KeyBank 2015 Annual Report Download - page 102

million of 1.700% Senior Notes due June 1, 2018; and $750 million of 3.300% Senior Notes due June 1, 2025.
On September 29, 2015, we updated the KeyBank Global Bank Note Program. This program has $20 billion
authorized for issuance, separate from the $20 billion authorized under the 2012 program. There will be no
additional notes issued under the 2012 program.
On May 22, 2015, KeyBank remarketed $300 million of 3.18% Term Enhanced ReMarketable Securities senior
debt.
On September 15, 2015, KeyCorp issued $1 billion of 2.90% Senior Medium-Term Notes due September 15,
2020, under its Medium-Term Note Program.
Liquidity for KeyCorp
The primary source of liquidity for KeyCorp is from subsidiary dividends, primarily from KeyBank. KeyCorp
has sufficient liquidity when it can service its debt; support customary corporate operations and activities
(including acquisitions); support occasional guarantees of subsidiaries’ obligations in transactions with third
parties at a reasonable cost, in a timely manner, and without adverse consequences; and pay dividends to
shareholders.
We use a parent cash coverage months metric as the primary measure to assess parent company liquidity. The
parent cash coverage months metric measures the months into the future where projected obligations can be met
with the current amount of liquidity. We generally issue term debt to supplement dividends from KeyBank to
manage our liquidity position at or above our targeted levels. The parent company generally maintains cash and
short-term investments in an amount sufficient to meet projected debt maturities over at least the next 24 months.
At December 31, 2015, KeyCorp held $2.7 billion in short-term investments, which we projected to be sufficient
to meet our projected obligations, including the repayment of our maturing debt obligations for the periods
prescribed by our risk tolerance.
Typically, KeyCorp meets its liquidity requirements through regular dividends from KeyBank, supplemented
with term debt. Federal banking law limits the amount of capital distributions that a bank can make to its holding
company without prior regulatory approval. A national bank’s dividend-paying capacity is affected by several
factors, including net profits (as defined by statute) for the two previous calendar years and for the current year,
up to the date of dividend declaration. During 2015, KeyBank paid $1 billion in dividends to KeyCorp. At
January 1, 2016, KeyBank had regulatory capacity to pay $553 million in dividends to KeyCorp without prior
regulatory approval.
Our liquidity position and recent activity
Over the past 12 months, our liquid asset portfolio, which includes overnight and short-term investments, as well
as unencumbered, high quality liquid securities held as protection against a range of potential liquidity stress
scenarios, has increased as a result of an increase in unpledged securities offset by net customer loan and deposit
flows. The liquid asset portfolio continues to exceed the amount that we estimate would be necessary to manage
through an adverse liquidity event by providing sufficient time to develop and execute a longer-term solution.
From time to time, KeyCorp or KeyBank may seek to retire, repurchase, or exchange outstanding debt, capital
securities, preferred shares, or common shares through cash purchase, privately negotiated transactions or other
means. Additional information on repurchases of common shares by KeyCorp is included in Part II, Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities of this report. Such transactions depend on prevailing market conditions, our liquidity and capital
requirements, contractual restrictions, regulatory requirements, and other factors. The amounts involved may be
material, individually or collectively.
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