What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-22 · 459 added, 575 removed, 2917 unchanged (26% of the section changed)

20 unchanged sentences

Variable Interest Entities

Acquisitions and Discontinued Operations

Discontinued Operations

Securities Financing Activities

16 unchanged sentences

We are responsible for establishing and maintaining a system of internal control that is designed to protect our assets and the integrity of our financial reporting as defined in the Securities Exchange Act of 1934, as amended.

This corporate-wide system of controls includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in conformity with U.S.

generally accepted accounting principles, and that receipts and expenditures of the Corporation are made only in accordance with authorizations of management and directors of the Corporation;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a material effect on the consolidated financial statements.

generally accepted accounting principles, and that receipts and expenditures of KeyCorp are made only in accordance with authorizations of management and directors of KeyCorp;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of KeyCorp’s assets that could have a material effect on the consolidated financial statements.

All employees are required to comply with our code of ethics.

3 unchanged sentences

The independent registered public accounting firm and the internal auditors have free access to, and meet confidentially with, the audit committee to discuss appropriate matters.

Also, the Corporation maintains a Disclosure Review Committee.

This committee’s purpose is to design and maintain disclosure controls and procedures to ensure that material information relating to the financial and operating condition of the Corporation is properly reported to its Chief Executive Officer, Chief Financial Officer, General Auditor, and the Audit Committee of the Board of Directors in connection with the preparation and filing of periodic reports and the certification of those reports by the Chief Executive Officer and the Chief Financial Officer.

Also, KeyCorp maintains a Disclosure Review Committee.

This committee’s purpose is to design and maintain disclosure controls and procedures to ensure that material information relating to the financial and operating condition of KeyCorp is properly reported to its Chief Executive Officer, Chief Financial Officer, General Auditor, and the Audit Committee of the Board of Directors in connection with the preparation and filing of periodic reports and the certification of those reports by the Chief Executive Officer and the Chief Financial Officer.

Management’s Assessment of Internal Control over Financial Reporting

Management assessed, with participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, the effectiveness of our internal control and procedures over financial reporting using criteria described in “Internal Control - Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Management assessed, with participation of the KeyCorp’s Chief Executive Officer and Chief Financial Officer, the effectiveness of our internal control and procedures over financial reporting using criteria described in “Internal Control - Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on that assessment, we believe we maintained an effective system of internal control over financial reporting as of December 31, 2024.

1 unchanged sentence

Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Corporation's internal control over financial reporting as of December 31, 2023, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their accompanying report dated February 22, 2024.

KeyCorp's internal control over financial reporting as of December 31, 2024, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their accompanying report dated February 21, 2025.

Christopher M.

29 unchanged sentences

We have audited the accompanying consolidated balance sheets of KeyCorp as of December 31, 2024 and 2023 , and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of KeyCorp at December 31, 2023 and 2022 , and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of KeyCorp at December 31, 2024 and 2023 , and results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

13 unchanged sentences

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Loan and Lease Losses

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As discussed in Note 1 and 5 of the financial statements, the ALLL represents management’s current estimate of lifetime credit losses inherent in the loan portfolio at the balance sheet date.

Management estimates the ALLL using relevant available information, from internal and external sources, relating to past events, current portfolio specific and economic conditions, and reasonable and supportable forecasts.

Management estimates the ALLL using relevant available information, from internal and external sources, relating to past events, current economic conditions, idiosyncratic risk factors and reasonable and supportable forecasts.

The ALLL is the sum of (i) asset specific / individual loan reserves;

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Auditing management’s ALLL was complex due to the loss forecasting models used to compute the quantitative reserve and involves a high degree of subjectivity and judgment in evaluating management’s determination of the economic forecast and qualitative factor adjustments to the ALLL described above.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over KeyCorp’s ALLL process, including controls over the appropriateness of the ALLL methodology, the development, operation and monitoring of loss forecasting models, the reliability and accuracy of data used in developing the ALLL estimate, and management’s review and approval process over the economic forecast, qualitative adjustments and overall ALLL results.

With the assistance of EY specialists, we tested management’s loss forecasting models including evaluating the conceptual soundness of model methodology, assessing model performance and governance, testing key modeling assumptions, including the reasonable and supportable forecast period, and independently recalculating model output.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over KeyCorp’s ALLL process, including controls over the appropriateness of the ALLL methodology, operation and monitoring of loss forecasting models, the reliability and accuracy of data used in developing the ALLL estimate, and management’s review and approval process over the economic forecast, qualitative adjustments and overall ALLL results.

We also verified the underlying economic forecast data used to estimate the quantitative reserve was complete and accurate.

1 unchanged sentence

We tested the completeness, accuracy and relevance of the underlying data used to estimate the qualitative adjustments.

We evaluated whether qualitative adjustments were reasonable based on changes in economic conditions, the loan portfolio, management’s policies and procedures, and lending personnel.

We evaluated whether qualitative adjustments were reasonable based on changes in economic conditions, the loan portfolio, and management’s policies and procedures.

For example, we evaluated the reasonableness of qualitative adjustments (or lack thereof) for concentrations of credit by independently comparing to loan portfolio information.

1 unchanged sentence

Further, we performed an independent search for the existence of new or contrary information relating to risks impacting the qualitative factor adjustments to validate that management’s considerations are appropriate.

Additionally, we evaluated whether the overall ALLL, inclusive of qualitative factor adjustments, appropriately reflects losses expected in the loan and lease portfolio by comparing to peer bank data.

Additionally, we evaluated whether the overall ALLL, inclusive of qualitative factor adjustments, reasonably reflects losses expected in the loan and lease portfolio by comparing to peer bank data and KeyCorp’s actual historical loss data.

Goodwill Impairment Test of the Institutional Bank Reporting Unit

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As discussed in Notes 1 and 12 of the financial statements, management performs an annual goodwill impairment test at the reporting unit level as of October 1, or more frequently as events occur or circumstances change that may indicate that it is more likely than not that the fair value of any reporting unit may be less than its carrying value.

Effective in the first quarter of 2024, management realigned KeyCorp’s real estate capital business from the Commercial Bank reporting unit to the Institutional Bank reporting unit.

The realignment was identified as a triggering event for purposes of performing an interim quantitative goodwill impairment test immediately before and immediately after the realignment.

Management estimates the fair value of its reporting units by using a combination of income and market approaches.

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The market approach incorporates comparable public company multiples along with data related to recent merger and acquisition activity.

Auditing management's annual goodwill impairment test for the Institutional Bank reporting unit was complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting unit.

In particular, the fair value estimate was sensitive to the (i) discounted cash flow method of the income approach and its significant assumptions, which include the terminal growth rate and discount rate and (ii) valuation multiples of comparable public companies and recent transaction information.

Auditing management's interim quantitative goodwill impairment test, for the Institutional Bank reporting unit, immediately before the realignment, was complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting unit as of the interim measurement date.

In particular, the fair value estimate was sensitive to certain assumptions, which includes the internal forecast and discount rate utilized in the discounted cash flow method of the income approach.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over KeyCorp’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above.

With the assistance of EY specialists, we evaluated management’s fair value methodology, assessed the reasonableness of significant assumptions used in the discounted cash flow method, evaluated the appropriateness of selected multiples of comparable public companies and recent transaction information used in the market approach, developed an independent fair value range of the Institutional Bank reporting unit and compared the results to management’s fair value estimate and carrying value of the Institutional Bank reporting unit, and reconciled management’s estimated fair value of KeyCorp to its market capitalization as of the annual measurement date.

To test management’s interim quantitative goodwill impairment test for the Institutional Bank reporting unit, we evaluated certain assumptions of the internal forecast utilized by management in the discounted cash flow method of the income approach with historical performance (e.g., trend analysis), current industry and economic trends, and changes in KeyCorp’s strategies.

We evaluated the consistency of the internal forecast utilized in the income approach by comparing the internal forecast to other analyses used within the organization and inquiries performed of senior management regarding strategic plans for the reporting unit.

We also performed sensitivity analyses related to significant assumptions to evaluate the change in the fair value of the reporting unit resulting from changes in the assumptions.

With the assistance of EY specialists, we evaluated management’s fair value methodology, assessed the reasonableness of significant assumptions used in the discounted cash flow method of the income approach and reconciled management’s estimated fair value of KeyCorp to its market capitalization as of the interim measurement date.

We have served as KeyCorp’s auditor since 1994.

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Common Shares, $ 1 par value;

authorized 2,100,000,000 and 2,100,000,000 shares;

issued 1,256,702,081 and 1,256,702,081 shares

authorized 2,100,000,000 shares;

issued 1,256,702,081 shares at December 31, 2024 and 2023

Capital surplus 6,038 6,281

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Operating lease income and other leasing gains 76 92 103

Other income (a)

Other income 23 46 22

Net securities gains (losses) ( 1,856 ) ( 11 ) 9

Total noninterest income 809 2,470 2,718

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NET INCOME (LOSS) $ ( 161 ) $ 967 $ 1,917

Net income (loss) attributable to noncontrolling interests — — —

NET INCOME (LOSS) ATTRIBUTABLE TO KEY $ 967 $ 1,917 $ 2,625

Income (loss) from continuing operations attributable to Key common shareholders $ ( 306 ) $ 821 $ 1,793

3 unchanged sentences

Income (loss) from discontinued operations, net of taxes — — .01

Net income (loss) attributable to Key common shareholders (b)

Net income (loss) attributable to Key common shareholders (a)

( .32 ) .89 1.94

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Income (loss) from discontinued operations, net of taxes — — .01

Net income (loss) attributable to Key common shareholders (b)

Net income (loss) attributable to Key common shareholders (a)

( .32 ) .88 1.93

Weighted-average Common Shares outstanding (000) 949,561 927,217 924,363

Effect of convertible preferred stock — — —

Effect of Common Share options and other stock awards 5,542 8,696 10,349

Effect of Common Share options and other stock awards (b)

— 5,542 8,696

Weighted-average Common Shares and potential Common Shares outstanding (000) (c)

949,561 932,759 933,059

(a) Net securities gains (losses) totaled $( 11 ) million for the year ended December 31, 2023, $ 9 million for the year ended December 31, 2022, and $ 7 million for the year ended December 31, 2021.

(b) EPS may not foot due to rounding.

(a) EPS may not foot due to rounding.

(b) For periods ended in a loss from continuing operations attributable to Key common shareholders, anti-dilutive instruments have been excluded from the calculation of diluted earnings per share.

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Net pension and postretirement benefit costs, net of income taxes of $ 8 , $ 0 , and $ 1

( 26 ) — ( 5 )

Total other comprehensive income (loss), net of tax 1,759 1,066 ( 5,709 )

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( 25 ) ( 25 )

Open market Common Share repurchases ( 27,346 ) ( 559 ) ( 559 )

Series H Preferred Stock ($ .477917 per depositary share)

( 12 ) ( 12 )

Employee equity compensation program Common Share repurchases ( 1,736 ) — ( 44 ) ( 44 )

Common shares reissued (returned) for stock options and other employee benefit plans 6,211 24 113 137

Common Share repurchases under ASR program ( 26,027 ) — ( 585 ) ( 585 )

Issuance of Series H Preferred Stock 600 600 ( 10 ) 590

BALANCE AT DECEMBER 31, 2022 1,996 933,325 $ 2,500 $ 1,257 $ 6,286 $ 15,616 $ ( 5,910 ) $ ( 6,295 ) $ 13,454

1 unchanged sentence

Other comprehensive income (loss)

( 5,709 ) ( 5,709 )

Deferred compensation

13 unchanged sentences

Open market Common Share repurchases

( 2,550 ) ( 38 ) ( 38 )

Employee equity compensation program Common Share repurchases

1 unchanged sentence

Common Shares reissued (returned) for stock options and other employee benefit plans 7,622 — 138 138

Issuance of Series H Preferred stock 600 600 ( 10 ) 590

BALANCE AT DECEMBER 31, 2023 1,996 936,564 $ 2,500 $ 1,257 $ 6,281 $ 15,672 $ ( 5,844 ) $ ( 5,229 ) $ 14,637

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( 37 ) ( 37 )

Open market Common Share repurchases ( 2,550 ) ( 38 ) ( 38 )

Employee equity compensation program Common Share repurchases ( 1,991 ) ( 28 ) ( 28 )

Common Shares reissued (returned) for stock options and other employee benefit plans 9,342 ( 42 ) 170 128

Common Shares reissued under Scotiabank investment agreement, net of issuance costs 162,871 ( 198 ) 2,969 2,771

BALANCE AT DECEMBER 31, 2024 1,996 1,106,786 $ 2,500 $ 1,257 $ 6,038 $ 14,584 $ ( 2,733 ) $ ( 3,470 ) $ 18,176

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Provision for credit losses 335 489 502

Depreciation and amortization expense, net 134 137 32

Accretion of acquired loans 20 27 24

Depreciation, amortization, and accretion, net 73 154 164

Increase in cash surrender value of corporate-owned life insurance ( 118 ) ( 110 ) ( 113 )

7 unchanged sentences

Net losses (gains) on sales of fixed assets ( 7 ) 18 ( 7 )

Net decrease (increase) in trading account assets ( 313 ) ( 128 ) 34

Net transfer of loans held for sale — — —

Net change in:

Trading account assets ( 141 ) ( 313 ) ( 128 )

Accrued income and other assets ( 270 ) 554 ( 1,044 )

Accrued expense and other liabilities ( 72 ) 450 1,409

Other operating activities, net ( 139 ) 389 17

9 unchanged sentences

Purchases of held-to-maturity securities — ( 1,194 ) ( 3,670 )

Purchases of other investments ( 599 ) ( 667 ) ( 55 )

Proceeds from sales of other investments 646 17 41

Proceeds from prepayments and maturities of other investments 11 15 26

Net decrease (increase) in other investments 202 58 ( 635 )

Net decrease (increase) in loans, excluding acquisitions, sales, and transfers 7,920 6,668 ( 17,649 )

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FINANCING ACTIVITIES

Net increase (decrease) in deposits, excluding acquisitions 2,992 ( 9,977 ) 17,290

Net increase (decrease) in deposits 4,173 2,992 ( 9,977 )

Net increase (decrease) in short-term borrowings ( 947 ) ( 6,372 ) 8,702

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Employee equity compensation program Common Share repurchases ( 28 ) ( 34 ) ( 44 )

Common share purchases under ASR program — — ( 585 )

Net proceeds from reissuance of Common Shares 10 1 6

Net proceeds from Scotiabank investment 2,771 — —

Cash dividends paid ( 927 ) ( 911 ) ( 854 )

13 unchanged sentences

ABS risk retentions 5 7 8

Securities received as consideration — — 2,825

See Notes to Consolidated Financial Statements.

3 unchanged sentences

As of December 31, 2024, KeyBank operated 944 full-service retail banking branches and 1,182 ATMs in 15 states, as well as additional offices, online and mobile banking capabilities, and a telephone banking call center.

Additional information pertaining to our two major business segments, Consumer Bank and Commercial Bank, is included in Note 25 (“Business Segment Reporting”).

Additional information pertaining to our two reportable business segments, Consumer Bank and Commercial Bank, is included in Note 25 (“Business Segment Reporting”).

Use of Estimates

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All significant intercompany accounts and transactions have been eliminated in consolidation.

Some previously reported amounts related to derivative valuations and reserves have been reclassified from Other Income to Corporate Services Income to conform to current reporting practices.

Some previously reported amounts have been reclassified in the Consolidated Statements of Cash Flows from “other operating activities, net” to either the net change in “accrued income and other assets” or “accrued expense and other liabilities” to align with updated presentation.

Some previously reported amounts have been reclassified in the Consolidated Statements of Income from “other income” to “net securities gains (losses)”.

The consolidated financial statements also include the accounts of any voting rights entities in which we have a controlling financial interest and certain VIEs.

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We do not consider cash on deposit with the Federal Reserve to be restricted.

Effective January 1, 2023, we adopted the provisions of ASU 2022-02, Financial Instruments —Credit Losses (Topic

326), which eliminated the accounting for troubled debt restructurings while expanding loan modification and vintage disclosure requirements.

Under this guidance we assess all loan modifications to determine whether one is granted to a borrower experiencing financial difficulty, regardless of whether the modification loan terms include a

Modifications granted to borrowers experiencing financial difficulty may be in the form of an interest rate reduction, payment delay, other modifications, or some combination thereof.

We assess all loan modifications to determine whether one is granted to a borrower experiencing financial difficulty, regardless of whether the modification loan terms include a concession.

Modifications granted to borrowers

experiencing financial difficulty may be in the form of an interest rate reduction, payment delay, other modifications, or some combination thereof.

A borrower is considered to be experiencing financial difficulty when there is significant doubt about the borrower’s ability to make required payments on the loan or to get equivalent financing from another creditor at a market rate for a similar loan.

Prior to the adoption of ASU 2022-02, a TDR occurred when a loan to a borrower experiencing financial difficulty was restricted with a concession provided that a creditor would not otherwise consider.

Loans held in portfolio, which management has the intent and ability to hold for the foreseeable future or until maturity or payoff, are carried at the principal amount outstanding, net of unearned income, including net deferred loan fees and costs and unamortized premiums and discounts.

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Nonperforming Loans

Nonperforming loans are loans for which we do not accrue interest income and may include commercial and consumer loans and leases, modified loans to borrowers experiencing financial difficulty, and nonaccruing TDR loans prior to the adoption of ASU 2022-02.

Nonperforming loans are loans for which we do not accrue interest income and may include commercial and consumer loans and leases, modified loans to borrowers experiencing financial difficulty.

Nonperforming loans do not include loans held for sale.

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Any second lien home equity loan with an associated first lien that is 120 days or more past due or in foreclosure, or for which the first mortgage delinquency timeframe is unknown, is reported as a nonperforming loan.

Secured loans that are discharged through Chapter 7 bankruptcy and not formally re-affirmed are designated as nonperforming loans and TDRs prior to the adoption of ASU 2022-02.

Secured loans that are discharged through Chapter 7 bankruptcy and not formally re-affirmed are designated as nonperforming loans.

Our charge-off policy for most consumer loans takes effect when payments are 120 days past due.

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multiplied by the loan balance and the results are aggregated for purposes of measuring specific reserve

• The population of individually assessed consumer loans includes loans deemed collateral dependent, in

addition to all TDRs.

These loans are written down based on the collateral's fair market value less costs to

• The population of individually assessed consumer loans includes loans deemed collateral dependent.

These loans are written down based on the collateral's fair market value less costs to sell.

Quantitative Component

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Debt securities that we intend to hold for an indefinite period of time but that may be sold in response to changes in interest rates, prepayment risk, liquidity needs, or other factors are classified as available-for-sale and reported at fair value.

Realized gains and losses resulting from sales of securities using the specific identification method, are included in “other income” on the income statement.

Realized gains and losses resulting from sales of securities using the specific identification method, are included in “net securities gains (losses)” on the income statement.

Unrealized holding gains are recorded through other comprehensive income.

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For available-for-sale securities in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis.

If either of these criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value in “other income” on the income statement.

If either of these criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value in “net securities gains (losses)” on the income statement.

For debt securities that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors.

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A derivative that is designated and qualifies as a hedging instrument must be designated as a fair value hedge, a cash flow hedge, or a hedge of a net investment in a foreign operation.

Changes in the fair value of a hedging instrument are reflected in the same income statement line as the earnings effect of the change in fair value of the hedged item attributable to the hedged risk.

A fair value hedge is used to limit exposure to changes in the fair value of existing assets, liabilities, and commitments caused by changes in interest rates or other economic factors.

The change in the fair value of an instrument designated as a fair value hedge is recorded in earnings at the same time as a change in fair value of the hedged item attributable to the hedged risk.

The change in the fair value of an instrument designated as a fair value hedge is recorded in earnings at the same time as a change in fair value of the hedged item attributable to the hedged risk and recorded in the same income statement line as the change in fair value of the hedged item.

A cash flow hedge is used to minimize the variability of future cash flows that is caused by changes in interest rates or other economic factors.

The gain or loss on a cash flow hedge is recorded as a component of AOCI on the balance sheet and reclassified to earnings in the same period in which the hedged transaction affects earnings (e.g., when we incur variable-rate interest on debt, earn variable-rate interest on loans, or sell commercial real estate loans).

A net investment hedge is used to hedge the exposure of changes in the carrying value of investments as a result of changes in the related foreign exchange rates.

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If the fair value is less than the carrying value, an impairment charge is recorded for the difference, to the extent that the loss recognized does not exceed the amount of the goodwill allocated to that reporting unit.

Beginning January 1, 2021, the amount of capital being allocated to our reporting units as a proxy for the carrying value is based on a combination of regulatory and economic equity.

The amount of capital being allocated to our reporting units as a proxy for the carrying value is based on a combination of regulatory and economic equity.

Fair values are estimated using a combination of market and income approaches.

1 unchanged sentence

The income approach consists of discounted cash flow modeling that utilizes internal forecasts and various other inputs and assumptions.

A multi-year internal forecast is

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

A multi-year internal forecast is prepared

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

Earnings projections for reporting units are adjusted for after tax cost savings expected to be realized by a market participant.

2 unchanged sentences

The discount rates differ between our reporting units as they have different levels of risk.

A sensitivity analysis is typically performed on key assumptions, such as the discount rates and cost savings estimates.

A sensitivity analysis is typically performed on key assumptions, such as the discount rates, net interest margin and cost savings estimates.

Other intangible assets with finite lives are amortized on either an accelerated or straight-line basis.

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Our accounting policy for intangible assets is summarized in this note under the heading “Goodwill and Other Intangible Assets.”

Additional information regarding acquisitions is provided in Note 15 (“Acquisitions and Discontinued Operations”).

Securities Financing Activities

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Standard Date of Adoption Description Effect on Financial Statements or Other Significant Matters

ASU 2021-08, Business Combinations

(Topic 805) January 1, 2023

At the acquisition date, an acquirer must account for any acquired revenue contracts in accordance with Topic 606 as if it had originated the contracts (i.e., measure contract assets and liabilities, generally consistent with acquiree's financial statements).

The guidance should be applied on a prospective basis.

The adoption of this guidance did not have a material impact on Key’s financial condition or results of operations.

ASU 2022-01, Derivatives and Hedging (Topic 815) January 1, 2023

This guidance allows entities to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets.

It also allows multiple hedged layers to be designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments.

If a breach is anticipated, an entity is required to partially or fully dedesignate a hedged layer or layers until a breach is no longer anticipated.

There are additional requirements and enhanced disclosures related to basis adjustments.

The guidance should be applied on a prospective, retrospective or modified retrospective basis depending on the amendment.

The adoption of this guidance did not have a material impact on Key’s financial condition or results of operations.

ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) January 1, 2023

The amendments eliminate current Troubled Debt Restructuring (TDR) guidance and instead require entities to apply the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or is a continuation of an existing loan.

Entities must disclose current-period gross write-offs on an amortized cost basis by credit quality indicator and class of financing receivable by year of origination.

The guidance should be applied on a prospective basis except for amendments related to recognition and measurement of TDRs, where a modified retrospective transition method is optional.

The adoption of this guidance did not have a material impact on Key's financial condition or results of operations.

Newly required disclosures are included in Note 5 (“Asset Quality”).

Investments—Equity

Method and Joint

Ventures (Topic 323) January 1, 2023

Reporting entities may elect to account for their tax equity investments, not limited to LIHTC structures, using the proportional amortization method as long as certain criteria are met.

Entities must make an accounting policy election to apply the proportional amortization method on a tax credit-program-by-tax-credit-program basis.

investments not accounted for using the proportional amortization method will no longer be allowed to use the delayed equity contribution guidance.

Further, accounting guidance in ASC 323-740 is now only applicable to tax equity investments accounted for using the proportional amortization method.

The guidance should be applied on a modified

retrospective or retrospective basis.

The guidance did not have a material impact on Key’s financial condition or results of operations.

Key adopted this guidance on a modified retrospective basis.

Accounting Guidance Adopted in 2024

Standard Date of Adoption Description Effect on Financial Statements or Other Significant Matters

ASU 2022-03, Fair Value Measurement - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820) January 1, 2024

The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and is not considered in measuring fair value.

ASU 2022-03, Fair Value Measurement - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820) January 1, 2024 The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and is not considered in measuring fair value.

Entities cannot, as a separate unit of account, recognize and measure a contractual sale restriction.

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The guidance did not have a material impact on Key’s financial condition or results of operations.

ASU 2023-07 Segment Reporting (Topic 280) January 1, 2024 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.

This guidance did not have a material impact on Key’s financial condition or results of operations.

Key updated its segment disclosures in Note.

25, Business Segment Reporting, to reflect this new guidance.

Accounting Guidance Adopted in 2025

Standard Date of Adoption Description Effect on Financial Statements or Other Significant Matters

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

Early adoption is permitted.

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

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.

Earnings Per Common Share

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Income (loss) from continuing operations $ ( 163 ) $ 964 $ 1,911

Net income (loss) attributable to noncontrolling interests — — —

Income (loss) from continuing operations attributable to Key 964 1,911 2,612

Dividends on preferred stock 143 143 118

4 unchanged sentences

Weighted-average Common Shares outstanding (000) 949,561 927,217 924,363

Effect of common share options and other stock awards 5,542 8,696 10,349

Weighted-average common shares and potential Common Shares outstanding (000) (a)

Effect of common share options and other stock awards (a)

— 5,542 8,696

Weighted-average common shares and potential Common Shares outstanding (000) (b)

949,561 932,759 933,059

EARNINGS PER COMMON SHARE

1 unchanged sentence

Income (loss) from discontinued operations, net of taxes — — .01

Net income (loss) attributable to Key common shareholders (b)

Net income (loss) attributable to Key common shareholders (c)

( .32 ) .89 1.94

1 unchanged sentence

Income (loss) from discontinued operations, net of taxes — assuming dilution — — .01

Net income (loss) attributable to Key common shareholders — assuming dilution (b)

Net income (loss) attributable to Key common shareholders — assuming dilution (c)

( .32 ) .88 1.93

(a) Assumes conversion of Common Share options and other stock awards and/or convertible preferred stock, as applicable.

(b) EPS may not foot due to rounding.

(a) For periods ended in a loss from continuing operations attributable to Key common shareholders, anti-dilutive instruments have been excluded from the calculation of diluted earnings per share.

(b) Assumes conversion of Common Share options and other stock awards and/or convertible preferred stock, as applicable.

Restrictions on Cash, Dividends, and Lending Activities

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During 2024, KeyBank paid $ 750 million in dividends to KeyCorp.

At December 31, 2023, KeyBank had regulatory capacity to pay $ 2.3 billion in dividends to KeyCorp without prior regulatory approval.

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

At December 31, 2024, KeyCorp held $ 5.2 billion in cash and short-term investments, which can be used to pay dividends to shareholders, service debt, and finance corporate operations.

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Total residential — prime loans 26,244 28,097

Consumer direct loans 5,890 6,508

Other consumer loans 5,167 5,916

Credit cards 958 1,002

Consumer indirect loans 26 43

Total consumer loans 32,369 35,015

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Home equity loans 86 ( 16 ) ( 2 ) 2 70

Consumer direct loans 111 53 ( 50 ) 7 121

Other consumer loans 122 70 ( 64 ) 8 136

Credit cards 78 39 ( 47 ) 6 76

Consumer indirect loans 2 ( 1 ) ( 1 ) 1 1

Total consumer loans 448 19 ( 116 ) 21 372

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Total ALLL — including discontinued operations $ 1,524 $ 341 $ ( 530 ) $ 87 $ 1,422

(a) Excludes a provision related to reserves on lending-related commit ments of $ 74 million.

(a) Excludes a credit related to reserves on lending-related commit ments of $ 6 million.

Twelve Months Ended December 31, 2023 :

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Home equity loans 98 ( 13 ) ( 2 ) 3 86

Consumer direct loans 105 32 ( 34 ) 8 111

Other consumer loans 113 52 ( 51 ) 8 122

Credit cards 66 42 ( 37 ) 7 78

Consumer indirect loans 2 2 ( 4 ) 2 2

Total consumer loans 473 44 ( 91 ) 22 448

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Home equity loans 110 ( 14 ) ( 1 ) 3 98

Consumer direct loans 128 ( 2 ) ( 29 ) 8 105

Other consumer loans 107 34 ( 38 ) 10 113

Credit cards 61 29 ( 30 ) 6 66

Consumer indirect loans 39 ( 13 ) ( 39 ) 15 2

Total consumer loans 373 143 ( 67 ) 24 473

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Total ALLL — including discontinued operations $ 1,089 $ 434 $ ( 251 ) $ 86 $ 1,358

(a) Excludes a credit related to reserves on lending-related commitments of $ 37 million.

(a) Excludes a provision related to reserves on lending-related commitments of $ 65 million.

As described in Note 1 ("Basis of Presentation and Accounting Policies"), we estimate the ALLL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

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Segment Portfolio Key Macroeconomic Variables (a)

Commercial Commercial and industrial BBB corporate bond rate (spread), fixed investment, business bankruptcies, GDP, industrial production, and unemployment rate, Producer Price Index

Commercial Commercial and industrial BBB corporate bond rate (spread), fixed investment, business bankruptcies, GDP, industrial production, unemployment rate, and Producer Price Index

Commercial real estate Property & real estate price indices, unemployment rate, business bankruptcies, GDP, SOFR

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Home equity Home price index, unemployment rate, and 30 year mortgage rate

Consumer direct Unemployment rate and U.S.

Other consumer Unemployment rate and U.S.

household income

Consumer indirect Unemployment rate

Credit cards Unemployment rate and U.S.

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Economic Outlook

As of December 31, 2023, economic uncertainty remained elevated.

Unemployment rates remain at relatively low levels, but job growth is moderating.

Inflation, in the United States, has eased as the restrictive monetary policy and higher interest rates have made an impact.

Commercial real estate values remain under pressure, with office being the most vulnerable asset class.

We utilized the Moody’s November 2023 Consensus forecast as our baseline forecast to estimate our expected credit losses as of December 31, 2023.

As of December 31, 2024, economic uncertainty remains elevated due to geopolitical tensions and the interest rate environment, as well as the U.S.

presidential administration change.

The unemployment rate remained at a relatively low level, although job growth remains stable.

Inflation has continued to come down and commercial real estate pressures have eased.

We utilized the Moody’s November 2024 Consensus forecast as the baseline forecast to estimate our expected credit losses as of December 31, 2024.

We determined such forecast to be a reasonable view of the outlook for the economy given all available information at year end.

The baseline scenario reflects continued economic resiliency, but weaknesses remain and the economy is forecasted to slow down in 2024.

GDP is expected to grow at an annual rate of approximately 1.1% and 1.6% for 2024 and 2025, respectively, down from 2.4% in 2023.

The expected national unemployment rate was 3.8% in the fourth quarter of 2023 and forecasted to peak at 4.5% in late 2024.

The forecast assumes the Fed Funds rate begins easing mid-2024.

Consumer Price Index annualized rate is forecasted at 2.7% for 2024.

The national home price index is expected to remain generally stable over 2024, while the commercial real estate price index is forecasted to drop approximately 7%.

To the extent we identified credit risk considerations that were not captured by the third-party economic forecast, we addressed the risk through management’s qualitative adjustments to the ALLL.

The baseline scenario reflects continued economic resiliency, but slowing growth into 2025.

GDP is expected to grow at an annual rate of approximately 2.0% for both 2025 and 2026, compared to 2.7% in 2024.

The expected National Unemployment Rate was 4.2% in the fourth quarter of 2024, with the forecast remaining at 4.4% through late-2025.

Consumer Price Index is forecasted at 2.2% for 2025.

The outlook for the National Home Price Index reflects 2% growth in 2025, while the Commercial Real Estate Price Index is forecasted to remain stable.

We did not identify material limitations in the third-party economic forecast that required management qualitative adjustments to the ALLL.

As a result of the current economic uncertainty, our future loss estimates may vary considerably from our December 31, 2024 assumptions.

Commercial Loan Portfolio

The commercial ALLL increased by $ 196 million, or 22.7 %, from December 31, 2022, through December 31, 2023.

The overall increase is driven by changes in portfolio activity and the economic outlook.

The reserve levels are reflective of the inflationary and elevated interest rate environment as of December 31, 2023.

The reserve increase from the prior year is concentrated in the commercial real estate portfolio, and reflects changes in portfolio factors and deterioration in the economic conditions for this segment.

Offsetting these drivers was a decrease in the reserve for the commercial & industrial portfolio, largely due to planned balance sheet optimization efforts in the current year, partly offset by portfolio migration.

The commercial ALLL decreased by $ 23 million, or 2.2 %, from December 31, 2023, through December 31, 2024.

The overall decrease is driven by changes in portfolio activity and the economic outlook.

The change in the reserve levels is reflective of the strategic and ongoing balance sheet optimization efforts, in addition to improving credit quality and economic conditions for the commercial real estate portfolio.

Reserve decreases due to these drivers are partly offset by a reserve build due to credit quality migration in the commercial and industrial portfolio and changes in management qualitative adjustments for commercial real estate price volatility.

Consumer Loan Portfolio

The consumer ALLL decreased $ 76 million, or 17.0 %, from December 31, 2023, through December 31, 2024.

The overall decrease in the allowance is primarily driven by changes in the economic outlook.

The most meaningful change to the economic forecast year-over-year is the improvement in the home price index outlook, which contributes to reserve decreases for both the residential mortgage and home equity portfolios.

The overall decrease in the allowance is primarily driven by changes in portfolio activity.

The reserve decrease is concentrated in the real estate portfolio and is largely attributable to the ongoing loan reductions.

The most meaningful change to the economic forecast year-over-year is the improvement in the home price index outlook, which contributed to reserve decreases for both the residential mortgage and home equity portfolios.

Credit Risk Profile

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The scores are obtained from a nationally recognized consumer rating agency and are presented in the tables below at the dates indicated.

Most extensions of credit are subject to loan scoring.

Most extensions of credit are subject to loan grading or scoring.

Loan grades are assigned at the time of origination, verified by credit risk management, and periodically re-evaluated thereafter.

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the second rating reflects expected recovery rates on the credit facility.

Default probability is determined based on, among other factors, the financial strength of

the borrower, an assessment of the borrower’s management, the borrower’s competitive position within its industry sector, and our view of industry risk in the context of the general economic outlook.

Default probability is determined based on, among other factors, the financial strength of the borrower, an assessment of the borrower’s management, the borrower’s competitive position within its industry sector, and our view of industry risk in the context of the general economic outlook.

Types of exposure, transaction structure, and collateral, including credit risk mitigants, affect the expected recovery assessment.

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Current period gross write-offs — — — — — 1 1 — 2

Consumer direct loans

Other consumer loans

750 and above 107 143 1,149 1,210 527 245 88 — 3,469

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Current period gross write-offs — — — — — — 47 — 47

Consumer indirect loans

750 and above — — ( 2 ) — — 14 — — 12

660 to 749 — — — — — 10 — — 10

Less than 660 — — — — — 4 — — 4

No Score — — — — — — — — —

Total consumer indirect loans — — ( 2 ) — — 28 — — 26

Current period gross write-offs — — — — — 1 — — 1

Total consumer loans $ 628 $ 1,140 $ 8,104 $ 10,471 $ 3,934 $ 3,328 $ 4,408 $ 356 $ 32,369

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The following aging analysis of past due and current loans as of December 31, 2024, and December 31, 2023, provides further information regarding Key’s credit exposure.

Aging Analysis of Loan Portfolio (a)

December 31, 2023 Current 30-59

Aging Analysis of Loan Portfolio

December 31, 2024 Current (b)(c)

Non-performing

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Dollars in millions

LOAN TYPE (a)

Commercial and industrial $ 52,473 $ 48 $ 21 $ 45 $ 322 $ 436 $ 52,909

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Home equity loans 6,232 26 8 3 89 126 6,358

Consumer direct loans 5,853 15 10 9 3 37 5,890

Other consumer loans 5,129 15 9 9 5 38 5,167

Credit cards 928 6 5 12 7 30 958

Consumer indirect loans 24 1 — — 1 2 26

Total consumer loans $ 32,055 $ 67 $ 30 $ 24 $ 193 $ 314 $ 32,369

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(b) Accrued interest of $ 456 million pre sented in “Accrued income and other assets” on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

December 31, 2022 Current 30-59

(c) Includes balances of $ 75 million in Commercial mortgage and $ 7 million in Real estate - residential mortgage associated with loans sold to GNMA where Key has the right but not the obligation to repurchase.

(d) Net of unearned income, net of deferred fees and costs, and unamortized discounts and premiums.

December 31, 2023 Current (b)(c)

Non-performing

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Dollars in millions

LOAN TYPE (a)

Commercial and industrial $ 55,354 $ 62 $ 30 $ 72 $ 297 $ 461 $ 55,815

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Home equity loans 7,001 27 10 4 97 138 7,139

Consumer direct loans 6,478 15 7 5 3 30 6,508

Other consumer loans 5,877 16 10 9 4 39 5,916

Credit cards 974 6 5 12 5 28 1,002

Consumer indirect loans 42 — — — 1 1 43

Total consumer loans $ 34,715 $ 66 $ 32 $ 25 $ 177 $ 300 $ 35,015

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(b) Accrued intere st of $ 522 million prese nted in “Accrued income and other assets” on the Consolidated Balance Sheets is excluded from the amortized cost basis disclosed in this table.

(c) Includes balances of $ 94 million in Commercial mortgage and $ 3 million in Real estate - residential mortgage associated with loans sold to GNMA where Key has the right but not the obligation to repurchase.

(d) Net of unearned income, net of deferred fees and costs, and unamortized discounts and premiums.

At December 31, 2024, the carrying amount of our commercial nonperforming loans outstanding represented 72 % of their original contractual amount owed, total nonperforming loans outstanding represented 77 % of their original contractual amount owed, and nonperforming assets in total were carried at 79 % of their original contractual amount owed.

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Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023 Key adopted the provision of ASU 2022-02, which eliminated the accounting for TDRs while expanding loan modification and vintage disclosure requirements.

As part of our loss mitigation activities, we may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty.

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Consumer borrowers identified as experiencing financial difficulty are generally unable to refinance their loans through our normal origination channel or through other independent sources.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty since the adoption of ASU 2022-02 on January 1, 2023, disaggregated by class of loan and type of concession granted.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty within the past 12 months or since the adoption of ASU 2022-02 for the reporting period in 2023.

The table does not include those modifications that only resulted in an insignificant payment delay.

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As of December 31, 2024, there were 120 loans totaling $ 20 million in a trial modification period.

Commitments outstanding to lend additional funds to borrowers experiencing financial difficulty whose loans were modified were $ 61 million at December 31, 2023.

As of December 31, 2023 Interest Rate Reduction Term Extension Other Combination (b)

As of December 31, 2023, there were 121 loans totaling $ 15 million in a trial modification period.

Commitments outstanding to lend additional funds to borrowers experiencing financial difficulty whose loans were modified were $ 15 million and $ 61 million at December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024 Interest Rate Reduction Term Extension Other Combination (a)

Dollars in millions Amortized Cost Basis Amortized Cost Basis Amortized Cost Basis Amortized Cost Basis Amortized Cost Basis % of Total Loan Type

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Home equity loans 3 1 2 7 13 0.20

Consumer direct loans — 1 — 2 3 0.05

Other consumer loans — 2 — 3 5 0.10

Credit cards — — — 3 3 0.31

Consumer indirect loans (a)

Total consumer loans $ 4 $ 4 $ 2 $ 25 $ 35 0.11 %

Total loans $ 32 $ 387 $ 49 $ 66 $ 534 0.51 %

(a) The amortized cost amount as of December 31, 2023, for Consumer indirect loans modified for borrowers experiencing financial difficulty totaled less than $1 million.

(b) Combination modifications consist primarily of loans modified with both an interest rate reduction and a term extension.

(a) Combination modifications consist primarily of loans modified with both an interest rate reduction and a term extension.

As of December 31, 2023 Interest Rate Reduction Term Extension Other Combination (a)

Dollars in millions Amortized Cost Basis Amortized Cost Basis Amortized Cost Basis Amortized Cost Basis Amortized Cost Basis % of Total Loan Type

Commercial and Industrial $ — $ 180 $ 49 $ 34 $ 263 0.47 %

Commercial real estate:

Commercial mortgage — 4 2 — 6 0.04

Construction — — — — — —

Total commercial real estate loans — 4 2 — 6 0.03

Commercial lease financing — — — — — —

Total commercial loans $ — $ 184 $ 51 $ 34 $ 269 0.35 %

Real estate — residential mortgage $ — $ — $ 1 $ 9 $ 10 0.05 %

Home equity loans 2 1 1 5 9 0.13

Other consumer loans — 1 — 2 3 0.05

Credit cards — — — 4 4 0.40

Total consumer loans $ 2 $ 2 $ 2 $ 20 $ 26 0.07 %

Total loans $ 2 $ 186 $ 53 $ 54 $ 295 0.26 %

(a) Combination modifications consist primarily of loans modified with both an interest rate reduction and a term extension.

Financial Effects of Modifications to Borrowers Experiencing Financial Difficulty

The following table summarizes the financial impacts of loan modifications made to specific loans during the three and twelve months ended December 31, 2023.

Three months ended December 31, 2023 Weighted-average Interest Rate Change Weighted-average Term Extension (in years)

The following table summarizes the financial impacts of loan modifications made to specific loans during the twelve months ended December 31, 2024.

Twelve months ended December 31, 2024 Weighted-average Interest Rate Change Weighted-average Term Extension (in years)

Commercial and Industrial ( 4.12 ) % 1.75

Commercial mortgage ( 1.49 ) % 0.66

Construction — % 2.87

Real estate — residential mortgage ( 1.81 ) % 6.15

Home equity loans ( 4.03 ) % 6.53

Consumer direct loans ( 1.17 ) % 0.38

Other consumer loans ( 4.06 ) % 0.77

Credit cards ( 16.26 ) % 1.00

Consumer indirect loans — % 0.42

Twelve months ended December 31, 2023 Weighted-average Interest Rate Change Weighted-average Term Extension (in years)

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Home equity loans ( 4.02 ) % 6.87

Consumer direct loans ( 3.62 ) % 1.01

Other consumer loans ( 3.62 ) % 1.01

Credit cards ( 14.90 ) % 1.00

Consumer indirect loans ( 3.05 ) % 0.51

Amortized Cost Basis of Modified Loans That Subsequently Defaulted

There were $ 1 million of Commercial mortgage loans that were modified for borrowers experiencing financial difficulty that received modifications and subsequently defaulted during the three-month period ended December 31, 2023.

There were $ 11 million of loans that were modified for borrowers experiencing financial difficulty that received modifications and subsequently defaulted during the twelve-month period ended December 31, 2023.

Key closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the performance of loans that have been modified for borrowers experiencing financial difficulty in the past 12 months.

As of December 31, 2023 Current 30-89

Dollars in millions

Twelve months ended December 31, 2024

Dollars in millions Interest Rate Reduction Term Extension Other Combination Total

Commercial and Industrial $ — $ 22 $ — $ 1 $ 23

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Home equity loans — — — 2 2

Consumer direct loans 3 — — 3

Other consumer loans — — — — —

Credit cards — — — — —

Consumer indirect loans — — — —

Total consumer loans $ — $ — $ — $ 3 $ 3

Total loans $ 11 $ 22 $ — $ 4 $ 37

Liability for Credit Losses on Off Balance Sheet Exposures

The liability for credit losses on off balance sheet exposure is included in “accrued expense and other liabilities” on the balance sheet.

This includes credit risk for recourse associated with loans sold under the Fannie Mae Delegated Underwriting and Servicing program and credit losses inherent in unfunded lending-related commitments, such as letters of credit and unfunded loan commitments, and certain financial guarantees.

Changes in the liability for credit losses for off balance sheet exposures are summarized as follows:

Twelve months ended December 31, 2023

Dollars in millions 2023 2022

Balance at beginning of period $ 225 $ 160

Provision (credit) for losses on off balance sheet exposures 74 65

Other ( 3 ) —

Balance at end of period $ 296 $ 225

TDR Disclosures Prior to the Adoption of ASU 2022-02

Prior to our adoption of ASU 2022-02, we accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR.

See Note 1 (“Summary of Significant Accounting Policies”) in this report for more information on TDR accounting and disclosure requirements.

Commitments outstanding to lend additional funds to borrowers whose loan terms have been modified in TDRs were $ 10 million at December 31, 2022.

The consumer TDR other concession category in the table below primarily includes those borrowers’ debts that are discharged through Chapter 7 bankruptcy and have not been formally re-affirmed.

The following table shows the post-modification outstanding recorded investment by concession type for our commercial and consumer accruing and nonaccruing TDRs that occurred during the periods indicated:

Dollars in millions 2022

Commercial loans:

Extension of Maturity Date $ 36

Consumer loans:

Interest rate reduction $ 13

Total TDRs $ 69

The following table summarizes the change in the post-modification outstanding recorded investment of our accruing and nonaccruing TDRs during the periods indicated:

Dollars in millions 2022

Balance at beginning of the period $ 220

Payments ( 45 )

Charge-offs ( 18 )

Balance at end of period $ 236

A further breakdown of TDRs included in nonperforming loans by loan category for the periods indicated are as follows:

December 31, 2022

of Loans Pre-modification

Investment Post-modification

Dollars in millions Interest Rate Reduction Term Extension Other Combination Total

Commercial and Industrial $ — $ 7 $ — $ 3 $ 10

Commercial real estate

Commercial mortgage — — 1 — 1

Construction — — — — —

Total commercial real estate loans — 7 1 3 11

Commercial lease financing — — — — —

Total commercial loans $ — $ 7 $ 1 $ 3 $ 11

Real estate — residential mortgage $ — $ — $ — $ — $ —

Home equity loans — — — — —

Other consumer loans — — — — —

Credit cards — — — — —

Total consumer loans $ — $ — $ — $ — $ —

Total loans $ — $ 7 $ 1 $ 3 $ 11

Key closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the performance of loans that have been modified for borrowers experiencing financial difficulty in the past 12 months as of each respective period.

As of December 31, 2024 Current 30-89

Dollars in millions

Nonperforming:

Commercial and Industrial $ 154 $ 3 $ 6 $ 163

Commercial real estate

Real estate — commercial mortgage 4 50 13

Commercial mortgage 260 19 28 307

Construction 29 — — 29

Total commercial real estate loans 289 19 28 336

Commercial lease financing — — — —

Total commercial loans $ 443 $ 22 $ 34 $ 499

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Home equity loans 11 1 1 13

Consumer direct loans 156 2 2

Other consumer loans 5 — — 5

Credit cards 3 — — 3

Consumer indirect loans 16 2 1

Total consumer loans $ 31 $ 2 $ 2 $ 35

Total nonperforming TDRs 1,240 178 118

Prior-year accruing:

Total loans $ 474 $ 24 $ 36 $ 534

As of December 31, 2023 Current 30-89

Dollars in millions

Commercial and Industrial $ 238 $ 25 $ — $ 263

Commercial real estate

Real estate — commercial mortgage — — —

Commercial mortgage 6 — — 6

Construction — — — —

Total commercial real estate loans 244 25 — 269

Commercial lease financing — — — —

Total commercial loans $ 244 $ 25 $ — $ 269

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Home equity loans 8 — 1 9

Consumer direct loans 272 4 3

Other consumer loans 3 — — 3

Credit cards 3 1 — 4

Consumer indirect loans 95 11 5

Total consumer loans $ 23 $ 2 $ 1 $ 26

Total prior-year accruing TDRs 2,965 156 118

Total TDRs 4,205 $ 334 $ 236

(a) All TDRs that were restructured prior to January 1, 2022, are fully accruing.

Commercial loan TDRs are considered defaulted when principal and interest payments are 90 days past due.

Consumer loan TDRs are considered defaulted when principal and interest payments are more than 60 days past due.

During 2022, there were 12 comme rcial loan TDRs and 191 consumer loan TDRs with a combined recorded investment of $ 12 million that experienced payment defaults after modifications resulting in TDR status during 2021.

Total loans $ 267 $ 27 $ 1 $ 295

Liability for Credit Losses on Off Balance Sheet Exposures

The liability for credit losses on off balance sheet exposure is included in “accrued expense and other liabilities” on the balance sheet.

Changes in the liability for credit losses for off balance sheet exposures are summarized as follows:

Twelve months ended December 31,

Dollars in millions 2024 2023

Balance at beginning of period $ 296 $ 225

Provision (credit) for losses on off balance sheet exposures ( 6 ) 74

Other — ( 3 )

Balance at end of period $ 290 $ 296

Fair Value Measurements

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Principal investments:

Direct $ — $ — $ — $ — $ — $ — $ 1 $ 1

Indirect (measured at NAV) (a)

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• Observable market prices of similar securities.

Fair value of level 3 securities is determined by:

• Internally developed valuation techniques, principally discounted cash flow methods (income approach).

• Revenue multiples of comparable public companies (market approach).

For level 3 securities, increases (decreases) in the discount rate and marketability discount used in the discounted cash flow models would have resulted in lower (higher) fair value measurements.

Higher volatility factors would have further magnified changes in fair value.

The valuations provided by the third-party pricing service are based on observable market inputs, which include benchmark yields, reported trades, issuer spreads, benchmark securities, bids, offers, and reference data obtained from market research publications.

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Valuations reflect prices within the bid-ask spread that are most representative of fair value.

Principal investments (direct) Direct principal investments consist of equity and debt instruments of private companies made by our principal investing entities.

Fair value is determined using:

• Operating performance and market multiples of comparable businesses

• Other unique facts and circumstances related to each individual investment

Direct principal investments are accounted for as investment companies in accordance with the applicable accounting guidance, whereby each investment is adjusted to fair value with any net realized or unrealized gain/loss recorded in the current period’s earnings.

As of December 31, 2023, we have wound down substantially all of our direct principal investment portfolio.

Asset/liability class Valuation technique Valuation hierarchy classification(s)

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Key completed conforming and/or divesting certain indirect investments subject to the Volcker Rule as of June 30, 2023.

The following table presents the fair value of our direct and indirect principal investments and related unfunded commitments at December 31, 2023, as well as financial support provided for the years ended December 31, 2023, and December 31, 2022.

The following table presents the fair value of our indirect principal investments and related unfunded commitments at December 31, 2024, as well as financial support provided for the years ended December 31, 2024, and December 31, 2023.

Financial support provided

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INVESTMENT TYPE

Direct investments $ — $ — $ — $ — $ — $ —

Indirect investments (a)

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The majority of our derivative positions are Level 2 and are valued using internally developed models based on market convention and observable market inputs.

These derivative contracts include interest rate swaps, certain options, floors, cross currency swaps, credit default swaps, and forward mortgage loan sale commitments.

These derivative contracts include interest rate swaps, commodity swaps, certain options, floors, cross currency swaps, credit default swaps, and forward mortgage loan sale commitments.

Significant inputs used in the valuation models include:

• LIBOR, SOFR and Overnight Index Swap (OIS) curves, index pricing curves, foreign currency curves

• SOFR and Overnight Index Swap (OIS) curves, index pricing curves, foreign currency curves

• Volatility surfaces (a three-dimensional graph of implied volatility against strike price and maturity)

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Year ended December 31, 2024

Securities available for sale

Other securities $ — $ — $ —

$ — $ — $ — $ — $ — $ — $ — $ —

Other investments

Principal investments

Direct 1 — ( 1 ) — — — — — — — —

Equity investments

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$ — $ — $ — $ — $ — $ — $ 2 $ —

Loans held for sale (residential) — — — — — — — — — — —

Loans held for investment (residential) 9 — 1 — — — ( 2 ) — 2 10 —

Derivative instruments (b)

Derivative instruments (a)

Interest rate ( 2 ) — ( 8 ) (d)

4 — — — 2 (e)

Credit ( 2 ) — — (d)

— 2 — — — — — —

Credit — — — — — — — — — — —

2 — — — — — ( 2 ) — — — —

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Year ended December 31, 2023

Securities available for sale

Other securities $ — $ — $ —

$ — $ — $ — $ — $ — $ — $ — $ —

Other investments

Principal investments

Direct 1 — — — — — — — — 1 —

Equity investments

Direct $ 1 $ — $ ( 1 ) (c)

$ — $ — $ — $ — $ — $ — $ — $ —

Loans held for sale (residential) — — — — — — — — — — —

Equity investments

Direct 2 — — — — — 2 —

Loans held for investment (residential) 9 — — — — — — — — 9 —

Derivative instruments (b)

Derivative instruments (a)

Interest rate 2 ( 23 ) (d)

19 1 — ( 6 ) (e)

Credit ( 6 ) — 4 (d)

— — $ — — — ( 2 ) —

Credit ( 2 ) — — — 2 — — — — — —

— — — — — — 2 — — 2 —

(a) Amounts represent Level 3 interest rate lock commitments.

(b) Amounts represent Level 3 derivative assets less Level 3 derivative liabilities.

(a) Amounts represent Level 3 derivative assets less Level 3 derivative liabilities.

(b) Amounts represent Level 3 interest rate lock commitments.

(c) Realized and unrealized gains and losses on principal investments are reported in “other income” on the income statement.

Realized and unrealized losses on equity investments are reported in “other income” on the income statement.

(d) Realized and unrealized gains and losses on derivative instruments are reported in “corporate services income” and “other income” on the income statement.

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Collateral-dependent loans $ — $ — $ 152 $ 152 $ — $ — $ 104 $ 104

Other intangible assets — — — — — — — —

Accrued income and other assets — — 14 14 — — 29 29

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Asset/liability class Valuation technique Valuation hierarchy classification(s)

Collateral-dependent loans When a loan is collateral-dependent, the fair value of the loan is determined based on the fair value of the underlying collateral.

Commercial loans and student loans held for sale Through a quarterly analysis of our loan portfolios held for sale, which include both performing and nonperforming commercial loans and student loans, we determine any adjustments necessary to record the portfolios at the lower of cost or fair value in accordance with GAAP.

Valuation inputs include:

• Non-binding bids for the respective loans or similar loans

• Recent sales transactions

• Internal models that emulate recent securitizations

Level 2 and 3

Direct financing leases and operating lease assets held for sale Valuations of direct financing leases and operating lease assets held for sale are performed using an internal model that relies on market data, including:

• Swap rates and bond ratings

• Our own assumptions about the exit market for the leases

• Details about the individual leases in the portfolio

Leases for which we receive a current nonbinding bid, and for which the sale is considered probable, may be classified as Level 2.

Valuations of lease and operating lease assets held for sale that employ our own assumptions are classified as Level 3 assets.

The inputs based on our own assumptions include changes in the value of leased items and internal credit ratings.

Level 2 and 3

Collateral-dependent loans When a loan is collateral-dependent, the fair value of the loan is determined based on the fair value of the underlying collateral less estimated selling costs.

OREO, other repossessed personal properties, and right-of-use assets (a)

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Level 2 and 3

LIHTC, HTC, and NMTC investments (a)

Valuation of LIHTC, HTC and NMTC involves measuring the present value of future tax benefits and comparing that value against the current carrying value of the investment.

Expected future tax benefits are discounted to their present value using discounted cash flow modeling that incorporates an appropriate risk premium.

LIHTC and HTC investments are impaired when it is more likely than not that the carrying amount of the investment will not be realized.

Other equity investments We have other investments in equity securities that do not have readily determinable fair values and do not qualify for the practical expedient to measure the investment using a net asset value per share.

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At December 31, 2024, and December 31, 2023, the carrying amount of equity investments recorded under this method was $ 394 million and $ 339 million, respectively.

No impairment or other adjustments were recorded for the year ended December 31, 2023.

We recorded $ 5 million of impairment for the year ended December 31, 2024.

We recorded no impairment for the year ended December 31, 2023.

Mortgage Servicing Rights (a)

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Unobservable Input Range

(Weighted-Average) (b), (c)

(Weighted-Average) (a), (b)

Dollars in millions

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0 - 1 ( .48 )

Insignificant level 3 assets, net of liabilities(d) 4 1

Collateral dependent loans 104 17 Fair value of underlying collateral Credit and liquidity discount 0 - 10.00 % ( 5.00 %)

Insignificant level 3 assets, net of liabilities (c)

Collateral dependent loans 152 104 Fair value of underlying collateral Liquidity discount 0 - 100.00 % ( 33.00 %)

0 - 10.00 % ( 5.00 %)

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OREO and other assets 14 21 Appraised value Appraised value N/M N/M

(a) Principal investments, direct is excluded from this table as the balance at December 31, 2023, is insignificant (less than $1 million).

(b) The weighted average of significant unobservable inputs is calculated using a weighting relative to fair value.

(c) For significant unobservable inputs with no range, a single figure is reported to denote the single quantitative factor used.

(d) Represents the aggregate amount of level 3 assets and liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant.

(a) The weighted average of significant unobservable inputs is calculated using a weighting relative to fair value.

(b) For significant unobservable inputs with no range, a single figure is reported to denote the single quantitative factor used.

(c) Represents the aggregate amount of level 3 assets and liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant.

The amount includes certain equity investments and certain financial derivative assets and liabilities.

(e) Excludes $ 8 million pertaining to mortgage servicing assets measured at fair value as of December 31, 2023.

No mortgage servicing assets required fair value adjustments as of December 31, 2022.

(d) Excludes $ 8 million pertaining to mortgage servicing assets measured as of December 31, 2023.

Refer to Note 9 (“Mortgage Servicing Assets”) for significant unobservable inputs pertaining to these assets.

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Agency commercial mortgage-backed securities 4,927 — 517 4,410 10,295 — 1,203 9,092

Other securities — — — — — — — —

Total securities available for sale $ 41,302 $ 31 $ 3,626 $ 37,707 $ 42,695 $ 10 $ 5,520 $ 37,185

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Agency commercial mortgage-backed securities 2,333 — 203 2,130 2,473 1 204 2,270

Asset-backed securities (b)

Asset-backed securities (c)

308 — 8 300 738 — 29 709

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At December 31, 2023, accrued interest receivable on available for sale securities and held-to-maturity securities totaled $ 64 million and $ 25 million, respectively.

(b) Includes $ 731 million of securities as of December 31, 2023, and $ 1.4 billion of securities as of December 31, 2022, related to the purchase of senior notes from a securitization collateralized by sold indirect auto loans.

(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.

(c) Includes $ 303 million of securities as of December 31, 2024, and $ 731 million of securities as of December 31, 2023, related to the purchase of senior notes from a securitization collateralized by sold indirect auto loans.

The following table summarizes securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of December 31, 2024, and December 31, 2023:

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Asset-backed securities — — 300 8 300 8

Other securities 17 — (a)

Other securities 7 — 8 1 15 1

Total securities in an unrealized loss position $ 15,728 $ 281 $ 22,010 $ 3,906 $ 37,738 $ 4,187

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Asset-backed securities — — 709 29 709 29

Other securities 10 — (b)

Other securities 17 — 12 — 29 —

Total securities in an unrealized loss position $ 2,055 $ 79 $ 41,416 $ 5,970 $ 43,471 $ 6,049

(a) At December 31, 2023, gross unrealized losses totaled less than $1 million for other securities held to maturity with a loss duration of less than 12 months.

(b) At December 31, 2022, gross unrealized losses totaled less than $1 million for other securities held to maturity with a loss duration of less than 12 months

Based on our evaluation at December 31, 2024, an allowance for credit losses has not been recorded nor have unrealized losses been recognized into income.

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The issuers continue to make timely principal and interest payments.

During the year ended December 31, 2023, we recognized $ 4 million in gross realized gains and $ 8 million in gross realized losses from the sale of securities available for sale.

For the years ended December 31, 2022 and December 31, 2021, we had no realized gains or losses from the sale of securities available for sale.

The following table presents gross realized gains and losses associated with our securities available for sale portfolio for the noted periods.

Realized losses for the year ended December 31, 2024, relate primarily to the strategic repositioning completed in the third and fourth quarters of 2024.

Year ended December 31,

Dollars in millions

2024 2023 2022

Securities available for sale

Realized gains $ — $ 4 $ —

Realized (losses) ( 1,863 ) ( 8 ) —

At December 31, 2024, securities available-for-sale and held-to-maturity securities totaling $ 19.1 billion were pledged to secure securities sold under repurchase agreements, to secure public and trust deposits, to facilitate access to secured funding, and for other purposes required or permitted by law.

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• foreign exchange risk is the risk that an exchange rate will adversely affect the fair value of a financial instrument.

At December 31, 2023, after taking into account the effects of bilateral collateral and master netting agreements, we had $ 13 million of derivative assets and less than $ 1 million of derivative liabilities that relate to contracts designated as hedging instruments.

At December 31, 2024, after taking into account the effects of bilateral collateral and master netting agreements, we had $( 6 ) million of derivative assets in a negative fair value position and less than $ 1 million of derivative liabilities that relate to contracts designated as hedging instruments.

As a result of bilateral collateral and master netting arrangements, which are applied at the counterparty level, we could have derivative contracts with negative fair values included in derivative assets and contracts with positive fair values in derivative liabilities related to counterparties with which we have both hedging and trading derivatives.

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These swaps convert certain floating-rate debt into fixed-rate debt.

We also use these swaps to manage the interest rate risk associated with anticipated sales of certain commercial real estate loans and certain student loans originated through our Laurel Road digital lending business.

The swaps protect against the possible short-term decline in the value of the loans that could result from changes in interest rates between the time they are originated and the time they are sold.

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As of December 31, 2024, excess collateral that has not been offset against net derivative instrument positions totaled $ 168 million of cash collateral and $ 215 million of securities collateral posted as well as $ 13 million of cash collateral and $ 32 million of securities collateral held.

As of December 31, 2023, excess collateral that has not been offset against net derivative instrument positions totaled $ 161 million of cash collateral and $ 269 million of securities collateral posted as well as $ 16 million of cash collateral and $ 212 million of securities collateral held.

(d) Other collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.

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Dollars in millions Balance sheet line item in which the hedge item is included Carrying amount of hedged item (a)

Hedge accounting basis adjustment

Interest rate contracts Long-term debt (b)

$ 9,919 $ ( 437 )

Interest rate contracts Securities available for sale (c)

8,655 ( 152 )

Hedge accounting basis adjustment - active hedges Hedge accounting basis adjustment - discontinued hedges

Interest rate contracts Long-term debt $ 10,249 $ ( 490 ) $ ( 4 )

Interest rate contracts Securities available for sale (b)

December 31, 2023

Dollars in millions Balance sheet line item in which the hedge item is included Carrying amount of hedged item (a)

Hedge accounting basis adjustment

Interest rate contracts Long-term debt (b)

Hedge accounting basis adjustment - active hedges Hedge accounting basis adjustment - discontinued hedges

Interest rate contracts Long-term debt $ 9,919 $ ( 432 ) $ ( 5 )

Interest rate contracts Securities available for sale (b)

8,655 ( 152 ) —

Interest rate contracts Securities available for sale (c)

(a) The carrying amount represents the portion of the asset or liability designated as the hedged item.

(b) Basis adjustments related to de-designated hedges that no longer qualify as fair value hedges reduced the hedge accounting basis adjustment by $ 5 million and $ 6 million at December 31, 2023 and December 31, 2022, respectively.

The carrying amount represents the amortized costs basis of the prepayable financial assets used to designate hedging relationships in which the hedged item is the l ast layer expected to be remaining at the end of the relationship.

At December 31, 2023 and December 31, 2022, the

amortized cost of the closed portfolios used in these hedging relationships was $ 13 billion and $ 708 million, respectively, of which $ 7 billion and $ 405 million were designated in a portfolio layer hedging relationship.

At December 31, 2023 and December 31, 2022, the cumulative basis adjustments associated with these amounts totaled $( 147 ) million and $ 48 million.

(b) Certain amounts are designed as fair value hedges under the portfolio layer method.

The carrying amount represents the amortized costs basis of the prepayable financial assets used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the relationship.

At December 31, 2024 and December 31, 2023, the amortized cost of the closed portfolios used in these hedging relationships was $ 5 billion and $ 13 billion, respectively, of which $ 4 billion and $ 7 billion were designated in a portfolio layer hedging relationship.

At December 31, 2024 and December 31, 2023, the cumulative basis adjustments associated with these amounts totaled $ 41 million and $( 147 ) million, which is comprised of $ 24 million and $( 147 ) million in active hedging relationships and $ 17 million and no adjustments for discontinued hedging relationships.

Cash flow hedges.

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These reclassified amounts could differ from actual amounts recognized due to changes in interest rates hedge de-designations and the addition of other hedges subsequent to December 31, 2024 .

As of December 31, 2023, the maximum length of time over which we hedge forecasted transactions is 4.02 years.

As of December 31, 2024, the maximum length of time over which we hedge forecasted transactio ns is 3.67 year s.

The following tables summarize the effect of fair value and cash flow hedge accounting on the income statement for the years ended December 31, 2024, December 31, 2023, and December 31, 2022.

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We had net exposure of $ 42 million after the application of master netting agreements and cash collateral, where such qualifying agreements exist.

We had net exposure of $ 47 million after considering $ 18 million of additional collateral held in the form of securities.

We held no additional collateral in the form of securities against this net exposure.

We enter into transactions using master netting agreements with clients to accommodate their business needs.

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For transactions that are not clearable, we mitigate our market risk by buying and selling U.S.

Treasuries and Eurodollar futures or entering into offsetting positions.

Treasuries and SOFR futures or entering into offsetting positions.

Due to the cross-collateralization to the underlying loan, we typically do not exchange cash or marketable securities collateral in connection with these transactions.

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We purchase credit derivatives to manage the credit risk associated with specific commercial lending and swap obligations as well as exposures to debt securities.

Our credit derivative portfolio was in a net liability position of $ 1 million as of December 31, 2023, and $ 2 million as of December 31, 2022.

Our credit derivative portfolio was in a nominal net liability position as of December 31, 2024, and $ 1 million as of December 31, 2023.

Our credit derivative portfolio may consist of the following:

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If the customer swap has a negative fair value, the counterparty has no reimbursement requirements.

If the customer defaults on the swap contract and the seller fulfills its payment

obligations under the risk participation agreement, the seller is entitled to a pro rata share of the lead participant’s claims against the customer under the terms of the swap agreement.

If the customer defaults on the swap contract and the seller fulfills its payment obligations under the risk participation agreement, the seller is entitled to a pro rata share of the lead participant’s claims against the customer under the terms of the swap agreement.

The following table provides information on the types of credit derivatives sold by us and held on the balance sheet at December 31, 2024, and December 31, 2023.

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As of December 31, 2024, and December 31, 2023, th e fair value of additional collateral that could be required to be posted as a result of the credit risk related contingent features being triggered was immaterial to Key’s consolidated financial statements.

There were no derivative contracts with credit risk contingent features held by KeyCorp at December 31, 2023.

At December 31, 2024 and December 31, 2023, only KeyBank held derivative contacts with credit risk contingent features.

Mortgage Servicing Assets

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Actual rates may differ from those estimated due to changes in a variety of economic factors.

An increase in the prepayment speed would cause a decrease in the fair value of our residential mortgage servicing assets.

increase in the prepayment speed would cause a decrease in the fair value of our residential mortgage servicing assets.

An increase in the assigned discount rates and servicing cost assumptions would cause a decrease in the fair value of our residential mortgage servicing assets.

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As of December 31, 2024, the Commercial Bank and Institutional Bank reporting units were allocated goodwill of $ 218 million and $ 715 million, respectively.

As of December 31, 2023, the Commercial Bank and Institutional Bank reporting units were allocated goodwill of $ 800 million and $ 133 million, respectively.

The reallocation of goodwill between the Commercial Bank and Institutional Bank reporting units was a result of the realignment of Key’s business described below.

Additional information pertaining to our accounting policy for goodwill and other intangible assets is summarized in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Goodwill and Other Intangible Assets.”

For our annual test, we conducted a quantitative test as of October 1, 2023.

During the first quarter, Key realigned its real estate capital business from its Commercial Bank reporting unit to its 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.

This reorganization 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 results of the interim impairment test reflecting the realignment indicated the fair value of each of the three reporting units, Consumer Bank, Commercial Bank, and Institutional Bank, exceeded their respective carrying values by more than 10%.

We utilized a combination of market and income approaches to calculate the estimated fair values of our reporting units.

We determined that the estimated fair value of the Consumer Bank reporting unit was 31 % greater than its carrying amount, the estimated fair value of the Commercial Bank reporting unit was 31 % greater than its carrying amount, and the estimated fair value of the Institutional Bank reporting unit was 7 % greater than its carrying amount.

We determined in our interim quantitative test that 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.

The carrying amounts of the reporting units represent the average equity based on blended capital for goodwill impairment testing and management reporting purposes.

Based on the results of the quantitative test, there was no 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.

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 is below its respective carrying value as of December 31, 2023.

Based on the results of the interim quantitative test, there was no goodwill impairment.

For our annual test, we conducted a qualitative test 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 as of February 29, 2024 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 an evaluation of 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 is below its respective carrying value as of December 31, 2024.

Changes in the carrying amount of goodwill by reporting segment are presented in the following table:

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BALANCE AT DECEMBER 31, 2022 $ 1,819 $ 933 $ 2,752

XUP acquisition measurement period adjustment — 1 1

GradFin acquisition 58 — 58

BALANCE AT DECEMBER 31, 2023 1,819 933 2,752

BALANCE AT DECEMBER 31, 2024 $ 1,819 $ 933 $ 2,752

Additional information regarding recent acquisitions is provided in Note 15 (“Acquisitions and Discontinued Operations”).

As of December 31, 2024, we expect goodwill in the amount of $ 293 million to be deductible for tax purposes in future periods.

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For all legally binding unfunded equity commitments, we increase our recognized investment and recognize a liability.

As of December 31, 2023, and December 31, 2022, we had liabilities of $ 1.4 billion and $ 957 million, respectively, related to investments in qualified affordable housing projects, which are recorded in “accrued expense and other liabilities” on our Consolidated Balance Sheets.

As of December 31, 2024, and December 31, 2023, we had liabilities of $ 1.4 billion and $ 1.4 billion, respectively, related to investments in qualified affordable housing projects, which are recorded in “accrued expense and other liabilities” on our Consolidated Balance Sheets.

We continue to invest in these LIHTC operating partnerships.

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At December 31, 2024, we had federal net operating loss carryforwards of $ 420 million and federal credit carryforwards of $ 215 million.

The federal net operating loss carryforwards are from prior acquisitions by First Niagara and are subject to annual limitations under the tax code and, if not utilized, will expire in the years beginning 2027.

The federal credit carryforward consists of general business credits which expire in 2027, under the Internal Revenue Code.

Federal net operating loss carryforwards of $ 7 million are from prior acquisitions by First Niagara and are subject to annual limitations under the tax code and if not utilized, will expire in the years beginning 2027.

The remaining $ 413 million of net operating losses generated in 2024 do not expire.

The federal credit carryforward consists of general business credits generated in 2012 of $ 1 million and 2024 of $ 214 million, which expire in 2027 and 2039, respectively, under the Internal Revenue Code.

We currently expect to fully utilize these losses and credits.

We had state net operating loss carryforwards of $ 23 million, resulting in a net state deferred tax asset of $ 1 million.

We had state net operating loss carryforwards of $ 271 million, resulting in a net state deferred tax asset of $ 11 million and state credit carryforwards of $ 9 million.

We currently expect to fully utilize these losses and credits.

The following table shows how our total income tax expense (benefit) and the resulting effective tax rate were derived:

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State income tax, net of federal tax benefit ( 20 ) 6.6 18 1.6 53 2.3

State income tax rate change, net of federal benefit ( 17 ) 5.5 — — — —

Tax credits ( 211 ) 69.1 ( 196 ) ( 16.9 ) ( 204 ) ( 8.8 )

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As permitted under the applicable accounting guidance, it is our policy to record interest and penalties related to unrecognized tax benefits in income tax expense.

We recorded net interest benefit of $ 4 million, $ 1.5 million, and $ 0.1 million in 2023, 2022, and 2021, respectively.

We recorded net interest benefit of less than $ 1 million, $ 4 million, and $ 1.5 million in 2024, 2023, and 2022, respectively.

We did no t recover any state tax penalties in 2024, 2023, or 2022.

At December 31, 2023, we had $ 0.6 million accrued interest payable, compared to none at December 31, 2022.

At December 31, 2024, we had $ 1 million accrued interest payable, compared to $ 0.6 million at December 31, 2023.

There were no unrecognized tax benefits presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, at December 31, 2024 and December 31, 2023, respectively.

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No deferred tax liability has been established as these events are not expected to occur in the foreseeable future.

Acquisitions and Discontinued Operations

XUP Payments .

On November 19, 2021, KeyBank acquired XUP Payments, a B2B focused digital platform.

The acquisition was accounted for as a business combination.

As a result of the acquisition, we recognized goodwill of $ 20.6 million and no separately identified intangible assets were recorded.

Other acquired assets and liabilities of XUP were immaterial.

The valuation was final as of March 31, 2022.

On May 2, 2022, KeyBank acquired GradFin, a public service loan forgiveness counseling provider.

The acquisition was accounted for as a business combination.

Consideration paid totaled $ 72 million consisting of $ 62 million in cash and $ 10 million in contingent consideration.

As a result of the acquisition, we recognized goodwill of $ 58 million and other intangible assets of $ 12 million, with remaining assets acquired consisting primarily of cash.

Other acquired assets and liabilities of GradFin were immaterial.

The valuation was final as of September 30, 2022.

Discontinued Operations

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Therefore, excess collateral, if any, is not reflected above.

(c) Repurchase agreements are collateralized by mortgaged-backed agency securities and are contracted on an overnight or continuous basis.

As of December 31, 2023, the carrying amount of assets pledged as collateral against repurchase agreements totaled $ 38 million.

(c) Repurchase agreements are primarily collateralized by mortgaged-backed agency securities and are contracted on an overnight or continuous basis.

As of December 31, 2024, assets pledged as collateral against repurchase agreements totaled $ 14 million.

Assets pledged as collateral are reported in “available for sale” and “held-to-maturity” securities on the Consolidated Balance Sheets.

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Treasury and fixed income securities.

In addition, we may need to provide collateral to counterparties under our repurchase

In addition, we may need to provide collateral to counterparties under our repurchase agreements.

With the exception of collateral pledged against customer sweep repurchase agreements, the collateral we pledge and receive can generally be sold or repledged by the secured parties.

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At December 31, 2024, we h ad 29,269,060 Co mmon Shares available for future grant under our compensation plans.

In accordance with a resolution adopted by the Compensation and Organization Committee of KeyCorp’s Board of Directors, we may not grant options to purchase Common Shares, restricted stock or other shares under any long-term compensation plan in an aggregate amount that exceeds 6 % of our outstanding Common Shares in any rolling three-year period.

In accordance with a resolution adopted by the Compensation and Organization Committee of KeyCorp’s

Board of Directors, we may not grant options to purchase Common Shares, restricted stock or other shares under any long-term compensation plan in an aggregate amount that exceeds 6 % of our outstanding Common Shares in any rolling three-year period.

Stock Options

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Employee Benefits

Pension Plans

Key maintains a cash balance pension plan and other defined benefit plans.

Pension Plans and Other Postretirement Benefit Plans

Key maintains a qualified cash balance pension plan and other nonqualified defined benefit plans.

These plans are frozen and closed to new employees.

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Plans provide benefits based upon length of service and compensation levels.

We also sponsor a retiree healthcare plan in which all employees age 55 with five years of service (or employees age 50 with 15 years of service who are terminated under conditions that entitle them to a severance benefit) are eligible to participate.

Participant contributions are adjusted annually.

Key may provide a subsidy toward the cost of coverage for certain employees hired before 2001 with a minimum of 15 years of service at the time of termination.

We use a separate VEBA trust to fund the retiree healthcare plan.

Key utilizes its fiscal year-end as the measurement date for its pension and other postretirement employee benefit plans.

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Gain or loss amounts in AOCI are only amortized to the extent that they exceed 10% of the greater of the market-related value or the projected benefit obligation.

Pre-tax AOCI not yet recognized as net pension cost w a s $ 384 million a t December 31, 2023, and $ 385 million at December 31, 2022, consisting entirely of net unrecognized losses.

During 2023, 2022, and 2021, we recognized a settlement loss for lump sum payments made under certain pension plans.

During 2024, Key did not recognize a settlement loss.

In 2023, and 2022, we recognized a settlement loss for lump sum payments made under certain pension plans.

In accordance with the applicable accounting guidance for defined benefit plans, we performed a remeasurement of the affected plans in conjunction with the settlement and recognized the settlement loss reflected in the following table.

Net pension cost is recorded within “other expense.” The components of net pension cost and the amount recognized in OCI for all funded and unfunded plans are as follows:

Net pension cost is recorded within “other expense.” The components of net pension cost and the amount recognized in OCI for all funded and unfunded pension plans and postretirement benefit plan are as follows:

Year ended December 31,

Dollars in millions

Pension Plans Postretirement Benefit Plan

2024 2023 2022 2024 2023 2022

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Expected return on plan assets ( 39 ) ( 42 ) ( 27 ) ( 2 ) ( 2 ) ( 2 )

Amortization of losses 9 15 18

Amortization of losses (gains) 9 9 15 ( 1 ) ( 1 ) ( 1 )

Amortization of prior service credit — — — ( 1 ) ( 1 ) ( 1 )

Settlement loss — 18 12 — — —

3 unchanged sentences

Amortization of (gains) 6 ( 27 ) ( 27 ) — — —

Amortization of prior service credit — — — 1 1 1

Total recognized in comprehensive income $ 32 $ ( 1 ) $ 4 $ 2 $ 2 $ 2

Total recognized in net pension cost and comprehensive income $ 43 $ 29 $ 31 $ — $ — $ —

The information related to our pension plans presented in the following tables is based on current actuarial reports using measurement dates of December 31, 2023, and December 31, 2022.

The following table summarizes changes in the PBO related to our pension plans.

Actuarial losses in 2023 were primarily driven by a decrease in discount rates.

The information related to our pension plans and postretirement benefit plan presented in the following tables is based on current actuarial reports using measurement dates of December 31, 2024, and December 31, 2023.

The following table summarizes changes in the PBO and changes in the FVA related to our pension plans and post retirement benefit plan.

Actuarial gains in 2024 associated with the pension plans were primarily driven by an increase in discount rates.

Actuarial losses in 2024 associated with the postretirement benefit plan are a result of asset performance.

Year ended December 31,

Dollars in millions

Pension Plans Postretirement Benefit Plan

2024 2023 2024 2023

PBO at beginning of year $ 923 $ 965 $ 40 $ 40

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Actuarial losses (gains) ( 34 ) 10 6 6

Plan participants’ contributions — — 1 1

Benefit payments ( 84 ) ( 97 ) ( 8 ) ( 9 )

PBO at end of year $ 846 $ 923 $ 41 $ 40

The following table summarizes changes in the FVA.

Year ended December 31,

Dollars in millions

FVA at beginning of year $ 827 $ 886 $ 40 $ 40

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Employer contributions 13 $ 13 — $ —

Plan participants’ contributions — $ — 1 $ 1

Benefit payments ( 84 ) $ ( 97 ) ( 8 ) $ ( 9 )

FVA at end of year $ 805 $ 827 $ 41 $ 40

The following table summarizes the funded status of the pension plans, which equals the amounts recognized in the balance sheets at December 31, 2023, and December 31, 2022.

The following table summarizes the funded status of the pension plans, which equals the amounts recognized in the balance sheets at December 31, 2024, and December 31, 2023, as well as the amount of pre-tax AOCI not yet recognized as net pension cost for the pension plans and postretirement benefit plan.

The postretirement benefit plan’s PBO equaled its FVA at both December 31, 2024, and December 31, 2023.

Ther efore, no asset or liability was recognized on our Consolidated Balance Sheets with respect to that plan.

Dollars in millions

Pension Plans Postretirement Benefit Plan

2024 2023 2024 2023

Funded status (a)

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$ ( 40 ) $ ( 95 )

Net unrecognized losses (gains) $ 415 $ 384 $ ( 8 ) $ ( 9 )

Net unrecognized prior service credit — — ( 9 ) ( 11 )

Total unrecognized AOCI $ 415 $ 384 $ ( 17 ) $ ( 20 )

(a) The shortage of the FVA under the PBO.

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We also do not expect to make any significant discretionary contributions during 2025.

At December 31, 2023, we expect to pay the benefits from all funded and unfunded pension plans as follows:

2024 — $ 89 million;

2025 — $ 87 million;

2026 — $ 84 million;

2027 — $ 81 million;

2028 — $ 79 million and $ 347 million in the aggregate from 2029 through 2033.

There are no regulations that require contributions to the VEBA trust that funds our retiree healthcare plan, so there is no minimum funding

We are permitted to make discretionary contributions to the VEBA trust, subject to certain IRS restrictions and limitations.

We anticipate that our discretionary contributions in 2025, if any, will be minimal.

At December 31, 2024, we expect to pay the benefits from all funded and unfunded pension plans and postretirement benefit plan as follows:

Dollars in millions

Pension Plans Postretirement Benefit Plan

2025 $ 82 $ 5

2030-2034 339 17

The ABO for all of our pension plans was $ 845 million a t December 31, 2024, and $ 922 million at December 31, 2023.

As indicated in the table below, collectively our plans had an ABO in excess of plan assets as follows:

As indicated in the table below, collectively our pension plans had an ABO in excess of plan assets as follows:

December 31, 2024 2023

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December 31, 2024 2023

Pension Plans:

Discount rate 5.33 % 4.68 %

Weighted-average interest crediting rate 4.74 % 4.09 %

Postretirement Benefit Plan:

Discount rate 4.50 % 4.50 %

To determine net pension cost, we assumed the following weighted-average rates.

1 unchanged sentence

2024 2023 2022

Pension Plans:

Discount rate 4.68 % 4.85 % 2.43 %

4.85 % 2.43 % 2.05 %

Expected return on plan assets 4.50 % 4.50 % 2.75 %

4.50 % 2.75 % 2.75 %

We estimate that we will recogniz e $ 11 million in net pension cost for 2024.

Postretirement Benefit Plan:

Discount rate 4.50 % 4.50 % 4.50 %

Expected return on plan assets 4.50 % 4.50 % 4.50 %

We estimate that we will recogniz e $ 7 million in net pension cost for 2025 related to our pension plans.

We estimate that a 25 basis point increase or decrease in the expected return on plan assets would change our net pension cost for 2025 by approximately $ 2.1 million.

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We estimate that a 25 basis point change in the assumed discount rate would change net pension cost for 2025 by approximately $ 1 million.

The expected return on plan assets is determined by considering a number of factors, the most significant of which are:

We expect to recognize a $ 2 million credit in net postretirement benefit cost for 2025 related to our postretirement benefit plan.

The realized net investment income for the postretirement healthcare plan VEBA trust is subject to federal income taxes, which are reflected in the weighted-average expected return on plan assets shown above.

Assumed healthcare cost trend rates do not have a material impact on net postretirement benefit cost or obligations since the postretirement plan has cost-sharing provisions and benefit limitations

Pension Plan Assets

The expected return on plan assets for our qualified cash balance pension plan is determined by considering a number of factors, the most significant of which are:

• Our expectations for returns on plan assets over the long term, weighted for the investment mix of the assets.

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• Historical returns on our plan assets.

Based on an annual reassessment of current and expected future capital market returns, our expected return on plan assets was 4.5 % for 2023, 4.5 % for 2022 and 2.75 % for 2021.

Based on an annual reassessment of current and expected future capital market returns, our expected return on plan assets for estimating the year-end pension benefit obligation of our qualified cash balance pension plan was 5.25 % for 2024, 4.5 % for 2023 and 4.5 % for 2022.

We deemed a rate of 4.50 % to be appropriate in estimating 2024 pension cost.

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An executive oversight committee reviews the plan’s investment performance at least quarterly, and compares performance against appropriate market indices.

The pension fund’s investment objectives are to balance total return objectives with a continued management of plan liabilities, and to minimize the mismatch between assets and

The pension fund’s investment objectives are to balance total return objectives with a continued management of plan liabilities, and to minimize the mismatch between assets and liabilities.

The following table shows the asset target allocations prescribed by the pension fund’s investment policies based on the plan’s funded status at December 31, 2024.

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The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the fair value of plan assets presented elsewhere within this footnote.

What changed 10-K

Item 8. Financial Statements and Supplementary Data