KeyBank 2013 Annual Report Download - page 57

Figure 4. GAAP to Non-GAAP Reconciliations, continued
Three months ended
dollars in millions 12-31-13 9-30-13
Common Equity Tier 1 under the Regulatory Capital Rules (estimates)
Tier 1 common equity under current regulatory rules $ 9,347 $ 9,258
Adjustments from current regulatory rules to the Regulatory Capital Rules:
Deferred tax assets and other (g) (129) (140)
Common Equity Tier 1 anticipated under the Regulatory Capital Rules (h) $ 9,218 $ 9,118
Net risk-weighted assets under current regulatory rules $ 83,328 $ 82,913
Adjustments from current regulatory rules to the Regulatory Capital Rules:
Loan commitments less than one year 784 496
Past due loans 164 244
Mortgage servicing assets (i) 497 576
Deferred tax assets (i) 182 240
Other 1,413 1,451
Total risk-weighted assets anticipated under the Regulatory Capital Rules $ 86,368 $ 85,920
Common Equity Tier 1 ratio under the Regulatory Capital Rules (h) 10.67 % 10.61 %
(a) Financial data was not adjusted to reflect the treatment of Victory as a discontinued operation.
(b) Years ended December 31, 2013, and December 31, 2012, exclude $92 million and $123 million, respectively, of period-end purchased
credit card receivable intangible assets.
(c) Net of capital surplus for the year ended December 31, 2013.
(d) Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities),
net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance for defined
benefit and other postretirement plans.
(e) Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed intangible assets (excluding goodwill) and
deductible portions of nonfinancial equity investments. There were no disallowed deferred tax assets at December 31, 2013,
December 31, 2012, and December 31, 2011. There were disallowed deferred tax assets of $158 million at December 31, 2010, and $514
million at December 31, 2009.
(f) Years ended December 31, 2013, and December 31, 2012, exclude $107 million and $55 million, respectively, of average ending
purchased credit card receivable intangible assets.
(g) Includes the deferred tax asset subject to future taxable income for realization, primarily tax credit carryforwards, as well as the
deductible portion of purchased credit card receivables.
(h) The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies’ Regulatory Capital
Rules (as fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital Rules under the “standardized approach.”
(i) Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250%.
Results of Operations
Net interest income
One of our principal sources of revenue is net interest income. Net interest income is the difference between
interest income received on earning assets (such as loans and securities) and loan-related fee income, and interest
expense paid on deposits and borrowings. There are several factors that affect net interest income, including:
/the volume, pricing, mix and maturity of earning assets and interest-bearing liabilities;
/the volume and value of net free funds, such as noninterest-bearing deposits and equity capital;
/the use of derivative instruments to manage interest rate risk;
/interest rate fluctuations and competitive conditions within the marketplace; and
/asset quality.
43