KEY

KeyCorp just dropped Q3 2026 numbers that beat the market's mood, not by a little but in the core places that matter for a regional bank. The stock came into the release roughly flat over the past month and is only up about 1% today, which is a muted reaction for a lender that just printed record quarterly revenue above US$2.0b and stronger earnings per share. The emotional read is caution. The fundamental read is firmer profits and a cleaner margin story. This is setting up a gap between what the price is reflecting today and what the income statement is starting to say. Like the earnings beat but wish you had more banks with firm profits and strong balance sheets to compare it against? Check out the list of solid balance sheet and fundamentals stocks (25 results) - Revenue (Q3 2026 vs Q3 2025): US$1,983m vs. US$1,779m (up about 11%) - Net Income (Q3 2026 vs Q3 2025, excl. extra items): US$579m vs. US$454m (up about 28%) - Basic EPS (Q3 2026 vs Q3 2025): US$0.55 vs. US$0.41 (up about 33%) - Net Interest Margin, or NIM (Q3 2026 vs Q3 2025): 2.95% compared with 2.75% (higher by 20 basis points) Ask Charlie what KeyCorp's buyback plan signals about management's confidence. The bullish pitch argues that capital strength and active deployment can turn balance sheet muscle into higher earnings power for KeyCorp. "Peer leading capital ratios with CET1 approaching 12% and marked CET1 of 10.3%, combined with planned and potential incremental share repurchases and balance sheet restructurings, create flexibility to optimize the capital base." Q3 results show this is not just intent. CET1 sits at 11.1% with marked CET1 around 9%, and the bank has repurchased more than US$1b of stock year to date, alongside redeeming US$525m of preferreds, while posting 15.1% ROTCE and record quarterly revenue. This is the blueprint being put to work. Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there. Concerns around KeyCorp's higher expense base and fee reliance can be framed simply. The worry is that tech and hiring spend get locked in while noninterest revenue cools. "Ongoing hiring of frontline producers and sustained technology spend, even after the initial ramp, risk entrenching a structurally higher cost base if fee growth from capital markets, commercial payments and wealth slows, compressing operating leverage and net margins." Q3 shows that risk is not biting yet. Expenses rose modestly while fee lines grew 12% and record revenue supported 15.1% ROTCE. The miss for bears is timing, not logic. Key still needs several quarters proving fees can consistently outrun that US$1b tech budget. KeyCorp just showed how a strong income statement can sit awkwardly beside a muted share price. The real opportunity is spotting companies that could be undervalued before the market closes that gap. - Company 1 - 21% below our estimate - designs liquid cooling and power equipment that supports high-density, heat-intensive data centre workloads. - Company 2 - 33% below our estimate - converts long-duration AI infrastructure and multicloud database agreements into recurring subscription revenue from expanding data workloads. - Company 3 - 40% below our estimate - expands a membership-focused teahouse network as consumers seek premium, lower caffeine alternatives to sugary beverages. Those are three of them. See every one of the 33 undervalued companies on it → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include KEY. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. - Earnings Per Share: $0.51, up 24% year over year. - Revenue: Record quarterly revenue over $2 billion, up 8% year over year. - Pre-Provision Net Revenue (PPNR): Record level; grew $60 million on a linked-quarter basis. - Return on Average Tangible Common Equity: 15.1%, up 260 basis points year over year. - Net Interest Income (tax-equivalent): Up 10% year over year and 4% sequentially. - Net Interest Margin: 2.95%, up 6 basis points sequentially; ~3% expected in Q4 2026. - Non-Interest Income: Up 6% year over year (includes $6 million Visa-related charge). - Non-Interest Expenses: $1.2 billion, up 2% sequentially and 5% year over year (excluding prior-year FDIC special assessment); full-year growth of 4% expected. - Provision for Credit Losses: $61 million, including $89 million (32 basis points) of net charge-offs and a $28 million reserve release. - Net Charge-Off Ratio: 32 basis points; full-year guidance tightened to 3739 basis points. - Non-Performing Asset Ratio: 55 basis points, improved 19 basis points sequentially (lowest since late 2023). - Criticized Loan Ratio: Stable at 4.9%. - Average Loans: Up $1.5 billion sequentially; full-year average loan growth guidance raised to ~5%. - Average C&I Loans: Up 4% ($2.3 billion) sequentially; period-end C&I loans up 5% ($3.3 billion); full-year commercial loan growth guidance raised to ~10%. - Line Utilization: Up 200 basis points to 33%, highest in over three years. - Average Total Deposits: Grew $3.6 billion (2.4%) sequentially; client deposits grew $2.8 billion (1.9%). - Deposit Costs: Total deposit costs up 3 basis points sequentially to 1.66%; total funding costs up 1 basis point. - Investment Banking & Debt Placement Fees: $214 million, up 27% sequentially; mid-single-digit IB fee growth expected for the year. - Trust & Investment Services Income: Up 10% year over year; wealth AUM at a record. - Cards & Payments / Service Charges: Up 8% and 5% year over year, respectively; total gross commercial payment fees up 80% year over year. - Commercial Mortgage Servicing Fees: $53 million; $50$60 million expected in Q4. - Priority Fee-Based Businesses: Investment banking, commercial payments and wealth management collectively grew 12% year over year. - Capital Ratios: CET1 ratio 11.1%; March CET1 ratio 9.0%. - Share Repurchases: $320 million repurchased in the quarter; over $1 billion year-to-date; ~$250 million remaining toward $1.3 billion full-year target. - Client Growth: Commercial clients up 3% and relationship households up 2% year over year. - Technology Budget: $1 billion for the year. - Warning! GuruFocus has detected 3 Warning Signs with KEY. - Is KEY fairly valued? Test your thesis with our free DCF calculator. Release Date: October 20, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - KeyCorp (NYSE:KEY) reported record quarterly revenue exceeding $2 billion, up 8% year over year, with EPS of $0.51, up 24% year over year. - Net interest margin expanded 6 basis points sequentially to 2.95%, driven by commercial loan growth and funding optimization. - Average total deposits grew $3.6 billion, with client deposits up $2.8 billion, allowing reduction of wholesale funding. - Asset quality improved with net charge-off ratio at 32 basis points and non-performing asset ratio at 55 basis points, the lowest since late 2023. - KeyCorp (NYSE:KEY) returned $320 million through share repurchases and remains on pace to achieve $1.3 billion full-year buyback target, with strong capital position (CET1 ratio 11.1%). - KeyCorp (NYSE:KEY) expects loan growth to moderate in the fourth quarter, with earning asset growth of $1.5-$2 billion, down from prior pace. - Deposit beta is expected to rise to mid-50s over time, which could increase funding costs and pressure net interest margin. - Investment banking fees face uncertainty, particularly in transactional real estate, where deals are slowing due to higher rates. - Noninterest expenses increased 2% sequentially and are expected to grow 4% for the full year, limiting operating leverage. - KeyCorp (NYSE:KEY) remains slightly liability sensitive to short-term rates, which could negatively impact net interest income if rates rise further. Q: Can you unpack what drove the strong deposit growth this quarter, what goes into the mid-50s deposit beta expectation, and how much opportunity there is to reduce wholesale borrowings? A: CFO Clark Khayat said average deposits grew about $3.6 billion, with $2.8 billion of that being client deposits, driven by seasonal commercial operating flows, deepening existing relationships, and new-to-bank customers that came on with loans in the first half. He expects to fund fourth quarter loan growth with client deposits and to grow deposits at or better than loans through 2027. On beta, he expects roughly low-40s in the fourth quarter, moving to the mid-50s over two to three quarters, with the hiking-cycle beta roughly symmetrical to the easing cycle. Q: What keeps you confident you can still reach the $3.25-plus NIM by the fourth quarter of 2027 despite fourth quarter noise? A: CFO Clark Khayat said the 15%-plus ROTCE target for the fourth quarter of 2027 remains the most important goal and the $3.25-plus NIM target is intact. About $24 billion of securities, swaps, and residential mortgages are repricing at a weighted average yield pickup of roughly 165 basis points, which alone drives about 70% of the required NIM expansion. Client deposit growth, funding loans with deposits, and paying down wholesale funding are the other drivers, partly offset by modest liability sensitivity. Q: What is driving the strong 5% sequential C&I loan growth and the 200 basis point rise in utilization, and how sustainable is it? A: CEO Chris Gorman said growth is broad-based by geography and industry, driven by new client acquisition and clients investing in their businesses through CapEx and small tuck-in acquisitions. He highlighted utilities, power, and renewables as an area of significant growth, with investment-grade utility clients making large investments amid the country's power and distribution shortage. Q: How much of your loan growth is tied to AI-related build-out, and how would a stall in AI financing affect customer activity? A: CEO Chris Gorman said the utility investment cycle is decades long and does not stop, though AI is a marginal driver. Key has less than $1 billion of data center exposure, directly to hyperscalers rather than to data center builders. CFO Clark Khayat added that internal sector limits apply, relationships span decades, the bank avoids merchant power generation in favor of contracted power, and AI-adjacent high-impact exposure outside data centers is also under $1 billion. Q: How should we think about the buyback appetite given capital ratios, Basel III uncertainty, and improving growth? A: CFO Clark Khayat said the bank feels good about its capital position and expects roughly 100 basis points of capital benefit from Basel III risk-weighted asset changes, likely arriving in early 2027 with 2028 implementation. Key reiterated its fourth quarter buybacks to reach $1.3 billion for the year, with more discussion in January. Buybacks remain the last decision in the capital priority stack, and the bank expects to increase its HTM percentage of the portfolio. Q: What is the outlook for investment banking and middle-market sponsor activity? A: CEO Chris Gorman said pipelines are up 5% sequentially and 20% year over year despite pull-through, and he remains comfortable with mid-single-digit fee growth this year. Deals under $1 billion are down 11% while deals over $1 billion are up 12%. Transactional real estate is the wildcard because every deal is being retraded, but he expects activity to free up once clients accept a higher-for-longer rate environment. Q: How much of the commercial loan growth comes from new banker hiring versus industry tailwinds and utilization? A: CEO Chris Gorman said banker headcount rose about 10% last year, and 90% of the middle-market bankers hired last year brought in business within their first quarter. Of the $3.3 billion in period-end loan growth, about $2 billion was utilization, reflecting clients going longer on inventory, buying smaller businesses, and investing in CapEx. Key can lend to investment-grade companies at tighter spreads because of the broader relationship, including payments, hedging, and advice. Q: What is the outlook for expenses and operating leverage over the medium term? A: CEO Chris Gorman said there are no large expense items on the horizon, with continued investment in people and technology as the tech budget rose from $800 million to $900 million to $1 billion. CFO Clark Khayat noted the full-year impact of Clearwater will make year-over-year comparisons look higher, but he sees no reason the bank could not manage to about 3% annual expense growth after 2027. Q: Is 10% NII growth the right ballpark for 2027, or should we expect an asset growth slowdown? A: CEO Chris Gorman said formal 2027 guidance will come at year-end but noted that 70% of the margin increase is now mechanical based on the $24 billion of repricing this year and next. CFO Clark Khayat said the industry trade-off between good-quality loan growth and NIM likely continues, with Key accepting some NIM dilution for accretive long-term relationships, but not at the expense of returns, EPS, or NII. Q: Are you seeing any erosion in loan demand amid higher rates, and where do you expect fourth quarter loan growth to moderate? A: CEO Chris Gorman said there is no erosion in loan demand except in transactional real estate, where some deals are clearly slowing. Loan demand remains significant and the bank is being selective while distributing most of the capital it raises. CFO Clark Khayat guided fourth quarter earning asset growth of about $1.5 billion to $2 billion, a step-down from the third quarter. Q: How are you using AI in commercial originations without undermining relationship banking? A: CFO Clark Khayat said complex commercial relationships involve heavy decision-making and paperwork, and AI can build a streamlined chassis underneath the process to augment, not replace, the relationship. CEO Chris Gorman added that commercial onboarding and servicing was fully reengineered over three years, with a goal of twice the throughput in half the time and a better client and employee experience. Q: Has there been a structural change in credit underwriting that explains the resilient credit quality? For the complete transcript of the earnings call, please refer to the full earnings call transcript.

TORONTO, Oct. 21, 2026 /CNW/ -- Scotiabank announced today that the expected net income contribution from its ownership interest in KeyCorp will be approximately CAD $96 million in Q4 2026. This contribution represents the Bank's share of KeyCorp's Q3 2026 net income, includes acquisition-related and other accounting impacts, is net of the Bank's associated funding costs and is reported on a one-month lag. Adjusting for the amortization of acquired intangible assets of approximately CAD $8 million the Bank's adjusted net income contribution from KeyCorp will be approximately CAD $104 million.1 The Chilean government recently approved a reduction in the corporate income tax rate by 4% over the next three years to 23%. The tax rate reduction will result in a one-time deferred tax asset write-down and is expected to reduce the Bank and International Banking segment's fourth quarter reported and adjusted earnings by approximately CAD $55 million. Scotiabank will release its fourth quarter financial results and host an earnings conference call on December 2, 2026. Conference call and audio webcast details will be announced closer to that date. About Scotiabank Scotiabank's vision is to be our clients' most trusted financial partner and deliver sustainable, profitable growth. Guided by our purpose: "for every future," we help our clients, their families and their communities achieve success through a broad range of advice, products, and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With assets of approximately $1.5 trillion (as at July 31, 2026), Scotiabank is one of the largest banks in North America by assets, and trades on the Toronto Stock Exchange (TSX: BNS) and New York Stock Exchange (NYSE: BNS). For more information, please visit http://www.scotiabank.com and follow us on X @Scotiabank. ____________________________ 1 Adjusted results represent a non-GAAP measure. Adjusted results remove certain specified items from revenue, non-interest expenses, income taxes and non-controlling interests. Presenting results on both a reported basis and adjusted basis allows readers to assess the impact of certain items on results for the periods presented, and to better assess results and trends excluding those items that may not be reflective of ongoing business performance. Forward-looking statements From time to time, our public communications include oral or written forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission (SEC), or in other communications. In addition, representatives of the Bank may include forward-looking statements orally to analysts, investors, the media and others. All such statements are made pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may include, but are not limited to, statements made in this document, the Management's Discussion and Analysis in the Bank's 2025 Annual Report under the headings "Outlook" and in other statements regarding the Bank's objectives, strategies to achieve those objectives, the regulatory environment in which the Bank operates, anticipated financial results, and the outlook for the Bank's businesses and for the Canadian, U.S. and global economies. Such statements are typically identified by words or phrases such as "believe," "expect," "aim," "achieve," "foresee," "forecast," "anticipate," "intend," "estimate," "outlook," "seek," "schedule," "plan," "goal," "strive," "target," "project," "commit," "objective," and similar expressions of future or conditional verbs, such as "will," "may," "should," "would," "might," "can" and "could" and positive and negative variations thereof. By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors, many of which are beyond our control and effects of which can be difficult to predict, could cause our actual results to differ materially from the expectations, targets, estimates or intentions expressed in such forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: general economic and market conditions in the countries in which we operate and globally; changes in currency and interest rates; increased funding costs and market volatility due to market illiquidity and competition for funding; the failure of third parties to comply with their obligations to the Bank and its affiliates, including relating to the care and control of information, and other risks arising from the Bank's use of third parties; changes in monetary, fiscal, or economic policy and tax legislation and interpretation; changes in laws and regulations or in supervisory expectations or requirements, including capital, interest rate and liquidity requirements and guidance, and the effect of such changes on funding costs; geopolitical risk (including policies and other changes related to, or affecting, economic or trade matters, including tariffs, countermeasures, tariff mitigation policies and tax-related risks); changes to our credit ratings; the possible effects on our business and the global economy of war, conflicts or terrorist actions and unforeseen consequences arising from such actions; technological changes, including open banking and the use of data and artificial intelligence in our business, and technology resiliency; operational and infrastructure risks; reputational risks; the accuracy and completeness of information the Bank receives on customers and counterparties; the timely development and introduction of new products and services, and the extent to which products or services previously sold by the Bank require the Bank to incur liabilities or absorb losses not contemplated at their origination; our ability to execute our strategic plans, including the successful completion of acquisitions and dispositions, including obtaining regulatory approvals; critical accounting estimates and the effect of changes to accounting standards, rules and interpretations on these estimates; global capital markets activity; the Bank's ability to attract, develop and retain key executives; the evolution of various types of fraud or other criminal behaviour to which the Bank is exposed; anti-money laundering; disruptions or attacks (including cyberattacks) on the Bank's information technology, internet connectivity, network accessibility, or other voice or data communications systems or services, which may result in data breaches, unauthorized access to sensitive information, denial of service and potential incidents of identity theft; increased competition in the geographic and business areas in which we operate, including through internet and mobile banking and non-traditional competitors; exposure related to significant litigation and regulatory matters; environmental, social and governance risks, including climate-related risk, our ability to implement various sustainability-related initiatives (both internally and with our clients and other stakeholders) under expected time frames, and our ability to scale our sustainable-finance products and services; the occurrence of natural and unnatural catastrophic events and claims resulting from such events, including disruptions to public infrastructure, such as transportation, communications, power or water supply; inflationary pressures; global supply-chain disruptions; Canadian housing and household indebtedness; the emergence or continuation of widespread health emergencies or pandemics, including their impact on the local, national or global economies, financial market conditions and the Bank's business, results of operations, financial condition and prospects; and the Bank's anticipation of and success in managing the risks implied by the foregoing. A substantial amount of the Bank's business involves making loans or otherwise committing resources to specific companies, industries or countries. Unforeseen events affecting such borrowers, industries or countries could have a material adverse effect on the Bank's financial results, businesses, financial condition or liquidity. These and other factors may cause the Bank's actual performance to differ materially from that contemplated by forward-looking statements. The Bank cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Bank's results, for more information, please see the "Risk Management" section of the Bank's 2025 Annual Report, as may be updated by quarterly reports. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2025 Annual Report under the headings "Outlook", as updated by quarterly reports. The "Outlook" and "2026 Priorities" sections are based on the Bank's views and the actual outcome is uncertain. Readers should consider the above-noted factors when reviewing these sections. When relying on forward-looking statements to make decisions with respect to the Bank and its securities, investors and others should carefully consider the preceding factors, other uncertainties and potential events. Any forward-looking statements contained in this document represent the views of management only as of the date hereof and are presented for the purpose of assisting the Bank's shareholders and analysts in understanding the Bank's financial position, objectives and priorities, and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf. Additional information relating to the Bank, including the Bank's Annual Information Form, can be located on the SEDAR+ website at www.sedarplus.ca and on the EDGAR section of the SEC's website at www.sec.gov. View original content to download multimedia: http://www.newswire.ca/en/releases/archive/October2026/21/c4064.html

MIAMI, Oct. 21, 2026 /PRNewswire/ -- Stock Preachers News Commentary - Tuesday's session showed how quickly market leadership can change hands. The Dow Jones Industrial Average climbed 529.85 points, or 1.02%, to 52,495.88, and the small-cap Russell 2000 rose 1.65%, while the Nasdaq Composite slipped 0.02% to 26,424.82 and the S&P 500 added 0.28% to 7,712.57. Some of the day's sharpest moves came from third-quarter reports at companies well outside the megacap technology names: a credit data company, a toy and game maker, an industrial manufacturer and a Cleveland-based bank. Active Companies from around the markets with current developments this week include: 3M Company (NYSE: MMM), Equifax Inc. (NYSE: EFX), Hasbro, Inc. (NASDAQ: HAS), KeyCorp (NYSE: KEY). Those four stocks gained between 4.47% and 11.33% on Tuesday, according to Stock Analysis data, and no two of them moved for the same reason. One paired a solid quarter with a new data center partnership. One jumped even after trimming its full-year revenue outlook. One raised its outlook on the strength of a single trading card game. And one posted record quarterly revenue. That spread is a useful reminder of how earnings season works. Index levels tell investors where the market closed, but the reaction to each individual report shows what investors were actually paying for, and with more companies reporting through the rest of the week, those reactions are worth watching one stock at a time. When a stock gaps higher on earnings, the chart is where traders look to see whether the move holds. The free Knowledge is Power guide from Stock Preachers shows how to read the news and the charts together, and it comes with The Roadmap market reports at stockpreachers.com. In other industry developments and happenings in the market this week include: 3M Company (NYSE: MMM) 3M reported third-quarter GAAP sales of $6.6 billion, up 1.0%, organic growth of 3.3% on adjusted sales of $6.6 billion, and adjusted EPS of $2.50 on a new basis, up 12% year over year, and it raised its 2026 adjusted EPS guidance to $9.10 to $9.15, incorporating that new basis. The company also entered an expanded strategic commercial relationship with a major cloud and e-commerce company to deploy and scale 3M's optical connectivity and other data center related products, and issued that company a warrant to purchase up to 3.2 million shares of 3M common stock based upon the achievement of $6 billion in cumulative sales of those products over the next seven years and other event-based milestones. 3M shares rose 5.78% to $171.37. "We delivered another quarter of strong results, including solid sales growth, continued margin expansion, double-digit EPS growth, and robust free cash flow," said William Brown, 3M Chairman and CEO. Equifax Inc. (NYSE: EFX) Equifax reported third-quarter revenue of $1.693 billion, up 10%, with 9% local currency revenue growth, and adjusted EPS of $2.26, up 11%. U.S. Mortgage revenue grew 15%, although the company said the mortgage market weakened in the latter half of the quarter as mortgage interest rates increased substantially, and it reduced the midpoint of its 2026 revenue guidance to $6.661 billion. Its adjusted EPS guidance of $8.50 per share is a reduction of only $0.04 per share at the midpoint and well within its previous range, according to the company. The shares rose 11.33% to $176.54. "Equifax delivered a strong third quarter performance executing on our EFX2028 Strategic Priorities with reported revenue of $1.693 billion, up 10% on a reported basis, with 9% local currency revenue growth," said Mark W. Begor, Equifax Chief Executive Officer. Hasbro, Inc. (NASDAQ: HAS) Hasbro reported a 15% increase in third-quarter revenue, driven by growth in Wizards and Digital Gaming, up 31%, Consumer Products, up 4%, and Entertainment, up 9%. Magic: The Gathering revenue rose 34% and surpassed $600 million in a quarter for the first time. Adjusted operating profit was $541 million, up 52%, and adjusted net earnings were $2.90 per diluted share. Hasbro raised its 2026 outlook for total revenue growth to 7% to 9% in constant currency, from 5% to 7%, and for adjusted EBITDA to $1.575 billion to $1.625 billion, from $1.45 billion to $1.50 billion. The shares rose 11.20% to $109.52. "Inspiring a lifetime of play is our superpower, and this quarter showed what it can do," said Chris Cocks, Hasbro Chief Executive Officer. "We delivered a fourth consecutive quarter of double-digit revenue growth, and Magic: The Gathering topped $600 million in quarterly revenue for the first time." KeyCorp (NYSE: KEY) KeyCorp reported third-quarter net income of $537 million, or $0.51 per diluted common share, with diluted EPS up 24% year over year. Revenue reached a record $2.04 billion, up 8% from a year earlier and 4% from the prior quarter, net interest margin widened to 2.95%, up 20 basis points year over year, and the bank repurchased $320 million of common shares during the quarter. The shares rose 4.47% to $20.81. "Our third quarter results reflect the strength of Key's relationship-driven franchise, the disciplined execution of our strategy, and the momentum we are building across the business," said Chris Gorman, Chairman and CEO of KeyCorp. Earnings can move a stock 10% or more in a single session, in either direction. Learn to spot the setups before and after reports like these with the free Stock Preachers guide, plus The Roadmap market reports, at stockpreachers.com. Contact Information: stockpreachers.com Media Contact: [email protected] DISCLAIMER: Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is not a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. This article is independent news commentary. Stock Preachers is wholly owned and operated by Market Equities Limited ("MEL"), a company incorporated under the laws of Ireland. MEL has not been paid by any company mentioned in this article. MEL and its owners, operators, directors, and affiliates do not currently own any shares of the companies mentioned in this article, but reserve the right to, and will, buy and sell shares of those companies at any time without further notice. Daily price changes are from the October 19, 2026 close to the October 20, 2026 close based on Stock Analysis data. Company guidance is as stated by the companies and may change. Information is drawn from company news releases and filings, government and industry data, published reporting and third-party data believed to be reliable, but its accuracy is not guaranteed. Investing in securities carries risk, including the loss of some or all of your investment. This document is governed by the laws of Ireland. View original content to download multimedia:https://www.prnewswire.com/news-releases/outside-big-tech-tuesdays-earnings-winners-jumped-as-much-as-11-302915344.html View original content to download multimedia: http://www.newswire.ca/en/releases/archive/October2026/21/c5057.html

- Interested in KeyCorp? Here are five stocks we like better. - KeyCorp reported strong third-quarter results, with earnings per share up 24% year over year to $0.51, record revenue above $2 billion and return on average tangible common equity reaching 15.1%. - Commercial lending drove growth: average commercial and industrial loans rose 4% sequentially, while line utilization reached its highest level in more than three years. The company raised its 2026 loan-growth outlook and expects net interest income to increase approximately 10%. - Credit quality and funding improved, with net charge-offs falling to 32 basis points and deposits rising faster than loans. KeyCorp also repurchased $320 million of shares during the quarter and plans significant technology and artificial-intelligence investments. - 5 Stocks Showing Why Pricing Power Matters More Than Government Money KeyCorp (NYSE:KEY) reported third-quarter 2026 earnings of $0.51 per share, up 24% from a year earlier, as record revenue, commercial loan growth and improved credit quality supported results. Chairman and Chief Executive Officer Chris Gorman said quarterly revenue exceeded $2 billion, an 8% year-over-year increase, while return on average tangible common equity rose above the company's 15% target threshold. "We reported record quarterly revenue of over $2 billion," Gorman said, adding that KeyCorp generated return on tangible common equity exceeding 15% as it works toward sustaining that level by the end of 2027. The company reported return on average tangible common equity of 15.1%, up 260 basis points from the prior year. → Berkshire Just Backed This Little-Known Stock—Should You Chase It? - 3 Lesser-Known Quantum Plays the Market May Be Overlooking Right Now Chief Financial Officer and Head of Technology Clark Khayat said tax-equivalent net interest income increased 10% year over year and 4% from the second quarter. Net interest margin expanded 6 basis points sequentially to 2.95%, helped by commercial loan growth, deposit growth, funding optimization, securities and swap repricing, and an additional day in the quarter. Average loans rose $1.5 billion sequentially. Average commercial and industrial loans increased $2.3 billion, or 4%, while period-end C&I balances increased $3.3 billion, or 5%. Gorman said growth was broad-based across industries and geographies, driven by new client acquisition, greater line utilization and business investment. → These 3 Green Stocks Have a Growth Story That Goes Far Beyond Washington - Keysight: The AI and Defense Stock Seeing Big Price Target Boosts C&I line utilization rose 200 basis points to 33%, the highest level in more than three years. Gorman said clients were using credit lines to support inventory, capital expenditures and small tuck-in acquisitions. He also pointed to utilities, power and renewable-energy clients as an area of significant growth, saying investment-grade utilities are making major investments in generation and distribution. Management said it expects some moderation in loan growth during the fourth quarter. Gorman said loan demand remains substantial, though transactional real estate activity has slowed as borrowers and investors adapt to higher financing costs. → Broadcom's CEO Sees Years of AI Demand But Warns of a Bigger Threat to the Boom The company updated its 2026 outlook, now expecting: - Approximately 10% full-year net interest income growth, narrowed from prior guidance of 9% to 11%. - Approximately 5% average loan growth, compared with previous guidance of 4% to 5%. - Approximately 10% average commercial loan growth, versus a prior outlook of 8% to 10%. - Net charge-offs of 37 to 39 basis points for the year, improved from prior guidance of 40 to 45 basis points. - Fourth-quarter net interest margin of about 3%. Khayat reaffirmed the company's target for net interest margin of at least 3.25% in the fourth quarter of 2027. He said about $24 billion of securities, swaps and residential mortgages are expected to roll off through the end of 2027, with a projected weighted-average yield pickup of roughly 165 basis points based on current rate assumptions and forward-starting swaps. Average deposits increased $3.6 billion, or 2.4%, from the prior quarter, exceeding loan growth and allowing KeyCorp to reduce wholesale funding. Client deposits, excluding certificate of deposit growth, rose $2.8 billion, driven largely by commercial operating balances. Total deposit costs increased 3 basis points to 1.66%, while total funding costs increased only 1 basis point. Khayat said third-quarter growth included expected seasonal commercial deposit flows, deeper relationships with existing customers and deposits from clients added earlier in the year. The company had previously expected at least $3 billion of client deposit growth during the second half of 2026. Khayat said KeyCorp nearly reached that figure in the third quarter alone and now anticipates additional client deposit growth. The company expects fourth-quarter loan growth to be fully funded by client deposits and said it expects deposits to grow at or above loan growth through 2027. Non-interest income increased 6% from a year earlier, despite a $6 million Visa-related charge in the quarter. Investment banking and debt placement fees totaled $214 million, increasing 27% sequentially on stronger merger-and-acquisition and syndication activity. Gorman said investment-banking pipelines rose 5% from the second quarter and 20% year over year despite strong third-quarter conversion. He reiterated KeyCorp's expectation for mid-single-digit investment-banking fee growth in 2026 and said the company remains comfortable with its stated goal of reaching $1 billion in annual investment-banking revenue by 2028. Management said middle-market M&A activity has yet to normalize. Gorman noted that transactions under $1 billion were down 11% year to date, while deals above $1 billion were up 12%. He said volatility in interest rates and forward rate expectations has contributed to the slower pace of middle-market transactions, although the company sees a significant backlog of potential activity. Other fee categories also grew. Trust and investment-services income increased 10% year over year on higher market values and positive client flows. Cards and payments fees increased 8%, while service charges on deposit accounts rose 5%. Commercial mortgage servicing fees were $53 million, and the company expects $50 million to $60 million in fourth-quarter servicing fees. Credit quality improved during the quarter. Net charge-offs were $89 million, or 32 basis points of average loans, while nonperforming assets declined $191 million sequentially to 55 basis points, the lowest level since late 2023. The criticized loan ratio was unchanged at 4.9%. Khayat said the provision for credit losses was $61 million, including a $28 million reserve release. The release reflected improved portfolio performance, scenario effects and a continued shift toward higher-credit-quality relationships, partially offset by qualitative reserve builds related to economic and geopolitical uncertainty. KeyCorp's CET1 ratio was 11.1% at quarter-end, with a marked CET1 ratio of 9%. The company repurchased $320 million of common stock during the quarter and has repurchased more than $1 billion year to date. It has about $250 million remaining under its 2026 target of $1.3 billion in share repurchases. Gorman said capital priorities remain supporting clients, investing in people and technology, maintaining the dividend and returning excess capital through buybacks. He said traditional whole-bank mergers and acquisitions are not a priority, though the company continues to pursue tuck-in acquisitions such as Clearwater. KeyCorp said it is investing $1 billion in technology during 2026 and is expanding artificial-intelligence initiatives across commercial onboarding and servicing, commercial originations, consumer servicing and software engineering. Management said the effort is intended to simplify processes, improve productivity, reduce fraud, accelerate client onboarding and enhance risk controls. Looking ahead, Gorman said KeyCorp expects record revenue and pre-provision net revenue for 2026 and believes the company is positioned for another year of "outsized" revenue and earnings growth in 2027, though formal 2027 guidance is expected at year-end. KeyCorp is a financial services company headquartered in Cleveland, Ohio, and the parent company of KeyBank National Association. Through KeyBank, it provides retail and commercial banking services to individuals, businesses, institutional clients and government entities. KeyBank's offerings include checking and savings accounts, consumer lending, mortgages, home equity financing, credit cards, business loans, treasury management and payment services. The company also provides investment banking and capital markets services through KeyBanc Capital Markets, as well as wealth management, investment management and personal financial planning services. KeyCorp traces its history to 1825, when the institution that became KeyBank was established in Albany, New York. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What KeyCorp (KEY) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Image source: The Motley Fool. Tuesday, Oct. 20, 2026 - Chairman and Chief Executive Officer - Chris Gorman - Chief Financial Officer and Head of Technology - Clark Khayat - Chief Risk Officer - Mo Ramani - Director of Investor Relations - Troy Gates Operator: Good morning and welcome to KeyCorp's third quarter 2026 earnings conference call. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. As a reminder, this conference is being recorded. I would now like to turn the conference over to Troy Gates, KeyCorp's Director of Investor Relations. Please go ahead. Troy Gates: Thank you operator, and good morning everyone. I'd like to thank you for joining KeyCorp's third quarter 2026 earnings conference call. I'm here with Chris Gorman, our Chairman and Chief Executive Officer, Clark Khayat, our Chief Financial Officer and Head of Technology, and Mo Ramani, our Chief Risk Officer. As usual, we will reference our earnings presentation slides, which can be found in the investor relations section of the key.com website. In the back of the presentation, you will find our statement on forward-looking disclosures and certain financial measures, including non-GAAP measures. This covers our earnings material as well as remarks made on this morning's call. Actual results may differ materially from forward-looking statements, and those statements speak only as of today, October 20, 2026, and will not be updated. With that, I will turn it over to Chris. Chris Gorman: Thank you Troy, and good morning everyone. We reported third quarter earnings of $0.51 per share, up 24% year-over-year, reflecting the strength of Key's relationship driven franchise, the disciplined execution of our strategy, and the momentum we continue to build across the business. We reported record quarterly revenue of over $2 billion, which represents 8% year-over-year growth. PPNR growth of $60 million on a linked quarter basis, and importantly, return on tangible common equity that exceeded 15%. As we continue to make significant progress with respect to achieving and sustaining a 15% plus return on tangible common equity by year end 2027. On our path to achieving our current long-term target between 16% and 19%. We continue to deliver on the commitments we have made. Our relationship focused business model continues to differentiate Key and was evident again this quarter. Our deposit franchise continues to perform well in a competitive environment. Average total deposits grew $3.6 billion, while interest bearing deposit costs increased only three basis points during the quarter. Overall funding costs rose just one basis point. Net interest margin expanded six basis points sequentially to 2.95%, reflecting the continued fixed asset repricing and funding optimization. Our capital markets team delivered strong results with investment banking and debt placement fees increasing 27% sequentially with growth in M&A and syndications. Asset quality remains strong. Our net charge-off ratio improved to 32 basis points and our non-performing asset ratio improved 19 basis points to 55 basis points. During the quarter, we repurchased $320 million of common stock, keeping us on pace to achieve our full year share repurchase target of $1.3 billion. We remain comfortable with our current capital levels. With strong organic capital generation, we will continue to take a measured approach to capital management. As a reminder, our capital priorities remain unchanged. First, we will continue to support our clients and prospects. Second, we will continue to invest in people and technology. Third, we will maintain our strong dividend. Finally, we will return capital to shareholders through share repurchases. While we continue to successfully complete tuck-in acquisitions like Clearwater, traditional whole bank M&A is not a priority. The economic environment remains constructive and our momentum continues to be strong. We are seeing healthy client engagement and activity across our businesses. We continue to organically grow clients. In the third quarter, commercial clients increased 3% and relationship households increased 2% from the prior year. Commercial loan growth remains strong and broad-based by both industry and geography. Period-end C&I loans increased 5% sequentially, reflecting both new client acquisition and a 200 basis point increase in line utilization to 33%, the highest level in over three years. The line utilization increase is reflective of clients continuing to invest in their businesses. Our consumer trends remain strong and resilient as our clients continue to benefit from a healthy labor market and the wealth effect. We continue to see strong performance and are gaining share across our priority fee-based businesses, investment banking, commercial payments and wealth management. In the third quarter, these businesses collectively grew 12% compared to the prior year. Investment banking pipelines are up 5% sequentially, despite significant pull-through in the third quarter, and remain at historically elevated levels, supported by record M&A pipelines. While middle market M&A activity has yet to normalize, we continue to see significant client engagement and remain confident in our expectation for mid-single digit investment banking fee growth this year. In commercial payments, total gross payment fees increased 8% compared to the prior year. We continue to scale embedded banking and are encouraged by our trajectory. In wealth, assets under management reached another record this quarter. Wealth remains a significant opportunity for us as we are less than 10% penetrated with respect to our current base of mass affluent households who bank with Key. We continue to invest in people and technology. We are attracting top talent and continue to hire frontline bankers. Our $1 billion technology budget this year has supported new product and service capabilities while allowing us to position the company for the future. We continue to embed AI in enterprise-wide end-to-end processes, currently targeting four domains: commercial onboarding and servicing, commercial originations, consumer servicing, and software engineering. Earlier this year, Clark assumed leadership of our technology organization, creating even tighter alignment among our business strategy, operating model, and technology investments. Under his leadership, we are accelerating the deployment of AI across these domains to simplify processes, increase productivity, and help our teammates spend more time delivering advice and solution to clients. While we remain in the early stages, we are encouraged by the opportunity in front of us. As we look ahead, the geopolitical and macro outlook remain uncertain. At Key, we remain focused on managing what we can control and remain well-positioned to perform through a range of potential economic scenarios. While our results are strong, we acknowledge there is uncertainty in the broader market. We are actively managing the risks and maintaining discipline throughout the bank. We are well positioned for a range of potential rate scenarios and continue to intentionally manage our balance sheet to be fairly neutral from an interest rate perspective. In summary, we are proud of our third quarter performance and the sustained momentum across our business. These results would not be possible without the contributions from each of our teammates. Thank you for your dedication that will result in what we expect to be both a record revenue and record PPNR year in 2026. We are currently in the midst of our planning process, and will have more to say on 2027 at year-end. But with our strong trajectory and healthy pipelines, I believe we are well positioned to drive another year of outsized revenue and earnings growth in 2027. With that, I'll turn it over to Clark. Clark Khayat: Thanks, Chris. As Chris highlighted, continued execution of our relationship-based strategy drove strong performance in the quarter. For the third quarter, revenue exceeded $2 billion. PPNR reached a record level and improved returns inclusive of improving credit quality. Starting on slide 4. We reported third quarter earnings per share of $0.51. Revenue was up 8% year-over-year, while non-interest expenses increased by 5% when excluding the FDIC special assessment in the year-ago quarter. Tax-equivalent NII increased 10% year-over-year and 4% sequentially. Non-interest income increased 6% year-over-year. Provision for credit losses was $61 million, including $89 million or 32 basis points of net charge-offs and a reserve release of $28 million. The net release reflected improved portfolio performance, scenario impacts, and continued remix to higher credit quality relationships, partially offset with some qualitative builds to reflect ongoing economic and geopolitical uncertainty. We remain well reserved for a range of economic outcomes. Return on average tangible common equity increased 260 basis points year-over-year to 15.1%. Moving to the balance sheet on slide 5. Average loans were up $1.5 billion sequentially. Average C&I loans increased 4% or $2.3 billion, partly offset by the runoff of low-yielding consumer loans. On a period end basis, C&I loans increased by $3.3 billion or 5%. As Chris mentioned, growth came from a combination of broad-based new client acquisition and an increase in utilization. Turning to slide 6. Average deposit balances increased $3.6 billion or 2.4% sequentially, exceeding loan growth and allowing us to reduce wholesale funding. Client deposits, which exclude growth from CDs, grew $2.8 billion or 1.9%, driven by growth in commercial operating balances. Last quarter, we communicated expectations for $3 billion or more of client deposit growth in the second half of 2026, and based on the growth in the third quarter, we have nearly achieved that. While we continue to monitor deposit dynamics in a higher rate environment, we now expect incremental client deposit growth beyond the original $3 billion, and we expect our loan growth for the remainder of 2026 to be fully client deposit funded. Total deposit cost increased three basis points sequentially to 1.66%, and total funding cost rose just one basis point. If market expectations materialize as currently estimated, we expect beta in the rate hiking cycle to be roughly symmetrical to the rate easing cycle, reaching a mid-fifties cumulative beta over time with a beta lag in the first few quarters. Turning to the drivers of NII and NIM on slide seven. Taxable equivalent NII was up 4% and net interest margin of 2.95% increased six basis points from the prior quarter. The increase was driven by commercial loan growth, funding optimization via strong client deposit growth, swaps and securities repricing at higher rates, as well as an additional day in the quarter. We continue to manage our balance sheet to a fairly neutral interest rate position over a 12-month horizon, which we view as prudent from a risk management perspective, given continued rate uncertainty and our focus on driving performance through the cycle. On slide eight, non-interest income increased 6% year-over-year, including the negative impact of a $6 million Visa-related charge in the current quarter. Investment banking debt placement fees were $214 million, a 27% increase sequentially driven by M&A and syndication activity. Trust and investment services income grew 10% year-over-year, reflecting higher market values and positive net flows. Cards and payments and service charges on deposit accounts increased by 8% and 5% year-over-year respectively, both reflecting strong commercial payment activity. Corporate services fees were stable compared to the year ago quarter, as higher loan commitment and client FX fees were offset by lower hedging activity. Commercial mortgage servicing fees were $53 million. At quarter end, we were named primary or special servicer on approximately $735 billion of commercial real estate loans, of which about $270 billion is in special servicing. Active special servicing third party assets were flat sequentially at $10 billion, about half of which is office. We continue to expect $50 million-$60 million of commercial mortgage servicing fees for the fourth quarter. On slide nine, third quarter non-interest expenses were $1.2 billion, up 2% sequentially. The increase was driven by investments in people and technology, higher incentive compensation related to strong fee growth, and an additional day in the quarter. We continue to expect full year expense growth of 4%. A portion of our technology investment is focused on leveraging AI to create a more efficient and scalable operating model. As Chris mentioned, in addition to broad-based adoption of AI tools, we've selected four end-to-end processes against which to apply these capabilities at scale. The confluence of well-understood processes with supporting data and an opportunity to reimagine client and employee experiences is proving to be a valuable recipe for AI tools. We are still early in the process but are optimistic that we can generate growth and efficiency while improving risk and controls. In commercial onboarding and servicing, we're focused on delivering a faster client onboarding experience, which speeds our time to revenue generation while simplifying client support. In consumer servicing, we're deploying AI to automate high volume tasks, reduce fraud, and enable faster issue resolution. In commercial originations, we're streamlining the credit and collateral processes to improve client and banker experiences and accelerate cycle times. In software engineering, we're transforming how we build, deliver, and support technology through AI to achieve greater speed, quality, resiliency, and efficiency. In summary, I'm energized by the opportunities ahead and what AI can unlock across Key. Turning to slide 10, credit quality is broadly improving as our focus on disciplined client selection, prudent underwriting standards, and deep domain expertise in helping clients navigate the uncertain environment was evident this quarter. Net charge-offs were $89 million, or an annualized 32 basis points of average loans. As expected, non-performing assets decreased $191 million, or 19 basis points sequentially, and at 55 basis points is the lowest since late 2023. The decrease was driven by broad-based portfolio resolutions. The criticized loan ratio was stable at 4.9%. Moving to slide 11, our CET1 ratio was 11.1%, and our marked CET1 ratio was 9% at quarter end. Since the start of the year, we've repurchased over $1 billion of shares and have approximately $250 million remaining to complete our targeted $1.3 billion of repurchases in 2026. Moving to slide 12, we are updating our 2026 guidance. We are tightening our full year net interest income growth outlook to approximately 10% compared to the prior guide of 9%-11%. We now expect average loan growth to increase approximately 5% compared to the prior guide of 4%-5%, and average commercial loan growth of approximately 10% compared to the prior guide of 8%-10%. We see full year net charge-offs coming in the range of 37-39 basis points compared to the previous guidance of 40-45 basis points. The outlook reflects the improving credit trends we've seen in our portfolio to date. We now expect to generate a net interest margin of approximately 3% in the fourth quarter of 2026, reflecting average earning asset growth of approximately $1.5 billion-$2 billion from the third quarter. The updated guide is primarily a function of continued commercial loan growth and preferred capital optimization, actions that are accretive to EPS and returns but are slightly dilutive to NIM. Compared to our guidance in the second quarter, we now expect fourth quarter earning assets excluding AOCI to be approximately $2.5 billion higher. This increases NII and return but reduces NIM approximately two basis points. We will continue to execute our relationship-based strategy to drive attractive returns from new and existing clients. With respect to preferred capital, we redeemed $525 million of Series D preferreds back in September, and we're planning to opportunistically issue new preferreds in the second half of the year. Based on prevailing market conditions, however, we've not yet made the decision to issue new preferreds. We'll continue to watch the market and act accordingly to optimize our capital structure. As a result, we'll see lower preferred dividend payments in Q4, which from an earnings standpoint, will be partially offset by slightly lower NII. The net result is de minimis on EPS but will impact NIM by about one basis point. All other guidance remains unchanged. In summary, we continue to see strong momentum in our business through the fourth quarter and expect to deliver on our commitments while navigating a dynamic and evolving environment. With that, I'd like to now turn the call back to the operator to provide instructions for the Q&A session. Operator? Operator: Thank you, Clark. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Please kindly limit yourself to one question and one follow-up. If you have any further questions, please rejoin the queue. Our first question today is from Manan Gosalia from Morgan Stanley. Your line is now open. Please go ahead. Manan Gosalia: Hey, good morning. Clark, you saw a nice acceleration in average deposit growth this quarter. Can you unpack what drove that deposit growth and what goes into your expectations for that mid-50s deposit beta that you outlined? Actually, maybe if you can layer onto that, given that the deposit growth was higher than loan growth this quarter, how much opportunity is there to reduce the reliance on wholesale borrowings over the next few quarters? Yep. Thanks, Manan. As you noted, we grew deposits by about $3.6 billion on average in the quarter, with $2.8 billion of that being client deposits. As you noted, deposit costs were only up about three basis points. On the second quarter call, we noted we had some visibility into seasonal deposit flows, primarily commercial operating deposits. Clark Khayat: That view supported our guide at the time of $3 billion of client deposit growth in the second half. We obviously saw that and more in the third quarter alone, driven not just by the seasonal growth, but by deepening deposit relationships with the existing clients and adding deposits from new to bank customers, which would have come on with loans in the first half of the year. Overall, very pleased with the trajectory on the deposit side. I'd say the trends we're seeing now continue to be encouraging, which gives us confidence that we can fund our 4Q loan growth with client deposits. Given the rate hike in September, we don't expect the same modest price increase of three basis points, but we do feel like we can effectively manage the cost along with the balance growth. Competition at this point is certainly intense, but it has been competitive all year, and we haven't really seen that intensity increase yet. Increased industry loan demand could ratchet that up, although we expect some of the loan growth for us to moderate actually in 4Q. To be clear, I'd say we aren't taking a victory lap here, and we're definitely not getting complacent. The deposit gain requires consistent effort, so we're not going to let off the gas at all. I would say our focus on primacy, including deposits and commercial payments over the last decade plus, is serving us well. Our visibility here is based on name-by-name, bottoms-up analysis, and that's really what's driving our confidence. To your point about deposit growth outpacing loan growth in the quarter, we mentioned we expect to fund that loan growth with deposits in the fourth quarter, and I think going forward through 2027 would expect to grow deposits at or better than loan growth. Manan Gosalia: Got it. Then maybe on the flip side, on the loan growth side the C&I growth was really strong this quarter at up 5% Q on Q. I think you touched on this in your remarks a little, but can you expand on what's driving that strength, especially given that the utilization rate is up 200 basis points Q on Q? How sustainable is that, and how should we think about that into 2027? Chris Gorman: Yeah, Manan, it's Chris. Good morning. It's broad based. As I mentioned, it's broad based from a geographic perspective. It's broad based from an industry perspective. We're growing new clients, which obviously is helpful. The other thing that obviously is driving it is people are investing in their business. We've been looking forward to that happening for some time. You're seeing people spending money on CapEx, people buying small tuck-in acquisitions, and we're expanding the customer base. It's pretty broad based. The one area that I would point out where we've had really significant growth, and it's an area that we're really strong in, is our utilities, power, and renewable. You can imagine with all the discussion about the shortage of electrons in this country and the shortage of distribution, our good clients that are investment-grade utilities are also making some pretty significant investments. Operator: Thank you, Manan. Our next question is from Scott Siefers from TD Securities. Your line is now open. Please go ahead. Scott Siefers: Morning, guys. Thanks for taking the question. Clark, I was hoping you could please help to put a finer point on the margin progression. Sounds like there will be some noise in the fourth quarter, and then you will also be impacted by the strong loan growth you are seeing. But you are sticking with the 3.25% plus margin by 4Q 2027, which is great. Maybe once we get through that transitory noise in the fourth quarter, maybe if you can help bridge the gap between now and end of 2027. What keeps you confident that you can still get there over the next several quarters? Clark Khayat: Sure. Thanks, Scott, and welcome back to the call. First, maybe let me just- Scott Siefers: Thank you. Clark Khayat: zoom out a little bit and start with the broader objective of ROTCE. I would just remind you the most important target we have out there for the fourth quarter 2027 is delivering 15%+ ROTCE. Based on what we are seeing today and the performance we are delivering, we remain highly confident we are going to achieve that. We are also maintaining, as we said, and you noted, the 3.25%+ NIM for 4Q 2027, so that remains intact as well. I would just note that when we first offered that target, the environment was quite different, and we did note at the time that we thought we had multiple paths to achieve that, and we still believe that to be true. As we build the bridge, I would say the most valuable opportunity for sure is the fixed asset repricing opportunity. Between now and the end of 2027, we have about $24 billion of security swaps and resi mortgages rolling off. Given the current view of rates and our forward starting swap positions, we see a weighted average yield pickup of about 165 basis points there. If you consider that, say that alone drives roughly 70% of the NIM expansion required to hit that target. More mechanical than it was a quarter ago, and that is just a function of the rate environment. The second driver would be client deposit growth, which we just covered a little bit. As we have discussed, we have seen great client deposit growth and attractive rates, and we feel we can fund our loan growth going forward with deposits. Third, and I would say probably more of an expansion of the second, we think we can actually grow deposits, client deposits, faster than loans here, which allows us to pay down wholesale funding, and again, would be accretive to that NIM expansion there. Those deposit benefits are going to be partially offset by rate hikes given our modest liability sensitivity on the short end of the curve. Net, we think those components get us there. I think it is important to remember we are managing the balance sheet to be fairly neutral in rate moves here, and the pressure on deposits from higher rates often carries with it better reinvestment rates on the fixed asset repricing. So there is a little bit of a trade in both directions there. As I noted, the move up in rates, particularly over the last month or so, has made achieving the target more mechanical than it was just a quarter ago. Hopefully that provides you a little bit of detail. Scott Siefers: Yeah, that is perfect, and thank you for that. Then maybe, Chris, one for you. Investment banking, great to see the better pull through. I guess the change since last quarter is maybe there has been a little bit, I guess, just this little air pocket in overall activity industry wide. Maybe just sort of your updated thoughts. It was good to hear you reiterate the full year expectations for investment banking, but maybe sort of where are we? Where do you feel more and less confident than you may have felt, say, 90 days or so ago? Chris Gorman: Sure. In this business, I never really, Scott, as you know, focus a whole lot on one quarter or the other. The business just broadly has a lot of trajectory. As you know, it is a business that is a mature business that we have had for some time. We have a public goal of getting to $1 billion a year by 2028. We are very comfortable that we can hit our mid-single-digit number. Pipelines continue to be strong. The pipelines, in spite of the pull through, are up 5% on a linked quarter basis and 20% year-over-year. Now, the one piece of that, and I am still comfortable with our guidance, by the way, the one piece of that we have to watch is the real estate piece, because transactional real estate, the cost of capital is such a significant part of those deals. Every piece of transactional real estate right now is getting retraded. I personally think that we will get through this because I think once people come to grips with the fact that we are in a higher for longer environment, I think people will transact. But that is the one wildcard. As you know, I feel good about the business. We have been building it for a long time, and we have got a bunch of great clients. Operator: Thank you, Scott. Our next question is from Ebrahim Poonawala from Bank of America. Your line is now open. Please go ahead. Ebrahim Poonawala: Hey, good morning. Chris Gorman: Good morning. Ebrahim Poonawala: Maybe just, Chris, following up on, I think you mentioned power utility driving loan growth or contributing meaningfully. It sounds like that is sort of a second derivative of when we think about the whole AI CapEx and compute build-out. Maybe talk to us around your visibility into the amount of growth that's being driven AI related, second, third derivative versus loan. And where I'm trying to get to is, and I'd love your perspective, if we see a stalling in AI financing in the markets and things slow down, does it meaningfully then slow down when we think about just customer activity across the board for Key and your peers? Chris Gorman: That's a great question. There's a lot in that. Let me unpack that a little bit. The first part of the question is secondary and tertiary derivatives of the AI build-out. I would contend that the investment cycle for these publicly owned utilities is one that's literally decades long, and we've been deficient in the amount of power that we've had. I don't think that stops. Is part of it on the margin driven by AI? Yes. I mean, obviously, those are big consumers of power. With respect to our book of business, as it relates to data centers specifically, we have less than $1 billion of exposure, and that exposure is directly to the hyperscalers as opposed to directly to people just building out the data centers. I do think there are long tentacles to the build-out. I think if you think about, for example, trying to buy a diesel generator, right now you will have to wait 24 or 36 months in order to get one. I do think the tentacles of the build-out are fairly long. It is hard for me to calculate for you exactly what the primary, secondary, and tertiary factors are there, but I think the tentacles are long. Mo Ramani: Chris, I think that is well said. Maybe a couple other points from a risk management perspective. One, we do have internal sector limits, so utilities would, of course, fall into that. These relationships typically span over three decades. Again, we have been very careful with clients that are tried and true. We are not really focused on merchant power generation. Again, we are looking for contracted power. Again, to Chris's point, really there is a need for electrons regardless of the AI build-out. Things like our largest sponsors are less than 7% of our portfolio. Again, take or pay contracts and the like. Again, we feel good about the exposure. Again, just a reminder, there are internal limits. On the AI front, too, we did do a bit of an exercise relative to what sectors could be what I call adjacent. We did kind of carve out what could be higher impact, what could be kind of neutral, and then what are some areas to watch. Again, in terms of high impact on what I call AI adjacency outside of the data center point that Chris made, that number is very small, less than $1 billion of potential disruption there in business services. So we are looking at it from multiple angles, and we do feel comfortable with the exposure. Ebrahim Poonawala: That is helpful. Maybe just a separate, I know you talked about capital markets looking into the fourth quarter, but just in terms of momentum in capital markets, if there are investments you have made that should help as we look into next year. Maybe, Chris, give us a mark to market on sponsor activity. I think you mentioned about 40% of the business is exposed to sponsors. Are higher rates more sort of geopolitical headlines? Is all that again serving as a wet blanket on activity there? Chris Gorman: Yeah, I do think the mid-market, which as you correctly point out, sponsors are a big part of, is yet to normalize. I'll give you a statistic. Deals under $1 billion this year are down 11%, whereas deals over $1 billion are up 12%. However, as you well know, there's an inverse relationship between your cash-on-cash return and the holding period. I'm optimistic that those deals will start to come out, and we're obviously when we talk about our pipeline, these are where we have a signed engagement letter and people are spending a lot of time on it. Obviously, when you have dislocations in the market like we had in the debt market over the last month, that obviously puts things on hold. But once people come to grips with we're in a higher-for-longer, pick your tenure, 5%, 6%, I think people will transact there. Yes, it's still depressed. Yes, it's in the backlog. And yes, I think it'll start to free up. Clark Khayat: And maybe just to respond to your question about investments, Ebrahim, just a reminder that we've added a fair amount of bankers over the last two years. Those could hit the ground running pretty well. And then obviously we closed Clearwater here in the quarter, so we're continuing to build capability by market and industry. Operator: Thank you, Ebrahim. Our next question is from Mike Mayo from Wells Fargo. Your line is now open. Please go ahead. Mike Mayo: Hi. Just more on the commercial loan growth. I am trying to separate what is the industry tailwind from what is the drawdown, which a lot of banks are not seeing the loan utilization improve, and new business as a result of your hiring. I see three different parts of that. I know you hired a lot of commercial bankers. Remind us how much you hired, what you are still hiring, and how much they contributed to the loan and deposit growth. Thank you. Chris Gorman: So there is a lot in that, Mike. Good morning. Let me start with the final part of the question. Last year we increased our number of bankers on the ground by around 10%. We monitor very closely their ramp up. We have always said that it takes 12 to 18 months for bankers to be successful. We were very pleased in that the cohort of middle market bankers that we hired last year, 90% of them brought in a piece of business. That does not mean that they were profitable to hire, but brought in a piece of business in the first quarter. We are pleased with that trajectory. As you know, we have hired groups of people very successfully and integrated them. With respect to bifurcating what is utilization and what is other loan growth. If you look at the end of period, $2 billion of our $3.3 billion in loan growth was utilization. I think that utilization plays out in a few areas. One is, as I have said for some time, I expected people to start to go a little longer on inventory in the environment that we are in. I think we are starting to see that. I think some of the utilization was actually people actually buying smaller businesses, and you can see strategic moves there. Also we have talked about ever since the Big Beautiful Bill in July of 2025, that we expected people to be investing more in CapEx. So those are some of the points. As far as Key being an outlier in terms of utilization, a portion of that, Mike, is our starting point. 57% of our C&I loans are investment grade, and as a consequence, a 31% utilization rate is probably significantly below probably many of our peers. The reason we are able to do that is because we can lend to investment grade companies because we can do so many other things for them, payments, hedging, advice, et cetera. So that is just a bit of the texture of the puts and takes around utilization. Mike Mayo: Just one follow-up. The newer question that comes up is exposure to data centers. You have a choice to participate as much or as little as you want. Is that an area that you're focused on, that you're worried about, that's a growth area? Maybe is it just the early days of that whole process? Or how do you kind of factor that in with your experience in wholesale banking for several decades? Chris Gorman: Sure. It's not an area that we're focused on, Mike. As I mentioned, we have about $1 billion of data center exposure, but that data center exposure is really to the hyperscalers. It's not necessarily to the people building the data centers per se. My sense of it is, having done this for a while, anytime you see growth at such a pace, I think it's time to be a little cautious. We're cautious in terms of lending directly into the data centers at this point. Operator: Thank you, Mike. Our next question is from Chris McGratty from KBW. Your line is now open. Please go ahead. Chris McGratty: Good morning. Thanks. Good question. Clark, on the capital ratios, obviously the moving rates adjusted the ratios this quarter. Could you just speak about appetite for buybacks? I know I hear you on the fourth quarter with the $1.3 billion, but as we contemplate Basel III with great uncertainty and improving growth, how do we think about the toggle between the two over the medium term? Thanks. Clark Khayat: Yeah. Thanks, Chris. First of all, I'd say we feel very good about our current capital position and our ability to manage that. I think with mark capital, which we've been talking about now for several years, it's really half the equation, and we haven't been including the benefit of the Basel III changes, which I think we all feel are highly probable to arrive early in 2027, with implementation in 2028. As a reminder, when those come in on the risk-weighted asset reduction, we get roughly 100 basis points of additional benefit to the capital ratio. That point puts us squarely back into our range. We'd expect not to be overly concerned about the current position. We've talked about being willing to be below that 9.5-10 range on a limited basis. I wouldn't describe that as kind of spending in advance of that Basel III, but I think we'd be short-sighted not to include it given the timing and probability of that materializing. I think that's sort of the broad base. We did reiterate, as you noted, fourth quarter buybacks to get to the 1.3 for the year. I think we'll have more conversation in January about how to think about the go forward. But I would really consider buybacks as Chris went through the capital priority stack as managing sort of at the end of the discussion around capital ratios and capital return. I don't know that we'll give the same kind of clarity on expectations for buybacks going forward post 2026. We are doing a few things, I think, in the AFS to HTM realm that will insulate us a bit from further moves up. Happy to unpack that as well, but I think you can expect us. We've been a low user of HTM historically for a variety of reasons. I think some of those are changing. You will see us move up the HTM percentage of our portfolio. But again, I think the capital priorities are pretty clear and the buybacks to us are sort of the last decision we're making in that process. Chris McGratty: Okay, great. Then on the operating leverage front, I hear you on the investments in AI and what you're doing there. Any notable expense projects over the medium term that would interrupt the momentum you have on the operating leverage? Chris, I heard you talk about next year being another good year for PPNR and revenue growth. But anything on the expense horizon that we should be mindful? Chris Gorman: No. We're going to continue to invest in people and in technology. Our technology budget's gone from $800 million to $900 million to $1 billion. But obviously we're generating a lot of capital, and there's no huge expense out there, Chris, on the horizon. We're going to keep focusing on organic growth and continue to build the business brick by brick. Clark Khayat: Yeah. I do think the one reminder is just the full year impact of Clearwater, which we talked a little bit about recently. That'll hit obviously for year-over-year. So it will look a little bit higher than otherwise would be planned, but we don't see any reason why post 2027 we couldn't be managing to sort of 3% annual expense growth. Operator: Thank you, Chris. Our next question is from Erika Najarian from UBS. Your line is now open. Please go ahead. Erika Najarian: Hi. Good morning. Chris Gorman: Good morning. Erika Najarian: Chris, good morning. I was just struck by something you said in prepared remarks. You mentioned another outsized revenue growth year in 2027. I fully appreciate you're in the middle of budget season, but if I just unpack the components, you're looking for 18 basis points of NIM expansion for 4Q25 to 4Q26. Your guidance implies 25 basis points of margin expansion from 4Q26 to 4Q27. If I think about it, you're looking at 10% NII growth for 2026, is that the right ballpark to think about 2027? Or is there sort of an asset growth slowdown that we should consider? Chris Gorman: Well, a couple things. One, you're kind to ask the question, but we'll obviously provide guidance for 2027 at the end of the year. However, I think Clark mentioned something that I think is really important, and that is of the increase in margin, 70% of it is now mechanical based on the $24 billion repricing in the last quarter of this year and next year. Obviously we've got a lot of momentum in our business, and we're going to continue to grow the business. We'll have more to say on specific targets after the fourth quarter. Clark Khayat: But I think, Erika, you're picking up on something we've been talking about and the industry's been talking about, which is the trade-off between good quality loan growth and NIM. Obviously, we've made, as others have, some trade-offs to go into what we believe will be very accretive long-term client relationships at the expense of NIM, but not at the expense of returns, EPS or NII. I think your comment about asset growth slowdown is probably the right place to be focused, and that trade-off is something that likely continues to present itself. But with the visibility we have now, we think we can manage that combination. Erika Najarian: Just to follow up on that, obviously deposit growth has been impressive and there is a seasonal aspect. As we think about slowing earning asset growth, how should we think about year-over-year deposit growth progression? In other words, you hired a bunch of bankers, you have clearly made the investments. How should we think about the progress year-over-year on deposit growth sort of eliminating for seasonality? Clark Khayat: Yeah, I think the way to consider that is when you make a loan to a client, we have a theory here that we have espoused for the last decade or so, which we refer to as kind of payments attachment. Which means when you make a loan, the expectation to the banker is you are going to get the deposit, you are going to get the payments with it. I think we do a very good job with that, but it does not necessarily happen on day one. It takes a little bit of time to move accounts and to get things changed. Some of the third quarter growth you would have seen would have been off new clients in the first half. It is hard to predict exactly how long that timeframe takes, but even if we had a little bit of new loan slowdown in 2027, I think you would still see some pull through from the 2026 production in terms of commercial deposits. Operator: Thank you, Erika. Our next question is from John Pancari from Evercore ISI. Your line is now open. Please go ahead. John Pancari: Morning. Clark Khayat: Good morning. John Pancari: Just on back to the loan demand side. You saw the pretty good step up in utilization in the quarter, but you also cited the expected moderation in loan growth in the fourth quarter. Can you just elaborate a little bit more on what areas that you expect that moderation? And also, are you beginning to see any erosion around loan demand at all amid the rise in rates, and is that what's influencing your expectation on that front in any way? Thanks. Chris Gorman: I would say we're not seeing an erosion in loan demand with the notable exception, John, that I made earlier, and that's on transactional real estate. I think some of those deals are clearly slowing down. Look, there's significant loan demand out there. When we're out talking to our clients, loan demand doesn't grow evenly quarter to quarter. But we feel good that there's a lot of demand out there. And keep in mind, we're doing this at a time when we're distributing about 70% or 82% of the capital that we're raising. So there's a fair amount of activity out there, and we're being selective, but we've got a lot of opportunity. Clark Khayat: John, we guided just to remind you of earning asset growth in the fourth quarter of about $1.5 billion to $2 billion, just relative to where we were in the third quarter. That's a little bit of a step down. And some of that, I think, to Chris's point, will get priced in the market. John Pancari: Got it. Right. Okay. No, that helps. Thank you. On the deposit side, I know growth came in better than your expectation. You are confident in the ability to fund upcoming loan growth with deposits. How should we think about the mix and the non-interest bearing component of that? On the beta front, I know you are looking for the mid-50s over time. How does that play out in the near term in terms of deposit cost compression as we look at the next few quarters from here? I know you are up about three bps in the third quarter. Thanks. Clark Khayat: Sure. I think, look, deposit competition or composition, sorry, on the commercial side, I think it is going to look more interest bearing than non-interest bearing from a reporting standpoint, just given our use of hybrids. We continue to use that as a vehicle to capture a full client relationship. I think we will see primary growth in operating accounts, which is allowing us to manage the overall expense. So I think that commercial loan growth will come on kind of consistent with the portfolio rate we see today, obviously subject to indexed changes from rate hikes. So we feel like it will be a representative sample there broadly. On the consumer side, we have started to pick some places to raise some rates and do some targeted deposit raising, which we have had some early success on, and we are doing that to raise some balances, but not more broadly raise the overall consumer deposit rates. So we feel pretty good about our early returns there. Based on how that materializes, I think we will have the opportunity to do a little more of that. But we also still really are not at the full offer to some of the competition, but we have picked up our MMDA promo and CD rates in certain markets in targeted ways in the last quarter. Again, we have seen some positive response to that. So I think it is not going to be all commercial, but we will start to see a little bit of consumer growth come on that we think will be valuable, and that commercial growth we think will be kind of representative of what it looks like today on a portfolio basis. Operator: Thank you, John. Our next question is from David Chiaverini from Jefferies. Your line is now open. Please go ahead. David Chiaverini: Hi. Thanks for taking the questions. You mentioned about being neutral to interest rates and the forward curve. Does the path to 325, you mentioned about 70%-75% of it is mechanical. With being rate kind of neutral, does that mean loan growth is the main swing factor? Can you unpack that a bit? Clark Khayat: Sure. I think it's really loan growth and deposit growth and the cost of the deposit growth. I do think we'll see kind of low 40s beta here in the fourth quarter, and that'll over the next probably first or second quarter of 2027 would start to move up to mid-50s. Obviously depends on if there are or are not additional rate hikes in the year. But we'd expect over sort of two to three quarters to get to that 50 to mid-50s number. If that were to be more loan growth or less deposit growth or more expensive deposit growth, I think that is the combination of things that we're watching really closely. But the visibility we have now makes us feel like we can fund that loan growth with deposits. We can potentially pay down some wholesale funding with deposits, and we can effectively manage the cost of those deposits within the scope of where rates are. And there's that natural trade-off, as I mentioned, between higher rates on the front end delivering better reinvestment rates and the counter if rates go down. So we think there's a little bit of a natural hedge in that neutrality. David Chiaverini: Thanks. Very helpful. My follow-up, in your prepared remarks you mentioned about with the AI use cases. You mentioned four pillars. I was interested in the comment about commercial originations as being part of that AI use case. Normally, when I think of commercial banks, it's relationship banking and somewhat insulated from AI. Can you walk through how you're using AI for commercial originations? Clark Khayat: Yeah. If you think about particularly complex commercial relationships, there's a lot of decision making, interaction, and work that goes into that process. We just think there's opportunities to streamline that to make them more informed, to improve the borrower experience and the banker experience in something that historically has been maybe a little bit more analog in nature because they tend to be, to your point, person-to-person relationships. We just think we can build a chassis underneath that is AI enabled and streamlined. That is not at the expense of the relationship. It is to augment the relationship. I think it's to reduce paper and a lot of back and forth and make that process more streamlined. Chris Gorman: David, for example, you asked about commercial loans, but if you think about commercial onboarding and servicing, we completely re-engineered that process over the last three years, which now opens it up to use AI. Our goal there is to have twice the throughput in half the time, and frankly, have it be a better client experience and a better experience for our employees. That's kind of how we think about it. These four domains that we're talking about are enterprise-wide. So it involves re-engineering the whole process and then using AI as an enabler. Thank you, David. Our next question is from Gerard Cassidy from RBC. Your line is now open. Please go ahead. Gerard Cassidy: Hi, Chris. Hi, Clark. Clark Khayat: Hey, Gerard. Gerard Cassidy: Good morning. Chris, coming back to the investment banking comments about sponsor activity, and we all recognize that the uncertainty in the economy and the geopolitical risks, the political risks in this country, those are constants. We hear about them for years. Putting them aside for a moment, what has to happen to get that activity in the middle market M&A to really pick up? Or is it the companies themselves that are in these portfolios are just not worth what the sponsors think they're worth, and it may never come back? Clark Khayat: Well, I think part of it is I'm sure there's some element of sort of bid-ask, what is the value, what's the exit strategy, what's the timing. I personally think one of the big constraints has been not only the volatility in interest rates, but the volatility in the forwards of interest rates. If you thought there were going to be five cuts, and in fact there were no cuts- Chris Gorman: And there was an increase. I think that kind of puts people on the sideline. I think once people have a clear view of where rates are or where they think they're going to be over a period of time, Gerard, I think that frees it up. Another thing that has changed a bit, though, are these continuation funds. So some of the algorithms as to years holding period, I think some of those have changed with some of the continuation funds. Having said that, there is a very significant backlog out there that at some point is going to have to clear. Gerard Cassidy: Very good. I might regret asking this question. I asked it on one of your competitor's calls. Can you guys give us some insights on credit quality? Has there been a structural change in the way the industry and KeyCorp in particular is underwriting credit today? Because credit is so resilient and you guys had obviously some meaningful improvement this quarter. Across the board, the banking industry's credit is very strong. We're certainly not naive enough to suggest that in a down economic cycle, credit's not going to get worse. We know that. It just seems that things are really quite good. Has the industry been more conservative or the financial crisis driving the regulators to de-risk the industry? What are your guys' thoughts on that? Chris Gorman: I'll give you some perspective on what I think drives it industry-wide and then some things that I think are idiosyncratic to us. I think in the global financial crisis, there were a lot of lessons learned. I think if you think about here at Key, where we built the underwrite to distribute model, including in real estate, that was a big fundamental change for our risk profile. So that's the lessons learned in the global financial crisis. I think the advent of the private credit market, where in the private credit market really dominated the small leverage deals. For some time, that's what, a $3 trillion market. I think that would have been in the banking system, and it's not in the banking system. I think those are two kind of fundamental things, Gerard. The other thing I would say that's idiosyncratic to Key is on our consumer side. As you know, we don't have a big card portfolio, and we have a super prime portfolio. At funding, our average FICO score is 766, and currently it's 787. So on the consumer side, we have a super prime book. Lastly, which I think is a huge advantage that is idiosyncratic to Key, is this notion of going to market by industry groups. I think is really helpful because I think it enables you to decipher and discern among the people in the industry. I think you put all that together, I think those are the things that have changed. Clark Khayat: I might add one just data point, Gerard. If you go back to when I joined Key in 2012, I think our leverage book was about $2 billion. I think today it's $2 billion. We're obviously a much larger bank, so that's not where I think the banks broadly have seen the growth. That growth is happening. It's just not happening, I think, in some of the traditional banking spaces. Mo Ramani: Hey, Gerard, great question. This is Mo. The only other thing I would add is I think, again, from a supervisory perspective, the financial risks continue to be a major focus for them. Tying our stress testing to our underwriting, to our portfolio limits and having that all be one ecosystem. We just continue to add that sophistication as well as, again, connecting the dots with data across the enterprise as well. We just continue to be expected to raise the bar, and we're also just continue to uplift these programs. Operator: Thank you, Gerard. Our next question is from Matthew O'Connor from Deutsche Bank. Your line is now open. Please go ahead. Matthew O'Connor: Good morning. You guys are obviously focused on growing the commercial side of the loan book, and the results are looking really good. Just remind us on the consumer side, you've been running down there and where do those balances kind of level out, and are there any areas that you're kind of leaning into or would like to be better at over time on the consumer lending side? Thank you. Chris Gorman: Sure, Matt. By design, we have been running down our consumer book. We would've said two quarters ago that the quarterly runoff would've been about $600 million. Given where rates have gone, the current runoff is about $400 million. What we're doing is we're basically redeploying out of mortgages that are very safe mortgages because they're made to they're jumbo mortgages, they're first mortgages to doctors and dentists. But we're redeploying that in our C&I portfolio, where we have a really good track record of having a complete relationship and driving a bunch of revenue. We're going to continue to do that. The one area that we've tasked our consumer folks with doing is, given some of the metrics I just gave about our consumer customer, many of our customers have significant equity in their homes. What we're doing is we're building a digital interface that's as good as for home mortgage. I'm sorry, for home equity, that's as good as our home equity, our home mortgage app. That'll be an area that you'll see grow in 2027. Matthew O'Connor: Okay, that's helpful. Then just one cleanup question on the fees. The corporate services income was down Q2 and flat year-over-year. Just remind us what, one, what drove that, and then the interplay of that and, say, loan growth. As loans grow, is there a counter there or what that relationship is, if there is one. Thank you. Clark Khayat: Yeah. Thanks, Matt. Generally, you would see corporate services increase with loan growth. What's in there would be FX fees, derivatives fees, and some loan fee categories. In the quarter, we saw derivatives or client hedging fees come down, and I think that's really just reflective of the rate volatility. We might see that come back. I think fourth quarter we'd expect it to be pretty flat to fourth quarter of 2025. We did see a dip there in direct client activity off lending, and again, just driven by sort of an unwillingness of clients to lock in rates with the current volatility. I would say that's sort of flip side of our spot and forward starting swaps are coming on at pretty attractive rates, and clients aren't wanting to take the other side of that in some cases. Chris Gorman: Yeah. The other piece of it, of course, we do a lot of hedging around oil and gas, and as you can imagine, there's not a lot of activity in terms of people hedging oil and gas right now. Operator: Thank you, Matt. Our next question is from Ken Usdin from Autonomous Research. Your line is now open. Please go ahead. Ken Usdin: Thanks. Hey, good morning, guys. Clark, just wanted to ask you talked about being slightly liability sensitive to the front end of the curve, and I wonder if you can kind of talk us through that and the incremental swap adds you've made. Does that get you to the point where you want to be in terms of balance, and how does that affect the future rate sensitivity when you consider all of that you've added this quarter and the forwards that are still coming on? Thanks. Clark Khayat: Sure. Yeah. So the short end rate sensitivity or liability sensitivity, really when we talk about that is if you think we're getting to the kind of mid-50s terminal betas that we talked about, the break even is kind of low to mid-40. So we're going to be a little bit liability sensitive on the front end of that deposit beta. As we noted, assuming no material change in the shape of the curve, we would assume we'd get some of that back on the reinvestment rate. I think we feel, again, quite good about the neutral position we're in. I think the steeper the curve is, the better that is for us. The flatter it is obviously is the inverse. And we've effectively been replacing swaps at this point as they roll off and, as we noted, replacing them at much higher levels right now. And we've done a little bit of maintenance sort of out into 2028 and 2029 where we saw some portfolio gaps on the swap side. But generally speaking, I think we're pretty much in maintenance mode and feel good about maintaining that neutrality. Operator: Thank you, Ken. That concludes our Q&A session. I would now like to pass the conference call over to CEO Chris Gorman for any closing remarks. Chris Gorman: Thank you. We appreciate your interest in Key. If you have any further questions, feel free to reach out to Troy Gates and the rest of our IR team. Thank you. Operator: Thank you. This concludes today's call. Thank you for joining. You may now disconnect your lines. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. KeyCorp (KEY) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Achieved record quarterly revenue of over $2 billion, driven by a relationship-focused business model that prioritized commercial client acquisition and deepening existing household penetration. - Performance was bolstered by a 200 basis point increase in commercial line utilization to 33%, the highest level in three years, indicating clients are actively investing in CapEx and tuck-in acquisitions. - Net interest margin expansion of six basis points was primarily fueled by the disciplined repricing of fixed assets and optimization of funding sources despite a competitive deposit environment. - Strategic focus on priority fee-based businesses—investment banking, commercial payments, and wealth management—resulted in 12% year-over-year growth for these segments collectively. - Management is accelerating the deployment of AI across four specific domains to simplify end-to-end processes, aiming for twice the throughput in half the time for commercial onboarding. - Maintained a super-prime consumer credit profile by intentionally running down lower-yielding consumer loans and redeploying capital into higher-return C&I relationships. - Management maintains high confidence in achieving a 15% plus return on tangible common equity by year-end 2027, supported by a mechanical 165 basis point yield pickup on $24 billion of maturing assets. - Guidance for 2026 net interest income growth was tightened to approximately 10%, assuming continued commercial loan growth and the funding of new loans entirely through client deposits. - The bank expects to reach a mid-fifties cumulative deposit beta over the rate cycle, anticipating that beta behavior in the easing cycle will be roughly symmetrical to the hiking cycle. - Investment banking fees are projected to grow at a mid-single-digit rate for the full year, supported by record M&A pipelines despite current volatility in transactional real estate markets. - Capital management strategy remains measured, with a focus on completing the $1.3 billion share repurchase target for 2026 while monitoring Basel III impacts for potential 2027 benefits. - Credit quality improved significantly with the non-performing asset ratio falling to 55 basis points, the lowest level since late 2023, leading to a $28 million reserve release. - Management noted that transactional real estate remains a wildcard, as the high cost of capital has led to frequent retrading of deals in the current environment. - The bank is shifting toward a higher percentage of Held-to-Maturity (HTM) securities to insulate capital ratios from further interest rate volatility and AOCI fluctuations. - Exposure to data centers is strictly limited to less than $1 billion and focused on hyperscalers, reflecting a cautious stance toward rapid growth in that sector. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management clarified that 70% of the projected NIM expansion is 'mechanical,' driven by the repricing of $24 billion in securities, swaps, and residential mortgages. - The remaining expansion will come from growing client deposits faster than loans to pay down more expensive wholesale funding. - The increase was broad-based across geographies and industries, particularly in the utilities, power, and renewable sectors where investment-grade clients are making long-term infrastructure investments. - Clients are also utilizing lines for inventory management and small strategic acquisitions as they adjust to a 'higher-for-longer' rate environment. - The $1 billion technology budget is focused on four domains: commercial onboarding, commercial originations, consumer servicing, and software engineering. - Management expects these investments to allow for a 3% annual expense growth cap post-2027 while improving risk controls and client experience. - KeyCorp expects a roughly 100 basis point benefit to capital ratios once Basel III risk-weighted asset changes are implemented, likely in early 2027. - Current buybacks are viewed as the final step in the capital stack after supporting organic growth, technology investments, and dividends.

KeyCorp's KEY third-quarter 2026 earnings from continuing operations of 51 cents per share surpassed the Zacks Consensus Estimate of 46 cents. The bottom line reflected a 24.4% rise from the prior-year quarter. Results primarily benefited from higher net interest income (NII) and non-interest income. Higher average loan balances, along with lower provisions, were other tailwinds. However, higher expenses hurt the results to some extent. Net income from continuing operations attributable to common shareholders was $537 million, up from $454 million in the prior-year quarter. Total revenues (taxable-equivalent or TE) increased 8.3% year over year to a record $2.05 billion. The top line surpassed the Zacks Consensus Estimate of $2.03 billion. NII (TE basis) jumped 9.6% from the prior-year quarter to $1.31 billion. The net interest margin (TE basis) from continuing operations expanded 20 basis points (bps) to 2.95%. Both metrics benefited from lower deposit costs as a result of declining interest rates and proactive deposit beta management, the reinvestment of proceeds from maturing low-yielding investment securities and fixed-rate swaps into higher-yielding investments, an expanding balance sheet and a continued strategic shift toward higher-yielding commercial and industrial loans. These benefits were partially offset by the impact of lower interest rates on repricing earning assets. Non-interest income was $744 million, up 6% year over year. The rise was mainly driven by higher investment banking and debt placement fees, trust and investment services income, and cards and payments income. These were partially offset by lower commercial mortgage servicing fees. Non-interest expenses increased 5.8% year over year to $1.25 billion. The rise was predominantly due to an increase in personnel expenses, primarily related to continued investments in people, employee benefits and incentive compensation associated with non-interest income growth. These were partially offset by a decline in other expenses. At the end of the third quarter, average total loans were $111.59 billion, up 1.4% from the previous quarter and 5% year over year. Average total deposits were $151.18 billion, up 2.4% sequentially and 0.5% year over year. The provision for credit losses was $61 million, down 43% from the prior-year quarter. Net loan charge-offs, as a percentage of average total loans, declined 10 bps year over year to 0.32%. Also, non-performing assets, as a percentage of period-end portfolio loans, other real estate-owned property assets and other non-performing assets, were 0.55%, down 8 bps. The allowance for loan and lease losses was $1.40 billion, down 3.2% year over year. KEY's tangible common equity to tangible assets ratio was 6.9% as of Sept. 30, 2026, down from 8.1% in the corresponding period of 2025. The Tier 1 risk-based capital ratio was 12.3%, down from 13.5%. The Common Equity Tier 1 ratio was 11.1%, down from 11.8% as of Sept. 30, 2025. In the reported quarter, KeyCorp repurchased shares worth $320 million at an average price of $22.57 per share. KeyCorp delivered record revenues and pre-provision net revenues in the third quarter of 2026. The company generated a return on tangible common equity exceeding 15%, reinforcing its confidence in achieving and sustaining a return on tangible common equity of 15% or more by the end of 2027. Along with this, robust commercial and industrial loan growth, balance sheet repositioning efforts and growth in fee-based businesses will likely support the company's top-line growth in the near term. However, higher non-interest expenses and declining capital ratios remain concerning. KeyCorp price-consensus-eps-surprise-chart | KeyCorp Quote KeyCorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Bank of America's BAC third-quarter 2026 adjusted earnings of $1.08 per share missed the Zacks Consensus Estimate of $1.11. In the prior-year quarter, the company reported earnings of $1.04. Bank of America witnessed dismal trading performance this time around due to weaker fixed-income trading. Similarly, amid weakness in advisory and debt underwriting activities, BAC's investment banking (IB) business performance was not good. While BAC's capital markets business performance was not impressive this time, year-over-year growth in NII drove total revenues. Provisions declined in the quarter on a year-over-year basis, which was a positive, but non-interest expenses increased, creating another major headwind. JPMorgan's JPM third-quarter 2026 adjusted earnings of $5.75 per share missed the Zacks Consensus Estimate of $5.94. After considering the net investment securities losses of 18 cents, earnings were $5.57 per share, up 9.9% from the year ago. JPM's reported net revenues of $50.17 billion rose 8% year over year. Strong equity trading performance, IB activity and loan growth supported revenues, while the fixed income trading business was subdued. While JPMorgan recorded a year-over-year rise in expenses in the quarter, it witnessed a decline in provisions, which aided results to some extent. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KeyCorp (KEY) : Free Stock Analysis Report Bank of America Corporation (BAC) : Free Stock Analysis Report JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). 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KeyCorp (KEY) reported $2.05 billion in revenue for the quarter ended September 2026, representing a year-over-year increase of 8.8%. EPS of $0.51 for the same period compares to $0.41 a year ago. The reported revenue represents a surprise of +1.13% over the Zacks Consensus Estimate of $2.03 billion. With the consensus EPS estimate being $0.46, the EPS surprise was +10.87%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how KeyCorp performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: - Book value at period end: $15.01 versus the four-analyst average estimate of $15.93. - Net interest margin (TE) from continuing operations: 3% versus 3% estimated by four analysts on average. - Net loan charge-offs to average loans: 0.3% versus 0.4% estimated by four analysts on average. - Cash efficiency ratio (non-GAAP): 60.6% versus the four-analyst average estimate of 61.2%. - Capital Ratios - Tier 1 risk-based capital: 12.3% versus the two-analyst average estimate of 12.5%. - Capital Ratios - Leverage: 9.9% versus the two-analyst average estimate of 10.1%. - Average Balance - Total earning assets: $173.77 billion compared to the $173.97 billion average estimate based on two analysts. - Service charges on deposit accounts: $79 million compared to the $79 million average estimate based on four analysts. - Corporate services income: $72 million versus $77.3 million estimated by four analysts on average. - Trust and investment services income: $165 million compared to the $160.88 million average estimate based on four analysts. - Investment banking and debt placement fees: $214 million versus the four-analyst average estimate of $207.04 million. - Cards and payments income: $93 million versus $93.44 million estimated by four analysts on average. View all Key Company Metrics for KeyCorp here>>> Shares of KeyCorp have returned -4.6% over the past month versus the Zacks S&P 500 composite's +0.7% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KeyCorp (KEY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research