22. Condensed Financial Information of the Parent Company

CONDENSED BALANCE SHEETS


December 31, in millions	2012		2011
ASSETS
Cash and due from banks and interest-bearing deposits	$	2,206	$	2,114
Loans and advances to:
Banks		90		—
Nonbank subsidiaries		619		713
Total loans and advances		709		713
Investment in subsidiaries:
Banks		9,155		10,114
Nonbank subsidiaries		707		689
Total investment in subsidiaries		9,862		10,803
Accrued income and other assets		1,151		1,153
Total assets	$	13,928	$	14,783


LIABILITIES
Accrued expense and other liabilities	$	573	$	579
Long-term debt due to:
Subsidiaries		431		1,225
Unaffiliated companies		2,653		3,074
Total long-term debt		3,084		4,299
Total liabilities		3,657		4,878

SHAREHOLDERS’ EQUITY ^(a)		10,271		9,905
Total liabilities and shareholders’ equity	$	13,928	$	14,783

(a)	See Key’s Consolidated Statements of Changes in Equity.

CONDENSED STATEMENTS OF INCOME

Year ended December 31,


in millions	2012			2011		2010
INCOME
Dividends from subsidiaries:
Bank subsidiaries	$	1,775			—		—
Nonbank subsidiaries		—		$	345	$	25
Interest income from subsidiaries		36			67		99
Other income		66			18		32
Total income		1,877			430		156
EXPENSE
Interest on long-term debt with subsidiary trusts		29			53		54
Interest on other borrowed funds		86			89		67
Personnel and other expense		91			178		121
Total expense		206			320		242
Income (loss) before income taxes and equity in net income (loss) less dividends from subsidiaries		1,671			110		(86	)
Income tax benefit		57			73		38
Income (loss) before equity in net income (loss) less dividends from subsidiaries		1,728			183		(48	)
Equity in net income (loss) less dividends from subsidiaries ^(a)		(863	)		749		632
NET INCOME (LOSS)		865			932		584
Less: Net income attributable to noncontrolling interests		7			12		30
NET INCOME (LOSS) ATTRIBUTABLE TO KEY	$	858		$	920	$	554

(a)	Includes results of discontinued operations described in Note 13 (“Acquisitions and Discontinued Operations”).

CONDENSED STATEMENTS OF CASH FLOWS

Year ended December 31,


in millions	2012			2011			2010
OPERATING ACTIVITIES
Net income (loss) attributable to Key	$	858		$	920			$ 554
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred income taxes		17			(39	)		(23	)
Equity in net (income) loss less dividends from subsidiaries^(a)		863			(749	)		(632	)
Net increase in other assets		(158	)		(130	)		(186	)
Net increase (decrease) in other liabilities		85			(43	)		(27	)
Other operating activities, net		13			83			93
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		1,678			42			(221	)
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits^(b)		(2,048	)		3,207			163
Purchases of securities available for sale		(34	)		(18	)		(31	)
Proceeds from sales, prepayments and maturities of securities available for sale		1			32			32
Net decrease in loans and advances to subsidiaries		36			939			170
Net (increase) decrease in investments in subsidiaries		—			2			(77	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(2,045	)		4,162			257
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt		—			1,000			750
Payments on long-term debt		(1,149	)		(1,043	)		(602	)
Repurchase of Treasury Shares		(251	)		—			—
Series B Preferred Stock — TARP redemption		—			(2,500	)		—
Repurchase of common stock warrant		—			(70	)		—
Net proceeds from the issuance of common shares and preferred stock		2			604			—
Cash dividends paid		(191	)		(164	)		(184	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(1,589	)		(2,173	)		(36	)
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS^(b)		(1,956	)		2,031			—
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR		2,031			—			—
CASH AND DUE FROM BANKS AT END OF YEAR	$	75		$	2,031			—

(a)	Includes results of discontinued operations described in Note 13.

(b)	During 2011, we shut down the Eurosweep (interest bearing) deposit account and moved the deposits to an interest bearing account within the parent company.

KeyCorp paid interest on borrowed funds totaling $113 million in 2012, $151 million in 2011, and $131 million in 2010.