There are oh-so-many ways to analyze a bank's performance, and probably a good half-dozen ways to determine the "fair" value of a banking stock. So while I won't pretend to have all the answers on Ohio's KeyCorp (NYSE:KEY), and I don't assume every reader will agree with my analysis, I think there are some reasons for hope in the long run -- and caution in the short-run.

The first thing that jumped out to me about KeyCorp's results was that core revenue rose about 5% (as opposed to the 7.4% reported increase), but core non-interest expense rose about 6%. Operating expenses rising faster than revenue means negative operating leverage, and that's not a good thing.

I also noticed that reported net income was down about 11% in the community banking business, with negative loan growth and reasonable (nearly 7%) deposit growth. That stands in contrast, then, to the better-than-9% growth in national banking income and the far stronger loan growth there.

Overall loan growth wasn't exactly inspirational (up 4.6%), but the company's overall management of loan growth and the spread between borrowing costs and lending rates wasn't all that bad in the context of other Midwestern operators like National City (NYSE:NCC), Fifth Third (NASDAQ:FITB), or U.S. Bancorp (NYSE:USB). What's more, credit quality is solid, and KeyCorp is heavily weighted toward commercial lending as opposed to, say, more exotic residential mortgage lending.

Longer-term, the company seems serious about trying to get the community banking business back up to snuff. Moreover, it seems to me that management is in fact pulling back a bit from the riskier aspects of commercial real estate lending. Couple that with a decent business in equipment leasing and such, and I'm not pessimistic about the bank's long-term fortunes.

I wouldn't rush to snap up these shares, but investors could certainly do worse than buying KeyCorp today with the idea of holding for a period of several years. If nothing else, you'll collect a pretty fair dividend along the way, and should self-improvement efforts exceed expectation, there'd be a capital-gains kicker as well.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).