KeyBank 2014 Annual Report Download - page 188

/The entity’s equity at risk holders do not have the obligation to absorb losses or the right to receive residual
returns.
/The voting rights of some investors are not proportional to their economic interests in the entity, and
substantially all of the entity’s activities involve, or are conducted on behalf of, investors with
disproportionately few voting rights.
Our VIEs are summarized below. We define a “significant interest” in a VIE as a subordinated interest that
exposes us to a significant portion, but not the majority, of the VIE’s expected losses or residual returns, even
though we do not have the power to direct the activities that most significantly impact the entity’s economic
performance.
On September 30, 2014, we sold the residual interests in all of our outstanding education loan securitization
trusts and therefore no longer have a significant interest in those trusts. We deconsolidated the securitization
trusts as of September 30, 2014, and removed the trust assets and liabilities from our balance sheet. Further
information regarding these education loan securitization trusts is provided in Note 13 (“Acquisitions and
Discontinued Operations”) under the heading “Education lending.”
Consolidated VIEs Unconsolidated VIEs
December 31, 2014
in millions
Total
Assets
Total
Liabilities
Total
Assets
Total
Liabilities
Maximum
Exposure to Loss
LIHTC funds $ 1 $ 1 $ 55 — —
LIHTC investments N/A N/A 1,234 $ 4 $521
Our involvement with VIEs is described below.
Consolidated VIEs
LIHTC guaranteed funds. KAHC formed limited partnership funds that invested in LIHTC operating
partnerships. Interests in these funds were offered in syndication to qualified investors who paid a fee to KAHC
for a guaranteed return. We also earned syndication fees from the guaranteed funds and continue to earn asset
management fees. The guaranteed funds’ assets, primarily investments in LIHTC operating partnerships, totaled
$5 million at December 31, 2014. These investments are recorded in “accrued income and other assets” on the
balance sheet and serve as collateral for the guaranteed funds’ limited obligations.
We have not formed new guaranteed funds or added LIHTC partnerships since October 2003. However, we
continue to act as asset manager and to provide occasional funding for existing funds under a guarantee
obligation. As a result of this guarantee obligation, we have determined that we are the primary beneficiary of
these guaranteed funds. Additional information on return guarantee agreements with LIHTC investors is
presented in Note 20 (“Commitments, Contingent Liabilities and Guarantees”) under the heading “Guarantees.”
In accordance with the applicable accounting guidance for distinguishing liabilities from equity, third-party
interests associated with our LIHTC guaranteed funds are considered mandatorily redeemable instruments and
are recorded in “accrued expense and other liabilities” on the balance sheet. However, the FASB has indefinitely
deferred the measurement and recognition provisions of this accounting guidance for mandatorily redeemable
third-party interests associated with finite-lived subsidiaries, such as our LIHTC guaranteed funds. We adjust our
financial statements each period for the third-party investors’ share of the guaranteed funds’ profits and losses.
At December 31, 2014, we estimated the settlement value of these third-party interests to be between zero and $4
million, while the recorded value, including reserves, totaled $5 million. The partnership agreement for each of
our guaranteed funds requires the fund to be dissolved by a certain date.
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