Line of Business Results

12 Months Ended

Dec. 31, 2011

Line of Business Results [Abstract]

Line of Business Results

21. Line of Business Results

The specific lines of business that comprise each of the major business segments (operating segments) are described below.

Key Community Bank

Regional Banking serves a range of clients.

¿ For individuals, Regional Banking offers branch-based deposit and investment products, personal finance services and loans, including residential mortgages, home equity and various types of installment loans.

¿ For small businesses, Regional Banking provides deposit, investment and credit products, and business advisory services.

¿ For high-net-worth clients, Regional Banking offers financial, estate and retirement planning, and asset management services to assist with banking, trust, portfolio management, insurance, charitable giving and related needs.

Commercial Banking provides midsize businesses with products and services that include commercial lending, cash management, equipment leasing, investment and employee benefit programs, succession planning, access to capital markets, derivatives and foreign exchange.

Key Corporate Bank

Real Estate Capital and Corporate Banking Services consists of two business units, Real Estate Capital and Corporate Banking Services.

Real Estate Capital is a national business that provides a variety of financial services to both public and private owners, investors and developers of commercial real estate. Real Estate Capital’s activities include direct lending (construction, interim and revolving lines of credit), permanent placement (origination and servicing of long term debt that is either sold or placed in the secondary market) and treasury management. This unit deals primarily with nonowner-occupied properties (i.e., generally properties in which at least 50% of the debt service is provided by rental income from non-affiliated third parties). Real Estate Capital emphasizes providing clients with finance solutions through access to the capital markets.

Corporate Banking Services provides treasury management, interest rate derivatives, and foreign exchange products and services to clients served by Key Community Bank and Key Corporate Bank. Through its Public Sector and Financial Institutions businesses, Corporate Banking Services also provides a full array of commercial banking products and services to government and not-for-profit entities and to community banks. A variety of cash management services are provided through the Global Treasury Management unit.

Equipment Finance meets the equipment financing needs of companies worldwide and provides equipment manufacturers, distributors and resellers with financing options for their clients. Lease financing receivables and related revenues are assigned to other lines of business (primarily Institutional and Capital Markets, and Commercial Banking) if those businesses are principally responsible for maintaining the relationship with the client.

Institutional and Capital Markets through its KeyBanc Capital Markets unit, provides commercial lending, treasury management, investment banking, derivatives, foreign exchange, equity and debt underwriting and trading, and syndicated finance products and services to large corporations and middle-market companies.

Institutional and Capital Markets, through its Victory Capital Management unit, also manages or offers advice regarding investment portfolios for a national client base, including corporations, labor unions, not-for-profit organizations, governments and individuals. These portfolios may be managed in separate accounts, common funds or the Victory family of mutual funds.

Other Segments

Other Segments consist of Corporate Treasury, our Principal Investing unit and various exit portfolios.

Reconciling Items

Total assets included under “Reconciling Items” primarily represent 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.

The table on the following pages shows selected financial data for our two major business segments for December 31, 2011, 2010, and 2009. This table is accompanied by supplementary information for each of the lines of business that make up these segments. The information was derived from the internal financial reporting system we use to monitor and manage our financial performance. GAAP guides financial accounting, but there is no authoritative guidance for “management accounting” — the way we use our judgment and experience to make reporting decisions. Consequently, the line of business results we report may not be comparable to line of business results presented by other companies.

The selected financial data are based on internal accounting policies designed to compile results on a consistent basis and in a manner that reflects the underlying economics of the businesses. In accordance with our policies:

¿ Net interest income is determined by assigning a standard cost for funds used or a standard credit for funds provided based on their assumed maturity, prepayment and/or repricing characteristics.

¿ Indirect expenses, such as computer servicing costs and corporate overhead, are allocated based on assumptions regarding the extent to which each line of business actually uses the services.

¿ The consolidated provision for loan and lease losses is allocated among the lines of business primarily based on their actual net charge-offs, adjusted periodically for loan growth and changes in risk profile. The amount of the consolidated provision is based on the methodology that we use to estimate our consolidated allowance for loan and lease losses. This methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan and Lease Losses.”

¿ Income taxes are allocated based on the statutory federal income tax rate of 35% (adjusted for tax-exempt interest income, income from corporate-owned life insurance and tax credits associated with investments in low-income housing projects) and a blended state income tax rate (net of the federal income tax benefit) of 2.2%.

¿ Capital is assigned based on our assessment of economic risk factors (primarily credit, operating and market risk) directly attributable to each line of business.

Developing and applying the methodologies that we use to allocate items among our lines of business is a dynamic process. Accordingly, financial results may be revised periodically to reflect accounting enhancements, changes in the risk profile of a particular business or changes in our organizational structure.

Year ended December 31,	Key Community Bank									Key Corporate Bank
dollars in millions	2011			2010			2009			2011			2010			2009
SUMMARY OF OPERATIONS
Net interest income (TE)	$	1,488		$	1,618		$	1,722		$	703		$	796		$	870
Noninterest income		746			772			758			866			839			693
Total revenue (TE) (a)		2,234			2,390			2,480			1,569			1,635			1,563
Provision (credit) for loan and lease losses		160			413			731			(198	)		(28	)		1,826
Depreciation and amortization expense		38			37			42			71			94			117
Other noninterest expense		1,787			1,781			1,895			806			904			1,132
Income (loss) from continuing operations before income taxes (TE)		249			159			(188	)		890			665			(1,512	)
Allocated income taxes and TE adjustments		36			4			(120	)		325			242			(520	)
Income (loss) from continuing operations		213			155			(68	)		565			423			(992	)
Income (loss) from discontinued operations, net of taxes		—			—			—			—			—			—
Net income (loss)		213			155			(68	)		565			423			(992	)
Less: Net income (loss) attributable to noncontrolling interests		—			—			—			—			(1	)		(5	)
Net income (loss) attributable to Key	$	213		$	155		$	(68	)	$	565		$	424		$	(987	)
AVERAGE BALANCES (b)
Loans and leases	$	26,308		$	27,044		$	29,747		$	17,402		$	20,370		$	27,235
Total assets (a)		29,744			30,254			32,564			21,547			24,348			32,965
Deposits		47,893			49,652			52,525			10,795			12,235			12,709
OTHER FINANCIAL DATA
Expenditures for additions to long-lived assets (a), (b)	$	118		$	110		$	139		$	15			—		$	9
Net loan charge-offs (b)		286			509			455			138			607			1,260
Return on average allocated equity (b)		6.73	%		4.45	%		(1.93	)%		25.07	%		13.65	%		(26.19	)%
Return on average allocated equity		6.73			4.45			(1.93	)		25.07			13.65			(26.19	)
Average full-time equivalent employees (c)		8,540			8,255			8,578			2,231			2,192			2,353

(a) Substantially all revenue generated by our major business segments is derived from clients that reside in the United States. Substantially all long-lived assets, including premises and equipment, capitalized software and goodwill held by our major business segments, are located in the United States.

(b) From continuing operations.

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

(d) Reconciling Items for 2009 include a $106 million credit to income taxes, due primarily to the settlement of IRS audits for the tax years 1997-2006. Results for 2009 also include a $32 million ($20 million after tax) gain from the sale of our claim associated with the Lehman Brothers’ bankruptcy and a $105 million ($65 million after tax) gain from the sale of our remaining equity interest in Visa Inc.

Other Segments									Total Segments									Reconciling Items											Key
2011			2010			2009			2011			2010			2009			2011			2010			2009					2011			2010			2009
$	83		$	98			$      (175)		$	2,274		$	2,512		$	2,417		$	18		$	25			$          (11)				$	2,292		$	2,537		$	2,406
	234			327			473			1,846			1,938			1,924			(38	)		16			111		(d	)		1,808			1,954			2,035
	317			425			298			4,120			4,450			4,341			(20	)		41			100					4,100			4,491			4,441
	(17	)		261			592			(55	)		646			3,149			(5	)		(8	)		10					(60	)		638			3,159
	18			38			69			127			169			228			143			161			161					270			330			389
	80			157			294			2,673			2,842			3,321			(153	)		(138	)		(156	)				2,520			2,704			3,165
	236			(31	)		(657	)		1,375			793			(2,357	)		(5	)		26			85					1,370			819			(2,272	)
	43			(62	)		(268	)		404			184			(908	)		(10	)		28			(101	)	(d	)		394			212			(1,009	)
	193			31			(389	)		971			609			(1,449	)		5			(2	)		186					976			607			(1,263	)
	—			—			—			—			—			—			(44	)		(23	)		(48	)				(44	)		(23	)		(48	)
	193			31			(389	)		971			609			(1,449	)		(39	)		(25	)		138					932			584			(1,311	)
	12			31			29			12			30			24			—			—			—					12			30			24
$	181			—		$	(418	)	$	959		$	579		$	(1,473	)	$	(39	)	$	(25	)	$	138				$	920		$	554		$	(1,335	)
$	4,837		$	6,507		$	9,357		$	48,547		$	53,921		$	66,339		$	59		$	50		$	47				$	48,606		$	53,971		$	66,386
	29,666			30,816			28,676			80,957			85,418			94,205			1,136			2,056			966					82,093			87,474			95,171
	725			1,597			2,427			59,413			63,484			67,661			(150	)		(92	)		(616	)				59,263			63,392			67,045
	—			—			—		$	133		$	110		$	148		$	78		$	66		$	127				$	211		$	176		$	275
	117			454			543			541			1,570			2,258			—			—			(1	)				541			1,570			2,257
	24.01	%		—			(31.69	)%		15.54	%		7.59	%		(17.10	)%		.13	%		(.06	)%		9.39	%				9.51	%		5.30	%		(12.15	)%
	24.01			—			(31.69	)		15.54			7.59			(17.10	)		(.98	)		(.77	)		6.97					9.08			5.08			(12.60	)
	24			187			232			10,795			10,634			11,163			4,586			4,976			5,535					15,381			15,610			16,698

Supplementary information (Key Community Bank lines of business)

Year ended December 31,	Regional Banking									Commercial Banking
dollars in millions	2011			2010			2009			2011			2010			2009
Total revenue (TE)	$	1,774		$	1,923		$	2,055		$	460		$	467		$	425
Provision (credit) for loan and lease losses		183			355			467			(23	)		58			264
Noninterest expense		1,633			1,644			1,709			192			174			228
Net income (loss) attributable to Key		30			7			(26	)		183			148			(42	)
Average loans and leases		17,464			18,256			19,540			8,844			8,788			10,207
Average loans held for sale		59			79			146			17			12			1
Average deposits		41,578			44,261			48,139			6,315			5,391			4,386
Net loan charge-offs		239			346			285			47			163			170
Net loan charge-offs to average loans		1.37	%		1.90	%		1.46	%		.53	%		1.85	%		1.67	%
Nonperforming assets at year end	$	287		$	326		$	319		$	128		$	171		$	225
Return on average allocated equity		1.35	%		.30	%		(1.16	)%		19.28	%		12.63	%		(3.28	)%
Average full-time equivalent employees		8,171			7,900			8,217			369			355			361

Supplementary information (Key Corporate Bank lines of business)

Year ended December 31,	Real Estate Capital and Corporate Banking Services									Equipment Finance									Institutional and Capital Markets
dollars in millions	2011			2010			2009			2011			2010			2009			2011			2010			2009
Total revenue (TE)	$	638		$	661		$	580		$	256		$	250		$	253		$	675		$	724		$	730
Provision (credit) for loan and lease losses		(109	)		34			1,492			(79	)		(15	)		223			(10	)		(47	)		111
Noninterest expense		246			388			425			190			200			254			441			410			570
Net income (loss) attributable to Key		316			152			(852	)		91			41			(140	)		158			231			5
Average loans and leases		7,702			10,864			14,602			4,617			4,556			4,925			5,083			4,950			7,708
Average loans held for sale		190			178			204			5			5			11			107			131			203
Average deposits		7,724			9,731			10,398			9			4			8			3,062			2,500			2,303
Net loan charge-offs		119			509			1,042			11			67			102			8			31			116
Net loan charge-offs to average loans		1.55	%		4.69	%		7.14	%		.24	%		1.47	%		2.07	%		.16	%		.63	%		1.50	%
Nonperforming assets at year end	$	209		$	442		$	1,094		$	41		$	68		$	122		$	44		$	65		$	110
Return on average allocated equity		26.20	%		8.13	%		(37.19	)%		29.35	%		11.65	%		(36.36	)%		21.41	%		26.07	%		.46	%
Average full-time equivalent employees		920			901			968			515			544			621			796			747			764