KeyBank 2014 Annual Report Download - page 107

and monitoring internal control mechanisms lies with the managers of our various lines of business. The
Operational Risk Committee, a senior management committee, oversees our level of operational risk and directs
and supports our operational infrastructure and related activities. This committee and the Operational Risk
Management function are an integral part of our ERM Program. Our Risk Review function periodically assesses
the overall effectiveness of our Operational Risk Management Program and our system of internal controls. Risk
Review reports the results of reviews on internal controls and systems to senior management and the Audit
Committee and independently supports the Audit Committee’s oversight of these controls.
Cybersecurity
We devote significant time and resources to maintaining and regularly updating our technology systems and
processes to protect the security of our computer systems, software, networks, and other technology assets
against attempts by third parties to obtain unauthorized access to confidential information, destroy data, disrupt
or degrade service, sabotage systems, or cause other damage. We and many other U.S. financial institutions have
experienced distributed denial-of-service attacks from technologically sophisticated third parties. These attacks
are intended to disrupt or disable consumer online banking services and prevent banking transactions. We also
periodically experience other attempts to breach the security of our systems and data. These cyberattacks have
not, to date, resulted in any material disruption of our operations, material harm to our customers, and have not
had a material adverse effect on our results of operations.
Cyberattack risks may also occur with our third-party technology service providers, and may interfere with their
ability to fulfill their contractual obligations to us, with attendant potential for financial loss or liability that could
adversely affect our financial condition or results of operations. Recent high-profile cyberattacks have targeted
retailers and other businesses for the purpose of acquiring the confidential information (including personal,
financial, and credit card information) of customers, some of whom are customers of ours. We may incur
expenses related to the investigation of such attacks or related to the protection of our customers from identity
theft as a result of such attacks. Risks and exposures related to cyberattacks are expected to remain high for the
foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the
expanding use of Internet banking, mobile banking, and other technology-based products and services by us and
our clients.
Fourth Quarter Results
Figure 45 shows our financial performance for each of the past eight quarters. Highlights of our results for the
fourth quarter of 2014 are summarized below.
Earnings
Our fourth quarter net income from continuing operations attributable to Key common shareholders was $246
million, or $.28 per common share, compared to $229 million, or $.26 per common share, for the fourth quarter
of 2013.
On an annualized basis, our return on average total assets from continuing operations for the fourth quarter of
2014 was 1.12%, compared to 1.08% for the fourth quarter of 2013. The annualized return on average common
equity from continuing operations was 9.50% for the fourth quarter of 2014, compared to 9.10% for the year-ago
quarter.
Net interest income
Our taxable-equivalent net interest income was $588 million for the fourth quarter of 2014, and the net interest
margin was 2.94%. These results compare to taxable-equivalent net interest income of $589 million and a net
interest margin of 3.01% for the fourth quarter of 2013. The decrease in net interest margin was largely
attributable to lower earning asset yields and higher levels of excess liquidity driven by commercial deposit
growth.
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