KeyCorp 8K Reports Third Quarter 2008 Results | KEY 21 Oct 08

Exhibit 99.1


CONTACTS:	ANALYSTS	MEDIA
	Vernon L. Patterson	William C. Murschel
	216.689.0520	216.828.7416
	Vernon_Patterson@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 THIRD QUARTER 2008 RESULTS

¨		Net loss of $36 million ($0.10 per common share) for the third quarter

¨		Loan loss reserve increased $133 million to $1.554 billion, or 2.03% of total loans

¨		Capital ratios remain strong; costs well controlled

¨		Actions taken to exit certain businesses

¨		Community Banking revenue and deposits up

¨		Opted-in to IRS global tax settlement; after-tax recovery of up to $100 million anticipated

CLEVELAND, October 21, 2008 — KeyCorp (NYSE: KEY) today announced a third quarter loss from continuing operations of $36 million, or $0.10 per common share, compared to income from continuing operations of $224 million, or $0.57 per diluted common share, for the third quarter of 2007.

The continuation of a difficult economic environment and a resulting increase in Key’s loan loss reserves contributed to the loss recorded for the current quarter. The Company’s third quarter results reflect a $133 million increase in reserves to $1.554 billion, or 2.03% of total loans. Additionally, third quarter results were adversely impacted by $33 million of after-tax losses on derivative contracts that resulted from market disruption caused by the failure of Lehman Brothers.

“We have experienced the most severe financial crisis any of us has known in our business lifetime,” said Chief Executive Officer Henry L. Meyer, III. “However, in my 35 years in the banking industry, we have successfully managed through a number of troublesome credit cycles, each of which seemed daunting at the time. As I reflect back on those past cycles, I cannot recall a time when we were more prepared than today. Key has strong capital ratios (8.48% Tier 1 capital) and a strong loan loss reserve (2.03% of total loans; 161% coverage of nonperforming loans). In the third quarter, the increase in nonperforming assets slowed — up only 2.4%. Key does not have a subprime mortgage portfolio, credit card portfolio, or consumer automobile loan portfolio — the epicenters of consumer

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 2

credit issues. Also, in both the second and third quarters we were aggressive in reducing our exposure to the homebuilder segment of our commercial real estate business. As of the end of the third quarter, our total residential property exposure in commercial real estate, including loans held for sale, has been reduced by $1.3 billion, or 34%, from one year ago, with the majority of this reduction coming from the weakest, or most susceptible, portion of the portfolio.

“Additionally, we have elected to reduce uncertainty surrounding our previously disclosed leveraged lease tax issue with the IRS. While we continue to believe that our initial tax position was correct, it would have taken years of effort and expense to resolve this matter through litigation. Consequently, Key has opted-in to the IRS’ global settlement initiative, which is essentially an offer by the federal tax authorities to resolve all such disputed cases. We expect that the definitive settlement documents will be executed as soon as the fourth quarter and that Key should realize an after-tax recovery of between $75 million and $100 million for previously accrued interest on disputed tax balances.”

Key continued to take decisive steps in the third quarter to exit low-return, indirect businesses so that the company can focus its capital and resources on its best relationship customers. Key is in the process of exiting direct and indirect retail and floor-plan lending for marine and recreational vehicle products and will limit new student loans to those backed by government guarantee. These actions are the result of a series of decisions made over several years that have seen the Company exit subprime mortgage and automobile financing, broker-originated home equity lending as well as dispose of a segment of its residential homebuilder portfolio.

“With respect to our relationship businesses, our Community Banking group continues to perform solidly, with higher revenue and deposit growth across our branch network. Despite the market turmoil, we are building a relationship-based, customer-focused business model which will serve us well as the economy ultimately recovers,” 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.

Significant Items Affecting the Comparability of Earnings


	Third Quarter 2008									Second Quarter 2008									Third 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

Provision for loan losses in excess of net charge-offs	$	(134	)	$	(83	)	$	(.17	)	$	(123	)	$	(77	)	$	(.18	)	$	(10	)	$	(6	)	$	(.02	)
Realized and unrealized (losses) gains on loan and securities portfolios held for sale or trading		(94	)^a		(59	)^a		(.12	)		62			39			.09			(77	)		(49	)		(.12	)
Net (losses) gains from principal investing		(24	)		(15	)		(.03	)		(14	)		(8	)		(.02	)		9			6			.01
Severance and other exit costs		(19	)		(14	)		(.03	)		(8	)		(5	)		(.01	)		(4	)		(3	)		(.01	)
Reversal of litigation reserve		23			14			.03			—			—			—			—			—			—
Charges related to leveraged lease tax litigation		—			(30	)		(.06	)		(359	)		(1,011	)		(2.43	)		—			—			—
Gain related to MasterCard Incorporated shares		—			—			—			—			—			—			27			17			.04

(a)

Includes $54 million ($33 million after tax) of derivative-related charges recorded as a result of market disruption caused by the failure of Lehman Brothers and $31 million ($19 million after tax) of realized and unrealized losses from the residential properties segment of the construction loan portfolio.

EPS = Earnings per diluted common share

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 3

SUMMARY OF CONTINUING OPERATIONS

Key’s taxable-equivalent net interest income was $705 million for the third quarter of 2008, compared to $712 million for the year-ago quarter. Average earning assets rose by $6.6 billion, or 8%, due primarily to growth in commercial loans 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 3.13% from 3.40% for the third quarter of 2007. Approximately 13 basis points of the reduction was attributable to the prospective decrease in net interest income caused by the second quarter 2008 recalculation of income previously recognized on all leveraged leases being contested by the Internal Revenue Service (“IRS”). Also contributing to the lower net interest margin were tighter loan and deposit spreads caused by competitive pricing, and a higher level of nonperforming assets.

Compared to the second quarter of 2008, taxable-equivalent net interest income decreased by $33 million and the net interest margin declined by 19 basis points, using adjusted second quarter results, which exclude the effects of the charges recorded in connection with the tax litigation pertaining to Key’s leveraged lease financing portfolio. As previously reported, Key’s taxable-equivalent net interest income for the second quarter of 2008 was reduced significantly as a result of an adverse federal court decision on the company’s tax treatment of a Service Contract Lease transaction entered into by AWG Leasing Trust, in which Key is a partner. In accordance with the applicable accounting guidance, Key recalculated the lease income recognized from inception for all of the leveraged leases being contested by the IRS, not just the single leveraged lease subject to the Court decision. Key’s second quarter results also reflect a $475 million charge to income taxes for the interest cost associated with the contested tax liabilities. 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.

On August 6, 2008, the IRS announced an initiative for the settlement of all transactions, including the contested leveraged leases entered into by Key, which the IRS has characterized as LILO/SILO transactions (the “LILO/SILO Settlement Initiative”). As preconditions to its participation, Key was required to provide written acceptance to the IRS of the terms of the LILO/SILO Settlement Initiative and to dismiss its appeal of the AWG Leasing Trust litigation. Key has complied with these preconditions and was accepted into the LILO/SILO Settlement Initiative by the IRS on October 6, 2008. However, Key’s acceptance into this initiative is not binding until a closing agreement is executed by both Key and the IRS. Management believes that, upon the execution of a closing agreement, Key should realize an after-tax recovery of between $75 million and $100 million for previously accrued interest on disputed tax balances.

Key’s noninterest income was $388 million for the third quarter of 2008, compared to $438 million for the year-ago quarter. Noninterest income for the current quarter includes $54 million of derivative-related charges recorded as a result of market disruption caused by the failure of Lehman Brothers and $31 million of realized and unrealized losses from the residential properties segment of the construction loan portfolio, while results for the third quarter of 2007 benefited from a $27 million gain from the sale of MasterCard Incorporated shares. Excluding these items, noninterest income was up $62 million. The improvement reflected a $14 million increase in income from trust and investment services, a $6 million increase in deposit service charges and a $15 million decrease in losses attributable to changes in the fair values of certain real estate related investments held by the Private Equity unit within the Real Estate Capital and Corporate Banking Services line of business. Excluding the loan-related losses mentioned above, Key had net gains of $1 million from loan sales and write-downs in the current quarter, compared to net losses of $53 million for the same period last

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 4

year. These favorable results were offset in part by net losses of $24 million from principal investing in the third quarter of 2008, compared to net gains of $9 million for the year-ago quarter.

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

Fee-Based Income — Major Components


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

Trust and investment services income	$	133		$	138	$	129	$	131	$	119
Service charges on deposit accounts		94			93		88		90		88
Investment banking and capital markets (loss) income		(31	)		80		8		12		9
Operating lease income		69			68		69		72		70
Letter of credit and loan fees		53			51		37		58		51
Corporate-owned life insurance income		28			28		28		37		27
Electronic banking fees		27			27		24		25		25

Compared to the second quarter of 2008, noninterest income decreased by $167 million, reflecting the continued effects of adverse conditions in the financial markets. Results from investment banking and capital markets activities decreased by $111 million, due primarily to an $85 million reduction from dealer trading and derivatives activities, including the third quarter charges resulting from market disruption caused by the failure of Lehman Brothers. Additionally, Key recorded $30 million in net losses from loan sales and write-downs, related primarily to commercial real estate loans held for sale, compared to net gains of $33 million for the prior quarter. Net losses from principal investing increased by $10 million from the second quarter of 2008.

Key’s noninterest expense was $762 million for the third quarter of 2008, compared to $753 million for the same period last year. Personnel expense decreased by $2 million as increases in both salaries and severance expense were more than offset by reductions in costs associated with employee benefits and stock-based compensation. Nonpersonnel expense rose by $11 million, reflecting increases of $8 million in professional fees, $6 million in marketing expense, $5 million in net occupancy expense and $7 million resulting from the write-down or amortization of intangible assets. Included in noninterest expense for the third quarter of 2008 is $19 million of severance and other exit costs, including $10 million of expense recorded in connection with Key’s third quarter 2008 decision to exit direct and indirect retail and floor-plan lending for marine and recreational vehicle products. Key expects to record additional exit-related costs in the fourth quarter. The increase in noninterest expense relative to the year-ago quarter was moderated by a $23 million credit to miscellaneous expense, representing the reversal of the remaining litigation reserve associated with the previously reported Honsador litigation, which was settled in September.

Compared to the second quarter of 2008, noninterest expense decreased by $19 million. Personnel expense decreased by $23 million, due primarily to lower incentive compensation accruals. Nonpersonnel expense was up $4 million, reflecting an $8 million provision for losses on lending-related commitments in the current quarter, compared to a $2 million credit in the prior quarter, a $6 million increase in marketing expense and a $4 million write-off of goodwill recorded during the third quarter in connection with Key’s decision to exit certain businesses. These increases were offset by the reversal of the remaining Honsador litigation reserve.

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 5

ASSET QUALITY

Key’s provision for loan losses from continuing operations was $407 million for the third quarter of 2008, compared to $69 million for the year-ago quarter and $647 million for the second quarter of 2008. Key’s provision for loan losses for the third quarter of 2008 exceeded its net loan charge-offs by $134 million, as the company continued to build reserves.

As previously reported, Key has 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. As of June 30, 2008, sales had closed on $44 million of these loans, and $340 million remained to be sold. During the third quarter, Key continued to work with bidders to finalize sales terms and documentation. However, continued disruption in the financial markets has precluded the ability of certain potential buyers to obtain the necessary funding. As shown in the following table, the balance of this portfolio was reduced to $133 million at September 30, 2008, as a result of cash proceeds received from loan sales, transfers to other real estate owned (“OREO”) and both realized and unrealized losses. Key is continuing to pursue the sale of the remaining loans, all of which are on nonperforming status.

Loans Held for Sale — Residential Properties Segment of Construction Loan Portfolio


in millions

Balance at June 30, 2008	$	340
Cash proceeds from loan sales		(135	)
Loans transferred to OREO		(35	)
Realized and unrealized losses		(31	)
Payments		(6	)

Balance at September 30, 2008	$	133

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

Selected Asset Quality Statistics


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

Net loan charge-offs	$	273		$	524		$	121		$	119		$	59
Net loan charge-offs to average loans from continuing operations		1.43	%		2.75	%		.67	%		.67	%		.35	%
Nonperforming loans at period end	$	967		$	814		$	1,054		$	687		$	498
Nonperforming loans to period-end portfolio loans		1.26	%		1.07	%		1.38	%		.97	%		.72	%
Nonperforming assets at period end	$	1,239		$	1,210		$	1,115		$	764		$	570
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.61	%		1.59	%		1.46	%		1.08	%		.83	%
Allowance for loan losses	$	1,554		$	1,421		$	1,298		$	1,200		$	955
Allowance for loan losses to period-end loans		2.03	%		1.87	%		1.70	%		1.69	%		1.38	%
Allowance for loan losses to nonperforming loans		160.70			174.57			123.15			174.67			191.77

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 6

Net loan charge-offs for the quarter totaled $273 million, or 1.43% of average loans from continuing operations, compared to $59 million, or 0.35%, for the same period last year and $524 million, or 2.75%, for the previous quarter. Net loan charge-offs from the commercial, commercial real estate and education loan portfolios totaled $62 million, $99 million and $40 million, respectively, in the current quarter. The net charge-offs in the commercial real estate portfolio reflect continued weakness in the housing market, while the education loan charge-offs are attributable to a weakening economic environment.

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

Net Loan Charge-offs


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

Commercial, financial and agricultural	$	62		$	61		$	36		$	35		$	22
Real estate — commercial mortgage		20			15			4			1			2
Real estate — construction		79			339	^a		25			44			6
Commercial lease financing		19			14			9			6			8

Total commercial loans		180			429			74			86			38
Home equity — Community Banking		9			9			8			6			4
Home equity — National Banking		12			10			7			6			4
Marine		16			10			16			8			5
Education		40			54	^b		2			2			1
Other		16			12			14			11			7

Total consumer loans		93			95			47			33			21

Total net loan charge-offs	$	273		$	524		$	121		$	119		$	59


Net loan charge-offs to average loans from continuing operations		1.43	%		2.75	%		.67	%		.67	%		.35	%


(a)		During the second quarter of 2008, Key transferred $384 million of commercial real estate loans ($719 million of primarily construction loans, net of $335 million in net charge-offs) from the loan portfolio to held-for-sale status.

(b)		On March 31, 2008, Key transferred $3.3 billion of education loans from loans held for sale to the loan portfolio.

The company expects net loan charge-offs for the fourth quarter to be in the range of 1.20% to 1.60% of average loans.

At September 30, 2008, Key’s nonperforming loans totaled $967 million and represented 1.26% of period-end portfolio loans, compared to 1.07% at June 30, 2008, and 0.72% at September 30, 2007. At the same time, nonperforming assets totaled $1.239 billion and represented 1.61% of portfolio loans, other real estate owned and other nonperforming assets, compared to 1.59% at June 30, 2008, and 0.83% at September 30, 2007. The decrease in nonperforming loans held for sale and the increase in OREO and other nonperforming assets during the third quarter were largely attributable to the previously discussed activity in the residential properties segment of Key’s construction loan portfolio.

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 7

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

Nonperforming Assets


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

Commercial, financial and agricultural	$	309		$	259		$	147		$	84		$	94
Real estate — commercial mortgage		119			107			113			41			41
Real estate — construction		334			256			610			415			228
Commercial lease financing		55			57			38			28			30
Total consumer loans		150			135			146			119			105

Total nonperforming loans		967			814			1,054			687			498
Nonperforming loans held for sale		169			342			9			25			6
OREO and other nonperforming assets		103			54			52			52			66

Total nonperforming assets	$	1,239		$	1,210		$	1,115		$	764		$	570


Nonperforming loans to period-end portfolio loans		1.26	%		1.07	%		1.38	%		.97	%		.72	%
Nonperforming assets to period-end portfolio loans, plus OREO and other nonperforming assets		1.61			1.59			1.46			1.08			.83

Key’s allowance for loan losses was $1.554 billion, or 2.03% of loans outstanding, at September 30, 2008, compared to $1.421 billion, or 1.87%, at June 30, 2008, and $955 million, or 1.38%, at September 30, 2007.

CAPITAL

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

Capital Ratios


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

Tier 1 risk-based capital^a		8.48	%		8.53	%		8.33	%		7.44	%		7.94	%
Total risk-based capital^a		12.31			12.41			12.34			11.38			11.76
Tangible equity to tangible assets		6.95			6.98			6.85			6.58			6.87


(a)		9-30-08 ratio is estimated.

Key issued 7 million additional common shares and 75,000 additional shares of noncumulative perpetual convertible preferred stock on July 11, 2008. These shares were issued as part of the over allotment granted by Key to the underwriters in connection with the issuances of common shares and preferred stock completed during the second quarter.

During the third quarter, Key reissued 2 million of its common shares under employee benefit plans. There was no repurchase activity by Key during the third quarter, and the company currently does not anticipate any share repurchase activity during the remainder of 2008.

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.

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 8

Summary of Changes in Common Shares Outstanding


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

Shares outstanding at beginning of period		485,662		400,071		388,793		388,708		389,362
Common shares issued		7,066		85,106		—		—		—
Shares reissued to acquire U.S.B. Holding Co., Inc.		—		—		9,895		—		—
Shares reissued under employee benefit plans		2,037		485		1,383		85		1,346
Common shares repurchased		—		—		—		—		(2,000	)

Shares outstanding at end of period		494,765		485,662		400,071		388,793		388,708

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 3Q08 vs.
dollars in millions	3Q08			2Q08			3Q07			2Q08			3Q07

Revenue from continuing operations (TE)
Community Banking	$	658		$	661		$	629			(.5	)%		4.6	%
National Banking^a		482			(130	)		507			N/M			(4.9	)
Other Segments		(17	)		(31	)		15			45.2			N/M

Total Segments		1,123			500			1,151			124.6			(2.4	)
Reconciling Items^c		(30	)		(45	)		(1	)		33.3			N/M

Total	$	1,093		$	455		$	1,150			140.2	%		(5.0	)%


(Loss) income from continuing operations
Community Banking	$	98		$	105		$	134			(6.7	)%		(26.9	)%
National Banking^a		(133	)		(672	)		70			80.2			N/M
Other Segments^b		9			(13	)		16			N/M			(43.8	)

Total Segments		(26	)		(580	)		220			95.5			N/M
Reconciling Items^c		(10	)		(546	)		4			98.2			N/M

Total	$	(36	)	$	(1,126	)	$	224			96.8	%		N/M


(a)		National Banking’s results for the third quarter of 2008 include $54 million ($33 million after tax) of derivative-related charges recorded as a result of market disruption caused by the failure of Lehman Brothers and $31 million ($19 million after tax) of realized and unrealized losses from the residential properties segment of the construction loan portfolio. 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 decision on the tax treatment of a Service Contract Lease transaction.

(b)		Other Segments’ results for the third quarter of 2008 include a $23 million ($14 million after tax) credit, representing the reversal of the remaining litigation reserve associated with the Honsador litigation, which was settled in September.

(c)		Reconciling Items for the third and second quarters of 2008 include charges of $30 million and $475 million, respectively, to income taxes for the interest cost associated with the leveraged lease tax litigation. Reconciling Items for the third quarter of 2007 include a $27 million ($17 million after tax) gain related to MasterCard Incorporated shares.

TE = Taxable Equivalent, N/M = Not Meaningful

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 9

Community Banking


								Percent change 3Q08 vs.
dollars in millions	3Q08		2Q08		3Q07			2Q08			3Q07

Summary of operations
Net interest income (TE)	$	445	$	439	$	412			1.4	%		8.0	%
Noninterest income		213		222		217			(4.1	)		(1.8	)

Total revenue (TE)		658		661		629			(.5	)		4.6
Provision for loan losses		56		44		2			27.3			N/M
Noninterest expense		445		449		413			(.9	)		7.7

Income before income taxes (TE)		157		168		214			(6.5	)		(26.6	)
Allocated income taxes and TE adjustments		59		63		80			(6.3	)		(26.3	)

Net income	$	98	$	105	$	134			(6.7	)%		(26.9	)%


Percent of consolidated income from continuing operations		N/M		N/M		60	%		N/A			N/A

Average balances
Loans and leases	$	28,872	$	28,477	$	26,944			1.4	%		7.2	%
Total assets		31,934		31,304		29,708			2.0			7.5
Deposits		50,384		49,948		46,729			.9			7.8

Assets under management at period end	$	18,278	$	19,366	$	21,903			(5.6	)%		(16.6	)%

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

Additional Community Banking Data


										Percent change 3Q08 vs.
dollars in millions	3Q08			2Q08			3Q07			2Q08			3Q07

Average deposits outstanding
NOW and money market deposit accounts	$	19,507		$	19,656		$	20,307			(.8	)%		(3.9	)%
Savings deposits		1,752			1,804			1,569			(2.9	)		11.7
Certificates of deposit ($100,000 or more)		6,875			6,661			4,566			3.2			50.6
Other time deposits		13,103			12,735			11,485			2.9			14.1
Deposits in foreign office		1,193			1,306			1,128			(8.7	)		5.8
Noninterest-bearing deposits		7,954			7,786			7,674			2.2			3.6

Total deposits	$	50,384		$	49,948		$	46,729			.9	%		7.8	%


Home equity loans
Average balance	$	9,887		$	9,766		$	9,690
Weighted-average loan-to-value ratio		70	%		70	%		70	%
Percent first lien positions		54			55			58

Other data
Branches		986			985			954
Automated teller machines		1,479			1,479			1,439

Community Banking Summary of Operations

Community Banking recorded net income of $98 million for the third quarter of 2008, compared to $134 million for the year-ago quarter. Increases in the provision for loan losses and noninterest expense were the primary causes of the decline, and more than offset an increase in net interest income.

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 10

Taxable-equivalent net interest income rose by $33 million, or 8%, from the third 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 $3.7 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 provision for loan losses rose by $54 million compared to the third quarter of 2007, reflecting a $51 million increase in net loan charge-offs, almost half of which was attributable to two specific commercial loans.

Noninterest expense rose by $32 million or 8%, from the year-ago quarter as a result of increases in personnel expense, marketing expense, professional fees, costs associated with other real estate owned, and smaller increases in a variety of other expense components. Overall, the increase in noninterest expense was largely attributable to initiatives undertaken with regard to branch modernization, deposit growth and the acquisition of U.S.B. Holding Co., Inc.

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 3Q08 vs.
dollars in millions	3Q08			2Q08			3Q07			2Q08			3Q07

Summary of operations
Net interest income (loss) (TE)	$	322		$	(476	) ^a	$	355			N/M			(9.3	)%
Noninterest income		160	^a		346			152			(53.8	)%		5.3

Total revenue (TE)		482			(130	)		507			N/M			(4.9	)
Provision for loan losses		350			609			69			(42.5	)		407.2
Noninterest expense		342			337			327			1.5			4.6

(Loss) income from continuing operations before income taxes (TE)		(210	)		(1,076	)		111			80.5			N/M
Allocated income taxes and TE adjustments		(77	)		(404	)		41			80.9			N/M

(Loss) income from continuing operations		(133	)		(672	)		70			80.2			N/M
Loss from discontinued operations, net of taxes		—			—			(14	)		—			100.0

Net (loss) income	$	(133	)	$	(672	)	$	56			80.2	%		N/M


Percent of consolidated income from continuing operations		N/M			N/M			31	%		N/A			N/A

Average balances from continuing operations
Loans and leases	$	47,075		$	47,877		$	40,279			(1.7	)%		16.9	%
Loans held for sale		1,651			1,282			4,692			28.8			(64.8	)
Total assets		56,183			56,323			50,961			(.2	)		10.2
Deposits		12,439			12,289			12,631			1.2			(1.5	)

Assets under management at period end	$	58,398		$	61,632		$	66,197			(5.2	)%		(11.8	)%


(a)		National Banking’s results for the third quarter of 2008 include $54 million ($33 million after tax) of derivative-related charges recorded as a result of market disruption caused by the failure of Lehman Brothers and $31 million ($19 million after tax) of realized and unrealized losses from the residential properties segment of the construction loan portfolio. 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 decision on the tax treatment of a Service Contract Lease transaction.

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

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 11

National Banking Summary of Continuing Operations

National Banking recorded a loss of $133 million from continuing operations for the third quarter of 2008, compared to income of $70 million from continuing operations for the same period last year. A substantially higher provision for loan losses, lower net interest income and an increase in noninterest expense were offset in part by growth in noninterest income.

Taxable-equivalent net interest income decreased by $33 million, or 9%, from the third quarter of 2007 as a result of tighter loan and deposit spreads caused by competitive pricing, and a higher level of nonperforming assets. Also contributing to the decrease was the prospective reduction in net interest income caused by the second quarter 2008 recalculation of income previously recognized on all leveraged leases being contested by the IRS. Average loans and leases grew by $6.8 billion, or 17%, while the level of average deposits was down slightly from the year-ago quarter. Contributing to the loan growth was the March 31, 2008, transfer of $3.3 billion of education loans from loans held for sale to the loan portfolio.

Excluding $54 million of derivative-related charges recorded in the current quarter as a result of market disruption caused by the failure of Lehman Brothers, noninterest income rose by $62 million, or 41%, from the third quarter of 2007. The improvement reflected a $15 million increase in income from trust and investment services, a $23 million reduction in net losses from loan sales and write-downs, and a $15 million decrease in losses attributable to changes in the fair values of certain real estate related investments held by the Private Equity unit within the Real Estate Capital and Corporate Banking Services line of business. Noninterest income also benefited from an increase in fee income generated from tuition payment plan processing.

The provision for loan losses rose by $281 million, due primarily to higher levels of net loan charge-offs from the commercial, commercial real estate and education loan portfolios. National Banking’s provision for loan losses for the third quarter of 2008 exceeded its net loan charge-offs by $147 million, as the company continued to build reserves.

Noninterest expense increased by $15 million, or 5%, from the third quarter of 2007, reflecting $10 million of additional expense attributable to severance and other costs recorded during the current quarter in connection with Key’s decision to exit direct and indirect retail and floor-plan lending for marine and recreational vehicle products.

Other Segments

Other segments consist of Corporate Treasury and Key’s Principal Investing unit. These segments generated net income of $9 million for the third quarter of 2008, compared to $16 million for the same period last year. These results reflect less favorable results from principal investing in the current year.

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.

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 12

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 Financeprovides government guaranteed education loans to students and their parents, and processes tuition payments for private schools. Through its Commercial Floor Plan Lending unit, this line of business also finances inventory for automobile dealers. Starting in October 2008, Consumer Finance will exit direct and indirect retail and floor-plan lending for marine and recreational vehicle products and will limit new education loans to those backed by government guarantee. It will continue to service existing loans in these portfolios and to honor existing education loan commitments. These actions are consistent with Key’s strategy of de-emphasizing nonrelationship or out-of-footprint businesses.

Cleveland-based KeyCorp is one of the nation’s largest bank-based financial services companies, with assets of $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 986 branches and additional offices;

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 13

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, October 21, 2008. An audio replay of the call will be available through October 28.

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 earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our financial condition, results of operations, earnings outlook, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent only management’s current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Key’s control. Key’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.

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) continued disruption in the housing markets and related conditions in the financial markets; (7) increased competitive pressure among financial services companies due to the recent consolidation of competing financial institutions and the conversion of certain investment banks to bank holding companies; (8) heightened legal standards and regulatory practices, requirements or expectations; (9) the inability to successfully execute strategic initiatives designed to grow revenues and/or manage expenses; (10) increased FDIC deposit premiums; (11) consummation of significant business combinations or divestitures; (12) operational or risk management failures due to technological or other factors; (13) changes in accounting or tax practices or requirements; (14) new legal obligations or liabilities or unfavorable resolution of litigation; and (15) disruption in the economy and general business climate as a result of terrorist activities or military actions. For additional information on the factors that could cause Key’s actual results or financial condition to differ materially from those described in the forward-looking statements consult Key’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008, and June 30, 2008, Annual Report on Form 10-K for the year ended December 31, 2007, and Current Reports on Form 8-K, filed with the Securities and Exchange Commission and available on the Securities and Exchange Commission’s website (www.sec.gov). 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 Third Quarter 2008 Results
October 21, 2008
Page 14

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


	Three months ended
	9-30-08			6-30-08			9-30-07

Summary of operations
Net interest income (loss) (TE)	$	705		$	(100	) ^a	$	712
Noninterest income		388			555			438

Total revenue (TE)		1,093			455			1,150
Provision for loan losses		407			647			69
Noninterest expense		762			781			753
(Loss) income from continuing operations		(36	)		(1,126	)		224
Loss from discontinued operations, net of taxes^b		—			—			(14	)
Net (loss) income		(36	)		(1,126	) ^a		210
Net (loss) income applicable to common shares		(48	)		(1,126	)		210

Per common share
(Loss) income from continuing operations	$	(.10	)	$	(2.70	)	$	.58
(Loss) income from continuing operations — assuming dilution		(.10	)		(2.70	)		.57
Loss from discontinued operations^b		—			—			(.03	)
Loss from discontinued operations — assuming dilution^b		—			—			(.03	)
Net (loss) income		(.10	)		(2.70	)		.54
Net (loss) income — assuming dilution		(.10	)		(2.70	) ^a		.54
Cash dividends paid		.1875			.375			.365
Book value at period end		16.16			16.59			20.12
Tangible book value at period end		12.66			13.00			16.76
Market price at period end		11.94			10.98			32.33

Performance ratios — from continuing operations
Return on average total assets		(.14	)%		(4.38	)%		.93	%
Return on average common equity		(2.36	)		(53.35	)		11.50
Return on average total equity		(1.64	)		(52.56	)		11.50
Net interest margin (TE)		3.13			(.44	)		3.40

Performance ratios — from consolidated operations
Return on average total assets		(.14	)%		(4.38	)%^a		.88	%
Return on average common equity		(2.36	)		(53.35	) ^a		10.79
Return on average total equity		(1.64	)		(52.56	) ^a		10.79
Net interest margin (TE)		3.13			(.44	) ^a		3.40

Capital ratios at period end
Equity to assets		8.54	%		8.57	%		8.13	%
Tangible equity to tangible assets		6.95			6.98			6.87
Tier 1 risk-based capital^c		8.48			8.53			7.94
Total risk-based capital^c		12.31			12.41			11.76
Leverage^c		9.46			9.34			8.96

Asset quality
Net loan charge-offs	$	273		$	524		$	59
Net loan charge-offs to average loans from continuing operations		1.43	%		2.75	%		.35	%
Allowance for loan losses	$	1,544		$	1,421		$	955
Allowance for loan losses to period-end loans		2.03	%		1.87	%		1.38	%
Allowance for loan losses to nonperforming loans		160.70			174.57			191.77
Nonperforming loans at period end	$	967		$	814		$	498
Nonperforming assets at period end		1,239			1,210			570
Nonperforming loans to period-end portfolio loans		1.26	%		1.07	%		.72	%
Nonperforming assets to period-end portfolio loans plus
OREO and other nonperforming assets		1.61			1.59			.83

Trust and brokerage assets
Assets under management	$	76,676		$	80,998		$	88,100
Nonmanaged and brokerage assets		27,187			29,905			33,273

Other data
Average full-time equivalent employees		18,291			18,164			18,567
Branches		986			985			954

Taxable-equivalent adjustment	$	6		$	(458	)	$	18

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 15

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


	Nine months ended
	9-30-08			9-30-07

Summary of operations
Net interest income (TE)	$	1,309	^a	$	2,118
Noninterest income		1,471			1,741

Total revenue (TE)		2,780			3,859
Provision for loan losses		1,241			166
Noninterest expense		2,275			2,352
(Loss) income from continuing operations		(944	)		919
Loss from discontinued operations, net of taxes^b		—			(25	)
Net (loss) income		(944	)^a		894
Net (loss) income applicable to common shares		(956	)		894

Per common share
(Loss) income from continuing operations	$	(2.19	)	$	2.34
(Loss) income from continuing operations — assuming dilution		(2.19	)		2.31
Loss from discontinued operations^b		—			(.06	)
Loss from discontinued operations — assuming dilution^b		—			(.06	)
Net (loss) income		(2.19	)		2.28
Net (loss) income — assuming dilution		(2.19	)^a		2.25
Cash dividends paid		.9375			1.095

Performance ratios — from continuing operations
Return on average total assets		(1.22	)%		1.31	%
Return on average common equity		(15.32	)		16.03
Return on average total equity		(14.66	)		16.03
Net interest margin (TE)		1.95			3.46

Performance ratios — from consolidated operations
Return on average total assets		(1.22	)%^a		1.28	%
Return on average common equity		(15.32	)^a		15.59
Return on average total equity		(14.66	)^a		15.59
Net interest margin (TE)		1.95	^a		3.46

Asset quality
Net loan charge-offs	$	918		$	156
Net loan charge-offs to average loans from continuing operations		1.63	%		.31	%

Other data
Average full-time equivalent employees		18,294			19,081

Taxable-equivalent adjustment	$	(461	)	$	59

(a)		The following table entitled “GAAP to Non-GAAP Reconciliations” presents 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 certain GAAP performance measures to the corresponding 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)		9-30-08 ratio is estimated.

TE = Taxable Equivalent

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 16

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

As a result of an adverse federal court decision 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 certain earnings data and performance ratios, excluding these charges (non-GAAP), reconciles the GAAP performance measures to the corresponding 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									Nine months ended
	9-30-08			6-30-08			3-31-08			9-30-08

Net income
Net (loss) income (GAAP)	$	(36	)	$	(1,126	)	$	218		$	(944	)
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)	$	(36	)	$	(115	)	$	256		$	105


Net (loss) income applicable to common shares (GAAP)	$	(48	)	$	(1,126	)	$	218		$	(956	)

Per common share
Net (loss) income — assuming dilution (GAAP)	$	(.10	)	$	(2.70	)	$	.54		$	(2.19	)
Net (loss) income, excluding charges related to leveraged lease tax litigation — assuming dilution (non-GAAP)		(.10	)		(.28	)		.64			.23

Performance ratios
Return on average total assets^a
Average total assets	$	103,156		$	103,290		$	103,356		$	103,267

Return on average total assets (GAAP)		(.14	)%		(4.38	)%		.85	%		(1.22	)%
Return on average total assets, excluding charges related to leveraged lease tax litigation (non-GAAP)		(.14	)		(.45	)		1.00			.14

Return on average common equity^a
Average common equity	$	8,077		$	8,489		$	8,445		$	8,336

Return on average common equity (GAAP)		(2.36	)%		(53.35	)%		10.38	%		(15.32	)%
Return on average common equity, excluding charges related to leveraged lease tax litigation (non-GAAP)		(2.36	)		(5.45	)		12.19			1.49

Return on average total equity^a
Average total equity	$	8,734		$	8,617		$	8,445		$	8,599

Return on average total equity (GAAP)		(1.64	)%		(52.56	)%		10.38	%		(14.66	)%
Return on average total equity, excluding charges related to leveraged lease tax litigation (non-GAAP)		(1.64	)		(5.37	)		12.19			1.63

Net interest income and margin
Net interest income
Net interest income (GAAP)	$	699		$	358		$	713		$	1,770
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)	$	699		$	717		$	716		$	2,132


Net interest income/margin (TE)
Net interest income (loss) (TE) (as reported)	$	705		$	(100	)	$	704		$	1,309
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)	$	705		$	738		$	738		$	2,181


Net interest margin (TE) (as reported)^a		3.13	%		(.44	)%		3.14	%		1.95	%
Impact of charges related to leveraged lease tax litigation, pre-tax (TE)^a		—			3.76			.15			1.30

Net interest margin, excluding charges related to leveraged lease tax litigation (TE) (adjusted basis)^a		3.13	%		3.32	%		3.29	%		3.25	%

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

TE = Taxable Equivalent

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 17

Consolidated Balance Sheets
(dollars in millions)


	9-30-08			6-30-08			9-30-07

ASSETS
Loans	$	76,705		$	75,855		$	68,999
Loans held for sale		1,475			1,833			4,791
Securities available for sale		8,391			8,312			7,915
Held-to-maturity securities		28			25			36
Trading account assets		1,449			1,483			1,060
Short-term investments		653			826			528
Other investments		1,556			1,559			1,509

Total earning assets		90,257			89,893			84,838
Allowance for loan losses		(1,554	)		(1,421	)		(955	)
Cash and due from banks		1,937			1,912			2,016
Premises and equipment		801			748			631
Operating lease assets		1,030			1,089			1,135
Goodwill		1,595			1,598			1,202
Other intangible assets		135			146			105
Corporate-owned life insurance		2,940			2,917			2,845
Derivative assets		951			1,693			539
Accrued income and other assets		3,198			2,969			3,781

Total assets	$	101,290		$	101,544		$	96,137


LIABILITIES
Deposits in domestic offices:
NOW and money market deposit accounts	$	25,789		$	27,278		$	24,198
Savings deposits		1,731			1,809			1,544
Certificates of deposit ($100,000 or more)		10,316			8,699			6,672
Other time deposits		13,929			12,541			11,403

Total interest-bearing deposits		51,765			50,327			43,817
Noninterest-bearing deposits		11,122			10,561			14,003
Deposits in foreign office — interest-bearing		1,791			3,508			5,894

Total deposits		64,678			64,396			63,714
Federal funds purchased and securities sold under repurchase agreements		1,799			2,088			5,398
Bank notes and other short-term borrowings		5,352			5,985			2,429
Derivative liabilities		589			637			218
Accrued expense and other liabilities		4,624			4,626			5,009
Long-term debt		15,597			15,106			11,549

Total liabilities		92,639			92,838			88,317

SHAREHOLDERS’ EQUITY
Preferred stock		658			650			—
Common shares		584			577			492
Capital surplus		2,552			2,544			1,617
Retained earnings		7,320			7,461			8,788
Treasury stock, at cost		(2,616	)		(2,675	)		(3,023	)
Accumulated other comprehensive income (loss)		153			149			(54	)

Total shareholders’ equity		8,651			8,706			7,820

Total liabilities and shareholders’ equity	$	101,290		$	101,544		$	96,137


Common shares outstanding (000)		494,765			485,662			388,708

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 18

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


	Three months ended									Nine months ended
	9-30-08			6-30-08			9-30-07			9-30-08			9-30-07

Interest income
Loans	$	1,066		$	717		$	1,209		$	2,906		$	3,546
Loans held for sale		21			20			91			128			248
Securities available for sale		110			111			106			330			312
Held-to-maturity securities		1			—			—			2			1
Trading account assets		16			10			11			39			26
Short-term investments		6			8			5			23			24
Other investments		12			14			12			38			40

Total interest income		1,232			880			1,434			3,466			4,197

Interest expense
Deposits		347			347			482			1,122			1,362
Federal funds purchased and securities sold under repurchase agreements		10			15			55			53			163
Bank notes and other short-term borrowings		34			27			30			100			59
Long-term debt		142			133			173			421			554

Total interest expense		533			522			740			1,696			2,138


Net interest income		699			358			694			1,770			2,059
Provision for loan losses		407			647			69			1,241			166

Net interest income (loss) after provision for loan losses		292			(289	)		625			529			1,893

Noninterest income
Trust and investment services income		133			138			119			400			359
Service charges on deposit accounts		94			93			88			275			247
Investment banking and capital markets (loss) income		(31	)		80			9			57			105
Operating lease income		69			68			70			206			200
Letter of credit and loan fees		53			51			51			141			134
Corporate-owned life insurance income		28			28			27			84			84
Electronic banking fees		27			27			25			78			74
Net (losses) gains from loan securitizations and sales		(30	)		33			(53	)		(98	)		(11	)
Net securities gains (losses)		1			(1	)		4			3			(41	)
Net (losses) gains from principal investing		(24	)		(14	)		9			(29	)		128
Gain from redemption of Visa Inc. shares		—			—			—			165			—
Gain from sale of McDonald Investments branch network		—			—			—			—			171
Other income		68			52			89			189			291

Total noninterest income		388			555			438			1,471			1,741

Noninterest expense
Personnel		381			404			383			1,194			1,222
Net occupancy		65			62			60			193			182
Computer processing		46			43			49			136			149
Operating lease expense		56			55			58			169			165
Professional fees		35			33			27			91			79
Equipment		23			23			22			70			71
Marketing		27			21			21			62			60
Other expense		129			140			133			360			424

Total noninterest expense		762			781			753			2,275			2,352


(Loss) income from continuing operations before income taxes		(82	)		(515	)		310			(275	)		1,282
Income taxes		(46	)		611			86			669			363

(Loss) income from continuing operations		(36	)		(1,126	)		224			(944	)		919
Loss from discontinued operations, net of taxes		—			—			(14	)		—			(25	)

Net (loss) income	$	(36	)	$	(1,126	)	$	210		$	(944	)	$	894


Net (loss) income applicable to common shares	$	(48	)	$	(1,126	)	$	210		$	(956	)	$	894

Per common share:
(Loss) income from continuing operations	$	(.10	)	$	(2.70	)	$	.58		$	(2.19	)	$	2.34
Net (loss) income		(.10	)		(2.70	)		.54			(2.19	)		2.28

Per common share — assuming dilution:
(Loss) income from continuing operations	$	(.10	)	$	(2.70	)	$	.57		$	(2.19	)	$	2.31
Net (loss) income		(.10	)		(2.70	)		.54			(2.19	)		2.25

Cash dividends declared per common share	$	.1875		$	.375		$	.365		$	.9375		$	1.095

Weighted-average common shares outstanding (000)		491,179			416,629			389,319			435,846			393,048
Weighted-average common shares and potential common shares outstanding (000)		491,179			416,629			393,164			435,846			397,816

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 19

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


	Third Quarter 2008								Second Quarter 2008									Third 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	$	26,345		$	356		5.38	%	$	26,057		$	352			5.42	%	$	22,393		$	410		7.25	%
Real estate — commercial mortgage		10,718			158		5.87			10,593			156			5.91			8,855			172		7.69
Real estate — construction		7,806			109		5.53			8,484			118			5.61			8,285			167		8.01
Commercial lease financing		9,585			108		4.52			9,798			(709	)		(28.94	) ^c		10,172			147		5.80

Total commercial loans		54,454			731		5.35			54,932			(83	)		(.58	)		49,705			896		7.16
Real estate — residential		1,899			28		6.04			1,918			30			6.12			1,586			26		6.68
Home equity:
Community Banking		9,887			141		5.64			9,765			140			5.78			9,690			175		7.14
National Banking		1,138			22		7.65			1,200			23			7.68			1,193			24		7.85

Total home equity loans		11,025			163		5.85			10,965			163			5.99			10,883			199		7.22
Consumer other — Community Banking		1,264			33		10.37			1,271			33			10.34			1,342			36		10.66
Consumer other — National Banking:
Marine		3,586			57		6.33			3,646			56			6.26			3,506			55		6.32
Education		3,635			54		5.90			3,595			53			5.88			332			8		9.65
Other		308			6		8.22			325			7			8.21			326			7		8.92

Total consumer other — National Banking		7,529			117		6.20			7,566			116			6.16			4,164			70		6.79

Total consumer loans		21,717			341		6.25			21,720			342			6.32			17,975			331		7.33

Total loans		76,171			1,072		5.60			76,652			259			1.37			67,680			1,227		7.20
Loans held for sale		1,723			21		4.76			1,356			20			5.94			4,731			91		7.59
Securities available for sale^a,d		8,266			110		5.38			8,315			111			5.40			7,825			106		5.45
Held-to-maturity securities^a		27			1		13.81			25			—			11.47			36			—		6.43
Trading account assets		1,579			16		4.02			1,041			10			3.88			1,055			11		4.39
Short-term investments		794			6		3.44			773			8			3.83			633			5		3.32
Other investments^d		1,563			12		2.87			1,580			14			3.09			1,563			12		2.99

Total earning assets		90,123			1,238		5.47			89,742			422			1.89			83,523			1,452		6.92
Allowance for loan losses		(1,498	)							(1,338	)								(942	)
Accrued income and other assets		14,531								14,886									12,581

Total assets	$	103,156							$	103,290								$	95,162


Liabilities
NOW and money market deposit accounts	$	26,657			108		1.61		$	27,158			102			1.51		$	24,190			209		3.41
Savings deposits		1,783			1		.21			1,815			1			.27			1,581			—		.19
Certificates of deposit ($100,000 or more)^e		9,506			97		4.05			8,670			88			4.09			6,274			80		5.06
Other time deposits		13,118			129		3.92			12,751			135			4.27			11,512			136		4.68
Deposits in foreign office		2,762			12		1.77			4,121			21			1.95			4,540			57		5.00

Total interest-bearing deposits		53,826			347		2.57			54,515			347			2.56			48,097			482		3.98
Federal funds purchased and securities sold under repurchase agreements		2,546			10		1.58			3,267			15			1.86			4,470			55		4.85
Bank notes and other short-term borrowings		4,843			34		2.72			4,770			27			2.26			2,539			30		4.70
Long-term debt^e,f		15,123			142		3.91			14,620			133			3.87			11,801			173		5.89

Total interest-bearing liabilities		76,338			533		2.80			77,172			522			2.75			66,907			740		4.40

Noninterest-bearing deposits		10,756								10,617									14,424
Accrued expense and other liabilities		7,328								6,884									6,106

Total liabilities		94,422								94,673									87,437

Shareholders’ equity
Preferred stock		657								128									—
Common shareholders’ equity		8,077								8,489									7,725

Total shareholders’ equity		8,734								8,617									7,725


Total liabilities and shareholders’ equity	$	103,156							$	103,290								$	95,162


Interest rate spread (TE)							2.67	%								(.86	)%							2.52	%

Net interest income (loss) (TE) and net interest margin (TE)					705		3.13	%					(100	) ^c		(.44	)%^c					712		3.40	%

TE adjustment^a					6								(458	)								18

Net interest income, GAAP basis				$	699							$	358								$	694

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 decision 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 Third Quarter 2008 Results
October 21, 2008
Page 20

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


	Nine months ended September 30, 2008									Nine months ended September 30, 2007
	Average									Average
	Balance			Interest			Yield/Rate			Balance			Interest		Yield/Rate

Assets
Loans:^a,b
Commercial, financial and agricultural	$	25,939		$	1,100			5.66	%	$	21,940		$	1,203		7.33	%
Real estate — commercial mortgage		10,532			489			6.20			8,617			500		7.76
Real estate — construction		8,251			361			5.84			8,252			500		8.10
Commercial lease financing		9,795			(503	)		(6.85	) ^c		10,121			435		5.73

Total commercial loans		54,517			1,447			3.55			48,930			2,638		7.20
Real estate — residential		1,911			88			6.15			1,501			74		6.61
Home equity:
Community Banking		9,782			435			5.93			9,676			518		7.15
National Banking		1,199			69			7.69			1,105			65		7.86

Total home equity loans		10,981			504			6.13			10,781			583		7.22
Consumer other — Community Banking		1,280			100			10.43			1,387			109		10.47
Consumer other — National Banking:
Marine		3,626			171			6.30			3,317			156		6.29
Education		2,535			114			5.98			334			24		9.57
Other		324			20			8.25			312			21		9.03

Total consumer other — National Banking		6,485			305			6.27			3,963			201		6.78

Total consumer loans		20,657			997			6.44			17,632			967		7.33

Total loans		75,174			2,444			4.34			66,562			3,605		7.24
Loans held for sale		2,684			128			6.35			4,365			248		7.59
Securities available for sale^a,d		8,333			331			5.35			7,723			312		5.39
Held-to-maturity securities^a		27			2			12.06			38			1		6.79
Trading account assets		1,233			39			4.22			875			26		3.97
Short-term investments		910			23			3.44			718			24		4.56
Other investments^d		1,565			38			3.00			1,502			40		3.43

Total earning assets		89,926			3,005			4.46			81,783			4,256		6.95
Allowance for loan losses		(1,358	)								(942	)
Accrued income and other assets		14,699									12,727

Total assets	$	103,267								$	93,568


Liabilities
NOW and money market deposit accounts	$	26,936			349			1.73		$	23,525			565		3.21
Savings deposits		1,821			5			.37			1,614			2		.19
Certificates of deposit ($100,000 or more)^e		8,752			280			4.27			6,221			235		5.04
Other time deposits		12,877			410			4.26			11,872			415		4.68
Deposits in foreign office		4,240			78			2.45			3,804			145		5.10

Total interest-bearing deposits		54,626			1,122			2.74			47,036			1,362		3.87
Federal funds purchased and securities sold under repurchase agreements		3,223			53			2.20			4,376			163		4.97
Bank notes and other short-term borrowings		4,849			100			2.74			1,813			59		4.37
Long-term debt^{e, f}		14,330			421			4.14			12,769			554		5.87

Total interest-bearing liabilities		77,028			1,696			2.97			65,994			2,138		4.34

Noninterest-bearing deposits		10,705									13,867
Accrued expense and other liabilities		6,935									6,041

Total liabilities		94,668									85,902

Shareholders’ equity
Preferred stock		263									—
Common shareholders’ equity		8,336									7,666

Total shareholders’ equity		8,599									7,666


Total liabilities and shareholders’ equity	$	103,267								$	93,568


Interest rate spread (TE)								1.49	%							2.61	%

Net interest income (TE) and net interest margin (TE)					1,309	^c		1.95	%^c					2,118		3.46	%

TE adjustment^a					(461	)								59

Net interest income, GAAP basis				$	1,770								$	2,059


(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 decision 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 5.02% for the first nine months of 2008, and Key’s taxable-equivalent net interest margin would have been 3.25%.

(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 Third Quarter 2008 Results
October 21, 2008
Page 21

Noninterest Income
(in millions)


	Three months ended									Nine months ended
	9-30-08			6-30-08			9-30-07			9-30-08			9-30-07

Trust and investment services income^a	$	133		$	138		$	119		$	400		$	359
Service charges on deposit accounts		94			93			88			275			247
Investment banking and capital markets (loss) income^a		(31	)		80			9			57			105
Operating lease income		69			68			70			206			200
Letter of credit and loan fees		53			51			51			141			134
Corporate-owned life insurance income		28			28			27			84			84
Electronic banking fees		27			27			25			78			74
Net (losses) gains from loan securitizations and sales		(30	)		33			(53	)		(98	)		(11	)
Net securities gains (losses)		1			(1	)		4			3			(41	)
Net (losses) gains from principal investing		(24	)		(14	)		9			(29	)		128
Gain from redemption of Visa Inc. shares		—			—			—			165			—
Gain from sale of McDonald Investments branch network		—			—			—			—			171
Other income:
Insurance income		15			20			16			50			45
Loan securitization servicing fees		4			5			5			13			16
Credit card fees		6			3			4			13			10
Gains related to MasterCard Incorporated shares		—			—			27			—			67
Litigation settlement — automobile residual value insurance		—			—			—			—			26
Miscellaneous income		43			24			37			113			127

Total other income		68			52			89			189			291

Total noninterest income	$	388		$	555		$	438		$	1,471		$	1,741


(a)		Additional detail provided in tables below.

Trust and Investment Services Income
(in millions)


	Three months ended						Nine months ended
	9-30-08		6-30-08		9-30-07		9-30-08		9-30-07

Brokerage commissions and fee income	$	37	$	41	$	26	$	111	$	94
Personal asset management and custody fees		38		40		41		119		122
Institutional asset management and custody fees		58		57		52		170		143

Total trust and investment services income	$	133	$	138	$	119	$	400	$	359

Investment Banking and Capital Markets Income
(in millions)


	Three months ended								Nine months ended
	9-30-08			6-30-08		9-30-07			9-30-08			9-30-07

Investment banking income	$	20		$	36	$	22		$	78		$	65
(Loss) income from other investments		(7	)		1		(22	)		(12	)		(11	)
Dealer trading and derivatives (loss) income		(57	)		28		(2	)		(50	)		18
Foreign exchange income		13			15		11			41			33

Total investment banking and capital markets (loss) income	$	(31	)	$	80	$	9		$	57		$	105

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 22

Noninterest Expense
(dollars in millions)


	Three months ended								Nine months ended
	9-30-08		6-30-08			9-30-07			9-30-08			9-30-07

Personnel^a	$	381	$	404		$	383		$	1,194		$	1,222
Net occupancy		65		62			60			193			182
Computer processing		46		43			49			136			149
Operating lease expense		56		55			58			169			165
Professional fees		35		33			27			91			79
Equipment		23		23			22			70			71
Marketing		27		21			21			62			60
Other expense:
Postage and delivery		11		12			11			34			34
Franchise and business taxes		7		8			8			23			25
Telecommunications		7		7			7			22			21
Provision (credit) for losses on lending-related commitments		8		(2	)		5			(21	)		3
Miscellaneous expense		96		115			102			302			341

Total other expense		129		140			133			360			424

Total noninterest expense	$	762	$	781		$	753		$	2,275		$	2,352


Average full-time equivalent employees		18,291		18,164			18,567	^b		18,294			19,081	^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						Nine months ended
	9-30-08		6-30-08		9-30-07		9-30-08		9-30-07

Salaries	$	245	$	235	$	240	$	719	$	721
Incentive compensation		55		79		55		208		212
Employee benefits		59		65		67		200		222
Stock-based compensation		8		17		17		39		57
Severance		14		8		4		28		10

Total personnel expense	$	381	$	404	$	383	$	1,194	$	1,222

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 23

Loan Composition
(dollars in millions)


								Percent change 9-30-08 vs.
	9-30-08		6-30-08			9-30-07		6-30-08			9-30-07

Commercial, financial and agricultural	$	27,207	$	25,929		$	23,192		4.9	%		17.3	%
Commercial real estate:
Commercial mortgage		10,569		10,737			9,272		(1.6	)		14.0
Construction		7,708		7,849			8,214		(1.8	)		(6.2	)

Total commercial real estate loans		18,277		18,586	^a		17,486		(1.7	)		4.5
Commercial lease financing		9,437		9,610			10,309		(1.8	)		(8.5	)

Total commercial loans		54,921		54,125			50,987		1.5			7.7
Real estate — residential mortgage		1,898		1,928			1,583		(1.6	)		19.9
Home equity:
Community Banking		9,970		9,851			9,674		1.2			3.1
National Banking		1,101		1,153			1,230		(4.5	)		(10.5	)

Total home equity loans		11,071		11,004			10,904		.6			1.5
Consumer other — Community Banking		1,274		1,261			1,308		1.0			(2.6	)
Consumer other — National Banking:
Marine		3,529		3,634			3,549		(2.9	)		(.6	)
Education		3,711		3,584	^b		334		3.5			N/M
Other		301		319			334		(5.6	)		(9.9	)

Total consumer other — National Banking		7,541		7,537			4,217		.1			78.8

Total consumer loans		21,784		21,730			18,012		.2			20.9

Total loans	$	76,705	$	75,855		$	68,999		1.1	%		11.2	%

Loans Held for Sale Composition
(dollars in millions)


								Percent change 9-30-08 vs.
	9-30-08		6-30-08			9-30-07		6-30-08			9-30-07

Commercial, financial and agricultural	$	159	$	212		$	67		(25.0	)%		137.3	%
Real estate — commercial mortgage		718		994			1,560		(27.8	)		(54.0	)
Real estate — construction		262		398	^a		237		(34.2	)		10.5
Commercial lease financing		52		42			5		23.8			940.0
Real estate — residential mortgage		57		79			36		(27.8	)		58.3
Home equity		—		—			1		—			(100.0	)
Education		223		103	^b		2,877		116.5			(92.2	)
Automobile		4		5			8		(20.0	)		(50.0	)

Total loans held for sale	$	1,475	$	1,833		$	4,791		(19.5	)%		(69.2	)%


(a)		During the second quarter of 2008, Key transferred $384 million of commercial real estate loans ($719 million of primarily construction loans, net of $335 million in net charge-offs) from the loan portfolio to held-for-sale status.

(b)		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 Third Quarter 2008 Results
October 21, 2008
Page 24

Summary of Loan Loss Experience
(dollars in millions)


	Three months ended									Nine months ended
	9-30-08			6-30-08			9-30-07			9-30-08			9-30-07

Average loans outstanding from continuing operations	$	76,171		$	76,652		$	67,680		$	75,174		$	66,562


Allowance for loan losses at beginning of period	$	1,421		$	1,298		$	945		$	1,200		$	944
Loans charged off:
Commercial, financial and agricultural		75			75			33			200			80

Real estate^___ commercial mortgage		21			15			2			40			13
Real estate^___ construction		80			340			7			445			10

Total commercial real estate loans		101			355	^a		9			485	^a		23
Commercial lease financing		24			18			11			57			33

Total commercial loans		200			448			53			742			136
Real estate — residential mortgage		2			2			1			8			3
Home equity:
Community Banking		10			9			5			28			15
National Banking		12			11			4			30			10

Total home equity loans		22			20			9			58			25
Consumer other — Community Banking		11			11			8			31			23
Consumer other — National Banking:
Marine		20			16			8			55			22
Education		41			55	^b		1			98			3
Other		4			2			2			10			6

Total consumer other — National Banking		65			73			11			163			31

Total consumer loans		100			106			29			260			82

Total loans charged off		300			554			82			1,002			218
Recoveries:
Commercial, financial and agricultural		13			14			11			41			24

Real estate^___ commercial mortgage		1			—			—			1			4
Real estate^___ construction		1			1			1			2			1

Total commercial real estate loans		2			1			1			3			5
Commercial lease financing		5			4			3			15			10

Total commercial loans		20			19			15			59			39
Real estate — residential mortgage		—			1			—			1			1
Home equity:
Community Banking		1			—			1			2			3
National Banking		—			1			—			1			1

Total home equity loans		1			1			1			3			4
Consumer other — Community Banking		1			1			3			4			6
Consumer other — National Banking:
Marine		4			6			3			13			9
Education		1			1			—			2			1
Other		—			1			1			2			2

Total consumer other — National Banking		5			8			4			17			12

Total consumer loans		7			11			8			25			23

Total recoveries		27			30			23			84			62

Net loan charge-offs		(273	)		(524	)		(59	)		(918	)		(156	)
Provision for loan losses from continuing operations		407			647			69			1,241			166
Allowance related to loans acquired, net		—			—			—			32			—
Foreign currency translation adjustment		(1	)		—			—			(1	)		1

Allowance for loan losses at end of period	$	1,554		$	1,421		$	955		$	1,554		$	955


Net loan charge-offs to average loans from continuing operations		1.43	%		2.75	%		.35	%		1.63	%		.31	%
Allowance for loan losses to period-end loans		2.03			1.87			1.38			2.03			1.38
Allowance for loan losses to nonperforming loans		160.70			174.57			191.77			160.70			191.77


(a)		During the second quarter of 2008, Key transferred $384 million of commercial real estate loans ($719 million of primarily construction loans, net of $335 million in net charge-offs) from the loan portfolio to held-for-sale status.

(b)		On March 31, 2008, Key transferred $3.3 billion of education loans from loans held for sale to the loan portfolio.

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 25

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


	Three months ended							Nine months ended
	9-30-08		6-30-08			9-30-07		9-30-08			9-30-07

Balance at beginning of period	$	51	$	53		$	50	$	80		$	53
Provision (credit) for losses on lending- related commitments		8		(2	)		5		(21	)		3
Charge-offs		—		—			—		—			(1	)

Balance at end of period^a	$	59	$	51		$	55	$	59		$	55


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

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


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

Commercial, financial and agricultural	$	309		$	259		$	147		$	84		$	94

Real estate — commercial mortgage		119			107			113			41			41
Real estate — construction		334			256			610			415			228

Total commercial real estate loans		453			363	^b		723			456			269
Commercial lease financing		55			57			38			28			30

Total commercial loans		817			679			908			568			393
Real estate — residential mortgage		35			32			34			28			29
Home equity:
Community Banking		70			61			60			54			50
National Banking		16			14			14			12			11

Total home equity loans		86			75			74			66			61
Consumer other — Community Banking		3			2			2			2			2
Consumer other — National Banking:
Marine		22			20			20			20			12
Education		3			4			15			2			—
Other		1			2			1			1			1

Total consumer other — National Banking		26			26			36			23			13

Total consumer loans		150			135			146			119			105

Total nonperforming loans		967			814			1,054			687			498

Nonperforming loans held for sale		169			342	^b		9			25			6

OREO		64			26			29			21			21
Allowance for OREO losses		(4	)		(2	)		(2	)		(2	)		(1	)

OREO, net of allowance		60			24			27			19			20

Other nonperforming assets^a		43			30			25			33			46

Total nonperforming assets	$	1,239		$	1,210		$	1,115		$	764		$	570


Accruing loans past due 90 days or more	$	328		$	367		$	283		$	231		$	190
Accruing loans past due 30 through 89 days		937			852			1,169			843			717
Nonperforming loans to period-end portfolio loans		1.26	%		1.07	%		1.38	%		.97	%		.72	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		1.61			1.59			1.46			1.08			.83

Summary of Changes in Nonperforming Loans
(in millions)


	3Q08			2Q08			1Q08			4Q07			3Q07

Balance at beginning of period	$	814		$	1,054		$	687		$	498		$	276
Loans placed on nonaccrual status		530			789			566			378			337
Charge-offs		(300	)		(547	)		(144	)		(147	)		(81	)
Loans sold		(1	)		(48	)		—			(13	)		(6	)
Payments		(43	)		(86	)		(32	)		(17	)		(13	)
Transfers to OREO		—			—			(10	)		(5	)		(12	)
Transfer to nonperforming loans held for sale		(30	)		(342	)^b		(8	)		—			—
Loans returned to accrual status		(3	)		(6	)		(5	)		(7	)		(3	)

Balance at end of period	$	967		$	814		$	1,054		$	687		$	498


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

(b)		During the second quarter of 2008, Key transferred $384 million of commercial real estate loans ($719 million of primarily construction loans, net of $335 million in net charge-offs) from the loan portfolio to held-for-sale status.

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 26

Line of Business Results
(dollars in millions)

Community Banking


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

Summary of operations
Total revenue (TE)	$	658		$	661		$	630		$	654		$	629			(.5)	%		4.6	%
Provision for loan losses		56			44			18			36			2			27.3			N/M
Noninterest expense		445			449			429			438			413			(.9	)		7.7
Net income		98			105			114			113			134			(6.7	)		(26.9	)
Average loans and leases		28,872			28,477			28,094			27,234			26,944			1.4			7.2
Average deposits		50,384			49,948			49,769			47,254			46,729			.9			7.8
Net loan charge-offs		70			38			30			31			19			84.2			268.4
Net loan charge-offs to average loans		.96	%		.54	%		.43	%		.45	%		.28	%		N/A			N/A
Nonperforming assets at period end	$	225		$	218		$	204		$	153		$	159			3.2			41.5
Return on average allocated equity		12.84	%		13.81	%		15.34	%		17.76	%		21.20	%		N/A			N/A
Average full-time equivalent employees		8,949			8,785			8,714			8,454			8,625			1.9			3.8

Supplementary information (lines of business)
Regional Banking
Total revenue (TE)	$	557		$	559		$	530		$	556		$	534			(.4)	%		4.3	%
Provision for loan losses		39			25			13			26			12			56.0			225.0
Noninterest expense		399			401			386			386			367			(.5	)		8.7
Net income		74			83			82			91			97			(10.8	)		(23.7	)
Average loans and leases		19,794			19,621			19,560			18,771			18,667			.9			6.0
Average deposits		46,655			46,246			46,178			43,696			43,237			.9			7.9
Net loan charge-offs		41			33			29			26			17			24.2			141.2
Net loan charge-offs to average loans		.82	%		.68	%		.60	%		.55	%		.36	%		N/A			N/A
Nonperforming assets at period end	$	168		$	157		$	142		$	119		$	119			7.0			41.2
Return on average allocated equity		13.67	%		15.21	%		15.14	%		20.75	%		22.03	%		N/A			N/A
Average full-time equivalent employees		8,603			8,439			8,365			8,101			8,264			1.9			4.1

Commercial Banking
Total revenue (TE)	$	101		$	102		$	100		$	98			95.00			(1.0)	%		6.3	%
Provision for loan losses		17			19			5			10			(10	)		(10.5	)		N/M
Noninterest expense		46			48			43			52			46			(4.2	)		—
Net income		24			22			32			22			37			9.1			(35.1	)
Average loans and leases		9,078			8,856			8,534			8,463			8,277			2.5			9.7
Average deposits		3,729			3,702			3,591			3,558			3,492			.7			6.8
Net loan charge-offs		29			5			1			5			2			480.0			N/M
Net loan charge-offs to average loans		1.27	%		.23	%		.05	%		.23	%		.10	%		N/A			N/A
Nonperforming assets at period end	$	57		$	61		$	62		$	34		$	40			(6.6	)		42.5
Return on average allocated equity		10.83	%		10.25	%		15.87	%		11.12	%		19.29	%		N/A			N/A
Average full-time equivalent employees		346			346			349			353			361			—			(4.2	)

KeyCorp Reports Third Quarter 2008 Results
October 21, 2008
Page 27

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

National Banking


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

Summary of operations
Total revenue (TE)	$	482		$	(130	)	$	438		$	610		$	507			N/M			(4.9)	%
Provision for loan losses		350			609			169			327			69			(42.5)	%		407.2
Noninterest expense		342			337			308			388			327			1.5			4.6
(Loss) income from continuing operations		(133	)		(672	)		(24	)		(68	)		70			80.2			N/M
Net (loss) income		(133	)		(672	)		(24	)		(65	)		56			80.2			N/M
Average loans and leases^a		47,075			47,877			44,162			42,040			40,279			(1.7	)		16.9
Average loans held for sale^a		1,651			1,282			4,932			4,709			4,692			28.8			(64.8	)
Average deposits^a		12,439			12,289			11,885			12,629			12,631			1.2			(1.5	)
Net loan charge-offs^a		203			486			91			88			40			(58.2	)		407.5
Net loan charge-offs to average loans^a		1.72	%		4.08	%		.83	%		.83	%		.39	%		N/A			N/A
Nonperforming assets at period end	$	1,014		$	992		$	911		$	611		$	410			2.2			147.3
Return on average allocated equity^a		(10.28)	%		(51.59)	%		(1.96)	%		(6.02)	%		6.62	%		N/A			N/A
Return on average allocated equity		(10.28	)		(51.59	)		(1.96	)		(5.75	)		5.30			N/A			N/A
Average full-time equivalent employees		3,589			3,603			3,758			4,010			3,869			(.4	)		(7.2	)

Supplementary information (lines of business)
Real Estate Capital and Corporate Banking Services
Total revenue (TE)	$	92		$	233		$	80		$	159		$	128			(60.5)	%		(28.1)	%
Provision for loan losses		99			366			45			270			43			(73.0	)		130.2
Noninterest expense		89			68			61			118			88			30.9			1.1
Net (loss)		(60	)		(126	)		(16	)		(143	)		(2	)		52.4			N/M
Average loans and leases		16,447			17,086			16,497			15,003			14,160			(3.7	)		16.2
Average loans held for sale		792			616			989			1,257			1,584			28.6			(50.0	)
Average deposits		10,446			10,460			9,785			10,397			10,243			(.1	)		2.0
Net loan charge-offs		100			376			38			45			7			(73.4	)		N/M
Net loan charge-offs to average loans		2.42	%		8.85	%		.93	%		1.19	%		.20	%		N/A			N/A
Nonperforming assets at period end	$	714		$	779		$	732		$	475		$	281			(8.3	)		154.1
Return on average allocated equity		(11.76)	%		(23.61)	%		(3.42)	%		(36.89)	%		(.56)	%		N/A			N/A
Average full-time equivalent employees		1,222			1,228			1,233			1,310			1,309			(.5	)		(6.6	)

Equipment Finance
Total revenue (TE)	$	111		$	(696	)	$	98		$	184		$	138			N/M			(19.6)	%
Provision for loan losses		64			36			24			23			16			77.8	%		300.0
Noninterest expense		90			89			96			96			93			1.1			(3.2	)
Net (loss) income		(27	)		(513	)		(14	)		40			18			94.7			N/M
Average loans and leases		10,012			10,326			10,595			10,729			10,681			(3.0	)		(6.3	)
Average loans held for sale		49			51			32			15			6			(3.9	)		716.7
Average deposits		20			21			14			17			16			(4.8	)		25.0
Net loan charge-offs		32			28			24			18			16			14.3			100.0
Net loan charge-offs to average loans		1.27	%		1.09	%		.91	%		.67	%		.59	%		N/A			N/A
Nonperforming assets at period end	$	115		$	105		$	69		$	58		$	65			9.5			76.9
Return on average allocated equity		(11.99)	%		(225.99)	%		(6.11)	%		17.40	%		8.00	%		N/A			N/A
Average full-time equivalent employees		827			837			859			923			900			(1.2	)		(8.1	)

Institutional and Capital Markets
Total revenue (TE)	$	183		$	229		$	157		$	169		$	156			(20.1)	%		17.3	%
Provision for loan losses		16			36			16			15			(2	)		(55.6	)		N/M
Noninterest expense		107			128			102			115			105			(16.4	)		1.9
Net income		37			42			25			25			34			(11.9	)		8.8
Average loans and leases		8,364			7,898			7,633			7,219			6,716			5.9			24.5
Average loans held for sale		649			494			555			394			373			31.4			74.0
Average deposits		1,479			1,384			1,459			1,560			1,844			6.9			(19.8	)
Net loan (recoveries) charge-offs		(1	)		5			2			6			6			N/M			N/M
Net loan (recoveries) charge-offs to average loans		(.05)	%		.25	%		.11	%		.33	%		.35	%		N/A			N/A
Nonperforming assets at period end	$	58		$	26		$	12		$	15		$	17			123.1			241.2
Return on average allocated equity		11.47	%		13.48	%		8.29	%		8.50	%		12.55	%		N/A			N/A
Average full-time equivalent employees		975			931			938			979			1,019			4.7			(4.3	)

Consumer Finance
Total revenue (TE)	$	96		$	104		$	103		$	98		$	85			(7.7)	%		12.9	%
Provision for loan losses		171			171			84			19			12			—			N/M
Noninterest expense		56			52			49			59			41			7.7			36.6
(Loss) income from continuing operations		(83	)		(75	)		(19	)		10			20			(10.7	)		N/M
Net (loss) income		(83	)		(75	)		(19	)		13			6			(10.7	)		N/M
Average loans and leases^a		12,252			12,567			9,437			9,089			8,722			(2.5	)		40.5
Average loans held for sale^a		161			121			3,356			3,043			2,729			33.1			(94.1	)
Average deposits^a		494			424			627			655			528			16.5			(6.4	)
Net loan charge-offs^a		72			77			27			19			11			(6.5	)		554.5
Net loan charge-offs to average loans^a		2.34	%		2.46	%		1.15	%		.83	%		.50	%		N/A			N/A
Nonperforming assets at period end	$	127		$	82		$	98		$	63		$	47			54.9			170.2
Return on average allocated equity^a		(35.09)	%		(32.54)	%		(8.31)	%		4.59	%		9.87	%		N/A			N/A
Return on average allocated equity		(35.09	)		(32.54	)		(8.31	)		5.97			2.96			N/A			N/A
Average full-time equivalent employees		565			607			728			798			641			(6.9	)		(11.9	)

(a) From continuing operations.

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

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