Revenue of $865 million; Adjusted for selected items^(a), revenue up 16% year-over-year

Net interest income up 10% linked quarter

Momentum across investment banking, payments, and wealth management fees up 27% year-over-year

Common Equity Tier 1 ratio increased 120 basis points quarter-over-quarter to 12%^(b)

CLEVELAND, Jan. 21, 2025 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced a net loss from continuing operations attributable to Key common shareholders of $(279) million, or $(.28) per diluted common share, or adjusted net income of $378 million or $.38 per diluted common share^(a), for the fourth quarter of 2024. Included in the fourth quarter of 2024 are $(657) million, or $(.66) per diluted common share, after-tax, of charges related to the loss on the sale of securities^(c). For the third quarter of 2024, KeyCorp reported a net loss from continuing operations attributable to Key common shareholders of $(447) million, or $(.47) per diluted common share, or adjusted net income of $285 million or $.30 per diluted common share^(a). Net income from continuing operations attributable to Key common shareholders was $30 million, or $.03 per diluted common share, or adjusted net income of $239 million or $.25 per diluted common share^(a), for the fourth quarter of 2023. During the quarter, Key and Scotiabank received regulatory approval to complete Scotiabank's minority investment in Key as announced on August 12, 2024.

Comments from Chairman and CEO, Chris Gorman

"Our fourth quarter results marked a strong finish to the year. EPS and revenue were impacted by the previously communicated completion of our securities portfolio repositioning. On an adjusted basis^(a), revenues were up 16% year-over-year and 11% sequentially. Net interest income was up 10% quarter-over-quarter and fees (as adjusted^(a)), were up meaningfully versus comparable periods. We achieved year-over-year positive operating leverage for a second consecutive quarter. On a linked quarter basis, net charge-offs were down 26% and criticized loans down 7%. 

Our strong financial results are a function of continued client momentum. Relationship households were up 3%, client deposits were up 4%, and AUM increased to a record level of $61 billion in 2024. We continued to drive significant progress in each of our strategic, fee-based businesses – wealth management, commercial payments, and investment banking. 

I am very proud of all that our team accomplished in 2024. As we turn the page to 2025, we celebrate KeyBank's 200th anniversary, a remarkable milestone that reflects the hard work of our teammates over the past two centuries, and their collective dedication to our clients. With strong performance momentum and a leading capital position, we are well positioned for sound, profitable growth in 2025 and beyond."

Taxable-equivalent net interest income was $1.1 billion for the fourth quarter of 2024 and the net interest margin was 2.41%. Compared to the fourth quarter of 2023, net interest income increased by $133 million, and the net interest margin increased by 34 basis points. The increase in net interest income and the net interest margin reflect the reinvestment of proceeds from maturing investment securities into higher yielding investments, the maturity of lower-yielding interest rate swaps with negative carry that were terminated in 2023, and the first tranche of the repositioning of the available-for-sale portfolio of $7.0 billion during the third quarter of 2024. In addition, during the fourth quarter of 2024, Key completed the second tranche of the available-for-sale portfolio repositioning, which involved the sale and reinvestment of approximately $3.0 billion of lower-yielding mortgaged-backed securities into higher-yielding investments. Net interest income and the net interest margin also benefited from an increase in lower-cost deposits, which contributed to the decline in wholesale borrowings. These benefits were partially offset by a decline in loan balances and the impact of lower interest rates on repricing earning assets.

Compared to the third quarter of 2024, taxable-equivalent net interest income increased by $97 million, and the net interest margin increased by 24 basis points. Net interest income and the net interest margin benefited from the reinvestment of proceeds from maturing investment securities into higher-yielding investments, the repositioning of the available-for-sale portfolio, the maturity of amortizing interest rate swaps with negative carry, and an improved funding mix.

Compared to the fourth quarter of 2023, noninterest income decreased by $806 million. The decrease was driven by a $915 million loss on the sale of securities as part of a strategic repositioning of the portfolio, as well as a $3 million loss related to the Scotiabank investment agreement valuation in the fourth quarter of 2024. See the Selected Items Impact on Earnings table on page 25 for more information. The decline was partly offset by an $85 million increase in investment banking and debt placement fees, reflective of stronger syndication fees, underwriting fees, and merger and acquisition fees, as well as a $20 million increase in commercial mortgage servicing fees.

Compared to the third quarter of 2024, noninterest income increased by $73 million, primarily driven by a $50 million increase in investment banking and debt placement fees, reflective of stronger syndication fees and merger and acquisition advisory fees. Additionally, net securities losses declined relative to the prior quarter, reflecting gains from other investment activity in the fourth quarter.

Compared to the fourth quarter of 2023, noninterest expense decreased $143 million. The decline was driven by selected items that impacted earnings in the fourth quarter of 2023, which included the FDIC special assessment, efficiency related expenses, and a pension settlement charge in the fourth quarter of 2023, which collectively totaled $275 million. See the Selected Items Impact on Earnings table on page 25 for more information. Partly offsetting the decline was an increase in personnel expense of $60 million due to an increase in incentive and stock-based compensation related to strong capital markets activity, as well as an increase in technology investments.

Compared to the third quarter of 2024, noninterest expense increased by $135 million. The increase was driven by a $64 million increase in personnel expense, primarily related to incentive and stock-based compensation, reflective of stronger capital markets activity, as well as an increase in employee benefits. Additionally, there was a $40 million increase in other expense, largely related to seasonal miscellaneous expenses such as charitable donations.

Average loans were $104.7 billion for the fourth quarter of 2024, a decrease of $9.2 billion compared to the fourth quarter of 2023, reflective of continued tepid client loan demand. The decline in average loans was mostly driven by a $6.5 billion decline in average commercial loans, due to lower commercial and industrial loans and commercial mortgage real estate loans. Additionally, average consumer loans declined by $2.7 billion, reflective of broad-based declines across all consumer loan categories.

Compared to the third quarter of 2024, average loans decreased by $1.5 billion. Average commercial loans declined by $961 million, primarily driven by a decrease in commercial mortgage real estate loans and commercial and industrial loans. Average consumer loans declined $572 million, driven by lower consumer mortgage and home equity loan balances.

Average deposits totaled $149.7 billion for the fourth quarter of 2024, an increase of $4.7 billion compared to the year-ago quarter, reflecting growth in both consumer and commercial deposits.

Compared to the third quarter of 2024, average deposits increased by $2.0 billion, driven by an increase in both consumer and commercial deposit balances.

Key's provision for credit losses was $39 million, compared to $102 million in the fourth quarter of 2023 and $95 million in the third quarter of 2024. The decrease from prior periods primarily reflects lower loan balances, slowing asset quality migration, and changes in net charge-off levels.

Net loan charge-offs for the fourth quarter of 2024 totaled $114 million, or 0.43% of average total loans. These results compare to $76 million, or 0.26%, for the fourth quarter of 2023 and $154 million, or 0.58%, for the third quarter of 2024. Key's allowance for credit losses was $1.7 billion, or 1.63% of total period-end loans at December 31, 2024, compared to 1.60% at December 31, 2023, and 1.68% at September 30, 2024.

At December 31, 2024, Key's nonperforming loans totaled $758 million, which represented 0.73% of period-end portfolio loans. These results compare to 0.51% at December 31, 2023, and 0.69% at September 30, 2024. Nonperforming assets at December 31, 2024, totaled $772 million, and represented 0.74% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to 0.52% at December 31, 2023, and 0.70% at September 30, 2024.

CAPITAL

Key's estimated risk-based capital ratios, included in the following table, continued to exceed all "well-capitalized" regulatory benchmarks at December 31, 2024.

Key's regulatory capital position remained strong in the fourth quarter of 2024. As shown in the preceding table, at December 31, 2024, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 12.0% and 13.7%, respectively. Key's tangible common equity ratio was 7.0% at December 31, 2024.

Key elected the CECL phase-in option provided by regulatory guidance which delayed for two years the estimated impact of CECL on regulatory capital and phases it in over three years beginning in 2022. Effective for the first quarter 2022, Key entered a three-year transition period, and the full impact of the CECL standard was phased-in to regulatory capital through December 31, 2024. In the first quarter of 2025, CECL will be fully reflected in regulatory capital. On a fully phased-in basis, Key's Common Equity Tier 1 ratio would be reduced by five basis points.

Key declared a dividend in January of 2025 of $.205 per common share, payable in the first quarter of 2025. 

LINE OF BUSINESS RESULTS

The following table shows the contribution made by each major business segment to Key's taxable-equivalent revenue from continuing operations and income (loss) from continuing operations attributable to Key for the periods presented. For more detailed financial information pertaining to each business segment, see the tables at the end of this release.

Consumer Bank Summary of Operations (4Q24 vs. 4Q23)

• Key's Consumer Bank recorded net income attributable to Key of $88 million for the fourth quarter of 2024, compared to a loss of $11 million for the year-ago quarter
• Taxable-equivalent net interest income increased by $93 million, or 17.1%, compared to the fourth quarter of 2023
• Average loans and leases decreased $3.2 billion, or 7.8%, from the fourth quarter of 2023, driven by broad-based declines across all loan categories
• Average deposits increased $3.9 billion, or 4.7%, from the fourth quarter of 2023, driven by growth in money market deposits and certificates of deposit
• Provision for credit losses increased $38 million compared to the fourth quarter of 2023, largely driven by higher net charge-offs
• Noninterest income increased $9 million from the year-ago quarter, driven by increases in trust and investment services, consumer mortgage, and cards and payments income
• Noninterest expense decreased $66 million from the year-ago quarter, primarily driven by a FDIC special assessment charge in the fourth quarter of 2023

Commercial Bank Summary of Operations (4Q24 vs. 4Q23)

• Key's Commercial Bank recorded net income attributable to Key of $379 million for the fourth quarter of 2024 compared to $150 million for the year-ago quarter
• Taxable-equivalent net interest income increased by $85 million, or 18.8%, compared to the fourth quarter of 2023
• Average loan and lease balances decreased $6.0 billion, or 8.3%, compared to the fourth quarter of 2023, driven by a decline in commercial and industrial loans and commercial real estate loans
• Average deposit balances increased $1.5 billion compared to the fourth quarter of 2023, driven by our focus on growing deposits across our commercial businesses
• Provision for credit losses decreased $99 million compared to the fourth quarter of 2023, driven by lower loan balances, slowing asset quality migration, and changes in the economic outlook
• Noninterest income increased $110 million compared to the fourth quarter of 2023, primarily driven by an increase in investment banking and debt placement fees and commercial mortgage servicing fees
• Noninterest expense decreased $10 million compared to the fourth quarter of 2023, driven by a FDIC special assessment charge in the fourth quarter of 2023, partly offset by higher incentive compensation from an increase in investment banking activity

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KeyCorp's roots trace back nearly 200 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $187 billion at December 31, 2024.

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 1,000 branches and approximately 1,200 ATMs. Key also provides a broad range of 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 throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.

Notes to Editors:

A live Internet broadcast of KeyCorp's conference call to discuss quarterly results and currently anticipated earnings trends and to answer analysts' questions can be accessed through the Investor Relations section at https://www.key.com/ir at 8:00 a.m. ET, on January 21, 2025. A replay of the call will be available on our website through January 21, 2026.

For up-to-date company information, media contacts, and facts and figures about Key's lines of business, visit our Media Newsroom at https://www.key.com/newsroom. 

*****

KeyCorp

Fourth Quarter 2024

Financial Supplement

Basis of Presentation

Use of Non-GAAP Financial Measures

This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Key's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this document, the financial supplement, or conference call slides related to this document, all of which can be found on Key's website (www.key.com/ir).

Forward-Looking Non-GAAP Financial Measures 

From time to time Key may discuss forward-looking non-GAAP financial measures. Key is unable to provide a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures because Key is unable to provide, without unreasonable effort, a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant for future results.

Annualized Data

Certain returns, yields, performance ratios, or quarterly growth rates are presented on an "annualized" basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts.

Taxable Equivalent

The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at the federal statutory rate. This adjustment puts all earning assets, most notably tax-exempt loans, and certain lease assets, on a common basis that facilitates comparison of results to peers.

Earnings Per Share Equivalent 

Certain income or expense items may be expressed on a per common share basis. This is done for analytical and decision-making purposes to better discern underlying trends in total consolidated earnings per share performance excluding the impact of such items. When the impact of certain income or expense items is disclosed separately, the after-tax amount is computed using the marginal tax rate, unless otherwise specified, with this then being the amount used to calculate the earnings per share equivalent.

GAAP to Non-GAAP Reconciliations

(Dollars in millions)

The table below presents certain non-GAAP financial measures related to "tangible common equity," "return on average tangible common equity," "pre-provision net revenue," "cash efficiency ratio," "adjusted taxable-equivalent revenue," "noninterest expense adjusted for selected items," "adjusted income (loss) available from continuing operations attributable to Key common shareholders," and "diluted earnings per share - adjusted."

The tangible common equity ratio and the return on average tangible common equity ratio have been a focus for some investors, and management believes these ratios may assist investors in analyzing Key's capital position without regard to the effects of intangible assets and preferred stock.

The table also shows the computation for pre-provision net revenue, which is not formally defined by GAAP. Management believes that eliminating the effects of the provision for credit losses makes it easier to analyze the results by presenting them on a more comparable basis.

The cash efficiency ratio is a ratio of two non-GAAP performance measures. As such, there is no directly comparable GAAP performance measure. The cash efficiency ratio performance measure removes the impact of Key's intangible asset amortization from the calculation. Management believes this ratio provides greater consistency and comparability between Key's results and those of its peer banks. Additionally, this ratio is used by analysts and investors as they develop earnings forecasts and peer bank analysis.

Adjusted taxable-equivalent revenue is a non-GAAP measure in that it adjusts revenue for certain tax-exempt instruments and selected items. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest income, we use interest income on a taxable-equivalent basis by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable instruments. Additionally, management believes adjusting for the selected items provide investors with useful information to gain a better understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrate the effects of the financial impacts related to those selected items.

Noninterest expense adjusted for selected items is a non-GAAP measure in that it excludes selected items. Management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects on noninterest expense related to those selected items.

Adjusted income (loss) available from continuing operations attributable to Key common shareholders (or "adjusted net income") and diluted earnings per share - adjusted (or "adjusted earnings per share") are non-GAAP in that these measures exclude selected items, net of tax. Management believes these measures provide investors with useful information to gain a better understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrate the effects of the financial impacts related to the selected items.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.