Restrictions on Cash, Dividends and Lending Activities

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Restrictions on Cash, Dividends and Lending Activities

3. Restrictions on Cash, Dividends and Lending Activities

Federal law requires a depository institution to maintain a prescribed amount of cash or deposit reserve balances with its Federal Reserve Bank. KeyBank maintained average reserve balances aggregating $181 million in 2014 to fulfill these requirements.

Capital distributions from KeyBank and other subsidiaries are our principal source of cash flows for paying dividends on our common and preferred shares, servicing our debt, and financing corporate operations. 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 the dividend is declared.

During 2014, KeyBank paid KeyCorp a total of $300 million in dividends; nonbank subsidiaries did not pay any cash dividends or noncash dividends to KeyCorp. As of December 31, 2014, KeyBank had regulatory capacity to pay $935 million in dividends to KeyCorp. During 2014, KeyCorp did not make any cash capital infusions to KeyBank and made $9 million of cash capital infusions to nonbank subsidiaries. At December 31, 2014, KeyCorp held $2.2 billion in short-term investments, which can be used to pay dividends to shareholders, service debt, and finance corporate operations.

As indicated in the “Supervision and Regulation” section of Item 1 of this report under the heading “Bank transactions with affiliates,” federal law and regulation also restricts loans and advances from bank subsidiaries to their parent companies (and to nonbank subsidiaries of their parent companies), and requires those transactions to be secured.