# KeyCorp (KEY)

Sector: Regional bank

| Field | Value |
|---|---|
| Price | $19.99 |
| Fair value (Analysts) | $23.10 |
| Discount to fair value | 13.5% |
| Fair value uncertainty (Analysts) | Medium |
| Economic moat (Analysts) | None |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2.29 |
| Data as of | 2026-10-16 |
| Next earnings | 2026-10-20 (confirmed) |

## In short

The market prices KeyCorp for a low net interest margin and doubts about its return targets, and a margin that reaches its year-end target with stable credit can close the gap over four to six quarters.

## Themes and gap

- Themes: Interest rates (interest-rates)
- Gap type: Can close (closable)
- Why: The Q3 2026 report on October 20, 2026, and the Q4 report on January 20, 2027, show whether the margin reaches the 2026 exit target.

## About

KeyCorp is a US regional bank holding company based in Cleveland, Ohio, and the parent of KeyBank. At June 30, 2026, it had $191 billion in assets, $110 billion in loans and $153 billion in deposits. Its Consumer Bank serves people and small businesses through branches from Maine to Alaska, and it offers wealth management with a record $74 billion of assets under management. Its Commercial Bank lends to middle-market and large companies, and its investment bank, KeyBanc Capital Markets, earns advisory, debt placement and syndication fees. It also has a large commercial payments business and services commercial mortgage loans for other lenders. Net interest income was about 64% of revenue in Q2 2026.

## Thesis

The market prices KeyCorp for a net interest margin that is still low for a bank of its size and for doubt that its returns can reach its targets. Its margin was 2.89% in Q2 2026, against a long-term target of 3.25% or more. Its return on tangible common equity was 12.9%, against a target of more than 15% by Q4 2027. Part of the gap comes from low-yield securities and fixed-rate swaps, so the margin rises only as they mature and KeyCorp reinvests the money at higher rates. The market also watches credit: nonperforming loans rose to 0.73% of loans at June 30, 2026, from 0.62% three months earlier. For the gap to close, three things must be true. The margin must reach the 3.00% to 3.05% exit rate that KeyCorp guides for Q4 2026. Commercial loans must keep growing 8% to 10% in 2026, and fee income from investment banking, payments and wealth management must keep growing. Net charge-offs must stay within the 0.40% to 0.45% guidance, so that buybacks continue. The Q3 2026 report on October 20, 2026, and the Q4 report on January 20, 2027, show whether the margin reaches 3.00%. If it does, the gap can close over the next four to six quarters, as the 2027 return target comes into view. The main reason it may not close is a margin that stalls below 3.00% because of high deposit costs or lower interest rates on new loans.

## Checkpoints

- Oct 20, 2026: Q3 2026 earnings: margin on track to 3.00%. Status: Pending. Watch: A net interest margin above 2.89% with the 3.00% to 3.05% exit rate kept and net charge-offs within 0.40% to 0.45% pass; a flat margin or a lower exit rate fails.
- Jan 20, 2027: Q4 2026 results and the 2027 outlook. Status: Pending. Watch: A Q4 2026 margin of 3.00% or more and a 2027 outlook that keeps a return of more than 15% by Q4 2027 pass; a margin below 3.00% or a later return target fails.

## Balance sheet

KeyCorp funds itself mostly with deposits. At June 30, 2026, total assets were $191.3 billion and deposits were $153.1 billion, up $4.4 billion from December 31, 2025. Estimated uninsured deposits were $68.8 billion. Other funding was $3.7 billion of bank notes and other short-term borrowings and $11.0 billion of long-term debt. Cash and due from banks was $1.7 billion and short-term investments were $12.4 billion. Securities were $38.5 billion available for sale and $9.5 billion held to maturity. Loans were $110.4 billion, and the allowance for credit losses was 1.56% of loans. Capital is the real limit. Total equity was $19.8 billion, including $2.5 billion of preferred stock, after an accumulated other comprehensive loss of $2.4 billion. The estimated CET1 ratio was 11.2%, and the long-term target for CET1 including unrealized losses is 9.5% to 10%. KeyCorp bought back $727 million of common shares in the first half of 2026 and redeemed $525 million of Series D preferred stock on September 15, 2026.

As of 2026-06-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/91576/000162828026052671/key-20260630.htm
- https://www.sec.gov/Archives/edgar/data/91576/000009157626000017/a2q26earningsrelease.htm
- https://www.sec.gov/Archives/edgar/data/91576/000162828026061680/barclaysconferencepresen.htm
- https://www.sec.gov/Archives/edgar/data/91576/000162828026057141/key-20260814.htm

## Recent events

- 2026-09-15: KeyCorp redeemed all of its Series D preferred stock, with a liquidation preference of $525 million.
- 2026-09-14: At an investor conference, KeyCorp raised its 2026 outlook. It now expects revenue up about 8% from 2025 (previously 7% to 8%) and fee income up 4% to 5% (previously 3% to 4%), with adjusted expenses up about 4%. It kept its guidance for net interest income up 9% to 11%, a net interest margin of 3.00% to 3.05% at the end of 2026, and net charge-offs of 0.40% to 0.45% of loans.
- 2026-07-21: KeyCorp reported Q2 2026 results. EPS was $0.44, up 26% from a year earlier, and revenue rose 7% to $1.96 billion. Net interest income rose 9% and the net interest margin rose to 2.89%. Period-end loans rose $1.2 billion from the prior quarter, with commercial and industrial loans up $2.1 billion. Net charge-offs were 0.42% of loans. The CET1 ratio was 11.2%, and KeyCorp bought back $341 million of shares.
- 2026-04-16: KeyCorp reported Q1 2026 results. EPS was $0.44, and the net interest margin was 2.87%.

## Risks

- High: KeyCorp's returns depend on a higher net interest margin. If deposit costs rise or rates on new loans and securities fall, the margin can stay below the 3.00% to 3.05% exit rate for 2026 and the 15% return target for Q4 2027 can slip.
- Medium: Nonperforming loans rose to $809 million, or 0.73% of loans, at June 30, 2026, from $682 million three months earlier. Commercial real estate and large commercial loans can bring higher losses in a weaker economy.
- Medium: Accumulated other comprehensive loss was $2.4 billion at June 30, 2026, mostly from unrealized losses on securities and swaps. Higher long-term interest rates can raise this loss and lower tangible capital.
- Low: Investment banking and commercial mortgage servicing fees change with the markets. Investment banking fees fell 14% from Q1 2026 to Q2 2026, and commercial mortgage servicing fees fell 30% from a year earlier.

## Links

- Page: https://picks.kamadorueda.com/company/KEY/
- History of changes: https://picks.kamadorueda.com/company/KEY/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/KEY.json

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