content_image/81454.jpg
## MANAGEMENTGLYPH<213>S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES 

In some cases, Key retains a residual interest in securitized loans that may take the form of an interest-only strip, a residual asset, a servicing asset and/or a security. Key accounts for these retained interests as debt securities and classifies them as either available for sale or trading account assets on the balance sheet. The retained interests represent Key’s maximum exposure to loss if they were to decline in value. In the event that cash flows generated by the securitized assets become inadequate to service the obligations of the trusts, the investors in the asset-backed securities would have no further recourse against Key. Additional information pertaining to Key’s retained interests in loan securitizations is summarized in Note 1 under the heading “Loan Securitizations” on page 52, Note 6 (“Securities”), which begins on page 61, and Note 8 under the heading “Retained Interests in Loan Securitizations” on page 63. 

Commitments to extend credit or funding. Loan commitments generally help Key meet clients’ financing needs. Such commitments provide for financing on predetermined terms as long as the client continues to meet specified criteria. These commitments generally carry variable rates of interest and have fixed expiration dates or other termination clauses. In many cases, a client must pay a fee to obtain a loan commitment from Key. Because a commitment may expire without resulting in a loan, the total amount of outstanding commitments may significantly 

exceed Key’s eventual cash outlay. Further information about Key’s loan commitments at December 31, 2003, is presented in Note 18 (“Commitments, Contingent Liabilities and Guarantees”) under the heading “Commitments to Extend Credit or Funding” on page 77. Figure 24 shows the remaining contractual amount of each class of commitments to extend credit or funding, which represents Key’s maximum possible accounting loss at December 31, 2003. 

Other off-balance sheet arrangements. Other off-balance sheet arrangements include financial instruments that do not meet the definition of a guarantee as specified in Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Other,” and other relationships, such as liquidity support provided to an asset-backed commercial paper conduit, indemnification agreements and intercompany guarantees. Information about such arrangements is provided in Note 18 under the heading “Other Off-Balance Sheet Risk” on page 79. 

## Contractual obligations 

Figure 24 summarizes Key’s significant contractual obligations, and lending-related and other off-balance sheet commitments at December 31, 2003, by the specific time periods in which related payments are due or commitments expire. 

<img src='content_image/81454.jpg'>

Deposits and borrowings exclude interest. 

## Guarantees 

Key is a guarantor in various agreements with third parties. As guarantor, Key may be contingently liable to make payments to the guaranteed party based on changes in an underlying that is related to an asset or liability or another entity’s failure to perform under an obligating agreement. 

An underlying is a specified interest rate, foreign exchange rate or other variable (including the occurrence or nonoccurrence of a specified event). Additional information regarding these types of arrangements is presented in Note 18 under the heading “Guarantees” on page 78. 

