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KeyCorp looks to build on First Niagara combination

KeyCorp has held on to First Niagara Financial Group employees and customers and has seen retail deposits grow in each of First Niagara's former markets since it completed the deal, the bank's chief executive said Thursday.

"Rather than losing deposits, we've grown deposits," said Beth E. Mooney, Key's chairman and CEO.

And the bank intends to build on business lines Key gained from First Niagara such as auto lending and mortgage banking.

"As volumes grow and so forth, there would be needs for additional people," Mooney said. "I think we start well staffed with good management teams. But those are businesses that are securely headquartered in Buffalo."

Mooney, in an interview with The News, said Key and First Niagara have blended well together nearly six months after Key finished the $4 billion deal.

"Most of our folks are back to focusing on growing our deposits, growing our clients and really focused on running the banks on a combined basis," she said. "I thought that was a strong statement to be able to make, that we were able to turn the page and consider ourselves business as usual in January."

Cleveland-based Key formally acquired First Niagara in August and converted its branches to Key's brand and systems in October. The bank has set a target of achieving $400 million in cost savings stemming from the merger and expects to reach that total in the middle of this year, said Don Kimble, the chief financial officer, during a conference call with analysts.

As of the end of December, Key had achieved about $100 million in cost savings, Mooney said. Key expects another big chunk of savings to come in this quarter as the bank ends contracts with vendors that had provided technology services to First Niagara.

Key expects its total acquisition-related costs to reach $550 million; as of the end of last year, the bank had absorbed about $470 million in such expenses, Mooney said.

Mortgages are an example of a business line already in place at First Niagara that Key can expand across its larger footprint, Mooney said. "It is a product that is needed in every single market by virtually every single customer," Mooney said. "We're very excited about our ability to do that. We think that will be a significant growth engine this year."

KeyCorp during the fourth quarter reported net income of $213 million from continuing operations attributable to Key common shareholders, or 20 cents per common share, compared to $224 million, or 27 cents per common share, a year ago.

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