KeyBank 2015 Annual Report Download - page 196

assets. Estimates of these assumptions are based on how a market participant would view the respective rates and
reflect historical data associated with the loans, industry trends, and other considerations. Actual rates may differ
from those estimated due to changes in a variety of economic factors. A decrease in the value assigned to the
escrow earn rates would cause a decrease in the fair value of our mortgage servicing assets. An increase in the
assumed default rates of commercial mortgage loans or an increase in the assigned discount rates would cause a
decrease in the fair value of our mortgage servicing assets.
Contractual fee income from servicing commercial mortgage loans totaled $48 million for the year ended
December 31, 2015, $46 million for the year ended December 31, 2014, and $58 million for the year ended
December 31, 2013. We have elected to account for servicing assets using the amortization method. The
amortization of servicing assets is determined in proportion to, and over the period of, the estimated net servicing
income. The amortization of servicing assets for each period, as shown in the table at the beginning of this note,
is recorded as a reduction to fee income. Both the contractual fee income and the amortization are recorded in
“mortgage servicing fees” on the income statement.
Additional information pertaining to the accounting for mortgage and other servicing assets is included in Note 1
(“Summary of Significant Accounting Policies”) under the heading “Servicing Assets.”
10. Goodwill and Other Intangible Assets
Goodwill represents the amount by which the cost of net assets acquired in a business combination exceeds their
fair value. Other intangible assets are primarily the net present value of future economic benefits to be derived
from the purchase of credit card receivable assets and core deposits. Additional information pertaining to our
accounting policy for goodwill and other intangible assets is summarized in Note 1 (“Summary of Significant
Accounting Policies”) under the heading “Goodwill and Other Intangible Assets.”
Our annual goodwill impairment testing is performed as of October 1 each year. On that date in 2015, we
determined that the estimated fair value of the Key Community Bank unit was 52% greater than its carrying
amount; in 2014, the excess was 26%. On that date in 2015, we determined that the estimated fair value of the
Key Corporate Bank unit was 27% greater than its carrying amount; in 2014, the excess was 16%. If actual
results, market conditions, and economic conditions were to differ from the assumptions and data used in this
goodwill impairment testing, the estimated fair value of the Key Community Bank and Key Corporate Bank units
could change. The carrying amounts of the Key Community Bank and Key Corporate Bank units represent the
average equity based on risk-weighted regulatory capital for goodwill impairment testing and management
reporting purposes.
Based on our quarterly review of impairment indicators during 2015 and 2014, it was not necessary to perform
further reviews of goodwill recorded in our Key Community Bank or Key Corporate Bank units. We will
continue to monitor the Key Community Bank and Key Corporate Bank units as appropriate since it is
particularly dependent upon economic conditions that impact consumer credit risk and behavior.
Changes in the carrying amount of goodwill by reporting unit are presented in the following table.
in millions
Key
Community
Bank
Key
Corporate
Bank Total
BALANCE AT DECEMBER 31, 2013 $ 979 — $ 979
Impairment losses based on results of interim impairment testing — — —
Acquisition of Pacific Crest Securities — $ 78 78
BALANCE AT DECEMBER 31, 2014 979 78 1,057
Impairment losses based on results of interim impairment testing — — —
Tax adjustment resulting from Pacific Crest Securities acquisition — 3 3
BALANCE AT DECEMBER 31, 2015 $ 979 $ 81 $ 1,060
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