Company: KEY-PI
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000091576-25-000038
Chunk: 118

Company: KEYCORP /NEW/
Filing Date: 2025-02-21
Form: 10-K
Item: Item 8
Chunk 118
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— 100 202877 — 77 202955 — 55 Thereafter80 3 83 Total lease payments$557 $4 $561 Less imputed interest51 1 52 Total$506 $3 $509 Lessor Equipment LeasingLeases may have fixed or floating rate terms. Variable payments are based on an index or other specified rate and are included in rental payments. Certain leases contain an option to extend the lease term or the option to terminate at the discretion of the lessee. Under certain conditions, lease agreements may also contain the option for a lessee to purchase the underlying asset.Interest income from sales-type and direct financing leases is recognized in "interest income — loans" on the statement of income. Income related to operating leases is recognized in “operating lease income and other leasing gains” on the income statement. The components of equipment leasing income are summarized in the table below: Dollars in millionsDecember 31, 2024December 31, 2023Sales-type and direct financing leasesInterest income on lease receivable$69 $78  Interest income related to accretion of unguaranteed residual asset9 13  Interest income on deferred fees and costs20 4 Total sales-type and direct financing lease income98 95 Operating leasesOperating lease income related to lease payments68 84 Other operating leasing gains and (losses)8 8 Total operating lease income and other leasing gains76 92 Total lease income$174 $187 Equipment leasing receivables relate to sales-type and direct financing leases. The composition of the net investment in sales-type and direct financing leases is as follows:Dollars in millionsDecember 31, 2024December 31, 2023Lease receivables$2,345 $2,896 Unearned income(270)(286)Unguaranteed residual value421 468 Deferred fees and costs1 2 Net investment in sales-type and direct financing leases$2,497 $3,080 

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The residual value component of a lease represents the fair value of the leased asset at the end of the lease term. We rely on industry data, historical experience, independent appraisals and the experience of the equipment leasing asset management team to value lease residuals. Relationships with a number of equipment vendors give the asset management team insight into the life cycle of the leased equipment, pending product upgrades and competing products.