Earnings Release

KeyCorp Reports Record First Quarter 2021 Net Income Of $591 Million, Or $.61 Per Diluted Common Share

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, a digital 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 shareholders	$	591		$	549		$	118		7.7	%	400.8	%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution	.61			.56			.12			8.9		408.3
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


(a)	The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial 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	$	133	8.1	%	—	%
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 gains	38		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	%


(a)	Commercial and industrial average loan balances include $126 million, $129 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 loans	197.5		%	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

	3/31/2021		12/31/2020		3/31/2020
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.
(b)	The table entitled "GAAP to Non-GAAP Reconciliations" in the attached financial supplement presents the computations of certain financial measures related to "tangible common equity." 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		975,773	976,205	977,189	—		(.1)	%
Open market repurchases and return of shares under employee compensation plans		(9,277)	(1,092)	(7,862)	749.5		18.0
Shares issued under employee compensation plans (net of cancellations)		6,091	660	5,992	822.9	%	1.7
	Shares outstanding at end of period	972,587	975,773	975,319	(.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	%


(a)	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 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 adjustments	69		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	$	36,189	2.4	%	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 adjustments	99		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 gains	38		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 that any list of risks and uncertainties or risk factors is complete. Factors that could cause Key's actual results to differ from those described in the forward-looking statements can be found in KeyCorp's Form 10-K for the year ended December 31, 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 other shocks, the extensive regulation of the U.S. financial services industry, and the 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			12/31/2020			3/31/2020
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 shareholders		591			549			118
	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 shareholders		$	.61		$	.57		$	.12
	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 shareholders — assuming dilution		.61			.56			.12
	Income (loss) from discontinued operations, net of taxes — assuming dilution		—			.01			—
	Net income (loss) attributable to Key common shareholders — assuming dilution ^(a)		.61			.57			.12

	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 nonperforming assets		.78			.92			.82

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.
(b)	The following table entitled "GAAP to Non-GAAP Reconciliations" presents 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)	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 common equity ratio have been a focus for some investors, and management believes these ratios may assist investors in analyzing Key's capital position without regard to the effects of intangible assets and preferred stock.

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

The cash efficiency ratio is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key's intangible asset amortization from the calculation. Management believes this ratio provide greater consistency and comparability between Key's results and those of its peer banks. Additionally, this ratio is used by analysts and investors as they develop earnings forecasts and peer bank analysis.

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

	Three months ended
	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 shareholders (GAAP)	$	591		$	549		$	118
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
	3/31/2021			12/31/2020			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		%

(a)	For the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, intangible assets exclude $4 million, $4 million, and $6 million, respectively, of period-end purchased credit card receivables.
(b)	Net of capital surplus.
(c)	For the three months ended March 31, 2021, December 31, 2020, and March 31, 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		12/31/2020		3/31/2020
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	$	176,203	170,336		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
			3/31/2021		12/31/2020		3/31/2020
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 shareholders			$	591	$	549	$	118
Net income (loss) attributable to Key common shareholders			595		556		119
Per common share
Income (loss) from continuing operations attributable to Key common shareholders			$	.61	$	.57	$	.12
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 shareholders			$	.61	$	.56	$	.12
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) ^(b)			974,297		976,460		976,110


(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 agreements	243		—		.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


(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.
(b)	Interest income on tax-exempt securities and loans has been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 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.
(d)	Commercial and industrial average balances include $126 million, $129 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.
(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
	3/31/2021		12/31/2020		3/31/2020
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
	3/31/2021		12/31/2020		3/31/2020
Salaries and contract labor	$	320	$	342	$	316
Incentive and stock-based compensation	196		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		12/31/2020		3/31/2020		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 loans	14,824		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 mortgage	10,300		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)	%


(a)	Loan balances include $126 million, $127 million, and $143 million of commercial credit card balances at March 31, 2021, December 31, 2020, and March 31, 2020, respectively.
(b)	Commercial lease financing includes receivables held as collateral for a secured borrowing of $21 million, $23 million, and $14 million at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. Principal reductions are based on the cash payments received from these related receivables.
(c)	Total loans exclude loans of $675 million at March 31, 2021, $710 million at December 31, 2020, and $821 million at March 31, 2020, related to the discontinued operations of the education lending business.
(d)	Accrued interest of $242 million, $241 million, and $241 million at 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
	3/31/2021		12/31/2020		3/31/2020		12/31/2020		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, net	83		(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 prior period	$	197		$	208		$	68
Liability for credit losses on contingent guarantees at the end of the prior period	—			—			7
Cumulative effect from change in accounting principle ^{(a), (b)}	—			—			66
Liability for credit losses on lending-related commitments at beginning of period	197			208			141
Provision (credit) for losses on lending-related commitments	(19)			(11)			20
Liability for credit losses on lending-related commitments at end of period ^(c)	$	178		$	197		$	161

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.
(b)	Three months ended March 31, 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)
	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 nonperforming assets	.78			.92			.97			.89			.82


(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)
	3/31/2021			12/31/2020			9/30/2020			6/30/2020			3/31/2020
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 nonperforming assets	.78			.92			.97			.89			.82

(a)

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

Summary of Changes in Nonperforming Loans From Continuing Operations
(in millions)
	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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Keycorp Beats

KeyCorp Reports Record First Quarter 2021 Net Income Of $591 Million, Or $.61 Per Diluted Common Share