- RF
- KEY
Quick Read
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Regions <a href="https://bitcomme.com/chi-rho-financial-appoints-daniel-hoinacki-head-of-capital-formation/” title=”Chi-Rho Financial Appoints Daniel Hoinacki Head Of Capital Formation”>Financial (RF) raised its dividend 13% to $0.30 quarterly, yielding 4.4%, while KeyCorp (KEY) has held flat at $0.205 since November 2022.
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Regions holds a 10.7% CET1 ratio and generates between 45 and 50 basis points of capital per quarter, consuming only 20 for its dividend.
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KeyCorp’s nonperforming assets jumped from $692M to $818M in one quarter, raising credit risk that could pressure its already-frozen payout.
Regions Financial (NYSE:RF) and KeyCorp (NYSE:KEY) reported second-quarter results in July. Regions raised its dividend by 13%, while KeyCorp held at $0.205. For retirees, the question is which balance sheet can support those payments.
Regions Pays More and Keeps Raising It
The new $0.30 quarterly payout gives Regions a forward yield of about 4.4% versus KeyCorp’s 4.1%. Regions has grown its dividend at a 16% compound annual rate over 10 years. KeyCorp has paid the same amount since November 2022. On earnings coverage, payouts take about 49% and 48% of trailing earnings.
Capital and Deposits Decide Whether Checks Keep Coming
Regulators set minimum capital levels. Credit losses or deposit outflows erode capital, and dividends get pressured first. KeyCorp cut its payout from $0.375 to $0.1875 in 2008.
Regions ended the quarter with a CET1 ratio (core capital as a share of risk-weighted assets) of 10.7%, and its Fed stress test coverage ratio of 101.4% ranked second highest among its peers. It generates 45 to 50 basis points of capital per quarter, and the new dividend uses about 20 basis points. Interest-bearing deposit costs of 1.72% lead its peers, which points to a loyal, low-cost depositor base. Management said clearly: “Our business model is not built around using high-cost deposits as a funding source.”
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Rate Cuts Help KeyCorp, but Credit Is Slipping
KeyCorp guides to 9-11% net interest income (NII) growth and a NIM of 3.25%+ by 4Q27, passing about 56% of rate cuts to depositors. Regions expects only 2.5-4% NII growth from a wider margin. KeyCorp’s concern: nonperforming assets rose to $818M from $692M in one quarter.
