Financial Highlights (dollars in millions, except per share
amounts) Three months ended 12-31-08 9-30-08 12-31-07 Summary of
operations Net interest income (TE) $646 (a) $705 (a) $750
Noninterest income 399 388 488 Total revenue (TE) 1,045 1,093 1,238
Provision for loan losses 594 407 363 Noninterest expense 1,303 762
896 (Loss) income from continuing operations (524) (36) 22 Income
from discontinued operations, net of taxes (b) --- --- 3 Net (loss)
income (524)(a) (36)(a) 25 Net (loss) income applicable to common
shares (554) (48) 25 Per common share (Loss) income from continuing
operations $(1.13) $(.10) $.06 (Loss) income from continuing
operations - assuming dilution (1.13) (.10) .06 Income from
discontinued operations (b) --- --- .01 Income from discontinued
operations - assuming dilution (b) --- --- .01 Net (loss) income
(1.13) (.10) .06 Net (loss) income - assuming dilution (1.13)(a)
(.10)(a) .06 Cash dividends paid .0625 .1875 .365 Book value at
period end 14.97 16.16 19.92 Tangible book value at period end
12.41 12.66 16.39 Market price at period end 8.52 11.94 23.45
Performance ratios - from continuing operations Return on average
total assets (1.93)% (.14)% .09 % Return on average common equity
(27.65) (2.36) 1.11 Return on average total equity (21.08) (1.64)
1.11 Net interest margin (TE) 2.76 3.13 3.48 Performance ratios -
from consolidated operations Return on average total assets
(1.93)%(a) (.14)%(a) .10 % Return on average common equity
(27.65)(a) (2.36)(a) 1.26 Return on average total equity (21.08)(a)
(1.64)(a) 1.26 Net interest margin (TE) 2.76 (a) 3.13 (a) 3.48
Capital ratios at period end Equity to assets 10.03 % 8.54 % 7.89 %
Tangible equity to tangible assets 8.92 6.95 6.58 Tangible common
equity to tangible assets 5.95 6.29 6.58 Tier 1 risk-based capital
(c) 10.81 8.55 7.44 Total risk-based capital (c) 14.67 12.40 11.38
Leverage (c) 11.03 9.28 8.39 Asset quality Net loan charge-offs
$342 $273 $119 Net loan charge-offs to average loans from
continuing operations 1.77 % 1.43 % .67 % Allowance for loan losses
$1,803 $1,554 $1,200 Allowance for loan losses to period- end loans
2.36 % 2.03 % 1.69 % Allowance for loan losses to nonperforming
loans 147.18 160.70 174.67 Nonperforming loans at period end $1,225
$967 $687 Nonperforming assets at period end 1,464 1,239 764
Nonperforming loans to period-end portfolio loans 1.60 % 1.26 % .97
% Nonperforming assets to period-end portfolio loans plus OREO and
other nonperforming assets 1.91 1.61 1.08 Trust and brokerage
assets Assets under management $64,717 $76,676 $85,442 Nonmanaged
and brokerage assets 22,728 27,187 33,918 Other data Average
full-time equivalent employees 17,697 18,098 18,500 Branches 986
986 955 Taxable-equivalent adjustment $7 $6 $40 Financial
Highlights (continued) (dollars in millions, except per share
amounts) Twelve months ended 12-31-08 12-31-07 Summary of
operations Net interest income (TE) $1,955 (a) $2,868 Noninterest
income 1,870 2,229 Total revenue (TE) 3,825 5,097 Provision for
loan losses 1,835 529 Noninterest expense 3,578 3,248 (Loss) income
from continuing operations (1,468) 941 Loss from discontinued
operations, net of taxes (b) --- (22) Net (loss) income (1,468)(a)
919 Net (loss) income applicable to common shares (1,510) 919 Per
common share (Loss) income from continuing operations $(3.36) $2.40
(Loss) income from continuing operations - assuming dilution (3.36)
2.38 Loss from discontinued operations (b) --- (.06) Loss from
discontinued operations - assuming dilution (b) --- (.05) Net
(loss) income (3.36) 2.35 Net (loss) income - assuming dilution
(3.36)(a) 2.32 Cash dividends paid 1.00 1.46 Performance ratios -
from continuing operations Return on average total assets (1.41)%
.99 % Return on average common equity (18.32) 12.19 Return on
average total equity (16.45) 12.19 Net interest margin (TE) 2.16
3.46 Performance ratios - from consolidated operations Return on
average total assets (1.41)% (a) .97 % Return on average common
equity (18.32)(a) 11.90 Return on average total equity (16.45)(a)
11.90 Net interest margin (TE) 2.16 (a) 3.46 Asset quality Net loan
charge-offs $1,260 $275 Net loan charge-offs to average loans from
continuing operations 1.67 % .41 % Other data Average full-time
equivalent employees 18,095 18,934 Taxable-equivalent adjustment
$(454) $99 (a) The following table entitled "GAAP to Non-GAAP
Reconciliations" presents certain earnings data and performance
ratios, excluding (credits) charges related to the tax treatment of
certain leveraged lease financing transactions disallowed by the
Internal Revenue Service, and the charge resulting from Key's
annual goodwill impairment testing completed during the fourth
quarter of 2008. The table reconciles certain GAAP performance
measures to the corresponding non-GAAP measures and provides a
basis for period-to- period comparisons. (b) Key sold the subprime
mortgage loan portfolio held by the Champion Mortgage finance
business in November 2006, and completed the sale of Champion's
origination platform in February 2007. As a result of these
actions, Key has accounted for this business as a discontinued
operation. (c) 12-31-08 ratio is estimated. TE = Taxable Equivalent
GAAP to Non-GAAP Reconciliations (dollars in millions, except per
share amounts) During the fourth quarter of 2008, Key recorded an
after-tax credit of $120 million, or $.24 per common share, in
connection with its opt-in to the IRS global tax settlement. As a
result of an adverse federal court decision on Key's tax treatment
of a Service Contract Lease transaction entered into by AWG Leasing
Trust, in which Key is a partner, Key recorded after-tax charges of
$30 million, or $.06 per common share, during the third quarter of
2008 and $1.011 billion, or $2.43 per common share, during the
second quarter of 2008. During the first quarter of 2008, Key
increased its tax reserves for certain lease in, lease out
transactions and recalculated its lease income in accordance with
prescribed accounting standards, resulting in after-tax charges of
$38 million, or $.10 per common share. Additionally, during the
fourth quarter of 2008, Key recorded an after- tax charge of $420
million, or $.85 per common share, as a result of its annual
goodwill impairment testing. During the third quarter of 2008, Key
recorded an after-tax charge of $4 million, or $.01 per common
share, as a result of goodwill impairment related to management's
decision to limit new education loans. The table below presents
certain earnings data and performance ratios, excluding these
(credits) charges (non-GAAP), reconciles the GAAP performance
measures to the corresponding non-GAAP measures and provides a
basis for period-to-period comparisons. Non-GAAP financial measures
have inherent limitations, are not required to be uniformly applied
and are not audited. Non-GAAP financial measures should not be
considered in isolation, or as a substitute for analyses of results
as reported under GAAP. Twelve months Three months ended ended
12-31-08 9-30-08 6-30-08 3-31-08 12-31-08 Net income Net (loss)
income (GAAP) $(524) $(36) $(1,126) $218 $(1,468) (Credits) charges
related to leveraged lease tax litigation, after tax (120) 30 1,011
38 959 Charges related to goodwill impairment, after tax 420 4 ---
--- 424 Net (loss) income, excluding (credits) charges related to
leveraged lease tax litigation and goodwill impairment (non-GAAP)
$(224) $(2) $(115) $256 $(85) Preferred dividends $30 $12 --- ---
$42 Net (loss) income applicable to common shares (GAAP) $(554)
$(48) $(1,126) $218 $(1,510) Net (loss) income applicable to common
shares, excluding (credits) charges related to leveraged lease tax
litigation and goodwill impairment (non-GAAP) (254) (14) (115) 256
(127) Per common share Net (loss) income - assuming dilution (GAAP)
$(1.13) $(.10) $(2.70) $.54 $(3.36) Net (loss) income, excluding
(credits) charges related to leveraged lease tax litigation and
goodwill impairment - assuming dilution (non-GAAP) (.52) (.03)
(.28) .64 (.28) Performance ratios Return on average total assets
(a) Average total assets $107,735 $103,156 $103,290 $103,356
$104,390 Return on average total assets (GAAP) (1.93)% (.14)%
(4.38)% .85 % (1.41)% Return on average total assets, excluding
(credits) charges related to leveraged lease tax litigation and
goodwill impairment (non-GAAP) (.83) (.01) (.45) 1.00 (.08) Return
on average common equity (a) Average common equity $7,971 $8,077
$8,489 $8,445 $8,244 Return on average common equity (GAAP)
(27.65)% (2.36)% (53.35)% 10.38 % (18.32)% Return on average common
equity, excluding (credits) charges related to leveraged lease tax
litigation and goodwill impairment (non-GAAP) (12.68) (.69) (5.45)
12.19 (1.54) Return on average total equity (a) Average total
equity $9,888 $8,734 $8,617 $8,445 $8,923 Return on average total
equity (GAAP) (21.08)% (1.64)% (52.56)% 10.38 % (16.45)% Return on
average total equity, excluding (credits) charges related to
leveraged lease tax litigation and goodwill impairment (non-GAAP)
(9.01) (.09) (5.37) 12.19 (.95) Net interest income and margin Net
interest income Net interest income (GAAP) $639 $699 $358 $713
$2,409 Charges related to leveraged lease tax litigation, pre-tax
18 --- 359 3 380 Net interest income, excluding charges related to
leveraged lease tax litigation (non-GAAP) $657 $699 $717 $716
$2,789 Net interest income/margin (TE) Net interest income (loss)
(TE) (as reported) $646 $705 $(100) $704 $1,955 Charges related to
leveraged lease tax litigation, pre-tax (TE) 18 --- 838 34 890 Net
interest income, excluding charges related to leveraged lease tax
litigation (TE) (adjusted basis) $664 $705 $738 $738 $2,845 Net
interest margin (TE) (as reported) (a) 2.76 % 3.13 % (.44)% 3.14 %
2.16 % Impact of charges related to leveraged lease tax litigation,
pre-tax (TE) (a) .08 --- 3.76 .15 .98 Net interest margin,
excluding charges related to leveraged lease tax litigation (TE)
(adjusted basis) (a) 2.84 % 3.13 % 3.32 % 3.29 % 3.14 % (a) Income
statement amount has been annualized in calculation of percentage.
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting
principles Consolidated Balance Sheets (dollars in millions)
12-31-08 9-30-08 12-31-07 Assets Loans $76,504 $76,705 $70,823
Loans held for sale 1,027 1,475 4,736 Securities available for sale
8,437 8,391 7,860 Held-to-maturity securities 25 28 28 Trading
account assets 1,280 1,449 1,056 Short-term investments 5,221 653
516 Other investments 1,526 1,556 1,538 Total earning assets 94,020
90,257 86,557 Allowance for loan losses (1,803) (1,554) (1,200)
Cash and due from banks 1,257 1,937 1,814 Premises and equipment
840 801 681 Operating lease assets 990 1,030 1,128 Goodwill 1,138
1,595 1,252 Other intangible assets 128 135 123 Corporate-owned
life insurance 2,970 2,940 2,872 Derivative assets 1,896 951 879
Accrued income and other assets 3,095 3,198 4,122 Total assets
$104,531 $101,290 $98,228 Liabilities Deposits in domestic offices:
NOW and money market deposit accounts $24,191 $25,789 $27,635
Savings deposits 1,712 1,731 1,513 Certificates of deposit
($100,000 or more) 11,991 10,316 6,982 Other time deposits 14,763
13,929 11,615 Total interest-bearing deposits 52,657 51,765 47,745
Noninterest-bearing deposits 11,485 11,122 11,028 Deposits in
foreign office - interest-bearing 1,118 1,791 4,326 Total deposits
65,260 64,678 63,099 Federal funds purchased and securities sold
under repurchase agreements 1,557 1,799 3,927 Bank notes and other
short-term borrowings 8,477 5,352 5,861 Derivative liabilities
1,038 589 252 Accrued expense and other liabilities 2,724 4,624
5,386 Long-term debt 14,995 15,597 11,957 Total liabilities 94,051
92,639 90,482 Shareholders' equity Preferred stock, Series A 658
658 --- Preferred stock, Series B 2,414 --- --- Common shares 584
584 492 Common stock warrants 87 --- --- Capital surplus 2,553
2,552 1,623 Retained earnings 6,727 7,320 8,522 Treasury stock, at
cost (2,608) (2,616) (3,021) Accumulated other comprehensive income
65 153 130 Total shareholders' equity 10,480 8,651 7,746 Total
liabilities and shareholders' equity $104,531 $101,290 $98,228
Common shares outstanding (000) 495,002 494,765 388,793
Consolidated Statements of Income (dollars in millions, except per
share amounts) Three months ended Twelve months ended 12-31-08
9-30-08 12-31-07 12-31-08 12-31-07 Interest income Loans $996
$1,066 $1,205 $3,902 $4,751 Loans held for sale 18 21 89 146 337
Securities available for sale 110 110 115 440 427 Held-to-maturity
securities 1 1 1 3 2 Trading account assets 17 16 12 56 38
Short-term investments 8 6 13 31 37 Other investments 13 12 12 51
52 Total interest income 1,163 1,232 1,447 4,629 5,644 Interest
expense Deposits 346 347 483 1,468 1,845 Federal funds purchased
and securities sold under repurchase agreements 4 10 45 57 208 Bank
notes and other short- term borrowings 31 34 45 131 104 Long-term
debt 143 142 164 564 718 Total interest expense 524 533 737 2,220
2,875 Net interest income 639 699 710 2,409 2,769 Provision for
loan losses 594 407 363 1,835 529 Net interest income after
provision for loan losses 45 292 347 574 2,240 Noninterest income
Trust and investment services income 138 133 131 538 490 Service
charges on deposit accounts 90 94 90 365 337 Operating lease income
64 69 72 270 272 Letter of credit and loan fees 42 53 58 183 192
Corporate-owned life insurance income 33 28 37 117 121 Electronic
banking fees 25 27 25 103 99 Insurance income 15 15 10 65 55
Investment banking and capital markets income (loss) 6 (31) 12 63
117 Net securities (losses) gains (5) 1 6 (2) (35) Net (losses)
gains from principal investing (33) (24) 6 (62) 134 Net gains
(losses) from loan securitizations and sales 3 (30) (6) (95) (17)
Gain from redemption of Visa Inc. shares --- --- --- 165 --- Gain
from sale of McDonald Investments branch network --- --- --- ---
171 Other income 21 53 47 160 293 Total noninterest income 399 388
488 1,870 2,229 Noninterest expense Personnel 411 381 399 1,605
1,621 Net occupancy 68 65 64 261 246 Operating lease expense 55 56
59 224 224 Computer processing 51 46 52 187 201 Professional fees
51 35 38 142 117 Equipment 22 23 25 92 96 Marketing 25 27 16 87 76
Goodwill impairment 465 4 5 469 5 Other expense 155 125 238 511 662
Total noninterest expense 1,303 762 896 3,578 3,248 (Loss) income
from continuing operations before income taxes (859) (82) (61)
(1,134) 1,221 Income taxes (335) (46) (83) 334 280 (Loss) income
from continuing operations (524) (36) 22 (1,468) 941 Income (loss)
from discontinued operations, net of taxes --- --- 3 --- (22) Net
(loss) income $(524) $(36) $25 $(1,468) $919 Net (loss) income
applicable to common shares $(554) $(48) $25 $(1,510) $919 Per
common share: (Loss) income from continuing operations $(1.13)
$(.10) $.06 $(3.36) $2.40 Net (loss) income (1.13) (.10) .06 (3.36)
2.35 Per common share - assuming dilution: (Loss) income from
continuing operations $(1.13) $(.10) $.06 $(3.36) $2.38 Net (loss)
income (1.13) (.10) .06 (3.36) 2.32 Cash dividends declared per
common share $.0625 $.1875 $.74 $1.00 $1.835 Weighted-average
common shares outstanding (000) 492,311 491,179 388,940 450,039
392,013 Weighted-average common shares and potential common shares
outstanding (000) 492,311 491,179 389,911 450,039 395,823
Consolidated Average Balance Sheets, Net Interest Income and
Yields/Rates From Continuing Operations (dollars in millions)
Fourth Quarter 2008 Average Balance Interest Yield/Rate Assets
Loans: (a), (b) Commercial, financial and agricultural $27,662 $346
4.98 % Real estate - commercial mortgage 10,707 151 5.63 Real
estate - construction 7,686 100 5.16 Commercial lease financing
9,186 78 3.38(c) Total commercial loans 55,241 675 4.87 Real estate
- residential 1,903 29 6.00 Home equity: Community Banking 10,037
129 5.13 National Banking 1,088 21 7.62 Total home equity loans
11,125 150 5.37 Consumer other - Community Banking 1,260 30 9.57
Consumer other - National Banking: Marine 3,467 55 6.32 Education
3,661 56 6.19 Other 288 6 8.22 Total consumer other - National
Banking 7,416 117 6.33 Total consumer loans 21,704 326 6.00 Total
loans 76,945 1,001 5.19 Loans held for sale 1,495 18 4.84
Securities available for sale (a), (d) 8,269 111 5.39
Held-to-maturity securities (a) 27 2 10.74 Trading account assets
1,416 17 4.81 Short-term investments 3,715 8 .88 Other investments
(d) 1,557 13 3.06 Total earning assets 93,424 1,170 4.98 Allowance
for loan losses (1,676) Accrued income and other assets 15,987
Total assets $107,735 Liabilities NOW and money market deposit
accounts $24,919 78 1.24 Savings deposits 1,722 1 .16 Certificates
of deposit ($100,000 or more) (e) 11,270 118 4.20 Other time
deposits 14,560 146 3.98 Deposits in foreign office 1,300 3 .90
Total interest-bearing deposits 53,771 346 2.56 Federal funds
purchased and securities sold under repurchase agreements 1,727 4
.86 Bank notes and other short-term borrowings 9,205 31 1.36
Long-term debt (e), (f) 14,557 143 4.08 Total interest-bearing
liabilities 79,260 524 2.65 Noninterest-bearing deposits 10,860
Accrued expense and other liabilities 7,727 Total liabilities
97,847 Shareholders' equity 9,888 Total liabilities and
shareholders' equity $107,735 Interest rate spread (TE) 2.33 % Net
interest income (TE) and net interest margin (TE) 646 (c) 2.76%(c)
TE adjustment (a) 7 Net interest income, GAAP basis $639 Third
Quarter 2008 Average Balance Interest Yield/Rate Assets Loans: (a),
(b) Commercial, financial and agricultural $26,345 $356 5.38 % Real
estate - commercial mortgage 10,718 158 5.87 Real estate -
construction 7,806 109 5.53 Commercial lease financing 9,585 108
4.52 Total commercial loans 54,454 731 5.35 Real estate -
residential 1,899 28 6.04 Home equity: Community Banking 9,887 141
5.64 National Banking 1,138 22 7.65 Total home equity loans 11,025
163 5.85 Consumer other - Community Banking 1,264 33 10.37 Consumer
other - National Banking: Marine 3,586 57 6.33 Education 3,635 54
5.90 Other 308 6 8.22 Total consumer other - National Banking 7,529
117 6.20 Total consumer loans 21,717 341 6.25 Total loans 76,171
1,072 5.60 Loans held for sale 1,723 21 4.76 Securities available
for sale (a), (d) 8,266 110 5.38 Held-to-maturity securities (a) 27
1 13.81 Trading account assets 1,579 16 4.02 Short-term investments
794 6 3.44 Other investments (d) 1,563 12 2.87 Total earning assets
90,123 1,238 5.47 Allowance for loan losses (1,498) Accrued income
and other assets 14,531 Total assets $103,156 Liabilities NOW and
money market deposit accounts $26,657 108 1.61 Savings deposits
1,783 1 .21 Certificates of deposit ($100,000 or more) (e) 9,506 97
4.05 Other time deposits 13,118 129 3.92 Deposits in foreign office
2,762 12 1.77 Total interest-bearing deposits 53,826 347 2.57
Federal funds purchased and securities sold under repurchase
agreements 2,546 10 1.58 Bank notes and other short-term borrowings
4,843 34 2.72 Long-term debt (e), (f) 15,123 142 3.91 Total
interest-bearing liabilities 76,338 533 2.80 Noninterest-bearing
deposits 10,756 Accrued expense and other liabilities 7,328 Total
liabilities 94,422 Shareholders' equity 8,734 Total liabilities and
shareholders' equity $103,156 Interest rate spread (TE) 2.67 % Net
interest income (TE) and net interest margin (TE) 705 3.13 % TE
adjustment (a) 6 Net interest income, GAAP basis $699 Fourth
Quarter 2007 Average Balance Interest Yield/Rate Assets Loans: (a),
(b) Commercial, financial and agricultural $23,825 $419 6.98 % Real
estate - commercial mortgage 9,351 175 7.42 Real estate -
construction 8,192 153 7.42 Commercial lease financing 10,252 171
6.65 Total commercial loans 51,620 918 7.06 Real estate -
residential 1,596 27 6.72 Home equity: Community Banking 9,658 168
6.92 National Banking 1,259 24 7.77 Total home equity loans 10,917
192 7.02 Consumer other - Community Banking 1,308 35 10.73 Consumer
other - National Banking: Marine 3,608 58 6.34 Education 329 8 9.47
Other 339 7 8.66 Total consumer other - National Banking 4,276 73
6.76 Total consumer loans 18,097 327 7.20 Total loans 69,717 1,245
7.10 Loans held for sale 4,748 89 7.53 Securities available for
sale (a), (d) 7,858 115 5.89 Held-to-maturity securities (a) 30 1
6.24 Trading account assets 1,042 12 4.40 Short-term investments
1,226 13 3.94 Other investments (d) 1,589 12 3.02 Total earning
assets 86,210 1,487 6.86 Allowance for loan losses (966) Accrued
income and other assets 13,547 Total assets $98,791 Liabilities NOW
and money market deposit accounts $25,687 197 3.05 Savings deposits
1,523 1 .19 Certificates of deposit ($100,000 or more) (e) 6,887 86
4.98 Other time deposits 11,455 135 4.68 Deposits in foreign office
5,720 64 4.42 Total interest-bearing deposits 51,272 483 3.74
Federal funds purchased and securities sold under repurchase
agreements 4,194 45 4.23 Bank notes and other short-term borrowings
4,233 45 4.15 Long-term debt (e), (f) 11,851 164 5.72 Total
interest-bearing liabilities 71,550 737 4.11 Noninterest-bearing
deposits 12,948 Accrued expense and other liabilities 6,405 Total
liabilities 90,903 Shareholders' equity 7,888 Total liabilities and
shareholders' equity $98,791 Interest rate spread (TE) 2.75 % Net
interest income (TE) and net interest margin (TE) 750 3.48 % TE
adjustment (a) 40 Net interest income, GAAP basis $710 Average
balances have not been restated to reflect Key's January 1, 2008,
adoption of Financial Accounting Standards Board ("FASB")
Interpretation No. 39, "Offsetting of Amounts Related to Certain
Contracts," and FASB Staff Position FIN 39-1, "Amendment of FASB
Interpretation 39." (a) Interest income on tax-exempt securities
and loans has been adjusted to a taxable-equivalent basis using the
statutory federal income tax rate of 35%. (b) For purposes of these
computations, nonaccrual loans are included in average loan
balances. (c) During the fourth quarter of 2008, Key's
taxable-equivalent net interest income was reduced by $18 million
as a result of an agreement reached with the IRS on all material
aspects related to the IRS global tax settlement pertaining to
certain leveraged lease financing transactions. Excluding this
reduction, the taxable- equivalent yield on Key's commercial lease
financing portfolio would have been 4.17% for the fourth quarter of
2008, and Key's taxable- equivalent net interest margin would have
been 2.84%. (d) Yield is calculated on the basis of amortized cost.
(e) Rate calculation excludes basis adjustments related to fair
value hedges. (f) Results from continuing operations exclude the
dollar amount of liabilities assumed necessary to support
interest-earning assets held by the discontinued Champion Mortgage
finance business. The interest expense related to these
liabilities, which also is excluded from continuing operations, was
calculated using a matched funds transfer pricing methodology. TE =
Taxable Equivalent, GAAP = U.S. generally accepted accounting
principles Consolidated Average Balance Sheets, Net Interest Income
and Yields/Rates From Continuing Operations (dollars in millions)
Twelve months ended December 31, 2008 Average Balance Interest
Yield/Rate Assets Loans: (a), (b) Commercial, financial and
agricultural $26,372 $1,446 5.48 % Real estate - commercial
mortgage 10,576 640 6.05 Real estate - construction 8,109 461 5.68
Commercial lease financing 9,642 (425) (4.41)(c) Total commercial
loans 54,699 2,122 3.88 Real estate - residential 1,909 117 6.11
Home equity: Community Banking 9,846 564 5.73 National Banking
1,171 90 7.67 Total home equity loans 11,017 654 5.93 Consumer
other - Community Banking 1,275 130 10.22 Consumer other - National
Banking: Marine 3,586 226 6.30 Education 2,818 170 6.05 Other 315
26 8.25 Total consumer other - National Banking 6,719 422 6.29
Total consumer loans 20,920 1,323 6.33 Total loans 75,619 3,445
4.56 Loans held for sale 2,385 146 6.11 Securities available for
sale (a), (d) 8,317 442 5.36 Held-to-maturity securities (a) 27 4
11.73 Trading account assets 1,279 56 4.38 Short-term investments
1,615 31 1.96 Other investments (d) 1,563 51 3.02 Total earning
assets 90,805 4,175 4.59 Allowance for loan losses (1,438) Accrued
income and other assets 15,023 Total assets $104,390 Liabilities
NOW and money market deposit accounts $26,429 427 1.62 Savings
deposits 1,796 6 .32 Certificates of deposit ($100,000 or more) (e)
9,385 398 4.25 Other time deposits 13,300 556 4.18 Deposits in
foreign office 3,501 81 2.31 Total interest-bearing deposits 54,411
1,468 2.70 Federal funds purchased and securities sold under
repurchase agreements 2,847 57 2.00 Bank notes and other short-term
borrowings 5,944 131 2.20 Long-term debt (e), (f) 14,387 564 4.12
Total interest-bearing liabilities 77,589 2,220 2.89
Noninterest-bearing deposits 10,744 Accrued expense and other
liabilities 7,134 Total liabilities 95,467 Shareholders' equity
8,923 Total liabilities and shareholders' equity $104,390 Interest
rate spread (TE) 1.70 % Net interest income (TE) and net interest
margin (TE) 1,955 (c) 2.16 %(c) TE adjustment (a) (454) Net
interest income, GAAP basis $2,409 Twelve months ended December 31,
2007 Average Balance Interest Yield/Rate Assets Loans: (a), (b)
Commercial, financial and agricultural $22,415 $1,622 7.23 % Real
estate - commercial mortgage 8,802 675 7.67 Real estate -
construction 8,237 653 7.93 Commercial lease financing 10,154 606
5.97 Total commercial loans 49,608 3,556 7.17 Real estate -
residential 1,525 101 6.64 Home equity: Community Banking 9,671 686
7.09 National Banking 1,144 89 7.84 Total home equity loans 10,815
775 7.17 Consumer other - Community Banking 1,367 144 10.53
Consumer other - National Banking: Marine 3,390 214 6.30 Education
333 32 9.54 Other 319 28 8.93 Total consumer other - National
Banking 4,042 274 6.77 Total consumer loans 17,749 1,294 7.29 Total
loans 67,357 4,850 7.20 Loans held for sale 4,461 337 7.57
Securities available for sale (a), (d) 7,757 427 5.52
Held-to-maturity securities (a) 36 2 6.68 Trading account assets
917 38 4.10 Short-term investments 846 37 4.34 Other investments
(d) 1,524 52 3.33 Total earning assets 82,898 5,743 6.84 Allowance
for loan losses (948) Accrued income and other assets 12,934 Total
assets $94,884 Liabilities NOW and money market deposit accounts
$24,070 762 3.17 Savings deposits 1,591 3 .19 Certificates of
deposit ($100,000 or more) (e) 6,389 321 5.02 Other time deposits
11,767 550 4.68 Deposits in foreign office 4,287 209 4.87 Total
interest-bearing deposits 48,104 1,845 3.84 Federal funds purchased
and securities sold under repurchase agreements 4,330 208 4.79 Bank
notes and other short-term borrowings 2,423 104 4.28 Long-term debt
(e), (f) 12,537 718 5.84 Total interest-bearing liabilities 67,394
2,875 4.28 Noninterest-bearing deposits 13,635 Accrued expense and
other liabilities 6,133 Total liabilities 87,162 Shareholders'
equity 7,722 Total liabilities and shareholders' equity $94,884
Interest rate spread (TE) 2.56 % Net interest income (TE) and net
interest margin (TE) 2,868 3.46 % TE adjustment (a) 99 Net interest
income, GAAP basis $2,769 Average balances have not been restated
to reflect Key's January 1, 2008, adoption of Financial Accounting
Standards Board ("FASB") Interpretation No. 39, "Offsetting of
Amounts Related to Certain Contracts," and FASB Staff Position FIN
39-1, "Amendment of FASB Interpretation 39." (a) Interest income on
tax-exempt securities and loans has been adjusted to a
taxable-equivalent basis using the statutory federal income tax
rate of 35%. (b) For purposes of these computations, nonaccrual
loans are included in average loan balances. (c) During the fourth
quarter of 2008, Key's taxable-equivalent net interest income was
reduced by $18 million as a result of an agreement reached with the
IRS on all material aspects related to the IRS global tax
settlement pertaining to certain leveraged lease financing
transactions. During the second quarter of 2008, Key's taxable-
equivalent net interest income was reduced by $838 million as a
result of an adverse federal court decision on Key's tax treatment
of a Service Contract Lease transaction. During the first quarter
of 2008, Key's taxable-equivalent net interest income was reduced
by $34 million as a result of an increase to Key's tax reserves for
certain lease in, lease out transactions and a recalculation of its
lease income in accordance with prescribed accounting standards.
Excluding these reductions, the taxable-equivalent yield on Key's
commercial lease financing portfolio would have been 4.82% for the
twelve months ended December 31, 2008, and Key's taxable-equivalent
net interest margin would have been 3.14%. (d) Yield is calculated
on the basis of amortized cost. (e) Rate calculation excludes basis
adjustments related to fair value hedges. (f) Results from
continuing operations exclude the dollar amount of liabilities
assumed necessary to support interest-earning assets held by the
discontinued Champion Mortgage finance business. The interest
expense related to these liabilities, which also is excluded from
continuing operations, was calculated using a matched funds
transfer pricing methodology. TE = Taxable Equivalent, GAAP = U.S.
generally accepted accounting principles Noninterest Income (in
millions) Three months ended Twelve months ended 12-31-08 9-30-08
12-31-07 12-31-08 12-31-07 Trust and investment services income (a)
$138 $133 $131 $538 $490 Service charges on deposit accounts 90 94
90 365 337 Operating lease income 64 69 72 270 272 Letter of credit
and loan fees 42 53 58 183 192 Corporate-owned life insurance
income 33 28 37 117 121 Electronic banking fees 25 27 25 103 99
Insurance income 15 15 10 65 55 Investment banking and capital
markets income (loss) (a) 6 (31) 12 63 117 Net securities (losses)
gains (5) 1 6 (2) (35) Net (losses) gains from principal investing
(33) (24) 6 (62) 134 Net gains (losses) from loan securitizations
and sales 3 (30) (6) (95) (17) Gain from redemption of Visa Inc.
shares --- --- --- 165 --- Gain from sale of McDonald Investments
branch network --- --- --- --- 171 Other income: Loan
securitization servicing fees 5 4 5 18 21 Credit card fees 3 6 3 16
13 Gains related to MasterCard Incorporated shares --- --- --- ---
67 Litigation settlement - automobile residual value insurance ---
--- --- --- 26 Miscellaneous income 13 43 39 126 166 Total other
income 21 53 47 160 293 Total noninterest income $399 $388 $488
$1,870 $2,229 (a) Additional detail provided in tables below. Trust
and Investment Services Income (in millions) Three months ended
Twelve months ended 12-31-08 9-30-08 12-31-07 12-31-08 12-31-07
Brokerage commissions and fee income $48 $37 $31 $159 $125 Personal
asset management and custody fees 39 38 43 158 165 Institutional
asset management and custody fees 51 58 57 221 200 Total trust and
investment services income $138 $133 $131 $538 $490 Investment
Banking and Capital Markets Income (in millions) Three months ended
Twelve months ended 12-31-08 9-30-08 12-31-07 12-31-08 12-31-07
Investment banking income $7 $20 $21 $85 $86 Losses from other
investments (32) (7) (23) (44) (34) Dealer trading and derivatives
income (loss) 11 (57) (1) (39) 17 Foreign exchange income 20 13 15
61 48 Total investment banking and capital markets income (loss) $6
$(31) $12 $63 $117 Noninterest Expense (dollars in millions) Three
months ended Twelve months ended 12-31-08 9-30-08 12-31-07 12-31-08
12-31-07 Personnel (a) $411 $381 $399 $1,605 $1,621 Net occupancy
68 65 64 261 246 Operating lease expense 55 56 59 224 224 Computer
processing 51 46 52 187 201 Professional fees 51 35 38 142 117
Equipment 22 23 25 92 96 Marketing 25 27 16 87 76 Noncash charge
for goodwill impairment 465 4 5 469 5 Other expense: Postage and
delivery 12 11 13 46 47 Franchise and business taxes 7 7 7 30 32
Telecommunications 8 7 7 30 28 (Credit) provision for losses on
lending- related commitments (5) 8 25 (26) 28 Liability to Visa
Inc. --- --- 64 --- 64 Miscellaneous expense 133 92 122 431 463
Total other expense 155 125 238 511 662 Total noninterest expense
$1,303 $762 $896 $3,578 $3,248 Average full-time equivalent
employees 17,697 18,098 18,500(b) 18,095 18,934(b) (a) Additional
detail provided in table below. (b) The number of average full-time
equivalent employees has not been adjusted for discontinued
operations. Personnel Expense (in millions) Three months ended
Twelve months ended 12-31-08 9-30-08 12-31-07 12-31-08 12-31-07
Salaries $241 $245 $255 $960 $976 Incentive compensation 78 55 52
286 264 Employee benefits 58 59 65 258 287 Stock-based compensation
11 8 3 50 60 Severance 23 14 24 51 34 Total personnel expense $411
$381 $399 $1,605 $1,621 Loan Composition (dollars in millions)
Percent change 12-31-08 vs. 12-31-08 9-30-08 12-31-07 9-30-08
12-31-07 Commercial, financial and agricultural $27,260 $27,207
$24,797 .2 % 9.9 % Commercial real estate: Commercial mortgage
10,819 10,569 9,630 2.4 12.3 Construction 7,717 7,708 8,102 .1
(4.8) Total commercial real estate loans (a) 18,536 18,277 17,732
1.4 4.5 Commercial lease financing 9,039 9,437 10,176 (4.2) (11.2)
Total commercial loans 54,835 54,921 52,705 (.2) 4.0 Real estate -
residential mortgage 1,908 1,898 1,594 .5 19.7 Home equity:
Community Banking 10,124 9,970 9,655 1.5 4.9 National Banking 1,051
1,101 1,262 (4.5) (16.7) Total home equity loans 11,175 11,071
10,917 .9 2.4 Consumer other - Community Banking 1,233 1,274 1,298
(3.2) (5.0) Consumer other - National Banking: Marine 3,401 3,529
3,637 (3.6) (6.5) Education (b) 3,669 3,711 331 (1.1) N/M Other 283
301 341 (6.0) (17.0) Total consumer other - National Banking 7,353
7,541 4,309 (2.5) 70.6 Total consumer loans 21,669 21,784 18,118
(.5) 19.6 Total loans $76,504 $76,705 $70,823 (.3)% 8.0 % Loans
Held for Sale Composition (dollars in millions) Percent change
12-31-08 vs. 12-31-08 9-30-08 12-31-07 9-30-08 12-31-07 Commercial,
financial and agricultural $102 $159 $250 (35.8)% (59.2)% Real
estate - commercial mortgage 273 718 1,219 (62.0) (77.6) Real
estate - construction (a) 164 262 35 (37.4) 368.6 Commercial lease
financing 7 52 1 (86.5) 600.0 Real estate - residential mortgage 77
57 47 35.1 63.8 Home equity --- --- 1 --- (100.0) Education (b) 401
223 3,176 79.8 (87.4) Automobile 3 4 7 (25.0) (57.1) Total loans
held for sale $1,027 $1,475 $4,736 (30.4)% (78.3)% (a) During the
second quarter of 2008, Key transferred $384 million of commercial
real estate loans ($719 million of primarily construction loans,
net of $335 million in net charge-offs) from the loan portfolio to
held-for-sale status. (b) On March 31, 2008, Key transferred $3.284
billion of education loans from loans held for sale to the loan
portfolio. N/M = Not Meaningful Summary of Loan Loss Experience
(dollars in millions) Three months ended Twelve months ended
12-31-08 9-30-08 12-31-07 12-31-08 12-31-07 Average loans
outstanding from continuing operations $76,945 $76,171 $69,717
$75,619 $67,357 Allowance for loan losses at beginning of period
$1,554 $1,421 $955 $1,200 $944 Loans charged off: Commercial,
financial and agricultural 132 75 48 332 128 Real estate --
commercial mortgage 43 21 3 83 16 Real estate -- construction 49 80
44 494 54 Total commercial real estate loans (a) 92 101 47 577 70
Commercial lease financing 26 24 18 83 51 Total commercial loans
250 200 113 992 249 Real estate -- residential mortgage 7 2 3 15 6
Home equity: Community Banking 15 10 6 43 21 National Banking 17 12
6 47 16 Total home equity loans 32 22 12 90 37 Consumer other -
Community Banking 13 11 8 44 31 Consumer other - National Banking:
Marine 30 20 11 85 33 Education (b) 33 41 2 131 5 Other 4 4 3 14 9
Total consumer other - National Banking 67 65 16 230 47 Total
consumer loans 119 100 39 379 121 Total loans charged off 369 300
152 1,371 370 Recoveries: Commercial, financial and agricultural 13
13 13 54 37 Real estate -- commercial mortgage --- 1 2 1 6 Real
estate -- construction --- 1 --- 2 1 Total commercial real estate
loans --- 2 2 3 7 Commercial lease financing 5 5 12 20 22 Total
commercial loans 18 20 27 77 66 Real estate -- residential mortgage
--- --- --- 1 1 Home equity: Community Banking 1 1 --- 3 3 National
Banking --- --- --- 1 1 Total home equity loans 1 1 --- 4 4
Consumer other - Community Banking 2 1 2 6 8 Consumer other -
National Banking: Marine 5 4 3 18 12 Education --- 1 --- 2 1 Other
1 --- 1 3 3 Total consumer other - National Banking 6 5 4 23 16
Total consumer loans 9 7 6 34 29 Total recoveries 27 27 33 111 95
Net loan charge-offs (342) (273) (119) (1,260) (275) Provision for
loan losses from continuing operations 594 407 363 1,835 529
Allowance related to loans acquired, net --- --- --- 32 --- Foreign
currency translation adjustment (3) (1) 1 (4) 2 Allowance for loan
losses at end of period $1,803 $1,554 $1,200 $1,803 $1,200 Net loan
charge-offs to average loans from continuing operations 1.77% 1.43%
.67% 1.67% .41% Allowance for loan losses to period-end loans 2.36
2.03 1.69 2.36 1.69 Allowance for loan losses to nonperforming
loans 147.18 160.70 174.67 147.18 174.67 (a) During the second
quarter of 2008, Key transferred $384 million of commercial real
estate loans ($719 million of primarily construction loans, net of
$335 million in net charge-offs) from the loan portfolio to
held-for-sale status. (b) On March 31, 2008, Key transferred $3.284
billion of education loans from loans held for sale to the loan
portfolio. Changes in Liability for Credit Losses on
Lending-Related Commitments (in millions) Three months ended Twelve
months ended 12-31-08 9-30-08 12-31-07 12-31-08 12-31-07 Balance at
beginning of period $59 $51 $55 $80 $53 (Credit) provision for
losses on lending-related commitments (5) 8 25 (26) 28 Charge-offs
--- (1) Balance at end of period (a) $54 $59 $80 $54 $80 (a)
Included in "accrued expense and other liabilities" on the
consolidated balance sheet. Summary of Nonperforming Assets and
Past Due Loans (dollars in millions) 12-31-08 9-30-08 6-30-08
3-31-08 12-31-07 Commercial, financial and agricultural $415 $309
$259 $147 $84 Real estate - commercial mortgage 128 119 107 113 41
Real estate - construction 436 334 256 610 415 Total commercial
real estate loans 564 453 363 (b) 723 456 Commercial lease
financing 81 55 57 38 28 Total commercial loans 1,060 817 679 908
568 Real estate - residential mortgage 39 35 32 34 28 Home equity:
Community Banking 76 70 61 60 54 National Banking 15 16 14 14 12
Total home equity loans 91 86 75 74 66 Consumer other - Community
Banking 3 3 2 2 2 Consumer other - National Banking: Marine 26 22
20 20 20 Education 4 3 4 15 2 Other 2 1 2 1 1 Total consumer other
- National Banking 32 26 26 36 23 Total consumer loans 165 150 135
146 119 Total nonperforming loans 1,225 967 814 1,054 687
Nonperforming loans held for sale 90 169 342 (b) 9 25 OREO 110 64
26 29 21 Allowance for OREO losses (3) (4) (2) (2) (2) OREO, net of
allowance 107 60 24 27 19 Other nonperforming assets (a) 42 43 30
25 33 Total nonperforming assets $1,464 $1,239 $1,210 $1,115 $764
Accruing loans past due 90 days or more $433 $328 $367 $283 $231
Accruing loans past due 30 through 89 days 1,314 937 852 1,169 843
Nonperforming loans to period-end portfolio loans 1.60 % 1.26 %
1.07 % 1.38 % .97 % Nonperforming assets to period-end portfolio
loans plus OREO and other nonperforming assets 1.91 1.61 1.59 1.46
1.08 Summary of Changes in Nonperforming Loans (in millions) 4Q08
3Q08 2Q08 1Q08 4Q07 Balance at beginning of period $967 $814 $1,054
$687 $498 Loans placed on nonaccrual status 734 530 789 566 378
Charge-offs (369) (300) (547) (144) (147) Loans sold (5) (1) (48)
--- (13) Payments (77) (43) (86) (32) (17) Transfers to OREO (22)
--- --- (10) (5) Transfer to nonperforming loans held for sale ---
(30) (342)(b) (8) --- Loans returned to accrual status (3) (3) (6)
(5) (7) Balance at end of period $1,225 $967 $814 $1,054 $687 (a)
Primarily investments held by the Private Equity unit within Key's
Real Estate Capital and Corporate Banking Services line of
business. (b) During the second quarter of 2008, Key transferred
$384 million of commercial real estate loans ($719 million of
primarily construction loans, net of $335 million in net
charge-offs) from the loan portfolio to held-for-sale status. Line
of Business Results (dollars in millions) Community Banking 4Q08
3Q08 2Q08 1Q08 4Q07 Summary of operations Total revenue (TE) $644
$653 $656 $629 $653 Provision for loan losses 102 56 44 18 36
Noninterest expense 489 445 448 428 438 Net income 33 95 103 114
112 Average loans and leases 29,157 28,872 28,477 28,093 27,234
Average deposits 51,055 50,384 49,950 49,777 47,261 Net loan
charge-offs 66 70 38 30 31 Net loan charge-offs to average loans
.90% .96% .54% .43% .45% Nonperforming assets at period end $261
$225 $218 $204 $153 Return on average allocated equity 4.19% 12.42%
13.49% 15.29% 17.52% Average full-time equivalent employees 8,796
8,854 8,785 8,714 8,454 Supplementary information (lines of
business) Regional Banking Total revenue (TE) $556 $552 $554 $529
$555 Provision for loan losses 80 39 25 9 26 Noninterest expense
437 398 400 385 385 Net income 24 72 81 84 90 Average loans and
leases 20,015 19,795 19,621 19,562 18,776 Average deposits 47,427
46,655 46,253 46,192 43,718 Net loan charge-offs 52 41 33 29 26 Net
loan charge-offs to average loans 1.03% .82% .68% .60% .55%
Nonperforming assets at period end $184 $168 $157 $142 $119 Return
on average allocated equity 4.34% 13.25% 14.77% 15.43% 20.39%
Average full-time equivalent employees 8,458 8,512 8,439 8,365
8,101 Commercial Banking Total revenue (TE) $88 $101 $102 $100 $98
Provision for loan losses 22 17 19 9 10 Noninterest expense 52 47
48 43 53 Net income 9 23 22 30 22 Average loans and leases 9,142
9,077 8,856 8,531 8,458 Average deposits 3,628 3,729 3,697 3,585
3,543 Net loan charge-offs 14 29 5 1 5 Net loan charge-offs to
average loans .61% 1.27% .23% .05% .23% Nonperforming assets at
period end $77 $57 $61 $62 $34 Return on average allocated equity
3.83% 10.39% 10.21% 14.90% 11.12% Average full-time equivalent
employees 338 342 346 349 353 Community Banking Percent change 4Q08
vs. 3Q08 4Q07 Summary of operations Total revenue (TE) (1.4)%
(1.4)% Provision for loan losses 82.1 183.3 Noninterest expense 9.9
11.6 Net income (65.3) (70.5) Average loans and leases 1.0 7.1
Average deposits 1.3 8.0 Net loan charge-offs (5.7) 112.9 Net loan
charge-offs to average loans N/A N/A Nonperforming assets at period
end 16.0 70.6 Return on average allocated equity N/A N/A Average
full-time equivalent employees (.7) 4.0 Supplementary information
(lines of business) Regional Banking Total revenue (TE) .7 % .2 %
Provision for loan losses 105.1 207.7 Noninterest expense 9.8 13.5
Net income (66.7) (73.3) Average loans and leases 1.1 6.6 Average
deposits 1.7 8.5 Net loan charge-offs 26.8 100.0 Net loan
charge-offs to average loans N/A N/A Nonperforming assets at period
end 9.5 54.6 Return on average allocated equity N/A N/A Average
full-time equivalent employees (.6) 4.4 Commercial Banking Total
revenue (TE) (12.9)% (10.2)% Provision for loan losses 29.4 120.0
Noninterest expense 10.6 (1.9) Net income (60.9) (59.1) Average
loans and leases .7 8.1 Average deposits (2.7) 2.4 Net loan
charge-offs (51.7) 180.0 Net loan charge-offs to average loans N/A
N/A Nonperforming assets at period end 35.1 126.5 Return on average
allocated equity N/A N/A Average full-time equivalent employees
(1.2) (4.2) Line of Business Results (continued) (dollars in
millions) National Banking 4Q08 3Q08 2Q08 1Q08 4Q07 Summary of
operations Total revenue (TE) $539 $487 $(127) $438 $610 Provision
for loan losses 489 350 609 169 327 Noninterest expense 830 342 337
308 388 Loss from continuing operations (662) (130) (671) (24) (67)
Net loss (662) (130) (671) (24) (64) Average loans and leases (a)
47,474 47,075 47,877 44,163 42,040 Average loans held for sale (a)
1,404 1,651 1,282 4,932 4,709 Average deposits (a) 12,305 12,439
12,287 11,877 12,622 Net loan charge- offs (a) 276 203 486 91 88
Net loan charge- offs to average loans (a) 2.31 % 1.72 % 4.08 % .83
% .83 % Nonperforming assets at period end $1,190 $1,014 $992 $911
$611 Return on average allocated equity (a) (49.64)% (10.07)%
(51.44)% (1.96)% (5.95)% Return on average allocated equity (49.64)
(10.07) (51.44) (1.96) (5.68) Average full-time equivalent
employees 3,316 3,552 3,604 3,759 4,010 Supplementary information
(lines of business) Real Estate Capital and Corporate Banking
Services Total revenue (TE) $161 $96 $235 $82 $160 Provision for
loan losses 153 99 366 45 270 Noninterest expense 93 89 67 60 117
Net (loss) (53) (58) (124) (14) (142) Average loans and leases
16,604 16,447 17,086 16,497 15,003 Average loans held for sale 511
792 616 989 1,257 Average deposits 10,390 10,446 10,460 9,784
10,396 Net loan charge-offs 81 100 376 38 45 Net loan charge-offs
to average loans 1.94 % 2.42 % 8.85 % .93 % 1.19 % Nonperforming
assets at period end $763 $714 $779 $732 $475 Return on average
allocated equity (9.96)% (11.40)% (23.15)% (3.01)% (36.68)% Average
full-time equivalent employees 1,107 1,209 1,228 1,233 1,310
Equipment Finance Total revenue (TE) $92 $111 $(696) $94 $183
Provision for loan losses 33 64 36 24 23 Noninterest expense 349 90
89 96 96 Net (loss) income (276) (27) (513) (16) 40 Average loans
and leases 9,548 10,013 10,326 10,596 10,730 Average loans held for
sale 29 49 51 32 15 Average deposits 15 20 21 14 17 Net loan
charge-offs 51 32 28 24 18 Net loan charge-offs to average loans
2.12 % 1.27 % 1.09 % .91 % .67 % Nonperforming assets at period end
$158 $115 $105 $69 $58 Return on average allocated equity (124.21)%
(12.00)% (226.24)% (6.97)% (17.40)% Average full-time equivalent
employees 781 819 838 860 923 Institutional and Capital Markets
Total revenue (TE) $200 $185 $230 $159 $169 Provision for loan
losses 52 16 36 16 15 Noninterest expense 329 107 128 103 116 Net
(loss) income (193) 39 41 25 25 Average loans and leases 9,352
8,363 7,898 7,633 7,218 Average loans held for sale 545 649 494 555
394 Average deposits 1,442 1,479 1,384 1,460 1,560 Net loan charge-
offs (recoveries) 38 (1) 5 2 6 Net loan charge-offs (recoveries) to
average loans 1.62 % (.05)% .25 % .11 % .33 % Nonperforming assets
at period end $55 $58 $26 $12 $15 Return on average allocated
equity (57.82)% 12.11 % 13.11 % 8.28 % 8.51 % Average full-time
equivalent employees 939 964 931 938 979 Consumer Finance Total
revenue (TE) $86 $95 $104 $103 $98 Provision for loan losses 251
171 171 84 19 Noninterest expense 59 56 53 49 59 (Loss) income from
continuing operations (140) (84) (75) (19) 10 Net (loss) income
(140) (84) (75) (19) 13 Average loans and leases (a) 11,970 12,252
12,567 9,437 9,089 Average loans held for sale (a) 319 161 121
3,356 3,043 Average deposits (a) 458 494 422 619 649 Net loan
charge- offs (a) 106 72 77 27 19 Net loan charge-offs to average
loans (a) 3.52 % 2.34 % 2.46 % 1.15 % .83 % Nonperforming assets at
period end $214 $127 $82 $98 $63 Return on average allocated equity
(a) (57.12)% (35.70)% (32.72)% (8.36)% 4.65 % Return on average
allocated equity (57.12) (35.70) (32.72) (8.36) 6.04 Average
full-time equivalent employees 489 560 607 728 798 National Banking
Percent change 4Q08 vs. 3Q08 4Q07 Summary of operations Total
revenue (TE) 10.7 % (11.6)% Provision for loan losses 39.7 49.5
Noninterest expense 142.7 113.9 Loss from continuing operations
(409.2) (888.1) Net loss (409.2) (934.4) Average loans and leases
(a) .8 12.9 Average loans held for sale (a) (15.0) (70.2) Average
deposits (a) (1.1) (2.5) Net loan charge-offs (a) 36.0 213.6 Net
loan charge-offs to average loans (a) N/A N/A Nonperforming assets
at period end 17.4 94.8 Return on average allocated equity (a) N/A
N/A Return on average allocated equity N/A N/A Average full-time
equivalent employees (6.6) (17.3) Supplementary information (lines
of business) Real Estate Capital and Corporate Banking Services
Total revenue (TE) 67.7 % .6 % Provision for loan losses 54.5
(43.3) Noninterest expense 4.5 (20.5) Net (loss) 8.6 62.7 Average
loans and leases 1.0 10.7 Average loans held for sale (35.5) (59.3)
Average deposits (.5) (.1) Net loan charge-offs (19.0) 80.0 Net
loan charge-offs to average loans N/A N/A Nonperforming assets at
period end 6.9 60.6 Return on average allocated equity N/A N/A
Average full-time equivalent employees (8.4) (15.5) Equipment
Finance Total revenue (TE) (17.1)% (49.7)% Provision for loan
losses (48.4) 43.5 Noninterest expense 287.8 263.5 Net (loss)
income (922.2) N/M Average loans and leases (4.6) (11.0) Average
loans held for sale (40.8) 93.3 Average deposits (25.0) (11.8) Net
loan charge-offs 59.4 183.3 Net loan charge-offs to average loans
N/A N/A Nonperforming assets at period end 37.4 172.4 Return on
average allocated equity N/A N/A Average full-time equivalent
employees (4.6) (15.4) Institutional and Capital Markets Total
revenue (TE) 8.1 % 18.3 % Provision for loan losses 225.0 246.7
Noninterest expense 207.5 183.6 Net (loss) income N/M N/M Average
loans and leases 11.8 29.6 Average loans held for sale (16.0) 38.3
Average deposits (2.5) (7.6) Net loan charge-offs (recoveries) N/M
533.3 Net loan charge-offs (recoveries) to average loans N/A N/A
Nonperforming assets at period end (5.2) 266.7 Return on average
allocated equity N/A N/A Average full-time equivalent employees
(2.6) (4.1) Consumer Finance Total revenue (TE) (9.5)% (12.2)%
Provision for loan losses 46.8 N/M Noninterest expense 5.4 ___
(Loss) income from continuing operations (66.7) N/M Net (loss)
income (66.7) N/M Average loans and leases (a) (2.3) 31.7 Average
loans held for sale (a) 98.1 (89.5) Average deposits (a) (7.3)
(29.4) Net loan charge-offs (a) 47.2 457.9 Net loan charge-offs to
average loans (a) N/A N/A Nonperforming assets at period end 68.5
239.7 Return on average allocated equity (a) N/A N/A Return on
average allocated equity N/A N/A Average full-time equivalent
employees (12.7) (38.7) (a) From continuing operations. TE =
Taxable Equivalent, N/A = Not Applicable, N/M = Not Meaningful
DATASOURCE: KeyCorp Web site: https://www.key.com/
https://www.key.com/newsroom https://www.key.com/ir
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