KEYCORP NEW

Our actions and results during the third quarter of 2024 support our long-term targets and corporate strategy described in the “Introduction” section under the “Corporate strategy” heading on page 50 of our 2023 Form 10-K.

•Our relationship-based business model and our long-term strategic commitment to primacy, that is, serving as our client's primary bank, continues to serve us well, highlighted by a 4% year-over-year increase in client deposits and 3.5% net new relationship household growth annualized year-to-date.

•Since the launch of Key Private Client last year, serving mass affluent prospects, we have continued to see growth. In the third quarter, we had over five thousand new enrollments and approximately $620 million in assets added to the platform. Overall, our Assets Under Management have now reached $61.1 billion.

•Our continuous focus on maintaining our risk discipline has and will continue to position us to perform well through all business cycles. Net charge-offs remain at the low-end of our long-term target range of 40 to 60 basis points and have been below range the past few years.

•Expenses remained well-controlled, down approximately 1% compared to the prior year. This implies about 400 basis points of positive operating leverage on a year-over-year basis, excluding the securities portfolio repositioning.

•We ended the quarter with a Common Equity Tier 1 ratio of 10.8%(a), up approximately 100 basis points from a year ago, including the impact of our balance sheet repositioning and the strategic minority investment by Scotiabank.

(a)September 30, 2024 capital ratios are estimates

In addition to the actions and results described above, we executed the following strategic actions during the third quarter of 2024:

Strategic Minority Investment by Scotiabank

On August 12, 2024, we entered into an Investment Agreement with Scotiabank pursuant to which Scotiabank agreed to make a strategic minority investment in KeyCorp of approximately $2.8 billion, representing approximately 14.9% pro forma common stock ownership of KeyCorp, for a fixed price of $17.17 per share. On August 30, 2024, Scotiabank completed the initial purchase of KeyCorp’s Common Shares with an investment of approximately $821 million in gross proceeds. With this investment, Scotiabank owns approximately 4.9% of KeyCorp’s common stock. The parties expect to complete the final purchase of approximately $2.0 billion of KeyCorp’s common stock in the first quarter of 2025, subject to Federal Reserve approval. Refer to Note 19 (“Shareholders’ Equity”) for additional information on this transaction.

Securities Repositioning

On September 6, 2024, we initiated a strategic repositioning of our available-for-sale investment securities portfolio by selling approximately $7.0 billion in market value of low-yielding mortgage-backed securities. The mortgage-backed securities that were sold had a weighted average book yield of approximately 2.3% and an average duration of approximately six years. Reinvestment of the proceeds from the sale was completed in October, with the new securities having an average book yield of approximately 4.95% and an average duration of approximately four years. During the third quarter of 2024, along with our customary sale of short-dated U.S. Treasuries set to mature within the quarter, we also sold approximately $3 billion in U.S. Treasuries yielding 50 basis points that were set to mature in the fourth quarter of 2024. The total pre-tax loss on sale of securities available for sale for the third quarter was $935 million of which $918 million was associated with the strategic repositioning.

Business outlook

Consistent with the forward guidance we provided on October 18, 2024, we expect these current year results, that is full year 2024 vs. full year 2023:

(a)Additional Guidance: End of period loans: down 5 to 6% vs. year-end 2023 balances; Net interest income (TE): Up low-single digits vs 4Q23 annualized exit rate, 10%+ 4Q24 vs 4Q23.

(b)Excludes the $918 million loss on sale of securities incurred from the repositioning of our available for sale investment securities portfolio in the third quarter of 2024.

(c) Noninterest expense guidance excludes the FDIC special assessment of $190 million, efficiency related expenses of $131 million, a pension settlement charge of $18 million recorded in 2023 and the FDIC special assessment of $28 million in 2024.

(d)Effective tax rate excluding the $918 million loss on sale of securities from the repositioning of our securities available for sale investment portfolio in the third quarter of 2024 would have been ~20%.