	$	1.26	$	1.61
Income (loss) from discontinued operations, net of taxes			0.01		—		—		.01		.01
Net income (loss) attributable to Key common shareholders ^(a)			.57		.41		.45		1.27		1.62

Cash dividends declared per common share			$	.185	$	.185	$	.185	$	.740	$	.710

Weighted-average common shares outstanding (000)			967,987		967,804		973,450		967,783		992,091
	Effect of common share options and other stock awards		8,473		6,184		10,911		7,024		10,163
Weighted-average common shares and potential common shares outstanding (000) ^(b)			976,460		973,988		984,361		974,807		1,002,254


(a)	Earnings per share may not foot due to rounding.
(b)	Assumes conversion of common share options and other stock awards, as applicable.

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(dollars in millions)
		Fourth Quarter 2020						Third Quarter 2020						Fourth Quarter 2019
		Average				Yield/		Average				Yield/		Average				Yield/
		Balance		Interest ^(a)		Rate ^(a)		Balance		Interest ^(a)		Rate ^(a)		Balance		Interest ^(a)		Rate ^(a)
Assets
	Loans: ^{(b), (c)}
	Commercial and industrial ^(d)	$	53,562	$	477	3.54	%	$	57,067	$	474	3.31	%	$	48,345	$	522	4.28	%
	Real estate — commercial mortgage	12,862		121		3.74		13,202		117		3.54		13,335		159		4.71
	Real estate — construction	1,959		19		3.79		1,987		18		3.57		1,495		18		4.87
	Commercial lease financing	4,353		32		2.92		4,488		35		3.10		4,482		39		3.52
	Total commercial loans	72,736		649		3.55		76,744		644		3.34		67,657		738		4.33
	Real estate — residential mortgage	8,968		74		3.29		8,398		73		3.46		6,777		65		3.83
	Home equity loans	9,410		91		3.81		9,580		91		3.82		10,362		122		4.69
	Consumer direct loans	4,583		56		4.93		4,403		56		5.07		3,125		51		6.45
	Credit cards	973		26		10.57		967		25		10.24		1,103		32		11.38
	Consumer indirect loans	5,040		45		3.56		4,827		44		3.66		4,583		46		3.99
	Total consumer loans	28,974		292		4.01		28,175		289		4.10		25,950		316		4.84
	Total loans	101,710		941		3.68		104,919		933		3.55		93,607		1,054		4.47
	Loans held for sale	1,621		11		2.76		1,924		17		3.61		1,653		17		4.11
	Securities available for sale ^{(b), (e)}	28,046		119		1.75		24,941		115		1.90		22,262		137		2.49
	Held-to-maturity securities ^(b)	7,939		51		2.56		8,677		53		2.44		10,264		63		2.43
	Trading account assets	744		4		2.21		686		4		2.08		1,103		8		3.08
	Short-term investments	14,111		4		.14		12,525		1		0.04		2,716		12		1.73
	Other investments ^(e)	615		3		1.31		640		2		1.49		603		2		1.82
	Total earning assets	154,786		1,133		2.93		154,312		1,125		2.93		132,208		1,293		3.90
	Allowance for loan and lease losses	(1,715)						(1,696)						(882)
	Accrued income and other assets	15,861						16,195						14,402
	Discontinued assets	717						752						908
	Total assets	$	169,649					$	169,563					$	146,636
Liabilities
	NOW and money market deposit accounts	$	80,636	12		.06		$	80,175	26		.13		$	66,412	135		.81
	Savings deposits	5,737		—		.03		5,478		1		.04		4,660		1		.07
	Certificates of deposit ($100,000 or more)	2,983		9		1.20		3,862		16		1.60		6,899		40		2.31
	Other time deposits	3,209		7		.80		3,735		11		1.17		5,187		25		1.92
	Total interest-bearing deposits	92,565		28		.12		93,250		54		.23		83,158		201		.96
	Federal funds purchased and securities sold under repurchase agreements	220		—		.04		225		—		.05		267		1		.75
	Bank notes and other short-term borrowings	791		1		.73		761		1		.68		801		4		2.02
	Long-term debt ^{(f), (g)}	12,118		61		2.05		12,801		64		2.12		12,531		100		3.22
	Total interest-bearing liabilities	105,694		90		.34		107,037		119		.45		96,757		306		1.25
	Noninterest-bearing deposits	43,156						41,694						29,446
	Accrued expense and other liabilities	2,177						2,350						2,347
	Discontinued liabilities ^(g)	717						752						908
	Total liabilities	151,744						151,833						129,458
Equity
	Key shareholders' equity	17,905						17,730						17,178
	Noncontrolling interests	—						—						—
	Total equity	17,905						17,730						17,178
	Total liabilities and equity	$	169,649					$	169,563					$	146,636
Interest rate spread (TE)						2.59	%					2.48	%					2.65	%
Net interest income (TE) and net interest margin (TE)				1,043		2.70	%			1,006		2.62	%			987		2.98	%
TE adjustment ^(b)				8						6						8
	Net interest income, GAAP basis			$	1,035					$	1,000					$	979


(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.
(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 21% for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial and industrial average balances include $129 million, $129 million, and $146 million of assets from commercial credit cards for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, 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, 2020						Twelve months ended December 31, 2019
		Average				Yield/		Average				Yield/
		Balance		Interest ^(a)		Rate ^(a)		Balance		Interest ^(a)		Rate ^(a)
Assets
	Loans: ^{(b), (c)}
	Commercial and industrial ^(d)	$	55,145	$	1,977	3.59	%	$	47,482	$	2,144	4.51	%
	Real estate — commercial mortgage	13,279		521		3.92		13,641		676		4.95
	Real estate — construction	1,843		74		3.99		1,485		78		5.24
	Commercial lease financing	4,497		139		3.09		4,488		163		3.63
	Total commercial loans	74,764		2,711		3.63		67,096		3,061		4.56
	Real estate — residential mortgage	8,094		284		3.50		6,095		241		3.95
	Home equity loans	9,772		392		4.01		10,634		526		4.95
	Consumer direct loans	4,213		221		5.26		2,475		176		7.11
	Credit cards	1,001		107		10.65		1,100		127		11.51
	Consumer indirect loans	4,845		180		3.72		4,111		168		4.09
	Total consumer loans	27,925		1,184		4.24		24,415		1,238		5.07
	Total loans	102,689		3,895		3.79		91,511		4,299		4.70
	Loans held for sale	1,972		69		3.49		1,411		63		4.48
	Securities available for sale ^{(b), (e)}	23,742		484		2.10		21,362		537		2.51
	Held-to-maturity securities ^(b)	8,938		222		2.49		10,841		262		2.41
	Trading account assets	814		20		2.47		1017		32		3.18
	Short-term investments	9,096		18		.20		2,876		61		2.11
	Other investments ^(e)	635		6		.87		630		13		2.09
	Total earning assets	147,886		4,714		3.20		129,648		5,267		4.06
	Allowance for loan and lease losses	(1481)						(880)
	Accrued income and other assets	15,650						14,411
	Discontinued assets	775						984
	Total assets	$	162,830					$	144,163
Liabilities
	NOW and money market deposit accounts	$	75,733	206		.27		$	63,731	566		.89
	Savings deposits	5,252		2		.04		4,740		4		.09
	Certificates of deposit ($100,000 or more)	4,520		83		1.83		7,757		180		2.32
	Other time deposits	4,041		56		1.38		5,426		103		1.90
	Total interest-bearing deposits	89,546		347		.39		81,654		853		1.04
	Federal funds purchased and securities sold under repurchase agreements	670		6		.88		264		2		.66
	Bank notes and other short-term borrowings	1,452		12		.85		730		17		2.31
	Long-term debt ^{(f), (g)}	12,578		286		2.36		13,062		454		3.52
	Total interest-bearing liabilities	104,246		651		.63		95,710		1326		1.39
	Noninterest-bearing deposits	37,740						28,376
	Accrued expense and other liabilities	2,433						2,456
	Discontinued liabilities ^(g)	775						984
	Total liabilities	145,194						127,526
Equity
	Key shareholders' equity	17,636						16,636
	Noncontrolling interests	—						1
	Total equity	17,636						16,637
	Total liabilities and equity	$	162,830					$	144,163
Interest rate spread (TE)						2.57	%					2.67	%
Net interest income (TE) and net interest margin (TE)				4,063		2.77	%			3,941		3.04	%
TE adjustment ^(b)				29						32
	Net interest income, GAAP basis			$	4,034					$	3,909


(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.
(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 21% for the twelve months ended December 31, 2020, and December 31, 2019, respectively.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial and industrial average balances include $135 million and $141 million of assets from commercial credit cards for the twelve months ended December 31, 2020, and December 31, 2019, 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
	12/31/2020		9/30/2020		12/31/2019		12/31/2020		12/31/2019
Personnel ^(a)	$	661	$	588	$	551	$	2,336	$	2,250
Net occupancy	75		76		76		298		293
Computer processing	62		59		51		232		214
Business services and professional fees	54		49		54		196		186
Equipment	26		25		25		100		100
Operating lease expense	35		33		32		138		123
Marketing	30		22		27		97		96
FDIC assessment	9		6		8		32		31
Intangible asset amortization	15		15		19		65		89
OREO expense, net	—		(1)		3		8		13
Other expense	161		165		134		607		506
Total noninterest expense	$	1,128	$	1,037	$	980	$	4,109	$	3,901
Average full-time equivalent employees ^(b)	17,029		17,097		16,537		16,826		17,045


(a)	Additional detail provided in Personnel Expense table below.
(b)	The number of average full-time equivalent employees has not been adjusted for discontinued operations.

Personnel Expense
(in millions)

	Three months ended						Twelve months ended
	12/31/2020		9/30/2020		12/31/2019		12/31/2020		12/31/2019
Salaries and contract labor	$	342	$	339	$	312	$	1,329	$	1,268
Incentive and stock-based compensation	208		155		154		627		584
Employee benefits	89		93		85		350		348
Severance	22		1		—		30		50
Total personnel expense	$	661	$	588	$	551	$	2,336	$	2,250

Loan Composition
(dollars in millions)

							Percent change 12/31/2020 vs
	12/31/2020		9/30/2020		12/31/2019		9/30/2020		12/31/2019
Commercial and industrial ^(a)	$	52,907	$	55,025	$	48,295	(3.8)	%	9.5	%
Commercial real estate:
Commercial mortgage	12,687		13,059		13,491		(2.8)		(6.0)
Construction	1,987		1,947		1,558		2.1		27.5
Total commercial real estate loans	14,674		15,006		15,049		(2.2)		(2.5)
Commercial lease financing ^(b)	4,399		4,450		4,688		(1.1)		(6.2)
Total commercial loans	71,980		74,481		68,032		(3.4)		5.8
Residential — prime loans:
Real estate — residential mortgage	9,298		8,715		7,023		6.7		32.4
Home equity loans	9,360		9,488		10,274		(1.3)		(8.9)
Total residential — prime loans	18,658		18,203		17,297		2.5		7.9
Consumer direct loans	4,714		4,395		3,513		7.3		34.2
Credit cards	989		970		1,130		2.0		(12.5)
Consumer indirect loans	4,844		5,032		4,674		(3.7)		3.6
Total consumer loans	29,205		28,600		26,614		2.1		9.7
Total loans ^{(c), (d)}	$	101,185	$	103,081	$	94,646	(1.8)	%	6.9	%


(a)	Loan balances include $127 million, $128 million, and $144 million of commercial credit card balances at December 31, 2020, September 30, 2020, and December 31, 2019, respectively.
(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $23 million, $18 million, and $15 million at December 31, 2020, September 30, 2020, and December 31, 2019, respectively. Principal reductions are based on the cash payments received from these related receivables.
(c)	Total loans exclude loans of $710 million at December 31, 2020, $743 million at September 30, 2020, and $865 million at December 31, 2019, related to the discontinued operations of the education lending business.
(d)	Accrued interest of $241 million, $235 million, and $244 million at December 31, 2020, September 30, 2020, and December 31, 2019, respectively, presented in "other assets" on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

Loans Held for Sale Composition
(dollars in millions)

							Percent change 12/31/2020 vs
	12/31/2020		9/30/2020		12/31/2019		9/30/2020		12/31/2019
Commercial and industrial	$	249	$	336	$	367	(25.9)	%	(32.2)	%
Real estate — commercial mortgage	1,014		1,031		772		(1.6)		31.3
Commercial lease financing	—		1		2		N/M		N/M
Real estate — residential mortgage	264		288		140		(8.3)		88.6
Consumer direct loans	56		68		53		(17.6)		5.7
Total loans held for sale ^(a)	$	1,583	$	1,724	$	1,334	(8.2)	%	18.7	%


(a)	Total loans held for sale include Real estate — residential mortgage loans held for sale at fair value of $264 million at December 31, 2020, $288 million at September 30, 2020, and $140 million at December 31, 2019.

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

	4Q20		3Q20		2Q20		1Q20		4Q19
Balance at beginning of period	$	1,724	$	2,007	$	2,143	$	1,334	$	1,598
New originations	3,835		3,282		3,621		3,333		3,659
Transfers from (to) held to maturity, net	(24)		75		(15)		200		26
Loan sales	(3,932)		(3,583)		(3,679)		(2,649)		(3,933)
Loan draws (payments), net	(19)		(57)		(61)		(77)		(18)
Valuation adjustments	—		—		(2)		2		2
Balance at end of period ^(a)	$	1,583	$	1,724	$	2,007	$	2,143	$	1,334


(a)	Total loans held for sale include Real estate — residential mortgage loans held for sale at fair value of $264 million at December 31, 2020, $288 million at September 30, 2020, $250 million at June 30, 2020, $152 million at March 31, 2020, and $140 million at December 31, 2019.

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

	Three months ended									Twelve months ended
	12/31/2020			9/30/2020			12/31/2019			12/31/2020			12/31/2019
Average loans outstanding	$	101,710		$	104,919		$	93,607		$	102,689		$	91,511
Allowance for loan and lease losses at the end of the prior period	$	1,730		$	1708		$	893		$	900		$	883
Cumulative effect from change in accounting principle ^(a)	—			—			—			204			—
Allowance for loan and lease losses at the beginning of the period	1,730			1,708			893			1,104			883
Loans charged off:
Commercial and industrial	119			101			77			351			319

Real estate — commercial mortgage	1			13			2			19			8
Real estate — construction	—			—			1			—			5
Total commercial real estate loans	1			13			3			19			13
Commercial lease financing	19			10			1			35			26
Total commercial loans	139			124			81			405			358
Real estate — residential mortgage	—			—			—			2			3
Home equity loans	1			4			3			11			19
Consumer direct loans	7			8			11			37			41
Credit cards	7			9			10			39			44
Consumer indirect loans	6			6			10			28			34
Total consumer loans	21			27			34			117			141
Total loans charged off	160			151			115			522			499
Recoveries:
Commercial and industrial	15			9			5			34			27

Real estate — commercial mortgage	—			2			—			3			2
Total commercial real estate loans	—			2			—			3			2
Commercial lease financing	—			—			1			1			5
Total commercial loans	15			11			6			38			34
Real estate — residential mortgage	—			1			1			1			2
Home equity loans	1			3			2			7			8
Consumer direct loans	1			2			2			7			7
Credit cards	2			2			1			8			7
Consumer indirect loans	6			4			4			18			17
Total consumer loans	10			12			10			41			41
Total recoveries	25			23			16			79			75
Net loan charge-offs	(135)			(128)			(99)			(443)			(424)
Provision (credit) for loan and lease losses	31			150			106			965			441
Allowance for loan and lease losses at end of period	$	1,626		$	1,730		$	900		$	1,626		$	900

Liability for credit losses on lending-related commitments at the end of the prior period	$	208		$	198		$	65		$	68		$	64
Liability for credit losses on contingent guarantees at the end of the prior period	—			—			—			7			—
Cumulative effect from change in accounting principle ^{(a), (b)}	—			—			—			66			—
Liability for credit losses on lending-related commitments at beginning of period	208			198			65			141			64
Provision (credit) for losses on lending-related commitments	(11)			10			3			56			4
Liability for credit losses on lending-related commitments at end of period ^(c)	$	197		$	208		$	68		$	197		$	68

Total allowance for credit losses at end of period	$	1,823		$	1,938		$	968		$	1,823		$	968

Net loan charge-offs to average total loans	.53		%	.49		%	.42		%	.43		%	.46		%
Allowance for loan and lease losses to period-end loans	1.61			1.68			.95			1.61			.95
Allowance for credit losses to period-end loans	1.80			1.88			1.02			1.80			1.02
Allowance for loan and lease losses to nonperforming loans	207.1			207.4			156.0			207.1			156.0
Allowance for credit losses to nonperforming loans	232.2			232.4			167.8			232.2			167.8

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


(a)	The cumulative effect from change in accounting principle relates to the January 1, 2020, adoption of ASU 2016-13.
(b)	The twelve months ended December 30, 2020, amount excludes $4 million related to the provision for other financial assets as a result of the change in accounting principle.
(c)	Included in "Accrued expense and other liabilities" on the balance sheet.

Asset Quality Statistics From Continuing Operations
(dollars in millions)
	4Q20			3Q20			2Q20			1Q20			4Q19
Net loan charge-offs	$	135		$	128		$	96		$	84		$	99
Net loan charge-offs to average total loans	.53		%	.49		%	.36		%	.35		%	.42		%
Allowance for loan and lease losses	$	1,626		$	1,730		$	1,708		$	1,359		$	900
Allowance for credit losses ^(a)	1,823			1,938			1,906			1,520			968
Allowance for loan and lease losses to period-end loans	1.61		%	1.68		%	1.61		%	1.32		%	.95		%
Allowance for credit losses to period-end loans	1.80			1.88			1.80			1.47			1.02
Allowance for loan and lease losses to nonperforming loans	207.1			207.4			224.7			215.0			156.0
Allowance for credit losses to nonperforming loans	232.2			232.4			250.8			240.5			167.8
Nonperforming loans at period end	$	785		$	834		$	760		$	632		$	577
Nonperforming assets at period end	937			1,003			951			844			715
Nonperforming loans to period-end portfolio loans	.78		%	.81		%	.72		%	.61		%	.61		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	.92			.97			.89			.82			.75


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

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
(dollars in millions)
	12/31/2020			9/30/2020			6/30/2020			3/31/2020			12/31/2019
Commercial and industrial	$	385		$	459		$	404		$	277		$	264

Real estate — commercial mortgage	104			104			91			87			83
Real estate — construction	—			1			1			2			2
Total commercial real estate loans	104			105			92			89			85
Commercial lease financing	8			6			9			5			6
Total commercial loans	497			570			505			371			355
Real estate — residential mortgage	110			96			89			89			48
Home equity loans	154			146			141			143			145
Consumer direct loans	5			3			3			4			4
Credit cards	2			2			2			3			3
Consumer indirect loans	17			17			20			22			22
Total consumer loans	288			264			255			261			222
Total nonperforming loans	785			834			760			632			577
OREO	100			105			112			119			35
Nonperforming loans held for sale	49			61			75			89			94
Other nonperforming assets	3			3			4			4			9
Total nonperforming assets	$	937		$	1,003		$	951		$	844		$	715
Accruing loans past due 90 days or more	86			73			87			128			97
Accruing loans past due 30 through 89 days	241			336			419			393			329
Restructured loans — accruing and nonaccruing ^(a)	363			306			310			340			347
Restructured loans included in nonperforming loans ^(a)	229			168			166			172			183
Nonperforming assets from discontinued operations — education lending business	5			6			7			7			7
Nonperforming loans to period-end portfolio loans	.78		%	.81		%	.72		%	.61		%	.61		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	.92			.97			.89			.82			.75

(a)

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

Summary of Changes in Nonperforming Loans From Continuing Operations
(in millions)
	4Q20		3Q20		2Q20		1Q20		4Q19
Balance at beginning of period	$	834	$	760	$	632	$	577	$	585
Loans placed on nonaccrual status ^(a)	300		387		293		219		268
Charge-offs	(160)		(150)		(111)		(100)		(114)
Loans sold	(9)		(6)		(5)		(4)		(1)
Payments	(83)		(83)		(29)		(31)		(59)
Transfers to OREO	(3)		—		—		(3)		(3)
Transfers to nonperforming loans held for sale	—		—		—		—		(47)
Loans returned to accrual status	(94)		(74)		(20)		(26)		(52)
Balance at end of period	$	785	$	834	$	760	$	632	$	577

(a)

Purchase credit impaired (PCI) loans meeting nonperforming criteria were historically excluded from Key's nonperforming disclosures. As a result of CECL implementation on January 1, 2020, PCI loans became purchased credit deteriorated (PCD) loans. PCD loans that met the definition of nonperforming are now included in nonperforming disclosures, resulting in a $45 million increase in nonperforming loans in the first quarter of 2020.

Line of Business Results
(dollars in millions)

																Percentage change 4Q20 vs.
	4Q20			3Q20			2Q20			1Q20			4Q19			3Q20		4Q19
Consumer Bank
Summary of operations
Total revenue (TE)	$	905		$	871		$	841		$	820		$	825		3.9	%	9.7	%
Provision for credit losses	(4)			(16)			167			140			55			N/M		N/M
Noninterest expense	611			571			555			542			550			7.0		11.1
Net income (loss) attributable to Key	228			241			91			105			168			(5.4)		35.7
Average loans and leases	41,137			41,471			39,197			35,197			34,148			(.8)		20.5
Average deposits	83,171			83,175			79,502			73,320			73,561			—		13.1
Net loan charge-offs	28			23			39			43			43			21.7		(34.9)
Net loan charge-offs to average total loans	.27		%	.22		%	.40		%	.49		%	.50		%	N/A		N/A
Nonperforming assets at period end	$	374		$	353		$	332		$	342		$	306		5.9		22.2
Return on average allocated equity	25.45		%	27.03		%	10.45		%	12.26		%	19.64		%	N/A		N/A

Commercial Bank
Summary of operations
Total revenue (TE)	$	913		$	804		$	857		$	630		$	771		13.6	%	18.4	%
Provision for credit losses	42			163			314			218			38			(74.2)		10.5
Noninterest expense	494			443			438			358			393			11.5		25.7
Net income (loss) attributable to Key	308			160			101			63			311			92.5		(1.0)
Average loans and leases	59,992			62,925			68,038			60,082			58,535			(4.7)		2.5
Average loans held for sale	1,285			1,383			2,012			1,607			1,465			(7.1)		(12.3)
Average deposits	52,163			51,238			47,685			36,256			38,224			1.8		36.5
Net loan charge-offs	108			104			57			40			39			3.8		176.9
Net loan charge-offs to average total loans	.72		%	.66		%	.34		%	.27		%	.26		%	N/A		N/A
Nonperforming assets at period end	$	558		$	645		$	616		$	407		$	402		(13.5)		38.8
Return on average allocated equity	24.04		%	12.57		%	8.41		%	5.40		%	26.40		%	N/A		N/A

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

Notable Items
(in millions)

	Three months ended				Twelve months ended
	12/31/2020	9/30/2020	12/31/2019		12/31/2020	12/31/2019
Provision for credit losses	—	—	$	(16)	—	$	(139)

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