KeyCorp 8K Reports Second Quarter 2008 Results | KEY 22 Jul 08

Exhibit 99.1


CONTACTS:	ANALYSTS	MEDIA
	Jonathan I. Shulman	William C. Murschel
	216.689.3882	216.828.7416
	Jonathan_I_Shulman@KeyBank.com	William_C_Murschel@KeyBank.com

	Christopher F. Sikora
	216.689.3133
	Chris_F_Sikora@KeyBank.com

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

FOR IMMEDIATE RELEASE

KEYCORP REPORTS SECOND QUARTER 2008 RESULTS

¨		Net loss of $2.70 per common share for the second quarter

¨		After-tax charges of $1.011 billion recorded in connection with previously disclosed federal tax court ruling on leveraged lease transactions; company plans appeal

¨		Strong fee revenue performance

¨		Costs are well controlled; capital ratios remain strong

¨		Actions taken to reduce commercial real estate exposure; bolster capital

¨		Loan loss reserve increased to 1.87% of loans

CLEVELAND, July 22, 2008 — KeyCorp (NYSE: KEY) today announced a second quarter loss from continuing operations of $1.126 billion, or $2.70 per common share. This compares to income from continuing operations of $337 million, or $0.85 per diluted common share, for the second quarter of 2007, and $218 million, or $0.54 per diluted common share, for the first quarter of 2008.

Key’s results for the second quarter include after-tax charges of $1.011 billion, or $2.43 per common share, resulting from a previously announced adverse federal tax court ruling on a service contract lease transaction — a ruling that the company intends to appeal based on its position that the tax treatment it applied to its leveraged lease transactions complied with all applicable tax laws and regulations in effect at the time and was consistent with industry practice. Results also reflect an increase in loan loss reserves to 1.87% of loans to address current economic conditions.

“The federal tax court ruling notwithstanding, Key’s performance this quarter reflects an ongoing effort to fortify the company against a difficult economic environment for lenders,” said Chief Executive Officer Henry L. Meyer III. “For our part, Key has been aggressive about reducing exposure in the residential properties segment of the construction loan portfolio through the planned sale of certain loans. Additionally, we have taken action to bolster Key’s loan loss reserve.

“All the while,” he continued, “our earning capacity has remained strong as evidenced by the performance of a number of our fee-based businesses, including trust and investment services and investment banking. These outcomes, along with a capital base that is essentially unchanged thanks to the capital raise we initiated last month, affirm our relationship banking approach and should put us in a good position in the periods ahead.”

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 2

During the first quarter of 2008, Key increased its tax reserves for certain lease in, lease out transactions and recalculated its lease income in accordance with prescribed accounting standards, resulting in after-tax charges of $38 million, or $0.10 per common share. Excluding the lease financing charges recorded in the first and second quarters, Key had a loss from continuing operations of $115 million, or $0.28 per common share, for the second quarter of 2008, compared to income from continuing operations of $337 million, or $0.85 per diluted common share, for the second quarter of 2007, and $256 million, or $0.64 per diluted common share, for the first quarter of 2008.

For the first six months of 2008, Key reported a loss from continuing operations of $908 million, or $2.23 per common share. Adjusting for the lease financing charges, Key had income from continuing operations of $141 million, or $0.34 per diluted common share, compared to $695 million, or $1.74 per diluted common share, for the first half of 2007.

Key reported a net loss of $1.126 billion, or $2.70 per common share, for the second quarter of 2008, compared to net income of $334 million, or $0.84 per diluted common share, for the second quarter of 2007, and $218 million, or $0.54 per diluted common share, for the first quarter of 2008. For the first half of 2008, Key reported a net loss of $908 million, or $2.23 per common share, compared to net income of $684 million, or $1.71 per diluted common share, for the same period last year.

In addition to the lease financing charges, Key’s results for the second quarter of 2008 were adversely affected by a higher provision for loan losses recorded in connection with the company’s previously reported efforts to aggressively reduce its exposure to the residential properties segment of its commercial real estate construction loan portfolio. Key’s provision for loan losses for the second quarter of 2008 was $647 million, compared to $53 million for the same period one year ago and $187 million for the first quarter of 2008. The current quarter’s provision exceeded net loan charge-offs by $123 million and increased Key’s reserve for loan losses to $1.421 billion, or 1.87% of period-loans.

The following table shows Key’s continuing and discontinued operating results for comparative quarters and for the six-month periods ended June 30, 2008 and 2007.


	Three months ended								Six months ended
in millions, except per share amounts	6-30-08			3-31-08		6-30-07			6-30-08			6-30-07

Summary of operations
(Loss) income from continuing operations	$	(1,126	)	$	218	$	337		$	(908	)	$	695
Loss from discontinued operations, net of taxes^a		—			—		(3	)		—			(11	)

Net (loss) income	$	(1,126	)	$	218	$	334		$	(908	)	$	684


Per common share — assuming dilution
(Loss) income from continuing operations	$	(2.70	)	$	.54	$	.85		$	(2.23	)	$	1.74
Loss from discontinued operations^a		—			—		(.01	)		—			(.03	)

Net (loss) income	$	(2.70	)	$	.54	$	.84		$	(2.23	)	$	1.71

(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.

“We took aggressive steps in the second quarter to fortify our already-strong capital position in light of the adverse court ruling on the tax treatment of a service contract lease transaction,” said Meyer. “The successful $1.65 billion capital raise, plus a reduction of our dividend effective in the third quarter, will position the company to respond to future business opportunities and are prudent steps in light of the challenging industry environment.

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 3

“In a process that is well underway, we have also moved to reduce our exposure in the residential homebuilder portfolio through the planned sale of certain assets. We have been pleased with the level of bidding interest. Although our actions in this regard resulted in additional net charge-offs and provisioning for the quarter, the sale of these loans, once closed, will reduce the level of Key’s total nonperforming assets. With the number of assets and bidders involved in the process, it will take additional time to consummate the transactions, but we anticipate that the majority of the loan sales will close in the third quarter.

“During the second quarter, we experienced positive trends in several fee-based businesses, notably trust and investment services, and our investment banking, syndications and capital markets businesses. Expenses continued to be well controlled, we benefited from the actions taken in the first quarter to significantly reduce the company’s exposure to future market volatility and we continue to gain traction in our Community Banking model. While we work through this difficult credit cycle, we continue to focus on our relationship business model,” Meyer concluded.

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.


	Second Quarter 2008									First Quarter 2008									Second 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

Charges related to leveraged lease tax litigation	$	(359	)	$	(1,011	)	$	(2.43	)	$	(3	)	$	(38	)	$	(.10	)		—			—			—
Gain from redemption of Visa Inc. shares		—			—			—			165			103			.26			—			—			—
Realized and unrealized gains (losses) on loan and securities portfolios held for sale or trading		62			39			.09			(128	)		(80	)		(.20	)	$	51		$	32		$	.08
Litigation reserve		—			—			—			—			—			—			(42	)		(26	)		(.07	)
Gains related to MasterCard Incorporated shares		—			—			—			—			—			—			40			25			.06

EPS = Earnings per diluted common share

SUMMARY OF CONTINUING OPERATIONS

Key’s taxable-equivalent net interest income for the second quarter of 2008 was reduced significantly as a result of an adverse federal court ruling on the company’s tax treatment of a service contract lease transaction entered into by AWG Leasing Trust, in which Key is a partner. The court’s decision applies only to the single AWG Leasing transaction and Key has determined to appeal the trial court decision. Notwithstanding the appeal, management believes that the applicable accounting guidance requires Key to recalculate lease income recognized on its entire portfolio of contested leveraged leases, not just the single leveraged lease subject to the court’s decision. 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,” Key has recalculated the lease income recognized from inception for all of the contested leases. Key’s second quarter results also reflect a $475 million charge to income taxes for the interest cost associated with the contested tax liabilities. Key estimates that the interest accrual associated with the contested liabilities will approximate $32 million to $34 million (after tax) per quarter for the third and fourth quarters of 2008. The level of future interest accruals will depend on the applicable interest rate at the time. This amount will be included in income tax expense in future quarters. These actions reduced Key’s taxable-equivalent net interest income and net interest margin for the second quarter of 2008 by $838 million and 376 basis points, respectively, and reduced Key’s earnings by $1.011 billion, or $2.43 per common share.

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 4

The impacts of the leveraged lease accounting charges on the components of Key’s interest income and related yields for the second quarter of 2008 are shown in the following table.


	Second Quarter 2008
	As Reported								Adjusted Basis
	Average								Average
dollars in millions	Balance		Interest			Yield/Rate			Balance		Interest		Yield/Rate

Total commercial loans	$	54,932	$	(83	)		(.58)	%	$	54,932	$	755		5.52	%

Total earning assets		89,742		422			1.89			89,742		1,260		5.63
Total interest-bearing liabilities		77,172		522			2.75			77,172		522		2.75

Interest rate spread (TE)							(.86)	%						2.88	%

Net interest income (TE) and net interest margin (TE)				(100	)		(.44)	%				738		3.32	%

TE adjustment				(458	)							21

Net interest income			$	358							$	717

TE = Taxable Equivalent

Excluding the charges associated with the leveraged lease tax litigation, Key’s taxable-equivalent net interest income was $738 million for the second quarter of 2008, compared to $706 million for the year-ago quarter. Average earning assets rose by $8.2 billion, or 10%, due primarily to 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 adjusted net interest margin for the current quarter declined to 3.32% from 3.46% for the second quarter of 2007. The reduction was attributable largely to tighter loan and deposit spreads caused by competitive pricing, and a higher level of nonperforming assets.

Compared to the first quarter of 2008, Key’s taxable-equivalent net interest income and net interest margin were essentially unchanged, after excluding the effects of charges recorded in connection with leveraged lease transactions in both periods. During the first quarter of 2008, Key increased its tax reserves for certain lease in, lease out transactions and recalculated its income under FASB Staff Position No. 13-2. 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. On an adjusted basis, Key had taxable-equivalent net interest income of $738 million and a net interest margin of 3.29% for the first quarter of 2008.

Key’s noninterest income was $555 million for the second quarter of 2008, compared to $649 million for the year-ago quarter. The decrease was attributable largely to net losses of $14 million from principal investing in the second quarter of 2008, compared to net gains of $90 million for the same period last year. Additionally, results for the second quarter of 2007 benefited from a $40 million gain related to the sale of MasterCard Incorporated shares. These factors were offset in part by higher income from several fee-based businesses. Income from investment banking and capital markets activities rose by $28 million, trust and investment services income was up $23 million, and income from deposit service charges grew by $9 million.

The major components of Key’s fee-based income for the past five quarters are shown in the following table.


in millions	2Q08		1Q08		4Q07		3Q07		2Q07

Trust and investment services income	$	138	$	129	$	131	$	119	$	115
Service charges on deposit accounts		93		88		90		88		84
Investment banking and capital markets income		80		8		12		9		52
Operating lease income		68		69		72		70		66
Letter of credit and loan fees		51		37		58		51		45
Corporate-owned life insurance income		28		28		37		27		32
Electronic banking fees		27		24		25		25		25

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 5

Compared to the first quarter of 2008, noninterest income increased by $27 million. Excluding the $165 million gain from the partial redemption of Visa Inc. shares recorded in the first quarter, noninterest income was up $192 million, reflecting improvements in both capital markets-driven businesses and other fee-based businesses. The improvement in Key’s capital markets-driven businesses was attributable to improved execution, market conditions and the previously announced actions taken by management during the first quarter of 2008 to mitigate the effects of future market volatility on Key’s held-for-sale and trading portfolios.

During the second quarter of 2008, Key recorded $33 million in net gains from loan sales and mark-to-market adjustments, compared to $101 million in net losses from loan sales and write-downs (primarily commercial real estate loans held for sale) for the first quarter. Additionally, income from investment banking and capital markets activities increased by $72 million, due primarily to a $49 million contribution from dealer trading and derivatives, and a $14 million increase in investment banking income. Net losses from principal investing totaled $14 million for the second quarter of 2008, compared to net gains of $9 million for the prior quarter.

Trust and investment services income grew by $9 million from the first quarter of 2008, driven by growth in income from brokerage commissions and fees. The company also experienced increases of $14 million in syndication and other loan-related fees, and $5 million in income from deposit service charges.

Key’s noninterest expense was $781 million for the second quarter of 2008, compared to $815 million for the same period last year. Personnel expense decreased by $7 million, due primarily to a reduction in costs associated with employee benefits. Nonpersonnel expense decreased by $27 million from the year-ago quarter, due to a $42 million litigation charge recorded during the second quarter of 2007, offset in part by a $7 million increase in professional fees.

Compared to the first quarter of 2008, noninterest expense rose by $49 million. Personnel expense decreased by $5 million, while nonpersonnel expense was up $54 million, due primarily to a $2 million credit for losses on lending-related commitments in the current quarter, compared to a $27 million credit in the prior quarter. Also contributing to the growth were increases in professional fees and marketing expense of $10 million and $7 million, respectively.

ASSET QUALITY

Key’s provision for loan losses from continuing operations was $647 million for the second quarter of 2008, compared to $53 million for the year-ago quarter and $187 million for the first quarter of 2008. The increase in the provision was due primarily to a higher level of net loan charge-offs recorded in the commercial real estate portfolio. As previously reported, Key had undertaken a process to aggressively reduce its exposure in the residential properties segment of its construction loan portfolio through the planned sale of certain loans. In conjunction with these efforts, Key transferred $384 million of commercial real estate loans ($719 million, net of $335 million in net charge-offs) from the held-to-maturity loan portfolio to held-for-sale status in June. In excess of 100 bids were received in this process. As of June 30, 2008, sales had already closed on $44 million of these loans. With respect to the balance, Key is working with numerous bidders to finalize sales terms and documentation, and management anticipates that sales of the majority of the remaining $340 million of loans, which are on nonperforming status, will close during the third quarter. Key’s provision for loan losses for the second quarter of 2008 exceeded its net loan charge-offs by $123 million, as the company continued to build reserves.

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 6

Selected asset quality statistics for Key for each of the past five quarters are presented in the following table.


dollars in millions	2Q08			1Q08			4Q07			3Q07			2Q07

Net loan charge-offs	$	524		$	121		$	119		$	59		$	53
Net loan charge-offs to average loans from continuing operations		2.75	%		.67	%		.67	%		.35	%		.32	%
Nonperforming loans at period end	$	814		$	1,054		$	687		$	498		$	276
Nonperforming loans to period-end portfolio loans		1.07	%		1.38	%		.97	%		.72	%		.41	%
Nonperforming assets at period end	$	1,210		$	1,115		$	764		$	570		$	378
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.59	%		1.46	%		1.08	%		.83	%		.57	%
Allowance for loan losses	$	1,421		$	1,298		$	1,200		$	955		$	945
Allowance for loan losses to period-end loans		1.87	%		1.70	%		1.69	%		1.38	%		1.42	%
Allowance for loan losses to nonperforming loans		174.57			123.15			174.67			191.77			342.39

Net loan charge-offs for the quarter totaled $524 million, or 2.75% of average loans from continuing operations, compared to $53 million, or 0.32%, for the same period last year and $121 million, or 0.67%, for the previous quarter. Net loan charge-offs from the commercial real estate and educational loan portfolios totaled $354 million and $54 million, respectively, in the current quarter. The net charge-offs in the commercial real estate portfolio reflect the actions previously mentioned, while the educational loan charge-offs derived from approximately $780 million of noncore loans, predominately loans associated with non-Title IV schools, which the company stopped underwriting in mid-2006.

Key’s net loan charge-offs by loan type for each of the past five quarters are shown in the table below.


dollars in millions	2Q08			1Q08			4Q07			3Q07			2Q07

Commercial, financial and agricultural	$	61		$	36		$	35		$	22		$	24
Real estate — commercial mortgage		15			4			1			2			4
Real estate — construction		339			25			44			6			2
Commercial lease financing		14			9			6			8			5
Total consumer loans		95			47			33			21			18

Total net loan charge-offs	$	524		$	121		$	119		$	59		$	53


Net loan charge-offs to average loans from continuing operations		2.75	%		.67	%		.67	%		.35	%		.32	%

The company expects net loan charge-offs to be below the second quarter level during the remainder of 2008; however, net loan charge-offs are expected to remain at elevated levels. Additionally, the company expects net loan charge-offs to be in the range of 1.20% to 1.60% of average loans for the third and fourth quarters of 2008.

At June 30, 2008, Key’s nonperforming loans totaled $814 million and represented 1.07% of period-end portfolio loans, compared to 1.38% at March 31, 2008, and 0.41% at June 30, 2007. At the same time, nonperforming assets totaled $1.210 billion and represented 1.59% of portfolio loans, other real estate owned and other nonperforming assets, compared to 1.46% at March 31, 2008, and 0.57% at June 30, 2007. The decrease in nonperforming loans and the increase in nonperforming assets during the second quarter were largely attributable to the transfer of commercial real estate construction loans (principally those in Florida and southern California) to held-for-sale status. Also contributing to the rise in nonperforming assets was an increase in the level of commercial loans (principally to businesses tied to residential construction properties) on nonaccrual status.

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 7

The following table illustrates the trend in Key’s nonperforming assets by loan type over the past five quarters.


dollars in millions	2Q08			1Q08			4Q07			3Q07			2Q07

Commercial, financial and agricultural	$	259		$	147		$	84		$	94		$	83
Real estate — commercial mortgage		107			113			41			41			41
Real estate — construction		256			610			415			228			23
Commercial lease financing		57			38			28			30			34
Total consumer loans		135			146			119			105			95

Total nonperforming loans		814			1,054			687			498			276
Nonperforming loans held for sale		342			9			25			6			4
OREO and other nonperforming assets		54			52			52			66			98

Total nonperforming assets	$	1,210		$	1,115		$	764		$	570		$	378


Nonperforming loans to period-end portfolio loans		1.07	%		1.38	%		.97	%		.72	%		.41	%
Nonperforming assets to period-end portfolio loans, plus OREO and other nonperforming assets		1.59			1.46			1.08			.83			.57

Key’s allowance for loan losses was $1.421 billion, or 1.87% of loans outstanding, at June 30, 2008, compared to $1.298 billion, or 1.70%, at March 31, 2008, and $945 million, or 1.42%, at June 30, 2007.

CAPITAL

Key’s capital ratios, as presented in the following table, continued to exceed all “well-capitalized” regulatory benchmarks at June 30, 2008.

Capital Ratios


	6-30-08			3-31-08			6-30-07

Tier 1 risk-based capital^a		8.49	%		8.33	%		8.14	%
Total risk-based capital^a		12.35			12.34			12.15
Tangible equity to tangible assets		6.98			6.85			6.97


(a)		6-30-08 ratio is estimated.

As previously announced, during the second quarter of 2008, Key took several actions to preserve its capital strength in light of the charges recorded in response to the federal court ruling on the tax treatment of a service contract lease transaction. Key issued $650 million, or 6.5 million shares, of noncumulative perpetual convertible preferred stock with a liquidation value of $100 per share, and $1.0 billion, or 85.1 million additional common shares. Further Key’s Board of Directors announced its intention to reduce the dividend on Key’s common shares by 50% to an annualized dividend of $0.75 per share commencing with the dividend declared on July 18, 2008.

As part of the over allotment granted by Key to the underwriters on June 12, 2008, Key issued 7 million additional common shares and 75,000 additional shares of noncumulative perpetual convertible preferred stock on July 11, 2008. The proceeds received as a result of these issuances totaled approximately $90 million, and represented approximately 9 basis points of additional Tier 1 and total capital.

During the second quarter, Key reissued .5 million of its common shares under employee benefit plans. There was no repurchase activity by Key during the second quarter, and the company currently does not anticipate any share repurchase activity during the remainder of 2008.

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 8

Share issuances and repurchases that caused the change in Key’s outstanding common shares over the past five quarters are summarized in the following table.

Summary of Changes in Common Shares Outstanding


in thousands	2Q08		1Q08		4Q07		3Q07			2Q07

Shares outstanding at beginning of period		400,071		388,793		388,708		389,362			394,483
Common shares issued		85,106		—		—		—			—
Shares reissued to acquire U.S.B. Holding Co., Inc.		—		9,895		—		—			—
Shares reissued under employee benefit plans		485		1,383		85		1,346			879
Common shares repurchased		—		—		—		(2,000	)		(6,000	)

Shares outstanding at end of period		485,662		400,071		388,793		388,708			389,362

LINE OF BUSINESS RESULTS

The following table shows the contribution made by each major business group to Key’s taxable-equivalent revenue and (loss) 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 2Q08 vs.
dollars in millions	2Q08			1Q08			2Q07		1Q08			2Q07

Revenue from continuing operations (TE)

Community Banking	$	659		$	630		$	631		4.6	%		4.4	%
National Banking^a		(126	)		439			612		N/M			N/M
Other Segments		(31	)		26			101		N/M			N/M

Total Segments		502			1,095			1,344		(54.2	)		(62.6	)
Reconciling Items^c		(47	)		137			11		N/M			N/M

Total	$	455		$	1,232		$	1,355		(63.1)	%		(66.4)	%


(Loss) income from continuing operations

Community Banking	$	104		$	115		$	102		(9.6)	%		2.0	%
National Banking^a		(670	)		(24	)		157		N/M			N/M
Other Segments^b		(13	)		21			55		N/M			N/M

Total Segments		(579	)		112			314		N/M			N/M
Reconciling Items^c		(547	)		106			23		N/M			N/M

Total	$	(1,126	)	$	218		$	337		N/M			N/M


(a)	During the second quarter of 2008, National Banking’s taxable-equivalent net interest income and net income were reduced by $838 million and $536 million, respectively, as a result of an adverse federal court ruling on the tax treatment of a service contract lease transaction. During the prior quarter, National Banking increased its tax reserves for certain lease in, lease out transactions and recalculated its lease income in accordance with prescribed accounting standards. These actions reduced National Banking’s taxable-equivalent revenue by $34 million and its net income by $21 million in the first quarter.

(b)	Other Segments’ results for the second quarter of 2007 include a $26 million ($16 million after tax) charge for litigation. This charge and the litigation charge referred to in note (c) below comprise the $42 million charge recorded in connection with the Honsador litigation.

(c)	Reconciling Items for the second quarter of 2008 include a $475 million charge to income taxes for the interest cost associated with the leveraged lease tax litigation. Reconciling Items for the prior quarter include a $165 million ($103 million after tax) gain from the partial redemption of Key’s equity interest in Visa Inc. and a $17 million charge to income taxes for the interest cost associated with the increase to Key’s tax reserves for certain lease in, lease out transactions. Reconciling Items for the second quarter of 2007 include a $40 million ($25 million after tax) gain related to MasterCard Incorporated shares, and a $16 million ($10 million after tax) charge for litigation.

TE	= Taxable Equivalent, N/M = Not Meaningful

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 9

Community Banking


									Percent change 2Q08 vs.
dollars in millions	2Q08		1Q08			2Q07			1Q08			2Q07

Summary of operations
Net interest income (TE)	$	437	$	423		$	417			3.3	%		4.8	%
Noninterest income		222		207			214			7.2			3.7

Total revenue (TE)		659		630			631			4.6			4.4
Provision for loan losses		44		18			21			144.4			109.5
Noninterest expense		449		428			446			4.9			.7

Income before income taxes (TE)		166		184			164			(9.8	)		1.2
Allocated income taxes and TE adjustments		62		69			62			(10.1	)		—

Net income	$	104	$	115		$	102			(9.6	)%		2.0	%


Percent of consolidated income from continuing operations		N/M		53	%		30	%		N/A			N/A

Average balances
Loans and leases	$	28,478	$	28,128		$	26,574			1.2	%		7.2	%
Total assets		31,385		31,068			29,346			1.0			6.9
Deposits		49,948		49,767			46,126			.4			8.3

Assets under management at period end	$	19,366	$	20,049		$	21,061			(3.4	)%		(8.0	)%

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

Additional Community Banking Data


										Percent change 2Q08 vs.
dollars in millions	2Q08			1Q08			2Q07			1Q08			2Q07

Average deposits outstanding
NOW and money market deposit accounts	$	19,656		$	19,865		$	18,970			(1.1	)%		3.6	%
Savings deposits		1,804			1,754			1,619			2.9			11.4
Certificates of deposit ($100,000 or more)		6,661			6,435			4,709			3.5			41.5
Other time deposits		12,735			12,778			12,038			(.3	)		5.8
Deposits in foreign office		1,306			1,256			1,046			4.0			24.9
Noninterest-bearing deposits		7,786			7,679			7,744			1.4			.5

Total deposits	$	49,948		$	49,767		$	46,126			.4	%		8.3	%


Home equity loans
Average balance	$	9,766		$	9,693		$	9,660
Weighted-average loan-to-value ratio		70	%		70	%		70	%
Percent first lien positions		55			56			58

Other data
On-line households / household penetration		759,003 / 45	%		749,512 / 45	%		723,955 / 44	%
Branches		985			985			954
Automated teller machines		1,479			1,479			1,450

Community Banking Summary of Operations

Community Banking recorded net income of $104 million for the second quarter of 2008, compared to $102 million for the year-ago quarter. Increases in both net interest income and noninterest income accounted for the improvement, but were substantially offset by a higher provision for loan losses.

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 10

Taxable-equivalent net interest income rose by $20 million, or 5%, from the second quarter of 2007. The increase was attributable to a $1.9 billion, or 7%, rise in average earning assets, due largely to growth in the commercial loan portfolio, and a $3.8 billion, or 8%, increase in average deposits. Both loans and deposits experienced organic growth and 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.

Noninterest income increased by $8 million, or 4%, from the same period one year ago, reflecting strong growth in bank channel investment product sales income and deposit service charge income.

The provision for loan losses rose by $23 million, or 110%, compared to the second quarter of 2007, reflecting a $12 million increase in net loan charge-offs and the remainder a provision for general weakness in the economy.

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.

National Banking


										Percent change 2Q08 vs.
dollars in millions	2Q08			1Q08			2Q07			1Q08			2Q07

Summary of operations
Net interest income (TE)	$	(472	) ^a	$	339		$	339			N/M			N/M
Noninterest income		346			100			273			246.0	%		26.7	%

Total revenue (TE)		(126	)		439			612			N/M			N/M
Provision for loan losses		609			169			32			260.4			N/M
Noninterest expense		337			308			330			9.4			2.1

(Loss) income from continuing operations before income taxes (TE)		(1,072	)		(38	)		250			N/M			N/M
Allocated income taxes and TE adjustments		(402	)		(14	)		93			N/M			N/M

(Loss) income from continuing operations		(670	)		(24	)		157			N/M			N/M
Loss from discontinued operations, net of taxes		—			—			(3	)		—			100.0	%

Net (loss) income	$	(670	)	$	(24	)	$	154			N/M			N/M


Percent of consolidated income from continuing operations		N/M			N/M			47	%		N/A			N/A

Average balances from continuing operations
Loans and leases	$	47,876		$	44,149		$	39,325			8.4	%		21.7	%
Loans held for sale		1,282			4,932			4,377			(74.0	)		(70.7	)
Total assets		56,242			56,219			49,585			—			13.4
Deposits		12,289			11,888			12,082			3.4			1.7

Assets under management at period end	$	61,632		$	60,404		$	64,531			2.0	%		(4.5)	%


(a)	During the second quarter of 2008, National Banking’s taxable-equivalent net interest income and net income were reduced by $838 million and $536 million, respectively, as a result of an adverse federal court ruling on the tax treatment of a service contract lease transaction. During the prior quarter, National Banking increased its tax reserves for certain lease in, lease out transactions and recalculated its lease income in accordance with prescribed accounting standards. These actions reduced National Banking’s taxable-equivalent revenue by $34 million and its net income by $21 million in the first quarter.

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

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 11

National Banking Summary of Continuing Operations

National Banking recorded a loss of $670 million from continuing operations for the second quarter of 2008, compared to income of $157 million from continuing operations for the same period last year. During the second quarter of 2008, National Banking’s net interest income was adversely affected by a federal court ruling on the tax treatment of a segment of Key’s leveraged lease financing portfolio as further described below. Also contributing to the less favorable results compared to the year-ago quarter were a substantially higher provision for loan losses and an increase in noninterest expense, offset in part by significant growth in noninterest income.

National Banking’s taxable-equivalent net interest income for the second quarter of 2008 was reduced significantly as a result of an adverse federal court ruling on the company’s tax treatment of a service contract lease transaction entered into by AWG Leasing Trust, in which Key is a partner. As a result of this ruling, 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,” National Banking recalculated its lease income from inception for this particular transaction, as well as any other lease financing transactions being contested by the Internal Revenue Service. Excluding the additional charges associated with these actions, taxable-equivalent net interest income grew by $27 million, or 8%, from the second quarter of 2007 as a result of increases in average earning assets and deposits, offset in part by tighter loan and deposit spreads and a higher level of nonperforming assets. Average loans and leases grew by $8.6 billion, or 22%, while average deposits rose by $207 million, or 2%, from the year-ago quarter.

Noninterest income increased by $73 million, or 27%, reflecting higher income from several fee-based businesses. Income from investment banking and capital markets activities rose by $35 million, while trust and investment services income was up $23 million. Increases in income from tuition payment plan processing, as well as syndication and other loan-related fees also contributed to the improvement.

The provision for loan losses rose by $577 million, due primarily to a higher level of net loan charge-offs recorded in the commercial real estate portfolio. National Banking’s provision for loan losses for the second quarter of 2008 exceeded its net loan charge-offs by $123 million, as the company continued to build reserves.

Other Segments

Other segments consist of Corporate Treasury and Key’s Principal Investing unit. These segments generated a net loss of $13 million for the second quarter of 2008, compared to net income of $55 million for the same period last year. These results reflect net losses of $14 million from principal investing in the second quarter of 2008, compared to net gains of $90 million for the year-ago quarter.

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 12

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 Marketsthrough its KeyBanc Capital Markets unit, provides 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 its Victory Capital Management unit, Institutional and Capital Markets also manages or offers 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 Financeoffers loans to consumers on a direct basis and an indirect basis through dealers. It also provides federal and private education loans to students and their parents, and processes tuition payments for private schools. Through its Commercial Floor Plan Lending unit, Consumer Finance finances inventory for automobile, recreation and marine dealers.

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 13

Cleveland-based KeyCorp is one of the nation’s largest bank-based financial services companies, with assets of $102 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/,^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 results 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, July 22, 2008. An audio replay of the call will be available through July 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) 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 Second Quarter 2008 Results
July 22, 2008
Page 14

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


	Three months ended
	6-30-08			3-31-08			6-30-07

Summary of operations
Net interest income (TE)	$	(100	)^a	$	704	^a	$	706
Noninterest income		555			528			649

Total revenue (TE)		455			1,232			1,355
Provision for loan losses		647			187			53
Noninterest expense		781			732			815
(Loss) income from continuing operations		(1,126	)		218			337
Loss from discontinued operations, net of taxes^b		—			—			(3	)
Net (loss) income		(1,126	)^a		218	^a		334
Net (loss) income applicable to common shares		(1,126	)		218			334

Per common share
(Loss) income from continuing operations	$	(2.70	)	$	.55		$	.86
(Loss) income from continuing operations — assuming dilution		(2.70	)		.54			.85
Loss from discontinued operations^b		—			—			(.01	)
Loss from discontinued operations — assuming dilution^b		—			—			(.01	)
Net (loss) income		(2.70	)		.55			.85
Net (loss) income — assuming dilution		(2.70	)^a		.54	^a		.84
Cash dividends paid		.375			.375			.365
Book value at period end		16.59			21.48			19.78
Tangible book value at period end		13.00			17.07			16.41
Market price at period end		10.98			21.95			34.33

Performance ratios — from continuing operations
Return on average total assets		(4.38	)%		.85	%		1.45	%
Return on average common equity		(53.35	)		10.38			17.66
Return on average total equity		(52.56	)		10.38			17.66
Net interest margin (TE)		(.44	)		3.14			3.46

Performance ratios — from consolidated operations
Return on average total assets		(4.38	)%^a		.85	%^a		1.43	%
Return on average common equity		(53.35	)^a		10.38	^a		17.50
Return on average total equity		(52.56	)^a		10.38	^a		17.50
Net interest margin (TE)		(.44	)^a		3.14	^a		3.46

Capital ratios at period end
Equity to assets		8.57	%		8.47	%		8.28	%
Tangible equity to tangible assets		6.98			6.85			6.97
Tier 1 risk-based capital^c		8.49			8.33			8.14
Total risk-based capital^c		12.35			12.34			12.15
Leverage^c		9.33			9.15			9.11

Asset quality
Net loan charge-offs	$	524		$	121		$	53
Net loan charge-offs to average loans from continuing operations		2.75	%		.67	%		.32	%
Allowance for loan losses	$	1,421		$	1,298		$	945
Allowance for loan losses to period-end loans		1.87	%		1.70	%		1.42	%
Allowance for loan losses to nonperforming loans		174.57			123.15			342.39
Nonperforming loans at period end	$	814		$	1,054		$	276
Nonperforming assets at period end		1,210			1,115			378
Nonperforming loans to period-end portfolio loans		1.07	%		1.38	%		.41	%
Nonperforming assets to period-end portfolio loans plus
OREO and other nonperforming assets		1.59			1.46			.57

Trust and brokerage assets
Assets under management	$	80,998		$	80,453		$	85,592
Nonmanaged and brokerage assets		29,905			30,532			33,485

Other data
Average full-time equivalent employees		18,164			18,426			18,888
Branches		985			985			954

Taxable-equivalent adjustment	$	(458	)	$	(9	)	$	20

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 15

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


	Six months ended
	6-30-08			6-30-07

Summary of operations
Net interest income (TE)	$	604	^a	$	1,406
Noninterest income		1,083			1,303

Total revenue (TE)		1,687			2,709
Provision for loan losses		834			97
Noninterest expense		1,513			1,599
(Loss) income from continuing operations		(908	)		695
Loss from discontinued operations, net of taxes^b		—			(11	)
Net (loss) income		(908	)^a		684
Net (loss) income applicable to common shares		(908	)		684

Per common share
(Loss) income from continuing operations	$	(2.23	)	$	1.76
(Loss) income from continuing operations — assuming dilution		(2.23	)		1.74
Loss from discontinued operations^b		—			(.03	)
Loss from discontinued operations — assuming dilution^b		—			(.03	)
Net (loss) income		(2.23	)		1.73
Net (loss) income — assuming dilution		(2.23	)^a		1.71
Cash dividends paid		.75			.73

Performance ratios — from continuing operations
Return on average total assets		(1.77)	%		1.51	%
Return on average common equity		(21.57	)		18.35
Return on average total equity		(21.40	)		18.35
Net interest margin (TE)		1.35			3.48

Performance ratios — from consolidated operations
Return on average total assets		(1.77	)%^a		1.49	%
Return on average common equity		(21.57	)^a		18.06
Return on average total equity		(21.40	)^a		18.06
Net interest margin (TE)		1.35	^a		3.49

Asset quality
Net loan charge-offs	$	645		$	97
Net loan charge-offs to average loans from continuing operations		1.74	%		.30	%

Other data
Average full-time equivalent employees		18,295			19,342

Taxable-equivalent adjustment	$	(467	)	$	41

(a)		The following table entitled “GAAP to Non-GAAP Reconciliations” presents computations of certain earnings data and performance ratios, excluding charges related to the tax treatment of certain leveraged lease financing transactions disallowed by the Internal Revenue Service. The table reconciles the related GAAP measures to these non-GAAP measures and provides a basis for period-to-period comparisons.

(b)		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.

(c)		6-30-08 ratio is estimated.

TE = Taxable Equivalent

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 16

GAAP to Non-GAAP Reconciliations
(dollars in millions, except per share amounts)

As a result of an adverse federal court ruling on Key’s tax treatment of a service contract lease transaction entered into by AWG Leasing Trust, in which Key is a partner, Key recorded after-tax charges of $1.011 billion, or $2.43 per common share, during the second quarter of 2008. Additionally, during the first quarter of 2008, Key increased its tax reserves for certain lease in, lease out transactions and recalculated its lease income in accordance with prescribed accounting standards, resulting in after-tax charges of $38 million, or $0.10 per common share. The table below presents computations of certain earnings data and performance ratios, excluding these charges (non-GAAP), reconciles the related GAAP measures to these non-GAAP measures and provides a basis for period-to-period comparisons. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Non-GAAP financial measures should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.


		Three months ended						Six months ended
		6-30-08			3-31-08			6-30-08

Net income
Net (loss) income (GAAP)	A	$	(1,126	)	$	218		$	(908	)
Charges related to leveraged lease tax litigation, after tax			1,011			38			1,049

Net (loss) income, excluding charges related to leveraged lease tax litigation (non-GAAP)	B	$	(115	)	$	256		$	141


Weighted-average common shares and potential common shares outstanding (000)	C		416,629			399,769			407,875

Per common share
Net (loss) income — assuming dilution (GAAP)	A/C	$	(2.70	)	$	.54		$	(2.23	)
Net (loss) income, excluding charges related to leveraged lease tax litigation — assuming dilution (non-GAAP)	B/C		(.28	)		.64			.34

Performance ratios
Return on average total assets^a
Average total assets	D	$	103,290		$	103,356		$	103,323

Return on average total assets (GAAP)	A/D		(4.38)	%		.85	%		(1.77	)%
Return on average total assets, excluding charges related to leveraged lease tax litigation (non-GAAP)	B/D		(.45	)		1.00			.27

Return on average common equity^a
Average common equity	E	$	8,489		$	8,445		$	8,467

Return on average common equity (GAAP)	A/E		(53.35)	%		10.38	%		(21.57	)%
Return on average common equity, excluding charges related to leveraged lease tax litigation (non-GAAP)	B/E		(5.45	)		12.19			3.35

Return on average total equity^a
Average total equity	F	$	8,617		$	8,445		$	8,531

Return on average total equity (GAAP)	A/F		(52.56)	%		10.38	%		(21.40	)%
Return on average total equity, excluding charges related to leveraged lease tax litigation (non-GAAP)	B/F		(5.37	)		12.19			3.32

Net interest income
Net interest income (GAAP)		$	358		$	713		$	1,071
Charges related to leveraged lease tax litigation, pre-tax			359			3			362

Net interest income, excluding charges related to leveraged lease tax litigation (non-GAAP)		$	717		$	716		$	1,433


Net interest income/margin (TE)
Net interest income (TE) (as reported)		$	(100	)	$	704		$	604
Charges related to leveraged lease tax litigation, pre-tax (TE)			838			34			872

Net interest income, excluding charges related to leveraged lease tax litigation (TE) (adjusted basis)		$	738		$	738		$	1,476


Net interest margin (TE) (as reported)			(.44)	%		3.14	%		1.35	%
Impact of charges related to leveraged lease tax litigation, pre-tax (TE)			3.76			.15			1.95

Net interest margin, excluding charges related to leveraged lease tax litigation (TE) (adjusted basis)			3.32	%		3.29	%		3.30	%

(a)		Income statement amount has been annualized in calculation.

TE = Taxable Equivalent

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 17

Consolidated Balance Sheets
(dollars in millions)


	6-30-08			3-31-08			6-30-07

ASSETS
Loans	$	75,855		$	76,444		$	66,692
Loans held for sale		1,833			1,674			4,546
Securities available for sale		8,312			8,419			7,819
Held-to-maturity securities		25			29			37
Trading account assets		1,483			1,015			994
Short-term investments		826			577			471
Other investments		1,559			1,561			1,602

Total earning assets		89,893			89,719			82,161
Allowance for loan losses		(1,421	)		(1,298	)		(945	)
Cash and due from banks		1,912			1,730			1,818
Premises and equipment		748			712			600
Operating lease assets		1,089			1,070			1,110
Goodwill		1,598			1,599			1,202
Other intangible assets		146			164			110
Corporate-owned life insurance		2,917			2,894			2,822
Derivative assets		1,693			1,508			374
Accrued income and other assets		2,969			3,394			3,715

Total assets	$	101,544		$	101,492		$	92,967


LIABILITIES
Deposits in domestic offices:
NOW and money market deposit accounts	$	27,278		$	26,527		$	23,315
Savings deposits		1,809			1,826			1,613
Certificates of deposit ($100,000 or more)		8,699			8,330			6,197
Other time deposits		12,541			12,933			11,832

Total interest-bearing deposits		50,327			49,616			42,957
Noninterest-bearing deposits		10,561			10,896			14,199
Deposits in foreign office — interest-bearing		3,508			4,190			3,443

Total deposits		64,396			64,702			60,599
Federal funds purchased and securities sold under repurchase agreements		2,088			3,503			4,362
Bank notes and other short-term borrowings		5,985			5,464			2,476
Derivative liabilities		637			465			248
Accrued expense and other liabilities		4,626			4,429			5,000
Long-term debt		15,106			14,337			12,581

Total liabilities		92,838			92,900			85,266

SHAREHOLDERS’ EQUITY
Preferred stock		650			—			—
Common shares		577			492			492
Capital surplus		2,544			1,659			1,652
Retained earnings		7,461			8,737			8,720
Treasury stock, at cost		(2,675	)		(2,689	)		(2,994	)
Accumulated other comprehensive income (loss)		149			393			(169	)

Total shareholders’ equity		8,706			8,592			7,701

Total liabilities and shareholders’ equity	$	101,544		$	101,492		$	92,967


Common shares outstanding (000)		485,662			400,071			389,362

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 18

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


	Three months ended									Six months ended
	6-30-08			3-31-08			6-30-07			6-30-08			6-30-07

INTEREST INCOME
Loans	$	717		$	1,123		$	1,176		$	1,840		$	2,337
Loans held for sale		20			87			82			107			157
Securities available for sale		111			109			106			220			206
Held-to-maturity securities		—			1			—			1			1
Trading account assets		10			13			7			23			14
Short-term investments		8			9			9			17			20
Other investments		14			12			15			26			28

Total interest income		880			1,354			1,395			2,234			2,763

INTEREST EXPENSE
Deposits		347			428			447			775			880
Federal funds purchased and securities sold under repurchase agreements		15			28			59			43			108
Bank notes and other short-term borrowings		27			39			18			66			29
Long-term debt		133			146			185			279			381

Total interest expense		522			641			709			1,163			1,398


NET INTEREST INCOME		358			713			686			1,071			1,365
Provision for loan losses		647			187			53			834			97

Net interest income after provision for loan losses		(289	)		526			633			237			1,268

NONINTEREST INCOME
Trust and investment services income		138			129			115			267			240
Service charges on deposit accounts		93			88			84			181			159
Investment banking and capital markets income		80			8			52			88			96
Operating lease income		68			69			66			137			130
Letter of credit and loan fees		51			37			45			88			83
Corporate-owned life insurance income		28			28			32			56			57
Electronic banking fees		27			24			25			51			49
Net gains (losses) from loan securitizations and sales		33			(101	)		33			(68	)		42
Net securities (losses) gains		(1	)		3			2			2			(45	)
Net (losses) gains from principal investing		(14	)		9			90			(5	)		119
Gain from redemption of Visa Inc. shares		—			165			—			165			—
Gain from sale of McDonald Investments branch network		—			—			—			—			171
Other income		52			69			105			121			202

Total noninterest income		555			528			649			1,083			1,303

NONINTEREST EXPENSE
Personnel		404			409			411			813			839
Net occupancy		62			66			59			128			122
Computer processing		43			47			49			90			100
Operating lease expense		55			58			55			113			107
Professional fees		33			23			26			56			52
Equipment		23			24			24			47			49
Marketing		21			14			20			35			39
Other expense		140			91			171			231			291

Total noninterest expense		781			732			815			1,513			1,599


(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(515	)		322			467			(193	)		972
Income taxes		611			104			130			715			277

(LOSS) INCOME FROM CONTINUING OPERATIONS		(1,126	)		218			337			(908	)		695
Loss from discontinued operations, net of taxes		—			—			(3	)		—			(11	)

NET (LOSS) INCOME	$	(1,126	)	$	218		$	334		$	(908	)	$	684


Net (loss) income applicable to common shares	$	(1,126	)	$	218		$	334		$	(908	)	$	684

Per common share:

(Loss) income from continuing operations	$	(2.70	)	$	.55		$	.86		$	(2.23	)	$	1.76
Net (loss) income		(2.70	)		.55			.85			(2.23	)		1.73

Per common share — assuming dilution:

(Loss) income from continuing operations	$	(2.70	)	$	.54		$	.85		$	(2.23	)	$	1.74
Net (loss) income		(2.70	)		.54			.84			(2.23	)		1.71
Cash dividends declared per common share	$	.375			—		$	.365		$	.375		$	.73
Weighted-average common shares outstanding (000)		416,629			399,121			392,045			407,875			394,944
Weighted-average common shares and potential common shares outstanding (000)		416,629			399,769			396,918			407,875			400,180

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 19

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


	Second Quarter 2008									First Quarter 2008									Second 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	$	26,057		$	352			5.42	%	$	25,411		$	392			6.21	%	$	21,856		$	401		7.36	%
Real estate — commercial mortgage		10,593			156			5.91			10,283			175			6.84			8,565			165		7.75
Real estate — construction		8,484			118			5.61			8,468			134			6.36			8,243			167		8.09
Commercial lease financing		9,798			(709	)		(28.94	)^c		10,004			98			3.91	^c		10,096			142		5.62

Total commercial loans		54,932			(83	)		(.58	)		54,166			799			5.93			48,760			875		7.19
Real estate — residential		1,918			30			6.12			1,916			30			6.29			1,472			24		6.57
Home equity:
Community Banking		9,765			140			5.78			9,693			154			6.38			9,660			172		7.15
National Banking		1,200			23			7.68			1,260			24			7.74			1,092			21		7.86

Total home equity loans		10,965			163			5.99			10,953			178			6.54			10,752			193		7.22
Consumer other — Community Banking		1,271			33			10.34			1,305			34			10.59			1,370			37		10.64
Consumer other — National Banking:
Marine		3,646			56			6.26			3,646			58			6.31			3,323			52		6.26
Education		3,595			53			5.88			363			7			8.04			329			8		9.56
Other		325			7			8.21			339			7			8.32			309			7		9.18

Total consumer other — National Banking		7,566			116			6.16			4,348			72			6.61			3,961			67		6.76

Total consumer loans		21,720			342			6.32			18,522			314			6.81			17,555			321		7.33

Total loans		76,652			259			1.37			72,688			1,113			6.15			66,315			1,196		7.23
Loans held for sale		1,356			20			5.94			4,984			87			7.01			4,415			82		7.50
Securities available for sale ^a,d		8,315			111			5.40			8,419			110			5.28			7,793			106		5.45
Held-to-maturity securities ^a		25			—			11.47			29			1			11.02			39			—		6.72
Trading account assets		1,041			10			3.88			1,075			13			4.84			813			8		3.58
Short-term investments		773			8			3.83			1,165			9			3.18			671			8		4.93
Other investments^d		1,580			14			3.09			1,552			12			3.05			1,541			15		3.68

Total earning assets		89,742			422			1.89			89,912			1,345			6.01			81,587			1,415		6.95
Allowance for loan losses		(1,338	)								(1,236	)								(942	)
Accrued income and other assets		14,886									14,680									12,767

Total assets	$	103,290								$	103,356								$	93,412


Liabilities
NOW and money market deposit accounts	$	27,158			102			1.51		$	26,996			139			2.07		$	22,953			179		3.14
Savings deposits		1,815			1			.27			1,865			3			.62			1,633			1		.19
Certificates of deposit ($100,000 or more) ^e		8,670			88			4.09			8,072			95			4.72			6,237			79		5.03
Other time deposits		12,751			135			4.27			12,759			146			4.59			12,047			141		4.70
Deposits in foreign office		4,121			21			1.95			5,853			45			3.13			3,600			47		5.20

Total interest-bearing deposits		54,515			347			2.56			55,545			428			3.10			46,470			447		3.85
Federal funds purchased and securities sold under repurchase agreements		3,267			15			1.86			3,863			28			2.91			4,748			59		5.04
Bank notes and other short-term borrowings		4,770			27			2.26			4,934			39			3.22			1,771			18		4.14
Long-term debt^e,f		14,620			133			3.87			13,238			146			4.71			12,909			185		5.83

Total interest-bearing liabilities		77,172			522			2.75			77,580			641			3.36			65,898			709		4.33

Noninterest-bearing deposits		10,617									10,741									13,927
Accrued expense and other liabilities		6,884									6,590									5,933

Total liabilities		94,673									94,911									85,758

Shareholders’ equity
Preferred stock		128									—									—
Common shareholders’ equity		8,489									8,445									7,654

Total shareholders’ equity		8,617									8,445									7,654


Total liabilities and shareholders’ equity	$	103,290								$	103,356								$	93,412


Interest rate spread (TE)								(.86	)%								2.65	%							2.62	%

Net interest income (TE) and net interest margin (TE)					(100	)^c		(.44	)%^c					704	^c		3.14	%^c					706		3.46	%

TE adjustment ^a					(458	)								(9	)								20

Net interest income, GAAP basis				$	358								$	713								$	686

Average balances have not been restated to reflect Key’s January 1, 2008, adoption of Financial Accounting Standards Board (“FASB”) Interpretation No. 39, “Offsetting of Amounts Related to Certain Contracts,” and FASB Staff Position FIN 39-1, “Amendment of FASB Interpretation 39.”


(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)		During the second quarter of 2008, Key’s taxable-equivalent net interest income and net income were reduced by $838 million and $1.011 billion, respectively, as a result of an adverse federal court ruling on Key’s tax treatment of a service contract lease transaction. Excluding this reduction, the taxable-equivalent yield on Key’s commercial lease financing portfolio would have been 5.25% for the second quarter of 2008, and Key’s taxable-equivalent net interest margin would have been 3.32%. During the prior quarter, Key increased its tax reserves for certain lease in, lease out transactions and recalculated its lease income in accordance with prescribed accounting standards. These actions reduced Key’s first quarter 2008 taxable-equivalent net interest income and net income by $34 million and $38 million, respectively. Excluding this reduction, the taxable-equivalent yield on Key’s commercial lease financing portfolio would have been 5.27% for the first quarter of 2008, and Key’s taxable-equivalent net interest margin would have been 3.29%.

(d)		Yield is calculated on the basis of amortized cost.

(e)		Rate calculation excludes basis adjustments related to fair value hedges.

(f)		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 Second Quarter 2008 Results
July 22, 2008
Page 20

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


	Six months ended June 30, 2008									Six months ended June 30, 2007
	Average									Average
	Balance			Interest			Yield/Rate			Balance			Interest		Yield/Rate

Assets
Loans: ^a,b
Commercial, financial and agricultural	$	25,734		$	744			5.81	%	$	21,710		$	793		7.37	%
Real estate — commercial mortgage		10,438			331			6.37			8,496			328		7.79
Real estate — construction		8,476			252			5.98			8,235			333		8.14
Commercial lease financing		9,901			(611	)		(12.34	) ^c		10,095			288		5.70

Total commercial loans		54,549			716			2.65			48,536			1,742		7.23
Real estate — residential		1,917			60			6.20			1,458			48		6.58
Home equity:
Community Banking		9,729			294			6.08			9,668			343		7.15
National Banking		1,230			47			7.71			1,061			41		7.87

Total home equity loans		10,959			341			6.26			10,729			384		7.22
Consumer other — Community Banking		1,288			67			10.46			1,410			73		10.39
Consumer other — National Banking:
Marine		3,646			114			6.28			3,221			101		6.27
Education		1,979			60			6.07			334			16		9.53
Other		332			14			8.27			306			14		9.10

Total consumer other — National Banking		5,957			188			6.32			3,861			131		6.77

Total consumer loans		20,121			656			6.55			17,458			636		7.33

Total loans		74,670			1,372			3.70			65,994			2,378		7.25
Loans held for sale		3,170			107			6.78			4,179			157		7.59
Securities available for sale ^a,d		8,367			221			5.34			7,671			206		5.36
Held-to-maturity securities ^a		27			1			11.23			39			1		6.96
Trading account assets		1,058			23			4.37			783			14		3.68
Short-term investments		969			17			3.44			762			20		5.09
Other investments ^d		1,566			26			3.07			1,471			28		3.66

Total earning assets		89,827			1,767			3.95			80,899			2,804		6.97
Allowance for loan losses		(1,287	)								(942	)
Accrued income and other assets		14,783									12,801

Total assets	$	103,323								$	92,758


Liabilities
NOW and money market deposit accounts	$	27,077			241			1.79		$	23,187			356		3.10
Savings deposits		1,840			4			.45			1,631			2		.19
Certificates of deposit ($100,000 or more) ^e		8,371			183			4.39			6,194			155		5.03
Other time deposits		12,755			281			4.43			12,055			279		4.67
Deposits in foreign office		4,987			66			2.64			3,430			88		5.16

Total interest-bearing deposits		55,030			775			2.83			46,497			880		3.81
Federal funds purchased and securities sold under repurchase agreements		3,565			43			2.43			4,328			108		5.04
Bank notes and other short-term borrowings		4,852			66			2.75			1,444			29		4.08
Long-term debt ^{e, f}		13,929			279			4.27			13,261			381		5.87

Total interest-bearing liabilities		77,376			1,163			3.05			65,530			1,398		4.31

Noninterest-bearing deposits		10,679									13,584
Accrued expense and other liabilities		6,737									6,008

Total liabilities		94,792									85,122

Shareholders’ equity
Preferred stock		64									—
Common shareholders’ equity		8,467									7,636

Total shareholders’ equity		8,531									7,636


Total liabilities and shareholders’ equity	$	103,323								$	92,758


Interest rate spread (TE)								.90	%							2.66	%

Net interest income (TE) and net interest margin (TE)					604	^c		1.35	%^c					1,406		3.48	%

TE adjustment ^a					(467	)								41

Net interest income, GAAP basis				$	1,071								$	1,365


(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)		During the second quarter of 2008, Key’s taxable-equivalent net interest income and net income were reduced by $838 million and $1.011 billion, respectively, as a result of an adverse federal court ruling on Key’s tax treatment of a service contract lease transaction. During the prior quarter, Key’s taxable-equivalent net interest income and net income were reduced by $34 million and $38 million, respectively, as a result of an increase to Key’s tax reserves for certain lease in, lease out transactions and a recalculation of its lease income in accordance with prescribed accounting standards. Excluding these reductions, the taxable-equivalent yield on Key’s commercial lease financing portfolio would have been 5.26% for the first six months of 2008, and Key’s taxable-equivalent net interest margin would have been 3.30%.

(d)		Yield is calculated on the basis of amortized cost.

(e)		Rate calculation excludes basis adjustments related to fair value hedges.

(f)		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 Second Quarter 2008 Results
July 22, 2008
Page 21

Noninterest Income
(in millions)


	Three months ended								Six months ended
	6-30-08			3-31-08			6-30-07		6-30-08			6-30-07

Trust and investment services income^a	$	138		$	129		$	115	$	267		$	240
Service charges on deposit accounts		93			88			84		181			159
Investment banking and capital markets income^a		80			8			52		88			96
Operating lease income		68			69			66		137			130
Letter of credit and loan fees		51			37			45		88			83
Corporate-owned life insurance income		28			28			32		56			57
Electronic banking fees		27			24			25		51			49
Net gains (losses) from loan securitizations and sales		33			(101	)		33		(68	)		42
Net securities (losses) gains		(1	)		3			2		2			(45	)
Net (losses) gains from principal investing		(14	)		9			90		(5	)		119
Gain from redemption of Visa Inc. shares		—			165			—		165			—
Gain from sale of McDonald Investments branch network		—			—			—		—			171
Other income:
Insurance income		20			15			15		35			29
Loan securitization servicing fees		5			4			6		9			11
Credit card fees		3			4			3		7			6
Gains related to MasterCard Incorporated shares		—			—			40		—			40
Litigation settlement — automobile residual value insurance		—			—			—		—			26
Miscellaneous income		24			46			41		70			90

Total other income		52			69			105		121			202

Total noninterest income	$	555		$	528		$	649	$	1,083		$	1,303


(a)		Additional detail provided in tables below.

Trust and Investment Services Income
(in millions)


	Three months ended						Six months ended
	6-30-08		3-31-08		6-30-07		6-30-08		6-30-07

Brokerage commissions and fee income	$	41	$	33	$	28	$	74	$	68
Personal asset management and custody fees		40		41		41		81		81
Institutional asset management and custody fees		57		55		46		112		91

Total trust and investment services income	$	138	$	129	$	115	$	267	$	240

Investment Banking and Capital Markets Income
(in millions)


	Three months ended							Six months ended
	6-30-08		3-31-08			6-30-07		6-30-08			6-30-07

Investment banking income	$	36	$	22		$	22	$	58		$	43
Income (loss) from other investments		1		(6	)		6		(5	)		11
Dealer trading and derivatives income (loss)		28		(21	)		12		7			20
Foreign exchange income		15		13			12		28			22

Total investment banking and capital markets income	$	80	$	8		$	52	$	88		$	96

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 22

Noninterest Expense
(dollars in millions)


	Three months ended									Six months ended
	6-30-08			3-31-08			6-30-07			6-30-08			6-30-07

Personnel^a	$	404		$	409		$	411		$	813		$	839
Net occupancy		62			66			59			128			122
Computer processing		43			47			49			90			100
Operating lease expense		55			58			55			113			107
Professional fees		33			23			26			56			52
Equipment		23			24			24			47			49
Marketing		21			14			20			35			39
Other expense:
Postage and delivery		12			11			11			23			23
Franchise and business taxes		8			8			8			16			17
Telecommunications		7			8			7			15			14
(Credit) provision for losses on lending-related commitments		(2	)		(27	)		6			(29	)		(2	)
Miscellaneous expense		115			91			139			206			239

Total other expense		140			91			171			231			291

Total noninterest expense	$	781		$	732		$	815		$	1,513		$	1,599


Average full-time equivalent employees		18,164			18,426			18,888	^b		18,295			19,342	^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						Six months ended
	6-30-08		3-31-08		6-30-07		6-30-08		6-30-07

Salaries	$	235	$	239	$	236	$	474	$	481
Incentive compensation		79		74		82		153		157
Employee benefits		65		76		73		141		155
Stock-based compensation		17		14		16		31		40
Severance		8		6		4		14		6

Total personnel expense	$	404	$	409	$	411	$	813	$	839

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 23

Loan Composition
(dollars in millions)


							Percent change 6-30-08 vs.
	6-30-08		3-31-08		6-30-07		3-31-08			6-30-07

Commercial, financial and agricultural	$	25,929	$	25,777	$	21,814		.6	%		18.9	%
Commercial real estate:
Commercial mortgage		10,737		10,479		8,629		2.5			24.4
Construction		7,849		8,473		8,214		(7.4	)		(4.4	)

Total commercial real estate loans		18,586		18,952		16,843		(1.9	)		10.3
Commercial lease financing		9,610		10,000		10,138		(3.9	)		(5.2	)

Total commercial loans		54,125		54,729		48,795		(1.1	)		10.9
Real estate — residential mortgage		1,928		1,954		1,572		(1.3	)		22.6
Home equity:
Community Banking		9,851		9,678		9,736		1.8			1.2
National Banking		1,153		1,220		1,143		(5.5	)		.9

Total home equity loans		11,004		10,898		10,879		1.0			1.1
Consumer other — Community Banking		1,261		1,266		1,366		(.4	)		(7.7	)
Consumer other — National Banking:
Marine		3,634		3,653		3,444		(.5	)		5.5
Education^a		3,584		3,608		327		(.7	)		996.0
Other		319		336		309		(5.1	)		3.2

Total consumer other — National Banking		7,537		7,597		4,080		(.8	)		84.7

Total consumer loans		21,730		21,715		17,897		.1			21.4

Total loans	$	75,855	$	76,444	$	66,692		(.8	)%		13.7	%

Loans Held for Sale Composition
(dollars in millions)


							Percent change 6-30-08 vs.
	6-30-08		3-31-08		6-30-07		3-31-08			6-30-07

Commercial, financial and agricultural	$	212	$	291	$	76		(27.1)	%		178.9	%
Real estate — commercial mortgage		994		1,139		1,613		(12.7	)		(38.4	)
Real estate — construction		398		25		172		N/M			131.4
Commercial lease financing		42		31		22		35.5			90.9
Real estate — residential mortgage		79		58		39		36.2			102.6
Home equity		—		1		—		(100.0	)		—
Education^a		103		123		2,616		(16.3	)		(96.1	)
Automobile		5		6		8		(16.7	)		(37.5	)

Total loans held for sale	$	1,833	$	1,674	$	4,546		9.5	%		(59.7	)%


(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 Second Quarter 2008 Results
July 22, 2008
Page 24

Summary of Loan Loss Experience
(dollars in millions)


	Three months ended									Six months ended
	6-30-08			3-31-08			6-30-07			6-30-08			6-30-07

Average loans outstanding from continuing operations	$	76,652		$	72,688		$	66,315		$	74,670		$	65,994


Allowance for loan losses at beginning of period	$	1,298		$	1,200		$	944		$	1,200		$	944
Loans charged off:
Commercial, financial and agricultural		75			50			30			125			47

Real estate — commercial mortgage		15			4			5			19			11
Real estate — construction		340			25			2			365			3

Total commercial real estate loans		355			29			7			384			14
Commercial lease financing		18			15			9			33			22

Total commercial loans		448			94			46			542			83
Real estate — residential mortgage		2			4			1			6			2
Home equity:
Community Banking		9			9			5			18			10
National Banking		11			7			3			18			6

Total home equity loans		20			16			8			36			16
Consumer other — Community Banking		11			9			8			20			15
Consumer other — National Banking:
Marine		16			19			6			35			14
Education		55			2			1			57			2
Other		2			4			2			6			4

Total consumer other — National Banking		73			25			9			98			20

Total consumer loans		106			54			26			160			53

		554			148			72			702			136
Recoveries:
Commercial, financial and agricultural		14			14			6			28			13

Real estate — commercial mortgage		—			—			1			—			4
Real estate — construction		1			—			—			1			—

Total commercial real estate loans		1			—			1			1			4
Commercial lease financing		4			6			4			10			7

Total commercial loans		19			20			11			39			24
Real estate — residential mortgage		1			—			1			1			1
Home equity:
Community Banking		—			1			1			1			2
National Banking		1			—			1			1			1

Total home equity loans		1			1			2			2			3
Consumer other — Community Banking		1			2			1			3			3
Consumer other — National Banking:
Marine		6			3			3			9			6
Education		1			—			1			1			1
Other		1			1			—			2			1

Total consumer other — National Banking		8			4			4			12			8

Total consumer loans		11			7			8			18			15

		30			27			19			57			39

Net loan charge-offs		(524	)		(121	)		(53	)		(645	)		(97	)
Provision for loan losses from continuing operations		647			187			53			834			97
Allowance related to loans acquired, net		—			32			—			32			—
Foreign currency translation adjustment		—			—			1			—			1

Allowance for loan losses at end of period	$	1,421		$	1,298		$	945		$	1,421		$	945


Net loan charge-offs to average loans from continuing operations		2.75	%		.67	%		.32	%		1.74	%		.30	%
Allowance for loan losses to period-end loans		1.87			1.70			1.42			1.87			1.42
Allowance for loan losses to nonperforming loans		174.57			123.15			342.39			174.57			342.39

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 25

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


	Three months ended									Six months ended
	6-30-08			3-31-08			6-30-07			6-30-08			6-30-07

Balance at beginning of period	$	53		$	80		$	45		$	80		$	53
(Credit) provision for losses on lending- related commitments		(2	)		(27	)		6			(29	)		(2	)
Charge-offs		—			—			(1	)		—			(1	)

Balance at end of period ^a	$	51		$	53		$	50		$	51		$	50


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

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


	6-30-08			3-31-08			12-31-07			9-30-07			6-30-07

Commercial, financial and agricultural	$	259		$	147		$	84		$	94		$	83

Real estate — commercial mortgage		107			113			41			41			41
Real estate — construction		256			610			415			228			23

Total commercial real estate loans		363			723			456			269			64
Commercial lease financing		57			38			28			30			34

Total commercial loans		679			908			568			393			181
Real estate — residential mortgage		32			34			28			29			27
Home equity:
Community Banking		61			60			54			50			46
National Banking		14			14			12			11			9

Total home equity loans		75			74			66			61			55
Consumer other — Community Banking		2			2			2			2			2
Consumer other — National Banking:
Marine		20			20			20			12			10
Education		4			15			2			—			—
Other		2			1			1			1			1

Total consumer other — National Banking		26			36			23			13			11

Total consumer loans		135			146			119			105			95

Total nonperforming loans		814			1,054			687			498			276

Nonperforming loans held for sale		342	^b		9			25			6			4

OREO		26			29			21			21			27
Allowance for OREO losses		(2	)		(2	)		(2	)		(1	)		(2	)

OREO, net of allowance		24			27			19			20			25

Other nonperforming assets^a		30			25			33			46			73

Total nonperforming assets	$	1,210		$	1,115		$	764		$	570		$	378


Accruing loans past due 90 days or more	$	367		$	283		$	231		$	190		$	181
Accruing loans past due 30 through 89 days		852			1,169			843			717			623
Nonperforming loans to period-end portfolio loans		1.07	%		1.38	%		.97	%		.72	%		.41	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.59			1.46			1.08			.83			.57


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

(b)		Primarily real estate construction loans.

Summary of Changes in Nonperforming Loans
(in millions)


	2Q08			1Q08			4Q07			3Q07			2Q07

Balance at beginning of period	$	1,054		$	687		$	498		$	276		$	254
Loans placed on nonaccrual status		789			566			378			337			130
Charge-offs		(547	)		(144	)		(147	)		(81	)		(72	)
Loans sold		(48	)		—			(13	)		(6	)		(7	)
Payments		(86	)		(32	)		(17	)		(13	)		(21	)
Transfers to OREO		—			(10	)		(5	)		(12	)		—
Transfer to nonperforming loans held for sale		(342	)		(8	)		—			—			—
Loans returned to accrual status		(6	)		(5	)		(7	)		(3	)		(8	)

Balance at end of period	$	814		$	1,054		$	687		$	498		$	276

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 26

Line of Business Results
(dollars in millions)

Community Banking


																	Percent change 2Q08 vs.
	2Q08			1Q08				4Q07			3Q07			2Q07			1Q08			2Q07

Summary of operations
Total revenue (TE)	$	659		$	630			$	653		$	628		$	631			4.6	%		4.4	%
Provision for loan losses		44			18				36			2			21			144.4			109.5
Noninterest expense		449			428				438			414			446			4.9			.7
Net income		104			115				112			133			102			(9.6	)		2.0
Average loans and leases		28,478			28,128				27,234			26,944			26,574			1.2			7.2
Average deposits		49,948			49,767				47,254			46,729			46,126			.4			8.3
Net loan charge-offs		38			30				31			19			26			26.7			46.2
Return on average allocated equity		13.68	%		15.47	%			17.60	%		21.04	%		16.57	%		N/A			N/A
Average full-time equivalent employees		8,785			8,714				8,454			8,625			9,026			.8			(2.7	)

Supplementary information (lines of business)
Regional Banking
Total revenue (TE)	$	557		$	531		��	$	555		$	533		$	537			4.9	%		3.7	%
Provision for loan losses		25			13				26			12			20			92.3			25.0
Noninterest expense		401			385				385			368			396			4.2			1.3
Net income		82			83				90			96			75			(1.2	)		9.3
Average loans and leases		19,608			19,472				18,771			18,667			18,471			.7			6.2
Average deposits		46,246			46,176				43,696			43,237			42,725			.2			8.2
Net loan charge-offs		33			29				26			17			20			13.8			65.0
Return on average allocated equity		15.06	%		15.38	%			20.52	%		21.80	%		17.38	%		N/A			N/A
Average full-time equivalent employees		8,439			8,365				8,101			8,264			8,655			.9			(2.5	)

Commercial Banking
Total revenue (TE)	$	102		$	99			$	98		$	95		$	94			3.0	%		8.5	%
Provision for loan losses		19			5				10			(10	)		1			280.0			N/M
Noninterest expense		48			43				53			46			50			11.6			(4.0	)
Net income		22			32				22			37			27			(31.3	)		(18.5	)
Average loans and leases		8,870			8,656				8,463			8,277			8,103			2.5			9.5
Average deposits		3,702			3,591				3,558			3,492			3,401			3.1			8.9
Net loan charge-offs		5			1				5			2			6			400.0			(16.7	)
Return on average allocated equity		10.21	%		15.73	%			11.12	%		19.29	%		14.67	%		N/A			N/A
Average full-time equivalent employees		346			349				353			361			371			(.9	)		(6.7	)

KeyCorp Reports Second Quarter 2008 Results
July 22, 2008
Page 27

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

National Banking


																Percent change 2Q08 vs.
	2Q08			1Q08			4Q07			3Q07			2Q07			1Q08			2Q07

Summary of operations
Total revenue (TE)	$	(126	)	$	439		$	609		$	505		$	612			N/M			N/M
Provision for loan losses		609			169			327			69			32			260.4	%		N/M
Noninterest expense		337			308			389			327			330			9.4			2.1	%
(Loss) income from continuing operations		(670	)		(24	)		(69	)		68			157			N/M			N/M
Net (loss) income		(670	)		(24	)		(66	)		54			154			N/M			N/M
Average loans and leases^a		47,876			44,149			42,040			40,279			39,325			8.4			21.7
Average loans held for sale^a		1,282			4,932			4,709			4,692			4,377			(74.0	)		(70.7	)
Average deposits^a		12,289			11,888			12,629			12,631			12,082			3.4			1.7
Net loan charge-offs^a		486			91			88			40			27			434.1			N/M
Return on average allocated equity^a		(51.60	)%		(1.96	)%		(6.13	)%		6.43	%		15.12	%		N/A			N/A
Return on average allocated equity		(51.60	)		(1.96	)		(5.86	)		5.11			14.83			N/A			N/A
Average full-time equivalent employees		3,603			3,758			4,010			3,869			3,856			(4.1	)		(6.6	)

Supplementary information (lines of business)
Real Estate Capital and Corporate Banking Services
Total revenue (TE)	$	233		$	77		$	158		$	128		$	214			202.6	%		8.9	%
Provision for loan losses		366			45			270			43			8			713.3			N/M
Noninterest expense		68			61			117			88			92			11.5			(26.1	)
Net (loss) income		(126	)		(18	)		(143	)		(2	)		71			(600.0	)		N/M
Average loans and leases		17,086			16,484			15,003			14,160			13,713			3.7			24.6
Average loans held for sale		616			989			1,257			1,584			1,246			(37.7	)		(50.6	)
Average deposits		10,460			9,787			10,397			10,243			9,447			6.9			10.7
Net loan charge-offs		376			38			45			7			3			889.5			N/M
Return on average allocated equity		(23.69	)%		(3.85	)%		(36.91	)%		(.56	)%		20.43	%		N/A			N/A
Average full-time equivalent employees		1,228			1,233			1,310			1,309			1,293			(.4	)		(5.0	)

Equipment Finance
Total revenue (TE)	$	(694	)	$	100		$	181		$	136		$	150			N/M			N/M
Provision for loan losses		36			24			23			16			16			50.0	%		125.0	%
Noninterest expense		89			96			97			94			94			(7.3	)		(5.3	)
Net (loss) income		(512	)		(13	)		38			16			25			N/M			N/M
Average loans and leases		10,326			10,595			10,729			10,681			10,609			(2.5	)		(2.7	)
Average loans held for sale		51			32			15			6			10			59.4			410.0
Average deposits		21			14			17			16			16			50.0			31.3
Net loan charge-offs		28			24			18			16			16			16.7			75.0
Return on average allocated equity		(225.30	)%		(5.66	)%		16.53	%		7.10	%		11.43	%		N/A			N/A
Average full-time equivalent employees		837			859			923			900			895			(2.6	)		(6.5	)

Institutional and Capital Markets
Total revenue (TE)	$	231		$	158		$	171		$	155		$	159			46.2	%		45.3	%
Provision for loan losses		36			16			15			(2	)		—			125.0			N/M
Noninterest expense		128			102			116			104			99			25.5			29.3
Net income		42			25			25			33			38			68.0			10.5
Average loans and leases		7,897			7,633			7,219			6,716			6,566			3.5			20.3
Average loans held for sale		494			555			394			373			463			(11.0	)		6.7
Average deposits		1,384			1,460			1,560			1,844			2,072			(5.2	)		(33.2	)
Net loan charge-offs		5			2			6			6			—			150.0			N/M
Return on average allocated equity		13.61	%		8.39	%		8.59	%		12.20	%		13.92	%		N/A			N/A
Average full-time equivalent employees		931			938			979			1,019			992			(.7	)		(6.1	)

Consumer Finance
Total revenue (TE)	$	104		$	104		$	99		$	86		$	89			—			16.9	%
Provision for loan losses		171			84			19			12			8			103.6	%		N/M
Noninterest expense		52			49			59			41			45			6.1			15.6
(Loss) income from continuing operations		(74	)		(18	)		11			21			23			(311.1	)		N/M
Net (loss) income		(74	)		(18	)		14			7			20			(311.1	)		N/M
Average loans and leases^a		12,567			9,437			9,089			8,722			8,437			33.2			49.0
Average loans held for sale^a		121			3,356			3,043			2,729			2,658			(96.4	)		(95.4	)
Average deposits^a		424			627			655			528			547			(32.4	)		(22.5	)
Net loan charge-offs^a		77			27			19			11			8			185.2			862.5
Return on average allocated equity^a		(32.07	)%		(7.87	)%		5.06	%		10.36	%		11.56	%		N/A			N/A
Return on average allocated equity		(32.07	)		(7.87	)		6.44			3.45			10.05			N/A			N/A
Average full-time equivalent employees		607			728			798			641			676			(16.6	)		(10.2	)

(a) From continuing operations.

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

KeyCorp (KEY) 8-KKeycorp Reports Second Quarter 2008 Results