KeyCorp FY Conference Summary Company Overview - **Company**: KeyCorp (NYSE: KEY) - **Event**: FY Conference held on September 08, 2025 - **Speakers**: Clark Khayat (CFO), Randy Paine (President of Key Institutional Bank) Key Points Company Structure and Differentiation - KeyCorp's Institutional Bank includes equipment finance, corporate investment banking (KeyBank Capital Markets), and a comprehensive real estate platform [4][5] - The bank has a unique position in the market, focusing on emerging growth and middle-market companies, differentiating itself from both boutique firms and larger competitors [5][6] Client Sentiment and Economic Outlook - Client sentiment is characterized as cautiously optimistic, with strong earnings reported in the first half of the year [8] - Commercial lending activity increased by 5% in the first half of the year, with investment banking fees up 19% compared to 2024 [9][10] - There is a noted slowdown in middle-market M&A activity, although large-cap M&A remains strong [11][12] Growth Projections - KeyCorp aims for mid to high single-digit growth in investment banking fees, with a potential to exceed this if market conditions remain favorable [10][11] - The bank is optimistic about reaching $1 billion in organic revenues in the future, supported by a strong real estate platform and renewable energy initiatives [13][14] Recruitment and Talent Development - KeyCorp plans to grow its investment banking team by approximately 10%, focusing on healthcare, technology, and real estate sectors [17][18] - The bank emphasizes internal talent development, with 80% of bankers in key verticals being homegrown [20] Financial Performance and Metrics - The bank's revenues are approximately $3.5 billion, with a significant portion of expenses tied to incentive compensation [30] - Net Interest Income (NII) is projected to grow by 20% to 22% for the year, with expectations of a strong NIM (Net Interest Margin) in the 270s [40][41] Technology Investments - KeyCorp is increasing technology investments by $100 million, focusing on enhancing customer service and internal productivity [27][28] M&A Strategy - The bank is open to small acquisitions, particularly those that align culturally and operationally with its existing platform [34][35] - Current focus is on broad market M&A rather than bank acquisitions, with an emphasis on enhancing capabilities in non-bank sectors [36][37] Credit and Loan Growth - Loan growth is expected to be flat, with a slight increase in commercial and industrial loans, while residential real estate is anticipated to decline [39][40] - Credit quality remains stable, with reserves expected to be flat or slightly released [42] Profitability Targets - KeyCorp aims for a return on tangible common equity (ROTCE) of 15% or higher in the midterm, with a focus on improving return on assets (ROA) [63] Collaboration with Bank of Nova Scotia - KeyCorp maintains a productive relationship with the Bank of Nova Scotia, exploring collaborative opportunities while focusing on meaningful investments [64][66] Additional Insights - The bank's approach to managing expenses includes flexibility in compensation based on performance, allowing for adjustments in response to market conditions [30][31] - The focus on affordable housing is highlighted, with KeyCorp being a leading player in this sector, leveraging its comprehensive service offerings [25][26]

Core Insights - KeyBank announced that over 4,400 clients graduated from the Key Secured Credit Card® program in the first half of 2025, indicating a significant effort to empower individuals in improving their credit scores and establishing financial stability [1] Group 1 - The program has successfully helped more than half of its participants graduate in the last year, showcasing its effectiveness in enhancing credit health [1] - The initiative is part of KeyBank's broader strategy to support long-term financial health among its clients [1]

Core Insights - KeyBank's EasyUp® tool empowers clients to save money through automatic transfers from debit card purchases, reflecting the bank's commitment to financial solutions [1][5] - Since its launch in August 2019, EasyUp has enabled clients to save over $182 million, with an average annual saving of $490 per user as of July 31, 2025 [1][2] Product Features - EasyUp allows clients to set automatic transfers of up to $5 from their checking to savings accounts with each debit card purchase, promoting consistent savings behavior [1][8] - The tool is integrated into KeyBank's online and mobile banking platforms, simplifying the process of saving without requiring significant changes in spending habits [2][8] - Clients can easily enroll in EasyUp and manage their settings, including adjusting transfer amounts and pausing or resuming the service at any time [8] Relationship Benefits - Clients using EasyUp can also benefit from KeyBank's relationship program by completing five or more qualifying transactions monthly, which includes debit card purchases [4] - This dual benefit of saving while spending enhances client engagement and loyalty to KeyBank [4][5] Company Overview - KeyCorp, the parent company of KeyBank, is celebrating its 200th anniversary in 2025 and operates with approximately $185 billion in assets as of June 30, 2025 [7] - KeyBank provides a wide range of financial services, including deposit, lending, and investment services, through a network of around 1,000 branches and 1,200 ATMs across 15 states [8]

Company Overview - KeyCorp is celebrating its bicentennial in 2025, marking 200 years of service to clients and communities from Maine to Alaska [3] - The company is headquartered in Cleveland, Ohio, and is one of the largest bank-based financial services companies in the United States, with assets of approximately $185 billion as of June 30, 2025 [3] Services Offered - KeyCorp provides a range of services including deposit, lending, cash management, and investment services to individuals and businesses across 15 states through approximately 1,000 branches and 1,200 ATMs [4] - The company also offers sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications, and derivatives to middle market companies in selected industries under the KeyBanc Capital Markets trade name [4] Upcoming Events - KeyCorp will present at the Barclays Global Financial Services Conference on September 8, 2025, at 12:00 p.m. ET in New York City, with discussions on performance, strategy, and outlook [1][2] - A live audio webcast of the conference will be available on the company's investor relations website, with options for re-broadcast for those unable to attend live [2]

Core Viewpoint - KeyCorp's recent earnings report shows a significant year-over-year increase in earnings and revenues, but also highlights rising expenses and provisions that could impact future performance [2][4][10]. Financial Performance - KeyCorp's Q2 2025 earnings per share from continuing operations was 35 cents, exceeding estimates by a penny and reflecting a 40% increase from the prior year [2]. - Net income from continuing operations attributable to common shareholders was $387 million, up 63.3% year over year [3]. - Total revenues increased 20.9% year over year to $1.83 billion, surpassing the Zacks Consensus Estimate of $1.80 billion [4]. - Net interest income (NII) increased 27.9% year over year to $1.15 billion, with net interest margin (NIM) expanding 62 basis points to 2.66% [5]. - Non-interest income rose 10% year over year to $690 million, driven by increases in most fee income components [7]. Expenses and Provisions - Non-interest expenses grew 7% year over year to $1.15 billion, attributed to increases in nearly all cost components [8]. - The provision for credit losses was $138 million, up 38% year over year, indicating potential credit quality concerns [10]. Loan and Deposit Trends - Average total loans were $105.72 billion, up 1.3% from the previous quarter, while average total deposits decreased to $147.45 billion [9]. - The decline in deposits was primarily due to reductions in higher-cost commercial client balances and retail CDs [9]. Credit Quality - The allowance for loan and lease losses was $1.45 billion, down 6.5% from the prior year, while non-performing assets as a percentage of total loans decreased to 0.66% [11]. Capital Ratios - KeyCorp's tangible common equity to tangible assets ratio improved to 7.8%, and the Tier 1 risk-based capital ratio rose to 13.4% [12]. Future Outlook - Management expects average loan balances to decline by 1-3% in 2025, with period-end loans anticipated to rise by approximately 2% [13]. - NII is projected to increase by 20-22% in 2025, with NIM expected to reach around 2.75% by Q4 2025 [14]. - Non-interest income is expected to rise by 5% or more in 2025, while non-interest expenses are anticipated to increase by 3-5% [15]. Market Position - KeyCorp has experienced a downward trend in estimates since the earnings release, currently holding a Zacks Rank 3 (Hold) [16][18]. - In comparison, State Street Corporation, a peer in the same industry, reported a revenue increase of 8.1% year over year and has a Zacks Rank 2 (Buy) [20].

Group 1 - Zacks Premium offers tools for investors to enhance their stock market confidence and investment strategies, including daily updates, research reports, and stock screens [1][2] - The Zacks Style Scores are indicators that rate stocks based on value, growth, and momentum characteristics, helping investors identify stocks likely to outperform the market in the short term [2][3] Group 2 - The Value Score identifies attractive and discounted stocks using various financial ratios, appealing to value investors [3] - The Growth Score focuses on a company's future prospects and financial health, analyzing earnings, sales, and cash flow [4] - The Momentum Score helps investors capitalize on price trends by analyzing recent price changes and earnings estimate revisions [5] Group 3 - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors seeking stocks with strong value, growth, and momentum [6] - The Zacks Rank, a proprietary stock-rating model, utilizes earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks historically yielding an average annual return of +23.75% since 1988 [7][9] Group 4 - KeyCorp, based in Cleveland, offers a range of financial services and is currently rated 3 (Hold) with a VGM Score of B [11] - KeyCorp has a Momentum Style Score of A, with a recent share price increase of 0.1% over the past four weeks, and has seen positive earnings estimate revisions [12]

Financial Performance - Net interest income increased to $1,141 million for the three months ended June 30, 2025, compared to $887 million for the same period in 2024, reflecting a growth of 28.6%[270] - Net income for the three months ended June 30, 2025, was $425 million, up from $274 million in Q2 2024, representing a growth of 55.1%[274] - Net income for the six months ended June 30, 2025, was $830 million, compared to $493 million in 2024, representing a 68.3% increase[280] - Basic earnings per share for the six months ended June 30, 2025, was $0.69, up from $0.45 in 2024, indicating a 53.3% increase[289] - The net income for the second quarter of 2025 was reported at $830 million, compared to $425 million for the first quarter of 2025, indicating a significant increase of 95.3%[276] Asset and Liability Management - Total assets decreased to $185,499 million as of June 30, 2025, from $187,168 million at December 31, 2024, representing a decline of 0.9%[268] - Total liabilities decreased to $166,015 million as of June 30, 2025, from $168,992 million at December 31, 2024, a reduction of 1.2%[268] - As of June 30, 2025, total shareholders' equity increased to $19,484 million, up from $18,176 million at December 31, 2024, reflecting a growth of approximately 7.2%[276] - Retained earnings increased to $14,886 million as of June 30, 2025, from $14,584 million at December 31, 2024, reflecting a growth of 2.1%[268] Income and Expenses - Total interest income rose to $2,107 million in Q2 2025, up from $2,088 million in Q2 2024, marking an increase of 0.9%[270] - Noninterest income for the six months ended June 30, 2025, was $1,358 million, compared to $1,274 million in the same period of 2024, an increase of 6.6%[270] - The provision for credit losses increased to $138 million in Q2 2025, compared to $100 million in Q2 2024, indicating a rise of 38%[270] Shareholder Returns - Cash dividends declared for common shares were $456 million at a rate of $0.410 per share for the second quarter of 2025[276] - The company repurchased 1,961 thousand common shares during the second quarter of 2025, reflecting ongoing commitment to shareholder returns[276] Loan and Credit Quality - Total loans increased to $106,389 million as of June 30, 2025, up from $104,260 million at the end of 2024, reflecting a growth of 2.0%[291] - The allowance for loan and lease losses (ALLL) increased to $1,446 million as of June 30, 2025, from $1,429 million at the end of the previous quarter[299] - The total nonperforming loans outstanding represented 76% of their original contractual amount owed as of June 30, 2025[330] - Nonperforming loans reduced expected interest income by $27 million for the six months ended June 30, 2025[331] Economic Outlook - U.S. GDP is projected to grow at an annual rate of 1.2% for 2025 and 1.5% for 2026, indicating a slowing growth forecast[308] - The expected National Unemployment Rate is forecasted to peak at 4.6% in mid-2026, reflecting potential economic challenges ahead[308] - The geopolitical environment remains uncertain, posing potential downside risks to the economic outlook over the next two years[309] Derivative and Investment Management - The company has a notional amount of $151.0 billion in net derivatives as of June 30, 2025, with derivative assets of $270 million and liabilities of $683 million[387] - The total fair value of derivatives not designated as hedging instruments was $651 million in assets and $1.154 billion in liabilities as of June 30, 2025[387] - The company reported net gains from cash flow hedges of $122 million recognized in OCI for the three months ended June 30, 2025, compared to a loss of $(78) million for the same period in 2024[398] Tax and Regulatory Matters - The effective tax rate for the second quarter of 2025 was 21.4%, compared to 18.5% for the same period in 2024[438] - The company had $40 million in unrecognized tax benefits as of June 30, 2025[441] Other Comprehensive Income - The total other comprehensive income for the period ended June 30, 2025, was $969 million, improving from a balance of $(3,470) million at December 31, 2024[466] - The company recorded unrealized gains of $576 million on securities available for sale for the three months ended June 30, 2025[466]

Group 1: Uber Technologies, Inc. - Uber is projected to reach $200, and it is recommended to buy more shares at the current price [1] - Uber has launched Robotaxi services in partnership with WeRide on Al Reem and Al Maryah Islands in Abu Dhabi [1] Group 2: Micron Technology, Inc. - A recommendation to buy Micron shares is given, but there is a need for DRAM pricing to increase for better stock performance [2] - Micron has launched a high-density, radiation-tolerant SLC NAND chip, marking its entry into the space-qualified memory market [2] Group 3: KeyCorp - KeyCorp is viewed as being in expansion mode rather than sell mode [3] - Truist Securities has maintained a Hold rating on KeyCorp and raised the price target from $17 to $19 [3] Group 4: Price Action - Uber shares increased by 0.6% to close at $87.64 [5] - Micron shares rose by 2.5% to close at $114.74 [5] - KeyCorp shares fell by 1.3% to settle at $18.16 [5]

Core Insights - KeyBank and the Buffalo Sabres have announced a 10-year extension of their arena naming rights deal, which will keep the KeyBank Center name in place through the 2035-36 season [1] - The partnership reflects KeyBank's commitment to the Buffalo community and includes the introduction of the HocKey Assists Community Program aimed at supporting local youth and entrepreneurs [2][3] Company and Partnership Details - KeyBank is the official and exclusive bank of the Buffalo Sabres, with a partnership that dates back to 2015 [1] - The new agreement will also see KeyBank become the team's away helmet sponsor starting in the 2025-26 season [1] - KeyBank's Chairman and CEO emphasized the investment in Buffalo and the shared goal of driving community impact [1] Community Initiatives - The HocKey Assists Community Program will focus on education, small business growth, and neighborhood engagement, aiming to empower youth and support local entrepreneurs [2][3] - KeyBank Center is positioned as a community hub, with plans to drive economic growth in downtown Buffalo [3] Company Background - KeyCorp is celebrating its bicentennial in 2025, marking 200 years of service with approximately $185 billion in assets as of June 30, 2025 [4] - KeyBank operates a network of around 1,000 branches and 1,200 ATMs across 15 states, providing a range of financial services [5]

Core Points - KeyBank Foundation has launched a $5.4 million grant program to support Community Development Financial Institutions (CDFIs) across 27 markets, focusing on affordable housing and small business growth [1][3] - In areas without eligible CDFI proposals, KeyBank will establish a $200,000 donor-advised fund to ensure community participation in the bicentennial celebration [1] - The selected CDFI grant recipients are implementing community-driven solutions in affordable housing, economic inclusion, workforce development, and neighborhood revitalization [2] Company Overview - KeyBank is celebrating its bicentennial in 2025, marking 200 years of service with approximately $185 billion in assets as of June 30, 2025 [6] - The bank operates under the name KeyBank National Association, providing a range of financial services through about 1,000 branches and 1,200 ATMs across 15 states [7] - KeyBank also offers corporate and investment banking products, including merger and acquisition advice, public and private debt and equity, syndications, and derivatives [7]