KeyCorp (KEY) Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. KeyCorp operates as a large accelerated filer with two primary business segments: Consumer Bank (individuals and small businesses) and Commercial Bank (middle market and institutional clients). The company reported net income from continuing operations attributable to common shareholders of $486 million, or $0.44 diluted earnings per share.
Key Financial Metrics
- Revenue: Total revenue (taxable-equivalent) was $1.95 billion, up from $1.77 billion in Q1 2025.
- Net Interest Income (TE): $1.23 billion, an increase of $125 million year-over-year, driven by lower deposit costs and a favorable shift in loan mix.
- Net Interest Margin (TE): 2.87%, up 29 basis points from the prior year.
- Noninterest Income: $723 million, up 8.2% year-over-year, led by growth in investment banking fees and trust services.
- Noninterest Expense: $1.18 billion, up 4.4% year-over-year, primarily due to higher personnel costs.
- Provision for Credit Losses: $106 million, down from $118 million in Q1 2025.
- Capital Ratios (Estimated): Common Equity Tier 1 (CET1) ratio was 11.40%; Tier 1 Capital ratio was 13.03%; Total Capital ratio was 15.18%.
- Liquidity: Available contingent liquidity totaled $96.1 billion.
Material Changes vs. Prior Period
- Loan Portfolio: Total loans increased to $109.2 billion. Commercial loans grew by $3.3 billion (4.3%), while consumer loans declined by $0.6 billion (2.1%) due to intentional runoff of low-yielding assets.
- Asset Quality: Nonperforming assets increased to $692 million from $627 million at year-end 2025, driven by two idiosyncratic exposures in utilities and multifamily real estate. Net charge-offs to average loans were 0.38%.
- Deposits: Total deposits decreased slightly to $147.8 billion, reflecting an intentional runoff of brokered certificates of deposit.
- Assets Under Management (AUM): Increased to $69.8 billion, up 14.3% year-over-year.
Guidance, Outlook, and Risks
Full Year 2026 Outlook: Management expects revenue to increase approximately 7% and net interest income to increase 9-10% compared to 2025. The net interest margin is projected to exit the fourth quarter at approximately 3.05%. Average loans are expected to grow 2-4%, with commercial loans growing 6-8%.
Capital Actions: The company repurchased approximately $389 million of common shares in Q1 2026 and paid a quarterly dividend of $0.205 per share.
Risks and Contingencies:
- Regulatory Changes: New capital rule proposals issued in March 2026 could impact risk-weighted assets and capital requirements.
- Geopolitical/Economic: Elevated geopolitical tensions and potential energy price volatility are driving qualitative reserve increases.
- Interest Rate Risk: The company maintains a neutral interest rate risk position, with simulated exposure to rising and falling rates within tolerance levels.
Investor Verification Checklist
- Verify the impact of the two idiosyncratic nonperforming asset exposures on future credit loss provisions.
- Monitor the execution of the commercial loan growth strategy against the 6-8% full-year guidance.
- Assess the sustainability of the net interest margin expansion given the declining interest rate environment.
- Review the potential impact of the March 2026 regulatory capital proposals on future capital ratios.
- Confirm the trajectory of the intentional consumer loan runoff and its effect on fee income.