Company: KEY-PI
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0000091576-25-000110
Chunk: 230

Company: KEYCORP /NEW/
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 8
Chunk 230
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 mid-2026. The U.S. Consumer Price Index is forecasted at 3.2% for 2025. The geopolitical environment remains both uncertain and complex. The U.S. administration’s policy changes pose potential downside-risks to the economic outlook over the next two years, although to what extent remains highly uncertain. These economic considerations continue to be addressed through a qualitative reserve adjustment, which leverages downside economic assumptions.As a result of the current economic uncertainty, our future loss estimates may vary considerably from our June 30, 2025 assumptions.Commercial Loan Portfolio The ALLL from continuing operations for the commercial segment increased by $29 million, or 2.7%, from March 31, 2025. The change in the reserve levels is reflective of a reserve build due to the worsening economic outlook, paired with loan growth and changes in the portfolio mix.  Consumer Loan Portfolio The ALLL from continuing operations for the consumer segment decreased by $12 million, or 3.2%,from March 31, 2025. The overall decrease in the consumer allowance was driven by the impact of loan runoff across all portfolio segments, which was partly offset by reserve increases due to the worsening economic outlook. 

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Credit Risk ProfileThe prevalent risk characteristic for both commercial and consumer loans is the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Evaluation of this risk is stratified and monitored by the loan risk rating grades assigned for the commercial loan portfolios and the refreshed FICO score assigned for the consumer loan portfolios. The internal risk grades assigned to loans follow our definitions of Pass and Criticized, which are consistent with published definitions of regulatory risk classifications. Loans with a pass rating represent those loans not classified on our rating scale for credits, as minimal credit risk has been identified. Criticized loans are those loans that either have a potential weakness deserving management's close attention or have a well-defined weakness that may put full collection of contractual cash flows at risk. Borrower FICO scores provide information about the credit quality of our consumer loan portfolio as they provide an indication as to the likelihood that a debtor will repay its debts. The scores are obtained from a nationally recognized consumer rating agency and are presented in the tables below at the dates indicated.Most extensions of credit are subject to loan grading or scoring. Loan grades are assigned at the time of origination, verified by credit risk management, and periodically re-evaluated thereafter. This risk rating methodology blends our judgment with quantitative modeling. Commercial loans