KeyCorp third-quarter profit rises to $537 million as revenue hits record $2.04 billion

KeyCorp (KEY) reported third-quarter net income from continuing operations of $537 million, or 51 cents per diluted common share, the company said Tuesday in a filing. Revenue reached a record $2.04 billion.

The result compares with $454 million, or 41 cents per diluted share, a year earlier. That year-earlier figure included a $4 million after-tax benefit from an updated FDIC special assessment, and adjusted net income was $450 million.

Net income from continuing operations in the second quarter was $472 million, or 44 cents per diluted share.

Here's how the company did:

• Earnings per share: 51 cents per diluted share vs. 41 cents a year earlier
• Revenue: $2.04 billion vs. $1.89 billion a year earlier
• Net interest margin: 2.95% vs. 2.75% a year earlier
• Average deposits: $151.2 billion vs. $150.4 billion a year earlier

Revenue rose 8% from a year earlier and 4% from the second quarter.

Net interest income was $1.30 billion, up from $1.18 billion a year earlier. The company said the increase reflected a reduction in deposit costs as a result of declining interest rates and proactive deposit beta management.

It also cited the reinvestment of maturing low-yielding investment securities and fixed-rate swaps into higher-yielding investments, and a continued shift toward higher-yielding commercial and industrial loans.

The net interest margin, a measure of the spread a bank earns on its assets after funding costs, rose to 2.95%. That was up from 2.89% in the second quarter.

Noninterest income reached $744 million, up from $702 million a year earlier. Investment banking and debt placement fees were $214 million, up 27% from the second quarter and $30 million higher than a year earlier.

Trust and investment services income was $165 million, compared with $150 million a year earlier.

Total noninterest expense rose to $1.25 billion from $1.18 billion a year earlier. Personnel expense was $815 million, up from $742 million, which the company linked to continued investments in people, employee benefits and incentive compensation tied to noninterest income growth.

Average full-time equivalent employees numbered 17,700, compared with 17,414 a year earlier.

The provision for credit losses fell to $61 million from $107 million a year earlier and $92 million in the second quarter. The company said the provision reflected a reserve release of $28 million.

Net loan charge-offs were $89 million, or 0.32% of average total loans, down from 0.42% a year earlier. Nonperforming loans were $618 million, or 0.55% of period-end portfolio loans, compared with 0.62% a year earlier.

Average loans held for investment reached $111.6 billion, up $5.4 billion from a year earlier and $1.5 billion from the second quarter. The company said commercial and industrial lending drove the growth, while consumer loans continued to run off.

Average deposits rose $3.6 billion from the second quarter, driven by demand deposits and money market deposits.

The company repurchased $320 million of common shares during the quarter, at an average price of $22.57 per share. Shares outstanding fell 1.3% from the second quarter.

The Common Equity Tier 1 ratio was an estimated 11.1% at Sept. 30, down from 11.8% a year earlier. Return on average tangible common equity from continuing operations was 15.11%, up from 12.51% a year earlier.

Chairman and CEO Chris Gorman said, "These results reinforce our confidence in achieving and sustaining a return on tangible common equity of 15%+ by the end of 2027."

For 2026, the company now expects net interest income to rise about 10% on an operating basis, compared with a previous range of 9% to 11%. It expects revenue to rise about 8%, noninterest income to rise 4% to 5%, and adjusted noninterest expense to rise about 4%.

The company also expects average loans to rise about 5%, up from a previous range of 4% to 5%, and average commercial loans to rise about 10%, from a previous range of 8% to 10%. It expects net charge-offs of 37 to 39 basis points of average loans, down from a previous range of 40 to 45 basis points.

The company declared a quarterly dividend of 20.5 cents per common share, unchanged from a year earlier. It plans to repurchase $1.3 billion of common shares in 2026, according to a supplemental presentation furnished with the filing.

Here's how the segments did during the quarter:

• Consumer Bank: net income of $211 million vs. $208 million a year earlier
• Commercial Bank: net income of $516 million vs. $440 million a year earlier

The Commercial Bank's total revenue was $1.20 billion, compared with $1.12 billion a year earlier.

The company posted a supplemental information package on its website and furnished the press release and financial statements with the filing. KeyCorp is based in Cleveland, Ohio, and had assets of approximately $193 billion at Sept. 30, 2026.