KeyBank 2013 Annual Report Download - page 101

up to the date of dividend declaration. During 2013, KeyBank paid KeyCorp $600 million in dividends, while the
nonbank subsidiaries did not make any dividend payments to the parent. KeyCorp did not make any cash capital
infusions to KeyBank during 2013. As of December 31, 2013, KeyBank had fully utilized its regulatory capacity
to pay dividends to KeyCorp.
Our liquidity position and recent activity
Over the past twelve months our liquid asset portfolio, which includes overnight and short-term investments, as
well as unencumbered, high quality liquid securities held as protection against a range of potential liquidity stress
scenarios, has increased as a result of an increase in unpledged securities, growth in deposits related to the
acquisition of the commercial mortgage servicing portfolio and special servicing business, and net customer loan
and deposit flows. The liquid asset portfolio continues to exceed the amount that we estimate would be necessary
to manage through an adverse liquidity event by providing sufficient time to develop and execute a longer-term
solution. The issuance of $1 billion of Senior Bank Notes in February 2013, $750 million of Senior Bank Notes
in November 2013, and $750 million of parent Medium-Term Notes in November 2013 provided additional
liquidity to support normal business flows and maintain our liquid asset portfolio within target levels.
From time to time, KeyCorp or KeyBank may seek to retire, repurchase or exchange outstanding debt, capital
securities, preferred shares or common shares through cash purchase, privately negotiated transactions or other
means. Additional information on repurchases of common shares by KeyCorp is included in Part II, Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities of this report. Such transactions depend on prevailing market conditions, our liquidity and capital
requirements, contractual restrictions, regulatory requirements and other factors. The amounts involved may be
material, individually or collectively.
We generate cash flows from operations and from investing and financing activities. We have approximately
$236 million of cash and cash equivalents and short-term investments in international tax jurisdictions as of
December 31, 2013. As we consider alternative long-term strategic and liquidity plans, opportunities to repatriate
these amounts would result in approximately $16 million in taxes to be paid. If we were to cease operations in all
international tax jurisdictions, the total amount of taxes to be paid would increase to approximately $31 million.
Accordingly, we have included the total amount as a deferred tax liability at December 31, 2013.
The consolidated statements of cash flows summarize our sources and uses of cash by type of activity for the
years ended December 31, 2013, and 2012.
Credit risk management
Credit risk is the risk of loss to us arising from an obligor’s inability or failure to meet contractual payment or
performance terms. Like other financial services institutions, we make loans, extend credit, purchase securities
and enter into financial derivative contracts, all of which have related credit risk.
Credit policy, approval and evaluation
We manage credit risk exposure through a multifaceted program. The Credit Risk Committee approves both
retail and commercial credit policies. These policies are communicated throughout the organization to foster a
consistent approach to granting credit.
Our credit risk management team is responsible for credit approval, is independent of our lines of business, and
consists of senior officers who have extensive experience in structuring and approving loans. Only credit risk
management members are authorized to grant significant exceptions to credit policies. It is not unusual to make
exceptions to established policies when mitigating circumstances dictate, but most major lending units have been
assigned specific thresholds to keep exceptions at a manageable level.
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