Good morning everyone and welcome to KeyCorp’s Second Quarter 2008 Earnings Results Conference Call. The call is being recorded. At this time, I would like to turn the call over to the Chairman and Chief Executive Officer, Mr. Henry Myer. Mr. Myer, please go ahead, sir. Henry L. Meyer – Chairman and Chief Executive Officer: Thank you, operator. Good morning and welcome to KeyCorp's second quarter earnings conference call. Joining me for today’s presentation is our CFO, Jeff Weeden. Also joining me for the Q&A portion of our call are Vice Chairs Tom Bunn and Beth Mooney and our Chief Risk Officer Chuck Hyle. I would like to turn your attention to slide #2, which is our forward-looking disclosure statement. It covers both our presentation and the Q&A portion that will follow. Now you turn to slide #3. Before Jeff goes over the numbers in detail, I want to make just a few comments on several issues that are always important for banks, but are particularly noteworthy in the current environment. #1, our costs are well controlled. As you know if you have followed us for any length of time one of our top objectives has been to control expenses and improve our cost ratios on a continuing basis consistent with our growth strategy and conditions in the market places. I believe you can see that that objective continuing to be reflected in today’s results. Our fee revenue is strong. We experienced strong results in several of our fee revenue areas including trust and investment services, investment banking, and loan syndication fees. These areas are built on continuing relationships with our clients. With the actions we took in the first quarter to reduce risk in our held for sale books, we also saw a strong rebound in gains from loan…

Thank you, Henry. I will begin with financial summary shown on slide #4. My comments today will be with respect to Key’s results from continuing operations and I will focus on those results excluding the leverage lease impact. These results are identified as adjusted figures and are more representative of Key’s performance during the second quarter. In some cases our comment on comparisons to both the second quarter of 2007 and the first quarter of 2008. As addressed in our earnings release, the second quarter was not only impacted by the leverage lease adjustment but also by the continuation of the credit cycle. We did experience a number of positives during the second quarter. However, they were overshadowed by the lease adjustment and higher credit costs. For the second quarter of 2008, we reported a loss of $2.70 per share from continuing operations compared to the income of $0.85 per share for the same period one year ago. On an adjusted basis excluding the impact of the contested leverage lease transactions, we incurred a loss of $0.28 per share as a result of higher credit cost. Slide 5, identifies the impact of the leverage lease adjustment on specific line items of the income statement. The two areas that are impacted by the adjustment are net interest income and the tax provision. Approximately two-thirds of the FAS 13-2 lease accounting adjustment which is the $838 million of net interest income less the tax of $302 million on the leverage lease income for a net amount of $536 million were reversed back into income over the remaining lives of the impacted leases. Some of these leases go out as far as an additional 20 to 30 years. Based on these contractual maturities, the company does not expect a reversal of income to…

Thank you very much. [Operator Instructions]. Our first question of the morning goes to Brent Erensel at Portales Partners. Please go ahead.

Good morning. Question on a commercial real estate portfolio. You have the sale of $700 million plus and then you have payments and yet the decline in the owner occupied -- sorry non-owner occupied portfolio is vest in that, can you explain that and what do you think the last content is in that remaining portfolio?

I think in terms of -- this is Jeff Weeden, when we look at the portfolio we also commitments that are outstanding and of course the projects that are continuing and so you will draws on some of the commitments that are existing on project. We had payments that did come in on various projects, the $719 million that we transferred on out during the course of the quarter, of course, came primarily are going to come from the residential property section. So, we have continuation in the total non-owner occupied in the income properties area of the portfolio. I think when we saw the largest decline it went down approximately $900 million in the residential property section between the first quarter of 2008 and the second quarter of 2008. So that’s primarily where I would concentrate, we are still doing business in the other areas of commercial estate.

And real quickly if you just back up the losses on the reserve build, you get some sort of operating range of earnings between $0.16 and $0.30 per quarter, do you have any comment on that?

No, our comments are related to the specific line items that are given in the back on slide #16 of our presentation.

Okay. Thank you.

[Operator Instructions]. And we will go next to Gerard Cassidy at RBC Capital Markets. Please go ahead.

Thank you and good morning. I apologize if you’ve addressed this, I had to jump off the call for a minute. In the loan sales that you had of $44 million in the commercial real estate area, what was the booked value of those loans where you received $3 million or $4 million in proceeds from?

Well, I think what we are talking about Gerard is in total we are including that 44, $719 million if you look at the fact that we moved $384 million it would equate to approximately a 53% realization factor on the portfolio. So, with respect to those that have actually closed I don’t have that specific information, I’ve looked at it more in the aggregate in total, in it will very obviously property by property.

Okay. So, essentially $0.53 on the dollar is the fair number then?

That’s the fair number for the portfolio that was identified for sale during the second quarter and moved to a held for sale category or part of loans actually closed on that portfolio in the second quarter, that’s correct.

Yes, correct. And I recall most of those residential construction or there some other construction in, in as well?

Those were in the residential construction portfolio only.

Okay. And then, second, the margin obviously you guys reported that a higher net interest margin in the quarter similar to your peers, I see in your other page, on page 16 that the margin forecast is actually lower for the second half of the year than the second quarter can you give us color on that why its directionally going that way?

Gerard, it would relate specifically to the accounting treatment surrounding the leverage lease transactions that is putting pressure on it is got reconstruct going forward. The yield volume dropped significantly. If we pull that out as, I think we did on page to give us a better flavor for the true net interest margin, which is 3.32% could you give us an estimate of what that would be with out there was leverage leased you know the impacts?

Yes it would be relatively flat, so we would still be around the 3.3 range.

Okay, great thank you.

Our next question goes to Nancy A. Bush with NAB Research LLC.

Good morning and if you could just clarify on sort of switching between the calls here, you said $32 million to $34 million for quarter is that the impact of that leverage lease transactions.

That $32 million to $34 million Nancy is the after tax cost of the interest accrual on the disputed balances with the IRS.

Okay, and Henry you had mentioned sort of the indiscriminate panic I guess among the populas at that time of to sell your IndyMac and I assume that for you are alluding to. Had you have to raise your deposit cost that all given the particular challenges of your region and if you could just comment about the whole comparative environment there right now? I would appreciate it.

Yeah Nancy -- I made that comment because there are a lot of media stories about FDIC insurance and there is a lot more interest by our depositors but on that reported that we actually grew our deposits last week, so we are not seeing runs locks or any concerned but our plans and I think plans generally which is what my comments were aimed at are really trying to understand better what insured what FDIC insurance is all about how you spread accounts all that kind of, all those kinds of issues but I think important thing is that last week our deposits actually grew. To the other part of your question Nancy it is a very competitive market place out there and it is not like those deposits grew for free but we are paying, we are not trying to buy the market place either.

Thank you.

And our next question goes to Matthew O’Connor of UBS. Please go ahead. Matthew O’Connor: Good morning

Good morning Matthew O’Connor: Just to clarify the tax part of 32 to 34 per quarter for back half of the year, is that go away in 2009.

No it does not that will continue on and of course little varied depending upon interest rates that are charged on those particular accruals until those amounts are either resolved in the form of a deposit with the government or they result in a different fashion where we prevail on appeal of our tax case. Matthew O’Connor: Okay, now I guess just an aggregate, what is the total amount if you have a deposit or something?

We have not disclosed that, but I think if you go back and look, there was the $1.7 billion of deferred taxes related to the leverage lease transactions and then of course, the interest on top of that so the $475 million was an after tax accrual, so you would have to gross that up, add that on top of the $1.7 billion. Matthew O’Connor: Okay, and then secondly, I think there is a lot of talk about consumers being very sensitive to their deposits in this kind of environment, but I am wondering from a commercial side, we hear about lines being cut at some other banks. I am just wondering if that causes some commercial customers to lose their deposits and if you are seeing any deposits up for grabs out there that you might be able to grab?

Beth, do you want to comment?

Yeah, Matthew I will tell you that it is a highly competitive environment and we do see and are staying very close to our clients in good prospects in our communities and in our various markets and are opportunistically taking share of our clients as well as those in other institutions. We have not in our book cut or reduce lines to any of our clients and we will continue to call on our competitors with good prospects to try and garner more deposits and more relationships. Matthew O’Connor: I don’t know if there’s a rule of thumb, but do we tend to see the credit relationship move first, that’s one thing that we are seeing as some pretty good commercial loan growth out there and I wonder if the deposits will follow?

Mathew, I would follow up and say that it varies. It depends on how you have been calling on a company and presenting the opportunity to do business, but often times they do lead with credit opportunities that chance to build a relationship. Matthew O’Connor: But, we do want the full relationship and customers will get our better pricing if we get the full relationship. So, we are not interested in just credit only. We want a total relationship that’s our strategy, that’s what it is built around.

Matthew, it’s Tom Bunn, I would add to what Beth said in that we have seen successes in our treasury management capabilities and to Beth’s world, from the community bank down to the business banking client as well and that builds deposits as well. So, I think when you combine our relationship approach with our treasury management capabilities and as Beth said the whole approach of cross selling and if you are seeing that as an opportunity in this market. One other comment I would suggest is that again accurately what Beth said taking it across my world as well. Clients there exiting this bank tend to be client that we want to exit this bank right now from a credit exposure standpoint. We are not seeing any departure of clients that are good relationship clients they we’re working to keep. Matthew O’Connor: Okay, great, thank you.

And we will go next to Betsy Graseck of Morgan Stanley.

No problem, Hi, good morning. Couple of questions. One, on the reserving, when you are running your reserve analysis are you factoring any deterioration in home values from here and your numbers?

This is Chuck Hyle. Yes, we are, and in fact over the last 4 to 6 weeks, I would say that our view of the residential home markets have deteriorated a little bit more. More in terms of pushing at a recovery rather than anything else more dramatic than that and that is reflected in the way we look at our reserving market by market.

Can you give us the sense as to what you are anticipating from here, if it is built already into your reserve?

Well, I am not quite sure how to put it into numbers for you because it really is determined on a case by case basis, the type of loan it is, where it is located, the market itself, we are doing an enormous amount of analysis individually. But clearly, on some of the land only situations many of which we have always sold in this portfolio we have just dealt with the discounts can be fairly dramatic, 50% give or take. If it is a completed project, in a better location that will obviously vary but clearly where we are pushing out our views in terms of when the housing market is going to bottom and that is reflected in our reserving.

And, is there anything that you are doing to hedge your portfolio at all?

In terms of credit risk?

Yeah.

Clearly, we hedge on the CMBS side what we hedge credit risk in that portfolio. We do use the credit derivative market in the corporate side of the business. It’s a little more difficult to do in pure real estate. We have done some modest hedging through indices but that’s a fairly small number in our organization.

And against the [res-e] portfolio?

A little bit on indices, but again not really a lot.

Okay, on the loan growth that you presented your slide on each 8 or 9 the consumer growth that you are getting and could you just indicate what bucket set is coming from at this geographically based more than product based that’s fine.

Beth will comment a little bit on that. We are seeing some growth with respect to our home equity portfolio and its I think more of the growth has been coming in the Western Markets as well as so it would be the Rockies on the specific North West is where we were seeing some of that on the consumer side of equation. The other consumer books of course are relatively flat, so if you look at some of indirect portfolios; those are flat and we have those are some of the portfolios that I talked about our that our expectation would be that flat to down slightly as it become more selective on the credit there, another area where we were becoming very selective on credit off course just because of the spreads, would be in the leasing portfolio. You will see the that’s down slightly also and just a matter of function of the marketplace of what can get for return from that business, Beth is there anything you want to talk about a geographic area.

Betsy I would just underscore that we have had modest consumer loan growth in the community bank are primarily through our growth and our equity portfolios concentrating mainly in our Western Market and as you can see in the appendix in our supplemental credit slide that is largely half of first lean position portfolio, as well as extremely high cycle scores and judicious use of loan to value. So again we continue to monitor both the quality of our new offerings in our growth and we would say that we have seen the best growth in our Western Market.

And would you say that’s more a new client acquisition or draw downs of existing lasting lines?

We have seen an increase in draw downs to some extent but another trend that we have seen that is difference and where we would have been last year if the rate of pay downs on line has slowed. The more of our acquisition of clients and expansion of relationships is going to the balance sheet as a result.

Okay and just one last question on NIM and how are you thinking about your investments and securities at this stage, is there any interest in, in a potentially moving up the NIM through use of the balance sheet?

Well, I’ll have Joe Beta comment on that, but I would say that we have no intention of expanding our investment portfolio at this time. As you know, we mainly manage our interest rate risk position through the use of Corp balance sheet swaps received fixed a pay a variable and this with the swap in the yield curve obviously and the number of swap positions that we put on last year in anticipation of the declining rate environment, that’s actually benefiting the margin here in the 2008 time period, so Joe anything else you would like to add to that?

Only that we mange the investment portfolios as part of our overall, a liability management position and it is not drawn as a rate of return portfolio, over in the context of our overall AL management position, the preferred instrument of choice as Jeff said is interest rates swaps to rebalance our rate sensitivity as necessary, and we do strive over longer period of time to be very much neutral with a bias to advance slightly liability sensitive.

Okay. Could you see an opportunity that improved the NIM, at all in the next few quarters here?

Well our guidance that we provided for on the NIM was really that it could under some pressure as a result of the re-characterization of the leverage leased transactions.

Al right

Excluding that It would be relatively flat in the primary reason for being relatively flat as I think there is a just competition for deposits and certainly the price of turned financing is elevated for the industry as a whole.

Okay thanks.

And we’ll go next to Seriph Karenske from Cambridge Place Investment Management. Please go ahead.

Asked and answered. Thank you.

Al right thank you and we’ll go next to David Pringle at Fells Point Research. Please go ahead.

Good morning could you talk a little bit about the dynamics with 30days, 89 days past to declining in the quarter first?

The decline, decline in that portfolio was primarily related to the commercial real estate book of business though I guess we were encouraged David by the fact that we experienced the nice decline in that area approximately $300 million so that for the decline came to the other areas remain relatively stable.

And what’s your outlook for that Jeff?

Well I can let chuck’s comment on that, but the outlook is really where continued to remain focused on those near term delinquencies and work with our clients and keep the payments coming in.

Yeah David I would just add that we had been very, very focused on this portfolio not just the residential commercial real estate but really across all portfolios looking for sort of early warning signs of deterioration and back to a comment made earlier by Jeff and also by Tom, we had been encouraging certain customers to move to other institutions and when I think we are beginning to see a little bit of that positive impact in the 30 to 80/90 bucket. Clearly the most impact is from the residential commercial real estate sale.

Thank you, Jeff.

And we do have a follow up question from Gerard Cassidy at RBC Capital Markets. Please go ahead.

Thank you for taking the follow up. Regarding the nonperforming asset in this current quarter about 1.2 billion now, I noticed there was a sizable increase in the commercial financial and agricultural category to $259 million from the 147 in the prior quarter and at the end of the year about $84 million, could you guys share with us what you are seeing in that side of the business not the real estate related stuff, which has been well documented but now it looks like more of the C&I issues that might be developed, excuse me, developing here?

This is Chuck. Again let me try to take that one, there are couple of pieces to that to that question, when as we are saying a little bit of an up tick in leasing related assets these are transactions that are booked as loans rather than as leases but they come through our leasing division and that is a part of that. The other piece is we do have a small portfolio of residential, real estate related exposures that by virtue of there being unsecured when they are executed and also by virtue of loans being to entities, corporate entities rather than projects are really residential real estate assets. That total portfolio is about $300 million give or take, there were not a large portfolio but it does show up in the C&I category, though about $75 million of that increase of about a $112 million in the C&I category is related to that portfolio so it really is essentially an extension of our residential real estate book that just happens to show up in C&I. A lot of that exposure is to National Home Builder type names, but there are few that are more lot project type and not just the categorization issue. So, having said that I would say that our base C&I portfolios, the institutional side of the business and our middle market and business banking continued to perform quiet well. So that up tick is really not a reflection of those portfolios.

Okay, thank you. And certain in back to the leasing loans that you identified is there any particular category within leasing that if this, you have noticed this more problematic than other areas within leasing?

Yeah, there are two one is which is referenced before the small tickets, side of things particularly commercial vehicles and construction again relating to the residential side of things and you will pick up the theme. And, the other is actually small aircraft generally purchased for individuals where we have seen some degradation in the borrowers. Again, many of these are individuals who where in the real estate business, developers, people of that type who purchased small aircraft two, three, four years ago and join the boom. So, we are seeing some NPLs there, but the good news is that the recovery rates on those aircraft continued to be very strong, prices have held up exceptionally well and we don’t see any indication if that’s going to change. So the NPLs are up but the last content we think is quite small.

Thank you.

And, Mr. Myer with no other questions in the queue, I’d like to turn the call back to you for any closing comments, sir.

Thank you, operator. Again, we thank you all for taking time from your schedule to participate in our call today. If you have any follow up questions on the items we’ve discussed this morning please don’t hesitate to call John Schulman who is helping out in Vern’s absence and John’s number is 216-689-3882, or Chris Secora who works with Vern in our Investor Relations Department and his number is area code 216-689-3133. That concludes our remarks and again thank you for your participation.

Thank you. That does conclude the call. We do appreciate your participation. At this time you may disconnect. Thank you.