KeyCorp (KEY) 8-K Keycorp Reports Fourth Quarter and 2007 Earnings

EXHIBIT 99.1

CONTACTS:	Vernon L. Patterson	William C. Murschel
	Analyst	Media
	216.689.0520	216.828.7416
	Vernon_Patterson@KeyBank.com	William_C_Murschel@KeyBank.com

INVESTOR	KEY MEDIA
RELATIONS: www.key.com/ir	NEWSROOM: www.key.com/newsroom
FOR IMMEDIATE RELEASE

KEYCORP REPORTS FOURTH QUARTER AND 2007 EARNINGS

• EPS from continuing operations of $0.06 for the fourth quarter and $2.38 for the full year

• Results impacted by continued disruption in financial markets and downturn in U.S. housing market

• Strategic actions taken to strengthen loan loss reserves and improve business mix

     CLEVELAND, January 22, 2008 — KeyCorp (NYSE: KEY) today announced fourth quarter income from continuing operations of $22 million, or $0.06 per diluted common share. This compares to income from continuing operations of $311 million, or $0.76 per share, for the fourth quarter of 2006, and $224 million, or $0.57 per share, for the third quarter of 2007. Key’s income from continuing operations for 2007 was $941 million, or $2.38 per diluted common share. This compares to income from continuing operations — before the cumulative effect of an accounting change — of $1.193 billion, or $2.91 per share, for 2006.

     Net income totaled $25 million, or $0.06 per diluted common share, for the fourth quarter of 2007, compared to net income of $146 million, or $0.36 per share, for the fourth quarter of 2006 and $210 million, or $0.54 per share, for the third quarter of 2007. Key’s net income for 2007 was $919 million, or $2.32 per diluted common share, compared to $1.055 billion, or $2.57 per share, in 2006.

     Key’s continuing and discontinued operating results for comparative quarters and for the twelve months ended December 31, 2007, and 2006, are presented in the following table.

	Three months ended								Twelve months ended
in millions, except per share amounts	12-31-07		9-30-07			12-31-06			12-31-07			12-31-06
Summary of operations
Income from continuing operations before cumulative effect of accounting change	$	22	$	224		$	311		$	941		$	1,193
Income (loss) from discontinued operations, net of taxesa		3		(14	)c		(165	)d		(22	)		(143	)d
Cumulative effect of accounting change, net of taxes		—		—			—			—			5
Net income	$	25	$	210		$	146		$	919		$	1,055
Per common share — assuming dilution b
Income from continuing operations before cumulative effect of accounting change	$	.06	$	.57		$	.76		$	2.38		$	2.91
Income (loss) from discontinued operationsa		.01		(.03	)c		(.40	)d		(.05	)		(.35	)d
Cumulative effect of accounting change		—		—			—			—			.01
Net income	$	.06	$	.54		$	.36		$	2.32		$	2.57

(a)	Key sold the subprime mortgage loan portfolio held by the Champion Mortgage finance business in November 2006, and completed the sale of Champion’s origination platform in February 2007. As a result of these actions, Key has accounted for this business as a discontinued operation.
(b)	Earnings per share may not foot due to rounding.
(c)	The loss from discontinued operations recorded in the third quarter of 2007 was attributable largely to a write-down on the building lease for the former Champion headquarters.
(d)	Includes a net after-tax charge of $165 million, or $.40 per share, consisting of: (1) a $170 million, or $.42 per share, write-off of goodwill associated with Key’s 1997 acquisition of Champion and (2) a net after-tax credit of $5 million, or $.01 per share, from the net gain on sale of the Champion Mortgage loan portfolio and disposal transaction costs.

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
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     Key’s provision for loan losses from continuing operations was $363 million for the fourth quarter of 2007, up from $53 million for the same period one year ago. The increase was due primarily to deteriorating market conditions in the commercial real estate portfolio. Also, during the fourth quarter of 2007, the fixed income markets continued to experience extraordinary volatility, widening credit spreads and significantly reduced liquidity. The widening of credit spreads has adversely impacted the market values of Key’s loans held for sale and trading portfolios. During the fourth quarter, Key recorded net losses of $6 million from loan sales and write-downs, $1 million from dealer trading and derivatives, and $23 million from certain real estate-related investments for a total of $30 million in net losses. This compares to net gains of $58 million from these activities for the fourth quarter of 2006 and net losses of $77 million for the third quarter of 2007.

     “Key’s results for the fourth quarter of 2007 were adversely affected by a number of charges related to additional reserves for loan losses, separation expense, losses associated with volatility in the fixed income markets and the strategic decision to exit certain business activities,” said Chairman and Chief Executive Officer Henry L. Meyer III. “With these actions, previously announced on December 20, we believe Key is entering 2008 with adequate loan loss reserves and a disciplined approach to managing its expense structure.”

     Meyer continued: “Key has been positioning itself for a potential downturn in the credit cycle. We moved two years ago to curtail our Florida condominium exposure, completed the sale of our subprime home mortgage lending business during the fourth quarter of 2006 and just recently announced our decisions to exit dealer-originated home improvement lending activities and cease conducting business with non-relationship homebuilders outside of our Community Banking footprint. Further, we have no meaningful CLO, CDO, ABCP or SIV exposure.”

     Meyer concluded: “We experienced a number of positive trends in the fourth quarter. Our commercial loan growth remained strong and several of our fee-based businesses, including institutional asset management, had favorable performances. Additionally, on January 1, 2008, we completed the acquisition of U.S.B. Holding Company, headquartered in Orangeburg, New York. This acquisition doubles our branch penetration in the attractive Lower Hudson Valley area and reflects our continued focus on our core relationship banking businesses.

     “Recognizing the underlying strength of our company, on December 20, 2007, the Board of Directors declared the 2008 first-quarter regular quarterly cash dividend of $0.375 per common share. This represents a 2.7% increase over the prior quarterly dividend, marking the 43rd consecutive year of dividend increases.”

SUMMARY OF CONTINUING OPERATIONS

     Taxable-equivalent net interest income was $750 million for the fourth quarter of 2007, compared to $744 million for the year-ago quarter. Average earning assets grew by $5.4 billion, or 7%, while the net interest margin for the current quarter declined to 3.48% from 3.66% for the fourth quarter of 2006. The reduction was due largely to both loan and deposit spreads which have been under pressure due to competitive pricing. During the fourth quarter of 2007, an $18 million lease accounting adjustment contributed approximately 9 basis points to Key’s taxable-equivalent net interest margin. In the year-ago quarter, the net interest margin also benefited from a $16 million lease accounting adjustment, as well as an $8 million principal investing distribution received in the form of a dividend. These two items added approximately 12 basis points to Key’s taxable-equivalent net interest margin for that period.

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
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     Compared to the third quarter of 2007, taxable-equivalent net interest income grew by $38 million, and the net interest margin rose by 8 basis points. The improvement reflected a $2.7 billion, or 13% annualized, increase in average earning assets, as well as the lease accounting adjustment recorded during the fourth quarter of 2007. The growth in average earning assets was driven by strong demand for commercial loans in Key’s National Banking operation.

     Key’s noninterest income was $488 million for the fourth quarter of 2007, compared to $558 million for the year-ago quarter. The decrease was attributable to the impact of continued market volatility on several of Key’s capital markets-driven businesses, as well as the sale of the McDonald Investments branch network completed in the first quarter of 2007. Results for the current quarter include $6 million in net losses from loan sales and write-downs, including $31 million in net losses pertaining to commercial real estate loans held for sale, offset in part by $28 million in net gains from the sales of commercial lease financing receivables. This compares to net gains of $42 million for the same period last year, including $14 million in net gains related to commercial real estate loans, and a $25 million gain from the securitization and sale of education loans. Income from investment banking and capital markets activities decreased by $57 million, due to a $22 million reduction in investment banking income and declines in the fair values of certain real estate-related investments held by the Private Equity unit within the Real Estate Capital line of business. Trust and investment services income was down $11 million, due to lower brokerage income resulting from the sale of the McDonald Investments branch network. Excluding the impact of the McDonald Investments sale, trust and investment services income increased by $21 million, or 19%, driven by growth in both personal and institutional asset management income. The company also experienced higher noninterest income from deposit service charges and operating lease revenue, which grew by $13 million and $9 million, respectively.

     Compared to the third quarter of 2007, noninterest income grew by $50 million. The improvement reflected a $47 million reduction in net losses from loan sales and write-downs, as well as higher trust and investment services income. Noninterest income for the third quarter included a $27 million gain related to the sale of MasterCard Incorporated shares.

     Key’s noninterest expense was $896 million for the fourth quarter of 2007, compared to $809 million for the same period last year. Personnel expense decreased by $48 million, due primarily to lower incentive compensation accruals, offset in part by higher costs associated with salaries and severance. Approximately $27 million of the reduction in total personnel expense was attributable to the sale of the McDonald Investments branch network. Nonpersonnel expense rose by $135 million from the year-ago quarter. During the fourth quarter of 2007, nonpersonnel expense included a $64 million charge, representing the estimated fair value of Key’s liability to Visa Inc. In accordance with Visa USA Bylaws, each Visa USA member is obligated to indemnify Visa for a broad range of costs, damages, liabilities and other expenses incurred by Visa. A primary factor used by each member in determining the amount of its liability is its membership proportion. Also contributing to the increase in nonpersonnel expense was a $25 million provision for losses on lending-related commitments, compared to a $6 million credit for the year-ago quarter; a $9 million increase in costs associated with operating leases; and franchise and business tax expense of $7 million for the fourth quarter of 2007, compared to a $7 million credit in the year-ago quarter which resulted from settlements of disputed amounts. The McDonald Investments sale reduced Key’s total nonpersonnel expense by approximately $16 million.

     Compared to the third quarter of 2007, noninterest expense grew by $143 million. The increase included a $16 million rise in personnel expense, due largely to higher costs associated with severance. Nonpersonnel expense rose by $127 million, reflecting the liability to Visa Inc., a higher provision for losses on lending-related commitments and an increase in professional fees.

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
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ASSET QUALITY

     Key’s provision for loan losses from continuing operations was $363 million for the fourth quarter of 2007, compared to $53 million for the year-ago quarter and $69 million for the third quarter of 2007. During the fourth quarter of 2007, Key’s provision exceeded its net loan charge-offs by $244 million. The additional provision was a result of deteriorating market conditions in the commercial real estate portfolio. As previously announced on December 20, 2007, Key has moved to cease conducting business with non-relationship homebuilders outside of its 13-state Community Banking footprint. Based on this determination and its prior decision to curtail condominium development lending activities, Key has transferred approximately $1.1 billion of homebuilder-related loans and $800 million of condominium exposure to its special asset management group. The majority of these portfolios is currently performing and is expected to continue to perform.

     Net loan charge-offs for the quarter totaled $119 million, or 0.67% of average loans from continuing operations, compared to $54 million, or 0.33%, for the same period last year and $59 million, or 0.35%, for the previous quarter.

     At December 31, 2007, Key’s nonperforming loans totaled $687 million and represented 0.97% of period-end portfolio loans, compared to 0.72% at September 30, 2007, and 0.33% at December 31, 2006. At December 31, 2007, nonperforming assets totaled $764 million and represented 1.08% of portfolio loans, other real estate owned and other nonperforming assets, compared to 0.83% at September 30, 2007, and 0.41% at December 31, 2006. The increase in nonperforming assets during the fourth quarter of 2007 was attributable primarily to deteriorating market conditions in the residential properties segment of Key’s commercial real estate construction portfolio, principally in Florida and California.

     Key’s allowance for loan losses was $1.200 billion, or 1.69% of loans outstanding, at December 31, 2007, compared to $955 million, or 1.38%, at September 30, 2007, and $944 million, or 1.43%, at December 31, 2006.

CAPITAL

     Key’s capital ratios continued to exceed all “well-capitalized” regulatory benchmarks at December 31, 2007. Key’s tangible equity to tangible assets ratio was 6.46% at quarter end, compared to 6.78% at September 30, 2007, and 7.01% at December 31, 2006.

     During the fourth quarter of 2007, Key did not repurchase any of its common shares and reissued .1 million shares under employee benefit plans. At December 31, 2007, Key had 14.0 million common shares remaining for repurchase under the current 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	4Q07		3Q07			2Q07			1Q07			4Q06
Shares outstanding at beginning of period		388,708		389,362			394,483			399,153			402,748
Issuance of shares under employee benefit plans		85		1,346			879			3,330			1,405
Repurchase of common shares		—		(2,000	)		(6,000	)		(8,000	)		(5,000	)
Shares outstanding at end of period		388,793		388,708			389,362			394,483			399,153

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
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LINE OF BUSINESS RESULTS

     The following table shows the contribution made by each major business group to Key’s taxable-equivalent revenue and income from continuing operations 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 tables at the end of this release.

Major Business Groups

										Percent change 4Q07 vs.
dollars in millions	4Q07			3Q07			4Q06			3Q07			4Q06
Revenue from continuing operations (TE)
Community Banking	$	651		$	626		$	677			4.0	%		(3.8)	%
National Banking		614			511			670			20.2			(8.4	)
Other Segments		17			14			(11	)		21.4			N/M
Total Segments		1,282			1,151			1,336			11.4			(4.0	)
Reconciling Items		(44	)		(1	)		(34	)		N/M			(29.4	)
Total	$	1,238		$	1,150		$	1,302			7.7	%		(4.9)	%
Income (loss) from continuing operations
Community Banking	$	109		$	130		$	101			(16.2)	%		7.9	%
National Banking		(65	)		73			195			N/M			N/M
Other Segments		21			16			2			31.3			950.0
Total Segments		65			219			298			(70.3	)		(78.2	)
Reconciling Items		(43	)		5			13			N/M			N/M
Total	$	22		$	224		$	311			(90.2)	%		(92.9)	%

TE = Taxable Equivalent, N/M = Not Meaningful

Community Banking

										Percent change 4Q07 vs.
dollars in millions	4Q07			3Q07			4Q06			3Q07			4Q06
Summary of operations
Net interest income (TE)	$	432		$	409		$	438			5.6	%		(1.4	)%
Noninterest income		219			217			239			.9			(8.4	)
Total revenue (TE)		651			626			677			4.0			(3.8	)
Provision for loan losses		36			1			23			N/M			56.5
Noninterest expense		441			418			493			5.5			(10.5	)
Income before income taxes (TE)		174			207			161			(15.9	)		8.1
Allocated income taxes and TE adjustments		65			77			60			(15.6	)		8.3
Net income	$	109		$	130		$	101			(16.2	)%		7.9	%
Percent of consolidated income from continuing operations		495	%		58	%		32	%		N/A			N/A
Average balances
Loans and leases	$	27,236		$	26,947		$	26,697			1.1	%		2.0	%
Total assets		29,911			29,716			29,666			.7			.8
Deposits		47,253			46,727			47,348			1.1			(.2	)

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

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
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Additional Community Banking Data

										Percent change 4Q07 vs.
dollars in millions	4Q07			3Q07			4Q06			3Q07			4Q06
Average deposits outstanding
NOW and money market deposit accounts	$	20,471		$	20,305		$	20,586			.8	%		(.6	)%
Savings deposits		1,513			1,569			1,639			(3.6	)		(7.7	)
Certificates of deposit ($100,000 or more)		4,918			4,566			4,329			7.7			13.6
Other time deposits		11,454			11,485			11,915			(.3	)		(3.9	)
Deposits in foreign office		1,249			1,128			818			10.7			52.7
Noninterest-bearing deposits		7,648			7,674			8,061			(.3	)		(5.1	)
Total deposits	$	47,253		$	46,727		$	47,348			1.1	%		(.2	)%
Home equity loans
Average balance	$	9,658		$	9,690		$	9,881
Weighted-average loan-to-value ratio		70	%		70	%		70	%
Percent first lien positions		57			58			59
Other data
On-line households / household penetration		737,393 / 45	%		743,909 / 45	%		682,955 / 53	%
Branches		955			954			950
Automated teller machines		1,443			1,439			2,050

Community Banking Summary of Operations

     Community Banking recorded net income of $109 million for the fourth quarter of 2007, up from $101 million for the year-ago quarter. The improvement was attributable to a decrease in noninterest expense which more than offset declines in net interest income and noninterest income, and an increase in the provision for loan losses.

     Taxable-equivalent net interest income decreased by $6 million, or 1%, from the fourth quarter of 2006, as interest rate spreads on both average earning assets and deposits have remained under pressure due to the continuation of competitive pricing. The decrease also reflected the effect of the February 2007 sale of the McDonald Investments branch network in which Key transferred approximately $1.3 billion of NOW and money market deposit accounts to the buyer. McDonald Investments’ NOW and money market deposit accounts averaged $1.6 billion for the fourth quarter of 2006.

     Noninterest income decreased by $20 million, or 8%. The decrease was attributable to the McDonald Investments sale. Excluding the impact of this sale, noninterest income rose by $20 million, or 10%, from the same period one year ago, due to growth in deposit service charge income, gains from the sales of securities in the fourth quarter of 2007, and higher income from trust and investment services.

     The provision for loan losses increased by $13 million, or 57%, compared to the fourth quarter of 2006.

     Noninterest expense declined by $52 million, or 11%, from the year-ago quarter. Reductions in costs resulting from the sale of the McDonald Investments branch network accounted for $43 million of the decline, including a $27 million decrease in personnel expense. The remainder of the decline in total noninterest expense reflected decreases in various direct and indirect charges, due in part to a reduction in the number of average full-time equivalent employees.

     On January 1, 2008, Key acquired U.S.B. Holding Co., Inc., the holding company for Union State Bank, a 31-branch state-chartered commercial bank headquartered in Orangeburg, New York. U.S.B. Holding Company had assets of $2.8 billion and deposits of $1.8 billion at the date of acquisition. The acquisition doubles Key’s branch penetration in the attractive Lower Hudson Valley area.

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 7

National Banking

										Percent change 4Q07 vs.
dollars in millions	4Q07			3Q07			4Q06			3Q07			4Q06
Summary of operations
Net interest income (TE)	$	391		$	359		$	365			8.9	%		7.1	%
Noninterest income		223			152			305			46.7			(26.9	)
Total revenue (TE)		614			511			670			20.2			(8.4	)
Provision for loan losses		327			68			30			380.9			990.0
Noninterest expense		388			328			328			18.3			18.3
(Loss) income from continuing operations before income taxes (TE)		(101	)		115			312			N/M			N/M
Allocated income taxes and TE adjustments		(36	)		42			117			N/M			N/M
(Loss) income from continuing operations		(65	)		73			195			N/M			N/M
Income (loss) from discontinued operations, net of taxes		3			(14	)		(165	)		N/M			N/M
Net (loss) income	$	(62	)	$	59		$	30			N/M	%		N/M	%
Percent of consolidated income from continuing operations		N/M	%		33	%		63	%		N/A			N/A
Average balances from continuing operations
Loans and leases	$	42,037		$	40,277		$	38,469			4.4	%		9.3	%
Loans held for sale		4,709			4,692			4,521			.4			4.2
Total assets		53,324			50,954			49,033			4.7			8.8
Deposits		12,630			12,633			11,876			—			6.3

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

National Banking Summary of Continuing Operations

     National Banking recorded a net loss of $65 million from continuing operations for the fourth quarter of 2007, compared to net income of $195 million from continuing operations for the same period last year. Lower noninterest income along with increases in the provision for loan losses and noninterest expense accounted for the reduction, and more than offset an increase in net interest income.

     Taxable-equivalent net interest income rose by $26 million, or 7%, from the fourth quarter of 2006 as a result of increases in average earning assets and deposits, offset in part by tighter interest rate spreads. Average loans and leases grew by $3.6 billion, or 9%, while average deposits rose by $754 million, or 6%, from the year-ago quarter.

     Noninterest income declined by $82 million, or 27%, as several capital markets-driven businesses were adversely affected by continued volatility in the financial markets. Results for the current quarter include $9 million in net losses from loan sales and write-downs, including $31 million in net losses pertaining to commercial real estate loans held for sale, offset in part by $28 million in net gains from the sales of commercial lease financing receivables. This compares to net gains of $37 million for the same period last year, including $14 million in net gains related to commercial real estate loans and a $25 million gain from the securitization and sale of education loans. Income from investment banking and capital markets activities decreased by $60 million, due to a $20 million decline in investment banking income, a $29 million decrease in the fair values of certain real estate-related investments held by the Private Equity unit within the Real Estate Capital line of business, and less favorable results from trading activities conducted in the Debt Capital Markets area. The decrease in total noninterest income was offset in part by an $18 million increase in trust and investment services income and a $10 million increase in operating lease revenue.

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 8

     The provision for loan losses rose by $297 million, reflecting deteriorating market conditions in the residential properties segment of Key’s commercial real estate construction portfolio. As recently announced, Key has moved to cease conducting business with non-relationship homebuilders outside of its 13-state Community Banking footprint. Based on this determination and its prior decision to curtail condominium development lending activities, Key has transferred approximately $1.1 billion of homebuilder-related loans and $800 million of condominium exposure to its special asset management group. The majority of these portfolios is currently performing and is expected to continue to perform.

     Noninterest expense grew by $60 million, or 18%, from the year-ago quarter. Contributing to the growth was a $22 million increase in the provision for losses on lending-related commitments and a $9 million rise in costs associated with operating leases.

     During the fourth quarter of 2007, Key’s management made the strategic decision to exit dealer-originated home improvement lending activities, which involve prime loans but are largely out-of-footprint. Key also decided to cease offering its Payroll Online services which were not of sufficient size to provide the company with economies of scale to compete profitably.

     On October 1, 2007, Key acquired Tuition Management Systems, Inc., one of the nation’s largest providers of outsourced tuition planning, billing and related technology services. Headquartered in Warwick, Rhode Island, Tuition Management Systems serves more than 700 colleges, universities, elementary and secondary educational institutions. The payment plan systems and technology in place at Tuition Management Systems and the array of payment plan products offered by Key’s Consumer Finance line of business will create one of the largest, most robust payment plan offerings in the nation.

Other Segments

     Other segments consist of Corporate Treasury and Key’s Principal Investing unit. These segments generated net income of $21 million for the fourth quarter of 2007, compared to $2 million for the same period last year. Results for the fourth quarter of 2006 were reduced by a $24 million charge recorded in connection with the redemption of certain trust preferred securities.

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 9

Line of Business Descriptions

Community Banking

Regional 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. This line of business also provides small businesses with deposit, investment and credit products, and business advisory services.

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

Commercial Bankingprovides midsize businesses with products and services that include commercial lending, cash management, equipment leasing, investment and employee benefit programs, succession planning, access to capital markets, derivatives and foreign exchange.

National Banking

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 in which at least 50% of the debt service is provided by rental income from nonaffiliated third parties).

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 Institutional and Capital Markets, and Commercial Banking) if those businesses are principally responsible for maintaining the relationship with the client.

Institutional and Capital Marketsprovides products and services to large corporations, middle-market companies, financial institutions, government entities and not-for-profit organizations. These products and services include commercial lending, treasury management, investment banking, derivatives and foreign exchange, equity and debt underwriting and trading, and syndicated finance.

Through its Victory Capital Management unit, Institutional and Capital Markets also 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.

Consumer Financeincludes Indirect Lending, Commercial Floor Plan Lending, Home Equity Services and Business Services.

Indirect Lending offers loans to consumers through dealers. This business unit also provides federal and private education loans to students and their parents, and processes payments on loans that private schools make to parents.

Commercial Floor Plan Lending finances inventory for automobile and marine dealers.

Home Equity Services works with home improvement contractors to provide home equity and home improvement financing solutions.

Business Services provides payroll processing solutions for businesses of all sizes.

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 10

     Cleveland-based KeyCorp is one of the nation’s largest bank-based financial services companies, with assets of approximately $100 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 955 branches and additional offices; a network of 1,443 ATMs; telephone banking centers (1.800.KEY2YOU); and a Web site,https://www.key.com/,^âthat 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 athttps://www.key.com/irat 9:00 a.m. ET, on Tuesday, January 22, 2008. An audio replay of the call will be available through January 29.

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

This news release contains forward-looking statements, including statements about our financial condition, results of operations, earnings outlook, asset quality trends and profitability. Forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to assumptions, risks and uncertainties. Although management believes that the expectations and forecasts reflected in these forward-looking statements are reasonable, actual results could differ materially due to a variety of factors including: (1) changes in interest rates; (2) changes in trade, monetary or fiscal policy; (3) changes in general economic conditions, or in the condition of the local economies or industries in which we have significant operations or assets, which could, among other things, materially impact credit quality trends and our ability to generate loans; (4) increased competitive pressure among financial services companies; (5) the inability to successfully execute strategic initiatives designed to grow revenues and/or manage expenses; (6) consummation of significant business combinations or divestitures; (7) operational or risk management failures due to technological or other factors; (8) heightened regulatory practices, requirements or expectations; (9) new legal obligations or liabilities or unfavorable resolution of litigation; (10) adverse capital markets conditions; (11) continued disruption in the fixed income markets; (12) disruption in the economy and general business climate as a result of terrorist activities or military actions; and (13) changes in accounting or tax practices or requirements. Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management’s views as of any subsequent date. We do not assume any obligation to update these forward-looking statements. For further information regarding KeyCorp, please read KeyCorp’s reports that are filed with the Securities and Exchange Commission and are available at www.sec.gov.

###

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 11

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

	Three months ended
	12-31-07			9-30-07			12-31-06
Summary of operations
Net interest income (TE)	$	750		$	712		$	744
Noninterest income		488			438			558
Total revenue (TE)		1,238			1,150			1,302
Provision for loan losses		363			69			53
Noninterest expense		896			753			809
Income from continuing operations before cumulative effect of accounting change		22			224			311
Income (loss) from discontinued operations, net of taxesa		3			(14	)		(165	)
Net income		25			210			146
Per common share
Income from continuing operations before cumulative effect of accounting change	$	.06		$	.58		$	.77
Income from continuing operations before cumulative effect of accounting change — assuming dilution		.06			.57			.76
Income (loss) from discontinued operationsa		.01			(.03	)		(.41	)
Income (loss) from discontinued operations — assuming dilutiona		.01			(.03	)		(.40	)
Net income		.06			.54			.36
Net income — assuming dilution		.06			.54			.36
Cash dividends paid		.365			.365			.345
Book value at period end		19.92			20.12			19.30
Market price at period end		23.45			32.33			38.03
Performance ratios — from continuing operations
Return on average total assets		.09	%		.93	%		1.33	%
Return on average equity		1.11			11.50			15.63
Net interest margin (TE)		3.48			3.40			3.66
Performance ratios — from consolidated operations
Return on average total assets		.10	%		.88	%		.61	%
Return on average equity		1.26			10.79			7.34
Net interest margin (TE)		3.48			3.40			3.69
Capital ratios at period end
Equity to assets		7.75	%		8.03	%		8.34	%
Tangible equity to tangible assets		6.46			6.78			7.01
Tier 1 risk-based capitalb		7.37			7.94			8.24
Total risk-based capitalb		11.29			11.76			12.43
Leverageb		8.30			8.96			8.98
Asset quality
Net loan charge-offs	$	119		$	59		$	54
Net loan charge-offs to average loans from continuing operations		.67	%		.35	%		.33	%
Allowance for loan losses	$	1,200		$	955		$	944
Allowance for loan losses to period-end loans		1.69	%		1.38	%		1.43	%
Allowance for loan losses to nonperforming loans		174.67			191.77			439.07
Nonperforming loans at period end	$	687		$	498		$	215
Nonperforming assets at period end		764			570			273
Nonperforming loans to period-end portfolio loans		.97	%		.72	%		.33	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.08			.83			.41
Trust and brokerage assets
Assets under management	$	85,442		$	88,100		$	84,699
Nonmanaged and brokerage assetsc		33,918			33,273			56,292
Other data
Average full-time equivalent employees		18,500			18,567			20,100
Branches		955			954			950
Taxable-equivalent adjustment	$	40		$	18		$	32

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 12

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

	Twelve months ended
	12-31-07			12-31-06
Summary of operations
Net interest income (TE)	$	2,868		$	2,918
Noninterest income		2,229			2,127
Total revenue (TE)		5,097			5,045
Provision for loan losses		529			150
Noninterest expense		3,248			3,149
Income from continuing operations before cumulative effect of accounting change		941			1,193
Loss from discontinued operations, net of taxesa		(22	)		(143	)
Net income		919			1,055
Per common share
Income from continuing operations before cumulative effect of accounting change	$	2.40		$	2.95
Income from continuing operations before cumulative effect of accounting change — assuming dilution		2.38			2.91
Loss from discontinued operationsa		(.06	)		(.35	)
Loss from discontinued operations — assuming dilutiona		(.05	)		(.35	)
Net income		2.35			2.61
Net income — assuming dilution		2.32			2.57
Cash dividends paid		1.46			1.38
Performance ratios — from continuing operations
Return on average total assets		.99	%		1.30	%
Return on average equity		12.19			15.43
Net interest margin (TE)		3.46			3.67
Performance ratios — from consolidated operations
Return on average total assets		.97	%		1.12	%
Return on average equity		11.90			13.64
Net interest margin (TE)		3.46			3.69
Asset quality
Net loan charge-offs	$	275		$	170
Net loan charge-offs to average loans from continuing operations		.41	%		.26	%
Other data
Average full-time equivalent employees		18,934			20,006
Taxable-equivalent adjustment	$	99		$	103

(a)	Key sold the subprime mortgage loan portfolio held by the Champion Mortgage finance business in November 2006, and completed the sale of Champion’s origination platform in February 2007. As a result of these actions, Key has accounted for this business as a discontinued operation.
(b)	12-31-07 ratio is estimated.
(c)	On February 9, 2007, Key sold the McDonald Investments branch network.

TE = Taxable Equivalent

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 13

Consolidated Balance Sheets
(dollars in millions)

	12-31-07			9-30-07			12-31-06
Assets
Loans	$	70,823		$	68,999		$	65,826
Loans held for sale		4,736			4,791			3,637
Securities available for sale		7,860			7,915			7,827
Held-to-maturity securities		28			36			41
Trading account assets		1,056			1,060			912
Short-term investments		800			663			495
Other investments		1,538			1,509			1,352
Total earning assets		86,841			84,973			80,090
Allowance for loan losses		(1,200	)		(955	)		(944	)
Cash and due from banks		1,814			2,016			2,264
Premises and equipment		681			631			595
Operating lease assets		1,128			1,135			1,124
Goodwill		1,252			1,202			1,202
Other intangible assets		123			105			120
Corporate-owned life insurance		2,872			2,845			2,782
Derivative assets		2,205			1,497			1,091
Accrued income and other assets		4,267			3,917			4,013
Total assets	$	99,983		$	97,366		$	92,337
Liabilities
Deposits in domestic offices:
NOW and money market deposit accounts	$	27,635		$	24,198		$	24,340
Savings deposits		1,513			1,544			1,642
Certificates of deposit ($100,000 or more)		6,982			6,672			5,941
Other time deposits		11,615			11,403			11,956
Total interest-bearing deposits		47,745			43,817			43,879
Noninterest-bearing deposits		11,028			14,003			13,553
Deposits in foreign office — interest-bearing		4,326			5,894			1,684
Total deposits		63,099			63,714			59,116
Federal funds purchased and securities sold under repurchase agreements		3,927			5,398			3,643
Bank notes and other short-term borrowings		6,453			2,743			1,192
Derivative liabilities		1,340			1,063			922
Accrued expense and other liabilities		5,461			5,079			5,228
Long-term debt		11,957			11,549			14,533
Total liabilities		92,237			89,546			84,634
Shareholders’ equity
Preferred stock		—			—			—
Common shares		492			492			492
Capital surplus		1,623			1,617			1,602
Retained earnings		8,522			8,788			8,377
Treasury stock, at cost		(3,021	)		(3,023	)		(2,584	)
Accumulated other comprehensive income (loss)		130			(54	)		(184	)
Total shareholders’ equity		7,746			7,820			7,703
Total liabilities and shareholders’ equity	$	99,983		$	97,366		$	92,337
Common shares outstanding (000)		388,793			388,708			399,153

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 14

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

	Three months ended									Twelve months ended
	12-31-07			9-30-07			12-31-06			12-31-07			12-31-06
Interest income
Loans	$	1,205		$	1,209		$	1,187		$	4,751		$	4,561
Loans held for sale		89			91			90			337			325
Securities available for sale		115			106			96			427			347
Held-to-maturity securities		1			—			—			2			2
Trading account assets		12			11			8			38			30
Short-term investments		13			5			8			37			33
Other investments		12			12			24			52			82
Total interest income		1,447			1,434			1,413			5,644			5,380
Interest expense
Deposits		483			482			440			1,845			1,576
Federal funds purchased and securities sold under repurchase agreements		45			55			37			208			107
Bank notes and other short-term borrowings		45			30			19			104			94
Long-term debt		164			173			205			718			788
Total interest expense		737			740			701			2,875			2,565
Net interest income		710			694			712			2,769			2,815
Provision for loan losses		363			69			53			529			150
Net interest income after provision for loan losses		347			625			659			2,240			2,665
Noninterest income
Trust and investment services income		131			119			142			490			553
Service charges on deposit accounts		90			88			77			337			304
Investment banking and capital markets income		12			9			69			117			230
Operating lease income		72			70			63			272			229
Letter of credit and loan fees		58			51			55			192			188
Corporate-owned life insurance income		37			27			31			121			105
Electronic banking fees		25			25			27			99			105
Net (losses) gains from loan securitizations and sales		(6	)		(53	)		42			(17	)		76
Net securities gains (losses)		6			4			3			(35	)		1
Net gains from principal investing		6			9			5			134			53
Gain from sale of McDonald Investments branch network		—			—			—			171			—
Other income		57			89			44			348			283
Total noninterest income		488			438			558			2,229			2,127
Noninterest expense
Personnel		399			383			447			1,621			1,692
Net occupancy		64			60			68			246			250
Computer processing		52			49			55			201			212
Operating lease expense		59			58			50			224			184
Professional fees		38			27			33			117			134
Equipment		25			22			24			96			102
Marketing		16			21			27			76			97
Other expense		243			133			105			667			478
Total noninterest expense		896			753			809			3,248			3,149
(Loss) income from continuing operations before income taxes and cumulative effect of accounting change		(61	)		310			408			1,221			1,643
Income taxes		(83	)		86			97			280			450
Income from continuing operations before cumulative effect of accounting change		22			224			311			941			1,193
Income (loss) from discontinued operations, net of taxes		3			(14	)		(165	)		(22	)		(143	)
Income before cumulative effect of accounting change		25			210			146			919			1,050
Cumulative effect of change in accounting for forfeited stock-based awards, net of taxes		—			—			—			—			5
Net income	$	25		$	210		$	146		$	919		$	1,055
Per common share:
Income from continuing operations before cumulative effect of accounting change	$	.06		$	.58		$	.77		$	2.40		$	2.95
Income before cumulative effect of accounting change		.06			.54			.36			2.35			2.60
Net income		.06			.54			.36			2.35			2.61
Per common share — assuming dilution:
Income from continuing operations before cumulative effect of accounting change	$	.06		$	.57		$	.76		$	2.38		$	2.91
Income before cumulative effect of accounting change		.06			.54			.36			2.32			2.56
Net income		.06			.54			.36			2.32			2.57
Cash dividends declared per common share	$	.74		$	.365		$	.345		$	1.835		$	1.38
Weighted-average common shares outstanding (000)		388,841			389,319			402,329			391,988			404,490
Weighted-average common shares and potential common shares outstanding (000)		389,911			393,164			407,828			395,823			410,222

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 15

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

	Fourth Quarter 2007								Third Quarter 2007								Fourth Quarter 2006
	Average								Average								Average
	Balance			Interest		Yield/Rate			Balance			Interest		Yield/Rate			Balance			Interest		Yield/Rate
Assets
Loans:a,b
Commercial, financial and agricultural	$	23,825		$	419		6.98	%	$	22,393		$	410		7.25	%	$	21,384		$	400		7.42	%
Real estate — commercial mortgage		9,351			175		7.42			8,855			172		7.69			8,399			167		7.86
Real estate — construction		8,192			153		7.42			8,285			167		8.01			8,347			174		8.25
Commercial lease financing		10,252			171		6.65			10,172			147		5.80			9,891			160		6.47
Total commercial loans		51,620			918		7.06			49,705			896		7.16			48,021			901		7.44
Real estate — residential		1,596			27		6.72			1,586			26		6.68			1,428			24		6.59
Home equity		10,917			192		7.02			10,883			199		7.22			10,896			197		7.22
Consumer — direct		1,308			35		10.73			1,342			36		10.66			1,557			34		8.63
Consumer — indirect		4,276			73		6.76			4,164			70		6.79			3,671			62		6.85
Total consumer loans		18,097			327		7.20			17,975			331		7.33			17,552			317		7.21
Total loans		69,717			1,245		7.10			67,680			1,227		7.20			65,573			1,218		7.38
Loans held for sale		4,748			89		7.53			4,731			91		7.59			4,547			90		7.86
Securities available for sale c		7,858			115		5.89			7,825			106		5.45			7,765			96		4.88
Held-to-maturity securitiesa		30			1		6.24			36			—		6.43			38			1		7.68
Trading account assets		1,042			12		4.40			1,055			11		4.39			883			8		3.70
Short-term investments		1,226			13		3.94			633			5		3.32			701			8		4.46
Other investments c		1,589			12		3.02			1,563			12		2.99			1,351			24		6.76
Total earning assets		86,210			1,487		6.86			83,523			1,452		6.92			80,858			1,445		7.09
Allowance for loan losses		(966	)							(942	)							(941	)
Accrued income and other assets		13,547								12,581								13,129
Total assets	$	98,791							$	95,162							$	93,046
Liabilities
NOW and money market deposit accounts	$	25,687			197		3.05		$	24,190			209		3.41		$	25,136			198		3.13
Savings deposits		1,523			1		.19			1,581			—		.19			1,651			1		.19
Certificates of deposit ($100,000 or more)d		6,887			86		4.98			6,274			80		5.06			6,013			75		4.93
Other time deposits		11,455			135		4.68			11,512			136		4.68			11,921			136		4.50
Deposits in foreign office e		5,720			64		4.42			4,540			57		5.00			2,245			30		5.55
Total interest-bearing deposits		51,272			483		3.74			48,097			482		3.98			46,966			440		3.72
Federal funds purchased and securities sold under repurchase agreements e		4,194			45		4.23			4,470			55		4.85			2,816			37		5.21
Bank notes and other short-term borrowings		4,233			45		4.15			2,539			30		4.70			1,814			19		4.17
Long-term debt d,e		11,851			164		5.72			11,801			173		5.89			14,092			205		5.80
Total interest-bearing liabilities		71,550			737		4.11			66,907			740		4.40			65,688			701		4.24
Noninterest-bearing deposits		12,948								14,424								13,424
Accrued expense and other liabilities		6,405								6,106								6,041
Total liabilities		90,903								87,437								85,153
Shareholders’ equity		7,888								7,725								7,893
Total liabilities and shareholders’ equity	$	98,791							$	95,162							$	93,046
Interest rate spread (TE)							2.75	%							2.52	%							2.85	%
Net interest income (TE) and net interest margin (TE)					750		3.48	%					712		3.40	%					744		3.66	%
TE adjustmenta					40								18								32
Net interest income, GAAP basis				$	710							$	694							$	712

(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.
(e)	Results from continuing operations exclude the dollar amount of liabilities assumed necessary to support interest-earning assets held by the discontinued Champion Mortgage finance business. The interest expense related to these liabilities, which also is excluded from continuing operations, was calculated using a matched funds transfer pricing methodology.

TE = Taxable Equivalent

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 16

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

	Twelve months ended December 31, 2007								Twelve months ended December 31, 2006
	Average								Average
	Balance			Interest		Yield/Rate			Balance			Interest		Yield/Rate
Assets
Loans:a,b
Commercial, financial and agricultural	$	22,415		$	1,622		7.23	%	$	21,679		$	1,547		7.13	%
Real estate — commercial mortgage		8,802			675		7.67			8,167			628		7.68
Real estate — construction		8,237			653		7.93			7,802			635		8.14
Commercial lease financing		10,154			606		5.97			9,773			595		6.08
Total commercial loans		49,608			3,556		7.17			47,421			3,405		7.18
Real estate — residential		1,525			101		6.64			1,430			93		6.49
Home equity		10,815			775		7.17			10,971			775		7.07
Consumer — direct		1,367			144		10.53			1,639			152		9.26
Consumer — indirect		4,042			274		6.77			3,535			238		6.73
Total consumer loans		17,749			1,294		7.29			17,575			1,258		7.16
Total loans		67,357			4,850		7.20			64,996			4,663		7.17
Loans held for sale		4,461			337		7.57			4,168			325		7.80
Securities available for sale c		7,757			427		5.52			7,302			347		4.71
Held-to-maturity securitiesa		36			2		6.68			47			3		7.43
Trading account assets		917			38		4.10			857			30		3.51
Short-term investments		846			37		4.34			791			33		4.15
Other investments c		1,524			52		3.33			1,362			82		5.78
Total earning assets		82,898			5,743		6.84			79,523			5,483		6.88
Allowance for loan losses		(948	)							(952	)
Accrued income and other assets		12,934								13,131
Total assets	$	94,884							$	91,702
Liabilities
NOW and money market deposit accounts	$	24,070			762		3.17		$	25,044			710		2.84
Savings deposits		1,591			3		.19			1,728			4		.23
Certificates of deposit ($100,000 or more)d		6,389			321		5.02			5,581			261		4.67
Other time deposits		11,767			550		4.68			11,592			481		4.14
Deposits in foreign office e		4,287			209		4.87			2,305			120		5.22
Total interest-bearing deposits		48,104			1,845		3.84			46,250			1,576		3.41
Federal funds purchased and securities sold under repurchase agreements e		4,330			208		4.79			2,215			107		4.80
Bank notes and other short-term borrowings		2,423			104		4.28			2,284			94		4.12
Long-term debt d,e		12,537			718		5.84			13,983			788		5.62
Total interest-bearing liabilities		67,394			2,875		4.28			64,732			2,565		3.96
Noninterest-bearing deposits		13,635								13,053
Accrued expense and other liabilities		6,133								6,183
Total liabilities		87,162								83,968
Shareholders’ equity		7,722								7,734
Total liabilities and shareholders’ equity	$	94,884							$	91,702
Interest rate spread (TE)							2.56	%							2.92	%
Net interest income (TE) and net interest margin (TE)					2,868		3.46	%					2,918		3.67	%
TE adjustmenta					99								103
Net interest income, GAAP basis				$	2,769							$	2,815

(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.
(e)	Results from continuing operations exclude the dollar amount of liabilities assumed necessary to support interest-earning assets held by the discontinued Champion Mortgage finance business. The interest expense related to these liabilities, which also is excluded from continuing operations, was calculated using a matched funds transfer pricing methodology.

TE = Taxable Equivalent

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 17

Noninterest Income
(in millions)

	Three months ended								Twelve months ended
	12-31-07			9-30-07			12-31-06		12-31-07			12-31-06
Trust and investment services incomea	$	131		$	119		$	142	$	490		$	553
Service charges on deposit accounts		90			88			77		337			304
Investment banking and capital markets incomea		12			9			69		117			230
Operating lease income		72			70			63		272			229
Letter of credit and loan fees		58			51			55		192			188
Corporate-owned life insurance income		37			27			31		121			105
Electronic banking fees		25			25			27		99			105
Net (losses) gains from loan securitizations and sales		(6	)		(53	)		42		(17	)		76
Net securities gains (losses)		6			4			3		(35	)		1
Net gains from principal investing		6			9			5		134			53
Gain from sale of McDonald Investments branch network		—			—			—		171			—
Other income:
Insurance income		10			16			15		55			64
Loan securitization servicing fees		5			5			5		21			20
Credit card fees		3			4			3		13			17
Gains related to MasterCard Incorporated shares		—			27			—		67			9
Litigation settlement — automobile residual value insurance		—			—			—		26			—
Miscellaneous income		39			37			21		166			173
Total other income		57			89			44		348			283
Total noninterest income	$	488		$	438		$	558	$	2,229		$	2,127

(a) Additional detail provided in tables below.

Trust and Investment Services Income
(in millions)

	Three months ended						Twelve months ended
	12-31-07		9-30-07		12-31-06		12-31-07		12-31-06
Brokerage commissions and fee income	$	31	$	26	$	58	$	125	$	235
Personal asset management and custody fees		43		41		40		165		156
Institutional asset management and custody fees		57		52		44		200		162
Total trust and investment services income	$	131	$	119	$	142	$	490	$	553

Investment Banking and Capital Markets Income
(in millions)

	Three months ended								Twelve months ended
	12-31-07			9-30-07			12-31-06		12-31-07			12-31-06
Investment banking income	$	21		$	22		$	43	$	86		$	112
(Loss) income from other investments		(23	)		(22	)		6		(34	)		43
Dealer trading and derivatives (loss) income		(1	)		(2	)		10		17			33
Foreign exchange income		15			11			10		48			42
Total investment banking and capital markets income	$	12		$	9		$	69	$	117		$	230

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 18

Noninterest Expense
(dollars in millions)

	Three months ended							Twelve months ended
	12-31-07		9-30-07		12-31-06			12-31-07		12-31-06
Personnela	$	399	$	383	$	447		$	1,621	$	1,692
Net occupancy		64		60		68			246		250
Computer processing		52		49		55			201		212
Operating lease expense		59		58		50			224		184
Professional fees		38		27		33			117		134
Equipment		25		22		24			96		102
Marketing		16		21		27			76		97
Other expense:
Postage and delivery		13		11		12			47		50
Franchise and business taxes		7		8		(7	)		32		22
Telecommunications		7		7		7			28		28
Provision (credit) for losses on lending-related commitments		25		5		(6	)		28		(6	)
Liability to Visa		64		—		—			64		—
Miscellaneous expense		127		102		99			468		384
Total other expense		243		133		105			667		478
Total noninterest expense	$	896	$	753	$	809		$	3,248	$	3,149
Average full-time equivalent employeesb		18,500		18,567		20,100			18,934		20,006

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

Personnel Expense
(in millions)

	Three months ended						Twelve months ended
	12-31-07		9-30-07		12-31-06		12-31-07		12-31-06
Salaries	$	255	$	240	$	238	$	976	$	940
Incentive compensation		52		55		120		264		388
Employee benefits		65		67		64		287		287
Stock-based compensation		3		17		17		60		64
Severance		24		4		8		34		13
Total personnel expense	$	399	$	383	$	447	$	1,621	$	1,692

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 19

Loan Composition
(dollars in millions)

							Percent change 12-31-07 vs.
	12-31-07		9-30-07		12-31-06		9-30-07			12-31-06
Commercial, financial and agricultural	$	24,797	$	23,192	$	21,412		6.9	%		15.8	%
Commercial real estate:
Commercial mortgage		9,630		9,272		8,426		3.9			14.3
Construction		8,102		8,214		8,209		(1.4	)		(1.3	)
Total commercial real estate loans		17,732		17,486		16,635		1.4			6.6
Commercial lease financing		10,176		10,309		10,259		(1.3	)		(.8	)
Total commercial loans		52,705		50,987		48,306		3.4			9.1
Real estate — residential mortgage		1,594		1,583		1,442		.7			10.5
Home equity		10,917		10,904		10,826		.1			.8
Consumer — direct		1,298		1,308		1,536		(.8	)		(15.5	)
Consumer — indirect:
Marine		3,637		3,549		3,077		2.5			18.2
Other		672		668		639		.6			5.2
Total consumer — indirect loans		4,309		4,217		3,716		2.2			16.0
Total consumer loans		18,118		18,012		17,520		.6			3.4
Total loans	$	70,823	$	68,999	$	65,826		2.6	%		7.6	%

Loans Held for Sale Composition
(dollars in millions)

							Percent change 12-31-07 vs.
	12-31-07		9-30-07		12-31-06		9-30-07			12-31-06
Commercial, financial and agricultural	$	250	$	67	$	47		273.1	%		431.9	%
Real estate — commercial mortgage		1,219		1,560		946		(21.9	)		28.9
Real estate — construction		35		237		36		(85.2	)		(2.8	)
Commercial lease financing		1		5		3		(80.0	)		(66.7	)
Real estate — residential mortgage		47		36		21		30.6			123.8
Home equity		1		1		180		—			(99.4	)
Education		3,176		2,877		2,390		10.4			32.9
Automobile		7		8		14		(12.5	)		(50.0	)
Total loans held for sale	$	4,736	$	4,791	$	3,637		(1.1	)%		30.2	%

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 20

Summary of Loan Loss Experience
(dollars in millions)

	Three months ended									Twelve months ended
	12-31-07			9-30-07			12-31-06			12-31-07			12-31-06
Average loans outstanding from continuing operations	$	69,717		$	67,680		$	65,573		$	67,357		$	64,996
Allowance for loan losses at beginning of period	$	955		$	945		$	944		$	944		$	966
Loans charged off:
Commercial, financial and agricultural		48			33			18			128			92
Real estate — commercial mortgage		3			2			15			16			24
Real estate — construction		44			7			1			54			4
Total commercial real estate loans		47			9			16			70			28
Commercial lease financing		18			11			13			51			40
Total commercial loans		113			53			47			249			160
Real estate — residential mortgage		3			1			2			6			7
Home equity		12			9			8			37			30
Consumer — direct		8			8			7			31			33
Consumer — indirect		16			11			10			47			38
Total consumer loans		39			29			27			121			108
		152			82			74			370			268
Recoveries:
Commercial, financial and agricultural		13			11			7			37			34
Real estate — commercial mortgage		2			—			2			6			5
Real estate — construction		—			1			—			1			1
Total commercial real estate loans		2			1			2			7			6
Commercial lease financing		12			3			4			22			27
Total commercial loans		27			15			13			66			67
Real estate — residential mortgage		—			—			—			1			1
Home equity		—			1			2			4			7
Consumer — direct		2			3			2			8			7
Consumer — indirect		4			4			3			16			16
Total consumer loans		6			8			7			29			31
		33			23			20			95			98
Net loan charge-offs		(119	)		(59	)		(54	)		(275	)		(170	)
Provision for loan losses from continuing operations		363			69			53			529			150
Credit for loan losses from discontinued operations		—			—			—			—			(3	)
Foreign currency translation adjustment		1			—			1			2			1
Allowance for loan losses at end of period	$	1,200		$	955		$	944		$	1,200		$	944
Net loan charge-offs to average loans from continuing operations		.67	%		.35	%		.33	%		.41	%		.26	%
Allowance for loan losses to period-end loans		1.69			1.38			1.43			1.69			1.43
Allowance for loan losses to nonperforming loans		174.67			191.77			439.07			174.67			439.07

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 21

Changes in Liability for Credit Losses on Lending-Related Commitments
(in millions)

	Three months ended							Twelve months ended
	12-31-07		9-30-07		12-31-06			12-31-07			12-31-06
Balance at beginning of period	$	55	$	50	$	59		$	53		$	59
Provision (credit) for losses on lending- related commitments		25		5		(6	)		28			(6	)
Charge-offs		—		—		—			(1	)		—
Balance at end of perioda	$	80	$	55	$	53		$	80		$	53

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

	12-31-07			9-30-07			6-30-07			3-31-07			12-31-06
Commercial, financial and agricultural	$	84		$	94		$	83		$	70		$	38
Real estate — commercial mortgage		41			41			41			44			48
Real estate — construction		415			228			23			10			10
Total commercial real estate loans		456			269			64			54			58
Commercial lease financing		28			30			34			31			22
Total commercial loans		568			393			181			155			118
Real estate — residential mortgage		28			29			27			32			34
Home equity		66			61			55			52			50
Consumer — direct		2			2			2			2			2
Consumer — indirect		23			13			11			13			11
Total consumer loans		119			105			95			99			97
Total nonperforming loans		687			498			276			254			215
Nonperforming loans held for sale		25			6			4			3			3
OREO		21			21			27			42			57
Allowance for OREO losses		(2	)		(1	)		(2	)		(2	)		(3	)
OREO, net of allowance		19			20			25			40			54
Other nonperforming assets b		33			46			73			56			1
Total nonperforming assets	$	764		$	570		$	378		$	353		$	273
Accruing loans past due 90 days or more	$	231		$	190		$	181		$	146		$	120
Accruing loans past due 30 through 89 days		843			717			623			626			644
Nonperforming loans to period-end portfolio loans		.97	%		.72	%		.41	%		.39	%		.33	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.08			.83			.57			.54			.41

Summary of Changes in Nonperforming Loans
(in millions)

	4Q07			3Q07			2Q07			1Q07			4Q06
Balance at beginning of period	$	498		$	276		$	254		$	215		$	223
Loans placed on nonaccrual status		378			337			130			129			115
Charge-offs		(147	)		(81	)		(72	)		(61	)		(74	)
Loans sold		(13	)		(6	)		(7	)		—			(5	)
Payments		(17	)		(13	)		(21	)		(7	)		(23	)
Transfers to OREO		(5	)		(12	)		—			(9	)		(12	)
Loans returned to accrual status		(7	)		(3	)		(8	)		(13	)		(9	)
Balance at end of period	$	687		$	498		$	276		$	254		$	215

(a)	Included in “accrued expense and other liabilities” on the consolidated balance sheet.
(b)	Primarily investments held by the Private Equity unit within Key’s Real Estate Capital line of business.

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 22

Line of Business Results
(dollars in millions)

Community Banking

																Percent change 4Q07 vs.
	4Q07			3Q07			2Q07			1Q07			4Q06			3Q07			4Q06
Summary of operations
Total revenue (TE)	$	651		$	626		$	629		$	805		$	677			4.0	%		(3.8)	%
Provision for loan losses		36			1			21			14			23			N/M			56.5
Noninterest expense		441			418			449			471			493			5.5			(10.5	)
Net income		109			130			99			200			101			(16.2	)		7.9
Average loans and leases		27,236			26,947			26,576			26,456			26,697			1.1			2.0
Average deposits		47,253			46,727			46,124			46,521			47,348			1.1			(.2	)
Net loan charge-offs		31			20			26			19			24			55.0			29.2
Return on average allocated equity		17.14	%		20.60	%		16.12	%		32.93	%		16.03	%		N/A			N/A
Average full-time equivalent employees		8,464			8,632			9,028			9,478			9,683			(1.9	)		(12.6	)
Supplementary information (lines of business)
Regional Banking
Total revenue (TE)	$	553		$	531		$	535		$	713		$	579			4.1	%		(4.5)	%
Provision for loan losses		26			12			19			18			19			116.7			36.8
Noninterest expense		389			371			401			422			445			4.9			(12.6	)
Net income		86			93			72			170			72			(7.5	)		19.4
Average loans and leases		18,768			18,661			18,459			18,483			18,677			.6			.5
Average deposits		43,692			43,229			42,712			43,039			43,749			1.1			(.1	)
Net loan charge-offs		26			18			19			18			19			44.4			36.8
Return on average allocated equity		19.61	%		21.13	%		16.70	%		39.53	%		16.07	%		N/A			N/A
Average full-time equivalent employees		8,162			8,322			8,709			9,155			9,362			(1.9	)		(12.8	)
Commercial Banking
Total revenue (TE)	$	98		$	95		$	94		$	92		$	98			3.2	%		—
Provision for loan losses		10			(11	)		2			(4	)		4			N/M			150.0	%
Noninterest expense		52			47			48			49			48			10.6			8.3
Net income		23			37			27			30			29			(37.8	)		(20.7	)
Average loans and leases		8,468			8,286			8,117			7,973			8,020			2.2			5.6
Average deposits		3,561			3,498			3,412			3,482			3,599			1.8			(1.1	)
Net loan charge-offs		5			2			7			1			5			150.0			—
Return on average allocated equity		11.65	%		19.37	%		14.73	%		16.92	%		15.94	%		N/A			N/A
Average full-time equivalent employees		302			310			319			323			321			(2.6	)		(5.9	)

KeyCorp Reports Fourth Quarter and 2007 Earnings
January 22, 2008
Page 23

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

National Banking

																Percent change 4Q07 vs.
	4Q07			3Q07			2Q07			1Q07			4Q06			3Q07			4Q06
Summary of operations
Total revenue (TE)	$	614		$	511		$	617		$	600		$	670			20.2	%		(8.4	)%
Provision for loan losses		327			68			32			30			30			380.9			990.0
Noninterest expense		388			328			327			314			328			18.3			18.3
Loss (income) continuing operations		(65	)		73			162			160			195			N/M			N/M
Net (loss) income		(62	)		59			159			152			30			N/M			N/M
Average loans and leasesa		42,037			40,277			39,323			38,839			38,469			4.4			9.3
Average loans held for salea		4,709			4,692			4,377			3,917			4,521			.4			4.2
Average depositsa		12,630			12,633			12,085			11,294			11,876			—			6.3
Net loan charge-offsa		88			39			27			25			30			125.6			193.3
Return on average allocated equitya		(5.78	)%		6.93	%		15.65	%		16.07	%		19.38	%		N/A			N/A
Return on average allocated equity		(5.52	)		5.60			15.36			15.26			2.81			N/A			N/A
Average full-time equivalent employees		3,996			3,841			3,820			4,207			4,293			4.0			(6.9	)
Supplementary information (lines of business)
Real Estate Capital
Total revenue (TE)	$	127		$	104		$	187		$	167		$	189			22.1	%		(32.8	)%
Provision for loan losses		270			43			8			1			18			527.9			N/M
Noninterest expense		105			76			78			71			69			38.2			52.2
Net (loss) income		(155	)		(9	)		63			59			63			N/M			N/M
Average loans and leases		13,847			13,187			12,827			12,755			12,931			5.0			7.1
Average loans held for sale		1,257			1,584			1,241			1,145			1,125			(20.6	)		11.7
Average deposits		5,273			5,559			4,864			4,293			4,091			(5.1	)		28.9
Net loan charge-offs		45			7			3			1			8			542.9			462.5
Return on average allocated equity		(43.09	)%		(2.67	)%		19.27	%		19.30	%		20.42	%		N/A			N/A
Average full-time equivalent employees		1,014			1,007			991			971			957			.7			6.0
Equipment Finance
Total revenue (TE)	$	184		$	139		$	153		$	134		$	146			32.4	%		26.0	%
Provision for loan losses		23			16			16			13			7			43.8			228.6
Noninterest expense		95			93			92			85			77			2.2			23.4
Net income		41			18			28			23			39			127.8			5.1
Average loans and leases		10,729			10,681			10,609			10,479			10,222			.4			5.0
Average loans held for sale		15			6			10			4			33			150.0			(54.5	)
Average deposits		17			16			16			13			15			6.3			13.3
Net loan charge-offs		18			16			16			13			14			12.5			28.6
Return on average allocated equity		17.68	%		7.92	%		12.69	%		10.65	%		17.99	%		N/A			N/A
Average full-time equivalent employees		1,009			985			971			952			938			2.4			7.6
Institutional and Capital Markets
Total revenue (TE)	$	203		$	182		$	189		$	184		$	223			11.5	%		(9.0	)%
Provision for loan losses		15			(3	)		—			—			(5	)		N/M			N/M
Noninterest expense		132			121			116			117			137			9.1			(3.6	)
Net income		36			41			46			42			58			(12.2	)		(37.9	)
Average loans and leases		8,381			7,693			7,454			7,435			7,521			8.9			11.4
Average loans held for sale		394			373			468			140			387			5.6			1.8
Average deposits		6,796			6,633			6,815			6,600			7,372			2.5			(7.8	)
Net loan charge-offs (recoveries)		6			5			—			1			(2	)		20.0			N/M
Return on average allocated equity		11.61	%		14.29	%		15.92	%		14.90	%		19.99	%		N/A			N/A
Average full-time equivalent employees		1,281			1,320			1,302			1,350			1,375			(3.0	)		(6.8	)
Consumer Finance
Total revenue (TE)	$	100		$	86		$	88		$	115		$	112			16.3	%		(10.7	)%
Provision for loan losses		19			12			8			16			10			58.3			90.0
Noninterest expense		56			38			41			41			45			47.4			24.4
Income from continuing operations		13			23			25			36			35			(43.5	)		(62.9	)
Net income (loss)		16			9			22			28			(130	)		77.8			N/M
Average loans and leasesa		9,080			8,716			8,433			8,170			7,795			4.2			16.5
Average loans held for salea		3,043			2,729			2,658			2,628			2,976			11.5			2.3
Average depositsa		544			425			390			388			398			28.0			36.7
Net loan charge-offsa		19			11			8			10			10			72.7			90.0
Return on average allocated equitya		5.85	%		11.38	%		12.60	%		18.72	%		18.34	%		N/A			N/A
Return on average allocated equity		7.20			4.45			11.09			14.56			(51.78	)		N/A			N/A
Average full-time equivalent employees		692			529			556			934			1,023			30.8			(32.4	)

(a) From continuing operations.

 

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