KeyCorp said Thursday that its first-quarter profit climbed 62.6% from a year earlier as its acquisition of First Niagara continued to add to its customer base and boost interest and fee income.

The $135 billion-asset parent of KeyBank reported net income of $296 million in the first quarter. Earnings per share increased 33% year over year, to 27 cents a share, but would have been 32 cents if not for charges associated with its July acquisition of First Niagara Financial Group in Buffalo, N.Y. Analysts had projected earnings per share of 28 cents, according to FactSet Research Systems.

“Revenue relative to the year-ago period benefited from higher net interest income, positive momentum in our fee-based businesses and the addition of over one million newly acquired consumer and business clients,” Chairman and CEO Beth Mooney said in a press release.

Keycorp Chairman and CEO Beth Mooney.
Despite the rise in expenses, KeyCorp Chairman and CEO Beth Mooney said, "We remain on track to achieve our initial $400 million cost savings target by the end of the second quarter and expect to reach $450 million by early 2018." Bloomberg News

Net interest income increased 51.9% to $929 million in the first quarter and included $53 million of purchase accounting accretion related to the First Niagara deal.

Noninterest income increased 33.9% to $577 million. KeyCorp said the most notable increase was in investment banking and debt-placement fees, which increased $56 million from the first quarter last year. Key also benefited from increases in trust and investment income, cards and payment income, and service charges on deposit accounts associated with its acquisition of First Niagara.

Noninterest expenses rose 44.1% to $1 billion in the first quarter and included $81 million in charges associated with the First Niagara acquisition. The merger-related charges primarily consisted of $51 million of nonpersonnel expenses, like marketing, net occupancy and business services and professional fees.

Despite the rise in expenses, Mooney said, “We remain on track to achieve our initial $400 million cost savings target by the end of the second quarter and expect to reach $450 million by early 2018.”