KeyBank 2014 Annual Report Download - page 78

Securities
Our securities portfolio totaled $18.4 billion at December 31, 2014, compared to $17.1 billion at December 31,
2013. Available-for-sale securities were $13.4 billion at December 31, 2014, compared to $12.3 billion at
December 31, 2013. Held-to-maturity securities were $5 billion at December 31, 2014, compared to $4.8 billion
at December 31, 2013.
As shown in Figure 23, all of our mortgage-backed securities, which include both securities available for sale and
held-to-maturity securities, are issued by government-sponsored enterprises or GNMA, and are traded in liquid
secondary markets. These securities are recorded on the balance sheet at fair value for the available-for-sale
portfolio and at cost for the held-to-maturity portfolio. For more information about these securities, see Note 6
(“Fair Value Measurements”) under the heading “Qualitative Disclosures of Valuation Techniques,” and Note 7
(“Securities”).
Figure 23. Mortgage-Backed Securities by Issuer
December 31,
in millions 2014 2013 2012
FHLMC $ 5,666 $ 7,047 $ 7,923
FNMA 4,998 5,978 5,246
GNMA 7,636 3,997 2,746
Total (a) $ 18,300 $ 17,022 $ 15,915
(a) Includes securities held in the available-for-sale and held-to-maturity portfolios.
Securities available for sale
The majority of our securities available-for-sale portfolio consists of Federal Agency CMOs and mortgage-
backed securities. CMOs are debt securities secured by a pool of mortgages or mortgage-backed securities. These
mortgage securities generate interest income, serve as collateral to support certain pledging agreements, and
provide liquidity value under upcoming regulatory requirements. At December 31, 2014, we had $13.3 billion
invested in CMOs and other mortgage-backed securities in the available-for-sale portfolio, compared to $12.3
billion at December 31, 2013.
We periodically evaluate our securities available-for-sale portfolio in light of established A/LM objectives,
changing market conditions that could affect the profitability of the portfolio, the regulatory environment, and the
level of interest rate risk to which we are exposed. These evaluations may cause us to take steps to adjust our
overall balance sheet positioning.
In addition, the size and composition of our securities available-for-sale portfolio could vary with our needs for
liquidity and the extent to which we are required (or elect) to hold these assets as collateral to secure public funds
and trust deposits. Although we generally use debt securities for this purpose, other assets, such as securities
purchased under resale agreements or letters of credit, are used occasionally when they provide a lower cost of
collateral or more favorable risk profiles.
Throughout 2013 and 2014, our investing activities continued to complement other balance sheet developments
and provide for our ongoing liquidity management needs. Our actions to not reinvest the monthly security cash
flows at various times during this time period served to provide the liquidity necessary to address our funding
requirements. These funding requirements included ongoing loan growth and occasional debt maturities. At other
times, we may make additional investments that go beyond the replacement of maturities or mortgage security
cash flows as our liquidity position and/or interest rate risk management strategies may require. Lastly, our focus
on investing in GNMA-related securities is also related to liquidity management strategies as we continue to
make progress in preparing for future regulatory requirements.
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