PR Newswire | Jan 20, 2022 06:31AM EST

DILUTED COMMON SHARE

01/20 05:30 CST

KEYCORP REPORTS FOURTH QUARTER 2021 NET INCOME OF $601 MILLION, OR $.64 PER DILUTED COMMON SHARERecord revenue for the fourth quarter and full yearRecord pre-provision net revenue for the fourth quarter and full yearPositive operating leverage for the fourth quarter and full yearStrong credit quality: net charge-offs to average loans of 8 basis pointsSignificant capital return: 75% of net income returned to shareholders in 2021 CLEVELAND, Jan. 20, 2022

CLEVELAND, Jan. 20, 2022 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $601 million, or $.64 per diluted common share for the fourth quarter of 2021. This compared to $616 million, or $.65 per diluted common share, for the third quarter of 2021 and $549 million, or $.56 per diluted common share, for the fourth quarter of 2020.

Our fourth quarter results marked a strong finish to a record year for Key. Leveraging our distinctive business model, we continue to add and deepen relationships with clients across both our consumer and commercial businesses. We are also seeing significant momentum from recent investments we have made in teammates, niche businesses, and digital capabilities.

Our team generated record revenue for both the quarter and the year. We delivered broad-based growth across each of our businesses. Our consumer business produced both record household growth and record consumer loan originations. In our commercial businesses, we raised over $100 billion for the benefit of our clients.

Our collective focus on sound, profitable growth is evidenced by our strong credit quality. We remain committed to our capital priorities and maximizing shareholder value. In 2021, we returned 75% of our net income to shareholders, in the form of dividends and share repurchases.

I am very proud of all that we accomplished this year. I want to thank our teammates for their dedication and commitment to serving our clients, our communities, and our shareholders, while growing our business.

- Chris Gorman, Chairman and CEO

Selected Financial Highlights



Dollars in millions, except per share data Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Income (loss) from continuing operations attributable to Key common $ 601 $ 616 $ 549 (2.4)% 9.5 %shareholders

Income (loss) from continuing operations attributable to Key common .64 .65 .56 (1.5) 14.3 shareholders per common share - assuming dilution

Return on average tangible common equity from continuing operations ^(a) 18.69 %18.55 %16.61 %N/A N/A

Return on average total assets from continuing operations 1.34 1.41 1.35 N/A N/A

Common Equity Tier 1 ratio ^(b) 9.4 9.6 9.7 N/A N/A

Book value at period end $ 16.76 $ 16.82 $ 16.53 (.4) 1.4

Net interest margin (TE) from continuing operations 2.44 %2.47 %2.70 %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) December 31, 2021 ratio is estimated.

TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS



Revenue



Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Net interest income (TE) $ 1,038$ 1,025$ 1,0431.3 % (.5)%

Noninterest income 909 797 802 14.1 13.3

Total revenue $ 1,947$ 1,822$ 1,8456.9 % 5.5 %



TE = Taxable Equivalent

Taxable-equivalent net interest income was $1.0 billion for the fourth quarter of 2021 and the net interest margin was 2.44%. Compared to the fourth quarter of 2020, net interest income decreased $5 million, while the net interest margin decreased by 26 basis points. Both net interest income and the net interest margin reflect the impact of lower reinvestment yields and the exit of the indirect auto loan portfolio, largely offset by a favorable earning asset mix. The net interest margin was also impacted by elevated levels of liquidity as we continued to experience higher levels of deposit inflows in 2021.

Compared to the third quarter of 2021, taxable-equivalent net interest income increased by $13 million and the net interest margin decreased by 3 basis points. The increase in net interest income was driven by balance sheet growth and a favorable mix of earning assets, as well as higher loan fees from the PPP forgiveness and core portfolio growth. Additionally, both net interest income and the net interest margin were impacted by lower reinvestment yields and the exit of the indirect auto loan portfolio.

Noninterest Income



Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Trust and investment services income $ 135$ 129$ 1234.7 %9.8 %

Investment banking and debt placement fees 323 235 243 37.4 32.9

Service charges on deposit accounts 90 91 82 (1.1) 9.8

Operating lease income and other leasing gains37 37 39 - (5.1)

Corporate services income 73 69 63 5.8 15.9

Cards and payments income 86 111 97 (22.5) (11.3)

Corporate-owned life insurance income 34 33 38 3.0 (10.5)

Consumer mortgage income 25 33 43 (24.2) (41.9)

Commercial mortgage servicing fees 48 34 32 41.2 50.0

Other income 58 25 42 132.0 38.1

Total noninterest income $ 909$ 797$ 80214.1 %13.3 %



Compared to the fourth quarter of 2020, noninterest income increased by $107 million. The increase was primarily driven by investment banking and debt placement fees, up $80 million. Additionally, commercial mortgage servicing fees and other income both increased $16 million. Partially offsetting the increase was a $18 million decrease in consumer mortgage income, driven by higher balance sheet retention and lower gain on sale margins.

Compared to the third quarter of 2021, noninterest income increased by $112 million. The primary driver was investment banking and debt placement fees, which increased $88 million. Additionally, commercial mortgage servicing fees increased $14 million and other income increased $33 million, reflecting market related gains. Partially offsetting the increase was a $25 million decrease in cards and payments income, driven by lower prepaid card revenue.

Noninterest Expense



Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Personnel expense $ 674$ 640$ 6615.3 %2.0 %

Nonpersonnel expense 496 472 467 5.1 6.2

Total noninterest expense$ 1,170$ 1,112$ 1,1285.2 %3.7 %



Key's noninterest expense was $1.2 billion for the fourth quarter of 2021, an increase of $42 million from the year-ago period. The increase in nonpersonnel expense was primarily driven by higher business services and professional fees and computer processing fees. The increase in personnel expense reflects higher incentive and stock-based compensation from strong fee production, partially offset by lower severance.

Compared to the third quarter of 2021, noninterest expense increased $58 million. The increase was largely related to personnel expense, reflecting higher incentive and stock-based compensation. The increase in nonpersonnel expense was driven by higher business services and professional fees.

BALANCE SHEET HIGHLIGHTS



Average Loans



Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Commercial and industrial ^(a)$ 49,510$ 49,868$ 53,562(.7) %(7.6)%

Other commercial loans 19,743 19,362 19,174 2.0 3.0

Total consumer loans 30,144 30,908 28,974 (2.5) 4.0

Total loans $ 99,397$ 100,138 $ 101,710 (.7) %(2.3)%



Commercial and industrial average loan balances include $141 million, $137(a) million, and $129 million of assets from commercial credit cards at December 31, 2021, September 30, 2021, and December 31, 2020, respectively.

Average loans were $99.4 billion for the fourth quarter of 2021, a decrease of $2.3 billion compared to the fourth quarter of 2020. Commercial loans decreased by $3.5 billion, reflecting a decline in PPP balances. Total PPP loan forgiveness was $8.0 billion for 2021. Partly offsetting the decrease was core growth in commercial and industrial and commercial real estate loans. Consumer loans increased $1.2 billion, reflecting strength from Key's consumer mortgage business and Laurel Road, partly offset by the sale of the indirect auto loan portfolio.

Compared to the third quarter of 2021, average loans decreased by $741 million. Commercial loans were relatively unchanged from the prior quarter as declines in PPP balances were largely offset by core growth in commercial and industrial and commercial real estate loans. Consumer loans decreased $764 million, reflecting the sale of the indirect auto loan portfolio, which reduced average loans by $2.7 billion. In addition, we continued to experience strength from Key's consumer mortgage business and Laurel Road.

Average Deposits



Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Non-time deposits $ 146,979$ 142,537$ 129,5293.1 %13.5 %

Certificates of deposit ($100,000 or more)1,793 1,975 2,983 (9.2) (39.9)

Other time deposits 2,233 2,404 3,209 (7.1) (30.4)

Total deposits $ 151,005$ 146,916$ 135,7212.8 %11.3 %



Cost of total deposits .04 %.04 %.08 %N/A N/A



N/A = Not Applicable

Average deposits totaled $151.0 billion for the fourth quarter of 2021, an increase of $15.3 billion compared to the year-ago quarter. The increase reflects growth from consumer and commercial relationships, including higher commercial escrow and retail deposits, partially offset by a decline in time deposits.

Compared to the third quarter of 2021, average deposits increased by $4.1 billion, primarily driven by higher commercial escrow balances and retail deposits.

ASSET QUALITY



Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Net loan charge-offs $ 19 $ 29 $ 135 (34.5) %(85.9)%

Net loan charge-offs to average total loans .08 %.11 %.53 %N/A N/A

Nonperforming loans at period end $ 454 $ 554 $ 785 (18.1) (42.2)

Nonperforming assets at period end 489 599 937 (18.4) (47.8)

Allowance for loan and lease losses 1,061 1,084 1,626 (2.1) (34.7)

Allowance for credit losses 1,221 1,236 1,823 (1.2) (33.0)

Provision for credit losses 4 (107) 20 (103.7) (80.0)



Allowance for loan and lease losses to nonperforming loans233.7 %195.7 %207.1 %N/A N/A

Allowance for credit losses to nonperforming loans 268.9 223.1 232.2 N/A N/A



N/A = Not Applicable

Key's provision for credit losses was $4 million, compared to $20 million in the fourth quarter of 2020 and a net benefit of $107 million in the third quarter of 2021.

Net loan charge-offs for the fourth quarter of 2021 totaled $19 million, or .08% of average total loans. These results compare to $135 million, or .53%, for the fourth quarter of 2020 and $29 million, or .11%, for the third quarter of 2021. Key's allowance for credit losses was $1.2 billion, or 1.20% of total period-end loans at December 31, 2021, compared to 1.80% at December 31, 2020, and 1.25% at September 30, 2021.

At December 31, 2021, Key's nonperforming loans totaled $454 million, which represented .45% of period-end portfolio loans. These results compare to .78% at December 31, 2020, and .56% at September 30, 2021. Nonperforming assets at December 31, 2021, totaled $489 million, and represented .48% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .92% at December 31, 2020, and .61% at September 30, 2021.

CAPITAL

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

Capital Ratios



12/31/20219/30/202112/31/2020

Common Equity Tier 1 ^(a) 9.4 %9.6 %9.7 %

Tier 1 risk-based capital ^(a) 10.7 10.9 11.1

Total risk based capital ^(a) 12.4 12.7 13.4

Tangible common equity to tangible assets ^(b)6.9 7.0 7.9

Leverage ^(a) 8.4 8.4 8.9



(a) December 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(b) financial supplement presents the computations of certain financial 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 fourth quarter of 2021. As shown in the preceding table, at December 31, 2021, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.4% and 10.7%, respectively. Key's tangible common equity ratio was 6.9% at December 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 17 basis points.

Summary of Changes in Common Shares Outstanding



In thousands Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Shares outstanding at beginning of period 930,544960,276 976,205(3.1) %(4.7)%

Open market repurchases, repurchases under the accelerated repurchase (2,482)(29,923)(1,092)(91.7) 127.3 program, and return of shares under employee compensation plans

Shares issued under employee compensation plans (net of cancellations)788 191 660 312.6 19.4

Shares outstanding at end of period 928,850930,544 975,773(.2) %(4.8)%



N/M = Not Meaningful

During the fourth quarter of 2021, Key declared a dividend of $.195 per common share, representing a 5% increase from the prior quarter. The reduction in share count was driven by the final settlement of 2.5 million shares related to the accelerated share repurchase program disclosed in the third quarter of 2021. There were no additional open market share repurchases in the fourth quarter.

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 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Revenue from continuing operations (TE)

Consumer Bank $ 839$ 870$ 896(3.6) %(6.4) %

Commercial Bank 1,028 886 922 16.0 11.5

Other ^(a) 80 66 27 21.2 196.3

Total $ 1,947$ 1,822$ 1,8456.9 %5.5 %



Income (loss) from continuing operations attributable to Key

Consumer Bank $ 161$ 241$ 225(33.2)%(28.4)%

Commercial Bank 449 381 310 17.8 44.8

Other ^(a) 17 21 40 (19.0) (57.5)

Total $ 627$ 643$ 575(2.5) %9.0 %



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(a) nonearning assets of corporate support functions. Charges related to the 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 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Summary of operations

Net interest income (TE) $ 569$ 582$ 638(2.2) %(10.8) %

Noninterest income 270 288 258 (6.3) 4.7

Total revenue (TE) 839 870 896 (3.6) (6.4)

Provision for credit losses 13 (38) (5) 134.2 (360.0)

Noninterest expense 614 591 606 3.9 1.3

Income (loss) before income taxes (TE) 212 317 295 (33.1) (28.1)

Allocated income taxes (benefit) and TE adjustments51 76 70 (32.9) (27.1)

Net income (loss) attributable to Key $ 161$ 241$ 225(33.2)%(28.4) %



Average balances

Loans and leases $ 37,792 $ 39,796 $ 39,448 (5.0) %(4.2) %

Total assets 41,024 42,981 42,666 (4.6) (3.8)

Deposits 90,271 89,156 82,845 1.3 9.0



Assets under management at period end $ 55,806 $ 52,867 $ 47,086 5.6 %18.5 %



TE = Taxable Equivalent

Additional Consumer Bank Data



Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Noninterest income

Trust and investment services income $ 106$ 105$ 951.0 %11.6 %

Service charges on deposit accounts 55 56 49 (1.8) 12.2

Cards and payments income 64 62 54 3.2 18.5

Consumer mortgage income 25 33 43 (24.2) (41.9)

Other noninterest income 20 32 17 (37.5) 17.6

Total noninterest income $ 270$ 288$ 258(6.3) %4.7 %



Average deposit balances

NOW and money market deposit accounts $ 57,197 $ 56,353 $ 53,045 1.5 %7.8 %

Savings deposits 6,951 6,749 5,407 3.0 28.6

Certificates of deposit ($100,000 or more)1,669 1,846 2,801 (9.6) (40.4)

Other time deposits 2,227 2,398 3,186 (7.1) (30.1)

Noninterest-bearing deposits 22,227 21,810 18,406 1.9 20.8

Total deposits $ 90,271 $ 89,156 $ 82,845 1.3 %9.0 %



Other data

Branches 999 1,000 1,073

Automated teller machines 1,317 1,316 1,386



Consumer Bank Summary of Operations (4Q21 vs. 4Q20)

* Net income attributable to Key of $161 million for the fourth quarter of 2021, compared to $225 million for the year-ago quarter * Taxable-equivalent net interest income decreased by $69 million, compared to the fourth quarter of 2020, related to the sale of the indirect auto portfolio, partially offset by strong consumer mortgage balance sheet growth and fees related to PPP loans * Average loans and leases decreased $1.7 billion, or 4.2%, from the fourth quarter of 2020, driven by the sale of the indirect auto loan portfolio, partially offset by growth in residential mortgage and Laurel Road * Average deposits increased $7.4 billion, or 9.0%, from the fourth quarter of 2020, driven by consumer retention of stimulus payments and relationship growth * Provision for credit losses increased $18 million, compared to the fourth quarter of 2020, driven by expectations of a more stable economic outlook and portfolio growth * Noninterest income increased $12 million, or 4.7%, from the year ago quarter, driven by higher cards and payments income and trust and investment services income. Partially offsetting the increase was consumer mortgage income, reflecting higher balance sheet retention and lower gain on sale margins * Noninterest expense increased $8 million, or 1.3%, from the year ago quarter, driven by higher production-related incentives and increased marketing expense related to Laurel Road

Commercial Bank





Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Summary of operations

Net interest income (TE) $ 417$ 410$ 4201.7 %(.7) %

Noninterest income 611 476 502 28.4 21.7

Total revenue (TE) 1,028 886 922 16.0 11.5

Provision for credit losses (12) (69) 44 (82.6) (127.3)

Noninterest expense 501 470 499 6.6 .4

Income (loss) before income taxes (TE) 539 485 379 11.1 42.2

Allocated income taxes and TE adjustments90 104 69 (13.5) 30.4

Net income (loss) attributable to Key $ 449$ 381$ 31017.8 %44.8 %



Average balances

Loans and leases $ 61,127 $ 59,914 $ 62,016 2.0 %(1.4) %

Loans held for sale 1,962 1,190 1,285 64.9 52.7

Total assets 71,642 69,285 71,303 3.4 0.5

Deposits 59,537 56,522 52,489 5.3 %13.4 %



TE = Taxable Equivalent, N/M = Not Meaningful

Additional Commercial Bank Data



Dollars in millions Change 4Q21 vs.

4Q21 3Q21 4Q20 3Q21 4Q20

Noninterest income

Trust and investment services income $ 29$ 24$ 2820.8 %3.6 %

Investment banking and debt placement fees 323 234 243 38.0 32.9

Operating lease income and other leasing gains36 37 39 (2.7) (7.7)



Corporate services income 65 63 55 3.2 18.2

Service charges on deposit accounts 34 34 32 - 6.3

Cards and payments income 26 44 44 (40.9) (40.9)

Payments and services income 125 141 131 (11.3) (4.6)



Commercial mortgage servicing fees 47 34 32 38.2 46.9

Other noninterest income 51 6 29 750.0 75.9

Total noninterest income $ 611 $ 476 $ 502 28.4 %21.7 %



N/M = Not Meaningful

Commercial Bank Summary of Operations (4Q21 vs. 4Q20)

* Net income attributable to Key of $449 million for the fourth quarter of 2021, compared to $310 million for the year-ago quarter * Taxable-equivalent net interest income decreased by $3 million, compared to the fourth quarter of 2020, as lower average loan balances offset fees related to PPP loans * Average loan and lease balances decreased $889 million, compared to the fourth quarter of 2020, reflecting a decline in PPP balances, partly offset by core growth in commercial and industrial and commercial real estate loans * Average deposit balances increased $7.0 billion, or 13.4%, compared to the fourth quarter of 2020, driven by growth in targeted relationships and higher commercial escrow deposits * Provision for credit losses decreased $56 million, compared to the fourth quarter of 2020. The provision for credit losses was a net benefit, driven by lower net loan charge-offs and improved asset quality * Noninterest income increased $109 million from the year-ago quarter, driven by elevated investment banking client activity and corporate services income, partially offset by lower cards and payments income * Noninterest expense increased by $2 million, or 0.4%, from the fourth quarter of 2020, driven by higher production-related incentives related to strong investment banking and debt placement fees

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

KeyCorp's roots trace back nearly 200 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 $186.3 billion at December 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 approximately 1,000 branches and approximately 1,300 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 8:00 a.m. ET, on January 20, 2022. A replay of the call will be available through January 29, 2022.

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

Fourth Quarter 2021

Financial Supplement



Page

12 Financial Highlights

14 GAAP to Non-GAAP Reconciliation

16 Consolidated Balance Sheets

17 Consolidated Statements of Income

18 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

21 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

12/31/2021 9/30/2021 12/31/2020

Summary of operations

Net interest income (TE) $ 1,038 $ 1,025 $ 1,043

Noninterest income 909 797 802

Total revenue (TE) 1,947 1,822 1,845

Provision for credit losses 4 (107) 20

Noninterest expense 1,170 1,112 1,128

Income (loss) from continuing operations attributable to Key 627 643 575

Income (loss) from discontinued operations, net of taxes 2 2 7

Net income (loss) attributable to Key 629 645 582



Income (loss) from continuing operations attributable to Key common 601 616 549 shareholders

Income (loss) from discontinued operations, net of taxes 2 2 7

Net income (loss) attributable to Key common shareholders 603 618 556



Per common share

Income (loss) from continuing operations attributable to Key common $ .65 $ .65 $ .57 shareholders

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

Net income (loss) attributable to Key common shareholders ^(a) .65 .66 .57



Income (loss) from continuing operations attributable to Key common .64 .65 .56 shareholders - assuming dilution

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

Net income (loss) attributable to Key common shareholders - assuming dilution ^ .64 .65 .57 (a)



Cash dividends declared .195 .185 .185

Book value at period end 16.76 16.82 16.53

Tangible book value at period end 13.72 13.80 13.61

Market price at period end 23.13 21.62 16.41



Performance ratios

From continuing operations:

Return on average total assets 1.34 %1.41 %1.35 %

Return on average common equity 15.31 15.28 13.65

Return on average tangible common equity ^(b) 18.69 18.55 16.61

Net interest margin (TE) 2.44 2.47 2.70

Cash efficiency ratio ^(b) 59.4 60.2 60.3



From consolidated operations:

Return on average total assets 1.35 %1.41 %1.36 %

Return on average common equity 15.36 15.33 13.82

Return on average tangible common equity ^(b) 18.75 18.61 16.82

Net interest margin (TE) 2.44 2.46 2.69

Loan to deposit ^(c) 68.9 66.5 76.5



Capital ratios at period end

Key shareholders' equity to assets 9.4 %9.4 %10.6 %

Key common shareholders' equity to assets 8.4 8.4 9.5

Tangible common equity to tangible assets ^(b) 6.9 7.0 7.9

Common Equity Tier 1^ (d) 9.4 9.6 9.7

Tier 1 risk-based capital ^(d) 10.7 10.9 11.1

Total risk-based capital ^(d) 12.4 12.7 13.4

Leverage ^(d) 8.4 8.4 8.9



Asset quality - from continuing operations

Net loan charge-offs $ 19 $ 29 $ 135

Net loan charge-offs to average loans .08 %.11 %.53 %

Allowance for loan and lease losses $ 1,061 $ 1,084 $ 1,626

Allowance for credit losses 1,221 1,236 1,823

Allowance for loan and lease losses to period-end loans 1.04 %1.10 %1.61 %

Allowance for credit losses to period-end loans 1.20 1.25 1.80

Allowance for loan and lease losses to nonperforming loans 233.7 195.7 207.1

Allowance for credit losses to nonperforming loans 268.9 223.1 232.2

Nonperforming loans at period-end $ 454 $ 554 $ 785

Nonperforming assets at period-end 489 599 937

Nonperforming loans to period-end portfolio loans .45 %.56 %.78 %

Nonperforming assets to period-end portfolio loans plus OREO and other .48 .61 .92 nonperforming assets



Trust assets

Assets under management $ 55,806 $ 52,867 $ 47,086



Other data

Average full-time equivalent employees 16,797 17,009 17,029

Branches 999 1,000 1,073

Taxable-equivalent adjustment $ 5 $ 9 $ 8



Financial Highlights (continued)

(Dollars in millions, except per share amounts)

Twelve months ended

12/31/2021 12/31/2020

Summary of operations

Net interest income (TE) $ 4,098 $ 4,063

Noninterest income 3,194 2,652

Total revenue (TE) 7,292 6,715

Provision for credit losses (418) 1,021

Noninterest expense 4,429 4,109

Income (loss) from continuing operations attributable to Key 2,612 1,329

Income (loss) from discontinued operations, net of taxes 13 14

Net income (loss) attributable to Key 2,625 1,343



Income (loss) from continuing operations attributable to Key common 2,506 1,223 shareholders

Income (loss) from discontinued operations, net of taxes 13 14

Net income (loss) attributable to Key common shareholders 2,519 1,237



Per common share

Income (loss) from continuing operations attributable to Key common $ 2.64 $ 1.26 shareholders

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

Net income (loss) attributable to Key common shareholders ^(a) 2.65 1.28



Income (loss) from continuing operations attributable to Key common 2.62 1.26 shareholders - assuming dilution

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

Net income (loss) attributable to Key common shareholders - assuming dilution ^ 2.63 1.27 (a)



Cash dividends paid .75 .74



Performance ratios

From continuing operations:

Return on average total assets 1.46 %.82 %

Return on average common equity 15.90 7.77

Return on average tangible common equity ^(b) 19.37 9.51

Net interest margin (TE) 2.50 2.77

Cash efficiency ratio ^(b) 59.9 60.2



From consolidated operations:

Return on average total assets 1.46 %.82 %

Return on average common equity 15.98 7.86

Return on average tangible common equity ^(b) 19.47 9.62

Net interest margin (TE) 2.50 2.76



Asset quality - from continuing operations

Net loan charge-offs $ 184 $ 443

Net loan charge-offs to average total loans .18 %.43 %



Other data

Average full-time equivalent employees 16,974 16,826



Taxable-equivalent adjustment 27 29

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

The following table entitled "GAAP to Non-GAAP Reconciliations" presents(b) the computations of certain financial measures related to "tangible common 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) December 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 Twelve months ended

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Tangible common equity to tangible assets at period-end

Key shareholders' equity (GAAP) $ 17,423 $ 17,510 $ 17,981

Less: Intangible assets ^(a) 2,820 2,814 2,848

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

Tangible common equity (non-GAAP) $ 12,747 $ 12,840 $ 13,277

Total assets (GAAP) $ 186,346 $ 187,035 $ 170,336

Less: Intangible assets ^(a) 2,820 2,814 2,848

Tangible assets (non-GAAP) $ 183,526 $ 184,221 $ 167,488

Tangible common equity to tangible assets ratio (non-GAAP) 6.95 %6.97 %7.93 %

Pre-provision net revenue

Net interest income (GAAP) $ 1,033 $ 1,016 $ 1,035 $ 4,071 $ 4,034

Plus: Taxable-equivalent adjustment 5 9 8 27 29

Noninterest income 909 797 802 3,194 2,652

Less: Noninterest expense 1,170 1,112 1,128 4,429 4,109

Pre-provision net revenue from continuing operations (non-GAAP) $ 777 $ 710 $ 717 $ 2,863 $ 2,606

Average tangible common equity

Average Key shareholders' equity (GAAP) $ 17,471 $ 17,899 $ 17,905 $ 17,665 $ 17,636

Less: Intangible assets (average) ^(c) 2,814 2,823 2,855 2,829 2,878

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

Average tangible common equity (non-GAAP) $ 12,757 $ 13,176 $ 13,150 $ 12,936 $ 12,858

Return on average tangible common equity from continuing operations

Net income (loss) from continuing operations attributable to Key common $ 601 $ 616 $ 549 $ 2,506 $ 1,223 shareholders (GAAP)

Average tangible common equity (non-GAAP) 12,757 13,176 13,150 12,936 12,858



Return on average tangible common equity from continuing operations (non-18.69 %18.55 %16.61 %19.37 %9.51 %GAAP)

Return on average tangible common equity consolidated

Net income (loss) attributable to Key common shareholders (GAAP) $ 603 $ 618 $ 556 $ 2,519 $ 1,237

Average tangible common equity (non-GAAP) 12,757 13,176 13,150 12,936 12,858



Return on average tangible common equity consolidated (non-GAAP) 18.75 %18.61 %16.82 %19.47 %9.62 %

GAAP to Non-GAAP Reconciliations (continued)

(Dollars in millions)

Three months ended Twelve months ended

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Cash efficiency ratio

Noninterest expense (GAAP) $ 1,170 $ 1,112 $ 1,128 $ 4,429 $ 4,109

Less: Intangible asset amortization 14 15 15 58 65

Adjusted noninterest expense (non-GAAP) $ 1,156 $ 1,097 $ 1,113 $ 4,371 $ 4,044



Net interest income (GAAP) $ 1,033 $ 1,016 $ 1,035 $ 4,071 $ 4,034

Plus: Taxable-equivalent adjustment 5 9 8 27 29

Noninterest income 909 797 802 3,194 2,652

Total taxable-equivalent revenue (non-GAAP)$ 1,947 $ 1,822 $ 1,845 $ 7,292 $ 6,715



Cash efficiency ratio (non-GAAP) 59.4 %60.2 %60.3 %59.9 %60.2 %



For the three months ended December 31, 2021, September 30, 2021, and(a) December 31, 2020, intangible assets exclude $3 million, $3 million, and $4 million, respectively, of period-end purchased credit card receivables.

(b) Net of capital surplus.

For the three months ended December 31, 2021, September 30, 2021, and December 31, 2020, average intangible assets exclude $3 million, $3(c) million, and $5 million, respectively, of average purchased credit card receivables. For the twelve months ended months ended December 31, 2021, and December 31, 2020, average intangible assets exclude $4 million and $6 million, respectively, of average purchased credit card receivables.

GAAP = U.S. generally accepted accounting principles

Consolidated Balance Sheets

(Dollars in millions)



12/31/2021 9/30/2021 12/31/2020

Assets

Loans $ 101,854 $ 98,609$ 101,185

Loans held for sale 2,729 1,805 1,583

Securities available for sale 45,364 40,594 27,556

Held-to-maturity securities 7,539 8,423 7,595

Trading account assets 701 902 735

Short-term investments 11,010 19,608 16,194

Other investments 639 607 621

Total earning assets 169,836 170,548 155,469

Allowance for loan and lease losses (1,061) (1,084) (1,626)

Cash and due from banks 913 763 1,091

Premises and equipment 681 678 753

Goodwill 2,693 2,673 2,664

Other intangible assets 130 144 188

Corporate-owned life insurance 4,327 4,312 4,286

Accrued income and other assets 8,265 8,404 6,812

Discontinued assets 562 597 699

Total assets $ 186,346 187,035 170,336



Liabilities

Deposits in domestic offices:

NOW and money market deposit accounts $ 89,207$ 87,242$ 80,427

Savings deposits 7,503 7,259 5,913

Certificates of deposit ($100,000 or more) 1,705 1,890 2,733

Other time deposits 2,153 2,315 3,010

Total interest-bearing deposits 100,568 98,706 92,083

Noninterest-bearing deposits 52,004 53,225 43,199

Total deposits 152,572 151,931 135,282

Federal funds purchased and securities sold under repurchase agreements 173 228 220

Bank notes and other short-term borrowings 588 767 759

Accrued expense and other liabilities 3,548 3,434 2,385

Long-term debt 12,042 13,165 13,709

Total liabilities 168,923 169,525 152,355



Equity

Preferred stock 1,900 1,900 1,900

Common shares 1,257 1,257 1,257

Capital surplus 6,278 6,141 6,281

Retained earnings 14,553 14,133 12,751

Treasury stock, at cost (5,979) (5,876) (4,946)

Accumulated other comprehensive income (loss) (586) (45) 738

Key shareholders' equity 17,423 17,510 17,981

Total liabilities and equity $ 186,346 $ 187,035 $ 170,336



Common shares outstanding (000) 928,850 930,544 975,773

Consolidated Statements of Income

(Dollars in millions, except per share amounts)

Three months ended Twelve months ended

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Interest income

Loans $ 873 $ 882 $ 933 $ 3,532 $ 3,866

Loans held for sale 15 13 11 50 69

Securities available for sale 148 135 119 546 484

Held-to-maturity securities 52 43 51 185 222

Trading account assets 5 4 4 19 20

Short-term investments 8 9 4 28 18

Other investments 2 1 3 7 6

Total interest income 1,103 1,087 1,125 4,367 4,685

Interest expense

Deposits 15 15 28 67 347

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

Bank notes and other short-term borrowings 2 2 1 8 12

Long-term debt 53 54 61 221 286

Total interest expense 70 71 90 296 651

Net interest income 1,033 1,016 1,035 4,071 4,034

Provision for credit losses 4 (107) 20 (418) 1,021

Net interest income after provision for credit losses 1,029 1,123 1,015 4,489 3,013

Noninterest income

Trust and investment services income 135 129 123 530 507

Investment banking and debt placement fees 323 235 243 937 661

Service charges on deposit accounts 90 91 82 337 311

Operating lease income and other leasing gains 37 37 39 148 167

Corporate services income 73 69 63 261 228

Cards and payments income 86 111 97 415 368

Corporate-owned life insurance income 34 33 38 128 139

Consumer mortgage income 25 33 43 131 176

Commercial mortgage servicing fees 48 34 32 160 80

Other income 58 25 42 147 15

Total noninterest income 909 797 802 3,194 2,652

Noninterest expense

Personnel 674 640 661 2,561 2,336

Net occupancy 75 74 75 300 298

Computer processing 73 67 62 284 232

Business services and professional fees 70 56 54 227 196

Equipment 25 25 26 100 100

Operating lease expense 31 30 35 126 138

Marketing 37 32 30 126 97

Intangible asset amortization 14 15 15 58 65

Other expense 171 173 170 647 647

Total noninterest expense 1,170 1,112 1,128 4,429 4,109

Income (loss) from continuing operations before income taxes 768 808 689 3,254 1,556

Income taxes 141 165 114 642 227

Income (loss) from continuing operations 627 643 575 2,612 1,329

Income (loss) from discontinued operations, net of taxes 2 2 7 13 14

Net income (loss) 629 645 582 2,625 1,343

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

Net income (loss) attributable to Key $ 629 $ 645 $ 582 $ 2,625 $ 1,343



Income (loss) from continuing operations attributable to Key common $ 601 $ 616 $ 549 $ 2,506 $ 1,223 shareholders

Net income (loss) attributable to Key common shareholders 603 618 556 2,519 1,237

Per common share

Income (loss) from continuing operations attributable to Key common $ .65$ .65$ .57$ 2.64$ 1.26shareholders

Income (loss) from discontinued operations, net of taxes - - 0.01 .01 .01

Net income (loss) attributable to Key common shareholders ^(a) .65 .66 .57 2.65 1.28

Per common share - assuming dilution

Income (loss) from continuing operations attributable to Key common $ .64$ .65$ .56$ 2.62$ 1.26shareholders

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

Net income (loss) attributable to Key common shareholders ^(a) .64 .65 .57 2.63 1.27



Cash dividends declared per common share $ .195 $ .185 $ .185 $ .750$ .740



Weighted-average common shares outstanding (000) 922,970 942,446 967,987 947,065 967,783

Effect of common share options and other stock awards 11,758 10,077 8,473 10,349 7,024

Weighted-average common shares and potential common shares outstanding (000) ^ 934,729 952,523 976,460 957,414 974,807 (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)

Fourth Quarter 2021 Third Quarter 2021 Fourth 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) $ 49,510$ 447 3.58 %$ 49,868$ 445 3.54 %$ 53,562$ 477 3.54 %

Real estate - commercial mortgage 13,671 121 3.51 13,306 120 3.56 12,862 121 3.74

Real estate - construction 2,119 19 3.50 2,134 19 3.53 1,959 19 3.79

Commercial lease financing 3,953 26 2.57 3,922 27 2.80 4,353 32 2.92

Total commercial loans 69,253 613 3.51 69,230 611 3.50 72,736 649 3.55

Real estate - residential mortgage 15,017 102 2.72 13,168 92 2.78 8,968 74 3.29

Home equity loans 8,603 79 3.64 8,894 84 3.75 9,410 91 3.81

Consumer direct loans 5,509 60 4.33 5,175 59 4.55 4,583 56 4.93

Credit cards 941 24 10.13 917 23 10.07 973 26 10.57

Consumer indirect loans 74 - - 2,754 22 3.15 5,040 45 3.56

Total consumer loans 30,144 265 3.49 30,908 280 3.60 28,974 292 4.01

Total loans 99,397 878 3.50 100,138 891 3.53 101,710 941 3.68

Loans held for sale 2,202 15 2.83 1,447 13 3.66 1,621 11 2.76

Securities available for sale ^(b), (e) 42,329 148 1.39 36,923 135 1.48 28,046 119 1.75

Held-to-maturity securities ^(b) 7,991 52 2.61 6,507 43 2.66 7,939 51 2.56

Trading account assets 853 5 2.48 743 4 2.19 744 4 2.21

Short-term investments 15,505 8 .20 19,274 9 .18 14,111 4 .14

Other investments ^(e) 634 2 1.15 614 1 .99 615 3 1.31

Total earning assets 168,911 1,108 2.60 165,646 1,096 2.64 154,786 1,133 2.93

Allowance for loan and lease losses (1,081) (1,222) (1,715)

Accrued income and other assets 17,133 16,947 15,861

Discontinued assets 574 618 717

Total assets $ 185,537 $ 181,989 $ 169,649

Liabilities

NOW and money market deposit accounts $ 88,110$ 11.05 $ 85,333$ 10.05 $ 80,636$ 12.06

Savings deposits 7,375 - .01 7,117 - .01 5,737 - .03

Certificates of deposit ($100,000 or more) 1,793 2 .53 1,975 3 .59 2,983 9 1.20

Other time deposits 2,233 2 .21 2,404 2 .26 3,209 7 .80

Total interest-bearing deposits 99,511 15 .06 96,829 15 .06 92,565 28 .12

Federal funds purchased and securities sold 230 - .02 231 - .02 220 - .04 under repurchase agreements

Bank notes and other short-term borrowings 789 2 1.45 671 2 1.11 791 1 .73

Long-term debt ^(f), (g) 12,159 53 1.74 12,601 54 1.73 12,118 61 2.05

Total interest-bearing liabilities 112,689 70 .25 110,332 71 .26 105,694 90 .34

Noninterest-bearing deposits 51,494 50,087 43,156

Accrued expense and other liabilities 3,309 3,053 2,177

Discontinued liabilities ^(g) 574 618 717

Total liabilities $ 168,066 $ 164,090 $ 151,744

Equity

Key shareholders' equity $ 17,471 $ 17,899 $ 17,905

Noncontrolling interests - - -

Total equity 17,471 17,899 17,905

Total liabilities and equity $ 185,537 $ 181,989 $ 169,649

Interest rate spread (TE) 2.36 % 2.38 % 2.59 %

Net interest income (TE) and net interest margin (TE) $ 1,038 2.44 % $ 1,025 2.47 % $ 1,043 2.70 %

TE adjustment ^(b) 5 9 8

Net interest income, GAAP basis $ 1,033 $ 1,016 $ 1,035

(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.

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 December 31, 2021, September 30, 2021, and December 31, 2020.

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

Commercial and industrial average balances include $141 million, $137(d) million, and $129 million of assets from commercial credit cards for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020, 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

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

(Dollars in millions)

Twelve months ended December 31, 2021 Twelve months ended December 31, 2020

Average Yield/ Average Yield/

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

Assets

Loans: ^(b), (c)

Commercial and industrial ^(d) $ 50,931$ 1,795 3.52 %$ 55,145$ 1,977 3.59 %

Real estate - commercial mortgage 13,118 472 3.60 13,279 521 3.92

Real estate - construction 2,113 77 3.61 1,843 74 3.99

Commercial lease financing 4,019 114 2.84 4,497 139 3.09

Total commercial loans 70,181 2,458 3.50 74,764 2,711 3.63

Real estate - residential mortgage 12,252 348 2.84 8,094 284 3.50

Home equity loans 8,967 336 3.74 9,772 392 4.01

Consumer direct loans 5,105 233 4.56 4,213 221 5.26

Credit cards 925 94 10.11 1,001 107 10.65

Consumer indirect loans 2,839 90 3.19 4,845 180 3.72

Total consumer loans 30,088 1,101 3.66 27,925 1,184 4.24

Total loans 100,269 3,559 3.55 102,689 3,895 3.79

Loans held for sale 1,700 50 2.96 1,972 69 3.49

Securities available for sale ^(b), (e) 35,765 546 1.53 23,742 484 2.10

Held-to-maturity securities ^(b) 7,035 185 2.63 8,938 222 2.49

Trading account assets 820 19 2.35 814 20 2.47

Short-term investments 17,529 28 .16 9,096 18 .20

Other investments ^(e) 621 7 1.14 635 6 .87

Total earning assets 163,739 4,394 2.69 147,886 4,714 3.20

Allowance for loan and lease losses (1,340) (1,481)

Accrued income and other assets 16,520 15,650

Discontinued assets 632 775

Total assets $ 179,551 $ 162,830

Liabilities

NOW and money market deposit accounts $ 84,736$ 41.05 $ 75,733$ 206.27

Savings deposits 6,893 1 .02 5,252 2 .04

Certificates of deposit ($100,000 or more) 2,135 16 .72 4,520 83 1.83

Other time deposits 2,540 9 .37 4,041 56 1.38

Total interest-bearing deposits 96,304 67 .07 89,546 347 .39

Federal funds purchased and securities sold 239 - .02 670 6 .88 under repurchase agreements

Bank notes and other short-term borrowings 770 8 1.08 1,452 12 .85

Long-term debt ^(f), (g) 12,391 221 1.79 12,578 286 2.36

Total interest-bearing liabilities 109,704 296 .27 104,246 651 .63

Noninterest-bearing deposits 48,731 37,740

Accrued expense and other liabilities 2,819 2,433

Discontinued liabilities ^(g) 632 775

Total liabilities $ 161,886 $ 145,194

Equity

Key shareholders' equity $ 17,665 $ 17,636

Noncontrolling interests - -

Total equity 17,665 17,636

Total liabilities and equity $ 179,551 $ 162,830

Interest rate spread (TE) 2.42 % 2.57 %

Net interest income (TE) and net interest margin (TE) $ 4,098 2.50 % $ 4,063 2.77 %

TE adjustment ^(b) 27 29

Net interest income, GAAP basis $ 4,071 $ 4,034



(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.

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 twelve months ended months ended December 31, 2021, and December 31, 2020, respectively.

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

Commercial and industrial average balances include $134 million and $135(d) million of assets from commercial credit cards for the twelve months ended months ended December 31, 2021, and December 31, 2020, 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

Noninterest Expense

(Dollars in millions)



Three months ended Twelve months ended

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Personnel ^(a) $ 674$ 640$ 661$ 2,561$ 2,336

Net occupancy 75 74 75 300 298

Computer processing 73 67 62 284 232

Business services and professional fees 70 56 54 227 196

Equipment 25 25 26 100 100

Operating lease expense 31 30 35 126 138

Marketing 37 32 30 126 97

Intangible asset amortization 14 15 15 58 65

Other expense 171 173 170 647 647

Total noninterest expense $ 1,170 $ 1,112 $ 1,128 $ 4,429$ 4,109

Average full-time equivalent employees ^(b)16,797 17,009 17,029 16,974 16,826

(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

(Dollars in millions)



Three months ended Twelve months ended

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Salaries and contract labor $ 342$ 328$ 342$ 1,311$ 1,329

Incentive and stock-based compensation243 212 208 861 627

Employee benefits 89 100 89 388 350

Severance - - 22 1 30

Total personnel expense $ 674$ 640$ 661$ 2,561$ 2,336

Loan Composition

(Dollars in millions)



Percent change 12/31/2021 vs

12/31/2021 9/30/2021 12/31/2020 9/30/2021 12/31/2020

Commercial and industrial ^(a) $ 50,525$ 49,553$ 52,9072.0 % (4.5) %

Commercial real estate:

Commercial mortgage 14,244 13,674 12,687 4.2 12.3

Construction 1,996 2,120 1,987 (5.8) .5

Total commercial real estate loans16,240 15,794 14,674 2.8 10.7

Commercial lease financing ^(b) 4,071 3,982 4,399 2.2 (7.5)

Total commercial loans 70,836 69,329 71,980 2.2 (1.6)

Residential - prime loans:

Real estate - residential mortgage15,756 14,204 9,298 10.9 69.5

Home equity loans 8,467 8,747 9,360 (3.2) (9.5)

Total residential - prime loans 24,223 22,951 18,658 5.5 29.8

Consumer direct loans 5,753 5,324 4,714 8.1 22.0

Credit cards 972 928 989 4.7 (1.7)

Consumer indirect loans 70 77 4,844 (9.1) (98.6)

Total consumer loans 31,018 29,280 29,205 5.9 6.2

Total loans ^(c), (d) $ 101,854 $ 98,609$ 101,185 3.3 % .7 %

(a) Loan balances include $139 million, $139 million, and $127 million of commercial credit card balances at December 31, 2021, September 30, 2021, and December 31, 2020, respectively.

Commercial lease financing includes receivables held as collateral for a(b) secured borrowing of $16 million, $16 million, and $23 million at December 31, 2021, September 30, 2021, and December 31, 2020, respectively. Principal reductions are based on the cash payments received from these related receivables.

(c) Total loans exclude loans of $567 million at December 31, 2021, $602 million at September 30, 2021, and $710 million at December 31, 2020, related to the discontinued operations of the education lending business.

Accrued interest of $198 million, $211 million, and $241 million at(d) December 31, 2021, September 30, 2021, and December 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 12/31/2021 vs

12/31/2021 9/30/2021 12/31/2020 9/30/2021 12/31/2020

Commercial and industrial $ 1,438$ 122$ 249N/M 477.5 %

Real estate - commercial mortgage 1,010 1,446 1,014 (30.2) (0.4)

Real estate - residential mortgage281 237 264 18.6 6.4

Consumer direct loans - - 56 N/M N/M

Total loans held for sale $ 2,729$ 1,805 $ 1,583 51.2 %72.4 %



N/M = Not Meaningful

Summary of Changes in Loans Held for Sale

(Dollars in millions)



4Q21 3Q21 2Q21 1Q21 4Q20

Balance at beginning of period $ 1,805$ 1,537$ 2,296$ 1,583$ 1,724

New originations 5,741 3,328 3,573 4,010 3,835

Transfers from (to) held to maturity, net(1) 3,305 (71) 83 (24)

Loan sales (4,779) (6,405) (4,195) (3,303) (3,932)

Loan draws (payments), net (12) 8 (27) (73) (19)

Valuation and other adjustments (25) 32 (39) (4) -

Balance at end of period $ 2,729$ 1,805$ 1,537$ 2,296$ 1,583

Summary of Loan and Lease Loss Experience From Continuing Operations

(Dollars in millions)



Three months ended Twelve months ended

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Average loans outstanding $ 99,397 $ 100,138 $ 101,710 $ 100,269 $ 102,689

Allowance for loan and lease losses at the end of the prior period $ 1,084 $ 1,220 $ 1,730 $ 1,626 $ 900

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

Allowance for loan and lease losses at the beginning of the period 1,084 1,220 1,730 1,626 1,104

Loans charged off:

Commercial and industrial 33 27 119 174 351



Real estate - commercial mortgage 1 - 1 40 19

Real estate - construction - - - - -

Total commercial real estate loans 1 - 1 40 19

Commercial lease financing 1 1 19 6 35

Total commercial loans 35 28 139 220 405

Real estate - residential mortgage (1) (2) - (2) 2

Home equity loans 2 1 1 9 11

Consumer direct loans 7 7 7 29 37

Credit cards 6 6 7 27 39

Consumer indirect loans 1 26 6 39 28

Total consumer loans 15 38 21 102 117

Total loans charged off 50 66 160 322 522

Recoveries:

Commercial and industrial 23 20 15 83 34



Real estate - commercial mortgage 1 1 - 9 3

Real estate - construction - - - - -

Total commercial real estate loans 1 1 - 9 3

Commercial lease financing - 6 - 7 1

Total commercial loans 24 27 15 99 38

Real estate - residential mortgage 1 1 - 3 1

Home equity loans 1 2 1 5 7

Consumer direct loans 2 2 1 8 7

Credit cards 2 1 2 8 8

Consumer indirect loans 1 4 6 15 18

Total consumer loans 7 10 10 39 41

Total recoveries 31 37 25 138 79

Net loan charge-offs (19) (29) (135) (184) (443)

Provision (credit) for loan and lease losses (4) (107) 31 (381) 965

Allowance for loan and lease losses at end of period $ 1,061 $ 1,084 $ 1,626 $ 1,061 $ 1,626



Liability for credit losses on lending-related commitments at the end of the prior $ 152 $ 152 $ 208 $ 197 $ 68 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 152 152 208 197 141 period

Provision (credit) for losses on lending-related commitments 8 - (11) (37) 56

Liability for credit losses on lending-related commitments at end of period ^ $ 160 $ 152 $ 197 $ 160 $ 197 (c)



Total allowance for credit losses at end of period $ 1,221 $ 1,236 $ 1,823 $ 1,221 $ 1,823



Net loan charge-offs to average total loans .08 %.11 %.53 %.18 %.43 %

Allowance for loan and lease losses to period-end loans 1.04 1.10 1.61 1.04 1.61

Allowance for credit losses to period-end loans 1.20 1.25 1.80 1.20 1.80

Allowance for loan and lease losses to nonperforming loans 233.7 195.7 207.1 233.7 207.1

Allowance for credit losses to nonperforming loans 268.9 223.1 232.2 268.9 232.2



Discontinued operations - education lending business:

Loans charged off $ 1 1 $ 1 $ 4 $ 5

Recoveries - 1 2 2 5

Net loan charge-offs $ (1) - $ 1 $ (2) $ -

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

(b) Twelve months ended December 30, 2020, excludes $4 million related to the 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)

4Q21 3Q21 2Q21 1Q21 4Q20

Net loan charge-offs $ 19 $ 29 $ 22 $ 114 $ 135

Net loan charge-offs to average total loans .08 %.11 %.09 %.46 %.53 %

Allowance for loan and lease losses $ 1,061 $ 1,084 $ 1,220 $ 1,438 $ 1,626

Allowance for credit losses ^(a) 1,221 1,236 1,372 1,616 1,823

Allowance for loan and lease losses to period-end loans 1.04 %1.10 %1.21 %1.42 %1.61 %

Allowance for credit losses to period-end loans 1.20 1.25 1.36 1.60 1.80

Allowance for loan and lease losses to nonperforming loans 233.7 195.7 175.8 197.5 207.1

Allowance for credit losses to nonperforming loans 268.9 223.1 197.7 222.0 232.2

Nonperforming loans at period end $ 454 $ 554 $ 694 $ 728 $ 785

Nonperforming assets at period end 489 599 738 790 937

Nonperforming loans to period-end portfolio loans .45 %.56 %.69 %.72 %.78 %

Nonperforming assets to period-end portfolio loans plus OREO and other .48 .61 .73 .78 .92 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)

12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020

Commercial and industrial $ 191 $ 253 $ 355 $ 387 $ 385



Real estate - commercial mortgage 44 49 66 66 104

Real estate - construction - - - - -

Total commercial real estate loans 44 49 66 66 104

Commercial lease financing 4 5 7 8 8

Total commercial loans 239 307 428 461 497

Real estate - residential mortgage 72 93 99 95 110

Home equity loans 135 146 146 148 154

Consumer direct loans 4 4 4 5 5

Credit cards 3 3 3 3 2

Consumer indirect loans 1 1 14 16 17

Total consumer loans 215 247 266 267 288

Total nonperforming loans 454 554 694 728 785

OREO 8 8 9 12 100

Nonperforming loans held for sale 24 35 32 47 49

Other nonperforming assets 3 2 3 3 3

Total nonperforming assets $ 489 $ 599 $ 738 $ 790 $ 937

Accruing loans past due 90 days or more 68 82 74 92 86

Accruing loans past due 30 through 89 days 165 164 190 191 241

Restructured loans - accruing and nonaccruing ^(a) 220 270 334 376 363

Restructured loans included in nonperforming loans ^(a) 99 146 177 192 229

Nonperforming assets from discontinued operations - education lending business 4 4 5 5 5

Nonperforming loans to period-end portfolio loans .45 %.56 %.69 %.72 %.78 %

Nonperforming assets to period-end portfolio loans plus OREO and other .48 .61 .73 .78 .92 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

(Dollars in millions)

4Q21 3Q21 2Q21 1Q21 4Q20

Balance at beginning of period $ 554$ 694$ 728$ 785$ 834

Loans placed on nonaccrual status 116 116 186 196 300

Charge-offs (51) (66) (74) (135) (160)

Loans sold (38) (17) (10) (13) (9)

Payments (68) (136) (92) (37) (83)

Transfers to OREO (1) (1) - (3) (3)

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

Loans returned to accrual status (58) (36) (44) (65) (94)

Balance at end of period $ 454$ 554$ 694$ 728$ 785

Line of Business Results

(Dollars in millions)



Percentage change 4Q21 vs.

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

Consumer Bank

Summary of operations

Total revenue (TE) $ 839 $ 870 $ 852 $ 864 $ 896 (3.6) % (6.4) %

Provision for credit losses 13 (38) (70) (23) (5) 134.2 360.0

Noninterest expense 614 591 584 601 606 3.9 1.3

Net income (loss) attributable to Key 161 241 257 217 225 (33.2) (28.4)

Average loans and leases 37,792 39,796 40,598 39,249 39,448 (5.0) (4.2)

Average deposits 90,271 89,156 88,412 85,033 82,845 1.3 9.0

Net loan charge-offs 22 35 34 36 28 (37.1) (21.4)

Net loan charge-offs to average total loans.23 %.35 %.34 %.39 %.29 %(34.3) (20.7)

Nonperforming assets at period end $ 222 $ 254 $ 274 $ 276 $ 300 (12.6) (26.0)

Return on average allocated equity 18.05 %25.81 %28.53 %25.74 %25.60 %(30.1) (29.5)



Commercial Bank

Summary of operations

Total revenue (TE) $ 1,028 $ 886 $ 871 $ 858 $ 922 16.0 % 11.5 %

Provision for credit losses (12) (69) (131) (67) 44 (82.6) 127.3

Noninterest expense 501 470 451 443 499 6.6 .4

Net income (loss) attributable to Key 449 381 432 383 310 17.8 44.8

Average loans and leases 61,127 59,914 59,953 61,221 62,016 2.0 (1.4)

Average loans held for sale 1,962 1,190 1,341 1,237 1,285 64.9 52.7

Average deposits 59,537 56,522 54,814 51,894 52,489 5.3 13.4

Net loan charge-offs - (6) 9 78 108 (100.0) (100.0)

Net loan charge-offs to average total loans- %(.04) %.06 %.51 %.68 %(100.0) (100.0)

Nonperforming assets at period end $ 267 $ 345 $ 464 $ 514 $ 637 (22.6) (58.1)

Return on average allocated equity 21.54 %18.54 %20.69 %17.41 %23.79 %16.2 (9.5)

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

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SOURCE KeyCorp