KEYCORP /NEW/

The following discussion provides a summary of recent regulatory developments and should be read in conjunction with the disclosure included in our 2025 Form 10-K under the heading “Supervision and Regulation” in Item 1. Business and under the heading “V. Compliance Risk” in Item 1A. Risk Factors as well as the disclosure included in Part II, Item 1A. "Risk Factors" of this report.

Regulatory capital requirements

KeyCorp and KeyBank are subject to regulatory capital requirements that are based largely on the Basel III international capital framework (“Basel III”). The Basel III capital framework and the U.S. implementation of the Basel III capital framework (“Regulatory Capital Rules”) are discussed in more detail in Item 1. Business of our 2025 Form 10-K under the heading “Supervision and Regulation — Regulatory Capital and Liquidity Requirements.”

Under the Regulatory Capital Rules, standardized approach banking organizations, such as KeyCorp and KeyBank, are required to meet the minimum capital and leverage ratios set forth in Figure 1 below. At September 30, 2026, KeyCorp’s ratios under the fully phased-in Regulatory Capital Rules were as set forth in Figure 1.

Figure 1. Minimum Capital Ratios and KeyCorp Ratios Under the Regulatory Capital Rules

(a)As a Category IV banking organization, KeyCorp is not subject to the 3% supplementary leverage ratio requirement.

(b)Stress capital buffer must consist of Common Equity Tier 1 capital. As a Category IV banking organization, KeyCorp is not subject to the countercyclical capital buffer of up to 2.5% imposed upon an advanced approaches banking organization or a Category III banking organization under the Regulatory Capital Rules. KeyCorp’s buffer is 3.20% as of October 1, 2025.

(c)September 30, 2026 capital ratios are estimates.

Revised prompt corrective action framework

The federal Prompt Corrective Action (“PCA”) framework under the FDIA groups FDIC-insured depository institutions into one of five prompt corrective action capital categories: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” In addition to implementing the Basel III capital framework in the United States, the Regulatory Capital Rules also revised the PCA capital category threshold ratios applicable to FDIC-insured depository institutions such as KeyBank. The revised PCA framework table in Figure 2 identifies the capital category threshold ratios for a “well capitalized” and an “adequately capitalized” institution under the PCA framework.

Figure 2. "Well Capitalized" and "Adequately Capitalized" Capital Category Ratios under Revised Prompt Corrective Action Framework

(a)A “well capitalized” institution also must not be subject to any written agreement, order, or directive to meet and maintain a specific capital level for any capital measure.

(b)As a Category IV national bank, KeyBank is not subject to the 3% supplementary leverage ratio requirement.

As of September 30, 2026, KeyBank (consolidated) satisfied the risk-based and leverage capital requirements necessary to be considered “well capitalized” for purposes of the revised PCA framework. However, investors should not regard this determination as a representation of the overall financial condition or prospects of KeyBank because the PCA framework is intended to serve a limited supervisory function. Moreover, it is important to note that the PCA framework does not apply to BHCs, like KeyCorp.

Stress Testing and Stress Capital Buffer

On September 30, 2026, the Federal Reserve adopted two final rules related to supervisory stress testing and stress capital buffer (“SCB”) requirements. One of the final rules codifies a process under which the Federal Reserve will annually disclose and seek public comment on the models and scenarios used in the supervisory stress test. The other final rule (the “SCB Averaging Rule”) is intended to reduce year-over-year volatility in capital requirements by revising the Federal Reserve’s approach to calculating SCBs for certain firms.

Under the Federal Reserve’s previous rules, and subject to a floor of 2.5%, the SCB of a firm subject to an annual supervisory stress test was calculated as the sum of the difference between the firm's starting and minimum projected CET1 capital ratio under the severely adverse scenario in the supervisory stress test (the “stress capital decline component”) plus four quarters of planned common stock dividends as a percentage of risk-weighted assets (the “dividend add-on component”). Under the SCB Averaging Rule, the Federal Reserve will generally calculate the stress capital decline component for a firm that is subject to the Federal Reserve’s supervisory stress test in two consecutive years by taking the average of the firm’s stress capital decline component over those two years. That average stress capital decline will then be added to the dividend add-on component from the current year to produce the firm’s final SCB, subject to a floor of 2.5%.

The SCB Averaging Rule also includes other changes to the Federal Reserve’s rules relating to SCBs, including a change that will make new SCBs effective January 1 of the year following the year in which the SCB was calculated, rather than October 1 of the year in which the SCB was calculated. The change to SCB effective dates will be effective for the 2027 supervisory stress test, but the Federal Reserve will not begin to implement SCB averaging until after the 2028 supervisory stress test. Accordingly, beginning January 1, 2029, the SCB assigned to a firm that was subject to both the 2027 and 2028 supervisory stress test will be calculated using the averaging approach described above. A firm that was subject to the 2028 supervisory stress test but not the 2027 supervisory stress test will be assigned an SCB calculated using only the results of the 2028 supervisory stress test.

As a Category IV banking organization, KeyCorp is not required to participate in the 2027 supervisory stress test, but may elect by January 5, 2027, to opt in to the 2027 test. If KeyCorp opts in to the 2027 test, it will receive a new SCB, effective January 1, 2028, equal to KeyCorp’s stress capital decline component calculated based on the results of the 2027 stress test, plus an updated dividend add-on component. If KeyCorp does not opt in to the 2027 test, KeyCorp’s new SCB, effective January 1, 2028, is expected to be equal to KeyCorp’s current SCB, as adjusted to reflect an updated dividend add-on component.

Community Reinvestment Act

Rules adopted by the federal banking regulators under the Community Reinvestment Act (“CRA”) require depository institutions to help meet the credit needs of the communities that they serve, including low- and moderate-income neighborhoods. In October 2023 the federal banking agencies adopted a final rule to substantially revise their regulations implementing the CRA. Various trade associations filed a lawsuit in the United States District Court for the Northern District of Texas against the rule, and in March 2024 the court in that case issued a preliminary injunction. The decision was appealed to the United States Court of Appeals for the Fifth Circuit, but the appeal was subsequently stayed after the federal banking agencies indicated that they intended to issue a proposal to rescind the 2023 rule and to generally reinstate the CRA framework that was in place prior to the issuance of that rule (the “rescission proposal”). The rescission proposal was issued on July 16, 2025.

On July 31, 2026, the FDIC and OCC withdrew the rescission proposal and instead proposed changes that, while reinstating the general framework of CRA rules that was in place prior to 2023 rule, would also make certain substantive changes to those rules. For example, the proposal would modify the criteria that would need to be satisfied for a bank to receive CRA credit for certain activities. The proposal would also change the thresholds for the application of certain CRA requirements to certain banks, but would not change the applicability of the CRA rules to KeyBank.