KeyBank 2013 Annual Report Download - page 188

/The voting rights of some investors are not proportional to their economic interests in the entity, and
substantially all of the entity’s activities involve, or are conducted on behalf of, investors with
disproportionately few voting rights.
Our VIEs are summarized below. We define a “significant interest” in a VIE as a subordinated interest that
exposes us to a significant portion, but not the majority, of the VIE’s expected losses or residual returns, even
though we do not have the power to direct the activities that most significantly impact the entity’s economic
performance.
Consolidated VIEs Unconsolidated VIEs
in millions
Total
Assets
Total
Liabilities
Total
Assets
Total
Liabilities
Maximum
Exposure to Loss
December 31, 2013
LIHTC funds $ 22 $ 22 $ 97 — —
Education loan securitization trusts 1,980 1,854 N/A N/A N/A
LIHTC investments N/A N/A 774 — $ 503
Our involvement with VIEs is described below.
Consolidated VIEs
LIHTC guaranteed funds. KAHC formed limited partnerships known as funds that invested in LIHTC
operating partnerships. Interests in these funds were offered in syndication to qualified investors who paid a fee
to KAHC for a guaranteed return. We also earned syndication fees from the funds and continue to earn asset
management fees. The funds’ assets, primarily investments in LIHTC operating partnerships, totaled $13 million
at December 31, 2013. These investments are recorded in “accrued income and other assets” on the balance sheet
and serve as collateral for the funds’ limited obligations.
We have not formed new funds or added LIHTC partnerships since October 2003. However, we continue to act
as asset manager and to provide occasional funding for existing funds under a guarantee obligation. As a result of
this guarantee obligation, we have determined that we are the primary beneficiary of these funds. Additional
information on return guarantee agreements with LIHTC investors is presented in Note 20 (“Commitments,
Contingent Liabilities and Guarantees”) under the heading “Guarantees.”
In accordance with the applicable accounting guidance for distinguishing liabilities from equity, third-party
interests associated with our LIHTC guaranteed funds are considered mandatorily redeemable instruments and
are recorded in “accrued expense and other liabilities” on the balance sheet. However, the FASB has indefinitely
deferred the measurement and recognition provisions of this accounting guidance for mandatorily redeemable
third-party interests associated with finite-lived subsidiaries, such as our LIHTC guaranteed funds. We adjust our
financial statements each period for the third-party investors’ share of the funds’ profits and losses. At
December 31, 2013, we estimated the settlement value of these third-party interests to be between zero and $11
million, while the recorded value, including reserves, totaled $22 million. The partnership agreement for each of
our guaranteed funds requires the fund to be dissolved by a certain date.
Education loan securitization trusts. In September 2009, we decided to exit the government-guaranteed
education lending business. Therefore, we have accounted for this business as a discontinued operation. In the
past, as part of our education lending business model, we originated and securitized education loans. As the
transferor, we retained a portion of the risk in the form of a residual interest and also retained the right to service
the securitized loans and receive servicing fees. We have not securitized any education loans since 2006.
We consolidated our ten outstanding education loan securitization trusts as of January 1, 2010. We were required
to consolidate these trusts because we hold the residual interests and, as the master servicer, we have the power
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