Core Insights - The KeyBank survey indicates that 70% of middle market companies plan to leverage the provisions of the One Big Beautiful Bill Act (OBBBA) for competitive advantage [1][3] - The survey reveals high familiarity with OBBBA among executives, with 60% reporting awareness of its provisions [5] - Companies anticipate significant impacts on the U.S. economy and their own businesses, with 86% expecting moderate or greater effects within the next 12 months [5] Familiarity and Expectations - 60% of middle market companies are familiar with OBBBA provisions [5] - 86% expect the bill's provisions to have a moderate or greater level of impact on the U.S. economy in the next 12 months, with 45% anticipating significant impact [5] - 60% expect a meaningful positive impact on their business in the next two years [5] - 89% anticipate at least one significant long-term impact from OBBBA on their business [5] Anticipated Long-Term Impacts - The top three expected long-term impacts include: - Increased ability to invest in growth and expansion (59%) [5] - Improved cash flow through accelerated depreciation and capital expenditure incentives (59%) [5] - Greater certainty and stability in financial planning and forecasting (53%) [5] Strategic Priorities Post-Enactment - Within 12 months of OBBBA enactment, middle market companies plan to prioritize: - Upgrading technology or investing in process automation (68%) [5] - Increasing domestic R&D investment (65%) [5] - Expanding/reconfiguring supply chain (63%) [5] - Adjusting debt financing or leverage strategy (59%) [5] - Accelerating capital expenditures (58%) [5] - Enhancing employee benefits (57%) [5] - Investing in clean energy projects (55%) [5]

Summary of Key Points from the Conference Call Industry Overview - The focus on AI investments has overshadowed other potential investment opportunities in various sectors, including semiconductors, power plants, and capital goods [1][2] - Companies not directly benefiting from AI are highlighted as compelling investment options, such as Freeport-McMoRan, which has indirect exposure to AI [1] Core Insights and Arguments - A screening of Buy-rated US stocks not included in AI/power/infrastructure ETFs identified 82 stocks with positive 3-month EPS revisions and trading below a market multiple of 26x, leading to a final list of 16 equities [2] - Savita Subramanian models an 8% return for the S&P over the next 12 months, emphasizing the importance of owning average stocks rather than the index [3] - Risks associated with AI investments include potential declines in middle-income white-collar jobs, which could impair consumer spending [3] - Hyperscalers investing heavily in AI technology may face de-rating if monetization does not meet expectations, as they currently trade at high multiples despite capital-intensive spending [3] Notable Companies and Their Performance - **Amcor PLC (AMCR)**: Recent acquisition of Berry Global is expected to enhance valuation, with EBITDA projected to approach $3.8 billion for F26 [11][12] - **AT&T Inc. (T)**: Strong performance metrics with 405k post-paid phone net additions, projecting a 9% EPS growth in 2026 [15][17] - **BGC Group**: Dominates the energy derivatives market, with expected growth in volumes due to increased power consumption driven by cloud and AI adoption [18][19] - **Church & Dwight (CHD)**: Positioned to benefit from consumer trade-down trends, with organic sales growth of 3.4% in Q3 [20][21] - **Dollar General (DG)**: Improved execution and a focus on lower price points are expected to boost sales, with a current valuation below the 5-year average [23][27] - **Freeport-McMoRan (FCX)**: Anticipates a restart of the Grasberg mine, with bullish forecasts for copper prices due to supply challenges [32][34] - **Henry Schein (HSIC)**: Transitioning to a higher-margin business model, with a target of 60% operating income from high-growth products by 2027 [38][39] - **Progressive Corp (PGR)**: Strong EPS revisions and expected dividend announcements are anticipated to drive growth [65][67] - **Walt Disney Co. (DIS)**: Growth drivers intact with expectations for double-digit growth in Entertainment operating income [80] Additional Important Insights - The market is currently cautious, providing room for multiple expansions as fundamentals improve across various sectors [14] - Regulatory improvements in Connecticut are expected to enhance Eversource's valuation [28][30] - Viking Holdings is positioned for premium valuation due to its unique brand and superior margins in the cruise industry [76][79] - The overall sentiment indicates a potential for significant investment opportunities outside the AI sector, as companies adapt to changing market dynamics and consumer behaviors [1][2][3]

Core Insights - Bank of America has identified AT&T among 16 stock picks for investors seeking to diversify away from AI-related investments [1][2][9] - The selected stocks are believed to be undervalued, with raised profit estimates in the last three months, trading below broader market multiples, and at least 10% below their 52-week highs [3][9] Consumer-Focused Stocks - Notable companies include AT&T, Walt Disney Co., Dollar General, and Viking Holdings, which are familiar to American consumers [5][9] - Disney is expected to benefit from its sports offerings and theme parks, while AT&T has shown growth potential after exceeding phone subscriber estimates [6] - Viking's unique all-inclusive product offering is driving superior financial performance, and Dollar General is anticipated to perform well as consumers seek value amid inflation [7] Finance and Logistics Stocks - KeyCorp and Progressive are among the finance and logistics firms listed, with Progressive experiencing strong positive revisions in earnings per share estimates [10] - Analysts believe that current estimates for Progressive may be too conservative for upcoming quarters and into 2027 [10]

KeyCorp plans to push westward to increase its share of retail deposits in new-economy states such as Washington https://t.co/wLWMYQxJnY ...

Core Insights - The KeyBank Financial Mobility Survey reveals a shift in how Americans define financial success, with 74% prioritizing debt-free living over traditional milestones [1][2][5] - Financial stress is prevalent, with 68% of Americans feeling financial pressure, an increase from 50% in 2024 [2][6] - The survey indicates a decline in emergency readiness, with 25% of Americans unable to cover an unexpected $2,000 expense, up from 19% in 2024 [7] Financial Management Trends - Consumers are increasingly concerned about daily expenses, with 55% worried about groceries, 35% about housing costs, and 26% about credit card debt [6] - Traditional milestones such as homeownership and marriage are becoming less prioritized, with 53% of consumers focusing less on lifestyle expenses compared to the previous year [7] - Only 39% of Americans feel more financially successful than five years ago, with rising living costs and inflation cited as primary reasons for decreased success [7] Generational Perspectives - Gen Z is notably redefining success, with only 13% pursuing traditional milestones; 33% have opted against homeownership, marriage, children, and higher education [7] - Younger generations, particularly Gen Z, are more likely to adopt a casual approach to financial management, with 28% stating, "I'll figure it out" [7] Financial Tools and Strategies - Many Americans are turning to Buy Now, Pay Later (BNPL) options for immediate relief, with 58% using such programs, especially among younger generations [13] - Despite the short-term flexibility offered by BNPL, 73% of users still report feeling financially stressed, highlighting the tension between immediate choices and long-term financial planning [13]

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KeyCorp Conference Call Summary Company Overview - **Company**: KeyCorp (NYSE: KEY) - **Assets**: $187 billion - **Location**: Cleveland, Ohio - **Consumer Banking**: Serves over 3 million customers across 15 states Key Points Consumer Banking Performance - **Deposits**: $80 billion from 2 million households and 250,000 small business clients [5][6] - **Wealth Management**: Manages a record $68 billion, with 75% from Eastern markets [5][6] - **Growth in Western Markets**: Higher relationship household growth rate in Western states compared to Eastern states [5][6] - **Credit Profile**: Average FICO score of 790, with residential mortgage portfolio above 800 [7][18] Strategic Focus - **Core Activities**: Focus on growing relationship households, wealth business, and client care [8][18] - **Client Satisfaction**: Internal measures of client satisfaction have increased by double digits [9] - **Relationship Households**: 80% of consumer deposits are from relationship households, up from 70% pre-COVID [11] Wealth Management Growth - **Key Private Client Initiative**: Targets clients with $250,000 to $2 million in investable assets [12][14] - **Mass Affluent Segment**: 50,000 households added $6 billion in assets, averaging $125,000 per family [14] - **Goals**: Aim for $100 billion in assets under management by 2030 [17] Operational Efficiency - **Branch Efficiency**: Average branch size increased by 40%, with 1,000 fewer employees than a few years ago [9] - **Sales Professionals**: Planning to start 2026 with 100 more sales professionals than in January 2025 [16] Market Position and Competition - **Competitive Confidence**: Increased confidence in closing the gap with competitors in consumer banking [19][20] - **Client Experience**: Enhanced client experience through better service and rewards for active checking account holders [20][21] M&A and Capital Management - **M&A Strategy**: Focus on organic growth; depository M&A is a low priority [25][28] - **Share Buybacks**: Committed to $100 million in buybacks for Q4, with potential for more [27][29] Lending Strategy - **Consumer Loans**: Focus on supporting relationship clients with a full suite of lending products [40][41] - **Home Equity Lines of Credit**: Anticipated growth in HELOCs due to high home equity levels [43] NDFI Exposure - **NDFI Portfolio**: $18 billion in NDFI, with a focus on specialty finance lending [49][50] - **Quality of Book**: Strong performance with minimal losses in specialty finance lending [50] Government Shutdown Impact - **Minimal Impact**: Limited effects on consumer and commercial areas from the government shutdown [55] Relationship with Scotiabank - **Ownership**: Scotiabank owns nearly 15% of KeyCorp; exploring business opportunities but not a top priority [57][58] Conclusion KeyCorp is positioned for growth through a focus on consumer banking and wealth management, with a strong emphasis on client relationships and operational efficiency. The company aims to enhance its market position while maintaining a disciplined approach to capital management and lending.

Financial Performance - Net interest income rose to $1,184 million for the three months ended September 30, 2025, up 24.4% from $952 million in the same period of 2024[273]. - Net income for the three months ended September 30, 2025, was $489 million, a turnaround from a loss of $410 million in the same quarter of 2024[273]. - Comprehensive income for the three months ended September 30, 2025, was $841 million, compared to $1,453 million in Q3 2024, indicating a decrease of 42.1%[276]. - The net income for the period ending September 30, 2025, was reported at $1,319 million, compared to a net income of $489 million for the previous quarter, indicating a significant increase[278]. - Basic earnings per share for the nine months ended September 30, 2025, was $1.10, compared to a loss of $0.03 in 2024[291]. Asset and Equity Growth - Total assets increased to $187,409 million as of September 30, 2025, compared to $187,168 million at December 31, 2024, reflecting a growth of 0.13%[269]. - As of September 30, 2025, total shareholders' equity increased to $20,102 million, up from $19,484 million as of June 30, 2025, reflecting a growth of approximately 3.15%[278]. - Retained earnings increased to $15,111 million as of September 30, 2025, compared to $14,584 million at December 31, 2024, reflecting a growth of 3.6%[269]. Loan and Deposit Activity - Total loans increased to $105,902 million as of September 30, 2025, up from $104,260 million at the end of 2024[294]. - Total deposits grew to $150,765 million as of September 30, 2025, up from $149,760 million at December 31, 2024, marking a 0.67% increase[269]. - Net increase in deposits was $1,005 million, down from $4,766 million in the previous year[282]. Credit Loss Provisions - The provision for credit losses increased to $107 million in Q3 2025, compared to $95 million in Q3 2024, indicating a cautious approach to potential loan defaults[273]. - Provision for credit losses increased to $363 million in 2025 from $296 million in 2024, indicating a rise in expected credit losses[282]. Securities and Derivatives - Total securities available for sale reached $40,456 million as of September 30, 2025, up from $37,707 million at the end of 2024, indicating a growth of approximately 4.7%[360]. - The company's total derivative assets were valued at $559 million on September 30, 2025, compared to $612 million on December 31, 2024, showing a decrease of about 8.7%[360]. - The company had derivative instruments with a total notional amount of $155.868 billion as of September 30, 2025, with net derivative amounts of $227 million in assets and $636 million in liabilities[391]. Nonperforming Loans and Risk Ratings - As of September 30, 2025, 48% of nonperforming loans were contractually current, an increase from 43% as of December 31, 2024[334]. - The carrying amount of commercial nonperforming loans represented 70% of their original contractual amount owed as of September 30, 2025[332]. - For commercial and industrial loans, the "Pass" risk rating category saw an increase to $53,025 million in 2025 from $48,905 million in 2024, a rise of about 8%[318]. Tax and Legal Matters - The effective tax rate for Q3 2025 was 18.7%, slightly lower than 18.8% for Q3 2024, primarily due to income from tax-advantaged investments[444]. - The company continually monitors and reassesses the potential materiality of litigation matters, indicating that no current matters are expected to materially affect financial condition[460]. Economic Outlook - The expected U.S. GDP growth rate is projected at 1.7% for both 2025 and 2026, indicating a slowing growth outlook[311]. - The national unemployment rate is forecasted to peak at 4.5% in mid-2026, reflecting potential economic challenges ahead[311].

Core Insights - KeyCorp, headquartered in Cleveland, is a long-standing financial institution in the U.S. with a market capitalization of $19.5 billion, offering a wide range of financial services through KeyBank [1] Performance Overview - KeyCorp's stock has underperformed compared to the broader market, with a marginal increase over the past 52 weeks, while the S&P 500 Index has risen by 17.4% [2] - Year-to-date, KeyCorp shares are up 2.2%, significantly lower than the S&P 500's 16% increase [2] - The stock has also lagged behind the Financial Select Sector SPDR Fund's 10.8% return over the past 52 weeks and 8.1% year-to-date gains [3] Financial Results - KeyCorp reported strong Q3 results, with net interest income increasing by 23.8% and net interest margin rising to 2.75% from 2.17% year-over-year [4] - Despite these operational improvements, investor sentiment remains cautious due to concerns over slower loan growth and elevated funding and deposit costs [4] Earnings Expectations - Analysts project KeyCorp's EPS to grow by 25.9% year-over-year to $1.46 for the current fiscal year ending in December 2025 [5] - The company has a promising earnings surprise history, having beaten consensus estimates in the last four quarters [5] - Among 24 analysts covering the stock, the consensus rating is a "Moderate Buy," with 10 "Strong Buy" ratings, 2 "Moderate Buys," and 12 "Holds" [5] Analyst Ratings - DA Davidson recently lowered its price target on KeyCorp from $22 to $21 while maintaining a "Buy" rating, citing strong Q3 results and higher full-year revenue guidance, but suggesting that these positives are already reflected in consensus estimates [6]