KEYCORP REPORTS SECOND QUARTER 2025 NET INCOME OF $387 MILLION, OR $.35 PER DILUTED COMMON SHARE

Revenue of $1.8 billion, up 21% year-over-year; Significant positive operating leverage on both a total and fee basis year-over-year

Net interest income up 4% and net interest margin increased 8 bps quarter-over-quarter

Period-end loans up $1.6 billion quarter-over-quarter; Commercial loans up $3.3 billion or 5% year-to-date

Net charge-offs declined 8% quarter-over-quarter; Other credit metrics stable to improved

CLEVELAND, July 22, 2025 /PRNewswire/ -- KeyCorp (NYSE:KEY) today announced net income from continuing operations attributable to Key common shareholders of $387 million, or $.35 per diluted common share, for the second quarter of 2025. For the first quarter of 2025, net income from continuing operations attributable to Key common shareholders was $370 million, or $.33 per diluted common share. For the second quarter of 2024, KeyCorp reported net income from continuing operations attributable to Key common shareholders of $237 million, or $.25 per diluted common share, or adjusted net income of $241 million, or $.25 per diluted common share^(a). Included in the second quarter of 2024 are $4 million, after-tax, of charges related to the FDIC special assessment^(b).

Comments from Chairman and CEO, Chris Gorman

"Our second quarter results demonstrate continued strong momentum. Revenue was up 21% year-over-year driven by our clearly defined net interest income tailwinds and 10% growth in noninterest income, while expenses grew 7%. Sequentially, net interest income grew 4%. Credit quality continues to trend in a positive direction with overall credit migration improving for the sixth consecutive quarter.

Business activity with clients and prospects continues to accelerate. Client deposits and relationship households were up 2% year-over-year while deposit costs were managed below 2%. Period end commercial loans grew $2.1 billion in the second quarter. Assets under management reached a record $64 billion. Investment banking pipelines remain at historically elevated levels. In the second quarter we raised over $30 billion of capital on behalf of our clients. Commercial payments-related fees grew high single digits year-over-year.

We continue to make investments in people and technology that will drive future growth for our company. We remain on target to increase our front line bankers - investment bankers, middle market relationship managers, payments advisors, and wealth managers - by 10% in 2025.

I am energized by our momentum as we win and take share in the marketplace. I remain confident that we will continue to execute against our compelling organic growth opportunities."

 

 

   

Taxable-equivalent net interest income was $1.15 billion for the second quarter of 2025 and the net interest margin was 2.66%. Compared to the second quarter of 2024, net interest income increased by $251 million, and the net interest margin increased by 62 basis points. These increases primarily reflect the impact of lower deposit costs, reinvestment of proceeds from maturing low-yielding investment securities, fixed-rate loans and swaps repricing into higher-yielding investments, the repositioning of the available-for-sale portfolio during the third and fourth quarters of 2024, and an improved funding mix as lower-cost deposits increased while wholesale borrowings declined. These benefits were partially offset by the impact of lower interest rates on variable-rate earning assets, and lower loan balances.

Compared to the first quarter of 2025, taxable-equivalent net interest income increased by $45 million, and the net interest margin increased by 8 basis points. These increases were driven by a decline in funding costs, including interest-bearing deposit costs, the redeployment of maturing low-yielding investments and swaps into higher-yielding investments, and growth in commercial and industrial loans. Net interest income also benefited from one additional day in the second quarter of 2025 compared to the first quarter of 2025.

           

Compared to the second quarter of 2024, noninterest income increased by $63 million. The increase was driven by a $52 million increase in investment banking and debt placement fees reflecting higher syndications, commercial real estate, and equity issuance activity, and a $9 million increase in commercial mortgage servicing fees reflecting higher active special servicing balances. We also continued to see momentum across wealth management and commercial payments, which partially offset a $20 million decrease in other income and a $7 million decrease in operating lease income and other leasing gains.

Compared to the first quarter of 2025, noninterest income increased by $22 million. The increase was driven by an $11 million increase in corporate services income reflecting higher loan, derivative and FX client activity, and a $7 million increase in trust and investment services income. The increase was partly offset by a $6 million decrease in commercial mortgage servicing fees.

 

Compared to the second quarter of 2024, noninterest expense increased by $75 million. The increase was primarily driven by a $69 million increase in personnel expense primarily related to incentive compensation associated with noninterest income growth, and continued investments in people. Business services and professional fees, and computer processing expenses increased primarily due to technology-related investments. These were partially offset by a $7 million decrease in operating lease expense.

Compared to the first quarter of 2025, noninterest expense increased by $23 million. The increase was primarily driven by a $25 million increase in personnel expense primarily related to incentive compensation associated with noninterest income growth, and continued investments in people. Higher business services and professional fees were driven by increases in technology-related investments. This was partially offset by a $15 million decrease in other expenses primarily due to lower fraud and other losses and FDIC insurance expense.

 

Average loans were $105.7 billion for the second quarter of 2025, a decrease of $3.2 billion compared to the second quarter of 2024. Average commercial loans declined by $787 million, primarily driven by a decrease in commercial real estate loans. Average consumer loans declined by $2.5 billion, reflective of broad-based declines across all loan categories.

Compared to the first quarter of 2025, average loans increased by $1.4 billion. Average commercial loans increased $1.9 billion, primarily driven by an increase in commercial and industrial loans. Average consumer loans declined by $586 million, reflective of the intentional run-off of low-yielding loans.

 

Average deposits totaled $147.4 billion for the second quarter of 2025, an increase of $3.3 billion compared to the year-ago quarter, reflecting growth in consumer deposits.

Compared to the first quarter of 2025, average deposits decreased by $1.1 billion, driven by a reduction in higher-cost commercial client balances and retail CDs. The rate paid on interest-bearing deposits declined by 9 basis points, and the overall cost of deposits declined by 7 basis points to 1.99%.

           

Key's provision for credit losses was $138 million, compared to $100 million in the second quarter of 2024 and $118 million in the first quarter of 2025. The increase from the year-ago quarter reflects higher net loan charge-offs and a larger reserve build. The increase from the prior quarter reflects a larger reserve build, partially offset by lower net charge-offs. This quarter, Key added $36 million to its allowance for credit losses to account for recent loan growth, changes in loan mix, and some deterioration in the macroeconomic outlook.

Net loan charge-offs for the second quarter of 2025 totaled $102 million, or 0.39% of average total loans. These results compare to $91 million, or 0.34%, for the second quarter of 2024 and $110 million, or 0.43%, for the first quarter of 2025. Key's allowance for credit losses was $1.7 billion, or 1.64% of total period-end loans at June 30, 2025, compared to 1.71% at June 30, 2024, and 1.63% at March 31, 2025.

At June 30, 2025, Key's nonperforming loans totaled $696 million, which represented 0.65% of period-end portfolio loans. These results compare to 0.66% at June 30, 2024, and 0.65% at March 31, 2025. Nonperforming assets at June 30, 2025, totaled $707 million, and represented 0.66% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to 0.68% at June 30, 2024, and 0.67% at March 31, 2025.

CAPITAL

Key's estimated risk-based capital ratios, included in the following table, continued to exceed all "well-capitalized" regulatory benchmarks at June 30, 2025.

 

Key's regulatory capital position remained strong in the second quarter of 2025. As shown in the preceding table, at June 30, 2025, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 11.7% and 13.4%, respectively.

 

           

Key declared a dividend in May of 2025 of $.205 per common share, payable in the second 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 (2Q25 vs. 2Q24)

• Key's Consumer Bank recorded net income attributable to Key of $122 million for the second quarter of 2025, compared to $59 million for the year-ago quarter
• Taxable-equivalent net interest income increased by $153 million, or 29.3%, compared to the second quarter of 2024
• Average loans and leases decreased $3.0 billion, or 7.8%, from the second quarter of 2024, driven by broad-based declines across all loan categories
• Average deposits increased $2.6 billion, or 3.1%, from the second quarter of 2024, driven by growth in money market deposits and demand deposits
• Provision for credit losses increased $22 million compared to the second quarter of 2024, primarily driven by changes in reserve levels due to deterioration in the economic outlook
• Noninterest income increased $1 million from the year-ago quarter, driven by an increase in trust and investment services income, partially offset by a decrease in consumer mortgage income
• Noninterest expense increased $48 million from the year-ago quarter, primarily driven by higher support and overhead expense

 

 

Commercial Bank Summary of Operations (2Q25 vs. 2Q24)

• Key's Commercial Bank recorded net income attributable to Key of $349 million for the second quarter of 2025 compared to $206 million for the year-ago quarter
• Taxable-equivalent net interest income increased by $145 million, or 35.3%, compared to the second quarter of 2024
• Average loan and lease balances decreased $161 million, or 0.2%, compared to the second quarter of 2024, driven by a decline in commercial real estate loans and commercial lease financing
• Average deposit balances decreased $1.5 billion compared to the second quarter of 2024, driven by a reduction in higher-cost client balances
• Provision for credit losses decreased $3 million compared to the second quarter of 2024, driven by a lower reserve build as changes in the portfolio mix offset economic deterioration, as well as lower net loan charge-offs
• Noninterest income increased $61 million compared to the second quarter of 2024, primarily driven by an increase in investment banking and debt placement fees and commercial mortgage servicing fees
• Noninterest expense increased $18 million compared to the second quarter of 2024, driven by higher support and overhead expense

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KeyCorp's roots trace back 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 $185 billion at June 30, 2025.

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.

 

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 9:00 a.m. ET, on July 22, 2025. A replay of the call will be available on our website through July 22, 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.

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KeyCorp

Second Quarter 2025

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," "adjusted 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 and adjusted pre-provision net revenue, which are 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. Further, management believes that adjusting pre-provision net revenue for significant or unusual items that management does not consider indicative of ongoing financial performance provides a greater understanding of ongoing operations and enhances comparability of results with prior periods.

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.

Noninterest expense adjusted for selected items is a non-GAAP measure in that it excludes significant or unusual items that management does not consider indicative of ongoing financial performance. Management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods.

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 significant or unusual items, net of tax, that management does not consider indicative of ongoing financial performance . 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.

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE KeyCorp