With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-396-Keycorp

Owner of KeyBank, the only major bank based in Cleveland, the financial services company has more than 1,000 branches in 15 states, and corporate banking offices in another 10. KeyCorp CEO Beth Mooney, the first woman to be named a CEO of a Top 20 U.S. bank, retired from the post in May 2020, and was succeeded by Chris Gorman.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-411-KeyCorp

This financial services company, headquartered in Cleveland, Ohio, provides banking and other services to individuals and businesses in 15 states.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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KeyCorp, the holding company for KeyBank National Association, is a leading financial institution with a history dating back to 1849. The company operates across two main divisions: consumer banking and commercial banking. KeyCorp offers a wide range of services including checking and savings accounts, personal and business loans, mortgages, credit cards, and student loan refinancing. It also provides investment management, financial planning, and wealth management services, catering to both individuals and institutions, including nonprofits and high-net-worth clients.

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KeyCorp (KEY): Company Profile, Stock Price, News, Rankings

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KeyCorp

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Welcome to KeyCorp's Q1 2026 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question during that time, simply press star one on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Brian Mauney, KeyCorp Director of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. I'd like to thank you for joining KeyCorp's Q1 2026 earnings conference call. I'm here with Chris Gorman, our Chairman and Chief Executive Officer, Clark Khayat, our Chief Financial Officer, and Mohit Ramani, our Chief Risk Officer. As usual, we will reference our earnings presentation slides, which can be found in the investor relations section of the key.com website. In the back of the presentation, you will find our statement on forward-looking disclosures and certain financial measures, including non-GAAP measures. This covers our earnings materials as well as remarks made on this morning's call. Actual results may differ materially from forward-looking statements, and those statements speak only as of today, April 16th, 2026, and will not be updated. With that, I will turn it over to Chris.

Thank you, Brian, and good morning, everyone. Our strong Q1 performance demonstrates disciplined execution and significant momentum as we continue to deliver on our commitments. We reported Q1 earnings of $0.44 per share, up 33% year-over-year. Return on tangible common equity exceeded 13% as we continue to make significant progress with respect to our goal of 15%+ return on tangible common equity by year-end 2027. Revenue grew 10% year-over-year, with revenue growing more than 2 times the rate of expenses. Adjusted pre-provision net revenue grew an additional $29 million sequentially, marking the eighth consecutive quarter of adjusted PPNR growth. Net interest margin expanded 5 basis points sequentially to 2.87% as we remain on track to exceed 3% net interest margin by year-end.

Commercial loan growth was strong and broad-based across industries and geographies, increasing $3.3 billion or 4% sequentially on a period-end basis. We continued to be disciplined with respect to funding cost management. Total funding costs declined by 15 basis points during the quarter, with interest-bearing deposit costs decreasing 22 basis points, resulting in a cumulative through the cycle down beta of 56%. Asset quality metrics remained strong with a net charge-off ratio of just 38 basis points. In addition to improving our return on capital, we remain committed to substantial return of capital to our shareholders. During the quarter, we took advantage of the pullback in regional bank stock prices and repurchased nearly $400 million of common stock, well in excess of the $300 million+ commitment we made in January. We are also encouraged by the latest Basel III endgame proposal.

Our preliminary estimate shows 100+ basis point benefit to our marked CET1 ratio under the revised standardized approach if implemented as currently proposed. This would imply a fully phased-in ratio of around 11%, higher than our peers and higher than we believe we need to operate our business in the ordinary course. Our capital position gives us flexibility to continue to lean in aggressively this year and in the coming years to support our clients, to support our own organic growth, and to repurchase our shares. Subject to market conditions, we expect to buy back at least $1.3 billion of our shares in 2026, up from the $1.2 billion we previously communicated.

While the macroeconomic environment has continued to be dynamic, we will remain laser-focused on managing what we can control, the delivery of our differentiated capabilities, acceleration of new client acquisition, and exceptional service to all our clients. We continue to grow clients. Commercial clients were up 3%, and relationship households were up 2% from the prior year in the Q1. We continue to gain share across our priority fee-based businesses, wealth, investment banking, and commercial payments. In the Q1, these businesses collectively grew by 12% when compared to the prior year. This past quarter, we raised nearly $47 billion of capital on behalf of our clients, retaining 19% on our balance sheet. Investment banking pipelines continue to remain elevated, up 5% from year-end, with M&A pipelines at record levels.

While we do currently expect investment banking fees to decline in the Q2 compared to the record Q1, given current market conditions, we continue to feel very comfortable that we can grow investment banking fees in the mid-single digits for the full year. Commercial loan pipelines also remain very healthy, up nearly 20% from year-end, despite the strong pull-through in the Q1. Our mass affluent wealth strategy continues to bring in new households, net flows, and client assets to Key. Reaching 57,000 households and $7.4 billion of total client assets as of March 31st. With a mass affluent household opportunity of 1.15 million customers, we remain less than 10% penetrated, implying a significant runway going forward. We continue to hire frontline bankers. This past quarter, we hired a middle market banking team based in Atlanta and a family office and private capital team based in Kansas City.

We also hired talented investment bankers and wealth managers as our differentiated platforms continue to attract top bankers. We will continue to grow our banker ranks, including evaluating team hires and niche tuck-in non-bank transaction opportunities as they arise in order to leverage our unique but currently under-leveraged platforms. Lastly, we are investing approximately $1 billion in technology this year that will give us new product and service capabilities and deliver better outcomes and experiences for those we serve. As it pertains to AI, we are focused on a few thematic use cases that will enhance client experiences, accelerate credit decisioning, increase technology productivity, and strengthen risk and security monitoring. Given the strong start to the year and the favorable dynamics we are seeing across loans and deposits, we have increased our full year net interest income and loan guidance while reiterating each of our other financial commitments.

While we enjoy strong momentum, we will remain vigilant as it pertains to a wide variety of potential macroeconomic outcomes. Our updated NII guidance assumes a wide range of interest rate scenarios. Additionally, we have added to our already elevated qualitative loan loss reserves this past quarter in order to account for a wider range of potential macroeconomic outcomes. As it pertains to private credit, we have provided additional disclosures this quarter. The summary here is we continue to be very comfortable with these books of business. Finally, the Q1 was a strong quarter, and our business enjoys a significant amount of momentum. Before turning it over to Clark, I am pleased to announce that Clark has assumed an expanded role to lead our technology and operations organization in addition to his role as CFO.

We look forward to the contributions he will bring to our technology and operations teams at a pivotal and exciting time as we leverage AI to grow our business and better serve our clients. With that, I'd like to turn it over to Clark. Clark?

Thanks, Chris. Starting on slide four. We reported Q1 earnings per share of $0.44. Revenue was up 10% year-over-year, while expenses increased by 4%. Taxable-equivalent net interest income increased 11% year-over-year and was up 1% sequentially, despite impact from two fewer days in the quarter and seasonally lower deposits. Non-interest income increased 8% year-over-year as our priority fee-based businesses collectively grew by 12%. Loan loss provision of $106 million included 38 basis points of net charge-offs and a reserve build of $5 million. The net build reflected additional qualitative reserves to account for the macro uncertainty, offsetting improvement in Moody's economic scenarios and credit migration trends. Tangible book value per share increased 10% year-over-year. Moving to the balance sheet on slide five. Average loans were up $1.4 billion sequentially and increased $2.6 billion on a period-end basis.

Average C&I loans and average CRE loans both grew by 3%, partly offset by the ongoing intentional runoff of low-yielding consumer loans. On a period-end basis, C&I loans grew by $3 billion or 5%. Growth was broad-based across industries and regions with both institutional and middle-market clients. The largest industry contributors were within our financial services and utilities, power, and renewables industry verticals. C&I line utilization increased 1% sequentially to 31.5% as loan growth outpaced commitments. Turning to slide 6. With the attention that MDFI and private credit have been getting lately, we've provided some additional disclosures with respect to our portfolio and want to share how we manage the businesses. First, a reminder that the MDFI nomenclature is a regulatory definition.

As you know, these definitions have changed and continue to be refined, and we will continue to apply our best efforts to categorize these loans within the spirit of these definitions. In the quarter, we grew MDFI loans by $2.4 billion. A third of that growth is a result of the reclassification of existing loans. That's not actual loan growth, but rather an expansion of what had previously been included in the category based on further examination of the regulatory guidance. The loans here are real estate non-owner-occupied. The additional growth of approximately $1.6 billion comes from three areas. About half of these are loans connected to real estate debt funds run by sophisticated sponsors with whom we have deep relationships, and where the underlying properties are geographically diversified. We expect to syndicate about 25% of these loans in the Q2.

Second, $400 million of this growth is fairly evenly split between insurance and other high-quality finance companies. Third, our specialty finance business loans grew about $400 million, primarily from AAA-rated CLOs. While we will, of course, continue to disclose MDFI under the regulatory rules, this is not the way we think about these loans. They're a reflection of four distinct businesses that are collectively 90% investment grade. Institutional real estate lending, specialty finance lending, insurance and finance companies, and our unitranche funds. Each business is relationship-based and has its own set of credit concentration limits and risk parameters with de minimis NPLs and much lower criticized loan rates than our other commercial loans.

As it pertains to private credit, as the waterfall shows, we estimate approximately $10.9 billion of outstandings as of March 31, with roughly 70% through our specialty finance lending business, which are asset-backed loans made largely through bankruptcy remote SPE vehicles. SFL loans are 98% investment grade, diversified by industry and geography with thousands of underlying obligors. We typically underwrite to the counterparty and their underwriting policies and have a long list of collateral eligibility criteria that they must adhere to. First loss cushions typically range from 30%-50%, and we're very disciplined when it comes to ongoing collateral and liquidity monitoring with structural protections if performance deteriorates. Through the Q1, all of our facilities are performing as structured and required. In short, we think these are great businesses.

They are relationship-based with excellent credit profiles and require the focus and expertise that make them excellent examples of our targeted scale strategy. Turning to slide 7. Average deposits decreased by 2% sequentially, reflecting typical seasonal patterns and the intentional runoff of $1.6 billion in higher cost brokered CDs. We expect the deposits to trough in early May and grow from there through year-end. Reported average non-interest-bearing deposits decreased 5.5% sequentially, but remained stable at 24% of total deposits when adjusted for our hybrid accounts. Total deposit costs declined by 16 basis points to 1.65%. Our cumulative interest-bearing deposit beta increased to 56%.

We continue to take proactive actions in repricing deposits through limiting our incremental funding needs by remixing loans from consumer to commercial, gathering low-cost commercial deposits, particularly in payments, while allowing certain rate-sensitive excess commercial deposits to leave, and by actively rotating maturing CDs into money market deposits and consumer. Overall interest-bearing funding costs decreased by 21 basis points, bringing our cumulative funding beta to 68%. Slide 8 provides drivers of NII and NIM this quarter. Taxable equivalent NII was up 1% and net interest margin increased 5 basis points from the prior quarter to 2.87%. The increase was driven by remixing lower yielding consumer loans into higher yielding commercial loans, swap repricing, and proactive deposit beta management, which more than offset the impact of seasonally lower deposits and 2 fewer days in the quarter.

Our balance sheet position continues to be fairly neutral to changes in interest rates as we move through 2026. We would see some modest benefit from reductions in the short end of the curve, as well as from increases in three- and five-year reinvestment rates. On slide nine, non-interest income increased 8% year-over-year. Investment banking and debt placement fees were $197 million, an increase of 13% year-over-year and a new Q1 record. Growth was driven by M&A, equity issuance activity, and commercial mortgage debt placement activity. Our pipelines remain elevated, and we're up about 5% from year-end. M&A pipelines were at record levels. Still, as Chris mentioned, given uncertain market conditions, we're planning for Q2 investment banking fees to be in the $175 million-$180 million range with upside if geopolitical and other macro risks subside.

We continue to feel very comfortable that investment banking fees will grow mid-single digits in 2026. Trust and investment services income also grew 13% year-over-year, reflecting positive net flows and higher market values. Assets under management remained stable at $70 billion. Service charges on deposit accounts and corporate service fees increased by 12% and 9% year-over-year respectively. The increase in service charge was driven by growth in commercial payments, which grew fee equivalent revenue at 11%, while corporate services income was driven by higher loan commitment fees and client FX activity. Commercial mortgage servicing fees were $62 million, down $14 million year-over-year, largely driven by lower deposit placement fees as well as resolutions in special servicing. At quarter end, we were named primary or special servicer on approximately $720 billion of CRE loans, of which about $265 billion is special servicing.

Active special servicing third-party assets were $10 billion, about half in office. This is down from $12 billion a year ago as the commercial real estate industry continues to recover. We continue to expect commercial mortgage servicing fees to run about $50 million-$60 million per quarter for the remainder of the year. On slide 10, Q1 non-interest expenses of $1.2 billion improved 6% sequentially when excluding the prior quarter's FDIC special assessment and increased 4% year-over-year. Compared to the year ago quarter, the increase was driven by higher personnel expenses related to our frontline banker hiring, incentive compensation associated with the strong fee performance, and higher benefits costs. Sequentially, expenses declined due to lower incentive compensation, seasonally lower professional fees and marketing expenses, and fewer days in the quarter.

Expenses are expected to increase through the balance of the year, reflecting our ongoing investments in people and technology, incentive compensation associated with expected continued revenue momentum, and other seasonal impacts. We continue to feel very comfortable with our full-year expense growth guide of 3%-4%. Turning to the next slide. Credit quality remains solid. Net charge-offs were $101 million, down 3% sequentially, and were an annualized 38 basis points of average loans.

Non-performing assets increased by $65 million sequentially back to Q3 2025 levels and remain below historical levels at 63 basis points. The increase was driven by two credits in utilities and multi-family real estate industries, respectively. We're confident we will resolve these credits in the coming quarters, and we are well reserved against them today. Lastly, criticized loans declined by $3 million sequentially. Moving to slide 12, our CET1 ratio was 11.4%, and our marked CET1 ratio was 10% at quarter end. Our preliminary assessment of the updated Basel III endgame proposal is that our risk-weighted assets would decline by approximately 9% under the revised standardized approach, resulting in 100 basis points plus improvement to our marked CET1 ratio. RWA relief would come primarily from lower risk weights associated with off-balance sheet commercial loan commitments, residential mortgages, and corporate loans.

As we wait for rules to be finalized, we'll continue to manage our marked CET1 ratio in the 9.5%-10% range under current RWA methodology. We expect to repurchase at least $300 million of our shares per quarter for the balance of the year, which implies at least $1.3 billion for the full year. We remain focused on supporting our clients and growing our business, and as Chris mentioned, delivering a return of capital and a return on capital for our shareholders. Moving to slide 13, we're positively revising our 2026 guidance given the strong start to the year. We now expect full year net interest income growth of 9%-10%, compared to our prior guide of 8%-10%. We now also expect to exit the year with a net interest margin of approximately 3.05% on a stable earning asset base relative to the Q1.

This guidance holds under a fairly broad range of interest rate scenarios. As of today, our base case assumes no cuts this year. We also improved our loan guidance. Average loans are expected to increase 2%-4%, compared to our previous guidance of 1%-2%, and average commercial loans are now expected to grow 6%-8% this year. All of our other guidance remains unchanged, although, as you would expect, we continue to monitor macro conditions closely. In summary, subject to the usual macro caveats, we're confident that we will deliver another year of outsized organic revenue and earnings growth for our shareholders. With that, I would like to now turn the call back to the operator to provide instructions for the Q&A session. Operator?

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove your question or your question has been answered, please press star followed by two. If you are streaming today's call and would like to ask a question, please dial in and enter star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to register. Our first question will go to the line of Erika Najarian with UBS. Erika, your line is open.

Thank you, and good morning. The first one is for you, Chris. Given the strength that you showed this quarter on both lending and fees, maybe talk a little bit about client sentiment and how they're balancing sort of the geopolitical volatility with some of the positive on the ground Big Beautiful Bill stimulus and everything else that's happening domestically. Additionally, thank you so much for the MDFI, in quotes, breakdown. I'm wondering what you're seeing in terms of sponsor activity, what you're seeing in terms of your private credit clients. One of your peers, David Solomon, mentioned actually in the private credit space, widening spreads. I'm wondering if KeyCorp is seeing something similar.

Well, sure. Good morning, Erika. Let me start if I could, with the consumer, because that's a little less complicated. The consumer's in great shape. If you look at all of our credit metrics, if you look at the fact that these tax refunds from the Big Beautiful Bill will exceed what they did last year. If you look at spending is up kind of mid-single digits year-over-year. Online spending is up maybe double digits. The other thing that's interesting with our client base is the wealth effect. I think this is something that's been underreported. When we talk about massive flow, we're talking about our customers with between $250,000 and $2 million to invest. 18 months ago, we thought that universe was 1 million of our 3.5 million customers. We went back and redid it based on market activity.

We now believe it to be 1.15 million, so up 15%. On the consumer side, our consumer is in good shape. Now, on the commercial side, there's obviously some puts and takes. You saw for the first time, as Clark detailed, our utilization went up, which is a good thing. We're starting to see people actually invest more in CapEx with some of the benefits from the Big Beautiful Bill that you pointed out. Of course, the flip side of it is just the macro uncertainty. What we did see in the quarter is some people pulled some deals forward. Think about if you were going to go to the investment-grade credit markets and the activity started, you probably pulled that forward.

Conversely, on M&A deals, what's happening is they're not going away, but people are kind of slow playing it, doing a lot of due diligence because there's so much volatility kind of day to day, week to week. We sort of saw both sides of that. Having said that, as we said earlier, our pipelines remain very strong. I'm very optimistic about where we are from our commercial businesses. Obviously, it's not without impact from the near-term volatility.

Second part of your question as it relates to MDFI is a very great question because this is kind of a developing area. We've seen a steady march down in terms of spreads for a long time because there's just been too much capacity in the market with respect to commercial loans. What we're seeing just as of late is a firming there, and part of the firming of that is that some of the private credit players, obviously, in light of redemptions, are not in the market the way they have been. I actually think as you look forward, there's a lot of discussion around private credit.

I personally don't think there's a credit problem, but these redemptions are real and that if you have a bunch of redemption requests, the first thing you do is stop shoveling it out the front door, which I think will give the banks, in some instances, an opportunity to re-intermediate some of those activities. That's my perspective. Anything else on that, Erika? Operator, we'll take the next question.

Yes, of course. Thank you, Erika. The next question will go to the line of Ken Usdin with Autonomous. Ken, your line is open.

Thanks a lot. Appreciate it. I want to ask a question on deposits. I know the Q1 is seasonal and it had a decline in brokered CDs. Just wondering how you think that deposits will trend from here. If you think you're getting close to the bottom of that NIB mix, which I know was part of that seasonality in the Q1. Thanks.

Yeah. Hey, Ken. It's Clark. Thanks for the question. You hit on the, I think the bigger drivers, broker deposits coming out at about $1.6 billion seasonal decline. First, I would say as we did decline, we are actually slightly better in the Q1 than we would have planned. I think just consistent with our expectations. On NIB, you did see that come down on a reported basis. I think if you put our hybrids in there, we're stable. Those continue to be a very good vehicle to work with commercial clients and maintain those high-quality operating deposits. I think as usual, we would expect to trough kind of mid-May and then build up through the quarter.

I'd say Q1 to Q2 average balances will be stable to maybe slightly up, but I'd expect ending balances June 30 to be higher and those to continue to rise through the course of the year. We feel very good about the liquidity we have if loan growth continues or picks up. We have low loan-to-deposit ratio on a relative basis. We've brought our market funds down, so we have a lot of third-party capacity if we need it. And then we have great access to client excess deposits and new operating deposits. If we need to fund more loan growth, that's a high-class problem that we feel very confident about.

Yeah. As a follow-up on the cost side, you put in the slides about the cumulative down beta has been great at 56, with rate cuts presumably on hold for a while. Can you just talk about deposit competition? How much room do you have, if any, to continue to bring down deposit costs and just the environment out there across the businesses for deposit taking? Thank you.

Yeah, sure. Look, I think you hit it. With no cuts, and that is our base case, we'd expect deposit pricing in general to sort of stabilize. Now, if loan growth really kicked in, some of the dynamics Chris talked about, if banks really step back in, we would expect some intensification of that deposit pricing. Right now, our view is that those will be fairly stable. Our deposit price will be fairly stable at this point. As I just outlined, we will get back some balances on things like NIB and others. I think we have some puts and takes. We will continue to drive down broker deposits through the first half, but if we needed more funding and we had to dip into that market to not hit more painful pricing across the book, we can do that.

I think we continue to have a lot of avenues at our disposal. I think if there were cuts, our deposit betas will probably drop a little bit in a year, just given the timing component of that. Again, our base case is stable, and I think we can hold serve in the mid-50s as we move forward. That's all premised on the loan growth we're guiding to. If that came in stronger, we might see a little bit of a dip there, but I think we'd make that trade-off as long as it's good quality relationship growth.

Thank you, Ken. Our next question will go to the line of John Pancari with Evercore ISI. John, your line is open.

I guess just similarly on the competitive front on the lending side, and one or two of your peers have cited a bit more aggressiveness out there on the lending front, particularly on structure for the most part, but also to a degree on pricing. Are you seeing this showing up in your markets, and maybe if you can talk about how it's influenced loan spreads that you're seeing as you're pricing new originations. Thanks.

Yeah, John. The phenomenon you're talking about has definitely been a prevailing phenomenon for some time. What I was describing in my answer to Erika is sort of real time, some adjustment that we're seeing. There's no question there's been excess capacity for some time, and I've talked about this at length, that a properly graded commercial loan can't return its cost of capital. There's been just a constant pressure on spreads and on structure. I think we may be, and I emphasize the word may, be at an inflection point on that trend.

Again, we have not adjusted any of our credit boxes or underwriting standards. We are still maintaining, again, the same standards that we've always had, so.

Yeah, Mo, I think that's a good point. We never give on structure. Obviously, it's a market out there, and we price where we need to price. The advantage we have, John, is we can do a lot of other things for these clients, whether it's payments, whether it's strategic advice, hedging, et cetera. That's how we run our business.

Yeah. As we did 80% of the time this last quarter.

Got it. Okay. Very helpful. Thank you. You gave some pretty good color here on the capital front in terms of buyback expectations. I guess, if you could just remind us of your allocation priorities there and if anything could impact that pace of buyback and how do you think about any potential inorganic opportunities? Thanks.

Obviously, what could impact it more than anything is if we had a severe macroeconomic downturn and started having credit losses. We do not see that. We feel really good about our credit book. Our capital priorities remain unchanged. It's first to support the growth of our clients, which we were pleased to see that we got in this last quarter. The next thing is to invest in our business, and we always talk about when we talk about investing in our business, it's really people and it's technology. We'll continue to invest heavily in our business. We also, as I mentioned in my remarks, will continue to hire a lot of individual bankers. We'll hire groups of bankers, and opportunistically, we would look at small acquisitions of kind of boutique type operations, which are really just an extension of hiring a group of people.

The next priority, of course, is to pay our dividend, which we don't talk about a lot, but it's $0.205 a share, which is not inconsequential as you look at the yield. Lastly, repurchase our shares. We said earlier in our comments, John, we plan to repurchase $1.3 billion worth of stock in the year.

Thank you, John. The next question will go to the line of Ryan Nash with Goldman Sachs. Ryan, your line is open.

Chris, if I look at the high end of the loan growth guidance, it doesn't imply that much growth from the 1Q end-of-period levels. Now, I know you mentioned some moving parts in one of your other answers, some syndications that could be coming in 2Q, but I'm curious on the drivers of loan growth from here. What will drive the slowdown and can there be some upside from current expectations? Thank you.

Well, thanks for the question. I'll start with, I guess, what's the premise of your question is the loan guide conservative, and that if we didn't book a whole bunch of more loans, we'll basically grow at 6% for the year. I'd say there probably is some appropriate conservatism in the number, given the macro uncertainty out there. Let me kind of give you the pieces and parts. Utilization actually, for the first time in a long time, spiked up. I wouldn't necessarily imagine that that will continue to spike up. We waited a long time for it to start moving. We do have broad-based growth across all geographies and industries, which should play forward. I mentioned in my remarks that we have a 20% increase in our backlog from year-end. Obviously, we would expect some of that to in fact pull through.

Utilities and power continue to be an area of huge opportunity when you think about both renewables and the massive build-out that's required for GenAI. There's two other areas where we're starting to see some traction. One is healthcare. We're starting to see consolidation, which is necessary, by the way, in the healthcare industry. Lastly, for the first time in a long time, we're starting to see this backlog of commercial real estate transactional activity. We've been refinancing a lot of commercial real estate, but what we're starting to see is people are starting to trade as the bid and the ask comes in and everybody sort of gets comfortable that we're going to be in this kind of an interest rate range for a while.

That's the puts and then also I just would remind you, we're going to continue to run off $0.5 billion to $600 million of residential mortgages per quarter. That's kind of the puts and takes, Ryan.

Gotcha. No, this is super helpful, Chris. Maybe as a follow-up to something that was talked about before. Within the investment banking business, if I look at the mid-single-digit guide, it implies low single-digit growth for the remainder of the year. I feel like coming into the year, you were upbeat on the potential return of M&A to drive upside. Historically, it's been a bigger part of your business. It sounds like from your comments earlier that M&A hasn't been as robust as you would have expected, but are there other parts of the business that are trailing? What would we need to see for some parts of the business to begin to outperform expectations? Thank you.

Sure. With respect to M&A, what's interesting about M&A, Ryan, is there's been a lot of headline numbers, and as you well know, the GSIBs have reported some incredible numbers with respect to advisory. I think deal volumes in total are up like 46%. Transaction volumes, however, are down 26%. You put all that together, and we're still waiting for this huge surge of middle market M&A activity to come through. That is something that we're keeping a close eye on. Those transactions are binary. What we're guiding to right now is 5%-6% growth year-over-year. We did about $780 million last year. At the middle of the range, that'd be something like $825 million off of a record year last year.

I feel really good about the business, but admittedly, while we have record backlogs, we're not seeing as much come out of the pipeline right now as we would hope. I think when some of the geopolitical things are resolved, I think it'll be a little better environment for that. Thanks for your question, Ryan.

Thank you, Ryan. Our next question will go to the line of Scott Siefers with Piper Sandler. Scott, your line is open.

Morning, guys. Thanks for taking the question. Wanted to return for a moment to the capital discussion. It seems like there really should be good capital management runway for a while, especially if you elect to put to work some of the additional access you'd have should the Fed's NPRs pass as proposed. I guess I'm curious to hear how you would decide when and how aggressively to deploy that additional access if those proposals in particular do advance, and what other considerations are there, whether it's ratings agencies, investor expectations, et cetera, just as you think about the appropriate capital levels to sort of land on.

Hey, Scott, it's Clark. Thanks for the question.

One, we guided on the Q4 call that we try to get to 10% marks by the end of the year. We actually arrived there a few quarters early in this quarter, so we feel very comfortable there and would feel comfortable over the course of the year dipping into that 9.5%-10%, and that's under the current regime. Again, no issues there. To the extent the NPR passes as proposed, we expect, as we said, 100+ basis points of additional marked capital there. I think that gives us more room to continue to both invest in growing client activities, but also to continue our share repurchase. On the one hand, we're guiding to $1.3 billion for the year. Short of some more extreme situations, I would expect that to be more like the floor for buybacks for the year.

I don't know how much more we'll go over that. We'll play that by ear. We certainly believe over time, as you know, we've got more capacity to lean into capital return. The other point that I would just make is I don't think anybody should expect one big swing at this. I think you should expect from us thoughtful, orderly, kind of methodical capital management over time, where we are sharing as much visibility as we have given conditions and kind of marching down to that range over some meaningful and manageable period of time. We're not going to do anything dramatic in any quarter or two.

Gotcha. Okay, perfect. Thank you. Maybe switching gears for just a second. I appreciate the refresh and the color you guys have given on the full-year investment banking expectations. Clark, I was hoping maybe you could kind of provide some thoughts on how you see some of the other key areas, whether it's wealth, payments, some of those other focus areas projecting through the year.

Sure. One, as Chris noted, we continue to get gains in our wealth business. To the extent the market cooperates, we'd expect to see investment management fees continue to grow, and I think that's a mid- to high-single-digit number for the year. That's tracking pretty well, even despite a little bit of volatility in the Q1. Our payments business, particularly on a fee equivalent revenue, which as you know Scott, is the gross fees, continues to be very strong. If you unpacked, for example, what happened in the quarter on deposit service charges, those numbers would've been mid-teens year-over-year. We continue to get really good activity from our payments team, either selling additional services into existing clients or anchoring with new clients as they come in. No reason to think that that's going to stop.

We continue to add new capabilities in payments, whether it's in our portal, our information reporting, or things like embedded banking. I think all of those are on very good trajectories, and we'd continue to expect to see those grow. That's again, on a gross number, kind of low single digits on a net number. Low double digits on a net number, high single digits. Sorry for that confusion there. Corporate services, which is really FX and derivatives.

Other hedging. The oil volatility has created some tailwinds there. If that settles in, derivatives tends to follow with loan growth. That's been very positive. We've seen some good traction in FX as well. I think all of those categories continue to look up and have been consistently strong. The one place that we called out in the Q4 call and will continue to be year-over-year down, but that is not a reflection of the quality of the business, is our commercial real estate servicing business. Again, that's a function of advance rates coming down, clients paying us with deposits versus fees, and some recovery in the industry that causes special servicing and other resolutions to likely be down year-over-year. Again, nothing negative to say about that business.

That's just the market trends that are affecting it right now.

In summary, expenses and fees we expect to be relatively close. We'd like to be a little bit better on fees, but we're really looking at reported fees to be, again, pretty consistent with expense growth over the course of the year, and then adjusted fees being in that mid-single-digit range and priority fee bases high single-digit.

Excellent. All right, good. Thank you very much.

Thank you, Scott. Our next question will go to the line of Mike Mayo with Wells Fargo. Mike, your line is open.

Hi. Chris, you've already answered part of the question about your investment banking and debt placement business, and I know you've built that business, a big organic grower. When you said you're looking for mid-single digit growth this year, that's not so exciting, right? Like waiting this long for capital markets to come back. I know it's been skewed toward the large mergers, and you're saying it's not really back yet. I guess that mid-single digit guide, is that just what it is? Or is that what it is given your thoughts that activity will be delayed maybe until next year? Thank you.

Well, first of all, good morning, Mike. That's what it is based on where we are right now in the market. I do take a lot of comfort in that our Q1 was a record. It was a record after last Q1 was a record. Last year was our second best. Our pipelines are at record levels. If we could get some stability out there in terms of rates and in terms of people's perspective going forward, I think there's a huge opportunity here. Right now, as we look at it, what we're comfortable with is guiding 5%-6%, understanding that the business has a lot of momentum.

What do you think the difference is for the very large mergers? What we heard from the biggest banks is that de-reg and pent-up demand and still very high stock prices and liquidity, that's all transcending the conflict, and you're seeing these pipelines get replenished and all that with more of your middle-market companies where the activity is still subdued.

Yeah. I think it's a couple things. One, those are transactions that obviously require a lot of regulatory approval, and there's no question that regulatory approval has improved geometrically. That's the first thing. Second thing is many of those deals are stock for stock or a huge component of stock, and therefore don't require nearly as much financing. The third thing is, typically, I've always noticed as you come out of a rut, and we have been in a rut in M&A, the first deals to start coming out are really large, high-quality deals. I think that's what you've seen. I think it will percolate to the entire market.

Mike, one other just element we're seeing more consistently also, sorry, on the middle market end, which as you know, is heavily sponsor-backed. We're seeing more continuation vehicles as an option versus outright sales, and those obviously don't always translate to the same level of activity.

That all makes sense. Would you say that some of the same factors, though, that could drive more loan demand due to CapEx, could also drive merger? In other words, to the extent that middle market CEOs become more comfortable, then they're more likely to spend for CapEx, and maybe therefore they're more likely to do mergers. What's the demand for CapEx-driven financing?

Well, I don't think there's any question. I think as people get comfortable with the forward view and get comfortable kind of where they think rates are going to be, I think that will be an impetus to transact. I think having gone through a bunch of market disruptions, I think once people see that sort of the coast is clear, I think there's probably a lot of people that are gearing up to go, and we have many in our backlog.

Thank you, Mike. Our next question will go to the line of Manan Gosalia with Morgan Stanley. Manan, your line is open.

Chris, Clark, since you gave the ROTCE guide, NII and loan growth are trending better. You noted 100 basis points or so of benefit from Basel endgame. That's fairly sizable. I'm assuming you should be able to use some of it. Would that, I guess, all be upside as we think about the 15% or so exit ROTCE for 2027?

Well, clearly, I think as the rules get finalized, we will have greater flexibility. We mentioned to the tune of, if you just look at the standard approach, 100 basis points or so. We'll have more to say about that after the final rules come out and we make final decisions with respect to standard approach or ERBA.

KeyCorp (KEY) Q1 2026 Earnings Call Transcript

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