Form 8-K KEYCORP /NEW/ For: Jul 26

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July 26, 2016 7:03 AM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 26, 2016

LOGO

(Exact name of registrant as specified in charter)

Ohio

001-11302

34-6542451

(State or other jurisdiction

of incorporation)

Commission

File Number

(I.R.S. Employer

Identification No.)


127 Public Square, Cleveland, Ohio		44114-1306
(Address of principal executive offices)		(Zip Code)

(216) 689-3000

Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02

Results of Operations and Financial Condition.

On July 26, 2016, KeyCorp issued a press release announcing its financial results for the three and six-month periods ended June 30, 2016 (the “Press Release”), and posted on its website its second quarter 2016 Supplemental Information Package (the “Supplemental Information Package”). The Press Release and Supplemental Information Package are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively.

The information in the preceding paragraph, as well as Exhibit 99.1 and Exhibit 99.2 referenced therein, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”).

KeyCorp’s Consolidated Balance Sheets and Consolidated Statements of Income (collectively, the “Financial Statements”), included as part of the Press Release, are filed as Exhibit 99.3 to this report. Exhibit 99.3 is deemed “filed” for purposes of Section 18 of the Exchange Act and, therefore, may be incorporated by reference in filings under the Securities Act.

Item 9.01

Financial Statements and Exhibits.

(d)

Exhibits

The following exhibits are furnished, or filed in the case of Exhibit 99.3, herewith:


99.1		Press Release, dated July 26, 2016, announcing financial results for the three and six-month periods ended June 30, 2016.

99.2		Supplemental Information Package reviewed during the conference call and webcast.

99.3		Financial Statements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	KEYCORP
	(Registrant)

Date: July 26, 2016	/s/ Douglas M. Schosser
	By:	Douglas M. Schosser
		Chief Accounting Officer

Exhibit 99.1


				NEWS
		FOR IMMEDIATE RELEASE

KEYCORP REPORTS SECOND QUARTER 2016

NET INCOME OF $193 MILLION, OR $.23 PER COMMON SHARE; EARNINGS PER COMMON SHARE OF $.27, EXCLUDING $.04 OF MERGER-RELATED EXPENSE

Positive operating leverage compared to prior year, excluding merger-related expense

Revenue stable from year-ago period; up 3% from prior quarter

Average loans up 5% from prior year, driven by a 12% increase in commercial, financial and agricultural loans

Solid asset quality with net charge-offs to average loans of .28%, below targeted range

First Niagara Financial Group acquisition scheduled to close on August 1

CLEVELAND, July 26, 2016 – KeyCorp (NYSE: KEY) today announced second quarter net income from continuing operations attributable to Key common shareholders of $193 million, or $.23 per common share, compared to $182 million, or $.22 per common share, for the first quarter of 2016, and $230 million, or $.27 per common share, for the second quarter of 2015. During the second quarter of 2016, Key incurred merger-related expense totaling $45 million, or $.04 per common share, compared to $24 million, or $.02 per common share, in the first quarter of 2016. Excluding merger-related expense, earnings per common share were $.27 for the second quarter of 2016 and $.24 for the first quarter of 2016. No merger-related expense was incurred in the second quarter of 2015.

“During the second quarter, we maintained positive momentum in our core businesses and made significant progress on our upcoming acquisition of First Niagara,” said Chairman and Chief Executive Officer Beth Mooney. “Excluding merger-related expense, we generated positive operating leverage relative to the year-ago period. Revenue was stable compared with the same period last year and up 3% from last quarter, despite lower interest rates and challenging market conditions. Expenses continue to be well managed, which allows us to make ongoing investments in our businesses. Credit quality remained solid, with net charge-offs to average loans below our targeted range.”

“Additionally, we increased our dividend by 13% during the quarter, and we were pleased to receive no objection from the Federal Reserve to our 2016 capital plan. We look forward to resuming share repurchases upon completion of our First Niagara acquisition, and, subject to approval by our Board of Directors, increasing the quarterly dividend to $.095 per common share next year,” continued Mooney.

“As we previously announced, we expect to close our First Niagara acquisition on or about August 1. Significant progress is being made as we move toward integration, including plans for our combined branch network that were shared earlier this month,” added Mooney. “We are excited about the opportunity to bring these two companies together and deliver on the financial commitments we have made to our shareholders.”

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 2

SECOND QUARTER 2016 FINANCIAL RESULTS, from continuing operations

Compared to Second Quarter of 2015

•

Average loans up 5%, driven by 12% growth in commercial, financial and agricultural loans

•

Average deposits, excluding deposits in foreign office, up 5% reflecting core deposit growth in Key’s retail banking franchise, growth in escrow deposits from the commercial mortgage servicing business, and commercial deposit inflows

•

Net interest income (taxable-equivalent) up $14 million, as higher earning asset balances and yields were partially offset by lower reinvestment yields

•

Noninterest income down $15 million due to lower investment banking and debt placement fees, partially offset by an increase in other income and growth in core fee-based businesses

•

Noninterest expense, excluding merger-related expense of $45 million, decreased $5 million, primarily attributable to lower personnel expense, net occupancy expense, and business services and professional fees partially offset by higher other and non-merger related marketing expense

•

Net loan charge-offs to average loans of .28%, up from .25% in the year-ago quarter

Compared to First Quarter of 2016

•

Average loans up 2%, primarily driven by a 3% increase in commercial, financial and agricultural loans

•

Average deposits up 3%, due to growth in escrow deposits in Key’s commercial mortgage servicing business, short-term inflows from commercial clients, and an increase in certificates of deposit and other time deposits

•

Net interest income (taxable-equivalent) down $7 million driven by lower reinvestment yields and lower loan fees, partially offset by higher earning asset balances

•

Noninterest income up $42 million, primarily due to an increase in investment banking and debt placement fees and higher net gains on principal investing

•

Noninterest expense, excluding merger-related expense, increased $27 million, primarily driven by expense from certain real estate investments and higher non-merger related marketing expense

•

Net loan charge-offs to average loans of .28%, down from .31% in the prior quarter

Selected Financial Highlights


										Change 2Q16 vs.
dollars in millions, except per share data	2Q16			1Q16			2Q15			1Q16			2Q15
Income (loss) from continuing operations attributable to Key common shareholders	$	193		$	182		$	230			6.0	%		(16.1	)%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution		.23			.22			.27			4.5			(14.8	)
Return on average total assets from continuing operations		.82	%		.80	%		1.03	%		N/A			N/A
Common Equity Tier 1^{(a), (b)}		11.12			11.07			10.71			N/A			N/A
Book value at period end		$13.08			$12.79			$12.21			2.3	%		7.1	%
Net interest margin (TE) from continuing operations		2.76	%		2.89	%		2.88	%		N/A			N/A

(a)

The table entitled “GAAP to Non-GAAP Reconciliations” in the attached financial supplement presents the computations of certain financial measures related to “Common Equity Tier 1.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the “Capital” section of this release.

(b)	6-30-16 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 3

INCOME STATEMENT HIGHLIGHTS

Revenue


dollars in millions							Change 2Q16 vs.
dollars in millions	2Q16		1Q16		2Q15		1Q16			2Q15
Net interest income (TE)	$	605	$	612	$	591		(1.1	)%		2.4	%
Noninterest income		473		431		488		9.7			(3.1	)

Total revenue (TE)	$	1,078	$	1,043	$	1,079		3.4	%		(.1	)%

TE = Taxable Equivalent

Taxable-equivalent net interest income was $605 million for the second quarter of 2016, and the net interest margin was 2.76%. These results compare to taxable-equivalent net interest income of $591 million and a net interest margin of 2.88% for the second quarter of 2015. The $14 million increase in net interest income compared to the year-ago quarter reflects higher earning asset balances and an increase in earning asset yields, largely the result of Key’s loan portfolio re-pricing to higher short-term interest rates. The benefit to net interest income from these items was partly offset by lower reinvestment yields in Key’s securities and derivatives portfolios. The 12 basis point decline in the net interest margin reflects higher levels of liquidity, lower reinvestment yields in the securities and derivatives portfolios, and lower loan fees. Key’s Federal Reserve account averaged $5.6 billion during the second quarter of 2016, which increased $2.3 billion compared to the second quarter of 2015 and reduced the net interest margin by 7 basis points.

Compared to the first quarter of 2016, taxable-equivalent net interest income decreased by $7 million, and the net interest margin decreased by 13 basis points. The decrease in net interest income was primarily attributable to lower reinvestment yields and a decline in loan fees, which was partly offset by higher earning asset balances. The 13 basis point decline in net interest margin reflects higher levels of liquidity, as well as lower reinvestment yields and a decline in loan fees. Key’s Federal Reserve account increased $2.1 billion during the quarter, driven by growth in short-term deposits from commercial clients, which resulted in 7 basis points of the decline in the net interest margin.

Noninterest Income


dollars in millions							Change 2Q16 vs.
dollars in millions	2Q16		1Q16		2Q15		1Q16			2Q15
Trust and investment services income	$	110	$	109	$	111		.9	%		(.9	)%
Investment banking and debt placement fees		98		71		141		38.0			(30.5	)
Service charges on deposit accounts		68		65		63		4.6			7.9
Operating lease income and other leasing gains		18		17		24		5.9			(25.0	)
Corporate services income		53		50		43		6.0			23.3
Cards and payments income		52		46		47		13.0			10.6
Corporate-owned life insurance income		28		28		30		—			(6.7	)
Consumer mortgage income		3		2		4		50.0			(25.0	)
Mortgage servicing fees		10		12		9		(16.7	)		11.1
Net gains (losses) from principal investing		11		—		11		N/M			—
Other income		22		31		5		(29.0	)		N/M

Total noninterest income	$	473	$	431	$	488		9.7	%		(3.1	)%

N/M = Not Meaningful

Key’s noninterest income was $473 million for the second quarter of 2016, compared to $488 million for the year-ago quarter. The decrease from the prior year was largely attributable to lower investment banking and debt placement fees of $43 million, reflecting challenging market conditions, as well as $6 million of lower operating lease income and other leasing gains. These declines were offset by an increase of $17 million in other income primarily related to gains from certain real estate investments, along with continued growth in some of Key’s core fee-based businesses, including corporate services and cards and payments.

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 4

Compared to the first quarter of 2016, noninterest income increased by $42 million. The primary driver of the increase was $27 million of higher investment banking and debt placement fees, reflecting improved capital markets conditions. Core fee-based businesses continued to perform well, as cards and payments income increased $6 million and corporate services income increased $3 million, along with $3 million in increased service charges on deposit accounts compared to the prior quarter. Net gains on principal investing also contributed $11 million to the increase from the prior quarter. Partially offsetting these increases was a decrease of $9 million in other income.

Noninterest Expense


dollars in millions							Change 2Q16 vs.
dollars in millions	2Q16		1Q16		2Q15		1Q16			2Q15
Personnel expense	$	427	$	404	$	408		5.7	%		4.7	%
Nonpersonnel expense		324		299		303		8.4			6.9

Total noninterest expense	$	751	$	703	$	711		6.8			5.6


Merger-related expense		45		24		—		87.5			N/M

Total noninterest expense excluding merger-related expense^(a)	$	706	$	679	$	711		4.0	%		(.7	)%

(a)	Non-GAAP measure. See the table entitled “GAAP to Non-GAAP Reconciliations” in this financial supplement.

Key’s noninterest expense was $751 million for the second quarter of 2016. Noninterest expense included $45 million of merger-related expense, primarily made up of $35 million in personnel expense related to technology development for systems conversions and fully-dedicated personnel for merger and integration efforts. The remaining $10 million of merger-related expense was nonpersonnel expense, largely recognized in business services and professional fees and marketing. In the first quarter of 2016, Key incurred $24 million of merger-related expense, while no merger-related expense was incurred in the second quarter of 2015.

Excluding merger-related expense, noninterest expense was $5 million lower than the second quarter of last year. The decrease is primarily attributable to $16 million in lower personnel expense related to lower performance-based compensation, along with lower net occupancy expenses and business services and professional fees. These decreases were partially offset by an increase in other expense, reflecting the impact of certain real estate investments and other miscellaneous items, along with increased non-merger related marketing expense.

Compared to the first quarter of 2016, excluding merger-related expense, noninterest expense increased by $27 million. The increase is primarily related to $23 million of higher nonpersonnel expense, including an increase in other expense reflecting the impact of certain real estate investments and other miscellaneous items. Additionally, Key incurred $8 million in higher non-merger related marketing expense and $4 million in increased personnel expense, related to higher performance-based compensation.

BALANCE SHEET HIGHLIGHTS

In the second quarter of 2016, Key had average assets of $99.2 billion compared to $93.9 billion in the second quarter of 2015 and $96.3 billion in the first quarter of 2016. The increase in average assets from both the year-ago period and prior quarter reflect growth in average loan balances as well as an increase in short-term investments related to higher levels of liquidity.

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 5

Average Loans


							Change 2Q16 vs.
dollars in millions	2Q16		1Q16		2Q15		1Q16			2Q15
Commercial, financial and agricultural^(a)	$	32,630	$	31,590	$	29,017		3.3	%		12.5	%
Other commercial loans		13,222		13,111		13,161		.8			.5
Home equity loans		10,098		10,240		10,510		(1.4	)		(3.9	)
Other consumer loans		5,198		5,215		5,290		(.3	)		(1.7	)

Total loans	$	61,148	$	60,156	$	57,978		1.6	%		5.5	%

(a)	Commercial, financial and agricultural average loan balances include $87 million, $85 million, and $88 million of assets from commercial credit cards at June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

Average loans were $61.1 billion for the second quarter of 2016, an increase of $3.2 billion compared to the second quarter of 2015. The loan growth primarily occurred in the commercial, financial and agricultural portfolio, which increased $3.6 billion and was spread across Key’s commercial lines of business. Consumer loans declined by $504 million mostly due to paydowns in Key’s home equity loan portfolio and continued run-off in Key’s consumer exit portfolios.

Compared to the first quarter of 2016, average loans increased by $992 million, driven by commercial, financial and agricultural loans, which grew $1 billion. Consumer loans declined $159 million, largely the result of a decline in home equity loans.

Average Deposits


										Change 2Q16 vs.
dollars in millions	2Q16			1Q16			2Q15			1Q16			2Q15
Non-time deposits^(a)	$	67,419		$	65,637		$	65,109			2.7	%		3.5	%
Certificates of deposit ($100,000 or more)		3,233			2,761			2,010			17.1			60.8
Other time deposits		3,252			3,200			3,136			1.6			3.7

Total deposits	$	73,904		$	71,598		$	70,255			3.2	%		5.2	%


Cost of total deposits^(a)		.19	%		.17	%		.15	%		N/A			N/A

(a)	Excludes deposits in foreign office.

N/A = Not Applicable

Average deposits, excluding deposits in foreign office, totaled $73.9 billion for the second quarter of 2016, an increase of $3.6 billion compared to the year-ago quarter. Interest-bearing deposits increased $4.9 billion driven by a $3.6 billion increase in NOW and money market deposit accounts and a $1.3 billion increase in certificates of deposit and other time deposits. The increase in average deposits from the year-ago quarter reflects core deposit growth in Key’s retail banking franchise, growth in escrow deposits from the commercial mortgage servicing business, and commercial deposit inflows. These increases were partially offset by a $1.2 billion decline in noninterest-bearing deposits.

Compared to the first quarter of 2016, average deposits increased by $2.3 billion. The increase was driven by NOW and money market deposit accounts which increased $2.0 billion, and certificates of deposit and other time deposits which increased $524 million. Higher escrow deposits from Key’s commercial mortgage servicing business, short-term inflows from Key’s commercial clients, and core deposit growth in Key’s retail banking franchise contributed to the linked-quarter increase in NOW and money market deposit accounts.

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 6

ASSET QUALITY


										Change 2Q16 vs.
dollars in millions	2Q16			1Q16			2Q15			1Q16			2Q15
Net loan charge-offs	$	43		$	46		$	36			(6.5	)%		19.4	%
Net loan charge-offs to average total loans		.28	%		.31	%		.25	%		N/A			N/A
Nonperforming loans at period end^(a)	$	619		$	676		$	419			(8.4	)%		47.7	%
Nonperforming assets at period end^(a)		637			692			440			(7.9	)		44.8
Allowance for loan and lease losses		854			826			796			3.4			7.3
Allowance for loan and lease losses to nonperforming loans^(a)		138.0	%		122.2	%		190.0	%		N/A			N/A
Provision for credit losses	$	52		$	89		$	41			(41.6	)%		26.8	%

(a)	Nonperforming loan balances exclude $11 million, $11 million, and $12 million of purchased credit impaired loans at June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

N/A = Not Applicable

Key’s provision for credit losses was $52 million for the second quarter of 2016, compared to $41 million for the second quarter of 2015 and $89 million for the first quarter of 2016. Key’s allowance for loan and lease losses was $854 million, or 1.38% of total period-end loans, at June 30, 2016, compared to 1.37% at June 30, 2015, and 1.37% at March 31, 2016.

Net loan charge-offs for the second quarter of 2016 totaled $43 million, or .28% of average total loans. These results compare to $36 million, or .25%, for the second quarter of 2015, and $46 million, or .31%, for the first quarter of 2016.

At June 30, 2016, Key’s nonperforming loans totaled $619 million and represented 1.00% of period-end portfolio loans, compared to ..72% at June 30, 2015, and 1.12% at March 31, 2016. Nonperforming assets at June 30, 2016 totaled $637 million and represented 1.03% of period-end portfolio loans and OREO and other nonperforming assets, compared to .75% at June 30, 2015, and 1.14% at March 31, 2016.

CAPITAL

Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at June 30, 2016.

Capital Ratios


	6-30-16			3-31-16			6-30-15
Common Equity Tier 1^{(a), (b)}		11.12	%		11.07	%		10.71
Tier 1 risk-based capital^(a)		11.43			11.38			11.11
Total risk based capital^(a)		13.66			13.12			12.66
Tangible common equity to tangible assets^(b)		9.95			9.97			9.86
Leverage^(a)		10.58			10.73			10.74

(a)	6-30-16 ratio is estimated.

(b)

The table entitled “GAAP to Non-GAAP Reconciliations” in the attached financial supplement presents the computations of certain financial measures related to “tangible common equity” and “Common Equity Tier 1.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. See below for further information on the Regulatory Capital Rules.

As shown in the preceding table, at June 30, 2016, Key’s estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 11.12% and 11.43%, respectively. In addition, the tangible common equity ratio was 9.95% at June 30, 2016.

In October 2013, federal banking regulators published the final Basel III capital framework for U.S. banking organizations (the “Regulatory Capital Rules”). The mandatory compliance date for Key as a “standardized approach” banking organization began on January 1, 2015, subject to transitional provisions

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 7

extending to January 1, 2019. Key’s estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 11.07% at June 30, 2016. This estimate exceeds the fully phased-in required minimum Common Equity Tier 1 and Capital Conservation Buffer of 7.00%.

Summary of Changes in Common Shares Outstanding


								Change 2Q16 vs.
in thousands	2Q16		1Q16		2Q15			1Q16			2Q15
Shares outstanding at beginning of period		842,290		835,751		850,920			.8	%		(1.0	)%
Common shares repurchased		—		—		(8,794	)		N/M			N/M
Shares reissued (returned) under employee benefit plans		413		6,539		1,482			N/M			(72.1	)

Shares outstanding at end of period		842,703		842,290		843,608			—			(.1	)%

N/M = Not Meaningful

As previously reported, Key’s existing share repurchase program is currently suspended due to the pending acquisition of First Niagara Financial Group.

Key’s 2016 capital plan, effective as of the third quarter of 2016, received no objection from the Federal Reserve during the Comprehensive Capital Analysis and Review process and includes common share repurchases of up to $350 million. This authorization includes repurchases to offset issuances of common shares under our employee compensation plans. Share repurchases are expected to be executed following the completion of the pending acquisition of First Niagara Financial Group and through the second quarter of 2017.

LINE OF BUSINESS RESULTS

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

Major Business Segments


										Change 2Q16 vs.
dollars in millions	2Q16			1Q16			2Q15			1Q16			2Q15
Revenue from continuing operations (TE)
Key Community Bank	$	598		$	595		$	560			.5	%		6.8	%
Key Corporate Bank		452			426			478			6.1			(5.4	)
Other Segments		31			21			43			47.6			(27.9	)

Total segments		1,081			1,042			1,081			3.7			—
Reconciling Items		(3	)		1			(2	)		N/M			N/M

Total	$	1,078		$	1,043		$	1,079			3.4	%		(.1	)%


Income (loss) from continuing operations attributable to Key
Key Community Bank	$	81		$	74		$	69			9.5	%		17.4	%
Key Corporate Bank		135			118			131			14.4			3.1
Other Segments		24			14			31			71.4			(22.6	)

Total segments		240			206			231			16.5			3.9
Reconciling Items		(41	)		(19	)		4			N/M			N/M

Total	$	199		$	187		$	235			6.4	%		(15.3	)%

TE = Taxable Equivalent, N/M = Not Meaningful

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 8

Key Community Bank


							Change 2Q16 vs.
dollars in millions	2Q16		1Q16		2Q15		1Q16			2Q15
Summary of operations
Net interest income (TE)	$	391	$	399	$	362		(2.0	)%		8.0	%
Noninterest income		207		196		198		5.6			4.5

Total revenue (TE)		598		595		560		.5			6.8
Provision for credit losses		25		42		3		(40.5	)		733.3
Noninterest expense		444		436		447		1.8			(.7	)

Income (loss) before income taxes (TE)		129		117		110		10.3			17.3
Allocated income taxes (benefit) and TE adjustments		48		43		41		11.6			17.1

Net income (loss) attributable to Key	$	81	$	74	$	69		9.5	%		17.4	%

Average balances
Loans and leases	$	30,936	$	30,789	$	30,707		.5	%		.7	%
Total assets		32,963		32,856		32,809		.3			.5
Deposits		53,794		52,803		50,765		1.9			6.0

Assets under management at period end	$	34,535	$	34,107	$	38,399		1.3	%		(10.1	)%

TE = Taxable Equivalent

Additional Key Community Bank Data


										Change 2Q16 vs.
dollars in millions	2Q16			1Q16			2Q15			1Q16			2Q15
Noninterest income
Trust and investment services income	$	73		$	73		$	76			—			(3.9	)%
Service charges on deposit accounts		56			54			52			3.7	%		7.7
Cards and payments income		46			43			43			7.0			7.0
Other noninterest income		32			26			27			23.1			18.5

Total noninterest income	$	207		$	196		$	198			5.6	%		4.5	%


Average deposit balances
NOW and money market deposit accounts	$	30,144		$	29,432		$	28,284			2.4	%		6.6	%
Savings deposits		2,365			2,340			2,385			1.1			(.8	)
Certificates of deposit ($100,000 or more)		2,383			2,120			1,547			12.4			54.0
Other time deposits		3,245			3,197			3,132			1.5			3.6
Deposits in foreign office		—			—			299			N/M			N/M
Noninterest-bearing deposits		15,657			15,714			15,118			(.4	)		3.6

Total deposits	$	53,794		$	52,803		$	50,765			1.9	%		6.0	%


Home equity loans
Average balance	$	9,908		$	10,037		$	10,266
Combined weighted-average loan-to-value ratio (at date of origination)		71	%		71	%		71	%
Percent first lien positions		61			61			60

Other data
Branches		949			961			989
Automated teller machines		1,236			1,249			1,280

N/M = Not Meaningful

Key Community Bank Summary of Operations

•

Positive operating leverage from prior year

•

Net income increased to $81 million, 17.4% growth from prior year

•

Commercial, financial, and agricultural average loan growth of $675 million, or 5.4% from prior year

•

Average deposits up $3.0 billion, or 6.0% from the prior year

Key Community Bank recorded net income attributable to Key of $81 million for the second quarter of 2016, compared to $69 million for the year-ago quarter.

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 9

Taxable-equivalent net interest income increased by $29 million, or 8.0%, from the second quarter of 2015 due to favorable deposit rates and balance growth. Average deposits increased $3 billion, or 6.0%, from one year ago, and average loans and leases grew $229 million, or .7%. Commercial, financial and agricultural loans grew by $675 million, or 5.4%, from the prior year.

Noninterest income increased $9 million, or 4.5%, from the year-ago quarter. Service charges on deposit accounts increased $4 million, and cards and payments income and investment banking and debt placement fees each increased $3 million. These increases were partially offset by market weakness affecting Key’s Private Bank as well as lower consumer mortgage income.

The provision for credit losses increased by $22 million from the second quarter of 2015. Net loan charge-offs decreased $3 million from the same period one year ago.

Noninterest expense remained relatively stable, decreasing by $3 million, or .7%, from the year-ago quarter.

Key Corporate Bank


								Change 2Q16 vs.
dollars in millions	2Q16			1Q16		2Q15		1Q16			2Q15
Summary of operations
Net interest income (TE)	$	222		$	218	$	228		1.8	%		(2.6	)%
Noninterest income		230			208		250		10.6			(8.0	)

Total revenue (TE)		452			426		478		6.1			(5.4	)
Provision for credit losses		30			43		41		(30.2	)		(26.8	)
Noninterest expense		259			237		256		9.3			1.2

Income (loss) before income taxes (TE)		163			146		181		11.6			(9.9	)
Allocated income taxes and TE adjustments		29			28		50		3.6			(42.0	)

Net income (loss)		134			118		131		13.6			2.3
Less: Net income (loss) attributable to noncontrolling interests		(1	)		—		—		N/M			N/M

Net income (loss) attributable to Key	$	135		$	118	$	131		14.4	%		3.1	%


Average balances
Loans and leases	$	28,607		$	27,722	$	25,298		3.2	%		13.1	%
Loans held for sale		591			811		1,234		(27.1	)		(52.1	)
Total assets		33,909			33,413		31,173		1.5			8.8
Deposits		19,129			18,074		19,709		5.8			(2.9	)

TE = Taxable Equivalent, N/M = Not Meaningful

Additional Key Corporate Bank Data


							Change 2Q16 vs.
dollars in millions	2Q16		1Q16		2Q15		1Q16			2Q15
Noninterest income
Trust and investment services income	$	37	$	36	$	35		2.8	%		5.7	%
Investment banking and debt placement fees		94		70		139		34.3			(32.4	)
Operating lease income and other leasing gains		15		13		18		15.4			(16.7	)
Corporate services income		40		38		33		5.3			21.2
Service charges on deposit accounts		12		11		11		9.1			9.1
Cards and payments income		6		3		4		100.0			50.0

Payments and services income		58		52		48		11.5			20.8
Mortgage servicing fees		10		12		9		(16.7	)		11.1
Other noninterest income		16		25		1		(36.0	)		N/M

Total noninterest income	$	230	$	208	$	250		10.6	%		(8.0	)%

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 10

Key Corporate Bank Summary of Operations

•

Average loan and lease balances up $3.3 billion, or 13.1% from the prior year

•

Net income increased to $135 million, 3.1% growth from the prior year

Key Corporate Bank recorded net income attributable to Key of $135 million for the second quarter of 2016, compared to $131 million for the same period one year ago.

Taxable-equivalent net interest income decreased by $6 million, or 2.6%, compared to the second quarter of 2015. Average loan and lease balances increased $3.3 billion, or 13.1%, from the year-ago quarter, primarily driven by growth in commercial, financial and agricultural loans. This loan growth was offset by spread compression due to higher funding costs and a decline in loan fees due to lower refinance activity from the prior year. Average deposit balances decreased $580 million, or 2.9%, from the year-ago quarter, mostly driven by lower public deposits.

Noninterest income was down $20 million, or 8.0%, from the prior year. Investment banking and debt placement fees declined $45 million, or 32.4%, due to challenging market conditions. Other noninterest income increased $15 million from the year-ago quarter mostly due to gains from certain real estate investments. Corporate services income was up $7 million, or 21.2%, due to growth in commitment fees and derivatives.

The provision for credit losses decreased $11 million, or 26.8%, compared to the second quarter of 2015 as lower provisioning related to unfunded commitments offset higher net loan charge-offs.

Noninterest expense increased by $3 million, or 1.2%, from the second quarter of 2015. Increases in various other expense items, including operating lease expense, were partially offset by lower personnel costs.

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 $24 million for the second quarter of 2016, compared to $31 million for the same period last year. This decline was largely attributable to spread compression.

*****

KeyCorp was organized more than 160 years ago and is headquartered in Cleveland, Ohio. One of the nation’s largest bank-based financial services companies, Key had assets of approximately $101.2 billion at June 30, 2016.

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

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 11


CONTACTS:

ANALYSTS		MEDIA
Vernon L. Patterson		Jack Sparks
216.689.0520		720.904.4554
[email protected]		[email protected]
		Twitter: @keybank_news
Kelly L. Dillon
216.689.3133
[email protected]

Melanie S. Misconish
216.689.4545
[email protected]

INVESTOR		KEY MEDIA
RELATIONS: www.key.com/ir		NEWSROOM: www.key.com/newsroom

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as “goal,” “objective,” “plan,” “expect,” “assume,” “anticipate,” “intend,” “project,” “believe,” “estimate,” or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Forward-looking statements, by their nature, are subject to assumptions, risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause Key’s actual results to differ from those described in the forward-looking statements can be found in KeyCorp’s Form 10-K for the year ended December 31, 2015, as well as in KeyCorp’s subsequent SEC filings, all of which have been filed with the Securities and Exchange Commission (the “SEC”) and are available on Key’s website (www.key.com/ir) and on the SEC’s website (www.sec.gov). These factors may include, among others: deterioration of commercial real estate market fundamentals, adverse changes in credit quality trends, declining asset prices, a reversal of the U.S. economic recovery due to financial, political, or other shocks, and the extensive and increasing regulation of the U.S. financial services industry. Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.

Notes to Editors:

A live Internet broadcast of KeyCorp’s conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts’ questions can be accessed through the Investor Relations section at https://www.key.com/ir at 9:00 a.m. ET, on Tuesday, July 26, 2016. An audio replay of the call will be available through August 2, 2016.

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.

*****

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 12

KeyCorp

Second Quarter 2016

Financial Supplement


Page
13		Financial Highlights
15		GAAP to Non-GAAP Reconciliation
18		Consolidated Balance Sheets
19		Consolidated Statements of Income
20		Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
22		Noninterest Expense
22		Personnel Expense
23		Loan Composition
23		Loans Held for Sale Composition
23		Summary of Changes in Loans Held for Sale
24		Exit Loan Portfolio From Continuing Operations
24		Asset Quality Statistics From Continuing Operations
25		Summary of Loan and Lease Loss Experience From Continuing Operations
26		Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
27		Summary of Changes in Nonperforming Loans From Continuing Operations
27		Summary of Changes in Other Real Estate Owned, Net of Allowance, From Continuing Operations
28		Line of Business Results

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 13

Financial Highlights

(dollars in millions, except per share amounts)


	Three months ended
	6-30-16			3-31-16			6-30-15
Summary of operations
Net interest income (TE)	$	605		$	612		$	591
Noninterest income		473			431			488

Total revenue (TE)		1,078			1,043			1,079
Provision for credit losses		52			89			41
Noninterest expense		751			703			711
Income (loss) from continuing operations attributable to Key		199			187			235
Income (loss) from discontinued operations, net of taxes^(a)		3			1			3
Net income (loss) attributable to Key		202			188			238

Income (loss) from continuing operations attributable to Key common shareholders		193			182			230
Income (loss) from discontinued operations, net of taxes^(a)		3			1			3
Net income (loss) attributable to Key common shareholders		196			183			233

Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.22		$	.27
Income (loss) from discontinued operations, net of taxes ^(a)		—			—			—
Net income (loss) attributable to Key common shareholders ^(b)		.23			.22			.28

Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.23			.22			.27
Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)		—			—			—
Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)		.23			.22			.27

Cash dividends paid		.085			.075			.075
Book value at period end		13.08			12.79			12.21
Tangible book value at period end		11.81			11.52			10.92
Market price at period end		11.05			11.04			15.02

Performance ratios
From continuing operations:
Return on average total assets		.82	%		.80	%		1.03	%
Return on average common equity		7.15			6.86			8.96
Return on average tangible common equity ^(c)		7.94			7.64			10.01
Net interest margin (TE)		2.76			2.89			2.88
Cash efficiency ratio ^(c)		69.0			66.6			65.1

From consolidated operations:
Return on average total assets		.82	%		.79	%		1.02	%
Return on average common equity		7.26			6.90			9.07
Return on average tangible common equity ^(c)		8.06			7.68			10.14
Net interest margin (TE)		2.74			2.83			2.85
Loan to deposit ^(d)		85.3			85.7			87.3

Capital ratios at period end
Key shareholders’ equity to assets		11.18	%		11.25	%		11.19	%
Key common shareholders’ equity to assets		10.90			10.95			10.89
Tangible common equity to tangible assets ^(c)		9.95			9.97			9.86
Common Equity Tier 1 ^{(c), (e)}		11.12			11.07			10.71
Tier 1 risk-based capital ^(e)		11.43			11.38			11.11
Total risk-based capital ^(e)		13.66			13.12			12.66
Leverage ^(e)		10.58			10.73			10.74

Asset quality — from continuing operations
Net loan charge-offs	$	43		$	46		$	36
Net loan charge-offs to average loans		.28	%		.31	%		.25	%
Allowance for loan and lease losses	$	854		$	826		$	796
Allowance for credit losses		904			895			841
Allowance for loan and lease losses to period-end loans		1.38	%		1.37	%		1.37	%
Allowance for credit losses to period-end loans		1.46			1.48			1.44
Allowance for loan and lease losses to nonperforming loans ^(f)		138.0			122.2			190.0
Allowance for credit losses to nonperforming loans ^(f)		146.0			132.4			200.7
Nonperforming loans at period end ^(f)	$	619		$	676		$	419
Nonperforming assets at period end ^(f)		637			692			440
Nonperforming loans to period-end portfolio loans ^(f)		1.00	%		1.12	%		.72	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets ^(f)		1.03			1.14			.75

Trust and brokerage assets
Assets under management	$	34,535		$	34,107		$	38,399
Nonmanaged and brokerage assets		52,102			49,474			48,789

Other data
Average full-time equivalent employees		13,419			13,403			13,455
Branches		949			961			989

Taxable-equivalent adjustment	$	8		$	8		$	7

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 14

Financial Highlights (continued)

(dollars in millions, except per share amounts)


	Six months ended
	6-30-16			6-30-15
Summary of operations
Net interest income (TE)	$	1,217		$	1,168
Noninterest income		904			925

Total revenue (TE)		2,121			2,093
Provision for credit losses		141			76
Noninterest expense		1,454			1,380
Income (loss) from continuing operations attributable to Key		386			463
Income (loss) from discontinued operations, net of taxes ^(a)		4			8
Net income (loss) attributable to Key		390			471

Income (loss) from continuing operations attributable to Key common shareholders	$	375		$	452
Income (loss) from discontinued operations, net of taxes ^(a)		4			8
Net income (loss) attributable to Key common shareholders		379			460

Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.45		$	.53
Income (loss) from discontinued operations, net of taxes ^(a)		—			.01
Net income (loss) attributable to Key common shareholders ^(b)		.45			.54

Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		.44			.52
Income (loss) from discontinued operations, net of taxes — assuming dilution ^(a)		—			.01
Net income (loss) attributable to Key common shareholders — assuming dilution ^(b)		.45			.53

Cash dividends paid		.16			.14

Performance ratios
From continuing operations:
Return on average total assets		.81	%		1.03	%
Return on average common equity		7.01			8.86
Return on average tangible common equity ^(c)		7.79			9.91
Net interest margin (TE)		2.83			2.89
Cash efficiency ratio ^(c)		67.8			65.1

From consolidated operations:
Return on average total assets		.80	%		1.02	%
Return on average common equity		7.08			9.01
Return on average tangible common equity ^(c)		7.87			10.08
Net interest margin (TE)		2.80			2.86

Asset quality — from continuing operations
Net loan charge-offs	$	89		$	64
Net loan charge-offs to average total loans		.30	%		.22	%

Other data
Average full-time equivalent employees		13,411			13,512

Taxable-equivalent adjustment	$	16		$	13

(a)

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

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

(c)

The following table entitled “GAAP to Non-GAAP Reconciliations” presents the computations of certain financial measures related to “tangible common equity,” “Common Equity Tier 1,” and “cash efficiency.” The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons. For further information on the Regulatory Capital Rules, see the “Capital” section of this release.

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

(e)	6-30-16 ratio is estimated.

(f)	Nonperforming loan balances exclude $11 million, $11 million, and $12 million of purchased credit impaired loans at June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

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

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 15

GAAP to Non-GAAP Reconciliations

(dollars in millions)

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

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

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

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

On October 30, 2015, Key announced that it entered into a definitive agreement and plan of merger to acquire First Niagara Financial Group. As a result of this pending transaction, Key has recognized merger-related expense. The table below shows the computation for noninterest expense excluding merger-related expense, earnings per common share excluding merger-related expense, and return on average assets from continuing operations excluding merger-related expense. Management believes that eliminating the effects of the merger-related expense makes it easier to analyze the results by presenting them on a more comparable basis.

The cash efficiency ratio is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key’s intangible asset amortization from the calculation. The table below also shows the computation for the cash efficiency ratio excluding merger-related expense. Management believes these ratios provide greater consistency and comparability between Key’s results and those of its peer banks. Additionally, these ratios are used by analysts and investors as they develop earnings forecasts and peer bank analysis.

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


	Three months ended
	6-30-16			3-31-16			6-30-15
Tangible common equity to tangible assets at period end
Key shareholders’ equity (GAAP)	$	11,313		$	11,066		$	10,590
Less: Intangible assets ^(a)		1,074			1,077			1,085
Preferred Stock, Series A ^(b)		281			281			281

Tangible common equity (non-GAAP)	$	9,958		$	9,708		$	9,224


Total assets (GAAP)	$	101,150		$	98,402		$	94,606
Less: Intangible assets ^(a)		1,074			1,077			1,085

Tangible assets (non-GAAP)	$	100,076		$	97,325		$	93,521


Tangible common equity to tangible assets ratio (non-GAAP)		9.95	%		9.97	%		9.86	%

Common Equity Tier 1 at period end
Key shareholders’ equity (GAAP)	$	11,313		$	11,066			10,590
Less: Preferred Stock, Series A ^(b)		281			281			281

Common Equity Tier 1 capital before adjustments and deductions		11,032			10,785			10,309
Less: Goodwill, net of deferred taxes		1,033			1,033			1,034
Intangible assets, net of deferred taxes		30			35			33
Deferred tax assets		1			1			1
Net unrealized gains (losses) on available-for-sale securities, net of deferred taxes		129			70			—
Accumulated gains (losses) on cash flow hedges, net of deferred taxes		77			46			(20	)
Amounts in accumulated other comprehensive income (loss) attributed to pension and postretirement benefit costs, net of deferred taxes		(362	)		(365	)		(361	)

Total Common Equity Tier 1 capital ^(c)	$	10,124		$	9,965			9,622


Net risk-weighted assets (regulatory) ^(c)	$	91,021		$	90,014			89,851

Common Equity Tier 1 ratio (non-GAAP) ^(c)		11.12	%		11.07	%		10.71

Noninterest expense excluding merger-related expense
Noninterest expense (GAAP)	$	751		$	703		$	711
Less: Merger-related expense		45			24			—

Noninterest expense excluding merger-related expense (non-GAAP)	$	706		$	679		$	711


Earnings per common share (EPS) excluding merger-related expense
EPS from continuing operations attributable to Key common shareholders – assuming dilution	$	.23		$	.22		$	.27
Add: EPS impact of merger-related expense		.04			.02			—

EPS from continuing operations attributable to Key common shareholders excluding merger-related expense (non-GAAP)	$	.27		$	.24		$	.27

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 16

GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)


		Three months ended
		6-30-16			3-31-16			6-30-15
Pre-provision net revenue
Net interest income (GAAP)		$	597		$	604		$	584
Plus:	Taxable-equivalent adjustment		8			8			7
	Noninterest income		473			431			488
Less:	Noninterest expense		751			703			711

Pre-provision net revenue from continuing operations (non-GAAP)		$	327		$	340		$	368


Average tangible common equity
Average Key shareholders’ equity (GAAP)		$	11,147		$	10,953		$	10,590
Less:	Intangible assets (average)^(d)		1,076			1,079			1,086
	Preferred Stock, Series A (average)		290			290			290

	Average tangible common equity (non-GAAP)	$	9,781		$	9,584		$	9,214


Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	193		$	182		$	230
Average tangible common equity (non-GAAP)			9,781			9,584			9,214

Return on average tangible common equity from continuing operations (non-GAAP)			7.94	%		7.64	%		10.01	%

Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)		$	196		$	183		$	233
Average tangible common equity (non-GAAP)			9,781			9,584			9,214

Return on average tangible common equity consolidated (non-GAAP)			8.06	%		7.68	%		10.14	%

Cash efficiency ratio
Noninterest expense (GAAP)		$	751		$	703		$	711
Less:	Intangible asset amortization		7			8			9

	Adjusted noninterest expense (non-GAAP)		744			695			702
Less:	Merger-related expense		45			24			—

	Adjusted noninterest expense excluding merger-related expense (non-GAAP)	$	699		$	671		$	702


Net interest income (GAAP)		$	597		$	604		$	584
Plus:	Taxable-equivalent adjustment		8			8			7
	Noninterest income		473			431			488

	Total taxable-equivalent revenue (non-GAAP)	$	1,078		$	1,043		$	1,079


Cash efficiency ratio (non-GAAP)			69.0	%		66.6	%		65.1	%

Cash efficiency ratio excluding merger-related expense (non-GAAP)			64.8	%		64.3	%		65.1	%

Return on average total assets from continuing operations excluding merger-related expense
Income from continuing operations attributable to Key (GAAP)		$	199		$	187		$	235
Add:	Merger-related expense, after tax		28			15			—

	Income from continuing operations atrributable to Key excluding merger-related expense, after tax (non-GAAP)	$	227		$	202		$	235


Average total assets from continuing operations (GAAP)		$	97,413		$	94,477		$	91,658


Return on average total assets from continuing operations excluding merger-related expense (non-GAAP)			.94	%		.86	%		1.03	%

		Three months ended
		6-30-16
Common Equity Tier 1 under the Regulatory Capital Rules (“RCR”) (estimates)
Common Equity Tier 1 under current RCR		$	10,124
Adjustments from current RCR to the fully phased-in RCR:
Deferred tax assets and other intangible assets^(e)			(21	)

Common Equity Tier 1 anticipated under the fully phased-in RCR^(f)		$	10,103

Net risk-weighted assets under current RCR		$	91,021
Adjustments from current RCR to the fully phased-in RCR:
Mortgage servicing assets^(g)			485
Volcker funds			(224	)
All other assets			12

Total risk-weighted assets anticipated under the fully phased-in RCR^(f)		$	91,294

Common Equity Tier 1 ratio under the fully phased-in RCR^(f)			11.07	%

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 17

GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)


		Six months ended
		6-30-16			6-30-15
Pre-provision net revenue
Net interest income (GAAP)		$	1,201		$	1,155
Plus:	Taxable-equivalent adjustment		16			13
	Noninterest income (GAAP)		904			925
Less:	Noninterest expense (GAAP)		1,454			1,380

Pre-provision net revenue from continuing operations (non-GAAP)		$	667		$	713


Average tangible common equity
Average Key shareholders’ equity (GAAP)		$	11,050		$	10,580
Less:	Intangible assets (average)^(h)		1,077			1,088
	Preferred Stock, Series A (average)		290			290

	Average tangible common equity (non-GAAP)	$	9,683		$	9,202


Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)		$	375		$	452
Average tangible common equity (non-GAAP)			9,683			9,202

Return on average tangible common equity from continuing operations (non-GAAP)			7.79	%		9.91	%

Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)		$	379		$	460
Average tangible common equity (non-GAAP)			9,683			9,202

Return on average tangible common equity consolidated (non-GAAP)			7.87	%		10.08	%

Cash efficiency ratio		$	1,454		$	1,380
Noninterest expense (GAAP)
Less:	Intangible asset amortization (GAAP)		15			18

	Adjusted noninterest expense (non-GAAP)		1,439			1,362
Less:	Merger-related expense		69			—

	Adjusted noninterest expense excluding merger-related expense (non-GAAP)	$	1,370		$	1,362


Net interest income (GAAP)		$	1,201		$	1,155
Plus:	Taxable-equivalent adjustment		16			13
	Noninterest income (GAAP)		904			925

	Total taxable-equivalent revenue (non-GAAP)	$	2,121		$	2,093


Cash efficiency ratio (non-GAAP)			67.8	%		65.1	%

Cash efficiency ratio excluding merger-related expense (non-GAAP)			64.6	%		65.1	%

Return on average total assets from continuing operations excluding merger-related expense
Income from continuing operations attributable to Key (GAAP)		$	386		$	463
Add:	Merger-related expense, after tax		43			—

	Income from continuing operations atrributable to Key excluding merger-related expense, after tax (non-GAAP)	$	429		$	463


Average total assets from continuing operations (GAAP)		$	95,945		$	90,648


Return on average total assets from continuing operations excluding merger-related expense (non-GAAP)			.90	%		1.03	%

(a)	For the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, intangible assets exclude $36 million, $40 million, and $55 million, respectively, of period-end purchased credit card receivables.

(b)	Net of capital surplus.

(c)	6-30-16 amount is estimated.

(d)	For the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, average intangible assets exclude $38 million, $42 million, and $58 million, respectively, of average purchased credit card receivables.

(e)	Includes the deferred tax assets subject to future taxable income for realization, primarily tax credit carryforwards, as well as intangible assets (other than goodwill and mortgage servicing assets) subject to the transition provisions of the final rule.

(f)	The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies’ Regulatory Capital Rules (as fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital Rules under the “standardized approach.”

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

(h)	For the six months ended June 30, 2016, and June 30, 2015, average intangible assets exclude $40 million and $61 million, respectively, of average ending purchase credit card receivables.

GAAP = U.S. generally accepted accounting principles

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 18

Consolidated Balance Sheets

(dollars in millions)


	6-30-16			3-31-16			6-30-15
Assets
Loans	$	62,098		$	60,438		$	58,264
Loans held for sale		442			684			835
Securities available for sale		14,552			14,304			14,244
Held-to-maturity securities		4,832			5,003			5,022
Trading account assets		965			765			674
Short-term investments		6,599			5,436			3,222
Other investments		577			643			703

Total earning assets		90,065			87,273			82,964
Allowance for loan and lease losses		(854	)		(826	)		(796	)
Cash and due from banks		496			474			693
Premises and equipment		742			750			788
Operating lease assets		399			362			296
Goodwill		1,060			1,060			1,057
Other intangible assets		50			57			83
Corporate-owned life insurance		3,568			3,557			3,502
Derivative assets		1,234			1,065			536
Accrued income and other assets		2,673			2,849			3,312
Discontinued assets		1,717			1,781			2,169

Total assets	$	101,150		$	98,402		$	94,604


Liabilities
Deposits in domestic offices:
NOW and money market deposit accounts	$	40,195		$	38,946		$	36,024
Savings deposits		2,355			2,385			2,370
Certificates of deposit ($100,000 or more)		3,381			3,095			2,032
Other time deposits		3,267			3,259			3,105

Total interest-bearing deposits		49,198			47,685			43,531
Noninterest-bearing deposits		26,127			25,697			26,640
Deposits in foreign office — interest-bearing		—			—			498

Total deposits		75,325			73,382			70,669
Federal funds purchased and securities sold under repurchase agreements		360			374			444
Bank notes and other short-term borrowings		687			615			528
Derivative liabilities		746			790			560
Accrued expense and other liabilities		1,326			1,410			1,537
Long-term debt		11,388			10,760			10,265

Total liabilities		89,832			87,331			84,003

Equity
Preferred stock, Series A		290			290			290
Common shares		1,017			1,017			1,017
Capital surplus		3,835			3,818			3,898
Retained earnings		9,166			9,042			8,614
Treasury stock, at cost		(2,881	)		(2,888	)		(2,884	)
Accumulated other comprehensive income (loss)		(114	)		(213	)		(345	)

Key shareholders’ equity		11,313			11,066			10,590
Noncontrolling interests		5			5			11

Total equity		11,318			11,071			10,601

Total liabilities and equity	$	101,150		$	98,402		$	94,604


Common shares outstanding (000)		842,703			842,290			843,608

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 19

Consolidated Statements of Income

(dollars in millions, except per share amounts)


	Three months ended							Six months ended
	6-30-16			3-31-16		6-30-15		6-30-16			6-30-15
Interest income
Loans	$	567		$	562	$	532	$	1,129		$	1,055
Loans held for sale		5			8		12		13			19
Securities available for sale		74			75		72		149			142
Held-to-maturity securities		24			24		24		48			48
Trading account assets		6			7		5		13			10
Short-term investments		6			4		2		10			4
Other investments		2			3		5		5			10

Total interest income		684			683		652		1,367			1,288

Interest expense
Deposits		34			31		26		65			52
Bank notes and other short-term borrowings		3			2		2		5			4
Long-term debt		50			46		40		96			77

Total interest expense		87			79		68		166			133

Net interest income		597			604		584		1,201			1,155
Provision for credit losses		52			89		41		141			76

Net interest income after provision for credit losses		545			515		543		1,060			1,079

Noninterest income
Trust and investment services income		110			109		111		219			220
Investment banking and debt placement fees		98			71		141		169			209
Service charges on deposit accounts		68			65		63		133			124
Operating lease income and other leasing gains		18			17		24		35			43
Corporate services income		53			50		43		103			86
Cards and payments income		52			46		47		98			89
Corporate-owned life insurance income		28			28		30		56			61
Consumer mortgage income		3			2		4		5			7
Mortgage servicing fees		10			12		9		22			22
Net gains (losses) from principal investing		11			—		11		11			40
Other income ^(a)		22			31		5		53			24

Total noninterest income		473			431		488		904			925

Noninterest expense
Personnel		427			404		408		831			797
Net occupancy		59			61		66		120			131
Computer processing		45			43		42		88			80
Business services and professional fees		40			41		42		81			75
Equipment		21			21		22		42			44
Operating lease expense		14			13		12		27			23
Marketing		22			12		15		34			23
FDIC assessment		8			9		8		17			16
Intangible asset amortization		7			8		9		15			18
OREO expense, net		2			1		1		3			3
Other expense		106			90		86		196			170

Total noninterest expense		751			703		711		1,454			1,380

Income (loss) from continuing operations before income taxes		267			243		320		510			624
Income taxes		69			56		84		125			158

Income (loss) from continuing operations		198			187		236		385			466
Income (loss) from discontinued operations, net of taxes		3			1		3		4			8

Net income (loss)		201			188		239		389			474
Less: Net income (loss) attributable to noncontrolling interests		(1	)		—		1		(1	)		3

Net income (loss) attributable to Key	$	202		$	188	$	238	$	390		$	471


Income (loss) from continuing operations attributable to Key common shareholders	$	193		$	182	$	230	$	375		$	452
Net income (loss) attributable to Key common shareholders		196			183		233		379			460

Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.22	$	.27	$	.45		$	.53
Income (loss) from discontinued operations, net of taxes		—			—		—		—			.01
Net income (loss) attributable to Key common shareholders ^(b)		.23			.22		.28		.45			.54

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.22	$	.27	$	.44		$	.52
Income (loss) from discontinued operations, net of taxes		—			—		—		—			.01
Net income (loss) attributable to Key common shareholders ^(b)		.23			.22		.27		.45			.53

Cash dividends declared per common share	$	.085		$	.075	$	.075	$	.16		$	.14

Weighted-average common shares outstanding (000)		831,899			827,381		839,454		829,640			843,992
Effect of common share options and other stock awards		6,597			7,679		6,858		7,138			7,695

Weighted-average common shares and potential common shares outstanding (000) ^(c)		838,496			835,060		846,312		836,778			851,687

(a)	For the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, net securities gains (losses) totaled less than $1 million. For the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, Key did not have any impairment losses related to securities.

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

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

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 20

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations

(dollars in millions)


	Second Quarter 2016								First Quarter 2016								Second Quarter 2015
	Average Balance			Interest ^(a)		Yield/Rate ^(a)			Average Balance			Interest ^(a)		Yield/Rate ^(a)			Average Balance			Interest ^(a)		Yield/Rate ^(a)
Assets
Loans:^{(b), (c)}

Commercial, financial and agricultural^(d)	$	32,630		$	270		3.32	%	$	31,590		$	263		3.35	%	$	29,017		$	233		3.23	%
Real estate — commercial mortgage		8,404			80		3.85			8,138			77		3.78			7,981			74		3.70
Real estate — construction		869			8		3.78			1,016			10		4.11			1,199			11		3.60
Commercial lease financing		3,949			37		3.77			3,957			36		3.65			3,981			36		3.58

Total commercial loans		45,852			395		3.47			44,701			386		3.47			42,178			354		3.36
Real estate — residential mortgage		2,253			22		4.11			2,236			24		4.18			2,237			23		4.22
Home equity loans		10,098			102		4.04			10,240			103		4.06			10,510			104		3.98
Consumer direct loans		1,599			26		6.53			1,593			26		6.53			1,571			26		6.52
Credit cards		792			21		10.58			784			21		10.72			737			19		10.57
Consumer indirect loans		554			9		6.56			602			10		6.44			745			12		6.38

Total consumer loans		15,296			180		4.74			15,455			184		4.76			15,800			184		4.69

Total loans		61,148			575		3.78			60,156			570		3.80			57,978			538		3.72
Loans held for sale		611			5		3.18			826			8		4.02			1,263			12		3.91
Securities available for sale^(b), (e)		14,268			74		2.08			14,207			75		2.12			13,360			73		2.17
Held-to-maturity securities^(b)		4,883			24		1.98			4,817			24		2.01			4,965			24		1.91
Trading account assets		967			6		2.28			817			7		3.50			805			5		2.55
Short-term investments		5,559			6		.45			3,432			4		.46			3,228			2		.26
Other investments^(e)		610			2		1.54			647			3		1.73			713			5		2.48

Total earning assets		88,046			692		3.16			84,902			691		3.27			82,312			659		3.21
Allowance for loan and lease losses		(833	)							(803	)							(793	)
Accrued income and other assets		10,200								10,378								10,139
Discontinued assets		1,738								1,804								2,194

Total assets	$	99,151							$	96,281							$	93,852


Liabilities
NOW and money market deposit accounts	$	39,687			16		.17		$	37,708			15		.16		$	36,122			14		.16
Savings deposits		2,375			—		.02			2,349			—		.02			2,393			—		.02
Certificates of deposit ($100,000 or more)^(f)		3,233			11		1.39			2,761			10		1.37			2,010			6		1.25
Other time deposits		3,252			7		.85			3,200			6		.79			3,136			5		.70
Deposits in foreign office		—			—		—			—			—		—			583			1		.23

Total interest-bearing deposits		48,547			34		.29			46,018			31		.27			44,244			26		.24
Federal funds purchased and securities sold under repurchase agreements		337			—		.01			437			—		.07			557			—		.02
Bank notes and other short-term borrowings		694			3		1.39			591			2		1.63			657			2		1.39
Long-term debt^{(f), (g)}		9,294			50		2.25			8,566			46		2.19			6,967			40		2.30

Total interest-bearing liabilities		58,872			87		.60			55,612			79		.57			52,425			68		.52

Noninterest-bearing deposits		25,357								25,580								26,594
Accrued expense and other liabilities		2,032								2,322								2,039
Discontinued liabilities^(g)		1,738								1,804								2,194

Total liabilities		87,999								85,318								83,252

Equity
Key shareholders’ equity		11,147								10,953								10,590
Noncontrolling interests		5								10								10

Total equity		11,152								10,963								10,600

Total liabilities and equity	$	99,151							$	96,281							$	93,852


Interest rate spread (TE)							2.56	%							2.70	%							2.69	%


Net interest income (TE) and net interest margin (TE)					605		2.76	%					612		2.89	%					591		2.88	%

TE adjustment^(b)					8								8								7

Net interest income, GAAP basis				$	597							$	604							$	584

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

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

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

(d)	Commercial, financial and agricultural average balances include $87 million, $85 million, and $88 million of assets from commercial credit cards for the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

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

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

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

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

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 21

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations

(dollars in millions)


	Six months ended June 30, 2016								Six months ended June 30, 2015
	Average Balance			Interest^(a)		Yield/Rate ^(a)			Average Balance			Interest^(a)		Yield/Rate ^(a)

Assets
Loans:^{(b), (c)}

Commercial, financial and agricultural ^(d)	$	32,110		$	533		3.33	%	$	28,671		$	456		3.21	%
Real estate — commercial mortgage		8,271			157		3.81			8,038			147		3.68
Real estate — construction		942			18		3.96			1,169			22		3.75
Commercial lease financing		3,953			73		3.71			4,025			72		3.57

Total commercial loans		45,276			781		3.47			41,903			697		3.35
Real estate — residential mortgage		2,245			46		4.15			2,233			47		4.24
Home equity loans		10,169			205		4.05			10,543			208		3.99
Consumer direct loans		1,596			52		6.53			1,558			51		6.57
Credit cards		788			42		10.65			735			39		10.79
Consumer indirect loans		578			19		6.50			774			25		6.40

Total consumer loans		15,376			364		4.75			15,843			370		4.71

Total loans		60,652			1,145		3.79			57,746			1,067		3.72
Loans held for sale		718			13		3.66			1,030			19		3.68
Securities available for sale^(b), (e)		14,238			149		2.10			13,225			143		2.17
Held-to-maturity securities^(b)		4,850			48		2.00			4,956			48		1.92
Trading account assets		892			13		2.83			762			10		2.67
Short-term investments		4,495			10		.45			2,816			4		.26
Other investments^(e)		629			5		1.64			727			10		2.64

Total earning assets		86,474			1,383		3.21			81,262			1,301		3.22
Allowance for loan and lease losses		(818	)							(793	)
Accrued income and other assets		10,289								10,179
Discontinued assets		1,771								2,232

Total assets	$	97,716							$	92,880


Liabilities
NOW and money market deposit accounts	$	38,698			31		.16		$	35,540			27		.15
Savings deposits		2,362			—		.02			2,389			—		.02
Certificates of deposit ($100,000 or more)^(f)		2,997			21		1.38			2,014			13		1.28
Other time deposits		3,226			13		.82			3,176			11		.71
Deposits in foreign office		—			—		—			556			1		.23

Total interest-bearing deposits		47,283			65		.28			43,675			52		.24

Federal funds purchased and securities sold under repurchase agreements		387			—		.04			638			—		.03
Bank notes and other short-term borrowings		643			5		1.50			582			4		1.46
Long-term debt^{(f), (g)}		8,930			96		2.22			6,548			77		2.40

Total interest-bearing liabilities		57,243			166		.59			51,443			133		.52

Noninterest-bearing deposits		25,468								26,432
Accrued expense and other liabilities		2,177								2,182
Discontinued liabilities^(g)		1,771								2,232

Total liabilities		86,659								82,289

Equity
Key shareholders’ equity		11,050								10,580
Noncontrolling interests		7								11

Total equity		11,057								10,591

Total liabilities and equity	$	97,716							$	92,880


Interest rate spread (TE)							2.62	%							2.70	%


Net interest income (TE) and net interest margin (TE)					1,217		2.83	%					1,168		2.89	%

TE adjustment^(b)					16								13

Net interest income, GAAP basis				$	1,201							$	1,155

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

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

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

(d)	Commercial, financial and agricultural average balances include $86 million and $88 million of assets from commercial credit cards for the six months ended June 30, 2016, and June 30, 2015, respectively.

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

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

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

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

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 22

Noninterest Expense

(dollars in millions)


	Three months ended						Six months ended
	6-30-16		3-31-16		6-30-15		6-30-16		6-30-15
Personnel ^(a)	$	427	$	404	$	408	$	831	$	797
Net occupancy		59		61		66		120		131
Computer processing		45		43		42		88		80
Business services and professional fees		40		41		42		81		75
Equipment		21		21		22		42		44
Operating lease expense		14		13		12		27		23
Marketing		22		12		15		34		23
FDIC assessment		8		9		8		17		16
Intangible asset amortization		7		8		9		15		18
OREO expense, net		2		1		1		3		3
Other expense		106		90		86		196		170

Total noninterest expense	$	751	$	703	$	711	$	1,454	$	1,380


Merger-related expense ^(b)		45		24		—		69		—

Total noninterest expense excluding merger-related expense ^(c)	$	706	$	679	$	711	$	1,385	$	1,380


Average full-time equivalent employees ^(d)		13,419		13,403		13,455		13,411		13,512

(a)	Additional detail provided in Personnel Expense table below.

(b)	Additional detail provided in Merger-Related Expense table below.

(c)	Non-GAAP measure. See the table entitled “GAAP to Non-GAAP Reconciliations” in this financial supplement.

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

Personnel Expense

(in millions)


	Three months ended						Six months ended
	6-30-16		3-31-16		6-30-15		6-30-16		6-30-15
Salaries and contract labor	$	266	$	244	$	239	$	510	$	467
Incentive and stock-based compensation		101		89		109		190		192
Employee benefits		58		68		55		126		127
Severance		2		3		5		5		11

Total personnel expense	$	427	$	404	$	408	$	831	$	797


Merger-Related Expense
(in millions)

	Three months ended						Six months ended
	6-30-16		3-31-16		6-30-15		6-30-16		6-30-15
Personnel ^(a)	$	35	$	16		—	$	51		—
Business services and professional fees		5		7		—		12		—
Marketing		3		1		—		4		—
Other nonpersonnel expense		2		—		—		2		—

Total merger-related expense^(b)	$	45	$	24		—	$	69		—

(a)	Personnel expense includes technology development related to systems conversion and fully-dedicated personnel for merger and integration efforts.

(b)	Non-GAAP measure. See the table entitled “GAAP to Non-GAAP Reconciliations” in this financial supplement.

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 23

Loan Composition

(dollars in millions)


							Percent change 6-30-16 vs.
	6-30-16		3-31-16		6-30-15		3-31-16			6-30-15
Commercial, financial and agricultural ^(a)	$	33,376	$	31,976	$	29,285		4.4	%		14.0	%
Commercial real estate:
Commercial mortgage		8,582		8,364		7,874		2.6			9.0
Construction		881		841		1,254		4.8			(29.7	)

Total commercial real estate loans		9,463		9,205		9,128		2.8			3.7
Commercial lease financing ^(b)		3,988		3,934		4,010		1.4			(.5	)

Total commercial loans		46,827		45,115		42,423		3.8			10.4
Residential — prime loans:
Real estate — residential mortgage		2,285		2,234		2,252		2.3			1.5
Home equity loans		10,062		10,149		10,532		(.9	)		(4.5	)

Total residential — prime loans		12,347		12,383		12,784		(.3	)		(3.4	)
Consumer direct loans		1,584		1,579		1,595		.3			(.7	)
Credit cards		813		782		753		4.0			8.0
Consumer indirect loans		527		579		709		(9.0	)		(25.7	)

Total consumer loans		15,271		15,323		15,841		(.3	)		(3.6	)

Total loans^{(c), (d)}	$	62,098	$	60,438	$	58,264		2.7	%		6.6	%

Loans Held for Sale Composition

(dollars in millions)


							Percent change 6-30-16 vs.
	6-30-16		3-31-16		6-30-15		3-31-16			6-30-15
Commercial, financial and agricultural	$	150	$	103	$	217		45.6	%		(30.9	)%
Real estate — commercial mortgage		270		562		576		(52.0	)		(53.1	)
Commercial lease financing		3		—		7		N/M			(57.1	)
Real estate — residential mortgage		19		19		35		—			(45.7	)

Total loans held for sale^(e)	$	442	$	684	$	835		(35.4	)%		(47.1	)%

Summary of Changes in Loans Held for Sale

(in millions)


	2Q16			1Q16			4Q15			3Q15			2Q15
Balance at beginning of period	$	684		$	639		$	916		$	835		$	1,649
New originations		1,539			1,114			1,655			1,673			1,650
Transfers from (to) held to maturity, net		22			—			22			24			6
Loan sales		(1,802	)		(1,108	)		(1,943	)		(1,616	)		(2,466	)
Loan draws (payments), net		(1	)		39			(11	)		—			(4	)

Balance at end of period^(e)	$	442		$	684		$	639		$	916		$	835

(a)	Loan balances include $88 million, $85 million, and $89 million of commercial credit card balances at June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $102 million, $115 million, and $191 million at June 30, 2016, March 31, 2016, and June 30, 2015, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c)

At June 30, 2016, total loans include purchased loans of $104 million, of which $11 million were purchased credit impaired. At March 31, 2016, total loans include purchased loans of $109 million, of which $11 million were purchased credit impaired. At June 30, 2015, total loans include purchased loans of $125 million, of which $12 million were purchased credit impaired.

(d)	Total loans exclude loans of $1.7 billion at June 30, 2016, $1.8 billion at March 31, 2016, and $2 billion at June 30, 2015, related to the discontinued operations of the education lending business.

(e)	Total loans held for sale exclude loans held for sale of $179 million at June 30, 2015, related to the discontinued operations of the education lending business.

N/M = Not Meaningful

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 24

Exit Loan Portfolio From Continuing Operations

(in millions)


	Balance Outstanding				Change 6-30-16 vs.			Net Loan Charge-offs				Balance on Nonperforming Status
	6-30-16		3-31-16		3-31-16			2Q16		1Q16		6-30-16		3-31-16
Residential properties — homebuilder		—		—		—			—		—	$	4	$	3
Commercial lease financing^(a)	$	731	$	743	$	(12	)	$	1	$	1		—		—

Total commercial loans		731		743		(12	)		1		1		4		3
Home equity — Other		183		195		(12	)		1		1		7		7
Marine		496		544		(48	)		3		2		3		4
RV and other consumer		35		39		(4	)		—		—		—		—

Total consumer loans		714		778		(64	)		4		3		10		11

Total exit loans in loan portfolio	$	1,445	$	1,521	$	(76	)	$	5	$	4	$	14	$	14


Discontinued operations — education lending business (not included in exit loans above)	$	1,692	$	1,760	$	(68	)	$	4	$	6	$	5	$	6

(a)

Includes (1) the business aviation, commercial vehicle, office products, construction, and industrial leases; (2) Canadian lease financing portfolios; (3) European lease financing portfolios; and (4) all remaining balances related to lease in, lease out; sale in, lease out; service contract leases; and qualified technological equipment leases.

Asset Quality Statistics From Continuing Operations

(dollars in millions)


	2Q16			1Q16			4Q15			3Q15			2Q15
Net loan charge-offs	$	43		$	46		$	37		$	41		$	36
Net loan charge-offs to average total loans		.28	%		.31	%		.25	%		.27	%		.25	%
Allowance for loan and lease losses	$	854		$	826		$	796		$	790		$	796
Allowance for credit losses^(a)		904			895			852			844			841
Allowance for loan and lease losses to period-end loans		1.38	%		1.37	%		1.33	%		1.31	%		1.37	%
Allowance for credit losses to period-end loans		1.46			1.48			1.42			1.40			1.44
Allowance for loan and lease losses to nonperforming loans^(b)		138.0			122.2			205.7			197.5			190.0
Allowance for credit losses to nonperforming loans ^(b)		146.0			132.4			220.2			211.0			200.7
Nonperforming loans at period end^(b)	$	619		$	676		$	387		$	400		$	419
Nonperforming assets at period end^(b)		637			692			403			417			440
Nonperforming loans to period-end portfolio loans^(b)		1.00	%		1.12	%		.65	%		.67	%		.72	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets^(b)		1.03			1.14			.67			.69			.75

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

(b)	Nonperforming loan balances exclude $11 million, $11 million, $11 million, $12 million, and $12 million of purchased credit impaired loans at June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015, and June 30, 2015, respectively.

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 25

Summary of Loan and Lease Loss Experience From Continuing Operations

(dollars in millions)


	Three months ended									Six months ended
	6-30-16			3-31-16			6-30-15			6-30-16			6-30-15
Average loans outstanding	$	61,148		$	60,156		$	57,978		$	60,652		$	57,746


Allowance for loan and lease losses at beginning of period	$	826		$	796		$	794		$	796		$	794
Loans charged off:
Commercial, financial and agricultural		35			26			21			61			33

Real estate — commercial mortgage		2			1			—			3			2
Real estate — construction		—			—			—			—			1

Total commercial real estate loans		2			1			—			3			3
Commercial lease financing		3			3			1			6			3

Total commercial loans		40			30			22			70			39

Real estate — residential mortgage		1			2			1			3			3
Home equity loans		7			10			10			17			18
Consumer direct loans		6			6			6			12			12
Credit cards		8			8			8			16			16
Consumer indirect loans		2			4			5			6			11

Total consumer loans		24			30			30			54			60

Total loans charged off		64			60			52			124			99
Recoveries:
Commercial, financial and agricultural		3			3			6			6			11

Real estate — commercial mortgage		6			2			—			8			2
Real estate — construction		—			1			1			1			1

Total commercial real estate loans		6			3			1			9			3
Commercial lease financing		2			—			1			2			5

Total commercial loans		11			6			8			17			19

Real estate — residential mortgage		—			2			1			2			1
Home equity loans		4			3			2			7			5
Consumer direct loans		2			1			2			3			4
Credit cards		1			1			1			2			1
Consumer indirect loans		3			1			2			4			5

Total consumer loans		10			8			8			18			16

Total recoveries		21			14			16			35			35

Net loan charge-offs		(43	)		(46	)		(36	)		(89	)		(64	)
Provision (credit) for loan and lease losses		71			76			37			147			66
Foreign currency translation adjustment		—			—			1			—			—

Allowance for loan and lease losses at end of period	$	854		$	826		$	796		$	854		$	796


Liability for credit losses on lending-related commitments at beginning of period	$	69		$	56		$	41		$	56		$	35
Provision (credit) for losses on lending-related commitments		(19	)		13			4			(6	)		10

Liability for credit losses on lending-related commitments at end of period^(a)	$	50		$	69		$	45		$	50		$	45


Total allowance for credit losses at end of period	$	904		$	895		$	841		$	904		$	841


Net loan charge-offs to average total loans		.28	%		.31	%		.25	%		.30	%		.22	%
Allowance for loan and lease losses to period-end loans		1.38			1.37			1.37			1.38			1.37
Allowance for credit losses to period-end loans		1.46			1.48			1.44			1.46			1.44
Allowance for loan and lease losses to nonperforming loans		138.0			122.2			190.0			138.0			190.0
Allowance for credit losses to nonperforming loans		146.0			132.4			200.7			146.0			200.7

Discontinued operations — education lending business:
Loans charged off	$	6		$	9		$	6		$	15		$	16
Recoveries		2			3			4			5			8

Net loan charge-offs	$	(4	)	$	(6	)	$	(2	)	$	(10	)	$	(8	)

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

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 26

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

(dollars in millions)


	6-30-16			3-31-16			12-31-15			9-30-15			6-30-15
Commercial, financial and agricultural	$	321		$	380		$	82		$	89		$	100

Real estate — commercial mortgage		14			16			19			23			26
Real estate — construction		25			12			9			9			12

Total commercial real estate loans		39			28			28			32			38
Commercial lease financing		10			11			13			21			18

Total commercial loans		370			419			123			142			156

Real estate — residential mortgage		54			59			64			67			67
Home equity loans		189			191			190			181			184
Consumer direct loans		1			1			2			1			1
Credit cards		2			2			2			2			2
Consumer indirect loans		3			4			6			7			9

Total consumer loans		249			257			264			258			263

Total nonperforming loans^(a)		619			676			387			400			419
OREO		15			14			14			17			20
Other nonperforming assets		3			2			2			—			1

Total nonperforming assets^(a)	$	637		$	692		$	403		$	417		$	440


Accruing loans past due 90 days or more	$	70		$	70		$	72		$	54		$	66
Accruing loans past due 30 through 89 days		203			237			208			271			181
Restructured loans — accruing and nonaccruing^(b)		277			283			280			287			300
Restructured loans included in nonperforming loans^(b)		133			151			159			160			170
Nonperforming assets from discontinued operations — education lending business		5			6			7			8			6
Nonperforming loans to period-end portfolio loans ^(a)		1.00	%		1.12	%		.65	%		.67	%		.72	%
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets^(a)		1.03			1.14			.67			.69			.75

(a)	Nonperforming loan balances exclude $11 million, $11 million, $11 million, $12 million, and $12 million of purchased credit impaired loans at June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015, and June 30, 2015, respectively.

(b)

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

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 27

Summary of Changes in Nonperforming Loans From Continuing Operations

(in millions)


	2Q16			1Q16			4Q15			3Q15			2Q15
Balance at beginning of period	$	676		$	387		$	400		$	419		$	437
Loans placed on nonaccrual status		124			406			81			81			92
Charge-offs		(64	)		(60	)		(51	)		(53	)		(52	)
Loans sold		—			(11	)		—			(2	)		—
Payments		(75	)		(8	)		(21	)		(16	)		(25	)
Transfers to OREO		(6	)		(4	)		(4	)		(4	)		(5	)
Transfers to other nonperforming assets		—			—			(1	)		—			—
Loans returned to accrual status		(36	)		(34	)		(17	)		(25	)		(28	)

Balance at end of period^(a)	$	619		$	676		$	387		$	400		$	419

(a)	Nonperforming loan balances exclude $11 million, $11 million, $11 million, $12 million, and $12 million of purchased credit impaired loans at June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015, and June 30, 2015, respectively.

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

(in millions)


	2Q16			1Q16			4Q15			3Q15			2Q15
Balance at beginning of period	$	14		$	14		$	17		$	20		$	20
Properties acquired — nonperforming loans		6			4			4			4			5
Valuation adjustments		(2	)		(1	)		(2	)		(2	)		(1	)
Properties sold		(3	)		(3	)		(5	)		(5	)		(4	)

Balance at end of period	$	15		$	14		$	14		$	17		$	20

KeyCorp Reports Second Quarter 2016 Profit

July 26, 2016

Page 28

Line of Business Results

(dollars in millions)


																Percent change 2Q16 vs.
	2Q16			1Q16			4Q15			3Q15			2Q15			1Q16			2Q15
Key Community Bank
Summary of operations
Total revenue (TE)	$	598		$	595		$	588		$	579		$	560			.5	%		6.8	%
Provision for credit losses		25			42			20			18			3			(40.5	)		733.3
Noninterest expense		444			436			456			444			447			1.8			(.7	)
Net income (loss) attributable to Key		81			74			70			74			69			9.5			17.4
Average loans and leases		30,936			30,789			30,925			31,039			30,707			.5			.7
Average deposits		53,794			52,803			52,219			51,234			50,765			1.9			6.0
Net loan charge-offs		17			23			23			21			20			(26.1	)		(15.0	)
Net loan charge-offs to average total loans		.22	%		.30	%		.30	%		.27	%		.26	%		N/A			N/A
Nonperforming assets at period end	$	300		$	303		$	303		$	306		$	305			(1.0	)		(1.6	)
Return on average allocated equity		11.99	%		11.09	%		10.39	%		10.92	%		10.34	%		N/A			N/A
Average full-time equivalent employees		7,331			7,376			7,390			7,476			7,574			(.6	)		(3.2	)

Key Corporate Bank
Summary of operations
Total revenue (TE)	$	452		$	426		$	479		$	454		$	478			6.1	%		(5.4	)%
Provision for credit losses		30			43			26			30			41			(30.2	)		(26.8	)
Noninterest expense		259			237			257			250			256			9.3			1.2
Net income (loss) attributable to Key		135			118			142			136			131			14.4			3.1
Average loans and leases		28,607			27,722			26,981			26,425			25,298			3.2			13.1
Average loans held for sale		591			811			820			918			1,234			(27.1	)		(52.1	)
Average deposits		19,129			18,074			19,080			18,809			19,709			5.8			(2.9	)
Net loan charge-offs		27			18			12			20			12			50.0			125.0
Net loan charge-offs to average total loans		.38	%		.26	%		.18	%		.30 %			.19	%		N/A			N/A
Nonperforming assets at period end	$	319		$	372		$	74		$	85		$	105			(14.2	)		203.8
Return on average allocated equity		26.23	%		23.15	%		29.05	%		28.29	%		29.24	%		N/A			N/A
Average full-time equivalent employees		2,138			2,126			2,113			2,173			2,058			.6			3.9

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

KeyCorp Second Quarter 2016 Earnings Review July 26, 2016 Beth E. Mooney Chairman and Chief Executive Officer Don Kimble Chief Financial Officer Exhibit 99.2

FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION DISCLOSURE This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, KeyCorp’s and First Niagara’s expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections. In addition to factors previously disclosed in KeyCorp’s and First Niagara’s reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: ability to meet closing conditions to the merger; delay in closing the merger; difficulties and delays in integrating the First Niagara business or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of KeyCorp’s products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results. This presentation also includes certain non-GAAP financial measures related to “tangible common equity,” “Common Equity Tier 1,” “pre-provision net revenue,” “cash efficiency ratio,” and certain financial measures excluding merger-related expenses. Management believes these measures may assist investors, analysts and regulators in analyzing Key’s financials. Although Key has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components, they have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of results under GAAP. For more information on these calculations and to view the reconciliations to the most comparable GAAP measures, please refer to the appendix of this presentation or page 96 of our Form 10-Q dated March 31, 2016.

Non-GAAP measure: see Appendix for reconciliations Merger-related expense detail provided in Appendix, on slide 17 6-30-16 ratio is estimated Disciplined Capital Management Generated positive operating leverage and grew pre-provision net revenue (a) from 2Q15, excluding merger-related expense of $45 MM (b) Revenue stable with prior year and up 3% from prior quarter Total average loans up 5% from prior year; CF&A loans up 12% Positive trends in several fee-based businesses, reflecting ongoing investments Market sensitive businesses improved from 1Q16 but continued to be impacted by challenging market conditions Expenses well-managed; reflect merger-related expense (b) and investments for growth Strong Risk Management Investor Highlights – 2Q16 Positive Operating Leverage Maintained credit discipline NCOs represented 28 bps of average loans, down from prior quarter and below targeted range Allowance to period-end loans remained strong at 1.38% Increased common share dividend by 13% in 2Q16 No objection from Federal Reserve on 2016 capital plan Common share repurchases of up to $350 MM, and, subject to Board approval, a 12% increase in the quarterly common share dividend in 2Q17 Common Equity Tier 1 ratio of 11.1% at 6/30/16 (a), (c)

0 First Niagara: Positioned to Complete Acquisition Acquisition Drives Value 2Q16 Updates Transaction scheduled to close on or about August 1, 2016 Federal Reserve approval received July 12, 2016 Announced combined branch network plans Includes consolidation of 106 FNFG and KEY branches Plans to invest in and expand businesses in New York Finalized branch divestiture agreements with Department of Justice and Federal Reserve Sale of 18 branches in the Buffalo MSA Attractive Financial Returns Significant Revenue Opportunities Complementary Business Model More Balanced Franchise Cost savings of $400 MM ROTCE ~200 bps higher Cash efficiency improves ~300 bps EPS accretion of ~5% IRR of ~15%; ROIC >10% Continued confidence in value attainment, financial targets and cultural compatibility Value attainment and financial metrics based upon full realization of cost savings (FY 2018); no revenue synergies assumed

Financial Review

Financial Highlights TE = Taxable equivalent; EOP = End of Period From continuing operations Year-over-year average balance growth (c) From consolidated operations (d) 6-30-16 ratios are estimated Non-GAAP measure: see Appendix for reconciliation Merger-related expense detail available in Appendix, on slide 17 EPS – assuming dilution $ .23 $ .22 $ .27 $ .26 $ .27 EPS –excl. merger-related expense (e), (f) .27 .24 .27 Cash efficiency ratio (e) 69.0 % 66.6 % 66.4 % 66.9 % 65.1 % Cash efficiency –excl. merger-related expense (e), (f) 64.8 64.3 65.8 Return on average total assets .82 .80 .97 .95 1.03 ROAA –excl. merger-related expense (e), (f) .94 .86 .99 Total loans and leases 5 % 5 % 5 % 6 % 4 % CF&A loans 12 12 14 15 10 Deposits (excl. foreign deposits) 5 4 3 3 6 Common Equity Tier 1 (d), (e) 11.1 % 11.1 % 11.0 % 10.5 % 10.7 % Tier 1 risk-based capital (d) 11.4 11.4 11.4 10.9 11.1 Tangible common equity to tangible assets (e) 10.0 10.0 10.0 9.9 9.9 NCOs to average loans .28 % .31 % .25 % .27 % .25 % NPLs to EOP portfolio loans 1.00 1.12 .65 .67 .72 Allowance for loan losses to EOP loans 1.38 1.37 1.33 1.31 1.37 Balance Sheet Growth (a), (b) Capital (c) Asset Quality (a) Financial Performance (a) Metrics 2Q16 1Q16 4Q15 3Q15 2Q15

Loans $ in billions Average Commercial, Financial & Agricultural Loans Total Average Loans Exit Portfolios Home Equity & Other Commercial $ in billions Period-end total loans up 7% in 2Q16 from 2Q15, driven by CF&A loans up 14% Utilization remains relatively stable Average Loans CF&A loans up 12% Highlights Total average loans up 5% Average total loans up 5% in 2Q16 from 2Q15, driven by CF&A loans up 12% Broad-based growth across Key’s commercial lines of business Consumer loan decline related to paydowns in the home equity portfolio and continued run-off in consumer exit portfolios Average balance growth in both Community Bank and Corporate Bank, compared to 2Q15 Period-End Loans

Deposit balances up 3% from 1Q16, reflecting: Growth in escrow deposits from the commercial mortgage servicing business Short-term inflows from commercial clients Core deposit growth in retail banking 2Q16 Average Deposit Mix Deposit growth of 5% from 2Q15 related to: Core deposit growth in retail banking Growth in escrow deposits from the commercial mortgage servicing business Inflows from commercial clients Average Deposits (a) Excludes deposits in foreign office Cost of total deposits (a) CDs and other time deposits Savings Noninterest-bearing NOW and MMDA Total average deposits (a) Highlights Deposits Total average deposits up 5% $ in billions $ in billions vs. Prior Year vs. Prior Quarter

Net interest income down $7 MM, or 1%, from 1Q16 Lower reinvestment yields and a decline in loan fees Higher earning asset balances TE = Taxable equivalent Net interest income (TE) NIM (TE) NIM Change (bps): vs. 1Q16 Short-term deposit growth/ higher levels of excess liquidity (0.07) Lower asset yields (0.05) Loan fees (0.01) Total change (0.13) Maintained moderate asset sensitivity Naturally asset sensitive balance sheet: 71% of loans variable rate High quality investment portfolio with average life of 3.6 years Flexibility to quickly adjust interest rate risk position Net interest income up $14 MM, or 2%, from 2Q15 Higher earning asset balances and yields Lower reinvestment yields in the securities and derivatives portfolios Net Interest Income and Margin Net Interest Income & Net Interest Margin Trend (TE) Highlights $ in millions; continuing operations vs. Prior Year vs. Prior Quarter

Noninterest Income Noninterest Income $ in millions Up / (Down) 2Q16 vs. 2Q15 vs. 1Q16 Trust and investment services income $ 110 $ (1) $ 1 Investment banking and debt placement fees 98 (43) 27 Service charges on deposit accounts 68 5 3 Operating lease income and other leasing gains 18 (6) 1 Corporate services income 53 10 3 Cards and payments income 52 5 6 Corporate-owned life insurance 28 (2) - Consumer mortgage income 3 (1) 1 Mortgage servicing fees 10 1 (2) Net gains (losses) from principal investing 11 - 11 Other income 22 17 (9) Total noninterest income $ 473 $ (15) $ 42 Highlights Noninterest income down 3% from 2Q15 Investment banking and debt placement fees $43 MM lower, reflecting challenging market conditions Continued momentum in core fee-based businesses: Corporate services income +$10 MM Cards and payments income +$5 MM $17 MM increase in other income, primarily related to gains from certain real estate investments Noninterest income up 10% from 1Q16 Strength in core fee-based businesses Investment banking and debt placement fees up $27 MM, reflecting improved capital markets conditions Cards and payments income up $6 MM $11 MM increase in net gains from principal investing (a) Other includes corporate-owned life insurance, principal investing, etc. vs. Prior Year vs. Prior Quarter

Noninterest expense, excl. merger-related expense (b) $ in millions Up / (Down) 2Q16 vs. 2Q15 vs. 1Q16 Personnel $ 427 $ 19 $ 23 Net occupancy 59 (7) (2) Computer processing 45 3 2 Business services, professional fees 40 (2) (1) Equipment 21 (1) - Operating lease expense 14 2 1 Marketing 22 7 10 FDIC assessment 8 - (1) Intangible asset amortization 7 (2) (1) OREO expense, net 2 1 1 Other expense 106 20 16 Total noninterest expense $ 751 $ 40 $ 48 Merger-related expense (a) 45 45 21 Total noninterest expense, excluding merger-related expense (b) $ 706 $ (5) $ 27 Noninterest Expense Noninterest Expense Merger-related expense detail provided in Appendix, on slide 17 Non-GAAP measure: see Appendix for reconciliation Highlights Cash efficiency ratio, excluding merger-related expense (b) Down 1%, or $5 MM, excluding merger-related expense Lower performance-based compensation, net occupancy and business services and professional fees Higher expense from certain real estate investments and other miscellaneous items Increased non-merger related marketing Merger-related expense (a) vs. Prior Year (excl. merger-related expense) vs. Prior Quarter (excl. merger-related expense) $ in millions $751 $703 $45 $706 $24 $679 $711 1Q16 2Q16 2Q15 Expense comparisons reflect merger-related expense of $45 MM in 2Q16, compared to $24 MM in 1Q16 (no merger-related expense in 2Q15) Up 4%, or $27 MM, excluding merger-related expense Higher expense from certain real estate investments and other miscellaneous items Increased non-merger related marketing Higher performance-based compensation

Nonperforming Assets Net Charge-offs & Provision for Credit Losses NPLs NPLs to period-end loans NCOs Provision for credit losses NCOs to average loans $ in millions NPLs held for sale, OREO & other NPAs Credit Quality Highlights Net loan charge-offs remain below targeted range, at 28 basis points of average loans Nonperforming loans decreased $57 MM from 1Q16 and represented 1.00% of period-end loans Allowance for loan and lease losses represented 1.38% of period-end loans; 138% coverage of nonperforming loans Allowance for Loan and Lease Losses Allowance for loan and lease losses to NPLs Allowance for loan and lease losses $ in millions $440 $637 $ in millions

Maintained strong capital position Common Equity Tier 1 ratio of 11.12% (b) at 6/30/16 Increased quarterly common share dividend by 13% in 2Q16 to $.085 per share No objection to 2016 capital plan from Federal Reserve, including: Share repurchase program of up to $350 MM 12% increase in the quarterly common share dividend in 2Q17 to $.095 per share, subject to Board approval Non-GAAP measure: see Appendix for reconciliation 6-30-16 ratio is estimated Capital Common Equity Tier 1 (a), (b) Tangible Common Equity to Tangible Assets (a) Highlights

Outlook and Expectations Average Loans Mid-single digit growth vs. FY 2015 Net Interest Income Up low to mid-single digit percentage without the benefit from higher interest rates Mid-single digit growth with the benefit of higher interest rates Noninterest Income Relatively stable to up low single-digit growth compared to 2015 Expense Relatively stable with 2015 Efficiency / Productivity Positive operating leverage Asset Quality Net charge-offs to average loans below targeted range of 40 – 60 bps Allowance, as a percentage of period-end loans, to remain relatively stable with 2Q16 Capital No objection to 2016 capital plan from Federal Reserve, including: Share repurchase program of up to $350 MM 12% increase in the quarterly common share dividend in 2Q17 to $.095 per share, subject to Board approval Guidance ranges: relatively stable: +/- 2%; low single-digit: <5%; mid-single digit: 4% - 6% Guidance provided does not include merger-related expense FY 2016: Key Stand-alone (a) Expected impact of First Niagara acquisition Revenue and expense: approximately 5 months of FNFG’s 1Q16 operating results Incremental amortization of expense of ~$30 million Average shares increase by ~240 million

Appendix

Progress on Targets for Success: Key Stand-alone (a) Continuing operations, unless otherwise noted Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits (excluding deposits in foreign office) Non-GAAP measure: see slides 25-26 for reconciliation Excludes $45 million and $24 million in merger-related expense for 2Q16 and 1Q16, respectively; detail provided in Appendix, on slide 17 Balance Sheet Efficiency Moderate Risk Profile High Quality, Diverse Revenue Streams Positive Operating Leverage Financial Returns Metrics (a) 1Q16 2Q16 Targets Loan to deposit ratio (b) NCOs to average loans Provision for credit losses to average loans Net interest margin Noninterest income to total revenue Cash efficiency ratio (c), (d) 86% 85% .31% .28% 64.3% 64.8% .60% .34% 2.89% 2.76% 41% 44% 90% -100% 40 - 60 bps 3.00% -3.25% <60% >40% .86% .94% 1.00% - 1.25% Return on average assets (c), (d)

2Q16 1Q16 4Q15 Personnel expense (a) $ 35 $ 16 - Business services and professional fees $ 5 $ 7 $ 5 Marketing 3 1 - All other nonpersonnel 2 - 1 Total nonpersonnel expense $ 10 $ 8 $ 6 Total merger-related expense (b) $ 45 $ 24 $ 6 EPS impact $ (.04) $ (.02) - FNFG Merger-related Expense Expenses related to the acquisition and integration of First Niagara Financial Group Total merger-related expense expected to be approximately $550 MM Majority of expense anticipated to occur in 2016 and the first half of 2017 $ in millions Increase / (Decrease) Personnel expense includes technology development related to systems conversions and fully-dedicated personnel for merger and integration efforts Non-GAAP measure: see slides 25-26 for reconciliation

Average Total Investment Securities Highlights Average AFS securities Investment Portfolio Portfolio composed primarily of GNMA and GSE-backed MBS and CMOs Continue to position portfolio for regulatory liquidity requirements: Reinvesting cash flows into High Quality Liquid Assets, including GNMA securities Average GNMA balances for the quarter were 52% of the total portfolio Securities cash flows of $1.2 billion in 2Q16 and $1.0 billion in 1Q16 Average portfolio life at 6/30/16 of 3.6 years, compared to 3.7 years at 3/31/16 Securities to Total Assets (b) (a) Yield is calculated on the basis of amortized cost (b) Includes end-of-period held-to-maturity and available-for-sale securities Average yield (a) Average HTM securities 2.10% $18.3 $19.2 $ in billions 2.06%

Interest Rate Risk Management Naturally Asset Sensitive Balance Sheet Actively Managing Rate Risk High quality Fixed rate agency MBS and CMOs Average maturity: 3.6 years GNMAs total 52% of portfolio Reinvesting cash flows into HQLAs, including GNMAs $14.6 $19.3 $8.1 $8.1 Size of swap portfolio Modeled asset sensitivity ~2% 0% 8% $8.1 Flexibility to Adjust Rate Sensitivity with Swaps Loan Portfolio Variable: 71% Fixed: 29% Deposits Flexibility to adjust rate sensitivity for changes in balance sheet growth/mix as well as interest rate outlook Debt hedges A/LM hedges Investment Portfolio Noninterest-bearing: 34% Interest-bearing, non-time: 57% CDs: 9% Maintained moderate asset sensitive position of ~2% (a) Assumes 200 basis point increase in short-term rates over a 12-month period Utilize swaps for debt hedging and asset liability management Fairly even pace of A/LM swap maturities $1.5B A/LM swaps scheduled to mature by year end 2016 6/30/16 Swaps ($ in B) 6/30/16 Notional Amt. Wtd. Avg. Maturity (Yrs.) Receive Rate Pay Rate A/L Management $ 14.6 2.1 1.0% .5% Debt 8.1 3.7 1.7 .5 $ 22.7 2.7 1.2% .5% 2Q16 $19.2 B AFS: $14.3 B HTM: $4.9 B Balance sheet has relatively short duration and is impacted by both short and intermediate-term interest rates $22.7 B 2Q16 2Q16 Note: Loan, deposit and investment portfolio balances reflect quarterly average balances (a) Preliminary estimate

Credit Quality Trends Criticized Outstandings (a) to Period-end Total Loans Delinquencies to Period-end Total Loans Loan and lease outstandings From continuing operations 30 – 89 days delinquent 90+ days delinquent Metric (b) 2Q16 1Q16 4Q15 3Q15 2Q15 Delinquencies to EOP total loans: 30-89 days .33 % .39 % .35 % .45 % .31 % Delinquencies to EOP total loans: 90+ days .11 .12 .12 .09 .11 NPLs to EOP portfolio loans 1.00 1.12 .65 .67 .72 NPAs to EOP portfolio loans + OREO + Other NPAs 1.03 1.14 .67 .69 .75 Allowance for loan losses to period-end loans 1.38 1.37 1.33 1.31 1.37 Allowance for loan losses to NPLs 138.0 122.2 205.7 197.5 190.0 Continuing operations Continuing operations

Period-end loans Average loans Net loan charge-offs Net loan charge-offs (b) / average loans (%) Nonperforming loans (c) Ending allowance (d) Allowance / period-end loans (d) (%) Allowance / NPLs (%) 6/30/16 2Q16 2Q16 2Q16 6/30/16 6/30/16 6/30/16 6/30/16 Commercial, financial and agricultural (a) $ 33,376 $ 32,630 $ 32 .39% $ 321 $ 513 1.54% 159.81% Commercial real estate: Commercial Mortgage 8,582 8,404 (4) (.19) 14 135 1.57 964.29 Construction 881 869 - - 25 18 2.04 72.00 Commercial lease financing 3,988 3,949 1 .10 10 45 1.13 450.00 Real estate – residential mortgage 2,285 2,253 1 .18 54 18 .79 33.33 Home equity 10,062 10,098 3 .12 189 64 .64 33.86 Credit cards 813 792 7 3.55 2 30 3.69 N/M Consumer direct loans 1,584 1,599 4 1.01 1 19 1.20 N/M Consumer indirect loans 527 554 (1) .73 3 11 2.09 366.67 Continuing total (e) $ 62,098 $ 61,148 $ 43 .28% $ 619 $ 854 1.38 137.96% Discontinued operations 1,692 1,717 4 .94 5 20 1.18 400.00 Consolidated total $ 63,790 $ 62,865 $ 47 .30% $ 624 $ 874 1.37 140.06% Credit Quality by Portfolio Credit Quality $ in millions (a) 6-30-16 ending loan balance includes $88 million of commercial credit card balances; 6-30-16 average loan balance includes $87 million of assets from commercial credit cards Net loan charge-off amounts are annualized in calculation 6-30-16 NPL amount excludes $11 million of purchased credit impaired loans 6-30-16 allowance by portfolio is estimated 6-30-16 ending loan balance includes purchased loans of $104 million, of which $11 million were purchased credit impaired N/M = Not meaningful

Oil & Gas Longstanding history, expertise and relationships Total commitments of $3.1 B, including upstream commitments of $1.6 B Upstream portfolio is primarily secured by proven, developed and producing reserves Total Loans Outstanding, 6/30/16 Portfolio performing in-line with expectations Reserve coverage: 8% of outstanding oil and gas loans at period-end Oil & Gas: 2% Other: 98% Oil & Gas Outstanding Balances, 6/30/16 Oilfield Services Upstream: 57%, $0.7 B Midstream: 33%, $0.4 B Downstream: 10%, $0.1 B $0.1 B Oil & Gas $1.2 B

Vintage (% of Loans) Loan Balances Average Loan Size ($) Average FICO Average CLTV (a) % of Loans CLTV>90% 2012 and later 2011 2010 2009 2008 and prior Loans and lines First lien $ 6,015 $ 70,349 772 67 % .5 % 61 % 4 % 2 % 2 % 31 % Second lien 3,864 45674 769 77 - 44 4 2 3 47 Community Bank $ 9,879 58,077 771 71 .3 55 4 2 3 37 Exit portfolio 183 18,875 728 80 .1 - - - - 100 Total home equity portfolio $ 10,062 Nonaccrual loans and lines First lien $ 112 $ 62,242 720 72 % 2.2 % 15 % 3 % 3 % 5 % 74 % Second lien 70 47,303 713 80 - 6 2 2 5 85 Community Bank $ 182 56,495 718 77 1.4 12 3 2 5 78 Exit portfolio 7 22,071 707 83 .2 - - - - 100 Total home equity nonaccruals $ 189 First quarter net charge-offs (NCOs) Total home equity portfolio $ 3 % of average loans .12 % (a) Average CLTVs are at origination; current average CLTVs for Community Bank total home equity loans and lines is approximately 65%, which compares to 66% at the end of the first quarter of 2016 Home Equity Portfolio – 6/30/16 $ in millions, except average loan size Home Equity Portfolio Highlights High quality portfolio Community bank loans and lines: 98% of total portfolio; branch-originated 61% first lien position Average FICO score of 771 Average CLTV at origination: 71% $4.0 billion of the total portfolio are fixed rate loans that require principal and interest payments; $6.1 billion are lines $0.9 billion in lines outstanding (9% of the total portfolio) come to end of draw period in the next three years Proactive communication and client outreach initiated near end of draw period CLTV = Combined weighted-average loan-to-value ratio

Balance Outstanding Change Net Loan Charge-offs Balance on Nonperforming Status 6-30-16 3-31-16 6-30-16 vs. 3-31-16 2Q16 1Q16 6-30-16 3-31-16 Residential properties – homebuilder - - - - - $ 4 $ 3 Commercial lease financing (a) $ 731 $ 743 $ (12) $ 1 $ 1 - - Total commercial loans 731 743 (12) 1 1 4 3 Home equity – Other 183 195 (12) 1 1 7 7 Marine 496 544 (48) 3 2 3 4 RV and other consumer 35 39 (4) - - - - Total consumer loans 714 778 (64) 4 3 10 11 Total exit loans in loan portfolio $ 1,445 $ 1,521 $ (76) $ 5 $ 4 $ 14 $ 14 Discontinued operations – education lending business (not included in exit loans above) $ 1,692 $ 1,760 $ (68) $ 4 $ 6 $ 5 $ 6 $ in millions; average balances Includes (1) the business aviation, commercial vehicle, office products, construction and industrial leases; (2) Canadian lease financing portfolios; (3) European lease financing portfolios; and (4) all remaining balances related to lease in, lease out; sale in, lease out; service contract leases; and qualified technological equipment leases. $ in millions Exit Loan Portfolio Exit Loan Portfolio

GAAP to Non-GAAP Reconciliation $ in millions Three months ended 6/30/16, 3/31/16, 12/31/15, 9/30/15, and 6/30/15, exclude $36 million, $40 million, $45 million, $50 million, and $55 million, respectively, of period-end purchased credit card receivables Net of capital surplus 6-30-16 amount is estimated Three months ended 6-30-2016 3-31-16 12-31-15 9-30-15 6-30-15 Tangible common equity to tangible assets at period end Key shareholders' equity (GAAP) $11,313 $11,066 $10,746 $10,705 $10,590 Less: Intangible assets (a) 1074 1077 1080 1084 1085 Preferred Stock, Series A (b) 281 281 281 281 281 Tangible common equity (non-GAAP) $9,958 $9,708 $9,385 $9,340 $9,224 Total assets (GAAP) $,101,150 $98,402 $95,133 $95,422 $94,606 Less: Intangible assets (a) 1074 1077 1080 1084 1085 Tangible common equity to tangible assets ratio (non-GAAP) $,100,076 $97,325 $94,053 $94,338 $93,521 Tangible common equity to tangible assets ratio (non-GAAP) 9.9500000000000005E-2 9.9699999999999997E-2 9.98E-2 9.9000000000000005E-2 9.8599999999999993E-2 Common Equity Tier 1 at period end Key shareholders' equity (GAAP) $11,313 $11,066 $10,746 $10,705 $10,590 Less: Preferred Stock, Series A (b) 281 281 281 281 281 Common Equity Tier 1 capital before adjustments and deductions 11032 10785 10465 10424 10309 Less: Goodwill, net of deferred taxes 1033 1034 1034 1036 1034 Intangible assets, net of deferred taxes 30 35 26 29 33 Deferred tax assets 1 1 1 1 1 Net unrealized gains (losses) on available-for-sale securities, net of deferred taxes 129 70 -58 54 - Accumulated gains (losses) on cash flow hedges, net of deferred taxes 77 47 -20 21 -20 Amounts in accumulated other comprehensive income (loss) attributed to pension and postretirement benefit costs, net of deferred taxes -362 -365 -365 -385 -361 Total Common Equity Tier 1 capital (c) $10,124 $9,963 $9,847 $9,668 $9,622 Net risk-weighted assets (regulatory) (c) $91,021 $89,712 $89,980 $92,307 $89,851 Common Equity Tier 1 ratio (non-GAAP) (c) 0.11119999999999999 0.1111 0.1094 0.1047 0.1071 Noninterest expense excluding merger-related expense Noninterest expense (GAAP) $751 $703 $736 $724 $711 Less: Merger-related expense 45 24 6 - - Noninterest expense excluding merger-related expense (non-GAAP) $706 $679 $730 $724 $711 Earnings per common share (EPS) excluding merger-related expense EPS from continuing operations attributable to Key common shareholders ─ assuming dilution $0.23 $0.22 $0.27 $0.26 $0.27 Add: EPS impact of merger-related expense 0.04 0.02 - - - EPS from continuing operations attributable to Key common shareholders excluding merger-related expense (non-GAAP) $0.27 $0.24 $0.27 $0.26 $0.27 Tier 1 common equity at period end Key shareholders' equity (GAPP) - - - - - Qualifying capital securities - - - - - Less: Goodwill - - - - - Accumulated other comprehensive income (loss) (d) - - - - - Other assets (e) - - - - - Total Tier 1 capital (regulatory) - - - - - Less: Qualifying capital securities - - - - - Preferred Stock, Series A (b) - - - - - Total Tier 1 common equity (non-GAAP) - - - - - Net risk-weighted assets (regulatory) - - - - - Tier 1 common equity ratio (non-GAAP) - - - - -

GAAP to Non-GAAP Reconciliation (continued) The months ended 6/30/16, 3/31/16, 12/31/15, 9/30/15, and 6/30/15, exclude $38 million, $42 million, $47 million, $52 million, and $58 million, respectively, of average purchased credit card receivables $ in millions Three months ended 6-30-16 3-31-16 12-31-15 9-30-15 6-30-15 Pre-provision net revenue excluding merger-related expense Net interest income (GAAP) $597 $604 $602 $591 $584 Plus: Taxable-equivalent adjustment 8 8 8 7 6 Noninterest income 473 431 485 470 488 Less: Noninterest expense excluding merger-related expense (non-GAAP) 751 679 730 724 711 Pre-provision net revenue from continuing operations excluding merger-related expense (non-GAAP) $327 $364 $365 $344 $368 Return on average assets excluding merger-related expense Net income (loss) from continuing operations attributable to Key (GAAP) $199 $187 $230 $222 $235 Less: Merger-related expense, after tax -28 -15 -4 - - Net income (loss) from continuing operations attributable to Key excluding merger-related expense, after tax (non-GAAP) $227 $202 $234 $222 $235 Average total assets from continuing operations $97,413 $94,477 $94,117 $92,649 $91,658 Return on average assets excluding merger-related expense (non-GAAP) .94% .86% .99% .95% 1.03E-2 Cash efficiency ratio Noninterest expense (GAAP) $751 $703 $736 $724 $711 Less: Intangible asset amortization 7 8 9 9 9 Adjusted noninterest expense (non-GAAP) $744 $695 $727 $715 $702 Less: Merger-related expense 45 24 6 - - Adjusted noninterest expense excluding merger-related expense (non-GAAP) $699 $671 $721 $715 $702 Net interest income (GAAP) 597 604 602 591 584 Plus: Taxable-equivalent adjustment 8 8 8 7 7 Noninterest income 473 431 485 470 488 Total taxable-equivalent revenue (non-GAAP) $1,078 $1,043 $1,095 $1,068 $1,079 Cash efficiency ratio (non-GAAP) 0.69 0.66600000000000004 0.66400000000000003 0.66900000000000004 0.65100000000000002 Cash efficiency ratio excluding merger-related expense (non-GAAP) 0.64800000000000002 0.64300000000000002 0.65800000000000003 0.66900000000000004 0.65100000000000002

$ in billions Quarter ended June 30, 2016 Common Equity Tier 1 under current RCR $ 10.1 Adjustments from current RCR to the fully phased-in RCR: Deferred tax assets and other intangible assets (b) - Common Equity Tier 1 anticipated under the fully phased-in RCR (c) $ 10.1 Net risk-weighted assets under current RCR $ 91.0 Adjustments from current RCR to the fully phased-in RCR: Mortgage servicing assets (d) .5 Volcker Funds (.2) All other assets - Total risk-weighted assets anticipated under the fully phased-in RCR (c) $ 91.3 Common Equity Tier 1 under the fully phased-in RCR 11.07 % Common Equity Tier 1 capital is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Common Equity Tier 1 along with other measures of capital as part of its financial analyses Includes the deferred tax asset subject to future taxable income for realization, primarily tax credit carryforwards, as well as intangible assets (other than goodwill and mortgage servicing assets) subject to the transition provisions of the final rule The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies’ Regulatory Capital Rules (as fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital Rules under the “standardized approach” Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250% Table may not foot due to rounding Common Equity Tier 1 Under the Regulatory Capital Rules (RCR) (estimated) (a)

Exhibit 99.3

Consolidated Balance Sheets

(dollars in millions)


	6-30-16			3-31-16			6-30-15
Assets
Loans	$	62,098		$	60,438		$	58,264
Loans held for sale		442			684			835
Securities available for sale		14,552			14,304			14,244
Held-to-maturity securities		4,832			5,003			5,022
Trading account assets		965			765			674
Short-term investments		6,599			5,436			3,222
Other investments		577			643			703

Total earning assets		90,065			87,273			82,964
Allowance for loan and lease losses		(854	)		(826	)		(796	)
Cash and due from banks		496			474			693
Premises and equipment		742			750			788
Operating lease assets		399			362			296
Goodwill		1,060			1,060			1,057
Other intangible assets		50			57			83
Corporate-owned life insurance		3,568			3,557			3,502
Derivative assets		1,234			1,065			536
Accrued income and other assets		2,673			2,849			3,312
Discontinued assets		1,717			1,781			2,169

Total assets	$	101,150		$	98,402		$	94,604


Liabilities
Deposits in domestic offices:
NOW and money market deposit accounts	$	40,195		$	38,946		$	36,024
Savings deposits		2,355			2,385			2,370
Certificates of deposit ($100,000 or more)		3,381			3,095			2,032
Other time deposits		3,267			3,259			3,105

Total interest-bearing deposits		49,198			47,685			43,531
Noninterest-bearing deposits		26,127			25,697			26,640
Deposits in foreign office — interest-bearing		—			—			498

Total deposits		75,325			73,382			70,669
Federal funds purchased and securities sold under repurchase agreements		360			374			444
Bank notes and other short-term borrowings		687			615			528
Derivative liabilities		746			790			560
Accrued expense and other liabilities		1,326			1,410			1,537
Long-term debt		11,388			10,760			10,265

Total liabilities		89,832			87,331			84,003

Equity
Preferred stock, Series A		290			290			290
Common shares		1,017			1,017			1,017
Capital surplus		3,835			3,818			3,898
Retained earnings		9,166			9,042			8,614
Treasury stock, at cost		(2,881	)		(2,888	)		(2,884	)
Accumulated other comprehensive income (loss)		(114	)		(213	)		(345	)

Key shareholders’ equity		11,313			11,066			10,590
Noncontrolling interests		5			5			11

Total equity		11,318			11,071			10,601

Total liabilities and equity	$	101,150		$	98,402		$	94,604


Common shares outstanding (000)		842,703			842,290			843,608

Consolidated Statements of Income

(dollars in millions, except per share amounts)


	Three months ended							Six months ended
	6-30-16			3-31-16		6-30-15		6-30-16			6-30-15
Interest income
Loans	$	567		$	562	$	532	$	1,129		$	1,055
Loans held for sale		5			8		12		13			19
Securities available for sale		74			75		72		149			142
Held-to-maturity securities		24			24		24		48			48
Trading account assets		6			7		5		13			10
Short-term investments		6			4		2		10			4
Other investments		2			3		5		5			10

Total interest income		684			683		652		1,367			1,288

Interest expense
Deposits		34			31		26		65			52
Bank notes and other short-term borrowings		3			2		2		5			4
Long-term debt		50			46		40		96			77

Total interest expense		87			79		68		166			133

Net interest income		597			604		584		1,201			1,155
Provision for credit losses		52			89		41		141			76

Net interest income after provision for credit losses		545			515		543		1,060			1,079

Noninterest income
Trust and investment services income		110			109		111		219			220
Investment banking and debt placement fees		98			71		141		169			209
Service charges on deposit accounts		68			65		63		133			124
Operating lease income and other leasing gains		18			17		24		35			43
Corporate services income		53			50		43		103			86
Cards and payments income		52			46		47		98			89
Corporate-owned life insurance income		28			28		30		56			61
Consumer mortgage income		3			2		4		5			7
Mortgage servicing fees		10			12		9		22			22
Net gains (losses) from principal investing		11			—		11		11			40
Other income ^{(a), (b)}		22			31		5		53			24

Total noninterest income		473			431		488		904			925

Noninterest expense
Personnel		427			404		408		831			797
Net occupancy		59			61		66		120			131
Computer processing		45			43		42		88			80
Business services and professional fees		40			41		42		81			75
Equipment		21			21		22		42			44
Operating lease expense		14			13		12		27			23
Marketing		22			12		15		34			23
FDIC assessment		8			9		8		17			16
Intangible asset amortization		7			8		9		15			18
OREO expense, net		2			1		1		3			3
Other expense		106			90		86		196			170

Total noninterest expense		751			703		711		1,454			1,380

Income (loss) from continuing operations before income taxes		267			243		320		510			624
Income taxes		69			56		84		125			158

Income (loss) from continuing operations		198			187		236		385			466
Income (loss) from discontinued operations, net of taxes		3			1		3		4			8

Net income (loss)		201			188		239		389			474
Less: Net income (loss) attributable to noncontrolling interests		(1	)		—		1		(1	)		3

Net income (loss) attributable to Key	$	202		$	188	$	238	$	390		$	471


Income (loss) from continuing operations attributable to Key common shareholders	$	193		$	182	$	230	$	375		$	452
Net income (loss) attributable to Key common shareholders		196			183		233		379			460

Per common share
Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.22	$	.27	$	.45		$	.53
Income (loss) from discontinued operations, net of taxes		—			—		—		—			.01
Net income (loss) attributable to Key common shareholders ^(b)		.23			.22		.28		.45			.54

Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.22	$	.27	$	.44		$	.52
Income (loss) from discontinued operations, net of taxes		—			—		—		—			.01
Net income (loss) attributable to Key common shareholders ^(b)		.23			.22		.27		.45			.53

Cash dividends declared per common share	$	.085		$	.075	$	.075	$	.16		$	.14

Weighted-average common shares outstanding (000)		831,899			827,381		839,454		829,640			843,992
Effect of common share options and other stock awards		6,597			7,679		6,858		7,138			7,695

Weighted-average common shares and potential common shares outstanding (000) ^(c)		838,496			835,060		846,312		836,778			851,687

(a)	For the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, net securities gains (losses) totaled less than $1 million. For the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, Key did not have any impairment losses related to securities.

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

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

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