First Interstate’s Alaska franchise was sold.

KeyCorp, an Albany, N.Y.-based bank holding company, said it had a definitive agreement to buy First Interstate Corp. of Alaska for $46 million. Sixteen of the bank’s 17 Alaska branches, representing about $400 million in assets, will be merged with KeyCorp’s Alaska Pacific Bank to form a new bank. The remaining office, located in Anchorage, will become a full-service subsidiary of First Interstate Bancorp of Los Angeles.