0a967c06526b1d589bf3d5692d83cff0e5d9a0e01b42418f532170ec42d1da68

KeyCorp, established in 1958 and based in Cleveland, Ohio, is a prominent bank-based financial services company in the United States, with consolidated total assets of approximately $188.3 billion as of December 31, 2023. The company operates mainly through its principal subsidiary, KeyBank National Association, offering a broad spectrum of financial services to individual, corporate, and institutional clients through its two primary business segments: Consumer Bank and Commercial Bank **[0000091576-24-000040_key-20231231.htm:9]**. The Consumer Bank segment provides a variety of products and services, including deposit and investment products, personal finance, lending, and wealth management **[0000091576-24-000066_key-20240331.htm:111]** **[0001628280-24-033136_key-20240630.htm:121]**. The Commercial Bank segment caters to the financial needs of middle market and large corporate clients, offering lending, equipment financing, and commercial real estate services **[0000091576-24-000066_key-20240331.htm:111]** **[0001628280-24-033136_key-20240630.htm:121]** **[0000091576-24-000040_key-20231231.htm:251]**.

1. **Commercial Bank** - Focuses on meeting the borrowing, cash management, and capital markets needs of middle market clients, and provides lending, equipment financing, and banking products to large corporate and institutional clients. It is a significant national commercial real estate lender and third-party servicer of commercial mortgage loans.
2. **Consumer Bank** - Offers deposit and investment products, personal finance and financial wellness services, lending, mortgage and home equity, student loan refinancing, credit card services, and business advisory services. It also provides wealth management and investment services to institutional, non-profit, and high-net-worth clients.

db81e3c4b75f8af465b36153a3fd6c53c24614310efda8761753ac95db28a675

| Metric [Unit: $ Million] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|--------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Consumer Bank**        | **900**  **[0000091576-23-000013_a4q22earningsrelease.htm:6]**  | **842**  **[0000091576-23-000062_a1q23earningsrelease.htm:6]**  | **803**  **[0000091576-23-000107_a2q23earningsrelease.htm:5]**  | **791**  **[0000091576-23-000121_a3q23earningsrelease.htm:5]**  | **786**  **[0000091576-24-000013_a4q23earningsrelease.htm:5]**  | **773**  **[0000091576-24-000061_a1q24earningsrelease.htm:5]**  | **769**  **[0001628280-24-032171_a2q24earningsrelease.htm:5]**  | **814**  **[0000091576-24-000104_a3q24earningsrelease.htm:5]**  |
| **Commercial Bank**      | **928**  **[0000091576-23-000013_a4q22earningsrelease.htm:6]**  | **841**  **[0000091576-23-000062_a1q23earningsrelease.htm:6]**  | **805**  **[0000091576-23-000107_a2q23earningsrelease.htm:5]**  | **790**  **[0000091576-23-000121_a3q23earningsrelease.htm:6]**  | **794**  **[0000091576-24-000013_a4q23earningsrelease.htm:5]**  | **791**  **[0000091576-24-000061_a1q24earningsrelease.htm:5]**  | **769**  **[0001628280-24-032171_a2q24earningsrelease.htm:5]**  | **868**  **[0000091576-24-000104_a3q24earningsrelease.htm:5]**  |
| **Other Segments**       | **70**  **[0000091576-23-000013_a4q22earningsrelease.htm:6]**   | **31**  **[0000091576-23-000062_a1q23earningsrelease.htm:6]**   | **(13)**  **[0000091576-23-000113_key-20230630.htm:128]**  | **(15)**  **[0000091576-23-000125_key-20230930.htm:133]**  | **(42)**  **[0000091576-24-000013_a4q23earningsrelease.htm:5]**  | **(31)**  **[0000091576-24-000061_a1q24earningsrelease.htm:5]**  | **(12)**  **[0001628280-24-032171_a2q24earningsrelease.htm:5]**  | **(987)**  **[0000091576-24-000104_a3q24earningsrelease.htm:5]**  |
| **Total Revenue**        | **1,898**  **[0000091576-23-000013_a4q22earningsrelease.htm:6]**  | **1,714**  **[0000091576-23-000062_a1q23earningsrelease.htm:6]**  | **1,595**  **[0000091576-23-000107_a2q23earningsrelease.htm:5]**  | **1,566**  **[0000091576-23-000121_a3q23earningsrelease.htm:5]**  | **1,538**  **[0000091576-24-000013_a4q23earningsrelease.htm:5]**  | **1,533**  **[0000091576-24-000061_a1q24earningsrelease.htm:5]**  | **1,526**  **[0001628280-24-032171_a2q24earningsrelease.htm:5]**  | **695**  **[0000091576-24-000104_a3q24earningsrelease.htm:5]**  |

766023721a655dd909ae722e5cdfcc4e2ac66d9c1946ca3f96530239916c16ce

f217dc852a34d3759f2ca700d68f319e208ecab3fa11b724875c9c91ccd9bf81

b6ae6a1a8ebc5166595f7d25284d03763f413273251e7c1eec906b4dd3cb2d6a

1. Given your guidance for low to mid-single digits expense growth in 2025, can you provide more clarity on the specific drivers of these expense increases and how you plan to manage expenses while investing in growth initiatives, especially considering the non-recurring expenses expected in the fourth quarter?

2. You anticipate over 20% net interest income improvement next year, with half depending on the completion of your securities portfolio repositioning pending regulatory approval. Can you elaborate on the risks associated with obtaining this approval and what contingencies you have if the repositioning cannot be executed as planned?

3. With the significant capital raised from Scotiabank’s investment and your CET1 ratio increasing to around 12% on a pro forma basis, how do you plan to deploy this additional capital strategically? Specifically, how are you evaluating potential bank M&A opportunities amid industry consolidation, and what criteria must be met for you to pursue an acquisition?

4. Despite your assertion that non-performing loans are peaking and expected to remain flat going forward, there was a recent increase attributed to broad-based factors. Can you provide more detail on the specific sectors or credits contributing to this increase, and what proactive measures are you taking to mitigate further credit deterioration?

5. Considering that increased capital markets activity and private credit are disintermediating traditional bank lending and impacting loan growth, how is KeyCorp adapting its business model to address this competitive pressure, and what strategies are in place to ensure sustainable loan growth in this environment?

b890031dd34448aa6597f25e652a40b94506bda0070f0d0ae64a105d7c0086ca

**Net loan charge-offs to average loans (%)**

**Assets Under Management ($ billion)**

**Amortized Cost Basis of Modified Loans That Subsequently Defaulted ($ million)**

**Liability for Credit Losses on Off Balance Sheet Exposures ($ million)**

**Commercial real estate loans ($ billion)**

**Amortized cost basis of nonperforming loans on nonaccrual status ($ million)**

**Collateral-dependent loans measured at fair value on a nonrecurring basis ($ million)**

**Accrued income and other assets measured at fair value on a nonrecurring basis ($ million)**

**Incremental pre-tax expense due to FDIC special assessment ($ million)**

**VaR ($ million)**

**Stressed VaR ($ million)**

**Stress capital buffer (%)**

**Simulated Change in Net Interest Income +200 bps (%)**

**Simulated Change in Net Interest Income -200 bps (%)**

**Weighted-average Interest Rate Change - Commercial and Industrial (%)**

**Weighted-average Interest Rate Change - Real estate - residential mortgage (%)**

**Weighted-average Interest Rate Change - Home equity loans (%)**

**Weighted-average Interest Rate Change - Consumer direct loans (%)**

**Weighted-average Interest Rate Change - Credit cards (%)**

**Weighted-average Interest Rate Change - Consumer indirect loans (%)**

**Weighted-average Interest Rate Change - Commercial Mortgage (%)**

**Weighted-average Interest Rate Change - Other Consumer Loans (%)**

01c9d6511c1606c886159729d0adc240bd281127a98df450952ff41e34e95475

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD]

EPS - Diluted [USD]

cff7e8e8f083e7358d938ffe8f681ce2bd14aadf3e1c8ebb9f6bda82a61ce37a

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

fbae604b5dd61300f5b841889328b133e3c62201d8690cf0ca96b5e0047955be

- National and super-regional banks
- Smaller community banks within the various geographic regions
- Savings associations
- Credit unions
- Mortgage banking companies
- Finance companies
- Mutual funds
- Insurance companies
- Investment management firms
- Investment banking firms
- Broker-dealers
- Other local, regional, national, and global financial services firms
- Nonbanks, including large technology companies  **[0000091576-24-000040_key-20231231.htm:65]** **[0000091576-24-000040_key-20231231.htm:12]** 

b3b8a034a50127791cf94615f002e0a1420d7930bde098c73fb00370d6fc8572

f6d15b2cd3f04a4a4c70e47b47763c5fdd136b456f19b68d8c981a130061b065

### Q3 2024 Earnings Call
- **Issued Period:** Q3 2024
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Net Interest Income (NII):** Expected to fall in the middle of the full-year guidance range of down 2% to 5%, with about 150 basis points of positive impact from the Scotiabank investment and securities portfolio restructuring  **[KEY_3402955_5]** .
  2. **Net Interest Margin (NIM):** Expected to be around **2.4%** for the fourth quarter  **[KEY_3402955_5]** .
  3. **Loan Forecast:** Year-end loan forecast was tweaked by 1% to down 5% to 6%  **[KEY_3402955_5]** .
  4. **Average Deposit Growth:** Positively revised to up 1% to 2%, with client deposits expected to grow by 3% to 4%  **[KEY_3402955_5]** .
  5. **Fee Growth:** Expected to grow 6% or better for the year, excluding the past quarter's securities portfolio restructuring  **[KEY_3402955_5]** .
  6. **Expenses:** Expected to be up approximately 2% for the year  **[KEY_3402955_5]** .
  7. **Net Charge-Off Ratio:** Expected to be closer to the high end of the 30 to 40 basis point range for the full year  **[KEY_3402955_5]** .
  8. **Provision for Credit Losses:** Expected to be around **$400 million** for the full year  **[KEY_3402955_5]** .
  9. **Capital Markets Revenue:** Expected to hit the high end of the full-year target for investment banking fees of **$600 million to $650 million**  **[KEY_3402955_1]** .
  10. **Noninterest Income:** Expected to be up 3% year-over-year  **[KEY_3402955_4]** .
  11. **Noninterest Expenses:** Expected to remain well controlled  **[KEY_3402955_4]** .
  12. **Nonperforming Loans and Assets:** Expected to peak and then decline  **[KEY_3402955_4]** .
  13. **Deposit Beta:** Expected to be in the low to mid-30s for the first rate cut  **[KEY_3402955_15]** .

### Q2 2024 Earnings Call
- **Issued Period:** Q2 2024
- **Guided Period:** Q4 2024 and FY 2024
- **Guidance:**
  1. **Net Interest Income (NII):** Confidence in delivering NII commitments for both the full year 2024 and the fourth quarter exit rate  **[KEY_3393418_1]** .
  2. **Deposits:** Anticipated continued growth in client deposits, up 5% year-over-year  **[KEY_3393418_1]** .
  3. **Loan Growth:** Expected normalization in net charge-offs, tending towards the higher end of the 30 to 40 basis point range  **[KEY_3393418_8]** .
  4. **Investment Banking Fees:** Expected a stronger second half of the year, hitting the high end of the full-year target of $600 million to $650 million  **[KEY_3393418_1]** **[KEY_3402955_1]** .
  5. **Credit Quality:** Expected moderation in the pace of increase in criticized loans  **[KEY_3393418_5]** .
  6. **Capital Position:** Continued building of capital position, with CET1 up 20 basis points to 10.5%  **[KEY_3393418_5]** .
  7. **Net Interest Margin (NIM):** Expected to improve to the 2.4% to 2.5% range in the fourth quarter  **[KEY_3379998_6]** .
  8. **Expenses:** Anticipated to remain relatively stable, with a guide of plus or minus 2%  **[KEY_3379998_12]** .

### Q1 2024 Earnings Call
- **Issued Period:** Q1 2024
- **Guided Period:** Q4 2024 and FY 2024
- **Guidance:**
  1. **Net Interest Income (NII):** Expected to achieve over $1 billion by the end of the year, with NIM improving to the 2.4% to 2.5% range in the fourth quarter  **[KEY_3379998_6]** .
  2. **Loan Balances:** Acknowledged challenges in ending loan balances due to rate impacts  **[KEY_3379998_5]** .
  3. **Credit Losses:** Reaffirmed guidance for net charge-offs to be 30 to 40 basis points for the full year  **[KEY_3379998_4]** .
  4. **Capital Ratios:** Aim to maintain a CET1 ratio of 10.3%  **[KEY_3379998_5]** .
  5. **Allowance for Credit Losses:** Expected to continue building, representing 1.66% of period-end loans  **[KEY_3379998_5]** .
  6. **Noninterest Income:** Expected some pullback in fees in the second quarter  **[KEY_3379998_1]** .

### Q4 2023 Earnings Call
- **Issued Period:** Q4 2023
- **Guided Period:** N/A
- **Guidance:** The documents do not provide information from the Q4 2023 earnings call for KeyCorp, so I cannot determine the specific guidance metrics or period.

402f7cd4295e8c0c05cd1251e807fa8da0f8daa6381c6c56b7c0a448b41ec391

| Name                  | Position                                      | Start Date       | Short Bio                                                                                                                                                                                                 |
|-----------------------|-----------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Victor B. Alexander   | Head of Consumer Bank                         | January 2020     | Victor B. Alexander has been KeyCorp's Head of Consumer Bank and an executive officer since January 2020. Previously, he was the Head of Home Lending and Treasurer  **[0000091576-24-000040_key-20231231.htm:15]** **[0000091576-23-000026_key-20221231.htm:14]** .                               |
| Darrin L. Benhart     | Chief Risk Officer                            | January 1, 2024  | Darrin L. Benhart became the Chief Risk Officer on January 1, 2024. He was previously Deputy Chief Risk Officer and Head of Enterprise Risk Management  **[0000091576-24-000040_key-20231231.htm:15]** .                                               |
| Amy G. Brady          | Chief Information Officer                     | May 2012         | Amy G. Brady has been the Chief Information Officer at KeyCorp since May 2012 and has served as an executive officer since joining the company  **[0000091576-24-000040_key-20231231.htm:15]** **[0000091576-23-000026_key-20221231.htm:14]** .                                                    |
| Trina M. Evans        | Director of Corporate Center                  | August 2012      | Trina M. Evans has been the Director of Corporate Center since August 2012 and became an executive officer in March 2013  **[0000091576-24-000040_key-20231231.htm:15]** **[0000091576-23-000026_key-20221231.htm:14]** .                                                                          |
| Kenneth C. Gavrity    | Head of Commercial Bank                       | November 2023    | Kenneth C. Gavrity has been serving as the Head of Commercial Bank since November 2023. He was previously the Head of Enterprise Payments  **[0000091576-24-000040_key-20231231.htm:15]** .                                                            |
| Christopher M. Gorman | Chairman, CEO, and President                  | May 1, 2020      | Christopher M. Gorman has been the Chairman, CEO, and President since May 1, 2020. He joined KeyCorp in 1998 and has held various leadership roles  **[0000091576-24-000040_key-20231231.htm:15]** **[0001193125-24-074588_d285260ddef14a.htm:15]** **[0001193125-23-078581_d397638ddef14a.htm:13]** .                                             |
| Clark H.I. Khayat     | Chief Financial Officer                       | March 16, 2023   | Clark H.I. Khayat has been the Chief Financial Officer since March 16, 2023. He rejoined KeyCorp as Chief Strategy Officer in 2018  **[0000091576-24-000040_key-20231231.htm:15]** **[0001193125-24-074588_d285260ddef14a.htm:58]** .                                                                |
| Allyson M. Kidik      | Chief Risk Review Officer and General Auditor | July 2022        | Allyson M. Kidik has been the Chief Risk Review Officer and General Auditor since July 2022. She was previously Senior Deputy General Auditor  **[0000091576-24-000040_key-20231231.htm:15]** **[0000091576-23-000026_key-20221231.htm:14]** .                                                     |
| Angela G. Mago        | Chief Human Resources Officer                 | November 2023    | Angela G. Mago has been the Chief Human Resources Officer since November 2023. She was previously the Head of Commercial Bank  **[0000091576-24-000040_key-20231231.htm:16]** **[0001193125-24-074588_d285260ddef14a.htm:58]** .                                                                     |
| Andrew J. Paine III   | Head of Institutional Bank                    | 2019             | Andrew J. Paine III has been the Head of Institutional Bank since 2019 and has been President of KeyBanc Capital Markets Inc. since 2013  **[0000091576-24-000040_key-20231231.htm:16]** **[0000091576-23-000026_key-20221231.htm:15]** .                                                          |
| Douglas M. Schosser   | Chief Accounting Officer                      | May 2015         | Douglas M. Schosser has been the Chief Accounting Officer since May 2015  **[0000091576-24-000040_key-20231231.htm:16]** **[0000091576-23-000026_key-20221231.htm:15]** .                                                                                                                          |
| Jaime Warder          | Head of Digital Banking                       | January 2019     | Jaime Warder has been the Head of Digital Banking since January 2019 and became an executive officer in May 2021  **[0000091576-24-000040_key-20231231.htm:16]** .                                                                                     |
| James L. Waters       | General Counsel and Secretary                 | July 2021        | James L. Waters became the General Counsel and Secretary in July 2021. He was previously General Counsel and Corporate Secretary of Cullen/Frost Bankers, Inc.  **[0000091576-24-000040_key-20231231.htm:16]** **[0000091576-24-000040_key-20231231.htm:15]** .                                    |
| Stacy L. Gilbert      | Chief Accounting Officer                      | March 2024       | Stacy L. Gilbert serves as the Chief Accounting Officer at KeyCorp since at least March 2024, as indicated by her signing various SEC filings in that capacity  **[0000091576-24-000052_xslF345X02/wk-form3_1710794436.xml:0]** .                                       |

985e684329901b008f05e379ae123b8cb75ca6b4d68ed847beb0a727f363852c

| Program Details            | Program 1       |
|----------------------------|-----------------|
| Approval Date              | **N/A**         |
| End Date/Duration          | **Q3 2021 - Q3 2023**  **[0000091576-23-000113_key-20230630.htm:126]** **[0000091576-23-000125_key-20230930.htm:132]** **[0000091576-24-000040_key-20231231.htm:246]**  |
| Total additional amount    | **$1.5 billion**  **[0000091576-23-000113_key-20230630.htm:126]** **[0000091576-23-000125_key-20230930.htm:132]** **[0000091576-24-000040_key-20231231.htm:246]**  |
| Remaining authorization amount | **$0**  **[0000091576-24-000108_key-20240930.htm:137]**  |
| Details                    | The program was part of KeyCorp's comprehensive capital plan to return capital to shareholders and manage capital levels. It expired on September 30, 2023. During 2023, KeyCorp repurchased **$38 million** of shares in the open market and **$34 million** related to equity compensation programs.  **[0000091576-23-000113_key-20230630.htm:126]** **[0000091576-23-000125_key-20230930.htm:132]** **[0000091576-24-000040_key-20231231.htm:246]**  |

8aa9a5baf28485fab953011df17d6fa86840e2c335eebda585186ee0c74dfead

**Quarterly guidance for Q4 2025:**
- **Net Interest Margin (NIM)**: 2.7% or better  **[KEY_3412865_5]** **[KEY_3412865_13]**  (raised from 2.4%  **[KEY_3402955_5]** )  
- **Net Interest Income (NII)**: Q4 2025 vs. Q4 2024 growth of 10% or more  **[KEY_3412865_5]** **[KEY_3412865_17]**  (no prior quarterly guidance)

**Annual guidance for FY 2025:**
- **Average Loans**: Decline by 2% to 5%  **[KEY_3412865_5]**  (raised from down 5% to 6%  **[KEY_3402955_5]** )  
- **Net Interest Income (NII)**: Increase by ~20%  **[KEY_3412865_5]** **[KEY_3412865_17]**  (raised from down 2% to 5%  **[KEY_3402955_5]** )  
- **Noninterest Income**: Growth of at least 5%  **[KEY_3412865_5]**  (raised from 3% year-over-year  **[KEY_3402955_4]** )  
- **Expenses**: Increase by 3% to 5%  **[KEY_3412865_5]**  (raised from up ~2%  **[KEY_3402955_5]** )  
- **Net Charge-Off Ratio**: 40 to 45 bps  **[KEY_3412865_5]**  (raised from closer to the high end of 30 to 40 bps  **[KEY_3402955_5]** )  
- **Nonperforming Assets (NPAs)**: Expected to decline by mid-2025  **[KEY_3412865_5]** **[KEY_3412865_4]**  (no numeric prior guidance)  
- **Criticized Loans**: Expected to decline  **[KEY_3412865_5]**  (no prior guidance)  
- **Tax Rate**: 21% to 22% (GAAP)  **[KEY_3412865_5]**  (no prior guidance)  
- **Deposit Growth**: Stable to slightly up  **[KEY_3412865_9]**  (lowered from up 1% to 2%  **[KEY_3402955_5]** )

8a0bafd68fbef4c5ea8c664d3fd630d58e5573c215affa8e78ef781d94260144

| Name              | Start Date | End Date | Reason for Change |
|-------------------|------------|----------|-------------------|
| Ernst & Young LLP | 1994  **[0000091576-24-000040_key-20231231.htm:143]**    | Present  | Current auditor   |

3d6f15ade06b1701a52bf79b5db97e2c7474be46f777063496e4af4a5a43bd18

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $865 million in Q4 2024 (-67% YoY from $2,660 million)  **[0000091576-24-000040_key-20231231.htm:145]** **[0000091576-25-000014_a4q24earningsrelease.htm:11]**   
- Operating Income (EBIT): -$413 million in Q4 2024 (down from $57 million in Q4 2023)  **[0000091576-24-000040_key-20231231.htm:145]** **[0000091576-25-000014_a4q24erex993.htm:2]**   
- Net Income: -$244 million in Q4 2024 (down from $65 million in Q4 2023)  **[0000091576-24-000040_key-20231231.htm:145]** **[0000091576-25-000014_a4q24erex993.htm:2]**   
- EPS (Basic & Diluted): -$0.28 in Q4 2024 (down from $0.03)  **[0000091576-24-000040_key-20231231.htm:145]** **[0000091576-25-000014_a4q24erex993.htm:2]**   

b92c88e39d24408d5dea088021c78bce8620d2b61c6ac5fd29ee3cfeb614965d

88c45467d91b137a4a4e5a830a62fa1b09cf941802010fb07df478ea138d6f3e

f4cb652b89a0aed63d884d3b82109d0ac98d022385a91fc740d870e5b097676c

- **KeyCorp's M&A backlog is at record highs**, positioning the company well for future growth in investment banking fees.  **[KEY_3379998_17]** **[KEY_3379998_10]**
- After **reducing RWAs by $14 billion** and **expenses by $400 million** in 2023, KeyCorp is now **"playing offense"**, focusing on expanding fee-based businesses where it has competitive advantages, such as payments, investment banking, wealth management, and business banking.  **[KEY_3379998_15]**
- Management expects **net interest margin to improve meaningfully**, potentially returning to normalized levels **closer to 3%**, as balance sheet optimization continues and the rate environment normalizes, enhancing profitability.  **[KEY_3379998_23]**

8c38dd0ea74c5ecb48eeb2a1a5f1a2cc2ffca478b19a7bdd924f0199c955fc1b

| Year | Amount Due (Millions) | Debt Type                  | Interest Rate (%) | % of Total Debt                                                                 |
|----------|---------------------------|--------------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2028     | 162                       | Trust Preferred Securities     | 6.333                | 0.9% = (162 / 18,036) * 100 **[0000091576-24-000108_key-20240930.htm:60]** **[0000091576-24-000108_key-20240930.htm:121]**                                       |
| 2029     | 91                        | Trust Preferred Securities     | 6.875                | 0.5% = (91 / 18,036) * 100 **[0000091576-24-000108_key-20240930.htm:60]** **[0000091576-24-000108_key-20240930.htm:121]**                                        |
| 2029     | 117                       | Trust Preferred Securities     | 7.750                | 0.6% = (117 / 18,036) * 100 **[0000091576-24-000108_key-20240930.htm:60]** **[0000091576-24-000108_key-20240930.htm:121]**                                       |
| 2034     | 8                         | Trust Preferred Securities     | 7.265                | 0.0% = (8 / 18,036) * 100 **[0000091576-24-000108_key-20240930.htm:60]** **[0000091576-24-000108_key-20240930.htm:121]**                                         |
| 2034     | 8                         | Trust Preferred Securities     | 7.265                | 0.0% = (8 / 18,036) * 100 **[0000091576-24-000108_key-20240930.htm:60]** **[0000091576-24-000108_key-20240930.htm:121]**                                         |
| 2035     | 22                        | Trust Preferred Securities     | 6.763                | 0.1% = (22 / 18,036) * 100 **[0000091576-24-000108_key-20240930.htm:60]** **[0000091576-24-000108_key-20240930.htm:121]**                                        |
| 2036     | 19                        | Trust Preferred Securities     | 6.797                | 0.1% = (19 / 18,036) * 100 **[0000091576-24-000108_key-20240930.htm:60]** **[0000091576-24-000108_key-20240930.htm:121]**                                        |
| 2037     | 22                        | Trust Preferred Securities     | 6.518                | 0.1% = (22 / 18,036) * 100 **[0000091576-24-000108_key-20240930.htm:60]** **[0000091576-24-000108_key-20240930.htm:121]**                                        |

ec497c9a478bb3e1c0999a17b10c60663485754f14b05bbd6ebd9663d76b5a74

1. **Net Interest Income Outlook**  
   **Q:** Will you achieve your net interest income targets?  
   **A:** Management is confident in meeting their net interest income guidance, expecting to reach a fourth-quarter exit rate of over **$1 billion**.  **[KEY_3379998_7]**  They view swap and U.S. Treasury roll-offs as predictable contributors, and believe loan growth will have minimal impact in the year.  **[KEY_3379998_7]**  The range of outcomes is relatively muted, even under different interest rate scenarios.  **[KEY_3379998_7]** 

2. **Loan Growth Expectations**  
   **Q:** Where do you see loan growth picking up?  
   **A:** They expect loan demand to increase in areas like strategic transactions, renewables, affordable housing, and investments in property, plant, and equipment.  **[KEY_3379998_9]**  While current demand is modest, they anticipate opportunities will develop over the course of the year.  **[KEY_3379998_9]** 

3. **Investment Banking Revenue Outlook**  
   **Q:** How do you see investment banking fees trending?  
   **A:** They expect some pullback in fees in the second quarter due to rate volatility causing hesitancy in transactions.  **[KEY_3379998_10]** **[KEY_3379998_12]**  However, they have record backlogs in M&A, with backlogs higher than a quarter ago and at year-end.  **[KEY_3379998_10]** **[KEY_3379998_16]**  As markets stabilize, they believe activity will normalize and fees will grow.  **[KEY_3379998_10]** **[KEY_3379998_16]** 

4. **Credit Quality and Reserve Build**  
   **Q:** Why did you increase your credit reserves?  
   **A:** The reserve build was a proactive measure, reflecting their view of a "higher-for-longer" interest rate environment and the potential for a recession.  **[KEY_3379998_11]**  They stressed the portfolio, focusing on leveraged loans and real estate, to prepare for future challenges.  **[KEY_3379998_11]** 

5. **Blackstone Partnership**  
   **Q:** How does the Blackstone partnership fit into your strategy?  
   **A:** The partnership allows them to support more clients without overextending their balance sheet.  **[KEY_3379998_13]**  They underwrite the loans, and Blackstone has the option to participate if the loans fit their criteria.  **[KEY_3379998_13]**  This helps manage credit concentrations and leverages their originate-to-distribute model.  **[KEY_3379998_13]** **[KEY_3379998_26]** 

6. **Expense Management**  
   **Q:** Can you manage expenses with an investment banking recovery?  
   **A:** They believe they can absorb the impact of a strong investment banking year within their expense guidance of relatively stable expenses, plus or minus **2%**.  **[KEY_3379998_12]**  They are focused on intelligently managing costs, including unexpected charges like the FDIC assessment.  **[KEY_3379998_12]** 

7. **Growth Strategy Focus**  
   **Q:** What's your focus for future growth?  
   **A:** They are now playing offense by leaning into areas where they have competitive positions, such as payments, investment banking, wealth, and business banking.  **[KEY_3379998_15]**  They aim to grow through capital-light businesses and emphasize deposit-centric growth to improve loan-to-deposit ratios.  **[KEY_3379998_15]** 

8. **Economic Outlook**  
   **Q:** Do you expect a recession?  
   **A:** Management anticipates a recession and believes the best time to make loans is during a downturn.  **[KEY_3379998_9]** **[KEY_3379998_14]**  They are cautious due to uncertainty about the economy and the strength of the labor market.  **[KEY_3379998_14]** **[KEY_3379998_29]** 

9. **Criticized Loans Monitoring**  
   **Q:** How are you handling criticized loans?  
   **A:** They are closely monitoring criticized loans, focusing on debt service coverage by assessing cash flow as the primary repayment source.  **[KEY_3379998_21]**  They delink any secondary repayment sources to take a conservative approach in their assessments.  **[KEY_3379998_21]** 

a39057435ab29d137fe407c5bf40e164a61c6fda8ee12921e2a811b0c047bbe9

1. **Net Interest Income and RWA Reduction**  
   **Q:** Will further RWA reductions beyond $10B impact NII bottoming?  
   **A:** Management confirmed they've reduced **$9 billion** of RWAs so far and are on track to hit the **$10 billion** target.  **[KEY_3337743_8]**  They believe this reduction suffices and anticipate only marginal impact on NII, emphasizing that the underlying business is strong and they're ready to resume growth.  **[KEY_3337743_9]** 

2. **Dividend Stability**  
   **Q:** Is there a risk of cutting the dividend?  
   **A:** Management's views on the dividend are **unchanged**.  **[KEY_3337743_11]**  They are confident in maintaining it, focusing on long-term management and considering factors like credit quality and capital generation. They've increased CET1 capital by **50 basis points** this quarter through RWA reductions and other actions.  **[KEY_3337743_11]** 

3. **Expense Outlook**  
   **Q:** Can expenses stay flat despite revenue declines?  
   **A:** Management is committed to keeping expenses **flat**, targeting around **$4.4 billion**.  **[KEY_3337743_18]** **[KEY_3337743_22]**  They've already taken out **$200 million** of expenses this year and continue to focus on personnel, real estate, and third-party contracts to rationalize costs.  **[KEY_3337743_29]** **[KEY_3337743_18]** 

4. **Capital Markets Outlook**  
   **Q:** What is the outlook for capital markets revenue amid higher rates and geopolitical risk?  
   **A:** In the **near term**, challenges persist due to higher rates and geopolitical issues.  **[KEY_3337743_10]**  However, management feels **good** about the **medium-term** outlook, expecting increased activity as rates stabilize and private equity firms begin transacting.  **[KEY_3337743_10]** 

5. **Credit Quality and Criticized Loans**  
   **Q:** Why have criticized loans increased recently?  
   **A:** The increase from **3.3%** to **3.9%** is due to proactive grading of the portfolio.  **[KEY_3337743_24]**  Sectors like transportation, healthcare, and consumer products are being closely monitored, especially for customers exposed to rate increases.  **[KEY_3337743_24]** **[KEY_3337743_28]**  Management does not see additional loss content from this increase.  **[KEY_3337743_24]** 

6. **Hedging Strategy Impact on NII**  
   **Q:** How does the hedging strategy affect NII?  
   **A:** New **$6.7 billion** pay-fixed swaps were added for AOCI protection, and **$7.5 billion** of 2024 pay-fixed swaps were terminated.  **[KEY_3337743_12]**  This strategy aims to reduce NII at risk to higher rates by half in a **200 basis point** rate rise scenario.  **[KEY_3337743_12]** 

7. **Loan Growth and RWA Optimization**  
   **Q:** Will you resume loan growth next year after RWA reductions?  
   **A:** Management plans to continue RWA optimization but not as aggressively as this year and aims to balance this with loan growth opportunities.  **[KEY_3337743_20]**  They believe RWAs are the raw material for expanding the client base.  **[KEY_3337743_20]** 

8. **Impact of Rising Rates on Capital**  
   **Q:** How do rising rates affect AOCI and capital levels?  
   **A:** Rising rates have increased AOCI losses, impacting capital levels.  **[KEY_3337743_31]**  Management has taken steps to mitigate this but recognizes they can't offset all effects due to rate magnitude.  **[KEY_3337743_31]** 

517b1edab96697df21d5c5e93dceaa4fa5059834d938898b97c187c45d9d599a

- **Increase in Non-Performing Loans (NPLs) and Net Charge-Offs (NCOs):** The company experienced an unexpected increase in NPLs, which management believes is "sort of peaking" and noted it's "kind of broad-based"  **[KEY_3402955_19]** . Net charge-offs were elevated due to three credits, and while these are not expected to recur, it raises concerns about potential credit quality issues  **[KEY_3402955_19]** .
- **Higher Deposit Betas Impacting Net Interest Income (NII):** The initial deposit beta on the first rate cut is expected to be in the "low to mid-30s," higher than previously modeled, which may pressure net interest income growth  **[KEY_3402955_7]** . The company had to take "more deposit action than we had previously planned," indicating challenges in managing funding costs  **[KEY_3402955_6]** .
- **Uncertainty in Loan Growth and Expense Management:** The company acknowledges the need for commercial loan growth, stating that pipelines suggest growth but "it's been telling us that for a quarter or two"  **[KEY_3402955_2]** . Additionally, higher expenses due to investments are anticipated, but the company advises not to annualize the fourth-quarter expense run rate into 2025, suggesting potential pressure on future earnings  **[KEY_3402955_17]** .

84c59fe046a0170b20708da5048b5cf253a79077c48be60b94896f2fd9a3e922

1. **Net Interest Income Outlook**  
   **Q:** Are you still expecting over 20% NII improvement next year?  
   **A:** Yes, we expect about **20% NII improvement in 2025**, assuming a constructive macro environment and completion of our balance sheet repositioning. Half of this growth comes from the impact of the repositioning, and the other half from continued fixed asset repricing, modest commercial loan growth, and managing deposit betas effectively.  **[KEY_3402955_7]** **[KEY_3402955_20]** 

2. **Deposit Betas Trajectory**  
   **Q:** How do you see deposit betas evolving going forward?  
   **A:** We anticipate deposit betas in the **low to mid-30%** range for the first rate cuts, slightly higher than previously planned due to more aggressive deposit actions. On the way down, betas may not match the levels seen on the way up, given the lower absolute level of rates and the magnitude of movement.  **[KEY_3402955_16]** **[KEY_3402955_18]** 

3. **Capital Markets Revenue Outlook**  
   **Q:** What is your outlook for capital markets revenue in 2025?  
   **A:** We are optimistic about 2025, expecting continued momentum from our strong pipelines, especially as the private equity universe begins to transact more actively. This could lead to higher investment banking fees and potentially a record year for capital markets revenue.  **[KEY_3402955_21]** 

4. **Loan Growth Expectations**  
   **Q:** What are your expectations for loan growth, particularly in C&I loans?  
   **A:** We anticipate loan stability with modest growth, offsetting consumer loan declines with commercial loan increases. Growth will come from areas like affordable housing, renewables, and increased transaction financing as M&A activity picks up. However, utilization rates remain low due to clients managing working capital efficiently.  **[KEY_3402955_11]** **[KEY_3402955_22]** **[KEY_3402955_25]** 

5. **Expense Outlook for 2025**  
   **Q:** How should we think about expenses in 2025?  
   **A:** We plan to target **low to mid-single-digit expense growth** in 2025. While we are investing in unique opportunities and expecting higher incentive compensation due to revenue growth, we remain disciplined on expenses and do not intend to annualize the elevated Q4 expenses.  **[KEY_3402955_17]** **[KEY_3402955_26]** 

6. **Credit Quality and NPLs**  
   **Q:** What's behind the increase in NPLs and net charge-offs?  
   **A:** The rise in net charge-offs was due to three credits, two in consumer products and one in equipment manufacturing, which were previously reserved for. We view NPLs as peaking and expect them to remain flat going forward, with no significant read-through to broader credit issues.  **[KEY_3402955_13]** **[KEY_3402955_19]** **[KEY_3402955_23]** 

7. **Private Equity and Disintermediation**  
   **Q:** How is private equity activity affecting your business?  
   **A:** The private equity universe, which drives about **one-third** of investment banking fees, is starting to transact, leading to a pickup in M&A activity. Capital markets activity, including private credit, is disintermediating bank lending to some extent, but we're participating by distributing paper to these markets.  **[KEY_3402955_8]** **[KEY_3402955_12]** 

8. **Rate Sensitivity and Balance Sheet Repositioning**  
   **Q:** How has your rate sensitivity changed after the balance sheet repositioning?  
   **A:** We've improved our rate sensitivity by moving out of higher-cost wholesale funding into lower-cost deposits and investing proceeds at favorable rates and durations. This strengthens our position as swaps roll off and aids our rate sensitivity going forward.  **[KEY_3402955_6]** **[KEY_3402955_20]** 

9. **Bank M&A Outlook**  
   **Q:** What's your stance on bank M&A given your increased capital levels?  
   **A:** With strong capital levels post-restructuring, we're well-positioned to take advantage of potential consolidation in the industry. While we expect consolidation to happen, it's not our current focus, but we're prepared if opportunities arise.  **[KEY_3402955_25]** 

10. **CRE Special Servicing Resolutions**  
    **Q:** How are you resolving issues in special servicing, particularly in CRE?  
    **A:** Resolutions vary by sector; in office, properties are trading at significant discounts due to capitulation. In multifamily, especially in the Southeast, we're attracting new capital and restructuring loans, as many projects were recently financed with aggressive assumptions.  **[KEY_3402955_10]** 

42dad5521f5fe8581894a2eb9093c885964e44b836e5ddc838884307eeafbe94

- **KeyCorp is lowering its loan growth guidance despite strong backlogs**, which may negatively impact future revenue growth.  **[KEY_3393418_28]**
- **Net interest income may decline more than anticipated if interest rates are cut**, with guidance indicating NII could be down closer to **5%**.  **[KEY_3393418_33]**
- **Increasing Allowance for Credit Losses (ACL) ratio due to declining loan balances and economic uncertainty**, potentially signaling credit quality concerns.  **[KEY_3393418_23]** **[KEY_3393418_24]**

a6194e7ad1f250787f98476ab0ad82fd4280bcc308031540ecd29b26d18461a4

- **Weak loan growth due to clients delaying investments in property, plant, and equipment, influenced by high interest rates and economic uncertainty.** The CEO stated: *"I have not seen a lot of people making significant investments in property, plant and equipment... I think it's a combination of both [high rates and uncertainty]."*  **[KEY_3379998_29]**
- **Uncertainty about the economic outlook and potential recession poses risks to the company's performance.** The CEO acknowledged: *"I think there's just a lot of uncertainty about the path of the economy. Will the Fed engineer a soft landing..."*  **[KEY_3379998_30]**
- **Expected pullback in investment banking fees in Q2 due to rate volatility impacting transactions.** The CEO noted: *"Any time there's this kind of volatility, it causes pause on certain transactions... as we look at what will come out of the backlog in the second quarter."*  **[KEY_3379998_10]** **[KEY_3379998_17]**

fc8ea992e5fc7902e46e40096a544ccdf57799a486ceff59ada2b90ae4b979a9

1. **NII Guidance and Loan Growth Impact**  
   **Q:** What's the downside risk to NII if loan growth weakens?  
   **A:** Management expects the structural repricing of assets to boost NII in late 2024, with **$5.5 billion** in Treasury maturities and **$3.2 billion** in swaps maturing in the second half of 2024.  **[KEY_3393418_7]**  Even if loan growth is lighter than guided, they believe they can achieve their NII targets unless loan growth is materially lower.  **[KEY_3393418_7]**  They also see additional asset repricing opportunities of about **$20 billion** in 2025, providing tailwinds for NII.  **[KEY_3393418_7]** 

2. **Capital Position and CET1 Management**  
   **Q:** How are you managing capital and CET1 levels amid RWA declines?  
   **A:** Management feels good about their capital position.  **[KEY_3393418_12]**  They acknowledge potential regulatory changes like Basel III Endgame but mention they have a clear path to desired CET1 levels.  **[KEY_3393418_12]**  They do not believe their AOCI position impacts day-to-day operations and expect to maintain a mid-70s loan-to-deposit ratio.  **[KEY_3393418_12]** 

3. **Credit Quality in C&I Portfolio**  
   **Q:** Any concerns about credit degradation in C&I loans?  
   **A:** Normal migration from criticized to nonperforming loans is occurring as expected.  **[KEY_3393418_8]**  Some clients are impacted by higher rates, particularly in consumer goods, business services, and equipment sectors.  **[KEY_3393418_8]**  However, their C&I portfolio is strong, with **53%** investment-grade and **70%** secured loans.  **[KEY_3393418_8]** 

4. **Expense Outlook and Operating Leverage in 2025**  
   **Q:** How much of the NII benefit will flow to the bottom line in 2025?  
   **A:** While not providing specific 2025 guidance, management indicated that expenses will rise as they continue to invest in the business.  **[KEY_3393418_19]**  They have been investing while reducing expenses elsewhere and expect expenses to increase due to business growth rather than deferred expenses.  **[KEY_3393418_19]** 

5. **Loan Growth Outlook and Pipelines**  
   **Q:** Given lower loan growth guidance, where are pipelines strengthening?  
   **A:** Despite tepid loan demand, pipelines are strengthening in areas like renewables, affordable housing, and healthcare.  **[KEY_3393418_11]**  Middle-market loan pipelines are up over **50%**.  **[KEY_3393418_11]**  Management remains disciplined and is not compromising on loan structures despite competition.  **[KEY_3393418_11]** 

6. **Investment Banking Fees and Pipeline**  
   **Q:** What's the outlook for investment banking revenues in the second half?  
   **A:** Management reaffirmed guidance of **$600 million to $650 million** in investment banking revenues for the year, expecting **$300 million to $350 million** in the second half.  **[KEY_3393418_21]**  They have strong pipelines, particularly in M&A, which is crucial for their middle-market clients.  **[KEY_3393418_21]** **[KEY_3393418_29]** 

7. **Deposit Costs and Funding Mix**  
   **Q:** How are rising deposit costs impacting NII?  
   **A:** Deposit costs are expected to continue rising.  **[KEY_3393418_7]**  Management guided to a mid-50s beta if there are no rate cuts, with costs drifting up.  **[KEY_3393418_7]**  They are improving funding mix by reducing reliance on wholesale funding like FHLB advances and brokered CDs.  **[KEY_3393418_13]** 

8. **Merger Environment and M&A**  
   **Q:** What's your appetite for mergers or acquisitions?  
   **A:** Management does not foresee mergers with depository institutions in the near future due to regulatory hurdles.  **[KEY_3393418_29]**  They anticipate eventual consolidation but are currently focusing on acquiring entrepreneurial niche businesses.  **[KEY_3393418_29]** 

9. **Consumer Loan Growth Outlook**  
   **Q:** What's the outlook for consumer loan growth?  
   **A:** Consumer lending is pressured due to low volumes in mortgages and student loans.  **[KEY_3393418_30]**  The consumer loan book is expected to decrease at a normalized rate unless rates decline significantly to stimulate refinancing.  **[KEY_3393418_30]** 

10. **Allowance for Credit Losses Ratio**  
    **Q:** How do you view the current ACL ratio and reserve levels?  
    **A:** The ACL ratio has been increasing due to factors like loan growth and economic outlook.  **[KEY_3393418_23]**  Management considers it premature to adjust reserves significantly until there's more economic clarity.  **[KEY_3393418_23]**  They will continue to evaluate reserves based on these factors.  **[KEY_3393418_23]** **[KEY_3393418_24]** 

11. **NII Impact of Rate Cuts**  
    **Q:** How would rate cuts affect NII guidance?  
    **A:** With two rate cuts, management expects NII to be closer to the lower end of the guidance range, around a **5%** decline.  **[KEY_3393418_25]**  They believe rate cuts could boost loan demand and economic activity, benefiting the bank.  **[KEY_3393418_25]** 

12. **Share Buybacks and Capital**  
    **Q:** What are the plans for resuming share buybacks?  
    **A:** There are no plans for share buybacks this year.  **[KEY_3393418_31]**  Management is awaiting clarity on regulatory changes like Basel III Endgame before considering buybacks.  **[KEY_3393418_32]** 

2a58ca32fd14628325f410eaeacda6220aabab8e6d206defce12107f03e8e7b3

- **KeyCorp expects a 20% improvement in Net Interest Income (NII) in 2025**, driven by securities portfolio repositioning, fixed asset repricing, and effective management of deposit betas  **[KEY_3402955_7]** .
- **M&A backlogs increased by 10% quarter-over-quarter**, signaling strong future investment banking fees due to heightened private equity activity  **[KEY_3402955_8]** .
- Anticipates **commercial loan growth** in areas like affordable housing and renewables, offsetting the decline in consumer loans, supported by growing pipelines and increased capital markets activities  **[KEY_3402955_22]** .

3f45e69fa6fc4f68363ea0731a0f5ef8ee180e701bc108443fedb03aa73cd16f

- **Declining revenue and uncertainty about achieving positive operating leverage:** Revenue was down **17% year-over-year in the third quarter**, while expenses remained flat. Management is uncertain about delivering positive operating leverage in 2024.  **[KEY_3337743_29]** **[KEY_3337743_30]**
- **High dividend payout ratio raises concerns about dividend sustainability:** The company has a **dividend payout ratio exceeding 70%**, and there is a risk of a dividend cut as management is reevaluating the dividend in the context of various scenarios.  **[KEY_3337743_11]**
- **Near-term challenges in capital markets business due to higher rates and geopolitical risks:** Management expects **additional headwinds** in the capital markets division in the near term, impacting revenue growth prospects.  **[KEY_3337743_10]**

02821646e2f17bac9d563a48c1d692d351e86fd4c61eb0297797b056c90e5951

- **KeyCorp's mass affluent business is experiencing significant growth**, adding **30,000 new customers** and **$3 billion** in assets, driving strong performance in trust and investment services.  **[KEY_3393418_22]**
- **Investment banking revenues** are expected to be strong, with guidance maintained at **$600-650 million** for 2024, supported by a robust **M&A pipeline** and strong **middle-market franchise**.  **[KEY_3393418_21]** **[KEY_3393418_30]**
- **Middle-market loan pipelines** have increased by **50% quarter-over-quarter**, indicating potential stabilization and growth in loan balances in the second half of the year.  **[KEY_3393418_27]**

0f68b0165cf72ffee950dde12884b3b6dd1fe77c73e6eaa100929936c49a8752

- **KeyCorp reported their best-ever results in the Shared National Credit review**, demonstrating strong credit quality in their loan portfolio.  **[KEY_3337743_19]**
- **Management has proactively reduced expenses by $200 million (about 4%) in the first quarter**, and is committed to further cost reductions and simplifying the business to improve efficiency.  **[KEY_3337743_29]**
- **KeyCorp is optimistic about the medium-term capital markets outlook**, expecting increased activity in 2024 to benefit their investment banking and capital markets businesses.  **[KEY_3337743_10]**

d4528119906342fd77b1602a4ab413fe4fee4ff23bb8969c656e30a8a245d9d8

KeyCorp (KEY)

Financials