KeyBank 2015 Annual Report Download - page 225

As of December 31, 2015, the trust preferred securities issued by the KeyCorp capital trusts represent $85
million, or .8%, of our total qualifying Tier 1 capital, net of goodwill.
The trust preferred securities, common stock, and related debentures are summarized as follows:
dollars in millions
Trust Preferred
Securities,
Net of Discount (a)
Common
Stock
Principal
Amount of
Debentures,
Net of Discount (b)
Interest Rate
of Trust Preferred
Securities and
Debentures (c)
Maturity
of Trust Preferred
Securities and
Debentures
December 31, 2015
KeyCorp Capital I $156 $ 6 $162 1.066% 2028
KeyCorp Capital II 109 4 113 6.875 2029
KeyCorp Capital III 143 4 147 7.750 2029
Total $408 $14 $422 4.961% —
December 31, 2014 $408 $14 $422 4.926% —
(a) The trust preferred securities must be redeemed when the related debentures mature, or earlier if provided in the governing indenture.
Each issue of trust preferred securities carries an interest rate identical to that of the related debenture. Certain trust preferred securities
include basis adjustments related to fair value hedges totaling $68 million at both December 31, 2015, and December 31, 2014. See Note
8 (“Derivatives and Hedging Activities”) for an explanation of fair value hedges.
(b) We have the right to redeem these debentures. If the debentures purchased by KeyCorp Capital I are redeemed before they mature, the
redemption price will be the principal amount, plus any accrued but unpaid interest. If the debentures purchased by KeyCorp Capital II or
KeyCorp Capital III are redeemed before they mature, the redemption price will be the greater of: (i) the principal amount, plus any
accrued but unpaid interest, or (ii) the sum of the present values of principal and interest payments discounted at the Treasury Rate (as
defined in the applicable indenture), plus 20 basis points for KeyCorp Capital II or 25 basis points for KeyCorp Capital III or 50 basis
points in the case of redemption upon either a tax or a capital treatment event for either KeyCorp Capital II or KeyCorp Capital III, plus
any accrued but unpaid interest. The principal amount of certain debentures includes basis adjustments related to fair value hedges
totaling $68 million at both December 31, 2015, and December 31, 2014. See Note 8 for an explanation of fair value hedges. The
principal amount of debentures, net of discounts, is included in “long-term debt” on the balance sheet.
(c) The interest rates for the trust preferred securities issued by KeyCorp Capital II and KeyCorp Capital III are fixed. KeyCorp Capital I has
a floating interest rate, equal to three-month LIBOR plus 74 basis points, that reprices quarterly. The total interest rates are weighted-
average rates.
20. Commitments, Contingent Liabilities and Guarantees
Obligations under Noncancelable Leases
We are obligated under various noncancelable operating leases for land, buildings and other property, consisting
principally of data processing equipment. Rental expense under all operating leases totaled $121 million in 2015,
$122 million in 2014, and $122 million in 2013. Minimum future rental payments under noncancelable operating
leases at December 31, 2015, are as follows: 2016 — $110 million; 2017 — $103 million; 2018 — $87 million;
2019 — $71 million; 2020 — $59 million; all subsequent years — $326 million.
Commitments to Extend Credit or Funding
Loan commitments provide for financing on predetermined terms as long as the client continues to meet
specified criteria. These agreements generally carry variable rates of interest and have fixed expiration dates or
termination clauses. We typically charge a fee for our loan commitments. Since a commitment may expire
without resulting in a loan, our aggregate outstanding commitments may significantly exceed our eventual cash
outlay.
Loan commitments involve credit risk not reflected on our balance sheet. We mitigate exposure to credit risk
with internal controls that guide how we review and approve applications for credit, establish credit limits and,
when necessary, demand collateral. In particular, we evaluate the creditworthiness of each prospective borrower
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