KeyCorp (NYSE:KEY) Conference Transcript

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.