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 December 3, 1999

Key Municipal seeks new markets, enters Web

BOULDER — Key Municipal Finance, born of longtime Boulder company Leasetec and national banking giant Key Corp., is breaking out on its own as a local and regional equipment financing company. By entering the world of the Web to reach more customers and by competing fiercely in the market, Key Municipal is coming out from the shadow of its parents.

The new company was formed in January from two organizations, the municipal part of Leasetec Corp., and Key Corp. Leasing. Leasetec had been a privately held company in Boulder and was purchased by Key Corp. in 1997.

“I was with Leasetec when it was acquired. It was 18 years old and did mostly commercial financing,´ said Gregory A. Bohan, Key Municipal Finance’s vice president and general manager.

Key Municipal Finance is designed to meet the municipal financing needs of state, local and municipal governments. The new company focuses on a diverse market from high-tech products like mainframe computers and networks to police car fleets and airplanes, he said.

“Our focus is on the equipment that state and local governments are acquiring — fire trucks, police cars, computer systems, any capital asset you need to run a state or local government,” Bohan said.

Key Municipal finances the equipment through a lease obligation that allows the customer to acquire capital assets without taking on debt, based on their annual appropriations, he said.

“We offer very good rates but our competitors do, too. When things go out to bid, we’re usually in a quarter of a percentage point of each other,” he said.

Because of the narrow range of rates, the company tries to edge out competition by offering better services and ease of handling, he said.

“We bring good asset management and technology management skills that the typical company doesn’t bring to the table,” he said. “We’re comfortable writing asset management leases and operating leases.”

Key Municipal also offers a more diverse product line. “We’re bringing more innovative products to customers,” he said.

The most common product in the industry is a lease-to-purchase in which the customer ends up with ownership of the product, he said. “It’s a very viable product and we do a lot of it,” he said.

“We’re also finding that customers want to lease products over a shorter period of time and return them, not taking ownership. We’ve done a lot of that,” Bohan said.

Generally, the equipment that customers want to return is computer or other high-tech equipment. “They want somebody to manage it,” he said.

Bohan said the company plans to add more services and asset management to its offering to achieve revenue growth in the future.

About half a dozen major players compete in the market including GE Capital Corp. Beyond those top six competitors on a nationwide basis, there are others which compete in local markets, he said.

Key Municipal has several hundred customers and has a nationwide presence. While Key Corp.’s municipal leasing company was focused on the Northeast and Northwest, Leasetec had a full nationwide market, he said.

Bohan said the new company works with both state government and small municipal districts like school systems and fire districts.

In its Boulder office, the company has 10 employees. It also has sales offices in Portland, Ore.; Cleveland, Ohio; and Albany, N.Y.

“We are always looking at opening more offices and other ways to go to market,” Bohan said. “We have an intense Web project going on right now. We’re experimenting with the most efficient way to get our product out to customers.”

About half of the company’s business comes from straight bid while the other half is handled through custom negotiations, he said.

The company counts as its clients the city of Denver and the Denver public school system, he said.

Key Corp., one of the country’s largest financial services companies, has assets of about $81 billion. It provides investment management, retail and commercial banking, consumer finance and investment banking products and services throughout the United States.

“We’re a small piece of the bank but a significant part of the bank’s leasing operation,” Bohan said. He declined to reveal the division’s revenues.

“We’re trying to grow our revenues with an increase in productivity and ways of doing business,” he said.

Key Municipal Finance is the first operating unit to be formed directly as a result of Key’s acquisition of Leasetec Corp. in July 1997.

BOULDER — Key Municipal Finance, born of longtime Boulder company Leasetec and national banking giant Key Corp., is breaking out on its own as a local and regional equipment financing company. By entering the world of the Web to reach more customers and by competing fiercely in the market, Key Municipal is coming out from the shadow of its parents.

The new company was formed in January from two organizations, the municipal part of Leasetec Corp., and Key Corp. Leasing. Leasetec had been a privately held company in Boulder and was purchased by Key Corp. in 1997.

“I was with Leasetec when…

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