Asset Quality

6 Months Ended

Jun. 30, 2012

Asset Quality and Loans and Loans Held for Sale [Abstract]

Asset Quality

4. Asset Quality

We manage our exposure to credit risk by closely monitoring loan performance trends and general economic conditions. A key indicator of the potential for future credit losses is the level of nonperforming assets and past due loans.

Our nonperforming assets and past due loans were as follows:

	June 30,		December 31,		June 30,
in millions	2012		2011		2011
Total nonperforming loans (a)	$	657	$	727	$	842
Nonperforming loans held for sale		38		46		42
OREO		28		65		52
Other nonperforming assets		28		21		14
Total nonperforming assets	$	751	$	859	$	950
Restructured loans included in nonperforming loans (b)	$	163	$	191	$	144
Restructured loans with an allocated specific allowance (c)		71		50		19
Specifically allocated allowance for restructured loans (d)		34		10		5
Accruing loans past due 90 days or more	$	131	$	164	$	118
Accruing loans past due 30 through 89 days		362		441		465

(a) Includes $36 million of performing home equity second liens at June 30, 2012, that are: subordinate to first liens that are 120 days or more past due; in foreclosure; or when the first mortgage delinquency timeframe is unknown. Such second liens are now being reported as nonperforming loans based upon regulatory guidance issued in January, 2012. This policy related to the classification of second lien home equity loans was implemented prospectively, and therefore prior periods were not presented.

(b) A loan is “restructured” (i.e., TDRs) when the borrower is experiencing financial difficulty and we grant a concession that we would not otherwise have considered to improve the collectability of the loan. Typical concessions include: reducing the interest rate, extending the maturity date, or reducing the principal balance.

(c) Included in individually impaired loans allocated a specific allowance.

(d) Included in allowance for individually evaluated impaired loans.

At June 30, 2012, the approximate carrying amount of our commercial nonperforming loans outstanding represented 59% of their original contractual amount, total nonperforming loans outstanding represented 70% of their original contractual amount owed, and nonperforming assets in total were carried at 64% of their original contractual amount.

At June 30, 2012, our twenty largest nonperforming loans totaled $220 million, representing 33% of total loans on nonperforming status from continuing operations. At June 30, 2011, the twenty largest nonperforming loans totaled $276 million, representing 33% of total loans on nonperforming status.

The amount by which nonperforming loans and loans held for sale reduced expected interest income was $12 million for the six months ended June 30, 2012, and $31 million for the year ended December 31, 2011.

The following tables set forth a further breakdown of individually impaired loans as of June 30, 2012, December 31, 2011 and June 30, 2011:

				Unpaid					Average
June 30, 2012	Recorded			Principal			Specific		Recorded
in millions	Investment		(a)	Balance		(b)	Allowance		Investment
With no related allowance recorded:
Commercial, financial and agricultural	$	59		$	142			—	$	68
Commercial real estate:
Commercial mortgage		112			199			—		113
Construction		51			204			—		49
Total commercial real estate loans		163			403			—		162
Total commercial loans with no related allowance recorded		222			545			—		230
Real estate — residential mortgage		1			1			—		1
Total consumer loans		1			1			—		1
Total loans with no related allowance recorded		223			546			—		231
With an allowance recorded:
Commercial, financial and agricultural		43			53		$	12		46
Commercial real estate:
Commercial mortgage		56			98			15		63
Construction		4			4			3		4
Total commercial real estate loans		60			102			18		67
Total commercial loans with an allowance recorded		103			155			30		113
Real estate — residential mortgage		16			17			2		8
Home equity:
Key Community Bank		11			11			3		6
Other		6			6			1		3
Total home equity loans		17			17			4		9
Consumer other — Key Community Bank		2			2			1		1
Consumer other:
Marine		50			50			11		25
Other		—			—			—		—
Total consumer other		50			50			11		25
Total consumer loans		85			86			18		43
Total loans with an allowance recorded		188			241			48		156
Total	$	411		$	787		$	48	$	387

(a) The Recorded Investment in impaired loans represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on our consolidated balance sheet.

(b) The Unpaid Principal Balance represents the customer’s legal obligation to us.

				Unpaid					Average
December 31, 2011	Recorded			Principal			Specific		Recorded
in millions	Investment		(a)	Balance		(b)	Allowance		Investment
With no related allowance recorded:
Commercial, financial and agricultural	$	88		$	195			—	$	75
Commercial real estate:
Commercial mortgage		100			240			—		131
Construction		30			113			—		98
Total commercial real estate loans		130			353			—		229
Total loans with no related allowance recorded		218			548			—		304
With an allowance recorded:
Commercial, financial and agricultural		62			70		$	26		75
Commercial real estate:
Commercial mortgage		96			115			21		91
Construction		12			18			4		29
Total commercial real estate loans		108			133			25		120
Total loans with an allowance recorded		170			203			51		201
Total	$	388		$	751		$	51	$	505

(a) The Recorded Investment in impaired loans represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on our consolidated balance sheet.

(b) The Unpaid Principal Balance represents the customer’s legal obligation to us.

				Unpaid					Average
June 30, 2011	Recorded			Principal			Specific		Recorded
in millions	Investment		(a)	Balance		(b)	Allowance		Investment
With no related allowance recorded:
Commercial, financial and agricultural	$	116		$	217			—	$	89
Commercial real estate:
Commercial mortgage		123			207			—		143
Construction		83			226			—		124
Total commercial real estate loans		206			433			—		267
Total loans with no related allowance recorded		322			650			—		356
With an allowance recorded:
Commercial, financial and agricultural		43			71		$	14		66
Commercial real estate:
Commercial mortgage		89			174			21		88
Construction		34			73			11		39
Total commercial real estate loans		123			247			32		127
Commercial lease financing		—			—			—		6
Total loans with an allowance recorded		166			318			46		199
Total	$	488		$	968		$	46	$	555

(a) The Recorded Investment in impaired loans represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on our consolidated balance sheet.

(b) The Unpaid Principal Balance represents the customer’s legal obligation to us.

For the six months ended June 30, 2012 and 2011, interest income recognized on the outstanding balances of accruing impaired loans totaled $2 million for each period presented.

At June 30, 2012, aggregate restructured loans (accrual, nonaccrual and held-for-sale loans) totaled $274 million, compared to $276 million at December 31, 2011, and $252 million at June 30, 2011. We added $109 million in restructured loans during the first six months of 2012, which were partially offset by $111 million in payments and charge-offs.

A further breakdown of restructured loans (TDRs) included in nonperforming loans by loan category as of June 30, 2012, follows:

				Pre-modification			Post-modification
				Outstanding			Outstanding
June 30, 2012	Number			Recorded			Recorded
dollars in millions	of loans			Investment			Investment
LOAN TYPE
Nonperforming:
Commercial, financial and agricultural		95	$		108	$		59
Commercial real estate:
Real estate — commercial mortgage		16			47			31
Real estate — construction		11			60			43
Total commercial real estate loans		27			107			74
Total commercial loans		122			215			133
Real estate — residential mortgage		56			7			7
Home equity:
Key Community Bank		50			4			4
Other		74			2			1
Total home equity loans		124			6			5
Consumer other — Key Community Bank		11			1			1
Consumer other:
Marine		139			17			17
Other		11			1			—
Total consumer other		150			18			17
Total consumer loans		341			32			30
Total nonperforming TDRs		463			247			163
Prior-year accruing (a)
Commercial, financial and agricultural		115			8			6
Commercial real estate:
Real estate — commercial mortgage		7			71			48
Real estate — construction		1			15			1
Total commercial real estate loans		8			86			49
Total commercial loans		123			94			55
Real estate — residential mortgage		111			11			11
Home equity:
Key Community Bank		88			7			7
Other		101			3			3
Total home equity loans		189			10			10
Consumer other — Key Community Bank		20			1			—
Consumer other:
Marine		135			34			33
Other		53			2			2
Total consumer other		188			36			35
Total consumer loans		508			58			56
Total prior-year accruing TDRs		631			152			111
Total TDRs		1,094	$		399	$		274

(a) All TDRs that were restructured prior to January 1, 2012 and are fully accruing.

We classify loan modifications as TDRs when a borrower is experiencing financial difficulties and we have granted a concession to the borrower without commensurate financial, structural, or legal consideration. All commercial and consumer loan TDRs, regardless of size, are evaluated for impairment individually to determine the probable loss content and are assigned a specific loan allowance if deemed appropriate. The financial effects of TDRs are reflected in the components that comprise the allowance for loan and lease losses in either the amount of charge-offs or loan loss provision and appropriately impact the ultimate allowance level.

Commercial and consumer loan TDRs are considered subsequently defaulted at 90 days past due and when they are greater than 60 days past due, respectively, for principal and interest payments. There were no significant commercial or consumer loans that were designated as TDRs during calendar year 2011, for which there was a payment default during the first six months of 2012.

Our loan modifications are handled on a case by case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet our client’s financial needs. A majority of our concessions granted to borrowers are in the form of interest rate reductions. Other concession types include forgiveness of principal and other modifications of loan terms. Consumer loan concessions include Home Affordable Modification Program (“HAMP”) loans of approximately $4 million as of June 30, 2012. These loan concessions have successfully completed the required trial period under HAMP and as a result have been permanently modified and are included in consumer TDRs.

The following table shows the concession types for our commercial accruing and nonaccruing TDRs.

	June 30,			December 31,			June 30,
dollars in millions	2012			2011			2011
Interest rate reduction	$	155		$	177		$	175
Forgiveness of principal		13			23			10
Other modification of loan terms		20			8			6
Total	$	188		$	208		$	191
Total commercial and consumer TDRs (a)	$	274		$	276		$	252
Total commercial TDRs to total commercial loans		.54	%		.60	%		.58	%
Total commercial TDRs to total loans		.38			.42			.40
Total commercial loans	$	34,603		$	34,782		$	32,688
Total loans		49,605			49,575			47,840

(a) Commitments outstanding to lend additional funds to borrowers whose terms have been modified in TDRs are $45 million, $25 million, and $45 million at June 30, 2012, December 31, 2011, and June 30, 2011, respectively.

Our policies for determining past due loans, placing loans on nonaccrual, applying payments on nonaccrual loans and resuming accrual of interest for our commercial and consumer loan portfolios are disclosed in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Nonperforming Loans” on page 117 of our 2011 Annual Report on Form 10-K. Pursuant to regulatory guidance issued in January 2012, the above-mentioned policy for nonperforming loans was revised effective for the second quarter of 2012. As of June 30, 2012, any second lien home equity loan with an associated first lien that is: 120 days or more past due; in foreclosure; or when the first mortgage delinquency timeframe is unknown, is reported as a nonperforming loan. This policy was implemented prospectively, and, therefore, prior periods were not presented.

At June 30, 2012, approximately $48.5 billion, or 98%, of our total loans are current. At June 30, 2012, total past due loans and nonperforming loans of $1.2 billion represent approximately 2% of total loans.

The following aging analysis as of June 30, 2012 and 2011, of past due and current loans provides further information regarding Key’s credit exposure.

			30-59		60-89		90 and Greater				Total Past Due and
June 30, 2012			Days Past		Days Past		Days Past		Nonperforming		Nonperforming		Total
in millions	Current		Due		Due		Due		Loans (a)		Loans		Loans
LOAN TYPE
Commercial, financial and agricultural	$	20,148	$	60	$	13	$	24	$	141	$	238	$	20,386
Commercial real estate:
Commercial mortgage		7,182		15		16		24		172		227		7,409
Construction		1,033		12		24		35		68		139		1,172
Total commercial real estate loans		8,215		27		40		59		240		366		8,581
Commercial lease financing		5,581		22		8		7		18		55		5,636
Total commercial loans	$	33,944	$	109	$	61	$	90	$	399	$	659	$	34,603
Real estate — residential mortgage	$	1,895	$	24	$	10	$	9	$	78	$	121	$	2,016
Home equity:
Key Community Bank		9,361		56		26		17		141		240		9,601
Other		445		10		4		3		17		34		479
Total home equity loans		9,806		66		30		20		158		274		10,080
Consumer other — Key Community Bank		1,237		13		4		7		2		26		1,263
Consumer other:
Marine		1,478		31		10		4		19		64		1,542
Other		95		2		2		1		1		6		101
Total consumer other		1,573		33		12		5		20		70		1,643
Total consumer loans	$	14,511	$	136	$	56	$	41	$	258	$	491	$	15,002
Total loans	$	48,455	$	245	$	117	$	131	$	657	$	1,150	$	49,605

(a) Includes $36 million of performing home equity second liens at June 30, 2012, that are subordinate to first liens that are 120 days or more past due; in foreclosure; or when the first mortgage delinquency is unknown. Such second liens are now being reported as nonperforming loans based upon regulatory guidance issued in January, 2012.

			30-59		60-89		90 and Greater				Total Past Due and
June 30, 2011			Days Past		Days Past		Days Past		Nonperforming		Nonperforming		Total
in millions	Current		Due		Due		Due		Loans		Loans		Loans
LOAN TYPE
Commercial, financial and agricultural	$	16,599	$	35	$	17	$	19	$	213	$	284	$	16,883
Commercial real estate:
Commercial mortgage		7,743		34		51		11		230		326		8,069
Construction		1,437		11		24		28		131		194		1,631
Total commercial real estate loans		9,180		45		75		39		361		520		9,700
Commercial lease financing		5,983		20		40		21		41		122		6,105
Total commercial loans	$	31,762	$	100	$	132	$	79	$	615	$	926	$	32,688
Real estate — residential mortgage	$	1,713	$	24	$	14	$	8	$	79	$	125	$	1,838
Home equity:
Key Community Bank		9,216		66		32		16		101		215		9,431
Other		559		13		7		5		11		36		595
Total home equity loans		9,775		79		39		21		112		251		10,026
Consumer other — Key Community Bank		1,129		14		4		7		3		28		1,157
Consumer other:
Marine		1,898		42		14		3		32		91		1,989
Other		138		2		1		—		1		4		142
Total consumer other		2,036		44		15		3		33		95		2,131
Total consumer loans	$	14,653	$	161	$	72	$	39	$	227	$	499	$	15,152
Total loans	$	46,415	$	261	$	204	$	118	$	842	$	1,425	$	47,840

The risk characteristic prevalent to both commercial and consumer loans is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Evaluation of this risk is stratified and monitored by the assigned loan risk rating grades for the commercial loan portfolios and the regulatory risk ratings assigned for the consumer loan portfolios. This risk rating stratification assists in the determination of the ALLL. Loan grades are assigned at the time of origination, verified by credit risk management, and periodically reevaluated thereafter.

Most extensions of credit are subject to loan grading or scoring. This risk rating methodology blends our judgment with quantitative modeling. Commercial loans generally are assigned two internal risk ratings. The first rating reflects the probability that the borrower will default on an obligation; the second rating reflects expected recovery rates on the credit facility. Default probability is determined based on, among other factors, the financial strength of the borrower, an assessment of the borrower’s management, the borrower’s competitive position within its industry sector, and our view of industry risk within the context of the general economic outlook. Types of exposure, transaction structure, and collateral, including credit risk mitigants, affect the expected recovery assessment.

Credit quality indicators for loans are updated on an ongoing basis. Bond rating classifications are indicative of the credit quality of our commercial loan portfolios and are determined by converting our internally assigned risk rating grades to bond rating categories. Payment activity and the regulatory classifications of pass and substandard are indicators of the credit quality of our consumer loan portfolios.

Credit quality indicators for our commercial and consumer loan portfolios based on bond rating, regulatory classification and payment activity as of June 30, 2012, and June 30, 2011, are as follows:

Commercial Credit Exposure

Credit Risk Profile by Creditworthiness Category ^(a)

June 30,
in millions
	Commercial, financial and  agricultural				RE — Commercial				RE — Construction				Commercial Lease				Total
RATING (b) (c)	2012		2011		2012		2011		2012		2011		2012		2011		2012		2011
AAA — AA	$	165	$	100		—	$	2	$	1	$	3	$	605	$	655	$	771	$	760
A		680		671	$	64		63		1		1		992		1,245		1,737		1,980
BBB — BB		17,652		13,546		5,925		5,553		791		747		3,709		3,590		28,077		23,436
B		868		955		553		941		58		262		197		343		1,676		2,501
CCC — C		1,021		1,611		867		1,510		321		618		133		272		2,342		4,011
Total	$	20,386	$	16,883	$	7,409	$	8,069	$	1,172	$	1,631	$	5,636	$	6,105	$	34,603	$	32,688

(a)  Credit quality indicators are updated on an ongoing basis and reflect credit quality information as of the dates indicated.

(b)  Our bond rating to internal loan grade conversion system is as follows: AAA - AA = 1, A = 2, BBB - BB = 3 - 13, B = 14 - 16, and CCC - C = 17 - 20.

(c)  Our internal loan grade to regulatory-defined classification is as follows: Pass = 1-16, Special Mention = 17, Substandard = 18, Doubtful = 19, and Loss = 20.

Consumer Credit Exposure

Credit Risk Profile by Regulatory Classifications ^(a) (b)

June 30,
in millions
	Residential — Prime
GRADE	2012		2011
Pass	$	11,831	$	11,644
Substandard		265		220
Total	$	12,096	$	11,864

Credit Risk Profile Based on Payment Activity ^(a) (b)

June 30,	Consumer — Key Community  Bank				Consumer — Marine				Consumer — Other				Total
in millions	2012		2011		2012		2011		2012		2011		2012		2011
Performing	$	1,261	$	1,154	$	1,523	$	1,957	$	100	$	141	$	2,884	$	3,252
Nonperforming		2		3		19		32		1		1		22		36
Total	$	1,263	$	1,157	$	1,542	$	1,989	$	101	$	142	$	2,906	$	3,288

(a) Credit quality indicators are updated on an ongoing basis and reflect credit quality information as of the dates indicated.

(b) Our past due payment activity to regulatory classification conversion is as follows: pass = less than 90 days; and substandard = 90 days and greater plus nonperforming loans. As of June 30, 2012, any second lien home equity loan with an associated first lien: that is 120 days or more past due; in foreclosure; or when the first mortgage delinquency timeframe is unknown, is reported as a nonperforming loan in accordance with regulatory guidance issued in January 2012.

We determine the appropriate level of the ALLL on at least a quarterly basis. The methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan and Lease Losses” beginning on page 117 of our 2011 Annual Report on Form 10-K. We apply expected loss rates to existing loans with similar risk characteristics as noted in the credit quality indicator table above and exercise judgment to assess the impact of factors such as changes in economic conditions, changes in credit policies or underwriting standards, and changes in the level of credit risk associated with specific industries and markets.

For all commercial and consumer loan TDRs, regardless of size, as well as impaired commercial loans with an outstanding balance greater than $2.5 million, we conduct further analysis to determine the probable loss content and assign a specific allowance to the loan if deemed appropriate. We estimate the extent of impairment by comparing the recorded investment of the loan with the estimated present value of its future cash flows, the fair value of its underlying collateral, or the loan’s observable market price. A specific allowance also may be assigned — even when sources of repayment appear sufficient — if we remain uncertain about whether the loan will be repaid in full. On at least a quarterly basis, we evaluate the appropriateness of our loss estimation methods to reduce differences between estimated incurred losses and actual losses. The ALLL at June 30, 2012 represents our best estimate of the probable credit losses inherent in the loan portfolio at that date

While quantitative modeling factors such as default probability and expected recovery rates are constantly changing as the financial strength of the borrower and overall economic conditions change, there have been no changes to the accounting policies or methodology we used to estimate the ALLL.

Commercial loans generally are charged off in full or charged down to the fair value of the underlying collateral when the borrower’s payment is 180 days past due. Our charge-off policy for most consumer loans is similar but takes effect when payments are 120 days past due. Home equity and residential mortgage loans generally are charged down to the fair value of the underlying collateral when payment is 180 days past due.

At June 30, 2012, the ALLL was $888 million, or 1.79% of loans, compared to $1.2 billion, or 2.57% of loans, at June 30, 2011. At June 30, 2012, the ALLL was 135.16% of nonperforming loans compared to 146.08% at June 30, 2011.

A summary of the allowance for loan and lease losses for the periods indicated is presented in the table below:

		Three months ended  June 30,					Six months ended  June 30,
in millions		2012		2011			2012		2011
Balance at beginning of period — continuing operations	$		944	$	1,372	$		1,004	$	1,604
Charge-offs			(131)		(177)			(263)		(409)
Recoveries			54		43			85		82
Net loans charged off			(77)		(134)			(178)		(327)
Provision for loan and lease losses from continuing operations			21		(8)			63		(48)
Foreign currency translation adjustment			—		—			(1)		1
Balance at end of period — continuing operations	$		888	$	1,230	$		888	$	1,230

The changes in the ALLL by loan category for the periods indicated are as follows:

in millions	December 31,  2011		Provision			Charge-offs		Recoveries		June 30,  2012
Commercial, financial and agricultural	$	334	$	(12)		$	(49)	$	31	$	304
Real estate — commercial mortgage		272		8			(46)		16		250
Real estate — construction		63		6			(16)		2		55
Commercial lease financing		78		—			(20)		10		68
Total commercial loans		747		2			(131)		59		677
Real estate — residential mortgage		37		—			(13)		2		26
Home equity:
Key Community Bank		103		21			(48)		4		80
Other		29		9			(17)		3		24
Total home equity loans		132		30			(65)		7		104
Consumer other — Key Community Bank		41		10			(20)		3		34
Consumer other:
Marine		46		15			(30)		13		44
Other		1		5			(4)		1		3
Total consumer other:		47		20			(34)		14		47
Total consumer loans		257		60			(132)		26		211
Total ALLL — continuing operations		1,004		62	(a)		(263)		85		888
Discontinued operations		104		6			(39)		8		79
Total ALLL — including discontinued operations	$	1,108	$	68		$	(302)	$	93	$	967

(a) Includes $1 million of foreign currency translation adjustment.

in millions	December 31,  2010		Provision			Charge-offs		Recoveries		June 30,  2011
Commercial, financial and agricultural	$	485	$	(22)		$	(93)	$	25	$	395
Real estate — commercial mortgage		416		(18)			(62)		7		343
Real estate — construction		145		15			(62)		8		106
Commercial lease financing		175		(53)			(26)		11		107
Total commercial loans		1,221		(78)			(243)		51		951
Real estate — residential mortgage		49		7			(17)		2		41
Home equity:
Key Community Bank		120		30			(53)		2		99
Other		57		4			(26)		2		37
Total home equity loans		177		34			(79)		4		136
Consumer other — Key Community Bank		57		9			(23)		4		47
Consumer other:
Marine		89		(14)			(42)		19		52
Other		11		(5)			(5)		2		3
Total consumer other:		100		(19)			(47)		21		55
Total consumer loans		383		31			(166)		31		279
Total ALLL — continuing operations		1,604		(47)	(a)		(409)		82		1,230
Discontinued operations		114		62			(73)		6		109
Total ALLL — including discontinued operations	$	1,718	$	15		$	(482)	$	88	$	1,339

(a) Includes $1 million of foreign currency translation adjustment.

Our ALLL decreased by $342 million, or 28%, since the second quarter of 2011. This contraction was associated with the improvement in credit quality of our loan portfolios, which has trended more favorably over the past six quarters. Our asset quality metrics have showed continued improvement and, therefore, resulted in favorable risk rating migration and a reduction in our general allowance. Our general allowance encompasses the application of expected loss rates to our existing loans with similar risk characteristics and an assessment of factors such as changes in economic conditions and changes in credit policies or underwriting standards. Our delinquency trends showed continued improvement during 2011 and the first-half of 2012. We attribute this improvement to a more moderate level of lending activity, more favorable conditions in the capital markets, improvement in client income statements, and continued run off in our exit loan portfolio.

For continuing operations, the loans outstanding individually evaluated for impairment totaled $411 million, with a corresponding allowance of $48 million at June 30, 2012. Loans outstanding collectively evaluated for impairment totaled $49.2 billion, with a corresponding allowance of $840 million at June 30, 2012.

A breakdown of the individual and collective ALLL and the corresponding loan balances as of June 30, 2012 follows:

	Allowance (a)				Outstanding (a)
June 30, 2012	Individually Evaluated for		Collectively Evaluated for					Individually Evaluated for		Collectively  Evaluated for
in millions	Impairment		Impairment		Loans			Impairment		Impairment
Commercial, financial and agricultural	$	12	$	292	$	20,386		$	102	$	20,284
Commercial real estate:
Commercial mortgage		15		235		7,409			168		7,241
Construction		3		52		1,172			55		1,117
Total commercial real estate loans		18		287		8,581			223		8,358
Commercial lease financing		—		68		5,636			—		5,636
Total commercial loans		30		647		34,603			325		34,278
Real estate — residential mortgage		2		24		2,016			17		1,999
Home equity:
Key Community Bank		3		77		9,601			11		9,590
Other		1		23		479			6		473
Total home equity loans		4		100		10,080			17		10,063
Consumer other — Key Community Bank		1		33		1,263			2		1,261
Consumer other:
Marine		11		33		1,542			50		1,492
Other		—		3		101			—		101
Total consumer other		11		36		1,643			50		1,593
Total consumer loans		18		193		15,002			86		14,916
Total ALLL — continuing operations		48		840		49,605			411		49,194
Discontinued operations		—		79		5,483	(b)		—		5,483
Total ALLL — including discontinued operations	$	48	$	919	$	55,088		$	411	$	54,677

(a) There were no loans acquired with deteriorated credit quality at June 30, 2012.

(b) Amount includes $2.8 billion of loans carried at fair value that are excluded from ALLL consideration.

A breakdown of the individual and collective ALLL and the corresponding loan balances as of June 30, 2011 follows:

	Allowance (a)				Outstanding (a)
June 30, 2011	Individually Evaluated for		Collectively Evaluated for				Individually Evaluated for		Collectively  Evaluated for
in millions	Impairment		Impairment		Loans		Impairment		Impairment
Commercial, financial and agricultural	$	14	$	381	$	16,883	$	159	$	16,724
Commercial real estate:
Commercial mortgage		21		322		8,069		213		7,856
Construction		11		95		1,631		116		1,515
Total commercial real estate loans		32		417		9,700		329		9,371
Commercial lease financing		—		107		6,105		—		6,105
Total commercial loans		46		905		32,688		488		32,200
Real estate — residential mortgage		—		41		1,838		—		1,838
Home equity:
Key Community Bank		—		99		9,431		—		9,431
Other		—		37		595		—		595
Total home equity loans		—		136		10,026		—		10,026
Consumer other — Key Community Bank		—		47		1,157		—		1,157
Consumer other:
Marine		—		52		1,989		—		1,989
Other		—		3		142		—		142
Total consumer other		—		55		2,131		—		2,131
Total consumer loans		—		279		15,152		—		15,152
Total ALLL — continuing operations		46		1,184		47,840		488		47,352
Discontinued operations		—		109		6,261		—		6,261
Total ALLL — including discontinued operations	$	46	$	1,293	$	54,101	$	488	$	53,613

(a) There were no loans acquired with deteriorated credit quality at June 30, 2011.

The liability for credit losses inherent in lending-related commitments, such as letters of credit and unfunded loan commitments, is included in “accrued expense and other liabilities” on the balance sheet. We establish the amount of this reserve by considering both historical trends and current market conditions quarterly, or more often if deemed necessary. Our liability for credit losses on lending-related commitments has decreased by $6 million since the second quarter of 2011 to $51 million at June 30, 2012. When combined with our ALLL, our total allowance for credit losses represented 1.89% of loans at June 30, 2012, compared to 2.69% at June 30, 2011.

Changes in the liability for credit losses on lending-related commitments are summarized as follows:

	Three months ended June 30,				Six months ended June 30,
in millions	2012		2011		2012		2011
Balance at beginning of period	$	45	$	69	$	45	$	73
Provision (credit) for losses on lending-related commitments		6		(12)		6		(16)
Balance at end of period	$	51	$	57	$	51	$	57