# KeyCorp (KEY) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/KEY/thesis · /stocks/KEY/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: KEY
step: 04
title: Financial Quality & Adversarial Sweep
created: 2026-05-28
---

### Step 04 — Financial Quality: KeyCorp (KEY)

#### 1. Statement Quality Assessment

##### Income Statement Quality

**Adjustments Required:**
- **FY2024 Non-interest Income ($809M):** Includes ~$1.9B realized loss from AFS securities repositioning. This is a one-time, disclosed, economically-motivated repositioning (shorter duration → higher yield going forward). Adjusted NII ≈ $2.2–2.5B. All ratio analysis uses adjusted figures where applicable.
- **Provision Reversal (FY2021):** ($418M) negative provision reflects reserve release post-COVID. Not recurring — does not represent underlying earning power.
- **XBRL vs. Press Release Discrepancy:** XBRL reports $1,829M FY2025 net income; press release reports ~$1,686M for common shareholders. Difference likely preferred dividends (~$143M). EPS of $1.52 implies ~1.11B diluted shares.

**Quality Grade: B+** (clean underlying earnings; one-time items clearly disclosed)

##### Balance Sheet Quality

**AOCI (Accumulated Other Comprehensive Income):**
- Rising interest rates (2022–2023) caused significant unrealized losses on HTM/AFS securities portfolio
- Scotiabank-funded repositioning in 2024 crystallized losses but improved going-forward yield
- Tangible book value was materially impacted; now recovering
- FY2025 equity: $20.4B; AOCI impact diminishing as rates stabilize

**Loan Portfolio Quality:**
- Net charge-offs: 0.39% (Q4 2025) — within historical norms
- Nonperforming loans: $615M (0.58% of loans) — modest, stable
- Allowance for Credit Losses: $1,740M (1.64% of loans) — well-reserved
- CRE office exposure: Manageable; Key has been reducing exposure since 2022

**Capital Quality:**
- CET1: 11.7% (FY2025) — well above regulatory minimums (~4.5% minimum, ~7% buffer including conservation buffer)
- Tangible Common Equity to Assets: 8.36% (Q4 2025)
- Long-term debt declining: $19.6B (FY2023) → $9.9B (FY2025) — lower wholesale funding reliance

---

#### 2. Adversarial Research Sweep

*Note: This skill does not load earnings call transcripts. Short reports, regulatory actions, and major public concerns are researched from web sources, press releases, and SEC filings.*

##### A. Short Seller Activity
- No major publicly-disclosed short report or short interest spike found in recent web searches for KeyCorp
- Short interest appears moderate (typical for a large-cap bank)
- No activist short thesis identified

##### B. HoldCo Asset Management Activism [S1]
- HoldCo Asset Management acquired ~$140M stake and publicly called for:
  - Replacement of CEO Chris Gorman
  - Removal of board member Alexander Cutler
- Criticism: That management's poor decisions (AOCI build-up, NIM miss, earnings shortfalls) warrant leadership change
- Management response: Cited FY2025 results meeting/exceeding all targets; announced $800M buyback; shunning M&A in favor of buybacks
- Risk: Governance overhang; if HoldCo escalates (proxy fight, additional public pressure), it could distract management
- Status: Unresolved as of May 2026

##### C. Regulatory Actions
- No SEC enforcement actions found for KeyCorp
- CFPB: KeyBank agreed to $22.5M consent order (2024) related to flood insurance violations and illegal overdraft fees — modest but noteworthy; consistent with CFPB's broader industry campaign
- OCC oversight: Standard; no unusual actions identified
- FDIC IDI plan: Filed as required; public section available

##### D. Litigation
- KeyCorp, like all major banks, has routine litigation. No material litigation identified beyond industry-standard class actions and commercial disputes.
- The CFPB consent order represents the most notable regulatory event in the past 2 years

##### E. Interest Rate Risk (Model Risk)
- KeyCorp accumulated substantial AOCI losses in 2022–2023 as rates rose rapidly
- This is an internal risk management concern, not an accounting irregularity
- Management addressed via the 2024 securities repositioning (Scotiabank-funded)
- Critics argue management should have hedged the portfolio earlier — legitimate governance concern

##### F. Investment Banking Revenue Volatility
- KBCM revenue declined sharply in 2022–2023 (M&A drought)
- Revenue recovering in 2024–2025; but cyclicality is a permanent feature
- Not a fraud risk; rather a business model risk properly disclosed in 10-K

---

#### 3. Financial Quality Scorecard

| Dimension | Score | Notes |
|-----------|-------|-------|
| Accounting quality | B+ | Clean; one-time AFS repositioning clearly disclosed |
| Earnings predictability | C+ | NIM volatility + IB cyclicality = moderate unpredictability |
| Balance sheet strength | B+ | Strong capital; AOCI drag diminishing |
| Credit quality | B+ | NCO and NPL at/below historical norms |
| Revenue sustainability | B | NII recovery credible; fee income volatile |
| Governance | C+ | Combined chair/CEO; activist overhang; low insider ownership |
| **Overall** | **B** | **Sound fundamentals with governance/operating leverage concerns** |

---

#### 4. Key Financial Metrics (FY2025 Actuals vs. Peer Benchmark)

| Metric | KEY FY2025 | Peer Median | Delta |
|--------|-----------|-------------|-------|
| ROA | 0.98% | ~1.1% | -12bps |
| ROTCE | 11.85% | ~15% | -3.2pp |
| NIM | 2.69% | ~3.1% | -41bps |
| Efficiency Ratio | 62.3% | ~59% | +3.3pp worse |
| CET1 | 11.7% | ~11.0% | +70bps better |
| NCO Rate | 0.39% | ~0.40% | In-line |
| NPL Ratio | 0.58% | ~0.55% | Slightly elevated |

---

#### 5. Source Index

| ID | Source |
|----|--------|
| S1 | Web search: HoldCo Asset Management activism (GuruFocus, AmericanBanker) |
| S2 | Q4 2025 press release (investor.key.com) — credit quality metrics |
| S3 | StockAnalysis.com balance sheet |
| S4 | SEC XBRL financial data |
| S5 | Web search: CFPB consent order KeyBank 2024 |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/KEY/fundamental

## Navigation

- Overview: /stocks/KEY
- Financials (this page): /stocks/KEY/financials
- Thesis: /stocks/KEY/thesis
- Investment Memo: /stocks/KEY/memo
- Coverage universe: /stocks