Oct 20, 2026 earnings call — Record revenue and strong commercial loan growth
Reported record quarterly revenue of over $2 billion and earnings of $0.51 per share.
Revenue $2.0B (est $2.0B) · EPS $0.51 (est $0.46)
Key quotes
"Average deposit balances increased $3.6 billion or 2.4% sequentially, exceeding loan growth and allowing us to reduce wholesale funding."
"We continue to embed AI in enterprise-wide end-to-end processes, currently targeting four domains: commercial onboarding and servicing, commercial originations, consumer servicing, and software engineering."
"During the quarter, we repurchased $320 million of common stock, keeping us on pace to achieve our full year share repurchase target of $1.3 billion."
Analyst Q&A 10
Deposit growth and funding
Q (Manan Gosalia · Morgan Stanley): Why did deposits grow strongly this quarter and how will that affect funding, beta, and wholesale borrowing?
A: Management said deposit growth came from seasonal commercial flows, deeper relationships with existing clients, and new-to-bank clients. They are confident deposits can fund fourth-quarter loan growth and expect to grow deposits at or better than loans through 2027.
"I'd say the trends we're seeing now continue to be encouraging, which gives us confidence that we can fund our 4Q loan growth with client deposits." — Clark Khayat (CFO)
Margin path to 4Q 2027
Q (Scott Siefers · TD): How will margin get to 3.25%+ by 4Q 2027 despite near-term noise? What gives you confidence?
A: Management pointed to several drivers: a large fixed asset repricing opportunity, client deposit growth, and the ability to grow deposits faster than loans to pay down wholesale funding. They said $24 billion of securities and resi mortgages rolling off will give a weighted average yield pickup that materially drives NIM expansion.
"Between now and the end of 2027, we have about $24 billion of security swaps and resi mortgages rolling off." — Clark Khayat (CFO)
AI and utility loan exposure
Q (Ebrahim Poonawala · BofA): How much loan growth is tied to AI build-out and could a slowdown in AI financing hurt activity?
A: Management said utility investment is long-term and only a portion is AI-related; Key has less than $1 billion of direct data center exposure, mainly to hyperscalers. They noted internal limits, conservative underwriting, and that AI-adjacent exposure in business services is very small.
"In terms of high impact on what I call AI adjacency outside of the data center point that Chris made, that number is very small, less than $1 billion of potential disruption there in business services." — Mo Ramani
Data center exposure
Q (Mike Mayo · Wells Fargo): Are data centers a focus, risk, or growth area for lending? How do you view that exposure?
A: Management said data center exposure is not a focus and they're cautious. They have about $1 billion of exposure, and that exposure is primarily to hyperscalers rather than to builders of data centers.
"As I mentioned, we have about $1 billion of data center exposure, but that data center exposure is really to the hyperscalers." — Chris Gorman (CEO·CHAIR)
Buybacks and capital plan
Q (Chris McGratty · KBW): How should we think about buybacks versus capital build amid Basel III uncertainty and improving growth?
A: Management said they feel good about the current capital position and expect Basel III changes likely early 2027 to add roughly 100 basis points to the capital ratio. They reiterated fourth-quarter buybacks to reach $1.3 billion for the year and said future buyback clarity will come in January.
"As a reminder, when those come in on the risk-weighted asset reduction, we get roughly 100 basis points of additional benefit to the capital ratio." — Clark Khayat (CFO)
Deposits after loans slow
Q (Erika Najarian · UBS): If earning-asset growth slows, how will deposits progress year-over-year and how long does it take deposits to follow loans?
A: Management said bankers are expected to attach deposits and payments to loans, but deposits do not move instantly and take time to flow after loans. They expect some commercial deposit pull-through from 2026 production even if loan growth slows in 2027.
"When you make a loan to a client, we have a theory here that we have espoused for the last decade or so, which we refer to as kind of payments attachment." — Clark Khayat (CFO)
Deposit mix and beta near term
Q (John Pancari · Evercore): How will deposit mix and noninterest-bearing accounts evolve, and how should we think about mid-50s beta timing and near-term cost?
A: Management said commercial deposits will be more interest bearing due to hybrids and operating accounts, and they are doing targeted consumer rate actions in some markets. They expect deposit beta to be low-40s in 4Q then move to mid-50s over a few quarters, depending on rate moves.
"I think that commercial loan growth will come on kind of consistent with the portfolio rate we see today, obviously subject to indexed changes from rate hikes." — Clark Khayat (CFO)
Rate sensitivity and AI use cases
Q (David Chiaverini · Jefferies): Is loan growth the main swing factor for NIM if the bank stays rate-neutral? How will you use AI in commercial originations?
A: Management said loan growth, deposit growth, and deposit cost are the main drivers; they expect low-40s beta in 4Q then mid-50s over two to three quarters. For AI, they will re-engineer complex commercial processes to streamline decisions and improve banker and client experience, using AI to augment relationships.
"I do think we'll see kind of low 40s beta here in the fourth quarter, and that'll over the next probably first or second quarter of 2027 would start to move up to mid-50s." — Clark Khayat (CFO)
Consumer loan runoff and redeployment
Q (Matthew O'Connor · Deutsche Bank): How much are you running down consumer balances and where will those balances settle? Any consumer lending initiatives?
A: Management said consumer runoff is intentional and has moved from about $600 million to $400 million quarterly given rates; they are redeploying from safe jumbo mortgages into C&I. They plan to grow home-equity offerings with a digital interface in 2027.
"What we're doing is we're basically redeploying out of mortgages that are very safe mortgages because they're made to they're jumbo mortgages, they're first mortgages to doctors and dentists." — Chris Gorman (CEO·CHAIR)
Liability sensitivity and swaps
Q (Ken Usdin · Autonomous): How does front-end liability sensitivity and recent swap adds affect rate sensitivity going forward?
A: Management said they are slightly liability sensitive on the short end as deposit beta rises; they've been replacing swaps as they roll off at higher levels and did some maintenance out to 2028 and 2029. Overall they feel in maintenance mode and comfortable with balance neutrality.
"And we've effectively been replacing swaps at this point as they roll off and, as we noted, replacing them at much higher levels right now." — Clark Khayat (CFO)