KeyCorp Reports Third Quarter 2021 Net Income Of $616 Million, Or $.65 Per Diluted Common Share

Positive operating leverage compared to the year-ago period

Record third quarter revenue, up 8% from the year-ago period

Record third quarter noninterest income, up 17% from the year-ago period

Strong credit quality: net charge-offs to average loans of 11 basis points

Entered into accelerated share repurchase program: aided by capital relief from sale of indirect auto loan portfolio

News provided by

KeyCorp

Oct 21, 2021, 06:33 ET

CLEVELAND, Oct. 21, 2021 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $616 million, or $.65 per diluted common share for the third quarter of 2021. This compared to $698 million, or $.72 per diluted common share, for the second quarter of 2021 and $397 million, or $.41 per diluted common share, for the third quarter of 2020.

Our results this quarter continue to reflect the strength of our distinctive business model, strong risk management practices, and significant momentum from recent investments in teammates and digital capabilities.

We delivered positive operating leverage with record third quarter revenue, reflecting broad-based growth across our businesses. We continue to add and deepen relationships in both our consumer and commercial businesses. Importantly, we achieved record consumer loan originations and record investment banking results for the quarter.

Our strong risk culture and disciplined underwriting practices continue to result in positive credit trends. Credit quality remained strong this quarter, with lower nonperforming loans and net charge-offs as a percent of loans of 11 basis points. In the third quarter, we entered into an accelerated share repurchase program which was supported by capital relief generated from the sale of our nonstrategic indirect auto loan portfolio. We remain committed to our capital priorities and maximizing stakeholder value.

- Chris Gorman, Chairman and CEO

Selected Financial Highlights

dollars in millions, except per share data										Change 3Q21 vs.
	3Q21			2Q21			3Q20			2Q21		3Q20
Income (loss) from continuing operations attributable to Key common shareholders	$	616		$	698		$	397		(11.7)	%	55.2	%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution	.65			.72			.41			(9.7)		58.5
Return on average tangible common equity from continuing operations ^(a)	18.55		%	21.34		%	12.19		%	N/A		N/A
Return on average total assets from continuing operations	1.41			1.63			1.00			N/A		N/A
Common Equity Tier 1 ratio ^(b)	9.6			9.9			9.5			N/A		N/A
Book value at period end	$	16.82		$	16.75		$	16.25		.4	%	3.5	%
Net interest margin (TE) from continuing operations	2.47		%	2.52		%	2.62		%	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)	September 30, 2021 ratio is estimated.
TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions							Change 3Q21 vs.
	3Q21		2Q21		3Q20		2Q21		3Q20
Net interest income (TE)	$	1,025	$	1,023	$	1,006	.2	%	1.9	%
Noninterest income	797		750		681		6.3		17.0
Total revenue	$	1,822	$	1,773	$	1,687	2.8	%	8.0	%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $1.0 billion for the third quarter of 2021, an increase of $19 million from the third quarter of 2020. The increase in net interest income reflects higher earning asset balances and lower interest-bearing deposit costs, partially offset by a lower net interest margin. The net interest margin was impacted by lower interest rates and a change in balance sheet mix, including elevated levels of liquidity, partly offset by higher loan fees from the Paycheck Protection Program ("PPP") forgiveness.

Compared to the second quarter of 2021, taxable-equivalent net interest income increased by $2 million, and the net interest margin decreased by 5 basis points. Both net interest income and the net interest margin were impacted by higher earning asset balances, including elevated levels of liquidity, partially offset by lower earning asset yields. Net interest income also benefited from one additional business day in the third quarter of 2021.

Noninterest Income

dollars in millions							Change 3Q21 vs.
	3Q21		2Q21		3Q20		2Q21		3Q20
Trust and investment services income	$	129	$	133	$	128	(3.0)	%	.8	%
Investment banking and debt placement fees	235		217		146		8.3		61.0
Service charges on deposit accounts	91		83		77		9.6		18.2
Operating lease income and other leasing gains	37		36		38		2.8		(2.6)
Corporate services income	69		55		51		25.5		35.3
Cards and payments income	111		113		114		(1.8)		(2.6)
Corporate-owned life insurance income	33		30		30		10.0		10.0
Consumer mortgage income	33		26		51		26.9		(35.3)
Commercial mortgage servicing fees	34		44		18		(22.7)		88.9
Other income	25		13		28		92.3		(10.7)
Total noninterest income	$	797	$	750	$	681	6.3	%	17.0	%

Compared to the third quarter of 2020, noninterest income increased by $116 million, primarily driven by an $89 million increase in investment banking and debt placement fees, driven by higher volumes in equity underwriting and advisory transactions. Corporate services income and commercial mortgage servicing fees increased $18 million and $16 million, respectively. Partially offsetting these increases was consumer mortgage income, which decreased $18 million, due to lower gain on sale margins.

Compared to the second quarter of 2021, noninterest income increased by $47 million, reflecting broad-based growth in our fee-based businesses. Notable drivers of the quarter-over-quarter increase were investment banking and debt placement fees and corporate services income, which increased $18 million and $14 million, respectively. Partially offsetting these increases was a $10 million decrease in commercial mortgage servicing fees, reflecting lower activity-related fees.

Noninterest Expense

dollars in millions							Change 3Q21 vs.
	3Q21		2Q21		3Q20		2Q21		3Q20
Personnel expense	$	640	$	623	$	588	2.7	%	8.8	%
Nonpersonnel expense	472		453		449		4.2		5.1
Total noninterest expense	$	1,112	$	1,076	$	1,037	3.3	%	7.2	%

Key's noninterest expense was $1.1 billion for the third quarter of 2021, an increase of $75 million from the year-ago period. The increase is primarily related to higher personnel costs of $52 million, reflecting higher incentive and stock-based compensation, attributed to an increase in fee production and Key's increased stock price. Additionally, other drivers for the year-over-year increase include higher business services and professional fees and marketing expense.

Compared to the second quarter of 2021, noninterest expense increased $36 million. The increase is primarily related to other expense, which is up $18 million reflecting elevated charitable contributions and a pension settlement charge. Additionally, personnel expense increased $17 million, mostly driven by an $8 million increase in employee benefits and a $7 million increase in salaries and contract labor due to one additional day in the quarter.

BALANCE SHEET HIGHLIGHTS

Average Loans

dollars in millions							Change 3Q21 vs.
	3Q21		2Q21		3Q20		2Q21		3Q20
Commercial and industrial ^(a)	$	49,868	$	51,808	$	57,067	(3.7)	%	(12.6)	%
Other commercial loans	19,362		19,034		19,677		1.7		(1.6)
Total consumer loans	30,908		29,972		28,175		3.1		9.7
Total loans	$	100,138	$	100,814	$	104,919	(.7)	%	(4.6)	%

(a)	Commercial and industrial average loan balances include $137 million, $132 million, and $129 million of assets from commercial credit cards at September 30, 2021, June 30, 2021, and September 30, 2020, respectively.

Average loans were $100.1 billion for the third quarter of 2021, a decrease of $4.8 billion compared to the third quarter of 2020. Commercial loans decreased $7.5 billion, reflecting decreased utilization versus the year-ago period and a decline in PPP balances. Consumer loans increased $2.7 billion, reflecting strength from Key's consumer mortgage business and Laurel Road, partly offset by the sale of the indirect auto loan portfolio.

Compared to the second quarter of 2021, average loans decreased by $676 million. Commercial loans decreased $1.6 billion, driven by a $3.3 billion decline in PPP loan balances, partially offset by core portfolio growth in commercial and industrial loans and commercial real estate loans. Consumer loans continue to reflect strength from Key's consumer mortgage business, partly offset by the sale of the indirect auto loan portfolio, which reduced average loans by $763 million.

Average Deposits

dollars in millions										Change 3Q21 vs.
	3Q21			2Q21			3Q20			2Q21		3Q20
Non-time deposits	$	142,537		$	139,480		$	127,347		2.2	%	11.9	%
Certificates of deposit ($100,000 or more)	1,975			2,212			3,862			(10.7)		(48.9)
Other time deposits	2,404			2,630			3,735			(8.6)		(35.6)
Total deposits	$	146,916		$	144,322		$	134,944		1.8	%	8.9	%

Cost of total deposits	.04		%	.05		%	.16		%	N/A		N/A

N/A = Not Applicable

Average deposits totaled $146.9 billion for the third quarter of 2021, an increase of $12.0 billion compared to the year-ago quarter, reflecting growth from consumer and commercial relationships, including higher commercial escrow deposits, partially offset by a decline in time deposits.

Compared to the second quarter of 2021, average deposits increased by $2.6 billion, primarily driven by commercial growth.

ASSET QUALITY

dollars in millions										Change 3Q21 vs.
	3Q21			2Q21			3Q20			2Q21		3Q20
Net loan charge-offs	$	29		$	22		$	128		31.8	%	(77.3)	%
Net loan charge-offs to average total loans	.11		%	.09		%	.49		%	N/A		N/A
Nonperforming loans at period end	$	554		$	694		$	834		(20.2)		(33.6)
Nonperforming assets at period end	599			738			1,003			(18.8)		(40.3)
Allowance for loan and lease losses	1,084			1,220			1,730			(11.1)		(37.3)
Allowance for credit losses	1,236			1,372			1,938			(9.9)		(36.2)
Allowance for loan and lease losses to nonperforming loans	195.7		%	175.8		%	207.4		%	N/A		N/A
Allowance for credit losses to nonperforming loans	223.1			197.7			232.4			N/A		N/A
Provision for credit losses	$	(107)		$	(222)		$	160		(51.8)	%	(166.9)	%

N/A = Not Applicable

Key's provision for credit losses was a net benefit of $107 million, including a $136 million reserve release for the third quarter of 2021, compared to an expense of $160 million in the third quarter of 2020 and a net benefit of $222 million in the second quarter of 2021. The reserve release was largely driven by a continued improvement in the economic outlook.

Net loan charge-offs for the third quarter of 2021 totaled $29 million, or .11% of average total loans. These results compare to $128 million, or .49%, for the third quarter of 2020 and $22 million, or .09%, for the second quarter of 2021. Net charge-offs in the current quarter included $22 million related to the sale of the indirect auto loan portfolio. Key's allowance for credit losses was $1.2 billion, or 1.25% of total period-end loans at September 30, 2021, compared to 1.88% at September 30, 2020, and 1.36% at June 30, 2021.

At September 30, 2021, Key's nonperforming loans totaled $554 million, which represented .56% of period-end portfolio loans. These results compare to .81% at September 30, 2020, and .69% at June 30, 2021. Nonperforming assets at September 30, 2021, totaled $599 million, and represented .61% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .97% at September 30, 2020, and .73% at June 30, 2021.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at September 30, 2021. On September 10, Key entered into an accelerated share repurchase program.

Capital Ratios

	9/30/2021		6/30/2021		9/30/2020
Common Equity Tier 1 ^(a)	9.6	%	9.9	%	9.5	%
Tier 1 risk-based capital ^(a)	10.9		11.3		10.9
Total risk based capital ^(a)	12.7		13.2		13.3
Tangible common equity to tangible assets ^(b)	7.0		7.4		7.8
Leverage ^(a)	8.4		8.7		8.7

(a)	September 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 third quarter of 2021. As shown in the preceding table, at September 30, 2021, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.6% and 10.9%, respectively. Key's tangible common equity ratio was 7.0% at September 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 3Q21 vs.
		3Q21	2Q21	3Q20	2Q21		3Q20
Shares outstanding at beginning of period		960,276	972,587	975,947	(1.3)	%	(1.6)	%
Open market repurchases, repurchases under the accelerated repurchase program, and return of shares under employee compensation plans		(29,923)	(13,304)	(1)	124.9		N/M
Shares issued under employee compensation plans (net of cancellations)		191	993	259	(80.8)		(26.3)
	Shares outstanding at end of period	930,544	960,276	976,205	(3.1)	%	(4.7)	%

N/M = Not Meaningful

During the third quarter of 2021, Key declared a dividend of $.185 per common share and completed $593 million of common share repurchases. Of the $593 million total common shares repurchased in the third quarter of 2021, $468 million were related to the initial settlement of the accelerated share repurchase program and $125 million were purchased in the open market.

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 3Q21 vs.
		3Q21		2Q21		3Q20		2Q21		3Q20
Revenue from continuing operations (TE)
Consumer Bank		$	870	$	852	$	864	2.1	%	.7	%
Commercial Bank		891		873		811		2.1		9.9
Other ^(a)		61		48		12		27.1		N/M
	Total	$	1,822	$	1,773	$	1,687	2.8	%	8.0	%

Income (loss) from continuing operations attributable to Key
Consumer Bank		$	241	$	257	$	229	(6.2)	%	5.2	%
Commercial Bank		384		433		173		(11.3)		122.0
Other ^(a)		18		34		22		(47.1)		(18.2)
	Total	$	643	$	724	$	424	(11.2)	%	51.7	%

(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 3Q21 vs.
	3Q21		2Q21		3Q20		2Q21		3Q20
Summary of operations
Net interest income (TE)	$	582	$	599	$	598	(2.8)	%	(2.7)	%
Noninterest income	288		253		266		13.8		8.3
Total revenue (TE)	870		852		864		2.1		.7
Provision for credit losses	(38)		(70)		(3)		45.7		N/M
Noninterest expense	591		584		567		1.2		4.2
Income (loss) before income taxes (TE)	317		338		300		(6.2)		5.7
Allocated income taxes (benefit) and TE adjustments	76		81		71		(6.2)		7.0
Net income (loss) attributable to Key	$	241	$	257	$	229	(6.2)	%	5.2	%

Average balances
Loans and leases	$	39,796	$	40,598	$	38,354	(2.0)	%	3.8	%
Total assets	42,981		43,818		43,304		(1.9)		(.7)
Deposits	89,156		88,412		82,829		.8		7.6

Assets under management at period end	$	52,867	$	51,013	$	43,949	3.6	%	20.3	%

TE = Taxable Equivalent

Additional Consumer Bank Data

dollars in millions							Change 3Q21 vs.
	3Q21		2Q21		3Q20		2Q21		3Q20
Noninterest income
Trust and investment services income	$	105	$	104	$	100	1.0	%	5.0	%
Service charges on deposit accounts	56		48		44		16.7		27.3
Cards and payments income	62		62		55		—		12.7
Consumer mortgage income	33		26		51		26.9		(35.3)
Other noninterest income	32		13		16		146.2		100.0
Total noninterest income	$	288	$	253	$	266	13.8	%	8.3	%

Average deposit balances
NOW and money market deposit accounts	$	56,353	$	56,038	$	52,539	.6	%	7.3	%
Savings deposits	6,749		6,523		5,168		3.5		30.6
Certificates of deposit ($100,000 or more)	1,846		2,083		3,550		(11.4)		(48.0)
Other time deposits	2,398		2,616		3,701		(8.3)		(35.2)
Noninterest-bearing deposits	21,810		21,152		17,872		3.1		22.0
Total deposits	$	89,156	$	88,412	$	82,830	.8	%	7.6	%

Other data
Branches	1,000		1,014		1,077
Automated teller machines	1,316		1,329		1,388

Consumer Bank Summary of Operations (3Q21 vs. 3Q20)

Net income attributable to Key of $241 million for the third quarter of 2021, compared to $229 million for the year-ago quarter
Taxable-equivalent net interest income decreased by $16 million, compared to the third quarter of 2020, driven by the lower interest rate environment, partially offset by strong consumer mortgage balance sheet growth and fees related to PPP loans
Average loans and leases increased $1.4 billion, or 3.8%, from the third quarter of 2020, driven by growth in consumer mortgage, partially offset by the sale of the indirect auto loan portfolio
Average deposits increased $6.3 billion, or 7.6%, from the third quarter of 2020, driven by retention of consumer stimulus payments and relationship growth
Provision for credit losses decreased $35 million, compared to the third quarter of 2020. The provision for credit losses was a net benefit and was driven by improvements in expected economic conditions and continued strength in client credit quality
Noninterest income increased $22 million, or 8.3%, from the year ago quarter, driven by higher service charges on deposit accounts and cards and payments income, partially offset by lower consumer mortgage income, due to lower gain on sale margins
Noninterest expense increased $24 million, or 4.2%, from the year ago quarter, driven by higher production-related incentives and support expenses related to higher loan volumes

Commercial Bank


dollars in millions							Change 3Q21 vs.
	3Q21		2Q21		3Q20		2Q21		3Q20
Summary of operations
Net interest income (TE)	$	414	$	418	$	427	(1.0)	%	(3.0)	%
Noninterest income	477		455		384		4.8		24.2
Total revenue (TE)	891		873		811		2.1		9.9
Provision for credit losses	(69)		(131)		150		(47.3)		(146.0)
Noninterest expense	470		451		447		4.2		5.1
Income (loss) before income taxes (TE)	490		553		214		(11.4)		129.0
Allocated income taxes and TE adjustments	106		120		41		(11.7)		158.5
Net income (loss) attributable to Key	$	384	$	433	$	173	(11.3)	%	122.0	%

Average balances
Loans and leases	$	59,914	$	59,953	$	66,378	(.1)	%	(9.7)	%
Loans held for sale	1,190		1,341		1,383		(11.3)		(14.0)
Total assets	69,285		69,101		74,530		0.3		(7.0)
Deposits	56,546		54,814		51,585		3.2	%	9.6	%

TE = Taxable Equivalent, N/M = Not Meaningful

Additional Commercial Bank Data

dollars in millions							Change 3Q21 vs.
	3Q21		2Q21		3Q20		2Q21		3Q20
Noninterest income
Trust and investment services income	$	24	$	27	$	28	(11.1)	%	(14.3)
Investment banking and debt placement fees	234		215		146		8.8		60.3	%
Operating lease income and other leasing gains	37		35		38		5.7		(2.6)

Corporate services income	63		47		44		34.0		43.2
Service charges on deposit accounts	34		34		33		—		3.0
Cards and payments income	44		49		60		(10.2)		(26.7)
Payments and services income	141		130		137		8.5		2.9

Commercial mortgage servicing fees	34		44		18		(22.7)		88.9
Other noninterest income	7		4		17		75.0		(58.8)
Total noninterest income	$	477	$	455	$	384	4.8	%	24.2	%

N/M = Not Meaningful

Commercial Bank Summary of Operations (3Q21 vs. 3Q20)

Net income attributable to Key of $384 million for the third quarter of 2021, compared to $173 million for the year-ago quarter
Taxable-equivalent net interest income decreased by $13 million, compared to the third quarter of 2020, as lower average loan balances offset fees related to PPP loans
Average loan and lease balances decreased $6.5 billion, compared to the third quarter of 2020, driven by lower commercial and industrial line draws and PPP loan forgiveness
Average deposit balances increased $5.0 billion, or 9.6%, compared to the third quarter of 2020, driven by growth in targeted relationships and the impact of government programs
Provision for credit losses decreased $219 million, compared to the third quarter of 2020. The provision for credit losses was a net benefit and was driven by expected improvements in economic conditions
Noninterest income increased $93 million, from the year-ago quarter, driven by elevated investment banking client activity and commercial mortgage servicing fees, partially offset by lower cards and payments income as individuals roll off unemployment benefits
Noninterest expense increased by $23 million, or 5.1%, from the third quarter of 2020, driven by higher production-related incentives related to strong revenue production

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

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 $187.0 billion at September 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 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 October 21, 2021. A replay of the call will be available through October 30, 2021.

*****

KeyCorp Third 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
			9/30/2021			6/30/2021			9/30/2020
Summary of operations
	Net interest income (TE)		$	1,025		$	1,023		$	1,006
	Noninterest income		797			750			681
		Total revenue (TE)	1,822			1,773			1,687
	Provision for credit losses		(107)			(222)			160
	Noninterest expense		1,112			1,076			1,037
	Income (loss) from continuing operations attributable to Key		643			724			424
	Income (loss) from discontinued operations, net of taxes		2			5			4
	Net income (loss) attributable to Key		645			729			428

	Income (loss) from continuing operations attributable to Key common shareholders		616			698			397
	Income (loss) from discontinued operations, net of taxes		2			5			4
	Net income (loss) attributable to Key common shareholders		618			703			401

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.65		$	.73		$	.41
	Income (loss) from discontinued operations, net of taxes		—			—			—
	Net income (loss) attributable to Key common shareholders ^(a)		.66			.73			.41

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.65			.72			.41
	Income (loss) from discontinued operations, net of taxes — assuming dilution		—			—			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)		.65			.73			.41

	Cash dividends declared		.185			.185			.185
	Book value at period end		16.82			16.75			16.25
	Tangible book value at period end		13.80			13.81			13.32
	Market price at period end		21.62			20.65			11.93

Performance ratios
	From continuing operations:
	Return on average total assets		1.41		%	1.63		%	1.00		%
	Return on average common equity		15.28		%	17.54			9.98
	Return on average tangible common equity ^(b)		18.55			21.34			12.19
	Net interest margin (TE)		2.47			2.52			2.62
	Cash efficiency ratio ^(b)		60.2			59.9			60.6

	From consolidated operations:
	Return on average total assets		1.41			1.64		%	1.00		%
	Return on average common equity		15.33			17.67			10.08
	Return on average tangible common equity ^(b)		18.61			21.49			12.31
	Net interest margin (TE)		2.46			2.55			2.62
	Loan to deposit ^(c)		66.5			70.4			77.2

Capital ratios at period end
	Key shareholders' equity to assets		9.4		%	9.9		%	10.4		%
	Key common shareholders' equity to assets		8.4			8.9			9.3
	Tangible common equity to tangible assets ^(b)		7.0			7.4			7.8
	Common Equity Tier 1^(d)		9.6			9.9			9.5
	Tier 1 risk-based capital ^(d)		10.9			11.3			10.9
	Total risk-based capital ^(d)		12.7			13.2			13.3
	Leverage ^(d)		8.4			8.7			8.7

Asset quality — from continuing operations
	Net loan charge-offs		$	29		$	22		$	128
	Net loan charge-offs to average loans		.11		%	.09		%	.49		%
	Allowance for loan and lease losses		$	1,084		$	1,220		$	1,730
	Allowance for credit losses		1,236			1,372			1,938
	Allowance for loan and lease losses to period-end loans		1.10		%	1.21		%	1.68		%
	Allowance for credit losses to period-end loans		1.25			1.36			1.88
	Allowance for loan and lease losses to nonperforming loans		195.7			175.8			207.4
	Allowance for credit losses to nonperforming loans		223.1			197.7			232.4
	Nonperforming loans at period-end		$	554		$	694		$	834
	Nonperforming assets at period-end		599			738			1,003
	Nonperforming loans to period-end portfolio loans		.56		%	.69		%	.81		%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.61			.73			.97

Trust assets
	Assets under management		$	52,867		$	51,013		$	43,949

Other data
	Average full-time equivalent employees		17,009			17,003			17,097
	Branches		1,000			1,014			1,077
	Taxable-equivalent adjustment		$	9		$	6		$	6


Financial Highlights (continued)
(dollars in millions, except per share amounts)
		Nine months ended
		9/30/2021			9/30/2020
Summary of operations
	Net interest income (TE)	$	3,060		$	3,020
	Noninterest income	2,285			1,850
	Total revenue (TE)	5,345			4,870
	Provision for credit losses	(422)			1,001
	Noninterest expense	3,259			2,981
	Income (loss) from continuing operations attributable to Key	1,985			754
	Income (loss) from discontinued operations, net of taxes	11			7
	Net income (loss) attributable to Key	1,996			761

	Income (loss) from continuing operations attributable to Key common shareholders	1,905			674
	Income (loss) from discontinued operations, net of taxes	11			7
	Net income (loss) attributable to Key common shareholders	1,916			681

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders	$	1.99		$	.70
	Income (loss) from discontinued operations, net of taxes	.01			.01
	Net income (loss) attributable to Key common shareholders ^(a)	2.00			.70

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution	1.98			.69
	Income (loss) from discontinued operations, net of taxes — assuming dilution	.01			.01
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)	1.99			.70

	Cash dividends paid	.56			.56

Performance ratios
	From continuing operations:
	Return on average total assets	1.50		%	.63		%
	Return on average common equity	15.98			5.75
	Return on average tangible common equity ^(b)	19.43			7.06
	Net interest margin (TE)	2.53			2.78
	Cash efficiency ratio ^(b)	60.1			60.2

	From consolidated operations:
	Return on average total assets	1.50		%	.63		%
	Return on average common equity	16.07			5.81
	Return on average tangible common equity ^(b)	19.54			7.13
	Net interest margin (TE)	2.52			2.78

Asset quality — from continuing operations
	Net loan charge-offs	$	165		$	308
	Net loan charge-offs to average total loans	.22		%	.40		%

Other data
	Average full-time equivalent employees	17,034			16,758

Taxable-equivalent adjustment		22			21

(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)	September 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									Nine months ended
	9/30/2021			6/30/2021			9/30/2020			9/30/2021			9/30/2020
Tangible common equity to tangible assets at period-end
Key shareholders' equity (GAAP)	$	17,510		$	17,941		$	17,722
Less: Intangible assets ^(a)	2,814			2,828			2,862
Preferred Stock ^(b)	1,856			1,856			1,856
Tangible common equity (non-GAAP)	$	12,840		$	13,257		$	13,004
Total assets (GAAP)	$	187,035		$	181,115		$	170,540
Less: Intangible assets ^(a)	2,814			2,828			2,862
Tangible assets (non-GAAP)	$	184,221		$	178,287		$	167,678
Tangible common equity to tangible assets ratio (non-GAAP)	6.97		%	7.44		%	7.76		%
Pre-provision net revenue
Net interest income (GAAP)	$	1,016		$	1,017		$	1,000		$	3,038		$	2,999
Plus: Taxable-equivalent adjustment	9			6			6			22			21
Noninterest income	797			750			681			2,285			1,850
Less: Noninterest expense	1,112			1,076			1,037			3,259			2,981
Pre-provision net revenue from continuing operations (non-GAAP)	$	710		$	697		$	650		$	2,086		$	1,889
Average tangible common equity
Average Key shareholders' equity (GAAP)	$	17,899		$	17,859		$	17,730		$	17,843		$	17,545
Less: Intangible assets (average) ^(c)	2,823			2,840			2,870			2,834			2,886
Preferred stock (average)	1,900			1,900			1,900			1,900			1,900
Average tangible common equity (non-GAAP)	$	13,176		$	13,119		$	12,960		$	13,109		$	12,759
Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)	$	616		$	698		$	397		$	1,905		$	674
Average tangible common equity (non-GAAP)	13,176			13,119			12,960			13,109			12,759

Return on average tangible common equity from continuing operations (non-GAAP)	18.55		%	21.34		%	12.19		%	19.43		%	7.06		%
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)	$	618		$	703		$	401		$	1,916		$	681
Average tangible common equity (non-GAAP)	13,176			13,119			12,960			13,109			12,759

Return on average tangible common equity consolidated (non-GAAP)	18.61		%	21.49		%	12.31		%	19.54		%	7.13		%

GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
	Three months ended									Nine months ended
	9/30/2021			6/30/2021			9/30/2020			9/30/2021			9/30/2020
Cash efficiency ratio
Noninterest expense (GAAP)	$	1,112		$	1,076		$	1,037		$	3,259		$	2,981
Less: Intangible asset amortization	15			14			15			44			50
Adjusted noninterest expense (non-GAAP)	$	1,097		$	1,062		$	1,022		$	3,215		$	2,931

Net interest income (GAAP)	$	1,016		$	1,017		$	1,000		$	3,038		$	2,999
Plus: Taxable-equivalent adjustment	9			6			6			22			21
Noninterest income	797			750			681			2,285			1,850
Total taxable-equivalent revenue (non-GAAP)	$	1,822		$	1,773		$	1,687		$	5,345		$	4,870

Cash efficiency ratio (non-GAAP)	60.2		%	59.9		%	60.6		%	60.1		%	60.2		%

(a)	For the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, intangible assets exclude $3 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 September 30, 2021, June 30, 2021, and September 30, 2020, average intangible assets exclude $3 million, $4 million, and $5 million, respectively, of average purchased credit card receivables. For the nine months ended September 30, 2021, and September 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)

			9/30/2021		6/30/2021		9/30/2020
Assets
	Loans		$	98,609	$	100,730	$	103,081
	Loans held for sale		1,805		1,537		1,724
	Securities available for sale		40,594		34,638		26,895
	Held-to-maturity securities		8,423		6,175		8,384
	Trading account assets		902		851		733
	Short-term investments		19,608		20,460		14,148
	Other investments		607		635		620
		Total earning assets	170,548		165,026		155,585
	Allowance for loan and lease losses		(1,084)		(1,220)		(1,730)
	Cash and due from banks		763		792		956
	Premises and equipment		678		785		765
	Goodwill		2,673		2,673		2,664
	Other intangible assets		144		159		203
	Corporate-owned life insurance		4,312		4,304		4,274
	Accrued income and other assets		8,404		7,966		7,084
	Discontinued assets		597		630		739
		Total assets	$	187,035	181,115		170,540

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	87,242	$	85,242	$	80,791
		Savings deposits	7,259		6,993		5,585
		Certificates of deposit ($100,000 or more)	1,890		2,064		3,345
		Other time deposits	2,315		2,493		3,450
		Total interest-bearing deposits	98,706		96,792		93,171
		Noninterest-bearing deposits	53,225		49,280		43,575
		Total deposits	151,931		146,072		136,746
	Federal funds purchased and securities sold under repurchase agreements		228		211		213
	Bank notes and other short-term borrowings		767		723		818
	Accrued expense and other liabilities		3,434		2,957		2,356
	Long-term debt		13,165		13,211		12,685
		Total liabilities	169,525		163,174		152,818

Equity
	Preferred stock		1,900		1,900		1,900
	Common shares		1,257		1,257		1,257
	Capital surplus		6,141		6,232		6,263
	Retained earnings		14,133		13,689		12,375
	Treasury stock, at cost		(5,876)		(5,287)		(4,940)
	Accumulated other comprehensive income (loss)		(45)		150		867
		Key shareholders' equity	17,510		17,941		17,722
	Noncontrolling interests		—		—		—
		Total equity	17,510		17,941		17,722
Total liabilities and equity			$	187,035	$	181,115	$	170,540

Common shares outstanding (000)			930,544		960,276		976,205

Consolidated Statements of Income
(dollars in millions, except per share amounts)
			Three months ended						Nine months ended
			9/30/2021		6/30/2021		9/30/2020		9/30/2021		9/30/2020
Interest income
	Loans		$	882	$	888	$	927	$	2,659	$	2,933
	Loans held for sale		13		11		18		35		58
	Securities available for sale		135		133		115		398		365
	Held-to-maturity securities		43		45		53		133		171
	Trading account assets		4		5		3		14		16
	Short-term investments		9		6		1		20		14
	Other investments		1		2		2		5		3
		Total interest income	1,087		1,090		1,119		3,264		3,560
Interest expense
	Deposits		15		16		54		52		319
	Federal funds purchased and securities sold under repurchase agreements		—		—		—		—		6
	Bank notes and other short-term borrowings		2		3		1		6		11
	Long-term debt		54		54		64		168		225
		Total interest expense	71		73		119		226		561
Net interest income			1,016		1,017		1,000		3,038		2,999
Provision for credit losses			(107)		(222)		160		(422)		1,001
Net interest income after provision for credit losses			1,123		1,239		840		3,460		1,998
Noninterest income
	Trust and investment services income		129		133		128		395		384
	Investment banking and debt placement fees		235		217		146		614		418
	Service charges on deposit accounts		91		83		77		247		229
	Operating lease income and other leasing gains		37		36		38		111		128
	Corporate services income		69		55		51		188		165
	Cards and payments income		111		113		114		329		271
	Corporate-owned life insurance income		33		30		30		94		101
	Consumer mortgage income		33		26		51		106		133
	Commercial mortgage servicing fees		34		44		18		112		48
	Other income		25		13		28		89		(27)
		Total noninterest income	797		750		681		2,285		1,850
Noninterest expense
	Personnel		640		623		588		1,887		1,675
	Net occupancy		74		75		76		225		223
	Computer processing		67		71		59		211		170
	Business services and professional fees		56		51		49		157		142
	Equipment		25		25		25		75		74
	Operating lease expense		30		31		33		95		103
	Marketing		32		31		22		89		67
	Intangible asset amortization		15		14		15		44		50
	Other expense		173		155		170		476		477
		Total noninterest expense	1,112		1,076		1,037		3,259		2,981
Income (loss) from continuing operations before income taxes			808		913		484		2,486		867
	Income taxes		165		189		60		501		113
Income (loss) from continuing operations			643		724		424		1,985		754
	Income (loss) from discontinued operations, net of taxes		2		5		4		11		7
Net income (loss)			645		729		428		1,996		761
	Less: Net income (loss) attributable to noncontrolling interests		—		—		—		—		—
Net income (loss) attributable to Key			$	645	$	729	$	428	$	1,996	$	761

Income (loss) from continuing operations attributable to Key common shareholders			$	616	$	698	$	397	$	1,905	$	674
Net income (loss) attributable to Key common shareholders			618		703		401		1,916		681
Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.65	$	.73	$	.41	$	1.99	$	.70
Income (loss) from discontinued operations, net of taxes			—		—		—		.01		.01
Net income (loss) attributable to Key common shareholders ^(a)			.66		.73		.41		2.00		.70
Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.65	$	.72	$	.41	$	1.98	$	.69
Income (loss) from discontinued operations, net of taxes			—		—		—		.01		.01
Net income (loss) attributable to Key common shareholders ^(a)			.65		.73		.41		1.99		.70

Cash dividends declared per common share			$	.185	$	.185	$	.185	$	.555	$	.555

Weighted-average common shares outstanding (000)			942,446		957,423		967,804		955,069		967,632
	Effect of common share options and other stock awards		10,077		9,740		6,184		9,712		6,648
Weighted-average common shares and potential common shares outstanding (000) ^(b)			952,523		967,163		973,988		964,781		974,280

(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)
		Third Quarter 2021						Second Quarter 2021						Third 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)	$	49,868	$	445	3.54		$	51,808	$	450	3.48		$	57,067	$	474	3.31
	Real estate — commercial mortgage	13,306		120		3.56		12,825		117		3.67		13,202		117		3.54
	Real estate — construction	2,134		19		3.53		2,149		20		3.68		1,987		18		3.57
	Commercial lease financing	3,922		27		2.80		4,060		30		2.98		4,488		35		3.10
	Total commercial loans	69,230		611		3.50		70,842		617		3.49		76,744		644		3.34
	Real estate — residential mortgage	13,168		92		2.78		11,055		81		2.92		8,398		73		3.46
	Home equity loans	8,894		84		3.75		9,089		85		3.76		9,580		91		3.82
	Consumer direct loans	5,175		59		4.55		4,910		57		4.69		4,403		56		5.07
	Credit cards	917		23		10.07		908		22		9.79		967		25		10.24
	Consumer indirect loans	2,754		22		3.15		4,010		32		3.19		4,827		44		3.66
	Total consumer loans	30,908		280		3.60		29,972		277		3.71		28,175		289		4.10
	Total loans	100,138		891		3.53		100,814		894		3.56		104,919		933		3.55
	Loans held for sale	1,447		13		3.66		1,616		11		2.60		1,924		18		3.61
	Securities available for sale ^{(b), (e)}	36,923		135		1.48		33,623		133		1.57		24,941		115		1.90
	Held-to-maturity securities ^(b)	6,507		43		2.66		6,452		45		2.75		8,677		53		2.44
	Trading account assets	743		4		2.19		837		5		2.56		686		3		2.08
	Short-term investments	19,274		9		.18		18,817		6		.13		12,525		1		.04
	Other investments ^(e)	614		1		.99		622		2		1.02		640		2		1.49
	Total earning assets	165,646		1,096		2.64		162,781		1,096		2.70		154,312		1,125		2.93
	Allowance for loan and lease losses	(1,222)						(1,442)						(1,696)
	Accrued income and other assets	16,947						16,531						16,195
	Discontinued assets	618						650						752
	Total assets	$	181,989					$	178,520					$	169,563
Liabilities
	NOW and money market deposit accounts	$	85,333	$	10	.05		$	83,981	$	9	.05		$	80,175	$	26	.13
	Savings deposits	7,117		—		.01		6,859		1		.03		5,478		1		.04
	Certificates of deposit ($100,000 or more)	1,975		3		.59		2,212		4		.72		3,862		16		1.60
	Other time deposits	2,404		2		.26		2,630		2		.38		3,735		11		1.17
	Total interest-bearing deposits	96,829		15		.06		95,682		16		.07		93,250		54		.23
	Federal funds purchased and securities sold under repurchase agreements	231		—		.02		251		—		.02		225		—		.05
	Bank notes and other short-term borrowings	671		2		1.11		744		3		1.19		761		1		.68
	Long-term debt ^{(f), (g)}	12,601		54		1.73		11,978		54		1.79		12,801		64		2.12
	Total interest-bearing liabilities	110,332		71		.26		108,655		73		.27		107,037		119		.45
	Noninterest-bearing deposits	50,087						48,640						41,694
	Accrued expense and other liabilities	3,053						2,716						2,350
	Discontinued liabilities ^(g)	618						650						752
	Total liabilities	$	164,090					$	160,661					$	151,833
Equity
	Key shareholders' equity	$	17,899					$	17,859					$	17,730
	Noncontrolling interests	—						—						—
	Total equity	17,899						17,859						17,730
	Total liabilities and equity	$	181,989					$	178,520					$	169,563
Interest rate spread (TE)						2.38	%					2.43	%					2.48	%
Net interest income (TE) and net interest margin (TE)				$	1,025	2.47	%			$	1,023	2.52	%			$	1,006	2.62	%
TE adjustment ^(b)				9						6						6
	Net interest income, GAAP basis			$	1,016					$	1,017					$	1,000

(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 September 30, 2021, June 30, 2021, and September 30, 2020.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial and industrial average balances include $137 million, $132 million, and $129 million of assets from commercial credit cards for the three months ended September 30, 2021, June 30, 2021, and September 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)
		Nine months ended September 30, 2021						Nine months ended September 30, 2020
		Average				Yield/		Average				Yield/
		Balance		Interest ^(a)		Rate ^(a)		Balance		Interest ^(a)		Rate ^(a)
Assets
	Loans: ^{(b), (c)}
	Commercial and industrial ^(d)	$	51,410	$	1,347	3.50	%	$	55,676	$	1,500	3.60	%
	Real estate — commercial mortgage	12,932		351		3.63		13,419		400		3.98
	Real estate — construction	2,111		58		3.65		1,804		55		4.06
	Commercial lease financing	4,041		89		2.93		4,546		107		3.15
	Total commercial loans	70,494		1,845		3.50		75,445		2,062		3.65
	Real estate — residential mortgage	11,320		246		2.89		7,801		210		3.59
	Home equity loans	9,089		257		3.78		9,894		301		4.07
	Consumer direct loans	4,969		173		4.65		4,089		165		5.38
	Credit cards	919		69		10.10		1,010		81		10.68
	Consumer indirect loans	3,771		91		3.22		4,779		135		3.78
	Total consumer loans	30,068		836		3.71		27,573		892		4.32
	Total loans	100,562		2,681		3.56		103,018		2,954		3.83
	Loans held for sale	1,531		35		3.03		2,090		58		3.68
	Securities available for sale ^{(b), (e)}	33,553		398		1.60		22,297		365		2.25
	Held-to-maturity securities ^(b)	6,713		133		2.64		9,274		171		2.46
	Trading account assets	809		14		2.30		837		16		2.55
	Short-term investments	18,211		20		.15		7,412		14		.24
	Other investments ^(e)	616		5		1.14		642		3		.72
	Total earning assets	161,995		3,286		2.71		145,570		3,581		3.30
	Allowance for loan and lease losses	(1,427)						(1,403)
	Accrued income and other assets	16,626						15,579
	Discontinued assets	651						794
	Total assets	$	177,845					$	160,540
Liabilities
	NOW and money market deposit accounts	$	83,599	$	30	.05		$	74,087	$	194	.35
	Savings deposits	6,730		1		.02		5,089		2		.04
	Certificates of deposit ($100,000 or more)	2,250		13		.77		5,036		74		1.96
	Other time deposits	2,644		8		.41		4,321		49		1.53
	Total interest-bearing deposits	95,223		52		.07		88,533		319		.48
	Federal funds purchased and securities sold under repurchase agreements	242		—		.03		821		6		.95
	Bank notes and other short-term borrowings	764		6		.96		1,674		11		.87
	Long-term debt ^{(f), (g)}	12,469		168		1.80		12,733		225		2.45
	Total interest-bearing liabilities	108,698		226		.28		103,761		561		.73
	Noninterest-bearing deposits	47,800						35,922
	Accrued expense and other liabilities	2,853						2,518
	Discontinued liabilities ^(g)	651						794
	Total liabilities	$	160,002					$	142,995
Equity
	Key shareholders' equity	$	17,843					$	17,545
	Noncontrolling interests	—						—
	Total equity	17,843						17,545
	Total liabilities and equity	$	177,845					$	160,540
Interest rate spread (TE)						2.44	%					2.57	%
Net interest income (TE) and net interest margin (TE)				$	3,060	2.53	%			$	3,020	2.78	%
TE adjustment ^(b)				22						21
	Net interest income, GAAP basis			$	3,038					$	2,999

(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 nine months ended September 30, 2021, and September 30, 2020, respectively.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	Commercial and industrial average balances include $131 million and $137 million of assets from commercial credit cards for the nine months ended September 30, 2021, and September 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						Nine months ended
	9/30/2021		6/30/2021		9/30/2020		9/30/2021		9/30/2020
Personnel ^(a)	$	640	$	623	$	588	$	1,887	$	1,675
Net occupancy	74		75		76		225		223
Computer processing	67		71		59		211		170
Business services and professional fees	56		51		49		157		142
Equipment	25		25		25		75		74
Operating lease expense	30		31		33		95		103
Marketing	32		31		22		89		67
Intangible asset amortization	15		14		15		44		50
Other expense	173		155		170		476		477
Total noninterest expense	$	1,112	$	1,076	$	1,037	$	3,259	$	2,981
Average full-time equivalent employees ^(b)	17,009		17,003		17,097		17,034		16,758

(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						Nine months ended
	9/30/2021		6/30/2021		9/30/2020		9/30/2021		9/30/2020
Salaries and contract labor	$	328	$	321	$	339	$	969	$	987
Incentive and stock-based compensation	212		210		155		618		419
Employee benefits	100		92		93		299		261
Severance	—		—		1		1		8
Total personnel expense	$	640	$	623	$	588	$	1,887	$	1,675

Loan Composition
(dollars in millions)

							Percent change 9/30/2021 vs
	9/30/2021		6/30/2021		9/30/2020		6/30/2021		9/30/2020
Commercial and industrial ^(a)	$	49,553	$	50,672	$	55,025	(2.2)	%	(9.9)	%
Commercial real estate:
Commercial mortgage	13,674		12,965		13,059		5.5		4.7
Construction	2,120		2,132		1,947		(.6)		8.9
Total commercial real estate loans	15,794		15,097		15,006		4.6		5.3
Commercial lease financing ^(b)	3,982		4,061		4,450		(1.9)		(10.5)
Total commercial loans	69,329		69,830		74,481		(.7)		(6.9)
Residential — prime loans:
Real estate — residential mortgage	14,204		12,131		8,715		17.1		63.0
Home equity loans	8,747		9,047		9,488		(3.3)		(7.8)
Total residential — prime loans	22,951		21,178		18,203		8.4		26.1
Consumer direct loans	5,324		5,049		4,395		5.4		21.1
Credit cards	928		923		970		.5		(4.3)
Consumer indirect loans	77		3,750		5,032		(97.9)		(98.5)
Total consumer loans	29,280		30,900		28,600		(5.2)		2.4
Total loans ^{(c), (d)}	$	98,609	$	100,730	$	103,081	(2.1)	%	(4.3)	%

(a)	Loan balances include $139 million, $135 million, and $128 million of commercial credit card balances at September 30, 2021, June 30, 2021, and September 30, 2020, respectively.
(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $16 million, $19 million, and $18 million at September 30, 2021, June 30, 2021, and September 30, 2020, respectively. Principal reductions are based on the cash payments received from these related receivables.
(c)	Total loans exclude loans of $602 million at September 30, 2021, $636 million at June 30, 2021, and $743 million at September 30, 2020, related to the discontinued operations of the education lending business.
(d)	Accrued interest of$211 million, $225 million, and $235 million at September 30, 2021, June 30, 2021, and September 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 9/30/2021 vs
	9/30/2021		6/30/2021		9/30/2020		6/30/2021		9/30/2020
Commercial and industrial	$	122	$	233	$	336	(47.6)	%	(63.7)	%
Real estate — commercial mortgage	1,446		1,073		1,031		34.8		40.3
Commercial lease financing	—		—		1		N/M		N/M
Real estate — residential mortgage	237		231		288		2.6		(17.7)
Consumer direct loans	—		—		68		N/M		N/M
Total loans held for sale	$	1,805	$	1,537	$	1,724	17.4	%	4.7	%

N/M = Not Meaningful

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

	3Q21		2Q21		1Q21		4Q20		3Q20
Balance at beginning of period	$	1,537	$	2,296	$	1,583	$	1,724	$	2,007
New originations	3,328		3,573		4,010		3,835		3,282
Transfers from (to) held to maturity, net	3,305		(71)		83		(24)		75
Loan sales	(6,405)		(4,195)		(3,303)		(3,932)		(3,583)
Loan draws (payments), net	8		(27)		(73)		(19)		(57)
Valuation and other adjustments	32		(39)		(4)		—		—
Balance at end of period	$	1,805	$	1,537	$	2,296	$	1,583	$	1,724

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

	Three months ended									Nine months ended
	9/30/2021			6/30/2021			9/30/2020			9/30/2021			9/30/2020
Average loans outstanding	$	100,138		$	100,814		$	104,919		$	100,562		$	103,018
Allowance for loan and lease losses at the end of the prior period	$	1,220		$	1,438		$	1,708		$	1,626		$	900
Cumulative effect from change in accounting principle ^(a)	—			—			—			—			204
Allowance for loan and lease losses at the beginning of the period	1,220			1,438			1,708			1,626			1,104
Loans charged off:
Commercial and industrial	27			41			101			141			232

Real estate — commercial mortgage	—			4			13			39			18
Real estate — construction	—			—			—			—			—
Total commercial real estate loans	—			4			13			39			18
Commercial lease financing	1			—			10			5			16
Total commercial loans	28			45			124			185			266
Real estate — residential mortgage	(2)			1			—			(1)			2
Home equity loans	1			4			4			7			10
Consumer direct loans	7			7			8			22			30
Credit cards	6			9			9			21			32
Consumer indirect loans	26			5			6			38			22
Total consumer loans	38			26			27			87			96
Total loans charged off	66			71			151			272			362
Recoveries:
Commercial and industrial	20			32			9			60			19

Real estate — commercial mortgage	1			6			2			8			3
Real estate — construction	—			—			—			—			—
Total commercial real estate loans	1			6			2			8			3
Commercial lease financing	6			—			—			7			1
Total commercial loans	27			38			11			75			23
Real estate — residential mortgage	1			—			1			2			1
Home equity loans	2			1			3			4			6
Consumer direct loans	2			2			2			6			6
Credit cards	1			3			2			6			6
Consumer indirect loans	4			5			4			14			12
Total consumer loans	10			11			12			32			31
Total recoveries	37			49			23			107			54
Net loan charge-offs	(29)			(22)			(128)			(165)			(308)
Provision (credit) for loan and lease losses	(107)			(196)			150			(377)			934
Allowance for loan and lease losses at end of period	$	1,084		$	1,220		$	1,730		$	1,084		$	1,730

Liability for credit losses on lending-related commitments at the end of the prior period	$	152		$	178		$	198		$	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	152			178			198			197			141
Provision (credit) for losses on lending-related commitments	—			(26)			10			(45)			67
Liability for credit losses on lending-related commitments at end of period ^(c)	$	152		$	152		$	208		$	152		$	208

Total allowance for credit losses at end of period	$	1,236		$	1,372		$	1,938		$	1,236		$	1,938

Net loan charge-offs to average total loans	.11		%	.09		%	.49		%	.22		%	.40		%
Allowance for loan and lease losses to period-end loans	1.10			1.21			1.68			1.10			1.68
Allowance for credit losses to period-end loans	1.25			1.36			1.88			1.25			1.88
Allowance for loan and lease losses to nonperforming loans	195.7			175.8			207.4			195.7			207.4
Allowance for credit losses to nonperforming loans	223.1			197.7			232.4			223.1			232.4

Discontinued operations — education lending business:
Loans charged off	$	1		1			$	—		$	3		$	4
Recoveries	1			—			—			2			3
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)	Nine months ended September 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)
	3Q21			2Q21			1Q21			4Q20			3Q20
Net loan charge-offs	$	29		$	22		$	114		$	135		$	128
Net loan charge-offs to average total loans	.11		%	.09		%	.46		%	.53		%	.49		%
Allowance for loan and lease losses	$	1,084		$	1,220		$	1,438		$	1,626		$	1,730
Allowance for credit losses ^(a)	1,236			1,372			1,616			1,823			1,938
Allowance for loan and lease losses to period-end loans	1.10		%	1.21		%	1.42		%	1.61		%	1.68		%
Allowance for credit losses to period-end loans	1.25			1.36			1.60			1.80			1.88
Allowance for loan and lease losses to nonperforming loans	195.7			175.8			197.5			207.1			207.4
Allowance for credit losses to nonperforming loans	223.1			197.7			222.0			232.2			232.4
Nonperforming loans at period end	$	554		$	694		$	728		$	785		$	834
Nonperforming assets at period end	599			738			790			937			1,003
Nonperforming loans to period-end portfolio loans	.56		%	.69		%	.72		%	.78		%	.81		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	.61			.73			.78			.92			.97

(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)
	9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
Commercial and industrial	$	253		$	355		$	387		$	385		$	459

Real estate — commercial mortgage	49			66			66			104			104
Real estate — construction	—			—			—			—			1
Total commercial real estate loans	49			66			66			104			105
Commercial lease financing	5			7			8			8			6
Total commercial loans	307			428			461			497			570
Real estate — residential mortgage	93			99			95			110			96
Home equity loans	146			146			148			154			146
Consumer direct loans	4			4			5			5			3
Credit cards	3			3			3			2			2
Consumer indirect loans	1			14			16			17			17
Total consumer loans	247			266			267			288			264
Total nonperforming loans	554			694			728			785			834
OREO	8			9			12			100			105
Nonperforming loans held for sale	35			32			47			49			61
Other nonperforming assets	2			3			3			3			3
Total nonperforming assets	$	599		$	738		$	790		$	937		$	1,003
Accruing loans past due 90 days or more	82			74			92			86			73
Accruing loans past due 30 through 89 days	164			190			191			241			336
Restructured loans — accruing and nonaccruing ^(a)	270			334			376			363			306
Restructured loans included in nonperforming loans ^(a)	146			177			192			229			168
Nonperforming assets from discontinued operations — education lending business	4			5			5			5			6
Nonperforming loans to period-end portfolio loans	.56		%	.69		%	.72		%	.78		%	.81		%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets	.61			.73			.78			.92			.97

(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)
	3Q21		2Q21		1Q21		4Q20		3Q20
Balance at beginning of period	$	694	$	728	$	785	$	834	$	760
Loans placed on nonaccrual status	116		186		196		300		387
Charge-offs	(66)		(74)		(135)		(160)		(150)
Loans sold	(17)		(10)		(13)		(9)		(6)
Payments	(136)		(92)		(37)		(83)		(83)
Transfers to OREO	(1)		—		(3)		(3)		—
Transfers to nonperforming loans held for sale	—		—		—		—		—
Loans returned to accrual status	(36)		(44)		(65)		(94)		(74)
Balance at end of period	$	554	$	694	$	728	$	785	$	834

Line of Business Results
(dollars in millions)

																Percentage change 3Q21 vs.
	3Q21			2Q21			1Q21			4Q20			3Q20			2Q21		3Q20
Consumer Bank
Summary of operations
Total revenue (TE)	$	870		$	852		$	864		$	896		$	864		2.1	%	.7	%
Provision for credit losses	(38)			(70)			(23)			(5)			(3)			45.7		N/M
Noninterest expense	591			584			601			606			567			1.2		4.2
Net income (loss) attributable to Key	241			257			217			225			229			(6.2)		5.2
Average loans and leases	39,796			40,598			39,249			38,033			38,354			(2.0)		3.8
Average deposits	89,156			88,412			85,033			82,845			82,829			.8		7.6
Net loan charge-offs	35			34			36			28			23			2.9		52.2
Net loan charge-offs to average total loans	.35		%	.34		%	.37		%	.29		%	.24		%	2.9		45.8
Nonperforming assets at period end	$	254		$	274		$	277		$	300		$	281		(7.3)		(9.6)
Return on average allocated equity	25.81		%	28.53		%	25.74		%	25.60		%	26.21		%	(9.5)		(1.5)

Commercial Bank
Summary of operations
Total revenue (TE)	$	891		$	873		$	858		$	922		$	811		2.1	%	9.9	%
Provision for credit losses	(69)			(131)			(67)			44			150			(47.3)		(187.3)
Noninterest expense	470			451			443			499			447			4.2		5.1
Net income (loss) attributable to Key	384			433			383			310			173			(11.3)		122.0
Average loans and leases	59,914			59,953			61,221			63,432			66,378			(.1)		(9.7)
Average loans held for sale	1,190			1,341			1,237			1,285			1,383			(11.3)		(14.0)
Average deposits	56,546			54,814			51,894			52,489			51,585			3.2		9.6
Net loan charge-offs	(6)			9			78			108			103			N/M		N/M
Net loan charge-offs to average total loans	(.04)		%	.06		%	.52		%	.68		%	.62		%	N/M		N/M
Nonperforming assets at period end	$	345		$	464		$	514		$	637		$	722		(25.6)		(52.2)
Return on average allocated equity	18.68		%	20.74		%	17.41		%	23.79		%	13.35		%	(9.9)		39.9