I'd like to thank you for joining KeyCorp's Fourth Quarter 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. Our fourth quarter and full-year results demonstrate the continued progress we are making with respect to our organic path to achieving consistently higher returns on capital.
Revenue exceeded $2 billion, growing 12% year-over-year on an adjusted basis, while expenses grew 2%. We have also committed to a more meaningful return of capital to our shareholders, which commenced in the fourth quarter. In spite of stepped-up share repurchases, we continue to maintain peer-leading capital ratios. We intend to manage this ratio down to the higher end of our targeted capital range of 9.5%-10% by the end of 2026.
Combined with our business momentum and meaningful ongoing capital generation, this puts us in a position to accelerate our repurchase activity further in 2026. We delivered full-year record revenue, which increased 16% compared to the prior year, with both net interest income and fee revenue growing greater than projected. As a result, we generated approximately 1,200 basis points of operating leverage and PP&R growth of about 44%. Loan growth outperformed, particularly C&I loans, which grew at 9%, and the recycling of lower-yielding consumer loans into commercial loans enabled us to manage our funding costs more proactively.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue growth | FY2026 | high single-digit rate (new) |
| Expense growth | FY2026 | approximately 3%-4% (about half of revenue growth) (new) |
| Share repurchases | Q1 2026 and subsequent quarters | at least $300 million in Q1, similar amounts in subsequent quarters (increased) |
| Net interest margin | Q4 2026 | 3.0%-3.05% (new) |
| Net interest margin | Q4 2027 | 3.25%+ (new) |
| Marked CET1 ratio | end of 2026 | higher end of 9.5%-10% target range (managing down) |
| Investment banking fees | FY2026 | up about 5% (new) |
| Commercial loan growth | FY2026 | about 5% (C&I ~7%) (new) |
| Total loan growth | FY2026 | 1%-2% (new) |
| Commercial mortgage servicing fees | FY2026 | $50-$60 million per quarter (lowered) |
| Return on tangible common equity | year-end 2027 | 15%+ (reiterated) |
| Metric | YoY | Note |
|---|---|---|
| Earnings per share | $0.43 ($0.41 adjusted) | Strong franchise momentum; prior-year quarter impacted by securities repositioning |
| Revenue (Q4) | up 12% adjusted | NII up 15% year-over-year and broad-based fee-based growth |
| Full-year revenue | up 16% (record) | NII and fee revenue both growing more than projected |
| Full-year net interest income | up 23% | Stronger commercial loan growth and better deposits on balance and beta |
| Full-year fees | up 7.5% | Investment banking up 13% plus high-single to low-double-digit growth in wealth, payments, and CRE servicing |
| Investment banking and debt placement fees (Q4) | up 10% to $243 million | Debt capital markets and commercial mortgage debt placement, with a pickup in M&A |
| Trust and investment services income | up 10% | Record positive net flows and higher market values; AUM record $70 billion |
| Service charges on deposit accounts | up 20% | Momentum in commercial payments |
| Tangible book value per share | up 18% | Earnings generation |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Net interest margin expansion | 2.75% (Q3 2025) | 2.82% | Improving |
| Balance sheet remix (consumer to commercial) | ongoing consumer runoff | continued runoff of ~$550 million low-yielding consumer loans, C&I growth; $17 billion fixed-rate repricing expected in 2026 | Continuing |
| Capital return | $100 million Q4 buyback discussed (Q3), then $200 million executed | $300 million+ per quarter planned for 2026, payout above 70%-80% target | Accelerating |
| Middle-market M&A recovery | tepid for first nine months of 2025 | first pickup in Q4, expected to roll into Q1 but limited full-year visibility | Early recovery |
| Banker hiring | targeting ~10% frontline growth | achieved just over 9% (closer to 5% in investment banking) | Largely complete |
| Deposit beta | ~55% cumulative IB beta (Q3) | declined modestly to 51%, expect low-to-mid 50s in 2026 | Stabilizing |