KeyCorp Reports Record Second Quarter 2021 Net Income Of $698 Million, Or $.72 Per Diluted Common Share

Record second quarter revenue, driven by an 8% year-over-year increase in noninterest income

Investment banking and debt placement fees up 39% from year-ago period

Strong consumer originations: over $4.0 billion in consumer mortgage and Laurel Road originations

Successful launch of Laurel Road for Doctors

Strong credit quality: nonperforming loans down from the prior quarter and year-ago period and net charge-offs to average loans of 9 basis points

Announced new common share repurchase authorization of up to $1.5 billion

News provided by

KeyCorp

Jul 20, 2021, 06:30 ET

CLEVELAND, July 20, 2021 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $698 million, or $.72 per diluted common share for the second quarter of 2021. This compared to $591 million, or $.61 per diluted common share, for the first quarter of 2021 and $159 million, or $.16 per diluted common share, for the second quarter of 2020.

Our results this quarter reflect the success of our productive, client-centric team, strong risk management practices, and momentum from recent investments in both our teammates and digital capabilities.

We generated record second quarter revenue, driven by growth in both our commercial and consumer businesses, as we acquired and deepened relationships across our franchise. Our fee-based businesses reported another strong quarter, with noninterest income up 8% year-over-year. Our investment banking business generated record fees for the second quarter. Furthermore, our investment banking revenue in the second quarter represents the second-highest quarter in our history. With broad-based growth across our targeted industry verticals and continued investments in our teammates, our investment banking business has delivered a decade of consistent growth.

Credit quality remained strong this quarter, with lower nonperforming loans and net charge-offs as a percent of loans of 9 basis points. Our positive credit trends reflect our strong risk culture and disciplined underwriting practices. Our capital position also continues to be one of our strengths, with a Common Equity Tier 1 ratio of 9.9% at the end of the quarter. Earlier this month, our Board of Directors approved a new share repurchase authorization of up to $1.5 billion and will evaluate an increase to the common stock dividend in the fourth quarter 2021.

- Chris Gorman, Chairman and CEO

Selected Financial Highlights

dollars in millions, except per share data										Change 2Q21 vs.
	2Q21			1Q21			2Q20			1Q21		2Q20
Income (loss) from continuing operations attributable to Key common shareholders	$	698		$	591		$	159		18.1	%	339.0	%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution	.72			.61			.16			18.0		350.0
Return on average tangible common equity from continuing operations ^(a)	22.34		%	18.25		%	4.96		%	N/A		N/A
Return on average total assets from continuing operations	1.63			1.44			.45			N/A		N/A
Common Equity Tier 1 ratio ^(b)	9.9			9.9			9.1			N/A		N/A
Book value at period end	$	16.75		$	16.22		$	16.07		3.3	%	4.2	%
Net interest margin (TE) from continuing operations	2.52		%	2.61		%	2.76		%	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)	June 30, 2021 ratio is estimated.
TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions							Change 2Q21 vs.
	2Q21		1Q21		2Q20		1Q21		2Q20
Net interest income (TE)	$	1,023	$	1,012	$	1,025	1.1	%	(.2)	%
Noninterest income	750		738		692		1.6		8.4
Total revenue	$	1,773	$	1,750	$	1,717	1.3	%	3.3	%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $1.0 billion for the second quarter of 2021, a decrease of $2 million from the second quarter of 2020. The decrease in net interest income reflects a decrease in the net interest margin, largely offset by higher earning asset balances. The net interest margin was impacted by lower interest rates and a change in balance sheet mix, including elevated levels of liquidity.

Compared to the first quarter of 2021, taxable-equivalent net interest income increased by $11 million, and the net interest margin decreased by 9 basis points. Both net interest income and the net interest margin were impacted by higher earning asset balances, including elevated levels of liquidity, lower interest-bearing deposit costs, and higher loan fees from the Paycheck Protection Program ("PPP") forgiveness, partially offset by lower earning asset yields. Net interest income also benefited from one additional day in the second quarter of 2021.

Noninterest Income

dollars in millions							Change 2Q21 vs.
	2Q21		1Q21		2Q20		1Q21		2Q20
Trust and investment services income	$	133	$	133	$	123	—	%	8.1	%
Investment banking and debt placement fees	217		162		156		34.0		39.1
Service charges on deposit accounts	83		73		68		13.7		22.1
Operating lease income and other leasing gains	36		38		60		(5.3)		(40.0)
Corporate services income	55		64		52		(14.1)		5.8
Cards and payments income	113		105		91		7.6		24.2
Corporate-owned life insurance income	30		31		35		(3.2)		(14.3)
Consumer mortgage income	26		47		62		(44.7)		(58.1)
Commercial mortgage servicing fees	44		34		12		29.4		266.7
Other income	13		51		33		(74.5)		(60.6)
Total noninterest income	$	750	$	738	$	692	1.6	%	8.4	%

Compared to the second quarter of 2020, noninterest income increased by $58 million, primarily driven by a $61 million increase in investment banking and debt placement fees. Commercial mortgage servicing fees increased $32 million. Additionally, cards and payments income increased $22 million, reflecting broad-based growth across credit, debit, and merchant product categories. Partially offsetting these increases were consumer mortgage income and other income, which decreased $36 million and $20 million, respectively.

Compared to the first quarter of 2021, noninterest income increased by $12 million. The largest driver of the quarter-over-quarter increase was a $55 million increase in investment banking and debt placement fees, reflecting broad-based growth in all areas. Commercial mortgage servicing fees and service charges on deposit accounts both increased $10 million. Partially offsetting these increases were a $38 million decrease in other income, reflecting market-related valuation adjustments, and a $21 million decrease in consumer mortgage income.

Noninterest Expense

dollars in millions							Change 2Q21 vs.
	2Q21		1Q21		2Q20		1Q21		2Q20
Personnel expense	$	623	$	624	$	572	(.2)	%	8.9	%
Nonpersonnel expense	453		447		441		1.3		2.7
Total noninterest expense	$	1,076	$	1,071	$	1,013	.5	%	6.2	%

Key's noninterest expense was $1.1 billion for the second quarter of 2021, an increase of $63 million from the year-ago period. The increase is primarily related to higher personnel costs of $51 million, reflecting higher incentive and stock-based compensation, attributed to an increase in revenue and stock performance and an increase in employee benefits. Additionally, other drivers for the year-over-year increase include higher computer processing expense and marketing expense.

Compared to the first quarter of 2021, noninterest expense increased $5 million. Incentive and stock-based compensation increased $14 million, reflecting Key's strong investment banking performance, offset by a $15 million decrease in employee benefits.

BALANCE SHEET HIGHLIGHTS

Average Loans

dollars in millions							Change 2Q21 vs.
	2Q21		1Q21		2Q20		1Q21		2Q20
Commercial and industrial ^(a)	$	51,808	$	52,581	$	60,480	(1.5)	%	(14.3)	%
Other commercial loans	19,034		18,848		19,850		1.0		(4.1)
Total consumer loans	29,972		29,299		27,611		2.3		8.6
Total loans	$	100,814	$	100,728	$	107,941	.1	%	(6.6)	%

(a)	Commercial and industrial average loan balances include $132 million, $126 million, and $135 million of assets from commercial credit cards at June 30, 2021, March 31, 2021, and June 30, 2020, respectively.

Average loans were $100.8 billion for the second quarter of 2021, a decrease of $7.1 billion compared to the second quarter of 2020. Commercial loans decreased $9.5 billion, reflecting decreased utilization versus the year-ago period, partly offset by growth in PPP loans. Consumer loans increased $2.4 billion, reflecting strength from Laurel Road and Key's consumer mortgage business, partly offset by Key's exit from the indirect auto lending business.

Compared to the first quarter of 2021, average loans increased by $86 million. Commercial loans declined due to lower commercial utilization rates, partly offset by growth in PPP loans. Consumer loans continue to reflect strength from Key's consumer mortgage business, partly offset by Key's exit from the indirect auto lending business.

Average Deposits

dollars in millions										Change 2Q21 vs.
	2Q21			1Q21			2Q20			1Q21		2Q20
Non-time deposits	$	139,480		$	132,267		$	118,694		5.5	%	17.5	%
Certificates of deposit ($100,000 or more)	2,212			2,571			4,950			(14.0)		(55.3)
Other time deposits	2,630			2,902			4,333			(9.4)		(39.3)
Total deposits	$	144,322		$	137,740		$	127,977		4.8	%	12.8	%

Cost of total deposits	.05		%	.06		%	.30		%	N/A		N/A

N/A = Not Applicable

Average deposits totaled $144.3 billion for the second quarter of 2021, an increase of $16.3 billion compared to the year-ago quarter, reflecting growth from consumer and commercial relationships, partially offset by a decline in time deposits.

Compared to the first quarter of 2021, average deposits increased by $6.6 billion, primarily driven by broad-based commercial growth and higher consumer balances.

ASSET QUALITY

dollars in millions										Change 2Q21 vs.
	2Q21			1Q21			2Q20			1Q21		2Q20
Net loan charge-offs	$	22		$	114		$	96		(80.7)	%	(77.1)	%
Net loan charge-offs to average total loans	.09		%	.46		%	.36		%	N/A		N/A
Nonperforming loans at period end	$	694		$	728		$	760		(4.7)		(8.7)
Nonperforming assets at period end	738			790			951			(6.6)		(22.4)
Allowance for loan and lease losses	1,220			1,438			1,708			(15.2)		(28.6)
Allowance for credit losses	1,372			1,616			1,906			(15.1)		(28.0)
Allowance for loan and lease losses to nonperforming loans	175.8		%	197.5		%	224.7		%	N/A		N/A
Allowance for credit losses to nonperforming loans	197.7			222.0			250.8			N/A		N/A
Provision for credit losses	$	(222)		$	(93)		$	482		138.7	%	(146.1)	%

N/A = Not Applicable

Key's provision for credit losses was a net benefit of $222 million, including a $244 million reserve release for the second quarter of 2021, compared to an expense of $482 million in the second quarter of 2020 and a net benefit of $93 million in the first quarter of 2021. The reserve release was largely driven by a continued improvement in the economic outlook.

Net loan charge-offs for the second quarter of 2021 totaled $22 million, or .09% of average total loans. These results compare to $96 million, or .36%, for the second quarter of 2020 and $114 million, or .46%, for the first quarter of 2021. Key's allowance for credit losses was $1.4 billion, or 1.36% of total period-end loans at June 30, 2021, compared to 1.80% at June 30, 2020, and 1.60% at March 31, 2021.

At June 30, 2021, Key's nonperforming loans totaled $694 million, which represented .69% of period-end portfolio loans. These results compare to .72% at June 30, 2020, and .72% at March 31, 2021. Nonperforming assets at June 30, 2021, totaled $738 million, and represented .73% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .89% at June 30, 2020, and .78% at March 31, 2021.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at June 30, 2021.

Capital Ratios

	6/30/2021		3/31/2021		6/30/2020
Common Equity Tier 1 ^(a)	9.9	%	9.9	%	9.1	%
Tier 1 risk-based capital ^(a)	11.3		11.3		10.5
Total risk based capital ^(a)	13.2		13.4		12.8
Tangible common equity to tangible assets ^(b)	7.4		7.5		7.6
Leverage ^(a)	8.7		8.9		8.8

(a)	June 30, 2021 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 second quarter of 2021. As shown in the preceding table, at June 30, 2021, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.9% and 11.3%, respectively. Key's tangible common equity ratio was 7.4% at June 30, 2021.

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 20 basis points.

Summary of Changes in Common Shares Outstanding

in thousands					Change 2Q21 vs.
		2Q21	1Q21	2Q20	1Q21		2Q20
Shares outstanding at beginning of period		972,587	975,773	975,319	(.3)	%	(.3)	%
Open market repurchases and return of shares under employee compensation plans		(13,304)	(9,277)	(19)	43.4		N/M
Shares issued under employee compensation plans (net of cancellations)		993	6,091	647	(83.7)		53.5
	Shares outstanding at end of period	960,276	972,587	975,947	(1.3)	%	(1.6)	%

N/M = Not Meaningful

During the second quarter of 2021, Key declared a dividend of $.185 per common share and completed $300 million of common share repurchases. Capital distributions for the quarter were consistent with the regulatory capital distribution guidelines. In July of 2021, Key's Board of Directors approved a new share repurchase authorization program of up to $1.5 billion, applicable for the third quarter of 2021 through the third quarter of 2022, that supersedes the remaining capacity under the previous authorization. Additionally, Key will evaluate an increase to the per share common dividend in the fourth quarter of 2021, subject to Board approval.

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 2Q21 vs.
		2Q21		1Q21		2Q20		1Q21		2Q20
Revenue from continuing operations (TE)
Consumer Bank		$	854	$	867	$	835	(1.5)	%	2.3	%
Commercial Bank		874		859		879		1.7		(.6)
Other ^(a)		45		24		3		87.5		1,400.0
	Total	$	1,773	$	1,750	$	1,717	1.3	%	3.3	%

Income (loss) from continuing operations attributable to Key
Consumer Bank		$	259	$	220	$	98	17.7	%	164.3	%
Commercial Bank		434		384		106		13.0		309.4
Other ^(a)		31		14		(19)		121.4		N/M
	Total	$	724	$	618	$	185	17.2	%	291.4	%

(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 2Q21 vs.
	2Q21		1Q21		2Q20		1Q21		2Q20
Summary of operations
Net interest income (TE)	$	600	$	610	$	589	(1.6)	%	1.9	%
Noninterest income	254		257		246		(1.2)		3.3
Total revenue (TE)	854		867		835		(1.5)		2.3
Provision for credit losses	(70)		(23)		155		(204.3)		(145.2)
Noninterest expense	584		601		552		(2.8)		5.8
Income (loss) before income taxes (TE)	340		289		128		17.6		165.6
Allocated income taxes (benefit) and TE adjustments	81		69		30		17.4		170.0
Net income (loss) attributable to Key	$	259	$	220	$	98	17.7	%	164.3	%

Average balances
Loans and leases	$	40,598	$	39,249	$	37,300	3.4	%	8.8	%
Total assets	43,991		42,476		42,194		3.6		4.3
Deposits	88,412		85,033		79,235		4.0		11.6

Assets under management at period end	$	47,737	$	45,218	$	39,722	5.6	%	20.2	%

TE = Taxable Equivalent

Additional Consumer Bank Data

dollars in millions										Change 2Q21 vs.
	2Q21			1Q21			2Q20			1Q21		2Q20
Noninterest income
Trust and investment services income	$	104		$	101		$	87		3.0	%	19.5	%
Service charges on deposit accounts	47			38			36			23.7		30.6
Cards and payments income	62			54			47			14.8		31.9
Consumer mortgage income	26			47			61			(44.7)		(57.4)
Other noninterest income	15			17			15			(11.8)		.0
Total noninterest income	$	254		$	257		$	246		(1.2)	%	3.3	%

Average deposit balances
NOW and money market deposit accounts	$	56,038		$	54,685		$	49,143		2.5	%	14.0	%
Savings deposits	6,523			5,878			4,816			11.0		35.4
Certificates of deposit ($100,000 or more)	2,083			2,424			4,520			(14.1)		(53.9)
Other time deposits	2,615			2,888			4,296			(9.5)		(39.1)
Noninterest-bearing deposits	21,153			19,159			16,460			10.4		28.5
Total deposits	$	88,412		$	85,033		$	79,235		4.0		11.6	%

Home equity loans
Average balance	$	9,081		$	9,234		$	9,893
Combined weighted-average loan-to-value ratio (at date of origination)	68		%	69		%	70		%
Percent first lien positions	70			68			63

Other data
Branches	1,014			1,068			1,077
Automated teller machines	1,329			1,368			1,394

Consumer Bank Summary of Operations (2Q21 vs. 2Q20)

Net income attributable to Key of $259 million for the second quarter of 2021, compared to $98 million for the year-ago quarter
Taxable-equivalent net interest income increased by $11 million, or 1.9%, compared to the second quarter of 2020, driven by strong consumer mortgage balance sheet growth and fees related to PPP loans, partially offset by the lower interest rate environment
Average loans and leases increased $3.3 billion, or 8.8%, driven by growth in consumer mortgage and benefit from the PPP
Average deposits increased $9.2 billion, or 11.6%, from the second quarter of 2020, driven by retention of consumer stimulus payments and relationship growth
Provision for credit losses decreased $225 million, compared to the second quarter of 2020. The provision for credit losses was a net benefit and was driven by expected improvements in economic conditions and continued strength in client credit quality
Noninterest income increased $8 million, or 3.3%, from the year ago quarter, driven by higher trust and investment services income and client spend activity, partially offset by lower consumer mortgage income, due to lower gain on sale volume
Noninterest expense increased $32 million, or 5.8%, from the year ago quarter, driven by higher variable compensation and support expenses related to higher loan volumes

Commercial Bank


dollars in millions							Change 2Q21 vs.
	2Q21		1Q21		2Q20		1Q21		2Q20
Summary of operations
Net interest income (TE)	$	419	$	413	$	458	1.5	%	(8.5)	%
Noninterest income	455		446		421		2.0		8.1
Total revenue (TE)	874		859		879		1.7		(.6)
Provision for credit losses	(131)		(67)		326		95.5		(140.2)
Noninterest expense	451		443		441		1.8		2.3
Income (loss) before income taxes (TE)	554		483		112		14.7		394.6
Allocated income taxes and TE adjustments	120		99		6		21.2		N/M
Net income (loss) attributable to Key	$	434	$	384	$	106	13.0	%	309.4	%

Average balances
Loans and leases	$	59,953	$	61,221	$	70,336	(2.1)	%	(14.8)	%
Loans held for sale	1,341		1,237		2,012		8.4		(33.3)
Total assets	69,101		70,448		79,267		(1.9)		(12.8)
Deposits	54,814		51,894		47,954		5.6	%	14.3	%

TE = Taxable Equivalent, N/M = Not Meaningful

Additional Commercial Bank Data

dollars in millions							Change 2Q21 vs.
	2Q21		1Q21		2Q20		1Q21		2Q20
Noninterest income
Trust and investment services income	$	27	$	32	$	37	(15.6)	%	(27.0)
Investment banking and debt placement fees	215		162		156		32.7		37.8	%
Operating lease income and other leasing gains	35		38		59		(7.9)		(40.7)

Corporate services income	47		56		45		(16.1)		4.4
Service charges on deposit accounts	34		33		30		3.0		13.3
Cards and payments income	49		52		45		(5.8)		8.9
Payments and services income	130		141		120		(7.8)		8.3

Commercial mortgage servicing fees	44		34		12		29.4		266.7
Other noninterest income	4		39		37		(89.7)		(89.2)
Total noninterest income	$	455	$	446	$	421	2.0	%	8.1	%

N/M = Not Meaningful

Commercial Bank Summary of Operations (2Q21 vs. 2Q20)

Net income attributable to Key of $434 million for the second quarter of 2021, compared to $106 million for the year-ago quarter
Taxable-equivalent net interest income decreased by $39 million, compared to the second quarter of 2020, as lower average loan balances offset fees related to PPP loans
Average loan and lease balances decreased $10.4 billion, compared to the second quarter of 2020, driven by lower commercial and industrial line draws
Average deposit balances increased $6.9 billion, or 14.3%, compared to the second quarter of 2020, driven by growth in targeted relationships and the impact of government programs
Provision for credit losses decreased $457 million, compared to the second quarter of 2020. The provision for credit losses was a net benefit and was driven by expected improvements in economic conditions
Noninterest income increased $34 million, from the year-ago quarter, driven by elevated investment banking client activity and commercial mortgage servicing fees, partially offset by favorable market-related adjustments to customer derivatives in the year-ago period
Noninterest expense increased by $10 million, or 2.3%, from the second quarter of 2020, driven by higher personnel-related costs

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

KeyCorp's roots trace back nearly 200 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 $181.1 billion at June 30, 2021.

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 1,300 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, 2020, 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 worsening of the U.S. economy due to financial, political, or other shocks, the extensive regulation of the U.S. financial services industry, and the impact of the COVID-19 global pandemic on us, our clients, our third-party service providers, and the markets. 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 July 20, 2021. A replay of the call will be available through July 29, 2021.

*****

KeyCorp
Second Quarter 2021
Financial Supplement

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

Financial Highlights
(dollars in millions, except per share amounts)
			Three months ended
			6/30/2021			3/31/2021			6/30/2020
Summary of operations
	Net interest income (TE)		$	1,023		$	1,012		$	1,025
	Noninterest income		750			738			692
		Total revenue (TE)	1,773			1,750			1,717
	Provision for credit losses		(222)			(93)			482
	Noninterest expense		1,076			1,071			1,013
	Income (loss) from continuing operations attributable to Key		724			618			185
	Income (loss) from discontinued operations, net of taxes		5			4			2
	Net income (loss) attributable to Key		729			622			187

	Income (loss) from continuing operations attributable to Key common shareholders		698			591			159
	Income (loss) from discontinued operations, net of taxes		5			4			2
	Net income (loss) attributable to Key common shareholders		703			595			161

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.73		$	.61		$	.16
	Income (loss) from discontinued operations, net of taxes		—			—			—
	Net income (loss) attributable to Key common shareholders ^(a)		.73			.62			.17

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.72			.61			.16
	Income (loss) from discontinued operations, net of taxes — assuming dilution		—			—			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)		.73			.61			.17

	Cash dividends declared		.185			.185			.185
	Book value at period end		16.75			16.22			16.07
	Tangible book value at period end		13.81			13.30			13.12
	Market price at period end		20.65			19.98			12.18

Performance ratios
	From continuing operations:
	Return on average total assets		1.63		%	1.44		%	.45		%
	Return on average common equity		18.21			14.98			4.05
	Return on average tangible common equity ^(b)		22.34			18.25			4.96
	Net interest margin (TE)		2.52			2.61			2.76
	Cash efficiency ratio ^(b)		59.9			60.3			57.9

	From consolidated operations:
	Return on average total assets		1.64		%	1.45		%	.46		%
	Return on average common equity		18.34			15.08			4.10
	Return on average tangible common equity ^(b)		22.50			18.37			5.02
	Net interest margin (TE)		2.55			2.60			2.76
	Loan to deposit ^(c)		70.4			73.1			80.4

Capital ratios at period end
	Key shareholders' equity to assets		9.9		%	10.0		%	10.2		%
	Key common shareholders' equity to assets		8.9			9.0			9.2
	Tangible common equity to tangible assets ^(b)		7.4			7.5			7.6
	Common Equity Tier 1^(d)		9.9			9.9			9.1
	Tier 1 risk-based capital ^(d)		11.3			11.3			10.5
	Total risk-based capital ^(d)		13.2			13.4			12.8
	Leverage ^(d)		8.7			8.9			8.8

Asset quality — from continuing operations
	Net loan charge-offs		$	22		$	114		$	96
	Net loan charge-offs to average loans		.09		%	.46		%	.36		%
	Allowance for loan and lease losses		$	1,220		$	1,438		$	1,708
	Allowance for credit losses		1,372			1,616			1,906
	Allowance for loan and lease losses to period-end loans		1.21		%	1.42		%	1.61		%
	Allowance for credit losses to period-end loans		1.36			1.60			1.80
	Allowance for loan and lease losses to nonperforming loans		175.8			197.5			224.7
	Allowance for credit losses to nonperforming loans		197.7			222.0			250.8
	Nonperforming loans at period-end		$	694		$	728		$	760
	Nonperforming assets at period-end		738			790			951
	Nonperforming loans to period-end portfolio loans		.69		%	.72		%	.72		%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.73			.78			.89

Trust assets
	Assets under management		$	47,737		$	45,218		$	39,722

Other data
	Average full-time equivalent employees		17,157			17,086			16,646
	Branches		1,014			1,068			1,077
	Taxable-equivalent adjustment		$	6		$	7		$	7


Financial Highlights (continued)
(dollars in millions, except per share amounts)
		Six months ended
		6/30/2021			6/30/2020
Summary of operations
	Net interest income (TE)	$	2,035		$	2,014
	Noninterest income	1,488			1,169
	Total revenue (TE)	3,523			3,183
	Provision for credit losses	(315)			841
	Noninterest expense	2,147			1,944
	Income (loss) from continuing operations attributable to Key	1,342			330
	Income (loss) from discontinued operations, net of taxes	9			3
	Net income (loss) attributable to Key	1,351			333

	Income (loss) from continuing operations attributable to Key common shareholders	1,289			277
	Income (loss) from discontinued operations, net of taxes	9			3
	Net income (loss) attributable to Key common shareholders	1,298			280

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders	$	1.34		$	.29
	Income (loss) from discontinued operations, net of taxes	.01			—
	Net income (loss) attributable to Key common shareholders ^(a)	1.35			.29

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution	1.33			.28
	Income (loss) from discontinued operations, net of taxes — assuming dilution	.01			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)	1.34			.29

	Cash dividends paid	.37			.37

Performance ratios
	From continuing operations:
	Return on average total assets	1.55		%	.43		%
	Return on average common equity	16.64			3.58
	Return on average tangible common equity ^(b)	20.34			4.40
	Net interest margin (TE)	2.56			2.88
	Cash efficiency ratio ^(b)	60.1			60.0

	From consolidated operations:
	Return on average total assets	1.55		%	.43		%
	Return on average common equity	16.76			3.62
	Return on average tangible common equity ^(b)	20.48			4.45
	Net interest margin (TE)	2.57			2.87

Asset quality — from continuing operations
	Net loan charge-offs	$	136		$	180
	Net loan charge-offs to average total loans	.27		%	.35		%

Other data
	Average full-time equivalent employees	17,122			16,587

Taxable-equivalent adjustment		13			15

(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)	June 30, 2021, 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."

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									Six months ended
	6/30/2021			3/31/2021			6/30/2020			6/30/2021			6/30/2020
Tangible common equity to tangible assets at period-end
Key shareholders' equity (GAAP)	$	17,941		$	17,634		$	17,542
Less: Intangible assets ^(a)	2,828			2,842			2,877
Preferred Stock ^(b)	1,856			1,856			1,856
Tangible common equity (non-GAAP)	$	13,257		$	12,936		$	12,809
Total assets (GAAP)	$	181,115		$	176,203		$	171,192
Less: Intangible assets ^(a)	2,828			2,842			2,877
Tangible assets (non-GAAP)	$	178,287		$	173,361		$	168,315
Tangible common equity to tangible assets ratio (non-GAAP)	7.44		%	7.46		%	7.61		%
Pre-provision net revenue
Net interest income (GAAP)	$	1,017		$	1,005		$	1,018		$	2,022		$	1,999
Plus: Taxable-equivalent adjustment	6			7			7			13			15
Noninterest income	750			738			692			1,488			1,169
Less: Noninterest expense	1,076			1,071			1,013			2,147			1,944
Pre-provision net revenue from continuing operations (non-GAAP)	$	697		$	679		$	704		$	1,376		$	1,239
Average tangible common equity
Average Key shareholders' equity (GAAP)	$	17,271		$	17,769		$	17,688		$	17,519		$	17,452
Less: Intangible assets (average) ^(c)	2,840			2,844			2,886			2,840			2,894
Preferred stock (average)	1,900			1,900			1,900			1,900			1,900
Average tangible common equity (non-GAAP)	$	12,531		$	13,025		$	12,902		$	12,779		$	12,658
Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)	$	698		$	591		$	159		$	1,289		$	277
Average tangible common equity (non-GAAP)	12,531			13,025			12,902			12,779			12,658

Return on average tangible common equity from continuing operations (non- GAAP)	22.34		%	18.25		%	4.96		%	20.34		%	4.40		%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)	$	703		$	595		$	161		$	1,298		$	280
Average tangible common equity (non-GAAP)	12,531			13,025			12,902			12,779			12,658

Return on average tangible common equity consolidated (non-GAAP)	22.50		%	18.37		%	5.02		%	20.48		%	4.45		%

GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
	Three months ended									Six months ended
	6/30/2021			3/31/2021			6/30/2020			6/30/2021			6/30/2020
Cash efficiency ratio
Noninterest expense (GAAP)	$	1,076		$	1,071		$	1,013		$	2,147		$	1,944
Less: Intangible asset amortization	14			15			18			29			35
Adjusted noninterest expense (non-GAAP)	$	1,062		$	1,056		$	995		$	2,118		$	1,909

Net interest income (GAAP)	$	1,017		$	1,005		$	1,018		$	2,022		$	1,999
Plus: Taxable-equivalent adjustment	6			7			7			13			15
Noninterest income	750			738			692			1,488			1,169
Total taxable-equivalent revenue (non-GAAP)	$	1,773		$	1,750		$	1,717		$	3,523		$	3,183

Cash efficiency ratio (non-GAAP)	59.9		%	60.3		%	57.9		%	60.1		%	60.0		%

(a)	For the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, intangible assets exclude $4 million, $4 million, and $5 million, respectively, of period-end purchased credit card receivables.
(b)	Net of capital surplus.
(c)	For the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, average intangible assets exclude $4 million, $4 million, and $6 million, respectively, of average purchased credit card receivables. For the six months ended June 30, 2021, and June 30, 2020, average intangible assets exclude $4 million and $6 million, respectively, of average purchased credit card receivables
GAAP = U.S. generally accepted accounting principles

Consolidated Balance Sheets
(dollars in millions)

			6/30/2021		3/31/2021		6/30/2020
Assets
	Loans		$	100,730	$	100,926	$	106,159
	Loans held for sale		1,537		2,296		2,007
	Securities available for sale		34,638		33,923		23,600
	Held-to-maturity securities		6,175		6,857		9,075
	Trading account assets		851		811		645
	Short-term investments		20,460		15,376		14,036
	Other investments		635		621		655
		Total earning assets	165,026		160,810		156,177
	Allowance for loan and lease losses		(1,220)		(1,438)		(1,708)
	Cash and due from banks		792		938		1,059
	Premises and equipment		785		737		776
	Goodwill		2,673		2,673		2,664
	Other intangible assets		159		173		218
	Corporate-owned life insurance		4,304		4,296		4,251
	Accrued income and other assets		7,966		7,347		6,976
	Discontinued assets		630		667		779
		Total assets	$	181,115	176,203		171,192

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	85,242	$	82,777	$	78,853
		Savings deposits	6,993		6,655		5,371
		Certificates of deposit ($100,000 or more)	2,064		2,437		4,476
		Other time deposits	2,493		2,782		4,011
		Total interest-bearing deposits	96,792		94,651		92,711
		Noninterest-bearing deposits	49,280		47,532		42,802
		Total deposits	146,072		142,183		135,513
	Federal funds purchased and securities sold under repurchase agreements		211		281		267
	Bank notes and other short-term borrowings		723		744		1,716
	Accrued expense and other liabilities		2,957		2,862		2,420
	Long-term debt		13,211		12,499		13,734
		Total liabilities	163,174		158,569		153,650

Equity
	Preferred stock		1,900		1,900		1,900
	Common shares		1,257		1,257		1,257
	Capital surplus		6,232		6,213		6,240
	Retained earnings		13,689		13,166		12,154
	Treasury stock, at cost		(5,287)		(5,005)		(4,945)
	Accumulated other comprehensive income (loss)		150		103		936
		Key shareholders' equity	17,941		17,634		17,542
	Noncontrolling interests		—		—		—
		Total equity	17,941		17,634		17,542
Total liabilities and equity			$	181,115	$	176,203	$	171,192

Common shares outstanding (000)			960,276		972,587		975,947

Consolidated Statements of Income
(dollars in millions, except per share amounts)
			Three months ended						Six months ended
			6/30/2021		3/31/2021		6/30/2020		6/30/2021		6/30/2020
Interest income
	Loans		$	888	$	889	$	980	$	1,777	$	2,006
	Loans held for sale		11		11		21		22		40
	Securities available for sale		133		130		121		263		250
	Held-to-maturity securities		45		45		56		90		118
	Trading account assets		5		5		5		10		13
	Short-term investments		6		5		7		11		13
	Other investments		2		2		—		4		1
		Total interest income	1,090		1,087		1,190		2,177		2,441
Interest expense
	Deposits		16		21		96		37		265
	Federal funds purchased and securities sold under repurchase agreements		—		—		—		—		6
	Bank notes and other short-term borrowings		3		1		5		4		10
	Long-term debt		54		60		71		114		161
		Total interest expense	73		82		172		155		442
Net interest income			1,017		1,005		1,018		2,022		1,999
Provision for credit losses			(222)		(93)		482		(315)		841
Net interest income after provision for credit losses			1,239		1,098		536		2,337		1,158
Noninterest income
	Trust and investment services income		133		133		123		266		256
	Investment banking and debt placement fees		217		162		156		379		272
	Service charges on deposit accounts		83		73		68		156		152
	Operating lease income and other leasing gains		36		38		60		74		90
	Corporate services income		55		64		52		119		114
	Cards and payments income		113		105		91		218		157
	Corporate-owned life insurance income		30		31		35		61		71
	Consumer mortgage income		26		47		62		73		82
	Commercial mortgage servicing fees		44		34		12		78		30
	Other income		13		51		33		64		(55)
		Total noninterest income	750		738		692		1,488		1,169
Noninterest expense
	Personnel		623		624		572		1,247		1,087
	Net occupancy		75		76		71		151		147
	Computer processing		71		73		56		144		111
	Business services and professional fees		51		50		49		101		93
	Equipment		25		25		25		50		49
	Operating lease expense		31		34		34		65		70
	Marketing		31		26		24		57		45
	Intangible asset amortization		14		15		18		29		35
	Other expense		155		148		164		303		307
		Total noninterest expense	1,076		1,071		1,013		2,147		1,944
Income (loss) from continuing operations before income taxes			913		765		215		1,678		383
	Income taxes		189		147		30		336		53
Income (loss) from continuing operations			724		618		185		1,342		330
	Income (loss) from discontinued operations, net of taxes		5		4		2		9		3
Net income (loss)			729		622		187		1,351		333
	Less: Net income (loss) attributable to noncontrolling interests		—		—		—		—		—
Net income (loss) attributable to Key			$	729	$	622	$	187	$	1,351	$	333

Income (loss) from continuing operations attributable to Key common shareholders			$	698	$	591	$	159	$	1,289	$	277
Net income (loss) attributable to Key common shareholders			703		595		161		1,298		280
Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.73	$	.61	$	.16	$	1.34	$	.29
Income (loss) from discontinued operations, net of taxes			—		—		—		.01		—
Net income (loss) attributable to Key common shareholders ^(a)			.73		.62		.17		1.35		.29
Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.72	$	.61	$	.16	$	1.33	$	.28
Income (loss) from discontinued operations, net of taxes			—		—		—		.01		—
Net income (loss) attributable to Key common shareholders ^(a)			.73		.61		.17		1.34		.29

Cash dividends declared per common share			$	.185	$	.185	$	.185	$	.370	$	.370

Weighted-average common shares outstanding (000)			961,292		964,878		967,147		957,423		967,380
	Effect of common share options and other stock awards		9,514		9,419		4,994		9,740		6,892
Weighted-average common shares and potential common shares outstanding (000) ^(b)			970,806		974,297		972,141		967,163		974,272

(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)
		Second Quarter 2021						First Quarter 2021						Second Quarter 2020
		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)	$	51,808	$	450	3.52		$	52,581	$	453	3.48		$	60,480	$	518	3.44
	Real estate — commercial mortgage	12,825		117		3.67		12,658		114		3.67		13,510		128		3.80
	Real estate — construction	$	2,149	$	20	3.68		$	2,048	$	19	3.75		$	1,756	$	17	3.97
	Commercial lease financing	4,060		30		2.98		4,142		31		2.99		4,584		33		2.96
	Total commercial loans	$	70,842	$	617	3.53		$	71,429	$	617	3.50		$	80,330	$	696	3.49
	Real estate — residential mortgage	11,055		81		2.92		9,699		76		3.12		7,783		69		3.57
	Home equity loans	$	9,089	$	85	3.76		$	9,282	$	85	3.73		$	9,949	$	97	3.89
	Consumer direct loans	4,910		57		4.69		4,817		56		4.72		4,152		55		5.24
	Credit cards	$	908	$	22	9.79		$	933	$	24	10.45		$	983	$	25	10.22
	Consumer indirect loans	4,010		32		3.23		4,568		37		3.30		4,744		45		3.82
	Total consumer loans	$	29,972	$	277	3.74		$	29,299	$	278	3.84		$	27,611	$	291	4.22
	Total loans	100,814		894		3.59		100,728		895		3.60		107,941		987		3.67
	Loans held for sale	$	1,616	$	11	2.60		$	1,531	$	11	2.89		$	2,463	$	21	3.50
	Securities available for sale ^{(b), (e)}	33,623		133		3.13		30,039		130		1.76		20,749		121		2.43
	Held-to-maturity securities ^(b)	$	6,452	$	45	2.75		$	7,188	$	46	2.53		$	9,331	$	56	2.43
	Trading account assets	837		5		2.56		848		5		2.15		760		5		2.43
	Short-term investments	$	18,817	$	6	0.13		$	16,510	$	5	0.13		$	7,892	$	7	0.31
	Other investments ^(e)	622		2		1.02		614		2		1.40		672		—		0.29
	Total earning assets	$	162,781	$	1,096	2.72		$	157,458	$	1,094	2.81		$	149,808	$	1,197	3.22
	Allowance for loan and lease losses	(1,442)						(1,623)						(1,413)
	Accrued income and other assets	$	16,531					$	16,398					$	15,704
	Discontinued assets	650						686						793
	Total assets	$	178,520					$	172,919					$	164,892
Liabilities
	NOW and money market deposit accounts	$	83,981	$	9	.05		$	81,439	$	10	.05		$	75,297	$	56	.30
	Savings deposits	6,859		1		.03		6,203		1		.03		5,130		—		.04
	Certificates of deposit ($100,000 or more)	$	2,212	$	4	.72		$	2,571	$	6	.96		$	4,950	$	24	1.93
	Other time deposits	2,630		2		.38		2,902		4		.57		4,333		16		1.52
	Total interest-bearing deposits	$	95,682	$	16	.07		$	93,115	$	21	.09		$	89,710	$	96	.43
	Federal funds purchased and securities sold under repurchase agreements	251		—		.02		243		—		.04		242		—		.03
	Bank notes and other short-term borrowings	$	744	$	3	1.19		$	878	$	1	.64		$	2,869	$	5	.57
	Long-term debt ^{(f), (g)}	11,978		54		1.83		12,831		60		1.93		12,954		71		2.30
	Total interest-bearing liabilities	$	108,655	$	73	.27		$	107,067	$	82	.31		$	105,775	$	172	.66
	Noninterest-bearing deposits	48,640						44,625						38,267
	Accrued expense and other liabilities	$	3,304					$	2,772					$	2,369
	Discontinued liabilities ^(g)	650						686						793
	Total liabilities	$	161,249					$	155,150					$	147,204
Equity
	Key shareholders' equity	$	17,271					$	17,769					$	17,688
	Noncontrolling interests	—						—						—
	Total equity	$	17,271					$	17,769					$	17,688
	Total liabilities and equity	$	178,520					$	172,919					$	164,892
Interest rate spread (TE)						2.45	%					2.50	%					2.56	%
Net interest income (TE) and net interest margin (TE)				1,023		2.52	%			1,012		2.61	%			1,025		2.76	%
TE adjustment ^(b)				6						7						7
	Net interest income, GAAP basis			$	1,017					$	1,005					$	1,018

(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.
(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 21% for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial and industrial average balances include $132 million, $126 million, and $135 million of assets from commercial credit cards for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, 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)
		Six months ended June 30, 2021						Six months ended June 30, 2020
		Average				Yield/		Average				Yield/
		Balance		Interest ^(a)		Rate ^(a)		Balance		Interest ^(a)		Rate ^(a)
Assets
	Loans: ^{(b), (c)}
	Commercial and industrial ^(d)	$	52,194	$	902	3.48	%	$	54,973	$	1,026	3.75	%
	Real estate — commercial mortgage	12,742		232		3.67		13,529		283		4.20
	Real estate — construction	2,099		39		3.71		1,711		37		4.35
	Commercial lease financing	4,101		61		2.99		4,575		72		3.17
	Total commercial loans	71,136		1,234		3.49		74,788		1,418		3.81
	Real estate — residential mortgage	10,380		154		2.97		7,500		137		3.66
	Home equity loans	9,189		173		3.79		10,052		210		4.19
	Consumer direct loans	4,864		113		4.70		3,930		109		5.56
	Credit cards	920		46		10.12		1,032		56		10.89
	Consumer indirect loans	4,288		69		3.25		4,756		91		3.84
	Total consumer loans	29,641		555		3.77		27,270		603		4.44
	Total loans	100,777		1,789		3.58		102,058		2,021		3.98
	Loans held for sale	1,574		22		2.74		2,174		40		3.71
	Securities available for sale ^{(b), (e)}	31,841		263		1.66		20,960		250		2.46
	Held-to-maturity securities ^(b)	6,818		90		2.63		9,575		118		2.47
	Trading account assets	842		10		2.35		913		13		2.73
	Short-term investments	17,670		11		0.13		4,828		13		0.52
	Other investments ^(e)	618		4		1.21		643		1		0.34
	Total earning assets	160,140		2,189		2.75		141,151		2,456		3.51
	Allowance for loan and lease losses	(1532)						(1255)
	Accrued income and other assets	16,463						15,268
	Discontinued assets	668						815
	Total assets	$	175,739					$	155,979
Liabilities
	NOW and money market deposit accounts	$	82,717	20		.05		$	71,009	168		.47
	Savings deposits	6,533		1		.03		4,893		1		.04
	Certificates of deposit ($100,000 or more)	2,390		10		.85		5,630		58		2.08
	Other time deposits	2,766		6		.48		4,617		38		1.67
	Total interest-bearing deposits	94,406		37		.08		86,149		265		.62
	Federal funds purchased and securities sold under repurchase agreements	247		—		.03		1,122		6		1.05
	Bank notes and other short-term borrowings	811		4		.89		2,135		10		.90
	Long-term debt ^{(f), (g)}	12,402		114		1.87		12,698		161		2.62
	Total interest-bearing liabilities	107,866		155		.29		102,104		442		.87
	Noninterest-bearing deposits	46,638						33,004
	Accrued expense and other liabilities	3,048						2,604
	Discontinued liabilities ^(g)	668						815
	Total liabilities	158,220						138,527
Equity
	Key shareholders' equity	17,519						17,452
	Noncontrolling interests	—						—
	Total equity	17,519						17,452
	Total liabilities and equity	$	175,739					$	155,979
Interest rate spread (TE)						2.46	%					2.64	%
Net interest income (TE) and net interest margin (TE)				2,035		2.56	%			2,014		2.88	%
TE adjustment ^(b)				13						15
	Net interest income, GAAP basis			$	2,022					$	1,999

(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 six months ended June 30, 2021, and June 30, 2020, respectively.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial and industrial average balances include $129 million and $140 million of assets from commercial credit cards for the six months ended June 30, 2021, and June 30, 2020, 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						Six months ended
	6/30/2021		3/31/2021		6/30/2020		6/30/2021		6/30/2020
Personnel ^(a)	$	623	$	624	$	572	$	1,247	$	1,087
Net occupancy	75		76		71		151		147
Computer processing	71		73		56		144		111
Business services and professional fees	51		50		49		101		93
Equipment	25		25		25		50		49
Operating lease expense	31		34		34		65		70
Marketing	31		26		24		57		45
Intangible asset amortization	14		15		18		29		35
Other expense	155		148		164		303		307
Total noninterest expense	$	1,076	$	1,071	$	1,013	$	2,147	$	1,944
Average full-time equivalent employees ^(b)	17,157		17,086		16,646		17,122		16,587

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

Personnel Expense
(in millions)

	Three months ended						Six months ended
	6/30/2021		3/31/2021		6/30/2020		6/30/2021		6/30/2020
Salaries and contract labor	$	321	$	320	$	332	$	641	$	648
Incentive and stock-based compensation	210		196		162		406		264
Employee benefits	92		107		76		199		168
Severance	—		1		2		1		7
Total personnel expense	$	623	$	624	$	572	$	1,247	$	1,087

Loan Composition
(dollars in millions)

							Percent change 6/30/2021 vs
	6/30/2021		3/31/2021		6/30/2020		3/31/2021		6/30/2020
Commercial and industrial ^(a)	$	50,672	$	52,486	$	58,297	(3.5)	%	(13.1)	%
Commercial real estate:
Commercial mortgage	12,965		12,702		13,465		2.1		(3.7)
Construction	2,132		2,122		1,919		.5		11.1
Total commercial real estate loans	15,097		14,824		15,384		1.8		(1.9)
Commercial lease financing ^(b)	4,061		4,104		4,524		(1.0)		(10.2)
Total commercial loans	69,830		71,414		78,205		(2.2)		(10.7)
Residential — prime loans:
Real estate — residential mortgage	12,131		10,300		8,149		17.8		48.9
Home equity loans	9,047		9,158		9,782		(1.2)		(7.5)
Total residential — prime loans	21,178		19,458		17,931		8.8		18.1
Consumer direct loans	5,049		4,862		4,327		3.8		16.7
Credit cards	923		909		974		1.5		(5.2)
Consumer indirect loans	3,750		4,283		4,722		(12.4)		(20.6)
Total consumer loans	30,900		29,512		27,954		4.7		10.5
Total loans ^{(c), (d)}	$	100,730	$	100,926	$	106,159	(.2)	%	(5.1)	%

(a)	Loan balances include $135 million, $126 million, and $132 million of commercial credit card balances at June 30, 2021, March 31, 2021, and June 30, 2020, respectively.
(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $19 million, $21 million, and $18 million at June 30, 2021, March 31, 2021, and June 30, 2020, respectively. Principal reductions are based on the cash payments received from these related receivables.
(c)	Total loans exclude loans of $636 million at June 30, 2021, $675 million at March 31, 2021, and $780 million at June 30, 2020, related to the discontinued operations of the education lending business.
(d)	Accrued interest of $225 million, $241 million, and $225 million at June 30, 2021, March 31, 2021, and June 30, 2020, 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 6/30/2021 vs
	6/30/2021		3/31/2021		6/30/2020		3/31/2021		6/30/2020
Commercial and industrial	$	233	$	1,175	$	419	(80.2)	%	(44.4)	%
Real estate — commercial mortgage	1,073		837		1,107		28.2		(3.1)
Commercial lease financing	—		—		—		N/M		N/M
Real estate — residential mortgage	231		236		250		(2.1)		(7.6)
Consumer direct loans	—		48		231		N/M		N/M
Total loans held for sale	$	1,537	$	2,296	$	2,007	(33.1)	%	(23.4)	%

N/M = Not Meaningful

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

	2Q21		1Q21		4Q20		3Q20		2Q20
Balance at beginning of period	$	2,296	$	1,583	$	1,724	$	2,007	$	2,143
New originations	3,573		4,010		3,835		3,282		3,621
Transfers from (to) held to maturity, net	(71)		83		(24)		75		(15)
Loan sales	(4,195)		(3,303)		(3,932)		(3,583)		(3,679)
Loan draws (payments), net	(27)		(73)		(19)		(57)		(61)
Valuation and other adjustments	(39)		(4)		—		—		(2)
Balance at end of period	$	1,537	$	2,296	$	1,583	$	1,724	$	2,007

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

	Three months ended									Six months ended
	6/30/2021			3/31/2021			6/30/2020			6/30/2021			6/30/2020
Average loans outstanding	$	100,814		$	100,728		$	107,941		$	100,777		$	102,058
Allowance for loan and lease losses at the end of the prior period	$	1,438		$	1,626		$	1359		$	1,626		$	900
Cumulative effect from change in accounting principle ^(a)	—			—			—			—			204
Allowance for loan and lease losses at the beginning of the period	1,438			1,626			1,359			1,626			1,104
Loans charged off:
Commercial and industrial	41			73			71			114			351

Real estate — commercial mortgage	4			35			2			39			19
Real estate — construction	—			—			—			—			—
Total commercial real estate loans	4			35			2			39			19
Commercial lease financing	—			4			4			4			35
Total commercial loans	45			112			77			157			405
Real estate — residential mortgage	1			—			2			1			2
Home equity loans	4			2			2			6			11
Consumer direct loans	7			8			10			15			37
Credit cards	9			6			12			15			39
Consumer indirect loans	5			7			7			12			28
Total consumer loans	26			23			33			49			117
Total loans charged off	71			135			110			206			522
Recoveries:
Commercial and industrial	32			8			5			40			34

Real estate — commercial mortgage	6			1			—			7			3
Real estate — construction	—			—			—			—			—
Total commercial real estate loans	6			1			—			7			3
Commercial lease financing	—			1			1			1			1
Total commercial loans	38			10			6			48			38
Real estate — residential mortgage	—			1			—			1			1
Home equity loans	1			1			1			2			7
Consumer direct loans	2			2			2			4			7
Credit cards	3			2			2			5			8
Consumer indirect loans	5			5			3			10			18
Total consumer loans	11			11			8			22			41
Total recoveries	49			21			14			70			78
Net loan charge-offs	(22)			(114)			(96)			(136)			(443)
Provision (credit) for loan and lease losses	(196)			(74)			445			(270)			965
Allowance for loan and lease losses at end of period	$	1,220		$	1,438		$	1,708		$	1,220		$	1,626

Liability for credit losses on lending-related commitments at the end of the prior period	$	178		$	197		$	161		$	197		$	68
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	178			197			161			197			141
Provision (credit) for losses on lending-related commitments	(26)			(19)			37			(45)			56
Liability for credit losses on lending-related commitments at end of period ^(c)	$	152		$	178		$	198		$	152		$	197

Total allowance for credit losses at end of period	$	1,372		$	1,616		$	1,906		$	1,372		$	1,823

Net loan charge-offs to average total loans	.09		%	.46		%	.36		%	.27		%	.35		%
Allowance for loan and lease losses to period-end loans	1.21			1.42			1.61			1.21			1.61
Allowance for credit losses to period-end loans	1.36			1.60			1.80			1.36			1.80
Allowance for loan and lease losses to nonperforming loans	175.8			197.5			224.7			175.8			224.7
Allowance for credit losses to nonperforming loans	197.7			222.0			250.8			197.7			250.8

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

(a)	The cumulative effect from change in accounting principle relates to the January 1, 2020, adoption of ASU 2016-13.
(b)	Six months ended June 30, 2020, 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)
	2Q21			1Q21			4Q20			3Q20			2Q20
Net loan charge-offs	$	22		$	114		$	135		$	128		$	96
Net loan charge-offs to average total loans	.09		%	.46		%	.53		%	.49		%	.36		%
Allowance for loan and lease losses	$	1,220		$	1,438		$	1,626		$	1,730		$	1,708
Allowance for credit losses ^(a)	1,372			1,616			1,823			1,938			1,906
Allowance for loan and lease losses to period-end loans	1.21		%	1.42		%	1.61		%	1.68		%	1.61		%
Allowance for credit losses to period-end loans	1.36			1.60			1.80			1.88			1.80
Allowance for loan and lease losses to nonperforming loans	175.8			197.5			207.1			207.4			224.7
Allowance for credit losses to nonperforming loans	197.7			222.0			232.2			232.4			250.8
Nonperforming loans at period end	$	694		$	728		$	785		$	834		$	760
Nonperforming assets at period end	738			790			937			1,003			951
Nonperforming loans to period-end portfolio loans	.69		%	.72		%	.78		%	.81		%	.72		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	.73			.78			.92			.97			.89

(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)
	6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Commercial and industrial	$	355		$	387		$	385		$	459		$	404

Real estate — commercial mortgage	66			66			104			104			91
Real estate — construction	—			—			—			1			1
Total commercial real estate loans	66			66			104			105			92
Commercial lease financing	7			8			8			6			9
Total commercial loans	428			461			497			570			505
Real estate — residential mortgage	99			95			110			96			89
Home equity loans	146			148			154			146			141
Consumer direct loans	4			5			5			3			3
Credit cards	3			3			2			2			2
Consumer indirect loans	14			16			17			17			20
Total consumer loans	266			267			288			264			255
Total nonperforming loans	694			728			785			834			760
OREO	9			12			100			105			112
Nonperforming loans held for sale	32			47			49			61			75
Other nonperforming assets	3			3			3			3			4
Total nonperforming assets	$	738		$	790		$	937		$	1,003		$	951
Accruing loans past due 90 days or more	74			92			86			73			87
Accruing loans past due 30 through 89 days	190			191			241			336			419
Restructured loans — accruing and nonaccruing ^(a)	334			376			363			306			310
Restructured loans included in nonperforming loans ^(a)	177			192			229			168			166
Nonperforming assets from discontinued operations — education lending business	5			5			5			6			7
Nonperforming loans to period-end portfolio loans	.69		%	.72		%	.78		%	.81		%	.72		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	.73			.78			.92			.97			.89

(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)
	2Q21		1Q21		4Q20		3Q20		2Q20
Balance at beginning of period	$	728	$	785	$	834	$	760	$	632
Loans placed on nonaccrual status	186		196		300		387		293
Charge-offs	(74)		(135)		(160)		(150)		(111)
Loans sold	(10)		(13)		(9)		(6)		(5)
Payments	(92)		(37)		(83)		(83)		(29)
Transfers to OREO	—		(3)		(3)		—		—
Transfers to nonperforming loans held for sale	—		—		—		—		—
Loans returned to accrual status	(44)		(65)		(94)		(74)		(20)
Balance at end of period	$	694	$	728	$	785	$	834	$	760

Line of Business Results
(dollars in millions)

																Percentage change 2Q21 vs.
	2Q21			1Q21			4Q20			3Q20			2Q20			1Q21		2Q20
Consumer Bank
Summary of operations
Total revenue (TE)	$	854		$	867		$	899		$	866		$	835		(1.5)	%	2.3	%
Provision for credit losses	(70)			(23)			(5)			(3)			155			(204.3)		145.2
Noninterest expense	584			601			606			567			552			(2.8)		5.8
Net income (loss) attributable to Key	259			220			228			231			98			17.7		164.3
Average loans and leases	40,598			39,249			39,455			38,476			37,300			3.4		8.8
Average deposits	88,412			85,033			82,854			82,836			79,235			4.0		11.6
Net loan charge-offs	34			36			28			23			40			(5.6)		(15.0)
Net loan charge-offs to average total loans	.34		%	.37		%	.28		%	.24		%	.43		%	(8.1)		(20.9)
Nonperforming assets at period end	$	274		$	345		$	374		$	353		$	332		(20.6)		(17.5)
Return on average allocated equity	28.74		%	26.10		%	25.95		%	26.44		%	11.50		%	10.1		149.9

Commercial Bank
Summary of operations
Total revenue (TE)	$	874		$	859		$	923		$	813		$	879		1.7	%	(.6)	%
Provision for credit losses	(131)			(67)			44			150			326			95.5		(120.6)
Noninterest expense	451			443			498			447			441			1.8		2.3
Net income (loss) attributable to Key	434			384			311			174			106			13.0		309.4
Average loans and leases	59,953			61,221			62,016			66,264			70,336			(2.1)		(14.8)
Average loans held for sale	1,341			1,237			1,285			1,383			2,012			8.4		(33.3)
Average deposits	54,814			51,894			52,489			51,585			47,954			5.6		14.3
Net loan charge-offs	9			78			108			103			57			(88.5)		(84.2)
Net loan charge-offs to average total loans	.06		%	.52		%	.69		%	.62		%	.33		%	N/A		N/A
Nonperforming assets at period end	$	464		$	441		$	558		$	645		$	616		5.2		(24.7)
Return on average allocated equity	20.79		%	17.45		%	23.87		%	13.43		%	8.66		%	N/A		N/A