Commercial loans outstanding increased by $3.3 billion, or 4.6%, to $75.2 billion at June 30, 2025, compared to December 31, 2024, primarily driven by broad-based increases in commercial and industrial loans. This growth contrasts with a $3.2 billion year-over-year decrease in average total loans.

Assets Under Management (AUM) reached a record high of $64.2 billion in Q2 2025, an 11.5% increase from $57.6 billion in Q2 2024. This growth, fueled by net positive cash inflows and market impacts, contributed to a 5.0% year-over-year increase in trust and investment services income.

Consumer loans outstanding decreased by $1.2 billion, or 3.7%, to $31.2 billion at June 30, 2025, compared to December 31, 2024. This decline across all consumer loan categories reflects management's intentional strategy to run off lower-yielding loans.

Management's continuous focus on risk discipline has resulted in net charge-offs tracking at the low-end of the current outlook for the year. The company's capital levels consistently exceed regulatory requirements, with a Common Equity Tier 1 ratio of 11.72% at June 30, 2025, demonstrating effective capital management.

Total noninterest expense increased 7.0% year-over-year to $1.154 billion in Q2 2025, primarily due to a 10.8% rise in personnel expense from investments in people and higher incentive compensation. However, other nonpersonnel expense grew by a modest 1.4%, indicating effective cost management alongside technology-related investments.

KeyCorp actively manages its balance sheet to maintain desired interest rate risk (IRR) positioning, with simulated exposure to interest rate changes being neutral at June 30, 2025. The company's modeled exposure remains within Board-approved tolerances, demonstrating effective hedging and investment strategies.

The provision for credit losses increased by $38 million year-over-year to $138 million in Q2 2025, primarily attributed to a higher reserve build to capture loan growth and a worsening macroeconomic outlook. This indicates management's concern over potential future credit quality deterioration.

KeyCorp faces ongoing regulatory challenges, including proposed revisions to the Large Financial Institution Rating System and lawsuits challenging CFPB rules (Sections 1071 and 1033). These developments could impose limitations on activities and acquisitions, and potentially lead to new compliance costs.

The VaR backtesting multiplier for KeyCorp increased from 3.0 at March 31, 2025, to 3.4 at June 30, 2025, due to five backtesting exceptions caused by large moves in rates. This suggests increased market volatility impacting the derivatives portfolio and potentially higher capital requirements.

KeyCorp's long-term strategic commitment to primacy and its relationship-based business model continue to serve it well, as evidenced by a 2% increase year-over-year in client deposits and net new relationship households. This indicates strong client retention and acquisition in a competitive market.

Noninterest income increased 10% year-over-year in Q2 2025, driven by strategically focused differentiated fee businesses. Investment banking and debt placement fees, for example, rose 41.3% year-over-year, highlighting KeyCorp's competitive strength in specialized financial services.

Assets Under Management (AUM) reached a record high of $64.2 billion in Q2 2025, up 11.5% from the prior year. This growth, driven by net positive cash inflows and market impacts, suggests a strong competitive position in attracting and retaining wealth management clients.

Other nonpersonnel expense increased by a modest $6 million, or 1.4%, year-over-year in Q2 2025, despite increases in business services and professional fees driven by technology-related investments. This indicates effective cost control in operational areas.

Personnel expense, the largest category of noninterest expense, increased by $69 million, or 10.8%, year-over-year in Q2 2025. This rise is attributed to continued investments in people and higher incentive compensation, suggesting a strategic focus on talent acquisition and retention.

KeyCorp mitigates operational risk through a comprehensive program involving risk identification, measurement, internal controls, and reporting, supported by an operational event database and software tools. This structured approach aims to maintain safety and soundness and maximize profitability.

Increases in business services and professional fees, contributing to noninterest expense, were driven by technology-related investments. This indicates ongoing allocation of resources to enhance technological capabilities and support business operations.

The Consumer Bank serves healthcare professionals nationally through its digital channel, alongside its 15-state branch footprint. This highlights efforts in digital transformation to reach a broader customer base and offer services through modern platforms.

ASU 2024-03 and ASU 2025-01, requiring additional disclosures about certain costs and expenses, are pending adoption by January 1, 2027. While not expected to materially impact Key’s disclosures, it represents an ongoing evolution in financial reporting standards that may require system adjustments.

The Board of Directors authorized a $1.0 billion share repurchase program on March 13, 2025, with repurchases expected to begin in the second half of 2025. This authorization indicates management's belief that shares are undervalued and a commitment to returning capital to shareholders.

KeyCorp's Common Equity Tier 1 ratio of 11.72% at June 30, 2025, significantly exceeds the regulatory minimum of 7.60%. All other capital ratios also remain above required levels, positioning the company to support organic growth and execute its capital priorities.

KeyCorp maintained its quarterly dividend of $0.205 per Common Share for Q2 2025, consistent with its capital plan. This demonstrates a stable approach to shareholder returns, supported by strong financial performance.

KeyCorp reported $2.4 billion in investments in LIHTC operating partnerships at June 30, 2025, for qualified affordable housing projects. This ongoing commitment highlights the company's social responsibility initiatives and contribution to community development.

The Board of Directors' Nominating & Corporate Governance Committee assists with oversight of corporate governance matters and Key's policies and practices on significant issues of corporate responsibility and sustainability efforts. This indicates a structured approach to ESG governance.

Management explicitly states that its ability to manage reputational risk includes risks related to corporate responsibility and sustainability efforts. This demonstrates an awareness of the importance of ESG factors in maintaining public trust and brand value.

As of June 30, 2025, KeyCorp noted continued economic resiliency but also elevated uncertainty due to recent changes in trade and other policies, and a complex geopolitical environment. The Moody's May 2025 Consensus forecast projects slowing U.S. GDP growth of 1.2% for 2025 and 1.5% for 2026.

Net interest income and margin benefited from lower deposit costs and the reinvestment of maturing low-yielding investments into higher-yielding assets. The company's simulated exposure to interest rate changes was neutral at June 30, 2025, indicating effective management of interest rate risk in the current environment.

The recently signed 'One Big Beautiful Bill Act' (OBBBA) makes permanent many 2017 tax provisions, though many changes are not effective until 2026. KeyCorp is evaluating the impact but does not expect any material change to its ongoing tax rate or results of operations in the near term.