KeyCorp | 2019 Annual Report 2019 2019 Annual Report KeyCorp 127 Public Square Cleveland, OH 44114-1306 001CSN41AA ©2020 KeyCorp KeyBank is Member FDIC 200110-720772 Form No. 77-7700KC Investor Connection Key is committed to communicating with investors accurately and cost-effectively. By choosing to receive Key’s Proxy Statement and Annual Report on Form 10-K over the Internet instead of receiving a paper copy, you get information faster and help us reduce costs and key.com/IR environmental impact. A copy of our 2019 Annual Report on Form 10-K is also available at no charge upon written request. If you wish to receive copies of any of the exhibits, we will send them to you upon payment of our expenses for doing so. Please write to: KeyCorp Investor Relations Corporate Headquarters: 127 Public Square • OH-01-27-0737 216-689-3000 Cleveland, OH 44114-1306 Investor Relations: 216-689-4221 If you hold your shares directly, you may sign up for electronic access Media Relations: 216-471-3133 at computershare.com through the Investor Center. If a broker holds your Transfer Agent/Registrar and shares, contact the brokerage firm to sign up. Shareholder Services: 1-800-539-7216 Key also encourages shareholders to vote their shares over the Internet or by phone instead of using the paper proxy card. Our Purpose Key’s Investor Relations website, key.com/IR, provides quick access We help our clients and communities thrive. to useful information and shareholder services, including live webcasts of management’s quarterly earnings discussions. Our Promise Corporate Headquarters: To clients: We remove barriers between people and their financial goals. Annual meeting of shareholders KeyCorp 127 Public Square To employees: Together, we have a strong sense of community where Thursday, May 21, 2020 • 8:30 a.m. Cleveland, OH 44114 each of us has the opportunity for personal growth, to do work that One Cleveland Center 1375 E. 9th Street matters, and work in a place where results are rewarded. KeyCorp Investor Relations: Cleveland, OH 44114 To communities: Through lending, investing, grants and volunteerism, 127 Public Square we participate in the growth, revitalization, and sustainability of the Common shares: KeyCorp common shares are listed on the New York OH-01-27-0737 communities we serve. Stock Exchange under the symbol KEY. Anticipated dividend payable dates Cleveland, OH 44114 are on or about the 15th of March, June, September, and December, Our Strategy subject to approval by our Board of Directors. Transfer Agent/Registrar Build enduring relationships with targeted clients by knowing and delivering and Shareholder Services: Quarterly financial releases: Key expects to announce quarterly what matters most to them. Computershare earnings in April, July, and October 2020 and January 2021. Earnings P.O. Box 43078 announcements can be accessed on key.com/IR. Printed copies of our Our Values Providence, RI 02940 earnings announcements also can be obtained by selecting the Request Teamwork: We work together to achieve shared objectives. Information link on key.com/IR or by calling Key’s Investor Relations For overnight delivery: Respect: We value the unique talents, skills, and experience that department at 216-689-4221. diversity provides. Computershare Dividend reinvestment/Direct stock purchase plan: Computershare 250 Royall Street Accountability: We deliver on what we promise. Trust Company, Inc. administers a direct stock purchase plan that Canton, MA 02021 Integrity: We are open and honest in everything we do. includes dividend reinvestment and Computershare BYDSSM for investors Leadership: We anticipate the need to act and inspire others to follow. in common shares of KeyCorp. The plan brochure and enrollment forms can be downloaded at computershare.com. Forward-looking statements: The preceding letter from our Chairman and Chief Executive Officer, accompanying articles, and this page contain forward-looking statements. For a discussion of factors that could cause future results to differ from historical performance or those forward- looking statements, see “Forward-looking Statements” on page 2, “Supervision and Regulation” on page 10, and “Item 1A. Risk Factors” on page 23 of the attached Annual Report on Form 10-K. KeyCorp 2019 Annual Report Letter to Shareholders To our fellow shareholders: The last decade has been a period of rapid change for the banking industry, and collectively, we have transformed Key as a company. We have developed a distinctive business model that provides a differentiated offering to both our I recently announced that I will be stepping down as your Chairman consumer and commercial clients. We have and CEO effective May 1, 2020, and that Chris Gorman will succeed me. built momentum across our businesses and He is the right leader at the right time for Key, and I have never been more are focused on positioning the company for optimistic about our future. I look forward to continued growth led by the future, by making strategic investments Chris and his dedicated leadership team. to build scale in targeted areas to drive Together, we have transformed the company and delivered on growth. Supporting our growth is a culture our commitments. If you look at our business model, our go-to-market based on execution, accountability, and strategy, our commitment to relationship banking, the breadth and depth a deep commitment to our clients and the of our teams, our discipline around risk and capital management, and as communities we proudly serve. a result, our financial results – we are a fundamentally different company In 2019, we delivered on our commitments, than we were a decade ago. including generating strong financial We have continuously improved the financial and operational performance and a 37% increase in our performance of our company, driven by momentum in both fee revenue stock price, which exceeded both the and net interest income, as well as disciplined expense management. market and peer average. Last year In 2019, we achieved our target of reducing annual expenses by marked our seventh consecutive year $200 million. We have built a more efficient organization and instilled a of delivering positive operating leverage, culture of continuous improvement across our company, with a relentless driven by growth in our core businesses focus on balancing cost savings with investments for our future. This focus and strong expense management. drove an improvement of more than 900 basis points over the last decade Importantly, we have maintained our in two of our long-term financial targets, cash efficiency and return on sound credit quality and disciplined tangible common equity, and set us up for success in the future. approach to capital management. Importantly, we continue to invest for the future. We have been thoughtful in our approach and very targeted in the way we invest – focused on building targeted scale against defined businesses and clients, in the areas where we can be the most relevant. The “spotlight” on the coming pages highlights our investments in more detail, but we are investing to strengthen our franchise, accelerate growth, and build scale in a targeted way. The pace of change in our industry continues to accelerate with Learn more about KeyCorp at key.com/IR technological advancements changing the way we interact with our clients and drive operational efficiencies. We are making the right investments to digitize our business, focused on improving the client experience, modernizing core systems, and simplifying back-office processes. continued 1 KeyCorp 2019 Annual Report On the consumer side, we have rolled out financial wellness Following market research and client feedback, we also reviews for individuals and small businesses. Our team recently rolled out a new suite of digital and banking tools to completed more than 800,000 of these reviews in 2019 – promote our clients’ financial wellness and ensure we are a testament to our dedication to the financial wellness of all keeping pace with client needs and preferences. The new our clients. For our commercial clients, we continue to offer capabilities include the KeyBank CashbackSM credit card new and expanded capabilities and have partnered with and EasyUp,® which combined, empower clients to save fintech companies to adopt industry-leading solutions money and pay down debt faster while earning money back to support our targeted, niche client segments. and avoiding unnecessary extra costs. In my tenure at Key, we have never had a more competitive consumer offering. Laurel Road, a leading digital-first consumer lending platform primarily focused on student loan refinancing for medical professionals, acquired in April 2019, is the most recent of a series of strategic acquisitions and third-party partnerships, which have accelerated our capabilities and improved our speed to market. Laurel Road is a great example of our targeted scale approach, as it pairs well with Key’s existing healthcare focus and improves our digital capabilities. Laurel Road has exceeded our expectations by virtually all measures, originating $1.8 billion of student loan refinances since the acquisition. We are excited about the Key originated $4.3 billion in residential mortgages in 2019. future opportunity the platform offers, such as expanding into other digital offerings, including digital residential As it relates to our team, we believe our people are our mortgage originations, which will improve the client #1 asset – and we have been investing in talent across the experience, reduce origination and servicing costs, and company. Not only have we invested heavily in growing in return, increase profitability. areas like digital, analytics, and payments, but we have Another major area of investment has been our residential expanded client-facing roles across the franchise. We are mortgage business. We built the business from the ground becoming a destination employer for commercial bankers. up, hired a best-in-class team, and made sure we had the With an average tenure of more than 10 years, our senior best processes and systems in the industry.