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What changed in KeyCorp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of KeyCorp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+575 added−552 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-22)

Top changes in KeyCorp's 2024 10-K

575 paragraphs added · 552 removed · 429 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

97 edited+41 added−44 removed122 unchanged
Biggest changeOn March 4, 2020, the Federal Reserve adopted a final rule integrating certain aspects of the Federal Reserve’s Regulatory Capital Rules with CCAR and the stress test rules in order to simplify the overall capital framework that is currently applicable to BHCs that have $100 billion or more in total consolidated assets (including KeyCorp). 16 Table of contents Under the final rule, the Federal Reserve amended the capital conservation buffer requirement under the Regulatory Capital Rules by replacing the static risk-weighted assets component of the buffer with a new measure, the stress capital buffer, which will be based on the results of an individual BHC’s supervisory stress test and cannot be less than 2.5 percent of risk-weighted assets.
Biggest changeOn March 4, 2020, the Federal Reserve adopted a final rule integrating certain aspects of the Federal Reserve’s Regulatory Capital Rules with CCAR and the stress test rules in order to simplify the overall capital framework that is currently applicable to BHCs that have $100 billion or more in total consolidated assets (including KeyCorp).
Resolution plans BHCs with at least $50 billion in total consolidated assets, like KeyCorp, have been required to periodically submit to the Federal Reserve and FDIC a plan discussing how the company could be rapidly and orderly resolved if the company failed or experienced material financial distress.
Resolution and recovery plans BHCs with at least $50 billion in total consolidated assets, like KeyCorp, have been required to periodically submit to the Federal Reserve and FDIC a plan discussing how the company could be rapidly and orderly resolved if the company failed or experienced material financial distress.
She has been a director of DuPont de Nemours, Inc., a multi-industry specialty solutions company, since 2019. Trina M. Evans (59) - Ms. Evans has been the Director of Corporate Center for KeyCorp since August 2012. Prior to this role, Ms. Evans was the Chief Administrative Officer for Key Community Bank and the Director of Client Experience for KeyBank.
She has been a director of DuPont de Nemours, Inc., a multi-industry specialty solutions company, since 2019. Trina M. Evans (60) - Ms. Evans has been the Director of Corporate Center for KeyCorp since August 2012. Prior to this role, Ms. Evans was the Chief Administrative Officer for Key Community Bank and the Director of Client Experience for KeyBank.
Basel III To address deficiencies in the international regulatory capital standards identified during the 2007-2009 global financial crisis, in 2010 the Basel Committee released comprehensive revisions to the international regulatory capital framework, commonly referred to as “Basel III.” The Basel III revisions are designed to strengthen the quality and quantity of regulatory capital, in part through the introduction of a Common Equity Tier 1 capital requirement; provide more comprehensive and robust risk coverage, particularly for securitization exposures, equities, and off-balance sheet positions; and address pro-cyclicality concerns through the implementation of capital buffers.
Basel III To address deficiencies in the international regulatory capital standards identified during the 2007-2009 global financial crisis, in 2010 the Basel Committee released comprehensive revisions to the international regulatory capital framework, commonly referred to as “Basel III.” The Basel III revisions are designed to strengthen the quality and quantity of regulatory capital, in part through the introduction of a Common Equity Tier 1 capital requirement; provide more comprehensive and robust risk coverage, particularly for securitization exposures, equities, and off-balance sheet positions; and address pro-cyclicality concerns through the implementation of capital 12 Table of contents buffers.
Prior to July 2022, he served as a National Bank Examiner with the OCC from March 1992 to March 2022. Amy G. Brady (57) - Ms. Brady is KeyCorp’s Chief Information Officer, serving in that role since May 2012. Ms. Brady has been an executive officer of KeyCorp since she joined in 2012.
Prior to July 2022, he served as a National Bank Examiner with the OCC from March 1992 to March 2022. Amy G. Brady (58) - Ms. Brady is KeyCorp’s Chief Information Officer, serving in that role since May 2012. Ms. Brady has been an executive officer of KeyCorp since she joined in 2012.
As an FHC, KeyCorp is subject to regulation, supervision, and examination by the Federal Reserve under the BHCA. Our national bank subsidiaries and their subsidiaries are subject to regulation, supervision, and examination by the OCC. At December 31, 2023, we operated one full-service, FDIC-insured national bank subsidiary, KeyBank, and one national bank subsidiary that is limited to fiduciary activities.
As an FHC, KeyCorp is subject to regulation, supervision, and examination by the Federal Reserve under the BHCA. Our national bank subsidiaries and their subsidiaries are subject to regulation, supervision, and examination by the OCC. At December 31, 2024, we operated one full-service, FDIC-insured national bank subsidiary, KeyBank, and one national bank subsidiary that is limited to fiduciary activities.
Since 2010, the Federal Rule has implemented the following EPSs required under the Dodd-Frank Act: (i) the resolution plan requirements (through a joint final rule adopted with the FDIC), (ii) stress test requirements, (iii) the incorporation of the Regulatory Capital Rules through the Federal Reserve’s previously finalized rules on capital planning and stress tests; (iv) liquidity requirements; (v) the risk management framework, including requirements around the risk committee and the chief risk officer as well as the corporate governance requirements as they relate to liquidity risk management; and (vi) a 15-to-1 debt-to-equity, limit for companies that the FSOC determines pose a “grave threat” to U.S. financial stability.
Since 2010, the Federal Rule has implemented the following enhanced prudential standards required under the Dodd-Frank Act: (i) the resolution plan requirements (through a joint final rule adopted with the FDIC), (ii) stress test requirements, (iii) the incorporation of the Regulatory Capital Rules through the Federal Reserve’s previously finalized rules on capital planning and stress tests; (iv) liquidity requirements; (v) the risk management framework, including requirements around the risk committee and the chief risk officer as well as the corporate governance requirements as they relate to liquidity risk management; and (vi) a 15-to-1 debt-to-equity, limit for companies that the FSOC determines pose a “grave threat” to U.S. financial stability.
Key competes with other providers of financial services, such as BHCs, commercial banks, savings associations, credit unions, mortgage banking companies, finance companies, mutual funds, insurance companies, investment management firms, investment banking firms, broker-dealers, and other local, regional, national, and global institutions that offer financial services.
Key competes with other providers of financial services, such as BHCs, commercial banks, savings associations, credit unions, mortgage banking companies, finance companies, mutual funds, insurance companies, investment management firms, private credit funds, investment banking firms, broker-dealers, financial technology companies, and other local, regional, national, and global institutions that offer financial services.
Specifically, the FSOC is authorized to: (i) identify risks to U.S. financial stability that could arise from the material financial distress or failure, or ongoing activities, of large, interconnected SIFIs, or that could arise outside the financial services marketplace; (ii) promote market discipline by eliminating expectations that the U.S. government will shield shareholders, creditors, and counterparties from losses in the event of failure; and (iii) respond to emerging threats to the stability of the U.S. financial system.
Specifically, the FSOC is authorized to: (i) identify risks to U.S. financial stability that could arise from the material financial distress or failure, or ongoing activities, of large, interconnected SIFIs, or that could arise outside the financial services marketplace; (ii) promote market discipline by eliminating expectations that the U.S. government will shield shareholders, creditors, and counterparties from losses in the event of failure; and (iii) respond to emerging threats 11 Table of contents to the stability of the U.S. financial system.
As enacted in 2010, the Dodd-Frank Act required the Federal Reserve to impose enhanced prudential standards and early remediation requirements (collectively, “EPSs”), including enhanced liquidity standards, upon BHCs (like KeyCorp) with at least $50 billion in total consolidated assets.
As enacted in 2010, the Dodd-Frank Act required the Federal Reserve to impose enhanced prudential standards and early remediation requirements, including enhanced liquidity standards, upon BHCs (like KeyCorp) with at least $50 billion in total consolidated assets.
Under the Regulatory Capital Rules, standardized approach banking organizations, such as KeyCorp and KeyBank, are required to meet the minimum capital and leverage ratios set forth in the following table. At December 31, 2023, KeyCorp’s ratios under the fully phased-in Regulatory Capital Rules are set forth in the following table.
Under the Regulatory Capital Rules, standardized approach banking organizations, such as KeyCorp and KeyBank, are required to meet the minimum capital and leverage ratios set forth in the following table. At December 31, 2024, KeyCorp’s ratios under the fully phased-in Regulatory Capital Rules are set forth in the following table.
On July 27, 2023, the federal banking agencies issued a proposal (the “Capital Proposal”) that would make significant changes to the Regulatory Capital Rules applicable to banking organizations with total assets of $100 billion or more and their depository institution subsidiaries (“Large Banking Organizations”) (including KeyCorp and KeyBank) and banking organizations with significant trading activity.
Recent regulatory capital-related developments On July 27, 2023, the federal banking agencies issued a proposal (the “Capital Proposal”) that would make significant changes to the Regulatory Capital Rules applicable to banking organizations with total assets of $100 billion or more and their depository institution subsidiaries (“Large Banking Organizations”) (including KeyCorp and KeyBank) and banking organizations with significant trading activity.
Also posted on our website, and available in print upon request from any shareholder to our Investor Relations Department, are the charters for our Technology Committee, Audit Committee, Compensation and Organization Committee, Executive Committee, Nominating and Corporate Governance Committee, and Risk Committee; our Corporate Governance Guidelines; the Code of Business Conduct and Ethics for our directors, officers, and employees; our Standards for Determining Independence of Directors; our policy for Review of Transactions Between KeyCorp and Its Directors, Executive Officers and Other Related Persons; our Statement of Political Activity; and our Corporate Responsibility Report.
Also posted on our website, and available in print upon request from any shareholder to our Investor Relations Department, are the charters for the committees of our Board of Directors, which includes the Audit Committee, Compensation and Organization Committee, Executive Committee, Nominating and Corporate Governance Committee, Risk Committee, and Technology Committee; our Corporate Governance Guidelines; the Code of Business Conduct and Ethics for our directors, officers, and employees; our Standards for Determining Independence of Directors; our policy for Review of Transactions Between KeyCorp and Its Directors, Executive Officers and Other Related Persons; our Statement of Political Activity; and our Corporate Responsibility Report.
She became an executive officer of KeyCorp in March 2013. Kenneth C. Gavrity (47) - Mr. Gavrity has been Head of Commercial Bank since November 2023 and became an executive officer of KeyCorp in May 2021. Prior to this, Mr.
She became an executive officer of KeyCorp in March 2013. Kenneth C. Gavrity (48) - Mr. Gavrity has been Head of Commercial Bank since November 2023 and became an executive officer of KeyCorp in May 2021. Prior to this, Mr.
Under the rules, Key, as a Category IV firm with average weighted short-term wholesale funding of less than $50 billion, is not subject to an NSFR requirement.
Under the rules, KeyCorp, as a Category IV firm with average weighted short-term wholesale funding of less than $50 billion, is not subject to an NSFR requirement.
The rate charged depends on 17 Table of contents KeyBank’s performance on the FDIC’s “large and highly complex institution” risk-assessment scorecard, which includes factors such as KeyBank’s regulatory rating, its ability to withstand asset and funding-related stress, and the relative magnitude of potential losses to the FDIC in the event of KeyBank’s failure.
The rate charged depends on KeyBank’s performance on the FDIC’s “large and highly complex institution” risk-assessment scorecard, which includes factors such as KeyBank’s regulatory rating, its ability to withstand asset and funding-related stress, and the relative magnitude of potential losses to the FDIC in the event of KeyBank’s failure.
We design our compensation programs to balance risk and reward and align with the guidance of our regulators, and we regularly monitor these programs to remain within our risk tolerances. We subject all discretionary incentives paid to our employees to a robust risk adjustment process that begins before grant and extends beyond payment.
We design our compensation programs to balance risk and reward and align with the guidance of our regulators, and we regularly monitor these programs to remain within our risk tolerances. We subject all discretionary 8 Table of contents incentives paid to our employees to a robust risk adjustment process that begins before grant and extends beyond payment.
As a result of the Federal Reserve’s implementation of certain of the EPSs, KeyCorp is subject to requirements relating to cash flow projections, a contingency funding plan, liquidity risk limits, the monitoring of liquidity risks (with respect to collateral, legal entities, currencies, business lines, and intraday exposures), liquidity stress testing, a liquidity buffer, and liquidity risk management requirements, including requirements that apply to the board of directors, the risk committee, senior management, and the independent review function.
As a result of the Federal Reserve’s implementation of certain of the enhanced prudential standards, KeyCorp is subject to requirements relating to cash flow projections, a contingency funding plan, liquidity risk limits, the monitoring of liquidity risks (with respect to collateral, legal entities, currencies, business lines, and intraday exposures), liquidity stress testing, a liquidity buffer, and liquidity risk management requirements, including requirements that apply to the board of directors, the risk committee, senior management, and the independent review function.
Because Darrin Benhart and James Waters have been employed at KeyCorp for less than five years, information is being provided concerning their prior business experience. There are no family relationships among the directors or the executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected.
Because Mo Ramani and James Waters have been employed at KeyCorp for less than five years, information is being provided concerning their prior business experience. There are no family relationships among the directors or the executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected.
Shareholders may obtain a copy of any of the above-referenced corporate governance documents by writing to our Investor Relations Department at Investor Relations, KeyCorp, 127 Public Square, Mailcode OH-01-27-0737, Cleveland, Ohio 44114-1306; by calling (216) 689-4221; or by sending an e-mail to investor_relations@keybank.com. Competition The market for banking and related financial services is highly competitive.
Shareholders may obtain a copy of any of the above-referenced corporate governance documents by writing to our Investor Relations Department at Investor Relations, KeyCorp, 127 Public Square, Mailcode OH-01-27-0737, Cleveland, Ohio 44114-1306; by calling (216) 689-4221; or by sending an e-mail to investor_relations@keybank.com. 7 Table of contents Competition The market for banking and related financial services is highly competitive and continuously evolving.
The FDIC updates these projections at least semiannually. 18 Table of contents Conservatorship and receivership of insured depository institutions Upon the insolvency of an insured depository institution, the FDIC will be appointed as receiver or, in rare circumstances, conservator for the insolvent institution under the FDIA.
The FDIC updates these projections at least semiannually. Conservatorship and receivership of insured depository institutions Upon the insolvency of an insured depository institution, the FDIC will be appointed as receiver or, in rare circumstances, conservator for the insolvent institution under the FDIA.
EGRRCPA gave the Federal Reserve the authority to continue to apply EPSs to any BHCs having at least $100 billion but less than $250 billion in total consolidated assets (like KeyCorp) if it determines that the application of the EPS is appropriate to prevent or mitigate risks to financial stability or to promote the safety and soundness of the BHC or BHCs, taking into consideration the BHC’s or BHCs’ capital structure, riskiness, complexity, financial activities, size, and other relevant factors.
EGRRCPA gave the Federal Reserve the authority to continue to apply enhanced prudential standards to any BHCs having at least $100 billion but less than $250 billion in total consolidated assets (like KeyCorp) if it determines that the application of the standard is appropriate to prevent or mitigate risks to financial stability or to promote the safety and soundness of the BHC or BHCs, taking into consideration the BHC’s or BHCs’ capital structure, riskiness, complexity, financial activities, size, and other relevant factors.
In addition, 11 Table of contents federal law provides that in the bankruptcy of a BHC, any commitment by the BHC to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.
In addition, federal law provides that in the bankruptcy of a BHC, any commitment by the BHC to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.
While KeyBank has only had to conduct an annual stress test, KeyCorp has had to conduct both an annual and a mid-cycle stress test. KeyCorp and KeyBank have been required to report the results of their annual stress tests to the Federal Reserve and the OCC.
While KeyBank currently only has to conduct an annual stress test, KeyCorp has had to conduct both an annual and a mid-cycle stress test in the past. KeyCorp and KeyBank have been required to report the results of their annual stress tests to the Federal Reserve and the OCC.
The final rule revises the elements of the capital plan that Category IV firms are required to submit to the Federal Reserve and makes related changes to regulatory reporting requirements. Also, the final rule updates the frequency for calculating the stress capital buffer for these firms.
The final rule revised the elements of the capital plan that Category IV firms are required to submit to the Federal Reserve and makes related changes to regulatory reporting requirements. Also, the final rule updated the frequency for calculating the stress capital buffer for these firms.
Revised prompt corrective action framework The federal prompt corrective action (“PCA”) framework under the FDIA groups FDIC-insured depository institutions into one of five prompt corrective action capital categories: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” In addition to implementing the Basel III capital framework in the United States, the Regulatory Capital Rules also revised the PCA capital category threshold ratios applicable to FDIC-insured depository institutions such as KeyBank, with an effective date of January 1, 2015.
Revised prompt corrective action framework The federal prompt corrective action (“PCA”) framework under the FDIA groups FDIC-insured depository institutions into one of five prompt corrective action capital categories: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” In addition to implementing the Basel III capital framework in the United States, the Regulatory Capital Rules also revised the PCA capital category threshold ratios applicable to FDIC-insured depository institutions such as KeyBank.
ITEM 1. BUSINESS Overview KeyCorp, organized in 1958 under the laws of the State of Ohio, is headquartered in Cleveland, Ohio. We are a BHC under the BHCA and one of the nation’s largest bank-based financial services companies, with consolidated total assets of approximately $188.3 billion at December 31, 2023.
ITEM 1. BUSINESS Overview KeyCorp, organized in 1958 under the laws of the State of Ohio, is headquartered in Cleveland, Ohio. We are a BHC under the BHCA and one of the nation’s largest bank-based financial services companies, with consolidated total assets of approximately $187.2 billion at December 31, 2024.
EGRRCPA, enacted on May 24, 2018, raised the asset threshold above which the Federal Reserve is required to apply EPSs to BHCs from $50 billion to $250 billion.
EGRRCPA, enacted on May 24, 2018, raised the asset threshold above which the Federal Reserve is required to apply enhanced prudential standards to BHCs from $50 billion to $250 billion.
KeyCorp has been required to report the results of its mid-cycle stress test to the Federal Reserve. Under one of the Tailoring Rules, KeyCorp is no longer required to conduct and publicly disclose the results of company-run stress tests and is subject to a supervisory stress test conducted by the Federal Reserve every other year rather than every year.
Under one of the Tailoring Rules, KeyCorp is no longer required to conduct and publicly disclose the results of company-run stress tests and is subject to a supervisory stress test conducted by the Federal Reserve every other year rather than every year.
Under the Liquidity Coverage Rules, KeyCorp was required to calculate a Modified LCR on a monthly basis and was required to satisfy a minimum Modified LCR requirement of 100%. KeyBank was not subject to the LCR or the Modified LCR under the Liquidity Coverage Rules.
Under the Liquidity Coverage Rules, KeyCorp was required to calculate a Modified LCR on a monthly basis and was required to satisfy a minimum Modified LCR requirement of 100%.
The impact of the special assessment to Key was approximately $190 million, which was recognized upon issuance of the final rule in the fourth quarter of 2023.
The initial impact of the special assessment to Key was approximately $190 million in pre-tax expense, which was recognized upon issuance of the final rule in the fourth quarter of 2023.
The Revised PCA framework table below identifies the capital category threshold ratios for a “well capitalized” and an “adequately capitalized” institution under the Prompt Corrective Action Framework. 13 Table of contents “Well Capitalized” and “Adequately Capitalized” Capital Category Ratios under Revised Prompt Corrective Action Framework Prompt Corrective Action Capital Category Ratio Well Capitalized (a) Adequately Capitalized Common Equity Tier 1 Risk-Based 6.5 % 4.5 % Tier 1 Risk-Based 8.0 6.0 Total Risk-Based 10.0 8.0 Tier 1 Leverage (b) 5.0 4.0 (a) A “well capitalized” institution also must not be subject to any written agreement, order or directive to meet and maintain a specific capital level for any capital measure.
“Well Capitalized” and “Adequately Capitalized” Capital Category Ratios under Revised Prompt Corrective Action Framework Prompt Corrective Action Capital Category Ratio Well Capitalized (a) Adequately Capitalized Common Equity Tier 1 Risk-Based 6.5 % 4.5 % Tier 1 Risk-Based 8.0 6.0 Total Risk-Based 10.0 8.0 Tier 1 Leverage (b) 5.0 4.0 (a) A “well capitalized” institution also must not be subject to any written agreement, order or directive to meet and maintain a specific capital level for any capital measure.
As of December 31, 2023, these services were provided across the country through KeyBank’s 959 full-service retail banking branches and a network of 1,217 ATMs in 15 states, as well as additional offices, online and mobile banking capabilities, including our national digital bank, Laurel Road, and a telephone banking call center.
As of December 31, 2024, these services were provided across the country through KeyBank’s 944 full-service retail banking branches and a network of 1,182 ATMs in 15 states, as well as additional offices, online and mobile banking capabilities, including our national digital brand, Laurel Road, and a telephone banking call center.
Minimum Capital Ratios and KeyCorp Ratios Under Regulatory Capital Rules Ratios (including stress capital buffer) Regulatory Minimum Requirement Stress Capital Buffer (b) Regulatory Minimum With Stress Capital Buffer KeyCorp December 31, 2023 (c) Common Equity Tier 1 4.50 % 2.50 % 7.00 % 10.02 % Tier 1 Capital 6.00 2.50 8.50 11.67 Total Capital 8.00 2.50 10.50 14.15 Leverage (a) 4.00 N/A 4.00 9.03 (a) As a standardized approach banking organization, KeyCorp is not subject to the 3% supplementary leverage ratio requirement, which became effective January 1, 2018.
Minimum Capital Ratios and KeyCorp Ratios Under Regulatory Capital Rules Ratios (including stress capital buffer) Regulatory Minimum Requirement Stress Capital Buffer (b) Regulatory Minimum With Stress Capital Buffer KeyCorp December 31, 2024 (c) Common Equity Tier 1 4.50 % 3.10 % 7.60 % 11.92 % Tier 1 Capital 6.00 3.10 9.10 13.69 Total Capital 8.00 3.10 11.10 16.15 Leverage (a) 4.00 N/A 4.00 10.03 (a) As a standardized approach banking organization, KeyCorp is not subject to the 3% supplementary leverage ratio requirement, which became effective January 1, 2018.
Career Development and Growth We invest in our teammates’ growth and professional development through a variety of internal networking groups, including our twelve Key Business Impact and Networking Groups (“KBINGs”), formal and informal mentoring programs, including Key’s enterprise-wide formal mentoring program, MentorMe at Key, and a suite of leadership development programs.
Career Development and Growth We invest in our teammates’ growth and professional development through a variety of internal networking groups that are open to all teammates, including our Key Business Impact and Networking Groups (“KBINGs”), formal and informal mentoring programs, including Key’s enterprise-wide formal mentoring program, MentorMe at Key, and a suite of leadership development programs.
Victor B. Alexander (44) - Mr. Alexander has been KeyCorp’s Head of Consumer Bank and an executive officer of KeyCorp since January 2020. Prior to that time, he served as the Head of Home Lending from October 2018 to January 2020 and Treasurer from July 2017 to October 2018. Darrin L. Benhart (58) - Mr.
Victor B. Alexander (45) - Mr. Alexander has been KeyCorp’s Head of Consumer Bank and an executive officer of KeyCorp since January 2020. Prior to that time, he served as the Head of Home Lending from October 2018 to January 2020 and Treasurer from July 2017 to October 2018. Darrin L. Benhart (59) - On December 31, 2024, Mr.
On October 24, 2023, the federal banking agencies issued a set of principles that provide a high-level framework for the safe and sound management of exposures to climate-related financial risks for financial institutions with over $100 billion in total consolidated assets.
Key is monitoring developments in this case. Developments relating to climate change On October 24, 2023, the federal banking agencies issued a set of principles that provide a high-level framework for the safe and sound management of exposures to climate-related financial risks for financial institutions with over $100 billion in total consolidated assets.
The federal banking agencies indicated that the proposal would improve the resolvability of the covered entities in case of their failure, reduce costs to the DIF, and mitigate contagion and financial stability risks by reducing the risk of loss to uninsured depositors. Comments on the proposal were due by January 16, 2024.
The federal banking agencies indicated that the proposal would improve the resolvability of the covered entities in case of their failure, reduce costs to the DIF, and mitigate contagion and financial stability risks by reducing the risk of loss to uninsured depositors.
As of December 31, 2023, a total of 17,333 full-time and part-time employees worked in the following regions, which are generally aligned to the regions Key uses for its retail branch banking network: Region Employee Count East 12,459 West 2,322 All Other 2,552 9 Table of contents We invest significant time and resources in creating an attractive work environment and competitive total rewards package that attracts and retains top talent.
As of December 31, 2024, a total of 17,406 full-time and part-time employees worked in the following regions, which are generally aligned to the regions Key uses for its retail branch banking network: Region Employee Count East 12,399 West 2,834 All Other 2,173 We invest significant time and resources in creating an attractive work environment and competitive total rewards package that attracts and retains top talent.
Volcker Rule The Volcker Rule implements Section 619 of the Dodd-Frank Act, which prohibits “banking entities,” such as KeyCorp, KeyBank and their affiliates and subsidiaries, from owning, sponsoring, or having certain relationships with hedge funds and private equity funds (referred to as “covered funds”) and engaging in short-term proprietary trading of financial instruments, including securities, derivatives, commodity futures and options on these instruments. 20 Table of contents The Volcker Rule excepts certain transactions from the general prohibition against proprietary trading, including transactions in government securities (e.g., U.S.
Volcker Rule The Volcker Rule implements Section 619 of the Dodd-Frank Act, which prohibits “banking entities,” such as KeyCorp, KeyBank and their affiliates and subsidiaries, from owning, sponsoring, or having certain relationships with hedge funds and private equity funds (referred to as “covered funds”) and engaging in short-term proprietary trading of financial instruments, including securities, derivatives, commodity futures and options on these instruments.
Khayat rejoined KeyCorp as Chief Strategy Officer in January 2018 and served in that role until March 2023. Mr. Khayat had previously served as Head of Key’s Enterprise Commercial Payments group from April 2014 to June 2016. Allyson M. Kidik (44) - Ms.
Khayat has been Chief Financial Officer since March 2023 and an executive officer since September 2018. Mr. Khayat rejoined KeyCorp as Chief Strategy Officer in January 2018 and served in that role until March 2023. Mr. Khayat had previously served as Head of Key’s Enterprise Commercial Payments group from April 2014 to June 2016. Allyson M. Kidik (45) - Ms.
Comments on the proposal were due by November 30, 2023. Other Regulatory Requirements and Developments The Bank Secrecy Act The BSA requires all financial institutions (including banks and securities broker-dealers) to, among other things, maintain a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.
Other Regulatory Requirements and Developments The Bank Secrecy Act The BSA requires all financial institutions (including banks and securities broker-dealers) to, among other things, maintain a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.
Benhart became Chief Risk Officer and an executive officer of KeyCorp on January 1, 2024. Prior to that time, he served as Deputy Chief Risk Officer and Head of Enterprise Risk Management from August 2023 to December 2023 and Chief Enterprise Risk Officer from July 2022 to August 2023.
Benhart was Chief Risk Officer and an executive officer of KeyCorp and had served in such capacity since January 1, 2024. Prior to that time, he served as Deputy Chief Risk Officer and Head of Enterprise Risk Management from August 2023 to December 2023 and Chief Enterprise Risk Officer from July 2022 to August 2023.
Kidik has been the Chief Risk Review Officer and General Auditor and an executive officer of KeyCorp since July 2022. Ms. Kidik previously served as Senior Deputy General Auditor from 2018 to 2022 and Deputy General Auditor from 2015 to 2018. 10 Table of contents Angela G. Mago (58) - Ms.
Kidik has been the Chief Risk Review Officer and General Auditor and an executive officer of KeyCorp since July 2022. Ms. Kidik previously served as Senior Deputy General Auditor from 2018 to 2022 and Deputy General Auditor from 2015 to 2018. Angela G. Mago (59) - Ms. Mago has served as the Chief Human Resources Officer since November 2023.
Set forth below are the names and ages of the executive officers of KeyCorp as of December 31, 2023, the positions held by each at KeyCorp during the past five years, and the year each first became an executive officer of KeyCorp. On January 1, 2024, Darrin J. Benhart became Chief Risk Officer.
Set forth below are the names and ages of the executive officers of KeyCorp as of December 31, 2024, the positions held by each at KeyCorp during the past five years, and the year each first became an executive officer of KeyCorp. On January 23, 2025, Mohit (Mo) Ramani became Chief Risk Officer.
The LFI Rating System will provide a supervisory evaluation of whether an institution possesses sufficient operational strength and resilience to maintain safe and sound operations through a range of conditions and will assess an institution’s capital planning and positions, liquidity risk management and positions, and governance and controls.
The LFI Rating System provides a supervisory evaluation of whether an institution possesses sufficient operational strength and resilience to maintain safe and sound operations through a range of conditions and assesses an institution’s capital planning and positions, liquidity risk management and positions, and governance and controls. Ratings issued under the LFI Rating System are confidential.
Debit Card Interchange Fee Cap On October 25, 2023, the Federal Reserve issued for public comment a proposal to lower the maximum interchange fee that a debit card issuer with $10 billion or more in total consolidated assets (including KeyBank) can receive for a debit card transaction.
Comments on the proposal were due by January 16, 2024. 22 Table of contents Debit card interchange fee cap On October 25, 2023, the Federal Reserve issued for public comment a proposal to lower the maximum interchange fee that a debit card issuer with $10 billion or more in total consolidated assets (including KeyBank) can receive for a debit card transaction.
Supervision and Regulation The regulatory framework applicable to BHCs and banks is intended primarily to protect consumers, the DIF, taxpayers and the banking system as a whole, rather than to protect the security holders and creditors of financial services companies.
Supervision and Regulation The regulatory framework applicable to BHCs and banks is intended primarily to protect consumers, the DIF, taxpayers and the banking system as a whole, rather than to protect the security holders and creditors of financial services companies. Comprehensive reform of the legislative and regulatory environment for financial services companies occurred in 2010 and remains ongoing.
EGRRCPA, enacted on May 24, 2018, raised the asset threshold above which the Federal Reserve is required to apply EPSs to BHCs from $50 billion to $250 billion and gave the Federal Reserve the authority to apply EPSs to BHCs with at least $100 billion in assets.
EGRRCPA raised the asset threshold above which the Federal Reserve is required to apply enhanced prudential standards to BHCs from $50 billion to $250 billion and gave the Federal Reserve the authority to apply enhanced prudential standards to BHCs with at least $100 billion in assets.
In the new proposal, the Federal Reserve proposed to lower the cap to the sum of 14.4 cents for each transaction plus an amount equal to 0.04% of the value of the transaction and a 1.3 cent fraud prevention adjustment.
In the new proposal, the Federal Reserve proposed to lower the cap to the sum of 14.4 cents for each transaction plus an amount equal to 0.04% of the value of the transaction and a 1.3 cent fraud prevention adjustment. The Federal Reserve indicated that it was proposing this revision to the fee cap to reflect changes in issuer costs.
Our human capital management strategy is focused on attracting, developing, and retaining the talent our businesses need to deliver strong returns to our shareholders, which we do by offering a competitive total rewards package, providing opportunities for career development and growth, and fostering a culture that is fair and inclusive.
Our human capital management strategy is focused on attracting, retaining, developing, motivating and rewarding the talent our businesses need to drive sound, profitable growth, and ultimately, enhance shareholder value, which we do by offering a competitive total rewards package, providing opportunities for career development and growth, and fostering a culture that is fair and inclusive for all.
Key does not anticipate that the proprietary trading or covered fund restrictions in the Volcker Rule will have a material impact on its business, but it was required to divest certain fund investments. As of June 30, 2023, Key has completed conforming and/or divesting certain indirect investments subject to the Volcker Rule.
Key does not anticipate that the proprietary trading or covered fund restrictions in the Volcker Rule will have a material impact on its business, but it was required to divest certain fund investments.
For more information on competition and related risks, see Item 1A. Risk Factors - “ We operate in a highly competitive industry.” Mergers and acquisitions have also led to increased concentration in the banking industry, placing added competitive pressure on Key’s core banking products and services as we see competitors enter some of our markets or offer similar products.
Mergers and acquisitions have also led to increased concentration in the banking industry, placing added competitive pressure on Key’s core banking products and services as we see competitors enter some of our markets or offer similar products.
Information About Our Executive Officers KeyCorp’s executive officers are principally responsible for managing the operations of KeyCorp, making policy for KeyCorp, executing on strategic decisions, and managing material risks, subject to the supervision and direction of the Board. All executive officers are subject to annual election at the annual organizational meeting of the Board held each May.
Information About Our Executive Officers KeyCorp’s executive officers are principally responsible for managing the operations of KeyCorp, making policy for KeyCorp, executing on strategic decisions, and managing material risks, subject to the supervision and direction of 9 Table of contents the Board.
Key’s annualized rate for voluntary turnover as of December 31, 2023, was 14.6%, lower than our annualized voluntary turnover rate for 2022, which was 18.0%, and lower than our previous five year historical average of 16.8%.
Key’s annualized rate for voluntary turnover as of December 31, 2024, was 13.2%, lower than our annualized voluntary turnover rate for 2023, which was 14.6%, and lower than our previous five-year historical average of 15.3%.
The operating segment includes the KBCM platform which provides a broad suite of capital markets products and services including syndicated finance, debt and equity capital markets, derivatives, foreign exchange, financial advisory, public finance, commercial payments, equipment finance, and commercial mortgage banking. Additionally, KBCM provides fixed income and equity sales and trading services to investor clients.
The operating segment includes the KBCM platform which provides a broad suite of capital markets products and services including syndicated finance, debt and equity underwriting, fixed income and equity sales and trading, derivatives, foreign exchange, mergers & acquisition and other advisory, and public finance.
On November 16, 2023, the FDIC issued a final rule to impose a special assessment on IDIs to recover the loss to the DIF resulting from the use of the systemic risk exception to protect the uninsured depositors of SVB and Signature.
Under the FDIA, the loss to the DIF arising from the use of the systemic risk exception must be recovered through one or more special assessments. 17 Table of contents On November 16, 2023, the FDIC issued a final rule to impose a special assessment on IDIs to recover the loss to the DIF resulting from the use of the systemic risk exception to protect the uninsured depositors of SVB and Signature.
Final rules related to the implementation of EGRRCPA (“Tailoring Rules”) became effective on December 31, 2019. The Tailoring Rules established four risk-based categories of banking organizations with $100 billion or more in total consolidated assets and applied tailored regulatory requirements to each respective category.
Final rules related to the implementation of EGRRCPA (“Tailoring Rules”) established four risk-based categories of banking organizations with $100 billion or more in total consolidated assets and applied tailored regulatory requirements to each respective category. KeyCorp falls within the least restrictive of those categories (“Category IV Firms”).
Large BHCs, like KeyCorp, are also subject to liquidity requirements contained in regulations adopted pursuant to the Dodd-Frank Act and the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”).
KeyBank was not subject to the LCR or the Modified LCR under the Liquidity Coverage Rules. 14 Table of contents Large BHCs, like KeyCorp, are also subject to liquidity requirements contained in regulations adopted pursuant to the Dodd-Frank Act and the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”).
Since the adoption of a final rule by the federal banking agencies in October 2019, KeyBank is no longer required to conduct annual company-run stress tests.
In 2024, KeyCorp was required to participate in the Federal Reserve’s CCAR process and was subject to a supervisory stress test conducted by the Federal Reserve. Since the adoption of a final rule by the federal banking agencies in October 2019, KeyBank is no longer required to conduct annual company-run stress tests.
Among other things, the proposal would (i) require IDIs with more than $100 billion in total assets (including KeyBank) to submit full resolution plans every two years, (ii) require IDIs with total assets between $50 billion and $100 billion to submit informational filings every two years, (iii) require both groups of filers to submit more limited supplements in the off years, (iv) enhance and clarify the requirements for the content of resolution submissions, (v) codify certain aspects of guidance and feedback provided to filers subject to the current rule, (vi) expand expectations regarding engagement and capabilities testing, and (vii) establish an enhanced credibility standard for the evaluation of resolution submissions.
G-SIB (including KeyBank) to submit full resolution plans every three years, (iii) requires IDIs with total assets between $50 billion and $100 billion to submit informational filings every three years, (iv) requires triennial filers to submit more limited supplements in the off years, (v) enhances and clarifies the requirements for the content of resolution submissions, (vi) codifies certain 19 Table of contents aspects of guidance and feedback provided to filers subject to the current rule, (vii) expands expectations regarding engagement and capabilities testing, and (viii) establishes an enhanced credibility standard for the evaluation of resolution submissions.
These investments include a comprehensive and competitive total rewards program, representing our investment in our teammates’ collective success and reflecting our commitment to helping them thrive.
We have made other compensation adjustments in response to market trends, competitive pressures, and a dynamic market for talent. These investments include a comprehensive and competitive total rewards program, representing our investment in our teammates’ collective success and reflecting our commitment to helping them thrive.
For example, the minimum total risk-based capital ratio requirement for a banking organization subject to the market risk capital rule equals the ratio of the banking organization’s total capital to the sum of its credit risk-weighted assets and market 12 Table of contents risk-weighted assets.
For example, the minimum total risk-based capital ratio requirement for a banking organization subject to the market risk capital rule equals the ratio of the banking organization’s total capital to the sum of its credit risk-weighted assets and market risk-weighted assets. Only KeyCorp is subject to the market risk capital rule, as KeyBank does not engage in substantial trading activity.
(b) As a standardized approach banking organization, KeyBank is not subject to the 3% supplementary leverage ratio requirement, which became effective January 1, 2018. However, KeyCorp will be subject to the supplementary leverage ratio if proposed revisions to the Regulatory Capital Rules discussed below are adopted.
(b) As a standardized approach banking organization, KeyBank is not subject to the 3% supplementary leverage ratio requirement, which became effective January 1, 2018.
On October 24, 2023, the federal banking agencies adopted a final rule to strengthen and modernize their regulations implementing the CRA to better achieve the purposes of the law, adapt to changes in the banking industry, and provide clarity and consistency in the application of their regulations.
The CRA requires the federal banking agencies to assess the record of each institution that they supervise in meeting the credit needs of its entire community, including LMI neighborhoods. 21 Table of contents On October 24, 2023, the federal banking agencies adopted a final rule to strengthen and modernize their regulations implementing the CRA to better achieve the purposes of the law, adapt to changes in the banking industry, and provide clarity and consistency in the application of their regulations.
Midkiff was Chief Risk Officer and an executive officer of KeyCorp since January 2018. Andrew J. Paine III (54) - Mr. Paine has been the Head of Institutional Bank since 2019. He previously served as Co-Head of Key Corporate Bank from 2016 to May 2019.
She previously served as Head of Commercial Bank from May 2019 to November 2023 and Co-Head of Key Corporate Bank from 2016 to May 2019. She became an executive officer of KeyCorp in 2016. 10 Table of contents Andrew J. Paine III (55) - Mr. Paine has been the Head of Institutional Bank since 2019.
KeyCorp does not meet the $50 billion threshold and is not subject to the reduced LCR or an LCR public disclosure requirement. Under another Tailoring Rule, Category IV Firms (like KeyCorp) are required to conduct internal liquidity stress tests quarterly and are subject to simplified liquidity risk management requirements.
Under another Tailoring Rule, Category IV Firms (like KeyCorp) are required to conduct internal liquidity stress tests quarterly and are subject to simplified liquidity risk management requirements.
The Federal Reserve and FDIC make available on their websites the public sections of resolution plans for the companies, including KeyCorp and KeyBank, that submitted plans. The public sections of the resolution plans of KeyCorp and KeyBank are available at http://www.federalreserve.gov/supervisionreg/resolution-plans.htm and 19 Table of contents https://www.fdic.gov/regulations/reform/resplans/.
The Federal Reserve and FDIC make available on their websites the public sections of resolution plans for the companies, including KeyCorp and KeyBank, that submitted plans. The public sections of the resolution plans of KeyCorp and KeyBank are available at http://www.federalreserve.gov/supervisionreg/resolution-plans.htm and https://www.fdic.gov/resolutions/fdic-and-financial-regulatory-reform-title-i-and-idi-resolution-planning/. KeyCorp’s last resolution plan was submitted in 2017, and KeyBank’s last resolution plan was submitted in 2022.
The determination that a SIFI should be placed into OLA receivership is made by the U.S. Treasury Secretary, who must conclude that the SIFI is in default or in danger of default and that the SIFI’s failure poses a risk to the stability of the U.S. financial system.
Treasury Secretary, who must conclude that the SIFI is in default or in danger of default and that the SIFI’s failure poses a risk to the stability of the U.S. financial system. This determination must come after supermajority recommendations by the Federal Reserve and the FDIC, and consultation between the U.S. Treasury Secretary and the President.
We compete by offering quality products and innovative services at competitive prices, and by maintaining our product and service offerings to keep pace with customer preferences and industry standards. 7 Table of contents Human Capital Engaging a diverse and talented team is a top strategic priority for Key.
We compete by offering quality products and innovative services at competitive prices, and by maintaining our product and service offerings to keep pace with customer preferences and industry standards.
Historically, dividends paid by KeyBank have been an important source of cash flow for KeyCorp to pay dividends on its equity securities and interest on its debt. Dividends by our national bank subsidiaries are limited to the lesser of the amounts calculated under an earnings retention test and an undivided profits test.
Dividend restrictions Federal law and regulation impose limitations on the payment of dividends by our national bank subsidiaries, like KeyBank. Historically, dividends paid by KeyBank have been an important source of cash flow for KeyCorp to pay dividends on its equity securities and interest on its debt.
The Federal Reserve indicated that it was proposing this revision to the fee 23 Table of contents cap to reflect changes in issuer costs. The Federal Reserve also proposed to update the amount of the fee cap every other year going forward by using data it collects in a biennial survey of large debit card issuers.
The Federal Reserve also proposed to update the amount of the fee cap every other year going forward by using data it collects in a biennial survey of large debit card issuers. Comments on the proposal were due by May 12, 2024.
From 2018 to 2021, he served as General Counsel and Corporate Secretary of Cullen/Frost Bankers, Inc., a financial holding company. Prior to 2018, he was a partner of the law firm Haynes and Boone, LLP.
Waters became the General Counsel and Secretary and an executive officer of KeyCorp in July 2021. From 2018 to 2021, he served as General Counsel and Corporate Secretary of Cullen/Frost Bankers, Inc., a financial holding company.
Enhanced prudential standards and early remediation requirements As enacted in 2010, the Dodd-Frank Act required the Federal Reserve to impose EPSs upon BHCs, like KeyCorp, with at least $50 billion in total consolidated assets.
As of June 30, 2023, Key has completed conforming and/or divesting certain indirect investments subject to the Volcker Rule. 20 Table of contents Enhanced prudential standards and early remediation requirements The Dodd-Frank Act required the Federal Reserve to impose enhanced prudential standards upon BHCs, like KeyCorp, with at least $50 billion in total consolidated assets.
The Commercial operating segment is a full-service, commercial banking platform that focuses primarily on serving the borrowing, cash 6 Table of contents management, and capital markets needs of middle market clients within Key’s 15-state branch footprint. It is also a significant, national, commercial real estate lender and third-party servicer of commercial mortgage loans and special servicer of CMBS.
The Commercial operating segment is a full-service, commercial banking platform that focuses primarily on serving the borrowing, cash 6 Table of contents management, and capital markets needs of middle market clients within Key’s 15-state branch footprint. The Institutional operating segment operates nationally in providing lending, equipment financing, and banking products and services to large corporate and institutional clients.
The Federal Reserve has conducted a supervisory stress test on KeyCorp, pursuant to which the Federal Reserve projects revenues, expenses, losses, and resulting post-stress capital levels and regulatory capital ratios under conditions that affect the U.S. economy or the financial condition of KeyCorp, including supervisory baseline and severely adverse scenarios, that are determined by the Federal Reserve.
The Federal Reserve expects BHCs subject to CCAR to have and maintain regulatory capital in an amount that is sufficient to withstand a severely adverse operating environment and, at the same time, be able to continue operations, maintain ready access to funding, meet obligations to creditors and counterparties, and provide credit intermediation. 15 Table of contents The Federal Reserve has conducted a supervisory stress test on KeyCorp, pursuant to which the Federal Reserve projects revenues, expenses, losses, and resulting post-stress capital levels and regulatory capital ratios under conditions that affect the U.S. economy or the financial condition of KeyCorp, including supervisory baseline and severely adverse scenarios, that are determined by the Federal Reserve.
On August 29, 2023, the FDIC released for public comment a proposal to amend and restate its current resolution plan rule in order to clarify and strengthen resolution plan submission requirements and reflect lessons learned since the adoption of the FDIC’s current resolution plan rule in 2012.
Under this rule, KeyCorp is no longer subject to resolution planning requirements. On June 20, 2024, the FDIC adopted a final rule to amend and restate its current resolution plan rule in order to clarify and strengthen resolution plan submission requirements and reflect lessons learned since the adoption of the FDIC’s current resolution plan rule in 2012.
The powers of a receiver under the OLA are generally based on the FDIC’s powers as receiver for insured depository institutions under the FDIA. Certain provisions of the OLA were modified to reduce disparate treatment of creditors’ claims between the U.S. Bankruptcy Code and the OLA.
Certain provisions of the OLA were modified to reduce disparate treatment of creditors’ claims between the U.S. Bankruptcy Code and the OLA.
Supervision and governance On November 2, 2018, the Federal Reserve announced that it is adopting a new supervisory rating system for large financial institutions, including BHCs with total consolidated assets of $100 billion or more (like KeyCorp) (“LFI Rating System”), in order to align the Federal Reserve’s rating system with the post-crisis supervisory programs for these firms.
Supervision and governance KeyCorp is subject to the Federal Reserve’s supervisory rating system for large financial institutions, which includes BHCs with total consolidated assets of $100 billion or more (including KeyCorp) (“LFI Rating System”).
Comments on this proposal were due by January 16, 2024. Liquidity requirements U.S. banking organizations are subject to regulatory liquidity requirements based on international liquidity standards established by the Basel Committee in 2010, and subsequently revised between 2013 and 2014 (as revised, the “Basel III liquidity framework”).
All other elements of the calculation of regulatory capital would apply on the effective date of a final rule if the proposal is adopted. Comments on this proposal were due by January 16, 2024. Liquidity requirements U.S. banking organizations are subject to regulatory liquidity requirements based on international liquidity standards established by the Basel Committee (the “Basel III liquidity framework”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRISK FACTORS Summary of Risk Factors The following is a summary of some of the material risks and uncertainties that could have an adverse effect on our business. • Credit Risk ◦ We have concentrated credit exposure in commercial and industrial loans, commercial real estate loans, and commercial leases. ◦ Should the fundamentals of the commercial real estate market deteriorate, our financial condition and results of operations could be adversely affected. ◦ We are subject to the risk of defaults by our loan clients and counterparties. ◦ Various factors may cause our allowance for loan and lease losses to increase or to be inadequate. ◦ Declining asset prices could adversely affect us. ◦ Geopolitical destabilization could adversely impact our loan portfolios. • Compliance Risk ◦ We are subject to extensive government regulation, supervision, and tax legislation. ◦ We are subject to complex and evolving laws and regulations regarding privacy and cybersecurity, which could limit our ability to pursue business initiatives, increase the cost of doing business and subject us to compliance risks and potential liability. ◦ Changes in accounting policies, standards, and interpretations could materially affect how we report our financial condition and results of operations. • Operational Risk ◦ We are subject to a variety of operational risks. ◦ We and third parties on which we rely (including their downstream service providers) may experience a cyberattack, technology failure, information system or security breach or interruption. ◦ We rely on third parties to perform significant operational services for us. ◦ We are, and may in the future be, subject to claims, litigation, investigations, and governmental proceedings, which could result in significant financial liability and/or reputational harm. ◦ Our controls and procedures may fail or be circumvented, and our methods of reducing risk exposure may not be effective. ◦ Our operations and financial performance could be adversely affected by severe weather and natural disasters exacerbated by climate change. ◦ Societal and governmental responses to climate change could adversely affect Key’s business and performance, including indirectly through impacts on Key’s customers. ◦ The increased use of remote work infrastructure has expanded potential attack vectors and resulted in increased operational risks. • Liquidity Risk ◦ Capital and liquidity requirements imposed by banking regulations require banks and BHCs to maintain more and higher quality capital and more and higher quality liquid assets. ◦ Federal agencies’ actions to ensure stability of the U.S. financial system may have disruptive effects on us. ◦ We rely on dividends by our subsidiaries for most of our funds. ◦ We are subject to liquidity risk, which could negatively affect our funding levels. ◦ Our credit ratings affect our liquidity position. • Market Risk ◦ A worsening of the U.S. economy and volatile or recessionary conditions in the U.S. or abroad could negatively affect our business or our access to capital markets. ◦ We are subject to interest rate risk, which could adversely affect net interest income. ◦ Our profitability depends upon economic conditions in the geographic regions where we have significant operations and in certain market segments in which we conduct significant business. ◦ The soundness of other financial institutions could adversely affect us. ◦ Depressed market values for our common stock and adverse economic conditions sustained over a period of time may require us to write down all or some portion of our goodwill. 25 Table of contents • Reputation Risk ◦ Damage to our reputation could significantly impact our business and major stakeholders. ◦ Key is subject to environmental, social, and governance (ESG) risks that could adversely affect our reputation, the trading price of our common stock and/or our business and results of operations. • Strategic Risk ◦ We may not realize the expected benefits of our strategic initiatives. ◦ We operate in a highly competitive industry. ◦ Maintaining or increasing our market share depends upon our ability to adapt our products and services to evolving industry standards and consumer preferences, while maintaining competitive products and services. ◦ We may not be able to attract and retain skilled people. ◦ Acquisitions or strategic partnerships may disrupt our business and dilute shareholder value. • Model Risk ◦ We rely on quantitative models to manage certain accounting, risk management, capital planning, and treasury functions.
Biggest changeRISK FACTORS Summary of Risk Factors The following is a summary of some of the material risks and uncertainties that could have an adverse effect on our business. • Credit Risk ◦ We have concentrated credit exposure in commercial and industrial loans, commercial real estate loans, and commercial leases. ◦ Should the fundamentals of the commercial real estate market deteriorate, our financial condition and results of operations could be adversely affected. ◦ We are subject to the risk of defaults by our loan clients and counterparties. ◦ Declining asset prices could adversely affect us. ◦ Various factors may cause our allowance for loan and lease losses to increase or to be inadequate. ◦ Geopolitical destabilization could adversely impact our loan portfolios. • Market Risk ◦ A worsening of the U.S. economy and volatile or recessionary conditions in the U.S. or abroad could negatively affect our business or our access to capital markets. ◦ We are subject to interest rate risk, which could adversely affect net interest income. ◦ Our profitability depends upon economic conditions in the geographic regions where we have significant operations and in certain market segments in which we conduct significant business. ◦ The soundness of other financial institutions could adversely affect us. • Liquidity Risk ◦ We are subject to liquidity risk, which could negatively affect our funding levels. ◦ Capital and liquidity requirements imposed by banking regulations require banks and BHCs to maintain more and higher quality capital and more and higher quality liquid assets. ◦ Federal agencies’ actions to ensure stability of the U.S. economy and financial system may have costly or disruptive effects on us. ◦ We rely on dividends by our subsidiaries for most of our funds. ◦ Our credit ratings affect our liquidity position. • Operational Risk ◦ We are subject to a variety of operational risks. ◦ We and third parties on which we rely (including their downstream service providers) may experience a cyberattack, technology failure, information system or security breach or interruption. ◦ We rely on third parties to perform significant operational services for us, and their failure to perform to our standards or other issues of concern with them could harm us. ◦ Our framework for managing risks and mitigating losses may not be effective. ◦ We are, and may in the future be, subject to claims, litigation, arbitration, investigations, and governmental proceedings, which could result in significant financial liability and/or reputational harm. ◦ Our controls and procedures may fail or be circumvented, and our methods of reducing risk exposure may not be effective. ◦ Our operations and financial performance could be adversely affected by severe weather and natural disasters exacerbated by climate change. ◦ Societal and governmental responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers. ◦ The increased use of remote work infrastructure has expanded potential attack vectors and resulted in increased operational risks. • Compliance Risk ◦ We are subject to extensive government regulation, supervision, and tax legislation. ◦ We are subject to complex and evolving laws and regulations regarding privacy and cybersecurity, which could limit our ability to pursue business initiatives, increase the cost of doing business and subject us to compliance risks and potential liability. 24 Table of contents • Strategic Risk ◦ We may not realize the expected benefits of our strategic initiatives. ◦ We operate in a highly competitive industry. ◦ Maintaining or increasing our market share depends upon our ability to adapt our products and services to evolving industry standards and consumer preferences, while maintaining competitive products and services. ◦ We may not be able to attract and retain skilled people. ◦ Acquisitions or strategic partnerships may disrupt our business and dilute shareholder value. ◦ Scotiabank holds a significant equity interest in our business and may exercise influence over us, including through its ability to designate up to two directors to our Board of Directors. • Reputation Risk ◦ Damage to our reputation could significantly impact our business and major stakeholders. ◦ Key is subject to corporate responsibility and sustainability efforts risks that could adversely affect our reputation and our business and results of operations. • Model Risk ◦ We rely on quantitative models to manage certain accounting, risk management, capital planning, and treasury functions. • Estimates and Assumptions Risk ◦ The preparation of our consolidated financial statements requires us to make subjective determinations and use estimates that may vary from actual results and materially impact our financial condition and results of operations. ◦ Changes in accounting policies, standards, and interpretations could materially affect how we report our financial condition and results of operations. ◦ Impairment of goodwill could require charges to earnings, which could result in a negative impact on our results of operations.
The determination of the appropriate level of the ALLL inherently involves a degree of subjectivity and requires that we make significant estimates of current credit risks and current trends and reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and material changes.
The determination of the appropriate level of the ALLL inherently involves a degree of subjectivity and requires that we make significant estimates of current credit risks, current trends, and reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and material changes.
Social media facilitates the rapid dissemination of information or misinformation, thereby increasing the potential for rapid and widespread dissemination of inaccurate, false, misleading, or other negative information that could damage our reputation. Negative public opinion can also adversely affect our ability to attract and maintain customer relationships and could subject us to litigation and regulatory action.
Social media facilitates the rapid dissemination of information or misinformation, thereby increasing the potential for widespread dissemination of inaccurate, false, misleading, or other negative information that could damage our reputation. Negative public opinion can also adversely affect our ability to attract and maintain customer relationships and could subject us to litigation and regulatory action.
Other attacks have attempted to obtain unauthorized access to confidential, proprietary, or personal information or intellectual property, to extort money through the use of “ransomware” or other extortion tactics, or to alter or destroy data or systems, often through various attack vectors and methods, including the introduction of computer viruses or malicious code (commonly referred to as “malware”), phishing, cyberattacks, account takeovers, credential stuffing, and other means.
Other attacks have attempted to obtain unauthorized access to confidential, proprietary, or personal information or intellectual property, to extort money through the use of “ransomware” or other extortion tactics, or to alter or destroy data or systems, often through various attack vectors and methods, including the introduction of computer viruses or malicious or destructive code (commonly referred to as “malware”), phishing, cyberattacks, account takeovers, credential stuffing, and other means.
These properties typically require additional leasing through the life of the loan to provide cash flow to support debt service payments. If property market fundamentals deteriorate sharply, performance under existing leases could deteriorate and the execution of new leases could slow, compromising the borrower’s ability to cover debt service payments.
These properties typically require additional leasing through the life of the loan to provide adequate cash flow to support debt service payments. If property market fundamentals deteriorate sharply, performance under existing leases could deteriorate and the execution of new leases could slow, compromising the borrower’s ability to cover debt service payments.
Our failure to comply with evolving regulatory requirements related to natural disaster risk management may also result in legal and financial consequences. Societal and governmental responses to climate change could adversely affect Key’s business and performance, including indirectly through impacts on Key’s customers.
Our failure to comply with evolving regulatory requirements related to natural disaster risk management may also result in legal and financial consequences. Societal and governmental responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.
Changes in monetary policy, including changes in interest rate controls being applied by the Federal Reserve, could influence the amount of interest we receive on loans and securities, the amount of interest we pay on deposits and borrowings, our ability to originate loans and obtain deposits, and the fair value of our financial assets and liabilities.
Changes in monetary policy, including changes in interest rate controls being applied by the Federal Reserve, could influence the amount and timing of interest we receive on loans and securities, the amount and timing of interest we pay on deposits and borrowings, our ability to originate loans and obtain deposits, and the fair value of our financial assets and liabilities.
Maintaining or increasing our market share depends upon our ability to adapt our products and services to evolving industry standards and consumer preferences, while maintaining competitive products and services. The continuous, widespread adoption of new technologies requires us to evaluate our product and service offerings to ensure they remain competitive.
Maintaining or increasing our market share depends upon our ability to adapt our products and services to evolving industry standards and consumer preferences, while maintaining competitive products and services. The continuous, widespread adoption of new technologies requires us to continually evaluate our product and service offerings to ensure they remain competitive.
KeyBank’s ability to comply with BSA/AML and other regulations is dependent on its ability to improve detection and reporting capabilities and reduce variation in control processes and oversight accountability. Additionally, federal banking law grants substantial enforcement powers to federal banking regulators.
KeyBank’s ability to comply with BSA/AML and other regulations is dependent on its ability to continuously improve detection and reporting capabilities and reduce variation in control processes and oversight accountability. Additionally, federal banking law grants substantial enforcement powers to federal banking regulators.
Our credit risk may be exacerbated when the collateral held cannot be realized upon or is liquidated at prices insufficient to recover the full amount of the loan or derivative exposure due to us.
Our credit risk may be exacerbated when the collateral held cannot be realized or is liquidated at prices insufficient to recover the full amount of the loan or derivative exposure due to us.
The failure or inadequacy of a model may result in increased regulatory scrutiny on us or may result in an enforcement action or proceeding against us by one of our regulators. 41 Table of contents
The failure or inadequacy of a model may result in increased regulatory scrutiny on us or may result in an enforcement action or proceeding against us by one of our regulators. 41 Table of contents IX.
We are subject to complex and evolving laws and regulations governing the privacy and protection of personal information of our customers, employees, job applicants, and other individuals.
We are subject to complex and evolving laws, regulations, and requirements governing the privacy and protection of personal information of our customers, employees, job applicants, and other individuals.
These regulations increase our costs and affect our lending practices, capital structure, investment practices, dividend policy, ability to repurchase our common shares, and growth, among other things. KeyBank and KeyCorp remain covered institutions under the Dodd-Frank Act’s heightened prudential standards and regulations, including its provisions designed to protect consumers from financial abuse.
These regulations increase our costs and affect our lending practices, capital structure, investment practices, dividend policy, ability to repurchase our common shares, and growth, among other things. KeyBank and KeyCorp remain covered institutions under the Dodd-Frank Act’s enhanced prudential standards and regulations, including its provisions designed to protect consumers from financial abuse.
The specific ESG factors considered, as well as the approach to incorporating the factors into a broader investment process, vary by investor and can shift over time.
The specific factors considered, as well as the approach to incorporating the factors into a broader investment process, vary by investor and can shift over time.
The impact of the recent downgrades to KeyCorp's or KeyBank's credit ratings, or further downgrades, could adversely affect our access to liquidity and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us, reducing our ability to generate income.
The impact of downgrades to KeyCorp's or KeyBank's credit ratings could adversely affect our access to liquidity and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us, reducing our ability to generate income.
Our ability to anticipate changes in these factors or to hedge the related on-and off-balance sheet exposures, and the cost of any such hedging activity, can significantly influence the success of our asset-and-liability management activities and the resulting level of our net interest income and net interest margin.
Our ability to anticipate changes in these factors or to hedge the related on-and off-balance sheet exposures, and the cost of any such hedging activity, can significantly influence the success of our asset-and-liability management activities and our net interest income and net interest margin.
We also face competition from many other types of financial institutions, including, without limitation, savings associations, credit unions, mortgage banking companies, finance companies, mutual funds, insurance companies, investment management firms, investment banking firms, broker-dealers and other local, regional, national, and global financial services firms.
We also face competition from many other types of financial institutions, including, without limitation, savings associations, credit unions, mortgage banking companies, finance companies, mutual funds, insurance companies, investment management firms, private credit funds, investment banking firms, broker-dealers, financial technology companies, and other local, regional, national, and global financial services firms.
To date, our losses and costs related to these breaches have not been material, but other similar events in the future could have a material impact on our business strategy, results of operations, or financial condition. 30 Table of contents In addition, our customers routinely use Key-issued credit and debit cards to pay for transactions conducted with businesses in person and over the internet.
To date, our losses and costs related to these breaches have not been material, but other similar events in the future could have a material impact on our business strategy, results of operations, or financial condition. In addition, our customers routinely use Key-issued credit and debit cards to pay for transactions conducted with businesses in person and over the internet.
Further, enforcement matters could impact our supervisory and CRA ratings, which may in turn restrict or limit our activities. In recent years, there has been an increase in the number of investigations and proceedings in the financial services industry.
Further, enforcement matters could impact our supervisory and CRA ratings, which may in turn restrict or limit certain of our business activities. In recent years, there has been an increase in the number of investigations and proceedings in the financial services industry.
Acquiring other banks, bank branches, or other businesses involves various risks commonly associated with acquisitions or partnerships, including exposure to unknown or contingent liabilities of the acquired company; diversion of our management’s time and attention; significant integration risk with respect to employees, accounting 40 Table of contents systems, and technology platforms; increased regulatory scrutiny; and the possible loss of key employees and customers of the acquired company.
Acquiring other banks, bank branches, or other businesses involves various risks commonly associated with acquisitions or partnerships, including exposure to unknown or contingent liabilities of the acquired company; diversion of our management’s time and attention; significant integration risk with respect to employees, accounting systems, and technology platforms; increased regulatory scrutiny; and the possible loss of key employees and customers of the acquired company.
Key also provides card transaction processing services to some merchant customers under agreements we have with payment networks such as Mastercard. Under these agreements, we may be responsible for certain losses and penalties if one of our merchant customers suffers a data breach. We also face risks related to the increasing interdependence and interconnectivity of financial entities and technology systems.
Key also provides card transaction processing services to some merchant customers under agreements we have with payment networks. Under these agreements, we may be responsible for certain losses and penalties if one of our merchant customers suffers a data breach. We also face risks related to the increasing interdependence and interconnectivity of financial entities and technology systems.
A correction in the real estate markets could impact the ability of borrowers to make debt service payments on loans or to refinance the loans at maturity. A 26 Table of contents relatively small portion of our commercial real estate loans are construction loans. New construction and value-add or rehabilitation construction projects may not be fully leased at loan origination.
A correction in the real estate markets could impact the ability of borrowers to make debt service payments on loans or to refinance the loans at maturity. A relatively small portion of our commercial real estate loans are construction loans. New construction and value-add or rehabilitation construction projects may not be fully leased at loan origination.
As new privacy-related laws and regulations, and judicially-created frameworks, are implemented in jurisdictions in which KeyBank operates, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for noncompliance and reporting obligations in the case of data breaches, may significantly increase.
As new privacy-related laws and regulations, and judicially-created frameworks, are implemented in jurisdictions in which 37 Table of contents KeyBank operates, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for noncompliance and reporting obligations in the case of data breaches, may significantly increase.
Changes in economic conditions affecting borrowers, the softening of certain macroeconomic variables that we are more susceptible to, such as GDP, unemployment, SOFR and other interest rates, the producer price index, and real estate values, along with updated information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may indicate the need for an increase in the ALLL.
Changes in economic conditions affecting borrowers, the softening of certain macroeconomic variables that we are more susceptible to, such as GDP, unemployment, SOFR and other interest rates, the producer price index, and real estate values, along with updated information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the ALLL.
Recent Federal Reserve monetary policy, including shrinkage of its balance sheet and incremental increases in target interest rates early in 2023 followed by a sustained period of relatively high target interest rates throughout the latter part of 2023, continue to impact the commercial and residential real estate markets.
Recent Federal Reserve monetary policy, including shrinkage of its balance sheet and incremental increases in target interest rates early in 2023 followed by a sustained period of relatively higher target interest rates throughout the latter part of 2023 and 2024, continue to impact the commercial and residential real estate markets.
We are also exposed to operational risk through our outsourcing arrangements, and the effect that changes in circumstances or capabilities of our outsourcing vendors can have on our ability to continue to perform operational functions necessary to our business, 29 Table of contents such as certain loan processing functions.
We are also exposed to operational risk through our outsourcing arrangements, and the effect that changes in circumstances or capabilities of our outsourcing vendors can have on our ability to continue to perform operational functions necessary to our business, such as certain loan processing functions.
Compliance Risk We are subject to extensive government regulation, supervision, and tax legislation. As a financial services institution, we are subject to extensive federal and state regulation, supervision, and tax legislation. Banking regulations are primarily intended to protect depositors’ funds, the DIF, consumers, taxpayers, and the banking system as a whole, not our debtholders or shareholders.
As a financial services institution, we are subject to extensive federal and state regulation, supervision, and tax legislation. Banking regulations are primarily intended to protect depositors’ funds, the DIF, consumers, taxpayers, and the banking system as a whole, not our debtholders or shareholders.
Significant harm to our reputation can arise from various sources, including inappropriate behavior or misconduct of employees, actual or perceived unethical behavior, litigation or regulatory outcomes, inadequate or ineffective risk management practices, failing to deliver minimum or required standards of service and quality, corporate governance and regulatory compliance failures, disclosure of confidential information, significant or numerous failures, interruptions or breaches of our information systems, failure to meet external commitments and goals, including financial and ESG-related commitments, the activities of our clients, customers and counterparties, including vendors, and actions taken by shareholder activists and community organizations.
Significant harm to our reputation can arise from various sources, including inappropriate behavior or misconduct of employees, actual or perceived unethical behavior, litigation or regulatory outcomes, inadequate or ineffective risk management practices, failing to deliver minimum or required standards of service and quality, corporate governance and regulatory compliance failures, disclosure of confidential information, significant or numerous failures, interruptions or breaches of our information systems, complex fraud threats, failure to meet external commitments and goals, including financial corporate responsibility and sustainability related commitments, the activities of our clients, customers and counterparties, including vendors, and actions taken by shareholder activists and community organizations.
Our security systems, and those of the third-party service providers on which we rely, may not be able to protect our information systems or data from similar attacks due to the rapid evolution and creation of sophisticated cyberattacks.
Our security systems, and those of the third-party service providers on which we rely, 33 Table of contents may not be able to protect our information systems or data from similar attacks due to the rapid evolution and creation of sophisticated cyberattacks.
Asset price deterioration has a negative effect on the valuation of collateral and certain of the asset categories represented on our balance sheet and reduces our ability to sell assets at prices we deem acceptable. The most recent recession, resulting from the impact of the COVID-19 pandemic, did not have significant lasting impact on collateral value.
Asset price deterioration has a negative effect on the valuation of collateral and certain assets represented on our balance sheet and reduces our ability to sell assets at prices we deem acceptable. The most recent recession in the U.S., resulting from the impact of the COVID-19 pandemic, did not have significant lasting impact on collateral value.
The level of the allowance at December 31, 2023 represents management’s estimate of expected credit losses over the contractual life of our existing loan portfolio.
The level of the allowance at December 31, 2024 represents management’s estimate of expected credit losses over the contractual life of our existing loan portfolio.
Given our broad regional focus, we are exposed to a wide range of weather-related risk across different geographical areas. Severe weather events can directly affect our operations by interrupting systems, damaging facilities, disrupting our supply chain, and hindering our ability to conduct business as usual.
Given our broad regional focus, we are exposed to a wide range of climate-related physical risks across different geographical areas. Severe weather events can directly affect our operations by interrupting systems, damaging facilities, disrupting our supply chain, and hindering our ability to conduct business as usual.
When the Federal Reserve raises or reduces interest rates, the behavior of national money market rate indices, the correlation of consumer deposit rates to financial market interest rates, and the setting of benchmark rates may not follow historical relationships, which could influence net interest income and net interest margin.
When the Federal Reserve raises or reduces interest rates, the behavior of national money market rate indices, the correlation of consumer deposit rates to financial market interest rates, and the setting of benchmark rates may not follow historical relationships, which could influence net interest income and net interest margin through basis and other risks.
In particular, we face the following risks, and other unforeseeable risks, in connection with a downturn in the economic and market environment or in the face of downside shocks or a recession, whether in the United States or internationally: • A loss of confidence in the financial services industry and the debt and equity markets by investors, placing pressure on the price of Key’s common shares, decreasing the credit or liquidity available to Key, or leading to an increase in depositors withdrawing funds; • A decrease in consumer and business confidence levels generally, decreasing credit usage and investment or increasing delinquencies and defaults; • A decrease in household or corporate incomes, reducing demand for Key’s products and services; • A decrease in the value of collateral securing loans to Key’s borrowers or a decrease in the quality of Key’s loan portfolio, increasing loan charge-offs and reducing Key’s net income; • A decrease in our ability to liquidate positions at acceptable market prices; • An increase in competition or consolidation in the financial services industry; • Increased concern over and scrutiny of the capital and liquidity levels of financial institutions generally, and those of our transaction counterparties specifically; • A decrease in confidence in the creditworthiness of the United States or other issuers whose securities we hold; and • An increase in limitations on or the regulation of financial services companies like Key.
In particular, we face the following risks, and other unforeseeable risks, in connection with a downturn in the economic and market environment or in the face of downside shocks or a recession, whether in the United States or internationally: • A loss of confidence in the financial services industry and the debt and equity markets by investors, placing pressure on the price of our common shares or decreasing the credit or liquidity available to Key, while also increasing the cost of such credit or liquidity; • A decrease in consumer and business confidence levels generally, decreasing credit usage and investment or increasing delinquencies and defaults; • A decrease in household or corporate incomes, reducing demand for our products and services; 27 Table of contents • A decrease in the value of collateral securing loans to our borrowers or a decrease in the quality of our loan portfolio, increasing loan charge-offs and reducing Key’s net income; • A decrease in our ability to liquidate financial positions at acceptable market prices; • An increase in competition or consolidation in the financial services industry; • Increased concern over and scrutiny of the capital and liquidity levels of financial institutions generally, and those of our transaction counterparties specifically with a corresponding increase in our cost of capital, liquidity and/or funding; • A decrease in confidence in the creditworthiness of the United States or other issuers whose securities we hold; and • An increase in limitations on or the regulation of financial services companies like Key.
We have exposure to many different industries and counterparties in the financial services industries, and we routinely execute transactions with such counterparties, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, insurance companies, and other institutional clients. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
We have exposure to many different industries and counterparties in the financial services industries, and we routinely execute transactions with such counterparties, including brokers and dealers, banks, mortgage originators, hedge funds, insurance companies, and other institutional clients. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
Geopolitical destabilization could adversely impact our loan portfolios. While we have minimal direct foreign company exposure in our loan portfolios, there are correlated and contingent risks posed by geopolitical destabilization within our loan portfolio.
While we have minimal direct foreign company exposure in our loan portfolios, there are correlated and contingent risks posed by geopolitical destabilization within our loan portfolio.
Further, KeyCorp and certain of its directors and officers are currently named, and have in the past been named and may be named in the future, as defendants in various class actions and other litigation relating to our business and activities.
Further, KeyCorp is currently named, and KeyCorp and certain of its officers and directors have in the past been named, and may in the future be named, as defendants in various class actions, mass arbitrations, and other litigation relating to our business and activities.
These alternative means of funding may result in an increase to the overall cost of funds and may not be available under stressed conditions, which would cause us to liquidate a portion of our liquid asset portfolio to meet any funding needs. Our credit ratings affect our liquidity position.
These alternative means of funding may result in an increase in the overall cost of funds and may not be available under stressed conditions, which would cause us to liquidate a portion of our liquid asset portfolio to meet any funding needs.
Additionally, those bodies that establish and/or interpret the financial accounting and reporting standards (such as the FASB, SEC, and banking regulators) may change prior interpretations or positions on how these standards should be applied. These changes can be difficult to predict and can materially affect how Key records and reports its financial condition and results of operations.
Additionally, those bodies that establish and/or interpret the financial accounting and reporting standards (such as the FASB, SEC, and other regulatory agencies) may change prior interpretations or positions on how these standards should be applied. These changes can be difficult to predict and can materially affect how Key records and reports its consolidated financial condition and results of operations.
In addition, the insurance we maintain may not be adequate to cover our losses resulting from any business interruption resulting from a natural disaster or other severe weather events, and recurring extreme weather events could reduce the availability or increase the cost of insurance.
Furthermore, the insurance we maintain may not be adequate to cover our losses resulting from any business interruption resulting from a natural disaster or other severe weather events. Recurring extreme weather events could also reduce the availability or increase the cost of insurance.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions, the competitive environment within our markets, consumer preferences for specific loan and deposit products, and policies of various governmental and regulatory 36 Table of contents agencies, in particular, the Federal Reserve.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions, the competitive environment within our markets, consumer preferences for specific loan and deposit products and their payment behavior, and policies of various governmental and regulatory agencies, in particular, the Federal Reserve.
Our success depends on our ability to attract, retain, motivate, and develop a talented and diverse workforce. Competition for talent in our business is strong and requires us to make investments to provide compensation and benefits at market levels. Rising wages, as well as inflation, may cause us to increase these investments.
Our success depends on our ability to attract, retain, motivate, and develop a high performing, inclusive, and collaborative workforce. Competition for talent in our business is strong and requires us to make investments to provide compensation and benefits at market levels. Rising wages, as well as inflation, may cause us to increase these investments.
Like similarly situated institutions, Key undergoes routine scrutiny from bank supervisors in the examination process and is subject to enforcement of regulations at the federal and state levels, particularly with respect to consumer banking-related practices, including fair and responsible banking, fair lending, unfair, deceptive or abusive practices, and the Community Reinvestment Act, as well as compliance with AML, BSA and Office of Foreign Assets Control efforts.
Like similarly situated 36 Table of contents institutions, Key undergoes routine scrutiny from bank supervisors in the examination process and is subject to enforcement of regulations at the federal and state levels, particularly with respect to customer practices involving fair and responsible banking, fair lending, unfair, deceptive or abusive practices, and the Community Reinvestment Act, as well as compliance with AML, BSA and Office of Foreign Assets Control efforts.
These processes, the severity and other characteristics of which may evolve from year-to-year, are used by the Federal Reserve to, among other things, evaluate our management of capital and the adequacy of our regulatory capital and to determine the stress capital buffer that we must maintain above our minimum regulatory capital requirements.
The severity and other features of these processes, which take the form of stress tests and other measures, may evolve from year to year and are used by the Federal Reserve to, among other things, evaluate our management of capital and the adequacy of our regulatory capital and to determine the stress capital buffer that we must maintain above our minimum regulatory capital requirements.
Concerns over the long-term impacts of climate change have led and may continue to lead to governmental efforts around the world to mitigate those impacts.
Concerns over the long-term impacts of climate change have led and may continue to lead to governmental efforts around the world to mitigate those impacts, creating potential transition risk.
We use quantitative models to help provide value input into the management of certain aspects of our business and to assist with certain business decisions, including, but not limited to, estimating CECL, measuring the fair value of financial instruments when reliable market prices are unavailable, estimating the effects of changing interest rates and other market measures on our financial condition and results of operations, managing risk, and for capital planning purposes (including during the capital stress testing process).
We use quantitative models to help manage certain aspects of our business and to assist with certain business decisions, including, but not limited to, estimating ALLL, measuring the fair value of financial instruments when reliable market prices are unavailable, estimating the effects of changing interest rates and other market measures on our financial condition and results of operations, managing risk, predicting cash flows, and for capital planning purposes (including during the capital stress testing process).
We are subject to interest rate risk, which could adversely affect net interest income. Our earnings are largely dependent upon our net interest income. Net interest income is the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds.
“Risk Factors.” We are subject to interest rate risk, which could adversely affect net interest income. Our earnings depend heavily upon our net interest income. Net interest income is the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds.
Conversely, earnings could also be adversely affected if the interest we receive on loans and other investments falls more quickly than the interest we pay on deposits and other borrowings.
Conversely, earnings could also be adversely affected if the interest we receive on loans and other investments falls more quickly than the interest we pay on deposits and other borrowings. These scenarios illustrate repricing risk.
These alternatives may include generating client deposits, securitizing or selling loans, extending the maturity of wholesale borrowings, borrowing under certain secured borrowing arrangements, using relationships developed with a variety of fixed income investors, and further managing loan growth and investment opportunities.
These alternatives may include generating client deposits, securitizing or selling loans, extending the maturity of wholesale borrowings, borrowing under certain secured borrowing arrangements, using relationships developed with a variety of fixed income investors to access new funds or renegotiate the terms of outstanding debt, and further managing loan growth and investment opportunities.
In addition, volatility and uncertainty related to inflation and the effects of inflation, which has recently led to increased costs for businesses and consumers and caused the Federal Reserve to initiate a series of interest rate increases, may enhance or contribute to some of the risks of our business by adversely affecting the creditworthiness of our borrowers, increasing our costs, or resulting in lower values for our investment securities and other fixed-rate assets.
In addition, volatility and uncertainty related to inflation and the effects of inflation, which has, in recent years, led to increased costs for businesses and consumers and could cause the Federal Reserve to reinitiate a series of interest rate increases, which may amplify or contribute to some of the risks of our business by adversely affecting the creditworthiness of our borrowers, increasing our costs, or resulting in lower values for our investment securities and other fixed-rate assets.
Our strategic priorities include growing profitability; acquiring and expanding targeted client relationships; effectively managing risk and rewards; maintaining financial strength; and engaging, retaining, and inspiring our diverse and high-performing workforce. The success of these initiatives can be subject to changes in the macroeconomic environment that are beyond our control.
Our strategic priorities include growing profitability; acquiring and expanding targeted client relationships; effectively managing risk and rewards; maintaining financial strength; fostering an inclusive work environment for all employees; and engaging, retaining, and inspiring our high-performing and talented workforce. The success of these initiatives can be subject to changes in the macroeconomic environment that are beyond our control.
A violation of law or regulation by another financial institution may give rise to an inquiry or investigation by regulators or other authorities of the same or similar practices by Key.
A violation of law or regulation by another financial institution has, in the past, resulted in, and may, in the future, give rise to an inquiry or investigation by regulators or other authorities of the same or similar practices by Key.
Both an increase in the ALLL and actual losses exceeding our current estimates will reduce our net income and could impact our capital positions and may materially and adversely affect our business, financial condition or results of operations. Declining asset prices could adversely affect us.
Both an increase in the ALLL and actual losses exceeding our current estimates will reduce our net income and could impact our capital positions and may materially and adversely affect our business, financial condition or results of operations. Geopolitical destabilization could adversely impact our loan portfolios.
These shifts in investing priorities may result in adverse effects on the trading price of KeyCorp’s common stock if investors determine that Key has not made sufficient progress on ESG matters or is not aligned with the investors’ ESG-related priorities.
These shifts in investing priorities may result in adverse effects on the trading price of our common stock if investors determine that Key has not made sufficient progress on corporate responsibility and sustainability matters or is not aligned with the investors’ priorities.
The timing and effects of these natural disasters are difficult to accurately predict, and the potential impact of such disasters on our operations, employees, and customers could 32 Table of contents have a material adverse effect on our business, financial position, and results of operations.
The timing and effects of these climate-related physical risks are difficult to accurately predict, and the potential impact of such risks on our operations, employees, communities, and 35 Table of contents customers could have a material adverse effect on our business, financial position, and results of operations.
Capitalization rates are rising, and property value appreciation has slowed or is now declining. In many markets within Key’s footprint, property values have begun to decrease. Industrial and retail properties continue to remain stable, but multifamily, office, hospitality, and single family detached properties are beginning to show signs of deterioration.
Capitalization rates have risen, and property value appreciation has slowed and continues to decline. In many markets within Key’s footprint, property values continue to decrease. Industrial and retail properties continue to remain stable, but multifamily, office, hospitality, and single family detached properties show signs of deterioration.
Views about ESG-related issues are diverse, dynamic, and rapidly changing. Financial services companies, including Key, face increasing criticism from social and environmental activists who target companies, including Key, for engaging in business with clients engaged in industries such activists perceive to be harmful to communities or the environment. Such criticism directed at Key could generate dissatisfaction among our stakeholders.
Views about corporate responsibility and sustainability-related issues are diverse, dynamic, and rapidly changing. Financial services companies, including Key, face increasing criticism from social and environmental activists who target companies, including Key, for engaging in business with clients engaged in industries which such activists perceive to be harmful to communities or the environment.
As of December 31, 2023, the book value of our goodwill was $2.8 billion. Goodwill is periodically tested for impairment by comparing the fair value of each reporting unit to its carrying amount. If the fair value is greater than the carrying amount, then the reporting unit’s goodwill is deemed not to be impaired.
Goodwill is periodically tested for impairment by comparing the fair value of each reporting unit to its carrying amount. If the fair value is greater than the carrying amount, then the reporting unit’s goodwill is deemed not to be impaired.
We are subject to complex and evolving laws and regulations regarding privacy and cybersecurity, which could limit our ability to pursue business initiatives, increase the cost of doing business and subject us to compliance risks and potential liability.
For more information, see “Supervision and Regulation” in Item 1 of this report. We are subject to complex and evolving laws and regulations regarding privacy and cybersecurity, which could limit our ability to pursue business initiatives, increase the cost of doing business and subject us to compliance risks and potential liability.
We have experienced, and may continue to experience, disruption related to remote work, which disruptions could adversely impact our business, and could result in legal liability, regulatory penalties, litigation expenses, remediation costs, or reputational harm. IV.
We have experienced, and may continue to experience, disruption related to remote work, which disruptions could adversely impact our business, and could result in legal liability, regulatory penalties, litigation expenses, remediation costs, or reputational harm. V. Compliance Risk We are subject to extensive government regulation, supervision, and tax legislation.
Additionally, however we respond to such criticism, we face the risk that current or potential clients may decline to do business with us or current or potential employees refuse to work with us.
Such criticism directed at Key could generate dissatisfaction among our stakeholders. Additionally, however we respond to such criticism, we face the risk that current or potential clients may decline to do business with us or current or potential employees refuse to work with us.
Recent and persistent interest rate increases and a slowing economy have presented a challenge for the industry, including Key, and affected business and financial performance.
Recent and persistent interest rate increases and a slowing economy could present a challenge for the industry, including Key, and negatively affect business and financial performance.
The actual or perceived failure to adequately address conflicts of interest could affect the willingness of clients to deal with us, which could adversely affect our businesses, and could give rise to litigation or enforcement actions. 38 Table of contents Key is subject to environmental, social, and governance (ESG) risks that could adversely affect our reputation, the trading price of our common stock and/or our business and results of operations.
The actual or perceived failure to adequately address conflicts of interest could affect the willingness of clients to deal with us, which could adversely affect our businesses, and could give rise to litigation or enforcement actions. Key is subject to corporate responsibility and sustainability efforts risks that could adversely affect our reputation and our business and results of operations.
These risks include: • A correction in equity or housing markets; • Supply chain issues such as closed factories and disrupted port activity, as well as the impact of the Russia-Ukraine war and the Israel-Hamas war on global transportation and the availability of materials; • Labor-supply constraints, leading to slowing job growth and boosting wages along with inflation (wage-price spiral); and 27 Table of contents • Negative GDP growth, as a result of, in part, the Federal Reserve’s monetary policy efforts to arrest inflationary pressures within the broader economy.
These risks include, but are not limited to: 26 Table of contents • A correction in equity or housing markets; • Supply chain issues such as closed factories and disrupted port activity, as well as the impact of the Russia-Ukraine war and the Israel-Hamas war on global transportation and the availability of materials; • Recessionary pressures on other major international economies, such as China, that may impact the broader global and our domestic economy; • Labor-supply constraints, including as a result of potential changes to U.S. immigration policies and laws, leading to slowing job growth and rising wages along with inflation (wage-price spiral); and • Negative real GDP growth, as a result of, in part, the Federal Reserve’s monetary policy to arrest inflationary pressures within the broader economy.
Compliance with these laws and regulations has required and may continue to require us to change our policies, procedures, and technology for information security and segregation of data, which could, among other things, make us more vulnerable to operational failures, and subject us to monetary penalties for breach of such laws and regulations.
Compliance with these laws and regulations has required and may continue to require us to change our policies, procedures, and technology for information security and segregation of data, which could, among other things, make us more vulnerable to operational failures, result in increased costs as a result of continually evaluating our policies and processes and adapting to new requirements that are or become applicable to us, and subject us to monetary penalties for breach of such laws and regulations.
Capital and long-term debt requirements require us to divert resources from otherwise profitable lending and investment opportunities to ensure compliance, which may be dilutive to shareholders or limit Key’s ability to buy back shares or issue dividends.
Capital and long-term debt requirements require us to divert resources from otherwise profitable lending and investment opportunities to ensure compliance, which may be dilutive to shareholders or limit Key’s ability to buy back shares or pay dividends. The Federal Home Loan Bank (FHLB) system continues to be a source of funding.
For example, we are required to deliver a substantial portion of the variable compensation of certain teammates in the form of awards tied to our financial performance. The decline in our share price we experienced in 2023 could impact our ability to retain those individuals.
For example, we are required to deliver a substantial portion of the variable compensation of certain teammates in the form of awards tied to our financial performance and/or share price performance.
To the extent that the Federal Reserve’s policies around managing inflation do not mitigate the volatility and uncertainty related to inflation and the effects of inflation, or to the extent conditions otherwise worsen, we could experience adverse effects on our business, financial condition, and results of operations.
To the extent that the Federal Reserve’s policies around managing inflation fail to mitigate the volatility and uncertainty related to inflation and the effects of inflation, or to the extent conditions otherwise worsen or are exacerbated by policies enacted by the U.S. government, including the imposition of tariffs or other trade policies, we could experience adverse effects on our business, financial condition, and results of operations.
A financial institution or other counterparty failure, such as the bank failures in early 2023, or a cybersecurity breach could result in the failure of or disruption to a counterparty or client, which may materially and adversely affect our business, financial condition or results of operations.
A financial institution or other counterparty failure or a cybersecurity breach that causes the failure of or disruption to a counterparty or client, may materially and adversely affect our business, financial condition, or results of operations.
Although we maintain a liquid asset portfolio and have implemented strategies to maintain sufficient and diverse sources of funding to accommodate planned as well as unanticipated changes in assets, liabilities, and off-balance sheet commitments under various economic conditions (including a reduced level of wholesale funding sources), a substantial, unexpected, or prolonged change in the level or cost of liquidity could have a material adverse effect on us.
Despite actions that we take to manage these risks, unanticipated changes in assets, liabilities, and off-balance sheet commitments under various economic conditions (including a reduced level of wholesale funding sources), a substantial, unexpected, or prolonged change in the level or cost of liquidity could have a material adverse effect on us.
Additionally, regulatory guidance adopted by federal banking regulators related to how banks select, contract with, evaluate, engage with, and manage their third parties, including such third parties’ use of subcontractors, affects the 31 Table of contents circumstances and conditions under which we work with third parties and their subcontractors and the cost of managing such relationships.
Further, regulatory guidance adopted by federal banking regulators related to how banks select, contract with, evaluate, engage with, and manage their third parties, including such third parties’ use of subcontractors and downstream service providers, impacts whether and how we work with such parties, as well as the cost of managing such relationships.
As a result, some uncertainty remains as to the aggregate impact upon Key of significant regulations. Changes in accounting policies, standards, and interpretations could materially affect how we report our financial condition and results of operations. The FASB periodically changes the financial accounting and reporting standards governing the preparation of Key’s financial statements.
Changes in accounting policies, standards, and interpretations could materially affect how we report our financial condition and results of operations. The FASB periodically changes the financial accounting and reporting standards governing the preparation of Key’s consolidated financial statements.
We are, and may in the future be, subject to claims, litigation, investigations, and governmental proceedings, which could result in significant financial liability and/or reputational harm. We are subject to, and may in the future be subject to, claims or legal actions taken against us by customers, vendors, shareholders, or other parties.
We are subject to, and may in the future be subject to, claims or legal actions taken against us by customers, vendors, shareholders, or other parties.
Conversely, certain states have taken, and may in the future take, actions or proposed measures to limit the state’s ability to do business with financial institutions or other businesses identified as discriminating against certain industries or practices based on environmental or social criteria.
For example, President Trump recently issued an executive order opposing DEI initiatives in the private sector, and certain states have 40 Table of contents taken, and may in the future take, actions or proposed measures to limit the state’s ability to do business with financial institutions or other businesses identified as discriminating against certain industries or practices based on environmental or social criteria.
We could be inherently exposed to reputational, financial, and legal risk, and our ability to retain and attract customers and employees may be negatively impacted as a result of these contrasting arguments in how a financial institution should address these issues. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their ESG practices and disclosures.
We could be exposed to reputational, financial, and legal risk as a result of anti-ESG and anti-DEI sentiment, and our ability to retain and attract customers and employees may be negatively impacted as a result of these contrasting arguments in how a financial institution should address these issues.
Evolving capital standards resulting from the Dodd-Frank Act and the Regulatory Capital Rules adopted by our 33 Table of contents regulators have had and will continue to have a significant impact on banks and BHCs, including Key.
Capital and liquidity requirements imposed by banking regulations require banks and BHCs to maintain more and higher quality capital and more and higher quality liquid assets. Evolving capital standards resulting from the Dodd-Frank Act and the Regulatory Capital Rules adopted by our regulators have had and will continue to have a significant impact on banks and BHCs, including Key.
Market conditions or other events could negatively affect our access to or the cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, or fund asset growth and new business initiatives at a reasonable cost, in a timely manner and without adverse consequences.
Liquidity Risk We are subject to liquidity risk, which could negatively affect our funding levels. Liquidity risk refers to our ability to fund liability maturities and deposit withdrawals, meet contractual obligations, or fund asset growth and new business initiatives at a reasonable cost, in a timely manner and without adverse consequences.
We rely on dividends by our subsidiaries for most of our funds. We are a legal entity separate and distinct from our subsidiaries. With the exception of cash that we may raise from debt and equity issuances, we receive substantially all of our funding from dividends by our subsidiaries.
With the exception of cash that we may raise from debt and equity issuances, we receive substantially all of our funding from dividends by our subsidiaries. Dividends by our subsidiaries are the principal source of funds for the dividends we pay on our common and preferred stock and interest and principal payments on our debt.
Failure to comply with these and other regulations, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputational damage, or restrictions on our business.
Failure to comply with these and other regulations, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputational damage , or restrictions on our business. Moreover, different government administrations may have different regulatory priorities, which may impact the level of regulation of financial institutions and the enforcement environment.
The deterioration of a larger loan or a group of loans in this category could cause an increase in criticized and nonperforming loans, which could result in lower earnings from these loans, additional provision for loan and lease losses, and ultimately an increase in loan losses.
The deterioration of a larger loan or a group of loans in this category could cause an increase in criticized, classified, and nonperforming loans, which could result in lower earnings from these loans, additional provision for loan and lease losses, and ultimately an increase in loan losses. 25 Table of contents Should the fundamentals of the commercial real estate market deteriorate, our financial condition and results of operations could be adversely affected.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisks and exposures related to cybersecurity incidents are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of cybersecurity threats and geopolitical events, as well as due to the expanding use of Internet and mobile banking and other technology-based products and services utilized by us and our clients.
Biggest changeRisks and exposures related to cybersecurity incidents are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of cybersecurity threats and geopolitical events, as well as due to the expanding use of Internet and mobile banking and other technology-based products and services utilized by us and our clients, including products and services that utilize the cloud and artificial intelligence (AI), among other emerging technologies.
Privacy Compliance, which sits within Compliance Risk Management, provides advisory support, governance, and oversight of privacy-related statutes, regulations, and risks related to Key’s customers, employees, and other individuals from who Key collects personally identifiable information. • Third Line of Defense – Risk Review Group.
Privacy Compliance, which sits within Compliance Risk Management, provides advisory support, governance, and oversight of privacy-related statutes, regulations, and risks related to Key’s customers, employees, and other individuals from who Key collects personally identifiable information. • Third Line of Defense – Risk Review Group (RRG).
Our CISO has served in various roles in information technology and information security at Key for over 29 years, including serving as Enterprise Security Executive. The CISO holds a B.S.B.A in Management Information Systems. The CISO is responsible for reporting on information security matters, including cybersecurity risk, to the Board.
Our CISO has served in various roles in information technology and information security at Key for over 30 years, including serving as Enterprise Security Executive. The CISO holds a B.S.B.A in Management Information Systems. The CISO is responsible for reporting on information security matters, including cybersecurity risk, to the Board.
The RRG reviews and evaluates the scope and breadth of security activities throughout Key and the effectiveness of the IS Program. RRG conducts independent internal audits on Key’s LOBs, operations, information systems, and technologies. These internal audits provide an independent 42 Table of contents perspective on Key’s processes and risks.
The RRG reviews and evaluates the scope and breadth of security activities throughout Key and the effectiveness of the IS Program. RRG conducts independent internal 43 Table of contents audits on Key’s LOBs, operations, information systems, and technologies. These internal audits provide an independent perspective on Key’s processes and risks.
The CISO provides updates to the Audit Committee on cybersecurity matters at each regularly scheduled Committee meeting (six times in 2023). The CISO’s update to the Committee generally address the cybersecurity threat landscape, information security trends, strategic initiatives related to information security, and cybersecurity program reviews.
The CISO provides updates to the Audit Committee on cybersecurity matters at each regularly scheduled Committee meeting (six times in 2024). The CISO’s update to the Committee generally address the cybersecurity threat landscape, information security trends, strategic initiatives related to information security, and cybersecurity program reviews.
Any identified gaps are risk rated, issued a due date for remediation, and tracked through completion of remediation. Remediation is then verified by the RRG. 44 Table of contents
Any identified gaps are risk rated, issued a due date for remediation, and tracked through completion of remediation. Remediation is then verified by the RRG. 45 Table of contents
The Deputy CISO has over 16 years of cybersecurity and technology risk management experience across financial 43 Table of contents services and retail, previously served as the Head of Information Security Governance within KeyCorp’s Corporate Information Security group, as well as the Head of Cybersecurity and Technology Risk Oversight within KeyCorp’s Risk Management group.
The Deputy CISO has over 17 years of cybersecurity and technology risk management experience across financial services and retail, previously served as the Head of Information Security Governance within KeyCorp’s Corporate Information Security group, as well as the Head of Cybersecurity and Technology Risk Oversight within KeyCorp’s Risk Management group.
The CISO provides updates to the Board as needs arise and from time to time. Key’s Deputy CISO leads the Corporate Information Security function, including the Cyber Defense Center, Identity & Access Management Operations, Information Security Governance, and Security Architecture and Engineering.
The CISO provides updates to the Board as needs arise and from time to time. 44 Table of contents Key’s Deputy CISO leads the Corporate Information Security function, including the Cyber Defense Center, Identity & Access Management Operations, Information Security Governance and Data Protection, and Security Architecture, Engineering and Platform Operations.
Added
In addition, our management team from time to time participates in cybersecurity tabletop exercises that simulate cybersecurity incidents. These exercises are intended to test our response to potential incidents and assess the procedures outlined in our incident response playbooks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, Key owned two buildings in Brooklyn, Ohio, with office space that it operated from and totaling 584,930 square feet at December 31, 2023. Our office space is used by all of our segments. As of the same date, KeyBank owned 415 branches and leased 544 branches.
Biggest changeIn addition, Key owned two buildings in Brooklyn, Ohio, with office space that it operated from and totaling 584,930 square feet at December 31, 2024. Our office space is used by all of our segments. As of the same date, KeyBank owned 410 branches and leased 534 branches.
At December 31, 2023, Key leased approximately 375,414 square feet of the complex, encompassing the first floor branch, the 2nd, 3rd and 5th through 9th office floors, the 12th floor, and the 54th through 56th floors of the 57-story Key Center.
At December 31, 2024, Key leased approximately 375,414 square feet of the complex, encompassing the first floor branch, the 2nd, 3rd and 5th through 9th office floors, the 12th floor, and the 54th through 56th floors of the 57-story Key Center.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCalendar month Total number of shares repurchased (a) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Dollar value of shares that may yet be purchased as part of publicly announced plans or programs (b) October 1 - 31 — $ — — $ — November 1 - 30 — — — — December 1 -31 1,744 13.73 — — Total 1,744 $ 13.73 — (a) Includes Common Shares deemed surrendered by employees in connection with our stock compensation and benefit plans to satisfy tax obligations.
Biggest changeSee Note 24 (“Shareholders' Equity”) for more information regarding share repurchases. 47 Table of contents Calendar month Total number of shares repurchased (a) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Dollar value of shares that may yet be purchased as part of publicly announced plans or programs (b) October 1 - 31 236 $ 17.21 — $ — November 1 - 30 103,712 19.49 — — December 1 -30 262 18.84 — — Total 104,210 $ 19.48 — (a) Includes Common Shares deemed surrendered by employees in connection with our stock compensation and benefit plans to satisfy tax obligations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations are incorporated herein by reference: Page(s) Discussion of dividends in the section captioned “Capital — Dividends” 68 Discussion of our common shares, shareholder information, and repurchase activities in the section captioned “Capital — Common Shares outstanding” 68 The following graph compares the price performance of our Common Shares (based on an initial investment of $100 on December 31, 2018, and assuming reinvestment of dividends) with that of the S&P 500 Index and a group of other banks that constitute our peer group.
Management’s Discussion and Analysis of Financial Condition and Results of Operations are incorporated herein by reference: Page(s) Discussion of dividends in the section captioned “Capital — Dividends” 73 Discussion of our common shares, shareholder information, and repurchase activities in the section captioned “Capital — Common Shares outstanding” 73 The following graph compares the price performance of our Common Shares (based on an initial investment of $100 on December 31, 2019, and assuming reinvestment of dividends) with that of the S&P 500 Index and a group of other banks that constitute our peer group.
We did not complete any open market share repurchases in the fourth quarter of 2023. (b) Our previous share purchase authorization expired as of September 30, 2023 46 Table of contents
We did not complete any open market share repurchases in the fourth quarter of 2024.
Removed
The amounts involved may be material. In July 2021, the Board of Directors authorized the repurchase of up to $1.5 billion of our Common Shares, effective the third quarter of 2021 through the third quarter of 2022. In September 2022, the Board of Directors approved the extension of the previous authorization through the third quarter of 2023.
Added
The amounts involved may be material. We did not complete any open market share repurchases in 2024, and have no Board-approved repurchase authorizations outstanding. During 2024, Key repurchased $28 million of shares related to equity compensation programs.
Removed
This authorization expired as of September 30, 2023. During the fourth quarter of 2023, Key repurchased less than $1 million of shares related to equity compensation programs. The following table summarizes our repurchases of our Common Shares for the three months ended December 31, 2023.
Added
On August 30, 2024, KeyCorp issued 47,829,359 Common Shares for approximately $821 million in gross proceeds to Scotiabank pursuant to the first closing under the Investment Agreement. On December 27, 2024, Scotiabank completed the second and final purchase of 115,042,316 Common Shares under the Investment Agreement with an investment of approximately $2.0 billion in gross proceeds.
Added
These acquisitions were exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), by virtue of the exemption provided by Section 4(a)(s) of the Securities Act. The following table summarizes our repurchases of our Common Shares for the three months ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCommercial Real Estate Loans Geographic Region Dollars in millions West Southwest Central Midwest Southeast Northeast National Total Percent of Total Construction Commercial Mortgage December 31, 2023 Nonowner-occupied: Diversified $ 3 $ — $ — $ 3 $ — $ 16 $ 164 $ 186 1.0 % $ — $ 186 Industrial 58 24 80 110 230 280 20 802 4.4 168 634 Land & Residential 5 3 3 5 3 21 — 40 .2 18 22 Lodging 48 — 3 4 46 66 55 222 1.2 5 217 Medical Office 37 — 42 1 21 97 75 273 1.5 27 246 Multifamily 1,237 552 1,271 1,272 2,707 1,370 444 8,853 48.5 2,389 6,464 Office 142 — 153 76 118 285 50 824 4.5 — 824 Retail 213 6 84 183 102 297 213 1,098 6.0 75 1,023 Self Storage 62 — 45 15 72 32 171 397 2.2 4 393 Senior Housing 124 22 143 88 65 120 213 775 4.2 126 649 Skilled Nursing — — — 66 — 202 215 483 2.6 — 483 Student Housing — — — 27 158 — — 185 1.0 59 126 Other 1 12 8 35 37 67 160 320 1.8 — 320 Total nonowner-occupied 1,930 619 1,832 1,885 3,559 2,853 1,780 14,458 79.2 2,871 11,587 Owner-occupied 1,141 1 414 720 167 1,352 — 3,795 20.8 195 3,600 Total $ 3,071 $ 620 $ 2,246 $ 2,605 $ 3,726 $ 4,205 $ 1,780 $ 18,253 100.0 % $ 3,066 $ 15,187 Nonowner-occupied: Nonperforming loans $ 1 $ — $ 46 $ 1 $ 9 $ 5 $ 38 $ 100 N/M $ — $ 100 Accruing loans past due 90 days or more 1 — — 6 — 3 — 10 N/M — 10 Accruing loans past due 30 through 89 days 3 — 12 — 7 7 — 29 N/M — 29 December 31, 2022 Nonowner-occupied: Diversified $ 9 $ — $ — $ 4 $ — $ 24 $ 231 $ 268 1.4 % $ — $ 268 Industrial 75 25 101 135 220 284 52 892 4.7 203 689 Land & Residential 1 3 3 3 3 24 — 37 .2 15 22 Lodging 58 — 10 4 20 72 41 205 1.1 22 183 Medical Office 47 — 43 9 19 98 25 241 1.3 64 177 Multifamily 1,083 533 1,388 1,264 2,813 1,370 438 8,889 47.1 1,705 7,184 Office 189 1 173 113 128 300 95 999 5.3 — 999 Retail 282 35 112 183 69 395 235 1,311 6.9 106 1,205 Self Storage 85 13 50 20 79 37 202 486 2.6 4 482 Senior Housing 150 57 144 76 118 120 235 900 4.8 194 706 Skilled Nursing — — — 52 — 239 143 434 2.3 — 434 Student Housing — — — 53 199 13 — 265 1.4 39 226 Other 24 4 9 79 42 83 195 436 2.3 2 434 Total nonowner-occupied 2,003 671 2,033 1,995 3,710 3,059 1,892 15,363 81.4 2,354 13,009 Owner-occupied 1,149 5 364 580 128 1,293 — 3,519 18.6 176 3,343 Total $ 3,152 $ 676 $ 2,397 $ 2,575 $ 3,838 $ 4,352 $ 1,892 $ 18,882 100.0 % $ 2,530 $ 16,352 Nonperforming loans $ — $ — $ — $ 2 $ — $ 7 $ 12 $ 21 N/M $ — $ 21 Accruing loans past due 90 days or more — — — — — 8 — 8 N/M — 8 Accruing loans past due 30 through 89 days — — 1 11 — 6 — 18 N/M — 18 West – Alaska, California, Hawaii, Idaho, Montana, Oregon, Washington, and Wyoming Southwest – Arizona, Nevada, and New Mexico Central – Arkansas, Colorado, Oklahoma, Texas, and Utah Midwest – Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin Southeast – Alabama, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Washington, D.C., and West Virginia Northeast – Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont National – Accounts in three or more regions 64 Table of contents Consumer loan portfolio Consumer loans outstanding at December 31, 2023, totaled $35.0 billion, a decrease of $1.9 billion, or 5.2%, from one year ago .
Biggest changeCommercial Real Estate Loans Geographic Region Dollars in millions West Southwest Central Midwest Southeast Northeast National Total Percent of Total Construction Commercial Mortgage December 31, 2024 Nonowner-occupied: Data Center $ — $ — $ — $ 98 $ 54 $ — $ — $ 152 .9 % $ — $ 152 Diversified 1 — — 3 — 13 118 135 .8 — 135 Industrial 44 1 95 103 214 258 18 733 4.5 54 679 Land & Residential 10 7 3 7 — 21 — 48 .3 28 20 Lodging 48 — 12 14 46 55 59 234 1.4 — 234 Medical Office 35 43 42 — 37 97 17 271 1.7 — 271 Multifamily 1,303 485 1,201 1,204 2,325 1,336 156 8,010 49.3 2,405 5,605 Office 152 1 129 77 134 232 13 738 4.5 — 738 Retail 152 6 81 172 97 293 79 880 5.4 43 837 Self Storage 44 — 44 8 222 18 24 360 2.2 14 346 Senior Housing 172 39 97 85 54 142 4 593 3.7 154 439 Skilled Nursing — — — — 132 170 90 392 2.4 — 392 Student Housing 41 — 13 63 123 — — 240 1.5 50 190 Other 1 10 7 112 40 48 — 218 1.3 — 218 Total nonowner-occupied 2,003 592 1,724 1,946 3,478 2,683 578 13,004 80.0 2,748 10,256 Owner-occupied 1,078 — 330 601 182 1,051 — 3,242 20.0 188 3,054 Total $ 3,081 $ 592 $ 2,054 $ 2,547 $ 3,660 $ 3,734 $ 578 $ 16,246 100.0 % $ 2,936 $ 13,310 Nonowner-occupied: Nonperforming loans $ 5 $ — $ 64 $ 80 $ 81 $ 13 $ — $ 243 N/M $ — $ 243 Accruing loans past due 90 days or more 10 — 2 1 — 7 — 20 N/M 4 16 Accruing loans past due 30 through 89 days 1 — — 3 19 9 — 32 N/M — 32 December 31, 2023 Nonowner-occupied: Data Center $ — $ — $ — $ — $ — $ — $ — $ — — % $ — $ — Diversified 3 — — 3 — 16 164 186 1.0 — 186 Industrial 58 24 80 110 230 280 20 802 4.4 168 634 Land & Residential 5 3 3 5 3 21 — 40 .2 18 22 Lodging 48 — 3 4 46 66 55 222 1.2 5 217 Medical Office 37 — 42 1 21 97 75 273 1.5 27 246 Multifamily 1,237 552 1,271 1,272 2,707 1,370 444 8,853 48.5 2,389 6,464 Office 142 — 153 76 118 285 50 824 4.5 — 824 Retail 213 6 84 183 102 297 213 1,098 6.0 75 1,023 Self Storage 62 — 45 15 72 32 171 397 2.2 4 393 Senior Housing 124 22 143 88 65 120 213 775 4.2 126 649 Skilled Nursing — — — 66 — 202 215 483 2.6 — 483 Student Housing — — — 27 158 — — 185 1.0 59 126 Other 1 12 8 35 37 67 160 320 1.8 — 320 Total nonowner-occupied 1,930 619 1,832 1,885 3,559 2,853 1,780 14,458 79.2 2,871 11,587 Owner-occupied 1,141 1 414 720 167 1,352 — 3,795 20.8 195 3,600 Total $ 3,071 $ 620 $ 2,246 $ 2,605 $ 3,726 $ 4,205 $ 1,780 $ 18,253 100.0 % $ 3,066 $ 15,187 Nonperforming loans $ 1 $ — $ 46 $ 1 $ 9 $ 5 $ 38 $ 100 N/M $ — $ 100 Accruing loans past due 90 days or more 1 — — 6 — 3 — 10 N/M — 10 Accruing loans past due 30 through 89 days 3 — 12 — 7 7 — 29 N/M — 29 West – Alaska, California, Hawaii, Idaho, Montana, Oregon, Washington, and Wyoming Southwest – Arizona, Nevada, and New Mexico Central – Arkansas, Colorado, Oklahoma, Texas, and Utah Midwest – Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin Southeast – Alabama, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Washington, D.C., and West Virginia Northeast – Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont National – Accounts in three or more regions Consumer loan portfolio Consumer loans outstanding at December 31, 2024, totaled $32.4 billion, a decrease of $2.6 billion, or 7.6%, from one year ago .
The difference between these two scenarios would have driven an increase of approximately 1.7x for commercial and 1.6x for the consumer modeled allowance results. Similarly, deteriorating conditions for portfolio factors were also considered by moderately stressing key portfolio drivers, relative to the baseline portfolio conditions.
The difference between these two scenarios would have driven an increase of approximately 1.6x for commercial and 1.7x for the consumer modeled allowance results. Similarly, deteriorating conditions for portfolio factors were also considered by moderately stressing key portfolio drivers, relative to the baseline portfolio conditions.
In aligning our businesses and investments against these targeted client segments, we are able to make a meaningful impact for our clients. • Effectively manage risk and rewards — Our risk management activities are focused on ensuring we properly identify, measure, and manage risks across the entire company to maintain safety and soundness and maximize profitability. • Maintain financial strength — With the foundation of a strong balance sheet, we intend to remain focused on sustaining strong reserves, liquidity, and capital.
In aligning our businesses and investments against these targeted client segments, we are able to make a meaningful positive impact for our clients. • Effectively manage risk and rewards — Our risk management activities are focused on ensuring we properly identify, measure, and manage risks across the entire company to maintain safety and soundness and maximize profitability. • Maintain financial strength — With the foundation of a strong balance sheet, we intend to remain focused on sustaining strong reserves, liquidity, and capital.
Moody’s Consensus forecast is the source of macroeconomic projections, including the interest rate forecasts used in the credit models. We use a two year reasonable and supportable period across all products to forecast economic conditions. As the length of the life of a financial asset increases, these inputs may become impractical to estimate as reasonable and supportable.
Moody’s Consensus forecast is our source of macroeconomic projections, including the interest rate forecasts used in the credit models. We use a two year reasonable and supportable period across all products to forecast economic conditions. As the length of the life of a financial asset increases, these inputs may become impractical to estimate as reasonable and supportable.
The results of the various interest rate risk analyses are used to formulate A/LM strategies to achieve the desired risk profile while managing to objectives for capital adequacy and liquidity risk exposures. Specifically, risk positions are managed by purchasing securities, issuing term debt with floating or fixed interest rates, and using derivatives.
The results of the various interest rate risk analyses are used to formulate A/LM strategies to achieve the desired risk profile while managing to objectives for capital adequacy and liquidity risk exposures. Specifically, risk positions are managed by purchasing or selling securities, issuing term debt with floating or fixed interest rates, and using derivatives.
The table below depicts our risk management hierarchy and associated responsibilities and activities of each group. 75 Table of contents Group Overview and Responsibilities Activities Board of Directors – Oversight capacity – Oversees that Key’s risks are managed in a manner that is effective and balanced – Fiduciary duty to Key’s shareholders – Understands Key's risk philosophy – Approves the risk appetite – Inquires about risk practices – Reviews the portfolio of risks – Compares the actual risks to the risk appetite – Is apprised of significant risks, both actual and emerging, and determines whether management is responding appropriately – Challenges management and promotes accountability Board of Directors Audit Committee (a) – Oversight of financial statement integrity, regulatory and legal requirements, independent auditors’ qualifications and independence, and the performance of the internal audit function and independent auditors – Financial reporting, legal matters, and fraud risk – Meets with management and approves significant policies relating to the risk areas overseen by the Audit Committee – Receives reports on enterprise risk – Meets bi-monthly – Convenes to discuss the content of our financial disclosures and quarterly earnings releases Board of Directors Risk Committee (a) – Assist the Board in oversight of strategies, policies, procedures, and practices relating to the assessment and management of enterprise-wide risk, including credit, market, liquidity, model, operational, compliance, reputation, and strategic risks – Assist the Board in overseeing risks related to capital adequacy, capital planning, and capital actions – Reviews and provides oversight of management’s activities related to the enterprise-wide risk management framework, which includes an annual review of the ERM Policy, including the Risk Appetite Statement, and management and ERM reports – Approves any material changes to the charter of the ERM Committee and significant policies relating to risk management, including corporate risk tolerances for major risk categories ERM Committee – Chaired by the Chief Executive Officer and comprising other senior level executives – Manage risk and ensure that the corporate risk profile is managed in a manner consistent with our risk appetite – Oversees the ERM Program, which encompasses our risk philosophy, policy, framework, and governance structure for the management of risks across the entire company – Approves and manages the risk-adjusted capital framework we use to manage risks Disclosure Committee – Includes representatives from each of the Three Lines of Defense – Meets quarterly to review recent internal and external events to determine whether all appropriate disclosures have been made in reports filed with the SEC – Convenes quarterly to discuss the content of our 10-Q and 10-K Tier 2 Risk Governance Committees – Include attendees from each of the Three Lines of Defense – The First Line of Defense is the line of business primarily responsible to accept, own, proactively identify, monitor, and manage risk – The Second Line of Defense comprises Risk Management representatives who provide independent, centralized oversight over all risk categories by aggregating, analyzing, and reporting risk information – Risk Review, our internal audit function, provides the Third Line of Defense.
The table below depicts our risk management hierarchy and associated responsibilities and activities of each group. 77 Table of contents Group Overview and Responsibilities Activities Board of Directors – Oversight capacity – Oversees that Key’s risks are managed in a manner that is effective and balanced – Fiduciary duty to Key’s shareholders – Understands Key's risk philosophy – Approves the risk appetite – Inquires about risk practices – Reviews the portfolio of risks – Compares the actual risks to the risk appetite – Is apprised of significant risks, both actual and emerging, and determines whether management is responding appropriately – Challenges management and promotes accountability Board of Directors Audit Committee (a) – Assists the Board in oversight of financial statement integrity, regulatory and legal requirements, independent auditors’ qualifications and independence, and the performance of the internal audit function and independent auditors – Assists the Board in oversight of financial reporting, legal matters, and fraud risk – Meets with management and approves significant policies relating to the risk areas overseen by the Audit Committee – Receives reports on enterprise risk – Meets bi-monthly – Convenes to discuss the content of our financial disclosures and quarterly earnings releases Board of Directors Risk Committee (a) – Assists the Board in oversight of strategies, policies, procedures, and practices relating to the assessment and management of enterprise-wide risk, including credit, market, liquidity, model, operational, compliance, reputation, and strategic risks – Assists the Board in overseeing risks related to capital adequacy, capital planning, and capital actions – Reviews and provides oversight of management’s activities related to the enterprise-wide risk management framework, which includes an annual review of the ERM Policy, including the Risk Appetite Statement, and management and ERM reports – Approves any material changes to the charter of the ERM Committee and significant policies relating to risk management, including corporate risk tolerances for major risk categories ERM Committee – Chaired by the Chief Executive Officer and comprising the Chief Risk Officer and other senior level executives – Manage risk and ensure that the corporate risk profile is managed in a manner consistent with our risk appetite – Oversees the ERM Program, which encompasses our risk philosophy, policy, framework, and governance structure for the management of risks across the entire company – Approves and manages the risk-adjusted capital framework we use to manage risks Disclosure Committee – Includes representatives from each of the Three Lines of Defense – Meets quarterly to review recent internal and external events to determine whether all appropriate disclosures have been made in reports filed with the SEC – Convenes quarterly to discuss the content of our 10-Q and 10-K Tier 2 Risk Governance Committees – Includes attendees from each of the Three Lines of Defense – The First Line of Defense is the line of business primarily responsible to accept, own, proactively identify, monitor, and manage risk – The Second Line of Defense comprises Risk Management representatives who provide independent, centralized oversight over all risk categories by aggregating, analyzing, and reporting risk information – Risk Review, our internal audit function, provides the Third Line of Defense.
Further information about our loan commitments at December 31, 2023, is presented in Note 22 (“Commitments, Contingent Liabilities, and Guarantees”) under the heading “Commitments to Extend Credit or Funding.” Other off-balance sheet arrangements Other off-balance sheet arrangements include financial instruments that do not meet the definition of a guarantee in accordance with the applicable accounting guidance, and other relationships, such as liquidity support provided to asset-backed commercial paper conduits, indemnification agreements and intercompany guarantees.
Further information about our loan commitments at December 31, 2024, is presented in Note 22 (“Commitments, Contingent Liabilities, and Guarantees”) under the heading “Commitments to Extend Credit or Funding.” Other off-balance sheet arrangements Other off-balance sheet arrangements include financial instruments that do not meet the definition of a guarantee in accordance with the applicable accounting guidance, and other relationships, such as liquidity support provided to asset-backed commercial paper conduits, indemnification agreements and intercompany guarantees.
Additional information regarding the nature of VIEs and our involvement with them is included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Principles of Consolidation and Basis of Presentation” and in Note 13 (“Variable Interest Entities”). 73 Table of contents Commitments to extend credit or funding Loan commitments provide for financing on predetermined terms as long as the client continues to meet specified criteria.
Additional information regarding the nature of VIEs and our involvement with them is included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Principles of Consolidation and Basis of Presentation” and in Note 13 (“Variable Interest Entities”). 75 Table of contents Commitments to extend credit or funding Loan commitments provide for financing on predetermined terms as long as the client continues to meet specified criteria.
Information regarding our fair value policies, procedures, and methodologies is provided in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Fair Value Measurements” and Note 6 (“Fair Value Measurements”) in this report. 76 Table of contents Trading market risk Key incurs market risk as a result of trading activities that are used in support of client facilitation and hedging activities, principally within our investment banking and capital markets businesses.
Information regarding our fair value policies, procedures, and methodologies is provided in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Fair Value Measurements” and Note 6 (“Fair Value Measurements”) in this report. 78 Table of contents Trading market risk Key incurs market risk as a result of trading activities that are used in support of client facilitation and hedging activities, principally within our investment banking and capital markets businesses.
(b) Weighted-average yields are calculated based on amortized cost. Such yields have been adjusted to a TE basis using the statutory federal income tax rate in effect that calendar year. Held-to-maturity securities The majority of our held-to-maturity portfolio consists of Federal Agency CMOs and mortgage-backed securities. The portfolio is also comprised of asset-backed securities and foreign bonds.
(c) Weighted-average yields are calculated based on amortized cost. Such yields have been adjusted to a TE basis using the statutory federal income tax rate in effect that calendar year. Held-to-maturity securities The majority of our held-to-maturity portfolio consists of federal agency CMOs and mortgage-backed securities. The portfolio is also comprised of asset-backed securities and foreign bonds.
At December 31, 2023, we did not have any re-securitization positions. We maintain modest trading inventories to facilitate customer flow, make markets in securities, and hedge certain risks including but not limited to credit risk and interest rate risk. The risks associated with these activities are mitigated in accordance with the Market Risk hedging policy.
At December 31, 2024, we did not have any re-securitization positions. We maintain modest trading inventories to facilitate customer flow, make markets in securities, and hedge certain risks including but not limited to credit risk and interest rate risk. The risks associated with these activities are mitigated in accordance with the Market Risk hedging policy.
In 2023, our federal tax expense and effective tax rate differ from the amount that would be calculated using the federal statutory tax rate primarily due to investments in tax-advantaged assets, such as corporate-owned life insurance, and tax credits associated with low-income housing investments, and periodic adjustments to our tax reserves as described in Note 14 (“Income Taxes”).
In 2024, our federal tax expense and effective tax rate differ from the amount that would be calculated using the federal statutory tax rate primarily due to investments in tax-advantaged assets, such as corporate-owned life insurance, and tax credits associated with low-income housing investments, and periodic adjustments to our tax reserves as described in Note 14 (“Income Taxes”).
There is a risk that our actual future payments in the event of a default by the guaranteed party could exceed the recorded amount. See Note 22 (“Commitments, Contingent Liabilities, and Guarantees”) for a comparison of the liability recorded and the maximum potential undiscounted future payments for the various types of guarantees that we had outstanding at December 31, 2023.
There is a risk that our actual future payments in the event of a default by the guaranteed party could exceed the recorded amount. See Note 22 (“Commitments, Contingent Liabilities, and Guarantees”) for a comparison of the liability recorded and the maximum potential undiscounted future payments for the various types of guarantees that we had outstanding at December 31, 2024.
Federal banking regulators continue to emphasize with financial institutions the importance of relating capital management strategy to the level of risk at each institution. We believe our internal risk management processes help us achieve and maintain capital levels that are commensurate with our business activities and risks, and 74 Table of contents conform to regulatory expectations.
Federal banking regulators continue to emphasize with financial institutions the importance of relating capital management strategy to the level of risk at each institution. We believe our internal risk management processes help us achieve and maintain capital levels that are commensurate with our business activities and risks, and 76 Table of contents conform to regulatory expectations.
Considerable judgment may be involved in determining the amount that is most representative of fair value. 92 Table of contents For assets and liabilities recorded at fair value, our policy is to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements for those items where there is an active market.
Considerable judgment may be involved in determining the amount that is most representative of fair value. For assets and liabilities recorded at fair value, our policy is to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements for those items where there 94 Table of contents is an active market.
The various business units and trading desks are responsible for ensuring that market risk exposures are well-managed and prudent. Market risk is monitored through various measures, such as VaR, and through routine stress testing, sensitivity, and scenario analyses. The MRM conducts stress tests for each position using historical worst case and standard shock scenarios.
The various business units and trading desks are responsible for ensuring that market risk exposures are well-managed and prudent. Market risk is monitored through various measures, such as VaR, and through routine stress testing, sensitivity, and scenario analyses. MTRM conducts stress tests for each position using historical worst case and standard shock scenarios.
The MRM, as the second line of defense, is an independent risk management function that partners with the lines of business to identify, measure, and monitor market risks throughout our company. The MRM is responsible for ensuring transparency of significant market risks, monitoring compliance with established limits, and escalating limit exceptions to appropriate senior management.
MTRM, as the second line of defense, is an independent risk management function that partners with the lines of business to identify, measure, and monitor market risks throughout our company. MTRM is responsible for ensuring transparency of significant market risks, monitoring compliance with established limits, and escalating limit exceptions to appropriate senior management.
(b) Weighted-average yields are calculated based on amortized cost. Such yields have been adjusted to a TE basis using the statutory federal income tax rate in effect that calendar year. 69 Table of contents Deposits and other sources of funds Figure 18.
(b) Weighted-average yields are calculated based on amortized cost. Such yields have been adjusted to a TE basis using the statutory federal income tax rate in effect that calendar year. 71 Table of contents Deposits and other sources of funds Figure 18.
Based on these considerations, we concluded that it was not more-likely-than-not that the fair value of one or more of the reporting units was below its respective carrying value as of December 31, 2023. Additional information is provided in Note 12 (“Goodwill and Other Intangible Assets”).
Based on these considerations, we concluded that it was not more-likely-than-not that the fair value of one or more of the reporting units was below its respective carrying value as of December 31, 2024. Additional information is provided in Note 12 (“Goodwill and Other Intangible Assets”).
We have performed sensitivity analyses around certain assumptions to assess their reasonableness and impact on the reporting units’ fair values.
We performed sensitivity analyses around certain assumptions to assess their reasonableness and impact on the reporting units’ fair values.
The minimum capital and leverage ratios under the Regulatory Capital Rules together with the estimated ratios of KeyCorp at December 31, 2023, calculated on a fully phased-in basis, are set forth under the heading “Basel III” in the “Supervision and Regulation” section in Item 1 of this report.
The minimum capital and leverage ratios under the Regulatory Capital Rules together with the estimated ratios of KeyCorp at December 31, 2024, calculated on a fully phased-in basis, are set forth under the heading “Basel III” in the “Supervision and Regulation” section in Item 1 of this report.
Our ALLL models were designed to capture the correlation between economic and portfolio changes. As such, evaluating 91 Table of contents shifts in individual portfolio attributes and macroeconomic variables in isolation may not be indicative of past or future performance.
Our ALLL models were designed to capture the correlation between economic and portfolio changes. As such, evaluating 93 Table of contents shifts in individual portfolio attributes and macroeconomic variables in isolation may not be indicative of past or future performance.
Regardless of the lien position, credit metrics are refreshed quarterly, including recent FICO scores as well as updated loan-to-value ratios. This information is used in establishing the ALLL. Our methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan and Lease Losses.” Figure 11 presents our consumer loans by geography. Figure 11.
Regardless of the lien position, credit metrics are refreshed quarterly, including recent FICO scores as well as updated loan-to-value ratios. This information is used in establishing the ALLL. Our methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Allowance for Loan and Lease Losses”. Figure 11 presents our consumer loans by geography. Figure 11.
The maximum difference in the quarterly macroeconomic variables between the base and downside scenarios over the two year reasonable and supportable period includes an approximate 4 percentage point decline in GDP annualized growth and an approximate 3 percentage point increase in the U.S. unemployment rate.
The maximum difference in the quarterly macroeconomic variables between the base and downside scenarios over the two year reasonable and supportable period includes an approximate 5 percentage point decline in GDP annualized growth and an approximate 4 percentage point increase in the U.S. unemployment rate.
Figure 19 presents estimated uninsured deposits for the noted periods which reflect amounts disclosed in KeyBank’s Call Report adjusted for intercompany deposits, which are not customer facing and are eliminated in consolidation, and accrued interest. 70 Table of contents Figure 19.
Figure 19 presents estimated uninsured deposits for the noted periods which reflect amounts disclosed in KeyBank’s Call Report adjusted for intercompany deposits, which are not customer facing and are eliminated in consolidation, and accrued interest. 72 Table of contents Figure 19.
Future cash flows are based on multi-year forecasts for each reporting unit and include inputs and assumptions such as net interest margin, expected credit losses, noninterest income, noninterest expense, and required capital. A terminal growth rate is estimated for each reporting unit based on market expectations of inflation and economic conditions in the financial services industry.
Future cash 95 Table of contents flows are based on multi-year forecasts for each reporting unit and include inputs and assumptions such as net interest margin, expected credit losses, noninterest income, noninterest expense, and required capital. A terminal growth rate is estimated for each reporting unit based on market expectations of inflation and economic conditions in the financial services industry.
While we believe these credit ratings, under normal conditions in the capital markets, will enable KeyCorp or KeyBank to issue fixed income securities to investors, downgrades in our credit ratings could increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us. 82 Table of contents Figure 27.
While we believe these credit ratings, under normal conditions in the capital markets, will enable KeyCorp or KeyBank to issue fixed income securities to investors, downgrades in our credit ratings could increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us. Figure 27.
The following is a description of our current critical accounting policies. 90 Table of contents Allowance for loan and lease losses The allowance for loan and lease losses represents management’s estimate of all expected credit losses over the expected contractual life of our existing loan portfolio.
The following is a description of our current critical accounting policies. 92 Table of contents Allowance for loan and lease losses The allowance for loan and lease losses represents management’s estimate of all expected credit losses over the expected contractual life of our existing loan portfolio.
Our net VaR approach incorporates diversification, but our VaR calculation does not include the impact of counterparty risk and our own credit spreads on derivatives. The aggregate VaR at the 99% confidence level with a one day holding period for all covered positions was $1.6 million at December 31, 2023, and $1.1 million at December 31, 2022.
Our net VaR approach incorporates diversification, but our VaR calculation does not include the impact of counterparty risk and our own credit spreads on derivatives. The aggregate VaR at the 99% confidence level with a one day holding period for all covered positions was $1.4 million at December 31, 2024, and $1.6 million at December 31, 2023.
Figure 23 summarizes our VaR at the 99% confidence level with a one day holding period for significant portfolios of covered positions for the three months ended December 31, 2023, and December 31, 2022. Figure 23.
Figure 23 summarizes our VaR at the 99% confidence level with a one day holding period for significant portfolios of covered positions for the three months ended December 31, 2024, and December 31, 2023. Figure 23.
(b) See Figure 9 and the accompanying discussion in the “Loans and loans held for sale” section for more information related to our commercial loan portfolio. (c) Restructured loans (i.e., TDRs) are those for which Key, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider.
(b) See Figure 9 and the accompanying discussion in the “Loans and loans held for sale” section for more information related to our commercial loan portfolio. (c) Restructured loans are those for which Key, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider.
The net interest margin, which is an indicator of the profitability of our earning assets less the cost of funding, is calculated by dividing taxable-equivalent net interest income by average earning assets. 52 Table of contents Figure 1.
The net interest margin, which is an indicator of the profitability of our earning assets less the cost of funding, is calculated by dividing taxable-equivalent net interest income by average earning assets. 54 Table of contents Figure 1.
For example, an operational event database tracks the amounts and sources of operational risk and losses. This tracking mechanism helps to identify weaknesses and to highlight the need to take corrective action. We also rely upon software programs designed to assist in assessing operational risk and monitoring our control processes.
For example, an operational event database tracks the amounts and sources of 90 Table of contents operational risk and losses. This tracking mechanism helps to identify weaknesses and to highlight the need to take corrective action. We also rely upon software programs designed to assist in assessing operational risk and monitoring our control processes.
The simulation model estimates the amount of net interest income at risk by simulating the change in net interest income that would occur if rates were to gradually increase or decrease from current levels over the next 12 months (subject to a floor on market interest rates at zero).
The simulation model estimates the amount of net interest income at risk by simulating the change in net interest 81 Table of contents income that would occur if rates were to gradually increase or decrease from current levels over the next 12 months (subject to a floor on market interest rates at zero).
Stressing risk ratings by two ratings for commercial loans generates a 1.6x increase in the commercial modeled allowance results. Stressing FICO by ten points, and LTV and utilization by 10% for consumer loans generates a 1.2x increase in the consumer modeled allowance results.
Stressing risk ratings by two ratings for commercial loans generates a 1.5x increase in the commercial modeled allowance results. Stressing FICO by ten points, and LTV and utilization by 10% for consumer loans generates a 1.2x increase in the consumer modeled allowance results.
We have provided tax reserves that we believe are adequate to absorb potential 94 Table of contents adjustments that such challenges may necessitate. However, if our judgment later proves to be inaccurate, the tax reserves may need to be adjusted, which could have an adverse effect on our results of operations and capital.
We have provided tax reserves that we believe are adequate to absorb potential adjustments that such challenges may necessitate. However, if our judgment later proves to be inaccurate, the tax reserves may need to be adjusted, which could have an adverse effect on our results of operations and capital.
Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology. (b) Interest income on tax-exempt securities and loans has been adjusted to a TE basis using the statutory federal income tax rate in effect that calendar year.
Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology. (b) Interest income on tax-exempt securities and loans has been adjusted to a taxabale-equivalent basis using the statutory federal income tax rate in effect that calendar year.
(b) See Figure 9 and the accompanying discussion in the “Loans and loans held for sale” section for more information related to our commercial loan portfolio. (c) Included in “accrued expense and other liabilities” on the balance sheet. 87 Table of contents Nonperforming assets Figure 33 shows the composition of our nonperforming assets.
(b) See Figure 9 and the accompanying discussion in the “Loans and loans held for sale” section for more information related to our commercial loan portfolio. (c) Included in “accrued expense and other liabilities” on the balance sheet. Nonperforming assets Figure 33 shows the composition of our nonperforming assets.
Figure 34 shows the types of activity that caused the change in our nonperforming loans during each of the last four quarters and the years ended December 31, 2023, and December 31, 2022. Figure 34.
Figure 34 shows the types of activity that caused the change in our nonperforming loans during each of the last four quarters and the years ended December 31, 2024, and December 31, 2023. Figure 34.
VaR for Significant Portfolios of Covered Positions 2023 2022 Three months ended December 31, Three months ended December 31, Dollars in millions High Low Mean December 31, High Low Mean December 31, Trading account assets: Fixed income $ 1.3 $ .7 $ 1.1 $ 1.1 $ 1.1 $ .4 $ .7 $ .4 Derivatives: Interest rate $ .5 $ .3 $ .4 $ .4 $ .7 $ .2 $ .3 $ .6 Stressed VaR is calculated by running the portfolios through a predetermined stress period which is approved by the Market Risk Committee and is calculated at the 99% confidence level using the same model and assumptions used for general VaR.
VaR for Significant Portfolios of Covered Positions 2024 2023 Three months ended December 31, Three months ended December 31, Dollars in millions High Low Mean December 31, High Low Mean December 31, Trading account assets: Fixed income $ 1.3 $ .4 $ .9 $ .8 $ 1.3 $ .7 $ 1.1 $ 1.1 Derivatives: Interest rate $ .6 $ .4 $ .5 $ .5 $ .5 $ .3 $ .4 $ .4 Stressed VaR is calculated by running the portfolios through a predetermined stress period which is approved by the Market Risk Committee and is calculated at the 99% confidence level using the same model and assumptions used for general VaR.
For individual obligors, we employ a sliding scale of exposure, known as hold limits, which is dictated by the type of loan and strength of the borrower. Allowance for loan and lease losses 85 Table of contents We estimate the appropriate level of the ALLL on at least a quarterly basis.
For individual obligors, we employ a sliding scale of exposure, known as hold limits, which is dictated by the type of loan and strength of the borrower. Allowance for loan and lease losses We estimate the appropriate level of the ALLL on at least a quarterly basis.
(b) Commercial lease financing includes receivables held as collateral for a secured borrowing of $7 million and $8 million at December 31, 2023, and December 31, 2022, respectively. Principal reductions are based on the cash payments received from these related receivables. Additional information pertaining to this secured borrowing is included in Note 20 (“Long-Term Debt”).
(b) Commercial lease financing includes receivables held as collateral for a secured borrowing of $3 million and $7 million at December 31, 2024, and December 31, 2023, respectively. Principal reductions are based on the cash payments received from these related receivables. Additional information pertaining to this secured borrowing is included in Note 20 (“Long-Term Debt”).
At December 31, 2023, KeyCorp held $2.7 billion in cash and short-term investments, which we projected to be sufficient to meet our projected obligations, including the repayment of our maturing debt obligations for the periods prescribed by our risk tolerance. Typically, KeyCorp meets its liquidity requirements through regular dividends from KeyBank, supplemented with term debt.
At December 31, 2024, KeyCorp held $5.2 billion in cash and short-term investments, which we projected to be sufficient to meet our projected obligations, including the repayment of our maturing debt obligations for the periods prescribed by our risk tolerance. Typically, KeyCorp meets its liquidity requirements through regular dividends from KeyBank, supplemented with term debt.
(h) Average balances presented are based on daily average balances over the respective stated period. 53 Table of contents Figure 2 shows how the changes in yields or rates and average balances from the prior year affected net interest income. The section entitled “Financial Condition” contains additional discussion about changes in earning assets and funding sources. Figure 2.
(g) Average balances presented are based on daily average balances over the respective stated period. 55 Table of contents Figure 2 shows how the changes in yields or rates and average balances from the prior year affected net interest income. The section entitled “Financial Condition” contains additional discussion about changes in earning assets and funding sources. Figure 2.
See Note 5 (“Asset Quality“) for more information on our TDRs. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance.
See Note 5 (“Asset Quality“) for more information. These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance.
Construction loans provide a stream of funding for properties not fully leased at origination to support debt service payments over the term of the contract or project. As of December 31, 2023, 78% of our construction portfolio are multi-family project loans. Our office exposure only represents 5% of commercial real estate loans at period end.
Construction loans provide a stream of funding for properties not fully leased at origination to support debt service payments over the term of the contract or project. As of December 31, 2024, 82% of our construction portfolio are multi-family project loans. Our office exposure only represents 5% of commercial real estate loans at period end.
Actual losses for the total covered positions did not exceed aggregate daily VaR for any day during the quarters ended December 31, 2023, and December 31, 2022. The MRM backtests our VaR model on a daily basis to evaluate its predictive power. The test compares VaR model results at the 99% confidence level to daily held profit and loss.
Actual losses for the total covered positions did not exceed aggregate daily VaR for any day during the quarters ended December 31, 2024, and December 31, 2023. MTRM backtests our VaR model on a daily basis to evaluate its predictive power. The test compares VaR model results at the 99% confidence level to daily held profit and loss.
While operational and compliance 88 Table of contents risk are separate risk disciplines in KeyCorp’s ERM framework, losses and/or additional regulatory compliance costs are included in operational loss reporting and could take the form of explicit charges, increased operational costs, or harm to our reputation.
While operational and compliance risk are separate risk disciplines in KeyCorp’s ERM framework, losses and/or additional regulatory compliance costs are included in operational loss reporting and could take the form of explicit charges, increased operational costs, or harm to our reputation.
The aggregate market value of the securitization positions as defined by the Market Risk Rule was $6 million at December 31, 2023, all of which were mortgage-backed security positions. Specific risk is the price risk of individual financial instruments, which is not accounted for by changes in broad market risk factors and is measured through a standardized approach.
The aggregate market value of the securitization positions as defined by the Market Risk Rule was $24 million at December 31, 2024, all of which were mortgage-backed security positions. Specific risk is the price risk of individual financial instruments, which is not accounted for by changes in broad market risk factors and is measured through a standardized approach.
As shown in Figure 10, our commercial real estate loan portfolio includes various property types and geographic locations of the underlying collateral. These loans include commercial mortgage and construction loans in both Consumer Bank and Commercial Bank. Figure 10.
As shown in Figure 10, our commercial real estate loan portfolio includes various property types and geographic locations of the underlying collateral. These loans include commercial mortgage and construction loans in both Consumer Bank and Commercial Bank. 65 Table of contents Figure 10.
Market risk weighted assets, including the specific risk calculations, are run quarterly by the MRM in accordance with the Market Risk Rule, and approved by the Chief Market Risk Officer.
Market risk weighted assets, including the specific risk calculations, are run quarterly by MTRM in accordance with the Market Risk Rule, and approved by the Chief Market Risk Officer.
It is not unusual to make exceptions to established policies when mitigating circumstances dictate, however, a corporate level tolerance has been established to keep exceptions at an acceptable level based upon portfolio and economic considerations. Our credit risk management team uses risk models to evaluate consumer loans.
It is not unusual to make exceptions to established policies when mitigating circumstances dictate, however, a corporate level tolerance has been established to keep exceptions at an acceptable level based upon portfolio and economic considerations. 86 Table of contents Our credit risk management team uses risk models to evaluate consumer loans.
Figure 5 gives a breakdown of our major categories of noninterest expense as a percentage of total noninterest expense for the twelve months ended December 31, 2023. The following discussion explains the composition of certain elements of our noninterest expense and the factors that caused those elements to change. 56 Table of contents Figure 5.
Figure 5 gives a breakdown of our major categories of noninterest expense as a percentage of total noninterest expense for the twelve months ended December 31, 2024. 58 Table of contents The following discussion explains the composition of certain elements of our noninterest expense and the factors that caused those elements to change. Figure 5.
Additional information about our mortgage servicing assets is included in Note 9 (“Mortgage Servicing Assets”). 66 Table of contents Maturities and sensitivity of certain loans to changes in interest rates Figure 14 shows the remaining maturities of our loan portfolio and the sensitivity of certain loans to changes in interest rates as of December 31, 2023. Figure 14.
Additional information about our mortgage servicing assets is included in Note 9 (“Mortgage Servicing Assets”). 68 Table of contents Maturities and sensitivity of certain loans to changes in interest rates Figure 14 shows the remaining maturities of our loan portfolio and the sensitivity of certain loans to changes in interest rates as of December 31, 2024. Figure 14.
Our primary source of funding for KeyBank are customer deposits resulting in a consolidated loan-to-deposit ratio of 78% as of December 31, 2023 . If the cash flows needed to support operating and investing activities are not satisfied by deposit balances, we rely on wholesale funding or on-balance sheet liquid reserves.
Our primary source of funding for KeyBank is customer deposits resulting in a consolidated loan-to-deposit ratio of 70% as of December 31, 2024 . If the cash flows needed to support operating and investing activities are not satisfied by deposit balances, we rely on wholesale funding or on-balance sheet liquid reserves.
Liquidity management involves maintaining sufficient and diverse sources of funding to accommodate planned, as well as unanticipated, changes in assets and liabilities under both normal and adverse conditions. Governance structure We manage liquidity for all of our affiliates on an integrated basis.
Liquidity management involves maintaining sufficient and diverse sources of funding to accommodate planned, as well as unanticipated, changes in assets and liabilities under both normal and adverse conditions. Governance structure We manage liquidity for all of our affiliates on a consolidated basis.
Figure 22 represents the details of our regulatory capital positions at December 31, 2023, and December 31, 2022, under the Regulatory Capital Rules. Information regarding the regulatory capital ratios of KeyCorp’s banking subsidiaries is presented in Note 24 (“Shareholders' Equity”). 72 Table of contents Figure 22.
Figure 22 represents the details of our regulatory capital positions at December 31, 2024, and December 31, 2023, under the Regulatory Capital Rules. Information regarding the regulatory capital ratios of KeyCorp’s banking subsidiaries is presented in Note 24 (“Shareholders' Equity”). 74 Table of contents Figure 22.
This is followed by our home equity portfolio comprising approximately 20% of consumer loans outstanding at year end. We held the first lien position for approximately 64% of the home equity portfolio at December 31, 2023, and 66% at December 31, 2022. For loans with real estate collateral, we track borrower performance monthly.
This is followed by our home equity portfolio comprising approximately 20% of consumer loans outstanding at year end. 66 Table of contents We held the first lien position for approximately 65% of the home equity portfolio at December 31, 2024, and 64% at December 31, 2023. For loans with real estate collateral, we track borrower performance monthly.
Breakdown of Deposits at December 31, 2023 The following presents the breakdown of our deposits by product for the noted periods.
Breakdown of Deposits at December 31, 2024 The following presents the breakdown of our deposits by product for the noted periods.
The primary components of interest rate risk exposure consist of reprice risk, basis risk, yield curve risk, and option risk. • “Reprice risk ” is the exposure to changes in the level of interest rates and occurs when the volume of interest-bearing liabilities and the volume of interest-earning assets they fund (e.g., deposits used to fund loans) do not mature or reprice at the same time. • “Basis risk” is the exposure to asymmetrical changes in interest rate indexes and occurs when floating-rate assets and floating-rate liabilities reprice at the same time, but in response to different market factors or indexes. • “Yield curve risk” is the exposure to non-parallel changes in the slope of the yield curve (where the yield curve depicts the relationship between the yield on a particular type of security and its term to maturity) and occurs when interest-bearing liabilities and the interest-earning assets that they fund do not price or reprice to the same term point on the yield curve. • “Option risk” is the exposure to a customer or counterparty’s ability to take advantage of the interest rate environment and terminate or reprice one of our assets, liabilities, or off-balance sheet instruments prior to contractual maturity without a penalty.
The primary components of interest rate risk exposure consist of reprice risk, yield curve risk, option risk, and basis risk. • “Reprice risk ” is the exposure to changes in the level of interest rates and occurs when the volume of interest-bearing liabilities and the volume of interest-earning assets they fund (e.g., deposits used to fund loans) do not mature or reprice at the same time. • “Yield curve risk” is the exposure to non-parallel changes in the slope of the yield curve (where the yield curve depicts the relationship between the yield on a particular type of security and its term to maturity) and occurs when interest-bearing liabilities and the interest-earning assets that they fund do not price or reprice to the same term point on the yield curve. • “Option risk” is the exposure to a customer or counterparty’s ability to take advantage of the interest rate environment and terminate or reprice one of our assets, liabilities, or off-balance sheet instruments prior to contractual maturity.
Results of back testing are provided to the Market Risk Committee. Backtesting exceptions occur when trading losses exceed VaR. We do not engage in correlation trading or utilize the internal model approach for measuring default and credit migration risk.
Results of back testing are provided to the Market Risk Committee. Backtesting exceptions occur when daily held profit and loss exceed VaR. We do not engage in correlation trading or utilize the internal model approach for measuring default and credit migration risk.
Commercial and industrial loans are the largest component of our loan portfolio, representing 50% of our total loan portfolio at December 31, 2023, and 50% at December 31, 2022. This portfolio is approximately 88% variable rate and consists of loans primarily to large corporate, middle market, and small business clients.
Commercial and industrial loans are the largest component of our loan portfolio, representing 51% of our total loan portfolio at December 31, 2024, and 50% at December 31, 2023. This portfolio is approximately 89% variable rate and consists of loans primarily to large corporate, middle market, and small business clients.
The increase in stressed VaR is due to a change in the size and composition of our fixed income inventory. 78 Table of contents Figure 24.
The increase in stressed VaR is due to a change in the size and composition of our fixed income inventory. Figure 24.
We regularly monitor our liquidity position and funding sources and measure our capacity to obtain funds in a variety of hypothetical scenarios in an effort to maintain an appropriate mix of available and affordable funding. In the normal course of business, we perform a monthly internal liquidity stress test for both KeyCorp and KeyBank.
We regularly monitor our liquidity position and funding sources and measure our capacity to obtain funds in a variety of hypothetical scenarios in an effort to maintain an appropriate mix of available and affordable funding. In the normal course of business, we perform a monthly internal liquidity stress test at the consolidated KeyCorp level.
The aggregate stressed VaR for all covered positions was $4.0 million at December 31, 2023, and $1.9 million at December 31, 2022. Figure 24 summarizes our stressed VaR at the 99% confidence level with a one day holding period for significant portfolios of covered positions for the three months ended December 31, 2023, and December 31, 2022.
The aggregate stressed VaR for all covered positions was $5.2 million at December 31, 2024, and $4.0 million at December 31, 2023. Figure 24 summarizes our stressed VaR at the 99% confidence level with a one day holding period for significant portfolios of covered positions for the three months ended December 31, 2024, and December 31, 2023.
A significant portion of our trust and investment services income depends on the value and mix of assets under management. At December 31, 2023, our bank, trust, and registered investment advisory subsidiaries had assets under management or administration of $54.9 billion, compared to $51.3 billion at December 31, 2022.
A significant portion of our trust and investment services income depends on the value and mix of assets under management. At December 31, 2024, our bank, trust, and registered investment advisory subsidiaries had assets under management or administration of $61.4 billion, compared to $54.9 billion at December 31, 2023.
In a “heightened monitoring mode,” we may conduct internal liquidity stress tests more frequently, and use assumptions to reflect the changed market environment. Our testing incorporates estimates for loan and deposit lives based on our historical studies. Internal liquidity stress tests analyze potential liquidity scenarios under various funding constraints and time periods.
From time to time, we may conduct internal liquidity stress tests more frequently, and use assumptions to reflect the changed market environment. Our testing incorporates estimates for loan and deposit lives based on our historical studies. Internal liquidity stress tests analyze potential liquidity scenarios under various funding constraints and time periods.
As shown in Figure 33, nonperforming assets increased $171 million during 2023. See Note 1 (“Summary of Significant Accounting Policies”) under the headings “Nonperforming Loans,” “Impaired Loans,” and “Allowance for Loan and Lease Losses” for a summary of our nonaccrual and charge-off policies. Figure 33.
As shown in Figure 33, nonperforming assets increased $181 million during 2024. See Note 1 (“Summary of Significant Accounting Policies”) under the headings “Nonperforming Loans,” “Impaired Loans,” and “Allowance for Loan and Lease Losses” for a summary of our nonaccrual and charge-off policies. 89 Table of contents Figure 33.
Market risk is a component of our internal capital adequacy assessment. Our risk-weighted assets include a market risk-equivalent asset amount, which consists of a VaR component, stressed VaR component, a de minimis exposure amount, and a specific risk add-on including the securitization positions.
Our risk-weighted assets include a market risk-equivalent asset amount, which consists of a VaR component, stressed VaR component, a de minimis exposure amount, and a specific risk add-on including the securitization positions.
Credit Ratings December 31, 2023 Short-Term Borrowings Long-Term Deposits (a) Senior Long-Term Debt Subordinated Long-Term Debt Capital Securities Preferred Stock KEYCORP (THE PARENT COMPANY) Standard & Poor’s A-2 N/A BBB BBB- BB BB Moody’s P-2 N/A Baa2 Baa2 Baa3 Ba1 Fitch F2 N/A BBB+ N/A BB BB DBRS R-1 (low) N/A A A (low) A (low) BBB KEYBANK Standard & Poor’s A-2 N/A BBB+ BBB N/A N/A Moody’s P-2 P-1/A2 Baa1 Baa2 N/A N/A Fitch F2 F2/A- BBB+ BBB N/A N/A DBRS R-1 (middle) A (high) A (high) A N/A N/A (a) P-1 rating assigned by Moody’s is specific to KeyBank’s short-term bank deposit ratings.
Credit Ratings December 31, 2024 Outlook Short-Term Borrowings Long-Term Deposits (a) Senior Long-Term Debt Subordinated Long-Term Debt Capital Securities Preferred Stock KEYCORP Standard & Poor’s Stable A-2 N/A BBB BBB- BB BB Moody’s Stable P-2 N/A Baa2 Baa2 Baa3 Ba1 Fitch Positive F2 N/A BBB+ N/A BB BB DBRS Stable R-1 (low) N/A A (low) BBB (high) BBB (high) BBB (low) KEYBANK Standard & Poor’s Stable A-2 N/A BBB+ BBB N/A N/A Moody’s Stable P-2 P-1/A2 Baa1 Baa2 N/A N/A Fitch Positive F2 F2/A- BBB+ BBB N/A N/A DBRS Stable R-1 (low) A A A (low) N/A N/A (a) P-1 rating assigned by Moody’s is specific to KeyBank’s short-term bank deposit ratings.
Breakdown of Loans as of December 31, 2023 (a) Other consumer loans include Consumer direct loans, Credit cards, and Consumer indirect loans. See Note 4 (“Loan Portfolio”) Item 8. Financial Statements of this report. 61 Table of contents Figure 8 shows the composition of our loan portfolio at December 31 for each of the past two years. Figure 8.
Breakdown of Loans as of December 31, 2024 (a) Other consumer loans include Consumer loans and Credit cards. See Note 4 (“Loan Portfolio”) Item 8. Financial Statements of this report. Figure 8 shows the composition of our loan portfolio at December 31 for each of the past two years. Figure 8.
Sales of loans classified as held for sale generated net gains of $135 million during 2023. Figure 12 summarizes our loan sales during 2023 and 2022. Figure 12.
Sales of loans classified as held for sale generated net gains of $120 million during 2024. Figure 12 summarizes our loan sales during 2024 and 2023. Figure 12.
The ALLL includes $16 million and $21 million of allowance classified as “discontinued assets” on the balance sheet at December 31, 2023, and December 31, 2022, respectively.
The ALLL includes $13 million and $16 million of allowance classified as “discontinued assets” on the balance sheet at December 31, 2024, and December 31, 2023, respectively.
For example, $100 of tax-exempt income would be presented as $126, an amount that, if taxed at the statutory federal income tax rate of 21%, would yield $100. 51 Table of contents Net interest income (TE) for 2023 was $3.9 billion, and the net interest margin was 2.17%.
For example, $100 of tax-exempt income would be presented as $126, an amount that, if taxed at the statutory federal income tax rate of 21%, would yield $100. 53 Table of contents Net interest income (TE) for 2024 was $3.8 billion, and the net interest margin was 2.16%.
The ALLL at December 31, 2023, represents our best estimate of the lifetime expected credit losses inherent in the loan portfolio at that date. For more information, see Note 5 (“Asset Quality”). As shown in Figure 29, our ALLL from continuing operations increased by $171 million, or 12.8%, from December 31, 2022.
The ALLL at December 31, 2024, represents our best estimate of the lifetime expected credit losses inherent in the loan portfolio at that date. For more information, see Note 5 (“Asset Quality”). As shown in Figure 29, our ALLL from continuing operations decreased by $99 million, or 6.6%, from December 31, 2023.
This focus ensures our relationship clients foster and build portfolios with stable, recurring cash flows, with adequate, balanced cash reserves to support our balance sheet exposures through the economic cycle. At December 31, 2023, commercial real estate loans totaled $18.3 billion, comprised of $15.2 billion of mortgage loans and $3.1 billion of construction loans.
This focus ensures our relationship clients foster and build portfolios with stable, recurring cash flows, with adequate, balanced cash reserves to support our balance sheet exposures through the economic cycle. At December 31, 2024, commercial real estate loans totaled $16.2 billion, which includes $13.3 billion of mortgage loans and $2.9 billion of construction loans.
Those assumptions are based on historical behaviors, as well as forward expectations. Remediation plans are similarly developed if this analysis indicates that our EVE will decrease by more than 15% in response to an immediate increase or decrease in interest rates. The position is within these guidelines as of December 31, 2023. Management of interest rate exposure.
Remediation plans are similarly developed if this analysis indicates that our EVE will decrease by more than 15% in response to an immediate increase or decrease in interest rates. The position is within these guidelines as of December 31, 2024. Management of interest rate exposure.
Our shareholders’ equity to assets ratio was 7.8% at December 31, 2023, compared to 7.1% at December 31, 2022. Our tangible common equity to tangible assets ratio was 5.1% at December 31, 2023, compared to 4.4% at December 31, 2022.
Our shareholders’ equity to assets ratio was 9.7% at December 31, 2024, compared to 7.8% at December 31, 2023. Our tangible common equity to tangible assets ratio was 7.0% at December 31, 2024, compared to 5.1% at December 31, 2023.
Instruments that are used to hedge nontrading activities, such as bank-issued debt and loan portfolios, equity positions that are not actively traded, and securities financing activities, do not meet the definition of a covered position. The MRM is responsible for identifying our portfolios as either covered or non-covered.
At December 31, 2024, covered positions did not include any re-securitization positions. Instruments that are used to hedge nontrading activities, such as bank-issued debt and loan portfolios, equity positions that are not actively traded, and securities financing activities, do not meet the definition of a covered position. MTRM is responsible for identifying our portfolios as either covered or non-covered.
We use the loan-to-deposit ratio as a metric to monitor these strategies. Our target loan-to-deposit ratio is 90-100% (at December 31, 2023, our loan-to-deposit ratio was 77.9%), which we calculate as the sum of total loans, loans held for sale, and nonsecuritized discontinued loans divided by deposits.
We use the loan-to-deposit ratio as a metric to monitor these strategies. Our target loan-to-deposit ratio is around 80% (at December 31, 2024, our loan-to-deposit ratio was 70.3%), which we calculate as the sum of total loans, loans held for sale, and nonsecuritized discontinued loans divided by deposits.

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