EX-99.1 2 a2q23earningsrelease.htm EX-99.1 Document

                                        
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KEYCORP REPORTS SECOND QUARTER 2023 NET INCOME OF $250 MILLION,
OR $.27 PER DILUTED COMMON SHARE

Strong, core funded balance sheet: period-end deposits up $1.0 billion compared to the prior quarter

Solid credit quality: net charge-offs to average loans of 17 basis points

Built capital: Common Equity Tier 1 of 9.2%(a)

Disciplined expense management: expenses down 9% from prior quarter and relatively stable versus the year-ago period

Net income includes $87 million, or $.09 per share from allowance build



    CLEVELAND, July 20, 2023 - KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $250 million, or $.27 per diluted common share for the second quarter of 2023. This compared to $275 million, or $.30 per diluted common share, for the first quarter of 2023 and $504 million, or $.54 per diluted common share, for the second quarter of 2022.


Comments from Chairman and CEO, Chris Gorman

"Key’s second quarter results reflect our durable relationship-based business model, sound risk management, and strong balance sheet. Our longstanding commitment to primacy continues to serve us well, resulting in period-end deposit growth of $1 billion from the prior quarter.

Additionally, our results demonstrate our ongoing commitment to expense discipline. Expenses were down nearly 9% from the prior quarter, and stable compared to last year. We remain focused on improving productivity and efficiency across our businesses.

Credit quality continues to be a strength for Key, with net charge-offs to average loans of 17 basis points. In the second quarter, we added to our allowance, which represents over 7 years of annualized net charge-offs.

We continue to manage capital consistent with our capital priorities, which include supporting our relationship clients and dividends. At the end of the second quarter, Key’s Common Equity Tier 1 ratio was 9.2%, up over 10 basis points from the prior quarter.

I am confident in the long-term outlook for Key and in our ability to deliver value to all of our stakeholders.”








(a)June 30, 2023 ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 2

Selected Financial Highlights
Dollars in millions, except per share dataChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Income (loss) from continuing operations attributable to Key common shareholders$250 $275 $504 (9.1)%(50.4)%
Income (loss) from continuing operations attributable to Key common shareholders per common share — assuming dilution
.27 .30 .54 (10.0)(50.0)
Return on average tangible common equity from continuing operations (a)
11.04 %13.16 %20.90 %N/AN/A
Return on average total assets from continuing operations.58 .66 1.16 N/AN/A
Common Equity Tier 1 ratio (b)
9.2 9.1 9.2 N/AN/A
Book value at period end$12.18 $12.70 $13.48 (4.1)(9.6)
Net interest margin (TE) from continuing operations2.12 %2.47 %2.61 %N/AN/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)June 30, 2023 ratio is estimated.
TE = Taxable Equivalent, N/A = Not Applicable

INCOME STATEMENT HIGHLIGHTS
Revenue
Dollars in millionsChange 2Q23 vs.
 2Q231Q232Q221Q232Q22
Net interest income (TE)$986 $1,106 $1,104 (10.8)%(10.7)%
Noninterest income609 608 688 .2 (11.5)
Total revenue$1,595 $1,714 $1,792 (6.9)%(11.0)%
TE = Taxable Equivalent
Taxable-equivalent net interest income was $986 million for the second quarter of 2023 and the net interest margin was 2.12%. Compared to the second quarter of 2022, net interest income decreased $118 million, and the net interest margin decreased by 49 basis points. The decline in net interest income and the net interest margin reflects higher interest-bearing deposit costs and a shift in funding mix to higher cost deposits and borrowings.

Compared to the first quarter of 2023, taxable-equivalent net interest income decreased by $120 million, and the net interest margin decreased by 35 basis points. The decline in net interest income and the net interest margin reflects higher interest-bearing deposit costs and a shift in funding mix to higher-cost deposits and borrowings.

Noninterest Income
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Trust and investment services income$126 $128 $137 (1.6)%(8.0)%
Investment banking and debt placement fees120 145 149 (17.2)(19.5)
Cards and payments income85 81 85 4.9 — 
Service charges on deposit accounts69 67 96 3.0 (28.1)
Corporate services income86 76 96 13.2 (10.4)
Commercial mortgage servicing fees50 46 45 8.7 11.1 
Corporate-owned life insurance income32 29 35 10.3 (8.6)
Consumer mortgage income14 11 14 27.3 — 
Operating lease income and other leasing gains23 25 28 (8.0)(17.9)
Other income4 — 3 N/M(33.3)
Total noninterest income$609 $608 $688 .2 %(11.5)%

    
    Compared to the second quarter of 2022, noninterest income decreased by $79 million. The decrease was driven by a $29 million decline in investment banking and debt placement fees, reflecting lower merger


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July 20, 2023
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and acquisition advisory fees and lower syndication fees. Service charges on deposit accounts decreased $27 million, reflecting a reduction in overdraft and non-sufficient funds fees and lower account analysis fees related to the interest rate environment. Additionally, trust and investment services declined $11 million, reflecting a decline in fixed income and equity trading, and corporate services income decreased $10 million.

Compared to the first quarter of 2023, noninterest income increased by $1 million. The increase was driven by broad-based growth across most fee categories, including a $10 million increase in corporate services income, reflecting an increase in income associated with customer derivatives trading. These increases were mostly offset by a $25 million decline in investment banking and debt placement fees due to lower merger and acquisition advisory fees and lower syndication fees.


Noninterest Expense
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Personnel expense$622 $701 $607 (11.3)%2.5 %
Net occupancy65 70 78 (7.1)(16.7)
Computer processing95 92 78 3.3 21.8 
Business services and professional fees41 45 52 (8.9)(21.2)
Equipment22 22 26 — (15.4)
Operating lease expense21 20 27 5.0 (22.2)
Marketing29 21 34 38.1 (14.7)
Other expense181 205 176 (11.7)2.8 
Total noninterest expense$1,076 $1,176 $1,078 (8.5)%(.2)%
    Compared to the second quarter of 2022, noninterest expense decreased by $2 million. The decline was driven by a $13 million decrease in net occupancy expense as we exit corporate facilities and a $11 million decline in business services and professional fees. Partly offsetting the decline was an increase in computer processing expense of $17 million, due to technology investments, and a $15 million increase in personnel expense, due to an increase in salaries as a result of higher merit increases and employee benefits.

    Compared to the first quarter of 2023, noninterest expense decreased $100 million. The decline was primarily driven by a $79 million decrease in personnel expense, reflective of lower incentive and stock-based compensation and a decline in severance expense. Additionally, other expense declined by $24 million, reflecting higher expenses related to corporate real estate rationalization in the prior quarter.

BALANCE SHEET HIGHLIGHTS
Average Loans
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Commercial and industrial (a)
$61,426 $60,281 $53,858 1.9 %14.1 %
Other commercial loans22,623 22,778 21,173 (.7)6.8 
Total consumer loans36,623 36,778 34,107 (.4)7.4 
Total loans$120,672 $119,837 $109,138 .7 %10.6 %
(a)Commercial and industrial average loan balances include $194 million, $178 million, and $153 million of assets from commercial credit cards at June 30, 2023, March 31, 2023, and June 30, 2022, respectively.
    
Average loans were $120.7 billion for the second quarter of 2023, an increase of $11.5 billion compared to the second quarter of 2022. Commercial loans increased by $9.0 billion, largely reflecting growth in commercial and industrial loans of $7.6 billion, as well as an increase in commercial mortgage real estate loans of $1.5 billion. Consumer loans increased $2.5 billion, largely driven by Key's residential mortgage business.



KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
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Compared to the first quarter of 2023, average loans increased by $835 million. The increase was driven by commercial loans, reflecting growth in commercial and industrial loans.

Average Deposits
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Non-time deposits$127,687 $132,907 $144,012 (3.9)%(11.3)%
Certificates of deposit ($100,000 or more)3,851 2,392 1,487 61.0 159.0 
Other time deposits11,365 8,106 1,972 40.2 476.3 
Total deposits$142,903 $143,405 $147,471 (.4)%(3.1)%
Cost of total deposits1.49 %.99 %.06 %N/AN/A
N/A = Not Applicable

    Average deposits totaled $142.9 billion for the second quarter of 2023, a decrease of $4.6 billion compared to the year-ago quarter. The decline reflects elevated inflation-related spend, changing client behavior due to higher interest rates, and a normalization of pandemic-related deposits.

Compared to the first quarter of 2023, average deposits decreased by $502 million. The decline was driven by changing client behavior due to higher interest rates and normal seasonal deposit outflows in commercial deposits.

ASSET QUALITY
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Net loan charge-offs$52 $45 $44 15.6 %18.2 %
Net loan charge-offs to average total loans.17 %.15 %.16 %N/AN/A
Nonperforming loans at period end$431 $416 $429 3.6 0.5 
Nonperforming assets at period end462 447 463 3.4 (0.2)
Allowance for loan and lease losses1,480 1,380 1,099 7.2 34.7 
Allowance for credit losses1,771 1,656 1,272 6.9 39.2 
Provision for credit losses167 139 45 20.1 271.1 
Allowance for loan and lease losses to nonperforming loans343 %332 %256 %N/AN/A
Allowance for credit losses to nonperforming loans411 398 297 N/AN/A
N/A = Not Applicable

    
    Key's provision for credit losses was $167 million, compared to $45 million in the second quarter of 2022 and $139 million in the first quarter of 2023. The increase from the year-ago period and prior quarter reflects changes in the economic outlook and portfolio activity.

    Net loan charge-offs for the second quarter of 2023 totaled $52 million, or 0.17% of average total loans. These results compare to $44 million, or 0.16%, for the second quarter of 2022 and $45 million, or 0.15%, for the first quarter of 2023. Key’s allowance for credit losses was $1.8 billion, or 1.49% of total period-end loans at June 30, 2023, compared to 1.13% at June 30, 2022, and 1.38% at March 31, 2023.

    At June 30, 2023, Key’s nonperforming loans totaled $431 million, which represented 0.36% of period-end portfolio loans. These results compare to 0.38% at June 30, 2022, and 0.35% at March 31, 2023. Nonperforming assets at June 30, 2023, totaled $462 million, and represented 0.39% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to 0.41% at June 30, 2022, and 0.37% at March 31, 2023.

CAPITAL

Key’s estimated risk-based capital ratios included in the following table continued to exceed all “well-capitalized” regulatory benchmarks at June 30, 2023.


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
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Capital Ratios
6/30/20233/31/20236/30/2022
Common Equity Tier 1 (a)
9.2 %9.1 %9.2 %
Tier 1 risk-based capital (a)
10.7 10.6 10.4 
Total risk-based capital (a)
13.0 12.8 12.0 
Tangible common equity to tangible assets (b)
4.5 4.6 5.3 
Leverage (a)
8.7 8.8 8.6 
(a)June 30, 2023 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 second quarter of 2023. As shown in the preceding table, at June 30, 2023, Key’s estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.2% and 10.7%, respectively. Key's tangible common equity ratio was 4.5% at June 30, 2023.

    Key elected the CECL phase-in option provided by regulatory guidance which delayed for two years the estimated impact of CECL on regulatory capital and phases it in over three years beginning in 2022. Effective for the first quarter 2022, Key is now in the three-year transition period. On a fully phased-in basis, Key's Common Equity Tier 1 ratio would be reduced by eight basis points.

Summary of Changes in Common Shares Outstanding
In thousandsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Shares outstanding at beginning of period935,229 933,325 932,398 .2 %.3 %
Open market repurchases and return of shares under employee compensation plans(38)(4,333)(24)(99.1)58.3 
Shares issued under employee compensation plans (net of cancellations)542 6,237 269 (91.3)101.5 
Shares outstanding at end of period935,733 935,229 932,643 .1 %.3 %
N/M = Not Meaningful

    
    During the second quarter of 2023, Key declared a dividend of $.205 per common share. Additionally, we have $752 million remaining in our share repurchase authorization through the third quarter of 2023.

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.



KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
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Major Business Segments
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Revenue from continuing operations (TE)
Consumer Bank$803 $840 $858 (4.4)%(6.4)%
Commercial Bank805 844 874 (4.6)(7.9)
Other (a)
(13)30 60 (143.3)(121.7)
Total$1,595 $1,714 $1,792 (6.9)%(11.0)%
Income (loss) from continuing operations attributable to Key
Consumer Bank$82 $89 $128 (7.9)%(35.9)%
Commercial Bank214 255 340 (16.1)(37.1)
Other (a)
(10)(33)62 69.7 (116.1)
Total$286 $311 $530 (8.0)%(46.0)%
(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


Consumer Bank
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Summary of operations
Net interest income (TE)$558 $612 $604 (8.8)%(7.6)%
Noninterest income245 228 254 7.5 (3.5)
Total revenue (TE)803 840 858 (4.4)(6.4)
Provision for credit losses32 60 8 (46.7)300.0 
Noninterest expense663 663 681 — (2.6)
Income (loss) before income taxes (TE)108 117 169 (7.7)(36.1)
Allocated income taxes (benefit) and TE adjustments26 28 41 (7.1)(36.6)
Net income (loss) attributable to Key$82 $89 $128 (7.9)%(35.9)%
Average balances
Loans and leases$42,934 $43,086 $40,827 (.4)%5.2 %
Total assets45,761 45,935 43,897 (.4)4.2 
Deposits82,498 84,637 91,394 (2.5)(9.7)
Assets under management at period end$53,952 $53,689 $49,003 .5 %10.1 %
TE = Taxable Equivalent




KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
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Additional Consumer Bank Data
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Noninterest income
Trust and investment services income$101 $101 $104 — %(2.9)%
Service charges on deposit accounts41 38 59 7.9 (30.5)
Cards and payments income66 61 62 8.2 6.5 
Consumer mortgage income14 11 14 27.3 — 
Other noninterest income23 17 15 35.3 53.3 
Total noninterest income$245 $228 $254 7.5 %(3.5)%
Average deposit balances
Money market deposits$27,340 $28,128 $31,986 (2.8)%(14.5)%
Demand deposits23,845 24,849 25,905 (4.0)(8.0)
Savings deposits6,298 7,025 7,515 (10.3)(16.2)
Certificates of deposit ($100,000 or more)3,550 2,182 1,375 62.7 158.2 
Other time deposits2,864 2,169 1,966 32.0 45.7 
Noninterest-bearing deposits18,601 20,284 22,647 (8.3)(17.9)
Total deposits$82,498 $84,637 $91,394 (2.5)%(9.7)%
Other data
Branches965 972 993 
Automated teller machines1,255 1,265 1,308 


Consumer Bank Summary of Operations (2Q23 vs. 2Q22)
•Key's Consumer Bank recorded net income attributable to Key of $82 million for the second quarter of 2023, compared to $128 million for the year-ago quarter
•Taxable-equivalent net interest income decreased by $46 million, or 7.6%, compared to the second quarter of 2022, driven by higher interest-bearing deposit costs and a shift in funding mix
•Average loans and leases increased $2.1 billion, or 5.2%, from the second quarter of 2022, driven by growth in consumer mortgage loans
•Average deposits decreased $8.9 billion, or 9.7%, from the second quarter of 2022, reflecting elevated inflation-related spend, changing client behavior due to higher interest rates, and a normalization of pandemic-related deposits
•Provision for credit losses increased $24 million compared to the second quarter of 2022, driven by increases in both the allowance for credit losses and net loan charge-offs
•Noninterest income decreased $9 million from the year-ago quarter, driven by lower service charges on deposit accounts due to a planned reduction in overdraft and non-sufficient funds fees
•Noninterest expense decreased $18 million from the year-ago quarter, reflecting lower incentive compensation and employee benefits from the prior period, partly offset by an increase in salaries



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July 20, 2023
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Commercial Bank
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Summary of operations
Net interest income (TE)$459 $478 $470 (4.0)%(2.3)%
Noninterest income346 366 404 (5.5)(14.4)
Total revenue (TE)805 844 874 (4.6)(7.9)
Provision for credit losses134 80 37 67.5 262.2 
Noninterest expense405 442 411 (8.4)(1.5)
Income (loss) before income taxes (TE)266 322 426 (17.4)(37.6)
Allocated income taxes and TE adjustments52 67 86 (22.4)(39.5)
Net income (loss) attributable to Key$214 $255 $340 (16.1)%(37.1)%
Average balances
Loans and leases$77,277 $76,306 $67,825 1.3 %13.9 %
Loans held for sale1,014 876 1,016 15.8 (0.2)
Total assets87,106 85,852 78,816 1.5 10.5 
Deposits51,420 52,219 54,846 (1.5)%(6.2)%
TE = Taxable Equivalent

Additional Commercial Bank Data
Dollars in millionsChange 2Q23 vs.
2Q231Q232Q221Q232Q22
Noninterest income
Trust and investment services income$25 $27 $33 (7.4)%(24.2)%
Investment banking and debt placement fees120 145 150 (17.2)(20.0)
Cards and payments income22 20 23 10.0 (4.3)
Service charges on deposit accounts27 27 36 — (25.0)
Corporate services income77 69 87 11.6 (11.5)
Commercial mortgage servicing fees50 46 45 8.7 11.1 
Operating lease income and other leasing gains24 24 27 — (11.1)
Other noninterest income1 8 3 (87.5)(66.7)
Total noninterest income$346 $366 $404 (5.5)%(14.4)%

Commercial Bank Summary of Operations (2Q23 vs. 2Q22)
•Key's Commercial Bank recorded net income attributable to Key of $214 million for the second quarter of 2023 compared to $340 million for the year-ago quarter
•Taxable-equivalent net interest income decreased by $11 million, or 2.3%, compared to the second quarter of 2022, primarily reflecting higher interest-bearing deposit costs and a shift in funding mix to higher-cost deposits
•Average loan and lease balances increased $9.5 billion, or 13.9%, compared to the second quarter of 2022, reflecting growth in commercial and industrial loans and an increase in commercial mortgage real estate loans
•Average deposit balances decreased $3.4 billion compared to the second quarter of 2022, reflecting changing client behavior due to higher interest rates
•Provision for credit losses increased $97 million compared to the second quarter of 2022, driven by higher allowance for credit losses due to changes in the economic outlook and portfolio activity
•Noninterest income decreased $58 million from the year-ago quarter, primarily driven by lower investment banking and debt placement fees reflecting lower merger and acquisition advisory fees and lower syndication fees, as well as a decrease in corporate services income
•Noninterest expense decreased $6 million from the second quarter of 2022, primarily driven by a decline in incentive compensation


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 9


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

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 $195 billion at June 30, 2023.

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.


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 10

CONTACTS:
ANALYSTSMEDIA
Vernon L. PattersonSusan Donlan
216.689.0520216.471.3133
Vernon_Patterson@KeyBank.comSusan_E_Donlan@KeyBank.com
Adrienne AtkinsonBeth Strauss
216.689.4030216.471.2787
Adrienne.Atkinson@key.comBeth_A_Strauss@KeyBank.com
Halle A. NicholsTwitter: @keybank
216.471.2184
Halle_A_Nichols@KeyBank.com
INVESTOR RELATIONS:KEY MEDIA NEWSROOM:
www.key.com/irwww.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, 2022, Form 10-Q for the quarter ended March 31, 2023, 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, the soundness of other financial institutions and the impact of changes in the interest rate environment. 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 July 20, 2023. A replay of the call will be available through July 29, 2023.
For up-to-date company information, media contacts, and facts and figures about Key’s lines of business, visit our Media Newsroom at https://www.key.com/newsroom.

*****



KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
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KeyCorp
Second Quarter 2023
Financial Supplement


    
Page
Basis of Presentation
Financial Highlights
GAAP to Non-GAAP Reconciliation
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
Noninterest Expense
Personnel Expense
Loan Composition
Loans Held for Sale Composition
Summary of Changes in Loans Held for Sale
Summary of Loan and Lease Loss Experience From Continuing Operations
Asset Quality Statistics From Continuing Operations
Summary of Nonperforming Assets and Past Due Loans From Continuing Operations
Summary of Changes in Nonperforming Loans From Continuing Operations
Line of Business Results


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
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Basis of Presentation

Use of Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management
believes it to be helpful in understanding Key’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this document, the financial supplement, or conference call slides related to this document, all of which can be found on Key’s website (www.key.com/ir).

Annualized Data
Certain returns, yields, performance ratios, or quarterly growth rates are presented on an “annualized”
basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts.

Taxable Equivalent
Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at the federal statutory rate. This adjustment puts all earning assets, most notably tax-exempt municipal securities, and certain lease assets, on a common basis that facilitates comparison of results to results of peers.

Earnings Per Share Equivalent
Certain income or expense items may be expressed on a per common share basis. This is done for analytical and decision-making purposes to better discern underlying trends in total consolidated earnings per share performance excluding the impact of such items. When the impact of certain income or expense items is disclosed separately, the after-tax amount is computed using the marginal tax rate, with this then being the amount used to calculate the earnings per share equivalent.




KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
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Financial Highlights
(Dollars in millions, except per share amounts)
Three months ended
6/30/20233/31/20236/30/2022
Summary of operations
Net interest income (TE)$986 $1,106 $1,104 
Noninterest income609 608 688 
Total revenue (TE)
1,595 1,714 1,792 
Provision for credit losses167 139 45 
Noninterest expense1,076 1,176 1,078 
Income (loss) from continuing operations attributable to Key286 311 530 
Income (loss) from discontinued operations, net of taxes1 1 3 
Net income (loss) attributable to Key287 312 533 
Income (loss) from continuing operations attributable to Key common shareholders250 275 504 
Income (loss) from discontinued operations, net of taxes1 1 3 
Net income (loss) attributable to Key common shareholders251 276 507 
Per common share
Income (loss) from continuing operations attributable to Key common shareholders$.27 $.30 $.54 
Income (loss) from discontinued operations, net of taxes— — — 
Net income (loss) attributable to Key common shareholders (a)
.27 .30 .55 
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution.27 .30 .54 
Income (loss) from discontinued operations, net of taxes — assuming dilution— — — 
Net income (loss) attributable to Key common shareholders — assuming dilution (a)
.27 .30 .54 
Cash dividends declared.205 .205 .195 
Book value at period end12.18 12.70 13.48 
Tangible book value at period end9.16 9.67 10.40 
Market price at period end9.24 12.52 17.23 
Performance ratios
From continuing operations:
Return on average total assets.58 %.66 %1.16 %
Return on average common equity8.42 9.85 16.17 
Return on average tangible common equity (b)
11.04 13.16 20.90 
Net interest margin (TE)2.12 2.47 2.61 
Cash efficiency ratio (b)
66.8 68.0 59.5 
From consolidated operations:
Return on average total assets.58 %.66 %1.16 %
Return on average common equity8.45 9.89 16.27 
Return on average tangible common equity (b)
11.09 13.21 21.03 
Net interest margin (TE)2.12 2.47 2.60 
Loan to deposit (c)
83.0 84.4 78.3 
Capital ratios at period end
Key shareholders’ equity to assets7.1 %7.3 %7.7 %
Key common shareholders’ equity to assets5.8 6.0 6.7 
Tangible common equity to tangible assets (b)
4.5 4.6 5.3 
Common Equity Tier 1 (d)
9.2 9.1 9.2 
Tier 1 risk-based capital (d)
10.7 10.6 10.4 
Total risk-based capital (d)
13.0 12.8 12.0 
Leverage (d)
8.7 8.8 8.6 
Asset quality — from continuing operations
Net loan charge-offs
$52 $45 $44 
Net loan charge-offs to average loans
.17 %.15 %.16 %
Allowance for loan and lease losses
$1,480 $1,380 $1,099 
Allowance for credit losses
1,771 1,656 1,272 
Allowance for loan and lease losses to period-end loans
1.24 %1.15 %.98 %
Allowance for credit losses to period-end loans
1.49 1.38 1.13 
Allowance for loan and lease losses to nonperforming loans343 332 256 
Allowance for credit losses to nonperforming loans411 398 297 
Nonperforming loans at period-end$431 $416 $429 
Nonperforming assets at period-end462 447 463 
Nonperforming loans to period-end portfolio loans.36 %.35 %.38 %
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets.39 .37 .41 
Trust assets
Assets under management$53,952 $53,689 $49,003 
Other data
Average full-time equivalent employees
17,754 18,220 17,414 
Branches
965 971 978 
Taxable-equivalent adjustment
$8 $7 $7 




KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 14

Financial Highlights (continued)
(Dollars in millions, except per share amounts)
Six months ended
6/30/20236/30/2022
Summary of operations
Net interest income (TE)$2,092 $2,124 
Noninterest income1,217 1,364 
Total revenue (TE)3,309 3,488 
Provision for credit losses306 128 
Noninterest expense2,252 2,148 
Income (loss) from continuing operations attributable to Key597 977 
Income (loss) from discontinued operations, net of taxes2 4 
Net income (loss) attributable to Key599 981 
Income (loss) from continuing operations attributable to Key common shareholders525 924 
Income (loss) from discontinued operations, net of taxes2 4 
Net income (loss) attributable to Key common shareholders527 928 
Per common share
Income (loss) from continuing operations attributable to Key common shareholders$.57 $1.00 
Income (loss) from discontinued operations, net of taxes— — 
Net income (loss) attributable to Key common shareholders (a)
.57 1.00 
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution.56 .99 
Income (loss) from discontinued operations, net of taxes — assuming dilution— — 
Net income (loss) attributable to Key common shareholders — assuming dilution (a)
.57 1.00 
Cash dividends paid.41 .39 
Performance ratios
From continuing operations:
Return on average total assets.62 %1.08 %
Return on average common equity9.11 13.62 
Return on average tangible common equity (b)
12.06 17.15 
Net interest margin (TE)2.29 2.53 
Cash efficiency ratio (b)
67.5 60.9 
From consolidated operations:
Return on average total assets.62 %1.08 %
Return on average common equity9.15 13.68 
Return on average tangible common equity (b)
12.10 17.23 
Net interest margin (TE)2.29 2.53 
Asset quality — from continuing operations
Net loan charge-offs$97 $77 
Net loan charge-offs to average total loans.16 %.15 %
Other data
Average full-time equivalent employees17,987 17,262 
Taxable-equivalent adjustment15 13 
(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)June 30, 2023, ratio is estimated and reflects Key's election to adopt the CECL optional transition provision.


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 15

GAAP to Non-GAAP Reconciliations
(Dollars in millions)
The table below presents certain non-GAAP financial measures related to “tangible common equity,” “return on 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 provides 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 endedSix months ended
6/30/20233/31/20236/30/20226/30/20236/30/2022
Tangible common equity to tangible assets at period-end
Key shareholders’ equity (GAAP)$13,844 $14,322 $14,427 
Less: Intangible assets (a)
2,826 2,836 2,868 
Preferred Stock (b)
2,446 2,446 1,856 
Tangible common equity (non-GAAP)$8,572 $9,040 $9,703 
Total assets (GAAP)$195,037 $197,519 $187,008 
Less: Intangible assets (a)
2,826 2,836 2,868 
Tangible assets (non-GAAP)$192,211 $194,683 $184,140 
Tangible common equity to tangible assets ratio (non-GAAP)4.46 %4.64 %5.27 %
Pre-provision net revenue
Net interest income (GAAP)$978 $1,099 $1,097 $2,077 $2,111 
Plus: Taxable-equivalent adjustment8 7 7 15 13 
Noninterest income609 608 688 1,217 1,364 
Less: Noninterest expense1,076 1,176 1,078 2,252 2,148 
Pre-provision net revenue from continuing operations (non-GAAP)$519 $538 $714 $1,057 $1,340 
Average tangible common equity
Average Key shareholders' equity (GAAP)$14,412 $13,817 $14,398 $14,116 $15,583 
Less: Intangible assets (average) (c)
2,831 2,841 2,827 2,836 2,821 
Preferred stock (average)2,500 2,500 1,900 2,500 1,900 
Average tangible common equity (non-GAAP)$9,081 $8,476 $9,671 $8,780 $10,862 
Return on average tangible common equity from continuing operations
Net income (loss) from continuing operations attributable to Key common shareholders (GAAP)$250 $275 $504 $525 $924 
Average tangible common equity (non-GAAP)9,081 8,476 9,671 8,780 10,862 
Return on average tangible common equity from continuing operations (non-GAAP)11.04 %13.16 %20.90 %12.06 %17.15 %
Return on average tangible common equity consolidated
Net income (loss) attributable to Key common shareholders (GAAP)$251 $276 $507 $527 $928 
Average tangible common equity (non-GAAP)9,081 8,476 9,671 8,780 10,862 
Return on average tangible common equity consolidated (non-GAAP)11.09 %13.21 %21.03 %12.10 %17.23 %






KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 16

GAAP to Non-GAAP Reconciliations (continued)
(Dollars in millions)
Three months endedSix months ended
6/30/20233/31/20236/30/20226/30/20236/30/2022
Cash efficiency ratio
Noninterest expense (GAAP)$1,076 $1,176 $1,078 $2,252 $2,148 
Less: Intangible asset amortization10 10 12 20 23 
Adjusted noninterest expense (non-GAAP)$1,066 $1,166 $1,066 $2,232 $2,125 
Net interest income (GAAP)$978 $1,099 $1,097 $2,077 $2,111 
Plus: Taxable-equivalent adjustment8 7 7 15 13 
Noninterest income609 608 688 1,217 1,364 
Total taxable-equivalent revenue (non-GAAP)$1,595 $1,714 $1,792 $3,309 $3,488 
Cash efficiency ratio (non-GAAP)66.8 %68.0 %59.5 %67.5 %60.9 %
(a)For the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, intangible assets exclude $1 million, $1 million, and $2 million, respectively, of period-end purchased credit card receivables.
(b)Net of capital surplus.
(c)For the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, average intangible assets exclude $1 million, $1 million, and $2 million, respectively, of average purchased credit card receivables.
GAAP = U.S. generally accepted accounting principles



KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 17

Consolidated Balance Sheets
(Dollars in millions)
6/30/20233/31/20236/30/2022
Assets
Loans$119,011 $119,971 $112,390 
Loans held for sale1,130 1,211 1,306 
Securities available for sale37,908 39,498 42,437 
Held-to-maturity securities9,189 9,561 8,186 
Trading account assets1,177 1,118 809 
Short-term investments8,959 8,410 2,456 
Other investments1,474 1,587 969 
Total earning assets178,848 181,356 168,553 
Allowance for loan and lease losses(1,480)(1,380)(1,099)
Cash and due from banks758 784 678 
Premises and equipment652 628 638 
Goodwill2,752 2,752 2,752 
Other intangible assets75 85 118 
Corporate-owned life insurance4,378 4,372 4,343 
Accrued income and other assets8,668 8,512 10,529 
Discontinued assets386 410 496 
Total assets$195,037 $197,519 $187,008 
Liabilities
Deposits in domestic offices:
Interest-bearing deposits111,766 106,841 94,892 
Noninterest-bearing deposits33,366 37,307 50,973 
Total deposits145,132 144,148 145,865 
Federal funds purchased and securities sold under repurchase agreements 1,702 1,374 3,234 
Bank notes and other short-term borrowings6,949 10,061 2,809 
Accrued expense and other liabilities5,339 4,861 4,056 
Long-term debt22,071 22,753 16,617 
Total liabilities181,193 183,197 172,581 
Equity
Preferred stock2,500 2,500 1,900 
Common shares1,257 1,257 1,257 
Capital surplus6,231 6,207 6,241 
Retained earnings15,759 15,700 15,118 
Treasury stock, at cost(5,859)(5,868)(5,923)
Accumulated other comprehensive income (loss)(6,044)(5,474)(4,166)
Key shareholders’ equity13,844 14,322 14,427 
Total liabilities and equity$195,037 $197,519 $187,008 
Common shares outstanding (000)935,733 935,229 932,643 
    





KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 18

Consolidated Statements of Income
(Dollars in millions, except per share amounts)
Three months ended
Six months ended
6/30/20233/31/20236/30/20226/30/20236/30/2022
Interest income
Loans$1,576 $1,476 $923 $3,052 $1,760 
Loans held for sale17 13 10 30 22 
Securities available for sale194 194 188 388 361 
Held-to-maturity securities81 74 48 155 94 
Trading account assets15 12 7 27 13 
Short-term investments111 42 13 153 17 
Other investments16 13 4 29 6 
Total interest income2,010 1,824 1,193 3,834 2,273 
Interest expense
Deposits531 350 20 881 34 
Federal funds purchased and securities sold under repurchase agreements48 22 6 70 6 
Bank notes and other short-term borrowings104 78 9 182 12 
Long-term debt349 275 61 624 110 
Total interest expense1,032 725 96 1,757 162 
Net interest income978 1,099 1,097 2,077 2,111 
Provision for credit losses167 139 45 306 128 
Net interest income after provision for credit losses811 960 1,052 1,771 1,983 
Noninterest income
Trust and investment services income126 128 137 254 273 
Investment banking and debt placement fees120 145 149 265 312 
Cards and payments income85 81 85 166 165 
Service charges on deposit accounts69 67 96 136 187 
Corporate services income86 76 96 162 187 
Commercial mortgage servicing fees50 46 45 96 81 
Corporate-owned life insurance income32 29 35 61 66 
Consumer mortgage income14 11 14 25 35 
Operating lease income and other leasing gains23 25 28 48 60 
Other income4 — 3 4 (2)
Total noninterest income609 608 688 1,217 1,364 
Noninterest expense
Personnel622 701 607 1,323 1,237 
Net occupancy65 70 78 135 151 
Computer processing95 92 78 187 155 
Business services and professional fees41 45 52 86 105 
Equipment22 22 26 44 49 
Operating lease expense21 20 27 41 55 
Marketing29 21 34 50 62 
Other expense181 205 176 386 334 
Total noninterest expense1,076 1,176 1,078 2,252 2,148 
Income (loss) from continuing operations before income taxes344 392 662 736 1,199 
Income taxes58 81 132 139 222 
Income (loss) from continuing operations286 311 530 597 977 
Income (loss) from discontinued operations, net of taxes1 1 3 2 4 
Net income (loss)287 312 533 599 981 
Net income (loss) attributable to Key$287 $312 $533 $599 981 
Income (loss) from continuing operations attributable to Key common shareholders$250 $275 $504 $525 $924 
Net income (loss) attributable to Key common shareholders251 276 507 527 928 
Per common share
Income (loss) from continuing operations attributable to Key common shareholders$.27 $.30 $.54 $.57 $1.00 
Income (loss) from discontinued operations, net of taxes— — — — — 
Net income (loss) attributable to Key common shareholders (a)
.27 .30 .55 .57 1.00 
Per common share — assuming dilution
Income (loss) from continuing operations attributable to Key common shareholders$.27 $.30 $.54 $.56 $.99 
Income (loss) from discontinued operations, net of taxes— — — — — 
Net income (loss) attributable to Key common shareholders (a)
.27 .30 .54 .57 1.00 
Cash dividends declared per common share$.205 $.205 $.195 $.410 $.390 
Weighted-average common shares outstanding (000)926,741 926,490 924,302 926,807 923,717 
Effect of common share options and other stock awards3,713 7,314 7,506 5,513 9,087 
Weighted-average common shares and potential common shares outstanding (000) (b)
930,454 933,804 931,808 932,320 932,805 
(a)Earnings per share may not foot due to rounding.
(b)Assumes conversion of common share options and other stock awards, as applicable.


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 19

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(Dollars in millions)
Second Quarter 2023First Quarter 2023Second Quarter 2022
AverageYield/AverageYield/AverageYield/
Balance
Interest (a)
Rate (a)
Balance
Interest (a)
Rate (a)
Balance
Interest (a)
Rate (a)
Assets
Loans: (b), (c)
Commercial and industrial (d)
$61,426 $881 5.76 %$60,281 $807 5.42 %$53,858 $449 3.34 %
Real estate — commercial mortgage16,226 235 5.80 16,470 224 5.52 15,231 136 3.58 
Real estate — construction2,641 44 6.64 2,525 39 6.30 2,125 20 3.81 
Commercial lease financing3,756 29 3.07 3,783 27 2.87 3,817 24 2.47 
Total commercial loans84,049 1,189 5.67 83,059 1,097 5.35 75,031 629 3.36 
Real estate — residential mortgage21,659 176 3.25 21,436 172 3.21 18,383 131 2.85 
Home equity loans7,620 109 5.75 7,879 106 5.47 8,208 78 3.83 
Consumer direct loans6,323 77 4.89 6,439 75 4.71 6,514 68 4.19 
Credit cards984 33 13.49 983 32 13.37 943 24 10.20 
Consumer indirect loans37 — — 41 1 1.24 59 — — 
Total consumer loans36,623 395 4.33 36,778 386 4.23 34,107 301 3.53 
Total loans120,672 1,584 5.26 119,837 1,483 5.01 109,138 930 3.41 
Loans held for sale1,087 17 6.16 907 13 5.86 1,107 10 3.49 
Securities available for sale (b), (e)
38,899 194 1.74 39,172 194 1.72 43,023 188 1.60 
Held-to-maturity securities (b)
9,371 81 3.47 8,931 74 3.32 7,291 48 2.65 
Trading account assets1,244 15 4.64 1,001 12 4.86 854 7 3.45 
Short-term investments7,798 111 5.73 3,532 42 4.80 3,591 13 1.45 
Other investments (e)
1,566 16 4.03 1,309 13 4.01 800 4 2.27 
Total earning assets180,637 2,018 4.34 174,689 1,831 4.09 165,804 1,200 2.83 
Allowance for loan and lease losses(1,379)(1,336)(1,103)
Accrued income and other assets17,202 17,498 18,826 
Discontinued assets394 419 505 
Total assets$196,854 $191,270 $184,032 
Liabilities
Money market deposits$32,419 $123 1.53 %$33,853 $78 .94 %$36,362 $5 .05 %
Demand deposits53,569 256 1.91 52,365 183 1.42 49,027 13 .11 
Savings deposits6,592 1 .04 7,346 1 .03 7,891 — .01 
Certificates of deposit ($100,000 or more)3,851 33 3.48 2,392 16 2.64 1,487 1 .44 
Other time deposits11,365 118 4.17 8,106 72 3.61 1,972 1 .13 
Total interest-bearing deposits107,796 531 1.98 104,062 350 1.36 96,739 20 .08 
Federal funds purchased and securities sold under repurchase agreements3,767 48 5.07 2,087 22 4.34 2,792 6 .88 
Bank notes and other short-term borrowings7,982 104 5.22 6,597 78 4.80 1,943 9 1.77 
Long-term debt (f), (g)
22,284 349 6.26 20,141 275 5.47 12,662 61 1.92 
Total interest-bearing liabilities141,829 1,032 2.91 132,887 725 2.20 114,136 96 .34 
Noninterest-bearing deposits35,107 39,343 50,732 
Accrued expense and other liabilities5,112 4,804 4,261 
Discontinued liabilities (g)
394 419 505 
Total liabilities$182,442 $177,453 $169,634 
Equity
Key shareholders’ equity$14,412 $13,817 $14,398 
Noncontrolling interests— — — 
Total equity14,412 13,817 14,398 
Total liabilities and equity$196,854 $191,270 $184,032 
Interest rate spread (TE)1.43 %1.89 %2.50 %
Net interest income (TE) and net interest margin (TE)$986 2.12 %$1,106 2.47 %$1,104 2.61 %
TE adjustment (b)
877
Net interest income, GAAP basis$978 $1,099 $1,097 
(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 June 30, 2023, March 31, 2023, and June 30, 2022.
(c)For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)Commercial and industrial average balances include $194 million, $178 million, and $153 million of assets from commercial credit cards for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively.
(e)Yield is calculated on the basis of amortized cost.
(f)Rate calculation excludes basis adjustments related to fair value hedges.
(g)A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying Key’s matched funds transfer pricing methodology to discontinued operations.
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles












KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 20

Consolidated Average Balance Sheets, and Net Interest Income and Yields/Rates From Continuing Operations
(Dollars in millions)
Six months ended June 30, 2023Six months ended June 30, 2022
AverageYield/AverageYield/
BalanceInterest (a)Rate (a)BalanceInterest (a)Rate (a)
Assets
Loans: (b), (c)
Commercial and industrial (d)
$60,857 $1,688 5.59 %$52,723 $858 3.28 %
Real estate — commercial mortgage16,347 4595.66 14,910 2573.48 
Real estate — construction2,583 83 6.47 2,076 37 3.60 
Commercial lease financing3,770 56 2.97 3,879 48 2.44 
Total commercial loans83,557 2,286 5.51 73,588 1,200 3.28 
Real estate — residential mortgage21,548 348 3.23 17,352 243 2.80 
Home equity loans7,749 215 5.61 8,276 153 3.72 
Consumer direct loans6,380 152 4.80 6,236 129 4.18 
Credit cards984 65 13.43 938 48 10.28 
Consumer indirect loans39 1 0.60 75 — — 
Total consumer loans36,700 781 4.28 32,877 573 3.49 
Total loans120,257 3,067 5.14 106,465 1,773 3.35 
Loans held for sale997 30 6.02 1,295 22 3.40 
Securities available for sale (b), (e)
39,034 388 1.73 43,968 361 1.55 
Held-to-maturity securities (b)
9,152 155 3.40 7,239 94 2.59 
Trading account assets1123 27 4.74 848 13 3.10 
Short-term investments5,677 153 5.44 5,447 17 .65 
Other investments (e)
1,438 29 4.02 726 6 1.82 
Total earning assets177,678 3,849 4.22 165,988 2,286 2.72 
Allowance for loan and lease losses(1,357)(1,080)
Accrued income and other assets17,351 18,152 
Discontinued assets406 522 
Total assets$194,078 $183,582 
Liabilities
Money market deposits$33,110 $201 1.23 36,795 $9 .05 
Other demand deposits52,993 440 1.67 50,148 20 .08 
Savings deposits6,967 1 .04 7,746 1 .01 
Certificates of deposit ($100,000 or more)3,125 49 3.16 1,562 3 .44 
Other time deposits9,745 190 3.94 2,035 1 .14 
Total interest-bearing deposits105,940 881 1.68 98,286 34 .07 
Federal funds purchased and securities sold under repurchase agreements2,932 70 4.81 1,547 6 .81 
Bank notes and other short-term borrowings7,293 182 5.03 1,327 12 1.82 
Long-term debt (f), (g)
21,218 624 5.88 11,751 110 1.86 
Total interest-bearing liabilities137,383 1,757 2.57 112,911 162 .29 
Noninterest-bearing deposits37,213 50,523 
Accrued expense and other liabilities4,960 4,043 
Discontinued liabilities (g)
406 522 
Total liabilities$179,962 $167,999 
Equity
Key shareholders’ equity$14,116 $15,583 
Noncontrolling interests— — 
Total equity14,116 15,583 
Total liabilities and equity$194,078 $183,582 
Interest rate spread (TE)1.65 %2.44 %
Net interest income (TE) and net interest margin (TE)$2,092 2.29 %$2,124 2.53 %
TE adjustment (b)
1513 
Net interest income, GAAP basis$2,077 $2,111 
(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 six months ended June 30, 2023, and June 30, 2022, respectively.
(c)For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)Commercial and industrial average balances include $186 million and $147 million of assets from commercial credit cards for the six months ended June 30, 2023, and June 30, 2022, respectively.
(e)Yield is calculated on the basis of amortized cost.
(f)Rate calculation excludes basis adjustments related to fair value hedges.
(g)A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying Key’s matched funds transfer pricing methodology to discontinued operations.
TE = Taxable Equivalent, GAAP = U.S. generally accepted accounting principles



KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 21

Noninterest Expense
(Dollars in millions)
Three months endedSix months ended
6/30/20233/31/20236/30/20226/30/20236/30/2022
Personnel (a)
$622 $701 $607 $1,323 $1,237 
Net occupancy65 70 78 135 151 
Computer processing95 92 78 187 155 
Business services and professional fees41 45 52 86 105 
Equipment22 22 26 44 49 
Operating lease expense21 20 27 41 55 
Marketing29 21 34 50 62 
Other expense181 205 176 386 334 
Total noninterest expense$1,076 $1,176 $1,078 $2,252 $2,148 
Average full-time equivalent employees (b)
17,754 18,220 17,414 17,987 17,262 
(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 endedSix months ended
6/30/20233/31/20236/30/20226/30/20236/30/2022
Salaries and contract labor$416 $419 $357 $835 $705 
Incentive and stock-based compensation93 152 163 245 346 
Employee benefits103 99 83 202 180 
Severance10 31 4 41 6 
Total personnel expense$622 $701 $607 $1,323 $1,237 



KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 22

Loan Composition
(Dollars in millions)
Change 6/30/2023 vs.
6/30/20233/31/20236/30/20223/31/20236/30/2022
Commercial and industrial (a)
$60,059 $60,565 $55,245 (.8)%8.7 %
Commercial real estate:
Commercial mortgage16,048 16,348 15,636 (1.8)2.6 
Construction2,646 2,590 2,144 2.2 23.4 
Total commercial real estate loans18,694 18,938 17,780 (1.3)5.1 
Commercial lease financing (b)
3,801 3,763 3,956 1.0 (3.9)
Total commercial loans82,554 83,266 76,981 (.9)7.2 
Residential — prime loans:
Real estate — residential mortgage21,637 21,632 19,588 — 10.5 
Home equity loans7,529 7,706 8,134 (2.3)(7.4)
Total residential — prime loans29,166 29,338 27,722 (.6)5.2 
Consumer direct loans6,257 6,359 6,665 (1.6)(6.1)
Credit cards1,001 969 967 3.3 3.5 
Consumer indirect loans33 39 55 (15.4)(40.0)
Total consumer loans36,457 36,705 35,409 (.7)3.0 
Total loans (c), (d)
$119,011 $119,971 $112,390 (.8)%5.9 %
(a)Loan balances include $200 million, $185 million, and $161 million of commercial credit card balances at June 30, 2023, March 31, 2023, and June 30, 2022, respectively.
(b)Commercial lease financing includes receivables held as collateral for a secured borrowing of $5 million, $6 million, and $12 million at June 30, 2023, March 31, 2023, and June 30, 2022, respectively. Principal reductions are based on the cash payments received from these related receivables.
(c)Total loans exclude loans of $381 million at June 30, 2023, $407 million at March 31, 2023, and $498 million at June 30, 2022, related to the discontinued operations of the education lending business.
(d)Accrued interest of $500 million, $487 million, and $233 million at June 30, 2023, March 31, 2023, and June 30, 2022, 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)
Change 6/30/2023 vs.
6/30/20233/31/20236/30/20223/31/20236/30/2022
Commercial and industrial$221 $351 $213 (37.0)%3.8 %
Real estate — commercial mortgage829 815 1,004 1.7 (17.4)
Real estate — construction— — 6 — (100.0)
Commercial lease financing13 — — N/MN/M
Real estate — residential mortgage67 45 83 48.9 (19.3)
Total loans held for sale$1,130 $1,211 $1,306 (6.7)%(13.5)%
N/M = Not Meaningful
Summary of Changes in Loans Held for Sale
(Dollars in millions)
2Q231Q234Q223Q222Q22
Balance at beginning of period$1,211 $963 $1,048 $1,306 $1,170 
New originations1,798 1,779 3,158 2,157 2,837 
Transfers from (to) held to maturity, net(52)(13)(48)— (57)
Loan sales(1,798)(1,518)(3,124)(2,446)(2,506)
Loan draws (payments), net(28)— (71)26 (133)
Valuation and other adjustments(1)— — 5 (5)
Balance at end of period$1,130 $1,211 $963 $1,048 $1,306 
    




KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 23

Summary of Loan and Lease Loss Experience From Continuing Operations
(Dollars in millions)
Three months endedSix months ended
6/30/20233/31/20236/30/20226/30/20236/30/2022
Average loans outstanding$120,672 $119,837 $109,138 $120,257 $106,465 
Allowance for loan and lease losses at the beginning of the period1,380 1,337 1,105 1,337 1,061 
Loans charged off:
Commercial and industrial42 35 39 77 69 
Real estate — commercial mortgage9 5 3 14 7 
Real estate — construction— — — — — 
Total commercial real estate loans9 5 3 14 7 
Commercial lease financing1 (1)— — 2 
Total commercial loans52 39 42 91 78 
Real estate — residential mortgage1 — (2)1 (3)
Home equity loans2 1 — 3 1 
Consumer direct loans11 11 10 22 17 
Credit cards9 9 8 18 15 
Consumer indirect loans1 — 1 1 2 
Total consumer loans24 21 17 45 32 
Total loans charged off76 60 59 136 110 
Recoveries:
Commercial and industrial15 8 8 23 19 
Real estate — commercial mortgage1 — 1 1 2 
Real estate — construction— — 1 — 1 
Total commercial real estate loans1 — 2 1 3 
Commercial lease financing2 1 1 3 1 
Total commercial loans18 9 11 27 23 
Real estate — residential mortgage1 1 1 2 1 
Home equity loans1 1 1 2 2 
Consumer direct loans2 2 1 4 3 
Credit cards2 1 1 3 3 
Consumer indirect loans— 1 — 1 1 
Total consumer loans6 6 4 12 10 
Total recoveries24 15 15 39 33 
Net loan charge-offs(52)(45)(44)(97)(77)
Provision (credit) for loan and lease losses152 88 38 240 115 
Allowance for loan and lease losses at end of period$1,480 $1,380 $1,099 $1,480 $1,099 
Liability for credit losses on lending-related commitments at beginning of period276 225 166 225 160 
Provision (credit) for losses on lending-related commitments15 51 7 66 13 
Liability for credit losses on lending-related commitments at end of period (a)
$291 $276 $173 $291 $173 
Total allowance for credit losses at end of period$1,771 $1,656 $1,272 $1,771 $1,272 
Net loan charge-offs to average total loans.17 %.15 %.16 %.16 %.15 %
Allowance for loan and lease losses to period-end loans1.24 1.15 .98 1.24 .98 
Allowance for credit losses to period-end loans1.49 1.38 1.13 1.49 1.13 
Allowance for loan and lease losses to nonperforming loans343 332 256 343 256 
Allowance for credit losses to nonperforming loans411 398 297 411 297 
Discontinued operations — education lending business:
Loans charged off$2 $1 $1 $3 $3 
Recoveries1 — 1 1 1 
Net loan charge-offs$(1)$(1)$— $(2)$(2)
(a)Included in "Accrued expense and other liabilities" on the balance sheet.


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 24

Asset Quality Statistics From Continuing Operations
(Dollars in millions)
2Q231Q234Q223Q222Q22
Net loan charge-offs$52 $45 $41 $43 $44 
Net loan charge-offs to average total loans.17 %.15 %.14 %.15 %.16 %
Allowance for loan and lease losses$1,480 $1,380 $1,337 $1,144 $1,099 
Allowance for credit losses (a)
1,771 1,656 1,562 1,338 1,272 
Allowance for loan and lease losses to period-end loans1.24 %1.15 %1.12 %.98 %.98 %
Allowance for credit losses to period-end loans1.49 1.38 1.31 1.15 1.13 
Allowance for loan and lease losses to nonperforming loans343 332 346 293 256 
Allowance for credit losses to nonperforming loans411 398 404 343 297 
Nonperforming loans at period end$431 $416 $387 $390 $429 
Nonperforming assets at period end462 447 420 419 463 
Nonperforming loans to period-end portfolio loans.36 %.35 %.32 %.34 %.38 %
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets
.39 .37 .35 .36 .41 
        
(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)
6/30/20233/31/202312/31/20229/30/20226/30/2022
Commercial and industrial$188 $170 $174 $169 $197 
Real estate — commercial mortgage65 59 21 34 35 
Real estate — construction— — — — — 
Total commercial real estate loans65 59 21 34 35 
Commercial lease financing1 1 1 2 2 
Total commercial loans254 230 196 205 234 
Real estate — residential mortgage73 75 77 66 67 
Home equity loans97 104 107 112 120 
Consumer direct loans3 3 3 3 3 
Credit cards3 3 3 3 3 
Consumer indirect loans1 1 1 1 2 
Total consumer loans177 186 191 185 195 
Total nonperforming loans (a)
431 416 387 390 429 
OREO15 13 13 12 9 
Nonperforming loans held for sale16 18 20 17 25 
Other nonperforming assets— — — — — 
Total nonperforming assets$462 $447 $420 $419 $463 
Accruing loans past due 90 days or more73 55 60 47 41 
Accruing loans past due 30 through 89 days139 164 180 187 137 
Nonperforming assets from discontinued operations — education lending business 2 3 3 3 3 
Nonperforming loans to period-end portfolio loans.36 %.35 %.32 %.34 %.38 %
Nonperforming assets to period-end portfolio loans plus OREO and other nonperforming assets
.39 .37 .35 .36 .41 
(a)On January 1, 2023, Key adopted ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. In connection with the adoption of this guidance, nonperforming loans for periods after January 1, 2023, include certain loans which were modified for borrowers experiencing financial difficulty. Amounts prior to January 1, 2023, include nonperforming troubled debt restructurings (TDRs), for which accounting guidance was eliminated upon adoption of ASU 2022-02.

Summary of Changes in Nonperforming Loans From Continuing Operations
(Dollars in millions)
2Q231Q234Q223Q222Q22
Balance at beginning of period$416 $387 $390 $429 $439 
Loans placed on nonaccrual status169 143 113 80 118 
Charge-offs(76)(60)(67)(68)(59)
Loans sold(23)(2)(4)(3)(8)
Payments(20)(31)(22)(29)(35)
Transfers to OREO(2)(2)(1)(1)(2)
Loans returned to accrual status(33)(19)(22)(18)(24)
Balance at end of period$431 $416 $387 $390 $429 


KeyCorp Reports Second Quarter 2023 Profit     
July 20, 2023
Page 25

Line of Business Results
(Dollars in millions)
Change 2Q23 vs.
2Q231Q234Q223Q222Q221Q232Q22
Consumer Bank
Summary of operations
Total revenue (TE)$803 $840 $860 $877 $858 (4.4)%(6.4)%
Provision for credit losses32 60 105 37 8 (46.7)300.0 
Noninterest expense663 663 705 675 681 — (2.6)
Net income (loss) attributable to Key82 89 38 125 128 (7.9)(35.9)
Average loans and leases42,934 43,086 43,149 42,568 40,827 (.4)5.2 
Average deposits82,498 84,637 87,370 90,170 91,394 (2.5)(9.7)
Net loan charge-offs32 24 21 17 23 33.3 39.1 
Net loan charge-offs to average total loans.30 %.23 %.19 %.16 %.23 %30.4 30.4 
Nonperforming assets at period end$193 $196 $202 $195 $203 (1.5)(4.9)
Return on average allocated equity9.04 %9.87 %4.51 %14.26 %13.94 %(8.4)(35.2)
Commercial Bank
Summary of operations
Total revenue (TE)$805 $844 $894 $878 $874 (4.6)%(7.9)%
Provision for credit losses134 80 165 74 37 67.5 262.2 
Noninterest expense405 442 459 451 411 (8.4)(1.5)
Net income (loss) attributable to Key214 255 225 287 340 (16.1)(37.1)
Average loans and leases77,277 76,306 74,100 71,464 67,825 1.3 13.9 
Average loans held for sale1,014 876 1,377 1,036 1,016 15.8 (.2)
Average deposits51,420 52,219 54,385 52,272 54,846 (1.5)(6.2)
Net loan charge-offs20 21 25 27 21 (4.8)(4.8)
Net loan charge-offs to average total loans.10 %.11 %.13 %.15 %.12 %(9.1)(16.7)
Nonperforming assets at period end$269 $251 $218 $224 $260 7.2 3.5 
Return on average allocated equity8.17 %10.04 %9.36 %12.29 %15.29 %(18.6)(46.6)
TE = Taxable Equivalent