Keyp(US:KEY)2026-01-20 14:02Financial Data and Key Metrics Changes - The company reported fourth quarter earnings of $0.43 per share, with revenue exceeding $2 billion, growing 12% year-over-year on an adjusted basis, while expenses grew by 2% [3][4] - Full-year record revenue increased by 16% compared to the prior year, with net interest income and fee revenue both exceeding projections [6][16] - The fourth quarter net interest margin (NIM) was 2.82%, an increase of 7 basis points sequentially, and above the previously indicated target of 2.75%-2.8% [21][25] Business Line Data and Key Metrics Changes - Loan growth was particularly strong in commercial and industrial (C&I) loans, which grew by 9%, while consumer loans were intentionally reduced [6][18] - Fee income growth was 7.5%, with all priority fee-based businesses growing at a high single or low double-digit rate [6][10] - Investment banking fees increased by 10% year-over-year, driven by debt capital markets and commercial mortgage debt placement activity [22] Market Data and Key Metrics Changes - The company raised nearly $140 billion of capital on behalf of clients in 2025, retaining 20% on its balance sheet [9] - Assets under management in wealth management reached a record $70 billion, with significant growth in the mass affluent segment [9][10] - Commercial payments fee-equivalent revenue grew by 11% in 2025, reflecting successful investments in bankers and new geographies [10] Company Strategy and Development Direction - The company aims to achieve a 15%-plus return on tangible common equity by year-end 2027, focusing on organic growth in middle market, payments, investment banking, and wealth management [8][32] - Investments in technology, particularly in AI, are a priority, with spending increasing from $900 million to $1 billion [34] - The company plans to repurchase at least $300 million of stock in the first quarter and anticipates similar amounts in subsequent quarters throughout 2026 [4][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering another year of outsized revenue and earnings growth, supported by favorable macro conditions and strong business momentum [11][28] - The company expects to continue growing priority fee-based businesses at a mid to high single-digit pace, capitalizing on strong pipelines [8][10] - Management noted that the current environment plays well to the company's strengths, with expectations for improved middle market M&A activity in 2026 [9][11] Other Important Information - The company announced changes to its board, nominating two new directors with extensive experience in financial services [12][13] - The lead independent director role transitioned to Todd Vassos, with other board members retiring [14] Q&A Session Summary Question: Strategic priorities for 2026 - Management emphasized organic growth in middle market, payments, investment banking, and wealth management, alongside a focus on return on capital and technology investments [30][32] Question: Investment banking fee guidance - Management acknowledged the competitive hiring environment and expressed caution regarding visibility for investment banking fees, despite recent positive trends [36][38] Question: Expectations for growth and banker productivity - Management highlighted the importance of recent hires and backlogs, expressing optimism for growth as new bankers ramp up productivity [41][43] Question: Deposit beta assumptions and margin expectations - Management indicated a stable deposit base with expectations for low-to-mid 50s beta throughout the year, with a focus on remixing brokered deposits into client deposits [55][56] Question: Capital priorities and acquisition appetite - Management reiterated a focus on supporting clients, investing in technology, and pursuing complementary acquisitions, while maintaining a cautious stance on bank acquisitions [66][68]