KeyCorp (KEY) 8-K Keycorp Reports Second Quarter 2015

KeyCorp

Second Quarter 2015 Earnings Review

July 16, 2015

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 within the meaning of the Private Securities Litigation Reform Act of 1995. These statements

do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as “goal,” “objective,”

“plan,” “expect,” “assume,” “anticipate,” “intend,” “project,” “believe,” “estimate,” or other words of similar meaning. Forward-looking statements

provide management’s current expectations or forecasts of future events, circumstances, results or aspirations. Forward-looking statements, by their

nature, are subject to assumptions, risks, and uncertainties, many of which are outside of our control. Our actual results may differ materially from

those set forth in our forward-looking statements.

There is no assurance that any list of risks and uncertainties or risk factors is complete.  Factors that could cause actual results to differ from those

described in forward-looking statements 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) our concentrated credit exposure in commercial, financial, and agricultural loans; (5)

defaults by our loan counterparties or clients; (6) the extensive and increasing regulation of the U.S. financial services industry; (7) changes in

accounting policies, standards, and interpretations; (8) increasing capital and liquidity standards under applicable regulatory rules; (9) 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; (10) our ability to receive dividends from our subsidiary, KeyBank; (11) downgrades in our credit ratings or those of

KeyBank; (12) operational or risk management failures by us or critical third-parties; (13) breaches of security or failures of our technology systems

due to technological or other factors and cybersecurity threats; (14) negative outcomes from claims or litigation; (15) the occurrence of natural or

man-made disasters or conflicts or terrorist attacks; (16) a reversal of the U.S. economic recovery due to financial, political or other shocks; (17) our

ability to anticipate interest rate changes and manage interest rate risk; (18) deterioration of economic conditions in the geographic regions where we

operate; (19) the soundness of other financial institutions; (20) our ability to attract and retain talented executives and employees and to manage our

reputational risks; (21) our ability to timely and effectively implement our strategic initiatives; (22) increased competitive pressure due to industry

consolidation; (23) unanticipated adverse effects of strategic partnerships or acquisitions and dispositions of assets or businesses; and (24) 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 2014 Form 10-K and subsequent filings, which are available online at www.key.com/ir and

www.sec.gov. Any forward-looking statements made by us or on our behalf speak only as of the date they are made, and Key does not undertake any

obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

This

presentation

also

includes

certain

non-GAAP

financial

measures

related

to

“tangible

common

equity,”

“Common

Equity

Tier

1,”

“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 of this presentation and to page 95 of our Form 10-Q dated March 31, 2015.

3

Generated positive operating leverage

Revenue up 4% from 2Q14, benefitting from growth in fee income and loans

-

Record quarter for investment banking and debt placement: $141 MM, up 42%

-

Trust and investment services up 18%

-

Cards and payments up 9%

Expense growth from prior year reflects higher performance-based

compensation and the 3Q14 acquisition of Pacific Crest Securities

Asset quality remains strong

-

NCOs represented 25 bps of average loans in 2Q15, below targeted range

-

NPLs remain at a low level: 72 bps of period-end loans

Remaining disciplined with structure and relationship focus

Strong Risk

Management

Strong Risk

Management

Repurchased

$129

million

of

common

shares

in

2Q15

(a)

Increased quarterly common share dividend by 15% in 2Q15

Total 2015 payout estimated to be among the highest in our peer group for

third consecutive year

Positive

Operating

Leverage

Positive

Operating

Leverage

Investor Highlights –

2Q15

Disciplined

Capital

Management

Disciplined

Capital

Management

(a)

Common share repurchase amount includes repurchases to offset issuances of common shares under our employee compensation plans

4

Financial Review

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

5

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)

6-30-15 ratios are estimated

(e)

Non-GAAP measure: see Appendix for reconciliation

EPS –

assuming dilution

$ .27

$ .26

$ .28

$ .23

$  .27

Cash efficiency

ratio

(e)

65.1

%

65.1

%

64.4

%

69.7

%

65.6

%

Net interest margin (TE)

2.88

2.91

2.94

2.96

2.98

Return on average total assets

1.03

1.03

1.12

.92

1.14

Total loans and leases

4

%

5

%

5

%

5

%

6

%

CF&A

loans

10

12

12

11

13

Deposits

(excl. foreign deposits)

6

5

2

4

2

Common

Equity

Tier

1

(d),

(e)

10.7

%

10.6

%

-

-

-

Tier

1

common

equity

(e)

-

-

11.2

%

11.3

%

11.3

%

Tier

1

risk-based

capital

(d)

11.1

11.0

11.9

12.0

12.0

Tangible

common

equity

to

tangible

assets

(e)

9.9

9.9

9.9

10.3

10.2

NCOs to average loans

.25

%

.20

%

.22

%

.22

%

.22

%

NPLs to EOP portfolio loans

.72

.75

.73

.71

.71

Allowance for loan losses to EOP loans

1.37

1.37

1.38

1.43

1.46

Balance

Sheet

Growth

(a),

(b)

Balance

Sheet

Growth

(a),

(b)

Capital

(c)

Capital

(c)

Asset

Quality

(a)

Asset

Quality

(a)

Financial

Performance

(a)

Metrics

2Q15

1Q15

4Q14

3Q14

2Q14

$21.0

$23.0

$25.0

$27.0

$29.0

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

6

Average total loans up 4% in 2Q15 from prior year,

driven by CF&A up 10%

–

Average total loans up in both the

Community Bank and the Corporate Bank

Loan growth continues to be driven primarily by

CF&A loans

Total commitments continue to grow with

utilization relatively stable

Loan Growth

$ in billions

Highlights

Highlights

Average Commercial, Financial & Agricultural Loans

Average Commercial, Financial & Agricultural Loans

Average Loans

Average Loans

Exit Portfolios

Home Equity & Other

Total Commercial

$ in billions

$55.6

$26.4

$29.0

$58.0

7

Improving Deposit Mix

Highlights

Highlights

Funding Cost

Funding Cost

Deposit cost continues to improve compared to

prior year

Transaction deposit balances up 9% from 2Q14

Deposit growth of 6% from 2Q14 and 2% from

1Q15 reflects:

–

Strength in commercial mortgage servicing

–

Inflows from both commercial and  

consumer clients

Average

Deposits

(a)

Average

Deposits

(a)

$ in billions

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

(a)

Excludes deposits in foreign office

Cost of total deposits

(a)

Interest-bearing liability cost

CDs and other time deposits

Savings

Noninterest-bearing

NOW and MMDA

.18%

.15%

.52%

.52%

.00%

.20%

.40%

.60%

.80%

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

$66.5

$70.3

$579

$591

2.98%

2.88%

2.00%

2.50%

3.00%

3.50%

4.00%

$500

$540

$580

$620

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

8

Net Interest Income and Margin

TE = Taxable equivalent

Highlights

Highlights

Net Interest Income & Net Interest Margin Trend (TE)

Net Interest Income & Net Interest Margin Trend (TE)

Net interest income up $12 MM, or 2%, from the

prior year, reflecting higher earning asset balances

mitigated by lower earning asset yields

NII up $14 MM, or 2%, from the prior quarter,

primarily due to higher earning asset balances and

more days in the second quarter of 2015

Issued $1.75 B bank-level long-term debt in 2Q15,

benefitting LCR and credit ratings profile

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 3.8 years

–

Flexibility to quickly adjust interest rate risk

position

Net interest income (TE)

NIM (TE)

$ in millions; continuing operations

NIM Change (bps):

vs.  1Q15

Higher levels of liquidity

(.02)

Lower earning asset yields

(.01)

Total Change

(.03)

23%

29%

13%

9%

9%

2%

5%

10%

Trust & Investment Services

Investment Banking & Debt

Placement

Deposit Service Charges

Cards & Payments

Corporate Services

Mortgage Fees

Operating Lease Income

Other

9

Noninterest Income

Highlights

Highlights

Noninterest Income

Noninterest Income

Noninterest income up 7% from prior year, driven

by strength in core businesses:

–

Record quarter for investment banking and

debt placement fees; $141 MM, up 42%

–

Trust and investment services 18% higher

–

Cards and payments up 9%

Noninterest income up 12% from prior quarter

–

Investment banking and debt placement fees

more than doubled

–

Cards and payments income up 12%

2Q15 growth more than offset lower gains from

principal investing (compared to prior year and

prior quarter) and a $17 MM gain from the early

termination of a leveraged lease in 2Q14

2Q15 Noninterest Income Diversity

2Q15 Noninterest Income Diversity

$ in millions; continuing operations

(a)

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

$150

$225

$300

$375

$450

$525

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

Leveraged lease termination gains

$455

(a)

$488

$400

$500

$600

$700

$800

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

10

Focused Expense Management

Noninterest Expense

Noninterest Expense

$ in millions

Highlights

Highlights

$687

2Q15 noninterest expense up 3% from prior year,

primarily attributed to:

–

Performance-based compensation

–

Costs associated with the 3Q14 acquisition of

Pacific Crest

2Q15 included $10 MM of costs associated with

continuous improvement and efficiency efforts

Expense growth of 6% from 1Q15 driven by:

–

Performance-based compensation

–

Seasonal trends

•

Annual merit increases

•

Increased day count

•

Higher marketing spend

•

Lower employee benefits expense

–

Business services and professional fees

(a)

Non-GAAP measure: see Appendix for reconciliation

(b)

3Q12 excludes one-time gains of $54 million related to the redemption of trust preferred securities

Cash Efficiency Ratio

(a), (b)

Cash Efficiency Ratio

(a), (b)

Cash efficiency ratio, excl. costs for continuous improvement efforts

$711

$30

$36

$12

$41

.22%

.25%

.00%

.20%

.40%

.60%

$0

$10

$20

$30

$40

$50

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

.71%

.72%

0.40%

0.80%

1.20%

1.60%

$0

$200

$400

$600

$800

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

11

Nonperforming Assets

Nonperforming Assets

Net Charge-offs & Provision for Credit Losses

Net Charge-offs & Provision for Credit Losses

NPLs

NPLs to period-end loans

NCOs

Provision for credit

losses

NCOs to average loans

$ in millions

$ in millions

NPLs held for sale,

OREO & other NPAs

Strong Asset Quality

Highlights

Highlights

Net loan charge-offs remain below targeted range,

at 25 basis points of average loans

Nonperforming loans represented 72 basis points

of period-end loans

Allowance for loan and lease losses represented

1.37% of period-end loans: 190% coverage of

nonperforming loans

Allowance for Loan and Lease Losses

Allowance for Loan and Lease Losses

Allowance for loan and

lease losses to NPLs

Allowance for loan

and lease losses

$ in millions

$814

$796

206%

190%

110%

135%

160%

185%

210%

$600

$700

$800

$900

$1,000

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

$410

$440

12

Disciplined capital management

–

Increased quarterly common share

dividend by 15%

–

Repurchased $129 MM of common shares

in 2Q15

Tier

1

Common

Equity

(a)

Tier

1

Common

Equity

(a)

Tangible Common Equity to Tangible Assets

(a)

Tangible Common Equity to Tangible Assets

(a)

Strong Capital

Highlights

Highlights

Book Value per Share

Book Value per Share

Note: Common share repurchase amounts include repurchases to offset issuances of common shares under our employee compensation plans

(a)

Non-GAAP measure: see Appendix for reconciliations

(b)

6-30-15 ratio is estimated

(c)

The Regulatory Capital Rules, effective January 1, 2015 for Key, introduced a new capital measure, “Common Equity Tier 1”

$11.65

$12.21

$9.00

$10.00

$11.00

$12.00

$13.00

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

11.25%

10.69%

6.00%

8.00%

10.00%

12.00%

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

10.15%

9.86%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

Common Equity

Tier 1

(a), (b), (c)

Common Equity

Tier 1

(a), (b), (c)

Outlook and Expectations

Average Loans

•

Mid-single digit growth vs. FY 2014

Net Interest Income

•

Up low single-digits

without the benefit of higher rates

•

NIM: down from FY 2014, reflecting continued elevated levels of liquidity; relatively

stable with 2Q15 reported level

Noninterest

Income

•

Mid-single digit growth compared to 2014

Expense

•

Relatively stable with 2014

Efficiency / Productivity

•

Positive operating leverage

Asset Quality

•

Net

charge-offs

to

average

loans

below

targeted

range

of

40

–

60

bps 

•

Provision expected to approximate net charge-offs

Capital

•

Disciplined management of capital including dividends and share repurchases

13

Guidance

ranges:

relatively

stable:

+/-

2%;

low

single-digit:

<5%;

mid-single

digit:

4%

-

6%;

low

double-digit:

10%

-

13%

FY 2015

FY 2015

14

Appendix

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

Progress on Targets for Success

(a) 

Continuing operations, unless otherwise noted

(b)

Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits (excluding deposits in foreign office)

(c)

Excludes intangible asset amortization; non-GAAP measure: see Appendix for reconciliation

15

Balance Sheet

Efficiency

Balance Sheet

Efficiency

Moderate Risk

Profile

Moderate Risk

Profile

High Quality,

Diverse

Revenue Streams

High Quality,

Diverse

Revenue Streams

Positive

Operating

Leverage

Positive

Operating

Leverage

Disciplined

Capital

Management

Disciplined

Capital

Management

Metrics

(a)

2Q15

1Q15

Targets

Loan

to

deposit

ratio

(b)

Loan

to

deposit

ratio

(b)

NCOs to average loans

NCOs to average loans

Provision for credit losses          

to average loans

Provision for credit losses          

to average loans

Net interest margin

Net interest margin

Noninterest income to total revenue

Noninterest income to total revenue

Cash

efficiency

ratio

(c)

Cash

efficiency

ratio

(c)

Return on average assets

Return on average assets

87%

87%

.25%

.20%

65.1%

65.1%

1.03%

1.03%

.28%

.25%

2.88%

2.91%

45%

43%

90% -100%

40 -

60 bps

LT: >3.50%

LT: <60%

1.00% -1.25%

>40%

50%

55%

60%

65%

70%

2Q15

Business Growth,

Net of Investments

Expense Savings

Rising Rate Benefit

Long-term Target: <60%

16

Efficiency Ratio: Driving to 60% and Below

Business plans and macroeconomic environment provide path to an efficiency    

ratio below 60%

Cash Efficiency Ratio

(a)

Outlook

Cash Efficiency Ratio

(a)

Outlook

(a)

Non-GAAP measure: see Appendix for reconciliation

(b)

Assumes implied forward curve

2-3 year outlook: 60%

Long-term, committed to moving below 60%

(b)

Oil & Gas

Longstanding history, expertise and relationships

17

Strong Portfolio Characteristics

Strong Portfolio Characteristics

>10 years of experience in energy lending with >20

specialists dedicated to oil & gas

Focused on middle market companies, aligned with our

relationship strategy

Portfolio regularly stress tested

Primarily secured by proven reserves

Total Loans Outstanding, 6/30/15

>40% of clients’ 2015 production is hedged

Relationships contribute to noninterest income; ~5% of

FY14 investment banking and debt placement fees

Net charge-offs lower than overall portfolio

Allowance reflects estimated impact of current oil prices

Oil & Gas: 2%

Other: 98%

Oil & Gas Outstanding Balances, 6/30/15

Oilfield Services

Upstream: 60%,

$0.6 B

Midstream: 30%,   

$0.3 B

Downstream: 10%,

$0.1 B

$0.1 B

Oil & Gas

$1.0 B

18

Average Total Investment Securities

Average Total Investment Securities

Highlights

Highlights

Average AFS securities

$ in billions

High Quality Investment Portfolio

Portfolio composed primarily of GNMA and GSE-

backed MBS and CMOs

Continue to position portfolio for upcoming

regulatory liquidity requirements:

–

2015 average balance growth reflects

actions taken to increase liquidity reserves

–

Growth and reinvestment of portfolio cash

flows have been predominantly in GNMA

securities (~47% of total portfolio was

GNMA at 6/30/15)

Securities cash flows of $1.1 billion in 2Q15, up

slightly from $1 billion in 1Q15

Average portfolio life at 6/30/15 of 3.8 years,

compared to 3.5 years at 3/31/15

Securities to Total Assets

(b)

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

2.10%

.00%

1.00%

2.00%

3.00%

4.00%

5.00%

$0.0

$5.0

$10.0

$15.0

$20.0

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

19%

20%

10%

14%

18%

22%

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

$17.4

2.17%

$18.3

Interest Rate Risk Management

Naturally Asset Sensitive Balance Sheet

Naturally Asset Sensitive Balance Sheet

Actively Managing Rate Risk

Actively Managing Rate Risk

•

High quality

•

Fixed rate agency MBS and CMOs

•

Average maturity: 3.8 years

•

GNMAs total 47% of total portfolio

•

Reinvesting cash flows into GNMAs

$11

$17

$7

$7

Size of swap

portfolio

Modeled asset

sensitivity

~3%

0%

~7%

$7

Flexibility to Adjust Rate

Sensitivity

with

Swaps

(c)

Loan Portfolio

Variable:

70%

Fixed:

30%

Deposits

(a)

Flexibility to adjust rate sensitivity for changes in balance

sheet growth/mix as well as interest rate outlook

Debt 

hedges

A/LM

hedges

Investment Portfolio

Noninterest-

bearing: 38%

Interest-

bearing, non-

time: 55%

CDs:

7%

•

Maintaining

moderate

asset

sensitive

position

of

~3%

(b)

-

Assumes 200 basis point increase in short-term rates over a

12-month period

•

Utilize swaps for debt hedging and asset liability management

-

Fairly even pace of A/LM swap maturities

6/30/15

Swaps

($ in B)

6/30/15

Notional Amt.

Wtd. Avg.

Maturity (Yrs.)

Receive

Rate

Pay

Rate

A/L

Management

$   10.5

2.6

1.0%

.2%

Debt

6.8

3.5

2.1

.2

$  17.3

1.5%

.2%

2Q15

$18 B

AFS: $13 B

HTM: $5 B

Balance sheet has relatively short duration and is

more impacted by the short-end of the curve

$17 B

19

Actively managing a naturally asset sensitive balance sheet

Note: Loan, deposit and investment portfolio balances reflect quarterly average balances

(a)

Excludes deposits in foreign office

(b)

Preliminary estimate

(c)

May not foot due to rounding

2Q15

2Q15

20

Asset Quality Trends

Criticized Outstandings

(a)

to Period-end Total Loans

Criticized Outstandings

(a)

to Period-end Total Loans

Delinquencies to Period-end Total Loans

Delinquencies to Period-end Total Loans

(a)

Loan and lease outstandings

(b)

From continuing operations

30 –

89 days delinquent

90+ days delinquent

.49%

.31%

.15%

.11%

.00%

.25%

.50%

.75%

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

2.7%

3.1%

0.0%

1.0%

2.0%

3.0%

4.0%

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

Metric

(b)

2Q15

1Q15

4Q14

3Q14

2Q14

Delinquencies to

EOP total loans: 30-89 days

.31

%

.37

%

.41

%

.61

%

.49

%

Delinquencies to

EOP total loans: 90+ days

.11

.19

.17

.13

.15

NPLs to EOP portfolio loans

.72

.75

.73

.71

.71

NPAs to EOP portfolio loans + OREO + Other NPAs

.75

.79

.76

.74

.74

Allowance for loan losses to period-end loans

1.37

1.37

1.38

1.43

1.46

Allowance for loan losses to NPLs

189.8

181.7

190.0

200.5

205.6

Continuing operations

Continuing operations

Period-

end loans

Average

loans

Net loan

charge-

offs

Net loan 

charge-offs

(b)

/

average loans

(%)

Nonperforming  

loans

(c)

Ending

allowance

(d)

Allowance /

period-end

loans

(d)

(%)

Allowance

/

NPLs

(%)

6/30/15

2Q15

2Q15

2Q15

6/30/15

6/30/15

6/30/15

6/30/15

Commercial,

financial

and

agricultural

$   29,285

$   29,017

$            15

.21%

$                 100

$             418

1.43

418.00%

Commercial real estate:

Commercial Mortgage

7,874

7,981

-

-

26

144

1.83

553.85

Construction

1,254

1,199

(1)

(.33)

12

31

2.47

258.33

Commercial lease financing

4,010

3,981

-

-

18

53

1.32

294.44

Real

estate –

residential mortgage

2,252

2,237

-

-

67

20

.89

29.85

Home equity

10,532

10,510

8

.31

184

61

.58

33.15

Credit cards

753

737

7

3.81

2

31

4.12

N/M

Consumer other –

Key Community Bank

1,595

1,571

4

1.02

1

21

1.32

N/M

Consumer other

–

Exit Portfolio

709

745

3

1.62

9

17

2.40

188.89

Continuing total

(e)

$   58,264

$    57,978

$            36

.25%

$                 419

$             796

1.37

189.98%

Discontinued operations

1,962

2,168

2

.37

6

22

1.12

366.67

Consolidated total

$   60,226

$    60,146

$            38

.25%

$                 425

$             818

1.36

192.47%

Credit Quality by Portfolio

Credit Quality by Portfolio

Credit Quality

$ in millions

21

(a) 

6-30-15 ending loan balance includes $89 million of commercial credit card balances; 6-30-15 average loan balance includes $88 million of assets

from commercial credit cards

(b)

Net loan charge-off amounts are annualized in calculation

(c)

6-30-15 NPL amount excludes $12 million of purchased credit impaired loans

(d)

6-30-15 allowance by portfolio is estimated

(e)

6-30-15 ending loan balance includes purchased loans of $125 million, of which $12 million were purchased credit impaired

N/M = Not meaningful

(a)

Vintage (% of Loans)

Loan

Balances

Average

Loan Size ($)

Average

FICO

Average

LTV

% of

Loans

LTV>90%

2012 and

later

2011

2010

2009

2008 and

prior

Loans and lines

First lien

$            6,207

$          64,383

770

67%

.5%

55

%

4

%

3%

3%

35

%

Second lien

4,089

51,618

765

76

3.4

37

4

3

4

52

Community Bank

$          10,296

58,741

768

71

1.6

48

4

3

3

42

Exit portfolio

236

19,156

729

80

29.0

-

-

-

-

100

Total home equity

portfolio

$          10,532

Nonaccrual loans and lines

First lien

$                102

$          65,179

723

72%

1.3%

12

%

3

%

3%

5%

77

%

Second lien

74

47,054

712

80

1.3

5

2

2

4

87

Community Bank

$              176

56,140

718

76

1.3

9

3

2

5

81

Exit portfolio

8

22,626

702

75

24.0

-

-

-

-

100

Total home equity nonaccruals

$              184

Second quarter net charge-offs (NCOs)

Community Bank

$                 7

20

%

1

%

2%

5%

72

%

% of average loans

.27

%

Exit Portfolio

$                 1

-

-

-

-

-

% of average loans

1.64

%

(a) Average LTVs are at origination; current average LTVs for Community Bank total home equity loans and lines is approximately 68%,

compared to 70% at the end of the first quarter of 2015

Home Equity Portfolio –6/30/15

Home Equity Portfolio –6/30/15

$ in millions, except average loan size

Home Equity Portfolio

Highlights

Highlights

High quality portfolio

Community bank loans and lines: 98% of total portfolio; branch-

originated

–

60% first lien position

–

Average FICO score of 768

–

Average LTV at origination: 71%

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

principal and interest payments; $6.6 billion are lines

$1.3 billion in lines outstanding (12% 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

22

(a)

Balance Outstanding

Change

Net Loan Charge-offs

Balance on

Nonperforming Status

6-30-15

3-31-15

6-30-15 vs.   

3-31-15

2Q15

1Q15

(b)

6-30-15

3-31-15

Residential properties –

homebuilder

$           6

$          6

$            -

-

$      

1

$          8  

$          8  

Marine and RV floor plan

2

6

(4)

-

-

1

5

Commercial

lease

financing

(a)

831

877

(46)

-

(1)

-

-

Total commercial loans

839

889

(50)

-

-

9

13

Home equity –

Other

236

253

(17)

$         1

-

8

9

Marine

673

730

(57)

3

2

8

9

RV and other consumer

47

50

(3)

-

1

1

1

Total consumer loans

956

1,033

(77)

4

3

17

19

Total exit loans in loan portfolio

1,795

1,922

$        (127)

$        4

$         3   

$        26

$        32

Discontinued

operations

–

education

lending

business

(not

included

in

exit

loans

above)

(c)

$    1,962

$    2,219

$        (257)

$        2

$        6

$       

6

$      

8

$2,560

$1,859

$0

$1,000

$2,000

$3,000

$4,000

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

$ in millions; average balances

(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)

Credit amounts indicate recoveries exceeded charge-offs

(c)

Excludes loans held for sale of $179 million at June 30, 2015.

$ in millions

Exit Loan Portfolio

Exit Loan Portfolio

Exit Loan Portfolio

23

Three months ended

6-30-15

3-31-15

12-31-14

9-30-14

6-30-14

Tangible common equity to tangible assets at period end

Key shareholders’ equity (GAAP)

$

10,590

$

10,603

$

10,530

$

10,486

$

10,504

Less:

Intangible assets

(a)

1,085

1,088

1,090

1,105

1,008

Preferred Stock, Series A

(b)

281

281

282

282

282

Tangible common equity (non-GAAP) 

$

9,224

$

9,234

$

9,158

$

9,099

$

9,214

Total assets (GAAP)

$

94,606

$

94,206

$

93,821

$

89,784

$

91,798

Less:

Intangible assets

(a)

1,085

1,088

1,090

1,105

1,008

Tangible assets (non-GAAP)

$

93,521

$

93,118

$

92,731

$

88,679

$

90,790

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

9.86

%

9.92

%

9.88

%

10.26

%

10.15

%

Common Equity Tier 1 at period end

Key shareholders’ equity (GAAP)

$

10,590

$

10,603

-

-

-

Less:

Preferred Stock, Series A

(b)

281

281

-

-

-

Common Equity Tier 1 capital before adjustments and deductions

10,309

10,322

-

-

-

Less:

Goodwill, net of deferred taxes

1,036

1,036

-

-

-

Intangible

assets, net of deferred taxes

33

36

-

-

-

Deferred tax assets

1

1

-

-

-

Net unrealized gains (losses) on available-for-sale securities, net of     

deferred

taxes

1

52

-

-

-

Accumulated gain (loss) on cash flow hedges, net of deferred taxes

(21)

(8)

-

-

-

Amounts recorded in accumulated other comprehensive income

(loss),

net of deferred taxes

(362)

(364)

-

-

-

Total Common Equity Tier 1 capital

(c)

$

9,621

$

9,569

-

-

-

Net risk-weighted

assets (regulatory)

(c)

$

89,995

$

89,967

-

-

-

Common Equity Tier 1 ratio (non-GAAP)

(c)

10.69

%

10.64

%

-

-

-

Tier 1 common equity at period end

Key shareholders’ equity (GAAP)

-

-

$

10,530

$

10,486

$

10,504

Qualifying capital securities

-

-

339

340

339

Less:

Goodwill

-

-

1,057

1,051

979

Accumulated other comprehensive income (loss)

(d)

-

-

(395)

(366)

(328)

Other assets

(e)

-

-

83

110

86

Total Tier 1 capital (regulatory)

-

-

10,124

10,031

10,106

Less:

Qualifying capital securities

-

-

339

340

339

Preferred Stock, Series A

(b)

-

-

282

282

282

Total Tier 1 common equity (non-GAAP) 

-

-

$

9,503

$

9,409

$

9,485

Net risk-weighted assets (regulatory)

-

-

$

85,100

$

83,547

$

84,287

Tier 1 common equity ratio (non-GAAP)

-

-

11.17

%

11.26

%

11.25

%

GAAP to Non-GAAP Reconciliation

$ in millions

24

a)

Three

months

ended

6/30/15,

3/31/15,

12/31/14,

9/30/14,

and

6/30/14

exclude

$55

million,

$61

million,

$68

million,

$72

million,

and

$79

million,

respectively,

of

period-end purchased credit card receivable intangible assets

b)

Net of capital surplus

c)

6-30-15 amount is estimated

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

December

31,

2014,

September

30,

2014,

and

June

30,

2014.

Three months ended

6-30-15

3-31-15

12-31-14

9-30-14

6-30-14

Pre-provision net revenue

Net interest income (GAAP)

$

584

$

571

$

582

$

575

$

573

Plus:

Taxable-equivalent adjustment

7

6

6

6

6

Noninterest income (GAAP)

488

437

490

417

455

Less:

Noninterest expense (GAAP)

711

669

704

706

687

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

$

368

$

345

$

374

$

292

$

343

Average tangible common equity

Average Key shareholders’ equity (GAAP)

$

10,590

$

10,570

$

10,562

$

10,473

$

10,459

Less:

Intangible assets (average)

(a)

1,086

1,089

1,096

1,037

1,010

Preferred Stock, Series A (average)

290

290

291

291

291

Average tangible common equity (non-GAAP)

$

9,214

$

9,191

$

9,175

$

9,145

$

9,158

Return on average tangible common equity from continuing operations

Net income (loss) from continuing operations attributable to Key common

shareholders (GAAP)

$

230

$

222

$

246

$

197

$

242

Average tangible common equity (non-GAAP)

9,214

9,191

9,175

9,145

9,158

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

10.01

%

9.80

%

10.64

%

8.55

%

10.60

%

Return on average tangible common equity consolidated

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

$

233

$

227

$

248

$

180

$

214

Average tangible common equity (non-GAAP)

9,214

9,191

9,175

9,145

9,158

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

10.14

%

10.02

%

10.72

%

7.81

%

9.37

%

Cash efficiency ratio

Noninterest expense (GAAP)

$

711

$

669

$

704

$

706

$

687

Less:

Intangible asset amortization (GAAP)

9

9

10

10

9

Adjusted noninterest expense (non-GAAP)

$

702

$

660

$

694

$

696

$

678

Net interest income (GAAP)

$

584

$

571

$

582

$

575

$

573

Plus:

Taxable-equivalent adjustment

7

6

6

6

6

Noninterest income (GAAP)

488

437

490

417

455

Total taxable-equivalent revenue (non-GAAP)

$

1,079

$

1,014

$

1,078

$

998

$

1,034

Cash efficiency ratio (non-GAAP)

65.1

%

65.1

%

64.4

%

69.7

%

65.6

%

GAAP to Non-GAAP Reconciliation

(continued)

$ in millions

(a)

Three months ended 6/30/15, 3/31/15, 12/31/14, 9/30/14 and 6/30/14 exclude $58 million, $64 million, $69 million, $76 million, and $82 million, respectively,  of

average purchased credit card receivable intangible assets

25

KeyCorp & Subsidiaries

$ in billions

Quarter ended

June 30, 2015

Common Equity Tier 1 under current regulatory rules

$                   9.6

Adjustments from

current regulatory rules to the Regulatory Capital Rules:

Deferred

tax assets and other assets

(b)

(.1)

Common Equity Tier 1 anticipated under the Regulatory Capital Rules

(c)

$                   9.6

Net risk-weighted assets under current regulatory rules

$                  90.0

Adjustments from

current regulatory rules to the Regulatory Capital Rules:

Mortgage

servicing assets

(d)

.5

Deferred tax

assets

(d)

-

Significant investments

(d)

-

Other assets

(e)

-

Total risk-weighted assets anticipated under the Regulatory

Capital Rules

(c)

$                 90.5

Common Equity Tier 1 under the Regulatory Capital

Rules

10.6

%

(a)

Common Equity Tier 1 capital is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and

bank regulatory agencies to assess the capital position of financial services companies.  Management reviews Common Equity Tier 1 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% under the fully implemented final rule

(e)

Under the fully implemented rule, certain deferred tax assets and intangible assets subject to the transition provision are no longer required to be

risk-weighted because they are deducted directly from capital.

Table may not foot due to rounding

26

Common Equity Tier 1 Under the Regulatory Capital Rules

(estimated)

(a)