KeyCorp (KEY) 8-K Keycorp Reports Second Quarter 2004 Earnings

Exhibit 99.1

Analyst Contact:	Vernon L. Patterson	Media Contact:	Gary Cavano
	216.689.0520		216.689.0517
Investor Relations		Key Media
Information:	www.Key.com/ir	Newsroom:	www.Key.com/newsroom

FOR IMMEDIATE RELEASE

KEYCORP REPORTS SECOND QUARTER 2004 EARNINGS

• EPS of $0.58 for the second quarter

• Continued improvement in asset quality

• Strong capital position; 6 million shares repurchased

CLEVELAND, July 16, 2004 — KeyCorp (NYSE: KEY) today announced second quarter net income of $239 million, or $0.58 per diluted common share, compared with $225 million, or $0.53 per share, for the second quarter of 2003. For the first quarter of 2004, net income was $250 million, or $0.59 per diluted common share.

     “Key’s performance continued to improve in the second quarter,” said Chairman and Chief Executive Officer Henry L. Meyer III. “Noninterest income benefited from the stronger performance of our market-sensitive businesses, including investment banking and other capital markets activities. In addition, asset quality continued to improve as nonperforming loans decreased for the seventh consecutive quarter. At June 30, these loans were at their lowest level since December 31, 1999.

     “We also saw a modest, but encouraging, increase in commercial loan balances during the quarter. The increased demand for commercial loans was geographically broad-based and spread among a number of industry sectors.”

     The Company expects earnings to be in the range of $0.57 to $0.61 per share for the third quarter of 2004 and $2.35 to $2.45 per share for the full year.

SUMMARY OF CONSOLIDATED RESULTS

     Taxable-equivalent net interest income was $658 million for the second quarter of 2004, compared with $685 million in the previous quarter. A 17 basis point reduction in Key’s net interest margin caused the decrease, while average earning assets grew by $493 million. Increases in commercial loans and short-term investments more than offset declines in consumer loans (primarily due to sales in the home equity and indirect lending portfolios) and securities. Compared with the second quarter of 2003, taxable-equivalent net interest income decreased by $52 million due to a lower net interest margin and a slight reduction in average earning assets.

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 2

     Key’s noninterest income was $446 million for the second quarter of 2004, up from $431 million for the first quarter. A $27 million increase in income from investment banking and capital markets activities drove the improvement. In addition, noninterest income benefited from smaller increases in several other fee-based components, including electronic banking fees, letter of credit and loan fees, and service charges on deposit accounts. These positive results were offset in part by a $24 million decrease in net gains from loan securitizations and sales. Compared with the year-ago quarter, noninterest income grew by $12 million. Stronger financial markets contributed to a $15 million increase in income from investment banking and capital markets activities, and an $11 million increase in income from trust and investment services. In addition, Key recorded net gains of $4 million on the residual values of leased vehicles and equipment in the second quarter of 2004, compared with net losses of $7 million for the same period last year. These improvements were partially offset by a $13 million decrease in net gains from loan securitizations and sales, and a $5 million decrease in service charges on deposit accounts.

     Noninterest expense of $679 million for the second quarter of 2004 was up from $659 million in the prior quarter, due primarily to an increase in franchise and business tax expense (included in “Other expense”), and higher costs associated with marketing, occupancy and computer processing. Compared with the second quarter of 2003, noninterest expense decreased by $9 million due to a variety of factors.

ASSET QUALITY

     Key’s provision for loan losses was $74 million for the second quarter of 2004, down from $81 million for the first quarter of 2004 and $125 million for the year-ago quarter.

     Net loan charge-offs for the quarter totaled $104 million, or 0.67% of average loans, compared with $111 million, or 0.71%, for the previous quarter and $141 million, or 0.90%, for the same period last year.

     During the second quarter of 2004, Key’s nonperforming loans decreased by $133 million to $454 million, due primarily to reductions in the middle market, large corporate and healthcare portfolios. Nonperforming loans represented 0.71% of loans outstanding at June 30, 2004, down from 0.94% at March 31, 2004, and 1.32% at June 30, 2003.

     Key’s allowance for loan losses stood at $1.3 billion, or 1.99% of loans outstanding at June 30, 2004, compared with $1.3 billion, or 2.09% at March 31, 2004, and $1.4 billion, or 2.22% at June 30, 2003. At June 30, 2004, the allowance for loan losses represented 281% of nonperforming loans, compared with 222% at March 31, 2004, and 168% a year ago.

CAPITAL

     Key’s capital ratios continued to exceed all “well-capitalized” regulatory benchmarks at June 30, 2004. Key’s tangible equity to tangible assets ratio was 6.64% at quarter end, compared with 6.98% at March 31, 2004, and 6.90% at June 30, 2003.

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 3

     Key’s strong capital position provides the Company with the flexibility to take advantage of future investment opportunities, to repurchase shares when appropriate and to pay dividends. During the second quarter of 2004, Key repurchased 6 million of its common shares under an authorization that allows for the repurchase of up to 25 million shares. At June 30, 2004, there were 7 million shares remaining for repurchase under that authorization. Share repurchases and other activities that caused the change in Key’s outstanding common shares over the past five quarters are summarized in the table below.

Summary of Changes in Common Shares Outstanding

in thousands	2Q04			1Q04			4Q03			3Q03			2Q03
Shares outstanding at beginning of period		412,153			416,494			419,266			421,074			422,783
Issuance of shares under employee benefit and dividend reinvestment plans		1,128			3,659			1,228			692			1,291
Repurchase of common shares		(6,038	)		(8,000	)		(4,000	)		(2,500	)		(3,000	)
Shares outstanding at end of period		407,243			412,153			416,494			419,266			421,074

LINE OF BUSINESS RESULTS

     The following table summarizes the contribution made by each major business group to Key’s taxable-equivalent revenue and net income for the periods presented. The specific lines of business that comprise each of the major business groups are described under the heading “Line of Business Descriptions.” For more detailed financial information pertaining to each business group and its respective lines of business, see the last three pages of this release.

Major Business Groups

										Percent change 2Q04 vs.
dollars in millions	2Q04			1Q04			2Q03			1Q04			2Q03
Revenue (taxable equivalent)
Consumer Banking	$	551		$	573		$	586			(3.8	)%		(6.0	)%
Corporate and Investment Banking		362			353			366			2.5			(1.1	)
Investment Management Services		202			205			187			(1.5	)		8.0
Other Segments		15			4			29			275.0			(48.3	)
Total segments		1,130			1,135			1,168			(.4	)		(3.3	)
Reconciling Items		(26	)		(19	)		(24	)		(36.8	)		(8.3	)
Total	$	1,104		$	1,116		$	1,144			(1.1	)		(3.5	)
Net income (loss)											`
Consumer Banking	$	98		$	109		$	102			(10.1	)%		(3.9	)%
Corporate and Investment Banking		105			105			86			—			22.1
Investment Management Services		24			33			16			(27.3	)		50.0
Other Segments		14			7			23			100.0			(39.1	)
Total segments		241			254			227			(5.1	)		6.2
Reconciling Items		(2	)		(4	)		(2	)		50.0			—
Total	$	239		$	250		$	225			(4.4	)		6.2

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 4

Consumer Banking

										Percent change 2Q04 vs.
dollars in millions	2Q04			1Q04			2Q03			1Q04			2Q03
Summary of operations
Net interest income (TE)	$	431		$	446		$	463			(3.4	)%		(6.9	)%
Noninterest income		120			127			123			(5.5	)		(2.4	)
Total revenue (TE)		551			573			586			(3.8	)		(6.0	)
Provision for loan losses		46			59			65			(22.0	)		(29.2	)
Noninterest expense		348			339			358			2.7			(2.8	)
Income before income taxes (TE)		157			175			163			(10.3	)		(3.7	)
Allocated income taxes and TE adjustments		59			66			61			(10.6	)		(3.3	)
Net income	$	98		$	109		$	102			(10.1	)		(3.9	)
Percent of consolidated net income		41	%		44	%		45	%		N/A			N/A
Average balances
Loans	$	29,363		$	29,736		$	28,962			(1.3	)%		1.4	%
Total assets		31,953			32,222			31,451			(.8	)		1.6
Deposits		35,021			34,737			34,828			.8			.6

TE = Taxable Equivalent, N/A = Not Applicable

Additional Consumer Banking Data

										Percent change 2Q04 vs.
dollars in millions	2Q04			1Q04			2Q03			1Q04			2Q03
Average deposits outstanding
Noninterest-bearing	$	5,638		$	5,519		$	5,458			2.2	%		3.3	%
Money market deposit accounts and other savings		16,284			15,672			15,185			3.9			7.2
Time		13,099			13,546			14,185			(3.3	)		(7.7	)
Total deposits	$	35,021		$	34,737		$	34,828			.8			.6
Home equity loans
Retail Banking and Small Business:
Average balance	$	8,608		$	8,412		$	7,964
Average loan-to-value ratio		72	%		72	%		72	%
Percent first lien positions		60			59			56
National Home Equity:
Average balance	$	4,504		$	5,067		$	5,086
Average loan-to-value ratio		72	%		73	%		75	%
Percent first lien positions		78			79			81
Other data
On-line clients / household penetration		882,088/42	%		828,047/41	%		665,781/35	%
KeyCenters		902			903			903
Automated teller machines		2,166			2,172			2,159

     Net income for Consumer Banking was $98 million for the second quarter of 2004, representing a $4 million decrease from the year-ago quarter. The decrease was attributable to a reduction in taxable-equivalent revenue, which was offset substantially by a decline in noninterest expense and a lower provision for loan losses.

     Taxable-equivalent net interest income decreased by $32 million, or 7%, from the second quarter of 2003, due largely to a less favorable interest rate spread on deposits in a historically low interest rate environment.

     Noninterest income decreased slightly from the year-ago quarter, due largely to a $10 million decline in net gains from loan sales in the Consumer Finance line of business. The reduction in loan sale gains was essentially offset by a $9 million decrease in net losses incurred on the residual values of leased vehicles.

     Noninterest expense decreased by $10 million, or 3%, due primarily to declines in depreciation expense related to equipment and various indirect charges.

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 5

     The provision for loan losses decreased by $19 million, or 29%, as a result of improved asset quality in each of the major lines of business.

Corporate and Investment Banking

										Percent change 2Q04 vs.
dollars in millions	2Q04			1Q04			2Q03			1Q04			2Q03
Summary of operations
Net interest income (TE)	$	228		$	234		$	244			(2.6	)%		(6.6	)%
Noninterest income		134			119			122			12.6			9.8
Total revenue (TE)		362			353			366			2.5			(1.1	)
Provision for loan losses		25			21			56			19.0			(55.4	)
Noninterest expense		168			164			174			2.4			(3.4	)
Income before income taxes (TE)		169			168			136			.6			24.3
Allocated income taxes and TE adjustments		64			63			50			1.6			28.0
Net income	$	105		$	105		$	86			—			22.1
Percent of consolidated net income		44	%		42	%		38	%		N/A			N/A
Average balances
Loans	$	27,855		$	27,222		$	28,039			2.3	%		(.7	)%
Total assets		33,063			32,124			32,410			2.9			2.0
Deposits		4,958			4,756			4,097			4.2			21.0

TE = Taxable Equivalent, N/A = Not Applicable

     Net income for Corporate and Investment Banking was $105 million for the second quarter of 2004, up from $86 million for the same period last year. The improvement resulted largely from a significant decrease in the provision for loan losses.

     Taxable-equivalent net interest income decreased by $16 million, or 7%, from the second quarter of 2003, due primarily to a less favorable interest rate spread on deposits and other funding sources. The adverse effect of this factor was offset in part by an increase in average earning assets.

     During the same period, noninterest income rose by $12 million, or 10%, due largely to an increase in income from various investment banking and capital markets activities.

     Noninterest expense decreased by $6 million, or 3%, due primarily to lower professional fees and decreases in various indirect charges.

     The provision for loan losses decreased by $31 million, or 55%, reflecting improved asset quality in the Corporate Banking and National Equipment Finance lines.

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 6

Investment Management Services

										Percent change 2Q04 vs.
dollars in millions	2Q04			1Q04			2Q03			1Q04			2Q03
Summary of operations
Net interest income (TE)	$	59		$	60		$	60			(1.7	)%		(1.7	)%
Noninterest income		143			145			127			(1.4	)		12.6
Total revenue (TE)		202			205			187			(1.5	)		8.0
Provision for loan losses		2			1			4			100.0			(50.0	)
Noninterest expense		161			152			159			5.9			1.3
Income before income taxes (TE)		39			52			24			(25.0	)		62.5
Allocated income taxes and TE adjustments		15			19			8			(21.1	)		87.5
Net income	$	24		$	33		$	16			(27.3	)		50.0
Percent of consolidated net income		10	%		13	%		7	%		N/A			N/A
Average balances
Loans	$	5,226		$	5,140		$	5,031			1.7	%		3.9	%
Total assets		6,317			6,160			5,961			2.5			6.0
Deposits		7,188			6,908			5,939			4.1			21.0

TE = Taxable Equivalent, N/A = Not Applicable

Additional Investment Management Services Data

dollars in billions	2Q04		1Q04		2Q03
Assets under management	$	69.7	$	69.4	$	63.3
Nonmanaged and brokerage assets		68.1		67.1		61.5

     Net income for Investment Management Services was $24 million for the second quarter of 2004, up from $16 million for the second quarter of last year. The increase was due primarily to growth in noninterest income.

     Noninterest income grew by $16 million, or 13%, due to an increase in income from trust and investment services. This growth was attributable primarily to a rise in the market value of assets under management and a higher level of brokerage commissions, both of which reflect improvements in the equity markets.

     Noninterest expense rose by $2 million, or 1%, due to higher incentive compensation expense related to revenue generation, and an increase in occupancy expense related to the closing of two offices in the McDonald Financial Group. These increases were offset in part by decreases in various indirect charges.

     The provision for loan losses decreased by $2 million, or 50%, reflecting improved asset quality in the McDonald Financial Group.

Other Segments

     Other segments consist primarily of Treasury and principal investing. These segments generated net income of $14 million for the second quarter of 2004, compared with $23 million for the same period last year. Declines in taxable-equivalent net interest income, net gains from principal investing and income from corporate-owned life insurance drove the decrease.

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 7

Line of Business Descriptions

Consumer Banking

Retail Bankingprovides individuals with branch-based deposit and investment products, personal finance services and loans, including residential mortgages, home equity and various types of installment loans.

Small Businessprovides businesses that have annual sales revenues of $10 million or less with deposit, investment and credit products, and business advisory services.

Consumer Financeincludes Indirect Lending and National Home Equity.

Indirect Lending offers automobile and marine loans to consumers through dealers and finances inventory for automobile and marine dealers. This business unit also provides federal and private education loans to students and their parents and processes payments on loans from private schools to parents.

National Home Equity provides both prime and nonprime mortgage and home equity loan products to individuals. These products originate outside of Key’s retail branch system. This business unit also works with mortgage brokers and home improvement contractors to provide home equity and home improvement solutions.

Corporate and Investment Banking

Corporate Bankingprovides an array of products and services to large corporations, middle-market companies, financial institutions and government organizations. These products and services include financing, treasury management, investment banking, derivatives and foreign exchange, equity and debt trading, and syndicated finance.

KeyBank Real Estate Capitalprovides construction and interim lending, permanent debt placements and servicing, and equity and investment banking services to developers, brokers and owner-investors. This line of business deals exclusively with nonowner-occupied properties (i.e., generally properties for which the owner occupies less than 60% of the premises).

Key Equipment Financemeets the equipment leasing needs of companies worldwide and provides equipment manufacturers, distributors and resellers with financing options for their clients. Lease financing receivables and related revenues are assigned to other lines of business (primarily Corporate Banking) if those businesses are principally responsible for maintaining the relationship with the client.

Investment Management Services

Investment Management Servicesincludes Victory Capital Management and McDonald Financial Group.

Victory Capital Management manages or gives advice regarding investment portfolios for a national client base, including corporations, labor unions, not-for-profit organizations, governments and individuals. These portfolios may be managed in separate accounts, common funds or the Victory family of mutual funds.

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 8

McDonald Financial Group offers financial, estate and retirement planning and asset management services to assist high-net-worth clients with their banking, brokerage, trust, portfolio management, insurance, charitable giving and related needs.

     Cleveland-based KeyCorp is one of the nation’s largest bank-based financial services companies, with assets of approximately $86 billion. Key companies provide investment management, retail and commercial banking, consumer finance, and investment banking products and services to individuals and companies throughout the United States and, for certain businesses, internationally. The company’s businesses deliver their products and services through 902 KeyCenters and offices; a network of 2,166 ATMs; telephone banking centers (1.800.KEY2YOU); and a Web site, Key.com,®that provides account access and financial products 24 hours a day.

Notes to Editors:

A live Internet broadcast of KeyCorp’s conference call to discuss quarterly earnings and currently anticipated earnings trends and to answer analysts’ questions can be accessed through the Investor Relations section atwww.Key.com/irat 9:00 a.m. ET, on Friday, July 16, 2004. A tape of the call will be available through July 23.

For up-to-date company information, media contacts and facts and figures about Key’s lines of business visit our Media Newsroom atwww.Key.com/newsroom.

This news release contains forward-looking statements about issues like anticipated earnings outlook, asset quality trends and anticipated improvement in profitability and competitiveness. Forward-looking statements by their nature are subject to assumptions, risks and uncertainties. Actual results could differ materially from those contained in or implied by such forward-looking statements for a variety of factors including: changes in interest rates; failure of the economy to continue to recover which could materially impact credit quality trends and the ability to generate loans; failure of the capital markets to function consistent with customary levels; delay in or inability to execute strategic initiatives designed to grow revenues and/or manage expenses; consummation of significant business combinations or divestitures; new legal obligations or restrictions or unfavorable resolution of litigation; further disruption in the economy and the general business climate as a result of terrorist activities or military actions; and changes in accounting, tax or regulatory practices or requirements.

###

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 9

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

	Three months ended
	6-30-04			3-31-04			6-30-03
Summary of operations
Net interest income (TE)	$	658		$	685		$	710
Noninterest income		446			431			434
Total revenue (TE)		1,104			1,116			1,144
Provision for loan losses		74			81			125
Noninterest expense		679			659			688
Net income		239			250			225
Per common share
Net income	$	.58		$	.60		$	.53
Net income — assuming dilution		.58			.59			.53
Cash dividends paid		.31			.31			.305
Book value at period end		16.77			16.98			16.60
Market price at period end		29.89			30.29			25.27
Performance ratios
Return on average total assets		1.13	%		1.19	%		1.07	%
Return on average equity		13.97			14.47			12.98
Net interest margin (TE)		3.57			3.74			3.85
Capital ratios at period end
Equity to assets		7.92	%		8.29	%		8.18	%
Tangible equity to tangible assets		6.64			6.98			6.90
Tier 1 risk-based capitala		7.73			8.10			7.94
Total risk-based capitala		11.87			12.22			12.15
Leveragea		8.34			8.45			8.13
Asset quality
Net loan charge-offs	$	104		$	111		$	141
Net loan charge-offs to average loans		.67	%		.71	%		.90	%
Allowance for loan losses	$	1,276		$	1,306		$	1,405
Allowance for loan losses to period-end loans		1.99	%		2.09	%		2.22	%
Allowance for loan losses to nonperforming loans		281.06			222.49			167.86
Nonperforming loans at period end	$	454		$	587		$	837
Nonperforming assets at period end		540			670			897
Nonperforming loans to period-end loans		.71	%		.94	%		1.32	%
Nonperforming assets to period-end loans plus OREO and other nonperforming assets		.84			1.07			1.42
Other data
Average full-time equivalent employees		19,514			19,585			19,999
KeyCenters		902			903			903
Taxable-equivalent adjustment	$	22		$	24		$	14

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 10

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

	Six months ended
	6-30-04			6-30-03
Summary of operations
Net interest income (TE)	$	1,343		$	1,413
Noninterest income		877			831
Total revenue (TE)		2,220			2,244
Provision for loan losses		155			255
Noninterest expense		1,338			1,345
Net income		489			442
Per common share
Net income	$	1.18		$	1.04
Net income — assuming dilution		1.17			1.03
Cash dividends paid		.62			.61
Performance ratios
Return on average total assets		1.16	%		1.06	%
Return on average equity		14.22			12.94
Net interest margin (TE)		3.66			3.86
Asset quality
Net loan charge-offs	$	215		$	302
Net loan charge-offs to average loans		.69	%		.97	%
Other data
Average full-time equivalent employees		19,548			20,222
Taxable-equivalent adjustment	$	46		$	36

(a)	06-30-04 ratio is estimated.
TE =	Taxable Equivalent

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 11

Consolidated Balance Sheets
(dollars in millions)

	6-30-04			3-31-04			6-30-03
Assets
Loans	$	64,016		$	62,513		$	63,214
Investment securities		81			94			99
Securities available for sale		7,023			7,463			7,533
Short-term investments		2,639			2,042			1,867
Other investments		1,231			1,157			1,003
Total earning assets		74,990			73,269			73,716
Allowance for loan losses		(1,276	)		(1,306	)		(1,405	)
Cash and due from banks		2,313			2,113			3,249
Premises and equipment		600			604			606
Goodwill		1,150			1,150			1,142
Other intangible assets		31			34			31
Corporate-owned life insurance		2,550			2,528			2,470
Accrued income and other assets		5,863			6,056			5,670
Total assets	$	86,221		$	84,448		$	85,479
Liabilities
Deposits in domestic offices:
NOW and money market deposit accounts	$	19,956		$	19,120		$	17,900
Savings deposits		2,014			2,067			2,094
Certificates of deposit ($100,000 or more)		4,630			4,850			4,949
Other time deposits		10,342			10,834			11,231
Total interest-bearing		36,942			36,871			36,174
Noninterest-bearing		10,940			10,826			11,375
Deposits in foreign office — interest-bearing		4,541			2,234			2,320
Total deposits		52,423			49,931			49,869
Federal funds purchased and securities sold under repurchase agreements		3,794			3,584			4,766
Bank notes and other short-term borrowings		2,598			2,588			2,403
Accrued expense and other liabilities		5,969			6,013			5,760
Long-term debt		14,608			15,333			14,434
Capital securities of subsidiary trusts		—			—			1,258
Total liabilities		79,392			77,449			78,490
Shareholders’ equity
Preferred stock		—			—			—
Common shares		492			492			492
Capital surplus		1,469			1,459			1,452
Retained earnings		7,072			6,960			6,633
Treasury stock		(2,121	)		(1,966	)		(1,667	)
Accumulated other comprehensive income (loss)		(83	)		54			79
Total shareholders’ equity		6,829			6,999			6,989
Total liabilities and shareholders’ equity	$	86,221		$	84,448		$	85,479
Common shares outstanding (000)		407,243			412,153			421,074

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 12

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

	Three months ended						Six months ended
	6-30-04		3-31-04		6-30-03		6-30-04		6-30-03
Interest income
Loans	$	816	$	833	$	910	$	1,649	$	1,814
Tax-exempt investment securities		1		1		1		2		3
Securities available for sale		78		88		96		166		197
Short-term investments		9		9		8		18		16
Other investments		8		8		7		16		13
Total interest income		912		939		1,022		1,851		2,043
Interest expense
Deposits		161		161		183		322		371
Federal funds purchased and securities sold under repurchase agreements		10		10		15		20		29
Bank notes and other short-term borrowings		9		12		15		21		33
Long-term debt, including capital securities		96		95		113		191		233
Total interest expense		276		278		326		554		666
Net interest income		636		661		696		1,297		1,377
Provision for loan losses		74		81		125		155		255
		562		580		571		1,142		1,122
Noninterest income
Trust and investment services income		141		145		130		286		261
Service charges on deposit accounts		86		84		91		170		183
Investment banking and capital markets income		69		42		54		111		89
Letter of credit and loan fees		40		37		40		77		71
Corporate-owned life insurance income		25		27		27		52		54
Net gains from loan securitizations and sales		1		25		14		26		29
Electronic banking fees		22		18		22		40		41
Net securities gains		7		—		3		7		7
Other income		55		53		53		108		96
Total noninterest income		446		431		434		877		831
Noninterest expense
Personnel		371		373		371		744		734
Net occupancy		61		58		56		119		115
Computer processing		48		44		44		92		88
Equipment		30		31		34		61		66
Marketing		30		23		33		53		58
Professional fees		29		25		32		54		57
Other expense		110		105		118		215		227
Total noninterest expense		679		659		688		1,338		1,345
Income before income taxes		329		352		317		681		608
Income taxes		90		102		92		192		166
Net income	$	239	$	250	$	225	$	489	$	442
Net income per common share	$	.58	$	.60	$	.53	$	1.18	$	1.04
Net income per common share — assuming dilution		.58		.59		.53		1.17		1.03
Weighted-average common shares outstanding (000)		410,292		416,680		423,882		413,486		424,575
Weighted-average common shares and potential common shares outstanding (000)		414,908		421,572		427,170		418,240		427,628

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 13

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

	Second Quarter 2004								First Quarter 2004								Second Quarter 2003
	Average								Average								Average
	Balance			Interest		Yield/Rate			Balance			Interest		Yield/Rate			Balance			Interest		Yield/Rate
Assets
Loans:a,b
Commercial, financial and agricultural	$	17,392		$	189		4.36	%	$	17,037		$	190		4.50	%	$	17,391		$	218		5.01	%
Real estate — commercial mortgage		6,071			74		4.94			5,750			72		5.00			5,932			80		5.38
Real estate — construction		4,716			56		4.79			4,856			58		4.79			5,331			68		5.14
Commercial lease financing		8,729			127		5.83			8,536			127		5.96			7,883			119		6.05
Total commercial loans		36,908			446		4.86			36,179			447		4.96			36,537			485		5.32
Real estate — residential		1,568			24		6.09			1,589			25		6.21			1,803			30		6.54
Home equity		14,631			201		5.53			14,963			210		5.64			14,433			219		6.09
Consumer — direct		2,058			38		7.41			2,083			40		7.69			2,135			40		7.44
Consumer — indirect lease financing		199			5		9.74			266			6		9.72			601			14		9.40
Consumer — indirect other		5,137			95		7.39			5,389			105		7.79			5,002			105		8.43
Total consumer loans		23,593			363		6.17			24,290			386		6.37			23,974			408		6.82
Loans held for sale		2,602			28		4.28			2,327			23		4.07			2,518			29		4.70
Total loans		63,103			837		5.33			62,796			856		5.47			63,029			922		5.86
Taxable investment securities		16			—		4.20			17			—		4.36			5			—		5.44
Tax-exempt investment securitiesa		74			2		9.73			79			2		9.71			110			3		9.46
Total investment securities		90			2		8.72			96			2		8.79			115			3		9.27
Securities available for salea,c		7,130			78		4.37			7,516			88		4.70			8,321			97		4.68
Short-term investments		2,384			9		1.44			1,859			9		1.95			1,484			8		2.12
Other investmentsc		1,167			8		2.79			1,114			8		2.78			985			6		2.47
Total earning assets		73,874			934		5.07			73,381			963		5.27			73,934			1,036		5.61
Allowance for loan losses		(1,237	)							(1,378	)							(1,409	)
Accrued income and other assets		12,678								12,522								12,187
Total assets	$	85,315							$	84,525							$	84,712
Liabilities
NOW and money market deposit accounts	$	19,753			33		.67		$	18,882			29		.61		$	17,740			41		.93
Savings deposits		2,040			1		.23			2,052			1		.23			2,084			3		.54
Certificates of deposit ($100,000 or more)d		4,727			44		3.77			4,883			46		3.81			4,743			47		3.98
Other time deposits		10,591			76		2.87			10,957			80		2.96			11,434			84		2.96
Deposits in foreign office		2,635			7		1.05			2,167			5		.97			2,445			8		1.25
Total interest-bearing deposits		39,746			161		1.63			38,941			161		1.67			38,446			183		1.91
Federal funds purchased and securities sold under repurchase agreements		4,483			10		.93			4,068			10		.96			4,661			13		1.11
Bank notes and other short-term borrowingsd		2,512			9		1.43			2,603			12		1.81			2,765			17		2.50
Long-term debt, including capital securitiesd		14,465			96		2.74			15,229			95		2.63			16,309			113		2.90
Total interest-bearing liabilities		61,206			276		1.82			60,841			278		1.86			62,181			326		2.13
Noninterest-bearing deposits		11,010								10,660								10,053
Accrued expense and other liabilities		6,220								6,077								5,526
Total liabilities		78,436								77,578								77,760
Shareholders’ equity		6,879								6,947								6,952
Total liabilities and shareholders’ equity	$	85,315							$	84,525							$	84,712
Interest rate spread (TE)							3.25	%							3.41	%							3.48	%
Net interest income (TE) and net interest margin (TE)					658		3.57	%					685		3.74	%					710		3.85	%
TE adjustmenta					22								24								14
Net interest income, GAAP basis				$	636							$	661							$	696
Capital securities		—			—					—			—				$	1,266		$	18

(a)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.
(b)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(c)	Yield is calculated on the basis of amortized cost.
(d)	Rate calculation excludes basis adjustments related to fair value hedges.
TE =	Taxable Equivalent
GAAP =	Accounting Principles Generally Accepted in the United States

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 14

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

	Six months ended June 30, 2004								Six months ended June 30, 2003
	Average								Average
	Balance			Interest		Yield/Rate			Balance			Interest		Yield/Rate
Assets
Loans:a,b
Commercial, financial and agricultural	$	17,215		$	379		4.43	%	$	17,306		$	424		4.94	%
Real estate — commercial mortgage		5,911			146		4.97			5,983			161		5.44
Real estate — construction		4,785			114		4.79			5,506			141		5.15
Commercial lease financing		8,633			254		5.89			7,837			242		6.17
Total commercial loans		36,544			893		4.91			36,632			968		5.32
Real estate — residential		1,578			49		6.15			1,853			61		6.60
Home equity		14,797			411		5.59			14,220			437		6.19
Consumer — direct		2,071			78		7.55			2,132			80		7.56
Consumer — indirect lease financing		232			11		9.73			686			32		9.41
Consumer — indirect other		5,263			200		7.59			4,960			213		8.58
Total consumer loans		23,941			749		6.27			23,851			823		6.94
Loans held for sale		2,464			51		4.18			2,454			57		4.70
Total loans		62,949			1,693		5.40			62,937			1,848		5.91
Taxable investment securities		16			—		4.28			4			—		6.28
Tax-exempt investment securitiesa		77			4		9.72			117			5		9.16
Total investment securities		93			4		8.76			121			5		9.07
Securities available for salea,c		7,323			166		4.53			8,057			197		4.93
Short-term investments		2,122			18		1.66			1,595			16		1.99
Other investmentsc		1,140			16		2.79			971			13		2.56
Total earning assets		73,627			1,897		5.17			73,681			2,079		5.67
Allowance for loan losses		(1,307	)							(1,424	)
Accrued income and other assets		12,600								12,058
Total assets	$	84,920							$	84,315
Liabilities
NOW and money market deposit accounts	$	19,318			62		.64		$	17,246			84		.98
Savings deposits		2,046			2		.23			2,064			6		.57
Certificates of deposit ($100,000 or more)d		4,805			90		3.79			4,698			94		4.09
Other time deposits		10,774			156		2.91			11,616			174		3.03
Deposits in foreign office		2,401			12		1.01			2,084			13		1.24
Total interest-bearing deposits		39,344			322		1.65			37,708			371		1.98
Federal funds purchased and securities sold under repurchase agreements		4,275			20		.94			4,939			29		1.19
Bank notes and other short-term borrowingsd		2,558			21		1.62			2,574			33		2.62
Long-term debt, including capital securitiesd		14,847			191		2.69			16,791			233		2.88
Total interest-bearing liabilities		61,024			554		1.84			62,012			666		2.18
Noninterest-bearing deposits		10,835								9,921
Accrued expense and other liabilities		6,148								5,496
Total liabilities		78,007								77,429
Shareholders’ equity		6,913								6,886
Total liabilities and shareholders’ equity	$	84,920							$	84,315
Interest rate spread (TE)							3.33	%							3.49	%
Net interest income (TE) and net interest margin (TE)					1,343		3.66	%					1,413		3.86	%
TE adjustmenta					46								36
Net interest income, GAAP basis				$	1,297							$	1,377
Capital securities		—			—				$	1,260		$	36

(a)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.
(b)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(c)	Yield is calculated on the basis of amortized cost.
(d)	Rate calculation excludes basis adjustments related to fair value hedges.
TE =	Taxable Equivalent
GAAP =	Accounting Principles Generally Accepted in the United States

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 15

Noninterest Income
(in millions)

	Three months ended						Six months ended
	6-30-04		3-31-04		6-30-03		6-30-04		6-30-03
Trust and investment services income a	$	141	$	145	$	130	$	286	$	261
Service charges on deposit accounts		86		84		91		170		183
Investment banking and capital markets income a		69		42		54		111		89
Letter of credit and loan fees		40		37		40		77		71
Corporate-owned life insurance income		25		27		27		52		54
Net gains from loan securitizations and sales		1		25		14		26		29
Electronic banking fees		22		18		22		40		41
Net securities gains		7		—		3		7		7
Other income:
Insurance income		13		11		13		24		26
Loan securitization servicing fees		1		1		2		2		4
Credit card fees		3		3		3		6		6
Miscellaneous income		38		38		35		76		60
Total other income		55		53		53		108		96
Total noninterest income	$	446	$	431	$	434	$	877	$	831

^(a) Additional detail provided in tables below.

Trust and Investment Services Income
(in millions)

	Three months ended						Six months ended
	6-30-04		3-31-04		6-30-03		6-30-04		6-30-03
Brokerage commissions and fee income	$	66	$	70	$	65	$	136	$	130
Personal asset management and custody fees		42		42		36		84		71
Institutional asset management and custody fees		10		9		9		19		20
All other fees		23		24		20		47		40
Total trust and investment services income	$	141	$	145	$	130	$	286	$	261

Investment Banking and Capital Markets Income
(in millions)

	Three months ended							Six months ended
	6-30-04		3-31-04			6-30-03		6-30-04		6-30-03
Investment banking income	$	31	$	25		$	23	$	56	$	46
Net gains from principal investing		19		10			20		29		17
Foreign exchange income		12		12			8		24		15
Dealer trading and derivatives income (loss)		7		(5	)		3		2		11
Total investment banking and capital markets income	$	69	$	42		$	54	$	111	$	89

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 16

Noninterest Expense
(dollars in millions)

	Three months ended							Six months ended
	6-30-04		3-31-04			6-30-03		6-30-04		6-30-03
Personnel a	$	371	$	373		$	371	$	744	$	734
Net occupancy		61		58			56		119		115
Computer processing		48		44			44		92		88
Equipment		30		31			34		61		66
Marketing		30		23			33		53		58
Professional fees		29		25			32		54		57
Other expense:
Postage and delivery		13		13			13		26		28
Telecommunications		7		7			8		14		16
Franchise and business taxes		9		(1	)		13		8		25
OREO expense, net		7		4			4		11		5
Miscellaneous expense		74		82			80		156		153
Total other expense		110		105			118		215		227
Total noninterest expense	$	679	$	659		$	688	$	1,338	$	1,345
Average full-time equivalent employees		19,514		19,585			19,999		19,548		20,222

^(a) Additional detail provided in table below.

Personnel Expense
(in millions)

	Three months ended						Six months ended
	6-30-04		3-31-04		6-30-03		6-30-04		6-30-03
Salaries	$	210	$	209	$	214	$	419	$	432
Incentive compensation		92		85		86		177		150
Employee benefits		59		71		63		130		135
Stock-based compensation		8		7		3		15		7
Severance		2		1		5		3		10
Total personnel expense	$	371	$	373	$	371	$	744	$	734

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 17

Loan Composition
(dollars in millions)

							Percent change 6-30-04 vs.
	6-30-04		3-31-04		6-30-03		3-31-04			6-30-03
Commercial, financial and agricultural	$	17,721	$	17,058	$	17,381		3.9	%		2.0	%
Commercial real estate:
Commercial mortgage		6,312		5,802		5,886		8.8			7.2
Construction		4,863		4,777		5,192		1.8			(6.3	)
Total commercial real estate loans		11,175		10,579		11,078		5.6			.9
Commercial lease financing		8,792		8,705		8,009		1.0			9.8
Total commercial loans		37,688		36,342		36,468		3.7			3.3
Real estate — residential mortgage		1,542		1,585		1,754		(2.7	)		(12.1	)
Home equity		14,753		14,483		14,688		1.9			.4
Consumer — direct		2,074		2,050		2,170		1.2			(4.4	)
Consumer — indirect:
Automobile lease financing		170		227		528		(25.1	)		(67.8	)
Automobile loans		1,910		1,968		2,107		(2.9	)		(9.3	)
Marine		2,640		2,541		2,379		3.9			11.0
Other		598		884		595		(32.4	)		.5
Total consumer — indirect loans		5,318		5,620		5,609		(5.4	)		(5.2	)
Total consumer loans		23,687		23,738		24,221		(.2	)		(2.2	)
Loans held for sale:
Real estate — commercial mortgage		369		277		231		33.2			59.7
Real estate — residential mortgage		22		20		45		10.0			(51.1	)
Home equity		13		6		—		116.7			N/M
Education		2,237		2,130		2,249		5.0			(.5	)
Total loans held for sale		2,641		2,433		2,525		8.5			4.6
Total loans	$	64,016	$	62,513	$	63,214		2.4			1.3

N/M = Not Meaningful

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 18

Summary of Loan Loss Experience
(dollars in millions)

	Three months ended									Six months ended
	6-30-04			3-31-04			6-30-03			6-30-04			6-30-03
Average loans outstanding during the period	$	63,103		$	62,796		$	63,029		$	62,949		$	62,937
Allowance for loan losses at beginning of period	$	1,306		$	1,406		$	1,421		$	1,406		$	1,452
Loans charged off:
Commercial, financial and agricultural		43			52			77			95			164
Real estate — commercial mortgage		10			8			14			18			25
Real estate — construction		5			—			—			5			4
Total commercial real estate loans		15			8			14			23			29
Commercial lease financing		15			10			19			25			31
Total commercial loans		73			70			110			143			224
Real estate — residential mortgage		4			2			1			6			3
Home equity		11			17			15			28			29
Consumer — direct		11			12			13			23			25
Consumer — indirect lease financing		2			3			4			5			9
Consumer — indirect other		47			45			36			92			79
Total consumer loans		75			79			69			154			145
		148			149			179			297			369
Recoveries:
Commercial, financial and agricultural		13			13			10			26			16
Real estate — commercial mortgage		1			1			3			2			8
Real estate — construction		4			—			—			4			3
Total commercial real estate loans		5			1			3			6			11
Commercial lease financing		4			3			4			7			5
Total commercial loans		22			17			17			39			32
Real estate — residential mortgage		1			—			1			1			1
Home equity		1			1			2			2			3
Consumer — direct		2			2			2			4			4
Consumer — indirect lease financing		1			1			2			2			3
Consumer — indirect other		17			17			14			34			24
Total consumer loans		22			21			21			43			35
		44			38			38			82			67
Net loans charged off		(104	)		(111	)		(141	)		(215	)		(302	)
Provision for loan losses		74			81			125			155			255
Reclassification of allowance for credit losses on lending-related commitmentsa		—			(70	)		—			(70	)		—
Allowance for loan losses at end of period	$	1,276		$	1,306		$	1,405		$	1,276		$	1,405
Net loan charge-offs to average loans		.67	%		.71	%		.90	%		.69	%		.97	%
Allowance for loan losses to period-end loans		1.99			2.09			2.22			1.99			2.22
Allowance for loan losses to nonperforming loans		281.06			222.49			167.86			281.06			167.86

^(a) Included in accrued expenses and other liabilities on the consolidated balance sheet.

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 19

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

	6-30-04			3-31-04			12-31-03			��	9-30-03			6-30-03
Commercial, financial and agricultural	$	114		$	191		$	252			$	345		$	361
Real estate — commercial mortgage		61			72			85				89			143
Real estate — construction		1			12			25				38			22
Total commercial real estate loans		62			84			110				127			165
Commercial lease financing		59			84			103				108			92
Total commercial loans		235			359			465				580			618
Real estate — residential mortgage		38			39			39				36			38
Home equity		151			161			153				151			152
Consumer — direct		13			10			14				12			13
Consumer — indirect lease financing		2			2			3				3			4
Consumer — indirect other		15			16			20				13			12
Total consumer loans		219			228			229				215			219
Total nonperforming loans		454			587			694				795			837
OREO		71			76			61				69			60
Allowance for OREO losses		(8	)		(5	)		(4	)			(4	)		(3	)
OREO, net of allowance		63			71			57				65			57
Other nonperforming assets		23			12			2				2			3
Total nonperforming assets	$	540		$	670		$	753			$	862		$	897
Accruing loans past due 90 days or more	$	114		$	127		$	152			$	165		$	172
Accruing loans past due 30 through 89 days		622			559			613				710			731
Nonperforming loans to period-end loans		.71	%		.94	%		1.11	%			1.27	%		1.32	%
Nonperforming assets to period-end loans plus OREO and other nonperforming assets		.84			1.07			1.20				1.37			1.42

Summary of Changes in Nonperforming Loans
(in millions)

	2Q04			1Q04			4Q03			3Q03			2Q03
Balance at beginning of period	$	587		$	694		$	795		$	837		$	904
Loans placed on nonaccrual status		68			145			111			240			168
Charge-offs		(104	)		(111	)		(123	)		(123	)		(141	)
Loans sold		(33	)		(58	)		(40	)		(73	)		(42	)
Payments		(62	)		(56	)		(46	)		(73	)		(26	)
Transfers to OREO		—			(11	)		—			(6	)		(1	)
Loans returned to accrual status		(2	)		(16	)		(3	)		(7	)		(25	)
Balance at end of period	$	454		$	587		$	694		$	795		$	837

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 20

Line of Business Results
(dollars in millions)

Consumer Banking

																Percent change 2Q04 vs.
	2Q04			1Q04			4Q03			3Q03			2Q03			1Q04			2Q03
Summary of operations
Total revenue (TE)	$	551		$	573		$	576		$	601		$	586			(3.8	)%		(6.0	)%
Provision for loan losses		46			59			68			70			65			(22.0	)		(29.2	)
Noninterest expense		348			339			357			359			358			2.7			(2.8	)
Net income		98			109			95			107			102			(10.1	)		(3.9	)
Average loans		29,363			29,736			29,244			29,180			28,962			(1.3	)		1.4
Average deposits		35,021			34,737			35,003			35,053			34,828			.8			.6
Net loan charge-offs		61			71			68			70			65			(14.1	)		(6.2	)
Return on average allocated equity		19.47	%		21.22	%		18.31	%		20.49	%		19.93	%		N/A			N/A
Average full-time equivalent employees		8,383			8,385			8,380			8,496			8,436			—			(.6	)
Supplementary information (lines of business)
Retail Banking
Total revenue (TE)	$	312		$	312		$	325		$	330		$	333			—	%		(6.3	)%
Provision for loan losses		10			15			14			14			15			(33.3	)		(33.3	)
Noninterest expense		210			202			210			213			214			4.0			(1.9	)
Net income		58			59			63			64			65			(1.7	)		(10.8	)
Average loans		10,585			10,389			10,280			10,194			9,839			1.9			7.6
Average deposits		29,797			29,791			29,894			30,051			30,181			—			(1.3	)
Net loan charge-offs		10			15			14			14			15			(33.3	)		(33.3	)
Return on average allocated equity		39.01	%		39.75	%		41.80	%		42.46	%		43.82	%		N/A			N/A
Average full-time equivalent employees		6,137			6,094			6,107			6,212			6,142			.7			(.1	)
Small Business
Total revenue (TE)	$	94		$	92		$	98		$	97		$	97			2.2	%		(3.1	)%
Provision for loan losses		12			13			16			17			17			(7.7	)		(29.4	)
Noninterest expense		51			50			51			52			52			2.0			(1.9	)
Net income		19			18			20			17			18			5.6			5.6
Average loans		4,451			4,424			4,437			4,486			4,526			.6			(1.7	)
Average deposits		4,864			4,582			4,731			4,618			4,312			6.2			12.8
Net loan charge-offs		14			14			16			17			17			—			(17.6	)
Return on average allocated equity		20.11	%		19.05	%		20.83	%		17.70	%		19.30	%		N/A			N/A
Average full-time equivalent employees		416			415			380			382			379			.2			9.8
Consumer Finance
Total revenue (TE)	$	145		$	169		$	153		$	174		$	156			(14.2	)%		(7.1	)%
Provision for loan losses		24			31			38			39			33			(22.6	)		(27.3	)
Noninterest expense		87			87			96			94			92			—			(5.4	)
Net income		21			32			12			26			19			(34.4	)		10.5
Average loans		14,327			14,923			14,527			14,500			14,597			(4.0	)		(1.8	)
Average deposits		360			364			378			384			335			(1.1	)		7.5
Net loan charge-offs		37			42			38			39			33			(11.9	)		12.1
Return on average allocated equity		8.07	%		11.82	%		4.41	%		9.44	%		7.03	%		N/A			N/A
Average full-time equivalent employees		1,830			1,876			1,893			1,902			1,915			(2.5	)		(4.4	)

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 21

Line of Business Results (continued)
(dollars in millions)

Corporate and Investment Banking

																Percent change 2Q04 vs.
	2Q04			1Q04			4Q03			3Q03			2Q03			1Q04			2Q03
Summary of operations
Total revenue (TE)	$	362		$	353		$	390		$	358		$	366			2.5	%		(1.1	)%
Provision for loan losses		25			21			49			48			56			19.0			(55.4	)
Noninterest expense		168			164			182			174			174			2.4			(3.4	)
Net income		105			105			99			85			86			—			22.1
Average loans		27,855			27,222			27,421			27,904			28,039			2.3			(.7	)
Average deposits		4,958			4,756			4,780			4,566			4,097			4.2			21.0
Net loan charge-offs		39			39			49			48			73			—			(46.6	)
Return on average allocated equity		14.13	%		14.09	%		13.01	%		11.11	%		11.29	%		N/A			N/A
Average full-time equivalent employees		2,482			2,463			2,480			2,485			2,438			.8			1.8
Supplementary information (lines of business)
Corporate Banking
Total revenue (TE)	$	197		$	187		$	199		$	196		$	199			5.3	%		(1.0	)%
Provision for loan losses		25			15			37			43			50			66.7			(50.0	)
Noninterest expense		102			104			114			108			108			(1.9	)		(5.6	)
Net income		44			42			29			29			27			4.8			63.0
Average loans		12,558			12,213			12,372			12,816			12,876			2.8			(2.5	)
Average deposits		3,742			3,615			3,655			3,576			3,212			3.5			16.5
Net loan charge-offs		35			31			37			43			67			12.9			(47.8	)
Return on average allocated equity		11.19	%		10.77	%		7.22	%		7.02	%		6.45	%		N/A			N/A
Average full-time equivalent employees		1,177			1,182			1,191			1,177			1,145			(.4	)		2.8
KeyBank Real Estate Capital
Total revenue (TE)	$	91		$	89		$	122		$	102		$	101			2.2	%		(9.9	)%
Provision for loan losses		(4	)		1			4			—			(3	)		N/M			33.3
Noninterest expense		41			37			43			42			40			10.8			2.5
Net income		33			32			47			37			40			3.1			(17.5	)
Average loans		7,752			7,628			8,062			8,260			8,399			1.6			(7.7	)
Average deposits		1,202			1,127			1,111			976			872			6.7			37.8
Net loan charge-offs (recoveries)		(1	)		2			4			—			(3	)		N/M			(66.7	)
Return on average allocated equity		14.57	%		13.71	%		19.55	%		15.82	%		17.55	%		N/A			N/A
Average full-time equivalent employees		673			668			674			688			681			.7			(1.2	)
Key Equipment Finance
Total revenue (TE)	$	74		$	77		$	69		$	60		$	66			(3.9	)%		12.1	%
Provision for loan losses		4			5			8			5			9			(20.0	)		(55.6	)
Noninterest expense		25			23			25			24			26			8.7			(3.8	)
Net income		28			31			23			19			19			(9.7	)		47.4
Average loans		7,545			7,381			6,987			6,828			6,764			2.2			11.5
Average deposits		14			14			14			14			13			—			7.7
Net loan charge-offs		5			6			8			5			9			(16.7	)		(44.4	)
Return on average allocated equity		22.66	%		25.45	%		19.37	%		16.07	%		16.46	%		N/A			N/A
Average full-time equivalent employees		632			613			615			620			612			3.1			3.3

KeyCorp Reports Second Quarter 2004 Earnings
July 16, 2004
Page 22

Line of Business Results (continued)
(dollars in millions)

Investment Management Services

																Percent change 2Q04 vs.
	2Q04			1Q04			4Q03			3Q03			2Q03			1Q04			2Q03
Summary of operations
Total revenue (TE)	$	202		$	205		$	210		$	200		$	187			(1.5	)%		8.0	%
Provision for loan losses		2			1			6			5			4			100.0			(50.0	)
Noninterest expense	��	161			152			161			163			159			5.9			1.3
Net income		24			33			27			20			16			(27.3	)		50.0
Average loans		5,226			5,140			5,151			5,100			5,031			1.7			3.9
Average deposits		7,188			6,908			6,779			6,382			5,939			4.1			21.0
Net loan charge-offs		3			1			6			5			3			200.0			—
Return on average allocated equity		16.17	%		21.97	%		17.33	%		13.20	%		10.95	%		N/A			N/A
Average full-time equivalent employees		2,628			2,639			2,702			2,780			2,849			(.4	)		(7.8	)

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