Expenses tied to KeyCorp’s purchase of First Niagara Financial Group cut into the company’s bottom line in the fourth quarter.

The $136.5 billion-asset company said Thursday that it earned $209 million, down about 5% from a year earlier.

KeyCorp recorded $207 million in merger-related expenses compared with $6 million a year earlier. The Cleveland company bought First Niagara in July and completed the integration and systems conversion during the fourth quarter.

A KeyBank sign with a market ticker is seen on the facade of the KeyBank Building in Columbus, Ohio.
Bloomberg News

"The contribution from our First Niagara acquisition and quality of our new team members continue to exceed our expectations,” Beth Mooney, KeyCorp’s chairman and CEO, said in a news release. "As we continue to realize cost savings and begin to see traction on revenue opportunities, we remain confident in reaching our financial targets."

The merger-related charges included $80 million tied to personnel expenses for systems conversions and integration. The remaining $127 million was mainly for nonpersonnel costs, such as computer processing, professional fees and marketing. Overall noninterest expenses totaled $1.2 billion, up almost 66% from a year earlier.

Net interest income totaled $948 million, up more than 55% from a year earlier. The fourth quarter included $92 million of purchase accounting accretion related to the First Niagara acquisition, the company said. KeyCorp’s net interest margin improved 25 basis points, to 3.12%, from a year earlier.

Average total loans surged roughly 43%, to $85.4 billion, as commercial, financial and agricultural credits increased about 28%, to $39.5 billion. Home equity loans rose 23%, to $12.8 billion, while other consumer loans more than doubled to $11.4 billion.

Noninterest income increased more than 27%, to $618 million, as KeyCorp’s investment banking business posted a record quarter. Investment banking and debt placement fees jumped almost 24% to $157 million, while cards and payments income rose almost 47% to $69 million.

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