Company: KEY-PI
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0000091576-25-000058
Chunk: 240

Company: KEYCORP /NEW/
Filing Date: 2025-05-06
Form: 10-Q
Item: Item 8
Chunk 240
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 of our commercial mortgage servicing assets. Unlike residential mortgages, commercial mortgages experience significantly lower prepayments due to certain contractual restrictions affecting the borrower’s ability to prepay the mortgage. The amortization of commercial servicing assets is determined in proportion to, and over the period of, the estimated net servicing income. The amortization of commercial servicing assets for each period, as shown in the table at the beginning of this note, is recorded as a reduction to contractual fee income. The contractual fee income from servicing commercial mortgage loans totaled $107 million for the three-month period ended March 31, 2025, and $87 million for the three-month period ended March 31, 2024. This fee income was offset by $31 million of amortization for the three-month period ended March 31, 2025, and $31 million for the three-month period ended March 31, 2024. Both the contractual fee income and the amortization are recorded, net, in “commercial mortgage servicing fees” on the income statement.ResidentialChanges in the carrying amount of residential mortgage servicing assets are summarized as follows:Three months ended March 31,Dollars in millions20252024Balance at beginning of period$111 $108 Servicing retained from loan sales3 2 Amortization(3)(2)Balance at end of period$111 $108 Fair value at end of period$138 $133  The fair value of mortgage servicing assets is determined by calculating the present value of future cash flows associated with servicing the loans. This calculation uses a number of assumptions that are based on current market conditions. The range and weighted-average of the significant unobservable inputs used to fair value our mortgage servicing assets at March 31, 2025, and March 31, 2024, along with the valuation techniques, are shown in the following table:March 31, 2025March 31, 2024Valuation TechniqueSignificantUnobservable InputRangeWeighted AverageRangeWeighted AverageDiscounted cash flowPrepayment speed5.54 %29.62 %7.77 %6.29 %43.74 %7.68 %Discount rate6.50 %8.75 %6.61 %6.50 %8.75 %6.59 %Servicing cost$70.00 $4,332 $76.54 $70.00 $3,582 $74.91