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KEYCORP (KEY)

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KeyCorp : Reports First Quarter 2012 Net Income of $199 Million, or $.21 Per Common Share

04/19/2012 | 06:35am US/Eastern
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CLEVELAND, April 19, 2012 /PRNewswire/ --

    --  Net income from continuing operations of $199 million, or $.21 per
        common share for the first quarter of 2012
    --  Net interest margin of 3.16%, up three basis points from the fourth
        quarter of 2011
    --  Average total loans increased $766 million, or 6% annualized from the
        fourth quarter of 2011
    --  Net charge-offs declined to $101 million, or .82% of average loan
        balances for the first quarter of 2012
    --  Nonperforming loans declined to $666 million, or 1.35% of period-end
        loans, and nonperforming assets decreased to $767 million at March 31,
        2012
    --  Loan loss reserve at 1.92% of total period-end loans and 141.7% of
        nonperforming loans at March 31, 2012
    --  Received no objection from the Federal Reserve to Key's capital plan,
        which included a common stock repurchase program and a plan to evaluate
        a dividend increase
    --  Tier 1 common equity and Tier 1 risk-based capital ratios estimated at
        11.5% and 13.3%, respectively, at March 31, 2012

KeyCorp (NYSE: KEY) today announced first quarter net income from continuing operations attributable to Key common shareholders of $199 million, or $.21 per common share. This result compares to $184 million, or $.21 per common share for the first quarter of 2011, which included a deemed dividend of $49 million, or $.06 per diluted common share related to the accelerated amortization of the discount on the repurchased preferred shares from the U.S. Treasury. First quarter 2012 net income attributable to Key common shareholders was $194 million compared to net income attributable to Key common shareholders of $173 million for the same quarter one year ago.

During the first quarter of 2012, the Company continued to benefit from improved asset quality. Nonperforming loans decreased by $219 million and nonperforming assets declined by $322 million from the year-ago quarter to $666 million and $767 million, respectively. Net charge-offs declined to $101 million, or .82% of average loan balances for the first quarter of 2012, compared to $193 million, or 1.59% of average loan balances for the same period one year ago.

"Key's first quarter results demonstrate continued positive momentum as we execute on our relationship strategy, strengthen our balance sheet and maintain disciplined expense control," said Chairman and Chief Executive Officer Beth Mooney. "Asset quality improved again this quarter, and we were pleased to see growth in our commercial, financial and agricultural loan portfolio. Key remains committed to meeting the credit needs of its customers and communities."

Key originated approximately $8.3 billion in new or renewed lending commitments to consumers and businesses during the first quarter of 2012, which is up from $6.9 billion for the same period one year ago.

Mooney added that she was particularly pleased that Key received several industry honors and recognition in the first quarter. Corporate Insight's Bank Monitor commended Key for service excellence in categories including online bill pay, online account opening, alerts and fund transfers. Greenwich Associates' 2011 national banking survey recognized Key as a national and regional winner of three excellence awards for its small business banking and middle market banking.

At March 31, 2012, Key's estimated Tier 1 common equity and Tier 1 risk-based capital ratios were 11.5% and 13.3%, compared to 11.3% and 13.0%, respectively, at December 31, 2011.

Mooney continued: "As previously announced, our Board of Directors has authorized a common stock repurchase program of up to $344 million to begin in the second quarter of this year through the first quarter of 2013. Our Board will also evaluate an increase in our quarterly common stock dividend from $.03 per share up to $.05 per share next month at its regular meeting. These actions, which are a part of our 2012 capital plan submitted to the Federal Reserve and to which the Federal Reserve had no objection, represent an opportunity for Key to return capital to our shareholders while still maintaining our peer leading capital to support organic growth."

As previously reported, on January 11, 2012, Key signed a purchase and assumption agreement to acquire 37 retail banking branches in Buffalo and Rochester, NY. The deposits associated with these branches total approximately $2.4 billion, while loans total approximately $400 million. The transaction is expected to close early third quarter of 2012, subject to customary closing conditions, including regulatory approval of the acquisition.

The following table shows Key's continuing and discontinued operating results for the three-month periods ended March 31, 2012, December 31, 2011 and March 31, 2011.


    Results of Operations

                                                                                  Three months ended
                                                                                  ------------------
    in millions, except per share
     amounts                                                        3-31-12               12-31-11         3-31-11
    -----------------------------                                   -------               --------         -------
    Summary of operations
    ---------------------
    Income (loss) from continuing
     operations attributable to Key                                         $205                     $207          $274
    Income (loss) from discontinued
     operations, net of taxes (a)                                             (5)                      (7)          (11)
                                                                             ---                      ---           ---
    Net income (loss) attributable to
     Key                                                                    $200                     $200          $263
                                                                            ====                     ====          ====

    Income (loss) from continuing
     operations attributable to Key                                         $205                     $207          $274
    Less:                           Dividends on Series A Preferred
                                    Stock                                      6                        6             6
                                    Cash dividends on Series B
                                    Preferred Stock                            -                        -            31
                                    Amortization of discount on
                                    Series B Preferred Stock (b)               -                        -            53

    Income (loss) from continuing
     operations attributable to Key
     common shareholders                                                     199                      201           184
    Income (loss) from discontinued
     operations, net of taxes (a)                                             (5)                      (7)          (11)
                                                                             ---                      ---           ---
    Net income (loss) attributable to
     Key common shareholders                                                $194                     $194          $173
                                                                            ====                     ====          ====

    Per common share -assuming
     dilution
    --------------------------
    Income (loss) from continuing
     operations attributable to Key
     common shareholders                                                    $.21                     $.21          $.21
    Income (loss) from discontinued
     operations, net of taxes (a)                                           (.01)                    (.01)         (.01)
                                                                            ----                     ----          ----
    Net income (loss) attributable to
     Key common shareholders (c)                                            $.20                     $.20          $.19
                                                                            ====                     ====          ====

    (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. As a
                   result of these decisions, Key
                   has accounted for these
                   businesses as discontinued
                   operations. The loss from
                   discontinued operations for the
                   three-months ended March 31,
                   2012, was primarily attributable
                   to fair value adjustments
                   related to the education lending
                   securitization trusts.

    (b)            March 31, 2011 includes a $49
                   million deemed dividend related
                   to the repurchase of the $2.5
                   billion Fixed-Rate Perpetual
                   Preferred Stock, Series B
                   ("Series B Preferred Stock").

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

SUMMARY OF CONTINUING OPERATIONS

Taxable-equivalent net interest income was $559 million for the first quarter of 2012, and the net interest margin was 3.16%. These results compare to taxable-equivalent net interest income of $604 million and a net interest margin of 3.25% for the first quarter of 2011. The decrease in net interest income is attributed to a decline in both the net interest margin and earning assets. The net interest margin has been under pressure as a result of the continuation of the low-rate environment contracting the spread between lending rates and funding costs.

Compared to the fourth quarter of 2011, taxable-equivalent net interest income decreased by $4 million, and the net interest margin improved by three basis points. The slight decrease in net interest income is primarily due to the write-off of $6 million of capitalized loan origination costs resulting from the early termination of a leveraged lease in the first quarter of 2012. The improvement in the net interest margin resulted from a decrease in the balance of lower yielding short-term investments during the first quarter of 2012 and a continued decline in funding costs.

Key's noninterest income was $472 million for the first quarter of 2012, compared to $457 million for the year-ago quarter. Gains on leased equipment increased $23 million, primarily due to a $20 million gain related to the early termination of a leveraged lease, compared to the same period one year ago. Other income also increased $16 million from the year-ago quarter. These increases in noninterest income were partially offset by a $13 million decrease in operating lease income and a $13 million decline in electronic banking fees as a result of new government pricing controls on debit transactions that went into effect October 1, 2011.

The major components of Key's noninterest income for the past five quarters are shown in the following table.


    Noninterest Income - Major Components

    in
     millions                             1Q12      4Q11       3Q11      2Q11      1Q11
    ---------                             ----      ----       ----      ----      ----
    Trust and
     investment
     services
     income                                    $109      $104       $107      $113      $110
    Service
     charges
     on
     deposit
     accounts                                    68        70         74        69        68
    Operating
     lease
     income                                      22        25         30        32        35
    Letter of
     credit
     and loan
     fees                                        54        56         55        47        55
     Corporate-
     owned
     life
     insurance
     income                                      30        35         31        28        27
     Electronic
     banking
     fees                                        17        18         33        33        30
    Gains on
     leased
     equipment                                   27         9          7         5         4
    Insurance
     income                                      12        11         13        14        15
    Net gains
     (losses)
     from
     loan
     sales                                       22        27         18        11        19
    Net gains
     (losses)
     from
     principal
     investing                                   35        (8)        34        17        35
     Investment
     banking
     and
     capital
     markets
     income
     (loss)                                      43        24         25        42        43

Compared to the fourth quarter of 2011, noninterest income increased by $58 million. Net gains (losses) from principal investing (including results attributable to noncontrolling interests) increased $43 million, and investment banking and capital markets income increased $19 million compared to the fourth quarter of 2011. Key's fourth quarter investment banking and capital markets income included a $24 million charge related to funding Visa's litigation escrow liability account. Gains on leased equipment increased $18 million resulting from the early termination of a leveraged lease in the first quarter of 2012. These increases in noninterest income were partially offset by declines in corporate-owned life insurance of $5 million, net gains (losses) from loan sales of $5 million and other income of $10 million.

Key's noninterest expense was $703 million for the first quarter of 2012, compared to $701 million for the same period last year. Personnel expense increased $14 million due to increased salaries and stock-based compensation expenses, partially offset by a decrease in incentive compensation. Nonpersonnel expense decreased $12 million compared to the same period one year ago with declines in operating lease expense, FDIC assessments and other real estate owned ("OREO") expense being offset by increases in marketing, the provision (credit) for losses on lending-related commitments and other expense.

Compared to the fourth quarter of 2011, noninterest expense decreased by $14 million. Business services and professional fees decreased $19 million and marketing expense declined $11 million. These decreases in noninterest expense from the fourth quarter of 2011 were partially offset by increases of $11 million in the provision (credit) for losses on lending-related commitments and $8 million in other expenses.

ASSET QUALITY

Key's provision for loan and lease losses was a charge of $42 million for the first quarter of 2012, compared to a credit of $40 million for the year-ago quarter and a credit of $22 million for the fourth quarter of 2011. Key's allowance for loan and lease losses was $944 million, or 1.92% of total period-end loans at March 31, 2012, compared to 2.03% at December 31, 2011, and 2.83% at March 31, 2011.

Selected asset quality statistics for Key for each of the past five quarters are presented in the following table.


    Selected Asset Quality Statistics from Continuing Operations

    dollars in millions                                                    1Q12         4Q11         3Q11         2Q11         1Q11
    -------------------                                                    ----         ----         ----         ----         ----
    Net loan charge-offs                                                          $101         $105         $109         $134         $193
    Net loan charge-offs to average loans                                          .82%         .86%         .90%        1.11%        1.59%
    Allowance for loan and lease losses to annualized net loan charge-offs      232.39       241.01       261.54       228.85       175.29
    Allowance for loan and lease losses                                           $944       $1,004       $1,131       $1,230       $1,372
    Allowance for credit losses (a)                                                989        1,049        1,187        1,287        1,441
    Allowance for loan and lease losses to period-end loans                       1.92%        2.03%        2.35%        2.57%        2.83%
    Allowance for credit losses to period-end loans                               2.01         2.12         2.46         2.69         2.97
    Allowance for loan and lease losses to nonperforming loans                  141.74       138.10       143.53       146.08       155.03
    Allowance for credit losses to nonperforming loans                          148.50       144.29       150.63       152.85       162.82
    Nonperforming loans at period end                                             $666         $727         $788         $842         $885
    Nonperforming assets at period end                                             767          859          914          950        1,089
    Nonperforming loans to period-end portfolio loans                             1.35%        1.47%        1.64%        1.76%        1.82%
    Nonperforming assets to period-end portfolio loans plus OREO and              1.55         1.73         1.89         1.98         2.23
    other nonperforming assets

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

Net loan charge-offs for the first quarter of 2012 totaled $101 million, or .82% of average loans. These results compare to $193 million, or 1.59% for the same period last year and $105 million, or .86% for the fourth quarter of 2011.

Key's net loan charge-offs by loan type for each of the past five quarters are shown in the following table.


    Net Loan Charge-offs from Continuing Operations

    dollars in millions                                              1Q12       4Q11       3Q11       2Q11       1Q11
    -------------------                                              ----       ----       ----       ----       ----
    Commercial, financial and agricultural                                 $15        $28        $23        $36        $32
    Real estate - commercial mortgage                                       21         23         25         12         43
    Real estate - construction (a)                                          10         (6)         8         24         30
    Commercial lease financing                                               -          -          2          4         11
                                                                           ---        ---        ---        ---        ---
          Total commercial loans                                            46         45         58         76        116
    Home equity - Key Community Bank                                        23         20         18         27         24
    Home equity - Other                                                      7          9          8         10         14
    Marine                                                                  10         14         11          4         19
    Other                                                                   15         17         14         17         20
                                                                           ---        ---        ---        ---        ---
          Total consumer loans                                              55         60         51         58         77
                                                                           ---        ---        ---        ---        ---
          Total net loan charge-offs                                      $101       $105       $109       $134       $193
                                                                          ====       ====       ====       ====       ====

    Net loan charge-offs to average loans from continuing operations       .82%       .86%       .90%      1.11%      1.59%

    Net loan charge-offs from discontinued operations - education          $19        $25        $31        $32        $35
    lending business

    (a)            Credit amount indicates
                   recoveries exceeded charge-
                   offs.

Compared to the fourth quarter of 2011, net loan charge-offs in the commercial loan portfolio increased by $1 million and net loan charge-offs in the consumer loan portfolio decreased by $5 million. As shown in the table on page 6, Key's exit loan portfolio accounted for $26 million, or 25.74% of Key's total net loan charge-offs for the first quarter of 2012. Net loan charge-offs in the exit loan portfolio increased by $4 million from the fourth quarter of 2011 due to increases in net loan charge-offs in the commercial loan portfolios.

At March 31, 2012, Key's nonperforming loans totaled $666 million and represented 1.35% of period-end portfolio loans, compared to 1.47% at December 31, 2011, and 1.82% at March 31, 2011. Nonperforming assets at March 31, 2012, totaled $767 million and represented 1.55% of portfolio loans and OREO and other nonperforming assets, compared to 1.73% at December 31, 2011, and 2.23% at March 31, 2011. The following table illustrates the trend in Key's nonperforming assets by loan type over the past five quarters.


    Nonperforming Assets from Continuing Operations

    dollars in millions                                              1Q12       4Q11       3Q11       2Q11       1Q11
    -------------------                                              ----       ----       ----       ----       ----
    Commercial, financial and agricultural                                $168       $188       $188       $213         $221
    Real estate - commercial mortgage                                      175        218        237        230          245
    Real estate - construction                                              66         54         93        131          146
    Commercial lease financing                                              22         27         31         41           42
    Total consumer loans                                                   235        240        239        227          231
                                                                           ---        ---        ---        ---          ---
          Total nonperforming loans                                        666        727        788        842          885
    Nonperforming loans held for sale                                       24         46         42         42           86
    OREO and other nonperforming assets                                     77         86         84         66          118
                                                                           ---        ---        ---        ---          ---
          Total nonperforming assets                                      $767       $859       $914       $950       $1,089
                                                                          ====       ====       ====       ====       ======

    Restructured loans - accruing and nonaccruing (a)                     $293       $276       $277       $252         $242
    Restructured loans included in nonperforming loans (a)                 184        191        178        144          136
    Nonperforming assets from discontinued operations - education           19         23         22         21           22
    lending business
    Nonperforming loans to period-end portfolio loans                     1.35%      1.47%      1.64%      1.76%        1.82%
    Nonperforming assets to period-end portfolio loans plus OREO and      1.55       1.73       1.89       1.98         2.23
    other nonperforming assets

    (a)            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.

Nonperforming assets continued to decrease during the first quarter of 2012, representing the tenth consecutive quarterly decline. As shown in the following table, Key's exit loan portfolio accounted for $103 million, or 13.43% of Key's total nonperforming assets at March 31, 2012.

The following table shows the composition of Key's exit loan portfolio at March 31, 2012, and December 31, 2011, the net charge-offs recorded on this portfolio for the first quarter of 2012 and fourth quarter of 2011, and the nonperforming status of these loans at March 31, 2012, and December 31, 2011.


    Exit Loan Portfolio from Continuing Operations

                                                                           Balance               Change   Net Loan           Balance on
                                                                         Outstanding        3-31-12 vs. Charge-offs     Nonperforming Status
                                                                         -----------                    -----------     --------------------
               in millions                                                 3-31-12           12-31-11          12-31-11          1Q12        (c)        4Q11 (c) 3-31-12    12-31-11
               -----------                                                 -------           --------          --------          ----        ---        ---- --- -------    --------
               Residential properties - homebuilder                                     $34                         $41                            $(7)                 $2           $(2)  $17  $23
               Marine and RV floor plan                                                  59                          81                            (22)                  7             2    32   45
               Commercial lease financing (a)                                         1,534                       1,669                           (135)                 (1)           (2)   11    7
                                                                                      -----                       -----                           ----                 ---           ---   ---  ---
                     Total commercial loans                                           1,627                       1,791                           (164)                  8            (2)   60   75
               Home equity - Other                                                      507                         535                            (28)                  7             9    12   12
               Marine                                                                 1,654                       1,766                           (112)                 10            14    31   31
               RV and other consumer                                                    111                         125                            (14)                  1             1     -    1
                                                                                        ---                         ---                            ---                 ---           ---   ---  ---
                     Total consumer loans                                             2,272                       2,426                           (154)                 18            24    43   44
                                                                                      -----                       -----                           ----                 ---           ---   ---  ---
                     Total exit loans in loan portfolio                              $3,899                      $4,217                          $(318)                $26           $22  $103 $119
                                                                                     ======                      ======                          =====                 ===           ===  ==== ====

               Discontinued operations - education lending business (not             $5,715                      $5,812                           $(97)                $19           $25   $19  $23
               included in exit loans above) (b)

    (a)            Includes the business aviation,
                   commercial vehicle, office
                   products, construction and
                   industrial leases, and Canadian
                   lease financing portfolios; and
                   all remaining balances related
                   to lease in, lease out; sale in,
                   sale out; service contract
                   leases; and qualified
                   technological equipment leases.

    (b)            Includes loans in Key's
                   consolidated education loan
                   securitization trusts.

    (c)            Credit amounts indicate
                   recoveries exceeded charge-
                   offs.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at March 31, 2012.


     Capital
     Ratios

                                    3-31-12       12-31-11      9-30-11       6-30-11       3-31-11
                                    -------       --------      -------       -------       -------
             Tier 1 common equity
             (a), (b)                      11.55%        11.26%        11.28%        11.14%        10.74%
             Tier 1 risk-based
             capital (a)                   13.29         12.99         13.49         13.93         13.48
             Total risk-based
             capital (a)                   16.68         16.51         17.05         17.88         17.38
             Tangible common equity
             to tangible assets (b)        10.26          9.88          9.82          9.67          9.16

    (a)           3-31-12 ratio is estimated.

    (b)            The table entitled "GAAP to Non-GAAP
                   Reconciliations" presents the
                   computations of certain financial
                   measures related to "tangible common
                   equity" and "Tier 1 common equity."
                   The table reconciles the GAAP
                   performance measures to the
                   corresponding non-GAAP measures,
                   which provides a basis for period-
                   to-period comparisons.

As shown in the preceding table, at March 31, 2012, Key's estimated Tier 1 common equity and Tier 1 risk-based capital ratios stood at 11.5% and 13.3%, respectively. In addition, the tangible common equity ratio was 10.3% at March 31, 2012.

The changes in Key's outstanding common shares over the past five quarters are summarized in the following table.


    Summary of Changes in Common Shares Outstanding

    in thousands                                       1Q12    4Q11    3Q11     2Q11     1Q11
    ------------                                       ----    ----    ----     ----     ----
    Shares
     outstanding
     at beginning
     of period                                      953,008 952,808 953,822  953,926  880,608
    Common shares
     issued                                               -       -       -        -   70,621
    Shares
     reissued
     (returned)
     under
     employee
     benefit plans                                    3,094     200  (1,014)    (104)   2,697
                                                      -----     ---  ------     ----    -----
    Shares
     outstanding
     at end of
     period                                         956,102 953,008 952,808  953,822  953,926
                                                    ======= ======= =======  =======  =======

During the first quarter of 2011, Key successfully completed a $625 million common equity offering and a $1 billion debt offering. The proceeds from these offerings, along with other available funds, were used to repurchase the $2.5 billion of Series B Preferred Stock issued to the U.S. Treasury Department as a result of Key's participation in the U.S. Treasury's Capital Purchase Program.

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. Each of the major business lines is described under the heading "Line of Business Descriptions." For more detailed financial information pertaining to each business segment, see the tables at the end of this release.


    Major Business Segments

                                                                                                                    Percent change 1Q12 vs.
    dollars in millions                           1Q12             4Q11            1Q11             4Q11                    1Q11
    -------------------                           ----             ----            ----             ----                    ----
    Revenue from continuing
     operations (TE)
    -----------------------
    Key Community
     Bank                                                     $528            $546             $565          (3.3)%                      (6.5)%
    Key Corporate Bank                                         401             413              406           (2.9)                       (1.2)
    Other Segments                                             105              44               93          138.6                        12.9
                                                               ---             ---              ---          -----                        ----
          Total Segments                                     1,034           1,003            1,064            3.1                        (2.8)
    Reconciling Items                                   (3)             (26)             (3)             N/M                        -
                                                       ---              ---             ---              ---                      ---
          Total                                             $1,031            $977           $1,061            5.5%                      (2.8)%
                                                            ======            ====           ======

    Income (loss) from
     continuing operations
    ----------------------
    attributable to Key
    -------------------
    Key Community
     Bank                                                      $57             $40              $81           42.5%                     (29.6)%
    Key Corporate Bank                                         100             157              126          (36.3)                      (20.6)
    Other Segments                                              45              22               58          104.5                       (22.4)
                                                               ---             ---              ---          -----                       -----
          Total Segments                                       202             219              265           (7.8)                      (23.8)
    Reconciling Items                                    3              (12)              9              N/M                    (66.7)
                                                       ---              ---             ---              ---                    -----
          Total                                               $205            $207             $274          (1.0)%                     (25.2)%
                                                              ====            ====             ====

    TE = Taxable Equivalent, N/M = Not Meaningful
    ---------------------------------------------


    Key Community Bank

                                                                         Percent change 1Q12 vs.
    dollars in millions          1Q12         4Q11          1Q11                                 4Q11        1Q11
    -------------------          ----         ----          ----                                 ----        ----
    Summary of operations
          Net interest income
           (TE)                          $353         $365          $378                              (3.3)%       (6.6)%
          Noninterest income              175          181           187                               (3.3)        (6.4)
                                          ---          ---           ---                               ----         ----
          Total revenue (TE)              528          546           565                               (3.3)        (6.5)
          Provision (credit) for
           loan and lease losses            2           30            11                              (93.3)       (81.8)
          Noninterest expense             456          477           447                               (4.4)         2.0
                                          ---          ---           ---                               ----          ---
          Income (loss) before
           income taxes (TE)               70           39           107                               79.5        (34.6)
          Allocated income taxes
           and TE adjustments              13           (1)           26                                N/M        (50.0)
                                          ---          ---           ---                                ---        -----
          Net income (loss)
           attributable to Key            $57          $40           $81                               42.5%      (29.6)%
                                          ===          ===           ===

    Average balances
          Loans and leases            $26,617      $26,406       $26,312                                 .8%         1.2%
          Total assets                 30,194       29,867        29,739                                1.1          1.5
          Deposits                     47,768       48,076        48,108                                (.6)         (.7)

    Assets under
     management at period
     end                              $21,939      $17,938       $20,057                               22.3%         9.4%


    TE = Taxable
     Equivalent, N/M =
     Not Meaningful


    Additional Key Community Bank Data                                                                                            Percent change 1Q12 vs.
    dollars in millions                                           1Q12           4Q11           1Q11           4Q11          1Q11
    -------------------                                           ----           ----           ----           ----          ----
    Noninterest income
    Trust and investment services income                                   $48            $45            $46          6.7%               4.3%
    Service charges on deposit accounts                                       56             59             55         (5.1)               1.8
    Electronic banking fees                                                   17             18             30         (5.6)             (43.3)
    Other noninterest income                                                  54             59             56         (8.5)              (3.6)
                                                                             ---            ---            ---         ----               ----
          Total noninterest income                                        $175           $181           $187        (3.3)%             (6.4)%
                                                                          ====           ====           ====

    Average deposit balances
    NOW and money market deposit accounts                              $23,161        $22,524        $21,482          2.8%               7.8%
    Savings deposits                                                     1,992          1,959          1,901          1.7                4.8
    Certificates of deposit ($100,000 or more)                           3,447          3,639          4,513         (5.3)             (23.6)
    Other time deposits                                                  6,023          6,491          7,959         (7.2)             (24.3)
    Deposits in foreign office                                             370            393            398         (5.9)              (7.0)
    Noninterest-bearing deposits                                        12,775         13,070         11,855         (2.3)               7.8
                                                                        ------         ------         ------         ----                ---
          Total deposits                                               $47,768        $48,076        $48,108         (.6)%              (.7)%
                                                                       =======        =======        =======

    Home equity loans
    Average balance                                                     $9,173         $9,280         $9,454
    Weighted-average loan-to-value ratio (at date of origination)           70%            70%            70%
    Percent first lien positions                                            53             53             53
    ----------------------------                                           ---            ---            ---
    Other data
    Branches                                                             1,059          1,058          1,040
    Automated teller machines                                            1,572          1,579          1,547
    -------------------------                                            -----          -----          -----

Key Community Bank Summary of Operations

Key Community Bank recorded net income attributable to Key of $57 million for the first quarter of 2012, compared to net income attributable to Key of $81 million for the year-ago quarter.

Taxable-equivalent net interest income declined by $25 million, or 7% from the first quarter of 2011. Average loans and leases grew 1% while average deposits declined 1% from one year ago. Given the continued low-rate environment, the value derived from deposits was less in the current period.

Noninterest income decreased by $12 million, or 6% from the year-ago quarter, primarily due to a $13 million decline in electronic banking fees resulting from new government pricing controls on debit transactions that went into effect October 1, 2011.

The provision for loan and lease losses declined by $9 million, or 82% compared to the first quarter of 2011 due to lower net loan charge-offs from the same period one year ago. Net loan charge-offs were $49 million for the first quarter of 2012, down $27 million from the $76 million incurred in the same period one year ago.

Noninterest expense increased by $9 million, or 2% from the year-ago quarter. An increase in internally allocated costs and the provision (credit) for losses on lending-related commitments was partially offset by a reduction in FDIC deposit insurance assessments and a decline in personnel expense from one year ago.


    Key Corporate Bank

                                                                                                                                                                 Percent change 1Q12 vs.
    dollars in millions                                                       1Q12               4Q11                1Q11                4Q11               1Q11
    -------------------                                                       ----               ----                ----                ----               ----
    Summary of operations
          Net interest income (TE)                                                        $187                $177                $187               5.6%                                     -
          Noninterest income                                                                 214                 236                 219              (9.3)                                 (2.3)%
                                                                                             ---                 ---                 ---              ----                                  -----
          Total revenue (TE)                                                                 401                 413                 406              (2.9)                                  (1.2)
          Provision (credit) for loan and lease losses                              13                (61)                (21)                N/M                            N/M
          Noninterest expense                                                              231                 228                 228               1.3                                    1.3
                                                                                           ---                 ---                 ---               ---                                    ---
          Income (loss) before income taxes (TE)                                           157                 246                 199             (36.2)                                 (21.1)
          Allocated income taxes and TE adjustments                                         57                  90                  73             (36.7)                                 (21.9)
                                                                                           ---                 ---                 ---             -----                                  -----
          Net income (loss)                                                                100                 156                 126             (35.9)                                 (20.6)
             Less: Net income (loss) attributable to noncontrolling interests        -                 (1)                  -                 N/M                            N/M
                                                                                   ---                ---                 ---                 ---                            ---
          Net income (loss) attributable to Key                                           $100                $157                $126            (36.3)%                                (20.6)%
                                                                                          ====                ====                ====

    Average balances
          Loans and leases                                                             $18,584             $17,783             $17,677               4.5%                                   5.1%
          Loans held for sale                                                              509                 356                 275              43.0                                   85.1
          Total assets                                                                  22,863              21,811              21,747               4.8                                    5.1
          Deposits                                                                      11,556              11,162              11,282               3.5                                    2.4

    Assets under management at period end                                              $30,694             $33,794             $41,461             (9.2)%                                (26.0)%
    -------------------------------------                                              -------             -------             -------             -----                                 ------

    TE = Taxable Equivalent, N/M = Not Meaningful
    ---------------------------------------------

Key Corporate Bank Summary of Operations

Key Corporate Bank recorded net income attributable to Key of $100 million for the first quarter of 2012, compared to net income attributable to Key of $126 million for the same period one year ago.

Taxable-equivalent net interest income was flat compared to the first quarter of 2011 as the decreased value derived from deposits was offset by an increase in average earning assets. Although average deposits increased $274 million, or 2%, the deposit spread decreased $11 million due to the prolonged low-rate environment. Average earning assets increased $869 million, or 4% from the year-ago quarter, and combined with lower levels of nonperforming assets, led to a $12 million increase in earning asset spread.

Noninterest income declined by $5 million, or 2% from the first quarter of 2011. A decrease in operating lease income and trust and investment services income was partially offset by an increase in net gains (losses) from loan sales compared to the year-ago quarter.

The provision for loan and lease losses in the first quarter of 2012 was a charge of $13 million compared to a credit of $21 million for the same period one year ago. The charge in the first quarter of 2012 related to the increase in loans and leases, partially offset by continued improvement in the portfolio's asset quality for the tenth consecutive quarter. Net loan charge-offs in the first quarter of 2012 were $25 million compared to $75 million for the same period one year ago.

Noninterest expense increased by $3 million, or 1% from the first quarter of 2011. A decrease in operating lease expense was partially offset by increases in other operating expenses.

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 2012, compared to net income attributable to Key of $58 million for the same period last year. These results were primarily attributable to an increase in the provision for loan and lease losses of $52 million in the exit portfolio. This increase was partially offset by a $14 million net gain resulting from the early termination of a leveraged lease in the first quarter of 2012 ($20 million gain on leased equipment less a $6 million charge for the write-off of capitalized loan origination costs).

Line of Business Descriptions

Key Community Bank

Key Community Bank serves individuals and small to mid-sized businesses through its 14-state branch network.

Individuals are provided branch-based deposit and investment products, personal finance services and loans, including residential mortgages, home equity and various types of installment loans. In addition, financial, estate and retirement planning, and asset management services are offered to assist high-net-worth clients with their banking, trust, portfolio management, insurance, charitable giving and related needs.

Small businesses are provided deposit, investment and credit products, and business advisory services. Mid-sized businesses are provided products and services that include commercial lending, cash management, equipment leasing, investment and employee benefit programs, succession planning, access to capital markets, derivatives and foreign exchange.

Key Corporate Bank

Real Estate Capital and Corporate Banking Services consists of two business units, Real Estate Capital and Corporate Banking Services.

Real Estate Capital is a national business that provides construction and interim lending, permanent debt placements and servicing, equity and investment banking, and other commercial banking products and services to developers, brokers and owner-investors. This unit deals primarily with nonowner-occupied properties (i.e., generally properties in which at least 50% of the debt service is provided by rental income from nonaffiliated third parties). Real Estate Capital emphasizes providing clients with finance solutions through access to the capital markets.

Corporate Banking Services provides cash management, interest rate derivatives, and foreign exchange products and services to clients served by both the Key Community Bank and Key Corporate Bank groups. Through its Public Sector and Financial Institutions businesses, Corporate Banking Services also provides a full array of commercial banking products and services to government and not-for-profit entities and community banks. A variety of commercial payment products are provided through the Enterprise Commercial Payments Group.

Equipment Finance meets the equipment leasing needs of companies worldwide and provides equipment manufacturers, distributors and resellers with financing options for their clients. Lease financing receivables and related revenues are assigned to other lines of business (primarily Institutional and Capital Markets and Commercial Banking) if those businesses are principally responsible for maintaining the relationship with the client.

Institutional and Capital Markets, through its KeyBanc Capital Markets unit, provides commercial lending, treasury management, investment banking, derivatives, foreign exchange, equity and debt underwriting and trading, and syndicated finance products and services to large corporations and middle-market companies.

Institutional and Capital Markets, through its Victory Capital Management unit, also manages or offers advice regarding investment portfolios for a national client base, including corporations, labor unions, not-for-profit organizations, governments and individuals. These portfolios may be managed in separate accounts, common funds or the Victory family of mutual funds.

Key traces its history back more than 160 years and is headquartered in Cleveland, Ohio. One of the nation's largest bank-based financial services companies, Key has assets of approximately $87 billion at March 31, 2012.

Key provides deposit, lending, cash management and investment services to individuals and small businesses through its 14-state branch network 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.

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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 19, 2012. An audio replay of the call will be available through April 26, 2012.

For up-to-date company information, media contacts and facts and figures about Key's lines of business, visit our Media Newsroom at https://www.key.com/newsroom.

*****

                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                     Financial Highlights
                                                                                                                                                                       (dollars in millions, except per share amounts)
                                                                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                      Three months ended
                                                                                                                                                                                                                                                      ------------------
                                                                                                                                                                                                                                    3-31-12                                      12-31-11                                        3-31-11
                                                                                                                                                                                                                                    -------                                      --------                                        -------
    Summary of operations
                                                       Net interest income (TE)                                                                                                                                                                                $559                                                      $563                                                      $604
                                                       Noninterest income                                                                                                                                                                                       472                                                       414                                                       457
                                                                                                                                                                                                                                                                                                                                                                                         
                                                       Total revenue (TE)                                                                                                                                                                                     1,031                                                       977                                                     1,061
                                                       Provision (credit) for loan and lease losses                                                                                                                                                              42                                                       (22)                                                      (40)
                                                       Noninterest expense                                                                                                                                                                                      703                                                       717                                                       701
                                                       Income (loss) from continuing operations attributable to Key                                                                                                                                             205                                                       207                                                       274
                                                       Income (loss) from discontinued operations, net of taxes (b)                                                                                                                                              (5)                                                       (7)                                                      (11)
                                                       Net income (loss) attributable to Key                                                                                                                                                                    200                                                       200                                                       263
                                                                                                                                                                                                                                                                                                                                                                                                     
                                                       Income (loss) from continuing operations attributable to Key common shareholders                                                                                                                        $199                                                      $201                                                      $184
                                                       Income (loss) from discontinued operations, net of taxes (b)                                                                                                                                              (5)                                                       (7)                                                      (11)
                                                       Net income (loss) attributable to Key common shareholders                                                                                                                                                194                                                       194                                                       173
                                                                                                                                                                                                                                                                                                                                                                                                     
    Per common share
                                                       Income (loss) from continuing operations attributable to Key common shareholders                                                                                                                        $.21                                                      $.21                                                      $.21
                                                       Income (loss) from discontinued operations, net of taxes (b)                                                                                                                                            (.01)                                                     (.01)                                                     (.01)
                                                       Net income (loss) attributable to Key common shareholders                                                                                                                                                .20                                                       .20                                                       .20
                                                                                                                                                                                                                                                                                                                                                                                                     
                                                        Income (loss) from continuing operations attributable to Key common shareholders -
                                                        assuming dilution                                                                                                                                                                                       .21                                                       .21                                                       .21
                                                       Income (loss) from discontinued operations, net of taxes - assuming dilution (b)                                                                                                                        (.01)                                                     (.01)                                                     (.01)
                                                       Net income (loss) attributable to Key common shareholders - assuming dilution (e)                                                                                                                        .20                                                       .20                                                       .19
                                                                                                                                                                                                                                                                                                                                                                                                     
                                                       Cash dividends paid                                                                                                                                                                                      .03                                                       .03                                                       .01
                                                       Book value at period end                                                                                                                                                                               10.26                                                     10.09                                                      9.58
                                                       Tangible book value at period end                                                                                                                                                                       9.28                                                      9.11                                                      8.59
                                                       Market price at period end                                                                                                                                                                              8.50                                                      7.69                                                      8.88
                                                                                                                                                                                                                                                                                                                                                                                                     
    Performance ratios
                                                       From continuing operations:
                                                       Return on average total assets                                                                                                                                                                          1.02%                                                     1.01%                                                     1.32%
                                                       Return on average common equity                                                                                                                                                                         8.25                                                      8.26                                                      8.75
                                                       Net interest margin (TE)                                                                                                                                                                                3.16                                                      3.13                                                      3.25
                                                                                                                                                                                                                                                                                                                                                                                                     
                                                       From consolidated operations:
                                                       Return on average total assets                                                                                                                                                                           .93%                                                      .91%                                                     1.18%
                                                       Return on average common equity                                                                                                                                                                         8.04                                                      7.97                                                      8.23
                                                       Net interest margin (TE)                                                                                                                                                                                3.08                                                      3.04                                                      3.16
                                                       Loan to deposit (d)                                                                                                                                                                                    86.97                                                     87.00                                                     90.76
                                                                                                                                                                                                                                                                                                                                                                                                     
    Capital ratios at period end
                                                       Key shareholders' equity to assets                                                                                                                                                                     11.55%                                                    11.16%                                                    10.42%
                                                       Tangible Key shareholders' equity to tangible assets                                                                                                                                                   10.60                                                     10.21                                                      9.48
                                                       Tangible common equity to tangible assets (a)                                                                                                                                                          10.26                                                      9.88                                                      9.16
                                                       Tier 1 common equity (a), (c)                                                                                                                                                                          11.55                                                     11.26                                                     10.74
                                                       Tier 1 risk-based capital (c)                                                                                                                                                                          13.29                                                     12.99                                                     13.48
                                                       Total risk-based capital (c)                                                                                                                                                                           16.68                                                     16.51                                                     17.38
                                                       Leverage (c)                                                                                                                                                                                           12.09                                                     11.79                                                     11.56
                                                                                                                                                                                                                                                                                                                                                                                                     
    Asset quality - from continuing operations
                                                       Net loan charge-offs                                                                                                                                                                                    $101                                                      $105                                                      $193
                                                       Net loan charge-offs to average loans                                                                                                                                                                    .82%                                                      .86%                                                     1.59%
                                                       Allowance for loan and lease losses to annualized net loan charge-offs                                                                                                                                232.39                                                    241.01                                                    175.29
                                                       Allowance for loan and lease losses                                                                                                                                                                     $944                                                    $1,004                                                    $1,372
                                                       Allowance for credit losses                                                                                                                                                                              989                                                     1,049                                                     1,441
                                                       Allowance for loan and lease losses to period-end loans                                                                                                                                                 1.92%                                                     2.03%                                                     2.83%
                                                       Allowance for credit losses to period-end loans                                                                                                                                                         2.01                                                      2.12                                                      2.97
                                                       Allowance for loan and lease losses to nonperforming loans                                                                                                                                            141.74                                                    138.10                                                    155.03
                                                       Allowance for credit losses to nonperforming loans                                                                                                                                                    148.50                                                    144.29                                                    162.82
                                                       Nonperforming loans at period end                                                                                                                                                                       $666                                                      $727                                                      $885
                                                       Nonperforming assets at period end                                                                                                                                                                       767                                                       859                                                     1,089
                                                       Nonperforming loans to period-end portfolio loans                                                                                                                                                       1.35%                                                     1.47%                                                     1.82%
                                                        Nonperforming assets to period-end portfolio loans plus OREO and other
                                                        nonperforming assets                                                                                                                                                                                   1.55                                                      1.73                                                      2.23
                                                                                                                                                                                                                                                                                                                                                                                                     
    Trust and brokerage assets
                                                       Assets under management                                                                                                                                                                              $52,633                                                   $51,732                                                   $61,518
                                                       Nonmanaged and brokerage assets                                                                                                                                                                       33,021                                                    30,639                                                    29,024
                                                                                                                                                                                                                                                                                                                                                                                                     
    Other data
                                                       Average full-time equivalent employees                                                                                                                                                                15,404                                                    15,381                                                    15,301
                                                       Branches                                                                                                                                                                                               1,059                                                     1,058                                                     1,040
                                                                                                                                                                                                                                                                                                                                                                                                     
    Taxable-equivalent adjustment                                                                                                                                                                                                                                $6                                                        $6                                                        $7

    (a)            The following table entitled "GAAP to
                   Non-GAAP Reconciliations" presents
                   the computations of certain financial
                   measures related to "tangible common
                   equity" and "Tier 1 common equity."
                   The table reconciles the GAAP
                   performance measures to the
                   corresponding non-GAAP measures,
                   which provides a basis for period-
                   to-period comparisons.

    (b)            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. As a result of
                   these decisions, Key has accounted
                   for these businesses as discontinued
                   operations.

    (c)           3-31-12 ratio is estimated.

    (d)            Represents period-end consolidated
                   total loans and loans held for sale
                   (excluding education loans in the
                   securitization trusts) divided by
                   period-end consolidated total
                   deposits (excluding deposits in
                   foreign office).

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

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

GAAP to Non-GAAP Reconciliations
(dollars in millions, except per share amounts)

The table below presents certain non-GAAP financial measures related to "tangible common equity," "Tier 1 common equity" and "pre-provision net revenue."

The tangible common equity ratio has been a focus for some investors, and management believes this ratio 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. Since the commencement of the Comprehensive Capital Analysis and Review process in early 2009, the Federal Reserve has focused its assessment of capital adequacy on a component of Tier 1 risk-based capital known as Tier 1 common equity, a non-GAAP financial measure. Because the Federal Reserve has long indicated that voting common shareholders' equity (essentially Tier 1 risk-based capital less preferred stock, qualifying capital securities and noncontrolling interests in subsidiaries) generally should be the dominant element in Tier 1 risk-based capital, this focus on Tier 1 common equity is consistent with existing capital adequacy categories.

Tier 1 common equity is neither formally defined by GAAP nor prescribed in amount by federal banking regulations; this measure 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 Tier 1 common equity, 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.

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
                                                                                                                                ------------------
                                                                                                               3-31-12                        12-31-11                   3-31-11
                                                                                                               -------                        --------                   -------
    Tangible common equity to tangible assets at
     period end
                                                  Key shareholders'
                                                  equity (GAAP)                                                 $10,099                                 $9,905                    $9,425
                                                 Less:                   Intangible assets                                   932                                    934                       937
                                                                         Preferred Stock, Series A                           291                                    291                       291
                                                                                                                             ---                                    ---                       ---
                                                                         Tangible common equity (non-GAAP)                $8,876                                 $8,680                    $8,197
                                                                                                                          ======                                 ======                    ======

                                                 Total assets (GAAP)                                            $87,431                                $88,785                   $90,438
                                                 Less:                   Intangible assets                                   932                                    934                       937

                                                                         Tangible assets (non-GAAP)                      $86,499                                $87,851                   $89,501
                                                                                                                         =======                                =======                   =======

                                                  Tangible common equity
                                                  to tangible assets
                                                  ratio (non-GAAP)                                                10.26%                                  9.88%                     9.16%

    Tier 1 common equity at period end
                                                  Key shareholders'
                                                  equity (GAAP)                                                 $10,099                                 $9,905                    $9,425
                                                  Qualifying capital
                                                  securities                                                      1,046                                  1,046                     1,791
                                                 Less:                   Goodwill                                            917                                    917                       917
                                                                          Accumulated other comprehensive
                                                                          income (loss) (a)                                  (70)                                   (72)                      (93)
                                                                         Other assets (b)                                     69                                     72                       130
                                                                                                                             ---                                    ---                       ---
                                                                         Total Tier 1 capital (regulatory)                10,229                                 10,034                    10,262
                                                 Less:                   Qualifying capital securities                     1,046                                  1,046                     1,791
                                                                         Preferred Stock, Series A                           291                                    291                       291
                                                                                                                             ---                                    ---                       ---
                                                                         Total Tier 1 common equity (non-GAAP)            $8,892                                 $8,697                    $8,180
                                                                                                                          ======                                 ======                    ======

                                                  Net risk-weighted
                                                  assets (regulatory)
                                                  (b), (c)                                                      $76,979                                $77,214                   $76,129

                                                  Tier 1 common equity
                                                  ratio (non-GAAP) (c)                                            11.55%                                 11.26%                    10.74%

    Pre-provision net revenue
                                                  Net interest income
                                                  (GAAP)                                                           $553                                   $557                      $597
                                                 Plus:                   Taxable-equivalent adjustment                         6                                      6                         7
                                                                         Noninterest income                                  472                                    414                       457
                                                 Less:                   Noninterest expense                                 703                                    717                       701

                                                  Pre-provision net
                                                  revenue from
                                                  continuing operations
                                                  (non-GAAP)                                                       $328                                   $260                      $360
                                                                                                           ===

    (a)            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 December 31,
                   2006, adoption and subsequent
                   application of the applicable
                   accounting guidance for defined
                   benefit and other postretirement
                   plans.

    (b)            Other assets deducted from Tier 1
                   capital and net risk-weighted
                   assets consist of disallowed
                   deferred tax assets of $47 million
                   at March 31, 2011, disallowed
                   intangible assets (excluding
                   goodwill) and deductible portions
                   of nonfinancial equity
                   investments. There were no
                   disallowed deferred tax assets at
                   March 31, 2012 and December 31,
                   2011.

    (c)           3-31-12 amount is estimated.

    GAAP = U.S. generally accepted accounting
     principles

                                                                                                                                                                                                                                        
                                                                                                       Consolidated Balance Sheets
                                                                                                          (dollars in millions)
                                                                                                                                                                                                                                        
                                                                            3-31-12                                        12-31-11                                          3-31-11
                                                                            -------                                        --------                                          -------
    Assets
                        Loans                                                                          $49,226                                                     $49,575                                                     $48,552
                         Loans held for
                         sale                                                                              511                                                         728                                                         426
                         Securities
                         available for
                         sale                                                                           14,633                                                      16,012                                                      19,448
                         Held-to-
                         maturity
                         securities                                                                      3,019                                                       2,109                                                          19
                         Trading account
                         assets                                                                            614                                                         623                                                       1,041
                         Short-term
                         investments                                                                     3,605                                                       3,519                                                       3,705
                        Other investments                                                                1,188                                                       1,163                                                       1,402
                                                                                                                                                                                                              
                        Total earning assets                                                            72,796                                                      73,729                                                      74,593
                         Allowance for
                         loan and lease
                         losses                                                                           (944)                                                     (1,004)                                                     (1,372)
                         Cash and due from
                         banks                                                                             416                                                         694                                                         540
                         Premises and
                         equipment                                                                         937                                                         944                                                         906
                         Operating lease
                         assets                                                                            335                                                         350                                                         491
                        Goodwill                                                                           917                                                         917                                                         917
                         Other intangible
                         assets                                                                             15                                                          17                                                          20
                         Corporate-owned
                         life insurance                                                                  3,270                                                       3,256                                                       3,187
                        Derivative assets                                                                  830                                                         945                                                       1,005
                         Accrued income
                         and other assets                                                                3,091                                                       3,077                                                       3,758
                         Discontinued
                         assets                                                                          5,768                                                       5,860                                                       6,393
                                                                                                                                                                                                              
                        Total assets                                                                   $87,431                                                     $88,785                                                     $90,438
                                                                                                       =======                                                     =======                                                     =======
                                                                                                                                                                                                                                        
    Liabilities
                         Deposits in
                         domestic
                         offices:
                         NOW and money market deposit
                         accounts                                                                      $29,124                                                     $27,954                                                     $26,177
                        Savings deposits                                                                 2,075                                                       1,962                                                       1,964
                         Certificates of deposit ($100,000
                         or more)                                                                        3,984                                                       4,111                                                       5,314
                        Other time deposits                                                              5,848                                                       6,243                                                       7,597
                                                                                                         -----                                                       -----                                                       -----
                              Total interest-bearing deposits                                           41,031                                                      40,270                                                      41,052
                        Noninterest-bearing deposits                                                    19,606                                                      21,098                                                      16,495
                         Deposits in
                         foreign office -
                          interest-
                          bearing                                                                          857                                                         588                                                       3,263
                                                                                                                                                                                                              
                              Total deposits                                                            61,494                                                      61,956                                                      60,810
                         Federal funds
                         purchased and
                         securities sold
                         under repurchase                                                                1,846                                                       1,711                                                       2,232
                        agreements
                         Bank notes and
                         other short-
                         term borrowings                                                                   324                                                         337                                                         685
                         Derivative
                         liabilities                                                                       754                                                       1,026                                                       1,106
                         Accrued expense
                         and other
                         liabilities                                                                     1,450                                                       1,763                                                       1,931
                        Long-term debt                                                                   8,898                                                       9,520                                                      11,048
                         Discontinued
                         liabilities                                                                     2,549                                                       2,550                                                       2,929
                                                                                                                                                                                                              
                              Total liabilities                                                         77,315                                                      78,863                                                      80,741
                                                                                                                                                                                                                                        
    Equity
                         Preferred stock,
                         Series A                                                                          291                                                         291                                                         291
                        Common shares                                                                    1,017                                                       1,017                                                       1,017
                         Common stock
                         warrant                                                                             -                                                           -                                                          87
                        Capital surplus                                                                  4,116                                                       4,194                                                       4,167
                        Retained earnings                                                                6,411                                                       6,246                                                       5,721
                         Treasury stock,
                         at cost                                                                        (1,717)                                                     (1,815)                                                     (1,823)
                         Accumulated other
                         comprehensive
                         income (loss)                                                                     (19)                                                        (28)                                                        (35)
                                                                                                                                                                                                              
                              Key shareholders' equity                                                  10,099                                                       9,905                                                       9,425
                         Noncontrolling
                         interests                                                                          17                                                          17                                                         272
                                                                                                                                                                                                              
                              Total equity                                                              10,116                                                       9,922                                                       9,697
                                                                                                        ------                                                       -----                                                       -----
    Total liabilities and equity                                                                       $87,431                                                     $88,785                                                     $90,438
                                                                                                       =======                                                     =======                                                     =======
                                                                                                                                                                                                                                        
    Common shares outstanding (000)                                                                    956,102                                                     953,008                                                     953,926


                                                                                                                                                                                                    
                                                                                   Consolidated Statements of Income
                                                                            (dollars in millions, except per share amounts)
                                                                                                                                                                                                  
                                                                          Three months ended
                                                                          ------------------
                                                            3-31-12                             12-31-11                        3-31-11
                                                            -------                             --------                        -------
    Interest income
                           Loans                                                          $536                                             $542                                             $570
                            Loans held for
                            sale                                                             5                                                4                                                4
                            Securities
                            available for
                            sale                                                           116                                              128                                              166
                            Held-to-
                            maturity
                            securities                                                      12                                                9                                                -
                            Trading account
                            assets                                                           6                                                5                                                7
                            Short-term
                            investments                                                      1                                                1                                                1
                            Other
                            investments                                                      8                                                9                                               12
                                                                                                                                                                        
                           Total interest income                                           684                                              698                                              760
                                                                                                                                                                                                  
    Interest expense
                           Deposits                                                         77                                               85                                              110
                            Federal funds
                            purchased and
                            securities
                            sold under
                            repurchase
                            agreements                                                       1                                                1                                                1
                            Bank notes and
                            other short-
                            term
                            borrowings                                                       2                                                2                                                3
                           Long-term debt                                                   51                                               53                                               49
                                                                                                                                                                        
                           Total interest expense                                          131                                              141                                              163
                                                                                                                                                                                                  
    Net interest income                                                                    553                                              557                                              597
    Provision (credit) for loan and lease losses                                            42                                              (22)                                             (40)
                                                                                           ---                                              ---                                              ---
    Net interest income (expense) after provision for
     loan and lease losses                                                                 511                                              579                                              637
                                                                                                                                                                                                  
    Noninterest income
                            Trust and
                            investment
                            services
                            income                                                         109                                              104                                              110
                            Service charges
                            on deposit
                            accounts                                                        68                                               70                                               68
                            Operating lease
                            income                                                          22                                               25                                               35
                            Letter of
                            credit and
                            loan fees                                                       54                                               56                                               55
                            Corporate-
                            owned life
                            insurance
                            income                                                          30                                               35                                               27
                            Net securities
                            gains (losses)
                            (a)                                                              -                                                -                                               (1)
                            Electronic
                            banking fees                                                    17                                               18                                               30
                            Gains on leased
                            equipment                                                       27                                                9                                                4
                            Insurance
                            income                                                          12                                               11                                               15
                            Net gains
                            (losses) from
                            loan sales                                                      22                                               27                                               19
                            Net gains
                            (losses) from
                            principal
                            investing                                                       35                                               (8)                                              35
                            Investment
                            banking and
                            capital
                            markets income
                            (loss)                                                          43                                               24                                               43
                           Other income                                                     33                                               43                                               17
                                                                                                                                                                        
                           Total noninterest income                                        472                                              414                                              457
                                                                                                                                                                                                  
    Noninterest expense
                           Personnel                                                       385                                              387                                              371
                           Net occupancy                                                    64                                               66                                               65
                            Operating lease
                            expense                                                         17                                               18                                               28
                            Computer
                            processing                                                      41                                               42                                               42
                            Business
                            services and
                            professional
                            fees                                                            38                                               57                                               38
                           FDIC assessment                                                   8                                                7                                               29
                            OREO expense,
                            net                                                              6                                                5                                               10
                           Equipment                                                        26                                               25                                               26
                           Marketing                                                        13                                               24                                               10
                            Provision
                            (credit) for
                            losses on
                            lending-
                            related
                            commitments                                                      -                                              (11)                                              (4)
                           Other expense                                                   105                                               97                                               86
                                                                                                                                                                        
                           Total noninterest expense                                       703                                              717                                              701
                                                                                           ---                                              ---                                              ---
    Income (loss) from continuing operations before
     income taxes                                                                          280                                              276                                              393
                           Income taxes                                                     75                                               69                                              111
                                                                                                                                                                        
    Income (loss) from continuing operations                                               205                                              207                                              282
                            Income (loss)
                            from
                            discontinued
                            operations,
                            net of taxes                                                    (5)                                              (7)                                             (11)
                                                                                                                                                                        
    Net income (loss)                                                                      200                                              200                                              271
                                                                                           ---
                            Less: Net
                            income (loss)
                            attributable
                            to
                            noncontrolling
                            interests                                                        -                                                -                                                8
                                                                                                                                                                        
    Net income (loss) attributable to Key                                                 $200                                             $200                                             $263
                                                                                          ====                                             ====                                             ====
                                                                                                                                                                                                  
    Income (loss) from continuing operations
     attributable to Key common shareholders                                              $199                                             $201                                             $184
    Net income (loss) attributable to Key common
     shareholders                                                                          194                                              194                                              173
                                                                                                                                                                                                  
    Per common share
    ----------------
    Income (loss) from continuing operations
     attributable to Key common shareholders                                              $.21                                             $.21                                             $.21
    Income (loss) from discontinued operations, net of
     taxes                                                                                (.01)                                            (.01)                                            (.01)
    Net income (loss) attributable to Key common
     shareholders                                                                          .20                                              .20                                              .20
                                                                                                                                                                                                  
    Per common share - assuming dilution
    ------------------------------------
    Income (loss) from continuing operations
     attributable to Key common shareholders                                              $.21                                             $.21                                             $.21
    Income (loss) from discontinued operations, net of
     taxes                                                                                (.01)                                            (.01)                                            (.01)
    Net income (loss) attributable to Key common
     shareholders (c)                                                                      .20                                              .20                                              .19
                                                                                                                                                                                                  
    Cash dividends declared per common share                                              $.03                                             $.03                                             $.01
                                                                                                                                                                                                  
    Weighted-average common shares outstanding (000)                                   949,342                                          948,658                                          881,894
    Weighted-average common shares and potential
     common shares outstanding (000) (b)                                               953,971                                          951,684                                          887,836
                                                                                                                                                                                                  
                                                                                                                                                                                                  
    (a)                     For the three months ended March 31, 2012, December 31, 2011,
                            and March 31, 2011, Key did not have any impairment losses
                            related to securities.
                                                                                                                                                                                                  
    (b)                     Assumes conversion of stock options and/or Preferred Series A
                            shares, as applicable.
                                                                                                                                                                                                  
    (c)                    Earnings per share may not foot due to rounding.



                                                                                                                                                   Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
                                                                                                                                                                                             (dollars in millions)
                                                                                                                                           First Quarter 2012                                                              Fourth Quarter 2011                                First Quarter 2011
                                                                                                                                           ------------------                                                              -------------------                                ------------------
                                                                                                             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                     $19,638            $194                                          3.98%                                                    $18,323                   $179                          3.88%                       $16,311                   $174        4.33%
                                                          Real estate - commercial mortgage                            7,993              89                                          4.48                                                       8,090                     92                          4.48                          9,238                    104        4.58
                                                          Real estate - construction                                   1,284              16                                          4.86                                                       1,380                     16                          4.68                          2,031                     20        3.99
                                                          Commercial lease financing                                   5,846              58                                          3.97                                                       5,982                     69                          4.62                          6,335                     80        5.03

                                                                Total commercial loans                                34,761             357                                          4.12                                                      33,775                    356                          4.19                         33,915                    378        4.51
                                                          Real estate - residential mortgage                           1,950              25                                          5.04                                                       1,918                     24                          5.15                          1,810                     24        5.32
                                                          Home equity:
                                                          Key Community Bank                                           9,173              93                                          4.08                                                       9,280                     96                          4.10                          9,453                     97        4.14
                                                          Other                                                          521              10                                          7.68                                                         553                     11                          7.68                            647                     12        7.60
                                                                                                                         ---             ---                                          ----                                                         ---                    ---                          ----                            ---                    ---        ----
                                                                Total home equity loans                                9,694             103                                          4.27                                                       9,833                    107                          4.30                         10,100                    109        4.36
                                                          Consumer other - Key Community Bank                          1,193              28                                          9.61                                                       1,191                     30                          9.62                          1,157                     28        9.89
                                                          Consumer other:
                                                          Marine                                                       1,714              27                                          6.28                                                       1,820                     29                          6.35                          2,174                     34        6.26
                                                          Other                                                          118               2                                          7.79                                                         127                      2                          7.87                            156                      3        7.91
                                                                                                                         ---             ---                                          ----                                                         ---                    ---                          ----                            ---                    ---        ----
                                                                Total consumer other                                   1,832              29                                          6.38                                                       1,947                     31                          6.44                          2,330                     37        6.37
                                                                                                                       -----             ---                                          ----                                                       -----                    ---                          ----                          -----                    ---        ----
                                                                Total consumer loans                                  14,669             185                                          5.07                                                      14,889                    192                          5.12                         15,397                    198        5.20
                                                                                                                      ------             ---                                          ----                                                      ------                    ---                          ----                         ------                    ---        ----
                                                                Total loans                                           49,430             542                                          4.41                                                      48,664                    548                          4.47                         49,312                    576        4.72
                                                          Loans held for sale                                            581               5                                          3.62                                                         440                      4                          3.36                            390                      4        3.52
                                                          Securities available for sale (b), (e)                      15,259             116                                          3.15                                                      16,790                    128                          3.16                         21,159                    166        3.18
                                                          Held-to-maturity securities (b)                              2,251              12                                          2.08                                                       1,648                      9                          2.12                             19                      1       11.54
                                                          Trading account assets                                         808               6                                          2.72                                                         736                      5                          2.72                          1,018                      7        2.75
                                                          Short-term investments                                       1,898               1                                           .29                                                       2,929                      1                           .26                          1,963                      1         .24
                                                          Other investments (e)                                        1,169               8                                          2.78                                                       1,181                      9                          2.98                          1,360                     12        3.33

                                                                Total earning assets                                  71,396             690                                          3.91                                                      72,388                    704                          3.90                         75,221                    767        4.12
                                                          Allowance for loan and lease losses                           (968)                                                                                                                   (1,057)                                                                             (1,494)
                                                          Accrued income and other assets                             10,038                                                                                                                     9,942                                                                              10,568
                                                          Discontinued assets - education lending business             5,757                                                                                                                     5,912                                                                               6,479

                                                                Total assets                                         $86,223                                                                                                                   $87,185                                                                             $90,774
                                                                                                                     =======                                                                                                                   =======                                                                             =======

    Liabilities
                                                          NOW and money market deposit accounts                      $28,328              15                                           .21                                                     $27,722                     15                           .22                        $27,004                     19         .29
                                                          Savings deposits                                             1,997               -                                           .06                                                       1,964                      -                           .06                          1,907                      -         .06
                                                          Certificates of deposit ($100,000 or more) (f)               4,036              29                                          2.91                                                       4,275                     32                          2.97                          5,628                     43        3.05
                                                          Other time deposits                                          6,035              33                                          2.19                                                       6,505                     37                          2.24                          7,982                     47        2.39
                                                          Deposits in foreign office                                     769               -                                           .25                                                         650                      1                           .25                          1,040                      1         .31

                                                                Total interest-bearing deposits                       41,165              77                                           .76                                                      41,116                     85                           .82                         43,561                    110        1.02
                                                           Federal funds purchased and securities sold under
                                                           repurchase agreements                                       1,850               1                                           .21                                                       1,747                      1                           .25                          2,375                      1         .27
                                                          Bank notes and other short-term borrowings                     490               2                                          1.53                                                         471                      2                          1.87                            738                      3        1.71
                                                          Long-term debt (f), (g)                                      6,161              51                                          3.61                                                       7,020                     53                          3.21                          6,792                     49        3.09

                                                                Total interest-bearing liabilities                    49,666             131                                          1.07                                                      50,354                    141                          1.12                         53,466                    163        1.24
                                                                                                                      ------             ---                                          ----                                                      ------                    ---                          ----                         ------                    ---        ----
                                                          Noninterest-bearing deposits                                18,466                                                                                                                    18,464                                                                              16,479
                                                          Accrued expense and other liabilities                        2,325                                                                                                                     2,496                                                                               2,878
                                                           Discontinued liabilities -education lending
                                                           business (d), (g)                                           5,757                                                                                                                     5,912                                                                               6,479

                                                                Total liabilities                                     76,214                                                                                                                    77,226                                                                              79,302

    Equity
                                                          Key shareholders' equity                                     9,992                                                                                                                     9,943                                                                              11,214
                                                          Noncontrolling interests                                        17                                                                                                                        16                                                                                 258

                                                                Total equity                                          10,009                                                                                                                     9,959                                                                              11,472

                                                                Total liabilities and equity                         $86,223                                                                                                                   $87,185                                                                             $90,774
                                                                                                                     =======                                                                                                                   =======                                                                             =======

    Interest rate spread (TE)                                                                                                                                     2.84%                                                                                                                          2.78%                                                            2.88%
                                                                                                                                                                  ====                                                                                                                           ====                                                             ====

    Net interest income (TE) and net interest margin (TE)                                                                     559                                 3.16%                                                                                          563                             3.13%                                                   604      3.25%
                                                                                                                                                                  ====                                                                                                                           ====                                                             ====
    TE adjustment (b)                                                                                                           6                                                                                                                                  6                                                                                       7
                                                                                                                              ---                                                                                                                                ---                                                                                     ---
                                                          Net interest income, GAAP basis                                               $553                                                                                                                             $557                                                                                $597


    (a)            Results are from continuing
                   operations. Interest excludes the
                   interest associated with the
                   liabilities referred to in (d)
                   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)            Discontinued liabilities include
                   the liabilities of the education
                   lending business and the dollar
                   amount of any additional
                   liabilities assumed necessary to
                   support the assets associated
                   with this business.

    (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 Income
                                                              (in millions)

                                                                                Three months ended
                                                                                ------------------
                                                                     3-31-12           12-31-11    3-31-11
                                                                     -------           --------    -------
    Trust and investment
     services income (a)                                                         $109                 $104      $110
    Service charges on deposit accounts                                            68                   70        68
    Operating lease income                                                         22                   25        35
    Letter of credit and loan fees                                                 54                   56        55
    Corporate-owned life insurance income                                          30                   35        27
    Net securities gains (losses)                               -                              -            (1)
    Electronic banking fees                                                        17                   18        30
    Gains on leased equipment                                                      27                    9         4
    Insurance income                                                               12                   11        15
    Net gains (losses) from loan sales                                             22                   27        19
    Net gains (losses) from principal
     investing                                                                     35                   (8)       35
    Investment banking and capital
     markets income (loss) (a)                                                     43                   24        43
    Other income                                                                   33                   43        17
                                                                                  ---                  ---       ---
                                   Total noninterest income                      $472                 $414      $457
                                                                          ===

    (a)                             Additional detail provided in
                                    tables below.


                                                   Trust and Investment Services Income
                                                              (in millions)

                                                                              Three months ended
                                                                              ------------------
                                                                     3-31-12           12-31-11    3-31-11
                                                                     -------           --------    -------
    Brokerage commissions and
     fee income                                                                   $36                  $33       $32
    Personal asset management and custody
     fees                                                                          39                   38        38
    Institutional asset management and
     custody fees                                                                  34                   33        40
                                                                                  ---                  ---       ---
                                    Total trust and investment
                                    services income                              $109                 $104      $110
                                                                          ===


                                           Investment Banking and Capital Markets Income (Loss)
                                                              (in millions)

                                                                              Three months ended
                                                                              ------------------
                                                                     3-31-12           12-31-11    3-31-11
                                                                     -------           --------    -------
    Investment banking income                                                     $20                  $25       $26
    Income (loss) from other investments                                            5                    3         2

    Dealer trading and derivatives income
     (loss), proprietary (a), (b)                                                  (3)                  (6)       (2)
    Dealer trading and derivatives income
     (loss), non-proprietary (b)                                                   12                   (9)        6
                                                                                  ---                  ---       ---
                                    Total dealer trading and
                                    derivatives income (loss)                       9                  (15)        4

    Foreign exchange income                                                         9                   11        11
                                                                                  ---                  ---       ---
                                    Total investment banking and
                                    capital markets income
                                    (loss)                                        $43                  $24       $43
                                                                          ===

    (a)                             For the quarters ended March 31, 2012, December
                                    31, 2011 and March 31, 2011, fixed income and
                                    equity securities trading comprised the vast
                                    majority of this amount. In these quarters,
                                    income related to foreign exchange and interest
                                    rate derivative trading was less than $1 million
                                    and was offset by losses from Key's credit
                                    portfolio management activities.

    (b)                             The allocation between proprietary and non-
                                    proprietary is made based upon whether the trade
                                    is conducted for the benefit of Key or Key's
                                    clients rather than based upon the proposed
                                    rulemakings under the Volcker Rule. The
                                    prohibitions and restrictions on proprietary
                                    trading activities contemplated by the Volcker
                                    Rule and the rules proposed thereunder are not
                                    yet final. Therefore, the ultimate impact of the
                                    rules proposed under the Volcker Rule is not yet
                                    known.



                                                    Noninterest Expense
                                                   (dollars in millions)

                                                      Three months ended
                                                      ------------------
                                          3-31-12             12-31-11               3-31-11
                                          -------             --------               -------
    Personnel (a)                                       $385                             $387                         $371
    Net occupancy                                           64                               66                           65
    Operating lease expense                                 17                               18                           28
    Computer processing                                   41                               42                           42
    Business services and
     professional fees                                    38                               57                           38
    FDIC assessment                                        8                                7                           29
    OREO expense, net                                      6                                5                           10
    Equipment                                             26                               25                           26
    Marketing                                             13                               24                           10
    Provision (credit) for losses
     on lending-related
     commitments                                 -                              (11)                            (4)
    Other expense                                        105                               97                           86
                                                         ---                              ---                          ---
          Total noninterest
           expense                                      $703                             $717                         $701
                                                        ====                             ====                         ====

    Average full-time equivalent
     employees (b)                                    15,404                           15,381                       15,301

    (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
                                                    ------------------
                                          3-31-12             12-31-11               3-31-11
                                          -------             --------               -------
    Salaries                                            $236                             $234                         $224
    Incentive compensation                                66                               82                           73
    Employee benefits                                     65                               55                           62
    Stock-based compensation                              14                               13                            5
    Severance                                              4                                3                            7
                                                         ---                              ---                          ---
          Total personnel
           expense                                      $385                             $387                         $371
                                                        ====                             ====                         ====


                                                                                                                                                                                                                                                                                                                 
                                                                                                                                    Loan Composition
                                                                                                                                  (dollars in millions)
                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                     Percent change 3-31-12 vs.
                                                             3-31-12                          12-31-11                      3-31-11                     12-31-11                           3-31-11
                                                             -------                          --------                      -------                     --------                           -------
    Commercial, financial and agricultural                                           $19,787                                       $19,378                                       $16,440                                                           2.1%                                        20.4%
    Commercial real estate:
                           Commercial
                           mortgage                             7,807                                         8,037                                         8,806                                                          (2.9)                                         (11.3)
                          Construction                          1,273                                         1,312                                         1,845                                                          (3.0)                                         (31.0)
                                                                                                                                                                                                                                                                                
                                Total
                                 commercial
                                 real estate
                                 loans                          9,080                                         9,349                                        10,651                                                          (2.9)                                         (14.7)
    Commercial lease financing                                                         5,755                                         6,055                                         6,207                                                          (5.0)                                        (7.3)
                                                                                       -----                                         -----                                         -----                                                          ----                                         ----
                                Total
                                 commercial
                                 loans                         34,622                                        34,782                                        33,298                                                           (.5)                                           4.0
    Residential - prime loans:
                           Real estate -
                           residential
                           mortgage                             1,967                                         1,946                                         1,803                                                           1.1                                            9.1
                          Home equity:
                                Key Community
                                 Bank                           9,153                                         9,229                                         9,421                                                           (.8)                                          (2.8)
                                Other                             507                                           535                                           627                                                          (5.2)                                         (19.1)
                                                                                                                                                                                                                                                                                
                           Total home
                           equity loans                         9,660                                         9,764                                        10,048                                                          (1.1)                                          (3.9)
                                                                                                                                                                                                                                                                                
    Total residential - prime loans                                                   11,627                                        11,710                                        11,851                                                           (.7)                                        (1.9)
    Consumer other - Key Community Bank                                                1,212                                         1,192                                         1,141                                                           1.7                                          6.2
    Consumer other:
                          Marine                                1,654                                         1,766                                         2,112                                                          (6.3)                                         (21.7)
                          Other                                   111                                           125                                           150                                                         (11.2)                                         (26.0)
                                                                                                                                                                                                                                                                                
                                Total
                                 consumer -
                                 indirect
                                 loans                          1,765                                         1,891                                         2,262                                                          (6.7)                                         (22.0)
                                                                                                                                                                                                                                                                                
                                Total
                                 consumer
                                 loans                         14,604                                        14,793                                        15,254                                                          (1.3)                                          (4.3)
                                                                                                                                                                                                                                                                                
                           Total loans
                           (a)                                $49,226                                       $49,575                                       $48,552                                                          (.7)%                                           1.4%
                          ==========
                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                 
                                                                                                                             Loans Held for Sale Composition
                                                                                                                                  (dollars in millions)
                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                     Percent change 3-31-12 vs.
                                                             3-31-12                          12-31-11                      3-31-11                     12-31-11                           3-31-11
                                                             -------                          --------                      -------                     --------                           -------
    Commercial, financial and agricultural                                               $28                                           $19                                           $19                                                          47.4%                                        47.4%
    Real estate - commercial mortgage                                                    362                                           567                                           287                                                         (36.2)                                        26.1
    Real estate - construction                                                            15                                            35                                            61                                                         (57.1)                                       (75.4)
    Commercial lease financing                                                            30                                            12                                             7                                                         150.0                                        328.6
    Real estate - residential mortgage                                                    76                                            95                                            52                                                         (20.0)                                        46.2
                                                                                         ---                                           ---                                           ---                                                         -----                                         ----
                           Total loans
                           held for
                           sale (b)                              $511                                          $728                                          $426                                                        (29.8)%                                          20.0%
                          ==========
                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                 
                                                                                                                        Summary of Changes in Loans Held for Sale
                                                                                                                                  (dollars in millions)
                                                                                                                                                                                                                                                                                                                 
                                                              1Q12                               4Q11                         3Q11                        2Q11                               1Q11
                                                              ----                               ----                         ----                        ----                               ----
    Balance at beginning of period                                                      $728                                          $479                                          $381                                                          $426                                         $467
                           New
                           originations                           935                                         1,235                                           853                                                           914                                            980
                           Transfers
                           from held to
                           maturity,
                           net                                     19                                            19                                            23                                                            16                                             32
                          Loan sales                           (1,168)                                         (932)                                         (759)                                                       (1,039)                                          (991)
                           Loan draws
                           (payments),
                           net                                     (3)                                          (72)                                            1                                                            73                                            (62)
                           Transfers to
                           OREO /
                           valuation
                           adjustments                              -                                            (1)                                          (20)                                                           (9)                                             -
                                                                                                                                                                                                                                                                                                    
    Balance at end of period                                                            $511                                          $728                                          $479                                                          $381                                         $426
                                                                                        ====                                          ====                                          ====                                                          ====                                         ====


    (a)            Excluded at March 31, 2012,
                   December 31, 2011, and March
                   31, 2011, are loans in the
                   amount of $5.7 billion, $5.8
                   billion, and $6.3 billion,
                   respectively, related to the
                   discontinued operations of the
                   education lending business.

    (b)            Excluded at March 31, 2011, are
                   loans held for sale in the
                   amount of $14 million related
                   to the discontinued operations
                   of the education lending
                   business. There were no loans
                   held for sale in the
                   discontinued operations of the
                   education lending business at
                   March 31, 2012, and December
                   31, 2011.



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

                                          Three months ended
                                          ------------------
                                  3-31-12                      12-31-11                      3-31-11
                                  -------                      --------                      -------
    Average loans
     outstanding                                     $49,430                                        $48,664       $49,312
                                                     =======                                        =======       =======

    Allowance for loan
     and lease losses at
     beginning of period                              $1,004                                         $1,131        $1,604
    Loans charged off:
          Commercial,
           financial and
           agricultural                                   26                                             45            42

       Real estate -
        commercial mortgage                               23                                             24            46
       Real estate -
        construction                                      11                                              2            35
                                                         ---                                            ---           ---
             Total commercial
              real estate loans                           34                                             26            81
       Commercial lease
        financing                                          4                                              6            17
                                                         ---                                            ---           ---
             Total commercial
              loans                                       64                                             77           140
       Real estate -
        residential
        mortgage                                           6                                              7            10
       Home equity:
          Key Community Bank                              25                                             22            25
          Other                                            8                                             10            15
                                                         ---                                            ---           ---
             Total home equity
              loans                                       33                                             32            40
       Consumer other -Key
        Community Bank                                    10                                             11            12
       Consumer other:
          Marine                                          17                                             20            27
          Other                                            2                                              2             3
                                                         ---                                            ---           ---
             Total consumer other                         19                                             22            30
                                                         ---                                            ---           ---
             Total consumer loans                         68                                             72            92
                                                         ---                                            ---           ---
             Total loans charged
              off                                        132                                            149           232
    Recoveries:
       Commercial,
        financial and
        agricultural                                      11                                             17            10

       Real estate -
        commercial mortgage                                2                                              1             3
       Real estate -
        construction                                       1                                              8             5
                                                         ---                                            ---           ---
             Total commercial
              real estate loans                            3                                              9             8
       Commercial lease
        financing                                          4                                              6             6
                                                         ---                                            ---           ---
             Total commercial
              loans                                       18                                             32            24
       Real estate -
        residential
        mortgage                                           1                                              -             1
       Home equity:
          Key Community Bank                               2                                              2             1
          Other                                            1                                              1             1
                                                         ---                                            ---           ---
             Total home equity
              loans                                        3                                              3             2
       Consumer other -Key
        Community Bank                                     1                                              2             2
       Consumer other:
          Marine                                           7                                              6             8
          Other                                            1                                              1             2
                                                         ---                                            ---           ---
             Total consumer other                          8                                              7            10
                                                         ---                                            ---           ---
             Total consumer loans                         13                                             12            15
                                                         ---                                            ---           ---
             Total recoveries                             31                                             44            39
                                                         ---                                            ---           ---
    Net loan charge-offs                                (101)                                          (105)         (193)
    Provision (credit)
     for loan and lease
     losses                                               42                                            (22)          (40)
    Foreign currency
     translation
     adjustment                                           (1)                                             -             1
                                                         ---                                            ---           ---
    Allowance for loan
     and lease losses at
     end of period                                      $944                                         $1,004        $1,372
                                                        ====                                         ======        ======

    Liability for credit
     losses on lending-
     related commitments
     at beginning of
     period                                              $45                                            $56           $73
    Provision (credit)
     for losses on
     lending-related
     commitments                                           -                                            (11)           (4)
                                                         ---                                            ---           ---
    Liability for credit
     losses on lending-
     related commitments
     at end of period
     (a)                                                 $45                                            $45           $69
                                                         ===                                            ===           ===

    Total allowance for
     credit losses at
     end of period                                      $989                                         $1,049        $1,441
                                                        ====                                         ======        ======

    Net loan charge-
     offs to average
     loans                                               .82%                                           .86%         1.59%
    Allowance for loan
     and lease losses to
     annualized net loan
     charge-offs                                      232.39                                         241.01        175.29
    Allowance for loan
     and lease losses to
     period-end loans                                   1.92                                           2.03          2.83
    Allowance for credit
     losses to period-
     end loans                                          2.01                                           2.12          2.97
    Allowance for loan
     and lease losses to
     nonperforming loans                              141.74                                         138.10        155.03
    Allowance for credit
     losses to
     nonperforming loans                              148.50                                         144.29        162.82

    Discontinued
     operations -
     education lending
     business:
       Loans charged off                                 $23                                            $31           $38
       Recoveries                                          4                                              6             3
                                                         ---                                            ---           ---
       Net loan charge-
        offs                                            $(19)                                          $(25)         $(35)
                                                        ====                                           ====          ====

    (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)

                                                                3-31-12                     12-31-11                  9-30-11             6-30-11       3-31-11
                                                                -------                     --------                  -------             -------       -------
    Commercial, financial and agricultural                                           $168                                    $188                 $188          $213    $221

    Real estate - commercial mortgage                                                 175                                     218                  237           230     245
    Real estate - construction                                                         66                                      54                   93           131     146
                                                                                      ---                                     ---                  ---           ---     ---
          Total commercial real estate loans                                          241                                     272                  330           361     391
    Commercial lease financing                                                         22                                      27                   31            41      42
                                                                                      ---                                     ---                  ---           ---     ---
          Total commercial loans                                                      431                                     487                  549           615     654
    Real estate - residential mortgage                                                 82                                      87                   88            79      84
    Home equity:
       Key Community Bank                                                             109                                     108                  102           101      99
       Other                                                                           12                                      12                   12            11      13
                                                                                      ---                                     ---                  ---           ---     ---
          Total home equity loans                                                     121                                     120                  114           112     112
    Consumer other - Key Community Bank                                                 1                                       1                    4             3       3
    Consumer other:
       Marine                                                                          30                                      31                   32            32      31
       Other                                                                            1                                       1                    1             1       1
                                                                                      ---                                     ---                  ---           ---     ---
          Total consumer other                                                         31                                      32                   33            33      32
                                                                                      ---                                     ---                  ---           ---     ---
          Total consumer loans                                                        235                                     240                  239           227     231
                                                                                      ---                                     ---                  ---           ---     ---
          Total nonperforming loans                                                   666                                     727                  788           842     885
    Nonperforming loans held for sale                                                  24                                      46                   42            42      86
    OREO                                                                               61                                      65                   63            52      97
    Other nonperforming assets                                                         16                                      21                   21            14      21
                                                                                      ---                                     ---                  ---           ---     ---
       Total nonperforming assets                                                    $767                                    $859                 $914          $950  $1,089
                                                                                     ====                                    ====                 ====          ====  ======

    Accruing loans past due 90 days or more                                          $169                                    $164                 $118          $118    $153
    Accruing loans past due 30 through 89 days                                        420                                     441                  478           465     474
    Restructured loans - accruing and nonaccruing (a)                                 293                                     276                  277           252     242
    Restructured loans included in nonperforming loans (a)                            184                                     191                  178           144     136
    Nonperforming assets from discontinued operations -                                19                                      23                   22            21      22
    education lending business
    Nonperforming loans to period-end portfolio loans                                1.35%                                   1.47%                1.64%         1.76%   1.82%
    Nonperforming assets to period-end portfolio loans plus                          1.55                                    1.73                 1.89          1.98    2.23
    OREO and other nonperforming assets


    (a)            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)

                                     1Q12           4Q11                       3Q11                      2Q11                         1Q11
                                     ----           ----                       ----                      ----                         ----
    Balance at beginning of period         $727                                      $788                                      $842        $885  $1,068
          Loans placed on nonaccrual
           status                           214                                       230                                       292         410     335
          Charge-offs                      (132)                                     (149)                                     (157)       (177)   (232)
          Loans sold                        (27)                                      (28)                                      (16)        (11)    (74)
          Payments                          (65)                                      (70)                                     (125)       (156)   (114)
          Transfers to OREO                 (15)                                      (12)                                      (11)         (6)    (12)
          Transfers to nonperforming
           loans held for sale                -                                       (19)                                      (24)        (15)    (39)
          Transfers to other
           nonperforming assets               -                                        (4)                                       (3)          -      (2)
          Loans returned to accrual
           status                           (36)                                       (9)                                      (10)        (88)    (45)
                                            ---                                       ---                                       ---         ---     ---
    Balance at end of period               $666                                      $727                                      $788        $842    $885
                                           ====                                      ====                                      ====        ====    ====




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

                                     1Q12           4Q11                       3Q11                      2Q11                         1Q11
                                     ----           ----                       ----                      ----                         ----
    Balance at beginning of period          $46                                       $42                                       $42         $86    $106
          Transfers in                        -                                        19                                        24          15      39
          Net advances /(payments)           (1)                                       (3)                                       (5)        (13)    (20)
          Loans sold                         (1)                                      (11)                                       (5)        (37)    (38)
          Transfers to OREO                   -                                        (1)                                      (19)         (5)      -
          Valuation adjustments              (1)                                        -                                        (1)         (4)     (1)
          Loans returned to accrual
           status /other                    (19)                                        -                                         6           -       -
                                            ---                                       ---                                       ---         ---     ---
    Balance at end of period                $24                                       $46                                       $42         $42     $86
                                            ===                                       ===                                       ===         ===     ===




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

                                     1Q12           4Q11                       3Q11                      2Q11                         1Q11
                                     ----           ----                       ----                      ----                         ----
    Balance at beginning of period          $65                                       $63                                       $52         $97    $129
          Properties acquired -
           nonperforming loans               15                                        13                                        30          11      12
          Valuation adjustments              (7)                                       (4)                                       (3)         (7)    (11)
          Properties sold                   (12)                                       (7)                                      (16)        (49)    (33)
                                            ---                                       ---                                       ---         ---     ---
    Balance at end of period                $61                                       $65                                       $63         $52     $97
                                            ===                                       ===                                       ===         ===     ===



                                                                                                      Line of Business Results
                                                                                                       (dollars in millions)

                                                                                                                                                                      Percent change 1Q12 vs.
                                                                        1Q12         4Q11 3Q11                        2Q11             1Q11 4Q11         1Q11
                                                                        ----         ---- ----                        ----             ---- ----         ----
    Key Community Bank
    Summary of operations
          Total revenue (TE)                                                   $528              $546                            $565              $559         $565                          (3.3)% (6.5)%
          Provision (credit) for loan and lease losses                            2                30                              39                79           11                          (93.3) (81.8)
          Noninterest expense                                                   456               477                             457               447          447                           (4.4)   2.0
          Net income (loss) attributable to Key                                  57                40                              57                34           81                           42.5  (29.6)
          Average loans and leases                                           26,617            26,406                          26,270            26,242       26,312                             .8    1.2
          Average deposits                                                   47,768            48,076                          47,672            47,719       48,108                            (.6)   (.7)
          Net loan charge-offs                                                   49                71                              60                79           76                          (31.0) (35.5)
          Net loan charge-offs to average loans                                 .74%             1.07%                            .91%             1.21%        1.17%                           N/A    N/A
          Nonperforming assets at period end                                   $402              $415                            $439              $455         $475                           (3.1) (15.4)
          Return on average allocated equity                                   7.74%             5.07%                           7.19%             4.22%        9.97%                           N/A    N/A
          Average full-time equivalent employees                              8,719             8,633                           8,641             8,504        8,378                            1.0    4.1





    Key Corporate Bank
    Summary of operations
          Total revenue (TE)                                                   $401              $413                            $370              $391         $406                          (2.9)% (1.2)%
          Provision (credit) for loan and lease losses                           13               (61)                            (40)              (76)         (21)                           N/M    N/M
          Noninterest expense                                                   231               228                             216               207          228                            1.3    1.3
          Net income (loss) attributable to Key                                 100               157                             123               164          126                          (36.3) (20.6)
          Average loans and leases                                           18,584            17,783                          16,985            17,168       17,677                            4.5    5.1
          Average loans held for sale                                           509               356                             273               302          275                           43.0   85.1
          Average deposits                                                   11,556            11,162                          10,544            10,195       11,282                            3.5    2.4
          Net loan charge-offs                                                   25                12                              22                29           75                          108.3  (66.7)
          Net loan charge-offs to average loans                                 .54%              .27%                            .51%              .68%        1.72%                           N/A    N/A
          Nonperforming assets at period end                                   $237              $294                            $326              $339         $427                          (19.4) (44.5)
          Return on average allocated equity                                  21.07%            30.02%                          22.52%            28.26%       19.71%                           N/A    N/A
          Average full-time equivalent employees                              2,254             2,286                           2,288             2,191        2,155                           (1.4)   4.6

    Key Corporate Bank supplementary information (lines of business)
    Real Estate Capital and Corporate Banking Services
          Total revenue (TE)                                                   $161              $176                            $147              $156         $168                          (8.5)% (4.2)%
          Provision (credit) for loan and lease losses                            -               (31)                            (38)              (49)           9                            N/M    N/M
          Noninterest expense                                                    59                62                              65                50           69                           (4.8) (14.5)
          Net income (loss) attributable to Key                                  64                92                              76                97           57                          (30.4)  12.3
          Average loans and leases                                            7,699             7,445                           7,088             7,713        8,583                            3.4  (10.3)
          Average loans held for sale                                           291               216                             173               229          140                           34.7  107.9
          Average deposits                                                    8,221             7,643                           7,286             7,371        8,611                            7.6   (4.5)
          Net loan charge-offs                                                   16                10                              19                26           65                           60.0  (75.4)
          Net loan charge-offs to average loans                                 .84%              .53%                           1.06%             1.35%        3.07%                           N/A    N/A
          Nonperforming assets at period end                                   $173              $209                            $240              $245         $334                          (17.2) (48.2)
          Return on average allocated equity                                  27.56%            35.13%                          26.83%            31.13%       15.56%                           N/A    N/A
          Average full-time equivalent employees                                951               953                             942               902          882                            (.2)   7.8

    Equipment Finance
          Total revenue (TE)                                                    $64               $62                             $68               $63          $63                            3.2%   1.6%
          Provision (credit) for loan and lease losses                           (2)              (15)                             (8)              (30)         (26)                           N/M    N/M
          Noninterest expense                                                    37                48                              45                45           52                          (22.9) (28.8)
          Net income (loss) attributable to Key                                  18                18                              19                30           23                              -  (21.7)
          Average loans and leases                                            4,779             4,680                           4,619             4,545        4,621                            2.1    3.4
          Average loans held for sale                                            24                10                               7                 -            4                          140.0  500.0
          Average deposits                                                        8                 9                              11                12            6                          (11.1)  33.3
          Net loan charge-offs                                                    5                (1)                             (1)                2           10                            N/M  (50.0)
          Net loan charge-offs to average loans                                 .42%            (.08)%                          (.09)%              .18%         .88%                           N/A    N/A
          Nonperforming assets at period end                                    $28               $41                             $31               $39          $44                          (31.7) (36.4)
          Return on average allocated equity                                  26.71%            23.19%                          23.05%            35.81%       27.04%                           N/A    N/A
          Average full-time equivalent employees                                469               517                             511               511          521                           (9.3) (10.0)

    Institutional and Capital Markets
          Total revenue (TE)                                                   $176              $175                            $155              $172         $175                             .6%    .6%
          Provision (credit) for loan and lease losses                           15               (15)                              6                 3           (4)                           N/M    N/M
          Noninterest expense                                                   135               118                             106               112          107                           14.4   26.2
          Net income (loss) attributable to Key                                  18                47                              28                37           46                          (61.7) (60.9)
          Average loans and leases                                            6,106             5,658                           5,278             4,910        4,473                            7.9   36.5
          Average loans held for sale                                           194               130                              93                73          131                           49.2   48.1
          Average deposits                                                    3,327             3,510                           3,247             2,812        2,665                           (5.2)  24.8
          Net loan charge-offs                                                    4                 3                               4                 1            -                           33.3    N/M
          Net loan charge-offs to average loans                                 .26%              .21%                            .30%              .08%           -                            N/A    N/A
          Nonperforming assets at period end                                    $36               $44                             $55               $55          $49                          (18.2) (26.5)
          Return on average allocated equity                                  10.28%            25.61%                          15.51%            20.00%       24.51%                           N/A    N/A
          Average full-time equivalent employees                                834               816                             835               778          752                            2.2   10.9

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

SOURCE KeyCorp

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