EX-99.1 2 a4q18earningsreleaseclassic.htm EXHIBIT 99.1
KEYCORP REPORTS FOURTH QUARTER 2018 NET INCOME OF $459 MILLION,
OR $.45 PER COMMON SHARE
4Q18 results included a net impact of $.03 per common share related to notable items: a pension settlement charge and efficiency initiative expenses
Sixth consecutive year of positive operating leverage with record full-year revenue of $6.4 billion
Cash efficiency ratio and return on average tangible common equity improved
over 300 basis points vs. the prior year
Strong credit quality: 4Q18 net charge-offs to average loans of .27%
Significant capital return: 62% increase in common share dividend and over $1.1 billion share repurchases in 2018
CLEVELAND, January 17, 2019 - KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $459 million, or $.45 per common share for the fourth quarter of 2018, compared to $468 million, or $.45 per common share, for the third quarter of 2018 and $181 million, or $.17 per common share, for the fourth quarter of 2017. During the fourth quarter of 2018, Key’s results included notable items resulting in a net impact of $.03 per common share, consisting of a pension settlement charge and efficiency initiative expenses. No notable items were reported in the third quarter of 2018, however, notable items resulting in a net impact of $.19 per common share were reported in the fourth quarter of 2017.
For the year ended December 31, 2018, net income from continuing operations attributable to Key common shareholders was $1.8 billion, or $1.70 per common share, compared to $1.2 billion, or $1.12 per common share, for the same period one year ago.

Selected Financial Highlights |  |  |  |  |  |
dollars in millions, except per share data |  |  |  |  | Change 4Q18 vs.
|  | 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Income (loss) from continuing operations attributable to Key common shareholders | $ | 459 |  | $ | 468 |  | $ | 181 |  |  | (1.9 | )% | 153.6 | %
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution | .45 |  | .45 |  | .17 |  |  | — |  | 164.7 |
Return on average tangible common equity from continuing operations (a) | 16.40 | % | 16.81 | % | 6.35 | % |  | N/A |  | N/A |
Return on average total assets from continuing operations | 1.37 |  | 1.40 |  | .57 |  |  | N/A |  | N/A |
Common Equity Tier 1 ratio (b) | 9.92 |  | 9.95 |  | 10.16 |  |  | N/A |  | N/A |
Book value at period end | $ | 13.90 |  | $ | 13.33 |  | $ | 13.09 |  |  | 4.3 | % | 6.2 | %
Net interest margin (TE) from continuing operations | 3.16 | % | 3.18 | % | 3.09 | % |  | N/A |  | N/A |

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

(b) | 12/31/18 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS |  |  |  |  |  |
Revenue |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Net interest income (TE) | $ | 1,008 |  | $ | 993 |  | $ | 952 |  |  | 1.5 | % | 5.9 | %
Noninterest income | 645 |  | 609 |  | 656 |  |  | 5.9 |  | (1.7 | )
Total revenue | $ | 1,653 |  | $ | 1,602 |  | $ | 1,608 |  |  | 3.2 | % | 2.8 | %

TE = Taxable Equivalent
Taxable-equivalent net interest income was $1.0 billion for the fourth quarter of 2018, and the net interest margin was 3.16%, compared to taxable-equivalent net interest income of $952 million and a net interest margin of 3.09% for the fourth quarter of 2017, reflecting the benefit from higher interest rates and higher earning asset balances. Fourth quarter 2018 net interest income included $23 million of purchase accounting accretion, a decline of $15 million from the fourth quarter of 2017.
Compared to the third quarter of 2018, taxable-equivalent net interest income increased by $15 million, and the net interest margin declined by two basis points. Net interest income benefited from higher earning asset balances, while the overall decline in the net interest margin reflects the impact of lower purchase accounting accretion.

Noninterest Income |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Trust and investment services income | $ | 121 |  | $ | 117 |  | $ | 131 |  |  | 3.4 | % | (7.6 | )%
Investment banking and debt placement fees | 186 |  | 166 |  | 200 |  |  | 12.0 |  | (7.0 | )
Service charges on deposit accounts | 84 |  | 85 |  | 89 |  |  | (1.2 | ) | (5.6 | )
Operating lease income and other leasing gains | 28 |  | 35 |  | 27 |  |  | (20.0 | ) | 3.7 |
Corporate services income | 58 |  | 52 |  | 56 |  |  | 11.5 |  | 3.6 |
Cards and payments income | 68 |  | 69 |  | 77 |  |  | (1.4 | ) | (11.7 | )
Corporate-owned life insurance income | 39 |  | 34 |  | 37 |  |  | 14.7 |  | 5.4 |
Consumer mortgage income | 7 |  | 9 |  | 7 |  |  | (22.2 | ) | — |
Mortgage servicing fees | 21 |  | 19 |  | 17 |  |  | 10.5 |  | 23.5 |
Other income | 33 |  | 23 |  | 15 |  |  | 43.5 |  | 120.0 |
Total noninterest income | $ | 645 |  | $ | 609 |  | $ | 656 |  |  | 5.9 | % | (1.7 | )%

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 2
Key’s noninterest income was $645 million for the fourth quarter of 2018, compared to $656 million for the year-ago quarter. Trust and investment services income declined $10 million, related to the sale of Key Insurance and Benefits Services in the second quarter of 2018. Cards and payments income and service charges on deposit accounts were impacted by the 2018 adoption of the revenue recognition accounting standard. Excluding the revenue recognition changes, both of these line items grew from the prior year. Investment banking and debt placement fees were lower, following a record fourth quarter in 2017. Partially offsetting these declines were increases in other income and mortgage servicing fees.
Compared to the third quarter of 2018, noninterest income increased by $36 million, driven by momentum in many of Key's core fee-based businesses. Investment banking and debt placement fees increased $20 million, largely related to strength in commercial mortgage banking and advisory fees. Corporate services income reflected higher derivatives and trading income, and trust and investment services income grew, largely due to stronger brokerage commissions.

Noninterest Expense |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Personnel expense | $ | 576 |  | $ | 553 |  | $ | 609 |  |  | 4.2 | % | (5.4 | )%
Nonpersonnel expense | 436 |  | 411 |  | 489 |  |  | 6.1 |  | (10.8 | )
Total noninterest expense | $ | 1,012 |  | $ | 964 |  | $ | 1,098 |  |  | 5.0 | % | (7.8 | )%

Key’s noninterest expense was $1.0 billion for the fourth quarter of 2018, compared to $1.1 billion in the year-ago quarter. Personnel expense declined year-over-year, driven by lower incentive compensation and employee benefits costs, partially offset by increased severance expense related to Key's efficiency initiative. Net occupancy and marketing expenses also declined, largely related to merger-related charges in the fourth quarter of 2017. In the fourth quarter of 2018, Key's FDIC assessment costs decreased, due to the elimination of the FDIC quarterly surcharge.
Compared to the third quarter of 2018, noninterest expense increased by $48 million. The increase was primarily driven by notable items in the quarter - efficiency initiative expenses of $24 million and a $17 million pension settlement charge (reported in other expense). Business services and professional fees and other expense increased, but were partially offset by the benefit from the FDIC surcharge elimination.
BALANCE SHEET HIGHLIGHTS

Average Loans |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Commercial and industrial (a) | $ | 45,129 |  | $ | 44,749 |  | $ | 41,289 |  |  | .8 | % | 9.3 | %
Other commercial loans | 20,899 |  | 20,471 |  | 21,040 |  |  | 2.1 |  | (.7 | )
Home equity loans | 11,234 |  | 11,415 |  | 12,128 |  |  | (1.6 | ) | (7.4 | )
Other consumer loans | 12,026 |  | 11,832 |  | 11,549 |  |  | 1.6 |  | 4.1 |
Total loans | $ | 89,288 |  | $ | 88,467 |  | $ | 86,006 |  |  | .9 | % | 3.8 | %

(a) | Commercial and industrial average loan balances include $132 million, $128 million, and $119 million of assets from commercial credit cards at December 31, 2018, September 30, 2018, and December 31, 2017, respectively.

Average loans were $89.3 billion for the fourth quarter of 2018, an increase of $3.3 billion compared to the fourth quarter of 2017, reflecting broad-based growth in commercial and industrial loans, partially offset by higher paydowns in home equity lines of credit.

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
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Compared to the third quarter of 2018, average loans increased by $821 million, driven by growth in commercial real estate and commercial and industrial loans.

Average Deposits |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Non-time deposits | $ | 94,480 |  | $ | 92,414 |  | $ | 92,251 |  |  | 2.2 | % | 2.4 | %
Certificates of deposit ($100,000 or more) | 8,217 |  | 8,186 |  | 6,776 |  |  | .4 |  | 21.3 |
Other time deposits | 5,255 |  | 5,026 |  | 4,771 |  |  | 4.6 |  | 10.1 |
Total deposits | $ | 107,952 |  | $ | 105,626 |  | $ | 103,798 |  |  | 2.2 | % | 4.0 | %
Cost of total deposits | .64 | % | .53 | % | .31 | % |  | N/A |  | N/A |

N/A = Not Applicable
Average deposits totaled $108.0 billion for the fourth quarter of 2018, an increase of $4.2 billion compared to the year-ago quarter, reflecting growth in higher-yielding deposit products, as well as strength in Key’s retail banking franchise and growth from commercial relationships.
Compared to the third quarter of 2018, average deposits increased by $2.3 billion, driven primarily by the penetration of existing retail and commercial relationships, as well as short-term and seasonal deposit inflows.

ASSET QUALITY |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Net loan charge-offs | $ | 60 |  | $ | 60 |  | $ | 52 |  |  | — |  | 15.4 | %
Net loan charge-offs to average total loans | .27 | % | .27 | % | .24 | % |  | N/A |  | N/A |
Nonperforming loans at period end (a) | $ | 542 |  | $ | 645 |  | $ | 503 |  |  | (16.0 | )% | 7.8 |
Nonperforming assets at period end (a) | 577 |  | 674 |  | 534 |  |  | (14.4 | ) | 8.1 |
Allowance for loan and lease losses | 883 |  | 887 |  | 877 |  |  | (.5 | ) | .7 |
Allowance for loan and lease losses to nonperforming loans (a) | 162.9 | % | 137.5 | % | 174.4 | % |  | N/A |  | N/A |
Provision for credit losses | $ | 59 |  | $ | 62 |  | $ | 49 |  |  | (4.8 | )% | 20.4 | %

(a) | Nonperforming loan balances exclude $575 million, $606 million, and $738 million of purchased credit impaired loans at December 31, 2018, September 30, 2018, and December 31, 2017, respectively.

N/A = Not Applicable
Key’s provision for credit losses was $59 million for the fourth quarter of 2018, compared to $49 million for the fourth quarter of 2017 and $62 million for the third quarter of 2018. Key’s allowance for loan and lease losses was $883 million, or .99% of total period-end loans at December 31, 2018, compared to 1.01% at December 31, 2017, and .99% at September 30, 2018.
Net loan charge-offs for the fourth quarter of 2018 totaled $60 million, or .27% of average total loans. These results compare to $52 million, or .24%, for the fourth quarter of 2017, and $60 million, or .27%, for the third quarter of 2018.
At December 31, 2018, Key’s nonperforming loans totaled $542 million, a decline of $103 million from the prior quarter, which represented .61% of period-end portfolio loans. These results compare to .58% at December 31, 2017, and .72% at September 30, 2018. Nonperforming assets at December 31, 2018, totaled $577 million, and represented .64% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .62% at December 31, 2017, and .75% at September 30, 2018.
CAPITAL
Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at December 31, 2018.

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
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Capital Ratios |  |  |
| 12/31/2018 | 9/30/2018 | 12/31/2017
Common Equity Tier 1 (a) | 9.92 | % | 9.95 | % | 10.16 | %
Tier 1 risk-based capital (a) | 11.07 |  | 11.11 |  | 11.01 |
Total risk based capital (a) | 12.88 |  | 12.99 |  | 12.92 |
Tangible common equity to tangible assets (b) | 8.30 |  | 8.05 |  | 8.23 |
Leverage (a) | 9.93 |  | 10.03 |  | 9.73 |

(a) | 12/31/2018 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 “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. See below for further information on the Regulatory Capital Rules.

Key's capital position remained strong in the fourth quarter of 2018. As shown in the preceding table, at December 31, 2018, Key’s estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.92% and 11.07%, respectively. Key's tangible common equity ratio was 8.30% at December 31, 2018.
As a “standardized approach” banking organization, Key’s mandatory compliance with the final Basel III capital framework for U.S. banking organizations (the “Regulatory Capital Rules”) began on January 1, 2015, subject to transitional provisions. Key’s estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 9.83% at December 31, 2018. 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 4Q18 vs.
|  | 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Shares outstanding at beginning of period | 1,034,287 |  | 1,058,944 |  | 1,079,039 |  |  | (2.3 | )% | (4.1 | )%
Open market repurchases and return of shares under employee compensation plans | (15,216 | ) | (25,418 | ) | (10,617 | ) |  | (40.1 | ) | 43.3 |
Shares issued under employee compensation plans (net of cancellations) | 432 |  | 761 |  | 662 |  |  | (43.2 | ) | (34.7 | )
| Shares outstanding at end of period | 1,019,503 |  | 1,034,287 |  | 1,069,084 |  |  | (1.4 | )% | (4.6 | )%

Consistent with Key's 2018 Capital Plan, during the fourth quarter of 2018, Key declared a dividend of $.17 per common share and completed $278 million of common share repurchases. Key's remaining share repurchase authorization consistent with the 2018 Capital Plan (which continues through the second quarter of 2019) is $405 million.
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 4Q18 vs.
|  | 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Revenue from continuing operations (TE) |  |  |  |  |  |
Key Community Bank | $ | 1,022 |  | $ | 994 |  | $ | 961 |  |  | 2.8 | % | 6.3 | %
Key Corporate Bank | 581 |  | 574 |  | 605 |  |  | 1.2 |  | (4.0 | )
Other Segments | 53 |  | 24 |  | 41 |  |  | 120.8 |  | 29.3 |
| Total segments | 1,656 |  | 1,592 |  | 1,607 |  |  | 4.0 |  | 3.0 |
Reconciling Items | (3 | ) | 10 |  | 1 |  |  | N/M |  | N/M |
| Total | $ | 1,653 |  | $ | 1,602 |  | $ | 1,608 |  |  | 3.2 | % | 2.8 | %
Income (loss) from continuing operations attributable to Key |  |  |  |  |  |
Key Community Bank | $ | 261 |  | $ | 241 |  | $ | 152 |  |  | 8.3 | % | 71.7 | %
Key Corporate Bank | 215 |  | 199 |  | 223 |  |  | 8.0 |  | (3.6 | )
Other Segments | 45 |  | 22 |  | 48 |  |  | 104.5 |  | (6.3 | )
| Total segments | 521 |  | 462 |  | 423 |  |  | 12.8 | % | 23.2 |
Reconciling Items | (39 | ) | 20 |  | (228 | ) |  | N/M |  | N/M |
| Total | $ | 482 |  | $ | 482 |  | $ | 195 |  |  | — |  | 147.2 | %

TE = Taxable Equivalent, N/M = Not Meaningful

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
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Key Community Bank |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Summary of operations |  |  |  |  |  |
Net interest income (TE) | $ | 744 |  | $ | 726 |  | $ | 674 |  |  | 2.5 | % | 10.4 | %
Noninterest income | 278 |  | 268 |  | 287 |  |  | 3.7 |  | (3.1 | )
Total revenue (TE) | 1,022 |  | 994 |  | 961 |  |  | 2.8 |  | 6.3 |
Provision for credit losses | 48 |  | 43 |  | 57 |  |  | 11.6 |  | (15.8 | )
Noninterest expense | 633 |  | 635 |  | 665 |  |  | (.3 | ) | (4.8 | )
Income (loss) before income taxes (TE) | 341 |  | 316 |  | 239 |  |  | 7.9 |  | 42.7 |
Allocated income taxes (benefit) and TE adjustments | 80 |  | 75 |  | 87 |  |  | 6.7 |  | (8.0 | )
Net income (loss) attributable to Key | $ | 261 |  | $ | 241 |  | $ | 152 |  |  | 8.3 | % | 71.7 | %
Average balances |  |  |  |  |  |
Loans and leases | $ | 47,976 |  | $ | 47,862 |  | $ | 47,408 |  |  | .2 | % | 1.2 | %
Total assets | 51,881 |  | 51,740 |  | 51,398 |  |  | .3 |  | .9 |
Deposits | 84,288 |  | 82,259 |  | 80,352 |  |  | 2.5 |  | 4.9 |
Assets under management at period end | $ | 36,775 |  | $ | 40,575 |  | $ | 39,588 |  |  | (9.4 | )% | (7.1 | )%

TE = Taxable Equivalent

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
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Additional Key Community Bank Data |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Noninterest income |  |  |  |  |  |
Trust and investment services income | $ | 90 |  | $ | 90 |  | $ | 87 |  |  | — |  | 3.4 | %
Service charges on deposit accounts | 72 |  | 72 |  | 77 |  |  | — |  | (6.5 | )
Cards and payments income | 61 |  | 59 |  | 67 |  |  | 3.4 | % | (9.0 | )
Other noninterest income | 55 |  | 47 |  | 56 |  |  | 17.0 |  | (1.8 | )
Total noninterest income | $ | 278 |  | $ | 268 |  | $ | 287 |  |  | 3.7 | % | (3.1 | )%
Average deposit balances |  |  |  |  |  |
NOW and money market deposit accounts | $ | 47,310 |  | $ | 45,967 |  | $ | 44,415 |  |  | 2.9 | % | 6.5 | %
Savings deposits | 4,777 |  | 4,923 |  | 5,090 |  |  | (3.0 | ) | (6.1 | )
Certificates of deposit ($100,000 or more) | 6,169 |  | 5,608 |  | 4,628 |  |  | 10.0 |  | 33.3 |
Other time deposits | 5,244 |  | 5,019 |  | 4,765 |  |  | 4.5 |  | 10.1 |
Noninterest-bearing deposits | 20,788 |  | 20,742 |  | 21,454 |  |  | .2 |  | (3.1 | )
Total deposits | $ | 84,288 |  | $ | 82,259 |  | $ | 80,352 |  |  | 2.5 | % | 4.9 | %
Home equity loans |  |  |  |  |  |
Average balance | $ | 11,144 |  | $ | 11,317 |  | $ | 12,005 |  |  |  |
Combined weighted-average loan-to-value ratio (at date of origination) | 70 | % | 70 | % | 70 | % |  |  |
Percent first lien positions | 60 |  | 60 |  | 60 |  |  |  |
Other data |  |  |  |  |  |
Branches | 1,159 |  | 1,166 |  | 1,197 |  |  |  |
Automated teller machines | 1,505 |  | 1,518 |  | 1,572 |  |  |  |

Key Community Bank Summary of Operations (4Q18 vs. 4Q17)

• | Positive operating leverage compared to the prior year

• | Net income increased $109 million, or 71.7%, from the prior year

• | Average commercial and industrial loans increased $1.0 billion, or 5.6%, from the prior year

Key Community Bank recorded net income attributable to Key of $261 million for the fourth quarter of 2018, compared to $152 million for the year-ago quarter, benefiting from momentum in Key's core businesses, expense discipline, and a lower tax rate as a result of tax reform.
Taxable-equivalent net interest income increased by $70 million, or 10.4%, from the fourth quarter of 2017. The increase in net interest income was primarily attributable to the benefit from higher interest rates and loan growth, partially offset by lower purchase accounting accretion. Average loans and leases increased $568 million, or 1.2%, largely driven by a $1.0 billion, or 5.6%, increase in commercial and industrial loans. Additionally, average deposits increased $3.9 billion, or 4.9%, from the fourth quarter of 2017 due to strength in our relationship strategy.
Noninterest income decreased $9 million, or 3.1%, from the year-ago quarter driven by lower service charges on deposit accounts and cards and payments income, which were impacted by revenue recognition changes. Excluding the impact of the accounting change, both businesses grew from the prior period, related to continued household growth.
The provision for credit losses decreased by $9 million, or 15.8%, from the fourth quarter of 2017. Net loan charge-offs increased $7 million from the fourth quarter of 2017 driven by a larger balance sheet.
Noninterest expense decreased by $32 million, or 4.8%, from the year-ago quarter. Both personnel and nonpersonnel expense declined, driven by strong expense discipline across the businesses while continuing to invest strategically for growth.

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
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Key Corporate Bank |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Summary of operations |  |  |  |  |  |
Net interest income (TE) | $ | 272 |  | $ | 273 |  | $ | 284 |  |  | (.4 | )% | (4.2 | )%
Noninterest income | 309 |  | 301 |  | 321 |  |  | 2.7 |  | (3.7 | )
Total revenue (TE) | 581 |  | 574 |  | 605 |  |  | 1.2 |  | (4.0 | )
Provision for credit losses | 12 |  | 20 |  | (6 | ) |  | (40.0 | ) | N/M |
Noninterest expense | 329 |  | 316 |  | 352 |  |  | 4.1 |  | (6.5 | )
Income (loss) before income taxes (TE) | 240 |  | 238 |  | 259 |  |  | .8 |  | (7.3 | )
Allocated income taxes and TE adjustments | 25 |  | 39 |  | 36 |  |  | (35.9 | ) | (30.6 | )
Net income (loss) attributable to Key | $ | 215 |  | $ | 199 |  | $ | 223 |  |  | 8.0 | % | (3.6 | )%
Average balances |  |  |  |  |  |
Loans and leases | $ | 40,438 |  | $ | 39,714 |  | $ | 37,457 |  |  | 1.8 | % | 8.0 | %
Loans held for sale | 2,249 |  | 1,042 |  | 1,345 |  |  | 115.8 |  | 67.2 |
Total assets | 48,853 |  | 46,860 |  | 44,501 |  |  | 4.3 |  | 9.8 |
Deposits | 21,793 |  | 21,056 |  | 21,558 |  |  | 3.5 | % | 1.1 | %

TE = Taxable Equivalent, N/M = Not Meaningful

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
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Additional Key Corporate Bank Data |  |  |  |  |  |
dollars in millions |  |  |  |  | Change 4Q18 vs.
| 4Q18 | 3Q18 | 4Q17 |  | 3Q18 | 4Q17
Noninterest income |  |  |  |  |  |
Trust and investment services income | $ | 30 |  | $ | 27 |  | $ | 33 |  |  | 11.1 | % | (9.1 | )%
Investment banking and debt placement fees | 178 |  | 162 |  | 195 |  |  | 9.9 |  | (8.7 | )
Operating lease income and other leasing gains | 24 |  | 34 |  | 25 |  |  | (29.4 | ) | (4.0 | )
Corporate services income | 43 |  | 37 |  | 40 |  |  | 16.2 |  | 7.5 |
Service charges on deposit accounts | 12 |  | 13 |  | 12 |  |  | (7.7 | ) | — |
Cards and payments income | 7 |  | 10 |  | 10 |  |  | (30.0 | ) | (30.0 | )
Payments and services income | 62 |  | 60 |  | 62 |  |  | 3.3 |  | — |
Mortgage servicing fees | 18 |  | 15 |  | 15 |  |  | 20.0 |  | 20.0 |
Other noninterest income | (3 | ) | 3 |  | (9 | ) |  | N/M |  | N/M |
Total noninterest income | $ | 309 |  | $ | 301 |  | $ | 321 |  |  | 2.7 | % | (3.7 | )%

N/M = Not Meaningful
Key Corporate Bank Summary of Operations (4Q18 vs. 4Q17)

• | Record year for investment banking and debt placement fees

• | Commercial and industrial loans up $2.8 billion, or 12.7%, from prior year

Key Corporate Bank recorded net income attributable to Key of $215 million for the fourth quarter of 2018, compared to $223 million for the year-ago quarter.
Taxable-equivalent net interest income decreased by $12 million, or 4.2%, compared to the fourth quarter of 2017. This decline is related to lower purchase accounting accretion, as well as loan spread compression. Average loan and lease balances increased $3 billion, or 8%, from the year-ago quarter, driven by broad-based growth in commercial and industrial loans. Average deposit balances increased $235 million, or 1.1%, from the year-ago quarter, driven by growth in core deposits.
Noninterest income was down $12 million, or 3.7%, from the prior year. Investment banking and debt placement fees decreased $17 million, or 8.7%, from a record quarter in the year-ago period. This decrease was partially offset by increases in other noninterest income of $6 million related to higher gains on certain tax-advantaged assets, as well as higher mortgage servicing fees of $3 million.
During the fourth quarter of 2018, the provision for credit losses increased $18 million compared to the fourth quarter of 2017, mostly related to loan growth.
Noninterest expense decreased by $23 million, or 6.5%, from the fourth quarter of 2017. The decrease from the prior year was largely driven by lower personnel expense. The prior year also had higher impairments on certain tax-advantaged assets related to tax reform. These decreases are slightly offset by higher volumes driving increased operating lease expense.
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 $45 million for the fourth quarter of 2018, compared to $48 million for the same period last year.
*****
KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation’s largest bank-based financial services companies, with assets of approximately $139.6 billion at December 31, 2018.
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 over 1,100 branches and more than 1,500 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.

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 9

CONTACTS: |
ANALYSTS | MEDIA
Vernon L. Patterson | Susan Donlan
216.689.0520 | 216.471.3133
Vernon_Patterson@KeyBank.com | Susan_E_Donlan@KeyBank.com
| Twitter: @keybank_news
Melanie S. Kaiser |
216.689.4545 |
Melanie_S_Kaiser@KeyBank.com |
Emily J. Mills |
216.689.7781 |
emills@key.com |
INVESTOR | KEY MEDIA
RELATIONS: www.key.com/ir | NEWSROOM: 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, 2017, as well as in KeyCorp’s subsequent SEC filings, all of which have been filed with the Securities and Exchange Commission (the “SEC”) and are available on Key’s website (www.key.com/ir) and on the SEC’s website (www.sec.gov). These factors may include, among others: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive 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, January 17, 2019. An audio replay of the call will be available through January 27, 2019.
For up-to-date company information, media contacts, and facts and figures about Key’s lines of business, visit our Media Newsroom at https://www.key.com/newsroom.
*****

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 10
KeyCorp
Fourth Quarter 2018
Financial Supplement

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

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 11

Financial Highlights
(dollars in millions, except per share amounts)
|  |  | Three months ended
|  |  | 12/31/2018 | 9/30/2018 | 12/31/2017
Summary of operations |  |  |
| Net interest income (TE) | $ | 1,008 |  | $ | 993 |  | $ | 952 |
| Noninterest income | 645 |  | 609 |  | 656 |
|  | Total revenue (TE) | 1,653 |  | 1,602 |  | 1,608 |
| Provision for credit losses | 59 |  | 62 |  | 49 |
| Noninterest expense | 1,012 |  | 964 |  | 1,098 |
| Income (loss) from continuing operations attributable to Key | 482 |  | 482 |  | 195 |
| Income (loss) from discontinued operations, net of taxes (a) | 2 |  | — |  | 1 |
| Net income (loss) attributable to Key | 484 |  | 482 |  | 196 |
| Income (loss) from continuing operations attributable to Key common shareholders | 459 |  | 468 |  | 181 |
| Income (loss) from discontinued operations, net of taxes (a) | 2 |  | — |  | 1 |
| Net income (loss) attributable to Key common shareholders | 461 |  | 468 |  | 182 |
Per common share |  |  |
| Income (loss) from continuing operations attributable to Key common shareholders | $ | .45 |  | $ | .45 |  | $ | .17 |
| Income (loss) from discontinued operations, net of taxes (a) | — |  | — |  | — |
| Net income (loss) attributable to Key common shareholders (b) | .45 |  | .45 |  | .17 |
| Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution | .45 |  | .45 |  | .17 |
| Income (loss) from discontinued operations, net of taxes — assuming dilution (a) | — |  | — |  | — |
| Net income (loss) attributable to Key common shareholders — assuming dilution (b) | .45 |  | .45 |  | .17 |
| Cash dividends declared | .17 |  | .17 |  | .105 |
| Book value at period end | 13.90 |  | 13.33 |  | 13.09 |
| Tangible book value at period end | 11.14 |  | 10.59 |  | 10.35 |
| Market price at period end | 14.78 |  | 19.89 |  | 20.17 |
Performance ratios |  |  |
| From continuing operations: |  |  |
| Return on average total assets | 1.37 | % | 1.40 | % | .57 | %
| Return on average common equity | 13.07 |  | 13.36 |  | 5.04 |
| Return on average tangible common equity (c) | 16.40 |  | 16.81 |  | 6.35 |
| Net interest margin (TE) | 3.16 |  | 3.18 |  | 3.09 |
| Cash efficiency ratio (c) | 59.9 |  | 58.7 |  | 66.7 |
| From consolidated operations: |  |  |
| Return on average total assets | 1.37 | % | 1.39 | % | .57 | %
| Return on average common equity | 13.13 |  | 13.36 |  | 5.07 |
| Return on average tangible common equity (c) | 16.47 |  | 16.81 |  | 6.39 |
| Net interest margin (TE) | 3.14 |  | 3.16 |  | 3.07 |
| Loan to deposit (d) | 85.6 |  | 87.0 |  | 84.4 |
Capital ratios at period end |  |  |
| Key shareholders’ equity to assets | 11.17 | % | 10.96 | % | 10.91 | %
| Key common shareholders’ equity to assets | 10.15 |  | 9.93 |  | 10.17 |
| Tangible common equity to tangible assets (c) | 8.30 |  | 8.05 |  | 8.23 |
| Common Equity Tier 1 (e) | 9.92 |  | 9.95 |  | 10.16 |
| Tier 1 risk-based capital (e) | 11.07 |  | 11.11 |  | 11.01 |
| Total risk-based capital (e) | 12.88 |  | 12.99 |  | 12.92 |
| Leverage (e) | 9.93 |  | 10.03 |  | 9.73 |
Asset quality — from continuing operations |  |  |
| Net loan charge-offs | $ | 60 |  | $ | 60 |  | $ | 52 |
| Net loan charge-offs to average loans | .27 | % | .27 | % | .24 | %
| Allowance for loan and lease losses | $ | 883 |  | $ | 887 |  | $ | 877 |
| Allowance for credit losses | 946 |  | 947 |  | 934 |
| Allowance for loan and lease losses to period-end loans | .99 | % | .99 | % | 1.01 | %
| Allowance for credit losses to period-end loans | 1.06 |  | 1.06 |  | 1.08 |
| Allowance for loan and lease losses to nonperforming loans (f) | 162.9 |  | 137.5 |  | 174.4 |
| Allowance for credit losses to nonperforming loans (f) | 174.5 |  | 146.8 |  | 185.7 |
| Nonperforming loans at period-end (f) | $ | 542 |  | $ | 645 |  | $ | 503 |
| Nonperforming assets at period-end (f) | 577 |  | 674 |  | 534 |
| Nonperforming loans to period-end portfolio loans (f) | .61 | % | .72 | % | .58 | %
| Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets (f) | .64 |  | .75 |  | .62 |
Trust assets |  |  |
| Assets under management | $ | 36,775 |  | $ | 40,575 |  | $ | 39,588 |
Other data |  |  |
| Average full-time equivalent employees | 17,664 |  | 18,150 |  | 18,379 |
| Branches | 1,159 |  | 1,166 |  | 1,197 |
Taxable-equivalent adjustment | $ | 8 |  | $ | 7 |  | $ | 14 |

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 12

Financial Highlights (continued)
(dollars in millions, except per share amounts)
|  | Twelve months ended
|  | 12/31/2018 | 12/31/2017
Summary of operations |  |
| Net interest income (TE) | $ | 3,940 |  | $ | 3,830 |
| Noninterest income | 2,515 |  | 2,478 |
| Total revenue (TE) | 6,455 |  | 6,308 |
| Provision for credit losses | 246 |  | 229 |
| Noninterest expense | 3,975 |  | 4,098 |
| Income (loss) from continuing operations attributable to Key | 1,859 |  | 1,289 |
| Income (loss) from discontinued operations, net of taxes (a) | 7 |  | 7 |
| Net income (loss) attributable to Key | 1,866 |  | 1,296 |
| Income (loss) from continuing operations attributable to Key common shareholders | $ | 1,793 |  | $ | 1,219 |
| Income (loss) from discontinued operations, net of taxes (a) | 7 |  | 7 |
| Net income (loss) attributable to Key common shareholders | 1,800 |  | 1,226 |
Per common share |  |
| Income (loss) from continuing operations attributable to Key common shareholders | $ | 1.72 |  | $ | 1.13 |
| Income (loss) from discontinued operations, net of taxes (a) | .01 |  | .01 |
| Net income (loss) attributable to Key common shareholders (b) | 1.73 |  | 1.14 |
| Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution | 1.70 |  | 1.12 |
| Income (loss) from discontinued operations, net of taxes — assuming dilution (a) | .01 |  | .01 |
| Net income (loss) attributable to Key common shareholders — assuming dilution (b) | 1.71 |  | 1.13 |
| Cash dividends paid | .565 |  | .38 |
Performance ratios |  |
| From continuing operations: |  |
| Return on average total assets | 1.36 | % | .96 | %
| Return on average common equity | 12.88 |  | 8.65 |
| Return on average tangible common equity (c) | 16.22 |  | 10.84 |
| Net interest margin (TE) | 3.17 |  | 3.17 |
| Cash efficiency ratio (c) | 60.0 |  | 63.5 |
| From consolidated operations: |  |
| Return on average total assets | 1.35 | % | .96 | %
| Return on average common equity | 12.93 |  | 8.70 |
| Return on average tangible common equity (c) | 16.28 |  | 10.90 |
| Net interest margin (TE) | 3.15 |  | 3.15 |
Asset quality — from continuing operations |  |
| Net loan charge-offs | $ | 234 |  | $ | 208 |
| Net loan charge-offs to average total loans | .26 | % | .24 | %
Other data |  |
| Average full-time equivalent employees | 18,180 |  | 18,415 |
Taxable-equivalent adjustment | 31 |  | 53 |

(a) | 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.

(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” and “cash efficiency.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the “Capital” section of this release.

(d) | Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits.

(e) | December 31, 2018, ratio is estimated.

(f) | Nonperforming loan balances exclude $575 million, $606 million, and $738 million of purchased credit impaired loans at December 31, 2018, September 30, 2018, and December 31, 2017, respectively.

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 13
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,” “Common Equity Tier 1,” “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. 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 introduced 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.
The table also shows the computation for pre-provision net revenue, which is not formally defined by GAAP. Management believes that eliminating the effects of the provision for credit losses makes it easier to analyze the results by presenting them on a more comparable basis.
The cash efficiency ratio is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key’s intangible asset amortization from the calculation. Management believes this ratio provide greater consistency and comparability between Key’s results and those of its peer banks. Additionally, this ratio is used by analysts and investors as they develop earnings forecasts and peer bank analysis.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

| Three months ended |  | Twelve months ended
| 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 12/31/2018 | 12/31/2017
Tangible common equity to tangible assets at period-end |  |  |  |  |  |
Key shareholders’ equity (GAAP) | $ | 15,595 |  | $ | 15,208 |  | $ | 15,023 |  |  |  |
Less: Intangible assets (a) | 2,818 |  | 2,838 |  | 2,928 |  |  |  |
Preferred Stock (b) | 1,421 |  | 1,421 |  | 1,009 |  |  |  |
Tangible common equity (non-GAAP) | $ | 11,356 |  | $ | 10,949 |  | $ | 11,086 |  |  |  |
Total assets (GAAP) | $ | 139,613 |  | $ | 138,805 |  | $ | 137,698 |  |  |  |
Less: Intangible assets (a) | 2,818 |  | 2,838 |  | 2,928 |  |  |  |
Tangible assets (non-GAAP) | $ | 136,795 |  | $ | 135,967 |  | $ | 134,770 |  |  |  |
Tangible common equity to tangible assets ratio (non-GAAP) | 8.30 | % | 8.05 | % | 8.23 | % |  |  |
Pre-provision net revenue |  |  |  |  |  |
Net interest income (GAAP) | $ | 1,000 |  | $ | 986 |  | $ | 938 |  |  | $ | 3,909 |  | $ | 3,777 |
Plus: Taxable-equivalent adjustment | 8 |  | 7 |  | 14 |  |  | 31 |  | 53 |
Noninterest income | 645 |  | 609 |  | 656 |  |  | 2,515 |  | 2,478 |
Less: Noninterest expense | 1,012 |  | 964 |  | 1,098 |  |  | 3,975 |  | 4,098 |
Pre-provision net revenue from continuing operations (non-GAAP) | $ | 641 |  | $ | 638 |  | $ | 510 |  |  | $ | 2,480 |  | $ | 2,210 |
Average tangible common equity |  |  |  |  |  |
Average Key shareholders' equity (GAAP) | $ | 15,384 |  | $ | 15,210 |  | $ | 15,268 |  |  | $ | 15,131 |  | $ | 15,224 |
Less: Intangible assets (average) (c) | 2,828 |  | 2,848 |  | 2,939 |  |  | 2,869 |  | 2,837 |
Preferred stock (average) | 1,450 |  | 1,316 |  | 1,025 |  |  | 1,205 |  | 1,137 |
Average tangible common equity (non-GAAP) | $ | 11,106 |  | $ | 11,046 |  | $ | 11,304 |  |  | $ | 11,057 |  | $ | 11,250 |
Return on average tangible common equity from continuing operations |  |  |  |  |  |
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP) | $ | 459 |  | $ | 468 |  | $ | 181 |  |  | $ | 1,793 |  | $ | 1,219 |
Average tangible common equity (non-GAAP) | 11,106 |  | 11,046 |  | 11,304 |  |  | 11,057 |  | 11,250 |
Return on average tangible common equity from continuing operations (non-GAAP) | 16.40 | % | 16.81 | % | 6.35 | % |  | 16.22 | % | 10.84 | %
Return on average tangible common equity consolidated |  |  |  |  |  |
Net income (loss) attributable to Key common shareholders (GAAP) | $ | 461 |  | $ | 468 |  | $ | 182 |  |  | $ | 1,800 |  | $ | 1,226 |
Average tangible common equity (non-GAAP) | 11,106 |  | 11,046 |  | 11,304 |  |  | 11,057 |  | 11,250 |
Return on average tangible common equity consolidated (non-GAAP) | 16.47 | % | 16.81 | % | 6.39 | % |  | 16.28 | % | 10.90 | %
Cash efficiency ratio |  |  |  |  |  |
Noninterest expense (GAAP) | $ | 1,012 |  | $ | 964 |  | $ | 1,098 |  |  | $ | 3,975 |  | $ | 4,098 |
Less: Intangible asset amortization | 22 |  | 23 |  | 26 |  |  | 99 |  | 95 |
Adjusted noninterest expense (non-GAAP) | $ | 990 |  | $ | 941 |  | $ | 1,072 |  |  | $ | 3,876 |  | $ | 4,003 |
Net interest income (GAAP) | $ | 1,000 |  | $ | 986 |  | $ | 938 |  |  | $ | 3,909 |  | $ | 3,777 |
Plus: Taxable-equivalent adjustment | 8 |  | 7 |  | 14 |  |  | 31 |  | 53 |
Noninterest income | 645 |  | 609 |  | 656 |  |  | 2,515 |  | 2,478 |
Total taxable-equivalent revenue (non-GAAP) | $ | 1,653 |  | $ | 1,602 |  | $ | 1,608 |  |  | $ | 6,455 |  | $ | 6,308 |
Cash efficiency ratio (non-GAAP) | 59.9 | % | 58.7 | % | 66.7 | % |  | 60.0 | % | 63.5 | %

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 14

GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)
|  |  | Three months ended
|  |  | 12/31/2018
Common Equity Tier 1 under the Regulatory Capital Rules (“RCR”) (estimates) |
| Common Equity Tier 1 under current RCR | $ | 12,273 |
| Adjustments from current RCR to the fully phased-in RCR: |
|  | Deferred tax assets and other intangible assets (d) | — |
|  | Common Equity Tier 1 anticipated under the fully phased-in RCR (e) | $ | 12,273 |
| Net risk-weighted assets under current RCR | $ | 123,719 |
| Adjustments from current RCR to the fully phased-in RCR: |
|  | Mortgage servicing assets (f) | 809 |
|  | Deferred tax assets | 276 |
|  | All other assets | — |
|  | Total risk-weighted assets anticipated under the fully phased-in RCR (e) | $ | 124,804 |
| Common Equity Tier 1 ratio under the fully phased-in RCR (e) | 9.83 | %

(a) | For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, intangible assets exclude $14 million, $17 million, and $26 million, respectively, of period-end purchased credit card receivables.

(b) | Net of capital surplus.

(c) | For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, average intangible assets exclude $15 million, $18 million, and $28 million, respectively, of average purchased credit card receivables. For the twelve months ended December 31, 2018, and December 31, 2017, average intangible assets exclude $20 million and $34 million, respectively, of average purchased credit card receivables.

(d) | Includes the deferred tax assets subject to future taxable income for realization, primarily tax credit carryforwards, as well as intangible assets (other than goodwill and mortgage servicing assets) subject to the transition provisions of the final rule.

(e) | The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies’ Regulatory Capital Rules (fully phased-in); Key is subject to the Regulatory Capital Rules under the “standardized approach.”

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

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 15

Consolidated Balance Sheets
(dollars in millions)
|  |  | 12/31/2018 |  | 9/30/2018 |  | 12/31/2017 |
Assets |  |  |
| Loans | $ | 89,552 |  | $ | 89,268 |  | $ | 86,405 |
| Loans held for sale | 1,227 |  | 1,618 |  | 1,107 |
| Securities available for sale | 19,428 |  | 18,341 |  | 18,139 |
| Held-to-maturity securities | 11,519 |  | 11,869 |  | 11,830 |
| Trading account assets | 849 |  | 958 |  | 836 |
| Short-term investments | 2,562 |  | 2,272 |  | 4,447 |
| Other investments | 666 |  | 681 |  | 726 |
|  | Total earning assets | 125,803 |  | 125,007 |  | 123,490 |
| Allowance for loan and lease losses | (883 | ) | (887 | ) | (877 | )
| Cash and due from banks | 678 |  | 319 |  | 671 |
| Premises and equipment | 882 |  | 891 |  | 930 |
| Operating lease assets | 993 |  | 930 |  | 821 |
| Goodwill | 2,516 |  | 2,516 |  | 2,538 |
| Other intangible assets | 316 |  | 338 |  | 416 |
| Corporate-owned life insurance | 4,171 |  | 4,156 |  | 4,132 |
| Accrued income and other assets | 4,037 |  | 4,378 |  | 4,237 |
| Discontinued assets | 1,100 |  | 1,157 |  | 1,340 |
|  | Total assets | $ | 139,613 |  | 138,805 |  | 137,698 |
Liabilities |  |  |
| Deposits in domestic offices: |  |  |
|  | NOW and money market deposit accounts | $ | 59,918 |  | $ | 57,219 |  | $ | 53,627 |
|  | Savings deposits | 4,854 |  | 4,948 |  | 6,296 |
|  | Certificates of deposit ($100,000 or more) | 7,913 |  | 8,453 |  | 6,849 |
|  | Other time deposits | 5,332 |  | 5,130 |  | 4,798 |
|  | Total interest-bearing deposits | 78,017 |  | 75,750 |  | 71,570 |
|  | Noninterest-bearing deposits | 29,292 |  | 30,030 |  | 33,665 |
|  | Total deposits | 107,309 |  | 105,780 |  | 105,235 |
| Federal funds purchased and securities sold under repurchase agreements | 319 |  | 1,285 |  | 377 |
| Bank notes and other short-term borrowings | 544 |  | 637 |  | 634 |
| Accrued expense and other liabilities | 2,113 |  | 2,044 |  | 2,094 |
| Long-term debt | 13,732 |  | 13,849 |  | 14,333 |
|  | Total liabilities | 124,017 |  | 123,595 |  | 122,673 |
Equity |  |  |
| Preferred stock | 1,450 |  | 1,450 |  | 1,025 |
| Common shares | 1,257 |  | 1,257 |  | 1,257 |
| Capital surplus | 6,331 |  | 6,315 |  | 6,335 |
| Retained earnings | 11,556 |  | 11,262 |  | 10,335 |
| Treasury stock, at cost | (4,181 | ) | (3,910 | ) | (3,150 | )
| Accumulated other comprehensive income (loss) | (818 | ) | (1,166 | ) | (779 | )
|  | Key shareholders’ equity | 15,595 |  | 15,208 |  | 15,023 |
| Noncontrolling interests | 1 |  | 2 |  | 2 |
|  | Total equity | 15,596 |  | 15,210 |  | 15,025 |
Total liabilities and equity | $ | 139,613 |  | $ | 138,805 |  | $ | 137,698 |
Common shares outstanding (000) | 1,019,503 |  | 1,034,287 |  | 1,069,084 |

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 16

Consolidated Statements of Income
(dollars in millions, except per share amounts)
|  |  | Three months ended |  | Twelve months ended
|  |  | 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 12/31/2018 | 12/31/2017
Interest income |  |  |  |  |  |
| Loans | $ | 1,058 |  | $ | 1,025 |  | $ | 924 |  |  | $ | 4,023 |  | $ | 3,677 |
| Loans held for sale | 26 |  | 12 |  | 13 |  |  | 66 |  | 52 |
| Securities available for sale | 115 |  | 102 |  | 93 |  |  | 409 |  | 369 |
| Held-to-maturity securities | 71 |  | 72 |  | 61 |  |  | 284 |  | 222 |
| Trading account assets | 8 |  | 7 |  | 6 |  |  | 29 |  | 27 |
| Short-term investments | 15 |  | 15 |  | 12 |  |  | 46 |  | 26 |
| Other investments | 4 |  | 6 |  | 5 |  |  | 21 |  | 17 |
|  | Total interest income | 1,297 |  | 1,239 |  | 1,114 |  |  | 4,878 |  | 4,390 |
Interest expense |  |  |  |  |  |
| Deposits | 174 |  | 140 |  | 82 |  |  | 517 |  | 278 |
| Federal funds purchased and securities sold under repurchase agreements | 1 |  | 1 |  | — |  |  | 11 |  | 1 |
| Bank notes and other short-term borrowings | 4 |  | 4 |  | 3 |  |  | 21 |  | 15 |
| Long-term debt | 118 |  | 108 |  | 91 |  |  | 420 |  | 319 |
|  | Total interest expense | 297 |  | 253 |  | 176 |  |  | 969 |  | 613 |
Net interest income | 1,000 |  | 986 |  | 938 |  |  | 3,909 |  | 3,777 |
Provision for credit losses | 59 |  | 62 |  | 49 |  |  | 246 |  | 229 |
Net interest income after provision for credit losses | 941 |  | 924 |  | 889 |  |  | 3,663 |  | 3,548 |
Noninterest income |  |  |  |  |  |
| Trust and investment services income | 121 |  | 117 |  | 131 |  |  | 499 |  | 535 |
| Investment banking and debt placement fees | 186 |  | 166 |  | 200 |  |  | 650 |  | 603 |
| Service charges on deposit accounts | 84 |  | 85 |  | 89 |  |  | 349 |  | 357 |
| Operating lease income and other leasing gains | 28 |  | 35 |  | 27 |  |  | 89 |  | 96 |
| Corporate services income | 58 |  | 52 |  | 56 |  |  | 233 |  | 219 |
| Cards and payments income | 68 |  | 69 |  | 77 |  |  | 270 |  | 287 |
| Corporate-owned life insurance income | 39 |  | 34 |  | 37 |  |  | 137 |  | 131 |
| Consumer mortgage income | 7 |  | 9 |  | 7 |  |  | 30 |  | 26 |
| Mortgage servicing fees | 21 |  | 19 |  | 17 |  |  | 82 |  | 71 |
| Other income (a) | 33 |  | 23 |  | 15 |  |  | 176 |  | 153 |
|  | Total noninterest income | 645 |  | 609 |  | 656 |  |  | 2,515 |  | 2,478 |
Noninterest expense |  |  |  |  |  |
| Personnel | 576 |  | 553 |  | 609 |  |  | 2,309 |  | 2,278 |
| Net occupancy | 75 |  | 76 |  | 92 |  |  | 308 |  | 331 |
| Computer processing | 55 |  | 52 |  | 54 |  |  | 210 |  | 225 |
| Business services and professional fees | 49 |  | 43 |  | 52 |  |  | 184 |  | 192 |
| Equipment | 26 |  | 27 |  | 31 |  |  | 105 |  | 114 |
| Operating lease expense | 32 |  | 31 |  | 28 |  |  | 120 |  | 92 |
| Marketing | 25 |  | 26 |  | 35 |  |  | 102 |  | 120 |
| FDIC assessment | 9 |  | 21 |  | 20 |  |  | 72 |  | 82 |
| Intangible asset amortization | 22 |  | 23 |  | 26 |  |  | 99 |  | 95 |
| OREO expense, net | 1 |  | 3 |  | 3 |  |  | 6 |  | 11 |
| Other expense | 142 |  | 109 |  | 148 |  |  | 460 |  | 558 |
|  | Total noninterest expense | 1,012 |  | 964 |  | 1,098 |  |  | 3,975 |  | 4,098 |
Income (loss) from continuing operations before income taxes | 574 |  | 569 |  | 447 |  |  | 2,203 |  | 1,928 |
| Income taxes | 92 |  | 87 |  | 251 |  |  | 344 |  | 637 |
Income (loss) from continuing operations | 482 |  | 482 |  | 196 |  |  | 1,859 |  | 1,291 |
| Income (loss) from discontinued operations, net of taxes | 2 |  | — |  | 1 |  |  | 7 |  | 7 |
Net income (loss) | 484 |  | 482 |  | 197 |  |  | 1,866 |  | 1,298 |
| Less: Net income (loss) attributable to noncontrolling interests | — |  | — |  | 1 |  |  | — |  | 2 |
Net income (loss) attributable to Key | $ | 484 |  | $ | 482 |  | $ | 196 |  |  | $ | 1,866 |  | $ | 1,296 |
Income (loss) from continuing operations attributable to Key common shareholders | $ | 459 |  | $ | 468 |  | $ | 181 |  |  | $ | 1,793 |  | $ | 1,219 |
Net income (loss) attributable to Key common shareholders | 461 |  | 468 |  | 182 |  |  | 1,800 |  | 1,226 |
Per common share |  |  |  |  |  |
Income (loss) from continuing operations attributable to Key common shareholders | $ | .45 |  | $ | .45 |  | $ | .17 |  |  | $ | 1.72 |  | $ | 1.13 |
Income (loss) from discontinued operations, net of taxes | — |  | — |  | — |  |  | .01 |  | .01 |
Net income (loss) attributable to Key common shareholders (b) | .45 |  | .45 |  | .17 |  |  | 1.73 |  | 1.14 |
Per common share — assuming dilution |  |  |  |  |  |
Income (loss) from continuing operations attributable to Key common shareholders | $ | .45 |  | $ | .45 |  | $ | .17 |  |  | $ | 1.70 |  | $ | 1.12 |
Income (loss) from discontinued operations, net of taxes | — |  | — |  | — |  |  | .01 |  | .01 |
Net income (loss) attributable to Key common shareholders (b) | .45 |  | .45 |  | .17 |  |  | 1.71 |  | 1.13 |
Cash dividends declared per common share | $ | .17 |  | $ | .17 |  | $ | .105 |  |  | $ | .565 |  | $ | .38 |
Weighted-average common shares outstanding (000) | 1,018,614 |  | 1,036,480 |  | 1,062,348 |  |  | 1,040,890 |  | 1,072,077 |
| Effect of common share options and other stock awards | 11,803 |  | 13,497 |  | 16,982 |  |  | 13,792 |  | 16,515 |
Weighted-average common shares and potential common shares outstanding (000) (c) | 1,030,417 |  | 1,049,976 |  | 1,079,330 |  |  | 1,054,682 |  | 1,088,593 |

(a) | For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, net securities gains (losses) totaled less than $1 million. For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, Key did not have any impairment losses related to securities.

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

(c) | Assumes conversion of common share options and other stock awards, as applicable.

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 17

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(dollars in millions)
|  | Fourth Quarter 2018 |  | Third Quarter 2018 |  | Fourth Quarter 2017
|  | 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) | $ | 45,129 |  | 512 |  | 4.51 | % |  | $ | 44,749 |  | 495 |  | 4.39 | % |  | $ | 41,289 |  | 417 |  | 4.01 | %
| Real estate — commercial mortgage | 14,656 |  | 185 |  | 5.03 |  |  | 14,268 |  | 176 |  | 4.89 |  |  | 14,386 |  | 167 |  | 4.60 |
| Real estate — construction | 1,761 |  | 23 |  | 5.26 |  |  | 1,759 |  | 22 |  | 5.05 |  |  | 1,967 |  | 23 |  | 4.55 |
| Commercial lease financing | 4,482 |  | 43 |  | 3.79 |  |  | 4,444 |  | 43 |  | 3.88 |  |  | 4,687 |  | 45 |  | 3.86 |
| Total commercial loans | 66,028 |  | 763 |  | 4.59 |  |  | 65,220 |  | 736 |  | 4.49 |  |  | 62,329 |  | 652 |  | 4.15 |
| Real estate — residential mortgage | 5,496 |  | 54 |  | 3.97 |  |  | 5,466 |  | 55 |  | 3.99 |  |  | 5,474 |  | 54 |  | 3.95 |
| Home equity loans | 11,234 |  | 141 |  | 4.96 |  |  | 11,415 |  | 137 |  | 4.80 |  |  | 12,128 |  | 134 |  | 4.39 |
| Consumer direct loans | 1,806 |  | 36 |  | 7.87 |  |  | 1,789 |  | 35 |  | 7.71 |  |  | 1,782 |  | 32 |  | 7.15 |
| Credit cards | 1,112 |  | 33 |  | 11.61 |  |  | 1,095 |  | 32 |  | 11.43 |  |  | 1,061 |  | 30 |  | 11.14 |
| Consumer indirect loans | 3,612 |  | 39 |  | 4.28 |  |  | 3,482 |  | 37 |  | 4.25 |  |  | 3,232 |  | 36 |  | 4.42 |
| Total consumer loans | 23,260 |  | 303 |  | 5.16 |  |  | 23,247 |  | 296 |  | 5.06 |  |  | 23,677 |  | 286 |  | 4.80 |
| Total loans | 89,288 |  | 1,066 |  | 4.74 |  |  | 88,467 |  | 1,032 |  | 4.64 |  |  | 86,006 |  | 938 |  | 4.33 |
| Loans held for sale | 2,319 |  | 26 |  | 4.50 |  |  | 1,117 |  | 12 |  | 4.59 |  |  | 1,420 |  | 13 |  | 3.81 |
| Securities available for sale (b), (e) | 18,626 |  | 115 |  | 2.38 |  |  | 17,631 |  | 102 |  | 2.22 |  |  | 18,447 |  | 93 |  | 1.97 |
| Held-to-maturity securities (b) | 11,683 |  | 71 |  | 2.42 |  |  | 12,065 |  | 72 |  | 2.40 |  |  | 11,121 |  | 61 |  | 2.20 |
| Trading account assets | 934 |  | 8 |  | 3.42 |  |  | 787 |  | 7 |  | 3.37 |  |  | 898 |  | 6 |  | 2.72 |
| Short-term investments | 2,795 |  | 15 |  | 2.12 |  |  | 2,928 |  | 15 |  | 1.93 |  |  | 3,684 |  | 12 |  | 1.29 |
| Other investments (e) | 671 |  | 4 |  | 2.86 |  |  | 685 |  | 6 |  | 3.27 |  |  | 725 |  | 5 |  | 2.80 |
| Total earning assets | 126,316 |  | 1,305 |  | 4.09 |  |  | 123,680 |  | 1,246 |  | 3.98 |  |  | 122,301 |  | 1,128 |  | 3.66 |
| Allowance for loan and lease losses | (878 | ) |  |  |  | (886 | ) |  |  |  | (871 | ) |  |
| Accrued income and other assets | 13,743 |  |  |  |  | 13,935 |  |  |  |  | 13,825 |  |  |
| Discontinued assets | 1,120 |  |  |  |  | 1,186 |  |  |  |  | 1,358 |  |  |
| Total assets | $ | 140,301 |  |  |  |  | $ | 137,915 |  |  |  |  | $ | 136,613 |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |
| NOW and money market deposit accounts | $ | 59,292 |  | 110 |  | .74 |  |  | $ | 56,391 |  | 82 |  | .58 |  |  | $ | 53,601 |  | 40 |  | .29 |
| Savings deposits | 4,915 |  | 1 |  | .08 |  |  | 5,413 |  | 3 |  | .20 |  |  | 6,372 |  | 3 |  | .24 |
| Certificates of deposit ($100,000 or more) | 8,217 |  | 42 |  | 2.02 |  |  | 8,186 |  | 38 |  | 1.86 |  |  | 6,776 |  | 26 |  | 1.50 |
| Other time deposits | 5,255 |  | 21 |  | 1.59 |  |  | 5,026 |  | 17 |  | 1.40 |  |  | 4,771 |  | 13 |  | 1.05 |
| Total interest-bearing deposits | 77,679 |  | 174 |  | .89 |  |  | 75,016 |  | 140 |  | .74 |  |  | 71,520 |  | 82 |  | .45 |
| Federal funds purchased and securities sold under repurchase agreements | 281 |  | 1 |  | .12 |  |  | 552 |  | 1 |  | 1.00 |  |  | 360 |  | — |  | .08 |
| Bank notes and other short-term borrowings | 618 |  | 4 |  | 3.05 |  |  | 596 |  | 4 |  | 2.76 |  |  | 693 |  | 3 |  | 1.72 |
| Long-term debt (f), (g) | 12,963 |  | 118 |  | 3.58 |  |  | 12,678 |  | 108 |  | 3.34 |  |  | 13,140 |  | 91 |  | 2.76 |
| Total interest-bearing liabilities | 91,541 |  | 297 |  | 1.28 |  |  | 88,842 |  | 253 |  | 1.13 |  |  | 85,713 |  | 176 |  | .81 |
| Noninterest-bearing deposits | 30,273 |  |  |  |  | 30,610 |  |  |  |  | 32,278 |  |  |
| Accrued expense and other liabilities | 1,981 |  |  |  |  | 2,065 |  |  |  |  | 1,994 |  |  |
| Discontinued liabilities (g) | 1,120 |  |  |  |  | 1,186 |  |  |  |  | 1,359 |  |  |
| Total liabilities | 124,915 |  |  |  |  | 122,703 |  |  |  |  | 121,344 |  |  |
Equity |  |  |  |  |  |  |  |  |  |  |
| Key shareholders’ equity | 15,384 |  |  |  |  | 15,210 |  |  |  |  | 15,268 |  |  |
| Noncontrolling interests | 2 |  |  |  |  | 2 |  |  |  |  | 1 |  |  |
| Total equity | 15,386 |  |  |  |  | 15,212 |  |  |  |  | 15,269 |  |  |
| Total liabilities and equity | $ | 140,301 |  |  |  |  | $ | 137,915 |  |  |  |  | $ | 136,613 |  |  |
Interest rate spread (TE) |  |  | 2.81 | % |  |  |  | 2.85 | % |  |  |  | 2.85 | %
Net interest income (TE) and net interest margin (TE) |  | 1,008 |  | 3.16 | % |  |  | 993 |  | 3.18 | % |  |  | 952 |  | 3.09 | %
TE adjustment (b) |  | 8 |  |  |  |  | 7 |  |  |  |  | 14 |  |
| Net interest income, GAAP basis |  | 1,000 |  |  |  |  | 986 |  |  |  |  | 938 |  |

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

(b) | Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 21% for the three months ended December 31, 2018, and September 30, 2018, and 35% for the three months ended December 31, 2017.

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

(d) | Commercial and industrial average balances include $132 million, $128 million, and $119 million of assets from commercial credit cards for the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, 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

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 18

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(dollars in millions)
|  | Twelve months ended December 31, 2018 |  | Twelve months ended December 31, 2017
|  | Average |  | Yield/ |  | Average |  | Yield/
|  | Balance | Interest (a) | Rate (a) |  | Balance | Interest (a) | Rate (a)
Assets |  |  |  |  |  |  |
| Loans: (b), (c) |  |  |  |  |  |  |
| Commercial and industrial (d) | $ | 44,418 |  | $ | 1,926 |  | 4.34 | % |  | $ | 40,848 |  | $ | 1,613 |  | 3.95 | %
| Real estate — commercial mortgage | 14,267 |  | 698 |  | 4.90 |  |  | 14,878 |  | 687 |  | 4.62 |
| Real estate — construction | 1,816 |  | 90 |  | 4.97 |  |  | 2,143 |  | 103 |  | 4.78 |
| Commercial lease financing | 4,534 |  | 168 |  | 3.70 |  |  | 4,677 |  | 185 |  | 3.96 |
| Total commercial loans | 65,035 |  | 2,882 |  | 4.43 |  |  | 62,546 |  | 2,588 |  | 4.14 |
| Real estate — residential mortgage | 5,473 |  | 217 |  | 3.97 |  |  | 5,499 |  | 214 |  | 3.89 |
| Home equity loans | 11,530 |  | 547 |  | 4.74 |  |  | 12,380 |  | 536 |  | 4.33 |
| Consumer direct loans | 1,782 |  | 137 |  | 7.66 |  |  | 1,765 |  | 126 |  | 7.12 |
| Credit cards | 1,092 |  | 125 |  | 11.40 |  |  | 1,055 |  | 118 |  | 11.15 |
| Consumer indirect loans | 3,426 |  | 146 |  | 4.27 |  |  | 3,120 |  | 148 |  | 4.75 |
| Total consumer loans | 23,303 |  | 1,172 |  | 5.03 |  |  | 23,819 |  | 1,142 |  | 4.79 |
| Total loans | 88,338 |  | 4,054 |  | 4.59 |  |  | 86,365 |  | 3,730 |  | 4.32 |
| Loans held for sale | 1,501 |  | 66 |  | 4.43 |  |  | 1,325 |  | 52 |  | 3.96 |
| Securities available for sale (b), (e) | 17,898 |  | 409 |  | 2.20 |  |  | 18,548 |  | 369 |  | 1.96 |
| Held-to-maturity securities (b) | 12,003 |  | 284 |  | 2.37 |  |  | 10,515 |  | 222 |  | 2.11 |
| Trading account assets | 893 |  | 29 |  | 3.25 |  |  | 949 |  | 27 |  | 2.81 |
| Short-term investments | 2,450 |  | 46 |  | 1.86 |  |  | 2,363 |  | 26 |  | 1.11 |
| Other investments (e) | 697 |  | 21 |  | 3.04 |  |  | 712 |  | 17 |  | 2.35 |
| Total earning assets | 123,780 |  | 4,909 |  | 3.94 |  |  | 120,777 |  | 4,443 |  | 3.67 |
| Allowance for loan and lease losses | (878 | ) |  |  |  | (865 | ) |  |
| Accrued income and other assets | 13,910 |  |  |  |  | 13,807 |  |  |
| Discontinued assets | 1,212 |  |  |  |  | 1,448 |  |  |
| Total assets | $ | 138,024 |  |  |  |  | $ | 135,167 |  |  |
Liabilities |  |  |  |  |  |  |
| NOW and money market deposit accounts | $ | 56,001 |  | 297 |  | .53 |  |  | $ | 54,032 |  | 143 |  | .26 |
| Savings deposits | 5,704 |  | 14 |  | .24 |  |  | 6,569 |  | 13 |  | .20 |
| Certificates of deposit ($100,000 or more) | 7,728 |  | 139 |  | 1.80 |  |  | 6,233 |  | 82 |  | 1.31 |
| Other time deposits | 5,025 |  | 67 |  | 1.34 |  |  | 4,698 |  | 40 |  | .85 |
| Total interest-bearing deposits | 74,458 |  | 517 |  | .69 |  |  | 71,532 |  | 278 |  | .39 |
| Federal funds purchased and securities sold under repurchase agreements | 928 |  | 11 |  | 1.14 |  |  | 517 |  | 1 |  | .24 |
| Bank notes and other short-term borrowings | 915 |  | 21 |  | 2.34 |  |  | 1,140 |  | 15 |  | 1.34 |
| Long-term debt (f), (g) | 12,715 |  | 420 |  | 3.27 |  |  | 11,921 |  | 319 |  | 2.69 |
| Total interest-bearing liabilities | 89,016 |  | 969 |  | 1.09 |  |  | 85,110 |  | 613 |  | .72 |
| Noninterest-bearing deposits | 30,593 |  |  |  |  | 31,414 |  |  |
| Accrued expense and other liabilities | 2,071 |  |  |  |  | 1,970 |  |  |
| Discontinued liabilities (g) | 1,212 |  |  |  |  | 1,448 |  |  |
| Total liabilities | 122,892 |  |  |  |  | 119,942 |  |  |
Equity |  |  |  |  |  |  |
| Key shareholders’ equity | 15,131 |  |  |  |  | 15,224 |  |  |
| Noncontrolling interests | 1 |  |  |  |  | 1 |  |  |
| Total equity | 15,132 |  |  |  |  | 15,225 |  |  |
| Total liabilities and equity | $ | 138,024 |  |  |  |  | $ | 135,167 |  |  |
Interest rate spread (TE) |  |  | 2.85 | % |  |  |  | 2.95 | %
Net interest income (TE) and net interest margin (TE) |  | 3,940 |  | 3.17 | % |  |  | 3,830 |  | 3.17 | %
TE adjustment (b) |  | 31 |  |  |  |  | 53 |  |
| Net interest income, GAAP basis |  | $ | 3,909 |  |  |  |  | $ | 3,777 |  |

(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% and 35% for the twelve months ended December 31, 2018, and December 31, 2017, respectively.

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

(d) | Commercial and industrial average balances include $126 million and $117 million of assets from commercial credit cards for the twelve months ended December 31, 2018, and December 31, 2017, 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

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 19

Noninterest Expense
(dollars in millions)
| Three months ended |  | Twelve months ended
| 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 12/31/2018 | 12/31/2017
Personnel | $ | 576 |  | $ | 553 |  | $ | 609 |  |  | $ | 2,309 |  | $ | 2,278 |
Net occupancy | 75 |  | 76 |  | 92 |  |  | 308 |  | 331 |
Computer processing | 55 |  | 52 |  | 54 |  |  | 210 |  | 225 |
Business services and professional fees | 49 |  | 43 |  | 52 |  |  | 184 |  | 192 |
Equipment | 26 |  | 27 |  | 31 |  |  | 105 |  | 114 |
Operating lease expense | 32 |  | 31 |  | 28 |  |  | 120 |  | 92 |
Marketing | 25 |  | 26 |  | 35 |  |  | 102 |  | 120 |
FDIC assessment | 9 |  | 21 |  | 20 |  |  | 72 |  | 82 |
Intangible asset amortization | 22 |  | 23 |  | 26 |  |  | 99 |  | 95 |
OREO expense, net | 1 |  | 3 |  | 3 |  |  | 6 |  | 11 |
Other expense | 142 |  | 109 |  | 148 |  |  | 460 |  | 558 |
Total noninterest expense | $ | 1,012 |  | $ | 964 |  | $ | 1,098 |  |  | $ | 3,975 |  | $ | 4,098 |
Average full-time equivalent employees (b) | 17,664 |  | 18,150 |  | 18,379 |  |  | 18,180 |  | 18,415 |

(a) | Additional detail provided in Personnel Expense table below.

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

Personnel Expense
(in millions)
| Three months ended |  | Twelve months ended
| 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 12/31/2018 | 12/31/2017
Salaries and contract labor | $ | 336 |  | $ | 335 |  | $ | 346 |  |  | $ | 1,351 |  | $ | 1,341 |
Incentive and stock-based compensation | 139 |  | 138 |  | 168 |  |  | 569 |  | 566 |
Employee benefits | 77 |  | 79 |  | 91 |  |  | 343 |  | 347 |
Severance | 24 |  | 1 |  | 4 |  |  | 46 |  | 24 |
Total personnel expense | $ | 576 |  | $ | 553 |  | $ | 609 |  |  | $ | 2,309 |  | $ | 2,278 |

Merger-Related Charges
(in millions)
| Three months ended |  | Twelve months ended
| 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 12/31/2018 | 12/31/2017
Personnel | — |  | — |  | $ | 26 |  |  | — |  | $ | 112 |
Net occupancy | — |  | — |  | 12 |  |  | — |  | 14 |
Business services and professional fees | — |  | — |  | 3 |  |  | — |  | 16 |
Computer processing | — |  | — |  | 1 |  |  | — |  | 12 |
Marketing | — |  | — |  | 5 |  |  | — |  | 22 |
Other nonpersonnel expense | — |  | — |  | 9 |  |  | — |  | 41 |
Total merger-related charges | — |  | — |  | $ | 56 |  |  | — |  | $ | 217 |

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 20

Loan Composition
(dollars in millions)
|  |  | Percent change 12/31/2018 vs
| 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 9/30/2018 | 12/31/2017
Commercial and industrial (a) | $ | 45,753 |  | $ | 45,023 |  | $ | 41,859 |  |  | 1.6 | % | 9.3 | %
Commercial real estate: |  |  |  |  |  |  |  |
Commercial mortgage | 14,285 |  | 14,716 |  | 14,088 |  |  | (2.9 | ) | 1.4 |
Construction | 1,666 |  | 1,763 |  | 1,960 |  |  | (5.5 | ) | (15.0 | )
Total commercial real estate loans | 15,951 |  | 16,479 |  | 16,048 |  |  | (3.2 | ) | (.6 | )
Commercial lease financing (b) | 4,606 |  | 4,470 |  | 4,826 |  |  | 3.0 |  | (4.6 | )
Total commercial loans | 66,310 |  | 65,972 |  | 62,733 |  |  | .5 |  | 5.7 |
Residential — prime loans: |  |  |  |  |  |  |  |
Real estate — residential mortgage | 5,513 |  | 5,497 |  | 5,483 |  |  | .3 |  | .5 |
Home equity loans | 11,142 |  | 11,339 |  | 12,028 |  |  | (1.7 | ) | (7.4 | )
Total residential — prime loans | 16,655 |  | 16,836 |  | 17,511 |  |  | (1.1 | ) | (4.9 | )
Consumer direct loans | 1,809 |  | 1,807 |  | 1,794 |  |  | .1 |  | .8 |
Credit cards | 1,144 |  | 1,098 |  | 1,106 |  |  | 4.2 |  | 3.4 |
Consumer indirect loans | 3,634 |  | 3,555 |  | 3,261 |  |  | 2.2 |  | 11.4 |
Total consumer loans | 23,242 |  | 23,296 |  | 23,672 |  |  | (.2 | ) | (1.8 | )
Total loans (c) | $ | 89,552 |  | $ | 89,268 |  | $ | 86,405 |  |  | .3 | % | 3.6 | %

(a) | Loan balances include $132 million, $129 million, and $119 million of commercial credit card balances at December 31, 2018, September 30, 2018, and December 31, 2017, respectively.

(b) | Commercial lease financing includes receivables held as collateral for a secured borrowing of $10 million, $12 million, and $24 million at December 31, 2018, September 30, 2018, and December 31, 2017, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c) | Total loans exclude loans of $1.1 billion at December 31, 2018, $1.1 billion at September 30, 2018, and $1.3 billion at December 31, 2017, related to the discontinued operations of the education lending business.

Loans Held for Sale Composition
(dollars in millions)
|  |  |  |  | Percent change 12/31/2018 vs
| 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 9/30/2018 | 12/31/2017
Commercial and industrial | $ | 279 |  | $ | 97 |  | $ | 139 |  |  | 187.6 | % | 100.7 | %
Real estate — commercial mortgage | 894 |  | 1,433 |  | 897 |  |  | (37.6 | ) | (0.3 | )
Commercial lease financing | — |  | 1 |  | — |  |  | N/M |  | N/M |
Real estate — residential mortgage | 54 |  | 87 |  | 71 |  |  | (37.9 | ) | (23.9 | )
Total loans held for sale (a) | $ | 1,227 |  | $ | 1,618 |  | $ | 1,107 |  |  | (24.2 | )% | 10.8 | %

(a) | Total loans held for sale include Real estate — residential mortgage loans held for sale at fair value of $54 million at December 31, 2018, $87 million at September 30, 2018, and $71 million at December 31, 2017.

N/M = Not Meaningful

Summary of Changes in Loans Held for Sale
(in millions)
| 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q17
Balance at beginning of period | $ | 1,618 |  | $ | 1,418 |  | $ | 1,667 |  | $ | 1,107 |  | $ | 1,341 |
New originations | 5,057 |  | 2,976 |  | 2,665 |  | 3,280 |  | 3,566 |
Transfers from (to) held to maturity, net | 24 |  | 4 |  | (4 | ) | (14 | ) | (10 | )
Loan sales | (5,448 | ) | (2,491 | ) | (2,909 | ) | (2,705 | ) | (3,783 | )
Loan draws (payments), net | (24 | ) | (289 | ) | (1 | ) | (1 | ) | (7 | )
Balance at end of period (a) | $ | 1,227 |  | $ | 1,618 |  | $ | 1,418 |  | $ | 1,667 |  | $ | 1,107 |

(a) | Total loans held for sale include Real estate — residential mortgage loans held for sale at fair value of $54 million at December 31, 2018, $87 million at September 30, 2018, $58 million at June 30, 2018, $47 million at March 31, 2018, and $71 million at December 31, 2017.

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 21

Summary of Loan and Lease Loss Experience From Continuing Operations
(dollars in millions)
| Three months ended |  | Twelve months ended
| 12/31/2018 | 9/30/2018 | 12/31/2017 |  | 12/31/2018 | 12/31/2017
Average loans outstanding | $ | 89,288 |  | $ | 88,467 |  | $ | 86,006 |  |  | $ | 88,338 |  | $ | 86,365 |
Allowance for loan and lease losses at beginning of period | $ | 887 |  | $ | 887 |  | $ | 880 |  |  | $ | 877 |  | $ | 858 |
Loans charged off: |  |  |  |  |  |
Commercial and industrial | 45 |  | 38 |  | 32 |  |  | 159 |  | 133 |
Real estate — commercial mortgage | 12 |  | 6 |  | 2 |  |  | 21 |  | 11 |
Real estate — construction | — |  | — |  | — |  |  | — |  | 2 |
Total commercial real estate loans | 12 |  | 6 |  | 2 |  |  | 21 |  | 13 |
Commercial lease financing | 1 |  | 4 |  | 5 |  |  | 10 |  | 14 |
Total commercial loans | 58 |  | 48 |  | 39 |  |  | 190 |  | 160 |
Real estate — residential mortgage | — |  | 2 |  | 1 |  |  | 3 |  | 3 |
Home equity loans | 7 |  | 4 |  | 7 |  |  | 21 |  | 30 |
Consumer direct loans | 9 |  | 10 |  | 8 |  |  | 36 |  | 34 |
Credit cards | 10 |  | 10 |  | 10 |  |  | 44 |  | 44 |
Consumer indirect loans | 8 |  | 7 |  | 7 |  |  | 30 |  | 31 |
Total consumer loans | 34 |  | 33 |  | 33 |  |  | 134 |  | 142 |
Total loans charged off | 92 |  | 81 |  | 72 |  |  | 324 |  | 302 |
Recoveries: |  |  |  |  |  |
Commercial and industrial | 19 |  | 5 |  | 8 |  |  | 37 |  | 40 |
Real estate — commercial mortgage | 1 |  | 1 |  | 1 |  |  | 3 |  | 2 |
Real estate — construction | 1 |  | — |  | — |  |  | 2 |  | 1 |
Total commercial real estate loans | 2 |  | 1 |  | 1 |  |  | 5 |  | 3 |
Commercial lease financing | 1 |  | 3 |  | 1 |  |  | 5 |  | 6 |
Total commercial loans | 22 |  | 9 |  | 10 |  |  | 47 |  | 49 |
Real estate — residential mortgage | — |  | 2 |  | — |  |  | 2 |  | 4 |
Home equity loans | 2 |  | 3 |  | 3 |  |  | 11 |  | 15 |
Consumer direct loans | 2 |  | 1 |  | 2 |  |  | 7 |  | 6 |
Credit cards | 2 |  | 2 |  | 1 |  |  | 7 |  | 5 |
Consumer indirect loans | 4 |  | 4 |  | 4 |  |  | 16 |  | 15 |
Total consumer loans | 10 |  | 12 |  | 10 |  |  | 43 |  | 45 |
Total recoveries | 32 |  | 21 |  | 20 |  |  | 90 |  | 94 |
Net loan charge-offs | (60 | ) | (60 | ) | (52 | ) |  | (234 | ) | (208 | )
Provision (credit) for loan and lease losses | 56 |  | 60 |  | 49 |  |  | 240 |  | 227 |
Allowance for loan and lease losses at end of period | $ | 883 |  | $ | 887 |  | $ | 877 |  |  | $ | 883 |  | $ | 877 |
Liability for credit losses on lending-related commitments at beginning of period | $ | 60 |  | $ | 58 |  | $ | 57 |  |  | $ | 57 |  | $ | 55 |
Provision (credit) for losses on lending-related commitments | 3 |  | 2 |  | — |  |  | 6 |  | 2 |
Liability for credit losses on lending-related commitments at end of period (a) | $ | 63 |  | $ | 60 |  | $ | 57 |  |  | $ | 63 |  | $ | 57 |
Total allowance for credit losses at end of period | $ | 946 |  | $ | 947 |  | $ | 934 |  |  | $ | 946 |  | $ | 934 |
Net loan charge-offs to average total loans | .27 | % | .27 | % | .24 | % |  | .26 | % | .24 | %
Allowance for loan and lease losses to period-end loans | .99 |  | .99 |  | 1.01 |  |  | .99 |  | 1.01 |
Allowance for credit losses to period-end loans | 1.06 |  | 1.06 |  | 1.08 |  |  | 1.06 |  | 1.08 |
Allowance for loan and lease losses to nonperforming loans | 162.9 |  | 137.5 |  | 174.4 |  |  | 162.9 |  | 174.4 |
Allowance for credit losses to nonperforming loans | 174.5 |  | 146.8 |  | 185.7 |  |  | 174.5 |  | 185.7 |
Discontinued operations — education lending business: |  |  |  |  |  |
Loans charged off | $ | 4 |  | $ | 4 |  | $ | 6 |  |  | $ | 15 |  | $ | 26 |
Recoveries | 1 |  | 1 |  | 2 |  |  | 5 |  | 8 |
Net loan charge-offs | $ | (3 | ) | $ | (3 | ) | $ | (4 | ) |  | $ | (10 | ) | $ | (18 | )

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

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 22

Asset Quality Statistics From Continuing Operations
(dollars in millions)
| 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q17
Net loan charge-offs | $ | 60 |  | $ | 60 |  | $ | 60 |  | $ | 54 |  | $ | 52 |
Net loan charge-offs to average total loans | .27 | % | .27 | % | .27 | % | .25 | % | .24 | %
Allowance for loan and lease losses | $ | 883 |  | $ | 887 |  | $ | 887 |  | $ | 881 |  | $ | 877 |
Allowance for credit losses (a) | 946 |  | 947 |  | 945 |  | 941 |  | 934 |
Allowance for loan and lease losses to period-end loans | .99 | % | .99 | % | 1.01 | % | 1.00 | % | 1.01 | %
Allowance for credit losses to period-end loans | 1.06 |  | 1.06 |  | 1.07 |  | 1.07 |  | 1.08 |
Allowance for loan and lease losses to nonperforming loans (b) | 162.9 |  | 137.5 |  | 162.8 |  | 162.8 |  | 174.4 |
Allowance for credit losses to nonperforming loans (b) | 174.5 |  | 146.8 |  | 173.4 |  | 173.9 |  | 185.7 |
Nonperforming loans at period end (b) | $ | 542 |  | $ | 645 |  | $ | 545 |  | $ | 541 |  | $ | 503 |
Nonperforming assets at period end (b) | 577 |  | 674 |  | 571 |  | 569 |  | 534 |
Nonperforming loans to period-end portfolio loans (b) | .61 | % | .72 | % | .62 | % | .61 | % | .58 | %
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets (b) | .64 |  | .75 |  | .65 |  | .65 |  | .62 |

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

(b) | Nonperforming loan balances exclude $575 million, $606 million, $629 million, $690 million, and $738 million of purchased credit impaired loans at December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018, and December 31, 2017, respectively.

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
(dollars in millions)
| 12/31/2018 | 9/30/2018 | 6/30/2018 | 3/31/2018 | 12/31/2017
Commercial and industrial | $ | 152 |  | $ | 227 |  | $ | 178 |  | $ | 189 |  | $ | 153 |
Real estate — commercial mortgage | 81 |  | 98 |  | 42 |  | 33 |  | 30 |
Real estate — construction | 2 |  | 2 |  | 2 |  | 2 |  | 2 |
Total commercial real estate loans | 83 |  | 100 |  | 44 |  | 35 |  | 32 |
Commercial lease financing | 9 |  | 10 |  | 21 |  | 5 |  | 6 |
Total commercial loans | 244 |  | 337 |  | 243 |  | 229 |  | 191 |
Real estate — residential mortgage | 62 |  | 62 |  | 55 |  | 59 |  | 58 |
Home equity loans | 210 |  | 221 |  | 222 |  | 229 |  | 229 |
Consumer direct loans | 4 |  | 4 |  | 4 |  | 4 |  | 4 |
Credit cards | 2 |  | 2 |  | 2 |  | 2 |  | 2 |
Consumer indirect loans | 20 |  | 19 |  | 19 |  | 18 |  | 19 |
Total consumer loans | 298 |  | 308 |  | 302 |  | 312 |  | 312 |
Total nonperforming loans (a) | 542 |  | 645 |  | 545 |  | 541 |  | 503 |
OREO | 35 |  | 28 |  | 26 |  | 28 |  | 31 |
Other nonperforming assets | — |  | 1 |  | — |  | — |  | — |
Total nonperforming assets (a) | $ | 577 |  | $ | 674 |  | $ | 571 |  | $ | 569 |  | $ | 534 |
Accruing loans past due 90 days or more | 112 |  | 87 |  | 103 |  | 82 |  | 89 |
Accruing loans past due 30 through 89 days | 312 |  | 368 |  | 429 |  | 305 |  | 359 |
Restructured loans — accruing and nonaccruing (b) | 399 |  | 366 |  | 347 |  | 317 |  | 317 |
Restructured loans included in nonperforming loans (b) | 247 |  | 211 |  | 184 |  | 179 |  | 189 |
Nonperforming assets from discontinued operations — education lending business | 8 |  | 6 |  | 6 |  | 6 |  | 7 |
Nonperforming loans to period-end portfolio loans (a) | .61 | % | .72 | % | .62 | % | .61 | % | .58 | %
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets (a) | .64 |  | .75 |  | .65 |  | .65 |  | .62 |

(a) | Nonperforming loan balances exclude $575 million, $606 million, $629 million, $690 million, and $738 million of purchased credit impaired loans at December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018, and December 31, 2017, respectively.

(b) | 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)
| 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q17
Balance at beginning of period | $ | 645 |  | $ | 545 |  | $ | 541 |  | $ | 503 |  | $ | 517 |
Loans placed on nonaccrual status | 103 |  | 263 |  | 175 |  | 182 |  | 137 |
Charge-offs | (92 | ) | (81 | ) | (78 | ) | (70 | ) | (67 | )
Loans sold | (16 | ) | — |  | (1 | ) | — |  | — |
Payments | (53 | ) | (57 | ) | (33 | ) | (29 | ) | (52 | )
Transfers to OREO | (10 | ) | (5 | ) | (5 | ) | (4 | ) | (8 | )
Loans returned to accrual status | (35 | ) | (20 | ) | (54 | ) | (41 | ) | (24 | )
Balance at end of period (a) | $ | 542 |  | $ | 645 |  | $ | 545 |  | $ | 541 |  | $ | 503 |

(a) | Nonperforming loan balances exclude $575 million, $606 million, $629 million, $690 million, and $738 million of purchased credit impaired loans at December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018, and December 31, 2017, respectively.

KeyCorp Reports Fourth Quarter 2018 Profit
January 17, 2019
Page 23

Line of Business Results
(dollars in millions)
|  |  |  |  |  |  | Percentage change 4Q18 vs.
| 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q17 |  | 3Q18 | 4Q17
Key Community Bank |  |  |  |  |  |  |  |
Summary of operations |  |  |  |  |  |  |  |
Total revenue (TE) | $ | 1,022 |  | $ | 994 |  | $ | 997 |  | $ | 959 |  | $ | 961 |  |  | 2.8 | % | 6.3 | %
Provision for credit losses | 48 |  | 43 |  | 38 |  | 48 |  | 57 |  |  | 11.6 |  | (15.8 | )
Noninterest expense | 633 |  | 635 |  | 640 |  | 653 |  | 665 |  |  | (.3 | ) | (4.8 | )
Net income (loss) attributable to Key | 261 |  | 241 |  | 243 |  | 197 |  | 152 |  |  | 8.3 |  | 71.7 |
Average loans and leases | 47,976 |  | 47,862 |  | 47,985 |  | 47,683 |  | 47,408 |  |  | .2 |  | 1.2 |
Average deposits | 84,288 |  | 82,259 |  | 80,930 |  | 79,945 |  | 80,352 |  |  | 2.5 |  | 4.9 |
Net loan charge-offs | 42 |  | 43 |  | 34 |  | 42 |  | 35 |  |  | (2.3 | ) | 20.0 |
Net loan charge-offs to average total loans | .35 | % | .36 | % | .28 | % | .36 | % | .29 | % |  | N/A |  | N/A |
Nonperforming assets at period end | $ | 408 |  | $ | 467 |  | $ | 468 |  | $ | 425 |  | $ | 405 |  |  | (12.6 | ) | .7 |
Return on average allocated equity | 21.55 | % | 19.80 | % | 20.05 | % | 16.51 | % | 12.46 | % |  | N/A |  | N/A |
Average full-time equivalent employees | 10,195 |  | 10,529 |  | 10,619 |  | 10,666 |  | 10,629 |  |  | (3.2 | ) | (4.1 | )
Key Corporate Bank |  |  |  |  |  |  |  |
Summary of operations |  |  |  |  |  |  |  |
Total revenue (TE) | $ | 581 |  | $ | 574 |  | $ | 542 |  | $ | 558 |  | $ | 605 |  |  | 1.2 | % | (4.0 | )%
Provision for credit losses | 12 |  | 20 |  | 28 |  | 14 |  | (6 | ) |  | (40.0 | ) | N/M |
Noninterest expense | 329 |  | 316 |  | 325 |  | 312 |  | 352 |  |  | 4.1 |  | (6.5 | )
Net income (loss) attributable to Key | 215 |  | 199 |  | 167 |  | 208 |  | 223 |  |  | 8.0 |  | (3.6 | )
Average loans and leases | 40,438 |  | 39,714 |  | 39,709 |  | 38,257 |  | 37,457 |  |  | 1.8 |  | 8.0 |
Average loans held for sale | 2,249 |  | 1,042 |  | 1,299 |  | 1,118 |  | 1,345 |  |  | 115.8 |  | 67.2 |
Average deposits | 21,793 |  | 21,056 |  | 21,057 |  | 20,815 |  | 21,558 |  |  | 3.5 |  | 1.1 |
Net loan charge-offs | 16 |  | 19 |  | 26 |  | 11 |  | 16 |  |  | (15.8 | ) | — |
Net loan charge-offs to average total loans | .16 | % | .19 | % | .26 | % | .12 | % | .17 | % |  | N/A |  | N/A |
Nonperforming assets at period end | $ | 161 |  | $ | 196 |  | $ | 91 |  | $ | 127 |  | $ | 109 |  |  | (17.9 | ) | 47.7 |
Return on average allocated equity | 28.91 | % | 26.91 | % | 22.80 | % | 29.49 | % | 31.51 | % |  | N/A |  | N/A |
Average full-time equivalent employees | 2,486 |  | 2,546 |  | 2,537 |  | 2,543 |  | 2,418 |  |  | (2.4 | ) | 2.8 |

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