KeyBank 2014 Annual Report Download - page 171

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Quantitative Information about Level 3 Fair Value Measurements
The range and weighted-average of the significant unobservable inputs used to fair value our material Level 3
recurring and nonrecurring assets at December 31, 2014, and December 31, 2013, along with the valuation
techniques used, are shown in the following table:
December 31, 2014
dollars in millions
Fair Value of
Level 3 Assets Valuation Technique
Significant
Unobservable Input
Range
(Weighted-Average)
Recurring
Other investments — principal investments —
direct:
$ 102 Individual analysis of the condition of
each investment
Debt instruments EBITDA multiple 5.40 - 6.00 (5.50)
Equity instruments of private companies EBITDA multiple (where applicable) 5.50 - 6.20 (5.80)
Revenue multiple (where applicable) 4.30 - 4.30 (4.30)
Nonrecurring
Impaired loans 5 Fair value of underlying collateral Discount 10.00 - 64.00% (62.00%)
Goodwill 1,057 Discounted cash flow and market data Earnings multiple of peers 11.40 - 15.90 (12.92)
Equity multiple of peers 1.20 - 1.22 (1.21)
Control premium 10.00 - 30.00% (19.70%)
Weighted-average cost of capital 13.00 - 14.00% (13.52%)
December 31, 2013
dollars in millions
Fair Value of
Level 3 Assets Valuation Technique
Significant
Unobservable Input
Range
(Weighted-Average)
Recurring
Other investments — principal investments —
direct:
$141 Individual analysis of the condition of
each investment
Debt instruments EBITDA multiple 6.00 - 7.00 (6.10)
Equity instruments of private companies EBITDA multiple (where applicable) 4.80 - 10.40 (6.20)
Revenue multiple (where applicable) 1.10 - 4.70 (4.00)
Nonrecurring
Impaired loans 16 Fair value of underlying collateral Discount 10.00 - 100.00% (36.00%)
Goodwill 979 Discounted cash flow and market data Earnings multiple of peers 10.10 - 14.40 (11.59)
Equity multiple of peers 1.17 - 1.29 (1.24)
Control premium N/A (35.00%)
Weighted-average cost of capital N/A (13.00%)
Fair Value Disclosures of Financial Instruments
The levels in the fair value hierarchy ascribed to our financial instruments and the related carrying amounts at
December 31, 2014, and December 31, 2013, are shown in the following table.
December 31, 2014
Fair Value
in millions
Carrying
Amount Level 1 Level 2 Level 3
Netting
Adjustment Total
ASSETS
Cash and short-term investments (a) $ 4,922 $ 4,922 — — — $ 4,922
Trading account assets (b) 750 2 $ 748 — — 750
Securities available for sale (b) 13,360 22 13,328 $ 10 — 13,360
Held-to-maturity securities (c) 5,015 — 4,974 — — 4,974
Other investments (b) 760 2 344 414 — 760
Loans, net of allowance (d) 56,587 — — 54,993 — 54,993
Loans held for sale (b) 734 — — 734 — 734
Mortgage servicing assets (e) 323 — — 417 — 417
Derivative assets (b) 609 91 1,536 16 $ (1,034)(f) 609
LIABILITIES
Deposits with no stated maturity (a) $ 66,135 — $ 66,135 — — $ 66,135
Time deposits (e) 5,863 $ 564 5,361 — — 5,925
Short-term borrowings (a) 998 — 998 — — 998
Long-term debt (e) 7,875 7,625 626 — — 8,251
Derivative liabilities (b) 784 77 1,248 $ 1 $ (542)(f) 784
158