KeyBank 2013 Annual Report Download - page 67

Our federal tax (benefit) expense differs from the amount that would be calculated using the federal statutory tax
rate, primarily because we generate income from investments in tax-advantaged assets, such as corporate-owned
life insurance, earn credits associated with investments in low-income housing projects, and make periodic
adjustments to our tax reserves. In addition, in 2013 and 2012, our effective tax rate was lower due to the early
termination of certain leveraged leases that resulted in nontaxable gains pursuant to a prior settlement with the
IRS.
We recorded a valuation allowance of $1 million and $3 million at December 31, 2013, and 2012, respectively,
against the gross deferred tax assets for certain state net operating loss and state credit carryforwards.
Line of Business Results
This section summarizes the financial performance and related strategic developments of our two major business
segments (operating segments): Key Community Bank and Key Corporate Bank. Note 23 (“Line of Business
Results”) describes the products and services offered by each of these business segments, provides more detailed
financial information pertaining to the segments and certain lines of business, and explains “Other Segments”
and “Reconciling Items.”
Figure 12 summarizes the contribution made by each major business segment to our “taxable-equivalent revenue
from continuing operations” and “income (loss) from continuing operations attributable to Key” for each of the
past three years.
Figure 12. Major Business Segments - Taxable-Equivalent (“TE”) Revenue from Continuing Operations
and Income (Loss) from Continuing Operations Attributable to Key
Year ended December 31, Change 2013 vs. 2012
dollars in millions 2013 2012 2011 Amount Percent
REVENUE FROM CONTINUING OPERATIONS (TE)
Key Community Bank $ 2,191 $ 2,225 $ 2,206 $ (34) (1.5)%
Key Corporate Bank 1,538 1,521 1,499 17 1.1
Other Segments 387 414 299 (27) (6.5)
Total Segments 4,116 4,160 4,004 (44) (1.1)
Reconciling Items (2) (16) (24) 14 N/M
Total $ 4,114 $ 4,144 $ 3,980 $ (30) (.7)%
INCOME (LOSS) FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO KEY
Key Community Bank $ 151 $ 129 $ 191 $ 22 17.1 %
Key Corporate Bank 444 409 554 35 8.6
Other Segments 314 256 209 58 22.7
Total Segments 909 794 954 115 14.5
Reconciling Items (39) 41 1 (80) N/M
Total $ 870 $ 835 $ 955 $ 35 4.2 %
Key Community Bank summary of operations
As shown in Figure 13, Key Community Bank recorded net income attributable to Key of $151 million for 2013,
compared to $129 million for 2012, and $191 million for 2011. The increase in 2013 was primarily due to Key’s
efficiency initiative.
Taxable-equivalent net interest income declined by $47 million, or 3.2%, from 2012. Average loans and leases
grew $2.1 billion, or 7.8%, while average deposits increased by $1.1 billion, or 2.2%, compared to 2012. The
positive contribution to net interest income from loan and deposit growth was offset by a reduction in the value
of deposits in 2013 compared to one year ago.
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