KeyCorp’s third-quarter profit more than doubled from the same period last year, thanks largely to the Cleveland company’s 2016 acquisition of First Niagara Financial Group.

The $136.7 billion-asset company said Thursday that it earned $349 million in the quarter that ended Sept. 30, up 112% from last year’s third quarter. (The acquisition of Buffalo-based First Niagara closed in last year’s fourth quarter).

When compared with the second quarter of this year, net income was down 11% due primarily to $36 million of merger-related charges it took in this year’s third quarter. KeyCorp said the charges reduced its earnings per share by three cents, to 32 cents. Analysts polled by FactSet Research Systems had estimated earnings per share to come in at 35 cents.

Keycorp Chairman and CEO Beth Mooney.
Beth Mooney is KeyCorp's chairman and CEO. Bloomberg News

"Third-quarter results reflect strong returns and the seventh consecutive quarter of positive operating leverage compared to the prior year, as we continue to execute on our strategic priorities, grow our businesses, and deliver on the commitments we have made,” Beth Mooney, KeyCorp’s Chairman and CEO, said in a news release.

The First Niagara acquisition drove year-over-year gains in both net interest and noninterest income. Net interest income climbed 22% to $962 million as total loans increased nearly 12%, to $86.8 billion. The net interest margin was up by 30 basis points from a year earlier to 3.15%.

Noninterest income increased 7.8% year over year as higher income from mortgage servicing, cards and payments and trust and investment services offset a decline in investment banking fees.

Excluding merger-related charges, noninterest expenses increased by about 7% year over year to $992 million mostly due to higher personnel costs.

Excluding one-time items, noninterest expenses increased $21 million from the quarter that ended June 30. KeyCorp said that the increase represents its recent acquisition of the personal financial management tool Hello Wallet and other business investments.

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