KeyCorp

Good morning and welcome to Key Corp's fourth quarter earnings conference call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session. You can register a question by pressing star followed by the number one on your telephone keypad. As a reminder this conference is being recorded. I would now like to turn the conference over to Brian Morney, Key Corp Director of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. I'd like to thank you for joining Key Corp's fourth quarter 2024 earnings conference call. I am here with Chris Gorman, our Chairman and Chief Executive Officer, and Clark Kyatt, our Chief Financial Officer. As usual, we will reference our earnings presentation slides, which can be found in the investor relations section of the key.com website. In the back of the presentation, you will find our statement on forward-looking disclosures and certain financial measures, including non-GAAP measures. This covers our earnings materials as well as remarks made on this morning's call. Actual results may differ materially from forward-looking statements, and those statements speak only as of today, January 21, 2025, and will not be updated. With that, I will turn it over to Chris.

Thank you, Brian, and good morning, everyone. Our fourth quarter results marked another significant milestone for Key as we continue our journey to realize our full earnings potential. We reported an EPS loss of 28 cents per share. However, After adjusting for the impact of our second strategic securities repositioning, which we completed in December, EPS was a positive 38 cents. In the fourth quarter, we took the opportunity to incur approximately 50 million of elevated expenses that we would not expect to recur. Our revenue momentum is clearly defined and significant. Adjusting for the securities repositioning, revenue was up 11% sequentially and up 16% versus the prior year. Both net interest income and adjusted fees grew double digits. Regarding NII, while loan demand remained soft, we exceeded our fourth quarter exit rate commitment by driving another strong quarter of client deposit growth, up 1.5% sequentially and 4% year over year. Concurrently, we continue to execute our disciplined and proactive deposit repricing plan. Deposit betas have been stronger than expected, 40% from the first rate cut. Additionally, I continue to be encouraged by our strong credit performance. Credit migration improved for the fourth consecutive quarter. Criticized loans were down another $500 million, and net charge-offs were down $40 million sequentially. Non-performing assets are peaking and assuming the macro environment remains constructive for the balance of the year, we expect non-performing loans to begin to decline by mid-year. For the full year, I am proud that we met or exceeded the financial targets on an operating basis that we detailed for you at the beginning of 2024. Net interest income was in the middle of our targeted range and our exit rate was favorable. Fee growth was stronger than expected, more than offsetting the related expense levels. We achieved meaningful positive operating leverage in the second half of the year. Full-year net charge-offs were in line with guidance. Throughout the year, we continued to lay the groundwork that positions key to continue to deliver outsized growth and operating leverage in 2025. In consumer, We grew relationship households in excess of 3% for the second consecutive year, including growth of 5% to 8% throughout our western markets. In our eastern markets, we continued to grow households while continuing to penetrate the substantial wealth opportunity that exists in our scaled, mature markets. As of year end, our assets under management reached another record of approximately $61.4 billion. Sales production in our mass affluence segment also was record setting. We enrolled an additional 5,000 clients and added over $500 million to the platform in the fourth quarter. In the last two years, our mass affluence segment has added nearly 40,000 households with over $2 billion of AUM and almost $4.5 billion of total client assets. And currently, we have hired over 170 wealth professionals onto our platform, and we plan to hire another 60 or so in 2025. Turning to commercial payments and deposits. Commercial payments revenue grew mid-single digits year over year for the fourth quarter, and deposit balances were up 3% year over year, while being very disciplined on rate management, a testament to our relationship model. Over the last decade, payments has been an area of focus and an area of consistent investment. For example, we were one of the first banks to build embedded banking capabilities. We will continue to develop our differentiated platform with plans to invest in additional software advisors and relationship bankers, enhance digital and analytics tools, while concurrently continuing to invest in embedded banking. More broadly, in the middle market, we recently expanded our presence in Chicago and Southern California. Our new teams have hit the ground running. New loan volumes improved for the third consecutive quarter, and our pipelines are nearly double those of a year ago. I am confident in our ability to drive commercial loan growth this year. Finally, our investment banking results were outstanding for both the fourth quarter and for the full year. Fourth quarter fees were a robust $221 million, and full year fees were the second strongest in our history. Growth this quarter was broad-based across loan syndications, M&A, DCM, and ECM. 2024, we raised over $125 billion of capital for our clients, with $54 billion raised in the fourth quarter alone. Importantly, we are off to a strong start in 2025. Our pipelines, most notably M&A, remain at historically elevated levels. We successfully recruited senior bankers last year and plan to hire another 10% in 2025. Subject to the usual market caveats, I remain optimistic with respect to the trajectory of our investment banking business. In addition to the investments I just described, I'm also proud of the progress we made on a number of technological fronts last year. We completed two major core modernization projects. our core commercial loan platform, and our derivatives platform. We also made significant progress on our migration to the cloud, including our contact center technology and our consumer online banking portal. We expect to complete our cloud journey this year. At this point, all but two of our major systems and half of our apps have been successfully migrated to a hybrid cloud environment. In 2025, we plan to increase our overall tech spend by about 10% to $900 million, driven by transform or change the bank spend. Our ultimate objective is to make it easier for our clients to bank with Key and easier for our teammates to better serve the needs of our clients. Finally, I want to commend our team for the successful closing of the Scotiabank minority investment prior to year end. Relatedly, I also want to welcome two new board members, Jackie Allard and Samesh Khanna. Jackie and Samesh bring broad-based financial services, digital, and technology backgrounds that I believe will be additive to our already strong board of directors. I'm also pleased to welcome Mo Rahmani-Nakid as our new chief risk officer. Mo brings a wealth of industry experience. most recently serving as Deputy Chief Risk Officer at a large Category 3 bank. As we turn the page to 2025, we celebrate Key's 200th anniversary. This remarkable achievement is only possible because of the hard work of our teammates, both current and former, and their collective commitment to our clients, our communities, and our shareholders. I am grateful for their dedication to our company and proud to be part of their team. We enter 2025 from a position of strength. At year end, our reported common equity tier one ratio was 12%, and our marked CET one ratio was 9.8%, both in the top quartile of our peer group. We have pronounced tailwinds across both our net interest income and our high priority fee-based businesses. our credit profile remains strong. While we plan to make targeted investments in additional capabilities this year, we will remain disciplined with respect to our overall expenses, which we expect to grow in the low to mid single digit range. As a result, we will drive both fee-based operating leverage as well as a 10% or better overall operating leverage in 2025. In short, We are well positioned for a very strong year in 2025 and an exit rate that will further position Key for outsized growth again in 2026. With that, I will turn the call over to Clark to review the financial results and our 2025 outlook in greater detail. Clark? Thanks, Chris.