KeyBank 2013 Annual Report Download - page 189

to direct the activities that most significantly influence the trusts’ economic performance. We elected to
consolidate these trusts at fair value. The trust assets can be used only to settle the obligations or securities that
the trusts issue; we cannot sell the assets or transfer the liabilities. The security holders or beneficial interest
holders do not have recourse to us, and we do not have any liability recorded related to their securities. Further
information regarding these education loan securitization trusts is provided in Note 13 (“Acquisitions and
Discontinued Operations”) under the heading “Education lending.”
Unconsolidated VIEs
LIHTC nonguaranteed funds. Although we hold interests in certain nonguaranteed funds that we formed and
funded, we have determined that we are not the primary beneficiary because we do not absorb the majority of the
funds’ expected losses and do not have the power to direct activities that most significantly influence the
economic performance of these entities. At December 31, 2013, assets of these unconsolidated nonguaranteed
funds totaled $97 million. Our maximum exposure to loss in connection with these funds is minimal, and we do
not have any liability recorded related to the funds. We have not formed nonguaranteed funds since October
2003.
LIHTC investments. Through Key Community Bank, we have made investments directly in LIHTC operating
partnerships formed by third parties. As a limited partner in these operating partnerships, we are allocated tax
credits and deductions associated with the underlying properties. We have determined that we are not the primary
beneficiary of these investments because the general partners have the power to direct the activities that most
significantly influence the economic performance of their respective partnerships and have the obligation to
absorb expected losses and the right to receive benefits. At December 31, 2013, assets of these unconsolidated
LIHTC operating partnerships totaled approximately $774 million. At December 31, 2013, our maximum
exposure to loss in connection with these partnerships is the unamortized investment balance of $400 million
plus $103 million of tax credits claimed but subject to recapture. We do not have any liability recorded related to
these investments because we believe the likelihood of any loss is remote. During 2013, we did not obtain
significant direct investments (either individually or in the aggregate) in LIHTC operating partnerships.
We have additional investments in unconsolidated LIHTC operating partnerships that are held by the
consolidated LIHTC guaranteed funds. Total assets of these operating partnerships were approximately $773
million at December 31, 2013. The tax credits and deductions associated with these properties are allocated to the
funds’ investors based on their ownership percentages. We have determined that we are not the primary
beneficiary of these partnerships because the general partners have the power to direct the activities that most
significantly impact their economic performance and the obligation to absorb expected losses and right to receive
residual returns. Information regarding our exposure to loss in connection with these guaranteed funds is
included in Note 20 under the heading “Return guarantee agreement with LIHTC investors.”
Commercial and residential real estate investments and principal investments. Our Principal Investing unit
and the Real Estate Capital line of business make equity and mezzanine investments, some of which are in VIEs.
These investments are held by nonregistered investment companies subject to the provisions of the AICPA Audit
and Accounting Guide, “Audits of Investment Companies.” We are not currently applying the accounting or
disclosure provisions in the applicable accounting guidance for consolidations to these investments, which
remain unconsolidated. The FASB has indefinitely deferred the effective date of this guidance for such
nonregistered investment companies.
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