KeyCorp (NYSE: KEY ) announced third-quarter earnings last week that exceeded expectations, as results were driven by net interest income gains as well as growing income from the bank’s various fee-based businesses. KeyCorp generated double-digit top-line growthAnalyst’s Disclosure:I/we have a beneficial long position in the shares of USB either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other ...

KeyCorp (NYSE:KEY) is one of the 11 Dirt Cheap Stocks to Buy According to Analysts. On October 17, DA Davidson slightly reduced its price target on KeyCorp (NYSE:KEY) from $22 to $21 and kept a Buy rating. DA Davidson noted that KeyCorp (NYSE:KEY) reported strong Q3 2025 results and raised its full-year revenue guidance. However, the firm believes that consensus estimates have already taken this into account. DA Davidson Cuts KeyCorp (KEY) Price Target, Keeps Buy Rating The research firm pointed out tha ...

Core Insights - KeyCorp reported better-than-expected earnings for Q3, with adjusted earnings of 41 cents per share, surpassing market estimates of 38 cents per share [1] - Quarterly sales reached $1.895 billion, exceeding expectations of $1.881 billion [1] Financial Performance - Adjusted revenue increased by 17% year-over-year [2] - The company achieved over 1,000 basis points of operating leverage in the quarter [2] - Revenue growth was attributed to net interest income tailwinds and an 8% increase in adjusted noninterest income, which outpaced expense growth [2] - Tangible book value per share grew by 4% sequentially and 14% year-over-year [2] Stock Performance - KeyCorp shares rose by 0.6%, trading at $16.88 following the earnings announcement [2] Analyst Ratings - Truist Securities analyst Brian Foran maintained a Hold rating and lowered the price target from $20 to $19 [5] - DA Davidson analyst Peter Winter maintained a Buy rating and reduced the price target from $22 to $21 [5]

Core Viewpoint - KeyCorp's shares have experienced a mixed performance over the past year, with a loss of approximately 3% in value, reflecting broader sector trends and concerns regarding credit quality and economic outlook [1] Company Performance - KeyCorp's stock has been steadily declining since August, influenced by negative sentiment surrounding credit quality and the economic outlook [1] Market Sentiment - The overall sentiment in the sector has been weighed down by concerns about credit quality and the economic outlook, impacting KeyCorp's stock performance [1]

Group 1 - KeyCorp's shares have experienced a mixed performance over the past year, with a loss of approximately 3% in value [1] - The decline in share prices has been steady since August, influenced by concerns regarding credit quality and the overall economic outlook [1] Group 2 - The article emphasizes the importance of macro views and stock-specific turnaround stories in making investment decisions [1]

Core Insights - KeyCorp reported earnings per share (EPS) of $0.41, exceeding the estimated $0.38, and showing a significant improvement from $0.30 in the same quarter last year [2][6] - The company's revenue for the quarter was approximately $1.9 billion, reflecting a 17% year-over-year increase, despite being slightly below the estimated $1.93 billion [3][6] - Net income for the third quarter of 2025 was $454 million, driven by increased net interest income and strategic financial management [4][6] Financial Performance - KeyCorp's EPS of $0.41 represents a 7.89% earnings surprise, continuing a trend of outperforming consensus EPS estimates over the past four quarters [2] - The net interest income rose by 4% quarter-over-quarter, with the net interest margin increasing by 9 basis points to 2.75% [4] - The price-to-earnings (P/E) ratio is approximately 105.35, indicating high investor confidence, while the debt-to-equity ratio is about 0.76, showing moderate debt usage [5] Market Position - KeyCorp operates within the Zacks Banks - Major Regional sector, providing a wide range of financial services including personal and commercial banking, investment management, and mortgage services [1] - The company has consistently surpassed consensus revenue estimates in each of the last four quarters, demonstrating its ability to generate consistent growth [3]

Core Insights - KeyCorp reported third-quarter results exceeding Wall Street expectations, driven by strong revenue growth, improved credit quality, and a stronger net interest margin [1] Financial Performance - The bank posted net income of $454 million, or $0.41 per diluted share, surpassing analyst estimates of $0.38 [1] - Revenue reached $1.9 billion, slightly above the $1.88 billion consensus, and increased by 17% year-over-year when adjusted for the previous year's securities portfolio repositioning [1] Net Interest Income and Margin - Net interest income rose by 4% sequentially, with the net interest margin expanding by 9 basis points to 2.75% [2] - This improvement was due to a 2% quarter-over-quarter increase in average deposits and a 2-basis-point decline in total deposit costs to 1.97% [2] Credit Quality - Credit quality improved as nonperforming assets decreased by 6% sequentially [2] - Net charge-offs remained stable at 42 basis points, within the company's full-year guidance range of 40 to 45 basis points [2] Segment Performance - The Consumer Bank division generated net income of $152 million, more than doubling the $75 million earned in the same quarter last year [3] - The Commercial Bank reported net income of $367 million, reflecting a 22.7% year-over-year increase [3] - Executives attributed the results to disciplined expense management and effective execution across both retail and commercial segments [3]

Group 1 - The article does not provide any specific content related to a company or industry [1]

Core Insights - KeyCorp's third-quarter 2025 adjusted earnings per share from continuing operations reached 41 cents, exceeding the Zacks Consensus Estimate of 38 cents, marking a 36.7% increase from the prior-year quarter [1][10] - The company's shares rose by 1.4% in early trading following the announcement of better-than-expected results [1] Financial Performance - KeyCorp's total revenues increased significantly year over year to $1.89 billion, surpassing the Zacks Consensus Estimate of $1.88 billion [3] - Net interest income (NII) on a tax-equivalent basis rose 23.8% year over year to $1.19 billion, with the net interest margin (NIM) expanding 58 basis points to 2.75% [4] - Non-interest income was reported at $702 million, a substantial increase driven by a significant reduction in net securities losses, which fell to $6 million from a $918 million loss in the prior-year quarter [6] - Non-interest expenses increased by 7.4% year over year to $1.18 billion, attributed to rising costs across nearly all components [7] Loan and Deposit Trends - Average total loans at the end of the third quarter were $106.23 billion, a slight increase from the previous quarter, while average total deposits rose by 2% to $150.37 billion [8] Credit Quality - The provision for credit losses was $107 million, reflecting a 12.6% year-over-year increase, while net loan charge-offs as a percentage of average total loans decreased by 16 basis points to 0.42% [9][11] Capital Ratios - KeyCorp's tangible common equity to tangible assets ratio improved to 8.1% as of September 30, 2025, up from 6.2% a year earlier, with the Tier 1 risk-based capital ratio rising to 13.5% [12] Strategic Outlook - The company is expected to benefit from decent loan balances, balance sheet repositioning efforts, strategic buyouts, and relatively higher interest rates, although concerns remain regarding weakening asset quality amid a challenging macroeconomic environment [13]

Financial Data and Key Metrics Changes - The company reported earnings per share of $0.41, with return on assets surpassing 1% [3] - Pre-provision net revenue increased by $33 million quarter over quarter, marking a 5% rise and the sixth consecutive quarter of improvement [3] - Revenues, adjusting for last year's securities portfolio repositioning, grew by 17% [4] - Net interest income (NII) achieved a net interest margin (NIM) of 2.75%, reaching the year-end target one quarter ahead of schedule [5][10] - The company reported a common equity tier 1 (CET1) ratio approaching 12% at quarter-end, indicating strong capital ratios [5][24] Business Line Data and Key Metrics Changes - Fee income increased in the high single digits compared to 2024, contributing to overall revenue growth [4] - Commercial pipelines nearly doubled from the previous year, with investment banking pipelines also showing significant growth, particularly in M&A [7] - Assets under management in the wealth segment reached a record $68 billion, with strong sales production in the mass affluent segment [6][20] Market Data and Key Metrics Changes - Average loans increased by $5 billion sequentially, driven by a 2% increase in commercial and industrial (C&I) loans [14] - Average deposits grew by 2%, with period-end deposits increasing by 3% sequentially, primarily from commercial clients [15] - Non-performing assets (NPAs) and criticized loans declined, indicating improving asset quality [5][23] Company Strategy and Development Direction - The company aims to achieve a return on tangible common equity of 15% or better by 2027, focusing on improving NIM, compounding fee advantages, maintaining expense discipline, and share repurchases [10][11] - The company plans to repurchase approximately $100 million of common stock in the fourth quarter, indicating a cautious approach to capital management [11][24] - The strategic focus remains on organic growth opportunities, with bank M&A being a lower priority unless it aligns with strategic goals [46][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving another year of outsized revenue and earnings growth in 2026, supported by strong pipelines and market conditions [12][26] - The company maintains a positive outlook on credit quality, with net charge-offs within the target range [23] - Management highlighted the importance of maintaining flexibility in capital allocation while navigating potential macroeconomic uncertainties [76][90] Other Important Information - The company received a one-notch upgrade to its long and short-term ratings from Fitch, with a positive outlook from Moody's [13][24] - Non-interest expenses increased by 2% from the prior quarter and 7% year over year, driven by higher personnel expenses and technology investments [22] Q&A Session Summary Question: Can you provide more detail on the drivers to achieve the 15% ROTCE target? - Management reiterated that the 15% target is a milestone, with NIM improvement and strong organic activity being key drivers [28][30] Question: How does the company view bank M&A given current stock valuation? - Management stated that bank M&A is a lower priority, focusing instead on organic growth and tuck-in deals that align with strategic goals [46][48] Question: What are the conditions for further balance sheet restructuring? - Management indicated that any restructuring would depend on favorable market conditions and the need to support client growth [88][90] Question: How does the recent Fitch upgrade impact capital distribution decisions? - Management noted that while the upgrade is important, it would not be the primary driver for capital distribution decisions [91][92]