Third Quarter Highlights:
- GAAP net loss available to common shareholders per share of $1.90.
-
Operating earnings of $63.3 million or $0.18 per diluted share before the impact of two items:
- Non-cash pre-tax goodwill impairment charge of $800 million
- Non-cash goodwill impairment is an accounting loss and does not impact future profitability
- $45 million reserves to address a process issue related to certain customer deposit accounts
-
Average loans increased 9% annualized QOQ, driven by both commercial and consumer loan categories
- Average commercial business (C&I) loans increased 9% QOQ
- Average consumer loans increased 13% QOQ led by indirect auto and home equity balances
-
Transactional deposit balances increased 7% QOQ driven by higher customer balances
- Noninterest-bearing deposits increased 14% QOQ driven by commercial deposits
- Transactional deposit balances averaged 37% of deposits, up from 35% a year-ago
-
Strong credit quality maintained
- NCOs decreased three basis points QOQ to 0.27% of average originated loans
BUFFALO, N.Y., Oct. 24, 2014 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today reported a third quarter net loss available to common shareholders of $665 million, equal to $1.90 per share. Results included a non-cash goodwill impairment charge of $800 million, as well as a pretax $45 million reserve to address a process issue related to certain customer deposit accounts. Excluding these charges, operating net income available to common shareholders was $63.3 million, or $0.18 per diluted share, compared to net income available to common shareholders of $71.6 million, or $0.20 per diluted share in the third quarter of 2013.
"In the third quarter, despite the continued uncertainty in the macro-economic environment, we delivered very strong 9% average loan growth and remain on target as we continue to make good progress with the execution of our strategic investment plan," said Gary M. Crosby, President and Chief Executive Officer. "However, I am disappointed that two items that impacted our reported results distracted from such solid business fundamentals in the third quarter. In the third quarter, we recorded a non-cash goodwill impairment charge that drove the net loss in the quarter. It is important for customers and our shareholders to note that this is a non-cash accounting charge and has no impact on our daily operations, our ability to continue to serve customers, or our future profitability, and does not negatively impact key regulatory and tangible equity ratios. Based on current market-driven assumptions, we concluded that the goodwill was impaired and recognized an $800 million charge."
Mr. Crosby continued, "Additionally, we recently identified a process issue related to certain customer deposit accounts. First Niagara is conducting an internal review to determine the potential impact on our customers. Customers should be confident that their account balance information accurately reflects the funds on deposit with us. Based on the results of the review, we will develop a comprehensive corrective action plan, including customer remediation where appropriate. In accordance with applicable accounting guidance, we established a reserve of $45 million in the third quarter for this matter."
"In the third quarter of 2014, our already strong credit quality improved further with the net charge-off ratio declining to 27 basis points, down 3 basis points from the low levels in the prior quarter," said Gregory W. Norwood, Chief Financial Officer. "Higher-than-normal expenses, which are not expected to continue, included a valuation write-down of a real estate property, costs incurred to protect our customers following the Home Depot data security breach, and higher state franchise taxes and totaled approximately $7 million. These higher than expected expenses were offset by a lower than expected tax rate in the third quarter."
Third Quarter Results
In the third quarter of 2014, First Niagara reported GAAP net loss available to common shareholders of $665 million, equal to $1.90 per share. Results for the quarter included a non-cash pre-tax charge of $800 million to record the non-cash impairment of goodwill, a $45 million pre-tax reserve to address a process issue related to certain customer deposit accounts, and $2 million in pre-tax restructuring expenses incurred primarily in connection with a previously announced branch staffing realignment.
Excluding these charges, operating net income available to common shareholders was $63.3 million, or $0.18 per diluted share. In the second quarter of 2014, First Niagara reported net income available to common shareholders of $66.2 million, or $0.19 per diluted share. For the third quarter of 2013, net income available to common shareholders was $71.6 million, or $0.20 per diluted share. There were no restructuring expenses in the prior comparable periods.
Balance sheet growth remained strong as average loans increased 9% annualized compared to the prior quarter. Average commercial business and real estate loans increased 6% annualized over the prior quarter, while average consumer loans increased 13% annualized driven by continued increases in indirect auto and home equity balances. Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking accounts, increased 7% over the prior year quarter and currently represent 37% of the company's deposit balances, up from 35% a year ago.
Operating revenues of $349 million decreased 1% from the prior quarter. Net interest income increased $1 million in the third quarter compared to the prior quarter as the benefits of a 4% annualized increase in average earning assets, the impact of an additional day in the quarter, and income accretion from prepayments of certain collateralized loan obligations (CLOs) were partially offset by a decrease in net interest margin. Net interest margin was 3.21%, as compared to 3.26% in the prior quarter. Noninterest income decreased $5 million or 7% from the prior quarter.
The provision for loan losses on originated loans totaled $20 million in the third quarter of 2014, and reflected $7 million of additions to the loan loss reserve to support organic loan growth and $13 million to cover net charge-offs during the quarter. Net charge-offs equaled 0.27% of average originated loans, a decrease of three basis points from 0.30% in the second quarter. At September 30, 2014, nonperforming originated loans comprised 0.91% of originated loans, compared to 0.86% at the end of the prior quarter.
In the third quarter, operating expenses excluding the non-cash goodwill impairment charge, the reserve to address a process issue related to certain customer deposit accounts, and other restructuring expenses were $249 million, an increase of $5 million from the prior quarter. The increase was driven by $7 million of elevated charges related to the valuation write-down of a real estate property, state franchise taxes, and expenses incurred to protect First Niagara customers in response to the widely publicized Home Depot data security breach that impacted debit and credit card holders and banks across North America. These increases were partially offset by lower compensation expense as well as lower leasehold depreciation costs from elevated second quarter levels.
| Operating Results (Non-GAAP) | Q3 2014 | Q2 2014 | Q3 2013 | |||||
| Net interest income | $ 273.3 | $ 271.8 | $ 277.5 | |||||
| Provision for credit losses | 21.2 | 22.8 | 27.6 | |||||
| Noninterest income | 75.4 | 80.9 | 91.4 | |||||
| Noninterest expense | 249.5 | 244.1 | 231.2 | |||||
| Operating net income | 70.9 | 73.8 | 79.1 | |||||
| Preferred stock dividend | 7.5 | 7.5 | 7.5 | |||||
| Operating net income available to common shareholders | $ 63.3 | $ 66.2 | 71.6 | |||||
| Weighted average diluted shares outstanding | 351.9 | 351.5 | 350.9 | |||||
| Operating earnings per diluted share | $ 0.18 | $ 0.19 | $ 0.20 | |||||
| Reported Results (GAAP) | ||||||||
| Operating net income before non-operating items | $ 70.9 | $ 73.8 | $ 79.1 | |||||
| Non-operating expenses (a) | 728.1 | -- | -- | |||||
| Net Income / (loss) | (657.2) | 73.8 | 79.1 | |||||
| Preferred stock dividend | 7.5 | 7.5 | 7.5 | |||||
| Net income / (loss) available to common shareholders | $ (664.8) | $ 66.2 | $ 71.6 | |||||
| Weighted average diluted shares outstanding | 350.4 | 351.5 | 350.9 | |||||
| Earnings per diluted share | $ (1.90) | $ 0.19 | $ 0.20 | |||||
| All amounts in millions except earnings per diluted share. | ||||||||
| (a) $800 million non-cash goodwill impairment charge, reserves related to a process issue, and restructuring charges primarily related to branch realignment, net of taxes. | ||||||||
Loans
Average total loans increased 9% annualized from the prior quarter, driven by continued growth in the company's commercial lending, indirect auto and home equity portfolios.
Average commercial loans, which include commercial business (C&I) and commercial real estate (CRE) loans, increased to $13.7 billion, or a 6% annualized increase from the prior quarter. C&I loans averaged $5.7 billion, or a 9% annualized increase over the prior quarter. Average CRE loans increased 4% annualized to $8.0 billion. Compared to the second quarter of 2014, the company's New York and Tri-State markets contributed 80% of the increase in average commercial loans.
Average indirect auto loan balances increased $228 million to $2.0 billion. During the third quarter, indirect auto originations totaled $376 million at an average customer FICO score of 768 and yielded 2.84%, net of dealer reserve. Average residential real estate loans declined by $10 million, or 1% annualized. Home equity balances increased 8% annualized from the prior quarter reflecting higher customer draws and the benefits of promotional and cross-sell campaigns.
Deposits
The company's focus remains on efforts to grow its core deposit customer base, re-position its account mix and introduce new products and services that further enhance its value proposition to customers. Recent investments in mobile banking and remote deposit capture have further enhanced customers' ability to transact in the delivery channel of their choice while at the same time lowering the company's cost to acquire and serve such customers. Current and anticipated investments as part of the company's strategic investment plan in new digital features and improved functionalities such as online account opening will further enhance customers' ability to do business with First Niagara across all of the bank's delivery channels.
Average transactional deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased an annualized 7% over the prior quarter and currently represent 37% of the company's deposit balances, up from 35% a year ago. The average cost of interest-bearing deposits of 0.24% was unchanged from the prior quarter.
Average noninterest-bearing checking deposit balances increased 14% annualized compared to the prior quarter, driven by seasonal increases in commercial deposits. Interest-bearing checking balances averaged $4.8 billion and were essentially flat to the prior quarter.
Money market deposit balances decreased 4% reflecting normal seasonal trends in municipal deposit balances. Time deposits averaged $4.0 billion and were unchanged from the prior quarter.
Net Interest Income
Third quarter 2014 net interest income increased $1 million from the prior quarter to $273 million. The benefits of a 4% annualized increase in average earning assets, an additional day in the quarter and income accretion from CLO prepayments were partially offset by a 5-basis point decline in the net interest margin. Growth in average earning assets reflected continued strong loan growth, particularly commercial, indirect auto and home equity categories. Average investment securities decreased modestly from the prior quarter.
The 5-basis point decrease in net interest margin in the third quarter of 2014 reflected continued compression of commercial and consumer loan yields in the current low interest rate environment and to a lesser extent, the impact of one additional day in the quarter. Average commercial and consumer loan yields declined 9 and 7 basis points, respectively, from the prior quarter.
Credit Quality
At September 30, 2014, the allowance for loan losses was $231 million, compared to $224 million at June 30, 2014. Nonperforming assets to total assets were 0.57%, compared to 0.55% at the end of the prior quarter.
Information for both the originated and acquired portfolios follows.
| Q3 2014 | Q2 2014 | |||||
| $ in millions | Originated | Acquired | Total | Originated | Acquired | Total |
| Provision for loan losses* | $ 19.6 | $ 1.2 | $ 20.8 | $ 22.1 | $ 0.3 | $ 22.4 |
| Net charge-offs | 12.5 | 0.5 | 13.0 | 13.2 | 0.7 | 13.9 |
| NCOs/ Avg Loans | 0.27% | 0.05% | 0.23% | 0.30% | 0.06% | 0.25% |
| Total loans** | $ 18,842 | $ 4,028 | $ 22,770 | $ 18,196 | $ 4,255 | $ 22,346 |
| (*) Excludes provision for unfunded commitments of $0.4 million each in 3Q14 and 2Q14 | ||||||
| (**) Acquired loans before associated credit discount; see accompanying tables for further information | ||||||
Originated loans
The provision for loan losses on originated loans totaled $20 million, compared to $22 million in the prior quarter. This provision included $7 million of additions to the loan loss reserve to support organic loan growth during the quarter compared to $9 million in the prior quarter. Net charge-offs equaled $13 million or 27 basis points of average originated loans in the third quarter of 2014, compared to $13 million or 30 basis points in the prior quarter.
At September 30, 2014, nonperforming originated loans comprised 0.91% of originated loans, compared to 0.86% at June 30, 2014 driven primarily by increases in consumer nonperforming loans. The increase in consumer nonperforming loans primarily related to the continuing impact of last year's regulatory guidance related to consumer bankruptcies as well as normal seasoning of the indirect auto loan portfolio.
At September 30, 2014, the allowance for loan losses on originated loans totaled $227 million or 1.20% of such loans, compared to $220 million or 1.21% of such loans at June 30, 2014.
Acquired loans
The provision for losses on acquired loans totaled $1 million, compared to $0.3 million in the prior quarter. Net charge-offs on those portfolios totaled $0.5 million during the quarter, compared to $0.7 million in the prior period. At September 30, 2014, the allowance for loan losses on acquired loans totaled $5 million, compared to $4 million at June 30, 2014. Acquired nonperforming loans totaled $29 million, compared to $32 million at the end of the prior quarter. At September 30, 2014, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $100 million.
Fee Income
Third quarter 2014 noninterest income of $75 million decreased 7% or $5 million compared to the prior quarter driven by reductions across most fee income categories and partially offset by increases in insurance commissions and capital markets income.
Insurance commissions increased $1 million or 6% reflecting income recognized on higher renewal activity during the quarter. Higher syndication fee income drove the $1 million increase in capital markets income in the third quarter.
Deposit service charges decreased $3 million or 14% from the prior quarter. Mortgage banking revenues declined $1 million from the second quarter of 2014, driven by lower gain-on-sale revenues. Lending and leasing fees declined $1 million in the third quarter due in part to lower gain on SBA loan sales. Wealth management services income declined $1 million from the prior quarter as lower interest rates and increased supply of attractively priced longer-tenure certificate of deposit products resulted in lower demand and margins on annuity products. Other fee income decreased $2 million from the prior quarter and was driven by lower investment income.
Noninterest Expense
Including the $800 million non-cash goodwill impairment charge, third quarter noninterest expenses were $1.1 billion. Third quarter expenses also included a $45 million reserve to address a process issue related to certain customer deposit accounts, and $2 million in restructuring and severance expenses incurred primarily in connection with a previously announced branch staffing realignment. Excluding these items, adjusted operating expenses of $249 million increased $5 million or 2% sequentially.
This sequential increase included approximately $7 million of elevated other expenses, including:
- $3 million in valuation write-down on a single other real estate owned (OREO) property,
- $2 million related to higher state franchise taxes, and
- $2 million in losses and expenses incurred in protecting First Niagara customers in response to the widely publicized Home Depot data security breach that impacted debit and credit card holders across North America
Salaries and benefits expenses declined $1 million from the prior quarter in large part due to lower payroll taxes and incentive compensation expense. Occupancy and equipment expense decreased $1 million and was driven by a moderation in depreciation costs following an accelerated write-off of certain leasehold improvements recognized in the prior quarter.
In the third quarter of 2014, the operating efficiency ratio was 71.6% compared to 69.2% in the prior quarter.
Capital
At September 30, 2014, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.5% and 7.9% respectively, and were unchanged from June 30, 2014. The company remains well above current regulatory guidelines for well-capitalized institutions.
Effective Tax Rate
The provision for income taxes in the third quarter of 2014 was a benefit of $112 million, resulting in an effective tax rate benefit of 15%. The effective tax rate was 14% in the prior quarter, resulting in income tax expense of $12 million. The third quarter's effective tax rate benefit reflects the impact of the goodwill impairment charge, of which only a portion was tax deductible. On an operating basis, the effective tax rate for the third quarter of 2014 was 9%, reflecting the benefit of previously disclosed tax strategies and other items.
About First Niagara
First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with 411 branches, $38 billion in assets, $28 billion in deposits, and approximately 5,800 employees providing financial services to individuals, families and businesses across New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com.
Investor Call
A conference call will be held at 8:00 a.m. Eastern Time on Friday, October 24, 2014 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-800-857-5166 with the passcode: FNFG. Presentation slides will be used during the earnings conference call and are available under the investor relations tab of our website at www.firstniagara.com. A replay of the call will be available until December 1, 2014 by dialing 1-800-925-4513, passcode: 1024.
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) execution risk associated with the announced investment plan; (7) regulatory approval to continue payment of common and preferred dividends.
| First Niagara Financial Group, Inc. | |||||||||
| Income Statement Highlights - Reported Basis | |||||||||
| (in thousands, except per share amounts) | |||||||||
| 2014 | 2013 | Nine months ended | |||||||
| Third | Second | First | Fourth | Third | Second | September 30, | September 30, | ||
| Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | 2014 | 2013 | ||
| Interest income: | |||||||||
| Loans and leases | $ 212,452 | $ 210,218 | $ 209,644 | $ 213,778 | $ 214,746 | $ 209,970 | $ 632,314 | $ 631,356 | |
| Investment securities and other | 91,668 | 91,566 | 90,421 | 96,020 | 91,996 | 88,110 | 273,655 | 269,067 | |
| Total interest income | 304,120 | 301,784 | 300,065 | 309,798 | 306,742 | 298,080 | 905,969 | 900,423 | |
| Interest expense: | |||||||||
| Deposits | 13,590 | 13,183 | 12,236 | 12,941 | 12,931 | 12,967 | 39,009 | 40,175 | |
| Borrowings | 17,251 | 16,789 | 17,082 | 16,579 | 16,271 | 15,670 | 51,122 | 47,135 | |
| Total interest expense | 30,841 | 29,972 | 29,318 | 29,520 | 29,202 | 28,637 | 90,131 | 87,310 | |
| Net interest income | 273,279 | 271,812 | 270,747 | 280,278 | 277,540 | 269,443 | 815,838 | 813,113 | |
| Provision for credit losses | 21,200 | 22,800 | 24,800 | 32,000 | 27,600 | 25,200 | 68,800 | 73,000 | |
| Net interest income after provision | 252,079 | 249,012 | 245,947 | 248,278 | 249,940 | 244,243 | 747,038 | 740,113 | |
| Noninterest income: | |||||||||
| Deposit service charges | 20,373 | 23,733 | 23,356 | 25,726 | 27,115 | 26,482 | 67,462 | 78,397 | |
| Insurance commissions | 18,352 | 17,343 | 15,691 | 15,431 | 17,854 | 17,692 | 51,386 | 51,901 | |
| Merchant and card fees | 12,991 | 12,834 | 11,504 | 12,567 | 12,464 | 12,380 | 37,329 | 36,142 | |
| Wealth management services | 15,367 | 15,949 | 15,587 | 15,441 | 15,189 | 14,945 | 46,903 | 42,979 | |
| Mortgage banking | 4,358 | 5,241 | 3,396 | 2,754 | 2,268 | 6,882 | 12,995 | 15,574 | |
| Capital markets income | 3,509 | 2,917 | 3,623 | 6,310 | 5,058 | 5,002 | 10,049 | 16,091 | |
| Lending and leasing | 3,914 | 4,680 | 4,732 | 4,140 | 4,886 | 4,534 | 13,326 | 13,326 | |
| Bank owned life insurance | 3,080 | 3,145 | 5,405 | 6,027 | 3,725 | 3,321 | 11,630 | 10,513 | |
| Other income | (6,552) | (4,985) | (6,570) | 916 | 2,863 | 4,308 | (18,107) | 11,357 | |
| Total noninterest income | 75,392 | 80,857 | 76,724 | 89,312 | 91,422 | 95,546 | 232,973 | 276,280 | |
| Noninterest expense: | |||||||||
| Salaries and employee benefits | 116,245 | 117,728 | 117,940 | 113,754 | 115,034 | 116,305 | 351,913 | 347,129 | |
| Occupancy and equipment | 27,450 | 28,553 | 27,876 | 27,420 | 26,582 | 28,506 | 83,879 | 83,133 | |
| Technology and communications | 31,465 | 31,140 | 30,345 | 29,483 | 28,999 | 29,603 | 92,950 | 85,715 | |
| Marketing and advertising | 7,746 | 8,439 | 7,364 | 4,879 | 5,822 | 5,450 | 23,549 | 15,618 | |
| Professional services | 13,988 | 13,029 | 11,923 | 9,314 | 9,820 | 9,782 | 38,940 | 29,205 | |
| Amortization of intangibles | 6,521 | 6,790 | 7,509 | 7,562 | 7,702 | 10,850 | 20,820 | 32,671 | |
| Federal deposit insurance premiums | 9,579 | 9,756 | 8,855 | 7,431 | 9,351 | 9,348 | 28,190 | 27,600 | |
| Restructuring charges | 2,364 | -- | 10,356 | -- | -- | -- | 12,720 | -- | |
| Goodwill impairment | 800,000 | -- | -- | -- | -- | -- | 800,000 | -- | |
| Deposit account remediation | 45,000 | -- | -- | -- | -- | -- | 45,000 | -- | |
| Other expense | 36,467 | 28,680 | 26,568 | 27,305 | 27,883 | 25,326 | 91,715 | 82,958 | |
| Total noninterest expense | 1,096,825 | 244,115 | 248,736 | 227,148 | 231,193 | 235,170 | 1,589,676 | 704,029 | |
| Income (loss) before income tax | (769,354) | 85,754 | 73,935 | 110,442 | 110,169 | 104,619 | (609,665) | 312,364 | |
| Income tax expense (benefit) | (112,120) | 11,969 | 14,491 | 32,752 | 31,026 | 33,485 | (85,660) | 94,802 | |
| Net income (loss) | (657,234) | 73,785 | 59,444 | 77,690 | 79,143 | 71,134 | (524,005) | 217,562 | |
| Preferred stock dividend | 7,547 | 7,547 | 7,547 | 7,547 | 7,547 | 7,547 | 22,641 | 22,641 | |
| Net income (loss) available to common stockholders | $ (664,781) | $ 66,238 | $ 51,897 | $ 70,143 | $ 71,596 | $ 63,587 | $ (546,646) | $ 194,921 | |
| Financial Ratios: | |||||||||
| Earnings (loss) per basic share | $ (1.90) | $ 0.19 | $ 0.15 | $ 0.20 | $ 0.20 | $ 0.18 | $ (1.56) | $ 0.55 | |
| Earnings (loss) per diluted share | (1.90) | 0.19 | 0.15 | 0.20 | 0.20 | 0.18 | (1.56) | 0.55 | |
| Weighted average shares outstanding - basic(1) | 350,381 | 350,229 | 349,906 | 349,718 | 349,653 | 349,542 | 350,174 | 349,492 | |
| Weighted average shares outstanding - diluted(1) | 350,381 | 351,541 | 351,408 | 350,699 | 350,896 | 350,384 | 350,174 | 350,368 | |
| Net revenue(2) | $ 348,671 | $ 352,669 | $ 347,471 | $ 369,590 | $ 368,962 | $ 364,989 | $ 1,048,811 | $ 1,089,393 | |
| Noninterest income as a percentage of net revenue(2) | 21.62% | 22.93% | 22.08% | 24.17% | 24.78% | 26.18% | 22.21% | 25.36% | |
| Pre-tax, pre-provision income (loss)(3) | $ (748,154) | $ 108,554 | $ 98,735 | $ 142,442 | $ 137,769 | $ 129,819 | $ (540,865) | $ 385,364 | |
| Pre-tax, pre-provision income per diluted share(3) | $ (2.14) | $ 0.31 | $ 0.28 | $ 0.41 | $ 0.39 | $ 0.37 | $ (1.54) | $ 1.10 | |
| Pre-tax, pre-provision return on average assets(3) | (7.69)% | 1.14% | 1.06% | 1.51% | 1.47% | 1.41% | (1.89)% | 1.39% | |
| Net interest margin(4) | 3.21% | 3.26% | 3.33% | 3.41% | 3.40% | 3.36% | 3.27% | 3.39% | |
| Interest yield on average loans(4) | 3.80% | 3.89% | 3.98% | 4.04% | 4.14% | 4.19% | 3.89% | 4.19% | |
| Rate paid on interest-bearing liabilities | 0.44% | 0.44% | 0.44% | 0.43% | 0.43% | 0.43% | 0.44% | 0.44% | |
| Efficiency ratio | 314.57% | 69.22% | 71.58% | 61.46% | 62.66% | 64.43% | 151.57% | 64.63% | |
| Expenses as a percentage of average loans and deposits | 8.78% | 1.97% | 2.06% | 1.89% | 1.94% | 1.98% | 4.31% | 1.98% | |
| Effective tax rate (benefit) | (14.6)% | 14.0% | 19.6% | 29.7% | 28.2% | 32.0% | (14.1)% | 30.3% | |
| Return on average assets(5) | (6.76)% | 0.77 % | 0.64 % | 0.82% | 0.85% | 0.77 % | (1.83)% | 0.79% | |
| Return on average equity(5) | (51.12)% | 5.84 % | 4.79 % | 6.18% | 6.37% | 5.72 % | (13.83)% | 5.86% | |
| Return on average tangible equity(3)(5) | (100.96)% | 11.68 % | 9.66 % | 12.64% | 13.20% | 11.75 % | (27.61)% | 12.19% | |
| Return on average common equity | (55.38)% | 5.62 % | 4.48 % | 5.99% | 6.18% | 5.48 % | (15.46)% | 5.64% | |
| Return on average tangible common equity(3) | (117.50)% | 12.10 % | 9.76 % | 13.25% | 13.92% | 12.21 % | (33.23)% | 12.73% | |
| (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) | ||||||
| 2014 | 2013 | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | June 30, | |
| Cash and cash equivalents | $ 451,313 | $ 557,423 | $ 503,070 | $ 462,927 | $ 558,086 | $ 552,210 |
| Investment securities: | ||||||
| Available for sale | 6,198,140 | 6,683,914 | 7,060,237 | 7,423,162 | 7,609,676 | 7,916,353 |
| Held to maturity | 5,351,977 | 4,834,279 | 4,467,213 | 4,042,481 | 3,841,700 | 3,856,960 |
| FHLB and FRB common stock | 389,870 | 434,322 | 437,550 | 469,217 | 437,534 | 429,740 |
| Total investment securities | 11,939,987 | 11,952,515 | 11,965,000 | 11,934,860 | 11,888,910 | 12,203,053 |
| Loans held for sale | 31,245 | 45,446 | 34,465 | 50,137 | 80,468 | 118,104 |
| Loans and leases: | ||||||
| Commercial: | ||||||
| Real estate | 8,013,622 | 7,940,977 | 7,867,724 | 7,777,903 | 7,697,407 | 7,482,375 |
| Business | 5,836,235 | 5,741,684 | 5,470,177 | 5,290,392 | 5,204,672 | 5,165,606 |
| Total commercial loans | 13,849,857 | 13,682,661 | 13,337,901 | 13,068,295 | 12,902,079 | 12,647,981 |
| Consumer: | ||||||
| Residential real estate | 3,360,805 | 3,358,347 | 3,389,071 | 3,447,997 | 3,519,233 | 3,558,274 |
| Home equity | 2,886,655 | 2,835,421 | 2,767,024 | 2,752,229 | 2,706,603 | 2,670,672 |
| Indirect auto | 2,073,843 | 1,871,688 | 1,655,489 | 1,543,983 | 1,339,449 | 1,049,763 |
| Credit cards | 312,549 | 311,640 | 305,663 | 325,140 | 311,600 | 303,455 |
| Other consumer | 286,140 | 286,062 | 295,692 | 302,009 | 310,107 | 313,037 |
| Total consumer loans | 8,919,991 | 8,663,158 | 8,412,939 | 8,371,358 | 8,186,992 | 7,895,201 |
| Total loans and leases | 22,769,849 | 22,345,819 | 21,750,840 | 21,439,653 | 21,089,071 | 20,543,182 |
| Allowance for loan losses | 231,353 | 223,526 | 215,037 | 209,274 | 197,953 | 183,708 |
| Loans and leases, net | 22,538,496 | 22,122,293 | 21,535,803 | 21,230,379 | 20,891,118 | 20,359,474 |
| Bank owned life insurance | 423,376 | 420,230 | 417,031 | 415,205 | 413,555 | 410,182 |
| Goodwill and other intangibles | 1,723,437 | 2,528,481 | 2,535,271 | 2,542,783 | 2,549,931 | 2,557,560 |
| Other assets | 1,124,145 | 998,364 | 999,804 | 992,071 | 958,473 | 949,144 |
| Total assets | $ 38,231,999 | $ 38,624,752 | $ 37,990,444 | $ 37,628,362 | $ 37,340,541 | $ 37,149,727 |
| Deposits: | ||||||
| Savings accounts | $ 3,458,661 | $ 3,626,750 | $ 3,664,765 | $ 3,666,759 | $ 3,695,221 | $ 3,878,053 |
| Interest-bearing checking | 5,055,458 | 4,743,684 | 4,929,302 | 4,743,829 | 4,637,807 | 4,499,963 |
| Money market deposits | 9,894,346 | 9,834,344 | 10,106,569 | 9,739,539 | 9,905,341 | 10,013,996 |
| Noninterest-bearing deposits | 5,308,736 | 5,284,037 | 5,101,681 | 4,865,873 | 4,968,501 | 4,845,835 |
| Certificates of deposit | 3,952,879 | 3,955,754 | 3,795,438 | 3,649,257 | 3,762,132 | 3,911,989 |
| Total deposits | 27,670,080 | 27,444,569 | 27,597,755 | 26,665,257 | 26,969,002 | 27,149,836 |
| Short-term borrowings | 4,928,762 | 4,890,343 | 4,137,496 | 4,822,222 | 4,169,416 | 3,698,279 |
| Long-term borrowings | 733,684 | 733,337 | 733,384 | 733,883 | 732,547 | 732,598 |
| Other liabilities | 543,813 | 477,685 | 495,590 | 413,647 | 531,379 | 666,270 |
| Total liabilities | 33,876,339 | 33,545,934 | 32,964,225 | 32,635,009 | 32,402,344 | 32,246,983 |
| Preferred stockholders' equity | 338,002 | 338,002 | 338,002 | 338,002 | 338,002 | 338,002 |
| Common stockholders' equity | 4,017,658 | 4,740,816 | 4,688,217 | 4,655,351 | 4,600,195 | 4,564,742 |
| Total stockholders' equity | 4,355,660 | 5,078,818 | 5,026,219 | 4,993,353 | 4,938,197 | 4,902,744 |
| Total liabilities and stockholders' equity | $ 38,231,999 | $ 38,624,752 | $ 37,990,444 | $ 37,628,362 | $ 37,340,541 | $ 37,149,727 |
| Selected balance sheet information: | ||||||
| Total interest-earning assets(1) | $ 34,720,650 | $ 34,305,451 | $ 33,684,828 | $ 33,396,058 | $ 33,039,023 | $ 32,906,363 |
| Total interest-bearing liabilities | 28,023,790 | 27,784,211 | 27,366,955 | 27,355,489 | 26,902,465 | 26,734,878 |
| Net interest-earning assets | $ 6,696,860 | $ 6,521,240 | $ 6,317,873 | $ 6,040,569 | $ 6,136,558 | $ 6,171,485 |
| Tangible common equity(2) | $ 2,294,221 | $ 2,212,335 | $ 2,152,946 | $ 2,112,568 | $ 2,050,264 | $ 2,007,182 |
| Unrealized gain on available for sale securities, net of tax(3) | 56,142 | 86,244 | 72,579 | 63,930 | 76,686 | 83,898 |
| Total core deposits | $ 23,717,201 | $ 23,488,815 | $ 23,802,317 | $ 23,016,000 | $ 23,206,870 | $ 23,237,847 |
| Originated loans(4) | $ 18,841,896 | $ 18,196,302 | $ 17,388,542 | $ 16,922,161 | $ 16,211,505 | $ 15,102,336 |
| Acquired loans(5) | 4,028,091 | 4,254,750 | 4,475,593 | 4,642,775 | 5,006,753 | 5,581,651 |
| Credit related discount on acquired loans(6) | (100,138) | (105,233) | (113,295) | (125,283) | (129,187) | (140,805) |
| Total Loans | $ 22,769,849 | $ 22,345,819 | $ 21,750,840 | $ 21,439,653 | $ 21,089,071 | $ 20,543,182 |
| (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) Excludes unamortized unrealized gains recorded in accumulated other comprehensive income related to available for sale securities transferred to held to maturity. | ||||||
| (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 | Nine months ended | ||||||||||||||
| September 30, 2014 | June 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||
| 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) |
Balances |
and Rates(1) |
Balances |
and Rates(1)(2) |
||||||
| Interest-earning assets: | |||||||||||||||
| Loans and leases(2) | |||||||||||||||
| Commercial: | |||||||||||||||
| Real estate | $ 7,985 | $ 74 | 3.65% | $ 7,899 | $ 75 | 3.77% | $ 7,551 | $ 80 | 4.16% | $ 7,896 | $ 226 | 3.77% | $ 7,370 | $ 235 | 4.21% |
| Business | 5,694 | 51 | 3.51 | 5,564 | 50 | 3.56 | 5,163 | 48 | 3.64 | 5,558 | 149 | 3.54 | 5,092 | 142 | 3.68 |
| Total commercial loans | 13,679 | 126 | 3.59 | 13,463 | 125 | 3.68 | 12,714 | 128 | 3.95 | 13,454 | 375 | 3.68 | 12,462 | 377 | 3.99 |
| Consumer: | |||||||||||||||
| Residential real estate | 3,351 | 32 | 3.77 | 3,361 | 32 | 3.80 | 3,538 | 35 | 3.91 | 3,376 | 97 | 3.82 | 3,599 | 107 | 3.95 |
| Home equity | 2,857 | 29 | 4.01 | 2,800 | 28 | 4.06 | 2,683 | 28 | 4.17 | 2,805 | 85 | 4.07 | 2,664 | 84 | 4.24 |
| Indirect auto | 1,978 | 14 | 2.84 | 1,750 | 12 | 2.85 | 1,207 | 9 | 3.09 | 1,782 | 38 | 2.87 | 950 | 23 | 3.17 |
| Credit cards | 313 | 9 | 11.44 | 308 | 9 | 11.44 | 309 | 9 | 12.02 | 312 | 27 | 11.50 | 305 | 25 | 11.14 |
| Other consumer | 287 | 6 | 8.54 | 291 | 6 | 8.53 | 313 | 7 | 8.48 | 292 | 19 | 8.57 | 318 | 20 | 8.36 |
| Total consumer loans | 8,786 | 90 | 4.06 | 8,510 | 88 | 4.13 | 8,050 | 88 | 4.35 | 8,567 | 266 | 4.15 | 7,836 | 259 | 4.42 |
| Total loans and leases | 22,465 | 215 | 3.80 | 21,973 | 213 | 3.89 | 20,764 | 216 | 4.14 | 22,020 | 641 | 3.89 | 20,298 | 636 | 4.19 |
| Residential MBS | 6,405 | 41 | 2.56 | 6,097 | 41 | 2.67 | 5,515 | 37 | 2.68 | 6,067 | 121 | 2.65 | 5,500 | 104 | 2.53 |
| Commercial MBS | 1,564 | 13 | 3.32 | 1,608 | 14 | 3.45 | 1,810 | 17 | 3.68 | 1,623 | 41 | 3.35 | 1,868 | 51 | 3.63 |
| Other investment securities (3) | 3,854 | 39 | 4.06 | 4,159 | 38 | 3.69 | 4,620 | 40 | 3.47 | 4,131 | 117 | 3.76 | 4,758 | 119 | 3.34 |
| Total securities, at amortized cost | 11,824 | 93 | 3.15 | 11,864 | 93 | 3.13 | 11,945 | 94 | 3.14 | 11,821 | 278 | 3.14 | 12,126 | 274 | 3.02 |
| Money market and other investments | 86 | 1 | 2.76 | 165 | 1 | 1.27 | 157 | 1 | 2.27 | 125 | 2 | 1.74 | 189 | 2 | 1.74 |
| Total interest-earning assets | 34,375 | $ 309 | 3.57% | 34,002 | $ 307 | 3.62% | 32,866 | $ 311 | 3.75% | 33,966 | $ 920 | 3.62% | 32,613 | $ 913 | 3.74% |
| Goodwill and other intangibles | 2,518 | 2,532 | 2,554 | 2,529 | 2,575 | ||||||||||
| Other noninterest-earning assets | 1,698 | 1,678 | 1,673 | 1,691 | 1,774 | ||||||||||
| Total assets | $ 38,591 | $ 38,212 | $ 37,093 | $ 38,187 | $ 36,962 | ||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits | |||||||||||||||
| Savings accounts | $ 3,552 | $ 1 | 0.09% | $ 3,654 | $ 1 | 0.09% | $ 3,793 | $ 1 | 0.09% | $ 3,612 | $ 2 | 0.09% | $ 3,861 | $ 3 | 0.10% |
| Interest-bearing checking | 4,821 | -- | 0.03 | 4,820 | -- | 0.03 | 4,483 | -- | 0.04 | 4,792 | 1 | 0.03 | 4,456 | 1 | 0.04 |
| Money market deposits | 9,882 | 6 | 0.23 | 9,971 | 5 | 0.22 | 9,959 | 5 | 0.20 | 9,913 | 16 | 0.22 | 10,257 | 16 | 0.21 |
| Certificates of deposit | 3,969 | 7 | 0.67 | 3,971 | 7 | 0.66 | 3,824 | 7 | 0.69 | 3,864 | 20 | 0.68 | 3,935 | 20 | 0.67 |
| Total interest bearing deposits | 22,225 | 14 | 0.24% | 22,416 | 13 | 0.24% | 22,059 | 13 | 0.23% | 22,182 | 39 | 0.24% | 22,509 | 40 | 0.24% |
| Borrowings | |||||||||||||||
| Short-term borrowings | 4,737 | 5 | 0.43% | 4,410 | 5 | 0.43% | 4,014 | 4 | 0.41% | 4,596 | 15 | 0.43% | 3,570 | 11 | 0.41% |
| Long-term borrowings | 733 | 12 | 6.56 | 733 | 12 | 6.62 | 733 | 12 | 6.55 | 733 | 36 | 6.62 | 732 | 36 | 6.63 |
| Total borrowings | 5,470 | 17 | 1.25 | 5,143 | 17 | 1.31 | 4,747 | 16 | 1.36 | 5,330 | 51 | 1.28 | 4,302 | 47 | 1.46 |
| Total interest-bearing liabilities | 27,695 | $ 31 | 0.44% | 27,559 | $ 30 | 0.44% | 26,806 | $ 29 | 0.43% | 27,511 | $ 90 | 0.44% | 26,811 | $ 87 | 0.44% |
| Noninterest-bearing deposits | 5,260 | 5,077 | 4,787 | 5,068 | 4,657 | ||||||||||
| Other noninterest-bearing liabilities | 536 | 511 | 567 | 540 | 534 | ||||||||||
| Total liabilities | 33,491 | 33,147 | 32,160 | 33,120 | 32,002 | ||||||||||
| Total stockholders' equity | 5,100 | 5,065 | 4,933 | 5,067 | 4,960 | ||||||||||
| Total liabilities and stockholders' equity | $ 38,591 | $ 38,212 | $ 37,093 | $ 38,187 | $ 36,962 | ||||||||||
| Net interest income (FTE) | $ 278 | $ 277 | $ 282 | $ 830 | $ 826 | ||||||||||
| Taxable Equivalent Adjustment(1) | 5 | 5 | 4 | 14 | 13 | ||||||||||
| Total core deposits | $ 23,515 | $ 7 | 0.12% | $ 23,522 | $ 6 | 0.11% | $ 23,022 | $ 6 | 0.11% | $ 23,386 | $ 19 | 0.11% | $ 23,231 | $ 20 | 0.12% |
| Total transactional deposits | 10,081 | -- | 0.01% | 9,897 | -- | 0.01% | 9,270 | -- | 0.02% | 9,860 | 1 | 0.02% | 9,113 | 1 | 0.02% |
| Total deposits | 27,484 | 14 | 0.20% | 27,493 | 13 | 0.19% | 26,846 | 13 | 0.19% | 27,250 | 39 | 0.19% | 27,166 | 40 | 0.20% |
| Tax equivalent net interest rate spread(2) | 3.13% | 3.18% | 3.32% | 3.18% | 3.30% | ||||||||||
| Tax equivalent net interest rate margin(2) | 3.21% | 3.26% | 3.40% | 3.27% | 3.39% | ||||||||||
| (1) Tax equivalent interest income is calculated using a 35% tax rate. | |||||||||||||||
| (2) Includes nonaccrual loans. | |||||||||||||||
| (3) 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) | ||||||||
| 2014 | 2013 | Nine months ended | ||||||
| Third | Second | First | Fourth | Third | Second | September 30, | September 30, | |
| Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | 2014 | 2013 | |
| Beginning balance | $ 223,526 | $ 215,037 | $ 209,274 | $ 197,953 | $ 183,708 | $ 172,002 | $ 209,274 | $ 162,522 |
| Net loan (charge-offs) recoveries: | ||||||||
| Commercial real estate | $ (2,259) | $ (4,885) | $ 905 | $ (5,764) | $ 1,013 | $ (2,817) | $ (6,239) | $ (3,925) |
| Commercial business | (3,148) | (1,795) | (9,138) | (6,382) | (9,694) | (7,175) | (14,081) | (21,771) |
| Residential real estate | (102) | (352) | (174) | (168) | (137) | (291) | (628) | (855) |
| Home equity | (1,131) | (1,294) | (3,045) | (1,528) | (322) | (905) | (5,470) | (1,840) |
| Indirect auto | (1,621) | (1,455) | (2,086) | (1,215) | (692) | (552) | (5,162) | (1,496) |
| Credit cards | (2,726) | (2,930) | (3,044) | (3,082) | (1,300) | (194) | (8,700) | (1,698) |
| Other consumer | (1,986) | (1,200) | (2,055) | (2,140) | (1,823) | (1,160) | (5,241) | (4,784) |
| Total net loan charge-offs | $ (12,973) | $ (13,911) | $ (18,637) | $ (20,279) | $ (12,955) | $ (13,094) | $ (45,521) | $ (36,369) |
| Provision for loan losses | 20,800 | 22,400 | 24,400 | 31,600 | 27,200 | 24,800 | 67,600 | 71,800 |
| Ending balance | $ 231,353 | $ 223,526 | $ 215,037 | $ 209,274 | $ 197,953 | $ 183,708 | $ 231,353 | $ 197,953 |
| Supplemental information | ||||||||
| Allowance to loans | 1.02% | 1.00% | 0.99 % | 0.98 % | 0.94 % | 0.89 % | 1.02% | 0.94% |
| Allowance for originated loans to originated loans(1) | 1.20% | 1.21% | 1.21 % | 1.21 % | 1.20 % | 1.21 % | 1.20% | 1.20% |
| Net charge-offs (recoveries) to average loans (annualized) | ||||||||
| Commercial real estate | 0.11 % | 0.25% | (0.05)% | 0.30 % | (0.05)% | 0.15 % | 0.11% | 0.07% |
| Commercial business | 0.22 % | 0.13% | 0.68 % | 0.49 % | 0.75 % | 0.56 % | 0.34% | 0.57% |
| Total commercial loans | 0.16 % | 0.20% | 0.25 % | 0.38 % | 0.27 % | 0.32 % | 0.20% | 0.27% |
| Residential real estate | 0.01 % | 0.04% | 0.02 % | 0.02 % | 0.02 % | 0.03 % | 0.02% | 0.03% |
| Home equity | 0.16 % | 0.18% | 0.44 % | 0.22 % | 0.05 % | 0.14 % | 0.26% | 0.09% |
| Indirect auto | 0.33 % | 0.33% | 0.52 % | 0.33 % | 0.23 % | 0.23 % | 0.39% | 0.21% |
| Credit cards | 3.49 % | 3.80% | 3.88 % | 3.93 % | 1.68 % | 0.26 % | 3.72% | 0.74% |
| Other consumer | 2.77 % | 1.65% | 2.74 % | 2.79 % | 2.01 % | 0.88 % | 2.39% | 2.01% |
| Total consumer loans | 0.35 % | 0.34% | 0.50 % | 0.40 % | 0.22 % | 0.16 % | 0.39% | 0.18% |
| Total loans | 0.23 % | 0.25% | 0.34 % | 0.38 % | 0.25 % | 0.26 % | 0.28% | 0.24% |
| Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1) | ||||||||
| Commercial real estate | 0.13 % | 0.29% | (0.11)% | 0.24 % | (0.07)% | 0.14 % | 0.11% | 0.05% |
| Commercial business | 0.24 % | 0.14% | 0.73 % | 0.53 % | 0.83 % | 0.64 % | 0.36% | 0.64% |
| Total commercial loans | 0.18 % | 0.22% | 0.26 % | 0.37 % | 0.33 % | 0.36 % | 0.22% | 0.32% |
| Residential real estate | 0.02 % | 0.07% | 0.04 % | 0.04 % | 0.03 % | 0.07 % | 0.04% | 0.06% |
| Home equity | 0.17 % | 0.16% | 0.21 % | 0.29 % | 0.09 % | 0.26 % | 0.18% | 0.18% |
| Indirect auto | 0.33 % | 0.33% | 0.52 % | 0.33 % | 0.23 % | 0.23 % | 0.39% | 0.21% |
| Credit cards | 3.49 % | 3.80% | 3.88 % | 3.93 % | 1.68 % | 0.26 % | 3.72% | 0.81% |
| Other consumer | 2.77 % | 1.65% | 2.74 % | 2.80 % | 2.59 % | 1.91 % | 2.39% | 2.33% |
| Total consumer loans | 0.45 % | 0.45% | 0.57 % | 0.56 % | 0.33 % | 0.27 % | 0.49% | 0.29% |
| Total loans | 0.27 % | 0.30% | 0.36 % | 0.43 % | 0.33 % | 0.33 % | 0.31% | 0.31% |
| Nonperforming loans: | ||||||||
| Originated(1): | ||||||||
| Commercial real estate | $ 57,340 | $ 55,945 | $ 41,296 | $ 53,395 | $ 51,302 | $ 59,624 | $ 57,340 | $ 51,302 |
| Commercial business | 36,939 | 32,861 | 35,335 | 42,013 | 35,854 | 44,658 | 36,938 | 35,854 |
| Residential real estate | 36,113 | 33,870 | 32,736 | 31,478 | 31,312 | 29,667 | 36,113 | 31,312 |
| Home equity | 23,392 | 19,429 | 19,516 | 18,426 | 15,709 | 14,601 | 23,392 | 15,709 |
| Indirect auto | 11,890 | 9,821 | 7,943 | 6,274 | 5,129 | 3,276 | 11,890 | 5,129 |
| Other consumer | 5,134 | 5,037 | 5,216 | 5,838 | 5,538 | 2,818 | 5,134 | 5,538 |
| Total originated nonperforming loans | 170,808 | 156,963 | 142,042 | 157,424 | 144,844 | 154,644 | 170,807 | 144,844 |
| Total acquired nonperforming loans(2) | 28,611 | 32,488 | 30,617 | 30,088 | 30,388 | 27,556 | 28,611 | 30,388 |
| Total nonperforming loans | 199,419 | 189,451 | 172,659 | 187,512 | 175,232 | 182,200 | 199,418 | 175,232 |
| Real estate owned | 20,261 | 24,270 | 25,466 | 24,788 | 24,262 | 8,144 | 20,261 | 24,262 |
| Total nonperforming assets | $ 219,680 | $ 213,721 | $ 198,125 | $ 212,300 | $ 199,494 | $ 190,344 | $ 219,679 | $ 199,494 |
| Accruing troubled debt restructurings (TDR) | $ 69,199 | $ 80,214 | $ 56,038 | $ 52,263 | $ 69,877 | $ 69,892 | $ 69,199 | $ 69,877 |
| Loans 90 days past due still accruing(3) | 108,615 | 112,718 | 119,134 | 113,212 | 136,248 | 167,560 | 108,615 | 136,248 |
| Total classified loans(4) | 649,320 | 661,699 | 667,327 | 663,700 | 648,235 | 701,104 | 649,320 | 648,235 |
| Total criticized loans(5) | $ 1,089,851 | $ 1,072,133 | $ 1,075,523 | $ 985,019 | $ 977,798 | $ 1,012,305 | $ 1,089,851 | $ 977,798 |
| Total nonperforming loans to loans | 0.88% | 0.85% | 0.79 % | 0.87 % | 0.83 % | 0.89 % | 0.88% | 0.83% |
| Total nonperforming originated loans to originated loans(1) | 0.91% | 0.86% | 0.82 % | 0.93 % | 0.89 % | 1.02 % | 0.91% | 0.89% |
| Total nonperforming assets to loans and real estate owned | 0.96% | 0.96% | 0.91 % | 0.99 % | 0.94 % | 0.93 % | 0.96% | 0.94% |
| Total nonperforming assets to assets | 0.57% | 0.55% | 0.52 % | 0.56 % | 0.53 % | 0.51 % | 0.57% | 0.53% |
| Allowance to nonperforming loans | 116.0% | 118.0% | 124.5 % | 111.6 % | 113.0 % | 100.8 % | 116.0% | 113.0% |
| Originated loans(1) | $ 18,841,896 | $ 18,196,302 | $ 17,388,542 | $ 16,922,161 | $ 16,211,505 | $ 15,102,336 | $ 18,841,896 | $ 16,211,505 |
| Acquired loans(6) | 4,028,091 | 4,254,750 | 4,475,593 | 4,642,775 | 5,006,753 | 5,581,651 | 4,028,091 | 5,006,753 |
| Credit related discount on acquired loans(7) | (100,138) | (105,233) | (113,295) | (125,283) | (129,187) | (140,805) | (100,138) | (129,187) |
| Total Loans | $ 22,769,849 | $ 22,345,819 | $ 21,750,840 | $ 21,439,653 | $ 21,089,071 | $ 20,543,182 | $ 22,769,849 | $ 21,089,071 |
| (1) Originated loans represent total loans excluding acquired loans. | ||||||||
| (2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing. | ||||||||
| (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, 2013. | ||||||||
| (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 the carrying value of acquired loans plus the principal not expected to be collected. | ||||||||
| (7) Represent principal on acquired loans not expected to be collected. | ||||||||
| First Niagara Financial Group, Inc. | ||||||
| Key Statistics | ||||||
| (Risk weighted assets in millions; share counts in thousands) | ||||||
| 2014 | 2013 | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | June 30, | |
| First Niagara Financial Group, Inc. capital ratios(1): | ||||||
| Tier 1 risk based capital | 9.52% | 9.57% | 9.62% | 9.56% | 9.45% | 9.41% |
| Tier 1 common capital(2) | 7.89% | 7.92% | 7.92% | 7.86% | 7.72% | 7.65% |
| Total risk based capital | 11.49% | 11.53% | 11.60% | 11.53% | 11.40% | 11.35% |
| Leverage | 7.16% | 7.33% | 7.28% | 7.26% | 7.14% | 7.01% |
| Equity to assets | 11.39% | 13.15% | 13.23% | 13.27% | 13.22% | 13.20% |
| Tangible common equity to tangible assets(2) | 6.28% | 6.13% | 6.07% | 6.02% | 5.89% | 5.80% |
| Total risk weighted assets | $ 27,647 | $ 27,314 | $ 26,639 | $ 26,412 | $ 26,078 | $ 25,564 |
| First Niagara Bank, N.A capital ratios(1): | ||||||
| Tier 1 risk based capital | 10.12% | 10.18% | 10.22% | 10.15% | 10.08% | 10.08% |
| Total risk based capital | 11.01% | 11.05% | 11.08% | 10.99% | 10.89% | 10.85% |
| Leverage | 7.61% | 7.79% | 7.74% | 7.70% | 7.61% | 7.50% |
| Total risk weighted assets | $ 27,605 | $ 27,273 | $ 26,597 | $ 26,365 | $ 26,037 | $ 25,520 |
| Number of branches | 411 | 411 | 411 | 421 | 422 | 422 |
| Full time equivalent employees | 5,768 | 5,874 | 5,750 | 5,807 | 5,788 | 5,779 |
| Share information and per share metrics: | ||||||
| Common shares outstanding | 355,423 | 355,483 | 354,127 | 353,941 | 353,973 | 353,932 |
| Preferred shares outstanding | 14,000 | 14,000 | 14,000 | 14,000 | 14,000 | 14,000 |
| Treasury shares | 10,579 | 10,519 | 11,875 | 12,061 | 12,029 | 12,070 |
| Market price (NASDAQ: FNFG): | $ 8.33 | $ 8.74 | $ 9.45 | $ 10.62 | $ 10.37 | $ 10.07 |
| Book value per common share(3) | 11.46 | 13.53 | 13.40 | 13.31 | 13.15 | 13.06 |
| Tangible book value per common share(2)(3) | 6.55 | 6.31 | 6.15 | 6.04 | 5.86 | 5.74 |
| Price/Book | 72.69% | 64.60% | 70.52% | 79.79% | 78.86% | 77.11% |
| Price/Tangible book(2) | 127.18% | 138.51% | 153.66% | 175.83% | 176.96% | 175.44% |
| 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 | 0.54 |
| Dividend payout ratio | N/M | 42.11% | 53.33% | 40.00% | 40.00% | 44.44% |
| Dividend yield (annualized) | 3.81% | 3.67% | 3.43% | 2.99% | 3.06% | 3.19% |
| N/M Not meaningful | ||||||
| (1) Represents an estimate as of September 30, 2014. All preceding quarters represent actual amounts. | ||||||
| (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) | ||||||||
| 2014 | 2013 | Nine months ended | ||||||
| Third | Second | First | Fourth | Third | Second | September 30, | September 30, | |
| Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | 2014 | 2013 | |
| Financial ratios computed on an operating basis(1): | ||||||||
| Earnings per basic share | $ 0.18 | $ 0.19 | $ 0.17 | $ 0.20 | $ 0.20 | $ 0.18 | $ 0.54 | $ 0.55 |
| Earnings per diluted share | 0.18 | 0.19 | 0.17 | 0.20 | 0.20 | 0.18 | 0.54 | 0.55 |
| Weighted average shares outstanding - basic(2) | 350,381 | 350,229 | 349,906 | 349,718 | 349,653 | 349,542 | 350,174 | 349,492 |
| Weighted average shares outstanding - diluted(2) | 351,898 | 351,541 | 351,408 | 350,699 | 350,896 | 350,384 | 351,570 | 350,368 |
| Noninterest income as a percentage of net revenue(3) | 21.62% | 22.93% | 22.08% | 24.17% | 24.78% | 26.18% | 22.21% | 25.36% |
| Pre-tax, pre-provision income | 99,210 | 108,554 | 109,091 | 142,442 | 137,769 | 129,819 | 316,855 | 385,364 |
| Pre-tax, pre-provision income per diluted share | 0.28 | 0.31 | 0.31 | 0.41 | 0.39 | 0.37 | 0.90 | 1.10 |
| Pre-tax, pre-provision return on average assets | 1.02% | 1.14% | 1.17% | 1.51% | 1.47% | 1.41% | 1.11% | 1.39% |
| Net interest margin(4) | 3.21% | 3.26% | 3.33% | 3.41% | 3.40% | 3.36% | 3.27% | 3.39% |
| Interest yield on average loans(4) | 3.80% | 3.89% | 3.98% | 4.04% | 4.14% | 4.19% | 3.89% | 4.19% |
| Rate paid on interest-bearing liabilities | 0.44% | 0.44% | 0.44% | 0.43% | 0.43% | 0.43% | 0.44% | 0.44% |
| Efficiency ratio | 71.55% | 69.22% | 68.60% | 61.46% | 62.66% | 64.43% | 69.79% | 64.63% |
| Effective tax rate | 9.1% | 14.0% | 19.6% | 29.7% | 28.2% | 32.0% | 14.4% | 30.3% |
| Return on average assets | 0.73% | 0.77% | 0.73% | 0.82% | 0.85% | 0.77% | 0.74% | 0.79% |
| Return on average equity | 5.51% | 5.84% | 5.46% | 6.18% | 6.37% | 5.72% | 5.61% | 5.86% |
| Return on average tangible equity(5) | 10.89% | 11.68% | 11.02% | 12.64% | 13.20% | 11.75% | 11.19% | 12.19% |
| Return on average common equity | 5.28% | 5.62% | 5.20% | 5.99% | 6.18% | 5.48% | 5.37% | 5.64% |
| Return on average tangible common equity(6) | 11.19% | 12.10% | 11.33% | 13.25% | 13.92% | 12.21% | 11.54% | 12.73% |
| Reconciliation of noninterest expense on operating basis to reported noninterest expense(1): | ||||||||
| Total noninterest expense on operating basis (Non-GAAP) | $ 249,461 | $ 244,115 | $ 238,380 | $ 227,148 | $ 231,193 | $ 235,170 | $ 731,956 | $ 704,029 |
| Restructuring charges | 2,364 | -- | 10,356 | -- | -- | -- | 12,720 | -- |
| Goodwill impairment | 800,000 | -- | -- | -- | -- | -- | 800,000 | -- |
| Deposit account remediation | 45,000 | -- | -- | -- | -- | -- | 45,000 | -- |
| Total reported noninterest expense (GAAP) | $ 1,096,825 | $ 244,115 | $ 248,736 | $ 227,148 | $ 231,193 | $ 235,170 | $ 1,589,676 | $ 704,029 |
| Reconciliation of net operating income to net income(1): | ||||||||
| Net operating income (Non-GAAP) | $ 70,875 | $ 73,785 | $ 67,789 | $ 77,690 | $ 79,143 | $ 71,134 | $ 212,449 | $ 217,562 |
| Nonoperating income and expenses, net of tax: | ||||||||
| Restructuring charges | 1,557 | -- | 8,345 | -- | -- | -- | 9,902 | -- |
| Goodwill impairment | 697,319 | -- | -- | -- | -- | -- | 697,319 | -- |
| Deposit account remediation | 29,233 | -- | -- | -- | -- | -- | 29,233 | -- |
| Total nonoperating expenses, net of tax | 728,109 | -- | 8,345 | -- | -- | -- | 736,454 | -- |
| Net income (loss) (GAAP) | $ (657,234) | $ 73,785 | $ 59,444 | $ 77,690 | $ 79,143 | $ 71,134 | $ (524,005) | $ 217,562 |
| 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) | $ 63,328 | $ 66,238 | $ 60,242 | $ 70,143 | $ 71,596 | $ 63,587 | $ 189,808 | $ 194,921 |
| Nonoperating income and expenses, net of tax: | ||||||||
| Restructuring charges | 1,557 | -- | 8,345 | -- | -- | -- | 9,902 | -- |
| Goodwill impairment | 697,319 | -- | -- | -- | -- | -- | 697,319 | -- |
| Deposit account remediation | 29,233 | -- | -- | -- | -- | -- | 29,233 | -- |
| Total nonoperating income and expenses, net of tax | 728,109 | -- | 8,345 | -- | -- | -- | 736,454 | -- |
| Net income (loss) available to common stockholders (GAAP) | $ (664,781) | $ 66,238 | $ 51,897 | $ 70,143 | $ 71,596 | $ 63,587 | $ (546,646) | $ 194,921 |
| Computation of pre-tax,pre-provision income: | ||||||||
| Net interest income | $ 273,279 | $ 271,812 | $ 270,747 | $ 280,278 | $ 277,540 | $ 269,443 | $ 815,838 | $ 813,113 |
| Noninterest income | 75,392 | 80,857 | 76,724 | 89,312 | 91,422 | 95,546 | 232,973 | 276,280 |
| Noninterest expense | (1,096,825) | (244,115) | (248,736) | (227,148) | (231,193) | (235,170) | (1,589,676) | (704,029) |
| Pre-tax, pre-provision income (loss) (GAAP) | (748,154) | 108,554 | 98,735 | 142,442 | 137,769 | 129,819 | (540,865) | 385,364 |
| Add back: non-operating noninterest expenses (1) | 847,364 | -- | 10,356 | -- | -- | -- | 857,720 | -- |
| Pre-tax, pre-provision income (Non-GAAP)(1) | $ 99,210 | $ 108,554 | $ 109,091 | $ 142,442 | $ 137,769 | $ 129,819 | $ 316,855 | $ 385,364 |
| (1) Noninterest 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) Net revenue is comprised of net interest income and noninterest income. | ||||||||
| (4) Yields and rates calculated on a tax equivalent basis. | ||||||||
| (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) | ||||||||
| 2014 | 2013 | Nine months ended | ||||||
| Third | Second | First | Fourth | Third | Second | September 30, | September 30, | |
| Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | 2014 | 2013 | |
| Computation of Ending Tangible Assets: | ||||||||
| Total assets | $ 38,231,999 | $ 38,624,752 | $ 37,990,444 | $ 37,628,362 | $ 37,340,541 | $ 37,149,727 | $ 38,231,999 | $ 37,340,541 |
| Less: Goodwill and other intangibles | (1,723,437) | (2,528,481) | (2,535,271) | (2,542,783) | (2,549,931) | (2,557,560) | (1,723,437) | (2,549,931) |
| Tangible assets | $ 36,508,562 | $ 36,096,271 | $ 35,455,173 | $ 35,085,579 | $ 34,790,610 | $ 34,592,167 | $ 36,508,562 | $ 34,790,610 |
| Computation of Average Tangible Assets: | ||||||||
| Total assets | $ 38,591,116 | $ 38,211,808 | $ 38,211,808 | $ 37,378,780 | $ 37,093,236 | $ 36,982,893 | $ 38,186,687 | $ 36,962,164 |
| Less: Goodwill and other intangibles | (2,517,841) | (2,531,612) | (2,531,612) | (2,546,031) | (2,553,647) | (2,561,507) | (2,529,371) | (2,574,650) |
| Tangible assets | $ 36,073,275 | $ 35,680,196 | $ 35,680,196 | $ 34,832,749 | $ 34,539,589 | $ 34,421,386 | $ 35,657,316 | $ 34,387,514 |
| Computation of Ending Tangible Equity: | ||||||||
| Total stockholders' equity | $ 4,355,660 | $ 5,078,818 | $ 5,026,219 | $ 4,993,353 | $ 4,938,197 | $ 4,902,744 | $ 4,355,660 | $ 4,938,197 |
| Less: Goodwill and other intangibles | (1,723,437) | (2,528,481) | (2,535,271) | (2,542,783) | (2,549,931) | (2,557,560) | (1,723,437) | (2,549,931) |
| Tangible equity | $ 2,632,223 | $ 2,550,337 | $ 2,490,948 | $ 2,450,570 | $ 2,388,266 | $ 2,345,184 | $ 2,632,223 | $ 2,388,266 |
| Computation of Ending Tangible Common Equity: | ||||||||
| Total stockholders' equity | $ 4,355,660 | $ 5,078,818 | $ 5,026,219 | $ 4,993,353 | $ 4,938,197 | $ 4,902,744 | $ 4,355,660 | $ 4,938,197 |
| Less: Goodwill and other intangibles | (1,723,437) | (2,528,481) | (2,535,271) | (2,542,783) | (2,549,931) | (2,557,560) | (1,723,437) | (2,549,931) |
| Less: Preferred stockholders' equity | (338,002) | (338,002) | (338,002) | (338,002) | (338,002) | (338,002) | (338,002) | (338,002) |
| Tangible common equity | $ 2,294,221 | $ 2,212,335 | $ 2,152,946 | $ 2,112,568 | $ 2,050,264 | $ 2,007,182 | $ 2,294,221 | $ 2,050,264 |
| Computation of Average Tangible Equity: | ||||||||
| Total stockholders' equity | $ 5,100,494 | $ 5,065,008 | $ 5,034,093 | $ 4,984,003 | $ 4,932,949 | $ 4,989,006 | $ 5,066,774 | $ 4,960,026 |
| Less: Goodwill and other intangibles | (2,517,841) | (2,531,612) | (2,538,891) | (2,546,031) | (2,553,647) | (2,561,507) | (2,529,371) | (2,574,650) |
| Tangible equity | $ 2,582,653 | $ 2,533,396 | $ 2,495,202 | $ 2,437,972 | $ 2,379,302 | $ 2,427,499 | $ 2,537,403 | $ 2,385,376 |
| Computation of Average Tangible Common Equity: | ||||||||
| Total stockholders' equity | $ 5,100,494 | $ 5,065,008 | $ 5,034,093 | $ 4,984,003 | $ 4,932,949 | $ 4,989,006 | $ 5,066,774 | $ 4,960,026 |
| Less: Goodwill and other intangibles | (2,517,841) | (2,531,612) | (2,538,891) | (2,546,031) | (2,553,647) | (2,561,507) | (2,529,371) | (2,574,650) |
| Less: Preferred stockholders' equity | (338,002) | (338,002) | (338,002) | (338,002) | (338,002) | (338,002) | (338,002) | (338,002) |
| Tangible common equity | $ 2,244,651 | $ 2,195,394 | $ 2,157,200 | $ 2,099,970 | $ 2,041,300 | $ 2,089,497 | $ 2,199,401 | $ 2,047,374 |
| Computation of Tier 1 Common Capital: | ||||||||
| Tier 1 capital | $ 2,632,177 | $ 2,613,584 | $ 2,562,261 | $ 2,525,656 | $ 2,464,801 | $ 2,406,473 | $ 2,632,177 | $ 2,464,801 |
| Less: Qualifying restricted core capital elements | (113,556) | (113,330) | (113,107) | (112,886) | (112,667) | (112,449) | (113,556) | (112,667) |
| 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) | $ 2,180,619 | $ 2,162,252 | $ 2,111,152 | $ 2,074,768 | $ 2,014,132 | $ 1,956,022 | $ 2,180,619 | $ 2,014,132 |