KeyCorp (KEY) 8-K Keycorp Reports First Quarter 2008 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 FIRST QUARTER 2008 EARNINGS

• EPS of $0.54 for the first quarter

• $165 million pre-tax gain recorded on partial redemption of equity interest in Visa

• Results impacted by continued disruption in financial markets

• Costs remain well controlled

          CLEVELAND, April 17, 2008 — KeyCorp (NYSE: KEY) today announced first quarter income from continuing operations of $218 million, or $0.54 per diluted common share. This compares to income from continuing operations of $358 million, or $0.89 per share, for the first quarter of 2007, and $22 million, or $0.06 per share, for the fourth quarter of 2007.

          Net income totaled $218 million, or $0.54 per diluted common share, for the first quarter of 2008, compared to net income of $350 million, or $0.87 per share, for the first quarter of 2007 and $25 million, or $0.06 per share, for the fourth quarter of 2007.

          The table below shows Key’s continuing and discontinued operating results for the three-month periods ended March 31, 2008, December 31, 2007, and March 31, 2007.

	Three months ended
in millions, except per share amounts	3-31-08		12-31-07		3-31-07
Summary of operations
Income from continuing operations	$	218	$	22	$	358
Income (loss) from discontinued operations, net of taxesa		—		3		(8	)
Net income	$	218	$	25	$	350
Per common share — assuming dilution b
Income from continuing operations	$	.54	$	.06	$	.89
Income (loss) from discontinued operationsa		—		.01		(.02	)
Net income	$	.54	$	.06	$	.87

(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.

          “While Key’s first quarter earnings reflect the market volatility and rising credit costs facing the financial services industry as a whole, overall we are pleased that we achieved these financial results at the same time that we have taken steps to significantly reduce the company’s exposure to future market volatility and have continued to bolster our loan loss reserves,” said Chairman and Chief Executive Officer Henry L. Meyer III.

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 2

          “During the first quarter, we continued to take actions to mitigate the effects of future market volatility on our held-for-sale and trading portfolios. These actions include the placement of hedges on our remaining previously unhedged commercial real estate mortgage loans held for sale to protect against declines in market values that may result from changes in credit spreads and other market-driven factors, and the transfer of $3.3 billion of education loans held for sale to the held-to-maturity loan portfolio in response to the continued disruption in the student loan securitization market.

          “With nonperforming assets continuing to rise in this challenging credit environment, we continue to add to our loan loss reserve, which represented 1.70% of total loans and 123% of Key’s nonperforming loans at quarter end. The current quarter’s increase to the reserve, along with the actions we took in the fourth quarter of 2007 to bolster our reserves, reduce expenses and curtail certain higher risk or nonrelationship businesses, should help us better weather the current softness in the economy.

          “While current market conditions remain challenging, we believe by continuing to focus on our relationship business model, managing our expenses and upgrading our delivery platforms, we will keep Key positioned to respond to business opportunities as they emerge.”

     As shown in the following table, the comparability of Key’s earnings for the current, prior and year-ago quarters is affected by several significant items.

	First Quarter 2008									Fourth Quarter 2007									First Quarter 2007
	Pre-tax			After-tax			Impact			Pre-tax			After-tax			Impact			Pre-tax			After-tax			Impact
in millions, except per share amounts	Amount			Amount			on EPS			Amount			Amount			on EPS			Amount			Amount			on EPS
Gain from redemption of Visa Inc. shares	$	165		$	103		$	.26			—			—			—			—			—			—
Liability to Visa		—			—			—			$(64	)		$(40	)		$(.10	)		—			—			—
Realized and unrealized gains (losses) on loan and securities portfolios held for sale or trading		(128	)		(80	)		(.20	)		(30	)		(19	)		(.05	)	$	22		$	14		$	.03
Additional reserve for LILO transactions		(3	)		(38	)		(.10	)		—			—			—			—			—			—
McDonald Investments branch networka		—			—			—			—			—			—			159			99			.25
Gain from settlement of automobile residual value insurance litigation		—			—			—			—			—			—			26			17			.04
Loss from repositioning of securities portfolio		—			—			—			—			—			—			(49	)		(31	)		(.08	)

(a)	Represents the financial effect of the McDonald Investments branch network, including a gain of $171 million ($107 million after tax) from the February 9, 2007, sale of that network.
LILO	= Lease in, lease out transactions
EPS	= Earnings per diluted common share

          Key’s provision for loan losses was $187 million for the first quarter of 2008, up from $44 million for the same period one year ago. The increase was due primarily to continued weakness in the housing market and an additional provision recorded in connection with the March 2008 transfer of $3.3 billion of education loans from held-for-sale status to the loan portfolio. Also, during the first quarter of 2008, credit spreads continued to widen, causing the market values of Key’s loan and securities portfolios held for sale or trading to decrease. During the first quarter, Key recorded net losses of $101 million from loan sales and write-downs, $21 million from dealer trading and derivatives, and $6 million from certain real estate-related investments, for a total of $128 million in net losses. This compares to net gains of $22 million from these activities for the first quarter of 2007 and net losses of $30 million for the fourth quarter of 2007.

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 3

SUMMARY OF CONTINUING OPERATIONS

          Taxable-equivalent net interest income was $704 million for the first quarter of 2008, compared to $700 million for the year-ago quarter. Average earning assets rose by $9.7 billion, or 12%, due primarily to strong growth in commercial lending and the January 1 acquisition of U.S.B. Holding Co., Inc., which added approximately $1.5 billion to Key’s loan portfolio. The net interest margin for the current quarter declined to 3.14% from 3.50% for the first quarter of 2007. The reduction was attributable largely to tighter loan and deposit spreads, reflecting the effects of competitive pricing, and a lease accounting adjustment related to certain leveraged lease transactions.

          During the first quarter of 2008, Key increased its tax reserves for certain lease in, lease out (“LILO”) transactions, the deductions for which have been disallowed by the Internal Revenue Service. The change in the level of LILO reserves also necessitated a recalculation of lease income under FASB Staff Position No. 13-2, “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction.” These actions reduced Key’s taxable-equivalent net interest income and net interest margin for the first quarter of 2008 by $34 million and 15 basis points, respectively, and reduced Key’s earnings by $38 million, or $0.10 per diluted common share. As previously reported, the LILO transactions represent a portion of Key’s overall leveraged lease financing portfolio, the tax deductions for which are under challenge by the Internal Revenue Service.

          Compared to the fourth quarter of 2007, taxable-equivalent net interest income decreased by $46 million, and the net interest margin declined by 34 basis points. These reductions were due primarily to the charges recorded during the current period in connection with the additional reserves recorded for the above-mentioned LILO transactions, and a favorable lease accounting adjustment of $18 million recorded during the fourth quarter of 2007 that contributed approximately 9 basis points to Key’s taxable-equivalent net interest margin for that period. Average earning assets grew by $3.7 billion from the fourth quarter as a result of strong demand for commercial loans in Key’s National Banking group and the January 1, 2008, acquisition of U.S.B. Holding Co., Inc., which added approximately $1.7 billion to Key’s average earning assets in the first quarter.

          Key’s noninterest income was $528 million for the first quarter of 2008, compared to $654 million for the year-ago quarter. Included in current year results is a $165 million gain from the partial redemption of Visa Inc. shares, and both realized and unrealized losses associated with several of Key’s capital markets-driven businesses. Noninterest income for the first quarter of 2007 included a $171 million gain associated with the sale of the McDonald Investments branch network, a $26 million gain from the settlement of the automobile residual value insurance litigation and a $49 million loss recorded in connection with the repositioning of the securities portfolio.

          During the first quarter of 2008, Key recorded $101 million in net losses from loan sales and write-downs, related primarily to commercial real estate loans held for sale. This compares to net gains of $9 million for the same period last year. Additionally, income from investment banking and capital markets activities decreased by $36 million, due primarily to a $29 million reduction from dealer trading and derivatives, and net gains from principal investing were down $20 million from the year-ago quarter.

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 4

          Trust and investment services income increased by $4 million from the same period one year ago. Last year’s first quarter results included $16 million from the McDonald Investments operation. Adjusting for this revenue, trust and investment services income rose by $20 million, or 18%, driven by growth in institutional asset management income. The company also experienced a $13 million increase in income from deposit service charges.

          Compared to the fourth quarter of 2007, noninterest income grew by $40 million. The gain from the redemption of Visa shares more than offset a $95 million increase in net losses from loan sales and write-downs, and a $21 million reduction in letter of credit and loan fees.

          Key’s noninterest expense was $732 million for the first quarter of 2008, compared to $784 million for the same period last year. Personnel expense decreased by $19 million, due to lower stock-based compensation and decreases in costs associated with salaries and employee benefits. Approximately $13 million of the reduction in total personnel expense was attributable to the sale of the McDonald Investments branch network. Nonpersonnel expense decreased by $33 million from the year-ago quarter, reflecting a $27 million reduction to the liability for credit losses on lending-related commitments in the current quarter, compared to a reduction of $8 million recorded in the first quarter of 2007. Also contributing to the decrease were declines in marketing and computer processing expense of $5 million and $4 million, respectively. The McDonald Investments sale reduced Key’s total nonpersonnel expense by approximately $14 million.

          Compared to the fourth quarter of 2007, noninterest expense decreased by $164 million. Personnel expense rose by $10 million as a result of higher incentive compensation accruals and increases in costs associated with employee benefits (employment taxes) and stock-based compensation. These increases were offset in part by lower costs related to salaries and severance. Nonpersonnel expense decreased by $174 million, reflecting the $27 million reduction to the liability for credit losses on lending-related commitments, compared to a $25 million increase recorded in the prior quarter; a $15 million decrease in professional fees and a $5 million decline in computer processing expense. Additionally, noninterest expense for the fourth quarter of 2007 included a $64 million charge, representing the estimated fair value of Key’s liability to Visa Inc. This liability was satisfied in the first quarter of 2008 with proceeds resulting from Visa’s initial public offering.

ASSET QUALITY

          Key’s provision for loan losses from continuing operations was $187 million for the first quarter of 2008, compared to $44 million for the year-ago quarter and $363 million for the fourth quarter of 2007. During the first quarter of 2008, Key’s provision exceeded its net loan charge-offs by $66 million. The additional provision was a result of continued weakness in the housing market, which adversely affected Key’s commercial real estate portfolio, and an additional provision recorded in connection with the March 2008 transfer of $3.3 billion of education loans from held-for-sale status to the held-to-maturity loan portfolio. The secondary markets for these loans have been adversely affected by market liquidity issues, prompting the company’s decision to move them to a held-to-maturity classification.

          Net loan charge-offs for the quarter totaled $121 million, or 0.67% of average loans from continuing operations, compared to $44 million, or 0.27%, for the same period last year and $119 million, or 0.67%, for the previous quarter.

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 5

          At March 31, 2008, Key’s nonperforming loans totaled $1.054 billion and represented 1.38% of period-end portfolio loans, compared to 0.97% at December 31, 2007, and 0.39% at March 31, 2007. At March 31, 2008, nonperforming assets totaled $1.115 billion and represented 1.46% of portfolio loans, other real estate owned and other nonperforming assets, compared to 1.08% at December 31, 2007, and 0.54% at March 31, 2007. The increase in nonperforming assets during the first quarter of 2008 was attributable primarily to the continued deterioration of market conditions in the residential properties segment of Key’s commercial real estate construction portfolio, principally in Florida and southern California.

          Key’s allowance for loan losses was $1.298 billion, or 1.70% of loans outstanding, at March 31, 2008, compared to $1.200 billion, or 1.69%, at December 31, 2007, and $944 million, or 1.44%, at March 31, 2007. The January 1, 2008, acquisition of U.S.B. Holding Co., Inc. added approximately $32 million to Key’s allowance for loan losses.

CAPITAL

          Key’s capital ratios, as presented in the following table, continued to exceed all “well-capitalized” regulatory benchmarks at March 31, 2008.

Capital Ratios

	3-31-08			12-31-07			3-31-07
Tier 1 risk-based capitala		8.09	%		7.44	%		8.15	%
Total risk-based capitala		11.90			11.38			12.20
Tangible equity to tangible assets		6.85			6.58			7.04

(a) 3-31-08 ratio is estimated.

          During the first quarter of 2008, Key issued 9.9 million of its common shares in connection with the acquisition of U.S.B. Holding Co., Inc. and reissued 1.4 million shares under employee benefit plans. There was no repurchase activity by Key during the first quarter and the company currently does not anticipate any share repurchase activity in the second quarter of 2008. At March 31, 2008, 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	1Q08		4Q07		3Q07			2Q07			1Q07
Shares outstanding at beginning of period		388,793		388,708		389,362			394,483			399,153
Shares issued to acquire U.S.B. Holding Co., Inc.		9,895		—		—			—			—
Issuance of shares under employee benefit plans		1,383		85		1,346			879			3,330
Repurchase of common shares		—		—		(2,000	)		(6,000	)		(8,000	)
Shares outstanding at end of period		400,071		388,793		388,708			389,362			394,483

KeyCorp Reports First Quarter 2008 Earnings
April 17, 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. Key’s line of business results for all periods presented reflect a new organizational structure that took effect January 1, 2008.

Major Business Groups

										Percent change 1Q08 vs.
dollars in millions	1Q08			4Q07			1Q07			4Q07			1Q07
Revenue from continuing operations (TE)
Community Banking	$	629		$	652		$	805			(3.5	)%		(21.9	)%
National Banking		441			612			599			(27.9	)		(26.4	)
Other Segments		27			17			(20	)		58.8			N/M
Total Segments		1,097			1,281			1,384			(14.4	)		(20.7	)
Reconciling Itemsa		135			(43	)		(30	)		N/M			N/M
Total	$	1,232		$	1,238		$	1,354			(.5	)%		(9.0	)%
Income (loss) from continuing operations
Community Banking	$	113		$	111		$	203			1.8	%		(44.3	)%
National Banking		(23	)		(67	)		157			65.7			N/M
Other Segments		22			21			(8	)		4.8			N/M
Total Segments		112			65			352			72.3			(68.2	)
Reconciling Itemsa		106			(43	)		6			N/M			N/M
Total	$	218		$	22		$	358			890.9	%		(39.1	)%

(a)

For the first quarter of 2008, reconciling items include a $165 million ($103 million after tax) gain from the partial redemption of Key’s equity interest in Visa Inc. For the fourth quarter of 2007, reconciling items include a $64 million ($40 million after tax) charge, representing the fair value of Key’s potential liability to Visa Inc. This liability was satisfied in the first quarter of 2008 with proceeds resulting from Visa’s initial public offering.

TE

= Taxable Equivalent, N/M = Not Meaningful

Community Banking

										Percent change 1Q08 vs.
dollars in millions	1Q08			4Q07			1Q07			4Q07			1Q07
Summary of operations
Net interest income (TE)	$	423		$	434		$	418			(2.5	)%		1.2	%
Noninterest income		206			218			387			(5.5	)		(46.8	)
Total revenue (TE)		629			652			805			(3.5	)		(21.9	)
Provision for loan losses		18			36			14			(50.0	)		28.6
Noninterest expense		430			438			466			(1.8	)		(7.7	)
Income before income taxes (TE)		181			178			325			1.7			(44.3	)
Allocated income taxes and TE adjustments		68			67			122			1.5			(44.3	)
Net income	$	113		$	111		$	203			1.8	%		(44.3	)%
Percent of consolidated income from continuing operations		52	%		505	%		57	%		N/A			N/A
Average balances
Loans and leases	$	28,255		$	27,237		$	26,456			3.7	%		6.8	%
Total assets		31,404			29,912			29,293			5.0			7.2
Deposits		50,089			47,255			46,524			6.0			7.7
Assets under management at period end	$	20,049		$	21,592		$	20,634			(7.1	)%		(2.8	)%

TE = Taxable Equivalent, N/A = Not Applicable

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 7

Additional Community Banking Data										Percent change 1Q08 vs.
dollars in millions	1Q08			4Q07			1Q07			4Q07			1Q07
Average deposits outstanding
NOW and money market deposit accounts	$	19,886		$	20,471		$	19,616			(2.9	)%		1.4	%
Savings deposits		2,042			1,514			1,618			34.9			26.2
Certificates of deposit ($100,000 or more)		6,452			4,918			4,551			31.2			41.8
Other time deposits		12,765			11,454			12,051			11.4			5.9
Deposits in foreign office		1,257			1,249			960			.6			30.9
Noninterest-bearing deposits		7,687			7,649			7,728			.5			(.5	)
Total deposits	$	50,089		$	47,255		$	46,524			6.0	%		7.7	%
Home equity loans
Average balance	$	9,693		$	9,658		$	9,677
Weighted-average loan-to-value ratio		70	%		70	%		70	%
Percent first lien positions		56			57			59
Other data
On-line households / household penetration		749,512/45	%		737,393/45	%		719,736/43	%
Branches		985			955			950
Automated teller machines		1,479			1,443			1,447

Community Banking Summary of Operations

          Community Banking recorded net income of $113 million for the first quarter of 2008, compared to $203 million for the year-ago quarter. Excluding the impact of the sale of the McDonald Investments branch network during the first quarter of 2007, net income for Community Banking was up $9 million, or 9%, from the comparable quarter last year. Increases in both net interest income and noninterest income, and a reduction in noninterest expense drove the improvement and more than offset a higher provision for loan losses.

          Taxable-equivalent net interest income rose by $5 million, or 1%, from the first quarter of 2007. The increase was attributable to a $2.0 billion, or 7%, rise in average earning assets, due largely to growth in the commercial loan portfolio, and a $3.6 billion, or 8%, increase in average deposits. Both loan and deposit growth benefited from the January 1 acquisition of U.S.B. Holding Co., Inc. described below. The positive effect of this growth was offset in part by the impact of tighter loan and deposit spreads.

          Excluding the impact of the McDonald Investments sale, noninterest income rose by $9 million, or 5%, from the same period one year ago, due to growth in deposit service charge income, higher income from derivatives and growth in bank channel investment product sales commission income.

          The provision for loan losses increased by $4 million, or 29%, compared to the first quarter of 2007.

          Excluding the impact of the McDonald Investments sale, noninterest expense declined by $9 million, or 2%, from the year-ago quarter, reflecting a decrease in personnel expense, due primarily to reduced headcount. Additionally, Community Banking results for the current quarter benefited from a reduction to the liability for credit losses on lending-related commitments.

          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. The acquisition doubles Key’s branch penetration in the attractive Lower Hudson Valley area. Assets and deposits acquired in this transaction were assigned to both the Community Banking and National Banking groups.

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 8

National Banking

										Percent change 1Q08 vs.
dollars in millions	1Q08			4Q07			1Q07			4Q07			1Q07
Summary of operations
Net interest income (TE)	$	340		$	389		$	340			(12.6	)%		—
Noninterest income		101			223			259			(54.7	)		(61.0	)%
Total revenue (TE)		441			612			599			(27.9	)		(26.4	)
Provision for loan losses		169			327			30			(48.3	)		463.3
Noninterest expense		309			389			317			(20.6	)		(2.5	)
(Loss) income from continuing operations before income taxes (TE)		(37	)		(104	)		252			64.4			N/M
Allocated income taxes and TE adjustments		(14	)		(37	)		95			62.2			N/M
(Loss) income from continuing operations		(23	)		(67	)		157			65.7			N/M
Income (loss) from discontinued operations, net of taxes		—			3			(8	)		(100.0	)		100.0	%
Net (loss) income	$	(23	)	$	(64	)	$	149			64.1	%		N/M
Percent of consolidated income from continuing operations		N/M			N/M			44	%		N/A			N/A
Average balances from continuing operations
Loans and leases	$	44,021		$	42,037		$	38,839			4.7	%		13.3	%
Loans held for sale		4,932			4,709			3,917			4.7			25.9
Total assets		56,079			53,323			48,411			5.2			15.8
Deposits		11,849			12,628			11,291			(6.2	)		4.9
Assets under management at period end	$	60,404		$	63,850		$	61,754			(5.4	)%		(2.2	)%

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

National Banking Summary of Continuing Operations

          National Banking recorded a net loss of $23 million from continuing operations for the first quarter of 2008, compared to net income of $157 million from continuing operations for the same period last year. Lower noninterest income and an increase in the provision for loan losses accounted for the reduction and more than offset a decrease in noninterest expense. Net interest income was essentially unchanged from the year-ago quarter.

          During the first quarter of 2008, National Banking increased its tax reserves for certain lease in, lease out transactions and, as a result, recalculated its lease income in accordance with FASB Staff Position No. 13-2, “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction.” Excluding the additional charges associated with these actions, taxable-equivalent net interest income grew by $34 million, or 10%, from the first quarter of 2007 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 $5.2 billion, or 13%, while average deposits rose by $558 million, or 5%, from the year-ago quarter.

          Noninterest income declined by $158 million, or 61%, as several capital markets-driven businesses were adversely affected by continued volatility in the financial markets. Results for the current quarter include $105 million in net losses from loan sales and write-downs, related primarily to commercial real estate loans held for sale. This compares to net gains of $5 million for the same period last year. Income from investment banking and capital markets activities decreased by $47 million, due primarily to a $38 million reduction from dealer trading and derivatives. These decreases were offset in part by a $19 million increase in trust and investment services income. Additionally, results for the first quarter of 2007 included a $26 million gain from the settlement of the automobile residual value insurance litigation.

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 9

          The provision for loan losses rose by $139 million, reflecting continued deterioration of market conditions in the residential properties segment of Key’s commercial real estate construction portfolio, principally in Florida and southern California, and an additional provision recorded in the Consumer Finance line of business in connection with the March 2008 transfer of $3.3 billion of education loans from held-for-sale status to the loan portfolio.

          Noninterest expense decreased by $8 million, or 3%, from the year-ago quarter. Contributing to the improvement was a $22 million reduction to the liability for credit losses on lending-related commitments in the current quarter, compared to a reduction of $7 million recorded in the first quarter of 2007. This positive effect of this change was offset in part by a $6 million increase in costs associated with operating leases.

Other Segments

          Other segments consist of Corporate Treasury and Key’s Principal Investing unit. These segments generated net income of $22 million for the first quarter of 2008, compared to a net loss of $8 million for the same period last year. The improvement was due primarily to a $49 million loss recorded in the first quarter of 2007 in connection with the repositioning of the securities portfolio, offset in part by a decrease in net gains from principal investing.

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 10

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 Capital and Corporate Banking Servicesconsists of two business units. Real Estate Capital is a national business that provides construction and interim lending, permanent debt placements and servicing, equity and investment banking, and other commercial banking products and services to developers, brokers and owner-investors. This unit deals primarily 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). Particular emphasis has been placed on providing clients with finance solutions through access to the capital markets.

Corporate Banking Services provides cash management, interest rate derivatives, and foreign exchange products and services to clients throughout the Community Banking and National Banking groups. Through its Public Sector and Financial Institutions businesses, Corporate Banking Services provides a full array of commercial banking products and services to government and not-for-profit entities, and to community banks.

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 commercial lending, treasury management, investment banking, derivatives and foreign exchange, equity and debt underwriting and trading, and syndicated finance products and services to large corporations and middle-market companies through the KeyBanc Capital Markets subsidiary.

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 and Commercial Floor Plan Lending.

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 11

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 tuition payments for private schools.

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

          Cleveland-based KeyCorp is one of the nation’s largest bank-based financial services companies, with assets of approximately $101 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 985 branches and additional offices; a network of 1,479 ATMs; telephone banking centers (1.800.KEY2YOU); and a Web site,https://www.key.com/,^â 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 athttps://www.key.com/irat 9:00 a.m. ET, on Thursday, April 17, 2008. An audio replay of the call will be available through April 24.

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) continued disruption in the fixed income markets; (4) adverse capital markets conditions; (5) 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; (6) increased competitive pressure among financial services companies; (7) the inability to successfully execute strategic initiatives designed to grow revenues and/or manage expenses; (8) consummation of significant business combinations or divestitures; (9) operational or risk management failures due to technological or other factors; (10) changes in accounting or tax practices or requirements; (11) new legal obligations or liabilities or unfavorable resolution of litigation; (12) heightened regulatory practices, requirements or expectations; and (13) disruption in the economy and general business climate as a result of terrorist activities or military actions. 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 First Quarter 2008 Earnings
April 17, 2008
Page 12

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

	Three months ended
	3-31-08			12-31-07			3-31-07
Summary of operations
Net interest income (TE)	$	704		$	750		$	700
Noninterest income		528			488			654
Total revenue (TE)		1,232			1,238			1,354
Provision for loan losses		187			363			44
Noninterest expense		732			896			784
Income from continuing operations		218			22			358
Income (loss) from discontinued operations, net of taxesa		—			3			(8	)
Net income		218			25			350
Per common share
Income from continuing operations	$	.55		$	.06		$	.90
Income from continuing operations — assuming dilution		.54			.06			.89
Income (loss) from discontinued operationsa		—			.01			(.02	)
Income (loss) from discontinued operations — assuming dilutiona		—			.01			(.02	)
Net income		.55			.06			.88
Net income — assuming dilution		.54			.06			.87
Cash dividends paid		.375			.365			.365
Book value at period end		21.48			19.92			19.57
Market price at period end		21.95			23.45			37.47
Performance ratios — from continuing operations
Return on average total assets		.85	%		.09	%		1.58	%
Return on average equity		10.38			1.11			19.06
Net interest margin (TE)		3.14			3.48			3.50
Performance ratios — from consolidated operations
Return on average total assets		.85	%		.10	%		1.54	%
Return on average equity		10.38			1.26			18.63
Net interest margin (TE)		3.14			3.48			3.51
Capital ratios at period end
Equity to assets		8.47	%		7.89	%		8.37	%
Tangible equity to tangible assets		6.85			6.58			7.04
Tier 1 risk-based capitalb		8.09			7.44			8.15
Total risk-based capitalb		11.90			11.38			12.20
Leverageb		8.96			8.39			9.17
Asset quality
Net loan charge-offs	$	121		$	119		$	44
Net loan charge-offs to average loans from continuing operations		.67	%		.67	%		.27	%
Allowance for loan losses	$	1,298		$	1,200		$	944
Allowance for loan losses to period-end loans		1.70	%		1.69	%		1.44	%
Allowance for loan losses to nonperforming loans		123.15			174.67			371.65
Nonperforming loans at period end	$	1,054		$	687		$	254
Nonperforming assets at period end		1,115			764			353
Nonperforming loans to period-end portfolio loans		1.38	%		.97	%		.39	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.46			1.08			.54
Trust and brokerage assets
Assets under management	$	80,453		$	85,442		$	82,388
Nonmanaged and brokerage assets		30,532			33,918			32,838
Other data
Average full-time equivalent employees		18,426			18,500			19,801
Branches		985			955			950
Taxable-equivalent adjustment	$	(9	)	$	40		$	21

(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)	3-31-08 ratio is estimated.
TE	= Taxable Equivalent

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 13

Consolidated Balance Sheets
(dollars in millions)

	3-31-08			12-31-07			3-31-07
Assets
Loans	$	76,444		$	70,823		$	65,711
Loans held for sale		1,674			4,736			4,175
Securities available for sale		8,419			7,860			7,789
Held-to-maturity securities		29			28			38
Trading account assets		1,015			1,056			671
Short-term investments		577			516			1,313
Other investments		1,561			1,538			1,466
Total earning assets		89,719			86,557			81,163
Allowance for loan losses		(1,298	)		(1,200	)		(944	)
Cash and due from banks		1,730			1,814			2,052
Premises and equipment		712			681			590
Operating lease assets		1,070			1,128			1,074
Goodwill		1,599			1,252			1,202
Other intangible assets		164			123			115
Corporate-owned life insurance		2,894			2,872			2,805
Derivative assets		1,508			879			413
Accrued income and other assets		3,394			4,122			3,786
Total assets	$	101,492		$	98,228		$	92,256
Liabilities
Deposits in domestic offices:
NOW and money market deposit accounts	$	26,527		$	27,635		$	23,317
Savings deposits		1,826			1,513			1,654
Certificates of deposit ($100,000 or more)		8,330			6,982			6,094
Other time deposits		12,933			11,615			12,086
Total interest-bearing deposits		49,616			47,745			43,151
Noninterest-bearing deposits		10,896			11,028			13,473
Deposits in foreign office — interest-bearing		4,190			4,326			3,149
Total deposits		64,702			63,099			59,773
Federal funds purchased and securities sold under repurchase agreements		3,503			3,927			5,770
Bank notes and other short-term borrowings		5,464			5,861			922
Derivative liabilities		465			252			173
Accrued expense and other liabilities		4,429			5,386			4,838
Long-term debt		14,337			11,957			13,061
Total liabilities		92,900			90,482			84,537
Shareholders’ equity
Preferred stock		—			—			—
Common shares		492			492			492
Capital surplus		1,659			1,623			1,614
Retained earnings		8,737			8,522			8,528
Treasury stock, at cost		(2,689	)		(3,021	)		(2,801	)
Accumulated other comprehensive income (loss)		393			130			(114	)
Total shareholders’ equity		8,592			7,746			7,719
Total liabilities and shareholders’ equity	$	101,492		$	98,228		$	92,256
Common shares outstanding (000)		400,071			388,793			394,483

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 14

Consolidated Statements of Income

(dollars in millions, except per share amounts)

	Three months ended
	3-31-08			12-31-07			3-31-07
Interest income
Loans	$	1,123		$	1,205		$	1,161
Loans held for sale		87			89			75
Securities available for sale		109			115			100
Held-to-maturity securities		1			1			1
Trading account assets		13			12			7
Short-term investments		9			13			11
Other investments		12			12			13
Total interest income		1,354			1,447			1,368
Interest expense
Deposits		428			483			433
Federal funds purchased and securities sold under repurchase agreements		28			45			49
Bank notes and other short-term borrowings		39			45			11
Long-term debt		146			164			196
Total interest expense		641			737			689
Net interest income		713			710			679
Provision for loan losses		187			363			44
Net interest income after provision for loan losses		526			347			635
Noninterest income
Trust and investment services income		129			131			125
Service charges on deposit accounts		88			90			75
Investment banking and capital markets income		8			12			44
Operating lease income		69			72			64
Letter of credit and loan fees		37			58			38
Corporate-owned life insurance income		28			37			25
Electronic banking fees		24			25			24
Net (losses) gains from loan securitizations and sales		(101	)		(6	)		9
Net securities gains (losses)		3			6			(47	)
Net gains from principal investing		9			6			29
Gain from redemption of Visa Inc. shares		165			—			—
Gain from sale of McDonald Investments branch network		—			—			171
Other income		69			57			97
Total noninterest income		528			488			654
Noninterest expense
Personnel		409			399			428
Net occupancy		66			64			63
Computer processing		47			52			51
Operating lease expense		58			59			52
Professional fees		23			38			26
Equipment		24			25			25
Marketing		14			16			19
Other expense		91			243			120
Total noninterest expense		732			896			784
Income (loss) from continuing operations before income taxes		322			(61	)		505
Income taxes		104			(83	)		147
Income from continuing operations		218			22			358
Income (loss) from discontinued operations, net of taxes		—			3			(8	)
Net income	$	218		$	25		$	350
Per common share:
Income from continuing operations	$	.55		$	.06		$	.90
Net income		.55			.06			.88
Per common share — assuming dilution:
Income from continuing operations	$	.54		$	.06		$	.89
Net income		.54			.06			.87
Cash dividends declared per common share		—		$	.74		$	.365
Weighted-average common shares outstanding (000)		399,121			388,841			397,875
Weighted-average common shares and potential common shares outstanding (000)		399,769			389,911			403,478

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 15

Consolidated Average Balance Sheets, Net Interest Income and Yields/Rates
From Continuing Operations

(dollars in millions)

	First Quarter 2008									Fourth Quarter 2007								First Quarter 2007
	Average									Average								Average
	Balance			Interest			Yield / Rate			Balance			Interest		Yield / Rate			Balance			Interest		Yield / Rate
Assets
Loans:a,b
Commercial, financial and agricultural	$	25,411		$	392			6.21	%	$	23,825		$	419		6.98	%	$	21,562		$	392		7.38	%
Real estate — commercial mortgage		10,283			175			6.84			9,351			175		7.42			8,426			163		7.83
Real estate — construction		8,468			134			6.36			8,192			153		7.42			8,227			166		8.20
Commercial lease financing		10,004			98			3.91			10,252			171		6.65			10,094			146		5.78
Total commercial loans		54,166			799			5.93			51,620			918		7.06			48,309			867		7.26
Real estate — residential		1,916			30			6.29			1,596			27		6.72			1,444			24		6.60
Home equity		10,953			178			6.54			10,917			192		7.02			10,706			191		7.22
Consumer — direct		1,305			34			10.59			1,308			35		10.73			1,450			36		10.15
Consumer — indirect		4,348			72			6.61			4,276			73		6.76			3,760			64		6.79
Total consumer loans		18,522			314			6.81			18,097			327		7.20			17,360			315		7.32
Total loans		72,688			1,113			6.15			69,717			1,245		7.10			65,669			1,182		7.28
Loans held for sale		4,984			87			7.01			4,748			89		7.53			3,940			75		7.70
Securities available for sale a,c		8,419			110			5.28			7,858			115		5.89			7,548			100		5.27
Held-to-maturity securitiesa		29			1			11.02			30			1		6.24			39			1		7.21
Trading account assets		1,075			13			4.84			1,042			12		4.40			754			7		3.78
Short-term investments		1,165			9			3.18			1,226			13		3.94			853			11		5.22
Other investments c		1,552			12			3.05			1,589			12		3.02			1,400			13		3.65
Total earning assets		89,912			1,345			6.01			86,210			1,487		6.86			80,203			1,389		6.99
Allowance for loan losses		(1,236	)								(966	)							(942	)
Accrued income and other assets		14,680									13,547								12,835
Total assets	$	103,356								$	98,791							$	92,096
Liabilities
NOW and money market deposit accounts	$	26,996			139			2.07		$	25,687			197		3.05		$	23,424			177		3.06
Savings deposits		1,865			3			.62			1,523			1		.19			1,629			1		.19
Certificates of deposit ($100,000 or more)d		8,072			95			4.72			6,887			86		4.98			6,151			76		5.03
Other time deposits		12,759			146			4.59			11,455			135		4.68			12,063			138		4.64
Deposits in foreign office		5,853			45			3.13			5,720			64		4.42			3,258			41		5.12
Total interest-bearing deposits		55,545			428			3.10			51,272			483		3.74			46,525			433		3.77
Federal funds purchased and securities sold under repurchase agreements		3,863			28			2.91			4,194			45		4.23			3,903			49		5.04
Bank notes and other short-term borrowings		4,934			39			3.22			4,233			45		4.15			1,113			11		3.98
Long-term debt d,e		13,238			146			4.71			11,851			164		5.72			13,617			196		5.90
Total interest-bearing liabilities		77,580			641			3.36			71,550			737		4.11			65,158			689		4.29
Noninterest-bearing deposits		10,741									12,948								13,237
Accrued expense and other liabilities		6,590									6,405								6,083
Total liabilities		94,911									90,903								84,478
Shareholders’ equity		8,445									7,888								7,618
Total liabilities and shareholders’ equity	$	103,356								$	98,791							$	92,096
Interest rate spread (TE)								2.65	%							2.75	%							2.70	%
Net interest income (TE) and net interest margin (TE)					704			3.14	%					750		3.48	%					700		3.50	%
TE adjustmenta					(9	)								40								21
Net interest income, GAAP basis				$	713								$	710							$	679

(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 First Quarter 2008 Earnings
April 17, 2008
Page 16

Noninterest Income

(in millions)

	Three months ended
	3-31-08			12-31-07			3-31-07
Trust and investment services incomea	$	129		$	131		$	125
Service charges on deposit accounts		88			90			75
Investment banking and capital markets incomea		8			12			44
Operating lease income		69			72			64
Letter of credit and loan fees		37			58			38
Corporate-owned life insurance income		28			37			25
Electronic banking fees		24			25			24
Net (losses) gains from loan securitizations and sales		(101	)		(6	)		9
Net securities gains (losses)		3			6			(47	)
Net gains from principal investing		9			6			29
Gain from redemption of Visa Inc. shares		165			—			—
Gain from sale of McDonald Investments branch network		—			—			171
Other income:
Insurance income		15			10			14
Loan securitization servicing fees		4			5			5
Credit card fees		4			3			3
Litigation settlement — automobile residual value insurance		—			—			26
Miscellaneous income		46			39			49
Total other income		69			57			97
Total noninterest income	$	528		$	488		$	654

(a) Additional detail provided in tables below.

Trust and Investment Services Income

(in millions)

	Three months ended
	3-31-08		12-31-07		3-31-07
Brokerage commissions and fee income	$	33	$	31	$	40
Personal asset management and custody fees		41		43		40
Institutional asset management and custody fees		55		57		45
Total trust and investment services income	$	129	$	131	$	125

Investment Banking and Capital Markets Income

(in millions)

	Three months ended
	3-31-08			12-31-07			3-31-07
Investment banking income	$	22		$	21		$	21
(Loss) income from other investments		(6	)		(23	)		5
Dealer trading and derivatives (loss) income		(21	)		(1	)		8
Foreign exchange income		13			15			10
Total investment banking and capital markets income	$	8		$	12		$	44

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 17

Noninterest Expense

(dollars in millions)

	Three months ended
	3-31-08			12-31-07			3-31-07
Personnela	$	409		$	399		$	428
Net occupancy		66			64			63
Computer processing		47			52			51
Operating lease expense		58			59			52
Professional fees		23			38			26
Equipment		24			25			25
Marketing		14			16			19
Other expense:
Postage and delivery		11			13			12
Franchise and business taxes		8			7			9
Telecommunications		8			7			7
(Credit) provision for losses on lending-related commitments		(27	)		25			(8	)
Liability to Visa Inc.		—			64			—
Miscellaneous expense		91			127			100
Total other expense		91			243			120
Total noninterest expense	$	732		$	896		$	784
Average full-time equivalent employees		18,426			18,500	b		19,801	b

(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
	3-31-08		12-31-07		3-31-07
Salaries	$	239	$	255	$	245
Incentive compensation		74		52		75
Employee benefits		76		65		82
Stock-based compensation		14		3		24
Severance		6		24		2
Total personnel expense	$	409	$	399	$	428

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 18

Loan Composition

(dollars in millions)

							Percent change 3-31-08 vs.
	3-31-08		12-31-07		3-31-07		12-31-07			3-31-07
Commercial, financial and agricultural	$	25,777	$	24,797	$	21,476		4.0	%		20.0	%
Commercial real estate:
Commercial mortgage		10,479		9,630		8,519		8.8			23.0
Construction		8,473		8,102		8,355		4.6			1.4
Total commercial real estate loans		18,952		17,732		16,874		6.9			12.3
Commercial lease financing		10,000		10,176		10,036		(1.7	)		(.4	)
Total commercial loans		54,729		52,705		48,386		3.8			13.1
Real estate — residential mortgage		1,954		1,594		1,440		22.6			35.7
Home equity		10,898		10,917		10,669		(.2	)		2.1
Consumer — direct		1,266		1,298		1,375		(2.5	)		(7.9	)
Consumer — indirect:
Marine		3,653		3,637		3,203		.4			14.0
Educationa		3,608		331		336		990.0			973.8
Other		336		341		302		(1.5	)		11.3
Total consumer — indirect loans		7,597		4,309		3,841		76.3			97.8
Total consumer loans		21,715		18,118		17,325		19.9			25.3
Total loans	$	76,444	$	70,823	$	65,711		7.9	%		16.3	%

Loans Held for Sale Composition

(dollars in millions)

							Percent change 3-31-08 vs.
	3-31-08		12-31-07		3-31-07		12-31-07			3-31-07
Commercial, financial and agricultural	$	291	$	250	$	68		16.4	%		327.9	%
Real estate — commercial mortgage		1,139		1,219		1,224		(6.6	)		(6.9	)
Real estate — construction		25		35		163		(28.6	)		(84.7	)
Commercial lease financing		31		1		1		N/M			N/M
Real estate — residential mortgage		58		47		26		23.4			123.1
Home equity		1		1		—		—			N/M
Educationa		123		3,176		2,681		(96.1	)		(95.4	)
Automobile		6		7		12		(14.3	)		(50.0	)
Total loans held for sale	$	1,674	$	4,736	$	4,175		(64.7	)%		(59.9	)%

(a)	On March 31, 2008, Key transferred $3.3 billion of education loans from loans held for sale to the loan portfolio.
N/M	= Not Meaningful

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 19

Summary of Loan Loss Experience

(dollars in millions)

	Three months ended
	3-31-08			12-31-07			3-31-07
Average loans outstanding from continuing operations	$	72,688		$	69,717		$	65,669
Allowance for loan losses at beginning of period	$	1,200		$	955		$	944
Loans charged off:
Commercial, financial and agricultural		50			48			17
Real estate — commercial mortgage		4			3			6
Real estate — construction		25			44			1
Total commercial real estate loans		29			47			7
Commercial lease financing		15			18			13
Total commercial loans		94			113			37
Real estate — residential mortgage		4			3			1
Home equity		16			12			8
Consumer — direct		9			8			7
Consumer — indirect		25			16			11
Total consumer loans		54			39			27
		148			152			64
Recoveries:
Commercial, financial and agricultural		14			13			7
Real estate — commercial mortgage		—			2			3
Commercial lease financing		6			12			3
Total commercial loans		20			27			13
Home equity		1			—			1
Consumer — direct		2			2			2
Consumer — indirect		4			4			4
Total consumer loans		7			6			7
		27			33			20
Net loan charge-offs		(121	)		(119	)		(44	)
Provision for loan losses from continuing operations		187			363			44
Allowance related to loans acquired, net		32			—			—
Foreign currency translation adjustment		—			1			—
Allowance for loan losses at end of period	$	1,298		$	1,200		$	944
Net loan charge-offs to average loans from continuing operations		.67	%		.67	%		.27	%
Allowance for loan losses to period-end loans		1.70			1.69			1.44
Allowance for loan losses to nonperforming loans		123.15			174.67			371.65

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 20

Changes in Liability for Credit Losses on Lending-Related Commitments

(in millions)

	Three months ended
	3-31-08			12-31-07		3-31-07
Balance at beginning of period	$	80		$	55	$	53
(Credit) provision for losses on lending- related commitments		(27	)		25		(8	)
Balance at end of perioda	$	53		$	80	$	45

(a) Included in “accrued expense and other liabilities” on the consolidated balance sheet.

Summary of Nonperforming Assets and Past Due Loans

(dollars in millions)

	3-31-08			12-31-07			9-30-07			6-30-07			3-31-07
Commercial, financial and agricultural	$	147		$	84		$	94		$	83		$	70
Real estate — commercial mortgage		113			41			41			41			44
Real estate — construction		610			415			228			23			10
Total commercial real estate loans		723			456			269			64			54
Commercial lease financing		38			28			30			34			31
Total commercial loans		908			568			393			181			155
Real estate — residential mortgage		34			28			29			27			32
Home equity		74			66			61			55			52
Consumer — direct		2			2			2			2			2
Consumer — indirect		36			23			13			11			13
Total consumer loans		146			119			105			95			99
Total nonperforming loans		1,054			687			498			276			254
Nonperforming loans held for sale		9			25			6			4			3
OREO		29			21			21			27			42
Allowance for OREO losses		(2	)		(2	)		(1	)		(2	)		(2	)
OREO, net of allowance		27			19			20			25			40
Other nonperforming assets a		25			33			46			73			56
Total nonperforming assets	$	1,115		$	764		$	570		$	378		$	353
Accruing loans past due 90 days or more	$	283		$	231		$	190		$	181		$	146
Accruing loans past due 30 through 89 days		1,169			843			717			623			626
Nonperforming loans to period-end portfolio loans		1.38	%		.97	%		.72	%		.41	%		.39	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.46			1.08			.83			.57			.54

(a) Primarily investments held by the Private Equity unit within Key’s Real Estate Capital and Corporate Banking Services line of business.

Summary of Changes in Nonperforming Loans

(in millions)

	1Q08			4Q07			3Q07			2Q07			1Q07
Balance at beginning of period	$	687		$	498		$	276		$	254		$	215
Loans placed on nonaccrual status		566			378			337			130			129
Charge-offs		(144	)		(147	)		(81	)		(72	)		(61	)
Loans sold		—			(13	)		(6	)		(7	)		—
Payments		(22	)		(17	)		(13	)		(21	)		(7	)
Transfers to OREO		(20	)		(5	)		(12	)		—			(9	)
Transfer to nonperforming loans held for sale		(8	)		—			—			—			—
Loans returned to accrual status		(5	)		(7	)		(3	)		(8	)		(13	)
Balance at end of period	$	1,054		$	687		$	498		$	276		$	254

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 21

Line of Business Results

(dollars in millions)

Community Banking

																Percent change 1Q08 vs.
	1Q08			4Q07			3Q07			2Q07			1Q07			4Q07			1Q07
Summary of operations
Total revenue (TE)	$	629		$	652		$	626		$	629		$	805			(3.5	)%		(21.9	)%
Provision for loan losses		18			36			—			21			14			(50.0	)		28.6
Noninterest expense		430			438			415			446			466			(1.8	)		(7.7	)
Net income		113			111			132			101			203			1.8			(44.3	)
Average loans and leases		28,255			27,237			26,948			26,578			26,456			3.7			6.8
Average deposits		50,089			47,255			46,729			46,127			46,524			6.0			7.7
Net loan charge-offs		30			31			19			26			19			(3.2	)		57.9
Return on average allocated equity		15.15	%		17.43	%		20.88	%		16.41	%		33.36	%		N/A			N/A
Average full-time equivalent employees		8,779			8,515			8,683			9,080			9,529			3.1			(7.9	)
Supplementary information (lines of business)
Regional Banking
Total revenue (TE)	$	530		$	555		$	532		$	536		$	713			(4.5	)%		(25.7	)%
Provision for loan losses		11			25			8			22			16			(56.0	)		(31.3	)
Noninterest expense		386			385			369			397			417			.3			(7.4	)
Net income		83			90			97			73			175			(7.8	)		(52.6	)
Average loans and leases		19,653			18,771			18,667			18,471			18,499			4.7			6.2
Average deposits		46,499			43,696			43,236			42,723			43,056			6.4			8.0
Net loan charge-offs		29			26			17			20			18			11.5			61.1
Return on average allocated equity		15.28	%		20.51	%		22.03	%		16.92	%		40.63	%		N/A			N/A
Average full-time equivalent employees		8,430			8,162			8,322			8,709			9,156			3.3			(7.9	)
Commercial Banking
Total revenue (TE)	$	99		$	97		$	94		$	93		$	92			2.1	%		7.6	%
Provision for loan losses		7			11			(8	)		(1	)		(2	)		(36.4	)		N/M
Noninterest expense		44			53			46			49			49			(17.0	)		(10.2	)
Net income		30			21			35			28			28			42.9			7.1
Average loans and leases		8,602			8,466			8,281			8,107			7,957			1.6			8.1
Average deposits		3,590			3,559			3,493			3,404			3,468			.9			3.5
Net loan charge-offs		1			5			2			6			1			(80.0	)		—
Return on average allocated equity		14.80	%		10.61	%		18.25	%		15.22	%		15.75	%		N/A			N/A
Average full-time equivalent employees		349			353			361			371			373			(1.1	)		(6.4	)

KeyCorp Reports First Quarter 2008 Earnings
April 17, 2008
Page 22

Line of Business Results (continued)

(dollars in millions)

National Banking

																Percent change 1Q08 vs.
	1Q08			4Q07			3Q07			2Q07			1Q07			4Q07			1Q07
Summary of operations
Total revenue (TE)	$	441		$	612		$	509		$	616		$	599			(27.9	)%		(26.4	)%
Provision for loan losses		169			327			69			32			30			(48.3	)		463.3
Noninterest expense		309			389			327			330			317			(20.6	)		(2.5	)
(Loss) income from continuing operations		(23	)		(67	)		71			159			157			65.7			N/M
Net (loss) income		(23	)		(64	)		57			156			149			64.1			N/M
Average loans and leasesa		44,021			42,037			40,276			39,322			38,839			4.7			13.3
Average loans held for salea		4,932			4,709			4,692			4,377			3,917			4.7			25.9
Average depositsa		11,849			12,628			12,631			12,082			11,291			(6.2	)		4.9
Net loan charge-offsa		91			88			40			27			25			3.4			264.0
Return on average allocated equitya		(1.89	)%		(5.86	)%		6.54	%		14.86	%		15.22	%		N/A			N/A
Return on average allocated equity		(1.89	)		(5.59	)		5.25			14.58			14.44			N/A			N/A
Average full-time equivalent employees		3,727			3,945			3,791			3,768			4,157			(5.5	)		(10.3	)
Supplementary information (lines of business)
Real Estate Capital and Corporate Banking Services
Total revenue (TE)	$	79		$	159		$	129		$	214		$	191			(50.3	)%		(58.6	)%
Provision for loan losses		45			270			43			8			1			(83.3	)		N/M
Noninterest expense		61			117			88			91			85			(47.9	)		(28.2	)
Net (loss) income		(17	)		(143	)		(1	)		72			66			88.1			N/M
Average loans and leases		16,358			15,003			14,160			13,713			13,636			9.0			20.0
Average loans held for sale		989			1,257			1,584			1,246			1,146			(21.3	)		(13.7	)
Average deposits		9,749			10,396			10,243			9,446			8,538			(6.2	)		14.2
Net loan charge-offs		38			45			7			3			1			(15.6	)		N/M
Return on average allocated equity		(3.74	)%		(36.46	)%		(.27	)%		19.61	%		19.04	%		N/A			N/A
Average full-time equivalent employees		1,235			1,313			1,311			1,295			1,278			(5.9	)		(3.4	)
Equipment Finance
Total revenue (TE)	$	100		$	185		$	139		$	153		$	134			(45.9	)%		(25.4	)%
Provision for loan losses		24			23			16			16			13			4.3			84.6
Noninterest expense		97			98			94			94			86			(1.0	)		12.8
Net (loss) income		(13	)		40			18			27			22			N/M			N/M
Average loans and leases		10,595			10,729			10,681			10,609			10,479			(1.2	)		1.1
Average loans held for sale		32			15			6			10			4			113.3			700.0
Average deposits		14			17			16			16			13			(17.6	)		7.7
Net loan charge-offs		24			18			16			16			13			33.3			84.6
Return on average allocated equity		(5.49	)%		16.55	%		7.59	%		11.72	%		9.75	%		N/A			N/A
Average full-time equivalent employees		872			930			906			901			891			(6.2	)		(2.1	)
Institutional and Capital Markets
Total revenue (TE)	$	158		$	169		$	155		$	160		$	158			(6.5	)%		—
Provision for loan losses		16			15			(2	)		—			—			6.7			N/M
Noninterest expense		102			115			104			101			102			(11.3	)		—
Net income		25			25			33			37			34			—			(26.5	)%
Average loans and leases		7,631			7,216			6,713			6,563			6,550			5.8			16.5
Average loans held for sale		555			394			373			463			139			40.9			299.3
Average deposits		1,459			1,560			1,844			2,073			2,168			(6.5	)		(32.7	)
Net loan charge-offs		2			6			6			—			1			(66.7	)		100.0
Return on average allocated equity		8.37	%		8.54	%		12.20	%		13.53	%		12.76	%		N/A			N/A
Average full-time equivalent employees		905			911			939			902			925			(.7	)		(2.2	)
Consumer Finance
Total revenue (TE)	$	104		$	99		$	86		$	89		$	116			5.1	%		(10.3	)%
Provision for loan losses		84			19			12			8			16			342.1			425.0
Noninterest expense		49			59			41			44			44			(16.9	)		11.4
(Loss) income from continuing operations		(18	)		11			21			23			35			N/M			N/M
Net (loss) income		(18	)		14			7			20			27			N/M			N/M
Average loans and leasesa		9,437			9,089			8,722			8,437			8,174			3.8			15.5
Average loans held for salea		3,356			3,043			2,729			2,658			2,628			10.3			27.7
Average depositsa		627			655			528			547			572			(4.3	)		9.6
Net loan charge-offsa		27			19			11			8			10			42.1			170.0
Return on average allocated equitya		(7.87	)%		5.06	%		10.38	%		11.57	%		18.15	%		N/A			N/A
Return on average allocated equity		(7.87	)		6.44			3.46			10.07			14.00			N/A			N/A
Average full-time equivalent employees		715			791			635			670			1,063			(9.6	)		(32.7	)

(a)	From continuing operations.
TE	= Taxable Equivalent
N/A	= Not Applicable
N/M	= Not Meaningful