7-19-13 7:15 AM EDT | Email Article

Second Quarter Highlights:

  • Profitable organic growth continues with EPS of $0.18 per share
  • Operating revenues increase 3% QOQ primarily driven by a 7% increase in fee income
  • Strong customer activity drove QOQ increases in most fee income categories
  • Stable net interest margin of 3.36%
  • Organic loan growth continues with average total loans up 8% QOQ
  • Average commercial loans increase 10% QOQ, the bank's 14th consecutive quarter of double-digit commercial loan growth
  • Interest-bearing checking balances increase 11% QOQ
  • Transactional deposits averaged 34% of deposits, up from 30% a year-ago
  • Mobile banking exceeds 100,000 registered customers
  • Strong credit quality maintained
  • NCOs equaled 0.33% of average originated loans, compared to 0.35% in 2012

BUFFALO, N.Y., July 19, 2013 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today reported net income available to common shareholders of $63.6 million or $0.18 per diluted share for the second quarter of 2013 highlighted by organic expansion of commercial and indirect auto lending, continued growth in transactional deposit balances, strong fee income generation and positive operating leverage.

"We continue to drive profitable organic growth across our entire footprint by diversifying and enhancing revenue sources while managing expenses to achieve real operating leverage," said Gary Crosby, Interim President and Chief Executive Officer. "First Niagara's strong business fundamentals are translating into strong financial performance. As we continue our search for a permanent CEO, the entire First Niagara team has not missed a beat and we are all focused on achieving our overall performance goals by expanding and broadening customer relationships for profitable organic growth."

Second Quarter Results

In the second quarter of 2013, First Niagara reported net income available to common shareholders of $63.6 million, or $0.18 per diluted share. In the second quarter of 2012, First Niagara reported a net loss available to common shareholders of $18.5 million, or $0.05 per diluted share, that included $135.2 million in pre-tax acquisition and restructuring expenses incurred primarily in connection with the closing of the HSBC branch acquisition in May 2012. For the first three months of the year, net income to common shareholders was $59.7 million, or $0.17 per diluted share.

Balance sheet growth remained strong as average loans increased 8% annualized compared to the prior quarter. Average commercial loans increased 10% annualized over the prior quarter, the 14th consecutive quarter of double-digit growth. Average consumer loans increased 5% annualized driven by continued growth in indirect auto loan balances, partially offset by a decline in residential mortgage loans. Average interest-bearing checking deposits increased 11% annualized from the prior quarter driven by greater account acquisition activity particularly in the company's New York and New England markets as well as increases in balances held by customers.

Net interest income was up modestly in the second quarter compared to the prior quarter. Net interest margin was 3.36%, as compared to 3.39% in the first quarter of 2013. Noninterest income increased $6.2 million or 7% from the prior quarter primarily due to sequential strength in wealth management fees, deposit service charges, insurance commissions, and merchant and card fees.

The provision for loan losses on originated loans totaled $23.9 million in the second quarter of 2013, including $11.7 million to support loan growth and $12.2 million to cover net charge-offs during the quarter. At June 30, 2013, nonperforming originated loans comprised 1.02% of originated loans, essentially flat to prior quarter. Net charge-offs equaled 33 basis points of average originated loans, compared to 35 basis points in 2012.

Second quarter 2013 expenses of $235.2 million reflected higher incentive and variable compensation tied to strong fee income growth as well as costs related to selective investments in key initiatives and branch consolidations, partially offset by lower amortization of core deposit intangibles.

Reported Results (GAAP)Q2 2013Q1 2013Q2 2012
Net interest income $ 269.4 $ 266.1 $ 259.0
Provision for credit losses 25.2 20.2 28.1
Noninterest income 95.5 89.3 95.6
Noninterest expense 235.2 237.7 345.6
Net income (loss) 71.1 67.3 (10.9)
Preferred stock dividend 7.5 7.5 7.5
Net income (loss) available to common shareholders 63.6 59.7 (18.5)
Weighted average diluted shares outstanding 350.4 350.0 348.9
Earnings (loss) per diluted share $ 0.18 $ 0.17  $ (0.05)
       
All amounts in millions except earnings per diluted share.

"During the second quarter, we continued to generate positive operating leverage driven by stronger than expected fee income growth and our continued focus on managing our expense base to meet our previously disclosed year-end targets," said Gregory W. Norwood, Chief Financial Officer. "During the quarter, we continued to generate loan growth across all our geographies through market share gains and concerted efforts to earn more of our customers' business and used a portion of the cash flows from our investment securities portfolio to partially fund this loan growth."

Loans

Average total loans increased 8% annualized from the linked quarter boosted by a double-digit increase in commercial lending (business and real estate) as well as sustained momentum in the company's indirect auto business.  For the 14th consecutive quarter, average commercial loans, which includes commercial business (C&I) and commercial real estate (CRE) loans, increased at a double-digit pace organically, up $310 million, or 10% annualized over the prior quarter. 

Average CRE loans increased 11% annualized to $7.4 billion. C&I loans averaged $5.1 billion, representing a 9% annualized increase over the prior quarter. Average commercial loans in the company's Western Pennsylvania, Eastern Pennsylvania and New England markets increased at double-digit annualized growth rates of 25%, 10%, and 13%, respectively. Average commercial loans in the company's New York footprint increased 7% annualized from the prior quarter.  Since the acquisition of HSBC branches in May 2012, commercial loans in the company's New York market have increased at a 9% annualized growth rate. The commercial loan pipeline at quarter-end remains strong and consistent with prior quarters.

Average indirect auto loan balances increased $215 million to $927 million. During the second quarter, indirect auto originations totaled $296 million at an average customer FICO score of 745 and yielded 3.2%, net of dealer reserve. During the quarter, the company added an additional 51 dealers to its network. Average residential real estate loans declined by $121 million, or 13% annualized reflecting elevated prepayment levels. 

Deposits

The company continued to focus its efforts to grow its core customer base, re-position its account mix and lower deposit costs. Average transaction deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased an annualized 17% over the prior quarter and currently represent 34% of the company's deposit balances, up from 30% a year ago.

The average cost of interest-bearing deposits declined two basis points to 0.23% from 0.25% in the prior quarter. Pricing actions on non-transactional deposit accounts together with a favorable shift in mix of deposits drove the decline in overall cost of interest-bearing deposits.

Average interest-bearing checking deposit balances increased 11% annualized compared to the prior quarter driven by the continued acquisitions of new checking accounts, particularly in the mass affluent household segment as well as higher balances held by customers. Noninterest bearing deposit balances averaged $4.7 billion and increased an annualized 22% over the prior quarter.

Since 2011, the company has consolidated over 60 branches across its regional footprint, while investing in alternative delivery platforms such as online and mobile banking. More than 100,000 customers have registered for mobile banking since its launch in January 2013. In the first half of 2013, the company consolidated nine branches, including five branches in the second quarter. As customers migrate to other banking platforms, First Niagara will continue to optimize its physical branch network.

Net Interest Income

Second quarter 2013 net interest income of $269.4 million increased 1% from the prior quarter.  Compared to the prior quarter, the benefits of a 4% annualized increase in average interest-earning assets were partially offset by a 3 basis point decline in the net interest margin. Average loans increased an annualized 8% driven by strong commercial and indirect auto loan growth. Average other interest earning assets declined 3% annualized from the linked quarter.

In the second quarter of 2013, premium amortization on the residential mortgage backed securities portfolio was $11.6 million compared to $12.7 million in the prior quarter. During the quarter, cash flows from the CMO were below the company's expectations from last year due to the increase in mortgage rates. Compared to the first quarter of 2013, the modest benefits from commercial loan prepayments together with a 2 basis point decline in cost of interest bearing deposits were offset by continued compression of loan yields from elevated prepayments and reinvestments at lower spreads.

Credit Quality

At June 30, 2013, the allowance for loan losses was $183.7 million, compared to $172.0 million at March 31, 2013.  At June 30, 2013, nonperforming assets to total assets were 0.51%, largely unchanged from the prior quarter. Information for both the originated and acquired portfolios follows. 

    Q2 2013       Q1 2013  
$ in millions Originated Acquired Total   Originated Acquired Total
Provision for loan losses* $ 23.9 $ 0.9 $ 24.8   $ 18.9 $ 0.9 $ 19.8
Net charge-offs 12.2 0.9 13.1   9.1 1.2 10.3
NCOs/ Avg Loans 0.33 % 0.06 % 0.26 %   0.27 % 0.08 % 0.21 %
Total loans** $ 15,102 $ 5,581 $ 20,543   $ 14,100 $ 6,084 $ 20,035
               
(*) Excludes provision for unfunded commitments of $0.4 million each in 2Q13 and 1Q13
(**) Acquired loans before associated credit discount; see accompanying tables for further information
 

Originated loans

The provision for loan losses on originated loans totaled $23.9 million, compared to $18.9 million in the prior quarter. This provision included $11.7 million to support sequential originated loan growth of $1.0 billion, compared to $9.8 million in the prior quarter that supported $0.7 billion of originated loan growth. Net charge-offs equaled $12.2 million or 33 basis points of average originated loans in the second quarter of 2013, compared to 35 basis points in 2012.

At June 30, 2013, nonperforming originated loans comprised 1.02% of originated loans and were essentially flat to the prior quarter.  

At June 30, 2013, the allowance for loan losses on originated loans totaled $182.5 million or 1.21% of such loans, compared to $170.7 million or 1.21% of loans at March 31, 2013.

Acquired loans

The provision for losses on acquired loans totaled $0.9 million, unchanged from the prior quarter. Net charge-offs on those portfolios totaled $0.9 million during the quarter, compared to $1.2 million in the prior period.  At June 30, 2013, the allowance for loan losses on acquired loans totaled $1.3 million and was consistent with March 31, 2013. Acquired nonperforming loans totaled $27.5 million, compared to $27.7 million at the end of the prior quarter. At June 30, 2013, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $141 million.

Fee Income

Second quarter 2013 noninterest income of $95.5 million increased 7% or $6.2 million compared to the prior quarter driven by strong customer activity and sales productivity primarily in the company's wealth management and insurance businesses.

Wealth management revenue increased $2.1 million, or 16% from the first quarter driven by strong annuity sales, increased sales productivity as well as a 7% increase in assets under management. Insurance commissions increased $1.3 million or 8% from the first quarter due to higher renewal premiums. Deposit service charges increased 7% from the prior quarter and were driven by an increase in NSF incidence and collection rates. Merchant and card fees increased 10% driven by higher debit card interchange from strong customer usage. Mortgage banking revenues increased 7% to $6.9 million from $6.4 million in the prior quarter.

Offsetting these increases, capital markets income declined 17% or $1.0 million primarily due to lower derivative product demand during the quarter.

Noninterest Expense

Operating expenses in the second quarter reflected higher than expected incentives and variable compensation expenses related to strong fee income generation as well as additional costs related to branch consolidations.

Second quarter noninterest expenses were $235.2 million, compared to $237.7 million in the prior quarter which included $6.3 million in charges related to executive departures. Compared to the first quarter of 2013, a $4.2 million increase in incentives and variable compensation expenses tied to strong fee income growth was partially offset by a sequential decline in costs associated with employee headcount and benefits. The amortization of intangibles decreased $3.3 million from the prior quarter primarily reflecting the decline in amortization of the HSBC transaction-related core deposit intangible.

The efficiency ratio improved to 64.4% in the second quarter from 65.1% in the prior quarter adjusted to exclude the $6.3 million charge related to executive departures.

Capital

At June 30, 2013, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.3% and 7.7% respectively.  The company remains well above current regulatory guidelines for well-capitalized institutions. 

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 420 branches, approximately $37 billion in assets, $27 billion in deposits, and approximately 6,000 employees providing financial services to individuals, families and businesses across Upstate New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com.

Investor Call

A conference call will be held at 10:00 a.m. Eastern Time on Friday, July 19, 2013 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-888-664-9857 with the passcode: FNFG. Presentation slides will be used during the earnings conference call and is available under the investor relations tab of our website at www.firstniagara.com. A replay of the call will be available until August 2, 2013 by dialing 1-800-677-4914, passcode: 5269.

Non-GAAP Measures - This news release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). The company believes that non-GAAP financial measures provide a meaningful comparison of the underlying operational performance of the company, and facilitate investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, the company believes the exclusion of these non-operating items enables management to perform a more effective evaluation and comparison of the company's results and to assess performance in relation to the company's ongoing operations. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP disclosures are used in this news release, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this document.

Forward-Looking Statements - This press release contains forward-looking statements with respect to the financial condition and results of operations of First Niagara Financial Group, Inc. including, without limitations, statements relating to the earnings outlook of the company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in non-performing loans that could result from an economic downturn; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with an increase in commercial real estate and business loans and non-performing loans. 

                 
                 
First Niagara Financial Group, Inc.                
Income Statement Highlights -- Reported Basis                
(in thousands, except per share amounts)                
                 
    2012 Six months ended
   Second   First   Fourth   Third   Second   First   June 30,   June 30, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2013 2012
                 
Interest income:                
Loans and leases  $ 209,970  $ 206,640  $ 212,035  $ 211,767  $ 200,725  $ 189,385  $ 416,610  $ 390,110
Investment securities and other  88,110  88,961  71,564  90,101  99,116  101,395  177,071  200,511
Total interest income  298,080  295,601  283,599  301,868  299,841  290,780  593,681  590,621
                 
Interest expense:                
Deposits  12,967  14,277  16,902  18,358  16,391  14,998  27,244  31,389
Borrowings  15,670  15,194  14,411  13,905  24,437  33,411  30,864  57,848
Total interest expense  28,637  29,471  31,313  32,263  40,828  48,409  58,108  89,237
                 
Net interest income  269,443  266,130  252,286  269,605  259,013  242,371  535,573  501,384
Provision for credit losses  25,200  20,200  22,000  22,200  28,100  20,000  45,400  48,100
Net interest income after provision  244,243  245,930  230,286  247,405  230,913  222,371  490,173  453,284
                 
Noninterest income:                
Deposit service charges  26,482  24,800  26,345  26,422  21,433  17,037  51,282  38,470
Insurance commissions  17,692  16,355  15,497  18,764  17,072  16,833  34,047  33,905
Merchant and card fees  12,380  11,298  11,945  12,014  9,271  5,528  23,678  14,799
Wealth management services  14,945  12,845  12,000  11,069  9,207  9,039  27,790  18,246
Mortgage banking  6,882  6,424  8,060  10,974  7,174  5,649  13,306  12,823
Capital markets income  5,002  6,031  7,098  6,381  6,831  6,539  11,033  13,370
Lending and leasing  4,534  3,906  3,739  3,730  4,245  3,123  8,440  7,368
Bank owned life insurance  3,321  3,467  3,021  3,449  3,848  3,387  6,788  7,235
Other income  4,308  4,186  4,116  9,400  16,517  2,773  8,494  19,290
Total noninterest income  95,546  89,312  91,821  102,203  95,598  69,908  184,858  165,506
                 
Noninterest expense:                
Salaries and benefits  116,305  115,790  111,026  115,484  104,507  96,477  232,095  200,984
Occupancy and equipment  28,506  28,045  27,609  25,694  24,089  22,017  56,551  46,106
Technology and communications  29,603  27,113  28,257  28,110  24,434  19,713  56,716  44,147
Marketing and advertising  5,450  4,346  9,292  8,954  6,676  6,763  9,796  13,439
Professional services  9,782  9,603  11,163  11,193  9,263  8,895  19,385  18,158
Amortization of intangibles  10,850  14,119  14,224  14,506  9,839  6,466  24,969  16,305
FDIC premiums  9,348  8,901  9,158  8,850  10,552  6,133  18,249  16,685
Merger and acquisition integration expenses  --   --   3,678  29,404  131,460  12,970  --   144,430
Restructuring charges  --   --   --   --   3,750  2,703  --   6,453
Other expense  25,326  29,749  24,377  24,347  21,069  18,041  55,075  39,110
Total noninterest expense  235,170  237,666  238,784  266,542  345,639  200,178  472,836  545,817
                 
Income (loss) before income tax  104,619  97,576  83,323  83,066  (19,128)   92,101  202,195  72,973
Income tax expense (benefit)  33,485  30,291  22,226  24,682  (8,204)   32,236  63,776  24,032
Net income (loss)  71,134  67,285  61,097  58,384  (10,924)   59,865  138,419  48,941
Preferred stock dividend  7,547  7,547  7,547   7,547   7,547   5,115  15,094   12,662 
Net income (loss) available to common stockholders  $ 63,587  $ 59,738  $ 53,550  $ 50,837  $ (18,471)  $ 54,750  $ 123,325  $ 36,279
                 
Financial Ratios:                
Earnings (loss) per basic share  $ 0.18  $ 0.17  $ 0.15  $ 0.15  $ (0.05)  $ 0.16  $ 0.35  $ 0.10
Earnings (loss) per diluted share  0.18  0.17  0.15  0.14  (0.05)  0.16  0.35  0.10
Weighted average shares outstanding - basic(1)  349,542  349,278  349,071  349,001  348,941  348,823  349,411  348,882
Weighted average shares outstanding - diluted(1)  350,384  349,999  349,663  349,371  348,941  349,069  350,150  349,147
Net revenue(2)  $ 364,989  $ 355,442  $ 344,107  $ 371,808  $ 354,611  $ 312,279  $ 720,431  $ 666,890
Noninterest income as a percentage of net revenue(2) 26.18% 25.13% 26.68% 27.49% 26.96% 22.39% 25.66% 24.82%
Pre-tax, pre-provision income(3)  $ 129,819  $ 117,776  $ 105,323  $ 105,266  $ 8,972  $ 112,101  $ 247,595  $ 121,073
Pre-tax, pre-provision income per diluted share(3)  $ 0.37  $ 0.34  $ 0.30  $ 0.30  $ 0.03  $ 0.32  $ 0.71  $ 0.35
Pre-tax, pre-provision return on average assets(3) 1.41% 1.30% 1.15% 1.19% 0.10% 1.36% 1.35% 0.70%
Net interest margin(4) 3.36% 3.39% 3.22% 3.54% 3.26% 3.34% 3.38% 3.30%
Interest yield on average loans(4) 4.19% 4.25% 4.39% 4.47% 4.59% 4.62% 4.21% 4.60%
Rate paid on interest-bearing liabilities 0.43% 0.44% 0.48% 0.51% 0.61% 0.79% 0.44% 0.69%
Efficiency ratio 64.43% 66.86% 69.39% 71.69% 97.47% 64.10% 65.63% 81.85%
Effective tax rate 32.0% 31.0% 26.7% 29.7% 42.9% 35.0% 31.5% 32.9%
Return on average assets(5)  0.77 %  0.74 % 0.67% 0.66%  (0.12)% 0.73% 0.76% 0.28%
Return on average equity(5)  5.72 %  5.50 % 4.92% 4.77%  (0.90)% 4.96% 5.61% 2.02%
Return on average tangible equity(3)(5)  11.75 %  11.62 % 10.45% 10.34%  (1.64)% 7.90% 11.69% 3.44%
Return on average common equity  5.48 %  5.24 % 4.62% 4.46%  (1.64)% 4.88% 5.36% 1.61%
Return on average tangible common equity(3)  12.21 %  12.05 % 10.72% 10.60%  (3.18)% 8.12% 12.13% 2.89%
                 
(1)  Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(2)  Net revenue is comprised of net interest income and noninterest income.
(3)  The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4)  Yields and rates calculated on a tax equivalent basis.
(5)  Return used to calculate ratio excludes preferred stock dividend.
             
             
             
First Niagara Financial Group, Inc.            
Period End Balance Sheet            
(in thousands)            
             
    2012
  June 30, March 31, December 31,  September 30, June 30, March 31,
             
Cash and cash equivalents  $ 552,210  $ 424,176  $ 430,862  $ 447,087  $ 488,227  $ 370,380
Investment securities:            
Available for sale  7,916,353  7,876,160  10,993,605  10,579,970  9,937,271  12,248,058
Held to maturity  3,856,960  4,218,687  1,299,806  1,387,763  1,463,872  2,503,156
FHLB and FRB common stock  429,740  401,373  420,277  373,311  329,555  499,328
Total investment securities  12,203,053  12,496,220  12,713,688  12,341,044  11,730,698  15,250,542
Loans held for sale  118,104  126,389  154,745  117,375  101,596  102,513
Loans and leases:            
Commercial:            
Real estate  7,482,375  7,295,544  7,093,193  6,835,971  6,710,009  6,369,098
Business  5,165,606  5,044,738  4,953,323  4,682,154  4,514,537  4,108,363
Total commercial loans  12,647,981  12,340,282  12,046,516  11,518,125  11,224,546  10,477,461
Consumer:            
Residential real estate  3,558,274  3,614,912  3,761,567  3,870,756  4,037,045  3,881,003
Home equity  2,670,672  2,646,645  2,651,891  2,661,429  2,683,236  2,149,135
Indirect auto  1,049,763  818,401  601,456  419,258  185,774  --
Credit cards  303,455  298,310  314,973  308,387  304,368  --
Other consumer  313,037  316,669  333,609  328,571  328,547  283,320
Total consumer loans  7,895,201  7,694,937  7,663,496  7,588,401  7,538,970  6,313,458
Total loans and leases  20,543,182  20,035,219  19,710,012  19,106,526  18,763,516  16,790,919
Allowance for loan losses  183,708  172,002  162,522  149,933  138,516  126,746
Loans and leases, net  20,359,474  19,863,217  19,547,490  18,956,593  18,625,000  16,664,173
Bank owned life insurance  410,182  407,419  404,321  401,211  397,739  395,944
Goodwill and other intangibles  2,557,560  2,567,681  2,617,810  2,626,625  2,631,605  1,796,394
Other assets  949,144  959,459  937,316  983,999  1,130,891  937,859
Total assets  $ 37,149,727  $ 36,844,561  $ 36,806,232  $ 35,873,934  $ 35,105,756  $ 35,517,805
             
Deposits:            
Savings accounts  $ 3,878,053  $ 3,915,836  $ 3,887,587  $ 3,941,528  $ 4,103,773  $ 2,554,720
Interest-bearing checking  4,499,963  4,534,444  4,450,970  4,090,322  3,887,568  2,431,672
Money market deposits  10,013,996  10,493,243  10,581,137  10,801,280  10,919,766  7,100,646
Noninterest-bearing deposits  4,845,835  4,803,835  4,643,580  4,658,374  4,774,764  3,200,824
Certificates of deposit  3,911,989  3,985,702  4,113,257  4,206,192  4,211,116  3,741,525
Total deposits  27,149,836  27,733,060  27,676,531  27,697,696  27,896,987  19,029,387
             
Short-term borrowings  3,698,279  2,928,929  2,983,718  1,995,610  958,044  6,353,189
Long-term borrowings  732,598  732,510  732,425  732,339  732,263  4,688,251
Other liabilities  666,270  503,389  487,000  532,868  700,249  571,532
Total liabilities  32,246,983  31,897,888  31,879,674  30,958,513  30,287,543  30,642,359
Preferred stockholders' equity  338,002  338,002  338,002  338,002  338,002  338,002
Common stockholders' equity  4,564,742  4,608,671  4,588,556  4,577,419  4,480,211  4,537,444
Total stockholders' equity  4,902,744  4,946,673  4,926,558  4,915,421  4,818,213  4,875,446
Total liabilities and stockholders' equity  $ 37,149,727  $ 36,844,561  $ 36,806,232  $ 35,873,934  $ 35,105,756  $ 35,517,805
             
Selected balance sheet information:            
Total interest-earning assets(1)  $ 32,906,363  $ 32,524,313  $ 32,321,964  $ 31,316,470  $ 30,403,035  $ 31,959,556
Total interest-bearing liabilities  26,734,878  26,590,664  26,749,094  25,767,271  24,812,530  26,870,002
Net interest-earning assets  $ 6,171,485  $ 5,933,649  $ 5,572,870  $ 5,549,199  $ 5,590,505  $ 5,089,554
             
Tangible common equity(2)  $ 2,007,182  $ 2,040,990  $ 1,970,746  $ 1,950,794  1,848,606  2,741,050
Unrealized gain on securities, net of tax(3)  83,898  160,942  206,733  204,347  133,430  152,408
             
Total core deposits  $ 23,237,847  $ 23,747,358  $ 23,563,274  $ 23,491,504  $ 23,685,871  $ 15,287,862
             
Originated loans(4)  $ 15,102,336  $ 14,100,190  $ 13,372,357  $ 12,232,568  $ 11,392,158  $ 10,517,021
Acquired loans(5)  5,581,651  6,083,912  6,513,636  7,085,839  7,600,213  6,459,798
Credit related discount on acquired loans(6)  (140,805)  (148,883)  (175,981)  (211,881)  (228,855)  (185,900)
Total Loans  $ 20,543,182  $ 20,035,219  $ 19,710,012  $ 19,106,526  $ 18,763,516  $ 16,790,919
             
(1)  Includes interest bearing cash and cash equivalents, investment securities at amortized cost, loans held for sale, and total loans and leases.
(2)  The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3)  Unrealized gain at March 31, 2013 excludes $54 million of net pre-tax unrealized gains recorded in accumulated other comprehensive income related to available for sale securities transferred to held to maturity classification as of March 31, 2013.
(4)  Originated loans represent total loans excluding acquired loans.
(5)  Represents the carrying value of acquired loans plus the principal not expected to be collected.
(6)  Represent principal on acquired loans not expected to be collected.
 
 
 
First Niagara Financial Group, Inc.
Average Balance Sheet and Related Tax Equivalent Yields & Rates
(in millions)
  For the three months ended Six months ended
  June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
  Average  Interest(1)  Yields   Average  Interest(1)  Yields   Average  Interest(1)  Yields   Average  Interest(1)  Yields   Average  Interest(1)  Yields 
  Balances   and Rates(1) Balances   and Rates(1) Balances   and Rates(1)(2) Balances   and Rates(1) Balances   and Rates(1)(2)
                               
Interest-earning assets:                              
Loans and leases(3)                              
Commercial:                              
Real estate  $ 7,376  $ 79 4.22%  $ 7,179  $ 76 4.25%  $ 6,501  $ 80 4.88%  $ 7,278  $ 155 4.23%  $ 6,400  $ 159 4.93%
Business  5,112  47  3.66   4,999  47  3.74   4,293  44  4.03   5,056  94  3.70   4,104  84  4.05 
Total commercial loans  12,488  126  3.99   12,178  123  4.04   10,794  124  4.54   12,334  249  4.02   10,505  244  4.59 
Consumer:                              
Residential real estate  3,570  35  3.94   3,691  37  4.01   3,964  40  4.07   3,631  72  3.98   3,955  83  4.18 
Home equity  2,661  28  4.25   2,648  28  4.29   2,412  27  4.42   2,654  56  4.27   2,284  50  4.41 
Indirect auto  927  7  3.18   712  6  3.29   84  1  4.16   820  13  3.23   46  1  4.58 
Credit cards  302  8  10.96   304  8  10.40   160  5  11.58   303  16  10.68   93  5  11.32 
Other consumer  313  7  8.42   328  7  8.17   283  6  8.12   320  13  8.29   263  10  7.61 
Total consumer loans  7,773  86  4.41   7,683  85  4.50   6,903  78  4.55   7,728  171  4.45   6,641  149  4.51 
Total loans and leases  20,261  212  4.19   19,861  208  4.25   17,697  202  4.59   20,062  419  4.21   17,146  393  4.60 
Residential MBS(2)  5,496  33  2.40   5,488  34  2.50   8,982  61  2.72   5,492  67  2.45   8,766  126  2.87 
Commercial MBS  1,881  16  3.44   1,914  18  3.78   1,867  18  3.94   1,898  34  3.61   1,785  35  3.96 
Other investment securities (4)  4,833  41  3.37   4,822  38  3.19   3,652  31  3.43   4,827  79  3.28   3,165  54  3.41 
Total securities, at cost(2)  12,210  90  2.94   12,224  91  2.97   14,501  110  3.05   12,217  181  2.96   13,716  215  3.14 
Money market and other investments  171  1  1.85   241  1  1.31   349  1  0.94   206  2  1.53   311  1  0.94 
Total interest-earning assets(2)  32,642  $ 302 3.71%  32,326  $ 300 3.76%  32,547  $ 313 3.87%  32,485  $ 602 3.74%  31,173  $ 609 3.93%
Goodwill and other intangibles  2,561      2,609      2,207      2,585      2,004    
Other noninterest-earning assets  1,780      1,872      1,746      1,826      1,635    
                               
Total assets  $ 36,983      $ 36,807      $ 36,500      $ 36,896      $ 34,812    
                               
Interest-bearing liabilities:                              
Deposits                              
Savings accounts  $ 3,897  $ 1 0.11%  $ 3,894  $ 1 0.11%  $ 3,302  $ 1 0.14%  $ 3,896  $ 2 0.11%  $ 2,934  $ 1 0.09%
Interest-bearing checking  4,504  --   0.04   4,379  1  0.05   3,095  1  0.08   4,442  1  0.05   2,660  1  0.09 
Money market deposits  10,178  5  0.20   10,643  6  0.23   9,125  6  0.28   10,409  11  0.21   8,147  11  0.28 
Certificates of deposit  3,902  6  0.66   4,081  7  0.67   4,019  8  0.83   3,991  13  0.66   3,923  18  0.90 
Total interest bearing deposits  22,481  13 0.23%  22,997  14 0.25%  19,541  16 0.34%  22,738  27 0.24%  17,662  31 0.36%
Borrowings                              
Short-term borrowings  3,536  4 0.41%  3,152  3 0.40%  5,046  7 0.55%  3,345  7 0.40%  4,339  13 0.59%
Long-term borrowings  733  12  6.62   730  12  6.71   2,433  18  2.91   731  24  6.67   3,884  45  2.34 
Total borrowings  4,269  16  1.47   3,882  15  1.59   7,479  24  1.31   4,076  31  1.53   8,223  58  1.41 
Total interest-bearing liabilities  26,750  $ 29 0.43%  26,879  $ 29 0.44%  27,020  $ 41 0.61%  26,814  $ 58 0.44%  25,885  $ 89 0.69%
Noninterest-bearing deposits  4,711      4,468      3,835      4,591      3,444    
Other noninterest-bearing liabilities  533      502      765      517      618    
Total liabilities  31,994      31,849      31,620      31,922      29,947    
Total stockholders' equity  4,989      4,958      4,880      4,974      4,865    
Total liabilities and stockholders' equity  $ 36,983      $ 36,807      $ 36,500      $ 36,896      $ 34,812    
                               
Net interest income (FTE)    $ 274      $ 270      $ 272      $ 544      $ 520  
Taxable Equivalent Adjustment(1)    5      4      5      8      11  
                               
 Total core deposits   $ 23,290  $ 6 0.11%  $ 23,384  $ 8 0.13%  $ 19,357  $ 8 0.17%  $ 23,338  $ 14 0.12%  $ 17,183  $ 13 0.16%
 Total deposits   27,192  13 0.19%  27,465  14 0.21%  23,376  16 0.28%  27,329  27 0.20%  21,106  31 0.30%
                               
Tax equivalent net interest rate spread(2)     3.28%     3.32%     3.26%     3.30%     3.24%
Tax equivalent net interest rate margin(2)     3.36%     3.39%     3.37%     3.38%     3.36%
                               
(1)  Tax equivalent interest income is calculated using a 35% tax rate.
(2)  Amounts for both the three months and six months ended June 30, 2012 exclude accelerated CMO adjustments of $8 million. The yields, including these adjustments, are:
      Three months ended June 30, 2012 Six months ended June 30, 2012                  
Residential MBS     2.35% 2.68%                  
Total securities, at cost     2.81% 3.02%                  
Total interest earning assets     3.77% 3.88%                  
Tax equivalent net interest rate spread     3.16% 3.19%                  
Tax equivalent net interest rate margin     3.26% 3.30%                  
(3)  Includes nonaccrual loans.                  
(4)  Includes debt securities, collateralized loan obligations, asset-backed securities, FHLB and FRB common stock, and other investment securities.                  
                 
                 
                 
First Niagara Financial Group, Inc.                
Allowance for Loans and Lease Losses & Asset Quality                
(in thousands)                
    2012 Six months ended
   Second   First   Fourth   Third   Second   First   June 30,   June 30, 
  Quarter  Quarter   Quarter   Quarter   Quarter   Quarter  2013 2012
                 
Beginning balance  $ 172,002  $ 162,522  $ 149,933  $ 138,516  $ 126,746  $ 120,100  $ 162,522  $ 120,100
Net loan (charge-offs) recoveries:                
Commercial real estate  $ (2,817)  $ (2,121)  $ (1,935)  $ (1,791)  $ (2,384)  $ (5,994)  $ (4,938)  $ (8,378)
Commercial business  (7,175)  (4,902)  (3,385)  (6,077)  (10,958)  (4,143)  (12,077)  (15,101)
Residential real estate  (291)  (427)  (658)  (396)  (155)  (1,120)  (718)  (1,275)
Home equity  (905)  (613)  (673)  (401)  (1,536)  (1,161)  (1,518)  (2,697)
Other consumer  (1,906)  (2,257)  (2,285)  (1,406)  (805)  (836)  (4,163)  (1,641)
Total net loan charge-offs  $ (13,094)  $ (10,320)  $ (8,936)  $ (10,071)  $ (15,838)  $ (13,254)  $ (23,414)  $ (29,092)
Provision for loan losses  24,800  19,800  21,525  21,800  27,803  19,900  44,600  47,703
Allowance related to loans sold  --   --   --   (312)  (195)  --   --   (195)
Ending balance  $ 183,708  $ 172,002  $ 162,522  $ 149,933  $ 138,516  $ 126,746  $ 183,708  $ 138,516
                 
Supplemental information                
Allowance to loans 0.89% 0.86% 0.82% 0.78% 0.74% 0.75% 0.89% 0.74%
Allowance for originated loans to originated loans(1) 1.21% 1.21% 1.20% 1.20% 1.19% 1.19% 1.21% 1.19%
                 
Net charge-offs to average loans (annualized)                
Commercial real estate 0.15% 0.12% 0.11% 0.11% 0.15% 0.38% 0.14% 0.26%
Commercial business 0.56% 0.39% 0.28% 0.53% 1.02% 0.42% 0.48% 0.74%
Total commercial loans 0.32% 0.23% 0.18% 0.28% 0.49% 0.40% 0.28% 0.45%
Residential real estate 0.03% 0.05% 0.07% 0.04% 0.02% 0.11% 0.04% 0.06%
Home equity 0.14% 0.09% 0.10% 0.06% 0.25% 0.22% 0.11% 0.24%
Other consumer 0.49% 0.67% 0.79% 0.60% 0.61% 1.20% 0.58% 1.25%
Total consumer loans 0.16% 0.17% 0.19% 0.12% 0.15% 0.20% 0.17% 0.17%
Total loans 0.26% 0.21% 0.18% 0.21% 0.36% 0.32% 0.23% 0.34%
                 
Net charge-offs of originated loans to average originated loans (annualized)(1)              
Commercial real estate 0.14% 0.10% 0.07% 0.12% 0.18% 0.16% 0.12% 0.17%
Commercial business 0.64% 0.45% 0.33% 0.64% 1.25% 0.54% 0.54% 0.98%
Total commercial loans 0.36% 0.26% 0.19% 0.36% 0.66% 0.32% 0.31% 0.52%
Residential real estate 0.07% 0.10% 0.15% 0.09% 0.04% 0.27% 0.08% 0.15%
Home equity 0.26% 0.19% 0.21% 0.13% 0.51% 0.40% 0.22% 0.47%
Other consumer 0.51% 0.64% 0.94% 0.59% 0.81% 1.25% 0.57% 1.24%
Total consumer loans 0.27% 0.28% 0.35% 0.18% 0.28% 0.38% 0.27% 0.34%
Total loans 0.33% 0.27% 0.24% 0.30% 0.55% 0.34% 0.30% 0.46%
                 
Nonperforming loans:                
Originated(1):                
Commercial real estate  $ 59,624  $ 49,953  $ 50,848  $ 46,413  $ 46,881  $ 44,749  $ 59,624  $ 46,881
Commercial business  44,658  47,523  47,066  37,375  30,714  39,682  44,658  30,714
Residential real estate  29,667  28,455  27,192  21,377  23,058  22,021  29,666  23,058
Home equity  14,601  14,270  14,233  8,084  8,119  7,071  14,601  8,119
Other consumer  6,094  5,444  3,737  938  926  697  6,094  926
Total originated nonperforming loans  154,644  145,645  143,076  114,187  109,698  114,220  154,643  109,698
Total acquired nonperforming loans(2)  27,556  27,678  29,648  28,193  19,374  19,041  27,556  19,374
Total nonperforming loans  182,200  173,323  172,724  142,380  129,072  133,261  182,199  129,072
Real estate owned  8,144  10,816  10,114  9,669  10,632  7,202  8,144  10,632
Total nonperforming assets  $ 190,344  $ 184,139  $ 182,838  $ 152,049  $ 139,704  $ 140,463  $ 190,343  $ 139,704
                 
Accruing troubled debt restructurings (TDR)  $ 69,892  $ 64,311  $ 46,280  $ 55,732  $ 42,140  $ 42,358  $ 69,892  $ 42,140
Loans 90 days past due still accruing(3)  167,560  172,062  171,568  145,323  125,668  116,810  167,560  125,668
Total classified loans(4)  701,104  720,197  708,468  693,006  732,762  753,536  701,104  732,762
Total criticized loans(5)  $ 1,012,305  $ 1,044,874  $ 1,002,659  $ 990,670  $ 1,030,471  $ 1,044,731  $ 1,012,305  $ 1,030,471
                 
Total nonperforming loans to loans 0.89% 0.87% 0.88% 0.75% 0.69% 0.79% 0.89% 0.69%
Total nonperforming originated loans to originated loans(1) 1.02% 1.03% 1.07% 0.93% 0.96% 1.09% 1.02% 0.96%
Total nonperforming assets to loans and real estate owned 0.93% 0.92% 0.93% 0.80% 0.74% 0.84% 0.93% 0.74%
Total nonperforming assets to assets 0.51% 0.50% 0.50% 0.42% 0.40% 0.34% 0.51% 0.40%
Allowance to nonperforming loans 100.8% 99.2% 94.1% 105.3% 107.3% 95.1% 100.8% 107.3%
Texas ratio(6) 16.34% 16.10% 16.61% 14.16% 13.35% 8.97% 16.34% 13.35%
                 
Originated loans(1)  $ 15,102,336  $ 14,100,190  $ 13,372,357  $ 12,232,568  $ 11,392,158  $ 10,517,021  $ 15,102,336  $ 11,392,158
Acquired loans(7)  5,581,651  6,083,912  6,513,636  7,085,839  7,600,213  6,459,798  5,581,651  7,600,213
Credit related discount on acquired loans(8)  (140,805)   (148,883)   (175,981)   (211,881)   (228,855)   (185,900)   (140,805)   (228,855) 
Total Loans  $ 20,543,182  $ 20,035,219  $ 19,710,012  $ 19,106,526  $ 18,763,516  $ 16,790,919  $ 20,543,182  $ 18,763,516
                 
(1)  Originated loans represent total loans excluding acquired loans. 
(2)  Nonperforming acquired loans include certain lines of credit that are considered nonaccruing. The remaining credit discount, recorded at acquisition, is adequate to cover losses on these balances.
(3)  Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.
(4)  Includes consumer loans, which are considered classified when they are 90 days or more past due. Classified loans include substandard, doubtful, and loss, which are consistent with regulatory definitions, and as described in Item 1, "Business", under the heading "Asset Quality Review" in our Annual Report on 10-K for the year ended December 31, 2012.
(5)  Criticized loans includes consumer loans when they are 90 days or more past due. Criticized loans include special mention, substandard, doubtful, and loss.
(6)  Represents ratio computed using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(7)  Represents the carrying value of acquired loans plus the principal not expected to be collected.
(8)  Represent principal on acquired loans not expected to be collected.
               
               
               
First Niagara Financial Group, Inc.              
Key Statistics              
(Share counts in thousands)              
               
    2012  
  June 30, March 31, December 31,  September 30, June 30, March 31,  
               
First Niagara Financial Group, Inc. capital ratios:              
Tier 1 risk based capital 9.41% 9.45% 9.29% 9.51% 9.40% 14.66%(1)
Tier 1 common capital(2) 7.65% 7.64% 7.45% 7.59% 7.41% 12.47%(1)
Total risk based capital 11.34% 11.38% 11.23% 11.48% 11.37% 16.75%(1)
Leverage 7.01% 6.92% 6.75% 6.83% 6.32% 9.67%(1)
Equity to assets 13.20% 13.43% 13.39% 13.70% 13.72% 13.73%(1)
Tangible common equity to tangible assets(2) 5.80% 5.95% 5.77% 5.87% 5.69% 8.13%(1)
               
First Niagara Bank, N.A capital ratios:              
Tier 1 risk based capital 10.08% 10.15% 9.94% 10.19% 9.63% 14.69%(1)
Total risk based capital 10.85% 10.89% 10.66% 10.88% 10.57% 15.66%(1)
Leverage 7.50% 7.43% 7.23% 7.32% 6.48% 9.69%(1)
               
Number of branches  422  427  430  432  452  334  
Full time equivalent employees  5,779  5,875  5,927  6,036  6,103  4,753  
               
Share information and per share metrics:              
Common shares outstanding  353,932  353,008  352,621  352,632  352,665  351,936  
Preferred shares outstanding  14,000  14,000  14,000  14,000  14,000  14,000  
Treasury shares  12,070  12,994  13,381  13,370  13,337  14,066  
Market price (NASDAQ: FNFG):  $ 10.07  $ 8.86  $ 7.93  $ 8.07  $ 7.65  $ 9.84  
Book value per share(3)  13.06  13.19  13.15  13.11  12.84  13.00  
Tangible book value per share(2)(3)  5.74  5.84  5.65  5.59  5.30  7.86  
Price/Book 77.11% 67.17% 60.30% 61.56% 59.58% 75.69%  
Price/Tangible book(2) 175.44% 151.71% 140.35% 144.36% 144.34% 125.19%  
Common stock dividends  $ 0.08  $ 0.08  $ 0.08  $ 0.08  $ 0.08  $ 0.08  
Preferred stock dividends  0.54  0.54  0.54  0.54  0.54  0.37  
Dividend payout ratio 44.44% 47.06% 53.33% 53.33% N/M 50.00%  
Dividend yield (annualized) 3.19% 3.66% 4.01% 3.94% 4.21% 3.27%  
               
N/M   Not meaningful
(1)       Ratios reflect the impact of our capital raise completed in December 2011, the proceeds of which were used to consummate the acquisition of branches from HSBC Bank USA, National Association in May 2012.
(2)       The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3)       Share count excludes unallocated ESOP shares and unvested restricted stock shares.
                 
                 
                 
First Niagara Financial Group, Inc.                
Appendix A - Non-GAAP Reconciliation                
(in thousands, except per share amounts)                
                 
    2012 Six months ended
   Second   First   Fourth   Third   Second   First   June 30,   June 30, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2013 2012
Financial ratios computed on an operating basis(1):                
Earnings per basic share  $ 0.18  $ 0.17  $ 0.19  $ 0.19  $ 0.19  $ 0.19  $ 0.35  $ 0.37
Earnings per diluted share  0.18  0.17  0.19  0.19  0.19  0.19  0.35  0.37
Weighted average shares outstanding - basic(2)  349,542  349,278  349,071  349,001  348,941  348,823  349,411  348,882
Weighted average shares outstanding - diluted(2)  350,384  349,999  349,663  349,371  348,941  349,069  350,150  349,147
Noninterest income as a percentage of net revenue(4) 26.18% 25.13% 25.48% 26.43% 22.96% 22.39% 25.66% 22.69%
Pre-tax, pre-provision income  129,819  117,776  125,281  129,333  136,645  127,774  247,595  264,419
Pre-tax, pre-provision income per diluted share  0.37  0.34  0.36  0.37  0.39  0.37  0.71  0.76
Pre-tax, pre-provision return on average assets 1.41% 1.30% 1.37% 1.46% 1.51% 1.55% 1.35% 1.53%
Net interest margin(3) 3.36% 3.39% 3.42% 3.54% 3.37% 3.34% 3.38% 3.36%
Interest yield on average loans(3) 4.19% 4.25% 4.39% 4.47% 4.59% 4.62% 4.21% 4.60%
Rate paid on interest-bearing liabilities(3) 0.43% 0.44% 0.48% 0.51% 0.61% 0.79% 0.44% 0.69%
Efficiency ratio 64.43% 66.86% 65.24% 64.71% 60.63% 59.08% 65.63% 59.90%
Effective tax rate 32.0% 31.0% 27.0% 30.9% 33.5% 35.0% 31.5% 34.2%
Return on average assets 0.77% 0.74% 0.83% 0.83% 0.80% 0.85% 0.76% 0.82%
Return on average equity 5.72% 5.50% 6.06% 6.04% 5.95% 5.81% 5.61% 5.88%
Return on average tangible equity(5) 11.75% 11.62% 12.89% 13.11% 10.86% 9.24% 11.69% 10.00%
Return on average common equity 5.48% 5.24% 5.86% 5.83% 5.72% 5.79% 5.36% 5.76%
Return on average tangible common equity(6) 12.21% 12.05% 13.57% 13.86% 11.13% 9.63% 12.13% 10.33%
                 
Reconciliation of net interest income on operating basis to reported net interest income(1):                
Total net interest income on operating basis (Non-GAAP)  $ 269,443  $ 266,130  $ 268,566  $ 269,605  $ 267,371  $ 242,371  $ 535,573  $ 509,742
Additional premium amortization on securities portfolio  --   --   (16,280)  --  (8,358)  --  --   (8,358)
Total reported net interest income (GAAP)  269,443  266,130  252,286  269,605  259,013  242,371  535,573  501,384
                 
Reconciliation of noninterest income on operating basis to reported noninterest income(1):                
Total noninterest income on operating basis (Non-GAAP)  $ 95,546  $ 89,312  $ 91,821  $ 96,866  $ 79,703  $ 69,908  $ 184,858  $ 149,611
Gain on securities portfolio repositioning  --   --   --   5,337  15,895  --   --   15,895
Total reported noninterest income (GAAP)  95,546  89,312  91,821  102,203  95,598  69,908  184,858  165,506
                 
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):                
Total noninterest expense on operating basis (Non-GAAP)  $ 235,170  $ 237,666  $ 235,106  $ 237,138  $ 210,429  $ 184,505  $ 472,836  $ 394,934
Merger and acquisition integration expenses  --   --   3,678  29,404  131,460  12,970  --   144,430
Restructuring charges  --   --   --   --   3,750  2,703  --   6,453
Total reported noninterest expense (GAAP)  $ 235,170  $ 237,666  $ 238,784  $ 266,542  $ 345,639  $ 200,178  $ 472,836  $ 545,817
                 
Reconciliation of net operating income to net income(1):                
Net operating income (Non-GAAP)  $ 71,134  $ 67,285  $ 75,358  $ 74,027  $ 72,188  $ 70,053  $ 138,419  $ 142,241
Nonoperating income and expenses, net of tax:                
Additional premium amortization on securities portfolio  --   --   11,633  --  5,558  --  --   5,558
Gain on securities portfolio repositioning  --   --   --  (3,469)  (10,331)  --  --   (10,331)
Merger and acquisition integration expenses  --   --   2,628  19,112  85,448  8,431  --   93,879
Restructuring charges  --   --   --   --   2,437  1,757  --   4,194
Total nonoperating expenses, net of tax  --   --   14,261  15,643  83,112  10,188  --   93,300
Net income (GAAP)  $ 71,134  $ 67,285  $ 61,097  $ 58,384  $ (10,924)  $ 59,865  $ 138,419  $ 48,941
                 
Reconciliation of net operating income available to common stockholders to net income available to common stockholders(1):                
Net operating income available to common stockholders (Non-GAAP)  $ 63,587  $ 59,738  $ 67,811  $ 66,480  $ 64,641  $ 64,938  $ 123,325  $ 129,579
Nonoperating income and expenses, net of tax:                
Additional premium amortization on securities portfolio  --   --   11,633  --   5,558  --  --   5,558
Gain on securities portfolio repositioning  --   --   --   (3,469)  (10,331)  --  --   (10,331)
Merger and acquisition integration expenses  --   --   2,628  19,112  85,448  8,431  --   93,879
Restructuring charges  --   --   --   --   2,437  1,757  --   4,194
Total nonoperating income and expenses, net of tax  --   --   14,261  15,643  83,112  10,188  --   93,300
Net income available to common stockholders (GAAP)  $ 63,587  $ 59,738  $ 53,550  $ 50,837  $ (18,471)  $ 54,750  $ 123,325  $ 36,279
                 
Computation of pre-tax, pre-provision income:                
Net interest income  $ 269,443  $ 266,130  $ 252,286  $ 269,605  $ 259,013  $ 242,371  $ 535,573  $ 501,384
Noninterest income  95,546   89,312   91,821   102,203   95,598   69,908   184,858   165,506 
Noninterest expense  (235,170)  (237,666)  (238,784)  (266,542)  (345,639)  (200,178)  (472,836)  (545,817)
Pre-tax, pre-provision income (GAAP)  129,819  117,776  105,323  105,266  8,972  112,101  247,595  121,073
Add back: non-operating premium amortization  --   --   16,280  --   8,358  --   --   8,358
Add back: non-operating noninterest expenses (1)  --   --   3,678  29,404  135,210  15,673  --   150,883
Less: non-operating noninterest income (1)  --   --   --   (5,337)  (15,895)  --  --   (15,895)
Pre-tax, pre-provision income (Non-GAAP)(1)  $ 129,819  $ 117,776  $ 125,281  $ 129,333  $ 136,645  $ 127,774  $ 247,595  $ 264,419
                 
(1)  Net interest income, noninterest income and expense on an operating basis, net operating income, and pre-tax, pre-provision income on an operating basis are non-GAAP measures that we believe provide meaningful comparisons of our underlying operational performance and facilitates investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, we believe exclusion of these nonoperating items enables management to perform a more effective evaluation and comparison of our results and to assess performance in relation to our ongoing operations.
(2)  Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(3)  Yields and rates calculated on a tax equivalent basis.
(4)  Net revenue is comprised of net interest income and noninterest income.
(5)  Tangible equity is a non-GAAP measure and excludes goodwill and other intangibles.
(6)  Tangible common equity is a non-GAAP measure and excludes goodwill and other intangibles as well as preferred stock.
                 
                 
                 
First Niagara Financial Group, Inc.                
Appendix A - Non-GAAP Reconciliation (Cont.)                
(in thousands, except per share amounts)                
                 
    2012 Six months ended
   Second   First   Fourth   Third   Second   First   June 30,   June 30, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2013 2012
Computation of Ending Tangible Common Equity:                
Total stockholders' equity  $ 4,902,744  $ 4,946,673  $ 4,926,558  $ 4,915,421  $ 4,818,213  $ 4,875,446  $ 4,902,744  $ 4,928,097
Less: Goodwill and other intangibles  (2,557,560)   (2,567,681)   (2,617,810)   (2,626,625)   (2,631,605)   (1,796,394)   (2,557,560)   (2,617,809) 
Less: Preferred stockholders' equity  (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002) 
Tangible common equity  $ 2,007,182  $ 2,040,990  $ 1,970,746  $ 1,950,794  $ 1,848,606  $ 2,741,050  $ 2,007,182  $ 1,972,286
                 
Computation of Average Tangible Equity:                
Total stockholders' equity  $ 4,989,006  $ 4,958,402  $ 4,945,132  $ 4,872,605  $ 4,879,791  $ 4,850,276  $ 4,973,789  $ 4,887,071
Less: Goodwill and other intangibles  (2,561,507)   (2,609,409)   (2,619,322)   (2,626,666)   (2,206,682)   (1,800,613)   (2,585,326)   (2,315,013) 
Tangible equity  $ 2,427,499  $ 2,348,993  $ 2,325,810  $ 2,245,939  $ 2,673,109  $ 3,049,663  $ 2,388,463  $ 2,572,058
                 
Computation of Average Tangible Common Equity:                
Total stockholders' equity  $ 4,989,006  $ 4,958,402  $ 4,945,132  $ 4,872,605  $ 4,879,791  $ 4,850,276  $ 4,973,789  $ 4,887,071
Less: Goodwill and other intangibles  (2,561,507)   (2,609,409)   (2,619,322)   (2,626,666)   (2,206,682)   (1,800,613)   (2,585,326)   (2,315,013) 
Less: Preferred stockholders' equity  (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002) 
Tangible common equity  $ 2,089,497  $ 2,010,991  $ 1,987,808  $ 1,907,937  $ 2,335,107  $ 2,711,661  $ 2,050,461  $ 2,234,056
                 
Computation of Texas Ratio:                
Nonperforming Assets  $ 190,343  $ 184,139  $ 182,838  $ 152,049  $ 139,704  $ 140,463  $ 190,343  $ 182,838
Loans 90 days past due still accruing(1)  167,560  172,062  171,548  145,323  125,668  116,810  167,560  171,548
Sum of nonperforming assets and loans 90 days past due still accruing  $ 357,903  $ 356,201  $ 354,386  $ 297,372  $ 265,372  $ 257,273  $ 357,903  $ 354,386
                 
Tangible common equity  $ 2,007,182  $ 2,040,990  $ 1,970,746  $ 1,950,794  $ 1,848,606  $ 2,741,050  $ 2,007,182  $ 1,972,286
Allowance for loan losses  183,708  172,002  162,522  149,933  138,516  126,746  183,708  162,522
Sum of tangible common equity and allowance for loan losses  $ 2,190,890  $ 2,212,992  $ 2,133,268  $ 2,100,727  $ 1,987,122  $ 2,867,796  $ 2,190,890  $ 2,134,808
                 
Sum of nonperforming assets and acquired loans 90 days past due still accruing/Sum of tangible common equity and allowance for loan losses 16.34% 16.10% 16.61% 14.16% 13.35% 8.97% 16.34% 16.60%
                 
Computation of Tier 1 Common Capital:                
Tier 1 capital  $ 2,406,473  $ 2,356,763  $ 2,264,679  $ 2,225,121  $ 2,128,702  $ 3,009,727  $ 2,406,473  $ 2,264,679
Less: Qualifying restricted core capital elements  (112,449)   (112,236)   (112,025)  (111,820)  (111,630)  (111,453)  (112,449)   (112,025) 
Less: Perpetual non-cumulative preferred stock  (338,002)   (338,002)   (338,002)  (338,002)  (338,002)  (338,002)  (338,002)   (338,002) 
Tier 1 common capital (Non-GAAP)  $ 1,956,022  $ 1,906,525  $ 1,814,652  $ 1,775,299  $ 1,679,070  $ 2,560,272  $ 1,956,022  $ 1,814,652
                 
(1)  Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.
CONTACT: First Niagara Contacts
         
         Investors:
         Ram Shankar
         Senior Vice President, Investor Relations
         (716) 270-8623
         ram.shankar@fnfg.com
         
         News Media:
         David Lanzillo
         Senior Vice President, Corporate Communications
         (716) 819-5780
         david.lanzillo@fnfg.com
GlobeNewswire, Inc. 2013
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