KeyCorp Reports First Quarter 2015 Net Income Of $222 Million, Or $.26 Per Common Share

CLEVELAND, April 16, 2015 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced first quarter net income from continuing operations attributable to Key common shareholders of $222 million, or $.26 per common share, compared to $246 million, or $.28 per common share, for the fourth quarter of 2014, and $232 million, or $.26 per common share, for the first quarter of 2014.

"Our first quarter results were solid and reflect our continued focus on growing our businesses," said Chairman and Chief Executive Officer Beth Mooney. "Revenue was up from the prior year and expenses were well-managed as we generated positive operating leverage. Our asset quality continued to be strong, and we remain committed to improving productivity and efficiency."

"In the first quarter, we continued to benefit from solid loan growth, driven by our commercial businesses, as well as the traction we are gaining from investments in areas such as trust and investment services and cards and payments. While we saw growth in several of our other fee-based businesses, we experienced lower capital markets revenue in the quarter," added Mooney.

"Additionally, we were pleased to receive no objection to our 2015 capital plans. We expect to return a significant amount of our net income to our shareholders over the next five quarters, including a share repurchase program of up to $725 million and, subject to approval by our Board of Directors, an increase in the quarterly dividend," continued Mooney. "We anticipate these actions will lead to an estimated payout ratio that is among the highest in our peer group for the third consecutive year."

FIRST QUARTER 2015 FINANCIAL RESULTS, from continuing operations

Compared to First Quarter of 2014

Average loans up 5.1%, driven by a 11.5% growth in commercial, financial and agricultural loans
Average deposits up 4.9%, due to growth in noninterest-bearing deposits
Net interest income (taxable-equivalent) up $8 million, driven by higher loan balances partially offset by lower earning asset yields
Noninterest income up $2 million, reflecting increases in trust and investment services income primarily from the third quarter 2014 acquisition of Pacific Crest Securities and various other line items, partially offset by declines in investment banking and debt placement fees and operating lease income and other leasing gains
Noninterest expense up $5 million primarily due to the acquisition of Pacific Crest Securities and higher employee benefits expense
Solid asset quality, with net loan charge-offs to average loans remaining well below our targeted range of 40-60 basis points
Disciplined capital management, with the announcement of new planned capital actions including a share repurchase program of up to $725 million and, subject to approval by Key's Board of Directors, an increase of the quarterly common share dividend to $.075 per share

Compared to Fourth Quarter of 2014

Average loans up 1.7%, primarily driven by an increase in commercial, financial and agricultural loans
Average deposits declined slightly, reflecting lower certificates of deposit balances
Net interest income (taxable-equivalent) down $11 million, primarily due to fewer days in the first quarter
Noninterest income down $53 million, primarily due to lower investment banking and debt placement fees
Noninterest expense down $35 million, reflecting lower personnel and marketing expense, as well as a decline in business services and professional fees
Asset quality remains strong, with net loan charge-offs to average loans relatively flat to prior quarter and remaining well below the targeted range
Disciplined capital management, repurchasing $208 million of common shares during the first quarter of 2015 and maintaining a solid capital position with Common Equity Tier 1 of 10.82%

Selected Financial Highlights

dollars in millions, except per share data										Change 1Q15 vs.
		1Q15			4Q14			1Q14		4Q14		1Q14
Income (loss) from continuing operations attributable to Key common shareholders	$	222		$	246		$	232		(9.8)	%	(4.3)	%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution		.26			.28			.26		(7.1)		—
Return on average total assets from continuing operations		1.03	%		1.12	%		1.13	%	N/A		N/A
Common Equity Tier 1 ^(a)		10.82			N/A			N/A		N/A		N/A
Tier 1 common equity ^(a)		N/A			11.17			11.27		N/A		N/A
Book value at period end	$	12.12		$	11.91		$	11.43		1.8	%	6.0	%
Net interest margin (TE) from continuing operations		2.91	%		2.94	%		3.00	%	N/A		N/A

(a)

The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) and "Tier 1 common equity" (prior to January 1, 2015). The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the "Capital" section of this release.

TE = Taxable Equivalent, N/A = Not Applicable



INCOME STATEMENT HIGHLIGHTS

Revenue

dollars in millions								Change 1Q15 vs.
			1Q15		4Q14		1Q14	4Q14		1Q14
Net interest income (TE)		$	577	$	588	$	569	(1.9)	%	1.4	%
Noninterest income			437		490		435	(10.8)		.5
	Total revenue	$	1,014	$	1,078	$	1,004	(5.9)	%	1.0	%


TE = Taxable Equivalent

Taxable-equivalent net interest income was $577 million for the first quarter of 2015, and the net interest margin was 2.91%. These results compare to taxable-equivalent net interest income of $569 million and a net interest margin of 3.00% for the first quarter of 2014. The increase in net interest income reflects higher loan balances mitigated by lower earning asset yields, which also drove the decline in the net interest margin.

Compared to the fourth quarter of 2014, taxable-equivalent net interest income decreased by $11 million, and the net interest margin declined by three basis points. The decrease in net interest income was primarily attributable to fewer days in the first quarter of 2015. The decline in net interest margin reflects lower earning asset yields.

Noninterest Income

dollars in millions								Change 1Q15 vs.
			1Q15		4Q14		1Q14	4Q14		1Q14
Trust and investment services income		$	109	$	112	$	98	(2.7)	%	11.2	%
Investment banking and debt placement fees			68		126		84	(46.0)		(19.0)
Service charges on deposit accounts			61		64		63	(4.7)		(3.2)
Operating lease income and other leasing gains			19		15		29	26.7		(34.5)
Corporate services income			43		53		42	(18.9)		2.4
Cards and payments income			42		43		38	(2.3)		10.5
Corporate-owned life insurance income			31		38		26	(18.4)		19.2
Consumer mortgage income			3		3		2	—		50.0
Mortgage servicing fees			13		11		15	18.2		(13.3)
Net gains (losses) from principal investing			29		18		24	61.1		20.8
Other income			19		7		14	171.4		35.7
	Total noninterest income	$	437	$	490	$	435	(10.8)	%	.5	%

Key's noninterest income was $437 million for the first quarter of 2015, compared to $435 million for the year-ago quarter. Trust and investment services income increased $11 million, primarily due to the impact of the third quarter 2014 Pacific Crest Securities acquisition. Increases in net gains from principal investing, corporate-owned life insurance income, cards and payments income, and other income also contributed to the growth in the quarter. These increases were partially offset by a $16 million decline in investment banking and debt placement fees as a result of lower financial advisory fees. Additionally, operating lease income and other leasing gains declined by $10 million primarily due to the termination of a leveraged lease in the prior year.

Compared to the fourth quarter of 2014, noninterest income decreased by $53 million. First quarter results reflect seasonality and variability in several fee categories. Growth in operating lease income and other leasing gains, net gains from principal investing, and other income was more than offset by a $58 million quarter-over-quarter decline in investment banking and debt placement fees. This decline was primarily caused by lower revenue from loan syndications and financial advisory fees.

Noninterest Expense

dollars in millions								Change 1Q15 vs.
			1Q15		4Q14		1Q14	4Q14		1Q14
Personnel expense		$	389	$	409	$	388	(4.9)	%	.3	%
Nonpersonnel expense			280		295		276	(5.1)		1.4
	Total noninterest expense	$	669	$	704	$	664	(5.0)	%	.8	%

Key's noninterest expense was $669 million for the first quarter of 2015, compared to $664 million in the first quarter of last year. The increase was mainly related to the third quarter 2014 acquisition of Pacific Crest Securities and higher employee benefits costs. Partially offsetting the increase in expenses were $8 million in lower business services and professional fees, as well as continued cost savings across the organization. Additionally, expenses included $7 million in costs associated with Key's continuous improvement efforts to drive efficiency and productivity. These costs were primarily in personnel expense and were $3 million less than the year-ago quarter.

Compared to the fourth quarter of 2014, noninterest expense decreased by $35 million. The largest driver of this reduction was a $20 million decrease in personnel expense due to lower incentive compensation expense, partially offset by higher employee benefits costs. Other decreases included $8 million in marketing expense and $5 million in business services and professional fees.

BALANCE SHEET HIGHLIGHTS

In the first quarter of 2015, Key had average assets of $91.9 billion compared to $90.2 billion in the first quarter of 2014 and $91.1 billion in the fourth quarter of 2014. Compared to the first quarter of 2014, average loans grew 5.1% to $57.5 billion while average deposits grew 4.9% to $68.8 billion. In addition, Key's average total investment securities increased, with a higher percentage of Ginnie Mae securities, as Key continued to position the portfolio for upcoming regulatory liquidity requirements.

Average Loans

dollars in millions								Change 3-31-15 vs.
		3-31-15		12-31-14		3-31-14		12-31-14			3-31-14
Commercial, financial and agricultural ^(a)		$	28,321	$	27,188	$	25,390		4.2	%		11.5	%
Other commercial loans			13,304		13,357		13,337		(.4)			(.2)
Total home equity loans			10,576		10,639		10,630		(.6)			(.5)
Other consumer loans			5,311		5,357		5,389		(.9)			(1.4)
	Total loans	$	57,512	$	56,541	$	54,746		1.7	%		5.1	%


(a)	Commercial, financial and agricultural average loan balances include $87 million, $90 million, and $94 million of assets from commercial credit cards at March 31, 2015, December 31, 2014, and March 31, 2014, respectively.

Average loans were $57.5 billion for the first quarter of 2015, an increase of $2.8 billion compared to the first quarter of 2014. The loan growth occurred primarily in the commercial, financial and agricultural portfolio, which increased $2.9 billion and was broad-based across Key's commercial lines of business. Consumer loans remained relatively stable as modest increases across Key's core consumer loan portfolio were offset by run-off in Key's consumer exit portfolios.

Compared to the fourth quarter of 2014, average loans increased by $971 million, driven by commercial, financial and agricultural loans, which increased by $1.1 billion. On a period-end basis, commercial, financial and agricultural loans increased $801 million over the linked quarter driven by strong demand that carried over from the fourth quarter of 2014.

Average Deposits

dollars in millions											Change 3-31-15 vs.
		3-31-15			12-31-14			3-31-14			12-31-14			3-31-14
Non-time deposits ^(a)		$	63,606		$	63,541		$	59,197			.1	%		7.4	%
Certificates of deposit ($100,000 or more)			2,017			2,277			2,758			(11.4)			(26.9)
Other time deposits			3,217			3,306			3,679			(2.7)			(12.6)
	Total deposits	$	68,840		$	69,124		$	65,634			(.4)	%		4.9	%

Cost of total deposits ^(a)			.15	%		.15	%		.20	%		N/A			N/A


(a)	Excludes deposits in foreign office.

N/A = Not Applicable

Average deposits, excluding deposits in foreign office, totaled $68.8 billion for the first quarter of 2015, an increase of $3.2 billion compared to the year-ago quarter. Noninterest-bearing deposits increased by $3.6 billion, and NOW and money market deposit accounts increased $888 million, mostly due to the commercial mortgage servicing business. These increases were partially offset by a decline in certificates of deposit.

Compared to the fourth quarter of 2014, average deposits, excluding deposits in foreign office, decreased slightly primarily due to an expected decline in certificates of deposit.

ASSET QUALITY

dollars in millions										Change 1Q15 vs.
		1Q15			4Q14			1Q14		4Q14		1Q14
Net loan charge-offs	$	28		$	32		$	20		(12.5)	%	40.0	%
Net loan charge-offs to average total loans		.20	%		.22	%		.15	%	N/A		N/A
Nonperforming loans at period end ^(a)	$	437		$	418		$	449		4.5		(2.7)
Nonperforming assets at period end		457			436			469		4.8		(2.6)
Allowance for loan and lease losses		794			794			834		—		(4.8)
Allowance for loan and lease losses to nonperforming loans		181.7	%		190.0	%		185.7	%	N/A		N/A
Provision (credit) for loan and lease losses	$	29		$	22		$	6		31.8		383.3
Provision for credit losses		35			22			4		59.1	%	775.0	%

(a)	Loan balances exclude $12 million, $13 million, and $16 million of purchased credit impaired loans at March 31, 2015, December 31, 2014, and March 31, 2014, respectively.

N/A = Not Applicable

Key's provision for loan and lease losses was $29 million for the first quarter of 2015, compared to $22 million for the fourth quarter of 2014 and $6 million for the year-ago quarter. Key's allowance for loan and lease losses was $794 million, or 1.37% of total period-end loans, at March 31, 2015, compared to 1.38% at December 31, 2014, and 1.50% at March 31, 2014.

Net loan charge-offs for the first quarter of 2015 totaled $28 million, or .20% of average total loans. These results compare to $32 million, or .22%, for the fourth quarter of 2014, and $20 million, or .15%, for the same period last year.

At March 31, 2015, Key's nonperforming loans totaled $437 million and represented .75% of period-end portfolio loans, compared to .73% at December 31, 2014, and .81% at March 31, 2014. Nonperforming assets at March 31, 2015 totaled $457 million and represented .79% of period-end portfolio loans and OREO and other nonperforming assets, compared to .76% at December 31, 2014, and .85% at March 31, 2014.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at March 31, 2015.

Capital Ratios

	3-31-15		12-31-14		3-31-14
Common Equity Tier 1 ^{(a), (b)}	10.82	%	N/A		N/A
Tier 1 common equity ^(b)	N/A		11.17	%	11.27	%
Tier 1 risk-based capital ^(a)	11.22		11.90		12.01
Total risk based capital ^(a)	13.01		13.89		14.23
Tangible common equity to tangible assets ^(b)	9.92		9.88		10.14
Leverage ^(a)	10.90		11.26		11.30


(a)	3-31-15 ratio is estimated.

(b)	The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) and "Tier 1 common equity" (prior to January 1, 2015). The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. See below for further information on the Regulatory Capital Rules.

As shown in the preceding table, at March 31, 2015, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 10.82% and 11.22%, respectively. In addition, the tangible common equity ratio was 9.92% at March 31, 2015.

In October 2013, federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the "Regulatory Capital Rules"). While the Regulatory Capital Rules became effective January 1, 2014, the mandatory compliance date for Key as a "standardized approach" banking organization began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Key's estimated Common Equity Tier 1 as calculated under the fully phased-in Regulatory Capital Rules was 10.58% at March 31, 2015. This estimate exceeds the fully phased-in required minimum Common Equity Tier 1 and Capital Conservation Buffer of 7.00%.

Summary of Changes in Common Shares Outstanding

in thousands					Change 1Q15 vs.
		1Q15	4Q14	1Q14	4Q14		1Q14
Shares outstanding at beginning of period		859,403	868,477	890,724	(1.0)	%	(3.5)	%
Common shares repurchased		(14,087)	(9,786)	(9,845)	44.0		43.1
Shares reissued (returned) under employee benefit plans		5,571	712	3,990	682.4		39.6
Common shares exchanged for Series A Preferred Stock		33	—	—	N/M		N/M
	Shares outstanding at end of period	850,920	859,403	884,869	(1.0)	%	(3.8)	%

During the first quarter of 2015, Key completed $208 million of common share repurchases pursuant to its 2014 capital plan, including repurchases to offset issuances of common shares under employee compensation plans.

As previously reported, Key's 2015 capital plan, which received no objection from the Federal Reserve during the Comprehensive Capital Analysis and Review process, includes common share repurchases of up to $725 million. This authorization includes repurchases to offset issuances of common shares under our employee compensation plans. Share repurchases are expected to be executed through the second quarter of 2016.

LINE OF BUSINESS RESULTS

The following table shows the contribution made by each major business segment to Key's taxable-equivalent revenue from continuing operations and income (loss) from continuing operations attributable to Key for the periods presented. For more detailed financial information pertaining to each business segment, see the tables at the end of this release.

Major Business Segments

dollars in millions								Change 1Q15 vs.
			1Q15		4Q14		1Q14	4Q14		1Q14
Revenue from continuing operations (TE)
Key Community Bank		$	549	$	558	$	546	(1.6)	%	.5	%
Key Corporate Bank			401		460		392	(12.8)		2.3
Other Segments			67		62		65	8.1		3.1
	Total segments		1,017		1,080		1,003	(5.8)		1.4
Reconciling Items			(3)		(2)		1	N/M		N/M
	Total	$	1,014	$	1,078	$	1,004	(5.9)	%	1.0	%

Income (loss) from continuing operations attributable to Key
Key Community Bank		$	50	$	62	$	62	(19.4)	%	(19.4)	%
Key Corporate Bank			126		150		136	(16.0)		(7.4)
Other Segments			45		36		37	25.0		21.6
	Total segments		221		248		235	(10.9)		(6.0)
Reconciling Items			7		3		3	133.3		133.3
	Total	$	228	$	251	$	238	(9.2)	%	(4.2)	%


TE = Taxable equivalent, N/M = Not Meaningful




Key Community Bank


dollars in millions								Change 1Q15 vs.
			1Q15		4Q14		1Q14	4Q14		1Q14
Summary of operations
Net interest income (TE)		$	358	$	362	$	363	(1.1)	%	(1.4)	%
Noninterest income			191		196		183	(2.6)		4.4
	Total revenue (TE)		549		558		546	(1.6)		.5
Provision for credit losses			29		12		11	141.7		163.6
Noninterest expense			440		447		436	(1.6)		.9
	Income (loss) before income taxes (TE)		80		99		99	(19.2)		(19.2)
Allocated income taxes (benefit) and TE adjustments			30		37		37	(18.9)		(18.9)
	Net income (loss) attributable to Key	$	50	$	62	$	62	(19.4)	%	(19.4)	%

Average balances
Loans and leases		$	30,662	$	30,478	$	29,797	.6	%	2.9	%
Total assets			32,716		32,564		31,918	.5		2.5
Deposits			50,417		50,850		49,910	(.9)		1.0

Assets under management at period end		$	39,281	$	39,157	$	38,814	.3	%	1.2	%


TE = Taxable Equivalent




Additional Key Community Bank Data

dollars in millions											Change 1Q15 vs.
			1Q15			4Q14			1Q14		4Q14		1Q14
Noninterest income
Trust and investment services income		$	74		$	75		$	71		(1.3)	%	4.2	%
Service charges on deposit accounts			51			54			52		(5.6)		(1.9)
Cards and payments income			38			40			35		(5.0)		8.6
Other noninterest income			28			27			25		3.7		12.0
	Total noninterest income	$	191		$	196		$	183		(2.6)	%	4.4	%

Average deposit balances
NOW and money market deposit accounts		$	27,873		$	27,690		$	27,431		.7	%	1.6	%
Savings deposits			2,377			2,378			2,465		—		(3.6)
Certificates of deposit ($100,000 or more)			1,558			1,793			2,163		(13.1)		(28.0)
Other time deposits			3,211			3,301			3,673		(2.7)		(12.6)
Deposits in foreign office			333			332			309		.3		7.8
Noninterest-bearing deposits			15,065			15,356			13,869		(1.9)		8.6
	Total deposits	$	50,417		$	50,850		$	49,910		(.9)	%	1.0	%

Home equity loans
Average balance		$	10,316		$	10,365		$	10,305
Weighted-average loan-to-value ratio (at date of origination)			71	%		71	%		71	%
Percent first lien positions			60			60			58

Other data
Branches			992			994			1,027
Automated teller machines			1,287			1,287			1,330

Key Community Bank Summary of Operations

Average loan growth of $865 million, or 2.9% from the prior year
Average noninterest-bearing deposits up $1.2 billion, or 8.6% from the prior year
Noninterest income growth of 4.4% led by cards and payments and trust and investment services income growth versus the prior year

Key Community Bank recorded net income attributable to Key of $50 million for the first quarter of 2015, compared to net income attributable to Key of $62 million for the year-ago quarter.

Taxable-equivalent net interest income decreased by $5 million, or 1.4%, from the first quarter of 2014 due to declines in the deposit spread in the current period as a result of the continued low-rate environment. Average loans and leases grew 2.9% while average deposits increased 1.0% from one year ago.

Noninterest income increased $8 million, or 4.4%, from the year-ago quarter. This growth was balanced across the business with trust and investment services income and cards and payments income each increasing by $3 million.

The provision for credit losses increased by $18 million from the first quarter of 2014 related to loan growth.

Noninterest expense increased by $4 million, or .9%, from the year-ago quarter. Personnel expense increased $8 million and was partially offset by reduced infrastructure and internally-allocated costs.

Key Corporate Bank


dollars in millions								Change 1Q15 vs.
			1Q15		4Q14		1Q14	4Q14		1Q14
Summary of operations
Net interest income (TE)		$	213	$	219	$	196	(2.7)	%	8.7	%
Noninterest income			188		241		196	(22.0)		(4.1)
	Total revenue (TE)		401		460		392	(12.8)		2.3
Provision for credit losses			8		4		(3)	100.0		N/M
Noninterest expense			217		246		202	(11.8)		7.4
	Income (loss) before income taxes (TE)		176		210		193	(16.2)		(8.8)
Allocated income taxes and TE adjustments			49		60		57	(18.3)		(14.0)
	Net income (loss)		127		150		136	(15.3)		(6.6)
Less: Net income (loss) attributable to noncontrolling interests			1		—		—	N/M		N/M
	Net income (loss) attributable to Key	$	126	$	150	$	136	(16.0)	%	(7.4)	%

Average balances
Loans and leases		$	24,722	$	23,798	$	21,991	3.9	%	12.4	%
Loans held for sale			775		855		429	(9.4)		80.7
Total assets			30,297		28,996		27,171	4.5		11.5
Deposits			18,567		18,356		15,993	1.1		16.1

Assets under management at period end			—		—	$	79	N/M		N/M


TE = Taxable Equivalent, N/M = Not Meaningful




Additional Key Corporate Bank Data

dollars in millions								Change 1Q15 vs.
			1Q15		4Q14		1Q14	4Q14		1Q14
Noninterest income
Trust and investment services income		$	35	$	37	$	27	(5.4)	%	29.6	%
Investment banking and debt placement fees			68		125		84	(45.6)		(19.0)
Operating lease income and other leasing gains			14		17		21	(17.6)		(33.3)

Corporate services income			32		43		29	(25.6)		10.3
Service charges on deposit accounts			10		10		11	—		(9.1)
Cards and payments income			4		3		3	33.3		33.3
	Payments and services income		46		56		43	(17.9)		7.0

Mortgage servicing fees			13		11		15	18.2		(13.3)
Other noninterest income			12		(5)		6	N/M		100.0
	Total noninterest income	$	188	$	241	$	196	(22.0)	%	(4.1)	%


N/M = Not Meaningful

Key Corporate Bank Summary of Operations

Average loan and lease balances up 12.4% from the prior year
Average deposits up 16.1% from the prior year
Revenue up 2.3% from the prior year

Key Corporate Bank recorded net income attributable to Key of $126 million for the first quarter of 2015, compared to $136 million for the same period one year ago.

Taxable-equivalent net interest income increased by $17 million, or 8.7%, compared to the first quarter of 2014. Average earning assets increased $2.4 billion, or 9.9%, from the year-ago quarter, primarily driven by loan growth in commercial, financial and agricultural and real estate commercial mortgage. This growth in earning assets drove an increase of $7 million in earning asset spread. Average deposit balances increased $2.6 billion, or 16.1%, from the year-ago quarter, driven by commercial mortgage servicing deposits and other commercial client inflows. This growth in deposit balances drove an increase of $13 million in deposit and borrowing spread.

Noninterest income was down $8 million, or 4.1% from the prior year. The majority of this decline was related to investment banking and debt placement fees, which decreased $16 million from the prior year primarily due to lower financial advisory fees. Operating lease income and other leasing gains declined by $7 million due to the termination of a leveraged lease in the prior year. Partially offsetting these declines were increases in trust and investment services income of $8 million, primarily due to the third quarter 2014 acquisition of Pacific Crest Securities and an increase in other income of $6 million.

The provision for credit losses increased $11 million compared to the first quarter of 2014 related to loan growth.

Noninterest expense increased by $15 million, or 7.4%, from the first quarter of 2014. This increase was due to expenses related to the third quarter 2014 acquisition of Pacific Crest Securities.

Other Segments

Other Segments consist of Corporate Treasury, Key's Principal Investing unit and various exit portfolios. Other Segments generated net income attributable to Key of $45 million for the first quarter of 2015, compared to net income attributable to Key of $37 million for the same period last year. These results were primarily due to increases of $5 million in net gains from principal investing and $4 million in corporate-owned life insurance from the prior year, partially offset by a $4 million increase in personnel expense.

*****

KeyCorp was organized more than 160 years ago and is headquartered in Cleveland, Ohio. One of the nation's largest bank-based financial services companies, Key had assets of approximately $94.2 billion at March 31, 2015.

Key provides deposit, lending, cash management and investment services to individuals and small and mid-sized businesses in 12 states under the name KeyBank National Association. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.

This earnings release 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 our 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 Key's actual results to differ from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 2014, which has been filed with the Securities and Exchange Commission (the "SEC") and is available on Key's website (www.key.com/ir) and on the SEC's website (www.sec.gov). These factors may include, among others: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive and increasing regulation of the U.S. financial services industry. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

Notes to Editors:
A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 9:00 a.m. ET, on Thursday, April 16, 2015. An audio replay of the call will be available through April 23, 2015.

*****

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

			Three months ended
			3-31-15			12-31-14			3-31-14
Summary of operations
	Net interest income (TE)		$	577		$	588		$	569
	Noninterest income			437			490			435
		Total revenue (TE)		1,014			1,078			1,004
	Provision for credit losses			35			22			4
	Noninterest expense			669			704			664
	Income (loss) from continuing operations attributable to Key			228			251			238
	Income (loss) from discontinued operations, net of taxes ^(a)			5			2			4
	Net income (loss) attributable to Key			233			253			242

	Income (loss) from continuing operations attributable to Key common shareholders		$	222		$	246		$	232
	Income (loss) from discontinued operations, net of taxes ^(a)			5			2			4
	Net income (loss) attributable to Key common shareholders			227			248			236

Per common share
	Income (loss) from continuing operations attributable to Key common shareholders		$	.26		$	.29		$	.26
	Income (loss) from discontinued operations, net of taxes ^(a)			.01			—			—
	Net income (loss) attributable to Key common shareholders ^(b)			.27			.29			.27

	Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution			.26			.28			.26
	Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)			.01			—			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)			.26			.28			.26

	Cash dividends paid			.065			.065			.055
	Book value at period end			12.12			11.91			11.43
	Tangible book value at period end			10.84			10.65			10.28
	Market price at period end			14.16			13.90			14.24

Performance ratios
	From continuing operations:
	Return on average total assets			1.03	%		1.12	%		1.13	%
	Return on average common equity			8.76			9.50			9.33
	Return on average tangible common equity ^(c)			9.80			10.64			10.38
	Net interest margin (TE)			2.91			2.94			3.00
	Cash efficiency ratio ^(c)			65.1			64.4			65.1

	From consolidated operations:
	Return on average total assets			1.03	%		1.10	%		1.09	%
	Return on average common equity			8.96			9.58			9.50
	Return on average tangible common equity ^(c)			10.02			10.72			10.56
	Net interest margin (TE)			2.88			2.93			2.95
	Loan to deposit ^(d)			86.9			84.6			87.5

Capital ratios at period end
	Key shareholders' equity to assets			11.26	%		11.22	%		11.46	%
	Key common shareholders' equity to assets			10.95			10.91			11.14
	Tangible common equity to tangible assets ^(c)			9.92			9.88			10.14
	Common Equity Tier 1 ^{(c), (e)}			10.82			N/A			N/A
	Tier 1 common equity ^(c)			N/A			11.17			11.27
	Tier 1 risk-based capital ^(e)			11.22			11.90			12.01
	Total risk-based capital ^(e)			13.01			13.89			14.23
	Leverage ^(e)			10.90			11.26			11.30





Financial Highlights (continued)
(dollars in millions)

		Three months ended
		3-31-15			12-31-14			3-31-14
Asset quality — from continuing operations
	Net loan charge-offs	$	28		$	32		$	20
	Net loan charge-offs to average total loans		.20	%		.22	%		.15	%
	Allowance for loan and lease losses	$	794		$	794		$	834
	Allowance for credit losses		835			829			869
	Allowance for loan and lease losses to period-end loans		1.37	%		1.38	%		1.50	%
	Allowance for credit losses to period-end loans		1.44			1.44			1.57
	Allowance for loan and lease losses to nonperforming loans		181.7			190.0			185.7
	Allowance for credit losses to nonperforming loans		191.1			198.3			193.5
	Nonperforming loans at period end ^(f)	$	437		$	418		$	449
	Nonperforming assets at period end		457			436			469
	Nonperforming loans to period-end portfolio loans		.75	%		.73	%		.81	%
	Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.79			.76			.85

Trust and brokerage assets — from continuing operations
	Assets under management	$	39,281		$	39,157		$	38,893
	Nonmanaged and brokerage assets		49,508			49,147			47,396

Other data
	Average full-time equivalent employees		13,591			13,590			14,055
	Branches		992			994			1,027

Taxable-equivalent adjustment		$	6		$	6		$	6


(a)	In April 2009, management decided to wind down the operations of Austin Capital Management, Ltd., a subsidiary that specialized in managing hedge fund investments for institutional customers. In September 2009, management decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank National Association. In February 2013, Key decided to sell its investment subsidiary, Victory Capital Management, and its broker-dealer affiliate, Victory Capital Advisors, to a private equity fund. As a result of these decisions, Key has accounted for these businesses as discontinued operations.

(b)	Earnings per share may not foot due to rounding.

(c)	The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common equity," "Common Equity Tier 1" (compliance date of January 1, 2015, under the Regulatory Capital Rules) "Tier 1 common equity" (prior to January 1, 2015), and "cash efficiency." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the "Capital" section of document.

(d)	Represents period-end consolidated total loans and loans held for sale (excluding education loans in the securitization trusts for periods prior to September 30, 2014) divided by period-end consolidated total deposits (excluding deposits in foreign office).

(e)	3-31-15 ratio is estimated.

(f)	Loan balances exclude $12 million, $13 million, and $16 million of purchased credit impaired loans at March 31, 2015, December 31, 2014, and March 31, 2014, respectively.

TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles

GAAP to Non-GAAP Reconciliations
(dollars in millions)

The table below presents certain non-GAAP financial measures related to "tangible common equity," "return on tangible common equity," "Common Equity Tier 1," "Tier 1 common equity," "pre-provision net revenue," and "cash efficiency ratio."

The tangible common equity ratio and the return on tangible common equity ratio have been a focus for some investors, and management believes these ratios may assist investors in analyzing Key's capital position without regard to the effects of intangible assets and preferred stock. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. In October 2013, the federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the "Regulatory Capital Rules"). The Regulatory Capital Rules require higher and better-quality capital and introduces a new capital measure, "Common Equity Tier 1," a non-GAAP financial measure. The mandatory compliance date for Key as a "standardized approach" banking organization began on January 1, 2015, subject to transitional provisions extending to January 1, 2019. Prior to January 1, 2015, the Federal Reserve focused its assessment of capital adequacy on a component of Tier 1 risk-based capital known as Tier 1 common equity, also a non-GAAP financial measure.

Common Equity Tier 1 is not formally defined by GAAP and is considered to be a non-GAAP financial measure. Since analysts and banking regulators may assess Key's capital adequacy using tangible common equity and Common Equity Tier 1, management believes it is useful to enable investors to assess Key's capital adequacy on these same bases. The table also reconciles the GAAP performance measures to the corresponding non-GAAP measures.

The table also shows the computation for pre-provision net revenue, which is not formally defined by GAAP. Management believes that eliminating the effects of the provision for loan and lease losses makes it easier to analyze the results by presenting them on a more comparable basis.

The cash efficiency ratio is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key's intangible asset amortization from the calculation. Management believes this ratio provides greater consistency and comparability between Key's results and those of its peer banks. Additionally, this ratio is used by analysts and investors as they develop earnings forecasts and peer bank analysis.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

				Three months ended
				3-31-15			12-31-14			3-31-14
Tangible common equity to tangible assets at period end
	Key shareholders' equity (GAAP)			$	10,603		$	10,530		$	10,403
	Less:	Intangible assets ^(a)			1,088			1,090			1,012
		Preferred Stock, Series A ^(b)			281			282			282
		Tangible common equity (non-GAAP)		$	9,234		$	9,158		$	9,109

	Total assets (GAAP)			$	94,206		$	93,821		$	90,802
	Less:	Intangible assets ^(a)			1,088			1,090			1,012
		Tangible assets (non-GAAP)		$	93,118		$	92,731		$	89,790

	Tangible common equity to tangible assets ratio (non-GAAP)				9.92	%		9.88	%		10.14	%

Common Equity Tier 1 at period end
	Key shareholders' equity (GAAP)			$	10,603			—			—
	Less:	Preferred Stock, Series A ^(b)			281			—			—
		Common Equity Tier 1 capital before adjustments and deductions			10,322			—			—
	Less:	Goodwill			1,057			—			—
		Intangible assets, net of deferred tax liabilities			36			—			—
		Deferred tax assets			12			—			—
		Net unrealized gains (losses) on available-for-sale securities			52			—			—
		Accumulated gain (loss) on cash flow hedges			(8)			—			—
		Amounts recorded in accumulated other comprehensive income (loss)
			related to pension and postretirements benefit costs		(364)			—			—
		Total Common Equity Tier 1 capital ^(c)		$	9,537			—			—

	Net risk-weighted assets (regulatory) ^(c)			$	88,123			—			—

	Common Equity Tier 1 ratio (non-GAAP) ^(c)				10.82	%		—			—

Tier 1 common equity at period end
	Key shareholders' equity (GAAP)				—		$	10,530		$	10,403
	Qualifying capital securities				—			339			339
	Less:	Goodwill			—			1,057			979
		Accumulated other comprehensive income (loss) ^(d)			—			(395)			(367)
		Other assets ^(e)			—			83			84
		Total Tier 1 capital (regulatory)			—			10,124			10,046
	Less:	Qualifying capital securities			—			339			339
		Preferred Stock, Series A ^(b)			—			282			282
		Total Tier 1 common equity (non-GAAP)			—		$	9,503		$	9,425

	Net risk-weighted assets (regulatory)				—		$	85,100		$	83,637

	Tier 1 common equity ratio (non-GAAP)				—			11.17	%		11.27	%




GAAP to Non-GAAP Reconciliations (continued)
(dollars in millions)

			Three months ended
			3-31-15			12-31-14			3-31-14
Pre-provision net revenue
	Net interest income (GAAP)		$	571		$	582		$	563
	Plus:	Taxable-equivalent adjustment		6			6			6
		Noninterest income (GAAP)		437			490			435
	Less:	Noninterest expense (GAAP)		669			704			664
	Pre-provision net revenue from continuing operations (non-GAAP)		$	345		$	374		$	340

Average tangible common equity
	Average Key shareholders' equity (GAAP)		$	10,570		$	10,562		$	10,371
	Less:	Intangible assets (average) ^(f)		1,089			1,096			1,013
		Preferred Stock, Series A (average)		290			291			291
		Average tangible common equity (non-GAAP)	$	9,191		$	9,175		$	9,067

Return on average tangible common equity from continuing operations
	Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	222		$	246		$	232
	Average tangible common equity (non-GAAP)			9,191			9,175			9,067

	Return on average tangible common equity from continuing operations (non-GAAP)			9.80	%		10.64	%		10.38	%

Return on average tangible common equity consolidated
	Net income (loss) attributable to Key common shareholders (GAAP)		$	227		$	248		$	236
	Average tangible common equity (non-GAAP)			9,191			9,175			9,067

	Return on average tangible common equity consolidated (non-GAAP)			10.02	%		10.72	%		10.56	%

Cash efficiency ratio
	Noninterest expense (GAAP)		$	669		$	704		$	664
	Less:	Intangible asset amortization (GAAP)		9			10			10
		Adjusted noninterest expense (non-GAAP)	$	660		$	694		$	654

	Net interest income (GAAP)		$	571		$	582		$	563
	Plus:	Taxable-equivalent adjustment		6			6			6
		Noninterest income (GAAP)		437			490			435
		Total taxable-equivalent revenue (non-GAAP)	$	1,014		$	1,078		$	1,004

	Cash efficiency ratio (non-GAAP)			65.1	%		64.4	%		65.1	%

			Three months ended
			3-31-15
Common Equity Tier 1 under the Regulatory Capital Rules (estimates)
	Common Equity Tier 1 under current regulatory rules		$	9,537
	Adjustments from current regulatory rules to the Regulatory Capital Rules:
		Deferred tax assets and other assets ^(g)		(73)
		Common Equity Tier 1 anticipated under the Regulatory Capital Rules ^(h)	$	9,464

	Net risk-weighted assets under current regulatory rules		$	88,123
	Adjustments from current regulatory rules to the Regulatory Capital Rules:
		Mortgage servicing assets ⁽ⁱ⁾		486
		Deferred tax assets ⁽ⁱ⁾		338
		Significant investments ⁽ⁱ⁾		535
		Total risk-weighted assets anticipated under the Regulatory Capital Rules ^(h)	$	89,482

	Common Equity Tier 1 ratio under the Regulatory Capital Rules ^(h)			10.58	%



(a)	For the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, intangible assets exclude $61 million, $68 million, and $84 million, respectively, of period-end purchased credit card receivables.

(b)	Net of capital surplus.

(c)	3-31-15 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, and March 31, 2014.

(f)	For the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, average intangible assets exclude $64 million, $69 million, and $89 million, respectively, of average purchased credit card receivables.

(g)	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.

(h)	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."

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

GAAP = U.S. generally accepted accounting principles

Consolidated Balance Sheets
(dollars in millions)

			3-31-15		12-31-14		3-31-14
Assets
	Loans		$	57,953	$	57,381	$	55,445
	Loans held for sale			1,649		734		401
	Securities available for sale			13,120		13,360		12,359
	Held-to-maturity securities			5,005		5,015		4,826
	Trading account assets			789		750		840
	Short-term investments			3,378		4,269		2,922
	Other investments			730		760		899
		Total earning assets		82,624		82,269		77,692
	Allowance for loan and lease losses			(794)		(794)		(834)
	Cash and due from banks			506		653		409
	Premises and equipment			806		841		862
	Operating lease assets			306		330		294
	Goodwill			1,057		1,057		979
	Other intangible assets			92		101		117
	Corporate-owned life insurance			3,488		3,479		3,425
	Derivative assets			731		609		427
	Accrued income and other assets			3,144		2,952		3,004
	Discontinued assets			2,246		2,324		4,427
		Total assets	$	94,206	$	93,821	$	90,802

Liabilities
	Deposits in domestic offices:
		NOW and money market deposit accounts	$	35,623	$	34,536	$	34,373
		Savings deposits		2,413		2,371		2,513
		Certificates of deposit ($100,000 or more)		1,982		2,040		2,849
		Other time deposits		3,182		3,259		3,682
		Total interest-bearing deposits		43,200		42,206		43,417
		Noninterest-bearing deposits		27,948		29,228		23,244
	Deposits in foreign office — interest-bearing			474		564		605
		Total deposits		71,622		71,998		67,266
	Federal funds purchased and securities sold under repurchase agreements			517		575		1,417
	Bank notes and other short-term borrowings			608		423		464
	Derivative liabilities			825		784		408
	Accrued expense and other liabilities			1,308		1,621		1,297
	Long-term debt			8,713		7,875		7,712
	Discontinued liabilities			—		3		1,819
		Total liabilities		83,593		83,279		80,383

Equity
	Preferred stock, Series A			290		291		291
	Common shares			1,017		1,017		1,017
	Capital surplus			3,910		3,986		3,961
	Retained earnings			8,445		8,273		7,793
	Treasury stock, at cost			(2,780)		(2,681)		(2,335)
	Accumulated other comprehensive income (loss)			(279)		(356)		(324)
		Key shareholders' equity		10,603		10,530		10,403
	Noncontrolling interests			10		12		16
		Total equity		10,613		10,542		10,419
Total liabilities and equity			$	94,206	$	93,821	$	90,802

Common shares outstanding (000)				850,920		859,403		884,869




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

			Three months ended
			3-31-15		12-31-14		3-31-14
Interest income
	Loans		$	523	$	534	$	519
	Loans held for sale			7		8		4
	Securities available for sale			70		67		72
	Held-to-maturity securities			24		23		22
	Trading account assets			5		6		6
	Short-term investments			2		2		1
	Other investments			5		6		6
		Total interest income		636		646		630

Interest expense
	Deposits			26		26		32
	Federal funds purchased and securities sold under repurchase agreements			—		—		1
	Bank notes and other short-term borrowings			2		3		2
	Long-term debt			37		35		32
		Total interest expense		65		64		67

Net interest income				571		582		563
Provision for credit losses				35		22		4
Net interest income after provision for credit losses				536		560		559

Noninterest income
	Trust and investment services income			109		112		98
	Investment banking and debt placement fees			68		126		84
	Service charges on deposit accounts			61		64		63
	Operating lease income and other leasing gains			19		15		29
	Corporate services income			43		53		42
	Cards and payments income			42		43		38
	Corporate-owned life insurance income			31		38		26
	Consumer mortgage income			3		3		2
	Mortgage servicing fees			13		11		15
	Net gains (losses) from principal investing			29		18		24
	Other income ^(a)			19		7		14
		Total noninterest income		437		490		435

Noninterest expense
	Personnel			389		409		388
	Net occupancy			65		63		64
	Computer processing			38		40		38
	Business services and professional fees			33		38		41
	Equipment			22		23		24
	Operating lease expense			11		11		10
	Marketing			8		16		5
	FDIC assessment			8		9		6
	Intangible asset amortization			9		10		10
	OREO expense, net			2		2		1
	Other expense			84		83		77
		Total noninterest expense		669		704		664
Income (loss) from continuing operations before income taxes				304		346		330
	Income taxes			74		94		92
Income (loss) from continuing operations				230		252		238
	Income (loss) from discontinued operations, net of taxes			5		2		4
Net income (loss)				235		254		242
	Less: Net income (loss) attributable to noncontrolling interests			2		1		—
Net income (loss) attributable to Key			$	233	$	253	$	242

Income (loss) from continuing operations attributable to Key common shareholders			$	222	$	246	$	232
Net income (loss) attributable to Key common shareholders				227		248		236

Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.26	$	.29	$	.26
Income (loss) from discontinued operations, net of taxes				.01		—		—
Net income (loss) attributable to Key common shareholders ^(b)				.27		.29		.27

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders			$	.26	$	.28	$	.26
Income (loss) from discontinued operations, net of taxes				.01		—		—
Net income (loss) attributable to Key common shareholders ^(b)				.26		.28		.26

Cash dividends declared per common share			$	.065	$	.065	$	.055

Weighted-average common shares outstanding (000)				848,580		858,811		884,727
	Effect of convertible preferred stock			—		20,602		—
	Effect of common share options and other stock awards			8,542		6,773		7,163
Weighted-average common shares and potential common shares outstanding (000) ^(c)				857,122		886,186		891,890


(a)	For each of the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, net securities gains (losses) totaled less than $1 million. For the three months ended March 31, 2015, impairment losses related to securities totaled less than $1 million. For the three months ended December 31, 2014, and March 31, 2014, Key did not have any impairment losses related to securities.

(b)	Earnings per share may not foot due to rounding.

(c)	Assumes conversion of common share options and other stock awards and/or convertible preferred stock, as applicable.




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

			First Quarter 2015								Fourth Quarter 2014								First Quarter 2014
			Average								Average								Average
			Balance		Interest		^(a)	Yield/Rate		^(a)	Balance		Interest		^(a)	Yield/Rate		^(a)	Balance		Interest		^(a)	Yield/Rate		^(a)
Assets
	Loans: ^(b), (c)
	Commercial, financial and agricultural ^(d)		$	28,321	$	223			3.18	%	$	27,188	$	223			3.24	%	$	25,390	$	206			3.29	%
	Real estate — commercial mortgage			8,095		73			3.67			8,161		77			3.73			7,807		74			3.84
	Real estate — construction			1,139		11			3.90			1,077		10			3.90			1,091		12			4.55
	Commercial lease financing			4,070		36			3.57			4,119		38			3.67			4,439		42			3.78
		Total commercial loans		41,625		343			3.33			40,545		348			3.40			38,727		334			3.49
	Real estate — residential mortgage			2,229		24			4.26			2,223		24			4.28			2,187		24			4.44
	Home equity:
		Key Community Bank		10,316		99			3.89			10,365		103			3.91			10,305		100			3.92
		Other		260		5			7.82			274		5			7.84			325		6			7.77
		Total home equity loans		10,576		104			3.99			10,639		108			4.01			10,630		106			4.04
	Consumer other — Key Community Bank			1,546		25			6.66			1,552		27			6.78			1,438		25			7.06
	Credit cards			732		20			11.01			728		20			11.02			701		20			11.28
	Consumer other:
		Marine		755		12			6.35			802		13			6.29			996		15			6.18
		Other		49		1			7.32			52		—			7.52			67		1			7.55
		Total consumer other		804		13			6.41			854		13			6.36			1,063		16			6.26
		Total consumer loans		15,887		186			4.74			15,996		192			4.76			16,019		191			4.83
		Total loans		57,512		529			3.72			56,541		540			3.79			54,746		525			3.88
	Loans held for sale			795		7			3.33			871		8			3.72			446		4			3.34
	Securities available for sale ^{(b), (e)}			13,087		70			2.17			12,153		67			2.20			12,346		72			2.33
	Held-to-maturity securities ^(b)			4,947		24			1.93			4,947		23			1.91			4,767		22			1.84
	Trading account assets			717		5			2.80			868		6			2.84			981		6			2.51
	Short-term investments			2,399		2			.27			3,520		2			.27			2,486		1			.17
	Other investments ^(e)			742		5			2.79			792		6			2.77			936		6			2.57
		Total earning assets		80,199		642			3.20			79,692		652			3.27			76,708		636			3.32
	Allowance for loan and lease losses			(793)								(798)								(842)
	Accrued income and other assets			10,223								9,868								9,791
	Discontinued assets			2,271								2,359								4,493
		Total assets	$	91,900							$	91,121							$	90,150

Liabilities
	NOW and money market deposit accounts		$	34,952		13			.15		$	34,811		13			.14		$	34,064		12			.14
	Savings deposits			2,385		—			.02			2,388		—			.02			2,475		—			.03
	Certificates of deposit ($100,000 or more) ^(f)			2,017		7			1.30			2,277		7			1.25			2,758		10			1.50
	Other time deposits			3,217		6			.72			3,306		6			.76			3,679		10			1.07
	Deposits in foreign office			529		—			.22			543		—			.24			660		—			.22
		Total interest-bearing deposits		43,100		26			.24			43,325		26			.24			43,636		32			.30
	Federal funds purchased and securities sold under repurchase agreements			720		—			.03			621		—			.02			1,469		1			.17
	Bank notes and other short-term borrowings			506		2			1.56			772		3			1.17			587		2			1.63
	Long-term debt ^{(f), (g)}			6,126		37			2.52			5,135		35			2.80			5,169		32			2.57
		Total interest-bearing liabilities		50,452		65			.52			49,853		64			.51			50,861		67			.54
	Noninterest-bearing deposits			26,269								26,342								22,658
	Accrued expense and other liabilities			2,327								1,989								1,750
	Discontinued liabilities ^(g)			2,271								2,359								4,493
		Total liabilities		81,319								80,543								79,762

Equity
	Key shareholders' equity			10,570								10,562								10,371
	Noncontrolling interests			11								16								17
		Total equity		10,581								10,578								10,388

		Total liabilities and equity	$	91,900							$	91,121							$	90,150

Interest rate spread (TE)									2.68	%							2.76	%							2.78	%

Net interest income (TE) and net interest margin (TE)						577			2.91	%				588			2.94	%				569			3.00	%
TE adjustment ^(b)						6								6								6
	Net interest income, GAAP basis				$	571							$	582							$	563



(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.

(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.

(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.

(d)	Commercial, financial and agricultural average balances include $87 million, $90 million, and $94 million of assets from commercial credit cards for the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, respectively.

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

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

(g)	A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying our matched funds transfer pricing methodology to discontinued operations.

TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles

Noninterest Expense
(dollars in millions)

	Three months ended
	3-31-15		12-31-14		3-31-14
Personnel ^(a)	$	389	$	409	$	388
Net occupancy		65		63		64
Computer processing		38		40		38
Business services and professional fees		33		38		41
Equipment		22		23		24
Operating lease expense		11		11		10
Marketing		8		16		5
FDIC assessment		8		9		6
Intangible asset amortization		9		10		10
OREO expense, net		2		2		1
Other expense		84		83		77
Total noninterest expense	$	669	$	704	$	664

Average full-time equivalent employees ^(b)		13,591		13,590		14,055

(a) Additional detail provided in table below.

(b) The number of average full-time equivalent employees has not been adjusted for discontinued operations.


Personnel Expense
(in millions)

	Three months ended
	3-31-15		12-31-14		3-31-14
Salaries	$	218	$	224	$	220
Technology contract labor, net		10		12		17
Incentive compensation		70		105		72
Employee benefits		72		53		63
Stock-based compensation		13		13		11
Severance		6		2		5
Total personnel expense	$	389	$	409	$	388





Loan Composition
(dollars in millions)

									Percent change 3-31-15 vs.
			3-31-15		12-31-14		3-31-14		12-31-14			3-31-14
Commercial, financial and agricultural ^(a)			$	28,783	$	27,982	$	26,224		2.9	%		9.8	%
Commercial real estate:
	Commercial mortgage			8,162		8,047		7,877		1.4			3.6
	Construction			1,142		1,100		1,007		3.8			13.4
	Total commercial real estate loans			9,304		9,147		8,884		1.7			4.7
Commercial lease financing ^(b)				4,064		4,252		4,396		(4.4)			(7.6)
	Total commercial loans			42,151		41,381		39,504		1.9			6.7
Residential — prime loans:
	Real estate — residential mortgage			2,231		2,225		2,183		.3			2.2
	Home equity:
		Key Community Bank		10,270		10,366		10,281		(.9)			(.1)
		Other		253		267		315		(5.2)			(19.7)
	Total home equity loans			10,523		10,633		10,596		(1.0)			(.7)
Total residential — prime loans				12,754		12,858		12,779		(.8)			(.2)
Consumer other — Key Community Bank				1,547		1,560		1,436		(.8)			7.7
Credit cards				727		754		698		(3.6)			4.2
Consumer other:
	Marine			730		779		965		(6.3)			(24.4)
	Other			44		49		63		(10.2)			(30.2)
	Total consumer other			774		828		1,028		(6.5)			(24.7)
	Total consumer loans			15,802		16,000		15,941		(1.2)			(.9)
	Total loans ^(c), (d)		$	57,953	$	57,381	$	55,445		1.0	%		4.5	%



Loans Held for Sale Composition
(dollars in millions)

									Percent change 3-31-15 vs.
			3-31-15		12-31-14		3-31-14		12-31-14			3-31-14
Commercial, financial and agricultural			$	183	$	63	$	44		190.5	%		315.9	%
Real estate — commercial mortgage				1,408		638		333		120.7			322.8
Commercial lease financing				14		15		8		(6.7)			75.0
Real estate — residential mortgage				44		18		16		144.4			175.0
	Total loans held for sale		$	1,649	$	734	$	401		124.7	%		311.2	%



Summary of Changes in Loans Held for Sale
(in millions)

			1Q15		4Q14		3Q14		2Q14			1Q14
Balance at beginning of period			$	734	$	784	$	435	$	401		$	611
	New originations			2,130		2,465		1,593		978			645
	Transfers from (to) held to maturity, net			10		2		—		(8)			3
	Loan sales			(1,204)		(2,516)		(1,243)		(934)			(596)
	Loan draws (payments), net			(21)		(1)		(1)		(2)			(262)
Balance at end of period			$	1,649	$	734	$	784	$	435		$	401



(a)	Loan balances include $87 million, $88 million, and $95 million of commercial credit card balances at March 31, 2015, December 31, 2014, and March 31, 2014, respectively.

(b)	Commercial lease financing includes receivables of $230 million, $302 million, and $124 million held as collateral for a secured borrowing at March 31, 2015, December 31, 2014, and March 31, 2014, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c)	At March 31, 2015, total loans include purchased loans of $130 million, of which $12 million were purchased credit impaired. At December 31, 2014, total loans include purchased loans of $138 million, of which $13 million were purchased credit impaired. At March 31, 2014, total loans include purchased loans of $159 million, of which $16 million were purchased credit impaired.

(d)	Total loans exclude loans of $2.2 billion at March 31, 2015, $2.3 billion at December 31, 2014, and $4.4 billion at March 31, 2014, related to the discontinued operations of the education lending business.

N/M = Not Meaningful

Exit Loan Portfolio From Continuing Operations
(in millions)

	Balance				Change		Net Loan						Balance on
	Outstanding				3-31-15 vs.		Charge-offs						Nonperforming Status
	3-31-15		12-31-14		12-31-14		1Q15		^(b)	4Q14		^(b)	3-31-15		12-31-14
Residential properties — homebuilder	$	6	$	10	$	(4)	$	1			—		$	8	$	9
Marine and RV floor plan		6		7		(1)		—			—			5		5
Commercial lease financing ^(a)		877		967		(90)		(1)		$	3			—		1
Total commercial loans		889		984		(95)		—			3			13		15
Home equity — Other		253		267		(14)		—			—			9		10
Marine		730		779		(49)		2			3			9		15
RV and other consumer		50		54		(4)		1			(1)			1		1
Total consumer loans		1,033		1,100		(67)		3			2			19		26
Total exit loans in loan portfolio	$	1,922	$	2,084	$	(162)	$	3		$	5		$	32	$	41

Discontinued operations — education lending business (not included in exit loans above)	$	2,219	$	2,295	$	(76)	$	6		$	8		$	8	$	11


(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.

Asset Quality Statistics From Continuing Operations
(dollars in millions)

		1Q15			4Q14			3Q14			2Q14			1Q14
Net loan charge-offs	$	28		$	32		$	31		$	30		$	20
Net loan charge-offs to average total loans		.20	%		.22	%		.22	%		.22	%		.15	%
Allowance for loan and lease losses	$	794		$	794		$	804		$	814		$	834
Allowance for credit losses ^(a)		835			829			839			851			869
Allowance for loan and lease losses to period-end loans		1.37	%		1.38	%		1.43	%		1.46	%		1.50	%
Allowance for credit losses to period-end loans		1.44			1.44			1.49			1.53			1.57
Allowance for loan and lease losses to nonperforming loans		181.7			190.0			200.5			205.6			185.7
Allowance for credit losses to nonperforming loans		191.1			198.3			209.2			214.9			193.5
Nonperforming loans at period end ^(b)	$	437		$	418		$	401		$	396		$	449
Nonperforming assets at period end		457			436			418			410			469
Nonperforming loans to period-end portfolio loans		.75	%		.73	%		.71	%		.71	%		.81	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.79			.76			.74			.74			.85

(a)

Includes the allowance for loan and lease losses plus the liability for credit losses on lending-related unfunded commitments.

(b)

Loan balances exclude $12 million, $13 million, $14 million, $15 million, and $16 million of purchased credit impaired loans at March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014, and March 31, 2014, respectively.




Summary of Loan and Lease Loss Experience From Continuing Operations
(dollars in millions)

	Three months ended
	3-31-15			12-31-14			3-31-14
Average loans outstanding	$	57,512		$	56,541		$	54,746

Allowance for loan and lease losses at beginning of period	$	794		$	804		$	848
Loans charged off:
Commercial, financial and agricultural		12			10			12

Real estate — commercial mortgage		2			3			2
Real estate — construction		1			1			2
Total commercial real estate loans		3			4			4
Commercial lease financing		2			4			3
Total commercial loans		17			18			19
Real estate — residential mortgage		2			3			3
Home equity:
Key Community Bank		7			8			10
Other		1			1			3
Total home equity loans		8			9			13
Consumer other — Key Community Bank		6			7			8
Credit cards		8			7			6
Consumer other:
Marine		5			5			7
Other		1			—			1
Total consumer other		6			5			8
Total consumer loans		30			31			38
Total loans charged off		47			49			57
Recoveries:
Commercial, financial and agricultural		5			6			10

Real estate — commercial mortgage		2			—			1
Real estate — construction		—			1			14
Total commercial real estate loans		2			1			15
Commercial lease financing		4			2			2
Total commercial loans		11			9			27
Real estate — residential mortgage		—			—			1
Home equity:
Key Community Bank		2			2			3
Other		1			1			1
Total home equity loans		3			3			4
Consumer other — Key Community Bank		2			2			2
Credit cards		—			—			—
Consumer other:
Marine		3			2			3
Other		—			1			—
Total consumer other		3			3			3
Total consumer loans		8			8			10
Total recoveries		19			17			37
Net loan charge-offs		(28)			(32)			(20)
Provision (credit) for loan and lease losses		29			22			6
Foreign currency translation adjustment		(1)			—			—
Allowance for loan and lease losses at end of period	$	794		$	794		$	834

Liability for credit losses on lending-related commitments at beginning of period	$	35		$	35		$	37
Provision (credit) for losses on lending-related commitments		6			—			(2)
Liability for credit losses on lending-related commitments at end of period ^(a)	$	41		$	35		$	35

Total allowance for credit losses at end of period	$	835		$	829		$	869

Net loan charge-offs to average total loans		.20	%		.22	%		.15	%
Allowance for loan and lease losses to period-end loans		1.37			1.38			1.50
Allowance for credit losses to period-end loans		1.44			1.44			1.57
Allowance for loan and lease losses to nonperforming loans		181.7			190.0			185.7
Allowance for credit losses to nonperforming loans		191.1			198.3			193.5

Discontinued operations — education lending business:
Loans charged off	$	10		$	11		$	13
Recoveries		4			3			4
Net loan charge-offs	$	(6)		$	(8)		$	(9)

(a) Included in "accrued expense and other liabilities" on the balance sheet.





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

	3-31-15			12-31-14			9-30-14			6-30-14			3-31-14
Commercial, financial and agricultural	$	98		$	59		$	47		$	37		$	60

Real estate — commercial mortgage		30			34			41			38			37
Real estate — construction		12			13			14			9			11
Total commercial real estate loans		42			47			55			47			48
Commercial lease financing		20			18			14			15			18
Total commercial loans		160			124			116			99			126
Real estate — residential mortgage		72			79			81			89			105
Home equity:
Key Community Bank		182			185			174			178			188
Other		9			10			10			11			11
Total home equity loans		191			195			184			189			199
Consumer other — Key Community Bank		2			2			2			2			2
Credit cards		2			2			1			1			1
Consumer other:
Marine		9			15			16			15			15
Other		1			1			1			1			1
Total consumer other		10			16			17			16			16
Total consumer loans		277			294			285			297			323
Total nonperforming loans ^(a)		437			418			401			396			449
Nonperforming loans held for sale		—			—			—			1			1
OREO		20			18			16			12			12
Other nonperforming assets		—			—			1			1			7
Total nonperforming assets	$	457		$	436		$	418		$	410		$	469

Accruing loans past due 90 days or more	$	111		$	96		$	71		$	83		$	89
Accruing loans past due 30 through 89 days		216			235			340			274			267
Restructured loans — accruing and nonaccruing ^(b)		268			270			264			266			294
Restructured loans included in nonperforming loans ^(b)		141			157			137			142			178
Nonperforming assets from discontinued operations — education lending business		8			11			9			19			20
Nonperforming loans to period-end portfolio loans		.75	%		.73	%		.71	%		.71	%		.81	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets		.79			.76			.74			.74			.85


(a)	Loan balances exclude $12 million, $13 million, $14 million, $15 million, and $16 million of purchased credit impaired loans at March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014, and March 31, 2014, respectively.

(b)	Restructured loans (i.e., troubled debt restructurings) are those for which Key, for reasons related to a borrower's financial difficulties, grants a concession to the borrower that it would not otherwise consider. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance.

Summary of Changes in Nonperforming Loans From Continuing Operations
(in millions)

	1Q15		4Q14		3Q14		2Q14		1Q14
Balance at beginning of period	$	418	$	401	$	396	$	449	$	508
Loans placed on nonaccrual status		123		103		109		79		98
Charge-offs		(47)		(49)		(49)		(56)		(57)
Loans sold		—		(2)		—		(21)		(3)
Payments		(9)		(17)		(13)		(17)		(21)
Transfers to OREO		(7)		(6)		(7)		(4)		(3)
Loans returned to accrual status		(41)		(12)		(35)		(34)		(73)
Balance at end of period ^(a)	$	437	$	418	$	401	$	396	$	449

(a)



Summary of Changes in Other Real Estate Owned, Net of Allowance, From Continuing Operations
(in millions)

	1Q15		4Q14		3Q14		2Q14		1Q14
Balance at beginning of period	$	18	$	16	$	12	$	12	$	15
Properties acquired — nonperforming loans		7		6		7		4		3
Valuation adjustments		(1)		(2)		(1)		(1)		(1)
Properties sold		(4)		(2)		(2)		(3)		(5)
Balance at end of period	$	20	$	18	$	16	$	12	$	12




Line of Business Results
(dollars in millions)

																Percent change 1Q15 vs.
	1Q15			4Q14			3Q14			2Q14			1Q14			4Q14			1Q14
Key Community Bank
Summary of operations
Total revenue (TE)	$	549		$	558		$	558		$	553		$	546			(1.6)	%		.5	%
Provision for credit losses		29			12			27			25			11			141.7			163.6
Noninterest expense		440			447			439			442			436			(1.6)			.9
Net income (loss) attributable to Key		50			62			58			54			62			(19.4)			(19.4)
Average loans and leases		30,662			30,478			30,103			30,034			29,797			.6			2.9
Average deposits		50,417			50,850			50,302			50,230			49,910			(.9)			1.0
Net loan charge-offs		28			28			28			33			28			—			—
Net loan charge-offs to average total loans		.37	%		.36	%		.37	%		.44	%		.38	%		N/A			N/A
Nonperforming assets at period end	$	328		$	340		$	338		$	331		$	357			(3.5)			(8.1)
Return on average allocated equity		7.38	%		9.14	%		8.60	%		7.96	%		8.97	%		N/A			N/A
Average full-time equivalent employees		7,475			7,414			7,573			7,569			7,698			.8			(2.9)


Key Corporate Bank
Summary of operations
Total revenue (TE)	$	401		$	460		$	400		$	395		$	392			(12.8)	%		2.3	%
Provision for credit losses		8			4			(3)			(4)			(3)			100.0			N/M
Noninterest expense		217			246			215			208			202			(11.8)			7.4
Net income (loss) attributable to Key		126			150			136			135			136			(16.0)			(7.4)
Average loans and leases		24,722			23,798			23,215			22,886			21,991			3.9			12.4
Average loans held for sale		775			855			481			429			429			(9.4)			80.7
Average deposits		18,567			18,356			17,600			16,359			15,993			1.1			16.1
Net loan charge-offs		(4)			(3)			(1)			(2)			(12)			N/M			N/M
Net loan charge-offs to average total loans		(.07)	%		(.05)	%		(.02)	%		(.04)	%		(.22)	%		N/A			N/A
Nonperforming assets at period end	$	93		$	41		$	20		$	22		$	53			126.8			75.5
Return on average allocated equity		27.44	%		33.89	%		32.08	%		35.65	%		35.65	%		N/A			N/A
Average full-time equivalent employees		2,064			2,043			1,998			1,940			1,916			1.0			7.7

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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/keycorp-reports-first-quarter-2015-net-income-of-222-million-or-26-per-common-share-300067012.html

SOURCE KeyCorp

KeyCorp (NYSE:KEY)
Historical Stock Chart
From Mar 2024 to Apr 2024

KeyCorp (NYSE:KEY)
Historical Stock Chart
From Apr 2023 to Apr 2024

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

KEY KeyCorp

Latest KEY Messages

Loading Messages....

KeyCorp News

Loading Messages....

Your Recent History

Company

Business

Popular

Get The App

Trending Now

Toplists

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

KEY KeyCorp

Latest KEY Messages

Loading Messages....

KeyCorp News

Loading Messages....

Your Recent History

Company

Business

Popular

Get The App