KeyBank 2008 Annual Report Download - page 55

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MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES
by the securitized loans become inadequate to service the obligations of
the trusts, the investors in the asset-backed securities would have no
further recourse against Key. Additional information pertaining to
Key’s retained interests in loan securitizations is summarized in Note 1
under the heading “Loan Securitizations” on page 79, Note 6
(“Securities”), which begins on page 91, and Note 8 under the heading
“Retained Interests in Loan Securitizations” on page 94.
Commitments to extend credit or funding. Loan commitments provide
for financing on predetermined terms as long as the client continues to
meet specified criteria. These commitments generally carry variable
rates of interest and have fixed expiration dates or other termination
clauses. In many cases, a client must pay a fee to obtain a loan
commitment from Key. Since a commitment may expire without resulting
in a loan, the total amount of outstanding commitments may exceed
Key’s eventual cash outlay significantly. Further information about
Key’s loan commitments at December 31, 2008, is presented in Note 18
(“Commitments, Contingent Liabilities and Guarantees”) under the
heading “Commitments to Extend Credit or Funding” on page 113.
Figure 30 includes the remaining contractual amount of each class of
commitment to extend credit or funding. For loan commitments and
commercial letters of credit, this amount represents Key’s maximum
possible accounting loss if the borrower were to draw upon the full
amount of the commitment and then default on payment for the total
amount of the then outstanding loan.
Other off-balance sheet arrangements. Other off-balance sheet
arrangements include financial instruments that do not meet the definition
of a guarantee as specified in Interpretation No. 45, “Guarantor’s
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others,” and other relationships,
such as liquidity support provided to asset-backed commercial paper
conduits, indemnification agreements and intercompany guarantees.
Information about such arrangements is provided in Note 18 under
the heading “Other Off-Balance Sheet Risk” on page 115.
Contractual obligations
Figure 30 summarizes Key’s significant contractual obligations, and
lending-related and other off-balance sheet commitments at December
31, 2008, by the specific time periods in which related payments are due
or commitments expire.
After After
December 31, 2008 Within 1 Through 3 Through After
in millions 1 Year 3 Years 5 Years 5 Years Total
Contractual obligations:
(a)
Deposits with no stated maturity $37,388 — — — $37,388
Time deposits of $100,000 or more 6,756 $ 4,582 $1,391 $ 380 13,109
Other time deposits 6,146 6,117 1,937 563 14,763
Federal funds purchased and securities sold
under repurchase agreements 1,557 — — — 1,557
Bank notes and other short-term borrowings 8,477 — — — 8,477
Long-termdebt 3,105 5,180 800 5,910 14,995
Noncancelable operating leases 114 298 83 374 869
Liability for unrecognized tax benefits 1,611 21 — — 1,632
Purchase obligations:
Banking and financial data services 72 41 10 — 123
Telecommunications 21 11 4 — 36
Professional services 18 8 — — 26
Technology equipment and software 40 30 3—73
Other 12 11 2 1 26
Total purchase obligations 163 101 19 1 284
Total $65,317 $16,299 $4,230 $7,228 $93,074
Lending-related and other off-balance sheet commitments:
Commercial, including real estate $13,025 $8,987 $3,816 $ 678 $26,506
Home equity 41 264 464 7,659 8,428
When-issued and to-be-announced
securities commitments — — — 219 219
Commercial letters of credit 124 47 2 — 173
Principal investing commitments 11 19 16 230 276
Liabilities of certain limited partnerships
and other commitments 1 5 1 63 70
Total $13,202 $9,322 $4,299 $8,849 $35,672
(a)
Deposits and borrowings exclude interest.
FIGURE 30. CONTRACTUAL OBLIGATIONS AND OTHER OFF-BALANCE SHEET COMMITMENTS