KEYCORP FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
KeyCorp’s quarterly report for the period ended March 31, 2025, shows a net income of $1.1 billion, or $0.43 per diluted share, compared to $1.2 billion, or $0.45 per diluted share, in the same period last year. The company’s net interest income increased by 4% to $2.3 billion, driven by higher loan balances and a 10-basis-point increase in the net interest margin. Non-interest income decreased by 2% to $1.1 billion, primarily due to lower investment securities gains. The company’s total assets increased by 3% to $164.6 billion, while total deposits grew by 4% to $134.4 billion. KeyCorp’s common equity tier 1 capital ratio was 9.4%, exceeding the regulatory minimum requirement. The company’s board of directors declared a quarterly dividend of $0.21 per share, payable on June 15, 2025.
KeyCorp’s Solid Financial Performance in Q1 2025
KeyCorp, a major U.S. financial services company, has reported strong financial results for the first quarter of 2025. The company’s net income from continuing operations attributable to common shareholders was $370 million, or $0.33 per diluted share. This represents a solid performance that builds on the company’s long-term strategic priorities.
Relationship-Focused Business Model Pays Off KeyCorp’s relationship-based business model and commitment to serving as the primary bank for its clients continues to serve the company well. This is evidenced by a 4% year-over-year increase in client deposits and 2% net new relationship household growth. The company’s Assets Under Management also grew to $61.1 billion, as new client enrollments added to the platform.
Maintaining Risk Discipline KeyCorp’s focus on maintaining risk discipline has positioned the company to perform well through various economic cycles. Net charge-offs remain at the low-end of the company’s long-term target range, and nonperforming loans are down 9% quarter-over-quarter. This disciplined approach to risk management is a key strength of the organization.
Strong Performance in Capital Markets Activities The company’s investment banking and debt placement fees had a record first quarter, driven by strong syndication and debt capital markets activity. This demonstrates the strength of KeyCorp’s capital markets platform, which provides a broad suite of services to its clients.
Capital Position Remains Robust KeyCorp ended the first quarter with a Common Equity Tier 1 ratio of 11.8%, up approximately 150 basis points year-over-year. This strong capital position allows the company to continue supporting its existing and prospective clients.
Outlook for 2025 Looking ahead, KeyCorp provided guidance for the full year 2025 compared to 2024. The company expects average loans to decline by 2-5%, while ending loans are expected to be flat. Commercial loans are projected to grow 2-4%. Net interest income is expected to increase by around 20%, and adjusted noninterest income is expected to grow by 5% or more. Adjusted noninterest expense is anticipated to rise 3-5%, and the net charge-off ratio is expected to be 40-45 basis points. The effective tax rate is projected to be 21-22%, with a taxable-equivalent effective rate of 23-24%.
Segment Performance KeyCorp’s two major business segments, Consumer Bank and Commercial Bank, both contributed to the strong quarterly results.
The Consumer Bank reported net income of $118 million, up from $41 million in the year-ago quarter. Taxable-equivalent net interest income increased by 21.8%, driven by higher deposit balances and lower funding costs. Provision for credit losses increased, reflecting changes in the economic outlook and higher net charge-offs.
The Commercial Bank reported net income of $321 million, compared to $205 million in the first quarter of 2024. Taxable-equivalent net interest income grew by $137 million, reflecting the impact of lower deposit costs and the repositioning of the investment portfolio. Provision for credit losses decreased, driven by slowing asset quality migration, though this was partly offset by the uncertain economic environment and higher net charge-offs.
Loan Portfolio and Asset Quality KeyCorp’s total loans outstanding from continuing operations were $104.8 billion at the end of the first quarter, up from $104.3 billion at the end of 2024. The commercial loan portfolio grew by 1.7%, primarily driven by increases in commercial and industrial loans. The consumer loan portfolio declined by 2.1%, reflecting the intentional run-off of lower-yielding loans.
The company’s asset quality metrics remain strong, with net charge-offs at the low-end of the long-term target range and nonperforming loans down 9% quarter-over-quarter. KeyCorp’s commercial real estate portfolio is well-diversified, with a focus on stable, recurring cash flows and adequate reserves to support the balance sheet through economic cycles.
Funding and Liquidity KeyCorp’s highly diversified deposit base, which totaled $150.7 billion at the end of the first quarter, is the primary source of funding for the company. Uninsured deposits represented 43% of total deposits, a level consistent with recent quarters.
The company’s liquidity position remains strong, with a liquid asset portfolio that exceeds the amount estimated necessary to manage through an adverse liquidity event. KeyCorp maintains a Contingency Funding Plan and various liquidity programs to ensure it can access funding in a timely manner.
Capital Management KeyCorp’s capital levels remain robust, with a Common Equity Tier 1 ratio of 11.8% at the end of the first quarter. This positions the company well to support organic growth, pay dividends, and execute on its $1 billion share repurchase program authorized by the Board of Directors.
The company paid a quarterly dividend of $0.205 per common share in the first quarter. KeyCorp also has the capacity to pay an additional $485 million in dividends to the parent company without prior regulatory approval.
Regulatory Environment KeyCorp and its subsidiary, KeyBank, operate in a highly regulated environment. The company is subject to regulatory capital requirements based on the Basel III international framework, as implemented in the United States. As of March 31, 2025, KeyCorp’s capital ratios exceeded the minimum regulatory requirements.
The company is also subject to the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR) process, which assesses the capital planning and stress testing practices of large bank holding companies. KeyCorp’s capital plan and stress test results were used by the Federal Reserve to determine the company’s updated stress capital buffer requirement of 3.1%.
Additionally, KeyCorp and KeyBank are subject to the Federal Deposit Insurance Corporation’s (FDIC) deposit insurance assessment framework, which includes a special assessment to recover the losses incurred from the failures of Silicon Valley Bank and Signature Bank in 2023.
Conclusion KeyCorp’s strong financial performance in the first quarter of 2025 demonstrates the company’s ability to execute on its long-term strategic priorities. The company’s relationship-focused business model, disciplined risk management, and diversified revenue streams have positioned it well to navigate the current economic environment.
Looking ahead, KeyCorp’s guidance for 2025 suggests continued growth in key areas, such as net interest income and adjusted noninterest income, while maintaining a focus on cost control and credit quality. The company’s robust capital position and liquidity profile provide a solid foundation to support its clients and pursue strategic initiatives.
Overall, KeyCorp’s first-quarter results highlight the company’s resilience and its commitment to delivering value to its shareholders, clients, and communities.
