KEYCORP /NEW/ - 10-K Annual Report

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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, 2001

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)

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 $10,658,486,487 at February 28, 2002. (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, 2002.)

424,979,525 Shares
- --------------------------------------------------------------------------------
(NUMBER OF KEYCORP COMMON SHARES OUTSTANDING AS OF FEBRUARY 28, 2002)

Certain specifically designated portions of KeyCorp's 2001 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 2002 Annual Meeting of Shareholders are incorporated by
reference into Part III of this Form 10-K.

KEYCORP

2001 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

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, 2001, KeyCorp was one of the nation's largest bank-based
financial services companies with consolidated total assets of $80.9 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 lines of business: Key Consumer Banking, Key Corporate
Finance and Key Capital Partners. As of December 31, 2001, these services were
provided across much of the country through subsidiaries operating 911
full-service retail banking branches ("KeyCenters") in 12 states, a telephone
banking call center services group and 2,333 ATMs. Additional information
pertaining to the three business lines referred to above is included in the
"Line of Business Results" section beginning on page 26 and in Note 4 ("Line of
Business Results"), beginning on page 64 of the Financial Review section of
KeyCorp's 2001 Annual Report to Shareholders and is incorporated herein by
reference. KeyCorp and its subsidiaries had 21,230 full-time equivalent
employees as of December 31, 2001.

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, venture
capital, 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.

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

1

The following financial data is included in the Financial Review section of
KeyCorp's 2001 Annual Report to Shareholders and is incorporated herein by
reference:

ACQUISITIONS AND DIVESTITURES

The information presented in Note 3 ("Acquisitions and Divestitures"), beginning
on page 63 of the Financial Review section of KeyCorp's 2001 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 "Interstate Banking and
Branching" and "Financial Modernization Legislation" on page 7.

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.

The following 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.

2

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 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 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-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; 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 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. Since June 30, 2001, KeyBank USA has had a deficit in its
undivided profits account. Accordingly, its payment of dividends to KeyCorp
requires prior OCC consent. 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 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
3

operating 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 KeyBank
and KeyBank USA, including their operating subsidiaries, with or involving
KeyCorp and its nonbank subsidiaries which are not operating subsidiaries of
KeyBank and KeyBank USA was limited at December 31, 2001, to approximately $1.8
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, which 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.

Subprime Lending. In 2001, the Federal banking agencies published expanded
guidance to examiners in connection with their examination of subprime lending
programs. For these purposes, a subprime lending program is one that targets
borrowers with weakened credit histories or having questionable repayment
capacity. The guidance addresses supervisory expectations with respect to risk
management, the allowance for loan and lease losses, regulatory capital,
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 which possess
inadequate or weak controls. 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 KeyCorp or any of its
national bank subsidiaries of any such deficiency.

4

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.

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. 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, 2001,
Key's Tier 1 and total capital to risk-weighted assets ratios were 7.43% and
11.41%, 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
banking subsidiaries has been advised by its primary Federal banking regulator
of any specific leverage ratio applicable to it. At December 31, 2001, Key's
Tier 1 capital leverage ratio was 7.65%.

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,
2001, 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.

In late November 2001, the Federal banking agencies published their final rule
on the revised 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
5

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.

The final rule became effective on January 1, 2002, for any transactions that
settle on or after such date. Transactions which settle before January 1, 2002,
and result in increased regulatory capital requirements are not required to
conform to the final rule until December 31, 2002. Management is in the process
of completing its evaluation of the effect on Key of the final rule.

In late January 2002, the Federal banking agencies published their final rule on
the regulatory capital treatment of certain equity investments made by banking
organizations in companies engaged in nonfinancial activities. The final rule
becomes effective on April 1, 2002.

The final rule imposes marginal capital charges (applied by making deductions
from banking organization's Tier 1 capital) which 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% -
25% as such aggregate carrying amount increases from 15% to 25% of the banking
organization's Tier 1 capital. Management is in the process of completing its
evaluation of the effect on Key of the final rule.

As noted on page 4 in "Subprime Lending," the subprime lending examination
guidance addresses, among other matters, Federal banking agency supervisory
expectations with respect to regulatory capital of institutions with subprime
lending portfolios. For an institution having subprime lending portfolio
exposure aggregating 25% or more of the institution's Tier 1 capital, the
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 nonsubprime assets of a
similar type. Federal banking agencies may also apply this additional capital
requirement to other subprime portfolios such as those that are experiencing
rapid growth or adverse performance trends, that are administered by
inexperienced management, or which possess inadequate or weak controls.

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, 2001, 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
6

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 2001 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 2001 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. Starting in 2000, BIF and SAIF FICO
assessment rates equalized. Throughout 2001, Key paid FICO bond assessments at
an annualized rate of less than $.02 per $100 of its FICO-assessable deposits.

INTERSTATE BANKING AND BRANCHING

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (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 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 (the "GLBA"), enacted in November 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

7

practices, describes under what conditions a financial institution may disclose
nonpublic personal information about consumers to nonaffiliated third parties,
and provides an "opt-out" method for consumers to prevent the financial
institution from disclosing that information to nonaffiliated 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 of 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, banks 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 included a temporary exemption for
banks from the definitions of "broker" and "dealer" until October 2001. In July
2001, the SEC further extended this temporary exemption until May 2002. The SEC
has also given notice that it expects to amend its interim final rules and
further extend the temporary exemption so that banks will have a sufficient
transition period to bring their operations into compliance with the amended
rules.

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, 2001, 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
502 of their branch banking offices and leased 409 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 58 of the Financial Review section of
KeyCorp's 2001 Annual Report to Shareholders and is incorporated herein by
reference.

ITEM 3. LEGAL PROCEEDINGS

The information presented in the Legal Proceedings section of Note 17
("Commitments, Contingent Liabilities and Other Disclosures"), beginning on page
76 of the Financial Review section of KeyCorp's 2001 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 2001 Annual
Report to Shareholders are incorporated herein by reference:

8

ITEM 6. SELECTED FINANCIAL DATA

The Selected Financial Data presented on page 25 of the Financial Review section
of KeyCorp's 2001 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 22 through 52
of the Financial Review section of KeyCorp's 2001 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 29, 32 and 33 of the Financial Review section of KeyCorp's 2001 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 52 and on pages 54 through 83, respectively, of the
Financial Review section of KeyCorp's 2001 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 2002 Annual Meeting of Shareholders
to be held May 23, 2002, and is incorporated herein by reference. KeyCorp
expects to file its final proxy statement on or before April 12, 2002. The
information set forth in the sections captioned, "AUDIT AND RISK REVIEW
COMMITTEE INDEPENDENCE" and "AUDIT AND RISK REVIEW COMMITTEE REPORT" contained
in KeyCorp's definitive Proxy Statement for the 2002 Annual Meeting of
Shareholders to be held May 23, 2002, are not incorporated by reference in this
Report on Form 10-K.

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 2002 Annual Meeting of Shareholders
to be held May 23, 2002, 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 2002
Annual Meeting of Shareholders to be held May 23, 2002, is not incorporated by
reference in this Report on Form 10-K. KeyCorp expects to file its final proxy
statement on or before April 12, 2002.

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 2002 Annual Meeting

9

of Shareholders to be held May 23, 2002, and is incorporated herein by
reference. KeyCorp expects to file its final proxy statement on or before April
12, 2002.

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 2002 Annual Meeting of Shareholders to be held May 23, 2002,
and is incorporated herein by reference. KeyCorp expects to file its final proxy
statement on or before April 12, 2002.

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 2001 Annual Report to
Shareholders:

(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, 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
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 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.

10

10.4 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 herin by reference.

10.5 Form of Option Grant between KeyCorp and Robert W.
Gillespie, dated November 15, 2000, filed as Exhibit 10.5 to
Form 10-K for the year ended December 31, 2000, and
incorporated herein by reference.

10.6 Form of Option Grant between KeyCorp and Henry L. Meyer III,
dated November 15, 2000, filed as Exhibit 10.6 to Form10-K
for the year ended December 31, 2000, 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, filed as Exhibit 10.9 to Form 10-K for
the year ended December 31, 1999, and incorporated herein by
reference.

10.10 Amended Employment Agreement between KeyCorp and Henry L.
Meyer III, dated February 1, 2001, filed as Exhibit 10.10 to
Form 10-K for the year ended December 31, 2000, and
incorporated herein by reference.

10.11 Employment Agreement among KeyCorp, Robert T. Clutterbuck
and McDonald Investments Inc., dated October 4, 2000, filed
as Exhibit 10.13 to Form 10-K for the year ended December
31, 2000, and incorporated herein by reference.

10.12 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.

10.13 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.

10.14 KeyCorp Amended and Restated 1991 Equity Compensation Plan
(Amended as of November 14, 2001).

10.15 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.

10.16 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.

10.17 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.

10.18 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.

10.19 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.

10.20 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.

11

10.21 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.

10.22 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.

10.23 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.

10.24 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.

10.25 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.

10.26 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.

10.27 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.

10.28 First Amendment to KeyCorp Deferred Compensation Plan.

10.29 Second Amendment to KeyCorp Deferred Compensation Plan.

10.30 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.

10.31 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.

10.32 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.

10.33 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.

10.34 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.

10.35 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.

10.36 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.

10.37 Second Amendment to KeyCorp Supplemental Retirement Plan,
filed as Exhibit 10.37 to form 10-K for the year ended
December 31, 2000, 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.

12

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 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.

10.43 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.

10.44 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.

10.45 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.

10.46 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 2001 Annual Report to Shareholders.

21 Subsidiaries of the Registrant.

23 Consent of Independent Auditors.

24 Powers of Attorney.

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 10.46 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

December 20, 2001 -- The Registrant's December 20, 2001, press release
announcing: (a) actions taken to increase the loan loss reserve and strengthen
the balance sheet and (b) that the Registrant's Board of Directors increased the
cash dividend on the Registrant's common stock.

No other reports on Form 8-K were filed during the fourth quarter of 2001.

13

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
Vice Chairman,
Chief Administrative Officer and
Secretary
March 14, 2002

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.

/s/ Thomas C. Stevens
------------------------------------
* By Thomas C. Stevens,
attorney-in-fact
March 14, 2002

14