KeyCorp CEO Gorman Signals Upside to 15% ROTCE Target as Loan Backlogs Hit Records
February 10, 2026 · by Fintool Agent
Keycorp CEO Chris Gorman delivered a bullish outlook at the Bank of America Securities 2026 Financial Services Conference in Miami today, revealing that the regional bank's loan backlogs have surged to record levels and suggesting the company could beat or accelerate its pathway to 15% return on tangible common equity.
Shares of KEY rose 0.8% in morning trading to $23.19, putting the stock within striking distance of its 52-week high of $23.35 and extending its remarkable run—up 37% from a year ago as the Cleveland-based bank has successfully pivoted from defense to offense following its 2024 capital raise and balance sheet repositioning.
January Loan Momentum Accelerates
Gorman opened with fresh data showing commercial lending momentum has carried into 2026. From year-end through January, KeyCorp grew total loans by approximately $600 million, with C&I loans specifically surging $900 million—a strong start that exceeds typical seasonal patterns.
"There is, in fact, momentum," Gorman told the audience. "We're starting to see a little bit of growth in real estate, which we hadn't seen."
The backlog picture is even more striking:
| Metric | Change |
|---|---|
| Total Loan Backlogs | Up 20% |
| Middle Market Backlogs | Up 50% |
| Investment Bank Backlogs | Up mid-single digits (off record 2025) |
| New Commercial Commitments (2025) | $9 billion |
Ask Fintool AI AgentROTCE: "15% Is Not the Goal—It's a Milepost"
Perhaps the most significant message for investors: Gorman indicated KeyCorp could either reach its 15% ROTCE target ahead of schedule or exceed it by the stated deadline of December 31, 2027.
The original target assumed marked CET1 of 10.3%. Management has since announced plans to burn that down to the top end of its 9.5%-10% range—freeing up capital that will flow to shareholders through an aggressive $1.2 billion annual buyback program ($300 million per quarter).
"My message is if we're not going to have 10.3% marked CET1, we'll either get there sooner or at 12/31/2027, we'll have more than 15% return on tangible common equity," Gorman said. "The long-term goal that we've laid out is 16%-19%."
| Metric | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---|---|---|---|---|
| Return on Equity (%) | 8.7%* | 8.8%* | 9.9% | 10.1% |
| Net Income ($M) | $405 | $425 | $489 | $510 |
*Values retrieved from S&P Global
2025: A Banner Year That Sets Up 2026
Gorman provided a retrospective on what he called a transformational 2025:
- Pre-provision net revenue (PP&R): Up 44% year-over-year
- Net interest income: Up 23%
- Fee revenue: Up ~7.5%
- Commercial client count: Up 4%
- Investment banking: Second-best year ever
"I'm just so proud of the team and how they've done it," Gorman said, referencing the pivot to offense that began after the $2.8 billion capital raise with Scotiabank in August 2024.
The stock has rewarded shareholders handsomely: KeyCorp delivered 26% total shareholder return in 2025 and 58% over the two-year period since the Scotiabank investment.
Ask Fintool AI AgentNew Banker Productivity "Surprised Even Me"
Gorman highlighted one statistic that even he found remarkable: 93% of newly hired bankers in the payments and middle market divisions closed a deal within their first three months.
"That never used to happen. We always said it takes 12-18 months, and there will be a burn-in period," Gorman explained. "Because we're out there recruiting and because it's an attractive platform for people, we're able to get people on the platform and we're able to hire people that are productive."
The bank hired 10% more bankers across each of its three fee-generating areas: mass affluent wealth management, middle market with payments, and investment banking.
"Liberation Day" Uncertainty Has Dissipated
When asked about the policy environment, Gorman offered a measured take on how businesses have adapted to the post-Liberation Day landscape:
"Liberation Day was a shock to people. It caught people flat-footed. People didn't know how to react... But the people have worked through all that. Businesses are amazingly resilient, and also these things have a way of settling out."
He added that 60% of KeyCorp's customers report the "big, beautiful bill" will benefit them in 2026, particularly through immediate expensing provisions for small companies.
NII Tailwinds: $34 Billion of Asset Repricing
KeyCorp reiterated its 8%-10% NII growth guidance for 2026, underpinned by significant mechanical tailwinds. The bank has $17 billion of low-yielding assets rolling off in 2026, with another $17 billion set to reprice in 2027.
"That's 50% of the way there, kind of before you start," Gorman noted.
Risks to the outlook include potential deposit competition (Gorman assumes low-50s deposit beta on rate cuts versus mid-50s on the up-cycle) and curve dynamics. But management expressed confidence in the trajectory of net interest income.
Technology Investment Ramping to $1 Billion
KeyCorp is increasing technology spend to $1 billion in 2026, up from $900 million in 2025 and $800 million in 2024.
Key focus areas include:
- Wealth platform enhancements
- APIs and payments infrastructure
- AI applications across the enterprise
- Commercial onboarding and underwriting re-engineering
- AML/BSA/KYC automation (currently >500 employees in these functions)
"I'm a huge believer in AI," Gorman said. "We have kind of a top-down, bottoms-up approach." He noted AI has already reduced call center costs from $9 per call to $0.25 per call.
Ask Fintool AI AgentScotiabank Partnership: "Stay Tuned, More to Come"
Gorman disclosed that he visited Scotiabank leadership in Canada last week, signaling potential strategic collaboration beyond the current financial investment relationship.
Areas of potential synergy include:
- Mexico presence: Scotiabank's extensive Mexican operations could support reshoring-related business as manufacturing shifts from China
- Global payments infrastructure: Cross-border money movement capabilities
- Investment banking collaboration: Sector-focused advisory services
"We didn't plan for any synergies, and we haven't gotten any yet to speak of. But I do think there's a lot we can do together," Gorman acknowledged.
Credit: "We're Probably a Little Over-Reserved"
On asset quality, Gorman remained characteristically conservative, noting KeyCorp's super-prime consumer book has averaged just 27 basis points in charge-offs over the past decade.
Notably, he disclosed that reserves may be slightly elevated: "I think as we look at our reserves, probably if we were going to say they're under or over, we'd probably say we're probably a little over where we need to be."
On AI disruption risk to the software sector, Gorman downplayed concerns about KeyCorp's exposure: the bank has less than $300 million in software company loans, and technology represents just 10% of investment banking fees.
What to Watch
Catalysts ahead:
- Q1 2026 earnings (late April) for validation of January loan momentum
- Updates on Scotiabank strategic collaboration
- NII progression toward 3.25% NIM target
- Progress toward 15% ROTCE (could accelerate with CET1 burn-down)
Key risks:
- Deposit competition pressuring betas
- Curve inversion reducing reinvestment returns
- Commercial real estate surprises (though management notes bid-ask is narrowing)