KEYCORP REPORTS FIRST QUARTER 2025 NET INCOME OF $370 MILLION, OR $.33 PER DILUTED COMMON SHARE

Common equity tier 1 ratio of 11.8%, up ~150 basis points year-over-year

CLEVELAND, April 17, 2025 /PRNewswire/ -- KeyCorp (NYSE: KEY) today announced net income from continuing operations attributable to Key common shareholders of $370 million, or $.33 per diluted common share for the first quarter of 2025. For the fourth quarter of 2024, KeyCorp reported 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). Net income from continuing operations attributable to Key common shareholders was $183 million, or $.20 per diluted common share, or adjusted net income of $205 million or $.22 per diluted common share^(a), for the first 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^(b). Included in the first quarter of 2024 are $22 million, or $.02 per diluted common share, after-tax, of charges related to the FDIC special assessment^(b).           

Comments from Chairman and CEO, Chris Gorman

"Our first quarter results marked a strong beginning to the year. Revenue was up 16% year-over-year while expenses were essentially flat. We achieved both absolute and fee-based positive operating leverage on a year-over-year basis. Sequentially, net interest income grew 4% and the net interest margin increased by 17 basis points to 2.58%. On an adjusted basis^(a), pre-provision net revenue increased more than $90 million from the prior quarter. Credit quality remained strong, with credit migration trends improving for the fifth consecutive quarter.

Our strong financial results are a function of continued momentum with both clients and prospects. Client deposits were up 4% year-over-year while deposit betas continue to improve. Commercial loans grew $1.2 billion from year-end levels. We continued to demonstrate progress in each of our strategic, fee-based businesses – wealth management, commercial payments, and investment banking.

As we look to the future, we are confident in our ability to navigate the current environment from a position of strength. We ended the quarter with a strong capital position – a luxury that gives us both flexibility and resiliency. Our liquidity position is robust and our credit metrics continue to improve.

We enjoy strong earnings and business momentum and clearly defined net interest income tailwinds. I remain confident in our ability to perform well under a wide range of potential macroeconomic scenarios."

Taxable-equivalent net interest income was $1.1 billion for the first quarter of 2025 and the net interest margin was 2.58%. Compared to the first quarter of 2024, net interest income increased by $219 million, and the net interest margin increased by 56 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 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 repricing earning assets and lower loan balances.

Compared to the fourth quarter of 2024, taxable-equivalent net interest income increased by $44 million, and the net interest margin increased by 17 basis points. These increases were driven by a decline in funding costs, including interest-bearing deposit costs, impact from the second tranche of the available-for-sale portfolio repositioning, which was completed during the fourth quarter of 2024, and from the redeployment of low yielding investments into higher yielding investment securities. These benefits more than offset the impact from lower interest rates on repricing earning assets, and two fewer days in the first quarter of 2025 compared to the fourth quarter of 2024.

Compared to the first quarter of 2024, noninterest income increased by $21 million. The increase was driven by a $20 million increase in commercial mortgage servicing fees reflecting higher active special servicing balances and overall growth of the servicing portfolio. We also continued to see momentum across investment banking, wealth management and commercial payments, which offset a $15 million decrease in operating lease income and other leasing gains.

Compared to the fourth quarter of 2024, noninterest income increased by $864 million. The increase was driven primarily by a $915 million loss on the sale of securities as part of a strategic repositioning of the available-for-sale portfolio that impacted earnings in the fourth quarter of 2024. The increase was partly offset by a $46 million decrease in investment banking and debt placement fees.

Compared to the first quarter of 2024, noninterest expense decreased by $12 million. The decrease was driven by an $18 million decrease in other expense due to a FDIC special assessment charge in the first quarter of 2024, which more than offset increases in personnel and technology-related investments.

Compared to the fourth quarter of 2024, noninterest expense decreased by $98 million. The decrease was primarily driven by a $54 million decline in personnel expense, primarily related to lower incentive compensation, as well as lower employee benefits expense. Additionally, business services and professional fees, marketing and other expenses declined primarily due to seasonality and some elevated expenses in the fourth quarter of 2024.

Average loans were $104.4 billion for the first quarter of 2025, a decrease of $6.7 billion compared to the first quarter of 2024, generally reflective of tepid client loan demand. Average commercial loans declined by $4.1 billion and average consumer loans declined by $2.6 billion, reflective of broad-based declines across all loan categories.

Compared to the fourth quarter of 2024, average loans decreased by $357 million. Average commercial loans increased $276 million, primarily driven by an increase in commercial and industrial loans, offset by continued paydown activity in commercial mortgage real estate. Average consumer loans declined by $633 million, reflective of the intentional run-off of low yielding loans.

Average deposits totaled $148.5 billion for the first quarter of 2025, an increase of $5.7 billion compared to the year-ago quarter, reflecting growth in both consumer and commercial deposits.

Compared to the fourth quarter of 2024, average deposits decreased by $1.2 billion, driven by a seasonal decrease in commercial deposit balances. The rate paid on interest-bearing deposits declined by 18 basis points, and the overall cost of deposits declined by 12 basis points.

Key's provision for credit losses was $118 million, compared to $101 million in the first quarter of 2024 and $39 million in the fourth quarter of 2024. The increase from the year-ago quarter is driven by higher net loan charge-offs. The increase from the prior quarter reflects a reserve build driven by uncertainty in the economic outlook, partly offset by a reserve release due to improved credit migration trends.

Net loan charge-offs for the first quarter of 2025 totaled $110 million, or 0.43% of average total loans. These results compare to $81 million, or 0.29%, for the first quarter of 2024 and $114 million, or 0.43%, for the fourth quarter of 2024. Key's allowance for credit losses was $1.7 billion, or 1.63% of total period-end loans at March 31, 2025, compared to 1.66% at March 31, 2024, and 1.63% at December 31, 2024.

At March 31, 2025, Key's nonperforming loans totaled $686 million, which represented 0.65% of period-end portfolio loans. These results compare to 0.60% at March 31, 2024, and 0.73% at December 31, 2024. Nonperforming assets at March 31, 2025, totaled $700 million, and represented 0.67% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to 0.61% at March 31, 2024, and 0.74% at December 31, 2024.

CAPITAL

Key's estimated risk-based capital ratios, included in the following table, continued to exceed all "well-capitalized" regulatory benchmarks at March 31, 2025.

Key's regulatory capital position remained strong in the first quarter of 2025. As shown in the preceding table, at March 31, 2025, Key's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 11.8% and 13.5%, respectively.

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

In March 2025, KeyCorp's Board of Directors authorized a new repurchase program pursuant to which KeyCorp may purchase up to $1 billion of KeyCorp common shares in the open market or in privately negotiated transactions. 

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 (1Q25 vs. 1Q24)

• Key's Consumer Bank recorded net income attributable to Key of $118 million for the first quarter of 2025, compared to $41 million for the year-ago quarter
• Taxable-equivalent net interest income increased by $116 million, or 21.8%, compared to the first quarter of 2024
• Average loans and leases decreased $3.1 billion, or 7.8%, from the first quarter of 2024, driven by broad-based declines across all loan categories
• Average deposits increased $4.2 billion, or 5.0%, from the first quarter of 2024, driven by growth in money market deposits and certificates of deposit
• Provision for credit losses increased $45 million compared to the first quarter of 2024, primarily driven by changes in reserve levels due to uncertainty in the economic outlook and higher net loan charge-offs
• Noninterest income increased $1 million from the year-ago quarter, driven by an increase in trust and investment services
• Noninterest expense decreased $28 million from the year-ago quarter, primarily driven by a FDIC special assessment charge in the first quarter of 2024

Commercial Bank Summary of Operations (1Q25 vs. 1Q24)

• Key's Commercial Bank recorded net income attributable to Key of $321 million for the first quarter of 2025 compared to $205 million for the year-ago quarter
• Taxable-equivalent net interest income increased by $137 million, or 34.5%, compared to the first quarter of 2024
• Average loan and lease balances decreased $3.6 billion, or 5.1%, compared to the first quarter of 2024, driven by a decline in commercial real estate loans and commercial and industrial loans
• Average deposit balances increased $1.1 billion compared to the first quarter of 2024, driven by our focus on growing deposits across our commercial businesses
• Provision for credit losses decreased $27 million compared to the first quarter of 2024, driven by a lower reserve build due to slowing asset quality migration, which was partly offset by the impact of uncertainty in the economic outlook and higher net loan charge-offs
• Noninterest income increased $7 million compared to the first quarter of 2024, primarily driven by an increase in commercial mortgage servicing fees and service charges on deposit accounts
• Noninterest expense increased $20 million compared to the first quarter of 2024, driven by higher personnel expense

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 $189 billion at March 31, 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 8:00 a.m. ET, on April 17, 2025. A replay of the call will be available on our website through April 17, 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
First 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.