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Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-22 · 294 added, 311 removed, 1317 unchanged (31% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Long-term financial targets

Corporate strategy

Strategic developments

Executive overview

Results of Operations

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Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 Form 10-K filed with the SEC on February 22, 2024, which discussion is incorporated herein by reference.

Long-term financial targets

(a) See the section entitled “GAAP to non-GAAP Reconciliations,” which presents the computations of certain financial measures related to “cash efficiency.” The section includes tables that reconcile the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

(a) See the section entitled “GAAP to non-GAAP Reconciliations,” which presents the computations of certain financial measures related to “tangible common equity.” The section includes tables that reconcile the GAAP performance measures to the corresponding non-GAAP measures, which provides a basis for period-to-period comparisons.

Positive Operating Leverage

Generate positive operating leverage and a cash e fficiency ratio in the range of 54.0% to 56.0% .

For the 2023 fiscal year, our cash efficiency ratio and operating leverage were affected by an increase in noninterest expense and a decrease in revenues.

Noninterest expense increased 7% from prior year including the impact of the FDIC special assessment as well as efficiency-related charges as we focused on expense management, including simplifying and streamlining our businesses.

Net interest income decreased 13% from prior year reflecting higher interest-bearing deposit costs and a shift in funding mix to higher cost deposits and borrowings.

Positive operating leverage remains one of our long-term financial targets.

Moderate Risk Profile

Maintain a moderate risk profile by targeting a net loan charge-offs to average loans ratio in the range of .40% to .60% throug h a credit cycle.

Our net charge-offs to average loans ratio remains near historically low levels and continues to reflect our proven underwrite-to-distribute model.

We believe our strong risk management practices will allow us to continue supporting our clients, while maintaining our moderate risk profile, and will position Key to perform well through all business cycles.

Financial Return

A retur n on average tangible common equity in the range of 16.0% to 19.0%.

Our full-year dividend for 2023 was $.82.

Our proactive balance sheet optimization efforts drove the increase in our CET1 ratio and improved our liquidity and funding profile.

We believe that these proactive efforts will better position Key to deliver sound, profitable growth and value for all of our stakeholders.

Corporate strategy

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maintaining financial strength;

and engaging, retaining, and inspiring our diverse and high-performing workforce.

and engaging, retaining, and inspiring our high-performing and talented workforce and fostering a culture that is fair and inclusive for all.

These strategic priorities for enhancing long-term shareholder value are described in more detail below.

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We focus on markets and clients where we can be the most relevant.

In aligning our businesses and investments against these targeted client segments, we are able to make a meaningful impact for our clients.

In aligning our businesses and investments against these targeted client segments, we are able to make a meaningful positive impact for our clients.

• Effectively manage risk and rewards — Our risk management activities are focused on ensuring we properly identify, measure, and manage risks across the entire company to maintain safety and soundness and maximize profitability.

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Our capital position remains strong, and we are well-positioned relative to our capital priorities.

• Engage a high-performing, talented, and diverse workforce — Every day our employees provide our clients with great ideas, extraordinary service, and smart solutions.

We intend to continue to engage our high-performing, talented, and diverse workforce to create an environment where they can make a difference, own their careers, be respected, and feel a sense of pride.

Strategic developments

We took the following actions during 2023 in support of our corporate strategy:

• Throughout dynamic market conditions we continued to support our clients , growing in both commercial clients and consumer households and raising $80 billion in capital for our clients.

• We’ve continued to focus on relationships , primacy, and quality deposits, while de-emphasizing non-relationship business and significantly improving our funding and liquidity.

• Overall, credit quality remains strong reflecting our strong risk management discipline and our proven underwrite-to-distribute business model.

We’ve continued to maintain low exposure in high-risk categories such as leveraged lending and office properties.

• We proactively managed our balance sheet by reducing risk-weighted assets, improving our capital position .

• Engage a high-performing and talented workforce — Every day our employees provide our clients with great ideas, extraordinary service, and smart solutions.

We intend to continue to engage our high-performing and talented workforce to create an environment where everyone can make a difference, own their careers, be respected, and feel a sense of pride.

Executive overview

Our 2024 financial results were generally positive and reflected the impact of large securities repositioning trades that enhanced our future earnings trajectory.

Net interest income was down, reflecting lower loans and changes in interest rates, but remained within our target range versus 2023.

Fee growth was stronger than expected reflecting the second highest year of investment banking revenues in our history.

At December 31, 2024, our Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 11.92% and 13.69%, respectively.

• We remained committed to our strategy to engage a high-performing, talented, and diverse workforce.

We have been recognized by multiple organizations for our dedication to creating an environment where employees are treated with respect and empowered to bring their authentic selves to work.

Some of these awards and recognitions included the Human Rights Campaign naming us one of the 2023 Equality 100 Award recipients as a leader in LGBTQ+ Workplace Inclusion, Bloomberg listing us on the Gender-Equality Index, G.I.

Jobs and Military Spouse Magazine recognizing us as a Military Friendly ® and Military Friendly ® Spouse Employer, and receiving the Leading Disability Employer Seal from the National Organization on Disability.

We were also named to DiversityInc’s 2023 Top 50 Companies for Diversity.

Current year expectations - full year 2024 vs.

full year 2023

Category Expectations (a)

Average loans down 5% to 7% (c)

Average deposits flat to down 2%

Net interest income (TE) down 2% to 5% (c)

Noninterest income up 5%+

Noninterest expense relatively stable (b)

Net charge-offs to average loans 30 to 40 basis points (FY2024)

Effective tax rate ~20% (FY2024)

(a) Guidance range:

relatively stable:

(b) Excludes impact of the FDIC special assessment charge of $190 million, efficiency related expenses of $131 million, and a pension settlement charge of $18 million in 2023.

End of period loans:

relatively stable vs.

year-end 2023 balances;

We achieved meaningful positive operating leverage in the second half of the year and look to continue to deliver earnings growth and operating leverage in 2025.

Strategic Minority Investment by Scotiabank

On August 12, 2024, we entered into an Investment Agreement with Scotiabank pursuant to which Scotiabank agreed to make a strategic minority investment in KeyCorp of approximately $2.8 billion, representing approximately 14.9% pro forma common stock ownership of KeyCorp, for a fixed price of $17.17 per share.

On August 30, 2024, Scotiabank completed the initial purchase of our Common Shares with an investment of approximately $821 million in gross proceeds.

Following the initial purchase, Scotiabank owned approximately 4.9% of KeyCorp’s common stock.

On December 13, 2024, Key announced that all necessary bank regulatory approvals had been received for completion of Scotiabank’s strategic minority investment in KeyCorp.

On December 27, 2024, Scotiabank completed the final purchase of our Common Shares contemplated under the Investment Agreement with an investment of approximately $2.0 billion (the “Second Closing”).

Following the Second Closing, Scotiabank owns approximately 14.9% of our Common Shares.

On December 27, 2024, in connection with the Second Closing, the Board of Directors of KeyCorp increased the size of the Board to fifteen directors and appointed Jacqueline Allard and Somesh Khanna to serve on the Board, effectively immediately upon the Second Closing.

Refer to Note 24 (“Shareholders' Equity”) for additional information on this transaction.

Securities Repositioning

On September 6, 2024, we initiated a strategic repositioning of our available-for-sale investment securities portfolio by selling approximately $7.0 billion in market value of low-yielding mortgage-backed securities.

The mortgage-backed securities that were sold had a weighted average book yield of approximately 2.3% and an average duration of approximately six years.

Reinvestment of the proceeds from the sale was completed in October 2024, with the new securities having an average book yield of approximately 4.95% and an average duration of approximately four years.

During the third quarter of 2024, along with our customary sale of short-dated U.S.

Treasuries set to mature within the quarter, we also sold approximately $3 billion in U.S.

Treasuries yielding 50 basis points that were set to mature in the fourth quarter of 2024.

The total pre-tax loss on the sale of securities available for sale for the third quarter was $935 million of which $918 million was associated with the strategic repositioning.

Prior to the Second Closing, KeyCorp completed the strategic repositioning of its available-for-sale investment securities portfolio by selling an additional $3.0 billion in market value of low-yielding investment securities and terminating approximately $3.0 billion of fair value hedges, resulting in a pre-tax loss of $915 million in the fourth quarter of 2024.

The investment securities that were sold had a weighted average book yield of approximately 1.5% and an average duration of approximately eight years.

The reinvestment of the proceeds from the repositioning was completed in December 2024, with the new securities having an average book yield of 5.5% and an average duration of approximately four years.

In addition to the items described above, the following actions and results during 2024 also supported our overall corporate strategy.

• We have expanded our commercial banking business in Chicago and Southern California to serve more middle market clients with our differentiated platform, which includes a full range of commercial lending and capital markets capabilities as well as payments solutions designed specifically for the segment.

• We completed core technological modernization projects of our commercial loan platform and our derivatives platform.

• We ended the year with $61.4 billion in assets under management and administration, a record high, reflecting the strong sales production in our mass affluent segment.

• Within our Consumer Bank, we grew relationship households in excess of three percent for the second consecutive year, including growth of five to eight percent throughout our western markets.

• We remained committed to our strategy to engage a high-performing and talented workforce and fostering an inclusive environment for all .

We continue to be recognized by multiple organizations for our dedication to creating an environment where all employees are treated with respect and empowered to bring their authentic selves to work.

Business Outlook

Consistent with the forward guidance we provided on January 21, 2025, we expect these results for full year 2025 versus full year 2024.

Category 2024 Baseline

FY2024 vs FY2023 FY2025 (vs FY 2024) (a)

Average loans $107.7 Billion (9)% down 2% to 5%

Ending loans $104.3 Billion (7)% Flat vs YE 2024

PE Commercial Loans $71.9 Billion (7)% up 2% to 4%

Net interest income (TE) $3,810 Million (3)% up ~20% (b)

Adjusted noninterest income (c)

$2,645 Million +7% up 5%+

Adjusted noninterest expense (c)

$4,520 Million +3% up 3% to 5%

Net charge-offs to average loans 41 bps + 20 bps 40 to 45 basis points (FY2025)

Effective tax rate ~21% to 22% (FY2025)

Tax-equivalent Effective Rate (d)

~23% to 24% (FY2025)

(a) Ranges are shown on an operating basis.

(b) Additional Guidance:

Net interest income (TE):

Up low-single digits vs.

4Q23 annualized exit rate, 10%+ 4Q24 vs.

10%+ 4Q25 vs.

(c) Refer to the GAAP to Non-GAAP Reconciliation within Management's Discussion and Analysis of this Form 10-K for the reconciliation of these non-GAAP measures.

(d) Reflects the estimated full year taxable-equivalent adjustment.

Results of Operations

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The following chart provides a reconciliation of net income from continuing operations attributable to Key common shareholders for the year ended December 31, 2023, to the year ended December 31, 2024 (dollars in millions):

(a) Includes Preferred dividends.

Net interest income

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Net interest income (TE) for 2024 was $3.8 billion, and the net interest margin was 2.16%.

Compared to 2022, net interest income (TE) decreased $611 million, and the net interest margin decreased by 47 basis points.

The decline in net interest income (TE) and the net interest margin was driven by higher interest-bearing deposit costs and a shift in funding mix to higher cost deposits and borrowings.

Partly offsetting the decline in net interest income and the net interest margin were higher earning asset balances and yields.

Compared to 2023, net interest income (TE) decreased $133 million, and the net interest margin was relatively stable, decreasing by one basis point.

The decline in net interest income (TE) and the net interest margin reflects higher deposit costs, partly due to a shift in funding mix from noninterest-bearing deposits to higher cost deposits in 2024, and lower loan balances, in part due to the residual effect of Key’s balance sheet optimization efforts during the second half of 2023.

Net interest income (TE) and the net interest margin benefited from higher earning asset yields as a result of the higher interest rate environment, including the reinvestment of proceeds from maturing investment securities into higher-yielding investments.

Net interest income (TE) and the net interest margin also benefited from the maturity of interest rate swaps with negative carry, and an increase in lower-cost deposits, which contributed to the decline in wholesale borrowings.

In addition, during the second half of 2024, Key completed the available-for-sale portfolio repositioning, which involved the sale and reinvestment of approximately $10.0 billion of lower-yielding mortgaged-backed securities into higher-yielding investments.

Average loans totaled $107.7 billion for 2024, compared to $118.0 billion in 2023.

The $6.7 billion increase was driven by growth in commercial and industrial loans and consumer mortgage balances during the first half of 2023.

Average deposits totaled $144.1 billion for 2023, a decrease of $2.8 billion compared to 2022.

The decrease was driven by changing client behavior as a result of higher interest rates.

The $10.3 billion decrease reflected continued tepid client loan demand.

Commercial loans decreased $7.6 billion, due to lower commercial and industrial loans and commercial mortgage real estate loans.

Additionally, average consumer loans declined by $2.6 billion, reflective of broad-based declines across all consumer loan categories.

Average deposits totaled $146.2 billion for 2024, an increase of $2.1 billion compared to 2023, reflecting growth in both consumer and commercial deposits, partially offset by a decline in brokered CDs.

Figure 1 shows the various components of our balance sheet that affect interest income and expense and their respective yields or rates over the past three years.

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The net interest margin, which is an indicator of the profitability of our earning assets less the cost of funding, is calculated by dividing taxable-equivalent net interest income by average earning assets.

Consolidated Average Balance Sheets, Net Interest Income, and Yields/Rates from Continuing Operations (h)

Consolidated Average Balance Sheets, Net Interest Income, and Yields/Rates from Continuing Operations (g)

Year ended December 31, 2024 2023 2022

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Home equity loans 6,729 398 5.92 7,522 433 5.76 8,115 347 4.28

Consumer direct loans 6,228 304 4.88 6,490 277 4.27 5,105 233 4.56

Other consumer loans 5,519 278 5.04 6,263 305 4.86 6,552 277 4.27

Credit cards 934 138 14.78 986 136 13.88 959 107 11.23

Consumer indirect loans 35 1 .71 62 — — 2,839 90 3.19

Total consumer loans 33,564 1,488 4.43 36,199 1,573 4.35 34,662 1,290 3.72

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Savings deposits 5,010 7 .14 6,343 3 .04 7,798 1 .01

Certificates of deposit ($100,000 or more) (f)

4,517 171 3.79 1,455 8 .56 2,135 16 .72

Other time deposits 9,277 380 4.10 2,892 36 1.25 2,540 9 .37

Time deposits 16,497 752 4.56 13,794 551 4.00 4,347 44

Total interest-bearing deposits 117,162 3,307 2.82 109,387 2,322 2.12 97,818 279 .29

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Bank notes and other short-term borrowings 2,984 164 5.49 5,890 308 5.24 2,963 90 3.02

Long-term debt (f), (g)

Long-term debt (g)

17,279 1,187 6.87 20,983 1,305 6.22 14,915 475 3.19

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Accrued expense and other liabilities 4,886 5,167 4,309

Discontinued liabilities (g)

Discontinued liabilities (f)

Total liabilities 171,703 178,130 171,648

Key shareholders’ equity 13,881 14,730 17,665

Noncontrolling interests — — —

Total equity 15,408 13,881 14,730

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Interest excludes the interest associated with the liabilities referred to in (g) below, calculated using a matched funds transfer pricing methodology.

(b) Interest income on tax-exempt securities and loans has been adjusted to a TE basis using the statutory federal income tax rate in effect that calendar year.

(b) Interest income on tax-exempt securities and loans has been adjusted to a taxabale-equivalent basis using the statutory federal income tax rate in effect that calendar year.

(d) Commercial and industrial average loan balances include $215 million, $196 million, and $157 million of assets from commercial credit cards for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively.

(e) Yield is calculated on the basis of amortized cost.

(f) Rate calculation excludes basis adjustments related to fair value hedges.

(g) A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying our matched funds transfer pricing methodology to discontinued operations.

(h) Average balances presented are based on daily average balances over the respective stated period.

(e) Yield presented is calculated on the basis of amortized cost excluding fair value hedge basis adjustments.

The average amortized cost for securities available for sale was $42.2 billion and $44.0 billion for the twelve months ended December 31, 2024, and December 31, 2023, respectively.

Yield based on the fair value of securities available for sale was 3.08% and 2.10% for the twelve months ended December 31, 2024, and December 31, 2023, respectively.

(f) A portion of long-term debt and the related interest expense is allocated to discontinued liabilities as a result of applying our matched funds transfer pricing methodology to discontinued operations.

(g) Average balances presented are based on daily average balances over the respective stated period.

Figure 2 shows how the changes in yields or rates and average balances from the prior year affected net interest income.

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Savings deposits (1) 5 4

Certificates of deposit ($100,000 or more) 43 120 163

Other time deposits 169 175 344

Time deposits 117 84 201

Total interest-bearing deposits 252 733 985

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Our provision for credit losses was a net charge of $335 million for 2024, compared to $489 million for 2023.

The decrease in our provision for credit losses was driven by a lower reserve build, partly due to planned balance sheet optimization efforts over 2023, offset by higher net charge-offs.

In 2022, the increase in provision for credit losses was a result of reserve increases largely driven by changes in the economic outlook and loan growth.

The decrease in our provision for credit losses was driven by reserve releases, partly offset by higher net charge-offs.

The net reserve release in 2024 was driven by changes in the economic outlook and planned balance sheet optimization efforts, which offset reserve increases attributable to asset quality migration.

The higher net charge-offs were largely driven by the commercial and industrial portfolio.

Noninterest income

Noninterest income for 2023 was $2.5 billion, compared to $2.7 billion during 2022.

Noninterest income for 2024 was $809 million, inclusive of the $1.8 billion loss from the investment portfolio repositioning, compared to $2.5 billion during 2023.

Noninterest income represented 18% of total revenue for 2024 and 39% of total revenue for 2023.

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Noninterest Income

(a) Other noninterest income includes operating lease income and other leasing gains, corporate services income, corporate-owned life insurance income, consumer mortgage income, commercial mortgage servicing fees, and other income.

See the "Consolidated Statements of Income" in Part II, Item 8.

Financial Statements and Supplementary Data of this report.

Trust and investment services income

Trust and investment services income consists of brokerage commissions, trust and asset management commissions, and insurance income.

Trust and investment services income consists of brokerage commissions, trust and asset management fees, and insurance income.

The assets under management or administration that primarily generate these revenues are shown in Figure 4.

For 2023, trust and investment services income decreased $10 million, or 1.9%.

This was primarily due to a decrease in transactional commission based revenues slightly offset by an increase in investment management income and other fees stemming from increased assets under management.

For 2024, trust and investment services income increased $41 million, or 7.9%.

This was primarily due to an increase in investment management income and other fees stemming from increased assets under management.

A significant portion of our trust and investment services income depends on the value and mix of assets under management.

At December 31, 2024, our bank, trust, and registered investment advisory subsidiaries had assets under management or administration of $61.4 billion, compared to $54.9 billion at December 31, 2023.

The increase from 2022 to 2023 was attributable to movements in the equity markets and new business.

Assets Under Administration

The increase from 2023 to 2024 was attributable to movements in the market and net new business.

Assets Under Management or Administration

Year ended December 31, Change 2024 vs.

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Investment banking and debt placement fees

Investment banking and debt placement fees consist of syndication fees, debt and equity underwriting fees, merger and acquisition and debt placement advisor fees, gains on sales of commercial mortgages, and agency origination fees.

For 2023, investment banking and debt placement fees decreased $96 million, or 15.0%, from the prior year reflective of the continued challenging environment in the capital markets.

Investment banking and debt placement fees consist of syndication fees, debt and equity securities underwriting fees, merger and acquisition and debt placement advisor fees, gains on sales of commercial mortgages, and agency origination fees.

For 2024, investment banking and debt placement fees increased $146 million, or 26.9%, from the prior year reflective of growth across all products excluding commercial mortgage activity.

Service charges on deposit accounts

Service charges on deposit accounts decreased $9 million, or 3.3%, in 2024 compared to the prior year.

This decrease reflects the full year impact of new fee terms implemented in the second half of 2022 which eliminated NSF fees and introduced Key Coverage Zone TM for overdraft fees, as well as lower account analysis fees related to the interest rate environment.

This decrease was driven by lower overdraft, maintenance, and service fees, offset slightly by higher account analysis fees.

Cards and payments income

Cards and payments income, which consists of debit card, consumer and commercial credit card, and merchant services income remained relatively flat and only decreased $1 million, or 0.3%, in 2023 compared to 2022.

Cards and payments income, which consists of debit card, consumer and commercial credit card, and merchant services income decreased $9 million, or 2.6%, in 2024 compared to 2023, driven by a decrease in debit interchange fees, partially offset by an increase in card reward costs.

Other noninterest income

Other noninterest income decreased $61 million, or 7.1%, in 2023 compared to 2022, driven by decreases in corporate services income from lower derivatives trading income, decreases in operating lease income as our operating lease portfolio runs off, and decreases in consumer mortgage income from lower gain on sale margins.

These decreases were slightly offset by an increase in commercial mortgage servicing fees driven by a higher servicing portfolio.

Other noninterest income includes operating lease income and other leasing gains, corporate services income, corporate-owned life insurance income, consumer mortgage income, commercial mortgage servicing fees, net securities gains (losses), and other income.

Other noninterest income decreased $1.8 billion in 2024 compared to 2023, primarily attributable to approximately $1.8 billion in losses on the sales of securities available for sale as part of portfolio repositioning activity during the third and fourth quarters of 2024.

Excluding the impact of the repositioning activity, other noninterest income was relatively flat, increasing $3 million, reflecting an increase in commercial mortgage servicing fees offset by decreases in operating lease income and corporate services income.

Noninterest expense

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As shown in Figure 6, personnel expense, the largest category of our noninterest expense, increased by $54 million, or 2.0%, in 2024 compared to 2023.

Activity for the year was driven by higher salaries and severance with an offset from decreased incentive compensation costs from lower revenue generation in our variable expense businesses.

Overall activity for the year was driven by higher incentive compensation from strong capital markets activity during the year, partially offset by a decrease in severance expense.

Salaries and contract labor were down reflecting a decrease in FTE’s, offset slightly by increased contract labor costs.

Personnel Expense

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Non-personnel expense

In total, other non-personnel expense increased $230 million, or 12.5%, in 2023 compared to 2022 primarily due to the $190 million FDIC special assessment charge, as well as corporate real estate related rationalization costs recorded within other expense.

We recorded a tax provision from continuing operations of $196 million for 2023, compared to $422 million for 2022.

In total, other non-personnel expense decreased $243 million, or 11.7%, in 2024 compared to 2023 primarily due to items impacting non-personnel expense in 2023, including a $190 million FDIC special assessment charge, as well as corporate real estate related rationalization costs recorded within other expense.

We recorded a tax benefit from continuing operations of $143 million for 2024, compared to tax expense of $196 million for 2023.

The effective tax rate, which is the provision for income taxes as a percentage of income from continuing operations before income taxes, was 46.6% for 2024 and 16.9% for 2023.

The tax benefit recorded and increased effective tax rate for the year resulted primarily from the $1.8 billion loss on the sales of securities incurred as part of a strategic repositioning of our securities portfolio.

In 2024, our federal tax expense and effective tax rate differ from the amount that would be calculated using the federal statutory tax rate primarily due to investments in tax-advantaged assets, such as corporate-owned life insurance, and tax credits associated with low-income housing investments, and periodic adjustments to our tax reserves as described in Note 14 (“Income Taxes”).

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Summary of operations

• Net income attributable to Key of $248 million in 2023, compared to $365 million in 2022, a decrease of 32.1%, largely driven by higher interest rates on deposits and the FDIC special assessment charge

• Taxable equivalent net interest income decreased in 2023 by $133 million, or 5.5%, from the prior year, reflecting higher interest-bearing deposit costs

• Average loans and leases increased in 2023 by $1.1 billion, or 2.6%, from the prior year, driven by increases in residential mortgage loans

• Average deposits decreased in 2023 by $6.2 billion, or 6.8%, from the prior year, driven by changes in client behavior due to the higher interest rate environment

• Provision for credit losses decreased $82 million in 2023 compared to the prior year, driven by lower reserves due to planned balance sheet optimization efforts and changes in the economic outlook, offset by higher net charge-offs

• Noninterest income decreased in 2023 by $51 million, or 5.1%, driven by decreases in service charges on deposit accounts as a result of declining overdraft fee and NSF fees.

• Noninterest expense increased in 2023 by $52 million, or 1.9%, primarily reflective of the FDIC special assessment charge

• Net income attributable to Key of $283 million in 2024, compared to $202 million in 2023, an increase of 40.1%, largely driven by favorable rates on deposits and lower FDIC special assessment charges

• Taxable-equivalent net interest income increased in 2024 by $67 million, or 3.0%, from the prior year, due to favorable rates on deposits

• Average loans and leases decreased in 2024 by $3.0 billion, or 7.3%, from the prior year, driven by broad-based declines across all loan categories

• Average deposits increased in 2024 by $3.1 billion, or 3.7%, from the prior year, driven by growth in retail deposits, particularly in money market deposit accounts and certificates of deposit

• Provision for credit losses increased $15 million in 2024 compared to the prior year, driven by higher net charge-offs, partly offset by a reserve release due to changes in the portfolio and economic conditions

• Noninterest income decreased in 2024 by $12 million, or 1.3%, driven by decreases in cards and payments income and service charges on deposit accounts

• Noninterest expense decreased in 2024 by $67 million, or 2.4%, primarily reflective of lower FDIC special assessment charges

Commercial Bank

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Summary of operations

• Net income attributable to Key of $839 million in 2023, compared to $1.1 billion in 2022, a decrease of 26.7%, largely driven by an increase in reserves, increase in FDIC special assessment charges, lower investment banking and debt placement fees, and lower corporate services income

• Taxable equivalent net interest income decreased in 2023 by $52 million, or 2.8%, from the prior year, reflecting higher interest-bearing deposit costs and a shift in funding mix to higher-cost deposits

• Average loan and lease balances increased $5.6 billion in 2023, or 8.0%, driven by an increase in commercial and industrial loans and commercial real estate

• Average deposit balances decreased $798 million in 2023, or 1.5%, driven by changing client behavior due to the current economic environment while also being impacted by our focus on growing deposits across our commercial businesses

• Provision for credit losses increased $62 million in 2023 compared to the prior year, resulting from higher net-charge-offs and reserve increases driven by changes in portfolio activity and the economic outlook

• Noninterest income decreased $178 million in 2023, or 11.1%, from the prior year, driven by lower investment banking and debt placement fees, reflecting lower syndication and merger and acquisition advisory revenues, as well as a decline in corporate services income

• Noninterest expense increased by $69 million in 2023, or 4.0%, from the prior year, primarily due to the FDIC special assessment charge

• Net income attributable to Key of $1.1 billion in 2024, compared to $885 million in 2023, an increase of 23.3%, largely driven by an increase in investment banking and debt placement fees and commercial mortgage servicing income, along with lower FDIC assessment charges

• Taxable equivalent net interest income decreased in 2024 by $61 million, or 3.3%, from the prior year, primarily driven by a reduction in loan balances

• Average loan and lease balances decreased $7.3 billion in 2024, or 9.6%, driven by a decline in commercial and industrial loans

• Average deposit balances increased $3.0 billion in 2024, or 5.4%, driven by our focus on growing deposits across our commercial businesses

• Provision for credit losses decreased $152 million in 2024 compared to the prior year, resulting from reserve releases due to changes in the portfolio and economic conditions, partially offset by higher net charge-offs

• Noninterest income increased $198 million in 2024, or 13.8%, from the prior year, driven by growth in investment banking and debt placement fees and commercial mortgage servicing income

• Noninterest expense increased by $28 million in 2024, or 1.6%, from the prior year, primarily due to increases in incentive compensation and other personnel expenses, partially offset by decreases in FDIC special assessment charges and operating lease expenses

Financial Condition

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Breakdown of Loans as of December 31, 2024

(a) Other consumer loans include Consumer direct loans, Credit cards, and Consumer indirect loans.

(a) Other consumer loans include Consumer loans and Credit cards.

See Note 4 (“Loan Portfolio”) Item 8.

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Home equity loans 6,358 6.1 7,139 6.4

Consumer direct loans 5,890 5.2 6,508 5.4

Other consumer loans 5,167 5.0 5,916 5.2

Credit cards 958 0.9 1,002 0.9

Consumer indirect loans 26 — 43 0.1

Total consumer loans 32,369 31.1 35,015 31.1

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Commercial loan portfolio

Commercial loans outstanding were $77.6 billion at December 31, 2023, a decrease of $4.9 billion, or 5.9%, compared to December 31, 2022 .

The decrease was across all major commercial loan categories as a result of our planned balance sheet optimization efforts.

Commercial loans outstanding were $71.9 billion at December 31, 2024, a decrease of $5.7 billion, or 7.3%, compared to December 31, 2023, primarily reflecting declines in commercial and industrial loans and commercial mortgage real estate loans.

Figure 9 provides our commercial loan portfolio by industry classification as of December 31, 2024, and December 31, 2023.

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This focus ensures our relationship clients foster and build portfolios with stable, recurring cash flows, with adequate, balanced cash reserves to support our balance sheet exposures through the economic cycle.

At December 31, 2023, commercial real estate loans totaled $18.3 billion, comprised of $15.2 billion of mortgage loans and $3.1 billion of construction loans.

Compared to December 31, 2022, this portfolio decreased $629 million driven by our planned balance sheet optimization efforts.

At December 31, 2024, commercial real estate loans totaled $16.2 billion, which includes $13.3 billion of mortgage loans and $2.9 billion of construction loans.

Compared to December 31, 2023, this portfolio decreased $2.0 billion or 11.0%, driven mainly by decreases in nonowner-occupied.

Since the global financial crisis in 2008, we have limited our construction business and reduced our overall construction loans from 42% to 18% of commercial real estate loans as of December 31, 2024.

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Nonowner-occupied:

Data Center $ — $ — $ — $ 98 $ 54 $ — $ — $ 152 .9 % $ — $ 152

Diversified 1 — — 3 — 13 118 135 .8 — 135

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Nonowner-occupied:

Data Center $ — $ — $ — $ — $ — $ — $ — $ — — % $ — $ —

Diversified 3 — — 3 — 16 164 186 1.0 — 186

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Consumer loans outstanding at December 31, 2024, totaled $32.4 billion, a decrease of $2.6 billion, or 7.6%, from one year ago .

This decrease reflects lower residential and consumer direct loans.

The decrease was driven by declines across all consumer loan categories and reflect the higher interest rate environment and our focus on originating salable loans.

The residential mortgage portfolio is comprised of loans originated by our Consumer Bank and is the largest segment of our consumer loan portfolio as of December 31, 2024, representing approximately 61% of consumer loans.

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Consumer Loans by State

Dollars in millions Real estate — residential mortgage Home equity loans Consumer direct loans Credit cards Consumer indirect loans Total

Dollars in millions Real estate — residential mortgage Home equity loans Consumer direct loans Credit cards Total

December 31, 2024

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Florida 782 42 416 14 1,254

Texas 336 3 397 4 3 743

Illinois 134 3 212 2 1 352

Utah 851 252 64 18 1,185

Connecticut 765 255 113 29 1,162

Other 3,522 1,155 2,934 162 7,773

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Home equity loans 99 205 1,798 4,256 6,358

Consumer direct loans 497 946 2,395 2,052 5,890

Other consumer loans 505 807 2,040 1,815 5,167

Credit Cards 958 — — — 958

Consumer indirect loans — 20 5 1 26

Total consumer loans 1,745 1,048 4,516 25,060 32,369

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(c) Predetermined interest rates either are fixed or may change during the term of the loan according to a specific formula or schedule.

Our securities portfolio is constructed to help manage overall interest rate risk and provide a source of liquidity, including holding securities used to accommodate pledging requirements.

Our securities portfolio is constructed to store liquidity and help manage interest rate risk, including holding securities used to accommodate pledging requirements.

Our securities portfolio totaled $45.1 billion at December 31, 2024, compared to $45.8 billion at December 31, 2023.

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Securities available for sale

The majority of our securities available-for-sale portfolio consists of Federal Agency CMOs and mortgage-backed securities.

The majority of our securities available-for-sale portfolio consists of federal agency mortgage-backed securities and CMOs.

CMOs are debt securities secured by a pool of mortgages or mortgage-backed securities.

These mortgage securities generate interest income, serve as collateral to support certain pledging agreements, and provide liquidity value under regulatory requirements.

We periodically evaluate our securities available-for-sale portfolio in light of established A/LM objectives, changing market conditions that could affect the profitability of the portfolio, the regulatory environment, and the level of interest rate risk to which we are exposed.

These evaluations may cause us to take steps to adjust our overall balance sheet positioning.

In addition, the size and composition of our securities available-for-sale portfolio could vary with our needs for liquidity and the extent to which we are required (or elect) to hold these assets as collateral to secure public funds and trust deposits.

Although we generally use debt securities for this purpose, other assets, such as securities purchased under resale agreements or letters of credit, are used occasionally when they provide a lower cost of collateral or more favorable risk profiles.

Our investing activities continue to complement other balance sheet developments and provide for our ongoing liquidity management needs.

Our actions to not reinvest the monthly security cash flows at various times served to provide the liquidity necessary to address our funding requirements.

These funding requirements included periodic loan growth and occasional debt maturities.

At other times, we may make additional investments that go beyond the replacement of maturities or mortgage security cash flows as our liquidity position and/or interest rate risk management strategies may require.

Lastly, our focus on investing in high quality liquid assets, including GNMA-related securities, is related to liquidity management strategies to satisfy regulatory requirements.

In September 2024, we initiated a strategic repositioning of our securities available for sale portfolio by selling approximately $7.0 billion in market value of low-yielding mortgage-backed securities.

The investment securities that were sold had a weighted average book yield of approximately 2.3% and an average duration of approximately six years.

During the third quarter of 2024, along with our customary sale of short-dated U.S.

Treasuries set to mature within the quarter, we also sold approximately $3 billion in U.S.

Treasuries yielding 50 basis points that were set to mature in the fourth quarter of 2024.

In December 2024, we completed the strategic repositioning of our securities available-for-sale portfolio by selling an additional $3.0 billion of low-yielding investment securities and terminating approximately $3.0 billion of fair value hedges.

The investment securities sold had a weighted average book yield of approximately 1.5% and an average duration of approximately eight years.

Reinvestment of the proceeds from the sale was completed in December 2024, with the new securities having an average book yield of 5.5% and an average duration of approximately four years.

Figure 16 shows the composition, TE yields, and remaining maturities of our securities available for sale.

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Treasury, Agencies, and Corporations Agency Residential Collateralized Mortgage Obligations (a)

Agency Residential Mortgage-backed Securities (a),(b)

Agency Residential Mortgage-backed Securities (a)

Agency Commercial Mortgage-backed Securities (a)

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Fair value $ 8,904 $ 9,224 $ 15,169 $ 4,410 $ 37,707

Amortized cost 9,300 18,911 4,189 10,295 42,695 1.79 %

Weighted-average yield (b)

Amortized cost (b)

8,928 11,409 16,038 4,927 41,302 3.48 %

Weighted-average yield (c)

4.21 % 1.98 % 4.32 % 2.91 % 3.48 % —

Weighted-average maturity

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(a) Maturity is based upon expected average lives rather than contractual terms.

(b) Weighted-average yields are calculated based on amortized cost.

(b) Excluded from the amortized cost of securities available for sale are basis adjustments for securities designated in active fair value hedges.

Basis adjustments totaled $(6) million and $140 million as of December 31, 2024 and December 31, 2023, respectively.

The securities being hedged are primarily U.S Treasuries, Agency RMBS, and Agency CMBS.

Such yields have been adjusted to a TE basis using the statutory federal income tax rate in effect that calendar year.

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Agency Commercial Mortgage-backed Securities (a)

Asset-backed securities Other

Asset-backed securities (a)

Securities Total Weighted-Average Yield (b)

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Our Common Shares are traded on the NYSE under the symbol KEY with 27,154 holders of record at December 31, 2024.

Our book value per Common Share was $13.02 based on 936.6 million shares outstanding at December 31, 2023, compared to $11.79 based on 933.3 million shares outstanding at December 31, 2022.

Our book value per Common Share was $14.21 based on 1.1 billion shares outstanding at

December 31, 2024, compared to $13.02 based on 936.6 million shares outstanding at December 31, 2023.

At December 31, 2024, our tangible book value per Common Share was $11.70, compared to $10.02 at December 31, 2023.

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Shares outstanding at beginning of period 936,564 991,251 943,200 942,776 936,564 933,325

Open market repurchases and return of shares under employee compensation plans (4,383) (2) (10) (38) (4,333) (1,736)

Shares issued under employee compensation plans (net of cancellations) 7,622 405 438 542 6,237 6,211

Open market share repurchases — — — — — (2,550)

Shares issued under employee compensation plans (net of cancellations and returns) 7,351 493 222 424 6,212 5,789

Shares issued under Scotiabank investment agreement 162,871 115,042 47,829 — — —

Shares outstanding at end of period 1,106,786 1,106,786 991,251 943,200 942,776 936,564

During 2023, Common Shares outstanding increased by 3.2 million shares, primarily driven by issuances under employee compensation plans.

For more information on share repurchases activity, see Note 24 (“Shareholders' Equity”).

During 2024, Common Shares outstanding increased by 170.2 million shares, primarily driven by issuances under the Scotiabank investment agreement.

For more information on share activity, see Note 24 (“Shareholders' Equity”).

At December 31, 2024, we had 149.9 million treasury shares, compared to 320.1 million treasury shares at December 31, 2023.

The decrease in treasury shares during the year was primarily attributable to the issuance of 162.9 million shares to Scotiabank in connection with the strategic minority investment.

Going forward, we expect to reissue treasury shares as needed in connection with stock-based compensation awards and for other corporate purposes.

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Board of Directors Audit Committee (a)

– Oversight of financial statement integrity, regulatory and legal requirements, independent auditors’ qualifications and independence, and the performance of the internal audit function and independent auditors

– Financial reporting, legal matters, and fraud risk

– Assists the Board in oversight of financial statement integrity, regulatory and legal requirements, independent auditors’ qualifications and independence, and the performance of the internal audit function and independent auditors

– Assists the Board in oversight of financial reporting, legal matters, and fraud risk

– Meets with management and approves significant policies relating to the risk areas overseen by the Audit Committee

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Board of Directors Risk Committee (a)

– Assist the Board in oversight of strategies, policies, procedures, and practices relating to the assessment and management of enterprise-wide risk, including credit, market, liquidity, model, operational, compliance, reputation, and strategic risks

– Assist the Board in overseeing risks related to capital adequacy, capital planning, and capital actions

– Assists the Board in oversight of strategies, policies, procedures, and practices relating to the assessment and management of enterprise-wide risk, including credit, market, liquidity, model, operational, compliance, reputation, and strategic risks

– Assists the Board in overseeing risks related to capital adequacy, capital planning, and capital actions

– Reviews and provides oversight of management’s activities related to the enterprise-wide risk management framework, which includes an annual review of the ERM Policy, including the Risk Appetite Statement, and management and ERM reports

– Approves any material changes to the charter of the ERM Committee and significant policies relating to risk management, including corporate risk tolerances for major risk categories

ERM Committee – Chaired by the Chief Executive Officer and comprising other senior level executives

ERM Committee – Chaired by the Chief Executive Officer and comprising the Chief Risk Officer and other senior level executives

– Manage risk and ensure that the corporate risk profile is managed in a manner consistent with our risk appetite

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– Convenes quarterly to discuss the content of our 10-Q and 10-K

Tier 2 Risk Governance Committees – Include attendees from each of the Three Lines of Defense

Tier 2 Risk Governance Committees – Includes attendees from each of the Three Lines of Defense

– The First Line of Defense is the line of business primarily responsible to accept, own, proactively identify, monitor, and manage risk

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– Supports the ERM Committee by identifying early warning events and trends, escalating emerging risks, and discussing forward-looking assessments

Chief Risk Officer – Ensure that relevant risk information is properly integrated into strategic and business decisions

– Ensure appropriate ownership of risks

– Provides input into performance and compensation decisions

– Assesses aggregate enterprise risk

– Monitors capabilities to manage critical risks

– Executes appropriate Board and stakeholder reporting

Internal Audit – Provide the KeyCorp Board and management with independent, risk-based, and objective assurance, advice, insight, and foresight.

– Conducts objective examinations of evidence for the purpose of providing independent assessments to the Audit Committee, management, and outside parties on the adequacy and effectiveness of business processes, risk management activities, internal controls, and governance processes for KeyCorp.

(a) The Audit and Risk Committees meet jointly, as appropriate, to discuss matters that relate to each committee’s responsibilities.

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The majority of our positions are traded in active markets.

Management of trading market risks .

Governance structure - Trading market risk

Market risk management is an integral part of Key’s risk culture.

The Risk Committee of our Board provides oversight of trading market risks.

The ERM Committee and the Market Risk Committee regularly review and discuss market risk reports prepared by our MRM that contain our market risk exposures and results of monitoring activities.

The ERM Committee and the Market Risk Committee regularly review and discuss market risk exposures and results of monitoring activities.

Market risk policies and procedures have been defined and take into account our tolerance for risk and consideration for the business environment.

The Market Risk Committee approves market risk policies and recommends our significant market risk policy to the ERM Committee, the KeyBank Board, and the Risk Committee of the Board for approval.

The MRM, as the second line of defense, is an independent risk management function that partners with the lines of business to identify, measure, and monitor market risks throughout our company.

The MRM is responsible for ensuring transparency of significant market risks, monitoring compliance with established limits, and escalating limit exceptions to appropriate senior management.

MTRM, as the second line of defense, is an independent risk management function that partners with the lines of business to identify, measure, and monitor market risks throughout our company.

MTRM is responsible for ensuring transparency of significant market risks, monitoring compliance with established limits, and escalating limit exceptions to appropriate senior management.

The various business units and trading desks are responsible for ensuring that market risk exposures are well-managed and prudent.

Market risk is monitored through various measures, such as VaR, and through routine stress testing, sensitivity, and scenario analyses.

The MRM conducts stress tests for each position using historical worst case and standard shock scenarios.

MTRM conducts stress tests for each position using historical worst case and standard shock scenarios.

VaR, stressed VaR, and other analyses are prepared daily and distributed to appropriate management.

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Key’s covered positions may also include mortgage-backed and asset-backed securities that may be identified as securitization positions or re-securitization positions under the Market Risk Rule.

The MRM as well as the LOB that trades securitization positions monitor the positions, the portfolio composition and the risks identified in this section on a daily basis consistent with the Market Risk policies and procedures.

MTRM as well as the LOB that trades securitization positions monitor the positions, the portfolio composition and the risks identified in this section on a daily basis consistent with the Market Risk policies and procedures.

At December 31, 2024, covered positions did not include any re-securitization positions.

Instruments that are used to hedge nontrading activities, such as bank-issued debt and loan portfolios, equity positions that are not actively traded, and securities financing activities, do not meet the definition of a covered position.

The MRM is responsible for identifying our portfolios as either covered or non-covered.

MTRM is responsible for identifying our portfolios as either covered or non-covered.

The Covered Position Working Group develops the final list of covered positions, and a summary is provided to the Market Risk Committee.

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Stressed VaR is used to assess extreme conditions on market risk within our trading portfolios.

The MRM calculates VaR and stressed VaR

on a daily basis, and the results are distributed to appropriate management.

MTRM calculates VaR and stressed VaR at

various confidence levels and the results are closely monitored.

VaR and stressed VaR results are also provided to our regulators and utilized in regulatory capital calculations.

We use a historical simulation VaR model to measure the potential adverse effect of changes in interest rates, foreign exchange rates, equity prices, and credit spreads on the fair value of our covered positions and other non-covered positions.

We analyze market risk by portfolios and do not separately measure and monitor our portfolios by risk type.

Historical scenarios are customized for specific positions, and numerous risk factors are incorporated in the calculation.

Historical moves in risk factors across various asset classes are incorporated in VaR metrics.

Additional consideration is given to the risk factors to estimate the exposures that contain optionality features, such as options and cancellable provisions.

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Actual losses for the total covered positions did not exceed aggregate daily VaR for any day during the quarters ended December 31, 2024, and December 31, 2023.

The MRM backtests our VaR model on a daily basis to evaluate its predictive power.

MTRM backtests our VaR model on a daily basis to evaluate its predictive power.

The test compares VaR model results at the 99% confidence level to daily held profit and loss.

Results of back testing are provided to the Market Risk Committee.

Backtesting exceptions occur when trading losses exceed VaR.

Backtesting exceptions occur when daily held profit and loss exceed VaR.

We do not engage in correlation trading or utilize the internal model approach for measuring default and credit migration risk.

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Interest rate $ .4 $ .2 $ .3 $ .3 $ .4 $ .2 $ .3 $ .3

Internal capital adequacy assessment.

Market risk is a component of our internal capital adequacy assessment.

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Specific risk is the price risk of individual financial instruments, which is not accounted for by changes in broad market risk factors and is measured through a standardized approach.

Market risk weighted assets, including the specific risk calculations, are run quarterly by the MRM in accordance with the Market Risk Rule, and approved by the Chief Market Risk Officer.

Market risk weighted assets, including the specific risk calculations, are run quarterly by MTRM in accordance with the Market Risk Rule, and approved by the Chief Market Risk Officer.

Nontrading market risk

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Interest rate risk positions are influenced by a number of factors, including the balance sheet positioning that arises out of customer preferences for loan and deposit products, economic conditions, the competitive environment within our markets, changes in market interest rates that affect client activity, and our hedging, investing, funding, and capital positions.

The primary components of interest rate risk exposure consist of reprice risk, basis risk, yield curve risk, and option risk.

The primary components of interest rate risk exposure consist of reprice risk, yield curve risk, option risk, and basis risk.

• “Reprice risk ” is the exposure to changes in the level of interest rates and occurs when the volume of interest-bearing liabilities and the volume of interest-earning assets they fund (e.g., deposits used to fund loans) do not mature or reprice at the same time.

• “Basis risk” is the exposure to asymmetrical changes in interest rate indexes and occurs when floating-rate assets and floating-rate liabilities reprice at the same time, but in response to different market factors or indexes.

• “Yield curve risk” is the exposure to non-parallel changes in the slope of the yield curve (where the yield curve depicts the relationship between the yield on a particular type of security and its term to maturity) and occurs when interest-bearing liabilities and the interest-earning assets that they fund do not price or reprice to the same term point on the yield curve.

• “Option risk” is the exposure to a customer or counterparty’s ability to take advantage of the interest rate environment and terminate or reprice one of our assets, liabilities, or off-balance sheet instruments prior to contractual maturity without a penalty.

Option risk occurs when exposures to customer and counterparty early withdrawals or prepayments are not mitigated with an offsetting position or appropriate compensation.

Governance structure - Nontrading market risk

The management of nontrading market risk is centralized within Corporate Treasury.

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The A/LM Policy provides the framework for the oversight and management of interest rate risk and is administered by the ALCO.

The MRM, as the second line of defense, provides additional oversight.

LIBOR Transition

Key had successfully transitioned substantially all of it its products away from LIBOR as of June 30, 2023.

For most financial products, the most common alternative reference rates have been SOFR-based benchmarks.

This is true for both new originations and legacy LIBOR contracts that were subject to amendment or a transition by their terms.

We have also originated a small number of new loans using credit sensitive rates in a limited and managed fashion.

MTRM, as the second line of defense, provides additional oversight.

Net interest income simulation analysis.

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The modeling incorporates investment portfolio and swap portfolio balances consistent with management's desired interest rate risk positioning.

The simulation model estimates the amount of net interest income at risk by simulating the change in net interest income that would occur if rates were to gradually increase or decrease from current levels over the next 12 months (subject to a floor on market interest rates at zero).

The simulation model estimates the amount of net interest income at risk by simulating the change in net interest

income that would occur if rates were to gradually increase or decrease from current levels over the next 12 months (subject to a floor on market interest rates at zero).

Figure 25 presents the results of the simulation analysis at December 31, 2024, and December 31, 2023.

At December 31, 2023, our simulated impact to changes in interest rates was moderate low.

The exposure to declining rates has decreased as a result of the change in balance sheet mix compared to the December 31, 2022 analysis.

At December 31, 2024, our simulated impact to changes in interest rates was relatively neutral.

The exposure to declining rates has changed from (0.01)% as of December 31, 2023 to 0.15% as of December 31, 2024, as a result of the change in balance sheet mix and positioning.

Tolerance levels for risk management require the development of remediation plans to maintain residual risk within tolerance if simulation modeling demonstrates that a gradual, parallel 200 basis point increase or 200 basis point decrease in interest rates over the next 12 months would adversely affect net interest income over the same period by more than 5.5%.

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Basis point change assumption -200 200 -200 200

Assumed floor in market rates (in basis points) — N/A — N/A

Rising rate beta N/A Mid 50s N/A Mid 40s

Tolerance level (5.50) % (5.50) % (5.50) % (5.50) %

Interest rate risk assessment 0.15 % (0.39) % (0.01) % (2.08) %

+200 NII at risk beta sensitivity December 31, 2023

Beta assumption Mid 60s Low 60s Mid 50s Low 50s

Interest rate risk assessment (4.65) % (3.36) % (2.08) % (0.85) %

Simulation analysis produces a sophisticated estimate of interest rate exposure based on assumptions inputs within the model.

Simulation analyses produce an estimate of interest rate exposure based on assumption inputs within the model.

Assumptions are tailored to the specific interest rate environment and validated on a regular basis.

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Net interest income is highly dependent on the timing, magnitude, frequency, and path of interest rate changes and the associated assumptions for deposit repricing relationships, lending spreads, and the balance behavior of transaction accounts.

If fixed rate assets increase by $1 billion, or fixed rate liabilities decrease by $1 billion, then the benefit to rising rates would decrease by approximately 29 basis points.

If the interest-bearing liquid deposit beta assumption increases or decreases by 5% (e.g., 40% to 45%), then the benefit to rising rates would decrease or increase by approximately 123 basis points.

If fixed-rate assets increase by $1 billion, or fixed-rate liabilities decrease by $1 billion, then the potential benefit to declining rates would increase by approximately 23 basis points.

A five percentage point increase or decrease in the interest-bearing deposit beta assumption changes the current simulation results by approximately 120 basis points.

The current interest rate risk position could fluctuate to higher or lower levels of risk depending on the competitive environment and client behavior that may affect the actual volume, mix, maturity, and repricing characteristics of loan and deposit flows.

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EVE is calculated by subjecting the balance sheet to an immediate increase or decrease in interest rates, measuring the resulting change in the values of assets, liabilities, and off-balance sheet instruments, and comparing those amounts with the base case of the current interest rate environment.

EVE policy limits are measured against a +200 basis point/policy decline scenario.

The resulting rate in the policy decline scenario is equal to the greater of the current fed funds target and zero.

As of December 31, 2023, the policy decline scenario is minus 200 basis points.

This analysis is highly dependent upon assumptions applied to assets and liabilities with non-contractual maturities.

EVE policy limits are measured against a +/-200 basis point scenario subject to a floor on market interest rates at zero.

This analysis is highly dependent

upon assumptions applied to assets and liabilities with non-contractual maturities.

Those assumptions are based on historical behaviors, as well as forward expectations.

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The results of the various interest rate risk analyses are used to formulate A/LM strategies to achieve the desired risk profile while managing to objectives for capital adequacy and liquidity risk exposures.

Specifically, risk positions are managed by purchasing securities, issuing term debt with floating or fixed interest rates, and using derivatives.

Specifically, risk positions are managed by purchasing or selling securities, issuing term debt with floating or fixed interest rates, and using derivatives.

Interest rate swaps and options are predominantly used, which modify the interest rate characteristics of certain assets and liabilities.

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Total floors $ 6,500 $ 1 — — % — % $ 6,500 $ 15

Excludes accrued interest of $58 million and $62 million at December 31, 2023, and December 31, 2022, respectively.

(a) Excludes accrued interest of $51 million and $58 million at December 31, 2024, and December 31, 2023, respectively.

Liquidity risk management

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Governance structure

We manage liquidity for all of our affiliates on an integrated basis.

We manage liquidity for all of our affiliates on a consolidated basis.

This approach considers the funding sources available to each entity, as well as each entity’s capacity to manage through adverse conditions.

The approach also recognizes that adverse market conditions or other events that could negatively affect the availability or cost of liquidity will affect the access of all affiliates to sufficient wholesale funding.

The management of consolidated liquidity risk is centralized within Corporate Treasury.

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The Asset Liability Management Policy provides the framework for the oversight and management of liquidity risk and is administered by the ALCO.

The Corporate Treasury Oversight group within the MRM, as the second line of defense, provides additional oversight.

The Corporate Treasury Oversight group within MTRM, as the second line of defense, provides additional oversight.

Our current liquidity risk management practices are in compliance with the Federal Reserve Board’s Enhanced Prudential Standards.

These committees regularly review liquidity and funding summaries, liquidity trends, peer comparisons, variance analyses, liquidity projections, internal liquidity stress tests, and goal tracking reports.

The committees mentioned above regularly review liquidity and funding summaries, liquidity trends, peer comparisons, variance analyses, liquidity projections, internal liquidity stress tests, and goal tracking reports.

The reviews generate a discussion of positions, trends, and directives on liquidity risk and shape a number of our decisions.

When liquidity pressure is elevated, positions are monitored more closely and reporting is more intensive.

To ensure that emerging issues are identified, we also communicate with individuals inside and outside of the company on a daily basis.

To ensure that emerging issues are identified, we monitor an extensive set of systematic and idiosyncratic early warning indicators daily.

Factors affecting liquidity

Our liquidity could be adversely affected by both direct and indirect events.

An example of a direct event would be a downgrade in our public credit ratings by a rating agency.

An example of a direct event would be a downgrade in our credit ratings by a rating agency.

Examples of indirect events (events unrelated to us) that could impair our access to liquidity would be an act of terrorism or war, natural disasters, global pandemics, political events, or the default or bankruptcy of a major corporation, mutual fund, or hedge fund.

Similarly, market speculation, or rumors about us or the banking industry in general, may adversely affect the cost and availability of normal funding sources.

During 2023, rating agencies reacted to the volatility in the banking industry by issuing updated ratings for numerous U.S.

banks, including Key.

On August 21, 2023, Standard & Poor’s downgraded KeyCorp’s and KeyBank’s Long-term Debt ratings from “BBB+” to “BBB”, and from “A-” to “BBB+”, respectively.

On October 10, 2023, Fitch Ratings, Inc.

downgraded both KeyCorp and KeyBank’s respective Long-Term Debt ratings from “A-” to “BBB+” and, on October 20, 2023, Moody’s downgraded KeyCorp and KeyBank's Long-term Debt ratings from "Baa1" to "Baa2", and from "A3" to "Baa1.” The rationales for Standard & Poor’s, Fitch Ratings, Inc., and Moody’s downgrades are documented in their respective credit opinions and analyses.

Our credit ratings at December 31, 2024, are shown in Figure 27.

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Credit Ratings

December 31, 2023 Short-Term

KEYCORP (THE PARENT COMPANY)

December 31, 2024 Outlook Short-Term

Standard & Poor’s

A-2 N/A BBB BBB- BB BB

P-2 N/A Baa2 Baa2 Baa3 Ba1

F2 N/A BBB+ N/A BB BB

R-1 (low) N/A A A (low) A (low) BBB

Stable A-2 N/A BBB BBB- BB BB

Stable P-2 N/A Baa2 Baa2 Baa3 Ba1

Positive F2 N/A BBB+ N/A BB BB

Stable R-1 (low) N/A A (low) BBB (high) BBB (high) BBB (low)

Standard & Poor’s

A-2 N/A BBB+ BBB N/A N/A

Moody’s P-2 P-1/A2 Baa1 Baa2 N/A N/A

F2 F2/A- BBB+ BBB N/A N/A

R-1 (middle) A (high) A (high) A N/A N/A

Stable A-2 N/A BBB+ BBB N/A N/A

Moody’s Stable P-2 P-1/A2 Baa1 Baa2 N/A N/A

Positive F2 F2/A- BBB+ BBB N/A N/A

Stable R-1 (low) A A A (low) N/A N/A

(a) P-1 rating assigned by Moody’s is specific to KeyBank’s short-term bank deposit ratings.

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We regularly monitor our liquidity position and funding sources and measure our capacity to obtain funds in a variety of hypothetical scenarios in an effort to maintain an appropriate mix of available and affordable funding.

In the normal course of business, we perform a monthly internal liquidity stress test for both KeyCorp and KeyBank.

In a “heightened monitoring mode,” we may conduct internal liquidity stress tests more frequently, and use assumptions to reflect the changed market environment.

In the normal course of business, we perform a monthly internal liquidity stress test at the consolidated KeyCorp level.

From time to time, we may conduct internal liquidity stress tests more frequently, and use assumptions to reflect the changed market environment.

Our testing incorporates estimates for loan and deposit lives based on our historical studies.

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To compensate for the effect of these assumed liquidity pressures, we consider alternative sources of liquidity and maturities over different time periods to project how funding needs would be managed.

Our primary source of funding for KeyBank are customer deposits resulting in a consolidated loan-to-deposit ratio of 78% as of December 31, 2023 .

Our primary source of funding for KeyBank is customer deposits resulting in a consolidated loan-to-deposit ratio of 70% as of December 31, 2024 .

If the cash flows needed to support operating and investing activities are not satisfied by deposit balances, we rely on wholesale funding or on-balance sheet liquid reserves.

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During a problem period, that reserve could be used as a source of funding to provide time to develop and execute a longer-term strategy.

Figure 28 shows our available contingent liquidity at December 31, 2023 and December 31, 2022.

Figure 28 shows our available contingent liquidity at December 31,

2024 and December 31, 2023.

In 2024, our secured term borrowings decreased $8.5 billion from a reduction in FHLB borrowings.

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We use the loan-to-deposit ratio as a metric to monitor these strategies.

Our target loan-to-deposit ratio is 90-100% (at December 31, 2023, our loan-to-deposit ratio was 77.9%), which we calculate as the sum of total loans, loans held for sale, and nonsecuritized discontinued loans divided by deposits.

Our target loan-to-deposit ratio is around 80% (at December 31, 2024, our loan-to-deposit ratio was 70.3%), which we calculate as the sum of total loans, loans held for sale, and nonsecuritized discontinued loans divided by deposits.

Liquidity programs

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There are no restrictive financial covenants in any of these programs.

On January 26, 2023, KeyBank issued $500 million of 4.70% Fixed Rate Senior Bank Notes due January 26, 2026 and $1 billion of 5.00% Fixed Rate Senior Bank Notes due January 26, 2033.

Accordingly, at December 31, 2023, there was $15.5 billion available for issuance under the KeyBank Bank Note Program.

KeyBank had no bank note issuances during 2024.

At December 31, 2024, there was $20.0 billion available for issuance under the KeyBank Bank Note Program.

Liquidity for KeyCorp

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A national bank’s dividend-paying capacity is affected by several factors, including net profits (as defined by statute) for the two previous calendar years and for the current year, up to the date of dividend declaration.

During 2023, KeyBank paid $675 million in cash dividends to KeyCorp, and during the fourth quarter of 2023, KeyBank paid $150 million cash dividends to KeyCorp.

At January 1, 2024, KeyBank had regulatory capacity to pay $2.3 billion in dividends to KeyCorp without prior regulatory approval.

KeyCorp had no debt issuances during 2023 .

During 2024, KeyBank paid $750 million in cash dividends to KeyCorp, and during the fourth quarter of 2024, KeyBank paid no cash dividends to KeyCorp.

KeyCorp issued debt of $1.0 billion in the first

quarter of 2024.

At December 31, 2024, KeyBank had no regulatory capacity to pay any dividends to KeyCorp without prior regulatory approval.

Our liquidity position and recent activity

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The liquid asset portfolio continues to exceed the amount that we estimate would be necessary to manage through an adverse liquidity event by providing sufficient time to develop and execute a longer-term solution.

From time to time, KeyCorp or KeyBank may seek to retire, repurchase, or exchange outstanding debt, capital securities, preferred shares, or common shares through cash purchase, privately negotiated transactions or other

During the third quarter of 2023, Key repurchased $92.3 million of KeyBank senior debt consisting of $13.1 million of 3.30% Senior Unsecured Debt due June 1, 2025, $64.7 million of 4.15% Senior Unsecured Debt due August 8, 2025, and $14.5 million of 4.70% Senior Unsecured Debt due January 26, 2026.

On August 30, 2024, Scotiabank completed the initial purchase of 47,829,359 of our Common Shares with an investment of approximately $821 million in gross proceeds.

On December 13, 2024, we announced that all necessary bank regulatory approvals had been received for completion of Scotiabank’s strategic minority investment in KeyCorp.

On December 27, 2024, Scotiabank completed the final purchase of 115,042,316 of our Common Shares, contemplated under the Investment Agreement with an investment of approximately $2.0 billion.

Following the Second Closing, Scotiabank owns approximately 14.9% of our common stock.

In conjunction with the investment from Scotiabank, we executed a strategic repositioning of our securities available-for-sale portfolio, selling $7.0 billion and $3.0 billion in market value of low-yielding investment securities in the third and fourth quarters of 2024, respectively.

The sales resulted in a total pre-tax loss of $1.8 billion.

Proceeds from the sales were invested in shorter-duration, higher-yielding investment securities.

Additional information on repurchases of Common Shares by KeyCorp is included in Part II, Item 5.

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For more information, see Note 5 (“Asset Quality”).

As shown in Figure 29, our ALLL from continuing operations increased by $171 million, or 12.8%, from December 31, 2022.

The commercial ALLL increased by $196 million, or 22.7%, from December 31, 2022, driven by portfolio migration and changes in the economic outlook, including the impact from higher interest rates and lower commercial real estate values, partly offset by balance sheet reductions.

The consumer ALLL decreased $25 million, or 5.3%, from December 31, 2022, largely driven by changes in the economic forecasts, including improved home price values.

As shown in Figure 29, our ALLL from continuing operations decreased by $99 million, or 6.6%, from December 31, 2023.

The commercial ALLL decreased by $23 million, or 2.2%, from December 31, 2023, driven by strategic balance sheet reductions and changes in the economic outlook, partly offset by portfolio credit migration.

The consumer ALLL decreased $76 million, or 17.0%, from December 31, 2023, also largely driven by balance sheet reductions and economic forecasts, including improved home price values.

Allocation of the Allowance for Loan and Lease Losses

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Home equity loans 70 5.0 6.1 86 5.7 6.4

Consumer direct loans 121 8.0 5.2 111 8.3 5.4

Other consumer loans 136 9.6 5.0 122 8.1 5.2

Credit cards 76 5.4 .9 78 5.2 .9

Consumer indirect loans 1 .1 — 2 .1 .1

Total consumer loans 372 26.4 31.1 448 29.7 31.1

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Figure 31 shows the ratio of net charge-offs by loan category as a percentage of the respective average loan balance.

Over the past 12 months, net loan charge-offs increased $83 million.

Net Loan Charge-offs from Continuing Operations

Over the past 12 months, net loan charge-offs increased $196 million, with the most significant amounts coming from charge-offs of commercial and industrial loans from consumer goods related exposures.

Net Loan Charge-offs from Continuing Operations (a)

Year ended December 31,

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Real estate — construction — (1)

Commercial lease financing (a)

Commercial lease financing 2 (5)

Total commercial loans 345 175

Real estate — residential mortgage (a)

Real estate — residential mortgage (2) (3)

Home equity loans — (1)

Consumer direct loans 43 26

Other consumer loans 56 43

Credit cards 41 30

Consumer indirect loans — 2

Total consumer loans 95 69

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(a) Credit amounts indicate that recoveries exceeded charge-offs.

Net Loan Charge-offs to Average Loans from Continuing Operations

Net Loan Charge-offs to Average Loans from Continuing Operations (a)

Year ended December 31,

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Real estate — construction — (0.04)

Commercial lease financing (a)

(0.14) (0.05)

Commercial lease financing 0.05 (0.14)

Total commercial loans 0.46 0.21

Real estate — residential mortgage (a)

(0.01) (0.04)

Real estate — residential mortgage (0.01) (0.01)

Home equity loans — (0.01)

Consumer direct loans 0.69 0.40

Other consumer loans 1.01 0.69

Credit cards 4.44 3.04

Consumer indirect loans — 3.23

Total consumer loans 0.29 0.19

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Home equity loans 2 2

Consumer direct loans 50 34

Other consumer loans 64 51

Credit cards 47 37

Consumer indirect loans 1 4

Total consumer loans 116 91

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Home equity loans 2 3

Consumer direct loans 7 8

Other consumer loans 8 8

Credit cards 6 7

Consumer indirect loans 1 2

Total consumer loans 21 22

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Home equity loans 89 97

Consumer direct loans 3 3

Other consumer loans 5 4

Credit cards 7 5

Consumer indirect loans 1 1

Total consumer loans 193 177

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(b) See Figure 9 and the accompanying discussion in the “Loans and loans held for sale” section for more information related to our commercial loan portfolio.

(c) Restructured loans (i.e., TDRs) are those for which Key, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider.

See Note 5 (“Asset Quality“) for more information on our TDRs.

(c) Restructured loans are those for which Key, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider.

See Note 5 (“Asset Quality“) for more information.

These concessions are made to improve the collectability of the loan and generally take the form of a reduction of the interest rate, extension of the maturity date or reduction in the principal balance.

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This heightened level of regulation has increased our operational risk.

While operational and compliance

risk are separate risk disciplines in KeyCorp’s ERM framework, losses and/or additional regulatory compliance costs are included in operational loss reporting and could take the form of explicit charges, increased operational costs, or harm to our reputation.

While operational and compliance risk are separate risk disciplines in KeyCorp’s ERM framework, losses and/or additional regulatory compliance costs are included in operational loss reporting and could take the form of explicit charges, increased operational costs, or harm to our reputation.

We seek to mitigate operational risk through identification and measurement of risk, alignment of business strategies with risk appetite and tolerance, and a system of internal controls and reporting.

We continuously strive to strengthen our system of internal controls to improve the oversight of our operational risk and to ensure compliance with laws, rules, and regulations.

For example, an operational event database tracks the amounts and sources of operational risk and losses.

For example, an operational event database tracks the amounts and sources of

operational risk and losses.

This tracking mechanism helps to identify weaknesses and to highlight the need to take corrective action.

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Return on average tangible common equity consolidated (non-GAAP) (3.01) % 9.63 % 18.40 %

(a) For the years ended December 31, 2023, December 31, 2022, and December 31, 2021, intangible assets exclude $1 million, $2 million, and $3 million, respectively, of period-end purchased credit card relationships.

(a) For the years ended December 31, 2024, December 31, 2023, and December 31, 2022, intangible assets exclude less than $1 million, $1 million, and $2 million, respectively, of period-end purchased credit card relationships.

(b) Net of capital surplus.

(c) For the years ended December 31, 2023, December 31, 2022, and December 31, 2021, average intangible assets exclude $1 million, $2 million, and $4 million, respectively, of average purchased credit card relationships.

The cash efficiency ratio is a ratio of two non-GAAP performance measures, adjusted noninterest expense and total taxable-equivalent revenue.

Accordingly, there is no directly comparable GAAP performance measure.

The cash efficiency ratio excludes the impact of our intangible asset amortization from the calculation.

We believe this ratio provides greater consistency and comparability between our results and those of our peer banks.

Additionally, this ratio is used by analysts and investors to evaluate how effectively management is controlling noninterest expenses in generating revenue, as they develop earnings forecasts and peer bank analysis.

(c) For the years ended December 31, 2024, December 31, 2023, and December 31, 2022, average intangible assets exclude less than $1 million, $1 million, and $2 million, respectively, of average purchased credit card relationships.

Adjusted noninterest expense and adjusted noninterest income are non-GAAP measures in that they are adjusted to exclude the impact of certain items.

Management believes adjusting for the selected items provide investors with useful information to gain a better understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrate the effects of the financial impacts related to those selected items.

Year ended December 31,

Dollars in millions 2024 2023 2022

Cash efficiency ratio

Adjusted noninterest expense

Noninterest expense (GAAP) $ 4,545 $ 4,734 $ 4,410

Intangible asset amortization (GAAP) 39 47 58

Efficiency related expenses — (131) —

Pension settlement (other expense) — (18) —

FDIC special assessment (other expense) (25) (190) —

Adjusted noninterest expense (non-GAAP) $ 4,520 $ 4,395 $ 4,410

Net interest income (GAAP) $ 3,913 $ 4,527 $ 4,071

TE adjustment 30 27 27

Net interest income TE (non-GAAP) 3,943 4,554 4,098

Adjusted noninterest income

Noninterest income (GAAP) $ 809 $ 2,470 $ 2,718

Total TE revenue (non-GAAP) $ 6,413 $ 7,272 $ 7,292

Cash efficiency ratio (non-GAAP) 73.2 % 60.0 % 59.9 %

Loss on sale of securities for securities repositioning 1,833 — —

Scotiabank investment agreement valuation (other income) 3 — —

Adjusted noninterest income (non-GAAP) $ 2,645 $ 2,470 $ 2,718

Critical Accounting Policies and Estimates

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This estimate produced by our models is forward-looking and requires management to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument.

Moody’s Consensus forecast is the source of macroeconomic projections, including the interest rate forecasts used in the credit models.

Moody’s Consensus forecast is our source of macroeconomic projections, including the interest rate forecasts used in the credit models.

We use a two year reasonable and supportable period across all products to forecast economic conditions.

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While management uses judgment when determining the price at which willing market participants would transact when there has been a significant decrease in the volume or level of activity for the asset or liability in relation to “normal” market activity, management’s objective is to determine the point within the range of fair value estimates that is most representative of a sale to a third-party investor under current market conditions.

The value to us if the asset or liability were held to maturity is not included in the fair value estimates.

A fair value measure should reflect the assumptions that market participants would use in pricing the asset or liability, including the assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset and the risk of nonperformance.

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When utilizing the qualitative testing approach, Key examines numerous qualitative factors such as financial performance, market capitalization and other industry and economic trends to conclude whether it is more likely than not that goodwill is impaired.

We performed a quantitative annual goodwill impairment test as of October 1, 2023.

Effective in the first quarter of 2024, we realigned our real estate capital business from our Commercial Bank reporting unit to our Institutional Bank reporting unit.

The move was done to align product-based teams to the client-facing businesses they serve with the goal of reducing overhead and complexity and creating a better client experience.

Additionally, due to the realignment, a portion of goodwill was reallocated from our Commercial Bank reporting unit to our Institutional Bank reporting unit immediately after the realignment based on the relative fair value of the transferred business.

This realignment was identified as a triggering event for purposes of goodwill impairment testing.

As a result, interim goodwill impairment tests were performed during the first quarter of 2024 reflecting the reporting units both immediately before and immediately after the realignment, neither of which resulted in impairment.

The quantitative test estimates the fair value of the reporting units using the income approach (weighted 50%) and two market based approaches:

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The inputs and assumptions utilized for the valuation of each reporting unit include projections of future cash flows, discount rates, valuation multiples of comparable public companies, and recent transaction information.

Future cash flows are based on multi-year forecasts for each reporting unit and include inputs and assumptions such as net interest margin, expected credit losses, noninterest income, noninterest expense, and required capital.

flows are based on multi-year forecasts for each reporting unit and include inputs and assumptions such as net interest margin, expected credit losses, noninterest income, noninterest expense, and required capital.

A terminal growth rate is estimated for each reporting unit based on market expectations of inflation and economic conditions in the financial services industry.

Discount rates are developed using the CAPM which considers a risk free rate, 5-year adjusted beta based on peer companies, a market equity risk premium, a size premium, and a company specific risk premium.

Discount rates are developed using the Capital Asset Pricing Model (“CAPM”) which considers a risk free rate, 5-year adjusted beta based on peer companies, a market equity risk premium, a size premium, and a company specific risk premium.

The discount rates used for the Consumer, Commercial, and Institutional reporting units were, 13%, 13.5%, and 13.5%, respectively.

The results of the annual goodwill impairment test indicated that the fair values of the Consumer, Commercial and Institutional Bank reporting units were in excess of their respective carrying values, therefore, there was no goodwill impairment.

However, for the Institutional Bank reporting unit, the fair value of the reporting united exceeded its carrying value by 7%, indicating that the $133 million of goodwill allocated to this reporting unit could be at risk of future impairment.

The combined fair value of all reporting units was considered reasonable by comparison to Key's market capitalization.

The results of the interim quantitative goodwill impairment tests indicated that the fair values of the Consumer, Commercial and Institutional Bank reporting units were in excess of their respective carrying values both immediately prior to and immediately after the realignment, therefore, there was no goodwill impairment.

The fair values of the Consumer Bank and Commercial Bank reporting units were in excess of their respective carrying values by greater than 10% immediately prior to the realignment.

However, for the Institutional Bank reporting unit, the fair value of the reporting unit exceeded its carrying value by less than 4% prior to the reporting unit realignment.

The fair values of all reporting units were in excess of their carrying values by greater than 10% immediately after the realignment.

The combined fair value of all reporting units immediately before and immediately after the realignment was considered reasonable by comparison to Key's market capitalization.

The estimated fair values of each reporting unit are sensitive to changes in management’s estimates and assumptions.

Changes in the estimates and assumptions could result in instances in which the fair value of a reporting unit is less than its carrying value.

We have performed sensitivity analyses around certain assumptions to assess their reasonableness and impact on the reporting units’ fair values.

The analysis of the Institutional Bank reporting unit indicated that if the discount rate utilized in the income approach was increased or decreased by 50 basis points, the estimated fair value of the reporting unit inclusive of the weighted results of the market approaches would decrease or increase approximately 2%, respectively.

If the noninterest income rate utilized in the income approach was increased or decreased by 10%, the estimated fair value of the reporting unit inclusive of the weighted results of the market approaches would increase or decrease by approximately 10%, respectively, which if a decrease would result in goodwill impairment.

We performed sensitivity analyses around certain assumptions to assess their reasonableness and impact on the reporting units’ fair values.

The analysis of the Institutional Bank reporting unit immediately before the realignment indicated that if the discount rate utilized in the income approach was increased or decreased by 50 basis points, the estimated fair value of the reporting unit would have decreased or increased approximately 4%, respectively.

If the net interest margin utilized in the income approach was increased or decreased by 25 basis points, the estimated fair value of the reporting unit would have increased or decreased by approximately 19%, respectively, with a decrease resulting in impairment of goodwill recorded at the Institutional Bank reporting unit.

Determining the fair value of a reporting unit is subject to uncertainty as it is reliant on estimates of cash flows that extend far into the future, and, by their nature, are difficult to estimate over such an extended time frame.

In the future, changes in the assumptions or the discount rate could produce a material non-cash goodwill impairment.

Additionally, we monitored events and circumstances during the period from October 1, 2023 through December 31, 2023, including macroeconomic and market factors, industry and banking sector events, Key specific performance indicators, a comparison of management’s forecast and assumptions to those used in the October 1, 2023 quantitative impairment test, and the sensitivity of the October 1, 2023 quantitative test results to changes in assumptions through December 31, 2023.

The results of the impairment test after the realignment, however, indicated the fair value of each of the three reporting units, Consumer, Commercial, and Institutional, exceeded their respective carrying values by more than 10%.

The estimated fair value of the Consumer Bank reporting unit was 18% greater than its carrying amount, the estimated fair value of the Commercial Bank reporting unit was 25% greater than its carrying amount, and the estimated fair value of the Institutional Bank reporting unit was 34% greater than its carrying amount.

We performed an annual qualitative impairment test for all three of our reporting units as of October 1, 2024.

This test involved reviewing updated internal forecasts, evaluating market data, assessing reasonableness of critical assumptions used in the last quantitative goodwill impairment test and considering recent transactions and events that could impact the goodwill at each reporting unit.

Key concluded it was not more likely than not that goodwill was impaired as of October 1, 2024, our annual testing date.

Additionally, we monitored events and circumstances during the period from October 1, 2024 through December 31, 2024, including macroeconomic and market factors, industry and banking sector events, Key specific performance indicators, and updated management forecasts.

Based on these considerations, we concluded that it was not more-likely-than-not that the fair value of one or more of the reporting units was below its respective carrying value as of December 31, 2024.

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In the normal course of business, we may record tax benefits and then have those benefits contested by the IRS or state tax authorities.

We have provided tax reserves that we believe are adequate to absorb potential

adjustments that such challenges may necessitate.

We have provided tax reserves that we believe are adequate to absorb potential adjustments that such challenges may necessitate.

However, if our judgment later proves to be inaccurate, the tax reserves may need to be adjusted, which could have an adverse effect on our results of operations and capital.

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Accounting and reporting developments

Accounting guidance pending adoption

The following table presents accounting guidance pending adoption.

Standard Required Adoption Description Effect on Financial Statements or

Other Significant Matters

Combinations— Joint

Venture Formations

(Subtopic 805-60)

January 1, 2025

Early adoption is

This guidance requires that a joint venture apply a new basis of accounting upon its initial formation.

By doing this, a joint venture, upon formation, will recognize and initially measure its assets and liabilities at fair value, with certain exceptions.

Existing joint ventures have the option to apply this new guidance retrospectively as long as they have sufficient information to do so.

The guidance is not expected to have any impact on Key’s financial condition or results of operations.

Improvements The date on which the SEC’s removal of related

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Early adoption is

This guidance clarifies and improves disclosure requirements for a variety of topics.

This guidance clarifies and improves disclosure requirements for a variety of topics to align with the SEC's regulations.

The amendments should be applied prospectively.

The guidance is not expected to have a material impact on Key’s disclosures.

ASU 2023-07 Segment Reporting (Topic 280) Annual periods beginning January 1, 2024

Interim periods beginning January 1, 2025

Income Statement—Reporting Comprehensive

Income—Expense Disaggregation Disclosures (Topic 220-40) January 1, 2027

Early adoption is permitted.

This guidance requires certain segment disclosures in annual and interim periods.

It also clarifies that companies may report on additional measures if the chief operating decision maker uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The guidance should be applied on a retrospective basis.

We are still assessing the impact on Key’s disclosures.

ASU 2023-09 Income Taxes (Topic 740) January 1, 2025

The guidance requires public companies disclose additional information about certain types of costs and expenses.

The guidance should be applied on a prospective or retrospective basis.

The guidance is not expected to have a material impact on Key’s disclosures.

Debt—Debt with Conversion and

Other Options (Topic 470-20) January 1, 2026

Early adoption is permitted.

This guidance requires certain tax disclosures related to rate reconciliation and income taxes paid.

The guidance clarifies criteria to determine whether a settlement of a convertible debt instrument should be accounted for as an induced conversion.

The guidance should be applied on a prospective or retrospective basis.

We are still assessing the impact on Key’s disclosures.

The guidance is not expected to have a material impact on Key’s disclosures.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis