NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES 20. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS The carrying amount and estimated fair value of Key’s financial instruments are shown below in accordance with the requirements of SFAS No. 107, “Disclosures About Fair Value of Financial Instruments.” Residential real estate mortgage loans with carrying amounts of $1.6 billion at December 31, 2003, and $2.0 billion at December 31, 2002, are included in the amount shown for “Loans, net of allowance.” The estimated fair values of residential real estate mortgage loans and deposits do not take into account the fair values of related long-term client relationships, which are integral parts of the related financial instruments. The estimated fair values of these instruments would be significantly higher if they included the fair values of these relationships.  If management used different assumptions (related to discount rates and cash flow) and estimation methods, the estimated fair values shown in the table could change significantly. Accordingly, these estimates do not necessarily reflect the amounts Key’s financial instruments would command in a current market exchange. Similarly, because SFAS No. 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements, the fair value amounts shown in the table do not, by themselves, represent the underlying value of Key as a whole. For financial instruments with a remaining average life to maturity of less than six months, carrying amounts were used as an approximation of fair values. 82 PREVIOUS PAGE SEARCH BACK TO CONTENTS NEXT PAGE December 31,  2003 2002 Carrying Fair Carrying Fair in millions Amount Value Amount Value ASSETS Cash and short-term investments a $ 4,316 $ 4,316 $ 4,996 $ 4,996 Securities available for sale b 7,638 7,638 8,507 8,507 Investment securities b 98 104 120 129 Other investments c 1,092 1,092 919 919 Loans, net of allowance d 61,305 62,545 61,005 62,703 Servicing assets 117 157 99 132 Derivative assets f 1,896 1,896 2,477 2,477 LIABILITIES Deposits with no stated maturity a $32,205 $32,205 $28,908 $28,908 Time deposits e 18,653 19,028 20,438 21,021 Short-term borrowings a 5,614 5,614 6,685 6,685 Long-term debt e 15,294 14,934 15,605 15,712 Derivative liabilities f 1,208 1,208 1,628 1,628 CAPITAL SECURITIES e GLYPH<209> GLYPH<209> 1,260 1,129 a Fair value equals or approximates carrying amount. b Fair values of securities available for sale and investment securities generally were based on quoted market prices. Where quoted market prices were not available, fair values were based  on quoted market prices of similar instruments. c Fair values of most other investments were estimated based on the issuerGLYPH<213>s GLYPH<222>nancial condition and results of operations, prospects, values of public companies in comparable businesses, market liquidity, and the nature and duration of resale restrictions. Where fair values were not readily determinable, they were based on fair values of similar instruments, or the investments were included at their carrying amounts.  d Fair values of most loans were estimated using discounted cash GLYPH<223>ow models. Lease GLYPH<222>nancing receivables and loans held for sale were included at their carrying amounts in the estimated  fair value of loans.  e Fair values of time deposits, long-term debt and capital securities were estimated based on discounted cash GLYPH<223>ows. f Fair values of interest rate swaps and caps were based on discounted cash GLYPH<223>ow models. Foreign exchange forward contracts were valued based on quoted market prices and had a fair  value that approximated their carrying amount.  Valuation Methods and Assumptions