PR Newswire | Apr 20, 2021 06:31AM EDT

Per Diluted Common Share

04/20 05:30 CDT

KeyCorp Reports Record First Quarter 2021 Net Income Of $591 Million, Or $.61 Per Diluted Common SharePositive operating leverage compared to the year-ago quarterRecord first quarter revenue, up 19% from year-ago quarter, driven by broad-based strength in feesStrong credit quality: nonperforming loans and net charge-offs down from prior quarterReturned capital to shareholders: repurchased $135 million in common sharesSuccessful launch of Laurel Road for Doctors: expands digital reach nationally for medical professionals CLEVELAND, April 20, 2021

CLEVELAND, April 20, 2021 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $591 million, or $.61 per diluted common share for the first quarter of 2021. This compared to $549 million, or $.56 per diluted common share, for the fourth quarter of 2020 and $118 million, or $.12 per diluted common share, for the first quarter of 2020.

This was a strong start to the year for Key as we executed our strategy, grew and expanded client relationships, and delivered positive operating leverage. Our results reflect strong credit quality as well as record first quarter revenues, with strength in our investment banking business and ongoing momentum from our consumer growth engines.

We have continued to make investments in our business to position the company for success. In March, we successfully launched Laurel Road for Doctors, adigital platform tailored to the unique financial needs of healthcare professionals. Additionally, this platform expands our digital reach nationally, for this targeted client segment. Laurel Road for Doctors underscores our commitment to both targeted scale and digital transformation.

Credit quality continued to be a strength this quarter. Our strong risk management practices contributed to broad-based improvement in our credit metrics.

Maintaining our strong capital position also remains a priority. Our Common Equity Tier 1 ratio at the end of the first quarter was 9.8%, which is above our targeted range of 9.0% to 9.5%. In January, our Board of Directors authorized a $900 million share repurchase program of which we executed $135 million in the first quarter.

I remain optimistic about the future as we emerge from the pandemic and the economic recovery continues. Key is well-positioned to grow and deliver on our commitments to all of our stakeholders.

- Chris Gorman, Chairman and CEO

Selected Financial Highlights



dollars in millions, except per share data Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Income (loss) from continuing operations attributable to Key common $591 $549 $118 7.7 %400.8%shareholders

Income (loss) from continuing operations attributable to Key common shareholders per .61 .56 .12 8.9 408.3 common share - assuming dilution

Return on average tangible common equity from continuing operations ^(a) 18.25 %16.61 %3.82 %N/A N/A

Return on average total assets from continuing operations 1.44 1.35 .40 N/A N/A

Common Equity Tier 1 ratio ^(b) 9.8 9.7 8.9 N/A N/A

Book value at period end $16.22 $16.53 $15.95 (1.9)%1.7 %

Net interest margin (TE) from continuing operations 2.61 %2.70 %3.01 %N/A N/A



The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial(a) measures related to "Return on average tangible common equity from continuing operations." The table reconciles the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

(b) March 31, 2021 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS



Revenue



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Net interest income (TE)$1,012$1,043$989 (3.0) %2.3 %

Noninterest income 738 802 477 (8.0) 54.7

Total revenue $1,750$1,845$1,466(5.1) %19.4%



TE = Taxable Equivalent

Taxable-equivalent net interest income was $1.0 billion for the first quarter of 2021, compared to taxable-equivalent net interest income of $989 million for the first quarter of 2020. The increase in net interest income reflects higher earning asset balances and loan fees, partially offset by a lower net interest margin. The net interest margin was impacted by lower interest rates and a change in balance sheet mix, including elevated levels of liquidity.

Compared to the fourth quarter of 2020, taxable-equivalent net interest income decreased by $31 million and the net interest margin decreased by 9 basis points. The decrease in both net interest income and the net interest margin reflects lower reinvestment yields, lower loan fees, and an unfavorable balance sheet mix, including elevated levels of liquidity, partly offset by lower interest-bearing deposit costs. Net interest income was also impacted by two fewer days in the first quarter of 2021.

Noninterest Income



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Trust and investment services income $133$123$1338.1 %- %

Investment banking and debt placement fees 162 243 116 (33.3) 39.7

Service charges on deposit accounts 73 82 84 (11.0) (13.1)

Operating lease income and other leasing gains38 39 30 (2.6) 26.7

Corporate services income 64 63 62 1.6 3.2

Cards and payments income 105 97 66 8.2 59.1

Corporate-owned life insurance income 31 38 36 (18.4) (13.9)

Consumer mortgage income 47 43 20 9.3 135.0

Commercial mortgage servicing fees 34 32 18 6.3 88.9

Other income 51 42 (88) 21.4 (158.0)

Total noninterest income $738$802$477(8.0) %54.7 %



Compared to the first quarter of 2020, noninterest income increased by $261 million, primarily driven by a $139 million increase in other income including $92 million of market-related valuation adjustments in the year-ago quarter. Investment banking and debt placement fees increased $46 million from the year-ago period, due to strength in the debt and equity markets. Cards and payments income increased $39 million, due to heightened prepaid card activity. Additionally, investments made in Key's mortgage business continue to drive consumer mortgage income and commercial mortgage servicing fees, which increased $27 million and $16 million, respectively, from the year-ago quarter.

Compared to the fourth quarter of 2020, noninterest income decreased by $64 million. The largest driver of the quarter-over-quarter decrease was a $81 million decrease in investment banking and debt placement fees, partially driven by expected seasonality. Partially offsetting the decrease was a $10 million increase in trust and investment services income and a $8 million increase in cards and payments income.

Noninterest Expense



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Personnel expense $624 $661 $515(5.6) %21.2%

Nonpersonnel expense 447 467 416 (4.3) 7.5

Total noninterest expense$1,071$1,128$931(5.1) %15.0%



Key's noninterest expense was $1.1 billion for the first quarter of 2021, an increase of $140 million from the year-ago period. The increase is primarily related to higher personnel costs of $109 million, reflecting higher incentive and stock-based compensation, attributed to an increase in revenue and stock performance and an increase in employee benefits. Other drivers for the year-over-year increases include payments-related expenses from prepaid card activity incurred in the current period, as well as computer processing expenses.

Compared to the fourth quarter of 2020, noninterest expense decreased $57 million. This was largely due to decreases in severance, incentive and stock-based compensation, and salaries and contract labor. Additionally, other expense decreased $22 million, partially due to lower charitable contributions.

BALANCE SHEET HIGHLIGHTS



Average Loans



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Commercial and industrial ^(a)$52,581 $53,562 $49,466(1.8)%6.3 %

Other commercial loans 18,848 19,174 19,779 (1.7) (4.7)

Total consumer loans 29,299 28,974 26,929 1.1 8.8

Total loans $100,728$101,710$96,174(1.0)%4.7 %



Commercial and industrial average loan balances include $126 million, $129(a) million, and $145 million of assets from commercial credit cards at March 31, 2021, December 31, 2020, and March 31, 2020, respectively.

Average loans were $100.7 billion for the first quarter of 2021, an increase of $4.6 billion compared to the first quarter of 2020. Commercial loans increased $2.2 billion, reflecting Key's participation in the Paycheck Protection Program ("PPP"), partially offset by decreased utilization versus the year-ago period. Consumer loans increased $2.4 billion, driven by strength from Laurel Road and Key's consumer mortgage business.

Compared to the fourth quarter of 2020, average loans decreased by $1.0 billion. Commercial loans declined due to the forgiveness of a portion of PPP loans and lower commercial utilization rates. Consumer loans continue to reflect strength from Key's consumer mortgage business, as well as Laurel Road.

Average Deposits



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Non-time deposits $132,267 $129,529 $99,117 2.1 %33.4 %

Certificates of deposit ($100,000 or more)2,571 2,983 6,310 (13.8) (59.3)

Other time deposits 2,902 3,209 4,901 (9.6) (40.8)

Total deposits $137,740 $135,721 $110,328 1.5 %24.8 %



Cost of total deposits .06 %.08 %.62 %N/A N/A



N/A = Not Applicable

Average deposits totaled $137.7 billion for the first quarter of 2021, an increase of $27.4 billion compared to the year-ago quarter, reflecting growth from consumer and commercial relationships, partially offset by a decline in time deposits as a result of lower interest rates.

Compared to the fourth quarter of 2020, average deposits increased by $2.0 billion, primarily driven by broad-based commercial growth and higher consumer balances.

ASSET QUALITY



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Net loan charge-offs $114 $135 $84 (15.6) %35.7 %

Net loan charge-offs to average total loans .46 %.53 %.35 %N/A N/A

Nonperforming loans at period end $728 $785 $632 (7.3) 15.2

Nonperforming assets at period end 790 937 844 (15.7) (6.4)

Allowance for loan and lease losses 1,438 1,626 1,359 (11.6) 5.8

Allowance for credit losses 1,616 1,823 1,520 (11.4) 6.3

Allowance for loan and lease losses to nonperforming loans197.5 %207.1%215.0%N/A N/A

Allowance for credit losses to nonperforming loans 222.0 232.2 240.5 N/A N/A

Provision for credit losses $(93) $20 $359 (565.0)%(125.9)%



N/A = Not Applicable

Key's provision for credit losses was a net benefit of $93 million, including a $207 million reserve release for the first quarter of 2021, compared to an expense of $359 million in the first quarter of 2020 and an expense of $20 million in the fourth quarter of 2020. The reserve release was largely driven by expected improvement in the economic outlook.

Net loan charge-offs for the first quarter of 2021 totaled $114 million, or .46% of average total loans. These results compare to $84 million, or .35%, for the first quarter of 2020 and $135 million, or .53%, for the fourth quarter of 2020. Key's allowance for credit losses was $1.6 billion, or 1.60% of total period-end loans at March 31, 2021, compared to 1.47% at March 31, 2020, and 1.80% at December 31, 2020.

At March 31, 2021, Key's nonperforming loans totaled $728 million, which represented .72% of period-end portfolio loans. These results compare to .61% at March 31, 2020, and .78% at December 31, 2020. Nonperforming assets at March 31, 2021, totaled $790 million, and represented .78% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .82% at March 31, 2020, and .92% at December 31, 2020.

CAPITAL

Key's estimated risk-based capital ratios included in the following table continued to exceed all "well-capitalized" regulatory benchmarks at March 31, 2021.

Capital Ratios



3/31/202112/31/20203/31/2020

Common Equity Tier 1 ^(a) 9.8 % 9.7 %8.9 %

Tier 1 risk-based capital ^(a) 11.2 11.1 10.2

Total risk-based capital ^(a) 13.4 13.4 12.2

Tangible common equity to tangible assets ^(b)7.5 7.9 8.3

Leverage ^(a) 8.9 8.9 9.8



(a) March 31, 2021 ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.

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

Key's capital position remained strong in the first quarter of 2021. As shown in the preceding table, at March 31, 2021, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.8% and 11.2%, respectively. Key's tangible common equity ratio was 7.5% at March 31, 2021.

Key has elected the CECL phase-in option provided by regulatory guidance which delays for two years the estimated impact of CECL on regulatory capital and phases it in over three years beginning in 2022. On a fully phased-in basis, Key's Common Equity Tier 1 ratio would be reduced by 25 basis points.

Summary of Changes in Common Shares Outstanding



in thousands Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Shares outstanding at beginning of period 975,773976,205977,189- (.1)%

Open market repurchases and return of shares under employee compensation(9,277)(1,092)(7,862)749.5 18.0 plans

Shares issued under employee compensation plans (net of cancellations) 6,091 660 5,992 822.9 %1.7

Shares outstanding at end of period 972,587975,773975,319(.3) (.3)%



N/M = Not Meaningful

Consistent with Key's 2020 Capital Plan, during the first quarter of 2021, Key declared a dividend of $.185 per common share. In January, Key announced a new share repurchase authorization program of up to $900 million, applicable through September 30, 2021. During the first quarter, Key completed $135 million of common share repurchases.

LINE OF BUSINESS RESULTS

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

Major Business Segments



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Revenue from continuing operations (TE)

Consumer Bank $864 $896 $810 (3.6) %6.7 %

Commercial Bank 858 922 641 (6.9) 33.9

Other ^(a) 28 27 15 3.7 86.7

Total $1,750$1,845$1,466(5.1) %19.4 %



Income (loss) from continuing operations attributable to Key

Consumer Bank $217 $225 $103 (3.6) %110.7%

Commercial Bank 383 310 66 23.5 480.3

Other ^(a) 18 40 (24) (55.0) N/M

Total $618 $575 $145 7.5 %326.2%



Other includes other segments that consists of corporate treasury, our principal investing unit, and various exit portfolios as well as reconciling items which primarily represents the unallocated portion of nonearning assets of corporate support functions. Charges related to the(a) funding of these assets are part of net interest income and are allocated to the business segments through noninterest expense. Reconciling items also includes intercompany eliminations and certain items that are not allocated to the business segments because they do not reflect their normal operations.

TE = Taxable Equivalent, N/M = Not Meaningful

Consumer Bank





dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Summary of operations

Net interest income (TE) $607 $638 $581 (4.9) %4.5 %

Noninterest income 257 258 229 (.4) 12.2

Total revenue (TE) 864 896 810 (3.6) 6.7

Provision for credit losses (23) (5) 136 (360.0) (116.9)

Noninterest expense 601 606 539 (.8) 11.5

Income (loss) before income taxes (TE) 286 295 135 (3.1) 111.9

Allocated income taxes (benefit) and TE adjustments69 70 32 (1.4) 115.6

Net income (loss) attributable to Key $217 $225 $103 (3.6) %110.7 %



Average balances

Loans and leases $39,249$39,448$33,175(.5) %18.3 %

Total assets 42,476 42,666 36,415 (.4) 16.6

Deposits 85,033 82,845 73,133 2.6 16.3



Assets under management at period end $45,218$44,140$36,1892.4 %24.9 %



TE = Taxable Equivalent

Additional Consumer Bank Data



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Noninterest income

Trust and investment services income $101 $95 $93 6.3 %8.6 %

Service charges on deposit accounts 39 49 55 (20.4) (29.1)

Cards and payments income 54 54 49 - 10.2

Consumer mortgage income 47 43 20 9.3 135.0

Other noninterest income 16 17 12 (5.9) 33.3

Total noninterest income $257 $258 $229 (.4) %12.2 %



Average deposit balances

NOW and money market deposit accounts $54,684 $53,045 $45,569 3.1 %20.0 %

Savings deposits 5,878 5,407 4,345 8.7 35.3

Certificates of deposit ($100,000 or more) 2,424 2,801 5,587 (13.5) (56.6)

Other time deposits 2,888 3,187 4,869 (9.4) (40.7)

Noninterest-bearing deposits 19,159 18,406 12,763 4.1 50.1

Total deposits $85,033 $82,845 $73,133 2.6 16.3 %



Home equity loans

Average balance $9,234 $9,360 $10,093

Combined weighted-average loan-to-value ratio (at date of origination)69 %69 %70 %

Percent first lien positions 68 66 62



Other data

Branches 1,068 1,073 1,082

Automated teller machines 1,368 1,386 1,398



Consumer Bank Summary of Operations (1Q21 vs. 1Q20)

* Net income attributable to Key of $217 million for the first quarter of 2021, compared to $103 million for the year-ago quarter * Taxable-equivalent net interest income increased by $26 million, or 4.5%, compared to the first quarter of 2020, driven by strong balance sheet growth and fees related to PPP loans, partially offset by the lower interest rate environment * Average loans and leases increased $6.1 billion, or 18.3%, driven by benefit from the PPP, as well as growth from Laurel Road and consumer mortgage * Average deposits increased $11.9 billion, or 16.3%, from the first quarter of 2020. This was driven by consumer stimulus payments and relationship growth * Provision for credit losses decreased $159 million compared to the first quarter of 2020. The provision for credit losses was a net benefit and was driven by expected improvements in economic conditions and continued strength in client credit quality * Noninterest income increased $28 million, or 12.2%, from the year ago quarter, due to higher trust and investment services income, and strength in consumer mortgage income * Noninterest expense increased $62 million, or 11.5%, from the year ago quarter, driven by higher variable compensation from significantly favorable revenue and higher variable expenses related to higher loan volumes

Commercial Bank





dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Summary of operations

Net interest income (TE) $411 $420 $421 (2.1) %(2.4) %

Noninterest income 447 502 220 (11.0) 103.2

Total revenue (TE) 858 922 641 (6.9) 33.9

Provision for credit losses (67) 44 222 (252.3) (130.2)

Noninterest expense 443 498 362 (11.0) 22.4

Income (loss) before income taxes (TE) 482 380 57 26.8 745.6

Allocated income taxes and TE adjustments99 70 (9) 41.4 N/M

Net income (loss) attributable to Key $383 $310 $66 23.5 %480.3 %



Average balances

Loans and leases $60,885$61,680$62,104(1.3) %(2.0) %

Loans held for sale 1,237 1,285 1,607 (3.7) (23.0)

Total assets 70,114 70,969 71,410 (1.2) (1.8)

Deposits 51,894 52,489 36,443 (1.1) %42.4 %



TE = Taxable Equivalent, N/M = Not Meaningful

Additional Commercial Bank Data



dollars in millions Change 1Q21 vs.

1Q21 4Q20 1Q20 4Q20 1Q20

Noninterest income

Trust and investment services income $32 $28 $39 14.3 %(17.9)

Investment banking and debt placement fees 162 243 116 (33.3) 39.7 %

Operating lease income and other leasing gains38 39 30 (2.6) 26.7



Corporate services income 56 55 58 1.8 (3.4)

Service charges on deposit accounts 33 32 29 3.1 13.8

Cards and payments income 51 43 17 18.6 200.0

Payments and services income 140 130 104 7.7 34.6



Commercial mortgage servicing fees 34 32 18 6.3 88.9

Other noninterest income 41 30 (87) 36.7 147.1

Total noninterest income $447$502$220(11.0)%103.2 %



N/M = Not Meaningful

Commercial Bank Summary of Operations (1Q21 vs. 1Q20)

* Net income attributable to Key of $383 million for the first quarter of 2021, compared to $66 million for the year-ago quarter * Taxable-equivalent net interest income decreased by $10 million, compared to the first quarter of 2020, as the lower interest rate environment offset fees related to PPP loans * Average loan and lease balances decreased $1.2 billion, compared to the first quarter of 2020 as lower utilization offset PPP loans * Average deposit balances increased $15.5 billion, or 42.4%, compared to the first quarter of 2020, driven by growth in targeted relationships and the impact of government programs * Provision for credit losses decreased $289 million compared to the first quarter of 2020. The provision for credit losses was a net benefit and was driven by expected improvements in economic conditions * Noninterest income increased $227 million, from the year-ago quarter, driven by favorable market-related adjustments to customer derivatives compared to detriments in 2020, increased investment banking client activity, and higher cards and payments income related to prepaid card revenue * Noninterest expense increased by $81 million, or 22.4%, from the first quarter of 2020, driven by higher variable compensation from significantly favorable revenue and elevated variable expenses related to prepaid card

*******************************************

KeyCorp's roots trace back 190 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $176.2 billion at March 31, 2021.

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of more than 1,000 branches and approximately 1,400 ATMs. 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.

INVESTOR RELATIONS:KEY MEDIA NEWSROOM:

www.key.com/ir 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 thatany list of risks and uncertainties or risk factors is complete. Factors thatcould 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, 2020, as well as in KeyCorp's subsequent SEC filings, all of which have been or will be filed with the Securities and Exchange Commission (the "SEC") and are or will be 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 worsening of the U.S. economy due to financial, political, or othershocks, the extensive regulation of the U.S. financial services industry, andthe impact of the COVID-19 global pandemic on us, our clients, our third-party service providers, and the markets. 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 10:00 a.m. ET, on Tuesday, April 20, 2021. A replay of the call will be available through April 29, 2021.

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

First Quarter 2021

Financial Supplement



Page

14 Financial Highlights

15 GAAP to Non-GAAP Reconciliation

17 Consolidated Balance Sheets

18 Consolidated Statements of Income

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

20 Noninterest Expense

20 Personnel Expense

21 Loan Composition

21 Loans Held for Sale Composition

21 Summary of Changes in Loans Held for Sale

22 Summary of Loan and Lease Loss Experience From Continuing Operations

23 Asset Quality Statistics From Continuing Operations

23 Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

23 Summary of Changes in Nonperforming Loans From Continuing Operations

24 Line of Business Results

Financial Highlights

(dollars in millions, except per share amounts)

Three months ended

3/31/2021 12/31/20203/31/2020

Summary of operations

Net interest income (TE) $1,012 $1,043 $989

Noninterest income 738 802 477

Total revenue (TE) 1,750 1,845 1,466

Provision for credit losses (93) 20 359

Noninterest expense 1,071 1,128 931

Income (loss) from continuing operations attributable to Key 618 575 145

Income (loss) from discontinued operations, net of taxes 4 7 1

Net income (loss) attributable to Key 622 582 146



Income (loss) from continuing operations attributable to Key common 591 549 118 shareholders

Income (loss) from discontinued operations, net of taxes 4 7 1

Net income (loss) attributable to Key common shareholders 595 556 119



Per common share

Income (loss) from continuing operations attributable to Key common $.61 $.57 $.12 shareholders

Income (loss) from discontinued operations, net of taxes - .01 -

Net income (loss) attributable to Key common shareholders ^(a) .62 .57 .12



Income (loss) from continuing operations attributable to Key common .61 .56 .12 shareholders - assuming dilution

Income (loss) from discontinued operations, net of taxes - assuming dilution - .01 -

Net income (loss) attributable to Key common shareholders - assuming dilution ^ .61 .57 .12 (a)



Cash dividends declared .185 .185 .185

Book value at period end 16.22 16.53 15.95

Tangible book value at period end 13.30 13.61 12.98

Market price at period end 19.98 16.41 10.37



Performance ratios

From continuing operations:

Return on average total assets 1.44 %1.35 %.40 %

Return on average common equity 14.98 13.65 3.10

Return on average tangible common equity ^(b) 18.25 16.61 3.82

Net interest margin (TE) 2.61 2.70 3.01

Cash efficiency ratio ^(b) 60.3 60.3 62.3



From consolidated operations:

Return on average total assets 1.45 %1.36 %.40 %

Return on average common equity 15.08 13.82 3.12

Return on average tangible common equity ^(b) 18.37 16.82 3.86

Net interest margin (TE) 2.60 2.69 3.00

Loan to deposit ^(c) 73.1 76.5 92.1



Capital ratios at period end

Key shareholders' equity to assets 10.0 %10.6 %11.1 %

Key common shareholders' equity to assets 9.0 9.5 10.0

Tangible common equity to tangible assets ^(b) 7.5 7.9 8.3

Common Equity Tier 1^ (d) 9.8 9.7 8.9

Tier 1 risk-based capital ^(d) 11.2 11.1 10.2

Total risk-based capital ^(d) 13.4 13.4 12.2

Leverage ^(d) 8.9 8.9 9.8



Asset quality - from continuing operations

Net loan charge-offs $114 $135 $84

Net loan charge-offs to average loans .46 %.53 %.35 %

Allowance for loan and lease losses $1,438 $1,626 $1,359

Allowance for credit losses 1,616 1,823 1,520

Allowance for loan and lease losses to period-end loans 1.42 %1.61 %1.32 %

Allowance for credit losses to period-end loans 1.60 1.80 1.47

Allowance for loan and lease losses to nonperforming loans 197.5 207.1 215.0

Allowance for credit losses to nonperforming loans 222.0 232.2 240.5

Nonperforming loans at period-end $728 $785 $632

Nonperforming assets at period-end 790 937 844

Nonperforming loans to period-end portfolio loans .72 %.78 %.61 %

Nonperforming assets to period-end portfolio loans plus OREO and other .78 .92 .82 nonperforming assets



Trust assets

Assets under management $45,218 $44,140 $36,189



Other data

Average full-time equivalent employees 17,086 17,029 16,529

Branches 1,068 1,073 1,082

Taxable-equivalent adjustment $7 $8 $8

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

The following table entitled "GAAP to Non-GAAP Reconciliations" presents the computations of certain financial measures related to "tangible common(b) equity" 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.

(c) Represents period-end consolidated total loans and loans held for sale divided by period-end consolidated total deposits.

(d) March 31, 2021, ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.

GAAP to Non-GAAP Reconciliations

(dollars in millions)

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

The tangible common equity ratio and the return on average tangible commonequity ratio have been a focus for some investors, and management believesthese ratios may assist investors in analyzing Key's capital position withoutregard to the effects of intangible assets and preferred stock.

The table also shows the computation for pre-provision net revenue, which isnot formally defined by GAAP. Management believes that eliminating the effectsof the provision for credit losses makes it easier to analyze the results bypresenting them on a more comparable basis.

The cash efficiency ratio is a ratio of two non-GAAP performance measures. Assuch, there is no directly comparable GAAP performance measure. The cashefficiency ratio performance measure removes the impact of Key's intangibleasset amortization from the calculation. Management believes this ratio providegreater consistency and comparability between Key's results and those of itspeer banks. Additionally, this ratio is used by analysts and investors as theydevelop earnings forecasts and peer bank analysis.

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

Three months ended

3/31/2021 12/31/2020 3/31/2020

Tangible common equity to tangible assets at period-end

Key shareholders' equity (GAAP) $17,634 $17,981 $17,411

Less: Intangible assets ^(a) 2,842 2,848 2,894

Preferred Stock ^(b) 1,856 1,856 1,856

Tangible common equity (non-GAAP) $12,936 $13,277 $12,661

Total assets (GAAP) $176,203 $170,336 $156,197

Less: Intangible assets ^(a) 2,842 2,848 2,894

Tangible assets (non-GAAP) $173,361 $167,488 $153,303

Tangible common equity to tangible assets ratio (non-GAAP) 7.46 %7.93 %8.26 %

Pre-provision net revenue

Net interest income (GAAP) $1,005 $1,035 $981

Plus: Taxable-equivalent adjustment 7 8 8

Noninterest income 738 802 477

Less: Noninterest expense 1,071 1,128 931

Pre-provision net revenue from continuing operations (non-GAAP) $679 $717 $535

Average tangible common equity

Average Key shareholders' equity (GAAP) $17,769 $17,905 $17,216

Less: Intangible assets (average) ^(c) 2,844 2,855 2,902

Preferred stock (average) 1,900 1,900 1,900

Average tangible common equity (non-GAAP) $13,025 $13,150 $12,414

Return on average tangible common equity from continuing operations

Net income (loss) from continuing operations attributable to Key common $591 $549 $118 shareholders (GAAP)

Average tangible common equity (non-GAAP) 13,025 13,150 12,414



Return on average tangible common equity from continuing operations (non-GAAP) 18.25 %16.61 %3.82 %

Return on average tangible common equity consolidated

Net income (loss) attributable to Key common shareholders (GAAP) $595 $556 $119

Average tangible common equity (non-GAAP) 13,025 13,150 12,414



Return on average tangible common equity consolidated (non-GAAP) 18.37 %16.82 %3.86 %

GAAP to Non-GAAP Reconciliations (continued)

(dollars in millions)

Three months ended

3/31/202112/31/2020 3/31/2020

Cash efficiency ratio

Noninterest expense (GAAP) $1,071 $ 1,128 $931

Less: Intangible asset amortization 15 15 17

Adjusted noninterest expense (non-GAAP) $1,056 $ 1,113 $914



Net interest income (GAAP) $1,005 $ 1,035 $981

Plus: Taxable-equivalent adjustment 7 8 8

Noninterest income 738 802 477

Total taxable-equivalent revenue (non-GAAP)$1,750 $ 1,845 $1,466



Cash efficiency ratio (non-GAAP) 60.3 %60.3 % 62.3 %



For the three months ended March 31, 2021, December 31, 2020, and March 31,(a) 2020, intangible assets exclude $4 million, $4 million, and $6 million, respectively, of period-end purchased credit card receivables.

(b) Net of capital surplus.

For the three months ended March 31, 2021, December 31, 2020, and March 31,(c) 2020, average intangible assets exclude $4 million, $5 million, and $7 million, respectively, of average purchased credit card receivables.

GAAP = U.S. generally accepted accounting principles

Consolidated Balance Sheets

(dollars in millions)



3/31/2021 12/31/20203/31/2020

Assets

Loans $100,926$101,185$103,198

Loans held for sale 2,296 1,583 2,143

Securities available for sale 33,923 27,556 20,807

Held-to-maturity securities 6,857 7,595 9,638

Trading account assets 811 735 795

Short-term investments 15,376 16,194 4,073

Other investments 621 621 679

Total earning assets 160,810 155,469 141,333

Allowance for loan and lease losses (1,438) (1,626) (1,359)

Cash and due from banks 938 1,091 865

Premises and equipment 737 753 791

Goodwill 2,673 2,664 2,664

Other intangible assets 173 188 236

Corporate-owned life insurance 4,296 4,286 4,243

Accrued income and other assets 7,347 6,812 6,604

Discontinued assets 667 699 820

Total assets $176,203170,336 156,197



Liabilities

Deposits in domestic offices:

NOW and money market deposit accounts $82,777 $80,427 $71,005

Savings deposits 6,655 5,913 4,753

Certificates of deposit ($100,000 or more) 2,437 2,733 5,630

Other time deposits 2,782 3,010 4,623

Total interest-bearing deposits 94,651 92,083 86,011

Noninterest-bearing deposits 47,532 43,199 29,293

Total deposits 142,183 135,282 115,304

Federal funds purchased and securities sold under repurchase agreements 281 220 2,444

Bank notes and other short-term borrowings 744 759 4,606

Accrued expense and other liabilities 2,862 2,385 2,700

Long-term debt 12,499 13,709 13,732

Total liabilities 158,569 152,355 138,786



Equity

Preferred stock 1,900 1,900 1,900

Common shares 1,257 1,257 1,257

Capital surplus 6,213 6,281 6,222

Retained earnings 13,166 12,751 12,174

Treasury stock, at cost (5,005) (4,946) (4,956)

Accumulated other comprehensive income (loss) 103 738 814

Key shareholders' equity 17,634 17,981 17,411

Noncontrolling interests - - -

Total equity 17,634 17,981 17,411

Total liabilities and equity $176,203$170,336$156,197



Common shares outstanding (000) 972,587 975,773 975,319

Consolidated Statements of Income

(dollars in millions, except per share amounts)

Three months ended

3/31/202112/31/20203/31/2020

Interest income

Loans $889 $933 $1,026

Loans held for sale 11 11 19

Securities available for sale 130 119 129

Held-to-maturity securities 45 51 62

Trading account assets 5 4 8

Short-term investments 5 4 6

Other investments 2 3 1

Total interest income 1,087 1,125 1,251

Interest expense

Deposits 21 28 169

Federal funds purchased and securities sold under repurchase agreements - - 6

Bank notes and other short-term borrowings 1 1 5

Long-term debt 60 61 90

Total interest expense 82 90 270

Net interest income 1,005 1,035 981

Provision for credit losses (93) 20 359

Net interest income after provision for credit losses 1,098 1,015 622

Noninterest income

Trust and investment services income 133 123 133

Investment banking and debt placement fees 162 243 116

Service charges on deposit accounts 73 82 84

Operating lease income and other leasing gains 38 39 30

Corporate services income 64 63 62

Cards and payments income 105 97 66

Corporate-owned life insurance income 31 38 36

Consumer mortgage income 47 43 20

Commercial mortgage servicing fees 34 32 18

Other income 51 42 (88)

Total noninterest income 738 802 477

Noninterest expense

Personnel 624 661 515

Net occupancy 76 75 76

Computer processing 73 62 55

Business services and professional fees 50 54 44

Equipment 25 26 24

Operating lease expense 34 35 36

Marketing 26 30 21

Intangible asset amortization 15 15 17

Other expense 148 170 143

Total noninterest expense 1,071 1,128 931

Income (loss) from continuing operations before income taxes 765 689 168

Income taxes 147 114 23

Income (loss) from continuing operations 618 575 145

Income (loss) from discontinued operations, net of taxes 4 7 1

Net income (loss) 622 582 146

Less: Net income (loss) attributable to noncontrolling interests - - -

Net income (loss) attributable to Key $622 $582 $146



Income (loss) from continuing operations attributable to Key common $591 $549 $118 shareholders

Net income (loss) attributable to Key common shareholders 595 556 119

Per common share

Income (loss) from continuing operations attributable to Key common $.61 $.57 $.12 shareholders

Income (loss) from discontinued operations, net of taxes - .01 -

Net income (loss) attributable to Key common shareholders ^(a) .62 .57 .12

Per common share - assuming dilution

Income (loss) from continuing operations attributable to Key common $.61 $.56 $.12 shareholders

Income (loss) from discontinued operations, net of taxes - .01 -

Net income (loss) attributable to Key common shareholders ^(a) .61 .57 .12



Cash dividends declared per common share $.185 $.185 $.185



Weighted-average common shares outstanding (000) 964,878 967,987 967,446

Effect of common share options and other stock awards 9,419 8,473 8,664

Weighted-average common shares and potential common shares outstanding (000) ^ 974,297 976,460 976,110 (b)

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

(b) Assumes conversion of common share options and other stock awards, as applicable.

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

(dollars in millions)

First Quarter 2021 Fourth Quarter 2020 First Quarter 2020

Average Yield/ Average Yield/ Average Yield/

Balance Interest ^(a)Rate ^(a)Balance Interest ^(a)Rate ^(a)Balance Interest ^(a)Rate ^(a)

Assets

Loans: ^(b), (c)

Commercial and industrial ^(d) $52,581 $ 453 3.48 % $53,562 $ 477 3.54 % $49,466 $508 4.13 %

Real estate - commercial mortgage 12,658 114 3.67 12,862 121 3.74 13,548 155 4.60

Real estate - construction 2,048 19 3.75 1,959 19 3.79 1,666 20 4.75

Commercial lease financing 4,142 31 2.99 4,353 32 2.92 4,565 39 3.39

Total commercial loans 71,429 617 3.50 72,736 649 3.55 69,245 722 4.19

Real estate - residential mortgage 9,699 76 3.12 8,968 74 3.29 7,215 68 3.75

Home equity loans 9,282 85 3.73 9,410 91 3.81 10,155 113 4.49

Consumer direct loans 4,817 56 4.72 4,583 56 4.93 3,709 54 5.91

Credit cards 933 24 10.45 973 26 10.57 1,082 31 11.50

Consumer indirect loans 4,568 37 3.30 5,040 45 3.56 4,768 46 3.86

Total consumer loans 29,299 278 3.84 28,974 292 4.01 26,929 312 4.66

Total loans 100,728 895 3.60 101,710 941 3.68 96,174 1,034 4.32

Loans held for sale 1,531 11 2.89 1,621 11 2.76 1,885 19 3.99

Securities available for sale ^(b), (e) 30,039 130 1.76 28,046 119 1.75 21,172 129 2.49

Held-to-maturity securities ^(b) 7,188 45 2.53 7,939 51 2.56 9,820 62 2.51

Trading account assets 848 5 2.15 744 4 2.21 1,065 8 2.95

Short-term investments 16,510 5 .13 14,111 4 0.14 1,764 6 1.42

Other investments ^(e) 614 2 1.40 615 3 1.31 614 1 0.40

Total earning assets 157,458 1,094 2.81 154,786 1,133 2.93 132,494 1,259 3.82

Allowance for loan and lease losses (1,623) (1,715) (1,097)

Accrued income and other assets 16,398 15,861 14,831

Discontinued assets 686 717 838

Total assets $172,919 $169,649 $147,066

Liabilities

NOW and money market deposit accounts $81,439 10 .05 $80,636 12 .06 $66,721 112 .67

Savings deposits 6,203 1 .03 5,737 - .03 4,655 1 .05

Certificates of deposit ($100,000 or more) 2,571 6 .96 2,983 9 1.20 6,310 34 2.20

Other time deposits 2,902 4 .57 3,209 7 .80 4,901 22 1.81

Total interest-bearing deposits 93,115 21 .09 92,565 28 .12 82,587 169 .82

Federal funds purchased and securities sold under repurchase agreements243 - .04 220 - .04 2,002 6 1.17

Bank notes and other short-term borrowings 878 1 .64 791 1 .73 1,401 5 1.58

Long-term debt ^(f), (g) 12,831 60 1.93 12,118 61 2.05 12,443 90 2.96

Total interest-bearing liabilities 107,067 82 .31 105,694 90 .34 98,433 270 1.10

Noninterest-bearing deposits 44,625 43,156 27,741

Accrued expense and other liabilities 2,772 2,177 2,838

Discontinued liabilities ^(g) 686 717 838

Total liabilities 155,150 151,744 129,850

Equity

Key shareholders' equity 17,769 17,905 17,216

Noncontrolling interests - - -

Total equity 17,769 17,905 17,216

Total liabilities and equity $172,919 $169,649 $147,066

Interest rate spread (TE) 2.50 % 2.59 % 2.72 %

Net interest income (TE) and net interest margin (TE) 1,012 2.61 % 1,043 2.70 % 989 3.01 %

TE adjustment ^(b) 7 8 8

Net interest income, GAAP basis $ 1,005 $ 1,035 $981

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

Interest income on tax-exempt securities and loans has been adjusted to a(b) taxable-equivalent basis using the statutory federal income tax rate of 21% for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020.

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

Commercial and industrial average balances include $126 million, $129(d) million, and $145 million of assets from commercial credit cards for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively.

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

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

A portion of long-term debt and the related interest expense is allocated(g) 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

Noninterest Expense

(dollars in millions)



Three months ended

3/31/202112/31/20203/31/2020

Personnel ^(a) $ 624 $661 $515

Net occupancy 76 75 76

Computer processing 73 62 55

Business services and professional fees 50 54 44

Equipment 25 26 24

Operating lease expense 34 35 36

Marketing 26 30 21

Intangible asset amortization 15 15 17

Other expense 148 170 143

Total noninterest expense $ 1,071$1,128 $931

Average full-time equivalent employees ^(b) 17,086 17,029 16,529

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

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

Personnel Expense

(in millions)



Three months ended

3/31/202112/31/20203/31/2020

Salaries and contract labor $ 320 $342 $ 316

Incentive and stock-based compensation196 208 102

Employee benefits 107 89 92

Severance 1 22 5

Total personnel expense $ 624 $661 $ 515

Loan Composition

(dollars in millions)



Percent change 3/31/2021 vs

3/31/2021 12/31/20203/31/2020 12/31/2020 3/31/2020

Commercial and industrial ^(a) $52,486 $52,907 $55,983 (.8) %(6.2) %

Commercial real estate:

Commercial mortgage 12,702 12,687 13,548 .1 (6.2)

Construction 2,122 1,987 1,710 6.8 24.1

Total commercial real estate loans14,824 14,674 15,258 1.0 (2.8)

Commercial lease financing ^(b) 4,104 4,399 4,677 (6.7) (12.3)

Total commercial loans 71,414 71,980 75,918 (.8) (5.9)

Residential - prime loans:

Real estate - residential mortgage10,300 9,298 7,498 10.8 37.4

Home equity loans 9,158 9,360 10,103 (2.2) (9.4)

Total residential - prime loans 19,458 18,658 17,601 4.3 10.6

Consumer direct loans 4,862 4,714 3,833 3.1 26.8

Credit cards 909 989 1,041 (8.1) (12.7)

Consumer indirect loans 4,283 4,844 4,805 (11.6) (10.9)

Total consumer loans 29,512 29,205 27,280 1.1 8.2

Total loans ^(c), (d) $100,926$101,185$103,198(.3) %(2.2) %

Loan balances include $126 million, $127 million, and $143 million of(a) commercial credit card balances at March 31, 2021, December 31, 2020, and March 31, 2020, respectively.

Commercial lease financing includes receivables held as collateral for a secured borrowing of $21 million, $23 million, and $14 million at March 31,(b) 2021, December 31, 2020, and March 31, 2020, respectively. Principal reductions are based on the cash payments received from these related receivables.

Total loans exclude loans of $675 million at March 31, 2021, $710 million(c) at December 31, 2020, and $821 million at March 31, 2020, related to the discontinued operations of the education lending business.

Accrued interest of $242 million, $241 million, and $241 million at(d) March 31, 2021, December 31, 2020, and March 31, 2020, respectively, presented in "other assets" on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

Loans Held for Sale Composition

(dollars in millions)



Percent change 3/31/2021 vs

3/31/202112/31/20203/31/202012/31/2020 3/31/2020

Commercial and industrial $1,175 $249 $446 371.9 %163.5 %

Real estate - commercial mortgage 837 1,014 1,284 (17.5) (34.8)

Commercial lease financing - - 8 N/M N/M

Real estate - residential mortgage 236 264 152 (10.6) 55.3

Consumer direct loans 48 56 253 (14.3) (81.0)

Total loans held for sale $2,296 $1,583 $2,143 45.0 %7.1 %

N/M = Not Meaningful

Summary of Changes in Loans Held for Sale

(in millions)



1Q21 4Q20 3Q20 2Q20 1Q20

Balance at beginning of period $1,583$1,724$2,007$2,143$1,334

New originations 4,010 3,835 3,282 3,621 3,333

Transfers from (to) held to maturity, net83 (24) 75 (15) 200

Loan sales (3,303)(3,932)(3,583)(3,679)(2,649)

Loan draws (payments), net (73) (19) (57) (61) (77)

Valuation adjustments (4) - - (2) 2

Balance at end of period $2,296$1,583$1,724$2,007$2,143

Summary of Loan and Lease Loss Experience From Continuing Operations

(dollars in millions)



Three months ended

3/31/2021 12/31/2020 3/31/2020

Average loans outstanding $100,728 $101,710 $96,174

Allowance for loan and lease losses at the end of the prior period $1,626 $1,730 $900

Cumulative effect from change in accounting principle ^(a) - - 204

Allowance for loan and lease losses at the beginning of the period 1,626 1,730 1,104

Loans charged off:

Commercial and industrial 73 119 60



Real estate - commercial mortgage 35 1 3

Real estate - construction - - -

Total commercial real estate loans 35 1 3

Commercial lease financing 4 19 2

Total commercial loans 112 139 65

Real estate - residential mortgage - - -

Home equity loans 2 1 4

Consumer direct loans 8 7 12

Credit cards 6 7 11

Consumer indirect loans 7 6 9

Total consumer loans 23 21 36

Total loans charged off 135 160 101

Recoveries:

Commercial and industrial 8 15 5



Real estate - commercial mortgage 1 - 1

Real estate - construction - - -

Total commercial real estate loans 1 - 1

Commercial lease financing 1 - -

Total commercial loans 10 15 6

Real estate - residential mortgage 1 - -

Home equity loans 1 1 2

Consumer direct loans 2 1 2

Credit cards 2 2 2

Consumer indirect loans 5 6 5

Total consumer loans 11 10 11

Total recoveries 21 25 17

Net loan charge-offs (114) (135) (84)

Provision (credit) for loan and lease losses (74) 31 339

Allowance for loan and lease losses at end of period $1,438 $1,626 $1,359



Liability for credit losses on lending-related commitments at the end of the $197 $208 $68 prior period

Liability for credit losses on contingent guarantees at the end of the prior - - 7 period

Cumulative effect from change in accounting principle ^(a), (b) - - 66

Liability for credit losses on lending-related commitments at beginning of 197 208 141 period

Provision (credit) for losses on lending-related commitments (19) (11) 20

Liability for credit losses on lending-related commitments at end of period ^ $178 $197 $161 (c)



Total allowance for credit losses at end of period $1,616 $1,823 $1,520



Net loan charge-offs to average total loans .46 %.53 %.35 %

Allowance for loan and lease losses to period-end loans 1.42 1.61 1.32

Allowance for credit losses to period-end loans 1.60 1.80 1.47

Allowance for loan and lease losses to nonperforming loans 197.5 207.1 215.0

Allowance for credit losses to nonperforming loans 222.0 232.2 240.5



Discontinued operations - education lending business:

Loans charged off $1 1 $2

Recoveries 1 2 1

Net loan charge-offs $- 1 $(1)

(a) The cumulative effect from change in accounting principle relates to the January 1, 2020, adoption of ASU 2016-13.

Three months ended March 31, 2020, excludes $4 million related to the(b) provision for other financial assets as a result of the change in accounting principle.

(c) Included in "Accrued expense and other liabilities" on the balance sheet.

Asset Quality Statistics From Continuing Operations

(dollars in millions)

1Q21 4Q20 3Q20 2Q20 1Q20

Net loan charge-offs $114 $135 $128 $96 $84

Net loan charge-offs to average total loans .46 %.53 %.49 %.36 %.35 %

Allowance for loan and lease losses $1,438 $1,626 $1,730 $1,708 $1,359

Allowance for credit losses ^(a) 1,616 1,823 1,938 1,906 1,520

Allowance for loan and lease losses to period-end loans 1.42 %1.61 %1.68 %1.61 %1.32 %

Allowance for credit losses to period-end loans 1.60 1.80 1.88 1.80 1.47

Allowance for loan and lease losses to nonperforming loans 197.5 207.1 207.4 224.7 215.0

Allowance for credit losses to nonperforming loans 222.0 232.2 232.4 250.8 240.5

Nonperforming loans at period end $728 $785 $834 $760 $632

Nonperforming assets at period end 790 937 1,003 951 844

Nonperforming loans to period-end portfolio loans .72 %.78 %.81 %.72 %.61 %

Nonperforming assets to period-end portfolio loans plus OREO and other .78 .92 .97 .89 .82 nonperforming assets

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

Summary of Nonperforming Assets and Past Due Loans From Continuing Operations

(dollars in millions)

3/31/202112/31/20209/30/20206/30/20203/31/2020

Commercial and industrial $387 $ 385 $459 $404 $277



Real estate - commercial mortgage 66 104 104 91 87

Real estate - construction - - 1 1 2

Total commercial real estate loans 66 104 105 92 89

Commercial lease financing 8 8 6 9 5

Total commercial loans 461 497 570 505 371

Real estate - residential mortgage 95 110 96 89 89

Home equity loans 148 154 146 141 143

Consumer direct loans 5 5 3 3 4

Credit cards 3 2 2 2 3

Consumer indirect loans 16 17 17 20 22

Total consumer loans 267 288 264 255 261

Total nonperforming loans 728 785 834 760 632

OREO 12 100 105 112 119

Nonperforming loans held for sale 47 49 61 75 89

Other nonperforming assets 3 3 3 4 4

Total nonperforming assets $790 $ 937 $1,003 $951 $844

Accruing loans past due 90 days or more 92 86 73 87 128

Accruing loans past due 30 through 89 days 191 241 336 419 393

Restructured loans - accruing and nonaccruing ^(a) 376 363 306 310 340

Restructured loans included in nonperforming loans ^(a) 192 229 168 166 172

Nonperforming assets from discontinued operations - education lending business 5 5 6 7 7

Nonperforming loans to period-end portfolio loans .72 % .78 % .81 %.72 % .61 %

Nonperforming assets to period-end portfolio loans plus OREO and other .78 .92 .97 .89 .82 nonperforming assets

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

Summary of Changes in Nonperforming Loans From Continuing Operations

(in millions)

1Q21 4Q20 3Q20 2Q20 1Q20

Balance at beginning of period $785$834$760$632$577

Loans placed on nonaccrual status 196 300 387 293 219

Charge-offs (135)(160)(150)(111)(100)

Loans sold (13) (9) (6) (5) (4)

Payments (37) (83) (83) (29) (31)

Transfers to OREO (3) (3) - - (3)

Transfers to nonperforming loans held for sale- - - - -

Loans returned to accrual status (65) (94) (74) (20) (26)

Balance at end of period $728$785$834$760$632

Line of Business Results

(dollars in millions)



Percentage change 1Q21 vs.

1Q21 4Q20 3Q20 2Q20 1Q20 4Q20 1Q20

Consumer Bank

Summary of operations

Total revenue (TE) $ 864 $ 896 $ 864 $ 832 $ 810 (3.6) % 6.7 %

Provision for credit losses (23) (5) (3) 155 136 (360.0) (103.7)

Noninterest expense 601 606 567 552 539 (.8) 11.5

Net income (loss) attributable to Key 217 225 229 96 103 (3.6) 110.7

Average loans and leases 39,249 39,448 38,468 37,291 33,175 (.5) 18.3

Average deposits 85,033 82,845 82,829 79,233 73,133 2.6 16.3

Net loan charge-offs 36 28 23 40 43 28.6 (16.3)

Net loan charge-offs to average total loans.37 %.28 %.24 %.43 %.52 %N/A N/A

Nonperforming assets at period end $ 345 $ 374 $ 353 $ 332 $ 342 (7.8) .9

Return on average allocated equity 25.76 %25.61 %26.22 %11.28 %12.30 %N/A N/A



Commercial Bank

Summary of operations

Total revenue (TE) $ 858 $ 922 $ 811 $ 867 $ 641 (6.9) % 33.9 %

Provision for credit losses (67) 44 150 326 222 (252.3) (80.2)

Noninterest expense 443 498 447 441 362 (11.0) 22.4

Net income (loss) attributable to Key 383 310 173 96 66 23.5 480.3

Average loans and leases 60,885 61,680 65,928 69,945 62,104 (1.3) (2.0)

Average loans held for sale 1,237 1,285 1,383 2,012 1,607 (3.7) (23.0)

Average deposits 51,894 52,489 51,585 47,954 36,443 (1.1) 42.4

Net loan charge-offs 78 108 104 57 40 (27.8) 95.0

Net loan charge-offs to average total loans.52 %.70 %.63 %.33 %.26 %N/A N/A

Nonperforming assets at period end $ 441 $ 558 $ 645 $ 616 $ 407 (21.0) 8.4

Return on average allocated equity 17.47 %23.87 %13.40 %7.87 %5.57 %N/A N/A

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

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SOURCE KeyCorp