Company: KEY-PI
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000091576-25-000038
Chunk: 221

Company: KEYCORP /NEW/
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 221
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 net interest margin reflects higher deposit costs, partly due to a shift in funding mix from noninterest-bearing deposits to higher cost deposits in 2024, and lower loan balances, in part due to the residual effect of Key’s balance sheet optimization efforts during the second half of 2023. Net interest income (TE) and the net interest margin benefited from higher earning asset yields as a result of the higher interest rate environment, including the reinvestment of proceeds from maturing investment securities into higher-yielding investments. Net interest income (TE) and the net interest margin also benefited from the maturity of interest rate swaps with negative carry, and an increase in lower-cost deposits, which contributed to the decline in wholesale borrowings. In addition, during the second half of 2024, Key completed the available-for-sale portfolio repositioning, which involved the sale and reinvestment of approximately $10.0 billion of lower-yielding mortgaged-backed securities into higher-yielding investments. 

Average loans totaled $107.7 billion for 2024, compared to $118.0 billion in 2023. The $10.3 billion decrease reflected continued tepid client loan demand. Commercial loans decreased $7.6 billion, due to lower commercial and industrial loans and commercial mortgage real estate loans. Additionally, average consumer loans declined by $2.6 billion, reflective of broad-based declines across all consumer loan categories. 

Average deposits totaled $146.2 billion for 2024, an increase of $2.1 billion compared to 2023, reflecting growth in both consumer and commercial deposits, partially offset by a decline in brokered CDs. 

Figure 1 shows the various components of our balance sheet that affect interest income and expense and their respective yields or rates over the past three years. This figure also presents a reconciliation of TE net interest income to net interest income reported in accordance with GAAP for each of those years. The net interest margin, which is an indicator of the profitability of our earning assets less the cost of funding, is calculated by dividing taxable-equivalent net interest income by average earning assets.

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Figure 1. Consolidated Average Balance Sheets, Net Interest Income, and Yields/Rates from Continuing Operations(g) 

Year ended December 31,202420232022Dollars in millionsAverageBalanceInterest (a)Yield/Rate (a)AverageBalanceInterest (a)Yield/Rate (a)AverageBalanceInterest (a)Yield/Rate (a)ASSETSLoans (b