KeyCorp (NYSE:KEY) commercial banking head Ken Gavrity told investors the company’s commercial bank remains a significant contributor to revenue and funding, while outlining growth priorities across middle-market lending and commercial payments during a Feb. 9, 2026, presentation and fireside chat.
Commercial bank scale and growth runway
Gavrity said Key’s commercial bank generated $2.1 billion of revenue in 2025, representing “a little less than a third” of the company’s total revenue, and provided roughly 40% of overall deposits. He described two primary components of the commercial bank: the middle-market segment—defined as companies with $10 million to $1 billion in annual revenue—and a commercial payments platform that serves customers from small businesses through corporate and institutional clients.
Middle-market footprint, hiring, and 2025 performance
Gavrity said Key’s middle-market business operates with national reach, with teams in 30 markets and about 5,000 clients, and has an active presence across all 50 states. He said the footprint includes operations in 11 of the top 20 MSAs for middle-market companies and emphasized continued efforts to build density in existing markets, while selectively expanding when Key can recruit teams with “deep market ties” or vertical expertise.
He pointed to teams onboarded in Chicago and Southern California that he said have produced new customer growth, core deposits, and loan production at roughly two times the rate of the rest of the portfolio. He also announced a new Kansas City-based team focused on family offices nationally, which he described as a high-growth segment suited to Key’s integrated model.
On results, Gavrity said period-end C&I loan balances grew 9% in 2025, clients grew 4%, and pipelines were up more than 50% from the prior year period. He added that credit quality in the middle-market portfolio remained healthy, with net charge-offs and nonperforming loans at the low end of Key’s targeted range.
Gavrity also highlighted relationship depth metrics, saying 98% of middle-market deposits come from clients with an operating account, and that 90% of clients have at least one deposit or payment product, with more than 50% having three or more products.
Payments strategy and embedded banking momentum
Gavrity said Key’s payments business has been a “real growth engine,” describing it as closer to clients’ day-to-day operations and a source of durable fee income. He cited gross payment fees growing at an 8% CAGR over the past six years and rising 9% in 2025. Looking ahead, he reiterated an expectation for high single-digit to low double-digit growth in commercial payment fees.
He attributed that outlook to three areas:
- Payments “primacy” across commercial segments, with sales motions and incentives designed to attach operating accounts and payments when Key uses its balance sheet; he said a third of new commercial clients are payment and deposit-led.
- Product investment in treasury, liquidity, FX, and card services, alongside payments automation and “virtual ledgering,” supported by fintech partnerships. He cited partnerships with Qolo, Versapay, and RevSpring.
- Embedded banking, which he described as wrapping existing payment and reporting capabilities with APIs so clients can integrate Key into their own technology roadmaps. He said the embedded banking business doubled in 2025 and Key aims to double it again in 2026, citing a recent win with a pharmacy software platform that boarded as many merchant clients in a month as Key’s entire branch network.
2026 lending outlook, competition, and client sentiment
In discussion of 2026, Gavrity said Key’s full-year guidance for loan growth is more conservative than the prior year’s 9% growth, with an expectation of roughly 5% to 6%, while still aiming to outperform the market. He said the 2025 growth benefited from pent-up demand as banks pulled back on asset generation in 2023 and 2024, and he also said a pickup in middle-market M&A could be a headwind to balance growth as targets become new relationships.
On competition, he said Key’s differentiated middle-market approach is built on coordinating a holistic offering—capital markets, payments, wealth, and lending—for clients that may be too small for G-SIBs to serve with the same level of coordination. He also said private capital, while sizeable, tends to focus on higher leverage opportunities, and he does not see it competing for Key’s “core commercial customer” focused on lower-leverage revolvers and payments attachment.
Asked about macro uncertainty and tariff policy, Gavrity said middle-market clients have faced significant shocks in recent years and view themselves as resilient. He described client sentiment as “balanced sort of cautious optimism,” citing a Key middle-market survey (not yet released) in which just over 50% were neutral on the macro economy, while 77% were positive about their own businesses. He also said clients are watching potential benefits from accelerated depreciation tied to “one big, beautiful bill,” and investing in AI over the longer term.
Credit watchlist and operational priorities
Gavrity said the middle-market credit book is highly diversified with no concentrations he views as worrisome, but he flagged continued pressure in agriculture (commodity prices), healthcare (reimbursement rates and consumer responsibility-related bad debt), and consumer goods (lower margins and overseas components). Even in those areas, he said criticized assets, nonperforming loans, and charge-offs were trending positively.
He also discussed operational initiatives, including adding bankers—after achieving a 10% increase in the banker count last year and targeting a similar increase—alongside workflow tools, process streamlining in credit originations, and increased self-service adoption supported by automation and AI. He said Key is live in production with multiple AI “agents” in a proof of concept to reduce friction in commercial servicing, while emphasizing the need to maintain service quality.
In closing remarks, Gavrity said the commercial bank’s model is designed to deliver tangible customer value and sustainable shareholder returns, and he suggested the platform’s capabilities are best understood by seeing how it supports middle-market clients over time so they “never outgrow” the bank.
About KeyCorp (NYSE:KEY)
KeyCorp is a bank holding company headquartered in Cleveland, Ohio, that operates through its primary banking subsidiary, KeyBank. It provides a broad range of banking and financial services to individual consumers, small businesses, middle-market companies and large corporations. KeyBank’s offerings span traditional deposit and lending products as well as more specialized financial solutions designed for commercial and institutional clients.
The company’s product and service mix includes retail banking products such as checking and savings accounts, consumer and residential mortgage lending, and auto financing.
