KeyCorp Reports Second Quarter 2015 Net Income of $230 Million, or $.27 Per Common Share

Positive operating leverage

Revenue up 4% from prior year, reflecting growth in fee income and loans

Continued growth in commercial loans and record investment banking and debt placement fees affirms strength of business model

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

Disciplined capital management: quarterly common share dividend increased 15% and continued share repurchases

News provided by

KeyCorp

Jul 16, 2015, 06:30 ET

CLEVELAND, July 16, 2015 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced second quarter net income from continuing operations attributable to Key common shareholders of $230 million, or $.27 per common share, compared to $222 million, or $.26 per common share, for the first quarter of 2015, and $242 million, or $.27 per common share, for the second quarter of 2014.

For the six months ended June 30, 2015, net income from continuing operations attributable to Key common shareholders was $452 million, or $.52 per common share, compared to $474 million, or $.53 per common share, for the same period one year ago.

"Second quarter results reflect our continued success in executing our strategy and driving growth across our company," said Chairman and Chief Executive Officer Beth Mooney. "We generated positive operating leverage and added new and expanded relationships in both our Community Bank and Corporate Bank."

"Revenue benefited from positive trends in our core fee-based businesses, including investment banking and debt placement fees, which had a record quarter and was up 42% from the prior year. We also had momentum in trust and investment services and cards and payments income. Average loans continued to grow, driven by commercial, financial and agricultural loans, which were up 10% from one year ago," continued Mooney.

"Credit quality remained strong, with a net charge-offs to average loans ratio of .25%, well below our targeted range," said Mooney.

"We continue to be disciplined in the way we manage our capital. In the second quarter, our Board of Directors increased our quarterly common share dividend by 15% and we repurchased $129 million of common shares," added Mooney. "We expect our 2015 estimated payout ratio to remain among the highest in our peer group."

SECOND QUARTER 2015 FINANCIAL RESULTS, from continuing operations

Compared to Second Quarter of 2014

Average loans up 4.3%, driven by 9.7% growth in commercial, financial and agricultural loans
Average deposits, excluding deposits in foreign office, up 5.7% due to strength in commercial mortgage servicing and inflows from commercial and consumer clients
Net interest income (taxable-equivalent) up $12 million, as higher earning asset balances offset lower earning asset yields
Noninterest income up $33 million due to a record quarter for investment banking and debt placement fees and growth in other core fee-based businesses
Noninterest expense up $24 million primarily attributable to performance-based compensation and the third quarter 2014 acquisition of Pacific Crest Securities
The provision for credit losses was $41 million in the second quarter of 2015, compared to $12 million in the year-ago quarter
Asset quality remained strong, with net loan charge-offs to average loans of .25%, up from .22% in the year-ago quarter and remaining well below our targeted range of .40% to .60%
Disciplined capital management, repurchasing $129 million of common shares during the second quarter of 2015

Compared to First Quarter of 2015

Average loans up .8%, primarily driven by a 2.5% increase in commercial, financial and agricultural loans
Average deposits, excluding deposits in foreign office, up 2.1% primarily attributable to strength in commercial mortgage servicing and inflows from commercial and consumer clients
Net interest income (taxable-equivalent) up $14 million due to higher earning asset balances and day count
Noninterest income up $51 million, primarily due to a record quarter for investment banking and debt placement fees and growth in other core fee-based businesses
Noninterest expense up $42 million, primarily driven by performance-based compensation, seasonal trends, and higher business services and professional fees
The provision for credit losses was $41 million in the second quarter of 2015, compared to $35 million in the prior quarter
Strong asset quality, with net loan charge-offs to average loans of .25%, compared to .20% in the first quarter of 2015 and remaining well below our targeted range of .40% to .60%
Disciplined capital management, maintaining a solid capital position with a Common Equity Tier 1 ratio of 10.69% compared to 10.64% in the prior quarter

Selected Financial Highlights

dollars in millions, except per share data										Change 2Q15 vs.
		2Q15			1Q15			2Q14		1Q15		2Q14
Income (loss) from continuing operations attributable to Key common shareholders	$	230		$	222		$	242		3.6	%	(5.0)	%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution		.27			.26			.27		3.8		—
Return on average total assets from continuing operations		1.03	%		1.03	%		1.14	%	N/A		N/A
Common Equity Tier 1^(a)		10.69			10.64			N/A		N/A		N/A
Tier 1 common equity^(a)		N/A			N/A			11.25	%	N/A		N/A
Book value at period end	$	12.21		$	12.12		$	11.65		.7	%	4.8	%
Net interest margin (TE) from continuing operations		2.88	%		2.91	%		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 "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) and "Tier 1 common equity" (prior to January 1, 2015). The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the "Capital" section of this release.

TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions								Change 2Q15 vs.
			2Q15		1Q15		2Q14	1Q15		2Q14
Net interest income (TE)		$	591	$	577	$	579	2.4	%	2.1	%
Noninterest income			488		437		455	11.7		7.3
	Total revenue	$	1,079	$	1,014	$	1,034	6.4	%	4.4	%


TE = Taxable Equivalent

Taxable-equivalent net interest income was $591 million for the second quarter of 2015, and the net interest margin was 2.88%. These results compare to taxable-equivalent net interest income of $579 million and a net interest margin of 2.98% for the second quarter of 2014. The increase in net interest income reflects higher earning asset balances mitigated by lower earning asset yields, which also drove the decline in the net interest margin.

Compared to the first quarter of 2015, taxable-equivalent net interest income increased by $14 million, and the net interest margin declined by three basis points. The increase in net interest income was primarily attributable to higher earning asset balances and day count in the second quarter of 2015. The decline in the net interest margin reflects higher levels of excess liquidity driven by commercial deposit growth and slightly lower earning asset yields.

Noninterest Income

dollars in millions								Change 2Q15 vs.
			2Q15		1Q15		2Q14	1Q15		2Q14
Trust and investment services income		$	111	$	109	$	94	1.8	%	18.1	%
Investment banking and debt placement fees			141		68		99	107.4		42.4
Service charges on deposit accounts			63		61		66	3.3		(4.5)
Operating lease income and other leasing gains			24		19		35	26.3		(31.4)
Corporate services income			43		43		41	—		4.9
Cards and payments income			47		42		43	11.9		9.3
Corporate-owned life insurance income			30		31		28	(3.2)		7.1
Consumer mortgage income			4		3		2	33.3		100.0
Mortgage servicing fees			9		13		11	(30.8)		(18.2)
Net gains (losses) from principal investing			11		29		27	(62.1)		(59.3)
Other income			5		19		9	(73.7)		(44.4)
	Total noninterest income	$	488	$	437	$	455	11.7	%	7.3	%

Key's noninterest income was $488 million for the second quarter of 2015, compared to $455 million for the year-ago quarter. Results for the second quarter of 2015 reflect a record quarter for investment banking and debt placement fees, which increased $42 million year-over-year. This increase was primarily driven by strength in financial advisory fees and loan syndications. Investment banking and debt placement fees also benefited from the third quarter 2014 acquisition of Pacific Crest Securities. Trust and investment services income increased $17 million, primarily due to the impact of the Pacific Crest Securities acquisition as well as strength in Key's Retail and Private Banking businesses. Additionally, cards and payments income increased $4 million. Partially offsetting these increases was a $16 million decrease in net gains from principal investing and lower operating lease income and other leasing gains, which benefited from a $17 million gain from the early termination of a leveraged lease in the second quarter of 2014.

Compared to the first quarter of 2015, noninterest income increased by $51 million. The largest driver of this increase was the growth in investment banking and debt placement fees, which increased by $73 million due to strength in financial advisory fees and loan syndications. Additionally, cards and payments income increased $5 million predominantly due to credit and debit card growth. Compared to the first quarter of 2015, the growth in the second quarter of 2015 was partially offset by $18 million of lower net gains from principal investing and a $14 million decline in other income.

Noninterest Expense

dollars in millions								Change 2Q15 vs.
			2Q15		1Q15		2Q14	1Q15		2Q14
Personnel expense		$	408	$	389	$	389	4.9	%	4.9	%
Nonpersonnel expense			303		280		298	8.2		1.7
	Total noninterest expense	$	711	$	669	$	687	6.3	%	3.5	%

Key's noninterest expense was $711 million for the second quarter of 2015, compared to $687 million in the second quarter of last year. This increase was primarily due to higher performance-based compensation and the third quarter 2014 acquisition of Pacific Crest Securities.

Compared to the first quarter of 2015, noninterest expense increased by $42 million. This increase was primarily driven by performance-based compensation, normal seasonal trends, and higher business services and professional fees.

BALANCE SHEET HIGHLIGHTS

In the second quarter of 2015, Key had average assets of $93.9 billion compared to $91.1 billion in the second quarter of 2014 and $91.9 billion in the first quarter of 2015. Growth in Key's securities available for sale portfolio during the second quarter of 2015 resulted from higher levels of liquidity, driven by deposit growth and long-term debt issuance. In the second quarter of 2015, Key issued $1.75 billion in bank-level long-term debt, which benefited its liquidity coverage ratio and credit ratings profile.

Average Loans

dollars in millions								Change 6-30-15 vs.
		6-30-15		3-31-15		6-30-14		3-31-15			6-30-14
Commercial, financial and agricultural^(a)		$	29,017	$	28,321	$	26,444		2.5	%		9.7	%
Other commercial loans			13,161		13,304		13,186		(1.1)			(.2)
Total home equity loans			10,510		10,576		10,627		(.6)			(1.1)
Other consumer loans			5,290		5,311		5,354		(.4)			(1.2)
	Total loans	$	57,978	$	57,512	$	55,611		.8	%		4.3	%


(a)	Commercial, financial and agricultural average loan balances include $88 million, $87 million, and $95 million of assets from commercial credit cards at June 30, 2015, March 31, 2015, and June 30, 2014, respectively.

Average loans were $58.0 billion for the second quarter of 2015, an increase of $2.4 billion compared to the second quarter of 2014. The loan growth occurred primarily in the commercial, financial and agricultural portfolio, which increased $2.6 billion and was broad-based across Key's commercial lines of business. Consumer loans remained relatively stable as modest increases across Key's core consumer loan portfolio were offset by run-off in Key's consumer exit portfolios.

Compared to the first quarter of 2015, average loans increased by $466 million, driven by commercial, financial and agricultural loans, which increased by $696 million.

Average Deposits

dollars in millions											Change 6-30-15 vs.
		6-30-15			3-31-15			6-30-14			3-31-15			6-30-14
Non-time deposits^(a)		$	65,109		$	63,606		$	60,066			2.4	%		8.4	%
Certificates of deposit ($100,000 or more)			2,010			2,017			2,808			(.3)			(28.4)
Other time deposits			3,136			3,217			3,587			(2.5)			(12.6)
	Total deposits	$	70,255		$	68,840		$	66,461			2.1	%		5.7	%

Cost of total deposits^(a)			.15	%		.15	%		.18	%		N/A			N/A


(a)	Excludes deposits in foreign office.

N/A = Not Applicable

Average deposits, excluding deposits in foreign office, totaled $70.3 billion for the second quarter of 2015, an increase of $3.8 billion compared to the year-ago quarter. Noninterest-bearing deposits increased by $3.3 billion, and NOW and money market deposit accounts increased by $1.8 billion, reflecting continued growth in the commercial mortgage servicing business and inflows from commercial and consumer clients. These increases were partially offset by a decline in certificates of deposit.

Compared to the first quarter of 2015, average deposits, excluding deposits in foreign office, increased by $1.4 billion. The increase was driven by NOW and money market deposit accounts which increased $1.2 billion, and noninterest-bearing deposits which increased $325 million. Higher escrow deposits from Key's commercial mortgage servicing business and inflows related to both commercial and consumer clients drove the linked-quarter increase.

ASSET QUALITY

dollars in millions										Change 2Q15 vs.
		2Q15			1Q15			2Q14		1Q15		2Q14
Net loan charge-offs	$	36		$	28		$	30		28.6	%	20.0	%
Net loan charge-offs to average total loans		.25	%		.20	%		.22	%	N/A		N/A
Nonperforming loans at period end^(a)	$	419		$	437		$	396		(4.1)	%	5.8	%
Nonperforming assets at period end		440			457			410		(3.7)		7.3
Allowance for loan and lease losses		796			794			814		.3		(2.2)
Allowance for loan and lease losses to nonperforming loans		190.0	%		181.7	%		205.6	%	N/A		N/A
Provision for credit losses		41			35			12		17.1	%	241.7	%


(a) Loan balances exclude $12 million, $12 million, and $15 million of purchased credit impaired loans at June 30, 2015, March 31, 2015, and June 30, 2014,
respectively.

N/A = Not Applicable

Key's provision for credit losses was $41 million for the second quarter of 2015, compared to $12 million for the second quarter of 2014 and $35 million for the first quarter of 2015. Key's allowance for loan and lease losses was $796 million, or 1.37% of total period-end loans, at June 30, 2015, compared to 1.46% at June 30, 2014, and 1.37% at March 31, 2015.

Net loan charge-offs for the second quarter of 2015 totaled $36 million, or .25% of average total loans. These results compare to $30 million, or .22%, for the second quarter of 2014, and $28 million, or .20%, for the first quarter of 2015.

At June 30, 2015, Key's nonperforming loans totaled $419 million and represented .72% of period-end portfolio loans, compared to .71% at June 30, 2014, and .75% at March 31, 2015. Nonperforming assets at June 30, 2015 totaled $440 million and represented .75% of period-end portfolio loans and OREO and other nonperforming assets, compared to .74% at June 30, 2014, and .79% at March 31, 2015.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at June 30, 2015.

Capital Ratios

	6-30-15		3-31-15		6-30-14
Common Equity Tier 1^{(a), (b)}	10.69	%	10.64	%	N/A
Tier 1 common equity^(b)	N/A		N/A		11.25	%
Tier 1 risk-based capital^(a)	11.10	%	11.04	%	11.99
Total risk based capital^(a)	12.63		12.79		14.14
Tangible common equity to tangible assets^(b)	9.86		9.92		10.15
Leverage^(a)	10.73		10.91		11.24


(a)	6-30-15 ratio is estimated.

(b)	The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) and "Tier 1 common equity" (prior to January 1, 2015). The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. See below for further information on the Regulatory Capital Rules.

As shown in the preceding table, at June 30, 2015, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 10.69% and 11.10%, respectively. In addition, the tangible common equity ratio was 9.86% at June 30, 2015.

In October 2013, federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the "Regulatory Capital Rules"). The mandatory compliance date for Key as a "standardized approach" banking organization began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Key's estimated Common Equity Tier 1 as calculated under the fully phased-in Regulatory Capital Rules was 10.58% at June 30, 2015. This estimate exceeds the fully phased-in required minimum Common Equity Tier 1 and Capital Conservation Buffer of 7.00%.

Summary of Changes in Common Shares Outstanding

in thousands					Change 2Q15 vs.
		2Q15	1Q15	2Q14	1Q15		2Q14
Shares outstanding at beginning of period		850,920	859,403	884,869	(1.0)	%	(3.8)	%
Common shares repurchased		(8,794)	(14,087)	(7,824)	(37.6)		12.4
Shares reissued (returned) under employee benefit plans		1,482	5,571	(222)	(73.4)		N/M
Common shares exchanged for Series A Preferred Stock		—	33	—	N/M		N/M
	Shares outstanding at end of period	843,608	850,920	876,823	(.9)	%	(3.8)	%

As previously reported, Key's 2015 capital plan includes common share repurchases of up to $725 million, which are expected to be executed through the second quarter of 2016. During the second quarter of 2015, Key completed $129 million of common share repurchases, including repurchases to offset issuances of common shares under employee compensation plans.

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 2Q15 vs.
			2Q15		1Q15		2Q14	1Q15		2Q14
Revenue from continuing operations (TE)
Key Community Bank		$	559	$	549	$	553	1.8	%	1.1	%
Key Corporate Bank			477		401		395	19.0		20.8
Other Segments			44		66		87	(33.3)		(49.4)
	Total segments		1,080		1,016		1,035	6.3		4.3
Reconciling Items			(1)		(2)		(1)	N/M		N/M
	Total	$	1,079	$	1,014	$	1,034	6.4	%	4.4	%

Income (loss) from continuing operations attributable to Key
Key Community Bank		$	65	$	50	$	53	30.0	%	22.6	%
Key Corporate Bank			135		127		135	6.3		—
Other Segments			31		44		54	(29.5)		(42.6)
	Total segments		231		221		242	4.5		(4.5)
Reconciling Items			4		7		5	(42.9)		(20.0)
	Total	$	235	$	228	$	247	3.1	%	(4.9)	%


TE = Taxable Equivalent, N/M = Not Meaningful

Key Community Bank


dollars in millions								Change 2Q15 vs.
			2Q15		1Q15		2Q14	1Q15		2Q14
Summary of operations
Net interest income (TE)		$	362	$	358	$	361	1.1	%	.3	%
Noninterest income			197		191		192	3.1		2.6
	Total revenue (TE)		559		549		553	1.8		1.1
Provision for credit losses			7		29		25	(75.9)		(72.0)
Noninterest expense			449		441		443	1.8		1.4
	Income (loss) before income taxes (TE)		103		79		85	30.4		21.2
Allocated income taxes (benefit) and TE adjustments			38		29		32	31.0		18.8
	Net income (loss) attributable to Key	$	65	$	50	$	53	30.0	%	22.6	%

Average balances
Loans and leases		$	30,707	$	30,662	$	30,034	.1	%	2.2	%
Total assets			32,758		32,716		32,132	.1		1.9
Deposits			50,766		50,417		50,232	.7		1.1

Assets under management at period end		$	38,399	$	39,281	$	39,632	(2.2)	%	(3.1)	%


TE = Taxable Equivalent

Additional Key Community Bank Data

dollars in millions											Change 2Q15 vs.
			2Q15			1Q15			2Q14		1Q15		2Q14
Noninterest income
Trust and investment services income		$	76		$	75		$	71		1.3	%	7.0	%
Service charges on deposit accounts			52			51			55		2.0		(5.5)
Cards and payments income			43			38			38		13.2		13.2
Other noninterest income			26			27			28		(3.7)		(7.1)
	Total noninterest income	$	197		$	191		$	192		3.1	%	2.6	%

Average deposit balances
NOW and money market deposit accounts		$	28,284		$	27,873		$	27,578		1.5	%	2.6	%
Savings deposits			2,385			2,377			2,483		.3		(3.9)
Certificates of deposit ($100,000 or more)			1,547			1,558			2,169		(.7)		(28.7)
Other time deposits			3,132			3,211			3,580		(2.5)		(12.5)
Deposits in foreign office			299			333			294		(10.2)		1.7
Noninterest-bearing deposits			15,119			15,065			14,128		.4		7.0
	Total deposits	$	50,766		$	50,417		$	50,232		.7	%	1.1	%

Home equity loans
Average balance		$	10,266		$	10,316		$	10,321
Weighted-average loan-to-value ratio (at date of origination)			71	%		71	%		71	%
Percent first lien positions			60			60			59

Other data
Branches			989			992			1,009
Automated teller machines			1,280			1,287			1,311

Key Community Bank Summary of Operations

Net income increased to $65 million, up 22.6% from prior year
Commercial, financial, and agricultural loan growth of $692 million, or 5.9% from prior year
Average deposits (excluding certificates of deposit and other time deposits) up $1.6 billion, or 3.6% from the prior year

Key Community Bank recorded net income attributable to Key of $65 million for the second quarter of 2015, compared to net income attributable to Key of $53 million for the year-ago quarter.

Taxable-equivalent net interest income increased by $1 million, or .3%, from the second quarter of 2014. Average loans and leases increased 2.2% due to commercial, financial, and agricultural loan growth of $692 million, or 5.9%, while average deposits increased 1.1% from one year ago.

Noninterest income increased by $5 million, or 2.6%, from the year-ago quarter. Year-over-year improvement reflected core business growth, including trust and investment services income and cards and payments income, which each increased $5 million, partially offset by a $3 million decrease in service charges on deposit accounts.

The provision for credit losses was $7 million in the second quarter of 2015, compared to $25 million for the same period one year ago.

Noninterest expense increased by $6 million, or 1.4%, from the year-ago quarter, including increases in personnel expense of $2 million and nonpersonnel expense of $4 million, driven by higher marketing and sales-related expenses.

Key Corporate Bank


dollars in millions								Change 2Q15 vs.
			2Q15		1Q15		2Q14	1Q15		2Q14
Summary of operations
Net interest income (TE)		$	227	$	213	$	210	6.6	%	8.1	%
Noninterest income			250		188		185	33.0		35.1
	Total revenue (TE)		477		401		395	19.0		20.8
Provision for credit losses			38		8		(4)	375.0		N/M
Noninterest expense			252		216		207	16.7		21.7
	Income (loss) before income taxes (TE)		187		177		192	5.6		(2.6)
Allocated income taxes and TE adjustments			52		50		54	4.0		(3.7)
	Net income (loss)		135		127		138	6.3		(2.2)	%
Less: Net income (loss) attributable to noncontrolling interests			—		—		3	N/M		N/M
	Net income (loss) attributable to Key	$	135	$	127	$	135	6.3	%	—

Average balances
Loans and leases		$	25,298	$	24,722	$	22,886	2.3	%	10.5	%
Loans held for sale			1,234		775		429	59.2		187.6
Total assets			31,228		30,297		28,007	3.1		11.5
Deposits			19,708		18,567		16,357	6.1		20.5

Assets under management at period end			—		—	$	37	N/M		N/M


TE = Taxable Equivalent, N/M = Not Meaningful

Additional Key Corporate Bank Data

dollars in millions								Change 2Q15 vs.
			2Q15		1Q15		2Q14	1Q15		2Q14
Noninterest income
Trust and investment services income		$	35	$	34	$	23	2.9	%	52.2	%
Investment banking and debt placement fees			139		68		97	104.4		43.3
Operating lease income and other leasing gains			18		14		11	28.6		63.6

Corporate services income			33		32		30	3.1		10.0
Service charges on deposit accounts			11		10		11	10.0		—
Cards and payments income			4		4		3	—		33.3
	Payments and services income		48		46		44	4.3		9.1

Mortgage servicing fees			9		13		11	(30.8)		(18.2)
Other noninterest income			1		13		(1)	(92.3)		N/M
	Total noninterest income	$	250	$	188	$	185	33.0	%	35.1	%


N/M = Not Meaningful

Key Corporate Bank Summary of Operations

Record high quarter for investment banking and debt placement fees
Revenue up 20.8% from the prior year
Average loan and lease balances up 10.5% from the prior year
Average deposits up 20.5% from the prior year

Key Corporate Bank recorded net income attributable to Key of $135 million for the second quarter of 2015, unchanged from the same period one year ago.

Taxable-equivalent net interest income increased by $17 million, or 8.1%, compared to the second quarter of 2014. Average earning assets increased $2.6 billion, or 10.3%, from the year-ago quarter, primarily driven by loan growth in commercial, financial and agricultural and real estate commercial mortgage loans. This growth in earning assets drove an increase of $10 million in earning asset spread. Average deposit balances increased $3.4 billion, or 20.5%, from the year-ago quarter, driven by commercial mortgage servicing deposits and other commercial client inflows. This growth in deposit balances drove an increase of $13 million in deposit and borrowing spread.

Noninterest income was up $65 million, or 35.1% from the prior year. This growth was primarily due to a record high quarter for investment banking and debt placement fees, which increased $42 million or 43.3%, driven by strength in financial advisory fees and loan syndications. Trust and investment services income increased $12 million, mostly due to the Pacific Crest Securities acquisition. Operating lease income and other leasing gains also increased $7 million, or 63.6%.

The provision for credit losses was an expense of $38 million for the second quarter of 2015, compared to a credit of $4 million for the same period one year ago.

Noninterest expense increased by $45 million, or 21.7%, from the second quarter of 2014. This increase was due to performance-based compensation and expenses related to the third quarter 2014 acquisition of Pacific Crest Securities.

Other Segments

Other Segments consist of Corporate Treasury, Key's Principal Investing unit and various exit portfolios. Other Segments generated net income attributable to Key of $31 million for the second quarter of 2015, compared to net income attributable to Key of $54 million for the same period last year. These results were primarily due to $16 million in lower net gains on principal investing and $19 million in lower operating lease income and other leasing gains, partially offset by a $3 million increase in corporate-owned life insurance income and lower personnel expense.

*****

KeyCorp was organized more than 160 years ago and is headquartered in Cleveland, Ohio. One of the nation's largest bank-based financial services companies, Key had assets of approximately $94.6 billion at June 30, 2015.

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

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as "goal," "objective," "plan," "expect," "assume," "anticipate," "intend," "project," "believe," "estimate," or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Forward-looking statements, by their nature, are subject to assumptions, risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause Key's actual results to differ from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 2014, which has been filed with the Securities and Exchange Commission (the "SEC") and is available on Key's website (www.key.com/ir) and on the SEC's website (www.sec.gov). These factors may include, among others: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive and increasing regulation of the U.S. financial services industry. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

Notes to Editors:
A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 9:00 a.m. ET, on Thursday, July 16, 2015. An audio replay of the call will be available through July 23, 2015.

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

			Three months ended
			6-30-15			3-31-15			6-30-14
Summary of operations
	Net interest income (TE)		$	591		$	577		$	579
	Noninterest income			488			437			455
		Total revenue (TE)		1,079			1,014			1,034
	Provision for credit losses			41			35			12
	Noninterest expense			711			669			687
	Income (loss) from continuing operations attributable to Key			235			228			247
	Income (loss) from discontinued operations, net of taxes^(a)			3			5			(28)
	Net income (loss) attributable to Key			238			233			219

	Income (loss) from continuing operations attributable to Key common shareholders		$	230		$	222		$	242
	Income (loss) from discontinued operations, net of taxes^(a)			3			5			(28)
	Net income (loss) attributable to Key common shareholders			233			227			214

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.27		$	.26		$	.28
	Income (loss) from discontinued operations, net of taxes ^(a)			—			.01			(.03)
	Net income (loss) attributable to Key common shareholders ^(b)			.28			.27			.24

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution			.27			.26			.27
	Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)			—			.01			(.03)
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)			.27			.26			.24

	Cash dividends paid			.075			.065			.065
	Book value at period end			12.21			12.12			11.65
	Tangible book value at period end			10.92			10.84			10.50
	Market price at period end			15.02			14.16			14.33

Performance ratios
	From continuing operations:
	Return on average total assets			1.03	%		1.03	%		1.14	%
	Return on average common equity			8.96			8.76			9.55
	Return on average tangible common equity ^(c)			10.01			9.80			10.60
	Net interest margin (TE)			2.88			2.91			2.98
	Cash efficiency ratio ^(c)			65.1			65.1			65.6

	From consolidated operations:
	Return on average total assets			1.02	%		1.03	%		.96	%
	Return on average common equity			9.07			8.96			8.44
	Return on average tangible common equity ^(c)			10.14			10.02			9.37
	Net interest margin (TE)			2.85			2.88			2.94
	Loan to deposit ^(d)			87.3			86.9			87.1

Capital ratios at period end
	Key shareholders' equity to assets			11.19	%		11.26	%		11.44	%
	Key common shareholders' equity to assets			10.89			10.95			11.13
	Tangible common equity to tangible assets ^(c)			9.86			9.92			10.15
	Common Equity Tier 1 ^{(c), (e)}			10.69			10.64			N/A
	Tier 1 common equity ^(c)			N/A			N/A			11.25
	Tier 1 risk-based capital ^(e)			11.10			11.04			11.99
	Total risk-based capital ^(e)			12.63			12.79			14.14
	Leverage ^(e)			10.73			10.91			11.24

Asset quality — from continuing operations
	Net loan charge-offs		$	36		$	28		$	30
	Net loan charge-offs to average loans			.25	%		.20	%		.22	%
	Allowance for loan and lease losses		$	796		$	794		$	814
	Allowance for credit losses			841			835			851
	Allowance for loan and lease losses to period-end loans			1.37	%		1.37	%		1.46	%
	Allowance for credit losses to period-end loans			1.44			1.44			1.53
	Allowance for loan and lease losses to nonperforming loans			190.0			181.7			205.6
	Allowance for credit losses to nonperforming loans			200.7			191.1			214.9
	Nonperforming loans at period end ^(f)		$	419		$	437		$	396
	Nonperforming assets at period end			440			457			410
	Nonperforming loans to period-end portfolio loans			.72	%		.75	%		.71	%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets			.75			.79			.74

Trust and brokerage assets
	Assets under management		$	38,399		$	39,281		$	39,669
	Nonmanaged and brokerage assets			48,789			49,508			48,728

Other data
	Average full-time equivalent employees			13,455			13,591			13,867
	Branches			989			992			1,009

Taxable-equivalent adjustment			$	7		$	6		$	6

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

			Six months ended
			6-30-15			6-30-14
Summary of operations
	Net interest income (TE)		$	1,168		$	1,148
	Noninterest income			925			890
		Total revenue (TE)		2,093			2,038
	Provision for credit losses			76			16
	Noninterest expense			1,380			1,351
	Income (loss) from continuing operations attributable to Key			463			485
	Income (loss) from discontinued operations, net of taxes ^(a)			8			(24)
	Net income (loss) attributable to Key			471			461

	Income (loss) from continuing operations attributable to Key common shareholders		$	452		$	474
	Income (loss) from discontinued operations, net of taxes ^(a)			8			(24)
	Net income (loss) attributable to Key common shareholders			460			450

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.53		$	.54
	Income (loss) from discontinued operations, net of taxes ^(a)			.01			(.03)
	Net income (loss) attributable to Key common shareholders ^(b)			.54			.51

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution			.52			.53
	Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)			.01			(.03)
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)			.53			.51

	Cash dividends paid			.14			.12

Performance ratios
	From continuing operations:
	Return on average total assets			1.03	%		1.13	%
	Return on average common equity			8.86			9.44
	Return on average tangible common equity ^(c)			9.91			10.49
	Net interest margin (TE)			2.89			2.99
	Cash efficiency ratio ^(c)			65.1			65.4

	From consolidated operations:
	Return on average total assets			1.02	%		1.03	%
	Return on average common equity			9.01			8.96
	Return on average tangible common equity ^(c)			10.08			9.96
	Net interest margin (TE)			2.86			2.95

Asset quality — from continuing operations
	Net loan charge-offs		$	64		$	50
	Net loan charge-offs to average total loans			.22	%		.18	%

Other data
	Average full-time equivalent employees			13,512			13,961

Taxable-equivalent adjustment			$	13		$	12

(a)	In April 2009, management decided to wind down the operations of Austin Capital Management, Ltd., a subsidiary that specialized in managing hedge fund investments for institutional customers. In September 2009, management decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. In February 2013, Key decided to sell its investment subsidiary, Victory Capital Management, and its broker-dealer affiliate, Victory Capital Advisors, to a private equity fund. As a result of these decisions, Key has accounted for these businesses as discontinued operations.
(b)	Earnings per share may not foot due to rounding.
(c)	The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity," "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) "Tier 1 common equity" (prior to January 1, 2015), and "cash efficiency." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the "Capital" section of this release.
(d)	Represents period-end consolidated total loans and loans held for sale (excluding education loans in the securitization trusts for periods prior to September 30, 2014) divided by period-end consolidated total deposits (excluding deposits in foreign office).
(e)	6-30-15 ratio is estimated.
(f)	Loan balances exclude $12 million, $12 million, and $15 million of purchased credit impaired loans at June 30, 2015, March 31, 2015, and June 30, 2014, respectively.
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles

GAAP to Non-GAAP Reconciliations
(dollars in millions)

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

The tangible common equity ratio and the return on tangible common equity ratio have been a focus for some investors, and management believes these ratios may assist investors in analyzing Key's capital position without regard to the effects of intangible assets and preferred stock. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. In October 2013, the federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the "Regulatory Capital Rules"). The Regulatory Capital Rules require higher and better-quality capital and introduces a new capital measure, "Common Equity Tier 1," a non-GAAP financial measure. The mandatory compliance date for Key as a "standardized approach" banking organization began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Prior to January 1, 2015, the Federal Reserve focused its assessment of capital adequacy on a component of Tier 1 risk-based capital known as Tier 1 common equity, also a non-GAAP financial measure.

Common Equity Tier 1 is not formally defined by GAAP and is considered to be a non-GAAP financial measure. Since analysts and banking regulators may assess Key's capital adequacy using tangible common equity and Common Equity Tier 1, management believes it is useful to enable investors to assess Key's capital adequacy on these same bases. The table also reconciles the GAAP performance measures to the corresponding non-GAAP measures.

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

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

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

				Three months ended
				6-30-15			3-31-15			6-30-14
Tangible common equity to tangible assets at period end
	Key shareholders' equity (GAAP)			$	10,590		$	10,603		$	10,504
	Less:	Intangible assets ^(a)			1,085			1,088			1,008
		Preferred Stock, Series A ^(b)			281			281			282
		Tangible common equity (non-GAAP)		$	9,224		$	9,234		$	9,214

	Total assets (GAAP)			$	94,606		$	94,206		$	91,798
	Less:	Intangible assets ^(a)			1,085			1,088			1,008
		Tangible assets (non-GAAP)		$	93,521		$	93,118		$	90,790

	Tangible common equity to tangible assets ratio (non-GAAP)				9.86	%		9.92	%		10.15	%

Common Equity Tier 1 at period end
	Key shareholders' equity (GAAP)			$	10,590		$	10,603			—
	Less:	Preferred Stock, Series A ^(b)			281			281			—
		Common Equity Tier 1 capital before adjustments and deductions			10,309			10,322			—
	Less:	Goodwill, net of deferred taxes			1,036			1,036			—
		Intangible assets, net of deferred taxes			33			36			—
		Deferred tax assets			1			1			—
		Net unrealized gains (losses) on available-for-sale securities, net of deferred taxes			1			52			—
		Accumulated gain (loss) on cash flow hedges, net of deferred taxes			(21)			(8)			—
		Amounts recorded in accumulated other comprehensive income (loss), net of
			deferred taxes		(362)			(364)			—
		Total Common Equity Tier 1 capital ^(c)		$	9,621		$	9,569			—

	Net risk-weighted assets (regulatory) ^(c)			$	89,995		$	89,967			—

	Common Equity Tier 1 ratio (non-GAAP) ^(c)				10.69	%		10.64	%		—

Tier 1 common equity at period end
	Key shareholders' equity (GAAP)				—			—		$	10,504
	Qualifying capital securities				—			—			339
	Less:	Goodwill			—			—			979
		Accumulated other comprehensive income (loss) ^(d)			—			—			(328)
		Other assets ^(e)			—			—			86
		Total Tier 1 capital (regulatory)			—			—			10,106
	Less:	Qualifying capital securities			—			—			339
		Preferred Stock, Series A ^(b)			—			—			282
		Total Tier 1 common equity (non-GAAP)			—			—		$	9,485

	Net risk-weighted assets (regulatory)				—			—		$	84,287

	Tier 1 common equity ratio (non-GAAP)				—			—			11.25	%

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

			Three months ended
			6-30-15			3-31-15			6-30-14
Pre-provision net revenue
	Net interest income (GAAP)		$	584		$	571		$	573
	Plus:	Taxable-equivalent adjustment		7			6			6
		Noninterest income (GAAP)		488			437			455
	Less:	Noninterest expense (GAAP)		711			669			687
	Pre-provision net revenue from continuing operations (non-GAAP)		$	368		$	345		$	347

Average tangible common equity
	Average Key shareholders' equity (GAAP)		$	10,590		$	10,570		$	10,459
	Less:	Intangible assets (average)^(f)		1,086			1,089			1,010
		Preferred Stock, Series A (average)		290			290			291
		Average tangible common equity (non-GAAP)	$	9,214		$	9,191		$	9,158

Return on average tangible common equity from continuing operations
	Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	230		$	222		$	242
	Average tangible common equity (non-GAAP)			9,214			9,191			9,158

	Return on average tangible common equity from continuing operations (non-GAAP)			10.01	%		9.80	%		10.60	%

Return on average tangible common equity consolidated
	Net income (loss) attributable to Key common shareholders (GAAP)		$	233		$	227		$	214
	Average tangible common equity (non-GAAP)			9,214			9,191			9,158

	Return on average tangible common equity consolidated (non-GAAP)			10.14	%		10.02	%		9.37	%

Cash efficiency ratio
	Noninterest expense (GAAP)		$	711		$	669		$	687
	Less:	Intangible asset amortization (GAAP)		9			9			9
		Adjusted noninterest expense (non-GAAP)	$	702		$	660		$	678

	Net interest income (GAAP)		$	584		$	571		$	573
	Plus:	Taxable-equivalent adjustment		7			6			6
		Noninterest income (GAAP)		488			437			455
		Total taxable-equivalent revenue (non-GAAP)	$	1,079		$	1,014		$	1,034

	Cash efficiency ratio (non-GAAP)			65.1	%		65.1	%		65.6	%

			Three months ended
			6-30-15
Common Equity Tier 1 under the Regulatory Capital Rules (estimates)
	Common Equity Tier 1 under current regulatory rules		$	9,621
	Adjustments from current regulatory rules to the Regulatory Capital Rules:
		Deferred tax assets and other assets^(g)		(51)
		Common Equity Tier 1 anticipated under the Regulatory Capital Rules^(h)	$	9,570

	Net risk-weighted assets under current regulatory rules		$	89,995
	Adjustments from current regulatory rules to the Regulatory Capital Rules:
		Mortgage servicing assets⁽ⁱ⁾		494
		Deferred tax assets⁽ⁱ⁾		22
		Significant investments⁽ⁱ⁾		—
		Other assets^(j)		(51)
		Total risk-weighted assets anticipated under the Regulatory Capital Rules^(h)	$	90,460

	Common Equity Tier 1 ratio under the Regulatory Capital Rules^(h)			10.58	%

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

			Six months ended
			6-30-15			6-30-14
Pre-provision net revenue
	Net interest income (GAAP)		$	1,155		$	1,136
	Plus:	Taxable-equivalent adjustment		13			12
		Noninterest income (GAAP)		925			890
	Less:	Noninterest expense (GAAP)		1,380			1,351
	Pre-provision net revenue from continuing operations (non-GAAP)		$	713		$	687

Average tangible common equity
	Average Key shareholders' equity (GAAP)		$	10,580		$	10,415
	Less:	Intangible assets (average)^(k)		1,088			1,011
		Preferred Stock, Series A (average)		290			291
		Average tangible common equity (non-GAAP)	$	9,202		$	9,113

Return on average tangible common equity from continuing operations
	Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	452		$	474
	Average tangible common equity (non-GAAP)			9,202			9,113

	Return on average tangible common equity from continuing operations (non-GAAP)			9.91	%		10.49	%

Return on average tangible common equity consolidated
	Net income (loss) attributable to Key common shareholders (GAAP)		$	460		$	450
	Average tangible common equity (non-GAAP)			9,202			9,113

	Return on average tangible common equity consolidated (non-GAAP)			10.08	%		9.96	%

Cash efficiency ratio
	Noninterest expense (GAAP)		$	1,380		$	1,351
	Less:	Intangible asset amortization (GAAP)		18			19
		Adjusted noninterest expense (non-GAAP)	$	1,362		$	1,332

	Net interest income (GAAP)		$	1,155		$	1,136
	Plus:	Taxable-equivalent adjustment		13			12
		Noninterest income (GAAP)		925			890
		Total taxable-equivalent revenue (non-GAAP)	$	2,093		$	2,038

	Cash efficiency ratio (non-GAAP)			65.1	%		65.4	%

(a)	For the three months ended June 30, 2015, March 31, 2015, and June 30, 2014, intangible assets exclude $55 million, $61 million, and $79 million, respectively, of period-end purchased credit card receivables.
(b)	Net of capital surplus.
(c)	6-30-15 amount is estimated.
(d)	Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities), net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance for defined benefit and other postretirement plans.
(e)	Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed intangible assets (excluding goodwill) and deductible portions of nonfinancial equity investments. There were no disallowed deferred tax assets at June 30, 2014.
(f)	For the three months ended June 30, 2015, March 31, 2015, and June 30, 2014, average intangible assets exclude $58 million, $64 million, and $82 million, respectively, of average purchased credit card receivables.
(g)	Includes the deferred tax asset subject to future taxable income for realization, primarily tax credit carryforwards, as well as the deductible portion of purchased credit card receivables.
(h)	The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies' Regulatory Capital Rules (as fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital Rules under the "standardized approach."
(i)	Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250%.
(j)	Under the fully implemented rule, certain deferred tax assets and intangible assets subject to the transition provision are no longer required to be risk-weighted because they are deducted directly from capital.
(k)	For the six months ended June 30, 2015, and June 30, 2014, average intangible assets exclude $61 million, and $85 million, respectively, of average purchased credit card receivables.
GAAP = U.S. generally accepted accounting principles

Consolidated Balance Sheets
(dollars in millions)

			6-30-15		3-31-15		6-30-14
Assets
	Loans		$	58,264	$	57,953	$	55,600
	Loans held for sale			835		1,649		435
	Securities available for sale			14,244		13,120		12,224
	Held-to-maturity securities			5,022		5,005		5,233
	Trading account assets			674		789		890
	Short-term investments			3,222		3,378		3,176
	Other investments			703		730		899
		Total earning assets		82,964		82,624		78,457
	Allowance for loan and lease losses			(796)		(794)		(814)
	Cash and due from banks			693		506		604
	Premises and equipment			788		806		844
	Operating lease assets			296		306		306
	Goodwill			1,057		1,057		979
	Other intangible assets			83		92		108
	Corporate-owned life insurance			3,502		3,488		3,438
	Derivative assets			536		731		549
	Accrued income and other assets			3,314		3,144		3,090
	Discontinued assets			2,169		2,246		4,237
		Total assets	$	94,606	$	94,206	$	91,798

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	36,024	$	35,623	$	33,637
		Savings deposits		2,370		2,413		2,450
		Certificates of deposit ($100,000 or more)		2,032		1,982		2,743
		Other time deposits		3,105		3,182		3,505
		Total interest-bearing deposits		43,531		43,200		42,335
		Noninterest-bearing deposits		26,640		27,948		24,781
	Deposits in foreign office — interest-bearing			498		474		683
		Total deposits		70,669		71,622		67,799
	Federal funds purchased and securities sold under repurchase agreements			444		517		1,213
	Bank notes and other short-term borrowings			528		608		521
	Derivative liabilities			560		825		451
	Accrued expense and other liabilities			1,537		1,308		1,400
	Long-term debt			10,267		8,713		8,213
	Discontinued liabilities			—		—		1,680
		Total liabilities		84,005		83,593		81,277

Equity
	Preferred stock, Series A			290		290		291
	Common shares			1,017		1,017		1,017
	Capital surplus			3,898		3,910		3,987
	Retained earnings			8,614		8,445		7,950
	Treasury stock, at cost			(2,884)		(2,780)		(2,452)
	Accumulated other comprehensive income (loss)			(345)		(279)		(289)
		Key shareholders' equity		10,590		10,603		10,504
	Noncontrolling interests			11		10		17
		Total equity		10,601		10,613		10,521
Total liabilities and equity			$	94,606	$	94,206	$	91,798

Common shares outstanding (000)				843,608		850,920		876,823

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

			Three months ended						Six months ended
			6-30-15		3-31-15		6-30-14		6-30-15		6-30-14
Interest income
	Loans		$	532	$	523	$	526	$	1,055	$	1,045
	Loans held for sale			12		7		5		19		9
	Securities available for sale			72		70		71		142		143
	Held-to-maturity securities			24		24		23		48		45
	Trading account assets			5		5		7		10		13
	Short-term investments			2		2		1		4		2
	Other investments			5		5		6		10		12
		Total interest income		652		636		639		1,288		1,269

Interest expense
	Deposits			26		26		31		52		63
	Federal funds purchased and securities sold under repurchase agreements			—		—		—		—		1
	Bank notes and other short-term borrowings			2		2		2		4		4
	Long-term debt			40		37		33		77		65
		Total interest expense		68		65		66		133		133

Net interest income				584		571		573		1,155		1,136
Provision for credit losses				41		35		12		76		16
Net interest income after provision for credit losses				543		536		561		1,079		1,120

Noninterest income
	Trust and investment services income			111		109		94		220		192
	Investment banking and debt placement fees			141		68		99		209		183
	Service charges on deposit accounts			63		61		66		124		129
	Operating lease income and other leasing gains			24		19		35		43		64
	Corporate services income			43		43		41		86		83
	Cards and payments income			47		42		43		89		81
	Corporate-owned life insurance income			30		31		28		61		54
	Consumer mortgage income			4		3		2		7		4
	Mortgage servicing fees			9		13		11		22		26
	Net gains (losses) from principal investing			11		29		27		40		51
	Other income ^(a)			5		19		9		24		23
		Total noninterest income		488		437		455		925		890

Noninterest expense
	Personnel			408		389		389		797		777
	Net occupancy			66		65		68		131		132
	Computer processing			42		38		41		80		79
	Business services and professional fees			42		33		41		75		82
	Equipment			22		22		24		44		48
	Operating lease expense			12		11		10		23		20
	Marketing			15		8		13		23		18
	FDIC assessment			8		8		6		16		12
	Intangible asset amortization			9		9		9		18		19
	OREO expense, net			1		2		1		3		2
	Other expense			86		84		85		170		162
		Total noninterest expense		711		669		687		1,380		1,351
Income (loss) from continuing operations before income taxes				320		304		329		624		659
	Income taxes			84		74		76		158		168
Income (loss) from continuing operations				236		230		253		466		491
	Income (loss) from discontinued operations, net of taxes			3		5		(28)		8		(24)
Net income (loss)				239		235		225		474		467
	Less: Net income (loss) attributable to noncontrolling interests			1		2		6		3		6
Net income (loss) attributable to Key			$	238	$	233	$	219	$	471	$	461

Income (loss) from continuing operations attributable to Key common shareholders			$	230	$	222	$	242	$	452	$	474
Net income (loss) attributable to Key common shareholders				233		227		214		460		450

Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.27	$	.26	$	.28	$	.53	$	.54
Income (loss) from discontinued operations, net of taxes				—		.01		(.03)		.01		(.03)
Net income (loss) attributable to Key common shareholders ^(b)				.28		.27		.24		.54		.51

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.27	$	.26	$	.27	$	.52	$	.53
Income (loss) from discontinued operations, net of taxes				—		.01		(.03)		.01		(.03)
Net income (loss) attributable to Key common shareholders ^(b)				.27		.26		.24		.53		.51

Cash dividends declared per common share			$	.075	$	.065	$	.065	$	.14	$	.12

Weighted-average common shares outstanding (000)				839,454		848,580		875,298		843,992		879,986
	Effect of convertible preferred stock			—		—		20,602		—		—
	Effect of common share options and other stock awards			6,858		8,542		6,237		7,695		6,698
Weighted-average common shares and potential common shares outstanding (000) ^(c)				846,312		857,122		902,137		851,687		886,684


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

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

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

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

			Second Quarter 2015								First Quarter 2015								Second Quarter 2014
			Average								Average								Average
			Balance		Interest		^(a)	Yield/Rate		^(a)	Balance		Interest		^(a)	Yield/Rate		^(a)	Balance		Interest		^(a)	Yield/Rate		^(a)
Assets
	Loans:^{(b), (c)}
	Commercial, financial and agricultural^(d)		$	29,017	$	233			3.23	%	$	28,321	$	223			3.18	%	$	26,444	$	219			3.31	%
	Real estate — commercial mortgage			7,981		74			3.70			8,095		73			3.67			7,880		74			3.79
	Real estate — construction			1,199		11			3.60			1,139		11			3.90			1,049		11			4.03
	Commercial lease financing			3,981		36			3.58			4,070		36			3.57			4,257		38			3.54
		Total commercial loans		42,178		354			3.36			41,625		343			3.33			39,630		342			3.45
	Real estate — residential mortgage			2,237		23			4.22			2,229		24			4.26			2,189		24			4.41
	Home equity:
		Key Community Bank		10,266		99			3.89			10,316		99			3.89			10,321		100			3.92
		Other		244		5			7.86			260		5			7.82			306		6			7.80
		Total home equity loans		10,510		104			3.98			10,576		104			3.99			10,627		106			4.03
	Consumer other — Key Community Bank			1,571		26			6.52			1,546		25			6.66			1,479		26			6.97
	Credit cards			737		19			10.57			732		20			11.01			702		18			10.39
	Consumer other:
		Marine		702		11			6.30			755		12			6.35			926		15			6.18
		Other		43		1			7.77			49		1			7.32			58		1			8.09
		Total consumer other		745		12			6.38			804		13			6.41			984		16			6.29
		Total consumer loans		15,800		184			4.69			15,887		186			4.74			15,981		190			4.77
		Total loans		57,978		538			3.72			57,512		529			3.72			55,611		532			3.83
	Loans held for sale			1,263		12			3.91			795		7			3.33			458		5			4.14
	Securities available for sale^{(b), (e)}			13,360		73			2.17			13,087		70			2.17			12,408		71			2.30
	Held-to-maturity securities^(b)			4,965		24			1.91			4,947		24			1.93			4,973		23			1.87
	Trading account assets			805		5			2.55			717		5			2.80			985		7			2.80
	Short-term investments			3,228		2			.26			2,399		2			.27			2,475		1			.17
	Other investments^(e)			713		5			2.48			742		5			2.79			888		6			2.64
		Total earning assets		82,312		659			3.21			80,199		642			3.23			77,798		645			3.31
	Allowance for loan and lease losses			(793)								(793)								(824)
	Accrued income and other assets			10,140								10,223								9,767
	Discontinued assets			2,194								2,271								4,341
		Total assets	$	93,853							$	91,900							$	91,082

Liabilities
	NOW and money market deposit accounts		$	36,122		14			.16		$	34,952		13			.15		$	34,283		11			.14
	Savings deposits			2,393		—			.02			2,385		—			.02			2,493		—			.03
	Certificates of deposit ($100,000 or more)^(f)			2,010		6			1.25			2,017		7			1.30			2,808		10			1.39
	Other time deposits			3,136		5			.70			3,217		6			.72			3,587		9			.98
	Deposits in foreign office			583		1			.23			529		—			.22			662		1			.23
		Total interest-bearing deposits		44,244		26			.24			43,100		26			.24			43,833		31			.28
	Federal funds purchased and securities sold under repurchase agreements			557		—			.02			720		—			.03			1,470		—			.19
	Bank notes and other short-term borrowings			657		2			1.39			506		2			1.56			545		2			1.54
	Long-term debt^{(f), (g)}			6,968		40			2.30			6,126		37			2.52			5,476		33			2.51
		Total interest-bearing liabilities		52,426		68			.52			50,452		65			.52			51,324		66			.52
	Noninterest-bearing deposits			26,594								26,269								23,290
	Accrued expense and other liabilities			2,039								2,327								1,654
	Discontinued liabilities^(g)			2,194								2,271								4,341
		Total liabilities		83,253								81,319								80,609

Equity
	Key shareholders' equity			10,590								10,570								10,459
	Noncontrolling interests			10								11								14
		Total equity		10,600								10,581								10,473

		Total liabilities and equity	$	93,853							$	91,900							$	91,082

Interest rate spread (TE)									2.69	%							2.71	%							2.79	%

Net interest income (TE) and net interest margin (TE)						591			2.88	%				577			2.91	%				579			2.98	%
TE adjustment^(b)						7								6								6
	Net interest income, GAAP basis				$	584							$	571							$	573

(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.
(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial, financial and agricultural average balances include $88 million, $87 million, and $95 million of assets from commercial credit cards for the three months ended June 30, 2015, March 31, 2015, and June 30, 2014, respectively.
(e)	Yield is calculated on the basis of amortized cost.
(f)	Rate calculation excludes basis adjustments related to fair value hedges.
(g)	A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying our 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, 2015								Six months ended June 30, 2014
			Average								Average
			Balance		Interest		^(a)	Yield/Rate		^(a)	Balance		Interest		^(a)	Yield/ Rate		^(a)
Assets
	Loans:^{(b), (c)}
	Commercial, financial and agricultural ^(d)		$	28,671	$	456			3.21	%	$	25,920	$	425			3.30	%
	Real estate — commercial mortgage			8,038		147			3.68			7,844		148			3.82
	Real estate — construction			1,169		22			3.75			1,069		23			4.29
	Commercial lease financing			4,025		72			3.57			4,348		80			3.67
		Total commercial loans		41,903		697			3.35			39,181		676			3.47
	Real estate — residential mortgage			2,233		47			4.24			2,188		48			4.42
	Home equity:
		Key Community Bank		10,291		198			3.89			10,313		200			3.92
		Other		252		10			7.84			315		12			7.79
	Total home equity loans			10,543		208			3.99			10,628		212			4.03
	Consumer other — Key Community Bank			1,558		51			6.59			1,459		51			7.01
	Credit cards			735		39			10.79			702		38			10.83
	Consumer other:
		Marine		728		23			6.32			961		30			6.18
		Other		46		2			7.54			62		2			7.80
		Total consumer other		774		25			6.40			1,023		32			6.28
	Total consumer loans			15,843		370			4.71			16,000		381			4.80
	Total loans			57,746		1,067			3.72			55,181		1,057			3.86
	Loans held for sale			1,030		19			3.68			452		9			3.75
	Securities available for sale^{(b), (e)}			13,225		143			2.17			12,378		143			2.31
	Held-to-maturity securities^(b)			4,956		48			1.92			4,870		45			1.86
	Trading account assets			762		10			2.67			983		13			2.66
	Short-term investments			2,816		4			.26			2,480		2			.17
	Other investments^(e)			727		10			2.64			912		12			2.61
	Total earning assets			81,262		1,301			3.22			77,256		1,281			3.32
	Allowance for loan and lease losses			(793)								(833)
	Accrued income and other assets			10,181								9,779
	Discontinued assets			2,232								4,417
	Total assets		$	92,882							$	90,619

Liabilities
	NOW and money market deposit accounts		$	35,540		27			.15		$	34,174		23			.14
	Savings deposits			2,389		—			.02			2,484		—			.03
	Certificates of deposit ($100,000 or more)^(f)			2,014		13			1.28			2,783		20			1.45
	Other time deposits			3,176		11			.71			3,633		19			1.02
	Deposits in foreign office			556		1			.23			661		1			.22
		Total interest-bearing deposits		43,675		52			.24			43,735		63			.29

	Federal funds purchased and securities sold under repurchase agreements			638		—			.03			1,470		1			.18
	Bank notes and other short-term borrowings			582		4			1.46			565		4			1.59
	Long-term debt^{(f), (g)}			6,550		77			2.40			5,323		65			2.54
		Total interest-bearing liabilities		51,445		133			.52			51,093		133			.53
	Noninterest-bearing deposits			26,432								22,976
	Accrued expense and other liabilities			2,182								1,702
	Discontinued liabilities^(g)			2,232								4,417
	Total liabilities			82,291								80,188

Equity
	Key shareholders' equity			10,580								10,415
	Noncontrolling interests			11								16
	Total equity			10,591								10,431

	Total liabilities and equity		$	92,882							$	90,619

Interest rate spread (TE)									2.70	%							2.79	%

Net interest income (TE) and net interest margin (TE)						1,168			2.89	%				1,148			2.99	%
TE adjustment^(b)						13								12
	Net interest income, GAAP basis				$	1,155							$	1,136

(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.
(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial, financial and agricultural average balances include $88 million and $95 million of assets from commercial credit cards for the six months ended June 30, 2015, and June 30, 2014, respectively.
(e)	Yield is calculated on the basis of amortized cost.
(f)	Rate calculation excludes basis adjustments related to fair value hedges.
(g)	A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying our 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
	6-30-15		3-31-15		6-30-14		6-30-15		6-30-14
Personnel ^(a)	$	408	$	389	$	389	$	797	$	777
Net occupancy		66		65		68		131		132
Computer processing		42		38		41		80		79
Business services and professional fees		42		33		41		75		82
Equipment		22		22		24		44		48
Operating lease expense		12		11		10		23		20
Marketing		15		8		13		23		18
FDIC assessment		8		8		6		16		12
Intangible asset amortization		9		9		9		18		19
OREO expense, net		1		2		1		3		2
Other expense		86		84		85		170		162
Total noninterest expense	$	711	$	669	$	687	$	1,380	$	1,351

Average full-time equivalent employees ^(b)		13,455		13,591		13,867		13,512		13,961

(a) Additional detail provided in table below.

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


Personnel Expense
(in millions)

	Three months ended						Six months ended
	6-30-15		3-31-15		6-30-14		6-30-15		6-30-14
Salaries	$	229	$	218	$	224	$	447	$	444
Technology contract labor, net		10		10		14		20		31
Incentive and stock-based compensation		109		83		91		192		174
Employee benefits		55		72		50		127		113
Severance		5		6		10		11		15
Total personnel expense	$	408	$	389	$	389	$	797	$	777

Loan Composition
(dollars in millions)

									Percent change 6-30-15 vs.
			6-30-15		3-31-15		6-30-14		3-31-15			6-30-14
Commercial, financial and agricultural ^(a)			$	29,285	$	28,783	$	26,327		1.7	%		11.2	%
Commercial real estate:
	Commercial mortgage			7,874		8,162		7,946		(3.5)			(.9)
	Construction			1,254		1,142		1,047		9.8			19.8
	Total commercial real estate loans			9,128		9,304		8,993		(1.9)			1.5
Commercial lease financing ^(b)				4,010		4,064		4,241		(1.3)			(5.4)
	Total commercial loans			42,423		42,151		39,561		.6			7.2
Residential — prime loans:
	Real estate — residential mortgage			2,252		2,231		2,189		.9			2.9
	Home equity:
		Key Community Bank		10,296		10,270		10,379		.3			(.8)
		Other		236		253		300		(6.7)			(21.3)
	Total home equity loans			10,532		10,523		10,679		.1			(1.4)
Total residential — prime loans				12,784		12,754		12,868		.2			(.7)
Consumer other — Key Community Bank				1,595		1,547		1,514		3.1			5.4
Credit cards				753		727		718		3.6			4.9
Consumer other:
	Marine			673		730		888		(7.8)			(24.2)
	Other			36		44		51		(18.2)			(29.4)
	Total consumer other			709		774		939		(8.4)			(24.5)
	Total consumer loans			15,841		15,802		16,039		.2			(1.2)
	Total loans^{(c), (d)}		$	58,264	$	57,953	$	55,600		.5	%		4.8	%



Loans Held for Sale Composition
(dollars in millions)

									Percent change 6-30-15 vs.
			6-30-15		3-31-15		6-30-14		3-31-15			6-30-14
Commercial, financial and agricultural			$	217	$	183	$	181		18.6	%		19.9	%
Real estate — commercial mortgage				576		1,408		221		(59.1)			160.6
Commercial lease financing				7		14		10		(50.0)			(30.0)
Real estate — residential mortgage				35		44		23		(20.5)			52.2
	Total loans held for sale^(e)		$	835	$	1,649	$	435		(49.4)	%		92.0	%



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

			2Q15		1Q15		4Q14		3Q14			2Q14
Balance at beginning of period			$	1,649	$	734	$	784	$	435		$	401
	New originations			1,650		2,130		2,465		1,593			978
	Transfers from (to) held to maturity, net			6		10		2		—			(8)
	Loan sales			(2,466)		(1,204)		(2,516)		(1,243)			(934)
	Loan draws (payments), net			(4)		(21)		(1)		(1)			(2)
Balance at end of period^(e)			$	835	$	1,649	$	734	$	784		$	435

(a)	Loan balances include $89 million, $87 million, and $94 million of commercial credit card balances at June 30, 2015, March 31, 2015, and June 30, 2014, respectively.
(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $191 million, $230 million, and $375 million at June 30, 2015, March 31, 2015, and June 30, 2014, respectively. Principal reductions are based on the cash payments received from these related receivables.
(c)	At June 30, 2015, total loans include purchased loans of $125 million, of which $12 million were purchased credit impaired. At March 31, 2015, total loans include purchased loans of $130 million, of which $12 million were purchased credit impaired. At June 30, 2014, total loans include purchased loans of $151 million, of which $15 million were purchased credit impaired.
(d)	Total loans exclude loans of $2 billion at June 30, 2015, $2.2 billion at March 31, 2015, and $4.2 billion at June 30, 2014, related to the discontinued operations of the education lending business.
(e)	Total loans held for sale exclude loans held for sale of $179 million at June 30, 2015, related to the discontinued operations of the education lending business.
N/M = Not Meaningful

Exit Loan Portfolio From Continuing Operations
(in millions)

	Balance				Change		Net Loan					Balance on
	Outstanding				6-30-15 vs.		Charge-offs					Nonperforming Status
	6-30-15		3-31-15		3-31-15		2Q15		1Q15		^(c)	6-30-15		3-31-15
Residential properties — homebuilder	$	6	$	6		—		—	$	1		$	8	$	8
Marine and RV floor plan		2		6	$	(4)		—		—			1		5
Commercial lease financing^(a)		831		877		(46)		—		(1)			—		—
Total commercial loans		839		889		(50)		—		—			9		13
Home equity — Other		236		253		(17)	$	1		—			8		9
Marine		673		730		(57)		3		2			8		9
RV and other consumer		47		50		(3)		—		1			1		1
Total consumer loans		956		1,033		(77)		4		3			17		19
Total exit loans in loan portfolio	$	1,795	$	1,922	$	(127)	$	4	$	3		$	26	$	32

Discontinued operations — education lending business (not included in exit loans above)^(b)	$	1,962	$	2,219	$	(257)	$	2	$	6		$	6	$	8

(a)	Includes (1) the business aviation, commercial vehicle, office products, construction, and industrial leases; (2) Canadian lease financing portfolios; (3) European lease financing portfolios; and (4) all remaining balances related to lease in, lease out; sale in, lease out; service contract leases; and qualified technological equipment leases.
(b)	Excludes loans held for sale of $179 million at June 30, 2015.
(c)	Credit amounts indicate recoveries exceeded charge-offs.

Asset Quality Statistics From Continuing Operations
(dollars in millions)

		2Q15			1Q15			4Q14			3Q14			2Q14
Net loan charge-offs	$	36		$	28		$	32		$	31		$	30
Net loan charge-offs to average total loans		.25	%		.20	%		.22	%		.22	%		.22	%
Allowance for loan and lease losses	$	796		$	794		$	794		$	804		$	814
Allowance for credit losses^(a)		841			835			829			839			851
Allowance for loan and lease losses to period-end loans		1.37	%		1.37	%		1.38	%		1.43	%		1.46	%
Allowance for credit losses to period-end loans		1.44			1.44			1.44			1.49			1.53
Allowance for loan and lease losses to nonperforming loans		190.0			181.7			190.0			200.5			205.6
Allowance for credit losses to nonperforming loans		200.7			191.1			198.3			209.2			214.9
Nonperforming loans at period end^(b)	$	419		$	437		$	418		$	401		$	396
Nonperforming assets at period end		440			457			436			418			410
Nonperforming loans to period-end portfolio loans		.72	%		.75	%		.73	%		.71	%		.71	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.75			.79			.76			.74			.74

(a)

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

(b)

Loan balances exclude $12 million, $12 million, $13 million, $14 million, and $15 million of purchased credit impaired loans at June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, and June 30, 2014, respectively.

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

	Three months ended									Six months ended
	6-30-15			3-31-15			6-30-14			6-30-15			6-30-14
Average loans outstanding	$	57,978		$	57,512		$	55,611		$	57,746		$	55,181

Allowance for loan and lease losses at beginning of period	$	794		$	794		$	834		$	794		$	848
Loans charged off:
Commercial, financial and agricultural		21			12			11			33			23

Real estate — commercial mortgage		—			2			1			2			3
Real estate — construction		—			1			—			1			2
Total commercial real estate loans		—			3			1			3			5
Commercial lease financing		1			2			2			3			5
Total commercial loans		22			17			14			39			33
Real estate — residential mortgage		1			2			2			3			5
Home equity:
Key Community Bank		8			7			10			15			20
Other		2			1			3			3			6
Total home equity loans		10			8			13			18			26
Consumer other — Key Community Bank		6			6			8			12			16
Credit cards		8			8			12			16			18
Consumer other:
Marine		5			5			7			10			14
Other		—			1			—			1			1
Total consumer other		5			6			7			11			15
Total consumer loans		30			30			42			60			80
Total loans charged off		52			47			56			99			113
Recoveries:
Commercial, financial and agricultural		6			5			11			11			21

Real estate — commercial mortgage		—			2			1			2			2
Real estate — construction		1			—			1			1			15
Total commercial real estate loans		1			2			2			3			17
Commercial lease financing		1			4			4			5			6
Total commercial loans		8			11			17			19			44
Real estate — residential mortgage		1			—			1			1			2
Home equity:
Key Community Bank		1			2			1			3			4
Other		1			1			2			2			3
Total home equity loans		2			3			3			5			7
Consumer other — Key Community Bank		2			2			1			4			3
Credit cards		1			—			1			1			1
Consumer other:
Marine		2			3			2			5			5
Other		—			—			1			—			1
Total consumer other		2			3			3			5			6
Total consumer loans		8			8			9			16			19
Total recoveries		16			19			26			35			63
Net loan charge-offs		(36)			(28)			(30)			(64)			(50)
Provision (credit) for loan and lease losses		37			29			10			66			16
Foreign currency translation adjustment		1			(1)			—			—			—
Allowance for loan and lease losses at end of period	$	796		$	794		$	814		$	796		$	814

Liability for credit losses on lending-related commitments at beginning of period	$	41		$	35		$	35		$	35		$	37
Provision (credit) for losses on lending-related commitments		4			6			2			10			—
Liability for credit losses on lending-related commitments at end of period^(a)	$	45		$	41		$	37		$	45		$	37

Total allowance for credit losses at end of period	$	841		$	835		$	851		$	841		$	851

Net loan charge-offs to average total loans		.25	%		.20	%		.22	%		.22	%		.18	%
Allowance for loan and lease losses to period-end loans		1.37			1.37			1.46			1.37			1.46
Allowance for credit losses to period-end loans		1.44			1.44			1.53			1.44			1.53
Allowance for loan and lease losses to nonperforming loans		190.0			181.7			205.6			190.0			205.6
Allowance for credit losses to nonperforming loans		200.7			191.1			214.9			200.7			214.9

Discontinued operations — education lending business:
Loans charged off	$	6		$	10		$	11		$	16		$	24
Recoveries		4			4			4			8			8
Net loan charge-offs	$	(2)		$	(6)		$	(7)		$	(8)		$	(16)

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

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

	6-30-15			3-31-15			12-31-14			9-30-14			6-30-14
Commercial, financial and agricultural	$	100		$	98		$	59		$	47		$	37

Real estate — commercial mortgage		26			30			34			41			38
Real estate — construction		12			12			13			14			9
Total commercial real estate loans		38			42			47			55			47
Commercial lease financing		18			20			18			14			15
Total commercial loans		156			160			124			116			99
Real estate — residential mortgage		67			72			79			81			89
Home equity:
Key Community Bank		176			182			185			174			178
Other		8			9			10			10			11
Total home equity loans		184			191			195			184			189
Consumer other — Key Community Bank		1			2			2			2			2
Credit cards		2			2			2			1			1
Consumer other:
Marine		8			9			15			16			15
Other		1			1			1			1			1
Total consumer other		9			10			16			17			16
Total consumer loans		263			277			294			285			297
Total nonperforming loans^(a)		419			437			418			401			396
Nonperforming loans held for sale		—			—			—			—			1
OREO		20			20			18			16			12
Other nonperforming assets		1			—			—			1			1
Total nonperforming assets	$	440		$	457		$	436		$	418		$	410

Accruing loans past due 90 days or more	$	66		$	111		$	96		$	71		$	83
Accruing loans past due 30 through 89 days		181			216			235			340			274
Restructured loans — accruing and nonaccruing^(b)		300			268			270			264			266
Restructured loans included in nonperforming loans^(b)		170			141			157			137			142
Nonperforming assets from discontinued operations — education lending business		6			8			11			9			19
Nonperforming loans to period-end portfolio loans		.72	%		.75	%		.73	%		.71	%		.71	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.75			.79			.76			.74			.74

(a)

(b)

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

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

	2Q15		1Q15		4Q14		3Q14		2Q14
Balance at beginning of period	$	437	$	418	$	401	$	396	$	449
Loans placed on nonaccrual status		92		123		103		109		79
Charge-offs		(52)		(47)		(49)		(49)		(56)
Loans sold		—		—		(2)		—		(21)
Payments		(25)		(9)		(17)		(13)		(17)
Transfers to OREO		(5)		(7)		(6)		(7)		(4)
Loans returned to accrual status		(28)		(41)		(12)		(35)		(34)
Balance at end of period^(a)	$	419	$	437	$	418	$	401	$	396

(a) Loan balances exclude $12 million, $12 million, $13 million, $14 million, and $15 million of purchased credit impaired loans at June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, and June 30, 2014, respectively.



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

	2Q15		1Q15		4Q14		3Q14		2Q14
Balance at beginning of period	$	20	$	18	$	16	$	12	$	12
Properties acquired — nonperforming loans		5		7		6		7		4
Valuation adjustments		(1)		(1)		(2)		(1)		(1)
Properties sold		(4)		(4)		(2)		(2)		(3)
Balance at end of period	$	20	$	20	$	18	$	16	$	12

Line of Business Results
(dollars in millions)

																Percent change 2Q15 vs.
	2Q15			1Q15			4Q14			3Q14			2Q14			1Q15			2Q14
Key Community Bank
Summary of operations
Total revenue (TE)	$	559		$	549		$	558		$	558		$	553			1.8	%		1.1	%
Provision for credit losses		7			29			12			27			25			(75.9)			(72.0)
Noninterest expense		449			441			448			440			443			1.8			1.4
Net income (loss) attributable to Key		65			50			61			57			53			30.0			22.6
Average loans and leases		30,707			30,662			30,478			30,103			30,034			.1			2.2
Average deposits		50,766			50,417			50,850			50,302			50,232			.7			1.1
Net loan charge-offs		20			28			28			28			33			(28.6)			(39.4)
Net loan charge-offs to average total loans		.26	%		.37	%		.36	%		.37	%		.44	%		N/A			N/A
Nonperforming assets at period end	$	305		$	328		$	340		$	338		$	331			(7.0)			(7.9)
Return on average allocated equity		9.75	%		7.41	%		9.00	%		8.44	%		7.83	%		N/A			N/A
Average full-time equivalent employees		7,400			7,452			7,414			7,573			7,569			(.7)			(2.2)


Key Corporate Bank
Summary of operations
Total revenue (TE)	$	477		$	401		$	460		$	400		$	395			19.0	%		20.8	%
Provision for credit losses		38			8			4			(3)			(4)			375.0			N/M
Noninterest expense		252			216			245			215			207			16.7			21.7
Net income (loss) attributable to Key		135			127			151			136			135			6.3			—
Average loans and leases		25,298			24,722			23,798			23,215			22,886			2.3			10.5
Average loans held for sale		1,234			775			855			481			429			59.2			187.6
Average deposits		19,708			18,567			18,356			17,600			16,357			6.1			20.5
Net loan charge-offs		12			(4)			(3)			(1)			(2)			N/M			N/M
Net loan charge-offs to average total loans		.19	%		(.07)	%		(.05)	%		(.02)	%		(.04)	%		N/A			N/A
Nonperforming assets at period end	$	105		$	93		$	41		$	20		$	22			12.9			377.3
Return on average allocated equity		30.15	%		27.66	%		34.17	%		32.08	%		35.72	%		N/A			N/A
Average full-time equivalent employees		2,058			2,057			2,043			1,998			1,940			—			6.1

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