KeyBank 2014 Annual Report Download - page 23

(a) See Figure 4 entitled “GAAP to Non-GAAP Reconciliations,” which presents the computation for estimated Common Equity Tier 1. The
table reconciles the GAAP performance measure to the corresponding non-GAAP measure, which provides a basis for period-to-period
comparisons.
(b) Capital conservation buffer must consist of Common Equity Tier 1 capital. As a standardized approach banking organization, KeyCorp is
not subject to the countercyclical capital buffer of up to 2.5% imposed upon an advanced approaches banking organization under the
Regulatory Capital Rules.
(c) As a standardized approach banking organization, KeyCorp is not subject to the 3% supplemental leverage ratio requirement, which
becomes effective January 1, 2018. Because KeyCorp has less than $700 billion in consolidated total assets and less than $10 trillion in
assets under custody, KeyCorp is not subject to the supplemental leverage buffer requirement of at least 2%, which becomes effective
January 1, 2018.
Revised prompt corrective action capital category ratios
Federal prompt corrective action regulations under the FDIA group FDIC-insured depository institutions into one
of five prompt corrective action capital categories: “well capitalized,” “adequately capitalized,”
“undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” In addition to
implementing the Basel III capital framework in the U.S., the Regulatory Capital Rules also revised, effective
January 1, 2015, the prompt corrective action capital category threshold ratios applicable to FDIC-insured
depository institutions under the federal banking regulators’ prior prompt corrective action regulations. The Prior
and Revised Prompt Corrective Action table, below, identifies the capital category threshold ratios for a “well
capitalized” and an “adequately capitalized” institution under the prior and the revised prompt corrective action
rules.
“Well Capitalized” and “Adequately Capitalized” Capital Category Ratios Under Prior and
Revised Prompt Corrective Action Rules
Prompt Corrective Action
Capital Category
Well Capitalized (a) Adequately Capitalized
Ratio Revised Prior Revised Prior
Common Equity Tier 1 Risk-Based 6.5 % N/A 4.5 % N/A
Tier 1 Risk-Based 8.0 6.0 % 6.0 4.0 %
Total Risk-Based 10.0 10.0 8.0 8.0
Tier 1 Leverage (b) 5.0 5.0 4.0 3.0 or 4.0
(a) A “well capitalized” institution also must not be subject to any written agreement, order or directive to meet and maintain a specific
capital level for any capital measure.
(b) As a standardized approach banking organization, KeyBank is not subject to the 3% supplemental leverage ratio requirement, which
becomes effective January 1, 2018.
We believe that, as of December 31, 2014, KeyBank (consolidated) would have met all revised “well capitalized”
prompt corrective action capital and leverage ratio requirements under the Regulatory Capital Rules if such
requirements had been effective at that time. The prompt corrective action regulations, however, apply only to
FDIC-insured depository institutions (like KeyBank) and not to BHCs (like KeyCorp). Moreover, since the
regulatory capital categories under these regulations serve a limited supervisory function, investors should not
use them as a representation of the overall financial condition or prospects of KeyBank.
U.S. implementation of the Basel III liquidity framework
In October 2014, the federal banking agencies published the final Basel III liquidity framework for U.S. banking
organizations (the “Liquidity Coverage Rules”) that create a minimum liquidity coverage ratio (“LCR”) for
certain internationally active bank and nonbank financial companies (excluding KeyCorp) and a modified version
of the LCR (“Modified LCR”) for BHCs and other depository institution holding companies with over $50
billion in consolidated assets that are not internationally active (including KeyCorp).
KeyBank will not be subject to the LCR or the Modified LCR under the Liquidity Coverage Rules unless the
OCC affirmatively determines that application to KeyBank is appropriate in light of its asset size, level of
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