KeyBank 2013 Annual Report Download - page 225

including syndicated finance, debt and equity capital markets, commercial payments, equipment finance,
commercial mortgage banking, derivatives, foreign exchange, financial advisory and public finance. Key
Corporate Bank is also a significant servicer of commercial mortgage loans and a significant special servicer of
CMBS. Key Corporate Bank also delivers many of its product capabilities to clients of Key Community Bank.
Other Segments
Other Segments consist of Corporate Treasury, Community Development, Principal Investing and various exit
portfolios.
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.
The table on the following pages shows selected financial data for our two major business segments for the years
ended December 31, 2013, and 2012.
The information was derived from the internal financial reporting system that we use to monitor and manage our
financial performance. GAAP guides financial accounting, but there is no authoritative guidance for
“management accounting” — the way we use our judgment and experience to make reporting decisions.
Consequently, the line of business results we report may not be comparable to line of business results presented
by other companies.
The selected financial data are based on internal accounting policies designed to compile results on a consistent
basis and in a manner that reflects the underlying economics of the businesses. In accordance with our policies:
/Net interest income is determined by assigning a standard cost for funds used or a standard credit for funds
provided based on their assumed maturity, prepayment and/or repricing characteristics.
/Indirect expenses, such as computer servicing costs and corporate overhead, are allocated based on
assumptions regarding the extent to which each line of business actually uses the services.
/The consolidated provision for loan and lease losses is allocated among the lines of business primarily based
on their actual net loan charge-offs, adjusted periodically for loan growth and changes in risk profile. The
amount of the consolidated provision is based on the methodology that we use to estimate our consolidated
ALLL. This methodology is described in Note 1 (“Summary of Significant Accounting Policies”) under the
heading “Allowance for Loan and Lease Losses.”
/Income taxes are allocated based on the statutory federal income tax rate of 35% (adjusted for tax-exempt
interest income, income from corporate-owned life insurance, and tax credits associated with investments in
low-income housing projects) and a blended state income tax rate (net of the federal income tax benefit) of
2.2%.
/Capital is assigned to each line of business based on regulatory requirements.
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