KeyCorp 2025 Annual Report (Form 10-K) Summary
Business Context and Reporting Period
This summary covers KeyCorp's annual report for the fiscal year ended December 31, 2025. KeyCorp is a large accelerated filer and one of the nation's largest bank-based financial services companies, headquartered in Cleveland, Ohio. The company operates through two primary segments: Consumer Bank (retail banking, wealth management, and consumer lending) and Commercial Bank (middle market and institutional banking, capital markets, and commercial real estate). As of year-end 2025, KeyCorp reported consolidated total assets of approximately $184.4 billion.
Key Financial Metrics
| Metric | 2025 Value | 2024 Value | Change |
|---|---|---|---|
| Net Income (GAAP) | $1,829 million | ($161 million) loss | Significant improvement |
| Net Income Attributable to Common Shareholders | $1,686 million | ($304 million) loss | Significant improvement |
| Earnings Per Share (Diluted) | $1.52 | ($0.32) | Turnaround to profitability |
| Total Revenue (TE) | $7,513 million | $4,619 million | +$2,894 million |
| Net Interest Income (TE) | $4,671 million | $3,810 million | +$861 million |
| Net Interest Margin (TE) | 2.69% | 2.16% | +53 bps |
| Noninterest Income | $2,842 million | $809 million | +$2,033 million |
| Noninterest Expense | $4,703 million | $4,545 million | +$158 million |
| Provision for Credit Losses | $471 million | $335 million | +$136 million |
| Net Charge-offs to Average Loans | 41 bps | 41 bps | Flat |
| Common Equity Tier 1 (CET1) Ratio | 11.78% | 11.92% | -14 bps |
| Tangible Common Equity to Tangible Assets | 8.36% | 7.02% | +134 bps |
Material Changes vs. Prior Period
- Revenue Surge: Total revenue increased significantly, driven by a $861 million increase in Net Interest Income (NII) and a $2.0 billion increase in Noninterest Income. The 2024 comparison was distorted by a $1.8 billion loss on the sale of securities due to portfolio repositioning; excluding this, noninterest income grew organically.
- Net Interest Income Expansion: NII growth was fueled by lower interest-bearing deposit costs, reinvestment of maturing low-yielding securities into higher-yielding assets, and a shift in balance sheet composition toward higher-yielding commercial loans.
- Expense Management: Noninterest expense rose 3.5% year-over-year, primarily due to a $203 million increase in personnel expenses (higher incentive compensation and investments in people), partially offset by a $26 million decrease in FDIC special assessment accruals.
- Asset Quality: Nonperforming assets decreased by $145 million to $627 million. Net charge-offs remained stable at 41 basis points of average loans. The Allowance for Loan and Lease Losses (ALLL) increased slightly by $18 million to $1.427 billion, driven by commercial loan growth and economic uncertainty, offset by strong consumer credit performance.
- Capital Deployment: The company initiated a new $1.0 billion share repurchase program in Q4 2025, repurchasing approximately $200 million (11.1 million shares) during the quarter. Dividends remained stable at $0.82 per share annually.
Guidance, Outlook, and Risks
2026 Outlook: Management expects full-year 2026 revenue to increase approximately 7% versus 2025. Net interest income is projected to grow 8-10%, with a net interest margin exit rate of 3.00-3.05%. Noninterest income is expected to grow 3-4% (5-6% on an adjusted basis). Adjusted noninterest expense is expected to rise 3-4%. Net charge-offs are forecasted between 40-45 basis points.
Strategic Priorities: KeyCorp remains focused on growing profitably, expanding targeted client relationships, managing risk effectively, maintaining financial strength, and engaging a high-performing workforce. The company recently invested an additional $100 million in customer-facing technology.
Key Risks:
- Credit Risk: Concentrated exposure in commercial and industrial loans (54% of portfolio) and commercial real estate (16% of portfolio). Risks include potential deterioration in commercial real estate fundamentals and geopolitical instability impacting borrowers.
- Market Risk: Sensitivity to interest rate fluctuations affecting net interest income and the economic value of equity (EVE).
- Operational & Cyber Risk: Reliance on third-party vendors and exposure to cyberattacks, technology failures, and data privacy breaches.
- Regulatory Risk: Extensive regulation regarding capital, liquidity, and consumer protection. Potential changes in regulatory capital rules (Basel III endgame) could impact capital requirements.
Investor Verification Checklist
- 2024 Comparison Context: Verify that 2025 results are compared against a 2024 baseline that included a $1.8 billion one-time loss on securities sales; organic growth trends are more favorable than the headline numbers suggest.
- Commercial Real Estate Exposure: Review the specific breakdown of non-owner-occupied commercial real estate loans (81% of CRE portfolio) and monitor vacancy rates and capitalization trends in the multifamily sector, which represents the largest CRE segment.
- Deposit Stability: Confirm the stability of the deposit base, noting that uninsured deposits represent 45% of total deposits, and monitor the cost of funds as the company shifts away from wholesale borrowings.
- Capital Ratios: Verify that CET1 and Tier 1 capital ratios remain well above the regulatory minimums and the stress capital buffer (3.20% as of Oct 1, 2025).
- Scotiabank Investment: Note that Scotiabank holds approximately 14.9% of KeyCorp's common shares and has the right to designate up to two directors, which may influence corporate governance and strategic decisions.