KeyCorp Achieves Significant Milestones in Q4 2024: Record Wealth Growth, Enhanced Deposit Repricing Plan, and Strong Credit Performance

KeyCorp, a leading regional bank holding company, has achieved significant milestones in its fourth quarter of 2024. Despite reporting an EPS loss of $0.28 per share, the company's results marked another important step towards realizing its full earnings potential.

"Our fourth quarter results were strong," said Chris Gorman, Chairman and Chief Executive Officer of KeyCorp. "After adjusting for the impact of our second strategic securities repositioning, which we completed in December, EPS was a positive $0.38."

The company took advantage of the quarter to incur approximately $50 million of elevated expenses that it does not expect to recur. Adjusted revenue grew 11% sequentially and 16% year-over-year, driven by double-digit growth in both net interest income and adjusted fees.

"We exceeded our fourth quarter exit rate commitment by driving another strong quarter of client deposit growth," said Gorman. "Client deposits were up 1.5% sequentially and 4% year-over-year."

KeyCorp also continues to execute its disciplined and proactive deposit repricing plan, with deposit betas stronger than expected at 40% from the first rate cut.

"I continue to be encouraged by our strong credit performance," said Gorman. "Credit migration improved for the fourth consecutive quarter, criticized loans were down another $500 million, and net charge-offs were down $40 million sequentially."

The company's nonperforming assets are peaking, but assuming a constructive macro environment for the balance of the year, KeyCorp expects nonperforming loans to begin to decline by mid-year.

"We met or exceeded our financial targets on an operating basis that we detailed for you at the beginning of 2024," said Gorman. "Net interest income was in the middle of our targeted range, and fee growth was stronger than expected."

In consumer banking, KeyCorp grew relationship households in excess of 3% for the second consecutive year, with growth rates of 5-8% in its Western markets.

The company's assets under management reached another record high of approximately $61.4 billion as of year-end, while sales production in its mass affluent segment was also a new record.

"We enrolled an additional 5,000 clients and added over $100 million to the platform in the fourth quarter," said Gorman. "In the last two years, our mass affluent segment has added nearly 40,000 households with over $2 billion of AUM and almost $4.5 billion of total client assets."

In commercial payments and deposits, revenue grew mid-single digits year-over-year for the fourth quarter, while deposit balances were up 3% year-over-year.

"This is a testament to our relationship model," said Gorman. "We continue to develop our differentiated platform with plans to invest in additional software advisers and relationship bankers, enhanced digital and analytics tools."

KeyCorp's recent expansion of its presence in Chicago and Southern California has also been successful, with new teams hitting the ground running.