What changed in this filing

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Item 1A. Risk Factors

2026-02-23 compared with 2025-02-21 · 141 added, 139 removed, 407 unchanged (41% of the section changed)

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◦ We are subject to liquidity risk, which could negatively affect our funding levels.

◦ Capital and liquidity requirements imposed by banking regulations require banks and BHCs to maintain more and higher quality capital and more and higher quality liquid assets.

◦ Capital and liquidity requirements imposed by banking regulators and the credit rating agencies may require banks and BHCs to maintain more and higher quality capital and more and higher quality liquid assets.

◦ Federal agencies’ actions to ensure stability of the U.S.

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◦ Our credit ratings affect our liquidity position.

◦ A loss of customer deposits or an adverse change in deposit mix could increase our funding costs and/or impair our liquidity.

• Operational Risk

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◦ Our controls and procedures may fail or be circumvented, and our methods of reducing risk exposure may not be effective.

◦ Our operations and financial performance could be adversely affected by severe weather and natural disasters exacerbated by climate change.

◦ Societal and governmental responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.

◦ The increased use of remote work infrastructure has expanded potential attack vectors and resulted in increased operational risks.

◦ Our operations and financial performance could be adversely affected by severe weather and natural disasters, both directly and as a result of impacts on our customers.

◦ Our development and use of AI, including through third parties, exposes us to inherent risks that may adversely impact KeyCorp.

• Compliance Risk

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◦ Scotiabank holds a significant equity interest in our business and may exercise influence over us, including through its ability to designate up to two directors to our Board of Directors.

• Reputation Risk

◦ Damage to our reputation could significantly impact our business and major stakeholders.

◦ Key is subject to corporate responsibility and sustainability efforts risks that could adversely affect our reputation and our business and results of operations.

◦ Differing views on corporate responsibility and sustainability could adversely affect our reputation and our business and results of operations.

◦ We rely on quantitative models to manage certain accounting, risk management, capital planning, and treasury functions.

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Disclosures of risks should not be interpreted to imply that the risks have not already materialized.

Our ERM program incorporates risk management throughout our organization to identify, understand, and manage the risks presented by our business activities.

Our ERM program identifies Key’s major risk categories as:

compliance risk, operational risk, liquidity risk, market risk, credit risk, model risk, reputation risk, strategic risk, and estimates and assumptions risk.

These risk factors, and other risks we may face, are discussed in more detail in other sections of this report.

We have concentrated credit exposure in commercial and industrial loans, commercial real estate loans, and commercial leases.

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Should the fundamentals of the commercial real estate market deteriorate, our financial condition and results of operations could be adversely affected.

Recent Federal Reserve monetary policy, including shrinkage of its balance sheet and incremental increases in target interest rates early in 2023 followed by a sustained period of relatively higher target interest rates throughout the latter part of 2023 and 2024, continue to impact the commercial and residential real estate markets.

Capitalization rates have risen, and property value appreciation has slowed and continues to decline.

In many markets within Key’s footprint, property values continue to decrease.

Industrial and retail properties continue to remain stable, but multifamily, office, hospitality, and single family detached properties show signs of deterioration.

Development and construction continue, but at muted levels, and deliveries of additional units into the market have been supported.

Oversupply of multifamily housing is a concern in certain urban and gateway markets.

However, our exposures in those markets are limited (for example, approximately 5% of our multifamily portfolio is located in New York City, Chicago, Los Angeles, and San Francisco;

we also have no exposure to rent controlled properties in New York City).

The most severely impacted commercial real estate segments have been in office.

Key’s non-owner occupied office exposures are 5% of our total commercial real estate exposure.

Substantial deterioration in property market fundamentals could negatively impact our portfolio, with a large portion of our clients active in real estate but in the comparatively better performing multifamily space over the cycle.

A correction in the real estate markets could impact the ability of borrowers to make debt service payments on loans or to refinance the loans at maturity.

A relatively small portion of our commercial real estate loans are construction loans.

After disruptions in 2022 through early 2024 as a result of the increases in the Fed Funds rate and dislocations in the office sector as a result of COVID-19, the commercial and residential real estate markets have remained relatively steady over the past 18 months as they have adjusted to a more “normalized” rate environment.

Capitalization rates and commercial property prices have been supported by a continued inflow of capital into the real estate markets.

However, potential headwinds (labor market, geo-political, rate environment) could impact the real estate markets and Key’s portfolio moving forward.

A large portion of our clients are active in real estate, with most focused on the multifamily space, which has been the best performing real estate sector over the cycle.

However, while development and construction have continued

at muted levels over the past two years, oversupply of multifamily housing is a concern in certain urban markets.

This oversupply has resulted in higher vacancy rates and put pressure on some borrowers to achieve underwritten rents.

These two factors impact the ability of borrowers to generate sufficient cash flow in order to make debt service payments on loans or to refinance the loans at maturity.

Key’s risk to any specific market is limited, with all metropolitan statistical area concentrations less than 4%.

Further, Key has limited its exposure to rent-controlled properties across the country, with no exposure to rent-controlled properties in New York City.

A relatively small portion of our commercial real estate loans are construction loans, with most of these loans utilized to support the construction of affordable housing under the Low-Income Housing Tax Credit (LIHTC) program.

Loans made under the LIHTC program typically carry less risk due to the aligned interest of Tax Credit Investors and committed permanent loans at construction origination, which mitigates interest rate risk.

New construction and value-add or rehabilitation construction projects may not be fully leased at loan origination.

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If property market fundamentals deteriorate sharply, performance under existing leases could deteriorate and the execution of new leases could slow, compromising the borrower’s ability to cover debt service payments.

An inability to grow cash flow or pressure on expenses created by supply chain, insurance, or interest rate increases would result in an increase in the level of payment defaults within the sector, as well as limiting refinance options.

Further, these pressures would likely result in an outflow of capital from the real estate markets, which would in turn drive up capitalization rates and decrease property values.

We are subject to the risk of defaults by our loan clients and counterparties.

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Declining asset prices could adversely affect us.

During periods of economic stress, the volatility and disruption that the capital and credit markets experience may reach, and have in the past reached, extreme levels.

Market disruption may severely stress or even lead to the failure of financial institutions, which can cause further credit market constriction and further liquidation of assets, driving asset prices down even more.

During periods of macroeconomic or financial market stress, the volatility and disruption that the capital and credit markets experience may reach, and have in the past reached, extreme levels.

Market disruption may severely stress or even lead to the failure of financial institutions, which can cause credit market constriction and liquidation of assets, driving down their prices.

Asset price deterioration has a negative effect on the valuation of collateral and certain assets represented on our balance sheet and reduces our ability to sell assets at prices we deem acceptable.

The most recent recession in the U.S., resulting from the impact of the COVID-19 pandemic, did not have significant lasting impact on collateral value.

However, there are still risks to economic stability that could reverse recent stable trends in asset prices.

These risks include, but are not limited to:

Although the most recent U.S.

economic recession resulting from the impact of the COVID-19 pandemic did not have significant lasting impact on collateral value, the nature of that recession was atypical.

Most economic recessions are associated with financial market downturns and lower asset prices.

Present risks to stable asset prices include, but are not limited to:

• A correction in equity or housing markets;

• The imposition of further tariffs and other changes to U.S.

or global trade policies;

• Supply chain issues such as closed factories and disrupted port activity, as well as the impact of the Russia-Ukraine war and the Israel-Hamas war on global transportation and the availability of materials;

• Recessionary pressures on other major international economies, such as China, that may impact the broader global and our domestic economy;

• Labor-supply constraints, including as a result of potential changes to U.S.

immigration policies and laws, leading to slowing job growth and rising wages along with inflation (wage-price spiral);

• Labor-supply constraints, including as a result of further changes to U.S.

immigration policies and laws and immigration enforcement, leading to slowing job growth and rising wages along with inflation (wage-price spiral);

• Negative real GDP growth, as a result of, in part, the Federal Reserve’s monetary policy to arrest inflationary pressures within the broader economy.

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While we have minimal direct foreign company exposure in our loan portfolios, there are correlated and contingent risks posed by geopolitical destabilization within our loan portfolio.

For example, conflicts across the world, including the Russia-Ukraine war and the Israel-Hamas war, have proven to have a material impact on certain domestic commodity prices, impacting our borrowers' input costs and disrupting supply chains both domestically and abroad.

For example, conflicts across the world, including the Russia-Ukraine war and the Israel-Hamas war, and recent military action in Venezuela, have proven to or may have a material impact on certain domestic commodity prices, impacting our borrowers' input costs and disrupting supply chains both domestically and abroad.

These factors increase potential defaults in our loan portfolio and could ultimately increase loan losses.

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or abroad could negatively affect our business or our access to capital markets.

A worsening of economic and market conditions or downside shocks could result in adverse effects on Key and others in the financial services industry.

Recent and persistent interest rate increases and a slowing economy could present a challenge for the industry, including Key, and negatively affect business and financial performance.

In particular, we face the following risks, and other unforeseeable risks, in connection with a downturn in the economic and market environment or in the face of downside shocks or a recession, whether in the United States or internationally:

A worsening of economic and financial market conditions or downside shocks could result in adverse effects on Key and others in the financial services industry.

Banking conditions may deteriorate during periods of persistent or large and sudden interest rate increases and/or a slowing economy, negatively affecting business and financial performance.

In particular, we face the following risks, and other unforeseeable risks, in connection with a downturn in the macroeconomic and financial market environment or other such downside shocks, whether in the United States or internationally:

• A loss of confidence in the financial services industry and the debt and equity markets by investors, placing pressure on the price of our common shares or decreasing the credit or liquidity available to Key, while also increasing the cost of such credit or liquidity;

• A decrease in consumer and business confidence levels generally, decreasing credit usage and investment or increasing delinquencies and defaults;

• A decrease in consumer and business confidence levels generally, decreasing credit usage and investment or increasing delinquencies and defaults and committed line draws;

• A decrease in household or corporate incomes, reducing demand for our products and services;

• A decrease in the value of collateral securing loans to our borrowers or a decrease in the quality of our loan portfolio, increasing loan charge-offs and reducing Key’s net income;

• A decrease in our ability to liquidate financial positions at acceptable market prices;

• A decrease in the value of collateral securing loans to our borrowers or a decrease in the quality of our loan portfolio, increasing loan charge-offs and reducing our net income;

• A decrease in the value of collateral, or an increase in the haircuts on that collateral, that we pledge to secure funding and liquidity, reducing the quantum of that funding and/or liquidity;

• An impairment in our ability to liquidate financial positions at acceptable market prices;

• An increase in competition or consolidation in the financial services industry;

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To the extent that the Federal Reserve’s policies around managing inflation fail to mitigate the volatility and uncertainty related to inflation and the effects of inflation, or to the extent conditions otherwise worsen or are exacerbated by policies enacted by the U.S.

government, including the imposition of tariffs or other trade policies, we could experience adverse effects on our business, financial condition, and results of operations.

government, including the imposition of tariffs or other commercial policies, we could experience adverse effects on our business, financial condition, and results of operations.

In addition, when U.S.

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We incur basis risk to the extent that the relationship between different interest rate indices changes over time.

Option risk is present in assets, liabilities or other financial instruments that allow a party to change the timing of interest or principal payments.

Option risk is present in assets, liabilities or other financial instruments that allow a counterparty to change the timing of interest or principal payments.

Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions, the competitive environment within our markets, consumer preferences for specific loan and deposit products and their payment behavior, and policies of various governmental and regulatory agencies, in particular, the Federal Reserve.

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Changes in monetary policy, including changes in interest rate controls being applied by the Federal Reserve, could influence the amount and timing of interest we receive on loans and securities, the amount and timing of interest we pay on deposits and borrowings, our ability to originate loans and obtain deposits, and the fair value of our financial assets and liabilities.

When the Federal Reserve raises or reduces interest rates, the behavior of national money market rate indices, the correlation of consumer deposit rates to financial market interest rates, and the setting of benchmark rates may not follow historical relationships, which could influence net interest income and net interest margin through basis and other risks.

In addition, our ability to change deposit rates in response to changes in interest rates and other market and related factors is limited by client relationship considerations.

Moreover, if the interest we pay on deposits and other borrowings increases at a faster rate than the interest we receive on loans and other investments, net interest income, and therefore our earnings, would be adversely affected.

When the Federal Reserve raises or reduces interest rates, the behavior of national money market rate indices, the correlation of consumer deposit rates to financial market interest rates, and the evolution of benchmark rates may not follow historical relationships, which could influence net interest income and net interest margin through basis and other risks.

In addition, our ability to change deposit rates in response to changes in interest rates and other market and related factors is limited by client relationships and competitive considerations.

Conversely, earnings could also be adversely affected if the interest we receive on loans and other investments falls more quickly than the interest we pay on deposits and other borrowings.

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economy may differ from the economy of any particular geographic region.

Adverse conditions in a geographic region such as inflation, unemployment, recession, natural disasters, impact of public health crises, or other factors beyond our control could impact the ability of borrowers in these regions to repay their loans, decrease the value of collateral securing loans made in these regions, or affect the ability of our customers in these regions to continue conducting business with us.

Adverse conditions in a geographic region such as inflation, unemployment, recession, natural disasters, political instability, impact of public health crises, or other factors beyond our control could impact the ability of borrowers in these regions to repay their loans, decrease the value of collateral securing loans made in these regions, or affect the ability of our customers in these regions to continue conducting business with us.

Additionally, a significant portion of our business activities are concentrated within the commercial real estate, healthcare, finance, and utilities market segments.

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As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to, and may further lead to, market-wide liquidity problems and could lead to losses or defaults by us or other financial institutions.

Disruption within the financial markets, including negative news regarding the banking industry or perceived risks of a bank’s safety and soundness, can adversely impact the market price and volatility of our common stock or deposit runoff.

Banking is a confidence sensitive business, so disruption within the financial markets, including negative news, rumors, or misinformation regarding the banking industry or perceived risks of a bank’s safety and soundness, can adversely impact the market price and volatility of our common stock, cause deposit runoff or prompt the loss of important customers or counterparties.

Online and mobile banking have made it easier for customers to withdraw their deposits.

Higher withdrawals can raise funding cost, which may reduce Key’s net interest margin and net interest income.

Higher than customary withdrawals can raise funding cost, which may reduce Key’s net interest margin and net interest income.

In addition, many of our transactions with other financial institutions expose us to credit risk in the event of default of a counterparty or client.

Our credit risk may be affected when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of our loan or derivatives exposure.

Our credit risk may be affected when the collateral held by us cannot be liquidated at prices sufficient to recover the full amount of our loan or derivatives exposure.

There can be no assurance that any such losses would not adversely and materially affect our results of operations.

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We are subject to liquidity risk, which could negatively affect our funding levels.

Liquidity risk refers to our ability to fund liability maturities and deposit withdrawals, meet contractual obligations, or fund asset growth and new business initiatives at a reasonable cost, in a timely manner and without adverse consequences.

Liquidity risk is the danger that a bank may not be able to meet near-term cash demands, such as funding liability maturities and deposit withdrawals, meeting contractual obligations, or funding asset growth and new business initiatives at a reasonable cost, in a timely manner and without adverse consequences.

Our banking business is subject to four primary liquidity risks:

contingency risk, mismatch risk, funding risk, and refinancing risk.

Contingency risk arises from unexpected funding or liquidity needs occurring during challenging economic or financial market conditions.

Contingency risk arises from unexpected funding or liquidity needs occurring during adverse systemic or idiosyncratic economic or financial conditions.

Mismatch risk may occur when illiquid assets are funded with less stable funding sources.

Funding risk arises if funding sources become too concentrated.

Funding risk arises if funding sources become too concentrated, raising the risk of higher borrowing costs.

Refinancing risk arises when a concentrated liability maturity profile creates near-term funding stress.

Despite actions that we take to manage these risks, unanticipated changes in assets, liabilities, and off-balance sheet commitments under various economic conditions (including a reduced level of wholesale funding sources), a substantial, unexpected, or prolonged change in the level or cost of liquidity could have a material adverse effect on us.

Despite actions that we take to manage these risks, unanticipated changes in assets, liabilities, and off-balance sheet commitments under various economic conditions (reduced wholesale funding capacity), or a substantial, unexpected, or prolonged change in the level or cost of liquidity could have a material adverse effect on us.

If the cost effectiveness or the availability of supply in these credit markets is reduced for a prolonged period of time, our funding needs may require us to access funding and manage liquidity by other means.

These alternatives may include generating client deposits, securitizing or selling loans, extending the maturity of wholesale borrowings, borrowing under certain secured borrowing arrangements, using relationships developed with a variety of fixed income investors to access new funds or renegotiate the terms of outstanding debt, and further managing loan growth and investment opportunities.

These alternative means of funding may result in an increase in the overall cost of funds and may not be available under stressed conditions, which would cause us to liquidate a portion of our liquid asset portfolio to meet any funding needs.

Capital and liquidity requirements imposed by banking regulations require banks and BHCs to maintain more and higher quality capital and more and higher quality liquid assets.

These alternative means of funding would increase our overall cost of funds and they may not be available under stressed conditions, which may cause us to liquidate a portion of our liquid asset portfolio to meet any funding needs.

Capital and liquidity requirements imposed by banking regulators and the credit rating agencies may require banks and BHCs to maintain more and higher quality capital and more and higher quality liquid assets.

Evolving capital standards resulting from the Dodd-Frank Act and the Regulatory Capital Rules adopted by our regulators have had and will continue to have a significant impact on banks and BHCs, including Key.

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They could also result in our taking steps to increase our capital that may be dilutive to shareholders or limit our ability to pay dividends or otherwise return capital to shareholders.

In addition, regulatory liquidity standards require us to hold high-quality liquid assets, which has caused us to change, and may in the future cause us to change, our mix of investments, and may impact future business relationships with certain customers.

In addition, regulatory liquidity standards require us to hold high-quality liquid assets, which has caused us to change, and may in the future cause us to change, our mix of investments in favor of lower-yielding securities, and may impact future business relationships with certain customers, both of which may reduce our profitability.

Additionally, support of liquidity standards may be satisfied through the use of long-term wholesale borrowings, which tend to have a higher cost than that of traditional core deposits.

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The severity and other features of these processes, which take the form of stress tests and other measures, may evolve from year to year and are used by the Federal Reserve to, among other things, evaluate our management of capital and the adequacy of our regulatory capital and to determine the stress capital buffer that we must maintain above our minimum regulatory capital requirements.

Despite recent announcements by the Federal Reserve declaring intent to increase transparency into capital stress tests and models, the results of these processes are difficult to predict due to, among other things, the Federal Reserve’s use of proprietary stress models that differ from our internal models.

Notwithstanding recent actions by the Federal Reserve to increase transparency into capital stress tests and models, the results of these processes are difficult to predict due to, among other things, the Federal Reserve’s use of proprietary stress models that differ from our internal models.

Consequently, the Federal Reserve may impose capital requirements in excess of our expectations which could require us, as applicable, to revise our stress-testing or capital management approaches, resubmit our capital plan or postpone, cancel, or alter our planned capital actions.

The results may also lead to limits on Key’s ability to make distributions, including paying out dividends or buying back shares.

The results may also lead to limits on Key’s ability to make capital distributions, including paying out dividends or buying back shares.

To facilitate our wholesale funding and other business activities, we maintain credit ratings with three major credit rating agencies, and their assessments of our capital and liquidity are prominent determinants of our credit ratings.

Additionally, from time to time, the agencies revise their bank rating methodologies and may increase their expectations of the amount and/or type of capital and liquidity we hold in order to maintain our investment grade credit ratings.

In certain cases, those rating agency requirements may exceed regulatory requirements, making the

rating agency requirements our binding constraint and increasing our capital and/or liquidity costs above what they would otherwise be and potentially reducing our profitability.

From time to time, federal banking regulators tailor the extent to which various categories of large banks are subject to certain capital, liquidity and other regulations.

For instance, Category IV banks with assets between $100 billion and $250 billion, including Key, are not currently subject to certain capital and liquidity standards required of larger banks.

However, the bank regulatory environment evolves continually, and regulatory standards, expectations and

requirements evolve along with that environment, raising the risk of increased compliance costs in the future.

However, the bank regulatory environment evolves continually, and regulatory standards, expectations and requirements evolve along with that environment, raising the risk of increased compliance costs in the future.

Moreover, often in response to industry or macroeconomic stress events, informal regulatory expectations of capital and liquidity management practices may exceed formal requirements.

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The federal government’s actions can impact financial markets.

For example, during 2024 the Federal Reserve, after an extended period of raising its monetary policy rate, began lowering interest rates in an effort to prevent a recession.

For example, beginning in 2024 and during 2025, the Federal Reserve, after an extended period of raising its monetary policy rate, began lowering interest rates to support what it viewed as a weakening labor market.

These types of actions can impact financial markets and our business and cause increased financial market and interest rate volatility.

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The systemic bank exception can only be invoked for financial market risks that pose a threat to financial stability.

The FDIC may impose a special assessment on IDIs to recover the loss to the failed bank resulting from the use of the systemic risk exception to protect the uninsured depositors.

The potential impact of a special assessment to Key could increase noninterest expense for that quarter, as was the case during the first and second quarters of 2024.

The FDIC may impose a special assessment on IDIs to recover the loss to the failed bank resulting from the use of the systemic risk exception to protect uninsured depositors.

A special assessment could increase our noninterest expense for that quarter, as was the case during the fourth quarter of 2023 and first quarter of 2024.

Regulators can implement measures designed to strengthen capital and liquidity standards and restore confidence in the banking system applicable to Key including those discussed in “Regulatory capital requirements” under the heading “Supervision and Regulation” in Item 1 of this report.

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Capital and long-term debt requirements require us to divert resources from otherwise profitable lending and investment opportunities to ensure compliance, which may be dilutive to shareholders or limit Key’s ability to buy back shares or pay dividends.

The Federal Home Loan Bank (FHLB) system continues to be a source of funding.

Changes in FHLB lending policy could adversely affect our liquidity and profitability.

Further, as market conditions evolve and respond to the influence of government agency initiatives, or lack thereof, the slope of the yield curve will shift and influence our loan and deposit rates and value of investments.

The actions of federal agencies are not fully predictable which contributes to market volatility and changes to the slope of the yield curve.

The Federal Home Loan Bank (FHLB) system continues to be a source of secured funding.

Changes in FHLB lending policies or the haircuts they apply to our pledged collateral could adversely affect our liquidity and profitability.

We rely on dividends by our subsidiaries for most of our funds.

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With the exception of cash that we may raise from debt and equity issuances, we receive substantially all of our funding from dividends by our subsidiaries.

Dividends by our subsidiaries are the principal source of funds for the dividends we pay on our common and preferred stock and interest and principal payments on our debt.

Dividends by our subsidiaries are the principal source of funds for the dividends we pay on our common and preferred stock and interest and principal payments on KeyCorp debt and capital securities.

Federal banking law and regulations limit the amount of dividends that KeyBank (KeyCorp’s largest subsidiary) can pay.

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Changes in any of these factors could impair our ability to maintain our current credit ratings.

We may be unable to maintain our current ratings and our ratings may be downgraded again in the future.

The impact of downgrades to KeyCorp's or KeyBank's credit ratings could adversely affect our access to liquidity and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us, reducing our ability to generate income.

We may be unable to maintain our current ratings and our ratings may be downgraded in the future.

Downgrades to KeyCorp's or KeyBank's credit ratings could impair our access to liquidity and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us, reducing our ability to generate income.

If KeyCorp’s or KeyBank's credit ratings fell below investment grade, it could also create obligations or liabilities under the terms of existing arrangements that could increase our costs and reduce our profitability.

A loss of customer deposits or an adverse change in deposit mix could increase our funding costs and/or impair our liquidity.

We rely on customer deposits as a low-cost and stable source of funding.

KeyBank competes with banks and other financial institutions, and increasingly with non-banks that offer non-deposit and other alternative savings vehicles, such as stablecoins, for deposits.

If demand for deposit alternatives were to grow materially, KeyBank could experience deposit outflows or be compelled to materially increase deposit interest rates to retain its deposits.

Customers may also shift their deposits from non-interest bearing to interest bearing accounts or otherwise to higher cost products at KeyBank.

Our ability to maintain and grow deposits may be constrained by gaps in our product offerings, emerging technologies and changes in consumer behaviors and preferences, our scale relative to other banks and financial institutions, underlying macroeconomic conditions and monetary policy, and loss of confidence in our brand and our business.

To the extent that KeyBank is unable to retain deposits, funding costs may increase as such deposits are replaced with more expensive wholesale funding.

Any adverse movement in deposits and associated higher funding costs could reduce our net interest margin and net interest income and otherwise materially and adversely affect our liquidity, financial condition, and results of operations.

Operational Risk

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These concerns may be further exacerbated by employee turnover or labor shortages.

As a result of our necessary reliance on employees to perform these tasks and manage resulting risks, we are thus subject to human vulnerabilities.

As a result of our necessary reliance on employees to perform these tasks and manage resulting risks, we are thus

subject to human vulnerabilities.

These range from innocent human error to misconduct or malfeasance, potentially leading to operational breakdowns or other failures.

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To the extent that we use third parties to provide services to our clients, we cannot control all of the risks at these third parties or third parties’ downstream service providers.

Hardware, software, or applications developed by Key or received from third parties may contain exploitable vulnerabilities, bugs, or defects in design, maintenance or manufacture or other issues that could unpredictably compromise information and cybersecurity.

Hardware, software, or applications developed by Key or received from third parties may contain exploitable vulnerabilities, bugs, or defects in design, maintenance or manufacture or other issues that could lead to compromise of information and cybersecurity.

We depend on third party service providers and their downstream service providers to implement adequate controls and safeguards to protect against and report cyber incidents.

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Under these agreements, we may be responsible for certain losses and penalties if one of our merchant customers suffers a data breach.

We also face risks related to the increasing interdependence and interconnectivity of financial entities and technology systems.

We also face risks related to the interdependence and interconnectivity of financial entities and technology systems.

A technology failure, cyberattack or other security breach that significantly compromises the systems of one or more financial parties or service providers in the financial system could have a material impact on counterparties or market participants, including us.

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Any third-party technology failure, cyberattack, or security breach could adversely affect our ability to effect transactions, service clients, or otherwise operate our business and could result in legal liability, remediation costs, regulatory action, or reputational harm.

Additionally, the increasing use of third-party financial data aggregators and emerging technologies, including the use of automation, artificial intelligence and robotics, introduces new information security risks and exposure for us and for our third party service providers, and, additionally, such technologies may be used to identify vulnerabilities;

such technologies have resulted in a substantial increase in the volume and sophistication of cyberattacks against financial and other institutions, including the use of generative artificial intelligence to conduct more sophisticated social engineering attacks.

Such security attacks can originate from a wide variety of sources/malicious actors, including, but not limited to, persons who constitute an insider threat, who are involved with organized crime, or who may be linked to terrorist organizations or hostile foreign governments.

Additionally, the increasing use of third-party financial data aggregators and emerging technologies, including the use of AI, introduces new information security risks and exposure for us and for our third party service providers, and, additionally, such technologies may be used to identify vulnerabilities;

such technologies have resulted in a substantial increase in the volume and sophistication of cyberattacks against financial and other institutions, including the use of generative AI to conduct more sophisticated social engineering attacks.

Security attacks can originate from a wide variety of sources/malicious actors, including, but not limited to, persons who constitute an insider threat, who are involved with organized crime, or who may be linked to terrorist organizations or hostile foreign governments.

Those same parties may also attempt to fraudulently induce employees, customers, or other users of our systems to disclose sensitive information in order to gain access to our data or that of our customers or clients through social engineering, phishing, mobile phone malware and SIM card swapping, and other methods.

Our security systems, and those of the third-party service providers on which we rely,

may not be able to protect our information systems or data from similar attacks due to the rapid evolution and creation of sophisticated cyberattacks.

Our security systems, and those of the third-party service providers on which we rely, may not be able to protect our information systems or data from similar attacks due to the rapid evolution and creation of sophisticated cyberattacks.

We are also subject to the risk that a malicious actor or our employees may intercept and/or transmit or otherwise misuse unauthorized personal, confidential, or proprietary information or intellectual property.

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Disruption in services provided by these third parties, including a discontinuation or delay in services, could increase the costs of doing business and adversely affect our ability to deliver products and services to clients, to support teammates, and otherwise to conduct business, which would negatively impact our customer relationships, our reputation, and our business.

Further, regulatory guidance adopted by federal banking regulators related to how banks select, contract with, evaluate, engage with, and manage their third parties, including such third parties’ use of subcontractors and downstream service providers, impacts whether and how we work with such parties, as well as the cost of managing such relationships.

downstream service providers, impacts whether and how we work with such parties, as well as the cost of managing such relationships.

In some instances, we may be responsible for failures of third parties to comply with government regulations.

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Our risk management framework seeks to maintain safety and soundness and maximize profitability.

We have established policies, processes, and procedures intended to identify, measure, monitor, report, and analyze the types of risk to which we are subject, including compliance, operational, liquidity, market, credit, model, reputational, and strategic risk, among others.

We have established policies, processes, and procedures intended to identify, measure, monitor, report, and analyze the types of risk to which we are subject, including compliance, operational, technology, liquidity, market, credit, model, and strategic risk, among others.

We cannot provide assurance that our risk management framework will effectively mitigate risk and limit losses in our business and operations.

For example, our risk management framework and measures that we take to mitigate risk may not be fully effective in identifying and mitigating our risk exposure in all

market environments or against all types of risks, including risks that are unidentified or unanticipated, even if the frameworks for assessing risk are properly designed and implemented.

For example, our risk management framework and measures that we take to mitigate risk may not be fully effective in identifying and mitigating our risk exposure in all market environments or against all types of risks, including risks that are unidentified or unanticipated, even if the frameworks for assessing risk are properly designed and implemented.

In addition, some of our methods of managing risk are based upon our use of observed historical market behavior and management’s judgment.

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The systems may not work as intended or be circumvented by employees, third parties, or others outside of Key.

Additionally, instruments, systems, and strategies used to hedge or otherwise manage exposure to various types of market compliance, credit, liquidity, operational, and business risks and enterprise-wide risk could be less effective than anticipated.

Additionally, instruments, systems, and strategies used to mitigate or otherwise manage exposure to various types of risk could be less effective than anticipated.

As a result, we may not be able to effectively or fully mitigate our risk exposures in particular market environments or against particular types of risk.

Our operations and financial performance could be adversely affected by severe weather and natural disasters exacerbated by climate change.

Natural disasters, including wildfires, tornadoes, severe storms, and hurricanes, have seemingly become more frequent and severe due to climate change.

The timing and effects of these climate-related physical risks are difficult to accurately predict, and the potential impact of such risks on our operations, employees, communities, and

customers could have a material adverse effect on our business, financial position, and results of operations.

Our operations and financial performance could be adversely affected by severe weather and natural disasters, both directly and as a result of impacts on our customers.

Natural disasters, including wildfires, tornadoes, severe storms, and hurricanes, have seemingly become more frequent and severe.

The timing and effects of these climate-related physical risks are difficult to accurately predict, and the potential impact of such risks on our operations, employees, communities, and customers could have a material adverse effect on our business, financial position, and results of operations.

Given our broad regional focus, we are exposed to a wide range of climate-related physical risks across different geographical areas.

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Furthermore, the insurance we maintain may not be adequate to cover our losses resulting from any business interruption resulting from a natural disaster or other severe weather events.

Recurring extreme weather events could also reduce the availability or increase the cost of insurance.

Recurring extreme weather events could also reduce or eliminate the availability or increase the cost of insurance to Key and our customers.

Our failure to comply with evolving regulatory requirements related to natural disaster risk management may also result in legal and financial consequences.

Societal and governmental responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.

Concerns over the long-term impacts of climate change have led and may continue to lead to governmental efforts around the world to mitigate those impacts, creating potential transition risk.

Transition risks could include additional regulatory requirements or legislation, changes in stakeholder behaviors, or the development of new technologies to aid in the transition to a low-carbon economy, New and/or changing regulatory requirements could affect our results by requiring us to take costly measures to comply with any new laws or regulations related to climate change that may be adopted by federal, state, and local governments or regulators.

Consumers and businesses also may change their own behavior as a result of these concerns.

We and our customers may face cost increases, asset value reductions, operating process changes, and the like.

In addition, the multiple and potentially conflicting laws and regulations regarding climate change that have been or may be adopted by various jurisdictions could increase our cost of doing business and make compliance with such laws and regulations more difficult.

The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon-intensive activities.

The increased use of remote work infrastructure has expanded potential attack vectors and resulted in increased operational risks.

The increase in remote work over the past several years has resulted in an expanded potential attack surface and heightened operational risks and may negatively impact our ability, and the ability of our third-party service providers (including their downstream service providers), to perform services efficiently, securely, and without interruptions.

In addition to some of our workforce working remotely periodically or on a full-time basis, our third-party service providers (including their downstream service providers) may utilize personnel who work remotely.

Increased levels of remote access create additional cybersecurity risk and opportunities for cybercriminals to exploit vulnerabilities.

These fraudulent activities have resulted in increased fraud losses to us and the financial services industry generally.

In addition to enhanced cybersecurity risk, employees and other personnel performing services for us who work remotely may experience disruptions to their home internet or phone connections, decreased efficiency due to delayed network speeds or other interruptions, and/or delays in the dissemination and exchange of information, any of which could negatively impact our operations.

We have experienced, and may continue to experience, disruption related to remote work, which disruptions could adversely impact our business, and could result in legal liability, regulatory penalties, litigation expenses, remediation costs, or reputational harm.

Our development and use of AI, including through third parties, exposes us to inherent risks that may adversely impact KeyCorp.

We use, and will increasingly use AI, including through third party vendors acting on our behalf and other counterparties, in connection with our business and operations.

AI is complex and rapidly evolving and in order to compete with other banks and financial institutions effectively, we must incorporate new and emerging AI technology into our business and this may subject us to new or heightened legal, regulatory, operational, and other risk.

The legal and regulatory environment relating to AI is uncertain and evolving, and any changes to applicable laws and regulations could require changes to our use of AI technology and could cause an increase in associated costs and expenses.

We may also be unsuccessful in realizing the intended benefits of AI or otherwise enhancing our business or operations and our competitors may incorporate AI in their businesses or operations more quickly or more successfully than us, all of which could occur despite considerable expense and which could negatively affect our financial condition and results of operations.

The models underlying AI that we may leverage, including those developed by third party providers, may be incorrectly or inadequately designed or implemented and trained on, or otherwise use, data or algorithms that are incomplete, inadequate, misleading, biased, or otherwise flawed, or that are subject to intellectual property rights not known to us, and that ultimately produce outputs that are similarly flawed but that which we or third parties acting on our behalf rely, and any such flaw may not be easily and readily detectable.

The limited transparency into the underlying complexity of AI and associated models that we rely on makes reproducing the connection between input and output, at times, difficult or impossible.

If the AI that we leverage is flawed in such ways, we may make inaccurate or ineffective decisions and otherwise incur operational inefficiencies, compliance issues, competitive and reputational harm, adverse legal and regulatory actions, or other adverse impacts to our business and operations.

We may not be able to sufficiently mitigate or detect any of the foregoing risks given the emerging nature of AI technology.

Additionally, inappropriate or controversial data practices by third party AI developers and

their end-users could adversely affect public opinion of AI and ultimately impair acceptance of AI, including those incorporated into our business and operations.

Compliance Risk

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KeyBank and KeyCorp remain covered institutions under the Dodd-Frank Act’s enhanced prudential standards and regulations, including its provisions designed to protect consumers from financial abuse.

Like similarly situated

institutions, Key undergoes routine scrutiny from bank supervisors in the examination process and is subject to enforcement of regulations at the federal and state levels, particularly with respect to customer practices involving fair and responsible banking, fair lending, unfair, deceptive or abusive practices, and the Community Reinvestment Act, as well as compliance with AML, BSA and Office of Foreign Assets Control efforts.

Like similarly situated institutions, Key undergoes routine scrutiny from bank supervisors in the examination process and is subject to enforcement of regulations at the federal and state levels, particularly with respect to customer practices involving fair and responsible banking, fair lending, unfair, deceptive or abusive practices, and the Community Reinvestment Act, as well as compliance with AML, BSA and Office of Foreign Assets Control efforts.

Changes to existing statutes and regulations, and taxes (including industry-specific taxes and surcharges), or their interpretation or implementation, could affect us in substantial and unpredictable ways, particularly with those laws and regulations that serve to protect customers.

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In addition, there has been a significant increase in privacy-related litigation in recent years with respect to how organizations collect information and technical data from their public facing websites, and federal and state courts have been creating new legal frameworks around consumer and website privacy, which also creates new risks on businesses.

As new privacy-related laws and regulations, and judicially-created frameworks, are implemented in jurisdictions in which

KeyBank operates, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for noncompliance and reporting obligations in the case of data breaches, may significantly increase.

As new privacy-related laws and regulations, and judicially-created frameworks, are implemented in jurisdictions in which KeyBank operates, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for noncompliance and reporting obligations in the case of data breaches, may significantly increase.

Compliance with these laws and regulations has required and may continue to require us to change our policies, procedures, and technology for information security and segregation of data, which could, among other things, make us more vulnerable to operational failures, result in increased costs as a result of continually evaluating our policies and processes and adapting to new requirements that are or become applicable to us, and subject us to monetary penalties for breach of such laws and regulations.

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In addition, technology has lowered barriers to entry and made it possible for nonbanks, including large technology companies, to offer products and services traditionally provided by banks.

Furthermore, both financial institutions and their non-banking competitors face the risk that payments processing and other products and services, including deposits and other traditional banking products, could be significantly disrupted by the use of new technologies, such as cryptocurrencies and other applications using secure distributed ledgers that may not require intermediation.

We expect the competitive landscape of the financial services industry to become even more intense as a result of legislative, regulatory, structural, customer preference, and technological changes.

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our ability to develop and deliver competitive products and technologies expected by our customers, while maintaining safety and soundness, effective risk management practices, and high ethical standards;

our ability to attract, retain, and develop an employee workforce with the required skills and expertise;

our ability to attract, retain, and develop a workforce with the required skills and expertise;

and industry and economic trends.

Increased competition in the financial services industry, or our failure to perform in any of these areas, could significantly weaken our competitive position, which could adversely affect our growth and profitability.

Increased competition

in the financial services industry, or our failure to perform in any of these areas, could significantly weaken our competitive position, which could adversely affect our growth and profitability.

Strategic risk may also be realized due to events or issues that materialize in other risk factor areas.

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New products allow consumers to maintain funds in brokerage accounts or mutual funds that would have historically been held as bank deposits.

process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer loans and deposits and related income generated from those products.

The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer loans and deposits and related income generated from those products.

The increasing pressure from our competitors, both bank and nonbank, to keep pace and adopt new technologies and products and services requires us to incur substantial expense.

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We may not be able to attract and retain skilled people.

Our success depends on our ability to attract, retain, motivate, and develop a high performing, inclusive, and collaborative workforce.

Our success depends on our ability to attract, retain, motivate, and develop a high performing and collaborative workforce.

Competition for talent in our business is strong and requires us to make investments to provide compensation and benefits at market levels.

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Additionally, we increasingly compete for talent outside of the core financial services industry.

Non-financial institutions may be subject to different pay and hiring expectations than us, which may make it more difficult for us to attract qualified teammates.

Non-financial institutions may be subject to different pay and hiring expectations than us, which may make it more difficult and/or costlier for us to attract and retain qualified teammates.

For example, we are required to deliver a substantial portion of the variable compensation of certain teammates in the form of awards tied to our financial performance and/or share price performance.

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Similarly, our pay practices are subject to scrutiny by our regulators who may identify deficiencies in the structure of, or issue additional guidance on our compensation practices, causing us to make changes that may affect our ability to offer competitive pay to these individuals or that place us at a disadvantage to non-financial service industry competitors.

Finally, while remote work opportunities allow us to hire outside of our traditional footprint, it also increases competition.

These factors individually, or collectively, may constrain our ability to hire or retain a sufficient number of qualified employees, which could impact our ability to serve our customers and clients.

Acquisitions or strategic partnerships may disrupt our business and dilute shareholder value.

Acquiring other banks, bank branches, or other businesses involves various risks commonly associated with acquisitions or partnerships, including exposure to unknown or contingent liabilities of the acquired company;

Acquisitions of businesses, such as financial technology companies or investment banking firms, bank branches, or other banks involves various risks commonly associated with acquisitions or partnerships, including exposure to unknown or contingent liabilities of the acquired company;

diversion of our management’s time and attention;

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and the possible loss of key employees and customers of the acquired company.

We regularly evaluate merger and acquisition and strategic partnership opportunities and conduct due diligence activities related to possible transactions.

evaluate merger and acquisition and strategic partnership opportunities and conduct due diligence activities related to possible transactions.

As a result, mergers or acquisitions involving cash, debt or equity securities may occur at any time.

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As a result of the amount of common shares that are currently held by Scotiabank, together with its director designation rights, Scotiabank may be able to influence our policies and operations and impact matters requiring shareholder approval.

In addition, the existence of a large shareholder may have the effect of deterring takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in the best interests

of our company.

The interests of Scotiabank with respect to matters potentially or actually involving or affecting us and our other shareholders, such as future acquisitions, financings, and other corporate opportunities and attempts to acquire us, may conflict with the interests of our other shareholders.

Reputation Risk

Damage to our reputation could significantly impact our business and major stakeholders.

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Damage to our reputation could also adversely impact our credit ratings and access to capital markets.

Significant harm to our reputation can arise from various sources, including inappropriate behavior or misconduct of employees, actual or perceived unethical behavior, litigation or regulatory outcomes, inadequate or ineffective risk management practices, failing to deliver minimum or required standards of service and quality, corporate governance and regulatory compliance failures, disclosure of confidential information, significant or numerous failures, interruptions or breaches of our information systems, complex fraud threats, failure to meet external commitments and goals, including financial corporate responsibility and sustainability related commitments, the activities of our clients, customers and counterparties, including vendors, and actions taken by shareholder activists and community organizations.

Significant harm to our reputation can arise from various sources, including inappropriate behavior or misconduct of employees, actual or perceived unethical behavior, litigation or regulatory outcomes, inadequate or ineffective risk management practices, failing to deliver minimum or required standards of service and quality, failure to safeguard client information, corporate governance and regulatory compliance issues, disclosure of confidential information, significant or numerous failures, interruptions or breaches of our information systems, complex fraud threats, failure to meet external commitments and goals, including financial corporate responsibility and sustainability related commitments, the activities of our clients, customers and counterparties, including vendors, and actions taken by shareholder activists and community organizations.

The harm to our reputation is likely greater

to the extent that the behavior, misconduct, failures, issues, interruptions or actions are pervasive, long-standing or affect a significant number of customers, and particularly retail consumers.

The negative impacts to our business from such reputational damage may be disproportionate to the actual harm caused to customers.

Furthermore, because we conduct most of our businesses under the “Key” brand, negative public opinion about one business could also affect our other businesses.

Additionally, actions by the financial services industry generally or by certain members or individuals in the industry as well as legislative or regulatory actions that target or negatively impact the industry may also have a significant adverse effect on our reputation.

Negative coverage about Key published in traditional media or on social media websites, whether or not factually correct, may affect our reputation and our business prospects and impact our ability to attract and retain highly skilled employees.

Social media facilitates the rapid dissemination of information or misinformation, thereby increasing the potential for widespread dissemination of inaccurate, false, misleading, or other negative information that could damage our reputation.

Negative public opinion can also adversely affect our ability to attract and maintain customer relationships and could subject us to litigation and regulatory action.

We are also subject to the risk that disruptions to how our customers access our banking services, such as disruptions to our technology platforms (e.g., online banking websites or mobile applications) or other impacts to our branches, could harm our reputation with customers.

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The actual or perceived failure to adequately address conflicts of interest could affect the willingness of clients to deal with us, which could adversely affect our businesses, and could give rise to litigation or enforcement actions.

Key is subject to corporate responsibility and sustainability efforts risks that could adversely affect our reputation and our business and results of operations.

Views about corporate responsibility and sustainability-related issues are diverse, dynamic, and rapidly changing.

Financial services companies, including Key, face increasing criticism from social and environmental activists who target companies, including Key, for engaging in business with clients engaged in industries which such activists perceive to be harmful to communities or the environment.

Such criticism directed at Key could generate dissatisfaction among our stakeholders.

Additionally, however we respond to such criticism, we face the risk that current or potential clients may decline to do business with us or current or potential employees refuse to work with us.

This can be true regardless of whether we are perceived by some as not having done enough to address activist concerns or by others as having inappropriately yielded to activist pressures.

Conversely, there exists anti-environmental, social and governance (ESG) and anti-diversity, equity, and inclusion (DEI) sentiment among certain stakeholders and government institutions, which has gained momentum across the U.S.

For example, President Trump recently issued an executive order opposing DEI initiatives in the private sector, and certain states have

taken, and may in the future take, actions or proposed measures to limit the state’s ability to do business with financial institutions or other businesses identified as discriminating against certain industries or practices based on environmental or social criteria.

We could be exposed to reputational, financial, and legal risk as a result of anti-ESG and anti-DEI sentiment, and our ability to retain and attract customers and employees may be negatively impacted as a result of these contrasting arguments in how a financial institution should address these issues.

Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their corporate responsibility and sustainability practices and disclosures.

Negative coverage about Key published in traditional media or on social media websites, whether or not factually

correct, may affect our reputation and our business prospects and impact our ability to attract and retain highly skilled employees and customers.

There can be no assurance that such negative coverage will not damage our reputation and adversely affect our business.

Differing views on corporate responsibility and sustainability could adversely affect our reputation and our business and results of operations.

Views about corporate responsibility and sustainability-related issues are differing, dynamic, and rapidly changing.

Financial services companies, including Key, face increasing criticism with accompanying reputational risk from activists, politicians, investors, and stakeholders who believe companies should be focusing more or less on environmental, social, political, and governance matters.

Companies in our industry are also targeted for engaging or not engaging in business with specific customers or with customers in particular industries.

Additionally, however we respond to such criticism, we face the risk that current or potential customers may decline to do business with us (or encourage others to do so) or current or potential employees refuse to work for us and could subject us to litigation or regulatory action.

This can be true regardless of whether we are perceived by some as not having done enough to address these concerns or by others as having inappropriately yielded to stakeholder pressures.

Companies are also facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their corporate responsibility and sustainability practices and disclosures.

We may face criticism or a loss of confidence, with accompanying reputational risk, from our perceived action or inaction to deliver on our corporate responsibility and sustainability-related commitments.

Investors and other stakeholders, including U.S.

institutional investors, are increasingly considering how corporations are incorporating corporate responsibility and sustainability matters, including climate-related financial risks, into their business strategy when analyzing the expected risk and return of potential investments.

The specific factors considered, as well as the approach to incorporating the factors into a broader investment process, vary by investor and can shift over time.

These shifts in investing priorities may result in adverse effects on the trading price of our common stock if investors determine that Key has not made sufficient progress on corporate responsibility and sustainability matters or is not aligned with the investors’ priorities.

institutional investors, are increasingly considering how corporations are (or are not) incorporating corporate responsibility and sustainability matters, including climate-related financial risks, into their business strategy when analyzing the expected risk and return of potential investments.

These considerations in investing priorities may result in adverse effects on the trading price of our common stock if investors determine that Key is not aligned with investors’ priorities.

In addition, collecting, measuring, and reporting corporate responsibility and sustainability information and metrics can be costly, difficult and time consuming, is subject to evolving and potentially conflicting reporting standards, and can present numerous operational, reputational, financial, legal, and other risks.

Further, inadequate processes to collect and review this information prior to disclosure could result in potential liability related to such information.

We rely on quantitative models to manage certain accounting, risk management, capital planning, and treasury functions.

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Additionally, as businesses and markets evolve, our measurements may not accurately reflect this evolution.

Models can also produce inadequate estimates due to errors in computer code, use of unsuitable data during development or input into the model during model use, or the use of a model for a purpose outside the scope of the model’s design.

Some models we use employ methodologies based on artificial intelligence (AI) or machine learning (ML).

These models bring some unique complexities from those of traditional models, such as the need for large datasets for training, the potential for algorithmic bias, and the difficulty in interpreting model decisions.

Models can also produce inadequate estimates due to errors in computer code, use of unsuitable data during model development or implementation, or the use of a model for a purpose outside the scope of the model’s design.

Some models we use employ methodologies based on artificial intelligence or machine learning.

Compared to traditional models, these models may involve some additional complexities, such as the need for large datasets for training, the potential for algorithmic bias, and difficulty in interpreting model outputs.

If our models fail to produce reliable results on an ongoing basis, we may not make appropriate risk management, capital planning, or other business or financial decisions.

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We have an enterprise-wide model risk management program designed to accurately identify, measure, report, monitor, and manage model risk.

The management of model risk includes independent validation and model governance, establishing and monitoring model control standards and model risk metrics, and completeness and accuracy of the inventory of models.

The management of model risk includes independent validation and model

governance, establishing and monitoring model control standards and model risk metrics, and completeness and accuracy of the inventory of models.

Banking regulators continue to focus on the models used by banks and bank holding companies in their businesses.

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

What changed 10-K

Item 1A. Risk Factors