KeyBank 2006 Annual Report Download - page 40

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40
MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES
Figure 17 summarizes Key’s loan sales (including securitizations) for 2006 and 2005.
Commercial Commercial Residential Home Consumer
in millions Commercial Real Estate Lease Financing Real Estate Equity — Indirect Education Total
2006
Fourth quarter $ 80 $1,070 $ 13 $100 $2,474 — $ 983 $4,720
Third quarter 37 679 16 109 2 — 143 986
Second quarter 64 483 — 97 — — 110 754
First quarter 40 406 105 54 — — 172 777
Total $221 $2,638 $134 $360 $2,476 — $1,408 $7,237
2005
Fourth quarter $ 44 $ 792 $110 $ 95 $264 — $ 834 $2,139
Third quarter 40 710 — 99 3 $ 111 48 1,011
Second quarter 21 336 — 99 — 635 128 1,219
First quarter 18 389 — 98 31 992 208 1,736
Total $123 $2,227 $110 $391 $298 $1,738 $1,218 $6,105
FIGURE 17. LOANS SOLD (INCLUDING LOANS HELD FOR SALE)
Figure 18 shows loans that are either administered or serviced by Key,
but not recorded on the balance sheet. Included areloans that have
been both securitized and sold, or simply sold outright. As discussed
previously, the acquisitions of Malone Mortgage Company and the
commercial mortgage-backed securities servicing business of ORIX
Capital Markets, LLC added morethan $28 billion to our commercial
mortgage servicing portfolio during 2005.
December 31,
in millions 2006 2005 2004 2003 2002
Commercial real estate loans $ 93,611
a
$72,902 $33,252 $25,376 $19,508
Education loans 5,475 5,083 4,916 4,610 4,605
Home equity loans 2,360
b
59 130 215 456
Commercial lease financing 508 354 188 120 105
Commercial loans 268 242 210 167 123
Automobile loans ————54
Total $102,222 $78,640 $38,696 $30,488 $24,851
a
During 2006, Key acquired the servicing for seven commercial mortgage loan portfolios with an aggregate principal balance of $16.4 billion.
b
In November 2006, Key sold the $2.5 billion nonprime mortgage loan portfolio held by the Champion Mortgage finance business but continues to service these loans in accordance with the
terms of the sales agreement.
FIGURE 18. LOANS ADMINISTERED OR SERVICED
In the event of default by a borrower, Key is subject to recourse with
respect to approximately $619 million of the $102.2 billion of loans
administered or serviced at December 31, 2006. Additional information
about this recourse arrangement is included in Note 18 (“Commitments,
Contingent Liabilities and Guarantees”) under the heading “Recourse
agreement with Federal National Mortgage Association” on page 99.
Key derives income from several sources when loans are securitized or
sold, but Key retains the right to administer or service them. Key earns
noninterest income (recorded as “other income”) from fees for servicing
or administering loans. In addition, Key earns interest income from
securitized assets retained and from investing funds generated by escrow
deposits collected in connection with the servicing of commercial real
estate loans. These deposits have contributed to the growth in Key’s
average noninterest-bearing deposits over the past twelve months.
Figure19 shows the remaining final maturities of certain commercial and
real estate loans, and the sensitivity of those loans to changes in interest
rates. At December 31, 2006, approximately 37% of these outstanding
loans werescheduled to maturewithin one year.Loans with remaining
final maturities greater than one year include $20.2 billion with floating
or adjustable rates and $4.7 billion with predetermined rates.
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