KeyCorp (KEY) 8-K Goldman Sachs US Financial Services Conference 2013

KeyCorp

Goldman Sachs US Financial Services Conference 2013

Beth E. Mooney

Chairman and

Chief Executive Officer

Focused Forward

EXHIBIT 99.1

FORWARD-LOOKING STATEMENTS AND ADDITIONAL

INFORMATION DISCLOSURE

This

presentation

contains

forward-looking

statements,

including

statements

about

our

financial

condition,

results

of

operations,

asset

quality

trends,

capital

levels

and

profitability.

Forward-looking

statements

can

often

be

identified

by

words

such

as

“outlook,”

“goal,”

“objective,”

“plan,”

“expect,”

“anticipate,”

“intend,”

“project,”

“believe,”

or

“estimate.”

Forward-looking

statements

represent

management’s

current

expectations

and

forecasts

regarding

future

events.

If

underlying

assumptions

prove

to

be

inaccurate

or

unknown

risks

or

uncertainties

arise,

actual

results

could

vary

materially

from

these

projections

or

expectations.

Risks

and

uncertainties

include

but

are

not

limited

to:

(1)

continued

strain

on

the

global

financial

markets;

(2)

the

slow

progress

of

the

U.S.

economic

recovery;

changes

in

trade,

monetary

and

fiscal

policies;

(3)

our

ability

to

anticipate

interest

rate

changes

correctly

and

manage

interest

rate

risk;

(4)

changes

in

local,

regional

and

international

business,

economic

or

political

conditions;

(5)

regulatory

initiatives

in

the

U.S.,

including

the

Dodd-Frank

Act,

subjecting

us

to

new

and

more

stringent

regulatory

requirements;

(6)

the

increase

in

unemployment

or

deterioration

in

real

estate

asset

values

or

their

failure

to

recover

for

an

extended

period

of

time;

(7)

adverse

changes

in

credit

quality

trends;

(8)

our

ability

to

determine

accurate

values

of

certain

assets

and

liabilities;

(9)

adverse

behaviors

in

securities,

public

debt,

and

capital

markets

;

(10)

unanticipated

changes

in

our

liquidity

position,

including

but

not

limited

to,

changes

in

the

cost

of

liquidity,

our

ability

to

enter

the

financial

markets

and

to

secure

alternative

funding

sources;

(11)

the

soundness

of

other

financial

institutions;

(12)

our

ability

to

satisfy

new

capital

and

liquidity

standards

such

as

those

imposed

by

the

Dodd-Frank

Act

and

those

adopted

by

the

Basel

Committee;

(13)

our

ability

to

receive

dividends

from

our

subsidiary,

KeyBank;

(14)

downgrades

in

our

credit

ratings

and

the

credit

ratings

of

KeyBank;

(15)

our

ability

to

timely

and

effectively

implement

our

strategic

initiatives;

(16)

operational

or

risk

management

failures;

breaches

of

security

or

failures

of

our

technology

systems

due

to

technological

or

other

factors

and

cybersecurity

threats;

(17)

the

occurrence

of

natural

or

man-made

disasters

or

conflicts

or

terrorist

attacks;

(18)

the

adequacy

of

our

risk

management

programs;

(19)

adverse

judicial

proceedings;

(20)

increased

competitive

pressure

due

to

industry

consolidation;

(21)

our

ability

to

attract

and

retain

talented

executives

and

employees,

to

effectively

sell

additional

products

or

services

to

new

or

existing

customers,

and

to

manage

our

reputational

risks;

and

(22)

unanticipated

adverse

effects

of

acquisitions

and

dispositions

of

assets

or

businesses.

We

provide

greater

detail

regarding

these

factors

in

our

2012

Form

10-K

and

subsequent

filings,

which

are

available

online

at

www.key.com/ir

and

www.sec.gov.

Forward

looking

statements

speak

only

as

of

the

date

they

are

made

and

Key

does

not

undertake

any

obligation

to

update

the

forward-

looking

statements

to

reflect

new

information

or

future

events.

This

presentation

also

includes

certain

Non-GAAP

financial

measures

related

to

“tangible

common

equity,”

“Tier

1

common

equity,”

“pre-provision

net

revenue,”

“cash

efficiency

ratio,”

and

“adjusted

cash

efficiency

ratio.”

Management

believes

these

ratios

may

assist

investors,

analysts

and

regulators

in

analyzing

Key’s

financials.

Although

Key

has

procedures

in

place

to

ensure

that

these

measures

are

calculated

using

the

appropriate

GAAP

or

regulatory

components,

they

have

limitations

as

analytical

tools

and

should

not

be

considered

in

isolation,

or

as

a

substitute

for

analysis

of

results

under

GAAP.

For

more

information

on

these

calculations

and

to

view

the

reconciliations

to

the

most

comparable

GAAP

measures,

please

refer

to

the

Appendix

to

this

presentation

or

our

most

recent

earnings

press

release,

which

is

accessible

at

www.key.com/ir.

2

Progress Made on 2013 Key Focus Areas

Increased dividend by 10% in 2Q13

Repurchased $375 MM in shares        

3Q13 YTD

Maintaining peer-leading capital position

Acquired and expanded

commercial relationships

Enhanced core consumer and

small business payment products

–

Launched self-issuance credit card

capabilities

–

Realigned merchant services

Achieved cost savings of $207 MM

through 3Q13

–

Consolidated 6% of branches through 3Q13

–

Streamlined support functions and

improved sales processes

Optimize and

Grow

Revenue

Improve

Efficiency

Effectively

Manage

Capital

Shareholder Payout %

Adj. Cash Efficiency Ratio

(a)

Credit Card Production (#)

CF&A Loans ($)

3Q12

YTD

3Q13

YTD

46%

79%

2Q12

3Q13

69%

64%

3Q12

3Q13

3Q12

YTD

3Q13

YTD

3

+11%

+58%

(7)%

+72%

(a) Excludes efficiency initiative and pension settlement charges; non-GAAP measure: see Appendix for reconciliation

2013 Performance

Pre-provision Net Revenue

(a)

Price / Tangible Book Value, as of 11/30/13

Source: SNL Financial, peer SEC filings

Peers include BBT, CMA, FHN, FITB, HBAN,  MTB, PBCT, PNC, RF, STI, USB, and ZION; payout ratio excludes peers not participating in 2013 CCAR or CapPR

Executing

on

our

commitments

has

driven

PPNR

growth

and

peer

leading

shareholder

return

through

the

3rd

quarter…

…

but

Key

remains

focused

on

continuing

to

close

the

valuation

gap

to

peers

4

$ in millions

Total Shareholder Payout Ratio (3Q13 YTD)

Peers

Peers

Median 1.5x

Median 51%

(a)   Pre-provision net revenue excludes gains from the redemption of trust preferred securities and net gains from the early termination of leveraged leases; non-GAAP  

measure: see Appendix for reconciliation

5

Focused Forward

Positive

Operating

Leverage

Committed to improving returns by driving the business forward, with

positive operating leverage and disciplined risk and capital management

•

Improve productivity

•

Deliver solid organic revenue growth

•

Drive continuous improvement culture

Disciplined

Capital

Management

Effective Risk

Management

•

Execute

relationship

strategy

with

focus

on

segments

and

sectors

where

we have expertise and presence

•

Maintain discipline and commitment to core risk appetite and tolerances

•

Prioritize organic business growth and return of capital to shareholders,

consistent with capital priorities

•

Purposeful approach to capital management that is shareholder-friendly

I

II

III

Positive Operating Leverage

Key’s culture of continuous improvement is focused on both revenue and

expense levers to deliver positive operating leverage

Infrastructure

Sales and Service

Products and Capabilities

Streamline overall infrastructure while

continuing to invest in new and

enhanced capabilities to better serve

clients and meet regulatory

requirements 

Build cross-franchise capabilities to

acquire new and expand existing

client relationships across our

franchise

Invest in client-facing FTE and sales

process --

more productive bankers

calling on more targeted prospects

more often

•

Branch rationalization

•

Vendor management

•

Support alignment

•

Continued process improvement

•

Payments and card products

–

Credit card

–

Purchase card

–

Prepaid card

–

Merchant services

•

Treasury platform upgrades

•

Industry expertise

•

Digital channels

•

Sales FTE

–

Corporate Banking

–

Commercial Banking

–

Private Banking

–

Retail

•

Rigorous pipeline and

sales/relationship management

•

Goals and incentives

Driving Productivity Across the Franchise

6

I

Effective Risk Management

Significant Improvement in Credit Quality

Enterprise-wide Risk Management Approach

•

Execute rigorous and disciplined sales

approach

–

Relationship-oriented model

–

Clearly defined prospect pools

–

Standard relationship reviews

•

Target specific segments and sectors

where we have expertise

–

Dedicated relationship bankers and product

experts

–

Full suite of capabilities

•

Clearly defined and well understood risk

appetite and tolerances

–

Concentration and hold limits

–

Client level ROE thresholds

•

Risk management principles applied

actively

–

Exited >2,000 client relationships that did not

fit our risk/return criteria

–

Reduced non-core and construction CRE

–

Divested businesses not consistent with

relationship strategy (i.e. Victory Capital

Management)

(a)

Source: SNL; Peers include BBT, CMA, FITB, FHN, HBAN, MTB, PBCT,

PNC, RF, STI, USB and ZION

II

7

Improved Loan Portfolio

Exit

Consumer

Leasing

CRE

CF&A

29%

(41)%

(14)%

(66)%

13%

Targeted areas for strategic growth;  reducing non-core assets

Early resolution through the credit cycle

For the past 12 quarters, Key

has been approximately 20%

better than peer median

Net charge-offs to average loans

Disciplined Capital Management

1. Organic Growth

4. Opportunistic Growth

Disciplined capital management allows Key to execute on its strategic priorities and

maximize shareholder value

Capital Priorities

2. Dividends

3. Share Repurchases

•

Franchise investments to drive execution of relationship

strategy: product capabilities, client-facing personnel mix

•

10% increase in common share dividend in 2Q13

•

Repurchased $375 million 3Q13 YTD with remaining

authority of $187 million over the next two quarters

•

Acquisitions to strengthen business: commercial servicing,

credit card and Western NY branches

79% total payout to shareholders 3Q13 YTD, up from 46% in the prior year

III

8

Focused Forward

Key is well-positioned to grow and improve returns

9

Appendix

10

*

*

*

*

*

*

*

*

*

*

Business Model: Aligned and Targeted

Traditional Bank Products

Capital Markets Capabilities

Deposits & payments

Loans

Wealth management &

private banking

Equipment

finance

Commercial mortgage

banking

Derivatives & foreign

exchange

Equity capital markets

Equity research

M&A /

financial sponsors /

leveraged finance

Investment grade & high-

yield debt

Loan syndications

Public finance

Local delivery of broad product set and industry expertise

Community Bank

Corporate Bank

Consumer          Energy          Healthcare         Industrial

Public Sector         Real Estate

Targeted Industries

11

$3

$50

$1,500

$2,000

Commercial Client Revenue Size ($MM)

$25

$100

$250

$500

Financial Highlights

TE = Taxable equivalent, EOP = End of Period

(a)

From continuing operations

(b)

Year-over-year average balance growth

(c)

From consolidated operations

(d)

Non-GAAP measure: see slides 24-25 in Appendix for reconciliation

(e)

Efficiency initiative charges include pension settlement in 3Q13

Metrics

3Q13

2Q13

1Q13

4Q12

3Q12

EPS –

assuming dilution

$  .25

$  .21

$  .21

$  .20

$  .22

Cash efficiency ratio

(d)

67.5

%

69.1

%

66.0

%

69.0

%

64.1

%

Adj.

cash

efficiency

ratio

(ex.

initiative

charges

)

63.6

65.4

64.5

67.5

63.3

Net interest margin (TE)

3.11

3.13

3.24

3.37

3.23

Return on average total assets

1.12

.95

.99

.96

1.06

Total loans and leases

5

%

7

%

6

%

7

%

6

%

CF&A loans

11

14

16  

21

24

Deposits (excl. foreign deposits)

5

8

7

7

7

Tier 1 common equity

(d)

11.2

%

11.2

%

11.4

%

11.4

%

11.3

%

Tier 1 risk-based capital

11.9

11.9

12.2

12.2

12.1

Tangible common equity to tangible assets

(d)

9.9

10.0

10.2

10.2

10.4

NCOs to average loans

.28

%

.34

%

.38

%

.44

%

.86

%

NPLs to EOP portfolio loans

1.01

1.23

1.24

1.28

1.27

Allowance for loan losses to EOP loans

1.62

1.65

1.70

1.68

1.73

Financial

Performance

(a)

Balance

Sheet   

Growth

(a),

(b)

Capital

(c)

Asset

Quality

(a)

(d)

(e)

12

Progress on Targets for Success

Focus areas

Metrics

(a)

KEY

FY11

KEY

FY12

KEY

3Q13 YTD

Targets

Improving balance

sheet efficiency

Loan to deposit ratio

(b)

87%

86%

84%

90-100%

Maintaining

moderate risk profile

NCOs to average loans

1.11%

.69%

.33%

40-60 bps

Provision to average loans

(.12)%

.45%

.28%

Growing high

quality, diverse

revenue streams

Net interest margin

3.16%

3.21%

3.16%

>3.50%

Noninterest income

to total revenue

42%

46%

43%

>40%

Generating positive

operating leverage

Adj. cash efficiency ratio

(ex. efficiency initiative

charges)

(c)

67%

67%

65%

60-65%

Strengthening

returns with

disciplined capital

management

Return on average assets

1.17%

1.05%

1.02%

1.00-1.25%

(a) 

Continuing operations, unless otherwise noted

(b)

Represents period-end consolidated total loans and loans held for sale (excluding education loans in the securitization trusts)

divided by period-end consolidated total deposits (excluding deposits in foreign office)

(c)

Excludes intangible asset amortization; non-GAAP measure: see slides 24-25 in Appendix for reconciliation

13

Efficient Balance Sheet: Improving Balance Sheet Mix

Average Loans Continue to Increase, Driven by Commercial, Financial & Agricultural (CF&A)

Exit Portfolios

Home Equity & Other

Total Commercial

Growth in Non-time Deposits with Improved Funding Cost

CDs and other time deposits

Savings

Noninterest-bearing

NOW and MMDA

Cost of total deposits

Note: Loan and deposit figures represent average balances; deposits exclude deposits in foreign office

(a)

Source: Federal Reserve H8; industry data are not seasonally adjusted

(b)

Transaction deposits include noninterest-bearing, NOW, and MMDA

Key

U.S. Commercial Banks

(a)

14

$ in billions

$ in billions

CF&A Loans

Cumulative change since 4Q11

High Quality Revenue: Diverse Streams

TE = Taxable equivalent

(a)   Excludes gains from the redemption of trust preferred securities and leveraged lease terminations

Noninterest Income Diversity Provides Strength; Growth in Core Businesses

(a)

Net Interest Income & Net Interest Margin (TE) Trend

Net interest income (TE)

NIM

Noninterest Income

Leveraged lease termination gains

TruPS gains

Trust and investment services

Investment banking and debt placement

Service charges on deposit accounts

Cards and payments

Corporate Services

Operating lease income and other leasing gains

Other

Continuing Operations

15

Continuing Operations

$ in millions

3Q13

Continuing Operations

$ in millions

3Q12

Operating Leverage: Driving Productivity and Efficiency

Adjusted cash efficiency ratio 

(ex. efficiency initiative charges)

Cash efficiency ratio

(a)

Efficiency initiative charges include pension settlement in 3Q13

(b)

Non-GAAP measures: see slides 24-25 in Appendix for reconciliation

(c)

Excludes one-time gains of $54 million related to the redemption of trust preferred securities

Achieved Cost Savings Target; Focused on Further Efficiency Improvement

Efficiency initiative charges

(a)

Driving Productivity Enhancements: Improving Annualized Revenue per FTE

16

$ in thousands

$ in thousands

Noninterest Expense

Efficiency Ratio

(b)

Significant Improvement in Credit Quality Trends

Net charge-offs (NCOs)

Provision for loan and lease losses

NCOs to average loans

$ in millions

Moderate Risk Profile: Strong Credit Quality

Maintaining Moderate Risk Profile

3Q13

YTD

Net

Charge-offs

to

Average

Loans

(a)

NPLs

NPLs to period-end loans

NPLs held for sale,

OREO & other NPAs

17

(a)

Source: SNL; Peers include BBT, CMA, FITB, FHN, HBAN, MTB, PBCT,

PNC, RF, STI, USB and ZION

Peers

Peers

Outlook and Expectations

Loans

•

Mid-single digit average balance growth

NIM

•

Downward pressure in 4Q13 as a result of higher liquidity

Revenue

•

Net interest income relatively stable in 2H13

•

Continued strength in fee income businesses

Expense

•

$680 -

$700 million for 4Q13, including one-time charges

Efficiency

•

60% -

65% cash efficiency

NCOs / Provision

•

Within

or

below

targeted

range

of

40

–

60

bps

of

average

loans

•

Provision near the level of net charge-offs

Capital

•

Remaining

share

repurchase

authority

of

$187

million

over

the

next

two quarters

18

Average Total Investment Securities

Highlights

Average AFS securities

$ in billions

High Quality Investment Portfolio

•

Portfolio composed of Agency or GSE backed

CMOs: Fannie, Freddie & GNMA

•

No private label MBS or financial paper

•

Average portfolio life at 9/30/13 of 3.8 years

compared to 3.2 years at 6/30/13

•

Unrealized net gain of $3 million on available-for-

sale securities portfolio at 9/30/13

•

Securities cash flows of $1.3 billion in 3Q13     

and $1.5 billion in 2Q13

•

Yields on purchases were 67 bps lower than

3Q13 maturities

Securities to Total Assets

(b)

(a)  Yield is calculated on the basis of amortized cost

(b)  Includes end of period held-to-maturity and available-for-sale securities

Average yield

(a)

Average HTM securities

19

Asset Quality Trends

Quarterly Change in Criticized Outstandings

(a)

Delinquencies to Period-end Total Loans

(a)

Loan and lease outstandings

(b)

From continuing operations

30 –

89 days delinquent

90+ days delinquent

Metric

(b)

3Q13

2Q13

1Q13

4Q12

3Q12

Delinquencies to EOP total loans: 30-89 days

.54

%

.47

%

.70

%

.80

%

.69

%

Delinquencies to EOP total loans: 90+ days

.17

.15

.16

.15

.17

NPLs to EOP portfolio loans

1.01

1.23

1.24

1.28

1.27

NPAs to EOP portfolio loans + OREO + Other NPAs

1.08

1.30

1.34

1.39

1.39

Allowance for loan losses to period-end loans

1.62

1.65

1.70

1.68

1.73

Allowance for loan losses to NPLs

160.4

134.4

137.4

131.8

136.0

Continuing Operations

Continuing Operations

20

Period-

end

loans

Average

loans

Net loan

charge-offs

Net loan

charge-offs

(b)

/

average loans

(%)

Nonperforming   

loans

(c)

Ending

allowance

Allowance /

period-end

loans

(d)  

(%)

Allowance /

NPLs

(%)

9/30/13

3Q13

3Q13

2Q13

3Q13

2Q13

9/30/13

6/30/13

9/30/13

9/30/13

9/30/13

Commercial, financial and agricultural

(a)

$24,317

$23,864

$    4

$    8

.07

.14

$       102

$       146

$                370

1.52

362.75

Commercial real estate:

Commercial Mortgage

7,544

7,575

(8)

(2)

(.42)

(.11)

58

106

172

2.28

296.55

Construction

1,058

1,073

(6)

1

(2.22)

.38

17

26

36

3.40

211.76

Commercial lease financing

4,550

4,633

15

(2)

1.28

(.17)

22

14

64

1.41

290.91

Real estate –

residential mortgage

2,198

2,193

2

4

.36

.74

98

94

35

1.59

35.71

Home equity:

Key Community Bank

10,285

10,247

12

14

.46

.56

198

205

82

.80

41.41

Other

353

364

2

5

2.18

5.16

13

16

14

3.97

107.69

Consumer other –

Key Community Bank

1,440

1,435

7

5

1.94

1.44

2

3

27

1.88

N/M

Credit cards

698

700

8

6

4.53

3.45

4

11

34

4.87

850.00

Consumer other:

Marine

1,083

1,120

1

5

.35

1.66

25

30

31

2.86

124.00

Other

71

67

-

1

-

5.42

2

1

3

4.23

150.00

Continuing total

(e)

$53,597

$53,271

$  37

$  45

.28

.34

$       541

$       652

$               868

1.62

160.44

Discontinued operations

4,738

4,905

9

7

1.36

1.04

23

19

38

.80

165.22

Consolidated total

$58,335

$58,176

$46

$  52

.33

.38

$       564

$       671

$               906

1.55

160.64

Credit Quality by Portfolio

Credit Quality

(a)

9-30-13

ending

loan

balances

include

$96

million

of

commercial

credit

card

balances;

9-30-13

average

loan

balances

include

$96

million

of

assets

from commercial credit cards

(b)

Net loan charge-off amounts are annualized in calculation. NCO ratios for discontinued operations and consolidated Key exclude education loans in

the securitization trusts since valued at fair-market value

(c)

9-30-13 and 6-30-13 NPL amounts exclude $18 million and $19 million respectively of purchased credit impaired loans acquired in July 2012.

(d)   Allowance/period loans ratios for discontinued operations and consolidated Key exclude education loans in the securitization trusts since valued at

fair-market value

(e)  9-30-13 ending loan balances include purchased loans of $176 million of which $18 million were purchased credit impaired

$ in millions

N/M = Not Meaningful

21

Vintage (% of Loans)

Loan

Balances

Average Loan

Size ($)

Average

FICO

Average

LTV

(a)

% of Loans

LTV>90%

2012 and

later

2011

2010

2009

2008 and

prior

Home equity loans and lines

First lien

$              16

$           23,209

744

35

%

.4

%

-

-

1%

1%

98

%

Second lien

337

23,003

729

82

32.5

-

-

-

-

100

Total home equity loans and lines

$            353

23,013

729

80

31.0

-

-

-

-

100

Nonaccrual loans

First lien

$                 1

$           24,247

729

33

%

-

-

-

-

-

100

%

Second lien

12

24,712

702

82

35.1

%

-

-

-

-

100

Total home equity nonaccrual loans

$              13

24,685

703

80

33.0

-

-

-

-

100

Exit Portfolio -

Home Equity

Third quarter net charge-offs

$                 2

-

-

-

-

100

%

Net loan charge-offs to average loans

2.18

%

Vintage (% of Loans)

Loan

Balances

Average Loan

Size ($)

Average

FICO

Average

LTV

(a)

% of Loans

LTV>90%

2012 and

later

2011

2010

2009

2008 and

prior

Home equity loans and lines

First lien

$             5,932

$           67,691

765

67

%

.6  

%

40

%

6%

4

%

4

%

46%

Second lien

4,353

47,569

760

76

3.2

25

6

4

4

61

Total home equity loans and lines

$           10,285

57,525

763

71

1.8

33

6

4

4

53

Nonaccrual loans

First lien

$                 108

$           58,708

713

73

%

.4%

2

%

3%

3

%

5

%

87%

Second lien

90

48,922

711

78

2.0

-

2

2

4

92

Total home equity nonaccrual loans

$                 198

53,794

712

75

1.1

1

2

3

5

89

Community Bank -

Home Equity

Third quarter net charge-offs

$                   12

-

3%

-

4

%

93%

Net loan charge-offs to average loans

.46

%

(a) 

Average LTVs are at origination. Current average LTVs for Community Bank total home equity loans and lines is approximately 74%,

which compares to 75% at the end of the second quarter 2013.

Community Bank –

Home Equity

Exit Portfolio –

Home Equity

$ in millions, except average loan size

Home Equity Loans –

9/30/13

$ in millions, except average loan size

22

Balance Outstanding

Change

Net Loan Charge-offs

Balance on

Nonperforming Status

9-30-13

6-30-13

9-30-13 vs.           

6-30-13

3Q13

(c)

2Q13

(c)

9-30-13

6-30-13

Residential

properties

–

homebuilder

$          26

$          26

-

-

$         1

$           8

$         8

Marine and RV floor plan

25

28

$            (3)

-

-

6

7

Commercial lease financing

(a)

796

931

(135)

$        (2)

(2)

1

1

Total commercial loans

847

985

(138)

(2)

(1)

15

16

Home equity –

Other

353

375

(22)

2

5

14

16

Marine

1,083

1,160

(77)

1

5

25

31

RV and other consumer

71

69

2

-

1

2

-

Total consumer loans

1,507

1,604

(97)

3

11

41

47

Total exit loans in loan portfolio

$     2,354

$     2,589

$        (235)

$         1

$       10

$         56

$        63

Discontinued

operations

–

education

lending

business (not included in exit loans above)

(b)

$    4,738

$     4,992

$        (254)

$         9

$         7

$         23

$        19

$ in millions

(a)

Includes (1) the business aviation, commercial vehicle, office products, construction and industrial leases; (2) Canadian lease financing portfolios;

and (3) all remaining balances related to lease in, lease out; sale in, lease out; service contract leases; and qualified technological equipment leases

(b)

Includes loans in Key’s consolidated education loan securitization trusts

(c)

Credit amounts indicate recoveries exceeded charge-offs

$ in millions

Exit Loan Portfolio

Exit Loan Portfolio

23

Three months ended

9-30-13

6-30-13

9-30-12

Tangible common equity to  tangible assets at period end

Key shareholders’

equity (GAAP)

$

10,206

$

10,229

$

10,251

Less:

Intangible assets

(a)

1,017

1,021

1,031

Preferred Stock, Series A

(b)

282

282

291

Tangible common equity (non-GAAP) 

$

8,907

$

8,926

$

8,929

Total assets (GAAP)

$

90,708

$

90,639

$

86,950

Less:

Intangible assets

(a)

1,017

1,021

1,031

Tangible assets (non-GAAP)

$

89,691

$

89,618

$

85,919

Tangible common equity to tangible assets ratio (non-GAAP)

9.93

%

9.96

%

10.39

%

Tier 1 common equity at period end

Key shareholders' equity (GAAP)

$

10,206

$

10,229

$

10,251

Qualifying capital securities

340

339

339

Less:

Goodwill

979

979

979

Accumulated other comprehensive income (loss)

(c)

(409)

(359)

(109)

Other assets

(d)

96

101

121

Total Tier 1 capital (regulatory)

9,880

9,847

9,599

Less:

Qualifying capital securities

340

339

339

Preferred Stock, Series A

(b)

282

282

291

Total Tier 1 common equity (non-GAAP) 

$

9,258

$

9,226

$

8,969

Net risk-weighted assets (regulatory)

(d)

$

82,913

$

82,528

$

79,363

Tier 1 common equity ratio (non-GAAP)

11.17

%

11.18

%

11.30

%

Three months ended

Nine months ended

9-30-13

6-30-13

9-30-12

9-30-13

9-30-12

Pre-provision net revenue

Net interest income (GAAP)

$

578

$

581

$

572

$

1,742

$

1,663

Plus:

Taxable-equivalent adjustment

6

5

6

17

18

Noninterest income (GAAP)

459

429

518

1,313

1,417

Less:

Noninterest expense (GAAP)

716

711

712

2,108

2,084

Pre-provision net revenue from continuing operations (non-GAAP)

$

327

$

304

$

384

$

964

$

1,014

Pre-provision net revenue from continuing operations (non-GAAP)

$

964

$

1,014

Less:

Gains from redemption of trust preferred securities

-

54

Less:

Net gains from the early termination of leveraged leases

15

61

Adjusted pre-provision net revenue from continuing operations (non-GAAP)

$

949

$

899

GAAP to Non-GAAP Reconciliation

$ in millions

(a)

Three months ended September 30, 2013, June 30, 2013, and September 30, 2012 exclude $99 million, $107 million, and $130 million,

respectively, of period end purchased credit card receivable intangible assets

(b)

Net of capital surplus for the three months ended September 30, 2013 and June 30, 2013

(c)

Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities), net gains

or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance for defined benefit and other

postretirement plans

(d)

Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed intangible assets (excluding goodwill) and deductible

portions of nonfinancial equity investments.  There were no disallowed deferred tax assets at 9-30-13, 6-30-13, and 9-30-12

24

Three months ended

9-30-13

6-30-13

9-30-12

Average tangible common equity

Average Key shareholders' equity (GAAP)

$

10,237

$

10,314

$

10,222

Less:

Intangible assets (average)

(a)

1,019

1,023

1,026

Preferred Stock, Series A (average)

291

291

291

Average tangible common equity (non-GAAP)

$

8,927

$

9,000

$

8,905

Return on average tangible common equity from continuing operations

Net

income

(loss)

from

continuing

operations

attributable

to

Key

common

shareholders (GAAP)

$

229

$

193

$

211

Average tangible common equity (non-GAAP)

8,927

9,000

8,905

Return on average tangible common equity from continuing operations (non-

GAAP)

10.18

%

8.60

%

9.43

%

Return on average tangible common equity consolidated

Net income (loss) attributable to Key common shareholders (GAAP)

$

266

$

198

$

214

Average tangible common equity (non-GAAP)

8,927

9,000

8,905

Return on average tangible common equity consolidated (non-GAAP)

11.82

%

8.82

%

9.56

%

Three months ended

Nine

months

ended

Twelve months ended

Cash efficiency ratio

9-30-13

6-30-13

9-30-12

9-30-13

12-31-12

12-31-11

Noninterest expense (GAAP)

$

716

$

711

$

712

$

2,108

$

2,818

$

2,684

Less:

Intangible asset amortization on credit cards (GAAP)

8

7

6

23

14

-

Other intangible asset amortization (GAAP)

4

3

3

11

9

4

Adjusted noninterest expense (non-GAAP)

$

704

$

701

$

703

$

2,074

$

2,795

$

2,680

Net interest income (GAAP)

$

578

$

581

$

572

$

1,742

$

2,264

$

2,267

Plus:

Taxable-equivalent adjustment

6

5

6

17

24

25

Noninterest income (GAAP)

459

429

518

1,313

1,856

1,688

Total taxable-equivalent revenue (non-GAAP)

$

1,043

$

1,015

$

1,096

$

3,072

$

4,144

$

3,980

Cash efficiency ratio (non-GAAP)

67.5

%

69.1

%

64.1

%

67.5

%

67.4

%

67.3

%

Three months ended

Nine

months

ended

Twelve months ended

9-30-13

6-30-13

9-30-12

9-30-13

12-31-12

12-31-11

Adjusted cash efficiency ratio

Adjusted noninterest expense (non-GAAP)

$

704

$

701

$

703

$

2,074

$

2,795

$

2,680

Less:

Efficiency initiative and pension settlement charges (non-GAAP)

41

37

9

93

25

-

Net adjusted noninterest expense (non-GAAP)

$

663

$

664

$

694

$

1,981

$

2,770

$

2,680

Total taxable-equivalent revenue (non-GAAP)

$

1,043

$

1,015

$

1,096

$

3,072

$

4,144

$

3,980

Adjusted cash efficiency ratio (non-GAAP)

63.6

%

65.4

%

63.3

%

64.5

%

66.8

%

67.3

%

GAAP to Non-GAAP Reconciliation (continued)

$ in millions

(a)

Three months ended September 30, 2013, June 30, 2013, and September 30, 2012  exclude $103 million, $110 million and $86 million,

respectively,

of

average

ending

purchased

credit

card

receivable

intangible

assets

25

Tier 1 Common Equity Under the Regulatory Capital Rules,

Incorporating Basel III Guidance (estimated)

(a)

KeyCorp & Subsidiaries

$ in billions

Quarter ended

Sept. 30, 2013

Tier 1 common equity under current regulatory rules

$                    9.3

Adjustments from current regulatory rules to the Regulatory Capital Rules:

Deferred tax assets and other

(b)

(.1)

Tier 1 common equity anticipated under the Regulatory Capital Rules

(c)

$                    9.1  

Total risk-weighted assets under current regulatory rules

$                  82.9

Adjustments from current regulatory rules to the Regulatory Capital Rules:

Loan commitments <1 year

.5

Past Due Loans

.2

Mortgage servicing assets

(d)

.6

Deferred tax assets

(d)

.2

Other

1.5

Total risk-weighted assets anticipated under the Regulatory Capital Rules

$                  85.9

Tier 1 common equity ratio under the Regulatory Capital Rules

10.6

%

(a)

Tier

1

common

equity

is

a

non-generally

accepted

accounting

principle

(GAAP)

financial

measure

that

is

used

by

investors,

analysis

and

bank

regulatory agencies to assess the capital position of financial services companies; management reviews Tier 1 common equity along with other

measures of capital as part of its financial analyses

(b)

Includes the deferred tax asset subject to future taxable income

for realization, primarily tax credit carryforwards

(c)

The

anticipated

amount

of

regulatory

capital

and

risk-weighted

assets

is

based

upon

the

federal

banking

agencies’

Regulatory

Capital

Rules

(as

fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital

Rules under the “standardized approach”

(d)

Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250%

Table may not foot due to rounding

26