Company: KEY-PI
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001628280-25-048757
Chunk: 229

Company: KEYCORP /NEW/
Filing Date: 2025-11-04
Form: 10-Q
Item: Item 8
Chunk 229
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 two years, but no recession. U.S. GDP is expected to grow at an annual rate of 1.7% for 2025 and 2026. The expected National Unemployment Rate is forecasted to peak at 4.5% in mid-2026. The U.S. Consumer Price Index is forecasted to remain close to 3% through late 2026. The Federal Funds Rate decreases gradually over the next year, settling near 3%.The geopolitical environment remains both uncertain and complex, which poses potential downside-risks to the economic outlook over the next two years, although to what extent remains highly uncertain. These economic uncertainty 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 September 30, 2025 assumptions.Commercial Loan Portfolio The ALLL from continuing operations for the commercial segment decreased $3 million, or 0.3%, from June 30, 2025. The stable reserve levels are reflective of the uncertain economic environment, where economic drivers remain largely unchanged, as the full impacts of tariffs and other policy changes are lagged in making their way through the economy. Changes in loan balances and portfolio mix resulted in a decrease in reserves for our commercial real estate loan segment, which was partially offset by an increase in the reserves for our commercial and industrial segment.Consumer Loan Portfolio The ALLL from continuing operations for the consumer segment increased by $1 million, or 0.3%,from June 30, 2025. The stable reserve levels are reflective of the continued strong credit performance, particularly for the residential mortgage loan book which represents the largest segment of the consumer portfolio.

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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