I'd like to thank you for joining KeyCorp's Q3 2025 Earnings Conference Call. As usual, we will reference our earnings presentation slides, which can be found in the Investor Relations section of the Key.com website. This covers our earnings materials as well as remarks made on this morning's call. Pre-provision net revenue was up $33 million quarter over quarter, or 5%, marking the sixth straight quarter of improving PPNR.
Our net charge-off ratio year-to-date is squarely within our full-year target range of 40-45 Basis points. Finally, we continue to build upon our peer-leading capital ratios, with reported CET1 approaching 12% at quarter end. This excess capital provides us with both flexibility and optionality as we move forward. Additionally, sales production in our mass affluence segment also set a record this quarter.
Investment banking pipelines are also up meaningfully from prior periods, particularly our M&A pipeline, which has a multiplier effect as advisory assignments often drive additional ancillary business. We raised a robust $50 billion in capital on behalf of our clients in the Q3, retaining 15% on our balance sheet. Assuming market conditions remain favorable, we would anticipate that our Q4 fees would be similar to last year's Q4, which was one of our best quarters on record. In commercial payments, Fee-equivalent revenue continues to grow in the high single-digit range, reflecting our focus and commitment to helping our clients run their businesses better every day.
| Metric | Period | Current guidance |
|---|---|---|
| Share repurchases | Q4 2025 | approximately $100 million (resuming) |
| Net interest income and NIM | Q4 2025 | grow modestly off Q3 (new) |
| Investment banking fees | Q4 2025 | similar to Q4 2024 (~$220 million), about a 20% sequential lift (new) |
| Commercial mortgage servicing fees | Q4 2025 | $60-$65 million (expected to decline) |
| Net interest margin | year-end 2027 | 3.25%+ (new medium-term target) |
| Return on tangible common equity | run rate by end of 2027 | 15%+ (new medium-term target) |
| Expense growth | FY2025 | around 4% (reiterated) |
| Metric | YoY | Note |
|---|---|---|
| Earnings per share | $0.41 | Steady progress on profitability and returns; ROA above 1% |
| Revenue | up 17% adjusted | NII tailwinds plus high-single-digit fee growth |
| Taxable-equivalent net interest income | up 4% sequentially | Commercial loan and low-cost client deposit growth plus an extra day |
| Non-interest income | up 8% | Broad-based fee growth; included an ~$8 million Visa settlement charge |
| Investment banking and debt placement fees | up 8% to $184 million (up 15% YTD) | Broad-based debt and equity capital markets activity |
| Trust and investment services income | up 7% | Higher market values and positive net flows; AUM record $68 billion |
| Tangible book value per share | up 14% | Earnings generation |
| Net charge-offs | $114 million (42 bps) | Relatively stable credit; year-to-date 41 bps within target |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Net interest margin expansion | 2.66% (Q2 2025) | 2.75%, year-end target hit a quarter early | Improving |
| Capital return / buybacks | crawl, walk, run approach signaled | ~$100 million planned for Q4, continuing into 2026 | Resuming |
| Medium-term targets disclosed | not formalized | 15%+ ROTCE and 3.25%+ NIM by end of 2027 | Newly outlined |
| Balance sheet remix | ongoing consumer runoff into C&I | C&I up 8% YoY; ~$600 million quarterly consumer runoff continuing | Continuing |
| Deposit beta and funding costs | 55% cumulative IB beta (Q2) | ~55% IB deposit beta, total deposit costs down 2 bps to 1.97% | Stable |
| Bank M&A appetite | low priority | very tight screen, far down capital priorities; tuck-in fee-based deals preferred | Unchanged |