KeyCorp (KEY) 8-K Keycorp Reports First Quarter 2014

KeyCorp

First Quarter 2014 Earnings Review

April 17, 2014

Beth E. Mooney

Chairman and

Chief Executive Officer

Don Kimble

Chief Financial Officer

Exhibit 99.2

2

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) deterioration of commercial real estate market fundamentals; (2) declining asset prices; (3)

adverse changes in credit quality trends; (4) changes in local, regional and international business, economic or political conditions; (5) the extensive

and increasing regulation of the U.S. financial services industry; (6) increasing capital and liquidity standards under applicable regulatory rules; (7)

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; (8) our ability to receive dividends from our subsidiary, KeyBank; (9) downgrades in our credit ratings or those

of

KeyBank;

(10)

operational

or

risk

management

failures

by

us

or

critical

third-parties;

(11)

breaches

of

security

or

failures

of

our

technology

systems

due

to

technological

or

other

factors

and

cybersecurity

threats;

(12)

adverse

judicial

proceedings;

(13)

the

occurrence

of

natural

or

man-made

disasters or conflicts or terrorist attacks; (14) a reversal of the U.S. economic recovery due to economic, political or other shocks; (15) our ability to

anticipate interest rate changes and manage interest rate risk; (16) deterioration of economic conditions in the geographic regions where we operate;

(17)

the

soundness

of

other

financial

institutions;

(18)

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; (19) our ability to timely and effectively implement our

strategic initiatives; (20) increased competitive pressure due to industry consolidation; (21) unanticipated adverse effects of acquisitions and

dispositions of assets or businesses; and (22) our ability to develop and effectively use the quantitative models we rely upon in our business planning.

We provide greater detail regarding these factors in our 2013 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,”

and

“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.

3

Total average loans up 4% from prior year, driven by CF&A up 9%

Continued investment in fee-based businesses; noninterest income up 2%

from prior year

Disciplined expense management; expenses down 7% from 4Q13 and 3%

from prior year

Focused on continued improvement in productivity and efficiency

Net loan charge-offs improved with benefit from strong recoveries

NPAs down 33% compared to prior year

Strong level of reserves representing coverage of nearly 2x NPLs

Strong Risk

Management

Completed 2013 capital plan

–

Common share repurchases of $141 million in 1Q14

No objection from Federal Reserve on 2014 capital plan

–

Common share repurchases of up to $542 million and, subject to Board

approval, an 18% increase in the quarterly common share dividend

–

Total payout estimated to be among the highest in peer group for

second consecutive year

Positive

Operating

Leverage

Investor Highlights –

1Q14

Execution of strategy and differentiated business model driving results

Disciplined

Capital

Management

Note: Payout ratio calculations based upon 2013 and 2014 CCAR submissions and generally available industry data

Driving Growth and Efficiency

First Quarter 2014 Actions

Leadership

Investments

Strategic

Initiatives

Launched purchase and prepaid cards

Continued development of online and mobile

Improved sales productivity

Announced exit of international leasing business

4

Realigned leadership to accelerate momentum

Community Bank

Commercial payments

Financial Review

5

6

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)

3-31-14 ratios are estimated

(e)

Non-GAAP measure: see Appendix for reconciliation

Metrics

1Q14

4Q13

3Q13

2Q13

1Q13

EPS –

assuming dilution

$  .26

$  .26

$  .25

$  .21

$  .21

Cash efficiency ratio

(e)

64.9

%

67.4

%

67.5

%

69.1

%

66.0

%

Net interest margin (TE)

3.00

3.01

3.11

3.13

3.24

Return on average total assets

1.13

1.08

1.12

.95

.99

Total loans and leases

4

%

3

%

5

%

7

%

6

%

CF&A loans

9

8

11

14

16  

Deposits (excl. foreign deposits)

4

8

5

8

7

Tier 1 common equity

(d), (e)

11.2

%

11.2

%

11.2

%

11.2

%

11.4

%

Tier 1 risk-based capital

(d)

12.0

12.0

11.9

11.9

12.2

Tangible common equity to tangible assets

(e)

10.1

9.8

9.9

10.0

10.2

NCOs to average loans

.15

%

.27

%

.28

%

.34

%

.38

%

NPLs to EOP portfolio loans

.81

.93

1.01

1.23

1.24

Allowance for loan losses to EOP loans

1.50

1.56

1.62

1.65

1.70

Balance

Sheet

Growth

(a),

(b)

Capital

(c)

Asset

Quality

(a)

Financial

Performance

(a)

7

Solid loan growth: average total loans up 4% from

prior year

–

Driven by 9% increase in CF&A

Period-end loans up 2% from 12/31/13

Total commitments up from 4Q13 with slight

increase in line utilization

High quality new loan originations: consistent with

moderate risk profile

Loan Growth

$ in billions

Highlights

Average Commercial, Financial & Agricultural Loans

Average Loans

Exit Portfolios

(a)

Home Equity & Other

Total Commercial

$ in billions

$54.7

$52.6

(a)

Growth in exit portfolio from 4Q13 reflects movement of international leasing business

$23.3

$25.4

$0.0

$7.0

$14.0

$21.0

$28.0

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

$0.0

$15.0

$30.0

$45.0

$60.0

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

8

Improving Deposit Mix

Highlights

Funding Cost

Overall funding cost continues to improve

Transaction deposit balances up 6% from 1Q13

Deposits down from prior quarter primarily due to

expected reduction in commercial mortgage

servicing escrow balances

Total CD maturities and average cost

–

2014 Q2: $1.7 billion at .99%

–

2014 Q3: $1.2 billion at 1.39%

–

2014 Q4: $.7 billion at .79%

–

2015 and beyond: $2.9 billion at 1.37%

Average

Deposits

(a)

$ in billions

Note: Transaction deposits include noninterest-bearing, and NOW and MMDA

Cost of total deposits

(a)

Interest-bearing liability cost

CDs and other time deposits

Savings

Noninterest-bearing

NOW and MMDA

$65.6

$63.2

(a)

Excludes deposits in foreign office

.29%

.20%

.70%

.54%

.00%

.25%

.50%

.75%

1.00%

1.25%

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

9

Net Interest Income and Margin

TE = Taxable equivalent

Continuing Operations

Highlights

Net Interest Income (TE) & Net Interest Margin (TE) Trend

Net interest income down from prior quarter, due to:

–

Competitive environment and asset repricing

–

Fewer days in the quarter

–

Lower loan fees

Maintaining moderate asset sensitive position

–

Naturally asset sensitive balance sheet flows:

approximately 70% of loans variable rate

–

High quality investment portfolio with average

life of 3.6 years

–

Flexibility to quickly adjust interest rate risk

position

NIM Change (bps):

vs. 4Q13

Earning asset mix  / lower levels of liquidity

.06

Loan yield

(.05)

Loan fees

(.01)

Deposit balances and mix

(.01)

Total Change

(.01)

Net interest income (TE)

NIM (TE)

$ in millions

$620

$580

$540

$500

4.00%

3.50%

3.00%

2.50%

2.00%

$589

$569

3.24%

3.00%

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

10

Noninterest Income

TE = Taxable equivalent

Continuing Operations

Highlights

Noninterest Income

Noninterest income up 2% from prior year, reflecting

investments and execution of business model

–

Investment banking & debt placement (+6%)

–

Cards & payments (+3%)

–

Mortgage servicing (+88%, due to acquisition)

Change from prior quarter (down 4%) reflects:

–

Higher commercial mortgage special servicing   

income in 4Q13

–

Seasonal decline in corporate-owned life insurance

1Q14

Noninterest Income Diversity

$ in millions

(a)

Other includes corporate-owned life insurance, principal investing, etc.

Leveraged lease termination gains

TruPS gains

$435

$425

(a)

$525

$450

$375

$300

$225

$150

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

15%

3%

19%

23%

7%

10%

9%

14%

Trust & Investment Services

Investment Banking & Debt Placement

Deposit Service Charges

Cards & Payments

Corporate Services

Mortgage Fees

Operating Lease Income

Other

11

Focused Expense Management

Noninterest Expense

$ in millions

Highlights

$662

Noninterest Expense Outlook

(a)

Non-GAAP measure: see Appendix for reconciliation

(b)

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

$681

$2.8 B

Cash Efficiency Ratio

(a)

(b)

Expenses down 3% from prior year and 7% from

prior quarter

Achieved cash efficiency ratio target of 60% -

65%

Focused on continued improvement in efficiency

and driving further into targeted range

Y-o-Y:

low to

mid-

single

digit %

decline

FY13 Reported

FY14 Outlook

Efficiency charges:

Pension charges:

$15

$37

$16

$22

$10

$2

$25

Efficiency and

pension charges,

as a % of revenue:

.8%

1.5%

1.5%

3.6%

3.9%

2.3%

1.0%

Cash efficiency ratio,

excluding efficiency and

pension charges

60%

65%

70%

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

$400

$500

$600

$700

$800

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

Focused Expense Management

$2.82 B

$117 MM

$2.70 B

Continued cost savings enable investments and offset normal expense growth

(4) % –

(6) %

1 % –

2.5 %

1 % -

2%

(a)

(a)

Operating cost increase includes inflationary adjustments, annual merit increases, etc.

2 % –

2.5 %

12

Note: Percentage ranges based upon 2014 expense plans and calculated from 2013 reported NIE

Low to mid-

single digit

decline year-

over-year

2013 Reported

NIE

2013 Efficiency

and Pension

Charges

2013 NIE Excl.

Charges

Expense

Savings

Operating Cost

Increase

Investments

2014 NIE

Outlook Excl.

Charges

2014 Efficiency

Charges

2014 NIE

Outlook

Improving Efficiency

Cash Efficiency Ratio

(a)

Current target:

60% -

65%

Driving productivity and continuous improvement

13

Rising interest rates present an opportunity for additional improvement,

with long-term goal of moving below targeted range

65%

60%

55%

50%

1Q14

Business Growth,

Net of Investments

Expense Savings

2-3 Year Outlook

(a)

Non-GAAP measure: see Appendix for reconciliation

14

Nonperforming Assets

Net Charge-offs & Provision for Loan and Lease Losses

NPLs

NPLs to period-end loans

NCOs

Provision for loan and

lease losses

NCOs to average loans

$ in millions

$ in millions

NPLs held for sale,

OREO & other NPAs

Continued Improvement in Asset Quality

Highlights

Net loan charge-offs decreased 59% from 1Q13 to

$20 MM, or 15 bps of average loans

Total gross charge-offs down 14% from prior

quarter with recoveries up 28%

1Q14 total commercial loan recoveries exceeded

gross charge-offs by $8 MM

Net charge-offs expected to continue below the

targeted range for the remainder of the year

Allowance for Loan and Lease Losses

Allowance for loan and

lease losses to NPLs

Allowance for loan

and lease losses

$ in millions

$705

$469

$49

$20

$55

$6

.38%

.15%

(1.00)%

.00%

1.00%

2.00%

3.00%

$0

$40

$80

$120

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

$893

$834

137%

186%

100%

130%

160%

190%

$600

$700

$800

$900

$1,000

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

1.24%

.81%

0.40%

0.80%

1.20%

1.60%

$0

$200

$400

$600

$800

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

15

Disciplined execution of capital plan

–

1Q14: repurchased $141 MM in common shares

No objection from Federal Reserve on 2014 capital

plan, including:

–

Share repurchase program of up to $542 MM

–

18% increase in quarterly common share

dividend (subject to Board approval)

Strong liquidity positions Key to take actions

necessary to meet LCR requirements

Tier 1 Common Equity

(a), (b)

Tangible Common Equity to Tangible Assets

(a)

Strong Capital

Highlights

Book Value per Share

(a)

Non-GAAP measure: see Appendix for reconciliations

(b)

3-31-14 ratio is estimated

12.00%

10.00%

8.00%

6.00%

12.00%

10.00%

8.00%

6.00%

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

$11.50

$11.00

$10.50

$10.00

$9.50

$9.00

$8.50

$10.89

$11.43

11.40%

11.22%

10.24%

10.14%

2014 Outlook and Expectations

Loans

•

Mid-single digit average balance growth

Net Interest

Income

•

Relatively stable from 2013, with slight downward pressure from

competitive environment

Noninterest

Income

•

Low single-digit growth compared to prior year

Expense

•

Low to mid-single digit percentage decline from 2013

Efficiency /

Productivity

•

Positive operating leverage

Asset Quality

•

Net charge-offs to average loans expected to continue below

targeted

range

of

40

–

60

bps

for

the

remainder

of

the

year

Capital

•

Disciplined execution of 2014 capital plan, including dividends and

share repurchases

16

Guidance

ranges:

relatively

stable:

+/-

2%;

low

single-digit:

<5%;

mid-single

digit:

4%

-

6%

17

Appendix

Progress on Targets for Success

Focus areas

Metrics

(a)

1Q14

4Q13

Targets

Improving balance

sheet efficiency

Loan to deposit ratio

(b)

88%

84%

90-100%

Maintaining

moderate risk

profile

NCOs to average loans

.15%

.27%

40-60 bps

Provision to average loans

.04%

.14%

Growing high

quality, diverse

revenue streams

Net interest margin

3.00%

3.01%

>3.50%

Noninterest income

to total revenue

43%

43%

>40%

Generating

positive operating

leverage

Cash efficiency ratio

(c)

65%

67%

60-65%

Strengthening

returns with

disciplined capital

management

Return on average assets

1.13%

1.08%

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 Appendix for reconciliation

18

Supporting business activities with

technology development 

Driving productivity through improved

talent management

Driving Productivity and Efficiency

Revenue Growth

Expense Savings

Community

Bank

Corporate

Bank

Improving sales productivity

Adding commercial and private bankers

in target markets

Enhancing online and mobile channels

Optimizing branch channel

Driving greater efficiencies through back

and middle-office processes

Enterprise

Adding senior bankers with industry

expertise and relationships

Strengthening commercial payment

product capabilities

Exiting international leasing originations

and reducing related cost structure

Variablizing cost through utilization of

third-party partners

Improving operational effectiveness

(Lean Six Sigma, variablizing costs)

Reducing occupancy costs

Right-sizing support activities

19

20

Average Total Investment Securities

Highlights

Average AFS securities

$ in billions

High Quality Investment Portfolio

Portfolio composed of Agency-backed CMOs:

Fannie, Freddie & GNMA

–

No private label MBS or financial paper

Average portfolio life at 3/31/14 of 3.6 years,

unchanged from 12/31/13

Securities cash flows of $.8 billion in 1Q14     

and $.9 billion in 4Q13

Currently reinvesting cash flows into GNMA

securities, for Basel III liquidity

–

27% of total portfolio was GNMA at 3/31/14

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

$15.9

2.54%

$17.1

$20.0

$15.0

$10.0

$5.0

$0.0

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2.19%

25%

20%

15%

10%

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

19%

19%

21

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

Continuing Operations

Continuing Operations

1.00%

.75%

.50%

.25%

.00%

.70%

.48%

.16%

.16%

2Q12

4Q12

3Q12

1Q13

2Q13

3Q13

4Q13

1Q14

0%

(4)%

(2)%

(6)%

(8)%

(10)%

(12)%

(14)%

(16)%

2Q12

4Q12

3Q12

1Q13

2Q13

3Q13

4Q13

1Q14

(6)%

(5)%

Metric

(b)

1Q14

4Q13

3Q13

2Q13

1Q13

Delinquencies to EOP total loans: 30-89 days

.48

%

.58

%

.54

%

.47

%

.70

%

Delinquencies to EOP total loans: 90+ days

.16

.13

.17

.15

.16

NPLs to EOP portfolio loans

.81

.93

1.01

1.23

1.24

NPAs to EOP portfolio loans + OREO + Other NPAs

.85

.97

1.08

1.30

1.34

Allowance for loan losses to period-end loans

1.50

1.56

1.62

1.65

1.70

Allowance for loan losses to NPLs

185.7

166.9

160.4

134.4

137.4

Credit Quality by Portfolio

Credit Quality

$ in millions

22

N/M = Not meaningful

Commercial, financial

and

agricultural

Commercial real estate:

Commercial Mortgage

Construction

Commercial lease financing

estate –

Home equity

Credit cards

Consumer other

–

Key

Community Bank

Consumer other

–

Exit

Portfolio

Continuing

total

Discontinued operations

Consolidated total

Period-

end loans

Average

loans

Net loan

charge-

offs

Net loan 

charge-offs

/

average loans

(%)

Nonperforming   

loans

Ending

allowance

Allowance /

Period-end

loans

(%)

Allowance / 

NPLs

(%)

3/31/14

1Q14

1Q14

1Q14

3/31/14

3/31/14

3/31/14

3/31/14

$   26,224

7,877

1,007

4,396

2,183

10,596

698

1,436

1,028

$   55,445

4,382

$   59,827

$   25,390

7,807

1,091

4,439

2,187

10,630

701

1,438

1,063

$    54,746

4,455

$    59,201

$             2

1

(12)

1

2

9

6

6

5

$           20

9

$           29

.03

.05

(4.46)

.09

.37

.34

3.47

1.69

1.91

.15

1.45

.21

$                   60

37

11

18

105

199

1

2

16

$                 449

24

$                 473

$            373

161

37

62

27

91

32

25

26

$            834

34

$            868

1.42

2.04

3.67

1.41

1.24

.86

4.58

1.74

2.53

1.50

1.41

1.50

621.67

435.14

336.36

344.44

25.71

45.73

N/M

N/M

162.50

185.75

145.83

183.72

Real

residential mortgage

(d)

(a)

(e)

(c)

(b)

(d)

(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)

3-31-14 NPL amount excludes $16 million of purchased credit impaired loans

(d)   3-31-14 allowance by portfolio is estimated. Allowance/period loans ratios for discontinued operations and consolidated Key exclude education

loans in the securitization trusts since valued at fair-market value

(e)  3-31-14

ending

loan

balances

include

purchased

loans

of

$159

million,

of

which

$16

million

were

purchased

credit

impaired

(a)  3-31-14

ending

loan

balances

include

$95

million

of

commercial

credit

card

balances;

3-31-14

average

loan

balances

include

$94

million

of

assets

from commercial credit cards

(a) Average LTVs are at origination. Current average LTVs for Community Bank total home equity loans and lines is approximately 71%,

which compares to 73% at the end of the fourth quarter 2013.

Home Equity Portfolio –

3/31/14

$ in millions, except average loan size

Home Equity Portfolio

Highlights

High quality portfolio

Community bank loans and lines: 97% of total portfolio; branch-

originated

–

58% first lien position

–

Average FICO score of 764

–

Average LTV at origination: 71%

$3.9 billion of the total portfolio are fixed rate loans that require

principal and interest payments; $6.7 billion are lines

$1.4 billion in lines outstanding (13% of the total portfolio)

come to end of draw period in the next four years

–

Proactive communication and client outreach initiated

near end of draw period

23

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

Loans and lines

First lien

$

$

766

68

%

.1  

%

44

%

6

%

4%

4

%

42

%

Second lien

4,282

47,351

761

76

3.7

29

5

4

4

58

Community Bank

$

57,826

764

71

1.8

38

5

4

4

49

Exit portfolio

315

22,524

729

80

31.1

-

-

-

-

100

Total home equity portfolio

$

Nonaccrual loans and lines

First lien

$

$

714

72

%

.4

%

3

%

4

%

3

%

5

%

85

%

Second lien

92

48,815

710

78

1.4

1

2

2

3

92

Community Bank

$

55,353

712

75

.9

2

3

2

4

89

Exit portfolio

11

23,981

703

78

27.8

-

-

-

-

100

Total home equity nonaccruals

$

First quarter net charge-offs (NCOs)

Community Bank

$

1

%

3

%

1

%

3

%

92

%

% of average loans

.28%

Exit Portfolio

$

-

-

-

-

100

% of average loans

2.50%

5,999

10,281

10,596

$

96

188

199

7

2

68,672

63,490

Balance Outstanding

Change

3-31-14

12-31-13

3-31-14 vs.           

12-31-13

3-31-14

12-31-13

Residential

properties

–

homebuilder

$          20

$          20

-

$       (1)

-

$           7          

Marine and RV floor plan

23

24

$            (1)

-

-

6

6

Commercial

lease

financing

1,381

782

599

(2)

$        (2)

3

-

Total commercial loans

1,424

826

598

(3)

(2)

16

13

Home

equity

–

Other

315

334

(19)

2

3

11

16

Marine

965

1,028

(63)

4

5

15

26

RV and other consumer

63

70

(7)

1

1

1

1

Total consumer loans

1,343

1,432

(89)

7

9

27

43

Total exit loans in loan portfolio

$     2,767

$     2,258

$        509

$         4

$         7

$         43         

Discontinued

operations

–

education

lending

business

(not

included

in

exit

loans

above)

$    4,354

$    4,497

$        (143)

$         9

$         9

$         20         

$ in millions

(a)

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

(3) European lease financing portfolios; and (4) 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

24

$4,000

$3,000

$2,000

$1,000

$0

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

$2,758

$2,767

1Q14

(c)

4Q13

(c)

7

$

56

$

25

$

(a)

(b)

Growth in exit portfolio reflects

movement of international

leasing business

Balance on

Nonperforming Status

Net Loan Charge-offs

Three months ended

3-31-14

12-31-13

9-30-13

6-30-13

3-31-13

Tangible common equity to tangible assets at period end

Key shareholders’

equity (GAAP)

$

10,403

$

10,303

$

10,206

$

10,229

$

10,340

Less:

Intangible assets

(b)

1,012

1,014

1,017

1,021

1,024

Preferred Stock, Series A

(c)

282

282

282

282

291

Tangible common equity (non-GAAP) 

$

9,109

$

9,007

$

8,907

$

8,926

$

9,025

Total assets (GAAP)

$

90,802

$

92,934

$

90,708

$

90,639

$

89,198

Less:

Intangible assets

(b)

1,012

1,014

1,017

1,021

1,024

Tangible assets (non-GAAP)

$

89,790

$

91,920

$

89,691

$

89,618

$

88,174

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

10.14

%

9.80

%

9.93

%

9.96

%

10.24

%

Tier 1 common equity at period end

Key shareholders’

equity (GAAP)

$

10,403

$

10,303

$

10,206

$

10,229

$

10,340

Qualifying capital securities

339

339

340

339

339

Less:

Goodwill

979

979

979

979

979

Accumulated other comprehensive income (loss)

(d)

(367)

(394)

(409)

(359)

(204)

Other assets

(e)

86

89

96

101

106

Total Tier 1 capital (regulatory)

10,044

9,968

9,880

9,847

9,798

Less:

Qualifying capital securities

339

339

340

339

339

Preferred Stock, Series A

(c)

282

282

282

282

291

Total Tier 1 common equity (non-GAAP) 

$

9,423

$

9,347

$

9,258

$

9,226

$

9,168

Net risk-weighted assets (regulatory)

(f)

$

83,951

$

83,328

$

82,913

$

82,528

$

80,400

Tier 1 common equity ratio (non-GAAP)

(f)

11.22

%

11.22

%

11.17

%

11.18

%

11.40

%

Pre-provision net revenue

Net interest income (GAAP)

$

563

$

583

$

578

$

581

$

583

Plus:

Taxable-equivalent adjustment

6

6

6

5

6

Noninterest income (GAAP)

435

453

459

429

425

Less:

Noninterest expense (GAAP)

662

712

716

711

681

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

$

342

$

330

$

327

$

304

$

333

GAAP to Non-GAAP Reconciliation

(a)

$ in millions

25

a)

For the reconciliation of periods prior to 2013, please see page

99 of our 2013 Form 10-K

b)

Three months ended March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013, and March 31, 2013, exclude $84 million, $92 million, $99 million,

$107 million, and $114 million of period-end purchased credit card receivable intangible assets, respectively

c)

Net of capital surplus for the three months ended March 31, 2014, December 31, 2013, September 30, 2013, and June 30, 2013

d)

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  

e)

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 March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013, and

March 31, 2013

f)

3-31-14 amount is estimated

GAAP

to

Non-GAAP

Reconciliation

(a)

(continued)

$ in millions

(a)

For

the

reconciliation

of

periods

prior

to

2013,

please

see

page

99

of

our

2013

Form

10-K

(b)

Three

months

ended

March

31,

2014,

December

31,

2013,

September

30,

2013,

June

30,

2013,

and

March

31,

2013,

exclude

$89

million,

$96

million,

$103

million,

$110 million, and $118 million of average purchased credit card receivable intangible assets, respectively

26

Three months ended

3-31-14

12-31-13

9-30-13

6-30-13

3-31-13

Average tangible common equity

Average

Key

shareholders’

equity

(GAAP)

$

10,371

$

10,272

$

10,237

$

10,314

$

10,279

Less:

Intangible assets (average)

(b)

1,013

1,016

1,019

1,023

1,027

Preferred Stock, Series A (average)

291

291

291

291

291

Average tangible common equity (non-GAAP)

$

9,067

$

8,965

$

8,927

$

9,000

$

8,961

Return on average tangible common equity from continuing operations

Net

income

(loss)

from

continuing

operations

attributable

to

Key

common

shareholders (GAAP)

$

232

$

229

$

229

$

193

$

196

Average tangible common equity (non-GAAP)

9,067

8,965

8,927

9,000

8,961

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

10.38

%

10.13

%

10.18

%

8.60

%

8.87

%

Return on average tangible common equity consolidated

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

$

236

$

224

$

266

$

198

$

199

Average tangible common equity (non-GAAP)

9,067

8,965

8,927

9,000

8,961

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

10.56

%

9.91

%

11.82

%

8.82

%

9.01

%

Cash efficiency ratio

Noninterest expense (GAAP)

$

662

$

712

$

716

$

711

$

681

Less:

Intangible asset amortization (GAAP)

10

10

12

10

12

Adjusted noninterest expense (non-GAAP)

$

652

$

702

$

704

$

701

$

669

Net interest income (GAAP)

$

563

$

583

$

578

$

581

$

583

Plus:

Taxable-equivalent adjustment

6

6

6

5

6

Noninterest income (GAAP)

435

453

459

429

425

Total taxable-equivalent revenue (non-GAAP)

$

1,004

$

1,042

$

1,043

$

1,015

$

1,014

Cash efficiency ratio (non-GAAP)

64.9

%

67.4

%

67.5

%

69.1

%

66.0

%

$ in billions

Quarter ended

Mar. 31, 2014

Tier 1 common

equity under current regulatory rules

9.4

Adjustments from

current regulatory rules to the Regulatory Capital Rules:

Deferred

tax assets and PCCRs

(b)

(.1)

Common Equity Tier 1 anticipated under the Regulatory Capital Rules

(c)

9.3

Total risk-weighted assets under current regulatory rules

84.0

Adjustments from

current regulatory rules to the Regulatory Capital Rules:

Loan

commitments <1 year

1.0

Past Due Loans

.2

Mortgage

servicing assets

(d)

.5

Deferred tax

assets

(d)

.2

Other

1.4

Total risk-weighted assets anticipated under the Regulatory Capital Rules

87.2

Common Equity Tier 1 ratio under the Regulatory Capital Rules

10.7

%

Common Equity Tier 1 Under the Regulatory Capital  

Rules (estimated)

(a)

KeyCorp & Subsidiaries

Table may not foot due to rounding

27

(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, as well as the deductible portion 

of purchased credit card receivables

(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%

$

$

$

$