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<SEC-DOCUMENT>0000950152-03-003197.txt : 20030321
<SEC-HEADER>0000950152-03-003197.hdr.sgml : 20030321
<ACCEPTANCE-DATETIME>20030321110309
ACCESSION NUMBER:		0000950152-03-003197
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		18
CONFORMED PERIOD OF REPORT:	20021231
FILED AS OF DATE:		20030321

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KEYCORP /NEW/
		CENTRAL INDEX KEY:			0000091576
		STANDARD INDUSTRIAL CLASSIFICATION:	NATIONAL COMMERCIAL BANKS [6021]
		IRS NUMBER:				346542451
		STATE OF INCORPORATION:			OH
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11302
		FILM NUMBER:		03611514

	BUSINESS ADDRESS:	
		STREET 1:		127 PUBLIC SQ
		CITY:			CLEVELAND
		STATE:			OH
		ZIP:			44114-1306
		BUSINESS PHONE:		2166896300

	MAIL ADDRESS:	
		STREET 1:		127 PUBLIC SQ
		CITY:			CLEVELAND
		STATE:			OH
		ZIP:			44114-1306

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SOCIETY CORP
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>l97974ae10vk.txt
<DESCRIPTION>KEYCORP                        12-31-2002
<TEXT>
<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K
               [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
             FOR THE TRANSITION PERIOD FROM          TO

                          COMMISSION FILE NUMBER 0-850

                                 [KEYCORP LOGO]
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                      OHIO
                          ---------------------------
                        (STATE OR OTHER JURISDICTION OF
                         INCORPORATION OR ORGANIZATION)

                       127 PUBLIC SQUARE, CLEVELAND, OHIO
                    ---------------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                   34-6542451
                    ---------------------------------------
                                (I.R.S. EMPLOYER
                              IDENTIFICATION NO.)

                                   44114-1306
                                ----------------
                                   (ZIP CODE)

                                 (216) 689-6300
                 ----------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

<Table>
<S>                                               <C>
         Securities registered pursuant                    Securities registered pursuant
          to Section 12(b) of the Act:                      to Section 12(g) of the Act:
          Common Shares, $1 par value
        Rights to Purchase Common Shares                                None
- ------------------------------------------------  ------------------------------------------------
             (TITLE OF EACH CLASS)                                (TITLE OF CLASS)

            New York Stock Exchange
- ------------------------------------------------
  (NAME OF EACH EXCHANGE ON WHICH REGISTERED)
</Table>

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                    Yes [X]
                                     No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

                                    Yes [X]
                                     No [ ]

The aggregate market value of voting stock held by nonaffiliates of the
Registrant was approximately $10,038,678,546 at February 28, 2003. (The
aggregate market value has been computed using the closing market price of the
stock as reported by the New York Stock Exchange on February 28, 2003.)

                               423,037,444 Shares
- --------------------------------------------------------------------------------
     (NUMBER OF KEYCORP COMMON SHARES OUTSTANDING AS OF FEBRUARY 28, 2003)

Certain specifically designated portions of KeyCorp's 2002 Annual Report to
Shareholders are incorporated by reference into Parts I, II and IV of this Form
10-K. Certain specifically designated portions of KeyCorp's definitive Proxy
Statement for its 2003 Annual Meeting of Shareholders are incorporated by
reference into Part III of this Form 10-K.
<PAGE>

                                    KEYCORP

                          2002 FORM 10-K ANNUAL REPORT

                               TABLE OF CONTENTS

<Table>
<Caption>
 ITEM                                                                          PAGE
NUMBER                                                                        NUMBER
- ------                                                                        ------
<C>       <S>                                                                 <C>
          PART I
   1      Business....................................................           1
   2      Properties..................................................           8
   3      Legal Proceedings...........................................           8
   4      Submission of Matters to a Vote of Security Holders.........           8

          PART II
   5      Market for Registrant's Common Equity and Related
            Stockholder Matters.......................................           8
   6      Selected Financial Data.....................................           9
   7      Management's Discussion and Analysis of Financial Condition
            and Results of Operations.................................           9
   7A     Quantitative and Qualitative Disclosures about Market
            Risk......................................................           9
   8      Financial Statements and Supplementary Data.................           9
   9      Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure..................................           9

          PART III
  10      Directors and Executive Officers of the Registrant..........           9
  11      Executive Compensation......................................           9
  12      Security Ownership of Certain Beneficial Owners and
            Management................................................          10
  13      Certain Relationships and Related Transactions..............          10
  14      Controls and Procedures.....................................          10

          PART IV
  15      Exhibits, Financial Statement Schedules, and Reports on Form
            8-K.......................................................          11
          Signatures..................................................          15
          Management Certifications...................................          16
          Exhibits....................................................
</Table>
<PAGE>

                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

KeyCorp is a legal entity separate and distinct from its banking and other
subsidiaries. Accordingly, the right of KeyCorp, its security holders and its
creditors to participate in any distribution of the assets or earnings of
KeyCorp's banking and other subsidiaries is subject to the prior claims of the
respective creditors of such banking and other subsidiaries, except to the
extent that KeyCorp's claims in its capacity as creditor of such banking and
other subsidiaries may be recognized.

KeyCorp, organized in 1958 under the laws of the state of Ohio, is headquartered
in Cleveland, Ohio. It has elected to be a bank holding company and a financial
holding company under the Bank Holding Company Act of 1956, as amended ("BHCA").
At December 31, 2002, KeyCorp was one of the nation's largest bank-based
financial services companies with consolidated total assets of $85.2 billion.
Its subsidiaries provide a wide range of retail and commercial banking,
commercial leasing, investment management, consumer finance and investment
banking products and services to individual, corporate and institutional clients
through three major business groups: Key Consumer Banking, Key Corporate Finance
and Key Capital Partners. As of December 31, 2002, these services were provided
across much of the country through subsidiaries operating 910 full-service
retail banking branches ("KeyCenters"), a telephone banking call center services
group and 2,165 ATMs in 17 states. Additional information pertaining to the
three business lines referred to above is included in the "Line of Business
Results" section beginning on page 24 and in Note 4 ("Line of Business
Results"), beginning on page 65 of the Financial Review section of KeyCorp's
2002 Annual Report to Shareholders and is incorporated herein by reference.
KeyCorp and its subsidiaries have 20,437 full-time equivalent employees as of
December 31, 2002.

In addition to the customary banking services of accepting deposits and making
loans, KeyCorp's bank and trust company subsidiaries provide specialized
services, including personal and corporate trust services, personal financial
services, customer access to mutual funds, cash management services, investment
banking and capital markets products, and international banking services.
Through its subsidiary banks, trust company and registered investment adviser
subsidiaries, KeyCorp provides investment management services to individual and
institutional clients, including large corporate and public retirement plans,
foundations and endowments, high net worth individuals and Taft-Hartley plans
(i.e., multiemployer trust funds established for providing pension, vacation or
other benefits to employees).

KeyCorp provides other financial services both inside and outside of its primary
banking markets through its nonbank subsidiaries. These services include
accident and health insurance on loans made by subsidiary banks, principal
investing, community development financing, securities underwriting and
brokerage and other financial services. KeyCorp is an equity participant in a
joint venture with Key Merchant Services, LLC, which provides merchant services
to businesses.

                                        1
<PAGE>

The following financial data is included in the Financial Review section of
KeyCorp's 2002 Annual Report to Shareholders and is incorporated herein by
reference as indicated below:

<Table>
<Caption>
DESCRIPTION OF FINANCIAL DATA                                  PAGE
- -----------------------------                                  ----
<S>                                                            <C>
Selected Financial Data.....................................    23
Average Balance Sheets, Net Interest Income and
  Yields/Rates..............................................    28
Components of Net Interest Income Changes...................    31
Composition of Loans........................................    37
Maturities and Sensitivity of Certain Loans to Changes in
  Interest Rates............................................    40
Securities Available for Sale...............................    41
Investment Securities.......................................    41
Allocation of the Allowance for Loan Losses.................    42
Summary of Loan Loss Experience.............................    44
Summary of Nonperforming Assets and Past Due Loans..........    45
Maturity Distribution of Time Deposits of $100,000 or
  More......................................................    46
Impaired Loans and Other Nonperforming Assets...............    72
Short-Term Borrowings.......................................    74
</Table>

The executive offices of KeyCorp are located at 127 Public Square, Cleveland,
Ohio 44114-1306, and its telephone number is (216) 689-6300.

ACQUISITIONS AND DIVESTITURES

The information presented in Note 3 ("Acquisitions and Divestitures") on page 64
of the Financial Review section of KeyCorp's 2002 Annual Report to Shareholders
is incorporated herein by reference.

COMPETITION

The market for banking and related financial services is highly competitive.
KeyCorp and its subsidiaries ("Key") compete with other providers of financial
services, such as other bank holding companies, commercial banks, savings
associations, credit unions, mortgage banking companies, finance companies,
mutual funds, insurance companies, investment management firms, investment
banking firms, broker-dealers and a growing list of other local, regional and
national institutions which offer financial services. Key competes by offering
quality products and innovative services at competitive prices.

In recent years, mergers between financial institutions have led to greater
concentration in the banking industry and placed added competitive pressure on
Key's core banking services. In addition, competition has intensified as a
consequence of the financial modernization laws that were enacted in November
1999 and permit qualifying financial institutions to expand into other
activities. For example, commercial banks are now permitted to have affiliates
that underwrite and deal in securities, underwrite insurance and make merchant
banking investments under certain conditions. See "Financial Modernization
Legislation" on page 7.

SUPERVISION AND REGULATION

The following discussion addresses certain material elements of the regulatory
framework applicable to bank holding companies and their subsidiaries and
provides certain specific information regarding Key. The regulatory framework is
intended primarily to protect customers and depositors, the deposit insurance
funds of the Federal Deposit Insurance Corporation ("FDIC") and the banking
system as a whole, and generally is not intended to protect security holders.

Set forth below is a brief discussion of selected laws, regulations and
regulatory agency policies applicable to Key. This discussion is not intended to
be comprehensive and is qualified in its entirety by reference to the full text
of the statutes, regulations and regulatory agency policies to which the
discussion refers. Changes in applicable laws, regulations and regulatory agency
policies cannot necessarily be predicted by management, yet such changes may
have a material effect on Key's business, financial condition or results of
operations.

                                        2
<PAGE>

General

As a bank holding company, KeyCorp is subject to regulation, supervision and
examination by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the BHCA. Under the BHCA, bank holding companies
may not, in general, directly or indirectly acquire the ownership or control of
more than 5% of the voting shares, or substantially all of the assets, of any
bank, without the prior approval of the Federal Reserve Board. In addition, bank
holding companies are generally prohibited under the BHCA from engaging in
commercial or industrial activities. KeyCorp's bank subsidiaries are also
subject to extensive regulation, supervision and examination by applicable
federal banking agencies. KeyCorp operates two full-service, FDIC-insured
national bank subsidiaries, KeyBank National Association ("KBNA") and Key Bank
USA, National Association ("Key Bank USA"), and one national bank subsidiary
whose activities are limited to those of a fiduciary. All of KeyCorp's national
bank subsidiaries and their subsidiaries are subject to regulation, supervision
and examination by the Office of the Comptroller of the Currency (the "OCC").
Because the deposits in KBNA and Key Bank USA are insured (up to applicable
limits) by the FDIC, the FDIC also has certain regulatory and supervisory
authority over both banking subsidiaries.

KeyCorp also has other financial services subsidiaries that are subject to
regulation, supervision and examination by the Federal Reserve Board, as well as
other applicable state and federal regulatory agencies and self-regulatory
organizations. For example, KeyCorp's brokerage and asset management
subsidiaries are subject to supervision and regulation by the Securities and
Exchange Commission (the "SEC"), the National Association of Securities Dealers,
Inc. or the New York Stock Exchange and state securities regulators, and
KeyCorp's insurance subsidiaries are subject to regulation by the insurance
regulatory authorities of the various states. Other nonbank subsidiaries of
KeyCorp are subject to other laws and regulations of both the federal government
and the various states in which they are authorized to do business.

Dividend Restrictions

The principal source of cash flow to KeyCorp, including cash flow to pay
dividends on its common shares and debt service on its indebtedness, is
dividends from its subsidiaries. Various statutory and regulatory provisions
limit the amount of dividends that may be paid by KeyCorp's bank subsidiaries
without regulatory approval. The approval of the OCC is required for the payment
of any dividend by a national bank if the total of all dividends declared by the
board of directors of such bank in any calendar year would exceed the total of:
(i) the bank's net income for the current year plus (ii) the retained net income
(as defined and interpreted by regulation) for the preceding two years, less any
required transfer to surplus or a fund for the retirement of any preferred
stock. In addition, a national bank can pay dividends only to the extent of its
undivided profits. All of KeyCorp's national bank subsidiaries are subject to
these restrictions.

If, in the opinion of a federal banking agency, a depository institution under
its jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the institution, could
include the payment of dividends), the agency may require, after notice and
hearing, that such institution cease and desist from such practice. The OCC and
the FDIC have indicated that paying dividends that would deplete a depository
institution's capital base to an inadequate level would be an unsafe and unsound
practice. Moreover, under the Federal Deposit Insurance Act (the "FDIA"), an
insured depository institution may not pay any dividend if payment would cause
it to become less than "adequately capitalized," nor may such an institution pay
any dividend while the institution is in default in the payment of any
assessment due to the FDIC. See "Regulatory Capital Standards and Related
Matters -- Prompt Corrective Action." Also, the Federal Reserve Board, the OCC
and the FDIC have issued policy statements that provide that FDIC-insured
depository institutions and their holding companies should generally pay
dividends only out of their current operating earnings.

Holding Company Structure

Transactions Involving Bank Subsidiaries.  KeyCorp's national bank subsidiaries
(and their operating subsidiaries) are subject to Federal Reserve Act
provisions, which impose qualitative standards and quantitative limitations upon
certain transactions with or involving KeyCorp (and its nonbank subsidiaries
which are not operating

                                        3
<PAGE>

subsidiaries of KeyCorp's national banks). Transactions covered by these
provisions, which include loans and other extensions of credit as well as
purchases and sales of assets, must be on arm's length terms, cannot exceed
certain amounts which are determined with reference to the bank's regulatory
capital, and if a loan or other extension of credit, must be secured by
collateral in an amount and quality expressly prescribed by statute. For
example, the aggregate of all such outstanding covered transactions by KBNA and
Key Bank USA, including their operating subsidiaries, with or involving KeyCorp
and its nonbank subsidiaries that are not operating subsidiaries of KBNA and Key
Bank USA was limited at December 31, 2002, to approximately $1.9 billion. As a
result, these provisions materially restrict the ability of KeyCorp's national
bank subsidiaries and their operating subsidiaries to fund KeyCorp and its
nonbank subsidiaries that are not operating subsidiaries of KeyCorp's national
banks.

Source of Strength Doctrine.  Under Federal Reserve Board policy, a bank holding
company is expected to serve as a source of financial and managerial strength to
each of its subsidiary banks and, under appropriate circumstances, to commit
resources to support each such subsidiary bank. This support may be required by
the Federal Reserve Board at times when KeyCorp may not have the resources to
provide it, or, for other reasons, would not otherwise be inclined to provide
it. Certain loans by a bank holding company to a subsidiary bank are subordinate
in right of payment to deposits in, and certain other indebtedness of, the
subsidiary bank. In addition, the Crime Control Act of 1990 provides that in the
event of a bank holding company's bankruptcy, any commitment by a bank holding
company to a federal bank regulatory agency to maintain the capital of a
subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.

Depositor Preference.  The FDIA provides that, in the event of the "liquidation
or other resolution" of an insured depository institution, the claims of
depositors of such institution (including claims by the FDIC as subrogee of
insured depositors) and certain claims for administrative expenses of the FDIC
as a receiver would be afforded a priority over other general unsecured claims
against such an institution, including federal funds and letters of credit. If
an insured depository institution fails, insured and uninsured depositors along
with the FDIC will be placed ahead of unsecured, nondeposit creditors, including
a parent holding company, in order of priority of payment.

Liability of Commonly Controlled Institutions.  Under the FDIA, an insured
depository institution which is under common control with another insured
depository institution is generally liable for any loss incurred, or reasonably
anticipated to be incurred, by the FDIC in connection with the default of such
commonly controlled institution, or any assistance provided by the FDIC to such
commonly controlled institution which is in danger of default. The term
"default" is defined generally to mean the appointment of a conservator or
receiver and the term "in danger of default" is defined generally as the
existence of certain conditions indicating that a "default" is likely to occur
in the absence of regulatory assistance.

Regulatory Capital Standards and Related Matters

Risk-Based and Leverage Regulatory Capital.  Applicable law and regulation
define and prescribe minimum levels of regulatory capital for bank holding
companies and their bank subsidiaries. Adequacy of regulatory capital is
assessed periodically by the federal banking agencies in the examination and
supervision process, and in the evaluation of applications in connection with
specific transactions and activities, including acquisitions, expansion of
existing activities, and commencement of new activities.

Bank holding companies are subject to risk-based capital guidelines adopted by
the Federal Reserve Board. These guidelines establish minimum ratios of
qualifying capital to risk-weighted assets. Qualifying capital includes Tier 1
capital and Tier 2 capital. Risk-weighted assets are calculated by assigning
varying risk-weights to broad categories of assets and off-balance-sheet
exposures, based primarily on counterparty credit risk. The required minimum
Tier 1 risk-based capital ratio, calculated by dividing Tier 1 capital by
risk-weighted assets, is currently 4.00%. The required minimum total risk-based
capital ratio is currently 8.00%. It is calculated by dividing the sum of Tier 1
capital and Tier 2 capital not in excess of Tier 1 capital, after deductions for
investments in certain subsidiaries and associated companies and for reciprocal
holdings of capital instruments, by risk-weighted assets.

Tier 1 capital includes common equity, qualifying perpetual preferred equity,
and minority interests in the equity accounts of consolidated subsidiaries less
certain intangible assets (including goodwill) and certain other assets.
                                        4
<PAGE>

Tier 2 capital includes qualifying hybrid capital instruments, perpetual debt,
mandatory convertible debt securities, perpetual preferred equity not includable
in Tier 1 capital, and limited amounts of term subordinated debt, medium-term
preferred equity, certain unrealized holding gains on certain equity securities,
and the allowance for loan and lease losses.

Bank holding companies, such as KeyCorp, whose trading activities exceed
specified levels are required to maintain capital for market risk. Market risk
includes changes in the market value of trading account, foreign exchange, and
commodity positions, whether resulting from broad market movements (such as
changes in the general level of interest rates, equity prices, foreign exchange
rates, or commodity prices) or from position specific factors (such as
idiosyncratic variation, event risk, and default risk). At December 31, 2002,
Key's Tier 1 and total capital to risk-weighted assets ratios were 8.09% and
12.51%, respectively, which include required adjustments for market risk.

In addition to the risk-based standard, bank holding companies are subject to
the Federal Reserve Board's leverage ratio guidelines. These guidelines
establish minimum ratios of Tier 1 capital to total assets. The minimum leverage
ratio, calculated by dividing Tier 1 capital by average total consolidated
assets, is 3.00% for bank holding companies that either have the highest
supervisory rating or have implemented the Federal Reserve Board's risk-based
capital measure for market risk. All other bank holding companies must maintain
a minimum leverage ratio of at least 4.00%. Neither KeyCorp nor any of its bank
subsidiaries has been advised by its primary federal banking regulator of any
specific leverage ratio applicable to it. At December 31, 2002, Key's Tier 1
capital leverage ratio was 8.15%.

KeyCorp's national bank subsidiaries are also subject to risk-based and leverage
capital requirements adopted by the OCC which are substantially similar to those
imposed by the Federal Reserve Board on bank holding companies. At December 31,
2002, each of KeyCorp's national bank subsidiaries had regulatory capital in
excess of all minimum risk-based and leverage capital requirements.

In addition to establishing regulatory minimum ratios of capital to assets for
all bank holding companies and their bank subsidiaries, the risk-based and
leverage capital guidelines also identify various organization-specific factors
and risks that are not taken into account in the computation of the capital
ratios but that affect the overall supervisory evaluation of a banking
organization's regulatory capital adequacy and can result in the imposition of
higher minimum regulatory capital ratio requirements upon the particular
organization. Neither the Federal Reserve Board nor the OCC has advised KeyCorp
or any of its national bank subsidiaries of any specific minimum risk-based or
leverage capital ratio applicable to KeyCorp or such national bank subsidiary.
Additional information regarding regulatory capital levels is included in the
"Capital" section beginning on page 48 of the Financial Review section of
KeyCorp's 2002 Annual Report to Shareholders.

Recourse Obligations, Direct Credit Substitutes, and Residual Interests.  In
2002, a final rule issued by the federal banking agencies became effective that
revised the regulatory capital treatment of on-balance sheet assets and
off-balance sheet exposures consisting of recourse obligations, direct credit
substitutes, and residual interests that expose banking organizations primarily
to credit risk. The final rule treats recourse obligations and direct credit
substitutes more consistently and adds new standards for the treatment of
residual interests, including a concentration limit for credit-enhancing
interest-only strip receivables. In addition, the agencies use credit rating and
certain alternative approaches to match regulatory capital requirements more
closely to a banking organization's relative risk of loss for certain positions
in asset securitizations.

Equity Investments in Nonfinancial Companies.  On April 1, 2002, the federal
banking agencies issued a final rule regarding the regulatory capital treatment
of certain equity investments made by banking organizations in companies engaged
in nonfinancial activities. It imposes marginal capital charges (applied by
making deductions from Tier 1 capital) that increase as the banking
organization's aggregate carrying amount of its covered equity investments
increase in relation to its Tier 1 capital. Such capital charges range from 8%
to 25% as such aggregate carrying amount increases from 15% to 25% of the
banking organization's Tier 1 capital. Implementation of this new rule had no
material adverse effect on Key's regulatory capital in 2002.

Subprime Lending.  The federal banking agencies have heightened their
supervisory expectations with respect to regulatory capital of institutions
having subprime lending programs. For these purposes, a subprime lending

                                        5
<PAGE>

program is one that targets borrowers with weakened credit histories or
questionable repayment capacity. In addition to regulatory capital, the
supervisory guidance regarding subprime lending addresses supervisory
expectations with respect to risk management, the allowance for loan and lease
losses, portfolio and transaction level examination review, analysis, and
classification, cure program documentation, and predatory or abusive lending
practices.

While this guidance principally applies to institutions with subprime lending
programs having an aggregate credit exposure of at least 25% of Tier 1 capital,
federal banking examiners may apply it to other subprime portfolios, such as
those that are experiencing rapid growth or adverse performance trends, those
that are administered by inexperienced management, and those that possess
inadequate or weak controls. For an institution having subprime lending
portfolio exposure aggregating 25% or more of the institution's Tier 1 capital,
the supervisory guidance indicates examiners will likely expect, as a minimum,
that the institution would hold capital against such portfolio in an amount that
is 1.5 to 3.0 times greater than what is appropriate for non-subprime assets of
a similar type.

The federal banking agencies have indicated, however, that the guidance is
neither intended nor considered by the agencies to be a capital regulation and
does not represent a change in policy by the agencies. Moreover, the agencies
have also indicated that examiners would not unilaterally require additional
reserves or capital based upon the guidance, and that any determination made by
an examiner that an institution's reserves or capital is deficient would be
discussed with the institution's management and each agency's appropriate
supervisory office before a final decision is made. Neither the Federal Reserve
Board nor the OCC has advised Key of any such deficiency.

Prompt Corrective Action.  The "prompt corrective action" provisions of the FDIA
added by the FDIC Improvement Act ("FDICIA") create a statutory framework that
applies a system of both discretionary and mandatory supervisory actions indexed
to the capital level of FDIC-insured depository institutions. These provisions
impose progressively more restrictive constraints on operations, management, and
capital distributions of the institution as its regulatory capital decreases, or
in some cases, based on supervisory information other than the institution's
capital level. This framework and the authority it confers on the federal
banking agencies supplements other existing authority vested in such agencies to
initiate supervisory actions to address capital deficiencies. Moreover, other
provisions of law and regulation employ regulatory capital level designations
the same as or similar to those established by the prompt corrective action
provisions both in imposing certain restrictions and limitations and in
conferring certain economic and other benefits upon institutions. These include
restrictions on brokered deposits, FDIC deposit insurance limits on pass-through
deposits, limits on exposure to interbank liabilities, risk-based FDIC deposit
insurance premium assessments, and expedited action upon regulatory
applications.

FDIC-insured depository institutions are grouped into one of five prompt
corrective action capital categories -- well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized -- using the Tier 1 risk-based, total risk-based, and Tier 1
leverage capital ratios as the relevant capital measures. An institution is
considered well capitalized if it has a total risk-based capital ratio of at
least 10.00%, a Tier 1 risk-based capital ratio of at least 6.00% and a Tier 1
leverage capital ratio of at least 5.00% and is not subject to any written
agreement, order or capital directive to meet and maintain a specific capital
level for any capital measure. An adequately capitalized institution must have a
total risk-based capital ratio of at least 8.00%, a Tier 1 risk-based capital
ratio of at least 4.00% and a Tier 1 leverage capital ratio of at least 4.00%
(3.00% if the institution has achieved the highest composite rating in its most
recent examination) and is not well capitalized. At December 31, 2002, each
KeyCorp insured depository institution subsidiary met the requirements for the
"well capitalized" capital category. An institution's prompt corrective action
capital category, however, may not constitute an accurate representation of the
overall financial condition or prospects of KeyCorp or its bank subsidiaries,
and should be considered in conjunction with other available information
regarding Key's financial condition and results of operations.

                                        6
<PAGE>

FDIC DEPOSIT INSURANCE

Because substantially all of the deposits of KeyCorp's depository institution
subsidiaries are insured up to applicable limits by the FDIC, these subsidiaries
are subject to deposit insurance premium assessments by the FDIC to maintain the
Bank Insurance Fund (the "BIF") and the Savings Association Insurance Fund (the
"SAIF") of the FDIC. The FDIC has adopted a risk-related deposit insurance
assessment system under which premiums, ranging in 2002 from zero to $.27 for
each $100 of domestic deposits, are imposed based upon the depository
institution's capitalization and federal supervisory evaluation. Each of
KeyCorp's depository institution subsidiaries in 2002 qualified for a deposit
insurance assessment rate of zero. The FDIC is authorized to increase deposit
insurance premium assessments in certain circumstances. Any such increase would
have an adverse effect on Key's earnings.

In May 2002, the U.S. House of Representatives passed H.R. 3717, the Federal
Deposit Insurance Reform Act of 2002. Under this legislation: (i) BIF and SAIF
would merge into a single Deposit Insurance Fund ("DIF"), (ii) DIF coverage
limits would significantly increase with an inflation adjustment index for
future increases in coverage, (iii) a designated reserve ratio within a range of
1.15% to 1.40% would apply to DIF replacing the 1.25% designated reserve ratio
applicable under current law to BIF and SAIF, with the FDIC determining at least
annually the designated reserve ratio within the range that will apply to DIF,
(iv) current deposit insurance assessments would be set in an amount the FDIC
determines to be appropriate (including a maximum base assessment of $.01 per
$100 of assessable deposits for insured depository institutions in the lowest
risk category, so long as the DIF reserve ratio does not fall below 1.15%), (v)
a one-time credit predicated upon the December 31, 1996, assessment base of
eligible insured depository institutions would be available (with the amount of
such credit being limited for institutions exhibiting financial, operational, or
compliance weakness, including undercapitalization), (vi) the payment of
dividends to insured depository institutions would be required whenever the DIF
reserve ratio equals or exceeds specified percentages, (vii) an on-going system
of credits to be applied against future assessments would be established on the
same basis as the payment of dividends, and (viii) restoration plans for DIF
would be required to be established and implemented by the FDIC whenever DIF's
reserve ratio falls (or is projected to fall) below its then applicable
designated reserve ratio. This proposed legislation was not enacted into law
before the adjournment of the 107th Congress. Similar legislation has been
introduced in the 108th Congress. Enactment into law of legislation similar to
H.R. 3717 can be expected to adversely affect the results of operations of all
insured depository institutions, including KBNA and Key Bank USA.

FINANCIAL MODERNIZATION LEGISLATION

The Gramm-Leach-Bliley Act (the "GLBA"), enacted in November of 1999, authorizes
new activities for qualifying financial institutions. The GLBA repeals
significant provisions of the Glass-Steagall Act to permit commercial banks,
among other things, to have affiliates that underwrite and deal in securities
and make merchant banking investments provided certain conditions are met. The
GLBA modifies the BHCA to permit bank holding companies that meet certain
specified standards (known as "financial holding companies") to engage in a
broader range of financial activities than previously permitted under the BHCA,
and allows subsidiaries of commercial banks that meet certain specified
standards (known as "financial subsidiaries") to engage in a wide range of
financial activities that are prohibited to such banks themselves under certain
circumstances. In 2000, KeyCorp elected to become a financial holding company.
Under the authority conferred by the GLBA, Key has been able to expand the
nature and scope of its equity investments in nonfinancial companies, operate
its McDonald Investments Inc. subsidiary with fewer operating restrictions, and
acquire financial subsidiaries to engage in real estate leasing activities and
insurance agency activities without geographic restriction.

GLBA also established new requirements for financial institutions to provide new
privacy protections to consumers. The federal banking agencies jointly adopted a
final regulation providing for the implementation of these protections. It
requires a financial institution to provide notice to customers about its
privacy policies and practices, describes under what conditions a financial
institution may disclose nonpublic personal information about consumers to
non-affiliated third parties, and provides an "opt-out" method for consumers to
prevent the

                                        7
<PAGE>

financial institution from disclosing that information to non-affiliated third
parties. Financial institutions were required to be in compliance with the final
regulation by July 1, 2001.

Effective in May 2001, GLBA repealed the blanket exception for banks and savings
associations from the definitions of "broker" and "dealer" under the Securities
Exchange Act of 1934, and replaced this full exception with functional
exceptions. Under the statute, these institutions that engage in securities
activities either must conduct those activities through a broker-dealer or
conform their securities activities to those which qualify for functional
exceptions. The SEC issued interim final rules in May 2001, which include a
temporary exemption for banks from the definitions of "broker" and "dealer."
Since that time, the SEC has extended this temporary extension. The most recent
extension provides that banks are exempt from the definition of "broker" until
May 2003 and from the definition of "dealer" until February 2003. The SEC has
also indicated that it expects to amend the interim final rules, and that it
does not expect banks to develop compliance systems to bring their operations
into compliance with the interim final rules until they have been amended. In
November 2002, the SEC published proposed amendments to the interim final rules
principally with respect to the "dealer" exemption. These proposed amendments
were adopted in final form in February 2003 and become effective in September
2003.

ITEM 2.  PROPERTIES

The headquarters of KeyCorp, KBNA and Key Bank USA are located in Key Tower at
127 Public Square, Cleveland, Ohio 44114-1306. At December 31, 2002, Key leased
approximately 695,000 square feet of the complex, encompassing the first
twenty-three floors, the 28th floor and the 54th through 56th floors of the
57-story Key Tower. As of the same date, the bank subsidiaries of KeyCorp owned
503 of their branch banking offices and leased 407 offices. The lease terms for
applicable branch banking offices are not individually material, with terms
ranging from month-to-month to 99-years from inception. Additional information
pertaining to Key's properties is presented in Note 1 ("Summary of Significant
Accounting Policies"), beginning on page 57 of the Financial Review section of
KeyCorp's 2002 Annual Report to Shareholders and is incorporated herein by
reference.

ITEM 3.  LEGAL PROCEEDINGS

The information presented in the Legal Proceedings section of Note 19
("Commitments, Contingent Liabilities and Guarantees"), beginning on page 81 of
the Financial Review section of KeyCorp's 2002 Annual Report to Shareholders is
incorporated herein by reference.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year covered by this report, no matter
was submitted to a vote of security holders of KeyCorp.

                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

The dividend restrictions discussion on page 3 of this report and the following
disclosures included in the Financial Review section of KeyCorp's 2002 Annual
Report to Shareholders are incorporated herein by reference:

<Table>
<Caption>
                                                               PAGE
                                                              ------
<S>                                                           <C>
Discussion of common shares and shareholder information
  presented in the "Capital" section........................    48
Presentation of quarterly market price and cash dividends
  per common share..........................................    51
Discussion of dividend restrictions presented in the
  "Liquidity" section and in Note 5 ("Restrictions on Cash,
  Dividends and Lending Activities")........................  46, 68
</Table>

                                        8
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

The Selected Financial Data presented on page 23 of the Financial Review section
of KeyCorp's 2002 Annual Report to Shareholders is incorporated herein by
reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The information included under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" presented on pages 20 through 51
of the Financial Review section of KeyCorp's 2002 Annual Report to Shareholders
is incorporated herein by reference.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information included under the caption "Market risk management" presented on
pages 30 through 32 of the Financial Review section of KeyCorp's 2002 Annual
Report to Shareholders is incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Selected Quarterly Financial Data and the financial statements and the notes
thereto, presented on page 51 and on pages 53 through 88, respectively, of the
Financial Review section of KeyCorp's 2002 Annual Report to Shareholders are
incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is set forth in the sections captioned
"Issue One -- ELECTION OF DIRECTORS" and "EXECUTIVE OFFICERS" contained in
KeyCorp's definitive Proxy Statement for the 2003 Annual Meeting of Shareholders
to be held May 22, 2003, and is incorporated herein by reference. The
information set forth in the sections captioned, "AUDIT REVIEW COMMITTEE
INDEPENDENCE" and "AUDIT REVIEW COMMITTEE REPORT" contained in KeyCorp's
definitive Proxy Statement for the 2003 Annual Meeting of Shareholders to be
held May 22, 2003, are not incorporated by reference in this report on Form
10-K. KeyCorp expects to file its final proxy statement on or before April 2,
2003.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this item is set forth in the sections captioned
"THE BOARD OF DIRECTORS AND ITS COMMITTEES," "COMPENSATION OF EXECUTIVE
OFFICERS" and "EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS" contained in
KeyCorp's definitive Proxy Statement for the 2003 Annual Meeting of Shareholders
to be held May 22, 2003, and is incorporated herein by reference. The
information set forth in the sections captioned "COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION" and "KEYCORP STOCK PRICE PERFORMANCE" contained in
KeyCorp's definitive Proxy Statement for the 2003 Annual Meeting of Shareholders
to be held May 22, 2003, is not incorporated by reference in this report on Form
10-K. KeyCorp expects to file its final proxy statement on or before April 2,
2003.

                                        9
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is set forth in the sections captioned
"EQUITY COMPENSATION PLAN INFORMATION" and "SHARE OWNERSHIP AND PHANTOM STOCK
UNITS" contained in KeyCorp's definitive Proxy Statement for the 2003 Annual
Meeting of Shareholders to be held May 22, 2003, and is incorporated herein by
reference. KeyCorp expects to file its final proxy statement on or before April
2, 2003.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is set forth in the section captioned
"Issue One -- ELECTION OF DIRECTORS" contained in KeyCorp's definitive Proxy
Statement for the 2003 Annual Meeting of Shareholders to be held May 22, 2003,
and is incorporated herein by reference. KeyCorp expects to file its final proxy
statement on or before April 2, 2003.

ITEM 14.  CONTROLS AND PROCEDURES

As a bank holding company, KeyCorp is subject to the internal control reporting
requirements of the Federal Deposit Insurance Corporation Improvement Act, which
became effective in 1993 ("FDICIA"). FDICIA requirements include an annual
assessment by our Chief Executive Officer and Chief Financial Officer of the
effectiveness of our internal controls over financial reporting, which generally
include those controls relating to the preparation of our financial statements
in conformity with accounting principles generally accepted in the United
States. In addition, under FDICIA our independent auditors have annually
examined and attested to, without qualification, management's assertions
regarding the effectiveness of our internal controls. Accordingly, we have had
an established process of maintaining and evaluating our internal controls over
financial reporting.

In connection with recent legislation and regulations, our management has also
focused its attention on our "disclosure controls and procedures" which, as
defined by the SEC, are generally those controls and procedures designed to
ensure that financial and nonfinancial information required to be disclosed in
KeyCorp's reports filed with the SEC is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms and that
such information is accumulated and communicated to KeyCorp's management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure. In light
of the new requirements, we have engaged in a process of reviewing our
disclosure controls and procedures. As a result of our review, and although we
believe that our pre-existing disclosure controls and procedures were effective
in enabling us to comply with our disclosure obligations, we have implemented
enhancements, which include establishing a disclosure committee and generally
formalizing and documenting disclosure controls and procedures that we already
have in place. Any future refinements to our controls and procedures will
continue to build upon our existing framework.

Following the review described above and the establishment of our disclosure
committee and within the 90-day period prior to the filing of this report,
KeyCorp carried out an evaluation, under the supervision and with the
participation of KeyCorp's management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of
KeyCorp's disclosure controls and procedures. Based upon that evaluation,
KeyCorp's Chief Executive Officer and Chief Financial Officer concluded that the
design and operation of these disclosure controls and procedures were effective.
There have been no significant changes in internal controls that could
significantly affect internal controls subsequent to the date the Chief
Executive Officer and Chief Financial Officer completed their evaluation.

                                        10
<PAGE>

                                    PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) FINANCIAL STATEMENTS

The following financial statements of KeyCorp and its subsidiaries, and the
auditor's report thereon, are incorporated herein by reference to the pages
indicated in the Financial Review section of KeyCorp's 2002 Annual Report to
Shareholders:

<Table>
<Caption>
                                                               PAGE
                                                               ----
<S>                                                            <C>
Report of Ernst & Young LLP, Independent Auditors...........    52
Consolidated Financial Statements:
Consolidated Balance Sheets at December 31, 2002 and 2001...    53
Consolidated Statements of Income for the Years Ended
  December 31, 2002, 2001 and 2000..........................    54
Consolidated Statements of Changes in Shareholders' Equity
  for the Years Ended December 31, 2002, 2001 and 2000......    55
Consolidated Statements of Cash Flow for the Years Ended
  December 31, 2002, 2001 and 2000..........................    56
Notes to Consolidated Financial Statements..................    57
</Table>

(a)(2) FINANCIAL STATEMENT SCHEDULES

All financial statement schedules for KeyCorp and its subsidiaries have been
included in the consolidated financial statements or the related footnotes, or
they are either inapplicable or not required.

(a)(3) EXHIBITS*

<Table>
<C>                <S>
      3.1          Amended and Restated Articles of Incorporation of KeyCorp
                   filed, as Exhibit 3 to Form 10-Q for the quarter ended
                   September 30, 1998, and incorporated herein by reference.
      3.2          Amended and Restated Regulations of KeyCorp, effective May
                   23, 2002, filed as Exhibit 3.2 to Form 10-Q for the quarter
                   ended June 30, 2002, and incorporated herein by reference.
      4.1          Restated Rights Agreement, dated as of May 15, 1997, between
                   KeyCorp and KeyBank National Association, as Rights Agent,
                   filed on June 19, 1997, as Exhibit 1 to Form 8-A, and
                   incorporated herein by reference.
     10.1          Form of Change of Control Agreement between KeyCorp and
                   Certain Executive Officers of KeyCorp, effective January 17,
                   2002, filed as Exhibit 10.5 to Form 10-Q for the quarter
                   ended June 30, 2002, and incorporated herein by reference.
     10.2          Form of Premium Priced Option Grant between KeyCorp and
                   Henry L. Meyer III, dated January 13, 1999, filed as Exhibit
                   10.3 to Form 10-Q for the quarter ended March 31, 1999, and
                   incorporated herein by reference.
     10.3          Form of Option Grant between KeyCorp and Henry L. Meyer III,
                   dated November 15, 2000, filed as Exhibit 10.6 to Form 10-K
                   for the year ended December 31, 2000, and incorporated
                   herein by reference.
     10.4          Form of Award of Restricted Stock (2002-2003), filed as
                   Exhibit 10.1 to Form 10-Q for the quarter ended March 31,
                   2002, and incorporated herein by reference.
     10.5          Form of Award of Restricted Stock (2002-2004), filed as
                   Exhibit 10.2 to Form 10-Q for the quarter ended March 31,
                   2002, and incorporated herein by reference.
     10.6          Award of Restricted Stock to Henry L. Meyer III (2002-2003),
                   filed as Exhibit 10.3 to Form 10-Q for the quarter ended
                   March 31, 2002, and incorporated herein by reference.
     10.7          Award of Restricted Stock to Henry L. Meyer III (2002-2004),
                   filed as Exhibit 10.4 to Form 10-Q for the quarter ended
                   March 31, 2002, and incorporated herein by reference.
     10.8          Amended and Restated Employment Agreement between KeyCorp
                   and Henry L. Meyer III, dated July 18, 2002, filed as
                   Exhibit 10.6 to Form 10-Q for the quarter ended June 30,
                   2002, and incorporated herein by reference.
</Table>

                                        11
<PAGE>
<Table>
<C>                <S>
     10.9          Amended Employment Agreement among KeyCorp, Robert T.
                   Clutterbuck and McDonald Investments Inc., dated September
                   16, 2002, filed as Exhibit 10 to Form 10-Q for the quarter
                   ended September 30, 2002, and incorporated herein by
                   reference.
     10.10         Letter Agreement between KeyCorp and Thomas W. Bunn, dated
                   February 11, 2002.
     10.11         KeyCorp Annual Incentive Plan as amended and restated on
                   January 17, 2001, filed as Exhibit 10.3 to Form 10-Q for the
                   quarter ended March 31, 2001, and incorporated herein by
                   reference.
     10.12         KeyCorp Amended and Restated 1991 Equity Compensation Plan
                   (amended as of November 21, 2002).
     10.13         Society Corporation 1988 Stock Option Plan, amended as of
                   September 19, 1996, filed as Exhibit 10.11 to Form 10-K for
                   the year ended December 31, 1996, and incorporated herein by
                   reference.
     10.14         KeyCorp 1988 Stock Option Plan, amended and restated as of
                   September 19, 1996, filed as Exhibit 10.20 to Form 10-K for
                   the year ended December 31, 1996, and incorporated herein by
                   reference.
     10.15         McDonald & Company Investments, Inc. Stock Option Plan,
                   filed as Exhibit 10.39 to Form 10-K for the year ended
                   December 31, 1998, and incorporated herein by reference.
     10.16         McDonald & Company Investments, Inc. 1995 Key Employees
                   Stock Option Plan, filed as Exhibit 10.40 to Form 10-K for
                   the year ended December 31, 1998, and incorporated herein by
                   reference.
     10.17         KeyCorp Directors' Stock Option Plan (November 17, 1994
                   Restatement) filed as Exhibit 10.37 to Form 10-K for the
                   year ended December 31, 1994, and incorporated herein by
                   reference.
     10.18         KeyCorp 1997 Stock Option Plan for Directors as amended and
                   restated on March 14, 2001, filed as Exhibit 10.1 to Form
                   10-Q for the quarter ended March 31, 2001, and incorporated
                   herein by reference.
     10.19         KeyCorp Umbrella Trust for Directors between KeyCorp and
                   National Bank of Detroit, dated July 1, 1990, filed as
                   Exhibit 10.28 to Form 10-K for the year ended December 31,
                   1996, and incorporated herein by reference.
     10.20         Amended and Restated Director Deferred Compensation Plan
                   (May 18, 2000 Amendment and Restatement) filed as Exhibit 10
                   to Form 10-Q for the quarter ended June 30, 2000, and
                   incorporated herein by reference.
     10.21         KeyCorp Directors' Survivor Benefit Plan, effective
                   September 1, 1990, filed as Exhibit 10.25 to Form 10-K for
                   the year ended December 31, 1996, and incorporated herein by
                   reference.
     10.22         KeyCorp Excess 401(k) Savings Plan (Amended and Restated as
                   of January 1, 1998), filed as Exhibit 10.31 to Form 10-K for
                   the year ended December 31, 1998, and incorporated herein by
                   reference.
     10.23         KeyCorp Excess Cash Balance Pension Plan (Amended and
                   Restated as of January 1, 1998), filed as Exhibit 10.34 to
                   Form 10-K for the year ended December 31, 1998, and
                   incorporated herein by reference.
     10.24         First Amendment to KeyCorp Excess Cash Balance Pension Plan,
                   effective July 1, 1999, filed as Exhibit 10.4 to Form 10-Q
                   for the quarter ended September 30, 1999, and incorporated
                   herein by reference.
     10.25         KeyCorp Deferred Compensation Plan (Amended and Restated as
                   of January 1, 1998), filed as Exhibit 10.38 to Form 10-K for
                   the year ended December 31, 1998, and incorporated herein by
                   reference.
     10.26         First Amendment to KeyCorp Deferred Compensation Plan filed
                   as Exhibit 10.28 to Form 10-K for the year ended December
                   31, 2001, and incorporated herein by reference.
     10.27         Second Amendment to KeyCorp Deferred Compensation Plan filed
                   as Exhibit 10.29 to Form 10-K for the year ended December
                   31, 2001, and incorporated herein by reference.
     10.28         Third Amendment to KeyCorp Deferred Compensation Plan.
</Table>

                                        12
<PAGE>
<Table>
<C>                <S>
     10.29         KeyCorp Automatic Deferral Plan, filed as Exhibit 10.3 to
                   Form 10-Q for the quarter ended September 30, 1999, and
                   incorporated herein by reference.
     10.30         First Amendment to KeyCorp Automatic Deferral Plan, filed as
                   Exhibit 10.31 to Form 10-K for the year ended December 31,
                   2000, and incorporated herein by reference.
     10.31         McDonald Financial Group Deferral Plan.
     10.32         KeyCorp Signing Bonus Plan (effective January 1, 1999).
     10.33         First Amendment to KeyCorp Signing Bonus plan (effective
                   January 1, 2001).
     10.34         Key Asset Management Long Term Incentive Plan.
     10.35         KeyCorp Commissioned Deferred Compensation Plan as amended
                   and restated as of January 1, 2002.
     10.36         KeyCorp Excess 401(k) Savings Plan.
     10.37         Trust Agreement for certain amounts that may become payable
                   to certain executives and directors of KeyCorp, dated April
                   1, 1997, filed as Exhibit 10.2 to Form 10-Q for the quarter
                   ended June 30, 1997, and incorporated herein by reference.
     10.38         Trust Agreement (Executive Benefits Rabbi Trust), dated
                   November 3, 1988, filed as Exhibit 10.20 to Form 10-K for
                   the year ended December 31, 1995, and incorporated herein by
                   reference.
     10.39         KeyCorp Umbrella Trust for Executives between KeyCorp and
                   National Bank of Detroit, dated July 1, 1990, filed as
                   Exhibit 10.27 to Form 10-K for the year ended December 31,
                   1996, and incorporated herein by reference.
     10.40         KeyCorp Supplemental Retirement Plan, amended, restated and
                   effective January 1, 2002.
     10.41         KeyCorp Supplemental Retirement Benefit Plan, effective
                   January 1, 1981, restated August 16, 1990, amended January
                   1, 1995, and August 1, 1996, filed as Exhibit 10.26 to Form
                   10-K for the year ended December 31, 1998, and incorporated
                   herein by reference.
     10.42         Third Amendment to KeyCorp Supplemental Retirement Benefit
                   Plan, effective July 1, 1999, filed as Exhibit 10.6 to Form
                   10-Q for the quarter ended September 30, 1999, and
                   incorporated herein by reference.
     10.43         KeyCorp Executive Supplemental Pension Plan, amended,
                   restated and effective August 1, 1996, filed as Exhibit
                   10.29 to Form 10-K for the year ended December 31, 1996, and
                   incorporated herein by reference.
     10.44         First Amendment to KeyCorp Executive Supplemental Pension
                   Plan, effective January 1, 1997, filed as Exhibit 10.27 to
                   Form 10-K for the year ended December 31, 1997, and
                   incorporated herein by reference.
     10.45         Third Amendment to KeyCorp Executive Supplemental Pension
                   Plan, filed as Exhibit 10.42 to Form 10-K for the year ended
                   December 31, 2000, and incorporated herein by reference.
     10.46         KeyCorp Supplemental Retirement Benefit Plan for Key
                   Executives, effective July 1, 1990, restated August 16,
                   1990, amended as of January 1, 1995, and August 1, 1996,
                   filed as Exhibit 10.26 to Form 10-K for the year ended
                   December 31, 1996, and incorporated herein by reference.
     10.47         Third Amendment to KeyCorp Supplemental Retirement Benefit
                   Plan for Key Executives, effective July 1, 1999, filed as
                   Exhibit 10.7 to Form 10-Q for the quarter ended September
                   30, 1999, and incorporated herein by reference.
     10.48         KeyCorp Survivor Benefit Plan, effective September 1, 1990,
                   filed as Exhibit 10.17 to Form 10-K for the year ended
                   December 31, 1996, and incorporated herein by reference.
     12            Statement regarding Computation of Ratios.
     13            KeyCorp 2002 Annual Report to Shareholders.
     21            Subsidiaries of the Registrant.
     23            Consent of Independent Auditors.
     24            Powers of Attorney.
</Table>

                                        13
<PAGE>

<Table>
<S>                  <C>
         99.1        Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
                     2002.
         99.2        Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
                     2002.
</Table>

KeyCorp hereby agrees to furnish the SEC upon request, copies of instruments
outstanding, including indentures, which define the rights of long-term debt
security holders.

All documents listed as Exhibits 10.1 through 10.48 constitute management
contracts or compensatory plans or arrangements.

* Copies of these Exhibits have been filed with the SEC. Shareholders may obtain
  a copy of any exhibit, upon payment of reproduction costs, by writing KeyCorp
  Investor Relations, at 127 Public Square (Mail Code OH-01-27-1113), Cleveland,
  OH 44114-1306.

(b) REPORTS ON FORM 8-K

October 17, 2002 -- Item 5.  Other Events, Item 7. Financial Statements and
Exhibits and Item 9. Regulation FD Disclosure. Reporting that on October 17,
2002, KeyCorp issued a press release announcing its earnings results for the
three-and nine-month periods ended September 30, 2002, and providing a slide
presentation reviewed in the related conference call/webcast.

No other reports on Form 8-K were filed during the fourth quarter of 2002.

INFORMATION AVAILABLE ON WEBSITE

KeyCorp makes available free of charge on its website, www.Key.com, its annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K
and amendments to these reports as soon as reasonably practicable after KeyCorp
electronically files such material with, or furnishes it to, the SEC.

                                        14
<PAGE>

                                   SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON THE DATE INDICATED.
                                            KEYCORP

                                            /s/  THOMAS C. STEVENS
                                            ------------------------------------
                                            THOMAS C. STEVENS
                                            Vice Chairman, Chief Administrative
                                            Officer and Secretary
                                            March 21, 2003

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES AND ON THE DATE INDICATED.

<Table>
<Caption>
       SIGNATURE                 TITLE
       ---------                 -----
<S>                      <C>
* Henry L. Meyer III     Chairman, Chief
                         Executive Officer,
                         and President
                         (Principal Executive
                         Officer), and
                         Director

* Jeffrey B. Weeden      Chief Financial
                         Officer (Principal
                         Financial Officer)

* Lee G. Irving          Executive Vice
                         President and Chief
                         Accounting Officer
                         (Principal Accounting
                         Officer)

* Cecil D. Andrus        Director

* William G. Bares       Director
</Table>

<Table>
<Caption>
       SIGNATURE                 TITLE
       ---------                 -----
<S>                      <C>

* Edward P. Campbell     Director

* Dr. Carol A.           Director
  Cartwright

* Alexander M. Cutler    Director

* Henry S. Hemingway     Director

* Charles R. Hogan       Director

* Dr. Shirley A.         Director
  Jackson

* Douglas J. McGregor    Director

* Eduardo R. Menasce     Director

* Steven A. Minter       Director

* Thomas C. Stevens      Director

* Dennis W. Sullivan     Director

* Peter G. Ten Eyck, II  Director
</Table>

                                            /s/ Thomas C. Stevens
                                            ------------------------------------
                                            * By Thomas C. Stevens,
                                              attorney-in-fact
                                               March 21, 2003

                                        15
<PAGE>

                           CERTIFICATION PURSUANT TO
                               SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002

I, Henry L. Meyer III, certify that:

     1. I have reviewed this annual report on Form 10-K of KeyCorp;

     2. Based on my knowledge, this annual report does not contain any untrue
        statement of a material fact or omit to state a material fact necessary
        to make the statements made, in light of the circumstances under which
        such statements were made, not misleading with respect to the period
        covered by this annual report;

     3. Based on my knowledge, the financial statements, and other financial
        information included in this annual report, fairly present in all
        material respects the financial condition, results of operations and
        cash flows of the registrant as of, and for, the periods presented in
        this annual report;

     4. The registrant's other certifying officers and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
        have:

       a) Designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

       b) Evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

       c) Presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed, based
        on our most recent evaluation, to the registrant's auditors and the
        audit committee of registrant's board of directors (or persons
        performing the equivalent function):

       a) All significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

       b) Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

     6. The registrant's other certifying officers and I have indicated in this
        annual report whether there were significant changes in internal
        controls or in other factors that could significantly affect internal
        controls subsequent to the date of our most recent evaluation, including
        any corrective actions with regard to significant deficiencies and
        material weaknesses.

<Table>
<S>                                                    <C>
                                                       /s/ Henry L. Meyer III
                                                       -----------------------------------------------------
                                                       Henry L. Meyer III
                                                       Chairman, President and
Date: March 12, 2003                                   Chief Executive Officer
</Table>

                                        16
<PAGE>

                           CERTIFICATION PURSUANT TO
                               SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002

I, Jeffrey B. Weeden, certify that:

     1. I have reviewed this annual report on Form 10-K of KeyCorp;

     2. Based on my knowledge, this annual report does not contain any untrue
        statement of a material fact or omit to state a material fact necessary
        to make the statements made, in light of the circumstances under which
        such statements were made, not misleading with respect to the period
        covered by this annual report;

     3. Based on my knowledge, the financial statements, and other financial
        information included in this annual report, fairly present in all
        material respects the financial condition, results of operations and
        cash flows of the registrant as of, and for, the periods presented in
        this annual report;

     4. The registrant's other certifying officers and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
        have:

       a) Designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

       b) Evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

       c) Presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed, based
        on our most recent evaluation, to the registrant's auditors and the
        audit committee of registrant's board of directors (or persons
        performing the equivalent function):

       a) All significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

       b) Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

     6. The registrant's other certifying officers and I have indicated in this
        annual report whether there were significant changes in internal
        controls or in other factors that could significantly affect internal
        controls subsequent to the date of our most recent evaluation, including
        any corrective actions with regard to significant deficiencies and
        material weaknesses.

<Table>
<S>                                                    <C>
                                                       /s/ Jeffrey B. Weeden
                                                       -----------------------------------------------------
                                                       Jeffrey B. Weeden
Date: March 12, 2003                                   Chief Financial Officer
</Table>

                                        17

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>3
<FILENAME>l97974aexv10w10.txt
<DESCRIPTION>EX-10.10 LETTER AGREEMENT-KEYCORP/THOMAS W. BUNN
<TEXT>
<PAGE>
                                                                 [KEY CORP LOGO]

                                                                   Exhibit 10.10

HENRY L. MEYER III
Chairman and Chief Executive Officer                    KEYCORP
                                                        127 Public Square
February 11, 2002                                       Cleveland, OH 44114-1306

                                                        Tel: (216) 689-5715

Mr. Thomas W. Bunn
628 Hempstead Place
Charlotte, NC 28207

Dear Tom:

On behalf of KeyCorp, I am delighted to extend you our offer of employment as
the Senior Executive Vice-President for Key Corporate Finance, reporting
directly to me. In this role you will also be a member of my Senior Staff as
well as the Company's Executive Council.

I am pleased to advise you that the Compensation and Organization Committee has
approved the following employment terms, effective with your start date:

For 2002

      -     BASE SALARY: $500,000 per annum, payable semi-monthly. Your first
            salary review will be in April 2004 and will occur annually
            thereafter.

      -     CASH INCENTIVE: $1,250,000 guaranteed payment, payable when other
            annual incentives are paid, no later than March 15, 2003.

      -     LONG TERM: You will be a participant in the Company's 2002-2004 Long
            Term Incentive Compensation (LTIC) plan cycle. Your award for this
            cycle will be $500,000 and this award will be denominated in
            restricted stock shares per the terms of the plan. A description of
            the plan is enclosed for your review.

      -     STOCK OPTIONS: You will be awarded 125,000 stock options effective
            with your employment date. Of these shares, 75,000 will vest
            one-third per year (fully vested in three years) from the grant
            date. The remaining 50,000 options will vest three years from the
            anniversary of your start date. The exercise price for all shares
            will be established on your date of employment. To the maximum
            extent permissible under Internal Revenue Code limitations, the
            options will be incentive stock options (ISOs), with the balance
            being non-qualified options (NQOs). A copy of the KeyCorp Amended
            and Restated 1991 Equity Compensation Plan, which governs these
            options, is enclosed.

      -     SPECIAL SIGNING GRANT: Effective on your start date you will be
            granted a signing bonus of $600,000. This award will be denominated
            in phantom stock shares, effective on your start date, and will be
            paid to you in KeyCorp Common Stock at the end of the vesting
            period. One-third of the amount will vest each year for three years,
            on the anniversary of your start date.
<PAGE>
Mr. Thomas W. Bunn
February 11, 2002
Page 2

For 2003

      -     BASE SALARY: $500,000, the same as your 2002 salary.

      -     CASH INCENTIVE: $1,250,000 guaranteed payment, payable when other
            annual awards are paid, but no later than March 15, 2004.

      -     LONG TERM: Similar to 2002, you will be a participant in the
            Company's Long Term Incentive Compensation Plan. Under the current
            plan, a new three-year cycle (2003-2005) begins each year. Your
            grant will be $500,000 and will be denominated in restricted stock,
            per the terms of the plan.

      -     STOCK OPTIONS: You will receive a stock option grant of 125,000
            shares. These options will vest one third per year (fully vested in
            three years) from the date of grant. The exercise price will be set
            at the date of grant.

Beginning with your initial cash incentive award in the first quarter of 2003,
all amounts over $100,000 will be subject to the terms and conditions of
KeyCorp's Automatic Deferral Plan then in place. A copy of the KeyCorp Automatic
Deferral Plan Executive Compensation Communication, dated August 2000, is
enclosed.

As we agreed, your initial responsibilities will be to lead our Key Corporate
Finance organization. Further, your role will be expanded, no later than
September 1, 2002, to include responsibility for investment banking and capital
market activities.

As we discussed, we will review with you, prior to any release, external and
internal communications concerning you joining Key.

In addition, you will be eligible for the following:

CHANGE OF CONTROL AGREEMENT: You will be provided with a Change of Control
Agreement of the type generally given to other KeyCorp senior officers. A draft
copy of the current agreement is enclosed for your review.

EXECUTIVE PERQUISITES: You will be eligible for the following:

      -     Membership in one luncheon club in Cleveland. The company will pay
            any initiation fees, if required, and your monthly dues and any
            assessments. Reimbursement for monthly expenses will automatically
            be made through payroll and will be grossed-up for tax purposes.

      -     Initiation fees in a personal country club, if you desire. Any
            subsequent expenses (i.e., monthly dues, assessments, personal
            expenses, annual fees) will be paid by you. Business related
            expenses, of course, may be reimbursed through our expense
            reimbursement process.
<PAGE>
Mr. Thomas W. Bunn
February 11, 2002
Page 3



      -     Membership in one "Corporate Golf Club." The Company will pay for
            any initiation fees, if required, and your monthly dues and any
            assessments. Reimbursement for monthly expenses will automatically
            be made through payroll and will be grossed up for tax purposes.

Following the guaranteed period, beginning in 2004, you will participate in the
Short Term Incentive Compensation (STIC) program. Your current annualized target
incentive opportunity is $1,250,000. Your actual individual award will be based
on the company's performance, the performance of the businesses for which you
have responsibility and your individual contributions.

Also, in 2004 you will participate in KeyCorp's Stock Option Program. Based on
our current program you would have a stock option target of 100,000 shares.
Options currently vest one-third per year (fully vested in three years) from the
grant date and the exercise price of the options has historically been based on
the price of the stock at the time of the grant. All stock option awards are
discretionary, subject to the approval of the Compensation and Organization
Committee of KeyCorp's Board and are presently granted in accordance with the
KeyCorp Amended and Restated 1991 Equity Compensation Plan.

You will also continue to be eligible to participate in the KeyCorp Long-Term
Incentive Plan (LTIC). Your target award will be $500,000.

A copy of your relocation summary is enclosed with this letter for your
information. All of the services will be grossed up for Federal, state, local
and FICA taxes. If you voluntarily terminate your employment with KeyCorp within
one year of your hire date, you will be responsible for repayment of 100% of the
total relocation expense incurred by KeyCorp. If you voluntarily terminate after
one-year, but within two years of your hire date, you will be responsible for
repayment of one-half of the total relocation expense. Our relocation firm will
be in touch with you shortly to discuss relocation arrangements with you. We
also agree that as part of your relocation we will make the following
exceptions. First, we will provide temporary living arrangements for a maximum
of six months, if required. Second, you will be permitted two return trips home
each month during the period of your temporary living arrangements, to a maximum
of six months. Third, for purposes of your relocation, your mountain home will
be considered your primary residence.

As an employee you are also eligible for the following company benefits:

      -     Participation in the 401(k) and cash balance and the excess 401(k)
            and cash balance plans in accordance with plan documents.

      -     Enrollment in Medical, Dental, Life Insurance and other insurance
            coverage according to company policy and coverage limits (coverage
            begins the first of the month following employment).

      -     In accordance with policy, beginning in 2002, you will be eligible
            for 25 days of paid time off (PTO).
<PAGE>
Mr. Thomas W. Bunn
February 11, 2002
Page 4


      -     These and additional benefits are outlined in the New Employee
            Resources Guide, which I have included. (The company reserves the
            right to revise benefits at any time to comply with regulatory
            changes and/or changes in company policies.)

This employment offer and the compensation payable to you as set forth above are
contingent upon satisfactory completion of the following in KeyCorp's judgment:

      -     Application for employment and related documents.

      -     Review of references, a pre-employment drug screen and a background
            investigation.

      -     A review for FDIC prohibited offenses which includes fingerprints
            taken on or about the first day of employment and which can take up
            to six months to process.

      -     KeyCorp reserves the right to withdraw its offer of employment or to
            terminate your employment (if you become employed at KeyCorp) if the
            results of the applicant review are unsatisfactory in KeyCorp's
            judgment.

You will report directly to me, at least through March 15, 2004. Also, in the
event that you are terminated by Key, (other than for "Cause," as defined in the
Change of Control Agreement), prior to March 15, 2004, you will be entitled to
receive the remainder of the guaranteed compensation, including base salary,
cash incentive, vesting of all options, signing bonus and restricted stock
granted to you under this letter agreement within 30 days of said termination.

Tom, we are very excited about the prospect of you joining Key and look forward
to a mutually beneficial and rewarding relationship.

Sincerely,

/s/Henry

Henry L. Meyer III


AGREED TO:        /s/Thomas W. Bunn
           --------------------------------
                    Thomas W. Bunn

Dated: February 16, 2002
       --------------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>4
<FILENAME>l97974aexv10w12.txt
<DESCRIPTION>EX-10.12 AMENDED EQUITY COMPENSATION PLAN
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.12

                              AMENDED AND RESTATED
                          1991 EQUITY COMPENSATION PLAN
                        (AMENDED AS OF NOVEMBER 21, 2002)

         1.       PURPOSE.   The KeyCorp Amended and Restated 1991 Equity
Compensation Plan is intended to promote the interests of the Corporation and
its shareholders by providing equity-based incentives for effective service and
high levels of performance to Employees selected by the Committee. To achieve
these purposes, the Corporation may grant Awards of Options, Stock Appreciation
Rights, Limited Stock Appreciation Rights, Restricted Stock, and Performance
Shares to selected Employees, all in accordance with the terms and conditions
hereinafter set forth.

         2.       DEFINITIONS.

         2.1      1934 ACT.  The term "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.

         2.2      ACQUISITION PRICE.  The term "Acquisition Price" with respect
to Restricted Stock shall mean such amount, if any, required by applicable law
and as may be specified by the Committee in the Award Instrument with respect to
that Restricted Stock as the consideration to be paid by the Employee for that
Restricted Stock.

         2.3      AWARD.  The term "Award" shall mean an award granted under the
Plan of an Option, of Stock Appreciation Rights, of Limited Stock Appreciation
Rights, of Restricted Stock, or of Performance Shares.

         2.4      AWARD INSTRUMENT.  The term "Award Instrument" shall mean a
written instrument evidencing an Award in such form and with such provisions as
the Committee may prescribe, including, without limitation, an agreement to be
executed by the Employee and the Corporation, a certificate issued by the
Corporation, or a letter executed by the Committee or its designee. Acceptance
of the Award Instrument by an Employee constitutes agreement to the terms of the
Award evidenced thereby.

         2.5      CHANGE OF CONTROL.  A "Change of Control" shall be deemed to
have occurred if, at any time after the date of the grant of the relevant Award,
there is a Change of Control under any of clauses (a), (b), (c), or (d) below.
For these purposes, the Corporation will be deemed to have become a subsidiary
of another corporation if any other corporation (which term shall include, in
addition to a corporation, a limited liability company, partnership, trust, or
other organization) owns, directly or indirectly, 50 percent or more of the
total combined outstanding voting power of all classes of stock of the
Corporation or any successor to the Corporation.

<PAGE>

         (a)      A Change of Control will have occurred under this clause (a)
                  if the Corporation is a party to a transaction pursuant to
                  which the Corporation is merged with or into, or is
                  consolidated with, or becomes the subsidiary of another
                  corporation and either

                  (i)      immediately after giving effect to that transaction,
                           less than 65% of the then outstanding voting
                           securities of the surviving or resulting corporation
                           or (if the Corporation becomes a subsidiary in the
                           transaction) of the ultimate parent of the
                           Corporation represent or were issued in exchange for
                           voting securities of the Corporation outstanding
                           immediately prior to the transaction, or

                  (ii)     immediately after giving effect to that transaction,
                           individuals who were directors of the Corporation on
                           the day before the first public announcement of (A)
                           the pendency of the transaction or (B) the intention
                           of any person or entity to cause the transaction to
                           occur, cease for any reason to constitute at least
                           51% of the directors of the surviving or resulting
                           corporation or (if the Corporation becomes a
                           subsidiary in the transaction) of the ultimate parent
                           of the Corporation.

         (b)      A Change of Control will have occurred under this clause (b)
                  if a tender or exchange offer shall be made and consummated
                  for 35% or more of the outstanding voting stock of the
                  Corporation or any person (as the term "person" is used in
                  Section 13(d) and Section 14(d)(2) of the 1934 Act) is or
                  becomes the beneficial owner of 35% or more of the outstanding
                  voting stock of the Corporation or there is a report filed on
                  Schedule 13D or Schedule 14D-1 (or any successor schedule,
                  form or report), each as adopted under the 1934 Act,
                  disclosing the acquisition of 35% or more of the outstanding
                  voting stock of the Corporation in a transaction or series of
                  transactions by any person (as defined earlier in this clause
                  (b)).

         (c)      A Change of Control will have occurred under this clause (c)
                  if either

                  (i)      without the prior approval, solicitation, invitation,
                           or recommendation of the Corporation's Board of
                           Directors any person or entity makes a public

<PAGE>

                           announcement of a bona fide intention (A) to engage
                           in a transaction with the Corporation that, if
                           consummated, would result in a Change Event (as
                           defined below in this clause (c)), or (B) to
                           "solicit" (as defined in Rule 14a-1 under the 1934
                           Act) proxies in connection with a proposal that is
                           not approved or recommended by the Corporation's
                           Board of Directors, or

                  (ii)     any person or entity publicly announces a bona fide
                           intention to engage in an election contest relating
                           to the election of directors of the Corporation
                           (pursuant to Regulation 14A, including Rule 14a-11,
                           under the 1934 Act),

         and, at any time within the 24 month period immediately following the
         date of the announcement of that intention, individuals who, on the day
         before that announcement, constituted the directors of the Corporation
         (the "Incumbent Directors") cease for any reason to constitute at least
         a majority thereof unless both (A) the election, or the nomination for
         election by the Corporation's shareholders, of each new director was
         approved by a vote of at least two-thirds of the Incumbent Directors in
         office at the time of the election or nomination for election of such
         new director, and (B) prior to the time that the Incumbent Directors no
         longer constitute a majority of the Board of Directors, the Incumbent
         Directors then in office, by a vote of at least 75% of their number,
         reasonably determine in good faith that the change in Board membership
         that has occurred before the date of that determination and that is
         anticipated to thereafter occur within the balance of the 24 month
         period to cause the Incumbent Directors to no longer be a majority of
         the Board of Directors was not caused by or attributable to, in whole
         or in any significant part, directly or indirectly, proximately or
         remotely, any event under subclause (i) or (ii) of this clause (c).

         For purposes of this clause (c), the term "Change Event" shall mean any
         of the events described in the following subclauses (x), (y), or (z) of
         this clause (c):

                  (x)      A tender or exchange offer shall be made for 25% or
                           more of the outstanding voting stock of the
                           Corporation or any person (as the term "person" is
                           used in Section 13(d) and Section 14(d)(2) of the
                           1934 Act) is or becomes the beneficial owner of 25%
                           or more of the outstanding voting stock of the
                           Corporation or there is a report filed on Schedule

<PAGE>

                           13D or Schedule 14D-1 (or any successor schedule,
                           form, or report), each as adopted under the 1934 Act,
                           disclosing the acquisition of 25% or more of the
                           outstanding voting stock of the Corporation in a
                           transaction or series of transactions by any person
                           (as defined earlier in this subclause (x)).

                  (y)      The Corporation is a party to a transaction pursuant
                           to which the Corporation is merged with or into, or
                           is consolidated with, or becomes the subsidiary of
                           another corporation and, after giving effect to such
                           transaction, less than 50% of the then outstanding
                           voting securities of the surviving or resulting
                           corporation or (if the Corporation becomes a
                           subsidiary in the transaction) of the ultimate parent
                           of the Corporation represent or were issued in
                           exchange for voting securities of the Corporation
                           outstanding immediately prior to such transaction or
                           less than 51% of the directors of the surviving or
                           resulting corporation or (if the Corporation becomes
                           a subsidiary in the transaction) of the ultimate
                           parent of the Corporation were directors of the
                           Corporation immediately prior to such transaction.

                  (z)      There is a sale, lease, exchange, or other transfer
                           (in one transaction or a series of related
                           transactions) of all or substantially all the assets
                           of the Corporation.

         (d)      A Change of Control will have occurred under this clause (d)
                  if there is a sale, lease, exchange, or other transfer (in one
                  transaction or a series of related transactions) of all or
                  substantially all of the assets of the Corporation.

         2.6      COMMITTEE.  The term "Committee" shall mean a committee
appointed by the Board of Directors of the Corporation to administer the Plan.
The Committee shall be composed of not less than three directors of the
Corporation. The Board of Directors may also appoint one or more directors as
alternate members of the Committee. No officer or Employee of the Corporation or
of any Subsidiary shall be a member or alternate member of the Committee. The
Committee shall at all times be so comprised (a) as to satisfy the disinterested
administration standard contained in Rule 16b-3, if required to qualify for the
Rule 16b-3 Exemption and (b) as to satisfy the outside director standard under
Section 162(m) of the Internal Revenue Code of 1986, as amended, if required to
qualify compensation paid under one or more of the provisions of the Plan as
performance-based compensation within the meaning of that section.

<PAGE>

         2.7      COMMON SHARES.  The term "Common Shares" shall mean common
shares of the Corporation, with a par value of $1 each.

         2.8      CORPORATION.  The term "Corporation" shall mean KeyCorp and
its successors, including the surviving or resulting corporation of any merger
of KeyCorp with or into, or any consolidation of KeyCorp with, any other
corporation or corporations.

         2.9      DISABILITY.  The term "Disability" with respect to an Employee
shall mean physical or mental impairment which entitles the Employee to receive
disability payments under any long-term disability plan maintained by the
Corporation.

         2.10     EMPLOYEE.  The term "Employee" shall mean any individual
employed by the Corporation or by any Subsidiary and shall include officers as
well as all other employees of the Corporation or of any Subsidiary (including
employees who are members of the Board of Directors of the Corporation or any
Subsidiary).

         2.11     EMPLOYMENT TERMINATION DATE.  The term "Employment Termination
Date" with respect to an Employee shall mean the first date on which the
Employee is no longer employed by the Corporation or any Subsidiary.

         2.12     EXERCISE PRICE.  The term "Exercise Price" with respect to an
Option shall mean the price specified in the Option at which the Common Shares
subject to the Option may be purchased by the holder of the Option.

         2.13     FAIR MARKET VALUE.  Except as otherwise determined by the
Committee at the time of the grant of an Award, the term "Fair Market Value"
with respect to Common Shares shall mean: (a) if the Common Shares are traded on
a national exchange, the mean between the high and low sales price per Common
Share on that national exchange on the date for which the determination of fair
market value is made or, if there are no sales of Common Shares on that date,
then on the next preceding date on which there were any sales of Common Shares,
or (b) if the Common Shares are not traded on a national exchange, the mean
between the high and low sales price per Common Share in the over-the-counter
market, National Market System, as reported by the National Quotations Bureau,
Inc. and NASDAQ on the date for which the determination of fair market value is
made or, if there are no sales of Common Shares on that date, then on the next
preceding date on which there were any sales of Common Shares.

         2.14     INCENTIVE STOCK OPTION.  The term "Incentive Stock Option"
shall mean an Option intended by the Committee to qualify as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended.

         2.15     LIMITED STOCK APPRECIATION RIGHT.  The term "Limited Stock
Appreciation Right" or "Limited SAR" shall mean an Award granted to an Employee
with respect to all or any part of any Option, that entitles the holder thereof
to receive from the Corporation, upon exercise of the Limited SAR and surrender
of the related Option, or

<PAGE>
any portion of the Limited SAR and the related Option, an amount equal to
(unless the Committee specifies a lesser amount at the time of the grant of the
Award):

         (a)      in the case of a Limited SAR granted with respect to an
                  Incentive Stock Option, 100% of the excess, if any, measured
                  at the time of the exercise of the Limited SAR, of (i) the
                  Fair Market Value of the Common Shares subject to the
                  Incentive Stock Option with respect to which the Limited SAR
                  is exercised over (ii) the Exercise Price of those Common
                  Shares under the Incentive Stock Option, or

         (b)      in the case of a Limited SAR granted with respect to a
                  Nonqualified Option, 100% of the highest of:

                  (i)      the excess, measured at the time of the exercise of
                           the Limited SAR, of (A) the Fair Market Value of the
                           Common Shares subject to the Nonqualified Option with
                           respect to which the Limited SAR is exercised over
                           (B) the Exercise Price of those Common Shares under
                           the Nonqualified Option,

                  (ii)     the excess of (A) the highest gross price (before
                           brokerage commissions and soliciting dealers' fees)
                           paid or to be paid for a Common Share (whether in
                           cash or in property and whether by way of exchange,
                           conversion, distribution upon liquidation, or
                           otherwise) in connection with any Change of Control
                           multiplied by the number of Common Shares subject to
                           the Nonqualified Option with respect to which the
                           Limited SAR is exercised over (B) the Exercise Price
                           of those Common Shares under the Nonqualified Option,
                           or

                  (iii)    the excess of (A) the highest Fair Market Value of
                           the Common Shares subject to the Nonqualified Option
                           with respect to which the Limited SAR is exercised on
                           any one day during the period beginning on the
                           sixtieth day prior to the date on which the Limited
                           SAR is exercised multiplied by the number of Common
                           Shares subject to the Nonqualified Option with
                           respect to which the Limited SAR is exercised over
                           (B) the Exercise Price of those Common Shares under
                           the Nonqualified Option.

         2.16     NONQUALIFIED OPTION.  The term "Nonqualified Option" shall
mean an Option intended by the Committee not to qualify as an "incentive stock
option" under Section 422 of the Internal Revenue Code of 1986, as amended.

<PAGE>

         2.17     OPTION.  The term "Option," (a) when used otherwise than in
connection with the term Stock Appreciation Right or Limited Stock Appreciation
Right, shall mean an Award entitling the holder thereof to purchase a specified
number of Common Shares at a specified price during a specified period of time,
and (b) when used in connection with the term Stock Appreciation Right or
Limited Stock Appreciation Right, shall mean (i) any such Award or (ii) any
award under any other plan maintained or assumed by the Corporation entitling
the holder thereof to purchase a specified number of Common Shares at a
specified price during a specified period of time.

         2.18     OPTION EXPIRATION DATE.  The term "Option Expiration Date"
with respect to any Option shall mean the date selected by the Committee after
which, except as provided in Section 10.4 in the case of the death of the
Employee to whom the option was granted, the Option may not be exercised.

         2.19     PERFORMANCE GOAL.  The term "Performance Goal" shall mean a
performance goal specified by the Committee in connection with the potential
grant of Performance Shares and may include, without limitation, goals based
upon cumulative earnings per Common Share, return on investment, return on
shareholders' equity, or achievement of any other goals, whether or not readily
expressed in financial terms, that are related to the performance by the
Corporation, by any Subsidiary, or by any Employee or group of Employees in
connection with services performed by that Employee or those Employees for the
Corporation, a Subsidiary, or any one or more subunits of the Corporation or of
any Subsidiary.

         2.20     PERFORMANCE PERIOD.  The term "Performance Period" shall mean
such one or more periods of time, which may be of varying and overlapping
durations, as the Committee may select, over which the attainment of one or more
Performance Goals will be relevant in connection with one or more Awards of
Performance Shares.

         2.21     PERFORMANCE SHARES.  The term "Performance Shares" shall mean
an Award denominated in Common Shares and contingent upon attainment of one or
more Performance Goals by the Corporation or a Subsidiary or any subunit of the
Corporation or of any Subsidiary over a Performance Period.

         2.22     PLAN.  The term "Plan" shall mean this KeyCorp Amended and
Restated 1991 Equity Compensation Plan as from time to time hereafter amended in
accordance with Section 20.

         2.23     RESTRICTED STOCK.  The term "Restricted Stock" shall mean
Common Shares of the Corporation delivered to an Employee pursuant to an Award
subject to such restrictions, conditions and contingencies as the Committee may
provide in the relevant Award Instrument, including (a) the restriction that the
Employee not sell, transfer, otherwise dispose of, or pledge or otherwise
hypothecate the Restricted Stock during the applicable Restriction Period, (b)
the requirement that, subject to the provisions of Section 10, if the Employee's
employment terminates so that the Employee is no longer

<PAGE>

employed by the Corporation or any Subsidiary before the end of the applicable
Restriction Period, the Employee will offer to sell to the Corporation at the
Acquisition Price each Common Share of Restricted Stock held by the Employee at
the Employment Termination Date with respect to which, as of that date, any
restrictions, conditions, or contingencies have not lapsed, and (c) such other
restrictions, conditions, and contingencies, if any, as the Committee may
provide in the Award Instrument with respect to that Restricted Stock.

         2.24     RESTRICTION PERIOD.  The term "Restriction Period" with
respect to an Award of Restricted Stock shall mean the period selected by the
Committee and specified in the Award Instrument with respect to that Restricted
Stock during which the Employee may not sell, transfer, otherwise dispose of, or
pledge or otherwise hypothecate that Restricted Stock.

         2.25     RULE 16b-3.  Term "Rule 16b-3" shall mean Rule 16b-3 or any
rule promulgated in replacement thereof or in substitution therefor under the
1934 Act.

         2.26     RULE 16b-3 EXEMPTION.  The term "Rule 16b-3 Exemption" shall
mean the exemption from Section 16(b) of the 1934 Act that is available under
Rule 16b-3.

         2.27     SECTION 16(b) EMPLOYEE.  The term "Section 16(b) Employee"
shall mean an individual who is, or at any time within the preceding six months
was, a director, officer, or 10% shareholder of the Corporation within the
meaning of Section 16(b) of the 1934 Act.

         2.28     STOCK APPRECIATION RIGHT.  The term "Stock Appreciation Right
"or "SAR" shall mean an Award granted to an Employee with respect to all or any
part of any Option that entitles the holder thereof to receive from the
Corporation, upon exercise of the SAR and surrender of the related Option, or
any portion of the SAR and the related Option, an amount equal to 100%, or such
lesser percentage as the Committee may determine at the time of the grant of the
Award, of the excess, if any, measured at the time of the exercise of the SAR,
of (a) the Fair Market Value of the Common Shares subject to the Option with
respect to which the SAR is exercised over (b) the Exercise Price of those
Common Shares under the Option.

         2.29     SUBSIDIARY.  The term "Subsidiary" shall mean any corporation,
partnership, joint venture, or other business entity in which the Corporation
owns, directly or indirectly, 50 percent or more of the total combined voting
power of all classes of stock (in the case of a corporation) or other ownership
interest (in the case of any entity other than a corporation).

         2.30     TANDEM AWARD.  The term "Tandem Award" shall mean any two or
more Awards that are linked by the terms of any such Awards so that the exercise
of one such Award, in whole or in part, requires or will automatically result in
the surrender or cancellation, in whole or in proportionate part, of the other
such Awards.
<PAGE>

         2.31     TRANSFEREE.  The term "Transferee" shall mean, with respect to
Nonqualified Options only, any person or entity to which an Employee is
permitted by the Committee to transfer or assign all or part of his or her
Options.

         3.       ADMINISTRATION.  The Plan shall be administered by the
Committee. No Award may be made under the Plan to any member or alternate member
of the Committee. The Committee shall have authority, subject to the terms of
the Plan, (a) to determine the Employees who are eligible to participate in the
Plan, the type, size, and terms of Awards to be granted to any Employee, the
time or times at which Awards shall be exercisable or at which restrictions,
conditions, and contingencies shall lapse, and the terms and provisions of the
instruments by which Awards shall be evidenced, (b) to establish any other
restrictions, conditions, and contingencies on Awards in addition to those
prescribed by the Plan, (c) to interpret the Plan, and (d) to make all
determinations necessary for the administration of the Plan.

         The construction and interpretation by the Committee of any provision
of the Plan or any Award Instrument delivered pursuant to the Plan and any
determination by the Committee pursuant to any provision of the Plan or any
Award Instrument shall be final and conclusive. No member or alternate member of
the Committee shall be liable for any such action or determination made in good
faith.

         The Committee may act only by a majority of its members. Any
determination of the Committee may be made, without a meeting, by a writing or
writings signed by all of the members of the Committee. In addition, the
Committee may authorize any one or more of their number or any officer of the
Corporation to execute and deliver documents on behalf of the Committee and the
Committee may delegate to one or more employees, agents, or officers of the
Corporation, or to one or more third party consultants, accountants, lawyers, or
other advisors, such ministerial duties related to the operation of the Plan as
it may deem appropriate.

         4.       ELIGIBILITY.  Awards may be granted to Employees of the
Corporation or any Subsidiary selected by the Committee in its sole discretion.
The granting of any Award to an Employee shall not entitle that Employee to, nor
disqualify the Employee from, participation in any other grant of an Award. The
maximum number of Common Shares with respect to which any Employee may receive
Awards during any calendar year shall be the lesser of 400,000 Common Shares or
..2% of the outstanding Common Shares of the Corporation on the date such award
was made, which maximum number shall be subject to adjustment as provided in
Section 13 of the Plan.

         5.       STOCK SUBJECT TO THE PLAN.  The stock that may be issued and
distributed to Employees in connection with Awards granted under the Plan shall
be Common Shares and may be authorized and unissued Common Shares, treasury
Common Shares, or Common Shares acquired on the open market specifically for
distribution under the Plan, as the Board of Directors may from time to time
determine.

<PAGE>

         Subject to adjustment as provided in Section 13, the number of Common
Shares available for grant of Awards under the Plan shall be determined from
time to time as follows: (a) on the date of the 1994 Annual Meeting of
Shareholders of the Corporation (at which meeting an amendment and restatement
of the Plan was submitted for approval of the shareholders of the Corporation),
the number of Common Shares available for grant of Awards under the Plan shall
equal two percent of the total number of Common Shares outstanding on March 31,
1994, and (b) on January 2, 1995 and on each January 2 occurring thereafter
during the life of the Plan, the number of Common Shares available for grant of
Awards under the Plan shall be increased by adding to the number of Common
Shares then available for grant of Awards under the Plan, the number of Common
Shares of the Corporation that, when added to the number of Common Shares that
otherwise remain available for grant of additional Awards under the Plan on that
January 2, equals two percent of the total number of Common Shares of the
Corporation outstanding on December 31st of the next proceeding year.

         The number of Common Shares remaining available for grants of
additional Awards under the Plan at any particular time during a calendar year
shall be reduced, upon the granting thereafter of any Award under the Plan, by
the full number of Common Shares subject to that Award except that, in the case
of any particular Tandem Award, the number of Common Shares counted as being
subject to such Tandem Award shall be the maximum number of Common Shares with
respect to which the Employee may receive value under such Tandem Award. If any
Award for any reason expires or is terminated, in whole or in part, without the
receipt by an Employee of Common Shares (or the equivalent thereof in cash or
other property), the Common Shares subject to that part of the Award that has so
expired or terminated shall again be available for the future grant of Awards
under the Plan.

         Notwithstanding any other provision of the Plan, but subject to
adjustment under Section 13, (a) the maximum number of Common Shares that may be
issued under the Plan pursuant to Incentive Stock Options shall be 9,600,000
Common Shares, and (b) the maximum number of Common Shares that may be issued
under the Plan as Restricted Stock during any calendar year shall be that number
of Common Shares that is equal to five percent of the total number of Common
Shares available for grant of Awards under the Plan as of January 2 of that
calendar year.

         6.       STOCK OPTIONS.

         6.1      TYPE AND DATE OF GRANT OF OPTIONS.

         (a)      The Award Instrument pursuant to which any Incentive Stock
                  Option is granted shall specify that the Option granted
                  thereby shall be treated as an Incentive Stock Option. The
                  Award Instrument pursuant to which any Nonqualified Option is
                  granted shall specify that the Option granted thereby shall
                  not be treated as an Incentive Stock Option.

<PAGE>

         (b)      The day on which the Committee authorizes the grant of an
                  Incentive Stock Option shall be the date on which that Option
                  is granted. No Incentive Stock Option may be granted on any
                  date after the tenth anniversary of the date of adoption, on
                  March 17, 1994, by the Board of Directors of the Corporation,
                  of the Plan as amended and restated.

         (c)      The day on which the Committee authorizes the grant of a
                  Nonqualified Option shall be considered the date on which that
                  Option is granted, unless the Committee specifies a later
                  date.

         6.2      EXERCISE PRICE.  The Exercise Price under any Option shall be
not less than the Fair Market Value of the Common Shares subject to the Option
on the date the Option is granted.

         6.3      OPTION EXPIRATION DATE.  The Option Expiration Date under any
Incentive Stock Option shall be not later than ten years from the date on which
the Option is granted. The Option Expiration Date under any Nonqualified Option
shall not be later than ten years and one month from the date on which the
Option is granted.

         6.4      EXERCISE OF OPTIONS.

         (a)      Except as otherwise provided in Section 10, an Option may be
                  exercised only while the Employee to whom the Option was
                  granted is in the employ of the Corporation or of a
                  Subsidiary. Subject to this requirement, each Option shall
                  become exercisable in one or more installments at the time or
                  times provided in the Award Instrument evidencing the Option.
                  Once any portion of an Option becomes exercisable, that
                  portion shall remain exercisable until expiration or
                  termination of the Option. An Employee to whom an Option is
                  granted or, with respect to Nonqualified Options, the
                  Employee's Transferee may exercise the Option from time to
                  time, in whole or in part, up to the total number of Common
                  Shares with respect to which the Option is then exercisable,
                  except that no fraction of a Common Share may be purchased
                  upon the exercise of any Option.

         (b)      An Employee or, with respect to Nonqualified Options, any
                  Transferee electing to exercise an Option shall deliver to the
                  Corporation (i) the Exercise Price payable in accordance with
                  Section 6.5 and (ii) written notice of the election that
                  states the number of whole Common Shares with respect to which
                  the Employee is exercising the Option.

<PAGE>

         6.5      PAYMENT FOR COMMON SHARES.  Upon exercise of an Option by an
Employee or, with respect to Nonqualified Options, any Transferee, the Exercise
Price shall be payable by the Employee or Transferee in cash or in such other
form of consideration as the Committee determines may be accepted, including
without limitation, securities or other property, or any combination of cash,
securities or other property, or by delivery by the Employee or Transferee (with
the written notice of election to exercise) of irrevocable instructions to a
broker registered under the 1934 Act promptly to deliver to the Corporation the
amount of sale or loan proceeds to pay the Exercise Price. The Committee, in its
sole discretion, may grant to an Employee or, with respect to Nonqualified
Options, any Transferee the right to transfer Common Shares acquired upon the
exercise of a part of an Option in payment of the Exercise Price payable upon
immediate exercise of a further part of the Option.

         6.6      CONVERSION OF INCENTIVE STOCK OPTIONS.  The Committee may at
any time in its sole discretion take such actions as may be necessary to convert
any outstanding Incentive Stock Option (or any installments or portions of
installments thereof) into a Nonqualified Option with or without the consent of
the Employee to whom that Incentive Stock Option was granted and whether or not
that Employee is an Employee at the time of the conversion.

         7.       STOCK APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION
RIGHTS.

         7.1      GRANT OF SARS AND LIMITED SARS. An SAR may be granted only in
connection with an Option. An SAR granted in connection with an Incentive Stock
Option may be granted only when the Incentive Stock Option is granted. An SAR
granted in connection with a Nonqualified Option may be granted either when the
related Nonqualified Option is granted or at any time thereafter including, in
the case of any Nonqualified Option resulting from the conversion of an
Incentive Stock Option, simultaneously with or after the conversion. Similarly,
a Limited SAR may be granted only in connection with an Option. A Limited SAR
granted in connection with an Incentive Stock Option may be granted only when
the Incentive Stock Option is granted. A Limited SAR granted in connection with
a Nonqualified Option may be granted either when the related Nonqualified Option
is granted or at any time thereafter including, in the case of any Nonqualified
Option resulting from the conversion of an Incentive Stock Option,
simultaneously with or after the conversion.

         7.2      EXERCISE OF SARS AND LIMITED SARS.

         (a)      An Employee electing to exercise an SAR or a Limited SAR shall
                  deliver written notice to the Corporation of the election
                  identifying the SAR or Limited SAR and the related Option with
                  respect to which the SAR or Limited SAR was granted to the
                  Employee and specifying the number of whole Common Shares with
                  respect to which the Employee is exercising the SAR or Limited
                  SAR. Upon exercise of the SAR or Limited SAR, the related
                  Option shall be

<PAGE>

                  deemed to be surrendered to the extent that the SAR or Limited
                  SAR is exercised.

         (b)      SARs and Limited SARs may be exercised only (i) after the
                  expiration of six months from the date of grant of the SAR or
                  Limited SAR, (ii) on a date when the SAR or Limited SAR is "in
                  the money" (i.e., when there would be positive consideration
                  received upon exercise of the SAR or Limited SAR), (iii) at a
                  time and to the same extent as the related Option is
                  exercisable, (iv) unless otherwise provided in the relevant
                  Award Instrument, by surrender to the Corporation,
                  unexercised, of the related Option or any applicable portion
                  thereof, and (v) in compliance with all restrictions set forth
                  in or specified by the Committee pursuant to Section 7.2(c)
                  (in the case of SARs) or Section 7.2(d) (in the case of
                  Limited SARs).

         (c)      The Committee may specify in the Award Instrument pursuant to
                  which any SAR is granted waiting periods and restrictions on
                  permissible exercise periods in addition to the restrictions
                  on exercise set forth in Section 7.2(b), including, without
                  limitation, any restriction necessary to make applicable the
                  Rule 16b-3 Exemption.

         7.3      PAYMENT FOR SARS AND LIMITED SARS.  The amount payable upon
exercise of an SAR or Limited SAR may be paid by the Corporation in cash, or, if
the Committee shall determine in its sole discretion, in whole Common Shares
(taken at their Fair Market Value at the time of exercise of the SAR or Limited
SAR) or in a combination of cash and whole Common Shares; provided, however,
that in no event shall the total number of Common Shares that may be paid to an
Employee pursuant to the exercise of an SAR or Limited SAR exceed the total
number of Common Shares subject to the related Option.

         7.4      TERMINATION, AMENDMENT, OR SUSPENSION OF SARS AND LIMITED
         SARS. SARs and Limited SARs shall terminate and may no longer be
exercised upon the first to occur of (a) exercise or termination of the related
Option, (b) any termination date specified by the Committee at the time of grant
of the SAR or Limited SAR, or (c) the transfer by the Employee of the related
Option. In addition, the Committee may in its sole discretion at any time before
the occurrence of a Change of Control amend, suspend, or terminate any SAR or
Limited SAR theretofore granted under the Plan without the holder's consent;
provided that, in the case of amendment, no provision of the SAR or Limited SAR,
as amended, shall be in conflict with any provision of the Plan.

<PAGE>

         8.       RESTRICTED STOCK.

         8.1      ADDITIONAL CONDITIONS ON RESTRICTED STOCK.  In addition to the
restrictions on disposition of Restricted Stock during the Restriction Period
and the requirement to offer Restricted Stock to the Corporation if the
Employee's employment terminates during the Restriction Period, the Committee
may provide in the Award Instrument with respect to any Award of Restricted
Stock other restrictions, conditions, and contingencies, which other
restrictions, conditions, and contingencies, if any, may relate to, in addition
to such other matters as the Committee may deem appropriate, the Employee's
personal performance, corporate performance, or the performance of any subunit
of the Corporation or any Subsidiary, in each case measured in such manner as
may be specified by the Committee. The Committee may impose different
restrictions, conditions, and contingencies on separate Awards of Restricted
Stock granted to different Employees, whether at the same or different times,
and on separate Awards of Restricted Stock granted to the same Employee, whether
at the same or different times. The Committee may specify a single Restriction
Period for all of the Restricted Stock subject to any particular Award
Instrument or may specify multiple Restriction Periods so that the restrictions
with respect to the Restricted Stock subject to the Award will expire in stages
according to a schedule specified by the Committee and set forth in the Award
Instrument; provided, however, that no Restriction Period with respect to any
Restricted Stock shall end earlier than one year after the date on which that
Restricted Stock is granted.

         8.2      PAYMENT FOR RESTRICTED STOCK.  Each Employee to whom an Award
of Restricted Stock is made shall pay the Acquisition Price with respect to that
Restricted Stock to the Corporation not later than 30 days after the delivery to
the Employee of the Award Instrument with respect to that Restricted Stock. If
any Employee fails to pay the Acquisition Price with respect to any Award of
Restricted Stock within that 30 day period, the Employee's right under that
Award shall be forfeited.

         8.3      RIGHTS AS A SHAREHOLDER.  Upon payment by an Employee in full
of the Acquisition Price for Restricted Stock under an Award, the Employee shall
have all of the rights of a shareholder with respect to the Restricted Stock,
including voting and dividend rights, subject only to such restrictions and
requirements referred to in Section 8.1 as may be incorporated in the Award
Instrument with respect to that Restricted Stock.

         9.       PERFORMANCE SHARES.

         9.1      DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE SHARES.
The Committee shall have full discretion to select the Employees to whom Awards
of Performance Shares are made, the number of Performance Shares to be granted
to any Employee so selected, the kind and level of the Performance Goals and
whether those Performance Goals are to apply to the Corporation, a Subsidiary,
or any one or more subunits of the Corporation or of any Subsidiary, and the
dates on which each

<PAGE>

Performance Period shall begin and end, and to determine the form and provisions
of the Award Instrument to be used in connection with any Award of Performance
Shares.

         9.2      CONDITIONS TO PAYMENT FOR PERFORMANCE SHARES.

         (a)      Unless otherwise provided in the relevant Award Instrument, an
                  Employee must be employed by the Corporation or a Subsidiary
                  on the last day of a Performance Period to be entitled to
                  payment for any Performance Shares.

         (b)      The Committee may establish, from time to time, one or more
                  formulas to be applied against the Performance Goals to
                  determine whether all, some portion but less than all, or none
                  of the Performance Shares granted with respect to a
                  Performance Period are treated as earned pursuant to any
                  Award. An Employee will be entitled to receive payments with
                  respect to any Performance Shares only to the extent that
                  those Performance Shares are treated as earned under one or
                  more such formulas.

         9.3      PAYMENT FOR PERFORMANCE SHARES.  The Corporation shall pay
each Employee who is entitled to payment for Performance Shares earned with
respect to any Performance Period an amount for those Performance Shares (a) in
cash (based upon the per share Fair Market Value of Common Shares on the last
day of the Performance Period), (b) in Common Shares (one Common Share for each
Performance Share earned), (c) in Restricted Stock (one Common Share of
Restricted Stock for each Performance Share earned), or (d) any combination of
the foregoing, in such proportions as the Committee may determine. Restricted
Stock issued by the Corporation in payment of Performance Shares shall be
subject to all the provisions of Section 8.

         10.      TERMINATION OF EMPLOYMENT.  After an Employee's Employment
Termination Date, the rules set forth in this Section 10 shall apply. All
factual determinations with respect to the termination of an Employee's
employment that may be relevant under this Section 10 shall be made by the
Committee in its sole discretion.

         10.1     TERMINATION OTHER THAN UPON DEATH, DISABILITY, OR CERTAIN
RETIREMENTS.  Upon any termination of an Employee's employment for any reason
other than the Employee's retirement (under any retirement plan of the
Corporation or of a Subsidiary) as provided in Section 10.2, disability as
provided on Section 10.3, or death as provided in Section 10.4:

         (a)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee or, with respect to Nonqualified Options, any
                  Transferee shall have the right (i) during the period ending
                  six months after the Employment Termination Date, but not
                  later than the Option Expiration Date, to exercise any
                  Nonqualified Options and related

<PAGE>

                  SARs that were outstanding on the Employment Termination Date,
                  if and to the same extent as those Options and SARs were
                  exercisable by the Employee or Transferee (as the case may be)
                  on the Employment Termination Date, and (ii) during the period
                  ending three months after the Employment Termination Date, but
                  not later than the Option Expiration Date, to exercise any
                  Incentive Stock Options and related SARs that were outstanding
                  on the Employment Termination Date, if and to the same extent
                  as those Options and SARs were exercisable by the Employee on
                  the Employment Termination Date. Notwithstanding the preceding
                  sentence, if within two years after a Change of Control an
                  Employee's Employment Termination Date occurs other than as a
                  result of a Voluntary Resignation, unless otherwise provided
                  in the relevant Award Instrument, the Employee or, with
                  respect to Nonqualified Options, any Transferee shall have the
                  right, during the Extended Period, but not later than the
                  Option Expiration Date, to exercise any Options and related
                  SARs that were outstanding on the Employment Termination Date,
                  if and to the same extent as those Options and SARs were
                  exercisable by the Employee or Transferee (as the case may be)
                  on the Employment Termination Date (even though, in the case
                  of Incentive Stock Options, exercise of those Options more
                  than three months after the Employment Termination Date may
                  cause the Option to fail to qualify for Incentive Stock Option
                  treatment under the Internal Revenue Code of 1986, as
                  amended). As used in the immediately preceding sentence, the
                  term "Extended Period" means the longer of the period that the
                  Option or SAR would otherwise be exercisable in the absence of
                  the immediately preceding sentence or the period ending with
                  the second anniversary date of the Change of Control last
                  occurring before the Employment Termination Date and the term
                  "Voluntary Resignation" means that the Employee shall have
                  terminated his or her employment with the Corporation and its
                  Subsidiaries by voluntarily resigning at his or her own
                  instance without having been requested to so resign by the
                  Corporation or its Subsidiaries except that any resignation by
                  the Employee will not be deemed to be a Voluntary Resignation
                  if, after the Change of Control, the Employee's base salary
                  was reduced or the Employee was required to relocate his or
                  her principal place of employment more than 35 miles,

         (b)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee shall offer for resale at the Acquisition Price
                  to the Corporation each Common Share of Restricted Stock held
                  by the Employee at the Employment Termination Date with
                  respect to

<PAGE>
                  which, as of that date, any restrictions, conditions, or
                  contingencies have not lapsed, and

         (c)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee shall forfeit each Performance Share with respect
                  to which, as of that date, any restrictions, conditions, or
                  contingencies have not lapsed.

         10.2     TERMINATION DUE TO CERTAIN RETIREMENTS.  Upon any termination
of an Employee's employment with the Corporation or any Subsidiary under
circumstances entitling the Employee to immediate payment of normal retirement
or early retirement benefits under any retirement plan of the Corporation or of
a Subsidiary (whether the Employee elects to commence or defer receipt of such
payment):

         (a)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee or, with respect to Nonqualified Options, any
                  Transferee shall have the right (i) to exercise, from time to
                  time during the period ending three years (two years if the
                  Option was granted prior to January 1, 2002) after the
                  Employment Termination Date, but not later than the Option
                  Expiration Date, any Nonqualified Options and related SARs
                  that were outstanding on the Employment Termination Date, if
                  and to the same extent as those Options and SARs were
                  exercisable by the Employee or Transferee (as the case may be)
                  on the Employment Termination Date, and (ii) to exercise, from
                  time to time during the period ending three years (two years
                  if the Option was granted prior to January 1, 2002) after the
                  Employment Termination Date, but no later than the Option
                  Expiration Date, any Incentive Stock Options and related SARs
                  that were outstanding on the Employment Termination Date, if
                  and to the same extent as those Options and SARs were
                  exercisable by the Employee on the Employment Termination Date
                  (even though exercise of the Incentive Stock Option more than
                  three months after the Employment Termination Date may cause
                  the Option to fail to qualify for Incentive Stock Option
                  treatment under the Internal Revenue Code of 1986, as
                  amended),

         (b)      The relevant Award Instrument may provide that the Employee
                  or, with respect to Nonqualified Options, any Transferee will
                  have the right to exercise, from time to time until not later
                  than the Option Expiration Date, Nonqualified Stock Options
                  and SARs and Incentive Stock Options and SARs to the extent
                  such Options and SARs become exercisable by their terms prior
                  to the Option Expiration Date (or such earlier date as
                  specified in the relevant Award Instrument), notwithstanding
                  the fact that such Options and SARs were not exercisable in
                  whole or in part (whether because a

<PAGE>

                  condition to exercise had not yet occurred or a specified time
                  period had not yet elapsed or otherwise) on the Employment
                  Termination Date,

         (c)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee shall offer for resale at the Acquisition Price
                  to the Corporation each Common Share of Restricted Stock held
                  by the Employee at the Employment Termination Date with
                  respect to which, as of that date, any restrictions,
                  conditions, or contingencies have not lapsed, and

         (d)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee shall forfeit each Performance Share with respect
                  to which, as of that date, any restrictions, conditions, or
                  contingencies have not lapsed.

         10.3     TERMINATION DUE TO DISABILITY.  Upon any termination of an
Employee's employment due to disability:

         (a)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee, the Employee's attorney in fact or legal
                  guardian or, with respect to Nonqualified Options, any
                  Transferee shall have the right (i) to exercise, from time to
                  time during the period ending three years (two years if the
                  Option was granted prior to January 1, 2002) after the
                  Employment Termination Date, but not later than the Option
                  Expiration Date, any Nonqualified Options and related SARs
                  that were outstanding on the Employment Termination Date, if
                  and to the same extent those Options and SARs were exercisable
                  by the Employee or Transferee (as the case may be) on the
                  Employment Termination Date, and (ii) to exercise, from time
                  to time during the period ending three years (two years if the
                  Option was granted prior to January 1, 2002) after the
                  Employment Termination Date, but no later than the Option
                  Expiration Date, any Incentive Stock Options and related SARs
                  that were outstanding on the employment Termination Date, if
                  and to the same extent as those Options and SARs were
                  exercisable by the Employee on the Employment Termination Date
                  (even though exercise of the Incentive Stock Option more than
                  one year after the Employment Termination Date may cause the
                  Option to fail to qualify for Incentive Stock Option treatment
                  under the Internal Revenue Code of 1986, as amended),

         (b)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee shall offer for resale at the Acquisition Price
                  to the Corporation each Common Share of Restricted Stock held
                  by the

<PAGE>

                  Employee at the Employment Termination Date with respect to
                  which, as of that date, any restrictions, conditions, or
                  contingencies have not lapsed, and

         (c)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee shall forfeit each Performance Share with respect
                  to which, as of that date, any restrictions, conditions, or
                  contingencies have not lapsed.

         10.4.    DEATH OF AN EMPLOYEE.  Upon the death of an Employee while
employed by the Corporation or any Subsidiary or within any of the periods
referred to in any Section 10.1, 10.2, or 10.3 during which any particular
Option or SAR remains potentially exercisable:

         (a)      Unless otherwise provided in the relevant Award Instrument, if
                  the Option Expiration Date of any Nonqualified Option that had
                  not expired before the Employee's death would otherwise expire
                  before the first anniversary of the Employee's death, that
                  Option Expiration Date shall automatically be extended to the
                  first anniversary of the Employee's death or such other date
                  as provided in the relevant Award Instrument,

         (b)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee's executor or administrator, the person or
                  persons to whom the Employee's rights under any Option or SAR
                  are transferred by will or the laws of descent and
                  distribution or, with respect to Nonqualified Options, any
                  Transferee shall have the right to exercise, from time to time
                  during the period ending three years (two years if the Option
                  was granted prior to January 1, 2002) after the date of the
                  Employee's death, but not later than the Option Expiration
                  Date, any Options and related SARs that were outstanding on
                  the date of the Employee's death, if and to the same extent as
                  those Options and SARs were exercisable by the Employee or
                  Transferee (as the case may be) on the date of the Employee's
                  death,

         (c)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee shall offer for resale at the Acquisition Price
                  to the Corporation each Common Share of Restricted Stock held
                  by the Employee at the Employment Termination Date with
                  respect to which, as of that date, any restrictions,
                  conditions, or contingencies have not lapsed, and

         (d)      Unless otherwise provided in the relevant Award Instrument,
                  the Employee shall forfeit each Performance Share with respect
                  to

<PAGE>

                  which, as of that date, any restrictions, conditions, or
                  contingencies have not lapsed.

         11.      ACCELERATION UPON CHANGE OF CONTROL.  Unless otherwise
specified in the relevant Award Instrument, upon the occurrence of a Change of
Control of the Corporation, each Award theretofore granted to any Employee that
then remains outstanding shall be automatically treated as follows: (a) any
outstanding Option shall become immediately exercisable in full, (b) SARs and
Limited SARs related to any such Options shall also become immediately
exercisable in full, (c) the Restriction Period with respect to all outstanding
Awards of Restricted Stock shall immediately terminate, and (d) the
restrictions, conditions, or contingencies on any Performance Shares shall be
modified in such manner as the Committee may specify to give the Employee the
benefit of those Performance Shares through the date of Change of Control.

         12.      ASSIGNABILITY.  Nonqualified Options may not be assigned or
transferred (other than by will or by the laws of descent and distribution)
unless the Committee, in its sole discretion, determines to allow such
assignment or transfer and, if the Committee determines to allow any such
assignment or transfer, the Transferee shall have the power to exercise such
Nonqualified Option in accordance with the terms of the Award and the provisions
of this Plan. No Incentive Stock Option, SAR, Limited SAR, Restricted Stock
during the Restriction Period, or Performance Share may be transferred other
than by will or by the laws of descent and distribution. During an Employee's
lifetime, only the Employee (or in the case of incapacity of an Employee, the
Employee's attorney in fact or legal guardian) may exercise any Incentive Stock
Option, SAR, Limited SAR, Restricted Stock during the Restriction Period, or
Performance Share requiring or permitting exercise.

         13.      ADJUSTMENT UPON CHANGES IN COMMON SHARES.  Automatically and
without Committee action, in the event of any stock dividend, stock split, or
share combination of the Common Shares, or by appropriate Committee action in
the event of any reclassification, recapitalization, merger, consolidation,
other form of business combination, liquidation, or dissolution involving the
Corporation or any spin-off or other distribution to shareholders of the
Corporation (other than normal cash dividends), appropriate adjustments to (a)
the maximum number of Common Shares that may be issued under the Plan pursuant
to Section 5, the maximum number of Common Shares that may be issued under the
Plan pursuant to Incentive Stock Options as provided in Section 5, and the
maximum number of Common Shares with respect to which any Employee may receive
Awards during any calendar year as provided in Section 4, and (b) the number and
kind of shares subject to, the price per share under, and the terms and
conditions of each then outstanding Award shall be made to the extent necessary
and in such manner that the benefits of Employees under all then outstanding
Awards shall be maintained substantially as before the occurrence of such event.
Any such adjustment shall be conclusive and binding for all purposes of the Plan
and shall be effective, in the event of any stock dividend, stock split, or
share combination, as of the date of such stock

<PAGE>

dividend, stock split, or share combination, and in all other cases, as of such
date as the Committee may determine.

         14.      PURCHASE FOR INVESTMENT.  Each person acquiring Common Shares
pursuant to any Award may be required by the Corporation to furnish a
representation that he or she is acquiring the Common Shares so acquired as an
investment and not with a view to distribution thereof if the Corporation, in
its sole discretion, determines that such representation is required to insure
that a resale or other disposition of the Common Shares would not involve a
violation of the Securities Act of 1933, as amended, or of applicable blue sky
laws. Any investment representation so furnished shall no longer be applicable
at any time such representation is no longer necessary for such purposes.

         15.      WITHHOLDING OF TAXES.  The Corporation will withhold from any
payments of cash made pursuant to the Plan such amount as is necessary to
satisfy all applicable federal, state, and local withholding tax obligations.
The Committee may, in its discretion and subject to such rules as the Committee
may adopt from time to time, permit or require an Employee (or other person
exercising an Option with respect to withholding taxes upon exercise of such
Option) to satisfy, in whole or in part, any withholding tax obligation that may
arise in connection with the grant of an Award, the lapse of any restrictions
with respect to an Award, the acquisition of Common Shares pursuant to any
Award, or the disposition of any Common Shares received pursuant to any Award by
having the Corporation hold back some portion of the Common Shares that would
otherwise be delivered pursuant to the Award or by delivering to the Corporation
an amount equal to the withholding tax obligation arising with respect to such
grant, lapse, acquisition, or disposition in (a) cash, (b) Common Shares, or (c)
such combination of cash and Common Shares as the Committee may determine. The
Fair Market Value of the Common Shares to be so held back by the Company or
delivered by the Employee shall be determined as of the date on which the
obligation to withhold first arose.

         16.      HARMFUL ACTIVITY.  If an Employee shall engage in any "harmful
activity" prior to or within six months after termination of employment with
Key, then any Profits realized upon the exercise of any Covered Option on or
after one year prior to the termination of employment with Key shall inure to
the Corporation. The aforementioned restriction shall not apply in the event
that employment with Key terminates within two years after a Change of Control
of the Corporation if any of the following have occurred: a relocation of an
Employee's principal place of employment more than 35 miles from an Employee's
principal place of employment immediately prior to the Change of Control, a
reduction in an Employee's base salary after a Change of Control, or termination
of employment under circumstances in which an Employee is entitled to severance
benefits or salary continuation or similar benefits under a change of control
agreement, employment agreement, or severance or separation pay plan. If any
Profits realized upon the exercise of any Covered Option inure to the benefit of
the Corporation in accordance with the first sentence of this paragraph, an
Employee shall pay all such Profits to the Corporation within 30 days after
first engaging in any harmful activity and all unexercised Covered Options shall
immediately be forfeited and canceled. Consistent

<PAGE>

with the provisions of Section 3 of the Plan, the determination by the Committee
as to whether an Employee engaged in "harmful activity" prior to or within six
months after termination of employment with Key shall be final and conclusive.

A "harmful activity" shall have occurred if an Employee shall do any one or more
of the following:

                  a.  Use, publish, sell, trade or otherwise disclose Non-Public
         Information of the Key unless such prohibited activity was inadvertent,
         done in good faith and did not cause significant harm to Key.

                  b.  After notice from the Corporation, fail to return to Key
         any document, data, or thing in an Employee's possession or to which an
         Employee has access that may involve Non-Public Information of Key.

                  c.  After notice from the Corporation, fail to assign to Key
         all right, title, and interest in and to any confidential or
         non-confidential Intellectual Property which an Employee created, in
         whole or in part, during employment with Key, including, without
         limitation, copyrights, trademarks, service marks, and patents in or to
         (or associated with) such Intellectual Property.

                  d.  After notice from the Corporation, fail to agree to do any
         acts and sign any document reasonably requested by Key to assign and
         convey all right, title, and interest in and to any confidential or
         non-confidential Intellectual Property which an Employee created, in
         whole or in part, during employment with Key, including, without
         limitation, the signing of patent applications and assignments thereof.

                  e.  Upon an Employee's own behalf or upon behalf of any other
         person or entity that competes or plans to compete with Key, solicit or
         entice for employment or hire any Employee of Key.

                  f.  Upon an Employee's own behalf or upon behalf of any other
         person or entity that competes or plans to compete with Key, call upon,
         solicit, or do business with (other than business which does not
         compete with any business conducted by Key) any customer of Key an
         Employee called upon, solicited, interacted with, or became acquainted
         with, or learned of through access to information (whether or not such
         information is or was non-public) while employed at Key unless such
         prohibited activity was inadvertent, done in good faith, and did not
         involve a customer whom an Employee should have reasonably known was a
         customer of Key.

                  g.  Upon an Employee's own behalf or upon behalf of any other
         person or entity that competes or plans to compete with Key, engage in
         any business activity in competition with Key in the same or a closely
         related activity that an Employee

<PAGE>

         was engaged in for Key during the one year period prior to the
         termination of employment.

                  For purposes of this Section 16:

                  "Covered Option" means any Option granted on or after January
                  1, 2001 unless the granting resolution expressly excludes the
                  Option from the provisions of this Section 16.

                  "Intellectual Property" shall mean any invention, idea,
                  product, method of doing business, market or business plan,
                  process, program, software, formula, method, work of
                  authorship, or other information, or thing.

                  "Key" shall mean the Corporation and its Subsidiaries
                  collectively.

                  "Non-Public Information" shall mean, but is not limited to,
                  trade secrets, confidential processes, programs, software,
                  formulas, methods, business information or plans, financial
                  information, and listings of names (e.g., employees,
                  customers, and suppliers) that are developed, owned, utilized,
                  or maintained by an employer such as Key, and that of its
                  customers or suppliers, and that are not generally known by
                  the public.

                  "Profit" shall mean, with respect to any Covered Option, the
                  spread between the Fair Market Value of a Common Share on the
                  date of exercise and the exercise price multiplied by the
                  number of shares exercised under the Covered Option.

         17.      AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER COMPANIES.
Awards, whether Incentive Stock Options, Nonqualified Options, SARs, Limited
SARs Restricted Stock, or Performance Shares, may be granted under the Plan in
substitution for awards held by employees of a company who become Employees of
the Corporation or a Subsidiary as a result of the merger or consolidation of
the employer company with the Corporation or a Subsidiary, or the acquisition by
the Corporation or a Subsidiary of the assets of the employer company, or the
acquisition by the Corporation or a Subsidiary of stock of the employer company
as a result of which it becomes a Subsidiary. The terms, provisions, and
benefits of the substitute Awards so granted may vary from the terms, provisions
and benefits set forth in or authorized by the Plan to such extent as the
Committee at the time of the grant may deem appropriate to conform, in whole or
in part, to the terms, provisions, and benefits of the awards in substitution
for which they are granted.

<PAGE>

         18.      LEGAL REQUIREMENTS.  No Awards shall be granted and the
Corporation shall have no obligation to make any payment under the Plan, whether
in Common Shares, cash, or any combination thereof, unless such payment is,
without further action by the Committee, in compliance with all applicable
Federal and state laws and regulations, including, without limitation, the
United States Internal Revenue Code and Federal and state securities laws.

         19.      DURATION AND TERMINATION OF THE PLAN.  The Plan shall become
effective and shall be deemed to have been adopted on the date on which it is
approved by the shareholders of the Corporation and shall remain in effect
thereafter until terminated by action of the Board of Directors. No termination
of the Plan shall adversely affect the rights of any Employee with respect to
any Award granted before the effective date of the termination.

         20.      AMENDMENTS.  The Board of Directors, or a duly authorized
committee thereof, may alter or amend the Plan from time to time prior to its
termination in any manner the Board of Directors, or such duly authorized
committee, may deem to be in the best interests of the Corporation and its
shareholders, except that no amendment may be made without shareholder approval
if shareholder approval is required under Rule 16b-3 to qualify for the Rule
16b-3 Exemption, is required by any applicable securities law or tax law, or is
required by the rules of any exchange on which the Common Shares of the
Corporation are traded or, if the Common Shares are not listed on an exchange,
by the rules of the registered national securities association through whose
inter-dealer quotation system the Common Shares are quoted. The Committee shall
have the authority to amend these terms and conditions applicable to outstanding
Awards (a) in any case where expressly permitted by the terms of the Plan or of
the relevant Award Instrument or (b) in any other case with the consent of the
Employee to whom the Award was granted. Except as expressly provided in the Plan
or in the Award Instrument evidencing the Award, the Committee may not, without
the consent of the holder of an Award granted under the Plan, amend the terms
and conditions applicable to that Award in a manner adverse to the interests of
the Employee.

         21.      PLAN NONCONTRACTUAL.  Nothing herein contained shall be
construed as a commitment to or agreement with any person employed by the
Corporation or a Subsidiary to continue such person's employment with the
Corporation or the Subsidiary, and nothing herein contained shall be construed
as a commitment or agreement on the part of the Corporation or any Subsidiary to
continue the employment or the annual rate of compensation of any such person
for any period. All Employees shall remain subject to discharge to the same
extent as if the Plan had never been put into effect.

         22.      INTEREST OF EMPLOYEES.  Any obligation of the Corporation
under the Plan to make any payment at any future date merely constitutes the
unsecured promise of the Corporation to make such payment from its general
assets in accordance with the Plan, and no Employee shall have any interest in,
or lien or prior claim upon, any property of the Corporation or any Subsidiary
by reason of that obligation.

<PAGE>

         23.      CLAIMS OF OTHER PERSONS.  The provisions of the Plan shall in
no event be construed as giving any person, firm, or corporation any legal or
equitable right against the Corporation or any Subsidiary, their officers,
employees, agents, or directors, except any such rights as are specifically
provided for in the Plan or are hereafter created in accordance with the terms
and provisions of the Plan.

         24.      ABSENCE OF LIABILITY.  No member of the Board of Directors of
the Corporation or a Subsidiary, of the Committee, of any other committee of the
Board of Directors, or any officer or Employee of the Corporation or a
Subsidiary shall be liable for any act or action under the Plan, whether of
commission or omission, taken by any other member, or by any officer, agent, or
Employee, or except in circumstances involving his bad faith or willful
misconduct, for anything done or omitted to be done by himself.

         25.      SEVERABILITY.  The invalidity or unenforceability of any
particular provision of the Plan shall not affect any other provision hereof,
and the Plan shall be construed in all respects as if such invalid or
unenforceable provision were omitted herefrom.

         26.      GOVERNING LAW.  The provisions of the Plan shall be governed
and construed in accordance with the laws of the State of Ohio.

         27.      DURATION AND TERMINATION OF THE PLAN.  The Plan shall remain
in effect through June 30, 2012, and shall then terminate, unless terminated at
an earlier date by action of the Board of Directors or a duly authorized
Committee thereof; provided, however, that termination of the Plan shall not
affect Awards granted prior thereto.

         28.      PLAN EFFECTIVE DATE.  The Plan, originally named the Society
Corporation 1991 Equity Compensation Plan, was approved by the Corporation's
shareholders at the Annual Meeting of Shareholders held on April 16, 1991 and
became effective on that date. On March 17, 1994, the Corporation's Board of
Directors adopted, subject to shareholder approval, certain amendments to the
Plan, then renamed the KeyCorp Amended and Restated 1991 Equity Compensation
Plan. The shareholders approved these amendments at the Corporation's Annual
Meeting of Shareholders held on May 19, 1994. The Plan was further amended by
action of the Committee on July 17, 1996 to amend the definition of Change of
Control as set forth in Section 2.5 of the Plan, which amendment was effective
as of January 1, 1996. If the Corporation hereafter enters into a transaction
intended to be accounted for as a pooling of interests and the Committee
determines, based on the written advice of the Corporation's independent
accountants, that the July 17, 1996 amendment or the operation thereof would
conflict with or jeopardize the pooling of interests accounting treatment for
such transaction, then the July 17, 1996 amendment shall be inoperative and
shall be treated as if it had never been effected so that the definition of
Change of Control would be as in effect prior to such amendment. The Plan was
further amended and restated as of September 19, 1996, to

<PAGE>

provide for the transferability of Options granted hereunder. The Plan was
further amended by action of the Equity Based Compensation Subcommittee of the
Compensation and Organization Committee on May 6, 1998 to amend Section 10.1(a)
of the Plan to extend the option exercise period for terminated employees upon a
change of control in certain circumstances. The amendment to Section 10.1(a)
only applies to Awards and Award Instruments granted or entered into on or after
January 1, 1999. If the Corporation enters into a transaction intended to
qualify as a pooling of interests for accounting purposes prior to January 1,
1999, the amendment to Section 10.1(a) shall become null and void. The
Subcommittee also amended the Plan to delete Section 17 of the Plan and all
cross-references thereto. References in the Plan to specific numbers of Common
Shares have been adjusted pursuant to Section 13 to reflect the two-for-one
split in the Common Shares effective March 6, 1998. With respect to clause (a)
of the last paragraph of Section 5, as of May 6, 1998, Incentive Stock Options
covering 451,823 Common Shares had been theretofore granted and not expired or
terminated unexercised, leaving 9,148,177 Common Shares then available for
future grant of Incentive Stock Options (subject to increase in the event that
outstanding Incentive Stock Options expire or terminate unexercised). The Plan
was further amended by action of the Compensation and Organization Committee on
March 15, 2000 to amend Section 1 of the Plan to clarify that Awards under the
Plan may be made to any Employee of the Corporation. The Plan was amended on
January 17, 2001 to amend Section 6.4(a) to remove the requirement that an
Option will not become exercisable unless an Optionee has been continuously
employed by the Corporation for at least six months from the date of grant. The
Plan was also amended to add a new Section 16 entitled "Harmful Activity" which
states that, if an Optionee engages in a "harmful activity" prior to or within
six months of termination of employment, profits from the exercise of a Covered
Option will inure to the benefit of the Corporation in certain circumstances.
Section 16 does not apply to Options granted prior to January 1, 2001. The Plan
was amended on March 14, 2001 to amend Sections 10.2, 10.3, and 10.4 to extend
the period during which Options are exercisable pursuant to these sections to
three years after retirement, disability, or death. The amendment only applies
to Options granted on or after January 1, 2002. The Plan was amended on November
14, 2001 to amend Section 2.2 to change the consideration required for
Restricted Stock. The Plan was amended on November 21, 2002 to terminate the
Plan on June 30, 2012.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.28
<SEQUENCE>5
<FILENAME>l97974aexv10w28.txt
<DESCRIPTION>EX-10.28 3RD AMENDMNT TO KEYCORP DEFERD COMPNSTN P
<TEXT>
<PAGE>

                                                                   Exhibit 10.28


                             THIRD AMENDMENT TO THE
                                     KEYCORP
                           DEFERRED COMPENSATION PLAN

        WHEREAS, KeyCorp has established the KeyCorp Deferred Compensation Plan
("Plan") for certain employees of KeyCorp, and

     WHEREAS, the Board of Directors of KeyCorp has authorized its Compensation
and Organization Committee to permit amendments to the Plan, and

     WHEREAS, the Compensation and Organization Committee of the Board of
Directors of KeyCorp has determined it desirable to amend the Plan and has
accordingly authorized the execution of this Third Amendment,

     NOW THEREFORE, pursuant to such action of the Compensation and Organization
Committee, the Plan is hereby amended as follows:

     1. Section 5.1 shall be amended to delete it in its entirety and to
substitute therefore the following:

          "5.1 CREDITING OF CORPORATION CONTRIBUTIONS. Corporate Contributions
          shall be credited on a bookkeeping basis to the Participant's Plan
          Account in proportion to the respective amount of the Participant's
          Participant Deferrals made to the Plan during the applicable Deferral
          Period. Corporate Contributions shall be credited to the Participant's
          Plan Account as of the date that the Participant's Participant
          Deferrals are credited to the Plan.

               Notwithstanding the forgoing provisions of this Section 5.1,
          however, if the Participant is an "Officer" of the Corporation, as
          that term is defined in accordance with Section 16 of the Securities
          Act of 1934, such Corporate Contributions shall be credited to the
          Participant's Plan Account as follows:

               a. INCENTIVE COMPENSATION DEFERRALS. Corporate Contributions
               shall be credited on a bookkeeping basis to the Participant's
               Plan Account as of the date the Incentive Compensation Deferrals
               would have been payable to the Participant but for the
               Participant's election to defer such Incentive Compensation to
               the Plan.

               b. SALARY DEFERRALS. Corporate Contributions shall be credited to
               the Participant's Plan Account as of June 30 and December 31 of
               each Plan year, provided, however, that if a Participant has
               elected on a bookkeeping basis to invest his or her Salary
               Deferrals in the Plan's Common Stock Account then such Salary
               Deferrals shall be credited with Corporate Contributions as of
               the date such Salary Deferrals would have been paid to the
               Participant but for the Participant's election to defer such
               Salary Deferrals to the Plan.

               Participant Deferrals invested on a bookkeeping basis in the
          Plan's Interest Bearing Fund and/or Investment Funds shall be credited
          with Corporate Contributions equal to 6% of such Participant's
          Participant Deferrals; Participant Deferrals invested on a bookkeeping
          basis in the Plan's Common Stock Account shall be credited with
          Corporate Contributions equal to 10% of such Participant's Participant
          Deferrals. Corporate Contributions (equal to 6% or 10%, as the case
          may be) shall also be



                                      -1-

<PAGE>


          credited on behalf of those Participants whose Participant Deferrals
          become mandated under the requirements of Section 162(m) of the Code."

     2. Except as specifically amended herein, the Plan shall remain in full
force and effect.

             IN WITNESS WHEREOF, KeyCorp has caused this Third Amendment to the
Plan to be executed by its duly authorized officer to be effective as of January
1, 2003.


                                       KEYCORP

                                       BY:  /s/ Steven N. Bulloch
                                           ------------------------------

                                       TITLE:   Assistant Secretary
                                              ----------------------------








                                      -2-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>6
<FILENAME>l97974aexv10w31.txt
<DESCRIPTION>EX-10.31 MCDONALD FINANCIAL GROUP DEFERRAL PLAN
<TEXT>
<PAGE>

                                                                   Exhibit 10.31


                            MCDONALD FINANCIAL GROUP
                                  DEFERRAL PLAN


                                    ARTICLE I

     The McDonald Financial Group Deferral Plan ("Plan") is established
effective January 1, 2003, to maintain on a bookkeeping basis, those unvested
discretionary bonus awards that are granted under the various KeyCorp sponsored
Incentive Compensation Plan(s) that mandate the automatic deferral of such
unvested awards. The Plan, as structured, is also intended to provide those
Employees of KeyCorp with a tax-favorable savings vehicle, while providing
KeyCorp with a means of retaining such Employees continued employment. It is the
intention of KeyCorp, and it is the understanding of those Participants covered
under the Plan, that the Plan is unfunded.

                                   ARTICLE II

                                   DEFINITIONS
                                   -----------

     2.1 MEANING OF DEFINITIONS. For the purposes of this Plan, the following
words and phrases shall have the meanings hereinafter set forth, unless a
different meaning is clearly required by the context:

     (a)  "BENEFICIARY" shall mean the person, persons or entity entitled under
          Article VIII to receive any Plan benefits payable after a
          Participant's death.

     (b)  "BOARD" shall mean the Board of Directors of KeyCorp, the Board's
          Compensation and Organization Committee, or any other committee
          designated by the Board or a subcommittee designated by the Board's
          Compensation and Organization Committee.

     (c)  "CHANGE OF CONTROL" shall be deemed to have occurred if under a rabbi
          trust arrangement established by KeyCorp ("Trust"), as such Trust may
          from time to time be amended or substituted, the Corporation is
          required to fund the Trust because of a "Change of Control."

     (d)  "CODE" shall mean the Internal Revenue Code of 1986, as amended from
          time to time, together with all regulations promulgated thereunder.
          Reference to a section of the Code shall include such section and any
          comparable section or sections of any future legislation that amends,
          supplements, or supersedes such section.

     (e)  "COMMON STOCK ACCOUNT" shall mean the investment account established
          under the Plan for bookkeeping purposes, in which a Participant may
          elect to have his or her Discretionary Bonus awards credited.
          Discretionary Bonus awards invested in the Common Stock Account shall
          be credited based on a bookkeeping allocation of KeyCorp Common Shares
          (both whole and fractional rounded to the nearest one-hundredth of a
          share) that shall be equal to the amount of Discretionary Bonus awards
          and Corporate Contributions invested by the Participant and by the
          Corporation in the Common Stock Account. The Common Stock Account
          shall also reflect on a bookkeeping basis all dividends, gains, and
          losses attributable to such Common Shares. All Corporate



<PAGE>


          Contributions and all Discretionary Bonus awards credited to the
          Common Stock Account, shall be based on the ten-day average of the New
          York Stock Exchange's closing price for such Common Shares immediately
          preceding, up to, and including the day such Discretionary Bonus
          awards and Corporate Contributions are credited to the Participants'
          Plan Account.

     (f)  "CORPORATE CONTRIBUTIONS" shall mean the dollar amount that an
          Employer has agreed to contribute on a bookkeeping basis to the
          Participant's Plan Account in accordance with the provisions of
          Article V of the Plan.

     (g)  "CORPORATION" shall mean KeyCorp, an Ohio corporation, its corporate
          successors, and any corporation or corporations into or with which it
          may be merged or consolidated.

     (h)  "DEFERRAL PERIOD" shall mean each applicable calendar year.

     (i)  "DETERMINATION DATE" shall mean the last business day of each calendar
          quarter.

     (j)  "DISABILITY" shall mean (1) the physical or mental disability of a
          permanent nature which prevents a Participant from performing the
          duties such Participant was employed to perform for his or her
          Employer when such disability commenced, (2) qualifies for disability
          benefits under the federal Social Security Act within 30 months
          following the Participant's disability, and (3) qualifies the
          Participant for disability coverage under the KeyCorp Long Term
          Disability Plan.

     (k)  "DISCHARGE FOR CAUSE" shall mean the termination (whether by the
          Participant or the Employer) of a Participant's employment from his or
          her Employer and any other Employer that is the result of (1) serious
          misconduct as an Employee, including, but not limited to, a continued
          failure after notice to perform a substantial portion of his or her
          duties and responsibilities unrelated to illness or incapacity,
          unethical behavior such as acts of self-dealing or self-interest,
          harassment, violence in the workplace, or theft; (2) the commission of
          a crime involving a controlled substance, moral turpitude, dishonesty,
          or breach of trust; or (3) the Employer being directed by a regulatory
          agency or self-regulatory agency to terminate or suspend the
          Participant or to prohibit the Participant from performing services
          for the Employer. The Corporation in its sole and absolute discretion
          shall determine whether a Participant has been Discharged for Cause,
          as provided for in this Section 2.1(k), provided, however, that for a
          period of two years following a Change of Control, any determination
          by the Corporation that an Employee has been Discharged for Cause
          shall be set forth in writing with the factual basis for such
          Discharge for Cause clearly specified and documented by the
          Corporation.

     (l)  "DISCRETIONARY BONUS AWARDS" shall mean those unvested discretionary
          bonus award(s) granted to an Employee under the terms of an Incentive
          Compensation Plan during the applicable Deferral Period, which shall
          be subject to the automatic deferral and vesting provisions of Article
          III and Article VI of the Plan. For purposes of this Section 2.1(l),
          the term "Discretionary Bonus Awards" shall not include any
          compensation paid to the Employee during the applicable Deferral
          Period which constitutes any form of a hiring bonus, sales
          commissions, referral awards, recognition awards, and /or corporate
          long-term incentive compensation plan awards.



                                      -2-
<PAGE>


     (m)  "EMPLOYEE" shall mean a common law employee who is employed by an
          Employer.

     (n)  "EMPLOYER" shall mean the Corporation and any of its subsidiaries or
          affiliates, unless specifically excluded as an Employer for Plan
          purposes by written action by an officer of the Corporation. An
          Employer's Plan participation shall be subject to all conditions and
          requirements made by the Corporation, and each Employer shall be
          deemed to have appointed the Plan Administrator as its exclusive agent
          under the Plan as long as it continues as an Employer.

     (o)  "HARMFUL ACTIVITY" shall have occurred if the Participant shall do any
          one or more of the following:

         (i)   Use, publish, sell, trade or otherwise disclose Non-Public
               Information of KeyCorp unless such prohibited activity was
               inadvertent, done in good faith and did not cause significant
               harm to KeyCorp.

         (ii)  After notice from KeyCorp, fail to return to KeyCorp any
               document, data, or thing in his or her possession or to which the
               Participant has access that may involve Non-Public Information of
               KeyCorp.

         (iii) After notice from KeyCorp, fail to assign to KeyCorp all right,
               title, and interest in and to any confidential or
               non-confidential Intellectual Property which the Participant
               created, in whole or in part, during employment with KeyCorp,
               including, without limitation, copyrights, trademarks, service
               marks, and patents in or to (or associated with) such
               Intellectual Property.

         (iv)  After notice from KeyCorp, fail to agree to do any acts and sign
               any document reasonably requested by KeyCorp to assign and convey
               all right, title, and interest in and to any confidential or
               non-confidential Intellectual Property which the Participant
               created, in whole or in part, during employment with KeyCorp,
               including, without limitation, the signing of patent applications
               and assignments thereof.

         (v)   Upon the Participant's own behalf or upon behalf of any other
               person or entity that competes or plans to compete with KeyCorp,
               solicit or entice for employment or hire any KeyCorp employee.

         (vi)  Upon the Participant's own behalf or upon behalf of any other
               person or entity that competes or plans to compete with KeyCorp,
               call upon, solicit, or do business with (other than business
               which does not compete with any business conducted by KeyCorp)
               any KeyCorp customer the Participant called upon, solicited,
               interacted with, or became acquainted with, or learned of through
               access to information (whether or not such information is or was
               non-public) while the Participant was employed at KeyCorp unless
               such prohibited activity was inadvertent, done in good faith, and
               did not involve a customer whom the Participant should have
               reasonably known was a customer of KeyCorp.



                                      -3-
<PAGE>


          (vii) Upon the Participant's own behalf or upon behalf of any other
               person or entity that competes or plans to compete with KeyCorp,
               after notice from KeyCorp, continue to engage in any business
               activity in competition with KeyCorp in the same or a closely
               related activity that the Participant was engaged in for KeyCorp
               during the one year period prior to the termination of the
               Participant's employment.

               For purposes of this Section 2.1(o) the term:

               "INTELLECTUAL PROPERTY" shall mean any invention, idea, product,
               method of doing business, market or business plan, process,
               program, software, formula, method, work of authorship, or other
               information, or thing relating to KeyCorp or any of its
               businesses.

               "NON-PUBLIC INFORMATION" shall mean, but is not limited to, trade
               secrets, confidential processes, programs, software, formulas,
               methods, business information or plans, financial information,
               and listings of names (e.g., employees, customers, and suppliers)
               that are developed, owned, utilized, or maintained by an employer
               such as KeyCorp, and that of its customers or suppliers, and that
               are not generally known by the public.

               "KEYCORP" shall include KeyCorp, its subsidiaries, and its
               affiliates.

     (p)  "INCENTIVE COMPENSATION PLAN" shall mean a line of business or
          management incentive compensation plan that is sponsored by KeyCorp or
          an affiliate of KeyCorp that mandates the deferral of unvested
          discretionary bonus awards granted under an applicable Incentive
          Compensation Plan and which the Corporation in its sole discretion has
          determined constitutes an Incentive Compensation Plan for purposes of
          the Plan.

     (q)  "INTEREST BEARING ACCOUNT" shall mean the investment account
          established under the Plan for bookkeeping purposes in which a
          Participant may elect to have his or her Discretionary Bonus awards
          credited. Discretionary Bonus awards invested for bookkeeping purposes
          in the Interest Bearing Account shall be credited with earnings as of
          each Determination Date which shall be based on the effective annual
          yield of the average of Moody's Average Corporate Bond Yield Index for
          the previous calendar month increased by 50 basis points. In the event
          that Moody's Investor Services, Inc. ceases to publish such Index (or
          any successor publisher thereto) the Board, in its sole and absolute
          discretion, shall select a substantially similar index to be used in
          crediting earnings under the Interest Bearing Account.

     (r)  "INVESTMENT ACCOUNTS" shall collectively mean those investment
          accounts established under the Plan for bookkeeping purposes in which
          a Participant may elect to have his or her Discretionary Bonus awards
          credited. Investment Accounts shall include the Plan's (1) Interest
          Bearing Account, (2) Common Stock Account, and (3) Investment Funds.

     (s)  "INVESTMENT FUNDS" shall mean those investment accounts established
          under the Plan for bookkeeping purposes in which a Participant may
          elect to have his or her Discretionary Bonus awards credited and which
          mirror the investment funds established under Article VIII of the
          KeyCorp 401(k) Savings Plan ("Savings Plan") as may be amended from
          time to time, provided, however, that the Savings Plan's Corporation


                                      -4-
<PAGE>


          Stock Fund, for Plan purposes, shall be excluded from the definition
          of Investment Funds. Discretionary Bonus awards invested for
          bookkeeping purposes in the Investment Funds shall be credited on a
          bookkeeping basis with those earnings, gains, and losses experienced
          by the Savings Plan's investment funds.

     (t)  "INVOLUNTARY TERMINATION" shall mean the termination (by the Employer)
          of a Participant's employment from his or her Employer and from any
          other Employer, other than a Discharge for Cause or a Termination
          Under Limited Circumstances.

     (u)  "PARTICIPANT" shall mean an Employee who meets the eligibility and
          participation requirements set forth in Section 3.1 of the Plan.

     (v)  "PLAN" shall mean the McDonald Financial Group Deferral Plan with all
          amendments, modifications and revisions as hereafter made.

     (w)  "PLAN ACCOUNT" shall mean those bookkeeping accounts established by
          the Corporation for each Plan Participant, which shall reflect all
          Discretionary Bonus awards and Corporate Contributions invested for
          bookkeeping purposes in the Plan's Investment Accounts, with all
          earnings, dividends, gains, and losses thereon. Plan Accounts shall
          not constitute separate Plan funds or separate Plan assets. Neither
          the maintenance of, nor the crediting of amounts to such Plan Accounts
          shall be treated (i) as the allocation of any Corporation assets to,
          or a segregation of any Corporation assets in any such Plan Accounts,
          or (ii) as otherwise creating a right in any person or Participant to
          receive specific assets of the Corporation.

     (x)  "PLAN YEAR" shall mean the calendar year.

     (y)  "RETIREMENT" shall mean the termination of a Participant's employment
          any time after the Participant's attainment of age 55 and completion
          of 5 years of Vesting Service but shall not include the Participant's
          (i) Discharge for Cause, (ii) Involuntary Termination, (iii)
          Termination Under Limited Circumstances, (iv) Disability, or (v)
          death.

     (z)  "TERMINATION UNDER LIMITED CIRCUMSTANCES" shall mean the termination
          (whether by the Participant or the Employer) of a Participant's
          employment from his or her Employer, and from any other Employer (i)
          under circumstances in which the Participant is entitled to receive
          severance benefits or salary continuation benefits under the KeyCorp
          Separation Pay Plan, (ii) under circumstances in which the Participant
          is entitled to severance benefits or salary continuation or similar
          benefits under a change of control agreement or employment agreement
          within two years after a change of control (as defined by such
          agreement) has occurred, or (iii) as otherwise expressly approved by
          the Corporation or the Compensation and Organization Committee, in
          their sole discretion.

     (aa) "VESTING SERVICE" for purposes of Section 2.1(aa) shall be calculated
          by measuring the period of service commencing on the Employee's
          employment commencement date and ending on the Employee's termination
          date and shall be computed based on each full calendar month that the
          Employee is employed by an Employer.




                                      -5-
<PAGE>


     (bb) "VOLUNTARY TERMINATION" shall mean a voluntary termination of the
          Participant's employment from his or her Employer and from any other
          Employer, whether by resignation or otherwise, but shall not include
          the Participant's Discharge for Cause, Involuntary Termination,
          Retirement, Termination Under Limited Circumstances, or termination as
          a result of Disability or death.

     2.2  PRONOUNS. The masculine pronoun wherever used herein includes the
          feminine in any case so requiring, and the singular may include the
          plural.


                                   ARTICLE III

                          ELIGIBILITY AND PARTICIPATION
                          -----------------------------

     3.1 ELIGIBILITY AND PARTICIPATION. An Employee shall participate in the
Plan, and shall automatically become a Plan Participant upon (i) the Employee's
meeting the applicable Incentive Compensation Plan's annual production criteria
established by the Corporation for the applicable Deferral Period, and (ii) the
Employee being awarded a unvested, discretionary bonus award under his or her
applicable Incentive Compensation Plan.

     3.2 AUTOMATIC DEFERRAL REQUIREMENTS. An Employee meeting the eligibility
and automatic participation requirements of Section 3.1 hereof, shall
automatically have his or her Discretionary bonus awards deferred to the Plan.
Such Discretionary Bonus awards shall be maintained in the Plan until vested or
forfeited.

     3.3 DEFERRAL LIMITED BY TERMINATION UNDER LIMITED CIRCUMSTANCES,
INVOLUNTARY TERMINATION, RETIREMENT, DISABILITY, OR DEATH. As of a Participant's
Termination Under Limited Circumstances, Involuntary Termination, Retirement,
Disability or death, the Participant shall be relieved from and, further, shall
not be permitted to have any further bonus awards deferred to the Plan, and any
Discretionary Bonus that thereafter would have been subject to the Automatic
Deferral Requirements of Section 3.2 hereof, if and to the extent payable, shall
be paid directly to the Participant in accordance with the terms of the
applicable Incentive Compensation Plan.

     3.4 CHANGE IN PARTICIPATION STATUS. During those Deferral Periods in which
the Participant does not automatically defer Discretionary Bonus awards to the
Plan, Discretionary Bonus awards and Corporate Contributions previously credited
to the Participant's Plan Account shall remain in the Plan and shall continue to
vest under the terms of Section 6.1 hereof; such Discretionary Bonus awards and
Corporate Contributions with all earnings, gains, or losses thereon when vested
shall be distributed to the Participant in accordance with the provisions of
Article VII of the Plan.






                                      -6-
<PAGE>

                                   ARTICLE IV

                           DISCRETIONARY BONUS AWARDS
                           --------------------------

     4.1 PLAN ACCOUNT/INVESTMENT OF DISCRETIONARY BONUS AWARDS. Discretionary
Bonus awards and Corporate Contributions shall be credited on a bookkeeping
basis to a Plan Account established in the Participant's name. Each Participant
shall direct the manner in which his or her Discretionary Bonus awards are to be
invested for bookkeeping purposes under the Plan. All Discretionary Bonus awards
may be invested for bookkeeping purposes in any one or more of the Plan's
Investment Accounts, in such amounts as the Participant shall select, provided
that such election amounts are expressed in five percent increments.
Participants may modify their investment elections at such times and in such
manner as permitted by the Corporation.

     4.2 CREDITING OF DISCRETIONARY BONUS AWARDS. Discretionary Bonus awards
shall be credited to the Participant's Plan Account as of the date that the
Participant's Discretionary Bonus awards would have been payable to the
Participant under an Incentive Compensation Plan but for the Incentive
Compensation Plan's mandatory deferral requirements.

     4.3 DEFAULT INVESTMENT ELECTION. In the event that a Participant fails to
direct the manner in which his or her Discretionary Bonus award(s) shall be
invested for bookkeeping purposes under the Plan, then such Discretionary Bonus
award(s) when credited to the Participant's Plan Account shall be automatically
invested on a bookkeeping basis in the Plan's Interest Bearing Account.

                                    ARTICLE V

                             CORPORATE CONTRIBUTIONS
                             -----------------------

     5.1 CREDITING OF CORPORATION CONTRIBUTIONS. Matching Corporate
Contributions equal to 15% of the Participant's Discretionary Bonus awards for
the applicable Deferral Period shall be credited on a bookkeeping basis to the
Participant's Plan Account as of the payroll date on which the Participant's
Discretionary Bonus awards are automatically deferred and credited to the Plan.

     5.2 INVESTMENT OF CORPORATE CONTRIBUTIONS. All Corporate Contributions
credited to the Participant's Plan Account shall be invested for bookkeeping
purposes in the Plan's Common Stock Account. Corporate Contributions are not
subject to Participant investment direction.

     5.3 DETERMINATION OF AMOUNT. The Plan Administrator shall verify the amount
of Discretionary Bonus awards, Corporate Contributions, dividends, and earnings,
if any, to be credited to each Participant's Plan Account in accordance with the
provisions of the Plan. The reasonable and equitable decision of the Plan
Administrator as to the value of each Plan Account shall be conclusive and
binding upon all Participants and the Beneficiary of each deceased Participant
having any interest, direct or indirect in the Participant's Plan Account. As
soon as reasonably practicable after the close of the Plan Year, the Corporation
shall send to each Participant an itemized accounting statement that shall
reflect the Participant's Plan Account balance.

     5.4 CORPORATE ASSETS. All Discretionary Bonus awards, Corporate
Contributions, dividends, earnings and any other gains and losses credited to a
Participant's Plan Account on a bookkeeping basis, remain the assets and
property of the Corporation, which shall be subject to distribution to the
Participant only in accordance with Article VII of the Plan. Participants and





                                      -7-
<PAGE>


Beneficiaries shall have the status of general unsecured creditors of the
Corporation. Nothing contained in the Plan shall create, or be construed as
creating a trust of any kind or any other fiduciary relationship between the
Participant, the Corporation, or any other person. It is the intention of the
Corporation and it is the understanding of the Participant that the Plan be
unfunded.

     5.5 NO PRESENT INTEREST. Subject to any federal statute to the contrary, no
right or benefit under the Plan and no right or interest in each Participant's
Plan Account shall be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge any right or benefit under the Plan, or
Participant's Plan Account shall be void. No right, interest, or benefit under
the Plan or Participant's Plan Account shall be liable for or subject to the
debts, contracts, liabilities, or torts of the Participant or Beneficiary. If
the Participant or Beneficiary becomes bankrupt or attempts to alienate, sell,
assign, pledge, encumber, or charge any right under the Plan or Participant's
Plan Account, such attempt shall be void and unenforceable.


                                   ARTICLE VI
                                   ----------

                                    VESTING
                                    -------

     6.1 VESTING IN DISCRETIONARY BONUS AWARDS AND CORPORATE CONTRIBUTIONS. The
calculation of a Participant's vested interest in those Discretionary Bonus
awards and Corporate Contributions credited on a bookkeeping basis to the
Participant's Plan Account shall be measured from the last day of the applicable
calendar quarter in which Discretionary Bonus awards and Corporate Contributions
are credited to the Participant's Plan Account ("Quarterly Deferral Date"). A
Participant shall become vested in his or her Discretionary Bonus awards and
Corporate Contributions with all earnings, gains, and losses thereon under the
following three-year graded vesting schedule:


<TABLE>
<CAPTION>

<S>      <C>                                                                     <C>
     (a)  From the date the Participant's Discretionary Bonus awards and
          Corporate Contributions are credited to the Participant's Plan Account
          until one full calendar year from the Quarterly Deferral Date..........  0%.

     (b)  One full calendar year from the Quarterly Deferral Date of the
          Participant's Discretionary Bonus awards and Corporate Contributions
          to the Plan but less than two full calendar years from such Quarterly
          Deferral Date...........................................................33%.

     (c)  Two Full Calendar Years from the Quarterly Deferral Date of the
          Participant's Discretionary Bonus awards and Corporate Contributions
          to the Plan But less than three full calendar years from such
          Quarterly Deferral Date.................................................66%.

     (d)  Three full calendar years from the date of the Quarterly Deferral Date
          of the Participant's Discretionary Bonus awards and Corporate
          Contributions to the Plan..............................................100%.

</TABLE>

Notwithstanding the foregoing provisions of this Section 6.1, a Participant
shall become fully vested in all Discretionary Bonus awards and Corporate
Contributions credited on a bookkeeping basis to the Participant's Plan Account
upon the Participant's Termination Under Limited Circumstances, Disability or
death.





                                      -8-
<PAGE>


     6.2 CONTINUED VESTING UPON RETIREMENT. Subject to the provisions of Section
7.2 of the Plan, upon the Participant's Retirement, the Participant's unvested
Discretionary Bonus awards and Corporate Contributions credited to the
Participant's Plan Account with all earnings and gains thereon, shall remain in
the Plan and shall continue to vest under the vesting provisions of Section 6.1
of the Plan.

     6.3 FORFEITURE OF CORPORATE CONTRIBUTIONS. In the event of the
Participant's Involuntary Termination, as that term is defined in accordance
with Section 2.1(t) of the Plan, the Participant shall become immediately vested
in those Discretionary Bonus awards allocated on a bookkeeping basis to the
Participant's Plan Account with all earnings and gains thereon. All unvested
Corporate Contributions and related earnings credited on a bookkeeping basis to
the Participant's Plan Account shall be forfeited as of the Participant's last
day of employment.

     6.4 FORFEITURE OF DISCRETIONARY BONUS AWARDS AND CORPORATE CONTRIBUTIONS.
Notwithstanding any provision of the Plan to the contrary, upon the
Participant's Discharge for Cause or the Participant's Voluntary Termination,
the Participant shall automatically forfeit all Discretionary Bonus awards and
Corporate Contributions allocated on a bookkeeping basis to the Participant's
Plan Account with all earnings and gains thereon that have unvested in
accordance with the vesting provisions of Section 6.1 of the Plan as of the
Participant's last day of employment.

                                   ARTICLE VII

                          DISTRIBUTION OF PLAN BENEFITS
                          -----------------------------

     7.1 DISTRIBUTION OF INTEREST BEARING ACCOUNT AND/OR INVESTMENT FUNDS.
Subject to the provisions of Section 7.8 and Section 7.9 hereof, a Participant
shall receive a distribution of his or her vested Plan Account balance from the
Plan's Interest Bearing Account and /or Investment Funds as a single lump sum
cash distribution.

     7.2 DISTRIBUTION FOR COMMON STOCK ACCOUNT. Subject to the provisions of
Section 7.5 and Section 7.6 of the Plan, a Participant shall receive a
distribution of his or her vested Plan Account balance from the Plan's Common
Stock Account as a single lump sum distribution. Distributions of Discretionary
Bonus awards and vested Corporate Contributions from the Plan's Common Stock
Account shall be made in KeyCorp Common Shares.

     7.3 DISTRIBUTION OF ACCOUNT BALANCE. The Participant's vested Plan Account
shall be valued as of the Determination Date immediately preceding his or her
Termination, Retirement or Disability (the "valuation date"), and such lump sum
distribution shall be made as soon as reasonably practicable following the
Participant's Termination, Death or Disability date.

     7.4 DISTRIBUTIONS FOLLOWING RETIREMENT. Upon the Participant's Retirement,
the Participant's Plan Account balance shall continue to be maintained within
the Plan and all Discretionary Bonus awards and Corporate Contributions credited
to the Participant's Plan Account with all earnings, gains, and losses thereon,
shall continue to vest under the vesting provisions of Section 6.1 of the Plan,
and when vested, shall be distributed to the Participant in accordance with the
provisions of Section 7.1 and 7.2 hereof. Notwithstanding the foregoing
provisions of this Section 7.5, however, in the event of the Participant's
Retirement, and within twelve months of such Retirement, the Participant engages
in any "Harmful Activity" as that term is defined in accordance with Section 2.1
(o) of the Plan, such



                                      -9-
<PAGE>


Participant's unvested Plan Account balance shall be immediately forfeited and
the Participant shall automatically cease Plan participation.

     7.5 DISTRIBUTIONS FOLLOWING TERMINATION UNDER LIMITED CIRCUMSTANCES,
DISABILITY OR DEATH. Upon the Participant's Termination Under Limited
Circumstances, or termination of employment due to Disability or death, all
Discretionary Bonus awards and Corporate Contributions credited to the
Participant's Plan Account with all earnings, gains, and losses thereon shall
become immediately vested and shall be distributed to the Participant in a
single lump sum amount of cash and Common Shares.

     7.6 DISTRIBUTIONS FOLLOWING INVOLUNTARY TERMINATION. In accordance with the
provisions of Section 6.3 of the Plan, upon the Participant's Involuntary
Termination, all Discretionary Bonus awards credited to the Participant's Plan
Account with all earnings, gains and losses thereon, shall become immediately
vested and shall be distributed to the Participant in a single lump sum
distribution. All unvested Corporate Contributions credited to the Participant's
Plan Account with all related earnings thereon shall be forfeited by the
Participant as of his or her last day of employment.

     7.7 DISTRIBUTIONS FOLLOWING VOLUNTARY TERMINATION OR DISCHARGE FOR CAUSE.
Upon the Participant's Voluntary Termination or Discharge for Cause, all
unvested Discretionary Bonus awards and Corporate Contributions credited to the
Participant's Plan Account with all earnings, gains, and losses thereon shall be
forfeited by the Participant as of his or her last day of employment.

     7.8 WITHHOLDING. The withholding of taxes with respect to the Participant's
Discretionary Bonus awards, Corporate Contributions, and all earnings and gains
thereon shall be made at such time as it becomes required by any state, federal
or local law; such taxes shall be withheld from the Participant's Discretionary
Bonus awards and Corporate Contributions in accordance with applicable law to
the maximum extent possible.

     7.9 FACILITY OF PAYMENT. If it is found that any individual to whom an
amount is payable hereunder is incapable of attending to his or her financial
affairs because of any mental or physical condition, including the infirmities
of advanced age, such amount (unless prior claim therefor shall have been made
by a duly qualified guardian or other legal representative) may, in the
discretion of the Corporation, be paid to another person for the use or benefit
of the individual found incapable of attending to his or her financial affairs
or in satisfaction of legal obligations incurred by or on behalf of such
individual. Any such payment shall be charged to the Participant's Plan Account
from which any such payment would otherwise have been paid to the individual
found incapable of attending to his or her financial affairs, and shall be a
complete discharge of any liability therefor under the Plan.


                                  ARTICLE VIII

                             BENEFICIARY DESIGNATION
                             -----------------------

     8.1 BENEFICIARY DESIGNATION. Subject to Section 8.3 hereof, each
Participant shall have the right, at any time, to designate one or more persons
or an entity as Beneficiary (both primary as well as secondary) to whom benefits
under this Plan shall be paid in the event of Participant's death prior to
complete distribution of the Participant's vested Plan Account. Each Beneficiary
designation shall be in a written form prescribed by the Corporation and shall
be effective only when filed with the Corporation during the Participant's
lifetime.





                                      -10-
<PAGE>


     8.2 CHANGING BENEFICIARY. A Beneficiary designation may be changed by the
Participant without the consent of the previously named Beneficiary by the
Participant's filing of a new designation with the Corporation. The filing of a
new designation shall cancel all designations previously filed by the
Participant.

     8.3 NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
Beneficiary in the manner provided above, if the designation is void, or if the
Beneficiary (including all contingent Beneficiaries) designated by a deceased
Participant dies before the Participant, the Participant's Beneficiary shall be
the Participant's estate.


                                   ARTICLE IX

                                 ADMINISTRATION
                                 --------------

     9.1 ADMINISTRATION. The Corporation shall be responsible for the general
administration of the Plan, for carrying out the provisions hereof, and for
making payments hereunder. The Corporation shall have the sole and absolute
discretionary authority and power to carry out the provisions of the Plan,
including, but not limited to, the authority and power (a) to determine all
questions relating to the eligibility for and the amount of any benefit to be
paid under the Plan, (b) to determine all questions pertaining to claims for
benefits and procedures for claim review, (c) to resolve any and all questions
arising under the Plan, including any question of construction and/or
interpretation, and (d) to take such further action as the Corporation deems
necessary or advisable in the administration of the Plan. All findings,
decisions, and determinations of any kind made by the Plan Administrator shall
not be disturbed unless the Plan Administrator has acted in an arbitrary and
capricious manner. Subject to the requirements of law, the Plan Administrator
shall be the sole judge of the standard of proof required in any claim for
benefits and in any determination of eligibility for a benefit. All decisions of
the Plan Administrator shall be final and binding on all parties. The
Corporation may employ such attorneys, investment counsel, agents, and
accountants as it may deem necessary or advisable to assist it in carrying out
its duties hereunder. The actions taken and the decisions made by the
Corporation hereunder shall be final and binding upon all interested parties
subject, however, to the provisions of Section 9.2. The Plan Year, for purposes
of Plan administration, shall be the calendar year.

     9.2 CLAIMS REVIEW PROCEDURE. Whenever the Plan Administrator decides for
whatever reason to deny, whether in whole or in part, a claim for benefits under
this Plan filed by any person (herein referred to as the "Claimant"), the Plan
Administrator shall transmit a written notice of its decision to the Claimant,
which notice shall be written in a manner calculated to be understood by the
Claimant and shall contain a statement of the specific reasons for the denial of
the claim and a statement advising the Claimant that, within 60 days of the date
on which he or she receives such notice, he or she may obtain review of the
decision of the Plan Administrator in accordance with the procedures hereinafter
set forth. Within such 60-day period, the Claimant or his or her authorized
representative may request that the claim denial be reviewed by filing with the
Plan Administrator a written request therefor, which request shall contain the
following information:

     (a)  the date on which the request was filed with the Plan Administrator;
          provided, however, that the date on which the request for review was
          in fact filed with the Plan Administrator shall control in the event
          that the date of the actual filing is later than the date stated by
          the Claimant pursuant to this paragraph (a);



                                      -11-
<PAGE>


     (b)  the specific portions of the denial of his or her claim which the
          Claimant requests the Plan Administrator to review;

     (c)  a statement by the Claimant setting forth the basis upon which he or
          she believes the Plan Administrator should reverse its previous denial
          of the claim and accept the claim as made; and

     (d)  any written material which the Claimant desires the Plan Administrator
          to examine in its consideration of his or her position as stated
          pursuant to paragraph (b) above.

     In accordance with this Section, if the Claimant requests a review of the
Claim decision, such review shall be made by the Plan Administrator who shall,
within sixty (60) days after receipt of the request form, review and render a
written decision on the claim containing the specific reasons for the decision
including reference to Plan provisions upon which the decision is based. All
findings, decisions, and determinations of any kind made by the Plan
Administrator shall not be modified unless the Plan Administrator has acted in
an arbitrary and capricious manner. Subject to the requirements of law, the Plan
Administrator shall be the sole judge of the standard of proof required in any
claim for benefits, and any determination of eligibility for a benefit. All
decisions of the Plan Administrator shall be binding on the claimant and upon
all other Persons. If the Participant or Beneficiary shall not file written
notice with the Plan Administrator at the times set forth above, such individual
shall have waived all benefits under the Plan other than as already provided, if
any, under the Plan.


                                    ARTICLE X

                        AMENDMENT AND TERMINATION OF PLAN
                        ---------------------------------

     10.1 RESERVATION OF RIGHTS. The Corporation reserves the right to terminate
the Plan at any time by action of the Corporation, or any duly authorized
committee thereof, and to modify or amend the Plan, in whole or in part, at any
time and for any reason, subject to the following:

     (a)  PRESERVATION OF ACCOUNT BALANCE. No termination, amendment, or
          modification of the Plan shall reduce (i) the amount of Discretionary
          Bonus awards and Corporate Contributions, and (ii) all earnings and
          gains on such Discretionary Bonus awards and Corporate Contributions
          that have accrued up to the effective date of the termination,
          amendment, or modification.

     (b)  CHANGES IN EARNINGS RATE. No amendment or modification of the Plan
          shall reduce the rate of earnings to be credited on all Discretionary
          Bonus awards and Corporate Contribution, and all earnings and gains
          accrued thereon under the Common Stock Account until the close of the
          applicable Plan Year in which such amendment or modification is made.

     10.2 EFFECT OF PLAN TERMINATION. Notwithstanding anything to the contrary
contained in the Plan, the termination of the Plan shall terminate the liability
of the Corporation and all Employers to make further Corporate Contributions to
the Plan.





                                      -12-
<PAGE>


                                   ARTICLE XI

                                CHANGE OF CONTROL
                                -----------------

     11.1 CHANGE OF CONTROL. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change of Control as defined in accordance with
Section 2.1(c) of the Plan, no amendment or modification of the Plan may be made
at any time on or after such Change of Control (1) to reduce or modify a
Participant's Pre-Change of Control Account Balance, (2) to reduce or modify the
Common Stock Accounts' method of calculating earnings, gains, and/or losses on
the Participant's Pre-Change of Control Account Balance, or (3) to reduce or
modify the Participant's Discretionary Bonus awards and/or Corporate
Contributions to be credited to the Participant's Plan Account for the
applicable Deferral Period. For purposes of this Section 11.1, the term
"Pre-Change of Control Account Balance" shall mean, with regard to any Plan
Participant, the aggregate amount of the Participant's Discretionary Bonus
awards and Corporate Contributions with all earnings, gains, and losses thereon
which are credited to the Participant's Plan Account through the close of the
calendar year in which such Change of Control occurs.

     11.2 COMMON STOCK CONVERSION. In the event of a transaction or occurrence
in which the Common Shares of the Corporation are converted into or exchanged
for securities, cash and/or other property as a result of any capital
reorganization or reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with or into another corporation or
entity, or the sale of all or substantially all of its assets to another
corporation or entity, the Corporation shall cause the Common Stock Account to
reflect on a bookkeeping basis the securities, cash and other property that
would have been received in such reorganization, reclassification,
consolidation, merger or sale in an equivalent amount of Common Shares equal to
the balance in the Common Stock Account and, from and after such reorganization,
reclassification, consolidation, merger or sale, the Common Stock Account shall
reflect on a bookkeeping basis all dividends, interest, earnings and losses
attributable to such securities, cash, and other property.

     11.3 AMENDMENT IN THE EVENT OF A CHANGE OF CONTROL. On and after a Change
of Control, the provisions of Article II, Article III, Article IV, Article V,
Article VI, Article VII, Article VIII, Article IX, Article X, and this Article
XI may not be amended or modified as such Sections and Articles apply with
regard to the Participants' Pre-Change of Control Account Balances.


                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS
                            ------------------------

     12.1 UNFUNDED PLAN. This Plan is an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of "management or
highly-compensated employees."

     13.2 NO COMMITMENT AS TO EMPLOYMENT. Nothing herein contained shall be
construed as a commitment or agreement upon the part of any Employee hereunder
to continue his or her employment with an Employer, and nothing herein contained
shall be construed as a commitment on the part of any Employer to continue the
employment, rate of compensation, or terms and conditions of employment of any
Employee hereunder for any period. All Participants shall remain subject to
discharge to the same extent as if the Plan had never been put into effect.






                                      -13-
<PAGE>


     12.3 BENEFITS. Nothing in the Plan shall be construed to confer any right
or claim upon any person, firm, or corporation other than the Participants,
former Participants, and Beneficiaries.

     12.4 ABSENCE OF LIABILITY. No member of the Board of Directors of the
Corporation or a subsidiary or committee authorized by the Board of Directors,
or any officer of the Corporation or a subsidiary or officer of a subsidiary
shall be liable for any act or action hereunder, whether of commission or
omission, taken by any other member, or by any officer, agent, or Employee,
except in circumstances involving bad faith or willful misconduct, for anything
done or omitted to be done.

     12.5 EXPENSES. The expenses of administration of the Plan shall be paid by
the Corporation.

     12.6 PRECEDENT. Except as otherwise specifically agreed to by the
Corporation in writing, no action taken in accordance with the Plan by the
Corporation shall be construed or relied upon as a precedent for similar action
under similar circumstances.

     12.7 WITHHOLDING. The Corporation shall withhold any tax which the
Corporation in its discretion deems necessary to be withheld from any payment to
any Participant, former Participant, or Beneficiary hereunder, by reason of any
present or future law.

     12.8 VALIDITY OF PLAN. The validity of the Plan shall be determined and the
Plan shall be construed and interpreted in accordance with the provisions of the
laws of the State of Ohio. The invalidity or illegality of any provision of the
Plan shall not affect the validity or legality of any other part thereof.

     12.9 PARTIES BOUND. The Plan shall be binding upon the Employers,
Participants, former Participants, and Beneficiaries hereunder, and, as the case
may be, the heirs, executors, administrators, successors, and assigns of each of
them.

     12.10 HEADINGS. All headings used in the Plan are for convenience of
reference only and are not part of the substance of the Plan.

     12.11 DUTY TO FURNISH INFORMATION. The Corporation shall furnish to each
Participant, former Participant, or Beneficiary any documents, reports, returns,
statements, or other information that it reasonably deems necessary to perform
its duties imposed hereunder or otherwise imposed by law.

     12.12 VALIDITY. In case any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.

     12.13 NOTICE. Any notice required or permitted under the Plan shall be
deemed sufficiently provided if such notice is in writing and hand delivered or
sent by registered or certified mail. Such notice shall be deemed given as of
the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark or on the receipt for registration or certification. Mailed notice
to the Corporation shall be directed to the Corporation's address, attention:
KeyCorp Compensation and Benefits Department. Mailed notice to a Participant or
Beneficiary shall be directed to the individual's last known address in the
Employer's records.

     12.14 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of each Employer and its successors and assigns. The term successors as
used herein shall include any corporate



                                      -14-
<PAGE>


or other business entity, which shall, whether by merger, consolidation,
purchase or otherwise, acquire all or substantially all of the business and
assets of an Employer.

                                       KEYCORP



                                       By:
                                           -------------------------------------

                                       Title:     Exec. VP
                                              ----------------------------------



<PAGE>
                                   ADDENDUM A

         The terms of this Addendum A shall apply only to those Employees (i)
who have been specifically authorized by the Compensation and Organization
Committee of the KeyCorp Board of Directors ("Committee") to participate in the
McDonald Financial Group Deferral Plan ("Plan") under an enhanced benefit
structure, and (ii) whose average annual gross production averages a minimum of
$7,500,000 over the immediately preceding 3-year period under such criteria as
is authorized by the Corporation ("Authorized Employees"). In accordance with
the authorization granted by the Committee, the Plan is hereby modified with
regard to such Authorized Employees as follows:

         1.       Section 3.1 of the Plan shall be disregarded under the terms
                  of this Addendum, and the following new Section shall become
                  applicable with regard to such Authorized Employees:

                         "CREDITING OF CORPORATION CONTRIBUTIONS. Matching
                         Corporate Contributions equal to 2 times the Authorized
                         Employee's Deferred Bonus award for the applicable
                         Deferral Period shall be credited on a bookkeeping
                         basis to the Authorized Employee's Plan Account as of
                         the payroll date on which the Authorized Employee's
                         Discretionary Bonus award is automatically deferred and
                         credited to the Plan.

                                    Notwithstanding the foregoing provisions of
                         this Addendum, however, in the event that the
                         Authorized Employee's Branch Profit Margin (or where
                         applicable, the Branch Profit Margin for such
                         Authorized Employees) fail to equal or exceed (i) 20%
                         for the 2003 Plan year, (ii) 22% for the 2004 Plan
                         year, or (iii) 24% for the 2005 Plan year and for each
                         succeeding Plan years thereafter, then the provisions
                         of this Addendum shall be null and void for purposes of
                         allocating matching Corporate Contributions to such
                         Authorized Employee for the applicable Plan year and
                         the terms of Section 3.1 shall become applicable to
                         such Authorized Employees."

         For purposes of this Addendum A, the following words and phrases shall
have the meanings hereinafter set forth:

         1. "BRANCH PROFIT MARGIN" shall mean the branch profit margin per the
branch financial statements, calculated as branch revenues less production and
direct expenses. For purposes of calculating the branch's direct expenses, the
dollar cost of the Authorized Employee's Discretionary Bonus award and matching
Corporate Contribution will be included as part of the


<PAGE>

Branch's direct expenses for the year in which the Discretionary Bonus award is
earned rather than paid. Direct expenses, however, shall specifically exclude
all allocated expenses such as marketing, operations, and trading costs.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.32
<SEQUENCE>7
<FILENAME>l97974aexv10w32.txt
<DESCRIPTION>EX-10.32 SIGNING BONUS PLAN
<TEXT>
<PAGE>
                                                                   Exhibit 10.32

                                     KEYCORP

                               SIGNING BONUS PLAN

                                    ARTICLE I

      The KeyCorp Signing Bonus Plan ("Plan") is established effective January
1, 1999 to require certain select Employees of KeyCorp to defer all or a
percentage of the total amount of their signing bonus to be provided to the
Employee in conjunction with his or her employment with an Employer to the Plan.
As structured, the Plan is intended to provide those select Employees of KeyCorp
with a tax-favorable savings vehicle, while providing KeyCorp with a means of
retaining the Employee's continued employment. It is the intention of KeyCorp,
and it is the understanding of those Participants covered under the Plan, that
the Plan is unfunded for tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended.

                                   ARTICLE II

                                   DEFINITIONS

      2.1 MEANING OF DEFINITIONS. For the purposes of this Plan, the following
words and phrases shall have the meanings hereinafter set forth, unless a
different meaning is clearly required by the context:

      (a)   "BENEFICIARY" shall mean the person, persons or entity entitled
            under Article VIII to receive any Plan benefits payable after a
            Participant's death.

      (b)   "BOARD" shall mean the Board of Directors of KeyCorp, the Board's
            Compensation and Organization Committee, or any other committee
            designated by the Board or a subcommittee designated by the Board's
            Compensation and Organization Committee.

      (c)   "CHANGE OF CONTROL" shall be deemed to have occurred if under a
            rabbi trust arrangement established by KeyCorp ("Trust"), as such
            Trust may from time to time be amended or substituted, the
            Corporation is required to fund the Trust because a "Change of
            Control", as defined in the Trust, has occurred on and after January
            1, 1999.

      (d)   "COMMON STOCK ACCOUNT" shall mean the investment account established
            under the Plan for bookkeeping purposes in which the Participant
            shall have his or her Signing Bonus Deferral credited. Signing Bonus
            Deferrals shall be credited based on a bookkeeping allocation of
            KeyCorp Common Shares (both whole and fractional rounded to the
            nearest one-hundredth of a share) ("Common Shares") which, on the
            date credited, shall be equal in market value (as determined under
            the last sentence of this Section 2.1(d)) to the amount of the
            Signing Bonus Deferral deferred. The Common Stock Account shall also
            reflect on a bookkeeping basis all dividends, gains, and losses
            attributable to such Common Shares. All Signing Bonus Deferrals
            credited to the Common Stock Account shall be based on the New York
            Stock Exchange's closing price for such Common Shares as of the day
            such Signing Bonus Deferral is credited to the Participant's Plan
            Account.
<PAGE>
      (e)   "CORPORATION" shall mean KeyCorp, an Ohio corporation, its corporate
            successors, and any corporation or corporations into or with which
            it may be merged or consolidated. "Date of Hire" shall mean the
            first day an Employee commences active employment with an Employer.

      (f)   "DETERMINATION DATE" shall mean the last business day of each
            calendar quarter.

      (g)   "DISABILITY" shall mean (1) the physical or mental disability of a
            permanent nature which prevents a Participant from performing the
            duties such Participant was employed to perform for his or her
            Employer when such disability commenced, (2) qualifies for
            disability benefits under the federal Social Security Act within 30
            months following the Participant's disability, and (3) qualifies the
            Participant for disability coverage under the KeyCorp Long Term
            Disability Plan.

      (h)   "DISTRIBUTION AGREEMENT" shall mean the executed agreement submitted
            by the Participant to the Corporation a minimum of twelve months
            prior to the Participant's vesting in his or her Signing Bonus
            Deferral which shall contain, in pertinent part, the Participant's
            distribution instructions for such Signing Bonus Deferral when
            vested. In the event the Participant elects or is required to
            transfer his or her Signing Bonus Deferral to the KeyCorp Deferred
            Compensation Plan, the Participant, at the time of such transfer,
            shall be required to execute a new Distribution Agreement which
            shall control the distribution of such transferred Plan benefits.

      (i)   "EMPLOYEE" shall mean a common law employee who is employed by an
            Employer.

      (j)   "EMPLOYER" shall mean the Corporation and any of its subsidiaries or
            affiliates, unless specifically excluded as an Employer for Plan
            purposes by written action by an officer of the Corporation. An
            Employer's Plan participation shall be subject to all conditions and
            requirements made by the Corporation, and each Employer shall be
            deemed to have appointed the Plan Administrator as its exclusive
            agent under the Plan as long as it continues as an Employer.

      (k)   "HARMFUL ACTIVITY" shall have occurred if the Participant shall do
            any one or more of the following:

            (i)   Use, publish, sell, trade or otherwise disclose Non-Public
                  Information of KeyCorp unless such prohibited activity was
                  inadvertent, done in good faith and did not cause significant
                  harm to KeyCorp.

            (ii)  After notice from KeyCorp, fail to return to KeyCorp any
                  document, data, or thing in his or her possession or to which
                  the Participant has access that may involve Non-Public
                  Information of KeyCorp.

            (iii) After notice from KeyCorp, fail to assign to KeyCorp all
                  right, title, and interest in and to any confidential or
                  non-confidential Intellectual Property which the Participant
                  created, in whole or in part, during employment with KeyCorp,
                  including, without limitation, copyrights, trademarks, service
                  marks, and patents in or to (or associated with) such
                  Intellectual Property.


                                       2
<PAGE>
            (iv)  After notice from KeyCorp, fail to agree to do any acts and
                  sign any document reasonably requested by KeyCorp to assign
                  and convey all right, title, and interest in and to any
                  confidential or non-confidential Intellectual Property which
                  the Participant created, in whole or in part, during
                  employment with KeyCorp, including, without limitation, the
                  signing of patent applications and assignments thereof.

            (v)   Upon the Participant's own behalf or upon behalf of any other
                  person or entity that competes or plans to compete with
                  KeyCorp, solicit or entice for employment or hire any KeyCorp
                  employee.

            (vi)  Upon the Participant's own behalf or upon behalf of any other
                  person or entity that competes or plans to compete with
                  KeyCorp, call upon, solicit, or do business with (other than
                  business which does not compete with any business conducted by
                  KeyCorp) any KeyCorp customer the Participant called upon,
                  solicited, interacted with, or became acquainted with, or
                  learned of through access to information (whether or not such
                  information is or was non-public) while the Participant was
                  employed at KeyCorp unless such prohibited activity was
                  inadvertent, done in good faith, and did not involve a
                  customer whom the Participant should have reasonably known was
                  a customer of KeyCorp.

            (vii) Upon the Participant's own behalf or upon behalf of any other
                  person or entity that competes or plans to compete with
                  KeyCorp, after notice from KeyCorp, continue to engage in any
                  business activity in competition with KeyCorp in the same or a
                  closely related activity that the Participant was engaged in
                  for KeyCorp during the one year period prior to the
                  termination of the Participant's employment.

                  For purposes of this Section 2.1(k) the term:

                  "INTELLECTUAL PROPERTY" shall mean any invention, idea,
                  product, method of doing business, market or business plan,
                  process, program, software, formula, method, work of
                  authorship, or other information, or thing relating to KeyCorp
                  or any of its businesses.

                  "NON-PUBLIC INFORMATION" shall mean, but is not limited to,
                  trade secrets, confidential processes, programs, software,
                  formulas, methods, business information or plans, financial
                  information, and listings of names (e.g., employees,
                  customers, and suppliers) that are developed, owned, utilized,
                  or maintained by an employer such as KeyCorp, and that of its
                  customers or suppliers, and that are not generally known by
                  the public.

                  "KEYCORP" shall include KeyCorp, its subsidiaries, and its
                  affiliates.

            (l)   "SIGNING BONUS DEFERRAL" shall mean all or any portion of the
                  Employee's employment-signing bonus as negotiated and agreed
                  to by and between the Employee and the Employer as an
                  inducement for the Employee's acceptance of employment with an
                  Employer which has been deferred to the Plan.


                                       3
<PAGE>
            (m)   "PARTICIPANT" shall mean an Employee who meets the eligibility
                  and participation requirements set forth in Section 3.1 of the
                  Plan.

            (n)   "PLAN" shall mean the KeyCorp Signing Bonus Plan with all
                  amendments hereafter made.

            (o)   "PLAN ACCOUNT" shall mean the bookkeeping account established
                  by the Corporation for each Plan Participant, which shall
                  reflect the Participant's Signing Bonus Deferral invested for
                  bookkeeping purposes in the Plan's Common Stock Account, with
                  all earnings, dividends, gains, and losses thereon. Plan
                  Accounts shall not constitute separate Plan funds or separate
                  Plan assets. Neither the maintenance of, nor the crediting of
                  amounts to such Plan Accounts shall be treated (i) as the
                  allocation of any Corporation assets to, or a segregation of
                  any Corporation assets in any such Plan Accounts, or (ii) as
                  otherwise creating a right in any person or Participant to
                  receive specific assets of the Corporation.

            (p)   "PLAN YEAR" shall mean the calendar year.

            (q)   "TERMINATION UNDER LIMITED CIRCUMSTANCES" shall mean the
                  termination (whether by the Participant or the Employer) of a
                  Participant's employment from his or her Employer, and from
                  any other Employer (i) under circumstances in which the
                  Participant is entitled to receive severance benefits or
                  salary continuation benefits under the KeyCorp Separation Pay
                  Plan, (ii) under circumstances in which the Participant is
                  entitled to severance benefits or salary continuation or
                  similar benefits under a change of control agreement or
                  employment agreement within two years after a change of
                  control (as defined by such agreement) has occurred, or (iii)
                  as otherwise expressly approved by the Corporation or the
                  Compensation and Organization Committee, in their sole
                  discretion.

            (r)   "VESTING SERVICE" for purposes of Section 5.1 of the Plan,
                  shall be calculated by measuring the period of service
                  commencing on the Employee's commencement date of active
                  employment with an Employer and ending on the Employee's
                  termination date and shall be computed based on each full
                  calendar month that the Employee is employed by an Employer.

            (s)   "TERMINATION OF EMPLOYMENT" shall mean the voluntary or
                  involuntary termination of the Participant's employment from
                  his or her Employer and from any other Employer, but shall not
                  include the Participant's Termination Under Limited
                  Circumstances or termination as a result of Disability or
                  death.

            2.2   PRONOUNS. The masculine pronoun wherever used herein includes
                  the feminine in any case so requiring, and the singular may
                  include the plural.


                                       4
<PAGE>
                                   ARTICLE III

                          ELIGIBILITY AND PARTICIPATION

      3.1 ELIGIBILITY AND PARTICIPATION. An Employee shall be required to
participate in the Plan, and shall automatically become a Plan Participant upon
the Employer's grant of an employment-signing bonus to the Employee with such
grant being conditioned on the requirement that all or a portion of such bonus
be deferred to the Plan.

      3.2 AUTOMATIC DEFERRAL REQUIREMENTS. An Employee meeting the eligibility
and participation requirements of Section 3.1 hereof, shall in accordance with
the negotiated terms of the Employee's employment with his or her Employer,
defer such portion (as determined by the Employer) of the Employee's
employment-signing bonus to the Plan.

                                   ARTICLE IV

                             SIGNING BONUS DEFERRALS

      4.1 CREDITING OF SIGNING BONUS DEFERRALS. All Signing Bonus Deferrals
shall be credited on a bookkeeping basis to a Plan Account established in the
Participant's name as of the payroll date on which the Participant's Signing
Bonus would have been payable to the Participant but for the deferral provisions
of the Plan and the Employer's deferral requirements mandated in conjunction
with the Employee's receipt of his or her signing bonus.

      4.2 INVESTMENT OF SIGNING BONUS DEFERRALS. Signing Bonus Deferrals shall
be automatically invested on a bookkeeping basis in the Plan's Common Stock
Account.

      4.3 DETERMINATION OF AMOUNT. The Plan Administrator shall verify the
amount of each Participant's Signing Bonus Deferral, with all dividends, and
earnings, if any, to be credited to each Participant's Plan Account in
accordance with the provisions of the Plan. The reasonable and equitable
decision of the Plan Administrator as to the value of each Plan Account shall be
conclusive and binding upon all Participants and the Beneficiary of each
deceased Participant having any interest, direct or indirect in the
Participant's Plan Account. As soon as reasonably practicable after the close of
the Plan Year, the Corporation shall send to each Participant an itemized
accounting statement that shall reflect the Participant's Plan Account balance.

      4.4 CORPORATE ASSETS. All Signing Bonus Deferrals, dividends, earnings and
any other gains and losses credited to each Participant's Plan Account on a
bookkeeping basis, remain the assets and property of the Corporation, which
shall be subject to distribution to the Participant only in accordance with
Articles VI, IX and X of the Plan. Distributions made under the Plan shall be in
the form of Common Shares or as a plan-to-plan transfer to the KeyCorp Deferred
Compensation Plan as provided for in Article VI hereof. Participants and
Beneficiaries shall have the status of general unsecured creditors of the
Corporation. Nothing contained in the Plan shall create, or be construed as
creating a trust of any kind or any other fiduciary relationship between the
Participant, the Corporation, or any other person. It is the intention of the
Corporation and it is the understanding of the Participant that the Plan be
unfunded for tax purposes and for purposes of ERISA.


                                       5
<PAGE>
      4.5 NO PRESENT INTEREST. Subject to any federal statute to the contrary,
no right or benefit under the Plan and no right or interest in each
Participant's Plan Account shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance, or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber, or charge any right or benefit under
the Plan, or Participant's Plan Account shall be void. No right, interest, or
benefit under the Plan or Participant's Plan Account shall be liable for or
subject to the debts, contracts, liabilities, or torts of the Participant or
Beneficiary. If the Participant or Beneficiary becomes bankrupt or attempts to
alienate, sell, assign, pledge, encumber, or charge any right under the Plan or
Participant's Plan Account, such attempt shall be void and unenforceable.

                                    ARTICLE V

                                     VESTING

      5.1 VESTING IN PARTICIPANT SIGNING BONUS DEFERRALS. The calculation of a
Participant's vested interest in his or her Signing Bonus Deferral credited on a
bookkeeping basis to the Participant's Plan Account shall be measured from the
Participant's commencement date of active employment with an Employer. A
Participant shall become vested in his or her Signing Bonus Deferral with all
earnings, gains, and losses thereon after three full years of Vesting Service.
Alternatively, at the Employer's election, with such election having been
clearly communicated to the Employee prior to the Employee's date of hire with
the Employer, a Participant shall become vested in his or her Signing Bonus
Deferral under the following three-year graded vesting schedule (or such other
three year vesting schedule as is expressly agreed to in writing by the Employee
and Employer prior to the Employee's date of hire):

            (a) From the date the Participant's Signing Bonus Deferral is
            credited to the Participant's Plan Account ("Deferral Date") until
            one full calendar year from the deferral
            date.............................................................0%.

            (b) One full calendar year from the Deferral Date of the
            Participant's Signing Bonus Deferral to the Plan but less than two
            full calendar years from such Deferral
            Date............................................................33%.

            (c) Two full calendar years from the Deferral Date of the
            Participant's Signing Bonus Deferral to the Plan but less than three
            full calendar years from such Deferral
            Date............................................................66%.

            (d) Three full calendar years from the Deferral Date of the
            Participant's Signing Bonus Deferral to the
            Plan...........................................................100%.

Notwithstanding the foregoing provisions of this Section 5.1, however, a
Participant shall become fully vested in his or her Signing Bonus Deferral as
credited on a bookkeeping basis to the Participant's Plan Account upon the
Participant's Termination Under Limited Circumstances, Disability or death.

      5.2 FORFEITURE OF THE PARTICIPANT'S SIGNING BONUS DEFERRAL.
Notwithstanding any provision of the Plan to the contrary, upon the
Participant's Termination of Employment, the Participant shall automatically
forfeit his or her Signing Bonus Deferral that has been credited on a
bookkeeping basis to the Participant's Plan Account with all earnings and gains
thereon that have not vested in accordance with the vesting provisions of
Section 5.1 of the Plan as of the Participant's last day of employment.


                                       6
<PAGE>
                                   ARTICLE VI

                          DISTRIBUTION OF PLAN BENEFITS

      6.1 DISTRIBUTION OF DEFERRAL. A Participant's vested Signing Bonus
Deferral with all earnings and gains thereon, shall be distributed to the
Participant as of the Determination Date concurrently with or immediately
following the Participant's vesting in his or her Plan benefit in accordance
with the distribution directions provided by the Participant in his or her
Distribution Agreement, as follows:

            (a)   as a single lump sum distribution of Common Shares, or

            (b)   as a plan-to-plan transfer of the Participant's vested
                  bookkeeping Plan Account balance to the KeyCorp Deferred
                  Compensation Plan's Common Stock Account.

Subject to the withholding provisions of Section 6.4 hereof, lump sum
distributions from the Plan shall be made in Common Shares based on the
bookkeeping number of whole and fractional Common Shares attributable to the
Participant's vested Signing Bonus Deferral maintained in the Plan's Common
Stock Account as of the Determination Date concurrently with or immediately
preceding the date of such distribution. Participants' Plan Account balances
transferred to the KeyCorp Deferred Compensation Plan's Common Stock Account
will not be subject to investment diversification and/or reallocation under the
KeyCorp Deferred Compensation Plan.

Notwithstanding the foregoing provisions of this Section 6.1, however, in the
event a Participant who is subject to the Corporation Stock Ownership Guidelines
fails to meet his or her Stock Ownership Guidelines requirements at the time of
his or her Plan distribution and the Participant has elected to receive a lump
sum distribution from the Plan, the Corporation in its discretion may (1)
withhold such portion of the Participant's lump sum distribution of Common
Shares until the Participant has otherwise met his or her obligations under the
Corporation Stock Ownership Guidelines, or (2) issue to the Participant
restricted Common Shares whose transferability will be restricted until the
Participant otherwise meets his or her obligations under the Stock Ownership
Guidelines.

      6.2 DISTRIBUTIONS FOLLOWING TERMINATION UNDER LIMITED CIRCUMSTANCES,
DISABILITY OR DEATH. Upon the Participant's Termination Under Limited
Circumstances, termination of the Participant's employment due to Disability or
termination of the Participant's employment due to death, the Participant's
Signing Bonus Deferral, as credited to the Participant's Plan Account with all
earnings, gains, and losses thereon shall become immediately vested and shall be
distributed to the Participant or the Participant's Beneficiary in a single lump
sum distribution of Common Shares, net of withholding.

      6.3 FORFEITURE FOLLOWING TERMINATION OF EMPLOYMENT. Upon the Participant's
Termination of Employment, the Participant's non-vested Signing Bonus Deferral,
as credited to the Participant's Plan Account with all earnings, gains, and
losses thereon shall be forfeited by the Participant as of his or her last day
of employment.

      6.4 WITHHOLDING. The withholding of taxes with respect to the
Participant's Signing Bonus Deferral with all earnings and gains thereon shall
be made at such time as it becomes required by any state, federal or local law;
such taxes shall be withheld from the Participant's Signing Bonus Deferral in


                                       7
<PAGE>
accordance with applicable law and shall be paid by reducing the number of
Common Shares to be distributed to the Participant based on such Common Shares'
market value as of the distribution date.

      6.5 DISTRIBUTION LIMITATION. If the Corporation determines that a Signing
Bonus Deferral with all earnings and gains thereon:

            1. would not be deductible by the Corporation if paid in accordance
      with the distribution instructions specified by the Participant in his or
      her Distribution Agreement by reason of the disallowance rules of Section
      162(m) of the Code, but


            2. would be deductible by the Corporation if deferred and paid in a
      later Plan Year, the Corporation reserves the right to defer the
      distribution of all or any portion of such Participant's Signing Bonus
      Deferral with all earnings, gains or loses thereon until such time as the
      Corporation determines that the distribution of all or any portion of such
      Participant's Signing Bonus Deferral will be payable without the
      disallowance of the deduction prescribed by Code Section 162(m)
      ("Deferrals"). Such unpaid Deferral shall be transferred to the Deferred
      Compensation Plan and shall be held in the KeyCorp Deferred Compensation
      Plan's Common Stock Account and the provisions of the KeyCorp Deferred
      Compensation Plan thereafter shall become applicable with regard to such
      Deferral.

      Notwithstanding any other provision of this Section 6.5, however, a
Participant's Signing Bonus Deferral transferred to the KeyCorp Deferred
Compensation Plan together with all earnings, gains, and losses thereon, shall
be distributed to the Participant no later than April 15 of the year following
the employment termination date of the Participant, regardless of the
deductibility of such distribution.

      6.6 FACILITY OF PAYMENT. If it is found that any individual to whom an
amount is payable hereunder is incapable of attending to his or her financial
affairs because of any mental or physical condition, including the infirmities
of advanced age, such amount (unless prior claim therefor shall have been made
by a duly qualified guardian or other legal representative) may, in the
discretion of the Corporation, be paid to another person for the use or benefit
of the individual found incapable of attending to his or her financial affairs
or in satisfaction of legal obligations incurred by or on behalf of such
individual. Any such payment shall be charged to the Participant's Plan Account
from which any such payment would otherwise have been paid to the individual
found incapable of attending to his or her financial affairs, and shall be a
complete discharge of any liability therefor under the Plan.

                                   ARTICLE VII

                             BENEFICIARY DESIGNATION

      7.1 BENEFICIARY DESIGNATION. Subject to Section 7.3 hereof, each
Participant shall have the right, at any time, to designate one or more persons
or an entity as Beneficiary (both primary as well as secondary) to whom benefits
under this Plan shall be paid in the event of Participant's death prior to
complete distribution of the Participant's vested Plan Account. Each Beneficiary
designation shall be in a written form prescribed by the Corporation and shall
be effective only when filed with the Corporation during the Participant's
lifetime.

      7.2 CHANGING BENEFICIARY. Any Beneficiary designation may be changed by
the Participant without the consent of the previously named Beneficiary by the
Participant's filing of a new designation


                                       8
<PAGE>
with the Corporation. The filing of a new designation shall cancel all
designations previously filed by the Participant.

      7.3 NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
Beneficiary in the manner provided above, if the designation is void, or if the
Beneficiary (including all contingent Beneficiaries) designated by a deceased
Participant dies before the Participant, the Participant's Beneficiary shall be
the Participant's estate.

                                  ARTICLE VIII

                                 ADMINISTRATION

      8.1 ADMINISTRATION. The Corporation, as the "Plan Administrator" shall be
responsible for the general administration of the Plan, for carrying out the
provisions hereof, and for making payments hereunder. The Corporation shall have
the sole and absolute discretionary authority and power to carry out the
provisions of the Plan, including, but not limited to, the authority and power
(a) to determine all questions relating to the eligibility for and the amount of
any benefit to be paid under the Plan, (b) to determine all questions pertaining
to claims for benefits and procedures for claim review, (c) to resolve all other
questions arising under the Plan, including any questions of construction and/or
interpretation, and (d) to take such further action as the Corporation shall
deem necessary or advisable in the administration of the Plan. All findings,
decisions, and determinations of any kind made by the Plan Administrator shall
not be disturbed unless the Plan Administrator has acted in an arbitrary and
capricious manner. Subject to the requirements of law, the Plan Administrator
shall be the sole judge of the standard of proof required in any claim for
benefits and in any determination of eligibility for a benefit. All decisions of
the Plan Administrator shall be final and binding on all parties. The
Corporation may employ such attorneys, investment counsel, agents, and
accountants as it may deem necessary or advisable to assist it in carrying out
its duties hereunder. The actions taken and the decisions made by the
Corporation hereunder shall be final and binding upon all interested parties
subject, however, to the provisions of Section 8.2. The Plan Year, for purposes
of Plan administration, shall be the calendar year.

      8.2 CLAIMS REVIEW PROCEDURE. Whenever the Plan Administrator decides for
whatever reason to deny, whether in whole or in part, a claim for benefits under
this Plan filed by any person (herein referred to as the "Claimant"), the Plan
Administrator shall transmit a written notice of its decision to the Claimant,
which notice shall be written in a manner calculated to be understood by the
Claimant and shall contain a statement of the specific reasons for the denial of
the claim and a statement advising the Claimant that, within 60 days of the date
on which he or she receives such notice, he or she may obtain review of the
decision of the Plan Administrator in accordance with the procedures hereinafter
set forth. Within such 60-day period, the Claimant or his or her authorized
representative may request that the claim denial be reviewed by filing with the
Plan Administrator a written request therefor, which request shall contain the
following information:

      (a)   the date on which the request was filed with the Plan Administrator;
            provided, however, that the date on which the request for review was
            in fact filed with the Plan Administrator shall control in the event
            that the date of the actual filing is later than the date stated by
            the Claimant pursuant to this paragraph (a);


                                       9
<PAGE>
      (b)   the specific portions of the denial of his or her claim which the
            Claimant requests the Plan Administrator to review;

      (c)   a statement by the Claimant setting forth the basis upon which he or
            she believes the Plan Administrator should reverse its previous
            denial of the claim and accept the claim as made; and

      (d)   any written material which the Claimant desires the Plan
            Administrator to examine in its consideration of his or her position
            as stated pursuant to paragraph (b) above.

      In accordance with this Section 8.2, if the Claimant requests a review of
the claim decision, such review shall be made by the Plan Administrator, who
shall, within sixty (60) days after receipt of the request form, review and
render a written decision on the claim containing the specific reasons for the
decision including reference to Plan provisions upon which the decision is
based. All findings, decisions, and determinations of any kind made by the Plan
Administrator shall not be modified unless the Plan Administrator has acted in
an arbitrary and capricious manner. Subject to the requirements of law, the Plan
Administrator shall be the sole judge of the standard of proof required in any
claim for benefits, and any determination of eligibility for a benefit. All
decisions of the Plan Administrator shall be binding on the claimant and upon
all other persons or entities. If the Participant or Beneficiary shall not file
written notice with the Plan Administrator at the times set forth above, such
individual shall have waived all benefits under the Plan other than as already
provided, if any, under the Plan.

                                   ARTICLE IX

                        AMENDMENT AND TERMINATION OF PLAN

      9.1 RESERVATION OF RIGHTS. The Corporation reserves the right to terminate
the Plan at any time by action of the Board of Directors of the Corporation, or
any duly authorized committee thereof, and to modify or amend the Plan, in whole
or in part, at any time and for any reason, subject to the following:

      (a)   PRESERVATION OF ACCOUNT BALANCE. No termination, amendment, or
            modification of the Plan shall reduce (i) the amount of a
            Participant's Signing Bonus Deferral, and (ii) all earnings and
            gains on such Participant's Signing Bonus Deferral that have accrued
            up to the effective date of the termination, amendment, or
            modification.

      (b)   CHANGES IN EARNINGS RATE. No amendment or modification of the Plan
            shall reduce the rate of earnings to be credited on a Participant's
            Signing Bonus Deferral with all earnings and gains accrued thereon
            under the Common Stock Account until the close of the applicable
            Plan Year in which such amendment or modification is made.

      9.2 EFFECT OF PLAN TERMINATION. If the Corporation terminates the Plan,
either in whole or in part, the following will apply:


      (a)   PARTIAL TERMINATION. The Corporation may partially terminate the
            Plan by instructing the Plan Administrator to not accept any
            additional Signing Bonus Deferrals. If such a partial termination
            occurs, the Plan shall continue to operate and to be effective with


                                       10
<PAGE>
            regard to those Participant's Signing Bonus Deferrals deferred prior
            to the effective date of such partial termination.

      (b)   COMPLETE TERMINATION. The Corporation may completely terminate the
            Plan by instructing the Plan Administrator to not accept any
            additional Participant Deferrals and to fully vest all Participants'
            Plan Account balances. If such a complete termination occurs, the
            Plan shall cease to operate and the Plan Administrator shall
            distribute each Participant's Plan Account balance. Participants'
            distributions shall be made in a lump sum distribution of Common
            Shares, net of withholding, based on the value of each Participant's
            Plan Account balance as of the Participant's Plan distribution date.

      Notwithstanding the foregoing provisions of this Section 9.2, however, in
the event a Participant who is subject to the Corporation Stock Ownership
Guidelines fails to meet his or her Stock Ownership Guidelines requirements at
the time of his or her Plan distribution and the Participant has elected to
receive a lump sum distribution from the Plan, the Corporation in its discretion
may (1) withhold such portion of the Participant's lump sum distribution of
Common Shares until the Participant has otherwise met his or her obligations
under the Corporation Stock Ownership Guidelines, or (2) issue to the
Participant restricted Common Shares whose transferability will be restricted
until the Participant otherwise meets his or her obligations under the Stock
Ownership Guidelines.

                                    ARTICLE X

                                CHANGE OF CONTROL

      10.1 CHANGE OF CONTROL. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change of Control as defined in accordance with
Section 2.1(c) of the Plan, no amendment or modification of the Plan may be made
at any time on or after such Change of Control (1) to reduce or modify a
Participant's Pre-Change of Control Account Balance, or (2) to reduce or modify
the Common Stock Accounts' method of calculating earnings, gains, and/or losses
on the Participant's Pre-Change of Control Account Balance. For purposes of this
Section 10.1, the term "Pre-Change of Control Account Balance" shall mean, with
regard to any Plan Participant, the aggregate undistributed amount of the
Participant's Signing Bonus Deferral with all earnings, gains, and losses
thereon which are credited to the Participant's Plan Account through the close
of the calendar year in which such Change of Control occurs.

      10.2 COMMON STOCK CONVERSION. In the event of a transaction or occurrence
in which the Common Shares of the Corporation are converted into or exchanged
for securities, cash and/or other property as a result of any capital
reorganization or reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with or into another corporation or
entity, or the sale of all or substantially all of its assets to another
corporation or entity, the Corporation shall cause the Common Stock Account to
reflect on a bookkeeping basis the securities, cash and other property that
would have been received in such reorganization, reclassification,
consolidation, merger or sale in an equivalent amount of Common Shares equal to
the balance in the Common Stock Account and, from and after such reorganization,
reclassification, consolidation, merger or sale, the Common Stock Account shall
reflect on a bookkeeping basis all dividends, interest, earnings and losses
attributable to such securities, cash, and other property.


                                       11
<PAGE>
      10.3 AMENDMENT IN THE EVENT OF A CHANGE OF CONTROL. On and after a Change
of Control, the provisions of Article II, Article IV, Article V, Article VI,
Article VII, Article VIII, Article IX, and this Article X, may not be amended or
modified as such Sections and Articles apply with regard to the Participants'
Pre-Change of Control Account Balances.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

      11.1 UNFUNDED PLAN. This Plan is an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of "management or
highly-compensated employees."

      11.2 NO COMMITMENT AS TO EMPLOYMENT. Nothing herein contained shall be
construed as a commitment or agreement upon the part of any Employee hereunder
to continue his or her employment with an Employer, and nothing herein contained
shall be construed as a commitment on the part of any Employer to continue the
employment, rate of compensation, or terms and conditions of employment of any
Employee hereunder for any period. All Participants shall remain subject to
discharge to the same extent as if the Plan had never been put into effect.

      11.3 BENEFITS. Nothing in the Plan shall be construed to confer any right
or claim upon any person, firm, or corporation other than the Participants,
former Participants, and Beneficiaries.

      11.4 ABSENCE OF LIABILITY. No member of the Board of Directors of the
Corporation or a subsidiary or committee authorized by the Board of Directors,
or any officer of the Corporation or a subsidiary or officer of a subsidiary
shall be liable for any act or action hereunder, whether of commission or
omission, taken by any other member, or by any officer, agent, or Employee,
except in circumstances involving bad faith or willful misconduct, for anything
done or omitted to be done.

      11.5 EXPENSES. The expenses of administration of the Plan shall be paid by
the Corporation.

      11.6 PRECEDENT. Except as otherwise specifically agreed to by the
Corporation in writing, no action taken in accordance with the Plan by the
Corporation shall be construed or relied upon as a precedent for similar action
under similar circumstances.

      11.7 WITHHOLDING. The Corporation shall withhold any tax which the
Corporation in its discretion deems necessary to be withheld from any payment to
any Participant, former Participant, or Beneficiary hereunder, by reason of any
present or future law.

      11.8 VALIDITY OF PLAN. The validity of the Plan shall be determined and
the Plan shall be construed and interpreted in accordance with the laws of the
State of Ohio. The invalidity or illegality of any provision of the Plan shall
not affect the validity or legality of any other part thereof.

      11.9 PARTIES BOUND. The Plan shall be binding upon the Employers,
Participants, former Participants, and Beneficiaries hereunder, and, as the case
may be, the heirs, executors, administrators, successors, and assigns of each of
them.

      11.10 HEADINGS. All headings used in the Plan are for convenience of
reference only and are not part of the substance of the Plan.


                                       12
<PAGE>
      11.11 DUTY TO FURNISH INFORMATION. The Corporation shall furnish to each
Participant, former Participant, or Beneficiary any documents, reports, returns,
statements, or other information that it reasonably deems necessary to perform
its duties imposed hereunder or otherwise imposed by law.

      11.12 TRUST FUND. At its discretion, the Corporation may establish one or
more trusts, with such trustees as the Corporation may approve, for the purpose
of providing for the payment of benefits owed under the Plan. Although such a
trust may be irrevocable, in the event of insolvency or bankruptcy of the
Corporation, such assets will be subject to the claims of the Corporation's
general creditors. To the extent any benefits provided under the Plan are paid
from any such trust, the Employer shall have no further obligation to pay them.
If not paid from the trust, such benefits shall remain the obligation of the
Employer.

      11.13 VALIDITY. In case any provision of this Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.

      11.14 NOTICE. Any notice required or permitted under the Plan shall be
deemed sufficiently provided if such notice is in writing and hand delivered or
sent by registered or certified mail. Such notice shall be deemed given as of
the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark or on the receipt for registration or certification. Mailed notice
to the Corporation shall be directed to the Corporation's address, attention:
KeyCorp Compensation and Benefits Department. Mailed notice to a Participant or
Beneficiary shall be directed to the individual's last known address in the
Employer's records.

      11.15 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of each Employer and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity, which shall,
whether by merger, consolidation, purchase or otherwise, acquire all or
substantially all of the business and assets of an Employer.

                                         KEYCORP

                                         By: /s/ Thomas E. Helfrich
                                            ------------------------------------

                                         Title: Executive Vice President
                                               ---------------------------------


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.33
<SEQUENCE>8
<FILENAME>l97974aexv10w33.txt
<DESCRIPTION>EX-10.33 FIRST AMENDMENT TO SIGNING BONUS PLAN
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.33

                             FIRST AMENDMENT TO THE
                           KEYCORP SIGNING BONUS PLAN

         WHEREAS, KeyCorp has established the KeyCorp Signing Bonus Plan
("Plan") for certain employees of KeyCorp, and

         WHEREAS, the Board of Directors of KeyCorp has authorized its
Compensation and Organization Committee to permit amendments to the Plan, and

         WHEREAS, the Compensation and Organization Committee of the Board of
Directors of KeyCorp has determined it desirable to amend the Plan and has
accordingly authorized the execution of the First Amendment,

         NOW, THEREFORE, pursuant to such action of the Compensation and
Organization Committee, the Plan is hereby amended as follows:

         1.       Section 6.1 of the Plan is amended to delete it in its
entirety and to substitute therefore the following:

                  "6.1 DISTRIBUTION OF DEFERRAL.  A Participant's vested Signing
         Bonus Deferral with all earnings and gains thereon, shall be
         distributed to the Participant as of the Determination Date
         concurrently with or immediately following the Participant's vesting in
         his or her Plan benefit in accordance with the distribution directions
         provided by the Participant in his or her Distribution Agreement, as
         follows:

                  (a)    as a single lump sum distribution of Common Shares, or

                  (b)    if the participant is otherwise eligible to participate
                         in the KeyCorp Deferred Compensation Plan based on the
                         Participant's job grade (or job grade equivalent) at
                         the time of his or her Signing Bonus Deferral, then
                         such Participant may make a plan-to-plan transfer of
                         the Participant's vested bookkeeping Plan Account
                         balance to the KeyCorp Deferred Compensation Plan's
                         Common Stock Account.

         Subject to the withholding provisions of Section 6.4 hereof,
         distributions from the Plan shall be made in Common Shares based on the
         bookkeeping number of whole and fractional Common Shares attributable
         to the Participant's vested Signing Bonus Deferral maintained in the
         Plan's Common Stock Account as of the Determination Date concurrently
         with or immediately preceeding the date of such distribution.
         Participants' Plan Account balances transferred to the KeyCorp Deferred
         Compensation Plan's Common Stock Account will not be subject to
         investment diversification and/or reallocation under the KeyCorp
         Deferred Compensation Plan.

         Notwithstanding the foregoing provisions of this Section 6.1, however,
         in the event a Participant who is subject to the Corporation Stock
         Ownership Guidelines fails to meet his or her Stock Ownership
         Guidelines requirements at the time of his or her Plan distribution,
         and the Participant has elected to receive a lump sum distribution from
         the Plan, the Corporation in its discretion may (1) withhold such
         portion of the Participant's lump sum distribution of Common Shares
         until the Participant has otherwise met his or her obligations under
         the Corporation Stock Ownership Guidelines, or (2) issue to the
         Participant restricted Common Shares whose transferability will be

<PAGE>

         restricted until the Participant otherwise meets his or her obligations
         under the Stock Ownership Guidelines."

         2.       Except as specifically amended herein, the Plan shall remain
in full force and effect.

         IN WITNESS WHEREOF, KeyCorp has caused this First Amendment to the Plan
to be executed by its duly authorized officer to be effective as of the first
day of January, 2001.

                                                        KEYCORP

                                        By:   /s/ Steven N. Bulloch
                                            ----------------------------------

                                        Title:  Assistant Secretary
                                               ------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.34
<SEQUENCE>9
<FILENAME>l97974aexv10w34.txt
<DESCRIPTION>EX-10.34 KEY ASSET MGMNT LONG TERM INCENTIVE PLAN
<TEXT>
<PAGE>


                                                                   EXHIBIT 10.34

                                     KEYCORP
                           1998 INCENTIVE COMPENSATION
                  KEY ASSET MANAGEMENT LONG TERM INCENTIVE PLAN
                                  ("KAM PLAN")
- ------------------------------------------------------------------------------
SECTION 1:  PLAN SUMMARY
OBJECTIVE:
To recognize and reward existing key contributors and other selected new hires
in the KAM organization for the profitable growth and success of our asset
management business over a three year performance period.

EFFECTIVE DATE:
This plan is effective January 1, 1998 through December 31, 2000, unless
otherwise revised or revoked.

ELIGIBLE POSITIONS:
<TABLE>
<S>                                            <C>
- ---------------------------------------------------------------------------------------
                                               Senior Managing Directors and selected
Eligible Positions:                            Managing Directors. (See Attachment A)
- ---------------------------------------------------------------------------------------
Number of Employees Eligible:                  17 (As of 1998)
- ---------------------------------------------------------------------------------------
</TABLE>

PLAN FUNDING AND AWARD ALLOCATION MEASURES:
Plan funding is based on net operating income inclusive of long-term award
costs. Participants will receive target awards for meeting target NOI goals.
Awards in excess of target will be distributed to participants on a
discretionary basis.

The plan provides value to plan participants through two distinct components.
The first component is a long-term cash award which provides participants with a
chance to share in the growth created directly by the KAM group. This cash award
represents two thirds of the total long-term incentive opportunity for plan
participants. Phantom stock is the second component and is intended to represent
one third of the total incentive opportunity for plan participants. Incentive
calculations are detailed in Section 2.

PLAN ADMINISTRATOR:
The Plan administrator will prepare and present award recommendations to an
independent Compensation Committee comprised of H. Meyer, Y. Heisler, P.
Jamieson and L. Gilmer, who will review and approve the recommendation list for
KAM long term awards and will have final authority to modify/approve such
awards.

<TABLE>
<CAPTION>
INDEX:
<S>                                                                       <C>
Plan Summary............................................................  Section 1
Plan Funding and award allocation measures..............................  Section 2
Other Terms, Rules and Conditions.......................................  Section 3
Definitions.............................................................  Section 4
Example.................................................................  Attachment C
APPROVALS:
</TABLE>

<TABLE>
<S>                                            <C>
/s/ Yank Heisler          10/19/98             /s/ Henry L. Meyer II          10/19/98
- ---------------------------------------        -----------------------------------------
Executive Sponsor           Date               Executive Sponsor                Date
Yank Heisler                                   Henry Meyer

/s/ W. Lawrence Gilmer    10/7/98              /s/ Patty Jamieson             10/5/98
- ---------------------------------------        -----------------------------------------
Incentive Compensation      Date               Finance                          Date
W. Lawrence Gilmer                             Patty Jamieson
</TABLE>



                                       1
<PAGE>


SECTION 2:

PLAN FUNDING AND AWARD ALLOCATION MEASURES.
The KAM Plan is self-funded, meaning, the participants must first meet the net
operating income targets and fund the cost of long-term incentive awards before
any long-term awards are paid out. See Attachment B for the 1998-2000 plan cycle
financials.

CALCULATING METHODOLOGY
At the beginning of the 3 year cycle, cumulative 3 year net operating income
(NOI) growth targets will be set. Performance against these goals will be
measured at the end of the cycle and target award will be paid for meeting the
growth target. If the growth target has been achieved, participants will share
in the excess growth according to the following schedule:

<TABLE>
<CAPTION>
        ---------------------------------------------------------------------------
                PERFORMANCE AGAINST
                    GROWTH TARGET                        AMOUNT OF AWARD
        ---------------------------------------------------------------------------
<S>                                                <C>
        ---------------------------------------------------------------------------
                        100%                               Target award
        ---------------------------------------------------------------------------
                                                    Target award, plus 10% of
                   >100% and <105%                      excess NOI dollars
                             -
        ---------------------------------------------------------------------------
                                                    Target award, plus 20% of
                                                        excess incremental
                        >105%                         NOI dollars over 105%
        ---------------------------------------------------------------------------
</TABLE>

Target awards for each participant will be set at the beginning of the cycle and
will generally be based on market data for that position. There is no cap on the
maximum award amount that can be paid under the plan.

DISTRIBUTION OF POOL
If the NOI growth target has been achieved, each participant shall receive their
target cash award. Any excess pool resulting from performance above targeted NOI
will be distributed on a discretionary basis. The award recommendations will be
made by KAM senior management and will be presented to the Compensation
Committee, as defined on Page 1. Dividends on the deferred shares will be
accrued during the deferral period. Cash awards will be paid out as soon as
possible after the end of the 3 year cycle.

The phantom stock component of this long-term plan will be valued at the time of
the award at a price consistent with the average of the high and low of KeyCorp
stock as reported on the NYSE. Once awarded, these phantom stock units will vest
in two increments, 50% after 1 year from the date of the award and 50% after 2
years from the date of the award. Distributions to participants will be in
actual shares of KeyCorp stock. The Committee reserves the right to accelerate
vesting of the phantom stock as they see fit.

It is intended that the value of the phantom stock to KAM participants plus any
long-term cash awards constitute the target total long-term opportunity relative
to market. Any upside award above target will be delivered in the discretionary
cash award.

PARTICIPATION
The Committee reserves the right to terminate a Participant's participation in
the Plan during the 3 year cycle if the Participant's job responsibilities
and/or performance no longer warrants such participation. In this event, the
Participant will receive a prorated award at the end of the 3 years cycle, based
on the full number of months of participation.

                                       2
<PAGE>


SECTION 3:
OTHER TERMS, RULES AND CONDITIONS:

3.1     INTENT OF THE PLAN:
        The KAM Plan was developed to incent and reward eligible Plan
        Participants for meeting and exceeding the performance objectives of
        their respective employment positions with KeyCorp while increasing
        KeyCorp's revenues and business opportunities. ACCORDINGLY, THE
        EXPRESSED INTENT OF THE PLAN IS TO BENEFIT BOTH KEYCORP AND KAM PLAN
        PARTICIPANTS.

3.2     ENTITLEMENT OF PLAN BENEFITS:
        The Participant acknowledges the Participant maintains no present
        interest or entitlement to Plan benefits other than those determined by
        KeyCorp and the Compensation Committee to be payable under the terms of
        the Plan for which payment has been made.

3.3     CHANGE OF EVENTS:
        In the event of a material change of events such as a merger, a
        significant increase in allocated operating expense, or a major market
        change (up or down more than 20%), that the KAM group has no control
        over, the Committee reserves the right to increase or decrease the NOI
        targets as necessary to maintain the integrity of the Plan for the
        remainder of the three year cycle. Any changes to the NOI target would
        be based on overall KAM performance relative to the external market.

3.4     NEW HIRES, PROMOTED, REACTIVATED, TRANSFERRED-IN EMPLOYEES:
        Newly hired, promoted, reactivated and transferred-in employees will be
        eligible to participate in this Plan on an annual basis starting the
        first full year of employment. Participants would be eligible for a
        prorated share of any awards made under this plan.

3.5     RESPONSIBILITIES FOR CALCULATIONS AND PLAN PAYMENTS:
        Responsibilities for Plan administration will reside within KAM. KAM
        Senior Management will be responsible for calculating and submitting
        recommendations to the Compensation Committee. The KAM group will be
        responsible for submitting incentive payment requests.

3.6     PLAN ADMINISTRATION:
        The Compensation Committee, which shall be the "Administrator" of the
        Plan, shall be responsible for the general administration of the Plan,
        for carrying out the provisions hereof, and for making payments
        hereunder. The Compensation Committee shall have the sole and absolute
        discretionary authority and power to carry out the provisions of the
        Plan, including, but not limited to, the authority and power (a) to
        determine all questions relating to the eligibility for and the amount
        of any benefit to be paid under the Plan, (b) to determine all questions
        pertaining to claims for benefits under the Plan, (c) to resolve all
        other questions arising under the Plan, including any questions of
        construction and/or interpretations, and (d) to take such further action
        as the Compensation Committee shall deem necessary or advisable in the
        administration of the Plan. All finding, decisions and determinations of
        any kind made by the Plan Administrator shall not be disturbed. Subject
        to the requirements of law, the Plan Administrator shall be the sole
        judge of the standard of proof required in any claim for benefit and in
        any determination of eligibility for a benefit. All decisions of the
        Plan Administrator shall be final and binding on all parties.




                                       3
<PAGE>


SECTION 3:   cont'd.
OTHER TERMS, RULES AND CONDITIONS:

3.7     AMENDMENT AND TERMINATION:
        KeyCorp reserves the right to amend or terminate this Plan at any time,
        for any reason.

3.8     ASSIGNMENT OF INCENTIVE AWARDS:
        No benefits received under the Plan shall be subject to transfer,
        assignment, or encumbrance in any manner, either by the Participant or
        any other person. Any attempt by the Participant to assign his or her
        benefit thereunder shall result in Participant's forfeiture of such Plan
        benefits.

3.9.    INTEREST IN PLAN AWARDS:
        With respect to payments of awards under the Plan, Participants shall
        have rights against KeyCorp only as general, unsecured creditors.

3.10    DEATH, DISABILITY, LEAVE OF ABSENCE, OUT-PLACEMENT,
        RETIREMENT, AND TRANSFERS:
        In the event of a Participant's death, disability, medical leave of
        absence, out-placement, retirement or transfer, the Plan Administrator
        and the Compensation Committee will determine what incentives, if any,
        are payable to the Participant under the terms of the Plan.

3.11    TERMINATION:
        Termination (voluntary or involuntary) of a Participant's employment
        from KeyCorp for any reason other than death, disability, medical leave
        of absence, outplacement or retirement during the performance cycle,
        will result in the forfeiture of any potential awards.

3.12    NO COMMITMENT AS TO EMPLOYMENT:
        Nothing herein contained shall be construed as a commitment or agreement
        upon the part of any Participant hereunder to continue his or her
        employment with KeyCorp, and nothing herein contained shall be construed
        as a commitment on the part of KeyCorp to continue the employment, rate
        of compensation or terms and conditions of employment of any Participant
        hereunder for any period. All Participants shall remain subject to
        discharge to the same extent as if the Plan had never been put into
        effect.

3.13    PRECEDENT:
        Except as otherwise specifically agreed to by KeyCorp in writing, no
        action taken in accordance with the Plan by KeyCorp shall be construed
        or relied upon as a precedent for similar action under similar
        circumstances.




                                       4
<PAGE>


SECTION 4:

DEFINITIONS:
For purposes of this incentive plan, the following words and phrases shall have
the meaning indicated.

COMPENSATION COMMITTEE:
An independent committee comprised of representatives from Executive Management,
Finance and Human Resources, who will review and approve the recommendation list
for KAM long-term awards and will resolve any issues/disputes regarding such
awards and/or modifications to the plan.

PERFORMANCE PERIOD:
The period during which his plan will be effective: January 1, 1998 through
December 31, 2000, unless otherwise revised or revoked.

NET OPERATING INCOME:
Net operating income is pre-tax income including level 3 expenses (Key Services
and management overhead charges).


                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.35
<SEQUENCE>10
<FILENAME>l97974aexv10w35.txt
<DESCRIPTION>EX-10.35 COMMISSIONED DEFERRED COMPENSATION PLAN
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.35

                                     KEYCORP

                     COMMISSIONED DEFERRED COMPENSATION PLAN
                  (AMENDED AND RESTATED AS OF JANUARY 1, 2002)

                                    ARTICLE I

         The KeyCorp Commissioned Deferred Compensation Plan ("Plan") is hereby
established effective January 1, 2001, and amended and restated as of January 1,
2002, to provide certain selected employees of KeyCorp with the opportunity to
defer their immediate receipt of compensation to the Plan and thereby defer the
receipt of their taxable income to a later date. The Plan, as structured, is
accordingly intended to provide a current tax planning opportunity for such
employees. It is the intention of KeyCorp, and it is the understanding of those
Participants covered under the Plan, that the Plan constitutes a short-term
deferred compensation plan which is unfunded for tax purposes and for purposes
of Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").

                                   ARTICLE II

                                   DEFINITIONS

         2.1      MEANING OF DEFINITIONS.  For the purposes of this Plan, the
following words and phrases shall have the meanings hereinafter set forth,
unless a different meaning is clearly required by the context:

         (a)      "BENEFICIARY" shall mean the person, persons or entity
                  entitled under Article VII to receive any Plan benefits
                  payable after a Participant's death.

         (b)      "CHANGE OF CONTROL" shall be deemed to have occurred if under
                  any rabbi trust arrangement maintained by the Corporation, the
                  Corporation is required under the terms of such arrangement to
                  fund such rabbi trust to secure the payment of any
                  Participants' Plan benefits which become payable hereunder
                  because a "Change of Control" as defined in such rabbi trust
                  has occurred on and after January 1, 2001.

         (c)      "CODE" shall mean the Internal Revenue Code of 1986, as
                  amended from time to time, together with all regulations
                  promulgated thereunder. Reference to a section of the Code
                  shall include such section and any comparable section or
                  sections of any future legislation that amends, supplements,
                  or supersedes such section.

         (d)      "COMMISSION" shall mean those commissions or incentive
                  payout(s) awarded to the Employee that are tied to the
                  Employee's direct performance in conjunction with a KeyCorp
                  sales event(s) and are generally defined as a percent, share,
                  or dollar amount of the direct sale or profit generated to
                  KeyCorp as a result of such event.

         (e)      "COMMON STOCK ACCOUNT" shall mean the investment account
                  established under the Plan for bookkeeping purposes, in which
                  a Participant may elect to have his or her Participant
                  Deferrals credited. Participant Deferrals to the Common Stock
                  Account shall be credited based on a bookkeeping allocation of
                  KeyCorp Common Shares (both whole and fractional rounded to
                  the nearest one-hundredth of a share) which shall be equal to

                                      -1-
<PAGE>

                  the amount of Participant Deferrals and Corporate
                  Contributions invested by the Participant and by the
                  Corporation in the Common Stock Account. The Common Stock
                  Account shall also reflect on a bookkeeping basis all
                  Dividends, gains, and losses attributable to such Common
                  Shares. All Corporate Contributions and all Participant
                  Deferrals credited to the Common Stock Account, shall be based
                  on the ten-day average of the New York Stock Exchange's
                  closing price for such Common Shares immediately preceding, up
                  to, and including the day such Participant Deferrals and
                  Corporate Contributions are credited to the Participants' Plan
                  Account.

         (f)      "CORPORATE CONTRIBUTIONS" shall mean the contribution amount
                  which an Employer has agreed to contribute on a bookkeeping
                  basis to the Participant's Plan Account in accordance with the
                  provisions of Article V of the Plan.

         (g)      "CORPORATION" shall mean KeyCorp, an Ohio corporation, its
                  corporate successors, and any corporation or corporations into
                  or with which it may be merged or consolidated.

         (h)      "DEFERRAL PERIOD" shall mean each Plan Year, provided however,
                  that a Participant's initial Deferral Period shall be from his
                  or her first day of participation in the Plan through the last
                  day of the applicable Plan Year.

         (i)      "DETERMINATION DATE" shall mean the last business day of each
                  calendar quarter.

         (j)      "DISABILITY" shall mean (1) the physical or mental disability
                  of a permanent nature which prevents a Participant from
                  performing the duties that such Participant was employed to
                  perform for his or her Employer when such disability
                  commenced, (2) qualifies for disability benefits under the
                  Federal Social Security Act within 30 months following the
                  Participant's disability, and (3) qualifies the Participant
                  for disability coverage under the KeyCorp Long Term Disability
                  Plan.

         (k)      "DISCHARGE FOR CAUSE" shall mean the termination (whether by
                  the Participant or the Employer) of a Participant's employment
                  from his or her Employer and any other Employer that is the
                  result of (1) serious misconduct as an Employee, including,
                  but not limited to, a continued failure after notice to
                  perform a substantial portion of his or her duties and
                  responsibilities unrelated to illness or incapacity, unethical
                  behavior such as acts of self-dealing or self-interest,
                  harassment, violence in the workplace, or theft; (2) the
                  commission of a crime involving a controlled substance, moral
                  turpitude, dishonesty, or breach of trust; or (3) the Employer
                  being directed by a regulatory agency or self-regulatory
                  agency to terminate or suspend the Participant or to prohibit
                  the Participant from performing services for the Employer. The
                  Corporation in its sole and absolute discretion shall
                  determine whether a Participant has been Discharged for Cause,
                  as provided for in this Section 2.1(k), provided, however,
                  that for a period of two years following a Change of Control,
                  any determination by the Corporation that an Employee has been
                  Discharged for Cause shall be set forth in writing with the
                  factual basis for such Discharge for Cause clearly specified
                  and documented by the Corporation.

         (l)      "DIVIDENDS" shall mean those quarterly earnings approved by
                  the KeyCorp Board of Directors and awarded by the Corporation
                  to all shareholders of record as of each applicable
                  ex-dividend date which shall be payable in such form and at
                  such time as the Corporation shall determine.

                                      -2-

<PAGE>

         (m)      "EARLY RETIREMENT" shall mean the Participant's retirement
                  from his or her employment with an Employer on or after the
                  Participant's attainment of age 55 and completion of a minimum
                  of five years of Vesting Service, but prior to the
                  Participant's Normal Retirement Date.

         (n)      "EMPLOYEE" shall mean a common law employee who is employed by
                  an Employer.

         (o)      "EMPLOYER" shall mean the Corporation and any of its
                  subsidiaries, unless specifically excluded as an Employer for
                  Plan purposes by written action by an Officer of the
                  Corporation. An Employer's participation in the Plan shall be
                  subject to all conditions and requirements made by the
                  Corporation, and each Employer shall be deemed to have
                  appointed the Plan Administrator as its exclusive agent under
                  the Plan as long as it continues as an Employer.

         (p)      "HARMFUL ACTIVITY" shall have occurred if the Participant
                  shall do any one or more of the following:

                  (i)      Use, publish, sell, trade or otherwise disclose
                           Non-Public Information of KeyCorp unless such
                           prohibited activity was inadvertent, done in good
                           faith and did not cause significant harm to KeyCorp.

                  (ii)     After notice from KeyCorp, fail to return to KeyCorp
                           any document, data, or thing in his or her possession
                           or to which the Participant has access that may
                           involve Non-Public Information of KeyCorp.

                  (iii)    After notice from KeyCorp, fail to assign to KeyCorp
                           all right, title, and interest in and to any
                           confidential or non-confidential Intellectual
                           Property which the Participant created, in whole or
                           in part, during employment with KeyCorp, including,
                           without limitation, copyrights, trademarks, service
                           marks, and patents in or to (or associated with) such
                           Intellectual Property.

                  (iv)     After notice from KeyCorp, fail to agree to do any
                           acts and sign any document reasonably requested by
                           KeyCorp to assign and convey all right, title, and
                           interest in and to any confidential or
                           non-confidential Intellectual Property which the
                           Participant created, in whole or in part, during
                           employment with KeyCorp, including, without
                           limitation, the signing of patent applications and
                           assignments thereof.

                  (v)      Upon the Participant's own behalf or upon behalf of
                           any other person or entity that competes or plans to
                           compete with KeyCorp, solicit or entice for
                           employment or hire any KeyCorp employee.

                  (vi)     Upon the Participant's own behalf or upon behalf of
                           any other person or entity that competes or plans to
                           compete with KeyCorp, call upon, solicit, or do
                           business with (other than business which does not
                           compete with any business conducted by KeyCorp) any
                           KeyCorp customer the Participant called upon,
                           solicited, interacted with, or became acquainted
                           with, or learned of through access to information
                           (whether or not such information is or was
                           non-public) while the Participant was employed at
                           KeyCorp unless such prohibited activity was
                           inadvertent, done in

                                      -3-

<PAGE>

                           good faith, and did not involve a customer whom the
                           Participant should have reasonably known was a
                           customer of KeyCorp.

                  (vii)    Upon the Participant's own behalf or upon behalf of
                           any other person or entity that competes or plans to
                           compete with KeyCorp, after notice from KeyCorp,
                           continue to engage in any business activity in
                           competition with KeyCorp in the same or a closely
                           related activity that the Participant was engaged in
                           for KeyCorp during the one year period prior to the
                           termination of the Participant's employment.

                           For purposes of this Section 2.1(p) the term:

                           "INTELLECTUAL PROPERTY" shall mean any invention,
                           idea, product, method of doing business, market or
                           business plan, process, program, software, formula,
                           method, work of authorship, or other information, or
                           thing relating to KeyCorp or any of its businesses.

                           "NON-PUBLIC INFORMATION" shall mean, but is not
                           limited to, trade secrets, confidential processes,
                           programs, software, formulas, methods, business
                           information or plans, financial information, and
                           listings of names (e.g., employees, customers, and
                           suppliers) that are developed, owned, utilized, or
                           maintained by an employer such as KeyCorp, and that
                           of its customers or suppliers, and that are not
                           generally known by the public.

                           "KEYCORP" shall include KeyCorp, its subsidiaries,
                           and its affiliates.

         (q)      "INVOLUNTARY TERMINATION" shall mean the termination (by the
                  Employer) of a Participant's employment from his or her
                  Employer and from any other Employer, other than a Discharge
                  for Cause or a Termination Under Limited Circumstances.

         (r)      "NORMAL RETIREMENT" shall mean the Participant's retirement
                  under the KeyCorp Cash Balance Pension Plan on or after the
                  Participant's Normal Retirement Date.

         (s)      "PARTICIPANT" shall mean an Employee who meets the eligibility
                  requirements set forth in Section 3.1(a) and becomes a Plan
                  Participant pursuant to Section 3.1(b) or Section 3.1(c) of
                  the Plan.

         (t)      "PARTICIPANT DEFERRALS" shall mean the percentage or whole
                  dollar amount of the Participant's Commissions that are earned
                  by the Participant during the applicable Plan Year which the
                  Participant has elected in accordance with his or her
                  Participation Agreement to defer to the Plan.

         (u)      "PARTICIPATION AGREEMENT" shall mean the executed agreement
                  submitted by the Participant to the Corporation prior to the
                  beginning of each applicable Deferral Period, which contains,
                  in pertinent part, the Participant's deferral commitment for
                  such Deferral Period, and the distribution option selected by
                  the Participant for the payment of such Participant Deferrals,
                  Dividends, and Corporate Contributions upon the Participants
                  full vesting in such Dividends and Corporate Contributions.

                                      -4-

<PAGE>

         (v)      "PLAN" shall mean the KeyCorp Commissioned Deferred
                  Compensation Plan with all amendments hereafter made.

         (w)      "PLAN ACCOUNT" shall mean the bookkeeping account established
                  by the Corporation for each Plan Participant, which shall
                  reflect all Corporate Contributions, Participant Deferrals,
                  and Dividends invested for bookkeeping purposes in the Plan's
                  Common Stock Account with all gains and losses thereon. Plan
                  Accounts shall not constitute separate Plan funds or separate
                  Plan assets. Neither the maintenance of, nor the crediting of
                  amounts to such Plan Accounts shall be treated (i) as the
                  allocation of any Corporation assets to, or a segregation of
                  any Corporation assets in any such Plan Accounts, or (ii) as
                  otherwise creating a right in any person or Participant to
                  receive specific assets of the Corporation. All benefits under
                  the Plan shall be paid from the general assets of the
                  Corporation.

         (x)      "PLAN YEAR" shall mean the calendar year.

         (y)      "RETIREMENT" shall mean the termination of a Participant's
                  employment any time after the Participant's attainment of age
                  55 and completion of 5 years of Vesting Service under the
                  KeyCorp Cash Balance Pension Plan, but shall not include the
                  Participant's (i) Discharge for Cause, (ii) Involuntary
                  Termination, (iii) Termination under Limited Circumstances,
                  (iv) Disability or Death.

         (z)      "TERMINATION" shall mean the voluntary or involuntary and
                  permanent termination of a Participant's employment from his
                  or her Employer and any other Employer, whether by resignation
                  or otherwise, but shall not include the Participant's
                  Retirement.

         (aa)     "TERMINATION UNDER LIMITED CIRCUMSTANCES" shall mean a
                  Participant's termination (whether by the Participant or the
                  Employer) of the Participant's employment from his or her
                  Employer and from any other Employer (i) within two years
                  after a Change of Control under circumstances in which the
                  Participant is entitled to severance benefits or salary
                  continuation or similar benefits under a Change of Control
                  agreement, employment agreement, or severance or separation
                  pay plan, (ii) under circumstances in which the Participant is
                  entitled to receive severance benefits or salary continuation
                  under the KeyCorp Separation Pay Plan, (iii) due to Disability
                  or death, or (iv) as otherwise expressly approved by the
                  Compensation and Organization Committee, in its sole
                  discretion.

         (bb)     "VOLUNTARY TERMINATION" shall mean a voluntary termination of
                  the Participant's employment from his or her Employer and from
                  any other Employer, whether by resignation or otherwise, but
                  shall not include the Participant's Discharge for Cause,
                  Involuntary Termination, Retirement, Termination Under Limited
                  Circumstances, or termination as a result of Disability or
                  death.

         2.2      ADDITIONAL REFERENCE.  All other words and phrases used herein
shall have the meaning given them in the KeyCorp Cash Balance Pension Plan,
unless a different meaning is clearly required by the context.

         2.3      PRONOUNS.  The masculine pronoun wherever used herein includes
the feminine in any case so requiring, and the singular may include the plural.

                                      -5-

<PAGE>

                                   ARTICLE III

                          ELIGIBILITY AND PARTICIPATION

         3.1      ELIGIBILITY AND PARTICIPATION.

         (a)      ELIGIBILITY. An Employee shall be eligible to participate in
                  the Plan if (1) the Employee earns Commissions during any Plan
                  year in excess of $100,000, and (2) the Corporation selects
                  such Employee to participate in the Plan.

         (b)      PARTICIPATION. An Employee meeting the eligibility criteria of
                  Section 3.1(a) may elect to participate in the Plan with
                  respect to any Deferral Period by submitting a Participation
                  Agreement to the Corporation prior to the beginning of the
                  applicable Deferral Period or such other deadline as
                  established by the Corporation.

         (c)      MID-YEAR PARTICIPATION. When an Employee first becomes
                  eligible to participate in the Plan during a Deferral Period,
                  the Participant shall be required to submit a Participation
                  Agreement to the Corporation within thirty (30) days after the
                  Corporation notifies the Employee of his or her Plan
                  eligibility. Such Participation Agreement will be effective
                  when received by the Corporation.

         3.2      DEFERRAL LIMITATIONS.  A Participant may defer to the Plan no
more than 50% of the Participant's earned Commissions in excess of $100,000 (in
5% increments) that are payable to the Participant during the applicable
Deferral Period.

         3.3      COMMITMENT LIMITED BY TERMINATION, RETIREMENT, DISABILITY OR
DEATH.  As of the Participant's Termination date, Retirement date, date of
Disability or date of death, all Participant Deferrals under the Plan shall
cease.

         3.4      MODIFICATION OF DEFERRAL COMMITMENT.  A Participant's deferral
commitment as evidenced by his or her Participation Agreement for the applicable
Deferral Period shall be irrevocable.

         3.5      CHANGE IN EMPLOYMENT STATUS.  If the Corporation determines
that a Participant's performance is no longer at the level that deserves to be
rewarded through participation in the Plan, but does not terminate the
Participant's employment, the Participant's Participant Deferrals under the Plan
shall continue until the end of the applicable Deferral Period. Thereafter, the
Corporation shall not permit the Participant to make any further deferrals to
the Plan.

                                   ARTICLE IV

                              PARTICIPANT DEFERRALS

         4.1      PLAN ACCOUNT.  All Participant Deferrals and Corporate
Contributions shall be credited on a bookkeeping basis to a Plan Account
established in the Participant's name. Separate sub-accounts shall be
established to reflect all Dividends attributable to such Participant Deferrals
and Corporate Contributions.

         4.2      INVESTMENT OF PARTICIPANT DEFERRALS.  All Participant
Deferrals shall be invested for bookkeeping purposes in the Plan's Common Stock
Account.

                                      -6-

<PAGE>

         4.3      CREDITING OF PARTICIPANT DEFERRALS; WITHHOLDING.  Participant
Deferrals shall be credited to the Participant's Plan Account as of the date the
Participant's Commission would have been paid to the Participant "but for" the
Participant's election to defer such Commission to the Plan. The withholding of
taxes with respect to all Participant Deferrals as required by state, federal or
local law shall be withheld from the Participant's compensation to the maximum
extent possible; thereafter, any taxes remaining due shall be paid by reducing
the amount of Participant Deferrals to be credited to the Participant's Plan
Account.

                                    ARTICLE V

                             CORPORATE CONTRIBUTIONS

         5.1      CREDITING OF CORPORATION CONTRIBUTIONS.  Corporate
Contributions in an amount equal to 15% of the Participant's Participant
Deferrals deferred to the Plan for any applicable Deferral Period shall be
credited on a bookkeeping basis to the Participant's Plan Account as of the date
on which the Participant's Participant Deferrals are deferred and credited to
the Plan.

         5.2      INVESTMENT OF CORPORATE CONTRIBUTIONS.  All Corporate
Contributions credited to the Participant's Plan Account shall be invested for
bookkeeping purposes in the Plan's Common Stock Account.

         5.3      DETERMINATION OF AMOUNT.  The Plan Administrator shall verify
the amount of Participant Deferrals, Corporate Contributions, Dividends, and
earnings, if any, to be credited to each Participant's Plan Account in
accordance with the provisions of the Plan. The reasonable and equitable
decision of the Plan Administrator as to the value of each Plan Account shall be
conclusive and binding upon all Participants and the Beneficiary of each
deceased Participant having any interest, direct or indirect in the
Participant's Plan Account. As soon as reasonably practicable after the close of
the Plan Year, the Corporation shall send to each Participant an itemized
accounting statement that shall reflect the Participant's Plan Account balance.

         5.4      CORPORATE ASSETS. All Participant Deferrals, Corporate
Contributions, Dividends, earnings and any other gains and losses credited to a
Participant's Plan Account on a bookkeeping basis, remain the assets and
property of the Corporation, which shall become subject to distribution to the
Participant only in accordance with the provisions of Articles VII, X and XI of
the Plan. Distributions made under the Plan shall be in the form of Common
Shares. All Participants and Beneficiaries shall have the status of general
unsecured creditors of the Corporation. Nothing contained in the Plan shall
create, or shall be construed as creating a trust of any kind or any other
fiduciary relationship between the Participant, the Corporation, or any other
person. It is the intention of the Corporation and it is the understanding of
the Participant that the Plan is not funded for tax purposes as well as for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended.

         5.5      NO PRESENT INTEREST.  Subject to any federal statute to the
contrary, no right or benefit under the Plan and no right or interest in each
Participant's Plan Account shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance, or charge. Any attempt to anticipate, alienate,
sell, assign, pledge, encumber, or charge any right or benefit under the Plan,
or to the Participant's Plan Account shall be void. No right, interest, or
benefit under the Plan or Participant's Plan Account shall be liable for or
subject to the debts, contracts, liabilities, or torts of the Participant or
Beneficiary. If the Participant or Beneficiary becomes bankrupt or attempts to
alienate, sell, assign, pledge, encumber, or

                                      -7-

<PAGE>

charge any right under the Plan or Participant's Plan Account such attempt shall
be void and unenforceable.

                                   ARTICLE VI

                                     VESTING

         6.1      VESTING IN DIVIDENDS AND CORPORATE CONTRIBUTIONS.  The
calculation of a Participant's vested interest in his or her Corporate
Contributions and all Dividends credited on a bookkeeping basis to the
Participant's Plan Account shall be measured from the last day of the applicable
calendar quarter in which such Participant Deferrals and matching Corporate
Contributions are credited to the Participant's Plan Account ("Quarterly
Deferral Date"). A Participant shall become vested in those Corporate
Contributions and in those Dividends credited to the Participant's Plan Account
with regard to the applicable Participant Deferrals and Corporate Contributions,
upon the Participant's completion of three years of vested service. For purposes
of this Section 6.1, the term "vested service" shall be determined from the
Quarterly Deferral Date and shall be based upon full calendar years.

Notwithstanding the foregoing provisions of this Section 6.1, however, a
Participant shall become fully vested in all Dividends and Corporate
Contributions credited on a bookkeeping basis to the Participant's Plan Account
upon the Participant's Termination Under Limited Circumstances.

         6.2      CONTINUED VESTING UPON RETIREMENT.  Subject to the provisions
of Section 7.2 of the Plan, upon the Participant's Retirement, the Participant's
not-vested Dividends and not-vested Corporate Contributions credited to the
Participant's Plan Account with all gains and losses thereon, shall remain in
the Plan and shall continue to vest under the vesting provisions of Section 6.1
hereof.

         6.3      FORFEITURE OF CORPORATE CONTRIBUTIONS AND DIVIDENDS.  In the
event of the Participant's Termination all not-vested Corporate Contributions
and all not-vested Dividends that are credited on a bookkeeping basis to the
Participant's Plan Account shall be forfeited as of the Participant's last day
of employment.

                                   ARTICLE VII

                          DISTRIBUTION OF PLAN BENEFITS

         7.1      DISTRIBUTIONS PRIOR TO TERMINATION, TERMINATION UNDER LIMITED
CIRCUMSTANCES, OR RETIREMENT.  A Participant's vested Participant Deferrals,
vested Corporate Contributions and vested Dividends shall be distributed to the
Participant as of the Determination Date concurrently with or immediately
following the Participant's vesting in his or her Plan benefit in accordance
with the distribution directions provided by the Participant in his or her
Distribution Agreement, as follows:

                  (a)      as a single lump sum distribution of Common Shares,
                           or

                  (b)      in substantially equal annual installments payments
                           of Common Shares over a five (5) year period.

                                      -8-

<PAGE>

Lump sum distributions from the Plan of Participant Deferrals, vested Corporate
Contributions, and vested Dividends shall be made in Common Shares based on the
bookkeeping number of whole and fractional Common Shares attributable to those
Participant Deferrals, vested Corporate Contributions and vested Dividends
maintained in the Plan's Common Stock Account as of the Determination Date
concurrently with or immediately following the Participant's vesting date.
Distributions shall be made as soon as reasonably practicable following the
applicable Determination Date.

         7.2      DISTRIBUTIONS FOLLOWING RETIREMENT.  Upon the Participant's
Retirement, the Participant's Plan Account balance shall continue to be
maintained in the Plan and all Corporate Contributions and Dividends credited to
the Participant's Plan Account with any and all gains and losses thereon, shall
continue to vest under the vesting provisions of Section 6.1 of the Plan, and
when vested, shall be distributed to the Participant in accordance with the
provisions of Section 7.1 hereof. Notwithstanding the foregoing provisions of
this Section 7.2, however, in the event of the Participant's Retirement, and
within twelve months of such Retirement the Participant engages in any "Harmful
Activity" as that term is defined in accordance with Section 2.1(o) of the Plan,
such Participant's not-vested Corporate Contributions and not-vested Dividends
shall be immediately forfeited and the Participant shall automatically receive a
lump sum distribution of his or her Participant Deferrals under the Plan.

         7.3      DISTRIBUTIONS FOLLOWING TERMINATION UNDER LIMITED
CIRCUMSTANCES.  Upon the Participant's Termination Under Limited Circumstances,
all Participant Deferrals, Corporate Contributions, and Dividends credited to
the Participant's Plan Account with any and all gains and losses thereon shall
become immediately vested and shall be distributed to the Participant in a
single lump sum distribution of Common Shares.

         7.4      DISTRIBUTIONS FOLLOWING INVOLUNTARY TERMINATION.  Upon the
Participant's Involuntary Termination, all Participant Deferrals credited to the
Participant's Plan Account with all Dividends, gains and losses thereon, shall
become immediately vested and shall be distributed to the Participant in a
single lump sum distribution. All not-vested Corporate Contributions and all
not-vested Dividends credited on such Corporate Contributions with all related
earnings and or losses thereon shall be forfeited by the Participant as of his
or her last day of employment.

         7.5 DISTRIBUTIONS FOLLOWING VOLUNTARY TERMINATION OR DISCHARGE FOR
CAUSE.  Upon the Participant's Voluntary Termination or Discharge for Cause, all
not-vested Corporate Contributions and not-vested Dividends credited to the
Participant's Plan Account with all gains and losses thereon shall be forfeited
by the Participant as of his or her last day of employment, and the Participant
shall receive a lump sum distribution of his or her Participant Deferrals.

         7.6 WITHHOLDING.  The withholding of taxes with respect to the
Participant's Participant Deferrals, Corporate Contributions, and Dividends
shall be made at such time as it becomes required by any state, federal or local
law. All required taxes shall be withheld from the Participant's Participant
Deferrals and Corporate Contributions in accordance with applicable law to the
maximum extent possible.

         7.7      DISTRIBUTION OF ACCOUNT BALANCE.  The Participant's vested
Plan Account balance shall be valued as of the Determination Date immediately
following his or her date of Termination or Retirement (the "valuation date"):

                                      -9-

<PAGE>
                  (a)  LUMP SUM DISTRIBUTIONS. If a Participant has elected to
         receive a lump sum distribution of all of his or her vested Plan
         Account balance, such lump sum distribution of Common Shares shall be
         made as soon as reasonably practicable following the Participant's
         valuation date.

                  (b)  INSTALLMENT DISTRIBUTIONS.  If a Participant has elected
         to receive an installment distribution of all of his or her vested Plan
         Account, such installment distribution of Common Shares shall commence
         as soon as reasonably practicable following the Participant's valuation
         date. The Participant's vested unpaid Plan Account balance invested for
         bookkeeping purposes in the Plan's Common Stock Account shall be
         reflected as a number of whole and fractional Common Shares in a
         distribution sub-account and shall be credited with Dividends on a
         bookkeeping basis which shall be reinvested in the Plan's Common Stock
         Account throughout the installment distribution period; all such
         reinvested Dividends shall be paid to the Participant in Common Shares
         in conjunction with the Participant's final installment payment under
         the Plan.

         7.8      DISTRIBUTION OF SMALL ACCOUNTS.  Notwithstanding the
provisions of Sections 7.1 and 7.2 hereof, if the value of a Participant's
vested Account balance as of the Determination Date immediately preceding the
Participant's date of Termination or Retirement is under $50,000, such balance
shall be distributed to the Participant as a single distribution as soon as
reasonably practicable following such date.

         7.9      DISTRIBUTION LIMITATION.  If the Corporation determines that
any amount of a Participant's Participant Deferrals, Dividends, and/or Corporate
Contributions with all interest and earnings thereon:

         (1)      would not be deductible by the Corporation if paid in
                  accordance with the distribution instructions specified by the
                  Participant in his or her Participation Agreement by reason of
                  the disallowance rules of Section 162(m) of the Code, but

         (2)      would be deductible by the Corporation if deferred and paid in
                  a later Plan Year,

the Corporation reserves the right to defer the distribution of all or any
portion of such Participant's Participant Deferrals, Dividends, and/or Corporate
Contributions with all interest and earnings thereon until such time as the
Corporation determines that the distribution of all or any portion of such
Participant's Participant Deferrals, Dividends, and/or Corporate Contributions
will be payable without the disallowance of the deduction prescribed by Code
Section 162(m) ("Deferrals"). Such Deferrals shall continue to be held in the
Participant's Plan Account and shall continue to be credited, on a bookkeeping
basis, with all earnings, gains, and losses thereon. If it is thereafter
determined by the Corporation that such Deferrals will not be deductible even if
paid in a later year, then such Deferrals with all interest and earnings thereon
shall become immediately payable to the Participant.

         Notwithstanding any other provision of this Section 7.9 to the
contrary, in the event of the Participant's Termination or Retirement all
Deferrals required to be continued under this Section 7.9 contrary to the
Participant's distribution elections, shall be paid to the Participant on or
immediately following April 15th of the year immediately following the
Participant's Termination or Retirement, regardless of the deductibility of such
payment.

         7.10     FACILITY OF PAYMENT.  If it is found that any individual to
whom an amount is payable hereunder is incapable of attending to his or her
financial affairs because of any mental or physical

                                      -10-

<PAGE>

condition, including the infirmities of advanced age, such amount (unless prior
claim therefor shall have been made by a duly qualified guardian or other legal
representative) may, in the discretion of the Corporation, be paid to another
person for the use or benefit of the individual found incapable of attending to
his or her financial affairs or in satisfaction of legal obligations incurred by
or on behalf of such individual. Any such payment shall be charged to the
Participant's Plan Account from which any such payment would otherwise have been
paid to the individual found incapable of attending to his or her financial
affairs, and shall be a complete discharge of any liability therefor under the
Plan.

                                  ARTICLE VIII

                             BENEFICIARY DESIGNATION

         8.1      BENEFICIARY DESIGNATION.  Subject to Section 8.3 hereof, each
Participant shall have the right, at any time, to designate one or more persons
or an entity as Beneficiary (both primary as well as secondary) to whom benefits
under this Plan shall be paid in the event of Participant's death prior to
complete distribution of the Participant's Plan Account. Each Beneficiary
designation shall be in a written form prescribed by the Corporation and shall
be effective only when filed with the Corporation during the Participant's
lifetime.

         8.2      CHANGING BENEFICIARY.  Subject to Section 8.3, a Participant's
Beneficiary designation may be changed by the Participant without the consent of
the previously named Beneficiary by the filing of a new designation with the
Corporation. The filing of a new designation shall cancel all previously filed
designations.

         8.3      NO BENEFICIARY DESIGNATION.  If a Participant fails to
designate a Beneficiary in the manner provided above, if the designation is
void, or if the Beneficiary (including all contingent Beneficiaries) designated
by a deceased Participant dies before the Participant or before complete
distribution of the Participant's benefits, the Participant's Beneficiary shall
be the person in the first of the following classes in which there is a
survivor:

         (a)      The Participant's spouse;

         (b)      The Participant's children in equal shares, except that if any
                  of the children predeceases the Participant but leaves issue
                  surviving, then such issue shall take, by right of
                  representation the share the parent would have taken if
                  living;

         (c)      The Participant's estate.

         8.4      DISTRIBUTION UPON DEATH.  If a Participant dies after the
distribution of his or her interest under the Plan has commenced, the remaining
portion of the Participant's entire interest under the Plan, if any, shall be
distributed to the Participant's Beneficiary under the method of distribution
being used as of the Participant's date of death. If the Participant dies before
the distribution of the Participant's Plan Account has commenced, the
Participant's entire interest under the Plan shall be valued as of the
Determination Date immediately following the Participant's date of death, and
shall be distributed to his or her Beneficiary in a lump sum payment as soon as
reasonably practicable following the Participant's date of death.

                                      -11-

<PAGE>

                                   ARTICLE IX

                                 ADMINISTRATION

         9.1      ADMINISTRATION.  The Corporation shall be responsible for the
general administration of the Plan, for carrying out the provisions hereof, and
for making payments hereunder. The Corporation shall have the sole and absolute
discretionary authority and power to carry out the provisions of the Plan,
including, but not limited to, the authority and power (a) to determine all
questions relating to the eligibility for and the amount of any benefit to be
paid under the Plan, (b) to determine all questions pertaining to claims for
benefits and procedures for claim review, (c) to resolve any and all questions
arising under the Plan, including any question of construction and/or
interpretation, and (d) to take such further action as the Corporation deems
necessary or advisable in the administration of the Plan. All findings,
decisions, and determinations of any kind made by the Plan Administrator shall
not be disturbed unless the Plan Administrator has acted in an arbitrary and
capricious manner. Subject to the requirements of law, the Plan Administrator
shall be the sole judge of the standard of proof required in any claim for
benefits and in any determination of eligibility for a benefit. All decisions of
the Plan Administrator shall be final and binding on all parties. The
Corporation may employ such attorneys, investment counsel, agents, and
accountants as it may deem necessary or advisable to assist it in carrying out
its duties hereunder. The actions taken and the decisions made by the
Corporation hereunder shall be final and binding upon all interested parties
subject, however, to the provisions of Section 9.2. The Plan Year, for purposes
of Plan administration, shall be the calendar year.

         9.2      CLAIMS REVIEW PROCEDURE.  Whenever the Plan Administrator
decides for whatever reason to deny, whether in whole or in part, a claim for
benefits under this Plan filed by any person (herein referred to as the
"Claimant"), the Plan Administrator shall transmit a written notice of its
decision to the Claimant, which notice shall be written in a manner calculated
to be understood by the Claimant and shall contain a statement of the specific
reasons for the denial of the claim and a statement advising the Claimant that,
within 60 days of the date on which he or she receives such notice, he or she
may obtain review of the decision of the Plan Administrator in accordance with
the procedures hereinafter set forth. Within such 60-day period, the Claimant or
his or her authorized representative may request that the claim denial be
reviewed by filing with the Plan Administrator a written request therefor, which
request shall contain the following information:

         (a)      the date on which the request was filed with the Plan
                  Administrator; provided, however, that the date on which the
                  request for review was in fact filed with the Plan
                  Administrator shall control in the event that the date of the
                  actual filing is later than the date stated by the Claimant
                  pursuant to this paragraph (a);

         (b)      the specific portions of the denial of his or her claim which
                  the Claimant requests the Plan Administrator to review;

         (c)      a statement by the Claimant setting forth the basis upon which
                  he or she believes the Plan Administrator should reverse its
                  previous denial of the claim and accept the claim as made; and

         (d)      any written material which the Claimant desires the Plan
                  Administrator to examine in its consideration of his or her
                  position as stated pursuant to paragraph (b) above.

                                      -12-
<PAGE>

         In accordance with this Section, if the Claimant requests a review of
the Plan Administrator's decision, such review shall be made by the Plan
Administrator who shall, within sixty (60) days after receipt of the request
form, review and render a written decision on the claim containing the specific
reasons for the decision including reference to Plan provisions upon which the
decision is based. All findings, decisions, and determinations of any kind made
by the Plan Administrator shall not be modified unless the Plan Administrator
has acted in an arbitrary and capricious manner. Subject to the requirements of
law, the Plan Administrator shall be the sole judge of the standard of proof
required in any claim for benefits, and any determination of eligibility for a
benefit. All decisions of the Plan Administrator shall be binding on the
claimant and upon all other Persons. If the Participant or Beneficiary shall not
file written notice with the Plan Administrator at the times set forth above,
such individual shall have waived all benefits under the Plan other than as
already provided, if any, under the Plan.

                                    ARTICLE X

                        AMENDMENT AND TERMINATION OF PLAN

         10.1     RESERVATION OF RIGHTS. The Corporation reserves the right to
terminate the Plan at any time, and to modify or amend the Plan, in whole or in
part, at any time and for any reason, subject to the following:

         (a)      PRESERVATION OF ACCOUNT BALANCE. No termination, amendment, or
                  modification of the Plan shall reduce (i) the amount of
                  Participant Deferrals, Corporate Contributions, and Dividends
                  allocated to the Participants' Accounts as of the date of such
                  termination, amendment, or modification, and (ii) all earnings
                  and gains on such Participant Deferrals, Corporate
                  Contributions, and Dividends that have accrued up to the
                  effective date of the termination, amendment, or modification.

         (b)      CHANGES IN EARNINGS RATE. No amendment or modification of the
                  Plan shall reduce the rate of earnings to be credited under
                  the Common Stock Account until the close of the applicable
                  Deferral Period in which such amendment or modification is
                  made.

         10.2     EFFECT OF PLAN TERMINATION. If the Corporation terminates the
Plan either in whole or in part, the following will apply:

         (a)      PARTIAL TERMINATION.  The Corporation may partially terminate
                  the Plan by instructing the Plan Administrator to not accept
                  any additional Participation Agreements. If such a partial
                  termination occurs, the Plan shall continue to operate and be
                  effective with regard to Participation Agreements entered into
                  prior to the effective date of such partial termination.

         (b)      COMPLETE TERMINATION.  The Corporation may completely
                  terminate the Plan by instructing the Plan Administrator to
                  not accept any additional Participation Agreements and by
                  terminating all ongoing Participation Agreements. If such a
                  complete termination occurs, the Plan shall cease to operate,
                  and all Plan Participants shall become fully vested in their
                  Plan Account balance. Payment of each Participant's Plan
                  Account balance shall thereafter be made in equal monthly
                  installments over the following period, based on the value of
                  each Participant's Plan Account balance:

                                      -13-

<PAGE>

<TABLE>
<CAPTION>
     Account Balance                                 Payout Period
     ---------------                                 -------------
<S>                                                  <C>
Equal to or less than $100,000                         Lump Sum
More than $100,000                                     3 Years
</TABLE>

Plan distributions shall commence within sixty-five (65) days after the
Corporation terminates the Plan. The Participant's unpaid Plan Account balance
invested for bookkeeping purposes in the Plan's Common Stock Account shall be
reflected as a number of whole and fractional Common Shares in a distribution
sub-account and shall be credited with Dividends on a bookkeeping basis which
shall be reinvested in the Plan's Common Stock Account throughout the payout
period; all such reinvested Dividends shall be paid to the Participant as Common
Shares in conjunction with the Participant's final distribution under the Plan.

         10.3     EFFECT OF PLAN TERMINATION.  Notwithstanding anything to the
contrary contained in the Plan, the termination of the Plan shall terminate the
liability of the Corporation and all employees to make further Corporate
Contributions to the Plan.

                                   ARTICLE XI

                                CHANGE OF CONTROL

         11.1     CHANGE OF CONTROL.  Notwithstanding any other provision of the
Plan to the contrary, in the event of a Change of Control as defined in
accordance with Section 2.2 of the Plan, no amendment or modification of the
Plan may be made at any time on or after such Change of Control (1) to reduce or
modify a Participant's Pre-Change of Control Account Balance, (2) to reduce or
modify the Common Stock Accounts' method of calculating all earnings, gains,
and/or losses on a Participant's Pre-Change of Control Account Balance, or (3)
to reduce or modify the Participant's Participant Deferrals and/or Corporate
Contributions to be credited to a Participant's Plan Account for the applicable
Deferral Period. For purposes of this Section 11.1, the term "Pre-Change of
Control Account Balance" shall mean, with regard to any Plan Participant, the
aggregate amount of such Participant's Participant Deferrals and Corporate
Contributions and Dividends with all earnings, gains, and losses thereon which
are credited to the Participant's Plan Account through the close of the calendar
year in which such Change of Control occurs.

         11.2     COMMON STOCK CONVERSION.  In the event of a Change of Control
in which the common shares of the Corporation are converted into or exchanged
for securities, cash and/or other property as a result of any capital
reorganization or reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with or into another corporation or
entity, or the sale of all or substantially all of its assets to another
corporation or entity, the Corporation shall cause the Common Stock Account to
reflect on a bookkeeping basis the securities, cash and other property that
would have been received in such reorganization, reclassification,
consolidation, merger or sale on an equivalent amount of common shares equal to
the balance in the Common Stock Account and, from and after such reorganization,
reclassification, consolidation, merger or sale, the Common Stock Account shall
reflect on a bookkeeping basis all Dividends, interest, earnings and losses
attributable to such securities, cash, and other property.

         11.3     DISTRIBUTION PROVISIONS.  In the event of a Change of Control,
the provisions of Section 7.2 of the Plan which limit a Participant's ability to
provide services to a financial services organization, business, or company upon
the Participant's voluntary Termination, Retirement or Disability shall

                                      -14-

<PAGE>

become null and void, and such Participant's distribution elections as contained
within the Participant's Participation Agreement shall control the method and
timing of the Participant's distribution of his or her Plan Account balances.

         11.4     AMENDMENT IN THE EVENT OF A CHANGE OF CONTROL.  On or after a
Change of Control, the provisions of Article II, Article IV, Article V, Article
VI, Article VII, Article VIII, Article IX, Article X and Article XI may not be
amended or modified as such Sections and Articles apply with regard to the
Participants' Pre-Change of Control Account Balances.

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         12.1     NO COMMITMENT AS TO EMPLOYMENT.  Nothing herein contained
shall be construed as a commitment or agreement upon the part of any Employee
hereunder to continue his or her employment with an Employer, and nothing herein
contained shall be construed as a commitment on the part of any Employer to
continue the employment, rate of compensation or terms and conditions of
employment of any Employee hereunder for any period. All Participants shall
remain subject to discharge to the same extent as if the Plan had never been put
into effect.

         12.2 BENEFITS.  Nothing in the Plan shall be construed to confer any
right or claim upon any person, firm, or corporation other than the
Participants, former Participants, and Beneficiaries.

         12.3     ABSENCE OF LIABILITY.  No member of the Board of Directors of
the Corporation or a subsidiary or committee authorized by the Board of
Directors, or any officer of the Corporation or a subsidiary or officer of a
subsidiary shall be liable for any act or action hereunder, whether of
commission or omission, taken by any other member, or by any officer, agent, or
Employee, except in circumstances involving bad faith or willful misconduct, for
anything done or omitted to be done.

         12.4     EXPENSES.  The expenses of administration of the Plan shall be
paid by the Corporation.

         12.5     PRECEDENT.  Except as otherwise specifically agreed to by the
Corporation in writing, no action taken in accordance with the Plan by the
Corporation shall be construed or relied upon as a precedent for similar action
under similar circumstances.

         12.6     WITHHOLDING. The Corporation shall withhold any tax that the
Corporation in its discretion deems necessary to be withheld from any payment to
any Participant, former Participant, or Beneficiary hereunder, by reason of any
present or future law.

         12.7     VALIDITY OF PLAN.  The validity of the Plan shall be
determined and the Plan shall be construed and interpreted in accordance with
the provisions the laws of the State of Ohio. The invalidity or illegality of
any provision of the Plan shall not affect the validity or legality of any other
part thereof.

         12.8     PARTIES BOUND.  The Plan shall be binding upon the Employers,
Participants, former Participants, and Beneficiaries hereunder, and, as the case
may be, the heirs, executors, administrators, successors, and assigns of each of
them.

         12.9     HEADINGS.  All headings used in the Plan are for convenience
of reference only and are not part of the substance of the Plan.

                                      -15-

<PAGE>

         12.10    DUTY TO FURNISH INFORMATION.  The Corporation shall furnish to
each Participant, former Participant, or Beneficiary any documents, reports,
returns, statements, or other information that it reasonably deems necessary to
perform its duties imposed hereunder or otherwise imposed by law.

         12.11    VALIDITY.  In case any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and enforced
as if such illegal and invalid provision had never been inserted herein.

         12.12    NOTICE.  Any notice required or permitted under the Plan shall
be deemed sufficiently provided if such notice is in writing and hand delivered
or sent by registered or certified mail. Such notice shall be deemed given as of
the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark or on the receipt for registration or certification. Mailed notice
to the Corporation shall be directed to the Corporation's address, attention:
KeyCorp Compensation and Benefits Department. Mailed notice to a Participant or
Beneficiary shall be directed to the individual's last known address in the
Employer's records.

         12.13    SUCCESSORS.  The provisions of this Plan shall bind and inure
to the benefit of each Employer and its successors and assigns. The term
successors as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of an Employer.

                                      KEYCORP

                                      By: /s/ Steven N. Bulloch
                                          ------------------------------------
                                      Title:  Assistant Secretary
                                             ---------------------------------

                                      -16-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.36
<SEQUENCE>11
<FILENAME>l97974aexv10w36.txt
<DESCRIPTION>EX-10.36 KEYCORP EXCESS 401K SAVINGS PLAN
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.36

                                     KEYCORP

                           EXCESS 401(K) SAVINGS PLAN

         The KeyCorp Excess 401(k) Savings Plan ("Plan") is hereby amended and
restated in its entirety to be effective January 1, 1998. The Plan as amended
and restated is intended to provide certain key employees of KeyCorp with a Plan
benefit that is generally equal to the benefit that the Participant would have
been eligible to receive under the KeyCorp 401(k) Savings Plan but for the
contribution limits imposed by Section 402(g) of the Internal Revenue Code of
1986, as amended (Code) and the compensation limits imposed by Section
401(a)(17) of the Code. It is the intention of KeyCorp, and it is the
understanding of those Participants covered under the Plan that the Plan is
unfunded for tax purposes and for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").

                                    ARTICLE I

                                   DEFINITIONS

         1.1      MEANING OF DEFINITIONS. For the purposes hereof, the
following words and phrases shall have the meanings hereinafter set forth,
unless a different meaning is plainly required by the context:

                  (a)      "401(k) SAVINGS PLAN" shall mean the KeyCorp 401(k)
         Savings Plan, as shall be amended from time to time.

                  (b)      "BENEFICIARY" shall mean the same person, persons or
         entity as designated by the Participant under the 401(k) Savings Plan
         to receive any Plan benefits payable after a Participant's death.

                  (c)      "CHANGE OF CONTROL" shall be deemed to have occurred
         if under any rabbi trust arrangement maintained by the Corporation, the
         Corporation is required under the terms of such arrangement to fund
         such rabbi trust to secure the payment of any Participants' Plan
         benefits payable hereunder because a "Change of Control" as defined in
         such rabbi trust has occurred after January 1, 1997.

                  (d)      "CODE" shall mean the Internal Revenue Code of 1986,
         as amended from time to time, together with all regulations promulgated
         thereunder. Reference to a section of the Code includes such section
         and any comparable section or sections of any future legislation that
         amends, supplements, or supersedes such section.

                  (e)      "COMPENSATION" of a Participant for any Plan Year or
         any partial Plan Year in which the Participant incurs a Severance From
         Service Date shall mean the entire amount of compensation paid to such
         Participant during such period by reason of his or her employment with
         an Employer, as reported for federal income tax purposes, plus that
         compensation which would have been paid except for (1) the timing of an
         Employer's payroll processing operations, (2) the provisions of the
         401(k) Savings Plan, or (3) the provisions of the KeyCorp Flexible
         Benefits Plan, provided, however, that the term shall not include:
<PAGE>

                  (i)      any amount attributable to the Employee's receipt of
                           stock appreciation rights and the amount of any gain
                           to the Employee upon the exercise of a stock option;

                  (ii)     any amount attributable to the Employee's receipt of
                           non-cash remuneration which is included in the
                           Employee's income for federal income tax purposes;

                  (iii)    any amount attributable to the Employee's receipt of
                           moving expenses and any relocation bonus paid to the
                           Employee during the Plan Year;

                  (iv)     any amount attributable to any severance paid by an
                           Employer or the Corporation to the Employee;

                  (v)      any amount attributable to fringe benefits (cash and
                           non-cash), regardless of whether any or all such
                           items are includible in such Participant's gross
                           income for federal tax purposes;

                  (vi)     any amount attributable to any bonus or payment made
                           as an inducement for the Employee to accept
                           employment with an Employer;

                  (vii)    any amount attributable to compensation of any type
                           including bonus or incentive compensation payments
                           paid on or after the Employee's Severance From
                           Service Date; or

                  (viii)   any amount attributable to compensation deferred by
                           the Participant.

                  In determining a Participant's Compensation under the
         provisions of this Section 1.1(e), for those Plan Participants who
         participate in a line of business incentive plan, only that
         Compensation up to a maximum amount of $500,000 minus the amount of the
         Participant's Compensation utilized in computing his or her 401(k)
         Savings Plan benefit in accordance with Section 401(a)(17) of the Code
         shall be utilized in calculating the Participant's Participant
         Deferrals under this Plan.

                  (f)      "CORPORATE CONTRIBUTIONS" shall mean the amount an
         Employer has agreed to credit on a bookkeeping basis to the
         Participant's Plan Account in accordance with the provisions of Article
         IV of the Plan.

                  (g)      "CORPORATION STOCK FUND" shall mean the investment
         account established under the Plan for bookkeeping purposes under which
         a Participant may elect to have his or her Participant Deferrals
         credited and which mirrors the Corporation Stock Fund established in
         accordance with and pursuant to Article VIII of the 401(k) Savings
         Plan, as shall be amended from time to time. Participant Deferrals to
         the Corporation Stock Fund shall be credited based on a bookkeeping
         allocation of KeyCorp Common Shares (both whole and fractional rounded
         to the nearest one-hundredth of a share) which shall be equal to the
         amount of Participant Deferrals invested by the Participant in the
         Corporation Stock Fund. The Corporation Stock Fund shall also reflect
         on a bookkeeping basis all dividends, gains, and losses attributable to
         such Common Shares. All Corporate Contributions and all Participant
         Deferrals credited to the Corporation Stock Fund, shall be based on the
         New York Stock Exchange's closing price for such

<PAGE>

         Common Shares as of the day such Participant Deferrals are credited to
         the Participants' Plan Account.

                  (h)      "CORPORATION" shall mean KeyCorp, an Ohio
         Corporation, its corporate successors, and any corporation or
         corporations into or with which it may be merged or consolidated.

                  (i)      "DEFERRAL COMMENCEMENT DATE" shall mean the first pay
         period coinciding with or immediately following the date on which the
         Participant reaches his or her maximum contribution limit under Section
         402(g) of the Code and/or the Participant's maximum compensation limit
         under Section 401(a)(17) of the Code which effectively terminates the
         Participant's deferral of Compensation under the 401(k) Savings Plan.

                  (j)      "DEFERRAL ELECTION" shall mean the commitment made by
         the Participant to defer up to 6% of his or her Compensation on a per
         pay basis under the Plan, commencing as of the Participant's Deferral
         Commencement Date; a Participant's Deferral Election shall be made in
         such manner and at such time as the Corporation shall direct.

                  (k)      "DEFERRAL PERIOD" shall mean each Plan year,
         provided, however, that a Participant's initial Deferral Period shall
         be from his or her first day of participation in the Plan through the
         last day of the applicable Plan year.

                  (l)      "EMPLOYEE" shall mean a common law employee who is
         employed by an Employer; provided, however, the term "Employee" shall
         not include any person who at the time services are performed is not
         classified as a common law employee by the Employer even though such
         person may for federal income tax purposes, federal employment tax
         purposes, or any other purpose be reclassified by the Employer as a
         common law employee retroactive to when such services were performed by
         reason of administrative, judicial, regulatory or other governmental
         action.

                  (m)      "EMPLOYER" shall mean the Corporation and any of its
         subsidiaries, unless specifically excluded as an Employer for Plan
         purposes by written action of an officer of the Corporation. An
         Employer's participation shall be subject to all conditions and
         requirements made by the Corporation, and each Employer shall be deemed
         to have appointed the Plan Administrator as its exclusive agent under
         the Plan as long as it continues as a subsidiary.

                  (n)      "INVESTMENT FUNDS" shall mean those investment
         accounts established under the Plan for bookkeeping purposes in which a
         Participant may elect to have his or her Participant Deferrals credited
         and which mirror the investment funds established in accordance with
         and pursuant to Article VIII of the 401(k) Savings Plan as shall be
         amended from time to time. Participant Deferrals invested for
         bookkeeping purposes in the Investment Funds shall be credited on a
         bookkeeping basis with the same earnings, gains, and losses as
         experienced by the 401(k)Savings Plan's investment funds.

<PAGE>

                  (o)      "MATCHING EMPLOYER CONTRIBUTIONS" shall mean the
         amount which an Employer has agreed to contribute to the Plan in
         accordance with the provisions of Article IV of the Plan.

                  (p)      "PARTICIPANT" shall mean an Employee who meets the
         eligibility requirements set forth in Section 2.1 and becomes a Plan
         Participant pursuant to Section 2.2 of the Plan.

                  (q)      "PARTICIPANT DEFERRALS" shall mean the Participant's
         elective deferral of Compensation under this Plan.

                  (r)      "PLAN" shall mean the KeyCorp Excess 401(k) Savings
         Plan, with all amendments hereafter made.

                  (s)      "PLAN ACCOUNT" shall mean those bookkeeping accounts
         established by the Corporation for each Plan Participant, which shall
         reflect all Participant Deferrals and Corporate Contributions with all
         earnings, gains, and losses attributable thereto, if such Participant
         Deferrals and Corporate Contributions had been invested pursuant to
         Article V of the Plan in the various Plan Investment Funds. Plan
         Accounts shall not constitute separate Plan funds or Plan assets.
         Neither the maintenance of, nor the crediting of amounts on a
         bookkeeping basis to such Plan Accounts shall be treated as (i) the
         allocation of any Corporation assets to, or a segregation of any
         Corporation assets in any such Plan Accounts, or (ii) as otherwise
         creating a right in any person or Participant to receive specific
         assets of the Corporation. Benefits under the Plan shall be paid from
         the general assets of the Corporation.

                  (t)      "PROFIT SHARING CONTRIBUTIONS" shall mean those
         discretionary contributions which an Employer may contribute to the
         Plan pursuant to Article IV of the Plan.

                  (u)      "VALUATION DATE" shall mean each "business day" or
         "business days" designated by the Plan Administrator on which
         Investment Funds will be valued for bookkeeping purposes.

                  (v)      "RETIREMENT" shall mean the termination of employment
         of a Participant under circumstances in which the Participant begins to
         receive an Early Retirement or Normal Retirement Date benefit under the
         KeyCorp Cash Balance Pension Plan or, which pursuant to a written
         employment agreement with the Corporation, the Participant is expressly
         treated as if he or she had retired for purposes of the Plan or other
         deferred compensation arrangement of the Corporation.

                  (w)      "TERMINATION" shall mean the voluntary or involuntary
         and permanent termination of a Participant's employment from his or her
         Employer and any other Employer, whether by resignation or otherwise,
         but shall not include the Participant's Retirement or termination as a
         result of Disability.

         1.2      PRONOUNS:  The masculine pronoun wherever used herein includes
the feminine in any case so requiring, and the singular may include the plural.

<PAGE>

         1.3      ADDITIONAL REFERENCE:  All other words and phrases used herein
shall have the meaning given them in the 401(k) Savings Plan, unless a different
meaning is clearly required by the context.

                                   ARTICLE II

                             EMPLOYEE PARTICIPATION

         2.1      EMPLOYEE ELIGIBILITY. An Employee shall be eligible to
participate in the Plan, provided (1) the Employee is a participant in the
401(k) Savings Plan, (2) the Employee's elective deferrals of compensation under
the 401(k) Savings Plan reach the deferral limitations prescribed by Section
402(g) of the Code, and/or the compensation limitations prescribed by Section
401(a)(17) of the Code, and (3) the Corporation selects such Employee to
participate in the Plan.

         2.2      NOTIFICATION OF NEW PARTICIPANTS. The Corporation shall
notify an Employee of his or her eligibility to participate in the Plan; the
Employee's election to defer Compensation under the Plan shall be made at such
time and in such a manner as the Corporation shall direct.

         2.3      EFFECT AND DURATION. Upon becoming a Participant, an Employee
shall be entitled to the benefits and shall be bound by all terms and conditions
of the Plan. If the Corporation determines that a Participant's performance is
no longer at a level that deserves to be rewarded through participation in the
Plan, but does not terminate the Participant's employment with an Employer, the
Participant's Plan participation shall terminate at the end of the Deferral
Period and no new Participant Deferrals thereafter may be made by the
Participant.

         2.4      AUTHORIZED LEAVE OF ABSENCE. A Participant on an authorized
leave of absence who is not receiving Compensation during such leave period
shall continue as a Plan Participant during such leave, provided, however, that
no Corporate Contributions shall be credited to the Participant's Plan Account
on behalf of the Participant during such leave period. Upon the Participant's
return to active employment with an Employer, the Participant's Participant
Deferrals shall automatically resume in accordance with the Participant's
Deferral Election as in effect prior to the Participant's leave period unless
otherwise modified by the Participant.

                                   ARTICLE III

                              PARTICIPANT DEFERRALS

         3.1      PARTICIPANT DEFERRALS.  Upon meeting the eligibility criteria
contained within Section 2.1 hereof, a Participant may defer not less than one
percent nor more than six percent of his or her Compensation under the Plan.
Such Participant Deferrals shall commence with the first payment of Compensation
to the Participant coinciding with (1) the date on which the Participant's
elective deferral of Compensation under the 401(k) Savings Plan reaches the
maximum deferral limitations prescribed under Section 402(g) of the Code, or (2)
the date on which the Participant's elective deferral of Compensation under the
401(k) Savings Plan reaches the maximum compensation limits prescribed under
Section 401(a)(17) of the Code. Participant Deferrals shall be credited on a
bookkeeping basis to the Participant's Plan Account as of each applicable pay
period in which the Participant makes Participant Deferrals under the Plan.

<PAGE>

                                   ARTICLE IV

                             CORPORATE CONTRIBUTIONS

         4.1      MATCHING EMPLOYER CONTRIBUTIONS. Matching Employer
Contributions shall be credited on a bookkeeping basis to the Participant's Plan
Account as of each pay period in proportion to the respective amount of the
Participant's Participant Deferrals deferred under the Plan for such pay period.
Credited Matching Employer Contribution shall equal 100% of those Participant
Deferrals deferred under the Plan for such pay period.

         4.2      PROFIT SHARING CONTRIBUTIONS. Profit Sharing Contributions,
if any, shall be credited to Participant's Plan Account at such time and in such
manner as the Corporation directs.

                                    ARTICLE V

                                   INVESTMENTS

         5.1      PLAN ACCOUNT. All Participant Deferrals and Corporate
Contributions shall be credited on a bookkeeping basis to a Plan Account
established in the Participant's name. Separate sub-accounts may be established
to reflect Participant's investment elections on a bookkeeping basis, with all
earnings, gains, or losses attributable to such elections.

         5.2      INVESTMENT OF PARTICIPANT DEFERRALS. Each Participant shall
direct the manner in which his or her Participant Deferrals are to be invested
for bookkeeping purposes under the Plan. All Participant Deferrals may be
invested for bookkeeping purposes in the Plan's Corporation Stock Fund or any
one or more of the Plan Investment Funds in such amount as the Participant shall
select provided that such election amounts are expressed in five percent
increments. Participants may modify their investment elections at such times and
in such manner as permitted by the Corporation.

         5.3      INVESTMENT OF CORPORATE CONTRIBUTIONS. All Corporate
Contributions credited to the Participant's Plan Account shall be invested for
bookkeeping purposes in the Corporation Stock Fund. Corporate Contributions are
not subject to Participant investment directives.

         5.4      VESTING IN CORPORATE CONTRIBUTIONS. A Participant shall
become vested in those Corporate Contributions credited on a bookkeeping basis
to the Participant's Plan Account upon the Participant's (1) completion of three
years of vested service, (2) Disability, or (3) death. For purposes of this
Section 5.4 hereof, the term "vested service" shall be calculated based on the
Participant's employment commencement date through the Participant's Termination
or Retirement date (which ever shall first occur), and shall be based on
consecutive twelve-month periods during which time the Participant is employed
by an Employer.

         5.5      VALUATION OF PLAN ACCOUNTS. As of each Valuation Date, the
Plan Administrator shall verify the amount of Participant Deferrals, Corporate
Contributions, dividends, earnings, and losses, if any, to be credited to the
Participant's Plan Account in accordance with the provisions of the Plan. The
reasonable and equitable decision of the Plan Administrator as to the value of
the Participant's Plan Account shall be conclusive and binding upon all
Participants and the Beneficiary of each deceased Participant having any
interest, direct or indirect in the Participant's Plan Account. The value of the
Participant's Plan Account on any day not a Valuation Date, shall be the value
on the last preceding Valuation Date.

<PAGE>

         5.6      CORPORATE ASSETS. All Participant Deferrals, Corporate
Contributions, dividends, and all earnings and losses credited to a
Participant's Plan Account remain the assets and property of the Corporation,
which shall be subject to distribution to the Participant only in accordance
with Articles VI and VII of the Plan. All payments hereunder shall be in the
form of cash and KeyCorp Common Shares and shall be made from the general assets
of the Corporation, and Participants and Beneficiaries shall have the status of
general unsecured creditors of the Corporation. Nothing contained in the Plan
shall create, or be construed as creating a trust of any kind or any other
fiduciary relationship between the Participant, the Corporation, or any other
person. It is the intention of the Corporation and the Participant that the Plan
be unfunded for tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended.

         5.7      NO PRESENT INTEREST. Subject to any federal statute to the
contrary, no right or benefit under the Plan and no right or interest in each
Participant's Plan Account shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance, or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber, or charge any right or benefit under
the Plan, or Participant's Plan Account shall be void. No right, interest, or
benefit under the Plan or Participant's Plan Account shall be liable for or
subject to the debts, contracts, liabilities, or torts of the Participant or
Beneficiary. If the Participant or Beneficiary becomes bankrupt or attempts to
alienate, sell, assign, pledge, encumber, or charge any right under the Plan or
Participant's Plan Account, such attempt shall be void and unenforceable.

         5.8      EFFECT OF PLAN TERMINATION. Notwithstanding anything to the
contrary contained in the Plan, the termination of the Plan or the termination
of the 401(k) Savings Plan shall terminate the liability of the Corporation to
make further Corporate Contributions to the Plan.

                                   ARTICLE VI

                          DISTRIBUTION OF PLAN BENEFITS

         6.1      DISTRIBUTION OPTIONS. Subject to the provisions of Section
6.3 and Section 6.4 hereof, a Participant shall elect, as reflected in the
Participant's Distribution Election Agreement, to receive a distribution of his
or her vested Plan Account balance from the Plan's Investment Funds (other than
from the Corporation Stock Account) under the following payment options:

         (a)      a single lump sum distribution, or

         (b)      a series of monthly installment distributions over a period of
                  60, 120, or 180 months.

         Distributions of Participant Deferrals from the Plan's Investment Funds
other than the Corporation Stock Fund shall be made in cash.

         6.2      DISTRIBUTION OPTIONS FROM THE CORPORATION STOCK ACCOUNT.
Subject to the provisions of Section 6.3 and Section 6.4 of the Plan, a
Participant shall elect, as reflected in the Participant's Distribution Election
Agreement, to receive a distribution of his or her vested Plan Account balance
from the Plan's Corporation Stock Account under the following payment options:

         (a)      a single lump sum distribution, or

         (b)      a series of annual installment distributions over a period of
                  5, 10, or 15 years.

<PAGE>

         Distributions of Participant Deferrals and vested Corporate
Contributions from the Plan's Corporation Stock Fund made or commenced prior to
January 1, 1999 shall be made in cash; distributions from the Corporation Stock
Fund made or commenced on or after January 1, 1999 shall be made in KeyCorp
Common Shares; provided, however, that in the event that the Corporation enters
into a transaction intended to qualify as a pooling of interests for accounting
purposes prior to January 1, 1999, all distributions from the Corporation Stock
Fund shall continue to be made in cash.

         6.3      DISTRIBUTIONS FOLLOWING TERMINATION, RETIREMENT OR DISABILITY.

                  (a)      Upon a Participant's Termination, the Participant's
         vested Plan Account balance shall be distributed to the Participant in
         a single lump sum payment.

                  (b)      Upon a Participant's Retirement, or Disability, the
         Participant's vested Plan Account balance shall be distributed to the
         Participant in accordance with the distribution elections contained
         within the Participant's Distribution Election Agreement; provided,
         however, that if the Participant has failed to complete a Distribution
         Election Agreement, then the Participant's vested Plan Account balance
         shall be distributed as a single lump sum payment. Notwithstanding the
         foregoing provisions of this Section 6.3, however, in the event of the
         Participant's Retirement and thereafter within twelve months of such
         Retirement, without the prior written approval of the Corporation, the
         Participant provides services in any capacity to a financial services
         organization, or other competitor of the Corporation or any of its
         subsidiaries, such Participant's distribution election as contained
         within the Participant's Distribution Election Agreement shall be null
         and void, and the Participant shall receive an immediate lump sum
         distribution of his or her vested Plan Account balance.

         6.4      TIMING OF DISTRIBUTIONS. The Participant's vested Plan
Account shall be valued as of the Valuation Date immediately preceding his or
her Termination, Retirement or Disability (the "valuation date").

                  (a)      LUMP SUM DISTRIBUTION. If a Participant has elected
         to receive a lump sum distribution of his or her vested Plan Account
         upon his or her Termination, Retirement or Disability date, such lump
         sum distribution shall be made as soon as reasonably practicable
         immediately following the Participant's Termination, Retirement or
         Disability date.

                  (b)      INSTALLMENT DISTRIBUTION. If a Participant has
         elected to receive an installment distribution of his or her Plan
         Account upon his or her Retirement or Disability, such installment
         distribution shall commence as soon as reasonably practicable following
         the Participant's Retirement or Disability date.

                  (i)      The Participant's vested unpaid Plan Account balance
                  invested for bookkeeping purposes in the Plan's Investment
                  Funds (other than Corporation Stock Fund) shall be reflected
                  in a distribution sub-account, which shall be credited with
                  all earnings, gains and losses on such Investment Funds during
                  the Participant's installment distribution period.

                  (ii)     The Participant's vested unpaid Plan Account balance
                  invested for bookkeeping purposes in the Plan's Corporation
                  Stock Fund shall be reflected as a number of whole and
                  fractional Common Shares in a distribution sub-account and
                  shall be credited with dividends on a bookkeeping basis which
                  shall be reinvested in the Plan's Corporation

<PAGE>

                  Stock Fund throughout the installment distribution period; all
                  such reinvested dividends shall be paid to the Participant in
                  Common Shares in conjunction with the Participant's final
                  installment payment under the Plan.

         6.5      DISTRIBUTION OF SMALL ACCOUNTS. Notwithstanding the
provisions of Sections 6.1, 6.2, 6.3, and 6.4 hereof, if the value of a
Participant's vested Account balance as of the Valuation Date immediately
preceding the Participant's Retirement or Disability date is under $50,000, such
balance shall be distributed to the Participant as a single lump sum
distribution as soon as reasonably practicable following such Retirement or
Disability date.

         6.6      FACILITY OF PAYMENT. If it is found that any individual to
whom an amount is payable hereunder is incapable of attending to his or her
financial affairs because of any mental or physical condition, including the
infirmities of advanced age, such amount (unless prior claim therefor shall have
been made by a duly qualified guardian or other legal representative) may, in
the discretion of the Corporation, be paid to another person for the use or
benefit of the individual found incapable of attending to his or her financial
affairs or in satisfaction of legal obligations incurred by or on behalf of such
individual. Any such payment shall be charged to the Participant's Plan Account
from which any such payment would otherwise have been paid to the individual
found incapable of attending to his or her financial affairs, and shall be a
complete discharge of any liability therefor under the Plan.

                                   ARTICLE VII

                             BENEFICIARY DESIGNATION

         7.1      BENEFICIARY DESIGNATION. Subject to Section 7.3 hereof, the
Participant shall have the right, at any time, to designate one or more persons
or an entity as Beneficiary (both primary as well as secondary) to whom benefits
under this Plan shall be paid in the event of Participant's death prior to
complete distribution of the Participant's Plan Account. Each Beneficiary
designation shall be in a written form prescribed by the Corporation and shall
be effective only when filed with the Corporation during the Participant's
lifetime.

         7.2      CHANGING BENEFICIARY. Subject to Section 7.3, any Beneficiary
designation may be changed by a Participant without the consent of the
previously named Beneficiary by the filing of a new designation with the
Corporation. The filing of a new designation shall cancel all designations
previously filed.

         7.3      NO BENEFICIARY DESIGNATION. If any Participant fails to
designate a Beneficiary in the manner provided above, if the designation is
void, or if the Beneficiary (including all contingent Beneficiaries) designated
by a deceased Participant dies before the Participant or before complete
distribution of the Participant's benefits, the Participant's Beneficiary shall
be the person in the first of the following classes in which there is a
survivor:

         (a)      The Participant's spouse;

         (b)      The Participant's children in equal shares, except that if any
                  of the children predeceases the Participant but leaves issue
                  surviving, then such issue shall take, by right of
                  representation the share the parent would have taken if
                  living:

<PAGE>

         (c)      The Participant's estate.

         7.4      DISTRIBUTION UPON DEATH. If a Participant dies after the
distribution of his or her vested interest under the Plan has commenced, the
remaining portion of the Participant's entire interest under the Plan, if any,
shall be distributed to the Participant's Beneficiary under the method of
distribution being used as of the Participant's date of death. If the
Participant dies before the distribution of the Participant's Plan Account has
commenced, the Participant's entire interest under the Plan shall be valued as
of the Valuation Date immediately preceding the Participant's date of death, and
shall be distributed to his or her Beneficiary in a lump sum payment as soon as
reasonably practicable following the Participant's date of death.

                                  ARTICLE VIII

                                 ADMINISTRATION

         8.1      ADMINISTRATION. The Corporation, which shall be the
"Administrator" of the Plan for purposes of ERISA and the "Plan Administrator"
for purposes of the Code, shall be responsible for the general administration of
the Plan, for carrying out the provisions hereof, and for making payments
hereunder. The Corporation shall have the sole and absolute discretionary
authority and power to carry out the provisions of the Plan, including, but not
limited to, the authority and power (a) to determine all questions relating to
the eligibility for and the amount of any benefit to be paid under the Plan, (b)
to determine all questions pertaining to claims for benefits and procedures for
claim review, (c) to resolve all other questions arising under the Plan,
including any questions of construction and/or interpretation, and (d) to take
such further action as the Corporation shall deem necessary or advisable in the
administration of the Plan. All findings, decisions, and determinations of any
kind made by the Plan Administrator shall not be disturbed unless the Plan
Administrator has acted in an arbitrary and capricious manner. Subject to the
requirements of law, the Plan Administrator shall be the sole judge of the
standard of proof required in any claim for benefits and in any determination of
eligibility for a benefit. All decisions of the Plan Administrator shall be
final and binding on all parties. The Plan Administrator may employ such
attorneys, investment counsel, agents, and accountants as it may deem necessary
or advisable to assist it in carrying out its duties hereunder. The actions
taken and the decisions made by the Plan Administrator hereunder shall be final
and binding upon all interested parties subject, however, to the provisions of
Section 8.2. The Plan Year, for purposes of Plan administration, shall be the
calendar year.

         8.2      CLAIMS REVIEW PROCEDURE. Whenever the Plan Administrator
decides for whatever reason to deny, whether in whole or in part, a claim for
benefits under this Plan filed by any person (herein referred to as the
"Claimant"), the Plan Administrator shall transmit a written notice of its
decision to the Claimant, which notice shall be written in a manner calculated
to be understood by the Claimant and shall contain a statement of the specific
reasons for the denial of the claim and a statement advising the Claimant that,
within 60 days of the date on which he or she receives such notice, he or she
may obtain review of the decision of the Plan Administrator in accordance with
the procedures hereinafter set forth. Within such 60-day period, the Claimant or
his or her authorized representative may request that the claim denial be
reviewed by filing with the Plan Administrator a written request therefor, which
request shall contain the following information:

         (a)      the date on which the request was filed with the Plan
                  Administrator; provided, however, that the date on which the
                  request for review was in fact filed with the Plan

<PAGE>
                  Administrator shall control in the event that the date of the
                  actual filing is later than the date stated by the Claimant
                  pursuant to this paragraph (a);

         (b)      the specific portions of the denial of his or her claim which
                  the Claimant requests the Plan Administrator to review;

         (c)      a statement by the Claimant setting forth the basis upon which
                  he or she believes the Plan Administrator should reverse its
                  previous denial of the claim and accept the claim as made; and

         (d)      any written material which the Claimant desires the Plan
                  Administrator to examine in its consideration of his or her
                  position as stated pursuant to paragraph (b) above.

         In accordance with this Section, if the claimant requests a review of
the Plan Administrator's decision, such review shall be made by the Plan
Administrator, who shall, within sixty (60) days after receipt of the request
form, review and render a written decision on the claim containing the specific
reasons for the decision including reference to Plan provisions upon which the
decision is based. All findings, decisions, and determinations of any kind made
by the Plan Administrator shall not be modified unless the Plan Administrator
has acted in an arbitrary and capricious manner. Subject to the requirements of
law, the Plan Administrator shall be the sole judge of the standard of proof
required in any claim for benefits, and any determination of eligibility for a
benefit. All decisions of the Plan Administrator shall be binding on the
claimant and upon all other Persons. If the Participant or Beneficiary shall not
file written notice with the Plan Administrator at the times set forth above,
such individual shall have waived all benefits under the Plan other than as
already provided, if any, under the Plan.

                                   ARTICLE IX

                        AMENDMENT AND TERMINATION OF PLAN

         9.1      RESERVATION OF RIGHTS. The Corporation reserves the right to
terminate the Plan at any time by action of the Board of Directors of the
Corporation, or any duly authorized committee thereof, and to modify or amend
the Plan, in whole or in part, at any time and for any reason, subject to the
following:

         (a)      PRESERVATION OF ACCOUNT BALANCE. No termination, amendment, or
                  modification of the Plan shall reduce (i) the amount of
                  Participant Deferrals and Corporate Contributions, and (ii)
                  all earnings and gains on such Participant Deferrals and
                  Corporate Contributions that have accrued up to the effective
                  date of the termination, amendment, or modification.

         (b)      CHANGES IN EARNINGS RATE. No amendment or modification of the
                  Plan shall reduce or modify the method of accruing earnings,
                  gains, and losses under the Plan's Investment Funds that
                  differ from the method of accruing earnings, gains, and losses
                  under the 401(k) Savings Plan's investment funds until the
                  close of the applicable Deferral Period in which such
                  amendment or modification is made.

<PAGE>

                                    ARTICLE X

                                CHANGE OF CONTROL

         10.1     CHANGE OF CONTROL. Notwithstanding any other provision of the
Plan to the contrary, in the event of a Change of Control as defined in
accordance with Section 1.1 of the Plan, no amendment or modification of this
Plan may be made at any time on or after such Change of Control (1) to reduce or
modify a Participant's Pre-Change of Control Account Balance, (2) to reduce or
modify the Corporation Stock Fund's method of calculating all earnings, gains,
and/or losses on a Participant's Pre-Change of Control Account Balance, (3) to
reduce or modify any other Investment Funds' method of calculating all earnings,
gains, and/or losses on a Participant's Pre-Change of Control Account Balance,
or (4) to reduce or modify the Participant's Participant Deferrals and/or
Corporate Contributions to be credited to a Participant's Plan Account for the
applicable Deferral Period. For purposes of this Section 10.1, the term
"Pre-Change of Control Account Balance" shall mean, with regard to any Plan
Participant, the aggregate amount of such Participant's Participant Deferrals
and Corporate Contributions with all earnings, gains, and losses thereon which
are credited to the Participant's Plan Account through the close of the calendar
year in which such Change of Control occurs.

         10.2     COMMON STOCK CONVERSION. In the event of a Change of Control
in which the common shares of the Corporation are converted into or exchanged
for securities, cash and/or other property as a result of any capital
reorganization or reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with or into another corporation or
entity, or the sale of all or substantially all of its assets to another
corporation or entity, the Corporation shall cause the Corporation Stock Fund to
reflect on a bookkeeping basis the securities, cash and other property that
would have been received in such reorganization, reclassification,
consolidation, merger or sale on an equivalent amount of common shares equal to
the balance in the Corporation Stock Fund and, from and after such
reorganization, reclassification, consolidation, merger or sale, the Corporation
Stock Fund shall reflect on a bookkeeping basis all dividends, interest,
earnings and losses attributable to such securities, cash, and other property.

         10.3     DISTRIBUTION PROVISIONS. In the event of a Change of Control,
the provisions of Section 6.3 of the Plan which limit a Participant's ability to
provide services to a financial services organization, business, or company upon
the Participant's Retirement, shall become null and void, and such Participant's
distribution elections as contained within the Participant's Agreement shall
control the method and timing of the Participant's distribution of his or her
Plan Account balances.

         10.4     AMENDMENT IN THE EVENT OF A CHANGE OF CONTROL. On or after a
Change of Control, the provisions of Article II, Article IV, Article V, Article
VI, Article VII, Article VIII, Article IX and Article X may not be amended or
modified as such Sections and Articles apply with regard to the Participants'
Pre-Change of Control Account Balances.

<PAGE>

                                   ARTICLE XI

                           SECURITIES LAWS COMPLIANCE

         11.1     RESTRICTIONS IMPOSED ON TRANSACTIONS INVOLVING THE CORPORATION
STOCK FUND. Notwithstanding any contrary provision in this Plan, the
Corporation may, in its discretion, but in a uniform, non-discriminatory manner,
delay, suspend or otherwise limit any investment in or withdrawal from the
Corporation Stock Fund for such time and to the extent the Corporation, on
advice of legal counsel, determines is necessary or desirable to avoid violating
any applicable state or federal securities laws, rules or regulations.

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         12.1     UNFUNDED PLAN. This Plan is an unfunded plan maintained
primarily to provide deferred compensation benefits for a select group of
"management or highly-compensated employees" within the meaning of Sections 201,
301, and 401 of ERISA, and therefore is exempt from the provisions of Parts 2,
3, and 4 of Title I of ERISA.

         12.2     NO COMMITMENT AS TO EMPLOYMENT. Nothing herein contained
shall be construed as a commitment or agreement upon the part of any Employee
hereunder to continue his or her employment with an Employer, and nothing herein
contained shall be construed as a commitment on the part of any Employer to
continue the employment, rate of compensation or terms and conditions of
employment of any Employee hereunder for any period. All Participants shall
remain subject to discharge to the same extent as if the Plan had never been put
into effect.

         12.3     BENEFITS. Nothing in the Plan shall be construed to confer
any right or claim upon any person, firm, or corporation other than the
Participants, former Participants, and Beneficiaries.

         12.4     ABSENCE OF LIABILITY. No member of the Board of Directors of
the Corporation or a subsidiary or committee authorized by the Board of
Directors, or any officer of the Corporation or a subsidiary or officer of a
subsidiary shall be liable for any act or action hereunder, whether of
commission or omission, taken by any other member, or by any officer, agent, or
Employee, except in circumstances involving bad faith or willful misconduct, for
anything done or omitted to be done.

         12.5     EXPENSES. The expenses of administration of the Plan shall be
paid by the Corporation.


         12.6     PRECEDENT. Except as otherwise specifically agreed to by the
Corporation in writing, no action taken in accordance with the Plan by the
Corporation shall be construed or relied upon as a precedent for similar action
under similar circumstances.

         12.7     WITHHOLDING. The Corporation shall withhold any tax which the
Corporation in its discretion deems necessary to be withheld from any payment to
any Participant, former Participant, or Beneficiary hereunder, by reason of any
present or future law.

         12.8     VALIDITY OF PLAN. The validity of the Plan shall be
determined and the Plan shall be construed and interpreted in accordance with
the provisions of ERISA, the Code, and, to the extent

<PAGE>

applicable, the laws of the State of Ohio. The invalidity or illegality of any
provision of the Plan shall not affect the validity or legality of any other
part thereof.

         12.9     PARTIES BOUND. The Plan shall be binding upon the Employers,
Participants, former Participants, and Beneficiaries hereunder, and, as the case
may be, the heirs, executors, administrators, successors, and assigns of each of
them.

         12.10    HEADINGS. All headings used in the Plan are for convenience
of reference only and are not part of the substance of the Plan.

         12.11    DUTY TO FURNISH INFORMATION. The Corporation shall furnish to
each Participant, former Participant, or Beneficiary any documents, reports,
returns, statements, or other information that it reasonably deems necessary to
perform its duties imposed hereunder or otherwise imposed by law.

         12.12    TRUST FUND. At its discretion, the Corporation may establish
one or more trusts, with such trustees as the Corporation may approve, for the
purpose of providing for the payment of benefits owed under the Plan. Although
such a trust may be irrevocable, in the event of insolvency or bankruptcy of the
Corporation, such assets will be subject to the claims of the Corporation's
general creditors. To the extent any benefits provided under the Plan are paid
from any such trust, the Employer shall have no further obligation to pay them.
If not paid from the trust, such benefits shall remain the obligation of the
Employer.

         12.13    VALIDITY. In case any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and enforced
as if such illegal and invalid provision had never been inserted herein.

         12.14    NOTICE. Any notice required or permitted under the Plan shall
be deemed sufficiently provided if such notice is in writing and hand delivered
or sent by registered or certified mail. Such notice shall be deemed given as of
the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark or on the receipt for registration or certification. Mailed notice
to the Corporation shall be directed to the Corporation's address, attention:
KeyCorp Compensation and Benefits Department. Mailed notice to a Participant or
Beneficiary shall be directed to the individual's last known address in the
Employer's records.

         12.15    SUCCESSORS. The provisions of this Plan shall bind and inure
to the benefit of each Employer and its successors and assigns. The term
successors as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of an Employer.

                                  KEYCORP

                                  By:   /s/ Thomas E. Helfrich
                                      -------------------------------------

                                  Title:   Executive Vice President
                                         ----------------------------------


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.40
<SEQUENCE>12
<FILENAME>l97974aexv10w40.txt
<DESCRIPTION>EX-10.40 KEYCORP SUPPLEMENTAL RETIREMENT PLAN
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.40
                                     KEYCORP
                          SUPPLEMENTAL RETIREMENT PLAN

                                    ARTICLE I

                                    THE PLAN

         The KeyCorp Supplemental Retirement Plan (the "Plan"), as amended and
restated as of August 1, 1996, is hereby amended and restated in its entirety to
be effective as of January 1, 2002. The Plan, as amended, is designed to provide
a supplemental retirement benefit to certain key employees of KeyCorp and its
subsidiaries who became covered under the Plan in their capacity as a key
employee of Society Corporation, and who in accordance with the terms of the
Plan constitute a "Grandfathered Employee" as that term is defined below. It is
the intention of KeyCorp and it is the understanding of the Grandfathered
Employees covered under the Plan, that the Plan is unfunded for tax purposes and
for purposes of Title I of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").

                                   ARTICLE II

                                   DEFINITIONS

         2.1      MEANINGS OF DEFINITIONS. As used herein, the following words
and phrases shall have the meanings hereinafter set forth, unless a different
meaning is plainly required by the context:

         (a)      "AVERAGE INTEREST CREDIT" shall mean the average of the
                  Interest Credits (as defined in the Retirement Plan) for the
                  three (3) consecutive calendar years ending with the year of
                  the Grandfathered Employee's termination.

         (b)      "AVERAGE TREASURY RATE" shall mean the average of the Treasury
                  Rates (as defined in the Retirement Plan) for the three (3)
                  consecutive calendar years ending with the year of the
                  Grandfathered Employee's termination.

         (c)      "BENEFICIARY" shall mean the Grandfathered Employee's
                  surviving spouse or such other Beneficiary determined pursuant
                  to Article VII of the Retirement Plan in the event the
                  Grandfathered Employee dies before his or her Supplemental
                  Retirement Benefit shall have been distributed to him or her
                  in full.

         (d)      "COMPENSATION" for any Plan year or any partial Plan year in
                  which the Grandfathered Employee incurs a severance from
                  service date shall mean the entire amount of base compensation
                  paid to such Grandfathered Employee during such period by
                  reason of his employment as an Employee as reported for
                  federal income tax purposes, or such base compensation which
                  would have been paid

                                      -1-
<PAGE>
                  except for (1) the timing of an Employer's payroll processing
                  operations, (2) the Grandfathered Employee's election to
                  participate in the KeyCorp 401(k) Savings Plan, KeyCorp Excess
                  401(k) Savings Plan, the KeyCorp Flexible Benefits Plan, the
                  KeyCorp Automatic Deferral Plan, and/or (3) the Grandfathered
                  Employee's election to defer such base compensation election
                  of under the KeyCorp Deferred Compensation Plan for the
                  applicable Plan year(s), provided, however, that the term
                  Compensation shall specifically exclude:

                  (i)      any amount attributable to the Grandfathered
                           Employee's exercise of stock appreciation rights and
                           the amount of any gain to the Grandfathered Employee
                           upon the exercise of stock options;

                  (ii)     any amount attributable to the Grandfathered
                           Employee's receipt of non-cash remuneration whether
                           or not it is included in the Grandfathered Employee's
                           income for federal income tax purposes;

                  (iii)    any amount attributable to the Grandfathered
                           Employee's receipt of moving expenses and any
                           relocation bonus paid to the Grandfathered Employee
                           during the Plan year;

                  (iv)     any amount attributable to a lump sum severance
                           payment paid by an Employer or the Corporation to the
                           Grandfathered Employee;

                  (v)      any amount attributable to fringe benefits (cash and
                           non-cash);

                  (vi)     any amount attributable to any bonus or payment made
                           as an inducement for the Grandfathered Employee to
                           accept employment with an Employer;

                  (vii)    any amount paid to the Grandfathered Employee during
                           the Plan year which is attributable to interest
                           earned and any KeyCorp matching contributions
                           allocated on compensation deferred under a plan of an
                           Employer or the Corporation.

                  (viii)   any amount attributable to salary deferrals paid to
                           the Grandfathered Employee during the Plan year,
                           which have been previously included as compensation
                           under the Plan; and

                  (ix)     any amount paid for any period after the
                           Grandfathered Employee's termination or retirement
                           date.

                                      -2-
<PAGE>

         (e)      "CORPORATION" shall mean KeyCorp, an Ohio corporation, its
                  corporate successors, and any corporation or corporations into
                  or with which it may be merged or consolidated.

         (f)      "EARLY RETIREMENT DATE" shall mean the date of the
                  Grandfathered Employee's retirement from his or her employment
                  with an Employer on or after the Grandfathered Employee's
                  attainment of age 55 and completion of a minimum of ten years
                  of Benefit Service, but prior to the Grandfathered Employee's
                  Normal Retirement Date.

         (g)      "EMPLOYEE" shall mean any person who is employed by an
                  Employer, provided, however, that as of December 31, 1994 all
                  Employees who are Plan Grandfathered Employees (other than
                  Grandfathered Employees) shall cease any further future
                  benefit accrual under the Plan and such Employees'
                  Supplemental Retirement Plan benefit shall be valued in
                  accordance with the provisions of Article IX hereof and
                  transferred to KeyCorp Excess Cash Balance Pension Plan.
                  Thereafter, effective January 1, 1995, the term "Employee"
                  shall include only Grandfathered Employees.

         (h)      "EMPLOYER" shall mean the Corporation and any of its
                  subsidiaries or affiliates unless specifically excluded as an
                  Employer for Plan purposes by written action of an officer of
                  the Corporation. An Employer's participation shall be subject
                  to any conditions or requirements made by the Corporation, and
                  each Employer shall be deemed to appoint the Corporation as
                  its exclusive agent under the Plan as long as it continues as
                  an Employer.

         (i)      "FINAL AVERAGE COMPENSATION" shall mean with respect to any
                  Grandfathered Employee, the annual average of his or her
                  highest aggregate Compensation for any period of five
                  consecutive years within the period of ten consecutive full
                  years immediately prior to his or her retirement or other
                  termination of employment, or any termination of the Plan,
                  whichever first occurs; provided, however, that if a
                  Grandfathered Employee is employed for less than five
                  consecutive years prior to such date, the term shall mean the
                  monthly average of the aggregate amount of his or her
                  Compensation for the entire period of the Grandfathered
                  Employee's employment, multiplied by 12. If a Grandfathered
                  Employee receives no Compensation for any portion of such five
                  consecutive years because of absence from work, there shall be
                  treated as Compensation received during such period of absence
                  an amount equal to the Compensation he or she would have
                  received had the Grandfathered Employee not been absent, such
                  amount to be determined by the Corporation on the basis of
                  such Grandfathered Employee's salary or wage rate in effect
                  immediately prior to such absence; provided, however, that no
                  Compensation shall be credited hereunder for the period during
                  which the Grandfathered Employee is permanently and totally
                  disabled and for which he receives benefits under the long
                  term disability program maintained in effect by his Employer.

                                      -3-

<PAGE>

         (j)      "GRANDFATHERED EMPLOYEE" shall mean an Employee who is listed
                  on Exhibit A attached hereto.

         (k)      "HARMFUL ACTIVITY" shall have occurred if the Grandfathered
                  Employee shall do any one or more of the following:

                  (i)      Use, publish, sell, trade or otherwise disclose
                           Non-Public Information of KeyCorp unless such
                           prohibited activity was inadvertent, done in good
                           faith and did not cause significant harm to KeyCorp.

                  (ii)     After notice from KeyCorp, fail to return to KeyCorp
                           any document, data, or thing in his or her possession
                           or to which the Grandfathered Employee has access
                           that may involve Non-Public Information of KeyCorp.

                  (iii)    After notice from KeyCorp, fail to assign to KeyCorp
                           all right, title, and interest in and to any
                           confidential or non-confidential Intellectual
                           Property which the Grandfathered Employee created, in
                           whole or in part, during employment with KeyCorp,
                           including, without limitation, copyrights,
                           trademarks, service marks, and patents in or to (or
                           associated with) such Intellectual Property.

                  (iv)     After notice from KeyCorp, fail to agree to do any
                           acts and sign any document reasonably requested by
                           KeyCorp to assign and convey all right, title, and
                           interest in and to any confidential or
                           non-confidential Intellectual Property which the
                           Grandfathered Employee created, in whole or in part,
                           during employment with KeyCorp, including, without
                           limitation, the signing of patent applications and
                           assignments thereof.

                  (v)      Upon the Grandfathered Employee's own behalf or upon
                           behalf of any other person or entity that competes or
                           plans to compete with KeyCorp, solicit or entice for
                           employment or hire any KeyCorp employee.

                  (vi)     Upon the Grandfathered Employee's own behalf or upon
                           behalf of any other person or entity that competes or
                           plans to compete with KeyCorp, call upon, solicit, or
                           do business with (other than business which does not
                           compete with any business conducted by KeyCorp) any
                           KeyCorp customer the Grandfathered Employee called
                           upon, solicited, interacted with, or became
                           acquainted with, or learned of through access to
                           information (whether or not such information is or
                           was non-public) while the Grandfathered Employee was
                           employed at KeyCorp unless such prohibited activity
                           was inadvertent, done in good faith, and did not
                           involve a customer whom the Grandfathered Employee
                           should have reasonably known was a customer of
                           KeyCorp.

                                      -4-

<PAGE>

                  (vii)    Upon the Grandfathered Employee's own behalf or upon
                           behalf of any other person or entity that competes or
                           plans to compete with KeyCorp, after notice from
                           KeyCorp, continue to engage in any business activity
                           in competition with KeyCorp in the same or a closely
                           related activity that the Grandfathered Employee was
                           engaged in for KeyCorp during the one year period
                           prior to the termination of the Grandfathered
                           Employee's employment.

                           For purposes of this Section 2.1(k) the term:

                           "INTELLECTUAL PROPERTY" shall mean any invention,
                           idea, product, method of doing business, market or
                           business plan, process, program, software, formula,
                           method, work of authorship, or other information, or
                           thing relating to KeyCorp or any of its businesses.

                           "NON-PUBLIC INFORMATION" shall mean, but is not
                           limited to, trade secrets, confidential processes,
                           programs, software, formulas, methods, business
                           information or plans, financial information, and
                           listings of names (e.g., employees, customers, and
                           suppliers) that are developed, owned, utilized, or
                           maintained by an employer such as KeyCorp, and that
                           of its customers or suppliers, and that are not
                           generally known by the public.

                           "KEYCORP" shall include KeyCorp, its subsidiaries,
                           and its affiliates.

         (l)      "INCENTIVE COMPENSATION AWARD" for any Plan year shall
                  collectively mean the short term incentive compensation award
                  (whether in cash or common shares of the Corporation, and
                  whether paid or deferred, or a combination of both) and the
                  long term incentive compensation award (whether in cash or
                  common shares of the Corporation, and whether paid or
                  deferred, or a combination of both) (if any) granted to a
                  Grandfathered Employee under an Incentive Compensation Plan,
                  as follows:

                  -        An incentive compensation award granted under the
                           KeyCorp Annual Incentive Plan, the KeyCorp Short Term
                           Incentive Compensation Plan, the KeyCorp Management
                           Incentive Compensation Plan, and/or such other
                           Employer-sponsored line of business Incentive
                           Compensation Plan which shall constitute an incentive
                           compensation award for the year in which the award is
                           earned (without regard to the actual time of
                           payment).

                  -        An incentive compensation award granted under the
                           KeyCorp Long Term Incentive Compensation Plan ("LTIC
                           Plan") with respect to any multi-year performance
                           period which shall be deemed to be for the last year
                           of the multi-year period without regard to the actual
                           time of payment of the award. Accordingly, an
                           incentive compensation award granted under the LTIC
                           Plan

                                      -5-
<PAGE>
                           with respect to the three-year performance period of
                           1993, 1994, and 1995 will be deemed to be for 1995
                           (without regard to the actual time of payment), and
                           the entire Incentive Compensation award under the
                           LTIC Plan for that performance period will be a LTIC
                           Plan award for the year 1995.

                  -        An incentive compensation award granted under the
                           KeyCorp Long Term Incentive Plan ("Long Term Plan")
                           with respect to any multi-year period which shall be
                           deemed to be for the last year of the multi-year
                           performance period and for the year immediately
                           following such year (without regard to the actual
                           time of payment). Accordingly, an award granted under
                           the Long Term Plan with respect to the four-year
                           performance period of 1998, 1999, 2000, and 2001
                           shall be deemed to be for the years 2001 and 2002,
                           with one-half the award allocated to the year 2001,
                           and one-half the award allocated to the year 2002.

                  -        An incentive compensation award granted in the form
                           of restricted stock under the KeyCorp Amended and
                           Restated 1991 Equity Compensation Plan with respect
                           to any multi-year period (but specifically excluding
                           those awards applicable to the 2002-2003 multi-year
                           period), which shall be deemed to be for the year in
                           which the award (grant) is made to the Grandfathered
                           Employee; provided, however, that only those shares
                           of restricted stock that have vested as of the
                           Grandfathered Employee's termination date shall be
                           utilized for purposes of determining the
                           Grandfathered Employee's incentive compensation
                           award. The fair market value of such shares as of the
                           date of the restricted stock grant multiplied by the
                           number of vested shares as of the Grandfathered
                           Employee's termination date shall determine the value
                           of such incentive compensation award for purposes of
                           calculating the Grandfathered Employee's Supplemental
                           Retirement Benefit under the provisions of Article
                           III of the Plan.

                           Notwithstanding the foregoing, however, if at the
                           time of the Grandfathered Employee's termination
                           date, the Grandfathered Employee maintains shares of
                           not forfeited restricted stock and such restricted
                           stock later vests in conjunction with the passage of
                           time or with the Corporation's attainment of certain
                           performance criteria, or otherwise, then as of such
                           vesting date(s), the Grandfathered Employee's Monthly
                           Supplemental Retirement Benefit shall be recalculated
                           to include such newly vested shares for purposes of
                           determining the value of the Grandfathered Employee's
                           incentive compensation award(s) in accordance with
                           Article III of the Plan.

                  -        An incentive compensation award granted in the form
                           of either restricted stock and/or phantom shares
                           (hereinafter collectively referred to as "shares")
                           under the KeyCorp Chief Executive Officer Plan with
                           respect to any multi-year period (but specifically
                           excluding those awards applicable to the 2002-

                                      -6-

<PAGE>

                           2003 multi-year period), which shall be deemed to be
                           for the year in which the award (grant) is made to
                           the Grandfathered Employee; provided, however, that
                           only those shares that have vested as of the
                           Grandfathered Employee's termination date shall be
                           utilized for purposes of determining the
                           Grandfathered Employee's incentive compensation
                           award. The fair market value of such shares as of the
                           date of the share grant multiplied by the number of
                           vested shares as of the Grandfathered Employee's
                           termination date shall determine the value of such
                           incentive compensation award for purposes of
                           calculating the Grandfathered Employee's Supplemental
                           Retirement Benefit under the provisions of Article
                           III of the Plan.

                           Notwithstanding the foregoing, however, if at the
                           time of the Grandfathered Employee's termination
                           date, the Grandfathered Employee maintains not
                           forfeited shares, and such shares later vest in
                           conjunction with the passage of time or with the
                           Corporation's attainment of certain performance
                           criteria, or otherwise, then as of such vesting
                           date(s), the Grandfathered Employee's Monthly
                           Supplemental Retirement Benefit shall be recalculated
                           to include such newly vested shares for purposes of
                           determining the value of the Grandfathered Employee's
                           incentive compensation award(s) in accordance with
                           Article III of the Plan.

         (m)      "INCENTIVE COMPENSATION PLAN" shall mean the KeyCorp
                  Management Incentive Compensation Plan, the KeyCorp Annual
                  Incentive Plan, the KeyCorp Short Term Incentive Compensation
                  Plan, the KeyCorp Long Term Incentive Compensation Plan, the
                  KeyCorp Long Term Incentive Plan, the KeyCorp Amended and
                  Restated 1991 Equity Compensation Plan, the KeyCorp Chief
                  Executive Officer Plan and/or such other Employer-sponsored
                  line of business incentive compensation plan that KeyCorp in
                  its sole discretion determines constitutes an "Incentive
                  Compensation Plan" for purposes of this Section 2.1(m), as may
                  be amended from time to time.

         (n)      "KEYCORP CHIEF EXECUTIVE OFFICER PLAN" shall mean the KeyCorp
                  Chief Executive Officer Restricted Stock Plan, as may be
                  amended from time to time, including any other successor or
                  replacement plan.

         (o)      "NORMAL RETIREMENT DATE" shall mean the first day of the month
                  coinciding with or immediately following a Grandfathered
                  Employee's 65th birthday, or if later, the fifth anniversary
                  of the Grandfathered Employee's employment commencement date.

         (p)      "RETIREMENT PLAN" shall mean the KeyCorp Cash Balance Pension
                  Plan with all amendments, modifications and supplements which
                  may be made thereto, as in effect on the date of a
                  Grandfathered Employee's retirement, death, or other
                  termination of employment.

                                      -7-
<PAGE>

         (q)      "SUPPLEMENTAL RETIREMENT BENEFIT" shall mean the benefit paid
                  under this Plan as determined under Article III of the Plan.

         All other capitalized and undefined terms used herein shall have the
meanings given them in the Retirement Plan for Employees of Society Corporation
and Subsidiaries (January 1, 1993 Restatement) ("Society Retirement Plan"),
unless a different meaning is plainly required by the context.

         The masculine gender includes the feminine, and singular references
include the plural, unless the context clearly requires otherwise.

                                   ARTICLE III

                         SUPPLEMENTAL RETIREMENT BENEFIT

         3.1      ELIGIBILITY. A Grandfathered Employee shall be eligible for a
Supplemental Retirement Benefit hereunder if the Grandfathered Employee (i)
retires on or after age 65 with five or more years of Benefit Service, (ii)
terminates employment with an Employer on or after age 55 with ten or more years
of Benefit Service, (iii) terminates his or her active employment with an
Employer upon becoming Disabled after completing five or more years of Benefit
Service and disability benefits have ceased under the KeyCorp Long-Term
Disability Plan due to the Grandfathered Employee's election for Early or Normal
Retirement under the Retirement Plan, or (iv) dies after completing five or more
years of Benefit Service, and has a Beneficiary who is eligible for a benefit
under the Retirement Plan.

         3.2      AMOUNT AND PAYMENT. Subject to the provisions of Section 3.4
hereof, a Grandfathered Employee's Supplemental Retirement Benefit shall be
determined as follows:

         Effective as of December 5, 1989, the monthly Supplemental Retirement
         Benefit payable to a Grandfathered Employee shall be such amount as is
         required, when added to the monthly benefit payable (before the
         reduction applicable to any optional method of payment) under the
         Retirement Plan, to produce an aggregate monthly benefit equal to the
         monthly benefit which would have been payable (determined without
         regard to the annual limitation on Plan benefits imposed pursuant to
         Section 415 of the Code, the limitation on annual compensation imposed
         pursuant to Section 401(a)(17) of the Code, or the reduction applicable
         to any optional method of payment) under either the Society Retirement
         Plan formula in effect on and after January 1, 1989, or the applicable
         Society Retirement Plan formula in effect prior to January 1, 1989,
         whichever results in a larger monthly benefit, if there was added to
         the Grandfathered Employee's Final Average Monthly Compensation an
         amount equal to the monthly average of the highest five Incentive
         Compensation Awards granted to him or her under an Incentive
         Compensation Plan during the ten-year period preceding the earliest of
         his retirement, death, disability, or other termination of employment.
         Notwithstanding the foregoing, if a Grandfathered Employee was granted
         fewer than five awards, such monthly average is determined by

                                      -8-

<PAGE>

         adding the amounts of such awards and dividing by 60. Solely for
         purposes of reference, the alternative benefit formulas in effect under
         the Society Retirement Plan prior to January 1, 1989, and the
         eligibility criteria applicable to each are reproduced in Exhibit B
         attached hereto.

         3.3      EARLY RETIREMENT ELECTION. Subject to the provisions of
Section 3.4 hereof, if a Grandfathered Employee elects to receive his or her
Supplemental Retirement Benefit on or after the Grandfathered Employee's Early
Retirement Date but prior to the Grandfathered Employee's Normal Retirement
Date, the Grandfathered Employee's Supplemental Retirement Benefit shall be
calculated in accordance with the provisions of Section 3.2 hereof, provided,
however, that the benefit payable under the Retirement Plan for purposes of
Section 3.2 and this Section 3.3 hereof, shall be the Grandfathered Employee's
Normal Retirement Date benefit. In calculating this Normal Retirement Date
benefit, if the Grandfathered Employee is not eligible for, or chooses not to
elect his or her monthly benefit under the provisions of Section 6.5(b) of the
Retirement Plan, then such Grandfathered Employee's Retirement Plan benefit as
of his or her termination date shall be increased for purposes of this Plan with
an imputed Average Interest Credit to reflect the Grandfathered Employee's
benefit at his or her Normal Retirement Date, and shall be converted to the form
of a single life annuity option using the Average Treasury Rate and GATT
Mortality Table. The amount of the Grandfathered Employee's monthly Supplemental
Retirement Benefit otherwise determined under this Section 3.3 hereof shall then
be reduced by .3% for each month between ages 55 and 60 and .4% for each month
after age 60 in which the commencement of the Grandfathered Employee's
Supplemental Retirement Benefit precedes his or her Normal Retirement Date.

         3.4      RECALCULATION AS A RESULT OF HARMFUL ACTIVITY. Notwithstanding
the foregoing provisions of Section 3.2 and Section 3.3 hereof, the Corporation
reserves the right at all times to recalculate a Grandfathered Employee's
Supplemental Retirement Benefit, if it is determined that within six months of
the Grandfathered Employee's termination date the Grandfathered Employee engaged
in any Harmful Activity, as that term is defined in accordance with Section
2.1(k) of the Plan, which resulted in the forfeiture of all or any portion of
the Grandfathered Employee's restricted share award(s) under the KeyCorp Amended
and Restated 1991 Equity Compensation Plan or the KeyCorp Chief Executive
Officer Plan. Such recalculation shall relate back to the Grandfathered
Employee's original date of termination, and any Supplemental Retirement Benefit
payment paid to the Grandfathered Employee in excess of such recalculated
Supplemental Retirement Benefit amount shall be offset against any future
Supplemental Retirement Benefit payments to be paid to the Grandfathered
Employee.

         3.5      ACTUARIAL FACTORS. The Supplemental Retirement Benefit
payable to a Grandfathered Employee or Grandfathered Employee's Beneficiary in a
form other than a single life annuity shall be actuarially equivalent to such
single life annuity payment option. In making the determination provided for in
this Article III, the Corporation shall rely upon calculations made by the
independent actuaries for the Plan, who shall determine actuarially equivalent
benefits under the Plan by applying the UP-1984 Mortality Table (set back two
years) and using an interest rate of 6%.

                                      -9-

<PAGE>

                                   ARTICLE IV

                   PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFIT

         4.1      IMMEDIATE PAYMENT UPON TERMINATION OR RETIREMENT OF
GRANDFATHERED EMPLOYEE. Subject to the provisions of Section 4.2 hereof, a
Grandfathered Employee meeting the age and service eligibility requirements of
Section 3.1 shall receive an immediate distribution of his or her Supplemental
Retirement Benefit upon the Grandfathered Employee's retirement or termination
of employment, in the form of a single life annuity, unless the Grandfathered
Employee elects in writing a minimum of thirty days prior to his or her
retirement or termination date, to receive payment of his or her Supplemental
Retirement Benefit under a different form of payment. The forms of payment from
which a Grandfathered Employee may elect shall be identical to those forms of
payment specified in the Retirement Plan, provided, however, that the lump sum
payment option available under the Retirement Plan shall not be available under
this Plan. Such method of payment, once elected by the Grandfathered Employee,
shall be irrevocable.

         4.2      DEFERRED BENEFIT PAYMENT. A Grandfathered Employee who
retires or terminates his or her employment with an Employer after meeting the
age and service requirements of Section 3.1, may elect to defer receipt of his
or her Supplemental Retirement Benefit until a date specified by the
Grandfathered Employee, provided, (1) the Grandfathered Employee notifies the
Corporation in writing of his or her deferral election a minimum of one year
prior to the Grandfathered Employee's retirement or termination of employment,
(2) the Grandfathered Employee specifies the future date on which such
Supplemental Retirement Benefit shall be distributed, and (3) the Grandfathered
Employee commences distribution of his or her Supplemental Retirement Benefit no
later than the first day of the month immediately following the Grandfathered
Employee's sixty-fifth (65th) birthday. The election to defer, once made by the
Grandfathered Employee, shall be irrevocable.

         Notwithstanding the foregoing, in the case of an "unforeseeable
emergency", upon written application by the Grandfathered Employee to the
Corporation, the Corporation, in its sole discretion, may accelerate the
distribution of the Grandfathered Employee's deferred Supplemental Retirement
Benefit. For purposes of this Section 4.2, the term "unforeseeable emergency"
shall mean an unanticipated emergency that is caused by an event beyond the
control of the Grandfathered Employee that would result in severe financial
hardship to the Grandfathered Employee if such premature distribution were not
permitted.

         4.3      PAYMENT UPON DEATH OF GRANDFATHERED EMPLOYEE.

         (a)      Upon the death of a Grandfathered Employee who has met the
                  service requirement of Section 3.1, but who has not yet
                  commenced distribution of his or her Supplemental Retirement
                  Benefit there shall be paid to the Grandfathered Employee's
                  Beneficiary 50% of the Supplemental Retirement Benefit which
                  the Grandfathered Employee would have been entitled to receive
                  had he or she retired

                                      -10-

<PAGE>

                  on his or her Normal Retirement Date and elected to receive
                  his or her Supplemental Retirement Benefit.

                  For purposes of this Section 4.3(a) only, the following shall
                  apply:

                  (i)      The Grandfathered Employee's Benefit Service shall be
                           calculated as of the Grandfathered Employee's date of
                           death.

                  (ii)     The Grandfathered Employee's Retirement Plan benefit
                           shall be calculated under the provisions of Article
                           IV of the Retirement Plan as if the Grandfathered
                           Employee retired on his or her Normal Retirement
                           Date, with such Retirement Plan benefit being
                           increased for purposes of this Section 4.3(a) with an
                           imputed Average Interest Credit to reflect what the
                           Grandfathered Employee's Retirement Plan benefit
                           would have been as of the Grandfathered Employee's
                           Normal Retirement Date; such Retirement Plan benefit
                           shall be converted to a single life annuity option
                           using the Average Treasury Rate and the Gatt
                           Mortality Table.

                           Payment of this death benefit shall be made in the
                           form of a single life annuity, and will be subject to
                           distribution any time after the date the
                           Grandfathered Employee would have attained his or her
                           Early Retirement Date, which shall be calculated in
                           accordance with the actuarial reduction provisions
                           contained within Section 3.3 hereof, if paid prior to
                           the Grandfathered Employee's Normal Retirement Date.

         (b)      In the event of a Grandfathered Employee's death after the
                  Grandfathered Employee has commenced distribution of his or
                  her Supplemental Retirement Benefit, there shall be paid to
                  the Grandfathered Employee's Beneficiary only those survivor
                  benefits provided under the form of benefit payment elected by
                  the Grandfathered Employee.

         4.4      PAYMENT UPON GRANDFATHERED EMPLOYEE'S ATTAINMENT OF AGE
70-1/2. A Grandfathered Employee shall be required to commence distribution of
his or her Supplemental Retirement Benefit no later than April 1 of the calendar
year following the year in which the Grandfathered Employee attains age 70-1/2.

                                    ARTICLE V

                       ADMINISTRATION AND CLAIMS PROCEDURE

         5.1      ADMINISTRATION. The Corporation, which shall be the
"Administrator" of the Plan for purposes of ERISA and the "Plan Administrator"
for purposes of the Code, shall be responsible for the general administration of
the Plan, for carrying out the provisions hereof, and for making payments
hereunder. The Corporation shall have the sole and absolute discretionary

                                      -11-

<PAGE>
authority and power to carry out the provisions of the Plan, including, but not
limited to, the authority and power (a) to determine all questions relating to
the eligibility for and the amount of any benefit to be paid under the Plan, (b)
to determine all questions pertaining to claims for benefits and procedures for
claim review, (c) to resolve all other questions arising under the Plan,
including any questions of construction, and (d) to take such further action as
the Corporation shall deem necessary or advisable in the administration of the
Plan. All findings, decisions, and determinations of any kind made by the
Corporation shall not be disturbed unless the Corporation has acted in an
arbitrary and capricious manner. Subject to the requirements of law, the
Corporation shall be the sole judge of the standard of proof required in any
claim for benefits and in any determination of eligibility for a benefit. All
decisions of the Corporation shall be final and binding on all parties. The
Corporation may employ such attorneys, investment counsel, agents, and
accountants, as it may deem necessary or advisable to assist it in carrying out
its duties hereunder. The actions taken and the decisions made by the
Corporation hereunder shall be final and binding upon all interested parties
subject, however, to the provisions of Section 5.2. The Plan year, for purposes
of Plan administration, shall be the calendar year.

         5.2      CLAIMS REVIEW PROCEDURE. Whenever the Corporation decides for
whatever reason to deny, whether in whole or in part, a claim for benefits under
this Plan filed by any person (herein referred to as the "Claimant"), the
Corporation shall transmit a written notice of its decision to the Claimant,
which notice shall be written in a manner calculated to be understood by the
Claimant and shall contain a statement of the specific reasons for the denial of
the claim and a statement advising the Claimant that, within 60 days of the date
on which he receives such notice, he may obtain review of the decision of the
Corporation in accordance with the procedures hereinafter set forth. Within such
60-day period, the Claimant or his authorized representative may request that
the claim denial be reviewed by filing with the Corporation a written request
therefore, which request shall contain the following information:

         (a)      the date on which the request was filed with the Corporation;
                  provided, however, that the date on which the request for
                  review was in fact filed with the Corporation shall control in
                  the event that the date of the actual filing is later than the
                  date stated by the Claimant pursuant to this paragraph (a);

         (b)      the specific portions of the denial of his claim which the
                  Claimant requests the Corporation to review;

         (c)      a statement by the Claimant setting forth the basis upon which
                  he believes the Corporation should reverse its previous denial
                  of his or her claim and accept his or her claim as made; and;

         (d)      any written material which the Claimant desires the
                  Corporation to examine in its consideration of the Claimant's
                  position as stated pursuant to paragraph (c) above.

         In accordance with this Section, if the Claimant requests a review of
the Corporation's decision, such review shall be made by the Corporation, who
shall, within sixty (60) days after receipt of the request form, review and
render a written decision on the claim containing the

                                      -12-
<PAGE>

specific reasons for the decision including reference to Plan provisions upon
which the decision is based. All findings, decisions, and determinations of any
kind made by the Corporation shall not be modified unless the Corporation has
acted in an arbitrary and capricious manner. Subject to the requirements of a
law, the Corporation shall be the sole judge of the standard of proof required
in any claim for benefits, and any determination of eligibility for a benefit.
All decisions of the Corporation shall be binding on the Claimant and upon all
other Persons. If the Claimant shall not file written notice with the
Corporation at the times set forth above, such individual shall have waived all
benefits under the Plan other than as already provided, if any, under the Plan.

                                   ARTICLE VI

                                     FUNDING

         All benefits under the Plan shall be payable solely in cash from the
general assets of the Corporation or a subsidiary, and Grandfathered Employees,
and Grandfathered Employees' Beneficiaries shall have the status of general
unsecured creditors of the Corporation. The obligations of the Corporation to
make distributions in accordance with the provisions of the Plan constitute a
mere promise to make payments in the future. The Corporation shall have no
obligation to establish a trust or fund to fund its obligation to pay benefits
under the Plan or to insure any benefits under the Plan. Notwithstanding any
provision of this Plan, the Corporation may, in its sole discretion, combine the
payment due and owing under this Plan with one or more other payments owing to a
Grandfathered Employee, or a Grandfathered Employee's Beneficiary under any
other plan, contract, or otherwise (other than any payment due under the
Retirement Plan), in one check, direct deposit, wire transfer, or other means of
payment. Finally, it is the intention of the Corporation and the Grandfathered
Employees that the Plan be unfunded for tax purposes and for the purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended.

                                   ARTICLE VII

                            AMENDMENT AND TERMINATION

         The Corporation reserves the right to amend or terminate the Plan at
any time by action of its Board of Directors or a duly authorized committee of
such Board of Directors; provided, however, that no such action shall adversely
affect the benefit accrued up to the date of the Plan amendment or termination
for any Grandfathered Employee who has met the age and service requirements of
Section 3.1 of the Plan, or any Grandfathered Employee or Grandfathered
Employee's Beneficiary who is receiving a Supplemental Retirement Benefit,
unless an equivalent benefit is provided under another plan maintained by an
Employer.

                                      -13-

<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS

         8.1      INTEREST OF GRANDFATHERED EMPLOYEE. The obligation of the
Corporation under the Plan to provide a Grandfathered Employee, or Grandfathered
Employee's Beneficiary, with a Supplemental Retirement Benefit merely
constitutes the unsecured promise of the Corporation to make payments as
provided herein, and no person shall have any interest in, or a lien or prior
claim on, any property of the Corporation.

         8.2      NO COMMITMENT AS TO EMPLOYMENT. Nothing herein contained
shall be construed as a commitment or agreement upon the part of any
Grandfathered Employee hereunder to continue his employment with an Employer,
and nothing herein contained shall be construed as a commitment on the part of
any Employer to continue the employment or rate of compensation of any
Grandfathered Employee hereunder for any period. All Grandfathered Employees
shall remain subject to discharge to the same extent as if the Plan had never
been put into effect.

         8.3      BENEFITS. Nothing in the Plan shall be construed to confer
any right or claim upon any person, firm, or corporation other than
Grandfathered Employees, or Grandfathered Employees' Beneficiaries who become
entitled to a benefit under the Plan.

         8.4      RESTRICTIONS ON ALIENATION. Except to the extent permitted by
law, no benefit under the Plan shall be subject to anticipation, alienation,
assignment (either at law or in equity), encumbrance, garnishment, levy,
execution, or other legal or equitable process. No person shall have power in
any manner to anticipate, transfer, assign, (either at law or in equity),
alienate or subject to attachment, garnishment, levy, execution, or other legal
or equitable process, or in any way encumber his benefits under the Plan, or any
part thereof, and any attempt to do so shall be void.

         8.5      ABSENCE OF LIABILITY. No member of the Board of Directors of
the Corporation or a subsidiary or any officer of the Corporation or a
subsidiary shall be liable for any act or action hereunder, whether of
commission or omission, taken by any other member, or by any officer, agent, or
employee, except in circumstances involving his bad faith or willful misconduct,
for anything done or omitted to be done by himself.

         8.6      EXPENSES. The expenses of administration of the Plan shall be
paid by the Corporation.

         8.7      PRECEDENT. Except as otherwise specifically provided, no
action taken in accordance with the Plan by the Corporation shall be construed
or relied upon as a precedent for similar action under similar circumstances.

                                      -14-

<PAGE>

         8.8      DUTY TO FURNISH INFORMATION. The Corporation shall furnish to
each Grandfathered Employee or Grandfathered Employee's Beneficiary any
documents, reports, returns statements, or other information that it reasonably
deems necessary to perform its duties imposed hereunder or otherwise imposed by
law.

         8.9      WITHHOLDING. The Corporation shall withhold any tax required
by any present or future law to be withheld from any payment hereunder to any
Grandfathered Employee or Grandfathered Employee's Beneficiary.

         8.10     VALIDITY OF PLAN. The validity of the Plan shall be
determined and the Plan shall be construed and interpreted in accordance with
the provisions of the Act, the Code, and, to the extent applicable, the laws of
the State of Ohio. The invalidity or illegality of any provision of the Plan
shall not affect the validity or legality of any other part thereof.

         8.11     PARTIES BOUND. The Plan shall be binding upon the Employer,
all Grandfathered Employees, and all Grandfathered Employees' Beneficiaries, and
the executors, administrators, successors, and assigns of each of them.

         8.12     HEADINGS. All headings used in the Plan are for convenience
of reference only and are not part of the substance of the Plan.

                                   ARTICLE IX

                       TRANSFER OF EMPLOYEES' SUPPLEMENTAL
                    RETIREMENT PLAN BENEFIT INTO THE KEYCORP
                        EXCESS CASH BALANCE PENSION PLAN

         9.1      TRANSFER OF EMPLOYEES' SUPPLEMENTAL RETIREMENT PLAN BENEFIT
INTO THE KEYCORP EXCESS CASH BALANCE RETIREMENT PLAN. Effective December 31,
1994, all benefit accruals under the Plan for Employees (other than
Grandfathered Employees) shall cease, and the Plan benefits for such Employees
(other than Grandfathered Employees) shall be calculated and reduced to a lump
sum cash benefit by applying the Pension Benefit Guarantee Corporation interest
rate for determining lump sum cash benefits as in effect on January l, 1995 and
the UP-1984 Mortality Table (no set-back). Effective January l, 1995, the lump
sum value of each Employee's (other than Grandfathered Employees') Supplemental
Retirement Benefit, as so calculated, shall be transferred to the KeyCorp Excess
Cash Balance Pension Plan, and each Employee's Supplemental Retirement Benefit
shall become the Employee's opening account balance under the KeyCorp Excess
Cash Balance Pension Plan.

         9.2      APPLICABILITY OF PLAN PROVISIONS. Notwithstanding anything to
the contrary contained in this Plan, the sole provisions of this Plan which
continue to have any effect with respect to Employees (other than Grandfathered
Employees) on and after January 1, 1995 shall be the provisions of this Article
IX, and such Employees shall cease to be Plan Employees as of such date.

                                      -15-

<PAGE>

         9.3      EFFECT OF TRANSFER. The Plan shall not be deemed terminated
or discontinued by reason of this Article IX and the transfer of Employees'
Supplemental Retirement Benefits into the KeyCorp Excess Cash Balance Retirement
Plan; such transfer shall be applicable only to Employees and shall have no
effect on Grandfathered Employees' continued Plan participation and accrual of
Plan benefits on and after January 1, 1995. No Supplemental Retirement Benefit
or any other benefit shall be paid under this Plan to an Employee on or after
January 1, 1995.

                                    ARTICLE X

                                CHANGE OF CONTROL

         Notwithstanding any other provision of the Plan to the contrary, in the
event of a Change of Control, a Grandfathered Employee's interest in his or her
Supplemental Retirement Benefit shall vest, and the Grandfathered Employee shall
be entitled to receive an immediate distribution of his or her Supplemental
Retirement Benefit, if on and after a Change of Control the Grandfathered
Employee has at least five (5) years of Benefit Service, and (i) the
Grandfathered Employee's employment is terminated by his or her Employer and any
other Employer without cause, or (ii) the Grandfathered Employee resigns within
two years following a Change of Control as a result of the Grandfathered
Employee's mandatory relocation, reduction in the Grandfathered Employee's base
salary, reduction in the Grandfathered Employee's average annual incentive
compensation (unless such reduction is attributable to the overall corporate or
business unit performance), or the Grandfathered Employee's exclusion from stock
option programs as compared to comparably situated Employees.

         For purposes of this Article X hereof, a "Change of Control" shall be
deemed to have occurred if under a rabbi trust arrangement established by the
Corporation ("Trust"), as such Trust may from time to time be amended or
substituted, the Corporation is required to fund the Trust to secure the payment
of any Grandfathered Employees' Plan benefits payable hereunder because a
"Change of Control" as defined in the Trust has occurred.

                                           KEYCORP

                                      By: /s/ Thomas E. Helfrich
                                          -----------------------------------
                                      Title:  Executive Vice President
                                             --------------------------------

                                      -16-

<PAGE>
                                    EXHIBIT A

                         LIST OF GRANDFATHERED EMPLOYEE

         NAME OF EMPLOYEE                                 NAME OF EMPLOYEE

         Andrews, James                                   McGuire, James
         Auletta, Patrick                                 McDaniel, D.A.
         Bailey, Raymond                                  McGinty, Kevin
         Barger, C. Michael                               Melluzzo, Sebastian
         Beran, John                                      Meyer, John R.
         Blake, John T.                                   Meyer III, Henry
         Brooks, Craig                                    Moody Jr., John
         Bullard, Janet                                   Murray, Bruce
         Carlini, Lawrence                                Neel, Thomas M.
         Colao Jr., Anthony                               Newman, Michael
         Cortelli, John                                   Noall, Roger
         Cruse Jr., Donald                                Nucerino, Donald
         Deal, Frederick                                  O'Donnell, F. Scott
         Doland, Michael                                  Patrick, Robert
         Dorland, David                                   Platt, Craig T.
         Edmonds, David                                   Ponchak, Frank
         Egan, Richard                                    Purinton II, Arthur
         Fishell, James                                   Rapacz, Richard
         Flowers, James                                   Rasmussen, Eric
         Gill, Michael                                    Roark, Michael
         Gillespie, Jr., Robert                           Rusnak, Joseph
         Greer, Michael                                   Saddler, Thomas
         Gula, Allen                                      Schaedel, Elroy
         Haas, Robert                                     Seink, Edward
         Hancock, John                                    Simon, William
         Hann, Jr., William                               Smith, James J.
         Hartman, Sheldon                                 Swisher, Trace
         Hawthorne, Douglas                               Tracy, Robert
         Hedberg, Douglas                                 Trigg, Michael
         Heintel, Jr., Carl                               Uzl, Ralph R.
         Heisler, Jr., Robert                             Walker, Martin
         Herron, David                                    Wall, Stephen
         Heyworth, Anthony                                Wert, James W.
         Hitchcock, Thomas                                Willet, Richard
         Holloway, Ruben L.

                                      -17-

<PAGE>

         Johannsen, Rolland D.
         Jones, Robert G.
         Kamerer, James
         Kaplan, Stephen
         Karnatz, William
         Kleinhenz, Karen R.
         Klimas, Daniel
         Knapp, Peter O.
         Koontz, Cary
         Kucler, Jack
         Malone, Michael
         Mayer, George

                                      -18-

<PAGE>

                                    EXHIBIT B

         FOR PERIODS OF TIME PRIOR TO JANUARY 1, 1989, THREE ALTERNATIVE BENEFIT
FORMULAS WERE IN EFFECT UNDER THE SOCIETY RETIREMENT PLAN. THE MONTHLY AMOUNT OF
THE NORMAL RETIREMENT BENEFIT PAYABLE TO AN ELIGIBLE GRANDFATHERED EMPLOYEE WAS
EQUAL TO:

         (a) IF HE BECAME A GRANDFATHERED EMPLOYEE AND THEREFORE BEGAN TO ACCRUE
BENEFITS UNDER THE PLAN PRIOR TO JULY 1, 1981, THE GREATER OF:

         (i)      his final average monthly compensation multiplied by the sum
                  of:

                  (A)      3.2% multiplied by his years of benefit service not
                           in excess of 15, plus

                  (B)      1% multiplied by his years of benefit service in
                           excess of 15 but not in excess of 25, plus

                  (C)      0.5% multiplied by his years of benefit service in
                           excess of 25; reduced by:

                  (D)      3.33% of his Social Security Benefit Amount
                           multiplied by his years of benefit service not in
                           excess of 15; or

         (ii)     the amount determined in accordance with the formula set forth
                  in paragraph (b) below which is otherwise applicable to a
                  person who becomes an Employee on or after July 1, 1981; or

         (b) IF HE BECAME AN EMPLOYEE AND THEREFORE BEGAN TO ACCRUE BENEFITS
UNDER THE PLAN ON OR AFTER JULY 1, 1981, HIS FINAL AVERAGE MONTHLY COMPENSATION
MULTIPLIED BY THE SUM OF:

         (i)      2% multiplied by his years of benefit service not in excess of
                  30, plus

         (ii)     0.5% multiplied by his years of benefit service in excess of
                  30; reduced by:

         (iii)    1.67% of his Social Security Benefit Amount multiplied by his
                  years of benefit service not in excess of 30 to a maximum of
                  50% of such Amount; or

         (c) IF HE BECAME AN EMPLOYEE AND THEREFORE BEGAN TO ACCRUE BENEFITS
UNDER THE PLAN ON JANUARY 1, 1985, AND IMMEDIATELY PRIOR TO SUCH DATE WAS A
GRANDFATHERED EMPLOYEE IN THE THIRD NATIONAL BANK AND TRUST COMPANY OF DAYTON,
OHIO RETIREMENT PLAN, THE GREATER OF:

         (i)      the amount determined in accordance with the formula set forth
                  in paragraph (b) above which is otherwise applicable to a
                  person who becomes an Employee on or after July 1, 1981; or

                                      -19-

<PAGE>

         (ii)     the sum of:

                  (A)      2.2% of his final average monthly compensation,
                           reduced by 2% of his Social Security Benefit Amount;
                           the difference to be multiplied by his years of
                           benefit service at normal retirement date not in
                           excess of 25, plus

                  (B)      1.1% of his final average monthly compensation,
                           reduced by 1% of his Social Security Benefit Amount;
                           the difference to be multiplied by his years of
                           benefit service at normal retirement date in excess
                           of 25, adjusted as necessary to produce the actuarial
                           equivalent value on a straight life annuity basis of
                           a benefit otherwise payable on a ten-year certain and
                           continuous basis; provided, however, that in the case
                           of each Employee who was in the employment of Society
                           National Bank of Cleveland on December 31, 1971, and
                           whose continuous service is not broken after the date
                           and prior to the date of his retirement, the monthly
                           amount of his normal retirement benefit otherwise
                           determined under this Section shall be not less than
                           the monthly amount of his normal retirement benefit
                           determined under the normal retirement benefit
                           formula of the Plan as in effect on December 31,
                           1971, based on the assumption that he received no
                           increases in the rate of his compensation after
                           December 31, 1971, and using the rules for computing
                           continuous service specified in Article II of the
                           Plan as in effect on June 30, 1976 (hereinafter
                           referred to as his "minimum benefit"); and provided,
                           further, that the monthly amount so determined under
                           the provisions of this Exhibit B shall be reduced to
                           the extent provided in Section 14.10 of the Society
                           Retirement Plan as in effect on December 31, 1988.
                           Notwithstanding anything to the contrary contained in
                           the Society Retirement Plan, in no event shall an
                           Employee receive a benefit commencing at his normal
                           retirement date which is less than the largest early
                           retirement benefit to which he had been entitled
                           under the Society Retirement Plan prior to his normal
                           retirement date.

                                      -20-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>13
<FILENAME>l97974aexv12.txt
<DESCRIPTION>EX-12   COMPUTATION OF RATIOS
<TEXT>
<PAGE>

                                                                      EXHIBIT 12

                                    KEYCORP
                COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO
              COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
                             (DOLLARS IN MILLIONS)
                                  (UNAUDITED)

<Table>
<Caption>
                                                                       YEAR ENDED DECEMBER 31,
                                                              ------------------------------------------
                                                               2002     2001     2000     1999     1998
                                                              ------   ------   ------   ------   ------
<S>                                                           <C>      <C>      <C>      <C>      <C>
COMPUTATION OF EARNINGS
Net income..................................................  $  976   $  132   $1,002   $1,107   $  996
Add: Provision for income taxes.............................     336      102      515      577      483
Less: Cumulative effect of accounting changes, net of tax...      --     (25)       --       --       --
                                                              ------   ------   ------   ------   ------
    Income before income taxes and cumulative effect of
       accounting changes...................................   1,312      259    1,517    1,684    1,479
Fixed charges, excluding interest on deposits...............     747    1,367    1,820    1,649    1,517
                                                              ------   ------   ------   ------   ------
    Total earnings for computation, excluding interest on
       deposits.............................................   2,059    1,626    3,337    3,333    2,996
Interest on deposits........................................     897    1,478    1,768    1,305    1,359
                                                              ------   ------   ------   ------   ------
    Total earnings for computation, including interest on
       deposits.............................................  $2,956   $3,104   $5,105   $4,638   $4,355
                                                              ======   ======   ======   ======   ======
COMPUTATION OF FIXED CHARGES
Net rental expense..........................................  $  142   $  145   $  146   $  173   $  139
                                                              ======   ======   ======   ======   ======
Portion of net rental expense deemed representative of
  interest..................................................  $   27   $   43   $   41   $   46   $   35
Interest on short-term borrowed funds.......................     169      500      715      646      801
Interest on long-term debt, including capital securities....     551      824    1,064      957      681
                                                              ------   ------   ------   ------   ------
    Total fixed charges, excluding interest on deposits.....     747    1,367    1,820    1,649    1,517
Interest on deposits........................................     897    1,478    1,768    1,305    1,359
                                                              ------   ------   ------   ------   ------
    Total fixed charges, including interest on deposits.....  $1,644   $2,845   $3,588   $2,954   $2,876
                                                              ======   ======   ======   ======   ======
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Preferred stock dividend requirement on a pre-tax basis.....      --       --       --       --       --
Total fixed charges, excluding interest on deposits.........  $  747   $1,367   $1,820   $1,649   $1,517
                                                              ------   ------   ------   ------   ------
    Combined fixed charges and preferred stock dividends,
       excluding interest on deposits.......................     747    1,367    1,820    1,649    1,517
Interest on deposits........................................     897    1,478    1,768    1,305    1,359
                                                              ------   ------   ------   ------   ------
    Combined fixed charges and preferred stock dividends,
       including interest on deposits.......................  $1,644   $2,845   $3,588   $2,954   $2,876
                                                              ======   ======   ======   ======   ======

RATIO OF EARNINGS TO FIXED CHARGES
Excluding deposit interest..................................    2.76X    1.19x    1.83x    2.02x    1.97x
Including deposit interest..................................    1.80X    1.09x    1.42x    1.57x    1.51x

RATIO OF EARNINGS TO COMBINED FIXED CHARGES
  AND PREFERRED STOCK DIVIDENDS
Excluding deposit interest..................................    2.76X    1.19x    1.83x    2.02x    1.97x
Including deposit interest..................................    1.80X    1.09x    1.42x    1.57x    1.51x
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>14
<FILENAME>l97974aexv13.txt
<DESCRIPTION>EX-13  2002 ANNUAL REPORT TO SHAREHOLDERS
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                      EXHIBIT 13

FINANCIAL REVIEW

MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS

<TABLE>
<S>                                                          <C>
Introduction                                                 20

Highlights of Key's 2002 Performance                         21

Line of Business Results                                     24

Results of Operations

  Net Interest Income                                        27
  Market Risk Management                                     30
  Noninterest Income                                         32
  Noninterest Expense                                        34
  Income Taxes                                               36

Financial Condition

  Loans                                                      36
  Securities                                                 40
  Asset Quality                                              40
  Deposits and Other Sources of Funds                        46
  Liquidity                                                  46
  Capital                                                    48

Fourth Quarter Results                                       50

REPORT OF MANAGEMENT                                         52

REPORT OF ERNST & YOUNG LLP,
  INDEPENDENT AUDITORS                                       52

CONSOLIDATED FINANCIAL STATEMENTS                            53
</TABLE>

                                                                              19

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

INTRODUCTION

This section generally reviews the financial condition and results of operations
of KeyCorp and its subsidiaries for each of the past three years. Some tables
may cover a longer period to comply with disclosure requirements or to
illustrate trends in greater depth. When you read this discussion, you should
also refer to the consolidated financial statements and related notes that
appear on pages 53 through 88.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Key's business is dynamic and complex. Consequently, management must exercise
judgment in choosing and applying accounting policies and methodologies in many
areas. These choices are important; not only are they necessary to comply with
accounting principles generally accepted in the United States, they also reflect
management's view of the most appropriate manner in which to record and report
Key's overall financial performance. All accounting policies are important, and
all policies described in Note 1 ("Summary of Significant Accounting Policies"),
which begins on page 57, should be reviewed for a greater understanding of how
Key's financial performance is recorded and reported.

In management's opinion, some accounting policies are more likely than others to
have a significant effect on Key's financial results and to expose those results
to potentially greater volatility. These policies apply to areas of relatively
greater business importance or require management to make assumptions and
estimates that affect amounts reported in the financial statements. Because
these assumptions and estimates are based on current circumstances, they may
change over time or prove to be inaccurate based on actual experience. For Key,
the areas that rely most heavily on the use of assumptions and estimates include
accounting for the allowance for loan losses, loan securitizations, contingent
obligations arising from litigation and tax exposures, principal investments,
goodwill, and pension and other postretirement obligations. A brief discussion
of each of these areas appears below.

ALLOWANCE FOR LOAN LOSSES. Management determines probable losses inherent in
Key's loan portfolio (which represents by far the largest category of assets on
Key's balance sheet) and establishes an allowance that is sufficient to absorb
those losses by considering factors including historical loss rates, expected
cash flows and estimated collateral values. In assessing these factors,
management benefits from a lengthy organizational history and experience with
credit decisions and related outcomes. Nonetheless, if management's underlying
assumptions prove to be inaccurate, the allowance for loan losses would have to
be adjusted. Our accounting policy related to the allowance is disclosed in Note
1 under the heading "Allowance for Loan Losses" on page 58.

LOAN SECURITIZATIONS. Key securitizes certain types of loans and accounts for
such transactions as sales when the criteria set forth in Statement of Financial
Accounting Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishment of Liabilities" are met. If future events
were to preclude accounting for such transactions as sales, the loans would have
to be placed back on Key's balance sheet. This could have a potentially adverse
effect on Key's capital ratios and other unfavorable financial implications. In
addition, determining the gain or loss resulting from securitization
transactions and the subsequent carrying amount of retained interests is
dependent on underlying assumptions made by management, the most significant of
which are described in Note 8 ("Loan Securitizations and Variable Interest
Entities"), which begins on page 70. The use of alternative ranges of possible
outcomes for these assumptions would change the amount of the initial gain or
loss recognized. It could also result in changes in the carrying amount of
retained interests, with related effects on results of operations. Our
accounting policy related to loan securitizations is disclosed in Note 1 under
the heading "Loan Securitizations" on page 59.

CONTINGENT OBLIGATIONS. A detailed description of contingent obligations arising
from litigation and their potential effects on Key's results of operations is
contained in Note 19 ("Commitments, Contingent Liabilities and Guarantees"),
which begins on page 81.

In the normal course of business, Key is routinely subject to examinations and
challenges from tax authorities regarding the amount of taxes due in connection
with investments and business activities. Currently, the Internal Revenue
Service is challenging Key's tax treatment of certain leveraged lease
investments. This and other challenges by tax authorities may result in
adjustments to the timing or amount of Key's taxable income or deductions or the
allocation of income among tax jurisdictions. Management believes these
challenges will be resolved without having any material effect on Key's
financial condition or results of operations.

VALUATION METHODOLOGIES. Valuation methodologies employed by management often
involve a significant degree of judgment, particularly when there are no
observable liquid markets for the items being valued. The outcome of valuations
performed by management have a direct bearing on the carrying amounts of certain
assets and liabilities, such as principal investments, goodwill, and pension and
other postretirement benefit obligations. To determine the values of these
assets and liabilities, as well as the extent to which related assets may be
impaired, management makes assumptions and estimates related to discount rates,
asset returns, repayment rates and other factors. The use of different discount
rates or other valuation assumptions could produce significantly different
results, which could have material positive or negative effects on Key's results
of operations.

The valuation methodology management uses for principal investments is
summarized in Note 21 ("Fair Value Disclosures of Financial Instruments") on
page 86 and the methodology used in the testing for goodwill impairment is
summarized in Note 1 under the heading "Goodwill and Other Intangible Assets" on
page 59. The primary assumptions used in determining Key's pension and other
postretirement benefit obligations and related expenses are presented in Note 16
("Employee Benefits"), which begins on page 78.

When a potential asset impairment is identified through testing, observable
changes in liquid markets or other means, management must also exercise judgment
in determining the nature of the potential impairment (i.e., whether the
impairment is temporary or other than temporary) in order to apply the
appropriate accounting treatment. For example, unrealized losses on securities
available for sale that are deemed temporary are recorded in shareholders'
equity, whereas those deemed "other than temporary" are recorded in earnings.

REVENUE RECOGNITION

In recent months, corporate improprieties related to revenue recognition have
received a great deal of attention by regulatory authorities and the news media.
Although all companies face the risk of intentional or unintentional
misstatements, such misstatements are less likely in the

20

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

financial services industry because most of the revenue (i.e., interest
accruals) recorded is driven by nondiscretionary formulas based on written
contracts, such as loan agreements.

TERMINOLOGY

This report contains some shortened names and industry-specific terms. We want
to explain some of these terms at the outset so you can better understand the
discussion that follows.

- -   KEYCORP refers solely to the parent holding company.

- -   KBNA refers to Key's lead bank, KeyBank National Association.

- -   KEY refers to the consolidated entity consisting of KeyCorp and its
    subsidiaries.

- -   A KEYCENTER is one of Key's full-service retail banking facilities or
    branches.

- -   Key engages in CAPITAL MARKETS ACTIVITIES. These activities encompass a
    variety of products and services. Among other things, we trade securities as
    a dealer, enter into derivative contracts (both to accommodate clients'
    financing needs and for proprietary trading purposes), and conduct
    transactions in foreign currencies (both to accommodate clients' needs and
    to benefit from fluctuations in exchange rates).

- -   All earnings per share data included in this discussion are presented on a
    DILUTED basis, which takes into account all common shares outstanding as
    well as potential common shares that could result from the exercise of
    outstanding stock options. Some of the financial information tables also
    include BASIC earnings per share, which takes into account only common
    shares outstanding.

- -   For regulatory purposes, capital is divided into two classes. Federal
    regulations prescribe that at least one-half of a bank or bank holding
    company's TOTAL RISK-BASED CAPITAL must qualify as TIER 1. Both total and
    Tier 1 capital serve as bases for several measures of capital adequacy,
    which is an important indicator of financial stability and condition. You
    will find a more detailed explanation of total and Tier 1 capital and how
    they are calculated in the section entitled "Capital," which begins on page
    48.

- -   When we want to draw your attention to a particular item in Key's Notes to
    Consolidated Financial Statements, we refer to NOTE ___, giving the
    particular number, name and starting page number.

FORWARD-LOOKING STATEMENTS

This report may contain "forward-looking statements" about issues like
anticipated earnings, anticipated levels of net loan charge-offs and
nonperforming assets and anticipated improvement in profitability and
competitiveness. These statements usually can be identified by the use of
forward-looking language such as "our goal," "our objective," "our plan," "will
likely result," "will be," "are expected to," "as planned," "is anticipated,"
"intends to," "is projected," or similar words. Forward-looking statements by
their nature are subject to assumptions, risks and uncertainties. For a variety
of reasons, including the following, actual results could differ materially from
those contained in or implied by the forward-looking statements.

- -   Interest rates could change more quickly or more significantly than we
    expect, which may have an adverse effect on our financial results.

- -   If the economy or segments of the economy fail to recover or, decline
    further, the demand for new loans and the ability of borrowers to repay
    outstanding loans may decline.

- -   The stock and bond markets could suffer additional declines or disruptions,
    which may have adverse effects on our financial condition and that of our
    borrowers, and on our ability to raise money by issuing new securities.

- -   It could take us longer than we anticipate to implement strategic
    initiatives designed to increase revenues or manage expenses; we may be
    unable to implement certain initiatives; or the initiatives may be
    unsuccessful.

- -   Acquisitions and dispositions of assets, business units or affiliates could
    adversely affect us in ways that management has not anticipated.

- -   We may become subject to new legal obligations, or the resolution of pending
    litigation may have an adverse effect on our financial results.

- -   Terrorist activities or military actions could further disrupt the economy
    and the general business climate, which may have an adverse effect on our
    financial results or condition and that of our borrowers.

- -   We may become subject to new accounting, tax, or regulatory practices or
    requirements.

HIGHLIGHTS OF KEY'S 2002 PERFORMANCE

FINANCIAL PERFORMANCE

The primary measures of Key's financial performance for 2002, 2001 and 2000 are
summarized below.

- -   Net income for 2002 was $976 million, or $2.27 per common share, compared
    with $132 million, or $.31 per share for 2001, and $1.0 billion, or $2.30
    per share, for 2000.

- -   Key's return on average equity was 14.96% for 2002. This result compares
    with a return of 2.01% for 2001 and a return of 15.39% for 2000.

- -   Key's 2002 return on average total assets was 1.19%. This result compares
    with a return of .16% for 2001 and a return of 1.19% for 2000.

In the second and fourth quarters of 2001, we announced a series of strategic
initiatives designed to sharpen our business focus and strengthen Key's
financial performance. These included:

- -   Accelerating Key's revenue growth by delivering our products and services to
    customers through a seamless, integrated sales process called 1Key.

- -    Achieving 100% of the savings from our competitiveness initiative discussed
     on page 22.

- -   Re-emphasizing our commitment to our relationship-based activities, and
    committing to re-establish a conservative credit culture while
    de-emphasizing high-risk, low-return businesses.

Specific actions related to these initiatives included exiting the automobile
leasing business, de-emphasizing indirect prime automobile lending,
discontinuing many credit-only relationships in the leveraged financing and
nationally syndicated lending businesses, and increasing the allowance for loan
losses.

                                                                              21

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

As a result of these actions, Key recorded 2001 charges aggregating $1.1 billion
($774 million after tax) that hinder a direct comparison of financial results
over the past three years. Specifically, in the second quarter of 2001, we
recorded a $150 million write-down of goodwill associated with Key's 1995
acquisition of AutoFinance Group, Inc. This charge reflects our intention to
significantly downsize the automobile finance business. We also increased the
provision for loan losses by $300 million ($189 million after tax) to facilitate
the exiting of credits in the leveraged financing and nationally syndicated
lending businesses. Finally, we recorded a $40 million ($25 million after tax)
charge to establish a reserve for losses incurred on the residual values of
leased vehicles.

In the fourth quarter of 2001, we recorded an additional provision for loan
losses of $590 million ($372 million after tax) as a result of both the rapid
downturn in the economy and further erosion in credit quality experienced after
the events of September 11. In the same quarter, we recorded a $45 million ($28
million after tax) write-down of our principal investing portfolio and a $15
million ($9 million after tax) charge to increase our reserve for customer
derivative losses.

Results for 2001 also were adversely affected by a $39 million ($24 million
after tax) charge resulting from a prescribed change in accounting principles
generally accepted in the United States applicable to retained interests in
securitized assets and a $20 million ($13 million after tax) increase in
litigation reserves.

The charges summarized above and the primary reasons that Key's specific revenue
and expense components changed over the past three years are reviewed in greater
detail throughout the remainder of this discussion.

Figure 1 summarizes Key's financial performance for each of the past six years.

CORPORATE STRATEGY

Our goal is to achieve revenue and earnings per share growth that is
consistently above the median for stocks that make up the Standard & Poor's 500
Banks Index. Our strategy for achieving this goal comprises the following four
primary elements:

- -   FOCUS ON OUR CORE BUSINESSES. We intend to focus on businesses that enable
    us to build relationships with our clients. We will focus on our "footprint"
    businesses that serve individuals, small businesses and middle market
    companies. In addition, we intend to focus nationwide on our commercial real
    estate lending, asset management, home equity lending and equipment leasing
    businesses. These are businesses in which we believe we possess resources of
    the scale necessary to compete nationally.

- -   PUT OUR CLIENTS FIRST. We will work to deepen our relationship with our
    existing clients, and to build relationships with new clients who have the
    potential to purchase multiple products and services or to generate repeat
    business. One way in which we are pursuing this goal is by emphasizing
    deposit growth across all of our lines of business. We also want to ensure
    that our clients are receiving a distinctive level of service, so we are
    putting considerable effort into enhancing our service quality.

- -    ENHANCE OUR BUSINESS. We intend to build on the success of our
     competitiveness initiative by pursuing a continuous improvement process. We
     will continue to focus on increasing revenues, controlling expenses and
     better serving our clients, and we will also continue to leverage
     technology -- both to reduce costs and to enhance service quality. Over
     time, we also intend to diversify our revenue mix by emphasizing the growth
     of fee income while investing in higher-growth and higher-return
     businesses.

- -   CULTIVATE A WORKFORCE THAT DEMONSTRATES KEY'S VALUES AND WORKS TOGETHER FOR
    A COMMON PURPOSE. Key intends to achieve this by:

    -- paying for performance, but only if achieved in ways that are consistent
       with Key's values;

    -- attracting, developing and retaining a quality, high-performing and
       inclusive workforce;

    -- developing leadership at all levels in the company; and

    -- creating a positive, stimulating and entrepreneurial work environment.

STATUS OF COMPETITIVENESS INITIATIVE

Key launched a major initiative in November 1999, the first phase of which was
completed in 2000. This initiative was designed to improve Key's profitability
by reducing the costs of doing business, focusing on the most profitable growth
businesses and enhancing revenues. During the initial phase, we reduced our
annual operating expenses by approximately $100 million by outsourcing certain
nonstrategic support functions, consolidating sites in a number of our
businesses and reducing management layers.

During 2002, we completed the implementation of all projects related to the
second and final phase of the initiative, referred to as PEG (Perform, Excel,
Grow). In this phase, we reduced our annual operating expenses by an additional
$200 million by:

- -   consolidating 22 business lines into 10 to simplify Key's business
    structure;

- -   streamlining and automating business operations and processes;

- -   standardizing product offerings and internal processes;

- -   consolidating operating facilities and service centers; and

- -   outsourcing additional noncore activities.

Due primarily to the success of the overall initiative, noninterest expense for
2002 was lower than it has been for any year since 1998.

Management expected the competitiveness initiative to reduce Key's workforce by
approximately 4,000 positions (comprising both staffed and vacant positions).
During 2002, Key completed its workforce reduction bringing the total number of
positions eliminated in the initiative to nearly 4,100.

Since the inception of the competitiveness initiative, we have recorded related
net charges of $270 million. The section entitled "Noninterest expense," which
begins on page 34, and Note 18 ("Restructuring Charges") on page 81 provide more
information about Key's restructuring charges.

22

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

                        FIGURE 1 SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                                                         COMPOUND
                                                                                                                        ANNUAL RATE
                                                                                                                         OF CHANGE
dollars in millions, except per share amounts    2002        2001        2000        1999        1998        1997       (1997-2002)
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>         <C>         <C>         <C>         <C>         <C>          <C>
YEAR ENDED DECEMBER 31,
Interest income                                $  4,366    $  5,627    $  6,277    $  5,695    $  5,525    $  5,262       (3.7)%
Interest expense                                  1,617       2,802       3,547       2,908       2,841       2,517       (8.5)
Net interest income                               2,749       2,825       2,730       2,787       2,684       2,745         --
Provision for loan losses                           553       1,350         490         348         297         320       11.6
Noninterest income                                1,769       1,725       2,194       2,315       1,600       1,315        6.1
Noninterest expense                               2,653       2,941       2,917       3,070       2,508       2,395        2.1
Income before income taxes and cumulative
   effect of accounting changes                   1,312         259       1,517       1,684       1,479       1,345        (.5)
Income before cumulative effect
   of accounting changes                            976         157       1,002       1,107         996         919        1.2
Net income                                          976         132       1,002       1,107         996         919        1.2
- -----------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE
Income before cumulative effect
   of accounting changes                       $   2.29    $    .37    $   2.32    $   2.47    $   2.25    $   2.09        1.8%
Income before cumulative effect
   of accounting changes--
   assuming dilution                               2.27         .37        2.30        2.45        2.23        2.07        1.9
Net income                                         2.29         .31        2.32        2.47        2.25        2.09        1.8
Net income--assuming dilution                      2.27         .31        2.30        2.45        2.23        2.07        1.9
Cash dividends paid                                1.20        1.18        1.12        1.04         .94         .84        7.4
Book value at year end                            16.12       14.52       15.65       14.41       13.63       11.83        6.4
Market price at year end                          25.14       24.34       28.00       22.13       32.00       35.41       (6.6)
Dividend payout ratio                             52.40%     380.65%      48.28%      42.11%      41.78%      40.19%       5.4
Weighted average common shares (000)            425,451     424,275     432,617     448,168     441,895     439,042        (.6)
Weighted average common shares and
   potential common shares (000)                430,703     429,573     435,573     452,363     447,437     444,544        (.6)
- -----------------------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31,
Loans                                          $ 62,457    $ 63,309    $ 66,905    $ 64,222    $ 62,012    $ 53,380        3.2%
Earning assets                                   73,635      71,672      77,316      73,733      70,240      64,246        2.8
Total assets                                     85,202      80,938      87,270      83,395      80,020      73,699        2.9
Deposits                                         49,346      44,795      48,649      43,233      42,583      45,073        1.8
Long-term debt                                   15,605      14,554      14,161      15,881      12,967       7,446       15.9
Shareholders' equity                              6,835       6,155       6,623       6,389       6,167       5,181        5.7

Full-time equivalent employees                   20,437      21,230      22,142      24,568      25,862      24,595       (3.6)
KeyCenters                                          910         911         922         936         968       1,015       (2.2)
- -----------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE RATIOS
Return on average total assets                     1.19%        .16%       1.19%       1.37%       1.32%       1.33%       N/A
Return on average equity                          14.96        2.01       15.39       17.68       17.97       18.89        N/A
Net interest margin (taxable equivalent)           3.97        3.81        3.69        3.93        4.08        4.54        N/A
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL RATIOS AT DECEMBER 31,
Equity to assets                                   8.02%       7.60%       7.59%       7.66%       7.71%       7.03%       N/A
Tangible equity to tangible assets                 6.73        6.29        6.12        6.03        5.93        5.52        N/A
Tier 1 risk-based capital                          8.09        7.43        7.72        7.68        7.21        6.65        N/A
Total risk-based capital                          12.51       11.41       11.48       11.66       11.69       10.83        N/A
Leverage                                           8.15        7.65        7.71        7.77        6.95        6.40        N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Key completed several acquisitions and divestitures during the six-year period
shown in this table. One or more of these transactions may have had a
significant effect on Key's results, making it difficult to compare results from
one year to the next. Note 3 ("Acquisitions and Divestitures") on page 64
contains specific information about the acquisitions and divestitures that Key
completed in the past three years to help you understand how those transactions
may have impacted Key's financial condition and results of operations.

N/A = Not Applicable

                                                                              23

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

LINE OF BUSINESS RESULTS

This section summarizes the financial performance and related strategic
developments of each of Key's three major business groups: Key Consumer Banking,
Key Corporate Finance and Key Capital Partners. To better understand this
discussion, see Note 4 ("Line of Business Results"), which begins on page 65.
Note 4 includes a brief description of the products and services offered by each
of the three major business groups, more detailed financial information
pertaining to the groups and their respective lines of business and brief
descriptions of "Other Segments" and "Reconciling Items" included in Figure 2.

Figure 2 summarizes the contribution made by each major business group to Key's
taxable-equivalent revenue and net income for each of the past three years.

   FIGURE 2 MAJOR BUSINESS GROUPS--TAXABLE-EQUIVALENT REVENUE AND NET INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                    CHANGE 2002 VS 2001
                                                                           --------------------
dollars in millions               2002         2001           2000        AMOUNT         PERCENT
- ------------------------------------------------------------------------------------------------
<S>                              <C>          <C>           <C>           <C>            <C>
REVENUE (TAXABLE EQUIVALENT)
Key Consumer Banking             $ 2,302      $ 2,300       $  2,232      $     2           .1%
Key Corporate Finance              1,361        1,351          1,264           10           .7
Key Capital Partners               1,109        1,159          1,188          (50)        (4.3)
Other Segments                       (76)         (73)            57           (3)        (4.1)
- ------------------------------------------------------------------------------------------------
   Total segments                  4,696        4,737          4,741          (41)         (.9)
Reconciling Items                    (58)        (142)(b)        211(b)        84         59.2
- ------------------------------------------------------------------------------------------------
   Total                         $ 4,638      $ 4,595       $  4,952      $    43           .9%
                                 =======      =======       ========      =======

NET INCOME (LOSS)
Key Consumer Banking             $   422      $   358(a)    $    356      $    64         17.9%
Key Corporate Finance                394          429            396          (35)        (8.2)
Key Capital Partners                 156          129            142           27         20.9
Other Segments                       (20)         (20)            58           --           --
- ------------------------------------------------------------------------------------------------
  Total segments                     952          896            952           56          6.3
Reconciling Items                     24         (764)(b)         50(b)       788          N/M
- ------------------------------------------------------------------------------------------------
   Total                         $   976      $   132       $  1,002      $   844        639.4%
                                 =======      =======       ========      =======
- ------------------------------------------------------------------------------------------------
</TABLE>

(a) Results for 2001 include a one-time cumulative charge of $39 million ($24
    million after tax) resulting from a prescribed change, applicable to all
    companies, in the accounting for retained interests in securitized assets.

(b) Significant items included in Reconciling Items are as follows:

    Year ended December 31, 2001:

  - Noninterest income includes a $40 million ($25 million after tax) charge
    taken to establish a reserve for losses incurred on the residual values of
    leased vehicles and a $15 million ($9 million after tax) increase in the
    reserve for customer derivative losses.

  - The provision for loan losses includes an additional $400 million ($252
    million after tax) taken to increase the allowance for loan losses for Key's
    continuing loan portfolio and an additional $490 million ($309 million after
    tax) recorded primarily in connection with Key's decision to discontinue
    certain credit-only commercial relationships.

  - Noninterest expense includes a goodwill write-down of $150 million
    associated with the downsizing of the automobile finance business and
    charges of $20 million ($13 million after tax) taken to establish additional
    litigation reserves.

    Year ended December 31, 2000:

  - Noninterest income includes a gain of $332 million ($207 million after tax)
    from the sale of Key's credit card portfolio.

  - The provision for loan losses includes an additional $121 million ($76
    million after tax) recorded in connection with the implementation of an
    enhanced methodology for assessing credit risk, particularly in the
    commercial loan portfolio.

  - Noninterest expense includes $127 million ($80 million after tax), primarily
    restructuring charges, recorded in connection with strategic actions taken
    to improve Key's operating efficiency and profitability.

N/M = Not Meaningful

KEY CONSUMER BANKING

As shown in Figure 3, net income for Key Consumer Banking was $422 million for
2002, up from $358 million for 2001 and $356 million for 2000. The improvement
in 2002 reflects the cumulative effect of the 2001 accounting change presented
in the figure, as well as an increase in noninterest income and a reduction in
noninterest expense. These positive results were partially offset by a decrease
in taxable-equivalent net interest income. The provision for loan losses was
essentially unchanged.

Taxable-equivalent net interest income decreased by $13 million, or 1%, from
2001 as a more favorable interest rate spread on average earning assets and a
21% increase in average home equity loans were more than offset by the adverse
effects of a narrower spread on deposits and a decline in average deposits
outstanding. The decrease in deposits reflected declines in time deposits
resulting from reduced rates paid for those deposits, as well as consumer
preferences for alternative investments that provide higher levels of liquidity.
At the same time, savings deposits rose in response to more aggressive pricing
implemented in mid-2002, while noninterest-bearing deposits grew significantly
as a result of intensified cross-sell efforts and the introduction of new
products, including free checking.

24
<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

                         FIGURE 3 KEY CONSUMER BANKING

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                                 CHANGE 2002 VS 2001
                                                                                        -------------------
dollars in millions                            2002         2001           2000        AMOUNT        PERCENT
- ------------------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>            <C>          <C>           <C>
SUMMARY OF OPERATIONS
Net interest income (TE)                      $ 1,805      $ 1,818        $ 1,757      $   (13)       (.7)%
Noninterest income                                497          482            475           15        3.1
- ------------------------------------------------------------------------------------------------------------
Total revenue (TE)                              2,302        2,300          2,232            2         .1
Provision for loan losses                         303          300            281            3        1.0
Noninterest expense                             1,324        1,366          1,356          (42)      (3.1)
- ------------------------------------------------------------------------------------------------------------
Income before income taxes (TE) and
   cumulative effect of accounting change         675          634            595           41        6.5
Allocated income taxes and TE adjustments         253          252            239            1         .4
- ------------------------------------------------------------------------------------------------------------
Income before cumulative effect
   of accounting change                           422          382            356           40       10.5
Cumulative effect of accounting change             --          (24)(a)         --           24      100.0
- ------------------------------------------------------------------------------------------------------------
Net income                                    $   422      $   358        $   356      $    64       17.9%
                                              =======      =======        =======      =======

Percent of consolidated net income                 43%         271%            36%         N/A        N/A

AVERAGE BALANCES
Loans                                         $27,806      $27,673        $26,690      $   133         .5%
Total assets                                   29,970       30,398         29,637         (428)      (1.4)
Deposits                                       33,942       35,221         35,370       (1,279)      (3.6)
- ------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Results for 2001 include a one-time cumulative charge of $39 million ($24
    million after tax) resulting from a prescribed change, applicable to all
    companies, in the accounting for retained interests in securitized assets.

TE = Taxable Equivalent, N/A = Not Applicable

ADDITIONAL KEY CONSUMER BANKING DATA

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                                           CHANGE 2002 VS 2001
                                                                                                  -------------------
dollars in millions                                   2002          2001          2000            AMOUNT       PERCENT
- ----------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>           <C>              <C>          <C>
AVERAGE DEPOSITS OUTSTANDING
Noninterest-bearing deposits                         $ 5,136       $ 4,802       $ 4,935          $   334         7.0%
MMDA and other savings deposits                       13,054        12,832        13,154              222         1.7
Time deposits                                         15,752        17,587        17,281           (1,835)      (10.4)
- ----------------------------------------------------------------------------------------------------------------------
   Total deposits                                    $33,942       $35,221       $35,370          $(1,279)       (3.6)%
                                                     =======       =======       =======          =======
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                            RETAIL            NATIONAL                                                KEY CONSUMER
                                            BANKING         HOME EQUITY                                                  BANKING
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>               <C>                <C>                                  <C>
HOME EQUITY LOANS (2002)                                                       OTHER DATA (2002)
Average balance / % change from 2001      $6,619 / 28%      $4,906 / 11%       On-line clients / % penetration      575,894 / 32%
Average loan-to-value ratio                        71                80        KeyCenters                                    910
Percent first lien positions                       51                79        Automated teller machines                   2,165
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Noninterest income grew by $15 million, or 3%, due primarily to a $15 million
decrease in net losses from derivatives in the National Home Equity line of
business, an aggregate $7 million increase in service charges on deposit
accounts contributed by the Retail Banking and Small Business lines and higher
fees from mortgage lending and electronic banking services.  The growth in
deposit service charges resulted from new pricing implemented in mid-2001 in
connection with Key's competitiveness improvement initiative, but was moderated
by the introduction of free checking products in the third quarter of 2002.
These favorable results more than offset a $19 million increase in losses
incurred on the residual values of leased vehicles in the Indirect Lending line
of business.

Noninterest expense decreased by $42 million, or 3%, from 2001. The improvement
reflects an approximate $38 million reduction in goodwill amortization, which
resulted from the adoption of new accounting guidance, and lower costs for
software amortization. These reductions were partially offset by higher
personnel expense and an increase in marketing costs associated with the growth
in the National Home Equity line of business.

                                                                              25

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

In 2001, the increase in net income reflected a $61 million, or 3%, increase in
net interest income due to an improved interest rate spread on earning assets
and a favorable change in the composition of earning assets resulting from Key's
decision to retain (rather than securitize and sell) home equity loans starting
in 2000. The growth in net interest income was substantially offset by the
effect of the 2001 accounting change mentioned on page 25.

KEY CORPORATE FINANCE

As shown in Figure 4, net income for Key Corporate Finance was $394 million for
2002, compared with $429 million for 2001 and $396 million for 2000. The
decrease from 2001 resulted from a significantly higher provision for loan
losses and lower noninterest income. These adverse results were offset in part
by moderate growth in net interest income and improvement in noninterest
expense.

                         FIGURE 4 KEY CORPORATE FINANCE

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                               CHANGE 2002 VS 2001
                                                                                      -------------------
dollars in millions                            2002         2001         2000        AMOUNT        PERCENT
- ----------------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>          <C>          <C>           <C>
SUMMARY OF OPERATIONS
Net interest income (TE)                      $ 1,123      $ 1,092      $ 1,011      $    31         2.8%
Noninterest income                                238          259          253          (21)       (8.1)
- ----------------------------------------------------------------------------------------------------------
Total revenue (TE)                              1,361        1,351        1,264           10          .7
Provision for loan losses                         236          140          125           96        68.6
Noninterest expense                               495          517          497          (22)       (4.3)
- ----------------------------------------------------------------------------------------------------------
Income before income taxes (TE)                   630          694          642          (64)       (9.2)
Allocated income taxes and TE adjustments         236          265          246          (29)      (10.9)
- ----------------------------------------------------------------------------------------------------------
Net income                                    $   394      $   429      $   396      $   (35)       (8.2)%
                                              =======      =======      =======      =======
Percent of consolidated net income                 41%         325%          39%         N/A         N/A

AVERAGE BALANCES
Loans                                         $29,278      $31,098      $30,592      $(1,820)       (5.9)%
Total assets                                   30,568       32,593       32,086       (2,025)       (6.2)
Deposits                                        3,384        3,093        2,815          291         9.4
- ----------------------------------------------------------------------------------------------------------
</TABLE>

TE = Taxable Equivalent, N/A = Not Applicable

During 2002, taxable-equivalent net interest income increased by $31 million, or
3%. The increase was due primarily to a higher taxable-equivalent adjustment
related to portions of the equipment leasing portfolio, which became subject to
a lower income tax rate in the latter half of 2001. A more favorable interest
rate spread on earning assets and the growth in average deposits also
contributed to the improvement. These positive results were partially offset by
the adverse effect of a decline in average loans outstanding.

During the same time, noninterest income decreased by $21 million, or 8%. The
decrease was due principally to losses from residual values of leased equipment
in the National Equipment Finance line of business in 2002, compared with gains
in the prior year. Lower fees generated by Corporate Banking also contributed to
the decline. These adverse results more than offset increases in
nonyield-related loan fees and loan sale gains in the National Commercial Real
Estate line and growth in service charges on deposit accounts in the Corporate
Banking line.

Noninterest expense improved by $22 million, or 4%, reflecting a $16 million
reduction in goodwill amortization following the adoption of a new accounting
standard. The provision for loan losses rose by $96 million, or 69%, due largely
to higher levels of net charge-offs in the Corporate Banking and National
Equipment Finance lines.

In 2001, an $81 million, or 8%, improvement in net interest income drove the
increase in net income relative to the prior year. This growth was attributable
largely to a more favorable interest rate spread on earning assets, as well as
loan growth in both the National Commercial Real Estate and National Equipment
Finance lines of business.

KEY CAPITAL PARTNERS

As shown in Figure 5, Key Capital Partners' net income was $156 million for
2002, compared with $129 million for 2001 and $142 million for 2000. The
improvement in 2002 was attributable to a substantial decrease in noninterest
expense and growth in taxable-equivalent net interest income. These positive
results more than offset a decline in noninterest income, while the provision
for loan losses was essentially unchanged.

Taxable-equivalent net interest income increased by $19 million, or 9%, from
2001. The growth was due primarily to a more favorable interest rate spread on
earning assets.

Noninterest income decreased by $69 million, or 7%, as market-sensitive
businesses were adversely affected by the weak economy. The reduction was
attributable mainly to an aggregate decline of $51 million in trust and
investment services income in the High Net Worth and Victory Capital Management
lines and lower income from trading activities and derivatives in the Capital
Markets line. In addition, revenue for 2001 benefited from a net gain from the
sale of residential mortgage loans associated with the private banking business.
These factors more than offset an $18 million increase in investment banking
income.

26

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

                         FIGURE 5 KEY CAPITAL PARTNERS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                           CHANGE 2002 VS 2001
                                                                                  -------------------
dollars in millions                            2002        2001        2000       AMOUNT       PERCENT
- ------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>         <C>         <C>          <C>
SUMMARY OF OPERATIONS
Net interest income (TE)                      $  235      $  216      $  214      $   19         8.8%
Noninterest income                               874         943         974         (69)       (7.3)
- -----------------------------------------------------------------------------------------------------
Total revenue (TE)                             1,109       1,159       1,188         (50)       (4.3)
Provision for loan losses                         14          13           4           1         7.7
Noninterest expense                              846         926         944         (80)       (8.6)
- -----------------------------------------------------------------------------------------------------
Income before income taxes (TE)                  249         220         240          29        13.2
Allocated income taxes and TE adjustments         93          91          98           2         2.2
- -----------------------------------------------------------------------------------------------------
Net income                                    $  156      $  129      $  142      $   27        20.9%
                                              ======      ======      ======      ======

Percent of consolidated net income                16%         98%         14%        N/A         N/A

AVERAGE BALANCES
Loans                                         $4,904      $5,266      $5,439      $ (362)       (6.9)%
Total assets                                   8,382       8,965       8,994        (583)       (6.5)
Deposits                                       3,924       3,679       3,480         245         6.7
- -----------------------------------------------------------------------------------------------------
</TABLE>

TE = Taxable Equivalent, N/A = Not Applicable

ADDITIONAL KEY CAPITAL PARTNERS DATA

<TABLE>
<CAPTION>
DECEMBER 31, 2002
dollars in millions
<S>                                                    <C>
- --------------------------------------------------------------
Assets under management                                $61,694
Nonmanaged and brokerage assets                         64,968
High Net Worth sales personnel                             807
- --------------------------------------------------------------
</TABLE>

Noninterest expense decreased by $80 million, or 9%, in 2002, due primarily to
an approximate $25 million reduction in amortization expense following the
prescribed change in accounting for goodwill, lower variable compensation
expense associated with revenue generation and reduced software amortization.

In 2001, net income decreased primarily as a result of a $31 million, or 3%,
reduction in noninterest income. Weak conditions in the capital markets led to a
$39 million, or 6%, decline in income from trust and investment services.

OTHER SEGMENTS

Other Segments, which consists primarily of Treasury, Principal Investing and
the net effect of funds transfer pricing, generated net losses of $20 million in
both 2002 and 2001. In 2002, net losses from principal investing activities
decreased by $64 million ($40 million after tax), or 81%. This improvement was
offset by a $55 million ($34 million after tax), or 40%, decline in net interest
income, due primarily to the change in the net effect of funds transfer pricing,
and a $23 million ($14 million after tax), or 75%, reduction in net securities
gains recorded by Treasury.

In 2001, Other Segments generated a $20 million net loss, compared with net
income of $58 million for the prior year. The decrease in results was due
primarily to net losses of $79 million ($50 million after tax) from principal
investing in 2001, compared with net gains of $70 million ($44 million after
tax) in 2000. In addition, net interest income declined by $54 million ($34
million after tax), or 64%, due largely to the change in the net effect of funds
transfer pricing. The adverse effects of these factors were partially offset by
net securities gains of $31 million ($19 million after tax) recorded by Treasury
in 2001, compared with net securities losses of $40 million ($25 million after
tax) in 2000.

RESULTS OF OPERATIONS

NET INTEREST INCOME

Key's principal source of earnings is net interest income, which includes
interest paid to Key on earning assets such as loans and securities, as well as
loan-related fee income; less interest expense paid on deposits and borrowings.
There are several factors that affect net interest income, including:

- -   the volume, pricing, mix and maturity of earning assets and interest-bearing
    liabilities;

- -   the use of derivative instruments to manage interest rate risk;

- -   market interest rate fluctuations; and

- -   asset quality.

To make it easier to compare results among several periods and the yields on
various types of earning assets, we present all net interest income on a
"taxable-equivalent basis." In other words, if we earn $100 of tax-exempt
income, we present those earnings at a higher amount (specifically, $154) that
- -- if taxed at the statutory federal income tax rate of 35% --would yield $100.

Figure 6 shows the various components of Key's balance sheet that affect
interest income and expense, and their respective yields or rates over the past
six years. Net interest income for 2002 was $2.9 billion, essentially unchanged
from the prior year as the positive effect of an improved net interest margin
was offset by the effect of a decrease in average earning assets. Key's net
interest margin rose 16 basis points to 3.97%. The net interest margin is an
indicator of the profitability of the earning asset portfolio and is calculated
by dividing net interest income by average earning assets.

                                                                              27

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

     FIGURE 6 AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND YIELDS/RATES

<TABLE>
<CAPTION>
                                                           2002                          2001                       2000
YEAR ENDED DECEMBER 31,                        ----------------------------  ---------------------------- --------------------------
                                               AVERAGE               YIELD/  AVERAGE              YIELD/  AVERAGE             YIELD/
dollars in millions                            BALANCE   INTEREST    RATE    BALANCE    INTEREST  RATE    BALANCE   INTEREST  RATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>       <C>         <C>     <C>       <C>        <C>     <C>      <C>        <C>
ASSETS
Loans(a,b)
   Commercial, financial and agricultural      $ 17,767   $  907     5.10%   $ 19,459  $  1,362   7.00%   $19,369  $  1,669   8.63%
   Real estate-- commercial mortgage              6,345      373     5.87       6,821       511   7.50      6,911       628   9.10
   Real estate-- construction                     5,851      315     5.38       5,654       411   7.27      4,815       464   9.63
   Commercial lease financing                     7,263      491     6.76       7,049       490   6.95      6,821       493   7.22
- ------------------------------------------------------------------------------------------------------------------------------------
     Total commercial loans                      37,226    2,086     5.60      38,983     2,774   7.12     37,916     3,254   8.59
   Real estate-- residential                      2,126      149     7.00       3,607       275   7.64      4,274       325   7.61
   Home equity                                   13,028      889     6.82      10,595       906   8.55      8,857       822   9.29
   Credit card                                       --       --       --          --        --     --         --        --     --
   Consumer-- direct                              2,206      183     8.29       2,427       232   9.55      2,592       265  10.19
   Consumer-- indirect lease financing            1,405      126     8.96       2,618       217   8.27      3,089       249   8.03
   Consumer-- indirect other                      5,155      471     9.15       5,529       530   9.58      6,032       570   9.44
- ------------------------------------------------------------------------------------------------------------------------------------
     Total consumer loans                        23,920    1,818     7.60      24,776     2,160   8.72     24,844     2,231   8.97
   Loans held for sale                            2,247      123     5.52       2,217       169   7.64      2,534       230   9.05
- ------------------------------------------------------------------------------------------------------------------------------------
     Total loans                                 63,393    4,027     6.35      65,976     5,103   7.73     65,294     5,715   8.75
Taxable investment securities                         1       --     8.59           2        --   8.60          2        --   8.42
Tax-exempt investment securities(a)                 180       16     8.67         277        25   8.76        391        34   8.76
- ------------------------------------------------------------------------------------------------------------------------------------
     Total investment securities                    181       16     8.67         279        25   8.76        393        34   8.75
Securities available for sale(a,c)                6,359      389     6.14       6,625       455   6.89      6,470       448   6.80
Short-term investments                            1,496       30     1.99       1,712        65   3.81      1,717        83   4.84
Other investments(c)                                871       24     2.57         849        24   2.86        701        25   3.74
- ------------------------------------------------------------------------------------------------------------------------------------
     Total earning assets                        72,300    4,486     6.20      75,441     5,672   7.52     74,575     6,305   8.45
Allowance for loan losses                        (1,553)                       (1,090)                       (959)
Accrued income and other assets                  11,034                        10,552                      10,419
- ------------------------------------------------------------------------------------------------------------------------------------
                                               $ 81,781                      $ 84,903                     $84,035
                                               ========                      ========                     =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Money market deposit accounts                  $ 13,197      125      .94    $ 12,323       254   2.06    $12,211       414   3.39
Savings deposits                                  1,986       13      .67       1,952        21   1.05      2,206        32   1.47
NOW accounts                                        564        6     1.02         619         9   1.43        612        10   1.59
Certificates of deposit ($100,000 or more)(d)     4,741      218     4.63       5,284       301   5.71      5,511       340   6.15
Other time deposits                              12,859      496     3.86      14,208       786   5.53     13,974       805   5.76
Deposits in foreign office                        2,336       39     1.67       2,715       107   3.94      2,593       167   6.45
- ------------------------------------------------------------------------------------------------------------------------------------
     Total interest-bearing deposits             35,683      897     2.52      37,101     1,478   3.98     37,107     1,768   4.76
Federal funds purchased and securities
   sold under repurchase agreements               5,527       90     1.63       5,197       198   3.80      4,931       287   5.82
Bank notes and other short-term borrowings(d)     2,943       79     2.67       6,829       302   4.43      7,121       428   6.01
Long-term debt, including capital
 securities(d,e)                                 16,961      551     3.29      15,911       824   5.20     15,707     1,064   6.78
- ------------------------------------------------------------------------------------------------------------------------------------
     Total interest-bearing liabilities          61,114    1,617     2.66      65,038     2,802   4.31     64,866     3,547   5.47
Noninterest-bearing deposits                      9,098                         8,354                       8,328
Accrued expense and other liabilities             5,045                         4,939                       4,329
Shareholders' equity                              6,524                         6,572                       6,512
- ------------------------------------------------------------------------------------------------------------------------------------
                                               $ 81,781                      $ 84,903                     $84,035
                                               ========                      ========                     =======
Interest rate spread (TE)                                            3.54%                        3.21%                      2.98%
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income (TE) and net
     interest margin (TE)                                 $2,869     3.97%             $  2,870   3.81%            $  2,758  3.69%
                                                          ======     ====              ========   ====             ========  ====

Capital securities                             $  1,254   $   78             $  1,309  $     89           $ 1,243  $     95
TE adjustment(a)                                             120                             45                          28
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  Interest income on tax-exempt securities and loans has been adjusted to a
     taxable-equivalent basis using the statutory federal income tax rate of
     35%.

(b)  For purposes of these computations, nonaccrual loans are included in
     average loan balances.

(c)  Yield is calculated on the basis of amortized cost.

(d)  Rate calculation excludes basis adjustments related to fair value hedges.
     See Note 20 ("Derivatives and Hedging Activities"), which begins on page
     84, for an explanation of fair value hedges.

(e)  Rate calculation excludes ESOP debt.

TE = Taxable Equivalent, N/M = Not Meaningful

28

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                                                                  COMPOUND
                                                                                                                   ANNUAL
                                                                                                               RATE OF CHANGE
                1999                                 1998                              1997                      (1997-2002)
- ------------------------------------  ----------------------------------   ------------------------------    -------------------
AVERAGE                       YIELD/  AVERAGE                     YIELD/    AVERAGE                YIELD/    AVERAGE
BALANCE      INTEREST         RATE    BALANCE     INTEREST        RATE      BALANCE     INTEREST   RATE      BALANCE   INTEREST
- --------------------------------------------------------------------------------------------------------------------------------
<S>          <C>              <C>     <C>         <C>             <C>      <C>          <C>        <C>       <C>       <C>
$ 17,695     $  1,350          7.63%  $ 15,413    $  1,251         8.12%   $  12,911    $  1,126    8.72%      6.6%      (4.2)%
   6,946          580          8.35      7,080         627         8.86        7,101         663    9.34      (2.2)     (10.9)
   4,076          343          8.42      2,866         254         8.86        1,945         188    9.67      24.6       10.9
   6,092          445          7.30      4,822         359         7.45        3,310         228    6.89      17.0       16.6
- --------------------------------------------------------------------------------------------------------------------------------
  34,809        2,718          7.81     30,181       2,491         8.25       25,267       2,205    8.73       8.1       (1.1)
   4,479          338          7.55      5,440         422         7.76        6,192         524    8.46     (19.2)     (22.2)
   7,548          645          8.55      6,353         557         8.77        5,180         469    9.05      20.3       13.6
     997          152         15.25      1,438         212        14.74        1,710         256   14.97       N/M        N/M
   2,457          238          9.69      2,139         228        10.66        2,238         246   10.99       (.3)      (5.7)
   2,922          236          8.08      2,024         171         8.45        1,156          99    8.56       4.0        4.9
   6,584          608          9.23      6,647         603         9.07        7,023         633    9.01      (6.0)      (5.7)
- --------------------------------------------------------------------------------------------------------------------------------
  24,987        2,217          8.87     24,041       2,193         9.12       23,499       2,227    9.48        .4       (4.0)
   2,605          228          8.75      3,200         262         8.19        2,649         198    7.47      (3.2)      (9.1)
- --------------------------------------------------------------------------------------------------------------------------------
  62,401        5,163          8.27     57,422       4,946         9.02       51,415       4,630    9.01       4.3       (2.8)
       2           --         12.73          3          --         7.61            4          --    7.86     (24.2)       N/M
     535           46          8.60        801          67         8.36        1,227          97    7.91     (31.9)     (30.3)
- --------------------------------------------------------------------------------------------------------------------------------
     537           46          8.57        804          67         8.33        1,231          97    7.87     (31.8)     (30.3)
   6,403          425          6.68      6,610         450         6.84        7,629         527    6.69      (3.6)      (5.9)
   1,873           78          4.16      1,563          84         5.37          782          40    5.12      13.9       (5.6)
     442           15          3.46        279          12         4.36          243          12    4.55      29.1       14.9
- --------------------------------------------------------------------------------------------------------------------------------
  71,656        5,727          7.99     66,678       5,559         8.34       61,300       5,306    8.66       3.4       (3.3)
    (911)                                 (888)                                 (875)                         12.2
  10,201                                 9,491                                 8,525                           5.3
- --------------------------------------------------------------------------------------------------------------------------------
$ 80,946                               $75,281                               $68,950                           3.5
========                               =======                               =======

$ 12,950          390          3.01    $11,650         382         3.28    $  10,897         333    3.06       3.9      (17.8)
   2,716           44          1.62      3,225          59         1.83        4,319          94    2.18     (14.4)     (32.7)
     791           12          1.52      1,215          20         1.65        1,560          32    2.05     (18.4)     (28.5)
   4,257          223          5.24      3,520         194         5.51        3,376         190    5.63       7.0        2.8
  11,969          595          4.97     12,240         654         5.34       13,273         715    5.39       (.6)      (7.1)
     823           41          4.98        913          50         5.48        1,812          98    5.41       5.2      (16.8)
- --------------------------------------------------------------------------------------------------------------------------------
  33,506        1,305          3.89     32,763       1,359         4.15       35,237       1,462    4.15        .3       (9.3)

   4,856          220          4.53      6,635         342         5.15        6,942         359    5.17      (4.5)     (24.2)
   7,912          426          5.38      7,975         459         5.76        4,741         283    5.97      (9.1)     (22.5)
  16,473          957          6.09     11,175         681         6.30        6,554         413    6.38      20.9        5.9
- --------------------------------------------------------------------------------------------------------------------------------
  62,747        2,908          4.63     58,548       2,841         4.85       53,474       2,517    4.71       2.7       (8.5)
   8,474                                 8,509                                 8,536                           1.3
   3,464                                 2,681                                 2,074                          19.5
   6,261                                 5,543                                 4,866                           6.0
- --------------------------------------------------------------------------------------------------------------------------------
$ 80,946                              $ 75,281                             $  68,950                           3.5
========                              ========                             =========

                               3.36%                               3.49%                            3.95%
- --------------------------------------------------------------------------------------------------------------------------------

             $  2,819          3.93%              $  2,718         4.08%                $  2,789    4.54%                  .6%
               ======          ====               ========         ====                 ========    ====

$  1,162     $     85                 $    879    $     65                 $     648    $     49              14.1%       9.7%
                   32                                   34                                    44                         22.2
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                              29

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

Average earning assets decreased by 4% to $72.3 billion, due primarily to
declines in both commercial and consumer loans (other than home equity loans).
These declines reflected weak loan demand in a challenging economic environment,
as well as the effect of management's decision to exit and/or reduce certain
lending activities. This decision is more fully discussed below in the section
entitled "Interest earning assets."

In 2001, net interest income was $2.9 billion, representing a $112 million, or
4%, increase from 2000. This growth reflected an improved net interest margin,
which increased 12 basis points to 3.81%. Average earning assets increased by 1%
to $75.4 billion, as growth in the commercial and home equity portfolios more
than offset declines in other portfolios (some of which declined due to the
strategic decision mentioned above).

NET INTEREST MARGIN. Key's net interest margin improved over the past two years,
primarily because:

- -   we benefited from declining short-term interest rates;

- -   the interest rate spread on our total loan portfolio improved as we
    continued to focus on those businesses, such as home equity lending, that
    typically generate higher interest rate spreads;

- -   we sold loans with interest rate spreads that did not meet Key's internal
    profitability standards; and

- -   a greater proportion of Key's earning assets was supported by
    noninterest-bearing liabilities (such as demand deposits) and shareholders'
    equity.

INTEREST EARNING ASSETS. Average earning assets for 2002 totaled $72.3 billion,
which was $3.1 billion, or 4%, lower than the 2001 level. This decrease came
principally from the loan portfolio and was attributable to a number of factors,
including Key's decision in May 2001 to exit or scale back certain types of
lending. Another factor was loan sales, including the September 2001 sale of
$1.4 billion of residential mortgage loans. Weak loan demand resulting from the
general economic slowdown has also contributed to the net decline in loans.

In 2001, average earning assets totaled $75.4 billion, representing an $866
million, or 1%, increase from the prior year. This improvement was driven by the
growth of Key's loan portfolio, with the largest increases occurring in the
commercial and home equity sectors. However, our decision to scale back or exit
certain types of lending, and slower demand for loans in a weak economy, led to
declines in Key's commercial and consumer loans during the second half of 2001.
The September sale of $1.4 billion of residential mortgage loans also
contributed to the decline in consumer loans.

Over the past two years, the growth and composition of Key's loan portfolio has
been affected by several actions:

- -   During the third quarter of 2001, we sold $1.4 billion of residential
    mortgage loans, which were generated by our private banking and community
    development businesses. These loans are originated as a customer and
    community accommodation and are sold periodically because they have
    relatively low interest rate spreads that do not meet Key's internal
    profitability standards.

- -   During the second quarter of 2001, management announced that Key would exit
    the automobile leasing business, de-emphasize indirect prime automobile
    lending and discontinue certain credit-only commercial relationships. These
    portfolios, in the aggregate, have declined by approximately $3.3 billion
    since the date of the announcement through December 31, 2002.

- -   We sold commercial mortgage loans of $1.4 billion during 2002 and $1.7
    billion during 2001. Since some of these loans have been sold with limited
    recourse, Key established a loss reserve of an amount estimated by
    management to be appropriate to reflect the recourse risk. More information
    about the related recourse agreement is provided in Note 19 ("Commitments,
    Contingent Liabilities and Guarantees") under the section entitled "Recourse
    agreement with Federal National Mortgage Association" on page 83. Our
    business of originating and servicing commercial mortgage loans has grown,
    in part as a result of acquiring Conning Asset Management in the second
    quarter of 2002 and both Newport Mortgage Company, L.P. and National Realty
    Funding L.C. in 2000.

- -   We sold education loans of $1.1 billion ($750 million through
    securitizations) during 2002 and $1.2 billion ($491 million through
    securitizations) during 2001.

Figure 7 shows how the changes in yields or rates and average balances from the
prior year affected net interest income. The section entitled "Financial
Condition," which begins on page 36, contains more discussion about changes in
earning assets and funding sources.

MARKET RISK MANAGEMENT

The values of some financial instruments vary not only with changes in market
interest rates, but also with changes in foreign exchange rates, factors
influencing valuations in the equity securities markets, and other market-driven
rates or prices. For example, the value of a fixed-rate bond will decline if
market interest rates increase; the bond will become a less attractive
investment to the holder. Similarly, the value of the U.S. dollar regularly
fluctuates in relation to other currencies. The exposure that instruments tied
to such external factors present is called "market risk." Most of Key's market
risk is derived from interest rate fluctuations.

Interest rate risk management

Key's Asset/Liability Management Policy Committee has developed a program to
measure and manage interest rate risk. This committee is also responsible for
approving Key's asset/liability management policies, overseeing the formulation
and implementation of strategies to improve balance sheet positioning and
earnings, and reviewing Key's interest rate sensitivity exposure.

FACTORS CONTRIBUTING TO INTEREST RATE EXPOSURE. Key uses interest rate exposure
models to quantify the potential impact on earnings and economic value of equity
arising from a variety of possible future interest rate scenarios. The many
interest rate scenarios modeled estimate the level of Key's interest rate
exposure arising from option risk, basis risk and gap risk.

- -   A financial instrument presents "OPTION RISK" when one party to the
    instrument can take advantage of changes in interest rates without penalty.
    For example, when interest rates decline, borrowers may choose to prepay
    fixed-rate loans by refinancing at a lower rate.

30

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

               FIGURE 7 COMPONENTS OF NET INTEREST INCOME CHANGES

<TABLE>
<CAPTION>
                                                           2002 VS 2001                           2001 VS 2000
                                                 ---------------------------------      ---------------------------------
                                                 AVERAGE       YIELD/       NET         AVERAGE       YIELD/      NET
in millions                                      VOLUME        RATE        CHANGE       VOLUME        RATE        CHANGE
- -------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>          <C>          <C>          <C>          <C>
INTEREST INCOME
Loans                                            $  (193)     $  (883)     $(1,076)     $    59      $  (671)     $  (612)
Tax-exempt investment securities                      (9)          --           (9)         (10)           1           (9)
Securities available for sale                        (18)         (48)         (66)          10           (3)           7
Short-term investments                                (7)         (28)         (35)          --          (18)         (18)
Other investments                                      1           (1)          --            5           (6)          (1)
- -------------------------------------------------------------------------------------------------------------------------
   Total interest income (taxable equivalent)       (226)        (960)      (1,186)          64         (697)        (633)

INTEREST EXPENSE
Money market deposit accounts                         17         (146)        (129)           4         (164)        (160)
Savings deposits                                      --           (8)          (8)          (3)          (8)         (11)
NOW accounts                                          (1)          (2)          (3)          --           (1)          (1)
Certificates of deposit ($100,000 or more)           (29)         (54)         (83)         (14)         (25)         (39)
Other time deposits                                  (69)        (221)        (290)          13          (32)         (19)
Deposits in foreign office                           (13)         (55)         (68)           8          (68)         (60)
- -------------------------------------------------------------------------------------------------------------------------
   Total interest-bearing deposits                   (95)        (486)        (581)           8         (298)        (290)
Federal funds purchased and securities sold
  under repurchase agreements                         12         (120)        (108)          15         (104)         (89)
Bank notes and other short-term borrowings          (132)         (91)        (223)         (17)        (109)        (126)
Long-term debt, including capital securities          51         (324)        (273)          14         (254)        (240)
- -------------------------------------------------------------------------------------------------------------------------
   Total interest expense                           (164)      (1,021)      (1,185)          20         (765)        (745)
- -------------------------------------------------------------------------------------------------------------------------
   Net interest income (taxable equivalent)      $   (62)     $    61      $    (1)     $    44      $    68      $   112
                                                 =======      =======      =======      =======      =======      =======
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

The change in interest not due solely to volume or rate has been allocated in
proportion to the absolute dollar amounts of the change in each.


    Such a prepayment gives Key a return on its investment (the principal plus
    some interest), but unless there is a prepayment penalty, that return may
    not be as high as the return that would have been generated had payments
    been received for the duration originally scheduled. Floating-rate loans
    that are capped against potential interest rate increases, and deposits
    that can be withdrawn on demand also present option risk.

- -   One approach that Key follows to manage interest rate risk is to use
    floating-rate liabilities (such as borrowings) to fund floating-rate assets
    (such as loans). That way, as our interest expense increases, so will our
    interest income. We face "BASIS RISK" when our floating-rate assets and
    floating-rate liabilities reprice in response to different market factors or
    indices. Under those circumstances, even if equal amounts of assets and
    liabilities are repricing at the same time, interest expense and interest
    income may not change by the same amount.

- -   We often use an interest-bearing liability to fund an interest-earning
    asset. For example, Key may sell certificates of deposit and use the
    proceeds to make loans. That strategy presents "GAP RISK" if the related
    liabilities and assets do not mature or reprice at the same time.

MEASUREMENT OF SHORT-TERM INTEREST RATE EXPOSURE. Key uses a net interest income
simulation model to measure interest rate risk over a short time frame. These
simulations estimate the impact that various changes in the overall level of
interest rates over one- and two-year time horizons would have on net interest
income. The results help Key develop strategies for managing exposure to
interest rate risk.

Like any forecasting technique, interest rate simulation modeling is based on a
large number of assumptions and judgments. In this case, the assumptions relate
primarily to loan and deposit growth, asset and liability prepayments, interest
rates, and on- and off-balance sheet management strategies. Management believes
that, both individually and in the aggregate, the assumptions Key makes are
reasonable. Nevertheless, the simulation modeling process produces only a
sophisticated estimate, not a precise calculation of exposure.

Key's guidelines for risk management call for preventive measures to be taken if
the simulation modeling demonstrates that a gradual 200 basis point increase or
decrease in short-term rates over the next twelve months would adversely affect
net interest income over the same period by more than 2%. Key is operating
within these guidelines. Since short-term interest rates were relatively low at
December 31, 2002, management modified Key's standard rate scenario of a gradual
decrease of 200 basis points over twelve months to a gradual decrease of 50
basis points over three months and no change over the following nine months. As
of December 31, 2002, based on the results of our simulation model, and assuming
that management does not take action to alter the outcome, Key would expect net
interest income to decrease by approximately .43% if short-term interest rates
gradually increase by 200 basis points. Conversely, if short-term interest rates
gradually decrease by 50 basis points over the next three months, net interest
income would be expected to decrease by approximately .51% over the next twelve
months.

                                                                              31

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

The decline in net interest income under both of the preceding scenarios
reflects the fact that Key is currently in a liability sensitive position when
interest rates increase and an asset sensitive position when rates decrease.
Key's asset sensitive position to a decrease in interest rates stems from the
fact that short-term rates are at historically low levels. Consequently, the
results of the simulation model reflect management's assumption that deposit
rates will not decline from current levels, while interest rates on earning
assets will continue to do so. To mitigate the risk of a potentially adverse
effect on earnings, management is using interest rate contracts while
maintaining the flexibility to lower rates on deposits, if necessary.

Key has historically been in a liability sensitive position when interest rates
are rising. Management actively monitors the risk to higher rates and would
endeavor to take preventive actions to ensure that net interest income at risk
does not exceed guidelines established by the Asset/Liability Management Policy
Committee. Also, Key's lines of business have the ability to mitigate the
negative effect on net interest income from rising interest rates by growing
loans and deposits with profitable interest rate spreads.

MEASUREMENT OF LONG-TERM INTEREST RATE EXPOSURE. Key uses an economic value of
equity model to complement short-term interest rate risk analysis. The benefit
of this model is that it measures exposure to interest rate changes over time
frames longer than two years. The economic value of Key's equity is determined
by aggregating the present value of projected future cash flows for asset,
liability and derivative positions based on the current yield curve. However,
economic value does not represent the fair values of asset, liability and
derivative positions since it does not consider factors like credit risk and
liquidity.

Key's guidelines for risk management call for preventive measures to be taken if
an immediate 200 basis point increase or decrease in interest rates is estimated
to reduce the economic value of equity by more than 15%. Key is operating within
these guidelines. Certain short-term interest rates were limited to reductions
of less than 200 basis points since interest rates cannot decrease below zero in
Key's economic value of equity model.

MANAGEMENT OF INTEREST RATE EXPOSURE. Management uses the results of short-term
and long-term interest rate exposure models to formulate strategies to improve
balance sheet positioning, earnings, or both, within the bounds of Key's
interest rate risk, liquidity and capital guidelines. We manage interest rate
risk by using portfolio swaps and caps, which modify the repricing or maturity
characteristics of some of our assets and liabilities. The decision to use these
instruments rather than securities, debt or other on-balance sheet alternatives
depends on many factors, including the mix and cost of funding sources,
liquidity and capital requirements, and interest rate implications.

A brief description of interest rate swaps and caps follows.

- -   INTEREST RATE SWAPS are contracts in which two parties agree to exchange
    interest payment streams that are calculated based on agreed-upon amounts
    (known as "notional amounts"). For example, party A will pay interest at a
    fixed rate to, and receive interest at a variable rate from, party B. Key
    generally uses interest rate swaps to mitigate its exposure to interest rate
    risk on certain loans, securities, deposits, short-term borrowings and
    long-term debt.

- -   INTEREST RATE CAPS are contracts under which the holder is compensated based
    on an agreed-upon notional amount when a benchmark interest rate exceeds a
    specified level (known as the "strike rate"). Caps limit exposure to
    interest rate increases, but have no effect if interest rates decline. Key
    has used interest rate caps to manage the risk of adverse movements in
    interest rates on some of its debt.

For more information about how Key uses interest rate swaps and caps to manage
its balance sheet, see Note 20 ("Derivatives and Hedging Activities"), which
begins on page 84.

Trading portfolio risk management

Key's trading portfolio includes interest rate swap contracts entered into to
accommodate the needs of clients, positions with third parties that are intended
to offset or mitigate the interest rate risk of client positions, foreign
exchange contracts entered into to accommodate the needs of clients, and
proprietary trading positions in financial assets and liabilities. The fair
values of these trading portfolio items are included in "accrued income and
other assets" or "accrued expense and other liabilities" on the balance sheet.
For more information about these items, see Note 20 ("Derivatives and Hedging
Activities"), which begins on page 84.

Management uses a value at risk ("VAR") model to estimate the potential adverse
effect of changes in interest and foreign exchange rates, and equity prices on
the fair value of Key's trading portfolio. Using statistical methods, this model
estimates the maximum potential one-day loss with 95% probability. At December
31, 2002, Key's aggregate daily VAR was $.9 million, compared with $1.4 million
at December 31, 2001. Aggregate daily VAR averaged $1.4 million for 2002,
compared with an average of $1.3 million during 2001. VAR modeling augments
other controls that Key uses to mitigate the market risk exposure of the trading
portfolio. These controls include loss and portfolio size limits that are based
on market liquidity and the level of activity and volatility of trading
products.

NONINTEREST INCOME

Noninterest income for 2002 was $1.8 billion, representing a $44 million, or 3%,
increase from the prior year. In 2001, noninterest income of $1.7 billion was
down $469 million, or 21%, from 2000.

The 2002 improvement in noninterest income was due primarily to an $84 million
increase in income from investment banking and capital markets activities. This
increase was attributable to strong growth in investment banking fees, but also
reflected two significant charges recorded during the fourth quarter of 2001.
These charges included a $45 million write-down of the principal investing
portfolio and a $15 million increase to the reserve for customer derivative
losses. Also contributing to the 2002 improvement was an $18 million increase in
service charges on deposit accounts and a $10 million rise in letter of credit
and nonyield-related loan fees. These positive results were offset in part by a
$42 million reduction in income from trust and investment services and a $29
million decrease in net securities gains.

In 2001, Key's noninterest income decreased principally because noninterest
income in 2000 included a $332 million gain from the sale of Key's credit card
portfolio in January 2000. For more information on this transaction, see Note 3
("Acquisitions and Divestitures") on page 64. In addition,

32

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

capital markets-sensitive revenues, particularly those generated by the asset
management, principal investing and brokerage businesses, were affected
adversely by the recessionary economy. Income from investment banking and
capital markets activities decreased by $205 million (including the $60 million
of 2001 charges discussed on page 32), while income from trust and investment
services declined by $36 million. These reductions were substantially offset by
increases in net securities gains (up $63 million), service charges on deposit
accounts (up $46 million) and letter of credit and nonyield-related loan fees
(up $17 million).

Figure 8 shows the major components of Key's noninterest income. The discussion
that follows provides additional information, such as the composition of certain
components and the factors that caused them to change in 2002 and 2001.

                          FIGURE 8 NONINTEREST INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                                   CHANGE 2002 VS 2001
                                                                                         ---------------------
dollars in millions                                  2002        2001        2000        AMOUNT        PERCENT
- --------------------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>         <C>          <C>            <C>
Trust and investment services income                $   609     $   651     $   687      $   (42)       (6.5)%
Service charges on deposit accounts                     405         387         341           18         4.7
Investment banking and capital markets income           172          88         293           84        95.5
Letter of credit and loan fees                          134         124         107           10         8.1
Corporate-owned life insurance income                   108         114         109           (6)       (5.3)
Electronic banking fees                                  79          74          68            5         6.8
Net securities gains (losses)                             6          35         (28)         (29)      (82.9)
Gain from sale of credit card portfolio                  --          --         332           --          --
Other income:
  Insurance income                                       57          56          62            1         1.8
  Net gains from loan securitizations and sales          56          49          31            7        14.3
  Loan securitization servicing fees                      9          16          24           (7)      (43.8)
  Credit card fees                                        9           7          11            2        28.6
  Miscellaneous income                                  125         124         157            1          .8
- ------------------------------------------------------------------------------------------------------------
    Total other income                                  256         252         285            4         1.6
- ------------------------------------------------------------------------------------------------------------
    Total noninterest income                        $ 1,769     $ 1,725     $ 2,194      $    44         2.6%
                                                    =======     =======     =======      =======
- ------------------------------------------------------------------------------------------------------------
</TABLE>

TRUST AND INVESTMENT SERVICES INCOME. Trust and investment services provide
Key's largest source of noninterest income. Its primary components are shown in
Figure 9. A significant portion of this income is based on the value of assets
under management. Thus, over the past two years, the level of revenue derived
from these services has been adversely affected by continued declines in the
equity and fixed income markets.

                 FIGURE 9 TRUST AND INVESTMENT SERVICES INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                                                  CHANGE 2002 VS 2001
                                                                                                       -----------------------
dollars in millions                                     2002             2001            2000          AMOUNT          PERCENT
- -------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>             <C>           <C>             <C>
Personal asset management and custody fees              $162             $179            $189           $(17)            (9.5)%
Institutional asset management and custody fees           77               86              93             (9)           (10.5)
Bond services                                             36               41              42             (5)           (12.2)
Brokerage commission income                              198              202             224             (4)            (2.0)
All other fees                                           136              143             139             (7)            (4.9)
- ------------------------------------------------------------------------------------------------------------------------------
    Total trust and investment services income          $609             $651            $687           $(42)            (6.5)%
                                                        ====             ====            ====           ====
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

At December 31, 2002, Key's bank, trust and registered investment advisory
subsidiaries had assets under management of $61.7 billion, compared with $72.7
billion at the end of 2001. These assets are managed on behalf of both
institutions and individuals through a variety of equity, fixed income and money
market accounts. The composition of Key's assets under management is shown in
Figure 10. In 2002, the value of total assets under management decreased by a
net 15%. This decrease reflects a decline in the market value of assets under
management, as well as net asset outflows of approximately $4.1 billion during
the year.

Approximately 60% of the outflows represent funds that have been transferred to
an outside vendor in connection with Key's decision in 2002 to sell the 401(k)
recordkeeping business. Another 20% of the outflows are attributable to funds
which clients have elected to move from money market funds under management to
an FDIC insured deposit account with Key. As shown in Figure 10, 56% of the
assets Key manages are invested in more stable fixed income or money market
funds. The performance of the majority of Key's investment products exceeded the
performance of their respective benchmarks.

                                                                              33

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

                       FIGURE 10 ASSETS UNDER MANAGEMENT

<TABLE>
<CAPTION>
DECEMBER 31,
in millions                      2002        2001         2000
- ----------------------------------------------------------------
<S>                             <C>         <C>          <C>
Assets under management
  by investment type:
     Equity                     $27,224     $35,798      $37,748
     Fixed income                16,133      16,919       14,579
     Money market                18,337      20,000       21,688
- ----------------------------------------------------------------
        Total                   $61,694     $72,717      $74,015
                                =======     =======      =======

Proprietary mutual funds
  included in assets
  under management:
     Equity                     $ 2,878     $ 3,973      $ 4,405
     Fixed income                 1,215       1,190        1,042
     Money market                11,457      13,801       15,307
- ----------------------------------------------------------------
        Total                   $15,550     $18,964      $20,754
                                =======     =======      =======
- ----------------------------------------------------------------
</TABLE>

INVESTMENT BANKING AND CAPITAL MARKETS INCOME. As shown in Figure 11, the 2002
increase in investment banking and capital markets income was driven by improved
results from investment banking activities and from principal investing. The
improvement in principal investing reflects the $45 million charge taken for
write-downs in the fourth quarter of 2001.

Key's principal investing income is susceptible to volatility since it is
derived from investments in small to medium-sized businesses in various stages
of economic development and strategy implementation. While most of Key's
principal investments are in their mid to late stages, those that are in their
early stages are more vulnerable to changes in general economic conditions.
Principal investments consist of direct and indirect investments in
predominantly privately-held companies and are carried on the balance sheet at
fair value ($677 million at December 31, 2002, and $621 million at December 31,
2001). Thus, the net gains and losses presented in Figure 11 stem from changes
in estimated fair values, as well as actual gains and losses on sales of
principal investments. If the current weakness in the economy continues,
management anticipates there may be a further decline in the fair value of the
principal investing portfolio.

            FIGURE 11 INVESTMENT BANKING AND CAPITAL MARKETS INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                                                 CHANGE 2002 VS 2001
                                                                                                       ---------------------
dollars in millions                                        2002           2001           2000          AMOUNT       PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>            <C>            <C>           <C>          <C>
Dealer trading and derivatives income                      $ 32           $ 25           $ 80           $ 7           28.0%
Investment banking income                                   121            102            107            19           18.6
Net gains (losses) from principal investing                 (14)           (79)            71            65           82.3
Foreign exchange income                                      33             40             35            (7)         (17.5)
- --------------------------------------------------------------------------------------------------------------------------
    Total investment banking and capital markets income    $172           $ 88           $293           $84           95.5%
                                                           ====           ====           ====           ===
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

SERVICE CHARGES ON DEPOSIT ACCOUNTS. In 2002, service charges on deposit
accounts rose for the second consecutive year. These fees increased over the
past two years primarily because of strategies implemented in connection with
Key's competitiveness initiative and higher levels of noninterest-bearing
deposits. The growth in these fees slowed during the second half of 2002 as free
checking products were introduced in the third quarter and rolled out to all of
Key's markets by the end of the year.

CORPORATE-OWNED LIFE INSURANCE INCOME. Income from corporate-owned life
insurance, representing a tax-deferred increase in cash surrender values and
tax-exempt death benefits, decreased by 5% in 2002, following a 5% increase in
the prior year.

SECURITIES TRANSACTIONS. During 2002, Key realized net securities gains of $6
million, compared with net gains of $35 million in 2001 and net losses of $28
million in 2000. Since the 2001 sales involved primarily equity securities, the
sales did not have a significant adverse affect on Key's net interest income in
subsequent periods. In 2000, Key's securities transactions included $50 million
of net losses that resulted from the reconfiguration of the fixed income
securities portfolio.

OTHER INCOME. Other income for 2002 increased by $4 million, or 2%, from 2001.
The $33 million decrease in 2001 compared with the prior year was due largely to
a $40 million charge (included in miscellaneous income) taken in the second
quarter to establish a reserve for losses incurred on the residual values of
leased vehicles. This charge was offset in part by an increase in net gains from
loan securitizations and sales, and higher fees from electronic banking
services. Also, traditional fee income was supplemented in the fourth quarter of
2001 by $10 million of additional revenue, representing the value of shares
received as a result of the demutualization of an insurance company in which Key
is a policyholder. Key contributed these shares to its charitable foundation,
which also increased miscellaneous expense by $10 million.

NONINTEREST EXPENSE

Noninterest expense for 2002 was $2.7 billion, representing a $288 million, or
10%, decrease from the prior year and Key's lowest level of expense for any year
since 1998. In 2001, noninterest expense of $2.9 billion was essentially
unchanged from 2000.

The 2002 reduction in noninterest expense reflected a $234 million decrease in
amortization expense related to intangibles, which resulted from two significant
events. In the second quarter of 2001, we recorded a $150 million write-down of
goodwill associated with Key's decision to downsize its automobile finance
business. In addition, a 2002 prescribed change in accounting for goodwill
reduced amortization expense by approximately $79 million. For more information
pertaining to the accounting change, see the section entitled "Amortization of
intangibles" on page 36. Other factors that contributed to the 2002 improvement
in

34

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

noninterest expense were a $60 million reduction in computer processing expense,
a $16 million decrease in equipment expense and a $20 million charge (included
in miscellaneous expense) taken in the second quarter of 2001 to increase
litigation reserves. These positive results were partially offset by a $58
million rise in personnel expense.

Noninterest expense for both 2001 and 2000 included significant items that
hinder a comparison of results between those years. In 2001, these items
included the write-down of goodwill and the additional litigation reserves
mentioned above. In 2000, these items included $127 million of restructuring and
other special charges recorded in connection with strategic actions implemented
to improve operating efficiency and profitability. More information about these
charges can be found under the heading "Restructuring and other special charges"
on page 36. Excluding these items, noninterest expense for 2001 decreased by $19
million, or 1%, from 2000. The decrease was due primarily to a $67 million
improvement in personnel expense and a $21 million decline in equipment expense.
These reductions were partially offset by increases in a number of other expense
components. Included in miscellaneous expense for 2001 is the $10 million
contribution to our charitable foundation discussed under the heading "Other
income" on page 34.

Figure 12 shows the components of Key's noninterest expense. The discussion that
follows explains the composition of certain components and the factors that
caused them to change in 2002 and 2001.

                         FIGURE 12 NONINTEREST EXPENSE

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                                  CHANGE 2002 VS 2001
                                                                                        --------------------
dollars in millions                              2002         2001          2000        AMOUNT        PERCENT
- -------------------------------------------------------------------------------------------------------------
<S>                                            <C>          <C>           <C>          <C>            <C>
Personnel                                      $  1,436     $  1,378      $  1,445     $     58          4.2%
Net occupancy                                       226          232           223           (6)        (2.6)
Computer processing                                 192          252           240          (60)       (23.8)
Equipment                                           136          152           173          (16)       (10.5)
Marketing                                           122          112           110           10          8.9
Professional fees                                    92           88            89            4          4.5
Amortization of intangibles                          11          245           101         (234)       (95.5)
Restructuring charges (credits)                      --           (4)          102            4        100.0
Other expense:
  Postage and delivery                               59           63            65           (4)        (6.3)
  Telecommunications                                 35           44            51           (9)       (20.5)
  Equity- and gross receipts-based taxes             26           29            33           (3)       (10.3)
  OREO expense, net                                   7            6             7            1         16.7
  Miscellaneous expense                             311          344           278          (33)        (9.6)
- ------------------------------------------------------------------------------------------------------------
    Total other expense                             438          486           434          (48)        (9.9)
- ------------------------------------------------------------------------------------------------------------
    Total noninterest expense                  $  2,653     $  2,941      $  2,917     $   (288)        (9.8)%
                                               ========     ========      ========     ========

Full-time equivalent employees at year end       20,437       21,230        22,142         (793)        (3.7)%
- ------------------------------------------------------------------------------------------------------------
</TABLE>

PERSONNEL. Personnel expense, the largest category of Key's noninterest expense,
rose by $58 million, or 4%, in 2002 following decreases in each of the previous
two years. The 2002 increase was due primarily to a rise in the cost of benefits
and the effect of annual merit increases, most of which generally take effect
during the second quarter. The level of Key's personnel expense continues to
reflect the benefits derived from our successful competitiveness initiative.
Through this initiative we have improved efficiency and reduced the level of
personnel required to conduct our business. At December 31, 2002, the number of
full-time equivalent employees was 20,437, compared with 21,230 at the end of
2001 and 22,142 at the end of 2000. Figure 13 shows the major components of
Key's personnel expense.

                          FIGURE 13 PERSONNEL EXPENSE

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                      CHANGE 2002 VS 2001
                                                             -------------------
dollars in millions          2002       2001       2000      AMOUNT      PERCENT
- --------------------------------------------------------------------------------
<S>                         <C>        <C>        <C>        <C>         <C>
Salaries                    $  867     $  842     $  875     $   25        3.0%
Employee benefits              218        188        192         30       16.0
Incentive compensation         351        348        378          3         .9
- --------------------------------------------------------------------------------
   Total personnel expense  $1,436     $1,378     $1,445     $   58        4.2%
                            ======     ======     ======     ======
- --------------------------------------------------------------------------------
</TABLE>

                                                                              35

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

In September 2002, the Board of Directors approved management's recommendation
to change Key's method of accounting for stock options granted to eligible
employees and directors. Effective January 1, 2003, Key will adopt the fair
value method of accounting as outlined in SFAS No. 123, "Accounting for
Stock-Based Compensation." Additional information pertaining to this accounting
change is included in Note 1 ("Summary of Significant Accounting Policies")
under the heading "Accounting Pronouncements Pending Adoption" on page 62.

COMPUTER PROCESSING. The decrease in computer processing expense in 2002 was due
primarily to a lower level of computer software amortization. This reduction is
attributable to a decline in the number of capitalized software projects. Higher
software amortization and expenses related to software rental and maintenance
accounted for the increase in 2001.

EQUIPMENT. The decrease in equipment expense in 2002 and 2001 was driven by
reductions in depreciation and rental expense stemming from cost management
efforts and our competitiveness initiative.

AMORTIZATION OF INTANGIBLES. On January 1, 2002, Key stopped amortizing
goodwill, consistent with the industry-wide adoption of new accounting guidance.
This change reduced the company's noninterest expense by approximately $79
million for 2002. In accordance with the new guidance, Key completed its
transitional goodwill impairment testing during the first quarter of 2002, and
determined that no impairment existed as of January 1, 2002. Key performed its
annual goodwill impairment testing as of October 1, 2002, and determined that no
impairment existed at that date as well. Additional information pertaining to
the new accounting guidance is included in Note 1 ("Summary of Significant
Accounting Policies") under the heading "Goodwill and Other Intangible Assets"
on page 59.

RESTRUCTURING AND OTHER SPECIAL CHARGES. Key recorded net charges of $127
million (including net restructuring charges of $104 million) in 2000 in
connection with strategic actions related to the competitiveness initiative. For
more information related to the actions taken, associated cost savings and
reductions to Key's workforce, see the section entitled "Status of
competitiveness initiative" on page 22. Additional information related to the
restructuring charges can be found in Note 18 ("Restructuring Charges") on page
81. Cash generated by Key's operations is expected to fund the restructuring
charge liability; none of the charges had a material impact on Key's liquidity.

INCOME TAXES

The provision for income taxes was $336 million for 2002, compared with $102
million for 2001 and $515 million for 2000. The effective tax rate, which is the
provision for income taxes as a percentage of income before income taxes, was
25.6% for 2002, compared with 39.4% for 2001 and 33.9% for 2000. In 2001, the
effective tax rate was significantly distorted by the $150 million nondeductible
write-down of goodwill recorded in the second quarter in connection with Key's
decision to downsize its automobile finance business. Excluding this charge, the
effective tax rate for 2001 was 24.9%.

The effective tax rate for 2002 and the effective tax rate for 2001 (excluding
the goodwill charge) are substantially below Key's combined statutory federal
and state rate of 37% primarily because portions of our equipment leasing
portfolio became subject to a lower income tax rate in the latter half of 2001.
Responsibility for the management of portions of Key's leasing portfolio was
transferred to a subsidiary in a lower tax jurisdiction. Since Key intends to
permanently reinvest the earnings of this subsidiary, no deferred income taxes
have been recorded on those earnings in accordance with SFAS No. 109,
"Accounting for Income Taxes." Other factors that account for the difference
between the effective and statutory tax rates in each year include tax
deductions associated with dividends paid to Key's 401(k) savings plan, income
from investments in tax-advantaged assets (such as tax-exempt securities and
corporate-owned life insurance) and credits associated with investments in
low-income housing projects.

In 2002, Key attained a higher level of pre-tax income, but proportionately less
income was derived from tax-advantaged assets. This resulted in an increase from
Key's 2001 effective tax rate (excluding the goodwill charge). However, the
increase was moderated by the full-year effect of a lower tax rate on our
equipment leasing portfolio, as well as legislative changes in 2002 that
resulted in a higher tax deduction for dividends paid on Key stock held in Key's
401(k) savings plan. In addition, Key ceased amortizing goodwill effective
January 1, 2002, in accordance with new accounting guidance specified by SFAS
No. 142, "Goodwill and Other Intangible Assets."

In 2001, the effective tax rate (excluding the goodwill charge) decreased
significantly because tax-exempt interest income, nontaxable income from
corporate-owned life insurance and tax credits accounted for a significantly
higher portion of Key's pre-tax income. Pre-tax income was substantially lower
in 2001 due to the effects of a weak economy and significant charges recorded in
the second and fourth quarters. In addition, the charitable contribution of
appreciated stock resulted in a tax benefit.

FINANCIAL CONDITION

LOANS

At December 31, 2002, total loans outstanding were $62.5 billion, compared with
$63.3 billion at the end of 2001 and $66.9 billion at the end of 2000. Among the
factors that contributed to the decrease in our loans over the past two years
are:

- -   loan sales completed to improve the profitability of the overall portfolio,
    or to accommodate our funding needs;

- -   weakening loan demand due to the sluggish economy; and

- -   our efforts to exit the automobile leasing business, de-emphasize indirect
    prime automobile lending and discontinue certain credit-only commercial
    relationships.

Over the past several years, we have used alternative funding sources like loan
sales and securitizations to allow us to continue to capitalize on our loan
origination capabilities. In addition, Key has completed acquisitions that have
improved our ability to generate and securitize new loans, especially in the
area of commercial real estate. These acquisitions include the purchase of
Conning Asset Management in June 2002, and both Newport Mortgage Company, L.P.
and National Realty Funding L.C. in 2000. Over the past two years, we have also
sold loans and referred new business to an asset-backed commercial paper
conduit. These sales and referrals were curtailed in 2002 to keep the loans on
Key's balance sheet. For more information about the conduit,

36

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

see Note 19 ("Commitments, Contingent Liabilities and Guarantees") under the
heading "Guarantees" on page 83.

Figure 14 shows the composition of Key's loan portfolio at December 31 for each
of the past five years.

                         FIGURE 14 COMPOSITION OF LOANS

<TABLE>
<CAPTION>

DECEMBER 31,                                           2002                         2001                         2000
                                            --------------------------    ------------------------     -------------------------
dollars in millions                          AMOUNT        % OF TOTAL      AMOUNT      % OF TOTAL       AMOUNT       % OF TOTAL
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>          <C>             <C>           <C>
COMMERCIAL
Commercial, financial and agricultural      $  17,425         27.9%       $ 18,159        28.7%        $ 20,100         30.0%
Commercial real estate (a):
   Commercial mortgage                          6,015          9.6           6,669        10.5            6,876         10.3
   Construction                                 5,659          9.1           5,878         9.3            5,154          7.7
- ----------------------------------------------------------------------------------------------------------------------------
      Total commercial real estate loans       11,674         18.7          12,547        19.8           12,030         18.0
Commercial lease financing                      7,513         12.0           7,357        11.6            7,164         10.7
- ----------------------------------------------------------------------------------------------------------------------------
      Total commercial loans                   36,612         58.6          38,063        60.1           39,294         58.7

CONSUMER
Real estate -- residential mortgage             1,968          3.1           2,315         3.6            4,212          6.3
Home equity                                    13,804         22.1          11,184        17.7            9,908         14.8
Credit card                                        --           --              --          --               --           --
Consumer -- direct                              2,161          3.5           2,342         3.7            2,539          3.8
Consumer -- indirect:
   Automobile lease financing                     873          1.4           2,036         3.2            3,005          4.5
   Automobile loans                             2,181          3.5           2,497         4.0            2,809          4.2
   Marine                                       2,088          3.3           1,780         2.8            1,657          2.5
   Other                                          667          1.1           1,036         1.6            1,252          1.9
- ----------------------------------------------------------------------------------------------------------------------------
      Total consumer -- indirect loans          5,809          9.3           7,349        11.6            8,723         13.1
- ----------------------------------------------------------------------------------------------------------------------------
      Total consumer loans                     23,742         38.0          23,190        36.6           25,382         38.0
LOANS HELD FOR SALE                             2,103          3.4           2,056         3.3            2,229          3.3
- ----------------------------------------------------------------------------------------------------------------------------
      Total                                 $  62,457        100.0%       $ 63,309       100.0%        $ 66,905        100.0%
                                            =========        =====        ========       =====         ========        =====
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                       1999                       1998
                                            --------------------------  ----------------------------
                                             AMOUNT        % OF TOTAL    AMOUNT          % OF TOTAL
- ----------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>         <C>              <C>
COMMERCIAL
Commercial, financial and agricultural      $   18,497         28.8%    $   17,038             27.5%
Commercial real estate(a):
   Commercial mortgage                           6,836         10.6          7,309             11.8
   Construction                                  4,528          7.1          3,450              5.6
- ---------------------------------------------------------------------------------------------------
      Total commercial real estate loans        11,364         17.7         10,759             17.4
Commercial lease financing                       6,665         10.4          5,613              9.0
- ---------------------------------------------------------------------------------------------------
      Total commercial loans                    36,526         56.9         33,410             53.9

CONSUMER
Real estate-- residential mortgage               3,962          6.1          4,394              7.1
Home equity                                      7,973         12.4          7,990             12.9
Credit card                                         --           --          1,425              2.3
Consumer-- direct                                2,565          4.0          2,342              3.8
Consumer-- indirect:
   Automobile lease financing                    3,195          5.0          2,580              4.2
   Automobile loans                              3,082          4.8       See note(b)      See note(b)
   Marine                                        1,716          2.7       See note(b)      See note(b)
   Other                                         1,600          2.5          7,009             11.2
- ---------------------------------------------------------------------------------------------------
      Total consumer-- indirect loans            9,593         15.0          9,589             15.4
- ---------------------------------------------------------------------------------------------------
      Total consumer loans                      24,093         37.5         25,740             41.5
LOANS HELD FOR SALE                              3,603          5.6          2,862              4.6
- ---------------------------------------------------------------------------------------------------
      Total                                 $   64,222        100.0%    $   62,012            100.0%
                                            ==========        =====     ==========            =====
- ---------------------------------------------------------------------------------------------------
</TABLE>

(a) See Figure 15 for a more detailed breakdown of Key's commercial real estate
    loan portfolio at December 31, 2002.

(b) For 1998, indirect automobile and marine loans are included in other
    indirect loans.

                                                                              37

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

The level of Key's total loans outstanding (excluding loans held for sale) would
have decreased by $402 million, or less than 1%, over the past twelve months if
we had not sold $741 million of loans and acquired $244 million of loans during
2002. In the commercial loan portfolio, growth in lease financing receivables
was offset by a net decline in all other commercial portfolios, reflecting
continued weakness in the economy and our decision to discontinue many
credit-only relationships in the leveraged financing and nationally syndicated
lending businesses.

At December 31, 2002, Key's commercial real estate portfolio included mortgage
loans of $6.0 billion and construction loans of $5.7 billion. The average size
of a mortgage loan was $.5 million and the largest mortgage loan had a balance
of $68 million. The average size of a construction loan was $7 million. The
largest construction loan commitment was $57 million; that loan had an
outstanding balance of $31 million.

Key conducts its commercial real estate lending business through two primary
sources: a 12-state banking franchise and National Commercial Real Estate (a
national line of business that cultivates relationships both within and beyond
the branch system). This line of business deals exclusively with
nonowner-occupied properties (i.e., generally properties in which the owner
occupies less than 60% of the premises) and accounted for approximately 54% of
Key's total average commercial real estate loans during 2002. At December 31,
less than 1% of Key's nonowner-occupied portfolio was either nonperforming or
delinquent in payments. Our commercial real estate business as a whole focuses
on larger real estate developers and, as shown in Figure 15, is diversified by
both industry type and geography.

                     FIGURE 15 COMMERCIAL REAL ESTATE LOANS

<TABLE>
<CAPTION>
DECEMBER 31, 2002                                             GEOGRAPHIC REGION
                                                 -------------------------------------------
                                                                                                 TOTAL       PERCENT OF
dollars in millions                                EAST      MIDWEST     CENTRAL      WEST       AMOUNT        TOTAL
- -----------------------------------------------------------------------------------------------------------------------
<S>                                              <C>         <C>         <C>         <C>         <C>         <C>
Nonowner-occupied:
  Multi-family properties                        $   594     $   561     $   629     $   787     $ 2,571        22.0%
  Retail properties                                  324         565         150         226       1,265        10.8
  Office buildings                                   171         151         154         213         689         5.9
  Residential properties                              46         108         135         425         714         6.1
  Warehouses                                          51         217          98         105         471         4.0
  Manufacturing facilities                            36          28           6           6          76          .7
  Hotels/Motels                                        7           9          --          10          26          .2
  Other                                              247         404          79         261         991         8.5
- --------------------------------------------------------------------------------------------------------------------
                                                   1,476       2,043       1,251       2,033       6,803        58.2
Owner-occupied                                       551       2,329         574       1,417       4,871        41.8
- --------------------------------------------------------------------------------------------------------------------
    Total                                        $ 2,027     $ 4,372     $ 1,825     $ 3,450     $11,674       100.0%
                                                 =======     =======     =======     =======     =======       =====
- --------------------------------------------------------------------------------------------------------------------
Nonowner-occupied:
  Nonperforming loans                            $     6     $    12     $     2     $    12     $    32         N/M
  Accruing loans past due 90 days or more              6           1          --          --           7         N/M
  Accruing loans past due 30 through 89 days           1           9          --           6          16         N/M
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

N/M = Not Meaningful

Consumer loans would have increased (assuming no loan sales or acquisitions) by
$1.1 billion, or 5%, during 2002. Our home equity portfolio grew by $3.0
billion, largely as a result of our focused efforts to grow this business,
facilitated by a period of lower interest rates. The growth of the home equity
portfolio more than offset declines of $418 million in installment loans, $1.2
billion in automobile lease financing receivables and $347 million in
residential real estate mortgage loans. The declines in installment loans and
automobile lease financing receivables reflect our decision to de-emphasize
indirect prime automobile lending and exit the automobile leasing business.

Key's home equity portfolio is derived from both our Retail Banking line of
business (64% of the home equity portfolio at December 31, 2002) and our
National Home Equity line of business.

The National Home Equity line of business has two components: Champion Mortgage
Company, a home equity finance company that Key acquired in August 1997, and Key
Home Equity Services, which acts as a third-party purchaser of home equity
loans. The average loan-to-value ratio at origination for a loan generated by
the National Home Equity line of business is 80%. First lien positions comprised
79% of the portfolio for this line of business at December 31, 2002.

Key Home Equity Services purchases individual loans from an extensive network of
correspondents and agents. Prior to the third quarter of 2002, loans were also
purchased through bulk portfolio acquisitions from home equity loan companies.

Figure 16 summarizes Key's home equity loan portfolio at December 31 for each of
the last six years, as well as certain asset quality statistics and the yields
achieved on the portfolio as a whole.

SALES, SECURITIZATIONS AND DIVESTITURES. During 2002, Key sold $1.4 billion of
commercial real estate loans, $1.1 billion of education loans ($750 million
through a securitization) and $835 million of other types of loans. Since 1999,
Key has securitized only education loans.

Among the factors that Key considers in determining which loans to securitize
are:

- -   whether the characteristics of a specific loan portfolio make it conducive
    to securitization;

- -   the relative cost of funds;

- -   the level of credit risk; and

- -   capital requirements.

38

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

                           FIGURE 16 HOME EQUITY LOANS

<TABLE>
<CAPTION>
DECEMBER 31,
dollars in millions                           2002         2001         2000         1999         1998         1997
- ----------------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>          <C>          <C>          <C>
SOURCES OF LOANS OUTSTANDING
AT PERIOD END
Retail KeyCenters and other sources        $    8,867   $    6,431   $    6,136   $    5,740   $    6,036   $    5,210

Champion Mortgage Company                       2,210        1,886        1,082          371          689          242
Key Home Equity Services division               2,727        2,867        2,690        1,862        1,265          211
- ----------------------------------------------------------------------------------------------------------------------
   National Home Equity line of business        4,937        4,753        3,772        2,233        1,954          453
- ----------------------------------------------------------------------------------------------------------------------
      Total                                $   13,804   $   11,184   $    9,908   $    7,973   $    7,990   $    5,663
                                           ==========   ==========   ==========   ==========   ==========   ==========
- ----------------------------------------------------------------------------------------------------------------------
Nonperforming loans at year end            $      146   $       60   $       80   $       50   $       26   $       15
Net charge-offs for the year                       52           98           17            9            5            4
Yield for the year                               6.82%        8.55%        9.29%        8.54%        8.77%        9.05%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

Figure 17 summarizes Key's loan sales (including securitizations) for 2002 and
2001.

                        FIGURE 17 LOANS SOLD AND DIVESTED

<TABLE>
<CAPTION>
                             COMMERCIAL      COMMERCIAL       RESIDENTIAL    HOME     CONSUMER
in millions     COMMERCIAL   REAL ESTATE   LEASE FINANCING    REAL ESTATE   EQUITY   -- INDIRECT  EDUCATION       TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S>             <C>          <C>           <C>                <C>           <C>      <C>          <C>            <C>
    2002
- --------------
Fourth quarter    $  93      $    603            --            $     65      $ 110      $ 177      $    100      $  1,148
Third quarter        18           352            --                  25        242          3           784         1,424
Second quarter       31           159         $  18                  20         24         --            70           322
First quarter        --           319            --                  --          9         --           116           444
- -------------------------------------------------------------------------------------------------------------------------
   Total          $ 142      $  1,433         $  18            $    110      $ 385      $ 180      $  1,070      $  3,338
                  =====      ========         =====            ========      =====      =====      ========      ========
    2001
- --------------
Fourth quarter       --      $    678            --                  --      $ 145         --      $     23      $    846
Third quarter        --            93            --            $  1,427        269         --           597         2,386
Second quarter    $  44           577            --                  20         59         --           144           844
First quarter        --           327            --                   1         14         --           449           791
- -------------------------------------------------------------------------------------------------------------------------
   Total          $  44      $  1,675            --            $  1,448      $ 487         --      $  1,213      $  4,867
                  =====      ========         =====            ========      =====      =====      ========      ========
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Figure 18 shows loans that are either administered or serviced by Key, but not
recorded on the balance sheet. Included are loans that have been both
securitized and sold, or simply sold outright. In the event of default, Key is
subject to recourse with respect to approximately $227 million of the $24.8
billion of loans administered or serviced at December 31, 2002.

Key derives income from two sources when we sell or securitize loans but retain
the right to administer or service them. We earn noninterest income (recorded as
"other income") from servicing or administering the loans, and we earn interest
income from any securitized assets retained. Conning Asset Management and
National Realty Funding L.C. service the commercial real estate loans shown in
Figure 18, however, other financial institutions originated most of these loans.
Approximately $81 million of the assets held in the asset-backed commercial
paper conduit, for which Key serves as a referral agent, are also included in
Figure 18. For more information regarding the conduit, see Note 19
("Commitments, Contingent Liabilities and Guarantees") under the heading
"Guarantees" on page 83.

                    FIGURE 18 LOANS ADMINISTERED OR SERVICED

<TABLE>
<CAPTION>
DECEMBER 31,
in millions               2002            2001         2000
==============================================================
<S>                    <C>             <C>          <C>
Education loans        $    4,605      $    4,433   $    4,113
Automobile loans               54             131          422
Home equity loans             456             768        1,176
Commercial real
   estate loans            19,508(a)       10,471        7,108
Commercial loans              123             983          973
Commercial lease
   financing                   13              --           --
- --------------------------------------------------------------
   Total               $   24,759      $   16,786   $   13,792
                       ==========      ==========   ==========
- --------------------------------------------------------------
</TABLE>

(a) Includes $4.1 billion of serviced loans purchased in the June 28, 2002,
    acquisition of Conning Asset Management.

                                                                              39

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                      OPERATIONS KEYCORP AND SUBSIDIARIES

Figure 19 shows the maturities of certain commercial and real estate loans, and
the sensitivity of those loans to changes in interest rates. As indicated, at
December 31, 2002, approximately 50% of these outstanding loans were scheduled
to mature within one year. Loans with maturities greater than one year include
$12.2 billion with floating or adjustable rates and $3.2 billion with
predetermined rates.

<TABLE>
<CAPTION>

                  FIGURE 19 MATURITIES AND SENSITIVITY OF CERTAIN LOANS TO CHANGES IN INTEREST RATES

DECEMBER 31, 2002                                             WITHIN                   1-5             OVER
in millions                                                   1 YEAR                  YEARS           5 YEARS            TOTAL
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                     <C>             <C>               <C>
Commercial, financial and agricultural                        $10,007                 $4,982          $2,436            $17,425
Real estate -- construction                                     3,515                  2,025             119              5,659
Real estate -- residential and commercial mortgage              2,131                  2,139           3,713              7,983
- --------------------------------------------------------------------------------------------------------------------------------
                                                              $15,653                 $9,146          $6,268            $31,067
                                                              =======                 ======          ======            =======

Loans with floating or adjustable interest rates(a)                                   $7,833          $4,348
Loans with predetermined interest rates(b)                                             1,313           1,920
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                      $9,146          $6,268
                                                                                      ======          ======
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) "Floating" and "adjustable" rates vary in relation to other interest rates
    (such as the base lending rate) or a variable index that may change during
    the term of the loan.

(b) "Predetermined" interest rates either are fixed or will change during the
    term of the loan according to a specific formula or schedule.

SECURITIES

At December 31, 2002, the securities portfolio totaled $9.5 billion and included
$8.5 billion of securities available for sale, $120 million of investment
securities and $919 million of other investments (primarily principal
investments). In comparison, the total portfolio at December 31, 2001, was $6.5
billion, including $5.4 billion of securities available for sale, $225 million
of investment securities and $832 million of other investments.

The size and composition of Key's securities portfolio are dependent largely on
our needs for liquidity and the extent to which we are required or elect to hold
these assets as collateral to secure public and trust deposits. Although debt
securities are generally used for this purpose, other assets, such as securities
purchased under resale agreements, may be used temporarily when they provide
more favorable yields.

SECURITIES AVAILABLE FOR SALE. The majority of Key's securities available for
sale portfolio consists of collateralized mortgage obligations that provide a
source of interest income and serve as collateral in connection with pledging
requirements. A collateralized mortgage obligation (sometimes called a "CMO") is
a debt security that is secured by a pool of mortgages, mortgage-backed
securities, U.S. government securities, corporate debt obligations or other
bonds. At December 31, 2002, Key had $8.1 billion invested in collateralized
mortgage obligations and other mortgage-backed securities in the
available-for-sale portfolio, compared with $4.8 billion at December 31, 2001.
Key invested more heavily in these securities during 2002 as opportunities to
originate loans (Key's preferred earning assets) have been adversely affected by
the weak economy. Substantially all of these securities were issued or backed by
federal agencies.

Figure 20 shows the composition, yields and remaining maturities of Key's
securities available for sale. For more information about retained interests in
securitizations, gross unrealized gains and losses by type of security and
securities pledged, see Note 6 ("Securities"), which begins on page 68.

INVESTMENT SECURITIES. Securities issued by states and political subdivisions
account for all of Key's investment securities. Figure 21 shows the composition,
yields and remaining maturities of these securities.

OTHER INVESTMENTS. Principal investments -- investments in equity and mezzanine
instruments made by Key's Principal Investing unit -- are carried at fair value,
which aggregated $677 million at December 31, 2002. They represent approximately
75% of other investments and include direct and indirect investments
predominately in privately-held companies. Direct investments are those made in
a particular company, while indirect investments are made through funds that
include other investors.

In addition to principal investments, other investments include securities that
do not have readily determinable fair values. These securities include certain
real estate-related investments. Neither these securities nor principal
investments have stated maturities.

ASSET QUALITY

Key has a multi-faceted program to manage asset quality. Our professionals:

- -  evaluate and monitor credit quality and risk in credit-related assets;

- -  develop commercial and consumer credit policies and systems;

- -  monitor compliance with internal underwriting standards;

- -  establish credit-related concentration limits; and

- -  review the adequacy of the allowance for loan losses.

ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses at December 31, 2002,
was $1.5 billion, or 2.32% of loans. This compares with $1.7 billion, or 2.65%
of loans, at December 31, 2001. The allowance includes $179 million that was
specifically allocated for impaired loans of $377 million at December 31, 2002,
compared with $180 million that was allocated for impaired loans of $417 million
a year ago. For more information about impaired loans, see Note 9 ("Impaired
Loans and Other Nonperforming Assets") on page 72. At December 31, 2002, the
allowance for loan losses was 153.98% of nonperforming loans, compared with
184.29% at December 31, 2001.

40

<PAGE>

                     MANAGEMENT'S DISCUSSION & ANALYSIS OF
      FINANCIAL CONDITION & RESULTS OF OPERATIONS KEYCORP AND SUBSIDIARIES

                    FIGURE 20 SECURITIES AVAILABLE FOR SALE

<TABLE>
<CAPTION>
                                                                                       OTHER
                                  U.S. TREASURY,    STATES AND    COLLATERALIZED    MORTGAGE-        RETAINED
                                  AGENCIES AND      POLITICAL        MORTGAGE        BACKED        INTERESTS IN          OTHER
dollars in millions               CORPORATIONS     SUBDIVISIONS    OBLIGATIONS(a)  SECURITIES(a)  SECURITIZATIONS(a)  SECURITIES
- ---------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>              <C>            <C>              <C>            <C>                  <C>
DECEMBER 31, 2002
  Remaining maturity:
  One year or less                   $    3        $        1       $       852    $        9        $         8       $       1
  After one through five years            8                 6             6,018           644                201              12
  After five through ten years            5                11               185            12                 --               5
  After ten years                         7                17               152           187                 --             163(c)
- ---------------------------------------------------------------------------------------------------------------------------------
Fair value                           $   23        $       35       $     7,207    $      852        $       209       $     181
Amortized cost                           22                35             7,143           815                166             208
Weighted average yield                 5.29%             6.47%             5.26%         6.78%             22.16%           5.33%(b)
Weighted average maturity         8.4 YEARS        10.9 YEARS         2.8 YEARS     2.3 YEARS          3.6 YEARS       9.7 YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2001
Fair value                           $   99        $       21       $     3,805    $    1,032        $       234       $     217
Amortized cost                           99                21             3,791         1,008                214             232
- ---------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2000
Fair value                           $  984        $       33       $     4,298    $    1,355        $       316       $     398
Amortized cost                          984                33             4,296         1,355                334             362
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                         WEIGHTED
                                                          AVERAGE
dollars in millions                  TOTAL                YIELD(b)
- ------------------------------------------------------------------
<S>                                <C>                   <C>
DECEMBER 31, 2002
Remaining maturity:
   One year or less                $       874             5.65%
   After one through five years          6,889             5.56
   After five through ten years            218             8.53
   After ten years                         526             9.21
- ---------------------------------------------------------------
Fair value                         $     8,507                -
Amortized cost                           8,389             5.76%
Weighted average yield                    5.76%              --
Weighted average maturity            3.0 YEARS               --
- ---------------------------------------------------------------
DECEMBER 31, 2001
Fair value                         $     5,408              --
Amortized cost                           5,365            7.26%
- ---------------------------------------------------------------
DECEMBER 31, 2000
Fair value                         $     7,384              --
Amortized cost                           7,364            7.16%
- ---------------------------------------------------------------
</TABLE>

(a) Maturity is based upon expected average lives rather than contractual terms.

(b) Weighted average yields are calculated based on amortized cost and exclude
    equity securities of $188 million that have no stated yield. Such yields
    have been adjusted to a taxable-equivalent basis using the statutory federal
    income tax rate of 35%.

(c) Includes primarily marketable equity securities (including an internally
    managed portfolio of bank common stock investments) with no stated maturity.

                        FIGURE 21 INVESTMENT SECURITIES

<TABLE>
<CAPTION>
                                            STATES AND       WEIGHTED
                                            POLITICAL        AVERAGE
dollars in millions                        SUBDIVISIONS      YIELD(a)
- ---------------------------------------------------------------------
<S>                                        <C>               <C>
DECEMBER 31, 2002
Remaining maturity:
   One year or less                        $       32          9.79%
   After one through five years                    69          9.54
   After five through ten years                    18          8.32
   After ten years                                  1         11.22
- -------------------------------------------------------------------
Amortized cost                             $      120          9.43%
Fair value                                        129            --
Weighted average maturity                   2.8 YEARS            --
- -------------------------------------------------------------------
DECEMBER 31, 2001
Amortized cost                             $      225          8.71%
Fair value                                        234            --
- -------------------------------------------------------------------
DECEMBER 31, 2000
Amortized cost                             $      323          9.18%
Fair value                                        333            --
- -------------------------------------------------------------------
</TABLE>

(a) Weighted average yields are calculated based on amortized cost. Such yields
    have been adjusted to a taxable-equivalent basis using the statutory federal
    income tax rate of 35%.

Management estimates the appropriate level of the allowance for loan losses on a
quarterly (and at times more frequent) basis. The methodology used is described
in Note 1 ("Summary of Significant Accounting Policies") under the heading
"Allowance for Loan Losses" on page 58. Briefly, management assigns a specific
allowance to an impaired loan when the carrying amount of the loan exceeds the
estimated present value of related future cash flows and the fair value of any
existing collateral.

The allowance for loan losses arising from nonimpaired loans is determined by
applying historical loss rates to existing loans with similar risk
characteristics and by exercising judgment to assess the impact of factors such
as changes in economic conditions, credit policies or underwriting standards,
and the level of credit risk associated with specific industries and markets.
The aggregate balance of the allowance for loan losses at December 31, 2002,
represents management's best estimate of the losses inherent in the loan
portfolio at that date.

The allowance allocated for Key's impaired loans was essentially unchanged from
the prior year, reflecting Key's continued efforts to resolve problem credits,
combined with stabilizing credit quality trends in certain portfolios. During
the same period, the allowance allocated for nonimpaired loans decreased by $224
million, or 15%, due largely to slow loan growth and stabilizing credit quality
trends in certain portfolios.

Management has determined that the level of watch credits in several commercial
portfolios decreased from year-ago levels. Watch credits are loans with the
potential for further deterioration in quality based on the debtor's current
financial condition and related ability to perform in accordance with the terms
of the loan. The decline in watch credits in specific commercial portfolios was
due primarily to more conservative underwriting and slower loan growth in a
sluggish economy. The loan portfolios with the most significant decreases in
watch credits were large corporate and healthcare. Other portfolios, including
middle market, showed signs of stability or modest improvement. At the same
time, the media and commercial real estate portfolios experienced higher levels
of watch credits. These changes reflect the fluctuations that occur in loan
portfolios from quarter to quarter. Management does not believe that such
changes require any adjustment to the allowance at this time.

                                                                              41

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

As shown in Figure 22, most of the 2002 decrease in Key's allowance for loan
losses was attributable to developments in the commercial loan portfolio. This
decrease reflects net charge-offs recorded in the nonreplenished allowance
discussed in the following section, stabilizing credit quality trends in certain
portfolios and slow loan growth in a weak economy.

             FIGURE 22 ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
DECEMBER 31,                                        2002                        2001                      2000
                                           -----------------------     ----------------------    ------------------------
                                                      PERCENT OF                  PERCENT OF                  PERCENT OF
                                                     LOAN TYPE TO                LOAN TYPE TO                LOAN TYPE TO
dollars in millions                        AMOUNT     TOTAL LOANS      AMOUNT     TOTAL LOANS    AMOUNT      TOTAL LOANS
- -------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>       <C>               <C>       <C>             <C>         <C>
Commercial, financial and agricultural     $1,092        27.9%         $1,289        28.7%       $  742          30.0%
Real estate -- commercial mortgage             48         9.6              45        10.5            35          10.3
Real estate -- construction                    45         9.1              39         9.3            27           7.7
Commercial lease financing                     74        12.0              89        11.6            45          10.7
- ---------------------------------------------------------------------------------------------------------------------
   Total commercial loans                   1,259        58.6           1,462        60.1           849          58.7
Real estate -- residential mortgage             2         3.1               4         3.7             2           6.3
Home equity                                    65        22.1              59        17.7            20          14.8
Credit card                                    --          --              --          --            --            --
Consumer -- direct                             16         3.5              24         3.7            15           3.8
Consumer -- indirect lease financing            5         1.4               8         3.2             9           4.5
Consumer -- indirect other                    103         7.9             117         8.4           104           8.6
- ---------------------------------------------------------------------------------------------------------------------
   Total consumer loans                       191        38.0             212        36.7           150          38.0
Loans held for sale                             2         3.4               3         3.2             2           3.3
Unallocated                                    --          --              --          --            --            --
- ---------------------------------------------------------------------------------------------------------------------
   Total                                   $1,452       100.0%         $1,677       100.0%       $1,001         100.0%
                                           ======       =====          ======       =====        ======         =====
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                     1999                        1998
                                           -----------------------      ---------------------
                                                       PERCENT OF                  PERCENT OF
                                                      LOAN TYPE TO                LOAN TYPE TO
                                           AMOUNT      TOTAL LOANS      AMOUNT    TOTAL LOANS
- ---------------------------------------------------------------------------------------------
<S>                                        <C>        <C>               <C>       <C>
Commercial, financial and agricultural       $509         28.8%          $357        27.5%
Real estate -- commercial mortgage             34         10.6             32        11.8
Real estate -- construction                    16          7.1             15         5.6
Commercial lease financing                     39         10.4             49         9.0
- -----------------------------------------------------------------------------------------
   Total commercial loans                     598         56.9            453        53.9
Real estate -- residential mortgage             1          6.7              7         8.2
Home equity                                     7         11.8              5        11.8
Credit card                                    --           --             44         2.3
Consumer -- direct                              8          4.0             15         3.8
Consumer -- indirect lease financing            6          5.0              5         4.2
Consumer -- indirect other                     55         10.0             77        11.2
- -----------------------------------------------------------------------------------------
   Total consumer loans                        77         37.5            153        41.5
Loans held for sale                            18          5.6              1         4.6
Unallocated                                   237           --            293          --
- -----------------------------------------------------------------------------------------
   Total                                     $930        100.0%          $900       100.0%
                                             ====        =====           ====       =====
- -----------------------------------------------------------------------------------------
</TABLE>

RUN-OFF LOAN PORTFOLIO. In May 2001, management set apart $300 million of Key's
allowance for loan losses as part of its decision to discontinue many
credit-only relationships in the leveraged financing and nationally syndicated
lending businesses and to facilitate sales of distressed loans in other
portfolios. An additional $190 million was added to this allowance in the fourth
quarter of 2001. The resulting segregated allowance is being used to exit what
initially amounted to approximately $2.7 billion in related commitments
(including $1.6 billion of loans outstanding), which were moved to a separate
run-off portfolio, and to absorb losses incurred in connection with sales of
distressed loans in the continuing portfolio. As losses are charged to this
segregated allowance over time, we do not intend to replenish it. Within the
run-off portfolio, approximately $940 million of commitments (including $599
million of loans outstanding) remained as of December 31, 2002. Only $85 million
of these loans were nonperforming.

42

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

Figure 23 summarizes certain asset quality indicators, segregated between Key's
continuing and run-off loan portfolios. Additional information pertaining to the
run-off portfolio is presented in Figure 24.

FIGURE 23 ASSET QUALITY INDICATORS -- CONTINUING AND RUN-OFF LOAN PORTFOLIOS

<TABLE>
<CAPTION>
DECEMBER 31,                                                           RUN-OFF LOAN PORTFOLIO AND
                                       CONTINUING LOAN PORTFOLIO       NONREPLENISHED ALLOWANCE        TOTAL LOAN PORTFOLIO
                                       -------------------------       --------------------------      --------------------
in millions                               2002         2001                2002        2001               2002       2001
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>                 <C>         <C>                <C>         <C>
Loans outstanding                        $61,858     $62,286             $   599     $ 1,023            $62,457     $63,309
Nonperforming loans                          858         679                  85         231                943         910
Net loan charge-offs for the year            553         458                 227(a)      215(a)             780         673
Allowance for loan losses                  1,404       1,402                  48         275              1,452       1,677
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Includes activity related to the run-off loan portfolio and to sales of
    distressed loans in the continuing portfolio.

                        FIGURE 24 RUN-OFF LOAN PORTFOLIO

SUMMARY OF CHANGES IN COMMITMENTS AND LOANS OUTSTANDING

<TABLE>
<CAPTION>
                                                            TOTAL                     LOANS
in millions                                              COMMITMENTS               OUTSTANDING
- ----------------------------------------------------------------------------------------------
<S>                                                      <C>                       <C>
BALANCE AT DECEMBER 31, 2001                               $1,694                    $1,023
  Charge-offs                                                (139)                     (139)
  Payments, expirations and other changes, net               (615)                     (285)
- ----------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2002                               $  940                    $  599
                                                           ======                    ======
- ----------------------------------------------------------------------------------------------
</TABLE>

SUMMARY OF CHANGES IN NONPERFORMING LOANS
AND NONREPLENISHED ALLOWANCE FOR LOAN LOSSES(a)

<TABLE>
<CAPTION>
                                                          NONPERFORMING      NONREPLENISHED
in millions                                                   LOANS            ALLOWANCE
- -------------------------------------------------------------------------------------------
<S>                                                       <C>                <C>
BALANCE AT DECEMBER 31, 2001                                 $   231             $275
  Loans placed on nonaccrual status                               75              N/A
  Charge-offs                                                   (139)            (227)
  Payments and other changes, net                                (82)             N/A
- -------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2002                                 $    85             $ 48
                                                             =======             ====
- -------------------------------------------------------------------------------------------
</TABLE>

(a) Includes activity related to the run-off loan portfolio and to sales of
    distressed loans in the continuing portfolio.

N/A = Not Applicable

NET LOAN CHARGE-OFFS. Net loan charge-offs for 2002 were $780 million, or 1.23%
of average loans, compared with $673 million, or 1.02% of average loans, for
2001 and $414 million, or .63% of average loans, for 2000. The composition of
Key's loan charge-offs and recoveries by type of loan is shown in Figure 25. The
increase in net charge-offs for 2002 occurred in the commercial loan portfolio,
reflecting continued weakness in the economy and Key's continuing efforts to
resolve distressed credits. As shown in Figure 24, we used $227 million of Key's
nonreplenished allowance during 2002 to absorb losses arising from the run-off
loan portfolio and from sales of distressed loans in the continuing portfolio.

Structured finance refers to a type of lending characterized by a high degree of
leverage in the borrower's financial condition and a relatively low level of
tangible loan collateral. Key has used it in extensions of credit to borrowers
in the commercial, financial and agricultural portfolio represented in Figure
25. The structured finance portfolio accounted for 23% of commercial net
charge-offs for 2002, but represented only 3% of Key's commercial loans at the
end of the year.

As shown in Figure 25, the increase in commercial loan net charge-offs was
offset in part by a decrease in the level of net charge-offs in the consumer
loan portfolio, primarily in the home equity and consumer installment segments.
The reduction in net charge-offs on installment loans reflected actions taken by
Key since May 2001 to exit the automobile leasing business and to de-emphasize
indirect prime automobile lending.

                                                                              43

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

                     FIGURE 25 SUMMARY OF LOAN LOSS EXPERIENCE

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
dollars in millions                                    2002           2001           2000           1999           1998
- -------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>            <C>            <C>            <C>            <C>
Average loans outstanding during the year            $ 63,393       $ 65,976       $ 65,294       $ 62,401       $ 57,422
- -------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses at beginning of year       $  1,677       $  1,001       $    930       $    900       $    900
Loans charged off:
  Commercial, financial and agricultural                  407            313            175            112             66

  Real estate -- commercial mortgage                       78             18              9              2             20
  Real estate -- construction                              22              8             --             --              2
- -------------------------------------------------------------------------------------------------------------------------
     Total commercial real estate loans(a)                100             26              9              2             22
  Commercial lease financing                               94             62             14             20             12
- -------------------------------------------------------------------------------------------------------------------------
     Total commercial loans                               601            401            198            134            100
  Real estate -- residential mortgage                       6             17              8              8             11
  Home equity                                              56             99             19             10              6
  Credit card                                              --              1             17             89            104
  Consumer -- direct                                       51             47             57             41             44
  Consumer -- indirect lease financing                     25             27             23             13              8
  Consumer -- indirect other                              166            192            200            125            111
- -------------------------------------------------------------------------------------------------------------------------
     Total consumer loans                                 304            383            324            286            284
- -------------------------------------------------------------------------------------------------------------------------
                                                          905            784            522            420            384
Recoveries:
  Commercial, financial and agricultural                   44             26             25             28             25

  Real estate -- commercial mortgage                        6              4              4              4              6
  Real estate -- construction                               2             --             --              1              2
- -------------------------------------------------------------------------------------------------------------------------
     Total commercial real estate loans(a)                  8              4              4              5              8
  Commercial lease financing                                9              5              2              3              1
- -------------------------------------------------------------------------------------------------------------------------
     Total commercial loans                                61             35             31             36             34
  Real estate -- residential mortgage                       1              8              4              4              4
  Home equity                                               4              1              2              1              1
  Credit card                                               -              1              5             14             10
  Consumer -- direct                                        8              8              8              8              6
  Consumer -- indirect lease financing                      8              9              6              3              1
  Consumer -- indirect other                               43             49             52             36             31
- -------------------------------------------------------------------------------------------------------------------------
     Total consumer loans                                  64             76             77             66             53
- -------------------------------------------------------------------------------------------------------------------------
                                                          125            111            108            102             87
- -------------------------------------------------------------------------------------------------------------------------
Net loans charged off                                    (780)          (673)          (414)          (318)          (297)
Provision for loan losses                                 553          1,350            490            348            297
Allowance related to loans acquired (sold), net             2             (1)            (5)            --             --
- -------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses at end of year             $  1,452       $  1,677       $  1,001       $    930       $    900
                                                     ========       ========       ========       ========       ========
- -------------------------------------------------------------------------------------------------------------------------
Net loan charge-offs to average loans                    1.23%          1.02%           .63%           .51%           .52%
Allowance for loan losses to year-end loans              2.32           2.65           1.50           1.45           1.45
Allowance for loan losses to nonperforming loans       153.98         184.29         154.00         208.05         234.38
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) See Figure 15 on page 38 and the accompanying discussion for more
    information related to Key's commercial real estate portfolio.

NONPERFORMING ASSETS. Figure 26 shows the composition of Key's nonperforming
assets. These assets totaled $993 million at December 31, 2002, and represented
1.59% of loans, other real estate owned (known as "OREO") and other
nonperforming assets, compared with $947 million, or 1.49%, at December 31,
2001.

The economic slowdown can be expected to continue to impact Key's loan portfolio
in general, although the erosion in credit quality that we have experienced is
disproportionately concentrated. At December 31, 2002, two segments of the
commercial, financial and agricultural portfolio (loans to middle market clients
and loans underwritten as structured finance credits) accounted for $219 million
and $164 million, respectively, of Key's nonperforming loans. Although these two
segments comprised only 16% of Key's total loans, they accounted for 41% of
total nonperforming loans.

At December 31, 2002, our 20 largest nonperforming loans totaled $258 million,
representing 27% of total loans on nonperforming status. At December 31, 2002,
the run-off loan portfolio accounted for $85 million, or 9%, of Key's total
nonperforming loans presented in Figure 26.

44

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

        FIGURE 26 SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

<TABLE>
<CAPTION>
DECEMBER 31,
dollars in millions                              2002          2001          2000          1999         1998
- --------------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>           <C>           <C>           <C>
Commercial, financial and agricultural         $   448       $   409       $   301       $   175       $   144

Real estate -- commercial mortgage                 157           187            90           102            79
Real estate -- construction                         50            83            28             7             6
- --------------------------------------------------------------------------------------------------------------
     Total commercial real estate loans(a)         207           270           118           109            85
Commercial lease financing                          69            94            48            28            29
- --------------------------------------------------------------------------------------------------------------
     Total commercial loans                        724           773           467           312           258
Real estate - residential mortgage                  36            42            52            44            60
Home equity                                        146            50            80            50            26
Consumer - direct                                   13             9             8             6             6
Consumer - indirect lease financing                  5            10             7             3             3
Consumer - indirect other                           19            26            36            32            31
- --------------------------------------------------------------------------------------------------------------
     Total consumer loans                          219           137           183           135           126
- --------------------------------------------------------------------------------------------------------------
     Total nonperforming loans                     943           910           650           447           384

OREO                                                48            38            23            27            56
Allowance for OREO losses                           (3)           (1)           (1)           (3)          (18)
- --------------------------------------------------------------------------------------------------------------
     OREO, net of allowance                         45            37            22            24            38

Other nonperforming assets                           5            --            --             2             1
- --------------------------------------------------------------------------------------------------------------
     Total nonperforming assets                $   993       $   947       $   672       $   473       $   423
                                               =======       =======       =======       =======       =======
- --------------------------------------------------------------------------------------------------------------
Accruing loans past due 90 days or more        $   198       $   250       $   236       $   219       $   159
Accruing loans past due 30 through 89 days         790         1,096           963           916           753
- --------------------------------------------------------------------------------------------------------------
Nonperforming loans to year-end loans             1.51%         1.44%          .97%          .70%          .62%
Nonperforming assets to year-end loans
  plus OREO and other nonperforming assets        1.59          1.49          1.00           .74           .68
- --------------------------------------------------------------------------------------------------------------
</TABLE>

(a) See Figure 15 on page 38 and the accompanying discussion for more
    information related to Key's commercial real estate portfolio.

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 27. Within the transportation
category, Key had approximately $270 million of exposure to the commercial
passenger airline industry at December 31, 2002. The types of activity that
caused the change in Key's nonperforming loans during 2002 are summarized in
Figure 28.

             FIGURE 27 COMMERCIAL, FINANCIAL AND AGRICULTURAL LOANS

<TABLE>
<CAPTION>
DECEMBER 31, 2002                                                        NONPERFORMING LOANS
                                                                        ----------------------
                                            TOTAL         LOANS                     % OF LOANS
dollars in millions                      COMMITMENTS   OUTSTANDING        AMOUNT   OUTSTANDING
- ----------------------------------------------------------------------------------------------
<S>                                      <C>           <C>               <C>       <C>
Industry classification:
  Manufacturing                            $10,034       $ 3,931         $   155       3.9%
  Services                                   6,198         2,506              90       3.6
  Financial services                         4,061           979               5        .5
  Retail trade                               4,250         2,518              43       1.7
  Wholesale trade                            2,763         1,313              44       3.4
  Property management                        2,900         1,098               8        .7
  Public utilities                           1,728           461               1        .2
  Communications                             1,178           494              23       4.7
  Agriculture/forestry/fishing               1,085           666              17       2.6
  Building contractors                       1,217           547              26       4.8
  Public administration                        739           245               -         -
  Transportation                               819           440              11       2.5
  Insurance                                    732           216               6       2.8
  Mining                                       379           169               -         -
  Individuals                                  187           121               1        .8
  Other                                      1,904         1,721              18       1.0
- ----------------------------------------------------------------------------------------------
  Total                                    $40,174       $17,425         $   448       2.6%
                                           =======       =======         =======
- ----------------------------------------------------------------------------------------------
</TABLE>

                                                                              45

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

              FIGURE 28 SUMMARY OF CHANGES IN NONPERFORMING LOANS

<TABLE>
<CAPTION>
                                                                            2002 QUARTERS
                                                           ----------------------------------------------
in millions                                  FULL YEAR      FOURTH       THIRD        SECOND       FIRST
- ---------------------------------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>          <C>          <C>
BALANCE AT BEGINNING OF PERIOD                $   910      $   987      $   957      $   973      $   910
  Loans placed on nonaccrual status             1,168          339          281          254          294
  Charge-offs                                    (780)        (186)        (185)        (203)        (206)
  Loans sold                                      (79)         (36)         (25)         (18)           -
  Payments                                       (261)        (149)         (41)         (49)         (22)
  Transfers to OREO                                (3)           -            -            -           (3)
  Loans returned to accrual status                (13)         (13)           -            -            -
  Acquisition                                       1            1            -            -            -
- ---------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD                      $   943      $   943      $   987      $   957      $   973
                                              =======      =======      =======      =======      =======
- ---------------------------------------------------------------------------------------------------------
</TABLE>

DEPOSITS AND OTHER SOURCES OF FUNDS

"Core deposits" -- domestic deposits other than certificates of deposit of
$100,000 or more -- are Key's primary source of funding. During 2002, core
deposits averaged $37.7 billion, and represented 52% of the funds Key used to
support earning assets, compared with $37.5 billion and 50% during 2001, and
$37.3 billion and 50% during 2000. The composition of Key's deposits is shown in
Figure 6, which spans pages 28 and 29.

The increase in the level of Key's core deposits during 2002 was due primarily
to higher levels of noninterest-bearing deposits and money market deposit
accounts. The growth of these deposits reflected client preferences for
investments that provide high levels of liquidity in a low interest rate
environment. Also contributing to the significant growth in noninterest-bearing
deposits were our intensified cross-sell efforts and the introduction of new
products, including free checking. A more aggressive pricing structure
implemented in mid-2002 supported the growth in savings deposits. During 2002,
time deposits decreased by 9% in part because, like our competitors, Key reduced
the rates paid for them as the Federal Reserve reduced interest rates in
general.

In 2001, the level of Key's core deposits rose from the prior year as moderate
growth of time deposits more than offset a decline in the level of savings
deposits. Time deposits grew by 2% in 2001, following an increase of 17% in
2000. The growth rate of these deposits declined largely as a result of a lower
interest rate environment.

Purchased funds, comprising large certificates of deposit, deposits in the
foreign branch and short-term borrowings, averaged $15.5 billion during 2002,
compared with $20.0 billion during 2001 and $20.2 billion in 2000. As shown in
Figure 6, both certificates of deposit and short-term borrowings have declined
as funding sources. This is attributable in part to reduced funding needs
resulting from loan sales, slow demand for loans and from our decision to scale
back or discontinue certain types of lending. In addition, Key continues to
consider loan sales and securitizations as a funding alternative when market
conditions are favorable.

Since late 1995, Key has had a program in place under which deposit balances
(above a defined threshold) in certain negotiable order of withdrawal ("NOW")
accounts and noninterest-bearing checking accounts are transferred to money
market accounts, thereby reducing the level of deposit reserves required to be
maintained with the Federal Reserve. Based on certain limitations, funds are
periodically transferred back to the checking accounts to cover checks presented
for payment or withdrawals. As a result of this program, average deposit
balances for 2002 include NOW accounts of $4.4 billion and demand deposits of
$4.9 billion that are classified as money market deposit accounts. In Figure 6,
the NOW accounts transferred are included in the money market deposit account
category, while the demand deposits continue to be reported as
noninterest-bearing checking accounts.

At December 31, 2002, Key had $8.5 billion in time deposits of $100,000 or more.
Figure 29 shows the maturity distribution of these deposits.

      FIGURE 29 MATURITY DISTRIBUTION OF TIME DEPOSITS OF $100,000 OR MORE

<TABLE>
<CAPTION>
DECEMBER 31, 2002                DOMESTIC    FOREIGN
in millions                      OFFICES      OFFICE     TOTAL
- --------------------------------------------------------------
<S>                              <C>         <C>        <C>
Remaining maturity:
  Three months or less            $1,732     $3,743     $5,475
  After three through
     twelve months                   836          -        836
  After twelve months              2,181          -      2,181
- --------------------------------------------------------------
     Total                        $4,749     $3,743     $8,492
                                  ======     ======     ======
- --------------------------------------------------------------
</TABLE>

LIQUIDITY

"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.

LIQUIDITY RISK. There are both direct and indirect circumstances that could
adversely affect Key's liquidity or materially affect the cost of funds. For
example, events unrelated to Key, such as terrorism or war, natural disasters,
political events, or the default or bankruptcy of

46

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

a major corporation, mutual fund or hedge fund, can have market-wide
consequences. A direct (but hypothetical) event would be a significant downgrade
in Key's public credit rating by a rating agency due to a deterioration in asset
quality, a large charge to earnings, a significant merger or acquisition or
other events. Similarly, market speculation or rumors about Key or the banking
industry in general may cause normal funding sources to withdraw credit until
further information becomes available.

LIQUIDITY FOR KEY. Key's Funding and Investment Management Group monitors the
overall mix of funding sources with the objective of maintaining an appropriate
mix in light of the structure of the asset portfolios. We use several tools to
maintain sufficient liquidity.

- -   We maintain portfolios of short-term money market investments and securities
    available for sale, substantially all of which could be converted to cash
    quickly at a small expense.

- -   Key's portfolio of investment securities generates prepayments (often at a
    premium) and payments at maturity.

- -   We try to structure the maturities of our loans so we receive a relatively
    consistent stream of payments from borrowers.

- -   We have a proven ability to access the securitization markets for a variety
    of loan types.

- -   Our 910 full-service KeyCenters in 12 states generate a sizable volume of
    core deposits. We monitor deposit flows and use alternative pricing
    structures to attract deposits when necessary. For more information about
    core deposits, see the previous section entitled "Deposits and other sources
    of funds."

- -   Key has access to various sources of money market funding (such as federal
    funds purchased, securities sold under repurchase agreements, and bank
    notes) and also can borrow from the Federal Reserve Bank to meet short-term
    liquidity requirements. Key did not have any borrowings from the Federal
    Reserve outstanding at December 31, 2002.

The Consolidated Statements of Cash Flow on page 56 summarize Key's sources and
uses of cash by type of activity for the years ended December 31, 2002, 2001 and
2000. As shown in these statements, Key's largest cash flows relate to both
investing and financing activities. Over the past three years, the primary
sources of cash from investing activities have been loan securitizations and
sales and the sales, prepayments and maturities of securities available for
sale. Investing activities that have required the greatest use of cash include
lending and the purchases of new securities.

Over the past three years, the primary source of cash from financing activities
has been the issuance of long-term debt. However, in both 2002 and 2000,
deposits were also a significant source of cash. In each of the past three
years, cash has been used to repay debt issued in prior periods and to reduce
the levels of short-term borrowings.

LIQUIDITY FOR KEYCORP. KeyCorp meets its liquidity requirements principally
through regular dividends from affiliate banks. In 2002, affiliate banks paid
KeyCorp a total of $900 million in dividends. Federal banking law limits the
amount of capital distributions that banks can make to their holding companies
without obtaining prior regulatory approval. A national bank's dividend paying
capacity is affected by several factors, including the amount of its net profits
(as defined by statute) for the two previous calendar years, and net profits for
the current year up to the date of dividend declaration. Due to this constraint,
and the restructuring charges taken by KBNA and Key Bank USA in 2001, as of
January 1, 2003, neither bank could pay dividends or make other capital
distributions to KeyCorp without prior regulatory approval.

In February 2003, KBNA obtained regulatory approval to make capital
distributions to KeyCorp of up to $365 million in the aggregate in the first and
second quarters. If KBNA were to distribute such amount, it would not have any
further dividend paying capacity until it accumulates at least $300 million of
additional net profits in 2003. Management expects this will occur during the
second quarter. Management also expects Key Bank USA to have restored dividend
paying capacity during the first quarter.

Assuming KBNA had distributed the $365 million to KeyCorp as of February 15,
2003, as of that date, KeyCorp would have had approximately $1.5 billion of cash
or short-term investments available to pay dividends on its common shares, to
service its debt and to finance its corporate operations. Management does not
expect current constraints on the subsidiary banks to pay dividends to KeyCorp
to have any material effect on the ability of KeyCorp to pay dividends to its
shareholders, to service its debt or to meet its other obligations.

ADDITIONAL SOURCES OF LIQUIDITY. Management has implemented several programs
that enable Key and KeyCorp to raise money in the public and private markets
when necessary. The proceeds from all of these programs can be used for general
corporate purposes, including acquisitions. Each of the programs is replaced or
extended from time to time as needed.

BANK NOTE PROGRAM. During 2002, Key's affiliate banks raised $2.9 billion under
Key's bank note program. Of the notes issued during the year, $2.2 billion have
original maturities in excess of one year and are included in long-term debt.
The remaining notes have original maturities of one year or less and are
included in short-term borrowings. Key's current bank note program provides for
the issuance of both long- and short-term debt of up to $20.0 billion ($19.0
billion by KBNA and $1.0 billion by Key Bank USA). At December 31, 2002, $18.1
billion was available for future issuance under this program.

EURO NOTE PROGRAM. Under Key's euro note program, KeyCorp, KBNA and Key Bank USA
may issue both long- and short-term debt of up to $10.0 billion in the
aggregate. The notes are offered exclusively to non-U.S. investors and can be
denominated in U.S. dollars and many foreign currencies. There were $1.5 billion
of borrowings issued under this program during 2002. At the end of the year,
$4.2 billion was available for future issuance.

KEYCORP MEDIUM-TERM NOTE PROGRAM AND OTHER SECURITIES. KeyCorp has registered
with the Securities and Exchange Commission to provide for the issuance of up to
$2.2 billion of securities, which could include long- or short-term debt, or
equity securities. Of the amount registered, $1.0 billion has been allocated for
the issuance of medium-term notes. At December 31, 2002, unused capacity under
KeyCorp's universal shelf

                                                                              47

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

registration statement totaled $1.8 billion, including $575 million allocated
for the issuance of medium-term notes.

COMMERCIAL PAPER AND REVOLVING CREDIT. KeyCorp has a commercial paper program
and a revolving credit agreement with an unaffiliated financial institution that
provide funding availability of up to $500 million and $400 million,
respectively. As of December 31, 2002, there were no borrowings outstanding
under either the commercial paper program or the revolving credit agreement.

Key has favorable debt ratings as shown in Figure 30. As long as those debt
ratings are maintained, management believes that, under normal conditions in the
capital markets, future offerings of securities by KeyCorp or its affiliate
banks would be marketable to investors at a competitive cost.

                             FIGURE 30 DEBT RATINGS

<TABLE>
<CAPTION>
                                      SENIOR     SUBORDINATED
                        SHORT-TERM   LONG-TERM    LONG-TERM      CAPITAL
DECEMBER 31, 2002       BORROWINGS     DEBT         DEBT        SECURITIES
- --------------------------------------------------------------------------
<S>                     <C>          <C>         <C>            <C>
KEYCORP
Standard & Poor's          A-2         A-           BBB+            BBB
Moody's                    P-1         A2            A3            "Baal"
Fitch                      F1          A             A-              A

KBNA
Standard & Poor's          A-1         A             A-             N/A
Moody's                    P-1         A1            A2             N/A
Fitch                      F1          A             A-             N/A
- --------------------------------------------------------------------------
</TABLE>

N/A = Not Applicable

Figure 31 summarizes Key's significant cash obligations and contractual amounts
of off-balance sheet lending commitments at December 31, 2002, by the specific
time periods in which related payments are due or commitments expire.

          FIGURE 31 CASH OBLIGATIONS AND OFF-BALANCE SHEET COMMITMENTS

<TABLE>
<CAPTION>
DECEMBER 31, 2002                                                         AFTER       AFTER
                                                              WITHIN    1 THROUGH   3 THROUGH     AFTER
in millions                                                   1 YEAR     3 YEARS     5 YEARS     5 YEARS      TOTAL
- ----------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>        <C>         <C>          <C>         <C>
Cash obligations:
  Long-term debt                                               $ 4,430     $ 5,914     $ 2,676     $ 2,585     $15,605
  Noncancelable leases                                             125         212         170         395         902
- ----------------------------------------------------------------------------------------------------------------------
     Total                                                     $ 4,555     $ 6,126     $ 2,846     $ 2,980     $16,507
                                                               =======     =======     =======     =======     =======
Lending-related and other off-balance sheet commitments:
  Commercial, including real estate                            $16,350     $ 6,970     $ 2,343     $ 1,384     $27,047
  Home equity                                                       54         127          55       5,295       5,531
  Federal funds purchased and securities sold
     under repurchase agreements                                 3,862           -           -           -       3,862
  Principal investing                                                1           -           8         213         222
  Commercial letters of credit                                      82          49           4           -         135
- ----------------------------------------------------------------------------------------------------------------------
     Total                                                     $20,349     $ 7,146     $ 2,410     $ 6,892     $36,797
                                                               =======     =======     =======     =======     =======
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

CAPITAL

SHAREHOLDERS' EQUITY. Total shareholders' equity at December 31, 2002, was $6.8
billion, up $680 million from the balance at December 31, 2001. Growth in
retained earnings, net unrealized gains on securities available for sale and the
issuance of common shares out of the treasury stock account in connection with
employee stock purchase, 401(k), dividend reinvestment and stock option programs
contributed to the increase. Other factors contributing to the change in
shareholders' equity during 2002 are shown in the Consolidated Statements of
Changes in Shareholders' Equity presented on page 55.

SHARE REPURCHASES. In September 2000, the Board of Directors authorized the
repurchase of up to 25,000,000 common shares, including 3,647,200 shares
remaining at the time from an earlier repurchase program. These shares may be
repurchased in the open market or through negotiated transactions. During 2002,
Key repurchased a total of 3,000,000 of its common shares at an average price
per share of $25.58. At December 31, 2002, a remaining balance of 13,764,400
shares may be repurchased under the September 2000 authorization.

At December 31, 2002, Key had 67,945,135 treasury shares. Management expects to
reissue those shares over time to support the employee stock purchase, 401(k),
stock option and dividend reinvestment plans, and for other corporate purposes.
During 2002, Key reissued 2,938,589 treasury shares for employee benefit and
dividend reinvestment plans.

CAPITAL ADEQUACY. Capital adequacy is an important indicator of financial
stability and performance. Overall, Key's capital position remains strong: the
ratio of total shareholders' equity to total assets was 8.02% at December 31,
2002, and 7.60% at December 31, 2001.

48

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

Banking industry regulators prescribe minimum capital ratios for bank holding
companies and their banking subsidiaries. Note 14 ("Shareholders' Equity"),
which begins on page 76, explains the implications of failing to meet specific
capital requirements imposed by the banking regulators. Risk-based capital
guidelines require a minimum level of capital as a percent of "risk-weighted
assets," which is total assets plus certain off-balance sheet items, both
adjusted for predefined credit risk factors. Currently, banks and bank holding
companies must maintain, at a minimum, Tier 1 capital as a percent of
risk-weighted assets of 4.00%, and total capital as a percent of risk-weighted
assets of 8.00%. As of December 31, 2002, Key's Tier 1 capital ratio was 8.09%,
and its total capital ratio was 12.51%.

Another indicator of capital adequacy, the leverage ratio, is defined as Tier 1
capital as a percentage of average quarterly tangible assets. Leverage ratio
requirements vary with the condition of the financial institution. Bank holding
companies that either have the highest supervisory rating or have implemented
the Federal Reserve's risk-adjusted measure for market risk -- as KeyCorp has --
must maintain a minimum leverage ratio of 3.00%. All other bank holding
companies must maintain a minimum ratio of 4.00%. As of December 31, 2002, Key
had a leverage ratio of 8.15%.

Federal bank regulators group FDIC-insured depository institutions into five
categories, ranging from "critically undercapitalized" to "well capitalized."
Both of Key's affiliate banks qualified as "well capitalized" at December 31,
2002, since each exceeded the prescribed thresholds of 10.00% for total capital,
6.00% for Tier 1 capital and 5.00% for the leverage ratio. If these provisions
applied to bank holding companies, Key would also qualify as "well capitalized"
at December 31, 2002. The FDIC-defined capital categories serve a limited
supervisory function. Investors should not treat them as a representation of the
overall financial condition or prospects of Key or its affiliate banks.

Figure 32 presents the details of Key's regulatory capital position at December
31, 2002 and 2001.

KeyCorp's common shares are traded on the New York Stock Exchange under the
symbol KEY. At December 31, 2002:

- -   Book value per common share was $16.12, based on 423,943,645 shares
    outstanding, compared with $14.52, based on 424,005,056 shares outstanding,
    at December 31, 2001.

- -   The closing sales price of a KeyCorp common share on the New York Stock
    Exchange was $25.14. This price was 156% of year-end book value per share,
    and would produce a dividend yield of 4.77%.

- -   There were 40,166 holders of record of KeyCorp common shares.

In 2002, the quarterly dividend was $.30 per common share, up from $.295 per
common share in 2001. On January 16, 2003, the quarterly dividend per common
share was increased by 1.7% to $.305, effective with the March 2003 dividend
payment.

Figure 33 on page 51 shows the sales price ranges of the common shares, per
common share net income (loss) and dividends paid by quarter for each of the
last two years.

FIGURE 32 CAPITAL COMPONENTS AND RISK-WEIGHTED ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
dollars in millions                            2002         2001
- -----------------------------------------------------------------
<S>                                          <C>          <C>
TIER 1 CAPITAL
Common shareholders' equity(a)               $ 6,738      $ 6,117
Qualifying capital securities                  1,096        1,243
Less: Goodwill                                 1,142        1,101
      Other assets(b)                             60           37
- -----------------------------------------------------------------
  Total Tier 1 capital                         6,632        6,222
- -----------------------------------------------------------------
TIER 2 CAPITAL
Allowance for loan losses(c)                     986        1,040
Qualifying long-term debt                      2,639        2,286
- -----------------------------------------------------------------
  Total Tier 2 capital                         3,625        3,326
- -----------------------------------------------------------------
  Total risk-based capital                   $10,257      $ 9,548
                                             =======      =======
RISK-WEIGHTED ASSETS
Risk-weighted assets on balance sheet        $67,051      $67,783
Risk-weighted off-balance sheet exposure      16,595       17,480
Less: Goodwill                                 1,142        1,101
      Other assets(b)                            251           37
Plus: Market risk-equivalent assets              192          217
- -----------------------------------------------------------------
  Gross risk-weighted assets                  82,445       84,342
Less: Excess allowance for loan losses(c)        466          637
- -----------------------------------------------------------------
  Net risk-weighted assets                   $81,979      $83,705
                                             =======      =======
AVERAGE QUARTERLY
TOTAL ASSETS                                 $82,735      $82,467
                                             =======      =======
CAPITAL RATIOS
Tier 1 risk-based capital ratio                 8.09%        7.43%
Total risk-based capital ratio                 12.51        11.41
Leverage ratio(d)                               8.15         7.65
- -----------------------------------------------------------------
</TABLE>

(a) Common shareholders' equity does not include net unrealized gains or losses
    on securities (except for net unrealized losses on marketable equity
    securities) nor net gains or losses on cash flow hedges.

(b) "Other assets" deducted from Tier 1 capital consists of intangible assets
    (excluding goodwill) recorded after February 19, 1992, deductible portions
    of purchased mortgage servicing rights and deductible portions of
    nonfinancial equity investments.

     "Other assets" deducted from risk-weighted assets consists of intangible
     assets (excluding goodwill) recorded after February 19, 1992, deductible
     portions of purchased mortgage servicing rights and nonfinancial equity
     investments.

(c) The allowance for loan losses included in Tier 2 capital is limited by
    regulation to 1.25% of gross risk-weighted assets, excluding those with
    low-level recourse.

(d) This ratio is Tier 1 capital divided by average quarterly total assets less
    goodwill and the nonqualifying intangible assets described in footnote (b).

                                                                              49

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

FOURTH QUARTER RESULTS

Some of the highlights of Key's fourth quarter results are summarized below.
Key's financial performance for each of the past eight quarters is summarized in
Figure 33.

NET INCOME (LOSS). Key had net income of $245 million, or $.57 per common share,
for the fourth quarter of 2002, compared with a net loss of $174 million, or
$.41 per share, for the same period in 2001. The improvement resulted from
growth in both net interest income and noninterest income, along with a decrease
in noninterest expense and a substantial reduction in the provision for loan
losses. Results for the fourth quarter of 2001 included charges of approximately
$410 million (after tax), or $.96 per share, taken to increase Key's allowance
for loan losses and to strengthen the balance sheet. The section entitled
"Financial performance," which begins on page 21, provides more information
about these charges.

On an annualized basis, Key's return on average total assets for the fourth
quarter of 2002 was 1.17%, compared with a return of (.84)% for the fourth
quarter of 2001. The annualized return on average equity was 14.46% for the
fourth quarter of 2002, compared with a return of (10.57)% for the year-ago
quarter.

NET INTEREST INCOME. Net interest income was $712 million for the fourth quarter
of 2002, up from $700 million for the fourth quarter of 2001. Key's net interest
margin of 3.98% for the fourth quarter of 2002 was unchanged from the fourth
quarter of 2001, while average earning assets declined by $152 million or less
than one percent. The decrease in earning assets was due primarily to Key's May
2001 decision to exit the automobile leasing business, de-emphasize indirect
prime automobile lending and discontinue certain credit-only commercial
relationships. Key's sale in September 2001 of $1.4 billion of residential
mortgage loans with low interest rate spreads also contributed to the decrease.

NONINTEREST INCOME. Key's noninterest income was $446 million for the fourth
quarter of 2002 compared with $418 million for the year-ago quarter. The
increase was due primarily to a $33 million decrease in losses from principal
investing. Noninterest income also benefited from a $6 million increase in net
gains from sales of securities. These positive results were offset in part by an
$18 million decline in income from trust and investment services and a $7
million reduction in service charges on deposit accounts.

NONINTEREST EXPENSE. Noninterest expense for the fourth quarter of 2002 totaled
$668 million, compared with $702 million for the fourth quarter of 2001. The
largest declines occurred in software amortization and the amortization of
goodwill. The January 1, 2002, adoption of new accounting guidance for goodwill
resulted in an expense reduction of approximately $20 million for each quarter
of 2002.

PROVISION FOR LOAN LOSSES. Key's provision for loan losses was $147 million for
the fourth quarter of 2002, compared with $723 million for the fourth quarter of
2001. Included in the fourth quarter 2001 amount is $400 million, which was used
to increase the allowance for loan losses for Key's continuing loan portfolio.
Another $190 million provision was added last year to the portion of the
allowance segregated in the second quarter of 2001 in connection with Key's
decision to discontinue many credit-only relationships in the leveraged
financing and nationally syndicated lending businesses and to facilitate sales
of distressed loans in other portfolios as discussed on page 42 under the
heading "Run-off loan portfolio." Net loan charge-offs totaled $186 million and
were 1.18% of average loans outstanding for the quarter, compared with $220
million and 1.37%, respectively, for the fourth quarter of 2001. For more
information about Key's allowance for loan losses, see the section entitled
"Allowance for loan losses," which begins on page 40.

50

<PAGE>

     MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                       OPERATIONS KEYCORP AND SUBSIDIARIES

                  FIGURE 33 SELECTED QUARTERLY FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                      2002
                                                 ---------------------------------------------------
dollars in millions, except per share amounts      FOURTH      THIRD          SECOND         FIRST
- ----------------------------------------------------------------------------------------------------
<S>                                              <C>         <C>            <C>            <C>
FOR THE QUARTER
Interest income                                  $   1,077   $   1,095      $   1,102      $   1,092
Interest expense                                       365         395            419            438
Net interest income                                    712         700            683            654
Provision for loan losses                              147         135            135            136
Noninterest income before net securities
  gains (losses)                                       441         432            447            443
Net securities gains (losses)                            5          --              1             --
Noninterest expense                                    668         659            665            661
Income (loss) before income taxes and
  cumulative effect of accounting changes              343         338            331            300
Income (loss) before cumulative effect
  of accounting changes                                245         245            246            240
Net income (loss)                                      245         245            246            240
- ----------------------------------------------------------------------------------------------------
PER COMMON SHARE
Income (loss) before cumulative effect
  of accounting changes                          $     .58   $     .57      $     .58      $     .56
Income (loss) before cumulative effect
  of accounting changes-- assuming dilution            .57         .57            .57            .56
Net income (loss)                                      .58         .57            .58            .56
Net income (loss)-- assuming dilution                  .57         .57            .57            .56
Cash dividends paid                                    .30         .30            .30            .30
Book value at period end                             16.12       15.66          15.46          15.05
Market price:
  High                                               26.75       27.35          29.40          27.26
  Low                                                21.25       20.96          25.95          22.92
  Close                                              25.14       24.97          27.30          26.65
Weighted average common shares (000)               424,578     426,274        426,092        424,855
Weighted average common shares and
  potential common shares (000)                    429,531     431,326        431,935        430,019
- ----------------------------------------------------------------------------------------------------
AT PERIOD END
Loans                                            $  62,457   $  62,951      $  63,881      $  63,956
Earning assets                                      73,635      72,548         72,820         72,382
Total assets                                        85,202      83,518         82,778         81,359
Deposits                                            49,346      44,610         44,805         43,233
Long-term debt                                      15,605      16,276         16,895         15,256
Shareholders' equity                                 6,835       6,654          6,592          6,402

Full-time equivalent employees                      20,437      20,522         20,929         21,076
Branches                                               910         903            905            911
- ----------------------------------------------------------------------------------------------------
PERFORMANCE RATIOS
Return on average total assets                        1.17%       1.19%          1.21%          1.20%
Return on average equity                             14.46       14.74          15.16          15.53
Net interest margin (taxable equivalent)              3.98        3.99           3.98           3.93
- ----------------------------------------------------------------------------------------------------
CAPITAL RATIOS AT PERIOD END
Equity to assets                                      8.02%       7.97%          7.96%          7.87%
Tangible equity to tangible assets                    6.73        6.71           6.69           6.57
Tier 1 risk-based capital                             8.09        8.34           8.23           7.92
Total risk-based capital                             12.51       12.69          12.29          12.02
Leverage                                              8.15        8.15           8.14           8.13
- ----------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                      2001
                                                 ---------------------------------------------------
dollars in millions, except per share amounts      FOURTH      THIRD         SECOND         FIRST
- ----------------------------------------------------------------------------------------------------
<S>                                              <C>         <C>           <C>             <C>
FOR THE QUARTER
Interest income                                  $   1,210   $   1,380     $   1,467       $   1,570
Interest expense                                       510         656           754             882
Net interest income                                    700         724           713             688
Provision for loan losses                              723         116           401             110
Noninterest income before net securities
  gains (losses)                                       419         452           390             429
Net securities gains (losses)                           (1)          2             8              26
Noninterest expense                                    702         683           858             698
Income (loss) before income taxes and
  cumulative effect of accounting changes             (307)        379          (148)            335
Income (loss) before cumulative effect
  of accounting changes                               (174)        249          (136)            218
Net income (loss)                                     (174)        249          (160)            217
- ----------------------------------------------------------------------------------------------------
PER COMMON SHARE
Income (loss) before cumulative effect
  of accounting changes                          $    (.41)  $     .59     $    (.32)      $     .51
Income (loss) before cumulative effect
  of accounting changes-- assuming dilution           (.41)        .58          (.32)            .51
Net income (loss)                                     (.41)        .59          (.38)            .51
Net income (loss)-- assuming dilution                 (.41)        .58          (.38)            .51
Cash dividends paid                                   .295        .295          .295            .295
Book value at period end                             14.52       15.53         15.22           15.79
Market price:
  High                                               24.52       28.15         26.43           27.58
  Low                                                20.49       22.20         22.10           22.65
  Close                                              24.34       24.14         26.05           25.80
Weighted average common shares (000)               423,596     424,802       424,675         424,024
Weighted average common shares and
  potential common shares (000)                    428,280     430,346       429,760         429,917
- ----------------------------------------------------------------------------------------------------
AT PERIOD END
Loans                                            $  63,309   $  64,506     $  66,693       $  67,027
Earning assets                                      71,672      73,943        76,531          77,027
Total assets                                        80,938      84,419        85,838          86,457
Deposits                                            44,795      45,372        45,743          45,965
Long-term debt                                      14,554      15,114        14,675          14,495
Shareholders' equity                                 6,155       6,575         6,467           6,702

Full-time equivalent employees                      21,230      21,297        21,742          21,882
Branches                                               911         911           926             922
- ----------------------------------------------------------------------------------------------------
PERFORMANCE RATIOS
Return on average total assets                        (.84)%      1.16%         (.75)%          1.02%
Return on average equity                            (10.57)      15.20         (9.67)          13.28
Net interest margin (taxable equivalent)              3.98        3.85          3.77            3.63
- ----------------------------------------------------------------------------------------------------
CAPITAL RATIOS AT PERIOD END
Equity to assets                                      7.60%       7.79%         7.53%           7.75%
Tangible equity to tangible assets                    6.29        6.51          6.25            6.29
Tier 1 risk-based capital                             7.43        7.81          7.71            7.99
Total risk-based capital                             11.41       11.77         11.81           12.32
Leverage                                              7.65        7.90          7.68            7.79
- ----------------------------------------------------------------------------------------------------
</TABLE>

Note 3 ("Acquisitions and Divestitures") on page 64 contains specific
information about the business combinations and divestitures that Key completed
in the past three years to help you understand how those transactions may have
impacted Key's financial condition and results of operations.

                                                                              51

<PAGE>

                            KEYCORP AND SUBSIDIARIES

                              REPORT OF MANAGEMENT

Key's management is responsible for the preparation, content and integrity of
the financial statements and other statistical data and analyses compiled for
this annual report. The financial statements and related notes have been
prepared in conformity with accounting principles generally accepted in the
United States and reflect management's best estimates and judgments. Management
believes that the financial statements and notes present fairly Key's financial
position, results of operations and cash flows, and that the financial
information presented elsewhere in this annual report is consistent with the
financial statements.

Management is responsible for establishing and maintaining a system of internal
control that is intended to protect Key's assets and the integrity of its
financial statements. This corporate-wide system of controls includes
self-monitoring mechanisms, written policies and procedures, proper delegation
of authority and organizational division of responsibility, and the careful
selection and training of qualified personnel. Management also maintains a code
of ethics that addresses conflicts of interest, compliance with laws and
regulations, and prompt reporting of any failure or circumvention of controls,
among other things.

We generally certify compliance with Key's code of ethics annually. We have
established an effective risk management function to periodically test the other
internal controls, and we endeavor to correct control deficiencies as they are
identified. Although any system of internal control can be compromised by human
error or intentional circumvention of required procedures, management believes
Key's system provides reasonable assurances that financial transactions are
recorded properly, providing an adequate basis for reliable financial
statements.

The Board of Directors discharges its responsibility for Key's financial
statements through its Audit Committee. This committee, which draws its members
exclusively from the outside directors, also hires the independent auditors. The
Audit Committee meets regularly with the independent auditors to review the
scope of their audits and audit reports and to discuss necessary action. Both
the independent and internal auditors have direct access to and interaction with
the Audit Committee.

Management has assessed Key's internal control and procedures over financial
reporting using criteria described in "Internal Control --Integrated Framework,"
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on that assessment, management believes that Key maintained an effective
system of internal control for financial reporting as of December 31, 2002.

/s/Henry L. Meyer III

Henry L. Meyer III
Chairman and Chief Executive Officer

/s/Jeffrey B. Weeden

Jeffrey B. Weeden
Senior Executive Vice President and Chief Financial Officer

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Shareholders and Board of Directors
KeyCorp

We have audited the accompanying consolidated balance sheets of KeyCorp and
subsidiaries ("Key") as of December 31, 2002 and 2001, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flow for each of the three years in the period ended December 31, 2002. These
financial statements are the responsibility of Key's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Key at December
31, 2002 and 2001, and the consolidated results of their operations and their
cash flows for each of the three years in the period ended December 31, 2002, in
conformity with accounting principles generally accepted in the United States.

As discussed in Note 1 to the consolidated financial statements, in 2002 Key
changed its method of accounting for goodwill.

                                                          /s/ ERNST & YOUNG LLP

Cleveland, Ohio
January 13, 2003

52

<PAGE>

                            KEYCORP AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
dollars in millions                                                                                  2002         2001
- -------------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>          <C>
ASSETS
Cash and due from banks                                                                           $    3,364   $    2,891
Short-term investments                                                                                 1,632        1,898
Securities available for sale                                                                          8,507        5,408
Investment securities (fair value: $129 and $234)                                                        120          225
Other investments                                                                                        919          832
Loans, net of unearned income of $1,776 and $1,778                                                    62,457       63,309
   Less: Allowance for loan losses                                                                     1,452        1,677
- -------------------------------------------------------------------------------------------------------------------------
   Net loans                                                                                          61,005       61,632
Premises and equipment                                                                                   644          687
Goodwill                                                                                               1,142        1,103
Other intangible assets                                                                                   35           31
Corporate-owned life insurance                                                                         2,414        2,313
Accrued income and other assets                                                                        5,420        3,918
- -------------------------------------------------------------------------------------------------------------------------
   Total assets                                                                                   $   85,202   $   80,938
                                                                                                  ==========   ==========
LIABILITIES
Deposits in domestic offices:
   NOW and money market deposit accounts                                                          $   16,249   $   13,461
   Savings deposits                                                                                    2,029        1,918
   Certificates of deposit ($100,000 or more)                                                          4,749        4,493
   Other time deposits                                                                                11,946       13,657
- -------------------------------------------------------------------------------------------------------------------------
     Total interest-bearing                                                                           34,973       33,529
   Noninterest-bearing                                                                                10,630        9,667
Deposits in foreign office--interest-bearing                                                           3,743        1,599
- -------------------------------------------------------------------------------------------------------------------------
     Total deposits                                                                                   49,346       44,795
Federal funds purchased and securities sold under repurchase agreements                                3,862        3,735
Bank notes and other short-term borrowings                                                             2,823        5,549
Accrued expense and other liabilities                                                                  5,471        4,862
Long-term debt                                                                                        15,605       14,554
Corporation-obligated mandatorily redeemable preferred capital securities of subsidiary
   trusts holding solely subordinated debentures of KeyCorp (see Note 13)                              1,260        1,288
- -------------------------------------------------------------------------------------------------------------------------
     Total liabilities                                                                                78,367       74,783

SHAREHOLDERS' EQUITY
Preferred stock, $1 par value; authorized 25,000,000 shares, none issued                                  --           --
Common shares, $1 par value; authorized 1,400,000,000 shares;
   issued 491,888,780 shares                                                                             492          492
Capital surplus                                                                                        1,449        1,390
Retained earnings                                                                                      6,448        5,856
Treasury stock, at cost (67,945,135 and 67,883,724 shares)                                            (1,593)      (1,585)
Accumulated other comprehensive income                                                                    39            2
- -------------------------------------------------------------------------------------------------------------------------
     Total shareholders' equity                                                                        6,835        6,155
- -------------------------------------------------------------------------------------------------------------------------
     Total liabilities and shareholders' equity                                                   $   85,202   $   80,938
                                                                                                  ==========   ==========
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.

                                                                              53

<PAGE>

                            KEYCORP AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
dollars in millions, except per share amounts                                              2002         2001         2000
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>          <C>          <C>
INTEREST INCOME
Loans                                                                                   $    3,913   $    5,067   $    5,699
Tax-exempt investment securities                                                                10           17           23
Securities available for sale                                                                  389          454          447
Short-term investments                                                                          30           65           83
Other investments                                                                               24           24           25
- ----------------------------------------------------------------------------------------------------------------------------
   Total interest income                                                                     4,366        5,627        6,277

INTEREST EXPENSE
Deposits                                                                                       897        1,478        1,768
Federal funds purchased and securities sold under repurchase agreements                         90          198          287
Bank notes and other short-term borrowings                                                      79          302          428
Long-term debt, including capital securities                                                   551          824        1,064
- ----------------------------------------------------------------------------------------------------------------------------
   Total interest expense                                                                    1,617        2,802        3,547
- ----------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME                                                                          2,749        2,825        2,730
Provision for loan losses                                                                      553        1,350          490
- ----------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses                                          2,196        1,475        2,240

NONINTEREST INCOME
Trust and investment services income                                                           609          651          687
Service charges on deposit accounts                                                            405          387          341
Investment banking and capital markets income                                                  172           88          293
Letter of credit and loan fees                                                                 134          124          107
Corporate-owned life insurance income                                                          108          114          109
Electronic banking fees                                                                         79           74           68
Net securities gains (losses)                                                                    6           35          (28)
Gain from sale of credit card portfolio                                                         --           --          332
Other income                                                                                   256          252          285
- ----------------------------------------------------------------------------------------------------------------------------
   Total noninterest income                                                                  1,769        1,725        2,194

NONINTEREST EXPENSE
Personnel                                                                                    1,436        1,378        1,445
Net occupancy                                                                                  226          232          223
Computer processing                                                                            192          252          240
Equipment                                                                                      136          152          173
Marketing                                                                                      122          112          110
Professional fees                                                                               92           88           89
Amortization of intangibles                                                                     11          245          101
Restructuring charges (credits)                                                                 --           (4)         102
Other expense                                                                                  438          486          434
- ----------------------------------------------------------------------------------------------------------------------------
   Total noninterest expense                                                                 2,653        2,941        2,917

INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
   OF ACCOUNTING CHANGES                                                                     1,312          259        1,517
Income taxes                                                                                   336          102          515
- ----------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES                                          976          157        1,002
Cumulative effect of accounting changes, net of tax (see Note 1)                                --          (25)          --
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                                              $      976   $      132   $    1,002
                                                                                        ==========   ==========   ==========
Per common share:
   Income before cumulative effect of accounting changes                                $     2.29   $      .37   $     2.32
   Net income                                                                                 2.29          .31         2.32
   Income before cumulative effect of accounting changes--assuming dilution                   2.27          .37         2.30
Net income--assuming dilution                                                                 2.27          .31         2.30
Weighted average common shares outstanding (000)                                           425,451      424,275      432,617
Weighted average common shares and potential common
   shares outstanding (000)                                                                430,703      429,573      435,573
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.

54

<PAGE>

                            KEYCORP AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                       ACCUMULATED
                                                                                 LOANS TO   TREASURY      OTHER
                                                    COMMON  CAPITAL   RETAINED     ESOP      STOCK,   COMPREHENSIVE    COMPREHENSIVE
dollars in millions, except per share amounts       SHARES  SURPLUS   EARNINGS   TRUSTEE    AT COST   INCOME (LOSS)        INCOME
- ---------------------------------------------------------------------------------------------------------------------  -------------
<S>                                                 <C>     <C>       <C>        <C>        <C>       <C>              <C>
BALANCE AT DECEMBER 31, 1999                        $  492  $ 1,412   $  5,833   $    (24)  $(1,197)       $   (127)
Net income                                                               1,002                                          $     1,002
Other comprehensive income (losses):
   Net unrealized gains on securities available
     for sale, net of income taxes of $80(a)                                                                    132             132
   Foreign currency translation adjustments                                                                     (15)            (15)
                                                                                                                        ------------
       Total comprehensive income                                                                                       $     1,119
                                                                                                                        ===========
Cash dividends declared on common shares
   ($1.12 per share)                                                      (484)
Issuance of common shares:
   Employee benefit and dividend reinvestment
     plans-- 2,480,161 net shares                               (10)                             59
Repurchase of common shares-- 22,652,800 shares                                                (462)
ESOP transactions                                                            1         11
- ---------------------------------------------------------------------------------------------------------------------  -------------
BALANCE AT DECEMBER 31, 2000                           492    1,402      6,352        (13)   (1,600)            (10)
Net income                                                                 132                                          $       132
Other comprehensive income (losses):
   Net unrealized gains on securities available
     for sale, net of income taxes of $11(a)                                                                     13              13
   Cumulative effect of change in accounting
     for derivative financial instruments,
     net of income taxes of ($12)                                                                               (22)            (22)
   Net unrealized gains on derivative financial
     instruments, net of income taxes of $12                                                                     20              20
   Foreign currency translation adjustments                                                                       1               1
                                                                                                                        ------------
       Total comprehensive income                                                                                       $       144
                                                                                                                        ===========
Cash dividends declared on common shares
   ($1.48 per share)                                                      (628)
Issuance of common shares:
   Acquisition-- 370,830 shares                                                                   9
   Employee benefit and dividend reinvestment
     plans-- 2,415,914 net shares                               (12)                             56
Repurchase of common shares--2,035,600 shares                                                   (50)
ESOP transactions                                                                      13
- ---------------------------------------------------------------------------------------------------------------------  -------------
BALANCE AT DECEMBER 31, 2001                           492    1,390      5,856         --    (1,585)              2
Net income                                                                 976                                          $       976
Other comprehensive income (losses):
   Net unrealized gains on securities available
     for sale, net of income taxes of $27(a)                                                                     47              47
   Net unrealized gains on derivative financial
     instruments, net of income taxes of $5                                                                       8               8
   Foreign currency translation adjustments                                                                       7               7
   Minimum pension liability adjustment,
     net of income taxes of ($14)                                                                               (25)            (25)
                                                                                                                        ------------
       Total comprehensive income                                                                                       $     1,013
                                                                                                                        ===========
Deferred compensation obligation                                 68
Cash dividends declared on common shares
   ($.90 per share)                                                       (384)
Issuance of common shares:
   Employee benefit and dividend reinvestment
     plans--2,938,589 net shares                                 (9)                             69
Repurchase of common shares-- 3,000,000 shares                                                  (77)
- ---------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2002                        $  492  $ 1,449   $  6,448        --    $(1,593)       $     39
                                                    ======  =======   ========       ===    =======        ========
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Net of reclassification adjustments. Reclassification adjustments represent
    net unrealized gains (losses) as of December 31 of the prior year on
    securities available for sale that were sold during the current year. The
    reclassification adjustments were $35 million ($22 million after tax) in
    2002, ($5) million [($4) million after tax] in 2001 and ($11) million [($7)
    million after tax] in 2000.

See Notes to Consolidated Financial Statements.

                                                                              55

<PAGE>

                            KEYCORP AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                                                                                2002         2001         2000
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>          <C>          <C>
OPERATING ACTIVITIES
Net income                                                                              $      976   $      132   $    1,002
Adjustments to reconcile net income to net cash provided by operating
activities:
  Provision for loan losses                                                                    553        1,350          490
  Cumulative effect of accounting changes, net of tax                                           --           25           --
  Depreciation expense and software amortization                                               215          285          281
  Amortization of intangibles                                                                   11          245          101
  Net gain from sale of credit card portfolio                                                   --           --         (332)
  Net securities (gains) losses                                                                 (6)         (35)          28
  Net (gains) losses from principal investing                                                   14           79          (71)
  Net gains from loan securitizations and sales                                                (56)         (49)         (31)
  Deferred income taxes                                                                        155         (139)         335
  Net (increase) decrease in mortgage loans held for sale                                      118          (10)        (164)
  Net (increase) decrease in trading account assets                                           (204)         146           26
  Net increase (decrease) in accrued restructuring charges                                     (35)         (64)          31
  Other operating activities, net                                                             (282)        (271)        (113)
- ----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                    1,459        1,694        1,583
INVESTING ACTIVITIES
Cash used in acquisitions, net of cash acquired                                                (63)          (3)        (375)
Net (increase) decrease in other short-term investments                                        485         (160)         (49)
Purchases of securities available for sale                                                  (6,744)      (4,290)      (6,855)
Proceeds from sales of securities available for sale                                         1,552          349        2,450
Proceeds from prepayments and maturities of securities available for sale                    2,317        5,859        3,859
Purchases of investment securities                                                             (18)         (46)         (30)
Proceeds from prepayments and maturities of investment securities                               95          144          155
Purchases of other investments                                                                (167)        (225)        (374)
Proceeds from sales of other investments                                                        45           56          129
Proceeds from prepayments and maturities of other investments                                   57          106           56
Net increase in loans, excluding acquisitions, sales and divestitures                       (3,184)      (1,876)      (7,215)
Purchases of loans                                                                              --         (107)          --
Proceeds from loan securitizations and sales                                                 3,393        4,916        4,978
Purchases of premises and equipment                                                            (90)        (121)        (103)
Proceeds from sales of premises and equipment                                                    9           15           22
Proceeds from sales of other real estate owned                                                  40           27           28
- ----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                         (2,273)       4,644       (3,324)
FINANCING ACTIVITIES
Net increase (decrease) in deposits                                                          4,128       (3,854)       5,416
Net decrease in short-term borrowings                                                       (2,611)      (2,609)        (696)
Net proceeds from issuance of long-term debt, including capital securities                   4,739        3,864        4,286
Payments on long-term debt, including capital securities                                    (4,418)      (3,532)      (5,985)
Loan payments received from ESOP trustee                                                        --           13           11
Purchases of treasury shares                                                                   (77)         (50)        (462)
Net proceeds from issuance of common stock                                                      37           33           28
Cash dividends paid                                                                           (511)        (501)        (484)
- ----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                          1,287       (6,636)       2,114
- ----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS                                             473         (298)         373
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR                                                 2,891        3,189        2,816
- ----------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR                                                  $    3,364   $    2,891   $    3,189
                                                                                        ==========   ==========   ==========
- ----------------------------------------------------------------------------------------------------------------------------
Additional disclosures relative to cash flow:
  Interest paid                                                                         $    1,549   $    2,626   $    3,572
  Income taxes paid                                                                            173          115           92
Noncash items:
  Derivative assets resulting from adoption of new accounting standard                          --   $      120           --
  Derivative liabilities resulting from adoption of new accounting standard                     --          152           --
  Cash dividends declared, but not paid                                                         --          127           --
  Transfer of investment securities to other investments                                $      847          832   $      820
  Transfer of investment securities to securities available for sale                            62           62           55
  Assets acquired                                                                              475           --           --
  Liabilities assumed                                                                          450           --           --
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.

56

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

                 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

KeyCorp, an Ohio corporation and bank holding company headquartered in
Cleveland, Ohio, is one of the nation's largest bank-based financial services
companies. KeyCorp's subsidiaries provide retail and commercial banking,
commercial leasing, investment management, consumer finance and investment
banking products and services to individual, corporate and institutional clients
through three major business groups: Key Consumer Banking, Key Corporate
Finance and Key Capital Partners. As of December 31, 2002, KeyCorp's banking
subsidiaries operated 910 full-service branches, a telephone banking call center
services group and 2,165 ATMs in 17 states.

As used in these Notes, KeyCorp refers solely to the parent company and Key
refers to the consolidated entity consisting of KeyCorp and its subsidiaries.

USE OF ESTIMATES

Key's accounting policies conform to accounting principles generally accepted in
the United States and prevailing practices within the financial services
industry. Management must make certain estimates and judgments when determining
the amounts presented in Key's consolidated financial statements and the related
notes. If these estimates prove to be inaccurate, actual results could differ
from those reported.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of KeyCorp and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation. Some previously reported results have been
reclassified to conform to current reporting practices.

KeyCorp evaluates whether to consolidate entities in which it has invested based
on the nature and amount of equity contributed by third parties, the
decision-making power granted to those parties and the extent of their control
over the entity's operating and financial policies. Entities that KeyCorp
controls, generally through majority ownership, are consolidated and are
considered subsidiaries.

Unconsolidated investments in entities in which KeyCorp has significant
influence over operating and financing decisions (usually defined as a voting or
economic interest of 20 to 50%) are accounted for by the equity method.
Unconsolidated investments in entities in which KeyCorp has a voting or economic
interest of less than 20% are generally carried at cost. Investments held by
KeyCorp's broker/dealer and investment company subsidiaries (principal
investments) are carried at estimated fair value.

KeyCorp uses special purpose entities ("SPEs"), including securitization trusts,
in the normal course of business for funding purposes. SPEs established by
KeyCorp as qualifying special purpose entities under the provisions of SFAS No.
140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities,"are not consolidated. Nonqualifying SPEs are
evaluated for consolidation by KeyCorp based on the nature and amount of equity
contributed by third parties, the risks and rewards the parties assume and the
control the respective parties exercise over the SPE's activities.
Securitization trusts sponsored by KeyCorp are not consolidated since they are
qualifying SPEs.

KeyCorp also does not consolidate an asset-backed commercial paper conduit for
which it is a referral agent. The conduit is owned by a third party and
administered by an unaffiliated financial institution. KeyCorp shares the risks
and rewards of the conduit's activities with multiple third parties.

Additional information on SFAS No. 140 is summarized in this note under the
heading "Loan Securitizations" on page 59. Additional information on the conduit
is summarized in Note 19 ("Commitments, Contingent Liabilities and
Guarantees"),which begins on page 81. The "Accounting Pronouncements Pending
Adoption" section of this note, which begins on page 62, and Note 8 ("Loan
Securitizations and Variable Interest Entities"), which begins on page 70,
summarize guidance issued by the Financial Accounting Standards Board ("FASB")
in January 2003 that changes the methods for evaluating when to consolidate
entities and may affect Key's decision as to which entities to consolidate in
the future.

BUSINESS COMBINATIONS

Key accounts for its business combinations using the purchase method of
accounting. Under this method of accounting, the acquired company's net assets
are recorded at fair value at the date of acquisition and the results of
operations of the acquired company are combined with Key's results from that
date forward. Purchase premiums and discounts, including intangible assets, are
amortized over the remaining useful lives of the related assets or liabilities.
The difference between the purchase price and the fair value of the net assets
acquired is recorded as goodwill. Key's accounting policy for intangible assets
is summarized in this note under the heading "Goodwill and Other Intangible
Assets"on page 59.

In July 2001, the FASB issued SFAS No. 141, "Business Combinations," which
eliminated the pooling-of-interests method of accounting for business
combinations initiated after June 30, 2001. Since that date, Key has not
initiated any business combinations that would have qualified for the
pooling-of-interests method of accounting under previous accounting standards.
The last business combination that Key accounted for using the
pooling-of-interests method occurred in December 1994.

STATEMENTS OF CASH FLOW

Cash and due from banks are considered "cash and cash equivalents" for financial
reporting purposes.

SECURITIES

Key classifies its securities into four categories: trading, available for sale,
investment and other investments.

TRADING ACCOUNT SECURITIES. These are debt and equity securities that are
purchased and held by Key with the intent of selling them in the near term, and
certain interests retained in loan securitizations. All of these assets are
reported at fair value ($801 million at December 31, 2002, and $597 million at
December 31, 2001) and are included in "short-term investments" on the balance
sheet. Realized and unrealized gains and

                                                                              57

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

losses on trading account securities are reported in "investment banking and
capital markets income" on the income statement.

SECURITIES AVAILABLE FOR SALE. These include securities that Key intends to hold
for an indefinite period of time and that may be sold in response to changes in
interest rates, prepayment risk, liquidity needs or other factors. Securities
available for sale are reported at fair value and include debt and marketable
equity securities with readily determinable fair values. Unrealized gains and
losses (net of income taxes) deemed temporary are recorded in shareholders'
equity as a component of "accumulated other comprehensive income (loss)."
Unrealized gains and losses on specific securities deemed to be "other than
temporary" are included in "net securities gains (losses)" on the income
statement. Also included in "net securities gains (losses)" are actual gains and
losses resulting from sales of specific securities.

INVESTMENT SECURITIES. These are debt securities that Key has the intent and
ability to hold until maturity. Debt securities are carried at cost, adjusted
for amortization of premiums and accretion of discounts using the interest
method. This method produces a constant rate of return on the basis of the
adjusted carrying amount.

OTHER INVESTMENTS. Principal investments -- investments in equity and mezzanine
instruments made by Key's Principal Investing unit -- represent the majority of
other investments and are carried at fair value. They include direct and
indirect investments predominately in privately-held companies. Direct
investments are those made in a particular company, while indirect investments
are made through funds that include other investors. Changes in estimated fair
values and actual gains and losses on sales of Principal Investments are
included in "investment banking and capital markets income" on the income
statement.

In addition to principal investments, other investments include securities that
do not have readily determinable fair values. These securities include certain
real estate-related investments that are carried at estimated fair value, as
well as other types of securities that are generally carried at cost. The
carrying amount of the securities carried at cost is adjusted for declines in
value that are considered to be "other than temporary." These adjustments are
included in "net securities gains (losses)" on the income statement.

LOANS

Loans are carried at the principal amount outstanding, net of unearned income,
including net deferred loan fees and costs. Key defers certain nonrefundable
loan origination and commitment fees and the direct costs of originating or
acquiring loans. The net deferred amount is amortized over the estimated lives
of the related loans as an adjustment to the yield.

At December 31, 2002, loans held for sale include commercial, mortgage and
education loans. These loans are carried at the lower of aggregate cost or fair
value. Fair value is determined based on prevailing market prices for loans with
similar characteristics. When a loan is placed in the held for sale category,
amortization of the related deferred fees and costs is discontinued. The
remaining unamortized fees and costs are recognized as part of the cost basis of
the loan at the time it is sold.

Direct financing leases are carried at the aggregate of lease payments
receivable plus estimated residual values, less unearned income. Unearned income
on direct financing leases is amortized over the lease terms using methods that
approximate the interest method. This method amortizes unearned income to
produce a constant rate of return on the lease. Net gains or losses on sales of
lease residuals are included in "other income" on the income statement.

IMPAIRED AND OTHER NONACCRUAL LOANS

Key will generally stop accruing interest on a loan (i.e., designate the loan
"nonaccrual") when payment is 90 days or more past due, unless the loan is
well-secured and in the process of collection. Loans are also placed on
nonaccrual status when payment is not past due but management has serious doubts
as to the ability of the borrower to comply with existing loan repayment terms.
Once a loan is designated as nonaccrual, the interest accrued but not collected
is generally charged against the allowance for loan losses, and payments
subsequently received are generally applied to principal. However, if management
believes that all principal and interest on a nonaccrual loan ultimately are
collectible, interest income may be recognized as received.

Nonaccrual loans, other than smaller-balance homogeneous loans (i.e., loans to
finance residential mortgages, automobiles, etc.), are designated "impaired."
Impaired loans and other nonaccrual loans are returned to accrual status when
management determines that the borrower's performance has improved and that both
principal and interest are collectible. This generally requires a sustained
period of timely principal and interest payments.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses represents management's estimate of probable
credit losses inherent in the loan portfolio at the balance sheet date. Key
determines and maintains an appropriate allowance for loan losses based on an
analysis of the quality of the loan portfolio. This analysis is conducted at
least quarterly, and more often if deemed necessary.

ALLOWANCE FOR IMPAIRED LOANS. When expected cash flows or collateral values do
not justify the carrying amount of an impaired loan, the loan is assigned a
specific allowance. Management calculates the extent of the impairment, which is
the carrying amount of the loan less the estimated present value of future cash
flows and the fair value of any existing collateral. The amount that management
deems uncollectible (the impaired amount) is charged against the allowance for
loan losses. Even when collateral value or other sources of repayment appear
sufficient, if management remains uncertain about whether the loan will be
repaid in full, an amount is specifically allocated in the allowance for loan
losses.

ALLOWANCE FOR NONIMPAIRED LOANS AND BINDING COMMITMENTS.

Management establishes an allowance for nonimpaired loans and legally binding
commitments by applying historical loss rates to existing loans with similar
risk characteristics. The portion of this allowance that was related to legally
binding commitments was $72 million at December 31, 2002, compared with $71
million at December 31, 2001. The loss rates used to establish the allowance may
be adjusted to reflect management's current assessment of the following factors:

- -   changes in national and local economic and business conditions;

- -   changes in experience, ability and depth of lending management and staff,
    in lending policies or in the mix and volume of the loan portfolio;

58

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

- -   the trend of the volume of past due, nonaccrual and other loans; and

- -   external forces, such as competition, legal developments and regulatory
    guidelines.

LOAN SECURITIZATIONS

Key sells education and certain other types of loans in securitizations. A
securitization involves the sale of a pool of loan receivables to investors
through either a public or private issuance (generally by a SPE) of asset-backed
securities. Securitized loans are removed from the balance sheet and a net gain
or loss is recorded when the combined net sales proceeds and, if applicable,
residual interests differ from the loans' allocated carrying amount. Net gains
and losses resulting from securitizations are recorded in "other income" on the
income statement. A servicing asset may also be recorded if Key either purchases
or retains the right to service these loans and receives related fees that
exceed the going market rate. Income earned under servicing or administration
arrangements also is recorded in "other income."

Key adopted SFAS No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities," which took effect for all
transactions entered into after March 31, 2001. SFAS No. 140 added three
significant rules to practices already in effect. These rules:

- -   prescribe the test that determines whether a SPE is a "qualifying" SPE, and
    prescribe the amount and type of derivative instruments a qualifying SPE can
    hold and the activities it may pursue;

- -   provide more restrictive guidance regarding the circumstances under which a
    company that transfers assets to a qualifying SPE will be deemed to have
    relinquished control of such assets and may account for the transaction as a
    sale; and

- -   require extensive disclosures about collateral, assets securitized and
    accounted for as a sale, and retained interests in securitized assets.

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. The accounting for these retained interests is subject to the
rules contained in SFAS No. 140. Under these rules, the previous carrying amount
of the assets sold is allocated between the retained interests and the assets
sold based on their relative fair values at the date of transfer. Fair value is
determined by computing the present value of estimated cash flows, using a
discount rate that reflects the risks associated with the cash flows and the
dates that Key expects to receive such cash flows. Other assumptions used in the
determination of fair value are disclosed in Note 8 ("Loan Securitizations and
Variable Interest Entities"), which begins on page 70.

In July 2000, the Emerging Issues Task Force ("EITF"), a standard-setting group
working under the auspices of the FASB, issued EITF 99-20. This guidance
specifies how to record interest income and measure impairment on beneficial
interests retained in a securitization transaction accounted for as a sale under
SFAS No. 140, and on purchased beneficial interests in securitized financial
assets. Assets subject to this accounting guidance are presented on the balance
sheet as securities available for sale [see Note 6 ("Securities"), which begins
on page 68] or as trading account assets. This guidance became effective for
fiscal quarters beginning after March 15, 2001, causing Key to record a
cumulative after-tax loss of $24 million in earnings for the second quarter of
2001. This loss is presented on Key's income statement as a "cumulative effect
of accounting change."

Key conducts a review to determine whether all retained interests are valued
appropriately in the financial statements on a quarterly basis. Management
reviews the historical performance of each retained interest and the assumptions
used to project future cash flows. Assumptions are revised if past performance
and future expectations dictate, and the present values of cash flows are
recalculated based on the revised assumptions.

The present value of these cash flows is referred to as the "retained interest
fair value." For retained interests classified as trading account assets, any
increase or decrease in the asset's fair value is recognized in "other income"
on the income statement. Generally, if the carrying amount of a retained
interest classified as securities available for sale exceeds its fair value,
impairment is indicated and recognized in earnings. Conversely, if the fair
value of the retained interest exceeds its carrying amount, the write-up to fair
value is recorded in equity as a component of "accumulated other comprehensive
income (loss)," and the yield on the retained interest is adjusted
prospectively.

SERVICING ASSETS

Servicing assets purchased or retained by Key in a sale or securitization of
loans are reported at the lower of amortized cost or fair value ($99 million at
December 31, 2002, and $73 million at December 31, 2001) and included in
"accrued income and other assets" on the balance sheet. Fair value is initially
measured by allocating the previous carrying amount of the assets sold or
securitized to the retained interests and the assets sold based on their
relative fair values at the date of transfer. Fair value is determined by
estimating the present value of future cash flows associated with the serviced
loans. The estimate is based on a number of assumptions, including the cost of
servicing, discount rate, prepayment rate and default rate. The amortization of
servicing assets is determined in proportion to, and over the period of, the
estimated net servicing income and is recorded in "other income" on the income
statement.

PREMISES AND EQUIPMENT

Premises and equipment, including leasehold improvements, are stated at cost
less accumulated depreciation and amortization. Management determines
depreciation of premises and equipment using the straight-line method over the
estimated useful lives of the particular assets. Leasehold improvements are
amortized using the straight-line method over the terms of the leases.
Accumulated depreciation and amortization on premises and equipment totaled $1.1
billion at December 31, 2002 and 2001.

GOODWILL AND OTHER INTANGIBLE ASSETS

"Goodwill" represents the amount by which the cost of net assets acquired in a
business combination exceeds their fair value. "Other intangibles" represent
primarily the net present value of the future economic benefits to be derived
from the purchase of core deposits. Other intangibles are amortized on either an
accelerated or straight-line basis over periods ranging from 7 to 30 years.

                                                                              59

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

Effective January 1, 2002, Key adopted SFAS No. 142, "Goodwill and Other
Intangible Assets," which replaced Accounting Principles Board Opinion No.
17,"Intangible Assets." Under the new accounting standard, companies are no
longer permitted to amortize goodwill and other intangible assets deemed to have
indefinite lives. This change reduced Key's noninterest expense and increased
net income by approximately $79 million, or $.18 per common share, for 2002.

Under SFAS No. 142, goodwill and certain intangible assets are subject to
impairment testing, which must be conducted at least annually. Key has
determined that its reporting units for purposes of this testing are its major
business groups: Key Consumer Banking, Key Corporate Finance and Key Capital
Partners.

The first step in this testing requires that the fair value of each reporting
unit be determined. If the carrying amount of any reporting unit exceeds its
fair value, goodwill impairment may be indicated and a second step of impairment
testing is required. If such were the case, Key would assume that the purchase
price of the reporting unit is equal to its fair value as determined in the
first step and then allocate that purchase price to the fair value of the unit's
assets (excluding goodwill) and liabilities. Any excess of the assumed purchase
price over the fair value of the reporting unit's assets and liabilities
represents the implied fair value of goodwill. An impairment loss would be
recognized, as a charge to earnings, to the extent the carrying amount of the
reporting unit's goodwill exceeds the implied fair value of goodwill. Any
impairment losses resulting from the initial application of SFAS No. 142 must be
reported as a "cumulative effect of accounting change" on the income statement.

Key was required to perform a transitional impairment test of goodwill as of
January 1, 2002. In conducting this testing, Key used a discounted cash flow
methodology to determine the fair value of its reporting units and a relative
valuation methodology to review the fair values for reasonableness. Then, Key
compared the fair value of each reporting unit with its carrying amount. Under
SFAS No. 142, if the fair value of a particular reporting unit exceeds its
carrying amount, no impairment is indicated and further testing is not required.
Key completed its transitional goodwill impairment testing during the first
quarter of 2002, and determined that no impairment existed as of January 1,
2002.

The annual goodwill impairment testing required by SFAS No. 142 will be
performed by Key in the fourth quarter of each year beginning in 2002. Any
future impairment losses would be charged against income from operations. Key's
annual goodwill impairment testing was performed as of October 1, 2002, and it
was determined that no impairment existed at that date.

Prior to the adoption of SFAS No. 142, goodwill was amortized using the
straight-line method over the period (up to 40 years) that management expected
the acquired assets to have value. Accumulated amortization on goodwill and
other intangible assets was $919 million at December 31, 2002, and $908 million
at December 31, 2001. Before January 1, 2002, Key reviewed goodwill and other
intangibles for impairment when impairment indicators, such as significant
changes in market conditions, changes in product mix or management focus, or a
potential sale or disposition, arose. In most instances, Key used the
undiscounted cash flow method in testing for impairment. In May 2001, Key
recorded a goodwill impairment charge of $150 million as a result of
management's decision to downsize the automobile finance business.

INTERNALLY DEVELOPED SOFTWARE

Key relies on both company personnel and independent contractors to plan,
develop, install, customize and enhance computer systems applications that
support corporate and administrative operations. Software development costs,
such as those related to program coding, testing, configuration and
installation, are capitalized and included in "accrued income and other assets"
on the balance sheet. The resulting asset ($105 million at December 31, 2002,
and $134 million at December 31, 2001) is amortized using the straight-line
method over its expected useful life (not to exceed five years). Costs incurred
during both the planning and the post-development phases of an internal software
project are expensed as incurred.

Software that is considered impaired is written down to its fair value. Software
that is no longer used is written off to earnings immediately. When management
decides to replace unimpaired software, amortization of such software is
accelerated to the expected replacement date.

DERIVATIVES USED FOR ASSET AND LIABILITY MANAGEMENT PURPOSES

Key uses derivatives known as interest rate swaps and caps to hedge interest
rate risk. These instruments modify the repricing or maturity characteristics of
specified on-balance sheet assets and liabilities. For example, an interest rate
cap tied to variable rate debt would effectively prevent the interest rate on
that debt from rising above a specified point.

Key's accounting policies related to such derivatives reflect the accounting
guidance in SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which became effective for Key as of January 1, 2001. This
standard established the appropriate accounting and reporting for derivative
instruments and for hedging activities. SFAS No. 133 requires that all
derivatives be recognized as either assets or liabilities on the balance sheet
at fair value. The accounting for changes in the fair value (i.e., gains or
losses) of derivatives depends on whether they have been designated and qualify
as part of a hedging relationship, and further, on the type of hedging
relationship. For derivatives that are not designated as hedging instruments,
the gain or loss is recognized immediately in earnings.

A derivative that is designated and qualifies as a hedging instrument must be
designated either a fair value hedge, a cash flow hedge or a hedge of a net
investment in a foreign operation. Key does not have any derivatives that hedge
net investments in foreign operations.

A fair value hedge is used to hedge changes in the fair value of existing
assets, liabilities and firm commitments against changes in interest rates or
other economic factors. Key recognizes the gain or loss on the derivative, as
well as the related gain or loss on the hedged item underlying the hedged risk,
in earnings during the period in which the fair value changes. Thus, if a hedge
is perfectly effective, the change in the fair value of the hedged item will be
offset, resulting in no net effect on earnings.

60

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

A cash flow hedge is used to hedge the variability of future cash flows against
changes in interest rates or other economic factors. The effective portion of a
gain or loss on any cash flow hedge is reported as a component of "other
comprehensive income (loss)" and reclassified into earnings in the same period
or periods that the hedged transaction affects earnings. Any ineffective portion
of the derivative gain or loss is recognized in earnings during the current
period.

As a result of adopting SFAS No. 133, Key recorded cumulative after-tax losses
of $1 million in earnings and $22 million in "other comprehensive income (loss)"
as of January 1, 2001. The cumulative loss included in earnings represented the
fair value at January 1, 2001, of all derivatives that were then designated as
fair value hedges and the unrealized gain or loss on the related hedged assets
and liabilities. The cumulative loss included in "other comprehensive income
(loss)" represented the effective portion of the fair value of all derivatives
designated as cash flow hedges.

Prior to the effective date of SFAS No. 133, to qualify for hedge accounting
treatment, a derivative had to be effective at reducing the risk associated with
the exposure being managed and had to be designated as a risk management
transaction at the inception of the derivative contract. An instrument
effectively reduced risk if there was a high degree of interest rate correlation
between the derivative and the asset or liability being managed, both at
inception and over the life of the derivative contract.

There were several rules that governed the hedge accounting treatment of
derivatives prior to SFAS No. 133:

- -   Changes in fair value of a derivative were not included in the financial
    statements.

- -   The net interest income or expense associated with a derivative was accrued
    and recognized as an adjustment to the interest income or interest expense
    of the asset or liability being managed.

- -   The interest receivable or payable from a derivative contract was recorded
    in "other assets" or "other liabilities" on the balance sheet.

- -   Premiums paid for a derivative were amortized as an adjustment to the
    interest income or expense of the asset or liability being managed.

- -   Realized gains and losses resulting from the early termination of a
    derivative contract were deferred as an adjustment to the carrying amount of
    the related asset or liability. Such gains or losses were amortized using
    the straight-line method over the shorter of the projected remaining life of
    the derivative contract on the date of termination or the projected
    remaining life of the underlying asset or liability on that date.

DERIVATIVES USED FOR TRADING PURPOSES

Derivatives that are not used for asset and liability management purposes are
used for trading purposes. Key enters into contracts for such derivatives either
to make a market for clients or for proprietary trading purposes. Derivatives
used for trading purposes typically include financial futures, foreign exchange
forward and spot contracts, written and purchased options (including currency
options), and interest rate swaps, caps and floors.

All derivatives used for trading purposes are recorded at fair value. Fair value
is determined by estimating the present value of future cash flows. Derivatives
with a positive fair value are included in "accrued income and other assets" on
the balance sheet, and derivatives with a negative fair value are included in
"accrued expense and other liabilities." Changes in fair value (including
payments and receipts) are recorded in "investment banking and capital markets
income" on the income statement.

EMPLOYEE STOCK OPTIONS

Through December 31, 2002, Key accounted for stock options issued to employees
using the intrinsic value method. This method requires that compensation expense
be recognized to the extent that the fair value of the stock exceeds the
exercise price of the option at the grant date. Key's employee stock options
generally have fixed terms and exercise prices that are equal to or greater than
the fair value of Key's common shares at the grant date, so Key generally does
not recognize compensation expense related to stock options.

In September 2002, KeyCorp's Board of Directors approved management's
recommendation to change Key's method of accounting for stock options granted to
eligible employees and directors. Effective January 1, 2003, Key will adopt the
fair value method of accounting as outlined in SFAS No. 123, "Accounting for
Stock-Based Compensation." Additional information pertaining to this accounting
change is summarized under the heading "Accounting Pronouncements Pending
Adoption" on page 62.

SFAS No. 123 requires companies like Key that use the intrinsic value method to
account for employee stock options to provide pro forma disclosures of the net
income and earnings per share effect of stock options using the fair value
method. Management estimates the fair value of options granted using the
Black-Scholes option-pricing model. This model was originally developed to
estimate the fair value of exchange-traded equity options, which (unlike
employee stock options) have no vesting period or transferability restrictions.
As a result, the Black-Scholes model is not a perfect indicator of the value of
an option, but it is commonly used for this purpose.

The Black-Scholes model requires several assumptions, which management developed
based on historical trends and current market observations. These assumptions
include:

- -   an average option life of 4.1 years in 2002, 3.9 years in 2001 and 4.7 years
    in 2000;

- -   a future dividend yield of 4.84% in 2002, 4.22% in 2001 and 5.83% in 2000;

- -   share price volatility of .264 in 2002, .330 in 2001 and .267 in 2000; and

- -   a weighted average risk-free interest rate of 3.9% in 2002, 5.0% in 2001 and
    6.6% in 2000.

The level of accuracy achieved in deriving the estimated fair values is directly
related to the accuracy of the underlying assumptions.

                                                                              61

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

The model assumes that the estimated fair value of an option is amortized over
the option's vesting period and would be included in personnel expense on the
income statement. The pro forma effect of applying the fair value method of
accounting for the years shown in the following table may not be indicative of
the effect in future years.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions, except per share amounts                                                      2002         2001         2000
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>          <C>          <C>
Net income                                                                              $      976   $      132   $    1,002
Less: Stock-based employee compensation expense determined
      under fair value method, net of tax                                                       20           25           17
- ----------------------------------------------------------------------------------------------------------------------------
Net income-- pro forma                                                                  $      956   $      107   $      985
                                                                                        ==========   ==========   ==========
Per common share:
   Net income                                                                           $     2.29   $      .31   $     2.32
   Net income--pro forma                                                                      2.25          .25         2.28
   Net income assuming dilution                                                               2.27          .31         2.30
   Net income assuming dilution--pro forma                                                    2.23          .25         2.24
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

MARKETING COSTS

Key expenses all marketing-related costs, including advertising costs, as
incurred.

RESTRUCTURING CHARGES

Key may record restructuring charges in connection with certain events or
transactions, including business combinations, changes in Key's strategic plan,
changes in business conditions that may result in a decrease in or exit from
affected businesses, or other factors. Such charges typically result from
consolidating or relocating operations, or disposing of or abandoning operations
or productive assets. Any of these events could result in a significant
downsizing of the workforce.

To qualify as restructuring charges, costs must be incremental and incurred as a
direct result of a restructuring event or transaction. Restructuring charges do
not include costs that are associated with or incurred to benefit future
periods. Among the costs typically included in restructuring charges are those
related to:

- -   employee severance and termination benefits;

- -   the consolidation of operations facilities; and

- -   losses resulting from the impairment or disposal of assets.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." Additional information pertaining to this new
accounting guidance is summarized under the heading "Accounting Pronouncements
Pending Adoption."

ACCOUNTING PRONOUNCEMENTS ADOPTED IN 2002

ACQUISITIONS OF CERTAIN FINANCIAL INSTITUTIONS. Effective October 1, 2002, Key
adopted SFAS No. 147, "Acquisitions of Certain Financial Institutions." SFAS No.
147 addresses the financial accounting and reporting for the acquisition of all
or part of a financial institution and also provides guidance on the accounting
for the impairment or disposal of acquired long-term customer relationship
intangible assets. The adoption of this standard did not have any effect on
Key's financial condition or results of operations.

EXTINGUISHMENT OF DEBT. Effective April 1, 2002, Key adopted SFAS No. 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13 and Technical Corrections." Under this new standard, gains and losses on
the extinguishment of debt must be recognized as income or loss from continuing
operations rather than extraordinary items. The adoption of this standard did
not have any effect on Key's financial condition or results of operations.

IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS. Effective January 1, 2002, Key
adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." This new standard maintains the previous accounting for the impairment
or disposal of long-lived assets, but imposes more conditions on the
classification of such an asset as "held for sale." SFAS No. 144 also increases
the range of dispositions that qualify for reporting as discontinued operations
and changes the manner in which expected future operating losses from such
operations are to be reported. The adoption of this standard did not have any
effect on Key's financial condition or results of operations.

GOODWILL AND OTHER INTANGIBLE ASSETS. Effective January 1, 2002, Key adopted
SFAS No. 142, "Goodwill and Other Intangible Assets." Additional information
pertaining to this new accounting guidance is summarized under the heading
"Goodwill and Other Intangible Assets" on page 59.

ACCOUNTING PRONOUNCEMENTS PENDING ADOPTION

CONSOLIDATION OF VARIABLE INTEREST ENTITIES. In January 2003, the FASB issued
Interpretation No. 46, "Consolidation of Variable Interest Entities," which
significantly changes how Key and other companies determine when to consolidate
other entities. Under this guidance, entities are classified as either voting
interest entities or variable interest entities ("VIEs"). A voting interest
entity is evaluated for consolidation under existing accounting standards, which
focus on the equity owner with voting control, while a VIE is consolidated by
its primary beneficiary. The primary beneficiary is the party that holds
variable interests that expose it to a majority of the entity's expected losses
and/or residual returns. Variable interests include equity interests,
subordinated debt, derivative

62

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

contracts, leases, service agreements, guarantees, standby letters of credit,
loan commitments and other instruments.

Interpretation No. 46 was effective immediately for entities created or obtained
after January 31, 2003, and applies to previously existing entities in quarters
beginning after June 15, 2003. It requires additional disclosures by primary
beneficiaries and other significant variable interest holders. Management is
currently evaluating Key's involvement with entities created before February 1,
2003, to identify those that must be consolidated or only disclosed in
accordance with this guidance. The most significant impact of this new guidance
will be on Key's balance sheet since consolidating additional entities will
increase assets and liabilities and change leverage and capital ratios, as well
as asset concentrations. Additional information is summarized in Note 8 ("Loan
Securitizations and Variable Interest Entities"), which begins on page 70 and in
Note 19 ("Commitments, Contingent Liabilities and Guarantees"), which begins on
page 81.

ACCOUNTING FOR AND DISCLOSURE OF GUARANTEES. In November 2002, the FASB issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others." This
Interpretation requires a guarantor to recognize, at the inception of a
guarantee, a liability for the fair value of obligations undertaken. The
liability that must be recognized is specifically related to the obligation to
stand ready to perform over the term of the guarantee. The initial recognition
and measurement provisions of this guidance are effective on a prospective basis
for guarantees issued or modified on or after January 1, 2003.

This new accounting guidance also expands the disclosures that a guarantor must
make about its obligations under certain guarantees. These disclosure
requirements are effective for financial statements of interim or annual periods
ending after October 15, 2002. The required disclosures for Key are provided in
Note 19 ("Commitments, Contingent Liabilities and Guarantees"), which begins on
page 81.

Management expects that the adoption of Interpretation No. 45 will not have any
material effect on Key's financial condition or results of operations.

COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES. In July 2002, the FASB issued
SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities." This new standard is effective for exit or disposal activities
(e.g., activities related to ceasing a line of business, relocating operations,
etc.) initiated after December 31, 2002. SFAS No. 146 substantially changes the
rules for recognizing costs, such as lease or other contract termination costs
and one-time employee termination benefits associated with exit or disposal
activities arising from corporate restructurings. Generally, these costs must be
recognized when incurred. Previously, those costs could be recognized earlier,
for example, when a company committed to an exit or disposal plan. Key will
adopt SFAS No. 146 for restructuring activities initiated on or after January 1,
2003. Management expects that the adoption of SFAS No. 146 will not
significantly affect Key's financial condition or results of operations.

ASSET RETIREMENT OBLIGATIONS. In August 2001, the FASB issued SFAS No. 143,
"Accounting for Asset Retirement Obligations." The new standard takes effect for
fiscal years beginning after June 15, 2002. SFAS No. 143 addresses the
accounting for legal obligations associated with the retirement of tangible
long-lived assets and requires a liability to be recognized for the fair value
of these obligations in the period they are incurred. Related costs are
capitalized as part of the carrying amounts of the assets to be retired and are
amortized over the assets' useful lives. Key will adopt SFAS No. 143 as of
January 1, 2003. Management has determined that the adoption of this accounting
guidance will not affect Key's financial condition or results of operations.

ACCOUNTING FOR STOCK COMPENSATION. Under SFAS No. 123, "Accounting for
Stock-Based Compensation," companies may either recognize the compensation cost
associated with stock options as expense over the respective vesting periods or
disclose the pro forma impact on earnings in their audited financial statements.
Key has historically followed the latter approach, but in September 2002,
KeyCorp's Board of Directors approved management's recommendation to recognize
the compensation cost for stock options. Effective January 1, 2003, Key will
adopt the fair value method of accounting as outlined in SFAS No. 123.
Management intends to apply the change in accounting prospectively (prospective
method) to all awards as permitted under the transition provisions in SFAS No.
148, "Accounting for Stock-Based Compensation Transition and Disclosure," which
was issued in December 2002. SFAS No. 148 amends SFAS No. 123 to provide
alternative methods of transition for an entity that voluntarily changes to the
fair value method of accounting for stock compensation. These alternative
methods include the: (i) prospective method; (ii) modified prospective method;
and, (iii) retroactive restatement method. This accounting guidance also amends
the disclosure requirements of SFAS No. 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock compensation and the effect of the method used on reported financial
results. The required disclosures for Key are provided under the heading
"Employee Stock Options" on page 61 and in Note 15 ("Stock Options"), which
begins on page 77.

Based on the valuation and timing of options granted in 2002 and projected to be
granted in 2003, management estimates that the accounting change will reduce
Key's diluted earnings per common share by up to $.04 in 2003. The effect on
Key's earnings per common share in subsequent years will depend on the number
and timing of options granted and the assumptions used to estimate their fair
value.

                                                                              63

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

                          2. EARNINGS PER COMMON SHARE

Key calculates its basic and diluted earnings per common share as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
dollars in millions, except per share amounts                                              2002         2001         2000
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>          <C>          <C>
EARNINGS
Income before cumulative effect of accounting changes                                   $      976   $      157   $    1,002
Net income                                                                                     976          132        1,002
- ----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES
Weighted average common shares outstanding (000)                                           425,451      424,275      432,617
Effect of dilutive common stock options (000)                                                5,252        5,298        2,956
- ----------------------------------------------------------------------------------------------------------------------------
Weighted average common shares and potential
   common shares outstanding (000)                                                         430,703      429,573      435,573
                                                                                        ==========   ==========   ==========
- ----------------------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE
Income per common share before cumulative effect of accounting changes                  $     2.29   $      .37   $     2.32
Net income per common share                                                                   2.29          .31         2.32
Income per common share before cumulative effect of accounting changes--
   assuming dilution                                                                          2.27          .37         2.30
Net income per common share-- assuming dilution                                               2.27          .31         2.30
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                        3. ACQUISITIONS AND DIVESTITURES

Key completed the following acquisitions and divestitures during the past three
years.

ACQUISITIONS

UNION BANKSHARES, LTD.

On December 12, 2002, Key purchased Union Bankshares, Ltd., the holding company
for Union Bank & Trust, a seven-branch bank headquartered in Denver, Colorado.
Key paid $22.63 per Union Bankshares common share for a total cash consideration
of $66 million. Goodwill of approximately $34 million and core deposit
intangibles of $13 million were recorded. Union Bankshares, Ltd. had assets of
$475 million at the date of acquisition. On January 17, 2003, Union Bank & Trust
was merged into KBNA.

CONNING ASSET MANAGEMENT

On June 28, 2002, Key purchased substantially all of the mortgage loan and real
estate business of Conning Asset Management, headquartered in Hartford,
Connecticut. Conning's mortgage loan and real estate business originates,
securitizes and services multi-family, retail, industrial and office property
mortgage loans on behalf of pension fund and life insurance company investors.
At the date of acquisition, Conning had net assets of $17 million and serviced
approximately $4 billion in commercial mortgage loans. In accordance with a
confidentiality clause in the purchase agreement, the terms, which are not
material, have not been disclosed.

THE WALLACH COMPANY, INC.

On January 2, 2001, Key purchased The Wallach Company, Inc., an investment
banking firm headquartered in Denver, Colorado. Key paid the purchase price of
approximately $11 million using a combination of cash and 370,830 Key common
shares. Goodwill of approximately $9 million was recorded and, prior to the
adoption of SFAS No. 142, "Goodwill and Other Intangible Assets," on January 1,
2002, was being amortized using the straight-line method over a period of 10
years.

NEWPORT MORTGAGE COMPANY, L.P.

On September 30, 2000, Key purchased certain net assets of Newport Mortgage
Company, L.P., a commercial mortgage company headquartered in Dallas, Texas, for
$22 million in cash. Goodwill of approximately $10 million was recorded and,
prior to the adoption of SFAS No. 142, was being amortized using the
straight-line method over a period of 10 years.

NATIONAL REALTY FUNDING L.C.

On January 31, 2000, Key purchased certain net assets of National Realty Funding
L.C., a commercial finance company headquartered in Kansas City, Missouri, for
$359 million in cash. Goodwill of approximately $10 million was recorded and,
prior to the adoption of SFAS No. 142, was being amortized using the
straight-line method over a period of 15 years.

DIVESTITURES

401(K) RECORDKEEPING BUSINESS

On June 12, 2002, Key sold its 401(k) recordkeeping business. Key recognized a
gain of $3 million ($2 million after tax), which is included in "other income"
on the income statement.

CREDIT CARD PORTFOLIO

On January 31, 2000, Key sold its credit card portfolio of $1.3 billion in
receivables and nearly 600,000 active VISA and MasterCard accounts to Associates
National Bank (Delaware). Key recognized a gain of $332 million ($207 million
after tax), which is included in "gain from sale of credit card portfolio" on
the income statement.

64

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

                           4. LINE OF BUSINESS RESULTS

Key has three major business groups that consist of 10 lines of business:

KEY CONSUMER BANKING

RETAIL BANKING provides individuals with branch-based deposit and investment
products, personal finance services and loans, including residential mortgages,
home equity and various types of installment loans.

SMALL BUSINESS provides businesses that have annual sales revenues of $10
million or less with deposit, investment and credit products, and business
advisory services.

INDIRECT LENDING offers automobile, marine and recreational vehicle (RV) loans
to consumers through dealers, and finances inventory for automobile, marine and
RV dealers. This line of business also provides education loans, insurance and
interest-free payment plans for students and their parents.

NATIONAL HOME EQUITY provides primarily nonprime mortgage and home equity loan
products to individuals. These products originate outside of Key's retail branch
system. This line of business also works with mortgage brokers and home
improvement contractors to provide home equity and home improvement solutions.

KEY CORPORATE FINANCE

CORPORATE BANKING provides financing, cash and investment management and
business advisory services to middle-market companies and large corporations.

NATIONAL COMMERCIAL REAL ESTATE provides construction and interim lending,
permanent debt placements and servicing, and equity and investment banking
services to developers, brokers and owner-investors. This line of business deals
exclusively with nonowner-occupied properties (i.e., generally properties in
which the owner occupies less than 60% of the premises).

NATIONAL EQUIPMENT FINANCE meets the equipment leasing needs of companies
worldwide and provides equipment manufacturers, distributors and resellers with
financing options for their clients. Lease financing receivables and related
revenues are assigned to Corporate Banking or National Commercial Real Estate if
one of those businesses is principally responsible for maintaining the
relationship with the client.

KEY CAPITAL PARTNERS

VICTORY CAPITAL MANAGEMENT manages or gives advice regarding investment
portfolios for a national client base, including corporations, labor unions,
not-for-profit organizations, governments and individuals. These portfolios may
be managed in separate accounts, commingled funds or the Victory family of
mutual funds. This line of business also provides administrative services for
retirement plans.

HIGH NET WORTH offers financial, estate and retirement planning and asset
management services to assist high-net-worth clients with their banking,
brokerage, trust, portfolio management, insurance, charitable giving and related
needs.

CAPITAL MARKETS offers investment banking, capital raising, hedging strategies,
trading and financial strategies to public and privately-held companies,
institutions and government organizations.

OTHER SEGMENTS

Other segments consists primarily of Treasury, Principal Investing and the net
effect of funds transfer pricing.

RECONCILING ITEMS

Total assets included under "Reconciling Items" represent primarily the
unallocated portion of nonearning assets of corporate support functions. Charges
related to the funding of these assets are part of net interest income and are
allocated to the business segments through noninterest expense. Reconciling
Items also include significant items (see note b to the table on pages 66 and
67). These items are not allocated to the business segments because they are not
reflective of their normal operations.

The table that spans pages 66 and 67 shows selected financial data for each
major business group for the years ended December 31, 2002, 2001 and 2000. This
table is accompanied by additional supplementary information for each of the
lines of business that comprise these groups. The information was derived from
the internal financial reporting system that management uses to monitor and
manage Key's financial performance. Accounting principles generally accepted in
the United States guide financial accounting, but there is no authoritative
guidance for "management accounting" -- the way management uses its judgment and
experience to make reporting decisions. Consequently, the line of business
results Key reports may not be comparable with results presented by other
companies.

The selected financial data are based on internal accounting policies designed
to compile results on a consistent basis and in a manner that reflects the
underlying economics of the businesses. As such:

- -   Net interest income is determined by assigning a standard cost for funds
    used to assets or a standard credit for funds provided to liabilities based
    on their maturity, prepayment and/or repricing characteristics. The net
    effect of this funds transfer pricing is included in the "Other Segments"
    columns.

- -   Indirect expenses, such as computer servicing costs and corporate overhead,
    are allocated based on assumptions of the extent to which each line actually
    uses the services.

- -   Key's consolidated provision for loan losses is allocated among the lines of
    business based primarily on their actual net charge-offs (excluding those in
    the run-off portfolio discussed on page 43), adjusted for loan growth and
    changes in risk profile. The level of the consolidated provision is based on
    the methodology that management uses to estimate Key's consolidated
    allowance for loan losses. This methodology is described in Note 1 ("Summary
    of Significant Accounting Policies") under the heading "Allowance for Loan
    Losses" on page 58.

- -   Income taxes are allocated based on the statutory federal income tax rate of
    35% (adjusted for tax-exempt interest income, income from corporate-owned
    life insurance and tax credits associated with investments in low-income
    housing projects) and a blended state income tax rate (net of the federal
    income tax benefit) of 2%.

                                                                              65

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                   KEY CONSUMER BANKING                      KEY CORPORATE FINANCE
                                                ---------------------------------------    --------------------------------------
dollars in millions                                2002          2001           2000          2002          2001          2000
- ---------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>            <C>           <C>           <C>           <C>
SUMMARY OF OPERATIONS
Net interest income (TE)                        $    1,805    $    1,818     $    1,757    $    1,123    $    1,092    $    1,011
Noninterest income                                     497           482            475           238           259           253
- ---------------------------------------------------------------------------------------------------------------------------------
Total revenue (TE)(a)                                2,302         2,300          2,232         1,361         1,351         1,264
Provision for loan losses                              303           300            281           236           140           125
Depreciation and amortization expense                  137           216            224            39            64            62
Other noninterest expense                            1,187         1,150          1,132           456           453           435
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (TE)and
   cumulative effect of accounting changes             675           634            595           630           694           642
Allocated income taxes and TE adjustments              253           252            239           236           265           246
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect
   of accounting changes                               422           382            356           394           429           396
   Cumulative effect of accounting changes              --           (24)            --            --            --            --
- ---------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                               $      422    $      358     $      356    $      394    $      429    $      396
                                                ==========    ==========     ==========    ==========    ==========    ==========
Percent of consolidated net income                      43%          271%            36%           41%          325%           39%
Percent of total segments net income                    44            40             37            41            48            42
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES
Loans                                           $   27,806    $   27,673     $   26,690    $   29,278    $   31,098    $   30,592
Total assets(a)                                     29,970        30,398         29,637        30,568        32,593        32,086
Deposits                                            33,942        35,221         35,370         3,384         3,093         2,815
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA
Expenditures for additions to long-lived
   assets(a)                                    $       74    $       51     $       48    $       14    $       19    $       24
Net loan charge-offs                                   303           350            281           462           305           126
Return on average allocated equity                   21.14%        16.13%         14.64%        14.12%        15.42%        15.06%
Full-time equivalent employees                       8,299         8,523          8,769         1,789         1,770         2,034
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                   KEY CAPITAL PARTNERS
                                                --------------------------------------
dollars in millions                                2002          2001          2000
- --------------------------------------------------------------------------------------
<S>                                             <C>           <C>           <C>
SUMMARY OF OPERATIONS
Net interest income (TE)                        $      235    $      216    $      214
Noninterest income                                     874           943           974
- --------------------------------------------------------------------------------------
Total revenue (TE)(a)                                1,109         1,159         1,188
Provision for loan losses                               14            13             4
Depreciation and amortization expense                   53            97            93
Other noninterest expense                              793           829           851
- --------------------------------------------------------------------------------------
Income (loss) before income taxes (TE)and
   cumulative effect of accounting changes             249           220           240
Allocated income taxes and TE adjustments               93            91            98
- --------------------------------------------------------------------------------------
Income (loss) before cumulative effect
   of accounting changes                               156           129           142
   Cumulative effect of accounting changes              --            --            --
- --------------------------------------------------------------------------------------
Net income (loss)                               $      156    $      129    $      142
                                                ==========    ==========    ==========
Percent of consolidated net income                      16%           98%           14%
Percent of total segments net income                    16            14            15
- --------------------------------------------------------------------------------------
AVERAGE BALANCES
Loans                                           $    4,904    $    5,266    $    5,439
Total assets(a)                                      8,382         8,965         8,994
Deposits                                             3,924         3,679         3,480
- --------------------------------------------------------------------------------------
OTHER FINANCIAL DATA
Expenditures for additions to long-lived
   assets(a)                                    $       11    $       18    $       21
Net loan charge-offs                                    14            13             4
Return on average allocated equity                   16.25%        12.33%        12.49%
Full-time equivalent employees                       3,474         3,749         3,916
- --------------------------------------------------------------------------------------
</TABLE>

(a) Substantially all revenue generated by Key's major business groups is
    derived from clients resident in the United States. Substantially all
    long-lived assets, including premises and equipment, capitalized software
    and goodwill, held by Key's major business groups are located in the United
    States.

(b) Significant items included under Reconciling Items are as follows:

    Year ended December 31, 2001:

    -   Noninterest income includes a $40 million ($25 million after tax) charge
        taken to establish a reserve for losses incurred on the residual values
        of leased vehicles and a $15 million ($9 million after tax) increase in
        the reserve for customer derivative losses.

    -   The provision for loan losses includes an additional $400 million ($252
        million after tax) taken to increase the allowance for loan losses for
        Key's continuing loan portfolio and an additional $490 million ($309
        million after tax) recorded primarily in connection with Key's decision
        to discontinue certain credit-only commercial relationships.

    -   Depreciation and amortization expense includes a goodwill write-down of
        $150 million associated with the downsizing of the automobile finance
        business, and other noninterest expense includes charges of $20 million
        ($13 million after tax) taken to establish additional litigation
        reserves.

    Year ended December 31, 2000:

    -   Noninterest income includes a gain of $332 million ($207 million after
        tax) from the sale of Key's credit card portfolio.

    -   The provision for loan losses includes an additional $121 million ($76
        million after tax) recorded in connection with the implementation of an
        enhanced methodology for assessing credit risk, particularly in the
        commercial loan portfolio.

    -   Noninterest expense includes $127 million ($80 million after tax),
        primarily restructuring charges, recorded in connection with strategic
        actions taken to improve Key's operating efficiency and profitability.

TE = Taxable Equivalent, N/A = Not Applicable, N/M = Not Meaningful

- -   Capital is assigned based on management's assessment of economic risk
    factors (primarily credit, operating and market risk).

Developing and applying the methodologies that management uses to allocate items
among Key's lines of business is a dynamic process. Accordingly, financial
results may be revised periodically to reflect accounting enhancements, changes
in the risk profile of a particular business or changes in Key's organization
structure. The financial data reported for all periods presented in the
tables reflect a number of changes, which occurred during 2002:

- -   The Small Business line of business moved from Key Corporate Finance to Key
    Consumer Banking.

- -   Methodologies used to allocate certain overhead costs, management fees and
    funding costs were refined.

- -   In previous years, noninterest income and expense attributable to Key
    Capital Partners was assigned to the other business groups if one of those
    groups was principally responsible for maintaining the relationship with the
    client that used Key Capital Partners' products and services. That revenue
    and expense sharing has been discontinued.

- -   The methodology used to assign a provision for loan losses to each line of
    business was changed from one based on the credit quality expectations
    within each line over a normal business cycle to one based primarily upon
    actual net charge-offs (excluding those in the run-off portfolio), adjusted
    for loan growth and changes in risk profile.

66

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

<TABLE>
<CAPTION>
             OTHER SEGMENTS                              TOTAL SEGMENTS
- -----------------------------------------  -----------------------------------------
   2002           2001           2000           2002          2001           2000
- ------------------------------------------------------------------------------------
<S>            <C>            <C>            <C>           <C>            <C>
$     (194)    $     (139)    $      (85)    $    2,969    $    2,987     $    2,897
       118             66            142          1,727         1,750          1,844
- ------------------------------------------------------------------------------------
       (76)           (73)            57          4,696         4,737          4,741
         1              5              3            554           458            413
        --              1              1            229           378            380
        24             23             30          2,460         2,455          2,448
- ------------------------------------------------------------------------------------
      (101)          (102)            23          1,453         1,446          1,500
       (81)           (83)           (35)           501           525            548
- ------------------------------------------------------------------------------------
       (20)           (19)            58            952           921            952
        --             (1)            --             --           (25)            --
- ------------------------------------------------------------------------------------
$      (20)    $      (20)    $       58     $      952    $      896     $      952
==========     ==========     ==========     ==========    ==========     ==========
        (2)%          (15)%            6%            98%          679%            95%
        (1)            (2)             6            100           100            100
- ------------------------------------------------------------------------------------
$    1,262     $    1,833     $    2,280     $   63,250    $   65,870     $   65,001
    11,210         11,585         11,511         80,130        83,541         82,228
     3,606          3,492          3,773         44,856        45,485         45,438
- ------------------------------------------------------------------------------------
        --             --             --     $       99    $       88     $       93
$        1     $        5     $        3            780           673            414
       N/M            N/M            N/M          15.52%        13.72%         14.44%
        35             31             36         13,597        14,073         14,755
- ------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
            RECONCILING ITEMS(B)                              KEY
- -----------------------------------------  -----------------------------------------
   2002           2001           2000           2002          2001           2000
- ------------------------------------------------------------------------------------
<S>            <C>            <C>            <C>           <C>            <C>
$     (100)    $     (117)    $     (139)    $    2,869    $    2,870     $    2,758
        42            (25)           350          1,769         1,725          2,194
- ------------------------------------------------------------------------------------
       (58)          (142)           211          4,638         4,595          4,952
        (1)           892             77            553         1,350            490
         1            152              2            230           530            382
       (37)           (44)            87          2,423         2,411          2,535
- ------------------------------------------------------------------------------------
       (21)        (1,142)            45          1,432           304          1,545
       (45)          (378)            (5)           456           147            543
- ------------------------------------------------------------------------------------
        24           (764)            50            976           157          1,002
        --             --             --             --           (25)            --
- ------------------------------------------------------------------------------------
$       24     $     (764)    $       50     $      976    $      132     $    1,002
==========     ==========     ==========     ==========    ==========     ==========
         2%          (579)%            5%           100%          100%           100%
       N/A            N/A            N/A            N/A           N/A            N/A
- ------------------------------------------------------------------------------------
$      143     $      106     $      293     $   63,393    $   65,976     $   65,294
     1,651          1,362          1,807         81,781        84,903         84,035
       (75)           (30)            (3)        44,781        45,455         45,435
- ------------------------------------------------------------------------------------
$       95     $      111     $      107     $      194    $      199     $      200
        --             --             --            780           673            414
       N/M            N/M            N/M          14.96%         2.01%         15.39%
     6,840          7,157          7,387         20,437        21,230         22,142
- ------------------------------------------------------------------------------------
</TABLE>

SUPPLEMENTARY INFORMATION (KEY CONSUMER BANKING LINES OF BUSINESS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                 RETAIL BANKING                          SMALL BUSINESS
                                           -------------------------------------     --------------------------------------
dollars in millions                           2002          2001          2000          2002          2001          2000
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>           <C>           <C>           <C>           <C>
Total revenue (taxable equivalent)         $    1,301    $    1,324    $    1,304    $      398    $      391    $      367
Provision for loan losses                          71            62           124            60            44            33
Noninterest expense                               814           855           872           170           179           170
Net income                                        260           247           185           105           104           101
Average loans                                   8,784         7,675         7,654         4,272         4,409         4,065
Average deposits                               29,890        31,486        31,615         3,723         3,555         3,613
Net loan charge-offs                               71            62           124            60            44            33
Return on average allocated equity              46.93%        42.15%        27.13%        32.92%        30.59%        31.08%
Full-time equivalent employees                  6,053         6,191         6,606           295           258           253
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                INDIRECT LENDING                       NATIONAL HOME EQUITY
                                           --------------------------------------    ---------------------------------------
dollars in millions                           2002          2001          2000          2002          2001           2000
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>           <C>           <C>           <C>            <C>
Total revenue (taxable equivalent)         $      355    $      401    $      425    $      248    $      184     $      136
Provision for loan losses                         132           158           115            40            36              9
Noninterest expense                               175           187           182           165           145            132
Net income                                         30            10            76            27            (3)            (6)
Average loans                                   9,630        10,949        11,895         5,120         4,640          3,076
Average deposits                                  317           171           138            12             9              4
Net loan charge-offs                              132           158           115            40            86              9
Return on average allocated equity               4.52%         1.17%         7.60%         5.87%         (.68)%        (1.42)%
Full-time equivalent employees                    747           776           829         1,204         1,298          1,081
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

SUPPLEMENTARY INFORMATION (KEY CORPORATE FINANCE LINES OF BUSINESS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                               CORPORATE BANKING                  NATIONAL COMMERCIAL REAL ESTATE
                                           -------------------------------------     --------------------------------------
dollars in millions                            2002         2001           2000         2002          2001          2000
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>           <C>           <C>           <C>           <C>
Total revenue (taxable equivalent)         $      738    $      787    $      773    $      390    $      377    $      316
Provision for loan losses                         167            98           112             7            10             2
Noninterest expense                               283           313           327           131           118            98
Net income                                        179           233           207           158           155           135
Average loans                                  15,687        17,945        18,454         7,782         7,931         7,227
Average deposits                                2,776         2,561         2,478           599           525           328
Net loan charge-offs                              393           239           113             7            10             2
Return on average allocated equity              10.86%        14.26%        12.71%        21.88%        21.15%        24.19%
Full-time equivalent employees                    569           650           866           614           499           493
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                            NATIONAL EQUIPMENT FINANCE
                                           -------------------------------------
dollars in millions                           2002          2001          2000
- ---------------------------------------------------------------------------------
<S>                                        <C>           <C>           <C>
Total revenue (taxable equivalent)         $      233    $      187    $      175
Provision for loan losses                          62            32            11
Noninterest expense                                81            86            72
Net income                                         57            41            54
Average loans                                   5,809         5,222         4,911
Average deposits                                    9             7             9
Net loan charge-offs                               62            56            11
Return on average allocated equity              13.57%         9.86%        12.22%
Full-time equivalent employees                    606           621           675
- ---------------------------------------------------------------------------------
</TABLE>

                                                                              67

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

SUPPLEMENTARY INFORMATION (KEY CAPITAL PARTNERS LINES OF BUSINESS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                          VICTORY CAPITAL MANAGEMENT                    HIGH NET WORTH
                                           --------------------------------------    -------------------------------------
dollars in millions                            2002          2001          2000         2002         2001          2000
- --------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>           <C>           <C>          <C>           <C>
Total revenue (taxable equivalent)         $      205    $      227    $      235    $      583   $      619    $      652
Provision for loan losses                          --            --            --            14           13             4
Noninterest expense                               146           164           169           473          521           533
Net income                                         36            38            40            61           50            69
Average loans                                      13            26            29         4,204        4,633         4,825
Average deposits                                   59            75            85         2,246        2,067         1,896
Net loan charge-offs                               --            --            --            14           13             4
Return on average allocated equity              30.51%        28.57%        27.03%        13.47%        9.84%        12.34%
Full-time equivalent employees                    429           579           623         2,347        2,483         2,586
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                CAPITAL MARKETS
                                           -------------------------------------
dollars in millions                           2002         2001          2000
- --------------------------------------------------------------------------------
<S>                                        <C>          <C>           <C>
Total revenue (taxable equivalent)         $      321   $      313    $      301
Provision for loan losses                          --           --            --
Noninterest expense                               227          241           242
Net income                                         59           41            33
Average loans                                     687          607           585
Average deposits                                1,619        1,537         1,499
Net loan charge-offs                               --           --            --
Return on average allocated equity              15.17%       10.12%         7.67%
Full-time equivalent employees                    698          687           707
- --------------------------------------------------------------------------------
</TABLE>

           5. RESTRICTIONS ON CASH, DIVIDENDS AND LENDING ACTIVITIES

Federal law requires depository institutions to maintain a prescribed amount of
cash or noninterest-bearing balances with the Federal Reserve Bank. KeyCorp's
bank subsidiaries maintained average reserve balances aggregating $336
million in 2002 to fulfill these requirements.

KeyCorp's principal source of cash flow to pay dividends on its common shares,
to service its debt and to finance its corporate operations is capital
distributions from KBNA and its other subsidiaries. Federal banking law limits
the amount of capital distributions that national banks can make to their
holding companies without obtaining prior regulatory approval. A national bank's
dividend paying capacity is affected by several factors, including the amount of
its net profits (as defined by statute) for the two previous calendar years, and
net profits for the current year up to the date of dividend declaration. Due to
this constraint, and the restructuring charges taken by KBNA and Key Bank USA in
2001, as of January 1, 2003, neither bank could pay dividends or make other
capital distributions to KeyCorp without prior regulatory approval.

In February 2003, KBNA obtained regulatory approval to make capital
distributions to KeyCorp of up to $365 million in the aggregate in the first and
second quarters. If KBNA were to distribute such amount, it would not have any
further dividend paying capacity until it accumulates at least $300 million of
additional net profits in 2003. Management expects this will occur during the
second quarter. Management also expects Key Bank USA to have restored dividend
paying capacity during the first quarter.

Assuming KBNA had distributed the $365 million to KeyCorp as of February 15,
2003, as of that date, KeyCorp would have had approximately $1.5 billion of cash
or short-term investments available to pay dividends on its common shares, to
service its debt and to finance its corporate operations. Management does not
expect current constraints on the subsidiary banks to pay dividends to KeyCorp
to have any material effect on the ability of KeyCorp to pay dividends to its
shareholders, to service its debt or to meet its other obligations.

Federal law also restricts loans and advances from bank subsidiaries to their
parent companies (and to nonbank subsidiaries of their parent companies), and
requires those transactions to be secured.

                                 6. SECURITIES

The amortized cost, unrealized gains and losses, and approximate fair value of
Key's investment securities, securities available for sale and other investments
were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,                                                      2002
                                           -------------------------------------------------
                                                           GROSS        GROSS
                                            AMORTIZED    UNREALIZED   UNREALIZED    FAIR
in millions                                   COST         GAINS        LOSSES      VALUE
- --------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>          <C>
INVESTMENT SECURITIES
States and political subdivisions          $      120   $        9           --   $      129
- --------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE
U.S. Treasury, agencies and corporations   $       22   $        1           --   $       23
States and political subdivisions                  35           --           --           35
Collateralized mortgage obligations             7,143          129   $       65        7,207
Other mortgage-backed securities                  815           37           --          852
Retained interests in securitizations             166           43           --          209
Other securities                                  208           --           27          181
- --------------------------------------------------------------------------------------------
   Total securities available for sale     $    8,389   $      210   $       92   $    8,507
                                           ==========   ==========   ==========   ==========
- --------------------------------------------------------------------------------------------
OTHER INVESTMENTS
Principal investments                      $      702   $       36   $       61   $      677
Other securities                                  242           --           --          242
- --------------------------------------------------------------------------------------------
   Total other investments                 $      944   $       36   $       61   $      919
                                           ==========   ==========   ==========   ==========
- --------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,                                                      2001
                                           -------------------------------------------------
                                                           GROSS        GROSS
                                            AMORTIZED   UNREALIZED   UNREALIZED      FAIR
in millions                                    COST       GAINS        LOSSES       VALUE
- --------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>          <C>
INVESTMENT SECURITIES
States and political subdivisions          $      225   $        9           --   $      234
- --------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE
U.S. Treasury, agencies and corporations   $       99           --           --   $       99
States and political subdivisions                  21           --           --           21
Collateralized mortgage obligations             3,791   $       86   $       72        3,805
Other mortgage-backed securities                1,008           24           --        1,032
Retained interests in securitizations             214           20           --          234
Other securities                                  232            1           16          217
- --------------------------------------------------------------------------------------------
   Total securities available for sale     $    5,365   $      131   $       88   $    5,408
                                           ==========   ==========   ==========   ==========
- --------------------------------------------------------------------------------------------
OTHER INVESTMENTS
Principal investments                      $      699           --   $       78   $      621
Other securities                                  211           --           --          211
- --------------------------------------------------------------------------------------------
   Total other investments                 $      910           --   $       78   $      832
                                           ==========   ==========   ==========   ==========
- --------------------------------------------------------------------------------------------
</TABLE>

68

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

When Key retains an interest in loans it securitizes, it bears risk that the
loans will be prepaid (which would reduce expected interest income) or not paid
at all. Key accounts for these retained interests (which include both
certificated and uncertificated interests) as debt securities, classifying them
as available for sale or as trading account assets.

"Other securities" held in the available for sale portfolio primarily are
marketable equity securities, including an internally managed portfolio of bank
common stock investments. "Other securities" held in the other investments
portfolio are equity securities that do not have readily determinable fair
values.

Realized gains and losses related to securities available for sale were as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                          2002        2001        2000
- ------------------------------------------------------------------
<S>                                  <C>         <C>         <C>
Realized gains                       $ 34        $ 40        $ 59
Realized losses                        28           5          87
- ------------------------------------------------------------------
  Net securities gains (losses)      $  6        $ 35        $(28)
                                     ====        ====        ====
- ------------------------------------------------------------------
</TABLE>

At December 31, 2002, securities available for sale and investment securities
with an aggregate amortized cost of approximately $6.0 billion were pledged to
secure public and trust deposits, securities sold under repurchase agreements,
and for other purposes required or permitted by law.

The following table shows securities available for sale and investment
securities by remaining contractual maturity. Included in securities available
for sale are collateralized mortgage obligations, other mortgage- backed
securities and retained interests in securitizations. All of these securities
are presented based on their expected average lives. Other investments do not
have stated maturities and are not included in the table.

<TABLE>
<CAPTION>
                                         SECURITIES               INVESTMENT
                                     AVAILABLE FOR SALE           SECURITIES
                                     -------------------     -------------------
DECEMBER 31, 2002                    AMORTIZED     FAIR      AMORTIZED     FAIR
in millions                            COST        VALUE       COST        VALUE
- --------------------------------------------------------------------------------
<S>                                  <C>          <C>        <C>          <C>
Due in one year or less               $  861      $  874      $   32      $   32
Due after one through five years       6,718       6,889          69          76
Due after five through ten years         234         218          18          20
Due after ten years                      576         526           1           1
- --------------------------------------------------------------------------------
    Total                             $8,389      $8,507      $  120      $  129
                                      ======      ======      ======      ======
- -------------------------------------------------------------------------------=
</TABLE>

                                    7. LOANS

Key's loans by category are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
in millions                                     2002            2001
- ----------------------------------------------------------------------
<S>                                          <C>             <C>
Commercial, financial and agricultural       $  17,425       $  18,159
Commercial real estate:
  Commercial mortgage                            6,015           6,669
  Construction                                   5,659           5,878
- ----------------------------------------------------------------------
    Total commercial real estate loans          11,674          12,547
Commercial lease financing                       7,513           7,357
- ----------------------------------------------------------------------
    Total commercial loans                      36,612          38,063
Real estate--residential mortgage                1,968           2,315
Home equity                                     13,804          11,184
Consumer--direct                                 2,161           2,342
Consumer--indirect:
  Automobile lease financing                       873           2,036
  Automobile loans                               2,181           2,497
  Marine                                         2,088           1,780
  Other                                            667           1,036
- ----------------------------------------------------------------------
    Total consumer--indirect loans               5,809           7,349
- ----------------------------------------------------------------------
    Total consumer loans                        23,742          23,190
Loans held for sale:
  Commercial, financial and agricultural            41              --
  Real estate--commercial mortgage                 193             252
  Real estate--residential mortgage                 57             116
  Education                                      1,812           1,688
- ----------------------------------------------------------------------
    Total loans held for sale                    2,103           2,056
- ----------------------------------------------------------------------
    Total loans                              $  62,457       $  63,309
                                             =========       =========
- ----------------------------------------------------------------------
</TABLE>

Key uses interest rate swaps to manage interest rate risk; these swaps modify
the repricing and maturity characteristics of certain loans. For more
information about such swaps at December 31, 2002, see Note 20 ("Derivatives and
Hedging Activities"), which begins on page 84.

Commercial and consumer lease financing receivables in the preceding table
primarily are direct financing leases, but also include leveraged leases and
operating leases. The composition of the net investment in direct financing
leases is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
in millions                                           2002          2001
- --------------------------------------------------------------------------
<S>                                                 <C>            <C>
Direct financing lease receivable                   $ 5,384        $ 6,785
Unearned income                                        (639)          (888)
Unguaranteed residual value                             637            716
Deferred fees and costs                                  38             38
- --------------------------------------------------------------------------
    Net investment in direct financing leases       $ 5,420        $ 6,651
                                                    =======        =======
- --------------------------------------------------------------------------
</TABLE>

Minimum future lease payments to be received at December 31, 2002, are as
follows: 2003--$1.0 billion; 2004--$980 million; 2005--$1.1 billion;
2006--$793 million; 2007--$749 million; and all subsequent years--$807
million.

Changes in the allowance for loan losses are summarized as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                                 2002           2001           2000
- -------------------------------------------------------------------------------
<S>                                       <C>            <C>            <C>
Balance at beginning of year              $ 1,677        $ 1,001        $   930
Charge-offs                                  (905)          (784)          (522)
Recoveries                                    125            111            108
- -------------------------------------------------------------------------------
  Net charge-offs                            (780)          (673)          (414)
Provision for loan losses                     553          1,350            490
Allowance related to loans
  acquired (sold), net                          2             (1)            (5)
- -------------------------------------------------------------------------------
  Balance at end of year                  $ 1,452        $ 1,677        $ 1,001
                                          =======        =======        =======
- -------------------------------------------------------------------------------
</TABLE>

                                                                              69

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

             8. LOAN SECURITIZATIONS AND VARIABLE INTEREST ENTITIES

RETAINED INTERESTS IN LOAN SECURITIZATIONS

Key sells certain types of loans in securitizations. A securitization involves
the sale of a pool of loan receivables to investors through either a public or
private issuance of asset-backed securities. Generally, the assets are
transferred to a trust that sells interests in the form of certificates of
ownership. In some cases, Key retains an interest in the securitized loans.
Certain assumptions and estimates are used to determine the fair value allocated
to these retained interests at the date of transfer and at subsequent
measurement dates. These assumptions and estimates include loan repayment rates,
projected charge-offs and discount rates commensurate with the risks involved.
Additional information pertaining to Key's residual interests is disclosed in
Note 1 ("Summary of Significant Accounting Policies") under the heading "Loan
Securitizations" on page 59.

Key securitized and sold $792 million of education loans (including accrued
interest) in 2002 and $523 million in 2001. The securitizations resulted in an
aggregate gain of $7 million in 2002 (from gross cash proceeds of $799 million)
and $11 million in 2001 (from gross cash proceeds of $534 million). In these
transactions, Key retained residual interests in the form of servicing assets
and interest-only strips. During 2002, Key retained servicing assets of $6
million and interest-only strips of $26 million. During 2001, Key retained
servicing assets of $4 million and interest-only strips of $16 million.

Primary economic assumptions used to measure the fair value of Key's retained
interests and the sensitivity of the current fair value of residual cash flows
to immediate adverse changes in those assumptions are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 2002                                                    EDUCATION               HOME EQUITY           AUTOMOBILE
dollars in millions                                                    LOANS                    LOANS                 LOANS
- -----------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                     <C>                      <C>
Carrying amount (fair value) of retained interests                           $209                     $76               $ 8
Weighted-average life (years)                                          1.1 -- 5.3              1.9 -- 2.8                .5
- -----------------------------------------------------------------------------------------------------------------------------

PREPAYMENT SPEED ASSUMPTIONS (ANNUAL RATE)                         7.99% -- 16.32%        23.89% -- 27.10%             1.59%
Impact on fair value of 1% CPR (education and home equity)
  and .10% ABS (automobile) adverse change                                   $ (6)                    $(1)               --
Impact on fair value of 2% CPR (education and home equity)
  and .20% ABS (automobile) adverse change                                    (11)                     (2)               --
- -----------------------------------------------------------------------------------------------------------------------------
EXPECTED CREDIT LOSSES (STATIC RATE)                                 .01% -- 1.58%          1.27% -- 2.59%             5.51%
Impact on fair value of .10% (education)
  and .25% (home equity and automobile) adverse change                       $ (7)                    $(5)              $(1)
Impact on fair value of .20% (education)
  and .50% (home equity and automobile) adverse change                        (14)                     (9)               (2)
- -----------------------------------------------------------------------------------------------------------------------------
RESIDUAL CASH FLOWS DISCOUNT RATE (ANNUAL RATE)                    8.50% -- 12.00%         7.50% -- 10.75%             9.00%
Impact on fair value of 1% adverse change                                    $ (6)                    $(1)               --
Impact on fair value of 2% adverse change                                     (12)                     (2)               --
- -----------------------------------------------------------------------------------------------------------------------------
EXPECTED STATIC DEFAULT (STATIC RATE)                             10.46% -- 16.04%                    N/A               N/A
Impact on fair value of 1% (education loans) adverse change                  $ (8)                    N/A               N/A
Impact on fair value of 2% (education loans) adverse change                   (16)                    N/A               N/A
- -----------------------------------------------------------------------------------------------------------------------------
VARIABLE RETURNS TO TRANSFEREES                                                (a)                     (b)               (c)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

These sensitivities are hypothetical and should be relied upon with caution.
Sensitivity analysis for each asset type is based on the nature of the asset,
the seasoning (i.e., age and payment history) of the portfolio and the results
experienced. Changes in fair value based on a 1% variation in assumptions
generally cannot be extrapolated because the relationship of the change in
assumption to the change in fair value may not be linear. Also, the effect of a
variation in a particular assumption on the fair value of the retained interest
is calculated without changing any other assumption; in reality, changes in one
factor may cause changes in another. For example, increases in market interest
rates may result in lower prepayments and increased credit losses, which might
magnify or counteract the sensitivities.

(a)  Forward London Interbank Offered Rate (known as "LIBOR") plus contractual
     spread over LIBOR ranging from .06% to .75%, or Treasury plus contractual
     spread over Treasury ranging from .65% to 1.00% or fixed rate yield.

(b)  Forward LIBOR plus contractual spread over LIBOR ranging from .23% to .40%,
     or Treasury plus contractual spread over Treasury ranging from 2.40% to
     2.95% or fixed rate yield.

(c)  Fixed rate yield.

CPR = Constant Prepayment Rate, ABS = Absolute Prepayment Speed, N/A = Not
      Applicable

70

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

Information about the components of Key's managed loans (i.e., loans held in
portfolio and securitized loans), as well as related delinquencies and net
credit losses is as follows:

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                             --------------------------------------
                                                                    LOANS PAST DUE    NET CREDIT LOSSES
                                               LOAN PRINCIPAL       60 DAYS OR MORE    DURING THE YEAR
                                             -------------------    ---------------   ------------------
in millions                                    2002        2001     2002       2001    2002        2001
- --------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>        <C>        <C>    <C>          <C>
Education loans                              $ 6,336     $ 5,964    $166       $161   $   19        $ 13
Home equity loans                             14,242      11,925     237        200       58         104
Automobile loans                               2,235       2,628      24         41       84         106
- --------------------------------------------------------------------------------------------------------
   Total loans managed                        22,813      20,517     427        402      161         223

Less:
Loans securitized                              5,016       5,148     209        238       16          20
Loans held for sale or securitization          1,812       1,688      --         --       --          --
- --------------------------------------------------------------------------------------------------------
   Loans held in portfolio                   $15,985     $13,681    $218       $164   $  145        $203
                                             =======     =======    ====       ====   ======        ====
- --------------------------------------------------------------------------------------------------------
</TABLE>

VARIABLE INTEREST ENTITIES

A variable interest entity ("VIE") is a partnership, limited liability company,
trust or other legal entity that is not controlled through a voting equity
interest and/or does not have enough equity at risk invested to finance its
activities without subordinated financial support from another party. FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities," addresses
the consolidation of VIEs. This interpretation is summarized in Note 1 ("Summary
of Significant Accounting Policies") under the heading "Accounting
Pronouncements Pending Adoption" on page 62. Under Interpretation No. 46, VIEs
are consolidated by the party (the primary beneficiary) who is exposed to the
majority of the VIE's expected losses and/or residual returns.

The securitization trusts referred to in the "Retained Interests in Loan
Securitizations" section of this note are VIEs; however, as qualifying special
purpose entities under SFAS 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," they are exempt from
consolidation under Interpretation No. 46.

As required by Interpretation No. 46, Key is assessing its relationships and
arrangements with legal entities formed prior to February 1, 2003, to identify
VIEs in which Key holds a significant variable interest and to determine if Key
is the primary beneficiary of these entities and should therefore consolidate
them.

Based on the review performed to date, it is reasonably possible that Key will
have to consolidate (if primary beneficiary) or only disclose significant
variable interests in the following entities, as currently structured, when
Interpretation No. 46 becomes effective on July 1, 2003.

COMMERCIAL PAPER CONDUITS. Key, among others, refers third party assets and
borrowers and provides liquidity and credit enhancement to an unconsolidated
asset-backed commercial paper conduit. The conduit had assets of $423 million at
December 31, 2002.

In addition, Key holds a subordinated note in and provides referral services and
liquidity to one program, also unconsolidated, within another asset-backed
commercial paper conduit. This program had assets of $79 million at December 31,
2002. These assets are expected to decrease over time since this conduit program
is in the process of being liquidated.

At December 31, 2002, Key's maximum exposure to loss from its interests in these
conduits totaled $79 million, which represents a $68 million committed credit
enhancement facility and an $11 million subordinated note.

Additional information pertaining to Key's involvement with conduits is
summarized in Note 1 ("Summary of Significant Accounting Policies") under the
heading "Basis of Presentation" on page 57 and in Note 19 ("Commitments,
Contingent Liabilities and Guarantees") under the heading "Guarantees" on page
83 and the heading "Other Off-Balance Sheet Risk" on page 84.

LOW-INCOME HOUSING TAX CREDIT ("LIHTC") GUARANTEED FUNDS. Key Affordable Housing
Corporation ("KAHC") forms unconsolidated limited partnerships (funds) which
invest in LIHTC projects. Interests in these funds are offered to qualified
investors, who pay a fee to KAHC for a guaranteed return. Key also earns
syndication and asset management fees from these funds. At December 31, 2002,
the guaranteed funds had unamortized equity of $676 million. Additional
information on the return guaranty agreement with LIHTC investors is summarized
in Note 19 ("Commitments, Contingent Liabilities and Guarantees") under the
heading "Guarantees" on page 83.

Key's maximum exposure to loss from its relationships with the above entities
was $851 million at December 31, 2002, which represents undiscounted future
payments due to investors for the return on and of their investments. KAHC has
established a reserve in the amount of $35 million at December 31, 2002, which
management believes will be sufficient to absorb future estimated losses under
the guarantees.

LIHTC INVESTMENTS. Key makes investments directly in LIHTC projects through the
Retail Banking line of business. As a limited partner in these unconsolidated
projects, Key is allocated tax credits and deductions associated with the
underlying properties. At December 31, 2002, Key's investments in these projects
totaled $298 million. Key has not yet completed its analysis of these entities
under Interpretation No. 46.

                                                                              71

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

COMMERCIAL REAL ESTATE INVESTMENTS. Through the National Commercial Real Estate
line of business, Key provides real estate financing for new construction,
acquisition and rehabilitation projects. In certain of these unconsolidated
projects, Key has provided or committed funds through limited partnership
interests, mezzanine investments or standby letters of credit. At December 31,
2002, these investments and facilities totaled $131 million. Key has not yet
completed its analysis of these investments under Interpretation No. 46.

Key is continuing to evaluate its relationships with, and investments in, these
entities as well as others to assess whether it is reasonably possible that
consolidation or disclosure of significant interests in such entities will be
necessary when the guidance provided under Interpretation No. 46 becomes
effective for existing VIEs on July 1, 2003.

                9. IMPAIRED LOANS AND OTHER NONPERFORMING ASSETS

Impaired loans, which account for the largest portion of Key's nonperforming
assets, totaled $610 million at December 31, 2002, compared with $661 million at
December 31, 2001. Impaired loans averaged $653 million for 2002 and $535
million for 2001.

Key's nonperforming assets were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
in millions                              2002             2001
- --------------------------------------------------------------
<S>                                      <C>              <C>
Impaired loans                           $610             $661
Other nonaccrual loans                    333              249
- --------------------------------------------------------------
   Total nonperforming loans              943              910
Other real estate owned (OREO)             48               38
Allowance for OREO losses                  (3)              (1)
- --------------------------------------------------------------
   OREO, net of allowance                  45               37
Other nonperforming assets                  5               --
- --------------------------------------------------------------
   Total nonperforming assets            $993             $947
                                         ====             ====
- --------------------------------------------------------------
</TABLE>

At December 31, 2002, Key did not have any significant commitments to lend
additional funds to borrowers with loans on nonperforming status.

Key evaluates most impaired loans individually using the process described in
Note 1 ("Summary of Significant Accounting Policies") under the heading
"Allowance for Loan Losses" on page 58. At December 31, 2002, Key had $377
million of impaired loans with a specifically allocated allowance for loan
losses of $179 million, and $233 million of impaired loans that were carried at
their estimated fair value without a specifically allocated allowance. At
December 31, 2001, impaired loans included $417 million of loans with a
specifically allocated allowance of $180 million, and $244 million that were
carried at their estimated fair value.

Key does not perform a specific impairment valuation for smaller-balance,
homogeneous, nonaccrual loans (shown in the preceding table as "Other nonaccrual
loans"). These typically are consumer loans, including residential mortgages,
home equity loans and various types of installment loans. Management applies
historical loss experience rates to these loans, adjusted to reflect emerging
credit trends and other factors, and then allocates a portion of the allowance
for loan losses to each loan type.

The following table shows the amount by which loans classified as nonperforming
at December 31 reduced Key's expected interest income.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                           2002      2001      2000
- --------------------------------------------------------------
<S>                                   <C>       <C>       <C>
Interest income receivable under
      original terms                   $50       $52       $62
Less: Interest income recorded
      during the year                   20        21        25
- --------------------------------------------------------------
Net reduction to interest income       $30       $31       $37
                                       ===       ===       ===
- --------------------------------------------------------------
</TABLE>

                    10. GOODWILL AND OTHER INTANGIBLE ASSETS

Effective January 1, 2002, Key adopted SFAS No. 142, "Goodwill and Other
Intangible Assets," which eliminates the amortization of goodwill and intangible
assets deemed to have indefinite lives. Key's total amortization expense was $11
million for 2002, $245 million for 2001 and $101 million for 2000. Estimated
amortization expense for intangible assets subject to amortization for each of
the next five years is as follows: 2003 -- $12 million; 2004 -- $8 million; 2005
- -- $3 million; 2006 -- $3 million; and 2007 -- $3 million.

72

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

The calculation of Key's net income and earnings per common share, excluding
goodwill amortization, is presented below.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
dollars in millions, except per share amounts                  2002         2001           2000
- -------------------------------------------------------------------------------------------------
<S>                                                          <C>          <C>            <C>
EARNINGS
Net income                                                   $    976     $    132       $  1,002
Add: Goodwill amortization                                         --           82(a)          86
- -------------------------------------------------------------------------------------------------
    Adjusted net income                                      $    976     $    214       $  1,088
                                                             ========     ========       ========
- -------------------------------------------------------------------------------------------------

WEIGHTED AVERAGE COMMON SHARES
Weighted average common shares outstanding (000)              425,451      424,275        432,617
Weighted average common shares and potential
   common shares outstanding (000)                            430,703      429,573        435,573
- -------------------------------------------------------------------------------------------------

EARNINGS PER COMMON SHARE
Net income per common share                                  $   2.29     $    .31       $   2.32
Add: Goodwill amortization                                         --          .19(a)         .20
- -------------------------------------------------------------------------------------------------
   Adjusted net income per common share                      $   2.29     $    .50       $   2.52
                                                             ========     ========       ========
   Adjusted net income per common share--assuming dilution   $   2.27     $    .50       $   2.50
                                                             ========     ========       ========
- -------------------------------------------------------------------------------------------------
</TABLE>


(a)  Goodwill amortization for 2001 excludes a $150 million write-down
     (equivalent to $.35 per both basic and diluted common share) associated
     with Key's decision to downsize the automobile finance business.

The following table shows the gross carrying amount and the accumulated
amortization of intangible assets that are subject to amortization.

<TABLE>
<CAPTION>
DECEMBER 31,                                             2002                                2001
                                              --------------------------------   -------------------------------
                                              GROSS CARRYING      ACCUMULATED    GROSS CARRYING     ACCUMULATED
in millions                                       AMOUNT          AMORTIZATION       AMOUNT         AMORTIZATION
- ----------------------------------------------------------------------------------------------------------------
<S>                                           <C>                 <C>            <C>                <C>
Intangible assets subject to amortization:
      Core deposit intangibles                     $227               $197            $215              $187
      Other intangible assets                        11                  6               9                 6
- ----------------------------------------------------------------------------------------------------------------
           Total                                   $238               $203            $224              $193
                                                   ====               ====            ====              ====
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

During 2002, core deposit intangibles with a fair value of $13 million were
acquired in conjunction with the purchase of Union Bankshares and are being
amortized using the straight-line method over seven years. Additional
information pertaining to this acquisition is discussed in Note 3 ("Acquisitions
and Divestitures") on page 64.

During 2002, Key performed transitional impairment testing of goodwill at
January 1, 2002, that was completed during the first quarter and annual
impairment testing of goodwill at October 1, 2002, that was completed during
the fourth quarter. Both tests determined that no impairment of Key's goodwill
existed at either of those dates.

Additional information pertaining to the new accounting guidance is included in
Note 1 ("Summary of Significant Accounting Policies") under the heading
"Goodwill and Other Intangible Assets" on page 59.

Changes in the carrying amount of goodwill by major business group are as
follows:

<TABLE>
<CAPTION>
                                              KEY CONSUMER   KEY CORPORATE   KEY CAPITAL
in millions                                      BANKING        FINANCE       PARTNERS     TOTAL
- -------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>             <C>           <C>
BALANCE AT DECEMBER 31, 2001                      $446           $202           $455       $1,103
Additional goodwill:
  Union Bankshares acquisition                      34             --             --           34
  Conning Asset Management acquisition              --              5             --            5
- -------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2002                      $480           $207           $455       $1,142
                                                  ====           ====           ====       ======
- -------------------------------------------------------------------------------------------------
</TABLE>

                                                                              73

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

                            11. SHORT-TERM BORROWINGS

Selected financial information pertaining to the components of Key's short-term
borrowings is as follows:

<TABLE>
<CAPTION>
dollars in millions                               2002       2001       2000
- ------------------------------------------------------------------------------
<S>                                              <C>        <C>        <C>
FEDERAL FUNDS PURCHASED
Balance at year end                              $2,147     $2,591      $3,267
Average during the year                           3,984      3,575       2,991
Maximum month-end balance                         5,983      5,034       4,693
Weighted average rate during the year              1.71%      4.00%       6.42%
Weighted average rate at December 31               1.19       1.72        6.68
- ------------------------------------------------------------------------------

SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
Balance at year end                              $1,715     $1,144      $1,669
Average during the year                           1,543      1,622       1,940
Maximum month-end balance                         2,313      1,807       2,447
Weighted average rate during the year              1.49%      3.39%       4.90%
Weighted average rate at December 31               1.26       1.80        6.01
- ------------------------------------------------------------------------------

SHORT-TERM BANK NOTES
Balance at year end                              $  575     $3,748      $4,345
Average during the year                           1,700      4,649       5,021
Maximum month-end balance                         3,048      6,098       6,834
Weighted average rate during the year              1.94%      5.01%       7.35%
Weighted average rate at December 31               2.05       2.16        8.28
- ------------------------------------------------------------------------------

OTHER SHORT-TERM BORROWINGS
Balance at year end                              $2,248     $1,801      $2,612
Average during the year                           1,243      2,179       2,100
Maximum month-end balance                         2,248      2,841       2,326
Weighted average rate during the year              1.29%      2.39%       3.10%
Weighted average rate at December 31                .83       2.18        3.31
- ------------------------------------------------------------------------------
</TABLE>

Key uses interest rate swaps and caps, which modify the repricing and maturity
characteristics of certain short-term borrowings, to manage interest rate risk.
For more information about such financial instruments at December 31, 2002, see
Note 20 ("Derivatives and Hedging Activities"),which begins on page 84.

Key has several programs that support short-term financing needs.

BANK NOTE PROGRAM. This program provides for the issuance of up to $20.0 billion
[$19.0 billion by KeyBank National Association ("KBNA") and $1.0 billion by Key
Bank USA, National Association ("Key Bank USA")] of bank notes with original
maturities ranging from 30 days to 30 years. At December 31, 2002, $18.1 billion
was available for future issuance under this program.

EURO NOTE PROGRAM. KeyCorp, KBNA and Key Bank USA may issue both long- and
short-term debt of up to $10.0 billion to non-U.S. investors. This facility had
$4.2 billion available for future issuance as of December 31, 2002.

KEYCORP MEDIUM-TERM NOTE PROGRAM AND OTHER SECURITIES. KeyCorp has registered
with the Securities and Exchange Commission to provide for the issuance of up to
$2.2 billion of securities, which could include long- or short-term debt, or
equity securities. Of the amount registered, $1.0 billion has been allocated for
the issuance of medium-term notes. At December 31, 2002, unused capacity under
KeyCorp's universal shelf registration statement totaled $1.8 billion, including
$575 million allocated for the issuance of medium-term notes.

COMMERCIAL PAPER AND REVOLVING CREDIT. KeyCorp's commercial paper program and a
revolving credit agreement provide funding availability of up to $500 million
and $400 million, respectively. There were no borrowings outstanding under the
commercial paper program at December 31, 2002. Borrowings outstanding under the
commercial paper program totaled $25 million at December 31, 2001. There were no
borrowings outstanding under the revolving credit agreement at December 31, 2002
and 2001. The revolving credit agreement serves as a back-up facility for the
commercial paper program.

LINE OF CREDIT. KBNA has overnight borrowing capacity at the Federal Reserve
Bank. At December 31, 2002, this capacity was approximately $17.5 billion and
was secured by approximately $22.5 billion of loans, primarily those in the
commercial portfolio. There were no borrowings outstanding under this facility
at December 31, 2002 or 2001.

74

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

                               12. LONG-TERM DEBT

The components of Key's long-term debt, presented net of unamortized discount
where applicable, were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
dollars in millions                                 2002          2001
- -----------------------------------------------------------------------
<S>                                               <C>           <C>
Senior medium-term notes due through 2005(a)      $ 1,445       $ 1,286
Subordinated medium-term notes
  due through 2003(a)                                  45            85
Senior euro medium-term notes
  due through 2003(b)                                  50            50
7.50% Subordinated notes due 2006(c)                  250           250
6.75% Subordinated notes due 2006(c)                  200           200
8.125% Subordinated notes due 2002(c)                  --           200
8.00% Subordinated notes due 2004(c)                  125           125
6.625% Subordinated notes due 2017(c)                  24            --
All other long-term debt(i)                            36            16
- -----------------------------------------------------------------------
  Total parent company(j)                           2,175         2,212

Senior medium-term bank notes
  due through 2039(d)                               3,854         4,525
Senior euro medium-term bank notes
  due through 2007(e)                               4,792         3,989
6.50% Subordinated remarketable notes
  due 2027(f)                                         311           311
6.95% Subordinated notes due 2028(f)                  300           300
7.125% Subordinated notes due 2006(f)                 250           250
7.25% Subordinated notes due 2005(f)                  200           200
6.75% Subordinated notes due 2003(f)                  200           200
7.50% Subordinated notes due 2008(f)                  165           165
7.00% Subordinated notes due 2011(f)                  607           506
7.30% Subordinated notes due 2011(f)                  107           107
7.85% Subordinated notes due 2002(f)                   --            93
7.55% Subordinated notes due 2006(f)                   75            75
7.375% Subordinated notes due 2008(f)                  70            70
5.70% Subordinated notes due 2012(f)                  300            --
5.70% Subordinated notes due 2017(f)                  200            --
Lease financing debt due through 2006(g)              435           519
Federal Home Loan Bank advances
  due through 2033(h)                               1,018           762
All other long-term debt(i)                           546           270
- -----------------------------------------------------------------------
  Total subsidiaries                               13,430        12,342
- -----------------------------------------------------------------------
    Total long-term debt                          $15,605       $14,554
                                                  =======       =======
- -----------------------------------------------------------------------
</TABLE>

Key uses interest rate swaps and caps, which modify the repricing and maturity
characteristics of certain long-term debt, to manage interest rate risk. For
more information about such financial instruments at December 31, 2002, see Note
20 ("Derivatives and Hedging Activities"), which begins on page 84.

(a)  At December 31, 2002, the senior medium-term notes had a weighted average
     interest rate of 2.54%, and the subordinated medium-term notes had a
     weighted average interest rate of 7.30%. At December 31, 2001, the senior
     medium-term notes had a weighted average interest rate of 2.51%, and the
     subordinated medium-term notes had a weighted average interest rate of
     7.42%. These notes had a combination of fixed and floating interest rates.

(b)  Senior euro medium-term notes had a weighted average interest rate of 1.62%
     at December 31, 2002, and 2.33% at December 31, 2001. These notes had a
     floating interest rate based on the three-month LIBOR.

(c)  These notes may not be redeemed or prepaid prior to maturity.

(d)  Senior medium-term bank notes of subsidiaries had weighted average interest
     rates of 2.59% at December 31, 2002, and 2.45% at December 31, 2001. These
     notes had a combination of fixed and floating interest rates.

(e)  Senior euro medium-term notes had weighted average interest rates of 1.79%
     at December 31, 2002, and 2.58% at December 31, 2001. These notes, which
     are obligations of KBNA, had a combination of fixed interest rates and
     floating interest rates based on LIBOR.

(f)  These notes are all obligations of KBNA, with the exception of the 7.55%
     notes, which are obligations of Key Bank USA. None of the subordinated
     notes may be redeemed prior to their maturity dates.

(g)  Lease financing debt had weighted average interest rates of 7.14% at
     December 31, 2002, and 7.41% at December 31, 2001. This category of debt
     consists of primarily nonrecourse debt collateralized by leased equipment
     under operating, direct financing and sales type leases.

(h)  Long-term advances from the Federal Home Loan Bank had weighted average
     interest rates of 1.71% at December 31, 2002, and 2.19% at December 31,
     2001. These advances, which had a combination of fixed and floating
     interest rates, were secured by real estate loans and securities totaling
     $1.4 billion at December 31, 2002, and $1.1 billion at December 31, 2001.

(i)  Other long-term debt, consisting of industrial revenue bonds, capital lease
     obligations, and various secured and unsecured obligations of corporate
     subsidiaries, had weighted average interest rates of 6.29% at December 31,
     2002, and 6.72% at December 31, 2001.

(j)  At December 31, 2002, unused capacity under KeyCorp's universal shelf
     registration statement filed with the Securities and Exchange Commission
     totaled $1.8 billion, including $575 million which was allocated for the
     issuance of medium-term notes.

Scheduled principal payments on long-term debt over the next five years are as
follows:

<TABLE>
<CAPTION>
in millions         PARENT  SUBSIDIARIES   TOTAL
- -------------------------------------------------
<S>                 <C>     <C>            <C>
2003                 $773      $3,657      $4,430
2004                  490       3,112       3,602
2005                  403       1,909       2,312
2006                  450         785       1,235
2007                   --       1,441       1,441
- -------------------------------------------------
</TABLE>

                             13. CAPITAL SECURITIES

KeyCorp has six fully-consolidated subsidiary business trusts that have issued
corporation-obligated mandatorily redeemable preferred capital securities
("capital securities"). These securities are carried as liabilities on Key's
balance sheet. They provide an attractive source of funds since they constitute
Tier I capital for regulatory reporting purposes, but have the same tax
advantages as debt for federal income tax purposes. As guarantor, KeyCorp
unconditionally guarantees payment of:

- -    required distributions on the capital securities;

- -    the redemption price when a capital security is redeemed; and

- -    amounts due if a trust is liquidated or terminated.

KeyCorp owns the outstanding common stock of each of the trusts. The trusts used
the proceeds from the issuance of their capital securities and common stock to
buy debentures issued by their respective parent company: KeyCorp in the case of
the Key trusts, and Union Bankshares, Ltd. in the case of the Union trust. These
debentures are the trusts' only assets; the interest payments from the
debentures finance the distributions paid on the capital securities. Key's
financial statements do not reflect the debentures or the related effects on the
income statement because they are eliminated in consolidation.

                                                                              75

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

The capital securities, common stock and related debentures are summarized as
follows:

<TABLE>
<CAPTION>
                                                                              PRINCIPAL         INTEREST RATE           MATURITY
                                          CAPITAL                             AMOUNT OF           OF CAPITAL           OF CAPITAL
                                         SECURITIES,         COMMON           DEBENTURES,       SECURITIES AND       SECURITIES AND
dollars in millions                   NET OF DISCOUNT(a)     STOCK         NET OF DISCOUNT(b)    DEBENTURES(c)         DEBENTURES
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                    <C>           <C>                  <C>                  <C>
DECEMBER 31, 2002
KeyCorp Institutional Capital A          $  413                 $11             $  361               7.826%               2026
KeyCorp Institutional Capital B             177                   4                154               8.250                2026
KeyCorp Capital I                           230                   8                237               2.546                2028
KeyCorp Capital II                          182                   8                165               6.875                2029
KeyCorp Capital III                         248                   8                208               7.750                2029
Union Bankshares Capital Trust I(d)          10                   1                 11               9.000                2028
- -----------------------------------------------------------------------------------------------------------------------------------
   Total                                 $1,260                 $40             $1,136               6.779%                 --
                                         ======                 ===             ======
- -----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2001                        $1,288                 $39             $1,282               6.824%                 --
                                         ======                 ===             ======
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  The capital securities must be redeemed when the related debentures mature,
     or earlier if provided in the governing indenture. Each issue of capital
     securities carries an interest rate identical to that of the related
     debenture. The capital securities constitute minority interests in the
     equity accounts of KeyCorp's consolidated subsidiaries and, therefore,
     qualify as Tier 1 capital under Federal Reserve Board guidelines. Included
     in certain capital securities at December 31, 2002 and 2001, are basis
     adjustments of $164 million and $45 million, respectively, related to fair
     value hedges. See Note 20 ("Derivatives and Hedging Activities"), which
     begins on page 84, for an explanation of fair value hedges.

(b)  KeyCorp has the right to redeem its debentures: (i) in whole or in part, on
     or after December 1, 2006 (for debentures owned by Capital A), December 15,
     2006 (for debentures owned by Capital B), July 1, 2008 (for debentures
     owned by Capital I), March 18, 1999 (for debentures owned by Capital II),
     July 16, 1999 (for debentures owned by Capital III), and December 17, 2003
     (for debentures owned by Union Bankshares Capital Trust I); and (ii) in
     whole at any time within 90 days after and during the continuation of a
     "tax event" or a "capital treatment event" (as defined in the applicable
     offering circular). If the debentures purchased by Capital A or Capital B
     are redeemed before they mature, the redemption price will be the principal
     amount, plus a premium, plus any accrued but unpaid interest. If the
     debentures purchased by Capital I or Union Bankshares Capital Trust I are
     redeemed before they mature, the redemption price will be the principal
     amount, plus any accrued but unpaid interest. If the debentures purchased
     by Capital II or Capital III are redeemed before they mature, the
     redemption price will be the greater of: (a) the principal amount, plus any
     accrued but unpaid interest or (b) the sum of the present values of
     principal and interest payments discounted at the Treasury Rate (as defined
     in the applicable offering circular), plus 20 basis points (25 basis points
     for Capital III), plus any accrued but unpaid interest. When debentures are
     redeemed in response to tax or capital treatment events, the redemption
     price generally is slightly more favorable to Key.

(c)  The interest rates for Capital A, Capital B, Capital II, Capital III and
     Union Bankshares Capital Trust I are fixed. Capital I has a floating
     interest rate equal to three-month LIBOR plus 74 basis points; it reprices
     quarterly. The rates shown as the total at December 31, 2002 and 2001, are
     weighted average rates.

(d)  On December 12, 2002, KeyCorp acquired Union Bankshares, Ltd., the owner of
     all the common stock of Union Bankshares Capital Trust I and the guarantor
     of all the trust's obligations under its capital securities. On January 16,
     2003, Union Bankshares, Ltd. merged into KeyCorp. As a result of this
     merger, KeyCorp became the owner of the common stock of the trust and the
     guarantor of all the trust's obligations under its capital securities.

During 2002, the subsidiary business trusts repurchased an aggregate $159
million of their outstanding capital securities and KeyCorp repurchased a like
amount of the related debentures. Management intends to replace the capital
securities at some future date with capital securities that will yield a lower
cost.

                            14. SHAREHOLDERS' EQUITY

SHAREHOLDER RIGHTS PLAN

KeyCorp has a shareholder rights plan, which was first adopted in 1989 and has
since been amended. Under the plan, each shareholder received one Right --
representing the right to purchase a common share for $82.50 -- for each KeyCorp
common share owned. All of the Rights expire on May 14, 2007, but KeyCorp may
redeem Rights earlier for $.005 apiece, subject to certain limitations.

Rights will become exercisable if a person or group acquires 15% or more of
KeyCorp's outstanding shares. Until that time, the Rights will trade with the
common shares; any transfer of a common share will also constitute a transfer of
the associated Right. If the Rights become exercisable, they will begin to trade
apart from the common shares. If one of a number of "flip-in events" occurs,
each Right will entitle the holder to purchase a KeyCorp common share for $1.00
(the par value per share), and the Rights held by a 15% or more shareholder will
become void.

CAPITAL ADEQUACY

KeyCorp and its banking subsidiaries must meet specific capital requirements
imposed by federal banking regulators. Sanctions for failure to meet applicable
capital requirements may include regulatory enforcement actions that restrict
dividend payments, require the adoption of remedial measures to increase
capital, terminate Federal Deposit Insurance Corporation ("FDIC") deposit
insurance, and mandate the appointment of a conservator or receiver in severe
cases. As of December 31, 2002, KeyCorp and its bank subsidiaries met all
capital requirements.

Federal bank regulators apply certain capital ratios to assign FDIC- insured
depository institutions to one of five categories: "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized"
and "critically undercapitalized." At December 31, 2002 and 2001, the most
recent regulatory notification classified each of KeyCorp's subsidiary banks as
"well capitalized." Management does not believe there have been any changes in
condition or events since those notifications that would cause the banks'
classifications to change.

Unlike bank subsidiaries, bank holding companies are not classified by capital
adequacy. However, Key satisfied the criteria for a "well capitalized"
institution at December 31, 2002 and 2001. The FDIC- defined capital categories
serve a limited regulatory function and may not accurately represent the overall
financial condition or prospects of Key or its affiliates.

76

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

The following table presents Key's, KBNA's and Key Bank USA's actual capital
amounts and ratios, minimum capital amounts and ratios prescribed by regulatory
guidelines, and capital amounts and ratios required to qualify as "well
capitalized" under the Federal Deposit Insurance Act.

<TABLE>
<CAPTION>
                                                                                                          TO QUALIFY AS
                                                                               TO MEET MINIMUM           WELL CAPITALIZED
                                                                               CAPITAL ADEQUACY       UNDER FEDERAL DEPOSIT
                                                          ACTUAL                 REQUIREMENTS             INSURANCE ACT
                                                 ----------------------     ---------------------    -----------------------
dollars in millions                              AMOUNT           RATIO      AMOUNT         RATIO     AMOUNT          RATIO
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>              <C>       <C>             <C>       <C>             <C>
DECEMBER 31, 2002
TOTAL CAPITAL TO NET RISK-WEIGHTED ASSETS
Key                                              $10,257          12.51%     $6,558          8.00%        N/A            N/A
KBNA                                               8,248          11.19       5,899          8.00      $7,374          10.00%
Key Bank USA                                         837          12.04         556          8.00         695          10.00

TIER 1 CAPITAL TO NET RISK-WEIGHTED ASSETS
Key                                              $ 6,632           8.09%     $3,279          4.00%        N/A            N/A
KBNA                                               5,054           6.85       2,949          4.00      $4,424           6.00%
Key Bank USA                                         713          10.25         278          4.00         417           6.00

TIER 1 CAPITAL TO AVERAGE ASSETS
Key                                              $ 6,632           8.15%     $2,440          3.00%        N/A            N/A
KBNA                                               5,054           6.93       2,915          4.00      $3,644           5.00%
Key Bank USA                                         713           8.50         335          4.00         419           5.00
- ----------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2001
TOTAL CAPITAL TO NET RISK-WEIGHTED ASSETS
Key                                              $ 9,548          11.41%     $6,696          8.00%        N/A            N/A
KBNA                                               7,970          10.63       5,993          8.00      $7,492          10.00%
Key Bank USA                                         746          11.48         520          8.00         650          10.00

TIER 1 CAPITAL TO NET RISK-WEIGHTED ASSETS
Key                                              $ 6,222           7.43%     $3,348          4.00%        N/A            N/A
KBNA                                               5,170           6.90       2,997          4.00      $4,495           6.00%
Key Bank USA                                         618           9.51         260          4.00         390           6.00

TIER 1 CAPITAL TO AVERAGE ASSETS
Key                                              $ 6,222           7.65%     $2,440          3.00%        N/A            N/A
KBNA                                               5,170           7.13       2,897          4.00      $3,622           5.00%
Key Bank USA                                         618           8.53         290          4.00         362           5.00
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

N/A = Not Applicable

DEFERRED COMPENSATION OBLIGATION

Key maintains various deferred compensation plans, under which employees and
directors can defer a portion of their compensation for future distribution. All
or a portion of such deferrals will be distributed in the form of KeyCorp common
shares. Effective December 31, 2002, Key reclassified its $68 million obligation
relating to the portion of deferred compensation payable in KeyCorp common
shares from "other liabilities" to "capital surplus" in accordance with EITF
97-14,"Accounting for Deferred Compensation Arrangements Where Amounts Earned
Are Held in a Rabbi Trust and Invested." Among other things, EITF 97-14, which
became effective March 19, 1998, for deferrals after that date, requires that
the deferred compensation obligation to be settled by the delivery of shares be
classified in equity without any subsequent expense recognition for changes in
the market value of the underlying shares. Key did not reclassify its obligation
in prior years because it was not material.

                               15. STOCK OPTIONS

Key's compensation plans allow for the granting of stock options, stock
appreciation rights, limited stock appreciation rights, restricted stock and
performance shares to eligible employees and directors. Under all of the option
plans, exercise prices cannot be less than the fair value of Key's common stock
on the grant date. Generally, options become exercisable at the rate of 33% per
year beginning one year from their grant date and expire no later than 10 years
from their grant date.

At December 31, 2002, KeyCorp had 1,680,959 common shares available for future
grant, compared with 3,569,750 at December 31, 2001.

                                                                              77

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

The following table summarizes activity, pricing and other information about
Key's stock options.

<TABLE>
<CAPTION>
                                                          2002                                        2001
                                             --------------------------------          ----------------------------------
                                                             WEIGHTED AVERAGE                            WEIGHTED AVERAGE
                                              OPTIONS        PRICE PER OPTION           OPTIONS          PRICE PER OPTION
- -------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>                      <C>                <C>
Outstanding at beginning of year             34,246,323          $   24.66             34,291,153             $   23.72
Granted                                       7,918,780              24.85              7,377,680                 28.02
Exercised                                     2,346,983              16.08              2,212,746                 14.96
Lapsed or canceled                            2,142,189              26.54              5,209,764                 27.27
- -------------------------------------------------------------------------------------------------------------------------
Outstanding at end of year                   37,675,931          $   25.14             34,246,323             $   24.66
- -------------------------------------------------------------------------------------------------------------------------
Exercisable at end of year                   16,368,542          $   26.45             19,501,856             $   24.80
- -------------------------------------------------------------------------------------------------------------------------
Weighted average fair value of options
   granted during the year                  $      3.95                               $      6.26
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following table summarizes the range of exercise prices and other related
information pertaining to Key's stock options at December 31, 2002.

<TABLE>
<CAPTION>
                             OPTIONS OUTSTANDING                                                OPTIONS EXERCISABLE
- -----------------------------------------------------------------------------------      --------------------------------
  RANGE OF                                       WEIGHTED          WEIGHTED AVERAGE                             WEIGHTED
  EXERCISE               NUMBER OF             AVERAGE PRICE          REMAINING            OPTIONS              AVERAGE
   PRICES                 OPTIONS               PER OPTION           LIFE (YEARS)        EXERCISABLE             PRICE
- -------------------------------------------------------------------------------------------------------------------------
<S>                      <C>                   <C>                 <C>                   <C>                    <C>
$8.94-$14.99              2,350,269             $   14.14               1.7               2,350,269             $   14.14
 15.00-19.99              5,655,710                 17.55               5.5               2,175,367                 17.26
 20.00-24.99             10,463,784                 23.50               8.3                 194,475                 22.44
 25.00-29.99              9,760,542                 27.52               7.5               2,202,805                 26.15
 30.00-34.99              9,128,126                 31.37               5.6               9,128,126                 31.37
 35.00-50.00                317,500                 43.48               5.8                 317,500                 43.48
- -------------------------------------------------------------------------------------------------------------------------
   Total                 37,675,931             $   25.14               6.6              16,368,542             $   26.45
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Information pertaining to Key's method of accounting for employee stock options,
including pro forma disclosures of the net income and earnings per share effect
of stock options using the "fair value method," are included in Note 1 ("Summary
of Significant Accounting Policies") under the heading "Employee Stock Options"
on page 61.

                             16. EMPLOYEE BENEFITS

PENSION PLANS

Net periodic and total net pension cost (income) for all funded and unfunded
plans include the following components.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                              2002             2001       2000
- -------------------------------------------------------------------------
<S>                                      <C>             <C>         <C>
Service cost of benefits earned          $ 40            $ 37        $ 37
Interest cost on projected
  benefit obligation                       54              53          53
Expected return on plan assets            (91)            (95)        (90)
Amortization of unrecognized
  net transition asset                     --              (2)         (5)
Amortization of prior service cost         --               1           2
Amortization of losses                      3               1           1
- -------------------------------------------------------------------------
   Net periodic pension cost (income)       6              (5)         (2)
Curtailment gain                           --              --          (2)
- -------------------------------------------------------------------------
   Total net pension cost (income)       $  6            $ (5)       $ (4)
                                         ====            ====        ====
- -------------------------------------------------------------------------
</TABLE>

The curtailment gain in the above table resulted from Key's competitiveness
initiative and related reduction in workforce.

Changes in the projected benefit obligation ("PBO") related to Key's pension
plans are summarized as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                     2002         2001
- -------------------------------------------------
<S>                            <C>          <C>
PBO at beginning of year       $ 787        $ 715
Service cost                      40           37
Interest cost                     54           53
Actuarial losses                  31           57
Plan amendments                    3           --
Benefit payments                 (69)         (75)
- -------------------------------------------------
   PBO at end of year          $ 846        $ 787
                               =====        =====
- -------------------------------------------------
</TABLE>

Changes in the fair value of pension plan assets ("FVA") are summarized as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                        2002          2001
- -------------------------------------------------------
<S>                              <C>            <C>
FVA at beginning of year         $   875        $ 1,062
Actual loss on plan assets          (101)          (121)
Employer contributions                12              9
Benefit payments                     (69)           (75)
- -------------------------------------------------------
   FVA at end of year            $   717        $   875
                                 =======        =======
- -------------------------------------------------------
</TABLE>

78

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

The funded status of the pension plans at September 30 (the actuarial
measurement date), reconciled to the amounts recognized in the consolidated
balance sheets at December 31, 2002 and 2001, is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
in millions                                     2002            2001
- --------------------------------------------------------------------
<S>                                            <C>             <C>
Funded status(a)                               $(129)          $  88
Unrecognized net loss                            375             156
Unrecognized prior service benefit                (1)             (4)
Benefits paid subsequent to
   measurement date                                3               3
- --------------------------------------------------------------------
       Net prepaid pension cost                $ 248           $ 243
                                               =====           =====
- --------------------------------------------------------------------
Net prepaid pension cost consists of:
   Prepaid benefit cost                        $ 342           $ 332
   Accrued benefit liability                    (136)            (89)
   Deferred tax asset                             14              --
   Intangible asset                                3              --
   Accumulated other comprehensive loss           25              --
- --------------------------------------------------------------------
      Net prepaid pension cost                 $ 248           $ 243
                                               =====           =====
- --------------------------------------------------------------------
</TABLE>

(a)  The excess (shortfall) of the fair value of plan assets over the projected
     benefit obligation.

Included in the above table are the effects of certain nonqualified supplemental
executive retirement programs ("SERPs") that are unfunded. At December 31, 2002,
the projected benefit obligation for these unfunded plans was $148 million
(compared with $132 million at the end of 2001), and the accumulated benefit
obligation ("ABO") was $139 million (compared with $128 million at the end of
2001). The amount of accrued benefit liability for these plans was $136 million
at December 31, 2002, and $89 million at December 31, 2001.

Effective December 31, 2002, Key recorded an additional minimum liability
("AML") of $42 million for its SERPs. SFAS No. 87, "Employers' Accounting for
Pensions,"requires the recognition of an AML to the extent of any excess of the
unfunded ABO over the liability already recognized as unfunded accrued pension
cost. The after-tax effect of recording of the AML was a $25 million reduction
to "comprehensive income" in 2002. Key did not record an AML in prior years
because it was not material.

In order to determine the actuarial present value of benefit obligations and net
pension cost (income), management assumed the following weighted average rates:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,              2002         2001      2000
- ----------------------------------------------------------------
<S>                                  <C>          <C>       <C>
Discount rate                        6.50%        7.25%     7.75%
Compensation increase rate           4.00         4.00      4.00
Expected return on plan assets       9.75         9.75      9.75
- ----------------------------------------------------------------
</TABLE>

Management estimates that Key's net pension cost will be $38 million for 2003,
compared with cost of $6 million for 2002 and income of $5 million for 2001. The
substantial increase in cost for 2003 is due primarily to a decline in the fair
value of plan assets, reflecting continued weakness in the capital markets. The
higher cost also reflects an expected return of 9.00% on plan assets, compared
with expected returns of 9.75% in 2002 and 2001.

Management determines Key's expected return on plan assets by considering a
number of factors. Primary among these are:

- -    Historical returns on Key's plan assets.

- -    Historical returns that a portfolio with an investment mix similar to Key's
     would have earned.

- -    Management's expectations for returns on plan assets over the long term,
     weighted for the investment mix of the assets. In accordance with Key's
     current investment policy, plan assets include equity securities, which
     comprise 65% to 85% of the portfolio; fixed income securities, which
     comprise 15% to 30% of the portfolio; and convertible securities, which
     comprise up to 15% of the portfolio.

Management estimates that a 25 basis point decrease (increase) in the expected
return on plan assets would increase (decrease) Key's net pension cost for 2003
by approximately $2 million.

Additionally, pension cost is affected by an assumed discount rate and an
assumed compensation increase rate. Management estimates that a 25 basis point
change in either or both of these assumed rates would change net pension cost
for 2003 by less than $1 million.

Despite the 2002 decline in the fair value of plan assets, at December 31, Key's
qualified plan was sufficiently funded under the Employee Retirement Income
Security Act of 1974, which outlines pension-funding laws. Consequently, no
minimum contributions to the plan were required at that time.

OTHER POSTRETIREMENT BENEFIT PLANS

Key sponsors a contributory postretirement healthcare plan. Retirees'
contributions are adjusted annually to reflect certain cost-sharing provisions
and benefit limitations. Key also sponsors life insurance plans covering certain
grandfathered employees. These plans are principally noncontributory.

Net periodic and total net postretirement benefit cost includes the following
components.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                                    2002           2001           2000
- ---------------------------------------------------------------------------------
<S>                                            <C>            <C>            <C>
Service cost of benefits earned                $  3           $  3           $  3
Interest cost on accumulated
   postretirement benefit obligation              8              8              7
Expected return on plan assets                   (2)            (2)            (2)
Amortization of transition obligation             1              4              5
- ---------------------------------------------------------------------------------
   Net postretirement benefit cost               10             13             13
Curtailment (gain) loss                          --             (1)             5
- ---------------------------------------------------------------------------------
   Total net postretirement
     benefit cost                              $ 10           $ 12           $ 18
                                               ====           ====           ====
- ---------------------------------------------------------------------------------
</TABLE>

The curtailment activity in the above table resulted from the previously
mentioned competitiveness initiative and workforce reduction.

Changes in the accumulated postretirement benefit obligation ("APBO") are
summarized as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                                2002            2001
- ---------------------------------------------------------------
<S>                                       <C>             <C>
APBO at beginning of year                 $ 114           $ 106
Service cost                                  3               3
Interest cost                                 8               8
Plan participants' contributions              5               4
Actuarial losses                             17               9
Benefit payments                            (19)            (16)
- ---------------------------------------------------------------
  APBO at end of year                     $ 128           $ 114
                                          =====           =====
- ---------------------------------------------------------------
</TABLE>

                                                                              79

<PAGE>

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

Changes in the fair value of postretirement plan assets are summarized as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                               2002           2001
- -------------------------------------------------------------
<S>                                       <C>            <C>
FVA at beginning of year                  $ 39           $ 38
Employer contributions                      18             19
Plan participants' contributions             5              4
Benefit payments                           (19)           (16)
Actual loss on plan assets                  (4)            (6)
- -------------------------------------------------------------
    FVA at end of year                    $ 39           $ 39
                                          ====           ====
- -------------------------------------------------------------
</TABLE>

The funded status of the postretirement plans at September 30 (the actuarial
measurement date), reconciled to the amounts recognized in the consolidated
balance sheets at December 31, 2002 and 2001, is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                                     2002           2001
- -------------------------------------------------------------------
<S>                                             <C>            <C>
Funded status(a)                                $(89)          $(76)
Unrecognized net loss                             35             12
Unrecognized prior service cost                    2              3
Unrecognized transition obligation                40             44
Contributions/benefits paid subsequent
   to measurement date                            10              9
- -------------------------------------------------------------------
   Accrued postretirement benefit cost          $ (2)          $ (8)
                                                ====           ====
- -------------------------------------------------------------------
</TABLE>

(a)  The excess of the accumulated postretirement benefit obligation over the
     fair value of plan assets.

The assumed weighted average healthcare cost trend rate for 2003 is 10.0% for
both Medicare-eligible retirees and non-Medicare-eligible retirees. The rate is
assumed to decrease gradually to 5.0% by the year 2013 and remain constant
thereafter. Increasing or decreasing the assumed healthcare cost trend rate by
one percentage point each future year would not have a material impact on net
postretirement benefit cost or obligations since the postretirement plans have
cost-sharing provisions and benefit limitations.

To determine the accumulated postretirement benefit obligation and the net
postretirement benefit cost, management assumed the following weighted average
rates:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,              2002         2001      2000
- ----------------------------------------------------------------
<S>                                  <C>          <C>       <C>
Discount rate                        6.50%        7.25%     7.75%
Expected return on plan assets       5.73         5.71      5.71
- ----------------------------------------------------------------
</TABLE>

EMPLOYEE 401(K) SAVINGS PLAN

A substantial majority of Key's employees are covered under a savings plan that
is qualified under Section 401(k) of the Internal Revenue Code. Key's plan
permits employees to contribute from 1% to 16% (1% to 10% prior to January 1,
2002) of eligible compensation, with up to 6% being eligible for matching
contributions in the form of Key common shares. The plan also permits Key to
distribute a discretionary profit-sharing component. Total expense associated
with the plan was $54 million in 2002, $42 million in 2001 and $51 million in
2000.

                                17. INCOME TAXES

Income taxes included in the consolidated statements of income are summarized
below. Key files a consolidated federal income tax return.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                         2002            2001            2000
- ------------------------------------------------------------------------
<S>                                <C>             <C>             <C>
Currently payable:
    Federal                        $ 150           $ 222           $ 147
    State                             31              19              33
- ------------------------------------------------------------------------
                                     181             241             180
Deferred:
    Federal                          150            (133)            307
    State                              5              (6)             28
- ------------------------------------------------------------------------
                                     155            (139)            335
- ------------------------------------------------------------------------
    Total income tax expense(a)    $ 336           $ 102           $ 515
                                   =====           =====           =====
- ------------------------------------------------------------------------
</TABLE>

(a)  Income tax expense (benefit) on securities transactions totaled $2 million
     in 2002, $14 million in 2001 and ($10) million in 2000. Income tax expense
     in the above table excludes equity- and gross receipts-based taxes, which
     are assessed in lieu of an income tax in certain states in which Key
     operates. These taxes are recorded in noninterest expense on the income
     statement and totaled $26 million in 2002, $29 million in 2001 and $33
     million in 2000.

Significant components of Key's deferred tax assets and liabilities are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
in millions                                           2002            2001
- ---------------------------------------------------------------------------
<S>                                                  <C>             <C>
Provision for loan losses                            $  477          $  604
Restructuring charges                                    10              22
Write-down of OREO                                        4               5
Other                                                   268             294
- ---------------------------------------------------------------------------
    Total deferred tax assets                           759             925

Leasing income reported using the operating
  method for tax purposes                             2,104           1,853
Net unrealized securities gains                          57              18
Depreciation                                             12              --
Other                                                   388             606
- ---------------------------------------------------------------------------
    Total deferred tax liabilities                    2,561           2,477
- ---------------------------------------------------------------------------
    Net deferred tax liabilities                     $1,802          $1,552
                                                     ======          ======
- ---------------------------------------------------------------------------
</TABLE>

80

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

The following table shows how Key arrived at total income tax expense and the
effective tax rate.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                  2002                2001                   2000
                                                                   --------------     -----------------     ------------------
dollars in millions                                                AMOUNT    RATE      AMOUNT      RATE       AMOUNT      RATE
- ------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>       <C>      <C>         <C>         <C>         <C>
Income before income taxes times 35% statutory federal tax rate     $459     35.0%    $  90        35.0%      $ 531       35.0%
State income tax, net of federal tax benefit                          23      1.8         9         3.4          40        2.6
Amortization of nondeductible intangibles                             --       --        78        30.1          27        1.8
Tax-exempt interest income                                           (13)    (1.0)      (15)       (5.9)        (18)      (1.2)
Corporate-owned life insurance income                                (39)    (3.0)      (42)      (16.3)        (40)      (2.7)
Tax credits                                                          (37)    (2.8)      (42)      (16.1)        (36)      (2.4)
Reduced tax rate on lease income                                     (61)    (4.7)      (13)       (5.1)         --         --
Other                                                                  4       .3        37        14.3          11         .8
- ------------------------------------------------------------------------------------------------------------------------------
    Total income tax expense                                        $336     25.6%    $ 102        39.4%      $ 515       33.9%
                                                                    ====     ====     =====        ====       =====       ====
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                           18. RESTRUCTURING CHARGES

In November 1999, KeyCorp instituted a competitiveness initiative to improve
Key's operating efficiency and profitability.

In the first phase of the initiative, Key outsourced certain technology and
corporate support functions, consolidated sites in a number of businesses and
reduced the number of management layers. This phase was completed in 2000.
During 2002, Key completed the implementation of all projects related to the
second and final phase, which started during the second half of 2000. This phase
focused on:

- -    consolidating 22 business lines into 10 to simplify Key's business
     structure;

- -    streamlining and automating business operations and processes;

- -    standardizing product offerings and internal processes;

- -    consolidating operating facilities and service centers; and

- -    outsourcing certain noncore activities.

Management expected the initiative to reduce Key's workforce by approximately
4,000 positions. Those reductions were to occur at all levels throughout the
organization. During 2002, Key completed its workforce reduction, bringing the
total number of positions eliminated in the initiative to nearly 4,100.

Changes in the components of the restructuring charge liability associated with
the actions taken are as follows:

<TABLE>
<CAPTION>
                            DECEMBER 31,     RESTRUCTURING       CASH        DECEMBER 31,
in millions                    2001        CHARGES (CREDITS)   PAYMENTS         2002
- -----------------------------------------------------------------------------------------
<S>                         <C>            <C>                 <C>           <C>
Severance                      $ 27            $(11)            $ 13            $  3
Site consolidations              33               3                9              27
Equipment and other               1              (1)              --              --
- -----------------------------------------------------------------------------------------
    Total                      $ 61            $ (9)            $ 22            $ 30
                               ====            ====             ====            ====
- -----------------------------------------------------------------------------------------
</TABLE>

             19. COMMITMENTS, CONTINGENT LIABILITIES AND GUARANTEES

OBLIGATIONS UNDER NONCANCELABLE LEASES

Key is obligated under various noncancelable leases for land, buildings and
other property, consisting principally of data processing equipment. Rental
expense under all operating leases totaled $132 million in 2002, $132 million in
2001 and $136 million in 2000. Minimum future rental payments under
noncancelable leases at December 31, 2002, are as follows: 2003 -- $125 million;
2004 -- $113 million; 2005 -- $99 million; 2006 -- $91 million; 2007 -- $79
million; all subsequent years -- $395 million.

COMMITMENTS TO EXTEND CREDIT OR FUNDING

Loan commitments generally help Key meet clients' financing needs. However, they
also involve credit risk not reflected on Key's balance sheet. Key mitigates its
exposure to credit risk with internal controls that guide the way applications
for credit are reviewed and approved, credit limits are established and, when
necessary, demands for collateral are made. In particular, Key evaluates the
credit-worthiness of each prospective borrower on a case-by-case basis. Key does
not have any significant concentrations of credit risk related to commitments to
extend credit.

Loan commitments provide for financing on predetermined terms as long as the
client continues to meet specified criteria. These agreements 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. Since a commitment may expire without resulting in a loan, the total amount
of outstanding commitments may significantly exceed Key's eventual cash outlay.

The table on page 82 shows the remaining contractual amount of each class of
commitments to extend credit or funding as of the date indicated.

                                                                              81

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

This amount also represents Key's maximum possible accounting loss. The
estimated fair values of these instruments are not material; there are no
observable liquid markets for the majority of these instruments.

<TABLE>
<CAPTION>
DECEMBER 31,
in millions                                      2002           2001
- ---------------------------------------------------------------------
<S>                                            <C>            <C>
Loan commitments:
    Home equity                                $ 5,531        $ 4,965
    Commercial real estate and construction      2,042          2,487
    Commercial and other                        25,005         24,936
- ---------------------------------------------------------------------
    Total loan commitments                      32,578         32,388

Principal investing commitments                    222            191
Commercial letters of credit                       135            106
- ---------------------------------------------------------------------
    Total loan and other commitments           $32,935        $32,685
                                               =======        =======
- ---------------------------------------------------------------------
</TABLE>

LEGAL PROCEEDINGS

RESIDUAL VALUE INSURANCE LITIGATION. Key Bank USA obtained two insurance
policies from Reliance Insurance Company ("Reliance") insuring the residual
value of certain automobiles leased through Key Bank USA. The two policies ("the
Policies"), the "4011 Policy" and the "4019 Policy," together covered leases
entered into during the period from January 1, 1997 to January 1, 2001.

The 4019 Policy contains an endorsement stating that Swiss Reinsurance America
Corporation ("Swiss Re") will assume and reinsure 100% of Reliance's obligations
under the 4019 Policy in the event Reliance Group Holdings' ("Reliance's
parent") so-called "claims-paying ability" were to fall below investment grade.
Key Bank USA also entered into an agreement with Swiss Re and Reliance whereby
Swiss Re agreed to issue to Key Bank USA an insurance policy on the same terms
and conditions as the 4011 Policy in the event the financial condition of
Reliance Group Holdings fell below a certain level. Around May 2000, the
conditions under both the 4019 Policy and the Swiss Re agreement were triggered.

The 4011 Policy was canceled and replaced as of May 1, 2000, by a policy issued
by North American Specialty Insurance Company (a subsidiary or affiliate of
Swiss Re) ("the NAS Policy"). Tri-Arc Financial Services, Inc. ("Tri-Arc") acted
as agent for Reliance, Swiss Re and NAS. Since February 2000, Key Bank USA has
been filing claims under the Policies, but none of these claims has been paid.

In July 2000, Key Bank USA filed a claim for arbitration against Reliance, Swiss
Re, NAS and Tri-Arc seeking, among other things, a declaration of the scope of
coverage under the Policies and for damages. On January 8, 2001, Reliance filed
an action (litigation) against Key Bank USA in Federal District Court in Ohio
seeking rescission or reformation of the Policies because they allegedly do not
reflect the intent of the parties with respect to the scope of coverage and how
and when claims were to be paid. Key filed an answer and counterclaim against
Reliance, Swiss Re, NAS and Tri-Arc seeking, among other things, declaratory
relief as to the scope of coverage under the Policies, damages for breach of
contract and failure to act in good faith, and punitive damages. The parties
agreed to proceed with this court action and to dismiss the arbitration without
prejudice.

On May 29, 2001, the Commonwealth Court of Pennsylvania entered an order placing
Reliance in a court supervised "rehabilitation" and purporting to stay all
litigation against Reliance. On July 23, 2001, the Federal District Court in
Ohio stayed the litigation to allow the rehabilitator to complete her task. On
October 3, 2001, the Court in Pennsylvania entered an order placing Reliance
into liquidation and canceling all Reliance insurance policies as of November 2,
2001. On November 20, 2001, the Federal District Court in Ohio entered an order
that, among other things, required Reliance to report to the Court on the
progress of the liquidation. On January 15, 2002, Reliance filed a status report
requesting the continuance of the stay for an indefinite period. On February 20,
2002, Key Bank USA filed a Motion for Partial Lifting of the July 23, 2001, Stay
in which it asked the Court to allow the case to proceed against the parties
other than Reliance. The Court granted Key Bank USA's motion on May 17, 2002.

Management believes that Key Bank USA has valid insurance coverage or claims for
damages relating to the residual value of automobiles leased through Key Bank
USA during the four-year period ending January 1, 2001. With respect to each
individual lease, however, it is not until the lease expires and the vehicle is
sold that Key Bank USA can determine the existence and amount of any actual loss
(i.e., the difference between the residual value provided for in the lease
agreement and the vehicle's actual market value at lease expiration). Key Bank
USA's actual total losses for which it will file claims will depend to a large
measure upon the viability of, and pricing within, the market for used cars
throughout the lease run- off period, which extends through 2006. The market for
used cars varies.

Accordingly, the total expected loss on the portfolio for which Key Bank USA
will file claims cannot be determined with certainty at this time. Claims filed
by Key Bank USA through December 31, 2002, total approximately $259 million, and
management currently estimates that approximately $102 million of additional
claims may be filed through year-end 2006. As discussed above, a number of
factors could affect Key Bank USA's actual loss experience, which may be higher
or lower than management's current estimates.

Key is filing insurance claims for the entire amount of its losses and is
recording as a receivable on its balance sheet a portion of the amount of the
insurance claims as and when they are filed. Management believes the amount
being recorded as a receivable due from the insurance carriers is appropriate to
reflect the collectibility risk associated with the insurance litigation;
however, litigation is inherently not without risk, and any actual recovery from
the litigation may be more or less than the receivable. While management does
not expect an adverse decision, if a court were to make an adverse final
determination, such result would cause Key to record a material one-time expense
during the period when such determination is made. An adverse determination
would not have a material effect on Key's financial condition, but could have a
material adverse effect on Key's results of operations in the quarter it occurs.

OTHER LITIGATION. In the ordinary course of business, Key is subject to legal
actions that involve claims for substantial monetary relief. Based on
information presently known to management, management does not believe there is
any legal action to which KeyCorp or any of its subsidiaries is a party, or
involving any of their properties, that, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on Key's financial
condition or annual results of operations.

82

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

GUARANTEES

Key is a guarantor in various agreements with third parties. In accordance with
FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others,"certain
guarantees issued or modified on or after January 1, 2003, will require the
recognition of a liability on Key's balance sheet for the "stand ready"
obligation associated with such guarantees. The accounting for guarantees
existing at December 31, 2002, was not revised. Thus, the stand ready obligation
related to the majority of Key's guarantees was not recorded on the balance
sheet at December 31, 2002. Additional information pertaining to Interpretation
No. 45 is summarized in Note 1 ("Summary of Significant Accounting Policies")
under the heading "Accounting Pronouncements Pending Adoption" on page 62. The
following table shows the types of guarantees (as defined by Interpretation No.
45) that Key had outstanding at December 31, 2002.

<TABLE>
<CAPTION>
                                        MAXIMUM POTENTIAL
                                           UNDISCOUNTED           LIABILITY
in millions                              FUTURE PAYMENTS          RECORDED
- ----------------------------------------------------------------------------
<S>                                     <C>                       <C>
Financial guarantees:
    Standby letters of credit                $4,325                      --
    Credit enhancement for
      asset-backed commercial
      paper conduit                              68                  $    1
    Recourse agreement with FNMA                227                       4
    Return guaranty agreement
      with LIHTC investors                      851                      35
    Default guarantees                          140                       2
    Written interest rate caps(a)                43                      24
- ----------------------------------------------------------------------------
      Total                                  $5,654                  $   66
                                             ======                  ======
- ----------------------------------------------------------------------------
</TABLE>


(a)  As of December 31, 2002, the weighted average interest rate of written
     interest rate caps was 1.5%. Maximum potential undiscounted future payments
     were calculated assuming a 10% interest rate.

STANDBY LETTERS OF CREDIT. These instruments obligate Key to pay a third- party
beneficiary when a customer fails to repay an outstanding loan or debt
instrument, or fails to perform some contractual nonfinancial obligation.
Standby letters of credit are issued by many of Key's lines of business to
address clients' financing needs. If amounts are drawn under standby letters of
credit, such amounts are treated as loans; they bear interest (generally at
variable rates) and pose the same credit risk to Key as a loan would. At
December 31, 2002, Key's standby letters of credit had a remaining weighted
average life of approximately 2 years, with remaining actual lives ranging from
less than 1 to 16 years.

CREDIT ENHANCEMENT FOR ASSET-BACKED COMMERCIAL PAPER CONDUIT. Key provides
credit enhancement in the form of a committed facility to ensure the continuing
operations of an asset-backed commercial paper conduit, which is owned by a
third party and administered by an unaffiliated financial institution. The
commitment to provide credit enhancement extends until September 26, 2003, and
specifies that in the event of default by certain borrowers whose loans are held
by the conduit, Key will provide financial relief to the conduit in an amount
that is based on defined criteria that consider the level of credit risk
involved and other factors.

At December 31, 2002, Key's funding requirement under the credit enhancement
facility totaled $59 million. However, there were no drawdowns under the
facility during or at the end of the year. Key has no recourse or other
collateral available to offset any amounts that may be funded under this credit
enhancement facility. Key's commitments to provide increased credit enhancement
to the conduit are periodically evaluated by management.

RECOURSE AGREEMENT WITH FEDERAL NATIONAL MORTGAGE ASSOCIATION. KBNA participates
as a lender in the Federal National Mortgage Association ("FNMA") Delegated
Underwriting and Servicing ("DUS") program. As a condition to FNMA's delegation
of responsibility for originating, underwriting and servicing mortgages, KBNA
has agreed to assume a limited portion of the risk of loss during the remaining
term on each commercial mortgage loan sold. Accordingly, a reserve for such
potential losses has been established and is maintained in an amount estimated
by management to approximate the fair value of the liability undertaken by KBNA.
The outstanding commercial mortgage loans in this program had a weighted average
remaining term of 10 years at December 31, 2002. At December 31, 2002, the
unpaid principal balance outstanding of loans sold by KBNA as a participant in
this program was approximately $1.1 billion. The maximum potential amount of
undiscounted future payments that may be required under this program is equal to
20% of the principal balance of loans outstanding at December 31, 2002. If
payment is required under this program, Key would have an interest in the
collateral underlying the commercial mortgage loan on which the loss occurred.

RETURN GUARANTEE AGREEMENT WITH LOW-INCOME HOUSING TAX CREDIT ("LIHTC")
INVESTORS. Key Affordable Housing Corporation ("KAHC"), a subsidiary of KBNA,
offers limited partnership interests to qualified investors. Unconsolidated
partnerships formed by KAHC invest in low-income residential rental properties
that qualify for federal LIHTCs under Section 42 of the Internal Revenue Code.
In certain partnerships, investors pay a fee to KAHC for a guaranteed return
that is dependent on the financial performance of the property and the
property's ability to maintain its LIHTC status throughout the fifteen-year
compliance period. If these two conditions are not achieved, Key is obligated to
make any necessary payments to investors to provide the guaranteed return. KAHC
has the ability to affect changes in the management of the properties to improve
performance. However, other than the underlying income stream from the
properties, no recourse or collateral would be available to offset the guarantee
obligation. These guarantees have expiration dates that extend through 2018. Key
meets its obligations pertaining to the guaranteed returns generally through the
distribution of tax credits and deductions associated with the specific
properties.

As shown in the preceding table, KAHC had established a reserve in the amount of
$35 million at December 31, 2002, which management believes will be sufficient
to cover estimated future obligations under the guarantees. However, in
accordance with Interpretation No. 45, for any return guarantee agreements
entered into or modified with LIHTC investors on or after January 1, 2003, all
fees received in consideration for the guarantee will be established as the fair
value liability.

                                                                              83

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

VARIOUS TYPES OF DEFAULT GUARANTEES. Some lines of business provide or
participate in guarantees that obligate Key to perform if the debtor fails to
pay all or a portion of the subject indebtedness and/or related interest. These
guarantees are generally undertaken when Key is supporting or protecting its
underlying investment or where the risk profile of the debtor should provide an
investment return. The terms of these default guarantees range from 1 year to as
many as 19 years. Although no collateral is held, Key would have recourse
against the debtors for any payments made under these default guarantees.

WRITTEN INTEREST RATE CAPS. In the ordinary course of business, Key writes
interest rate caps for commercial loan clients that have variable rate loans
with Key. These caps are purchased by clients to limit their exposure to
interest rate increases.

Key is obligated to pay the interest rate counterparty if the applicable
benchmark interest rate exceeds a specified level (known as the "strike rate")
over a weighted average life of approximately 8.3 years. These instruments are
accounted for as derivatives with the fair market value liability recorded in
"other liabilities" on the balance sheet. Key's potential amount of future
payments under these obligations is mitigated by the fact that the company
enters into offsetting positions with third parties.

OTHER OFF-BALANCE SHEET RISK

Other off-balance sheet risk stems from financial instruments that do not meet
the definition of a guarantee as specified in Interpretation No. 45 and from
other relationships.

LIQUIDITY FACILITIES THAT SUPPORT ASSET-BACKED COMMERCIAL PAPER CONDUITS. Key
provides liquidity to all or a portion of two separate asset- backed commercial
paper conduits that are owned by third parties and administered by unaffiliated
financial institutions. These liquidity facilities obligate Key through February
15, 2005, to provide funding if such is required as a result of a disruption in
the markets or other factors. Additional information about these asset-backed
commercial paper conduits is summarized in Note 1 ("Summary of Significant
Accounting Policies") under the heading "Basis of Presentation" on page 57 and
in Note 8 ("Loan Securitizations and Variable Interest Entities") under the
heading "Variable Interest Entities" on page 71.

Key provides liquidity to the conduits in the form of committed facilities of
$1.7 billion. The amount available to be drawn on these facilities was $712
million at December 31, 2002. However, there were no drawdowns under either of
the committed facilities at that time. Of the $1.7 billion of liquidity facility
commitments, $108 million is associated with a conduit program that is in the
process of being liquidated. Therefore, Key's commitment will decrease as the
assets in this conduit program decrease. Key's commitments to provide liquidity
are periodically evaluated by management.

INDEMNIFICATIONS PROVIDED IN THE ORDINARY COURSE OF BUSINESS. Key provides
certain indemnifications primarily through representations and warranties in
contracts that are entered into in the ordinary course of business in connection
with purchases and sales of businesses, loan sales and other ongoing activities.
Management's past experience with these indemnifications has been that the
amounts paid, if any, have not had a significant effect on Key's financial
condition or results of operations.

INTERCOMPANY GUARANTEES. KeyCorp and primarily KBNA are parties to various
guarantees that are undertaken to facilitate the ongoing business activities of
other Key affiliates. These business activities encompass debt issuance, certain
lease and insurance obligations, investments and securities, and certain leasing
transactions involving clients.

RELATIONSHIP WITH MASTERCARD INTERNATIONAL INC. AND VISA U.S.A. INC. KBNA and
Key Bank USA are members of MasterCard International Inc. and Visa U.S.A. Inc.
MasterCard's charter documents and bylaws state that MasterCard may assess
members for certain liabilities, including litigation liabilities. Visa's
charter documents state that Visa may fix fees payable by members in connection
with Visa's operations. Descriptions of pending lawsuits and MasterCard's and
Visa's positions regarding the potential impact of those lawsuits on members are
set forth on MasterCard's and Visa's respective websites and in MasterCard's
public filings with the Securities and Exchange Commission. Key is not a party
to any significant litigation by third parties against MasterCard or Visa.

                     20. DERIVATIVES AND HEDGING ACTIVITIES

Key, mainly through its lead bank, KBNA, is party to various derivative
instruments. These instruments are used for asset and liability management and
trading purposes. Generally, these instruments help Key meet clients' financing
needs and manage exposure to "market risk" -- the possibility that economic
value or net interest income will be adversely affected by changes in interest
rates or other economic factors. However, like other financial instruments,
these derivatives contain an element of "credit risk" -- the possibility that
Key will incur a loss because a counterparty fails to meet its contractual
obligations.

The primary derivatives that Key uses are interest rate swaps, caps and futures,
and foreign exchange forward contracts. All foreign exchange forward contracts
and interest rate swaps and caps held are over-the-counter instruments.

ACCOUNTING TREATMENT AND VALUATION

Effective January 1, 2001, Key adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivatives and hedging activities. The new standards are
summarized in Note 1 ("Summary of Significant Accounting Policies") under the
heading "Derivatives Used for Asset and Liability Management Purposes" on page
60.

As a result of adopting SFAS No. 133, Key recorded cumulative after- tax losses
of $1 million in earnings and $22 million in "other comprehensive income (loss)"
as of January 1, 2001. Of the $22 million loss, an estimated $13 million was
reclassified as a charge to earnings during 2001.

84

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

At December 31, 2002, Key had $849 million of derivative assets and $151 million
of derivative liabilities on its balance sheet that were being used in
connection with hedging activities. As of the same date, the fair value of
derivative assets and liabilities classified as trading derivatives totaled $1.6
billion and $1.5 billion, respectively. Derivative assets and liabilities are
recorded in "accrued income and other assets" and "accrued expense and other
liabilities," respectively, on the balance sheet.

ASSET AND LIABILITY MANAGEMENT

FAIR VALUE HEDGING STRATEGIES. Key uses interest rate swap contracts known as
"receive fixed/pay variable" swaps to modify its exposure to interest rate risk.
These contracts convert specific fixed-rate deposits, short-term borrowings and
long-term debt into variable-rate obligations. As a result, Key receives
fixed-rate interest payments in exchange for variable-rate payments over the
lives of the contracts without exchanges of the underlying notional amounts.

During 2002, Key recognized a net gain of approximately $3 million related to
the ineffective portion of its fair value hedging instruments. The ineffective
portion recognized is included in "other income" on the income statement.

CASH FLOW HEDGING STRATEGIES. Key also enters into "pay fixed/receive variable"
interest rate swap contracts that effectively convert a portion of its
floating-rate debt into fixed-rate debt to reduce the potential adverse impact
of interest rate increases on future interest expense.

These contracts allow Key to exchange variable-rate interest payments for
fixed-rate payments over the lives of the contracts without exchanges of the
underlying notional amounts. Similarly, Key has converted certain floating-rate
commercial loans to fixed-rate loans by entering into interest rate swap
contracts.

Key also uses "pay fixed/receive variable" interest rate swaps to manage the
interest rate risk associated with anticipated sales or securitizations of
certain commercial real estate loans. These swaps protect against a possible
short-term decline in the value of the loans that could result from changes in
interest rates between the time they are originated and the time they are
securitized or sold. Key's general policy is to sell or securitize these loans
within one year of their origination.

In May 2001, Key revised its projections of future debt needs. Consequently,
during the second quarter of 2001, Key reclassified a $3 million gain from
"accumulated other comprehensive income (loss)" to "other income" on the
consolidated income statement. This reclassification relates to a cash flow
hedge of a previously forecasted debt issuance that Key did not make.

During 2002, the net gain recognized by Key in connection with the ineffective
portion of its cash flow hedging instruments was not significant. The exclusion
of portions of hedging instruments from the assessment of hedge effectiveness
had no effect on earnings during 2002.

The change in "accumulated other comprehensive income (loss)" resulting from
cash flow hedges is as follows:

<TABLE>
<CAPTION>
                                                                                              RECLASSIFICATION
                                                 DECEMBER 31,                 2002               OF LOSSES            DECEMBER 31,
in millions                                         2001                HEDGING ACTIVITY       TO NET INCOME              2002
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                    <C>                   <C>                     <C>
Accumulated other comprehensive income
   (loss) resulting from cash flow hedges           $(2)                      $(29)                  $37                  $6
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Key expects to reclassify an estimated $47 million of net gains on derivative
instruments from "accumulated other comprehensive income (loss)" to earnings
during the next twelve months. Reclassifications will coincide with the income
statement impact of the hedged item through the payment of variable-rate
interest on debt, the receipt of variable-rate interest on commercial loans and
the sale or securitization of commercial real estate loans.

TRADING PORTFOLIO

FUTURES CONTRACTS AND INTEREST RATE SWAPS, CAPS AND FLOORS. Key uses these
instruments for dealer activities, which are generally limited to Key's
commercial loan clients, and enters into positions with third parties that are
intended to offset or mitigate the interest rate risk of the client positions.
The transactions entered into with clients are generally limited to conventional
interest rate swaps. All futures contracts and interest rate swaps, caps and
floors are recorded at their estimated fair values. Adjustments to fair value
are included in "investment banking and capital markets income" on the income
statement.

FOREIGN EXCHANGE FORWARD CONTRACTS. Key uses these instruments to accommodate
the business needs of clients and for proprietary trading purposes. Foreign
exchange forward contracts provide for the delayed delivery or purchase of
foreign currency. Key mitigates the associated risk by entering into other
foreign exchange contracts with third parties. Adjustments to the fair value of
all foreign exchange forward contracts are included in "investment banking and
capital markets income" on the income statement.

OPTIONS AND FUTURES. Key uses these instruments for proprietary trading
purposes. Adjustments to the fair value of options and futures are included in
"investment banking and capital markets income" on the income statement.

The following table shows trading income recognized on interest rate swap,
foreign exchange forward, and option and futures contracts.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                               2002       2001      2000
- -------------------------------------------------------------------
<S>                                       <C>        <C>       <C>
Interest rate contracts                   $10        $17        $32
Foreign exchange forward contracts         33         40         35
Option and futures contracts               --         --          3
- -------------------------------------------------------------------
</TABLE>

                                                                              85

<PAGE>

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

COUNTERPARTY CREDIT RISK

Swaps and caps present credit risk because the counterparty may not meet the
terms of the contract. This risk is measured as the expected positive
replacement value of contracts. To mitigate credit risk, Key deals exclusively
with counterparties that have high credit ratings.

Key uses two additional precautions to manage exposure to credit risk on swap
contracts. First, Key generally enters into bilateral collateral and master
netting arrangements. These agreements include legal rights of setoff that
provide for the net settlement of the related contracts with the same
counterparty in the event of default. Second, Credit Administration monitors
credit risk exposure to the counterparty on each interest rate swap to determine
appropriate limits on Key's total credit exposure and whether it is advisable to
demand collateral.

At December 31, 2002, Key was party to interest rate swaps and caps with 51
different counterparties. Among these were swaps and caps entered into to offset
the risk of client exposure. Key had aggregate credit exposure of $631 million
to 31 of these counterparties, with the largest credit exposure to an individual
counterparty amounting to approximately $277 million.

              21. 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."

<TABLE>
<CAPTION>
DECEMBER 31,                                      2002                        2001
                                         ----------------------       -----------------------
                                         CARRYING        FAIR         CARRYING        FAIR
in millions                               AMOUNT         VALUE         AMOUNT         VALUE
- ---------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>             <C>
ASSETS
Cash and short-term investments(a)       $ 4,996        $ 4,996        $ 4,789        $ 4,789
Securities available for sale(b)           8,507          8,507          5,408          5,408
Investment securities(b)                     120            129            225            234
Other investments(c)                         919            919            832            832
Loans, net of allowance(d)                61,005         62,703         61,632         62,938
Servicing assets(a)                           99             99             73             73
Derivative assets(f)                       2,477          2,477          1,107          1,107

LIABILITIES
Deposits with no stated maturity(a)      $28,908        $28,908        $25,047        $25,047
Time deposits(e)                          20,438         21,021         19,748         20,067
Short-term borrowings(a)                   6,685          6,685          9,284          9,284
Long-term debt(e)                         15,605         15,712         14,554         14,268
Derivative liabilities(f)                  1,628          1,628            899            899

CAPITAL SECURITIES(c)                      1,260          1,129          1,288          1,157
- ---------------------------------------------------------------------------------------------
</TABLE>

Valuation Methods and Assumptions:

(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 issuer's
     financial 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 flow models.
     Lease financing 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 flows.

(f)  Fair values of interest rate swaps and caps were based on discounted cash
     flow models. Foreign exchange forward contracts were valued based on quoted
     market prices and had a fair value that approximated their carrying amount.

Residential real estate mortgage loans with carrying amounts of $2.0 billion at
December 31, 2002, and $2.3 billion at December 31, 2001, 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 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.

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.

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.

86

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

           22. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS
DECEMBER 31,
in millions                                         2002          2001
- ------------------------------------------------------------------------
<S>                                               <C>            <C>
ASSETS
Interest-bearing deposits with KBNA               $ 1,406        $ 1,054
Loans and advances to subsidiaries:
   Banks                                               77             99
   Nonbank subsidiaries                               693            669
- ------------------------------------------------------------------------
                                                      770            768
Investment in subsidiaries:
   Banks                                            5,884          5,744
   Nonbank subsidiaries                             1,993          2,004
- ------------------------------------------------------------------------
                                                    7,877          7,748
Accrued income and other assets                       881            780
- ------------------------------------------------------------------------
   Total assets                                   $10,934        $10,350
                                                  =======        =======

LIABILITIES
Accrued expense and other liabilities             $   595        $   580
Short-term borrowings                                 187            121
Long-term debt:
   Subsidiary trusts                                1,142          1,282
   Unaffiliated companies                           2,175          2,212
- ------------------------------------------------------------------------
                                                    3,317          3,494
- ------------------------------------------------------------------------
   Total liabilities                                4,099          4,195

SHAREHOLDERS' EQUITY(a)                             6,835          6,155
- ------------------------------------------------------------------------
Total liabilities and shareholders' equity        $10,934        $10,350
                                                  =======        =======
- ------------------------------------------------------------------------
</TABLE>

(a)  See page 55 for KeyCorp's Consolidated Statements of Changes in
     Shareholders' Equity.

<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31,
in millions                                                    2002            2001           2000
- ----------------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>             <C>
INCOME
Dividends from subsidiaries:
   Banks                                                     $   900         $   500         $ 1,440
   Nonbank subsidiaries                                          200             107              57
Interest income from subsidiaries                                 54              77              62
Other income                                                       3              49              46
- ----------------------------------------------------------------------------------------------------
                                                               1,157             733           1,605
EXPENSES
Interest on long-term debt with subsidiary trusts                 80              92              98
Interest on other borrowed funds                                  33             132             133
Restructuring charges (credits)                                   --              (4)            102
Personnel and other expense                                       58              56              59
- ----------------------------------------------------------------------------------------------------
                                                                 171             276             392
Income before income tax benefit and equity in
   net income less dividends from subsidiaries                   986             457           1,213
Income tax benefit                                                53              28             103
- ----------------------------------------------------------------------------------------------------
                                                               1,039             485           1,316
Equity in net income less dividends from subsidiaries            (63)           (353)           (314)
- ----------------------------------------------------------------------------------------------------
NET INCOME                                                   $   976         $   132         $ 1,002
                                                             =======         =======         =======
- ----------------------------------------------------------------------------------------------------
</TABLE>

                                                                              87

<PAGE>

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KEYCORP AND SUBSIDIARIES

CONDENSED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
in millions                                                                        2002           2001            2000
- ------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>             <C>             <C>
OPERATING ACTIVITIES
Net income                                                                       $   976         $   132         $ 1,002
Adjustments to reconcile net income to net cash provided by operating
   activities:
   Amortization of intangibles                                                        --              20              24
   Net securities gains (losses)                                                      16             (28)             (7)
   Deferred income taxes                                                             (21)            (20)             10
   Equity in net income less dividends from subsidiaries                              63             353             314
   Net increase in other assets                                                     (113)            (69)           (213)
   Net increase in other liabilities                                                 244             125             133
   Net increase (decrease) in accrued restructuring charges                          (32)            (68)             33
   Other operating activities, net                                                    11              39             (35)
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                          1,144             484           1,261
INVESTING ACTIVITIES
Cash used in acquisition, net of cash acquired                                       (66)             --              --
Net (increase) decrease in interest-bearing deposits                                (352)           (507)            136
Purchases of securities available for sale                                            (8)            (50)           (192)
Proceeds from prepayments and maturities of securities available for sale             25             195              10
Net increase in loans and advances to subsidiaries                                (1,648)           (136)            (83)
(Increase) decrease in investments in subsidiaries                                 1,604             670            (846)
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                 (445)            172            (975)
FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings                                      66          (1,063)            665
Net proceeds from issuance of long-term debt                                         423           1,142             290
Payments on long-term debt                                                          (637)           (230)           (334)
Loan payment received from ESOP trustee                                               --              13              11
Purchases of treasury shares                                                         (77)            (50)           (462)
Proceeds from issuance of common stock pursuant to employee
   benefit and dividend reinvestment plans                                            37              33              28
Cash dividends paid                                                                 (511)           (501)           (484)
- ------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES                                               (699)           (656)           (286)
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS                                    --              --              --
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR                                          --              --              --
- ------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR                                                --              --              --
                                                                                 =======         =======         =======
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

KeyCorp paid interest on borrowed funds amounting to $113 million in 2002, $224
million in 2001 and $231 million in 2000.

88

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>15
<FILENAME>l97974aexv21.txt
<DESCRIPTION>EX-21   SUBSIDIARIES OF THE REGISTRANT
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                      EXHIBIT 21

              SUBSIDIARIES OF THE REGISTRANT AT FEBRUARY 28, 2003

<Table>
<Caption>
                                                  JURISDICTION
                                                OF INCORPORATION
               SUBSIDIARIES(A)                  OR ORGANIZATION             PARENT COMPANY
- ----------------------------------------------  ----------------  ----------------------------------
<S>                                             <C>               <C>
KeyBank National Association                     United States                 KeyCorp
Key Bank USA, National Association               United States                 KeyCorp
</Table>

(a) Subsidiaries of KeyCorp other than KeyBank National Association and Key Bank
    USA, National Association are not listed above since, in the aggregate, they
    would not constitute a significant subsidiary. KeyBank National Association
    and Key Bank USA, National Association are 100% owned by KeyCorp.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>16
<FILENAME>l97974aexv23.txt
<DESCRIPTION>EX-23  CONSENT OF INDEPENDENT AUDITORS
<TEXT>
<PAGE>

                                                                      EXHIBIT 23

                        CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Annual Report (Form 10-K)
of KeyCorp of our report dated January 13, 2003, included in the 2002 Annual
Report to Shareholders of KeyCorp.

We also consent to the incorporation by reference in the following Registration
Statements of KeyCorp and in the related Prospectuses of our report dated
January 13, 2003, with respect to the consolidated financial statements
incorporated herein by reference in this Annual Report (Form 10-K) for the year
ended December 31, 2002:

<Table>
<S>                             <C>
Form S-3 No. 33-58405
Form S-3 No. 333-10577          (Post-Effective Amendments No. 1 and No. 2)
Form S-3 No. 333-55959
Form S-3 No. 333-64601
Form S-3 No. 333-59175
Form S-3 No. 333-76619          (Post-Effective Amendment No. 1)
Form S-3 No. 333-88063
Form S-3 No. 333-50802
Form S-3 No. 333-56258
Form S-3 No. 333-63104
Form S-3 No. 333-73380          (Amendment No. 1)
Form S-3 No. 333-88934          (Amendment No. 1)

Form S-4 No. 33-31569
Form S-4 No. 33-44657
Form S-4 No. 33-51717
Form S-4 No. 33-55573
Form S-4 No. 33-57329
Form S-4 No. 33-61539
Form S-4 No. 333-19151
Form S-4 No. 333-61025

Form S-8 No. 2-97452
Form S-8 No. 33-21643
Form S-8 No. 333-49609
Form S-8 No. 333-49633
Form S-8 No. 333-65391
Form S-8 No. 333-70669
Form S-8 No. 333-70703
Form S-8 No. 333-70775
Form S-8 No. 333-72189
Form S-8 No. 333-92881
Form S-8 No. 333-45320
Form S-8 No. 333-45322
Form S-8 No. 333-99493
Form S-8 No. 333-99495
Form S-8 No. 33-31569           (Post-Effective Amendment No. 1 to Form S-4)
Form S-8 No. 33-51717           (Post-Effective Amendment No. 1 to Form S-4)
Form S-8 No. 33-44657           (Post-Effective Amendment No. 1 to Form S-4)
Form S-8 No. 333-61025          (Post-Effective Amendment No. 1 to Form S-4)
</Table>

                                                           /s/ Ernst & Young LLP

Cleveland, Ohio
March 18, 2003

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>17
<FILENAME>l97974aexv24.txt
<DESCRIPTION>EX-24   POWERS OF ATTORNEY
<TEXT>
<PAGE>


                                                                      Exhibit 24



                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Thomas C. Stevens
                                    --------------------------------------


                     Typed Name:      Thomas C. Stevens
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24


                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Henry L. Meyer III
                                    --------------------------------------


                     Typed Name:      Henry L. Meyer III
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24




                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Jeffrey B. Weeden
                                    --------------------------------------


                     Typed Name:      Jeffrey B. Weeden
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Lee G. Irving
                                    --------------------------------------


                     Typed Name:      Lee G. Irving
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Cecil D. Andrus
                                    --------------------------------------


                     Typed Name:      Cecil D. Andrus
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24




                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ William G. Bares
                                    --------------------------------------


                     Typed Name:      William G. Bares
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24




                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Edward P. Campbell
                                    --------------------------------------


                     Typed Name:      Edward P. Campbell
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Dr. Carol A. Cartwright
                                    --------------------------------------


                     Typed Name:      Dr. Carol A. Cartwright
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Alexander M. Cutler
                                    --------------------------------------


                     Typed Name:      Alexander M. Cutler
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Henry S. Hemingway
                                    --------------------------------------


                     Typed Name:      Henry S. Hemingway
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Charles R. Hogan
                                    --------------------------------------


                     Typed Name:      Charles R. Hogan
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Dr. Shirley A. Jackson
                                    --------------------------------------


                     Typed Name:      Dr. Shirley A. Jackson
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Douglas J. McGregor
                                    --------------------------------------


                     Typed Name:      Douglas J. McGregor
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Eduardo R. Menasce
                                    --------------------------------------


                     Typed Name:      Eduardo R. Menasce
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Steven A. Minter
                                    --------------------------------------


                     Typed Name:      Steven A. Minter
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Dennis W. Sullivan
                                    --------------------------------------


                     Typed Name:      Dennis W. Sullivan
                                    --------------------------------------






<PAGE>
                                                                    Exhibit 24





                                     KEYCORP

                                POWER OF ATTORNEY

     The undersigned, an officer or director, or both an officer and director,
of KeyCorp, an Ohio corporation, which anticipates filing with the United States
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 (the "Annual Report"), hereby constitutes and
appoints Paul N. Harris, Thomas C. Stevens, and Daniel R. Stolzer, and each of
them, as attorney for the undersigned, with full power of substitution and
resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report and exhibits thereto, and any and all amendments
thereto, with full power and authority to do and perform any and all acts and
things requisite and necessary to be done, hereby ratifying and approving the
acts of such attorney or any such substitute or substitutes.

     IN WITNESS WHEREOF, the undersigned has hereto set his or her hand as of
March 13, 2003.


                                      /s/ Peter G. Ten Eyck, II
                                    --------------------------------------


                     Typed Name:      Peter G. Ten Eyck, II
                                    --------------------------------------







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>18
<FILENAME>l97974aexv99w1.txt
<DESCRIPTION>EX-99.1  CEO SECTION 906 CERT
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.1

                           CERTIFICATION PURSUANT TO
                               SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. 1350, the undersigned officer of KeyCorp (the "COMPANY"),
hereby certifies that the Company's Annual Report on Form 10-K for the year
ended December 31, 2002 (the "REPORT") fully complies with the requirements of
Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934
and that the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

March 12, 2003                            /s/ Henry L. Meyer III
                                          --------------------------------------
                                          Henry L. Meyer III
                                          Chairman, President and Chief
                                          Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>19
<FILENAME>l97974aexv99w2.txt
<DESCRIPTION>EX-99.2    CFO SECTION 906 CERT
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.2

                           CERTIFICATION PURSUANT TO
                               SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. 1350, the undersigned officer of KeyCorp (the "COMPANY"),
hereby certifies that the Company's Annual Report on Form 10-K for the year
ended December 31, 2002 (the "REPORT") fully complies with the requirements of
Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934
and that the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

March 12, 2003                            /s/ Jeffrey B. Weeden
                                          --------------------------------------
                                          Jeffrey B. Weeden
                                          Chief Financial Officer

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
