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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, 1999
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
(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)
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)
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.
The aggregate market value of voting stock held by nonaffiliates of the
Registrant was approximately $7,476,315,903 at February 29, 2000. (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 29, 2000.)
441,406,105 Shares
- --------------------------------------------------------------------------------
(NUMBER OF KEYCORP COMMON SHARES OUTSTANDING AS OF FEBRUARY 29, 2000)
Certain specifically designated portions of KeyCorp's 1999 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 2000 Annual Meeting of Shareholders are incorporated by
reference into Part III of this Form 10-K.
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KEYCORP
1999 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
ITEM PAGE
NUMBER NUMBER
- ------ ------
PART I
1 Business.................................................... 1
2 Properties.................................................. 7
3 Legal Proceedings........................................... 7
4 Submission of Matters to a Vote of Security Holders......... 8
PART II
5 Market for Registrant's Common Stock and Related Stockholder
Matters................................................... 8
6 Selected Financial Data..................................... 8
7 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 8
7A Quantitative and Qualitative Disclosures about Market
Risk...................................................... 8
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................................................ 9
13 Certain Relationships and Related Transactions.............. 9
PART IV
14 Exhibits, Financial Statement Schedules, and Reports on Form
8-K....................................................... 10
Signatures.................................................. 14
Exhibits.................................................... 15
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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 and registered
under the Bank Holding Company Act of 1956, as amended ("BHCA"), is
headquartered in Cleveland, Ohio. At December 31, 1999, it was one of the
nation's largest integrated multi-line financial services companies with
consolidated total assets of $83 billion. Its subsidiaries provide a wide range
of investment management, retail and commercial banking, consumer finance and
investment banking products and services to corporate, individual and
institutional clients through four lines of business: Key Retail Banking, Key
Specialty Finance, Key Corporate Capital and Key Capital Partners. As of
December 31, 1999, these services are provided across much of the country
through banking subsidiaries operating 936 full-service branches in 13 states, a
24-hour telephone banking call center and 2,516 ATMs in 15 states. Additional
information pertaining to the four business lines referred to above is included
in the "Line of Business Results" section beginning on page 29 and in Note 4
("Line of Business Results"), beginning on page 61 of the Financial Review
section of KeyCorp's 1999 Annual Report to Shareholders and is incorporated
herein by reference. KeyCorp and its subsidiaries have 24,568 full-time
equivalent employees as of December 31, 1999.
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 companies 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 that are established in accordance with applicable
law). In addition, investment management subsidiaries serve as investment
advisers to proprietary mutual funds offered by other KeyCorp affiliates.
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, venture
capital, community development financing, securities underwriting and brokerage,
automobile financing and other financial services. KeyCorp is an equity
participant in a joint venture with Key Merchant Services, LLC, which provides
merchant services to businesses.
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The following financial data is included in the Financial Review section of
KeyCorp's 1999 Annual Report to Shareholders and is incorporated herein by
reference as indicated below:
DESCRIPTION OF FINANCIAL DATA PAGE
----------------------------- ----
Selected Financial.......................................... 28
Average Balance Sheets, Net Interest Income and
Yields/Rates.............................................. 32
Components of Net Interest Income Changes................... 35
Composition of Loans........................................ 42
Maturities and Sensitivity of Certain Loans to Changes in
Interest Rates............................................ 44
Securities Available for Sale............................... 44
Investment Securities....................................... 45
Allocation of the Allowance for Loan Losses................. 46
Summary of Loan Loss Experience............................. 47
Summary of Nonperforming Assets and Past Due Loans.......... 48
Maturity Distribution of Time Deposits of $100,000 or
More...................................................... 48
Impaired Loans and Other Nonperforming Assets............... 65
Short-Term Borrowings....................................... 65
The executive offices of KeyCorp are located at 127 Public Square, Cleveland,
Ohio 44114-1306, and its telephone number is (216) 689-6300.
MERGERS, ACQUISITIONS AND DIVESTITURES
The information presented in Note 3 ("Mergers, Acquisitions and Divestitures"),
beginning on page 60 of the Financial Review section of KeyCorp's 1999 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 is expected to intensify
as a consequence of the financial modernization laws that were recently enacted
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 "Interstate Banking and
Branching" and "Financial Modernization Legislation" below.
SUPERVISION AND REGULATION
The following discussion addresses certain of the 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 for the protection of 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 for the protection of security holders.
Set forth below is a brief discussion of selected laws, regulations, and
regulatory agency policies applicable to Key. Such discussion is not intended to
be comprehensive, and is qualified in its entirety by reference to the full text
of such statutes, regulations, and regulatory agency policies. Changes in
applicable laws, regulations, and regulatory agency policies cannot necessarily
be predicted, but may have a material effect on Key's business, financial
condition and results of operation.
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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 banking 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 ("KeyBank") and Key
Bank USA, National Association ("KeyBank USA"), and six national bank
subsidiaries 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 KeyBank and KeyBank 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-regulated
organizations. For example, KeyCorp's brokerage and asset management
subsidiaries are subject to supervision and regulation by the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. or the
New York Stock Exchange and state securities regulators; KeyCorp's insurance
subsidiaries are subject to regulation by the insurance regulatory authorities
of the various states. Other nonbank subsidiaries of KeyCorp may be 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 banking 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. In addition, 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." See "Regulatory Capital Standards and Related
Matters--Prompt Corrective Action." The FDIA also prohibits the payment of any
dividend while the institution is in default in the payment of any assessment
due to the FDIC. Also, the Federal Reserve Board, the OCC and the FDIC have
issued policy statements which 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 Banking Subsidiaries. KeyCorp's national bank
subsidiaries (and their 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 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
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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 KeyBank and KeyBank USA, including
their subsidiaries, with or involving KeyCorp and its nonbank subsidiaries which
are not subsidiaries of KeyBank and KeyBank USA was limited at December 31,
1999, to approximately $1.8 billion. As a result, these provisions materially
restrict the ability of KeyCorp's national bank subsidiaries and their
subsidiaries to fund KeyCorp and its nonbank subsidiaries which are not
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.
Uniform Retail Credit Policy. On February 10, 1999, the Federal banking agencies
published their final Uniform Retail Credit Classification and Account
Management Policy (the "Retail Credit Policy"), which revises their 1980 Uniform
Policy for Classification of Consumer Installment Credit Based on Delinquency
Status. The Retail Credit Policy applies to all financial institutions which
file call reports or thrift financial reports with a Federal banking agency. In
general, the Retail Credit Policy establishes a uniform charge-off policy for
closed-end and open-end credit, respectively, provides uniform guidance for
loans affected by bankruptcy, fraud, and death, establishes guidelines for
re-aging, extending, deferring, or rewriting past due accounts, classifies
certain delinquent residential mortgage and home equity loans, and broadens
recognition of partial payments that qualify as full payments. Key anticipates
implementing these new guidelines prior to the required date of December 31,
2000, and perhaps as early as the first quarter of 2000. Based upon current
estimates, management expects that the implementation will accelerate up to $60
million of Key's consumer loan charge-offs which might otherwise have occurred
at later dates. Key's allowance already includes an allocation for these
potential losses.
Regulatory Capital Standards and Related Matters
Regulatory Capital. Applicable law and regulation define and prescribe minimum
levels of regulatory capital for bank holding companies and their banking
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.
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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%. The required minimum total risk-based
capital ratio is currently 8%. 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. 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, 1999,
Key's Tier 1 and total capital to risk-weighted assets ratios were 7.68% and
11.66%, respectively, which include all 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% 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%. Neither KeyCorp nor any of its banking
subsidiaries has been advised by its primary Federal banking regulator of any
specific leverage ratio applicable to it. At December 31, 1999, Key's Tier 1
capital leverage ratio was 7.77%.
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,
1999, each of these banking subsidiaries had regulatory capital in excess of all
minimum risk-based and leverage capital requirements.
Besides establishing regulatory minimum ratios of capital to assets for all bank
holding companies and their banking subsidiaries, the risk-based and leverage
capital guidelines also identify various organization-specific factors and risks
which are not taken into account in the computation of the capital ratios yet
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. The Federal Reserve
Board and OCC have published new proposals in 2000 to amend the risk-based
capital treatment of recourse obligations, direct credit substitutes and
securitized transactions, replacing earlier proposals that were not acted upon
in 1999.
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
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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%, a Tier 1 risk-based capital ratio of at least 6% and a Tier 1
leverage capital ratio of at least 5% 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%, a Tier 1 risk-based capital ratio
of at least 4% or greater and a Tier 1 leverage capital ratio of at least 4% (3%
if the institution has achieved the highest composite rating in its most recent
examination) and is not well capitalized. At December 31, 1999, 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 banking subsidiaries, and
should be considered in conjunction with other available information regarding
Key's financial condition and results of operations.
FDIC DEPOSIT INSURANCE AND FINANCING CORPORATION BOND ASSESSMENTS
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 1999 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 1999 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.
Beginning in 1997, all BIF-member institutions were required to join with
SAIF-member institutions in servicing the approximately $793 million of annual
interest on 30-year non-callable bonds issued by the Financing Corporation
("FICO") in the late 1980s to fund losses incurred by the former Federal Savings
and Loan Insurance Corporation. FICO bond assessments are separate from and in
addition to deposit insurance premium assessments and, unlike deposit insurance
premium assessments, do not vary with the depository institution's
capitalization and Federal supervisory evaluation. Federal law required the FICO
assessment rate on BIF assessable deposits to be one-fifth of that imposed on
SAIF assessable deposits through 1999. For 1999, the average annualized FICO
assessment rates were $.05925 per $100 of SAIF-assessable deposits and $.01185
per $100 of BIF-assessable deposits, resulting in approximately $6 million of
FICO assessments paid by Key for 1999. Starting in 2000, BIF and SAIF FICO
assessment rates equalize, with an annualized rate for the first quarter of 2000
of $.02120 per $100 of all FICO assessable deposits. As a result of this
assessment rate equalization, Key's FICO assessment expense for the first
quarter of 2000 increased 51% over such expense for the first quarter of 1999.
INTERSTATE BANKING AND BRANCHING
On September 29, 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Act") was enacted into Federal law. The
Interstate Act generally authorizes bank holding companies to acquire banks
located in any state, and also generally permits FDIC-insured banks located in
different states to merge, allowing the resulting institution to operate
interstate branches. In addition, the Interstate Act allows an FDIC-insured bank
to establish (or acquire) and operate a branch in a state in which such bank
does not maintain
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a branch if that state expressly permits such transactions. Using the authority
conferred by the Interstate Act, the number of FDIC-insured depository
institutions operated by KeyCorp has been reduced to two -- KeyBank and KeyBank
USA.
FINANCIAL MODERNIZATION LEGISLATION
The Gramm-Leach-Bliley Act of 1999 (the "GLBA") was enacted on November 12,
1999, providing for a range of 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.
On February 11, 2000, KeyCorp filed with the Federal Reserve Board its
declaration of election to become a financial holding company. It is not
presently known, however, to what extent KeyCorp and its subsidiaries will
utilize the broader range of financial activities available to KeyCorp as a
financial holding company.
ITEM 2. PROPERTIES
The headquarters of KeyCorp, KeyBank and KeyBank USA are located in Key Tower at
127 Public Square, Cleveland, Ohio 44114-1306. At December 31, 1999, 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 banking subsidiaries of KeyCorp owned
520 of their branch banking offices and leased 416 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 1999 Annual Report to Shareholders and is incorporated herein by
reference.
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, Key is subject to legal actions which
involve claims for substantial monetary relief. Based on information presently
known to management and Key's counsel, management does not believe that there
exists any legal action to which KeyCorp or any of its subsidiaries is a party,
or of which their properties are the subject, that, individually or in the
aggregate, will have a material adverse effect on the financial condition of
Key.
In March 1998, McDonald Investments Inc. ("McDonald"), now a subsidiary of
KeyCorp, participated as an initial purchaser in an offering to institutional
investors of certain securities of Nakornthai Strip Mill Public Company Ltd.
("NSM"), a Thailand public company, and certain NSM affiliates, including
approximately $452 million in debt securities and related warrants (the
"Securities"). The offering was part of the financing of an NSM steel mini-mill
located in Chonburi, Thailand. McDonald served as a financial advisor to NSM and
was an initial purchaser of approximately $44 million of the Securities. On
December 24, 1998, holders of Securities gave a Notice of Default alleging a
number of defaults under the terms of the Securities. NSM is currently working
toward a restructuring of its obligations, including obligations to holders of
the Securities and other creditors.
Certain purchasers of Securities have commenced litigation against McDonald and
other parties in California, Connecticut, Illinois, Minnesota, New Jersey and
New York, claiming that McDonald, the other initial purchasers and certain other
third party service providers to NSM have violated certain state and federal
securities and other laws. The lawsuits are based on alleged misstatements and
omissions in the Offering Memorandum for the Securities, and on certain other
information and oral statements allegedly provided to potential investors. In
each
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lawsuit the plaintiffs allege misrepresentations relating to (among other
things) the physical facilities at the mill, the management of the mill, the
supply of inputs to the mill and the use of the proceeds of the offering.
There are currently pending eight separate lawsuits brought by purchasers of the
Securities against McDonald, as well as other defendants (two suits in Federal
District Court in Minnesota; one suit in Federal District Court in New York; two
suits in California; and one suit in each of Connecticut, Illinois and New
Jersey). The aggregate amount of Securities alleged to have been purchased by
the plaintiffs in these eight lawsuits is at least $257 million. While the
relief claimed in the lawsuits varies, generally speaking, the plaintiffs seek
rescission of the sale of the Securities, compensatory damages, legal fees,
expenses, and in the case of the New Jersey action (which currently covers
approximately $107 million face value of Securities), treble damages consistent
with applicable law, exemplary damages and civil penalties.
McDonald is vigorously defending these actions and has filed, or will file,
responses to each complaint denying liability.
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 1999 Annual
Report to Shareholders are incorporated herein by reference:
PAGE
----
Discussion of common shares and shareholder information
presented in the capital and dividends section............ 49
Presentation of quarterly market price and cash dividends
per common share.......................................... 51
Discussion of dividend restrictions presented in Note 16
("Commitments, Contingent Liabilities and Other
Disclosures")............................................. 71
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data presented on page 28 of the Financial Review section
of KeyCorp's 1999 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 26 through 51
of the Financial Review section of KeyCorp's 1999 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 35 through 37 of the Financial Review section of KeyCorp's 1999 Annual
Report to Shareholders is incorporated herein by reference.
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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 76, respectively, of the
Financial Review section of KeyCorp's 1999 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 2000 Annual Meeting of Shareholders
to be held May 18, 2000, and is incorporated herein by reference. KeyCorp
expects to file its final proxy statement on or before April 14, 2000.
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 2000 Annual Meeting of Shareholders
to be held May 18, 2000, and is incorporated herein by reference. The
information set forth in the sections captioned "COMPENSATION AND ORGANIZATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION" and "KEYCORP STOCK PRICE
PERFORMANCE" contained in KeyCorp's definitive Proxy Statement for the 2000
Annual Meeting of Shareholders to be held May 18, 2000, is not incorporated by
reference in this Report on Form 10-K. KeyCorp expects to file its final proxy
statement on or before April 14, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth in the section captioned
"SHARE OWNERSHIP AND PHANTOM STOCK UNITS" contained in KeyCorp's definitive
Proxy Statement for the 2000 Annual Meeting of Shareholders to be held May 18,
2000, and is incorporated herein by reference. KeyCorp expects to file its final
proxy statement on or before April 14, 2000.
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 2000 Annual Meeting of Shareholders to be held May 18, 2000,
and is incorporated herein by reference. KeyCorp expects to file its final proxy
statement on or before April 14, 2000.
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PART IV
ITEM 14. 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 1999 Annual Report to
Shareholders:
PAGE
----
Consolidated Financial Statements:
Report of Ernst & Young LLP, Independent Auditors......... 52
Consolidated Balance Sheets at December 31, 1999 and
1998................................................... 53
Consolidated Statements of Income for the Years Ended
December 31, 1999, 1998 and 1997....................... 54
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 1999, 1998 and 1997... 55
Consolidated Statements of Cash Flow for the Years Ended
December 31, 1999, 1998 and 1997....................... 56
Notes to Consolidated Financial Statements................ 57
(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*
3.1 Amended and Restated Articles of Incorporation of KeyCorp
filed on November 13, 1998, as Exhibit 3 to Form 10-Q, and
incorporated herein by reference.
3.2 Amended and Restated Regulations of KeyCorp, effective May
15, 1997, filed on June 19, 1997, as Exhibit 2 to Form
8-A/A, 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 November
20, 1997, filed as Exhibit 10.5 to Form 10-K for the year
ended December 31, 1997, and incorporated herein by
reference.
10.2 First Amendment to Form of Change of Control Agreement
between KeyCorp and Certain Executive Officers of KeyCorp,
filed as Exhibit 10.1 to Form 10-Q for the quarter ended
September 30, 1999, and incorporated herein by reference.
10.3 Form of Stock Performance Option Grants between KeyCorp and
certain executive officers of KeyCorp, dated January 15,
1997, filed as Exhibit 10.35 to Form 10-K for the year ended
December 31, 1996, and incorporated herein by reference.
10.4 Form of Stock Performance Option Grants between KeyCorp and
Robert W. Gillespie, dated January 2, 1998, filed as Exhibit
10.7 to Form 10-K for the year ended December 31, 1997, and
incorporated herein by reference.
10.5 Form of Premium Priced Option Grant between KeyCorp and
Robert W. Gillespie dated January 13, 1999, filed as Exhibit
10.2 to Form 10-Q for the quarter ended March 31, 1999, and
incorporated herein by reference.
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10.6 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.
10.7 Amended and Restated Employment Agreement between KeyCorp
and Robert W. Gillespie, effective November 21, 1996, filed
as Exhibit 10.33 to Form 10-K for the year ended December
31, 1996, and incorporated herein by reference.
10.8 First Amendment to Amended and Restated Employment Agreement
between KeyCorp and Robert W. Gillespie, dated December 7,
1998, filed as Exhibit 10.10 to Form 10-K for the year ended
December 31, 1998, and incorporated herein by reference.
10.9 Second Amendment to Amended and Restated Employment
Agreement between KeyCorp and Robert W. Gillespie, dated
November 23, 1999.
10.10 Employment Agreement between KeyCorp and Henry L. Meyer III,
dated May 5, 1997, filed as Exhibit 10.1 to Form 10-Q for
the quarter ended June 30, 1997, and incorporated herein by
reference.
10.11 Amendment to Employment Agreement between KeyCorp and Henry
L. Meyer III, dated November 20, 1997, filed as Exhibit
10.10 to Form 10-K for the year ended December 31, 1997, and
incorporated herein by reference.
10.12 Second Amendment to Employment Agreement between KeyCorp and
Henry Meyer III, dated July 21, 1999, filed as Exhibit 10.2
to Form 10-Q for the quarter ended September 30, 1999, and
incorporated herein by reference.
10.13 Letter Agreement between KeyCorp and Thomas C. Stevens,
dated May 10, 1996 as amended April 7, 1997, filed as
Exhibit 10.12 to Form 10-K for the year ended December 31,
1997, and incorporated herein by reference.
10.14 Employment Agreement among KeyCorp, William B. Summers, Jr.,
and McDonald & Company Securities, Inc., dated June 14,
1998.
10.15 KeyCorp Long-Term Cash Incentive Compensation Plan (January
1, 1997 Restatement) filed as Exhibit 10.2 to Form 10-K for
the year ended December 31, 1996, and incorporated herein by
reference.
10.16 KeyCorp Long-Term Incentive Plan (January 1, 1998) filed as
Exhibit 10.3 to Form 10-K for the year ended December 31,
1997, and incorporated herein by reference.
10.17 KeyCorp Annual Incentive Plan (December 21, 1999
Restatement).
10.18 KeyCorp Amended and Restated 1991 Equity Compensation Plan
(Amended as of May 6, 1998). The Amendment filed as Exhibit
10 to Form 10-Q for the quarter ended June 30, 1998, and
incorporated herein by reference.
10.19 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.
10.20 KeyCorp 1988 Stock Option Plan as 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.
10.21 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.
10.22 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.
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10.23 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.
10.24 KeyCorp 1997 Stock Option Plan for Directors as amended and
restated on April 21, 1999, filed as Exhibit 10 to Form 10-Q
for the quarter ended June 30, 1999, and incorporated herein
by reference.
10.25 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.
10.26 Amended and Restated Director Deferred Compensation Plan
(May 6, 1998 Amendment and Restatement) filed as Exhibit 10
to Form 10-Q for the quarter ended September 30, 1998, and
incorporated herein by reference.
10.27 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.
10.28 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.
10.29 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.
10.30 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.
10.31 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.
10.32 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.
10.33 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.
10.34 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.
10.35 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.
10.36 KeyCorp Supplemental Retirement Plan, amended, restated and
effective August 1, 1996, filed as Exhibit 10.32 to Form
10-K for the year ended December 31, 1997, and incorporated
herein by reference.
10.37 First Amendment to KeyCorp Supplemental Retirement Plan,
effective July 1, 1999, filed as Exhibit 10.5 to Form 10-Q
for the quarter ended September 30, 1999, and incorporated
herein by reference.
10.38 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.
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10.39 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.
10.40 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.
10.41 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.
10.42 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.
10.43 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.
10.44 KeyCorp Survivor Benefit Plan, effective September 1, 1990,
filed as Exhibit 10.24 to Form 10-K for the year ended
December 31, 1996, and incorporated herein by reference.
10.45 KeyCorp Universal Life Insurance Plan filed as Exhibit 10.15
to Form 10-K for the year ended December 31, 1993, and
incorporated herein by reference.
10.46 KeyCorp Supplemental Long Term Disability Plan filed as
Exhibit 10.15 to Form 10-K for the year ended December 31,
1993, and incorporated herein by reference.
10.47 Old KeyCorp Supplemental Disability Plan (Specimen Document)
filed as Exhibit 10.17 to Form 10-K for the year ended
December 31, 1996, and incorporated herein by reference.
12 Statement re: Computation of Ratios.
13 KeyCorp 1999 Annual Report to Shareholders.
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27 Financial Data Schedule.
KeyCorp hereby agrees to furnish the Securities and Exchange Commission 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 10.47 constitute management
contracts or compensatory plans or arrangements.
* Copies of these Exhibits have been filed with the Securities and Exchange
Commission. 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 22, 1999 -- The Registrant's October 21, 1999, press release announcing
its earnings results for the three-month and nine-month periods ended September
30, 1999.
December 15, 1999 -- The Registrant's November 23, 1999, press release
announcing initiatives to improve operating efficiency and enhance earnings
growth.
No other reports on Form 8-K were filed during the fourth quarter of 1999.
13
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTIONS 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
Senior Executive Vice President,
General Counsel and Secretary
March 16, 2000
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.
SIGNATURE TITLE
--------- -----
* Robert W. Gillespie Chairman, Chief
Executive Officer
(Principal Executive
Officer) and
Director
* K. Brent Somers Senior Executive
Vice President and
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
* Albert C. Bersticker Director
SIGNATURE TITLE
--------- -----
* Edward P. Campbell Director
* Dr. Carol A. Cartwright Director
* Thomas A. Commes Director
* Kenneth M. Curtis Director
* Henry S. Hemingway Director
* Charles R. Hogan Director
* Douglas J. McGregor Director
* Henry L. Meyer III President, Chief
Operating Officer
and Director
* Bill R. Sanford Director
* Ronald B. Stafford Director
* Dennis W. Sullivan Director
* Peter G. Ten Eyck, II Director
/s/ Thomas C. Stevens
* By Thomas C. Stevens,
attorney-in-fact
March 16, 2000
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