KeyCorp's Tangible Common Equity Return Crosses 15%

The Tip Desk · October 22, 2026 · 3 min read

Return on average tangible common equity reached 15.11% as taxable-equivalent net interest income rose to $1.31 billion and investment banking fees hit $214 million.

KeyCorp (KEY), a Cleveland-based bank with about $193 billion of assets, posted third-quarter 2026 net income from continuing operations attributable to common shareholders of $537 million, or $0.51 a share, up 24% from a year earlier.

The more consequential turn was in profitability. Return on average tangible common equity from continuing operations rose 222 basis points sequentially to 15.11%, crossing the 15%+ level Chairman and CEO Chris Gorman had targeted for year-end 2027. Gorman said the results “reinforce our confidence in achieving and sustaining a return on tangible common equity of 15%+ by the end of 2027.”

Taxable-equivalent net interest income was $1.31 billion, up $50 million from the second quarter. The net interest margin expanded 6 basis points sequentially to 2.95%, after a 2 bps sequential expansion in the prior quarter, and 20 bps year-over-year. The company said the sequential increase reflected growth in commercial and industrial loans and higher deposit balances, reinvestment of proceeds from maturing low-yielding investment securities and fixed-rate swaps into higher-yielding investments, and higher rates on repricing earning assets, plus one additional day in the quarter. Versus the third quarter of 2025, the company attributed the year-over-year lift to lower deposit costs from declining rates and deposit beta management, the same securities reinvestment, an expanding balance sheet, and a strategic shift toward higher-yielding C&I loans, partly offset by lower rates on repricing earning assets.

Average deposits increased $3.6 billion sequentially to $151.2 billion, outpacing a $1.5 billion sequential rise in average loans held for investment. Deposit growth was led by demand, money market, and noninterest-bearing balances. Average commercial and industrial loans rose 3.7% sequentially to $64.4 billion. Average consumer loans declined 2.0% sequentially to $28.5 billion, which the company described as intentional run-off of low-yielding consumer credit.

Investment banking and debt placement fees increased 27% sequentially to $214 million. Total noninterest income was $744 million. Commercial Bank net income attributable to Key rose 22.0% sequentially to $516 million, with taxable-equivalent revenue up 8.4% sequentially. Consumer Bank net income was $211 million, essentially unchanged sequentially.

Credit costs eased. Net loan charge-offs fell to $89 million, or 0.32% of average loans, from 0.42% in both the prior quarter and the year-ago quarter. Nonperforming loans declined 23.6% sequentially to $618 million, or 0.55% of period-end loans. Provision for credit losses declined 33.7% sequentially to $61 million. Commercial Bank provision fell 88.1% sequentially to $8 million on a reserve release; Consumer Bank provision rose 111.5% sequentially to $55 million on a reserve build. The allowance for credit losses was $1.7 billion, or 1.50% of period-end loans.

The estimated Common Equity Tier 1 ratio declined 10 basis points sequentially to 11.1%. Key repurchased $320 million of common shares in the third quarter and declared a $0.205 dividend. Shares outstanding ended at 1.06 billion.