KeyCorp (KEY) — Q2 2026 Earnings Preview

1. Earnings Preview

Key Takeaway: The bar is achievable but not low — consensus sits modestly below KEY's own guided ranges on NII and IB fees, and the stock has lagged KRE since earnings, suggesting the market is not pricing in a beat. The biggest swing factor is whether commercial loan growth momentum from Q1 continued into Q2.

KeyCorp heads into Q2 2026 earnings with a constructive but not euphoric setup. Management guided Q2 NII up ~3% sequentially at the Morgan Stanley conference (June 10), implying ~$1.26B, and consensus sits at $1.257B — essentially in line with guidance. Investment banking fees were guided to $175–180M, and consensus is at $178.5M, also tracking guidance. The bar on credit is benign: management guided charge-offs to ~40bps and consensus is at 40.6bps. The stock has gained +7.6% since Q1 earnings vs. KRE +10.3% and SPY +5.8%, meaning KEY has underperformed its regional bank peers — a setup that could be favorable if the print is clean. The wildcard is commercial loan growth: KEY grew commercial loans $3.3B (4% QoQ) in Q1 and guided $1.5B quarter-to-date at the June 10 conference, which if sustained would imply another strong quarter and potential upward revision to full-year loan guidance. Middle-market M&A pipeline conversion remains the key uncertainty on the fee side.

2. KPIs & Consensus Expectations

Key Takeaway: NII and NIM are the primary value drivers — both are tracking management guidance and consensus is a modest but achievable bar. Investment banking fees are the swing factor, with consensus at $178.5M vs. guided $175–180M range.

Table 1 — Q2 2026 Current Quarter Snapshot

Source: Visible Alpha consensus and actuals data. NIM consensus of 2.95% is below management’s guided exit of 3.05% by year-end, suggesting room for upside if repricing continues on pace.

Table 2 — Beat/Miss History (Last 8 Quarters, Top 2 KPIs: NII & Operating EPS)

Pattern: KEY has beaten NII consensus in 7 of the last 8 quarters and beaten Operating EPS in all 8. NII beats have been modest (0.2–1.5%), while EPS beats have been more consistent and larger (2–18%). The trend of consistent beats supports a constructive setup, though the magnitude of NII beats has narrowed — Q1 2026 was only +0.2%.

3. Guidance & Commentary Evolution

Key Takeaway: Guidance was raised at Q1 earnings and reiterated at the Morgan Stanley conference — no changes since, with management expressing confidence across NII, NIM, loan growth, and buybacks. The only area of acknowledged uncertainty is the timing of middle-market M&A conversion.

4. Guidance vs. Estimate Revision Tracker

Key Takeaway: Estimates have been broadly stable since Q1 earnings — NII and EPS estimates for Q2 and full-year 2026 are tracking management guidance with minimal drift. The lack of downward revision despite macro uncertainty is a mild positive signal.

Note: Post-Q1 earnings estimates are approximated from the VA matrix data. The stability of estimates since Q1 earnings reflects management’s clear guidance and the market’s confidence in the NIM expansion path. The slight upward drift in EPS estimates (+1.7% for FY 2026) is consistent with the buyback acceleration providing incremental EPS tailwind.

5. Stock Performance

Key Takeaway: KEY has underperformed KRE by ~270bps since Q1 earnings (+7.6% vs. +10.3%), suggesting the market has not fully rewarded KEY’s strong Q1 print and raised guidance. The underperformance vs. peers creates a favorable asymmetry heading into Q2.

KEY vs. KRE (Regional Bank ETF) vs. S&P 500 (SPY) — Indexed to 100 at Q1 2026 Earnings (April 16, 2026). Source: Stock Price Data.

KEY gained +7.6% from $21.67 to $23.32 since Q1 earnings (April 16, 2026), compared to KRE +10.3% and SPY +5.8%. KEY outperformed the S&P 500 but lagged the regional bank ETF by ~270bps. The stock dipped to a low of ~$20.75 in mid-May before recovering sharply in June, coinciding with the broader regional bank rally. The $3B buyback authorization announced May 14 provided a floor, and the Morgan Stanley conference on June 10 (where management reiterated all guidance) helped catalyze the June rally. The stock has been range-bound in the $23–$24 range since late June, suggesting the market is waiting for the Q2 print to determine the next leg. The sector ETF (KRE) is used as the benchmark given KEY’s classification as a regional bank.

6. Peer Commentaries: Q2 2026 Read-Throughs

Key Takeaway: Peers reporting Q2 2026 results this week paint a broadly constructive picture — strong C&I loan growth, benign credit, and NIM expansion are consistent themes, all of which are positive read-throughs for KEY. The one nuance: TFC cut its NII guide, driven by portfolio optimization and spread compression, which is a company-specific dynamic not directly applicable to KEY.

This section covers Q2 2026 earnings commentary from regional bank peers that reported before KEY: PNC (July 15), MTB (July 15), CFG (July 16), USB (July 16), TFC (July 17), FITB (July 17), and RF (July 17). All commentary reflects Q2 2026 results and forward guidance.

Commercial Loan Growth — Broad-Based Strength ✅ Positive Read-Through

Multiple peers reported strong C&I loan growth in Q2 2026, consistent with KEY’s own strong Q1 momentum and QTD commentary at the June conference:

• PNC reported average loans up 4% linked quarter, with “virtually all of the loan growth in C&I” driven by strong new production and higher utilization across almost every loan category. PNC noted line utilization increased in Q2 and expects it to “at least hold, maybe go up a little” in H2.
• MTB reported the “strongest quarterly loan growth since 2012 (excluding acquisitions and PPP)” with commercial loans up $2.3B to $66B, driven by middle market, business banking, and specialty businesses. MTB noted “90% of all the businesses grew quarter over quarter” on the C&I front.
• RF reported average loans up ~2% QoQ with growth “broad-based in commercial and industrial lending categories, including power and utilities, manufacturing, government and public sector, and retail trade.” RF noted loan pipelines are “up roughly 15% from a year ago.”
• CFG reported average loans up 2% QoQ and period-end loans up 3%, with C&I growth “broad-based” across technology, healthcare, energy, and FIG sectors. CFG noted “loan spreads remained stable in Q2” — an improvement from earlier spread compression.
• USB reported average loans up 3% QoQ and 7.1% YoY, with “virtually all categories in the commercial side green from a growth standpoint.”
• TFC reported average commercial loans up 1.3% QoQ with “broad-based momentum across industry, banking, middle market, and commercial real estate teams.”

Read-through for KEY: Broad-based C&I loan demand across the peer group is a strong positive signal for KEY’s Q2 commercial loan growth. KEY guided $1.5B QTD at the June 10 conference; peers suggest the demand environment remained supportive through quarter-end. Utilities and power — a specific area of strength KEY called out — was also highlighted by RF and others.

NII & NIM — Expansion Continues ✅ Positive Read-Through

Fixed-rate asset repricing continues to drive NIM expansion across the peer group, consistent with KEY’s mechanical NIM expansion story:

• PNC reported NII up 4% QoQ with NIM at 2.96% (+1bp QoQ). PNC remains on track for NIM above 3% by year-end, driven by fixed-rate asset repricing.
• RF reported NII up 2% QoQ with NIM at 3.66%, and expects NIM to “exit the year at approximately 3.7%.” RF noted “balance sheet repricing to support margin expansion over multiple years.”
• CFG reported NII up 4.4% QoQ with NIM expanding 3bps linked quarter, and projects Q4 2026 NIM of 3.22–3.27%.
• MTB reported NII up 2% QoQ with NIM stable at 3.70%, supported by the strongest quarterly loan growth since 2012.
• USB reported NII up 2.2% QoQ with NIM improving 2bps to 2.79%, and expects to reach 3% NIM “at some point in 2027.”
• TFC reported NII up 0.6% QoQ but cut its full-year NII guide to +1–1.5% (from +2–3%), citing portfolio optimization (exiting marine/RV loans, reducing auto), lower loan spreads, and less favorable deposit mix. This is a TFC-specific dynamic driven by deliberate portfolio repositioning, not a macro signal.

Read-through for KEY: The NII/NIM expansion trend is intact across the peer group. TFC’s guide cut is idiosyncratic (deliberate consumer portfolio exits) and is not a read-through for KEY, which is growing commercial loans and has a mechanical repricing tailwind from $17B of low-yielding assets rolling off in 2026. The peer data supports KEY’s guided ~3% QoQ NII growth for Q2.

Investment Banking / Capital Markets — Strong Quarter ✅ Positive Read-Through

Capital markets activity was strong across peers in Q2 2026, a positive signal for KEY’s IB fee guidance of $175–180M:

• PNC reported capital markets and advisory revenue up 25% QoQ, with “record M&A advisory fees” at Harris Williams. PNC noted capital markets will be down ~20% QoQ in Q3 as some activity was pulled forward.
• CFG reported capital markets hit a “second quarter record,” with fees up 14% QoQ and 46% YoY, driven by loan syndications and bond underwriting. CFG noted M&A pipelines are “strong and continue to build” and financial sponsors are “seeing levels of books not seen in the last five years.”
• TFC reported investment banking and trading revenue up 72% YoY, with “stronger client activity, improved deal economics, and continued momentum across capital markets.”
• USB reported capital markets revenue (ex-Btig) up 31% YoY, with strong activity in FX, syndications, and corporate bond underwriting.
• RF reported capital markets income increased modestly QoQ, with improvements in loan syndications and M&A advisory fees, though higher long-term rates impacted overall capital markets income.
• FITB reported capital markets fees of $154M, “in line with the $600M run rate.”

Read-through for KEY: The strong capital markets environment across peers is a positive read-through for KEY’s guided $175–180M IB fee range. CFG’s commentary on M&A pipelines building and sponsors seeing elevated deal flow is particularly relevant for KEY’s middle-market M&A business. The PNC caveat about Q3 pullback (activity pulled forward) is worth monitoring for KEY’s H2 IB fee trajectory.

Credit Quality — Broadly Benign ✅ Positive Read-Through

Credit quality remained strong or improved across the peer group in Q2 2026:

• PNC reported NCO ratio of 25bps (down 3bps QoQ), NPLs down 10% QoQ to 0.55% of loans, and “overall credit quality remains strong.”
• MTB reported NCOs of 23bps (down 8bps QoQ), “granular with no single net charge-off greater than $10M,” and non-accrual loans at a “two-decade low.”
• RF reported NCOs declined 12bps QoQ to 42bps, with “credit largely normalized.” Business criticized and NPL ratios both declined.
• CFG reported NCOs of 37bps (down 2bps QoQ), with non-accrual loans down 4% QoQ.
• TFC reported NCOs of 50bps (down 11bps QoQ), with the allowance declining 2bps to 1.51%.
• FITB reported NCO ratio of 30bps (down 7bps QoQ), “the lowest level since Q2 2023.”
• USB reported NCO ratio of 53bps (down 3bps QoQ), with NPA ratio improving 5bps to 0.33%.

Read-through for KEY: The broad improvement in credit quality across peers is a strong positive read-through for KEY’s guided ~40bps charge-off rate. Management flagged at the June conference that some credit metrics might “plateau or tick up slightly” in oil/gas, ag, and transportation — but the peer data suggests the overall credit environment remains benign, reducing the risk of a negative credit surprise.

Deposit Trends — Stable to Growing ○ Neutral / Positive Read-Through

Deposit trends were mixed but generally stable across peers:

• PNC reported average deposits stable QoQ, with non-interest bearing deposits growing 4% QoQ to 23% of total deposits.
• RF reported average deposits grew modestly, with NIB deposits up >1% QoQ. Interest-bearing deposit costs fell 3bps to 1.69%.
• MTB reported average deposits declined $0.7B QoQ but end-of-period deposits increased to $168.9B, driven by commercial and trust demand deposits.
• TFC reported average deposits up 1.5% QoQ, with interest-bearing deposit costs up 1bp to 2.10%.
• USB reported average deposits flat QoQ, with consumer deposits reaching a “third consecutive quarter of record” levels.

Read-through for KEY: KEY guided deposits to trough in early May and grow through year-end. The peer data is consistent with this — most banks saw seasonal Q2 deposit patterns with end-of-period balances recovering. KEY’s front-book consumer deposit rate has been held at 350bps since March 2025, suggesting limited repricing pressure.

Macro Outlook — Cautiously Optimistic ○ Neutral Read-Through

Peers described the macro environment as “solid” (RF), “stable” (USB, PNC), and “cautiously optimistic” (MTB), with consumer spending healthy and commercial clients generally well-positioned despite ongoing uncertainty:

• MTB noted the U.S. economy “held up well through the energy shock” with “cautious optimism for continued growth,” though consumer spending has slowed.
• PNC base case assumes GDP growth of ~2.1% in 2026 with unemployment ending the year at ~4.3%, and expects the Fed to keep rates stable throughout 2026.
• FITB forward curve assumes a 25bp rate hike in September 2026.
• RF described the operating environment as “solid” with “economic activity solid and despite ongoing uncertainty, businesses are generally well positioned.”

Read-through for KEY: The macro backdrop described by peers is consistent with KEY’s own characterization — cautiously optimistic, with pockets of softness in oil/gas, ag, and transportation but no broad deterioration. The rate hike scenario flagged by FITB (25bp in September) would be a modest headwind for KEY given its slight liability sensitivity on the front end, but management has noted the balance sheet is “fairly neutral” across a broad range of rate scenarios.

Peer Read-Through Summary

8. Insider Transaction Activity

Key Takeaway: No open-market buys since Q1 earnings; two discretionary sales by a Director and the CHRO — neither is unusual in size or timing, and the absence of insider buying is not a negative signal given the stock’s appreciation and the company’s active buyback program.

No open-market purchases were recorded since Q1 earnings. The two sales are modest in size relative to total holdings and are not clustered or unusual in timing. The company’s aggressive buyback program ($1.3B+ in 2026) is the primary capital return signal, and the absence of insider buying is not a red flag in this context. Source: SEC Form 4 filings.