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. 

Sector

Strongest Dimension

Years on list

Previous rank

State

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

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.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

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

legacy

KeyCorp

keycorp

Good morning, and welcome to KeyCorp's 4th Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded. I would now like to turn the conference over to Brian Mauni, KeyCorp Director of Investor Relations.

Thank you, operator, and good morning, everyone. I'd like to thank you for joining KeyCorp's Q4 2024 Earnings Conference Call. I'm here with Chris Gorman, our Chairman and Chief Executive Officer and Clark Hyatt, our Chief Financial Officer. As usual, we will reference our earnings presentation slides, which can be found in the Investor Relations section of the key.com website. 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, January 21, 2025 and will not be updated. With that, I will turn it over

to Chris. Thank you, Brian and good morning everyone. Our 4th quarter results marked another significant milestone for Key as we continue our journey to realize our full earnings potential. We reported an EPS loss of $0.28 per share. However, after adjusting for the impact of our second strategic securities repositioning, which we completed in December, EPS was a positive $0.38 In the Q4, we took the opportunity to incur approximately $50,000,000 of elevated expenses that we would not expect to recur.

Our revenue momentum is clearly defined and significant. Adjusting for the securities repositioning, revenue was up 11% sequentially and up 16% versus the prior year. Both net interest income and adjusted fees grew double digits. Regarding NII, while loan demand remained soft, we exceeded our 4th quarter exit rate commitment by driving another strong quarter of client deposit growth, up 1.5% sequentially and 4% year over year. Concurrently, we continue to execute our disciplined and proactive deposit repricing plan.

Deposit betas have been stronger than expected, 40% from the first rate cut. Additionally, I continue to be encouraged by our strong credit performance. Credit migration improved for the 4th consecutive quarter. Criticized loans were down another $500,000,000 and net charge offs were down $40,000,000 sequentially. Non performing assets are peaking and assuming the macro environment remains constructive for the balance of the year, we expect non performing loans to begin to decline by mid year.

For the full year, I am proud that we met or exceeded the financial targets on an operating basis that we detailed for you at the beginning of 2024. Net interest income was in the middle of our targeted range and our exit rate was favorable. Fee growth was stronger than expected more than offsetting the related expense levels. We achieved meaningful positive operating leverage in the second half of the year. Full year net charge offs were in line with guidance.

Throughout the year, we continued to lay the groundwork that positions Key to continue to deliver outsized growth and operating leverage in 2025. In Consumer, we grew relationship households in excess of 3% for the 2nd consecutive year, including growth of 5% to 8% throughout our Western markets. In our Eastern markets, we continue to grow households while continuing to penetrate the substantial wealth opportunity that exists in our scaled mature markets. As of year end, our assets under management reached another record of approximately $61,400,000,000 Sales production in our Mass Affluent segment also was record setting. We enrolled an additional 5,000 clients and added over $500,000,000 to the platform in the 4th quarter.

Further, in the last two years, our mass affluent segment has added nearly 40,000 households with over $2,000,000,000 of AUM and almost $4,500,000,000 of total client assets.

currently, we have hired over 170 wealth professionals onto our platform, and we plan to hire another 60 or so in 2025. Turning to commercial payments and deposits. Commercial payments revenue grew mid single digits year over year for the Q4 and deposit balances were up 3% year over year, while being very disciplined on rate management, a testament to our relationship model. Over the last decade, payments has been an area of focus and an area of consistent investment. For example, we were one of the first banks to build embedded banking capabilities.

We will continue to develop our differentiated platform with plans to invest in additional software advisors and relationship bankers, enhanced digital and analytics tools, while concurrently continuing to invest in embedded banking. More broadly, in the middle market, we recently expanded our presence in Chicago and Southern California. Our new teams have hit the ground running. New loan volumes improved for the 3rd consecutive quarter and our pipelines are nearly double those of a year ago. I am confident in our ability to drive commercial loan growth this year.

Finally, our Investment Banking results were outstanding for both the Q4 and for the full year. 4th quarter fees were a robust $221,000,000 and full year fees were the 2nd strongest in our history. Growth this quarter was broad based across loan syndications, M and A, DCM and ECM. 2024, we raised over $125,000,000,000 of capital for our clients, with $54,000,000,000 raised in the Q4 alone. Importantly, we are off to a strong start in 2025.

Our pipelines, most notably M and A, remain at historically elevated levels. We successfully recruited senior bankers last year and plan to hire another 10% in 2025. Subject to the usual market caveats, I remain optimistic with respect to the trajectory of our Investment Banking business. In addition to the investments I just described, I'm also proud of the progress we made on a number of technological fronts last year. We completed 2 major core modernization projects, our core commercial loan platform and our derivatives platform.

We also made significant progress on our migration to the cloud, including our contact center technology and our consumer online banking portal. We expect to complete our cloud journey this year. At this point, all but 2 of our major systems and half of our apps have been successfully migrated to a hybrid cloud environment. In 2025, we plan to increase our overall tech spend by about 10% to $900,000,000 driven by transform or change the bank spend. Our ultimate objective is to make it easier for our clients to bank with Key and easier for our teammates to better serve the needs of our clients.

Finally, I want to commend our team for the successful closing of the Scotiabank minority investment prior to year end. Relatedly, I also want to welcome 2 new Board members, Jackie Allard and Samish Khan. Jackie and Samish bring broad based financial services, digital and technology backgrounds that I believe will be additive to our already strong Board of Directors. I'm also pleased to welcome Mo Rahmani to Key as our new Chief Risk Officer. Mo brings a wealth of industry experience, most recently serving as Deputy Chief Risk Officer at a large Category 3 bank.

As we turn the page to 2025, we celebrate Key's 200th anniversary. This remarkable achievement is only possible because of the hard work of our teammates, both current and former, and their collective commitment to our clients, our communities and our shareholders. I am grateful for their dedication to our company and proud to be part of their team. We entered 2025 from a position of strength. At year end, our reported common equity Tier 1 ratio was 12% and our mark CET1 ratio was 9.8%, both in the top quartile of our peer group.

We have pronounced tailwinds across both our net interest income and our high priority fee based businesses. Our credit profile remains strong. While we plan to make targeted investments in additional capabilities this year, we will remain disciplined with respect to our overall expenses, which we expect to grow in the low to mid single digit range. As a result, we will drive both fee based operating leverage as well as a 10% or better overall operating leverage in 2025. In short, we are well positioned for a very strong year in 2025 and an exit rate that will further position Key for outsized growth again in 2026.

With that, I will turn the call over to Clark to review the financial results and our 2025 outlook in greater detail. Clark?

Thanks, Chris. Starting on Slide 4. We reported a 4th quarter EPS loss of $0.28 or on an adjusted basis a positive $0.38 per share. Late December, we sold securities with a market value of roughly $3,000,000,000 with a weighted average yield of about 1 point 5 percent and an average duration of a little over 8 years. We fully reinvested the proceeds prior to year end in primarily 3 to 5 year duration MBS at a yield pickup of about 400 basis points.

These new securities will provide liquidity and capital benefits relative to what was previously owned. Consistent with our expectations when we announced the transaction with Scotiabank back in August, we utilized roughly half their capital injection to complete 2 securities portfolio repositionings, 1 each in the 3rd Q4. We sold in total approximately $10,000,000,000 in market value securities or almost 30% of our AFS portfolio and over 50% of the long dated securities that were yielding less than 2%. Together these actions added $54,000,000 to 20.24 net interest income and will add about another $270,000,000 in 2025 net interest income. Revenue trends were impacted by the losses from the security sales just described.

On an adjusted basis, revenue was up 11% sequentially and up 16% year over year with strength in both NII and fees. Expenses of $1,200,000,000 were up on an operating basis, reflecting the strong fee quarter and some charges we took to enable us to hit the ground running in 2025. I'll go into these in more detail later. On an adjusted basis, we achieved roughly 400 basis points of positive operating leverage year over year. Credit costs of $39,000,000 included $114,000,000 of net charge offs offset by a $75,000,000 loan loss reserve release.

The release was primarily a function of lower loans, a decline in criticized loans and $25,000,000 specifically allocated to charge offs we took in the quarter. Our CET1 ratio increased to 12% and tangible book value per share increased roughly 17% year over year. Turning to Slide 5, full year 2024 EPS was impacted by the securities portfolio repositionings. Adjusted for these actions and FDIC special assessment costs, EPS was about 1.16 dollars Net interest income was down about 3.5% or the middle of the target range we provided last January. Scotiabank Investment related benefits added about 150 basis points to growth offset by an $8,000,000,000 decline in loan balances over the course of 2024 and near term impact from rate cuts late in the year.

Our 4th quarter exit rate NII hit the $1,000,000,000 plus target that we had set at the beginning of the year even after adjusting for Scotiabank impacts. Adjusted fees were up 7%, meaningfully better than the 5% plus guide we provided at the start of the year as Investment Banking had its 2nd best year ever. Commercial mortgage servicing, wealth and commercial payments also posted strong results. Expenses were up almost 3% compared to our original guidance of flat to up 2% primarily due to the strong fee environment and the additional expenses we noted. Credit costs improved reflecting allowance releases this year versus builds in 2023 and net charge offs were 41 basis points at the high end of our original range of 30 basis points to 40 basis points due in part to the lower loan denominator.

Moving to the balance sheet on Slide 6. Average loans declined 1.4% sequentially and ended the quarter just north of $104,000,000,000 The decline reflects tepid client demand, active capital markets, our disciplined approach as to what we're willing to put on the balance sheet and the intentional runoff of low yielding consumer loans as they pay down and mature. As we've mentioned before, our business model provides clients with the best execution capabilities whether it's on or off our balance sheet. Quarterly we raised $54,000,000,000 of capital for our clients. As Chris mentioned, had a very strong quarter of investment banking fees.

I believe 12% of the capital we raised in the quarter went to our balance sheet. On Slide 7, average deposits increased 1.3 percent sequentially to nearly $150,000,000,000 reflecting growth across both consumer and commercial deposits. Client deposits were up 4% year over year. On a reported basis, non interest bearing deposits remained at 19% of total deposits. Similarly, when adjusted for the non interest bearing deposits in our hybrid accounts, that percentage remained stable at approximately 23%.

Deposit cost declined by 21 basis points with interest bearing cost decreasing by 25 basis points during the quarter. Deposit betas have been stronger than expected reaching 40% through the Q4 and closer to 45% through the month of December. Slide 8 provides drivers of net interest income in the NIM this quarter. Taxable equivalent net interest income was up 10% and the net interest margin increased 24 basis points from the prior quarter. While the increase was driven largely by the Scotiabank investment and related securities repositioning, we were able to mitigate near term impact from Fed rate cuts and lower loans with continued client deposit growth momentum, higher deposit beta and other funding optimization initiatives.

Overall interest bearing liabilities declined by 35 basis points this quarter. Turning to Slide 9, reported non interest income was negative due to the securities losses. Adjusting for this, non interest income was up 18% year over year. Investment banking and debt placement fees increased $85,000,000 up over 60% from the prior year. Syndications and M and A fees drove most of the increase while DCM, ECM and commercial mortgage activity all grew nicely as well.

Elsewhere, commercial mortgage servicing fees grew over 40% year on year and wealth management fee grew 8% perfecting strong business momentum in these areas. As of twelvethirty one, we serviced over $700,000,000,000 of loans in our commercial servicing business. In our wealth business, assets under management grew to another record level of $61,400,000,000 On Slide 10, 4th quarter non interest expenses were $1,200,000,000 up 12% both sequentially and year over year adjusting for selected items in the year ago quarter. Versus the year ago quarter, growth was driven by higher incentive and stock based compensation, reflecting the strong capital markets activity, a higher level of investment spend this year and some unusually elevated other expenses this quarter. Sequentially, the increase was driven by higher compensation related to the strong fee environment, investment spend, market and employee benefits cost and some seasonal and miscellaneous other expenses.

The bottom right of the page, we provide the primary drivers of the roughly $50,000,000 of unusually elevated expenses in the quarter that Chris referenced earlier. We would not expect those elevated expenses in 2025 and therefore I would not use the 4th quarter non interest expense run rate as a guide for the year. I'll cover this in more detail and guidance shortly, but as we've said, we will remain very disciplined on expense management efforts throughout 2025. Shown on Slide 11, credit quality is stable to improving. Net charge offs were $114,000,000 down 26% sequentially or an annualized 43 basis points on average loans.

Nonperforming assets were up a modest 4% sequentially and remain low at 74 basis points of loans. We believe NPAs are peaking and expect them to decline by mid-twenty 25 assuming no material adverse changes in the macro environment. Criticized loans declined by 7% in 4Q with broad based improvements across C and I and commercial real estate. Credit migration across the entire portfolio improved for a 4th consecutive quarter and is back to the levels of 2 years ago. We expect criticized loans will continue to decline from here as tailwinds from recent rate cuts are not yet reflected in clients' financial statements.

Turning to Slide 12, our CET1 ratio reached 12% as of December 31 and our March CET1 ratio, which includes unrealized AFS C1 ratio, which includes unrealized AFS and pension losses improved to 9.8%, both of which we believe are at or near the top of our peer group. Our tangible common equity ratio also improved to north of 7%. Slide 13 provides our outlook for full year 2025 relative to 2024. Ranges are shown on an operating basis. We expect average loans to be down 2% to 5% with year end 2025 balances flat to where they ended 2024.

Just a reminder that the down 2% to 5% is a measure of full year average loans, not a reduction from the end of 2024. That is within this guide, we expect consumer loans to decline by approximately $3,000,000,000 over the course of 2025, offset by growth in commercial loans. Net interest income is expected to be up roughly 20% and for a second straight year to be up north of 10% on a 4th quarter to 4th quarter exit rate basis. We expect NIM to be 2.7% or better by Q4. We expect non interest income to be up at least 5% with upside of capital markets conditions remain constructive.

We expect expenses to be up 3% to 5% off this year's $4,500,000,000 depending on the fee environment and we remain committed to achieving fee based operating leverage this year, meaning on a percentage basis fee income should grow faster than expenses. We expect the full year net charge off ratio to be in the 40 to 45 basis point range or stable to 4th quarter levels with NPAs and criticized loans improving over the course of the year. Finally, we expect the tax rate to be 21% to 22% or 23% to 24% on a taxable equivalent basis reflecting the expected higher level of earnings and some uptick in state tax rates. Finally, on Slide 14, we lay out the drivers behind our 20% growth expectations for net interest income 2025 and 10% plus growth expectations from Q4 to Q4. Our assumptions are conservative relative to this past Friday's forward curve and that we have assumed 2 rate cuts in 2025, 1 in May and 1 in December.

You can see over half of the growth comes from the Scotiabank related actions and amortization from swaps we terminated in late 2023 and another good chunk comes from ongoing fixed rate assets and swaps repricing. Given the structural nature of much of this, we have a high degree of confidence it will materialize. Primary swing factors related to the degree to which we can drive quality, commercial loan growth this year and continue to manage deposit betas as well as the shape of the yield curve. And if our clients continue to view the capital markets as a better option to fund their growth and bank debt, we're fortunate to have strong debt placement capabilities as a key and we would monetize these relationships through fees, not net interest income this year as we did this past year. With that, I'll now turn the call back to the operator to provide instructions for the Q and A portion of our call.

Thank you. We will now begin the question and answer Our Our first question today comes from John Pancari with Evercore ISI. John, please go ahead.

Good morning. Good morning. Just want to get a little more color on your morning. Just want to get a little more color on the 20% NII outlook. You maintained it despite completing the Bank of Nova Scotia stake earlier plus the steeper curve.

So and I appreciate the walk that you gave, but can you give a little bit more color around the rationale in keeping that 20%? I know you alluded to that your assumptions at least around the Fed could be conservative. Is there any other conservativeness built into this? And where could there be upside to this expectation as you look out? Thanks.

Sure. Thanks, John. So let me just for the benefit of everybody maybe go through the walk one more time, just so we're all on the same page, which would be Slide 14. If you just go kind of bucket by bucket in the waterfall, you have a big chunk that's just the full year incremental pickup from the securities repositioning and Scotiabank investment. Similarly, on the cash flow swaps we terminated back in October of 2023, you get the full year increment there as well.

And then in the fixed asset repricing and swap bucket, you have the full year incremental impact of the U. S. Treasuries that matured last year. You have about $5,000,000,000 plus of cash flows swaps that will mature this year at about 1.8%. We put some other forward starters on that come in later this year throughout the year at about 3.8%.

And then you have the reinvestments on cash flows out the investment portfolio, which you referenced will come in potentially at a higher rate. All of that we feel like it's not fully baked, but it's pretty well understood with some plus or minus in there. The last two pieces really are the business activity component. So as we mentioned, we'll continue to remix the loan portfolio in a quality commercial loans away from consumer fixed rate loans. We'll continue to grow quality customer deposits and manage those betas and deposit costs.

And then we've got some ability to optimize other liability costs as we move through the year. And

a reminder on that, 4th quarter deposit costs in total down 21 basis points, interest bearing deposits down 25 and interest bearing liabilities in total down 35. So we've continued to pull that lever where we can. And then the last piece there is just the full year impact of the size of the balance sheet on average relative to 2024 and the rate associated rate impacts with that. So as we noted, really the factors here are going to be around loan growth and the business activity between loans, loan balances, deposit and pricing on deposits. So I've said, we've worked really hard to get our balance sheet to a more resilient place here.

We believe today we're fairly neutral to rates and we can effectively manage through a variety of rate environments. That said, good question there of why not more than 20. If we go back to September when we did the first repositioning and through the Q3 call, we have had some things lean to the positive as you noted, namely fewer cuts or conversely higher reinvestment rates, and having closed that second tranche a bit earlier than we planned, meaning we get the 2nd portfolio trade done in 2024 and coming into 2025 clean. The counter to that really is starting loan balances. So we're down about $1,500,000,000 in average loans from Q3.

We would have expected that to be close to flat. So that pulls through the full year. As I mentioned though, I think we're in very good shape to manage through a range of rate scenarios and we're looking to support client loan demand. If we can grow commercial loans as planned, we will be in good shape relative to that 20% and our NIM should get close to that 2.8% level by year end. If we see stronger loan demand, we could and we can obviously support that, there could be some upside.

But the reality is the industry has been waiting for that loan demand to manifest now for several quarters. And if it doesn't, we'll have other levers to pull to make sure we can hit the 20%. Lastly, the environment right now is still a bit uncertain despite improving client optimism, which I'm sure Chris will touch on. And we've got a new administration take seat here in the last 24 hours. That administration appears to be getting to work very quickly.

So I think we'll all need a little bit of time to understand the moves and let the market digest them. But I'd say the short story is we're very confident in this guide and we think we're well situated take advantage of the market as it evolves.

Thanks, Clark. I appreciate the color. I guess just related to that, if you can elaborate a little bit more on your loan growth assumptions. I believe you had indicated implies about flat on an EOP basis, correct me if I'm wrong there. But and you're not

more conservative approach in guiding given the uncertain loan demand backdrop. But I wanted to see if you can give a little bit more color what you're seeing in terms of commercial borrowing activity and where the levers are there? Thanks.

Yes. So I'll hit a couple probably numbers here and then I'll let Chris provide some kind of qualitative client feedback. So we did see commercial loans stabilize and actually even tick up a bit at the end of the Q4. You're right on an end of period loan kind of flattish through the year. Just remember underneath that $3,000,000,000 of consumer loan runoff and about a 2% to 4% increase in the commercial loan portfolio.

So I think relative to others that's fairly consistent on the commercial loan side. And again, Chris will touch on this. I'm sure the pipelines continue to be very robust, and it's really just a question of pull through at this point.

Sure. Thanks for the question, John. So it's interesting. We're out talking to our clients all the time. Most recently, we did a survey of about 700 of our middle market clients.

80% of them said that they were very confident in their growth prospects. So that's all good. What we haven't seen yet is people really making investments in property, plant and equipment. And I think they're on the front edge of that right now. As you know, there's about an 18 month lag when you make investments like that.

And I think people wanted to see what the tax policy was going to be, which administration was going where which administration was going to be in power and what their policies were going to be. The other thing that I think gives us some opportunity for loan growth is utilization has been, in my mind, artificially flat at about 31%. Our typical utilization would be 35%, 36%. Every percent of utilization is worth about $700,000,000 of outstandings for us. My personal view is that the economy is actually starting to accelerate a bit.

My personal view is also that inflation isn't necessarily under complete control yet. It's also apparent that if we do have tariff policy, there'll be people kind of buying ahead on that from an inventory perspective. I'll give you a couple of other data points. Our M and A backlog right now is about as large as it's ever been, and there's still a whole bunch of capital on the sidelines. So for all those reasons, we think we will see loan growth.

You know, John, that here at Key, we've outgrown the H8 data on commercial loans every year with the notable exception of 2023 where we were actually shrinking our RWAs. So the opportunity isn't there yet, but the fact that we have more clients than ever and we're having more discussion with more clients than ever, I'm confident that when it's there to be had, we'll get it.

Our next question comes from Ebrahim Poonwala with Bank of America Merrill Lynch. Please go ahead.

Good morning. I just wanted to follow-up, Chris, I think regarding this as we think about pickup in M and A, we are seeing some large transactions being announced despite whatever the policy uncertainty is still prevailing. Given kind of you look at both these businesses and understand them extremely well, give us any historical correlation where you should think about Can M and A pick up without a pickup in lending demand, customers taking on more leverage, understanding that it may or may not come on bank balance sheets go towards capital markets. But I'm just wondering if we get a pickup in M and A when we hear your statement around the pipelines being as strong as they've ever been, should that imply that if M and A picks up, loan demand has to pick up?

It does, Ebrahim, to some degree. And obviously, there's a lot of stock for stock deals. No question about that. But keep in mind what a huge force the private equity market is and how delayed they are in actually participating with $1,000,000,000,000 on the sideline. Yes, there'll be less leverage, but there will still be leverage.

And so, there's no question that a robust M and A market is good for lending because usually there's large deals and out of those large deals spawn smaller deals. And so it's very good for the lending ecosystem to have a robust M and A environment.

Got it. And maybe one for you, Clark. Sorry if I missed it, if you gave a specific guidance in terms of deposit growth. Give us a sense of what you're doing on the funding side on deposits. Is there still some remix that we should think about?

And how should we think about just the average size of the balance sheet in terms of average earning assets relative to what you reported for Q4? Thank you.

Sure. So we continue, I think, do a very good job with customers on the deposit side, both balances and pricing. We'd expect as we go through the year for that to be stable to slightly up with continued client deposit growth. So we'll continue to remix out of brokered where it makes sense, which we've been doing as you know now for several quarters. Some of that also will depend on where the loan book goes and just the overall size of the balance sheet.

So again, continue to feel really good about our primacy focus and how that's translating to engagement with clients, balances and again overall pricing on those deposits.

Got it. And if you don't mind clarifying just average earning assets, how we should think about that trending from here?

I'd expect it to be relatively flat throughout the year.

Our next question comes from Bill Carcache with Wolfe Research. Please go ahead, Bill.

Thank you. Good morning, Chris and Clark. Chris, you've talked in the past about an operating environment where you envision key balance sheeting less risk and focusing more on generating fee income in your role as sort of a credit facilitator for your clients. Is that a fair characterization? And maybe if you could just update us on how you're thinking about the impact of a more pro growth administration?

Just trying to think high level about how to think about the trajectory of your fee income mix over time given the investments that you're making in payments, wealth management, investment banking and over time do those investments sort of affect that sort of, I guess remixing?

Sure. First of all, thanks for the question, Bill. We're about 60% net interest income, 40% non interest income. And I actually like that mix. What I want to make sure we do is grow both sides of that equation.

There's no question though that depending on where we are in the cycle, you'll see us leaning in one direction or the other. Right now, with all these markets being sort of flashing green and wide open, we can do a better job of serving our good clients by actually raising capital elsewhere. When the markets get a little choppy is where I think you'll see us really serve our clients and our prospects by growing our balance sheet disproportionately. To the larger part of your question, I think as I travel around and talk to our customers and our clients, I think people are feeling really good about a new administration. I think people think that the regulatory environment is going to improve.

Specifically, as it relates to our business, the regulatory environment around M and A. As you know, it's been very challenging to get deals approved. And I'm not speaking of the banking sector, I'm speaking of our M and A business. And I think that will I think there'll be a pretty significant unlock there. So I think people are optimistic on the regulatory front that we'll be able to not only do more, but do more in a way that's faster.

That's really helpful, Chris. Thank you. And if I may follow-up, Clark, on your comments around being able to generate greater fee income growth, to the extent your clients continue to take advantage of tight credit spreads and fund themselves via capital markets. Do you think we'll need to see I guess to what extent do you think we'll need to see credit spreads widen before banks broadly and key more specifically see a notable uptick in loan growth given as you mentioned we've been waiting for a long time sort of yet to manifest?

Yes. So look one maybe just one clarification there, which I know you know, but I think it's just worth stating. Our goal when we serve clients is to find the best landing spot for them, whether it's our balance sheet or the capital markets. When the capital markets get moving like they were in the Q4, we only put 12% of that capital we raised on the balance sheet, we'll put them into the capital markets and we're happy to continue to serve them. I think importantly, and this is why you hear us talk about so much deposits and payments, We continue to get that business even if we're not getting the loan.

The other thing I would say is in my time here at Key, which is going on kind of 12, 13 years, the one thing, as Chris noted earlier, that I've seen us do consistently with the noted exception we already raised is to grow quality commercial loans when they're available. So if the bank market is out there and it's the right thing for clients, I have confidence we will build the loan book. But if in the near term, the capital markets are the most advantageous place for clients, that's what our business model is and that's what we'll continue to do.

And Bill, the only thing I would add, where banks, I believe, always will have an advantage, whether it's the private capital markets or the public debt markets, is banks are a lot more flexible. And when things get choppy and when spreads start to blow out and structures change, that's when I think clients and prospects really go to their banks. And I think that's when we as an industry have an opportunity to really serve our customers.

Thanks. Chris and Clark, very helpful. I appreciate you taking my questions.

Yes. Our next question comes from Manan Ghazalia with Morgan Stanley. Please go ahead. Your line is now open.

Can you talk about your ability and willingness to do more securities repositioning here? Given that CET1 including AOCI is close to 10%, you're not you're going to be accreting more capital from here. AOCI impacts are coming down, loan growth is going to be flat. Why not do more on the securities repositioning front?

So we're constantly looking at what's out there in the marketplace and what we can do around the edges. And we've done a bunch of those things and we'll probably continue to look at those. But in terms of major securities repositioning, you're not going to see us do something of the order of magnitude that we did either in the Q3 or Q4.

Got it. Is there a CET1 ratio including AOCI that you're targeting that you don't want to go below?

There's not yet. And the reason I say that is, as you know, the capital rules are not finalized. Obviously, we have a lot of capital right now and we'll be constantly looking at what we think the optimal level of capital is. But we'll come out with new targets after the rules the capital rules are finalized.

Got it. And maybe if I can just follow-up on the securities question. I think you mentioned about 50% of long dated securities are currently yielding well, you've already sold about 50% of long dated securities yielding less than 2 percent. Is there a large chunk of that remaining 50% that matures in more than 2 years from here?

Yes, I don't have the exact percentage in front of me, but there is some component of that that is going to still take some time to work through.

The next question comes from Matthew O'Connor with Deutsche Bank. Matthew, please go ahead.

Good morning. First, just a quick clarification. Park, I think I heard you mention the NIM could reach 2.8% in the 4th quarter if loan growth tracks what you're expecting. But I think you had put Q7 in the deck. Maybe I misheard, but just clarifying that.

KeyCorp (KEY) Q4 2024 Earnings Call Transcript

Company Participants