KeyBank 2007 Annual Report Download - page 77

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES
COMMUNITY BANKING
Regional Banking provides individuals with branch-based deposit and
investment products, personal finance services and loans, including
residential mortgages, home equity and various types of installment
loans. This line of business also provides small businesses with deposit,
investment and credit products, and business advisory services.
Regional Banking also offers financial, estate and retirement planning,
and asset management services to assist high-net-worth clients with their
banking, trust, portfolio management, insurance, charitable giving and
related needs.
Commercial Banking provides midsize businesses with products and
services that include commercial lending, cash management, equipment
leasing, investment and employee benefit programs, succession planning,
access to capital markets, derivatives and foreign exchange.
NATIONAL BANKING
Real Estate Capital provides construction and interim lending,
permanent debt placements and servicing, and equity and investment
banking services to developers, brokers and owner-investors. This line
of business deals exclusively with nonowner-occupied properties (i.e.,
generally properties in which at least 50% of the debt service is provided
by rental income from nonaffiliated third parties).
Equipment Finance meets the equipment leasing needs of companies
worldwide and provides equipment manufacturers, distributors and
resellers with financing options for their clients. Lease financing
receivables and related revenues are assigned to other lines of business
(primarily Institutional and Capital Markets, and Commercial Banking)
if those businesses are principally responsible for maintaining the
relationship with the client.
Institutional and Capital Markets provides products and services to
large corporations, middle-market companies, financial institutions,
government entities and not-for-profit organizations. These products and
services include commercial lending, treasury management, investment
banking, derivatives and foreign exchange, equity and debt underwriting
and trading, and syndicated finance.
Through its Victory Capital Management unit, Institutional and Capital
Markets also manages or gives advice regarding investment portfolios
for a national client base, including corporations, labor unions, not-for-
profit organizations, governments and individuals. These portfolios
may be managed in separate accounts, common funds or the Victory
family of mutual funds.
Consumer Finance includes Indirect Lending, Commercial Floor Plan
Lending, Home Equity Services and Business Services.
Indirect Lending offers loans to consumers through dealers. This business
unit also provides federal and private education loans to students and their
parents, and processes tuition payments for private schools.
Commercial Floor Plan Lending finances inventory for automobile and
marine dealers.
Home Equity Services works with home improvement contractors to
provide home equity and home improvement financing solutions.
Business Services provides payroll processing solutions for businesses of
all sizes.
OTHER SEGMENTS
Other Segments consist of Corporate Treasury and Key’s Principal
Investing unit.
RECONCILING ITEMS
Total assets included under “Reconciling Items” primarily represent the
unallocated portion of nonearning assets of corporate support functions.
Charges related to the funding of these assets are part of net interest
income and are allocated to the business segments through noninterest
expense. Reconciling Items also includes intercompany eliminations
and certain items that are not allocated to the business segments because
they do not reflect their normal operations.
4. LINE OF BUSINESS RESULTS
The discontinued assets and liabilities of Champion Mortgage included
in the Consolidated Balance Sheets on page 61 are as follows:
McDonald Investments branch network
On February 9, 2007, McDonald Investments Inc., a wholly owned
subsidiary of KeyCorp, sold its branch network, which included
approximately 570 financial advisors and field support staff, and certain
fixed assets to UBS Financial Services Inc., a subsidiary of UBS AG. Key
received cash proceeds of $219 million and recorded a gain of $171
million ($107 million after tax, $.26 per diluted common share) in
connection with the sale. Key retained McDonald Investments’ corporate
and institutional businesses, including Institutional Equities and Equity
Research, Debt Capital Markets and Investment Banking. In addition,
KeyBank continues to operate the Wealth Management, Trust and
Private Banking businesses. On April 16, 2007, Key renamed the
registered broker/dealer through which its corporate and institutional
investment banking and securities businesses operate. The new name is
KeyBanc Capital Markets Inc.
December 31,
in millions 2007 2006
Loans $8 $10
Loans held for sale —179
Accrued income and other assets —22
Total assets $8 $211
Deposits —$ 88
Accrued expense and other liabilities $10 17
Total liabilities $10 $105