content_image/99519.jpg
As shown in Figure 30, the decrease in commercial loan net charge-offs was accompanied by a decrease in the level of net charge-offs in the consumer loan portfolio, primarily in the indirect lending segments. The reduction in these segments reflects actions taken by Key since May 2001 to exit the automobile leasing business and to de-emphasize indirect prime automobile lending. 

Nonperforming assets. Figure 31 shows the composition of Key’s nonperforming assets. These assets totaled $753 million at December 31, 2003, and represented 1.20% of loans, other real estate owned (known as “OREO”) and other nonperforming assets, compared with $993 million, or 1.59%, at December 31, 2002. See Note 1 (“Summary of Significant Accounting Policies”) under the headings “Impaired and Other Nonaccrual Loans” and “Allowance for Loan Losses” on page 51 for a summary of Key’s nonaccrual and charge-off policies. 

## FIGURE 31. SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS 

<img src='content_image/99519.jpg'>

a See Figure 15 and the accompanying discussion on page 26 for more information related to KeyGLYPH<213>s commercial real estate portfolio. 

The substantial reduction in nonperforming loans during 2003 was attributable largely to decreases in the structured finance, healthcare, middle-market and commercial real estate portfolios. These reductions were offset in part by an increase in the level of commercial lease financing receivables placed on nonaccrual status; this portfolio has experienced considerable growth since mid-2002. At December 31, 2003, our 20 largest nonperforming loans totaled $219 million, representing 32% of total loans on nonperforming status. 

Information pertaining to the credit exposure by industry classification inherent in the largest sector of Key’s loan portfolio, “commercial, financial and agricultural loans,” is presented in Figure 32. The types of activity that caused the change in Key’s nonperforming loans during 2003 are summarized in Figure 33. 

## Liquidity risk management 

“Liquidity” measures whether an entity has sufficient cash flow to meet its financial obligations when due. Key has sufficient liquidity when it can meet its obligations to depositors, borrowers and creditors at a reasonable cost, on a timely basis, and without adverse consequences. KeyCorp has sufficient liquidity when it can pay dividends to shareholders, service its debt, and support customary corporate operations and activities, including acquisitions, at a reasonable cost, in a timely manner and without adverse consequences. 

