24. Condensed Financial Information of the Parent Company

CONDENSED BALANCE SHEETS


December 31, in millions	2015		2014
ASSETS
Cash and due from banks	$	2,608	$	2,207
Short-term investments		58		31
Securities available for sale		10		22
Other investments		14		15
Loans to:
Banks		250		90
Nonbank subsidiaries		187		211
Total loans		437		301
Investment in subsidiaries:
Banks		9,955		9,998
Nonbank subsidiaries		703		632
Total investment in subsidiaries		10,658		10,630
Goodwill		167		244
Other intangible assets		—		11
Corporate-owned life insurance		206		212
Derivative assets		12		11
Accrued income and other assets		321		356
Total assets	$	14,491	$	14,040


LIABILITIES
Accrued expense and other liabilities	$	503	$	511
Derivative liabilities		—		2
Long-term debt due to:
Subsidiaries		423		422
Unaffiliated companies		2,819		2,575
Total long-term debt		3,242		2,997
Total liabilities		3,745		3,510

SHAREHOLDERS’ EQUITY^(a)		10,746		10,530
Total liabilities and shareholders’ equity	$	14,491	$	14,040

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

CONDENSED STATEMENTS OF INCOME

Year ended December 31,


in millions	2015			2014		2013
INCOME
Dividends from subsidiaries:
Bank subsidiaries	$	1,000		$	300	$	600
Nonbank subsidiaries		1			—		—
Interest income from subsidiaries		10			16		26
Other income		20			15		15
Total income		1,031			331		641

EXPENSE
Interest on long-term debt with subsidiary trusts		10			10		14
Interest on other borrowed funds		52			53		59
Personnel and other expense		73			40		65
Total expense		135			103		138
Income (loss) before income taxes and equity in net income (loss) less dividends from subsidiaries		896			228		503
Income tax (expense) benefit		39			45		33
Income (loss) before equity in net income (loss) less dividends from subsidiaries		935			273		536
Equity in net income (loss) less dividends from subsidiaries ^(a)		(15	)		634		374
NET INCOME (LOSS)		920			907		910
Less: Net income attributable to noncontrolling interests		4			7		—
NET INCOME (LOSS) ATTRIBUTABLE TO KEY	$	916		$	900	$	910

(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	2015			2014			2013
OPERATING ACTIVITIES
Net income (loss) attributable to Key	$	916		$	900			$ 910
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred income taxes (benefit)		10			(8	)		37
Stock-based compensation expense		9			14			11
Equity in net (income) loss less dividends from subsidiaries ^(a)		15			(634	)		(374	)
Other intangible asset amortization		2			—			—
Net (increase) decrease in goodwill and other intangibles		86			—			—
Net (increase) decrease in other assets		29			(53	)		612
Net increase (decrease) in other liabilities		(7	)		98			(154	)
Other operating activities, net		(52	)		24			(151	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		1,008			341			891
INVESTING ACTIVITIES
Net (increase) decrease in short-term investments		(27	)		4			2,096
Purchases of securities available for sale		(11	)		(2	)		(14	)
Cash used in acquisitions		—			(114	)		—
Proceeds from sales, prepayments and maturities of securities available for sale		20			—			39
Net (increase) decrease in loans to subsidiaries		(146	)		257			(4	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(164	)		145			2,117
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt		1,000			—			750
Payments on long-term debt		(750	)		—			(750	)
Repurchase of Treasury Shares		(448	)		(484	)		(474	)
Net proceeds from the issuance of common shares and preferred stock		22			27			26
Cash dividends paid		(267	)		(240	)		(217	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(443	)		(697	)		(665	)
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS		401			(211	)		2,343
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR		2,207			2,418			75
CASH AND DUE FROM BANKS AT END OF YEAR	$	2,608		$	2,207		$	2,418

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

KeyCorp paid interest on borrowed funds totaling $112 million in 2015, $114 million in 2014, and $119 million in 2013.