Key Corp 3Q07 Presentation

8/14/2019 Key Corp 3Q07 Presentation

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PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995FORWARD-LOOKING STATEMENT DISCLOSURE

This presentation contains forward-looking statements, including statements about our financialcondition, results of operations, earnings outlook, asset quality trends and profitability. Forward-looking statements express management's current expectations or forecasts of future events and,by their nature, are subject to assumptions, risks and uncertainties. Although management

believes that the expectations and forecasts reflected in these forward-looking statements arereasonable, actual results could differ materially due to a variety of factors including: (1) changesin interest rates; (2) changes in trade, monetary or fiscal policy; (3) changes in general economicconditions, or in the condition of the local economies or industries in which we have significantoperations or assets, which could, among other things, materially impact credit quality trends and

our ability to generate loans; (4) increased competitive pressure among financial servicescompanies; (5) the inability to successfully execute strategic initiatives designed to grow revenuesand/or manage expenses; (6) consummation of significant business combinations or divestitures;(7) operational or risk management failures due to technological or other factors; (8) heightenedregulatory practices, requirements or expectations; (9) new legal obligations or liabilities or

unfavorable resolution of litigation; (10) adverse capital markets conditions; (11) continueddisruption in the fixed income markets; (12) disruption in the economy and general businessclimate as a result of terrorist activities or military actions; and (13) changes in accounting or taxpractices or requirements. Forward-looking statements are not guarantees of future performanceand should not be relied upon as representing management's views as of any subsequent date.We do not assume any obligation to update these forward-looking statements. For further

information regarding KeyCorp, please read KeyCorp's reports that are filed with the Securitiesand Exchange Commission and are available at www.sec.gov.


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Strategic Update

Fixed income market volatility adversely

impacts results

Continued focus on credit quality

On track to complete UBH (Union State Bank)acquisition

Completed acquisition of Tuition ManagementSystems


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Net Interest Margin (TE)Continuing Ops.

$700$716

$692

$722 $726 $726$744

$712$706

2.96%

2.70%

2.62%

3.68%

3.50%3.46%

3.40%

3.09%3.06% 3.05%

2.85% 2.85%

2.52%

3.66%3.61%

3.72%3.68%

3.63%

$200

$300

$400

$500

$600

$700

$800

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

2.25%

2.50%

2.75%

3.00%

3.25%

3.50%

3.75%

4.00%

4.25%

Net Interest Income Net Interest Spread Net Interest Margin

TE = Taxable Equivalent

$ in millions


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Change 3Q07 vs.3Q07 2Q07 3Q06 2Q07 3Q06

Trust and investment services income $119 $115 $137 $4 $(18)Service charges on deposit accounts 88 84 78 4 10

Investment banking and capital markets income 9 52 44 (43) (35)

Operating lease income 70 66 58 4 12

Letter of credit and loan fees 51 45 48 6 3

Corporate-owned life insurance income 27 32 23 (5) 4

Electronic banking fees 25 25 27 - (2)

Net gains (losses) from loan securitizations and sales (53) 33 14 (86) (67)

Net securities gains (losses) 4 2 (7) 2 11

Gains related to MasterCard Incorporated shares 27 40 - (13) 27Net gains from principal investing 9 90 28 (81) (19)

Other income 62 65 93 (3) (31)

Total noninterest income $438 $649 $543 $(211) $(105)

Noninterest IncomeContinuing Ops.

$ in millions


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Change 3Q07 vs.

3Q07 2Q07 3Q06 2Q07 3Q06

Personnel $383 $411 $418 $(28) $(35)

Net occupancy 60 59 62 1 (2)

Computer processing 49 49 52 - (3)

Operating lease expense 58 55 48 3 10

Professional fees 27 26 28 1 (1)

Equipment 22 24 26 (2) (4)

Marketing 21 20 32 1 (11)

Litigation reserve - 42 - (42) -

Provision for losses on lending-relatedcommitments 5 6 - (1) 5

Other expense 128 123 124 5 4

Total noninterest expense $753 $815 $790 $(62) $(37)

Noninterest ExpenseContinuing Ops.

$ in millions


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64.2 64.963.467.766.3

62.065.2 65.6 65.7

$0

$15

$30

$45

$60

$75

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

-10%

-5%

0%

5%

10%

15%

Average Loan Growth from Prior Year

$ in billions

CommercialConsumer

$44.317.7

$45.817.6

$46.717.5

$47.317.6

$47.617.6

Average LoansContinuing Ops.

$48.017.6

$48.317.4

$48.817.5

$49.718.0


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$ in billions

$49.4$47.9

$51.7$50.6$50.3$52.1$51.7$51.6$50.3

$0

$10

$20

$30

$40

$50

$60

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

-4%

0%

4%

8%

12%

16%

Average Core Deposit Growth from Prior YearAverage Core Deposit Growth Adjusted for McDonald Divestiture

Average Core DepositsContinuing Ops.

DDA

NOW/MMDASavingsCDs

$12.2

22.92.0

10.8

$12.6

23.91.9

11.0

$12.7

24.51.8

11.3

$13.0

25.31.8

11.5

$13.1

25.21.7

11.7

$13.4

25.11.7

11.9

$13.2

23.41.6

12.1

$14.0

23.01.6

12.0

$14.4

24.21.6

11.5


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Net C/O $ 59 $ 53 $ 43 $ 6 $ 16to Average Loans fromContinuing Operations 0.35 % 0.32 % 0.26 %

Nonperforming Loans $ 498 $ 276 $ 223 $ 222 $ 275

to EOP Loans 0.72 % 0.41 % 0.34 %

Nonperforming Assets $ 570 $ 378 $ 329 $ 192 $ 241to EOP Loans + OREO 0.83 % 0.57 % 0.50 %

Allowance $ 955 $ 945 $ 944 $ 10 $ 11to Total Loans 1.38 % 1.42 % 1.44 %to Non performing Loans 192 % 342 % 423 %

Change 3Q07 vs.3Q062Q073Q07 2Q07 3Q06

Asset Quality

$ in millions


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Capital Ratios

Tangible Equity to Tangible AssetsTier 1 Risk-based Capital

Peer MedianTangible Equity to Tangible AssetsPeer MedianTier 1 Risk-based Capital

6.68% 6.71% 6.68%6.81%

7.01% 6.97% 6.89%6.78%

6.68%

7.72%7.59% 7.64%

7.90%8.02%

8.15% 8.14%8.24%

7.92%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07


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Fourth Quarter 2007 Outlook

Low- to mid-single-digit rangeCore Deposit Growth

35 45 basis point range

Approximately 32%

$0.68 $0.74 per share

Net Charge-Offs

Effective Tax Rate

4th Quarter Earnings Outlook

Commercial: Mid- to upper-single-digit rangeConsumer: Low- to mid-single-digit rangeLoan Growth

Low to mid 3.30% rangeNet Interest Margin


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Appendix


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Community Banking

Great Lakes

Core Deposits: 36%Comml Loans: 39%

Northwest


Rocky Mountains


Northeast


15


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Average Balance % Increase (Decrease) vs.3Q07 2Q07 3Q06 2Q07 3Q06

Commercial, financial and agricultural 22,393$ 21,856$ 21,648$ 2.5 % 3.4 %

Real estate commercial mortgage 8,855 8,565 8,106 3.4 9.2

Real estate construction 8,285 8,243 7,965 .5 4.0

Commercial lease financing 10,172 10,096 9,850 .8 3.3

Total Commercial Loans 49,705 48,760 47,569 1.9 4.5

Real Estate residential 1,586 1,472 1,415 7.7 12.1

Home equity 10,883 10,752 11,017 1.2 (1.2)

Consumer direct 1,342 1,370 1,585 (2.0) (15.3)

Consumer indirect 4,164 3,961 3,594 5.1 15.9

Total Consumer Loans 17,975 17,555 17,611 2.4 2.1Total Loans 67,680$ 66,315$ 65,180$ 2.1 % 3.8 %

Average Loan Breakdown

$ in millionsContinuing Operations

16


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Commercial Portfolio*Credit Size

12.6%

28.4%

15.3%11.0%

27.4%

46.3%

23.2%

35.8%

98.5%

0.2%0.3%1.0%

0%

20%

40%

60%

80%

100%

$25

($ in millions)

Outstanding Commitments # of Obligations

as of 9/30/07

*Excludes commercial lease financing balances

17


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Net Charge-Offs to Average Loans

(1) Excludes Passenger Airline Lease Portfolio

0.27%

1.02%

0.32%

0.24% 0.22%0.26%

0.33% 0.35%0.32%

0.22%0.26%

0.00%

0.30%

0.60%

0.90%

1.20%

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

Peer Median S&P Regional & Diversified Bank Indices

(1)(1)

Continuing Operations

18


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Net Charge-Offs to Average Loans

Consumer(1)Commercial

0.46%

0.15%0.23%

0.12%

0.28%0.20%

0.29%

0.51%0.43%

0.36%0.45% 0.47%

0.30%

0.41%

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q071Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

(1)Excludes Champion Mortgage

by Loan Type

19


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$ in millions

$307

$393

$570

$378$353

$273

$329$308$320

0.44%0.46%

0.50%0.54%

0.83%

0.41%

0.54%

0.57%

0.50%0.46%

0.48%0.46%

0.60%

0.43% 0.44%

0.49%

0.62%

$0

$100

$200

$300

$400

$500

$600

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

0.20%

0.40%

0.60%

0.80%

1.00%

CommercialConsumerOREO + Other

Nonperforming Assets

$23712333

$14213530

$13815725

$14413529


$13588

106

$1189758

$1559999

$18195

102

$39310572

NPAs to Loans + OREO

20


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Allowance to Period-End Loans

1.44%1.45%

1.67%

1.44% 1.42% 1.44% 1.43% 1.38%1.42%

0.50%

1.00%

1.50%

2.00%

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07


21


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Allowance to NPLs

372%349%

304%

327%343%

423%439%

192%

342%

0%

100%

200%

300%

400%

500%

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07


22


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% ofWest Southwest Central Midwest Southeast Northeast Total Total

Nonowner-occupied:

Residential properties 1,445$ 309$ 477$ 185$ 1,093$ 234$ 3,743$ 21.4 %Multi-family properties 449 243 471 263 293 330 2,049 11.7

Retail properties 255 175 338 389 652 167 1,976 11.3Land and development 202 207 227 113 247 60 1,056 6.1Office buildings 309 91 138 194 244 165 1,141 6.5Warehouses 176 12 80 81 161 79 589 3.4Health facilities 123 14 56 125 146 142 606 3.5Manufacturing facilities 18 22 23 57 4 124 .7

Hotels/Motels 52

50 15 39 1 157 .9Other 199 2 92 211 22 179 705 4.0

3,228 1,075 1,929 1,599 2,954 1,361 12,146 69.5

Owner-occupied 1,494 109 483 2,006 204 1,044 5,340 30.5

Total 4,722$ 1,184$ 2,412$ 3,605$ 3,158$ 2,405$ 17,486$ 100.0 %

Nonowner-occupied:

Nonperforming loans $81 $7 $25 $106 $9 $228 N/M90+ days past due 32 4 36 N/M30 89 days past due 33 $16 1 14 20 29 113 N/M

Geographic Region

Commercial Real Estate Loans

September 30, 2007$ in millions

N/M = Not Meaningful

23


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Commercial Real Estate

Residential Properties: $3.7 Billion

$1.4 B

$0.3 B$0.5 B

$0.2 B

$1.1 B

$0.2 B

$0.9 B

$0.7 B

Nonperforming & Past Due Loans

$ in millions West SW Central MW SE NE Total

Nonperforming loans $80 $18 $97 $4 $19990+ days past due 32 3230 89 days past due 3 $16 1 12 3 14 49

24


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$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

2000 2001 2002 2003 2004 2005 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

Servicing Portfolio Average Escrow Deposits

Commercial Real Estate Servicing

$ in billions

AverageEscro

w

Deposits

Servicing Portfolio

25


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Loan

Balances

Average

FICO

Average

LTV

% of

Loans

LTV>90%

Regional Banking

Home Equity Loans and LinesFirst Lien $5,597 744 66 % 0.49 %Second Lien 4,077 739 75 3.64

Total Home Equity Loans and Lines $9,674 742 70 1.84

Nonaccrual LoansTotal First Lien $ 28 689 76 % 0.54 %

Total Second Lien 24 684 80 7.13Total Home Equity Nonaccrual loans $ 52 687 78 3.61

Key Home Equity Services - Home Imp Div (Secured)

Home Equity Loans and LinesFirst Lien $ 43 749 26 % 0.55 %Second Lien 1,187 729 80 32.28

Total Home Equity Loans and Lines $1,230 730 78 31.16

Nonaccrual LoansTotal First Lien 704 28 % N/M

Total Second Lien $ 9 671 88 47.70 %Total Home Equity Nonaccrual loans $ 9 672 86 46.33

Home Equity Loans

Period End BalanceSeptember 30, 2007N/M = Not Meaningful

$ in millions


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Key Corp 3Q07 Presentation

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