KEYCORP NEW

Our 2024 financial results were generally positive and reflected the impact of large securities repositioning trades that enhanced our future earnings trajectory. Net interest income was down, reflecting lower loans and changes in interest rates, but remained within our target range versus 2023. Fee growth was stronger than expected reflecting the second highest year of investment banking revenues in our history. At December 31, 2024, our Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 11.92% and 13.69%, respectively. We achieved meaningful positive operating leverage in the second half of the year and look to continue to deliver earnings growth and operating leverage in 2025.

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 our Common Shares with an investment of approximately $821 million in gross proceeds. Following the initial purchase, Scotiabank owned approximately 4.9% of KeyCorp’s common stock.

On December 13, 2024, Key announced that all necessary bank regulatory approvals had been received for completion of Scotiabank’s strategic minority investment in KeyCorp. On December 27, 2024, Scotiabank completed the final purchase of our Common Shares contemplated under the Investment Agreement with an investment of approximately $2.0 billion (the “Second Closing”). Following the Second Closing, Scotiabank owns approximately 14.9% of our Common Shares.

On December 27, 2024, in connection with the Second Closing, the Board of Directors of KeyCorp increased the size of the Board to fifteen directors and appointed Jacqueline Allard and Somesh Khanna to serve on the Board, effectively immediately upon the Second Closing.

Refer to Note 24 (“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 2024, 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 the sale of securities available for sale for the third quarter was $935 million of which $918 million was associated with the strategic repositioning.

Prior to the Second Closing, KeyCorp completed the strategic repositioning of its available-for-sale investment securities portfolio by selling an additional $3.0 billion in market value of low-yielding investment securities and terminating approximately $3.0 billion of fair value hedges, resulting in a pre-tax loss of $915 million in the fourth quarter of 2024. The investment securities that were sold had a weighted average book yield of approximately 1.5% and an average duration of approximately eight years. The reinvestment of the proceeds from the repositioning was completed in December 2024, with the new securities having an average book yield of 5.5% and an average duration of approximately four years.

In addition to the items described above, the following actions and results during 2024 also supported our overall corporate strategy.

•We have expanded our commercial banking business in Chicago and Southern California to serve more middle market clients with our differentiated platform, which includes a full range of commercial lending and capital markets capabilities as well as payments solutions designed specifically for the segment.

•We completed core technological modernization projects of our commercial loan platform and our derivatives platform.

•We ended the year with $61.4 billion in assets under management and administration, a record high, reflecting the strong sales production in our mass affluent segment.

•Within our Consumer Bank, we grew relationship households in excess of three percent for the second consecutive year, including growth of five to eight percent throughout our western markets.

•We remained committed to our strategy to engage a high-performing and talented workforce and fostering an inclusive environment for all. We continue to be recognized by multiple organizations for our dedication to creating an environment where all employees are treated with respect and empowered to bring their authentic selves to work.

Business Outlook

Consistent with the forward guidance we provided on January 21, 2025, we expect these results for full year 2025 versus full year 2024.

(a) Ranges are shown on an operating basis.

(b) Additional Guidance: Net interest income (TE): 10%+ 4Q25 vs. 4Q24.

(c) Refer to the GAAP to Non-GAAP Reconciliation within Management's Discussion and Analysis of this Form 10-K for the reconciliation of these non-GAAP measures.

(d) Reflects the estimated full year taxable-equivalent adjustment.