10-K

United States Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
þ	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the fiscal year ended December 31, 2009
or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from          to

Commission file number: 1-11302

Exact name of Registrant as specified in its charter:

Ohio	34-6542451
State or other jurisdiction of incorporation or organization:	IRS Employer Identification Number:
127 Public Square, Cleveland, Ohio	44114
Address of principal executive offices:

(216) 689-6300

Registrant’s telephone number, including area code:

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class	Name of each exchange on which registered
Common Shares, $1 par value (“Common Shares”)	New York Stock Exchange
7.750% Non-Cumulative Perpetual Convertible Preferred Stock, Series A	New York Stock Exchange
5.875% Trust Preferred Securities, issued by KeyCorp Capital V, including Junior Subordinated Debentures of KeyCorp and Guarantee of KeyCorp1	New York Stock Exchange2
6.125% Trust Preferred Securities, issued by KeyCorp Capital VI, including Junior Subordinated Debentures of KeyCorp and Guarantee of KeyCorp1	New York Stock Exchange2
7.000% Enhanced Trust Preferred Securities, issued by KeyCorp Capital VIII, including Junior Subordinated Debentures of KeyCorp and Guarantee of KeyCorp1	New York Stock Exchange2
6.750% Enhanced Trust Preferred Securities, issued by KeyCorp Capital IX, including Junior Subordinated Debentures of KeyCorp and Guarantee of KeyCorp1	New York Stock Exchange2
8.000% Enhanced Trust Preferred Securities, issued by KeyCorp Capital X, including Junior Subordinated Debentures of KeyCorp and Guarantee of KeyCorp1	New York Stock Exchange2

1	The Subordinated Debentures and the Guarantee are issued by KeyCorp. The Trust Preferred Securities and the Enhanced Trust Preferred Securities are issued by the individual trusts.
2	The Subordinated Debentures and Guarantee of KeyCorp have been registered on the New York Stock Exchange only in connection with the trading of the Trust Preferred Securities and the Enhanced Trust Preferred Securities and not for independent trading.

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).   Yes þ   No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The aggregate market value of voting stock held by nonaffiliates of the Registrant is approximately $4,603,574,223 (based on the June 30, 2009, closing price of Common Shares of $5.24 as reported on the New York Stock Exchange). As of February 24, 2010, there were 878,138,496 Common Shares outstanding.

Certain specifically designated portions of KeyCorp’s 2009 Annual Report to Shareholders are incorporated by reference into Parts I, II and IV of this Form 10-K. Certain specifically designated portions of KeyCorp’s definitive Proxy Statement for its 2010 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.

KeyCorp

2009 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

Item			Page
Number			Number
PART I
	1	Business		1
	1A	Risk Factors		11
	1B	Unresolved Staff Comments		25
	2	Properties		26
	3	Legal Proceedings		26
	4	Submission of Matters to a Vote of Security Holders		26
PART II
	5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		26
	6	Selected Financial Data		26
	7	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
	7A	Quantitative and Qualitative Disclosures About Market Risk		27
	8	Financial Statements and Supplementary Data		27
	9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		27
	9A	Controls and Procedures		27
	9B	Other Information		27
PART III
	10	Directors, Executive Officers and Corporate Governance		27
	11	Executive Compensation		28
	12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		28
	13	Certain Relationships and Related Transactions, and Director Independence		28
	14	Principal Accountant Fees and Services		28
PART IV
	15	Exhibits and Financial Statement Schedules		29
		Signatures		33
		Exhibits
EX-3.1
EX-10.8
EX-10.12
EX-10.15
EX-10.19
EX-10.26
EX-10.28
EX-10.37
EX-10.38
EX-10.40
EX-10.42
EX-10.43
EX-10.47
EX-10.48
EX-10.49
EX-10.50
EX-12
EX-13
EX-21
EX-23
EX-24
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-99.1
EX-99.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I

ITEM 1.   BUSINESS

Overview

KeyCorp, organized in 1958 under the laws of the State of Ohio, is headquartered in Cleveland, Ohio. We are a bank holding company and a financial holding company under the Bank Holding Company Act of 1956, as amended (“BHCA”), and are one of the nation’s largest bank-based financial services companies, with consolidated total assets of $93.3 billion at December 31, 2009. KeyCorp is the parent holding company for KeyBank National Association (“KeyBank”), its principal subsidiary, through which most of its banking services are provided. Through KeyBank and certain other subsidiaries, we provide a wide range of retail and commercial banking, commercial leasing, investment management, consumer finance and investment banking products and services to individual, corporate and institutional clients through two major business groups, Community Banking and National Banking. As of December 31, 2009, these services were provided across the country through KeyBank’s 1,007 full-service retail banking branches in fourteen states, additional offices, a telephone banking call center services group and a network of 1,495 automated teller machines (“ATMs”) in sixteen states. Additional information pertaining to KeyCorp’s two business groups is included in the “Line of Business Results” section and in Note 4 (“Line of Business Results”) of the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto) and is incorporated herein by reference. KeyCorp and its subsidiaries had an average of 16,698 full-time equivalent employees for 2009.

In addition to the customary banking services of accepting deposits and making loans, our bank and trust company subsidiaries offer personal and corporate trust services, personal financial services, access to mutual funds, cash management services, investment banking and capital markets products, and international banking services. Through our subsidiary bank, trust company and registered investment adviser subsidiaries, we provide investment management services to clients that include large corporate and public retirement plans, foundations and endowments, high-net-worth individuals and multi-employer trust funds established for providing pension or other benefits to employees.

We provide other financial services — both within and outside of our primary banking markets — through various nonbank subsidiaries. These services include principal investing, community development financing, securities underwriting and brokerage, and merchant services. We also are an equity participant in a joint venture that provides merchant services to businesses.

KeyCorp is a legal entity separate and distinct from its banks and other subsidiaries. Accordingly, the right of KeyCorp, its security holders and its creditors to participate in any distribution of the assets or earnings of its banks and other subsidiaries is subject to the prior claims of the respective creditors of such banks and other subsidiaries, except to the extent that KeyCorp’s claims in its capacity as creditor of such banks and other subsidiaries may be recognized.

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Additional Information

The following financial data is included in the Financial Review section of our 2009 Annual Report to Shareholders (Exhibit 13 hereto) and is incorporated herein by reference as indicated below:

Description of Financial Data	Page(s)
Selected Financial Data		17
Consolidated Average Balance Sheets, Net Interest Income and Yields/Rates From Continuing Operations		29-30
Components of Net Interest Income Changes from Continuing Operations		31
Composition of Loans		39
Remaining Maturities and Sensitivity of Certain Loans to Changes in Interest Rates		45
Securities Available for Sale		47
Held-to-Maturity Securities		47
Maturity Distribution of Time Deposits of $100,000 or More		49
Allocation of the Allowance for Loan Losses		71
Summary of Loan Loss Experience from Continuing Operations		73
Summary of Nonperforming Assets and Past Due Loans from Continuing Operations		74
Exit Loan Portfolio		75
Nonperforming Assets and Past Due Loans from Continuing Operations		120
Short-Term Borrowings		123

Our executive offices are located at 127 Public Square, Cleveland, Ohio 44114-1306, and our telephone number is (216) 689-6300. Our website is www.key.com. The investor relations section of our website may be reached through www.key.com/ir. We make available free of charge, on or through the investor relations links on our website, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the United States Securities and Exchange Commission (the “SEC”). Also posted on our website, and available in print upon request of any shareholder to our Investor Relations Department, are our charters for our Audit Committee, Compensation and Organization Committee, Executive Committee, Nominating and Corporate Governance Committee, and Risk Management Committee; our Corporate Governance Guidelines; our Code of Ethics governing our directors, officers and employees; our Standards for Determining Independence of Directors; and our Limitation on Luxury Expenditures Policy. Within the time period required by the SEC and the New York Stock Exchange, we will post on our website any amendment to the Code of Ethics and any waiver applicable to any senior executive officer or director. We also make available a summary of filings made with the SEC of statements of beneficial ownership of our equity securities filed by our directors and officers under Section 16 of the Securities Exchange Act of 1934, as amended.

Shareholders may obtain a copy of any of the above-referenced corporate governance documents by writing to our Investor Relations Department. Our Investor Relations Department can be contacted at Investor Relations, KeyCorp, 127 Public Square, Mailcode OH-01-27-1113, Cleveland, Ohio 44114-1306, telephone (216) 689-6300, e-mail: investor_relations@keybank.com.

Acquisitions and Divestitures

The information presented in Note 3 (“Acquisitions and Divestitures”) of the Financial Review section of our 2009 Annual Report to Shareholders (Exhibit 13 hereto) is incorporated herein by reference.

Competition

The market for banking and related financial services is highly competitive. KeyCorp and its subsidiaries (“Key”) compete with other providers of financial services, such as bank holding companies, commercial banks, savings associations, credit unions, mortgage banking companies, finance companies, mutual funds, insurance companies, investment management firms, investment banking firms, broker-dealers and other local, regional and national

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institutions that offer financial services. Key competes by offering quality products and innovative services at competitive prices.

In recent years, mergers and acquisitions have led to greater concentration in the banking industry, placing added competitive pressure on Key’s core banking products and services. Consolidation efforts continued during 2009 as the challenges of the liquidity crisis and market disruption led to redistribution of deposits and certain banking assets to stronger and larger financial institutions. Financial institutions with liquidity challenges sought mergers and the deposits and certain banking assets of the 140 banks that failed during 2009, representing $170.9 billion in total assets, were redistributed through the Federal Deposit Insurance Corporation’s (“FDIC”) least-cost resolution process. While the number of bank failures increased dramatically in 2009, from 26 in 2008, the total asset value of the 2008 bank failures represented $373.6 billion, in large part due to the failure of Washington Mutual. These factors intensified the concentration of the industry and placed increased competitive pressure on Key’s core banking products and services.

The competitive landscape continued to be affected by the conversion of traditional investment banks to bank holding companies. The challenges of the liquidity crisis increased the desirability of the bank holding company structure due to the access it provides to government-sponsored sources of liquidity, such as the discount window and other programs designed specifically for bank holding companies and certain of their affiliates. The financial modernization legislation enacted in November 1999, which permits commercial bank affiliates to have affiliates that underwrite and deal in securities, underwrite insurance and make merchant banking investments under certain conditions, has enabled many of the more recent structural and regulatory changes. These structural and regulatory changes intensified the competitive landscape within which we compete, as these additional institutions now have access to low cost funding. For additional information on the financial modernization legislation, see the “Financial Modernization Legislation” section of this report.

Supervision and Regulation

The following discussion addresses certain material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides certain specific information regarding Key. This regulatory framework is intended primarily to protect customers and depositors, the Deposit Insurance Fund (the “DIF”) of the FDIC and the banking system as a whole, and generally is not intended for the protection of security holders.

Below is a brief discussion of selected laws, regulations and regulatory agency policies applicable to Key. This discussion is not intended to be comprehensive and is qualified in its entirety by reference to the full text of the statutes, regulations and regulatory agency policies to which this discussion refers. We cannot necessarily predict changes in the applicable laws, regulations and regulatory agency policies, yet such changes may have a material effect on our business, financial condition or results of operations.

General

As a bank holding company, KeyCorp is subject to regulation, supervision and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) under the BHCA. Under the BHCA, bank holding companies may not, in general, directly or indirectly acquire the ownership or control of more than 5% of the voting shares, or substantially all of the assets, of any bank, without the prior approval of the Federal Reserve Board. In addition, bank holding companies are generally prohibited from engaging in commercial or industrial activities.

KeyCorp’s bank subsidiaries are also subject to extensive regulation, supervision and examination by applicable federal banking agencies. KeyCorp operates one full-service, FDIC-insured national bank subsidiary, KeyBank, and one national bank subsidiary whose activities are limited to those of a fiduciary. Both of KeyCorp’s national bank subsidiaries and their subsidiaries are subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (the “OCC”). Because domestic deposits in KeyBank are insured (up to applicable limits) and certain deposits of KeyBank and debt obligations of KeyBank and KeyCorp are temporarily guaranteed (up to applicable limits) by the FDIC, the FDIC also has certain regulatory and supervisory authority over KeyBank and KeyCorp under the Federal Deposit Insurance Act (the “FDIA”).

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KeyCorp also has other financial services subsidiaries that are subject to regulation, supervision and examination by the Federal Reserve Board, as well as other applicable state and federal regulatory agencies and self-regulatory organizations. For example, KeyCorp’s brokerage and asset management subsidiaries are subject to supervision and regulation by the SEC, the Financial Industry Regulatory Authority and state securities regulators, and KeyCorp’s insurance subsidiaries are subject to regulation by the insurance regulatory authorities of the various states. Other nonbank subsidiaries of KeyCorp are subject to laws and regulations of both the federal government and the various states in which they are authorized to do business.

Dividend Restrictions

On November 14, 2008, KeyCorp sold $2.5 billion of Fixed-Rate Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”) and a warrant to purchase 35,244,361 common shares, par value $1.00 (the “Warrant”), to the United States Department of the Treasury (the “U.S. Treasury”) in conjunction with its Capital Purchase Program (the “CPP”). The terms of the transaction with the U.S. Treasury include limitations on KeyCorp’s ability to pay dividends and repurchase Common Shares. For three years after the issuance or until the U.S. Treasury no longer holds any Series B Preferred Stock, KeyCorp will not be able to increase its dividends above the level paid in the third quarter of 2008, nor will KeyCorp be permitted to repurchase any of its Common Shares or preferred stock without the approval of the U.S. Treasury, subject to the availability of certain limited exceptions (e.g., for purchases in connection with benefit plans). The Federal Reserve Board also advised in its February 24, 2009 Supervisory Letter SR 09-04 that recipients of CPP funds should communicate reasonably in advance with Federal Reserve Board staff concerning how any proposed dividends, capital redemptions and capital repurchases are consistent with the requirements of CPP, and discouraged bank holding companies from using proceeds of the CPP to pay dividends on trust preferred securities or repay debt obligations.

In addition, federal banking law and regulations limit the amount of dividends that may be paid to KeyCorp by its bank subsidiaries without regulatory approval. Historically, dividends paid to KeyCorp by KeyBank have been an important source of cash flow for KeyCorp to pay dividends on its equity securities and interest on its debt. The approval of the OCC is required for the payment of any dividend by a national bank if the total of all dividends declared by the board of directors of such bank in any calendar year would exceed the total of: (i) the bank’s net income for the current year plus (ii) the retained net income (as defined and interpreted by regulation) for the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock. In addition, a national bank can pay dividends only to the extent of its undivided profits. KeyCorp’s national bank subsidiaries are subject to these restrictions. During 2009, KeyBank did not pay any dividends to KeyCorp; nonbank subsidiaries paid KeyCorp a total of $.8 million in dividends. As of the close of business on December 31, 2009, KeyBank would not have been permitted to pay dividends to KeyCorp without prior regulatory approval since the bank had a net loss of $1.151 billion for 2009 and a net loss of $1.161 billion for 2008. KeyCorp made capital infusions of $1.2 billion and $1.6 billion for 2009 and 2008, respectively, into KeyBank in the form of cash. At December 31, 2009, KeyCorp held $3.5 billion in short-term investments, the funds from which can be used to pay dividends, service debt, and finance corporate operations.

If, in the opinion of a federal banking agency, a depository institution under its jurisdiction is engaged in or is about to engage in an unsafe or unsound practice (which, depending on the financial condition of the institution, could include the payment of dividends), the agency may require that such institution cease and desist from such practice. The OCC and the FDIC have indicated that paying dividends that would deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound practice. Moreover, under the FDIA, an insured depository institution may not pay any dividend (i) if payment would cause it to become less than “adequately capitalized” or (ii) while it is in default in the payment of an assessment due to the FDIC. For additional information on capital guidelines see the “Federal Deposit Insurance Act — Prompt Corrective Action” section of this report. Also, the federal banking agencies have issued policy statements that provide that FDIC-insured depository institutions and their holding companies should generally pay dividends only out of their current operating earnings.

Holding Company Structure

Bank Transactions with Affiliates.  Federal banking law and the regulations promulgated thereunder impose qualitative standards and quantitative limitations upon certain transactions by a bank with its affiliates. Transactions

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covered by these provisions, which include bank loans and other extensions of credit to affiliates, bank purchases of assets from affiliates, and bank sales of assets to affiliates, must be on arm’s length terms, and cannot exceed certain amounts, determined with reference to the bank’s regulatory capital, and if a loan or other extension of credit, must be secured by collateral in an amount and quality expressly prescribed by statute. For these purposes, a bank includes certain of its subsidiaries and other companies it is deemed to control, while an affiliate includes the bank’s parent bank holding company, certain of its nonbank subsidiaries and other companies it is deemed to control, and certain other companies. As a result, these provisions materially restrict the ability of KeyBank, as a bank, to fund its affiliates including KeyCorp, KeyBanc Capital Markets Inc., any of the Victory mutual funds, and KeyCorp’s nonbanking subsidiaries engaged in making merchant banking investments.

Source of Strength Doctrine.  Under Federal Reserve Board policy, a bank holding company is expected to serve as a source of financial and managerial strength to each of its subsidiary banks and, under appropriate circumstances, to commit resources to support each such subsidiary bank. This support may be required at a time when KeyCorp may not have the resources to, or would choose not to, provide it. Certain loans by a bank holding company to a subsidiary bank are subordinate in right of payment to deposits in, and certain other indebtedness of, the subsidiary bank. In addition, federal law provides that in the event of its bankruptcy, any commitment by a bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.

Regulatory Capital Standards and Related Matters

Risk-Based and Leverage Regulatory Capital.  Federal law defines and prescribes minimum levels of regulatory capital for bank holding companies and their bank subsidiaries. Adequacy of regulatory capital is assessed periodically by the federal banking agencies in the examination and supervision process, and in the evaluation of applications in connection with specific transactions and activities, including acquisitions, expansion of existing activities and commencement of new activities.

Bank holding companies are subject to risk-based capital guidelines adopted by the Federal Reserve Board. These guidelines establish minimum ratios of qualifying capital to risk-weighted assets. Qualifying capital includes Tier 1 capital and Tier 2 capital. Risk-weighted assets are calculated by assigning varying risk-weights to broad categories of assets and off-balance sheet exposures, based primarily on counterparty credit risk. The required minimum Tier 1 risk-based capital ratio, calculated by dividing Tier 1 capital by risk-weighted assets, is currently 4.00%. The required minimum total risk-based capital ratio is currently 8.00%. It is calculated by dividing the sum of Tier 1 capital and Tier 2 capital (which cannot exceed the amount of Tier 1 capital), after certain deductions, by risk-weighted assets.

Tier 1 capital includes common equity, qualifying perpetual preferred equity (including the Series A Preferred Stock and the Series B Preferred Stock), and minority interests in the equity accounts of consolidated subsidiaries less certain intangible assets (including goodwill) and certain other assets. Tier 2 capital includes qualifying hybrid capital instruments, perpetual debt, mandatory convertible debt securities, perpetual preferred equity not includable in Tier 1 capital, and limited amounts of term subordinated debt, medium-term preferred equity, certain unrealized holding gains on certain equity securities, and the allowance for loan and lease losses, limited as a percentage of net risk-weighted assets.

Bank holding companies, such as KeyCorp, whose securities and commodities trading activities exceed specified levels, also are required to maintain capital for market risk. Market risk includes changes in the market value of trading account, foreign exchange, and commodity positions, whether resulting from broad market movements (such as changes in the general level of interest rates, equity prices, foreign exchange rates, or commodity prices) or from position specific factors (such as idiosyncratic variation, event risk, and default risk). The federal banking agencies have developed and published for comment a proposed rule that would modify the existing market risk capital requirements. The proposed rule would enhance modeling requirements consistent with advances in risk management, enhance sensitivity to risks not adequately captured in the current methodologies of the existing requirements, and modify the definition of covered position to better capture positions for which the market risk capital requirements are appropriate. It would also impose an explicit capital requirement for incremental default risk to capture default risk over a time horizon of one year taking into account the impact of liquidity,

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concentrations, hedging, and optionality. The proposed rule has not yet been adopted as a final rule. At December 31, 2009, Key had regulatory capital in excess of all minimum risk-based requirements, including all required adjustments for market risk.

In addition to the risk-based standard, bank holding companies are subject to the Federal Reserve Board’s leverage ratio guidelines. These guidelines establish minimum ratios of Tier 1 capital to total assets. The minimum leverage ratio, calculated by dividing Tier 1 capital by average total consolidated assets, is 3.00% for bank holding companies that either have the highest supervisory rating or have implemented the Federal Reserve Board’s risk-based capital measure for market risk. All other bank holding companies must maintain a minimum leverage ratio of at least 4.00%. At December 31, 2009, Key had regulatory capital in excess of all minimum leverage capital requirements.

KeyCorp’s national bank subsidiaries are also subject to risk-based and leverage capital requirements adopted by the OCC, which are substantially similar to those imposed by the Federal Reserve Board on bank holding companies. At December 31, 2009, each of KeyCorp’s national bank subsidiaries had regulatory capital in excess of all minimum risk-based and leverage capital requirements.

In addition to establishing regulatory minimum ratios of capital to assets for all bank holding companies and their bank subsidiaries, the risk-based and leverage capital guidelines also identify various organization-specific factors and risks that are not taken into account in the computation of the capital ratios but that affect the overall supervisory evaluation of a banking organization’s regulatory capital adequacy and can result in the imposition of higher minimum regulatory capital ratio requirements upon the particular organization. Neither the Federal Reserve Board nor the OCC has advised KeyCorp or any of its national bank subsidiaries of any specific minimum risk-based or leverage capital ratios applicable to KeyCorp or such national bank subsidiary.

Basel Accords.  The current minimum risk-based capital requirements adopted by the U.S. federal banking agencies are based on a 1988 international accord (“Basel I”) that was developed by the Basel Committee on Banking Supervision. In 2004, the Basel Committee published its new capital framework document (“Basel II”) governing the capital adequacy of large, internationally active banking organizations that generally rely on sophisticated risk management and measurement systems. Basel II is designed to create incentives for these organizations to improve their risk measurement and management processes and to better align minimum capital requirements with the risks underlying activities conducted by these organizations.

Basel II adopts a three-pillar framework for addressing capital adequacy — minimum capital requirements, supervisory review, and market discipline. The minimum capital requirement pillar includes capital charges for credit, operational, and market risk exposures of a banking organization. The supervisory review pillar addresses the need for a banking organization to assess its capital adequacy position relative to its overall risk, rather than only with respect to its minimum capital requirement, as well as the need for a banking organization supervisory authority to review and respond to the banking organization’s capital adequacy assessment. The market discipline pillar imposes public disclosure requirements on a banking organization that are intended to allow market participants to assess key information about the organization’s risk profile and its associated level of capital.

In December 2007, the federal banking agencies issued a final rule to implement the advanced approaches framework of Basel II in the U.S. The rule was effective April 1, 2008, but implementation is subject to a multi-year transition period in which limits are imposed upon the amount by which minimum required capital may decrease. It does not supersede or change the existing prompt corrective action and leverage capital requirements, and explicitly reserves the agencies’ authority to require organizations to hold additional capital where appropriate. Application of the final rule to U.S. banking organizations is mandatory for some and optional for others. Currently, neither KeyCorp nor KeyBank is required to apply the final rule.

In July 2008, the agencies issued a proposed rule for implementing the standardized approach framework of Basel II. The proposal would provide an alternative approach to determining risk-based capital requirements for banking organizations that are not required to use the advanced approaches framework final rule published in December 2007. While the advanced approaches framework is mandatory for large, internationally active banking organizations, the standardized approach framework would be optional for others (including KeyCorp and KeyBank), which could also choose to remain under the Basel I framework.

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In December 2009, the Basel Committee on Banking Supervision published proposals to substantially revamp international capital and liquidity standards for banks. This proposal includes major changes to the regulatory and leverage capital ratio calculations, including a revised definition of capital, a revised capital structure, revised definitions of qualifying capital for Tier 1 purposes, revised Tier 1 and Tier 2 limits, a new common equity to risk-weighted assets measure, new minimum capital ratios and certain measures to address systemic risk. Banks have the opportunity to submit comments on the proposal by April 16, 2010. Specific requirements remain undefined and, therefore, KeyCorp cannot determine what impact such measures may ultimately have on the company.

Federal Deposit Insurance Act

Deposit Insurance Coverage Limits.  Prior to enactment of the Emergency Economic Stabilization Act of 2008 (“EESA”), the FDIC standard maximum depositor insurance coverage limit was $100,000, excluding certain retirement accounts qualifying for a maximum coverage limit of $250,000. Pursuant to the EESA, the FDIC standard maximum coverage limit had been temporarily increased to $250,000 through December 31, 2009. This temporary increase has been further extended to December 31, 2013, by the Helping Families Save Their Homes Act of 2009.

Deposit Insurance Assessments.  Substantially all of KeyBank’s domestic deposits are insured up to applicable limits by the FDIC. Accordingly, KeyBank is subject to deposit insurance premium assessments by the FDIC. Under current law, the FDIC is required to maintain the DIF reserve ratio within the range of 1.15% to 1.50% of estimated insured deposits. Because the DIF reserve ratio fell and was expected to remain below 1.15%, the FDIA required the FDIC to establish and implement a restoration plan to restore the DIF reserve ratio to at least 1.15% within eight years, absent extraordinary circumstances. Consequently, and depending upon an institution’s risk category, for the first quarter of 2009 annualized deposit insurance assessments ranged from $.12 to $.50 for each $100 of assessable domestic deposits, as compared with $.05 to $.43 throughout 2008. Moreover, under a new risk-based assessment system implemented in the second quarter of 2009, annualized deposit insurance assessments range from $.07 to $.775 for each $100 of assessable domestic deposits based on the institution’s risk category. On May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment on each insured depository institution’s assets minus Tier 1 capital as of June 30, 2009, not to exceed 10 basis points times the institution’s assessment base as of June 30, 2009. This special assessment was collected on September 30, 2009. On November 12, 2009, the FDIC amended its assessment regulations to require insured depository institutions to prepay, on December 30, 2009, their estimated quarterly assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012. The amount of KeyBank’s FDIC assessment prepayment was $539 million, which we paid on December 30, 2009.

FICO Assessments.  Since 1997, all FDIC-insured depository institutions have been required through assessments collected by the FDIC to service the annual interest on 30-year noncallable bonds issued by the Financing Corporation (“FICO”) in the late 1980s to fund losses incurred by the former Federal Savings and Loan Insurance Corporation. FICO assessments are separate from and in addition to deposit insurance assessments, are adjusted quarterly and, unlike deposit insurance assessments, are assessed uniformly without regard to an institution’s risk category. Throughout 2009, the annualized FICO assessment rate ranged from $.0102 to $.0114 for each $100 of assessable domestic deposits.

Temporary Liquidity Guarantee Program.  In October 2008, the FDIC, with the written concurrence of the Federal Reserve Board, made a systemic risk recommendation to the Secretary of the Treasury, who in consultation with the President determined that the systemic risk exception to the least-cost resolution provision under the FDIA should be invoked to enable the FDIC to establish the Temporary Liquidity Guarantee Program (the “TLGP”).

The TLGP regulation permitted the FDIC to temporarily guarantee the unpaid principal and interest due under a limited amount of qualifying newly issued senior unsecured debt of participating eligible entities (the “Debt Guarantee”) as well as all depositor funds in qualifying noninterest-bearing transaction accounts maintained at participating FDIC-insured depository institutions (the “Transaction Account Guarantee”). For FDIC-guaranteed debt issued before April 1, 2009, the Debt Guarantee expires on the earlier of the maturity of the debt or June 30, 2012. For FDIC-guaranteed debt issued on or after April 1, 2009, the Debt Guarantee expires on the earlier of the maturity of the debt or December 31, 2012. Unless a participating institution elected to opt-out, the Transaction Account Guarantee expires on June 30, 2010.

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Participants in the TLGP are subject to certain assessments by the FDIC. Assessments on participants under the Debt Guarantee part of the TLGP are computed by multiplying the amount of their FDIC-guaranteed debt by annualized rates that, depending on the type of issuer entity as well as the issuance and maturity dates of such debt, range from 50 to 110 basis points. Surcharges on these assessments ranging from 10 to 50 basis points depending on the issuance and maturity dates of the debt are also prescribed. In addition, participants under the Debt Guarantee part of the TLGP that have elected to have flexibility, before exceeding their FDIC-guaranteed debt limit, to issue certain senior unsecured debt not guaranteed by the FDIC are assessed an additional one-time, nonrefundable fee of 37.5 basis points. Assessments on participants under the Transaction Account Guarantee part of the TLGP are computed by multiplying qualifying noninterest-bearing transaction account balances in excess of $250,000 by an annualized ten basis point rate prior to January 1, 2010, and a 15, 20 or 25 basis point rate, depending on the institution’s risk category, on and after January 1, 2010 until June 30, 2010. Moreover, to the extent that participant assessments are insufficient to cover the expenses or losses to the DIF arising from the TLGP, the FDIA requires the FDIC to impose one or more special assessments on FDIC-insured depository institutions and depository institution holding companies.

KeyCorp is a participant in the Debt Guarantee component of the TLGP. KeyBank is a participant in both the Transaction Account Guarantee and the Debt Guarantee components of the TLGP, including the special election to issue long-term, senior unsecured debt not guaranteed by the FDIC. As of December 31, 2009, KeyCorp had $937.5 million of guaranteed debt outstanding under the TLGP and KeyBank had $1.0 billion of guaranteed debt outstanding under the TLGP.

Liability of Commonly Controlled Institutions.  Under the FDIA, an insured depository institution which is under common control with another insured depository institution generally is liable to the FDIC for any loss incurred, or reasonably anticipated to be incurred, by the FDIC in connection with the default of any such commonly controlled institution, or any assistance provided by the FDIC to the commonly controlled institution which is in danger of default. The term “default” is defined generally to mean the appointment of a conservator or receiver and the term “in danger of default” is defined generally as the existence of certain conditions indicating that a “default” is likely to occur in the absence of regulatory assistance.

Conservatorship and Receivership of Institutions.  If any insured depository institution becomes insolvent and the FDIC is appointed its conservator or receiver, the FDIC may, under federal law, disaffirm or repudiate any contract to which such institution is a party, if the FDIC determines that performance of the contract would be burdensome, and that disaffirmance or repudiation of the contract would promote the orderly administration of the institution’s affairs. Such disaffirmance or repudiation would result in a claim by its holder against the receivership or conservatorship. The amount paid upon such claim would depend upon, among other factors, the amount of receivership assets available for the payment of such claim and its priority relative to the priority of others. In addition, the FDIC as conservator or receiver may enforce most contracts entered into by the institution notwithstanding any provision providing for termination, default, acceleration, or exercise of rights upon or solely by reason of insolvency of the institution, appointment of a conservator or receiver for the institution, or exercise of rights or powers by a conservator or receiver for the institution. The FDIC as conservator or receiver also may transfer any asset or liability of the institution without obtaining any approval or consent of the institution’s shareholders or creditors.

Depositor Preference.  The FDIA provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of its depositors (including claims by the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as receiver would be afforded a priority over other general unsecured claims against such an institution. If an insured depository institution fails, insured and uninsured depositors along with the FDIC will be placed ahead of unsecured, nondeposit creditors, including a parent holding company and subordinated creditors, in order of priority of payment.

Prompt Corrective Action.  The “prompt corrective action” provisions of the FDIA create a statutory framework that applies a system of both discretionary and mandatory supervisory actions indexed to the capital level of FDIC-insured depository institutions. These provisions impose progressively more restrictive constraints on operations, management, and capital distributions of the institution as its regulatory capital decreases, or in some cases, based on supervisory information other than the institution’s capital level. This framework and the authority it confers on

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the federal banking agencies supplements other existing authority vested in such agencies to initiate supervisory actions to address capital deficiencies. Moreover, other provisions of law and regulation employ regulatory capital level designations the same as or similar to those established by the prompt corrective action provisions both in imposing certain restrictions and limitations and in conferring certain economic and other benefits upon institutions. These include restrictions on brokered deposits, limits on exposure to interbank liabilities, determination of risk-based FDIC deposit insurance premium assessments, and action upon regulatory applications.

FDIC-insured depository institutions are grouped into one of five prompt corrective action capital categories — well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized — using the Tier 1 risk-based, total risk-based, and Tier 1 leverage capital ratios as the relevant capital measures. An institution is considered well capitalized if it has a total risk-based capital ratio of at least 10.00%, a Tier 1 risk-based capital ratio of at least 6.00% and a Tier 1 leverage capital ratio of at least 5.00% and is not subject to any written agreement, order or capital directive to meet and maintain a specific capital level for any capital measure. An adequately capitalized institution must have a total risk-based capital ratio of at least 8.00%, a Tier 1 risk-based capital ratio of at least 4.00% and a Tier 1 leverage capital ratio of at least 4.00% (3.00% if it has achieved the highest composite rating in its most recent examination and is not well capitalized). An institution’s prompt corrective action capital category, however, may not constitute an accurate representation of the overall financial condition or prospects of the institution or its parent bank holding company, and should be considered in conjunction with other available information regarding the financial condition and results of operations of the institution and its parent bank holding company. KeyBank is well-capitalized pursuant to the prompt corrective action guidelines.

Financial Modernization Legislation

The provisions of the Gramm-Leach-Bliley Act of 1999 (the “GLBA”) authorized new activities for qualifying financial institutions. The GLBA repealed significant provisions of the Glass-Steagall Act to permit commercial banks, among other things, to have affiliates that underwrite and deal in securities and make merchant banking investments. The GLBA modified the BHCA to permit bank holding companies that meet certain specified standards (known as “financial holding companies”) to engage in a broader range of financial activities than previously permitted under the BHCA, and allowed subsidiaries of commercial banks that meet certain specified standards (known as “financial subsidiaries”) to engage in a wide range of financial activities that are prohibited to such banks themselves. In 2000, KeyCorp elected to become a financial holding company. Under the authority conferred by the GLBA, KeyCorp has been able to expand the nature and scope of its equity investments in nonfinancial companies, acquire its Victory Capital Advisers Inc. subsidiary, operate its KeyBanc Capital Markets Inc. subsidiary with fewer operating restrictions, and establish financial subsidiaries to engage more efficiently in certain activities.

In order for a company to maintain its status as a financial holding company under the GLBA, its depository institution subsidiaries must remain well capitalized (as defined under the prompt corrective action provisions of the FDIA) and well managed (as determined by the depository institution’s primary regulator). If any of the depository institution subsidiaries of a financial holding company fail to satisfy these criteria, the holding company must enter into an agreement with the Federal Reserve Board setting forth a plan to correct the deficiencies. If these deficiencies are not corrected within a 180-day period, the Federal Reserve Board may order the financial holding company to divest its depository institution subsidiaries. Alternatively, the holding company could retain its depository institution subsidiaries but would have to cease engaging in any activities that are permissible under the GLBA but were not permissible for a bank holding company prior to the enactment of that statute. In addition, if a depository institution subsidiary of a financial holding company receives a less than satisfactory rating under the Community Reinvestment Act (“CRA”), the holding company will not be permitted to commence new activities or make new acquisitions in reliance on the GLBA until the CRA rating of the subsidiary improves to being at least satisfactory.

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Entry Into Certain Covenants

KeyCorp entered into two transactions during 2006 and one transaction (with an overallotment option) in 2008, each of which involved the issuance of trust preferred securities (“Trust Preferred Securities”) by Delaware statutory trusts formed by KeyCorp (the “Trusts”), as further described below. Simultaneously with the closing of each of those transactions, KeyCorp entered into a so-called replacement capital covenant (each, a “Replacement Capital Covenant” and collectively, the “Replacement Capital Covenants”) for the benefit of persons that buy or hold specified series of long-term indebtedness of KeyCorp or its then largest depository institution, KeyBank (the “Covered Debt”). Each of the Replacement Capital Covenants provide that neither KeyCorp nor any of its subsidiaries (including any of the Trusts) will redeem or purchase all or any part of the Trust Preferred Securities or certain junior subordinated debentures issued by KeyCorp and held by the Trust (the “Junior Subordinated Debentures”), as applicable, on or before the date specified in the applicable Replacement Capital Covenant, with certain limited exceptions, except to the extent that, during the 180 days prior to the date of that redemption or purchase, KeyCorp has received proceeds from the sale of qualifying securities that (i) have equity-like characteristics that are the same as, or more equity-like than, the applicable characteristics of the Trust Preferred Securities or the Junior Subordinated Debentures, as applicable, at the time of redemption or purchase, and (ii) KeyCorp has obtained the prior approval of the Federal Reserve Board, if such approval is then required by the Federal Reserve Board. KeyCorp will provide a copy of the Replacement Capital Covenants to respective holders of Covered Debt upon request made in writing to KeyCorp, Investor Relations, 127 Public Square, Mail Code OH-01-27-1113, Cleveland, OH 44114-1306.

The following table identifies the (i) closing date for each transaction, (ii) issuer, (iii) series of Trust Preferred Securities issued, (iv) Junior Subordinated Debentures, and (v) applicable Covered Debt as of the date this annual report was filed with the SEC.

		Trust Preferred
Closing Date	Issuer	Securities	Junior Subordinated	Covered Debt
6/20/06	KeyCorp Capital VIII and KeyCorp	$250,000,000 principal amount of 7% Enhanced Trust Preferred Securities	KeyCorp’s 7% junior subordinated debentures due June 15, 2066	KeyCorp’s 5.70% junior subordinated debentures due 2035, underlying the 5.70% trust preferred securities of KeyCorp Capital VII (CUSIP No. 49327LAA4011)
11/21/06	KeyCorp Capital IX and KeyCorp	$500,000,000 principal amount of 6.750% Enhanced Trust Preferred Securities	KeyCorp’s 6.750% junior subordinated debentures due December 15, 2066	KeyCorp’s 5.70% junior subordinated debentures due 2035, underlying the 5.70% trust preferred securities of KeyCorp Capital VII (CUSIP No. 49327LAA4011)
2/27/08	KeyCorp Capital X and KeyCorp	$700,000,000 principal amount of 8.000% Enhanced Trust Preferred Securities	KeyCorp’s 8.000% junior subordinated debentures due March 15, 2068	KeyCorp’s 5.70% junior subordinated debentures due 2035, underlying the 5.70% trust preferred securities of KeyCorp Capital VII (CUSIP No. 49327LAA4011)
3/3/2008	KeyCorp Capital X and KeyCorp	$40,000,000 principal amount of 8.000% Enhanced Trust Preferred Securities	KeyCorp’s 8.000% junior subordinated debentures due March 15, 2068	KeyCorp’s 5.70% junior subordinated debentures due 2035 underlying the 5.70% trust preferred securities of KeyCorp Capital VII (CUSIP No. 49327LAA4011)

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ITEM 1A.   RISK FACTORS

An investment in our Common Shares is subject to risks inherent to our business, ownership of our equity securities and our industry. Described below are certain risks and uncertainties, the occurrence of which could have a material and adverse effect on KeyCorp. Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this report. The risks and uncertainties described below are not the only ones we face. Although we have significant risk management policies, procedures and practices aimed at mitigating these risks, uncertainties may nevertheless impair our business operations. This report is qualified in its entirety by these risk factors.

IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS, AND/OR ACCESS TO LIQUIDITY AND/OR CREDIT COULD BE MATERIALLY AND ADVERSELY AFFECTED (“MATERIAL ADVERSE EFFECT ON US”). IF THIS WERE TO HAPPEN, THE VALUE OF OUR SECURITIES — COMMON SHARES, SERIES A PREFERRED STOCK, SERIES B PREFERRED STOCK AND OUR TRUST PREFERRED SECURITIES — COULD DECLINE, PERHAPS SIGNIFICANTLY, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.

Risks Related to our Business

Certain industries, including the financial services industry, are more significantly affected by certain economic factors such as unemployment and real estate asset values. Should the improvement of these economic factors lag the improvement of the overall economy, or not occur, we could be adversely affected.

Should the stabilization of the U.S. economy lead to a general economic recovery, the improvement of certain economic factors, such as unemployment and real estate asset values and rents, may nevertheless continue to lag behind the overall economy, or not occur at all. These economic factors typically affect certain industries, such as real estate and financial services, more significantly. For example, improvements in commercial real estate fundamentals typically lag broad economic recovery by twelve to eighteen months. Our clients include entities active in these industries. Furthermore, financial services companies, with a substantial lending business, like ours, are dependent upon the ability of their borrowers to make debt service payments on loans. Should unemployment or real estate asset values fail to recover for an extended period of time, it could have a Material Adverse Effect on Us.

We are subject to market risks, including in the commercial real estate sector. Should the fundamentals of the commercial real estate market further deteriorate, our financial condition and results of operations could be adversely affected.

The fundamentals within the commercial real estate sector remain weak, under continuing pressure by reduced asset values, rising vacancies and reduced rents. Commercial real estate values peaked in the fall of 2007, after gaining approximately 30% since 2005 and 90% since 2001. According to Moody’s Real Estate Analytics, LLC Commercial Property Index, at November 30, 2009, commercial real estate values were down 43% from their peak. Many of our commercial real estate loans were originated between 2005 and 2007. A portion of our commercial real estate loans are construction loans. These properties are typically not fully leased at the origination of the loan, but the borrower may be reliant upon additional leasing through the life of the loan to provide cash flow to support debt service payments. Weak economic conditions typically slow the execution of new leases; such conditions may also lead to existing lease turnover. As a result of these factors, vacancy rates for retail, office and industrial space are expected to continue to rise in 2010. Increased vacancies could result in rents falling further over the next several quarters. The combination of these factors could result in further weakening in the fundamentals underlying the commercial real estate market. Should these fundamentals continue to deteriorate as a result of further decline in asset values and the instability of rental income, it could have a Material Adverse Effect on Us.

Declining asset prices could adversely affect us.

Over the last six quarters, the volatility and disruption that the capital and credit markets have experienced reached extreme levels. The market dislocations led to the failure of several substantial financial institutions, causing widespread liquidation of assets and further constraining credit markets. These asset sales, along with asset sales by

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other leveraged investors, including some hedge funds, rapidly drove down prices and valuations across a wide variety of traded asset classes. Asset price deterioration has a negative effect on the valuation of many of the asset categories represented on our balance sheet, and reduces our ability to sell assets at prices we deem acceptable. This could have a Material Adverse Effect on Us.

We are subject to credit risk.

There are inherent risks associated with our lending and trading activities. These risks include, among other things, the impact of changes in interest rates and changes in the economic conditions in the markets where we operate. Increases in interest rates and/or further weakening of economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans.

As of December 31, 2009, approximately 71% of our loan portfolio consisted of commercial, financial and agricultural loans, commercial real estate loans, including commercial mortgage and construction loans, and commercial leases. These types of loans are typically larger than residential real estate loans and consumer loans. We closely monitor and manage risk concentrations and utilize various portfolio management practices to limit excessive concentrations when it is feasible to do so; however, our loan portfolio still contains a number of commercial loans with relatively large balances.

We also do business with environmentally sensitive industries and in connection with the development of Brownfield sites that provide appropriate business opportunities. We monitor and evaluate our borrowers for compliance with environmental-related covenants, which include covenants requiring compliance with applicable law. We take steps to mitigate risks; however, should political or other changes make it difficult for certain of our customers to maintain compliance with applicable covenants, our credit quality could be adversely affected.

The deterioration of one or more of any of our loans could cause a significant increase in nonperforming loans, which could result in net loss of earnings from these loans, an increase in the provision for loan losses and an increase in loan charge-offs, any of which could have a Material Adverse Effect on Us.

We also are subject to various laws and regulations that affect our lending activities. Failure to comply with applicable laws and regulations could subject us to regulatory enforcement action that could result in the assessment against us of civil money or other penalties, which could have a Material Adverse Effect on Us.

The credit ratings of KeyCorp and KeyBank are important in order to maintain liquidity.

Although KeyCorp’s and KeyBank’s long-term debt is currently rated investment-grade by the major rating agencies, the ratings of Key’s long-term debt, Series A Preferred Stock and certain of its other securities have been downgraded and/or put on negative outlook by those major rating agencies. These rating agencies regularly evaluate the securities of KeyCorp and KeyBank, and their ratings of our long-term debt and other securities are based on a number of factors, including Key’s financial strength, ability to generate earnings, and other factors, some of which are not entirely within Key’s control, such as conditions affecting the financial services industry and the economy. In light of the difficulties in the financial services industry, the financial markets and the economy, there can be no assurance that Key will maintain its current ratings.

If the securities of KeyCorp and/or KeyBank suffer additional ratings downgrades, such downgrades could adversely affect access to liquidity and could significantly increase Key’s cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to Key, thereby curtailing its business operations and reducing its ability to generate income. Further downgrades of the credit ratings of Key’s securities, particularly if they are below investment-grade, could have a Material Adverse Effect on Us.

There can be no assurance that the EESA, the American Recovery and Reinvestment Act of 2009, and other initiatives undertaken by the United States government to restore liquidity and stability to the U.S. financial system will help stabilize the U.S. financial system.

The EESA was enacted and signed into law by President Bush in October 2008 in response to the ongoing financial crisis affecting the banking system and financial markets and going concern threats to investment banks and other financial institutions. Pursuant to the EESA, the U.S. Treasury has authority to, among other things, purchase up to

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$700 billion of mortgages, mortgage-backed securities, preferred equity and warrants, and certain other financial instruments from financial institutions for the purpose of stabilizing and providing liquidity to the U.S. financial markets. Under its authority provided by EESA, the U.S. Treasury established the CPP, and the core provisions of the Financial Stability Plan. There can be no assurance regarding the actual impact that the EESA, the American Recovery and Reinvestment Act of 2009 (“Recovery Bill”), or other programs and initiatives undertaken by the U.S. government will have on the financial markets. The extreme levels of volatility and limited credit availability experienced in late 2008 and through the third quarter of 2009 may return or persist. Regional financial institutions have faced difficulties issuing debt in the fixed-income debt markets; these conditions could return and pose continued difficulties for the issuance of both medium term note and long-term subordinated note issuances. The failure of the EESA or other government programs to sufficiently contribute to financial market stability and put the U.S. economy on a path for an economic recovery could result in a continuation or worsening of current financial market conditions, which could have a Material Adverse Effect on Us. In the event that any of the various forms of turmoil experienced in the financial markets continue, or, as the case may be, return or become exacerbated, there may be a Material Adverse Effect on Us from (1) continued or accelerated disruption and volatility in financial markets, (2) continued capital and liquidity concerns regarding financial institutions generally and our transaction counterparties specifically, (3) limitations resulting from further governmental action to stabilize or provide additional regulation of the financial system, or (4) recessionary conditions that return, are deeper, or last longer than currently anticipated.

The U.S. Treasury may require us to raise additional capital that would likely be dilutive to our Common Shares.

In our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, we reported that, under the U.S. Treasury’s Capital Assessment Program (“CAP”), we were required to participate in the Supervisory Capital Assessment Program (“SCAP”) to determine whether we would be required to raise additional capital. As announced on May 7, 2009, under the SCAP assessment, we were required to increase the amount of our Tier 1 common equity by $1.8 billion within six months. We generated in excess of the $1.8 billion of additional Tier 1 common equity required by the SCAP results. Nevertheless, there can be no assurance that our regulators, including the U.S. Treasury and the Federal Reserve Board, will not conduct additional “stress test” capital assessments outside of typical examination cycles, such as the SCAP, and/or require us to generate additional capital, including Tier 1 common equity, in the future in the event of further negative economic circumstances, or in order for us to redeem our Series B Preferred Stock held by the U.S. Treasury under the CPP. Any additional capital that KeyCorp generates in the future, whether through exchange offers, underwritten offerings of Common Shares, or other public or private transactions, would be dilutive to common shareholders and may reduce the market price of our Common Shares. These factors could have a Material Adverse Effect on Us.

The potential issuance of a significant amount of Common Shares or equity convertible into our Common Shares to a private investor or group of private investors may be dilutive and cause the market price of our Common Shares to decline.

Having a significant shareholder may make some future transactions more difficult or perhaps impossible to complete without the support of such shareholder. The interests of the significant shareholder may not coincide with our interests or the interests of other shareholders. There can be no assurance that any significant shareholder will exercise its influence in our best interests as opposed to its best interests as a significant shareholder. A significant shareholder may make it difficult to approve certain transactions even if they are supported by the other shareholders, which may have an adverse effect on the market price of our Common Shares. These factors could have a Material Adverse Effect on Us.

Issuing a significant amount of common equity to a private investor may result in a change in control of KeyCorp under regulatory standards and contractual terms.

Should KeyCorp obtain a significant amount of additional capital from any individual private investor, a change of control could occur under applicable regulatory standards and contractual terms. Such change of control may trigger notice, approval and/or other regulatory requirements in many states and jurisdictions in which we operate. We are a party to various contracts and other agreements that may require us to obtain consents from our respective contract counterparties in the event of a change in control. The failure to obtain any required regulatory consents or approvals or contractual consents due to a change in control may have a Material Adverse Effect on Us.

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Should we decide to repurchase the U.S. Treasury’s Series B Preferred Stock, future issuance(s) of Common Shares may be necessary, which, if necessary, would likely result in significant dilution to holders of KeyCorp Common Shares.

In conjunction with any repurchase of the Series B Preferred Stock issued to the U.S. Treasury, we may elect or be required by our regulators to increase the amount of our Tier 1 common equity through the sale of additional Common Shares. In addition, in connection with the U.S. Treasury’s purchase of the Series B Preferred Stock, pursuant to a Letter Agreement dated November 14, 2008, and the Securities Purchase Agreement — Standard Terms, the U.S. Treasury received a Warrant to purchase 35,244,361 of our Common Shares at an initial per share exercise price of $10.64, subject to adjustment, which expires ten years from the issuance date, and we have agreed to provide the U.S. Treasury with registration rights covering the Warrant and the underlying Common Shares. The terms of the Warrant provide for a procedure, upon repurchase of the Series B Preferred Stock, to determine the value of the Warrant, and purchase the Warrant, within approximately 40 days of the repurchase of the Series B Preferred Stock. However, even if we were to redeem the Series B Preferred Stock, there is no assurance that this Warrant will be fully retired and, therefore, that it will not be exercised, prior to its expiration date. The issuance of additional Common Shares as a result of the exercise of the Warrant the U.S. Treasury holds would likely dilute the ownership interest of KeyCorp’s existing common shareholders.

The terms of the Warrant provide that, if we issue Common Shares or securities convertible or exercisable into or exchangeable for Common Shares at a price that is less than 90% of the market price of such shares on the last trading day preceding the date of the agreement to sell such shares, the number and the per share price of Common Shares to be purchased pursuant to the Warrant will be adjusted pursuant to its terms. We may also choose to issue securities convertible into or exercisable for our Common Shares and such securities may themselves contain anti-dilution provisions. Such anti-dilution adjustment provisions may have a further dilutive effect on other holders of our Common Shares.

There can be no assurance that we will not in the future determine that it is advisable, or that we will not encounter circumstances where we determine that it is necessary, to issue additional Common Shares, securities convertible into or exchangeable for Common Shares or common-equivalent securities to fund strategic initiatives or other business needs or to build additional capital. The market price of our Common Shares could decline as a result of such exchange offerings, as well as other sales of a large block of our Common Shares or similar securities in the market thereafter, or the perception that such sales could occur. These factors could have a Material Adverse Effect on Us.

We may not be permitted to repurchase the U.S. Treasury’s TARP CPP investment if and when we request approval to do so.

We have generated in excess of the $1.8 billion in additional Tier 1 common equity required by the SCAP. While it is our plan to repurchase the Series B Preferred Stock as soon as practicable, in order to repurchase such securities, in whole or in part, we must establish to our regulators satisfaction that we have satisfied all of the conditions to repurchase and must obtain the approval of the Federal Reserve and the U.S. Treasury. There can be no assurance that we will be able to repurchase the U.S. Treasury’s TARP investment in our Series B Preferred Stock. In addition to limiting our ability to return capital to our shareholders, the U.S. Treasury’s investment could limit our ability to retain key executives and other key employees, and limit our ability to develop business opportunities. These factors could have a Material Adverse Effect on Us.

During 2009, disruptions and volatility in financial markets adversely affected KeyCorp. These factors could continue to affect KeyCorp. Our actions in response to these financial market disruptions may not be sufficient to mitigate the effects of market uncertainties and other risks presented.

The capital and credit markets, including the fixed income markets, experienced extreme volatility and disruption between July 2007 and October 2009. The disruptions in the capital and credit markets reached unprecedented levels during the third and fourth quarters of 2008. As a result of the severe economic conditions, in 2009, we, and many financial institutions similar to us, generated and raised Tier 1 common equity through exchanges of existing trust preferred securities or preferred equity for common stock, at-the-market offerings of common stock or underwritten offerings of common stock, or a combination of the foregoing. Until the middle of the third quarter of 2009, regional financial institutions continued to encounter difficulties in the fixed income markets.

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While most economists generally agree that the U.S. economy has stabilized, it remains unclear whether a sustainable recovery is underway. Uncertainties in the financial markets continue to present significant challenges, particularly for the financial services industry. As a financial services company, our operations and financial condition are significantly affected by general economic and market conditions. During 2009, the continued disruptions in the financial markets caused markdowns and/or losses by financial institutions from trading, hedging and other market activities, resulting in reduced earnings for many financial institutions. Additionally, financial institutions with lending operations faced substantial loan losses due to high unemployment, reduced real estate asset values and 1.43 million bankruptcy filings in 2009, representing an increase of 32% from 2008. Unemployment at December 31, 2009 was above 10%, up from 7.4% at December 31, 2008. We were similarly affected by these factors. During 2009, we increased our provision for loan losses by $1.622 billion or 106% in response to the continued deterioration in our loan portfolios resulting from the economic decline. During 2009, we also recorded noncash accounting charges of $268 million due to intangible assets impairment resulting from a decline in the fair value of our National Banking unit, reflecting the extreme weakness in financial markets, and our decisions to wind down the operations of Austin Capital Management Ltd. (“Austin”) and cease conducting our business in the commercial vehicle and office equipment leasing markets. It is difficult to predict how long these challenging economic conditions will exist, which of our markets, products or other businesses will ultimately be affected, and whether our actions will effectively mitigate these extreme external factors. Furthermore, the models that we use to assess the creditworthiness of customers and to estimate losses inherent in our credit exposure may become less predictive due to fundamental changes in the U.S. economy. Accordingly, these factors could have a Material Adverse Effect on Us.

We are subject to interest rate risk.

Our earnings and cash flows are largely dependent upon our net interest income. Net interest income is the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions, the competitive environment within our markets, consumer preferences for specific loan and deposit products and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board. Changes in monetary policy, including changes in interest rates, could influence not only the amount of interest we receive on loans and securities and the amount of interest we pay on deposits and borrowings, but such changes could also affect our ability to originate loans and obtain deposits as well as the fair value of our financial assets and liabilities. If the interest we pay on deposits and other borrowings increases at a faster rate than the interest we receive on loans and other investments, our net interest income, and therefore earnings, could be adversely affected. Earnings could also be adversely affected if the interest we receive on loans and other investments falls more quickly than the interest we pay on deposits and other borrowings. We use simulation analysis to produce an estimate of interest rate exposure based on assumptions and judgments related to balance sheet changes, customer behavior, new products, new business volume, product pricing, competitor behavior, the behavior of market interest rates and anticipated hedging activities. Simulation analysis involves a high degree of subjectivity and requires estimates of future risks and trends. Accordingly, there can be no assurance that actual results will not differ from those derived in simulation analysis due to the timing, magnitude and frequency of interest rate changes, actual hedging strategies employed, changes in balance sheet composition, and the possible effects of unanticipated or unknown events.

Although we believe we have implemented effective asset and liability management strategies, including simulation analysis and the use of interest rate derivatives as hedging instruments, to reduce the potential effects of changes in interest rates on our results of operations, any substantial, unexpected and/or prolonged change in market interest rates could have a Material Adverse Effect on Us.

We are subject to other market risk.

Traditionally, market factors such as changes in foreign exchange rates, changes in the equity markets and changes in the financial soundness of bond insurers, sureties and other unrelated financial companies have the potential to affect current market values of financial instruments. During 2008, market events demonstrated this to an extreme. Between July 2007 and October 2009, conditions in the fixed income markets, specifically the wider credit spreads

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over benchmark U.S. Treasury securities for many fixed income securities, caused significant volatility in the market values of loans, securities, and certain other financial instruments that are held in our trading or held-for-sale portfolios. Opportunities to minimize the adverse affects of market changes are not always available. It is possible that such volatility and adverse effects will continue over a prolonged period of time and/or worsen over time. It is not possible for us to predict whether there will be further substantial changes in the financial markets that could have a Material Adverse Effect on Us.

The soundness of other financial institutions could adversely affect us.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services to institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. During 2008, Key incurred $54 million of derivative-related charges as a result of market disruption caused by the failure of Lehman Brothers. Another example of losses related to this type of risk is the losses associated with the Bernie Madoff ponzi scheme (“Madoff ponzi scheme”). As a result of the Madoff ponzi scheme, our investment subsidiary, Austin, determined that its funds had suffered investment losses up to $186 million. Following Lehman Brothers failure, we took several steps to better measure, monitor, and mitigate our counterparty risks and to reduce these exposures. This includes daily position measurement and reporting, the use of scenario analysis and stress testing, replacement cost estimation, risk mitigation strategies, and market feedback validation.

Defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held cannot be realized upon or is liquidated at prices insufficient to recover the full amount of the loan or derivative exposure due us. It is not possible to anticipate all of these risks and it is not feasible to mitigate these risks completely. Accordingly, there is no assurance that losses from such risks would not have a Material Adverse Effect on Us.

We are subject to liquidity risk.

Market conditions or other events could negatively affect the level or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth and new business transactions at a reasonable cost, in a timely manner and without adverse consequences. Although we have implemented strategies to maintain sufficient and diverse sources of funding to accommodate planned as well as unanticipated changes in assets and liabilities under both normal and adverse conditions, any substantial, unexpected and/or prolonged change in the level or cost of liquidity could have a Material Adverse Effect on Us. Certain credit markets that we participate in and rely upon as sources of funding were significantly disrupted and volatile from the third quarter of 2007 through the third quarter of 2009. These conditions in the recent past increase our liquidity risk exposure, and could return. While the credit markets have improved, the availability of credit and the cost of funds remain tight and more expensive than typical for an economy with a growing gross domestic product. Part of our strategy to reduce liquidity risk involves promoting customer deposit growth, exiting certain noncore lending businesses, diversifying our funding base, maintaining a liquid asset portfolio, and strengthening our capital base to reduce our need for debt as a source of liquidity. Many of these disrupted markets are showing signs of recovery. Nonetheless, if further market disruption or other factors reduce the cost effectiveness and/or the availability of supply in the credit markets for a prolonged period of time, we may need to expand the utilization of unsecured wholesale funding instruments, or use other potential means of accessing funding and managing liquidity such as generating client deposits, securitizing or selling loans, extending the maturity of wholesale borrowings, purchasing deposits from other banks, borrowing under certain secured wholesale facilities, and utilizing relationships developed with fixed income investors in a variety of markets — domestic, European and Canadian — as well as increased management of loan growth and investment opportunities and other management tools. There can

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be no assurance that these alternative means of funding will be available; under certain stressed conditions experienced during the liquidity crisis, some of these alternative means of funding were not available. Should these forms of funding become unavailable, it is unclear what impact, given current economic conditions, unavailability of such funding would have on us. A deep and prolonged disruption in the markets could have the effect of significantly restricting the accessibility of cost effective capital and funding, which could have a Material Adverse Effect on Us.

Various factors may cause our allowance for loan losses to increase.

We maintain an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, that represents our estimate of losses within the existing portfolio of loans. The allowance is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The level of the allowance reflects our ongoing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions, and unexpected losses inherent in the current loan portfolio. The determination of the appropriate level of the allowance for loan losses inherently involves a degree of subjectivity and requires that we make significant estimates of current credit risks and future trends, all of which may undergo material changes. Changes in economic conditions affecting borrowers, the stagnation of certain economic indicators that we are more susceptible to, such as unemployment and real estate values, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. In addition, bank regulatory agencies periodically review our allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments that can differ somewhat from those of our own management. In addition, if charge-offs in future periods exceed the allowance for loan losses (i.e., if the loan allowance is inadequate), we will need additional loan loss provisions to increase the allowance for loan losses. Additional provisions to increase the allowance for loan losses, should they become necessary, would result in a decrease in net income and capital and may have a Material Adverse Effect on Us.

We are subject to operational risk.

Like all businesses, we are subject to operational risk, which represents the risk of loss resulting from human error, inadequate or failed internal processes and systems, and external events. Operational risk also encompasses compliance (legal) risk, which is the risk of loss from violations of, or noncompliance with, laws, rules, regulations, prescribed practices or ethical standards. We are also exposed to operational risk through our outsourcing arrangements, and the affect that changes in circumstances or capabilities of our outsourcing vendors can have on our ability to continue to perform operational functions necessary to our business, such as certain loan processing functions. Additionally, some of our outsourcing arrangements are located overseas and therefore are subject to political risks unique to the regions in which they operate. Although we seek to mitigate operational risk through a system of internal controls, resulting losses from operational risk could take the form of explicit charges, increased operational costs, harm to our reputation or foregone opportunities, any and all of which could have a Material Adverse Effect on Us.

Our profitability depends significantly on economic conditions in the geographic regions in which we operate.

Our success depends primarily on economic conditions in the markets in which we operate. We have concentrations of loans and other business activities in geographic areas where our branches are located — the Northwest, the Rocky Mountains, the Great Lakes and the Northeast — as well as potential exposure to geographic areas outside of our branch footprint. For example, the nonowner-occupied properties segment of our commercial real estate portfolio has exposures in several markets outside of our footprint. Real estate values and cash flows have been negatively affected on a national basis due to weak economic conditions. Certain markets, such as Florida, southern California, Phoenix, Arizona, and Las Vegas, Nevada, have experienced more significant deterioration. The delinquencies, nonperforming loans and charge-offs that we have experienced have been more heavily weighted to these specific markets. As a result of these and other economic factors, we recently increased the provision for loan losses. The regional economic conditions in areas in which we conduct our business have an impact on the demand

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for our products and services as well as the ability of our customers to repay loans, the value of the collateral securing loans and the stability of our deposit funding sources. A significant decline in general economic conditions caused by inflation, recession, an act of terrorism, outbreak of hostilities or other international or domestic occurrences, unemployment, changes in securities markets or other factors, such as severe declines in the value of homes and other real estate, could also impact these regional economies and, in turn, have a Material Adverse Effect on Us.

We operate in a highly competitive industry and market areas.

We face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources. Such competitors primarily include national and super-regional banks as well as smaller community banks within the various markets in which we operate. We also face competition from many other types of financial institutions, including, without limitation, savings associations, credit unions, mortgage banking companies, finance companies, mutual funds, insurance companies, investment management firms, investment banking firms, broker-dealers and other local, regional and national financial services firms. In recent years, while the breadth of the institutions that we compete with has increased, competition has intensified as a result of consolidation efforts. During 2009, competition continued to intensify as the challenges of the liquidity crisis and market disruption led to further redistribution of deposits and certain banking assets to stronger and larger financial institutions. We expect this trend to continue. The competitive landscape was also affected by the conversion of traditional investment banks to bank holding companies during the liquidity crisis due to the access it provides to government-sponsored sources of liquidity. The financial services industry’s competitive landscape could become even more intensified as a result of legislative, regulatory, structural and technological changes and continued consolidation. Also, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks.

Our ability to compete successfully depends on a number of factors, including, among other things:

•  our ability to develop and execute strategic plans and initiatives;

•  our ability to develop, maintain and build upon long-term customer relationships based on quality service, high ethical standards and safe, sound assets;

•  our ability to expand our market position;

•  the scope, relevance and pricing of products and services offered to meet customer needs and demands;

•  the rate at which we introduce new products and services relative to our competitors;

•  our ability to attract and retain talented executives and relationship managers; and

•  industry and general economic trends.

Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a Material Adverse Effect on Us.

We are subject to extensive government regulation and supervision.

We are subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not shareholders. These regulations affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. It is likely that there will be significant changes to the banking and financial institutions’ regulatory regime in light of recent events affecting the financial services industry. It is not possible to predict the scope of such changes or their potential impact on our results of operations.

For example, President Obama announced in January 2010 a reform proposal to: (1) limit the scope of financial institutions and ensure that a bank will not own, invest in or sponsor a hedge fund or a private equity fund, or have proprietary trading operations unrelated to its service of its customers for its own profit; and (2) limit further consolidation of the financial sector. This proposal — sometimes referred to by the media as the Volcker Rule —

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aims to place limits on the growth of market share at the largest financial firms, supplementing the existing caps on market share of deposits. It is impossible to predict whether President Obama’s proposal for financial regulatory reform will succeed or what the impact of any financial reform proposal would be on us or the banking industry generally. If this financial reform proposal is adopted in some form, it may, for example, limit the scope of financial services and investments that financial institutions with commercial banks may invest in, impose additional capital and liquidity standards, and/or limit the size of financial institutions in order to avoid any moral hazard associated with financial institutions deemed to big to fail. These types of reform could limit our ability to conduct certain of our businesses, such as funds that are part of our investment adviser subsidiary, Victory Capital Management Inc., or funds sponsored and advised by, and investments in private equity funds made by, our principal investing line of business, which could require us to divest or spin-off certain of our business units and private equity investments. Furthermore, as part of the SCAP, Key was identified as a financial institution that was one of nineteen firms that collectively hold two-thirds of the banking assets and more than one-half of the loans in the U.S. banking system. While it is difficult to predict if regulatory reform will occur and the extent or nature of regulatory reform, should regulatory reform limit the size of the SCAP banks, our ability to pursue opportunities to achieve growth through the acquisition of other banks or deposits could be affected, which, in turn could have a Material Adverse Effect on Us.

Changes to statutes, regulations or regulatory policies; changes in the interpretation or implementation of statutes, regulations or policies; and/or continuing to become subject to heightened regulatory practices, requirements or expectations, could affect us in substantial and unpredictable ways, and could have a Material Adverse Effect on Us. Such changes could subject us to additional costs, limit the types of financial services and products that we may offer and/or increase the ability of nonbanks to offer competing financial services and products, among other things. Failure to appropriately comply with laws, regulations or policies (including internal policies and procedures designed to prevent such violations) could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a Material Adverse Effect on Us.

Our controls and procedures may fail or be circumvented.

We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a Material Adverse Effect on Us.

We rely on dividends from our subsidiaries for most of our funds.

KeyCorp is a legal entity separate and distinct from its subsidiaries. With the exception of cash raised from debt and equity issuances, we receive substantially all of our cash flow from dividends from our subsidiaries. These dividends are the principal source of funds to pay dividends on our Common Shares and interest and principal on our debt. Federal banking law and regulations limit the amount of dividends that KeyBank (KeyCorp’s largest subsidiary) and certain nonbank subsidiaries may pay to KeyCorp. During 2008 and 2009, KeyBank did not pay any dividends to KeyCorp; nonbank subsidiaries paid KeyCorp $.8 million in dividends during 2009. As of the close of business on December 31, 2009, KeyBank would not have been permitted to pay dividends to KeyCorp without prior regulatory approval since the bank had a net loss of $1.151 billion for 2009 and a net loss of $1.161 billion for 2008. For further information on the regulatory restrictions on the payment of dividends by KeyBank see “Supervision and Regulation — Dividend Restrictions” of this report.

Also, KeyCorp’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. In the event KeyBank is unable to pay dividends to KeyCorp, we may not be able to service debt, pay obligations or pay dividends on our Common Shares. The inability to receive dividends from KeyBank could have a Material Adverse Effect on Us.

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Our earnings and/or financial condition may be affected by changes in accounting principles and in tax laws, or the interpretation of them.

Changes in U.S. generally accepted accounting principles could have a Material Adverse Effect on Us. Although these changes may not have an economic impact on our business, they could affect our ability to attain targeted levels for certain performance measures.

Like all businesses, we are subject to tax laws, rules and regulations. Changes to tax laws, rules and regulations, including changes in the interpretation or implementation of tax laws, rules and regulations by the Internal Revenue Service or other governmental bodies, could affect us in substantial and unpredictable ways. Such changes could subject us to additional costs, among other things. Failure to appropriately comply with tax laws, rules and regulations could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a Material Adverse Effect on Us.

Additionally, we conduct quarterly assessments of our deferred tax assets. The carrying value of these assets is dependent upon earnings forecasts and prior period earnings, among other things. A significant change in our assumptions could affect the carrying value of our deferred tax assets on our balance sheet, which, in turn, could have a Material Adverse Effect on Us.

Potential acquisitions may disrupt our business and dilute shareholder value.

Acquiring other banks, businesses, or branches involves various risks commonly associated with acquisitions, including, among other things:

•  potential exposure to unknown or contingent liabilities of the target company;

•  exposure to potential asset quality issues of the target company;

•  difficulty and expense of integrating the operations and personnel of the target company;

•  potential disruption to our business;

•  potential diversion of our management’s time and attention;

•  the possible loss of key employees and customers of the target company;

•  difficulty in estimating the value (including goodwill) of the target company;

•  difficulty in estimating the fair value of acquired assets, liabilities and derivatives of the target company; and

•  potential changes in banking or tax laws or regulations that may affect the target company.

We regularly evaluate merger and acquisition opportunities and conduct due diligence activities related to possible transactions with other financial institutions and financial services companies. As a result, merger or acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving cash, debt or equity securities may occur at any time. Acquisitions typically involve the payment of a premium over book and market values, and, therefore, some dilution of our tangible book value and net income per common share may occur in connection with any future transaction. Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have a Material Adverse Effect on Us.

We may not be able to attract and retain skilled people.

Our success depends, in large part, on our ability to attract and retain key people. Competition for the best people in most activities in which we are engaged can be intense, and we may not be able to retain or hire the people we want and/or need. In order to attract and retain qualified employees, we must compensate such employees at market levels. Typically, those levels have caused employee compensation to be our greatest expense. If we are unable to continue to attract and retain qualified employees, or do so at rates necessary to maintain our competitive position, our performance, including our competitive position, could suffer, and, in turn, have a Material Adverse Effect on Us. Although we maintain employment agreements with certain key employees, and have incentive compensation

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plans aimed, in part, at long-term employee retention, the unexpected loss of services of one or more of our key personnel could still occur, and such events may have a Material Adverse Effect on Us because of the loss of the employee’s skills, knowledge of our market, years of industry experience and the difficulty of promptly finding qualified replacement personnel for our talented executives and/or relationship managers.

Pursuant to the standardized terms of the CPP, among other things, we agreed to institute certain restrictions on the compensation of certain senior executive management positions that could have an adverse effect on our ability to hire or retain the most qualified senior executives. Other restrictions may also be imposed under the Recovery Bill or other legislation or regulations. Our ability to attract and/or retain talented executives and/or relationship managers may be affected by these developments or any new executive compensation limits, and such restrictions could have a Material Adverse Effect on Us.

Our information systems may experience an interruption or breach in security.

We rely heavily on communications and information systems to conduct our business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems. While we have policies and procedures designed to prevent or limit the effect of the possible failure, interruption or security breach of our information systems, there can be no assurance that any such failure, interruption or security breach will not occur or, if any does occur, that it will be adequately addressed. The occurrence of any failure, interruption or security breach of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a Material Adverse Effect on Us.

We continually encounter technological change.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Our largest competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a Material Adverse Effect on Us.

We are subject to claims and litigation.

From time to time, customers and/or vendors may make claims and take legal action against us. We maintain reserves for certain claims when deemed appropriate based upon our assessment of the claims. Whether any particular claims and legal actions are founded or unfounded, if such claims and legal actions are not resolved in our favor they may result in significant financial liability and/or adversely affect how the market perceives us and our products and services as well as impact customer demand for those products and services. We are also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding our business, including, among other things, accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. The number of these investigations and proceedings has increased in recent years with regard to many firms in the financial services industry. There have also been a number of highly publicized cases involving fraud or misconduct by employees in the financial services industry in recent years, and we run the risk that employee misconduct could occur. It is not always possible to deter or prevent employee misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Any financial liability for which we have not adequately maintained reserves, and/or any reputation damage from such claims and legal actions, could have a Material Adverse Effect on Us.

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Severe weather, natural disasters, acts of war or terrorism and other external events could significantly impact our business.

Severe weather, natural disasters, acts of war or terrorism and other adverse external events could have a significant impact on our ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. Although we have established disaster recovery plans and procedures, and monitor for significant environmental effects on our properties or our investments, the occurrence of any such event could have a Material Adverse Effect on Us.

Risks Associated With Our Common Shares

Our issuance of securities to the U.S. Treasury may limit our ability to return capital to our shareholders and is dilutive to our Common Shares. If we are unable to redeem such preferred shares, the dividend rate increases substantially after five years.

In connection with our sale of $2.5 billion of the Series B Preferred Stock to the U.S. Treasury in conjunction with its CPP, we also issued a Warrant to purchase 35,244,361 of our Common Shares at an exercise price of $10.64. The number of shares was determined based upon the requirements of the CPP, and was calculated based on the average market price of our Common Shares for the 20 trading days preceding approval of our issuance (which was also the basis for the exercise price of $10.64). The terms of the transaction with the U.S. Treasury include limitations on our ability to pay dividends and repurchase our Common Shares. For three years after the issuance or until the U.S. Treasury no longer holds any Series B Preferred Stock, we will not be able to increase our dividends above the level of our quarterly dividend declared during the third quarter of 2008 ($0.1875 per common share on a quarterly basis) nor repurchase any of our Common Shares or preferred stock without, among other things, U.S. Treasury approval or the availability of certain limited exceptions, e.g., purchases in connection with our benefit plans. Furthermore, as long as the Series B Preferred Stock issued to the U.S. Treasury is outstanding, dividend payments and repurchases or redemptions relating to certain equity securities, including our Common Shares, are prohibited until all accrued and unpaid dividends are paid on such preferred stock, subject to certain limited exceptions. These restrictions, combined with the dilutive impact of the Warrant, may have an adverse effect on the market price of our Common Shares, and, as a result, they could have a Material Adverse Effect on Us.

Unless we are able to redeem the Series B Preferred Stock during the first five years, the dividend payments on this capital will increase substantially at that point, from 5% ($125 million annually) to 9% ($225 million annually). Depending on market conditions at the time, this increase in dividends could significantly impact our liquidity and, as a result, have a Material Adverse Effect on Us.

You may not receive dividends on the Common Shares.

Holders of our Common Shares are only entitled to receive such dividends as the Board of Directors may declare out of funds legally available for such payments. Furthermore, our common shareholders are subject to the prior dividend rights of any holders of our preferred stock or depositary shares representing such preferred stock then outstanding. As of February 24, 2010, there were 2,904,839 shares of KeyCorp’s Series A Preferred Stock with a liquidation preference of $100 per share issued and outstanding and 25,000 shares of the Series B Preferred Stock with a liquidation preference of $100,000 per share issued and outstanding.

In July 2009, we reduced the quarterly dividend on our Common Shares to $0.01 per share. We do not expect to increase the quarterly dividend above $0.01 for the foreseeable future. We could decide to eliminate our Common Shares dividend altogether. Furthermore, as long as our Series A Preferred Stock and the Series B Preferred Stock are outstanding, dividend payments and repurchases or redemptions relating to certain equity securities, including our Common Shares, are prohibited until all accrued and unpaid dividends are paid on such preferred stock, subject to certain limited exceptions. In addition, prior to November 14, 2011, unless we have redeemed all of the Series B Preferred Stock or the U.S. Treasury has transferred all of the Series B Preferred Stock to third parties, the consent of the U.S. Treasury will be required for us to, among other things, increase our Common Shares dividend above $.1875 except in limited circumstances. This could adversely affect the market price of our Common Shares. Also, KeyCorp is a bank holding company and its ability to declare and pay dividends is dependent on certain federal

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regulatory considerations, including the guidelines of the Federal Reserve Board regarding capital adequacy and dividends.

In addition, terms of KeyBank’s outstanding junior subordinated debt securities prohibit us from declaring or paying any dividends or distributions on KeyCorp’s capital stock, including its Common Shares, or purchasing, acquiring, or making a liquidation payment on such stock, if an event of default has occurred and is continuing under the applicable indenture, if we are in default with respect to a guarantee payment under the guarantee of the related capital securities or if we have given notice of our election to defer interest payments but the related deferral period has not yet commenced or a deferral period is continuing. These factors could have a Material Adverse Effect on Us.

KeyCorp was required to conduct stress tests pursuant to the U.S. Treasury’s CAP and could be required to conduct additional stress tests and raise additional capital that would be dilutive to our Common Shares and may limit our ability to return capital to our shareholders.

On February 25, 2009, the U.S. Treasury announced preliminary details of the CAP component of its Financial Stability Plan. The CAP was implemented to ensure the continued ability of U.S. financial institutions to lend to creditworthy borrowers in the event of a weaker than expected economic environment and larger than expected potential losses. Following the conduct of such stress tests, our regulators determined that we needed to generate an additional $1.8 billion of Tier 1 common equity.

We completed various capital transactions, generating in excess of $1.8 billion of additional Tier 1 common equity. Should the U.S. Treasury and our banking regulators determine that additional stress testing is necessary, or in order to receive approval to redeem our Series B Preferred, we may need to raise additional capital. Should this happen, we may only have a limited window to raise that capital. Should we need to issue additional equity capital, it would be dilutive to our Common Shares and may limit our ability to return capital to our shareholders. These factors may have a Material Adverse Effect on Us.

Our share price can be volatile.

Share price volatility may make it more difficult for you to resell your Common Shares when you want and at prices you find attractive. Our share price can fluctuate significantly in response to a variety of factors including, among other things:

•  actual or anticipated variations in quarterly results of operations;

•  recommendations by securities analysts;

•  operating and stock price performance of other companies that investors deem comparable to our business;

•  changes in the credit, mortgage and real estate markets, including the market for mortgage-related securities;

•  news reports relating to trends, concerns and other issues in the financial services industry;

•  perceptions of us and/or our competitors in the marketplace;

•  new technology used, or products or services offered, by competitors;

•  significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments entered into by us or our competitors;

•  failure to integrate acquisitions or realize anticipated benefits from acquisitions;

•  future sales of our equity or equity-related securities;

•  our past and future dividend practices;

•  changes in governmental regulations affecting our industry generally or our business and operations;

•  changes in global financial markets, economies and market conditions, such as interest or foreign exchange rates, stock, commodity, credit or asset valuations or volatility;

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•  geopolitical conditions such as acts or threats of terrorism or military conflicts; and

•  the occurrence or nonoccurrence, as appropriate, of any circumstance described in these Risk Factors.

General market fluctuations, market disruption, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause our share price to decrease regardless of operating results. Any of these factors could have a Material Adverse Effect on Us.

An investment in our Common Shares is not an insured deposit.

Our Common Shares are not a bank deposit and, therefore, are not insured against loss by the FDIC, any other deposit insurance fund or by any other public or private entity. Investment in our Common Shares is inherently risky for the reasons described in this “Risk Factors” section and elsewhere in this report and is subject to the same market forces that affect the price of common shares in any company. As a result, if you acquire our Common Shares, you may lose some or all of your investment.

Our articles of incorporation and regulations, as well as certain banking laws, may have an anti-takeover effect.

Provisions of our articles of incorporation and regulations and federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire us, even if doing so would be perceived to be beneficial to our shareholders. The combination of these provisions may inhibit a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of our Common Shares.

Risks Associated With Our Industry

Difficult market conditions have adversely affected the financial services industry, business and results of operations.

The dramatic deterioration experienced in the housing market led to weakness across geographies, industries, and ultimately the broad economy. Over the last 30 months, the housing market experienced falling home prices, increasing foreclosures; unemployment and under-employment rose significantly; and weakened commercial real estate fundamentals negatively impacted the credit performance of mortgage loans and resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities, and commercial and investment banks. The resulting write-downs to assets of financial institutions have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions and, in some cases, to seek government assistance or bankruptcy protection. It is not possible to predict how long these economic conditions will exist, which of our markets, products or other businesses will ultimately be affected, and whether our actions and government remediation efforts will effectively mitigate these factors. Accordingly, the resulting lack of available credit, lack of confidence in the financial sector, decreased consumer confidence, increased volatility in the financial markets and reduced business activity could have a Material Adverse Effect on Us. Furthermore, continued deterioration in economic conditions could result in an increase in loan delinquencies and nonperforming assets, decreases in loan collateral values and a decrease in demand for our products and services, among other things, any of which could have a Material Adverse Effect on Us.

As a result of the challenges presented by economic conditions, we may face the following risks, including, but not limited to:

•  Increased regulation of our industry, including heightened legal standards and regulatory requirements or expectations imposed in connection with the EESA, the Recovery Bill or other government initiatives. Compliance with such regulation will likely increase our costs and limit our ability to pursue business opportunities.

•  Impairment of our ability to assess the creditworthiness of our customers if the models and approaches we use to select, manage, and underwrite customers become less predictive of future behaviors due to fundamental changes in economic conditions.

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•  The process we use to estimate losses inherent in our credit exposure requires difficult, subjective, and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of our borrowers to repay their loans. In a highly uncertain economic environment, these processes may no longer be capable of accurate estimation and, in turn, may impact the reliability of our evaluation of our credit risk and exposure.

•  Our ability to borrow from other financial institutions or to engage in securitization funding transactions on favorable terms or at all could be adversely affected by further disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations.

•  Increased intensity of competition in the financial services industry due to: (i) the continued trend of mergers of financial institutions with stronger and larger financial institutions and the redistribution of FDIC-insured deposits and certain banking assets through the FDIC least-cost resolution process, and (ii) the conversion of certain investment banks to bank holding companies. We expect competition to intensify as a result of these changes to the competitive landscape. Should competition in the financial services industry continue to intensify, our ability to market products and services may be adversely affected.

•  We will be required to pay significantly higher FDIC premiums in the future because market developments have significantly depleted the insurance fund of the FDIC and reduced the ratio of reserves to insured deposits. We are also likely to be required to pay other fees necessary to support the EESA, the Recovery Bill and other government efforts.

•  Financial institutions may be required, regardless of risk, to pay taxes or other fees to the U.S. Treasury. Such taxes or other fees could be designed to reimburse the U.S. Treasury for the many government programs and initiatives it has undertaken as part of its economic stimulus efforts.

•  Our ability to attract key executives and/or other key employees may be hindered as a result of executive compensation limits as a result of our participation in the CPP and/or regulations that may be issued by the U.S. Treasury or other regulators pursuant to its authority under the EESA or the Recovery Bill. Furthermore, we may lose key executives and/or other key employees as a result of such limitations.

Financial services companies depend on the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions, we may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information. We may also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a Material Adverse Effect on Us.

Consumers may decide not to use banks to complete their financial transactions.

Technology and other changes are allowing parties to complete through alternative methods financial transactions that historically have involved banks. For example, consumers can now maintain funds in brokerage accounts or mutual funds that would have historically been held as bank deposits. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a Material Adverse Effect on Us.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

There are no unresolved SEC staff comments.

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ITEM 2.   PROPERTIES

The headquarters of KeyCorp and KeyBank are located in Key Tower at 127 Public Square, Cleveland, Ohio 44114-1306. At December 31, 2009, Key leased approximately 686,002 square feet of the complex, encompassing the first twenty-three floors, and the 54th through 56th floors of the 57-story Key Tower. As of the same date, KeyBank owned 561 and leased 446 branches. The lease terms for applicable branches are not individually material, with terms ranging from month-to-month to 99 years from inception.

ITEM 3.   LEGAL PROCEEDINGS

The information in the Legal Proceedings section of Note 18 (“Commitments, Contingent Liabilities and Guarantees”) of the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto) is incorporated herein by reference.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year covered by this report, no matter was submitted to a vote of security holders of KeyCorp.

PART II

ITEM 5.   MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The dividend restrictions discussion in this report and the following disclosures included in the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto) are incorporated herein by reference:

	Page(s)
Discussion of Common Shares, shareholder information and repurchase activities in the section captioned “Capital — Common shares outstanding”		50-51
Presentation of annual market price and cash dividends per Common Share		17
Discussion of dividend restrictions in the “Liquidity risk management — Liquidity for KeyCorp” section, Note 5 (“Restrictions on Cash, Dividends and Lending Activities”), and Note 15 (“Shareholders’ Equity”)		66, 111, 128
KeyCorp common share price performance (2004-2009) graph		51

From time to time, KeyCorp or its principal subsidiary, KeyBank, may seek to retire, repurchase or exchange outstanding debt of KeyCorp or KeyBank, and capital securities or preferred stock of KeyCorp through cash purchase, privately negotiated transactions or otherwise. Such transactions, if any, depend on prevailing market conditions, our liquidity and capital requirements, contractual restrictions and other factors. The amounts involved may be material.

ITEM 6.   SELECTED FINANCIAL DATA

The Selected Financial Data presented in the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto) is incorporated herein by reference.

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The information included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto) is incorporated herein by reference.

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ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information included under the caption “Risk Management — Market risk management” of the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto) is incorporated herein by reference.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Selected Quarterly Financial Data and the financial statements and the notes thereto of the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto) are incorporated herein by reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A.   CONTROLS AND PROCEDURES

As of the end of the period covered by this report, KeyCorp carried out an evaluation, under the supervision and with the participation of KeyCorp’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of KeyCorp’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act), to ensure that information required to be disclosed by KeyCorp in reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to KeyCorp’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. Based upon that evaluation, KeyCorp’s Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective, in all material respects, as of the end of the period covered by this report. No changes were made to KeyCorp’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, KeyCorp’s internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting, the Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm in the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto) are incorporated herein by reference.

ITEM 9B.   OTHER INFORMATION

Not applicable.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is set forth in the sections captioned “Issue One — ELECTION OF DIRECTORS,” “EXECUTIVE OFFICERS,” and “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” contained in KeyCorp’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders to be held May 20, 2010 and is incorporated herein by reference. KeyCorp expects to file its final proxy statement on or before April 2, 2010.

KeyCorp has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. William G. Bares, Ruth Ann M. Gillis, Kristen L. Manos, Eduardo R. Menascé and Peter G. Ten Eyck, II are members of the Audit Committee. The Board of Directors has determined that Ms. Gillis and Mr. Menascé each qualify as an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K,

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and that each member of the Audit Committee is “independent,” as that term is defined in Section 303A.02 of the New York Stock Exchange’s listing standards.

KeyCorp has adopted a code of ethics that applies to all of its employees, including its Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and any persons performing similar functions, and to KeyCorp’s Board of Directors. The Code of Ethics is located on KeyCorp’s website (www.key.com). Any amendment to, or waiver from a provision of, the Code of Ethics that applies to its Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer will be promptly disclosed on its website as required by laws, rules and regulations of the SEC. Shareholders may obtain a copy of the Code of Ethics free of charge by writing KeyCorp Investor Relations, at 127 Public Square (Mail Code OH-01-27-1113), Cleveland, OH 44114-1306.

ITEM 11.   EXECUTIVE COMPENSATION

The information required by this item is set forth in the sections captioned “COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS,” “COMPENSATION DISCUSSION AND ANALYSIS” and “COMPENSATION AND ORGANIZATION COMMITTEE REPORT” contained in KeyCorp’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders to be held May 20, 2010, and is incorporated herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is set forth in the sections captioned “EQUITY COMPENSATION PLAN INFORMATION” and “SHARE OWNERSHIP AND OTHER PHANTOM STOCK UNITS” contained in KeyCorp’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders to be held May 20, 2010, and is incorporated herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is set forth in the section captioned “DIRECTOR INDEPENDENCE” contained in KeyCorp’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders to be held May 20, 2010, and is incorporated herein by reference.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is set forth in the sections captioned “AUDIT FEES,” “AUDIT-RELATED FEES,” “TAX FEES,” “ALL OTHER FEES” and “PRE-APPROVAL POLICIES AND PROCEDURES” contained in KeyCorp’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders to be held May 20, 2010, and is incorporated herein by reference.

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PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENTS

(a) (1) Financial Statements

The following financial statements of KeyCorp and its subsidiaries, and the auditor’s report thereon, are incorporated herein by reference to the pages indicated in the Financial Review section of KeyCorp’s 2009 Annual Report to Shareholders (Exhibit 13 hereto):

	Page(s)
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm		84
Consolidated Balance Sheets at December 31, 2009 and 2008		85
Consolidated Statements of Income for the Years Ended December 31, 2009, 2008 and 2007		86
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2009, 2008 and 2007		87
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007		88
Notes to Consolidated Financial Statements		89

(a) (2) Financial Statement Schedules

All financial statement schedules for KeyCorp and its subsidiaries have been included in the consolidated financial statements or the related footnotes, or they are either inapplicable or not required.

(a) (3) Exhibits*

3	.1	Amended and Restated Articles of Incorporation of KeyCorp.
3	.2	Amended and Restated Regulations of KeyCorp, effective May 15, 2008, filed as Exhibit 3.2 to Form 10-Q for the quarter ended June 30, 2008, and incorporated herein by reference.
10	.1	Form of Option Grant between KeyCorp and Henry L. Meyer III, dated November 15, 2000, filed as Exhibit 10.2 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.2	Form of Award of KeyCorp Executive Officer Grant with Restricted Stock Units (2008-2010), filed as Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2008, and incorporated herein by reference.
10	.3	Form of Award of KeyCorp Executive Officer Grant (2008-2010), filed as Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2008, and incorporated herein by reference.
10	.4	Form of Award of KeyCorp Officer Grant with Restricted Stock Units (2008-2010), filed as Exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2008, and incorporated herein by reference.
10	.5	Form of Award of KeyCorp Officer Grant (2008-2010), filed as Exhibit 10.4 to Form 10-Q for the quarter ended March 31, 2008, and incorporated herein by reference.
10	.6	Form of Award of KeyCorp Officer Grant (effective March 12, 2009), filed as Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2009, and incorporated herein by reference.
10	.7	Form of Award of Restricted Stock (Base Salary), filed as Exhibit 99.1 to Form 8-K filed September 23, 2009, and incorporated herein by reference.
10	.8	Form of Award of Non-Qualified Stock Options (effective June 12, 2009).
10	.9	Amended Employment Agreement between KeyCorp and Henry L. Meyer III, dated as of September 1, 2009, filed as Exhibit 10.1 to Form 8-K filed December 4, 2009, and incorporated herein by reference.
10	.10	Form of Change of Control Agreement (Tier I) between KeyCorp and Certain Executive Officers of KeyCorp, dated as of September 1, 2009, filed as Exhibit 10.2 to Form 8-K filed December 4, 2009, and incorporated herein by reference.

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10	.11	Form of Change of Control Agreement (Tier II) between KeyCorp and Certain Executive Officers of KeyCorp, dated as of September 1, 2009, filed as Exhibit 10.3 to Form 8-K filed December 4, 2009, and incorporated herein by reference.
10	.12	KeyCorp Annual Incentive Plan (January 1, 2009 Restatement).
10	.13	KeyCorp Annual Performance Plan (January 1, 2008 Restatement), effective as of January 1, 2008, filed as Exhibit 10.10 to Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.
10	.14	KeyCorp Amended and Restated 1991 Equity Compensation Plan (amended as of March 13, 2003), filed as Exhibit 10.16 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.15	KeyCorp 2004 Equity Compensation Plan.
10	.16	KeyCorp 1997 Stock Option Plan for Directors as amended and restated on March 14, 2001, filed as Exhibit 10.18 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.17	KeyCorp Umbrella Trust for Directors between KeyCorp and National Bank of Detroit, dated July 1, 1990, filed as Exhibit 10.19 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.18	Amended and Restated Director Deferred Compensation Plan (May 18, 2000 Amendment and Restatement), filed as Exhibit 10.20 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.19	Amendment to the Director Deferred Compensation Plan.
10	.20	KeyCorp Amended and Restated Second Director Deferred Compensation Plan, effective as of December 31, 2008, filed as Exhibit 10.22 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.21	KeyCorp Directors’ Deferred Share Plan, effective as of December 31, 2008, filed as Exhibit 10.23 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.22	KeyCorp Directors’ Survivor Benefit Plan, effective September 1, 1990, filed as Exhibit 10.24 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.23	KeyCorp Excess Cash Balance Pension Plan (Amended and Restated as of January 1, 1998), filed as Exhibit 10.25 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.24	First Amendment to KeyCorp Excess Cash Balance Pension Plan, effective July 1, 1999, filed as Exhibit 10.26 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.25	Second Amendment to KeyCorp Excess Cash Balance Pension Plan, effective January 1, 2003, filed as Exhibit 10.27 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.26	Restated Amendment to KeyCorp Excess Cash Balance Pension Plan.
10	.27	Disability Amendment to KeyCorp Excess Cash Balance Pension Plan, effective as of December 31, 2007, filed as Exhibit 10.26 to Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.
10	.28	KeyCorp Second Excess Cash Balance Pension Plan.
10	.29	KeyCorp Automatic Deferral Plan (December 31, 2008 Restatement) , filed as Exhibit 10.31 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.30	McDonald Financial Group Deferral Plan, restated as of December 31, 2008, filed as Exhibit 10.32 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.31	KeyCorp Deferred Bonus Plan, effective as of December 31, 2008, filed as Exhibit 10.33 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.32	KeyCorp Commissioned Deferred Compensation Plan, restated as of December 31, 2008, filed as Exhibit 10.34 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

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10	.33	Trust Agreement for certain amounts that may become payable to certain executives and directors of KeyCorp, dated April 1, 1997, and amended as of August 25, 2003, filed as Exhibit 10.35 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.34	Trust Agreement (Executive Benefits Rabbi Trust), dated November 3, 1988, filed as Exhibit 10.36 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.35	KeyCorp Umbrella Trust for Executives between KeyCorp and National Bank of Detroit, dated July 1, 1990, filed as Exhibit 10.37 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.36	KeyCorp Supplemental Retirement Benefit Plan, effective January 1, 1981, restated August 16, 1990, amended January 1, 1995 and August 1, 1996, filed as Exhibit 10.38 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.37	Amendment to KeyCorp Supplemental Retirement Benefit Plan, effective January 1, 1995.
10	.38	Second Amendment to KeyCorp Supplemental Retirement Benefit Plan, effective August 1, 1996.
10	.39	Third Amendment to KeyCorp Supplemental Retirement Benefit Plan, adopted July 1, 1999, filed as Exhibit 10.41 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.40	KeyCorp Second Executive Supplemental Pension Plan.
10	.41	KeyCorp Supplemental Retirement Benefit Plan for Key Executives, effective July 1, 1990, restated August 16, 1990, filed as Exhibit 10.43 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.42	Amendment to KeyCorp Supplemental Retirement Benefit Plan for Key Executives, effective January 1, 1995.
10	.43	Second Amendment to KeyCorp Supplemental Retirement Benefit Plan for Key Executives, effective August 1, 1996.
10	.44	Third Amendment to KeyCorp Supplemental Retirement Benefit Plan for Key Executives, adopted July 1, 1999, filed as Exhibit 10.46 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.45	Fourth Amendment to KeyCorp Supplemental Retirement Benefit Plan for Key Executives, effective December 28, 2004, filed as Exhibit 10.70 to Form 10-K for the year ended December 31, 2004, and incorporated herein by reference.
10	.46	KeyCorp Second Supplemental Retirement Benefit Plan for Key Executives, filed as Exhibit 10.71 to Form 10-K for the year ended December 31, 2004, and incorporated herein by reference.
10	.47	KeyCorp Deferred Equity Allocation Plan.
10	.48	KeyCorp Deferred Savings Plan.
10	.49	KeyCorp Second Supplemental Retirement Plan.
10	.50	KeyCorp Deferred Cash Award Plan.
10	.51	Letter Agreement between KeyCorp and Thomas W. Bunn dated August 5, 2008, filed as Exhibit 10 to Form 10-Q for the quarter ended June 30, 2008, and incorporated herein by reference.
10	.52	Letter Agreement between KeyCorp and Peter Hancock, dated November 25, 2008, filed as Exhibit 10.56 to Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.
10	.53	Letter Agreement, dated November 14, 2008, between KeyCorp and the United States Department of the Treasury, which includes the Securities Purchase Agreement — Standard Terms attached thereto, with respect to the issuance and sale of the Series B Preferred Stock and Warrant, and the Form of Express Terms of Fixed Rate Cumulative Perpetual Preferred Stock, Series B, to be proposed as the Preferred Stock Proposal at the KeyCorp 2009 Annual Meeting of Shareholders, filed as Exhibit 10.1 to Form 8-K filed November 20, 2008, and incorporated herein by reference.

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12		Computation of Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
13		Financial Review section of KeyCorp 2009 Annual Report to Shareholders.
21		Subsidiaries of the Registrant.
23		Consent of Independent Registered Public Accounting Firm.
24		Power of Attorney.
31	.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31	.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32	.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99	.1	Certification of Chief Executive Officer pursuant to Section 111 (b)(4) of the EESA.
99	.2	Certification of Chief Financial Officer pursuant to Section 111(b)(4) of the EESA.

101	.INS	XBRL Instance Document**
101	.SCH	XBRL Taxonomy Extension Schema Document**
101	.CAL	XBRL Taxonomy Extension Label Linkbase Document**
101	.LAB	XBRL Taxonomy Extension Presentation Linkbase Document**

KeyCorp hereby agrees to furnish the SEC upon request, copies of instruments, including indentures, which define the rights of long-term debt security holders. All documents listed as Exhibits 10.1 through 10.52 constitute management contracts or compensatory plans or arrangements.

*	Copies of these Exhibits have been filed with the SEC. Shareholders may obtain a copy of any exhibit, upon payment of reproduction costs, by writing KeyCorp Investor Relations, 127 Public Square, Mail Code OH-01-27-1113, Cleveland, OH 44114-1306.
**	As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the date indicated.

KEYCORP

/s/  Thomas C. Stevens

Thomas C. Stevens

Vice Chairman and Chief Administrative Officer

March 1, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Signature	Title
*Henry L. Meyer III	Chairman, Chief Executive Officer, and President (Principal Executive Officer), and Director
*Jeffrey B. Weeden	Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)
*Robert L. Morris	Executive Vice President and Chief Accounting Officer (Principal Accounting Officer)
*William G. Bares	Director
*Edward P. Campbell	Director
*Joseph A. Carrabba	Director
*Dr. Carol A. Cartwright	Director
*Alexander M. Cutler	Director
*H. James Dallas	Director
*Ruth Ann M. Gillis	Director
*Kristen L. Manos	Director
*Lauralee E. Martin	Director
*Eduardo R. Menascé	Director
*Bill R. Sanford	Director
*Thomas C. Stevens	Director
*Peter G. Ten Eyck, II	Director

/s/  Paul N. Harris

* By Daniel R. Stolzer, attorney-in-fact

March 1, 2010

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
KEYCORP

ARTICLE I

Name

          The name of the corporation (hereinafter called the “Corporation”) is “KeyCorp”.

ARTICLE II

Principal Office

          The principal office and headquarters of the Corporation shall be located in the City of Cleveland, County of Cuyahoga, State of Ohio.

ARTICLE III

Purposes

The purposes of the Corporation are:

(a) to organize, acquire, invest in, own, or control shares and other securities of banks, other depository institutions, and other companies which a bank holding company is permitted to own or control by the provisions of the Bank Holding Company Act of 1956, as now in effect or hereafter amended, and to carry on the business of a bank holding company in conformity with the Bank Holding Company Act of 1956, as now in effect or hereafter amended;

(b) to do whatever is deemed necessary, incidental, or conducive to carrying out any of the purposes of the Corporation; and

(c) to engage in any lawful act or activity for which corporations may be formed under the Ohio General Corporation Law.

ARTICLE IV

Authorized Shares of Capital Stock

          The authorized number of shares of the Corporation is 1,425,000,000, of which 25,000,000 shall be shares of preferred stock, with a par value of $1 each, as described in Part A of this Article IV (hereinafter called “Preferred Stock”), and 1,400,000,000 shall be Common Shares, with a par value of $1 each, as described in Part B of this Article IV (hereinafter called “Common Shares”).

          The express terms of each class are as follows:

PART A

EXPRESS TERMS OF THE PREFERRED STOCK

          Section 1. Series.

          The Preferred Stock may be issued from time to time in series. All shares of Preferred Stock shall be of equal rank and the express terms thereof shall be identical, except in respect of the terms that may be fixed by the Board of Directors as hereinafter provided, and each share of each series shall be identical with all other shares of such series, except that in the case of series on which dividends are cumulative the dates from which dividends are cumulative may vary to reflect differences in the dates of issue. Subject to the provisions of Sections 2 through 4, inclusive, of this Part A, which shall apply to all Preferred Stock, the Board of Directors is hereby authorized to cause shares of Preferred Stock to be issued in one or more series and with respect to each such series to fix:

(a)	The designation of the series, which may be by distinguishing number, letter, or title.
(b)	The authorized number of shares of the series, which number the Board of Directors may, except to the extent otherwise provided in the creation of the series, from time to time, increase or decrease, but not below the number of shares thereof then outstanding.
(c)	The dividend rate or rates (which may be fixed or adjustable) of the shares of the series.
(d)	The dates on which dividends, if declared, shall be payable and, in the case of series on which dividends are cumulative, the dates from which dividends shall be cumulative.
(e)	The redemption rights and price or prices, if any, for shares of the series.

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(f)	The amount, terms, conditions, and manner of operation of any retirement or sinking fund to be provided for the purchase or redemption of shares of the series.
(g)	The amounts payable on shares of the series in the event of any liquidation, dissolution, or winding up of the affairs of the Corporation.
(h)	Whether the shares of the series shall be convertible into Common Shares or shares of any other series or class, and, if so, the specification of such other class or series, the conversion price or prices or rate or rates, any adjustment thereof, and all other terms and conditions upon which such conversion may be made.
(i)	The restrictions, if any, upon the issue of any additional shares of the same series or of any other class or series.

          The Board of Directors is authorized to adopt from time to time amendments to these articles of incorporation fixing, with respect to each series, the matters described in Clauses (a) through (i), inclusive, of this Section 1.

          Section 2. Voting Rights.

(a)

The holders of Preferred Stock shall not be entitled to vote upon matters presented to the shareholders, except as provided in this Section 2 or as required by law.

(b)

If the Corporation shall fail to pay full dividends on any series of Preferred Stock for six quarterly dividend payment periods, whether or not consecutive, the number of directors will be increased by two, and the holders of all outstanding series of Preferred Stock, voting as a single class without regard to series, will be entitled to elect such additional two directors until full cumulative dividends for all past dividend payment periods on all series of Preferred Stock have been paid or declared and set apart for payment and non-cumulative dividends have been paid regularly for at least one full year. Such right to vote separately as a class to elect directors shall, when vested, be subject, always, to the same provisions for the vesting of such right to elect directors separately as a class in the case of future dividend defaults. At any time when such right to elect directors separately as a class shall have so vested, the Corporation may, and upon the written request of the holders of record of not less than twenty percent of the total number of shares of the Preferred Stock of the Corporation then outstanding shall, call a special meeting of shareholders for the election of such directors. In the case of such a written request, such special meeting shall be held within ninety days after the delivery of such request and, in either case, at the place and upon the notice provided by law and in the Regulations of the Corporation, provided that the Corporation shall not be required to call such a special meeting if such request is received less than 120 days before the date fixed for the next ensuing annual meeting of shareholders of the Corporation. Directors elected as aforesaid shall serve until the next annual meeting of shareholders of the Corporation

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	or until their respective successors shall be elected and qualify. If, prior to the end of the term of any director elected as aforesaid, a vacancy in the office of such director shall occur during the continuance of a default in dividends on any series of Preferred Stock by reason of death, resignation or disability, such vacancy shall be filled for the unexpired term by the appointment by the remaining director or directors elected as aforesaid of a new director for the unexpired term of such former director.
(c)	The affirmative vote or consent of the holders of at least two-thirds of the then outstanding shares of Preferred Stock, given in person or by proxy, either in writing or at a meeting called for the purpose at which the holders of Preferred Stock shall vote separately as a class, shall be necessary to effect any amendment, alteration, or repeal of any of the provisions of these articles of incorporation or the regulations of the Corporation which would be substantially prejudicial to the voting powers, rights, or preferences of the holders of Preferred Stock (but so far as the holders of Preferred Stock are concerned, such action may be effected with such vote or consent); provided, however, that neither the amendment of these articles of incorporation to authorize or to increase the authorized or outstanding number of shares of any class ranking junior to or on a parity with the Preferred Stock, nor the amendment of the regulations so as to change the number of directors of the Corporation, shall be deemed to be substantially prejudicial to the voting powers, rights, or preferences of the holders of Preferred Stock (and any such amendment referred to in this proviso may be made without the vote or consent of the holders of the Preferred Stock); and provided further that if such amendment, alteration, or repeal would be substantially prejudicial to the rights or preferences of one or more but not all then outstanding series of Preferred Stock, the affirmative vote or consent of the holders of at least two-thirds of the then outstanding shares of the series so affected shall also be required.
(d)	The affirmative vote or consent of the holders of at least two-thirds of the then outstanding shares of Preferred Stock, given in person or by proxy, either in writing or at a meeting called for the purpose at which the holders of Preferred Stock shall vote as a single class shall be necessary to effect any one or more of the following:

(i)

The authorization of, or the increase in the authorized number of, any shares of any class ranking prior to the Preferred Stock; or

(ii)

The purchase or redemption for sinking fund purposes or otherwise of less than all of the then outstanding Preferred Stock except in accordance with a purchase offer made to all holders of record of Preferred Stock, unless all dividends on all Preferred Stock then outstanding for all previous dividend periods shall have been declared and paid or funds therefor set apart and all accrued sinking fund obligations applicable thereto shall have been complied with.

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          Section 3. Preemptive Rights.

          No holder of Preferred Stock shall be entitled as such as a matter of right to subscribe for or purchase any part of any issue of shares of the Corporation, of any class whatsoever, or any part of any issue of securities convertible into shares of the Corporation, of any class whatsoever, and whether issued for cash, property, services or otherwise.

          Section 4. Definitions.

          For the purposes of this Part A:

(a)	Whenever reference is made to shares “ranking prior to the Preferred Stock,” such reference shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof either as to the payment of dividends or as to distribution in the event of a liquidation, dissolution or winding up of the Corporation are given preference over the rights of the holders of Preferred Stock.
(b)	Whenever reference is made to shares “on a parity with the Preferred Stock,” such reference shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof as to the payment of dividends or as to distributions in the event of a liquidation, dissolution or winding up of the Corporation rank on an equality or parity with the rights of the holders of Preferred Stock.
(c)	Whenever reference is made to shares “ranking junior to the Preferred Stock,” such reference shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof as to the payment of dividends and as to distributions in the event of a liquidation, dissolution or winding up of the Corporation are junior or subordinate to the rights of the holders of Preferred Stock.

PART B

EXPRESS TERMS OF COMMON SHARES

          Section 1. General.

          The holders of Common Shares shall be entitled to one vote for each Common Share held by them, respectively, on each matter properly submitted to shareholders for their vote, consent, waiver, release or other action.

          Section 2. Preemptive Rights.

          No holder of Common Shares shall be entitled as such as a matter of right to subscribe for or purchase any part of any issue of shares of the Corporation of any class whatsoever, or any part of any issue of securities convertible into shares of the Corporation, of any class whatsoever, and whether issued for cash, property, services or otherwise.

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PART C

CUMULATIVE VOTING

          No holder of shares of any class of the Corporation may cumulate his voting power.

PART D

EXPRESS TERMS OF THE 7.750% NON-CUMULATIVE PERPETUAL CONVERTIBLE PREFERRED STOCK, SERIES A

          Section 1. Designation. The designation of the series of Preferred Stock created by this Part D of Article IV shall be 7.750% Non-Cumulative Perpetual Convertible Preferred Stock, Series A, $1.00 par value, with a liquidation preference of $100 per share, and $747,500,000 in the aggregate (hereinafter referred to as the “Series A Preferred Stock”). Each share of Series A Preferred Stock shall be identical in all respects to every other share of Series A Preferred Stock. Series A Preferred Stock will rank equally with Parity Stock, if any, and will rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

          Section 2. Number of Shares. The number of authorized shares of Series A Preferred Stock shall be 7,475,000. Such number may from time to time be increased (but not in excess of the total number of authorized shares of Preferred Stock) or decreased (but not below the number of shares of Series A Preferred Stock then outstanding) by further amendment to the articles duly adopted by the Board of Directors. Shares of Series A Preferred Stock that are converted in accordance with the terms hereof, purchased or otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series, and available for subsequent issuance. The Corporation shall have the authority to issue fractional shares of Series A Preferred Stock.

          Section 3. Definitions. As used herein with respect to the Series A Preferred Stock:

          “Applicable Conversion Price” at any given time means, for each share of Series A Preferred Stock, the price equal to $100 divided by the Applicable Conversion Rate in effect at such time.

          “Applicable Conversion Rate” means the Conversion Rate in effect at any given time.

          “Base Price” has the meaning set forth in Section 13(d)(i) hereof.

          “Business Day” means each Monday, Tuesday, Wednesday, Thursday or Friday on which the Corporation is not authorized or obligated by law, regulation or executive order to close.

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          “Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, excluding any debt securities convertible into such equity.

          “Closing Price” of the Common Shares on any date of determination means the closing sale price or, if no closing sale price is reported, the last reported sale price of the Common Shares on the New York Stock Exchange on that date. If the Common Shares are not traded on the New York Stock Exchange on any date of determination, the Closing Price of the Common Shares on such date of determination means the closing sale price as reported in the composite transactions for the principal U.S. national or regional securities exchange or securities exchange in the European Economic Area on which the Common Shares are so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal U.S. national or regional securities exchange or securities exchange in the European Economic Area on which the Common Shares are so listed or quoted, or if the Common Shares are not so listed or quoted on a U.S. national or regional securities exchange or securities exchange in the European Economic Area, the last quoted bid price for the Common Shares in the over-the-counter market as reported by Pink Sheets LLC or a similar organization, or, if that bid price is not available, the market price of the Common Shares on that date as determined by a nationally recognized independent investment banking firm (unaffiliated with the Corporation) retained by the Corporation for this purpose. The “Closing Price” for any other share of Capital Stock shall be determined on a comparable basis, mutatis mutandis.

          For purposes of this Part D of this Article IV, all references herein to the “Closing Price” and “last reported sale price” of the Common Shares on the New York Stock Exchange shall be such closing sale price and last reported sale price as reflected on the website of the New York Stock Exchange (http://www.nyse.com) and as reported by Bloomberg Professional Service; provided that in the event that there is a discrepancy between the closing sale price or last reported sale price as reflected on the website of the New York Stock Exchange and as reported by Bloomberg Professional Service, the closing sale price and last reported sale price on the website of the New York Stock Exchange will govern.

          For purposes of calculating the Closing Price, if a Reorganization Event has occurred and (1) the Exchange Property consists only of shares of common securities, the Closing Price shall be based on the Closing Price of such common securities; (2) the Exchange Property consists only of cash, the Closing Price shall be the cash amount paid per share; and (3) the Exchange Property consists of securities, cash and/or other property, the Closing Price shall be based on the sum, as applicable, of (x) the Closing Price of such common securities, (y) the cash amount paid per Common Share and (z) the value (as determined by the board of directors from time-to-time) of any other securities or property paid to holders of Common Shares in connection with the Reorganization Event.

          “Common Shares” means the common shares, $1.00 par value per share, of the Corporation.

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          “Conversion Agent” means Computershare Investor Services LLC, acting in its capacity as conversion agent for the Series A Preferred Stock, and its successors and assigns or any other conversion agent appointed by the Corporation.

          “Conversion Date” has the meaning set forth in Section 13(a)(iv)(B) hereof.

          “Conversion Rate” means for each share of Series A Preferred Stock, 7.0922 Common Shares, plus cash in lieu of fractional shares, subject to adjustment as set forth herein.

          “Current Market Price” per Common Share on any date of determination means the average of the VWAP per Common Share on each of the 10 consecutive VWAP Trading Days ending on the earlier of the day in question and the day before the Ex-Date or other specified date with respect to the issuance or distribution requiring such computation, appropriately adjusted to take into account the occurrence during such period of any event described in Section 14(a)(i) through (v) hereof.

          “Depositary” means DTC or its nominee or any successor depositary appointed by the Corporation.

          “Dividend Payment Date” shall have the meaning set forth in Section 4(a) hereof.

          “Dividend Period” shall have the meaning set forth in Section 4(a) hereof.

          “Dividend Threshold Amount” has the meaning set forth in Section 14(a)(iv) hereof.

          “DTC” means The Depository Trust Company, together with its successors and assigns.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

          “Exchange Property” has the meaning set forth in Section 15(a) hereof.

          “Ex-Date” when used with respect to any issuance or distribution, means the first date on which such Common Shares or other securities trade without the right to receive an issuance or distribution with respect thereto.

          “Expiration Time” has the meaning set forth in Section 14(a)(v) hereof.

          “Expiration Date” has the meaning set forth in Section 14(a)(v) hereof.

          “Fiscal Quarter” means, with respect to the Corporation, the fiscal quarter publicly disclosed by the Corporation.

          “Fundamental Change” has the meaning set forth in Section 13(d)(i) hereof.

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          “Holder” means the Person in whose name the shares of Series A Preferred Stock are registered, which may be treated by the Corporation, Transfer Agent, Registrar, paying agent and Conversion Agent as the absolute owner of the shares of Series A Preferred Stock for the purpose of making payment and settling conversions and for all other purposes.

          “Junior Stock” means the Common Shares and any other class or series of stock of the Corporation hereafter authorized over which Series A Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

          “Make-Whole Acquisition” means the occurrence, prior to any Conversion Date, of one of the following:

(a) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of common equity of the Corporation representing more than 50% of the voting power of the Common Shares; or

(b) consummation of any consolidation or merger of the Corporation or similar transaction or any sale, lease or other transfer in one transaction or a series of related transactions of all or substantially all of the consolidated assets of the Corporation and its subsidiaries, taken as a whole, to any Person other than one of the Corporation’s subsidiaries, in each case, pursuant to which the Common Shares will be converted into cash, securities, or other property, other than pursuant to a transaction in which the Persons that “beneficially owned” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, Voting Shares immediately prior to such transaction beneficially own, directly or indirectly, Voting Shares representing a majority of the total voting power of all outstanding classes of Voting Shares of the continuing or surviving Person immediately after the transaction;

provided, however that a Make-Whole Acquisition will not be deemed to have occurred if at least 90% of the consideration received by holders of the Common Shares in the transaction or transactions (as determined by the board of directors) consists of shares of common securities of a Person or American Depositary Receipts in respect of such common securities that are traded on a U.S. national securities exchange or a securities exchange in the European Economic Area or that will be traded on a U.S. national securities exchange or a securities exchange in the European Economic Area when issued or exchanged in connection with a Make-Whole Acquisition.

          “Make-Whole Acquisition Conversion” has the meaning set forth in Section 13(c)(i) hereof.

          “Make-Whole Acquisition Conversion Period” has the meaning set forth in Section 13(c)(i) hereof.

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          “Make-Whole Acquisition Effective Date” has the meaning set forth in Section 13(c)(i) hereof.

          “Make-Whole Acquisition Share Price” means the price paid per Common Share in the event of a Make-Whole Acquisition. If the holders of Common Shares receive only cash in the Make-Whole Acquisition in a single per-share amount, other than with respect to appraisal and similar rights, the Make-Whole Acquisition Share Price shall be the cash amount paid per Common Share. For purposes of the preceding sentence as applied to a Make-Whole Acquisition of the type set forth in clause (a) of the definition Make-Whole Acquisition, a single price per Common Share shall be deemed to have been paid only if the transaction or transactions that caused the Make-Whole Acquisition to occur was a tender offer for more than 50% of the then-outstanding Common Shares. Otherwise, the Make-Whole Acquisition Share Price shall be the average of the Closing Price per Common Share on the ten Trading Days up to, but not including, the Make-Whole Acquisition Effective Date.

          “Make-Whole Shares” has the meaning set forth in Section 13(c)(i) hereof.

          “Mandatory Conversion Date” has the meaning set forth in Section 13(b)(iii) hereof.

          “Market Disruption Event” means any of the following events that has occurred:

          (a) any suspension of, or limitation imposed on, trading by any exchange or quotation system on which the VWAP is determined pursuant to the definition of the VWAP Trading Day (a “Relevant Exchange”) during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per Common Share any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) and whether by reason of movements in price exceeding limits permitted by the Relevant Exchange, or otherwise relating to Common Shares or in futures or options contracts relating to the Common Shares on the Relevant Exchange;

          (b) any event (other than an event described in clause (c)) that disrupts or impairs (as determined by the Corporation in its reasonable discretion) the ability of market participants during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per Common Share any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) in general to effect transactions in, or obtain market values for, the Common Shares on the Relevant Exchange or to effect transactions in, or obtain market values for, futures or options contracts relating to the Common Shares on the Relevant Exchange; or

          (c) the failure to open of the Relevant Exchange on which futures or options contracts relating to the Common Shares, are traded or the closure of such Relevant Exchange prior to its respective scheduled closing time for the regular trading session on such day (without regard to after hours or any other trading outside of the regular trading session hours) unless such earlier closing time is announced by such Relevant Exchange at least one hour prior to the earlier of the actual closing time for the regular trading session on such day and the submission

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deadline for orders to be entered into such Relevant Exchange for execution at the actual closing time on such day.

          “Notice of Mandatory Conversion” has the meaning set forth in Section 13(b)(iii) hereof.

          “Parity Stock” means any other class or series of stock of the Corporation that ranks on a parity with Series A Preferred Stock in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

          “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company or trust.

          “Purchased Shares” has the meaning set forth in Section 14(a)(v) hereof.

          “Record Date” has the meaning, for purposes of Section 14 hereof, as set forth in Section 14(d) hereof.

          “Reference Price” means the applicable Make-Whole Acquisition Share Price.

          “Registrar” means Computershare Investor Services LLC, in its capacity as registrar for the Series A Preferred Stock, and its successors and assigns or any other registrar appointed by the Corporation.

          “Relevant Exchange” has the meaning set forth above in the definition of Market Disruption Event.

          “Reorganization Event” has the meaning set forth in Section 15(a) hereof.

          “Series A Preferred Stock” shall have the meaning set forth in Section 1 hereof.

          “Trading Day” means a day on which the Common Shares:

          (a) are not suspended from trading on any national or regional securities exchange or association or in the over-the-counter market at the close of business; and

          (b) have traded at least once on the national or regional securities exchange or association or in the over-the-counter market that is the primary market for the trading of the Common Shares.

          “Transfer Agent” shall mean Computershare Investor Services LLC, acting in its capacity as transfer agent for the Series A Preferred Stock, and its successors and assigns or any other transfer agent appointed by the Corporation.

          “Voting Parity Stock” means any Parity Stock having similar voting rights as the Series A Preferred Stock.

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          “Voting Shares” of a Person means shares of all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the board of directors of such Person.

          “VWAP” per Common Share on any VWAP Trading Day means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg page KEY<equity>AQR (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant VWAP Trading Day until the close of trading on the relevant VWAP Trading Day (or if such volume-weighted average price is unavailable, the market price of one Common Share on such VWAP Trading Day determined, using a volume-weighted average method, by a nationally recognized investment banking firm (unaffiliated with the Corporation) retained for this purpose by the Corporation). The VWAP for any other share of Capital Stock shall be determined on a comparable basis, mutatis mutandis.

          “VWAP Trading Day” means, for purposes of determining a VWAP per Common Share, a Business Day on which the Relevant Exchange (as defined in the definition of Market Disruption Event) is scheduled to be open for business and on which there has not occurred or does not exist a Market Disruption Event.

          Section 4. Dividends.

               (a) Rate. Holders of Series A Preferred Stock shall be entitled to receive, if, as and when declared by the Board of Directors, but only out of assets legally available therefor, non-cumulative cash dividends on the liquidation preference of $100 per share of Series A Preferred Stock, and no more, payable quarterly in arrears on each March 15, June 15, September 15 and December 15, commencing on September 15, 2008 (each a “Dividend Payment Date”); provided, however, if any such day is not a Business Day, then payment of any dividend otherwise payable on that date will be made on the next succeeding day that is a Business Day (without any adjustment in respect of such delay to the amount of the dividends paid on such date). The period from and including the date of issuance of the Series A Preferred Stock or any Dividend Payment Date to but excluding the next Dividend Payment Date is a “Dividend Period.” In the event that additional shares of Series A Preferred Stock are issued after the original issue date, dividends on such shares shall accrue from (i) if the original issue date of such additional shares is a Dividend Payment Date, from such date, or (ii) if the original issue date is a date other than a Dividend Payment Date, from the immediately preceding Dividend Payment Date or, if no Dividend Payment Date has yet occurred, from the issue date of the Series A Preferred Stock. Dividends on each share of Series A Preferred Stock will accrue on the liquidation preference of $100 per share at a rate per annum equal to 7.750%. The record date for payment of dividends on the Series A Preferred Stock shall be the last Business Day of the calendar month immediately preceding the month during which the Dividend Payment Date falls. The amount of dividends payable shall be computed on the basis of a 360-day year and the actual number of days elapsed.

               (b) Non-Cumulative Dividends. Dividends on shares of Series A Preferred Stock shall be non-cumulative. To the extent that any dividends payable on the shares of Series A Preferred Stock on any Dividend Payment Date are not declared and paid, in full or otherwise, on such Dividend Payment Date, then such unpaid dividends shall not cumulate and

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shall cease to accrue and be payable and the Corporation shall have no obligation to pay, and the Holders shall have no right to receive, dividends accrued for such Dividend Period after the Dividend Payment Date for such Dividend Period or interest with respect to such dividends, whether or not dividends are declared for any subsequent Dividend Period with respect to Series A Preferred Stock, Parity Stock, Junior Stock or any other class or series of authorized Preferred Stock of the Corporation.

               (c) Priority of Dividends. So long as any share of Series A Preferred Stock remains outstanding, on any day during a Dividend Period (i) no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on any Junior Stock, other than a dividend payable solely in Junior Stock, (ii) no shares of Junior Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Stock), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, and (iii) no shares of Parity Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series A Preferred Stock and such Parity Stock except by conversion into or exchange for Junior Stock, in each case unless full dividends on all outstanding shares of Series A Preferred Stock for the immediately preceding Dividend Period have been paid in full or declared and a sum sufficient for the payment thereof set aside. When dividends are not paid in full upon the shares of Series A Preferred Stock and any Parity Stock, all dividends declared upon shares of Series A Preferred Stock and any Parity Stock will be declared on a proportional basis so that the amount of dividends declared per share will bear to each other the same ratio that accrued dividends for the then-current dividend period per share on Series A Preferred Stock and any Parity Stock, plus accrued and unpaid dividends from prior periods in the case of any Parity Stock that bears cumulative dividends, bear to each other. No interest will be payable in respect of any dividend payment on shares of Series A Preferred Stock that may be in arrears. If the Board of Directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation will provide, or cause to be provided, written notice to the holders of the Series A Preferred Stock prior to such date. Subject to the foregoing, and not otherwise, dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any Junior Stock from time to time out of any assets legally available therefor, and the shares of Series A Preferred Stock or Parity Stock shall not be entitled to participate in any such dividend.

          Section 5. Liquidation Rights.

               (a) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, Holders shall be entitled, out of assets legally available therefor, before any distribution or payment out of the assets of the Corporation may be made to or set aside for the holders of any Junior Stock and subject to the rights of the holders of any class or series of securities ranking senior to or on parity with Series A Preferred Stock upon liquidation and the rights of the Corporation’s depositors and other

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creditors, to receive in full a liquidating distribution in the amount of the liquidation preference of $100 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The Holder shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation other than what is expressly provided for in this Section 5.

               (b) Partial Payment. If the assets of the Corporation are not sufficient to pay in full the liquidation preference plus any authorized, declared and unpaid dividends to all Holders and all holders of any Parity Stock, the amounts paid to the Holders and to the holders of all Parity Stock shall be pro rata in accordance with the respective aggregate liquidation preferences plus any authorized, declared and unpaid dividends of Series A Preferred Stock and all such Parity Stock.

               (c) Residual Distributions. If the liquidation preference plus any authorized, declared and unpaid dividends has been paid in full to all Holders and all holders of any Parity Stock, the holders of Junior Stock shall be entitled to receive all remaining assets of the Corporation according to their respective rights and preferences.

               (d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of the Corporation shall not be deemed a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, nor shall the merger, consolidation or any other business combination transaction of the Corporation into or with any other corporation or person or the merger, consolidation or any other business combination transaction of any other corporation or person into or with the Corporation be deemed to be a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation.

          Section 6. Redemption. The Series A Preferred Stock will not be redeemable at any time.

          Section 7. Voting Rights. The Holders will have no voting rights on any matter, except as expressly provided in these Amended and Restated Articles of Incorporation, including Section 2 of Part A of this Article IV, and except as shall be affirmatively provided in the Ohio General Corporation Law.

          Section 8. [Intentionally Omitted]

          Section 9. Repurchase. Subject to the limitations imposed herein, the Corporation may purchase and sell Series A Preferred Stock from time to time to such extent, in such manner, and upon such terms as the Board of Directors of the Corporation may determine; provided, however, that the Corporation shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent.

          Section 10. Unissued or Reacquired Shares. Shares of Series A Preferred Stock not issued or which have been issued and converted, redeemed or otherwise purchased or

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acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock without designation as to series.

          Section 11. No Sinking Fund. Shares of Series A Preferred Stock are not subject to the operation of a sinking fund.

          Section 12. Right to Convert. Each Holder shall have the right, at such Holder’s option, at any time, to convert all or any portion of such Holder’s Series A Preferred Stock into Common Shares at the Applicable Conversion Rate (subject to the conversion procedures set forth in Section 13 herein) plus cash in lieu of fractional shares.

          Section 13. Conversion.

               (a) Conversion Procedures.

               (i) Effective immediately prior to the close of business on the Mandatory Conversion Date or any applicable Conversion Date, dividends shall no longer be declared on any converted shares of Series A Preferred Stock and such shares of Series A Preferred Stock shall cease to be outstanding, in each case, subject to the right of Holders to receive any declared and unpaid dividends on such shares and any other payments to which they are otherwise entitled pursuant to Section 12, Section 13(b), Section 13(c), Section 13(d), Section 15 or Section 16, as applicable.

               (ii) Prior to the close of business on the Mandatory Conversion Date or any applicable Conversion Date, Common Shares issuable upon conversion of, or other securities issuable upon conversion of, any shares of Series A Preferred Stock shall not be deemed outstanding for any purpose, and Holders shall have no rights with respect to the Common Shares or other securities issuable upon conversion (including voting rights, rights to respond to tender offers for the Common Shares and rights to receive any dividends or other distributions on the Common Shares and/or other securities issuable upon conversion), by virtue of holding shares of Series A Preferred Stock.

               (iii) The Person or Persons entitled to receive the Common Shares and/or other securities issuable upon conversion of Series A Preferred Stock shall be treated for all purposes as the record holder(s) of such Common Shares and/or such other securities as of the close of business on the Mandatory Conversion Date or any applicable Conversion Date except to the extent that all or a portion of such Common Shares is subject to the limitations set forth in Section 18. In the event that a Holder shall not by written notice designate the name in which Common Shares and/or cash, other securities or other property (including payments of cash in lieu of fractional shares) to be issued or paid upon conversion of shares of Series A Preferred Stock should be registered or paid or the manner in which such shares should be delivered, the Corporation shall be entitled to register and deliver such shares, and make such payment, in the name of the Holder and in the manner shown on the records of the Corporation through book-entry transfer through the Depositary.

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                    (iv) Conversion into Common Shares will occur on the Mandatory Conversion Date or any applicable Conversion Date as follows:

     (A)  On the Mandatory Conversion Date or applicable Conversion Date, certificates or evidence of shares in book-entry form representing Common Shares shall be issued and delivered to Holders or their designee upon presentation and surrender of the certificate evidencing the Series A Preferred Stock to the Conversion Agent if shares of the Series A Preferred Stock are held in certificated form, and, if required, the furnishing of appropriate endorsements and transfer documents and the payment of all transfer and similar taxes. If a Holder’s interest is a beneficial interest in a global certificate representing Series A Preferred Stock, a book-entry transfer through the Depositary will be made by the Conversion Agent upon compliance with the Depositary’s procedures for converting a beneficial interest in a global security.

     (B)  On the date of any conversion at the option of Holders pursuant to Section 12, Section 13(c) or Section 13(d), if a Holder’s interest is in certificated form, a Holder must do each of the following in order to convert:

          (1) complete and manually sign the conversion notice provided by the Conversion Agent, or a facsimile of the conversion notice, and deliver this irrevocable notice to the Conversion Agent;

          (2) surrender the shares of Series A Preferred Stock to the Conversion Agent;

          (3) if required, furnish appropriate endorsements and transfer documents;

          (4) if required, pay all transfer or similar taxes; and

          (5) if required, pay funds equal to any declared and unpaid dividend payable on the next Dividend Payment Date.

     If a Holder’s interest is a beneficial interest in a global certificate representing Series A Preferred Stock, in order to convert a Holder must comply with clauses (3) through (5) listed above and comply with the Depositary’s procedures for converting a beneficial interest in a global security.

     The date on which a Holder complies with the procedures in this clause (iv) is the “Conversion Date.”

     (C)  The Conversion Agent shall, on a Holder’s behalf, convert the Series A Preferred Stock into Common Shares and/or cash, other securities or other property (involving payments of cash in lieu of fractional shares), in accordance with the terms of the notice delivered by such Holder described in clause (B) above. If a Conversion Date on which a Holder elects to convert Series A Preferred Stock is prior to the record date relating to any declared dividend for the Dividend Period, such Holder will not have the

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right to receive any declared dividends for that Dividend Period. If a Conversion Date on which a Holder elects to convert Series A Preferred Stock or the Mandatory Conversion Date is after the record date for any declared dividend and prior to the Dividend Payment Date, such Holder shall receive that dividend on the relevant Dividend Payment Date if such Holder was the Holder of record on the record date for that dividend. Notwithstanding the preceding sentence, if the Conversion Date is after the record date relating to any declared dividend for the Dividend Period and prior to the Dividend Payment Date, whether or not such Holder was the Holder of record on the record date relating to any declared dividend for the Dividend Period, the Holder must pay to the Conversion Agent upon conversion of the shares of Series A Preferred Stock an amount in cash equal to the full dividend actually paid on the Dividend Payment Date for the then-current Dividend Period on the shares of Series A Preferred Stock being converted, unless the Holder’s shares of Series A Preferred Stock are being converted pursuant to Section 13(b), Section 13(c) or Section 13(d).

               (b) Mandatory Conversion at the Corporation’s Option.

          (i) On or after June 15, 2013, the Corporation may, at its option, at any time or from time to time, cause some or all of the Series A Preferred Stock to be converted into Common Shares at the Applicable Conversion Rate if, for 20 Trading Days during any period of 30 consecutive Trading Days, including the last Trading Day of such period, the Closing Price of the Common Shares exceeds 130% of the Applicable Conversion Price of the Series A Preferred Stock. The Corporation will provide Notice of Mandatory Conversion as set forth in Section 13(b)(iii) within three Trading Days after the end of the 30 consecutive Trading Day period.

          (ii) If the Corporation elects to cause less than all of the Series A Preferred Stock to be converted under clause (i) above, the Conversion Agent will select the Series A Preferred Stock to be converted by lot, or on a pro rata basis or by another method the Conversion Agent considers fair and appropriate, including any method required by the Depositary (so long as such method is not prohibited by the rules of any stock exchange or quotation association on which the Series A Preferred Stock is then traded or quoted). If the Conversion Agent selects a portion of a Holder’s Series A Preferred Stock for partial conversion at the Corporation’s option and such Holder converts a portion of its shares of Series A Preferred Stock at the same time, the portion converted at such Holder’s option will reduce the portion selected for conversion at the Corporation’s option under this Section 13(b).

          (iii) If the Corporation exercises the optional conversion right described in this Section 13(b), the Corporation shall give notice (such notice a “Notice of Mandatory Conversion”) by (1) providing a notice of such conversion by first class mail to each Holder of record for the shares of Series A Preferred Stock to be converted or (2) issuing a press release and making this information available on its website. The Conversion Date shall be a date selected by the Corporation (the “Mandatory Conversion Date”), not less than 10 days, and not more than 20 days, after the date on which the Corporation provides the Notice of Mandatory Conversion. In addition to any

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information required by applicable law or regulation, the Notice of Mandatory Conversion shall state, as appropriate:

     (A) the Mandatory Conversion Date;

     (B) the number of Common Shares to be issued upon conversion of each share of Series A Preferred Stock; and

     (C) the aggregate number of shares of Series A Preferred Stock to be converted.

               (c) Conversion upon Make-Whole Acquisition.

          (i) In the event of a Make-Whole Acquisition occurring prior to a Mandatory Conversion Date or Conversion Date, each Holder shall have the option to convert its shares of Series A Preferred Stock (a “Make-Whole Acquisition Conversion”) during the period (the “Make-Whole Acquisition Conversion Period”) beginning on the effective date of the Make-Whole Acquisition (the “Make-Whole Acquisition Effective Date”) and ending on the date that is 30 days after the Make-Whole Acquisition Effective Date and receive an additional number of Common Shares (the “Make-Whole Shares”) as set forth in clause (ii) below.

          (ii) The number of Make-Whole Shares per share of Series A Preferred Stock shall be determined by reference to the following table for the applicable Make-Whole Acquisition Effective Date and the applicable Make-Whole Acquisition Share Price:

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Make-Whole Acquisition Share Price

Effective Date	$11.75		$12.00		$13.00		$14.00		$15.00		$16.00		$17.00		$18.00		$20.00		$25.00		$30.00		$50.00		$100.00
June 18, 2008		1.4184		1.4184		1.2987		1.1200		0.9749		0.8556		0.7566		0.6734		0.5429		0.3431		0.2352		0.0771		0.0000
June 15, 2009		1.4184		1.4184		1.2833		1.1057		0.9615		0.8369		0.7030		0.6162		0.4816		0.2823		0.1807		0.0466		0.0000
June 15, 2010		1.4184		1.4184		1.2603		1.0914		0.9451		0.8074		0.6939		0.5999		0.4558		0.2494		0.1508		0.0350		0.0000
June 15, 2011		1.4184		1.4184		1.2295		1.0771		0.9295		0.7774		0.6527		0.5502		0.3957		0.1874		0.0993		0.0172		0.0000
June 15, 2012		1.4184		1.4055		1.1910		1.0628		0.8811		0.7057		0.5629		0.4467		0.2782		0.0803		0.0211		0.0000		0.0000
June 15, 2013		1.4184		1.3639		1.1526		1.0485		0.8517		0.6105		0.4377		0.2884		0.0688		0.0000		0.0000		0.0000		0.0000
June 15, 2014		1.4184		1.3805		1.1757		1.0771		0.8784		0.6292		0.4494		0.2940		0.0000		0.0000		0.0000		0.0000		0.0000
June 15, 2015		1.4184		1.3972		1.1987		1.1057		0.9050		0.6480		0.4612		0.2996		0.0000		0.0000		0.0000		0.0000		0.0000
June 15, 2016		1.4184		1.4139		1.2218		1.1342		0.9317		0.6667		0.4730		0.3051		0.0000		0.0000		0.0000		0.0000		0.0000
June 15, 2017		1.4184		1.4184		1.2449		1.1628		0.9584		0.6855		0.4847		0.3107		0.0000		0.0000		0.0000		0.0000		0.0000
June 15, 2018		1.4184		1.4184		1.2680		1.1914		0.9850		0.7042		0.4965		0.3162		0.0000		0.0000		0.0000		0.0000		0.0000
Thereafter		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000

     (A) The exact Make-Whole Acquisition Share Prices and Make-Whole Acquisition Effective Dates may not be set forth in the table, in which case:

     (1) if the Make-Whole Acquisition Share Price is between two Make-Whole Acquisition Share Price amounts in the table or the Make-Whole Acquisition Effective Date is between two dates in the table, the number of Make-Whole Shares will be determined by straight-line interpolation between the number of Make-Whole Shares set forth for the higher and lower Make-Whole Acquisition Share Price amounts and the two Make-Whole Acquisition Effective Dates, as applicable, based on a 365-day year;

     (2) if the Make-Whole Acquisition Share Price is in excess of $100 per share (subject to adjustment pursuant to Section 14), no Make-Whole Shares will be issued upon conversion of the Series A Preferred Stock; and

     (3) if the Make-Whole Acquisition Share Price is less than $11.75 per share (subject to adjustment pursuant to Section 14), no Make-Whole Shares will be issued upon conversion of the Series A Preferred Stock.

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     (B) The Make-Whole Acquisition Share Prices set forth in the table above are subject to adjustment pursuant to Section 14 hereof and shall be adjusted as of any date the Conversion Rate is adjusted. The adjusted Make-Whole Acquisition Share Prices will equal the Make-Whole Acquisition Share Prices applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to the adjustment giving rise to the Make-Whole Acquisition Share Prices adjustment and the denominator of which is the Conversion Rate as so adjusted. Each of the number of Make-Whole Shares in the table shall also be subject to adjustment in the same manner as the Conversion Rate pursuant to Section 14.

          (iii) On or before the 20th day prior to the date the Corporation anticipates being the effective date for the Make-Whole Acquisition or within two business days of becoming aware of a Make-Whole Acquisition of the type set forth in clause (a) of the definition Make-Whole Acquisition, a written notice shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders as they appear in the records of the Corporation. Such notice shall contain:

     (A) the anticipated effective date or effective date of the Make-Whole Acquisition; and

     (B) the date, which shall be 30 days after the Make-Whole Acquisition Effective Date, by which a Make-Whole Acquisition Conversion must be exercised.

          (iv) On the Make-Whole Acquisition Effective Date or as soon as practicable thereafter, another written notice shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders as they appear in the records of the Corporation. Such notice shall contain:

     (A) the date that shall be 30 days after the Make-Whole Acquisition Effective Date;

     (B) the number of Make-Whole Shares;

     (C) the amount of cash, securities and other consideration receivable by a Holder upon conversion; and

     (D) the instructions a Holder must follow to exercise its conversion option in connection with such Make-Whole Acquisition.

          (v) To exercise a Make-Whole Acquisition Conversion option, a Holder must, no later than 5:00 p.m., Cleveland, Ohio time on or before the date by which the Make-Whole Acquisition Conversion option must be exercised as specified in the notice delivered under clause (iv) above, comply with the procedures set forth in Section 13(a)(iv)(B).

          (vi) If a Holder does not elect to exercise the Make-Whole Acquisition Conversion option in accordance with the provisions specified in this Section

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13(c), the shares of Series A Preferred Stock or successor security held by it shall remain outstanding (unless otherwise converted as provided herein), and the Holder will not be eligible to receive Make-Whole Shares.

          (vii) Upon a Make-Whole Acquisition Conversion, the Conversion Agent shall, except as otherwise provided in the instructions provided by the Holder thereof in the written notice provided to the Corporation or its successor as set forth in Section 13(a)(iv) above, deliver to the Holder such cash, securities or other property as are issuable with respect to Make-Whole Shares in the Make-Whole Acquisition.

          (viii) In the event that a Make-Whole Acquisition Conversion is effected with respect to shares of Series A Preferred Stock or a successor security representing less than all the shares of Series A Preferred Stock or a successor security held by a Holder, upon such Make-Whole Acquisition Conversion the Corporation or its successor shall execute and the Conversion Agent shall, unless otherwise instructed in writing, countersign and deliver to the Holder thereof, at the expense of the Corporation or its successors, a certificate evidencing the shares of Series A Preferred Stock or such successor security held by the Holder as to which a Make-Whole Acquisition Conversion was not effected.

     (d) Conversion Upon Fundamental Change.

          (i) If the Reference Price in connection with a Make-Whole Acquisition is less than $11.75 (a “Fundamental Change”), a Holder may elect to convert each share of Series A Preferred Stock during the period beginning on the effective date of the Fundamental Change and ending on the date that is 30 days after the effective date of such Fundamental Change at an adjusted conversion price equal to the greater of (1) the Reference Price and (2) $5.875, subject to adjustment as described in clause (ii) below (the “Base Price”). If the Reference Price is less than the Base Price, Holders will receive a maximum of 17.0213 Common Shares per share of Series A Preferred Stock converted, subject to adjustment as a result of any adjustment to the Base Price described in clause (ii) below.

          (ii) The Base Price shall be adjusted as of any date the Conversion Rate of the Series A Preferred Stock is adjusted pursuant to Section 14. The adjusted Base Price shall equal the Base Price applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to the adjustment giving rise to the Conversion Rate adjustment and the denominator of which is the Conversion Rate as so adjusted.

          (iii) In lieu of issuing Common Shares upon conversion in the event of a Fundamental Change, the Corporation may at its option, and if it obtains any necessary regulatory approval, pay an amount in cash (computed to the nearest cent) equal to the Reference Price for each Common Share otherwise issuable upon conversion.

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          (iv) On or before the 20th day prior to the date the Corporation anticipates being the effective date for the Fundamental Change or within two business days of becoming aware of the Fundamental Change if it is a Make-Whole Acquisition of the type set forth in clause (a) of the definition Make-Whole Acquisition, a written notice shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders as they appear in the records of the Corporation. Such notice shall contain:

     (A) the anticipated effective date of the Fundamental Change; and

     (B) the date, which shall be 30 days after the anticipated effective date of a Fundamental Change, by which a Fundamental Change conversion must be exercised.

          (v) On the effective date of a Fundamental Change or as soon as practicable thereafter, another written notice shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders as they appear in the records of the Corporation. Such notice shall contain:

     (A) the date that shall be 30 days after the effective date of the Fundamental Change;

     (B) the Applicable Conversion Price following the Fundamental Change;

     (C) the amount of cash, securities and other consideration received by a Holder upon conversion; and

     (D) the instructions a Holder must follow to exercise its conversion option in connection with such Fundamental Change.

          (vi) To exercise its conversion option upon a Fundamental Change, a Holder must, no later than 5:00 p.m., Cleveland, Ohio time on or before the date by which the conversion option upon the Fundamental Change must be exercised as specified in the notice delivered under clause (v) above, comply with the procedures set forth in Section 13(a)(iv)(B) and indicate that it is exercising the Fundamental Change conversion option.

          (vii) If a Holder does not elect to exercise its conversion option upon a Fundamental Change in accordance with the provisions specified in this Section 13(d), the shares of Series A Preferred Stock or successor security held by it shall remain outstanding (unless otherwise converted as provided herein) and the Holder will not be eligible to convert its shares pursuant to this Section 13(d).

          (viii) Upon a conversion upon a Fundamental Change, the Conversion Agent shall, except as otherwise provided in the instructions provided by the Holder thereof in the written notice provided to the Corporation or its successor as set forth in Section 13(a)(iv), deliver to the Holder such cash, securities or other property as are issuable with respect to the adjusted conversion price following the Fundamental Change.

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               (ix) In the event that a conversion upon a Fundamental Change is effected with respect to shares of Series A Preferred Stock or a successor security representing less than all the shares of Series A Preferred Stock or a successor security held by a Holder, upon such conversion the Corporation or its successor shall execute and the Conversion Agent shall, unless otherwise instructed in writing, countersign and deliver to the Holder thereof, at the expense of the Corporation, a certificate evidencing the shares of Series A Preferred Stock or such successor security held by the Holder as to which a conversion upon a Fundamental Change was not effected.

          Section 14. Anti-Dilution Adjustments.

               (a) Adjustments. The Conversion Rate will be subject to adjustment, without duplication, under the following circumstances:

               (i) The issuance of Common Shares as a dividend or distribution to all holders of Common Shares or a subdivision or combination of Common Shares (other than in connection with a Reorganization Event), in which event the Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR₀ x (OS ¹ / OS₀)

where,

CR0	=	the Conversion Rate in effect at the close of business on the Record Date
CR1	=	the Conversion Rate in effect immediately after the Record Date
OS0	=	the number of Common Shares outstanding at the close of business on the Record Date prior to giving effect to such event
OS1	=	the number of Common Shares that would be outstanding immediately after, and solely as a result of, such event

          Notwithstanding the foregoing, (1) no adjustment will be made for the issuance of Common Shares as a dividend or distribution to all holders of Common Shares that is made in lieu of a quarterly or annual cash dividend or distribution to such holders, to the extent such dividend or distribution does not exceed the applicable Dividend Threshold Amount (with the amount of any such dividend or distribution equaling the number of such shares being issued multiplied by the average of the VWAP of the Common Shares over each of the five consecutive VWAP Trading Days prior to the Ex-Date for such dividend or distribution) and (2) in the event any dividend, distribution, subdivision or combination that is the subject of this Section 14(a)(i) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay or make such dividend or distribution or effect such subdivision or combination, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared or such subdivision or combination had not been announced.

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          (ii) The issuance to all holders of Common Shares of certain rights or warrants (other than rights issued pursuant to a shareholder rights plan or rights or warrants issued in connection with a Reorganization Event) entitling them for a period expiring 60 days or less from the date of issuance of such rights or warrants to purchase Common Shares (or securities convertible into Common Shares) at less than (or having a conversion price per share less than) the Current Market Price as of the Record Date, in which event each Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR₀ x [(OS₀ + X) / (OS₀ + Y)]

where,

CR0	=	the Conversion Rate in effect at the close of business on the Record Date
CR1	=	the Conversion Rate in effect immediately after the Record Date
OS0	=	the number of Common Shares outstanding at the close of business on the Record Date
X	=	the total number of Common Shares issuable pursuant to such rights or warrants (or upon conversion of such securities)
Y	=	the number of shares equal to the quotient of the aggregate price payable to exercise such rights or warrants (or the conversion price for such securities paid upon conversion) divided by the average of the VWAP of the Common Shares over each of the ten consecutive VWAP Trading Days prior to the Business Day immediately preceding the announcement of the issuance of such rights or warrants

          Notwithstanding the foregoing, (1) in the event that such rights or warrants described in this Section 14(a)(ii) are not so issued, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to issue such rights or warrants, to the Conversion Rate that would then be in effect if such issuance had not been declared and (2) to the extent that such rights or warrants are not exercised prior to their expiration or Common Shares are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of Common Shares actually delivered.

          In determining the aggregate price payable for such Common Shares, there shall be taken into account any consideration received by the Corporation for such rights or warrants and the value of such consideration (if other than cash, to be determined by the Board of Directors). If an adjustment to the Conversion Rate may be required pursuant to this Section 14(a)(ii), delivery of any additional Common Shares that may be deliverable upon conversion as a result of an adjustment required pursuant to this Section 14(a)(ii) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 14(a)(ii).

          (iii) The dividend or other distribution to all holders of Common Shares of shares of Capital Stock of the Corporation (other than the Common Shares) or evidences of its indebtedness or its assets (excluding any dividend, distribution

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or issuance covered by clauses (a)(i) or (a)(ii) above or (a)(iv) below, any dividend or distribution in connection with a Reorganization Event or any spin-off to which the provisions set forth below in this clause (a)(iii) apply) in which event the Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR₀ x [SP₀ / (SP₀ – FMV)]

where,

CR0	=	the Conversion Rate in effect at the close of business on the Record Date
CR1	=	the Conversion Rate in effect immediately after the Record Date
SP0	=	the Current Market Price as of the Record Date
FMV	=	the fair market value (as determined by the Board of Directors) on the Record Date of the shares of Capital Stock of the Corporation, evidences of indebtedness or assets so distributed, applicable to one Common Share

          However, if the transaction that gives rise to an adjustment pursuant to this clause (iii) is one pursuant to which the payment of a dividend or other distribution on Common Shares consists of shares of Capital Stock of, or similar equity interests in, a subsidiary or other business unit of the Corporation (i.e., a spin-off) that are, or, when issued, will be, traded on the New York Stock Exchange, the Nasdaq Stock Market or any other national or regional securities exchange or market, then the Conversion Rate will instead be adjusted based on the following formula:

CR ¹ = CR₀ x [(FMV₀ + MP₀) / MP₀]

where,

CR0	=	the Conversion Rate in effect at the close of business on the Record Date
CR1	=	the Conversion Rate in effect immediately after the Record Date
FMV0	=	the average of the VWAP of the Capital Stock distributed to holders of Common Shares applicable to one Common Share over each of the 10 consecutive VWAP Trading Days commencing on and including the third VWAP Trading Day after the date on which “ex-distribution trading” commences for such dividend or distribution on the New York Stock Exchange or such other national or regional exchange or association or over-the-counter market, or, if not so traded or quoted, the fair market value of the Capital Stock or similar equity interests distributed to holders of Common Shares applicable to one Common Share as determined by the Board of Directors
MP0	=	the average of the VWAP of the Common Shares over each of the 10 consecutive VWAP Trading Days commencing on and including the third VWAP Trading Day after the date on which “ex-distribution trading” commences for such dividend or distribution on the New York Stock Exchange or such other national or regional exchange or association or in the over-the-counter market on which Common Shares is then traded or quoted

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          Notwithstanding the foregoing, (1) if any dividend or distribution of the type described in this Section 14(a)(iii) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. If an adjustment to the Conversion Rate may be required under this Section 14(a)(iii), delivery of any additional Common Shares that may be deliverable upon conversion as a result of an adjustment required under this Section 14(a)(iii) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 14(a)(iii).

               (iv) The Corporation makes a distribution consisting exclusively of cash to all holders of Common Shares, excluding (a) any regular cash dividend on Common Shares to the extent that the aggregate cash dividend per Common Share does not exceed $0.1875 in any fiscal quarter (the “Dividend Threshold Amount”) and (b) any consideration payable in connection with a tender or exchange offer made by the Corporation or any its subsidiaries referred to in clause (v) below, in which event, the Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR₀ x [SP₀ / (SP₀ – C)]

where,

CR0	=	the Conversion Rate in effect at the close of business on the Record Date
CR1	=	the Conversion Rate in effect immediately after the Record Date
SP0	=	the Current Market Price as of the Record Date
C	=	the amount in cash per share equal to (1) in the case of a regular quarterly dividend, the amount the Corporation distributes to holders or pays, less the Dividend Threshold Amount or (2) in any other case, the amount the Corporation distributes to holders or pays

          The Dividend Threshold Amount is subject to adjustment on an inversely proportional basis whenever the Conversion Rate is adjusted; provided that no adjustment will be made to the Dividend Threshold Amount for any adjustment made to the Conversion Rate pursuant to this clause (iv).

          Notwithstanding the foregoing, if any dividend or distribution of the type described in this Section 14(a)(iv) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

               (v) The Corporation or one or more of its subsidiaries make purchases of Common Shares pursuant to a tender offer or exchange offer by the Corporation or a subsidiary of the Corporation for Common Shares to the extent that the cash and value (as determined by the Board of Directors) of any other consideration included in the payment per Common Share validly tendered or exchanged exceeds the

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VWAP per Common Share on the VWAP Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Date”), in which event the Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR₀ x [(FMV + (SP¹ x OS₁) / (SP ¹ x OS₀)]

where,

CR0	=	the Conversion Rate in effect at the close of business on the Expiration Date
CR1	=	the Conversion Rate in effect immediately after the Expiration Date
FMV	=	the fair market value (as determined by the Board of Directors), on the Expiration Date, of the aggregate value of all cash and any other consideration paid or payable for shares validly tendered or exchanged and not withdrawn as of the Expiration Date (the “Purchased Shares”)
OS1	=	the number of Common Shares outstanding as of the last time tenders or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Time”) less any Purchased Shares
OS0	=	the number of Common Shares outstanding at the Expiration Time, including any Purchased Shares
SP1	=	the average of the VWAP of the Common Shares over each of the ten consecutive VWAP Trading Days commencing with the VWAP Trading Day immediately after the Expiration Date.

               Notwithstanding the foregoing, if the Corporation, or one of its subsidiaries, is obligated to purchase Common Shares pursuant to any such tender or exchange offer, but the Corporation or such subsidiary is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made. If an adjustment to the Conversion Rate may be required under this Section 14(a)(v), delivery of any additional Common Shares that may be deliverable upon conversion as a result of an adjustment required under this Section 14(a)(v) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 14(a)(v).

               (b) Calculation of Adjustments. All adjustments to the Conversion Rate shall be calculated by the Corporation to the nearest 1/10,000th of one Common Share (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment to the Conversion Rate will be required unless such adjustment would require an increase or decrease of at least one percent; provided, however, that any such minor adjustments that are not required to be made will be carried forward and taken into account in any subsequent adjustment, and provided further that any such adjustment of less than one percent that has not been made will be made prior to any conversion pursuant to Section 13(b), Section 13(c) or Section 13(d).

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          (c) When No Adjustment Required.

          (i) Except as otherwise provided in this Section 14, the Conversion Rate will not be adjusted for the issuance of Common Shares or any securities convertible into or exchangeable for Common Shares or carrying the right to purchase any of the foregoing or for the repurchase of Common Shares.

          (ii) Rights Plans. To the extent that the Corporation has a stockholders’ rights plan in effect upon conversion of the Series A Preferred Stock into Common Shares, Holders will receive, in addition to any of the Common Shares deliverable and in lieu of any adjustment to the Conversion Rate, the rights under the stockholders’ rights plan, unless prior to any conversion, the rights have separated from Common Shares, in which case the Conversion Rate will be adjusted at the time of separation as if we distributed to all holders of Common Shares, shares of the Corporation’s Capital Stock, evidences of indebtedness or assets as described in Section 14(a)(iii). A further adjustment will occur as described in Section 14(a)(iii), if such rights become exercisable to purchase different securities, evidences of indebtedness or assets, subject to readjustment in the event of the expiration, termination or redemption of such rights.

          (iii) No adjustment to the Conversion Rate need be made:

   (A) upon the issuance of any Common Shares pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in Common Shares under any plan;

   (B) upon the issuance of any Common Shares or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Corporation or any of its subsidiaries; or

   (C) upon the issuance of any Common Shares pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security outstanding as of the date the Series A Preferred Stock was first issued.

          (iv) No adjustment to the Conversion Rate need be made for a transaction referred to in Section 14(a)(i) through (v) if Holders may participate in the transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Shares participate in the transaction.

          (v) No adjustment to the Conversion Rate need be made for a change in the par value of the Common Shares.

          (vi) No adjustment to the Conversion Rate will be made to the extent that such adjustment would result in the Conversion Price being less than the par value of the Common Shares.

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               (d) Record Date. For purposes of this Section 14, “Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of the Common Shares have the right to receive any cash, securities or other property or in which the Common Shares (or other applicable security) are exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Shares entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise).

               (e) Successive Adjustments. After an adjustment to the Conversion Rate under this Section 14, any subsequent event requiring an adjustment under this Section 14 shall cause an adjustment to such Conversion Rate as so adjusted.

               (f) Multiple Adjustments. For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Rate pursuant to this Section 14 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder.

               (g) Other Adjustments. The Corporation may (but is not required to) make such increases in the Conversion Rate, in addition to those required by Section 14(a)(i) through (v), as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Shares resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes.

               In addition to the foregoing, to the extent permitted by applicable law and subject to the applicable rules of the New York Stock Exchange, the Corporation from time to time may increase the Conversion Rate by any amount for any period of time if the period is at least 20 business days, the increase is irrevocable during the period and the Board of Directors shall have made a determination that such increase would be in the best interests of the Corporation, which determination shall be conclusive.

               (h) Notice of Adjustments. Whenever a Conversion Rate is adjusted as provided under Section 14, the Corporation shall within 10 Business Days following the occurrence of an event that requires such adjustment (or if the Corporation is not aware of such occurrence, as soon as reasonably practicable after becoming so aware) or within 15 calendar days of the date the Corporation makes an adjustment pursuant to Section 14(g):

                    (i) compute the adjusted applicable Conversion Rate in accordance with Section 14 and prepare and transmit to the Conversion Agent an Officers’ Certificate setting forth the applicable Conversion Rate, as the case may be, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based; and

                    (ii) provide a written notice to the Holders of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the applicable Conversion Rate was determined and setting forth the adjusted applicable Conversion Rate.

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                 (i) Conversion Agent. The Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the applicable Conversion Rate or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Conversion Agent shall be fully authorized and protected in relying on any Officers’ Certificate delivered pursuant to Section 14(h) and any adjustment contained therein and the Conversion Agent shall not be deemed to have knowledge of any adjustment unless and until it has received such certificate. The Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Shares, or of any securities or property, that may at the time be issued or delivered with respect to any of the Series A Preferred Stock; and the Conversion Agent makes no representation with respect thereto. The Conversion Agent shall not be responsible for any failure of the Corporation to issue, transfer or deliver any Common Shares pursuant to a the conversion of the Series A Preferred Stock or to comply with any of the duties, responsibilities or covenants of the Corporation contained in this Section 14.

          Section 15. Reorganization Events.

               (a) In the event of (any such event specified in this Section 15(a), a “Reorganization Event”):

               (i) any consolidation or merger of the Corporation with or into another Person, in each case pursuant to which the Common Shares will be converted into cash, securities, or other property of the Corporation or another Person;

               (ii) any sale, transfer, lease, or conveyance to another Person of all or substantially all of the consolidated assets of the Corporation and its subsidiaries, taken as a whole, in each case pursuant to which the Common Shares will be converted into cash, securities, or other property; or

               (iii) any reclassification of the Common Shares into securities, including securities other than the Common Shares; or

               (iv) any statutory exchange of the Corporation’s securities with another Person (other than in connection with a merger or acquisition);

each share of Series A Preferred Stock outstanding immediately prior to such Reorganization Event shall, without the consent of Holders, become convertible into the types and amounts of securities, cash, and other property that is or was receivable in such Reorganization Event by a holder of Common Shares that was not the counterparty to the Reorganization Event or an affiliate of such other party in exchange for such Common Shares (such securities, cash, and other property, the “Exchange Property”).

               (b) In the event that holders of Common Shares have the opportunity to elect the form of consideration to be received in such transaction, the consideration that the Holders are entitled to receive upon conversion shall be deemed to be the types and amounts of consideration received by the majority of the holders of Common Shares that affirmatively make

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an election (or of all such holders if none make an election). On each Conversion Date following a Reorganization Event, the Conversion Rate then in effect will be applied to the value on such Conversion Date of the securities, cash, or other property received per Common Share, determined as set forth above. The amount of Exchange Property receivable upon conversion of any Series A Preferred Stock in accordance with Section 12, Section 13(b), Section 13(c) or Section 13(d) hereof shall be determined based upon the then Applicable Conversion Rate.

               (c) The above provisions of this Section 15 shall similarly apply to successive Reorganization Events and the provisions of Section 14 shall apply to any shares of Capital Stock of the Corporation (or any successor) received by the holders of the Common Shares in any such Reorganization Event.

               (d) The Corporation (or any successor) shall, within 20 days of the occurrence of any Reorganization Event, provide written notice to the Holders of such occurrence of such event and of the type and amount of the cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 15.

          Section 16. Fractional Shares.

               (a) No fractional Common Shares will be issued as a result of any conversion of shares of Series A Preferred Stock.

               (b) In lieu of any fractional Common Share otherwise issuable in respect of any conversion at the Corporation’s option pursuant to Section 13(b) hereof or any conversion at the option of the Holder pursuant to Section 12, Section 13(c) or Section 13(d) hereof, the Corporation shall pay an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Price of the Common Shares determined as of the second Trading Day immediately preceding the effective date of conversion.

               (c) If more than one share of the Series A Preferred Stock is surrendered for conversion at one time by or for the same Holder, the number of full Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the Series A Preferred Stock so surrendered.

          Section 17. Reservation of Common Shares.

               (a) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Shares, solely for issuance upon the conversion of shares of Series A Preferred Stock as provided in these Articles of Amendment, free from any preemptive or other similar rights, such number of Common Shares as shall from time to time be issuable upon the conversion of all the shares of Series A Preferred Stock then outstanding, calculated assuming the Applicable Conversion Price equals the Base Price, subject to adjustment as described under Section 14. For purposes of this Section 17(a), the number of Common Shares that shall be deliverable upon the conversion of all outstanding shares of Series A Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single Holder.

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               (b) All Common Shares delivered upon conversion of the Series A Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens, claims, security interests and other encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).

               (c) Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Series A Preferred Stock, the Corporation shall use its reasonable best efforts to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

               (d) The Corporation hereby covenants and agrees that, so long as the Common Shares shall be listed on the New York Stock Exchange or any other national securities exchange or automated quotation system, the Corporation will, if permitted by the rules of such exchange or automated quotation system, list and keep listed all the Common Shares issuable upon conversion of the Series A Preferred Stock; provided, however, that if the rules of such exchange or automated quotation system permit the Corporation to defer the listing of such Common Shares until the first conversion of Series A Preferred Stock into Common Shares in accordance with the provisions hereof, the Corporation covenants to list such Common Shares issuable upon conversion of the Series A Preferred Stock in accordance with the requirements of such exchange or automated quotation system at such time.

          Section 18. Limitations on Beneficial Ownership. Notwithstanding anything to the contrary contained herein, and subject to the last sentence of this Section 18, no Holder will be entitled to receive Common Shares upon conversion pursuant to Section 12 and Section 13 hereof to the extent, but only to the extent, that such receipt would cause such converting holder to become, directly or indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of more than 9.9% of the Common Shares outstanding at such time. Any delivery of Common Shares upon a purported conversion of Series A Preferred Stock shall be void and have no effect and such shares shall for all purposes continue to represent outstanding shares of Series A Preferred Stock to the extent (but only to the extent) that such delivery would result in the converting holder becoming the beneficial owner of more than 9.9% of the Common Shares outstanding at such time. If any delivery of Common Shares owed to a holder upon conversion of Series A Preferred Stock is not made, in whole or in part, as a result of this limitation, the Corporation’s obligation to make such delivery shall not be extinguished and the Corporation shall deliver such shares as promptly as practicable after any such converting holder gives notice to the Corporation that such delivery would not result in it being the beneficial owner of more than 9.9% of the Common Shares outstanding at such time. Notwithstanding anything in this paragraph to the contrary, these limitations on beneficial ownership shall not be applicable to or limit the number of shares of Series A Preferred Stock to be converted as a result of a mandatory conversion by the Corporation pursuant to Section 13(b).

          Section 19. Preemptive or Subscription Rights. The Holders of Series A Preferred Stock shall not have any preemptive or subscription rights.

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PART E

EXPRESS TERMS OF FIXED RATE
CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES B

     Part 1. Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series B” (the “Designated Preferred Stock”). The authorized number of shares of Designated Preferred Stock shall be 25,000.

     Part 2. Standard Provisions. The Standard Provisions contained in Annex A attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part hereof to the same extent as if such provisions had been set forth in full herein.

     Part 3. Definitions. The following terms are used in this Part E (including the Standard Provisions in Annex A hereto) as defined below:

          (a) “Common Stock” means the common stock, par value $1.00 per share, of the Corporation.

          (b) “Dividend Payment Date” means February 15, May 15, August 15 and November 15 of each year.

          (c) “Junior Stock” means the Common Stock and any other class or series of stock of the Corporation the terms of which expressly provide that it ranks junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation.

          (d) “Liquidation Amount” means $100,000 per share of Designated Preferred Stock.

          (e) “Minimum Amount” means $625,000,000.

          (f) “Parity Stock” means any class or series of stock of the Corporation (other than Designated Preferred Stock) the terms of which do not expressly provide that such class or series will rank senior or junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation (in each case without regard to whether dividends accrue cumulatively or non-cumulatively). Without limiting the foregoing, Parity Stock shall include the Corporation’s 7.750% Non-Cumulative Perpetual Convertible Preferred Stock, Series A.

          (g) “Signing Date” means the Original Issue Date.

     Part 4. Certain Voting Matters. Holders of shares of Designated Preferred Stock will be entitled to one vote for each such share on any matter on which holders of Designated Preferred Stock are entitled to vote, including any action by written consent, as provided for in the Ohio General Corporation Law.

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     Part 5. No Senior Stock. For so long as any shares of Designated Preferred Stock are outstanding, the Corporation shall not authorize, or create or increase the authorized amount of, or issue, any shares of, or any securities convertible into or exchangeable or exercisable for shares of, any class or series of capital stock of the Corporation ranking senior or prior to Designated Preferred Stock with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

[Remainder of Page Intentionally Left Blank]

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ANNEX A

STANDARD PROVISIONS

     Section 1. General Matters. Each share of Designated Preferred Stock shall be identical in all respects to every other share of Designated Preferred Stock. The Designated Preferred Stock shall be perpetual, subject to the provisions of Section 5 of these Standard Provisions that form a part of the Certificate of Designations. The Designated Preferred Stock shall rank equally with Parity Stock and shall rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Corporation.

     Section 2. Standard Definitions. As used herein with respect to Designated Preferred Stock:

     (a) “Applicable Dividend Rate” means (i) during the period from the Original Issue Date to, but excluding, the first day of the first Dividend Period commencing on or after the fifth anniversary of the Original Issue Date, 5% per annum and (ii) from and after the first day of the first Dividend Period commencing on or after the fifth anniversary of the Original Issue Date, 9% per annum.

     (b) “Appropriate Federal Banking Agency” means the “appropriate Federal banking agency” with respect to the Corporation as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.

     (c) “Business Combination” means a merger, consolidation, statutory share exchange or similar transaction that requires the approval of the Corporation’s stockholders.

     (d) “Business Day” means any day except Saturday, Sunday and any day on which banking institutions in the State of New York generally are authorized or required by law or other governmental actions to close.

     (e) “Certificate of Designations” means the Certificate of Designations or comparable instrument relating to the Designated Preferred Stock, of which these Standard Provisions form a part, as it may be amended from time to time.

     (f) “Charter” means the Corporation’s certificate or articles of incorporation, articles of association, or similar organizational document.

     (g) “Dividend Period” has the meaning set forth in Section 3(a).

     (h) “Dividend Record Date” has the meaning set forth in Section 3(a).

     (i) “Liquidation Preference” has the meaning set forth in Section 4(a).

     (j) “Original Issue Date” means the date on which shares of Designated Preferred Stock are first issued.

     (k) “Preferred Director” has the meaning set forth in Section 7(b).

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ANNEX A

     (l) “Preferred Stock” means any and all series of preferred stock of the Corporation, including the Designated Preferred Stock.

     (m) “Qualified Equity Offering” means the sale and issuance for cash by the Corporation to persons other than the Corporation or any of its subsidiaries after the Original Issue Date of shares of perpetual Preferred Stock, Common Stock or any combination of such stock, that, in each case, qualify as and may be included in Tier 1 capital of the Corporation at the time of issuance under the applicable risk-based capital guidelines of the Corporation’s Appropriate Federal Banking Agency (other than any such sales and issuances made pursuant to agreements or arrangements entered into, or pursuant to financing plans which were publicly announced, on or prior to October 13, 2008).

     (n) “Regulations” means the amended and restated regulations of the Corporation, as they may be amended from time to time.

     (o) “Share Dilution Amount” has the meaning set forth in Section 3(b).

     (p) “Standard Provisions” mean these Standard Provisions that form a part of the Certificate of Designations relating to the Designated Preferred Stock.

     (q) “Successor Preferred Stock” has the meaning set forth in Section 5(a).

     (r) “Voting Parity Stock” means, with regard to any matter as to which the holders of Designated Preferred Stock are entitled to vote as specified in Sections 7(a) and 7(b) of these Standard Provisions that form a part of the Certificate of Designations, any and all series of Parity Stock upon which like voting rights have been conferred and are exercisable with respect to such matter.

     Section 3. Dividends.

     (a) Rate. Holders of Designated Preferred Stock shall be entitled to receive, on each share of Designated Preferred Stock if, as and when declared by the Board of Directors or any duly authorized committee of the Board of Directors, but only out of assets legally available therefor, cumulative cash dividends with respect to each Dividend Period (as defined below) at a rate per annum equal to the Applicable Dividend Rate on (i) the Liquidation Amount per share of Designated Preferred Stock and (ii) the amount of accrued and unpaid dividends for any prior Dividend Period on such share of Designated Preferred Stock, if any. Such dividends shall begin to accrue and be cumulative from the Original Issue Date, shall compound on each subsequent Dividend Payment Date (i.e., no dividends shall accrue on other dividends unless and until the first Dividend Payment Date for such other dividends has passed without such other dividends having been paid on such date) and shall be payable quarterly in arrears on each Dividend Payment Date, commencing with the first such Dividend Payment Date to occur at least 20 calendar days after the Original Issue Date. In the event that any Dividend Payment Date would otherwise fall on a day that is not a Business Day, the dividend payment due on that date will be postponed to the next day that is a Business Day and no additional dividends will accrue as a result of that postponement. The period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date is a “Dividend Period”, provided that the initial

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ANNEX A

Dividend Period shall be the period from and including the Original Issue Date to, but excluding, the next Dividend Payment Date.

          Dividends that are payable on Designated Preferred Stock in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of dividends payable on Designated Preferred Stock on any date prior to the end of a Dividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month.

          Dividends that are payable on Designated Preferred Stock on any Dividend Payment Date will be payable to holders of record of Designated Preferred Stock as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day immediately preceding such Dividend Payment Date or such other record date fixed by the Board of Directors or any duly authorized committee of the Board of Directors that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.

          Holders of Designated Preferred Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on Designated Preferred Stock as specified in this Section 3 (subject to the other provisions of the Certificate of Designations).

     (b) Priority of Dividends. So long as any share of Designated Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than dividends payable solely in shares of Common Stock) or Parity Stock, subject to the immediately following paragraph in the case of Parity Stock, and no Common Stock, Junior Stock or Parity Stock shall be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Corporation or any of its subsidiaries unless all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period (including, if applicable as provided in Section 3(a) above, dividends on such amount), on all outstanding shares of Designated Preferred Stock have been or are contemporaneously declared and paid in full (or have been declared and a sum sufficient for the payment thereof has been set aside for the benefit of the holders of shares of Designated Preferred Stock on the applicable record date). The foregoing limitation shall not apply to (i) redemptions, purchases or other acquisitions of shares of Common Stock or other Junior Stock in connection with the administration of any employee benefit plan in the ordinary course of business (including purchases to offset the Share Dilution Amount (as defined below) pursuant to a publicly announced repurchase plan) and consistent with past practice, provided that any purchases to offset the Share Dilution Amount shall in no event exceed the Share Dilution Amount; (ii) purchases or other acquisitions by a broker-dealer subsidiary of the Corporation solely for the purpose of market-making, stabilization or customer facilitation transactions in Junior Stock or Parity Stock in the ordinary course of its business; (iii) purchases by a brokerdealer subsidiary of the Corporation of capital stock of the Corporation for resale pursuant to an offering by the Corporation of such capital stock underwritten by such broker-dealer subsidiary; (iv) any dividends or distributions of rights or Junior Stock in connection with a stockholders’ rights plan or any redemption or repurchase of rights pursuant to any stockholders’ rights plan; (v) the acquisition by the Corporation or any of its subsidiaries of record ownership

A - 3

ANNEX A

in Junior Stock or Parity Stock for the beneficial ownership of any other persons (other than the Corporation or any of its subsidiaries), including as trustees or custodians; and (vi) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation amount) or Junior Stock, in each case, solely to the extent required pursuant to binding contractual agreements entered into prior to the Signing Date or any subsequent agreement for the accelerated exercise, settlement or exchange thereof for Common Stock. “Share Dilution Amount” means the increase in the number of diluted shares outstanding (determined in accordance with generally accepted accounting principles in the United States, and as measured from the date of the Corporation’s consolidated financial statements most recently filed with the Securities and Exchange Commission prior to the Original Issue Date) resulting from the grant, vesting or exercise of equity-based compensation to employees and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.

     When dividends are not paid (or declared and a sum sufficient for payment thereof set aside for the benefit of the holders thereof on the applicable record date) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period related to such Dividend Payment Date) in full upon Designated Preferred Stock and any shares of Parity Stock, all dividends declared on Designated Preferred Stock and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends declared shall bear the same ratio to each other as all accrued and unpaid dividends per share on the shares of Designated Preferred Stock (including, if applicable as provided in Section 3(a) above, dividends on such amount) and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) (subject to their having been declared by the Board of Directors or a duly authorized committee of the Board of Directors out of legally available funds and including, in the case of Parity Stock that bears cumulative dividends, all accrued but unpaid dividends) bear to each other. If the Board of Directors or a duly authorized committee of the Board of Directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation will provide written notice to the holders of Designated Preferred Stock prior to such Dividend Payment Date.

     Subject to the foregoing, and not otherwise, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or any duly authorized committee of the Board of Directors may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and holders of Designated Preferred Stock shall not be entitled to participate in any such dividends.

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ANNEX A

     Section 4. Liquidation Rights.

     (a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Designated Preferred Stock shall be entitled to receive for each share of Designated Preferred Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, subject to the rights of any creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to Designated Preferred Stock as to such distribution, payment in full in an amount equal to the sum of (i) the Liquidation Amount per share and (ii) the amount of any accrued and unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such amount), whether or not declared, to the date of payment (such amounts collectively, the “Liquidation Preference”).

     (b) Partial Payment. If in any distribution described in Section 4(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay in full the amounts payable with respect to all outstanding shares of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Corporation ranking equally with Designated Preferred Stock as to such distribution, holders of Designated Preferred Stock and the holders of such other stock shall share ratably in any such distribution in proportion to the full respective distributions to which they are entitled.

     (c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Corporation ranking equally with Designated Preferred Stock as to such distribution has been paid in full, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.

     (d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 4, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Designated Preferred Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.

     Section 5. Redemption.

     (a) Optional Redemption. Except as provided below, the Designated Preferred Stock may not be redeemed prior to the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date. On or after the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date, the Corporation, at its option, subject to the approval of the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from time to time, out of funds legally available therefor, the shares of Designated Preferred Stock at the time outstanding, upon notice given as provided in Section 5(c) below, at a redemption price equal to the sum of (i) the Liquidation Amount per share and (ii) except as otherwise provided below, any accrued and unpaid dividends (including, if applicable as

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ANNEX A

provided in Section 3(a) above, dividends on such amount) (regardless of whether any dividends are actually declared) to, but excluding, the date fixed for redemption.

     (b) Notwithstanding the foregoing, prior to the first Dividend Payment Date falling on or after the third anniversary of the Original Issue Date, the Corporation, at its option, subject to the approval of the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from time to time, the shares of Designated Preferred Stock at the time outstanding, upon notice given as provided in Section 5(c) below, at a redemption price equal to the sum of (i) the Liquidation Amount per share and (ii) except as otherwise provided below, any accrued and unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such amount) (regardless of whether any dividends are actually declared) to, but excluding, the date fixed for redemption; provided that (x) the Corporation (or any successor by Business Combination) has received aggregate gross proceeds of not less than the Minimum Amount (plus the “Minimum Amount” as defined in the relevant certificate of designations for each other outstanding series of preferred stock of such successor that was originally issued to the United States Department of the Treasury (the “Successor Preferred Stock”) in connection with the Troubled Asset Relief Program Capital Purchase Program) from one or more Qualified Equity Offerings (including Qualified Equity Offerings of such successor), and (y) the aggregate redemption price of the Designated Preferred Stock (and any Successor Preferred Stock) redeemed pursuant to this paragraph may not exceed the aggregate net cash proceeds received by the Corporation (or any successor by Business Combination) from such Qualified Equity Offerings (including Qualified Equity Offerings of such successor).

     (c) The redemption price for any shares of Designated Preferred Stock shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 3 above.

     (d) No Sinking Fund. The Designated Preferred Stock will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Designated Preferred Stock will have no right to require redemption or repurchase of any shares of Designated Preferred Stock.

     (e) Notice of Redemption. Notice of every redemption of shares of Designated Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Designated Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Designated Preferred Stock. Notwithstanding the foregoing, if shares of Designated Preferred Stock are

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ANNEX A

issued in book-entry form through The Depository Trust Corporation or any other similar facility, notice of redemption may be given to the holders of Designated Preferred Stock at such time and in any manner permitted by such facility. Each notice of redemption given to a holder shall state: (1) the redemption date; (2) the number of shares of Designated Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.

     (f) Partial Redemption. In case of any redemption of part of the shares of Designated Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Board of Directors or a duly authorized committee thereof may determine to be fair and equitable. Subject to the provisions hereof, the Board of Directors or a duly authorized committee thereof shall have full power and authority to prescribe the terms and conditions upon which shares of Designated Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.

     (g) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been deposited by the Corporation, in trust for the pro rata benefit of the holders of the shares called for redemption, with a bank or trust company doing business in the Borough of Manhattan, The City of New York, and having a capital and surplus of at least $500 million and selected by the Board of Directors, so as to be and continue to be available solely therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.

     (h) Status of Redeemed Shares. Shares of Designated Preferred Stock that are redeemed, repurchased or otherwise acquired by the Corporation shall revert to authorized but unissued shares of Preferred Stock (provided that any such cancelled shares of Designated Preferred Stock may be reissued only as shares of any series of Preferred Stock other than Designated Preferred Stock).

     Section 6. Conversion. Holders of Designated Preferred Stock shares shall have no right to exchange or convert such shares into any other securities.

     Section 7. Voting Rights. The holders of Designated Preferred Stock shall not have any voting rights except as expressly provided in the Amended and Restated Articles of

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ANNEX A

Incorporation of the Corporation, including Section 2 of Part A of Article IV, and except as shall be affirmatively provided in the Ohio General Corporation Law.

     Section 8. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for Designated Preferred Stock may deem and treat the record holder of any share of Designated Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.

     Section 9. Notices. All notices or communications in respect of Designated Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Charter or Regulations or by applicable law. Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Corporation or any similar facility, such notices may be given to the holders of Designated Preferred Stock in any manner permitted by such facility.

     Section 10. No Preemptive Rights. No share of Designated Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.

     Section 11. Replacement Certificates. The Corporation shall replace any mutilated certificate at the holder’s expense upon surrender of that certificate to the Corporation. The Corporation shall replace certificates that become destroyed, stolen or lost at the holder’s expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be reasonably required by the Corporation.

     Section 12. Other Rights. The shares of Designated Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Charter or as provided by applicable law.

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ARTICLE V

Purchase of Shares

          Subject to the provisions of Article IV hereof, the Corporation, by action of its directors, and without action by its shareholders, may, from time to time, purchase its own shares of any class in accordance with the provisions of the Ohio General Corporation Law; and such purchase may be made either in the open market, or at public or private sales, in such manner and amounts, from such holder or holders of outstanding shares of the Corporation and at such price as the directors shall, from time to time, determine.

ARTICLE VI

Voting

          Any proposal which, under applicable law, requires the approval of holders of shares of the Corporation:

(1)	to adopt an amendment to these articles of incorporation (which term includes amended articles of incorporation),
(2)	to sell, exchange, transfer, or otherwise dispose of all, or substantially all, the assets of the Corporation,
(3)	to effect a merger or consolidation involving the Corporation,
(4)	to effect a combination or majority share acquisition (as such terms are defined by the laws of the State of Ohio), or
(5)	to dissolve, liquidate, or wind up the affairs of the Corporation,

may be authorized and approved by the affirmative vote of the holders of shares entitling them to exercise a majority of the voting power of the Corporation on such proposal and, if a proposal upon which holders of shares of a particular class or classes are required to vote separately as a class by other provisions of these articles of incorporation or law, by the affirmative vote of the holders of shares entitling them to exercise a majority of the voting power of such class or classes, except as otherwise provided in Section 2 of Part A of Article IV with respect to the Preferred Stock of the Corporation. Notwithstanding the foregoing, the provisions of this Article VI shall not reduce the vote of shareholders required to approve a transaction which requires shareholder approval under Chapter 1704 of the Ohio Revised Code.

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ARTICLE VII

Election of Directors

     In order for a nominee to be elected a director of the Corporation in an uncontested election, the nominee must receive a greater number of votes cast “for” his or her election than “against” his or her election. Neither abstentions nor broker non-votes will be deemed to be votes “for” or “against” a nominee’s election. In a contested election, the nominee receiving the greatest number of votes shall be elected. An election shall be considered contested if, as of the record date for the meeting, there are more nominees properly nominated and not withdrawn for election than director positions to be filled in that election.

ARTICLE VIII

Opt-Out of Control Share Acquisitions Statute

          Section 1701.831 of the Ohio Revised Code shall not apply to control share acquisitions of shares of the Corporation.

ARTICLE IX

Amended and Restated Articles

          These Amended and Restated Articles of Incorporation of KeyCorp supersede the Amended and Restated Articles of Incorporation of KeyCorp filed with the Secretary of State of Ohio on July 23, 2008, as amended.

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EX-10.8

Exhibit 10.8

KEYCORP

Executive Officer Grants
(Nonqualified Stock Options)

«Name»

By action of the Compensation and Organization Committee (the “Committee”) of the Board of Directors of KeyCorp, taken pursuant to the KeyCorp 2004 Equity Compensation Plan (the “Plan”), and subject to the terms and conditions of the Plan, you have been awarded ___ nonqualified stock options.

1.	The options are being awarded in conformity with the provisions of the Emergency Economic Stabilization Act of 2008 (“EESA”). The options shall be null and void and immediately canceled if the award is found to be contrary to the provisions of EESA by the Committee, the Special Master for TARP Executive Compensation under EESA or otherwise. If the Committee determines at any time while the options are outstanding that the options may encourage you or the management of KeyCorp to take unnecessary and excessive risks that threaten the value of KeyCorp, the Committee may declare the options null and void and immediately canceled.
2.	The effective date of this option grant shall be June 12, 2009 (the “date of grant”) on which date the options become fully vested and exercisable, subject, however, to your agreeing to the terms of paragraph 4 hereof.
3.	The options shall be subject to a holding period (during which the options shall be retained by you and may not be exercised, transferred, or otherwise disposed of) until such time as any KeyCorp obligation under the Troubled Asset Relief Program obligation (other than warrants) no longer remains outstanding (the “Holding Period”).
4.	By executing this Agreement, you agree to retain (i.e. not exercise) the options until the later of (i) for one-third of the options, one year from the date of grant; for an additional one-third of the options, two years from the date of grant; and for the remaining one-third of the options, until three years from the date of grant or (ii) the conclusion of the Holding Period.
5.	By executing this Agreement, you agree as follows:

(a) Except in the proper performance of my duties for Key, I acknowledge and agree that from the date hereof through a period of one (1) year after the termination of my employment with Key for any reason, I will not, directly or indirectly, for myself or on behalf of any other person or entity, hire or solicit or entice for employment any Key employee without the written consent of Key, which consent it may grant or withhold in its discretion.

(b) Except in the proper performance of my duties for Key, I acknowledge and agree that from the date hereof through a period of one (1) year after the termination of my employment with Key for any reason, I will not, directly or indirectly, for myself or on behalf of any other person or entity, call upon, solicit, or do business with (other than for a business which does not compete with any business or business activity conducted by Key) any Key customer or potential customer I interacted with, became acquainted with, or learned of through access to information while I performed services for Key during my employment with Key, without the written consent of Key, which consent it may grant or withhold in its discretion. In the event that my employment is terminated with Key as a result of a Termination Under Limited Circumstances as defined below, the restrictions in this paragraph 5(b) shall become inapplicable to me; however, the restrictions in paragraph 5(a) of this Agreement shall remain in full force and effect nevertheless. I understand that a “Termination Under Limited Circumstances” shall mean the termination of my employment with Key (i) under circumstances in which I am entitled to receive severance benefits or salary continuation benefits under the terms and conditions of the KeyCorp Separation Plan in effect at the time of such termination, or (ii) under circumstances in which I am entitled to receive severance benefits, salary continuation benefits, or similar benefits under the terms and conditions of an agreement with Key, including, without limitation, a change of control agreement or employment or letter agreement, or (iii) as otherwise expressly approved by the Compensation and Organization Committee of KeyCorp in its sole discretion.

6. The terms and conditions of this award may not be modified, amended or waived except by an instrument in writing signed by a duly authorized executive officer of KeyCorp.

June 12, 2009

  Thomas E. Helfrich
Executive Vice President

AGREED TO AND ACCEPTED:

Dated: June 12, 2009

EX-10.12

Exhibit 10.12

KEYCORP
ANNUAL INCENTIVE PLAN
(January 1, 2009 Restatement)

     KeyCorp (the “Corporation”) hereby establishes this Annual Incentive Plan for the purpose of providing a discretionary annual incentive to selected key officers of the Corporation and its subsidiaries.

ARTICLE I

DEFINITIONS

     For the purposes hereof, the following words and phrases shall have the meanings indicated:

     1. A “Beneficiary” shall mean any person designated by a Participant in accordance with the Plan to receive payment of all or a portion of any Incentive Award for which the Participant is eligible at the time of the Participant’s death.

     2. A “Change of Control” shall mean a Change of Control under any of clauses (a), (b), (c), or (d) below. A “Non-Initiated Change of Control” shall mean (i) a Change of Control under clause (c) below (regardless of whether it also constitutes a Change of Control under any other clause below), and (ii) a Change of Control under clause (a), (b), or (d) below if such Change of Control results in whole or in any significant part, directly or indirectly, proximately or remotely, from or in response or reaction to an offer or proposal (whether to the Board of Directors or the shareholders of the Corporation) which was not solicited or invited by the management of the Corporation to engage in a transaction with the Corporation that, if consummated, would result in a Change Event under clause (c) below. An “Initiated Change of Control” shall mean all Changes of Control other than a Non-Initiated Change of Control. The determination of the Committee whether a Change of Control constitutes an Initiated or Non-Initiated Change of Control shall be final and conclusive. For purposes of this definition, the Corporation will be deemed to have become a subsidiary of another corporation if any other

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corporation (which term shall include, in addition to a corporation, a limited liability company, partnership, trust, or other organization) owns, directly or indirectly, 50 percent or more of the total combined outstanding voting power of all classes of stock of the Corporation or any successor to the Corporation.

(a) A Change of Control will have occurred under this clause (a) if the Corporation is a party to a transaction pursuant to which the Corporation is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation and either

(i) immediately after giving effect to that transaction, less than 65% of the then outstanding voting securities of the surviving or resulting corporation or (if the Corporation becomes a subsidiary in the transaction) of the ultimate parent of the Corporation represent or were issued in exchange for voting securities of the Corporation outstanding immediately prior to the transaction, or

(ii) immediately after giving effect to that transaction, individuals who were directors of the Corporation on the day before the first public announcement of (x) the pendency of the transaction or (y) the intention of any person or entity to cause the transaction to occur, cease for any reason to constitute at least 51% of the directors of the surviving or resulting corporation or (if the Corporation becomes a subsidiary in the transaction) of the ultimate parent of the Corporation.

(b) A Change of Control will have occurred under this clause (b) if a tender or exchange offer shall be made and consummated for 35% or more of the outstanding voting stock of the Corporation or any person (as the term “person” is used in Section 13(d) and Section 14(d)(2) of the 1934 Act) is or becomes the beneficial owner of 35% or more of the outstanding voting

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stock of the Corporation or there is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as adopted under the 1934 Act, disclosing the acquisition of 35% or more of the outstanding voting stock of the Corporation in a transaction or series of transactions by any person (as defined earlier in this clause (b)).

(c) A Change of Control will have occurred under this clause (c) if either

(i) without the prior approval, solicitation, invitation, or recommendation of the Corporation Board of Directors any person or entity makes a public announcement of a bona fide intention (A) to engage in a transaction with the Corporation that, if consummated, would result in a Change Event (as defined below in this clause (c)), or (B) to “solicit” (as defined in Rule 14a-1 under the 1934 Act) proxies in connection with a proposal that is not approved or recommended by the Corporation Board of Directors, or

(ii) any person or entity publicly announces a bona fide intention to engage in an election contest relating to the election of directors of the Corporation (pursuant to Regulation 14A, including Rule 14a-11, under the 1934 Act), and, at any time within the 24 month period immediately following the date of the announcement of that intention, individuals who, on the day before that announcement, constituted the directors of the Corporation (the “Incumbent Directors”) cease for any reason to constitute at least a majority thereof unless both (A) the election, or the nomination for election by the Corporation’s shareholders, of each new director was approved by a vote of at least two-thirds of the Incumbent Directors in office at the time of the election or

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nomination for election of such new director, and (B) prior to the time that the Incumbent Directors no longer constitute a majority of the Board of Directors, the Incumbent Directors then in office, by a vote of at least 75% of their number, reasonably determine in good faith that the change in Board membership that has occurred before the date of that determination and that is anticipated to thereafter occur within the balance of the 24 month period to cause the Incumbent Directors to no longer be a majority of the Board of Directors was not caused by or attributable to, in whole or in any significant part, directly or indirectly, proximately or remotely, any event under subclause (i) or (ii) of this clause (c).

For purposes of this clause (c), the term “Change Event” shall mean any of the events described in the following subclauses (x), (y), or (z) of this clause (c):

(x) A tender or exchange offer shall be made for 25% or more of the outstanding voting stock of the Corporation or any person (as the term “person” is used in Section 13(d) and Section 14(d)(2) of the 1934 Act) is or becomes the beneficial owner of 25% or more of the outstanding voting stock of the Corporation or there is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form, or report), each as adopted under the 1934 Act, disclosing the acquisition of 25% or more of the outstanding voting stock of the Corporation in a transaction or series of transactions by any person (as defined earlier in this subclause (x)).

(y) the Corporation is a party to a transaction pursuant to which the Corporation is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation and, after giving effect to such transaction, less than 50% of the then outstanding voting securities of the

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surviving or resulting corporation or (if the Corporation becomes a subsidiary in the transaction) of the ultimate parent of the Corporation represent or were issued in exchange for voting securities of the Corporation outstanding immediately prior to such transaction or less than 51% of the directors of the surviving or resulting corporation or (if the Corporation becomes a subsidiary in the transaction) of the ultimate parent of the Corporation were directors of the Corporation immediately prior to such transaction.

(z) There is a sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Corporation.

(d) A Change of Control will have occurred under this clause (d) if there is a sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation.

     3. The “Committee” shall mean the Compensation and Organization Committee of the Board of Directors of the Corporation or other Committee of the Board of Directors hereafter succeeding to the responsibilities currently performed by the Compensation and Organization Committee with respect to the Plan.

     4. “Grant Agreement” shall mean the agreement under which the Participant’s restricted stock and/or restricted stock units are granted to the Participant in accordance with the requirements of the KeyCorp 2004 Equity Plan, as may be amended from time to time.

     5. An “Incentive Award” shall mean the incentive which may be paid to a Participant pursuant to the Plan.

     6. “Market Point” shall mean for any Participant for any calendar year the market point (as determined under the Corporation’s salary administration program) of such Participant’s job grade at the end of the calendar year; provided, however, that if the

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Corporation changes such Participant’s job grade during any such calendar year or such Participant is promoted, transferred, or otherwise moves into a different job grade during such calendar year, then such Market Point shall be calculated on a pro rata basis for each of the periods in which such job grades were in effect for such Participant.

     7. A “Participant” shall mean a senior officer of the Corporation or one of its subsidiaries who is selected by the Committee to participate in the Plan.

     8. The “Plan” shall mean this Annual Incentive Plan, together with all amendments hereto.

     9. “Plan Year” shall mean each calendar year for which the Plan remains in existence.

     10. “Subsidiary” shall mean a corporation organized and existing under the laws of the United States or of any state or the District of Columbia of which 50 percent or more of the issued and outstanding stock is owned by the Corporation or by a Subsidiary of the Corporation.

     11. The “Target Incentive Pool” shall mean the aggregate amount, as determined in accordance with Article II of the Plan, of the aggregate individual target Incentive Awards of Participants.

     12. “Target Pool Percentage” shall mean the percentage determined pursuant to Article II, Sections 3 and 4 below that will be used to establish the aggregate amount available for Incentive Awards.

     13. The “1934 Act” shall mean the Securities Exchange Act of 1934 as from time to time amended.

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ARTICLE II

INCENTIVE AWARDS

     1. Participation. Annually, the Committee shall select the Participants in the Plan for the Plan Year. In general, the selection will be made prior to the beginning of each Plan Year or as soon thereafter as is reasonably practicable; in addition, such selection may be made at any time during a Plan Year in the case of a newly hired employee or an employee that receives a new position. Not in limitation of the foregoing, the Committee shall have the authority to designate at the beginning of a Plan Year, or as soon thereafter as is reasonably practicable, employees in selected job grades as Participants, including any employee that may later be hired or promoted into any such job grade during the Plan Year, without further action on behalf of the Committee. Participants shall be notified of their selection in writing. In the event that employees are determined to be Participants by job grade, the Chief Executive Officer, or his or her designee, may select, subject to the approval of the Committee or in accordance with guidelines established by the Committee, additional eligible employees for Plan participation notwithstanding their job grade. Employees otherwise eligible for participation because of their job grade may be excluded, by action of the Committee or the Chief Executive Officer (or his or her designee), if they are participants in business unit or other incentive compensation plans.

     2. Incentive Pool. The Committee shall approve on an annual basis the recommended target incentives for persons selected to be in the Plan. Target incentives for Participants who are eligible for part of the Plan Year or whose incentive group assignment changed during the Plan Year will be calculated on a pro rata basis for both the period of each incentive group assignment and the period during the Plan Year in which the Participant was an eligible employee. In the event that an individual whose job does not have an assigned salary grade is approved for participation in the Plan, the Chief Executive Officer, or his or her designee, is authorized to select a target incentive percentage for such individual and base the

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calculation of target incentive and other calculations under this Plan on such individual’s base salary.

     3. Formula for Target Pool Percentage; Knock-Out Factor. Prior to each Plan Year or as soon as practical thereafter, the Committee shall devise a formula to determine the Target Pool Percentage which formula shall be based on one or more financial criteria or other performance goals. The Committee shall have the discretion to set minimal performance goals which must be met before any Incentive Awards will be made under the Plan. In its sole discretion the Committee may revise or waive one or more of such minimal performance goals as a result of any change in conditions or the occurrence of any events or other factors which make such goal or goals unsuitable or undesirable. Notwithstanding that the Corporation has not met a minimal performance goal, if the Committee determines that one or more lines of business of the Corporation have had a level of performance deserving of Incentive Awards, the Committee may establish a pool for Incentive Awards utilizing a Target Pool Percentage fixed at 25% (or such higher or lower percentage as the Committee, in its sole discretion, shall determine).

     4. Incentive Awards. As soon as practical after the end of the Plan Year, the Committee shall determine the Target Pool Percentage (not to exceed 300%) to be applied to the Target Incentive Pool to establish the maximum aggregate amount to be distributed as Incentive Awards. The percentage shall be based on the formula established in Section 3 hereof but the Committee shall have the discretion to decrease or increase the otherwise determined Target Pool Percentage for the Plan Year by not more than thirty per cent (30%) of such Target Pool Percentage. (For example, if the Target Pool Percentage is established at 120%, the Committee would have the discretion to increase the Target Pool Percentage to not more than 156% or to decrease the Target Pool Percentage to not less than 84%.) In determining whether, and the extent to which, the formula established in Section 3 hereof has been achieved, the Committee shall have the discretion to disregard changes in accounting rules or practices, gains from the sale of subsidiaries or assets outside the ordinary course of

8

business, or restructuring or other nonrecurring charges or similar adjustments. It is contemplated that Incentive Awards may, depending upon the responsibilities of the Participant, be based wholly on corporate performance, partially on corporate performance and partially on line of business or business unit performance, or wholly on line of business or business unit performance. Ordinarily, the Committee will delegate to management responsibility for determining Target Pool Percentages for each line of business or business unit provided that the aggregate weighted average Target Pool Percentages for all lines of business and business units shall be substantially equivalent to the Target Pool Percentage established by the Committee.

     The Committee shall determine or approve the amount of the Incentive Award for each Participant above such job grade level as the Committee shall from time to time select and, with respect to all other Participants, the Committee shall approve the Incentive Awards based on the methodology utilized by management consistent with the Committee’s overall discretion.

     It may be determined that a Participant shall receive no Incentive Award for the Plan Year. In addition, the Plan does not restrict the maximum amount of an Incentive Award that may be paid to an individual Participant.

     5. Active Employment Requirement. Ordinarily, Incentive Awards shall be made only to Participants who are actively employed at the end of the Plan Year; however, Participants who retire at age 65 or over or become disabled during a Plan Year, or the Beneficiary(s) or estate of a Participant whose death occurs during a Plan Year shall be entitled to, on a pro rata basis (for the period of time the Participant was in the Plan for the Plan Year) the lesser of (i) the Participant’s target incentive or (ii) the Participant’s target incentive times the Target Pool Percentage if the Committee determines a Target Pool Percentage of less than 100%. Except as provided in Section 5 hereof, no other Participant who is not actively employed at the end of the Plan Year shall receive an Incentive Award unless the Committee, in its sole discretion, so determines that an Incentive Award shall be made.

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     6. Effect of Change of Control. Upon the occurrence of a Non-Initiated Change of Control during the Plan Year, this Plan shall terminate and each Participant immediately prior to the occurrence of such Non-Initiated Change of Control shall 60 days following the Plan’s termination date receive 300% of such Participant’s target incentive payable under the Plan for the full Plan Year. In the event of the occurrence of an Initiated Change of Control during the Plan Year, the Committee, in its sole discretion, shall determine whether the Plan should terminate and the manner of calculating, and the time for payment, of Incentive Awards (if any) to be made under the Plan for the Plan Year.

     7. Payment of Incentive Award. Except as provided in the first sentence of Section 6 hereof, Incentive Awards shall be paid by March 15, of the year following the applicable performance Plan Year. Notwithstanding any other provision of the Plan, the Committee, in its sole discretion, shall have the authority to authorize payment of all or a portion of all Incentive Awards prior to the end of the performance Plan Year, and if a portion, the Corporation shall pay the remaining portion of the Award as provided for in this Section 7.

     Notwithstanding any other provision of the Plan, the Committee, in its sole discretion, shall have the authority to require the deferral of payment of all or a portion of all Incentive Awards due to any Plan Participant if the Committee determines that the Corporation would be denied a deduction for federal income tax purposes for such Award or the portion thereof by reason of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder, if the Award or the portion thereof were not so deferred. Such deferred Incentive Awards, or the portion thereof, shall be deferred in accordance with the provisions of the KeyCorp Deferred Savings Plan.

ARTICLE III

Allocation of Restricted Shares. Any Incentive Award payable to a Participant in excess of $100,000 will have a percentage of the Award in excess of $100,000 paid to

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the Participant in KeyCorp time-lapsed restricted common shares or restricted units, under the following allocation structure:

• Twenty percent (20%) of the Participant’s Award amount between $100,000 up to and including $500,000 will be paid to the Participant in restricted shares/units.

• Twenty five percent (25%) of the Participant’s Award amount between $500,000 up to and including $1,000,000 will be paid to the Participant in restricted shares/units.

• Thirty percent (30%) of the Participant’s Award amount greater than $1,000,000 will be paid to the Participant in restricted shares/units.

All restricted shares/units awarded to the Participant in accordance with provisions of this Section 6 will be subject to a three-year graded vesting period, which will commence as of the date of the restricted stock/units grant. The vesting period will be measured based on consecutive full calendar months. In the event of the Participant’s death or disability, or in the event the Participant is terminated under limited circumstances, the Participant’s restricted shares/units shall vest in accordance with the provisions of the applicable Grant Agreement.

All restricted shares and units shall be granted under the KeyCorp 2004 Equity Compensation Plan, and the terms and conditions of each individual Grant Agreement shall control the disposition and payment of all vested restricted shares/units, including all restrictions mandated under the Emergency Economic Stabilization Act of 2008 and the requirements of Section 409A of the Code.

ARTICLE IV

ADMINISTRATION

     The Corporation shall be responsible for the general administration of the Plan and for carrying out the provisions hereof. The Committee shall have all such powers as may be necessary to carry out its duties under the Plan, including the power to determine all questions pertaining to claims for benefits and procedures for claim review, and the power to resolve all

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other questions arising under the Plan, including any questions of construction. The Corporation and the Committee may take such further action as the Corporation and the Committee shall deem advisable in the administration of the Plan. The actions taken and the decisions made by the Corporation and the Committee hereunder shall be final and binding upon all interested parties. In accordance with the provisions of Section 503 of the Employee Retirement Income Security Act of 1974, as amended, the Committee shall provide a procedure for handling claims of Participants or their Beneficiaries under this Plan. Such procedure shall be in accordance with regulations issued by the Secretary of Labor and shall provide adequate written notice within a reasonable period of time with respect to the denial of any such claims as well as a reasonable opportunity for a full and fair review by the Committee of any such denial. Notwithstanding anything to the contrary contained herein, the Corporation shall be the “administrator” for the purpose of the Employment Retirement Income Security Act of 1974, as amended. Any action authorized under the Plan to be done by the Committee may be done by the Board of Directors or any other Board committee authorized by the Board of Directors.

ARTICLE V

AMENDMENT AND TERMINATION

     The Corporation reserves the right to amend or terminate the Plan at any time by action of the Board of Directors or the Committee, but, from and after the occurrence of a Non-Initiated Change of Control, no such amendment or termination shall adversely affect the rights of a Participant which have accrued prior to such amendment or termination except with the written consent of such Participant.

ARTICLE VI

MISCELLANEOUS

     1. Not An Employment Agreement. Nothing herein contained shall be construed as a commitment to or agreement with any person employed by the Corporation or a Subsidiary to

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continue such person’s employment with the Corporation or Subsidiary, and nothing herein contained shall be construed as a commitment or agreement on the part of the Corporation or any Subsidiary to continue the employment or the annual rate of compensation of any such person for any period. All Participants shall remain subject to discharge to the same extent as if the Plan had never been put into effect.

     2. Unfunded for Tax and ERISA Purposes. It is the intention of the Corporation and the Participants that the Plan be unfunded for tax purposes and for the purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

     3. Claims of Other Persons. The provisions of the Plan shall in no event be construed as giving any person, firm, or corporation any legal or equitable right against the Corporation or any Subsidiary, their officers, employees, agents, or directors, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan.

     4. Absence of Liability. No member of the Board of Directors of the Corporation or a Subsidiary or any officer or employee of the Corporation or a Subsidiary shall be liable for any act or action hereunder, whether of commission or omission.

     5. Severability. The invalidity or unenforceability of any particular provisions of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom.

     6. Governing Law. The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Ohio.

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ARTICLE VII

CLAWBACK OF PLAN PAYMENTS

Notwithstanding any provision in the Plan to the contrary, in the event that a payment or payments are made to “senior executive officer(s)” or to a “most highly compensated employee” (as those terms are defined in accordance with Section 111(b)(3) of the Emergency Economic Stabilization Act of 2008 (EESA), as amended by the American Recovery and Reinvestment Act of 2009 (ARRA)) and it is later determined that the payment or payments were based on materially inaccurate financial statements or on any other materially inaccurate performance metric criteria, or otherwise determined to be in violation of the requirements of EESA and ARRA then in such event, to the extent necessary to comply with Section 111(b)(2)(B) of EESA, the full amount of any and all payment(s) that have been made to senior executive officer(s) and to the most highly compensated employees shall become immediately due and owing to KeyCorp, and the senior executive officer(s) and most highly compensated employees shall repay the full amount of such payment(s) to KeyCorp in accordance with and in a manner that complies with the requirements of Section 111(b)(2)(B) of EESA.

KEYCORP
By:	/s/ Steven N. Bulloch

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EX-10.15

Exhibit 10.15

2004 EQUITY COMPENSATION PLAN

     1. Purpose. The KeyCorp 2004 Equity Compensation Plan is intended to promote the interests of the Corporation and its shareholders by providing equity-based incentives for effective service and high levels of performance to Employees selected by the Committee. To achieve these purposes, the Corporation may grant Awards of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units to selected Employees, all in accordance with the terms and conditions hereinafter set forth.

     2. Definitions.

     2.1 1934 Act. The term “1934 Act” shall mean the Securities Exchange Act of 1934, as amended.

     2.2 Acquisition Price. The term “Acquisition Price” with respect to Restricted Stock and Restricted Stock Units shall mean such amount, if any, required by applicable law or as may be otherwise specified by the Committee in the Award Instrument with respect to the Restricted Stock or Restricted Stock Units as the consideration to be paid by the Employee for the Restricted Stock or Restricted Stock Units.

     2.3 Award. The term “Award” shall mean an award granted under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, or Performance Units.

     2.4 Award Instrument. The term “Award Instrument” shall mean a written instrument evidencing an Award in such form and with such provisions as the Committee may prescribe, including, without limitation, an agreement to be executed by the Employee and the Corporation, a certificate issued by the Corporation, or a letter executed by the Committee or its designee. An Award Instrument may also be in an electronic medium. Acceptance of the Award Instrument by an Employee constitutes agreement to the terms of the Award evidenced thereby.

     2.5 Base Price. The term “Base Price” with respect to a Free-Standing SAR shall mean the price specified in an Award of Free-Standing SARs to be used as the basis for determining the amount to which a holder of a Free-Standing SAR is entitled upon the exercise of a Free-Standing SAR.

     2.6 Change of Control. A “Change of Control” shall be deemed to have occurred if, at any time after the date of the grant of the relevant Award, there is a Change of Control under any of clauses (a), (b), (c), or (d) below. For these purposes, the Corporation will be deemed to have become a subsidiary of another corporation if any other corporation (which term shall include, in addition to a corporation, a limited liability company, partnership, trust, or other organization) owns, directly or indirectly, 50 percent or more of the total combined outstanding voting power of all classes of stock of the Corporation or any successor to the Corporation.

(a) A Change of Control will have occurred under this clause (a) if the Corporation is a party to a transaction pursuant to which the Corporation is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation and either

(i) immediately after giving effect to that transaction, less than 65% of the then outstanding voting securities of the surviving or resulting corporation or (if the Corporation becomes a subsidiary in the transaction) of the ultimate parent of the Corporation represent or were issued in exchange for voting securities of the Corporation outstanding immediately prior to the transaction, or

(ii) immediately after giving effect to that transaction, individuals who were directors of the Corporation on the day before the first public announcement of (A) the pendency of the transaction or (B) the intention of any person or entity to cause the transaction to occur, cease for any reason to constitute at least 51% of the directors of the surviving or resulting corporation or (if the Corporation becomes a subsidiary in the transaction) of the ultimate parent of the Corporation.

(b)

A Change of Control will have occurred under this clause (b) if a tender or exchange offer shall be made and consummated for 35% or more of the outstanding voting stock of the Corporation or any person (as the term “person” is used in Section 13(d) and Section 14(d)(2) of the 1934 Act) is or becomes the beneficial owner of 35% or more of the outstanding voting stock of the Corporation or there is a report filed on Schedule 13D or Schedule TO (or any successor schedule, form or report), each as adopted under the 1934 Act, disclosing the acquisition of 35% or more of the outstanding voting stock of the Corporation in a transaction or series of transactions by any person (as defined earlier in this clause (b)).

(c)

A Change of Control will have occurred under this clause (c) if either

(i) without the prior approval, solicitation, invitation, or recommendation of the Corporation’s Board of Directors any person or entity makes a public announcement of a bona fide intention (A) to engage in a transaction with the Corporation that, if consummated, would result in a Change Event (as defined below in this clause (c)), or (B) to “solicit” (as defined in Rule 14a-1 under the 1934 Act) proxies in connection with a proposal that is not approved or recommended by the Corporation’s Board of Directors, or

(ii) any person or entity publicly announces a bona fide intention to engage in an election contest relating to the election of directors of the Corporation (pursuant to Regulation 14A, including Rule 14a-11, under the 1934 Act),

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and, at any time within the 24 month period immediately following the date of the announcement of that intention, individuals who, on the day before that announcement, constituted the directors of the Corporation (the “Incumbent Directors”) cease for any reason to constitute at least a majority thereof unless both (A) the election, or the nomination for election by the Corporation’s shareholders, of each new director was approved by a vote of at least two-thirds of the Incumbent Directors in office at the time of the election or nomination for election of such new director, and (B) prior to the time that the Incumbent Directors no longer constitute a majority of the Board of Directors, the Incumbent Directors then in office, by a vote of at least 75% of their number, reasonably determine in good faith that the change in Board membership that has occurred before the date of that determination and that is anticipated to thereafter occur within the balance of the 24 month period to cause the Incumbent Directors to no longer be a majority of the Board of Directors was not caused by or attributable to, in whole or in any significant part, directly or indirectly, proximately or remotely, any event under subclause (i) or (ii) of this clause (c).

For purposes of this clause (c), the term “Change Event” shall mean any of the events described in the following subclauses (x), (y), or (z) of this clause (c):

(x)

A tender or exchange offer shall be made for 25% or more of the outstanding voting stock of the Corporation or any person (as the term “person” is used in Section 13(d) and Section 14(d)(2) of the 1934 Act) is or becomes the beneficial owner of 25% or more of the outstanding voting stock of the Corporation or there is a report filed on Schedule 13D or Schedule TO (or any successor schedule, form, or report), each as adopted under the 1934 Act, disclosing the acquisition of 25% or more of the outstanding voting stock of the Corporation in a transaction or series of transactions by any person (as defined earlier in this subclause (x)).

(y)

The Corporation is a party to a transaction pursuant to which the Corporation is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation and, after giving effect to such transaction, less than 50% of the then outstanding voting securities of the surviving or resulting corporation or (if the Corporation becomes a subsidiary in the transaction) of the ultimate parent of the Corporation represent or were issued in exchange for voting securities of the Corporation outstanding immediately prior to such transaction or less than 51% of the directors of the surviving or resulting corporation or (if the Corporation becomes a subsidiary in the transaction) of the ultimate parent of the Corporation were directors of the Corporation immediately prior to such transaction.

(z) There is a sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Corporation.

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(d) A Change of Control will have occurred under this clause (d) if there is a sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation.

     2.7 Committee. The term “Committee” shall mean the Compensation Committee of the Board of Directors of the Corporation or such other committee or subcommittee as may be designated by the Board of Directors of the Corporation from time to time.

     2.8 Common Shares. The term “Common Shares” shall mean common shares of the Corporation, with a par value of $1 each.

     2.9 Corporation. The term “Corporation” shall mean KeyCorp and its successors, including the surviving or resulting corporation of any merger of KeyCorp with or into, or any consolidation of KeyCorp with, any other corporation or corporations.

     2.10 Covered Employee. The term “Covered Employee” shall mean an Employee who is, or is determined by the Committee to be likely to become, a “covered employee” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.

     2.11 Disability. The term “Disability” with respect to an Employee shall mean physical or mental impairment which entitles the Employee to receive disability payments under any long-term disability plan maintained by the Corporation.

     2.12 Effective Date. The term “Effective Date” shall mean March 18, 2004, the date the Plan is approved and adopted by the Board of Directors of the Corporation.

     2.13 Employee. The term “Employee” shall mean any individual employed by the Corporation or by any Subsidiary and shall include officers as well as all other employees of the Corporation or of any Subsidiary (including employees who are members of the Board of Directors of the Corporation or any Subsidiary).

     2.14 Employment Termination Date. The term “Employment Termination Date” with respect to an Employee shall mean the first date on which the Employee is no longer employed by the Corporation or any Subsidiary.

     2.15 Exercise Price. The term “Exercise Price” with respect to an Option shall mean the price specified in the Option at which the Common Shares subject to the Option may be purchased by the holder of the Option.

     2.16 Fair Market Value. Except as otherwise determined by the Committee at the time of the grant of an Award, the term “Fair Market Value” with respect to Common Shares shall mean: (a) if the Common Shares are traded on a national exchange, the mean between the high and low sales price per Common Share on that national exchange on the date for which the determination of fair market value is made or, if there are no sales of Common Shares on that date, then on the next preceding date on which there were any sales of Common Shares, or (b) if

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the Common Shares are not traded on a national exchange, the mean between the high and low sales price per Common Share in the over-the-counter market, National Market System, as reported by the National Quotations Bureau, Inc. and NASDAQ on the date for which the determination of fair market value is made or, if there are no sales of Common Shares on that date, then on the next preceding date on which there were any sales of Common Shares.

     2.17 Free-Standing Stock Appreciation Right. The term “Free-Standing Stock Appreciation Right” or “Free-Standing SAR” shall mean an Award granted to an Employee that is not granted in tandem with an Option that entitles the holder thereof to receive from the Corporation, upon exercise of the Free-Standing SAR or any portion of the Free-Standing SAR, an amount equal to 100% or such lesser percentage as the Committee may determine at the time of grant of the Award, of the excess, if any, measured at the time of the exercise of the Free-Standing SAR, of (a) the Fair Market Value of the Common Shares underlying the Free-Standing SARs being exercised over (b) the aggregate Base Price of those Common Shares underlying the Free-Standing SARs being exercised.

     2.18 Incentive Stock Option. The term “Incentive Stock Option” shall mean an Option intended by the Committee to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.

     2.19 Limited Stock Appreciation Right. The term “Limited Stock Appreciation Right” or “Limited SAR” shall mean an Award granted to an Employee with respect to all or any part of any Option, that entitles the holder thereof to receive from the Corporation, upon exercise of the Limited SAR and surrender of the related Option, or any portion of the Limited SAR and the related Option, an amount equal to (unless the Committee specifies a lesser amount at the time of the grant of the Award):

(a)	in the case of a Limited SAR granted with respect to an Incentive Stock Option, 100% of the excess, if any, measured at the time of the exercise of the Limited SAR, of (i) the Fair Market Value of the Common Shares subject to the Incentive Stock Option with respect to which the Limited SAR is exercised over (ii) the Exercise Price of those Common Shares under the Incentive Stock Option, or
(b)	in the case of a Limited SAR granted with respect to a Nonqualified Option, 100% of the highest of:

(i) the excess, measured at the time of the exercise of the Limited SAR, of (A) the Fair Market Value of the Common Shares subject to the Nonqualified Option with respect to which the Limited SAR is exercised over (B) the Exercise Price of those Common Shares under the Nonqualified Option,

(ii) the excess of (A) the highest gross price (before brokerage commissions and soliciting dealers’ fees) paid or to be paid for a Common Share (whether in cash or in property and whether by way of exchange, conversion, distribution upon liquidation, or otherwise) in connection with

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any Change of Control multiplied by the number of Common Shares subject to the Nonqualified Option with respect to which the Limited SAR is exercised over (B) the Exercise Price of those Common Shares under the Nonqualified Option, or

(iii)

the excess of (A) the highest Fair Market Value of the Common Shares subject to the Nonqualified Option with respect to which the Limited SAR is exercised on any one day during the period beginning on the sixtieth day prior to the date on which the Limited SAR is exercised multiplied by the number of Common Shares subject to the Nonqualified Option with respect to which the Limited SAR is exercised over (B) the Exercise Price of those Common Shares under the Nonqualified Option.

     2.20 Nonqualified Option. The term “Nonqualified Option” shall mean an Option intended by the Committee not to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended.

     2.21 Option. The term “Option,” shall mean an Award entitling the holder thereof to purchase a specified number of Common Shares at a specified price during a specified period of time.

     2.22 Option Expiration Date. The term “Option Expiration Date” with respect to any Option shall mean the date selected by the Committee after which, except as provided in Section 11.4 in the case of the death of the Employee to whom the option was granted, the Option may not be exercised.

     2.23 Performance Goal. The term “Performance Goal” shall mean a performance goal specified by the Committee in connection with the potential grant of Performance Shares or Performance Units, or when so determined by the Committee, Options, SARs, Restricted Stock, and dividend credits pursuant to this Plan. Performance Goals may be described in terms of objectives that are related to the performance by the Corporation, by any Subsidiary, or by any Employee or group of Employees in connection with services performed by that Employee or those Employees for the Corporation, a Subsidiary, or any one or more subunits of the Corporation or of any Subsidiary. The Performance Goals may be made relative to the performance of other corporations. The Performance Goals applicable to any award to a Covered Employee will be based on, and described in terms of specified levels of, growth in, or ratios involving, one or more of the following criteria:

(a)	earnings per share;
(b)	total revenue;
(c)	net interest income
(d)	noninterest income;

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(e)	net income;
(f)	net income before tax;
(g)	noninterest expense
(h)	efficiency ratio;
(i)	return on equity;
(j)	return on assets;
(k)	economic profit added;
(l)	loans;
(m)	deposits;
(n)	tangible equity;
(o)	assets
(p)	net charge-offs; and
(q)	nonperforming assets

     If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Corporation, or the manner in which it conducts its business, or other events or circumstances render the Performance Goals unsuitable, the Committee may in its discretion modify such Performance Goals or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable, except in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the Award under Section 162(m) of the Internal Revenue Code of 1986, as amended. In such case, the Committee will not make any modification of the Performance Goals or minimum acceptable level of achievement.

     2.24 Performance Period. The term “Performance Period” shall mean such one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be relevant in connection with one or more Awards of Performance Shares or Performance Units.

     2.25 Performance Shares. The term “Performance Shares” shall mean an Award denominated in Common Shares and contingent upon attainment of one or more Performance Goals by the Corporation or a Subsidiary or any subunit of the Corporation or of any Subsidiary over a Performance Period.

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     2.26 Performance Units. The term “Performance Units” shall mean a bookkeeping entry that records a unit equal to $1.00 awarded pursuant to Section 10 of this Plan, which are contingent upon attainment of one or more Performance Goals by the Corporation or a Subsidiary or any subunit of the Corporation or of any Subsidiary over a Performance Period.

     2.27 Plan. The term “Plan” shall mean this KeyCorp 2004 Equity Compensation Plan as from time to time hereafter amended in accordance with Section 21.1.

     2.28 Restricted Stock. The term “Restricted Stock” shall mean Common Shares of the Corporation delivered to an Employee pursuant to an Award subject to such restrictions, conditions and contingencies as the Committee may provide in the relevant Award Instrument, including (a) the restriction that the Employee not sell, transfer, otherwise dispose of, or pledge or otherwise hypothecate the Restricted Stock during the applicable Restriction Period, (b) the requirement that the Restriction Period will terminate or terminate early upon achievement of specified Performance Goals, (c) the requirement that, subject to the provisions of Section 11, if the Employee’s employment terminates so that the Employee is no longer employed by the Corporation or any Subsidiary before the end of the applicable Restriction Period, the Employee will offer to sell to the Corporation at the Acquisition Price each Common Share of Restricted Stock held by the Employee at the Employment Termination Date with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed, and (d) such other restrictions, conditions, and contingencies, if any, as the Committee may provide in the Award Instrument with respect to that Restricted Stock.

     2.29 Restricted Stock Units. The term “Restricted Stock Units” shall mean an Award pursuant to Section 9 of this Plan, whereby an Employee receives the right to receive Common Shares or the cash equivalent thereof at a specified time in the future in consideration of the performance of services, but subject to such restrictions, conditions and contingencies as the Committee may provide in the relevant Award Instrument.

     2.30 Restriction Period. The term “Restriction Period” with respect to an Award of Restricted Stock shall mean the period selected by the Committee and specified in the Award Instrument with respect to that Restricted Stock during which the Employee may not sell, transfer, otherwise dispose of, or pledge or otherwise hypothecate that Restricted Stock.

     2.31 Stock Appreciation Right. The term “Stock Appreciation Right” or “SAR” shall mean a right granted pursuant to Section 7 of this Plan, and will include Tandem Stock Appreciation Rights, Limited Stock Appreciation Rights and Free-Standing Stock Appreciation Rights.

     2.32 Subsidiary. The term “Subsidiary” shall mean any corporation, partnership, joint venture, or other business entity in which the Corporation owns, directly or indirectly, 50 percent or more of the total combined voting power of all classes of stock (in the case of a corporation) or other ownership interest (in the case of any entity other than a corporation).

     2.33 Tandem Stock Appreciation Right. The term “Tandem Stock Appreciation Right “or “Tandem SAR” shall mean an Award granted to an Employee with respect to all or any part

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of any Option that entitles the holder thereof to receive from the Corporation, upon exercise of the Tandem SAR and surrender of the related Option, or any portion of the Tandem SAR and the related Option, an amount equal to 100%, or such lesser percentage as the Committee may determine at the time of the grant of the Award, of the excess, if any, measured at the time of the exercise of the Tandem SAR, of (a) the Fair Market Value of the Common Shares subject to the Option with respect to which the Tandem SAR is exercised over (b) the Exercise Price of those Common Shares under the Option.

     2.34 Transferee. The term “Transferee” shall mean, with respect to Nonqualified Options only, any person or entity to which an Employee is permitted by the Committee to transfer or assign all or part of his or her Options.

     3. Administration. The Plan shall be administered by the Committee. No Award may be made under the Plan to any member or alternate member of the Committee. The Committee shall have authority, subject to the terms of the Plan, (a) to determine the Employees who are eligible to participate in the Plan, the type, size, and terms of Awards to be granted to any Employee, the time or times at which Awards shall be exercisable or at which restrictions, conditions, and contingencies shall lapse, and the terms and provisions of the instruments by which Awards shall be evidenced, (b) to establish any other restrictions, conditions, and contingencies on Awards in addition to those prescribed by the Plan, (c) to interpret the Plan, and (d) to make all determinations necessary for the administration of the Plan.

     The construction and interpretation by the Committee of any provision of the Plan or any Award Instrument delivered pursuant to the Plan and any determination by the Committee pursuant to any provision of the Plan or any Award Instrument shall be final and conclusive. No member or alternate member of the Committee shall be liable for any such action or determination made in good faith.

     The Committee may act only by a majority of its members. Any determination of the Committee may be made, without a meeting, by a writing or writings signed by all of the members of the Committee. In addition, the Committee may authorize any one or more of their number or any officer of the Corporation to execute and deliver documents on behalf of the Committee and the Committee may delegate to one or more employees, agents, or officers of the Corporation, or to one or more third party consultants, accountants, lawyers, or other advisors, such ministerial duties related to the operation of the Plan as it may deem appropriate.

     4. Eligibility. Awards may be granted to Employees of the Corporation or any Subsidiary selected by the Committee in its sole discretion. The granting of any Award to an Employee shall not entitle that Employee to, nor disqualify the Employee from, participation in any other grant of an Award.

     5. Stock Subject to the Plan.

     5.1 Type of Stock. The stock that may be issued and distributed to Employees in connection with Awards granted under the Plan shall be Common Shares and may be authorized and unissued Common Shares, treasury Common Shares, or Common Shares acquired on the

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open market specifically for distribution under the Plan, as the Board of Directors may from time to time determine.

     5.2 Number of Shares Available. Subject to adjustment as provided in Section 5.3 and Section 14 of this Plan, the number of Common Shares that may be issued or transferred (a) upon the exercise of Options or Stock Appreciation Rights, (b) as Restricted Stock and released from a substantial risk of forfeiture thereof, (c) in payment of Restricted Stock Units, (d) in payment of Performance Shares or Performance Units that have been earned, (e) in payment of dividend equivalents paid with respect to Awards made under the Plan or (f) in payment of any other award pursuant to this Plan, following the Effective Date, shall not exceed in the aggregate 70,000,000 Common Shares, plus any shares described in Section 5.3.

     5.3 Adjustments. The number of shares available in Section 5.2 above shall be adjusted to account for shares relating to any awards that expire or are forfeited or that are transferred, surrendered or relinquished upon the payment of any exercise price by the transfer to the Corporation of Common Shares or upon satisfaction of any withholding amount, regardless of whether such expiration, forfeiture, transfer, surrender or relinquishment relates to awards that were granted under this Plan or any other plan of the Corporation, or before or after the Effective Date. Upon payment in cash of the benefit provided by any award granted under this Plan or under any other plan of the Corporation, at any time before or after the Effective Date, any shares that were covered by that award shall again be available for issue or transfer hereunder.

     5.4 Limits. Notwithstanding anything in this Section 5, or elsewhere in this Plan to the contrary and subject to adjustment as provided in Section 14 of this Plan:

(a)	the aggregate number of Common Shares actually issued or transferred by the Corporation upon the exercise of Incentive Stock Options shall not exceed 15,000,000 Common Shares;
(b)	no Employee shall be granted Options or Stock Appreciation Rights, in the aggregate, for more than 1,000,000 Common Shares during any one calendar year;
(c)	the number of Common Shares that may be issued as Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units, shall not in the aggregate exceed 14,000,000 Common Shares; and
(d)	in no event shall any Employee in any calendar year receive Awards of Performance Shares, Performance Units and Restricted Stock with Performance Goals having an aggregate maximum value as of their respective dates of grant in excess of $7,500,000.

     6. Stock Options.

     6.1 Type and Date of Grant of Options.

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(a)	The Award Instrument pursuant to which any Incentive Stock Option is granted shall specify that the Option granted thereby shall be treated as an Incentive Stock Option. The Award Instrument pursuant to which any Nonqualified Option is granted shall specify that the Option granted thereby shall not be treated as an Incentive Stock Option.
(b)	The day on which the Committee authorizes the grant of an Incentive Stock Option shall be the date on which that Option is granted.
(c)	The day on which the Committee authorizes the grant of a Nonqualified Option shall be considered the date on which that Option is granted, unless the Committee specifies a later date.
(d)	The Committee reserves the discretion after the date of grant of an Option to provide for (i) the payment of a cash bonus at the time of exercise; (ii) the availability of a loan at exercise; or (iii) the right to tender in satisfaction of the Exercise Price nonforfeitable, unrestricted Common Shares, which are already owned by the Employee and have a value at the time of exercise that is equal to the Exercise Price.

     6.2 Exercise Price. The Exercise Price under any Option shall be not less than the Fair Market Value of the Common Shares subject to the Option on the date the Option is granted.

     6.3 Option Expiration Date. The Option Expiration Date under any Option shall be not later than ten years from the date on which the Option is granted.

     6.4 Exercise of Options.

(a)	Except as otherwise provided in Section 11, an Option may be exercised only while the Employee to whom the Option was granted is in the employ of the Corporation or of a Subsidiary. Subject to this requirement, each Option shall become exercisable in one or more installments at the time or times provided in the Award Instrument evidencing the Option. Once any portion of an Option becomes exercisable, that portion shall remain exercisable until expiration or termination of the Option. An Employee to whom an Option is granted or, with respect to Nonqualified Options, the Employee’s Transferee may exercise the Option from time to time, in whole or in part, up to the total number of Common Shares with respect to which the Option is then exercisable, except that no fraction of a Common Share may be purchased upon the exercise of any Option.
(b)	The Award Instrument may provide that specified Performance Goals must be achieved as a condition to the exercise of any Option.
(c)	An Employee or, with respect to Nonqualified Options, any Transferee electing to exercise an Option shall deliver to the Corporation (i) the Exercise Price payable in accordance with Section 6.5 and (ii) written notice of the election that states the

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	number of whole Common Shares with respect to which the Employee is exercising the Option.
(d)	The exercise of an Option will result in the cancellation on a share-by-share basis of any Tandem SAR and Limited SAR authorized under Section 7 of this Plan.

     6.5 Payment For Common Shares. Upon exercise of an Option by an Employee or, with respect to Nonqualified Options, any Transferee, the Exercise Price shall be payable by the Employee or Transferee in cash or in such other form of consideration as the Committee determines may be accepted, including without limitation, securities or other property, or any combination of cash, securities or other property or, to the extent permitted by applicable law, by delivery by the Employee or Transferee (with the written notice of election to exercise) of irrevocable instructions to a broker registered under the 1934 Act promptly to deliver to the Corporation the amount of sale or loan proceeds to pay the Exercise Price. The Committee, in its sole discretion, may grant to an Employee or, with respect to Nonqualified Options, any Transferee the right to transfer Common Shares acquired upon the exercise of a part of an Option in payment of the Exercise Price payable upon immediate exercise of a further part of the Option.

     6.6 Conversion of Incentive Stock Options. The Committee may at any time in its sole discretion take such actions as may be necessary to convert any outstanding Incentive Stock Option (or any installments or portions of installments thereof) into a Nonqualified Option with or without the consent of the Employee to whom that Incentive Stock Option was granted and whether or not that Employee is an Employee at the time of the conversion.

     6.7 Dividend Equivalents. The Committee may, at or after the date on which an Option is granted, provide for the payment of dividend equivalents to the holder of the Option on either a current or deferred or contingent basis or may provide that such equivalents will be credited against the Exercise Price.

     7. Stock Appreciation Rights.

     7.1 Grant of SARs.

(a) The Committee may authorize the granting (i) to any holder of an Option, of Tandem SARs and Limited SARs in respect of Options granted hereunder, and (ii) to any Employee, of Free-Standing SARs. A Tandem SAR may be granted only in connection with an Option. A Tandem SAR granted in connection with an Incentive Stock Option may be granted only when the Incentive Stock Option is granted. A Tandem SAR granted in connection with a Nonqualified Option may be granted either when the related Nonqualified Option is granted or at any time thereafter including, in the case of any Nonqualified Option resulting from the conversion of an Incentive Stock Option, simultaneously with or after the conversion. Similarly, a Limited SAR may be granted only in connection with an Option. A Limited SAR

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granted in connection with an Incentive Stock Option may be granted only when the Incentive Stock Option is granted. A Limited SAR granted in connection with a Nonqualified Option may be granted either when the related Nonqualified Option is granted or at any time thereafter including, in the case of any Nonqualified Option resulting from the conversion of an Incentive Stock Option, simultaneously with or after the conversion. A Free-Standing SAR is not granted in tandem with an Option.

     7.2 Exercise of SARs.

(a)	An Employee electing to exercise an SAR shall deliver written notice to the Corporation of the election identifying the SAR and, with respect to Tandem SARs and Limited SARs, the related Option with respect to which the Tandem SAR or Limited SAR was granted to the Employee, and specifying the number of whole Common Shares with respect to which the Employee is exercising the SAR. Upon exercise of a Tandem SAR or Limited SAR, the related Option shall be deemed to be surrendered to the extent that the Tandem SAR or Limited SAR is exercised.
(b)	The Committee may specify in the Award Instrument pursuant to which SARs are granted that the amount payable on exercise of an SAR may not exceed a maximum specified by the Committee in the Award Instrument.
(c)	No SAR granted under this Plan may be exercised more than ten years from the date on which the SAR is granted.
(d)	The Committee may provide in the Award Instrument to which SARs are granted for the payment to the holder of the SAR of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis.
(e)	SARs may be exercised only (i) on a date when the SAR is “in the money” (i.e., when there would be positive consideration received upon exercise of the SAR), (ii) with respect to Tandem SARs and Limited SARs, at a time and to the same extent as the related Option is exercisable, (iii) with respect to Tandem SARs and Limited SARs, unless otherwise provided in the relevant Award Instrument, by surrender to the Corporation, unexercised, of the related Option or any applicable portion thereof, and (iv) in compliance with all restrictions set forth in or specified by the Committee.
(f)	The Committee may specify in the Award Instrument pursuant to which any SAR is granted waiting periods and restrictions on permissible exercise periods in addition to the restrictions on exercise set forth in this Section 7.
(g)	The Committee may specify in the Award Instrument pursuant to which SARs are granted Performance Goals that must be achieved as a condition of the exercise of such SARs.

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(h) Each Award Instrument pursuant to which Free-Standing SARs are granted shall specify in respect of each Free-Standing SAR, a Base Price, which shall be equal to or greater than the Fair Market Value of the Common Shares subject to each Free-Standing SAR on the date the Free-Standing SAR is granted.

     7.3 Payment for SARs. The amount payable upon exercise of an SAR may be paid by the Corporation in cash or in whole Common Shares (taken at their Fair Market Value at the time of exercise of the SAR) or in a combination of cash and whole Common Shares and may either grant to the Employee or retain in the Committee the right to elect among those alternatives; provided, however, that in no event shall the total number of Common Shares that may be paid to an Employee pursuant to the exercise of a Tandem SAR or Limited SAR exceed the total number of Common Shares subject to the related Option.

     7.4 Termination, Amendment, or Suspension of SARs. SARs shall terminate and may no longer by exercised upon the first to occur of (a) with respect to Tandem SARs and Limited SARs, the exercise or termination of the related Option, (b) any termination date specified by the Committee at the time of grant of the SAR, or (c) with respect to Tandem SARs and Limited SARs, the transfer by the Employee of the related Option. In addition, the Committee may in its sole discretion at any time before the occurrence of a Change of Control amend, suspend, or terminate any SAR theretofore granted under the Plan without the holder’s consent; provided that, in the case of amendment, no provision of the SAR, as amended, shall be in conflict with any provision of the Plan.

     8. Restricted Stock.

     8.1 Conditions on Restricted Stock.

(a) In addition to the restrictions on disposition of Restricted Stock during the Restriction Period and the requirement to offer Restricted Stock to the Corporation if the Employee’s employment terminates during the Restriction Period, the Committee may provide in the Award Instrument with respect to any Award of Restricted Stock other restrictions, conditions, and contingencies, which other restrictions, conditions, and contingencies, if any, may relate to, in addition to such other matters as the Committee may deem appropriate, the achievement of Performance Goals, the Employee’s personal performance, corporate performance, or the performance of any subunit of the Corporation or any Subsidiary, in each case measured in such manner as may be specified by the Committee. The Committee may impose different restrictions, conditions, and contingencies on separate Awards of Restricted Stock granted to different Employees, whether at the same or different times, and on separate Awards of Restricted Stock granted to the same Employee, whether at the same or different times. The Committee may specify a single Restriction Period for all of the Restricted Stock subject to any particular Award Instrument or may specify multiple Restriction Periods so that the restrictions with respect to the Restricted Stock subject to the Award will expire in stages according to a schedule specified by the Committee and set forth in the Award Instrument.

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(b)	The Committee may specify in the Award Instrument pursuant to which the Restricted Stock is granted, that any or all dividends or other distributions paid on Restricted Stock during the Restriction Period be automatically deferred and reinvested in additional shares of Restricted Stock, which may be subject to the same restrictions as the underlying Award.
(c)	If so directed by the Committee, all certificates representing Restricted Stock may be held in custody by the Corporation until all restrictions thereon shall have lapsed, together with a stock power or powers executed by the Employee in whose name such certificates are registered, endorsed in blank and covering such Common Shares.

     8.2 Payment for Restricted Stock. Each Employee to whom an Award of Restricted Stock is made shall pay the Acquisition Price, if any, with respect to that Restricted Stock to the Corporation not later than 30 days after the delivery to the Employee of the Award Instrument with respect to that Restricted Stock. If any Employee fails to pay any Acquisition Price with respect to an Award of Restricted Stock within that 30 day period, the Employee’s right under that Award shall be forfeited.

     8.3 Rights as a Shareholder. Upon payment by an Employee in full of the Acquisition Price for Restricted Stock under an Award, the Employee shall have all of the rights of a shareholder with respect to the Restricted Stock, including voting and dividend rights, subject only to such restrictions and requirements referred to in Section 8.1 as may be incorporated in the Award Instrument with respect to that Restricted Stock.

     9. Restricted Stock Units.

     9.1 Grant of Restricted Stock Units.

(a)

Each grant or sale of Restricted Stock Units shall provide that the Restricted Stock Units shall be subject to deferral and a risk of forfeiture, as determined by the Committee on the date the Restricted Stock Units are granted, and may provide for the earlier lapse or other modification of such period in the event of a Change in Control.

(b)

Each Employee to whom an Award of Restricted Stock Units is made shall pay the Acquisition Price, if any, with respect to those Restricted Stock Units to the Corporation not later than 30 days after delivery to the Employee of the Award Instrument with respect to the Restricted Stock Units being granted. If any Employee fails to pay any Acquisition Price with respect to an Award of Restricted Stock Units within that 30 day period, the Employee’s right under that Award shall be forfeited.

     9.2 Payment for Restricted Stock Units. The Corporation shall pay each Employee who is entitled to payment for Restricted Stock Units an amount for those Restricted Stock Units

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(a) in cash, (b) in Common Shares, or (c) any combination of the foregoing, and may either grant to the Employee or retain in the Committee the right to elect among those alternatives.

     9.3 Rights as a Shareholder. During any time that the Restricted Stock Units are outstanding, the Employee shall have no right to transfer any rights under his or her Award, shall have no rights of ownership in the Common Shares deliverable upon payment of the Restricted Stock Units and shall have no right to vote them, but the Committee may, at or after the date on which the Restricted Stock Units are granted, authorize the payment of dividend equivalents on such Common Shares underlying the Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional Common Shares.

     10. Performance Shares and Performance Units.

     10.1 Discretion of Committee with Respect to Performance Shares and Performance Units. The Committee shall have full discretion to select the Employees to whom Awards of Performance Shares and Performance Units are made, the number of Performance Shares or Performance Units to be granted to any Employee so selected, the kind and level of the Performance Goals and whether those Performance Goals are to apply to the Corporation, a Subsidiary, or any one or more subunits of the Corporation or of any Subsidiary, and the dates on which each Performance Period shall begin and end, and to determine the form and provisions of the Award Instrument to be used in connection with any Award of Performance Shares or Performance Units.

     10.2 Conditions to Payment for Performance Shares and Performance Units.

(a)

Unless otherwise provided in the relevant Award Instrument, an Employee must be employed by the Corporation or a Subsidiary on the last day of a Performance Period to be entitled to payment for any Performance Shares or Performance Units.

(b)

The Committee may establish, from time to time, one or more formulas to be applied against the Performance Goals to determine whether all, some portion but less than all, or none of the Performance Shares or Performance Units granted with respect to a Performance Period are treated as earned pursuant to any Award. An Employee will be entitled to receive payments with respect to any Performance Shares and Performance Units only to the extent that those Performance Shares or Performance Units, as the case may be, are treated as earned under one or more such formulas.

     10.3 Payment for Performance Shares and Performance Units. The Corporation shall pay each Employee who is entitled to payment for Performance Shares or Performance Units earned with respect to any Performance Period an amount for those Performance Shares or Performance Units, as the case may be, (a) in cash, (b) in Common Shares, (c) in Restricted Stock, or (d) any combination of the foregoing, and may either grant to the Employee or retain in the Committee the right to elect among those alternatives. Restricted Stock issued by the

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Corporation in payment of Performance Shares or Performance Units shall be subject to all the provisions of Section 8.

     11. Termination of Employment. After an Employee’s Employment Termination Date, the rules set forth in this Section 11 shall apply. All factual determinations with respect to the termination of an Employee’s employment that may be relevant under this Section 11 shall be made by the Committee in its sole discretion.

     11.1 Termination Other Than Upon Death, Disability, or Certain Retirements. Upon any termination of an Employee’s employment for any reason other than the Employee’s retirement (under any retirement plan of the Corporation or of a Subsidiary) as provided in Section 11.2, disability as provided on Section 11.3, or death as provided in Section 11.4:

(a) Unless otherwise provided in the relevant Award Instrument, the Employee or, with respect to Nonqualified Options, any Transferee shall have the right (i) during the period ending six months after the Employment Termination Date, but not later than the Option Expiration Date, to exercise any Nonqualified Options and related Tandem SARs and Limited SARs that were outstanding on the Employment Termination Date, if and to the same extent as those Options, Tandem SARs and Limited SARs were exercisable by the Employee or Transferee (as the case may be) on the Employment Termination Date, (ii) during the period ending three months after the Employment Termination Date, but not later than the Option Expiration Date, to exercise any Incentive Stock Options and related Tandem SARs and Limited SARs that were outstanding on the Employment Termination Date, if and to the same extent as those Options and Tandem SARs and Limited SARs were exercisable by the Employee on the Employment Termination Date, and (iii) during the period ending six months after the Employment Termination Date, but not later than the date any Free-Standing SAR expires, to exercise any Free-Standing SARs that were outstanding on the Employment Termination Date, if and to the same extent as those Free-Standing SARs were exercisable by the Employee on the Employment Termination Date. Notwithstanding the preceding sentence, if within two years after a Change of Control an Employee’s Employment Termination Date occurs other than as a result of a Voluntary Resignation, unless otherwise provided in the relevant Award Instrument, the Employee or, with respect to Nonqualified Options, any Transferee shall have the right, during the Extended Period, but not later than the Option Expiration Date or the date of expiration of Free-Standing SARs, as the case may be, to exercise any Options and related SARs that were outstanding on the Employment Termination Date, if and to the same extent as those Options and SARs were exercisable by the Employee or Transferee (as the case may be) on the Employment Termination Date (even though, in the case of Incentive Stock Options, exercise of those Options more than three months after the Employment Termination Date may cause the Option to fail to qualify for Incentive Stock Option treatment under the Internal Revenue Code of 1986, as amended). As used in the immediately preceding sentence, the term “Extended Period” means the longer of the period that the Option or SAR would otherwise

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	be exercisable in the absence of the immediately preceding sentence or the period ending with the second anniversary date of the Change of Control and the term “Voluntary Resignation” means that the Employee shall have terminated his or her employment with the Corporation and its Subsidiaries by voluntarily resigning at his or her own instance without having been requested to so resign by the Corporation or its Subsidiaries except that any resignation by the Employee will not be deemed to be a Voluntary Resignation if, after the Change of Control, the Employee’s base salary was reduced or the Employee was required to relocate his or her principal place of employment more than 35 miles;
(b)	Unless otherwise provided in the relevant Award Instrument, the Employee shall offer for resale at the Acquisition Price, if any, to the Corporation each Common Share of Restricted Stock and each Restricted Stock Unit held by the Employee at the Employment Termination Date with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed; and
(c)	Unless otherwise provided in the relevant Award Instrument, the Employee shall forfeit each Performance Share with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed.

     11.2 Termination Due To Certain Retirements. Upon any termination of an Employee’s employment with the Corporation or any Subsidiary under circumstances entitling the Employee to immediate payment of normal retirement or early retirement benefits under any retirement plan of the Corporation or of a Subsidiary (whether the Employee elects to commence or defer receipt of such payment):

(a) Unless otherwise provided in the relevant Award Instrument, the Employee or, with respect to Nonqualified Options, any Transferee shall have the right (i) to exercise, from time to time during the period ending three years after the Employment Termination Date, but not later than the Option Expiration Date, any Nonqualified Options and related Tandem SARs and Limited SARs that were outstanding on the Employment Termination Date, if and to the same extent as those Options, Tandem SARs and Limited SARs were exercisable by the Employee or Transferee (as the case may be) on the Employment Termination Date, (ii) to exercise, from time to time during the period ending three years after the Employment Termination Date, but no later than the Option Expiration Date, any Incentive Stock Options and related Tandem SARs and Limited SARs that were outstanding on the Employment Termination Date, if and to the same extent as those Options, Tandem SARs and Limited SARs were exercisable by the Employee on the Employment Termination Date (even though exercise of the Incentive Stock Option more than three months after the Employment Termination Date may cause the Option to fail to qualify for Incentive Stock Option treatment under the Internal Revenue Code of 1986, as amended) and (iii) to exercise, from time to time during the period ending three years after the Employment Termination Date, but not later than the date any Free-Standing SAR expires, any Free-Standing SARs that were outstanding on the Employment

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	Termination Date, if and to the same extent as those Free-Standing SARs were exercisable by the Employee on the Employment Termination Date;
(b)	The relevant Award Instrument may provide that the Employee or, with respect to Nonqualified Options, any Transferee will have the right to exercise, from time to time until not later than the expiration of the relevant Award, Nonqualified Stock Options, Incentive Stock Options and SARs to the extent such Options and SARs become exercisable by their terms prior to the expiration of the relevant Award (or such earlier date as specified in the relevant Award Instrument), notwithstanding the fact that such Options and SARs were not exercisable in whole or in part (whether because a condition to exercise had not yet occurred or a specified time period had not yet elapsed or otherwise) on the Employment Termination Date;
(c)	Unless otherwise provided in the relevant Award Instrument, the Employee shall offer for resale at the Acquisition Price, if any, to the Corporation each Common Share of Restricted Stock and each Restricted Stock Unit held by the Employee at the Employment Termination Date with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed; and
(d)	Unless otherwise provided in the relevant Award Instrument, the Employee shall forfeit each Performance Share with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed.

     11.3 Termination Due To Disability. Upon any termination of an Employee’s employment due to disability:

(a) Unless otherwise provided in the relevant Award Instrument, the Employee, the Employee’s attorney in fact or legal guardian or, with respect to Nonqualified Options, any Transferee shall have the right (i) to exercise, from time to time during the period ending three years after the Employment Termination Date, but not later than the Option Expiration Date, any Nonqualified Options and related Tandem SARs and Limited SARs that were outstanding on the Employment Termination Date, if and to the same extent those Options, Tandem SARs and Limited SARs were exercisable by the Employee or Transferee (as the case may be) on the Employment Termination Date, (ii) to exercise, from time to time during the period ending three years after the Employment Termination Date, but no later than the Option Expiration Date, any Incentive Stock Options and related Tandem SARs and Limited SARs that were outstanding on the Employment Termination Date, if and to the same extent as those Options and Tandem SARs and Limited SARs were exercisable by the Employee on the Employment Termination Date (even though exercise of the Incentive Stock Option more than one year after the Employment Termination Date may cause the Option to fail to qualify for Incentive Stock Option treatment under the Internal Revenue Code of 1986, as amended), and (iii) to exercise, from time to time during the period ending three years after the Employment Termination Date, but not later than the

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	date any Free-Standing SAR expires, any Free-Standing SARs that were outstanding on the Employment Termination Date, if and to the same extent as those Free-Standing SARs were exercisable by the Employee on the Employment Termination Date;
(b)	Unless otherwise provided in the relevant Award Instrument, the Employee shall offer for resale at the Acquisition Price, if any, to the Corporation each Common Share of Restricted Stock and each Restricted Stock Unit held by the Employee at the Employment Termination Date with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed; and
(c)	Unless otherwise provided in the relevant Award Instrument, the Employee shall forfeit each Performance Share with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed.

     11.4 Death of an Employee. Upon the death of an Employee while employed by the Corporation or any Subsidiary or within any of the periods referred to in any Section 11.1, 11.2, or 11.3 during which any particular Option or SAR remains potentially exercisable:

(a)	Unless otherwise provided in the relevant Award Instrument, if the Option Expiration Date of any Nonqualified Option that had not expired before the Employee’s death would otherwise expire before the first anniversary of the Employee’s death, that Option Expiration Date shall automatically be extended to the first anniversary of the Employee’s death or such other date as provided in the relevant Award Instrument provided that the Option Expiration Date shall not be extended beyond the date that is ten years from the date on which the Option was granted;
(b)	Unless otherwise provided in the relevant Award Instrument, the Employee’s executor or administrator, the person or persons to whom the Employee’s rights under any Option or SAR are transferred by will or the laws of descent and distribution or, with respect to Nonqualified Options, any Transferee shall have the right to exercise, from time to time during the period ending three years after the date of the Employee’s death, but not later than the expiration of the relevant Award, any Options and SARs that were outstanding on the date of the Employee’s death, if and to the same extent as those Options and SARs were exercisable by the Employee or Transferee (as the case may be) on the date of the Employee’s death;
(c)	Unless otherwise provided in the relevant Award Instrument, the Employee shall offer for resale at the Acquisition Price, if any, to the Corporation each Common Share of Restricted Stock and each Restricted Stock Unit held by the Employee at the Employment Termination Date with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed; and

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(d) Unless otherwise provided in the relevant Award Instrument, the Employee shall forfeit each Performance Share with respect to which, as of that date, any restrictions, conditions, or contingencies have not lapsed.

     12. Acceleration Upon Change of Control. Unless otherwise specified in the relevant Award Instrument, upon the occurrence of a Change of Control of the Corporation, each Award theretofore granted to any Employee that then remains outstanding shall be automatically treated as follows: (a) any outstanding Option shall become immediately exercisable in full, (b) Tandem SARs and Limited SARs related to any such Options shall also become immediately exercisable in full, (c) any outstanding Free-Standing SAR shall become exercisable in full, (d) the Restriction Period with respect to all outstanding Awards of Restricted Stock shall immediately terminate, (e) the restrictions, conditions or contingencies on any Restricted Stock Units shall immediately terminate, and (f) the restrictions, conditions, or contingencies on any Performance Shares and Performance Units shall be modified in such manner as the Committee may specify to give the Employee the benefit of those Performance Shares or Performance Units through the date of Change of Control.

     13. Restrictions.

     13.1 Assignment and Transfer. Nonqualified Options may not be assigned or transferred (other than by will or by the laws of descent and distribution) unless the Committee, in its sole discretion, determines to allow such assignment or transfer and, if the Committee determines to allow any such assignment or transfer, the Transferee shall have the power to exercise such Nonqualified Option in accordance with the terms of the Award and the provisions of this Plan. No Incentive Stock Option, SAR, Restricted Stock during the Restriction Period, Restricted Stock Unit or Performance Share may be transferred other than by will or by the laws of descent and distribution. During an Employee’s lifetime, only the Employee (or in the case of incapacity of an Employee, the Employee’s attorney in fact or legal guardian) may exercise any Incentive Stock Option or SAR.

     13.2 Further Restrictions. The Committee may specify at the date of grant of any Award that part or all of the Common Shares that are (i) to be issued or transferred by the Corporation upon the exercise of Options or SARs, upon the termination of any period of deferral applicable to Restrict Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the Restriction Period, will be subject to further restrictions on transfer.

     14. Adjustment Upon Changes in Common Shares. Automatically and without Committee action, in the event of any stock dividend, stock split, or share combination of the Common Shares, or by appropriate Committee action in the event of any reclassification, recapitalization, merger, consolidation, other form of business combination, liquidation, or dissolution involving the Corporation or any spin-off or other distribution to shareholders of the Corporation (other than normal cash dividends), appropriate adjustments to (a) the maximum number of Common Shares that may be issued under the Plan pursuant to Section 5, the maximum number of Common Shares that may be issued under the Plan pursuant to Incentive Stock Options as provided in Section 5, the maximum number of Common Shares that may be

21

issued under the Plan as Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units, and the maximum number of Common Shares with respect to which any Employee may receive Awards during any calendar year or calendar years as provided in Section 5, and (b) the number and kind of shares subject to, the price per share under, and the terms and conditions of each then outstanding Award shall be made to the extent necessary and in such manner that the benefits of Employees under all then outstanding Awards shall be maintained substantially as before the occurrence of such event. Any such adjustment shall be conclusive and binding for all purposes of the Plan and shall be effective, in the event of any stock dividend, stock split, or share combination, as of the date of such stock dividend, stock split, or share combination, and in all other cases, as of such date as the Committee may determine. In the event of any such transaction or event, the Committee, in its discretion, may provide in substitution for any or all outstanding Awards under this Plan, such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all Awards so replaced.

     15. Purchase For Investment. Each person acquiring Common Shares pursuant to any Award may be required by the Corporation to furnish a representation that he or she is acquiring the Common Shares so acquired as an investment and not with a view to distribution thereof if the Corporation, in its sole discretion, determines that such representation is required to insure that a resale or other disposition of the Common Shares would not involve a violation of the Securities Act of 1933, as amended, or of applicable blue sky laws. Any investment representation so furnished shall no longer be applicable at any time such representation is no longer necessary for such purposes.

     16. Withholding of Taxes. The Corporation will withhold from any payments of cash made pursuant to the Plan such amount as is necessary to satisfy all applicable Federal, state, and local withholding tax obligations. The Committee may, in its discretion and subject to such rules as the Committee may adopt from time to time, permit or require an Employee (or other person exercising an Option with respect to withholding taxes upon exercise of such Option) to satisfy, in whole or in part, any withholding tax obligation that may arise in connection with the grant of an Award, the lapse of any restrictions with respect to an Award, the acquisition of Common Shares pursuant to any Award, or the disposition of any Common Shares received pursuant to any Award by having the Corporation hold back some portion of the Common Shares that would otherwise be delivered pursuant to the Award or by delivering to the Corporation an amount equal to the withholding tax obligation arising with respect to such grant, lapse, acquisition, or disposition in (a) cash, (b) Common Shares, or (c) such combination of cash and Common Shares as the Committee may determine. The Fair Market Value of the Common Shares to be so held back by the Company or delivered by the Employee shall be determined as of the date on which the obligation to withhold first arose.

     17. Harmful Activity. If an Employee shall engage in any “harmful activity” prior to or within six months after termination of employment with Key, then (a) any shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units held by the Employee that have vested, (b) any Profits realized upon the exercise of any Covered Option or SAR and (c) any Profits realized upon the sale of any vested shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, on or after one year prior to the termination of

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employment with Key shall inure to the Corporation. The aforementioned restriction shall not apply in the event that employment with Key terminates within two years after a Change of Control of the Corporation if any of the following have occurred: a relocation of an Employee’s principal place of employment more than 35 miles from an Employee’s principal place of employment immediately prior to the Change of Control, a reduction in an Employee’s base salary after a Change of Control, or termination of employment under circumstances in which an Employee is entitled to severance benefits or salary continuation or similar benefits under a change of control agreement, employment agreement, or severance or separation pay plan. If any vested shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units or any Profits realized upon the exercise of any Covered Option or SAR or upon the sale of any vested shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units inure to the benefit of the Corporation in accordance with the first sentence of this paragraph, an Employee shall provide all such forfeited Awards and pay all such Profits to the Corporation within 30 days after first engaging in any harmful activity and all Awards that have not yet vested and all unexercised Covered Options or SARs shall immediately be forfeited and canceled. Consistent with the provisions of Section 3 of the Plan, the determination by the Committee as to whether an Employee engaged in “harmful activity” prior to or within six months after termination of employment with Key shall be final and conclusive. Unless otherwise provided in the relevant Award Instrument, the provisions of Section 17 shall apply to all Awards made under the Plan.

     A “harmful activity” shall have occurred if an Employee shall do any one or more of the following:

(a)	Use, publish, sell, trade or otherwise disclose Non-Public Information of Key unless such prohibited activity was inadvertent, done in good faith and did not cause significant harm to Key.
(b)	After notice from the Corporation, fail to return to Key any document, data, or thing in an Employee’s possession or to which an Employee has access that may involve Non-Public Information of Key.
(c)	After notice from the Corporation, fail to assign to Key all right, title, and interest in and to any confidential or non-confidential Intellectual Property which an Employee created, in whole or in part, during employment with Key, including, without limitation, copyrights, trademarks, service marks, and patents in or to (or associated with) such Intellectual Property.
(d)	After notice from the Corporation, fail to agree to do any acts and sign any document reasonably requested by Key to assign and convey all right, title, and interest in and to any confidential or non-confidential Intellectual Property which an Employee created, in whole or in part, during employment with Key, including, without limitation, the signing of patent applications and assignments thereof.

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(e)	Upon an Employee’s own behalf or upon behalf of any other person or entity that competes or plans to compete with Key, solicit or entice for employment or hire any Employee of Key.
(f)	Upon an Employee’s own behalf or upon behalf of any other person or entity that competes or plans to compete with Key, call upon, solicit, or do business with (other than business which does not compete with any business conducted by Key) any customer of Key an Employee called upon, solicited, interacted with, or became acquainted with, or learned of through access to information (whether or not such information is or was non-public) while employed at Key unless such prohibited activity was inadvertent, done in good faith, and did not involve a customer whom an Employee should have reasonably known was a customer of Key.
(g)	Upon an Employee’s own behalf or upon behalf of any other person or entity that competes or plans to compete with Key, engage in any business activity in competition with Key in the same or a closely related activity that an Employee was engaged in for Key during the one year period prior to the termination of employment.

     For purposes of this Section 17:

     “Covered Option or SAR” means any Option or SAR granted under this Plan unless the granting resolution expressly excludes the Option or SAR from the provisions of this Section 17.

     “Intellectual Property” shall mean any invention, idea, product, method of doing business, market or business plan, process, program, software, formula, method, work of authorship, or other information, or thing.

     “Key” shall mean the Corporation and its Subsidiaries collectively.

     “Non-Public Information” shall mean, but is not limited to, trade secrets, confidential processes, programs, software, formulas, methods, business information or plans, financial information, and listings of names (e.g., employees, customers, and suppliers) that are developed, owned, utilized, or maintained by an employer such as Key, and that of its customers or suppliers, and that are not generally known by the public.

     “Profit” shall mean, (1) with respect to any Covered Option or SAR, the spread between the Fair Market Value of a Common Share on the date of exercise and the exercise price or the Base Price, as the case may be, multiplied by the number of shares exercised under the Covered Option or SAR; and (2) with respect to any shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, any profit realized upon the sale of any Common Shares that were acquired upon the vesting of such Awards.

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     18. Awards in Substitution for Awards Granted by Other Companies. Awards, whether Incentive Stock Options, Nonqualified Options, SARs, Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, may be granted under the Plan in substitution for awards held by employees of a company who become Employees of the Corporation or a Subsidiary as a result of the merger or consolidation of the employer company with the Corporation or a Subsidiary, or the acquisition by the Corporation or a Subsidiary of the assets of the employer company, or the acquisition by the Corporation or a Subsidiary of stock of the employer company as a result of which it becomes a Subsidiary. The terms, provisions, and benefits of the substitute Awards so granted may vary from the terms, provisions and benefits set forth in or authorized by the Plan to such extent as the Committee at the time of the grant may deem appropriate to conform, in whole or in part, to the terms, provisions, and benefits of the awards in substitution for which they are granted.

     19. Legal Requirements. No Awards shall be granted and the Corporation shall have no obligation to make any payment under the Plan, whether in Common Shares, cash, or any combination thereof, unless such payment is, without further action by the Committee, in compliance with all applicable Federal and state laws and regulations, including, without limitation, the United States Internal Revenue Code and Federal and state securities laws.

     20. Duration and Termination of the Plan. The Plan shall become effective and shall be deemed to have been adopted on the Effective Date; provided, however, that if the Plan is not approved by the affirmative vote of the holders of the requisite number of outstanding Common Shares on or prior to December 31, 2004, the Plan shall be void and of no further effect. The Plan shall remain in effect until the date that is 10 years from the Effective Date. All grants made on or prior to such date of termination will continue in effect thereafter subject to the terms thereof and of this Plan.

     21. Miscellaneous.

     21.1 Amendments. The Board of Directors, or a duly authorized committee thereof, may alter or amend the Plan from time to time prior to its termination in any manner the Board of Directors, or such duly authorized committee, may deem to be in the best interests of the Corporation and its shareholders, except that no amendment may be made without shareholder approval if shareholder approval is required by any applicable securities law or tax law, or is required by the rules of any exchange on which the Common Shares of the Corporation are traded or, if the Common Shares are not listed on an exchange, by the rules of the registered national securities association through whose inter-dealer quotation system the Common Shares are quoted. The Committee shall have the authority to amend these terms and conditions applicable to outstanding Awards (a) in any case where expressly permitted by the terms of the Plan or of the relevant Award Instrument or (b) in any other case with the consent of the Employee to whom the Award was granted. Except as expressly provided in the Plan or in the Award Instrument evidencing the Award, the Committee may not, without the consent of the holder of an Award granted under the Plan, amend the terms and conditions applicable to that Award in a manner adverse to the interests of the Employee.

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     21.2 Deferral. The Committee also may permit Employees to elect to defer the issuance of Common Shares or the settlement of Awards in cash under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan. The Committee also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.

     21.3 Conditions. The Committee may condition the grant of any Award or combination of Awards authorized under this Plan on the surrender or deferral by the Employee of his or her right to receive a cash bonus or other compensation otherwise payable by the Corporation or a Subsidiary to the Employee.

     21.4 Acceleration. In case of termination of employment by reason of death, disability or normal or early retirement, or in the case of hardship or other special circumstances, of an Employee who holds an Option or SAR not immediately exercisable in full, or any Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the any period of deferral has not been completed, or any Performance Shares or Performance Units which have not been fully earned, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 13(b) of this Plan, the Committee may, in its sole discretion, accelerate the time at which such Option or SAR may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such period of deferral will end or the time at which such Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such Award.

     22. Plan Noncontractual. Nothing herein contained shall be construed as a commitment to or agreement with any person employed by the Corporation or a Subsidiary to continue such person’s employment with the Corporation or the Subsidiary, and nothing herein contained shall be construed as a commitment or agreement on the part of the Corporation or any Subsidiary to continue the employment or the annual rate of compensation of any such person for any period. All Employees shall remain subject to discharge to the same extent as if the Plan had never been put into effect.

     23. Interest of Employees. Any obligation of the Corporation under the Plan to make any payment at any future date merely constitutes the unsecured promise of the Corporation to make such payment from its general assets in accordance with the Plan, and no Employee shall have any interest in, or lien or prior claim upon, any property of the Corporation or any Subsidiary by reason of that obligation.

     24. Fractional Shares. The Corporation will not be required to issue any fractional Common Shares pursuant to this Plan. The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.

     25. Foreign Employees. In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for awards to Employees who are foreign nationals or who are employed by the Corporation or any Subsidiary

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outside of the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Corporation may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the shareholders of the Corporation.

     26. Claims of Other Persons. The provisions of the Plan shall in no event be construed as giving any person, firm, or corporation any legal or equitable right against the Corporation or any Subsidiary, their officers, employees, agents, or directors, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan.

     27. Absence of Liability. No member of the Board of Directors of the Corporation or a Subsidiary, of the Committee, of any other committee of the Board of Directors, or any officer or Employee of the Corporation or a Subsidiary shall be liable for any act or action under the Plan, whether of commission or omission, taken by any other member, or by any officer, agent, or Employee, or except in circumstances involving his bad faith or willful misconduct, for anything done or omitted to be done by himself.

     28. Severability. The invalidity or unenforceability of any particular provision of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom.

     29. Governing Law. The provisions of the Plan shall be governed and construed in accordance with the internal substantive laws of the State of Ohio.

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EX-10.19

Exhibit 10.19

AMENDMENT
TO THE KEYCORP
DIRECTOR DEFERRED

COMPENSATION PLAN

     WHEREAS, KeyCorp has established the KeyCorp Director Deferred Compensation Plan (the “Plan”), a nonqualified plan of deferred compensation for Directors of KeyCorp, and

     WHEREAS, the Board of Directors of KeyCorp has authorized amendments to the Plan, and

     WHEREAS, in conjunction with the enactment of the American Jobs Creation Act of 2004, the Board of Directors of KeyCorp has determined it desirable to preserve Plan participants’ earned and vested Plan benefits in accordance with the law in effect prior to the enactment of the American Jobs Creation Act of 2004 and accordingly has authorized the freezing of the Plan to preserve such benefits as of December 31, 2004. The Board of Directors of KeyCorp has accordingly directed the execution of this Amendment to effectuate the expressed intent of the Board.

     NOW, THEREFORE, pursuant to such action of the Board, the Plan is hereby frozen with regard to any additional accruals, deferrals, and contributions to the Plan after December 31, 2004 as follows:

1. A new Article VI has been added to the Plan to provide the following:

“ARTICLE VI
AMENDMENT TO FREEZE

6.1 No New Plan Deferrals. As of January 1, 2005 the Plan shall be frozen with regard to all new accruals, deferrals, and contributions to the Plan after December 31, 2004 and all Participants’ Plan benefits that are earned and vested as of December 31, 2004 shall be administered in accordance with the terms of the Plan as frozen and with the requirements of the law in effect prior to the enactment of Section 409A of the Code.”

2. The amendment set forth in Paragraphs 1 shall be effective as of December 31, 2004.

3. Except as otherwise amended herein, the Plan shall remain in full force and effect.

     IN WITNESS WHEREOF, KeyCorp has caused this Amendment to the Plan to be executed by its duly authorized officer as of this 28^th day of December 2004.

KEYCORP
By:	/s/ Thomas E. Helfrich
Title:	Executive Vice President

EX-10.26

Exhibit 10.26

RESTATED AMENDMENT
TO THE KEYCORP
EXCESS CASH BALANCE PENSION PLAN

     WHEREAS, KeyCorp has established the KeyCorp Excess Cash Balance Pension Plan (the “Plan”), a nonqualified plan of deferred compensation for a certain select group of KeyCorp employees, and

     WHEREAS, the Board of Directors of KeyCorp has authorized its Compensation Committee to permit amendments to the Plan, and

     WHEREAS, in conjunction with the enactment of the American Jobs Creation Act of 2004, the Compensation Committee of the Board of Directors of KeyCorp determined it desirable to preserve those earned and vested Plan benefits of December 31, 2004 in accordance with the law in effect prior to the enactment of the American Jobs Creation Act of 2004, and accordingly, has authorized the freezing of the Plan to preserve such vested Plan benefits as of December 31, 2004, and

     WHEREAS, to effectuate a simplified administration of those December 31, 2004 vested and frozen Plan benefits in accordance with the laws in effect prior to the enactment of the Act, as well as to comply with the requirements of the Act with regard to those participant Plan benefits that have not vested as of December 31, 2004, the Compensation Committee has accordingly directed the establishment of a KeyCorp Second Excess Cash Balance Pension Plan.

     NOW, THEREFORE, pursuant to such action of the Compensation Committee, the Amendment to the Plan is hereby restated to clarify that in conjunction with the freezing of the Plan, participants’ not vested Plan benefits as of December 31, 2004 shall be transferred to the KeyCorp Second Excess Cash Balance Pension Plan effective January 1, 2005, as follows:

     1. A new Article XI has been added to the Plan to provide the following:

“ARTICLE XI
AMENDMENT TO FREEZE

11.1 No New Accruals, Deferrals, and Contributions Under the Plan. As of January 1, 2005 the Plan shall be frozen with regard to all new accruals, deferrals, and contributions to the Plan after December 31, 2004 and all Participants’ Plan benefits that are earned and vested as of December 31, 2004 shall be administered in accordance with the terms of the Plan as frozen and with the requirements of the law in effect prior to the enactment of Section 409A of the Code. In conjunction with the foregoing, all Participants’ not vested Plan benefits as of December 31, 2004 shall be transferred to the KeyCorp Second Excess Cash Balance Pension Plan effective January 1, 2005 and shall be administered in accordance with the requirements of the KeyCorp Second Excess Cash Balance Pension Plan.

     2. The amendment set forth in Paragraphs 1 shall be effective as of December 31, 2004.

     3. Except as otherwise amended herein, the Plan shall remain in full force and effect.

     IN WITNESS WHEREOF, KeyCorp has caused this Restated Amendment to the Plan to be executed by its duly authorized officer on January 20, 2005, to be effective as of December 28, 2004.

KEYCORP

By: /s/ Thomas E. Helfrich        
Title: Executive Vice President

EX-10.28

Exhibit 10.28

KEYCORP
SECOND EXCESS CASH BALANCE PENSION PLAN

ARTICLE I
THE PLAN

     The KeyCorp Second Excess Cash Balance Pension Plan (“Plan”), as originally established December 28, 2004 to be effective January 1, 2005, and thereafter amended and restated as of December 31, 2007 and December 31, 2008, is hereby restated to reflect the December 31, 2009 Plan amendment to freeze all new additional accruals under the Plan. The Plan, as structured, is designed to provide certain select employees of KeyCorp with a Plan benefit that is generally equal to the benefit that the employee would have been eligible to receive under the KeyCorp Cash Balance Pension Plan but for the compensation and accrual limitations imposed by Section 401(a)(17) and Section 415 of the Internal Revenue Code of 1986, as amended, when combined with any vested benefit provided to the employee under the KeyCorp Excess Cash Balance Pension Plan. It is the intention of the Plan and it is the understanding of those employees covered under the Plan that the Plan is unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended. It is also the understanding of those employees covered under the Plan that the Plan will be administered in accordance with the requirements of Section 409A of the Code.

ARTICLE II
DEFINITIONS

     2.1 Meanings of Definitions. As used herein, the following words and phrases shall have the meanings hereinafter set forth, unless a different meaning is plainly required by the context:

(a)	“Beneficiary” shall mean the person, persons or entity entitled to receive the Participant’s Plan benefits, if any, that are payable after a Participant’s death.
(b)	“Credited Service” shall be calculated by measuring the period of service commencing on the Participant’s Employment Commencement Date and Re-Employment Commencement Date, if applicable, and ending on the Participant’s Severance from Service Date. Credited Service shall be computed based on each full month that the Employee is employed by an Employer.
(c)	“Compensation” of a Participant for any Plan Year or any partial Plan Year in which the Participant incurs a Severance From Service Date shall mean the entire amount of compensation paid to such Participant during such period by reason of his employment as an Employee, as reported for federal income tax purposes, or which would have been paid except for (1) the timing of an Employer’s payroll processing operations, (2) the Participant’s written election to defer the receipt of compensation during the Plan Year, (3) the provisions of the KeyCorp 401(k) Savings Plan, or (4) the provisions of the KeyCorp Flexible Benefits Plan and/or any transportation reimbursement plan for the applicable Plan year provided, however, the term shall not include:

(i)	any amount attributable to the Participant’s exercise of stock appreciation rights, restricted stock and stock units and the amount of any gain to the Participant upon the exercise of stock options;
(ii)	any amount attributable to the Participant’s receipt of non-cash remuneration whether or not it is included in the Participant’s income for federal income tax purposes;
(iii)	any amount attributable to the Participant’s receipt of moving expenses and any relocation bonus paid to the Participant during the Plan Year;
(iv)	any amount attributable to any severance paid by an Employer or the Corporation to the Participant;
(v)	any amount attributable to fringe benefits (cash and non-cash);
(vi)	any amount attributable to any bonus or payment made as an inducement for the Participant to accept employment with an Employer;
(vii)	any amount attributable to salary deferrals paid to the Participant during the Plan Year, which have been previously included as Compensation under the Plan during the Plan Year or any prior Plan Year;
(viii)	any amount paid to the Participant during the Plan Year which is attributable to interest earned on Compensation deferred under a plan of an Employer or the Corporation; and
(ix)	any amount paid for any period after the Participant’s Termination or Retirement date.
(x)	any amount attributable to deferred cash award payments to the Participant.

     For Plan Years beginning on and after January 1, 2006, only that Compensation which is in excess of the compensation limits mandated under Section 401(a)(17) of the Code shall be utilized in determining the Participant’s Excess Pension Benefit under the provisions of Section 3.2 of the Plan. Notwithstanding the foregoing, however, if the Participant is in a benefits designator 85 or below, then only that Compensation which is in excess of the compensation limits mandated under Section 401(a)(17) of the Code up to a Plan Compensation maximum of $500,000 shall be utilized in determining the Participant’s Excess Pension Benefit under the provisions of Section 3.2 hereof.

     (d) “Corporation” shall mean KeyCorp, an Ohio corporation, its corporate successors, and any corporation or corporations into or with which it may be merged or consolidated.

     (e) “Disability” shall mean (1) a physical or mental disability which prevents a Participant from performing the duties the Participant was employed to perform for his or her Employer when such disability commenced, (2) has resulted in the Participant’s absence from work for 180 qualifying days, and (3) application has been made for the Participant’s disability coverage under the KeyCorp Long Term Disability Plan, and which constitutes a separation from service under the requirements of Section 409A of the Code.

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     (f) “Employee” shall mean a common law employee who is employed by an Employer; provided, however, that the term “Employee” shall not include any person who at the time services are performed is not classified as a common law employee by the Employer even though such person may for federal income tax purposes, federal employment tax purposes, or any other purpose be reclassified by the Employer as a common law employee retroactive to when such services were performed by reason of administrative, judicial, regulatory or other governmental action.

     (g) “Employer” shall mean KeyCorp and all of its subsidiaries or affiliates unless specifically excluded as an Employer for Plan purposes by written action by an officer of the Corporation. An Employer’s participation shall be subject to any and all conditions and requirements made by the Corporation as the Plan Administrator, and each Employer shall be deemed to have appointed the Plan Administrator as its exclusive agent under the Plan.

     (h) “Excess Pension Benefit” shall mean the vested pension benefit payable pursuant to the terms of this Plan to a Participant meeting the eligibility requirements of Section 3.1 of the Plan.

     (i) “Excess Pension Program Benefit” shall mean the Participant’s collective nonqualified pension benefit accrued under the KeyCorp Excess Cash Balance Pension Plan and KeyCorp Second Excess Cash Balance Pension Plan, subject to the terms and conditions of each respective Plan.

     (j) “Executive Supplemental Pension Program Benefit” shall mean the Participants’ collective nonqualified pension benefit accrued under the KeyCorp Executive Supplemental Pension Plan and KeyCorp Second Executive Supplemental Pension Plan, subject to the terms and conditions of each respective Plan.

     (k) “Interest Credit” shall mean the rate at which a Participant’s Opening Account Balance, as provided for under Section 3.3 of the Plan, is periodically increased on a bookkeeping basis. The Interest Credit rate to be allocated to a Participant’s Opening Account Balance shall mirror the Pension Plan’s Interest Credit rate for each applicable Plan Year.

     (l) “Participant” shall mean an Employee who is a participant in the Pension Plan and who is a job grade 86 or above, and is selected by the Corporation to become a Participant in the Plan, and whose participation in the Plan has not been terminated by the Corporation.

     (m) “Pension Plan” shall mean the KeyCorp Cash Balance Pension Plan, as the same shall be in effect on the date of a Participant’s Retirement, death, Disability or other termination of employment.

     (n) “Retirement” shall mean the termination of employment of a Participant under circumstances in which entitle the Participant to receive an Early Retirement or Normal Retirement Date benefit under the KeyCorp Cash Balance Pension Plan, and which constitutes a separation from service as required under Section 409A of the Code.

     (o) “Supplemental Retirement Plan” shall mean the KeyCorp Second Supplemental Retirement Plan (formerly known as the Society Corporation Supplemental Retirement Plan), the KeyCorp Excess Pension Benefit Plan, and the KeyCorp Excess Pension Benefit Plan for Key Executives, with all amendments made thereto.

     (p) “Termination” shall mean the voluntary or involuntary and permanent termination of a Participant’s employment from his or her Employer and any other Employer, whether by resignation or otherwise, and which constitutes a separation from service as required under Section 409A of the Code.

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     All other capitalized and undefined terms used herein shall have the meanings given them in the Pension Plan, unless a different meaning is plainly required by the context.

     The masculine gender includes the feminine, and singular references include the plural, unless the context clearly requires otherwise.

ARTICLE III
EXCESS PENSION BENEFIT

     3.1 Eligibility. A Participant selected by the Corporation to participate in the Plan shall be eligible for an Excess Pension Benefit hereunder if the Participant (i) terminates employment with an Employer on or after age 55 with five or more years of Credited Service, (ii) is terminated from employment with an Employer in conjunction with his or her Disability, or (iii) dies after completing five years of Credited Service and has a Beneficiary who is eligible for a benefit under the Pension Plan.

     A Participant shall also be eligible for an Excess Pension Benefit if the Participant becomes involuntarily terminated from his or her employment with an Employer for reasons other than the Participant’s Discharge for Cause, and (i) as of the Participant’s termination date the Participant has a minimum of twenty-five (25) or more years of Credited Service, (ii) the Participant enters into a written non-solicitation and non-compete agreement with the Employer under terms that are satisfactory to the Employer.

     For purposes of this Section 3.1, hereof, the term “Discharge for Cause” shall mean a Participant’s employment termination that is the result of the Participant’s violation of the Employer’s policies, practices or procedures, violation of city, state, or federal law, or failure to perform his or her assigned job duties in a satisfactory manner. The Employer shall determine whether a Participant has had a Discharge for Cause.

     Notwithstanding any of the forgoing provisions of this Section 3.1, however, a Participant’s eligibility for an Excess Pension Benefit shall be subject to the requirements of Article V of the Plan.

     3.2 Amount of Excess Pension Benefit. The Excess Pension Benefit payable to a Participant shall be in such amount as is required, when added to the excess pension benefit payable in lump sum form to the Participant under the KeyCorp Excess Cash Balance Pension Plan (if any) and the Accrued Benefit payable in lump sum form to the Participant under the Pension Plan as of the Participant’s Retirement or Termination date to produce a lump sum cash aggregate benefit equal to the benefit which would have been payable under the Pension Plan formula in lump sum form to the Participant if the limitations of Section 401(a)(17) of the Code and the limitations of Section 415 of the Code had not been in effect. For purposes of this Section 3.2 hereof, the term “Pension Plan formula” means the method of calculating a Participant’s pension benefit as reflected in Article IV of the Pension Plan and shall not include any Predecessor Plan Grandfathered Benefits formula.

     3.3 Opening Account Balance. Effective January 1, 2005, Participants in the frozen KeyCorp Excess Cash Balance Pension Plan who as of December 31, 2004 were not vested in their Excess Cash Balance Pension Plan benefit shall have their accrued but not vested benefit transferred to this Plan and reflected in a bookkeeping opening account balance (“Opening Account Balance”) established for the Participant. Such Opening Account Balance shall be credited with Interest Credit as of the last day of each calendar quarter, based on the value of the Participant’s Opening Account Balance as of the first day of the applicable quarter. A Participant’s entitlement to this Opening Account Balance

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shall be governed by the eligibility provisions of Section 3.1 of this Plan, and the value of the Opening Account Balance shall be added to and become a part of such Participant’s Excess Pension Benefit, if any, which shall be payable in accordance with the terms of this Plan. The establishment of the Participant’s Plan Opening Account Balance shall terminate the Participant’s entitlement to any benefit under the frozen KeyCorp Excess Cash Balance Pension Plan.

ARTICLE IV
PAYMENT OF EXCESS PENSION BENEFIT

     4.1 Immediate Payment Upon Termination or Retirement of the Participant. Subject to the provisions of Section 4.2, Section 4.4, and Section 4.5 hereof, a Participant shall receive an immediate distribution of his or her Excess Pension Benefit which shall be made within 90 days following the Participant’s (1) attainment of age 55, and (2) upon the Participant’s Termination or Retirement. Such Excess Pension Benefit shall be paid in the form of a single life annuity, unless the Participant elects in writing, a minimum of sixty days prior to the Participant’s distribution date to receive his or her distribution under a different form of payment that is actuarially equivalent to the Participant’s Excess Pension Benefit when paid as a single life annuity payment. The forms of payment from which a Participant may elect shall be identical to those forms of payment provided under the Pension Plan, provided however, that the lump sum payment option available under the Pension Plan shall not be a form of distribution available under this Plan. Such payment method, once elected by the Participant, shall be irrevocable.

     In calculating the Participant’s actuarially equivalent form of distribution the Corporation shall rely upon calculations made by independent actuaries for the Pension Plan, who shall apply the actuarial assumptions and interest rate then in use under the Pension Plan for converting to the form of payment elected by the Participant.

     4.2 Forfeiture of Plan Benefits. Notwithstanding the any other provision of this Article VI, however, if the Participant engages in any Harmful Activity prior to or within twelve months of his or her Termination or Retirement date, then by operation of this Section 4.2 hereof and without any further notice to the Participant all further Excess Pension Benefits shall be immediately forfeited. In the event that a Participant has received a distribution of his or her Excess Pension Benefit, and the Participant engages in any Harmful Activity prior to or within twelve months of his or her Termination or Retirement, then in such event the Participant shall repay to the Corporation the full amount of such distributed Plan benefits within 60 days following the Participant’s receipt of the Corporation’s notice of such Harmful Activity.

     The foregoing restrictions shall not apply in the event that the Participant’s employment with an Employer terminates within two years after a Change of Control if any of the following have occurred: a relocation of the Participant’s principal place of employment more than 35 miles from the Participant’s principal place of employment immediately prior to the Change of Control, a reduction in the Participant’s base salary after a Change of Control, or termination of employment under circumstances in which the Participant is entitled to severance benefits or salary continuation or similar benefits under a change of control agreement, employment agreement, or severance or separation pay plan.

     The determination by the Corporation as to whether a Participant has engaged in a “Harmful Activity” prior to or within twelve months after the Participant’s Termination or Retirement shall be final and conclusive upon the Participant and upon all other Persons.

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For purposes of this Section 4.2, a “Harmful Activity” shall have occurred if the Participant shall do any one or more of the following:

ii) After notice from KeyCorp, fail to return to KeyCorp any document, data, or thing in his or her possession or to which the Participant has access that may involve Non-Public Information of KeyCorp.

(iii) After notice from KeyCorp, fail to assign to KeyCorp all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Participant created, in whole or in part, during employment with KeyCorp, including, without limitation, copyrights, trademarks, service marks, and patents in or to (or associated with) such Intellectual Property.

(iv) After notice from KeyCorp, fail to agree to do any acts and sign any document reasonably requested by KeyCorp to assign and convey all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Participant created, in whole or in part, during employment with KeyCorp, including, without limitation, the signing of patent applications and assignments thereof.

(v) Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, solicit or entice for employment or hire any KeyCorp employee.

(vi) Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, call upon, solicit, or do business with (other than business which does not compete with any business conducted by KeyCorp) any KeyCorp customer the Participant called upon, solicited, interacted with, or became acquainted with, or learned of through access to information (whether or not such information is or was non-public) while the Participant was employed at KeyCorp unless such prohibited activity was inadvertent, done in good faith, and did not involve a customer whom the Participant should have reasonably known was a customer of KeyCorp.

(vii) Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, after notice from KeyCorp, continue to engage in any business activity in competition with KeyCorp in the same or a closely related activity that the Participant was engaged in for KeyCorp during the one year period prior to the termination of the Participant’s employment.

For purposes of this Section 4.2 the term:

“Intellectual Property” shall mean any invention, idea, product, method of doing business, market or business plan, process, program, software, formula, method, work of authorship, or other information, or thing relating to KeyCorp or any of its businesses.

“Non-Public Information” shall mean, but is not limited to, trade secrets, confidential processes, programs, software, formulas, methods, business information or plans, financial information, and listings of names (e.g., employees, customers, and suppliers) that are developed, owned, utilized, or maintained by an employer such as KeyCorp, and that of its customers or suppliers, and that are not generally known by the public.

“KeyCorp” shall include KeyCorp, its subsidiaries, and its affiliates.

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4.3 Payment Upon Death of the Participant.

     (a) Upon the death of a Participant who has met the service requirement of Section 3.1, but who has not yet commenced distribution of his or her Excess Pension Benefit, there shall be paid to the Participant’s Beneficiary the Excess Pension Benefit that the Participant would have been entitled to receive had the Participant retired on his or her date of death and commenced distribution of his or her Excess Pension Benefit. Such Excess Pension Benefit shall be paid in the form of a single life annuity within 90 days following such date of death.

     (b) In the event of a Participant’s death after the Participant has commenced distribution of his or her Excess Pension Benefit, there shall be paid to the Participant’s Beneficiary only those survivor benefits provided under the form of benefit payment elected by the Participant.

     4.4 Distribution of Small Accounts. Notwithstanding any Plan provision other than Section 4.5 hereof, if the value of a Participant’s vested Excess Pension Benefit as of the Participant’s distribution date is under $50,000, such balance shall be distributed to the Participant as a single lump sum distribution as soon as reasonably practicable but in no event later than 90 days following the Participant’s Termination, Disability, Retirement or date of death (provided the Participant has attained age 55).

     4.5 Payment Limitation for Key Employees. Notwithstanding any other provision of the Plan to the contrary, in the event that the Participant constitutes a “key” employee of the Corporation, (as that term is defined in accordance with Section 416(i) of the Code without regard to paragraph (5) thereof), the distribution of the Participant’s Plan benefit shall not begin before the first day of the seventh month following the Participant’s date of separation from service (or, if earlier, the date of the Participant’s death). To the extent that an amount is deferred under the requirements of this Section 4.5 until the first business day of the seventh month following the Participant’s separation from service date, the payments to which the Participant would otherwise have been entitled during the first six months following the Participant’s separation from service date shall be accumulated and paid to the Executive on the first business day of the seventh month. The term “key employee” and the term “separation from service” shall be defined for Plan purposes in accordance with the requirements of Section 409A of the Code and applicable regulations issued thereunder.

ARTICLE V
DISTRIBUTION OF LARGEST PLAN BENEFIT

     5.1 Distribution of the Largest Plan Benefit. Unless otherwise previously elected by the Participant, a Participant who meets the eligibility requirements for an Excess Pension Program Benefit and who also meets the eligibility requirements for an Executive Supplemental Pension Program Benefit, shall automatically be provided the larger of the two Program benefits (i.e. the greater of the Participant’s Excess Pension Program Benefit or the Participant’s Executive Supplemental Pension Program Benefit).

     In making the determination required under this Section 5.1 hereof, the Corporation shall rely upon calculations made by independent actuaries for the Pension Plan, who shall apply the actuarial

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assumptions and interest rate then in use under the Pension Plan for converting the Participant’s Excess Pension Program Benefit to a single life annuity form of payment. The Participant automatically shall receive the Program Benefit that provides the Participant with the largest monthly single life annuity benefit.

     5.2 Beneficiary Distribution of the Largest Plan Benefit.

(a)	Upon the death of a Participant meeting eligibility requirements for an Excess Pension Program Benefit and the eligibility requirements for an Executive Supplemental Pension Program Benefit there shall be paid to the Participant’s Beneficiary the larger of the two Programs’ death benefit. Such death benefit shall be paid to the Beneficiary in the form of a single life annuity.
(b)	In the event of a Participant’s death after the Participant has commenced distribution of his or her Plan benefit, there shall be paid to the Participant’s Beneficiary only those survivor benefits provided under the form of benefit payment elected by the Participant.

ARTICLE VI
ADMINISTRATION

     6.1 Administration. The Corporation, which shall be the “Administrator” of the Plan for purposes of ERISA and the “Plan Administrator” for purposes of the Code, shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making payments hereunder. The Corporation shall have the sole and absolute discretionary authority and power to carry out the provisions of the Plan, including, but not limited to, the authority and power (a) to determine all questions relating to the eligibility for and the amount of any benefit to be paid under the Plan, (b) to determine all questions pertaining to claims for benefits and procedures for claim review, (c) to resolve all other questions arising under the Plan, including any questions of construction and/or interpretation, and (d) to take such further action as the Corporation deems necessary or advisable in the administration of the Plan. All findings, decisions and determinations of any kind made by the Plan Administrator shall not be disturbed unless the Plan Administrator has acted in an arbitrary and capricious manner. Subject to the requirements of law, the Plan Administrator shall be the sole judge of the standard of proof required in any claim for benefits and in any determination of eligibility for a benefit. All decisions of the Plan Administrator shall be final and binding on all parties. The Plan Administrator may employ such attorneys, investment counsel, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The actions taken and the decisions made by the Plan Administrator hereunder shall be final and binding upon all interested parties subject, however, to the provisions of Section 6.2. The Plan Year, for purposes of Plan administration, shall be the calendar year.

     6.2 Claims Review Procedure. Whenever the Plan Administrator decides for whatever reason to deny, whether in whole or in part, a claim for benefits under the Plan filed by any person (herein referred to as the “Claimant”), the Plan Administrator shall transmit a written notice of its decision to the Claimant, which notice shall be written in a manner calculated to be understood by the Claimant and shall contain a statement of the specific reasons for the denial of the claim and a statement advising the Claimant that, within 60 days of the date on which the Claimant receives such notice, Claimant may obtain review of the decision of the Plan Administrator in accordance with the procedures hereinafter set forth. Within such 60-day period, the Claimant or Claimant’s authorized representative may request that the claim denial be reviewed by filing with the Plan Administrator a written request therefore, which request shall contain the following information:

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(i)	the date on which the request was filed with the Plan Administrator; provided, however, that the date on which the request for review was in fact filed with the Plan Administrator shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (i);
(ii)	the specific portions of the denial of the Claimant’s claim which the Claimant requests the Plan Administrator to review;
(iii)	a statement by the Claimant setting forth the basis upon which Claimant believes the Plan Administrator should reverse its previous denial of the Claimant’s claim and accept the Claimant’s claim as made; and
(iv)	any written material which the Claimant desires the Plan Administrator to examine in its consideration of the Claimant’s position as stated pursuant to paragraph (iii) above.

     In accordance with this Section, if the Claimant requests a review of the Plan Administrator’s decision, such review shall be made by the Plan Administrator, which shall, within sixty (60) days after receipt of the request form, review and render a written decision on the claim containing the specific reasons for the decision including reference to Plan provisions upon which the decision is based. All findings, decisions, and determinations of any kind made by the Plan Administrator shall not be modified unless the Plan Administrator has acted in an arbitrary and capricious manner. Subject to the requirements of law, the Plan Administrator shall be the sole judge of the standard of proof required in any claim for benefits, and any determination of eligibility for a benefit. All decisions of the Plan Administrator shall be binding on the Claimant and upon all other Persons. If the Participant or Beneficiary shall not file written notice with the Plan Administrator at the times set forth above, such individual shall have waived all benefits under the Plan other than as already provided, if any, under the Pla

ARTICLE VII
CORPORATE ASSETS

     All benefits paid under the Plan shall be payable solely out of the general assets of the Corporation. The Corporation shall have no obligation to establish a trust to fund its obligation to pay benefits under the Plan or to insure any benefits under the Plan and nothing contained in the Plan shall create or be construed as creating a trust of any kind or any other fiduciary relationship between the Participant, the Corporation, or any other person. It is the intention of the Corporation and the Participant that the Plan be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended. The Corporation may, in its sole discretion, combine the payment due and owing under the Plan with one or more other payments owing to the Participant or the Participant’s Beneficiary under any other plan, contract, or otherwise (other than any payment due under the Pension Plan) in one check, direct deposit, wire transfer, or other means of payment.

ARTICLE VIII
AMENDMENT AND TERMINATION

     8.1 Termination or Amendment. The Corporation reserves the right to amend or terminate the Plan at any time by action of its Board of Directors, or any duly authorized Committee thereof; provided, however, that no such action shall adversely affect the accrued benefit of any Participant who

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has met the age and service requirements of Section 3.1 or any Participant or Participant’s Beneficiary who is receiving or who is eligible to receive an Excess Pension Benefit hereunder. No amendment or termination will result in an acceleration of Excess Pension Benefits in violation of Section 409A of the Code.

     8.2 Effect of Plan Termination. Notwithstanding anything to the contrary contained in the Plan, the termination of the Plan shall terminate the liability of the Corporation and all Employers to provide for future benefits under the Plan.

ARTICLE IX
MISCELLANEOUS

     9.1 Interest of Participant. The obligation of the Employer and of the Corporation to provide a Participant or the Participant’s Beneficiary with an Excess Pension Benefit under the Plan merely constitutes the unsecured promise of the Employer and the Corporation to make payments as provided herein and no person shall have any interest in, or a lien or prior claim on any property of the Employer or Corporation.

     9.2 Benefits. Nothing in the Plan shall be construed to confer any right or claim upon any person, firm, or corporation other than the Participant and the Participant’s Beneficiary who may become entitled to an Excess Pension Benefit under the Plan.

     9.3 No Present Interest. Subject to any federal statute to the contrary, no right or benefit under the Plan and no right or interest in each Participant’s Plan benefit shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any right or benefit under the Plan, or Participant’s Plan Account shall be void. No right, interest, or benefit under the Plan or the Participant’s Plan benefit shall be liable for or subject to the debts, contracts, liabilities, or torts of the Participant or his or her Beneficiary. If the Participant or the Participant’s Beneficiary becomes bankrupt or attempts to alienate, sell, assign, pledge, encumber, or charge any right under the Plan or the Participant’s Plan benefit, such attempt shall be void and unenforceable.

     9.4 Unfunded Plan. This Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly-compensated employees” within the meaning of Sections 201, 301, and 401 of ERISA, and therefore is exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA.

     9.5 No Commitment as to Employment. Nothing herein contained shall be construed as a commitment or agreement upon the part of any Employee hereunder to continue his or her employment with an Employer, and nothing herein contained shall be construed as a commitment on the part of any Employer to continue the employment, rate of compensation or terms and conditions of employment of any Employee hereunder for any period. All Participants shall remain subject to discharge to the same extent as if the Plan had never been put into effect.

     9.6 Absence of Liability. No member of the Board of Directors of the Corporation or a subsidiary or committee authorized by the Board of Directors, or any officer of the Corporation or a subsidiary shall be liable for any act or action hereunder, whether of commission or omission, taken by

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any other member, or by any officer, agent, or Employee, except in circumstances involving bad faith or willful misconduct for anything done or omitted to be done.

     9.7 Expenses. The Corporation will pay all Plan expenses.

     9.8 Precedent. Except as otherwise specifically agreed to by the Corporation in writing, no action taken in accordance with the Plan by the Corporation shall be construed or relied upon as a precedent for similar action under similar circumstances.

     9.9 Withholding. The Corporation shall withhold any tax which the Corporation in its discretion deems necessary to be withheld from any payment to any Participant, former Participant, or Beneficiary hereunder, by reason of any present or future law.

     9.10 Validity of Plan. The validity of the Plan shall be determined and the Plan shall be construed and interpreted in accordance with the provisions of ERISA, the Code, and, to the extent applicable, the laws of the State of Ohio. The invalidity or illegality of any provision of the Plan shall not affect the validity or legality of any other part thereof.

     9.11 Parties Bound. The Plan shall be binding upon the Employers, Participants, former Participants, and Beneficiaries hereunder, and, as the case may be, the heirs, executors, administrators, successors, and assigns of each of them.

     9.12 Headings. All headings used in the Plan are for convenience of reference only and are not part of the substance of the Plan.

     9.13 Duty to Furnish Information. The Corporation shall furnish to each Participant, former Participant, or Beneficiary any documents, reports, returns, statements, or other information that it reasonably deems necessary to perform its duties imposed hereunder or otherwise imposed by law.

     9.14 Trust Fund. At its discretion, the Corporation may establish one or more trusts, with such trustees as the Corporation may approve, for the purpose of providing for the payment of benefits owed under the Plan. Although such a trust may be irrevocable in the event of insolvency or bankruptcy of the Corporation, such assets will be subject to the claims of the Corporation’s general creditors. To the extent any benefits provided under the Plan are paid from any such trust, the Employer shall have no further obligation to pay them. If not paid from the trust, such benefits shall remain the obligation of the Employer.

     9.15 Notice. Any notice required or permitted under the Plan shall be deemed sufficiently provided if such notice is in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or on the receipt for registration or certification. Mailed notice to the Corporation shall be directed to the Corporation’s address, attention: KeyCorp Compensation and Benefits Department. Mailed notice to a Participant or Beneficiary shall be directed to the individual’s last known address in the Employer’s records

     9.16 Successors. The provisions of this Plan shall bind and inure to the benefit of each Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of an Employer.

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ARTICLE X
CHANGE OF CONTROL

     Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control, a Participant’s interest in his or her Excess Pension Benefit shall vest, and the Participant shall be entitled to receive an immediate distribution of his or her Excess Pension Benefit, if on and after a Change of Control (i) the Participant’s employment is terminated by his or her Employer and any other Employer without cause, or (ii) the Participant resigns within two years following a Change of Control as a result of the Participant’s mandatory relocation, reduction in the Participant’s base salary, reduction in the Participant’s average annual incentive compensation (unless such reduction is attributable to the overall corporate or business unit performance) or the Participant’s exclusion from stock option programs as compared to comparably situated Employees.

     For purposes of this Article X hereof, “Change of Control” shall be deemed to have occurred if under a rabbi trust arrangement established by KeyCorp (“Trust”), as such Trust may from time to time be amended or substituted, the Corporation is required to fund the Trust because a “Change of Control”, as defined in the Trust, has occurred.

ARTICLE XI
COMPLIANCE WITH
SECTION 409A CODE

     The Plan is intended to provide for the deferral of compensation in accordance with the provisions of Section 409A of the Code and regulations and published guidance issued pursuant thereto. Accordingly, the Plan shall be construed and administered in a manner that is consistent with those provisions and may at any time be amended in the manner and to the extent determined necessary or desirable by the Corporation to reflect or otherwise facilitate compliance with such provisions with respect to amounts deferred on and after January 1, 2005. Notwithstanding any provision of the Plan to the contrary, no otherwise permissible election, deferral, accrual, or distribution shall be made or given effect under the Plan that would result in a violation, early taxation or assessment of penalties, or interest of any amount under Section 409A of the Code.

ARTICLE XII
AMENDMENT TO FREEZE

     12.1. Amendment to Freeze all new Plan Eligibility. Notwithstanding the provisions of Section 3.1 of the Plan, as of December 31, 2009, the Plan shall be frozen to all new Participants and the Corporation shall not, on and after that date, select additional new Participants to participate in the Plan. All other provisions of Section 3.1 of the Plan shall remain in full force and effect.

     12.2 Amendment to Freeze Pay Credits and Transition Credits under the Plan. As of January 1, 2010 the Plan shall be frozen with regard to the accrual of new Pay Credits and Transition Credits (as those terms are defined under the KeyCorp Cash Balance Pension Plan) under the Plan, and all

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accruals of Pay Credits and Transition Credits under the Plan shall cease as of December 31, 2009. In conjunction with the freezing of all new accruals of Pay Credits and Transition Credits under the Plan, all Participants’ Plan benefits accrued up through December 31, 2009 shall be calculated under the requirements of Section 3.2 of the Plan as of December 31, 2009, (the Participants’ “Accrued Benefit”), and each Participant’s Accrued Benefit under the Plan shall be reflected in a Plan Account established in the Participants name. As of January 1, 2010, the provisions of Section 3.2 of the Plan will thereafter have no further effect.

     12.3 Continued Accrual of Interest Credit on Participants’ Plan Accounts. Effective January 1, 2010, each Participants’ Plan Accounts shall be increased with Interest Credits (as that term is defined and determined annually under the KeyCorp Cash Balance Pension Plan), as of the last day of each calendar quarter based on the value of the Participant’s Plan Account balance as of the preceding quarter-end Valuation Date. The Interest Credit rate to be allocated to Participants’ Plan Accounts shall mirror the Pension Plan’s Interest Credit rate for each applicable Plan Year. No Interest Credits shall be allocated to a Participant’s Plan Account for any period following the Participant’s benefit commencement date.”

     IN WITNESS WHEREOF, KeyCorp has caused this KeyCorp Second Excess Cash Balance Pension Plan to be executed by its duly authorized officer this 8th day of February 2010, to be effective as of that date.

KEYCORP
By:	/s/ Steven N. Bulloch
Title:		Assistant Secretary

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EX-10.37

Exhibit 10.37

AMENDMENT TO THE
KEYCORP
SUPPLEMENTAL RETIREMENT BENEFIT PLAN

     WHEREAS, KeyCorp has established the KeyCorp Supplemental Retirement Benefit Plan (the “Plan”), and

     WHEREAS, the Board of Directors of KeyCorp has authorized its Compensation Committee to permit amendments to the Plan, and

     WHEREAS, the Compensation Committee of the Board of Directors of KeyCorp has authorized the execution of this Amendment,

     NOW, THEREFORE, pursuant to such action of the Compensation Committee, the Plan is hereby amended as follows:

1. Article I shall be amended to add the following two (2) new definitions immediately prior to Section 1.1:

1.0 (a)	“Average Interest Credit” shall mean the average of the Interest Credits (as defined in the Pension Plan) for the three (3) consecutive calendar years ending with the year of termination.
1.0 (b)	“Average Treasury Rate” shall mean the average of the Treasury Rates (as defined in the Pension Plan) for the three (3) consecutive calendar years ending with the year of termination.

2.	Section 1.2 shall be amended to delete the term Pension Plan in its entirety and to substitute therefore the “KeyCorp Pension Plan (1989 Restatement).”
3.	Section 1.7 is amended to delete in its entirety and to substitute therefore the following:
	“Incentive Compensation Award” shall mean an Incentive Compensation Award granted to a Plan Participant under the KeyCorp Short-Term Incentive Compensation Plan and/or KeyCorp Management Incentive Compensation Plan. For purposes of this Section 1.7 hereof, an Incentive Compensation Award shall be deemed to be for the year in which the Incentive Compensation Award is earned (without regard to the actual time of payment), provided, however, that in no event shall more than one Incentive Compensation Award be included in determining a Participant’s Salary for any applicable year.
4.	Section 1.9 shall be amended to add the words “Cash Balance” immediately following the term KeyCorp and before the term Pension Plan, provided, however, that for purposes of determining a Participant’s monthly Primary Social Security Benefit the term “Pension Plan” shall reference the KeyCorp Pension Plan (1986 Restatement) and further, for purposes of determining the actuarial reduction factors and method of calculating actuarial equivalence the term “Pension Plan” shall reference the KeyCorp Pension Plan (1989 Restatement).
5.	Section 1.12 shall be amended to include the word “Award” immediately following the term “Incentive Compensation” appearing in the second line of Section 1.12.
6.	Section 2.1 shall be amended to include the following new sentence at the end of such Section:
	Effective December 31, 1994, all new participation to the Plan shall cease, and only those individuals designated by the Employer as a Participant prior to December 31, 1994 shall continue to participate in the Plan.
7.	Section 4.2 shall be amended to delete it in its entirety and to substitute therefore the following:
	Upon retirement after his Normal Retirement Date, a Participant shall receive a monthly allowance which shall commence on the first day of the month coincident with or next following the date of such retirement and shall be payable in the form and over such duration as elected by the Participant pursuant to Section 4.5. The amount of each such monthly retirement allowance shall be computed in the same manner as the Normal Retirement Allowance except that Final Average Salary will be determined as of the

	Delayed Retirement Date. A Participant shall not accrue additional Credited Service beyond his Normal Retirement Date, unless the Participant has less than twenty-five (25) years of Credited Service; in which case such Participant shall continue to accrue Credited Service (up to a total of twenty-five (25) years), for purposes or reducing or eliminating the short service reductions of Section 4.1(a) and (b). Credited Service accrued after a Participant’s Normal Retirement Date shall not be used in the multiplier fractions of Section 4.1(a) and (b).
8.	Section 4.3 shall be amended to add the following new paragraph at the end of such Section:
	Notwithstanding the foregoing, in calculating a Participant’s Early Retirement Allowance under the terms of this Section 4.3, the Participant’s monthly retirement allowance at his or her Normal Retirement Date for purposes of this Section 4.3 hereof shall be the Participant’s monthly retirement allowance under the Pension Plan as of the Participant’s Normal Retirement Date. In calculating this Normal Retirement Date benefit, if the Participant is not eligible for, or chooses not to elect his or her monthly retirement allowance under the provisions of Section 6.5(b) of the Pension Plan, such Participant’s Pension Plan benefit as of his or her termination date shall be increased for purposes of this Plan with an imputed Average Interest Credit to reflect the Participant’s benefit at his or her Normal Retirement Date and shall be converted to the form of a Single Life Annuity option using the Average Treasury Rate and the GATT Mortality Table.
9.	Section 4.5 is amended to delete it in its entirety and to substitute the following:

     4.5 (a) Immediate Payment Upon Normal Retirement Date of Participant. Subject to the provisions of Section 4.4 hereof, a Participant meeting the age and service eligibility requirements entitling a Participant to a Normal Retirement Allowance, shall receive an immediate distribution of his or her Normal Retirement Allowance upon the Participant’s retirement or termination of employment in the form of a single life annuity, unless the Participant elects in writing a minimum of thirty days prior to his or her retirement or termination date to receive payment of his or her Normal Retirement Allowance under a different form of payment. The forms of payment from which a Participant may elect shall be identical to those forms of payment specified in the Pension Plan, provided, however, that the lump sum payment option available under the Pension Plan shall not be available under this Plan. Such method of payment, once elected by the Participant, shall be irrevocable.

The same actuarial reduction factors and method of calculating actuarial equivalence under the former KeyCorp Pension Plan (1989 Restatement) shall be applicable under this Plan. Any such optional method of retirement payment shall be the actuarial equivalent of the actual dollar amount of lifetime retirement allowance otherwise payable from this Plan after adjustment for the benefit payable from the Pension Plan and the Primary Social Security Benefit.

     (b) Deferred Benefit Payment. A Participant who retires or terminates his or her employment with an Employer after meeting the age and service requirements for an Early Retirement Allowance, may elect to defer receipt of his or her Plan benefit until a date specified by the Participant, provided, (1) the Participant notifies the Employer in writing of his or her deferral election a minimum of one year prior to the Participant’s retirement or termination of employment, (2) the Participant specifies the future date on which such Plan benefit is to be distributed and (3) the Participant commences distribution of his or her Plan benefit no later than the first day of the month immediately following the Participant’s sixty-fifth (65th) birthday. The election to defer, once made by the Participant, shall be irrevocable.

     Notwithstanding the foregoing, in the case of an “enforceable emergency”, upon written application by the Participant to the Employer, the Employer in its sole discretion, may accelerate the distribution of the Participant’s Plan benefit. For purposes of this Section 4.5, the term “unforeseeable emergency” shall mean an unanticipated emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship to the Participant if such premature distribution were not permitted.

10.	The amendments set forth in Paragraphs 1, 3, 4, 5, 6, 7, 8, and 9 hereof shall be effective as of the first day of January 1995.
11.	The amendments set forth in Paragraph 2 hereof shall be effective as of the first day of January 1994.
12.	Except as specifically amended, the Plan shall remain in full force and effect.

     IN WITNESS WHEREOF, KeyCorp has caused this Amendment to the Plan to be executed by its duly authorized officer to be effective as of the first day of January 1995.

KEYCORP
By:	/s/ Steven N. Bulloch
Title:		Assistant Secretary

EX-10.38

Exhibit 10.38

THE SECOND AMENDMENT TO THE KEYCORP
SUPPLEMENTAL RETIREMENT BENEFIT PLAN

     WHEREAS, KeyCorp has established the KeyCorp Supplemental Retirement Benefit Plan (“Plan”), and

     WHEREAS, the Board of Directors of KeyCorp has authorized its Compensation Committee to approve amendments to the Plan, and

     WHEREAS, the Compensation Committee of the Board of Directors of KeyCorp has authorized the execution of this Second Amendment.

     NOW THEREFORE, pursuant to such action of the Compensation Committee, the Plan is amended as follows:

1. Section 5.1(a) is amended to delete it in its entirety and to substitute therefore the following:

“(a) If a Participant dies in active employment after completion of five or more years of Credited Service and is survived by a surviving spouse, a monthly retirement allowance shall be paid to the Participant’s spouse commencing on the first day of the month coincident with or next following the Participant’s date of death. Each such monthly retirement allowance shall equal 50 percent of the monthly retirement allowance to which the Participant would have been entitled had the Participant retired as of the Participant’s Normal Retirement Date. Such death benefit shall be paid in the form of a single life annuity and shall be subject to distribution any time after the Participant’s earliest retirement date.

For purposes of calculating the death benefit contained within this Section 5.1(a) only, the following shall apply:

(i)	The Participant’s Primary Social Security Benefit shall be calculated as if the Participant had retired as of his Normal Retirement Date,
(ii)	The Participant’s Pension Plan benefit shall be calculated under the provisions of Article IV of the Pension Plan as if the Participant had died on his Normal Retirement Date, with such Pension Plan benefit being increased for purposes of this Section 5.1(a) with an imputed Average Interest Credit to reflect the Participant’s Normal Retirement Date monthly retirement benefit converted to a single life annuity option using the Average Treasury Rate and Gatt Mortality Tables.
(iii)	The monthly retirement allowance paid to the Participant’s spouse upon the Participant’s death shall be reduced if paid prior to the Participant’s Normal Retirement Date using those actuarial factors as are applicable under the KeyCorp Pension Plan (1989 Restatement).”

2.	Section 6.2 shall be amended to delete it in its entirety and to substitute therefore the following:
	“6.2 Termination Prior to Five (5) Years of Credit Service. A Participant who terminates his employment with the Employer because of total and permanent disability and who has completed less than five (5) years of Credited Service at such time shall not be entitled to any benefits from the Plan.”
3.	The first paragraph of Section 6.3 shall be amended to delete it in its entirety and to substitute therefore the following:
	“6.3” Termination After Five (5) Years of Credited Service. A Participant who terminates his employment with the Employer because of total and permanent disability and who has completed five (5) or more years of Credited Service shall be subject to whichever of the following subsections shall be applicable:

(a) If he shall (after the applicable statutory waiting period) be continuously disabled and entitled to Social Security disability benefits until his attainment of age sixty-five (65), then he shall receive a monthly retirement allowance from this Plan commencing upon the first day of the month coincident with or next following the attainment of his sixty-fifth (65th) birthday and payable on the first day of each month thereafter for his remaining lifetime. Such monthly retirement allowance shall be determined in the same manner as for retirement at his Normal Retirement Date, except that:

(i)	Credited Service shall be determined as if the Participant had in fact continued in active employment until his sixty-fifth (65th) birthday, and
(ii)	Final Average Salary shall be determined as of the date of his actual termination of employment due to disability.

(b) If he shall (after the applicable statutory waiting period) not be continually disabled and entitled to Social Security disability benefits until his attainment of age sixty-five (65), he shall not be entitled to a disability benefit from this Plan, but shall be subject to the provisions of Section 6.4 hereof.”

     IN WITNESS WHEREOF, KEYCORP has caused this Amendment to the Plan to be executed by its duly authorized officer as of this first day of August, 1996.

KEYCORP
By:	/s/ Steven N. Bulloch
Title:	Assistant Secretary

EX-10.40

Exhibit 10.40

KEYCORP
SECOND EXECUTIVE SUPPLEMENTAL PENSION PLAN

ARTICLE I

THE PLAN

     The KeyCorp Second Executive Supplemental Pension Plan (the “Plan”), originally established on December 28, 2004 and made effective January 1, 2005, and thereafter amended and restated as of December 31, 2006 to reflect the merger of the KeyCorp Executive Supplemental Pension Plan into the Plan effective December 31, 2006, and thereafter amended on December 31, 2007 and September 1, 2009, is hereby restated to reflect the December 31, 2009 Plan amendment to freeze all new additional accruals under the Plan. It is the intention of KeyCorp and it is the understanding of those employees covered under the Plan, that the Plan constitutes a nonqualified retirement plan for a select group of management or highly compensated employees as described in Section 201(2), Section 301(3) and Section 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) and as such, the Plan is unfunded for tax purposes and for purposes of Title I of ERISA.

ARTICLE II

DEFINITIONS

2.1 Meanings of Definitions. As used herein, the following words and phrases shall have the meanings hereinafter set forth, unless a different meaning is plainly required by the context:

     (a) “Average Interest Credit” shall mean the average of the Interest Credits (as defined in the Pension Plan) for the three (3) consecutive calendar years ending with the year of the Participant’s termination.

     (b) “Average Treasury Rate” shall mean the average of the Treasury Rates (as defined in the Pension Plan) for the three (3) consecutive calendar years ending with the year of the Participant’s termination.

     (c) “Equity/Compensation Award” shall mean one-half (50%) of the value of an award granted under the KeyCorp 2004 Equity Compensation Plan for any Plan year. The term “Equity/Compensation Award” may include “Stock Appreciation Rights”, “Restricted Stock”, “Restricted Stock Units”, “Performance Shares”, and/or “Performance Units”, but shall specifically not include “Options” as those terms have been defined in accordance with the provisions of the KeyCorp 2004 Equity Compensation Plan.”

     (d) “Beneficiary” shall mean the Participant’s surviving spouse who is entitled to receive the benefits hereunder in the event the Participant dies before his or her Supplemental Pension Benefit shall have been distributed to him or her.

     (e) “Credited Service” shall be calculated with respect to a Participant by measuring the period of service commencing on the Participant’s Employment Commencement Date and Re-Employment Commencement Date, if applicable, and ending on the Participant’s Severance from Service Date, and shall be computed based on each full month during which time the Employee is employed by an Employer.

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     (f) “Compensation” for any Plan Year or any partial Plan Year in which the Participant incurs a Severance From Service Date shall mean the entire amount of base compensation paid to such Participant during such period by reason of his employment as an Employee, as reported for federal income tax purposes, or such base compensation which would have been paid except for (1) the timing of an Employer’s payroll processing operations, (2) the Participant’s election to participate in the KeyCorp 401(k) Savings Plan, the KeyCorp Excess 401(k) Savings Plan, a transportation reimbursement plan, and/or the KeyCorp Flexible Benefits Plan, and/or (3) the Participant’s election to defer such base compensation under the KeyCorp Deferred Compensation Plan or the KeyCorp Deferred Savings Plan for the applicable Plan Year, provided, however, that the term Compensation shall specifically exclude:

(i)	any amount attributable to the Participant’s exercise of stock appreciation rights and the amount of any gain to the Participant upon the exercise of stock options;
(ii)	any amount attributable to the Participant’s receipt of non-cash remuneration whether or not it is included in the Participant’s income for federal income tax purposes;
(iii)	any amount attributable to the Participant’s receipt of moving expenses and any relocation bonus paid to the Participant during the Plan Year;
(iv)	any amount attributable to a lump sum severance payment paid by an Employer or the Corporation to the Participant;
(v)	any amount attributable to fringe benefits (cash and non-cash);
(vi)	any amount attributable to any bonus or payment made as an inducement for the Participant to accept employment with an Employer;
(vii)	any amount paid to the Participant during the Plan Year which is attributable to interest earned on compensation which had been deferred under a plan of an Employer or the Corporation; and
(viii)	any amount paid for any period after the Participant’s termination or retirement date, and
(ix)	any deferred cash awards that upon vesting are paid to the Participant.

     (g) “Corporation” shall mean KeyCorp, an Ohio Corporation, its corporate successors, and any corporation or corporations into or with which it may be merged or consolidated.

     (h) “Disability” shall mean (1) a physical or mental disability which prevents a Participant from performing the duties such Participant was employed to perform for his or her Employer when such disability commenced, (2) has resulted in the Participant’s absence from work for 180 qualifying days, and (3) application has been made for the Participant’s disability coverage under the KeyCorp Long Term Disability Plan and which constitutes a separation from service in accordance with the requirements of Section 409A of the Code.

     (i) “Early Retirement Date” shall mean the date of Participant’s retirement from his or her employment with Employer on or after the Participant’s attainment of age 55 and completion of a minimum of ten years of Credited Service, but prior to the Participant’s Normal Retirement Date.

     (j) “Employee” shall mean the employees listed on Exhibit A attached hereto.

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     (k) “Employer” shall mean the Corporation and its subsidiaries unless specifically excluded as an Employer for Plan purposes by written action by an officer of the Corporation and approved by the Corporation. An Employer’s participation in the Plan shall be subject to any conditions or requirements made by the Corporation, and each Employer shall be deemed to appoint the Corporation as its exclusive agent under the Plan as long as it continues as a subsidiary of the Corporation.

     (l) “Excess Pension Program Benefit” shall mean the Participant’s collective nonqualified pension benefit accrued under the KeyCorp Excess Cash Balance Pension Plan and the KeyCorp Second Excess Cash Balance Pension Plan subject to the terms and conditions of each respective Plan.

     (m) “Executive Supplemental Pension Program Benefit” shall mean the Participant’s collective nonqualified pension benefit accrued under the KeyCorp Executive Supplemental Pension Plan and the KeyCorp Second Executive Supplemental Pension Plan subject to the terms and conditions of each respective Plan.

     (n) “Final Average Compensation” shall mean with respect to any Participant the annual average of his or her highest aggregate Compensation for any period of five consecutive years within the period of ten consecutive years immediately prior to his or her retirement, death, or other termination of employment, or any termination of the Plan, whichever first occurs. If the Participant receives no Compensation for any portion of such five years because of an absence from work, there shall be treated as Compensation received during such period of absence an amount equal to the Compensation the Participant would have received had he or she not been absent, such amount to be determined by the Corporation on the basis of such Participant’s Compensation in effect immediately prior to such absence. In computing a Participant’s Final Average Compensation, there shall be included the Participant’s highest five Incentive Compensation Awards granted under an Incentive Compensation Plan during the ten year period immediately preceding the earliest of his or her retirement, death, disability, or other termination of employment.

     (o) “Employment Commencement Date” of a Participant shall mean the date on which he or she first performs an Hour of Service for an Employer.

     (p) “Hour of Service” shall mean any hour for which an Employee is paid or entitled to payment by an Employer for the performance of duties.

     (q) “Incentive Compensation Award” for any Plan year shall collectively mean the short term incentive compensation award (whether in cash or common shares of the Corporation, and whether paid or deferred, or a combination of both) and the long term incentive compensation award (whether in cash or common shares of the Corporation, and whether paid or deferred, or a combination of both) (if any) granted to a Participant under an Incentive Compensation Plan, as follows:

• An incentive compensation award granted under the KeyCorp Annual Incentive Plan, the KeyCorp Short Term Incentive Compensation Plan, the KeyCorp Management Incentive Compensation Plan, and/or such other Employer-sponsored line of business Incentive Compensation Plan which shall constitute an Incentive Compensation Award for the year in which the award is earned (without regard to the actual time of payment).

• An incentive compensation award granted under the KeyCorp Long Term Incentive Compensation Plan (“LTIC Plan”) with respect to any multi-year performance period which shall be deemed to be for the last year of the multi-year period without regard to the actual time of payment of the award. Accordingly, an incentive compensation award granted under the LTIC Plan with respect to the

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	three-year performance period of 1993, 1994, and 1995 will be deemed to be for 1995 (without regard to the actual time of payment), and the entire incentive compensation award under the LTIC Plan for that performance period will be an Incentive Compensation Award for the year 1995.
•	An incentive compensation award granted under the KeyCorp Long Term Incentive Plan (“Long Term Plan”) with respect to any multi-year period which shall be deemed to be for the last year of the multi-year performance period and for the year immediately following such year (without regard to the actual time of payment). Accordingly, an award granted under the Long Term Plan with respect to the four-year performance period of 1998, 1999, 2000, and 2001 shall be deemed to be for the years 2001 and 2002, with one-half the award allocated to the year 2001, and one-half the award allocated to the year 2002.
•	An incentive compensation award granted in the form of restricted stock under the KeyCorp Amended and Restated 1991 Equity Compensation Plan with respect to any multi-year period (but specifically excluding those awards applicable to the 2002-2003 multi-year period), which shall be deemed to be for the year in which the award (grant) is made to the Participant; provided, however, that only those shares of restricted stock that have vested as of the Participant’s termination date shall be utilized for purposes of determining the Participant’s Incentive Compensation Award. The fair market value of such shares as of the date of the restricted stock grant multiplied by the number of vested shares as of the Participant’s termination date shall determine the value of such Incentive Compensation Award for purposes of calculating the Participant’s Supplemental Pension Benefit under the provisions of Article III of the Plan.
	Notwithstanding the foregoing, however, in calculating the Participant’s Supplemental Pension Benefit under the provisions of Article III of the Plan, if it is determined that an incentive compensation award granted under the KeyCorp Amended and Restated 1991 Equity Compensation Plan would produce a larger monthly Supplemental Pension Benefit for the Participant if the award was included in the year in which the award (or any part of the award) initially vested rather than in the year in which the award was granted, then such incentive compensation award shall be included in the year in which the award (or any part of the award) initially vested rather than for the year in which the award was granted.
	If at the time of the Participant’s termination date, the Participant maintains shares of not forfeited restricted stock and such restricted stock later vests in conjunction with the passage of time or with the Corporation’s attainment of certain performance criteria, or otherwise, then as of such subsequent vesting date the Participant’s monthly Supplemental Pension Benefit shall be recalculated to include such newly vested shares. Such newly vested shares shall relate to the award in which such shares were granted under the KeyCorp Amended and Restated 1991 Equity Compensation Plan, and shall be included as a part of that award (based on either the date granted or the date initially vested, whichever date was actually used by the Plan in calculating the Participant’s initial monthly Supplemental Pension Benefit).
	For those limited Participants who, for Plan purposes and in accordance with the provisions of this Section 2.1(q) hereof, received Incentive Compensation Award(s) granted in the form of time-lapsed restricted stock award(s) and/or

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performance shares under the KeyCorp Amended and Restated 1991 Equity Compensation Plan with respect to any multi-year period, the term Incentive Compensation Award shall also include those Equity/Compensation Award(s) granted to the Participant under the 2004 Equity Compensation Plan. An Equity/Compensation Award shall be deemed to be for the year in which the Equity/Compensation Award vests, provided however, that if such Equity/Compensation Award vests after the close of the applicable Award’s award cycle, then such Award will be deemed to for the last day of the final full year of the applicable Award’s award cycle. If an Award contains more than one award cycle, then such Award shall be deemed to be for the last day of the final full year of the longest award cycle of the Award. If the Equity/Compensation Award is in the form of Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, the fair market value of such shares as of the date of the Equity/Compensation Award grant multiplied by the number of vested shares as of the Participant’s termination date shall determine the value of such Incentive Compensation Award for purposes of calculating the Participant’s Supplemental Pension Benefit under the provisions of Article III of the Plan.

     Notwithstanding the foregoing provisions of this Section 2.1(q) hereof, in calculating a Participant’s Incentive Compensation Award for any 12 month period, there shall be included only one award granted under the KeyCorp Amended and Restated 1991 Equity Compensation Plan, or Equity/Compensation Award under the KeyCorp 2004 Equity Compensation Plan included for purposes of determining the Participant’s Incentive Compensation Award for such 12 month period.

•   The (i) value of those vested deferred cash awards granted as a part of the Participants annual incentive compensation award, if any, will be included for purposes of determining the Participant’s Incentive Compensation Award under the Plan as of the year in which the applicable annual incentive compensation is earned (rather than paid), and (ii) 50% of the value of those deferred cash awards granted as a part of the Participant’s long term incentive award, if any, will be included for purposes of determining the Participant’s Incentive Compensation Award under the Plan as of the last business day of the final full year of the applicable long term award’s cycle (rather than vesting date), provided, however, that if an award contains more than one award cycle, then in such event, the value of the award shall be included for purposes of determining the Participant’s Incentive Compensation Award under the Plan as of the last business day of the final full year of the longest award cycle within that award.

     (r) “Incentive Compensation Plan” shall mean the KeyCorp Management Incentive Compensation Plan, the KeyCorp Annual Incentive Plan, the KeyCorp Short Term Incentive Compensation Plan, the KeyCorp Long Term Incentive Compensation Plan, the KeyCorp Long Term Incentive Plan, the KeyCorp Amended and Restated 1991 Equity Compensation Plan, the KeyCorp 2004 Equity Compensation Plan, and/or such other Employer or KeyCorp-sponsored incentive compensation plan that KeyCorp in its sole discretion determines constitutes an “Incentive Compensation Plan” for purposes of this Section 2.1(r), as may be amended from time to time.”

     (s) “Harmful Activity” shall have occurred if the Participant shall do any one or more of the following:

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(i)	Use, publish, sell, trade or otherwise disclose Non-Public Information of KeyCorp unless such prohibited activity was inadvertent, done in good faith and did not cause significant harm to KeyCorp.
(ii)	After notice from KeyCorp, fail to return to KeyCorp any document, data, or thing in his or her possession or to which the Participant has access that may involve Non-Public Information of KeyCorp.
(iii)	After notice from KeyCorp, fail to assign to KeyCorp all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Participant created, in whole or in part, during employment with KeyCorp, including, without limitation, copyrights, trademarks, service marks, and patents in or to (or associated with) such Intellectual Property.
(iv)	After notice from KeyCorp, fail to agree to do any acts and sign any document reasonably requested by KeyCorp to assign and convey all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Participant created, in whole or in part, during employment with KeyCorp, including, without limitation, the signing of patent applications and assignments thereof.
(v)	Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, solicit or entice for employment or hire any KeyCorp employee.
(vi)	Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, call upon, solicit, or do business with (other than business which does not compete with any business conducted by KeyCorp) any KeyCorp customer the Participant called upon, solicited, interacted with, or became acquainted with, or learned of through access to information (whether or not such information is or was non-public) while the Participant was employed at KeyCorp unless such prohibited activity was inadvertent, done in good faith, and did not involve a customer whom the Participant should have reasonably known was a customer of KeyCorp.
(vii)	Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, after notice from KeyCorp, continue to engage in any business activity in competition with KeyCorp in the same or a closely related activity that the Participant was engaged in for KeyCorp during the one year period prior to the termination of the Participant’s employment.
	For purposes of this Section 2.1(s) the term:
	“Intellectual Property” shall mean any invention, idea, product, method of doing business, market or business plan, process, program, software, formula, method, work of authorship, or other information, or thing relating to KeyCorp or any of its businesses.
	“Non-Public Information” shall mean, but is not limited to, trade secrets, confidential processes, programs, software, formulas, methods, business information or plans, financial information, and listings of names (e.g., employees, customers, and suppliers) that are developed, owned, utilized, or maintained by an employer such as KeyCorp, and that of its customers or suppliers, and that are not generally known by the public.
	“KeyCorp” shall include KeyCorp, its subsidiaries, and its affiliates.

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     (t) “Normal Retirement Date” shall mean the first day of the month coinciding with or immediately following a Participant’s 65th birthday or, if later, the fifth anniversary of the Participant’s Employment Commencement Date.

     (u) “Participant” shall mean an Employee employed by an Employer in a position classified as a job grade 89 or above, who is selected by the Corporation to become a Participant in the Plan, and whose participation in the Plan has not been terminated by the Corporation. The Corporation retains the right at all times, in its sole and absolute discretion to determine who shall become and remain a Participant in the Plan.

     (v) “Pension Plan” shall mean the KeyCorp Cash Balance Pension Plan with all amendments that may be made thereto.

     (w) “Separation from Service” shall occur on the earlier of the date on which a Participant quits, retires, is terminated or dies, provided, however, that such date shall conform with the requirements of Section 409A of the Code.

     (x) “Social Security Primary Insurance Amount” shall mean the amount estimated by the Corporation that is expected to be paid to a Participant under the Federal Insurance Contributions Act. Such amount shall be calculated assuming the Participant receives payment at age 65 or the Participant’s Normal Retirement Date, whichever is later, and that he or she receives no earnings for the purpose of calculating this amount after the date of the Participant’s termination of employment. All compensation prior to the Participant’s date of termination of employment with an Employer shall be based upon a salary scale, projected backwards, which is the actual change in the average compensation from year to year, as indexed, and determined by the Social Security Administration.

     (y) “Supplemental Pension Benefit” shall mean the pension benefit payable pursuant to the terms of the Plan to a Participant meeting the eligibility requirements of Section 3.1 of the Plan.

2.2 Construction. Unless the context otherwise indicates, the masculine wherever used shall include the feminine and neuter, the singular shall include the plural, words such as “herein”, “hereof”, “hereby”, “hereunder” and words of similar import shall refer to the Plan as a whole and not any particular part thereof.

     All other capitalized but undefined terms used herein, shall have the meaning given to them in the Pension Plan.

ARTICLE III

SUPPLEMENTAL PENSION BENEFIT

3.1 Eligibility. Subject to the provisions of Article V hereof, a Participant shall be eligible for a Supplemental Pension Benefit hereunder if the Participant (i) retires on or after age 65 with five or more years of Credited Service, (ii) terminates employment with an Employer on or after age 55 with ten or more years of Credited Service, (iii) has a termination of employment from his or her Employer upon becoming Disabled, or (iv) dies after completing five years of Credited Service, and has a Beneficiary who is eligible for a benefit under the Pension Plan.

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A Participant shall also be eligible for an Supplemental Pension Benefit if the Participant becomes involuntarily terminated from his or her employment with an Employer for reasons other than the Participant’s Discharge for Cause, and (i) as of the Participant’s termination date the Participant has a minimum of twenty-five (25) or more years of Credited Service, and (ii) the Participant enters into a written non-solicitation and non-compete agreement under terms that are satisfactory to the Employer.

     For purposes of this Section 3.1, hereof, the term “Discharge for Cause” shall mean a Participant’s employment termination that is the result of the Participant’s violation of the Employer’s policies, practices or procedures, violation of city, state, or federal law, or failure to perform his or her assigned job duties in a satisfactory manner. The Employer shall determine whether a Participant has been Discharged for Cause.

     Notwithstanding any of the forgoing provisions of this Section 3.1, however, a Participant’s eligibility for a Supplemental Pension Benefit shall be subject to the requirements of Article V of the Plan.

3.2 Supplemental Pension Benefit Calculation. The amount of any Supplemental Pension Benefit to be paid to a Participant under the terms of the Plan on or after the Participant’s Normal Retirement Date shall be calculated as follows:

A Participant’s Supplemental Pension Benefit shall equal the difference between “(a)” and“(b)” where:

1.	“(a)” is equal to 2% times the Participant’s years of Credited Service (up to a Plan maximum of 25 years) times the Participant’s Final Average Compensation, and
2.	“(b)” is equal to the sum of:

(i)	the Participant’s accrued and vested annual pension benefit under the Pension Plan calculated as of the participant’s Normal Retirement Date, payable in the form of a single life annuity option, and
(ii)	the Participant’s annual estimated Social Security Primary Insurance Amount payable at the Participant’s Normal Retirement Date.

     For purposes of calculating a Participant’s Supplemental Pension Benefit under this Section 3.2 hereof, the Participant’s “annual pension benefit” under the Pension Plan shall be the Participant’s Accrued Benefit as of the Participant’s termination date calculated in accordance with the provisions of Article IV of the Pension Plan as if such benefit were to be paid in the form of a single life annuity; if the Participant receives his or her Pension Plan benefit under a Predecessor Plan grandfathered formula, such “annual pension benefit” for purposes of this Section 3.2 hereof, shall be the benefit payable to the Participant under the terms of the Pension Plan’s Predecessor Plan grandfathered formula as of the Participant’s termination date, as if such benefit were to be paid in the form of a single life annuity.

3.3 Early Retirement Election. In the event the Participant receives his or her Supplemental Pension Benefit on or after the Participant’s Early Retirement Date but prior to the Participant’s Normal Retirement Date, the Participant’s Supplemental Pension Benefit shall be calculated as provided in accordance with Section 3.2 hereof, provided, however, that in determining the Participant’s annual Pension Plan benefit as of the Participant’s Normal Retirement Date, the Participant’s Accrued Benefit under the Pension Plan as of his or her termination date shall be increased for purposes of this Plan with an imputed Average Interest Credit to reflect the Participant’s Pension Plan benefit at his

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or her Normal Retirement Date and shall be converted to the form of a single life annuity option using the Average Treasury Rate and the GATT Mortality Table. The amount of the Participant’s annual Supplemental Pension Benefit otherwise determined under Section 3.2 and Section 3.3 hereof, shall be reduced by 3.6% for each year that the Participant is between the ages of 55 and 60 and by 4.8% for each year after the Participant attains age 60 to actuarially adjust the commencement of the Participant’s Supplemental Pension Benefit prior to his or her Normal Retirement Date.

3.4 Actuarial Factors. The Supplemental Pension Benefit payable to a Participant or Participant’s Beneficiary in a form other than a single life annuity shall be actuarially equivalent to such single life annuity payment option. In making the determination provided for in this Article III, the Corporation shall rely upon calculations made by the independent actuaries for the Plan, who shall determine actuarially equivalent benefits under the Plan by applying the UP-1984 Mortality Table (set back two years) and using an interest rate of 6%.

3.5 Recalculation as a Result of Harmful Activity. Notwithstanding the foregoing provisions of Section 3.2 and Section 3.3 hereof, the Corporation reserves the right at all times to recalculate a Participant’s Supplemental Pension Benefit, if it is determined that within six months of the Participant’s termination date the Participant engaged in any Harmful Activity, as that term is defined in accordance with Section 2.1(s) of the Plan, which resulted in the forfeiture of all or any portion of the Participant’s restricted share award(s) under the KeyCorp Amended and Restated 1991 Equity Compensation Plan or Equity/Compensation Awards granted under the KeyCorp 2004 Equity Compensation Plan (if applicable). Such recalculation shall relate back to the Participant’s original date of termination, and any Supplemental Pension Benefit payment paid to the Participant in excess of such recalculated Supplemental Pension Benefit amount shall be offset against any future Supplemental Pension Benefit payments to be paid to the Participant.

ARTICLE IV

PAYMENT OF SUPPLEMENTAL PENSION BENEFIT

4.1 Immediate Payment Upon Termination or Retirement of Participant. Subject to the provisions of Section 4.2 and Section 4.3 hereof, a Participant shall receive an immediate distribution of his or her Supplemental Pension Benefit within 90 days following (1) the Participant’s attainment of age 55, and (2) the Participant’s termination of employment under circumstances which constitute a Separation from Service in accordance with the requirements of Section 409A of the Code. Payment of the Participant’s Supplemental Pension Benefit shall be made in the form of a single life annuity, unless the Participant elects in writing a minimum of thirty days prior to his or her termination date to receive payment of his or her Supplemental Pension Benefit under a different form of payment. The forms of payment from which a Participant may elect shall provide a benefit that is actuarially equivalent to the Participant’s single life annuity payment as calculated under the provisions of Section 3.2 hereof, and shall be identical to those forms of payment specified in the Pension Plan, provided, however, that the lump sum payment option available under the Pension Plan shall not be available under this Plan. Such method of payment, once elected by the Participant, shall be irrevocable.

4.2 Deferred Benefit Payment. A Participant may elect to defer the receipt of his or her Supplemental Pension Benefit until a date specified by the Participant, subject to the following requirements: (i) the Participant notifies the Corporation in writing of his or her deferral election a minimum of twelve months prior to the Participant’s termination of employment, (ii) the Participant specifies the future date on which such Supplemental Pension Benefit shall be distributed, (iii) the Participant’s requested deferral period is for a period of not less than five years following the Participant’s

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Separation from Service, and (iv) the Participant commences distribution of his or her Supplemental Pension Benefit no later than the first day of the month immediately following the Participant’s sixty-fifth (65th) birthday. The election to defer, once made by the Participant, shall be irrevocable.

     4.3 Payment Limitation for Key Employees. Notwithstanding any other provision of the Plan to the contrary, in the event that the Participant constitutes a “key” employee of the Corporation, (as that term is defined in accordance with Section 416(i) of the Code without regard to paragraph (5) thereof), distributions of the Participant’s Supplemental Pension Benefit may not be made before the first day of the seventh month following the Participant’s date of separation from service (or, if earlier, the date of the Participant’s death). The term “key employee” and the term “separation from service” shall be defined for Plan purposes in accordance with the requirements of Section 409A of the Code and applicable regulations issued thereunder.

4.4 Payment Upon the Death of the Participant.

     (a) Upon the death of a Participant who has met the service requirements of Section 3.1, but who has not yet commenced distribution of his or her Supplemental Pension Benefit, there shall be paid to the Participant’s Beneficiary 50% of the Supplemental Pension Benefit which the Participant would have been entitled to receive under the provisions of Section 3.2 of the Plan calculated as if the Participant had retired on his or her Normal Retirement Date and elected to receive his or her Supplemental Pension Benefit.

     For purposes of this Section 4.4(a) only, the following shall apply:

(i)	The Participant’s Credited Service shall be calculated as of the Participant’s date of death.
(ii)	The Participant’s Pension Plan benefit shall be calculated under the provisions of Article IV of the Pension Plan as if the Participant had died on his or her Normal Retirement Date, with such Pension Plan benefit being increased for purposes of this Section 4.4(a) with an imputed Average Interest Credit to reflect what the Participant’s Pension Plan benefit would have been as of the Participant’s Normal Retirement Date; such Pension Plan benefit shall be converted to a single life annuity option using the Average Treasury Rate and Gatt Mortality Table.
(iii)	The Participant’s Social Security Primary Amount shall be calculated as if the Participant had retired as of his or her Normal Retirement Date.

     Payment of this death benefit shall be made in the form of a single life annuity and will be subject to distribution any time after the Participant’s Early Retirement Date, which shall be calculated in accordance with the actuarial reduction provisions contained within Section 3.3 hereof, if paid prior to the Participant’s Normal Retirement Date.

     (b) In the event of a Participant’s death after the Participant has commenced distribution of his or her Supplemental Pension Benefit, there shall be paid to the Participant’s Beneficiary only those survivor benefits provided under the form of benefit payment elected by the Participant.

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ARTICLE V

DISTRIBUTION OF LARGEST PLAN BENEFIT

5.1 Distribution of Largest Plan Benefit. Subject to any previous benefit election made by the Participant under the KeyCorp Executive Supplemental Pension Plan, a Participant who meets the eligibility requirements for an Executive Supplemental Pension Program Benefit and who is also eligible for an Excess Pension Program Benefit shall automatically be provided at the Participant’s termination the larger of the two Program benefits (i.e. the greater of the Participant’s Excess Pension Program Benefit or the Executive Supplemental Pension Program Benefit).

     In making the determination required under this Section 5.1 hereof, the Corporation shall rely upon calculations made by independent actuaries for the Pension Plan, who shall apply the actuarial assumptions and interest rate then in use under the Pension Plan for converting the Participant’s Excess Pension Program Benefit to a single life annuity form of payment. The Participant automatically will receive the Program Benefit that provides the Participant with the largest monthly single life annuity benefit.

5.2 Beneficiary Distribution of Largest Plan Benefit.

(a)	Upon the death of a Participant meeting eligibility requirements for an Excess Pension Program Benefit and the eligibility requirements for an Executive Supplemental Pension Program Benefit there shall be paid to the Participant’s Beneficiary the larger of the two Programs’ death benefit. Such death benefit shall be paid to the Beneficiary in the form of a single life annuity.
(b)	In the event of a Participant’s death after the Participant has commenced distribution of his or her Plan benefit, there shall be paid to the Participant’s Beneficiary only those survivor benefits provided under the form of benefit payment elected by the Participant.

ARTICLE VI

ADMINISTRATION AND CLAIMS PROCEDURE

6.1 Administration. The Corporation, which shall be the “Administrator” of the Plan for purposes of ERISA and the “Plan Administrator” for purposes of the Code, shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making payments hereunder. The Corporation shall have the sole and absolute discretionary authority and power to carry out the provisions of the Plan, including, but not limited to, the authority and power (a) to determine all questions relating to the eligibility for and the amount of any benefit to be paid under the Plan, (b) to determine all questions pertaining to claims for benefits and procedures for claim review, (c) to resolve all other questions arising under the Plan, including any questions of construction and interpretation, and (d) to take such further action as the Corporation shall deem necessary or advisable in the administration of the Plan. All findings, decisions, and determinations of any kind made by the Corporation shall not be disturbed unless the Corporation has acted in an arbitrary and capricious manner. Subject to the requirements of law, the Corporation shall be the sole judge of the standard of proof required in any claim for benefits and in any determination of eligibility for a benefit. All decisions of the Corporation shall be final and binding on all parties. The Corporation may employ such attorneys, investment counsel, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The actions taken and the decisions made by the Corporation hereunder shall be final and binding upon

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all interested parties subject, however, to the provisions of Section 6.2. The Plan Year, for purposes of Plan administration, shall be the calendar year.

6.2 Claims Review Procedure. Whenever the Corporation decides for whatever reason to deny, whether in whole or in part, a claim for benefits under this Plan filed by any person (herein referred to as the “Claimant”), the Corporation shall transmit a written notice of its decision to the Claimant, which notice shall be written in a manner calculated to be understood by the Claimant and shall contain a statement of the specific reasons for the denial of the claim and a statement advising the Claimant that, within 60 days of the date on which he or she receives such notice, he or she may obtain review of the decision of the Corporation in accordance with the procedures hereinafter set forth. Within such 60-day period, the Claimant or his or her authorized representative may request that the claim denial be reviewed by filing with the Corporation a written request therefore, which request shall contain the following information:

(a)	the date on which the request was filed with the Corporation; provided, however, that the date on which the request for review was in fact filed with the Corporation shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (a);
(b)	the specific portions of the denial of his claim which the Claimant requests the Corporation to review;
(c)	a statement by the Claimant setting forth the basis upon which he believes the Corporation should reverse its previous denial of his claim and accept his claim as made; and
(d)	any written material which the Claimant desires the Corporation to examine in its consideration of his position as stated pursuant to paragraph (c) above.

     In accordance with this Section 6.2, if the Claimant requests a review of the Corporation’s decision, such review shall be made by the Corporation, or at the election of the Corporation, by the Claims Review Committee, who shall, within sixty (60) days after receipt of the request form, review and render a written decision on the claim containing the specific reasons for the decision including reference to Plan provisions upon which the decision is based. All findings, decisions, and determinations of any kind made by the Corporation shall not be modified unless the Corporation has acted in an arbitrary and capricious manner. Subject to the requirements of a law, the Corporation shall be the sole judge of the standard of proof required in any claim for benefits, and any determination of eligibility for a benefit. All decisions of the Corporation shall be binding on the Claimant and upon all other Persons. If the Participant, or Beneficiary shall not file written notice with the Corporation at the times set forth above, such individual shall have waived all benefits under the Plan other than as already provided, if any, under the Plan.

ARTICLE VII

FUNDING

     All benefits under the Plan shall be payable solely in cash from the general assets of the Corporation or a subsidiary, and Participants and Beneficiaries shall have the status of general unsecured creditors of the Corporation. The obligations of the Corporation to make distributions in accordance with Article III and Article IV of the Plan constitute a mere promise to make payments in the future. The Corporation shall have no obligation to establish a trust or fund to fund its obligation to pay benefits under the Plan or to insure any benefits under the Plan. Notwithstanding any provision of this Plan, the

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Corporation may, in its sole discretion, combine the payment due and owing under this Plan with one or more other payments owing to a Participant or a Participant’s Beneficiary under any other plan, contract, or otherwise (other than any payment due under the Pension Plan), in one check, direct deposit, wire transfer, or other means of payment. Finally, it is the intention of the Corporation and the Participants that the Plan be unfunded for tax purposes and for the purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

ARTICLE VIII

AMENDMENT AND TERMINATION

     The Corporation reserves the right to amend or terminate the Plan at any time by action of its Board of Directors or a duly authorized committee of such Board of Directors; provided, however, that no such action shall adversely affect the benefit accrued up to the date of the Plan amendment or termination for any Participant who has met the age and service requirements of Section 3.1 and Section 4.1 of the Plan, or any Participant or Participant’s Beneficiary who is receiving, or who is eligible to receive a Supplemental Pension Benefit hereunder, unless an equivalent benefit is provided under another plan maintained by the Corporation. No amendment or termination will result in an acceleration of Supplemental Pension Benefits in violation of Section 409A of the Code.

ARTICLE IX

MISCELLANEOUS

9.1 Interest of Participant. The obligation of the Corporation under the Plan to provide the Participant or the Participant’s Beneficiary with a Supplemental Pension Benefit merely constitutes the unsecured promise of the Corporation to make payments as provided herein, and no person shall have any interest in, or a lien, or prior claim on any property of the Corporation.

9.2 No Commitment as to Employment. Nothing herein contained shall be construed as a commitment or agreement upon the part of any Participant hereunder to continue his or her employment with an Employer, and nothing herein contained shall be construed as a commitment on the part of any Employer to continue the employment or rate of compensation of any Participant hereunder for any period. All Participants shall remain subject to discharge to the same extent as if the Plan had never been put into effect.

9.3 Benefits. Nothing in the Plan shall be construed to confer any right or claim upon any person, firm, or corporation other than Participants and Participants’ Beneficiaries who become entitled to a benefit under the Plan.

9.4 Restrictions on Alienation. Except to the extent permitted by law, no benefit under the Plan shall be subject to anticipation, alienation, assignment (either at law or in equity), encumbrance, garnishment, levy, execution, or other legal or equitable process. No person shall have power in any manner to anticipate, transfer, assign, (either at law or in equity), alienate or subject to attachment, garnishment, levy, execution, or other legal or equitable process, or in any way encumber his or her benefits under the Plan, or any part thereof, and any attempt to do so shall be void.

9.5 Absence of Liability. No member of the Board of Directors of the Corporation or a subsidiary, or any officer of the Corporation or a subsidiary shall be liable for any act or action hereunder, whether of commission or omission, taken by any other member, or by any officer, agent, or Employee except in circumstances involving his or her bad faith or willful misconduct.

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9.6 Expenses. The expenses of administration of the Plan shall be paid by the Corporation.

9.7 Precedent. Except as otherwise specifically provided, no action taken in accordance with the Plan by the Corporation shall be construed or relied upon as a precedent for similar action under similar circumstances.

9.8 Duty to Furnish Information. The Corporation shall furnish to each Participant or Participant’s Beneficiary any documents, reports, returns statements, or other information that it reasonably deems necessary to perform its duties imposed hereunder or otherwise imposed by law.

9.9 Withholding. The Corporation shall withhold any tax required by any present or future law to be withheld from any payment hereunder to any Participant or Participant’s Beneficiary.

9.10 Validity of Plan. The validity of the Plan shall be determined and the Plan shall be construed and interpreted in accordance with the provisions of the Act, the Code, and, to the extent applicable, the laws of the State of Ohio. The invalidity or illegality of any provision of the Plan shall not affect the validity or legality of any other part thereof.

9.11 Parties Bound. The Plan shall be binding upon the Corporation, all Participants, all Participants’ Beneficiaries, and the executors, administrators, successors, and assigns of each of them.

9.12 Headings. All headings used in the Plan are for convenience of reference only and are not part of the substance of the Plan.

ARTICLE X

CHANGE OF CONTROL

     Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control, a Participant’s interest in his or her Supplemental Pension Benefit shall vest. On and after a Change of Control, a Participant shall be entitled to receive an immediate distribution of his or her Supplemental Pension Benefit if the Participant has at least five (5) years of Credited Service, and (i) the Participant’s employment is terminated by his or her Employer and any other Employer without cause, or (ii) the Participant resigns within two years following a Change of Control as a result of the Participant’s mandatory relocation, reduction in the Participant’s base salary, reduction in the Participant’s average annual incentive compensation (unless such reduction is attributable to the overall corporate or business unit performance), or the Participant’s exclusion from stock option programs as compared to comparably situated Employees.

     For purposes of this Article X hereof, a “Change of Control” shall be deemed to have occurred if under a rabbi trust arrangement established by KeyCorp (“Trust”), as such Trust may from time to time be amended or substituted, the Corporation is required to fund the Trust because a “Change of Control”, as defined in the Trust, has occurred.

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ARTICLE XI

COMPLIANCE WITH
SECTION 409A CODE

     The Plan is intended to provide for the deferral of compensation in accordance with the provisions of Section 409A of the Code and regulations and published guidance issued pursuant thereto. Accordingly, the Plan shall be construed and administered in a manner that is consistent with those provisions and may at any time be amended in the manner and to the extent determined necessary or desirable by the Corporation to reflect or otherwise facilitate compliance with such provisions with respect to amounts deferred on and after January 1, 2005, including as contemplated by Section 855(f) of the American Jobs Creation Act of 2004. Notwithstanding any provision of the Plan to the contrary, no otherwise permissible election or distribution shall be made or given effect under the Plan that would result in a violation, early taxation or assessment of penalties or interest of any amount under Section 409A of the Code.

ARTICLE XII

MERGER OF THE
KEYCORP EXECUTIVE SUPPLEMENTAL PENSION PLAN
INTO THE PLAN

12.1 Merger. As of December 31, 2006, the KeyCorp Executive Supplemental Pension Plan shall be merged into this Plan, and as of that date the KeyCorp Executive Supplemental Pension Plan shall not exist separate and apart from this Plan and all benefits that have accrued under the KeyCorp Executive Supplemental Pension Plan shall be merged into and shall become a part of this Plan.

ARTICLE XIII
AMENDMENT TO FREEZE

13.1. Amendment to Freeze the Plan.. Notwithstanding any other Plan provision to the contrary, as of December 31, 2009, the Plan shall be frozen, and on and after that date all Participants’ Supplemental Pension Benefits shall be calculated in accordance with the provisions of this Article XIII and all other provisions of the Plan shall remain in full force and effect.

13.2 Calculation of Amount and Payment of Frozen Benefit. In accordance with the provisions of this Section 13, the monthly Supplemental Pension Benefit that shall be payable to a Participant on and after the Participant’s Normal Retirement Date shall be calculated under the provisions of Section 3.2 of the Plan, provided, however, that in calculating the Participant’s Supplemental Pension Benefit under Section 3.2 hereof, (i) the Participant’s Credited Service shall only include the Credited Service that has been accrued by the Participant up through December 31, 2009, (ii) the Participant’s Final Average Compensation shall be determined as of December 31, 2009, and shall be calculated by utilizing the annual average of the Participant’s highest aggregate Compensation for any period of five consecutive years within the period of ten consecutive years immediately prior to December 31, 2009 and shall include the Participant’s highest five Incentive Compensation Awards granted under an Incentive Compensation Plan during the ten year period immediately preceding December 31, 2009, (iii) the Participant’s vested and accrued annual pension benefit under the Pension Plan calculated as of the participant’s Normal Retirement Date and payable in the form of a single life annuity option shall be calculated as if the participant terminated his employment on December 31, 2009, and (iv) the

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Participant’s Social Security Primary Insurance Amount shall be determined under requirements of the Social Security requirements that are in effect with regard to the Participant as of December 31, 2009.

     IN WITNESS WHEREOF, KeyCorp has caused this KeyCorp Second Executive Supplemental Pension Plan to be executed as of the 8th day of February, 2010, to be effective as of that date.

KEYCORP
By:	/s/ Steven N. Bulloch
Title:		Assistant Secretary

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Exhibit A

Employee

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EX-10.42

Exhibit 10.42

AMENDMENT
TO THE
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
FOR KEY EXECUTIVES

     WHEREAS, KeyCorp has established the Supplemental Retirement Benefit Plan for Key Executives (the “Plan”), and

     WHEREAS, the Board of Directors of KeyCorp has authorized its Compensation Committee to permit amendments to the Plan, and

     WHEREAS, the Compensation Committee of the Board of Directors of KeyCorp has authorized the execution of this Amendment,

     NOW, THEREFORE, pursuant to such action of the Compensation Committee, the Plan is hereby amended as follows:

1. Article I shall be amended to add the following two (2) new definitions immediately prior to Section 1.1:

1.0 (a)	“Average Interest Credit” shall mean the average of the Interest Credits (as defined in the Pension Plan) for the three (3) consecutive calendar years ending with the year of termination.
1.0 (b)	“Average Treasury Rate” shall mean the average of the Treasury Rates (as defined in the Pension Plan) for the three (3) consecutive calendar years ending with the year of termination.

2.	Section 1.2 shall be amended to delete the term Pension Plan in its entirety and to substitute therefore the “KeyCorp Pension Plan (1989 Restatement).”
3.	Section 1.7 is amended to delete in its entirety and to substitute therefore the following:
	“Incentive Compensation Award” shall mean an Incentive Compensation Award granted to a Plan Participant under the KeyCorp Short-Term Incentive Compensation Plan and/or KeyCorp Management Incentive Compensation Plan. For purposes of this Section 1.7 hereof, an Incentive Compensation Award shall be deemed to be for the year in which the Incentive Compensation Award is earned (without regard to the actual time of payment), provided, however, that in no event shall more than one Incentive Compensation Award be included in determining a Participant’s Salary for any applicable year.
4.	Section 1.9 shall be amended to add the words “Cash Balance” immediately following the term KeyCorp and before the term Pension Plan, provided, however, that for purposes of determining a Participant’s monthly Primary Social Security Benefit the term “Pension Plan” shall reference the KeyCorp Pension Plan (1986 Restatement) and further, for purposes of determining the actuarial reduction factors and method of calculating actuarial equivalence the term “Pension Plan” shall reference the KeyCorp Pension Plan (1989 Restatement).
5.	Section 1.12 shall be amended to include the word “Award” immediately following the term “Incentive Compensation” appearing in the second line of Section 1.12.
6.	Section 2.1 shall be amended to include the following new sentence at the end of such Section:
	Effective December 31, 1994, all new participation to the Plan shall cease, and only those individuals designated by the Employer as a Participant prior to December 31, 1994 shall continue to participate in the Plan.

7.	Section 4.2 shall be amended to delete it in its entirety and to substitute therefore the following:
	Upon retirement after his Normal Retirement Date, a Participant shall receive a monthly allowance which shall commence on the first day of the month coincident with or next following the date of such retirement and shall be payable in the form and over such duration as elected by the Participant pursuant to Section 4.5. The amount of each such monthly retirement allowance shall be computed in the same manner as the Normal Retirement Allowance except that Final Average Salary will be determined as of the Delayed Retirement Date. A Participant shall not accrue additional Credited Service beyond his Normal Retirement Date, unless the Participant has less than twenty-five (25) years of Credited Service; in which case such Participant shall continue to accrue Credited Service (up to a total of twenty-five (25) years), for purposes or reducing or eliminating the short service reductions of Section 4.1(a) and (b). Credited Service accrued after a Participant’s Normal Retirement Date shall not be used in the multiplier fractions of Section 4.1(a) and (b).
8.	Section 4.3 shall be amended to add the following new paragraph at the end of such Section:
	Notwithstanding the foregoing, in calculating a Participant’s Early Retirement Allowance under the terms of this Section 4.3, the Participant’s monthly retirement allowance at his or her Normal Retirement Date for purposes of this Section 4.3 hereof shall be the Participant’s monthly retirement allowance under the Pension Plan as of the Participant’s Normal Retirement Date. In calculating this Normal Retirement Date benefit, if the Participant is not eligible for, or chooses not to elect his or her monthly retirement allowance under the provisions of Section 6.5(b) of the Pension Plan, such Participant’s Pension Plan benefit as of his or her termination date shall be increased for purposes of this Plan with an imputed Average Interest Credit to reflect the Participant’s benefit at his or her Normal Retirement Date and shall be converted to the form of a Single Life Annuity option using the Average Treasury Rate and the GATT Mortality Table.
9.	Section 4.5 is amended to delete it in its entirety and to substitute the following:
	4.5(a) Immediate Payment Upon Normal Retirement Date of Participant. Subject to the provisions of Section 4.4 hereof, a Participant meeting the age and service eligibility requirements entitling a Participant to a Normal Retirement Allowance, shall receive an immediate distribution of his or her Normal Retirement Allowance upon the Participant’s retirement or termination of employment in the form of a single life annuity, unless the Participant elects in writing a minimum of thirty days prior to his or her retirement or termination date to receive payment of his or her Normal Retirement Allowance under a different form of payment. The forms of payment from which a Participant may elect shall be identical to those forms of payment specified in the Pension Plan, provided, however, that the lump sum payment option available under the Pension Plan shall not be available under this Plan. Such method of payment, once elected by the Participant, shall be irrevocable.
	The same actuarial reduction factors and method of calculating actuarial equivalence under the former KeyCorp Pension Plan (1989 Restatement) shall be applicable under this Plan. Any such optional method of retirement payment shall be the actuarial equivalent of the actual dollar amount of lifetime retirement allowance otherwise payable from this Plan after adjustment for the benefit payable from the Pension Plan and the Primary Social Security Benefit.
	(b) Deferred Benefit Payment. A Participant who retires or terminates his or her employment with an Employer after meeting the age and service requirements for an Early Retirement Allowance, may elect to defer receipt of his or her Plan benefit until a date specified by the Participant, provided, (1) the Participant notifies the Employer in writing of his or her deferral election a minimum of one year prior to the Participant’s retirement or termination of employment, (2) the Participant specifies the future date on which such Plan benefit is to be distributed and (3) the Participant commences distribution of his or her Plan benefit no later than the first day of the month immediately following the Participant’s sixty-fifth (65th) birthday. The election to defer, once made by the Participant, shall be irrevocable.
	Notwithstanding the foregoing, in the case of an “enforceable emergency”, upon written application by the Participant to the Employer, the Employer in its sole discretion may accelerate the

	distribution of the Participant’s Plan benefit. For purposes of this Section 4.5, the term “unforeseeable emergency” shall mean an unanticipated emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship to the Participant if such premature distribution were not permitted.
10.	The amendments set forth in Paragraphs 1, 3, 4, 5, 6, 7, 8, and 9 hereof shall be effective as of the first day of January 1995.
11.	The amendments set forth in Paragraph 2 hereof shall be effective as of the first day of January 1994.
12.	Except as specifically amended, the Plan shall remain in full force and effect.

     IN WITNESS WHEREOF, KeyCorp has caused this Amendment to the Plan to be executed by its duly authorized officer to be effective as of the first day of January 1995.

KEYCORP
By:	/s/ Steven N. Bulloch
Title:	Assistant Secretary

EX-10.43

Exhibit 10.43

SECOND AMENDMENT TO THE KEYCORP
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
FOR KEY EXECUTIVES

     WHEREAS, KeyCorp has established the KeyCorp Supplemental Retirement Benefit Plan For Key Executives (“Plan”), and

     WHEREAS, the Board of Directors of KeyCorp has authorized its Compensation Committee to approve amendments to the Plan, and

     WHEREAS, the Compensation Committee of the Board of Directors of KeyCorp has authorized the execution of this Second Amendment.

     NOW THEREFORE, pursuant to such action of the Compensation Committee, the Plan is amended as follows:

1. Section 5.1(a) is amended to delete it in its entirety and to substitute therefore the following:

“(a)

If a Participant dies in active employment after completion of five or more years of Credited Service and is survived by a surviving spouse, a monthly retirement allowance shall be paid to the Participant’s surviving spouse commencing on the first day of the month coincident with or next following the Participant’s date of death. Each such monthly retirement allowance shall equal 50 percent of the monthly retirement allowance to which the Participant would have been entitled had the Participant retired as of the Participant’s Normal Retirement Date. Such death benefit shall be paid in the form of a single life annuity and shall be subject to distribution any time after the Participant’s earliest retirement date.

For purposes of calculating the death benefit contained within this Section 5.1(a) only, the following shall apply:

(i)	The Participant’s Primary Social Security Benefit shall be calculated as if the Participant had retired as of his Normal Retirement Date,
(ii)	The Participant’s Pension Plan benefit shall be calculated under the provisions of Article IV of the Pension Plan, as if the Participant had died on his Normal Retirement Date, with such Pension Plan benefit being increased for purposes of this Section 5.1(a) with an imputed Average Interest Credit to reflect the Participant’s Normal Retirement Date monthly retirement benefit converted to a single life annuity option using the Average Treasury Rate and Gatt Mortality Tables.
(iii)	The monthly retirement allowance paid to the Participant’s spouse upon the Participant’s death shall be reduced if paid prior to the Participant’s Normal Retirement Date using those actuarial factors as are applicable under the KeyCorp Pension Plan (1989 Restatement).”

2.	Section 6.2 shall be amended to delete it in its entirety and to substitute therefore the following:
	“6.2 Termination Prior to Five (5) Years of Credit Service. A Participant who terminates his employment with the Employer because of total and permanent disability and who has completed less than five (5) years of Credited Service at such time shall not thereby be entitled to any benefits from the Plan.”
3.	The first paragraph of Section 6.3 shall be amended to delete it in its entirety and to substitute therefore the following:
	“6.3” Termination After Five (5) Years of Credited Service. A Participant who terminates his employment with the Employer because of total and permanent disability and who has completed five

(5) or more years of Credited Service shall be subject to whichever of the following subsections shall be applicable:

(a) If he shall (after the applicable statutory waiting period) be continuously disabled and entitled to Social Security disability benefits until his attainment of age sixty-five (65), then he shall receive a monthly retirement allowance from this Plan commencing upon the first day of the month coincident with or next following the attainment of his sixty-fifth (65th) birthday and payable on the first day of each month thereafter for his remaining lifetime. Such monthly retirement allowance shall be determined in the same manner as for retirement at his Normal Retirement Date, except that:

(i)	Credited Service shall be determined as if the Participant had in fact continued in active employment until his sixty-fifth (65th) birthday, and
(ii)	Final Average Salary shall be determined as of the date of his actual termination of employment due to disability.

(b) If he shall (after the applicable statutory waiting period) not be continually disabled and entitled to Social Security disability benefits until his attainment of age sixty-five (65), he shall not be entitled to a disability benefit from this Plan, but shall be subject to the provisions of Section 6.4 hereof.”

     IN WITNESS WHEREOF, KEYCORP has caused this Amendment to the Plan to be executed by its duly authorized officer as of this first day of August, 1996.

KEYCORP
By:	/s/ Steven N. Bulloch
Title:	Assistant Secretary

EX-10.47

Exhibit 10.47

KeyCorp

Deferred Equity Allocation Plan

ARTICLE I

Purpose

     The purpose of the Plan is to establish limits on the crediting of Common Shares pursuant to the Corporation’s Deferred Compensation Plans as in effect from time to time, and to provide the shareholders of the Corporation with the opportunity to approve such limits.

ARTICLE II

Definitions

     For the purposes of this Plan, the following words shall have the meanings hereinafter set forth, unless a different meaning is clearly required by the context:

(a)	“Board” shall mean the Board of Directors of the Corporation, and to the extent of any delegation by the Board to a committee (or subcommittee thereof) pursuant to Section 5.1 of this Plan, such committee (or subcommittee).
(b)	“Common Shares” shall mean the common shares, par value $1.00 per share, of the Corporation or any security into which such Common Shares may be changed by reason of any transaction or event of the type referred to in Article IV of this Plan.
(c)	“Common Stock Account” shall mean the bookkeeping account established by the Corporation for each Participant under a Deferred Compensation Plan, in which a Participant may elect to have his or her Participant Deferrals credited in the form of Common Shares, and which shall reflect all Participant Deferrals, Corporate Contributions and dividends and other distributions, gains and losses credited in the form of Common Shares, in accordance with the terms of the applicable Deferred Compensation Plan.

(d)	“Corporate Contributions” shall mean the contribution amounts that an Employer has agreed, under the terms of the applicable Deferred Compensation Plan, to contribute on a bookkeeping basis to a Participant’s Common Stock Account.
(e)	“Corporation” shall mean KeyCorp, an Ohio corporation, its corporate successors, and any corporation or corporations into or with which it may be merged or consolidated.
(f)	“Deferred Compensation Plans” shall mean the Existing Plans and any other plan, agreement or program of the Corporation that is now or hereafter intended to provide Employees or Directors of the Corporation with the opportunity or obligation to make Participant Deferrals, but only if and to the extent that such plan (i) has been determined by the Board to be covered by this Plan as a Deferred Compensation Plan, (ii) has not been separately approved by the Corporation’s shareholders, and (iii) is not a plan that is qualified under Section 401(a) of the Internal Revenue Code. Notwithstanding the foregoing, no plan other than an Existing Plan shall be considered a Deferred Compensation Plan if (A) it provides for Corporate Contributions to Directors or Officers in excess of 25% of their Participant Deferrals, unless such plan is an Excess Plan, or (B) it provides for Corporate Contributions in excess of 100% of any Participant Deferrals.
(g)	“Director” shall mean a member of the Board of Directors of the Corporation.
(h)	“Effective Date” shall mean the date on which this Plan becomes effective, which shall be the date the Plan is approved by the Corporation’s shareholders.
(i)	“Employee” shall mean a common law employee who is employed by the Corporation.
(j)	“Excess Plan” shall mean a supplemental employee benefit plan that is operated in conjunction with a plan that is intended to be qualified under Section 401(a) of the Internal Revenue Code.
(k)	“Employer” shall mean the Corporation and any of its subsidiaries that participate in a Deferred Compensation Plan.
(l)	“Existing Plans” shall mean the following plans, as in effect on the Effective Date, as the same may be amended thereafter from time to time: the KeyCorp Commissioned Deferred Compensation Plan, the KeyCorp Deferred Compensation Plan, the Amended and Restated Director Deferred Compensation Plan, the KeyCorp Automatic Deferral Plan, the KeyCorp Signing Bonus Plan, the McDonald Financial Group Deferral Plan and the KeyCorp Excess 401(k) Plan.

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(m)	“Independent Director” shall mean a Director who is not an employee of the Corporation or a subsidiary of the Corporation and otherwise satisfies the applicable independence requirements set forth in the rules of the New York Stock Exchange.
(n)	“Officer” shall have the meaning set forth in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended.
(o)	“Participant” shall mean (i) any Employee and any Director who meets the eligibility requirements of any of the Existing Plans and who has elected or is required to participate in such Existing Plan and (ii) any Employee and any Director who will, in the future, meet the eligibility requirements of any other Deferred Compensation Plan of the Corporation and who elects or is required to participate in such Deferred Compensation Plan.
(p)	“Participant Deferrals” shall mean the amount of a Participant’s salary, bonuses (including signing and retention bonuses), retainers, commissions, fees, property, securities and other compensation earned by or awarded to the Participant, the time of payment or delivery of which the Participant has elected or been required to defer pursuant to a Deferred Compensation Plan. Notwithstanding anything to the contrary contained herein, Participant Deferrals shall be credited as Common Shares to a Participant’s Common Stock Account based on a price not less than the fair market value of the Common Shares on the date of the crediting of such Participant Deferrals to the Common Stock Account. The determination of fair market value shall be as provided in the applicable Deferred Compensation Plan.
(q)	“Plan” shall mean this KeyCorp Deferred Equity Allocation Plan, as the same may be amended from time to time.

ARTICLE III

Share Limitations

     Section 3.1 Shares Available Under the Plan. Subject to adjustment as provided in Section 3.4 and Article IV of this Plan, the number of Common Shares credited to Participants’ Common Stock Accounts as Participant Deferrals and Corporate Contributions pursuant to the Deferred Compensation Plans shall not in the aggregate exceed the aggregate number of shares credited to Participants’ Common Stock Accounts as of the Effective Date plus 15,000,000 Common Shares. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing. Any shares delivered to Participants by a trust that is treated as a “grantor trust” within the meaning of Sections 671-679 of the Internal Revenue Code of 1986, as amended, shall be treated as delivered by the Corporation under this Plan.

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     Section 3.2 Shares Available for Corporate Contributions. Subject to adjustment as provided in Section 3.4 and Article IV of this Plan, the number of Common Shares credited to Participants’ Common Stock Accounts as Corporate Contributions after the Effective Date shall not exceed 7,000,000 Common Shares.

     Section 3.3 Shares Available for Dividends. Common Shares that may be credited and thereafter distributed as dividend equivalents shall not be subject to the limits set forth in Sections 3.1 and 3.2, except that if any shares are so allocated at a rate in excess of the actual dividend rates on the Common Shares, such excess shall be subject to the limits set forth in Sections 3.1 and 3.2 hereof, as applicable.

     Section 3.4 Forfeitures, Etc.; Payment in Cash. The number of shares available in Sections 3.1 and 3.2 above shall be adjusted to account for shares credited to the Common Stock Accounts of Participants that are forfeited, surrendered or relinquished to the Corporation, to provide for the payment of taxes or otherwise, paid or distributed to such Participants in the form of cash, or that are not distributed in the form of Common Shares for any other reason, as provided under the terms of the particular Deferred Compensation Plan. Upon forfeiture, surrender or relinquishment, or upon payment or distribution in cash, of Common Shares credited to a Common Stock Account, or upon any other distribution or settlement of Common Stock Accounts other than in the form of Common Shares, such Common Shares shall again be available to be credited to a Common Stock Account under any of the Deferred Compensation Plans and Sections 3.1 and 3.2 of this Plan, as applicable.

ARTICLE IV

Adjustments

     The Board may make or provide for such adjustments in the number of Common Shares specified in Sections 3.1 and 3.2 hereof, and in the kind of shares covered by this Plan, as the Board, in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of rights that would otherwise result from (a) any stock dividend, stock split, combination of shares, recapitalization, or other change in the capital structure of the Corporation, or (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing.

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ARTICLE V

Administration

     Section 5.1 Administration of the Plan. This Plan shall be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to a committee of the Board (or a subcommittee thereof) consisting of not less than three Independent Directors appointed by the Board. A majority of the committee (or subcommittee) shall constitute a quorum, and the action of the members of the committee (or subcommittee) present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the committee (or subcommittee). To the extent of any such delegation, references in this Plan to the Board shall be deemed to be references to any such committee or subcommittee. As of the Effective Date, the Board delegates all of its authority under this Plan to its Compensation Committee.

     Section 5.2 Interpretation; Construction. The interpretation and construction by the Board of any provision of this Plan and any determination by the Board pursuant to any provision of this Plan shall be final and conclusive. No member of the Board shall be liable for any such action or determination made in good faith.

ARTICLE VI

Amendments, Etc.

     Section 6.1 Amendments. The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that any amendment that must be approved by the shareholders of the Corporation in order to comply with applicable law or the rules of the New York Stock Exchange or, if the Common Shares are not traded on the New York Stock Exchange, the principal national securities exchange upon which the Common Shares are traded or quoted, shall not be effective unless and until such approval has been obtained. Presentation of this Plan or any amendment hereof for shareholder approval shall not be construed to limit the Corporation’s authority to offer similar or dissimilar benefits under other plans without shareholder approval consistent with the rules of the New York Stock Exchange.

     Section 6.2 No Employment Rights. This Plan shall not confer upon any Participant any right with respect to continuation of employment or other service with the Corporation, nor shall it interfere in any way with any right the Corporation would otherwise have to terminate such Participant’s employment or other service at any time. Notwithstanding this Plan, the provisions of the applicable Deferred Compensation Plan, including, without limitation, the terms relating to eligibility, participation, Participant Deferrals and deferral limits, Corporate Contributions, vesting and distribution, shall continue to apply to the Participants in such Deferred Compensation Plan.

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     Section 6.3 Unfunded Plan. All Common Shares, dividends, earnings and any other gains and losses allocated to Participants’ Common Stock Accounts remain the assets and property of the Corporation, which shall be subject to distribution to the Participant only in accordance with the terms of each respective Deferred Compensation Plan. Payments made under each respective Deferred Compensation Plan in accordance with the provisions of this Plan shall be made from the general assets of the Corporation, and Participants and their beneficiaries shall have the status of general unsecured creditors of the Corporation. Nothing contained in this Plan shall create, or be construed as creating a trust of any kind or any other fiduciary relationship between the Participant, the Corporation, or any other person. It is the intention of the Corporation and the Participants that all Deferred Compensation Plans covered by this Plan be unfunded for tax purposes and for purposes of Title I of Employee Retirement Income Security Act of 1974, as amended.

     Section 6.4 Governing Law. The Plan shall be governed by and construed in accordance with the internal substantive laws of the State of Ohio.

     Section 6.5 Expenses. The expenses of administration of this Plan shall be paid by the Corporation.

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EX-10.48

Exhibit 10.48

KEYCORP
DEFERRED SAVINGS PLAN

ARTICLE I

     The KeyCorp Deferred Savings Plan (the “Plan”), as originally established effective December 30, 2006, and amended and restated in 2008, is hereby amended and restated, to be effective as of January 31, 2010. As structured, the Plan is intended to provide KeyCorp with an employment retention vehicle to ensure that Plan participants continue in their employment with Key, while providing Plan participants with an opportunity to save for their retirement on a tax deferred basis. It is the intention of KeyCorp and it is the understanding of those employees covered under the Plan, that the Plan constitutes a nonqualified plan of deferred compensation for a select group of KeyCorp employees, and as such, it is unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). It is also the understanding of employees covered under the Plan that the Plan is subject to the requirements of Section 409A of the Code, and that it will be administered in accordance with the requirements of Section 409A.

ARTICLE II
DEFINITIONS

     2.1 Meaning of Definitions. For the purposes of this Plan, the following words and phrases shall have the meanings hereinafter set forth, unless a different meaning is clearly required by the context:

(a) “Beneficiary” shall mean the person, persons or entity entitled under Article VIII to receive any Plan benefits payable after a Participant’s death.

(b) “Board” shall mean the Board of Directors of KeyCorp, the Board’s Compensation & Organization Committee, or any other committee designated by the Board or subcommittee designated by the Board’s Compensation Committee.

(c) “Change of Control” shall be deemed to have occurred if under a rabbi trust arrangement established by KeyCorp (“Trust”), as such Trust may from time to time be amended or substituted, the Corporation is required to fund the Trust because a “Change of Control”, as defined in the Trust, has occurred.

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with all regulations promulgated thereunder. Reference to a section of the Code shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section.

(e) “Common Stock Account” shall mean the investment account established under the Plan for bookkeeping purposes in which a Participant may elect to have his or her Participant Deferrals credited. Participant Deferrals and Corporate Contributions invested in the Common Stock Account shall be credited based on a bookkeeping allocation of KeyCorp Common Shares (both whole and fractional rounded to the nearest one-hundredth of a share), which shall be equal to the amount of Participant Deferrals and Corporate Contributions invested in the Common Stock Account. The Common

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Stock Account shall also reflect on a bookkeeping basis all dividends, gains, and losses attributable to such Common Shares. All Corporate Contributions and all Participant Deferrals credited to the Common Stock Account shall be based on the New York Stock Exchange’s closing price for such Common Shares as of the day such Participant Deferrals are credited to the Participants’ Plan Accounts.

(f) The “Compensation” of a Participant for any Plan Year or any partial Plan Year shall mean that portion of compensation that is paid to the Participant during such period by reason of his or her employment with an Employer, as reported for federal income tax purposes, which exceeds the compensation limits reflected in Section 401(a)(17) of the Code, as may be indexed from time to time. In determining whether the Participant has exceeded the compensation limits of Section 401(a)(17) of the Code, the compensation which would have been paid to the Participant but for (1) the timing of an Employer’s payroll processing operations, (2) the Participant’s deferral of compensation under the provisions of the KeyCorp Flexible Benefits Plan and transportation reimbursement plan, and (3) the Participant’s written deferral of his or her compensation to the KeyCorp 401(k) Savings Plan shall be included, provided, however, that the following compensation shall specifically not be included:

(i)	any amount attributable to the Employee’s receipt of stock appreciation rights, restricted stock awards, and stock units, and the amount of any gain to the Employee upon the exercise of a stock option;
(ii)	any amount attributable to the Employee’s receipt of non-cash remuneration which is included in the Employee’s income for federal income tax purposes;
(iii)	any amount attributable to the Employee’s receipt of moving expenses and any relocation bonus paid to the Employee during the Plan Year;
(iv)	any amount attributable to any severance paid by an Employer or the Corporation to the Employee;
(v)	any amount attributable to fringe benefits (cash and non-cash), regardless of whether any or all such items are includible in such Participant’s gross income for federal tax purposes;
(vi)	any amount attributable to any bonus or payment made as an inducement for the Employee to accept employment with an Employer;
(vii)	any amount attributable to compensation of any type including bonus or incentive compensation payments paid on or after the Employee’s Severance From Service Date;
(viii)	any other amounts attributable to compensation deferred by the Participant; and
(ix)	any amounts attributable to deferred cash award payments to the Participant.

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(g) “Corporate Contributions” shall mean the amount that an Employer has agreed to contribute on a bookkeeping basis to the Participant’s Plan Account in accordance with the provisions of Article V of the Plan.

(h) “Corporation” shall mean KeyCorp, an Ohio corporation, its corporate successors, and any corporation or corporations into or with which it may be merged or consolidated.

(i) “Deferral Period” shall mean each Plan Year, provided however, that a Participant’s initial Deferral Period shall be from his or her first day of participation in the Plan through the last day of the applicable Plan Year.

(j) “Determination Date” shall mean the last day of each calendar month.

(k) “Disability” shall mean (1) a physical or mental disability which prevents a Participant from performing the duties the Participant was employed to perform for his or her Employer when such disability commenced, (2) has resulted in the Participant’s absence from work for 180 qualifying days, and (3) application has been made for the Participant’s disability coverage under the KeyCorp Long Term Disability Plan, and such Disability results in the Participant’s Separation from Service.

(l) “Early Retirement” shall mean the Participant’s retirement from employment with an Employer on or after the Participant’s attainment of age 55 and completion of a minimum of five years of Vesting Service, but prior to the Participant’s Normal Retirement Date.

(m) “Employee” shall mean a common law employee who is employed by an Employer.

(n) “Employer” shall mean the Corporation and any of its subsidiaries, unless specifically excluded as an Employer for Plan purposes by written action of an officer of the Corporation. An Employer’s participation shall be subject to all conditions and requirements made by the Corporation, and each Employer shall be deemed to have appointed the Plan Administrator as its exclusive agent under the Plan as long as it continues as an Employer.

(o) “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in Section 152(a) of the Code), the loss of the Participant’s property due to casualty, or such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The determination of an “unforeseeable emergency” and the ability of the Corporation to accelerate the Participant’s distribution of Participant Deferrals and Corporate contributions shall be determined in accordance with the requirements of Section 409A of the Code and applicable regulations issued thereunder.

(p) “Incentive Compensation Award” shall mean the single annual incentive compensation award granted to a Participant under an Incentive Compensation Plan.

(q) “Incentive Compensation Deferral” shall mean a percentage amount of the Participant’s annual Incentive Compensation Award that otherwise would be payable to

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the Participant during the applicable Plan Year, but for the Participant’s election to defer such Incentive Compensation Award under the Plan.

(r) “Incentive Compensation Plan” shall mean a line of business or management incentive compensation plan that is sponsored by KeyCorp or an affiliate of KeyCorp that the Corporation has determined constitutes an Incentive Compensation Plan for purposes of the Plan.

(s) “Interest Bearing Account” shall mean the investment account established under the Plan for bookkeeping purposes in which a Participant may elect to have his or her Participant Deferrals credited. Participant Deferrals invested for bookkeeping purposes in the Interest Bearing Account shall be credited with earnings as of each month equal to 120% of the applicable long term federal rate as published by the Internal Revenue Service for that month, compounded monthly, and divided by 12.

(t) “Investment Accounts” shall collectively mean those investment accounts established under the Plan for bookkeeping purposes in which the Participant’s Participant Deferrals will be credited. Investment Accounts shall include the Plan’s (1) Interest Bearing Account, (2) Common Stock Account, and (3) Investment Funds.

(u) “Investment Funds” shall mean those Investment Accounts established under the Plan for bookkeeping purposes in which a Participant may elect to have his or her Participant Deferrals credited and which mirror the investment funds established under the KeyCorp 401(k) Savings Plan (“Savings Plan”), as may be modified from time to time, provided, however, that the Savings Plan’s Corporation Stock Fund, for Plan purposes, shall be excluded from the definition of Investment Funds. Participant Deferrals invested for bookkeeping purposes in the Investment Funds shall be credited on a bookkeeping basis with all earnings, gains, and losses experienced by the applicable Investment Fund.

(v) “Normal Retirement” shall mean the Participant’s retirement under the KeyCorp Cash Balance Pension Plan on or after the Participant’s Normal Retirement Date.

(w) “Participant” shall mean an Employee who meets the eligibility requirements set forth in Section 3.1(a) and who becomes a Plan Participant pursuant to Section 3.1(b) or Section 3.1(c) of the Plan.

(x) “Participation Agreement” shall mean the agreement submitted by the Participant to the Corporation, which contains, in pertinent part, the Participant’s deferral commitment for the applicable Deferral Period, as well as investment and distribution instructions with regard to the form of distribution for such Deferrals. The Participants’ Participation Agreement for Salary Deferrals shall be provided to the Corporation by no later than the close of the calendar year prior to the year in which the deferred salary is to be earned by the Participant. The Participants’ Participation Agreement for Incentive Compensation Deferrals shall be provided to the Corporation by no later than the close of the calendar year prior to the year in which such Incentive Compensation is to be earned by the Participant or as otherwise expressly permitted under the provisions of Section 409A of the Code.

(y) “Participant Deferrals” shall mean the Incentive Compensation Deferrals and Salary Deferrals the Participant has elected to defer under the Plan for each applicable Deferral Period.

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(z) “Plan” shall mean the KeyCorp Deferred Savings Plan with all amendments hereafter made.

(aa) “Plan Account” shall mean those bookkeeping accounts established by the Corporation for each Plan Participant, which shall reflect all Corporate Contributions and Participant Deferrals, and if applicable, any Predecessor Plan Participant Deferrals, Predecessor Plan Corporate Contributions, and Rollover Contributions invested for bookkeeping purposes in the Plan’s Investment Accounts with all earnings, dividends, gains, and losses thereon. Plan Accounts shall not constitute separate Plan funds or separate Plan assets. Neither the maintenance of, nor the crediting of amounts to such Plan Accounts shall be treated (i) as the allocation of any Corporation assets to, or a segregation of any Corporation assets in any such Plan Accounts, or (ii) as otherwise creating a right in any person or Participant to receive specific assets of the Corporation. Benefits under the Plan shall be paid from the general assets of the Corporation.

(bb) “Plan Year” shall mean the calendar year.

(cc) “Retirement” shall mean the termination of a Participant’s employment under circumstances in which the Participant begins to receive Early Retirement or Normal Retirement Date benefit under the KeyCorp Cash Balance Pension Plan, provided such retirement also constitutes a Separation from Service.

(dd) “Salary Deferrals” shall mean the amount of the Participant’s Compensation (other than Incentive Compensation) that the Participant has elected to defer to the Plan for the applicable Plan year

(ee) “Separation from Service” shall have the meaning as a “separation from service” under Section 409A(c)(2)(A)(i) of the Code and 26 CFR Section 1.409A-3(a)(1).

(ff) “Termination” shall mean the voluntary or involuntary and permanent termination of a Participant’s employment from his or her Employer and any other Employer, whether by resignation or otherwise, provided such termination also constitutes a Separation from Service, but shall not include the Participant’s Retirement or Termination under Limited Circumstances or as a result of the Participant’s death or Disability.

(gg) “Termination Under Limited Circumstances” shall mean a Participant’s termination of employment from the Employer (i) within two years after a Change of Control under circumstances in which the Participant becomes entitled to severance benefits or salary continuation or similar benefits under a Change of Control agreement, employment agreement, or severance or separation pay plan, (ii) under circumstances in which the Participant is entitled to receive salary continuation benefits under the KeyCorp Separation Pay Plan, or (iii) as otherwise expressly approved by an officer of the Corporation, provided such termination also constitutes a Separation from Service.

     2.2 Additional Reference. All other words and phrases used herein shall have the meaning given them in the KeyCorp Cash Balance Pension Plan, unless a different meaning is clearly required by the context.

     2.3 Pronouns. The masculine pronoun wherever used herein includes the feminine in any case so requiring, and the singular may include the plural.

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ARTICLE III
ELIGIBILITY AND PARTICIPATION

     3.1 Eligibility and Participation.

(a) Eligibility. Employees who have been assigned a benefits designator 86 or above shall be eligible to participate in the Plan (or if the position is not a graded position, then the equivalent of a benefits designator 86 or above). Notwithstanding the foregoing provisions of this Section 3.1(a), however, all participants in the KeyCorp Deferred Compensation Plan, the KeyCorp Second Deferred Compensation Plan, the KeyCorp Excess 401(k) Savings Plan, or the KeyCorp Second Excess 401(k) Savings Plan as of December 31, 2006 shall automatically become Participants in the Plan regardless of the Employees’ benefits designator.

(b) Participation. An Employee meeting the eligibility criteria of Section 3.1(a) may elect to participate in the Plan by submitting a Participation Agreement to the Corporation prior to the beginning of the applicable Deferral Period.

(c) Mid-Year Participation. When an Employee first becomes eligible to participate in the Plan during a Deferral Period, the Employee shall submit a Participation Agreement to the Corporation within thirty days (30) of the Employee’s initial Plan eligibility.

(d) Loss of Plan Eligibility. In the event that a Participant who is not in a benefits designator 86 or above (or its equivalent) voluntarily fails to make Participant Deferrals to the Plan, then in such event, the Participant’s continued Plan eligibility will end and the Participant shall not be eligible to make Participant Deferrals to the Plan.

     3.2 Deferral Limitations. The following Participant Deferral limitations shall apply for each Deferral Period:

(a) Salary Deferrals. A Participant may defer no more than 50% of the Participant’s Compensation (other than Incentive Compensation Award) during the applicable Deferral Period. For Mid-Year participation, a Participant may defer no more than 50% of his or her Compensation earned following the date of the Participant’s deferral election and actual participation in the Plan.

(b) Incentive Compensation Deferrals. A Participant may defer up to 100% of the Participant’s annual Incentive Compensation Award payable to the Participant during the applicable Deferral Period. For Mid-Year participation, however, a Participant may defer only that portion of his or her Incentive Compensation Award earned for services performed following the Participant’s deferral election. In determining the amount of Incentive Compensation that may be deferred under the provisions of this Mid-Year participation requirement, the election shall apply to no more than an amount equal to the total amount of the Incentive Compensation Award multiplied by the ratio of the number of days remaining in the performance period after the Participant’s election date over the total number of days in the performance period.

     3.3 Commitment Limited by Termination, Retirement, Disability or Death. As of the Participant’s Termination date, Retirement date, Termination Under Limited Circumstances date, date of Disability or date of death, all Participant Deferrals under the Plan shall cease.

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     3.4 Modification of Deferral Commitment. A Participant’s deferral commitment as evidenced by his or her Participation Agreement for the applicable Deferral Period shall be irrevocable.

     3.5 Evergreen Deferral Election. A Participant’s initial deferral commitment as evidenced by the Participant’s initial Participation Agreement will continue to be effective from Plan Year to Plan Year and for each successive Deferral Periods until otherwise modified by the Participant. The Participant’s revised Participation Agreement for Salary Deferrals shall be provided to the Corporation by no later than the close of the calendar year prior to the year in which the salary is to be earned by the Participant, and the Participant’s revised Participation Agreement for Incentive Compensation Deferrals shall be provided to the Corporation by no later than the close of the calendar year prior to the year in which such Incentive Compensation is to be earned by the Participant. Such revised Participation Agreement thereafter will continue to be effective for each successive Deferral Periods until modified by the Participant.

     3.6 A Change in Employment Status. If the Corporation determines that a Participant’s performance is no longer at a level that deserves to be rewarded through participation in the Plan, but does not terminate the Participant’s employment with his or her Employer, the Participant’s existing Participation Agreement shall terminate at the end of the Deferral Period, and no new Participation Agreement may be made by the Participant until the Plan year following the year in which the Corporation advises the Employee that he or she may resume Plan participation.

     3.7 Rollovers. At the Corporation’s direction, the Plan may accept on behalf of a Participant, a rollover of the Participant’s bookkeeping account balance from such other deferred compensation plans of the Employer in which the Participant also participates, provided, that such plan permits rollovers. The bookkeeping account balance so rolled shall be known as rollover contributions (“Rollover Contributions”). The Participant’s Rollover Contributions shall be credited to the Participant’s Plan Account on a bookkeeping basis in such a manner as the Corporation shall be able to separately identify such Plan Rollover Contributions and determine all net gains or losses attributable thereto. Such Plan Rollover Contributions shall, at all times, be invested in the Plan’s Common Stock Account and shall not be subject to the Participant’s investment direction or diversification. Plan Rollover Contributions shall be fully vested under the Plan and shall be subject to the distribution requirements contained within the Participant’s Rollover Election Form, provided, however, that the Participant’s Rollover Contributions will be required to be deferred under the Plan for a minimum of five (5) full years from the date of the rollover regardless of the Participant’s Termination date, Retirement date, or the distribution instructions contained in the Participant’s Rollover Election Form, and provided further, that the rollover election and the timing of the rollover election conforms with subsequent deferral election requirements mandated under Section 409A of the Code including the Participant’s irrevocable election to make a rollover contribution to the Plan a minimum of twelve full months prior to the date on which the Participant’s bookkeeping account balance from such other deferred compensation plan of the Employer vests and becomes available to be distributed to the Participant.

ARTICLE IV
PARTICIPANT DEFERRALS

     4.1 Plan Account. All Participant Deferrals and Corporate Contributions shall be credited on a bookkeeping basis to a Plan Account established in the Participant’s name. Separate sub-accounts may be established to reflect the Participant’s investment elections, which shall reflect all earnings, gains or losses attributable to such investment elections.

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     4.2 Investment of Participant Deferrals. Subject to the provisions of Section 4.3 hereof, each Participant shall direct the manner in which his or her Participant Deferrals are to be invested for bookkeeping purposes under the Plan. All Participant Deferrals may be invested for bookkeeping purposes in any one or more of the Plan’s Investment Accounts in such amounts as the Participant shall select. Subject to the provisions of Section 4.4 hereof, Participants may modify their investment elections at such times and in such manner as permitted by the Corporation.

     4.3 Compliance with Corporation’s Stock Ownership Guidelines. Notwithstanding the foregoing provisions of Section 4.2 hereof, Participants who have not met the Corporation’s Stock Ownership Guidelines shall be required to defer all Participant Deferrals into the Common Stock Account until such time as the Corporation Stock Ownership Guidelines have been met.

     4.4 Investment of Participant Deferrals Invested in the Common Stock Account. The Participant’s election to have his or her Participant Deferrals invested on a bookkeeping basis in the Plan’s Common Stock Account shall be irrevocable; Participant Deferrals invested in the Common Stock Account shall not be subject to investment direction by the Participant.

     4.5 Crediting of Participant Deferrals; Withholding. Participant Salary Deferrals shall be credited to the Participant’s Plan Account as of the date that such Compensation would have been payable to the Participant but for the Participant’s election to defer such Compensation to the Plan. Participant Incentive Compensation Deferrals shall be credited to the Participant’s Plan Account as of the date such Incentive Compensation would have been payable to the Participant but for the Participant’s election to defer such Incentive Compensation to the Plan. The withholding of taxes with respect to Participant Deferrals as required by state, federal or local law will be withheld from the Participant’s Compensation to the maximum extent possible.

     4.6 Section 16 Officers Investment of Participant Deferrals in the Common Stock Account. Notwithstanding the provisions of Section 4.4 and Section 4.5, hereof, if the Participant is an “Officer” of the Corporation, as that term is defined in accordance with Section 16 of the Securities Act of 1934, the Participant’s Participant Deferrals shall be invested in the Plan’s Common Stock Account as follows:

(a) Incentive Compensation Deferrals. Incentive Compensation Deferrals shall be credited on a bookkeeping basis to the Common Stock Account as of the date the Incentive Compensation Deferrals would have been payable to the Participant but for the Participant’s election to defer such Incentive Compensation to the Plan.

(b) Salary Deferrals. Salary Deferrals shall be credited to the Interest Bearing Account as of the date the Participant’s Salary Deferrals would have been payable to the Participant but for the Participant’s election to defer such Salary Deferrals to the Plan. Thereafter, as of the last day of each calendar quarter (or last business day of the applicable calendar quarter), those Salary Deferrals that the Participant elected to invest in the Common Stock Account that have been credited to the Interest Bearing Account during such calendar quarter, with all earnings, gains and losses thereon shall automatically be transferred to the Plan’s Common Stock Account.

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ARTICLE V
CORPORATE CONTRIBUTIONS

     5.1 Crediting of Corporation Contributions. Corporate Contributions shall be credited on a bookkeeping basis to the Participant’s Plan Account in proportion to the respective amount of the Participant’s Participant Deferrals made to the Plan during the applicable Deferral Period. Corporate Contributions shall equal up 100% of the Participant’s first 6% of Participant Deferrals credited to the Plan for the applicable pay period.

     Notwithstanding the forgoing provisions of this Section 5.1, however, if the Participant is an “Officer” of the Corporation, as that term is defined in accordance with Section 16 of the Securities Act of 1934, such Corporate Contributions shall be credited to the Participant’s Plan Account as follows:

(a) Incentive Compensation Deferrals. Corporate Contributions shall be credited on a bookkeeping basis to the Participant’s Plan Account as of the date the Participant’s Incentive Compensation Deferrals are credited, on a bookkeeping basis to the Participant’s Plan Account.

(b) Salary Deferrals. Corporate Contributions shall be credited to the Participant’s Plan Account as of the last day of each calendar quarter (or last business day of the applicable calendar quarter).

     5.2 Investment of Corporate Contributions. All Corporate Contributions credited to the Participant’s Plan Account shall be invested for bookkeeping purposes in the Plan’s Common Stock Account. Corporate Contributions are not subject to Participant investment directions.

     5.3 Vesting in Corporate Contributions. Subject to the provisions of Section 7.4 of the Plan, a Participant shall become vested in those Corporate Contributions credited on a bookkeeping basis to the Participant’s Plan Account upon the Participant’s (1) completion of three years of vested service, (2) Disability, (3) death, or (4) Termination under Limited Circumstances. For purposes of this Section 5.3 hereof, the term “vested service” shall be calculated from the Participant’s employment commencement date through the Participant’s Termination, or Retirement date (whichever shall first occur), and shall be based on consecutive twelve-month periods during which time the Participant is employed with an Employer.

     5.4 Forfeiture of Corporate Contributions. In the event of the Participant’s Termination or Retirement, all not vested Corporate Contributions and any not vested Participant Predecessor Plan corporate contributions shall be forfeited as of the Participant’s last day of employment.

     5.5 Determination of Amount. The Plan Administrator shall verify the amount of Participant Deferrals, Corporate Contributions, and if applicable, Participant Predecessor Plan Participant Deferrals, Participant Predecessor Plan Corporate Contributions, and Rollover Contributions with all earnings, gains and losses, if any, to be credited to each Participant’s Plan Accounts in accordance with the provisions of the Plan. The reasonable and equitable decision of the Plan Administrator as to the value of each Investment Account shall be conclusive and binding upon all Participants and the Beneficiary of each deceased Participant having any interest, direct or indirect in the Participant’s Plan Account. The value of an Investment Account on any day not a Determination Date shall be the value on the last preceding Determination Date. As soon as reasonably practicable after the close of the Plan Year, the Corporation shall send to each Participant an itemized accounting statement which shall reflect the Participant’s Plan Account balance.

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     5.6 Corporate Assets. All Participant Deferrals, Corporate Contributions, and if applicable, Participant Predecessor Plan Participant Deferrals, Participant Predecessor Plan Corporate Contributions, and Rollover Contributions with all dividends, earnings and any other gains and losses credited to a Participant’s Plan Account remain the assets and property of the Corporation, which shall be subject to distribution to the Participant only in accordance with Article VII, of the Plan. Payments made under the Plan shall be in the form of cash and common shares of the Corporation and shall be made from the general assets of the Corporation, and Participants and Beneficiaries shall have the status of general unsecured creditors of the Corporation. Nothing contained in the Plan shall create, or be construed as creating a trust of any kind or any other fiduciary relationship between the Participant, the Corporation, or any other person. It is the intention of the Corporation and the Participant that the Plan be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended, and Section 409A of the Code.

     5.7 No Present Interest. Subject to any federal statute to the contrary, no right or benefit under the Plan and no right or interest in each Participant’s Plan Account shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any right or benefit under the Plan, or Participant’s Plan Account shall be void. No right, interest, or benefit under the Plan or Participant’s Plan Account shall be liable for or subject to the debts, contracts, liabilities, or torts of the Participant or Beneficiary, including any domestic relations proceedings. If the Participant or Beneficiary becomes bankrupt or attempts to alienate, sell, assign, pledge, encumber, or charge any right under the Plan or Participant’s Plan Account, such attempt shall be void and unenforceable.

     5.8 Effect of Plan Termination. Notwithstanding anything to the contrary contained in the Plan, the termination of the Plan shall terminate the liability of the Corporation and all Employers to make further Corporate Contributions to the Plan.

ARTICLE VI
MERGER OF PREDECESSOR PLANS

     6.1 Merger of Predecessor Plans. Effective December 31, 2006, the KeyCorp Deferred Compensation Plan, the KeyCorp Second Deferred Compensation Plan, the KeyCorp Excess 401(k) Savings Plan, and the KeyCorp Second 401(k) Excess Savings Plan shall be merged into the Plan, and participants in such Predecessor Plan will automatically participate in the Plan. Hereinafter the KeyCorp Deferred Compensation Plan, the KeyCorp Second Deferred Compensation Plan, the KeyCorp Excess 401(k) Savings Plan, and the KeyCorp Second 401(k) Excess Savings Plan shall be referred to as the “Predecessor Plan”.

     6.2 Opening Account Balances. All Predecessor Plan participants shall have their Predecessor Plan benefits reflected, on a bookkeeping basis, as a single Predecessor Plan Opening Account Balance (“Opening Account Balance”). Such Opening Account Balance shall separately reflect Predecessor Plan (1) participant deferrals, (2) corporate contributions, and (3) any participant rollover balances, with all earnings, gains and losses thereon. All Predecessor Plan participant deferral elections made prior to December 31, 2006 shall be deferred to the Plan when paid, and shall be reflected as part of the Participant’s Predecessor Plan Opening Account Balance. Predecessor Plan benefits, as reflected in the Participant’s Opening Account Balance, will be subject to the distribution provisions of Section 6.4, Section 6.5 and Section 6.6 hereof, as well as the requirements of Article VII of the Plan.

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6.3 Investment of Predecessor Plan Benefits.

(a) Participant Deferrals Subject to Investment Direction. Predecessor Plan participants on or prior to December 31, 2006 shall be required make an election to direct the investment of those participant deferrals that are subject to investment diversification under the Predecessor Plan. The Participant’s election to invest his or her Predecessor Plan participant deferrals in the Plan’s Common Stock Account will constitute an irrevocable election, and such participant deferrals thereafter will not be subject to investment diversification by the participant.

(b) Participant Deferrals, Rollover Contributions, and Corporate Contributions Not Subject to Investment Direction. Predecessor Plan participant deferrals not subject to investment diversification, Predecessor Plan rollover contributions, and Predecessor Plan corporate contributions shall automatically be invested in the Plan’s Common Stock Account, and will not be subject to investment diversification by the participant.

     6.4 Vesting of Predecessor Plan Corporate Contributions. All Predecessor Plan corporate contributions that have not vested as of December 31, 2006 shall continue to vest under the vesting provisions of Section 5.3 hereof, and when vested, shall become a part of the Participant’s Plan benefit. Notwithstanding the foregoing provisions of this Section 6.4, however, in the event that the Participant elected to irrevocably invest his or her participant deferrals under the KeyCorp Deferred Compensation Plan and/or the KeyCorp Second Deferred Compensation Plan into the common stock account of those plans, and in exchange for this irrevocable investment election the Participant received an additional 4% corporate contribution amount on such participant deferrals, then in such event, this additional 4% corporate contribution amount, with all earnings and gains thereon, shall be forfeited in the event of the Participant’s Termination prior to his or her (a) Normal Retirement, or (b) Disability and termination of employment.

     6.5 Distribution Election for Predecessor Plan Benefits. Predecessor Plan participants shall make a single, irrevocable election prior to December 31, 2006 to have all Predecessor Plan benefits distributed under the following distribution payment options:

     (a) a single lump sum distribution, and/or

(b) a series of monthly installment distributions over a period of 60, 120, or 180 months.

If a Predecessor Plan participant fails to make a distribution election for his or her Predecessor Plan benefits, as provided for under this Section 6.4 hereof, the participant’s Predecessor Plan benefit with all earnings, gains and losses thereon shall be distributed to the participant as an installment distribution over a period of 120 months. The distribution of Predecessor Plan benefits shall be subject to all requirements of Article VII of the Plan.

     6.6 Constructive Receipt Limitation. Notwithstanding the foregoing provisions of Section 6.5 hereof, Participants’ Predecessor Plan distribution elections shall remain in effect and shall control all Participant Plan distributions occurring prior to July 1, 2007.

     6.7 Predecessor Plan Benefits in a Pay Status. All Predecessor Plan benefits in a pay status as of December 31, 2006 shall continue to be paid in accordance with the distribution elections in effect and in accordance with the terms of the Predecessor Plan.

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ARTICLE VII
DISTRIBUTION OF PLAN BENEFITS

     7.1 Distribution of Plan Benefits. Subject to the provisions of Section 7.4 and Section 7.7 hereof, a Participant shall commence the distribution of his or her vested Plan Account balance and vested Opening Account Balance at the Participant’s Termination, Retirement, Disability, death or Termination under Limited Circumstances (whichever shall first occur), but in no event later than 90 days following the date of the Participant’s Termination, Retirement, Disability, Termination under Limited Circumstances, or death.

     7.2 Unforeseeable Emergency. Upon a finding that the Participant has suffered an Unforseeable Emergency, the Corporation shall permit the Participant to obtain an Emergency Withdrawal from his or her vested Plan Account. The amount of such Emergency Withdrawal shall be limited to the amount reasonably necessary to meet the Participant’s immediate emergency needs resulting from the Unforeseeable Emergency, as defined under Section 409A of the Code. Distributions made to a Participant pursuant to this Section 7.2 hereof shall be paid in a lump sum amount as soon as administratively practicable but in no event later than 60 days following the Participant’s Unforeseeable Emergency request date.

     7.3 Distribution Options. Subject to the provisions of Section 7.4 and Section 7.5 hereof, a Participant shall elect, as reflected in the Participant’s Participation Agreement, to receive a distribution of his or her Participant Deferrals and Corporate Contributions for the applicable Deferral Period under the following payment options:

(a) a single lump sum distribution, or

(b) a series of monthly installment distributions over a period of 60, 120, or 180 months.

     Distribution of Participant Deferrals and Predecessor Plan participant deferrals from the Plan’s Investment Funds or Interest Bearing Account shall be made in cash. Distributions of Participant Deferrals, Rollover Contributions, Corporate Contributions, and Predecessor Plan participant deferrals, corporate contributions, and rollover contributions from the Company Stock Fund shall be made in KeyCorp common shares.

     7.4 Forfeiture of Plan Benefits. Notwithstanding any other provision of the Plan to the contrary, if the Participant engages in any Harmful Activity prior to or within twelve months following the Participant’s Termination or Retirement, then by operation of this Section 7.4 hereof, and without any further notice to the Participant, (a) (i) all Corporate Contributions and Predecessor Plan corporate contributions, and (ii) all earnings, dividends, and gains allocated to the Participant’s Plan Account with regard to both Participant Deferrals and Corporate Contributions as well as Predecessor Plan participant deferrals and corporate contributions shall become immediately forfeited (the Participant’s Participant Deferrals and Predecessor Plan participant deferrals shall be continue to be distributed to the Participant in accordance with the distribution instructions contained within the Participant’s Participation Agreements), and (b) all distributed Corporate Contributions and Predecessor Plan corporate contributions and all distributed earnings, gains and dividends on the Participant’s Participant Deferrals and Corporate Contributions and Predecessor Plan participant deferrals and corporate contributions that have been distributed to the Participant within one year of the Participant’s Termination or Retirement date shall be fully repaid by the Participant to the Corporation within 60 days following the Participant’s receipt of the Corporation’s notice of such Harmful Activity.

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     The foregoing restrictions shall not apply in the event that the Participant’s employment with an Employer terminates within two years after a Change of Control if any of the following have occurred: a relocation of the Participant’s principal place of employment more than 35 miles from the Participant’s principal place of employment immediately prior to the Change of Control, a reduction in the Participant’s base salary after a Change of Control, or termination of employment under circumstances in which the Participant is entitled to severance benefits or salary continuation or similar benefits under a change of control agreement, employment agreement, or severance or separation pay plan. The determination by the Corporation as to whether a Participant has engaged in a “Harmful Activity” prior to or within twelve months after the Participant’s Termination or Retirement shall be final and conclusive upon the Participant and upon all other Persons.

     For purposes of this Section 7.4, a “Harmful Activity” shall have occurred if the Participant shall do any one or more of the following:

(i) Use, publish, sell, trade or otherwise disclose Non-Public Information of KeyCorp unless such prohibited activity was inadvertent, done in good faith and did not cause significant harm to KeyCorp.

(ii) After notice from KeyCorp, fail to return to KeyCorp any document, data, or thing in his or her possession or to which the Participant has access that may involve Non-Public Information of KeyCorp.

(iii) After notice from KeyCorp, fail to assign to KeyCorp all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Participant created, in whole or in part, during employment with KeyCorp, including, without limitation, copyrights, trademarks, service marks, and patents in or to (or associated with) such Intellectual Property.

(iv) After notice from KeyCorp, fail to agree to do any acts and sign any document reasonably requested by KeyCorp to assign and convey all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Participant created, in whole or in part, during employment with KeyCorp, including, without limitation, the signing of patent applications and assignments thereof.

(v) Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, solicit or entice for employment or hire any KeyCorp employee.

(vi) Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, call upon, solicit, or do business with (other than business which does not compete with any business conducted by KeyCorp) any KeyCorp customer the Participant called upon, solicited, interacted with, or became acquainted with, or learned of through access to information (whether or not such information is or was non-public) while the Participant was employed at KeyCorp unless such prohibited activity was inadvertent, done in good faith, and did not involve a customer whom the Participant should have reasonably known was a customer of KeyCorp.

(vii) Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, after notice from KeyCorp, continue to engage in any business activity in competition with KeyCorp in the same or a closely

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related activity that the Participant was engaged in for KeyCorp during the one year period prior to the termination of the Participant’s employment.

For purposes of this Section 7.4, the term:

     “Intellectual Property” shall mean any invention, idea, product, method of doing business, market or business plan, process, program, software, formula, method, work of authorship, or other information, or thing relating to KeyCorp or any of its businesses.

     “Non-Public Information” shall mean, but is not limited to, trade secrets, confidential processes, programs, software, formulas, methods, business information or plans, financial information, and listings of names (e.g., employees, customers, and suppliers) that are developed, owned, utilized, or maintained by an employer such as KeyCorp, and that of its customers or suppliers, and that are not generally known by the public.

     “KeyCorp” shall include KeyCorp, its subsidiaries, and its affiliates.

     7.5 Distribution of Account Balances. The Participant’s vested Plan Account and vested Opening Account Balance shall be valued as of the Determination Date immediately following his or her Termination, Retirement, Termination Under Limited Circumstances, or death (the “valuation date”).

(a) Lump Sum Distributions. If a Participant has elected to receive a lump sum distribution of all or any portion of his or her vested Plan Account and/or vested Opening Account Balance, such lump sum distribution shall be made as soon as administratively practicable but in no event later than 90 days following the Participant’s Termination, Retirement, Disability, Termination Under Limited Circumstances, or death.

(b) Installment Distributions. If a Participant has elected to receive an installment distribution of all or any portion of his or her vested Plan Account and/or vested Opening Account Balance, such installment distribution shall commence as soon as administratively practicable but in no event later than 90 days following the Participant’s Termination, Retirement, Disability, Termination Under Limited Circumstances, or death.

(i) The Participant’s vested unpaid Plan Account balances invested for bookkeeping purposes in the Plan’s Investment Funds and/or Interest Bearing Account shall be reflected in a distribution sub-account, which shall be credited monthly with interest based on the average of the Interest Bearing Account’s rate of return for the 36 month period immediately preceding the Participant’s Termination, Retirement, or death during the Participant’s installment distribution period. Distributions shall be made in substantially equal monthly installments over the Participant’s elected installment distribution period.

(ii) The Participant’s vested unpaid Plan Account balance invested for bookkeeping purposes in the Plan’s Common Stock Account shall be reflected as a number of whole and fractional Common Shares in a distribution sub-account and shall be credited with dividends on a bookkeeping basis which shall be reinvested in the Plan’s Common Stock Account throughout the installment distribution period; all such reinvested dividends shall be paid to the Participant in Common Shares in

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conjunction with the Participant’s final installment payment under the Plan. Distributions shall be made in substantially equal annual installments over the Participant’s elected installment distribution period.

     7.6 Distribution of Small Accounts. Notwithstanding the provisions of Sections 7.2, 7.3, and 7.5, hereof, if the value of a Participant’s vested Account balance(s) as of the Determination Date immediately following the Participant’s Termination, Retirement, death, or Termination Under Limited Circumstances date is under $50,000, the Participant’s Account balance(s) shall be distributed to the Participant as a single lump sum distribution no later than 90 days following the Participant’s Termination, Retirement, Disability, Termination Under Limited Circumstances, or death.

     7.7 Payment Limitation for Key Employees. Notwithstanding any other provision of the Plan to the contrary, including the provisions contained within this Article VII hereof, in the event that the Participant is determined by KeyCorp to be a “specified employee” within the meaning of Section 409A of the Code, then in no event may distributions under this Article VII commence prior to the first business day of the seventh month following Participant’s Separation from Service date (or his date of death, if earlier). To the extent an amount is deferred under this Section 7.7 until the first business day of the seventh month following the Participant’s separation from service date, then in such event, the payment to which the Participant would otherwise have been entitled to during the first six months shall be accumulated and paid to the Participant on the first business day of the seventh month with all Plan earnings thereon. Distribution of the Participant’s Account shall commence on the first day of the seventh month following the Participant’s Separation from Service date, with such distribution being made in accordance with the distribution instructions provided in the Participant’s Participation Agreement(s).

     7.8 Facility of Payment. If it is found that any individual to whom an amount is payable hereunder is incapable of attending to his or her financial affairs because of any mental or physical condition, including the infirmities of advanced age, such amount (unless prior claim therefore shall have been made by a duly qualified guardian or other legal representative) may, in the discretion of the Corporation, be paid to another person for the use or benefit of the individual found incapable of attending to his or her financial affairs or in satisfaction of legal obligations incurred by or on behalf of such individual. Any such payment shall be charged to the Participant’s Plan Account from which any such payment would otherwise have been paid to the individual found incapable of attending to his or her financial affairs, and shall be a complete discharge of any liability therefore under the Plan.

ARTICLE VIII
BENEFICIARY DESIGNATION

     8.1 Beneficiary Designation. Subject to Section 8.3 hereof, each Participant shall be requested to designate one or more persons or an entity as Beneficiary (both primary as well as secondary) to whom benefits under this Plan shall be paid in the event of Participant’s death prior to complete distribution of the Participant’s Plan Account. Each Beneficiary designation shall be in a written form prescribed by the Corporation and shall be effective only when filed with the Corporation during the Participant’s lifetime.

     8.2 Changing Beneficiary. Subject to Section 8.3, any Beneficiary designation may be changed by a Participant without the consent of the previously named Beneficiary by the filing of a new designation with the Corporation. The filing of a new designation shall cancel all designations previously filed.

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     8.3 No Beneficiary Designation. If any Participant fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary (including all contingent Beneficiaries) designated by a deceased Participant dies before the Participant or before complete distribution of the Participant’s benefits, the Participant’s Beneficiary shall be the person in the first of the following classes in which there is a survivor:

(a) The Participant’s spouse;

(b) The Participant’s children in equal shares, except that if any of the children predeceases the Participant but leaves issue surviving, then such issue shall take, by right of representation the share the parent would have taken if living; and

(c) The Participant’s estate.

     8.4 Distribution Upon Death. If a Participant dies after the distribution of his or her interest under the Plan has commenced, the remaining portion of the Participant’s entire interest under the Plan, if any, shall be distributed to the Participant’s Beneficiary in a single lump sum benefit. If the Participant dies before the distribution of the Participant’s Plan Account has commenced, the Participant’s entire interest under the Plan shall be valued as of the Determination Date immediately following the Participant’s date of death, and shall be distributed to his or her Beneficiary in a lump sum payment within 90 days following the Participant’s date of death in accordance with the distributions provisions contained in Article VII.

ARTICLE IX
ADMINISTRATION

     9.1 Administration. The Plan Administrator shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making payments hereunder. The Plan Administrator shall have the sole and absolute discretionary authority and power to carry out the provisions of the Plan, including, but not limited to, the authority and power (a) to determine all questions relating to the eligibility for and the amount of any benefit to be paid under the Plan, (b) to determine all questions pertaining to claims for benefits and procedures for claim review, (c) to resolve all other questions arising under the Plan, including any questions of construction and/or interpretation, and (d) to take such further action as the Plan Administrator shall deem necessary or advisable in the administration of the Plan. All findings, decisions, and determinations of any kind made by the Plan Administrator shall not be disturbed unless the Plan Administrator has acted in an arbitrary and capricious manner. Subject to the requirements of law, the Plan Administrator shall be the sole judge of the standard of proof required in any claim for benefits and in any determination of eligibility for a benefit. All decisions of the Plan Administrator shall be final and binding on all parties. The Plan Administrator may employ such attorneys, investment counsel, agents, and accountants, as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The actions taken and the decisions made by the Plan Administrator hereunder shall be final and binding upon all interested parties subject, however, to the provisions of Section 9.2. The Plan Year, for purposes of Plan administration, shall be the calendar year.

     9.2 Claims Review Procedure. Whenever the Plan Administrator decides for whatever reason to deny, whether in whole or in part, a claim for benefits under this Plan filed by any person (herein referred to as the “Claimant”), the Plan Administrator shall transmit a written notice of its decision to the Claimant, which notice shall be written in a manner calculated to be understood by the Claimant

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and shall contain a statement of the specific reasons for the denial of the claim and a statement advising the Claimant that, within 60 days of the date on which he or she receives such notice, he or she may obtain review of the decision of the Plan Administrator in accordance with the procedures hereinafter set forth. Within such 60-day period, the Claimant or his or her authorized representative may request that the claim denial be reviewed by filing with the Plan’s Claims Review Committee a written request therefore, which request shall contain the following information:

(a) the date on which the request was filed with the Plan Administrator; provided, however, that the date on which the request for review was in fact filed with the Plan’s Claims Review Committee shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (a);

(b) the specific portions of the denial of his or her claim, which the Claimant requests the Plan’s Claims Review Committee to review;

(c) a statement by the Claimant setting forth the basis upon which he or she believes the Plan’s Claims Review Committee should reverse its previous denial of the claim and accept the claim as made; and

(d) any written material, which the Claimant desires the Plan’s Claims Review Committee to examine in its consideration of his or her position as stated pursuant to paragraph (b) above.

     In accordance with this Section, if the Claimant requests a review of the Plan Administrator’s decision, such review shall be made by the Plan’s Claims Review Committee, who shall, within sixty (60) days after receipt of the request form, review and render a written decision on the claim containing the specific reasons for the decision including reference to Plan provisions upon which the decision is based. All findings, decisions, and determinations of any kind made by the Plan’s Claims Review Committee shall not be modified unless the Plan’s Claims Review Committee has acted in an arbitrary and capricious manner. Subject to the requirements of law, the Plan’s Claims Review Committee shall be the sole judge of the standard of proof required in any claim for benefits, and any determination of eligibility for a benefit. All decisions of the Plan’s Claims Review Committee shall be binding on the claimant and upon all other Persons. If the Participant or Beneficiary shall not file written notice with the Plan’s Claims Review Committee at the times set forth above, such individual shall have waived all benefits under the Plan other than as already provided, if any, under the Plan.

ARTICLE X
AMENDMENT AND TERMINATION OF PLAN

     10.1 Reservation of Rights. The Corporation reserves the right to amend or terminate the Plan at any time by action of the Board of Directors of the Corporation, or any duly authorized committee thereof, and to modify or amend the Plan, in whole or in part, at any time and for any reason. No amendment or termination will result in an acceleration of distributions under the Plan in violation of Section 409A of the Code.

(a) Preservation of Account Balance. No termination, amendment, or modification of the Plan shall reduce (i) the amount of Plan Rollover Contributions, Predecessor Plan benefits, Participant Deferrals and Corporate Contributions, and (ii) all earnings and gains on such Plan Rollover Contributions, Predecessor Plan benefits,

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Participant Deferrals, and Corporate Contributions that have accrued up to the effective date of the termination, amendment, or modification.

(b) Changes in Earnings Rate. No amendment or modification of the Plan shall reduce the rate of earnings to be credited on all Plan Rollover Contributions, Predecessor Plan benefits, Participant Deferrals, and Corporate Contributions and all earnings accrued thereon until the close of the applicable Deferral Period in which such amendment or modification is made.

     10.2 Effect of Plan Termination. The Corporation may terminate the Plan by instructing the Plan Administrator to not accept any additional Participation Agreements. If such a termination occurs, the Plan shall continue to operate and be effective with regard to Participation Agreements entered into prior to the effective date of such termination.

ARTICLE XI
CHANGE OF CONTROL

     11.1 Change of Control. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control as defined in accordance with Section 2.2 of the Plan, no amendment or modification of the Plan may be made at any time on or after such Change of Control (1) to reduce or modify a Participant’s Pre-Change of Control Account Balance, (2) to reduce or modify the choice of Investment Funds or method of crediting such earnings to a Participant’s Pre-Change of Control Account Balances, (3) to reduce or modify the Common Stock Accounts’ method of calculating all earnings, gains, and/or losses on a Participant’s Pre-Change of Control Account Balance, or (4) to reduce or modify the Participant’s Participant Deferrals and/or Corporate Contributions to be credited to a Participant’s Plan Account for the applicable Deferral Period. For purposes of this Section 11.1, the term “Pre-Change of Control Account Balance” shall mean, with regard to any Plan Participant, the aggregate amount of such Participant’s Plan Rollover Contributions, Predecessor Plan benefits, Participant Deferrals, and Corporate Contributions with all earnings, gains, and losses thereon which are credited to the Participant’s Plan Account and Opening Account Balance through the close of the calendar year in which such Change of Control occurs.

     11.2 Common Stock Conversion. In the event of a Change of Control in which the common shares of the Corporation are converted into or exchanged for securities, cash and/or other property as a result of any capital reorganization or reclassification of the capital stock of the Corporation, or consolidation or merger of the Corporation with or into another corporation or entity, or the sale of all or substantially all of its assets to another corporation or entity, the Corporation shall cause the Common Stock Account to reflect on a bookkeeping basis the securities, cash and other property that would have been received in such reorganization, reclassification, consolidation, merger or sale on an equivalent amount of common shares equal to the balance in the Common Stock Account and, from and after such reorganization, reclassification, consolidation, merger or sale, the Common Stock Account shall reflect on a bookkeeping basis all dividends, interest, earnings and losses attributable to such securities, cash, and other property (with any cash earning interest at the rate applicable to the Interest Earning Account).

     11.3 Change of Control Provisions. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control, (i) the Participant’s employment is terminated by his or her Employer and any other Employer without cause, or (ii) the Participant resigns within two years following a Change of Control as a result of the Participant’s mandatory relocation, reduction in the Participant’s base salary, reduction in the Participant’s average annual incentive compensation (unless

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such reduction is attributable to the overall corporate or business unit performance), or the Participant’s exclusion from stock option programs as compared to comparably situated Employees, the provisions of Section 6.4 of the Plan which limit a Participant’s ability to provide services to a financial services organization, business, or company upon the Participant’s Termination or Retirement, shall become null and void.

     11.4 Amendment in the Event of a Change of Control. On or after a Change of Control, the provisions of Article II, Article III, Article IV, Article V, Article VI, Article VII, Article VIII, Article IX, Article X, and Article XI may not be amended or modified as such Sections and Articles apply with regard to the Participants’ Pre-Change of Control Account Balances.

ARTICLE XII
MISCELLANEOUS PROVISIONS

     12.1 Unfunded Plan. This Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly-compensated employees” within the meaning of Sections 201, 301, and 401 of ERISA, and therefore is exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA.

     12.2 No Commitment as to Employment. Nothing herein contained shall be construed as a commitment or agreement upon the part of any Employee hereunder to continue his or her employment with an Employer, and nothing herein contained shall be construed as a commitment on the part of any Employer to continue the employment, rate of compensation or terms and conditions of employment of any Employee hereunder for any period. All Participants shall remain subject to discharge to the same extent as if the Plan had never been put into effect.

     12.3 Benefits. Nothing in the Plan shall be construed to confer any right or claim upon any person, firm, or corporation other than the Participants, former Participants, and Beneficiaries.

     12.4 Absence of Liability. No member of the Board of Directors of the Corporation or a subsidiary or committee authorized by the Board of Directors, or any officer of the Corporation or a subsidiary or officer of a subsidiary shall be liable for any act or action hereunder, whether of commission or omission, taken by any other member, or by any officer, agent, or Employee, except in circumstances involving bad faith or willful misconduct, for anything done or omitted to be done.

     12.5 Expenses. The expenses of administration of the Plan shall be paid by the Corporation.

     12.6 Precedent. Except as otherwise specifically agreed to by the Corporation in writing, no action taken in accordance with the Plan by the Corporation shall be construed or relied upon as a precedent for similar action under similar circumstances.

     12.7 Withholding. The Corporation shall withhold any tax, which the Corporation in its discretion deems necessary to be withheld from any payment to any Participant, former Participant, or Beneficiary hereunder, by reason of any present or future law.

     12.8 Validity of Plan. The validity of the Plan shall be determined and the Plan shall be construed and interpreted in accordance with the provisions of ERISA, the Code, and, to the extent applicable, the laws of the State of Ohio. The invalidity or illegality of any provision of the Plan shall not affect the validity or legality of any other part thereof.

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     12.9 Parties Bound. The Plan shall be binding upon the Employers, Participants, former Participants, and Beneficiaries hereunder, and, as the case may be, the heirs, executors, administrators, successors, and assigns of each of them.

     12.10 Headings. All headings used in the Plan are for convenience of reference only and are not part of the substance of the Plan.

     12.11 Duty to Furnish Information. The Corporation shall furnish to each Participant, former Participant, or Beneficiary any documents, reports, returns, statements, or other information that it reasonably deems necessary to perform its duties imposed hereunder or otherwise imposed by law.

     12.12 Trust Fund. At its discretion, the Corporation may establish one or more trusts, with such trustees as the Corporation may approve, for the purpose of providing for the payment of benefits owed under the Plan. Although such a trust may be irrevocable, in the event of insolvency or bankruptcy of the Corporation, such assets will be subject to the claims of the Corporation’s general creditors. To the extent any benefits provided under the Plan are paid from any such trust, the Employer shall have no further obligation to pay them. If not paid from the trust, such benefits shall remain the obligation of the Employer.

     12.13 Validity. In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.

     12.14 Notice. Any notice required or permitted under the Plan shall be deemed sufficiently provided if such notice is in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or on the receipt for registration or certification. Mailed notice to the Corporation shall be directed to the Corporation’s address, attention: KeyCorp Compensation and Benefits Department. Mailed notice to a Participant or Beneficiary shall be directed to the individual’s last known address in the Employer’s records

     12.15 Successors. The provisions of this Plan shall bind and inure to the benefit of each Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity, which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of an Employer.

ARTICLE XIII
COMPLIANCE WITH
SECTION 409A CODE

     13.1 Compliance With Section 409A. The Plan is intended to provide for the deferral of compensation in accordance with the provisions of Section 409A of the Code and regulations and published guidance issued pursuant thereto. Accordingly, the Plan shall be construed and administered in a manner consistent with those provisions and may at any time be amended in the manner and to the extent determined necessary or desirable by the Corporation to reflect or otherwise facilitate compliance with such provisions with respect to amounts deferred. Notwithstanding any provision of the Plan to the contrary, no otherwise permissible election, deferral, accrual, or distribution shall be made or given effect

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under the Plan that would result in a violation, early taxation, or assessment of penalties or interest of any amount under Section 409A of the Code.

ARTICLE XIV
DISCRETIONARY PROFIT SHARING FEATURE

14.1 Discretionary Profit Sharing Contribution. The Corporation may, but shall not be required to contribute to the Plan for any Plan year, a Discretionary Profit Sharing Contribution in such amount as shall be determined under a formula approved by the Corporation’s Board of Directors or its authorized Committee thereof. This Discretionary Profit Sharing Contribution shall be credited on a bookkeeping basis to an Eligible Participant’s Plan Account in proportion to the respective amount authorized by the Corporation’s Board of Directors or by its authorized Committee. All Discretionary Profit Sharing Contributions shall be credited on a bookkeeping basis to an Eligible Participant’s Plan Account as of the last day of the applicable Plan year.

14.2 Modification of the Discretionary Profit Sharing Formula. The Corporation’s Board of Directors or its authorized Committee thereof, reserves the right to change or to discontinue an approved Discretionary Profit Sharing formula, provided, however, that such authority to change or discontinue an approved Discretionary Profit Sharing formula for any Plan year shall not apply on and after a Change of Control.

14.3 Investment of Discretionary Profit Sharing Contributions. Discretionary Profit Sharing Contributions shall be invested in accordance with the Eligible Participant’s investment instructions in effect for the Participant’s Participant Deferrals. If there are no investment instructions in effect, the Eligible Participant’s Discretionary Profit Sharing Contributions shall be invested in the age appropriate LifePath Fund in accordance with the administrative rules of the Plan.

14.4 Vesting in Discretionary Profit Sharing Contributions. Subject to the provisions of Section 7.4 of the Plan, an Eligible Participant shall become vested in those Discretionary Profit Sharing Contributions credited on a bookkeeping basis to the Eligible Participant’s Plan Account upon the Participant’s (1) completion of three years of vested service, (2) Disability, (3) death, or (4) Termination under Limited Circumstances. For purposes of this Section 14.4 hereof, the term “vested service” shall be calculated from the Eligible Participant’s employment commencement date through the Participant’s Termination, or Retirement date (whichever shall first occur), and shall be based on consecutive twelve-month periods during which time the Participant is employed with an Employer.

14.5 Distribution of Discretionary Profit Sharing Contributions. Subject to the provisions of Section 7.4, and Section 7.7 (except that those distribution instructions provided in the Participant’s Participation Agreement(s) shall not apply to the Discretionary Profit Sharing Contributions), a Participant shall commence the distribution of his or her vested Discretionary Profit Sharing Contributions at the Participant’s Termination, Retirement, death, Disability or Termination under Limited Circumstances (whichever shall first occur), but in no event later than 90 days following the date of the Participant’s Termination, Retirement, Disability, Termination under Limited Circumstances, or death. Distributions of Discretionary Profit Sharing Contributions shall be made in the form of a single lump sum cash distribution.

14.6 Eligible Participant. For purposes of this Article XIV, the term “Eligible Participant” for the applicable Plan year shall mean (a) a Plan Participant or an Employee who is employed in a job grade 86 or above (or in a job grade 86 or above equivalent), (b) who has completed 12 consecutive months of service with an Employer, (c) whose Compensation as of December 31 exceeds the compensation limits

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of Section 401(a)(17) of the Code, and (d) who is actively employed by an Employer as of the last day of the applicable Plan year. The term “applicable Plan year” shall mean the year for which the Discretionary Profit Sharing Contribution is to be allocated to Eligible Participants’ Plan Accounts.

     WITNESS WHEREOF, KeyCorp has caused this KeyCorp Deferred Savings Plan to be executed by its duly authorized officer to be effective as of January 31, 2010.

KEYCORP
By: Title:	/s/ Steven N. Bulloch Assistant Secretary

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EX-10.49

Exhibit 10.49

KEYCORP
SECOND SUPPLEMENTAL RETIREMENT PLAN

ARTICLE I

THE PLAN

     The KeyCorp Second Supplemental Retirement Plan (the “Plan”), as originally established on December 28, 2004, and thereafter amended and restated as of December 31, 2006 to reflect the merger of the KeyCorp Supplemental Retirement Plan into the Plan effective December 31, 2006, and thereafter amended and restated as of December 31, 2007 and September 1, 2009, is hereby restated to reflect the December 31, 2009 Plan amendment to freeze all new additional accruals under the Plan. It is the intention of KeyCorp and it is the understanding of those employees covered under the Plan, that the Plan constitutes a nonqualified retirement plan for a select group of management or highly compensated employees as described in Section 201(2), Section 301(3) and Section 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) and as such, the Plan is unfunded for tax purposes and for purposes of Title I of ERISA.

ARTICLE II

DEFINITIONS

     2.1 Meanings of Definitions. As used herein, the following words and phrases shall have the meanings hereinafter set forth, unless a different meaning is plainly required by the context:

(a)	“Average Interest Credit” shall mean the average of the Interest Credits (as defined in the Retirement Plan) for the three (3) consecutive calendar years ending with the year of the Grandfathered Employee’s termination.
(b)	“Average Treasury Rate” shall mean the average of the Treasury Rates (as defined in the Retirement Plan) for the three (3) consecutive calendar years ending with the year of the Grandfathered Employee’s termination.
(c)	“Equity/Compensation Award” shall mean one-half (50%) of the value of an award granted under the KeyCorp 2004 Equity Compensation Plan for any Plan year. The term “Equity/Compensation Award” may include “Stock Appreciation Rights”, “Restricted Stock”, “Restricted Stock Units”, “Performance Shares”, and/or “Performance Units”, but shall specifically not include “Options” as those terms have been defined in accordance with the provisions of the KeyCorp 2004 Equity Compensation Plan.”
(d)	“Beneficiary” shall mean the Grandfathered Employee’s surviving spouse or such other Beneficiary determined pursuant to Article VII of the Retirement Plan in the event the Grandfathered Employee dies before his or her Supplemental Retirement Benefit shall have been distributed to him or her in full.

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(e) “Compensation” for any Plan year or any partial Plan year in which the Grandfathered Employee incurs a severance from service date shall mean the entire amount of base compensation paid to such Grandfathered Employee during such period by reason of his employment as an Employee as reported for federal income tax purposes, or such base compensation which would have been paid except for (1) the timing of an Employer’s payroll processing operations, (2) the Grandfathered Employee’s election to participate in the KeyCorp 401(k) Savings Plan, KeyCorp Excess 401(k) Savings Plan, the KeyCorp Flexible Benefits Plan, a transportation reimbursement plan, the KeyCorp Automatic Deferral Plan, and/or (3) the Grandfathered Employee’s election to defer such base compensation election of under the KeyCorp Deferred Compensation Plan or the KeyCorp Deferred Savings Plan for the applicable Plan year(s), provided, however, that the term Compensation shall specifically exclude:

(i)	any amount attributable to the Grandfathered Employee’s exercise of stock appreciation rights and the amount of any gain to the Grandfathered Employee upon the exercise of stock options;
(ii)	any amount attributable to the Grandfathered Employee’s receipt of non-cash remuneration whether or not it is included in the Grandfathered Employee’s income for federal income tax purposes;
(iii)	any amount attributable to the Grandfathered Employee’s receipt of moving expenses and any relocation bonus paid to the Grandfathered Employee during the Plan year;
(iv)	any amount attributable to a lump sum severance payment paid by an Employer or the Corporation to the Grandfathered Employee;
(v)	any amount attributable to fringe benefits (cash and non-cash);
(vi)	any amount attributable to any bonus or payment made as an inducement for the Grandfathered Employee to accept employment with an Employer;
(vii)	any amount paid to the Grandfathered Employee during the Plan year which is attributable to interest earned and any KeyCorp matching contributions allocated on compensation deferred under a plan of an Employer or the Corporation;
(viii)	any amount attributable to salary deferrals paid to the Grandfathered Employee during the Plan year, which have been previously included as compensation under the Plan;
(ix)	any amount paid for any period after the Grandfathered Employee’s termination or retirement date, and
(x)	any deferred cash awards that upon vesting are paid to the Participant.

(f)	“Corporation” shall mean KeyCorp, an Ohio corporation its corporate successors, and any corporation or corporations into or with which it may be merged or consolidated.
(g)	“Disability” shall mean (1) a physical or mental disability which prevents a Grandfathered Employee from performing the duties such Grandfathered Employee was

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	employed to perform for his or her Employer when such disability commenced, (2) has resulted in the Grandfathered Employee’s absence from work for 180 qualifying days, and (3) application has been made for the Grandfathered Employee’s disability coverage under the KeyCorp Long Term Disability Plan, and which constitutes a separation from service under the requirements of Section 409A of the Code.
(h)	“Early Retirement Date” shall mean the date of the Grandfathered Employee’s retirement from his or her employment with an Employer on or after the Grandfathered Employee’s attainment of age 55 and completion of a minimum of five years of Benefit Service, but prior to the Grandfathered Employee’s Normal Retirement Date.
(i)	“Employer” shall mean the Corporation and its subsidiaries or affiliates unless specifically excluded as an Employer for Plan purposes by written action of an officer of the Corporation. An Employer’s participation shall be subject to any conditions or requirements made by the Corporation, and each Employer shall be deemed to appoint the Corporation as its exclusive agent under the Plan as long as it continues as an Employer.
(j)	“Final Average Compensation” shall mean with respect to any Grandfathered Employee, the annual average of his or her highest aggregate Compensation for any period of five consecutive years within the period of ten consecutive full years immediately prior to his or her retirement or other termination of employment, or termination of the Plan, whichever first occurs; provided, however, that if a Grandfathered Employee is employed for less than five consecutive years prior to such date, the term shall mean the monthly average of the aggregate amount of his or her Compensation for the entire period of the Grandfathered Employee’s employment, multiplied by 12. If a Grandfathered Employee receives no Compensation for any portion of such five consecutive years because of absence from work, there shall be treated as Compensation received during such period of absence an amount equal to the Compensation he or she would have received had the Grandfathered Employee not been absent, such amount to be determined by the Corporation on the basis of such Grandfathered Employee’s salary or wage rate in effect immediately prior to such absence.
(k)	“Grandfathered Employee” shall mean an Employee who is listed on Exhibit A attached hereto.
(l)	“Harmful Activity” shall have occurred if the Grandfathered Employee shall do any one or more of the following:

(i)	Use, publish, sell, trade or otherwise disclose Non-Public Information of KeyCorp unless such prohibited activity was inadvertent, done in good faith and did not cause significant harm to KeyCorp.
(ii)	After notice from KeyCorp, fail to return to KeyCorp any document, data, or thing in his or her possession or to which the Grandfathered Employee has access that may involve Non-Public Information of KeyCorp.
(iii)	After notice from KeyCorp, fail to assign to KeyCorp all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Grandfathered Employee created, in whole or in part, during employment with

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	KeyCorp, including, without limitation, copyrights, trademarks, service marks, and patents in or to (or associated with) such Intellectual Property.
(iv)	After notice from KeyCorp, fail to agree to do any acts and sign any document reasonably requested by KeyCorp to assign and convey all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Grandfathered Employee created, in whole or in part, during employment with KeyCorp, including, without limitation, the signing of patent applications and assignments thereof.
(v)	Upon the Grandfathered Employee’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, solicit or entice for employment or hire any KeyCorp employee.
(vi)	Upon the Grandfathered Employee’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, call upon, solicit, or do business with (other than business which does not compete with any business conducted by KeyCorp) any KeyCorp customer the Grandfathered Employee called upon, solicited, interacted with, or became acquainted with, or learned of through access to information (whether or not such information is or was non-public) while the Grandfathered Employee was employed at KeyCorp unless such prohibited activity was inadvertent, done in good faith, and did not involve a customer whom the Grandfathered Employee should have reasonably known was a customer of KeyCorp.
(vii)	Upon the Grandfathered Employee’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, after notice from KeyCorp, continue to engage in any business activity in competition with KeyCorp in the same or a closely related activity that the Grandfathered Employee was engaged in for KeyCorp during the one year period prior to the termination of the Grandfathered Employee’s employment.
	For purposes of this Section 2.1(l) the term:
	“Intellectual Property” shall mean any invention, idea, product, method of doing business, market or business plan, process, program, software, formula, method, work of authorship, or other information, or thing relating to KeyCorp or any of its businesses.
	“Non-Public Information” shall mean, but is not limited to, trade secrets, confidential processes, programs, software, formulas, methods, business information or plans, financial information, and listings of names (e.g., employees, customers, and suppliers) that are developed, owned, utilized, or maintained by an employer such as KeyCorp, and that of its customers or suppliers, and that are not generally known by the public.
	“KeyCorp” shall include KeyCorp, its subsidiaries, and its affiliates.

(m) “Incentive Compensation Award” for any Plan year shall collectively mean the short term incentive compensation award (whether in cash or common shares of the Corporation, and whether paid or deferred, or a combination of both) and the long term

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incentive compensation award (whether in cash or common shares of the Corporation, and whether paid or deferred, or a combination of both) (if any) granted to a Grandfathered Employee under an Incentive Compensation Plan, as follows:

• An incentive compensation award granted under the KeyCorp Annual Incentive Plan, the KeyCorp Short Term Incentive Compensation Plan, the KeyCorp Management Incentive Compensation Plan, and/or such other Employer-sponsored line of business Incentive Compensation Plan which shall constitute an Incentive Compensation Award for the year in which the award is earned (without regard to the actual time of payment).

• An incentive compensation award granted under the KeyCorp Long Term Incentive Compensation Plan (“LTIC Plan”) with respect to any multi-year performance period which shall be deemed to be for the last year of the multi-year period without regard to the actual time of payment of the award. Accordingly, an incentive compensation award granted under the LTIC Plan with respect to the three-year performance period of 1993, 1994, and 1995 will be deemed to be for 1995 (without regard to the actual time of payment), and the entire incentive compensation award under the LTIC Plan for that performance period will be an Incentive Compensation Award for the year 1995.

• An incentive compensation award granted under the KeyCorp Long Term Incentive Plan (“Long Term Plan”) with respect to any multi-year period which shall be deemed to be for the last year of the multi-year performance period and for the year immediately following such year (without regard to the actual time of payment). Accordingly, an award granted under the Long Term Plan with respect to the four-year performance period of 1998, 1999, 2000, and 2001 shall be deemed to be for the years 2001 and 2002, with one-half the award allocated to the year 2001, and one-half the award allocated to the year 2002.

• An incentive compensation award granted in the form of restricted stock under the KeyCorp Amended and Restated 1991 Equity Compensation Plan with respect to any multi-year period (but specifically excluding those awards applicable to the 2002-2003 multi-year period), which shall be deemed to be for the year in which

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	the award (grant) is made to the Grandfathered Employee; provided, however, that only those shares of restricted stock that have vested as of the Grandfathered Employee’s termination date shall be utilized for purposes of determining the Grandfathered Employee’s Incentive Compensation Award. The fair market value of such shares as of the date of the restricted stock grant multiplied by the number of vested shares as of the Grandfathered Employee’s termination date shall be included in determining the value of such award for purposes of calculating the Grandfathered Employee’s Supplemental Retirement Benefit under the provisions of Article III of the Plan.
	Notwithstanding the foregoing, however, in calculating the Grandfathered Employee’s Supplemental Retirement Benefit under the provisions of Article III of the Plan, if it is determined that an incentive compensation award granted under the KeyCorp Amended and Restated 1991 Equity Compensation Plan would produce a larger Plan benefit for the Grandfathered Employee if the award was included in the year in which the award (or any part of the award) was initially vested rather than in the year in which the award was granted, then such incentive compensation award shall be included for the year in which the award (or any part of the award) initially vested rather than for the year in which the award was granted.
	If at the time of the Grandfathered Employee’s termination date, the Grandfathered Employee maintains shares of not forfeited restricted stock and such restricted stock later vests in conjunction with the passage of time or with the Corporation’s attainment of certain performance criteria, or otherwise, then as of such subsequent vesting date the Grandfathered Employee’s Monthly Supplemental Retirement Benefit shall be recalculated to include such newly vested shares. Such newly vested shares shall relate to the award in which such shares were granted under the KeyCorp Amended and Restated 1991 Equity Compensation Plan and shall be included as a part of that award (based on either the date of grant or the date of initially vesting, whichever date was actually used by the Plan in calculating the Grandfathered Employee’s initial Monthly Supplemental Retirement Benefit).
•	An incentive compensation award granted in the form of either restricted stock and/or phantom shares (hereinafter collectively referred to as “shares”) under the KeyCorp Chief Executive Officer Plan with respect to any multi-year period (but specifically excluding those awards applicable to the 2002-2003 multi-year period), shall be deemed to be for the year in which the award (grant) is made to the Grandfathered Employee; provided, however, that only those shares that have vested as of the Grandfathered Employee’s termination date shall be utilized in calculating the Grandfathered Employee’s Incentive Compensation Award. The fair market value of such shares as of the date of the share grant multiplied by the number of vested shares as of the Grandfathered Employee’s termination date shall be used in determining value of such award for purposes of calculating the Grandfathered Employee’s Supplemental Retirement Benefit under the provisions of Article III of the Plan.

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•	Notwithstanding the foregoing, however, in calculating the Grandfathered Employee’s Supplemental Retirement Benefit under the provisions of Article III of the Plan, if it is determined that an incentive compensation award granted under the KeyCorp Chief Executive Officer Plan would produce a larger Plan benefit for the Grandfathered Employee if the award was included in the year in which the award (or any part of the award) initially vested rather than in the year in which the award was granted, then such incentive compensation award shall be included in year in which the award (or any part of the award) initially vested rather than for the year for which the award was granted.
	If at the time of the Grandfathered Employee’s termination date, the Grandfathered Employee maintains not forfeited shares, and such shares later vest in conjunction with the passage of time or with the Corporation’s attainment of certain performance criteria, or otherwise, then as of such subsequent vesting date, the Grandfathered Employee’s Monthly Supplemental Retirement Benefit shall be recalculated to include such newly vested shares. Such newly vested shares shall relate to the award in which such shares were granted under the under the KeyCorp Chief Executive Officer Plan, and shall be included as part of that award (based on either the date granted or the date initially vested, whichever date was actually used by the Plan in calculating the Grandfathered Employee’s initial Monthly Supplemental Retirement Benefit).
•	For those limited Grandfathered Employees who, for Plan purposes and in accordance with the provisions of this Section 2.1(m) received Incentive Compensation Award(s) granted in the form of time-lapsed restricted stock award(s) and/or performance shares under the KeyCorp Amended and Restated 1991 Equity Compensation Plan or the KeyCorp Chief Executive Officer Plan with respect to any multi-year period, the term Incentive Compensation Award shall also include those Equity/Compensation Award(s) granted to the Grandfathered Employee under the 2004 Equity Compensation Plan. An Equity/Compensation Award shall be deemed to be for the year in which the Equity/Compensation Award vest, provided, however, that if such Equity/Compensation Award vest after the close of the applicable Award’s award cycle, then such Award shall be deemed to be for the last day of the final full year of the applicable Award’s award cycle. If an Award contains more than one award cycle, then such Award shall be deemed to be for the last day of the final full year of the longest award cycle of the Award. If the Equity/Compensation Award is in the form of Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, the fair market value of such shares as of the date of the Equity/Compensation Award grant multiplied by the number of vested shares as of the Grandfathered Employee’s termination date shall determine the value of such Incentive Compensation Award for purposes of calculating the Grandfathered Employee’s Supplemental Retirement Benefit under the provisions of Article III of the Plan.
	Notwithstanding the foregoing provisions of this Section 2.1(m) hereof, in calculating a Grandfathered Employee’s Incentive Compensation Award for any 12 month period, there shall be included only one award granted under the KeyCorp Amended and Restated 1991 Equity Compensation Plan, the KeyCorp Chief Executive Officer Plan, or Equity/Compensation Award under the KeyCorp 2004

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Equity Compensation Plan for purposes of determining the Grandfathered Employee’s Incentive Compensation Award for such 12 month period.

•

The (i) value of those vested deferred cash awards granted as a part of the Grandfathered Employee’s annual incentive award, if any, will be included for purposes of determining the Grandfathered Employee’s Incentive Compensation Award under the Plan, as of the year in which the applicable annual award is earned (rather than paid), and (ii) 50% of the value of those deferred cash awards granted as a part of the Grandfathered Employee’s long term incentive award, if any, will be included for purposes of determining the Grandfather’s Incentive Compensation Award under the Plan as of the last business day of the final full year of the applicable long term award’s award cycle (rather than vesting date), provided, however, that if an award contains more than one award cycle, then in such event, the value of such award as of the last business day of the final full year of the longest award cycle within that award shall apply.

(n)	“Incentive Compensation Plan” shall mean the KeyCorp Management Incentive Compensation Plan, the KeyCorp Annual Incentive Plan, the KeyCorp Short Term Incentive Compensation Plan, the KeyCorp Long Term Incentive Compensation Plan, the KeyCorp Long Term Incentive Plan, the KeyCorp Amended and Restated 1991 Equity Compensation Plan, the KeyCorp Chief Executive Officer Plan, the KeyCorp 2004 Equity Compensation Plan, and/or such other Employer or KeyCorp-sponsored incentive compensation plan that KeyCorp in its sole discretion determines constitutes an “Incentive Compensation Plan” for purposes of this Section 2.1(n), as may be amended from time to time.”
(o)	“KeyCorp Chief Executive Officer Plan” shall mean the KeyCorp Chief Executive Officer Restricted Stock Plan, as may be amended from time to time, including any other successor or replacement plan.
(p)	“Normal Retirement Date” shall mean the first day of the month coinciding with or immediately following a Grandfathered Employee’s 65th birthday, or if later, the fifth anniversary of the Grandfathered Employee’s employment commencement date.
(q)	“Retirement Plan” shall mean the KeyCorp Cash Balance Pension Plan with all amendments, modifications and supplements which may be made thereto, as in effect on the date of a Grandfathered Employee’s retirement, death, or other termination of employment.
(r)	“Supplemental Retirement Benefit” shall mean the benefit paid under this Plan as determined under Article III of the Plan.

     All other capitalized and undefined terms used herein shall have the meanings given them in the Retirement Plan for Employees of Society Corporation and Subsidiaries (January 1, 1993 Restatement) (“Society Retirement Plan”), unless a different meaning is plainly required by the context.

     The masculine gender includes the feminine, and singular references include the plural, unless the context clearly requires otherwise.

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ARTICLE III

SUPPLEMENTAL RETIREMENT BENEFIT

     3.1 Eligibility. A Grandfathered Employee shall be eligible for a Supplemental Retirement Benefit hereunder if the Grandfathered Employee (i) retires on or after age 65 with five or more years of Benefit Service, (ii) terminates employment with an Employer on or after age 55 with ten or more years of Benefit Service, (iii) has a termination of employment from his or her Employer as a result of the Grandfathered Employee becoming Disabled, or (iv) dies after completing five or more years of Benefit Service, and has a Beneficiary who is eligible for a benefit under the Retirement Plan.

     A Grandfathered Employee shall also be eligible for a Supplemental Retirement Benefit if the Grandfathered Employee becomes involuntarily terminated from his or her employment with an Employer for reasons other than the Grandfathered Employee’s Discharge for Cause, and (i) as of the Grandfathered Employee’s termination date the Grandfathered Employee has a minimum of twenty-five (25) or more years of Benefit Service, and (ii) the Grandfathered Employee enters into a written non-solicitation and non-compete agreement within 60 days of his or her termination date under terms that are satisfactory to the Employer.

     For purposes of this Section 3.1, hereof, the term “Discharge for Cause” shall mean a Grandfathered Employee’s employment termination that is the result of the Grandfathered Employee’s violation of the Employer’s policies, practices or procedures, violation of city, state, or federal law, or failure to perform his or her assigned job duties in a satisfactory manner. The Employer in its sole and absolute discretion shall determine whether a Grandfathered Employee has been Discharged for Cause.

     3.2 Amount and Payment. Subject to the provisions of Section 3.4 hereof, a Grandfathered Employee’s Supplemental Retirement Benefit shall be calculated as follows:

The monthly Supplemental Retirement Benefit payable to a Grandfathered Employee shall be such amount as is required, when added to the monthly benefit payable (before the reduction applicable to any optional method of payment) under the Retirement Plan, to produce an aggregate monthly benefit equal to the monthly benefit which would have been payable in the form of a single life annuity (determined without regard to the annual limitation on Plan benefits imposed pursuant to Section 415 of the Code, the limitation on annual compensation imposed pursuant to Section 401(a)(17) of the Code, or the reduction applicable to any optional method of payment) under either the Society Retirement Plan formula in effect on and after January 1, 1989, or, if eligible, the applicable Society Retirement Plan formula in effect prior to January 1, 1989, whichever results in a larger monthly benefit, if there was added to the Grandfathered Employee’s Final Average Monthly Compensation an amount equal to the monthly average of the highest five Incentive Compensation Awards granted to the Grandfathered Employee under an Incentive Compensation Plan during the ten-year period preceding the earliest of his or her Retirement, death, disability, or other termination of employment (if the Grandfathered Employee was granted fewer than five Incentive Compensation Awards, such monthly average is determined by adding the amount of such awards and dividing by 60).

Solely for purposes of reference, the alternative benefit formulas in effect under the Society Retirement Plan prior to January 1, 1989, and the eligibility criteria applicable to each are reproduced in Exhibit B attached hereto.

     3.3 Early Retirement Election. Subject to the provisions of Section 3.4 hereof, if a Grandfathered Employee receives his or her Supplemental Retirement Benefit on or after the

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Grandfathered Employee’s Early Retirement Date but prior to the Grandfathered Employee’s Normal Retirement Date, the Grandfathered Employee’s Supplemental Retirement Benefit shall be calculated in accordance with the provisions of Section 3.2 hereof, provided, however, that the benefit payable under the Retirement Plan for purposes of Section 3.2 and this Section 3.3 hereof, shall be the Grandfathered Employee’s Normal Retirement Date benefit. In calculating this Normal Retirement Date benefit, if the Grandfathered Employee does not receive his or her monthly benefit under the provisions of Section 6.5(b) of the Retirement Plan then such Grandfathered Employee’s Retirement Plan benefit as of his or her termination date shall be increased for purposes of this Plan with an imputed Average Interest Credit to reflect the Grandfathered Employee’s benefit at his or her Normal Retirement Date, and shall be converted to the form of a single life annuity option using the Average Treasury Rate and GATT Mortality Table. The amount of the Grandfathered Employee’s monthly Supplemental Retirement Benefit otherwise determined under Section 3.2 and this Section 3.3 hereof shall then be reduced by .3% for each month between the ages of 55 and 60 and .4% for each month after age 60 that the commencement of the Grandfathered Employee’s Supplemental Retirement Benefit precedes his or her Normal Retirement Date.

     3.4 Recalculation as a Result of Harmful Activity. Notwithstanding the foregoing provisions of Section 3.2 and Section 3.3 hereof, the Corporation reserves the right at all times to recalculate a Grandfathered Employee’s Supplemental Retirement Benefit, if it is determined that within six months of the Grandfathered Employee’s termination date the Grandfathered Employee engaged in any Harmful Activity, as that term is defined in accordance with Section 2.1(l) of the Plan, which resulted in the forfeiture of all or any portion of the Grandfathered Employee’s restricted share award(s) granted under the KeyCorp Amended and Restated 1991 Equity Compensation Plan, phantom share awards granted under the KeyCorp Chief Executive Officer Plan, or Equity/Compensation Awards granted under the KeyCorp 2004 Equity Compensation Plan. Such recalculation shall relate back to the Grandfathered Employee’s original date of termination, and any Supplemental Retirement Benefit payment paid to the Grandfathered Employee in excess of such recalculated Supplemental Retirement Benefit amount shall be offset against any future Supplemental Retirement Benefit payments to be paid to the Grandfathered Employee.

     3.5 Actuarial Factors. The Supplemental Retirement Benefit payable to a Grandfathered Employee or Grandfathered Employee’s Beneficiary in a form other than a single life annuity shall be actuarially equivalent to such single life annuity payment option. In making the determination provided for in this Article III, the Corporation shall rely upon calculations made by the independent actuaries for the Plan, who shall determine actuarially equivalent benefits under the Plan by applying the UP-1984 Mortality Table (set back two years) and using an interest rate of 6%.

ARTICLE IV

PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFIT

     4.1 Payment of Supplemental Retirement Benefit. Subject to the provisions of Section 4.2 and Section 4.3 hereof, a Grandfathered Employee shall receive an immediate distribution of his or her Supplemental Retirement Benefit within 90 days following the Grandfathered Employee’s (1) attainment of age 55, and (2) the Grandfathered Employee’s retirement or termination of employment under circumstances which constitute a separation from service in accordance with the requirements of Section 409A of the Code. Supplemental Retirement Benefits shall be payable in the form of a single life annuity unless the Grandfathered Employee elects in writing a minimum of thirty days prior to his or her retirement or termination date to receive his or her Supplemental Retirement Benefit under a different

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form of payment. The forms of payment from which a Grandfathered Employee may elect shall be actuarially equivalent to the Grandfathered Employee’s single life annuity payment option, and shall be identical to those forms of payment specified in the Retirement Plan, provided, however, that the lump sum payment option available under the Retirement Plan shall not be available under this Plan. Such method of payment, once elected by the Grandfathered Employee, shall be irrevocable.

     4.2 Deferred Benefit Payment. A Grandfathered Employee may elect to defer the receipt of his or her Supplemental Retirement Benefit until a date specified by the Grandfathered Employee, subject to the following requirements: (i) the Grandfathered Employee notifies the Corporation in writing of his or her deferral election a minimum of one year prior to the Grandfathered Employee’s retirement or termination of employment, (ii) the Grandfathered Employee specifies the future date on which such Supplemental Retirement Benefit shall be distributed, (iii) the Grandfathered Employee’s requested deferral period is for a period of not less than five years following the Grandfathered Employee’s retirement or termination of employment, and (iv) the Grandfathered Employee commences distribution of his or her Supplemental Retirement Benefit no later than the first day of the month immediately following the Grandfathered Employee’s sixty-fifth (65th) birthday. The election to defer, once made by the Grandfathered Employee, shall be irrevocable.

     4.3 Payment Limitation for Key Employees. Notwithstanding any other provision of the Plan to the contrary, in the event that the Grandfathered Employee constitutes a “key” employee of the Corporation, (as that term is defined in accordance with Section 416(i) of the Code without regard to paragraph (5) thereof), distributions of the Grandfathered Employee’s Supplemental Retirement Benefit may not be commenced before the date which is the first day of the seventh month following the Grandfathered Employee’s date of separation from service (or, if earlier, the date of death of the Grandfathered Employee). The term “separation from service” and the term “key employee” shall be defined for Plan purposes in accordance with the requirements of Section 409A of the Code and applicable regulations issued thereunder.

     4.4 Payment Upon Death of Grandfathered Employee.

(a)

Upon the death of a Grandfathered Employee who has met the service requirements of Section 3.1, but who has not yet commenced distribution of his or her Supplemental Retirement Benefit there shall be paid to the Grandfathered Employee’s Beneficiary 50% of the Supplemental Retirement Benefit which the Grandfathered Employee would have been entitled to receive under the Provisions of Section 3.2 of the Plan calculated as if the Grandfathered Employee had retired on his or her Normal Retirement Date and elected to receive his or her Supplemental Retirement Benefit.

For purposes of this Section 4.4(a) only, the following shall apply:

(i)

The Grandfathered Employee’s Benefit Service shall be calculated as of the Grandfathered Employee’s date of death.

(ii)

The Grandfathered Employee’s Retirement Plan benefit shall be calculated under the provisions of Article IV of the Retirement Plan as if the Grandfathered Employee retired on his or her Normal Retirement Date, with such Retirement Plan benefit being increased for purposes of this Section 4.4(a) with an imputed Average Interest Credit to reflect what the Grandfathered Employee’s Retirement Plan benefit would have been as of the Grandfathered Employee’s Normal Retirement Date; such Retirement Plan benefit shall be converted to a single life annuity option using the Average Treasury Rate and the Gatt Mortality Table.

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Payment of this death benefit shall be made in the form of a single life annuity, and will be subject to distribution any time after the date the Grandfathered Employee would have attained his or her Early Retirement Date, as actuarially adjusted in accordance with Section 3.3 hereof, if paid prior to the Grandfathered Employee’s Normal Retirement Date.

(b) In the event of a Grandfathered Employee’s death after the Grandfathered Employee has commenced distribution of his or her Supplemental Retirement Benefit, there shall be paid to the Grandfathered Employee’s Beneficiary only those survivor benefits provided under the form of benefit payment elected by the Grandfathered Employee

ARTICLE V

ADMINISTRATION AND CLAIMS PROCEDURE

     5.1 Administration. The Corporation, which shall be the “Administrator” of the Plan for purposes of ERISA and the “Plan Administrator” for purposes of the Code, shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making payments hereunder. The Corporation shall have the sole and absolute discretionary authority and power to carry out the provisions of the Plan, including, but not limited to, the authority and power (a) to determine all questions relating to the eligibility for and the amount of any benefit to be paid under the Plan, (b) to determine all questions pertaining to claims for benefits and procedures for claim review, (c) to resolve all other questions arising under the Plan, including any questions of construction, and (d) to take such further action as the Corporation shall deem necessary or advisable in the administration of the Plan. All findings, decisions, and determinations of any kind made by the Corporation shall not be disturbed unless the Corporation has acted in an arbitrary and capricious manner. Subject to the requirements of law, the Corporation shall be the sole judge of the standard of proof required in any claim for benefits and in any determination of eligibility for a benefit. All decisions of the Corporation shall be final and binding on all parties. The Corporation may employ such attorneys, investment counsel, agents, and accountants, as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The actions taken and the decisions made by the Corporation hereunder shall be final and binding upon all interested parties subject, however, to the provisions of Section 5.2. The Plan year, for purposes of Plan administration, shall be the calendar year.

     5.2 Claims Review Procedure. Whenever the Corporation decides for whatever reason to deny, whether in whole or in part, a claim for benefits under this Plan filed by any person (herein referred to as the “Claimant”), the Corporation shall transmit a written notice of its decision to the Claimant, which notice shall be written in a manner calculated to be understood by the Claimant and shall contain a statement of the specific reasons for the denial of the claim and a statement advising the Claimant that, within 60 days of the date on which he receives such notice, he may obtain review of the decision of the Corporation in accordance with the procedures hereinafter set forth. Within such 60-day period, the Claimant or his authorized representative may request that the claim denial be reviewed by filing with the Corporation a written request therefore, which request shall contain the following information:

(a) the date on which the request was filed with the Corporation; provided, however, that the date on which the request for review was in fact filed with the Corporation shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (a);

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(b)	the specific portions of the denial of his claim which the Claimant requests the Corporation to review;
(c)	a statement by the Claimant setting forth the basis upon which he believes the Corporation should reverse its previous denial of his or her claim and accept his or her claim as made; and
(d)	any written material which the Claimant desires the Corporation to examine in its consideration of the Claimant’s position as stated pursuant to paragraph (c) above.

     In accordance with this Section, if the Claimant requests a review of the Corporation’s decision, such review shall be made by the Corporation, or at the election of the Corporation, by the Claims Review Committee, who shall, within sixty (60) days after receipt of the request form, review and render a written decision on the claim containing the specific reasons for the decision including reference to Plan provisions upon which the decision is based. All findings, decisions, and determinations of any kind made by the Corporation shall not be modified unless the Corporation has acted in an arbitrary and capricious manner. Subject to the requirements of a law, the Corporation shall be the sole judge of the standard of proof required in any claim for benefits, and any determination of eligibility for a benefit. All decisions of the Corporation shall be binding on the Claimant and upon all other Persons. If the Claimant shall not file written notice with the Corporation at the times set forth above, such individual shall have waived all benefits under the Plan other than as already provided, if any, under the Plan.

ARTICLE VI

FUNDING

     All benefits under the Plan shall be payable solely in cash from the general assets of the Corporation or a subsidiary, and Grandfathered Employees, and Grandfathered Employees’ Beneficiaries shall have the status of general unsecured creditors of the Corporation. The obligations of the Corporation to make distributions in accordance with the provisions of the Plan constitute a mere promise to make payments in the future. The Corporation shall have no obligation to establish a trust or fund to fund its obligation to pay benefits under the Plan or to insure any benefits under the Plan. Notwithstanding any provision of this Plan, the Corporation may, in its sole discretion, combine the payment due and owing under this Plan with one or more other payments owing to a Grandfathered Employee, or a Grandfathered Employee’s Beneficiary under any other plan, contract, or otherwise (other than any payment due under the Retirement Plan), in one check, direct deposit, wire transfer, or other means of payment. Finally, it is the intention of the Corporation and the Grandfathered Employees that the Plan be unfunded for tax purposes and for the purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended, and that the Plan be administered in accordance with the requirements of Section 409A of the Code and applicable regulations issued thereunder.

ARTICLE VII

AMENDMENT AND TERMINATION

     The Corporation reserves the right to amend or terminate the Plan at any time by action of its Board of Directors or a duly authorized committee of such Board of Directors; provided, however, that no such action shall adversely affect the benefit accrued up to the date of the Plan amendment or termination for any Grandfathered Employee who has met the age and service requirements of Sections 3.1 and 4.1 of the Plan, or any Grandfathered Employee or Grandfathered Employee’s Beneficiary who is receiving a

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Supplemental Retirement Benefit, unless an equivalent benefit is provided under another plan maintained by an Employer. No amendment or termination will result in an acceleration of Supplemental Retirement Benefits in violation of Section 409A of the Code.

ARTICLE VIII

MISCELLANEOUS

     8.1 Interest of Grandfathered Employee. The obligation of the Corporation under the Plan to provide a Grandfathered Employee, or Grandfathered Employee’s Beneficiary, with a Supplemental Retirement Benefit merely constitutes the unsecured promise of the Corporation to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim on, any property of the Corporation.

     8.2 No Commitment as to Employment. Nothing herein contained shall be construed as a commitment or agreement upon the part of any Grandfathered Employee hereunder to continue his or her employment with an Employer, and nothing herein contained shall be construed as a commitment on the part of any Employer to continue the employment or rate of compensation of any Grandfathered Employee hereunder for any period. All Grandfathered Employees shall remain subject to discharge to the same extent as if the Plan had never been put into effect.

     8.3 Benefits. Nothing in the Plan shall be construed to confer any right or claim upon any person, firm, or corporation other than Grandfathered Employees, or Grandfathered Employees’ Beneficiaries who become entitled to a benefit under the Plan.

     8.4 Restrictions on Alienation. Except to the extent required by law, no benefit under the Plan shall be subject to anticipation, alienation, assignment (either at law or in equity), encumbrance, garnishment, levy, execution, or other legal or equitable process. No person shall have power in any manner to anticipate, transfer, assign, (either at law or in equity), alienate or subject to attachment, garnishment, levy, execution, or other legal or equitable process, or in any way encumber his benefits under the Plan, or any part thereof, and any attempt to do so shall be void.

     8.5 Absence of Liability. No member of the Board of Directors of the Corporation or a subsidiary or any officer of the Corporation or a subsidiary shall be liable for any act or action hereunder, whether of commission or omission, taken by any other member, or by any officer, agent, or employee, except in circumstances involving his bad faith or willful misconduct, for anything done or omitted to be done by himself.

     8.6 Expenses. The expenses of administration of the Plan shall be paid by the Corporation.

     8.7 Precedent. Except as otherwise specifically provided, no action taken in accordance with the Plan by the Corporation shall be construed or relied upon as a precedent for similar action under similar circumstances.

     8.8 Duty to Furnish Information. The Corporation shall furnish to each Grandfathered Employee or Grandfathered Employee’s Beneficiary any documents, reports, returns statements, or other information that it reasonably deems necessary to perform its duties imposed hereunder or otherwise imposed by law.

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     8.9 Withholding. The Corporation shall withhold any tax required by any present or future law to be withheld from any payment hereunder to any Grandfathered Employee or Grandfathered Employee’s Beneficiary.

     8.10 Validity of Plan. The validity of the Plan shall be determined and the Plan shall be construed and interpreted in accordance with the provisions of the Act, the Code, and, to the extent applicable, the laws of the State of Ohio. The invalidity or illegality of any provision of the Plan shall not affect the validity or legality of any other part thereof.

     8.11 Parties Bound. The Plan shall be binding upon the Employer, all Grandfathered Employees, and all Grandfathered Employees’ Beneficiaries, and the executors, administrators, successors, and assigns of each of them.

     8.12 Headings. All headings used in the Plan are for convenience of reference only and are not part of the substance of the Plan.

ARTICLE IX

CHANGE OF CONTROL

     Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control, a Grandfathered Employee’s interest in his or her Supplemental Retirement Benefit shall vest. On and after a Change of Control, a Grandfathered Employee shall be entitled to receive an immediate distribution of his or her Supplemental Retirement Benefit if the Grandfathered Employee has at least five (5) years of Benefit Service, and (i) the Grandfathered Employee’s employment is terminated by his or her Employer and any other Employer without cause, or (ii) the Grandfathered Employee resigns within two years following a Change of Control as a result of the Grandfathered Employee’s mandatory relocation, reduction in the Grandfathered Employee’s base salary, reduction in the Grandfathered Employee’s average annual incentive compensation (unless such reduction is attributable to the overall corporate or business unit performance), or the Grandfathered Employee’s exclusion from stock option programs as compared to comparably situated Employees.

     For purposes of this Article IX hereof, a “Change of Control” shall be deemed to have occurred if under a rabbi trust arrangement established by KeyCorp (“Trust”), as such Trust may from time to time be amended or substituted, the Corporation is required to fund the Trust because a “Change of Control”, as defined in the Trust, has occurred.

ARTICLE X

COMPLIANCE WITH
SECTION 409A CODE

     The Plan is intended to provide for the deferral of compensation in accordance with the provisions of Section 409A of the Code and regulations and published guidance issued pursuant thereto. Accordingly, the Plan shall be construed and administered in a manner that is consistent with those provisions and may at any time be amended in the manner and to the extent determined necessary or desirable by the Corporation to reflect or otherwise facilitate compliance with such provisions with respect to amounts deferred on and after January 1, 2005, including as contemplated by Section 855(f) of the American Jobs Creation Act of 2004. Notwithstanding any provision of the Plan to the contrary, no otherwise permissible election or distribution shall be made or given effect under the Plan that would

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result in a violation, early taxation, or assessment of penalties or interest of any amount under Section 409A of the Code.

ARTICLE XI

MERGER OF THE
KEYCORP SUPPLEMENTAL RETIREMENT PLAN
INTO THE PLAN

11.1 Merger. As of December 31, 2006 the KeyCorp Supplemental Retirement Plan shall be merged into this Plan, and as of that date the KeyCorp Supplemental Retirement Plan shall not exist separate and apart from this Plan and all benefits that have accrued under the KeyCorp Supplemental Retirement Plan shall be merged into and shall become a part of this Plan.

ARTICLE XII
AMENDMENT TO FREEZE

12.1. Amendment to Freeze the Plan.. Notwithstanding any other Plan provision to the contrary, as of December 31, 2009, the Plan shall be frozen, and on and after that date all Grandfathered Employees’ Supplemental Retirement Benefits shall be calculated in accordance with the provisions of this Article XII, and all other provisions of the Plan shall remain in full force and effect.

12.2 Calculation of Amount and Payment of Frozen Benefit. In accordance with the provisions of Section 12.1 hereof, the monthly Supplemental Retirement Benefit payable to a Grandfathered Employee shall be in such amount as is required when added to the monthly benefit payable (before the reduction applicable to any optional method of payment) under the Retirement Plan to produce an aggregate monthly benefit equal to the monthly benefit which would have been payable in the form of a single life annuity (determined without regard to the annual limitation on Plan benefits imposed pursuant to Section 415 of the Code, the limitation on annual compensation imposed pursuant to Section 401(a)(17) of the Code, or the reduction applicable to any optional method of payment) under either the Society Retirement Plan formula in effect on and after January 1, 1989, or if eligible, the Society Retirement Plan formula in effect prior to January 1, 1989, whichever results in a larger monthly benefit, as if there was added to the Grandfathered Employee’s Final Average Monthly Compensation (with such Final Average Monthly Compensation of the Grandfathered Employee being determined as of December 31, 2009) an amount equal to the monthly average of the five highest Incentive Compensation Awards granted to the Grandfathered Employee under an Incentive Compensation Plan during the ten year period immediately preceding December 31, 2009. In calculating this benefit, the Grandfathered Employee’s monthly benefit payable (before the reduction applicable to any optional method of payment) under the Retirement Plan shall be calculated as if the Grandfathered Employee terminated his employment on December 31, 2009, and the applicable Social Security offset shall be determined under requirements of Social Security that are in effect with regard to the Grandfathered Employee as of December 31, 2009.

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     IN WITNESS WHEREOF, KeyCorp has caused the KeyCorp Second Supplemental Retirement Plan to be executed by its duly authorized officer as of the 8th day of February, 2010 to be effective as of that date.

KEYCORP
By:	/s/ Steven N. Bulloch
Title:	Assistant Secretary

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EXHIBIT A

LIST OF GRANDFATHERED EMPLOYEES

Name of Employee	Name of Employee
Andrews, James	Klimas, Daniel
Auletta, Patrick	Knapp, Peter O.
Bailey, Raymond	Koontz, Cary
Barger, C. Michael	Kucler, Jack
Beran, John	Malone, Michael
Blake, John T.	Mayer, George
Brooks, Craig	McGuire, James
Bullard, Janet	McDaniel, D. A.
Carlini, Lawrence	McGinty, Kevin
Colao Jr., Anthony	Melluzzo, Sebastian
Cortelli, John	Meyer, John R.
Cruse Jr., Donald	Meyer III, Henry
Deal, Frederick	Moody Jr., John
Doland, Michael	Murray, Bruce
Dorland, David	Neel, Thomas M.
Edmonds, David	Newman, Michael
Egan, Richard	Noall, Roger
Fishell, James	Nucerino, Donald
Flowers, James	O’Donnell, F. Scott
Gill, Michael	Patrick, Robert
Gillespie, Jr., Robert	Platt, Craig, T.
Greer, Michael	Ponchak, Frank
Gula, Allen	Purinton II, Arthur
Haas, Robert	Rapacz, Richard
Hancock, John	Rasmussen, Eric
Hann, Jr., William	Roark, Michael
Hartman, Sheldon	Rusnak, Joseph
Hawthorne, Douglas	Saddler, Thomas
Hedberg, Douglas	Schaedel, Elroy
Heintel, Jr., Carl	Seink, Edward
Heisler, Jr., Robert	Simon, William
Herron, David	Smith, James J.
Heyworth, Anthony	Swisher, Trace
Hitchcock, Thomas	Tracy, Robert
Holloway, Ruben L.	Trigg, Michael
Johannsen, Rolland D.	Uzl, Ralph R.
Jones, Robert G.	Walker, Martin
Kamerer, James	Wall, Stephen
Kaplan, Stephen	Wert, James W.
Karnatz, William	Willet, Richard
Kleinhenz, Karen R.

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EXHIBIT B

     For periods of time prior to January 1, 1989, three alternative benefit formulas were in effect under the Society Retirement Plan. The monthly amount of the normal retirement benefit payable to an eligible Grandfathered Employee was equal to:

     (a) if he became a Grandfathered Employee and therefore began to accrue benefits under the Plan prior to July 1, 1981, the greater of:

(i) his final average monthly compensation multiplied by the sum of:

(A)	3.2% multiplied by his years of benefit service not in excess of 15, plus
(B)	1% multiplied by his years of benefit service in excess of 15 but not in excess of 25, plus
(C)	0.5% multiplied by his years of benefit service in excess of 25; reduced by:
(D)	3.33% of his Social Security Benefit Amount multiplied by his years of benefit service not in excess of 15; or

(ii) the amount determined in accordance with the formula set forth in paragraph (b) below which is otherwise applicable to a person who becomes an Employee on or after July 1, 1981; or

     (b) if he became an Employee and therefore began to accrue benefits under the Plan on or after July 1, 1981, his final average monthly compensation multiplied by the sum of:

(i)	2% multiplied by his years of benefit service not in excess of 30, plus
(ii)	0.5% multiplied by his years of benefit service in excess of 30; reduced by:
(iii)	1.67% of his Social Security Benefit Amount multiplied by his years of benefit service not in excess of 30 to a maximum of 50% of such Amount; or

     (c) if he became an Employee and therefore began to accrue benefits under the Plan on January 1, 1985, and immediately prior to such date was a Grandfathered Employee in The Third National Bank and Trust Company of Dayton, Ohio Retirement Plan, the greater of:

(i) the amount determined in accordance with the formula set forth in paragraph (b) above which is otherwise applicable to a person who becomes an Employee on or after July 1, 1981; or

(ii) the sum of:

(A) 2.2% of his final average monthly compensation, reduced by 2% of his Social Security Benefit Amount; the difference to be multiplied by his years of benefit service at normal retirement date not in excess of 25, plus

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(B) 1.1% of his final average monthly compensation, reduced by 1% of his Social Security Benefit Amount; the difference to be multiplied by his years of benefit service at normal retirement date in excess of 25, adjusted as necessary to produce the actuarial equivalent value on a straight life annuity basis of a benefit otherwise payable on a ten-year certain and continuous basis; provided, however, that in the case of each Employee who was in the employment of Society National Bank of Cleveland on December 31, 1971, and whose continuous service is not broken after the date and prior to the date of his retirement, the monthly amount of his normal retirement benefit otherwise determined under this Section shall be not less than the monthly amount of his normal retirement benefit determined under the normal retirement benefit formula of the Plan as in effect on December 31, 1971, based on the assumption that he received no increases in the rate of his compensation after December 31, 1971, and using the rules for computing continuous service specified in Article II of the Plan as in effect on June 30, 1976 (hereinafter referred to as his “minimum benefit”); and provided, further, that the monthly amount so determined under the provisions of this Exhibit B shall be reduced to the extent provided in Section 14.10 of the Society Retirement Plan as in effect on December 31, 1988. Notwithstanding anything to the contrary contained in the Society Retirement Plan, in no event shall an Employee receive a benefit commencing at his normal retirement date which is less than the largest early retirement benefit to which he had been entitled under the Society Retirement Plan prior to his normal retirement date.

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EX-10.50

Exhibit 10.50

KEYCORP
DEFERRED CASH AWARD PLAN

ARTICLE I

     The KeyCorp Deferred Cash Award Plan (“Plan”) is hereby established effective March 1, 2009. The Plan, as structured, is intended to provide KeyCorp with a mandatory deferral vehicle for those deferred cash awards that are granted to selected employees of KeyCorp until such time as the awards become vested and distributed to the applicable Employee. The Plan, accordingly, is intended to provide those selected Employees of KeyCorp with a tax-favorable savings vehicle, while providing KeyCorp with a means to retain its Employees’ continued employment at Key. It is the intention of KeyCorp, and it is the understanding of those Employees who become covered under the Plan, that the Plan is unfunded for tax purposes. It is also the understanding of those Employees covered under the Plan that the Plan will be administered in accordance with the requirements of Section 409A of the Code as well as the requirements of the Emergency Economic Stabilization Act, as may be amended from time to time.

ARTICLE II
DEFINITIONS

     2.1 Meaning of Definitions. For the purposes of this Plan, the following words and phrases shall have the meanings hereinafter set forth, unless a different meaning is clearly required by the context:

(a)	“Beneficiary” shall mean the person, persons or entity entitled under Article VII to receive any Plan benefits payable after a Participant’s death.
(b)	“Board” shall mean the Board of Directors of KeyCorp, the Board’s Compensation and Organization Committee, or any other committee designated by the Board or a subcommittee designated by the Board’s Compensation and Organization Committee.
(c)	“Change of Control” shall be deemed to have occurred if under a rabbi trust arrangement established by KeyCorp (“Trust”), as such Trust may from time to time be amended or substituted, the Corporation is required to fund the Trust because a “Change of Control”, as defined in the Trust, has occurred.
(d)	“Corporation” shall mean KeyCorp, an Ohio corporation, its corporate successors, and any corporation or corporations into or with which it may be merged or consolidated.
(f)	“Deferred Cash Award” shall mean those deferred cash incentive award(s) that are granted to certain Employees of the Corporation, which are subject to a mandatory vesting schedule prior to becoming distributed to the Employee.
(g)	“Disability” shall mean (1) a physical or mental disability which prevents a Participant from performing the duties the Participant was employed to perform for his or her Employer when such disability commenced, (2) has resulted in the Participant’s absence from work for 180 qualifying days, and (3) application has

	been made for the Participant’s disability coverage under the KeyCorp Long Term Disability Plan, and the Participant has been terminated.
(i)	“Employee” shall mean a common law employee who is employed by an Employer.
(j)	“Employer” shall mean the Corporation and any of its subsidiaries or affiliates, unless specifically excluded as an Employer for Plan purposes by written action by an officer of the Corporation. An Employer’s Plan participation shall be subject to all conditions and requirements made by the Corporation, and each Employer shall be deemed to have appointed the Plan Administrator as its exclusive agent under the Plan as long as it continues as an Employer.
(k)	“Harmful Activity” shall have occurred if the Participant shall do any one or more of the following. This provision shall survive the Participant’s termination of employment with Key:

(i)	Use, publish, sell, trade or otherwise disclose Non-Public Information of KeyCorp unless such prohibited activity was inadvertent, done in good faith and did not cause significant harm to KeyCorp.
(ii)	After notice from KeyCorp, fail to return to KeyCorp any document, data, or thing in his or her possession or to which the Participant has access that may involve Non-Public Information of KeyCorp.
(iii)	After notice from KeyCorp, fail to assign to KeyCorp all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Participant created, in whole or in part, during employment with KeyCorp, including, without limitation, copyrights, trademarks, service marks, and patents in or to (or associated with) such Intellectual Property.
(iv)	After notice from KeyCorp, fail to agree to do any acts and sign any document reasonably requested by KeyCorp to assign and convey all right, title, and interest in and to any confidential or non-confidential Intellectual Property which the Participant created, in whole or in part, during employment with KeyCorp, including, without limitation, the signing of patent applications and assignments thereof.
(v)	Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, solicit or entice for employment or hire any KeyCorp employee.
(vi)	Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, call upon, solicit, or do business with (other than business which does not compete with any business conducted by KeyCorp) any KeyCorp customer the Participant called upon, solicited, interacted with, or became acquainted with, or learned of through access to information (whether or not such information is or was non-public) while the Participant was employed at KeyCorp unless such prohibited activity was inadvertent, done in good

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faith, and did not involve a customer whom the Participant should have reasonably known was a customer of KeyCorp.

(vii)

Upon the Participant’s own behalf or upon behalf of any other person or entity that competes or plans to compete with KeyCorp, after notice from KeyCorp, continue to engage in any business activity in competition with KeyCorp in the same or a closely related activity that the Participant was engaged in for KeyCorp during the one year period prior to the termination of the Participant’s employment.

	For purposes of this Section 2.1(k) the term:
	“Intellectual Property” shall mean any invention, idea, product, method of doing business, market or business plan, process, program, software, formula, method, work of authorship, or other information, or thing relating to KeyCorp or any of its businesses.
	“Non-Public Information” shall mean, but is not limited to, trade secrets, confidential processes, programs, software, formulas, methods, business information or plans, financial information, and listings of names (e.g., employees, customers, and suppliers) that are developed, owned, utilized, or maintained by an employer such as KeyCorp, and that of its customers or suppliers, and that are not generally known by the public.
	“KeyCorp” shall include KeyCorp, its subsidiaries, and its affiliates.
(l)	“Interest Bearing Account” shall mean the investment account established under the Plan for bookkeeping purposes in which the Participant’s Deferred Cash Awards shall be credited until vested and distributed to the Participant. Deferred Cash Awards invested for bookkeeping purposes in the Interest Bearing Account shall be credited with earnings as of each month equal to 120% of the applicable long term federal rate as published by the Internal Revenue Service for that month, compounded monthly, and divided by 12.
(m)	“Participant” shall mean an Employee who meets the eligibility and participation requirements set forth in Section 3.1 of the Plan.
(n)	“Plan” shall mean the KeyCorp Deferred Cash Award Plan with all amendments hereafter made.
(o)	“Plan Account” shall mean the bookkeeping account established by the Corporation for each Plan Participant, which shall reflect the Employee’s Deferred Cash Award deferred to the Plan on a bookkeeping basis, with all earnings thereon. Plan Accounts shall not constitute separate Plan funds or separate Plan assets. Neither the maintenance of, nor the crediting of amounts to such Plan Accounts shall be treated (i) as the allocation of any Corporation assets to, or a segregation of any Corporation assets in any such Plan Accounts, or (ii) as otherwise creating a right in any person or Participant to receive specific assets of the Corporation.

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(p)	“Plan Year” shall mean the calendar year.
(q)	“Retirement” shall mean the termination of a Participant’s employment any time after the Participant’s attainment of age 55 and completion of 5 years of Vesting Service but shall not include the Participant’s (i) Discharge for Cause, (ii) Involuntary Termination, (iii) a Termination Under Limited Circumstances, (iv) Disability, or (v) death.
(r)	“Termination Under Limited Circumstances” shall mean the termination of a Participant’s employment from his or her Employer, and from all other Employers (i) under circumstances in which the Participant is entitled to receive severance benefits or salary continuation benefits under the KeyCorp Separation Pay Plan, (ii) under circumstances in which the Participant is entitled to severance benefits or salary continuation or similar benefits under a change of control agreement or employment agreement within two years after a change of control (as defined by such agreement) has occurred, or (iii) as otherwise expressly approved by an officer of the Corporation.
(s)	“Termination of Employment” shall mean the voluntary or involuntary termination of the Participant’s employment from his or her Employer and from any other Employer, but shall not include the Participant’s Termination Under Limited Circumstances, Retirement, or termination as a result of Disability or death.

     2.2 Pronouns. The masculine pronoun wherever used herein includes the feminine in any case so requiring, and the singular may include the plural.

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ARTICLE III
ELIGIBILITY AND PARTICIPATION

     3.1 Eligibility and Participation. An Employee shall become a Plan Participant upon the Employer’s mandatory deferral of the Employee’s Deferred Cash Award.

ARTICLE IV
DEFERRED CASH AWARD

     4.1 Crediting of the Deferred Cash Award. A Deferred Cash Award shall be credited on a bookkeeping basis to a Plan Account established in the Participant’s name as of the date on which the Deferred Cash Award is granted to the Employee (“Deferred Cash Award Date”).

     4.2 Investment of Deferred Cash Awards. Unless otherwise specifically excluded from investment under the terms of the deferred cash award grant agreement, all Deferred Cash Awards shall be automatically invested on a bookkeeping basis in the Plan’s Interest Bearing Account, or such other investment account as may be later authorized by the Corporation.

     4.3 Determination of Amount. The Plan Administrator shall verify the amount of the Participant’s Deferred Cash Award, with all earnings thereon, credited to each Participant’s Plan Account in accordance with the provisions of the Plan. The reasonable and equitable decision of the Plan Administrator as to the value of each Plan Account shall be conclusive and binding upon the Participants and the Beneficiary of each deceased Participant having any interest, direct or indirect in the Participant’s Plan Account. As soon as reasonably practicable after the close of the applicable Plan Year the Corporation shall provide the Participant with a statement reflecting his or her year-end Account balance.

     4.4 Corporate Assets. All Deferred Cash Awards, and any earnings credited to each Participant’s Plan Account on a bookkeeping basis, remain the assets and property of the Corporation, which shall be subject to distribution to the Participant only in accordance with the provisions of Article VI of the Plan. Participants and Beneficiaries shall have the status of general unsecured creditors of the Corporation. Nothing contained in the Plan shall create, or be construed as creating a trust of any kind or any other fiduciary relationship between the Participant, the Corporation, or any other person. It is the intention of the Corporation and it is the understanding of the Participant that the Plan is an unfunded Plan.

     4.5 No Present Interest. Subject to any federal statute to the contrary, no right or benefit under the Plan and no right or interest in each Participant’s Plan Account shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any right or benefit under the Plan, or Participant’s Plan Account shall be void. No right, interest, or benefit under the Plan or Participant’s Plan Account shall be liable for or subject to the debts, contracts, liabilities, or torts of the Participant or Beneficiary, including domestic relations proceedings. If the Participant or Beneficiary becomes bankrupt or attempts to alienate, sell, assign, pledge, encumber, or charge any right under the Plan or Participant’s Plan Account, such attempt shall be void and unenforceable.

5

ARTICLE V
VESTING

     5.1 Deferred Cash Award Vesting. The calculation of a Participant’s vested interest in his or her Deferred Cash Award credited on a bookkeeping basis to the Participant’s Plan Account shall be measured in whole calendar years. A Participant shall become vested in his or her Deferred Cash Award allocated on a bookkeeping basis to the Participant’s Plan Account with all earnings thereon, in accordance with the following vesting schedule:

(a)	50% of the Participant’s Deferred Cash Award shall become 100% vested (and distributed to the Participant) two full calendar years following the Participant’s Deferred Cash Award Date, and
(b)	The remainder of the Participant’s Deferred Cash Award shall become 100% vested (and distributed to the Participant) three full calendar years following the Participant’s Deferred Cash Award Date.

     Alternatively, at the Employer’s election, the Employee shall become vested in his or her Deferred Cash Award under such other multi-year vesting schedule as is expressly communicated to the Employee by the Employer and reflected in the Participant’s Deferred Cash Award grant. Notwithstanding the foregoing provisions of this Section 5.1, however, a Participant shall become fully vested in the Deferred Cash Award credited on a bookkeeping basis to the Participant’s Plan Account upon the Participant’s Termination Under Limited Circumstances, Disability or death.

     5.2 Continued Vesting Upon Retirement. Subject to the provisions of Article VI of the Plan, upon the Participant’s Retirement, the Participant’s non-vested Deferred Cash Award credited to the Participant’s Plan Account with all earnings thereon, shall remain in the Plan and shall continue to vest under the vesting provisions of Section 5.1 of the Plan.

     5.3 Forfeiture of the Participant’s Deferred Cash Award. Notwithstanding any provision of the Plan to the contrary, upon the Participant’s Termination of Employment, the not vested Deferred Cash Award credited on a bookkeeping basis to the Participant’s Plan Account with all earnings thereon shall be automatically forfeited as of the Participant’s last day of employment.

ARTICLE VI
DISTRIBUTION OF PLAN BENEFITS

          6.1 Distribution of the Participant’s Deferred Cash Award. A Participant’s vested Deferred Cash Award with all earnings thereon shall be distributed from the Plan concurrently with or immediately following the Participant’s vesting in his or her Deferred Cash Award (but in any event within 90 days of the Participant’s vesting date) as a single lump sum cash payment less all applicable tax withholdings.

     6.2 Distributions Following Termination Under Limited Circumstances, Disability or Death. Upon the Participant’s Termination Under Limited Circumstances, Disability, or death, the Deferred Cash Award credited to the Participant’s Plan Account with all earnings thereon shall become

6

immediately vested and shall be distributed to the Participant or the Participant’s Beneficiary within 90 days thereafter in a single lump sum cash distribution less all applicable tax withholdings.

     6.3 Payment Limitation for Key Employees. Notwithstanding any other provision of the Plan to the contrary, including without limitation, the provisions of Section 6.2 hereof, in the event that the Participant constitutes a “specified employee” of the Corporation (as that term is defined in accordance with Treasury Reg. Section 1.409A-1(i)) at the time of his or her “separation from service”, then in such event the distributions of the Participant’s vested Deferred Cash Award due to the Participant’s separation from service shall not be made before the first day of the seventh month following the Participant’s date of separation from service (or, if earlier, the date of death of the Participant). To the extent an amount is deferred under this Section 6.3 until the first business day of the seventh month following the Participant’s separation from service date, then in such event, the payment to which the Participant would otherwise have been entitled to during the first six months shall be paid to the Participant on the first business day of the seventh month with all Plan earnings, gains and losses thereon. The term “separation from service” shall be defined for Plan purposes in accordance with the requirements of Section 409A(c)(2)(A)(i) of the Code and applicable regulations issued thereunder.

     6.4 Harmful Activity. If a Participant engages in any “Harmful Activity” prior to or within twelve months after the Participant’s Termination of Employment with an Employer, then all not vested Plan benefits shall be immediately forfeited, and any Plan distributions made to the Participant within one year prior to the Participant’s Termination or Retirement date shall be fully repaid by the Participant to the Corporation within 60 days following the Participant’s receipt of the Corporation’s notice of such Harmful Activity.

     The Harmful Activity restrictions with regard to the Participant’s not competing in businesses in which Key engages shall not apply in the event that the Participant’s Termination of Employment within two years after a Change of Control if any of the following have occurred: a relocation of the Participant’s principal place of employment of more than 35 miles from the Participant’s principal place of employment immediately prior to the Change of Control, a reduction in the Participant’s base salary after a Change of Control, or Termination of Employment under circumstances in which the Participant is entitled to severance benefits or salary continuation or similar benefits under a change of control agreement, employment agreement, or severance or separation pay plan.

     The determination by the Corporation as to whether a Participant has engaged in a “Harmful Activity” prior to or within twelve months after the Participant’s termination of employment with an Employer shall be final and conclusive upon the Participant and upon all other Persons.

     6.5 Withholding. The withholding of taxes with respect to any Deferred Cash Award with all earnings thereon shall be made at such time as it becomes required by any state, federal or local law; such taxes shall be withheld from the Deferred Cash Award in accordance with applicable law.

     6.6 Facility of Payment. If it is found that any individual to whom an amount is payable hereunder is incapable of attending to his or her financial affairs because of any mental or physical condition, including the infirmities of advanced age, such amount (unless prior claim therefore shall have been made by a duly qualified guardian or other legal representative) may, in the discretion of the Corporation, be paid to another person for the use or benefit of the individual found incapable of attending to his or her financial affairs or in satisfaction of legal obligations incurred by or on behalf of such individual. Any such payment shall be charged to the Participant’s Plan Account from which any such payment would otherwise have been paid to the individual found incapable of attending to his or her financial affairs, and shall be a complete discharge of any liability therefore under the Plan.

7

ARTICLE VII
BENEFICIARY DESIGNATION

     7.1 Beneficiary Designation. Subject to Section 7.3 hereof, each Participant shall have the right, at any time, to designate one or more persons or an entity as the Beneficiary (both primary as well as secondary) to who benefits under this Plan shall be paid in the event of Participant’s death prior to complete distribution of the Participant’s vested Plan Account. Each Beneficiary designation shall be in a written form prescribed by the Corporation and shall be effective only when filed with the Corporation during the Participant’s lifetime.

     7.2 Changing Beneficiary. Any Beneficiary designation may be changed by the Participant without the consent of the previously named Beneficiary by the Participant’s filing of a new designation with the Corporation. The filing of a new designation shall cancel all designations previously filed by the Participant.

     7.3 No Beneficiary Designation. If a Participant fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary (including all contingent Beneficiaries) designated by a deceased Participant dies before the Participant, or if the Beneficiary disclaims his or her interest in such benefit, the Participant’s Beneficiary shall be the Participant’s estate.

ARTICLE VIII
ADMINISTRATION

     8.1 Administration. The Corporation, as the “Plan Administrator,” shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making payments hereunder. The Corporation shall have the sole and absolute discretionary authority and power to carry out the provisions of the Plan, including, but not limited to, the authority and power (a) to determine all questions relating to the eligibility for and the amount of any benefit to be paid under the Plan, (b) to determine all questions pertaining to claims for benefits and procedures for claim review, (c) to resolve all other questions arising under the Plan, including any questions of construction and/or interpretation, and (d) to take such further action as the Corporation shall deem necessary or advisable in the administration of the Plan. All findings, decisions, and determinations of any kind made by the Plan Administrator shall not be disturbed unless the Plan Administrator has acted in an arbitrary and capricious manner. Subject to the requirements of law, the Plan Administrator shall be the sole judge of the standard of proof required in any claim for benefits and in any determination of eligibility for a benefit. All decisions of the Plan Administrator shall be final and binding on all parties. The Corporation may employ such attorneys, investment counsel, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The actions taken and the decisions made by the Corporation hereunder shall be final and binding upon all interested parties subject, however, to the provisions of Section 8.2. The Plan Year, for purposes of Plan administration, shall be the calendar year.

     8.2 Claims Review Procedure. Whenever the Plan Administrator decides for whatever reason to deny, whether in whole or in part, a claim for benefits under this Plan filed by any person (herein referred to as the “Claimant”), the Plan Administrator shall transmit a written notice of its decision to the Claimant, which notice shall be written in a manner calculated to be understood by the Claimant and shall contain a statement of the specific reasons for the denial of the claim and a statement advising the Claimant that, within 60 days of the date on which he or she receives such notice, he or she may obtain a review of the decision of the Plan Administrator in accordance with the procedures hereinafter set forth. Within such 60-day period, the Claimant or his or her authorized representative may request

8

that the claim denial be reviewed by filing with the Plan Administrator a written request therefore, which request shall contain the following information:

(a)	the date on which the request was filed with the Plan Administrator; provided, however, that the date on which the request for review was in fact filed with the Plan Administrator shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (a);
(b)	the specific portions of the denial of his or her claim which the Claimant requests the Plan Administrator to review;
(c)	a statement by the Claimant setting forth the basis upon which he or she believes the Plan Administrator should reverse its previous denial of the claim and accept the claim as made; and
(d)	any written material which the Claimant desires the Plan Administrator to examine in its consideration of his or her position as stated pursuant to paragraph (b) above.

     In accordance with this Section 8.2, if the Claimant requests a review of the claim decision, such review shall be made by the Plan Administrator or its designated Claims Committee, who shall, within sixty (60) days after receipt of the request form, review and render a written decision on the claim containing the specific reasons for the decision including reference to Plan provisions upon which the decision is based. All findings, decisions, and determinations of any kind made by the Plan Administrator (or its Claim Committee) shall not be modified unless the Plan Administrator (or its Claim Committee) has acted in an arbitrary and capricious manner. Subject to the requirements of law, the Plan Administrator (or its Claim Committee) shall be the sole judge of the standard of proof required in any claim for benefits, and any determination of eligibility for a benefit. All decisions of the Plan Administrator, including any determination made by the Claims Committee shall be binding on the claimant and upon all other persons or entities. If the Participant or Beneficiary shall not file written notice with the Plan Administrator at the times set forth above, such individual shall have waived all benefits under the Plan other than as already provided, if any, under the Plan.

ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN

     9.1 Reservation of Rights. The Corporation reserves the right to terminate the Plan at any time by action of the Board of Directors of the Corporation, or any duly authorized committee thereof, and to modify or amend the Plan, in whole or in part, at any time and for any reason, subject to the following:

(a)	Preservation of Account Balance. No termination, amendment, or modification of the Plan shall reduce (i) the amount of Deferred Cash Awards, and (ii) all earnings and gains on such Deferred Cash Awards that have accrued up to the effective date of the termination, amendment, or modification.
(b)	Changes in Earnings Rate. No amendment or modification of the Plan shall reduce the rate of earnings to be credited on Deferred Cash Awards with all earnings and gains accrued thereon under the Interest Bearing Account until the close of the applicable Plan Year in which such amendment or modification is made.

9

     9.2 Effect of Plan Termination. If the Corporation terminates the Plan, either in whole or in part, the Plan Administrator shall not accept any additional Deferred Cash Awards. If such a termination occurs, the Plan shall continue to operate and to be effective with regard to those Deferred Cash Awards maintained in the Plan prior to the effective date of such termination.

ARTICLE X
CHANGE OF CONTROL

     10.1 Change of Control. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control as defined in accordance with Section 2.1(c) of the Plan, no amendment or modification of the Plan may be made at any time on or after such Change of Control (1) to reduce or modify a Participant’s Pre-Change of Control Account Balance, or (2) to terminate or modify the Plan’s Interest Bearing Account. For purposes of this Section 10.1, the term “Pre-Change of Control Account Balance” shall mean, with regard to any Plan Participant, the aggregate undistributed amount of the Participant’s Deferred Cash Award(s) with all earnings thereon which are credited to the Participant’s Plan Account through the close of the calendar year in which such Change of Control occurs.

     10.3 Amendment in the Event of a Change of Control. On and after a Change of Control, the provisions of Article II, Article IV, Article V, Article VI, Article VII, Article VIII, Article IX, and this Article X, may not be amended or modified as such Sections and Articles apply with regard to the Participants’ Pre-Change of Control Account Balances.

ARTICLE XI
MISCELLANEOUS PROVISIONS

     11.1 Unfunded Plan. This Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly-compensated employees.”

     11.2 No Commitment as to Employment. Nothing herein contained shall be construed as a commitment or agreement upon the part of any Employee hereunder to continue his or her employment with an Employer, and nothing herein contained shall be construed as a commitment on the part of any Employer to continue the employment, rate of compensation, or terms and conditions of employment of any Employee hereunder for any period. All Participants shall remain subject to discharge to the same extent as if the Plan had never been put into effect.

     11.3 Benefits. Nothing in the Plan shall be construed to confer any right or claim upon any person, firm, or corporation other than the Participants, former Participants, and Beneficiaries.

     11.4 Absence of Liability. No member of the Board of Directors of the Corporation or a subsidiary or committee authorized by the Board of Directors, or any officer of the Corporation or a subsidiary or officer of a subsidiary shall be liable for any act or action hereunder, whether of commission or omission, taken by any other member, or by any officer, agent, or Employee, except in circumstances involving bad faith or willful misconduct, for anything done or omitted to be done.

     11.5 Expenses. The expenses of administration of the Plan shall be paid by the Corporation.

10

     11.6 Precedent. Except as otherwise specifically agreed to by the Corporation in writing, no action taken in accordance with the Plan by the Corporation shall be construed or relied upon as a precedent for similar action under similar circumstances.

     11.7 Withholding. The Corporation shall withhold any tax that the Corporation in its discretion deems necessary to be withheld from any payment to any Participant, former Participant, or Beneficiary hereunder, by reason of any present or future law.

     11.8 Validity of Plan. The validity of the Plan shall be determined and the Plan shall be construed and interpreted in accordance with the laws of the State of Ohio. The invalidity or illegality of any provision of the Plan shall not affect the validity or legality of any other part thereof.

     11.9 Parties Bound. The Plan shall be binding upon the Employers, Participants, former Participants, and Beneficiaries hereunder, and, as the case may be, the heirs, executors, administrators, successors, and assigns of each of them.

     11.10 Headings. All headings used in the Plan are for convenience of reference only and are not part of the substance of the Plan.

     11.11 Duty to Furnish Information. The Corporation shall furnish to each Participant, former Participant, or Beneficiary any documents, reports, returns, statements, or other information that it reasonably deems necessary to perform its duties imposed hereunder or otherwise imposed by law.

     11.12 Validity. In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.

     11.13 Notice. Any notice required or permitted under the Plan shall be deemed sufficiently provided if such notice is in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or on the receipt for registration or certification. Mailed notice to the Corporation shall be directed to the Corporation’s address, attention: KeyCorp Compensation and Benefits Department. Mailed notice to a Participant or Beneficiary shall be directed to the individual’s last known address in the Employer’s records.

     11.14 Successors. The provisions of this Plan shall bind and inure to the benefit of each Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity, which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of an Employer.

ARTICLE XII
COMPLIANCE WITH
SECTION 409A OF THE CODE

     12.1 Compliance With Section 409A. The Plan is intended to provide for the deferral of compensation in accordance with the provisions of Section 409A of the Code and regulations and published guidance issued pursuant thereto. Accordingly, the Plan shall be construed in a manner consistent with those provisions and may at any time be amended in the manner and to the extent determined necessary or desirable by the Corporation to reflect or otherwise facilitate compliance with such provisions. Notwithstanding any provision of the Plan to the contrary, no otherwise permissible

11

deferral or distribution shall be made or given effect under the Plan that would result in a violation, early taxation, or assessment of penalties or interest of any amount under Section 409A of the Code.

     IN WITNESS WHEREOF, KeyCorp has caused this KeyCorp Deferred Cash Award Plan to be executed and effective as of March 1, 2009.

KEYCORP
By:	/s/ Thomas E. Helfrich
Title:	Executive Vice President

12

EX-12

EXHIBIT 12

KEYCORP
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(dollars in millions)
(unaudited)

	Year ended December 31,
	2009			2008			2007			2006			2005
Computation of Earnings
Net income (loss) attributable to Key	$	(1,335	)	$	(1,468	)	$	919		$	1,055		$	1,129
Add: Provision for income taxes		(1,035	)		437			277			440			428
Less: Income (loss) from discontinued operations, net of taxes		(48	)		(173	)		(16	)		(127	)		53
Less: Cumulative effect of accounting change, net of taxes		—			—			—			5			—
Income (loss) before income taxes and cumulative effect of accounting change		(2,322	)		(858	)		1,212			1,617			1,504
Fixed charges, excluding interest on deposits		314			597			835			787			624
Total earnings for computation, excluding interest on deposits		(2,008	)		(261	)		2,047			2,404			2,128
Interest on deposits		1,119			1,468			1,845			1,576			976
Total earnings for computation, including interest on deposits	$	(889	)	$	1,207		$	3,892		$	3,980		$	3,104
Computation of Fixed Charges
Net rental expense	$	122		$	111		$	108		$	122		$	149
Portion of net rental expense deemed representative of interest	$	18		$	28		$	30		$	34		$	38
Interest on short-term borrowed funds		21			187			312			201			153
Interest on long-term debt		275			382			493			552			433
Total fixed charges, excluding interest on deposits		314			597			835			787			624
Interest on deposits		1,119			1,468			1,845			1,576			976
Total fixed charges, including interest on deposits	$	1,433		$	2,065		$	2,680		$	2,363		$	1,600
Combined Fixed Charges and Preferred Stock Dividends
Preferred stock dividend requirement on a pre-tax basis	$	294		$	42			—			—			—
Total fixed charges, excluding interest on deposits		314			597		$	835		$	787		$	624
Combined fixed charges and preferred stock dividends, excluding interest on deposits		608			639			835			787			624
Interest on deposits		1,119			1,468			1,845			1,576			976
Combined fixed charges and preferred stock dividends, including interest on deposits	$	1,727		$	2,107		$	2,680		$	2,363		$	1,600
Ratio of Earnings to Fixed Charges
Excluding deposit interest		(6.39	)x		(.44	)x		2.45	x		3.05	x		3.41	x
Including deposit interest		(.62	)x		.58	x		1.45	x		1.68	x		1.94	x
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
Excluding deposit interest		(3.30	)x		(.41	)x		2.45	x		3.05	x		3.41	x
Including deposit interest		(.51	)x		.57	x		1.45	x		1.68	x		1.94	x

EX-13

Financial Review
2009 KeyCorp Annual Report

Management’s Discussion & Analysis of Financial Condition & Results of Operations	4
Introduction	4
Terminology	4
Description of business	5
Forward-looking statements	5
Long-term goal	6
Corporate strategy	7
Economic overview	7
SCAP	8
FDIC Developments	8
Demographics	9
Critical accounting policies and estimates	10
Allowance for loan losses	10
Valuation methodologies	11
Derivatives and hedging	13
Contingent liabilities, guarantees and income taxes	13
Highlights of Our 2009 Performance	14
Financial performance	14
Strategic developments	21
Line of Business Results	22
Community Banking summary of operations	23
National Banking summary of continuing operations	24
Other Segments	26
Results of Operations	27
Net interest income	27
Noninterest income	31
Trust and investment services income	33
Service charges on deposit accounts	34
Operating lease income	34
Net gains (losses) from loan securitizations and sales	34
Net gains (losses) from principal investing	34
Investment banking and capital markets income (loss)	34
Noninterest expense	35
Personnel	36
Intangible assets impairment	37
Operating lease expense	37
Professional fees	37
Marketing expense	37
Corporate-wide initiative	37
Income taxes	37
Financial Condition	39
Loans and loans held for sale	39
Commercial loan portfolio	40
Commercial real estate loans	40
Commercial lease financing	42
Consumer loan portfolio	42
Loans held for sale	42
Sales and securitizations	43
Maturities and sensitivity of certain loans to changes in interest rates	45
Securities	45
Securities available for sale	45
Held-to-maturity securities	47
Other investments	48

1

Deposits and other sources of funds	48
Capital	50
Supervisory Capital Assessment Program and our capital-generating activities	50
Preferred stock private exchanges	50
Dividends	50
Common shares outstanding	50
Adoption of new accounting standards	51
Capital availability and management	52
Capital adequacy	52
Emergency Economic Stabilization Act of 2008	55
The TARP Capital Purchase Program	55
FDIC’s standard maximum deposit insurance coverage limit increase	55
Temporary Liquidity Guarantee Program	55
Financial Stability Plan	56
Capital Assistance Program	56
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations	57
Off-balance sheet arrangements	57
Variable interest entities	57
Loan securitizations	57
Commitments to extend credit or funding	58
Other off-balance sheet arrangements	58
Contractual obligations	59
Guarantees	59
Risk Management	60
Overview	60
Market risk management	61
Interest rate risk management	61
Net interest income simulation analysis	61
Economic value of equity modeling	63
Management of interest rate exposure	63
Derivatives not designated in hedge relationships	63
Liquidity risk management	64
Governance structure	64
Sources of liquidity	64
Factors affecting liquidity	64
Managing liquidity risk	64
Long-term liquidity strategy	65
Our liquidity position and recent activity	65
Liquidity for KeyCorp	66
Liquidity programs	67
Credit ratings	67
FDIC and U.S. Treasury Programs	68
Temporary Liquidity Guarantee Program	68
Financial Stability Plan	68
Credit risk management	68
Credit policy, approval and evaluation	68
Watch and criticized assets	70
Allowance for loan losses	70
Net loan charge-offs	72
Nonperforming assets	74
Operational risk management	77
Fourth Quarter Results	78
Earnings	78
Net interest income	78
Noninterest income	78
Noninterest expense	79
Provision for loan losses	79
Income taxes	79

2

Certifications	81
Management’s Annual Report on Internal Control Over Financial Reporting	82
Reports of Independent Registered Public Accounting Firm	83
Consolidated Financial Statements and Related Notes	85
Consolidated Balance Sheets	85
Consolidated Statements of Income	86
Consolidated Statements of Changes in Equity	87
Consolidated Statements of Cash Flows	88
Note 1. Summary of Significant Accounting Policies	89
Note 2. Earnings Per Common Share	102
Note 3. Acquisitions and Divestitures	103
Note 4. Line of Business Results	107
Note 5. Restrictions on Cash, Dividends and Lending Activities	111
Note 6. Securities	111
Note 7. Loans and Loans Held for Sale	114
Note 8. Loan Securitizations and Mortgage Servicing Assets	115
Note 9. Variable Interest Entities	118
Note 10. Nonperforming Assets and Past Due Loans from Continuing Operations	120
Note 11. Goodwill and Other Intangible Assets	121
Note 12. Short-Term Borrowings	123
Note 13. Long-Term Debt	125
Note 14. Capital Securities Issued by Unconsolidated Subsidiaries	126
Note 15. Shareholders’ Equity	128
Note 16. Stock-Based Compensation	131
Note 17. Employee Benefits	135
Note 18. Income Taxes	143
Note 19. Commitments, Contingent Liabilities and Guarantees	147
Note 20. Derivatives and Hedging Activities	152
Note 21. Fair Value Measurements	159
Note 22. Condensed Financial Information of the Parent Company	166

3

Management’s Discussion & Analysis of Financial Condition & Results of Operations

Introduction

This section generally reviews the financial condition and results of operations of KeyCorp and its subsidiaries for the each of the past three years. Some tables may include additional periods to comply with disclosure requirements or to illustrate trends in greater depth. When you read this discussion, you should also refer to the consolidated financial statements and related notes in this report. The page locations of specific sections and notes that we refer to are presented in the preceding table of contents.

Terminology

Throughout this discussion, references to “Key,” “we,” “our,” “us” and similar terms refer to the consolidated entity consisting of KeyCorp and its subsidiaries. “KeyCorp” refers solely to the parent holding company, and “KeyBank” refers to KeyCorp’s subsidiary bank, KeyBank National Association.

We want to explain some industry-specific terms at the outset so you can better understand the discussion that follows.

¨ In September 2009, we decided to discontinue the education lending business. In April 2009, we decided to wind down the operations of Austin Capital Management, Ltd., a subsidiary that specialized in managing hedge fund investments for institutional customers. As a result of these decisions, we have accounted for these businesses as discontinued operations. We use the phrase continuing operations in this document to mean all of our businesses other than the education lending business and Austin.

¨ Our exit loan portfolios are distinct from our discontinued operations. These portfolios, which are in a run-off mode, stem from product lines we decided to cease because they no longer fit with our corporate strategy. However, these product lines are part of broader ongoing businesses included in our continuing operations.

¨ We engage in capital markets activities primarily through business conducted by our National Banking group. These activities encompass a variety of products and services. Among other things, we trade securities as a dealer, enter into derivative contracts (both to accommodate clients’ financing needs and for proprietary trading purposes), and conduct transactions in foreign currencies (both to accommodate clients’ needs and to benefit from fluctuations in exchange rates).

¨ For regulatory purposes, capital is divided into two classes. Federal regulations prescribe that at least one-half of a bank or bank holding company’s total risk-based capital must qualify as Tier 1 capital. Both total and Tier 1 capital serve as bases for several measures of capital adequacy, which is an important indicator of financial stability and condition. As described in the section entitled “Economic Overview,” in 2009, regulators initiated an additional level of review of capital adequacy for the country’s nineteen largest banking institutions, including KeyCorp. As part of this review, banking regulators reviewed a component of Tier 1 capital, known as Tier 1 common equity, to assess capital adequacy. You will find a more detailed explanation of total capital, Tier 1 capital and Tier 1 common equity, and how they are calculated in the section entitled “Capital.”

Additionally, our discussion contains acronyms and abbreviations. A comprehensive list of the acronyms and abbreviations used throughout this report is included in Note 1 (“Summary of Significant Accounting Policies”), which follows this discussion.

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Description of business

KeyCorp was organized under the laws of the State of Ohio in 1958 and is headquartered in Cleveland, Ohio. We are a bank holding company and a financial holding company under the Bank Holding Company Act of 1956, as amended. As of December 31, 2009, we were one of the nation’s largest bank-based financial services companies, with consolidated total assets of $93.3 billion. KeyCorp is the parent holding company for KeyBank, its principal subsidiary, through which most of its banking services are provided. Through KeyBank and certain other subsidiaries, we provide a wide range of retail and commercial banking, commercial leasing, investment management, consumer finance, and investment banking products and services to individual, corporate and institutional clients. As of December 31, 2009, these services were provided across the country through KeyBank’s 1,007 full service retail banking branches in fourteen states, additional offices of our subsidiaries, a telephone banking call center services group and a network of 1,495 automated teller machines in sixteen states. We had 16,698 average full-time equivalent employees during 2009. Additional information pertaining to KeyCorp’s two major business groups, Community Banking and National Banking, appears in the “Line of Business Results” section and in Note 4 (“Line of Business Results”).

In addition to the customary banking services of accepting deposits and making loans, our bank and trust company subsidiaries offer personal and corporate trust services, personal financial services, access to mutual funds, cash management services, investment banking and capital markets products, and international banking services. Through our subsidiary bank, trust company and registered investment adviser subsidiaries, we provide investment management services to clients that include large corporate and public retirement plans, foundations and endowments, high-net-worth individuals and multi-employer trust funds established to provide pension or other benefits to employees.

We provide other financial services — both within and outside of our primary banking markets — through various nonbank subsidiaries. These services include principal investing, community development financing, securities underwriting and brokerage, and merchant services. We also are an equity participant in a joint venture that provides merchant services to businesses.

Forward-looking Statements

From time to time, we have made or will make forward-looking statements. These statements can be identified by the fact that they 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,” “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. Our disclosures in this Annual Report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in our other documents filed or furnished with the SEC. In addition, we may make forward-looking statements orally to analysts, investors, representatives of the media and others.

Forward-looking statements are not historical facts and, 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 actual results to differ from those described in forward-looking statements include, but are not limited to:

¨ indications of an improving economy may prove to be premature;

¨ changes in local, regional and international business, economic or political conditions in the regions that we operate or have significant assets;

¨ our ability to effectively deal with an economic slowdown or other economic or market difficulty;

¨ adverse changes in credit quality trends;

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¨ our ability to determine accurate values of certain assets and liabilities;

¨ credit ratings assigned to KeyCorp and KeyBank;

¨ adverse behaviors in securities, public debt, and capital markets, including changes in market liquidity and volatility;

¨ changes in investor sentiment, consumer spending or saving behavior;

¨ our ability to manage liquidity, including anticipating interest rate changes correctly;

¨ changes in trade, monetary and fiscal policies of various governmental bodies could affect the economic environment in which we operate;

¨ changes in foreign exchange rates;

¨ limitations on our ability to return capital to shareholders and potential dilution of our common shares as a result of the U.S. Treasury’s investment under the terms of the CPP;

¨ adequacy of our risk management program;

¨ increased competitive pressure due to consolidation;

¨ new or heightened legal standards and regulatory requirements, practices or expectations;

¨ our ability to timely and effectively implement our strategic initiatives;

¨ increases in FDIC premiums and fees;

¨ unanticipated adverse affects of acquisitions and dispositions of assets, business units or affiliates;

¨ our ability to attract and/or retain talented executives and employees;

¨ operational or risk management failures due to technological or other factors;

¨ changes in accounting principles or in tax laws, rules and regulations;

¨ adverse judicial proceedings;

¨ occurrence of natural or man-made disasters or conflicts or terrorist attacks disrupting the economy or our ability to operate; and

¨ other risks and uncertainties summarized in Part 1, Item 1A: Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2009.

Any forward-looking statements made by 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. Before making an investment decision, you should carefully consider all risks and uncertainties disclosed in our SEC filings, including our reports on Forms 8-K, 10-K and 10-Q and our registration statements under the Securities Act of 1933, as amended, all of which are accessible on the SEC’s website at www.sec.gov.

Long-term goal

Our long-term financial goal is to achieve a return on assets at or above the median of our peer group. The strategy for achieving this goal is described under the heading “Corporate strategy” below.

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Corporate strategy

We are committed to enhancing shareholder value by having a strong balance sheet, consistent earnings, and a focus on risk-adjusted returns. We expect to achieve this goal by implementing our client-driven relationship strategy, supported by client insights, a commitment to delivering high quality service and a robust risk management culture. Our strategic priorities for enhancing shareholder value and for creating sustainable long-term value are as follows:

¨ Return to sustainable profitability. We strive for continuous improvement in our business. We continue to focus on increasing revenues, controlling costs, and returning to a moderate risk profile in our loan portfolios. Further, we will continue to leverage technology to achieve these objectives.

¨ Sustain strong reserves, capital and liquidity. We intend to stay focused on sustaining strong reserves and capital, which we believe is important not only in today’s environment, but also to support future growth opportunities. We also remain committed to maintaining strong liquidity and funding positions.

¨ Continue building a robust risk-management culture. We will continue to align our risk tolerances with our corporate strategies and goals, and increase risk awareness throughout the company. Our employees must have a clear understanding of our risk tolerance with regard to factors such as asset quality, operational risk losses and liquidity levels to ensure that we operate within our desired risk appetite.

¨ Expand and acquire client relationships. We will work to deepen relationships with existing clients and to build relationships with new clients, particularly those that have the potential to purchase multiple products and services or to generate repeat business. We aim to better understand our clients and to devise better ways to meet their needs by regularly seeking client feedback and using those insights to improve our products and services. Our relationship strategies serve as the foundation for everything we do.

¨ Attract and retain a capable, diverse and engaged workforce. We are committed to investing in our workforce to optimize the talent in our organization. We will continue to stress the importance of training, retaining, developing and challenging our employees. We believe this is essential to succeeding on all of our priorities.

Economic overview

By the end of 2009, the United States economy appeared to have stabilized and showed signs of improvement. During the first quarter, the GDP contracted by 6.4%, the largest decline in more than 25 years, before rebounding to 2.2% growth in the third quarter. The average GDP for the first three quarters of 2009 declined by an average of 1.6%, an improvement from the 2008 average decline of 1.8%, but significantly below the ten-year average growth of 2.0%. The return to growth in the third quarter of 2009 was spurred by a rebound in consumer consumption driven by federal incentive programs such as the Car Allowance Rebate System, known as “Cash for Clunkers,” and the first-time homebuyer tax credits offered as part of the Worker, Homeownership, and Business Assistance Act of 2009. Consumer spending for all of 2009 increased at an average monthly rate of .3%, compared to an average monthly decline of .1% for all of 2008. Consumer spending in 2009 also was supported by an overall moderation in consumer price increases.

The rebound in consumer spending was tempered by continued weakness in the labor market in 2009. The economy lost 4.8 million jobs, resulting in an unemployment rate that rose above 10% during the fourth quarter, compared to 7.4% at December 31, 2008. The average unemployment rate for 2009 rose to 9.3%, compared to an average rate of 5.8% for 2008. The pace of job losses slowed substantially throughout 2009, with nearly 80% of the job losses occurring in the first six months of the year. Since the recession began in December 2007, the U.S. economy has lost an estimated 8.4 million jobs.

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Housing continued to drag on consumer wealth, confidence and spending levels in 2009. However, the housing market showed signs of improvement during the year. After peaking in July 2009, the level of foreclosures began to decline. Foreclosures increased approximately 15% in 2009, compared to a 41% annual increase reported in 2008. With the slowed pace of increases in foreclosures and the first-time homebuyer tax credit, real estate prices began to show some signs of stabilization. The median price of existing homes in December 2009 increased by 1.5% from December 2008, compared to a 15% decline a year earlier. Historically low mortgage rates, homebuyer tax credits and lower prices made houses more affordable and, consequently, increased housing market activity. Sales of existing homes rose by 15% in 2009, compared to a 5% decline in 2008. As homebuyer demand began to increase, home building activity followed suit. New home construction in December 2009 rose by .2% from the same month in 2008, compared to a 46% annual decline from December 2007 to December 2008. New home sales declined 9% in December 2009 from a year earlier, and median prices for new homes declined 4%.

The Federal Reserve held the federal funds target rate near zero during 2009 as the downside risks to the global economy remained elevated. To aid in promoting market liquidity and lower lending rates, the Federal Reserve also increased its purchases of agency debt, agency mortgage-backed securities and Treasury securities. Benchmark term interest rates rose during 2009, due to increased near-term economic optimism and heightened fears of inflation. The benchmark two-year Treasury yield increased to 1.14% at December 31, 2009, from .77% at December 31, 2008, and the ten-year Treasury yield, which began the year at 2.21%, closed the year at 3.84%. As credit concerns continued to ease throughout the year, short-term interbank lending rates declined by more than 100 basis points and credit spreads on banks’ and financial firms’ debt obligations narrowed dramatically.

As the year ended, various Federal Reserve reports stated that although the recession appears to be over, growth will be sluggish into 2010, and interest rates will remain low for an extended period of time. The Federal Reserve also announced in December 2009 that it would begin to unwind some of its liquidity programs.

SCAP

On February 10, 2009, the U.S. Treasury announced its Financial Stability Plan to alleviate uncertainty, restore confidence, and address liquidity and capital constraints. As part of the Financial Stability Plan, the U.S. Treasury, in conjunction with the Federal Reserve, Federal Reserve Banks, the FDIC, and the Office of the Comptroller of the Currency, commenced a review, referred to as SCAP, of the capital of the nineteen largest U.S. banking institutions. As announced on May 7, 2009, the regulators determined that ten of these institutions, including KeyCorp, needed to generate an additional capital buffer of approximately $75 billion, in the aggregate, within six months. These ten institutions generated, in the aggregate, well in excess of the $75 billion of Tier 1 common equity toward the fulfillment of the SCAP requirements through the November 2009 deadline. Approximately $112 billion of such capital was generated through equity offerings and exchange offers. During this same period, the other nine SCAP participants, which were not required to raise any additional capital buffer, raised approximately $24 billion of capital from equity offerings.

Further information on the actions we have taken to strengthen our capital position in connection with the results of the SCAP assessment is included in the “Capital” section under the heading “Supervisory Capital Assessment Program and our capital-generating activities.”

FDIC Developments

On September 1, 2009, the FDIC published a final rule to announce the extension of the transaction account guarantee component of the TLGP for a period of six months until June 30, 2010, for those institutions currently participating in this program. Institutions that elected to participate in the extension would incur an increase in their quarterly annualized fee from 10 basis points to between 15 and 25 basis points, based on their risk rating. On November 2, 2009, we chose to continue our participation in the program.

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With liquidity concerns of financial institutions stabilizing, in October 2009, the FDIC adopted a final rule for concluding the debt guarantee component of the TLGP. Under the final rule, qualifying financial institutions were permitted to issue FDIC-guaranteed debt until October 31, 2009, with the FDIC’s guarantee expiring no later than December 31, 2012. However, the FDIC has established a limited emergency guarantee facility that permits certain qualifying financial institutions to apply to the FDIC to issue FDIC-guaranteed debt for an additional six months (i.e., the FDIC will guarantee senior unsecured debt issued on or before April 30, 2010). As previously reported, we have no plans to issue any additional debt under the TLGP.

Further information on the TLGP-related developments is included in the “Capital” section under the heading “Temporary Liquidity Guarantee Program.”

On November 17, 2009, the FDIC published a final rule to announce an amended DIF restoration plan requiring depository institutions, such as KeyBank, to prepay, on December 30, 2009, their estimated quarterly risk-based assessments for the third and fourth quarters of 2009 and for all of 2010, 2011 and 2012. For further information on the amended restoration plan, see the section entitled “Deposits and other sources of funds.”

Demographics

We have two major business groups: Community Banking and National Banking. The effect on our business of continued volatility and weakness in the housing market varies with the state of the economy in the regions in which these business groups operate.

The Community Banking group serves consumers and small to mid-sized businesses by offering a variety of deposit, investment, lending and wealth management products and services. These products and services are provided through a 14-state branch network organized into three internally defined geographic regions: Rocky Mountains and Northwest, Great Lakes, and Northeast. The National Banking group includes those corporate and consumer business units that operate nationally, within and beyond our 14-state branch network, as well as internationally. The specific products and services offered by the Community and National Banking groups are described in Note 4.

Figure 1 shows the geographic diversity of our Community Banking group’s average core deposits, commercial loans and home equity loans.

Figure 1. Community Banking Geographic Diversity

	Geographic Region
	Rocky
Year ended December 31, 2009	Mountains and
dollars in millions	Northwest			Great Lakes			Northeast			Nonregion(a)			Total
Average deposits (b)	$	13,772		$	14,433		$	13,420		$	1,618		$	43,243
Percent of total		31.8	%		33.4	%		31.0	%		3.8	%		100.0	%
Average commercial loans	$	6,271		$	4,090		$	3,111		$	1,304		$	14,776
Percent of total		42.4	%		27.7	%		21.1	%		8.8	%		100.0	%
Average home equity loans	$	4,501		$	2,916		$	2,648		$	146		$	10,211
Percent of total		44.1	%		28.6	%		25.9	%		1.4	%		100.0	%

(a)	Represents average deposits, commercial loan and home equity loan products centrally managed outside of our three Community Banking regions.
(b)	Excludes certificates of deposit of $100,000 or more and deposits in the foreign office.

Figure 18, which appears later in this report in the “Loans and loans held for sale” section, shows the diversity of our commercial real estate lending business based on industry type and location. The homebuilder loan portfolio within the National Banking group has been adversely affected by the downturn in the U.S. housing market. Deteriorating market conditions in the residential properties segment of the commercial real estate construction portfolio, principally in Florida and southern

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California, have caused nonperforming loans and net charge-offs to increase significantly since mid-2007. We have taken aggressive steps to reduce exposure in this segment of the loan portfolio. As previously reported, during the fourth quarter of 2007, we announced our decision to cease conducting business with nonrelationship homebuilders outside of the 14-state Community Banking footprint; during the last half of 2008, we ceased all lending to homebuilders. During the second quarter of 2008, we initiated a process to further reduce exposure through the sale of certain loans. As a result of these actions, since December 31, 2007, we have reduced outstanding balances in the residential properties segment of the commercial real estate construction loan portfolio by $2.3 billion, or 66%, to $1.2 billion. Additional information about loan sales is included in the “Credit risk management” section.

Deterioration in the commercial real estate portfolio continued during 2009, but was concentrated in the nonowner-occupied properties segment. Rising vacancies, reduced cash flows and reduced real estate values adversely affected commercial real estate on a national basis due to weak economic conditions. Certain markets such as Florida, southern California, Phoenix, Arizona, and Las Vegas, Nevada, experienced more significant deterioration. The delinquencies, nonperforming loans and charge-offs that we have experienced are more heavily weighted to these specific markets.

Results for the National Banking group have also been affected adversely by increasing credit costs and volatility in the capital markets, which have led to declines in the market values of assets under management and the market values at which we record certain assets (primarily commercial real estate loans and securities held for sale or trading).

During the first quarter of 2009, we determined that the estimated fair value of the National Banking reporting unit was less than the carrying amount, reflecting the impact of continued weakness in the financial markets. As a result, we recorded an after-tax noncash accounting charge of $187 million, $23 million of which relates to the discontinued operations of Austin. As a result of this charge and a similar after-tax charge of $420 million recorded during the fourth quarter of 2008, we have now written off all of the goodwill that had been assigned to our National Banking reporting unit.

Critical accounting policies and estimates

Our business is dynamic and complex. Consequently, we must exercise judgment in choosing and applying accounting policies and methodologies. These choices are critical: not only are they necessary to comply with GAAP, they also reflect our view of the appropriate way to record and report our overall financial performance. All accounting policies are important, and all policies described in Note 1 should be reviewed for a greater understanding of how we record and report our financial performance.

In our opinion, some accounting policies are more likely than others to have a critical effect on our financial results and to expose those results to potentially greater volatility. These policies apply to areas of relatively greater business importance, or require us to exercise judgment and to make assumptions and estimates that affect amounts reported in the financial statements. Because these assumptions and estimates are based on current circumstances, they may prove to be inaccurate, or we may find it necessary to change them.

We rely heavily on the use of judgment, assumptions and estimates to make a number of core decisions. A brief discussion of each of these areas follows.

Allowance for loan losses.

The loan portfolio is the largest category of assets on our balance sheet. We consider a variety of data to determine probable losses inherent in the loan portfolio and to establish an allowance that is sufficient to absorb those losses. For example, we apply historical loss rates to existing loans with similar risk characteristics and exercise judgment to assess the impact of factors such as changes in economic conditions, lending policies, underwriting standards, and the level of credit risk associated with specific industries and markets. Other considerations include expected cash flows and estimated collateral values.

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If an impaired loan has an outstanding balance greater than $2.5 million, we conduct further analysis to determine the probable loss and assign a specific allowance to the loan if deemed appropriate. For example, a specific allowance may be assigned — even when sources of repayment appear sufficient — if we remain uncertain that the loan will be repaid in full.

We continually assess the risk profile of the loan portfolio and adjust the allowance for loan losses when appropriate. The economic and business climate in any given industry or market is difficult to gauge and can change rapidly, and the effects of those changes can vary by borrower. However, since our total loan portfolio is well diversified in many respects, and the risk profile of certain segments of the loan portfolio may be improving while the risk profile of others is deteriorating, we may decide to change the level of the allowance for one segment of the portfolio without changing it for any other segment.

In addition to adjusting the allowance for loan losses to reflect market conditions, we also may adjust the allowance because of unique events that cause actual losses to vary abruptly and significantly from expected losses. For example, class action lawsuits brought against an industry segment (e.g., one that used asbestos in its product) can cause a precipitous deterioration in the risk profile of borrowers doing business in that segment. Conversely, the dismissal of such lawsuits can improve the risk profile. In either case, historical loss rates for that industry segment would not have provided a precise basis for determining the appropriate level of allowance.

Even minor changes in the level of estimated losses can significantly affect management’s determination of the appropriate level of allowance because those changes must be applied across a large portfolio. To illustrate, an increase in estimated losses equal to one-tenth of one percent of our December 31, 2009, consumer loan portfolio would indicate the need for a $17 million increase in the level of allowance. The same level of increase in estimated losses for the commercial loan portfolio would result in a $42 million increase in the allowance. Such adjustments to the allowance for loan losses can materially affect financial results. Following the above examples, a $17 million increase in the allowance would have reduced our earnings by approximately $11 million, or $.02 per share; a $42 million increase in the allowance would have reduced earnings by approximately $26 million, or $.04 per share.

As we make decisions regarding the allowance, we benefit from a lengthy organizational history and experience with credit evaluations and related outcomes. Nonetheless, if our underlying assumptions later prove to be inaccurate, the allowance for loan losses would have to be adjusted, possibly having an adverse effect on our results of operations.

Our accounting policy related to the allowance is disclosed in Note 1 under the heading “Allowance for Loan Losses.”

Valuation methodologies.

Valuation methodologies often involve a significant degree of judgment, particularly when there are no observable active markets for the items being valued. To determine the values of assets and liabilities, as well as the extent to which related assets may be impaired, we make assumptions and estimates related to discount rates, asset returns, prepayment rates and other factors. The use of different discount rates or other valuation assumptions could produce significantly different results. The outcomes of valuations that we perform have a direct bearing on the carrying amounts of assets and liabilities, including loans held for sale, principal investments, goodwill, and pension and other postretirement benefit obligations.

A discussion of the valuation methodology applied to our loans held for sale is included in Note 1 under the heading “Loans held for sale.”

Our principal investments include direct and indirect investments, predominantly in privately-held companies. The fair values of these investments are determined by considering a number of factors, including the target company’s financial condition and results of operations, values of public companies in comparable businesses, market liquidity, and the nature and duration of resale restrictions. The fair value of principal investments was $1 billion at December 31, 2009; a 10% positive or negative variance in that fair value would have increased or decreased our 2009 earnings by $104 million ($65 million after tax, or $.09 per share).

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The valuation and testing methodologies used in our analysis of goodwill impairment are summarized in Note 1 under the heading “Goodwill and Other Intangible Assets.” The first step in testing for impairment is to determine the fair value of each reporting unit. Our reporting units for purposes of this testing are the two major business segments: Community Banking and National Banking. Fair values are estimated using comparable external market data (market approach) and discounted cash flow modeling that incorporates an appropriate risk premium and earnings forecast information (income approach). We perform a sensitivity analysis of the estimated fair value of each reporting unit as appropriate. We believe that the estimates and assumptions used in the goodwill impairment analysis for our reporting units are reasonable. However, if actual results and market conditions differ from the assumptions or estimates used, the fair value of each reporting unit could change in the future.

The second step of impairment testing is necessary only if the carrying amount of either reporting unit exceeds its fair value, suggesting goodwill impairment. In such a case, we would estimate a hypothetical purchase price for the reporting unit (representing the unit’s fair value) and then compare that hypothetical purchase price with the fair value of the unit’s net assets (excluding goodwill). Any excess of the estimated purchase price over the fair value of the reporting unit’s net assets represents the implied fair value of goodwill. An impairment loss would be recognized as a charge to earnings if the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of goodwill.

During 2009, we recorded noncash charges for intangible assets impairment of $241 million ($151 after tax, or $.22 per common share). See Note 11 (“Goodwill and Other Intangible Assets”) for a summary of the events that resulted in these charges.

We conduct a quarterly review of the applicable goodwill impairment indicators and evaluate the carrying amount of our goodwill, if necessary.

The primary assumptions used in determining our pension and other postretirement benefit obligations and related expenses, including sensitivity analysis of these assumptions, are presented in Note 17 (“Employee Benefits”).

When potential asset impairment is identified, we must exercise judgment to determine the nature of the potential impairment (i.e., temporary or other-than-temporary) to apply the appropriate accounting treatment. For example, unrealized losses on securities available for sale that are deemed temporary are recorded in shareholders’ equity; those deemed “other-than-temporary” are recorded in either earnings or shareholders’ equity based on certain factors. Additional information regarding temporary and other-than-temporary impairment on securities available for sale at December 31, 2009, is provided in Note 6 (“Securities”).

Effective January 1, 2008, we adopted the applicable accounting guidance for fair value measurements and disclosures, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. In the absence of quoted market prices, we determine the fair value of our assets and liabilities using internally developed models, which are based on third party data as well as our judgment, assumptions and estimates regarding credit quality, liquidity, interest rates and other relevant market available inputs. We describe our adoption of this accounting guidance, the process used to determine fair values and the fair value hierarchy in Note 1 under the heading “Fair Value Measurements” and in Note 21 (“Fair Value Measurements”).

At December 31, 2009, $20.4 billion, or 22%, of our total assets were measured at fair value on a recurring basis. Approximately 92% of these assets were classified as Level 1 or Level 2 within the fair value hierarchy. At December 31, 2009, $1.8 billion, or 2%, of our total liabilities were measured at fair value on a recurring basis. Substantially all of these liabilities were classified as Level 1 or Level 2.

At December 31, 2009, $930 million, or 1%, of our total assets were measured at fair value on a nonrecurring basis. Approximately 4% of these assets were classified as Level 1 or Level 2. At December 31, 2009, there were no liabilities measured at fair value on a nonrecurring basis.

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Derivatives and hedging.

We use primarily interest rate swaps to hedge interest rate risk for asset and liability management purposes. These derivative instruments modify the interest rate characteristics of specified on-balance sheet assets and liabilities. Our accounting policies related to derivatives reflect the current accounting guidance, which provides that all derivatives should be recognized as either assets or liabilities on the balance sheet at fair value, after taking into account the effects of master netting agreements. Accounting for changes in the fair value (i.e., gains or losses) of a particular derivative depends on whether the derivative has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship.

The application of hedge accounting requires significant judgment to interpret the relevant accounting guidance, as well as to assess hedge effectiveness, identify similar hedged item groupings, and measure changes in the fair value of the hedged items. We believe our methods of addressing these judgments and applying the accounting guidance are consistent with both the guidance and industry practices. However, interpretations of the applicable accounting guidance continue to change and evolve. In the future, these evolving interpretations could result in material changes to our accounting for derivative financial instruments and related hedging activities. Although such changes may not have a material effect on our financial condition, a change could have a material adverse effect on our results of operations in the period in which it occurs. Additional information relating to our use of derivatives is included in Note 1 under the heading “Derivatives” and Note 20 (“Derivatives and Hedging Activities”).

Contingent liabilities, guarantees and income taxes.

Contingent liabilities arising from litigation and from guarantees in various agreements with third parties under which we are a guarantor, and the potential effects of these items on the results of our operations, are summarized in Note 19 (“Commitments, Contingent Liabilities and Guarantees”). We record a liability for the fair value of the obligation to stand ready to perform over the term of a guarantee, but there is a risk that our actual future payments in the event of a default by the guaranteed party could exceed the recorded amount. See Note 19 for a comparison of the liability recorded and the maximum potential undiscounted future payments for the various types of guarantees that we had outstanding at December 31, 2009.

It is not always clear how the Internal Revenue Code and various state tax laws apply to transactions that we undertake. In the normal course of business, we may record tax benefits and then have those benefits contested by the IRS or state tax authorities. We have provided tax reserves that we believe are adequate to absorb potential adjustments that such challenges may necessitate. However, if our judgment later proves to be inaccurate, the tax reserves may need to be adjusted, possibly having an adverse effect on our results of operations and capital.

Additionally, we conduct quarterly assessments which determine the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded. The available evidence used in connection with these assessments includes taxable income in prior periods, projected future taxable income, potential tax-planning strategies and projected future reversals of deferred tax items. These assessments involve a degree of subjectivity which may undergo significant change. Based on these criteria, and in particular our projections for future taxable income, we currently believe it is more-likely-than-not that we will realize our net deferred tax asset in future periods. However, changes to the evidence used in our assessments could have a material adverse effect on our results of operations in the period in which they occur. For further information on our accounting for income taxes, see Note 18 (“Income Taxes”).

During 2009, we did not significantly alter the manner in which we applied our critical accounting policies or developed related assumptions and estimates.

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Highlights of Our 2009 Performance

Financial performance

For 2009, we recorded a loss from continuing operations attributable to Key common shareholders of $1.581 billion, or $2.27 per common share. Per share results for the current year are after preferred stock dividends and discount amortization of $294 million, or $.42 per common share. These dividends include a noncash deemed dividend of $114 million related to the exchange of common shares for Series A Preferred Stock as part of our efforts to raise additional Tier 1 common equity, and cash dividend payments of $125 million made to the U.S. Treasury under the CPP. In comparison, we recorded a loss from continuing operations attributable to Key common shareholders of $1.337 billion, or $2.97 per common share, for 2008, and income from continuing operations attributable to Key common shareholders of $935 million, or $2.36 per diluted common share, for 2007.

Including results from discontinued operations, we had a net loss attributable to Key of $1.335 billion, or $2.34 per common share, for 2009, compared to a net loss attributable to Key of $1.468 billion, or $3.36 per common share, for 2008, and net income attributable to Key of $919 million, or $2.32 per diluted common share, for 2007.

Figure 2 shows our continuing and discontinued operating results for the past three years. Our financial performance for each of the past six years is summarized in Figure 4.

Figure 2. Results of Operations

Year ended December 31,
dollars in millions, except per share amounts	2009			2008			2007
SUMMARY OF OPERATIONS
Income (loss) from continuing operations attributable to Key	$	(1,287	)	$	(1,295	)	$	935
Loss from discontinued operations, net of taxes (a)		(48	)		(173	)		(16	)
Net income (loss) attributable to Key	$	(1,335	)	$	(1,468	)	$	919
Income (loss) from continuing operations attributable to Key	$	(1,287	)	$	(1,295	)	$	935
Less: Dividends on Series A Preferred Stock		39			25			___
Noncash deemed dividend — common shares exchanged for Series A Preferred Stock		114			___			___
Cash dividends on Series B Preferred Stock		125			15			___
Amortization of discount on Series B Preferred Stock		16			2			___
Income (loss) from continuing operations attributable to Key common shareholders		(1,581	)		(1,337	)		935
Loss from discontinued operations, net of taxes (a)		(48	)		(173	)		(16	)
Net income (loss) attributable to Key common shareholders	$	(1,629	)	$	(1,510	)	$	919
PER COMMON SHARE — ASSUMING DILUTION
Income (loss) from continuing operations attributable to Key common shareholders	$	(2.27	)	$	(2.97	)	$	2.36
Loss from discontinued operations, net of taxes (a)		(.07	)		(.38	)		(.04	)
Net income (loss) attributable to Key common shareholders (b)	$	(2.34	)	$	(3.36	)	$	2.32

(a)

In September 2009, we decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank. In April 2009, we decided to wind down the operations of Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers. We sold the subprime mortgage loan portfolio held by the Champion Mortgage finance business in November 2006, and completed the sale of Champion’s origination platform in February 2007. As a result of these actions and decisions, we have accounted for these businesses as discontinued operations. Included in the loss from discontinued operations for the year ended December 31, 2009, is a $23 million after tax, or $.05 per common share, charge for intangible assets impairment related to Austin recorded during the first quarter.

(b)

Earnings per share may not foot due to rounding.

Three primary factors contributed to the decline in our results for 2009: we increased the provision for loan losses, we wrote off certain intangible assets, and we wrote down certain commercial real estate

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related investments. The same factors had an adverse effect on results for 2008. In addition, 2008 results were reduced by a $1.011 billion after-tax charge recorded in the second quarter as a result of an adverse federal tax court ruling that impacted our accounting for certain lease financing transactions.

While 2009 was one of the most challenging years in our history, we believe the actions we have taken to address asset quality, to strengthen capital, reserves and liquidity, and to invest in and reshape our businesses position us to emerge from this extraordinary credit cycle as a strong, Competitive company.

Over the past year, we increased our allowance for loan losses by more than $900 million to $2.5 billion. At December 31, 2009, our allowance represented 4.31% of total loans and 116% of nonperforming loans. One of our primary areas of focus has been to reduce our exposure to the higher risk segments of our commercial real estate portfolio through loan sales, re-underwritting and providing interim financing. Since December 31, 2007, we have reduced outstanding balances in the residential properties segment of the commercial real estate construction loan portfolio by $2.3 billion, or 66% to $1.2 billion. In addition, we are continuing to work down the loan portfolios that have been identified for exit to improve our risk-adjusted returns. Further information pertaining to our progress in reducing exposure in the residential properties segment and our exit loan portfolio is presented in the section entitled “Credit risk management.” Although we were encouraged by the improvement in most of our credit metrics in the fourth quarter of 2009, we expect asset quality to remain a challenge in 2010.

We also completed a series of successful transactions that generated approximately $2.4 billion of new Tier I common equity to strengthen our overall capital. At December 31, 2009, our Tier 1 risk-based capital and Tier 1 common equity ratios were 12.75% and 7.50%, respectively. Further information regarding the actions we have taken to generate additional capital is included in the “Capital” section under the heading “Supervisory Capital Assessment Program and our capital-generating activities.”

Additionally, we made significant progress on strengthening our liquidity and funding positions. Our consolidated average loan to deposit ratio was 97% for the fourth quarter of 2009, compared to 121% for the fourth quarter of 2008. This improvement was accomplished by growing deposits, reducing our reliance on wholesale funding, exiting nonrelationship businesses and increasing the portion of our earning assets invested in highly liquid securities. During 2009, we originated approximately $32 billion in new or renewed lending commitments and our average deposits grew by $2 billion, or 3%, compared to 2008.

In Community Banking, we are continuing to invest in our people, infrastructure and technology. In 2009, we opened 38 new branches in eight markets, and we plan to open an additional forty branches in 2010. We have completed 160 branch renovations over the past two years and expect to renovate another 100 branches in 2010. In addition, we created 157 “business intensive” branches last year, which are staffed to serve our small business clients.

Further, we are continuing to strengthen our business mix and to concentrate on the areas in which we believe we can be competitive. Early in October 2009, we announced our decision to exit the government-guaranteed education lending business, following actions taken in the third quarter of 2008 to cease private student lending. Also, within the equipment leasing business, we decided to cease lending in both the commercial vehicle and office leasing markets.

Finally, we continue to improve the efficiency and effectiveness of our organization. Over the past two years, we have reduced our staff by more than 2,200 average full-time equivalent employees and implemented ongoing initiatives that will better align our cost structure with our relationship-focused business strategies. We want to ensure that we have effective business models that are sustainable and flexible.

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Significant items that make it difficult to compare our financial performance over the past three years are shown in Figure 3. Events leading to the recognition of these items, as well as other factors that contributed to the changes in our revenue and expense components, are reviewed in detail throughout the remainder of the Management’s Discussion & Analysis section.

Figure 3. Significant Items Affecting the Comparability of Earnings

	2009									2008									2007
	Pre-tax			After-tax			Impact on			Pre-tax			After-tax			Impact on			Pre-tax			After-tax			Impact on
in millions, except per share amounts	Amount			Amount			EPS			Amount			Amount			EPS			Amount			Amount			EPS
Credits (charges) related to IRS audits and leveraged lease tax litigation		—		$	106		$	.15		$	(380	)	$	(959	)	$	(2.13	)		—			—			—
Net gains (losses) from repositioning of securities portfolio	$	125			78			.11			—			—			—		$	(49	)	$	(31	)	$	(.08	)
Gain from redemption of Visa Inc. shares		105			65			.09			165			103			.23			—			—			—
Gain (loss) related to exchange of common shares for capital securities		78			49			.07			—			—			—			—			—			—
Gain from sale of Key’s claim associated with the Lehman Brothers’ bankruptcy		32			20			.03			—			—			—			—			—			—
Provision for loan losses in excess of net charge-offs		(902	)		(566	)		(.81	)		(406	)		(254	)		(.56	)		(254	)		(159	)		(.40	)
Noncash charge for intangible assets impairment		(241	)		(192	)		(.28	)		(469	)		(424	)		(.94	)		—			—			—
Noncash deemed dividend — common shares exchanged for Series A Preferred Stock (a)		—			—			(.16	)		—			—			—			—			—			—
Realized and unrealized losses on loan and securities portfolios held for sale or trading		(174	)		(109	)		(.16	)		(160	) (b)		(100	)(b)		(.22	)		(10	)		(6	)		(.02	)
(Provision) credit for losses on lending-related commitments		(67	)		(42	)		(.06	)		26			16			.04			(28	)		(17	)		(.04	)
FDIC special assessment		(44	)		(27	)		(.04	)		—			—			—			—			—			—
Severance and other exit costs		(33	)		(21	)		(.03	)		(62	)		(39	)		(.09	)		(34	)		(21	)		(.05	)
Net gains (losses) from principal investing (c)		(31	)		(20	)		(.03	)		(62	)		(39	)		(.09	)		134			84			.21
Honsador litigation reserve		—			—			—			23			14			.03			(42	)		(26	)		(.07	)
U.S. taxes on accumulated earnings of Canadian leasing operation		—			—			—			—			(68	)		(.15	)		—			—			—
McDonald Investments branch network (d)		—			—			—			—			—			—			142			89			.22
Gains related to MasterCard Incorporated shares		—			—			—			—			—			—			67			42			.11
Gain from settlement of automobile residual value insurance litigation		—			—			—			—			—			—			26			17			.04
Liability to Visa		—			—			—			—			—			—			(64	)		(40	)		(.10	)

(a)	The deemed dividend related to the exchange of common shares for Series A Preferred Stock is subtracted from earnings to derive the numerator used in the calculation of per share results; it is not recorded as a reduction to equity.
(b)	Includes $54 million ($33 million after tax) of derivative-related charges recorded as a result of market disruption caused by the failure of Lehman Brothers, and $31 million ($19 million after tax) of realized and unrealized losses from the residential properties segment of the construction loan portfolio.
(c)	Excludes principal investing results attributable to noncontrolling interests.
(d)	Represents the financial effect of the McDonald Investments branch network, including a gain of $171 million ($107 million after tax) from the February 9, 2007, sale of that network.

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Figure 4. Selected Financial Data

																			Compound
																			Annual Rate
																			of Change
dollars in millions, except per share amounts	2009			2008			2007			2006(c)			2005(c)			2004(c)			(2004-2009)
YEAR ENDED DECEMBER 31,
Interest income	$	3,795		$	4,353		$	5,336		$	5,065		$	4,122		$	3,386			2.3	%
Interest expense		1,415			2,037			2,650			2,329			1,562			1,025			6.7
Net interest income		2,380	(a)		2,316	(a)		2,686			2,736			2,560			2,361			.2
Provision for loan losses		3,159			1,537			525			148			143			170			79.4
Noninterest income		2,035			1,847			2,241			2,124			2,058			1,910			1.3
Noninterest expense		3,554			3,476			3,158			3,061			2,962			2,825			4.7
Income (loss) from continuing operations before income taxes and cumulative effect of accounting change		(2,298	)		(850	)		1,244			1,651			1,513			1,276			N/M
Income (loss) from continuing operations attributable to Key before cumulative effect of accounting change		(1,287	)		(1,295	)		935			1,177			1,076			880			N/M
Income (loss) from discontinued operations, net of taxes (b)		(48	)		(173	)		(16	)		(127	)		53			74			N/M
Income (loss) attributable to Key before cumulative effect of accounting change		(1,335	)		(1,468	)		919			1,050			1,129			954			N/M
Net income (loss) attributable to Key		(1,335)	(a)		(1,468	)(a)		919			1,055			1,129			954			N/M
Income (loss) from continuing operations attributable to Key common shareholders		(1,581	)		(1,337	)		935			1,182			1,076			880			N/M
Income (loss) from discontinued operations, net of taxes (b)		(48	)		(173	)		(16	)		(127	)		53			74			N/M
Net income (loss) attributable to Key common shareholders		(1,629	)		(1,510	)		919			1,055			1,129			954			N/M
PER COMMON SHARE
Income (loss) from continuing operations attributable to Key common shareholders before cumulative effect of accounting change	$	(2.27	)	$	(2.97	)	$	2.39		$	2.91		$	2.63		$	2.14			N/M
Income (loss) from discontinued operations (b)		(.07	)		(.38	)		(.04	)		(.31	)		.13			.18			N/M
Income (loss) attributable to Key before cumulative effect of accounting change		(2.34	)		(3.36	)		2.35			2.60			2.76			2.32			N/M
Net income (loss) attributable to Key common shareholders		(2.34	)		(3.36	)		2.35			2.61			2.76			2.32			N/M
Income (loss) from continuing operations attributable to Key common shareholders before cumulative effect of accounting change — assuming dilution		(2.27	)		(2.97	)		2.36			2.87			2.60			2.12			N/M
Income (loss) from discontinued operations — assuming dilution (b)		(.07	)		(.38	)		(.04	)		(.31	)		.13			.18			N/M
Income (loss) attributable to Key before cumulative effect of accounting change — assuming dilution		(2.34	)		(3.36	)		2.32			2.56			2.73			2.30			N/M
Net income (loss) attributable to Key common shareholders — assuming dilution		(2.34)	(a)		(3.36	)(a)		2.32			2.57			2.73			2.30			N/M
Cash dividends paid		.0925			1.00			1.46			1.38			1.30			1.24			(40.5	)%
Book value at year end		9.04			14.97			19.92			19.30			18.69			17.46			(12.3	)
Tangible book value at year end		7.94			12.48			16.47			16.07			15.05			13.94			(10.6	)
Market price at year end		5.55			8.52			23.45			38.03			32.93			33.90			(30.4	)
Dividend payout ratio		N/M			N/M			62.13	%		52.87	%		47.10	%		53.45	%		N/A
Weighted-average common shares outstanding (000)		697,155			450,039			392,013			404,490			408,981			410,585			11.2
Weighted-average common shares and potential common shares outstanding (000)		697,155			450,039			395,823			410,222			414,014			415,430			10.9
AT DECEMBER 31,
Loans	$	58,770		$	72,835		$	70,492		$	65,480		$	66,112		$	62,981			(1.4	)%
Earning assets		80,318			89,759			82,865			77,146	(c)		76,908	(c)		75,278	(c)		1.3
Total assets		93,287			104,531			98,228			92,337	(c)		93,126	(c)		90,747	(c)		.6
Deposits		65,571			65,127			62,934			58,901			58,539			57,589			2.6
Long-term debt		11,558			14,995			11,957			14,533			13,939			14,846			(4.9	)
Key common shareholders’ equity		7,942			7,408			7,746			7,703			7,598			7,117			2.2
Key shareholders’ equity		10,663			10,480			7,746			7,703			7,598			7,117			8.4
PERFORMANCE RATIOS
From continuing operations:
Return on average total assets		(1.35	)%		(1.29	)%		1.00	%		1.18	%		1.32	%		1.15	%		N/A
Return on average common equity		(19.00	)		(16.22	)		12.11			15.28			14.69			12.69			N/A
Net interest margin (taxable equivalent)		2.83			2.15			3.50			3.73			3.68			3.56			N/A
From consolidated operations:
Return on average total assets		(1.34	)%(a)		(1.41	)%(a)		.97	%		1.12	%		1.24	%		1.10	%		N/A
Return on average common equity		(19.62	)(a)		(18.32	)(a)		11.90			13.64			15.42			13.75			N/A
Net interest margin (taxable equivalent)		2.81	(a)		2.16	(a)		3.46			3.69			3.69			3.63			N/A
CAPITAL RATIOS AT DECEMBER 31,
Key shareholders’ equity to assets		11.43	%		10.03	%		7.89	%		8.34	% (c)		8.16	%(c)		7.84	% (c)		N/A
Tangible Key shareholders’ equity to tangible assets		10.50			8.96			6.61			7.04	(c)		6.68	(c)		6.36	(c)		N/A
Tangible common equity to tangible assets		7.56			5.98			6.61			7.04	(c)		6.68	(c)		6.36	(c)		N/A
Tier 1 risk-based capital		12.75			10.92			7.44			8.24			7.59			7.22			N/A
Total risk-based capital		16.95			14.82			11.38			12.43			11.47			11.47			N/A
Leverage		11.72			11.05			8.39			8.98			8.53			7.96			N/A
OTHER DATA
Average full-time-equivalent employees		16,698			18,095			18,934			20,006			19,485			19,576			(3.1	)%
Branches		1,007			986			955			950			947			935			1.5

(a)	See Figure 5, which presents certain earnings data and performance ratios, excluding charges related to goodwill and other intangible assets impairment and the tax treatment of certain leveraged lease financing transactions disallowed by the IRS. Figure 5 reconciles certain GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.
(b)	In September 2009, we decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank. In April 2009, we decided to wind down the operations of Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers. We sold the subprime mortgage loan portfolio held by the Champion Mortgage finance business in November 2006, and completed the sale of Champion’s origination platform in February 2007. As a result of these actions and decisions, we have accounted for these businesses as discontinued operations.
(c)	Certain financial data for periods prior to 2007 have not been adjusted to reflect the effect of our January 1, 2008, adoption of new accounting guidance regarding the offsetting of amounts related to certain contracts.

17

Figure 5 presents certain earnings data and performance ratios, excluding (credits) charges related to intangible assets impairment and the tax treatment of certain leveraged lease financing transactions disallowed by the IRS. We believe that eliminating the effects of significant items that are generally nonrecurring assists in analyzing our results by presenting them on a more comparable basis.

During the fourth quarter of 2009, we recorded an after-tax credit of $80 million, or $.09 per common share, representing a final adjustment related to the resolution of certain lease financing tax issues. In the prior quarter, we recorded an after-tax charge of $28 million, or $.03 per common share, to write off intangible assets, other than goodwill, associated with actions taken to cease conducting business in certain equipment leasing markets. In the first quarter of 2009, we recorded an after-tax charge of $164 million, or $.33 per common share, for the impairment of goodwill and other intangible assets related to the National Banking reporting unit. We have now written off all of the goodwill that had been assigned to our National Banking reporting unit.

During the fourth quarter of 2008, we recorded an after-tax credit of $120 million, or $.24 per common share, in connection with our opt-in to the IRS global tax settlement. Following an adverse federal court decision regarding our tax treatment of a leveraged sale-leaseback transaction, we recorded after-tax charges of $30 million, or $.06 per common share, during the third quarter of 2008 and $1.011 billion, or $2.43 per common share, during the second quarter of 2008. During the first quarter of 2008, we increased our tax reserves for certain lease in, lease out transactions and recalculated our lease income in accordance with prescribed accounting standards, resulting in after-tax charges of $38 million, or $.10 per common share.

Additionally, during the fourth quarter of 2008, we recorded an after-tax charge of $420 million, or $.85 per common share, as a result of annual goodwill impairment testing. During the third quarter of 2008, we recorded an after-tax charge of $4 million, or $.01 per common share, as a result of goodwill impairment related to our decision to limit new education loans to those backed by government guarantee.

Figure 5 also shows certain financial measures related to “tangible common equity” and “Tier 1 common equity.” The tangible common equity ratio has become a focus of some investors. We believe this ratio may assist investors in analyzing our capital position without regard to the effects of intangible assets and preferred stock. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. As part of the SCAP, the Federal Reserve focused its assessment of capital adequacy on a component of Tier 1 capital known as Tier 1 common equity. Because the Federal Reserve has long indicated that voting common shareholders’ equity (essentially Tier 1 capital less preferred stock, qualifying capital securities and noncontrolling interests in subsidiaries) generally should be the dominant element in Tier 1 capital, this focus on Tier 1 common equity is consistent with existing capital adequacy guidelines.

Tier 1 common equity is neither formally defined by GAAP nor prescribed in amount by federal banking regulations; this measure is considered to be a non-GAAP financial measure. Since analysts and banking regulators may assess our capital adequacy using tangible common equity and Tier 1 common equity, we believe it is useful to enable investors to assess our capital adequacy on these same bases. Figure 5 also reconciles the GAAP performance measures to the corresponding non-GAAP measures.

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.

18

Figure 5. GAAP to Non-GAAP Reconciliations

Year ended December 31,
dollars in millions, except per share amounts	2009			2008
NET LOSS
Net loss attributable to Key (GAAP)	$	(1,335	)	$	(1,468	)
Charges related to intangible assets impairment, after tax		192			424
(Credits) charges related to leveraged lease tax litigation, after tax		(80	)		959
Net loss attributable to Key, excluding (credits) charges related to intangible assets impairment and leveraged lease tax litigation (non-GAAP)	$	(1,223	)	$	(85	)
Noncash deemed dividend — common shares exchanged for Series A Preferred Stock	$	114			___
Other preferred dividends and amortization of discount on preferred stock		180		$	42
Net loss attributable to Key common shareholders (GAAP)	$	(1,629	)	$	(1,510	)
Net loss attributable to Key common shareholders, excluding (credits) charges related to intangible assets impairment and leveraged lease tax litigation (non-GAAP)		(1,517	)		(127	)
PER COMMON SHARE
Net loss attributable to Key common shareholders — assuming dilution (GAAP)	$	(2.34	)	$	(3.36	)
Net loss attributable to Key common shareholders, excluding (credits) charges related to intangible assets impairment and leveraged lease tax litigation — assuming dilution (non-GAAP)		(2.18	)		(.28	)
PERFORMANCE RATIOS FROM CONSOLIDATED OPERATIONS
Return on average total assets: (a)
Average total assets	$	99,440		$	104,390
Return on average total assets (GAAP)		(1.34	)%		(1.41	)%
Return on average total assets, excluding (credits) charges related to intangible assets impairment and leveraged lease tax litigation (non-GAAP)		(1.23	)		(.08	)
Return on average common equity: (a)
Average common equity	$	7,723		$	8,244
Return on average common equity (GAAP)		(19.62	)%		(18.32	)%
Return on average common equity, excluding (credits) charges related to intangible assets impairment and leveraged lease tax litigation (non-GAAP)		(18.17	)		(1.54	)
NET INTEREST INCOME AND MARGIN
Net interest income:
Net interest income (GAAP)	$	2,380		$	2,316
Charges related to leveraged lease tax litigation, pre-tax		___			380
Net interest income, excluding charges related to leveraged lease tax litigation (non-GAAP)	$	2,380		$	2,696
Net interest income/margin (TE):
Net interest income (TE) (as reported)	$	2,406		$	1,862
Charges related to leveraged lease tax litigation, pre-tax (TE)		___			890
Net interest income, excluding charges related to leveraged lease tax
litigation (TE) (adjusted basis)	$	2,406		$	2,752
Net interest margin (TE) (as reported) (a)		2.83	%		2.15	%
Impact of charges related to leveraged lease tax litigation, pre-tax (TE) (a)		___			.98
Net interest margin, excluding charges related to leveraged lease tax litigation (TE) (adjusted basis) (a)		2.83	%		3.13	%

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Figure 5. GAAP to Non-GAAP Reconciliations (Continued)

December 31,
dollars in millions, except per share amounts	2009			2008
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Key shareholders’ equity (GAAP)	$	10,663		$	10,480
Less: Intangible assets		967			1,266	(d)
Preferred Stock, Series B		2,430			2,414
Preferred Stock, Series A		291			658
Tangible common equity (non-GAAP)	$	6,975		$	6,142
Total assets (GAAP)	$	93,287		$	104,531
Less: Intangible assets		967			1,266	(d)
Tangible assets (non-GAAP)	$	92,320		$	103,265
Tangible common equity to tangible assets ratio (non-GAAP)		7.56	%		5.95	%
TIER 1 COMMON EQUITY
Key shareholders’ equity (GAAP)	$	10,663		$	10,480
Qualifying capital securities		1,791			2,582
Less: Goodwill		917			1,138	(e)
Accumulated other comprehensive income (loss) (b)		(48	)		76
Other assets (c)		632			203
Total Tier 1 capital (regulatory)		10,953			11,645
Less: Qualifying capital securities		1,791			2,582
Preferred Stock, Series B		2,430			2,414
Preferred Stock, Series A		291			658
Total Tier 1 common equity (non-GAAP)	$	6,441		$	5,991
Net risk-weighted assets (regulatory) (c)	$	85,881		$	106,685
Tier 1 common equity ratio (non-GAAP)		7.50	%		5.62	%

(a)	Income statement amount has been annualized in calculation of percentage.
(b)	Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities), net gains or losses on cash flow hedges, and amounts resulting from our December 31, 2006, adoption and subsequent application of the applicable accounting guidance for defined benefit and other postretirement plans.
(c)	Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed deferred tax assets of $514 million at December 31, 2009, disallowed intangible assets (excluding goodwill), and deductible portions of nonfinancial equity investments.
(d)	Includes $25 million of goodwill and $12 million of other intangible assets classified as “discontinued assets” on the balance sheet.
(e)	Includes $25 million of goodwill classified as “discontinued assets” on the balance sheet.

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Strategic developments

We initiated the following actions during 2009 and 2008 to support our corporate strategy described in the “Introduction” section under the “Corporate Strategy” heading.

¨ During 2009, we opened 38 new branches in eight markets, and we have completed renovations on 160 branches over the past two years.

¨ During 2009, we settled all outstanding federal income tax issues with the IRS for the tax years 1997-2006, including all outstanding leveraged lease tax issues for all open tax years.

¨ During the third quarter of 2009, we decided to exit the government-guaranteed education lending business, following earlier actions taken in the third quarter of 2008 to cease private student lending. As a result of this decision, we have accounted for the education lending business as a discontinued operation. Additionally, we ceased conducting business in both the commercial vehicle and office equipment leasing markets.

¨ During the second quarter of 2009, we decided to wind down the operations of Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers. As a result of this decision, we have accounted for this business as a discontinued operation.

¨ During the fourth quarter of 2008, we initiated a process known as “Keyvolution,” a corporate-wide initiative designed to build an improved experience for clients, simplify processes, improve speed to market and enhance our ability to seize growth and profit opportunities. Through this initiative, we expect to achieve annualized cost savings of $300 million to $375 million by 2012.

¨ During the third quarter of 2008, we decided to exit retail and floor-plan lending for marine and recreational vehicle products. We also decided to cease lending to all homebuilders. This decision came after we began to reduce our business with nonrelationship homebuilders outside our 14-state Community Banking footprint in December 2007.

¨ On January 1, 2008, we acquired U.S.B. Holding Co., Inc., the holding company for Union State Bank, a 31-branch state-chartered commercial bank headquartered in Orangeburg, New York. The acquisition doubles our branch presence in the attractive Lower Hudson Valley area.

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Line of Business Results

This section summarizes the financial performance and related strategic developments of our two major business groups, Community Banking and National Banking. Note 4 (“Line of Business Results”) describes the products and services offered by each of these business groups, provides more detailed financial information pertaining to the groups and their respective lines of business, and explains “Other Segments” and “Reconciling Items.”

Figure 6 summarizes the contribution made by each major business group to our “taxable-equivalent revenue from continuing operations” and “income (loss) from continuing operations attributable to Key” for each of the past three years.

Figure 6. Major Business Groups – Taxable-Equivalent Revenue from Continuing Operations and
Income (Loss) from Continuing Operations Attributable to Key

Year ended December 31,										Change 2009 vs 2008
dollars in millions	2009			2008			2007			Amount			Percent
REVENUE FROM CONTINUING OPERATIONS (TE)
Community Banking (a)	$	2,482		$	2,576		$	2,725		$	(94	)		(3.6	)%
National Banking (b)		1,878			1,219			2,239			659			54.1
Other Segments (c)		123			(96	)		141			219			N/M
Total Segments		4,483			3,699			5,105			784			21.2
Reconciling Items (d)		(42	)		10			(79	)		(52	)		N/M
Total	$	4,441		$	3,709		$	5,026		$	732			19.7	%
INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO KEY
Community Banking (a)	$	(62	)	$	361		$	573		$	(423	)		N/M
National Banking (b)		(1,489	)		(1,313	)		305			(176	)		(13.4	)%
Other Segments (c)		66			(26	)		82			92			N/M
Total Segments		(1,485	)		(978	)		960			(507	)		(51.8	)
Reconciling Items (d)		198			(317	)		(25	)		515			N/M
Total	$	(1,287	)	$	(1,295	)	$	935		$	8			.6	%

(a)	Community Banking’s results for 2007 include a $171 million ($107 million after tax) gain from the sale of the McDonald Investments branch network. See Note 3 (“Acquisitions and Divestitures”) for more information about this sale.
(b)	National Banking’s results for 2009 include a $45 million ($28 million after tax) write-off of intangible assets, other than goodwill, resulting from actions taken to cease lending in certain equipment leasing markets, and a $196 million ($164 million after tax) noncash charge for goodwill and other intangible assets impairment. National Banking’s results for 2008 include a $465 million ($420 million after tax) noncash charge for intangible assets impairment. National Banking’s results for 2008 also include $54 million ($33 million after tax) of derivative-related charges as a result of market disruption caused by the failure of Lehman Brothers, and $31 million ($19 million after tax) of realized and unrealized losses from the residential properties segment of the construction loan portfolio. Also, during 2008, National Banking’s taxable-equivalent revenue and loss from continuing operations attributable to Key were reduced by $890 million and $557 million, respectively, as a result of that business group’s involvement with certain leveraged lease financing transactions that were challenged by the IRS. National Banking’s results for 2007 include a $26 million ($17 million after tax) gain from the settlement of the residual value insurance litigation.
(c)	Other Segments’ results for 2009 include a $17 million ($11 million after tax) loss during the third quarter and a $95 million ($59 million after tax) gain during the second quarter related to the exchange of common shares for capital securities. Also, during 2009, Other Segments’ results include net gains of $125 million ($78 million after tax) in connection with the repositioning of the securities portfolio. Other Segments’ results for 2008 include a $23 million ($14 million after tax) credit recorded when we reversed the remaining reserve associated with the Honsador litigation, which was settled in September 2008. Other Segments’ results for 2007 include a $26 million ($16 million after tax) charge for the Honsador litigation and a $49 million ($31 million after tax) loss in connection with the repositioning of the securities portfolio.
(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. Reconciling Items for 2008 include $120 million of previously accrued interest recovered in connection with our opt-in to the IRS global tax settlement and total charges of $505 million to income taxes for the interest cost associated with the leveraged lease tax litigation. Also, during 2008, Reconciling Items include a $165 million ($103 million after tax) gain from the partial redemption of our equity interest in Visa Inc. and a $17 million charge to income taxes for the interest cost associated with the increase to our tax reserves for certain LILO transactions. Reconciling Items for 2007 include gains of $27 million ($17 million after tax) during the third quarter and $40 million ($25 million after tax) during the second quarter related to MasterCard Incorporated shares. Results for 2007 also include a $64 million ($40 million after tax) charge representing the fair value of our potential liability to Visa Inc. and a $16 million ($10 million after tax) charge for the Honsador litigation.

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Community Banking summary of operations

As shown in Figure 7, Community Banking recorded a net loss attributable to Key of $62 million for 2009, compared to net income of $361 million for 2008 and $573 million for 2007. The decrease in 2009 was the result of reductions in net interest income and noninterest income, coupled with increases in the provision for loan losses and noninterest expense.

Taxable-equivalent net interest income declined by $41 million, or 2%, from 2008 as a result of a decrease in average earning assets, tighter earning asset spreads and a change in deposit mix, moderated in part by growth in deposits. Average loans and leases declined by $844 million, or 3%, due to reductions in the commercial loan portfolios, while average deposits grew by $2.1 billion, or 4%. The increase in average deposits reflects strong growth in certificates of deposit and noninterest-bearing deposits, which more than offset a decline in money market deposit accounts. During the second half of 2009, higher-costing certificates of deposit originated in the prior year began to mature and repriced to current market rates.

Noninterest income declined by $53 million, or 6%, from 2008, due in part to a $33 million decrease in service charges on deposit accounts, resulting from a change in customer behavior. In addition, market weakness prompted a $19 million reduction in income from trust and investment services, and a $12 million decline in income from investment banking and capital markets activities. The adverse effect of these factors was offset in part by a $15 million increase in mortgage loan sale gains.

The provision for loan losses rose by $418 million from 2008, reflecting a $167 million increase in net loan charge-offs, primarily from the commercial, financial and agricultural, and home equity loan portfolios. Community Banking’s provision for loan losses exceeded net loan charge-offs by $269 million as we continued to increase reserves in light of the challenging credit conditions brought on by a weak economy.

Noninterest expense grew by $164 million, or 9%, from 2008, due largely to a $130 million increase in the FDIC deposit insurance assessment. Also contributing to the growth in noninterest expense was a $17 million provision for lending-related commitments in 2009, compared to a $5 million credit in 2008, and higher costs associated with risk management activities, net occupancy and employee benefits (primarily pension expense). The increase in noninterest expense was also attributable to continued investment in our branch network. As previously disclosed, we have opened or renovated approximately 200 branches over the past two years, and have been working on plans for new branches and renovations in 2010. Additionally, during 2009, we implemented new teller platform technology throughout our branches, and upgraded or replaced various ATMs. The increase in noninterest expense was partially offset by a $33 million decrease in personnel costs, due in part to a decrease of 255 average full-time equivalent employees and lower incentive compensation accruals.

In 2008, the $212 million decrease in net income attributable to Key was the result of increases in the provision for loan losses and noninterest expense, coupled with a decrease in noninterest income. These changes more than offset an increase in net interest income. Community Banking’s results for 2007 include a $171 million ($107 million after tax) gain from the February 2007 sale of the McDonald Investments branch network.

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Figure 7. Community Banking

Year ended December 31,									Change 2009 vs 2008
dollars in millions	2009			2008		2007			Amount			Percent
SUMMARY OF OPERATIONS
Net interest income (TE)	$	1,701		$	1,742	$	1,687		$	(41	)		(2.4	)%
Noninterest income		781			834		1,038	(a)		(53	)		(6.4	)
Total revenue (TE)		2,482			2,576		2,725			(94	)		(3.6	)
Provision for loan losses		639			221		73			418			189.1
Noninterest expense		1,942			1,778		1,735			164			9.2
Income (loss) before income taxes (TE)		(99	)		577		917			(676	)		N/M
Allocated income taxes and TE adjustments		(37	)		216		344			(253	)		N/M
Net income (loss) attributable to Key	$	(62	)	$	361	$	573		$	(423	)		N/M
AVERAGE BALANCES
Loans and leases	$	27,806		$	28,650	$	26,801		$	(844	)		(2.9	)%
Total assets		30,730			31,634		29,463			(904	)		(2.9	)
Deposits		52,437			50,290		46,667			2,147			4.3
Assets under management at year end	$	17,709		$	15,486	$	21,592		$	2,223			14.4	%

(a) Community Banking’s results for 2007 include a $171 million ($107 million after tax) gain from the sale of the McDonald Investments branch network. See Note 3 (“Acquisitions and Divestitures”) for more information about this sale.

ADDITIONAL COMMUNITY BANKING DATA

Year ended December 31,										Change 2009 vs 2008
dollars in millions	2009			2008			2007			Amount			Percent
AVERAGE DEPOSITS OUTSTANDING
NOW and money market deposit accounts	$	17,507		$	19,180		$	19,844		$	(1,673	)		(8.7	)
Savings deposits		1,767			1,751			1,580			16			.9
Certificates of deposits ($100,000 or more)		8,628			7,002			4,687			1,626			23.2
Other time deposits		14,506			13,293			11,755			1,213			9.1
Deposits in foreign office		566			1,185			1,101			(619	)		(52.2	)
Noninterest-bearing deposits		9,463			7,879			7,700			1,584			20.1
Total deposits	$	52,437		$	50,290		$	46,667		$	2,147			4.3
HOME EQUITY LOANS
Average balance	$	10,211		$	9,846		$	9,671
Weighted-average loan-to-value ratio (at date of origination)		70	%		70	%		70	%
Percent first lien positions		53			54			57
OTHER DATA
Branches		1,007			986			955
Automated teller machines		1,495			1,478			1,443

National Banking summary of continuing operations

As shown in Figure 8, National Banking recorded a loss from continuing operations attributable to Key of $1.489 billion for 2009, compared to a loss of $1.313 billion for 2008 and income from continuing operations attributable to Key of $305 million for 2007. The 2009 decline was primarily due to a substantial increase in the provision for loan losses, which was moderated by growth in net interest income and noninterest income, and a decrease in noninterest expense.

Following an adverse federal court decision regarding our tax treatment of certain leveraged lease financing transactions, National Banking reduced its taxable-equivalent net interest income by $890 million during 2008. Excluding this charge, taxable-equivalent net interest income declined by $257 million, or 20%, in 2009 compared to 2008, due primarily to a reduction in average earning assets and a higher level of nonperforming assets, offset in part by an increase in average deposits. Average earning assets fell by $6.4 billion, or 13%, due primarily to reductions in the commercial loan portfolios; average deposits rose by $931 million, or 8%.

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Noninterest income increased by $26 million, or 3%, from 2008, due in part to lower net losses from loan sales and write-downs. During 2009, these net losses totaled $29 million. In comparison, net losses totaled $97 million in 2008 and included $112 million of losses from commercial real estate loans held for sale, offset in part by $19 million in net gains from the sale of commercial lease financing receivables. Also contributing to the improvement in noninterest income was a $59 million increase in gains on leased equipment and a $48 million rise in mortgage banking fees. The growth in noninterest income was offset in part by a $59 million increase in losses from other investments, reflecting reductions in the fair values of certain commercial real estate related investments made by the Real Estate Capital and Corporate Banking Services line of business. Noninterest income was also adversely impacted by a $38 million decline in operating lease revenue, a $30 million decrease in trust and investment services income, and reductions in income from investment banking and foreign exchange activities.

The provision for loan losses rose by $1.199 billion from 2008, reflecting higher levels of net loan charge-offs, primarily from the commercial loan portfolio. National Banking’s provision for loan losses exceeded net loan charge-offs by $631 million as we continued to increase reserves due to the weak economy.

During 2009 and 2008, noninterest expense was adversely affected by intangible asset impairment charges totaling $196 million and $465 million, respectively. These charges resulted from reductions in the estimated fair value of the National Banking reporting unit caused by weakness in the financial markets. Additionally, noninterest expense for 2009 was adversely affected by a $45 million write-off of intangible assets, other than goodwill, as a result of our decision to cease conducting business in certain equipment leasing markets. Excluding these intangible asset charges, noninterest expense rose by $137 million, or 11%, from 2008, due primarily to an $80 million increase in costs associated with OREO and a $50 million provision for lending-related commitments recorded during 2009, compared to a $21 million credit recorded in 2008. A higher FDIC deposit insurance assessment and a rise in internally allocated overhead and support costs also contributed to the increase in noninterest expense. These factors were partially offset by a $24 million decline in operating lease expense and an $84 million decrease in personnel costs, reflecting a reduction of 691 average full-time equivalent employees and lower severance costs.

In 2008, results were less favorable than they were in 2007 due to a $929 million, or 70%, reduction in net interest income, a $91 million, or 10%, decrease in noninterest income, an $865 million increase in the provision for loan losses and a $425 million, or 33%, increase in noninterest expense. The reduction in net interest income reflects the $890 million of charges recorded in 2008 as a result of the adverse federal court decision on our tax treatment of certain leveraged lease financing transactions. The increase in noninterest expense was driven by the $465 million charge for intangible asset impairment taken in 2008.

We continue to pursue opportunities to improve our business mix, to return our loan portfolios to a moderate risk profile, and to emphasize relationship businesses. In October 2009, we announced our decision to discontinue the education lending business, and to focus on the growing demand from schools for integrated, simplified billing, payment and cash management solutions. The Consumer Finance line of business will continue to service existing loans in this portfolio. In April 2009, we made the strategic decision to curtail the operations of Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers. As a result of these decisions, we have applied discontinued operations accounting to these businesses.

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Figure 8. National Banking

Year ended December 31,										Change 2009 vs 2008
dollars in millions	2009			2008			2007			Amount			Percent
SUMMARY OF OPERATIONS
Net interest income (TE)	$	1,037		$	404	(a)	$	1,333		$	633			156.7	%
Noninterest income		841			815	(a)		906	(a)		26			3.2
Total revenue (TE)		1,878			1,219			2,239			659			54.1
Provision for loan losses		2,518			1,319			454			1,199			90.9
Noninterest expense		1,632			1,719	(a)		1,294			(87	)		(5.1	)
Income (loss) from continuing operations before income taxes (TE)		(2,272	)		(1,819	)		491			(453	)		(24.9	)
Allocated income taxes and TE adjustments		(778	)		(506	)		186			(272	)		(53.8	)
Income (loss) from continuing operations		(1,494	)		(1,313	)		305			(181	)		(13.8	)
Loss from discontinued operations, net of taxes		(48	)		(173	)		(16	)		125			72.3
Net income (loss)		(1,542	)		(1,486	)		289			(56	)		(3.8	)
Less: Net loss attributable to noncontrolling interests		(5	)		___			___			(5	)		N/M
Net income (loss) attributable to Key	$	(1,537	)	$	(1,486	)	$	289		$	(51	)		(3.4	)
Loss from continuing operations attributable to Key	$	(1,489	)	$	(1,313	)	$	305		$	(176	)		(13.4	)%
AVERAGE BALANCES
Loans and leases	$	38,390		$	43,812		$	39,771		$	(5,422	)		(12.4	)%
Loans held for sale		503			1,332			1,670			(829	)		(62.2	)
Total assets		44,270			52,227			46,927			(7,957	)		(15.2	)
Deposits		13,012			12,081			11,942			931			7.7
Assets under management at year end	$	49,230		$	49,231		$	63,850		$	(1	)		___

(a) National Banking’s results for 2009 include a $45 million ($28 million after tax) write-off of intangible assets, other than goodwill, resulting from actions taken to cease lending in certain equipment leasing markets, and a $196 million ($164 million after tax) noncash charge for goodwill and other intangible assets impairment. National Banking’s results for 2008 include a $465 million ($420 million after tax) noncash charge for intangible assets impairment. National Banking’s results for 2008 also include $54 million ($33 million after tax) of derivative-related charges as a result of market disruption caused by the failure of Lehman Brothers, and $31 million ($19 million after tax) of realized and unrealized losses from the residential properties segment of the construction loan portfolio. Also, during 2008, National Banking’s taxable-equivalent revenue and loss from continuing operations attributable to Key were reduced by $890 million and $557 million, respectively, as a result of that business group’s involvement with certain leveraged lease financing transactions that were challenged by the IRS. National Banking’s results for 2007 include a $26 million ($17 million after tax) gain from the settlement of the residual value insurance litigation.

Other Segments

Other Segments consists of Corporate Treasury and our Principal Investing unit. These segments generated net income attributable to Key of $66 million for 2009, compared to a net loss of $26 million for 2008. This improvement was attributable primarily to net gains of $125 million recorded in 2009 in connection with the repositioning of the securities portfolio and net gains of $78 million related to the exchange of common shares for capital securities during 2009. Other Segments also experienced a $31 million decrease in net losses from principal investing attributable to Key and a $26 million reduction in net losses related to the 2008 restructuring of certain cash collateral arrangements for hedges that reduced exposure to counterparty risk and lowered the cost of borrowings. These factors were offset in part by unallocated portions of our funds transfer pricing that had an adverse effect on Corporate Treasury’s 2009 results.

In 2008, Other Segments generated a net loss attributable to Key of $26 million, compared to net income of $82 million for 2007. These results reflect net losses from principal investing attributable to Key of $62 million in 2008, compared to net gains of $134 million for the prior year. Additionally, during 2008, we recorded net losses of $34 million related to the volatility associated with the hedge accounting applied to debt instruments, compared to net gains of $2 million in 2007. The majority of the net losses recorded in 2008 were attributable to the restructuring of the cash collateral arrangements for hedges discussed above. The adverse effects from the above items were offset in part by a $49 million loss recorded in 2007 in connection with the repositioning of the securities portfolio.

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Results of Operations

Net interest income

One of our principal sources of revenue is net interest income. Net interest income is the difference between interest income received on earning assets (such as loans and securities) and loan-related fee income, and interest expense paid on deposits and borrowings. There are several factors that affect net interest income, including:

¨ the volume, pricing, mix and maturity of earning assets and interest-bearing liabilities;

¨ the volume and value of net free funds, such as noninterest-bearing deposits and equity capital;

¨ the use of derivative instruments to manage interest rate risk;

¨ interest rate fluctuations and competitive conditions within the marketplace; and

¨ asset quality.

To make it easier to compare results among several periods and the yields on various types of earning assets (some taxable, some not), we present net interest income in this discussion on a “taxable-equivalent basis” (i.e., as if it were all taxable and at the same rate). For example, $100 of tax-exempt income would be presented as $154, an amount that — if taxed at the statutory federal income tax rate of 35% — would yield $100.

Figure 9 shows the various components of our balance sheet that affect interest income and expense, and their respective yields or rates over the past six years. This figure also presents a reconciliation of taxable-equivalent net interest income to net interest income reported in accordance with GAAP for each of those years. The net interest margin, which is an indicator of the profitability of the earning assets portfolio, is calculated by dividing net interest income by average earning assets.

Taxable-equivalent net interest income for 2009 was $2.406 billion, and the net interest margin was 2.83%. These results compare to taxable-equivalent net interest income of $2.752 billion and a net interest margin of 3.13% for the prior year, after adjusting for the effects of charges recorded during 2008 in connection with subsequently resolved tax litigation pertaining to our leveraged lease financing portfolio. These charges decreased our 2008 net interest income by $890 million and reduced the related net interest margin by 98 basis points. The net interest margin has remained under pressure as the federal funds target rate decreased throughout 2008 and remained at low levels throughout 2009. This resulted in a larger decrease in the interest rates on earning assets than that experienced for interest-bearing liabilities. Additionally, during 2009, earning asset yields were compressed as a result of the elevated levels of nonperforming assets. We also terminated certain leveraged lease financing arrangements, which reduced our 2009 net interest income by $51 million and lowered the net interest margin by approximately 6 basis points. During the second half of 2009, we began to benefit from lower funding costs as higher-rate certificates of deposit issued in the prior year began to mature and either reprice at current market rates or move into lower-cost deposit products. In 2010, we expect to realize additional benefits from the repricing of maturing certificates of deposit.

Average earning assets for 2009 totaled $85.1 billion, which was $1.7 billion, or 2%, lower than the 2008 level. This reduction reflects a $6.4 billion decrease in loans caused by soft demand for credit due to the uncertain economic environment, paydowns on our portfolios as commercial clients continue to de-leverage, the run-off in our exit portfolios and net charge-offs. The decline in loans was partially offset by increases of $3 billion in securities available for sale and $2.5 billion in our short-term investments due to our emphasis on building liquidity.

In 2008, taxable-equivalent net interest income as reported was $1.862 billion, down $923 million, or 33%, from 2007. During 2008, our net interest margin declined by 135 basis points to 2.15%. The decline in net

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interest income and the reduction in the net interest margin were attributable primarily to the leveraged lease tax litigation charges recorded in 2008. The net interest margin also declined because of increases in the cost of deposits and borrowings caused by wider spreads, a shift in the mix of deposits to higher-cost categories, tighter loan spreads caused by competitive pricing, and higher levels of nonperforming assets and net loan charge-offs.

Average earning assets for 2008 totaled $86.8 billion, which was $7.2 billion, or 9%, higher than the 2007 level for two primary reasons: commercial loans increased by $5.1 billion, and on January 1, 2008, we acquired U.S.B. Holding Co., Inc., which added approximately $1.5 billion to our loan portfolio. The growth in commercial loans was due in part to the higher demand for credit caused by the volatile capital markets environment.

Since January 1, 2008, the size and composition of our loan portfolios have been affected by the following actions:

¨ In the fourth quarter of 2009, we transferred loans with a fair value of $82 million from held-for-sale status to the held-to-maturity portfolio as a result of current market conditions and our related plans to restructure the terms of these loans.

¨ In late September 2009, we transferred $193 million of loans ($248 million, net of $55 million in net charge-offs) from the held-to-maturity loan portfolio to held-for-sale status in conjunction with additional actions taken to reduce our exposure in the commercial real estate and institutional portfolios through the sale of selected assets. Most of these loans were sold during October 2009.

¨ We sold $1.3 billion of commercial real estate loans during 2009 and $2.2 billion during 2008. Since some of these loans have been sold with limited recourse (i.e., there is a risk that we will be held accountable for certain events or representations made in the sales agreements), we established and have maintained a loss reserve in an amount that we believe is appropriate. More information about the related recourse agreement is provided in Note 19 (“Commitments, Contingent Liabilities and Guarantees”) under the heading “Recourse agreement with FNMA.” In late March 2009, we transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines for the classification of loans that have reached a completed status. In June 2008, we transferred $384 million of commercial real estate loans ($719 million, net of $335 million in net charge-offs) from the held-to-maturity loan portfolio to held-for-sale status as part of a process undertaken to aggressively reduce our exposure in the residential properties segment of the construction loan portfolio through the sale of certain loans. Additional information about the status of this process is included in the section entitled “Loans and loans held for sale” under the heading “Commercial real estate loans.”

¨ In late September 2009, we decided to exit the government-guaranteed education lending business, following earlier actions taken in the third quarter of 2008 to cease private student lending. As a result of this decision, we have applied discontinued operations accounting to the education lending business for all periods presented in this report. We sold $474 million of education loans (included in “discontinued assets” on the balance sheet) during 2009 and $121 million during 2008.

¨ In addition to the sales of commercial real estate loans discussed above, we sold other loans totaling $1.8 billion (including $1.5 billion of residential real estate loans) during 2009 and $932 million (including $802 million of residential real estate loans) during 2008.

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Figure 9. Consolidated Average Balance Sheets, Net Interest Income and Yields/Rates From
Continuing Operations

Year ended December 31,	2009								2008									2007
	Average					Yield/			Average						Yield/			Average						Yield/
dollars in millions	Balance			Interest(a)		Rate(a)			Balance			Interest(a)			Rate(a)			Balance			Interest(a)			Rate(a)
ASSETS
Loans: (b), (c)
Commercial, financial and agricultural	$	23,181		$	1,038		4.48	%	$	26,372		$	1,446			5.48	%	$	22,415		$	1,622			7.23	%
Real estate — commercial mortgage		11,310	(d)		557		4.93			10,576			640			6.05			8,802			675			7.67
Real estate — construction		6,206	(d)		294		4.74			8,109			461			5.68			8,237			653			7.93
Commercial lease financing		8,220			369		4.48			9,642			(425	)		(4.41	)(f)		10,154			606			5.97
Total commercial loans		48,917			2,258		4.61			54,699			2,122			3.88			49,608			3,556			7.17
Real estate — residential		1,764			104		5.91			1,909			117			6.11			1,525			101			6.64
Home equity:
Community Banking		10,220			445		4.36			9,846			564			5.73			9,671			686			7.09
National Banking		939			71		7.55			1,171			90			7.67			1,144			89			7.84
Total home equity loans		11,159			516		4.63			11,017			654			5.93			10,815			775			7.17
Consumer other — Community Banking		1,202			127		10.62			1,275			130			10.22			1,367			144			10.53
Consumer other — National Banking:
Marine		3,097			193		6.22			3,586			226			6.30			3,390			214			6.30
Other		247			20		7.93			315			26			8.25			319			28			8.93
Total consumer other — National Banking		3,344			213		6.35			3,901			252			6.46			3,709			242			6.52
Total consumer loans		17,469			960		5.50			18,102			1,153			6.37			17,416			1,262			7.25
Total loans		66,386			3,218		4.85			72,801			3,275			4.50			67,024			4,818			7.19
Loans held for sale		650			29		4.37			1,404			76			5.43			1,705			108			6.35
Securities available for sale (b), (h)		11,169			462		4.19			8,126			406			5.04			7,560			380			5.04
Held-to-maturity securities (b)		25			2		8.17			27			4			11.73			36			2			6.68
Trading account assets		1,238			47		3.83			1,279			56			4.38			917			38			4.10
Short-term investments		4,149			12		.28			1,615			31			1.96			846			37			4.34
Other investments (h)		1,478			51		3.11			1,563			51			3.02			1,524			52			3.33
Total earning assets		85,095			3,821		4.49			86,815			3,899			4.49			79,612			5,435			6.82
Allowance for loan losses		(2,273	)							(1,341	)								(944	)
Accrued income and other assets		12,349								14,736									12,672
Discontinued assets — education lending business		4,269								4,180									3,544
Total assets	$	99,440							$	104,390								$	94,884
LIABILITIES AND SHAREHOLDERS’ EQUITY
NOW and money market deposit accounts	$	24,345			124		.51		$	26,429			427			1.62		$	24,070			762			3.17
Savings deposits		1,787			2		.07			1,796			6			.32			1,591			3			.19
Certificates of deposit ($100,000 or more) (i)		12,612			462		3.66			9,385			398			4.25			6,389			321			5.02
Other time deposits		14,535			529		3.64			13,300			556			4.18			11,767			550			4.68
Deposits in foreign office		802			2		.27			3,501			81			2.31			4,287			209			4.87
Total interest-bearing deposits		54,081			1,119		2.07			54,411			1,468			2.70			48,104			1,845			3.84
Federal funds purchased and securities sold under repurchase agreements		1,618			5		.31			2,847			57			2.00			4,330			208			4.79
Bank notes and other short-term borrowings		1,907			16		.84			5,931			130			2.20			2,423			104			4.28
Long-term debt (i)		9,455			275		3.16			10,392			382			3.94			9,222			493			5.48
Total interest-bearing liabilities		67,061			1,415		2.13			73,581			2,037			2.80			64,079			2,650			4.15
Noninterest-bearing deposits		12,964								10,596									13,418
Accrued expense and other liabilities		4,340								6,920									5,969
Discontinued liabilities — education lending business (e)		4,269								4,180									3,544
Total liabilities		88,634								95,277									87,010
EQUITY
Key shareholders’ equity		10,592								8,923									7,722
Noncontrolling interests		214								190									152
Total equity		10,806								9,113									7,874
Total liabilities and equity	$	99,440							$	104,390								$	94,884
Interest rate spread (TE)							2.36	%								1.69	%								2.67	%
Net interest income (TE) and net interest margin (TE)					2,406		2.83	%					1,862	(f)		2.15	% (f)					2,785			3.50	%
TE adjustment (b)					26								(454	)								99
Net interest income, GAAP basis				$	2,380							$	2,316								$	2,686	%

Prior to the third quarter of 2009, average balances have not been adjusted to reflect our January 1, 2008, adoption of the applicable accounting guidance related to the offsetting of certain derivative contracts on the consolidated balance sheet.

(a)	Results are from continuing operations. Interest excludes the interest associated with the liabilities referred to in (e) 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 35%.
(c)	For purposes of these computations, nonaccrual loans are included in average loan balances.
(d)	In late March 2009, we transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines for the classification of loans that have reached a completed status.
(e)	Discontinued liabilities include the liabilities of the education lending business and the dollar amount of any additional liabilities assumed necessary to support the assets associated with this business.

29

Figure 9. Consolidated Average Balance Sheets, Net Interest Income and Yields/Rates From
Continuing Operations (Continued)

																								Compound Annual
																								Rate of Change
2006								2005								2004								(2004-2009)
Average					Yield/			Average					Yield/			Average					Yield/			Average
Balance			Interest (a)		Rate (a)			Balance			Interest(a)		Rate(a)			Balance			Interest (a)		Rate(a)			Balance			Interest
$	21,679	(g)	$	1,547		7.13	%	$	19,480		$	1,083		5.56	%	$	17,119		$	762		4.45	%		6.3	%		6.4	%
	8,167			628		7.68			8,403			531		6.32			7,032			354		5.03			10.0			9.5
	7,802			635		8.14			6,263			418		6.67			4,926			250		5.08			4.7			3.3
	9,773	(g)		595		6.08			10,122			628		6.21			8,269			487		5.90			(.1	)		(5.4	)
	47,421			3,405		7.18			44,268			2,660		6.01			37,346			1,853		4.96			5.5			4.0
	1,430			93		6.49			1,468			90		6.10			1,563			94		6.01			2.4			2.0
	10,046			703		7.00			10,381			641		6.18			10,212			506		4.96			—			(2.5	)
	925			72		7.77			713			46		6.52			1,691			119		7.00			(11.1	)		(9.8	)
	10,971			775		7.07			11,094			687		6.20			11,903			625		5.25			(1.3	)		(3.8	)
	1,639			152		9.26			1,834			158		8.60			2,048			154		7.52			(10.1	)		(3.8	)
	2,896			178		6.16			2,512			152		6.07			2,516			156		6.18			4.2			4.3
	285			27		9.33			432			38		8.68			2,474			233		9.44			(36.9	)		(38.8	)
	3,181			205		6.44			2,944			190		6.45			4,990			389		7.80			(7.7	)		(11.3	)
	17,221			1,225		7.11			17,340			1,125		6.49			20,504			1,262		6.16			(3.2	)		(5.3	)
	64,642			4,630		7.16			61,608			3,785		6.14			57,850			3,115		5.39			2.8			.7
	1,187			83		7.01			939			87		9.22			406			24		5.85			9.9			3.9
	7,125			307		4.26			6,934			260		3.74			7,033			263		3.76			9.7			11.9
	47			3		7.43			76			5		7.30			85			8		8.69			(21.7	)		(24.2	)
	857			30		3.51			933			27		2.90			1,222			22		1.77			.3			16.4
	791			33		4.15			927			25		2.68			962			13		1.29			34.0			(1.6	)
	1,362			82		5.78			1,379			54		3.79			1,257			35		2.77			3.3			7.8
	76,011			5,168		6.79			72,796			4,243		5.82			68,815			3,480		5.06			4.3			1.9
	(946	)							(1,090	)							(1,260	)							12.5
	12,881								12,781								12,978								(1.0	)
	3,756								3,422								2,756								9.1
$	91,702							$	87,909							$	83,289								3.6
$	25,044			710		2.84		$	22,696			360		1.59		$	20,175			147		.73			3.8			(3.3	)
	1,728			4		.23			1,941			5		.26			2,007			5		.23			(2.3	)		(16.7	)
	5,581			261		4.67			4,957			189		3.82			4,834			178		3.71			21.1			21.0
	11,592			481		4.14			10,789			341		3.16			10,564			304		2.88			6.6			11.7
	2,305			120		5.22			2,662			81		3.06			1,438			6		.40			(11.0	)		(19.7	)
	46,250			1,576		3.41			43,045			976		2.27			39,018			640		1.64			6.7			11.8
	2,215			107		4.80			2,577			71		2.74			3,129			22		.71			(12.4	)		(25.6	)
	2,284			94		4.12			2,796			82		2.94			2,631			42		1.59			(6.2	)		(17.6	)
	10,495			552		5.26			10,904			433		4.08			11,758			321		2.87			(4.3	)		(3.0	)
	61,244			2,329		3.80			59,322			1,562		2.65			56,536			1,025		1.83			3.5			6.7
	12,803								11,772								10,959								3.4
	6,077								5,997								6,016								(6.3	)
	3,756								3,422								2,756								9.1
	83,880								80,513								76,267								3.1
	7,734								7,323								6,937								8.8
	88								73								85								20.3
	7,822								7,396								7,022								9.0
$	91,702							$	87,909							$	83,289								3.6
						2.99	%							3.17	%							3.23	%
				2,839		3.73	%					2,681		3.68	%					2,455		3.56	%					(.4	)%
				103								121								94								(22.7	)
			$	2,736							$	2,560							$	2,361								.2	%

(f)	During the fourth quarter of 2008, our taxable-equivalent net interest income was reduced by $18 million as a result of an agreement reached with the IRS on all material aspects related to the IRS global tax settlement pertaining to certain leveraged lease financing transactions. During the second quarter of 2008, our taxable-equivalent net interest income was reduced by $838 million following an adverse federal court decision on our tax treatment of a leveraged sale-leaseback transaction. During the first quarter of 2008, we increased our tax reserves for certain LILO transactions and recalculated our lease income in accordance with prescribed accounting standards. These actions reduced our first quarter 2008 taxable-equivalent net interest income by $34 million. Excluding all of these reductions, the taxable-equivalent yield on our commercial lease financing portfolio would have been 4.82% for 2008, and our taxable-equivalent net interest margin would have been 3.13%.
(g)	During the first quarter of 2006, we reclassified $760 million of average loans and related interest income from the commercial lease financing portfolio to the commercial, financial and agricultural portfolio to more accurately reflect the nature of these receivables. Balances presented for prior periods were not reclassified as the historical data was not available.
(h)	Yield is calculated on the basis of amortized cost
(i)	Rate calculation excludes basis adjustments related to fair value hedges.

30

Figure 10 shows how the changes in yields or rates and average balances from the prior year affected net interest income. The section entitled “Financial Condition” contains additional discussion about changes in earning assets and funding sources.

Figure 10. Components of Net Interest Income Changes from Continuing Operations

	2009 vs 2008									2008 vs 2007
	Average			Yield/			Net			Average			Yield/			Net
in millions	Volume			Rate			Change			Volume			Rate			Change
INTEREST INCOME
Loans	$	(300	)	$	243		$	(57	)	$	386		$	(1,929	)	$	(1,543	)
Loans held for sale		(35	)		(12	)		(47	)		(18	)		(14	)		(32	)
Securities available for sale		134			(78	)		56			28			(2	)		26
Held-to-maturity securities		—			(2	)		(2	)		(1	)		3			2
Trading account assets		(2	)		(7	)		(9	)		16			2			18
Short-term investments		22			(41	)		(19	)		22			(28	)		(6	)
Other investments		(3	)		3			—			1			(2	)		(1	)
Total interest income (TE)		(184	)		106			(78	)		434			(1,970	)		(1,536	)
INTEREST EXPENSE
NOW and money market deposit accounts		(31	)		(272	)		(303	)		69			(404	)		(335	)
Savings deposits		—			(4	)		(4	)		—			3			3
Certificates of deposit ($100,000 or more)		123			(59	)		64			133			(56	)		77
Other time deposits		49			(76	)		(27	)		67			(61	)		6
Deposits in foreign office		(37	)		(42	)		(79	)		(33	)		(95	)		(128	)
Total interest-bearing deposits		104			(453	)		(349	)		236			(613	)		(377	)
Federal funds purchased and securities sold under repurchase agreements		(18	)		(34	)		(52	)		(56	)		(95	)		(151	)
Bank notes and other short-term borrowings		(60	)		(54	)		(114	)		96			(70	)		26
Long-term debt		(32	)		(75	)		(107	)		57			(168	)		(111	)
Total interest expense		(6	)		(616	)		(622	)		333			(946	)		(613	)
Net interest income (TE)	$	(178	)	$	722		$	544		$	101		$	(1,024	)	$	(923	)

The change in interest not due solely to volume or rate has been allocated in proportion to the absolute dollar amounts of the change in each.

Noninterest income

Noninterest income for 2009 was $2.035 billion, up $188 million, or 10%, from 2008. In 2008, noninterest income decreased by $394 million, or 18%, compared to 2007.

Several significant items affected noninterest income in 2009 and 2008. In 2009, these items include net gains of $125 million from the repositioning of the securities portfolio, $78 million recorded in connection with the exchange of common shares for capital securities and $32 million from the sale of our claim associated with the Lehman Brothers’ bankruptcy. Additionally, we recorded a $105 million gain from the sale of Visa Inc. shares during 2009, compared to a $165 million gain from the partial redemption of Visa shares during 2008.

Excluding the above items, noninterest income for 2009 increased by $13 million. As shown in Figure 11, we benefited from an $81 million reduction in net losses from loan sales, a $59 million increase in net gains on sales of leased equipment, a $50 million decrease in net losses from principal investing (including results attributable to noncontrolling interests) and an increase in miscellaneous income, due primarily to mortgage banking activities and the volatility associated with the hedge accounting applied to debt instruments. These factors were substantially offset by less favorable results from investment banking and capital markets activities, as well as reductions in trust and investment services income, service charges on deposit accounts and operating lease income.

Significant items also influence a comparison of noninterest income for 2008 with that reported for 2007. The partial redemption of Visa Inc. shares discussed above generated a gain in 2008. Results for 2007 include gains of $171 million associated with the sale of the McDonald Investments branch network, $67 million related to the sale of MasterCard Incorporated shares and $26 million from the settlement of the automobile residual value insurance litigation, as well as a $49 million loss from the repositioning of the securities portfolio.

31

Excluding the above items, noninterest income for 2008 decreased by $344 million, or 17%, due to three primary factors. As shown in Figure 11, we recorded net losses of $54 million from principal investing (including results attributable to noncontrolling interests) in 2008, compared to net gains of $164 million in 2007. In addition, net losses from loan sales rose by $86 million, and income from investment banking and capital markets activities declined by $52 million. The reduction in noninterest income attributable to these factors was offset in part by increases of $40 million in income from trust and investment services, and $28 million in deposit service charges. Results for 2007 include $16 million of brokerage commissions and fees generated by the McDonald Investments branch network. Adjusting for this revenue, trust and investment services income rose by $56 million, or 12%, in 2008.

Figure 11. Noninterest Income

Year ended December 31,										Change 2009 vs 2008
dollars in millions	2009			2008			2007			Amount			Percent
Trust and investment services income	$	459		$	509		$	469		$	(50	)		(9.8	)%
Service charges on deposit accounts		330			365			337			(35	)		(9.6	)
Operating lease income		227			270			272			(43	)		(15.9	)
Letter of credit and loan fees		180			183			192			(3	)		(1.6	)
Corporate-owned life insurance income		114			117			121			(3	)		(2.6	)
Net securities gains (losses)		113			(2	)		(35	)		115			N/M
Electronic banking fees		105			103			99			2			1.9
Gains on leased equipment		99			40			35			59			147.5
Insurance income		68			65			55			3			4.6
Net gains (losses) from loan securitizations and sales		(1	)		(82	)		4			81			98.8
Net gains (losses) from principal investing		(4	)		(54	)		164			50			92.6
Investment banking and capital markets income (loss)		(42	)		68			120			(110	)		N/M
Gain from sale/redemption of Visa Inc. shares		105			165			—			(60	)		(36.4	)
Gain related to exchange of common shares for capital securities		78			—			—			78			N/M
Gain from sale of McDonald Investments branch network		—			—			171			—			—
Other income:
Gain from sale of Key’s claim associated with the Lehman Brothers’ bankruptcy		32			—			—			32			N/M
Credit card fees		14			16			13			(2	)		(12.5	)
Loan securitization servicing fees		—			—			1			—			—
Gains related to MasterCard Incorporated shares		—			—			67			—			—
Litigation settlement — automobile residual value insurance		—			—			26			—			—
Miscellaneous income		158			84			130			74			88.1
Total other income		204			100			237			104			104.0
Total noninterest income	$	2,035		$	1,847		$	2,241		$	188			10.2	%

The following discussion explains the composition of certain elements of our noninterest income and the factors that caused those elements to change.

32

Trust and investment services income

Trust and investment services are our largest source of noninterest income. The primary components of revenue generated by these services are shown in Figure 12. The 2009 decrease of $50 million, or 10%, is attributable to reductions in both institutional and personal asset management income, as well as lower income from brokerage commissions and fees.

In 2008, we experienced strong growth in institutional asset management income, and higher income from brokerage commissions and fees. Excluding the results of the McDonald Investments branch network, income from brokerage commissions and fees was up $50 million from the 2007 level.

Figure 12. Trust and Investment Services Income

Year ended December 31,							Change 2009 vs 2008
dollars in millions	2009		2008		2007		Amount			Percent
Brokerage commissions and fee income	$	151	$	159	$	125	$	(8	)		(5.0	)%
Personal asset management and custody fees		141		158		165		(17	)		(10.8	)
Institutional asset management and custody fees		167		192		179		(25	)		(13.0	)
Total trust and investment services income	$	459	$	509	$	469	$	(50	)		(9.8	)%

A significant portion of our trust and investment services income depends on the value and mix of assets under management. At December 31, 2009, our bank, trust and registered investment advisory subsidiaries had assets under management of $66.9 billion, compared to $64.7 billion at December 31, 2008. As shown in Figure 13, most of the increase was attributable to market appreciation in the equity portfolio, offset in part by decreases in the money market and securities lending portfolios. The value of the money market portfolio declined because of general economic conditions. The decline in the securities lending portfolio was due in part to increased volatility in the fixed income markets and actions taken to maintain sufficient liquidity within the portfolio. When clients’ securities are lent out, the borrower must provide us with cash collateral, which is invested during the term of the loan. The difference between the revenue generated from the investment and the cost of the collateral is shared with the lending client. This business, although profitable, generates a significantly lower rate of return (commensurate with the lower level of risk) than other types of assets under management. The decrease in the value of our portfolio of hedge funds is attributable in part to our second quarter 2009 decision to wind down the operations of Austin.

Figure 13. Assets Under Management

December 31,							Change 2009 vs 2008
dollars in millions	2009		2008		2007		Amount			Percent
Assets under management by investment type:
Equity	$	36,720	$	29,384	$	42,868	$	7,336			25.0	%
Securities lending		11,023		12,454		20,228		(1,431	)		(11.5	)
Fixed income		10,230		9,819		11,357		411			4.2
Money market		7,861		10,520		9,440		(2,659	)		(25.3	)
Hedge funds (a)		1,105		2,540		1,549		(1,435	)		(56.5	)
Total	$	66,939	$	64,717	$	85,442	$	2,222			3.4	%
Proprietary mutual funds included in assets under management:
Money market	$	5,778	$	7,458	$	7,298	$	(1,680	)		(22.5	)%
Equity		7,223		5,572		6,957		1,651			29.6
Fixed income		775		640		631		135			21.1
Total	$	13,776	$	13,670	$	14,886	$	106			.8	%

(a) Hedge funds are related to the discontinued operations of Austin.

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Service charges on deposit accounts

The 2009 decrease in service charges on deposit accounts is due primarily to lower transaction volume, which generated fewer overdraft fees. Additionally, because of the prevailing low interest rates and unlimited FDIC insurance, our corporate clients have been maintaining larger amounts on deposit, which has the effect of reducing their transaction service charges on their noninterest-bearing deposit accounts. In 2008, the increase in service charges on deposit accounts was attributable to growth in fee income from cash management services.

Operating lease income

The $43 million decrease in our 2009 operating lease income is attributable to lower client demand for operating equipment leases in the Equipment Finance line of business. Accordingly, as shown in Figure 15, depreciation expense associated with operating leases also declined. Operating lease income was essentially unchanged from 2007 to 2008.

Net gains (losses) from loan securitizations and sales

We sell or securitize loans to achieve desired interest rate and credit risk profiles, to improve the profitability of the overall loan portfolio, or to diversify funding sources. During 2009, we recorded $1 million of net losses from loan sales, compared to net losses of $82 million during 2008. Results for 2008 include $31 million of net losses from the third quarter 2008 sales and write-downs of loans within the residential properties segment of the construction loan portfolio, and $101 million of net losses from loan sales and write-downs recorded during the first quarter, due primarily to volatility in the fixed income markets and the related housing correction. Approximately $84 million of these losses pertained to commercial real estate loans held for sale. In March 2008, we transferred $3.3 billion of education loans from held-for-sale status to the held-to-maturity loan portfolio. The secondary markets for these loans have been adversely affected by market liquidity issues, making securitizations impractical. The types of loans sold during 2009 and 2008 are presented in Figure 20.

Net gains (losses) from principal investing

Principal investments consist of direct and indirect investments in predominantly privately-held companies. Our principal investing income is susceptible to volatility since most of it is derived from mezzanine debt and equity investments in small to medium-sized businesses. These investments are carried on the balance sheet at fair value ($1.0 billion at December 31, 2009, and $990 million at December 31, 2008). The net gains (losses) presented in Figure 11 derive from changes in fair values as well as sales of principal investments.

Investment banking and capital markets income (loss)

As shown in Figure 14, income from investment banking and capital markets activities decreased in both 2009 and 2008. The 2009 decline was driven by losses related to certain commercial real estate related investments, primarily due to changes in their fair values. Net losses from investments made by the Real Estate Capital and Corporate Banking Services line of business rose by $68 million from 2008. At December 31, 2009, the remaining investments had a carrying amount of approximately $63 million, representing 51% of our original investment. We also experienced a $36 million increase in losses associated with dealer trading and derivatives, including a $17 million increase in the provision for losses related to customer derivatives and a $6 million increase in losses resulting from changes in the fair values of certain commercial mortgage-backed securities. At December 31, 2009, these securities had a carrying amount of approximately $29 million, representing 33% of their face value.

The 2008 decline was caused by higher losses from other investments and less favorable results from dealer trading and derivatives, each of which reflects the extraordinary volatility in the financial markets since the latter half of 2007. In 2008, the loss from dealer trading and derivatives was attributable to $54 million of losses on derivative contracts as a result of market disruption caused by the failure of Lehman Brothers.

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Losses recorded from other investments were due largely to reductions in the fair values of certain commercial real estate related investments held within the Real Estate Capital and Corporate Banking Services line of business.

Figure 14. Investment Banking and Capital Markets Income (Loss)

Year ended December 31,										Change 2009 vs 2008
dollars in millions	2009			2008			2007			Amount			Percent
Investment banking income	$	83		$	85		$	86		$	(2	)		(2.4	)%
Loss from other investments		(103	)		(44	)		(34	)		(59	)		(134.1	)
Dealer trading and derivatives income (loss)		(70	)		(34	)		20			(36	)		(105.9	)
Foreign exchange income		48			61			48			(13	)		(21.3	)
Total investment banking and capital markets income (loss)	$	(42	)	$	68		$	120		$	(110	)		N/M

Noninterest expense

As shown in Figure 15, noninterest expense for 2009 was $3.554 billion, up $78 million, or 2%, from 2008. In 2008, noninterest expense rose by $318 million, or 10%.

In 2009, personnel expense decreased by $67 million. Excluding intangible assets impairment charges, nonpersonnel expense increased by $373 million, due primarily to a $167 million increase in the FDIC deposit insurance assessment, an $81 million increase in costs associated with OREO, a $46 million increase in professional fees and a $67 million provision for losses on lending-related commitments recorded during the current year, compared to a $26 million credit recorded for 2008. Additionally, nonpersonnel expense for 2008 was reduced by a $23 million credit (included in “miscellaneous expense”), representing the reversal of the remaining litigation reserve associated with the previously reported Honsador litigation settled in September 2008. The increase in nonpersonnel expense, compared to 2008, was moderated by decreases of $29 million in operating lease expense and $15 million in marketing expense. More information about the intangible assets impairment charges is provided in this section under the heading “Intangible assets impairment.”

In 2008, personnel expense decreased by $21 million, due in part to the February 2007 sale of the McDonald Investments branch network. As shown in Figure 15, nonpersonnel expense for 2008 was adversely affected by noncash goodwill impairment charges of $469 million, while results for 2007 include a $64 million charge for the estimated fair value of our potential liability to Visa Inc, which was satisfied in 2008. The sale of the McDonald Investments branch network reduced our nonpersonnel expense by approximately $22 million in 2008.

Excluding the charges to nonpersonnel expense discussed above, nonpersonnel expense for 2008 decreased by $66 million, due largely to a $26 million credit for losses on lending-related commitments, compared to a $28 million provision in 2007, a $13 million reduction in computer processing costs and the $23 million credit recorded during 2008 in connection with the Honsador litigation. These favorable results were offset in part by a $24 million increase in professional fees and a $13 million increase in net occupancy expense.

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Figure 15. Noninterest Expense

Year ended December 31,								Change 2009 vs 2008
dollars in millions	2009		2008			2007		Amount			Percent
Personnel	$	1,514	$	1,581		$	1,602	$	(67	)		(4.2	)%
Net occupancy		259		259			246		—			—
Intangible assets impairment		241		469			6		(228	)		(48.6	)
Operating lease expense		195		224			224		(29	)		(12.9	)
Computer processing		192		187			200		5			2.7
Professional fees		184		138			114		46			33.3
FDIC assessment		177		10			9		167			N/M
OREO expense, net		97		16			5		81			506.3
Equipment		96		92			96		4			4.3
Marketing		72		87			76		(15	)		(17.2	)
Provision (credit) for losses on lending-related commitments		67		(26	)		28		93			N/M
Other expense:
Postage and delivery		33		46			47		(13	)		(28.3	)
Franchise and business taxes		31		30			32		1			3.3
Telecommunications		26		30			28		(4	)		(13.3	)
Provision for losses on LIHTC guaranteed funds		17		17			12		—			—
Liability to Visa		—		—			64		—			—
Miscellaneous expense		353		316			369		37			11.7
Total other expense		460		439			552		21			4.8
Total noninterest expense	$	3,554	$	3,476		$	3,158	$	78			2.2	%
Average full-time equivalent employees (a)		16,698		18,095			18,934		(1,397	)		(7.7	)%

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

The following discussion explains the composition of certain elements of our noninterest expense and the factors that caused those elements to change.

Personnel

As shown in Figure 16, personnel expense, the largest category of our noninterest expense, decreased by $67 million, or 4%, in 2009, following a $21 million, or 1%, decline in 2008. The 2009 decrease was due largely to an 8% decrease in the number of average full-time equivalent employees, which contributed to reductions in incentive compensation accruals and salaries expense. We also experienced a substantial increase in pension expense in 2009. The growth is attributable primarily to lower expected returns and an increase in the amortization of losses, resulting from the decrease in the value of pension plan assets following steep declines in the equity markets in 2008.

The 2008 decrease was due primarily to a decline in stock-based compensation and lower costs associated with salaries and employee benefits, resulting from a 4% reduction in the number of average full-time equivalent employees. These reductions were offset in part by higher accruals for incentive compensation and an increase in severance expense due to our decision to exit certain businesses. The McDonald Investments branch network accounted for $3 million of our personnel expense for 2008, compared to $20 million for 2007.

Figure 16. Personnel Expense

Year ended December 31,							Change 2009 vs 2008
dollars in millions	2009		2008		2007		Amount			Percent
Salaries	$	905	$	949	$	963	$	(44	)		(4.6	)%
Incentive compensation		222		279		261		(57	)		(20.4	)
Employee benefits		303		255		284		48			18.8
Stock-based compensation (a)		51		50		60		1			2.0
Severance		33		48		34		(15	)		(31.3	)
Total personnel expense	$	1,514	$	1,581	$	1,602	$	(67	)		(4.2	)%

(a) Excludes directors’ stock-based compensation of $3 million in 2009, ($.8) million in 2008 and $2 million in 2007 reported as “miscellaneous expense” in Figure 15.

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Intangible assets impairment

Our charges associated with intangible assets impairment decreased substantially from 2008, when we recorded a $465 million noncash charge resulting from our annual goodwill impairment testing. During the first quarter of 2009, we determined that the estimated fair value of our National Banking reporting unit was less than the carrying amount, reflecting continued weakness in the financial markets. As a result, we recorded a noncash accounting charge of $223 million, $27 million of which relates to the discontinued operations of Austin. With this charge, we have now written off all of the goodwill that had been assigned to our National Banking reporting unit. During the third quarter of 2009, we recorded a $45 million charge to write off intangible assets, other than goodwill, associated with actions taken to cease conducting business in certain equipment leasing markets.

Operating lease expense

The 2009 decrease in operating lease expense corresponds with the lower volume of activity in the Equipment Finance line of business as we de-emphasize operating lease activities. In 2008, operating lease expense was unchanged from 2007. Income related to the rental of leased equipment is presented in Figure 11 as “operating lease income.”

Professional fees

Professional fees grew in 2009 and 2008 in part because of increased collection efforts on loans, higher legal expenses and the outsourcing of certain services.

Marketing expense

Marketing expense fluctuated over the past three years because of additional costs incurred during 2008 to promote deposit products.

Corporate-wide initiative

As previously discussed, in late 2008, we began a corporate-wide initiative designed to build a consistently superior experience for our clients, simplify processes, improve speed to market, and enhance our ability to seize growth and profit opportunities. Through this initiative, we expect to achieve annualized cost savings of $300 million to $375 million by 2012. Over the past two years, we have been exiting certain noncore businesses, such as retail marine and education lending, and in February 2009, we completed the implementation of new teller platform technology throughout our branches. As a result of these and other efforts, over the last two years, we have reduced our workforce by more than 2,200 average full-time equivalent employees.

Income taxes

We recorded a tax benefit from continuing operations of $1.035 billion for 2009, compared to provisions of $437 million for 2008 and $277 million for 2007.

The tax benefit recorded in 2009 is largely attributable to the continuation of a difficult economic environment and the resulting increase in our provision for loan losses, which contributed to the loss recorded for the year. During 2008, we recorded a significant tax provision as a result of several developments related to our tax treatment of certain leveraged lease financing transactions described below.

As previously reported, during the second quarter of 2008, we received an adverse federal court decision on our tax treatment of a service contract lease transaction. As a result, we were required to adjust the amount of unrecognized tax benefits associated with all of the leases under challenge by the IRS. The adjustment in unrecognized tax benefits required us to recalculate our lease income recognized from inception for all of the leveraged leases being contested by the IRS and to increase our tax reserves. These actions reduced our second quarter 2008 after-tax earnings by $1.011 billion, or $2.43 per common share, including a $359

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million reduction to lease income, a $177 million increase to the provision for income taxes and a $475 million charge to the tax provision for the interest cost associated with the contested tax liabilities. During the third quarter of 2008, we increased our tax provision by an additional $30 million for the interest cost associated with these tax liabilities. During the fourth quarter of 2008, we reached an agreement with the IRS on all material aspects related to the IRS global tax settlement, which resulted in the reversal of $120 million of the after-tax lease financing charges.

During the first quarter of 2008, we adjusted the amount of unrecognized tax benefits associated with the LILO transactions as a result of an updated internal assessment of our tax position. This adjustment in unrecognized tax benefits required us to recalculate our lease income and increase our tax reserves. These actions reduced our first quarter 2008 after-tax earnings by $38 million, or $.10 per common share, including a $3 million reduction to lease income, an $18 million increase to the provision for income taxes and a $17 million charge to the tax provision for the associated interest charges.

In the ordinary course of business, we enter into certain types of lease financing transactions that result in tax deductions. The IRS has completed audits of our income tax returns for a number of prior years and has disallowed the tax deductions taken in connection with these transactions. We have settled all leveraged lease financing tax issues with the IRS without incurring any additional tax or interest liability. Additional information pertaining to the contested lease financing transactions, the related charges and the settlement is included in Note 18 (“Income Taxes”).

Our federal tax (benefit) expense differs from the amount that would be calculated using the federal statutory tax rate, primarily because we generate income from investments in tax-advantaged assets, such as corporate-owned life insurance, earn credits associated with investments in low-income housing projects and make periodic adjustments to our tax reserves. Additionally, during 2009, we recorded a $106 million credit to income taxes, due primarily to the settlement of IRS audits for the tax years 1997-2006. The credit includes a final adjustment of $80 million related to the resolution of certain lease financing tax issues. For more information on how our total income tax (benefit) expense and the resulting effective tax rates for the past three years were derived, see Note 18.

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Financial Condition

Loans and loans held for sale

Figure 17 shows the composition of our loan portfolio at December 31 for each of the past five years.

Figure 17. Composition of Loans

December 31,	2009						2008					2007
dollars in millions	Amount			% of Total			Amount		% of Total			Amount		% of Total
COMMERCIAL
Commercial, financial and agricultural	$	19,248			32.7	%	$	27,260		37.4	%	$	24,797		35.2	%
Commercial real estate: (a)
Commercial mortgage		10,457	(b)		17.8			10,819		14.9			9,630		13.7
Construction		4,739	(b)		8.1			7,717		10.6			8,102		11.5
Total commercial real estate loans		15,196			25.9			18,536		25.4			17,732		25.2
Commercial lease financing		7,460			12.7			9,039		12.4			10,176		14.4
Total commercial loans		41,904			71.3			54,835		75.3			52,705		74.8
CONSUMER
Real estate — residential mortgage		1,796			3.1			1,908		2.6			1,594		2.3
Home equity:
Community Banking		10,052			17.1			10,124		13.9			9,655		13.7
National Banking		834			1.4			1,051		1.4			1,262		1.8
Total home equity loans		10,886			18.5			11,175		15.3			10,917		15.5
Consumer other — Community Banking		1,181			2.0			1,233		1.7			1,298		1.8
Consumer other — National Banking:
Marine		2,787			4.7			3,401		4.7			3,637		5.1
Other		216			.4			283		.4			341		.5
Total consumer other — National Banking		3,003			5.1			3,684		5.1			3,978		5.6
Total consumer loans		16,866			28.7			18,000		24.7			17,787		25.2
Total loans (c)	$	58,770			100.0	%	$	72,835		100.0	%	$	70,492		100.0	%

	2006					2005
	Amount		% of Total			Amount		% of Total
COMMERCIAL
Commercial, financial and agricultural	$	21,412		32.7	%	$	20,579		31.1	%
Commercial real estate: (a)
Commercial mortgage		8,426		12.9			8,360		12.6
Construction		8,209		12.5			7,109		10.8
Total commercial real estate loans		16,635		25.4			15,469		23.4
Commercial lease financing		10,259		15.7			10,352		15.7
Total commercial loans		48,306		73.8			46,400		70.2
CONSUMER
Real estate — residential mortgage		1,442		2.2			1,458		2.2
Home equity:
Community Banking		9,805		15.0			10,237		15.5
National Banking		1,021		1.6			3,251		4.9
Total home equity loans		10,826		16.6			13,488		20.4
Consumer other — Community Banking		1,536		2.3			1,794		2.7
Consumer other — National Banking:
Marine		3,077		4.7			2,715		4.1
Other		294		.4			257		.4
Total consumer other — National Banking		3,371		5.1			2,972		4.5
Total consumer loans		17,175		26.2			19,712		29.8
Total loans (c)	$	65,481		100.0	%	$	66,112		100.0	%

(a)	See Figure 18 for a more detailed breakdown of our commercial real estate loan portfolio at December 31, 2009.
(b)	In late March 2009, we transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines pertaining to the classification of loans for projects that have reached a completed status.
(c)	Excludes loans in the amount of $3.5 billion at December 31, 2009, $3.7 billion at December 31, 2008, $331 million at December 31, 2007, $345 million at December 31, 2006, and $366 million at December 31, 2005, related to the discontinued operations of the education lending business.

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At December 31, 2009, total loans outstanding were $58.8 billion, compared to $72.8 billion at the end of 2008 and $70.5 billion at the end of 2007. Loans related to the discontinued operations of the education lending business, which are excluded from total loans at December 31, 2009, December 31, 2008, and December 31, 2007, totaled $3.5 billion, $3.7 billion, and $331 million, respectively. Further information regarding our discontinued operations can be found in the section entitled “Consumer loan portfolio” within this discussion. The decrease in our loans from continuing operations over the past twelve months reflects reductions in most of our portfolios, with the largest decline experienced in the commercial portfolio.

Commercial loan portfolio

Commercial loans outstanding decreased by $12.9 billion, or 24%, since December 31, 2008, as a result of soft demand for credit due to the weak economic conditions, paydowns on our portfolios as commercial clients continue to de-leverage, net charge-offs and the run-off in our exit loan portfolio.

Commercial real estate loans. Commercial real estate loans for both our owner- and nonowner-occupied properties constitute one of the largest segments of our commercial loan portfolio. At December 31, 2009, our commercial real estate portfolio included mortgage loans of $10.5 billion and construction loans of $4.7 billion. The average mortgage loan originated during 2009 was $1 million, and our largest mortgage loan at December 31, 2009, had a balance of $123 million. At December 31, 2009, our average construction loan commitment was $5 million. Our largest construction loan commitment was $65 million, $51 million of which was outstanding.

Our commercial real estate lending business is conducted through two primary sources: our 14-state banking franchise, and Real Estate Capital and Corporate Banking Services, a national line of business that cultivates relationships both within and beyond the branch system. This line of business deals exclusively with nonowner-occupied properties (generally properties for which at least 50% of the debt service is provided by rental income from nonaffiliated third parties) and accounted for approximately 62% of our average commercial real estate loans during 2009. Our commercial real estate business generally focuses on larger real estate developers and, as shown in Figure 18, is diversified by both industry type and geographic location of the underlying collateral. Figure 18 includes commercial mortgage and construction loans in both the Community Banking and National Banking groups.

Figure 18. Commercial Real Estate Loans

December 31, 2009							Geographic Region									Percent of			Commercial
dollars in millions	Northeast		Southeast		Southwest			Midwest		Central		West		Total		Total			Mortgage		Construction
Nonowner-occupied:
Multifamily properties	$	348	$	575	$	444		$	254	$	497	$	450	$	2,568		16.9	%	$	1,558	$	1,010
Retail properties		257		640		189			690		362		419		2,557		16.8			1,460		1,097
Office buildings		317		127		120			156		228		337		1,285		8.5			805		480
Health facilities		252		135		48			244		219		340		1,238		8.2			1,133		105
Residential properties		227		272		56			92		199		285		1,131		7.4			206		925
Warehouses		118		111		1			62		66		162		520		3.4			397		123
Land and development		107		117		101			46		65		82		518		3.4			171		347
Hotels/Motels		79		117		—			15		48		57		316		2.1			225		91
Manufacturing facilities		—		9		9			—		—		34		52		.3			21		31
Other		140		190		5			72		24		109		540		3.6			453		87
Total nonowner-occupied		1,854		2,284		964			1,640		1,708		2,275		10,725		70.6			6,429		4,296
Owner-occupied		955		178		79			1,009		400		1,850		4,471		29.4			4,028		443
Total	$	2,809	$	2,462	$	1,043		$	2,649	$	2,108	$	4,125	$	15,196		100.0	%	$	10,457	$	4,739
Nonowner-occupied:
Nonperforming loans	$	161	$	416	$	108		$	92	$	142	$	169	$	1,088		N/M		$	460	$	628
Accruing loans past due 90 days or more		21		27		37			2		34		32		153		N/M			58		95
Accruing loans past due 30 through 89 days		18		44		32			11		53		124		282		N/M			132		150

Northeast – Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont

Southeast – Alabama, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Washington, D.C. and West Virginia

Southwest – Arizona, Nevada and New Mexico

Midwest – Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin

Central – Arkansas, Colorado, Oklahoma, Texas and Utah

West – Alaska, California, Hawaii, Idaho, Montana, Oregon, Washington and Wyoming

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Since December 31, 2008, nonperforming loans related to our nonowner-occupied properties have increased by $605 million, due in part to the continuation of deteriorating market conditions in both the income properties and residential properties segments of our commercial real estate construction portfolio. As previously reported, we have undertaken a process to reduce our exposure in the residential properties segment of our construction loan portfolio through the sale of certain loans. During the last half of 2008, we ceased lending to homebuilders within our 14-state Community Banking footprint. In conjunction with our efforts to mitigate our exposure in the residential properties segment of our construction loan portfolio, we transferred $384 million of commercial real estate loans ($719 million, net of $335 million in net charge-offs) from the held-to-maturity loan portfolio to held-for-sale status in June 2008. Our ability to sell these loans has been hindered by continued disruption in the financial markets which has precluded the ability of certain potential buyers to obtain the necessary funding. The balance of this portfolio has been reduced to $52 million at December 31, 2009, primarily as a result of cash proceeds from loan sales, transfers to OREO, and both realized and unrealized losses. We will continue to pursue the sale or foreclosure of the remaining loans, all of which are on nonperforming status.

The secondary market for commercial real estate loans has been severely constrained throughout 2009 and is expected to remain so for the foreseeable future. In prior years, we have not provided permanent financing for our clients upon the completion of their construction projects; permanent financing had been provided by the commercial mortgage-backed securities market or other lenders. With other sources of permanent commercial mortgage financing constrained, we are currently providing interim financing for our clients upon completion of their commercial real estate construction projects. During 2009, we extended the maturities of existing loans to commercial real estate clients with projects at or near completion. We applied normal customary underwriting standards to these longer-term extensions and generally received market rates of interest and additional fees. In cases where the terms involved less than normal market rates for similar lending arrangements, we have placed the loans on nonperforming status.

As shown in Figure 18, at December 31, 2009, 71% of our commercial real estate loans were for nonowner-occupied properties. Approximately 40% of these loans are construction loans. Typically, these properties are not fully leased at the origination of the loan; the borrower may rely upon additional leasing through the life of the loan to provide the cash flow necessary to support debt service payments. Weak economic conditions generally slow the execution of new leases and may also lead to the turnover of existing leases. As a result of these factors, we expect that vacancy rates for retail, office and industrial space will remain elevated and may continue to rise through 2010. According to Property & Portfolio Research, a third-party forecaster, vacancy rates for office and retail space were 19.7% and 19.2%, respectively, at December 31, 2009, up 300 basis points and 460 basis points, respectively, from December 31, 2008. Current market conditions also indicate a trend toward a reduction in the amount of square footage leased. If the upward trend in vacancies continues, any resulting effect would likely be most noticeable in the nonowner-occupied properties segment of our commercial real estate loan portfolio, particularly in the retail properties and office buildings components, which comprise 25% of our commercial real estate loans.

Commercial real estate values have also fallen as a result of the above factors. Values peaked in the fall of 2007, having experienced increases of approximately 30% since 2005 and 90% since 2001. According to Moody’s Real Estate Analytics, LLC Commercial Property Price Index, at November 30, 2009, commercial real estate values were down 43% from their peak, and the majority of economists believe the overall decline in values may reach approximately 50%. If the factors described above result in further weakening in the fundamentals underlying the commercial real estate market (i.e., vacancy rates, the stability of rental income and asset values), and lead to reduced cash flow to support debt service payments, our ability to collect such payments and the strength of our commercial real estate loan portfolio could be adversely affected.

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Commercial lease financing. We conduct financing arrangements through our Equipment Finance line of business and have both the scale and array of products to compete in the equipment lease financing business. Commercial lease financing receivables represented 18% of commercial loans at December 31, 2009, and 17% at December 31, 2008. During the third quarter of 2009, we ceased conducting business in both the commercial vehicle and office equipment leasing markets.

Consumer loan portfolio

Consumer loans outstanding decreased by $1.1 billion, or 6%, from one year ago. As shown in Figure 40 in the “Credit risk management” section, $898 million, or 79%, of the reduction came from our exit loan portfolio. Most of the decrease is attributable to the marine segment.

The home equity portfolio is the largest segment of our consumer loan portfolio. A significant amount of this portfolio (92% at December 31, 2009) is derived primarily from the Regional Banking line of business within our Community Banking group; the remainder originated from the Consumer Finance line of business within our National Banking group and has been in an exit mode since the fourth quarter of 2007. Home equity loans within the Community Banking group decreased by $72 million, or less than 1%, over the past twelve months.

Figure 19 summarizes our home equity loan portfolio by source as of December 31 for each of the last five years, as well as certain asset quality statistics and yields on the portfolio as a whole.

Figure 19. Home Equity Loans

December 31,
dollars in millions	2009			2008		2007			2006			2005
SOURCES OF YEAR-END LOANS
Community Banking	$	10,052		$	10,124	$	9,655		$	9,805		$	10,237
National Banking (a)		834			1,051		1,262			1,021			3,251
Total	$	10,886		$	11,175	$	10,917		$	10,826		$	13,488
Nonperforming loans at year end	$	128		$	91	$	66		$	50		$	79
Net loan charge-offs for the year		165			86		33			23			21
Yield for the year (b)		4.63	%		5.93		7.17	%		7.07	%		6.20	%

(a)	On August 1, 2006, we transferred $2.5 billion of subprime mortgage loans from the loan portfolio to loans held for sale, and approximately $55 million of subprime mortgage loans from nonperforming loans to nonperforming loans held for sale, in connection with our intention to sell the Champion Mortgage finance business.
(b)	From continuing operations.

We expect the level of our consumer loan portfolio to decrease in the future as a result of actions taken to exit low-return, indirect businesses. In December 2007, we decided to exit dealer-originated home improvement lending activities, which are largely out-of-footprint. During the last half of 2008, we exited retail and floor-plan lending for marine and recreational vehicle products, and began to limit new education loans to those backed by government guarantee. In September 2009, we made the decision to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank. We will continue to focus on the growing demand from schools for integrated, simplified billing, payment and cash management solutions. We ceased originating new education loans effective December 5, 2009; however, our Consumer Finance line of business continues to service existing loans in these portfolios.

Loans held for sale

As shown in Note 7 (“Loans and Loans Held for Sale”), our loans held for sale declined to $443 million at December 31, 2009, from $626 million at December 31, 2008, due primarily to normal loan sales. Loans held for sale related to the discontinued operations of the education lending business, which are excluded from total loans held for sale at December 31, 2009 and 2008, totaled $434 million and $401 million, respectively.

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At December 31, 2009, loans held for sale included $171 million of commercial mortgage and $139 million of residential mortgage loans. In the absence of quoted market prices, we use valuation models to measure the fair value of these loans and adjust the amount recorded on the balance sheet if fair value falls below recorded cost. The models are based on third party data, as well as assumptions related to prepayment speeds, default rates, funding cost, discount rates and other relevant market available inputs. In light of the volatility in the financial markets, we have reviewed our assumptions and determined that they reflect current market conditions. As a result, no significant adjustments to our assumptions were required during 2009.

During 2009, we recorded net unrealized losses of $39 million and net realized losses of $32 million on our loans held for sale portfolio. These net losses are reported in “net gains (losses) from loan securitizations and sales” on the income statement. We have not been significantly impacted by market volatility in the subprime mortgage lending industry, having exited this business in the fourth quarter of 2006.

Sales and securitizations

As market conditions allow, we continue to utilize alternative funding sources like loan sales to support our loan origination capabilities. In addition, certain acquisitions completed in past years have improved our ability to originate and sell new loans, and to service loans originated by others, especially in the area of commercial real estate.

As shown in Figure 20, during 2009, we sold $1.3 billion of commercial real estate loans, $1.5 billion of residential real estate loans, $303 million of commercial loans and $5 million of credit card loans. Most of these sales came from the held-for-sale portfolio. Additionally, we sold $474 million of education loans (included in “discontinued assets” on the balance sheet), which are excluded from Figure 20. Due to unfavorable market conditions, we have not securitized any education loans since 2006.

Among the factors that we consider in determining which loans to sell or securitize are:

t whether particular lending businesses meet established performance standards or fit with our relationship banking strategy;

t our A/LM needs;     

t whether the characteristics of a specific loan portfolio make it conducive to securitization;     

t the cost of alternative funding sources;     

t the level of credit risk;     

t capital requirements; and     

t market conditions and pricing.     

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Figure 20 summarizes our loan sales for 2009 and 2008.

Figure 20. Loans Sold (Including Loans Held for Sale)

					Commercial
			Commercial		Lease		Residential		Consumer
in millions	Commercial		Real Estate		Financing		Real Estate		Other		Total
2009
Fourth quarter	$	225	$	440		—	$	315	$	5	$	985
Third quarter		47		275		—		514		—		836
Second quarter		22		410		—		410		—		842
First quarter		9		192		—		302		—		503
Total	$	303	$	1,317		—	$	1,541	$	5	$	3,166	(a)
2008
Fourth quarter	$	10	$	580		—	$	222		—	$	812
Third quarter		11		699		—		197	$	9		916
Second quarter		19		761	$	38		213		—		1,031
First quarter		14		204		29		170		—		417
Total	$	54	$	2,244	$	67	$	802	$	9	$	3,176	(a)

(a) Excludes education loans of $474 million sold during 2009 and $121 million sold during 2008 that relate to the discontinued operations of the education lending business.

Figure 21 shows loans that are either administered or serviced by us, but not recorded on the balance sheet. The table includes loans that have been both securitized and sold, or simply sold outright.

Figure 21. Loans Administered or Serviced

December 31,
in millions	2009		2008		2007		2006		2005
Commercial real estate loans (a)	$	123,599	$	123,256	$	134,982	$	93,611	$	72,902
Education loans (b)		3,810		4,267		4,722		5,475		5,083
Home equity loans (c)		___		___		___		2,360		59
Commercial lease financing		649		713		790		479		354
Commercial loans		247		208		229		268		242
Total	$	128,305	$	128,444	$	140,723	$	102,193	$	78,640

(a)	We acquired the servicing for commercial mortgage loan portfolios with an aggregate principal balance of $7.2 billion during 2009, $1 billion during 2008, $45.5 billion during 2007 and $16.4 billion for 2006. During 2005, the acquisitions of Malone Mortgage Company and the commercial mortgage-backed securities servicing business of ORIX Capital Markets, LLC added more than $27.7 billion to our commercial mortgage servicing portfolio.
(b)	We adopted new accounting guidance on January 1, 2010, which required us to consolidate our education loan securitization trusts and resulted in the addition of approximately $2.8 billion of assets and liabilities to our balance sheet. Of this amount, $890 million of additional risk-weighted assets will be included in our risk-weighted assets under current federal banking regulations. Had this consolidation occurred on December 31, 2009, our Tier 1 risk-based capital ratio would have decreased by 13 basis points to 12.62%, and our Tier 1 common equity ratio would have declined by 8 basis points to 7.42%.
(c)	In November 2006, we sold the $2.5 billion subprime mortgage loan portfolio held by the Champion Mortgage finance business but continued to provide servicing through various dates in March 2007.

In the event of default by a borrower, we are subject to recourse with respect to approximately $729 million of the $128.3 billion of loans administered or serviced at December 31, 2009. Additional information about this recourse arrangement is included in Note 19 (“Commitments, Contingent Liabilities and Guarantees”) under the heading “Recourse agreement with FNMA.”

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We derive income from several sources when retaining the right to administer or service loans that are securitized or sold. We earn noninterest income (recorded as “other income”) from fees for servicing or administering loans. This fee income is reduced by the amortization of related servicing assets. In addition, we earn interest income from retained interests in securitized assets and from investing funds generated by escrow deposits collected in connection with the servicing of commercial real estate loans.

Maturities and sensitivity of certain loans to changes in interest rates

Figure 22 shows the remaining maturities of certain commercial and real estate loans, and the sensitivity of those loans to changes in interest rates. At December 31, 2009, approximately 41% of these outstanding loans were scheduled to mature within one year.

Figure 22. Remaining Maturities and Sensitivity of Certain Loans to Changes in
Interest Rates

December 31, 2009	Within		One - Five		Over
in millions	One Year		Years		Five Years		Total
Commercial, financial and agricultural	$	8,753	$	9,327	$	1,168	$	19,248
Real estate — construction		2,677		1,757		305		4,739
Real estate — residential and commercial mortgage		3,455		4,720		4,078		12,253
	$	14,885	$	15,804	$	5,551	$	36,240
Loans with floating or adjustable interest rates (a)			$	12,965	$	3,424	$	16,389
Loans with predetermined interest rates (b)				2,839		2,127		4,966
			$	15,804	$	5,551	$	21,355

(a)	Floating and adjustable rates vary in relation to other interest rates (such as the base lending rate) or a variable index that may change during the term of the loan.
(b)	Predetermined interest rates either are fixed or may change during the term of the loan according to a specific formula or schedule.

Securities

Our securities portfolio totaled $16.7 billion at December 31, 2009, compared to $8.3 billion at December 31, 2008. At each of these dates, most of our securities consisted of securities available for sale, with the remainder consisting of held-to-maturity securities of less than $30 million.

Securities available for sale

The majority of our securities available-for-sale portfolio consists of CMOs, which are debt securities that are secured by a pool of mortgages or mortgage-backed securities. CMOs generate interest income and serve as collateral to support certain pledging agreements. At December 31, 2009, we had $16.4 billion invested in CMOs and other mortgage-backed securities in the available-for-sale portfolio, compared to $8.1 billion at December 31, 2008.

As shown in Figure 23, all of our mortgage-backed securities are issued by government-sponsored enterprises or GNMA, and are traded in highly liquid secondary markets. We employ an outside bond pricing service to determine the fair value at which these securities should be recorded on the balance sheet. In performing the valuations, the pricing service relies on models that consider security-specific details, as well as relevant industry and economic factors. The most significant of these inputs are quoted market prices, interest rate spreads on relevant benchmark securities and certain prepayment assumptions. We review valuations derived from the models to ensure they are consistent with the values placed on similar securities traded in the secondary markets.

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Figure 23. Mortgage-Backed Securities by Issuer

December 31,
in millions	2009		2008		2007
Federal Home Loan Mortgage Corporation	$	7,485	$	4,719	$	4,566
Federal National Mortgage Association		4,433		3,002		2,748
Government National Mortgage Association		4,516		369		256
Total	$	16,434	$	8,090	$	7,570

During 2009, we had realized gains of $127 million and net unrealized losses of $16 million from CMOs and other mortgage-backed securities. Net realized gains include net gains of $125 million recorded in connection with the second quarter 2009 repositioning of our securities portfolio discussed below. The net unrealized losses resulted from an increase in market interest rates and were recorded in the AOCI component of shareholders’ equity.

We periodically evaluate our securities available-for-sale portfolio in light of established A/LM objectives, changing market conditions that could affect the profitability of the portfolio and the level of interest rate risk to which we are exposed. These evaluations may cause us to take steps to improve our overall balance sheet positioning.

In addition, the size and composition of our securities available-for-sale portfolio could vary with our needs for liquidity and the extent to which we are required (or elect) to hold these assets as collateral to secure public funds and trust deposits. Although we generally use debt securities for this purpose, other assets, such as securities purchased under resale agreements or letters of credit, are used occasionally when they provide a lower cost of collateral or more favorable risk profiles.

During May 2009, we sold approximately $2.8 billion of CMOs as part of our overall plan to generate additional capital required under the SCAP, and to reposition the securities available-for-sale portfolio to better support our strategies for managing interest rate and liquidity risk. The proceeds from the sale were reinvested in CMOs issued by government-sponsored entities and GNMA. Additional CMOs were purchased during the second quarter of 2009 to support our strategies for interest rate risk management, and improving overall balance sheet liquidity and access to secured funding sources. The repositioning improved our interest rate risk position by replacing the shorter-maturity CMOs sold with CMOs that have longer expected average maturities. The weighted-average maturity of our available-for-sale portfolio increased from 2.5 years at December 31, 2008, to 3.0 years at December 31, 2009. We continue to maintain a moderate asset-sensitive exposure to near-term changes in interest rates. As a result of the sale of CMOs, we recorded net realized gains of $125 million ($78 million after tax), which added to our Tier 1 common equity. These net gains were previously recorded in the AOCI component of shareholders’ equity.

During the second half of 2009, we purchased an additional $6.9 billion of CMOs issued by government-sponsored entities and GNMA. These purchases, as well as the second quarter 2009 repositioning, reduced our liquidity risk by increasing the amount of unencumbered, highly liquid securities in our portfolio. We are able to pledge these securities to the Federal Reserve or Federal Home Loan Bank for secured borrowing arrangements, sell them or enter into repurchase agreements should liquidity be required in the future.

Figure 24 shows the composition, yields and remaining maturities of our securities available for sale. For more information about these securities, including gross unrealized gains and losses by type of security and securities pledged, see Note 6 (“Securities”).

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Figure 24. Securities Available for Sale

										Other
	U.S. Treasury,			States and			Collateralized			Mortgage-									Weighted-			Retained
	Agencies and			Political			Mortgage			Backed			Other						Average			Interests in
dollars in millions	Corporations			Subdivisions			Obligations(a)			Securities(a)			Securities(b)			Total			Yield(c)			Securitizations(a),(e)
DECEMBER 31, 2009
Remaining maturity:
One year or less	$	3		$	1		$	865		$	3		$	11		$	883			4.95	%		—
After one through five years		2			10			14,141			1,296			103			15,552			3.71		$	56
After five through ten years		3			63			—			116			—			182			5.07			126
After ten years		—			9			—			13			2			24			5.88			—
Fair value	$	8		$	83		$	15,006		$	1,428		$	116		$	16,641			—		$	182
Amortized cost		8			81			14,894			1,351			100			16,434			3.79	%		173
Weighted-average yield (c)		2.29	%		5.85	%		3.69	%		4.87	%		5.37	% (d)		3.79	% (d)		—			14.70	%
Weighted-average maturity	3.8 years			7.5 years			3.0 years			3.6 years			2.0 years			3.0 years				—		4.9 years
DECEMBER 31, 2008
Fair value	$	10		$	91		$	6,523		$	1,567		$	55		$	8,246			—		$	191
Amortized cost		9			90			6,380			1,505			71			8,055			4.92	%		162
DECEMBER 31, 2007
Fair value	$	19		$	10		$	6,167		$	1,403		$	76		$	7,675			—		$	185
Amortized cost		19			10			6,167			1,393			72			7,661			4.94	%		149

(a)	Maturity is based upon expected average lives rather than contractual terms.
(b)	Includes primarily marketable equity securities.
(c)	Weighted-average yields are calculated based on amortized cost. Such yields have been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.
(d)	Excludes $113 million of securities at December 31, 2009, that have no stated yield.
(e)	Included in “discontinued assets” on the balance sheet.

Held-to-maturity securities

Foreign bonds, capital securities and preferred equity securities constitute most of our held-to-maturity securities. Figure 25 shows the composition, yields and remaining maturities of these securities.

Figure 25. Held-to-Maturity Securities

	States and									Weighted
	Political			Other						Average
dollars in millions	Subdivisions			Securities			Total			Yield(a)
DECEMBER 31, 2009
Remaining maturity:
One year or less	$	1		$	4		$	5			3.28	%
After one through five years		2			17			19			4.26
Amortized cost	$	3		$	21		$	24			3.97	%
Fair value		3			21			24			—
Weighted-average yield		8.59	%		2.83	% (b)		3.97	% (b)		—
Weighted-average maturity	1.4 years			2.2 years			2.0 years				—
DECEMBER 31, 2008
Amortized cost	$	4		$	21		$	25			4.34	%
Fair value		4			21			25			—
DECEMBER 31, 2007
Amortized cost	$	9		$	19		$	28			6.84	%
Fair value		9			19			28			—

(a)	Weighted-average yields are calculated based on amortized cost. Such yields have been adjusted to a taxable-equivalent basis using the statutory federal income tax rate of 35%.
(b)	Excludes $8 million of securities at December 31, 2009, that have no stated yield.

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Other investments

Most of our other investments are not traded on an active market. We determine the fair value at which these investments should be recorded based on the nature of the specific investment and all available relevant information. Among other things, our review may encompass such factors as the issuer’s past financial performance and future potential, the values of public companies in comparable businesses, the risks associated with the particular business or investment type, current market conditions, the nature and duration of resale restrictions, the issuer’s payment history, our knowledge of the industry and third party data. During 2009, net losses from our principal investing activities totaled $4 million, which includes $14 million of net unrealized gains. These net losses are recorded as “net gains (losses) from principal investing” on the income statement. Additional information pertaining to our other investments is presented in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Other Investments.”

Deposits and other sources of funds

Domestic deposits are our primary source of funding. During 2009, these deposits averaged $66.2 billion, and represented 78% of the funds we used to support loans and other earning assets, compared to $61.5 billion and 71% for 2008, and $57.2 billion and 72% for 2007. The composition of our deposits is shown in Figure 9 in the section entitled “Net interest income.”

The increase in average domestic deposits during 2009 was due to growth in certificates of deposit of $100,000 or more, other time deposits and noninterest-bearing deposits, offset in part by a decline in NOW and money market deposit accounts. This change in the composition of domestic deposits was attributable to two primary factors:

¨ Competition for deposits in the markets in which we operate remained strong, and consumer preferences shifted to higher-yielding certificates of deposit from NOW and money market deposit accounts as a result of the declining interest rate environment. However, during the second half of 2009, we began to benefit from lower funding costs as higher costing certificates of deposit originated in the prior year began to mature and repriced to current market rates. In 2010, we expect to realize additional benefits from the repricing of maturing certificates of deposit.

¨ Our corporate clients focused on reducing their transaction service charges by maintaining higher balances in their noninterest-bearing deposit accounts, especially in light of the low interest rate environment. The higher balances in these accounts also reflect new FDIC rules that temporarily provide for full insurance coverage for qualifying noninterest-bearing deposit accounts in excess of the current standard maximum deposit insurance amount of $250,000. More specific information regarding this extended insurance coverage is included in the “Capital” section under the heading “Temporary Liquidity Guarantee Program.”

Purchased funds, consisting of deposits in our foreign office and short-term borrowings, averaged $4.3 billion during 2009, compared to $12.3 billion during 2008 and $11 billion during 2007. The reduction from 2008 to 2009 is comprised of a $2.7 billion decrease in foreign office deposits, a $4 billion decline in bank notes and other short-term borrowings, and a $1.2 billion reduction in federal funds purchased and securities sold under agreements to repurchase. During 2008, we used purchased funds more heavily to accommodate borrowers’ increased reliance on commercial lines of credit in the volatile capital markets environment in which the availability of long-term funding had been restricted. During 2009, we reduced our reliance on wholesale funding, which was facilitated by improved liquidity for borrowers in the commercial paper market and a reduction in the demand for commercial lines of credit.

Substantially all of our domestic deposits are insured up to applicable limits by the FDIC. Accordingly, we are subject to deposit insurance premium assessments by the FDIC. Under current law, the FDIC is required to maintain the DIF reserve ratio within the range of 1.15% to 1.50% of estimated insured deposits. Current law also requires the FDIC to implement a restoration plan when it determines that the DIF reserve ratio has fallen, or will fall within six months, below 1.15% of estimated insured deposits. As

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of March 31, 2009, the DIF reserve ratio was .27%. Consequently, the FDIC has established a restoration plan under which all depository institutions, regardless of risk, paid a $.07 additional annualized deposit insurance assessment on June 30, 2009, for each $100 of assessable domestic deposits as of March 31, 2009. Under a final rule approved in May 2009, the FDIC also imposed on all insured depository institutions a special assessment equal to five basis points of total assets less Tier 1 capital as of June 30, 2009, not to exceed ten basis points of assessable domestic deposits as of that date. Our second quarter 2009 special assessment totaled $44 million and was paid on September 30, 2009.

Additionally, effective April 1, 2009, under a revised risk-based assessment system, which is being implemented as part of the FDIC’s restoration plan, annualized deposit insurance assessments for all insured depository institutions will range from $.07 to $.775 for each $100 of assessable domestic deposits as of June 30, 2009, and quarterly thereafter, based on the institution’s risk category, which, under the revised risk-based assessment program is determined and assessed on a quarterly basis by the FDIC. In addition to these assessments, an annualized fee of ten basis points has been assessed on qualifying noninterest-bearing transaction account balances in excess of $250,000 in conjunction with the Transaction Account Guarantee component of the FDIC’s TLGP discussed in the “Capital” section under the heading “Temporary Liquidity Guarantee Program.”

As a result of the above developments, our total FDIC deposit insurance assessment increased by $167 million from 2008 to 2009.

On November 17, 2009, the FDIC published a final rule to announce an amended DIF restoration plan requiring depository institutions, such as KeyBank, to prepay, on December 30, 2009, their estimated quarterly risk-based assessments for the third and fourth quarters of 2009 and for all of 2010, 2011 and 2012. On that date, KeyBank paid the FDIC $539 million to cover the insurance assessments for those time periods.

At December 31, 2009, Key had $11.7 billion in time deposits of $100,000 or more. Figure 26 shows the maturity distribution of these deposits.

Figure 26. Maturity Distribution of Time Deposits of $100,000 or More

December 31, 2009	Domestic		Foreign
in millions	Offices		Office		Total
Remaining maturity:
Three months or less	$	2,267	$	768	$	3,035
After three through six months		4,261		—		4,261
After six through twelve months		2,798		—		2,798
After twelve months		1,628		—		1,628
Total	$	10,954	$	768	$	11,722

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Capital

At December 31, 2009, our shareholders’ equity was $10.7 billion, up $183 million from December 31, 2008. Certain factors that contributed to the change in our shareholders’ equity over the past three years are discussed below. For other factors that contributed to the change, see the statement of changes in equity.

Supervisory Capital Assessment Program and our capital-generating activities

During 2009, we took several actions to further strengthen our capital position in connection with the results of the SCAP assessment, which required us to generate $1.8 billion of additional Tier 1 common equity. These actions included an “at-the-market” offering of common shares, a Series A Preferred Stock exchange offer for common shares, an institutional capital securities exchange offer for common shares, a retail capital securities exchange offer for common shares, the sale of certain securities, and a reduction of dividend and interest obligations on the exchanged securities. More specific information on the SCAP assessment and the related actions we have taken to raise capital is included in Note 15 (“Shareholders’ Equity”).

We have complied with the requirements of the SCAP assessment, generating total Tier 1 common equity in excess of $2.4 billion. Successful completion of our 2009 capital transactions has strengthened our capital framework, having improved KeyCorp’s Tier 1 common equity ratio, which will benefit us in the event that economic conditions worsen or any recovery of economic conditions is delayed.

Preferred stock private exchanges

During 2009, we entered into agreements with certain institutional shareholders who had contacted us to exchange Series A Preferred Stock held by the institutional shareholders for common shares. More specific information on these preferred stock exchanges is included in Note 15.

Dividends

During 2009, we made four quarterly dividend payments aggregating $125 million to the U.S. Treasury on our Series B Preferred Stock as a participant in the U.S. Treasury’s CPP.

In May 2009, the Board resolved to reduce our quarterly dividend on common shares to $.01 per share ($.04 annualized) from $.0625 per share ($.25 annualized), commencing in the second quarter of 2009.

Common shares outstanding

Our common shares are traded on the New York Stock Exchange under the symbol KEY. At December 31, 2009:

¨ Book value per common share was $9.04, based on 878.5 million shares outstanding, compared to $14.97, based on 495.0 million shares outstanding, at December 31, 2008.

¨ Tangible book value per common share was $7.94, compared to $12.41 at December 31, 2008.

¨ There were 36,057 holders of record of our common shares at December 31, 2009.

Figure 44 in the section entitled “Fourth Quarter Results” shows the market price ranges of our common shares, per common share earnings and dividends paid by quarter for each of the last two years.

Figure 27 compares the price performance of our common shares (based on an initial investment of $100 on December 31, 2004, and assuming reinvestment of dividends) with that of the Standard & Poor’s 500 Index and a group of other banks that constitute our peer group. The peer group consists of the banks that make up the Standard & Poor’s 500 Regional Bank Index and the banks that make up the Standard & Poor’s 500 Diversified Bank Index. We are included in the Standard & Poor’s 500 Index and the peer group.

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Figure 27. Common Share Price Performance (2004-2009) ^(a)

(a) Share price performance is not necessarily indicative of future price performance.

Figure 28 shows activities that caused the change in outstanding common shares over the past two years.

Figure 28. Changes in Common Shares Outstanding

			2009 Quarters
in thousands	2009		Fourth			Third		Second		First		2008
Shares outstanding at beginning of period		495,002		878,559			797,246		498,573		495,002		388,793
Common shares exchanged for capital securities		127,616		—			81,278		46,338		—		—
Common shares exchanged for Series A Preferred Stock		46,602		—			—		46,602		—		—
Common shares issued		205,439		—			—		205,439		—		92,172
Shares reissued (returned) under employee benefit plans		3,876		(24	)		35		294		3,571		4,142
Shares reissued to acquire U.S.B. Holding Co., Inc.		—		—			—		—		—		9,895
Shares outstanding at end of period		878,535		878,535			878,559		797,246		498,573		495,002

As shown above, common shares outstanding increased by 383.5 million shares during 2009, due primarily to the capital-generating activities discussed previously.

At December 31, 2009, we had 67.8 million treasury shares, compared to 89.1 million treasury shares at December 31, 2008. During 2009, we reissued treasury shares in connection with the Series A Preferred Stock private exchanges. We expect to reissue treasury shares as needed in connection with stock-based compensation awards and for other corporate purposes.

We repurchase common shares periodically in the open market or through privately negotiated transactions under a repurchase program authorized by the Board of Directors. The program does not have an expiration date, and we have outstanding Board authority to repurchase 14.0 million shares. We did not repurchase any common shares during 2009. Further, in accordance with the terms of our participation in the CPP, until the earlier of three years after the issuance of, or such time as the U.S. Treasury no longer holds, any Series B Preferred Stock issued by us under that program, we will not be able to repurchase any of our common shares without the approval of the U.S. Treasury, subject to certain limited exceptions (e.g., for purchases in connection with benefit plans).

Adoption of new accounting standards

The requirement under the applicable accounting guidance for defined benefit and other postretirement plans to measure plan assets and liabilities as of the end of the fiscal year became effective for the year ended December 31, 2008. In years prior to 2008, we used a September 30 measurement date. As a result of this accounting change, we recorded an after-tax charge of $7 million to the retained earnings component of our shareholders’ equity during 2008.

Effective January 1, 2007, we adopted the applicable accounting guidance related to a change or projected change in the timing of cash flows relating to income taxes generated by a leveraged lease transaction.

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This guidance affects when earnings from leveraged lease financing transactions will be recognized, and requires a lessor to recalculate its recognition of lease income when there are changes or projected changes in the timing of cash flows. As a result of adopting this guidance, we recorded a cumulative after-tax charge of $52 million to retained earnings during 2007.

Capital availability and management

As a result of market disruptions, the availability of capital (principally to financial services companies) has become severely restricted. While some companies, like ours, have been successful in raising additional capital, lower market prices per share have increased the dilution of our per common share results. We cannot predict when or if the markets will return to more favorable conditions.

We determine how capital is to be strategically allocated among our businesses to maximize returns and strengthen core relationship businesses. In that regard, we will continue to emphasize our relationship strategy.

Capital adequacy

Capital adequacy is an important indicator of financial stability and performance. All of our capital ratios remain strong at December 31, 2009. This, along with our improved liquidity, positions us well to weather the current credit cycle and to continue to serve our clients’ needs. Our Key shareholders’ equity to assets ratio was 11.43% at December 31, 2009, compared to 10.03% at December 31, 2008. Our tangible common equity to tangible assets ratio was 7.56% at December 31, 2009, compared to 5.95% at December 31, 2008.

Banking industry regulators prescribe minimum capital ratios for bank holding companies and their banking subsidiaries. Federal bank regulators group FDIC-insured depository institutions into five categories, ranging from “critically undercapitalized” to “well capitalized.” KeyCorp’s affiliate bank, KeyBank, qualified as “well capitalized” at December 31, 2009, since it exceeded the prescribed thresholds of 10.00% for total capital, 6.00% for Tier 1 capital and 5.00% for the leverage ratio. If these provisions applied to bank holding companies, we would qualify as “well capitalized” at December 31, 2009. The FDIC-defined capital categories serve a limited supervisory function. Investors should not treat them as a representation of the overall financial condition or prospects of KeyCorp or KeyBank. See Note 15 for a summary of the implications of failing to meet the minimum capital requirements.

Risk-based capital guidelines require a minimum level of capital as a percent of “risk-weighted assets.” Risk-weighted assets consist of total assets plus certain off-balance sheet items, subject to adjustment for predefined credit risk factors. Currently, banks and bank holding companies must maintain, at a minimum, Tier 1 capital as a percent of risk-weighted assets of 4.00% and total capital as a percent of risk-weighted assets of 8.00%. As of December 31, 2009, our Tier 1 risk-based capital ratio was 12.75%, and our total risk-based capital ratio was 16.95%.

Another indicator of capital adequacy, the leverage ratio, is defined as Tier 1 capital as a percentage of average quarterly tangible assets. Leverage ratio requirements vary with the condition of the financial institution. Bank holding companies that either have the highest supervisory rating or have implemented the Federal Reserve’s risk-adjusted measure for market risk — as we have — must maintain a minimum leverage ratio of 3.00%. All other bank holding companies must maintain a minimum ratio of 4.00%. As of December 31, 2009, we had a leverage ratio of 11.72%.

Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and composition of capital, the calculation of which is prescribed in federal banking regulations. As a result of the SCAP, the Federal Reserve has intensified its assessment of capital adequacy on a component of Tier 1 capital, known as Tier 1 common equity. Because the Federal Reserve has long indicated that voting common shareholders’ equity (essentially Tier 1 capital less preferred stock, qualifying capital securities and noncontrolling interests in subsidiaries) generally should be the dominant element in Tier 1 capital, such a focus is consistent with existing capital adequacy guidelines and does not

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imply a new or ongoing capital standard. Because Tier 1 common equity is neither formally defined by GAAP nor prescribed in amount by federal banking regulations, this measure is considered to be a non-GAAP financial measure. Figure 5 in the “Highlights of Our 2009 Performance” section reconciles Key shareholders’ equity, the GAAP performance measure, to Tier 1 common equity, the corresponding non-GAAP measure. Our Tier 1 common equity ratio was 7.50% at December 31, 2009, compared to 5.62% at December 31, 2008.

As discussed in Note 1 (“Summary of Significant Accounting Policies”), we adopted new guidance on January 1, 2010, will require us to consolidated our education loan securitization trusts (which will be classified as discontinued operations), thereby adding approximately $2.8 billion of assets and liabilities to our balance sheet. In accordance with federal banking regulations, the consolidated will add approximately $890 million to our net risk-weighted assets. Had the consolidation taken effect on December 31, 2009, this would have reduced our Tier 1 risk-based capital ratio at that date by 13 basis points to 12.62% and our Tier 1 common equity ratio by 8 basis points to 7.42%.

At December 31, 2009, we had a net deferred tax asset of $577 million; in recent years, we had been in a net deferred tax liability position. Generally, for risk-based capital purposes, deferred tax assets that are dependent upon future taxable income are limited to the lesser of: (i) the amount of deferred tax assets that a financial institution expects to realize within one year of the calendar quarter-end date, based on its projected future taxable income for the year, or (ii) 10% of the amount of an institution’s Tier 1 capital. Based on these restrictions, at December 31, 2009, $514 million of our net deferred tax asset was deducted from Tier 1 capital and risk-weighted assets. We anticipate that the amount of our net deferred tax asset disallowed for risk-based capital purposes will increase in coming quarters until we begin to generate taxable income and, as a result, will continue to adversely impact our risk-based capital ratios.

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Figure 29 presents the details of our regulatory capital position at December 31, 2009 and 2008:

Figure 29. Capital Components and Risk-Weighted Assets

December 31,
dollars in millions	2009			2008
TIER 1 CAPITAL
Key shareholders’ equity	$	10,663		$	10,480
Qualifying capital securities		1,791			2,582
Less: Goodwill (a)		917			1,138
Accumulated other comprehensive income (b)		(48	)		76
Other assets (c)		632			203
Total Tier 1 capital		10,953			11,645
TIER 2 CAPITAL
Allowance for losses on loans and liability for losses on
lending-related commitments (d)		1,112			1,352
Net unrealized gains on equity securities available for sale		7			—
Qualifying long-term debt		2,486			2,819
Total Tier 2 capital		3,605			4,171
Total risk-based capital	$	14,558		$	15,816
TIER 1 COMMON EQUITY
Tier 1 capital	$	10,953		$	11,645
Less: Qualifying capital securities		1,791			2,582
Series B Preferred Stock		2,430			2,414
Series A Preferred Stock		291			658
Total Tier 1 common equity	$	6,441		$	5,991
RISK-WEIGHTED ASSETS
Risk-weighted assets on balance sheet	$	70,485		$	84,922
Risk-weighted off-balance sheet exposure		18,118			22,979
Less: Goodwill (a)		917			1,138
Other assets (c)		1,308			1,162
Plus: Market risk-equivalent assets		1,203			1,589
Gross risk-weighted assets		87,581			107,190
Less: Excess allowance for loan losses (d)		1,700			505
Net risk-weighted assets	$	85,881		$	106,685
AVERAGE QUARTERLY TOTAL ASSETS	$	95,697		$	107,639
CAPITAL RATIOS
Tier 1 risk-based capital		12.75	%		10.92	%
Total risk-based capital		16.95			14.82
Leverage (e)		11.72			11.05
Tier 1 common equity		7.50			5.62

(a)	Goodwill includes $25 million at December 31, 2008, classified as “discontinued assets” on the balance sheet.
(b)	Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities), net gains or losses on cash flow hedges, and amounts resulting from our December 31, 2006, adoption and subsequent application of the applicable accounting guidance for defined benefit and other postretirement plans.
(c)	Other assets deducted from Tier 1 capital and risk-weighted assets consist of disallowed deferred tax assets of $514 million at December 31, 2009, disallowed intangible assets (excluding goodwill) and deductible portions of nonfinancial equity investments.
(d)	The allowance for loan losses included in Tier 2 capital is limited by regulation to 1.25% of the sum of gross risk-weighted assets plus low level exposures and residual interests calculated under the direct reduction method, as defined by the Federal Reserve. The excess allowance for loan losses includes $157 million and $174 million at December 31, 2009 and 2008, respectively, of allowance classified as “discontinued assets” on the balance sheet.
(e)	This ratio is Tier 1 capital divided by average quarterly total assets as defined by the Federal Reserve less: (i) goodwill, (ii) the disallowed intangible assets described in footnote (c), and (iii) deductible portions of nonfinancial equity investments; plus assets derecognized as an offset to AOCI resulting from the adoption and subsequent application of the applicable accounting guidance for defined benefit and other postretirement plans.

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Emergency Economic Stabilization Act of 2008

On October 3, 2008, former President Bush signed into law the EESA. The TARP provisions of the EESA provide broad authority to the Secretary of the U.S. Treasury to restore liquidity and stability to the United States financial system, including the authority to purchase up to $700 billion of “troubled assets” — mortgages, mortgage-backed securities and certain other financial instruments. While the key feature of TARP provides the Treasury Secretary the authority to purchase and guarantee types of troubled assets, other programs have emerged out of the authority and resources authorized by the EESA, as follows:

The TARP Capital Purchase Program. Under the CPP, in November 2008, we raised $2.5 billion of additional capital, including $2.4 billion, or 25,000 shares, of fixed-rate cumulative perpetual preferred stock, Series B (“Series B Preferred Stock”), with a liquidation preference of $100,000 per share, which was purchased by the U.S. Treasury. We also granted a warrant to purchase 35.2 million common shares to the U.S. Treasury at a fair value of $87 million in conjunction with this program. Terms and conditions of the program are available at the U.S. Treasury website, www.ustreas.gov/initiatives/eesa. Currently, bank holding companies that issue preferred stock to the U.S. Treasury under the CPP are permitted to include such capital instruments in Tier 1 capital for purposes of the Federal Reserve’s risk-based and leverage capital rules, and guidelines for bank holding companies.

FDIC’s standard maximum deposit insurance coverage limit increase. The EESA, as amended by the Helping Families Save Their Homes Act of 2009, provides for a temporary increase in the FDIC standard maximum deposit insurance coverage limit for all deposit accounts from $100,000 to $250,000. This temporary increase expires on December 31, 2013.

Temporary Liquidity Guarantee Program

On October 14, 2008, the FDIC announced its TLGP to strengthen confidence and encourage liquidity in the banking system. Under the FDIC’s Final Rule, 12 C.F.R. 370, as amended, the TLGP has two components: (i) a “Transaction Account Guarantee” for funds held at FDIC-insured depository institutions in noninterest-bearing transaction accounts in excess of the current standard maximum deposit insurance amount of $250,000, and (ii) a “Debt Guarantee” for qualifying newly issued senior unsecured debt of insured depository institutions, their holding companies and certain other affiliates of insured depository institutions designated by the FDIC for debt issued until October 31, 2009.

On September 1, 2009, a final rule published in the Federal Register announced the FDIC’s extension of the transaction account guarantee component of the TLGP for a period of six months until June 30, 2010, for those institutions currently participating in this program. Institutions that elect to participate in the extension will experience an increase in their quarterly annualized fee from 10 basis points to between 15 and 25 basis points based on their risk rating. On November 2, 2009, KeyBank chose to continue its participation in the program. We anticipate a certain amount of deposit run-off upon the expiration of the Transaction Account Guarantee. We have established a liquidity buffer in anticipation of the expiration and, as a result, do not expect it to have a significant effect on liquidity.

Under the Debt Guarantee, debt issued prior to April 1, 2009, is guaranteed until the earlier of maturity or June 30, 2012. Pursuant to an Interim Rule effective March 23, 2009, all insured depository institutions and other participating entities that have issued guaranteed debt before April 1, 2009, may issue FDIC-guaranteed debt during the extended issuance period that ends on October 31, 2009. The guarantee on such debt will expire no later than December 31, 2012. On March 16, 2009, KeyCorp issued $438 million of floating-rate senior notes due April 16, 2012, under the Debt Guarantee. This brings the aggregate amount of debt issued by KeyCorp and KeyBank under the TLGP to $1.9 billion.

In October 2009, the FDIC adopted a final rule for concluding the debt guarantee component of the TLGP. Under the final rule, qualifying financial institutions were permitted to issue FDIC-guaranteed debt until October 31, 2009, with the FDIC’s guarantee expiring no later than December 31, 2012. However, the FDIC has established a limited emergency guarantee facility that permits insured depository institutions and certain other participating entities that have issued FDIC-guaranteed debt under the TLGP by September 9, 2009, to apply to the FDIC to issue FDIC-guaranteed debt for an additional six months (i.e., the FDIC will guarantee senior unsecured debt issued on or before April 30, 2010). We have no plans to issue any additional debt under the TLGP.

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Financial Stability Plan

On February 10, 2009, the U.S. Treasury announced its FSP to alleviate uncertainty, restore confidence, and address liquidity and capital constraints. The primary components of the FSP are the CAP, including the SCAP, the TALF, the PPIP, the Affordable Housing and Foreclosure Mitigation Efforts Initiative, and the Small Business and Community Lending Initiative designed to increase lending to small businesses.

Capital Assistance Program. As part of the U.S. government’s FSP, on February 25, 2009, the U.S. Treasury announced its CAP, which is designed to: (i) restore confidence throughout the financial system by ensuring that the largest U.S. banking institutions have sufficient capital to absorb higher than anticipated potential future losses that could occur as a result of a more severe economic environment; and (ii) support lending to creditworthy borrowers.

To implement the U.S. Treasury’s CAP, the Federal Reserve, the Federal Reserve Banks, the FDIC, and the Office of the Comptroller of the Currency commenced a review — the SCAP — of the capital of the nineteen largest U.S. banking institutions. The SCAP involved a mandatory forward-looking capital assessment, or “stress test,” of all domestic bank holding companies with risk-weighted assets of more than $100 billion, including KeyCorp, at December 31, 2008. The SCAP was intended to estimate 2009 and 2010 credit losses, revenues and reserve needs for each of these bank holding companies under a macroeconomic scenario that reflects a consensus expectation for the depth and duration of the recession, and a “more adverse than expected” scenario that reflects the possibility of a longer, more severe recession than the so-called “consensus expectation.” Based on the results of the SCAP review, regulators made a determination as to the extent to which a bank holding company would need to augment its capital, by raising additional capital, effecting a change in the composition of its capital, or both. The purpose of the SCAP was to ensure that the institutions reviewed have sufficient capital to absorb higher than anticipated potential future losses and remain sufficiently capitalized over the next two years to facilitate lending to creditworthy borrowers should the “more adverse than expected” macroeconomic scenario become a reality. The CAP also provided eligible U.S. financial institutions with assets of more than $100 billion with access to U.S. Treasury capital to fill any shortfall in capital raised to meet the SCAP requirement. Additional information related to the SCAP is available on the Federal Reserve Board website, www.federalreserve.gov.

As announced on May 7, 2009, under the SCAP assessment, our regulators determined that we needed to generate $1.8 billion in additional Tier 1 common equity or contingent common equity (i.e., mandatorily convertible preferred shares). As required by SCAP, we submitted a comprehensive capital plan to the Federal Reserve Bank of Cleveland on June 1, 2009, describing our action plan for raising the required amount of additional Tier 1 common equity from nongovernmental sources. We have complied with the requirements of the SCAP assessment, generating total Tier 1 common equity in excess of $2.4 billion. The steps outlined in our capital plan include the capital-generating activities summarized earlier in this capital discussion.

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Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Off-balance sheet arrangements

We are party to various types of off-balance sheet arrangements, which could lead to contingent liabilities or risks of loss that are not reflected on the balance sheet.

Variable interest entities

A VIE is a partnership, limited liability company, trust or other legal entity that meets any one of the following criteria:

¨ The entity does not have sufficient equity to conduct its activities without additional subordinated financial support from another party.

¨ The entity’s investors lack the authority to make decisions about the activities of the entity through voting rights or similar rights, and do not have the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual returns.

¨ The voting rights of some investors are not proportional to their economic interest in the entity, and substantially all of the entity’s activities involve or are conducted on behalf of investors with disproportionately few voting rights.

In accordance with the applicable accounting guidance for consolidations, we consolidate a VIE if we have a variable interest in the entity and are exposed to the majority of its expected losses and/or residual returns (i.e., we are considered to be the primary beneficiary). Additional information regarding the nature of VIEs and our involvement with them is included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Basis of Presentation” and Note 9 (“Variable Interest Entities”).

We use the equity method to account for unconsolidated investments in voting rights entities or VIEs if we have significant influence over the entity’s operating and financing decisions (usually defined as a voting or economic interest of 20% to 50%, but not controlling). Unconsolidated investments in voting rights entities or VIEs in which we have a voting or economic interest of less than 20% generally are carried at cost. Investments held by our registered broker-dealer and investment company subsidiaries (primarily principal investments) are carried at fair value.

Loan securitizations

A securitization involves the sale of a pool of loan receivables indirectly to investors through either a public or private issuance (generally by a QSPE) of asset-backed securities. Generally, the assets are transferred to a trust which then sells bond and other interests in the form of certificates of ownership. Due to unfavorable market conditions, we have not securitized any education loans since 2006.

Additional information pertaining to our retained interests in loan securitizations is summarized in Note 1 under the heading “Loan Securitizations,” Note 6 (“Securities”) and Note 8 (“Loan Securitizations and Mortgage Servicing Assets”) under the heading “Retained Interests in Loan Securitizations.”

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Commitments to extend credit or funding

Loan commitments provide for financing on predetermined terms as long as the client continues to meet specified criteria. These commitments generally carry variable rates of interest and have fixed expiration dates or other termination clauses. We typically charge a fee for our loan commitments. Since a commitment may expire without resulting in a loan or being fully utilized, the total amount of an outstanding commitment may significantly exceed any related cash outlay. Further information about our loan commitments at December 31, 2009, is presented in Note 19 (“Commitments, Contingent Liabilities and Guarantees”) under the heading “Commitments to Extend Credit or Funding.” Figure 30 shows the remaining contractual amount of each class of commitment to extend credit or funding. For loan commitments and commercial letters of credit, this amount represents our maximum possible accounting loss if the borrower were to draw upon the full amount of the commitment and then default on payment for the total amount of the then outstanding loan.

Other off-balance sheet arrangements

Other off-balance sheet arrangements include financial instruments that do not meet the definition of a guarantee in accordance with the applicable accounting guidance, and other relationships, such as liquidity support provided to asset-backed commercial paper conduits, indemnification agreements and intercompany guarantees. Information about such arrangements is provided in Note 19 under the heading “Other Off-Balance Sheet Risk.”

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Contractual obligations

Figure 30 summarizes our significant contractual obligations, and lending-related and other off-balance sheet commitments at December 31, 2009, by the specific time periods in which related payments are due or commitments expire.

Figure 30. Contractual Obligations and Other Off-Balance Sheet Commitments

			After		After
December 31, 2009	Within		1 through		3 through		After
in millions	1 year		3 years		5 years		5 years		Total
Contractual obligations: (a)
Deposits with no stated maturity	$	40,563		—		—		—	$	40,563
Time deposits of $100,000 or more		8,018	$	2,814	$	710	$	180		11,722
Other time deposits		9,174		2,891		1,038		183		13,286
Federal funds purchased and securities sold under repurchase agreements		1,742		—		—		—		1,742
Bank notes and other short-term borrowings		340		—		—		—		340
Long-term debt		1,506		4,585		1,632		3,835		11,558
Noncancelable operating leases		119		210		182		350		861
Liability for unrecognized tax benefits		21		—		—		—		21
Purchase obligations:
Banking and financial data services		56		55		2		—		113
Telecommunications		44		30		3		—		77
Professional services		33		4		—		—		37
Technology equipment and software		29		26		4		1		59
Other		14		5		—		—		20
Total purchase obligations		176		120		9		1		306
Total	$	61,659	$	10,620	$	3,571	$	4,549	$	80,399
Lending-related and other off-balance sheet commitments:
Commercial, including real estate	$	11,082	$	8,309	$	1,038	$	462	$	20,891
Home equity		105		324		585		6,952		7,966
When-issued and to-be-announced securities commitments		—		—		—		190		190
Commercial letters of credit		113		11		—		—		124
Principal investing commitments		15		15		29		189		248
Liabilities of certain limited partnerships and other commitments		18		2		24		145		189
Total	$	11,333	$	8,661	$	1,676	$	7,938	$	29,608

(a) Deposits and borrowings exclude interest.

Guarantees

We are a guarantor in various agreements with third parties. As guarantor, we may be contingently liable to make payments to the guaranteed party based on changes in a specified interest rate, foreign exchange rate or other variable (including the occurrence or nonoccurrence of a specified event). These variables, known as underlyings, may be related to an asset or liability, or another entity’s failure to perform under a contract. Additional information regarding these types of arrangements is presented in Note 19 under the heading “Guarantees.”

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Risk Management

Overview

Like all financial services companies, we engage in business activities and assume the related risks. The most significant risks we face are credit, liquidity, market, compliance, operational, strategic and reputation risks. We must properly and effectively identify, assess, measure, monitor, control and report such risks across the entire enterprise in order to maintain safety and soundness and maximize profitability. Certain of these risks are defined and discussed in greater detail in the remainder of this section.

During 2009, our management team reevaluated our ERM capabilities, and developed our ERM Program. The ERM Committee, which consists of the Chief Executive Officer and his direct reports, is responsible for managing risk and ensuring that the corporate risk profile is managed in a manner consistent with our risk appetite. The Program encompasses our risk philosophy, policy, framework and governance structure for the management of risks across the entire company. The ERM Committee reports to the Risk Management Committee discussed below. The Board of Directors approves the ERM Program, as well as the risk appetite and corporate risk tolerances for major risk categories. We continue to enhance our ERM Program and related practices and to use a risk-adjusted capital framework to manage risks. This framework is approved and managed by the ERM Committee.

Our Board of Directors serves in an oversight capacity with the objective of managing our enterprise-wide risks in a manner that is effective, balanced and adds value for the shareholders. The Board inquires about risk practices, reviews the portfolio of risks, compares actual risks to the risk appetite and tolerances, and receives regular reports about significant risks — both actual and emerging. To assist in these efforts, the Board has delegated primary oversight responsibility for risk to the Audit Committee and Risk Management Committee.

The Audit Committee has oversight responsibility for internal audit; financial reporting; compliance and legal matters; the implementation, management and evaluation of operational risk and controls; information security and fraud risk; and evaluating the qualifications and independence of the independent auditors. The Audit Committee discusses policies related to risk assessment and risk management and the processes related to risk review and compliance.

The Risk Management Committee has responsibility for overseeing the management of credit risk, market risk, interest rate risk and liquidity risk (including the actions taken to mitigate these risks), as well as reputational risk and strategic risk. The Risk Management Committee also oversees the maintenance of appropriate regulatory and economic capital. The Risk Management Committee reviews the ERM reports and, in conjunction with the Audit Committee, annually reviews reports of material changes to the Operational Risk Committee and Compliance Risk Committee charters, and annually approves any material changes to the charter of the ERM Committee and other subordinate risk committees.

The Audit and Risk Management Committees meet jointly, as appropriate, to discuss matters that relate to each committee’s responsibilities. In addition to regularly scheduled bi-monthly meetings, the Audit Committee convenes to discuss the content of our financial disclosures and quarterly earnings releases. Committee chairpersons routinely meet with management during interim months to plan agendas for upcoming meetings and to discuss emerging trends and events that have transpired since the preceding meeting. All members of the Board receive formal reports designed to keep them abreast of significant developments during the interim months.

Consistent with the SCAP assessment, federal banking regulators are reemphasizing with financial institutions the importance of relating capital management strategy to the level of risk at each institution. We believe our internal risk management processes help us achieve and maintain capital levels that are commensurate with our business activities and risks, and comport with regulatory expectations. To further enhance our risk management and adequacy processes, management, together with our Board of Directors, engaged in a comprehensive review of policies and practices, and is implementing a number of enhancements. Among other things, we are refining appropriate risk tolerances, enhancing early warning

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risk triggers, and modifying contingency planning pertaining to risk and capital. In addition, we continue to refine corporate risk governance and reporting so that risks are more readily identified, assessed and managed.

Market risk management

The values of some financial instruments vary not only with changes in market interest rates but also with changes in foreign exchange rates. Financial instruments also are susceptible to factors influencing valuations in the equity securities markets and other market-driven rates or prices. For example, the value of a fixed-rate bond will decline if market interest rates increase. Similarly, the value of the U.S. dollar regularly fluctuates in relation to other currencies. The holder of a financial instrument faces “market risk” when the value of the instrument is tied to such external factors. Most of our market risk is derived from interest rate fluctuations.

Interest rate risk management

Interest rate risk, which is inherent in the banking industry, is measured by the potential for fluctuations in net interest income and the economic value of equity. Such fluctuations may result from changes in interest rates, and differences in the repricing and maturity characteristics of interest-earning assets and interest-bearing liabilities. To minimize the volatility of net interest income and the economic value of equity, we manage exposure to interest rate risk in accordance with policy limits established by the Risk Management Committee of the Board of Directors.

Interest rate risk positions can be influenced by a number of factors other than changes in market interest rates, including economic conditions, the competitive environment within our markets, and balance sheet positioning that arises out of consumer preferences for specific loan and deposit products. The primary components of interest rate risk exposure consist of basis risk, gap risk, yield curve risk and option risk.

¨ We face “basis risk” when floating-rate assets and floating-rate liabilities reprice at the same time, but in response to different market factors or indices. Under those circumstances, even if equal amounts of assets and liabilities are repricing, interest expense and interest income may not change by the same amount.

¨ “Gap risk” occurs if interest-bearing liabilities and the interest-earning assets they fund (for example, deposits used to fund loans) do not mature or reprice at the same time.

¨ “Yield curve risk” exists when short-term and long-term interest rates change by different amounts. For example, when U.S. Treasury and other term rates decline, the rates on automobile loans also will decline, but the cost of money market deposits and short-term borrowings may remain elevated.

¨ A financial instrument presents “option risk” when one party to the instrument can take advantage of changes in interest rates without penalty. For example, when interest rates decline, borrowers may choose to prepay fixed-rate loans by refinancing at a lower rate. Such a prepayment gives us a return on our investment (the principal plus some interest), but unless there is a prepayment penalty, that return may not be as high as the return that would have been generated had payments been received over the original term of the loan. Deposits that can be withdrawn on demand also present option risk.

Net interest income simulation analysis. The primary tool we use to measure our interest rate risk is simulation analysis. For purposes of this analysis, we estimate our net interest income based on the composition of our on- and off-balance sheet positions, and the current interest rate environment. The simulation assumes that changes in our on- and off-balance sheet positions will reflect recent product trends, targets established by the ALCO Committee, and consensus economic forecasts.

Typically, the amount of net interest income at risk is measured by simulating the change in net interest income that would occur if the federal funds target rate were to gradually increase or decrease by 200 basis

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points over the next twelve months, and term rates were to move in a similar fashion. In light of the low interest rate environment, beginning in the fourth quarter of 2008, we modified the standard rate scenario of a gradual decrease of 200 basis points over twelve months to a gradual decrease of 25 basis points over two months with no change over the following ten months. After calculating the amount of net interest income at risk, we compare that amount with the base case of an unchanged interest rate environment. The analysis also considers sensitivity to changes in a number of other variables, including other market interest rates and deposit mix. In addition, we assess the potential effect of different shapes in the yield curve (the yield curve depicts the relationship between the yield on a particular type of security and its term to maturity), including a sustained flat yield curve, an inverted slope yield curve and changes in credit spreads. We also perform stress tests to measure the effect on net interest income exposure to an immediate change in market interest rates, as well as changes in assumptions related to the pricing of deposits without contractual maturities, prepayments on loans and securities, other loan and deposit balance changes, and wholesale funding and capital management activities.

Simulation analysis produces only a sophisticated estimate of interest rate exposure based on assumptions and judgments related to balance sheet growth, customer behavior, new products, new business volume, product pricing, market interest rate behavior and anticipated hedging activities. We tailor the assumptions to the specific interest rate environment and yield curve shape being modeled, and validate those assumptions on a regular basis. Our simulations are performed with the assumption that interest rate risk positions will be actively managed through the use of on- and off-balance sheet financial instruments to achieve the desired risk profile. Actual results may differ from those derived in simulation analysis due to the timing, magnitude and frequency of interest rate changes, actual hedging strategies employed, changes in balance sheet composition, and repercussions from unanticipated or unknown events.

Figure 31 presents the results of the simulation analysis at December 31, 2009 and 2008. At December 31, 2009, our simulated exposure to a change in short-term interest rates was moderately asset-sensitive. ALCO policy limits for risk management call for corrective measures if simulation modeling demonstrates that a gradual increase or decrease in short-term interest rates over the next twelve months would adversely affect net interest income over the same period by more than 4%. As shown in Figure 31, we are operating within these limits.

Figure 31. Simulated Change in Net Interest Income

December 31, 2009
Basis point change assumption (short-term rates)	-25		+200
ALCO policy limits	-4.00	%	-4.00	%
Interest rate risk assessment	-.85	%	+3.55	%

December 31, 2008
Basis point change assumption (short-term rates)	-25		+200
ALCO policy limits	-2.00	%	-2.00	%
Interest rate risk assessment	-.96	%	+3.34	%

As interest rates declined throughout 2008 and remained at low levels throughout 2009, we gradually shifted from a liability-sensitive position to an asset-sensitive position as a result of increased client demand for fixed-rate certificates of deposit and a number of capital-raising transactions. Our current interest rate risk position could fluctuate to higher or lower levels of risk depending on the actual volume, mix and maturity of loan and deposit flows, and the execution of hedges. Our strategies for using excess funds generated from the strong deposit growth and the recent decline in loan balances will also affect our interest rate risk positioning. We proactively evaluate additional hedging activities based on our decisions to adjust the interest rate risk profile as changes occur to the configuration of the balance sheet and the outlook for the economy.

We also conduct simulations that measure the effect of changes in market interest rates in the second year of a two-year horizon. These simulations are conducted in a manner similar to those based on a twelve-month horizon. To capture longer-term exposures, we simulate changes to the EVE as discussed in the following section.

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Economic value of equity modeling. EVE complements net interest income simulation analysis since it estimates risk exposure beyond twelve- and twenty-four month horizons. EVE measures the extent to which the economic values of assets, liabilities and off-balance sheet instruments may change in response to fluctuations in interest rates. EVE is calculated by subjecting the balance sheet to an immediate 200 basis point increase or decrease in interest rates, and measuring the resulting change in the values of assets and liabilities. Under the current level of market interest rates, the calculation of EVE under an immediate 200 basis point decrease in interest rates results in certain interest rates declining to zero and a less than 200 basis point decrease in certain yield curve term points. This analysis is highly dependent upon assumptions applied to assets and liabilities with noncontractual maturities. Those assumptions are based on historical behaviors, as well as our expectations. We take corrective measures if this analysis indicates that our EVE will decrease by more than 15% in response to an immediate 200 basis point increase or decrease in interest rates. We are operating within these guidelines.

Management of interest rate exposure. We use the results of our various interest rate risk analyses to formulate A/LM strategies to achieve the desired risk profile within the parameters of our capital and liquidity guidelines. Specifically, we manage interest rate risk positions by purchasing securities, issuing term debt with floating or fixed interest rates, and using derivatives — predominantly in the form of interest rate swaps, which modify the interest rate characteristics of certain assets and liabilities.

Figure 32 shows all swap positions which we hold for A/LM purposes. These positions are used to convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e., notional amounts) to another interest rate index. For example, fixed-rate debt is converted to a floating rate through a “receive fixed/pay variable” interest rate swap. The volume, maturity and mix of portfolio swaps change frequently as we adjust our broader A/LM objectives and the balance sheet positions to be hedged. For more information about how we use interest rate swaps to manage our balance sheet, see Note 20 (“Derivatives and Hedging Activities”).

Figure 32. Portfolio Swaps by Interest Rate Risk Management Strategy

	December 31, 2009
						Weighted-Average								December 31, 2008
	Notional		Fair			Maturity		Receive			Pay			Notional		Fair
dollars in millions	Amount		Value			(Years)		Rate			Rate			Amount		Value
Receive fixed/pay variable—conventional A/LM (a)	$	12,238	$	50			.9		1.2			.2	%	$	11,728	$	408
Receive fixed/pay variable—conventional debt		5,220		324			14.9		5.2			.7			5,906		847
Pay fixed/receive variable—conventional debt		613		16			5.8		.6			3.1			751		(84	)
Pay fixed/receive variable—forward starting		189		1			3.2		.4			1.3			—		—
Foreign currency—conventional debt		1,888		(113	)		1.7		.9			.4			2,585		(324	)
Total portfolio swaps	$	20,148	$	278			4.8		2.2	%		.5	%	$	20,970	$	847

(a) Portfolio swaps designated as A/LM are used to manage interest rate risk tied to both assets and liabilities.

Derivatives not designated in hedge relationships

Our derivatives that are not designated in hedge relationships are described in Note 20. We use a VAR simulation model to measure the potential adverse effect of changes in interest rates, foreign exchange rates, equity prices and credit spreads on the fair value of this portfolio. Using two years of historical information, the model estimates the maximum potential one-day loss with a 95% confidence level. Statistically, this means that losses will exceed VAR, on average, five out of 100 trading days, or three to four times each quarter.

We manage exposure to market risk in accordance with VAR limits for trading activity that have been approved by the Risk Capital Committee. At December 31, 2009, the aggregate one-day trading limit set by the committee was $6.9 million. We are operating within these constraints. During 2009, our aggregate daily average, minimum and maximum VAR amounts were $2.8 million, $2.1 million and $3.7 million, respectively. During 2008, our aggregate daily average, minimum and maximum VAR amounts were $2.8 million, $1.7 million and $4.4 million, respectively.

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In addition to comparing VAR exposure against limits on a daily basis, we monitor loss limits, use sensitivity measures and conduct stress tests. We report our market risk exposure to the Risk Management Committee of the Board of Directors.

Liquidity risk management

We define “liquidity” as the ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth and new business transactions at a reasonable cost, in a timely manner and without adverse consequences. Liquidity management involves maintaining sufficient and diverse sources of funding to accommodate planned, as well as unanticipated, changes in assets and liabilities under both normal and adverse conditions.

Governance structure

We manage liquidity for all of our affiliates on an integrated basis. This approach considers the unique funding sources available to each entity, as well as each entity’s capacity to manage through adverse conditions. It also recognizes that adverse market conditions or other events that could negatively affect the availability or cost of liquidity will affect the access of all affiliates to money and capital market funding.

Oversight of the liquidity risk management process is governed by the Risk Management Committee of the KeyCorp Board of Directors, the KeyBank Board of Directors, the ERM Committee and the ALCO. These groups regularly review various liquidity reports, including liquidity and funding summaries, liquidity trends, peer comparisons, variance analyses, liquidity projections, hypothetical funding erosion stress tests and goal tracking reports. The reviews generate a discussion of positions, trends and directives on liquidity risk and shape a number of the decisions that we make. Whenever liquidity pressures are elevated, we monitor and manage our position more frequently. We meet with individuals within and outside of the company on a daily basis to discuss emerging issues. In addition, we use a variety of daily liquidity reports to monitor the flow of funds.

Sources of liquidity

Our primary sources of funding include customer deposits, wholesale funding and capital. If the cash flows needed to support operating and investing activities are not satisfied by deposit balances, we rely on wholesale funding or liquid assets. Conversely, excess cash generated by operating, investing and deposit-gathering activities may be used to repay outstanding debt or invest in liquid assets. We actively manage liquidity using a variety of nondeposit sources, including short- and long-term debt, and secured borrowings.

Factors affecting liquidity

Our liquidity could be adversely affected by both direct and indirect events. Examples of a direct event would be a downgrade in our public credit ratings by a rating agency. Examples of indirect events (events unrelated to us) that could impact our access to liquidity would be terrorism or war, natural disasters, political events, or the default or bankruptcy of a major corporation, mutual fund or hedge fund. Similarly, market speculation, or rumors about us or the banking industry in general may adversely affect the cost and availability of normal funding sources.

Managing liquidity risk

We regularly monitor our funding sources and measure our capacity to obtain funds in a variety of scenarios in an effort to maintain an appropriate mix of available and affordable funding. In the normal course of business, we perform a monthly hypothetical funding erosion stress test for both KeyCorp and KeyBank. When in a “heightened monitoring mode,” we conduct the hypothetical funding erosion stress tests more frequently, and revise assumptions so the stress tests are more strenuous and reflect the changed market environment. Erosion stress tests analyze potential liquidity scenarios under various funding constraints and time periods. Ultimately, they determine the periodic effects that major interruptions would have on our

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access to funding markets and our ability to fund our normal operations. To compensate for the effect of these assumed liquidity pressures, we consider alternative sources of liquidity and maturities over different time periods to project how funding needs would be managed.

Most credit markets in which we participate and rely upon as sources of funding have been significantly disrupted and highly volatile since July 2007. During the third quarter of 2009, our secured borrowings matured and were not replaced, though we retain the capacity to utilize secured borrowings as a contingent funding source. We continue to reposition our balance sheet to reduce future reliance on wholesale funding and increase our liquid asset portfolio.

We maintain a Contingency Funding Plan that outlines the process for addressing a liquidity crisis. The Plan provides for an evaluation of funding sources under various market conditions. It also assigns specific roles and responsibilities for effectively managing liquidity through a problem period. As part of that plan, we continue to maintain a balance in our Federal Reserve account, which has reduced our need to obtain funds through various short-term unsecured money market products. This account and the unpledged securities in our investment portfolio provide a buffer to address unexpected short-term liquidity needs. At December 31, 2009, our liquid asset portfolio totaled $9.8 billion, consisting of a $960 million balance at the Federal Reserve and $8.8 billion in unencumbered, high quality securities. We also have secured borrowing facilities established at the Federal Home Loan Bank of Cincinnati and the Federal Reserve Bank of Cleveland to facilitate short-term liquidity requirements. As of December 31, 2009, our unused secured borrowing capacity was $11 billion at the Federal Reserve Bank of Cleveland and $3.8 billion at the Federal Home Loan Bank. Additionally, at December 31, 2009, we maintained a $960 million balance at the Federal Reserve.

During the third quarter of 2009, we increased the portion of our earning assets invested in highly liquid, unpledged securities. These securities can be sold or serve as collateral for secured borrowings at the Federal Home Loan Bank, the repurchase agreement market, or the Federal Reserve.

Figure 30 in the section entitled “Off-Balance Sheet Arrangements and Aggregate Contractual Obligations” summarizes our significant contractual cash obligations at December 31, 2009, by specific time periods in which related payments are due or commitments expire.

Long-term liquidity strategy

Our long-term liquidity strategy is to reduce our reliance on wholesale funding. Our Community Banking group, supports our client-driven relationship strategy, with the objective of achieving greater reliance on deposit-based funding to reduce our liquidity risk.

Our liquidity position and recent activity

Over the past twelve months, we have increased our liquid asset portfolio, which includes overnight and short-term investments, as well as unencumbered, high quality liquid assets held as insurance against a range of potential liquidity stress scenarios. Liquidity stress scenarios include the loss of access to either unsecured or secured funding sources, as well as draws on unfunded commitments and significant deposit withdrawals.

From time to time, KeyCorp or its principal subsidiary, KeyBank, may seek to retire, repurchase or exchange outstanding debt, capital securities or preferred stock through cash purchase, privately negotiated transactions or other means. Such transactions depend on prevailing market conditions, our liquidity and capital requirements, contractual restrictions and other factors. The amounts involved may be material.

We generate cash flows from operations, and from investing and financing activities. Over the past three years, cash from investing activities has come primarily from sales, prepayments and maturities of securities available for sale. During 2009 and 2007, the sales were largely attributable to repositionings of the securities portfolio. Additionally, paydowns on loans and maturities of short-term investments provided

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significant cash inflows from investing activities during 2009. Purchases of securities available for sale required the greatest use of cash over the past three years. Also, lending required significant cash outflows during 2008 and 2007. During 2008, we also invested more heavily in short-term investments, reflecting actions taken by the Federal Reserve to begin paying interest on depository institutions’ reserve balances effective October 1, 2008.

During 2009, we used the proceeds from loan paydowns and maturities of short-term investments, along with deposit growth and the issuance of common shares, to fund the paydown of short-term borrowings and long-term debt and to grow our securities available-for-sale portfolio. During 2008, we used cash generated from the issuance of common shares and preferred stock, and the net issuance of long-term debt to fund the growth in portfolio loans. A portion was also deposited in interest-bearing accounts with the Federal Reserve. During 2007, we used short-term borrowings to pay down long-term debt, while the net increase in deposits partially funded the growth in portfolio loans and loans held for sale.

The consolidated statements of cash flows summarize our sources and uses of cash by type of activity for each of the past three years.

Liquidity for KeyCorp

The parent company has sufficient liquidity when it can service its debt; support customary corporate operations and activities (including acquisitions) at a reasonable cost, in a timely manner and without adverse consequences; and pay dividends to shareholders. In addition, we occasionally guarantee a subsidiary’s obligations in transactions with third parties.

Our primary tool for assessing parent company liquidity is the net short-term cash position, which measures the ability to fund debt maturing in twelve months or less with existing liquid assets. Another key measure of parent company liquidity is the “liquidity gap,” which represents the difference between projected liquid assets and anticipated financial obligations over specified time horizons. We generally rely upon the issuance of term debt to manage the liquidity gap within targeted ranges assigned to various time periods.

Typically, the parent company meets its liquidity requirements principally through regular dividends from KeyBank. Federal banking law limits the amount of capital distributions that a bank can make to its holding company without prior regulatory approval. A national bank’s dividend-paying capacity is affected by several factors, including net profits (as defined by statute) for the two previous calendar years and for the current year, up to the date of dividend declaration. During 2009, KeyBank did not pay any dividends to the parent, and nonbank subsidiaries paid the parent a total of $.8 million in dividends. As of the close of business on December 31, 2009, KeyBank would not have been permitted to pay dividends to the parent without prior regulatory approval. To compensate for the absence of dividends, the parent company has relied upon the issuance of long-term debt and stock. During 2009, the parent made capital infusions of $1.2 billion to KeyBank.

The parent company generally maintains excess funds in interest-bearing deposits in an amount sufficient to meet projected debt maturities over the next twelve months. At December 31, 2009, the parent company held $3.5 billion in short-term investments, which we projected to be sufficient to repay our maturing debt obligations.

During the first quarter of 2009, KeyCorp issued $438 million of FDIC-guaranteed floating-rate senior notes under the TLGP, which are due April 16, 2012. More specific information regarding this program and our participation is included in the “Capital” section under the heading “Temporary Liquidity Guarantee Program.”

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Liquidity programs

We have several liquidity programs, which are described in Note 12 (“Short-Term Borrowings”), that enable the parent company and KeyBank to raise funds in the public and private markets when the capital markets are functioning normally. The proceeds from most of these programs can be used for general corporate purposes, including acquisitions. Each of the programs is replaced or renewed as needed. There are no restrictive financial covenants in any of these programs.

Credit ratings

Our credit ratings at December 31, 2009, are shown in Figure 33. We believe that these credit ratings, under normal conditions in the capital markets, will enable the parent company or KeyBank to effect future offerings of securities that would be marketable to investors. Conditions in the credit markets are improving relative to the disruption experienced between the third quarter of 2007 and the third quarter of 2009; however, the availability of credit and the cost of funds remain tight and more costly than is typical of an economy with a growing gross domestic product.

The credit ratings footnoted in Figure 33 reflect downgrades of the credit ratings of KeyCorp securities that occurred subsequent to December 31, 2009. If our credit ratings fall below investment-grade, that event could have a material adverse effect on us. Such downgrades could adversely affect access to liquidity and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us. Ultimately, further downgrades would curtail our business operations and reduce our ability to generate income.

Figure 33. Credit Ratings

			Senior	Subordinated		Series A
	TLGP	Short-Term	Long-Term	Long-Term	Capital	Preferred
December 31, 2009	Debt	Borrowings	Debt	Debt	Securities	Stock
KEYCORP (THE PARENT COMPANY)
Standard & Poor’s	AAA	A-2	BBB+	BBB	BB	BB
Moody’s	Aaa	P-2	Baa1	Baa2	Baa2*	Baa3*
Fitch	AAA	F1	A-	BBB+	BBB	BBB
DBRS	AAA	R-1(low)	A (low)	BBB (high)	BBB (high)	BB (high)
KEYBANK
Standard & Poor’s	AAA	A-2	A-	BBB+	N/A	N/A
Moody’s	Aaa	P-1	A2	A3	N/A	N/A
Fitch	AAA	F1	A-	BBB+	N/A	N/A
DBRS	AAA	R-1(low)	A	A (low)	N/A	N/A
KNSF Amalco (a)
DBRS (b)	N/A	R-1(low)	A	N/A	N/A	N/A

* RECENT DOWNGRADES IN KEYCORP’S CREDIT RATINGS

	Moody’s Credit Ratings
	December 31,	February 17,
	2009	2010
KEYCORP (THE PARENT COMPANY)
Capital securities	Baa2	Baa3
Series A Preferred Stock	Baa3	Ba1

(a)	On March 1, 2009, KNSF merged with Key Canada Funding Ltd., an affiliated company, to form KNSF Amalco under the laws of Nova Scotia, Canada. The KNSF commercial paper program is no longer active or utilized as a source of funding. KNSF Amalco is subject to the obligations of KNSF under the terms of the indenture for KNSF’s medium-term note program.
(b)	Reflects the guarantee by KeyBank of KNSF’s issuance of medium-term notes, which matured in January 2010. We have no plans to reissue these medium-term notes.

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FDIC and U.S. Treasury Programs

Temporary Liquidity Guarantee Program. Information regarding the FDIC’s TLGP, and our participation in the Transaction Account Guarantee and the Debt Guarantee components, is included in the “Capital” section under the heading “Temporary Liquidity Guarantee Program.”

Financial Stability Plan. On February 10, 2009, the U.S. Treasury announced its FSP to alleviate uncertainty, restore confidence, and address liquidity and capital constraints. The primary components of the U.S. Treasury’s FSP are the CAP, the TALF, the PPIP, the Affordable Housing and Foreclosure Mitigation Efforts Initiative, and the Small Business and Community Lending Initiative designed to increase lending to small businesses. Information regarding significant aspects of the CAP, including the SCAP, is included in the “Capital” section under the heading “Financial Stability Plan.”

Credit risk management

Credit risk is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Like other financial service institutions, we make loans, extend credit, purchase securities and enter into financial derivative contracts, all of which have related credit risk.

Credit policy, approval and evaluation

We manage credit risk exposure through a multifaceted program. Independent committees approve both retail and commercial credit policies. These policies are communicated throughout the organization to foster a consistent approach to granting credit.

Credit risk management, which is responsible for credit approval, is independent of our lines of business, and consists of senior officers who have extensive experience in structuring and approving loans. Only credit risk management is authorized to grant significant exceptions to credit policies. It is not unusual to make exceptions to established policies when mitigating circumstances dictate, but most major lending units have been assigned specific thresholds to keep exceptions at a manageable level.

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 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 risk management uses risk models to evaluate consumer loans. These models, known as scorecards, forecast the probability of serious delinquency and default for an applicant. The scorecards are embedded in the application processing system, which allows for real-time scoring and automated decisions for many of our products. We periodically validate the loan grading and scoring processes.

We maintain an active concentration management program to encourage diversification in our credit portfolios. For individual obligors, we employ a sliding scale of exposure, known as hold limits, which is dictated by the strength of the borrower. Our legal lending limit is approximately of $2 billion for any individual borrower. However, internal hold limits generally restrict the largest exposures to less than half that amount. As of December 31, 2009, we had three client relationships with loan commitments of more than $200 million. The average amount outstanding on these commitments was $48 million at December 31, 2009. In general, our philosophy is to maintain a diverse portfolio with regard to credit exposures.

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We manage industry concentrations using several methods. On smaller portfolios, we may set limits based on a percentage of our total loan portfolio. On larger or higher risk portfolios, we may establish a specific dollar commitment level or a maximum level of economic capital.

In addition to these localized precautions, we manage the overall loan portfolio in a manner consistent with asset quality objectives, including the use of credit derivatives — primarily credit default swaps — to mitigate credit risk. Credit default swaps enable us to transfer a portion of the credit risk associated with a particular extension of credit to a third party. At December 31, 2009, we used credit default swaps with a notional amount of $1.1 billion to manage the credit risk associated with specific commercial lending obligations. We also sell credit derivatives — primarily index credit default swaps — to diversify and manage portfolio concentration and correlation risks. At December 31, 2009, the notional amount of credit default swaps sold by us for the purpose of diversifying our credit exposure was $461 million. Occasionally, we have provided credit protection to other lenders through the sale of credit default swaps. These transactions with other lenders generated fee income.

Credit default swaps are recorded on the balance sheet at fair value. Related gains or losses, as well as the premium paid or received for credit protection, are included in the trading income component of noninterest income. These swaps reduced our operating results by $37 million during 2009.

We also manage the loan portfolio using loan securitizations, portfolio swaps, and bulk purchases and sales. Our overarching goal is to manage the loan portfolio within a specified range of asset quality.

Selected asset quality statistics for each of the past five years are presented in Figure 34. The factors that drive these statistics are discussed in the remainder of this section.

Figure 34. Selected Asset Quality Statistics from Continuing Operations

Year ended December 31,
dollars in millions	2009			2008			2007			2006			2005
Net loan charge-offs	$	2,257		$	1,131		$	271		$	166		$	303
Net loan charge-offs to average loans		3.40	%		1.55	%		.41	%		.26	%		.49	%
Allowance for loan losses	$	2,534		$	1,629		$	1,195		$	939		$	959
Allowance for credit losses (a)		2,655			1,683			1,275			992			1,018
Allowance for loan losses to year-end loans		4.31	%		2.24	%		1.70	%		1.43	%		1.45	%
Allowance for credit losses to year-end loans		4.52			2.31			1.81			1.51			1.54
Allowance for loan losses to nonperforming loans		115.87			133.42			174.45			436.74			346.21
Allowance for credit losses to nonperforming loans		121.40			137.84			186.13			461.40			367.51
Nonperforming loans at year end	$	2,187		$	1,221		$	685		$	215		$	277
Nonperforming assets at year end		2,510			1,460			762			273			307
Nonperforming loans to year-end portfolio loans		3.72	%		1.68	%		.97	%		.33	%		.42	%
Nonperforming assets to year-end portfolio loans plus
OREO and other nonperforming assets		4.25			2.00			1.08			.42			.46

(a) Includes the allowance for loan losses plus the liability for credit losses on lending-related commitments.

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Watch and criticized assets

Watch assets are troubled commercial loans with the potential to deteriorate in quality due to the client’s current financial condition and possible inability to perform in accordance with the terms of the underlying contract. Criticized assets are troubled loans and other assets that show additional signs of weakness that may lead, or have led, to an interruption in scheduled repayments from primary sources, potentially requiring us to rely on repayment from secondary sources, such as collateral liquidation. During 2009, both watch and criticized asset levels increased in most of our commercial lines of business due to general weakness in the economy.

Allowance for loan losses

At December 31, 2009, the allowance for loan losses was $2.5 billion, or 4.31% of loans, compared to $1.6 billion, or 2.24%, at December 31, 2008. The allowance includes $300 million that was specifically allocated for impaired loans of $1.6 billion at December 31, 2009, compared to $178 million that was allocated for impaired loans of $876 million one year ago. For more information about impaired loans, see Note 10 (“Nonperforming Assets and Past Due Loans from Continuing Operations”). At December 31, 2009, the allowance for loan losses was 115.87% of nonperforming loans, compared to 133.42% at December 31, 2008.

We estimate the appropriate level of the allowance for loan losses on at least a quarterly basis. The methodology used is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan Losses.” Briefly, we apply historical loss rates to existing loans with similar risk characteristics 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. If an impaired loan has 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. 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. The allowance for loan losses at December 31, 2009, represents our best estimate of the losses inherent in the loan portfolio at that date.

As shown in Figure 35, our allowance for loan losses increased by $905 billion, or 56%, during 2009. This increase was attributable primarily to deteriorating conditions in the commercial real estate portfolio, and in various components of the commercial and financial portfolio. Deterioration in the home equity loan portfolio, which experienced a higher level of net charge-offs, also contributed to the increase. In addition, our liability for credit losses on lending-related commitments increased by $67 million to $121 million at December 31, 2009. When combined with our allowance for loan losses, our total allowance for credit losses represented 4.52% of loans at the end of the year.

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Figure 35. Allocation of the Allowance for Loan Losses

December 31,	2009								2008								2007
			Percent of			Percent of					Percent of			Percent of					Percent of			Percent of
			Allowance to			Loan Type to					Allowance to			Loan Type to					Allowance to			Loan Type to
dollars in millions	Amount		Total Allowance			Total Loans			Amount		Total Allowance			Total Loans			Amount		Total Allowance			Total Loans
Commercial, financial and agricultural	$	796		31.4	%		32.7	%	$	572		35.1	%		37.4	%	$	392		32.8	%		35.2	%
Real estate — commercial mortgage		578		22.8			17.8			228		14.0			14.9			206		17.2			13.7
Real estate — construction		418		16.5			8.1			346		21.2			10.6			326		27.3			11.5
Commercial lease financing		280		11.1			12.7			148		9.1			12.4			125		10.5			14.4
Total commercial loans		2,072		81.8			71.3			1,294		79.4			75.3			1,049		87.8			74.8
Real estate — residential mortgage		30		1.2			3.1			7		.4			2.6			7		.6			2.3
Home equity:
Community Banking		130		5.1			17.1			61		3.7			13.9			53		4.3			13.7
National Banking		78		3.1			1.4			69		4.3			1.4			19		1.6			1.8
Total home equity loans		208		8.2			18.5			130		8.0			15.3			72		5.9			15.5
Consumer other — Community Banking		73		2.9			2.0			51		3.2			1.7			31		2.7			1.8
Consumer other — National Banking:
Marine		140		5.5			4.7			132		8.1			4.7			28		2.3			5.1
Other		11		.4			.4			15		.9			.4			8		.7			.5
Total consumer other — National Banking		151		5.9			5.1			147		9.0			5.1			36		3.0			5.6
Total consumer loans		462		18.2			28.7			335		20.6			24.7			146		12.2			25.2
Total loans	$	2,534		100.0%	(a)		100.0	%	$	1,629		100.0	%(a)		100.0	%	$	1,195		100.0	%(a)		100.0	%

	2006								2005
			Percent of			Percent of					Percent of			Percent of
			Allowance to			Loan Type to					Allowance to			Loan Type to
	Amount		Total Allowance			Total Loans			Amount		Total Allowance			Total Loans
Commercial, financial and agricultural	$	341		36.3	%		32.7	%	$	338		35.2	%		31.1	%
Real estate — commercial mortgage		170		18.1			12.9			168		17.5			12.6
Real estate — construction		132		14.1			12.5			94		9.8			10.8
Commercial lease financing		139		14.7			15.7			183		19.0			15.7
Total commercial loans		782		83.2			73.8			783		81.5			70.2
Real estate — residential mortgage		12		1.3			2.2			13		1.4			2.2
Home equity:
Community Banking		60		6.4			15.0			83		8.7			15.5
National Banking		14		1.5			1.6			12		1.3			4.9
Total home equity loans		74		7.9			16.6			95		10.0			20.4
Consumer other — Community Banking		29		3.0			2.3			31		3.2			2.7
Consumer other — National Banking:
Marine		33		3.5			4.7			33		3.4			4.1
Other		9		1.1			.4			4		.5			.4
Total consumer other — National Banking		42		4.6			5.1			37		3.9			4.5
Total consumer loans		157		16.8			26.2			176		18.5			29.8
Total loans	$	939		100.0	% (a)		100.0	%	$	959		100.0	% (a)		100.0	%

(a) Excludes allocations of the allowance for loan losses in the amount of $157 million at December 31, 2009, $174 million at December 31, 2008, $5 million at December 31, 2007, $5 million at December 31, 2006, and $7 million at December 31, 2005, related to the discontinued operations of the education lending business.

Our provision for loan losses was $3.159 billion for 2009, compared to $1.537 billion for 2008. Credit migration, particularly in the commercial real estate portfolio, resulted in higher levels of net charge-offs and nonperforming loans, and increased reserves. Our provision for loan losses for 2009 exceeded net loan charge-offs by $902 million. As previously reported, we have undertaken a process to reduce exposure in the residential properties segment of our construction loan portfolio through the sale of certain loans. In conjunction with these efforts, we transferred $384 million of commercial real estate loans ($719 million, net of $335 million in net charge-offs) from the held-to-maturity loan portfolio to held-for-sale status in June 2008. Our ability to sell these loans has been hindered by continued disruption in the financial markets that has precluded the ability of certain potential buyers to obtain the necessary funding. As shown in Figure 36, the balance of this portfolio has been reduced to $52 million at December 31, 2009, primarily as a result of cash proceeds from loan sales, transfers to OREO, and both realized and unrealized losses. We will continue to pursue the sale or foreclosure of the remaining loans, all of which are on nonperforming status.

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Figure 36. Loans Held for Sale — Residential
Properties Segment of Construction Loan Portfolio

in millions
BALANCE AT JUNE 30, 2008	$	340
Cash proceeds from loan sales		(145	)
Loans transferred to OREO		(49	)
Realized and unrealized losses		(45	)
Payments		(13	)
BALANCE AT DECEMBER 31, 2008	$	88
Cash proceeds from loan sales		(3	)
Loans transferred to OREO		(13	)
Realized and unrealized losses		(20	)
Payments		—
BALANCE AT DECEMBER 31, 2009	$	52

Net loan charge-offs

Net loan charge-offs for 2009 totaled $2.257 billion, or 3.40% of average loans from continuing operations. These results compare to net charge-offs of $1.131 billion, or 1.55%, for 2008 and $271 million, or .41%, for 2007. Figure 37 shows the trend in our net loan charge-offs by loan type, while the composition of loan charge-offs and recoveries by type of loan is presented in Figure 38.

During 2009, net charge-offs in the commercial loan portfolio rose by $965 million, due primarily to commercial real estate related credits within the Real Estate Capital and Corporate Banking Services line of business. Net charge-offs for this line of business rose by $640 million, including $131 million of net charge-offs recorded on two specific customer relationships during the fourth quarter of 2009. The largest increases in net charge-offs in the consumer portfolio derived from the home equity and marine portfolios. As shown in Figure 40, our exit loan portfolio, which was established in mid-2008, accounted for $568 million, or 25%, of total net loan charge-offs for 2009. We expect net charge-offs to remain elevated in 2010; however, we anticipate that the level of net charge-offs will be lower than experienced in 2009.

Figure 37. Net Loan Charge-offs from Continuing Operations

Year ended December 31,
dollars in millions	2009			2008			2007			2006			2005
Commercial, financial and agricultural	$	786		$	278		$	91		$	58		$	59
Real estate ___ commercial mortgage		354			82			10			19			16
Real estate ___ construction		634			492	(a)		53			3			2
Commercial lease financing		106			63			29			13			148
Total commercial loans		1,880			915			183			93			225
Home equity — Community Banking		93			40			18			15			13
Home equity — National Banking		72			46			15			8			8
Marine		119			67			21			12			13
Other		93			63			34			38			44
Total consumer loans		377			216			88			73			78
Total net loan charge-offs	$	2,257		$	1,131		$	271		$	166		$	303
Net loan charge-offs to average loans		3.40	%		1.55	%		.41	%		.26	%		.49	%
Net loan charge-offs from discontinued operations — education lending business	$	143		$	129		$	4		$	4		$	12

(a) During the second quarter of 2008, we transferred $384 million of commercial real estate loans ($719 million of primarily construction loans, net of $335 million in net charge-offs) from the loan portfolio to held-for-sale status.

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Figure 38. Summary of Loan Loss Experience from Continuing Operations

Year ended December 31,
dollars in millions	2009			2008			2007			2006			2005
Average loans outstanding	$	66,386		$	72,801		$	67,024		$	64,642		$	61,608
Allowance for loan losses at beginning of year	$	1,629		$	1,195		$	939		$	959		$	1,119
Loans charged off:
Commercial, financial and agricultural		838			332			128			92			80
Real estate — commercial mortgage		356			83			16			24			19
Real estate — construction		643			494			54			4			5
Total commercial real estate loans(a),(b)		999			577			70			28			24
Commercial lease financing		128			83			51			40			183
Total commercial loans		1,965			992			249			160			287
Real estate — residential mortgage		20			15			6			7			7
Home equity:
Community Banking		97			43			21			19			16
National Banking		74			47			16			11			10
Total home equity loans		171			90			37			30			26
Consumer other — Community Banking		67			44			31			33			38
Consumer other — National Banking:
Marine		154			85			33			23			23
Other		19			14			9			9			13
Total consumer other — National Banking		173			99			42			32			36
Total consumer loans		431			248			116			102			107
Total loans charged off		2,396			1,240			365			262			394
Recoveries:
Commercial, financial and agricultural		52			54			37			34			21
Real estate — commercial mortgage		2			1			6			5			3
Real estate — construction		9			2			1			1			3
Total commercial real estate loans (b)		11			3			7			6			6
Commercial lease financing		22			20			22			27			35
Total commercial loans		85			77			66			67			62
Real estate — residential mortgage		1			1			1			1			1
Home equity:
Community Banking		4			3			3			4			3
National Banking		2			1			1			3			2
Total home equity loans		6			4			4			7			5
Consumer other — Community Banking		7			6			8			7			8
Consumer other — National Banking:
Marine		35			18			12			11			10
Other		5			3			3			3			5
Total consumer other — National Banking		40			21			15			14			15
Total consumer loans		54			32			28			29			29
Total recoveries		139			109			94			96			91
Net loans charged off		(2,257	)		(1,131	)		(271	)		(166	)		(303	)
Provision for loan losses		3,159			1,537			525			148			143
Credit for loan losses from discontinued operations		—			—			—			(3	)		—
Allowance related to loans acquired, net		—			32			—			—			—
Foreign currency translation adjustment		3			(4	)		2			1			—
Allowance for loan losses at end of year	$	2,534		$	1,629		$	1,195		$	939		$	959
Liability for credit losses on lending-related commitments at beginning of year	$	54		$	80		$	53		$	59		$	66
Provision (credit) for losses on lending-related commitments		67			(26	)		28			(6	)		(7	)
Charge-offs		—			—			(1	)		—			—
Liability for credit losses on lending-related commitments at end of year (c)	$	121		$	54		$	80		$	53		$	59
Total allowance for credit losses at end of year	$	2,655		$	1,683		$	1,275		$	992		$	1,018
Net loan charge-offs to average loans		3.40	%		1.55	%		.41	%		.26	%		.49	%
Allowance for loan losses to year-end loans		4.31			2.24			1.70			1.43			1.45
Allowance for credit losses to year-end loans		4.52			2.31			1.81			1.51			1.54
Allowance for loan losses to nonperforming loans		115.87			133.42			174.45			436.74			346.21
Allowance for credit losses to nonperforming loans		121.40			137.84			186.13			461.40			367.51
Discontinued operations — education lending business:
Loans charged off	$	147		$	131		$	5		$	6		$	15
Recoveries		4			2			1			2			3
Net loan charge-offs	$	(143	)	$	(129	)	$	(4	)	$	(4	)	$	(12	)

(a)	During the second quarter of 2008, we transferred $384 million of commercial real estate loans ($719 million of primarily construction loans, net of $335 million in net charge-offs) from the loan portfolio to held-for-sale status.
(b)	See Figure 18 and the accompanying discussion in the “Loans and loans held for sale” section for more information related to our commercial real estate portfolio.
(c)	Included in “accrued expense and other liabilities” on the balance sheet.

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Nonperforming assets

Figure 39 shows the composition of our nonperforming assets. These assets totaled $2.5 billion at December 31, 2009, and represented 4.25% of portfolio loans, OREO and other nonperforming assets, compared to $1.5 billion, or 2.00%, at December 31, 2008, and $762 million, or 1.08%, at December 31, 2007. See Note 1 under the headings “Impaired and Other Nonaccrual Loans” and “Allowance for Loan Losses” for a summary of our nonaccrual and charge-off policies.

Figure 39. Summary of Nonperforming Assets and Past Due Loans from Continuing Operations

December 31,
dollars in millions	2009			2008			2007			2006			2005
Commercial, financial and agricultural	$	580		$	415		$	84		$	38		$	63
Real estate — commercial mortgage		473			128			41			48			38
Real estate — construction		566			436			415			10			2
Total commercial real estate loans (a)		1,039			564	(b)		456			58			40
Commercial lease financing		113			81			28			22			39
Total commercial loans		1,732			1,060			568			118			142
Real estate — residential mortgage		73			39			28			34			46
Home equity:
Community Banking		107			76			54			42			26
National Banking		21			15			12			8			53
Total home equity loans		128			91			66			50			79
Consumer other — Community Banking		4			3			2			2			2
Consumer other — National Banking:
Marine		23			26			20			10			6
Other		2			2			1			1			2
Total consumer other — National Banking		25			28			21			11			8
Total consumer loans		230			161			117			97			135
Total nonaccrual loans		1,962			1,221			685			215			277
Restructured loans accruing interest		225			—			—			—			—
Total nonperforming loans		2,187			1,221			685			215			277
Nonperforming loans held for sale		116			90	(b)		25			3			3
OREO		191			110			21			57			25
Allowance for OREO losses		(23	)		(3	)		(2	)		(3	)		(2	)
OREO, net of allowance		168			107			19			54			23
Other nonperforming assets		39			42			33			1			4
Total nonperforming assets	$	2,510		$	1,460		$	762		$	273		$	307
Accruing loans past due 90 days or more	$	331		$	413		$	215		$	114		$	85
Accruing loans past due 30 through 89 days		933			1,230			785			616			470
Restructured loans included in nonaccrual loans		139			—			—			—			—
Nonperforming loans to year-end portfolio loans		3.72	%		1.68	%		.97	%		.33	%		.42	%
Nonperforming assets to year-end portfolio loans plus OREO and other nonperforming assets		4.25			2.00			1.08			.42			.46

(a)	See Figure 18 and the accompanying discussion in the “Loans and loans held for sale” section for more information related to our commercial real estate portfolio.
(b)	During the second quarter of 2008, we transferred $384 million of commercial real estate loans ($719 million of primarily construction loans, net of $335 million in net charge-offs) from the loan portfolio to held-for-sale status.

As shown in Figure 39, nonperforming assets rose during 2009. Almost half of the increase was attributable to the commercial real estate portfolio and was caused in part by the continuation of deteriorating market conditions in the income properties segment. In addition, at December 31, 2009, we held $225 million of restructured loans accruing interest. We are working with our customers to understand their financial difficulties, identify viable solutions and minimize the potential for loss. In that regard, we have modified the terms of select loans, primarily those in the commercial real estate portfolio. Since these loans have demonstrated sustained payment capability, they continue to accrue interest. The increase in nonperforming loans held for sale reflects the actions we are taking to reduce our exposure in the commercial real estate and institutional portfolios through the sale of selected assets. In conjunction with these efforts, we transferred $193 million of loans ($248 million, net of $55 million in net charge-offs) from the held-to-maturity loan

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portfolio to held-for-sale status during the third quarter of 2009. As of December 31, 2009, we had completed the sales on $188 million of these loans. As shown in Figure 40, our exit loan portfolio accounted for $599 million, or 24%, of total nonperforming assets at December 31, 2009, compared to $586 million, or 40%, at December 31, 2008.

At December 31, 2009, the carrying amount of our commercial nonperforming loans outstanding represented 74% of their original face value, and total nonperforming loans outstanding represented 76% of their face value. At the same date, OREO represented 63% of its original face value, while loans held for sale and other nonperforming assets in the aggregate represented 45% of their face value. In total, we have recorded approximately $1 billion in charge-offs and write-downs against our nonperforming assets outstanding at December 31, 2009.

At December 31, 2009, our 20 largest nonperforming loans totaled $582 million, representing 26% of total loans on nonperforming status.

While our nonperforming assets rose for the year as a whole, these assets decreased by $289 from the amount reported at September 30, 2009, marking the first quarterly reduction since the fourth quarter of 2006. Additionally, the level of our past due loans declined in each of the last two quarters of 2009. In the aggregate, past due loans decreased by $379 million, or 23%, since December 31, 2008.

Figure 40 shows the composition of our exit loan portfolio at December 31, 2009 and 2008, the net charge-offs recorded on this portfolio for 2009 and the second half of 2008, and the nonperforming status of these loans at December 31, 2009 and 2008. At December 31, 2009, the exit loan portfolio represented 13% of total loans and loans held for sale.

Figure 40. Exit Loan Portfolio

											Net Loan			Balance on
	Balance				Change			Net Loan			Charge-offs			Nonperforming
	Outstanding				12-31-09 vs.			Charge-offs			from July 1, 2008 to			Status
in millions	12-31-09		12-31-08		12-31-08			2009			December 31, 2008			12-31-09			12-31-08
Residential properties ___ homebuilder	$	379	$	883	$	(504	)	$	192		$	105		$	211	(c)	$	254
Residential properties ___ held for sale		52		88		(36	)		—	(b)		—	(b)		52			88
Total residential properties		431		971		(540	)		192			105			263			342
Marine and RV floor plan		427		945		(518	)		60			14			93			91
Commercial lease financing (a)		2,875		3,848		(973	)		111			46			195			105
Total commercial loans		3,733		5,764		(2,031	)		363			165			551			538
Home equity ___ National Banking		834		1,051		(217	)		72			29			20			15
Marine		2,787		3,401		(614	)		119			41			26	(c)		26
RV and other consumer		216		283		(67	)		14			7			2			7
Total consumer loans		3,837		4,735		(898	)		205			77			48			48
Total exit loans in loan portfolio	$	7,570	$	10,499	$	(2,929	)	$	568		$	242		$	599		$	586
Discontinued operations — education lending business	$	3,957	$	4,070	$	(113	)	$	143		$	73		$	13		$	4

(a)	Includes the business aviation, commercial vehicle, office products, construction and industrial, and Canadian lease financing portfolios; and all remaining balances related to LILO, SILO, service contract leases and qualified technological equipment leases.
(b)	Declines in the fair values of loans held for sale are recognized as charges to “net gains (losses) from loan securitizations and sales.” As shown in Figure 36, we recorded realized and unrealized losses of $20 million on loans held for sale in the exit portfolio during 2009, and $45 million during the second half of 2008.
(c)	Includes restructured loans accruing interest in the amount of $11 million for residential properties-homebuilder and $3 million for marine loans.

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Figure 41 shows credit exposure by industry classification in the largest sector of our loan portfolio, “commercial, financial and agricultural loans.” Since December 31, 2008, total commitments and loans outstanding in this sector have declined by $13.6 billion and $8 billion, respectively.

The types of activity that caused the change in our nonperforming loans during 2009 and 2008 are summarized in Figure 42. As shown in this figure, loans placed on nonaccrual status decreased in the third and fourth quarters of 2009. Additionally, during the last half of 2009, payments received more than doubled those received during the first two months of the year.

Figure 41. Commercial, Financial and Agricultural Loans

					Nonperforming Loans
December 31, 2009	Total		Loans				Percent of Loans
dollars in millions	Commitments (a)		Outstanding		Amount		Outstanding
Industry classification:
Services	$	9,981	$	3,924	$	113		2.9	%
Manufacturing		8,072		2,820		82		2.9
Public utilities		4,607		843		—		—
Wholesale trade		3,106		1,226		9		.7
Financial services		2,765		1,467		44		3.0
Retail trade		2,185		871		73		8.4
Property management		2,064		1,261		75		5.9
Dealer floor plan		1,969		1,267		71		5.6
Building contractors		1,570		679		72		10.6
Transportation		1,403		965		5		.5
Mining		1,284		544		11		2.0
Agriculture/forestry/fishing		896		567		15		2.6
Public administration		684		337		—		—
Insurance		555		59		—		—
Communications		545		198		—		—
Individuals		69		66		4		6.1
Other		2,282		2,154		6		.3
Total	$	44,037	$	19,248	$	580		3.0	%

(a) Total commitments include unfunded loan commitments, unfunded letters of credit (net of amounts conveyed to others) and loans outstanding.

Figure 42. Summary of Changes in Nonperforming Loans from Continuing Operations

				2009 Quarters
in millions	2009			Fourth			Third			Second			First			2008
Balance at beginning of period	$	1,221		$	2,290		$	2,185		$	1,735		$	1,221		$	685
Loans placed on nonaccrual status		4,615			1,082			1,140			1,218			1,175			2,607
Charge-offs		(2,396	)		(750	)		(619	)		(540	)		(487	)		(1,231	)
Loans sold		(101	)		(70	)		(4	)		(12	)		(15	)		(54	)
Payments		(802	)		(242	)		(300	)		(148	)		(112	)		(357	)
Transfers to OREO		(196	)		(38	)		(94	)		(30	)		(34	)		(32	)
Transfers to nonperforming loans held for sale		(58	)		(23	)		(5	)		(30	)		___			(380	)
Loans returned to accrual status		(96	)		(62	)		(13	)		(8	)		(13	)		(17	)
Balance at end of period	$	2,187		$	2,187		$	2,290		$	2,185		$	1,735		$	1,221

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Factors that contributed to the change in our OREO during 2009 and 2008 are summarized in Figure 43. As shown in this figure, the 2009 increase attributable to properties acquired was offset in part by sales and valuation adjustments, primarily during the second half of the year.

Figure 43. Summary of Changes in Other Real Estate Owned, Net of Allowance, from Continuing
Operations

				2009 Quarters
in millions	2009			Fourth			Third			Second			First			2008
Balance at beginning of period	$	107		$	147		$	171		$	143		$	107		$	19
Properties acquired (a)		279			98			91			46			44			130
Valuation adjustments		(60	)		(12	)		(36	)		(9	)		(3	)		(1	)
Properties sold		(158	)		(65	)		(79	)		(9	)		(5	)		(41	)
Balance at end of period	$	168		$	168		$	147		$	171		$	143		$	107

(a) Properties acquired consist of those related to performing and nonperforming loans.

Operational risk management

Like all businesses, we are subject to operational risk, which is the risk of loss resulting from human error, inadequate or failed internal processes and systems, and external events. Operational risk also encompasses compliance (legal) risk, which is the risk of loss from violations of, or noncompliance with, laws, rules and regulations, prescribed practices or ethical standards. Resulting losses could take the form of explicit charges, increased operational costs, harm to our reputation or forgone opportunities. We seek to mitigate operational risk through a system of internal controls.

We continuously strive to strengthen our system of internal controls to ensure compliance with laws, rules and regulations, and to improve the oversight of our operational risk. For example, a loss-event database tracks the amounts and sources of operational losses. This tracking mechanism helps to identify weaknesses and to highlight the need to take corrective action. We also rely upon software programs designed to assist in monitoring our control processes. This technology has enhanced the reporting of the effectiveness of our controls to senior management and the Board of Directors.

Primary responsibility for managing and monitoring internal control mechanisms lies with the managers of our various lines of business. Our Risk Review function periodically assesses the overall effectiveness of our system of internal controls. Risk Review reports the results of reviews on internal controls and systems to senior management and the Audit Committee, and independently supports the Audit Committee’s oversight of these controls. The Operational Risk Committee, a senior management committee, oversees our level of operational risk, and directs and supports our operational infrastructure and related activities.

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Fourth Quarter Results

Our financial performance for each of the past eight quarters is summarized in Figure 44. Highlights of our results for the fourth quarter of 2009 are summarized below.

Earnings

We had a fourth quarter loss from continuing operations attributable to Key common shareholders of $258 million, or $.30 per common share, compared to a net loss from continuing operations attributable to Key common shareholders of $524 million, or $1.07 per common share, for the fourth quarter of 2008.

Our loss from continuing operations declined because of increases in net interest income and noninterest income and a decrease in noninterest expense, offset in part by a significantly higher provision for loan losses.

On an annualized basis, our return on average total assets from continuing operations for the fourth quarter of 2009 was (.94)%, compared to (1.90)% for the fourth quarter of 2008. The annualized return on average common equity from continuing operations was (12.60)% for the fourth quarter of 2009, compared to (26.15)% for the year-ago quarter.

Net interest income

Our taxable-equivalent net interest income was $637 million for the fourth quarter of 2009, and the net interest margin was 3.04%. These results compare to taxable-equivalent net interest income of $624 million and a net interest margin of 2.79% for the fourth quarter of 2008. The net interest margin for the year-ago quarter was reduced by 8 basis points as a result of additional adjustments related to an agreement reached with the IRS in the second half of 2008 on all material aspects related to the IRS global tax settlement pertaining to certain leveraged lease financing transactions. During the first half of 2009, the net interest margin remained under pressure as customers continued to paydown existing loans and new loan demand remained soft given the uncertain economic environment. During the second half of 2009, we began to benefit from lower funding costs as higher costing certificates of deposit originated in the prior year began to mature and repriced to current market rates. In 2010, we expect to realize additional benefits from the repricing of maturing certificates of deposit.

Noninterest income

Our noninterest income was $469 million for the fourth quarter of 2009, compared to $383 million for the fourth quarter of 2008. The increase reflects net gains of $80 million from principal investing (which include results attributable to noncontrolling interests) in the fourth quarter of 2009, compared to net losses of $37 million for the same period last year, and a $22 million increase in investment banking income. Additionally, during the fourth quarter of 2008, we recorded net losses of $39 million related to the volatility associated with the hedge accounting applied to debt instruments. These factors were offset in part by losses related to certain commercial real estate related investments, primarily due to changes in their fair values. Net losses from investments made by the Real Estate Capital and Corporate Banking Services line of business rose by $34 million from the fourth quarter of 2008. At December 31, 2009, the investments remaining in this portfolio had a carrying amount of approximately $63 million, representing 51% of our original investment. We also experienced a $31 million reduction in income from dealer trading and derivatives activities, including a $16 million loss recorded during the current quarter as a result of changes in the fair values of certain commercial mortgage-backed securities. At December 31, 2009, these securities had a carrying amount of approximately $29 million, representing 33% of their face value. The improvement in noninterest income was also moderated by lower income from trust and investment services, service charges on deposit accounts and operating leases.

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Noninterest expense

Our noninterest expense was $871 million for the fourth quarter of 2009, compared to $1.264 billion for the same period last year. Noninterest expense for the fourth quarter of 2008 was adversely affected by a goodwill impairment charge of $465 million. Excluding this charge, noninterest expense for the current quarter was up $72 million, or 9%, from the year-ago quarter.

Personnel expense decreased by $5 million and nonpersonnel expense rose by $77 million. The growth in nonpersonnel expense was attributable to increases of $34 million in the FDIC deposit insurance assessment, $32 million in the provision for losses on lending-related commitments and $19 million in costs associated with OREO, including write-downs and losses on sales.

Provision for loan losses

Our provision for loan losses was $756 million for the fourth quarter of 2009, compared to $551 million for the year-ago quarter. During the fourth quarter of 2009, the provision exceeded net loan charge-offs by $48 million. As a result, our allowance for loan losses was $2.5 billion, or 4.31% of total loans, at December 31, 2009, compared to 2.24% at December 31, 2008.

Compared to the fourth quarter of 2008, net loan charge-offs in the commercial loan portfolio increased by $371 million. The increase was attributable to the continuation of elevated net charge-offs on our commercial real estate loans within the Real Estate Capital and Corporate Banking Services line of business. Net loan charge-offs in this line of business rose by $353 million, including $131 million of net charge-offs recorded on two specific customer relationships during the fourth quarter of 2009. The level of net charge-offs in the consumer loan portfolio rose by $28 million with the largest increases coming from the home equity and marine components. Our exit loan portfolio accounted for $141 million, or 20%, of total net loan charge-offs for the fourth quarter of 2009.

Income taxes

For the fourth quarter of 2009, we recorded a tax benefit of $347 million, compared to a benefit of $318 for the fourth quarter of 2008. In both years, the tax benefit was primarily a result of a pre-tax loss from continuing operations and credits recorded in connection with the IRS global tax settlement pertaining to certain leveraged lease financing transactions.

During the fourth quarter of 2009, we recorded a $106 million credit to income taxes, due primarily to the settlement of IRS audits for the tax years 1997-2006. This credit includes a final adjustment of $80 million related to the resolution of certain lease financing tax issues. During the fourth quarter of 2008, we reached an agreement with the IRS on all material aspects related to the IRS global tax settlement, which resulted in a $120 million reduction to income taxes for the recovery of previously accrued interest on disputed tax balances. The positive impact of the recovered interest was partially offset by $68 million of additional U.S. taxes recorded on accumulated earnings of the Canadian leasing operation. During the fourth quarter of 2008, we decided that, due to changes in the Canadian leasing operations, we would no longer permanently reinvest the earnings of the Canadian leasing subsidiaries overseas. For a discussion of the factors that cause the difference between our effective tax rate and the federal statutory tax rate, and the agreement entered into with the IRS, see the section entitled “Income taxes.”

79

Figure 44. Selected Quarterly Financial Data

	2009												2008
dollars in millions, except per share amounts	Fourth			Third			Second			First			Fourth			Third			Second			First
FOR THE PERIOD
Interest income	$	933		$	940		$	945		$	977		$	1,094		$	1,167		$	816		$	1,276
Interest expense		303			348			376			388			477			489			481			590
Net interest income		630			592			569			589			617			678			335			686
Provision for loan losses		756			733			823			847			551			336			507			143
Noninterest income		469			382			706			478			383			390			544			530
Noninterest expense		871			901			855			927			1,264			740			760			712
Income (loss) from continuing operations before income taxes		(528	)		(660	)		(403	)		(707	)		(815	)		(8	)		(388	)		361
Income (loss) from continuing operations attributable to Key		(217	)		(381	)		(230	)		(459	)		(494	)		3			(1,046	)		242
Income (loss) from discontinued operations, net of taxes (a)		(7	)		(16	)		4			(29	)		(30	)		(39	)		(80	)		(24	)
Net income (loss) attributable to Key		(224	)		(397	)		(226	)		(488	)		(524	)		(36	)		(1,126	)		218
Income (loss) from continuing operations attributable to Key common shareholders		(258	)		(422	)		(394	)		(507	)		(524	)		(9	)		(1,046	)		242
Income (loss) from discontinued operations, net of taxes (a)		(7	)		(16	)		4			(29	)		(30	)		(39	)		(80	)		(24	)
Net income (loss) attributable to Key common shareholders		(265	)		(438	)		(390	)		(536	)		(554	)		(48	)		(1,126	)		218
PER COMMON SHARE
Income (loss) from continuing operations attributable to Key common shareholders	$	(.30	)	$	(.50	)	$	(.68	)	$	(1.03	)	$	(1.07	)	$	(.02	)	$	(2.51	)	$	.61
Income (loss) from discontinued operations, net of taxes (a)		(.01	)		(.02	)		.01			(.06	)		(.06	)		(.08	)		(.19	)		(.06	)
Net income (loss) attributable to Key common shareholders		(.30	)		(.52	)		(.68	)		(1.09	)		(1.13	)		(.10	)		(2.70	)		.55
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution		(.30	)		(.50	)		(.68	)		(1.03	)		(1.07	)		(.02	)		(2.51	)		.60
Income (loss) from discontinued operations, net of taxes — assuming dilution (a)		(.01	)		(.02	)		.01			(.06	)		(.06	)		(.08	)		(.19	)		(.06	)
Net income (loss) attributable to Key common shareholders — assuming dilution		(.30	)		(.52	)		(.68	)		(1.09	)		(1.13	)		(.10	)		(2.70	)		.54
Cash dividends paid		.01			.01			.01			.0625			.0625			.1875			.375			.375
Book value at period end		9.04			9.39			10.21			13.82			14.97			16.16			16.59			21.48
Tangible book value at period end		7.94			8.29			8.93			11.76			12.48			12.72			13.06			17.15
Market price:
High		6.85			7.07			9.82			9.35			15.20			15.25			26.12			27.23
Low		5.29			4.40			4.40			4.83			4.99			7.93			10.00			19.00
Close		5.55			6.50			5.24			7.87			8.52			11.94			10.98			21.95
Weighted-average common shares outstanding (000)		873,268			839,906			576,883			492,813			492,311			491,179			416,629			399,121
Weighted-average common shares and potential common shares outstanding (000)		873,268			839,906			576,883			492,813			492,311			491,179			416,629			399,769
AT PERIOD END
Loans	$	58,770		$	62,193		$	67,167		$	70,003		$	72,835		$	72,994		$	72,271		$	72,836
Earning assets		80,318			84,173			85,649			84,722			89,759			86,128			86,019			85,802
Total assets		93,287			96,989			97,792			97,834			104,531			101,290			101,544			101,492
Deposits		65,571			67,259			67,780			65,877			65,127			64,567			64,278			64,544
Long-term debt		11,558			12,865			13,462			14,978			14,995			15,597			15,106			14,337
Key common shareholders’ equity		7,942			8,253			8,138			6,892			7,408			7,993			8,056			8,592
Key shareholders’ equity		10,663			10,970			10,851			9,968			10,480			8,651			8,706			8,592
PERFORMANCE RATIOS — FROM CONTINUING OPERATIONS
Return on average total assets		(.94	)%		(1.62	)%		(.96)	%		(1.87)	%		(1.90)	%		.01	%		(4.24)	%		.98	%
Return on average common equity		(12.60	)		(20.30	)		(15.54	)		(28.26	)		(26.15	)		(.44	)		(49.56	)		11.53
Net interest margin (TE)		3.04			2.80			2.70			2.79			2.79			3.17			(.57	)		3.16
PERFORMANCE RATIOS — FROM CONSOLIDATED OPERATIONS
Return on average total assets		(.93)	%		(1.62	)%		(.90)	%		(1.91)	%		(1.93)	%		(.14)	%		(4.38)	%		.85	%
Return on average common equity		(12.94	)		(21.07	)		(15.32	)		(29.87	)		(27.65	)		(2.36	)		(53.35	)		10.38
Net interest margin (TE)		3.00			2.79			2.67			2.77			2.76			3.13			(.44	)		3.14
CAPITAL RATIOS AT PERIOD END
Key shareholders’ equity to assets		11.43	%		11.31	%		11.10	%		10.19	%		10.03	%		8.54	%		8.57	%		8.47	%
Tangible Key shareholders’ equity to tangible assets		10.50			10.41			10.16			9.23			8.96			6.98			7.00			6.88
Tangible common equity to tangible assets		7.56			7.58			7.35			6.06			5.98			6.32			6.35			6.88
Tier 1 common equity		7.50			7.64			7.36			5.62			5.62			5.58			5.60			5.83
Tier 1 risk-based capital		12.75			12.61			12.57			11.22			10.92			8.55			8.53			8.33
Total risk-based capital		16.95			16.65			16.67			15.18			14.82			12.40			12.41			12.34
Leverage		11.72			12.07			12.26			11.19			11.05			9.28			9.34			9.15
TRUST AND BROKERAGE ASSETS
Assets under management	$	66,939		$	66,145		$	63,382		$	60,164		$	64,717		$	76,676		$	80,998		$	80,453
Nonmanaged and brokerage assets		27,190			25,883			23,261			21,786			22,728			27,187			29,905			30,532
OTHER DATA
Average full-time-equivalent employees		15,973			16,436			16,937			17,468			17,697			18,098			18,164			18,426
Branches		1,007			1,003			993			989			986			986			985			985

(a) In September 2009, we decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank. In April 2009, we decided to wind down the operations of Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers. As a result of these decisions, we have accounted for these businesses as discontinued operations.

80

Certifications

We have filed, as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2009, the certifications of our Chief Executive Officer and Chief Financial Officer required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

On June 8, 2009, we submitted to the New York Stock Exchange the Annual CEO Certification required pursuant to Section 303A.12(a) of the New York Stock Exchange Listed Company Manual.

81

Management’s Annual Report on Internal Control Over Financial Reporting

We are responsible for the preparation, content and integrity of the financial statements and other statistical data and analyses compiled for this annual report. The financial statements and related notes have been prepared in conformity with U.S. generally accepted accounting principles and reflect our best estimates and judgments. We believe the financial statements and notes present fairly our financial position, results of operations and cash flows in all material respects.

We are responsible for establishing and maintaining a system of internal control that is designed to protect our assets and the integrity of our financial reporting. This corporate-wide system of controls includes self-monitoring mechanisms and written policies and procedures, prescribes proper delegation of authority and division of responsibility, and facilitates the selection and training of qualified personnel.

All employees are required to comply with our code of ethics. We conduct an annual certification process to ensure that our employees meet this obligation. Although any system of internal control can be compromised by human error or intentional circumvention of required procedures, we believe our system provides reasonable assurance that financial transactions are recorded and reported properly, providing an adequate basis for reliable financial statements.

The Board of Directors discharges its responsibility for our financial statements through its Audit Committee. This committee, which draws its members exclusively from the outside directors, also hires the independent registered public accounting firm.

Management’s Assessment of Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over our financial reporting. We have assessed the effectiveness of our internal control and procedures over financial reporting using criteria described in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, we believe we maintained an effective system of internal control over financial reporting as of December 31, 2009. Our independent registered public accounting firm has issued an attestation report, dated March 1, 2010, on our internal control over financial reporting, which is included in this annual report.

Henry L. Meyer III
Chairman and Chief Executive Officer

Jeffrey B. Weeden
Senior Executive Vice President and Chief Financial Officer

82

Report of Independent Registered Public Accounting Firm
on Internal Control over Financial Reporting

Shareholders and Board of Directors KeyCorp

We have audited KeyCorp’s internal control over financial reporting as of December 31, 2009, based on criteria established in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). KeyCorp’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, KeyCorp maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of KeyCorp as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2009, and our report dated March 1, 2010 expressed an unqualified opinion thereon.

Cleveland, Ohio
March 1, 2010

83

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors
KeyCorp

We have audited the accompanying consolidated balance sheets of KeyCorp and subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of KeyCorp’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of KeyCorp and subsidiaries as of December 31, 2009 and 2008, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), KeyCorp’s internal control over financial reporting as of December 31, 2009, based on criteria established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2010 expressed an unqualified opinion thereon.

Cleveland, Ohio
March 1, 2010

84

Consolidated Balance Sheets

December 31,
in millions, except share data	2009			2008
ASSETS
Cash and due from banks	$	471		$	1,245
Short-term investments		1,743			5,221
Trading account assets		1,209			1,280
Securities available for sale		16,641			8,246
Held-to-maturity securities (fair value: $24 and $25)		24			25
Other investments		1,488			1,526
Loans, net of unearned income of $1,770 and $2,350		58,770			72,835
Less: Allowance for loan losses		2,534			1,629
Net loans		56,236			71,206
Loans held for sale		443			626
Premises and equipment		880			840
Operating lease assets		716			990
Goodwill		917			1,113
Other intangible assets		50			116
Corporate-owned life insurance		3,071			2,970
Derivative assets		1,094			1,896
Accrued income and other assets		4,096			2,818
Discontinued assets (see Note 3)		4,208			4,413
Total assets	$	93,287		$	104,531
LIABILITIES
Deposits in domestic offices:
NOW and money market deposit accounts	$	24,341		$	24,191
Savings deposits		1,807			1,712
Certificates of deposit ($100,000 or more)		10,954			11,991
Other time deposits		13,286			14,763
Total interest-bearing		50,388			52,657
Noninterest-bearing		14,415			11,352
Deposits in foreign office — interest-bearing		768			1,118
Total deposits		65,571			65,127
Federal funds purchased and securities sold under repurchase agreements		1,742			1,557
Bank notes and other short-term borrowings		340			8,477
Derivative liabilities		1,012			1,032
Accrued expense and other liabilities		2,007			2,481
Long-term debt		11,558			14,995
Discontinued liabilities (see Note 3)		124			181
Total liabilities		82,354			93,850
EQUITY
Preferred stock, $1 par value, authorized 25,000,000 shares:
7.750% Noncumulative Perpetual Convertible Preferred Stock, Series A, $100 liquidation preference; authorized 7,475,000 shares; issued 2,904,839 and 6,575,000 shares		291			658
Fixed-Rate Cumulative Perpetual Preferred Stock, Series B, $100,000 liquidation preference; authorized and issued 25,000 shares		2,430			2,414
Common shares, $1 par value; authorized 1,400,000,000 shares; issued 946,348,435 and 584,061,120 shares		946			584
Common stock warrant		87			87
Capital surplus		3,734			2,553
Retained earnings		5,158			6,727
Treasury stock, at cost (67,813,492 and 89,058,634 shares)		(1,980	)		(2,608	)
Accumulated other comprehensive income (loss)		(3	)		65
Key shareholders’ equity		10,663			10,480
Noncontrolling interests		270			201
Total equity		10,933			10,681
Total liabilities and equity	$	93,287		$	104,531

See Notes to Consolidated Financial Statements.

85

Consolidated Statements of Income

Year ended December 31,
dollars in millions, except per share amounts	2009			2008			2007
INTEREST INCOME
Loans	$	3,194		$	3,732		$	4,719
Loans held for sale		29			76			108
Securities available for sale		460			404			380
Held-to-maturity securities		2			3			2
Trading account assets		47			56			38
Short-term investments		12			31			37
Other investments		51			51			52
Total interest income		3,795			4,353			5,336
INTEREST EXPENSE
Deposits		1,119			1,468			1,845
Federal funds purchased and securities sold under repurchase agreements		5			57			208
Bank notes and other short-term borrowings		16			130			104
Long-term debt		275			382			493
Total interest expense		1,415			2,037			2,650
NET INTEREST INCOME		2,380			2,316			2,686
Provision for loan losses		3,159			1,537			525
Net interest income (expense) after provision for loan losses		(779	)		779			2,161
NONINTEREST INCOME
Trust and investment services income		459			509			469
Service charges on deposit accounts		330			365			337
Operating lease income		227			270			272
Letter of credit and loan fees		180			183			192
Corporate-owned life insurance income		114			117			121
Net securities gains (losses) (a)		113			(2	)		(35	)
Electronic banking fees		105			103			99
Gains on leased equipment		99			40			35
Insurance income		68			65			55
Net gains (losses) from loan securitizations and sales		(1	)		(82	)		4
Net gains (losses) from principal investing		(4	)		(54	)		164
Investment banking and capital markets income (loss)		(42	)		68			120
Gain from sale/redemption of Visa Inc. shares		105			165			—
Gain related to exchange of common shares for capital securities		78			—			—
Gain from sale of McDonald Investments branch network		—			—			171
Other income		204			100			237
Total noninterest income		2,035			1,847			2,241
NONINTEREST EXPENSE
Personnel		1,514			1,581			1,602
Net occupancy		259			259			246
Operating lease expense		195			224			224
Computer processing		192			187			200
Professional fees		184			138			114
FDIC assessment		177			10			9
OREO expense, net		97			16			5
Equipment		96			92			96
Marketing		72			87			76
Provision (credit) for losses on lending-related commitments		67			(26	)		28
Intangible asset impairment		241			469			6
Other expense		460			439			552
Total noninterest expense		3,554			3,476			3,158
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(2,298	)		(850	)		1,244
Income taxes		(1,035	)		437			277
INCOME (LOSS) FROM CONTINUING OPERATIONS		(1,263	)		(1,287	)		967
Loss from discontinued operations, net of taxes of ($28), ($103) and ($10) (see Note 3)		(48	)		(173	)		(16	)
NET INCOME (LOSS)		(1,311	)		(1,460	)		951
Less: Net income attributable to noncontrolling interests		24			8			32
NET INCOME (LOSS) ATTRIBUTABLE TO KEY	$	(1,335	)	$	(1,468	)	$	919
Income (loss) from continuing operations attributable to Key common shareholders	$	(1,581	)	$	(1,337	)	$	935
Net income (loss) attributable to Key common shareholders		(1,629	)		(1,510	)		919
Per common share:
Income (loss) from continuing operations attributable to Key common shareholders	$	(2.27	)	$	(2.97	)	$	2.39
Loss from discontinued operations, net of taxes		(.07	)		(.38	)		(.04	)
Net income (loss) attributable to Key common shareholders		(2.34	)		(3.36	)		2.35
Per common share — assuming dilution:
Income (loss) from continuing operations attributable to Key common shareholders	$	(2.27	)	$	(2.97	)	$	2.36
Loss from discontinued operations, net of taxes		(.07	)		(.38	)		(.04	)
Net income (loss) attributable to Key common shareholders		(2.34	)		(3.36	)		2.32
Cash dividends declared per common share		.0925			.625			1.835
Weighted-average common shares outstanding (000)		697,155			450,039			392,013
Weighted-average common shares and potential common shares outstanding (000)		697,155			450,039			395,823

(a) For the three months ended December 31, 2009, we did not have impairment losses related to securities. Impairment losses and the portion of those losses recorded in equity as a component of AOCI on the balance sheet totaled $4 million and $2 million, respectively, for the three months ended September 30, 2009, and $7 million and $1 million, respectively, for the three months ended June 30, 2009. (see Note 6)

See Notes to Consolidated Financial Statements.

86

Consolidated Statements of Changes in Equity

	Key Shareholders’ Equity
																							Accumulated
	Preferred Stock			Common Shares								Common								Treasury			Other
	Outstanding			Outstanding			Preferred			Common		Stock		Capital			Retained			Stock,			Comprehensive			Noncontrolling			Comprehensive
dollars in millions, except per share amounts	(000)			(000)			Stock			Shares		Warrant		Surplus			Earnings			at Cost			Income (Loss)			Interests			Income (Loss)
BALANCE AT DECEMBER 31, 2006		—			399,153			—		$	492		—	$	1,602		$	8,377		$	(2,584	)	$	(184	)	$	91
Cumulative effect of adopting a new accounting standard regarding income generated by leveraged leases, net of income taxes of ($2) (See Note 18)																		(52	)
Cumulative effect of adopting a new accounting standard regarding uncertain tax positions, net of income taxes of ($1)																		(1	)
BALANCE AT JANUARY 1, 2007																		8,324
Net income																		919									32		$	951
Other comprehensive income:
Net unrealized gains on securities available for sale, net of income taxes of $30 (a)																								49						49
Net unrealized gains on derivative financial instruments, net of income taxes of $63																								122						122
Net contribution from noncontrolling interests																											110			110
Foreign currency translation adjustments																								34						34
Net pension and postretirement benefit costs, net of income taxes																								109						109
Total comprehensive income																													$	1,375
Deferred compensation															16			(3	)
Cash dividends declared on common shares ($1.835 per share)																		(718	)
Common shares reissued for stock options and other employee benefit plans					5,640										5						158
Common shares repurchased					(16,000	)															(595	)
BALANCE AT DECEMBER 31, 2007		—			388,793			—		$	492		—	$	1,623		$	8,522		$	(3,021	)	$	130		$	233
Net loss																		(1,468	)								8		$	(1,460	)
Other comprehensive income (loss):
Net unrealized gains on securities available for sale, net of income taxes of $64 (a)																								106						106
Net unrealized gains on derivative financial instruments, net of income taxes of $94																								135						135
Net unrealized losses on common investments held in employee welfare benefits trust, net of income taxes																								(4	)					(4	)
Net distribution to noncontrolling interests																											(40	)		(40	)
Foreign currency translation adjustments																								(68	)					(68	)
Net pension and postretirement benefit costs, net of income taxes																								(234	)					(234	)
Total comprehensive loss																													$	(1,565	)
Effect of adopting the measurement date provisions of a new accounting standard regarding defined benefit and other postretirement plans, net of income taxes																		(7	)
Deferred compensation															8			(3	)
Cash dividends declared on common shares ($.625 per share)																		(273	)
Cash dividends declared on Noncumulative Series A Preferred Stock ($3.8105 per share)																		(25	)
Cash dividends accrued on Cumulative Series B Preferred Stock (5% per annum)																		(15	)
Amortization of discount on Series B Preferred Stock																		(2	)
Series A Preferred Stock issued		6,575						658							(20	)
Series B Preferred Stock issued		25						2,414										(2	)
Common shares issued					92,172						92				967
Common stock warrant													87
Common shares reissued:
Acquisition of U.S.B. Holding Co., Inc.					9,895										58						290
Stock options and other employee benefit plans					4,142										(83	)					123
BALANCE AT DECEMBER 31, 2008		6,600			495,002		$	3,072		$	584	$	87	$	2,553		$	6,727		$	(2,608	)	$	65		$	201
Net loss																		(1,335	)								24		$	(1,311	)
Other comprehensive income (loss):
Net unrealized losses on securities available for sale, net of income taxes of $(5) (a)																								(1	)					(1	)
Net unrealized losses on derivative financial instruments, net of income taxes of ($77)																								(124	)					(124	)
Net unrealized gains on common investments held in employee welfare benefits trust, net of income taxes																								1						1
Net contribution from noncontrolling interests																											45			45
Foreign currency translation adjustments																								45						45
Net pension and postretirement benefit costs, net of income taxes																								11						11
Total comprehensive loss																													$	(1,334	)
Deferred compensation															15
Cash dividends declared on common shares ($.0925 per share)																		(54	)
Cash dividends declared on Noncumulative Series A Preferred Stock ($7.75 per share)																		(34	)
Cash dividends accrued on Cumulative Series B Preferred Stock (5% per annum)																		(125	)
Amortization of discount on Series B Preferred Stock								16										(16	)
Common shares issued					205,439						205				781
Common shares exchanged for Series A Preferred Stock		(3,670	)		46,602			(367	)		29				(167	)		(5	)		508
Common shares exchanged for capital securities					127,616						128				634
Common shares reissued for stock options and other employee benefit plans					3,876										(82	)					120
BALANCE AT DECEMBER 31, 2009		2,930			878,535		$	2,721		$	946	$	87	$	3,734		$	5,158		$	(1,980	)	$	(3	)	$	270

(a) Net of reclassification adjustments. Reclassification adjustments represent net unrealized gains (losses) as of December 31 of the prior year on securities available for sale that were sold during the current year. The reclassification adjustments were $65 million ($41 million after tax) in 2009, ($3) million (($2) million after tax) in 2008 and ($51) million (($32) million after tax) in 2007.

See Notes to Consolidated Financial Statements.

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Consolidated Statements of Cash Flows

Year ended December 31,
in millions	2009			2008			2007
OPERATING ACTIVITIES
Net income (loss)	$	(1,311	)	$	(1,460	)	$	951
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for loan losses		3,159			1,537			525
Depreciation and amortization expense		382			424			420
Intangible assets impairment		241			469			6
Provision (credit) for losses on lending-related commitments		67			(26	)		28
Provision for losses on LIHTC guaranteed funds		17			17			12
Net (gains) losses from principal investing		4			54			(164	)
Net (gains) losses from loan securitizations and sales		1			82			(4	)
Deferred income taxes		(878	)		(1,722	)		(74	)
Net securities (gains) losses		(113	)		2			35
Gain from sale/redemption of Visa Inc. shares		(105	)		(165	)		—
Gains on leased equipment		(99	)		(40	)		(35	)
Gain related to exchange of common shares for capital securities		(78	)		—			—
Gain from sale of Key’s claim associated with the Lehman Brothers’ bankruptcy		(32	)		—			—
Liability to Visa		—			(64	)		64
Honsador litigation reserve		—			(23	)		42
Gain from sale of McDonald Investments branch network		—			—			(171	)
Gain related to MasterCard Incorporated shares		—			—			(67	)
Gain from settlement of automobile residual value insurance litigation		—			—			(26	)
Proceeds from settlement of automobile residual value insurance litigation		—			—			279
Net (increase) decrease in loans held for sale from continuing operations		295			981			(312	)
Net (increase) decrease in trading account assets		71			(224	)		(144	)
Other operating activities, net		699			(402	)		(1,409	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		2,320			(560	)		(44	)
INVESTING ACTIVITIES
Proceeds from sale/redemption of Visa Inc. shares		105			165			—
Proceeds from sale of McDonald Investments branch network, net of retention payments		—			—			199
Proceeds from sale of MasterCard Incorporated shares		—			—			67
Cash used in acquisitions, net of cash acquired		—			(157	)		(80	)
Net (increase) decrease in short-term investments		3,478			(4,632	)		(21	)
Purchases of securities available for sale		(15,501	)		(1,663	)		(4,696	)
Proceeds from sales of securities available for sale		2,970			1,001			2,102
Proceeds from prepayments and maturities of securities available for sale		4,275			1,464			2,564
Purchases of held-to-maturity securities		(6	)		(6	)		—
Proceeds from prepayments and maturities of held-to-maturity securities		7			8			14
Purchases of other investments		(177	)		(456	)		(662	)
Proceeds from sales of other investments		41			161			358
Proceeds from prepayments and maturities of other investments		70			211			191
Net (increase) decrease in loans, excluding acquisitions, sales and transfers		11,066			(2,358	)		(5,761	)
Purchases of loans		—			(16	)		(64	)
Proceeds from loan securitizations and sales		380			280			480
Purchases of premises and equipment		(229	)		(202	)		(196	)
Proceeds from sales of premises and equipment		16			8			9
Proceeds from sales of other real estate owned		114			27			64
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		6,609			(6,165	)		(5,432	)
FINANCING ACTIVITIES
Net increase in deposits		444			382			4,030
Net increase (decrease) in short-term borrowings		(7,952	)		(543	)		4,954
Net proceeds from issuance of long-term debt		763			6,465			654
Payments on long-term debt		(3,726	)		(3,884	)		(3,583	)
Purchases of treasury shares		—			—			(595	)
Net proceeds from issuance of common shares and preferred stock		986			4,101			—
Net proceeds from issuance of common stock warrant		—			87			—
Net proceeds from reissuance of common shares		—			6			112
Tax benefits over (under) recognized compensation cost for stock-based awards		(5	)		(2	)		13
Cash dividends paid		(213	)		(445	)		(570	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(9,703	)		6,167			5,015
NET DECREASE IN CASH AND DUE FROM BANKS		(774	)		(558	)		(461	)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR		1,245			1,803			2,264
CASH AND DUE FROM BANKS AT END OF YEAR	$	471		$	1,245		$	1,803
Additional disclosures relative to cash flows:
Interest paid	$	1,489		$	1,989		$	2,688
Income taxes paid (refunded)		(121	)		2,152			342
Noncash items:
Cash dividends declared, but not paid		—			—		$	148
Assets acquired		—		$	2,825			129
Liabilities assumed		—			2,653			126
Loans transferred to portfolio from held for sale	$	199			411			—
Loans transferred to held for sale from portfolio		311			459			—
Loans transferred to other real estate owned		264			130			35

See Notes to Consolidated Financial Statements.

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1. Summary of Significant Accounting Policies

As used in these Notes, references to “Key,” “we,” “our,” “us” and similar terms refer to the consolidated entity consisting of KeyCorp and its subsidiaries. KeyCorp refers solely to the parent holding company, and KeyBank refers to KeyCorp’s subsidiary, KeyBank National Association.

We have provided the following list of acronyms and abbreviations as a useful tool for the reader. The acronyms and abbreviations identified below are used in the Notes to Consolidated Financial Statements as well as Management’s Discussion & Analysis of Financial Condition & Results of Operation.

ABO: Accumulated benefit obligation.

AICPA: American Institute of Certified Public Accountants.

ALCO: Asset/Liability Management Committee.

A/LM: Asset/liability management.

AML: Additional minimum liability.

AOCI: Accumulated other comprehensive income (loss).

APBO: Accumulated postretirement benefit obligation.

Austin: Austin Capital Management, Ltd.

CAP: Capital Assistance Program.

CMO: Collateralized mortgage obligation.

Codification: FASB accounting standards codification.

CPP: Capital Purchase Program.

CPR: Constant prepayment rate.

DGP: Debt Guarantee Program.

DIF: Deposit Insurance Fund.

EESA: Emergency Economic Stabilization Act of 2008.

EPS: Earnings per share.

ERISA: Employee Retirement Income Security Act of 1974.

ERM: Enterprise risk management.

EVE: Economic value of equity.

FASB: Financial Accounting Standards Board.

FDIC: Federal Deposit Insurance Corporation.

Federal Reserve: Board of Governors of the Federal Reserve.

FHLMC: Federal Home Loan Mortgage Corporation.

FNMA: Federal National Mortgage Association.

FSP: Financial Stability Plan.

FVA: Fair value of pension plan assets.

GAAP: U.S. generally accepted accounting principles.

GDP: Gross Domestic Product.

GNMA: Government National Mortgage Association.

Heartland: Heartland Payment Systems, Inc.

IRS: Internal Revenue Service.

ISDA: International Swaps and Derivatives Association.

KAHC: Key Affordable Housing Corporation.

KNSF Amalco: Key Nova Scotia Funding Ltd.

LIBOR: London Interbank Offered Rate.

LIHTC: Low-income housing tax credit.

LILO: Lease in, lease out transaction.

Moody’s: Moody’s Investors Service, Inc.

N/A: Not applicable.

NASDAQ: National Association of Securities Dealers Automated Quotation.

N/M: Not meaningful.

NOW: Negotiable Order of Withdrawal.

NYSE: New York Stock Exchange.

OCC: Office of the Comptroller of the Currency.

OCI: Other comprehensive income (loss).

OREO: Other real estate owned.

OTTI: Other-than-temporary impairment.

PBO: Projected benefit obligation.

PPIP: Public-Private Investment Program.

QSPE: Qualifying special purpose entity.

S&P: Standard and Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc.

SCAP: Supervisory Capital Assessment Program administered by the Federal Reserve.

SEC: Securities & Exchange Commission.

Series A Preferred Stock: KeyCorp’s 7.750% Noncumulative Perpetual Convertible Preferred Stock, Series A.

Series B Preferred Stock: KeyCorp’s Fixed-Rate Cumulative Perpetual Preferred Stock, Series B.

SFAS: Statement of financial accounting standards.

SPE: Special purpose entity.

TALF: Term Asset-Backed Securities Loan Facility.

TARP: U.S. Treasury’s Troubled Asset Relief Program.

TE: Taxable equivalent.

TLGP: Temporary Liquidity Guarantee Program of the FDIC.

USR: Underwriting standards review.

U.S. Treasury: United States Department of the Treasury.

VAR: Value at risk.

VEBA: Voluntary Employee Beneficiary Association.

VIE: Variable interest entity.

XBRL: eXtensible Business Reporting Language.

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Organization

We are one of the nation’s largest bank-based financial services companies, with consolidated total assets of $93.3 billion at December 31, 2009. Through KeyBank and other subsidiaries, we provide a wide range of retail and commercial banking, commercial leasing, investment management, consumer finance, and investment banking products and services to individual, corporate and institutional clients. As of December 31, 2009, KeyBank operated 1,007 full service retail banking branches in 14 states, a telephone banking call center services group and 1,495 automated teller machines in 16 states. Additional information pertaining to Community Banking and National Banking, our two business groups, is included in Note 4 (“Line of Business Results”).

Use of Estimates

Our accounting policies conform to GAAP and prevailing practices within the financial services industry. We must make certain estimates and judgments when determining the amounts presented in our consolidated financial statements and the related notes. If these estimates prove to be inaccurate, actual results could differ from those reported.

Basis of Presentation

The consolidated financial statements include the accounts of KeyCorp and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Some previously reported amounts have been reclassified to conform to current reporting practices.

The consolidated financial statements include any voting rights entities in which we have a controlling financial interest. In accordance with the applicable accounting guidance for consolidations, we also consolidate a VIE if we have a variable interest in the entity and are exposed to the majority of its expected losses and/or residual returns (i.e., we are considered to be the primary beneficiary). Variable interests can include equity interests, subordinated debt, derivative contracts, leases, service agreements, guarantees, standby letters of credit, loan commitments, and other contracts, agreements and financial instruments. See Note 9 (“Variable Interest Entities”) for information on our involvement with VIEs.

We use the equity method to account for unconsolidated investments in voting rights entities or VIEs if we have significant influence over the entity’s operating and financing decisions (usually defined as a voting or economic interest of 20% to 50%, but not controlling). Unconsolidated investments in voting rights entities or VIEs in which we have a voting or economic interest of less than 20% generally are carried at cost. Investments held by our registered broker-dealer and investment company subsidiaries (primarily principal investments) are carried at fair value.

QSPEs, including securitization trusts, established under the applicable accounting guidance for transfers of financial assets are not consolidated. In June 2009, the FASB issued new accounting guidance which will change the way entities account for securitizations and SPEs by eliminating the concept of a QSPE, changing the requirements for derecognition of financial assets and requiring additional disclosures. Information related to transfers of financial assets and servicing is included in this note under the heading “Loan Securitizations.” For additional information regarding how this new accounting guidance will affect us, see the section entitled “Accounting Standards Pending Adoption at December 31, 2009” in this note.

In preparing these financial statements, subsequent events were evaluated through the time the financial statements were issued. Financial statements are considered issued when they are widely distributed to all shareholders and other financial statement users, or filed with the SEC. In compliance with applicable accounting standards, all material subsequent events have been either recognized in the financial statements or disclosed in the notes to the financial statements.

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Business Combinations

We account for our business combinations using the acquisition method of accounting. Under this method of accounting, the acquired company’s net assets are recorded at fair value at the date of acquisition, and the results of operations of the acquired company are combined with Key’s results from that date forward. Acquisition costs are expensed when incurred. The difference between the purchase price and the fair value of the net assets acquired (including intangible assets with finite lives) is recorded as goodwill. Our accounting policy for intangible assets is summarized in this note under the heading “Goodwill and Other Intangible Assets.”

Statements of Cash Flows

Cash and due from banks are considered “cash and cash equivalents” for financial reporting purposes.

Trading Account Assets

These are debt and equity securities, and commercial loans that we purchase and hold but intend to sell in the near term. Trading account assets are reported at fair value. Realized and unrealized gains and losses on trading account assets are reported in “investment banking and capital markets income (loss)” on the income statement.

Securities

Securities available for sale. These are securities that we intend to hold for an indefinite period of time but that may be sold in response to changes in interest rates, prepayment risk, liquidity needs or other factors. Securities available for sale are reported at fair value. Unrealized gains and losses (net of income taxes) deemed temporary are recorded in equity as a component of AOCI on the balance sheet. Unrealized losses on equity securities deemed to be “other-than-temporary,” and realized gains and losses resulting from sales of securities using the specific identification method are included in “net securities gains (losses)” on the income statement. Unrealized losses on debt securities deemed to be “other-than-temporary” are included in “net securities gains (losses)” on the income statement or AOCI in accordance with the applicable accounting guidance related to the recognition of OTTI of debt securities, as further described in Note 6 (“Securities”).

“Other securities” held in the available-for-sale portfolio are primarily marketable equity securities that are traded on a public exchange such as the NYSE or NASDAQ.

Held-to-maturity securities. These are debt securities that we have the intent and ability to hold until maturity. Debt securities are carried at cost and adjusted for amortization of premiums and accretion of discounts using the interest method. This method produces a constant rate of return on the adjusted carrying amount.

“Other securities” held in the held-to-maturity portfolio consist of foreign bonds, capital securities and preferred equity securities.

Other-than-Temporary Impairments

During the second quarter of 2009, we adopted new accounting guidance related to the recognition and presentation of OTTI of debt securities. This new guidance also requires additional disclosures for both debt and equity securities that we hold, which are included in Note 6. In accordance with this guidance, if the amortized cost of a debt security is greater than its fair value and we intend to sell it, or more-likely-than-not will be required to sell it, before the expected recovery of the amortized cost, then the entire impairment is recognized in earnings. If we have no intent to sell the security, or it is more-likely-than-not that we will not be required to sell it, before expected recovery, then the credit portion of the impairment is recognized in earnings, while the remaining portion attributable to factors such as liquidity and interest rate changes is recognized in equity as a component of AOCI on the balance sheet. The credit portion is equal

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to the difference between the cash flows expected to be collected and the amortized cost of the debt security. Additional information regarding this guidance is provided in this note under the heading “Accounting Standards Adopted in 2009” and in Note 6.

Other Investments

Principal investments — investments in equity and mezzanine instruments made by our Principal Investing unit — represented 70% and 65% of other investments at December 31, 2009 and 2008, respectively. They include direct investments (investments made in a particular company), as well as indirect investments (investments made through funds that include other investors). Principal investments are predominantly made in privately held companies and are carried at fair value ($1.0 billion at December 31, 2009, and $990 million at December 31, 2008). Changes in fair values and realized gains and losses on sales of principal investments are reported as “net gains (losses) from principal investing” on the income statement.

In addition to principal investments, “other investments” include other equity and mezzanine instruments, such as certain real estate-related investments that are carried at fair value, as well as other types of investments that generally are carried at cost. The carrying amounts of the investments carried at cost are adjusted for declines in value if they are considered to be other-than-temporary. These adjustments are included in “investment banking and capital markets income (loss)” on the income statement.

Loans

Loans are carried at the principal amount outstanding, net of unearned income, including net deferred loan fees and costs. We defer certain nonrefundable loan origination and commitment fees, and the direct costs of originating or acquiring loans. The net deferred amount is amortized over the estimated lives of the related loans as an adjustment to the yield.

Direct financing leases are carried at the aggregate of the lease receivable plus estimated unguaranteed residual values, less unearned income and deferred initial direct fees and costs. Unearned income on direct financing leases is amortized over the lease terms using a method that approximates the interest method. This method amortizes unearned income to produce a constant rate of return on the leases. Deferred initial direct fees and costs are amortized over the lease terms as an adjustment to the yield.

Leveraged leases are carried net of nonrecourse debt. Revenue on leveraged leases is recognized on a basis that produces a constant rate of return on the outstanding investment in the leases, net of related deferred tax liabilities, during the years in which the net investment is positive.

The residual value component of a lease represents the fair value of the leased asset at the end of the lease term. We rely on industry data, historical experience, independent appraisals and the experience of the equipment leasing asset management team to value lease residuals. Relationships with a number of equipment vendors give the asset management team insight into the life cycle of the leased equipment, pending product upgrades and competing products.

In accordance with applicable accounting guidance for leases, residual values are reviewed at least annually to determine if an other-than-temporary decline in value has occurred. If such a decline occurs, the residual value is adjusted to its fair value. Impairment charges, as well as net gains or losses on sales of lease residuals, are included in “other income” on the income statement.

Loans Held for Sale

Our loans held for sale at December 31, 2009 and 2008, are disclosed in Note 7 (“Loans and Loans Held for Sale”). These loans, which we originated and intend to sell, are carried at the lower of aggregate cost or fair value. Fair value is determined based on available market data for similar assets, expected cash flows, appraisals of underlying collateral and credit quality of the borrower. If a loan is transferred from the loan portfolio to the held-for-sale category, any write-down in the carrying amount of the loan at the date of transfer is recorded as a charge-off. Subsequent declines in fair value are recognized as a charge to

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noninterest income. When a loan is placed in the held-for-sale category, we stop amortizing the related deferred fees and costs. The remaining unamortized fees and costs are recognized as part of the cost basis of the loan at the time it is sold.

Impaired and Other Nonaccrual Loans

We generally will stop accruing interest on a loan (i.e., designate the loan “nonaccrual”) when the borrower’s payment is 90 days past due for a commercial loan or 120 days past due for a consumer loan, unless the loan is well-secured and in the process of collection. Loans also are placed on nonaccrual status when payment is not past due, but we have serious doubts about the borrower’s ability to comply with existing repayment terms. Once a loan is designated nonaccrual, the interest accrued but not collected generally is charged against the allowance for loan losses, and payments subsequently received generally are applied to principal. However, if we believe that all principal and interest on a nonaccrual loan ultimately are collectible, interest income may be recognized as received.

Nonaccrual loans, other than smaller-balance homogeneous loans (i.e., home equity loans, loans to finance automobiles, etc.), are designated “impaired.” Impaired loans and other nonaccrual loans are returned to accrual status if we determine that both principal and interest are collectible. This generally requires a sustained period of timely principal and interest payments.

Allowance for Loan Losses

The allowance for loan losses represents our estimate of probable credit losses inherent in the loan portfolio at the balance sheet date. We establish the amount of the allowance for loan losses by analyzing the quality of the loan portfolio at least quarterly, and more often if deemed necessary.

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.

We estimate the appropriate level of our allowance for loan losses by applying historical loss rates to existing loans with similar risk characteristics. The loss rates used to establish the allowance may be adjusted to reflect our current assessment of many factors, including:

¨  changes in national and local economic and business conditions;

¨  changes in experience, ability and depth of our lending management and staff, in lending policies, or in the mix and volume of the loan portfolio;

¨  trends in past due, nonaccrual and other loans; and

¨  external forces, such as competition, legal developments and regulatory guidelines.

If an impaired loan has 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 carrying amount 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.

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Liability for Credit Losses on Lending-Related Commitments

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 and totaled $121 million at December 31, 2009, and $54 million at December 31, 2008. We establish the amount of this allowance by considering both historical trends and current market conditions quarterly, or more often if deemed necessary.

Loan Securitizations

In the past, we securitized education loans when market conditions were favorable. A securitization involves the sale of a pool of loan receivables to investors through either a public or private issuance (generally by a QSPE) of asset-backed securities. The securitized loans are removed from the balance sheet, and a gain or loss is recorded when the combined net sales proceeds and residual interests, if any, differ from the loans’ allocated carrying amounts. Effective December 5, 2009, we ceased originating education loans. Accordingly, gains and losses resulting from previous education loan securitizations are recorded as one component of “loss from discontinued operations, net of taxes” on the income statement. For more information about this discontinued operation, see Note 3 (“Acquisitions and Divestitures”).

We generally retain an interest in securitized loans in the form of an interest-only strip, residual asset, servicing asset or security. A servicing asset is recorded if we purchase or retain the right to service securitized loans, and receive servicing fees that exceed the going market rate. Our accounting for servicing assets is discussed below under the heading “Servicing Assets.” All other retained interests from education loan securitizations are accounted for as debt securities and classified as “discontinued assets” on the balance sheet. The primary economic assumptions used in determining the fair values of our retained interests are disclosed in Note 8 (“Loan Securitizations and Mortgage Servicing Assets”).

In accordance with applicable accounting guidance, QSPEs, including securitization trusts, established under the current accounting guidance for transfers of financial assets are exempt from consolidation. Information on the new accounting guidance for transfers of financial assets (effective January 1, 2010, for us), which amends the existing accounting guidance for transfers of financial assets, is included in this note under the heading “Basis of Presentation.”

We conduct a quarterly review of the fair values of our retained interests. This process involves reviewing the historical performance of each retained interest and the assumptions used to project future cash flows, revising assumptions and recalculating present values of cash flows, as appropriate.

The present values of cash flows represent the fair value of the retained interests. If the fair value of a retained interest exceeds its carrying amount, the increase in fair value is recorded in equity as a component of AOCI on the balance sheet. Conversely, if the carrying amount of a retained interest exceeds its fair value, impairment is indicated. If we intend to sell the retained interest, or more-likely-than-not will be required to sell it, before its expected recovery, then the entire impairment is recognized in earnings. If we do not have the intent to sell it, or it is more-likely-than-not that we will not be required to sell it, before expected recovery, then the credit portion of the impairment is recognized in earnings, while the remaining portion is recognized in AOCI.

Servicing Assets

Servicing assets and liabilities purchased or retained after December 31, 2006, are initially measured at fair value, if practical. When no ready market value (such as quoted market prices, or prices based on sales or purchases of similar assets) is available to determine the fair value of servicing assets, fair value is determined by calculating the present value of future cash flows associated with servicing the loans. This calculation is based on a number of assumptions, including the market cost of servicing, the discount rate, the prepayment rate and the default rate.

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We have elected to remeasure our servicing assets using the amortization method at each subsequent reporting date. The amortization of servicing assets is determined in proportion to, and over the period of, the estimated net servicing income, and is recorded in “other income” on the income statement.

Prior to January 1, 2007, the initial value of servicing assets purchased or retained was determined by allocating the amount of the assets sold or securitized to the retained interests and the assets sold based on their relative fair values at the date of transfer. These servicing assets are reported at the lower of amortized cost or fair value.

We service primarily commercial real estate and education loans. Servicing assets related to education loan servicing, which totaled $20 million at December 31, 2009, and $23 million at December 31, 2008, are classified as “discontinued assets” on the balance sheet as a result of our decision to exit the education lending business. Servicing assets related to all commercial real estate loan servicing totaled $221 million at December 31, 2009, and $242 million at December 31, 2008, and are included in “accrued income and other assets” on the balance sheet.

Servicing assets are evaluated quarterly for possible impairment. This process involves classifying the assets based on the types of loans serviced and their associated interest rates, and determining the fair value of each class. If the evaluation indicates that the carrying amount of the servicing assets exceeds their fair value, the carrying amount is reduced through a charge to income in the amount of such excess. For the years ended December 31, 2009, 2008 and 2007, no servicing asset impairment occurred. Additional information pertaining to servicing assets is included in Note 8.

Premises and Equipment

Premises and equipment, including leasehold improvements, are stated at cost less accumulated depreciation and amortization. We determine depreciation of premises and equipment using the straight-line method over the estimated useful lives of the particular assets. Leasehold improvements are amortized using the straight-line method over the terms of the leases. Accumulated depreciation and amortization on premises and equipment totaled $1.1 billion at December 31, 2009, and $1.2 billion at December 31, 2008.

Goodwill and Other Intangible Assets

Goodwill represents the amount by which the cost of net assets acquired in a business combination exceeds their fair value. Other intangible assets primarily are customer relationships and the net present value of future economic benefits to be derived from the purchase of core deposits. Other intangible assets are amortized on either an accelerated or straight-line basis over periods ranging from three to thirty years. Goodwill and other types of intangible assets deemed to have indefinite lives are not amortized.

In accordance with relevant accounting guidance, goodwill and certain other intangible assets are subject to impairment testing, which must be conducted at least annually. We perform goodwill impairment testing in the fourth quarter of each year. Our reporting units for purposes of this testing are our two business groups, Community Banking and National Banking. Due to the ongoing uncertainty regarding market conditions, which may continue to affect the performance of our reporting units, we continue to monitor the impairment indicators for goodwill and other intangible assets, and to evaluate the carrying amount of these assets as necessary.

The first step in goodwill impairment testing is to determine the fair value of each reporting unit. This amount is estimated using comparable external market data (market approach) and discounted cash flow modeling that incorporates an appropriate risk premium and earnings forecast information (income approach). We perform a sensitivity analysis of the estimated fair value of each reporting unit, as appropriate. If the carrying amount of a reporting unit exceeds its fair value, goodwill impairment may be indicated. In such a case, we would estimate a hypothetical purchase price for the reporting unit (representing the unit’s fair value) and then compare that hypothetical purchase price with the fair value of the unit’s net assets (excluding goodwill). Any excess of the estimated purchase price over the fair value of the reporting unit’s net assets represents the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of goodwill, the impairment loss represented by this difference is charged to earnings.

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Additional information pertaining to goodwill and other intangible assets is included in Note 11 (“Goodwill and Other Intangible Assets”).

Internally Developed Software

We rely on company personnel and independent contractors to plan, develop, install, customize and enhance computer systems applications that support corporate and administrative operations. Software development costs, such as those related to program coding, testing, configuration and installation, are capitalized and included in “accrued income and other assets” on the balance sheet. The resulting asset ($85 million at December 31, 2009, and $105 million at December 31, 2008) is amortized using the straight-line method over its expected useful life (not to exceed five years). Costs incurred during the planning and post-development phases of an internal software project are expensed as incurred.

Software that is no longer used is written off to earnings immediately. When we decide to replace software, amortization of the phased-out software is accelerated to the expected replacement date.

Derivatives

In accordance with applicable accounting guidance for derivatives and hedging, all derivatives are recognized as either assets or liabilities on the balance sheet at fair value.

Accounting for changes in fair value (i.e., gains or losses) of derivatives differs depending on whether the derivative has been designated and qualifies as part of a hedge relationship, and further, on the type of hedge relationship. For derivatives that are not designated as hedging instruments, any gain or loss is recognized immediately in earnings. A derivative that is designated and qualifies as a hedging instrument must be designated as a fair value hedge, a cash flow hedge or a hedge of a net investment in a foreign operation. We do not have any derivatives that hedge net investments in foreign operations.

A fair value hedge is used to limit exposure to changes in the fair value of existing assets, liabilities and commitments caused by changes in interest rates or other economic factors. The effective portion of a change in the fair value of a fair value hedge is recorded in earnings at the same time as a change in fair value of the hedged item, resulting in no effect on net income. The ineffective portion of a change in the fair value of such a hedging instrument is recognized in “other income” on the income statement, with no corresponding offset.

A cash flow hedge is used to minimize the variability of future cash flows that is caused by changes in interest rates or other economic factors. The effective portion of a gain or loss on a cash flow hedge is recorded as a component of AOCI on the balance sheet, and reclassified to earnings in the same period in which the hedged transaction impacts earnings. The ineffective portion of a cash flow hedge is included in “other income” on the income statement.

Hedge “effectiveness” is determined by the extent to which changes in the fair value of a derivative instrument offset changes in the fair value or cash flows attributable to the risk being hedged. If the relationship between the change in the fair value of the derivative instrument and the change in the hedged item falls within a range considered to be the industry norm, the hedge is considered “highly effective” and qualifies for hedge accounting. A hedge is “ineffective” if the relationship between the changes falls outside the acceptable range. In that case, hedge accounting is discontinued on a prospective basis. Hedge effectiveness is tested at least quarterly.

Additional information regarding the accounting for derivatives is provided in Note 20 (“Derivatives and Hedging Activities”).

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Offsetting Derivative Positions

In accordance with the applicable accounting guidance related to the offsetting of certain derivative contracts on the balance sheet, we take into account the impact of master netting agreements that allow us to settle all derivative contracts held with a single counterparty on a net basis, and to offset the net derivative position with the related cash collateral when recognizing derivative assets and liabilities. Additional information regarding derivative offsetting is provided in Note 20.

Noncontrolling Interests

Our Principal Investing unit and the Real Estate Capital and Corporate Banking Services line of business have noncontrolling (minority) interests that are accounted for in accordance with the applicable accounting guidance, which allows us to report noncontrolling interests in subsidiaries as a component of equity on the balance sheet. “Net income (loss)” on the income statement includes our revenues, expenses, gains and losses, and those pertaining to the noncontrolling interests. The portion of net results attributable to the noncontrolling interests is disclosed separately on the face of the income statement to arrive at the “net income (loss) attributable to Key.”

Guarantees

In accordance with the applicable accounting guidance for guarantees, we recognize liabilities, which are included in “accrued expense and other liabilities” on the balance sheet, for the fair value of our obligations under certain guarantees issued or modified on or after January 1, 2003.

If we receive a fee for a guarantee requiring liability recognition, the amount of the fee represents the initial fair value of the “stand ready” obligation. If there is no fee, the fair value of the stand ready obligation is determined using expected present value measurement techniques, unless observable transactions for comparable guarantees are available. The subsequent accounting for these stand ready obligations depends on the nature of the underlying guarantees. We account for our release from risk under a particular guarantee when the guarantee expires or is settled, or by a systematic and rational amortization method, depending on the risk profile of the guarantee.

Additional information regarding guarantees is included in Note 19 (“Commitments, Contingent Liabilities and Guarantees”) under the heading “Guarantees.”

Fair Value Measurements

Effective January 1, 2008, we adopted the applicable accounting guidance for fair value measurements and disclosures for all applicable financial and nonfinancial assets and liabilities. This guidance defines fair value, establishes a framework for measuring fair value, expands disclosures about fair value measurements, and applies only when other guidance requires or permits assets or liabilities to be measured at fair value; it does not expand the use of fair value to any new circumstances.

As defined in this guidance, fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants in our principal market. It represents an exit price at the measurement date. Market participants are buyers and sellers who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. Current market conditions, including imbalances between supply and demand, are considered in determining fair value.

We value our assets and liabilities based on the principal market where we would sell the particular asset or transfer the liability. The principal market is that which has the greatest volume and level of activity. In the absence of a principal market, valuation is based on the most advantageous market (i.e., the market where the asset could be sold at a price that maximizes the amount to be received or the liability transferred at a price that minimizes the amount to be paid). In the absence of observable market transactions, we consider liquidity valuation adjustments to reflect the uncertainty in pricing the instruments.

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In measuring the fair value of an asset, we assume the highest and best use of the asset by a market participant to maximize the value of the asset rather than the intended use. We also consider whether any credit valuation adjustments are necessary based on the counterparty’s credit quality.

When measuring the fair value of a liability, we assume that the nonperformance risk associated with the liability is the same before and after the transfer. Nonperformance risk is the risk that an obligation will not be satisfied, and encompasses not only our own credit risk (i.e., the risk that we will fail to meet our obligation), but also other risks such as settlement risk (i.e., the risk that upon termination or sale, the contract will not settle). We consider the effect of our own credit risk on the fair value for any period in which fair value is measured.

There are three acceptable techniques that can be used to measure fair value: the market approach, the income approach and the cost approach. Selecting the appropriate technique for valuing a particular asset or liability depends on the exit market, the nature of the asset or liability being valued, and how a market participant would value the same asset or liability. Ultimately, determination of the appropriate valuation method requires significant judgment. Moreover, applying the valuation techniques requires sufficient knowledge and expertise.

Valuation inputs refer to the assumptions market participants would use in pricing a given asset or liability. Inputs can be observable or unobservable. Observable inputs are assumptions that are based on market data obtained from an independent source. Unobservable inputs are assumptions based on our own information or assessment of assumptions used by other market participants in pricing the asset or liability. Our unobservable inputs are based on the best and most current information available on the measurement date.

All inputs, whether observable or unobservable, are ranked in accordance with a prescribed fair value hierarchy that gives the highest ranking to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest ranking to unobservable inputs (Level 3). Fair values for assets or liabilities classified as Level 2 are based on one or a combination of the following factors: (i) quoted market prices for similar assets or liabilities; (ii) observable inputs, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data. The level in the fair value hierarchy ascribed to a fair value measurement in its entirety is based on the lowest level input that is significant to the measurement. We consider an input to be significant if it drives 10% or more of the total fair value of a particular asset or liability. Assets and liabilities may transfer between levels based on the observable and unobservable inputs used at the valuation date, as the inputs may be influenced by certain market conditions.

Typically, assets and liabilities are considered to be fair valued on a recurring basis if fair value is measured regularly. However, assets and liabilities are considered to be fair valued on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet. This generally occurs when the entity applies accounting guidance that requires assets and liabilities to be recorded at the lower of cost or fair value, or assessed for impairment.

At a minimum, we conduct our valuations quarterly. Additional information regarding fair value measurements and disclosures is provided in Note 21 (“Fair Value Measurements”).

Revenue Recognition

We recognize revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectibility is reasonably assured. Our principal source of revenue is interest income. This revenue is recognized on an accrual basis primarily according to nondiscretionary formulas in written contracts, such as loan agreements or securities contracts.

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Stock-Based Compensation

Stock-based compensation is measured using the fair value method of accounting, and the measured cost is recognized over the period during which the recipient is required to provide service in exchange for the award. We estimate expected forfeitures when stock-based awards are granted and record compensation expense only for those that are expected to vest.

We recognize compensation cost for stock-based, mandatory deferred incentive compensation awards using the accelerated method of amortization over a period of approximately four years (the current year performance period and three-year vesting period, which starts generally in the first quarter following the performance period).

Generally, employee stock options become exercisable at the rate of 33-1/3% per year beginning one year after their grant date and expire no later than ten years after their grant date. We recognize stock-based compensation expense for stock options with graded vesting using an accelerated method of amortization.

We use shares repurchased under a repurchase program (treasury shares) for share issuances under all stock-based compensation programs other than the discounted stock purchase plan. Shares issued under the stock purchase plan are purchased on the open market.

We estimate the fair value of options granted using the Black-Scholes option-pricing model, as further described in Note 16 (“Stock-Based Compensation”).

Marketing Costs

We expense all marketing-related costs, including advertising costs, as incurred.

Accounting Standards Adopted in 2009

Business combinations. In December 2007, the FASB issued new accounting guidance regarding business combinations, which requires the acquiring entity in a business combination to recognize only the assets acquired and liabilities assumed in a transaction, establishes the fair value at the date of acquisition as the initial measurement for all assets acquired and liabilities assumed, and requires expanded disclosures. Under this guidance, acquisition costs must be expensed when incurred. The guidance was effective for fiscal years beginning after December 15, 2008 (effective January 1, 2009, for us). Adoption of this guidance has not impacted us since no acquisitions occurred during 2009.

Noncontrolling interests. In December 2007, the FASB issued new accounting guidance regarding noncontrolling interests, which requires all entities to report noncontrolling interests in subsidiaries as a component of equity and sets forth other presentation and disclosure requirements. This guidance was effective for fiscal years beginning after December 15, 2008 (effective January 1, 2009, for us). Additional information regarding this guidance is provided in this note under the heading “Noncontrolling Interests.” Adoption of this guidance did not have a material effect on our financial condition or results of operations.

Accounting and reporting for decreases in ownership of a subsidiary. In January 2010, the FASB issued additional guidance related to noncontrolling interests, which addresses implementation issues associated with the existing accounting guidance and amends its scope. The new guidance clarifies the entities to which the noncontrolling interests guidance applies and expands the required disclosures. The new guidance is effective for the first interim or annual reporting period ending on or after December 15, 2009 (effective December 31, 2009, for us), with retrospective application required to the first period that an entity adopted the noncontrolling interests accounting guidance (January 1, 2009, for us). We did not have any transactions during 2009 that would be impacted by this guidance.

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Accounting for transfers of financial assets and repurchase financing transactions. In February 2008, the FASB issued new accounting guidance regarding transfers of financial assets and repurchase financing transactions, which presumes that an initial transfer of a financial asset and a repurchase financing are part of the same arrangement (linked transaction). However, if certain criteria are met, the initial transfer and repurchase financing are evaluated separately. This guidance was effective for fiscal years beginning after November 15, 2008 (effective January 1, 2009, for us). Adoption of this guidance did not have a material effect on our financial condition or results of operations.

Disclosures about derivative instruments and hedging activities. In March 2008, the FASB issued new accounting guidance regarding derivative instruments and hedging activities, which amended and expanded the existing disclosure requirements. This new guidance requires qualitative disclosures about objectives and strategies for using derivatives; quantitative disclosures about fair value amounts; gains and losses on derivative instruments; and disclosures about credit risk-contingent features in derivative agreements. These expanded disclosure requirements were effective for fiscal years beginning after November 15, 2008 (effective January 1, 2009, for us). The required disclosures are provided in Note 20.

Determination of the useful life of intangible assets. In April 2008, the FASB issued new accounting guidance regarding how to determine the useful life of intangible assets. This guidance amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under the applicable goodwill and other intangibles accounting guidance. This new guidance was effective for fiscal years beginning after December 15, 2008 (effective January 1, 2009, for us). Adoption of this guidance did not have a material effect on our financial condition or results of operations.

Accounting for convertible debt instruments. In May 2008, the FASB issued new accounting guidance regarding the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement). This guidance requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate. This guidance was effective for fiscal years beginning after December 15, 2008 (effective January 1, 2009, for us). We have not issued and do not have any convertible debt instruments outstanding that are subject to this guidance.

Employers’ disclosures about postretirement benefit plan assets. In December 2008, the FASB issued new accounting guidance regarding employers’ disclosures about postretirement benefit plan assets. This guidance amends existing accounting guidance and requires additional disclosures about assets held in an employer’s defined benefit pension or other postretirement plans, including fair values of each major asset category and their levels within the fair value hierarchy as set forth in the fair value measurement accounting guidance. The new guidance was effective for fiscal years ending after December 15, 2009 (effective December 31, 2009, for us). The required disclosures are provided in Note 17 (“Employee Benefits”).

Recognition and presentation of other-than-temporary impairments. In April 2009, the FASB issued new accounting guidance regarding the recognition and presentation of OTTI of debt securities, which requires additional disclosures for both debt and equity securities. This guidance was effective for interim and annual periods ending after June 15, 2009 (effective June 30, 2009, for us). Additional information regarding this guidance is provided in this note under the heading “Other-than-Temporary Impairments” and in Note 6.

Interim disclosures about fair value of financial instruments. In April 2009, the FASB issued new accounting guidance regarding interim disclosures about fair value of financial instruments. This guidance amended existing accounting guidance to require disclosures about the fair value of financial instruments in interim financial statements of publicly traded companies. This new guidance was effective for interim and annual periods ending after June 15, 2009 (effective June 30, 2009, for us). The required disclosures are provided in Note 21.

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Determining fair value when volume and level of activity have significantly decreased and identifying transactions that are not orderly. In April 2009, the FASB issued new accounting guidance regarding the determination of fair value when the volume and level of activity for an asset or liability have significantly decreased, and transactions are not orderly. Guidance is provided for: (i) estimating fair value in accordance with the accounting guidance on fair value measurements when the volume and level of activity for an asset or liability have significantly decreased; and (ii) identifying circumstances that indicate that a transaction is not orderly. This guidance emphasizes that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions (i.e., not a forced liquidation or distressed sale). This guidance was effective for interim and annual periods ending after June 15, 2009 (effective June 30, 2009, for us). Adoption of this accounting guidance did not have a material effect on our financial condition or results of operations.

Subsequent events. In May 2009, the FASB issued new accounting guidance regarding subsequent events. This accounting guidance is similar to the previously existing standard, with some exceptions that do not result in significant changes in practice. This new guidance was effective on a prospective basis for interim or annual financial periods ending after June 15, 2009 (effective June 30, 2009, for us). In preparing these financial statements, we evaluated subsequent events through the time the financial statements were issued.

FASB accounting standards codification. In June 2009, the FASB issued accounting guidance that establishes the Codification as the single source of authoritative nongovernmental GAAP. As of the effective date, all existing accounting standard documents were superseded, and all other accounting literature not included in the Codification will be considered nonauthoritative. The Codification was launched on July 1, 2009, and is effective for interim and annual periods ending after September 15, 2009 (effective September 30, 2009, for us).

Fair value of alternative investments. In September 2009, the FASB issued an update to the Codification, which provides additional guidance related to measuring the fair value of certain alternative investments, such as interests in private equity and venture capital funds. In addition to requiring additional disclosures, this guidance allows companies to use net asset value per share to estimate the fair value of these alternative investments as a practical expedient if certain conditions are met. This guidance is effective for interim and annual periods ending after December 15, 2009 (effective December 31, 2009, for us). As permitted, we elected to early adopt the accounting requirements specified in the guidance as of September 30, 2009, and adopted the disclosure requirements as of December 31, 2009. Adoption of this guidance did not have a material effect on our financial condition or results of operations. The required disclosures are provided in Note 21.

Accounting Standards Pending Adoption at December 31, 2009

Transfers of financial assets. In June 2009, the FASB issued new accounting guidance which will change the way entities account for securitizations and SPEs by eliminating the concept of a QSPE, changing the requirements for derecognition of financial assets and requiring additional disclosures. This guidance will be effective at the start of an entity’s first fiscal year beginning after November 15, 2009 (effective January 1, 2010, for us). We do not expect the adoption of this guidance to have a material effect on our financial condition or results of operations.

Consolidation of variable interest entities. In June 2009, the FASB issued new accounting guidance which, in addition to requiring additional disclosures, will change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar) rights should be consolidated. The determination of whether a company is required to consolidate an entity will be based on, among other things, the entity’s purpose and design, and the company’s ability to direct the activities that most significantly impact the entity’s economic performance. This guidance will be effective at the start of a company’s first fiscal year beginning after November 15, 2009 (effective January 1, 2010, for us).

In February 2010, the FASB deferred the application of this new guidance for certain investment entities and clarified other aspects of the guidance. Entities qualifying for this deferral will continue to apply the previously existing consolidation guidance.

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Adoption of this accounting guidance on January 1, 2010, will require us to consolidate our education loan securitization trusts (which will be classified as discontinued operations), thereby adding approximately $2.8 billion in assets and liabilities to our balance sheet. In accordance with federal banking regulations, the consolidation will add approximately $890 million to our net risk-weighted assets. Had the consolidation taken effect on December 31, 2009, this would have reduced our Tier 1 risk-based capital ratio at that date by 13 basis points to 12.62% and our Tier 1 Common equity ratio by 8 basis points to 7.42%.

Improving disclosures about fair value measurements. In January 2010, the FASB issued new accounting guidance which will require new disclosures regarding certain aspects of an entity’s fair value disclosures and clarifies existing fair value disclosure requirements. The new disclosures and clarifications are effective for interim and annual reporting periods beginning after December 15, 2009 (effective January 1, 2010, for us), except for disclosures regarding purchases, sales, issuances and settlements in the rollforward of activity in Level 3 fair value measurements, which are effective for interim and annual periods beginning after December 15, 2010 (effective January 1, 2011, for us).

2. Earnings Per Common Share

Our basic and diluted earnings per common share are calculated as follows:

Year ended December 31,
dollars in millions, except per share amounts	2009			2008			2007
EARNINGS
Income (loss) from continuing operations	$	(1,263	)	$	(1,287	)	$	967
Less: Net income attributable to noncontrolling interests		24			8			32
Income (loss) from continuing operations attributable to Key		(1,287	)		(1,295	)		935
Less: Dividends on Series A Preferred Stock		39			25			—
Noncash deemed dividend — common shares exchanged for Series A Preferred Stock		114			—			—
Cash dividends on Series B Preferred Stock		125			15			—
Amortization of discount on Series B Preferred Stock		16			2			—
Income (loss) from continuing operations attributable to Key common shareholders		(1,581	)		(1,337	)		935
Loss from discontinued operations, net of taxes (a)		(48	)		(173	)		(16	)
Net income (loss) attributable to Key common shareholders	$	(1,629	)	$	(1,510	)	$	919
WEIGHTED-AVERAGE COMMON SHARES
Weighted-average common shares outstanding (000)		697,155			450,039			392,013
Effect of dilutive convertible preferred stock, common stock options and other stock awards (000)		—			—			3,810
Weighted-average common shares and potential common shares outstanding (000)		697,155			450,039			395,823
EARNINGS PER COMMON SHARE
Income (loss) from continuing operations attributable to Key common shareholders	$	(2.27	)	$	(2.97	)	$	2.39
Loss from discontinued operations, net of taxes (a)		(.07	)		(.38	)		(.04	)
Net income (loss) attributable to Key common shareholders		(2.34	)		(3.36	)		2.35
Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution	$	(2.27	)	$	(2.97	)	$	2.36
Loss from discontinued operations, net of taxes (a)		(.07	)		(.38	)		(.04	)
Net income (loss) attributable to Key common shareholders — assuming dilution		(2.34	)		(3.36	)		2.32

(a) In September 2009, we decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank. In April 2009, we decided to wind down the operations of Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers. We sold the subprime loan portfolio held by the Champion Mortgage finance business in November 2006, and completed the sale of Champion’s origination platform in February 2007. As a result of these decisions, we have accounted for these businesses as discontinued operations. Included in the loss from discontinued operations for 2009 is a $23 million after tax, or $.05 per common share, charge for intangible assets impairment related to Austin.

During the year ended December 31, 2007, certain weighted-average options to purchase common shares were not included in the calculation of “net income per common share attributable to Key common shareholders — assuming dilution” during any quarter in which their exercise prices were greater than the average market price of the common shares because including them would have been antidilutive. The number of options excluded from the 2007 calculation, determined by averaging the results of the four quarterly calculations, is shown in the following table. For the years ended December 31, 2009 and 2008,

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no options were included in the computation of our diluted per share results because we recorded losses for both of those years.

Year ended December 31,	2007
Weighted-average options excluded from the calculation of net income per common share attributable to Key common shareholders — assuming dilution		10,953,063
Exercise prices for weighted-average options excluded	$	27.08 to $50.00

In addition, during the years ended December 31, 2009, 2008 and 2007, weighted-average contingently issuable performance-based awards for 4,536,173, 1,177,881 and 1,616,054 common shares, respectively, were outstanding, but not included in the calculations of “net income (loss) per common share attributable to Key common shareholders — assuming dilution.” These awards vest only if we achieve certain cumulative three-year financial performance targets and were not included in the respective calculations because the time period for the measurement had not yet expired.

3. Acquisitions and Divestitures

Acquisitions and divestitures entered into during the past three years are summarized below.

Acquisitions

U.S.B. Holding Co., Inc.

On January 1, 2008, we acquired U.S.B. Holding Co., Inc., the holding company for Union State Bank, a 31-branch state-chartered commercial bank headquartered in Orangeburg, New York. U.S.B. Holding Co. had assets of $2.8 billion and deposits of $1.8 billion at the date of acquisition. Under the terms of the agreement, we exchanged 9,895,000 common shares, with a value of $348 million, and $194 million in cash for all of the outstanding shares of U.S.B. Holding Co. In connection with the acquisition, we recorded goodwill of approximately $350 million in the Community Banking reporting unit. The acquisition expanded our presence in markets both within and contiguous to our current operations in the Hudson Valley.

Tuition Management Systems, Inc.

On October 1, 2007, we acquired Tuition Management Systems, Inc., one of the nation’s largest providers of outsourced tuition planning, billing, counseling and payment services. Headquartered in Warwick, Rhode Island, Tuition Management Systems serves more than 700 colleges, universities, and elementary and secondary educational institutions. The terms of the transaction were not material.

Divestitures

Discontinued operations

Education lending. In September 2009, we decided to exit the government-guaranteed education lending business and to focus on the growing demand from schools for integrated, simplified billing, payment and cash management solutions. This decision exemplifies our disciplined focus on our core relationship businesses. As a result of this decision, we have accounted for this business as a discontinued operation.

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The results of this discontinued business are included in “loss from discontinued operations, net of taxes” on the income statement. Included in these results, as a component of noninterest income, is contractual fee income for servicing education loans, which totaled $16 million for 2009, $18 million for 2008 and $20 million for 2007. The components of “income (loss) from discontinued operations, net of taxes” for this business are as follows:

Year ended December 31,
in millions	2009			2008			2007
Net interest income	$	95		$	93		$	83
Provision for loan losses		126			298			4
Net interest income (expense) after provision for loan losses		(31	)		(205	)		79
Noninterest income		23			2			(3	)
Noninterest expense		59			83			73
Income (loss) before income taxes		(67	)		(286	)		3
Income taxes		(25	)		(107	)		1
Income (loss) from discontinued operations, net of taxes (a)	$	(42	)	$	(179	)	$	2

(a) Includes after-tax charges of $59 million for 2009, $114 million for 2008 and $141 million for 2007, determined by applying a matched funds transfer pricing methodology to the liabilities assumed necessary to support the education lending operations.

The discontinued assets and liabilities of our education lending business included on the balance sheet are as follows:

December 31,
in millions	2009		2008
Securities available for sale	$	182	$	191
Loans, net of unearned income of $1 and $2		3,523		3,669
Less: Allowance for loan losses		157		174
Net loans		3,366		3,495
Loans held for sale		434		401
Accrued income and other assets		192		270
Total assets	$	4,174	$	4,357
Noninterest-bearing deposits	$	119	$	133
Derivative liabilities		—		6
Accrued expense and other liabilities		4		24
Total liabilities	$	123	$	163

Austin Capital Management, Ltd. In April 2009, we decided to wind down the operations of Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers. As a result of this decision, we have accounted for this business as a discontinued operation.

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The results of this discontinued business are included in “loss from discontinued operations, net of taxes” on the income statement. The components of “income (loss) from discontinued operations, net of taxes” for this business are as follows:

Year ended December 31,
in millions	2009			2008		2007
Noninterest income	$	26		$	29	$	21
Intangible assets impairment		27			—		—
Other noninterest expense		8			19		15
Income (loss) before income taxes		(9	)		10		6
Income taxes		(3	)		4		2
Income (loss) from discontinued operations, net of taxes	$	(6	)	$	6	$	4

The discontinued assets and liabilities of Austin included on the balance sheet are as follows:

December 31,
in millions	2009		2008
Cash and due from banks	$	23	$	12
Goodwill		—		25
Other intangible assets		1		12
Accrued income and other assets		10		7
Total assets	$	34	$	56
Accrued expense and other liabilities	$	1	$	18
Total liabilities	$	1	$	18

Champion Mortgage. On February 28, 2007, we sold the Champion Mortgage loan origination platform to an affiliate of Fortress Investment Group LLC, a global alternative investment and asset management firm, for cash proceeds of $.5 million. In 2006, we sold the subprime mortgage loan portfolio held by the Champion Mortgage finance business to a wholly owned subsidiary of HSBC Finance Corporation.

We have applied discontinued operations accounting to the Champion Mortgage finance business. The results of this discontinued business are included in “loss from discontinued operations, net of taxes” on the income statement for the year ended December 31, 2007. The components of “loss from discontinued operations, net of taxes” for this business are as follows:

Year ended December 31,
in millions	2007
Net interest income	$	2
Noninterest income (a)		3
Noninterest expense (b)		40
Loss before income taxes		(35	)
Income taxes		(13	)
Loss from discontinued operations, net of taxes (c)	$	(22	)

(a)	Includes loss on disposal of $3 million ($2 million after tax).
(b)	Includes disposal transaction costs of $21 million ($13 million after tax).
(c)	Includes after-tax charges of $.8 million, determined by applying a matched funds transfer pricing methodology to the liabilities assumed necessary to support Champion’s operations.

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Combined discontinued operations. The combined results of the discontinued operations are as follows:

Year ended December 31,
in millions	2009			2008			2007
Net interest income	$	95		$	93		$	85
Provision for loan losses		126			298			4
Net interest income (expense) after provision for loan losses		(31	)		(205	)		81
Noninterest income		49			31			21
Intangible assets impairment		27			—			—
Noninterest expense		67			102			128
Loss before income taxes		(76	)		(276	)		(26	)
Income taxes		(28	)		(103	)		(10	)
Loss from discontinued operations, net of taxes (a)	$	(48	)	$	(173	)	$	(16	)

(a) Includes after-tax charges of $59 million for 2009, $114 million for 2008 and $142 million for 2007, determined by applying a matched funds transfer pricing methodology to the liabilities assumed necessary to support the discontinued operations.

The combined assets and liabilities of the discontinued operations are as follows:

December 31,
in millions	2009		2008
Cash and due from banks	$	23	$	12
Securities available for sale		182		191
Loans, net of unearned income of $1 and $2		3,523		3,669
Less: Allowance for loan losses		157		174
Net loans		3,366		3,495
Loans held for sale		434		401
Goodwill		—		25
Other intangible assets		1		12
Accrued income and other assets		202		277
Total assets	$	4,208	$	4,413
Noninterest-bearing deposits	$	119	$	133
Derivative liabilities		—		6
Accrued expense and other liabilities		5		42
Total liabilities	$	124	$	181

McDonald Investments branch network

On February 9, 2007, McDonald Investments Inc., our wholly owned subsidiary, sold its branch network, which included approximately 570 financial advisors and field support staff, and certain fixed assets to UBS Financial Services Inc., a subsidiary of UBS AG. We received cash proceeds of $219 million and recorded a gain of $171 million ($107 million after tax, or $.26 per diluted common share) in connection with the sale. We retained McDonald Investments’ corporate and institutional businesses, including Institutional Equities and Equity Research, Debt Capital Markets and Investment Banking. In addition, we continue to operate our Wealth Management, Trust and Private Banking businesses. On April 16, 2007, we changed the name of the registered broker-dealer through which our corporate and institutional investment banking and securities businesses operate to KeyBanc Capital Markets Inc.

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4. Line of Business Results

Community Banking

Regional Banking provides individuals with branch-based deposit and investment products, personal finance services and loans, including residential mortgages, home equity and various types of installment loans. This line of business also provides small businesses with deposit, investment and credit products, and business advisory services.

Regional Banking also offers financial, estate and retirement planning, and asset management services to assist high-net-worth clients with their 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.

National Banking

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 construction and interim lending, permanent debt placements and servicing, equity and investment banking, and other commercial banking products and services to developers, brokers and owner-investors. 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 nonaffiliated third parties). Real Estate Capital emphasizes providing clients with finance solutions through access to the capital markets.

Corporate Banking Services provides cash management, interest rate derivatives, and foreign exchange products and services to clients served by the Community Banking and National Banking groups. 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.

Equipment Finance meets the equipment leasing 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.

Through its Victory Capital Management unit, Institutional and Capital Markets 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.

Consumer Finance processes tuition payments for private schools. Through its Commercial Floor Plan Lending unit, this line of business also finances inventory for automobile dealers. In October 2008, we exited retail and floor-plan lending for marine and recreational vehicle products, and began to limit new education loans to those backed by government guarantee. In September 2009, we decided to discontinue

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the education lending business and to focus on the growing demand from schools for integrated, simplified billing, payment and cash management solutions. The Consumer Finance line of business continues to service existing loans in these portfolios. These actions are consistent with our strategy of de-emphasizing nonrelationship or out-of-footprint businesses.

Other Segments

Other Segments consist of Corporate Treasury and our Principal Investing unit.

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 each major business group for the years ended December 31, 2009, 2008 and 2007. This table is accompanied by supplementary information for each of the lines of business that make up these groups. The information was derived from the internal financial reporting system that 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 with 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. The net effect of this funds transfer pricing is charged to the lines of business based on the total loan and deposit balances of each line.

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

¨  The consolidated provision for loan 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 losses. This methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan 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.

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.

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Year ended December 31,	Community Banking									National Banking
dollars in millions	2009			2008			2007			2009			2008			2007
SUMMARY OF OPERATIONS
Net interest income (TE)	$	1,701		$	1,742		$	1,687		$	1,037		$	404	(d)	$	1,333
Noninterest income		781			834			1,038	(c)		841			815	(d)		906	(d)
Total revenue (TE) (a)		2,482			2,576			2,725			1,878			1,219			2,239
Provision (credit) for loan losses		639			221			73			2,518			1,319			454
Depreciation and amortization expense		145			146			142			237			278			278
Other noninterest expense		1,797			1,632			1,593			1,395	(d)		1,441			1,016
Income (loss) from continuing operations before income taxes (TE)		(99	)		577			917			(2,272	)		(1,819	)		491
Allocated income taxes and TE adjustments		(37	)		216			344			(778	)		(506	)		186
Income (loss) from continuing operations		(62	)		361			573			(1,494	)		(1,313	)		305
Loss from discontinued operations, net of taxes		—			—			—			(48	)		(173	)		(16	)
Net income (loss)		(62	)		361			573			(1,542	)		(1,486	)		289
Less: Net income (loss) attributable to noncontrolling interests		—			—			—			(5	)		—			—
Net income (loss) attributable to Key	$	(62	)	$	361		$	573		$	(1,537	)	$	(1,486	)	$	289
AVERAGE BALANCES (b)
Loans and leases	$	27,806		$	28,650		$	26,801		$	38,390		$	43,812		$	39,771
Total assets (a)		30,730			31,634			29,463			44,270			52,227			46,927
Deposits		52,437			50,290			46,667			13,012			12,081			11,942
OTHER FINANCIAL DATA
Expenditures for additions to long-lived assets (a), (b)	$	139		$	489		$	99		$	9		$	11		$	14
Net loan charge-offs (b)		370			203			95			1,887			928			176
Return on average allocated equity (b)		(1.86	)%		11.70	%		22.82	%		(27.71	)%		(25.41)	%		7.23	%
Return on average allocated equity		(1.86	)		11.70			22.82			(28.65	)		(28.75	)		6.85
Average full-time equivalent employees (g)		8,532			8,787			8,891			2,838			3,529			3,974

(a)	Substantially all revenue generated by our major business groups 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 groups, are located in the United States.
(b)	From continuing operations.
(c)	Community Banking’s results for 2007 include a $171 million ($107 million after tax) gain from the sale of the McDonald Investments branch network on February 9, 2007. See Note 3 (“Acquisitions and Divestitures”) for more information about this transaction.
(d)	National Banking’s results for 2009 include a $45 million ($28 million after tax) write-off of intangible assets, other than goodwill, resulting from actions taken to cease lending in certain equipment leasing markets, and a $196 million ($164 million after tax) noncash charge for goodwill and other intangible assets impairment. National Banking’s results for 2008 include a $465 million ($420 million after tax) noncash charge for intangible assets impairment. National Banking’s results for 2008 also include $54 million ($33 million after tax) of derivative-related charges as a result of market disruption caused by the failure of Lehman Brothers, and $31 million ($19 million after tax) of realized and unrealized losses from the residential properties segment of the construction loan portfolio. Also, during 2008, National Banking’s taxable-equivalent revenue and loss from continuing operations attributable to Key were reduced by $890 million and $557 million, respectively, as a result of its involvement with certain leveraged lease financing transactions which were challenged by the IRS. National Banking’s results for 2007 include a $26 million ($17 million after tax) gain from the settlement of the residual value insurance litigation.
(e)	Other Segments’ results for 2009 include a $17 million ($11 million after tax) loss during the third quarter and a $95 million ($59 million after tax) gain during the second quarter related to the exchange of common shares for capital securities. Also, during 2009, Other Segments’ results include net gains of $125 million ($78 million after tax) in connection with the repositioning of the securities portfolio. Other Segments’ results for 2008 include a $23 million ($14 million after tax) credit recorded when we reversed the remaining reserve associated with the Honsador litigation, which was settled in September 2008. Other Segments’ results for 2007 include a $26 million ($16 million after tax) charge for the Honsador litigation and a $49 million ($31 million after tax) loss in connection with the repositioning of the securities portfolio.
(f)	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. Reconciling Items for 2008 include $120 million of previously accrued interest recovered in connection with our opt-in to the IRS global tax settlement and total charges of $505 million to income taxes for the interest cost associated with the leveraged lease tax litigation. Also, during 2008, Reconciling Items include a $165 million ($103 million after tax) gain from the partial redemption of our equity interest in Visa Inc. and a $17 million charge to income taxes for the interest cost associated with the increase to our tax reserves for certain LILO transactions. Reconciling Items for 2007 include gains of $27 million ($17 million after tax) during the third quarter and $40 million ($25 million after tax) during the second quarter related to MasterCard Incorporated shares. Results for 2007 also include a $64 million ($40 million after tax) charge representing the fair value of our potential liability to Visa Inc. and a $16 million ($10 million after tax) charge for the Honsador litigation.
(g)	The number of average full-time equivalent employees has not been adjusted for discontinued operations.

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Other Segments									Total Segments									Reconciling Items										Key
2009			2008			2007			2009			2008			2007				2009			2008			2007			2009			2008			2007
$	(188	)	$	(137	)	$	(98	)	$	2,550		$	2,009		$	2,922			$	(144	)	$	(147	)	$	(137	)	$	2,406		$	1,862		$	2,785
	311	(e)		41			239	(e)		1,933			1,690			2,183				102	(f)		157	(f)		58	(f)		2,035			1,847			2,241
	123			(96	)		141			4,483			3,699			5,105				(42	)		10			(79	)		4,441			3,709			5,026
	___			___			___			3,157			1,540			527				2			(3	)		(2	)		3,159			1,537			525
	___			___			___			382			424			420				___			___			___			382			424			420
	40			10	(e)		53	(e)		3,232			3,083			2,662				(60	)		(31	)		76	(f)		3,172			3,052			2,738
	83			(106	)		88			(2,288	)		(1,348	)		1,496				16			44			(153	)		(2,272	)		(1,304	)		1,343
	(12	)		(88	)		(26	)		(827	)		(378	)		504				(182)	(f)		361	(f)		(128	)		(1,009	)		(17	)		376
	95			(18	)		114			(1,461	)		(970	)		992				198			(317	)		(25	)		(1,263	)		(1,287	)		967
	___			___			___			(48	)		(173	)		(16	)			___			___			___			(48	)		(173	)		(16	)
	95			(18	)		114			(1,509	)		(1,143	)		976				198			(317	)		(25	)		(1,311	)		(1,460	)		951
	29			8			32			24			8			32				___			___			___			24			8			32
$	66		$	(26	)	$	82		$	(1,533	)	$	(1,151	)	$	944			$	198		$	(317	)	$	(25	)	$	(1,335	)	$	(1,468	)	$	919
$	142		$	209		$	255		$	66,338		$	72,671		$	66,827			$	48		$	130		$	197		$	66,386		$	72,801		$	67,024
	19,272			14,992			12,665			94,272			98,853			89,055				899			1,357			2,285			95,171			100,210			91,340
	1,809			2,819			3,035			67,258			65,190			61,644				(213	)		(183	)		(122	)		67,045			65,007			61,522
	___			___			___		$	148		$	500		$	113			$	127		$	161		$	174		$	275		$	661		$	287
	___			___			___			2,257			1,131			271				___			___			___			2,257			1,131			271
	N/M			N/M			N/M			(16.23)	%		(11.26)	%		13.41	%			N/M			N/M			N/M			(12.15)	%		(14.51)	%		12.11	%
	N/M			N/M			N/M			(16.39	)		(13.25	)		13.19				N/M			N/M			N/M			(12.60	)		(16.45	)		11.90
	40			42			43			11,410			12,358			12,908				5,288			5,737			6,026			16,698			18,095			18,934

Supplementary information (Community Banking lines of business)

Year ended December 31,	Regional Banking									Commercial Banking
dollars in millions	2009			2008			2007			2009			2008			2007
Total revenue (TE)	$	2,093		$	2,181		$	2,344		$	389		$	395		$	381
Provision for loan losses		472			155			76			167			66			(3	)
Noninterest expense		1,723			1,593			1,540			219			185			195
Net income (loss) attributable to Key		(64	)		271			455			2			90			118
Average loans and leases		19,541			19,754			18,608			8,265			8,896			8,193
Average loans held for sale		146			63			32			1			9			3
Average deposits		48,156			46,634			43,201			4,281			3,656			3,466
Net loan charge-offs		287			154			81			83			49			14
Net loan charge-offs to average loans		1.47	%		.78	%		.44	%		1.00	%		.55	%		.17	%
Nonperforming assets at year end	$	312		$	169		$	119		$	157		$	76		$	34
Return on average allocated equity		(2.76)	%		12.47	%		26.01	%		.20	%		9.88	%		15.49	%
Average full-time equivalent employees		8,223			8,459			8,542			309			328			349

Supplementary information (National Banking lines of business)

	Real Estate Capital
Year ended December 31,	and Corporate Banking Services									Equipment Finance									Institutional and Capital Markets									Consumer Finance
dollars in millions	2009			2008			2007			2009			2008			2007			2009			2008			2007			2009			2008			2007
Total revenue (TE)	$	555		$	582		$	697		$	388		$	(404	)	$	608		$	729		$	747		$	624		$	206		$	294		$	310
Provision for loan losses		1,648			662			322			360			156			69			112			122			12			398			379			51
Noninterest expense		498			319			384			392			621			372			571			647			421			171			132			117
Income (loss) from continuing operations attributable to Key		(1,012	)		(249	)		(6	)		(228	)		(833	)		105			(1	)		(94	)		119			(248	)		(137	)		87
Net income (loss) attributable to Key		(1,012	)		(249	)		(6	)		(228	)		(833	)		105			(7	)		(88	)		123			(290	)		(316	)		67
Average loans and leases (a)		15,265			16,658			14,132			8,508			10,119			10,626			7,708			8,299			6,739			6,909			8,736			8,274
Average loans held for sale (a)		255			727			1,309			44			40			9			203			561			343			1			4			9
Average deposits		10,397			10,271			9,662			16			17			15			2,303			1,441			1,910			296			352			355
Net loan charge-offs (a)		1,234			594			57			187			135			63			116			45			10			350			153			46
Net loan charge-offs to average loans (a)		8.08	%		3.57	%		.40	%		2.20	%		1.33	%		.59	%		1.50	%		.54	%		.15	%		5.07	%		1.75	%		.56	%
Nonperforming assets at year end (a)	$	1,076		$	543		$	475		$	313		$	158		$	58		$	102		$	53		$	15		$	209		$	209		$	40
Return on average allocated equity (a)		(39.56)	%		(12.05)	%		(.42)	%		(34.97)	%		(92.15)	%		11.89	%		(.09)	%		(7.46	)%		10.81	%		(23.96)	%		(14.62	)%		10.82	%
Return on average allocated equity		(39.56	)		(12.05	)		(.42	)		(34.97	)		(92.15	)		11.89			(.63	)		(6.98	)		11.17			(28.02	)		(33.72	)		8.33
Average full-time equivalent employees (b)		981			1,194			1,297			737			903			974			846			943			1,116			274			489			587

(a)	From continuing operations.
(b)	The number of average full-time equivalent employees has not been adjusted for discontinued operations.

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5. Restrictions on Cash, Dividends and Lending Activities

Federal law requires a depository institution to maintain a prescribed amount of cash or deposit reserve balances with its Federal Reserve Bank. KeyBank maintained average reserve balances aggregating $179 million in 2009 to fulfill these requirements.

Capital distributions from KeyBank and other subsidiaries are our principal source of cash flows for paying dividends on our common and preferred shares, servicing our debt and financing corporate operations. Federal banking law limits the amount of capital distributions that a bank can make to its holding company without prior regulatory approval. A national bank’s dividend-paying capacity is affected by several factors, including net profits (as defined by statute) for the two previous calendar years and for the current year, up to the date of dividend declaration.

During 2009, KeyBank did not pay any dividends to KeyCorp; nonbank subsidiaries paid KeyCorp a total of $.8 million in dividends. As of the close of business on December 31, 2009, KeyBank would not have been permitted to pay dividends to KeyCorp without prior regulatory approval since the bank had a net loss of $1.151 billion for 2009. For information related to the limitations on KeyCorp’s ability to pay dividends and repurchase common shares as a result of its participation in the U.S. Treasury’s CPP, see Note 15 (“Shareholders’ Equity”). During 2009, KeyCorp made capital infusions of $1.2 billion to KeyBank. At December 31, 2009, KeyCorp held $3.5 billion in short-term investments, which can be used to pay dividends, service debt and finance corporate operations.

Federal law also restricts loans and advances from bank subsidiaries to their parent companies (and to nonbank subsidiaries of their parent companies), and requires those transactions to be secured.

6. Securities

The amortized cost, unrealized gains and losses, and approximate fair value of our securities available for sale and held-to-maturity securities are presented in the following table. Gross unrealized gains and losses represent the difference between the amortized cost and the fair value of securities on the balance sheet as of the dates indicated. Accordingly, the amount of these gains and losses may change in the future as market conditions change.

	2009								2008
			Gross		Gross						Gross		Gross
December 31,	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
in millions	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury, agencies and corporations	$	8		—		—	$	8	$	9	$	1		—	$	10
States and political subdivisions		81	$	2		—		83		90		1		—		91
Collateralized mortgage obligations		14,894		187	$	75		15,006		6,380		148	$	5		6,523
Other mortgage-backed securities		1,351		77		—		1,428		1,505		63		1		1,567
Other securities		100		17		1		116		71		1		17		55
Total securities available for sale (a)	$	16,434	$	283	$	76	$	16,641	$	8,055	$	214	$	23	$	8,246
HELD-TO-MATURITY SECURITIES
States and political subdivisions	$	3		—		—	$	3	$	4		—		—	$	4
Other securities		21		—		—		21		21		—		—		21
Total held-to-maturity securities	$	24		—		—	$	24	$	25		—		—	$	25

(a) Excludes retained interests in securitizations with a fair value of $182 million and $191 million at December 31, 2009 and 2008, respectively, related to the discontinued operations of the education lending business.

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The following table summarizes our securities available for sale that were in an unrealized loss position as of December 31, 2009 and 2008.

	Duration of Unrealized Loss Position
	Less than 12 Months				12 Months or Longer				Total
			Gross				Gross				Gross
			Unrealized				Unrealized				Unrealized
in millions	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
DECEMBER 31, 2009
Securities available for sale:
Collateralized mortgage obligations	$	4,988	$	75		—		—	$	4,988	$	75
Other securities		2		—	$	4	$	1		6		1
Total temporarily impaired securities	$	4,990	$	75	$	4	$	1	$	4,994	$	76
DECEMBER 31, 2008
Securities available for sale:
Collateralized mortgage obligations	$	107		—	$	360	$	5	$	467	$	5
Other mortgage-backed securities		3		—		15		1		18		1
Other securities		40	$	13		5		4		45		17
Total temporarily impaired securities	$	150	$	13	$	380	$	10	$	530	$	23

Of the $76 million of gross unrealized losses at December 31, 2009, $75 million relates to 21 fixed-rate collateralized mortgage obligations, which we invested in as part of an overall A/LM strategy. Since these securities have fixed interest rates, their fair value is sensitive to movements in market interest rates. These securities have a weighted-average maturity of 3.5 years at December 31, 2009.

The unrealized losses within each investment category are considered temporary since we expect to collect all contractually due amounts from these securities. Accordingly, these investments have been reduced to their fair value through OCI, not earnings.

We regularly assess our securities portfolio for OTTI. The assessments are based on the nature of the securities, underlying collateral, the financial condition of the issuer, the extent and duration of the loss, our intent related to the individual securities, and the likelihood that we will have to sell these securities prior to expected recovery.

Debt securities identified to have OTTI are written down to their current fair value. For those debt securities that we intend to sell, or more-likely-than-not will be required to sell, prior to the expected recovery of the amortized cost, the entire impairment (i.e., difference between amortized cost and the fair value) is recognized in earnings. For those debt securities that we do not intend to sell, or it is more-likely-than-not that we will not be required to sell, prior to expected recovery, the credit portion of OTTI is recognized in earnings, while the remaining OTTI is recognized in equity as a component of AOCI on the balance sheet. For the nine months ended December 31, 2009, impairment losses through earnings and the portion of those loses recorded in equity as a component of AOCI on the balance sheet totaled $11 million and $3 million, respectively.

As shown in the following table, there were no additional credit related impairments on our debt securities during the fourth quarter of 2009. The cumulative credit impairments of $8 million all relate to residual interests associated with our education loan securitizations. These assets are included in “discontinued assets” on the balance sheet as a result of our decision to exit the education lending business. For more information about this discontinued operation, see Note 3 (“Acquisitions and Divestitures”).

Three months ended December 31, 2009
in millions
Balance at September 30, 2009	$	8
Impairment recognized in earnings		—
Balance at December 31, 2009	$	8

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Realized gains and losses related to securities available for sale were as follows:

Year ended December 31,
in millions	2009		2008			2007
Realized gains	$	129	$	37		$	40
Realized losses		16		39			75
Net securities gains (losses)	$	113	$	(2	)	$	(35	)

At December 31, 2009, securities available for sale and held-to-maturity securities totaling $8.7 billion were pledged to secure public and trust deposits and securities sold under repurchase agreements, to facilitate access to secured funding and for other purposes required or permitted by law.

The following table shows securities by remaining maturity. Collateralized mortgage obligations and other mortgage-backed securities — both of which are included in the securities available-for-sale portfolio — are presented based on their expected average lives. The remaining securities, including all of those in the held-to-maturity portfolio, are presented based on their remaining contractual maturity. Actual maturities may differ from expected or contractual maturities since borrowers have the right to prepay obligations with or without prepayment penalties.

	Securities				Held-to-Maturity
	Available for Sale				Securities
December 31, 2009	Amortized		Fair		Amortized		Fair
in millions	Cost		Value		Cost		Value
Due in one year or less	$	854	$	883	$	5	$	5
Due after one through five years		15,381		15,552		19		19
Due after five through ten years		177		182		—		—
Due after ten years		22		24		—		—
Total (a)	$	16,434	$	16,641	$	24	$	24

(a) At December 31, 2009, we have excluded retained interests in securitizations with an amortized cost and fair value of $173 million and $182 million, respectively, related to the discontinued operations of the education lending business. Of these amounts, $52 million ($56 million at fair value) is due after one through five years and the remaining $121 million ($126 million at fair value) is due after five through ten years.

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7. Loans and Loans Held for Sale

Our loans by category are summarized as follows:

December 31,
in millions	2009			2008
Commercial, financial and agricultural	$	19,248		$	27,260
Commercial real estate:
Commercial mortgage		10,457	(a)		10,819
Construction		4,739	(a)		7,717
Total commercial real estate loans		15,196			18,536
Commercial lease financing		7,460			9,039
Total commercial loans		41,904			54,835
Real estate — residential mortgage		1,796			1,908
Home equity:
Community Banking		10,052			10,124
National Banking		834			1,051
Total home equity loans		10,886			11,175
Consumer other — Community Banking		1,181			1,233
Consumer other — National Banking:
Marine		2,787			3,401
Other		216			283
Total consumer other — National Banking		3,003			3,684
Total consumer loans		16,866			18,000
Total loans (b)	$	58,770		$	72,835

(a)	In late March 2009, we transferred $1.5 billion of loans from the construction portfolio to the commercial mortgage portfolio in accordance with regulatory guidelines pertaining to the classification of loans for projects that have reached a completed status.
(b)	Excludes loans in the amount of $3.5 billion and $3.7 billion at December 31, 2009 and 2008, respectively, related to the discontinued operations of the education lending business.

We use interest rate swaps, which modify the repricing characteristics of certain loans, to manage interest rate risk. For more information about such swaps, see Note 20 (“Derivatives and Hedging Activities”).

Our loans held for sale by category are summarized as follows:

December 31,
in millions	2009		2008
Commercial, financial and agricultural	$	14	$	102
Real estate — commercial mortgage		171		273
Real estate — construction		92		164
Commercial lease financing		27		7
Real estate — residential mortgage		139		77
Automobile		—		3
Total loans held for sale (a)	$	443	$	626

(a) Excludes loans in the amount of $434 million and $401 million at December 31, 2009 and 2008, respectively, related to the discontinued operations of the education lending business.

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Commercial and consumer lease financing receivables primarily are direct financing leases, but also include leveraged leases. The composition of the net investment in direct financing leases is as follows:

December 31,
in millions	2009			2008
Direct financing lease receivables	$	5,554		$	6,286
Unearned income		(573	)		(678	)
Unguaranteed residual value		453			529
Deferred fees and costs		61			66
Net investment in direct financing leases	$	5,495		$	6,203

At December 31, 2009, minimum future lease payments to be received are as follows: 2010 ¾ $2 billion; 2011 ¾ $1.5 billion; 2012 ¾ $866 million; 2013 ¾ $489 million; 2014 ¾ $260 million; and all subsequent years ¾ $270 million. The allowance related to lease financing receivables is $280 million at December 31, 2009.

Changes in the allowance for loan losses are summarized as follows:

Year ended December 31,
in millions	2009			2008			2007
Balance at beginning of year	$	1,629		$	1,195		$	939
Charge-offs		(2,396	)		(1,240	)		(365	)
Recoveries		139			109			94
Net loans charged off		(2,257	)		(1,131	)		(271	)
Provision for loan losses from continuing operations		3,159			1,537			525
Allowance related to loans acquired, net		—			32			—
Foreign currency translation adjustment		3			(4	)		2
Balance at end of year	$	2,534		$	1,629		$	1,195

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

Year ended December 31,
in millions	2009		2008			2007
Balance at beginning of year	$	54	$	80		$	53
Provision (credit) for losses on lending-related commitments		67		(26	)		28
Charge-offs		—		—			(1	)
Balance at end of year (a)	$	121	$	54		$	80

(a) Included in “accrued expense and other liabilities” on the balance sheet.

8. Loan Securitizations and Mortgage Servicing Assets

Retained Interests in Loan Securitizations

A securitization involves the sale of a pool of loan receivables indirectly to investors through either a public or private issuance (generally by a QSPE) of asset-backed securities. Generally, the assets are transferred to a trust, which then sells bond and other interests in the form of certificates of ownership. In previous years, we sold education loans in securitizations, but we have not securitized any education loans since 2006 due to unfavorable market conditions.

A servicing asset is recorded if we purchase or retain the right to service securitized loans and receive servicing fees that exceed the going market rate. We generally retain an interest in securitized loans in the form of an interest-only strip, residual asset, servicing asset or security. Our mortgage servicing assets are discussed in this note under the heading “Mortgage Servicing Assets.” Retained interests

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from education loan securitizations are accounted for as debt securities and classified as “discontinued assets” on the balance sheet as a result of our decision to exit the education lending business.

In accordance with the relevant accounting guidance, QSPEs, including securitization trusts, established under the accounting guidance related to transfers of financial assets are exempt from consolidation. In June 2009, the FASB issued new guidance which will change the way entities account for securitizations and SPEs. Information related to our consolidation policy is included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Basis of Presentation.” For additional information regarding how this new accounting guidance, which is effective January 1, 2010, will affect us, see Note 1 under the heading “Accounting Standards Pending Adoption at December 31, 2009.”

We use certain assumptions and estimates to determine the fair value to be allocated to retained interests at the date of transfer and at subsequent measurement dates. At December 31, 2009, primary economic assumptions used to measure the fair value of our retained interests in education loans and the sensitivity of the current fair value of residual cash flows to immediate adverse changes in those assumptions are as follows:

December 31, 2009
dollars in millions
Fair value of retained interests	$	182
Weighted-average life (years)		1.0 - 7.0
PREPAYMENT SPEED ASSUMPTIONS (ANNUAL RATE)		4.00% - 26.00	%
Impact on fair value of 1% CPR	$	(4	)
Impact on fair value of 10% CPR		(32	)
EXPECTED CREDIT LOSSES		2.00% - 80.00	%
Impact on fair value of 5% loss severity increase	$	(2	)
Impact on fair value of 10% loss severity increase		(11	)
RESIDUAL CASH FLOWS DISCOUNT RATE (ANNUAL RATE)		8.50% - 14.00	%
Impact on fair value of 2% increase	$	(29	)
Impact on fair value of 5% increase		(47	)
EXPECTED DEFAULTS (STATIC RATE)		3.75% - 40.00	%
Impact on fair value of 1% increase	$	(9	)
Impact on fair value of 10% increase		(68	)
VARIABLE RETURNS TO TRANSFEREES		(a	)

These sensitivities are hypothetical and should be relied upon with caution. Sensitivity analysis is based on the nature of the asset, the seasoning (i.e., age and payment history) of the portfolio, and historical results. We generally cannot extrapolate changes in fair value based on a 1% variation in assumptions because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may cause changes in another. For example, increases in market interest rates may result in lower prepayments and increased credit losses, which might magnify or counteract the sensitivities.

(a)

LIBOR plus contractual spread over LIBOR ranging from .00% to 1.30%.

The fair value measurement of our mortgage servicing assets is described in this note under the heading “Mortgage Servicing Assets.” We conduct a quarterly review of the fair values of our other retained interests. In particular, we review the historical performance of each retained interest, revise assumptions used to project future cash flows, and recalculate present values of cash flows, as appropriate.

The present values of cash flows represent the fair value of the retained interests. If the fair value of a retained interest exceeds its carrying amount, the increase in fair value is recorded in equity as a component of AOCI on the balance sheet. Conversely, if the carrying amount of a retained interest exceeds its fair value, impairment is indicated. If we intend to sell the retained interest, or more-likely-than-not will be required to sell it, before its expected recovery, then the entire impairment is

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recognized in earnings. If we do not have the intent to sell it, or it is more-likely-than-not that we will not be required to sell it, before expected recovery, then the credit portion of the impairment is recognized in earnings, while the remaining impairment is recognized in AOCI.

The table below shows the relationship between the education loans we manage and those held in “discontinued assets” on the balance sheet. Managed loans include those held in discontinued assets, and those securitized and sold, but still serviced by us. Related delinquencies and net credit losses are also presented.

	December 31,
					Loans Past Due				Net Credit Losses
	Loan Principal				60 Days or More				During the Year
in millions	2009		2008		2009		2008		2009		2008
Education loans managed	$	7,767	$	8,337	$	249	$	249	$	253	$	247
Less: Loans securitized		3,810		4,267		149		163		110		107
Loans held for sale		434		401		6		2		—		11
Loans held in discontinued assets	$	3,523	$	3,669	$	94	$	84	$	143	$	129

Mortgage Servicing Assets

We originate and periodically sell commercial mortgage loans but continue to service those loans for the buyers. We also may purchase the right to service commercial mortgage loans for other lenders. A servicing asset is recorded if we purchase or retain the right to service loans in exchange for servicing fees that exceed the going market rate. Changes in the carrying amount of mortgage servicing assets are summarized as follows:

Year ended December 31,
in millions	2009			2008
Balance at beginning of year	$	242		$	313
Servicing retained from loan sales		10			18
Purchases		18			5
Amortization		(49	)		(94	)
Balance at end of year	$	221		$	242
Fair value at end of year	$	334		$	406

The fair value of mortgage servicing assets is determined by calculating the present value of future cash flows associated with servicing the loans. This calculation uses a number of assumptions that are based on current market conditions. Primary economic assumptions used to measure the fair value of our mortgage servicing assets at December 31, 2009 and 2008, are:

¨  prepayment speed generally at an annual rate of 0.00% to 25.00%;

¨  expected credit losses at a static rate of 2.00%; and

¨  residual cash flows discount rate of 8.50% to 15.00%.

Changes in these assumptions could cause the fair value of mortgage servicing assets to change in the future. The volume of loans serviced and expected credit losses are critical to the valuation of servicing assets. At December 31, 2009, a 1.00% increase in the assumed default rate of commercial mortgage loans would cause an $8 million decrease in the fair value of our mortgage servicing assets.

Contractual fee income from servicing commercial mortgage loans totaled $71 million for 2009, $68 million for 2008 and $77 million for 2007. We have elected to remeasure servicing assets using the amortization method. The amortization of servicing assets is determined in proportion to, and over the period of, the estimated net servicing income. The amortization of servicing assets for each period, as

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shown in the preceding table, is recorded as a reduction to fee income. Both the contractual fee income and the amortization are recorded in “other income” on the income statement.

Additional information pertaining to the accounting for mortgage and other servicing assets is included in Note 1 under the heading “Servicing Assets.”

Note 9. Variable Interest Entities

A VIE is a partnership, limited liability company, trust or other legal entity that meets any one of the following criteria:

¨  The entity does not have sufficient equity to conduct its activities without additional subordinated financial support from another party.

¨  The entity’s investors lack the authority to make decisions about the activities of the entity through voting rights or similar rights, and do not have the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual returns.

¨  The voting rights of some investors are not proportional to their economic interest in the entity, and substantially all of the entity’s activities involve or are conducted on behalf of investors with disproportionately few voting rights.

Our VIEs, including those consolidated and those in which we hold a significant interest, are summarized below. We define a “significant interest” in a VIE as a subordinated interest that exposes us to a significant portion, but not the majority, of the VIE’s expected losses or residual returns.

	Consolidated VIEs		Unconsolidated VIEs
	Total		Total		Total		Maximum
in millions	Assets		Assets		Liabilities		Exposure to Loss
December 31, 2009
LIHTC funds	$	181	$	175		—		—
LIHTC investments		N/A		896		—	$	446

Our involvement with VIEs is described below.

Consolidated VIEs

LIHTC guaranteed funds. KAHC formed limited partnerships, known as funds, which invested in LIHTC operating partnerships. Interests in these funds were offered in syndication to qualified investors who paid a fee to KAHC for a guaranteed return. We also earned syndication fees from the funds and continue to earn asset management fees. The funds’ assets primarily are investments in LIHTC operating partnerships, which totaled $160 million at December 31, 2009. These investments are recorded in “accrued income and other assets” on the balance sheet and serve as collateral for the funds’ limited obligations.

We have not formed new funds or added LIHTC partnerships since October 2003. However, we continue to act as asset manager and provide occasional funding for existing funds under a guarantee obligation. As a result of this guarantee obligation, we have determined that we are the primary beneficiary of these funds. We recorded expenses of $18 million related to this guarantee obligation during 2009. Additional information on return guarantee agreements with LIHTC investors is presented in Note 19 (“Commitments, Contingent Liabilities and Guarantees”) under the heading “Guarantees.”

In accordance with the applicable accounting guidance for distinguishing liabilities from equity, third-party interests associated with our LIHTC guaranteed funds are considered mandatorily redeemable

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instruments and are recorded in “accrued expense and other liabilities” on the balance sheet. However, the FASB has indefinitely deferred the measurement and recognition provisions of this accounting guidance for mandatorily redeemable third-party interests associated with finite-lived subsidiaries, such as our LIHTC guaranteed funds. We adjust our financial statements each period for the third-party investors’ share of the funds’ profits and losses. At December 31, 2009, we estimated the settlement value of these third-party interests to be between $110 million and $122 million, while the recorded value, including reserves, totaled $181 million. The partnership agreement for each of our guaranteed funds requires the fund to be dissolved by a certain date.

Unconsolidated VIEs

LIHTC nonguaranteed funds. Although we hold significant interests in certain nonguaranteed funds that we formed and funded, we have determined that we are not the primary beneficiary of those funds because we do not absorb the majority of the funds’ expected losses. At December 31, 2009, assets of these unconsolidated nonguaranteed funds totaled $175 million. Our maximum exposure to loss in connection with these funds is minimal, and we do not have any liability recorded related to the funds. We have not formed nonguaranteed funds since October 2003.

LIHTC investments. Through the Community Banking business group, we have made investments directly in LIHTC operating partnerships formed by third parties. As a limited partner in these operating partnerships, we are allocated tax credits and deductions associated with the underlying properties. We have determined that we are not the primary beneficiary of these investments because the general partners are more closely associated with the partnerships’ business activities. At December 31, 2009, assets of these unconsolidated LIHTC operating partnerships totaled approximately $896 million. At December 31, 2009, our maximum exposure to loss in connection with these partnerships is the unamortized investment balance of $369 million plus $77 million of tax credits claimed but subject to recapture. We do not have any liability recorded related to these investments because we believe the likelihood of any loss in connection with these partnerships is remote. During 2009, we did not obtain significant direct investments (either individually or in the aggregate) in LIHTC operating partnerships.

We have additional investments in unconsolidated LIHTC operating partnerships that are held by the consolidated LIHTC guaranteed funds. Total assets of these operating partnerships were approximately $1.3 billion at December 31, 2009. The tax credits and deductions associated with these properties are allocated to the funds’ investors based on their ownership percentages. We have determined that we are not the primary beneficiary of these partnerships because the general partners are more closely associated with the partnerships’ business activities. Information regarding our exposure to loss in connection with these guaranteed funds is included in Note 19 under the heading “Return guarantee agreement with LIHTC investors.”

Commercial and residential real estate investments and principal investments. Our Principal Investing unit and the Real Estate Capital and Corporate Banking Services line of business make equity and mezzanine investments, some of which are in VIEs. These investments are held by nonregistered investment companies subject to the provisions of the AICPA Audit and Accounting Guide, “Audits of Investment Companies.” We are not currently applying the accounting or disclosure provisions in the applicable accounting guidance for consolidations to these investments, which remain unconsolidated. The FASB deferred the effective date of this guidance for such nonregistered investment companies until the AICPA clarifies the scope of the Audit Guide.

In June 2009, the FASB issued new accounting guidance which will change how a company determines when an entity that is insufficiently capitalized or not controlled through voting (or similar) rights should be consolidated. Additional information regarding this guidance is provided in Note 1 under the heading “Accounting Standards Pending Adoption at December 31, 2009.”

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10. Nonperforming Assets and Past Due Loans from Continuing Operations

Impaired loans totaled $1.9 billion at December 31, 2009, compared to $985 million at December 31, 2008. Impaired loans had an average balance of $1.7 billion for 2009, $750 million for 2008 and $241 million for 2007. Restructured loans totaled $364 million at December 31, 2009, of which $225 million were accruing interest. Restructured loans were nominal at December 31, 2008.

Our nonperforming assets and past due loans were as follows:

December 31,
in millions	2009			2008
Impaired loans	$	1,903		$	985
Other nonaccrual loans		59			236
Restructured loans accruing interest (a)		225			___
Total nonperforming loans		2,187			1,221
Nonperforming loans held for sale		116			90
Other real estate owned (“OREO”)		191			110
Allowance for OREO losses		(23	)		(3	)
OREO, net of allowance		168			107
Other nonperforming assets		39			42
Total nonperforming assets	$	2,510		$	1,460
Impaired loans with a specifically allocated allowance	$	1,645		$	876
Specifically allocated allowance for impaired loans		300			178
Restructured loans included in nonaccrual loans (a)	$	139			___
Restructured loans with a specifically allocated allowance (b)		357			___
Specifically allocated allowance for restructured loans (c)		44			___
Accruing loans past due 90 days or more	$	331		$	413
Accruing loans past due 30 through 89 days		933			1,230

(a)	Restructured loans (i.e. troubled debt restructurings) are those for which we, for reasons related to a borrower’s financial difficulties, have granted a concession to the borrower that we would not otherwise have considered. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance. Restructured loans in compliance with their modified terms continue to accrue interest.
(b)	Included in impaired loans with a specifically allocated allowance.
(c)	Included in specifically allocated allowance for impaired loans.

At December 31, 2009, we did not have any significant commitments to lend additional funds to borrowers with loans on nonperforming status.

We evaluate the collectibility of our loans by applying historical loss experience rates to loans with similar risk characteristics. These loss rates are adjusted to reflect emerging credit trends and other factors to determine the appropriate level of allowance for loan losses to be allocated to each loan type. As described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan Losses,” we conduct further analysis to determine the probable loss content of impaired loans with larger balances. We do not perform a loan-specific impairment valuation for smaller-balance, homogeneous, nonaccrual loans (shown in the preceding table as “Other nonaccrual loans”), such as residential mortgages, home equity loans and various types of installment loans.

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The following table shows the amount by which loans and loans held for sale that were classified as nonperforming at December 31 reduced expected interest income.

Year ended December 31,
in millions	2009		2008		2007
Interest income receivable under original terms	$	94	$	52	$	57
Less: Interest income recorded during the year		53		36		42
Net reduction to interest income	$	41	$	16	$	15

11. Goodwill and Other Intangible Assets

Goodwill represents the amount by which the cost of net assets acquired in a business combination exceeds their fair value. Other intangible assets primarily are customer relationships and the net present value of future economic benefits to be derived from the purchase of core deposits. Additional information pertaining to our accounting policy for goodwill and other intangible assets is summarized in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Goodwill and Other Intangible Assets.”

During the first quarter of 2009, our review of impairment indicators prompted additional impairment testing of the carrying amount of the goodwill and other intangible assets assigned to our Community Banking and National Banking units. This review indicated that the estimated fair value of the Community Banking unit was greater than its carrying amount, while the estimated fair value of the National Banking unit was less than its carrying amount, reflecting continued weakness in the financial markets. Based on the results of additional impairment testing, we recorded a $223 million pre-tax impairment charge and have now written off all of the goodwill that had been assigned to the National Banking unit.

In April 2009, we decided to wind down the operations of Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers. Accordingly, we have accounted for this business as a discontinued operation. Of the $223 million impairment charge recorded for the National Banking unit, $27 million is related to the Austin discontinued operation, and has been reclassified to “income (loss) from discontinued operations, net of taxes” on the income statement. See Note 3 (“Acquisitions and Divestitures”) for additional information regarding the Austin discontinued operations.

Based on reviews of impairment indicators during both the second and third quarters of 2009, we determined that further reviews of goodwill recorded in our Community Banking unit were necessary. These further reviews indicated that the estimated fair value of the Community Banking unit continued to exceed its carrying amount at both September 30, 2009, and June 30, 2009. Accordingly, no further impairment testing was required.

Our annual goodwill impairment testing was performed as of October 1, 2009, and we determined that the estimated fair value of the Community Banking unit was 13% greater than its carrying amount. Therefore, no further testing was required. A sensitivity analysis of the estimated fair value of the Community Banking unit was performed, which indicated that the fair value continued to exceed the carrying amount under deteriorating assumptions. If actual results and market and economic conditions were to differ from the related assumptions and data used, the estimated fair value of the Community Banking unit could change in the future.

In 2008, our annual goodwill impairment testing performed as of October 1 indicated that the estimated fair value of the National Banking unit was less than its carrying amount, reflecting unprecedented weakness in the financial markets. As a result, we recorded a $465 million impairment charge. In

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September 2008, we decided to limit new student loans to those backed by government guarantee. As a result, we wrote off $4 million of goodwill during the third quarter of 2008.

Changes in the carrying amount of goodwill by reporting unit are presented in the following table.

	Community		National
in millions	Banking		Banking			Total
BALANCE AT DECEMBER 31, 2007	$	565	$	669	(a)	$	1,234
Acquisition of U.S.B. Holding Co., Inc.		352		—			352
Impairment losses based on results of annual impairment testing		—		(465	)		(465	)
Impairment of goodwill related to cessation of private education lending program		—		(4	)		(4	)
Adjustment to Tuition Management Systems goodwill		—		(4	)		(4	)
BALANCE AT DECEMBER 31, 2008		917		196	(a)		1,113
Impairment losses based on results of interim impairment testing		—		(196	)		(196	)
BALANCE AT DECEMBER 31, 2009	$	917		—		$	917

(a) Excludes goodwill in the amount of $25 million and $18 million at December 31, 2008 and 2007, respectively, related to the discontinued operations of Austin.

Accumulated impairment losses related to the National Banking reporting unit totaled $665 million at December 31, 2009, and $469 million at December 31, 2008. There were no accumulated impairment losses related to the Community Banking unit at December 31, 2009 and 2008.

As of December 31, 2009, we expected goodwill in the amount of $197 million to be deductible for tax purposes in future periods.

The following table shows the gross carrying amount and the accumulated amortization of intangible assets subject to amortization.

December 31,	2009				2008
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
in millions	Amount		Amortization		Amount		Amortization
Intangible assets subject to amortization:
Core deposit intangibles	$	65	$	40	$	65	$	32
Other intangible assets (a)		154		129		155		72
Total	$	219	$	169	$	220	$	104

(a) Gross carrying amount and accumulated amortization excludes $18 million and $17 million respectively at December 31, 2009, and $18 million and $6 million, respectively, at December 31, 2008, related to the discontinued operations of Austin.

During 2009, we identified a $45 million intangible asset related to vendor relationships in the equipment leasing business that was impaired as a result of our actions to cease conducting business in the commercial vehicle and office equipment leasing markets. As a result, we recorded a $45 million charge to write off this intangible asset.

During 2008, we recorded core deposit intangibles with a fair value of $33 million in conjunction with the purchase of U.S.B. Holding Co., Inc. These core deposit intangibles are being amortized using the economic depletion method over a period of ten years. Additional information pertaining to this acquisition is included in Note 3.

Intangible asset amortization expense was $76 million for 2009, $29 million for 2008 and $23 million for 2007. Estimated amortization expense for intangible assets for each of the next five years is as follows: 2010 — $14 million; 2011 — $7 million; 2012 — $6 million; 2013 — $5 million; and 2014 — $4 million.

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12. Short-Term Borrowings

Selected financial information pertaining to the components of our short-term borrowings is as follows:

dollars in millions	2009			2008			2007
FEDERAL FUNDS PURCHASED
Balance at year end	$	160		$	137		$	2,355
Average during the year		143			1,312			2,742
Maximum month-end balance		214			3,272			4,246
Weighted-average rate during the year		.16	%		2.44	%		5.11	%
Weighted-average rate at December 31		.11			.74			4.30
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
Balance at year end	$	1,582		$	1,420		$	1,572
Average during the year		1,475			1,535			1,588
Maximum month-end balance		1,582			1,876			1,701
Weighted-average rate during the year		.32	%		1.63	%		4.28	%
Weighted-average rate at December 31		.32			.83			3.67
OTHER SHORT-TERM BORROWINGS
Balance at year end	$	340		$	8,477		$	5,861
Average during the year		1,907			5,931			2,423
Maximum month-end balance		5,078			9,747			5,861
Weighted-average rate during the year		.84	%		2.20	%		4.28	%
Weighted-average rate at December 31		3.22			.97			4.10

Rates exclude the effects of interest rate swaps and caps, which modify the repricing characteristics of certain short-term borrowings. For more information about such financial instruments, see Note 20 (“Derivatives and Hedging Activities”).

As described below, KeyCorp and KeyBank have a number of programs and facilities that support our short-term financing needs. In addition, certain subsidiaries maintain credit facilities with third parties, which provide alternative sources of funding in light of current market conditions. KeyCorp is the guarantor of some of the third-party facilities.

Bank note program. KeyBank’s note program allows for the issuance of up to $20 billion of notes. These notes may have original maturities from thirty days up to thirty years. During 2009, KeyBank did not issue any notes under this program. At December 31, 2009, $16.5 billion was available for future issuance. Amounts outstanding under this program are classified as “long-term debt” on the balance sheet.

Euro medium-term note program. Under our Euro medium-term note program, KeyCorp and KeyBank may, subject to the completion of certain filings, issue both long- and short-term debt of up to $10 billion in the aggregate ($9 billion by KeyBank and $1 billion by KeyCorp). The notes are offered exclusively to non-U.S. investors, and can be denominated in U.S. dollars or foreign currencies. We did not issue any notes under this program during 2009. At December 31, 2009, $8.3 billion was available for future issuance. Amounts outstanding under this program are classified as “long-term debt” on the balance sheet.

KeyCorp shelf registration, including medium-term note program. In June 2008, KeyCorp filed an updated shelf registration statement with the SEC under rules that allow companies to register various types of debt and equity securities without limitations on the aggregate amounts available for issuance. During the same month, KeyCorp filed an updated prospectus supplement, renewing a medium-term note program that permits KeyCorp to issue notes with original maturities of nine months or more. KeyCorp issued $438 million of medium-term notes during 2009, all of which were FDIC-guaranteed under the TLGP. At December 31, 2009, KeyCorp had authorized and available for issuance up to $1.5 billion of additional debt securities under the medium-term note program.

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KeyCorp’s Board of Directors has also authorized an equity shelf program pursuant to which we conduct “at-the-market” offerings of our common shares. On May 11, 2009, we commenced a public “at-the-market” offering of up to $750 million in aggregate gross proceeds of common shares, and filed a prospectus supplement to KeyCorp’s existing automatic shelf registration statement on file with the SEC in connection with such offering. We increased the aggregate gross sales price of the common shares to be issued to $1 billion on June 2, 2009, and, on the same date, announced that we had successfully issued all $1 billion in additional common shares. In conjunction with the common stock offering, we issued 205,438,975 shares at an average price of $4.87 per share and raised a total of $987 million in net proceeds. KeyCorp’s equity shelf program serves as an available source of liquidity, subject to Board approval for future issuances of common shares and the completion of certain supplemental SEC filings.

KeyCorp also maintains a shelf registration for the issuance of capital securities or preferred stock, which serves as an additional source of liquidity. At December 31, 2009, KeyCorp had authorized and available for issuance up to $1.3 billion of preferred stock or capital securities.

Commercial paper. KeyCorp has a commercial paper program that provides funding availability of up to $500 million. At December 31, 2009, there were no borrowings outstanding under this program.

Other short-term credit facilities. We maintain a large balance in our Federal Reserve account, which has reduced our need to obtain funds through various short-term unsecured money market products. This account and the unpledged securities in our investment portfolio provide a buffer to address unexpected short-term liquidity needs. We also have secured borrowing facilities at the Federal Home Loan Bank of Cincinnati and the Federal Reserve Bank of Cleveland to facilitate short-term liquidity requirements. As of December 31, 2009, our unused secured borrowing capacity was $11 billion at the Federal Reserve Bank of Cleveland and $3.8 billion at the Federal Home Loan Bank. Additionally, at December 31, 2009, we maintained a $960 million balance at the Federal Reserve.

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13. Long-Term Debt

The following table presents the components of our long-term debt, net of unamortized discounts and adjustments related to hedging with derivative financial instruments:

December 31,
dollars in millions	2009		2008
Senior medium-term notes due through 2013 (a)	$	1,698	$	2,270
Senior Euro medium-term notes due through 2011 (b)		470		459
1.030% Subordinated notes due 2028 (c)		158		201
6.875% Subordinated notes due 2029 (c)		96		231
7.750% Subordinated notes due 2029 (c)		122		271
5.875% Subordinated notes due 2033 (c)		128		195
6.125% Subordinated notes due 2033 (c)		60		82
5.700% Subordinated notes due 2035 (c)		177		295
7.000% Subordinated notes due 2066 (c)		192		360
6.750% Subordinated notes due 2066 (c)		342		562
8.000% Subordinated notes due 2068 (c)		580		836
9.580% Subordinated notes due 2027 (c)		21		21
3.861% Subordinated notes due 2031 (c)		20		20
3.084% Subordinated notes due 2034 (c)		10		10
Total parent company		4,074		5,813
Senior medium-term notes due through 2039 (d)		2,065		2,671
Senior Euro medium-term notes due through 2013 (e)		1,483		2,362
7.413% Subordinated remarketable notes due 2027 (f)		260		311
7.00% Subordinated notes due 2011 (f)		536		554
7.30% Subordinated notes due 2011 (f)		113		117
5.70% Subordinated notes due 2012 (f)		324		332
5.80% Subordinated notes due 2014 (f)		824		861
4.95% Subordinated notes due 2015 (f)		253		253
5.45% Subordinated notes due 2016 (f)		542		578
5.70% Subordinated notes due 2017 (f)		221		242
4.625% Subordinated notes due 2018 (f)		90		101
6.95% Subordinated notes due 2028 (f)		301		248
Lease financing debt due through 2015 (g)		44		365
Federal Home Loan Bank advances due through 2036 (h)		428		132
Mortgage financing debt due through 2011 (i)		—		55
Total subsidiaries		7,484		9,182
Total long-term debt	$	11,558	$	14,995

We use interest rate swaps and caps, which modify the repricing characteristics of certain long-term debt, to manage interest rate risk. For more information about such financial instruments, see Note 20 (“Derivatives and Hedging Activities”).

(a)	The senior medium-term notes had weighted-average interest rates of 3.34% at December 31, 2009, and 3.41% at December 31, 2008. These notes had a combination of fixed and floating interest rates, and may not be redeemed prior to their maturity dates.
(b)	Senior Euro medium-term notes had weighted-average interest rates of .47% at December 31, 2009, and 2.35% at December 31, 2008. These notes had a floating interest rate based on the three-month LIBOR and may not be redeemed prior to their maturity dates.
(c)	See Note 14 (“Capital Securities Issued by Unconsolidated Subsidiaries”) for a description of these notes.
(d)	Senior medium-term notes had weighted-average interest rates of 3.53% at December 31, 2009, and 3.95% at December 31, 2008. These notes had a combination of fixed and floating interest rates, and may not be redeemed prior to their maturity dates.

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(e)	Senior Euro medium-term notes had weighted-average interest rates of .43% at December 31, 2009, and 2.55% at December 31, 2008. These notes had a combination of fixed and floating interest rates based on LIBOR, and may not be redeemed prior to their maturity dates.
(f)	Only the subordinated remarketable notes due 2027 may be redeemed prior to their maturity dates.
(g)	Lease financing debt had weighted-average interest rates of 6.10% at December 31, 2009, and 4.66% at December 31, 2008. This category of debt consists primarily of nonrecourse debt collateralized by leased equipment under operating, direct financing and sales-type leases.
(h)	Long-term advances from the Federal Home Loan Bank had weighted-average interest rates of 1.94% at December 31, 2009, and 5.18% at December 31, 2008. These advances, which had a combination of fixed and floating interest rates, were secured by real estate loans and securities totaling $650 million at December 31, 2009, and $179 million at December 31, 2008.
(i)	Mortgage financing debt had a weighted-average interest rate of 4.84% at December 31, 2008. This category of debt was collateralized by real estate properties.

At December 31, 2009, scheduled principal payments on long-term debt were as follows:

in millions	Parent		Subsidiaries		Total
2010	$	679	$	827	$	1,506
2011		290		1,419		1,709
2012		437		2,439		2,876
2013		762		31		793
2014		—		839		839
All subsequent years		1,906		1,929		3,835

14. Capital Securities Issued by Unconsolidated Subsidiaries

We own the outstanding common stock of business trusts formed by us that issued corporation-obligated mandatorily redeemable preferred capital securities. The trusts used the proceeds from the issuance of their capital securities and common stock to buy debentures issued by KeyCorp. These debentures are the trusts’ only assets; the interest payments from the debentures finance the distributions paid on the capital securities.

The capital securities provide an attractive source of funds: they constitute Tier 1 capital for regulatory reporting purposes, but have the same federal tax advantages as debt. In 2005, the Federal Reserve adopted a rule that allows bank holding companies to continue to treat capital securities as Tier 1 capital, but imposed stricter quantitative limits that were to take effect March 31, 2009. On March 17, 2009, in light of continued stress in the financial markets, the Federal Reserve delayed the effective date of these new limits until March 31, 2011. We believe the new rule will not have any material effect on our financial condition.

We unconditionally guarantee the following payments or distributions on behalf of the trusts:

ƫ	required distributions on the capital securities;
ƫ	the redemption price when a capital security is redeemed; and
ƫ	the amounts due if a trust is liquidated or terminated.

On June 3, 2009, we commenced an offer to exchange common shares for any and all institutional capital securities issued by the KeyCorp Capital I, KeyCorp Capital II, KeyCorp Capital III and KeyCorp Capital VII trusts. The institutional exchange offer, which expired on June 30, 2009, is a component of our comprehensive capital plan, which we devised in response to the SCAP, which determined that we needed to increase our Tier 1 common equity. For more information on this exchange offer, see Note 15 (“Shareholders’ Equity”).

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In an effort to further enhance our Tier 1 common equity by $1.8 billion, on July 8, 2009, we commenced a separate offer to exchange Key’s common shares for any and all retail capital securities issued by the KeyCorp Capital V, KeyCorp Capital VI, KeyCorp Capital VIII, KeyCorp Capital IX and KeyCorp Capital X trusts. On July 22, 2009, we amended this exchange offer to set the maximum aggregate liquidation preference amount that would be accepted at $500 million. This exchange offer expired on August 4, 2009. For further information related to this exchange offer and other capital-generating activities, see Note 15.

The capital securities, common stock and related debentures are summarized as follows:

						Principal	Interest Rate		Maturity
		Capital				Amount of	of Capital		of Capital
		Securities,		Common		Debentures,	Securities and		Securities and
dollars in millions		Net of Discount (a)		Stock		Net of Discount (b)	Debentures (c)		Debentures
December 31, 2009
KeyCorp Capital I		$156		$6		$158	1.030	%	2028
KeyCorp Capital II		97		4		96	6.875		2029
KeyCorp Capital III		130		4		122	7.750		2029
KeyCorp Capital V		115		4		128	5.875		2033
KeyCorp Capital VI		55		2		60	6.125		2033
KeyCorp Capital VII		165		5		177	5.700		2035
KeyCorp Capital VIII		182		—		192	7.000		2066
KeyCorp Capital IX		343		—		342	6.750		2066
KeyCorp Capital X		579		—		580	8.000		2068
Union State Capital I		20		1		21	9.580		2027
Union State Statutory II		20		—		20	3.861		2031
Union State Statutory IV		10		—		10	3.084		2034
Total	$	1,872	$	26	$	1,906	6.577	%	—
December 31, 2008	$	3,042	$	40	$	3,084	6.931	%	—

(a)	The capital securities must be redeemed when the related debentures mature, or earlier if provided in the governing indenture. Each issue of capital securities carries an interest rate identical to that of the related debenture. Basis adjustments of $81 million at December 31, 2009, and $459 million at December 31, 2008, related to fair value hedges are included in certain capital securities. See Note 20 (“Derivatives and Hedging Activities”) for an explanation of fair value hedges.
(b)	We have the right to redeem our debentures: (i) in whole or in part, on or after July 1, 2008 (for debentures owned by KeyCorp Capital I); March 18, 1999 (for debentures owned by KeyCorp Capital II); July 16, 1999 (for debentures owned by KeyCorp Capital III); July 21, 2008 (for debentures owned by KeyCorp Capital V); December 15, 2008 (for debentures owned by KeyCorp Capital VI); June 15, 2010 (for debentures owned by KeyCorp Capital VII); June 15, 2011 (for debentures owned by KeyCorp Capital VIII); December 15, 2011 (for debentures owned by KeyCorp Capital IX); March 15, 2013 (for debentures owned by KeyCorp Capital X); February 1, 2007 (for debentures owned by Union State Capital I); July 31, 2006 (for debentures owned by Union State Statutory II); and April 7, 2009 (for debentures owned by Union State Statutory IV); and (ii) in whole at any time within 90 days after and during the continuation of a “tax event,” an “investment company event” or a “capital treatment event” (as defined in the applicable indenture). If the debentures purchased by KeyCorp Capital I, KeyCorp Capital V, KeyCorp Capital VI, KeyCorp Capital VII, KeyCorp Capital VIII, KeyCorp Capital IX, KeyCorp Capital X or Union State Statutory IV are redeemed before they mature, the redemption price will be the principal amount, plus any accrued but unpaid interest. If the debentures purchased by KeyCorp Capital II or KeyCorp Capital III are redeemed before they mature, the redemption price will be the greater of: (a) the principal amount, plus any accrued but unpaid interest or (b) the sum of the present values of principal and interest payments discounted at the Treasury Rate (as defined in the applicable indenture), plus 20 basis points (25 basis points for KeyCorp Capital III), plus any accrued but unpaid interest. If the debentures purchased by Union State Capital I are redeemed before they mature, the redemption price will be 104.31% of the principal amount, plus any accrued but unpaid interest. If the debentures purchased by Union State Statutory II are redeemed before they mature, the redemption price will be 104.50% of the principal amount, plus any accrued but unpaid interest. When debentures are redeemed in response to tax or capital treatment events, the redemption price generally is slightly more favorable to us. The principal amount of debentures includes adjustments related to hedging with financial instruments totaling $89 million at December 31, 2009, and $461 million at December 31, 2008.
(c)	The interest rates for KeyCorp Capital II, KeyCorp Capital III, KeyCorp Capital V, KeyCorp Capital VI, KeyCorp Capital VII, KeyCorp Capital VIII, KeyCorp Capital IX, KeyCorp Capital X and Union State Capital I are fixed. KeyCorp Capital I has a floating interest rate equal to three-month LIBOR plus 74 basis points that reprices quarterly. Union State Statutory II has a floating interest rate equal to three-month LIBOR plus 358 basis points that reprices quarterly. Union State Statutory IV has a floating interest rate equal to three-month LIBOR plus 280 basis points that reprices quarterly. The total interest rates are weighted-average rates.

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15. Shareholders’ Equity

Preferred Stock

Series A. During 2008, KeyCorp issued $658 million, or 6,575,000 shares, of Series A Preferred Stock, with a liquidation preference of $100 per share. The Series A Preferred Stock: (i) is nonvoting, other than class voting rights on matters that could adversely affect the shares; (ii) pays a noncumulative dividend at the rate of 7.75% per annum at the discretion of Key’s Board of Directors; and (iii) is not redeemable at any time. The Series A Preferred Stock ranks senior to our common shares and is on parity with the Series B Preferred Stock discussed below in the event of our liquidation or dissolution. Each share of Series A Preferred Stock is convertible by the investor at any time into 7.0922 common shares (equivalent to an initial conversion price of approximately $14.10 per common share), plus cash in lieu of fractional shares. The conversion rate may change upon the consummation of a merger, a change of control (a “make-whole” acquisition), a reorganization event or to prevent dilution. On or after June 15, 2013, if the closing price of our common shares exceeds 130% of the conversion price for 20 trading days during any consecutive 30 trading day period, we may automatically convert some or all of the outstanding Series A Preferred Stock into common shares at the then prevailing conversion rate.

Series B. During 2008, we received approval to participate in the U.S. Treasury’s CPP. Accordingly, during 2008, we raised $2.5 billion of capital, including $2.4 billion, or 25,000 shares, of fixed-rate cumulative perpetual preferred stock, Series B (“Series B Preferred Stock”), with a liquidation preference of $100,000 per share, which was purchased by the U.S. Treasury.

The Series B Preferred Stock: (i) is nonvoting, other than class voting rights on matters that could adversely affect the shares; (ii) pays a cumulative mandatory dividend at the rate of 5% per annum for the first five years, resetting to 9% per annum thereafter; and (iii) is callable at par plus accrued and unpaid dividends at any time. The Series B Preferred Stock ranks senior to our common shares and is on parity with the Series A Preferred Stock in the event of our liquidation or dissolution.

The terms of the transaction with the U.S. Treasury include limitations on our ability to pay dividends on and repurchase common shares. For three years after the issuance or until the U.S. Treasury no longer holds any Series B Preferred Stock, we will not be able to increase dividends on our Common Shares above the level paid in the third quarter of 2008, nor will we be permitted to repurchase any of our common shares or preferred stock without the approval of the U.S. Treasury, subject to the availability of certain limited exceptions (e.g., for purchases in connection with benefit plans).

Common Stock Warrant

During 2008, in conjunction with our participation in the CPP discussed above, we granted a warrant to purchase 35,244,361 common shares to the U.S. Treasury, which we recorded at a fair value of $87 million. The warrant gives the U.S. Treasury the option to purchase common shares at an exercise price of $10.64 per share. The warrant has a term of ten years, is immediately exercisable, in whole or in part, and is transferable. The U.S. Treasury has agreed not to exercise voting power with respect to any common shares we issue upon exercise of the Warrant.

Supervisory Capital Assessment Program and Our Capital-Generating Activities

To implement the CAP, the Federal Reserve, the Federal Reserve Banks, the FDIC and the OCC commenced a review of the capital of all domestic bank holding companies with risk-weighted assets of more than $100 billion at December 31, 2008, of which we were one. This review, referred to as the SCAP, involved a forward-looking capital assessment, or “stress test.” As announced on May 7, 2009, under the SCAP assessment, our regulators determined that we needed to generate $1.8 billion in additional Tier 1 common equity or contingent common equity (i.e., mandatorily convertible preferred shares).

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Pursuant to the requirements of the SCAP assessment, we submitted a comprehensive capital plan to the Federal Reserve Bank of Cleveland on June 1, 2009, describing how we would raise the required amount of additional Tier 1 common equity from nongovernmental sources. During the second quarter of 2009, we completed various transactions, as discussed below, to generate the additional capital.

Common stock offering. On May 11, 2009, we launched a public “at-the-market” offering of up to $750 million in aggregate gross proceeds of common shares. On June 2, 2009, we increased the aggregate gross sales price of the common shares to be issued to $1 billion and announced that we had successfully issued all $1 billion in additional common shares. In conjunction with this offering, we issued 205,438,975 common shares at an average price of $4.87 per share.

Series A Preferred Stock public exchange offer. On June 3, 2009, we launched an offer to exchange common shares for any and all outstanding shares of Series A Preferred Stock. In connection with this exchange offer, which expired on June 30, 2009, we issued 29,232,025 common shares, or 3.67% of our issued and outstanding common shares at that date, for 2,130,461 shares of the outstanding Series A Preferred Stock, representing $213 million aggregate liquidation preference. The exchange ratio for this exchange offer was 13.7210 common shares per share of Series A Preferred Stock.

Other Preferred Stock Private Exchanges

During April and May 2009, we entered into agreements with certain institutional shareholders who had contacted us to exchange Series A Preferred Stock held by the institutional shareholders for common shares. In the aggregate, we exchanged 17,369,926 common shares, or 3.25% of our issued and outstanding common shares at May 18, 2009 (the date on which the last of the exchange transactions settled), for 1,539,700 shares of the Series A Preferred Stock. The exchanges were conducted in reliance upon the exemption set forth in Section 3(a)(9) of the Securities Act of 1933, as amended, for securities exchanged by the issuer and an existing security holder where no commission or other remuneration is paid or given directly or indirectly by the issuer for soliciting such exchange. We utilized treasury shares to complete the transactions.

Institutional capital securities exchange offer. On June 3, 2009, we launched a separate offer to exchange common shares for any and all institutional capital securities issued by the KeyCorp Capital I, KeyCorp Capital II, KeyCorp Capital III and KeyCorp Capital VII trusts. In connection with this exchange offer, which expired on June 30, 2009, we issued 46,338,101 common shares, or 5.81% of our issued and outstanding common shares at that date, for $294 million aggregate liquidation preference of the outstanding capital securities in the aforementioned trusts. The exchange ratios for this exchange offer, which ranged from 132.5732 to 160.9818 common shares per $1,000 liquidation preference of capital securities, were based on the timing of each investor’s tender offer and the trust from which the capital securities were tendered.

In the aggregate, the Series A Preferred Stock and the institutional capital securities exchange offers generated $544 million of additional Tier 1 common equity. Both exchanges were conducted in reliance upon the exemption set forth in Section 3(a)(9) of the Securities Act of 1933, as amended.

We have complied with the requirements of the SCAP assessment, having generated total Tier 1 common equity in excess of $1.8 billion. We raised: (i) $1.5 billion of capital through three of the above transactions, (ii) $149 million of capital through other exchanges of Series A Preferred Stock, (iii) $125 million of capital through the sale of certain securities, and (iv) approximately $70 million of capital by reducing our dividend and interest obligations on the exchanged securities through the SCAP assessment period, which ends on December 31, 2010. Successful completion of our capital transactions has strengthened our capital framework. KeyCorp’s improved Tier 1 common equity ratio will benefit us should economic conditions worsen or any economic recovery be delayed.

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Retail Capital Securities Exchange Offer

In an effort to further enhance our Tier 1 common equity, on July 8, 2009, we commenced a separate, SEC-registered offer to exchange common shares for any and all retail capital securities issued by the KeyCorp Capital V, KeyCorp Capital VI, KeyCorp Capital VIII, KeyCorp Capital IX and KeyCorp Capital X trusts. After an enthusiastic response, we announced that we would limit this exchange offer to capital securities with an aggregate liquidation preference of $500 million. Shares tendered exceeded this amount. In connection with this exchange offer, which expired on August 4, 2009, we issued 81,278,214 common shares, or 9.25% of the issued and outstanding common shares at that date. The exchange ratios for this exchange offer, which ranged from 3.8289 to 4.1518 common shares per $25 liquidation preference of capital securities, were based on the timing of each investor’s tender offer and the trust from which the capital securities were tendered. The retail capital securities exchange offer generated approximately $505 million of additional Tier 1 common equity.

Capital Adequacy

KeyCorp and KeyBank must meet specific capital requirements imposed by federal banking regulators. Sanctions for failure to meet applicable capital requirements may include regulatory enforcement actions that restrict dividend payments, require the adoption of remedial measures to increase capital, terminate FDIC deposit insurance, and mandate the appointment of a conservator or receiver in severe cases. In addition, failure to maintain a well-capitalized status affects how regulatory applications for certain activities, including acquisitions, continuation and expansion of existing activities, and commencement of new activities are evaluated, and could make clients and potential investors less confident. As of December 31, 2009, KeyCorp and KeyBank met all regulatory capital requirements.

Federal bank regulators apply certain capital ratios to assign FDIC-insured depository institutions to one of five categories: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” At December 31, 2008, the most recent regulatory notification classified KeyBank as “well capitalized.” We believe there has not been any change in condition or event since the most recent notification that would cause KeyBank’s capital classification to change.

Bank holding companies are not assigned to any of the five capital categories applicable to insured depository institutions. However, if those categories applied to bank holding companies, we believe KeyCorp would satisfy the criteria for a “well capitalized” institution at December 31, 2009 and 2008. The FDIC-defined capital categories serve a limited regulatory function and may not accurately represent our overall financial condition or prospects.

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The following table presents Key’s and KeyBank’s actual capital amounts and ratios, minimum capital amounts and ratios prescribed by regulatory guidelines, and capital amounts and ratios required to qualify as “well capitalized” under the Federal Deposit Insurance Act.

						To Meet Minimum					To Qualify as Well Capitalized
						Capital Adequacy					Under Federal Deposit
	Actual					Requirements					Insurance Act
dollars in millions	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2009
TOTAL CAPITAL TO NET RISK-WEIGHTED ASSETS
Key	$	14,558		16.95	%	$	6,870		8.00	%		N/A		N/A
KeyBank		11,632		14.23			6,533		8.00		$	8,166		10.00	%
TIER 1 CAPITAL TO NET RISK-WEIGHTED ASSETS
Key	$	10,953		12.75	%	$	3,435		4.00	%		N/A		N/A
KeyBank		8,090		9.90			3,266		4.00		$	4,900		6.00	%
TIER 1 CAPITAL TO AVERAGE QUARTERLY TANGIBLE ASSETS
Key	$	10,953		11.72	%	$	2,804		3.00	%		N/A		N/A
KeyBank		8,090		8.85			3,653		4.00		$	4,566		5.00	%
December 31, 2008
TOTAL CAPITAL TO NET RISK-WEIGHTED ASSETS
Key	$	15,816		14.82	%	$	8,535		8.00	%		N/A		N/A
KeyBank		12,124		11.85			8,177		8.00		$	10,221		10.00	%
TIER 1 CAPITAL TO NET RISK-WEIGHTED ASSETS
Key	$	11,645		10.92	%	$	4,267		4.00	%		N/A		N/A
KeyBank		8,012		7.83			4,088		4.00		$	6,132		6.00	%
TIER 1 CAPITAL TO AVERAGE QUARTERLY TANGIBLE ASSETS
Key	$	11,645		11.05	%	$	3,160		3.00	%		N/A		N/A
KeyBank		8,012		7.81			4,101		4.00		$	5,126		5.00	%

16. Stock-Based Compensation

We maintain several stock-based compensation plans, which are described below. Total compensation expense for these plans was $54 million for 2009, $49 million for 2008 and $62 million for 2007. The total income tax benefit recognized in the income statement for these plans was $20 million for 2009, $19 million for 2008 and $23 million for 2007. Stock-based compensation expense related to awards granted to employees is recorded in “personnel expense” on the income statement; compensation expense related to awards granted to directors is recorded in “other expense.”

Our compensation plans allow us to grant stock options, restricted stock, performance shares, discounted stock purchases and certain deferred compensation-related awards to eligible employees and directors. At December 31, 2009, we had 48,473,793 common shares available for future grant under our compensation plans. In accordance with a resolution adopted by the Compensation and Organization Committee of Key’s Board of Directors, we may not grant options to purchase common shares, restricted stock or other shares under any long-term compensation plan in an aggregate amount that exceeds 6% of our outstanding common shares in any rolling three-year period.

Stock Option Plans

Stock options granted to employees generally become exercisable at the rate of 33-1/3% per year beginning one year from their grant date; options expire no later than ten years from their grant date. The exercise price is the average of the high and low price of our common shares on the date of grant, and cannot be less than the fair market value of our common shares on the grant date.

We determine the fair value of options granted using the Black-Scholes option-pricing model. This model was originally developed to determine the fair value of exchange-traded equity options, which (unlike employee stock options) have no vesting period or transferability restrictions. Because of these differences, the Black-Scholes model does not precisely value an employee stock option, but it is commonly used for this purpose. The model assumes that the estimated fair value of an option is amortized as compensation expense over the option’s vesting period.

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The Black-Scholes model requires several assumptions, which we developed and update based on historical trends and current market observations. Our determination of the fair value of options is only as accurate as the underlying assumptions. The assumptions pertaining to options issued during 2009, 2008 and 2007 are shown in the following table.

Year ended December 31,	2009			2008			2007
Average option life	6.0 years			5.9 years			7.0 years
Future dividend yield		.72	%		5.80	%		4.04	%
Historical share price volatility		.460			.284			.231
Weighted-average risk-free interest rate		3.0	%		3.6	%		4.9	%

Our stock option grants occur upon approval by the Compensation and Organization Committee. The following table summarizes activity, pricing and other information for our stock options for the year ended December 31, 2009.

				Weighted-Average		Weighted-Average		Aggregate
	Number of			Exercise Price		Remaining Life		Intrinsic
	Options			Per Option		(Years)		Value(a)
Outstanding at December 31, 2008		32,816,394		$	27.96
Granted		5,396,235			5.79
Lapsed or canceled		(4,189,683	)		28.99
Outstanding at December 31, 2009		34,022,946		$	24.32		5.6		—
Expected to vest		33,072,862		$	24.65		5.5		—
Exercisable at December 31, 2009		26,652,931		$	27.70		4.7		—

(a) The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the exercise price of the option. At December 31, 2009, the fair value of the underlying stock was less than the weighted-average exercise price per option.

The weighted-average grant-date fair value of options was $2.37 for options granted during 2009, $1.78 for options granted during 2008 and $7.13 for options granted during 2007. No options were exercised during 2009. The total intrinsic value of exercised options for 2008 and 2007 was $2 million and $44 million, respectively. As of December 31, 2009, unrecognized compensation cost related to nonvested options expected to vest under the plans totaled $7 million. We expect to recognize this cost over a weighted-average period of 2.0 years.

Cash received from options exercised was $6 million for 2008 and $112 million for 2007. The actual tax benefit realized for the tax deductions from options exercised totaled $.3 million for 2008 and $13 million for 2007.

Long-Term Incentive Compensation Program

Our Long-Term Incentive Compensation Program rewards senior executives critical to our long-term financial success. The Program covers three-year performance cycles, with a new cycle beginning each year. Awards are primarily in the form of deferred cash payments, time-lapsed restricted stock, performance-based restricted stock and performance shares payable in stock.

The time-lapsed restricted stock generally vests after the end of the three-year cycle for which it was granted. Performance-based restricted stock and performance shares will not vest unless Key attains defined performance levels. During 2009, we did not pay cash awards in connection with vested performance shares. During 2008 and 2007, we paid cash awards in connection with vested performance shares of $1 million and $3 million, respectively.

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The following table summarizes activity and pricing information for the nonvested shares in the Program for the year ended December 31, 2009.

						Vesting Contingent on
	Vesting Contingent on					Performance and
	Service Conditions					Service Conditions
				Weighted-					Weighted-
	Number of			Average		Number of			Average
	Nonvested			Grant-Date		Nonvested			Grant-Date
	Shares			Fair Value		Shares			Fair Value
Outstanding at December 31, 2008		797,563		$	28.52		1,774,457		$	31.23
Granted		47,111			7.96		4,694,172			6.55
Vested		(130,710	)		30.89		(78,272	)		34.59
Forfeited		(147,163	)		31.63		(948,117	)		26.06
Outstanding at December 31, 2009		566,801		$	25.45		5,442,240		$	10.78

The compensation cost of time-lapsed and performance-based restricted stock awards granted under the Program is calculated using the closing trading price of our common shares on the grant date.

Unlike time-lapsed and performance-based restricted stock, performance shares payable in stock and those payable in cash for over 100% of targeted performance do not pay dividends during the vesting period. Consequently, the fair value of these awards is calculated by reducing the share price at the date of grant by the present value of estimated future dividends forgone during the vesting period, discounted at an appropriate risk-free interest rate.

The weighted-average grant-date fair value of awards granted under the Program was $6.56 during 2009, $22.81 during 2008 and $38.06 during 2007. As of December 31, 2009, unrecognized compensation cost related to nonvested shares expected to vest under the Program totaled $8 million. We expect to recognize this cost over a weighted-average period of 1.1 years. The total fair value of shares vested was $2 million during 2009, $9 million during 2008 and $21 million during 2007.

Other Restricted Stock Awards

We also may grant, upon approval by the Compensation and Organization Committee, other time-lapsed restricted stock awards under various programs to recognize outstanding performance. At December 31, 2009, the majority of the nonvested shares shown in the table below relate to July 2008 and March 2009 grants of time-lapsed restricted stock to qualifying executives and certain other employees identified as high performers. These awards generally vest after three years of service.

The following table summarizes activity and pricing information for the nonvested shares granted under these restricted stock awards for the year ended December 31, 2009.

				Weighted-
	Number of			Average
	Nonvested			Grant-Date
	Shares			Fair Value
Outstanding at December 31, 2008		3,504,399		$	18.36
Granted		2,469,999			6.44
Vested		(511,561	)		17.81
Forfeited		(360,300	)		16.55
Outstanding at December 31, 2009		5,102,537		$	12.76

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The weighted-average grant-date fair value of awards granted was $6.44 during 2009, $13.62 during 2008 and $36.81 during 2007. As of December 31, 2009, unrecognized compensation cost related to nonvested restricted stock expected to vest under these special awards totaled $18 million. We expect to recognize this cost over a weighted-average period of 1.4 years. The total fair value of restricted stock vested was $3 million during 2009, and $2 million during 2008 and 2007.

Deferred Compensation Plans

Our deferred compensation arrangements include voluntary and mandatory deferral programs for common shares awarded to certain employees and directors. Mandatory deferred incentive awards, together with a 15% employer matching contribution, vest at the rate of 33-1/3% per year beginning one year after the deferral date. Deferrals under the voluntary programs are immediately vested, except for any employer match, which generally will vest after three years of service. The voluntary deferral programs provide an employer match ranging from 6% to 15% of the deferral.

Several of our deferred compensation arrangements allow participants to redirect deferrals from common shares into other investments that provide for distributions payable in cash. We account for these participant-directed deferred compensation arrangements as stock-based liabilities and remeasure the related compensation cost based on the most recent fair value of our common shares. The compensation cost of all other nonparticipant-directed deferrals is measured based on the average of the high and low trading price of our common shares on the deferral date. We did not pay any stock-based liabilities during 2009 or 2008. We paid stock-based liabilities of $.1 million during 2007.

The following table summarizes activity and pricing information for the nonvested shares in our deferred compensation plans for the year ended December 31, 2009.

	Number of			Weighted-Average
	Nonvested			Grant-Date
	Shares			Fair Value
Outstanding at December 31, 2008		883,908		$	28.74
Granted		686,397			6.83
Dividend equivalents		39,851			7.07
Vested		(885,392	)		19.06
Forfeited		(23,098	)		27.67
Outstanding at December 31, 2009		701,666		$	18.32

The weighted-average grant-date fair value of awards granted was $6.83 during 2009, $12.01 during 2008 and $36.13 during 2007. As of December 31, 2009, unrecognized compensation cost related to nonvested shares expected to vest under our deferred compensation plans totaled $4 million. We expect to recognize this cost over a weighted-average period of 2.3 years. The total fair value of shares vested was $6 million during 2009, $15 million during 2008 and $25 million during 2007. Dividend equivalents presented in the preceding table represent the value of dividends accumulated during the vesting period.

Discounted Stock Purchase Plan

Our Discounted Stock Purchase Plan provides employees the opportunity to purchase our common shares at a 10% discount through payroll deductions or cash payments. Purchases are limited to $10,000 in any month and $50,000 in any calendar year, and are immediately vested. To accommodate employee purchases, we acquire shares on the open market on or around the fifteenth day of the month following the month employee payments are received. We issued 371,417 shares at a weighted-average cost of $6.31 during 2009, 337,544 shares at a weighted-average cost of $13.77 during 2008 and 165,061 shares at a weighted-average cost of $32.00 during 2007.

Information pertaining to our method of accounting for stock-based compensation is included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Stock-Based Compensation.”

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17. Employee Benefits

In 2008, in accordance with the applicable accounting guidance for defined benefit and other postretirement plans, we began to measure plan assets and liabilities as of the end of the fiscal year. In years prior to 2008, we used a September 30 measurement date. As a result of this accounting change, we recorded an after-tax charge of $7 million to the “retained earnings” component of shareholders’ equity in the fourth quarter of 2008.

Pension Plans

Effective December 31, 2009, we amended our pension plans to freeze all benefit accruals. We will continue to credit participants’ account balances for interest until they receive their plan benefits. The plans were closed to new employees as of December 31, 2009.

The components of pre-tax AOCI not yet recognized as net pension cost are shown below.

December 31,
in millions	2009		2008
Net unrecognized losses	$	483	$	497
Net unrecognized prior service cost		—		6
Total unrecognized AOCI	$	483	$	503

During 2010, we expect to recognize $37 million of pre-tax accumulated other comprehensive loss as net pension cost. The charge will consist entirely of net unrecognized losses.

The components of net pension cost and the amount recognized in other comprehensive income for all funded and unfunded plans are as follows:

Year ended December 31,
in millions	2009			2008			2007
Service cost of benefits earned	$	50		$	52		$	51
Interest cost on PBO		58			64			58
Expected return on plan assets		(65	)		(93	)		(88	)
Amortization of prior service cost		1			1			—
Amortization of losses		42			13			28
Curtailment loss (gain)		5			—			(3	)
Net pension cost	$	91		$	37		$	46
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Prior service benefit due to curtailment	$	(5	)		—			—
Net loss (gain)		28		$	397		$	(106	)
Prior service cost (benefit)		(1	)		(1	)		6
Amortization of losses		(42	)		(13	)		(28	)
Total recognized in comprehensive income	$	(20	)	$	383		$	(128	)
Total recognized in net pension cost and comprehensive income	$	71		$	420		$	(82	)

The information related to our pension plans presented in the following tables is based on current actuarial reports using measurement dates of December 31, 2009 and 2008.

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The following table summarizes changes in the PBO related to our pension plans.

Year ended December 31,
in millions	2009			2008
PBO at beginning of year	$	1,066		$	1,115
Service cost		50			65
Interest cost		58			79
Actuarial losses (gains)		120			(66	)
Benefit payments		(92	)		(127	)
PBO at end of year	$	1,202		$	1,066

The following table summarizes changes in the FVA.

Year ended December 31,
in millions	2009			2008
FVA at beginning of year	$	761		$	1,220
Actual return on plan assets		158			(347	)
Employer contributions		12			15
Benefit payments		(92	)		(127	)
FVA at end of year	$	839		$	761

The following table summarizes the funded status of the pension plans, which equals the amounts recognized in the balance sheets at December 31, 2009 and 2008.

December 31,
in millions	2009			2008
Funded status (a)	$	(363	)	$	(305	)
Net prepaid pension cost recognized (b)		(363	)		(305	)

(a)	The shortage of the FVA under the PBO.
(b)	Represents the accrued benefit liability of the pension plans.

At December 31, 2009, our primary qualified cash balance pension plan was sufficiently funded under the requirements of ERISA. Consequently, we are not required to make a minimum contribution to that plan in 2010. We also do not expect to make any significant discretionary contributions during 2010.

At December 31, 2009, we expect to pay the benefits from all funded and unfunded pension plans as follows: 2010 ¾ $111 million; 2011 ¾ $105 million; 2012 ¾ $104 million; 2013 ¾ $99 million; 2014 ¾ $97 million; and $444 million in the aggregate from 2015 through 2019.

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The ABO for all of our pension plans was $1.2 billion at December 31, 2009, and $1.1 billion at December 31, 2008. As indicated in the table below, all of our plans had an ABO in excess of plan assets as follows:

December 31,
in millions	2009		2008
PBO	$	1,202	$	1,066
ABO		1,200		1,064
Fair value of plan assets		839		761

To determine the actuarial present value of benefit obligations, we assumed the following weighted-average rates.

December 31,	2009			2008
Discount rate		5.25	%		5.75	%
Compensation increase rate		4.00			4.00

To determine net pension cost, we assumed the following weighted-average rates.

Year ended December 31,	2009			2008			2007
Discount rate		5.75	%		6.00	%		5.50	%
Compensation increase rate		4.00			4.64			4.00
Expected return on plan assets		8.25			8.75			8.75

We estimate that our net pension cost will be $25 million for 2010, compared to $91 million for 2009 and $37 million for 2008. Costs will decline in 2010 primarily because we amended all pension plans to freeze benefits effective December 31, 2009. The increase in 2009 cost was due primarily to a rise in the amortization of losses. Those losses stemmed largely from a decrease in the value of plan assets in 2008 due to steep declines in the capital markets, particularly the equity markets, coupled with a 50 basis point decrease in the assumed expected return on assets.

We determine the expected return on plan assets using a calculated market-related value of plan assets that smoothes what might otherwise be significant year-to-year volatility in net pension cost. Changes in the value of plan assets are not recognized in the year they occur. Rather, they are combined with any other cumulative unrecognized asset- and obligation-related gains and losses, and are reflected evenly in the market-related value during the five years after they occur as long as the market-related value does not vary more than 10% from the plan’s FVA.

We estimate that a 25 basis point increase or decrease in the expected return on plan assets would either decrease or increase, respectively, our net pension cost for 2010 by approximately $2 million. Pension cost is also affected by an assumed discount rate. We estimate that a 25 basis point change in the assumed discount rate would change net pension cost for 2010 by approximately $1 million.

We determine the assumed discount rate based on the rate of return on a hypothetical portfolio of high quality corporate bonds with interest rates and maturities that provide the necessary cash flows to pay benefits when due.

The expected return on plan assets is determined by considering a number of factors, the most significant of which are:

¨ Our expectations for returns on plan assets over the long term, weighted for the investment mix of the assets. These expectations consider, among other factors, historical capital market returns of equity,

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	fixed income, convertible and other securities, and forecasted returns that are modeled under various economic scenarios.
¨	Historical returns on our plan assets. Based on an annual reassessment of current and expected future capital market returns, our expected return on plan assets for 2009 was 8.25%, compared to 8.75% for 2008 and 2007.

The investment objectives of the pension funds are developed to reflect the characteristics of the plans, such as the plans’ pension formulas and cash lump sum distribution features, and the liability profiles created by the plans’ participants. An executive oversight committee reviews the plans’ investment performance at least quarterly, and compares performance against appropriate market indices. The pension funds’ investment objectives are to achieve an annualized rate of return equal to or greater than our expected return on plan assets over ten to twenty-year periods; to realize annual and three- and five-year annualized rates of return consistent with specific market benchmarks at the individual asset class level; and to maximize ten to twenty-year annualized rates of return while maintaining prudent levels of risk, consistent with our asset allocation policy. The following table shows the asset target allocations prescribed by the pension funds’ investment policies.

	Target Allocation
Asset Class	2009
Equity securities		55	%
Fixed income securities		25
Convertible securities		5
Other assets		15
Total		100	%

Equity securities include common stocks of domestic and foreign companies, as well as foreign company stocks traded as American Depositary Shares on U.S. stock exchanges. Fixed income securities include investments in domestic- and foreign-issued corporate bonds, U.S. government and agency bonds, and mutual funds. Convertible securities include investments in convertible preferred stocks and convertible bonds. Other assets include deposits under insurance company contracts and an investment in a multi-manager, multi-strategy investment fund.

Although the pension funds’ investment policies conditionally permit the use of derivative contracts, no such contracts have been entered into, and we do not expect to employ such contracts in the future.

Descriptions of the valuation methodologies used to measure the fair value of pension plan assets are as follows:

Equity securities. Equity securities traded on securities exchanges are valued at the closing price on the exchange or system where the security is principally traded. These securities are classified as Level 1 since quoted prices for identical securities in active markets are available.

Debt securities. Substantially all debt Securities are investment grade and include domestic and foreign-issued corporate bonds and U.S. government and agency bonds. These securities are valued using evaluated prices provided by Interactive Data, a third-party valuation service. Because the evaluated prices are based on observable inputs, such as dealer quotes, available trade information, spreads, bids and offers, prepayment speeds, U.S. Treasury curves and interest rate movements, securities in this category are classified as Level 2.

Mutual funds. Investments in mutual funds are valued at their closing net asset value. Exchange-traded mutual funds are valued at the closing price on the exchange or system where the security is principally traded. These securities are generally classified as Level 1 since quoted prices for identical securities in active markets are available.

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Common trust funds. Investments in common trust funds are valued at their closing net asset value. Because net asset values are based primarily on observable inputs, most notably quoted prices of similar assets, these investments are classified as Level 2.

Insurance company contracts. Deposits under insurance company contracts are valued by the insurance companies. Because these valuations are determined using a significant number of unobservable inputs, these investments are classified as Level 3.

Multi-strategy investment funds. Investments in investment funds are valued by the investment managers of the funds based on the fair value of the fund’s underlying investments. Because this valuation is determined using a significant number of unobservable inputs, this fund is classified as Level 3.

The following table shows the fair values of our pension plan assets by asset category.

December 31, 2009
in millions	Level 1		Level 2		Level 3		Total
ASSET CATEGORY
Equity securities:
U.S.	$	374		—		—	$	374
International		55		—		—		55
Fixed income securities:
Corporate bonds — U.S.		—	$	55		—		55
Corporate bonds — International		—		5		—		5
U.S. government and agency		—		46		—		46
Mutual funds:
U.S. equity		1		—		—		1
International equity		81		1		—		82
U.S. government and agency		50		—		—		50
Common trust funds:
U.S. equity		—		24		—		24
Fixed income securities		—		14		—		14
Convertible securities		—		66		—		66
Short-term investments		—		30		—		30
Insurance company contracts		—		—	$	11		11
Multi-strategy investment funds		—		—		26		26
Total net assets at fair value	$	561	$	241	$	37	$	839

The following table shows the changes in the fair values of our Level 3 plan assets for the year ended December 31, 2009.

			Multi-
	Insurance		Strategy
	Company		Investment
in millions	Contracts		Funds			Total
Balance at December 31, 2008	$	10	$	43		$	53
Actual return on plan assets:
Relating to assets held at reporting date		1		7			8
Relating to assets sold during the period		—		(2	)		(2	)
Purchases, sales and settlements		—		(22	)		(22	)
Balance at December 31, 2009	$	11	$	26		$	37

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Other Postretirement Benefit Plans

We sponsor a contributory postretirement healthcare plan that covers substantially all active and retired employees hired before 2001 who meet certain eligibility criteria. Retirees’ contributions are adjusted annually to reflect certain cost-sharing provisions and benefit limitations. We also sponsor life insurance plans covering certain grandfathered employees. These plans are principally noncontributory. Separate VEBA trusts are used to fund the healthcare plan and one of the life insurance plans.

The components of pre-tax AOCI not yet recognized as net postretirement benefit cost are shown below.

December 31,
in millions	2009			2008
Net unrecognized losses (gains)	$	(1	)	$	1
Net unrecognized prior service benefit		(10	)		(14	)
Total unrecognized AOCI	$	(11	)	$	(13	)

During 2010, we expect to recognize $1 million of pre-tax AOCI resulting from prior service benefits as a reduction of other postretirement benefit cost.

The components of net postretirement benefit cost and the amount recognized in other comprehensive income for all funded and unfunded plans are as follows:

December 31,
in millions	2009			2008			2007
Service cost of benefits earned	$	1		$	1		$	8
Interest cost on APBO		4			4			7
Expected return on plan assets		(3	)		(5	)		(4	)
Amortization of unrecognized:
Transition obligation		—			—			4
Prior service benefit		(1	)		(1	)		—
Cumulative net gains		—			(2	)		—
Net postretirement (benefit) cost	$	1		$	(3	)	$	15
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net (gain) loss	$	(4	)	$	29		$	(43	)
Prior service (benefit) cost		2			(34	)		—
Amortization of prior service cost		1			1			—
Amortization of losses		—			2			—
Amortization of unrecognized transition obligation		—			(1	)		(4	)
Total recognized in comprehensive income	$	(1	)	$	(3	)	$	(47	)
Total recognized in net postretirement (benefit) cost and comprehensive income		—		$	(6	)	$	(32	)

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The information related to our postretirement benefit plans presented in the following tables is based on current actuarial reports using measurement dates of December 31, 2009 and 2008.

The following table summarizes changes in the APBO.

Year ended December 31,
in millions	2009			2008
APBO at beginning of year	$	69		$	108
Service cost		1			2
Interest cost		4			6
Plan participants’ contributions		8			11
Actuarial losses (gains)		5			(5	)
Benefit payments		(17	)		(19	)
Plan amendment		2			(34	)
APBO at end of year	$	72		$	69

The following table summarizes changes in the FVA.

Year ended December 31,
in millions	2009			2008
FVA at beginning of year	$	45		$	90
Employer contributions		3			1
Plan participants’contributions		17			3
Benefit payments		(19	)		(21	)
Actual return on plan assets		12			(28	)
FVA at end of year	$	58		$	45

The following table summarizes the funded status of the postretirement plans, which equals the amounts recognized in the balance sheets at December 31, 2009 and 2008.

December 31,
in millions	2009			2008
Funded status (a)	$	(14	)	$	(21	)
Accrued postretirement benefit cost recognized		(14	)		(21	)

(a) The shortage of the FVA under the APBO.

There are no regulatory provisions that require contributions to the VEBA trusts that fund some of our benefit plans. Consequently, there is no minimum funding requirement. We are permitted to make discretionary contributions to the VEBA trusts, subject to certain IRS restrictions and limitations. We anticipate that our discretionary contributions in 2010, if any, will be minimal.

At December 31, 2009, we expect to pay the benefits from all funded and unfunded other postretirement plans as follows: 2010 ¾ $6 million; 2011 ¾ $6 million; 2012 ¾ $6 million; 2013¾ $6 million; 2014 ¾ $6 million; and $28 million in the aggregate from 2015 through 2019.

To determine the APBO, we assumed weighted-average discount rates of 5.25% and 5.75% at December 31, 2009 and 2008, respectively.

To determine net postretirement benefit cost, we assumed the following weighted-average rates.

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Year ended December 31,	2009			2008			2007
Discount rate		5.75	%		6.00	%		5.50	%
Expected return on plan assets		5.48			5.66			5.66

The realized net investment income for the postretirement healthcare plan VEBA trust is subject to federal income taxes, which are reflected in the weighted-average expected return on plan assets shown above.

Our assumptions regarding healthcare cost trend rates are as follows:

December 31,	2009			2008
Healthcare cost trend rate assumed for the next year:
Under age 65		8.00	%		8.50	%
Age 65 and over		8.00			9.00
Rate to which the cost trend rate is assumed to decline		5.00			5.00
Year that the rate reaches the ultimate trend rate		2018			2018

Increasing or decreasing the assumed healthcare cost trend rate by one percentage point each future year would not have a material impact on net postretirement benefit cost or obligations since the postretirement plans have cost-sharing provisions and benefit limitations.

We estimate that our net postretirement benefit cost for 2010 will amount to less than $1 million, compared to a cost of $1 million for 2009, and a credit of $3 million for 2008. The increase in 2009 cost was primarily due to the previously mentioned decrease in the value of plan assets in 2008, as a result of steep declines in the capital markets, particularly the equity markets. Additionally, the 2009 assumed weighted-average expected return on plan assets decreased by 18 basis points from 2008. The 2008 net postretirement benefit credit was attributable to a change that took effect January 1, 2008, under which inactive employees receiving benefits under our Long-Term Disability Plan will no longer be eligible for health care and life insurance benefits.

We estimate the expected returns on plan assets for VEBA trusts much the same way we estimate returns on our pension funds. The primary investment objectives of the VEBA trusts are to obtain a market rate of return and to diversify the portfolios in accordance with the VEBA trusts anticipated liquidity requirements. The following table shows the asset target allocation ranges prescribed by the trusts’ investment policies.

	Target Allocation
	Range
Asset Class	2009
Equity securities		70% - 90	%
Fixed income securities		0-10
Convertible securities		0-10
Cash equivalents and other assets		10-30

Investments consist of common trust funds that invest in underlying assets in accordance with the asset target allocation ranges shown above. These investments are valued at their closing net asset value. Because net asset values are based primarily on observable inputs, most notably quoted prices for similar assets, these investments are classified as Level 2.

Although the VEBA trusts’ investment policies conditionally permit the use of derivative contracts, no such contracts have been entered into, and we do not expect to employ such contracts in the future.

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The following table shows the fair values of our postretirement plan assets by asset category.

December 31, 2009
in millions	Level 1		Level 2		Level 3		Total
ASSET CATEGORY
Common trust funds:
U.S. equities		—	$	42		—	$	42
International equities		—		7		—		7
Convertible securities		—		3		—		3
Short-term investments		—		6		—		6
Total net assets at fair value		—	$	58		—	$	58

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 introduced a prescription drug benefit under Medicare, and provides a federal subsidy to sponsors of retiree healthcare benefit plans that offer “actuarially equivalent” prescription drug coverage to retirees. Based on our application of the relevant regulatory formula, we expect that the prescription drug coverage related to our retiree healthcare benefit plan will not be actuarially equivalent to the Medicare benefit for the vast majority of retirees. For the years ended December 31, 2009, 2008 and 2007, these subsidies did not have a material effect on our APBO and net postretirement benefit cost.

Employee 401(k) Savings Plan

A substantial number of our employees are covered under a savings plan that is qualified under Section 401(k) of the Internal Revenue Code. The plan permits employees to contribute from 1% to 25% of eligible compensation, with up to 6% being eligible for matching contributions in the form of KeyCorp common shares. We also maintain a deferred savings plan that provides certain employees with benefits that they otherwise would not have been eligible to receive under the qualified plan because of contribution limits imposed by the IRS. Total expense associated with the above plans was $44 million in 2009, $51 million in 2008 and $52 million in 2007. The plan also permits us to distribute a discretionary profit-sharing component. We have committed to a 3% profit-sharing allocation for 2010 for eligible employees as of December 31, 2010.

18. Income Taxes

Income taxes included in the income statement are summarized below. We file a consolidated federal income tax return.

Year ended December 31,
in millions	2009			2008			2007
Currently payable:
Federal	$	(97	)	$	1,975		$	333
State		(60	)		184			18
		(157	)		2,159			351
Deferred:
Federal		(806	)		(1,526	)		(68	)
State		(72	)		(196	)		(6	)
		(878	)		(1,722	)		(74	)
Total income tax (benefit) expense (a)	$	(1,035	)	$	437		$	277

(a) Income tax (benefit) expense on securities transactions totaled $42 million in 2009, ($.8) million in 2008 and ($13) million in 2007. Income tax expense excludes equity- and gross receipts-based taxes, which are assessed in lieu of an income tax in certain states in which we operate. These taxes, which are recorded in “noninterest expense” on the income statement, totaled $24 million in 2009, $21 million in 2008 and $23 million in 2007.

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Significant components of our deferred tax assets and liabilities, included in “accrued income and other assets” and “accrued expense and other liabilities,” respectively, on the balance sheet, are as follows:

December 31,
in millions	2009		2008
Provision for loan losses	$	1,127	$	746
Employee benefits		208		60
Federal credit carryforward		235		—
Net operating loss		53		14
Other		448		272
Total deferred tax assets		2,071		1,092
Leasing income reported using the operating method for tax purposes		1,226		1,277
Net unrealized securities gains		150		234
Other		118		139
Total deferred tax liabilities		1,494		1,650
Net deferred tax assets (liabilities)(a)	$	577	$	(558	)

(a)  From continuing operations.

We conduct quarterly assessments of all available evidence to determine the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded. The available evidence used in connection with these assessments includes taxable income in prior periods, projected future taxable income, potential tax-planning strategies and projected future reversals of deferred tax items. These assessments involve a degree of subjectivity which may undergo significant change. Based on these criteria, and in particular our projections for future taxable income, we currently believe it is more-likely-than-not that we will realize our net deferred tax asset in future periods. However, changes to the evidence used in our assessments could have a material adverse effect on our results of operations in the period in which they occur.

At December 31, 2009, we had a federal net operating loss of $57 million and a credit carryforward of $235 million. Additionally, we had state net operating loss carryforwards of $986 million, after considering the estimated effect of amending prior years’ state tax returns to reflect the IRS settlement described under the heading “Lease Financing Transactions” below. These carryforwards are subject to limitations imposed by tax laws and, if not utilized, will gradually expire through 2029.

The following table shows how our total income tax (benefit) expense and the resulting effective tax rate were derived:

Year ended December 31,	2009						2008						2007
dollars in millions	Amount			Rate			Amount			Rate			Amount			Rate
Income (loss) before income taxes times 35% statutory federal tax rate	$	(804	)		35.0	%	$	(297	)		35.0	%	$	436			35.0	%
Amortization of tax-advantaged investments		53			(2.3	)		40			(4.7	)		32			2.6
Amortization of nondeductible intangibles		38			(1.7	)		121			(14.2	)		___			___
Foreign tax adjustments		9			(.4	)		56			(6.6	)		(11	)		(0.9	)
Reduced tax rate on lease financing income		(16	)		.7			290			(34.1	)		(34	)		(2.7	)
Tax-exempt interest income		(17	)		.8			(16	)		1.9			(14	)		(1.1	)
Corporate-owned life insurance income		(40	)		1.7			(43	)		5.0			(44	)		(3.5	)
Increase (decrease) in tax reserves		(53	)		2.3			414			(48.7	)		9			.7
State income tax, net of federal tax benefit		(86	)		3.7			(5	)		.6			13			1.0
Tax credits		(106	)		4.6			(102	)		12.0			(83	)		(6.7	)
Other		(13	)		.6			(21	)		2.4			(27	)		(2.1	)
Total income tax expense (benefit)	$	(1,035	)		45.0	%	$	437			(51.4	)%	$	277			22.3	%

Prior to 2008, we applied a lower tax rate to a portion of the equipment leasing portfolio that was managed by a foreign subsidiary in a lower tax jurisdiction. Since we intended to permanently reinvest the earnings of this foreign subsidiary overseas, at December 31, 2007, we did not record domestic deferred income taxes of $308 million in accordance with the applicable accounting guidance for income

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taxes. As part of the IRS settlement, we agreed to forgo any tax benefits related to this subsidiary and reversed all previously recorded tax benefits as part of a $536 million after-tax charge recorded in the second quarter of 2008.

Prior to 2008, we intended to permanently reinvest the earnings of our Canadian leasing subsidiaries overseas. Accordingly, we did not record domestic deferred income taxes on the earnings of these subsidiaries in accordance with the applicable accounting guidance for income taxes. However, during the fourth quarter of 2008, we decided that, due to changes in the Canadian leasing operations, we will no longer permanently reinvest the earnings of the Canadian leasing subsidiaries overseas. As a result, we recorded domestic deferred income taxes of $68 million for that quarter and $2 million during 2009.

Lease Financing Transactions

During 2009, we resolved all outstanding federal income tax issues with the IRS for tax years 1997-2006, including all outstanding leveraged lease tax issues for all open tax years, through the execution of closing agreements. The closing agreements reflected the agreement reached with the IRS during the fourth quarter of 2008. In collaboration with the IRS, we have completed and agreed upon the final tax calculations for the tax years 1997-2006. We have deposited funds with the IRS, which are sufficient to cover the amount of taxes and associated interest due to the IRS for tax years 1997-2006, including all tax years affected by the leveraged lease tax settlement.

During 2009, we amended our state tax returns and paid all state income taxes and associated interest due in conjunction with the completed IRS income tax audits for the tax years 1997-2006, including the impact of the leveraged lease tax settlement on all prior tax years. We anticipate that certain statutory penalties under state tax laws may be imposed on us. We intend to vigorously defend our position against the imposition of any such penalties; however, current accounting guidance requires us to continue to estimate and accrue for them.

Liability for Unrecognized Tax Benefits

The change in our liability for unrecognized tax benefits is as follows:

Year ended December 31,
in millions	2009			2008
Balance at beginning of year	$	1,632		$	21
Increase for tax positions of prior years attributable to leveraged lease transactions		___			2,192
Increase for other tax positions of prior years		1			2
Decrease under the leveraged lease Settlement Initiative		(1,610	)		(583	)
Decrease related to other settlements with taxing authorities		(2	)		___
Balance at end of year	$	21		$	1,632

Each quarter, we review the amount of unrecognized tax benefits recorded on our leveraged lease transactions in accordance with the applicable accounting guidance for income taxes. Any adjustment to unrecognized tax benefits for the interest associated with the leveraged lease tax settlement is recorded in income tax expense. As shown in the above table, during 2009, we decreased the amount of unrecognized tax benefits associated with our leveraged lease transactions by $1.6 billion to reflect the payment of all federal and state income tax liabilities due as a result of the settlement of the leveraged lease issues. Our quarterly review of unrecognized tax benefits also requires us to recalculate our lease income under the applicable accounting guidance for a change or projected change in the timing of cash flows relating to income taxes generated by a leveraged lease transaction. As a result, we recognized a $10 million ($5 million after tax) increase to earnings during 2009.

The amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $21 million and $23 million at December 31, 2009 and 2008, respectively. We do not currently anticipate that the amount of unrecognized tax benefits will significantly change over the next twelve months.

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As permitted under the applicable accounting guidance for income taxes, it is our policy to record interest and penalties related to unrecognized tax benefits in income tax expense. We recorded a net interest credit of $99 million in 2009, interest expense of $602 million in 2008 and interest expense of $5 million in 2007. The portion of the respective interest credit or expense attributable to our leveraged lease transactions was $62 million in 2009, $598 million in 2008 and $2 million in 2007. We recovered penalties of $1 million in 2009 and recognized penalties of $31 million in 2008. At December 31, 2009, we have an accrued interest receivable of $62 million, compared to a payable of $622 million at December 31, 2008. Our liability for accrued state tax penalties was $30 million and $31 million at December 31, 2009 and 2008, respectively.

We file federal income tax returns, as well as returns in various state and foreign jurisdictions. Currently, the IRS is auditing our income tax returns for the 2007 and 2008 tax years. We are not subject to income tax examinations by other tax authorities for years prior to 2001, except in California and New York. Income tax returns filed in those jurisdictions are subject to examination as far back as 1995 (California) and 2000 (New York).

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19. Commitments, Contingent Liabilities and Guarantees

Obligations under Noncancelable Leases

We are obligated under various noncancelable operating leases for land, buildings and other property, consisting principally of data processing equipment. Rental expense under all operating leases totaled $119 million in 2009, $121 million in 2008 and $122 million in 2007. Minimum future rental payments under noncancelable operating leases at December 31, 2009, are as follows: 2010 — $119 million; 2011 — $110 million; 2012 — $100 million; 2013 — $95 million; 2014 — $87 million; all subsequent years — $350 million.

Commitments to Extend Credit or Funding

Loan commitments provide for financing on predetermined terms as long as the client continues to meet specified criteria. These agreements generally carry variable rates of interest and have fixed expiration dates or termination clauses. We typically charge a fee for our loan commitments. Since a commitment may expire without resulting in a loan, the total amount of outstanding commitments may significantly exceed our eventual cash outlay.

Loan commitments involve credit risk not reflected on our balance sheet. We mitigate exposure to credit risk with internal controls that guide how applications for credit are reviewed and approved, how credit limits are established and, when necessary, how demands for collateral are made. In particular, we evaluate the creditworthiness of each prospective borrower on a case-by-case basis and, when appropriate, adjust the allowance for credit losses on lending-related commitments. Additional information pertaining to this allowance is included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Liability for Credit Losses on Lending-Related Commitments” and Note 7 (“Loans and Loans Held for Sale”).

The following table shows the remaining contractual amount of each class of commitments related to extending credit or funding principal investments as of December 31, 2009 and 2008. For loan commitments and commercial letters of credit, this amount represents our maximum possible accounting loss if the borrower were to draw upon the full amount of the commitment and subsequently default on payment for the total amount of the outstanding loan.

December 31,
in millions	2009		2008
Loan commitments:
Commercial and other	$	19,179	$	22,578
Home equity		7,966		8,428
Commercial real estate and construction		1,712		3,928
Total loan commitments		28,857		34,934
When-issued and to be announced securities commitments		190		219
Commercial letters of credit		124		173
Principal investing commitments		248		276
Liabilities of certain limited partnerships and other commitments		189		70
Total loan and other commitments	$	29,608	$	35,672

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Legal Proceedings

Tax disputes. The information pertaining to lease financing transactions presented in Note 18 (“Income Taxes”) is incorporated herein by reference.

Taylor litigation. On August 11, 2008, a purported class action case was filed against KeyCorp, its directors and certain employees, captioned Taylor v. KeyCorp et al., in the United States District Court for the Northern District of Ohio. On September 16, 2008, a second and related case was filed in the same district court, captioned Wildes v. KeyCorp et al. The plaintiffs in these cases seek to represent a class of all participants in our 401(k) Savings Plan and allege that the defendants in the lawsuit breached fiduciary duties owed to them under ERISA. On January 7, 2009, the Court consolidated the Taylor and Wildes lawsuits into a single action. Plaintiffs have since filed their consolidated complaint, which continues to name certain employees as defendants but no longer names any outside directors. We strongly disagree with the allegations contained in the complaints and the consolidated complaint, and intend to vigorously defend against them.

Madoff-related claims. In December 2008, Austin, a subsidiary that specialized in managing hedge fund investments for institutional customers, determined that its funds had suffered investment losses of up to approximately $186 million resulting from the crimes perpetrated by Bernard L. Madoff and entities that he controlled. The investment losses borne by Austin’s clients stem from investments that Austin made indirectly in certain Madoff-advised “hedge” funds. Several lawsuits, including putative class actions and direct actions, and one arbitration proceeding were filed against Austin seeking to recover losses incurred as a result of Madoff’s crimes. The lawsuits and arbitration proceeding allege various claims, including negligence, fraud, breach of fiduciary duties, and violations of federal securities laws and ERISA. In the event we were to incur any liability for this matter, we believe such liability would be covered under the terms and conditions of our insurance policy, subject to a $25 million self-insurance deductible and usual policy exceptions.

In April 2009, we decided to wind down Austin’s operations and have determined that the related exit costs will not be material. Information regarding the Austin discontinued operations is included in Note 3 (“Acquisitions and Divestitures”).

Data Treasury matter. In February 2006, an action styled DataTreasury Corporation v. Wells Fargo & Company, et al., was filed against KeyBank and numerous other financial institutions, as owners and users of Small Value Payments Company, LLC software, in the United States District Court for the Eastern District of Texas. The plaintiff alleges patent infringement and is seeking an unspecified amount of damages and treble damages. In January 2010, the Court entered an order establishing three trial dates due to the number of defendants involved in the action, including an October 2010 trial date for KeyBank and its trial phase codefendants. Two trials involving a total of eight defendants are scheduled to occur in advance of the trial including KeyBank as a defendant. We strongly disagree with the allegations asserted against us, and have been vigorously defending against them. Management believes it has established appropriate reserves for the matter consistent with applicable accounting guidance.

Other litigation. In the ordinary course of business, we are subject to other legal actions that involve claims for substantial monetary relief. Based on information presently known to us, we do not believe there is any legal action to which we are a party, or involving any of our properties that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on our financial condition.

Guarantees

We are a guarantor in various agreements with third parties. The following table shows the types of guarantees that we had outstanding at December 31, 2009. Information pertaining to the basis for determining the liabilities recorded in connection with these guarantees is included in Note 1 under the heading “Guarantees.”

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	Maximum Potential
December 31, 2009	Undiscounted		Liability
in millions	Future Payments		Recorded
Financial guarantees:
Standby letters of credit	$	12,026	$	86
Recourse agreement with FNMA		729		9
Return guarantee agreement with LIHTC investors		213		62
Written interest rate caps (a)		311		23
Default guarantees		77		2
Total	$	13,356	$	182

(a) As of December 31, 2009, the weighted-average interest rate on written interest rate caps was .3%, and the weighted-average strike rate was 3.5%. Maximum potential undiscounted future payments were calculated assuming a 10% interest rate over a period of one year.

We determine the payment/performance risk associated with each type of guarantee described below based on the probability that we could be required to make the maximum potential undiscounted future payments shown in the preceding table. We use a scale of low (0-30% probability of payment), moderate (31-70% probability of payment) or high (71-100% probability of payment) to assess the payment/performance risk, and have determined that the payment/performance risk associated with each type of guarantee outstanding at December 31, 2009, is low.

Standby letters of credit. KeyBank issues standby letters of credit to address clients’ financing needs. These instruments obligate us to pay a specified third party when a client fails to repay an outstanding loan or debt instrument, or fails to perform some contractual nonfinancial obligation. Any amounts drawn under standby letters of credit are treated as loans to the client; they bear interest (generally at variable rates) and pose the same credit risk to us as a loan. At December 31, 2009, our standby letters of credit had a remaining weighted-average life of 1.7 years, with remaining actual lives ranging from less than one year to as many as nine years.

Recourse agreement with FNMA. We participate as a lender in the FNMA Delegated Underwriting and Servicing program. Briefly, FNMA delegates responsibility for originating, underwriting and servicing mortgages, and we assume a limited portion of the risk of loss during the remaining term on each commercial mortgage loan that we sell to FNMA. We maintain a reserve for such potential losses in an amount that we believe approximates the fair value of our liability. At December 31, 2009, the outstanding commercial mortgage loans in this program had a weighted-average remaining term of 6.3 years, and the unpaid principal balance outstanding of loans sold by us as a participant in this program was $2.3 billion. As shown in the above table, the maximum potential amount of undiscounted future payments that we could be required to make under this program is equal to approximately one-third of the principal balance of loans outstanding at December 31, 2009. If we are required to make a payment, we would have an interest in the collateral underlying the related commercial mortgage loan.

Return guarantee agreement with LIHTC investors. KAHC, a subsidiary of KeyBank, offered limited partnership interests to qualified investors. Partnerships formed by KAHC invested in low-income residential rental properties that qualify for federal low income housing tax credits under Section 42 of the Internal Revenue Code. In certain partnerships, investors paid a fee to KAHC for a guaranteed return that is based on the financial performance of the property and the property’s confirmed LIHTC status throughout a fifteen-year compliance period. Typically, KAHC provides these guaranteed returns by distributing tax credits and deductions associated with the specific properties. If KAHC defaults on its obligation to provide the guaranteed return, KeyBank is obligated to make any necessary payments to investors. No recourse or collateral is available to offset our guarantee obligation other than the underlying income stream from the properties and the residual value of the operating partnership interests.

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As shown in the previous table, KAHC maintained a reserve in the amount of $62 million at December 31, 2009, which we believe will be sufficient to cover estimated future obligations under the guarantees. The maximum exposure to loss reflected in the table represents undiscounted future payments due to investors for the return on and of their investments.

These guarantees have expiration dates that extend through 2019, but there have been no new partnerships formed under this program since October 2003. Additional information regarding these partnerships is included in Note 9 (“Variable Interest Entities”).

Written interest rate caps. In the ordinary course of business, we “write” interest rate caps for commercial loan clients that have variable rate loans with us and wish to limit their exposure to interest rate increases. At December 31, 2009, outstanding caps had a weighted-average life of 1.5 years.

We are obligated to pay the client if the applicable benchmark interest rate exceeds a specified level (known as the “strike rate”). These instruments are accounted for as derivatives, which are further discussed in Note 20 (“Derivatives and Hedging Activities”). We typically mitigate our potential future payments by entering into offsetting positions with third parties.

Default guarantees. Some lines of business participate in guarantees that obligate us to perform if the debtor (typically a client) fails to satisfy all of its payment obligations to third parties. We generally undertake these guarantees for one of two possible reasons: either the risk profile of the debtor should provide an investment return, or we are supporting our underlying investment. The terms of these default guarantees range from less than one year to as many as nine years; some default guarantees do not have a contractual end date. Although no collateral is held, we would receive a pro rata share should the third party collect some or all of the amounts due from the debtor.

Other Off-Balance Sheet Risk

Other off-balance sheet risk stems from financial instruments that do not meet the definition of a guarantee as specified in the applicable accounting guidance for guarantees, and from other relationships.

Liquidity facilities that support asset-backed commercial paper conduits. We provide liquidity facilities to several unconsolidated third-party commercial paper conduits. These facilities obligate us to provide funding in the event that a credit market disruption or other factors prevent the conduit from issuing commercial paper. The liquidity facilities, all of which expire by November 24, 2010, obligate us to provide aggregate funding of up to $562 million, with individual facilities ranging from $41 million to $88 million. The aggregate amount available to be drawn is based on the amount of current commitments to borrowers and totaled $462 million at December 31, 2009. We periodically evaluate our commitments to provide liquidity.

Indemnifications provided in the ordinary course of business. We provide certain indemnifications, primarily through representations and warranties in contracts that we execute in the ordinary course of business in connection with loan sales and other ongoing activities, as well as in connection with purchases and sales of businesses. We maintain reserves, when appropriate, with respect to liability that reasonably could arise in connection with these indemnities.

Intercompany guarantees. KeyCorp and certain of our affiliates are parties to various guarantees that facilitate the ongoing business activities of other affiliates. These business activities encompass debt issuance, certain lease and insurance obligations, the purchase or issuance of investments and securities, and certain leasing transactions involving clients.

Heartland Payment Systems matter. Under an agreement between KeyBank and Heartland Payment Systems, Inc. (“Heartland”), Heartland utilizes KeyBank’s membership in the Visa and MasterCard networks to provide merchant payment processing services for Visa and MasterCard transactions. On

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January 20, 2009, Heartland publicly announced its discovery of an alleged criminal breach of its credit card payment processing systems environment (the “Intrusion”) that reportedly occurred during 2008 and allegedly involved the malicious collection of in-transit, unencrypted payment card data that Heartland was processing. Heartland’s 2008 Form 10-K filed with the SEC on March 16, 2009, reported that Heartland expects the major card brands, including Visa and MasterCard, to assert claims seeking to impose fines, penalties, and/or other assessments against Heartland and/or certain card brand members, such as KeyBank, as a result of the alleged potential breach of the respective card brand rules and regulations, and the alleged criminal breach of its credit card payment processing systems environment.

KeyBank has received letters from both Visa and MasterCard imposing fines, penalties or assessments related to the Intrusion. KeyBank continues to be in the process of pursuing appeals of such charges. Under its agreement with Heartland, KeyBank has certain rights of indemnification from Heartland for costs assessed against it by Visa and MasterCard and other associated costs, and KeyBank has notified Heartland of its indemnification rights. In the event that Heartland is unable to fulfill its indemnification obligations to KeyBank, the charges (net of any indemnification) could be significant, although it is not possible to quantify them at this time. Accordingly, under applicable accounting rules, we have not established any reserve.

In Heartland’s Form 8-K filed with the SEC on January 8, 2010, Heartland reported that on January 7, 2010, Heartland, KeyBank, Heartland Bank (KeyBank and Heartland Bank are collectively referred to as the “Sponsor Banks”), Visa U.S.A. Inc., Visa International Service Association, and Visa Inc. (the Visa entities are collectively referred to as “Visa”) (Visa, the Sponsor Banks and Heartland are collectively referred to as the “Parties”) entered into a settlement agreement (“Settlement Agreement”) to resolve potential claims and other disputes among the Parties with respect to potential rights and claims of Visa and certain issuers of Visa-branded credit and debit cards related to the Intrusion. The maximum potential aggregate amounts payable pursuant to the Settlement Agreement will not exceed $60 million, including Visa’s crediting towards the settlement amounts the $780,000 of fines related to the Intrusion previously collected by Visa from the Sponsor Banks and in turn collected by the Sponsor Banks from Heartland. The Settlement amounts will also be paid by the Sponsor Banks to Visa, and in turn collected by the Sponsor Banks from Heartland. The Settlement Agreement contains mutual releases between Heartland and the Sponsor Banks, on the one hand, and Visa on the other. Consummation of the settlement is subject to several events and a termination period. On February 18, 2010, Heartland announced its total provision for the Intrusion during 2009 was $128.9 million (before adjustment for taxes).

For further information on Heartland and the Intrusion, see Heartland’s 2008 Form 10-K, Heartland’s Form 10-Q filed with the SEC on May 11, 2009, Heartland’s Form 8-K filed with the SEC on August 4, 2009, Heartland’s Form 10-Q filed with the SEC on August 7, 2009, Heartland’s Form 8-Ks filed with the SEC on August 4, 2009, November 3, 2009, January 8, 2010, and February 4, 2010, and February 18, 2010.

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20. Derivatives and Hedging Activities

We are a party to various derivative instruments, mainly through our subsidiary, KeyBank. Derivative instruments are contracts between two or more parties that have a notional amount and an underlying, require no net investment and allow for the net settlement of positions. A derivative’s notional amount serves as the basis for the payment provision of the contract, and takes the form of units, such as shares or dollars. A derivative’s underlying is a specified interest rate, security price, commodity price, foreign exchange rate, index or other variable. The interaction between the notional amount and the underlying determines the number of units to be exchanged between the parties and influences the fair value of the derivative contract.

The primary derivatives that we use are interest rate swaps, caps, floors and futures; foreign exchange contracts; energy derivatives; credit derivatives and equity derivatives. Generally, these instruments help us manage exposure to interest rate risk, mitigate the credit risk inherent in the loan portfolio, hedge against changes in foreign currency exchange rates, and meet client financing and hedging needs. Interest rate risk represents the possibility that economic value of equity or net interest income will be adversely affected by fluctuations in interest rates. Credit risk is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms.

Derivative assets and liabilities are recorded at fair value on the balance sheet, after taking into account the effects of master netting agreements. These master netting agreements allow us to settle all derivative contracts held with a single counterparty on a net basis, and to offset net derivative positions with related cash collateral, where applicable. As a result, we could have derivative contracts with negative fair values included in derivative assets on the balance sheet and contracts with positive fair values included in derivative liabilities.

At December 31, 2009, after taking into account the effects of bilateral collateral and master netting agreements, we had $245 million of derivative assets and $93 million of derivative liabilities that relate to contracts entered into for hedging purposes. As of the same date, after taking into account the effects of bilateral collateral and master netting agreements, and a reserve for potential future losses, we had derivative assets of $849 million and derivative liabilities of $919 million that were not designated as hedging instruments.

Additional information regarding our accounting policies for derivatives is provided in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Derivatives.”

Derivatives Designated in Hedge Relationships

Changes in interest rates and differences in the repricing and maturity characteristics of interest-earning assets and interest-bearing liabilities may cause fluctuations in net interest income and the economic value of equity. To minimize the volatility of net interest income and the EVE, we manage exposure to interest rate risk in accordance with policy limits established by the Risk Management Committee of the Board of Directors. We utilize derivatives that have been designated as part of a hedge relationship in accordance with the applicable accounting guidance for derivatives and hedging to minimize interest rate volatility. The primary derivative instruments used to manage interest rate risk are interest rate swaps, which modify the interest rate characteristics of certain assets and liabilities. These instruments are used to convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e., notional amounts) to another interest rate index.

We designate certain “receive fixed/pay variable” interest rate swaps as fair value hedges. These swaps are used primarily to modify our exposure to interest rate risk. These contracts convert certain fixed-rate long-term debt into variable-rate obligations. As a result, we receive fixed-rate interest payments in exchange for making variable-rate payments over the lives of the contracts without exchanging the notional amounts.

Similarly, we designate certain “receive fixed/pay variable” interest rate swaps as cash flow hedges. These contracts effectively convert certain floating-rate loans into fixed-rate loans to reduce the potential adverse

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effect of interest rate decreases on future interest income. These contracts allow us to receive fixed-rate interest payments in exchange for making variable-rate payments over the lives of the contracts without exchanging the notional amounts. We also designate certain “pay fixed/receive variable” interest rate swaps as cash flow hedges. These swaps are used to convert certain floating-rate debt into fixed-rate debt.

We also use interest rate swaps to hedge the floating-rate debt that funds fixed-rate leases entered into by our Equipment Finance line of business. These swaps are designated as cash flow hedges to mitigate the interest rate mismatch between the fixed-rate lease cash flows and the floating-rate payments on the debt.

The derivatives used for managing foreign currency exchange risk are cross currency swaps. We have several outstanding issuances of medium-term notes that are denominated in foreign currencies. The notes are subject to translation risk, which represents the possibility that changes in the fair value of the foreign-denominated debt will occur based on movement of the underlying foreign currency spot rate. It is our practice to hedge against potential fair value changes caused by changes in foreign currency exchange rates and interest rates. The hedge converts the notes to a variable-rate functional currency-denominated debt, which is designated as a fair value hedge of foreign currency exchange risk.

We have used “pay fixed/receive variable” interest rate swaps as cash flow hedges to manage the interest rate risk associated with anticipated sales of certain commercial real estate loans. These swaps protected against a possible short-term decline in the value of the loans that could result from changes in interest rates between the time the loans were originated and the time they were sold. During the first quarter of 2009, these hedges were terminated. Therefore, we did not have any of these hedges outstanding at December 31, 2009.

Derivatives Not Designated in Hedge Relationships

On occasion, we enter into interest rate swap contracts to manage economic risks but do not designate the instruments in hedge relationships. We did not have any significant derivatives hedging risks on an economic basis at December 31, 2009.

Like other financial services institutions, we originate loans and extend credit, both of which expose us to credit risk. We actively manage our overall loan portfolio and the associated credit risk in a manner consistent with asset quality objectives. This process entails the use of credit derivatives ¾ primarily credit default swaps ¾ to mitigate our credit risk. Credit default swaps enable us to transfer to a third party a portion of the credit risk associated with a particular extension of credit, and to manage portfolio concentration and correlation risks. Occasionally, we also provide credit protection to other lenders through the sale of credit default swaps. In most instances, this objective is accomplished through the use of an investment-grade diversified dealer-traded basket of credit default swaps. These transactions may generate fee income, and diversify and reduce overall portfolio credit risk volatility. Although we use these instruments for risk management purposes, they are not treated as hedging instruments as defined by the applicable accounting guidance for derivatives and hedging.

We also enter into derivative contracts to meet customer needs and for proprietary purposes that consist of the following instruments:

¨ interest rate swap, cap, floor and futures contracts entered into generally to accommodate the needs of commercial loan clients;

¨ energy swap and options contracts and foreign exchange forward contracts entered into to accommodate the needs of clients;

¨ positions with third parties that are intended to offset or mitigate the interest rate or market risk related to client positions discussed above; and

¨ interest rate swaps and foreign exchange forward contracts used for proprietary trading purposes.

These contracts are not designated as part of hedge relationships.

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Fair Values, Volume of Activity and Gain/Loss Information Related to Derivative Instruments

The following table summarizes the fair values of our derivative instruments on a gross basis as of December 31, 2009, and September 30, 2009. The volume of our derivative transaction activity during the fourth quarter of 2009 is represented by the change in the notional amounts of our gross derivatives by type from September 30, 2009, to December 31, 2009. The notional amounts are not affected by bilateral collateral and master netting agreements. Our derivative instruments are included in “derivative assets” or “derivative liabilities” on the balance sheet, as indicated in the following table:

	December 31, 2009								September 30, 2009
			Fair Value								Fair Value
	Notional		Derivative			Derivative			Notional		Derivative			Derivative
in millions	Amount		Assets			Liabilities			Amount		Assets			Liabilities
Derivatives designated as hedging instruments:
Interest rate	$	18,259	$	489		$	9		$	20,443	$	600		$	8
Foreign exchange		1,888		78			189			2,664		87			233
Total		20,147		567			198			23,107		687			241
Derivatives not designated as hedging instruments:
Interest rate		70,017		1,434			1,345			70,985		1,749			1,635
Foreign exchange		6,293		206			184			6,241		229			201
Energy and commodity		1,955		403			427			2,175		445			471
Credit		4,538		55			49			4,847		62			54
Equity		3		1			1			—		—			—
Total		82,806		2,099			2,006			84,248		2,485			2,361
Netting adjustments (a)		N/A		(1,572	)		(1,192	)		N/A		(1,887	)		(1,417	)
Total derivatives	$	102,953	$	1,094		$	1,012		$	107,355	$	1,285		$	1,185

(a) Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance related to the offsetting of certain derivative contracts on the balance sheet. The net basis takes into account the impact of master netting agreements that allow us to settle all derivative contracts with a single counterparty on a net basis and to offset the net derivative position with the related cash collateral.

Fair value hedges. Instruments designated as fair value hedges are recorded at fair value and included in “derivative assets” or “derivative liabilities” on the balance sheet. The effective portion of a change in the fair value of a hedging instrument designated as a fair value hedge is recorded in earnings at the same time as a change in fair value of the hedged item, resulting in no effect on net income. The ineffective portion of a change in the fair value of such a hedging instrument is recorded in “other income” on the income statement with no corresponding offset. During 2009, we did not exclude any portion of these hedging instruments from the assessment of hedge effectiveness. While some ineffectiveness is present in our hedging relationships, all of our fair value hedges remained “highly effective” as of December 31, 2009.

The following table summarizes the pre-tax net gains (losses) on our fair value hedges for the year ended December 31, 2009, and where they are recorded on the income statement.

		Net Gains				Income Statement Location	Net Gains
Year ended December 31, 2009	Income Statement Location	(Losses)				of Net Gains (Losses) on Hedged	(Losses)
in millions	of Net Gains (Losses) on Derivative	on Derivative			Hedged Item	Item	on Hedged Item
Interest rate	Other income	$	(505	)	Long-term debt	Other income	$	499	(a)
Interest rate	Interest expense — Long-term debt		228
Foreign exchange	Other income		41		Long-term debt	Other income		(43	) (a)
Foreign exchange	Interest expense — Long-term debt		18		Long-term debt	Interest expense — Long-term debt		(45	) (b)
Total		$	(218	)			$	411

(a)	Net gains (losses) on hedged items represent the change in fair value caused by fluctuations in interest rates.
(b)	Net losses on hedged items represent the change in fair value caused by fluctuations in foreign currency exchange rates.

Cash flow hedges. Instruments designated as cash flow hedges are recorded at fair value and included in “derivative assets” or “derivative liabilities” on the balance sheet. The effective portion of a gain or loss on a cash flow hedge is initially recorded as a component of AOCI on the balance sheet and subsequently reclassified into income when the hedged transaction impacts earnings (e.g. when we pay variable-rate interest on debt, receive variable-rate interest on commercial loans or sell commercial real estate loans).

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The ineffective portion of cash flow hedging transactions is included in “other income” on the income statement. During 2009, we did not exclude any portion of these hedging instruments from the assessment of hedge effectiveness. While some ineffectiveness is present in our hedging relationships, all of our cash flow hedges remained “highly effective” as of December 31, 2009.

The following table summarizes the pre-tax net gains (losses) on our cash flow hedges for the year ended December 31, 2009, and where they are recorded on the income statement. The table includes the effective portion of net gains (losses) recognized in OCI during the period, the effective portion of net gains (losses) reclassified from OCI into income during the current period and the portion of net gains (losses) recognized directly in income, representing the amount of hedge ineffectiveness.

Year ended December 31, 2009 in millions	Net Gains (Losses) Recognized in OCI (Effective Portion)		Income Statement Location of Net Gains (Losses) Reclassified From OCI Into Income (Effective Portion)	Net Gains (Losses) Reclassified From OCI Into Income (Effective Portion)			Income Statement Location of Net Gains (Losses) Recognized in Income (Ineffective Portion)	Net Gains (Losses) Recognized in Income (Ineffective Portion)
Interest rate	$	180	Interest income — Loans	$	426		Other income	$	(1	)
Interest rate		30	Interest expense — Long-term debt		(20	)	Other income		1
Interest rate		4	Net gains (losses) from loan securitizations and sales		5		Other income		—
Total	$	214		$	411				—

The after-tax change in AOCI resulting from cash flow hedges is as follows:

					Reclassification
	December 31,		2009		of Gains to			December 31,
in millions	2008		Hedging Activity		Net Income			2009
Accumulated other comprehensive income resulting from cash flow hedges	$	238	$	134	$	(258	)	$	114

Considering the interest rates, yield curves and notional amounts as of December 31, 2009, we would expect to reclassify an estimated $51 million of net losses on derivative instruments from AOCI to income during the next twelve months. The maximum length of time over which forecasted transactions are hedged is nineteen years.

Nonhedging instruments. Our derivatives that are not designated as hedging instruments are recorded at fair value in “derivative assets” and “derivative liabilities” on the balance sheet. Adjustments to the fair values of these instruments, as well as any premium paid or received, are included in “investment banking and capital markets income (loss)” on the income statement.

The following table summarizes the pre-tax net gains (losses) on our derivatives that are not designated as hedging instruments for the year ended December 31, 2009, and where they are recorded on the income statement.

Year ended December 31, 2009	Net Gains
in millions	(Losses) (a)
Interest rate	$	22
Foreign exchange		48
Energy and commodity		6
Credit		(34	)
Total	$	42

(a) Recorded in “investment banking and capital markets income (loss)” on the income statement.

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Counterparty Credit Risk

Like other financial instruments, derivatives contain an element of credit risk. This risk is measured as the expected positive replacement value of the contracts. We use several means to mitigate and manage exposure to credit risk on derivative contracts. We generally enter into bilateral collateral and master netting agreements using standard forms published by ISDA. These agreements provide for the net settlement of all contracts with a single counterparty in the event of default. Additionally, we monitor credit counterparty risk exposure on each contract to determine appropriate limits on our total credit exposure across all product types. We review our collateral positions on a daily basis and exchange collateral with our counterparties in accordance with ISDA and other related agreements. We generally hold collateral in the form of cash and highly rated securities issued by the U.S. Treasury, government-sponsored enterprises or GNMA. The cash collateral netted against derivative assets on the balance sheet totaled $381 million at December 31, 2009, and $974 million at December 31, 2008. The cash collateral netted against derivative liabilities totaled less than $1 million at December 31, 2009, and $586 million at December 31, 2008.

At December 31, 2009, the largest gross exposure to an individual counterparty was $217 million, which was secured with $21 million in collateral. Additionally, we had a derivative liability of $331 million with this counterparty, whereby we pledged $164 million in collateral. After taking into account the effects of a master netting agreement and collateral, we had a net exposure of $29 million.

The following table summarizes the fair value of our derivative assets by type. These assets represent our gross exposure to potential loss after taking into account the effects of master netting agreements and other means used to mitigate risk.

December 31,
in millions	2009		2008
Interest rate	$	1,147	$	2,333
Foreign exchange		178		279
Energy and commodity		131		214
Credit		19		42
Equity		—		2
Derivative assets before cash collateral		1,475		2,870
Less: Related cash collateral		381		974
Total derivative assets	$	1,094	$	1,896

We enter into derivative transactions with two primary groups: broker-dealers and banks, and clients. Since these groups have different economic characteristics, we have different methods for managing counterparty credit exposure and credit risk.

We enter into transactions with broker-dealers and banks for various risk management purposes and proprietary trading purposes. These types of transactions generally are high dollar volume. We generally enter into bilateral collateral and master netting agreements with these counterparties. At December 31, 2009, after taking into account the effects of master netting agreements, we had gross exposure of $1 billion to broker-dealers and banks. We had net exposure of $250 million after the application of master netting agreements and cash collateral. Our net exposure to broker-dealers and banks at December 31, 2009, was reduced to $31 million by $219 million of additional collateral held in the form of securities.

We enter into transactions with clients to accommodate their business needs. These types of transactions generally are low dollar volume. We generally enter into master netting agreements with these counterparties. In addition, we mitigate our overall portfolio exposure and market risk by entering into offsetting positions with broker-dealers and other banks. Due to the smaller size and magnitude of the individual contracts with clients, collateral generally is not exchanged in connection with these derivative transactions. In order to address the risk of default associated with the uncollateralized contracts, we have established a default reserve (included in “derivative assets”) in the amount of $59 million at December 31, 2009, which we estimate to be the potential future losses on amounts due from client counterparties in the event of default. At December 31, 2009, after taking into account the effects of master netting agreements, we had gross exposure of $994 million to client counterparties. We had net exposure of $852 million on

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our derivatives with clients after the application of master netting agreements, cash collateral and the related reserve.

Credit Derivatives

We are both a buyer and seller of credit protection through the credit derivative market. We purchase credit derivatives to manage the credit risk associated with specific commercial lending and swap obligations. We also sell credit derivatives, mainly index credit default swaps, to diversify the concentration risk within our loan portfolio.

The following table summarizes the fair value of our credit derivatives purchased and sold by type as of December 31, 2009 and 2008. The fair value of credit derivatives presented below does not take into account the effects of bilateral collateral or master netting agreements.

December 31,	2009								2008
in millions	Purchased			Sold			Net		Purchased		Sold			Net
Single name credit default swaps	$	5		$	(3	)	$	2	$	155	$	(104	)	$	51
Traded credit default swap indices		2			—			2		34		(47	)		(13	)
Other		(1	)		4			3		—		(8	)		(8	)
Total credit derivatives	$	6		$	1		$	7	$	189	$	(159	)	$	30

Single name credit default swaps are bilateral contracts, whereby the seller agrees, for a premium, to provide protection against the credit risk of a reference entity in connection with a specific debt obligation. The protected credit risk is related to adverse credit events, such as bankruptcy, failure to make payments, and acceleration or restructuring of obligations specified in the credit derivative contract using standard documentation terms governed by ISDA. As the seller of a single name credit derivative, we would be required to pay the purchaser the difference between par value and the market price of the debt obligation (cash settlement) or receive the specified referenced asset in exchange for payment of the par value (physical settlement) if the underlying reference entity experiences a predefined credit event. For a single name credit derivative, the notional amount represents the maximum amount that a seller could be required to pay. In the event that physical settlement occurs and we receive our portion of the related debt obligation, we will join other creditors in the liquidation process, which may result in the recovery of a portion of the amount paid under the credit default swap contract. We also may purchase offsetting credit derivatives for the same reference entity from third parties that will permit us to recover the amount we pay should a credit event occur.

A traded credit default swap index represents a position on a basket or portfolio of reference entities. As a seller of protection on a credit default swap index, we would be required to pay the purchaser if one or more of the entities in the index had a credit event. For a credit default swap index, the notional amount represents the maximum amount that a seller could be required to pay. Upon a credit event, the amount payable is based on the percentage of the notional amount allocated to the specific defaulting entity.

The majority of transactions represented by the “other” category shown in the above table are risk participation agreements. In these transactions, the lead participant has a swap agreement with a customer. The lead participant (purchaser of protection) then enters into a risk participation agreement with a counterparty (seller of protection), under which the counterparty receives a fee to accept a portion of the lead participant’s credit risk. If the customer defaults on the swap contract, the counterparty to the risk participation agreement must reimburse the lead participant for the counterparty’s percentage of the positive fair value of the customer swap as of the default date. If the customer swap has a negative fair value, the counterparty has no reimbursement requirements. The notional amount represents the maximum amount that the seller could be required to pay. In the case of customer default, the seller is entitled to a pro rata share of the lead participant’s claims against the customer under the terms of the initial swap agreement between the lead participant and the customer.

The following table provides information on the types of credit derivatives sold by us and held on the balance sheet at December 31, 2009 and 2008. The payment/performance risk assessment is based on the

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default probabilities for the underlying reference entities’ debt obligations using the credit ratings matrix provided by Moody’s, specifically Moody’s “Idealized” Cumulative Default Rates, except as noted. The payment/performance risk shown in the table represents a weighted-average of the default probabilities for all reference entities in the respective portfolios. These default probabilities are directly correlated to the probability that we will have to make a payment under the credit derivative contracts.

December 31,	2009							2008
			Average		Payment /					Average		Payment /
	Notional		Term		Performance			Notional		Term		Performance
dollars in millions	Amount		(Years)		Risk			Amount		(Years)		Risk
Single name credit default swaps	$	1,140		2.57		4.88	%	$	1,476		2.44		4.75	%
Traded credit default swap indices		733		2.71		13.29			1,759		1.51		4.67
Other		44		1.94		5.41			59		1.50	Low		(a)
Total credit derivatives sold	$	1,917		—		—		$	3,294		—		—

(a) At December 31, 2008, the other credit derivatives were not referenced to an entity’s debt obligation. We determined the payment/performance risk based on the probability that we could be required to pay the maximum amount under the credit derivatives. We have determined that the payment/performance risk associated with the other credit derivatives was low at December 31, 2008 (i.e., less than or equal to 30% probability of payment).

Credit Risk Contingent Features

We have entered into certain derivative contracts that require us to post collateral to the counterparties when these contracts are in a net liability position. The amount of collateral to be posted is based on the amount of the net liability and thresholds generally related to our long-term senior unsecured credit ratings with Moody’s and S&P. Collateral requirements are also based on minimum transfer amounts, which are specific to each Credit Support Annex (a component of the ISDA Master Agreement) that we have signed with the counterparties. In a limited number of instances, counterparties also have the right to terminate their ISDA Master Agreements with us if our ratings fall below a certain level, usually investment-grade level (i.e., “Baa3” for Moody’s and “BBB-” for S&P). At December 31, 2009, KeyBank’s ratings with Moody’s and S&P were “A2” and “A-,” respectively, and KeyCorp’s ratings with Moody’s and S&P were “Baa1” and “BBB+,” respectively. If there were a downgrade of our ratings, we could be required to post additional collateral under those ISDA Master Agreements where we are in a net liability position. As of December 31, 2009, the aggregate fair value of all derivative contracts with credit risk contingent features (i.e., those containing collateral posting or termination provisions based on our ratings) that were in a net liability position totaled $845 million, which includes $639 million in derivative assets and $1.5 billion in derivative liabilities. We had $860 million in cash and securities collateral posted to cover those positions as of December 31, 2009.

The following table summarizes the additional cash and securities collateral that KeyBank would have been required to deliver had the credit risk contingent features been triggered for the derivative contracts in a net liability position as of December 31, 2009. The additional collateral amounts were calculated based on scenarios under which KeyBank’s ratings are downgraded one, two or three ratings as of December 31, 2009, and take into account all collateral already posted. At December 31, 2009, KeyCorp did not have any derivatives in a net liability position that contained credit risk contingent features.

December 31, 2009
in millions	Moody’s		S&P
KeyBank’s long-term senior unsecured credit ratings		A2		A-
One rating downgrade	$	34	$	22
Two rating downgrades		56		31
Three rating downgrades		65		36

If KeyBank’s ratings had been downgraded below investment grade as of December 31, 2009, payments of up to $74 million would have been required to either terminate the contracts or post additional collateral for those contracts in a net liability position, taking into account all collateral already posted. To be

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downgraded below investment grade, KeyBank’s long-term senior unsecured credit rating would need to be downgraded five ratings by Moody’s and four ratings by S&P.

On February 17, 2010, Moody’s downgraded its ratings of KeyCorp’s capital securities from Baa2 to Baa3 and on KeyCorp’s Series A Preferred Stock from Baa3 to Ba1. At the time we filed this report on March 1, 2010, no other ratings had changed since December 31, 2009.

21. Fair Value Measurements

Fair Value Determination

As defined in the applicable accounting guidance for fair value measurements and disclosures, fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants in our principal market. We have established and documented our process for determining the fair values of our assets and liabilities, where applicable. Fair value is based on quoted market prices, when available, for identical or similar assets or liabilities. In the absence of quoted market prices, we determine the fair value of our assets and liabilities using valuation models or third-party pricing services. Both of these approaches rely on market-based parameters when available, such as interest rate yield curves, option volatilities and credit spreads, or unobservable inputs. Unobservable inputs may be based on our judgment, assumptions and estimates related to credit quality, liquidity, interest rates and other relevant inputs.

Valuation adjustments, such as those pertaining to counterparty and our own credit quality and liquidity, may be necessary to ensure that assets and liabilities are recorded at fair value. Credit valuation adjustments are made when market pricing is not indicative of the counterparty’s credit quality.

When we are unable to observe recent market transactions for identical or similar instruments, we make liquidity valuation adjustments to the fair value to reflect the uncertainty in the pricing and trading of the instrument. Liquidity valuation adjustments are based on the following factors:

¨  the amount of time since the last relevant valuation;

¨  whether there is an actual trade or relevant external quote available at the measurement date; and

¨  volatility associated with the primary pricing components.

We ensure that our fair value measurements are accurate and appropriate by relying upon various controls, including:

¨  an independent review and approval of valuation models;

¨  a detailed review of profit and loss conducted on a regular basis; and

¨  a validation of valuation model components against benchmark data and similar products, where possible.

We review any changes to valuation methodologies to ensure they are appropriate and justified, and refine valuation methodologies as more market-based data becomes available.

Additional information regarding our accounting policies for the determination of fair value is provided in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Fair Value Measurements.”

Qualitative Disclosures of Valuation Techniques

Loans. Loans recorded as trading account assets are valued using an internal cash flow model because the market in which these assets typically trade is not active. The most significant inputs to our internal model are actual and projected financial results for the individual borrowers. Accordingly, these loans are classified as Level 3 assets. As of December 31, 2009, there were two loans that were actively traded. The

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loans were valued based on market spreads for identical assets. These two loans are classified as Level 2 since the fair value recorded is based on observable market data.

Securities (trading and available for sale). Securities are classified as Level 1 when quoted market prices are available in an active market for those identical securities. Level 1 instruments include exchange-traded equity securities. If quoted prices for identical securities are not available, we determine fair value using pricing models or quoted prices of similar securities. These instruments, classified as Level 2 assets, include municipal bonds and other bonds backed by the U.S. government, corporate bonds, certain mortgage-backed securities, securities issued by the U.S. Treasury and certain agency and corporate collateralized mortgage obligations. Inputs to the pricing models include actual trade data (i.e., spreads, credit ratings and interest rates) for comparable assets, spread tables, matrices, high-grade scales, option-adjusted spreads and standard inputs, such as yields, broker/dealer quotes, bids and offers. Where there is limited activity in the market for a particular instrument, we use internal models based on certain assumptions to determine fair value. Such instruments, classified as Level 3 assets, include certain commercial mortgage-backed securities and certain commercial paper. Inputs for the Level 3 internal models include expected cash flows from the underlying loans, which take into account expected default and recovery percentages, market research, and discount rates commensurate with current market conditions.

Private equity and mezzanine investments. Private equity and mezzanine investments consist of investments in debt and equity securities through our Real Estate Capital line of business. They include direct investments made directly in a property, as well as indirect investments made in funds that include other investors for the purpose of investing in properties. There is not an active market in which to value these investments. The direct investments are initially valued based upon the transaction price. The carrying amount is then adjusted based upon the estimated future cash flows associated with the investments. Inputs used in determining future cash flows include the cost of build-out, future selling prices, current market outlook and operating performance of the particular investment. The indirect investments are valued using a methodology that is consistent with the new accounting guidance that allows us to use statements from the investment manager to calculate net asset value per share. A primary input used in estimating fair value is the most recent value of the capital accounts as reported by the general partners of the investee funds. Private equity and mezzanine investments are classified as Level 3 assets since our judgment impacts determination of fair value.

Within the private equity and mezzanine investments, we have investments in real estate private equity funds. The main purpose of these funds is to acquire a portfolio of real estate investments that provides attractive risk adjusted returns and current income for investors. Certain of these investments do not have readily determinable fair values and represent our ownership interest in an entity that follows measurement principles under investment company accounting. The following table presents the fair values of the funds and the unfunded commitments for the funds at December 31, 2009.

December 31, 2009			Unfunded
in millions	Fair Value		Commitments
INVESTMENT TYPE
Passive funds (a)	$	15	$	7
Co-managed funds (b)		16		22
Total	$	31	$	29

(a)

We invest in passive funds, which are multi-investor private equity funds. These investments can never be redeemed. Instead, distributions are received through the liquidation of the underlying investments in the funds. Some funds have no restrictions on sale, while others require investors to remain in the fund until maturity. The funds will be liquidated over a period of two to seven years.

(b)

We are a manager or co-manager of these funds. These investments can never be redeemed. Instead, distributions are received through the liquidation of the underlying investments in the funds. In addition, we receive management fees. A sale or transfer of our interest in the funds can only occur through written consent of a majority of the fund’s investors. In one instance, the other co-manager of the fund must consent to the sale or transfer of our interest in the fund. The funds will mature over a period of five to eight years.

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Principal investments. Principal investments consist of investments in equity and debt instruments made by our principal investing entities. They include direct investments (investments made in a particular company), as well as indirect investments (investments made through funds that include other investors) in predominantly privately held companies and funds. When quoted prices are available in an active market for the identical investment, the quoted prices are used in the valuation process, and the related investments are classified as Level 1 assets. However, in most cases, quoted market prices are not available for the identical investment, and we must rely upon other sources and inputs, such as market multiples; historical and forecast earnings before interest, taxation, depreciation and amortization; net debt levels; and investment risk ratings to perform the valuations of the direct investments. The indirect investments include primary and secondary investments in private equity funds engaged mainly in venture- and growth-oriented investing and do not have readily determinable fair values. The indirect investments are valued using a methodology that is consistent with new accounting guidance that allows us to estimate fair value using net asset value per share (or its equivalent, such as member units or an ownership interest in partners’ capital to which a proportionate share of net assets is attributed). A primary input used in estimating fair value is the most recent value of the capital accounts as reported by the general partners of the investee funds. These investments are classified as Level 3 assets since our assumptions impact the overall determination of fair value. The following table presents the fair values of the indirect funds and the unfunded commitments for the indirect funds at December 31, 2009.

December 31, 2009			Unfunded
in millions	Fair Value		Commitments
INVESTMENT TYPE
Private equity funds (a)	$	481	$	245
Hedge funds (b)		11		—
Total	$	492	$	245

(a)

Consists of buyout, venture capital and fund of funds. These investments can never be redeemed with the investee funds. Instead, distributions are received through the liquidation of the underlying investments of the fund. These investments cannot be sold without the approval of the general partners of the investee funds. We estimate that the underlying investments of the funds will be liquidated over a period of one to ten years.

(b)

Consists of investee funds invested in long and short positions of “stressed and distressed” fixed income-oriented securities with the goal of producing attractive risk-adjusted returns. The investments can be redeemed quarterly with 45 days’ notice. However, the general partners may impose quarterly redemption limits that may delay receipt of requested redemptions.

Derivatives. Exchange-traded derivatives are valued using quoted prices and, therefore, are classified as Level 1 instruments. However, only a few types of derivatives are exchange-traded, so the majority of our derivative positions are valued using internally developed models based on market convention that use observable market inputs, such as interest rate curves, yield curves, the LIBOR discount rates and curves, index pricing curves, foreign currency curves and volatility curves. These derivative contracts, which are classified as Level 2 instruments, include interest rate swaps, certain options, cross currency swaps and credit default swaps. In addition, we have a few customized derivative instruments and risk participations that are classified as Level 3 instruments. These derivative positions are valued using internally developed models. Inputs to the models consist of available market data, such as bond spreads and asset values, as well as our assumptions, such as loss probabilities and proxy prices.

Market convention implies a credit rating of “AA” equivalent in the pricing of derivative contracts, which assumes all counterparties have the same creditworthiness. In order to reflect the actual exposure on our derivative contracts related to both counterparty and our own creditworthiness, we record a fair value adjustment in the form of a default reserve. The credit component is valued on a counterparty-by-counterparty basis based on the probability of default, and considers master netting and cash collateral agreements. The default reserve is considered to be a Level 3 input.

161

Other assets and liabilities. The value of our repurchase and reverse repurchase agreements, trade date receivables and payables, and short positions is driven by the valuation of the underlying securities. The underlying securities may include equity securities, which are valued using quoted market prices in an active market for identical securities, resulting in a Level 1 classification. If quoted prices for identical securities are not available, fair value is determined by using pricing models or quoted prices of similar securities, resulting in a Level 2 classification. Inputs include spreads, credit ratings and interest rates for the interest rate-driven products. Inputs include actual trade data for comparable assets, and bids and offers for the credit-driven products. Credit-driven securities include corporate bonds and mortgage-backed securities, while interest rate-driven securities include government bonds, U.S. Treasury bonds and other products backed by the U.S. government.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Certain assets and liabilities are measured at fair value on a recurring basis in accordance with GAAP. These assets and liabilities are measured at fair value on a regular basis. The following table presents our assets and liabilities measured at fair value on a recurring basis.

December 31, 2009							Netting
in millions	Level 1		Level 2		Level 3		Adjustments(a)			Total
ASSETS MEASURED ON A RECURRING BASIS
Short term investments		—	$	285		—		—		$	285
Trading account assets:
U.S. Treasury, agencies and corporations		—		10		—		—			10
Other mortgage-backed securities		—		—	$	29		—			29
Other securities	$	100		624		423		—			1,147
Total trading account securities		100		634		452		—			1,186
Other trading account assets		—		4		19		—			23
Total trading account assets		100		638		471		—			1,209
Securities available for sale:
U.S. Treasury, agencies and corporations		—		8		—		—			8
States and political subdivisions		—		83		—		—			83
Collateralized mortgage obligations		—		15,006		—		—			15,006
Other mortgage-backed securities		—		1,428		—		—			1,428
Other securities		102		14		—		—			116
Total securities available for sale		102		16,539		—		—			16,641
Other investments		—		—		1,092		—			1,092
Derivative assets		140		2,416		110	$	(1,572	)		1,094
Accrued income and other assets		8		38		—		—			46
Total assets on a recurring basis at fair value	$	350	$	19,916	$	1,673	$	(1,572	)	$	20,367
LIABILITIES MEASURED ON A RECURRING BASIS
Federal funds purchased and securities sold under repurchase agreements		—	$	449		—		—		$	449
Bank notes and other short-term borrowings	$	1		276		—		—			277
Derivative liabilities		123		2,079	$	2	$	(1,192	)		1,012
Accrued expense and other liabilities		—		21		—		—			21
Total liabilities on a recurring basis at fair value	$	124	$	2,825	$	2	$	(1,192	)	$	1,759

(a) Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance related to the offsetting of certain derivative contracts on the balance sheet. The net basis takes into account the impact of master netting agreements that allow us to settle all derivative contracts with a single counterparty on a net basis and to offset the net derivative position with the related cash collateral.

Changes in Level 3 Fair Value Measurements

The following table shows the change in the fair values of our Level 3 financial instruments for the year ended December 31, 2009. We mitigate the credit risk, interest rate risk and risk of loss related to many of these Level 3 instruments through the use of securities and derivative positions classified as Level 1 or Level 2. Level 1 or Level 2 instruments are not included in the following table. Therefore, the gains or losses shown do not include the impact of our risk management activities.

162

	Trading Account Assets
	Other						Other
	Mortgage-						Trading
	Backed			Other			Account			Other			Derivative
in millions	Securities			Securities			Assets			Investments			Instruments		(a)
Balance at December 31, 2008	$	67		$	758		$	31		$	1,134		$	15
Losses included in earnings		(38	) (b)		(2	) (b)		(1	) (b)		(115	) (c)		(12	) (b)
Purchases, sales, issuances and settlements		—			(333	)		(7	)		73			18
Net transfers in (out) Level 3		—			—			(4	)		—			87
Balance at December 31, 2009	$	29		$	423		$	19		$	1,092		$	108
Unrealized losses included in earnings	$	(37	) (b)	$	(2	) (b)	$	(1	) (b)	$	(87	) (c)	$	(1	) (b)

(a)	Amount represents Level 3 derivative assets less Level 3 derivative liabilities.
(b)	Realized and unrealized gains and losses on trading account assets and derivative instruments are reported in “investment banking and capital markets income (loss)” on the income statement.
(c)	Other investments consist of principal investments and private equity and mezzanine investments. Realized and unrealized gains and losses on principal investments are reported in “net gains (losses) from principal investments” on the income statement. Realized and unrealized gains and losses on private equity and mezzanine investments are reported in “investment banking and capital markets income (loss)” on the income statement.

Assets Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in accordance with GAAP. The adjustments to fair value generally result from the application of accounting guidance that requires assets and liabilities to be recorded at the lower of cost or fair value, or assessed for impairment. The following table presents our assets measured at fair value on a nonrecurring basis at December 31, 2009.

December 31, 2009
in millions	Level 1		Level 2		Level 3		Total
ASSETS MEASURED ON A NONRECURRING BASIS
Impaired loans		—	$	3	$	679	$	682
Loans held for sale (a)		—		—		85		85
Operating lease assets		—		—		9		9
Goodwill and other intangible assets		—		—		—		—
Accrued income and other assets		—		36		118		154
Total assets on a nonrecurring basis at fair value		—	$	39	$	891	$	930

(a) During the fourth quarter of 2009, we transferred $82 million of commercial and consumer loans from held-for-sale status to the held-to-maturity portfolio at their current fair value.

We typically adjust the carrying amount of our impaired loans when there is evidence of probable loss and the expected fair value of the loan is less than its contractual amount. The amount of the impairment may be determined based on the estimated present value of future cash flows, the fair value of the underlying collateral or the loan’s observable market price. Cash flow analysis considers internally developed inputs, such as discount rates, default rates, costs of foreclosure and changes in real estate values. The fair value of the collateral, which may take the form of real estate or personal property, is based on internal estimates, field observations and assessments provided by third-party appraisers. Impaired loans with a specifically allocated allowance based on cash flow analysis or the underlying collateral are classified as Level 3 assets, while those with a specifically allocated allowance based on an observable market price that reflects recent sale transactions for similar loans and collateral are classified as Level 2. Current market conditions, including credit risk profiles and decreased real estate values, impacted the inputs used in our internal valuation analysis, resulting in write-downs of these assets.

Through a quarterly analysis of our commercial loan and lease portfolios held for sale, we determined that certain adjustments were necessary to record the portfolios at the lower of cost or fair value in accordance with GAAP. After adjustments, these loans and leases totaled $94 million at December 31, 2009. Current market conditions, including credit risk profiles, liquidity and decreased real estate values, impacted the inputs used in our internal models and other valuation methodologies, resulting in write-downs of these assets.

163

The valuations of performing commercial mortgage and construction loans are conducted using internal models that rely on market data from sales or nonbinding bids on similar assets, including credit spreads, treasury rates, interest rate curves and risk profiles, as well as our own assumptions about the exit market for the loans and details about individual loans within the respective portfolios. Therefore, we have classified these loans as Level 3 assets. The inputs related to our assumptions and other internal loan data include changes in real estate values, costs of foreclosure, prepayment rates, default rates and discount rates.

The valuations of nonperforming commercial mortgage and construction loans are based on current agreements to sell the loans or approved discounted payoffs. If a negotiated value is not available, third party appraisals, adjusted for current market conditions, are used. Since valuations are based on unobservable data, these loans have been classified as Level 3 assets.

The valuation of commercial finance and operating leases is performed using an internal model that relies on market data, such as swap rates and bond ratings, as well as our own assumptions about the exit market for the leases and details about the individual leases in the portfolio. These leases have been classified as Level 3 assets. The inputs related to our assumptions include changes in the value of leased items and internal credit ratings. In addition, commercial leases may be valued using nonbinding bids when they are available and current. The leases valued under this methodology are classified as Level 2 assets.

On a quarterly basis, we review impairment indicators to determine whether we need to evaluate the carrying amount of the goodwill and other intangible assets assigned to our Community Banking and National Banking units. We also perform an annual impairment test for goodwill. Fair value of our reporting units is determined using both an income approach (discounted cash flow method) and a market approach (using publicly traded company and recent transactions data), which are weighted equally. Inputs used include market available data, such as industry, historical and expected growth rates and peer valuations, as well as internally driven inputs, such as forecasted earnings and market participant insights. Since this valuation relies on a significant number of unobservable inputs, we have classified these assets as Level 3. During the first quarter of 2009, we wrote off all of the goodwill that had been assigned to the National Banking unit. For additional information on the results of goodwill impairment testing, see Note 11 (“Goodwill and Other Intangible Assets”).

The fair value of other intangible assets is calculated using a cash flow approach. While the calculation to test for recoverability uses a number of assumptions that are based on current market conditions, the calculation is based primarily on unobservable assumptions; therefore the assets are classified as Level 3. Inputs are dependent on the type of intangible being valued, and include such items as attrition rates, types of customers, revenue streams, prepayment rates, refinancing probabilities and credit defaults. For additional information on the results of other intangible assets impairment testing, see Note 11.

OREO and other repossessed properties are valued based on inputs such as appraisals and third-party price opinions, less estimated selling costs. Therefore, we have classified these assets as Level 3. OREO and other repossessed properties are classified as Level 2 if we receive binding purchase agreements to sell these properties. Returned lease inventory is valued based on market data for similar assets and is classified as Level 2. Assets that are acquired through, or in lieu of, loan foreclosures are recorded as held for sale initially at the lower of the loan balance or fair value upon the date of foreclosure. After foreclosure, valuations are updated periodically, and current market conditions may require the assets to be marked down further to a new cost basis.

164

Fair Value Disclosures of Financial Instruments

The carrying amount and fair value of our financial instruments at December 31, 2009 and 2008, are shown in the following table.

December 31,	2009				2008
	Carrying		Fair		Carrying		Fair
in millions	Amount		Value		Amount		Value
ASSETS
Cash and short-term investments (a)	$	2,214	$	2,214	$	6,466	$	6,466
Trading account assets (e)		1,209		1,209		1,280		1,280
Securities available for sale (e)		16,434		16,641		8,055		8,246
Held-to-maturity securities (b)		24		24		25		25
Other investments (e)		1,488		1,488		1,526		1,526
Loans, net of allowance (c)		56,236		49,136		71,206		63,081
Loans held for sale (e)		443		443		626		626
Mortgage servicing assets (d)		221		334		242		406
Derivative assets (e)		1,094		1,094		1,896		1,896
LIABILITIES
Deposits with no stated maturity (a)	$	40,563	$	40,563	$	37,255	$	37,255
Time deposits (d)		25,008		25,908		27,872		28,528
Short-term borrowings (a)		2,082		2,082		10,034		10,034
Long-term debt (d)		11,558		10,761		14,995		12,859
Derivative liabilities (e)		1,012		1,012		1,032		1,032

Valuation Methods and Assumptions

(a)	Fair value equals or approximates carrying amount. The fair value of deposits with no stated maturity does not take into consideration the value ascribed to core deposit intangibles.
(b)	Fair values of held-to-maturity securities are determined through the use of models that are based on security-specific details, as well as relevant industry and economic factors. The most significant of these inputs are quoted market prices, interest rate spreads on relevant benchmark securities and certain prepayment assumptions. We review the valuations derived from the models for reasonableness to ensure they are consistent with the values placed on similar securities traded in the secondary markets.
(c)	The fair value of the loans is based on the present value of the expected cash flows. The projected cash flows are based on the contractual terms of the loans, adjusted for prepayments and use of a discount rate based on the relative risk of the cash flows, taking into account the loan type, maturity of the loan, liquidity risk, servicing costs, and a required return on debt and capital. In addition, an incremental liquidity discount was applied to certain loans using historical sales of loans during periods of similar economic conditions as a benchmark. The fair value of loans includes lease financing receivables at their aggregate carrying amount, which is equivalent to their fair value.
(d)	Fair values of servicing assets, time deposits and long-term debt are based on discounted cash flows utilizing relevant market inputs.
(e)	Information pertaining to our methodology for measuring the fair values of these assets and liabilities is included in the section entitled “Qualitative Disclosures of Valuation Techniques” and “Assets Measured at Fair Value on a Nonrecurring Basis” in this note.

Excluded from the table above are loans, net of allowance, and loans held for sale related to the discontinued operations of the education lending business. Loans, net of allowance, related to the discontinued operations of the education lending business had a carrying amount of $3.4 billion ($2.5 billion fair value) at December 31, 2009, and $3.5 billion ($2.8 billion fair value) at December 31, 2008. At December 31, 2009 and 2008, loans held for sale related to our discontinued education lending business had carrying amounts of $434 million and $401 million, respectively. Their fair values were identical to their carrying amounts.

Residential real estate mortgage loans with carrying amounts of $1.8 billion at December 31, 2009, and $1.9 billion at December 31, 2008, are included in the amount shown for “Loans, net of allowance” in the above table.

For financial instruments with a remaining average life to maturity of less than six months, carrying amounts were used as an approximation of fair values.

165

We use valuation methods based on exit market prices in accordance with the applicable accounting guidance for fair value measurements. We determine fair value based on assumptions pertaining to the factors a market participant would consider in valuing the asset. If we were to use different assumptions, the fair values shown in the preceding table could change significantly. Also, because the applicable accounting guidance for financial instruments excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements, the fair value amounts shown in the table above do not, by themselves, represent the underlying value of our company as a whole.

22. Condensed Financial Information of the Parent Company

Condensed Balance Sheets

December 31,
in millions	2009		2008
ASSETS
Interest-bearing deposits	$	3,460	$	4,756
Loans and advances to nonbank subsidiaries		1,763		1,934
Investment in subsidiaries:
Banks		8,580		8,654
Nonbank subsidiaries		650		691
Total investment in subsidiaries		9,230		9,345
Accrued income and other assets		897		1,043
Total assets	$	15,350	$	17,078
LIABILITIES
Accrued expense and other liabilities	$	613	$	786
Long-term debt due to:
Subsidiaries		1,907		3,084
Unaffiliated companies		2,167		2,728
Total long-term debt		4,074		5,812
Total liabilities		4,687		6,598
SHAREHOLDERS’ EQUITY (a)		10,663		10,480
Total liabilities and shareholders’ equity	$	15,350	$	17,078

(a) See Key’s Consolidated Statements of Changes in Equity.

166

Condensed Statements of Income

Year ended December 31,
in millions	2009			2008			2007
INCOME
Dividends from subsidiaries:
Banks		—			—		$	500
Nonbank subsidiaries	$	1			—			488
Interest income from subsidiaries		114		$	112			162
Other income		89			17			15
Total income		204			129			1,165
EXPENSE
Interest on long-term debt with subsidiary trusts		77			120			114
Interest on other borrowed funds		67			81			129
Personnel and other expense		172			302			86
Total expense		316			503			329
Income (loss) before income taxes and equity in net income (loss) less dividends from subsidiaries		(112	)		(374	)		836
Income tax benefit		38			84			59
Income (loss) before equity in net income (loss) less dividends from subsidiaries		(74	)		(290	)		895
Equity in net income (loss) less dividends from subsidiaries (a)		(1,237	)		(1,170	)		56
NET INCOME (LOSS)		(1,311	)		(1,460	)		951
Less: Net income attributable to noncontrolling interests		24			8			32
NET INCOME (LOSS) ATTRIBUTABLE TO KEY	$	(1,335	)	$	(1,468	)	$	919

(a) Includes results of discontinued operations described in Note 3 (“Acquisitions and Divestitures”).

167

Condensed Statements of Cash Flows

Year ended December 31,
in millions	2009			2008			2007
OPERATING ACTIVITIES
Net income (loss)	$	(1,335	)	$	(1,468	)	$	919
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain related to exchange of common shares for capital securities		(78	)		—			—
Deferred income taxes		11			(5	)		(9	)
Equity in net (income) loss less dividends from subsidiaries (a)		1,237			1,170			(56	)
Net increase in other assets		(96	)		(382	)		(148	)
Net increase (decrease) in other liabilities		(274	)		651			(72	)
Other operating activities, net		157			370			38
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(378	)		336			672
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits		1,303			(3,985	)		1,698
Purchases of securities available for sale		(18	)		(23	)		(15	)
Cash used in acquisitions		—			(194	)		—
Proceeds from sales, prepayments and maturities of securities available for sale		20			26			15
Net (increase) decrease in loans and advances to subsidiaries		69			65			(219	)
Increase in investments in subsidiaries		(1,200	)		(1,600	)		(100	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		174			(5,711	)		1,379
FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings		—			(112	)		29
Net proceeds from issuance of long-term debt		436			1,990			—
Payments on long-term debt		(1,000	)		(250	)		(1,040	)
Purchases of treasury shares		—			—			(595	)
Net proceeds from the issuance of common shares and preferred stock		986			4,101			—
Net proceeds from the issuance of common stock warrant		—			87			—
Net proceeds from the reissuance of common shares		—			6			112
Tax benefits over (under) recognized compensation cost for stock-based awards		(5	)		(2	)		13
Cash dividends paid		(213	)		(445	)		(570	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		204			5,375			(2,051	)
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS		—			—			—
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR		—			—			—
CASH AND DUE FROM BANKS AT END OF YEAR		—			—			—

(a) Includes results of discontinued operations described in Note 3.

KeyCorp paid interest on borrowed funds totaling $167 million in 2009, $198 million in 2008 and $255 million in 2007.

168

EX-21

EXHIBIT 21

KEYCORP
SUBSIDIARIES OF THE REGISTRANT AT DECEMBER 31, 2009

	Jurisdiction
	of Incorporation
Subsidiariesa	or Organization	Parent Company
KeyBank National Association	United States	KeyCorp

^a Subsidiaries of KeyCorp other than KeyBank National Association are not listed above since, in the aggregate, they would not constitute a significant subsidiary. KeyBank National Association is 100% owned by KeyCorp.

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Annual Report (Form 10-K) of KeyCorp and subsidiaries (“Key”) of our reports dated March 1, 2010, with respect to the consolidated financial statements of Key, and the effectiveness of internal control over financial reporting of Key, included in the 2009 Annual Report to Shareholders of Key.

We consent to the incorporation by reference in the following Registration Statements of Key:

Form S-3 No. 333-55959
Form S-3 No. 333-59175
Form S-3 No. 333-64601
Form S-3 No. 333-76619
Form S-3 No. 333-88934
Form S-3 No. 333-121553	(Amendment No. 1)
Form S-3 No. 333-124023	(Amendment No. 1)
Form S-3 No. 333-134937	(Post-Effective Amendment No. 3)
Form S-3 No. 333-151608
Form S-4 No. 33-31569
Form S-4 No. 33-44657
Form S-4 No. 33-51717
Form S-4 No. 33-55573
Form S-4 No. 33-57329
Form S-4 No. 33-61539
Form S-4 No. 333-61025
Form S-4 No. 333-146456
Form S-4 No. 333-159490	(Amendment No. 3)
Form S-8 No. 2-97452
Form S-8 No. 33-21643
Form S-8 No. 333-49609
Form S-8 No. 333-49633
Form S-8 No. 333-65391
Form S-8 No. 333-70669
Form S-8 No. 333-70703
Form S-8 No. 333-70775
Form S-8 No. 333-72189
Form S-8 No. 333-92881
Form S-8 No. 333-45320
Form S-8 No. 333-45322
Form S-8 No. 333-99493
Form S-8 No. 333-99495
Form S-8 No. 33-31569	(Post-Effective Amendment No. 1 to Form S-4)
Form S-8 No. 33-44657	(Post-Effective Amendment No. 1 to Form S-4)
Form S-8 No. 33-51717	(Post-Effective Amendment No. 1 to Form S-4)
Form S-8 No. 333-66057	(Post-Effective Amendment No. 1 to Form S-4 No. 333-61025)
Form S-8 No. 333-107074
Form S-8 No. 333-107075
Form S-8 No. 333-107076
Form S-8 No. 333-109273
Form S-8 No. 333-112225
Form S-8 No. 333-116120

of our reports dated March 1, 2010, with respect to the consolidated financial statements of Key, and the effectiveness of internal control over financial reporting of Key, included in the 2009 Annual Report to Shareholders of Key, which is incorporated by reference in the Annual Report (Form 10-K) of Key for the year ended December 31, 2009.

/s/ Ernst & Young LLP

Cleveland, Ohio
March 1, 2010

EX-24

Exhibit 24

KEYCORP

POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director, of KeyCorp, an Ohio corporation, which anticipates filing with the United States Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (the “Annual Report”), hereby constitutes and appoints Paul N. Harris, Daniel R. Stolzer, and Molly Z. Brown and each of them, as attorney for the undersigned, with full power of substitution and resubstitution, for and in the name, place, and stead of the undersigned, to sign and file the Annual Report and exhibits thereto, and any and all amendments thereto, with full power and authority to do and perform any and all acts and things requisite and necessary to be done, hereby ratifying and approving the acts of such attorney or any such substitute or substitutes.

     This Power of Attorney may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of March 1, 2010.

/s/ Henry L. Meyer III Henry L. Meyer III	/s/ Jeffrey B. Weeden Jeffrey B. Weeden
Chairman, Chief Executive Officer, President and Director (Principal Executive Officer)	Senior Executive Vice President and Chief Financial Officer
/s/ Robert L. Morris Robert L. Morris	/s/ William G. Bares William G. Bares, Director
Executive Vice President and Chief Accounting Officer (Principal Accounting Officer)
/s/ Edward P. Campbell Edward P. Campbell, Director	/s/ Joseph A. Carrabba Joseph A. Carrabba, Director
/s/ Carol A. Cartwright Carol A. Cartwright, Director	/s/ Alexander M. Cutler Alexander M. Cutler, Director
/s/ H. James Dallas H. James Dallas, Director	/s/ Ruth Ann M. Gillis Ruth Ann M. Gillis, Director
/s/ Kristen L. Manos Kristen L. Manos, Director	/s/ Lauralee E. Martin Lauralee E. Martin, Director
/s/ Eduardo R. Menascé Eduardo R. Menascé, Director	/s/ Bill R. Sanford Bill R. Sanford, Director
/s/ Thomas C. Stevens	/s/ Peter G. Ten Eyck, II
Thomas C. Stevens, Director	Peter G. Ten Eyck, II, Director

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Henry L. Meyer III, certify that:

1.	I have reviewed this annual report on Form 10-K of KeyCorp;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2010 /s/  Henry L. Meyer III
Henry L. Meyer III
Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Jeffrey B. Weeden, certify that:

1.  I have reviewed this annual report on Form 10-K of KeyCorp;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2010 /s/  Jeffrey B. Weeden
Jeffrey B. Weeden
Senior Executive Vice President and
Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. 1350, the undersigned officer of KeyCorp (the ‘‘Company”), hereby certifies that the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 26, 2010 /s/  Henry L. Meyer III
Henry L. Meyer III
Chairman, President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. 1350, the undersigned officer of KeyCorp (the ‘‘Company”), hereby certifies that the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 26, 2010 /s/  Jeffrey B. Weeden
Jeffrey B. Weeden
Senior Executive Vice President and
Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

CERTIFICATION PURSUANT TO SECTION 111(b)(4)
OF THE EMERGENCY ECONOMIC STABILIZATION ACT OF 2008

I, Henry L. Meyer III, certify, based on my knowledge, that:

(i) The compensation committee of KeyCorp has discussed, reviewed, and evaluated with senior risk officers at least every six months during the period beginning on the later of September 14, 2009, or ninety days after the closing date of the agreement between KeyCorp and Treasury and ending with the last day of KeyCorp’s fiscal year containing that date (the applicable period), the senior executive officer (SEO) compensation plans and the employee compensation plans and the risks these plans pose to KeyCorp;

(ii) The compensation committee of KeyCorp has identified and limited during the applicable period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of KeyCorp, and during that same applicable period has identified any features of the employee compensation plans that pose risks to KeyCorp and has limited those features to ensure that KeyCorp is not unnecessarily exposed to risks;

(iii) The compensation committee has reviewed, at least every six months during the applicable period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of KeyCorp to enhance the compensation of an employee, and has limited any such features;

(iv) The compensation committee of KeyCorp will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;

(v) The compensation committee of KeyCorp will provide a narrative description of how it limited during any part of the most recently completed fiscal year that included a TARP period the features in:

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of KeyCorp;

(B) Employee compensation plans that unnecessarily expose KeyCorp to risks; and

(C) Employee compensation plans that could encourage the manipulation of reported earnings of KeyCorp to enhance the compensation of an employee;

(vi) KeyCorp has required that bonus payments, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), of the SEOs and twenty next most highly compensated employees be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) KeyCorp has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to an SEO or any of the next five most highly compensated employees during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date;

(viii) KeyCorp has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date;

(ix) The board of directors of KeyCorp has established an excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, by the later of September 14, 2009, or ninety days after the closing date of the agreement between KeyCorp and Treasury; this policy has been provided to Treasury and its primary regulatory agency; KeyCorp and its employees have complied with this policy during the applicable period; and any expenses that, pursuant to this policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were

properly approved, except that certain expenses determined to be reasonable business expenses in accordance with KeyCorp expense policies were not pre-approved under the policy;

(x) KeyCorp will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date;

(xi) KeyCorp will disclose the amount, nature, and justification for the offering during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

(xii) KeyCorp will disclose whether KeyCorp, the board of directors of KeyCorp, or the compensation committee of KeyCorp has engaged during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date, a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) KeyCorp has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date;

(xiv) KeyCorp has substantially complied with all other requirements related to employee compensation that are provided in the agreement between KeyCorp and Treasury, including any amendments;

(xv) KeyCorp has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year and the most recently completed fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 U.S.C. 1001.)

/s/  Henry L. Meyer III

Henry L. Meyer III

Chairman, President and Chief Executive Officer

Date: February 26, 2010

EX-99.2

Exhibit 99.2

CERTIFICATION PURSUANT TO SECTION 111(b)(4)
OF THE EMERGENCY ECONOMIC STABILIZATION ACT OF 2008

I, Jeffrey B. Weeden, certify, based on my knowledge, that:

(i) The compensation committee of KeyCorp has discussed, reviewed, and evaluated with senior risk officers at least every six months during the period beginning on the later of September 14, 2009, or ninety days after the closing date of the agreement between KeyCorp and Treasury and ending with the last day of KeyCorp’s fiscal year containing that date (the applicable period), the senior executive officer (SEO) compensation plans and the employee compensation plans and the risks these plans pose to KeyCorp;

(ii) The compensation committee of KeyCorp has identified and limited during the applicable period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of KeyCorp, and during that same applicable period has identified any features of the employee compensation plans that pose risks to KeyCorp and has limited those features to ensure that KeyCorp is not unnecessarily exposed to risks;

(iii) The compensation committee has reviewed, at least every six months during the applicable period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of KeyCorp to enhance the compensation of an employee, and has limited any such features;

(iv) The compensation committee of KeyCorp will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;

(v) The compensation committee of KeyCorp will provide a narrative description of how it limited during any part of the most recently completed fiscal year that included a TARP period the features in:

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of KeyCorp;

(B) Employee compensation plans that unnecessarily expose KeyCorp to risks; and

(C) Employee compensation plans that could encourage the manipulation of reported earnings of KeyCorp to enhance the compensation of an employee;

(vi) KeyCorp has required that bonus payments, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), of the SEOs and twenty next most highly compensated employees be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) KeyCorp has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to an SEO or any of the next five most highly compensated employees during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date;

(viii) KeyCorp has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date;

(ix) The board of directors of KeyCorp has established an excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, by the later of September 14, 2009, or ninety days after the closing date of the agreement between KeyCorp and Treasury; this policy has been provided to Treasury and its primary regulatory agency; KeyCorp and its employees have complied with this policy during the applicable period; and any expenses that, pursuant to this policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were

properly approved, except that certain expenses determined to be reasonable business expenses in accordance with KeyCorp expense policies were not pre-approved under the policy;

(x) KeyCorp will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date;

(xi) KeyCorp will disclose the amount, nature, and justification for the offering during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

(xii) KeyCorp will disclose whether KeyCorp, the board of directors of KeyCorp, or the compensation committee of KeyCorp has engaged during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date, a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) KeyCorp has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during the period beginning on the later of the closing date of the agreement between KeyCorp and Treasury or June 15, 2009 and ending with the last day of KeyCorp’s fiscal year containing that date;

(xiv) KeyCorp has substantially complied with all other requirements related to employee compensation that are provided in the agreement between KeyCorp and Treasury, including any amendments;

(xv) KeyCorp has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year and the most recently completed fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 U.S.C. 1001.)

/s/  Jeffrey B. Weeden

Jeffrey B. Weeden

Senior Executive Vice President

and Chief Financial Officer

Date: February 26, 2010