Advertisement

Topics

First Niagara Reports Second Quarter 2015 Results

20:00 EDT 23 Jul 2015 | Globe Newswire

Second Quarter 2015 Highlights:

  • Second quarter GAAP earnings of $0.15 per diluted share
  • Revenues, excluding the impact of tax credit amortization, of $353 million increased 2% QOQ
    • Noninterest income increased 9% driven by customer activity and favorable seasonal trends
    • Net interest income stable QOQ
  • Period-end commercial business loans increased 9% QOQ
    • Average consumer loan growth increased 2% QOQ driven by Indirect Auto and Home Equity balances
    • Strong commercial loan pipeline at the end of the second quarter
  • Average transactional deposit balances increased 5% QOQ and averaged 37% of deposits
    • Average consumer checking balances increased 12% annualized QOQ and 5% YOY
    • Strong customer response to Simple Checking and Companion Savings deposit products
  • Strong credit quality maintained
    • NCOs averaged 0.31% of originated loans, unchanged QOQ
    • Nonperforming loans declined 9% QOQ; Total criticized loans decreased 5% QOQ

BUFFALO, N.Y., July 24, 2015 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (NASDAQ:FNFG) today reported GAAP net income available to common shareholders of $53.5 million, or $0.15 per diluted share for the second quarter of 2015, compared to $43.8 million, or $0.12 per diluted share, for the quarter ended March 31, 2015.

"We had solid execution in the second quarter reflecting adherence to our prudent credit underwriting practices and progress in implementing our strategic investment plan, which remains on-time and on-budget," said Gary M. Crosby, President and Chief Executive Officer. "Our team is focused on providing a faster, easier, simpler and more secure banking experience, and our customers are responding well. I'm especially proud of our recent recognition by the Reputation Institute as the number four most-reputable bank based on customer feedback. In particular, we received high scores for innovation, citizenship and product quality. Customer-centricity is the heart of our strategy and culture. Every decision we make and every action we take are with our customers, and ultimately our shareholders, top-of-mind and we're gratified to see those efforts recognized by the people we serve."

"Compared to the prior quarter, revenues increased as most noninterest income categories benefited from strong customer activity as well as seasonal strength," said Gregory W. Norwood, Chief Financial Officer. "In our commercial lending business, we ended the quarter on a strong note with period-end commercial business (C&I) balances increasing 9% annualized from the prior quarter benefitting from strong activity in June. Importantly, our loan pipeline at the end of the quarter also was robust. Sequentially, average consumer deposit balances increased 5% annualized driven by interest-checking and money market deposit balances. Net interest margin of 3.02% was in line with our expectations."

Second Quarter Results

On a GAAP basis, in the second quarter of 2015, First Niagara reported net income available to common shareholders of $53.5 million, or $0.15 per diluted share, compared to $43.8 million, or $0.12 per diluted share in the first quarter of 2015, and $68.3 million, or $0.19 per diluted share, for the quarter ended June 30, 2014.

Compared to the first quarter of 2015, the increase in net income available to common shareholders was primarily driven by a 5% increase in noninterest income as well as the impact of $11 million in after-tax restructuring charges or $0.03 per share that were incurred in the first quarter of 2015 primarily in connection with previously announced branch consolidations and the company's Organization Simplification initiative. These were partially offset by an increase in provision for credit losses from very low first quarter levels. Compared to the year-ago period, the decline in GAAP earnings was driven by a higher effective tax rate and net interest margin compression.

In the second quarter of 2015, average loans increased 1% annualized from the linked quarter. Average commercial business and real estate loans increased 1% annualized over the prior quarter, driven by increases in commercial business loan balances; period-end commercial business loan balances increased 9% annualized. Average consumer loans increased 2% annualized, driven by increases in indirect auto and home equity balances. Average interest-bearing deposit balances increased 8% annualized, led by sequential increases across all categories. Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking account balances, increased 5% annualized and currently represent 37% of the company's deposit balances.

Revenues, excluding the impact of $3 million in amortization related to the company's investments in tax credits, increased 2% from the prior quarter primarily driven by an increase in noninterest income. Net interest income was unchanged from prior quarter levels as the benefits of earning asset growth and one extra day in the quarter were offset by the continued impact of reinvestments and re-pricing of assets in the current low interest rate and competitive pricing environment. Net interest margin was 3.02%, down 5 basis points from the prior quarter. Noninterest income, excluding tax credit amortization, increased 9% from the prior quarter driven by strong customer activity and favorable seasonal trends that benefited certain noninterest income categories. Excluding the impact of restructuring charges incurred in the prior quarter, noninterest expenses of $248 million increased 2% sequentially, reflecting business and volume related expenses as well as vendor and other costs associated with the company's strategic initiatives and other corporate activities.

The provision for loan losses on originated loans totaled $20 million and covered net charge-offs of $15.5 million, or 0.31% of average originated loans. At June 30, 2015, total criticized loans decreased 5% from the prior quarter. At June 30, 2015, nonperforming originated loans were $181 million, or 8% lower than at March 31, 2015.

Operating Results (Non-GAAP) Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014
Net interest income $ 263.1 $ 262.9 $ 269.8 $ 273.3 $ 271.8
Provision for credit losses 20.8 12.8 35.7 16.7 19.8
Noninterest income 86.6 82.2 77.2 75.4 80.9
Noninterest expense 247.9 243.5 248.2 249.5 244.1
Operating net income 61.0 62.2 60.7 74.0 75.9
Preferred stock dividend 7.5 7.5 7.5 7.5 7.5
Operating net income available to common $ 53.5 $ 54.7 $ 53.2 $ 66.5 $ 68.3
Weighted average diluted shares outstanding 352.8 352.6 352.2 351.9 351.5
Operating earnings per diluted share $ 0.15 $ 0.15 $ 0.15 $ 0.19 $ 0.19
           
Reported Results (GAAP) Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014
Operating net income before non-op. items $ 61.0 $ 62.2 $ 60.7 $ 74.0 $ 75.9
Non-operating items (a) -- 10.9 (8.4) 994.1 --
Net Income / (loss)  61.0 51.4 69.1 (920.0) 75.9
Preferred stock dividend 7.5 7.5 7.5 7.5 7.5
Net income / (loss) available to common   $ 53.5  $ 43.8  $ 61.5  $ (927.6)  $ 68.3
Weighted average diluted shares outstanding 352.8 352.6 352.2 350.4 351.5
Earnings per diluted share $ 0.15 $ 0.12 $ 0.17  $ (2.65) $ 0.19
           
All amounts in millions except earnings per diluted share.           
(a)  Q1 2015: Restructuring charges primarily related to staffing realignment, branch consolidations and third-party professional fees incurred in connection with the overstatement of allowance resulting from mid-level employee misconduct, net of taxes.
Q4 2014: Benefit from reversal of process issue reserve related to certain customer deposit accounts less severance and other restructuring charges related to Organizational Simplification initiative, net of taxes.
Q3 2014: $1.1 billion non-cash goodwill impairment charge, reserves related to a process issue, and restructuring charges primarily related to branch realignment, net of taxes.

Loans

On an end-of-period basis, total loans increased 4% from the prior quarter driven by a 9% increase in commercial business (C&I) loans.

Average loans increased 1% annualized from the prior quarter to $23.2 billion, driven primarily by increases in the company's indirect auto, home equity and C&I loan portfolios.

Average commercial loans, which include C&I and commercial real estate (CRE) loans, increased 1% annualized to $14.1 billion, driven by growth primarily in the company's Eastern Pennsylvania and Tri-State markets. Average commercial loan growth in the second quarter was impacted by the timing of new business volumes, commercial real estate pay-downs early in the quarter as well as the company's continued focus on balancing volume growth with prudent credit underwriting.

Average C&I loans increased 2% annualized to $5.8 billion, driven primarily by increases in the middle market and healthcare segments. CRE loans averaged $8.3 billion and were relatively flat compared to the prior quarter due to higher principal pay-downs driven primarily by customers' sale of the properties.

Average indirect auto loan balances increased 9% annualized or by $51 million to $2.2 billion, as strong new origination activity was partially offset by increased pay-downs. Indirect auto originations during the quarter totaled $273 million. New originations in the second quarter yielded 3.38%, net of dealer reserve, an increase of 13 basis points compared to the prior quarter originations. 

Average residential real estate loans decreased 1% annualized, driven by prepayment of adjustable rate mortgages and the company's limited appetite for longer-duration mortgage assets. Home equity balances increased for the ninth consecutive quarter to $3.0 billion, or 3% annualized from the prior quarter reflecting higher customer draws and the benefits of promotional and cross-sell campaigns.

Deposits

Average deposits increased 6% annualized from the prior quarter to $28.2 billion. Average consumer deposit balances increased 5% annualized to $18.1 billion, driven by higher customer balances, new account acquisitions, and successful money market deposit promotional campaigns primarily in the company's New York State footprint. Average consumer interest-bearing and noninterest-bearing checking account balances increased 12% annualized to $5.4 billion, driven by higher balances held by customers as well as new customer acquisitions. Average savings balances increased 7% annualized driven by new Companion Savings accounts as well as higher average customer balances.

Money market deposit balances increased 5% annualized, reflecting promotional marketing campaigns. Time deposits increased 15% annualized to $3.9 billion, as increases in brokered certificate of deposit balances were partially offset by lower consumer and municipal certificate of deposit balances.  Non-interest checking deposit balances averaged $5.4 billion, and were unchanged from the prior quarter but increased 7% from the year-ago period driven by higher business deposit balances.

Net Interest Income

Second quarter 2015 GAAP net interest income of $263 million was consistent with the prior quarter as the benefit of a 2% annualized increase in average earning assets was offset by a 5 basis point decline in the net interest margin. The decrease in net interest margin reflects continued compression of earning asset yields in the current low interest rate and competitive pricing environment as well as the impact of deposit pricing promotional campaigns.  

Yields on loans decreased 2 basis points to 3.73%, driven primarily by elevated refinance activity in the company's residential real estate portfolio. Yields on investment securities declined 3 basis points due primarily to higher premium amortization on the residential mortgage-backed securities portfolio as well as purchases of new securities at yields lower than the overall portfolio.

The average cost of interest-bearing deposits increased 1 basis point to 0.29% from the prior quarter, reflecting a modest shift in deposit mix and the impact of promotional pricing on money market deposit accounts.

Credit Quality

At June 30, 2015, the allowance for loan losses was $236 million, compared to $231 million at March 31, 2015. Nonperforming assets decreased to $225 million and comprised 0.58% of total assets, compared to $247 million or 0.63% of total assets at March 31, 2015. Total criticized loans decreased 5% from the prior quarter.

Information for both the originated and acquired portfolios follows.

             
   Q2 2015 Q1 2015        
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses*  $ 19.5  $ 0.9  $ 20.5  $ 11.1  $ 3.0  $ 14.2
Net charge-offs 15.5 0.5 16.0 15.0 2.3 17.3
NCOs/ Avg Loans 0.31 % 0.06 % 0.28 % 0.31 % 0.25 % 0.30 %
Total loans**  $ 19,930  $ 3,438  $ 23,368  $ 19,529  $ 3,590  $ 23,118
             
 (*) Excludes provision for unfunded commitments of $0.3 million and $(1.4) million in 2Q15 and 1Q15, respectively    
(**) Acquired loans net of associated credit discount; see accompanying tables for further information      

Originated loans

The provision for loan losses on originated loans totaled $20 million, compared to $11 million in the first quarter of 2015. This increase was in large part driven by provisioning associated with the $0.4 billion increase in period-end originated loans from the prior quarter. Net charge-offs in the second quarter equaled $15 million or 31 basis points of average originated loans, and were consistent with the prior quarter.

At June 30, 2015, nonperforming originated loans decreased $17 million or 8% from March 31, 2015, and comprised 0.91% of originated loans, compared to 1.01% at March 31, 2015. This decrease was driven by principal pay-downs as well as loan charge-offs.

At June 30, 2015, the allowance for loan losses on originated loans totaled $228 million or 1.15% of such loans, compared to $224 million or 1.15% of such loans at March 31, 2015.

Acquired loans

The provision for losses on acquired loans totaled $0.9 million, compared to $3 million in the prior quarter. Net charge-offs on the acquired portfolio totaled $0.5 million during the quarter, compared to $2.3 million of net charge-offs in the prior quarter. At June 30, 2015, the allowance for loan losses on acquired loans totaled $7 million, relatively unchanged from March 31, 2015. Acquired nonperforming loans totaled $27 million, a 12% decrease from the prior quarter. Acquired classified and criticized loans decreased 8% and 13%, respectively from March 31, 2015. At June 30, 2015, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $79 million.

Noninterest Income

Excluding the impact of $3 million in amortization of tax credit investments, second quarter 2015 noninterest income of $90 million increased 9% or $7 million compared to the prior quarter. This sequential increase was across most noninterest income categories reflecting strong customer activity as well as typical seasonal patterns.

Deposit service charges increased 9% from the prior quarter reflecting typical seasonal trends. Insurance commissions also increased $1 million or 9% driven primarily by higher revenues from the health and welfare business line as well as contingent commissions. Merchant and card fees increased $1 million or 12% and was driven by higher debit and credit card purchase volumes. Wealth management services increased $1 million or 7%, reflecting strong annuity sales and 1% increase in assets under management during the quarter. Capital markets income, which primarily includes income from derivatives and syndications, increased $1 million.  Mortgage banking increased $1 million or 18%, driven by an increase in gain-on-sale margins as well as a 5% increase in new locked volumes.

Offsetting these benefits, other noninterest income declined $3 million from the prior quarter reflecting amortization related to the company's tax credit investments.

Noninterest Expense

Noninterest expenses totaled $248 million in the second quarter of 2015, or $13 million lower than the first quarter of 2015 which included $18 million in restructuring charges primarily related to severance and other expenses from previously announced branch consolidations and the completion of the company's Organizational Simplification initiative.  Excluding the impact of restructuring expenses, the quarter-over-quarter increase was primarily driven by variable expenses tied to business volume and revenue growth as well as higher professional services fees.

Salaries and benefits expenses increased $2 million or 1% compared to the prior quarter, and was driven primarily by higher commissions expense tied to revenue growth. Occupancy and equipment expense decreased $1 million or 5%, due primarily to lower building maintenance expenses. Technology and communications expenses increased $1 million or 4%, due primarily to higher debit transaction volumes. Professional services fees increased $3 million in large part due to vendor and other costs associated with the company's strategic initiatives and other corporate activities in the second quarter of 2015.

In the second quarter of 2015, the operating efficiency ratio was 70.9%, consistent with 70.5% in the prior quarter.

Effective Tax Rate

The effective tax rate, on a GAAP basis, was 25%, compared to 28% in the prior quarter, primarily reflecting the benefits related to the company's tax credit investments.

Capital

Beginning in the first quarter of 2015, all regulatory capital ratios and amounts were calculated under the Basel III standardized transitional approach. At June 30, 2015, the company's estimated consolidated Total Risk Based capital and Common Equity Tier 1 capital ratios were 12.0% and 8.5% respectively, unchanged from March 31, 2015, 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 390 branches, $39 billion in assets, $28 billion in deposits, and approximately 5,400 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 8:30 a.m. Eastern Time on Friday, July 24, 2015 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-800-732-6870 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 September 1, 2015 by dialing 1-800-633-8284, passcode: 21771915.

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)
                 
  2015 2014 Six months ended
  Second
Quarter
First
Quarter
Fourth
Quarter
Third 
Quarter
Second 
Quarter
First 
Quarter
June 30,
2015
June 30,
2014
                 
Interest income:                
Loans and leases  $ 211,899  $ 210,371  $ 214,609  $ 212,452  $ 210,218  $ 209,644  $ 422,270  $ 419,862
Investment securities and other  86,356  86,280  86,919  91,668  91,566  90,421  172,636  181,987
Total interest income  298,255  296,651  301,528  304,120  301,784  300,065  594,906  601,849
                 
Interest expense:                
Deposits  16,568  15,344  14,295  13,590  13,183  12,236  31,912  25,419
Borrowings  18,577  18,363  17,450  17,251  16,789  17,082  36,940  33,871
Total interest expense  35,145  33,707  31,745  30,841  29,972  29,318  68,852  59,290
                 
Net interest income  263,110  262,944  269,783  273,279  271,812  270,747  526,054  542,559
Provision for credit losses  20,756  12,765  35,706  16,700  19,800  23,700  33,521  43,500
Net interest income after provision  242,354  250,179  234,077  256,579  252,012  247,047  492,533  499,059
                 
Noninterest income:                
Deposit service charges  22,208  20,389  22,611  20,373  23,733  23,356  42,597  47,089
Insurance commissions  17,060  15,714  14,764  18,352  17,343  15,691  32,774  33,034
Merchant and card fees  13,317  11,907  13,043  12,991  12,834  11,504  25,224  24,338
Wealth management services  15,718  14,650  14,404  15,367  15,949  15,587  30,368  31,536
Mortgage banking  5,783  4,887  4,600  4,358  5,241  3,396  10,670  8,637
Capital markets income  5,284  4,152  8,312  3,509  2,917  3,623  9,436  6,540
Lending and leasing  3,998  4,353  4,567  3,914  4,680  4,732  8,351  9,412
Bank owned life insurance  3,160  3,592  3,187  3,080  3,145  5,405  6,752  8,550
Other income  79  2,600  (8,311)  (6,552)  (4,985)  (6,570)  2,679  (11,555)
Total noninterest income  86,607  82,244  77,177  75,392  80,857  76,724  168,851  157,581
                 
Noninterest expense:                
Salaries and employee benefits  113,561  111,973  110,985  116,245  117,728  117,940  225,534  235,668
Occupancy and equipment  26,021  27,332  28,379  27,450  28,553  27,876  53,353  56,429
Technology and communications  36,486  35,061  33,940  31,465  31,140  30,345  71,547  61,485
Marketing and advertising  10,297  9,863  11,584  7,746  8,439  7,364  20,160  15,803
Professional services  16,321  13,070  16,644  13,988  13,029  11,923  29,391  24,952
Amortization of intangibles  5,092  6,205  6,432  6,521  6,790  7,509  11,297  14,299
Federal deposit insurance premiums  11,750  11,158  11,911  9,579  9,756  8,855  22,908  18,611
Restructuring charges  --   17,517  9,066  2,364  --   10,356  17,517  10,356
Goodwill impairment  --   --   --   1,100,000  --   --   --  --
Deposit account remediation  --   --   (23,000)  45,000  --   --   --  --
Other expense  28,371  28,859  28,371  36,467  28,680  26,568  57,230  55,248
Total noninterest expense  247,899  261,038  234,312  1,396,825  244,115  248,736  508,937  492,851
                 
Income (loss) before income tax  81,062  71,385  76,942  (1,064,854)  88,754  75,035  152,447  163,789
Income tax expense (benefit)  20,052  20,000  7,875  (144,808)  12,879  14,825  40,052  27,704
Net income (loss)  61,010  51,385  69,067  (920,046)  75,875  60,210  112,395  136,085
Preferred stock dividend  7,547  7,547  7,547  7,547  7,547  7,547   15,094  15,094 
Net income (loss) available to common stockholders  $ 53,463  $ 43,838  $ 61,520  $ (927,593)  $ 68,328  $ 52,663  $ 97,301  $ 120,991
                 
Financial Ratios:                
Earnings (loss) per basic share  $ 0.15  $ 0.12  $ 0.17  $ (2.65)  $ 0.19  $ 0.15  $ 0.27  $ 0.34
Earnings (loss) per diluted share  $ 0.15  $ 0.12  $ 0.17  $ (2.65)  $ 0.19  0.15  $ 0.27  0.34
Weighted average shares outstanding - basic(1)  351,126  350,741  350,444  350,381  350,229  349,906  350,935  350,068
Weighted average shares outstanding - diluted(1)  352,791  352,621  352,152  350,381  351,541  351,408  352,683  351,448
Net revenue(2)  $ 349,717  $ 345,188  $ 346,960  $ 348,671  $ 352,669  $ 347,471  $ 694,905  $ 700,140
Noninterest income as a percentage of net revenue(2) 24.76% 23.83% 22.24% 21.62% 22.93% 22.08% 24.30% 22.51%
Pre-tax, pre-provision income (loss)(3)  $ 101,818  $ 84,150  $ 112,648  $ (1,048,154)  $ 108,554  $ 98,735  $ 185,968  $ 207,289
Pre-tax, pre-provision income per diluted share(3)  $ 0.29  $ 0.24  $ 0.32  $ (2.99)  $ 0.31  $ 0.28  $ 0.53  $ 0.59
Pre-tax, pre-provision return on average assets(3) 1.05% 0.88%  1.17 %  (10.8)% 1.14% 1.06%  0.97 % 1.10%
Net interest margin(4) 3.02% 3.07% 3.11% 3.21% 3.26% 3.33% 3.04% 3.30%
Interest yield on average loans(4) 3.73% 3.75% 3.78% 3.80% 3.89% 3.98% 3.74% 3.94%
Rate paid on interest-bearing liabilities 0.49% 0.48% 0.45% 0.44% 0.44% 0.44% 0.49% 0.44%
Efficiency ratio 70.9% 75.6% 67.5% 400.6% 69.2% 71.6% 73.2% 70.4%
Expenses as a percentage of average loans and deposits 1.93% 2.05% 1.85% 11.19% 1.97% 2.06% 2.01% 2.03%
Effective tax rate (benefit) 24.7% 28.0%  10.2 %  (13.6)% 14.5% 19.8%  26.3 % 16.9%
Return on average assets(5)  0.63 %  0.54 %  0.72 %  (9.46)%  0.80 % 0.65%  0.58 % 0.72%
Return on average equity(5)  5.90 %  5.05 %  6.62 %  (71.57)%  6.01 % 4.85%  5.48 % 5.43%
Return on average tangible equity(3)(5)  8.94 %  7.68 %  10.07 %  (141.16)%  12.01 % 9.79%  8.32 % 10.91%
Return on average common equity  5.63 %  4.69 %  6.42 %  (77.27)%  5.80 % 4.55%  5.17 % 5.18%
Return on average tangible common equity(3)  8.94 %  7.48 %  10.24 %  (163.71)%  12.48 % 9.90%  8.22 % 11.21%
                 
(1)  Share count excludes unallocated ESOP shares prior to January 1, 2015 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 the 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)
             
  2015 2014
  June 30, March 31,  December 31,  September 30, June 30, March 31,
Cash and cash equivalents  $ 527,323  $ 387,676  $ 420,033  $ 451,313  $ 557,423  $ 503,070
Investment securities:            
Available for sale  5,750,860  5,911,419  5,915,338  6,198,140  6,683,914  7,060,237
Held to maturity  6,169,838  6,214,561  5,941,621  5,351,977  4,834,279  4,467,213
FHLB and FRB common stock  379,135  375,090  411,857  389,870  434,322  437,550
Total investment securities  12,299,833  12,501,070  12,268,816  11,939,987  11,952,515  11,965,000
Loans held for sale  59,816  48,755  39,825  31,245  45,446  34,465
Loans and leases:             
Commercial:            
Real estate  8,312,332  8,287,108  8,204,027  8,013,622  7,940,977  7,867,724
Business  5,923,524  5,790,980  5,775,413  5,836,235  5,741,684  5,470,177
Total commercial loans  14,235,856  14,078,088  13,979,440  13,849,857  13,682,661  13,337,901
Consumer:            
Residential real estate  3,329,799  3,330,216  3,353,081  3,360,805  3,358,347  3,389,071
Home equity  2,984,872  2,943,844  2,936,123  2,886,655  2,835,421  2,767,024
Indirect auto  2,256,004  2,200,913  2,166,320  2,073,843  1,871,688  1,655,489
Credit cards  304,682  301,228  324,113  312,549  311,640  305,663
Other consumer  257,204  263,985  278,305  286,140  286,062  295,692
Total consumer loans  9,132,561  9,040,186  9,057,942  8,919,992  8,663,158  8,412,939
Total loans and leases  23,368,417  23,118,274  23,037,382  22,769,849  22,345,819  21,750,840
Allowance for loan losses  235,600  231,138  234,251  222,753  219,426  213,937
Loans and leases, net  23,132,817  22,887,136  22,803,131  22,547,096  22,126,393  21,536,903
Bank owned life insurance  431,335  428,454  426,192  423,376  420,230  417,031
Goodwill and other intangibles  1,404,201  1,410,800  1,417,005  1,423,437  2,528,481  2,535,271
Other assets  1,208,218  1,243,588  1,176,036  1,155,588  997,120  999,469
Total assets  $ 39,063,543  $ 38,907,479  $ 38,551,038  $ 37,972,042  $ 38,627,608  $ 37,991,209
             
Deposits:            
Savings accounts  $ 3,483,777  $ 3,488,441  $ 3,451,616  $ 3,458,661  $ 3,626,750  $ 3,664,765
Interest-bearing checking  5,088,856  5,158,264  5,084,456  5,055,458  4,743,684  4,929,302
Money market deposits  10,303,873  10,368,358  9,962,220  9,894,346  9,834,344  10,106,569
Noninterest-bearing deposits  5,549,944  5,500,484  5,407,382  5,308,736  5,284,037  5,101,681
Certificates of deposit  4,020,367  3,734,226  3,875,563  3,952,879  3,955,754  3,795,438
Total deposits  28,446,817  28,249,773  27,781,237  27,670,080  27,444,569  27,597,755
             
Short-term borrowings  4,275,886  4,739,264  5,471,974  4,928,762  4,890,343  4,137,496
Long-term borrowings  1,683,476  1,233,550  733,620  733,684  733,337  733,384
Other liabilities  536,239  559,646  471,449  543,813  477,685  495,589
Total liabilities  34,942,418  34,782,233  34,458,280  33,876,339  33,545,934  32,964,224
Preferred stockholders' equity  338,002  338,002  338,002  338,002  338,002  338,002
Common stockholders' equity  3,783,123  3,787,244  3,754,756  3,757,701  4,743,672  4,688,983
Total stockholders' equity  4,121,125  4,125,246  4,092,758  4,095,703  5,081,674  5,026,985
Total liabilities and stockholders' equity  $ 39,063,543  $ 38,907,479  $ 38,551,038  $ 37,972,042  $ 38,627,608  $ 37,991,209
             
Selected balance sheet information:            
Total interest-earning assets(1)  $ 35,813,498  $ 35,594,208  $ 35,310,447  $ 34,720,650  $ 34,305,451  $ 33,684,828
Total interest-bearing liabilities  28,856,235  28,722,103  28,579,449  28,023,790  27,784,211  27,366,955
Net interest-earning assets  $ 6,957,263  $ 6,872,105  $ 6,730,998  $ 6,696,860  $ 6,521,240  $ 6,317,873
             
Tangible common equity(1)(2)  $ 2,378,922  $ 2,376,444  $ 2,337,751  $ 2,334,263  $ 2,215,191  $ 2,153,712
Unrealized gain on available for sale securities, net of tax(3)  37,464  68,194  52,244  55,052  86,244  72,579
             
Total core deposits  $ 24,426,450  $ 24,515,547  $ 23,905,674  $ 23,717,201  $ 23,488,815  $ 23,802,317
             
Originated loans(4)  $ 19,929,719  $ 19,528,609  $ 19,295,553  $ 18,841,896  $ 18,196,302  $ 17,388,542
Acquired loans(5)  3,517,525  3,681,354  3,834,931  4,028,091  4,254,750  4,475,593
Credit related discount on acquired loans(6)  (78,827)  (91,689)  (93,102)  (100,138)  (105,233)  (113,295)
Total Loans  $ 23,368,417  $ 23,118,274  $ 23,037,382  $ 22,769,849  $ 22,345,819  $ 21,750,840
             
(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 the 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)  Carrying value of acquired loans plus the principal not expected to be collected.
(6)  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, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014
  Average
Balances
 
Interest(1)

 
Yields
and
Rates(1)
Average
Balances
 
Interest(1)

Yields
and
Rates(1)
Average
Balances
 
Interest(1)

Yields
and
Rates(1)
Average
Balances
 
Interest(1)

Yields
and
Rates(1)
Average
Balances
 
Interest(1)

Yields
and
Rates(1)
                               
Interest-earning assets:                              
Loans and leases(2)                              
Commercial:                              
Real estate  $ 8,257  $ 75 3.61%  $ 8,263  $ 74 3.60%  $ 7,899  $ 75 3.77%  $ 8,260  $ 150 3.60%  $ 7,850  $ 151 3.83%
Business  5,830  52  3.48   5,797  50  3.43   5,564  50  3.56   5,813  101  3.46   5,489  98  3.56 
Total commercial loans  14,087  127  3.56   14,060  124  3.53   13,463  125  3.68   14,073  251  3.54   13,339  249  3.72 
Consumer:                              
Residential real estate  3,326  31  3.68   3,338  32  3.78   3,361  32  3.80   3,332  62  3.73   3,389  65  3.84 
Home equity  2,963  28  3.86   2,939  28  3.91   2,800  28  4.06   2,951  57  3.89   2,778  56  4.09 
Indirect auto  2,238  15  2.74   2,187  15  2.79   1,750  12  2.85   2,213  30  2.77   1,682  24  2.89 
Credit cards  304  9  11.40   311  9  11.74   308  9  11.44   307  18  11.57   311  18  11.54 
Other consumer  260  5  8.49   275  6  8.49   291  6  8.53   267  11  8.49   295  13  8.59 
Total consumer loans  9,091  88  3.91   9,050  90  4.02   8,510  88  4.13   9,070  178  3.96   8,455  176  4.20 
Total loans and leases  23,178  215  3.73   23,110  214  3.75   21,973  213  3.89   23,143  429  3.74   21,794  425  3.94 
Residential MBS  7,381  43  2.30   7,180  45  2.49   6,097  41  2.67   7,281  87  2.39   5,895  80  2.71 
Commercial MBS  1,311  11  3.42   1,404  11  3.26   1,608  14  3.45   1,357  23  3.34   1,652  28  3.36 
Other investment securities (3)  3,604  34  3.75   3,554  31  3.52   4,159  38  3.69   3,580  65  3.63   4,272  77  3.62 
Total securities, at amortized cost  12,296  88  2.85   12,138  87  2.88   11,864  93  3.13   12,218  175  2.86   11,819  185  3.13 
Money market and other investments  100  --   1.56   158  --   1.01   165  1  1.27   129  1  1.22   145  1  1.43 
Total interest-earning assets  35,574  $ 303 3.42%  35,406  $ 302 3.45%  34,002  $ 307 3.62%  35,490  $ 605 3.44%  33,758  $ 611 3.65%
Goodwill and other intangibles  1,408      1,414      2,532      1,411      2,535    
Other noninterest-earning assets  1,931      1,887      1,679      1,909      1,689    
                               
Total assets  $ 38,913      $ 38,707      $ 38,213      $ 38,810      $ 37,982    
                               
Interest-bearing liabilities:                              
Deposits                              
Savings accounts  $ 3,494  $ 1 0.09%  $ 3,432  $ --  0.08%  $ 3,654  $ 1 0.09%  $ 3,463  $ 1 0.09%  $ 3,643  $ 2 0.08%
Interest-bearing checking  5,131  --   0.03   5,001  --   0.03   4,820  --   0.03   5,067  1  0.03   4,778  1  0.03 
Money market deposits  10,251  8  0.29   10,132  7  0.26   9,971  5  0.22   10,192  14  0.27   9,929  10  0.21 
Certificates of deposit  3,917  8  0.82   3,778  8  0.84   3,971  7  0.66   3,848  16  0.83   3,810  13  0.68 
Total interest bearing deposits  22,793  17 0.29%  22,343  15 0.28%  22,416  13 0.24%  22,570  32 0.29%  22,160  25 0.23%
Borrowings                              
Short-term borrowings  4,522  5 0.48%  5,125  6 0.46%  4,410  5 0.43%  4,821  11 0.47%  4,525  10 0.43%
Long-term borrowings  1,359  13  3.90   1,027  13  4.98   733  12  6.62   1,194  26  4.36   733  24  6.65 
Total borrowings  5,881  18  1.27   6,152  19  1.21   5,143  17  1.31   6,015  37  1.24   5,258  34  1.30 
Total interest-bearing liabilities  28,674  $ 35 0.49%  28,495  $ 34 0.48%  27,559  $ 30 0.44%  28,585  $ 69 0.49%  27,418  $ 59 0.44%
Noninterest-bearing deposits  5,427      5,430      5,077      5,428      4,971    
Other noninterest-bearing liabilities  667      654      511      660      543    
Total liabilities  34,768      34,579      33,147      34,673      32,932    
Total stockholders' equity  4,145      4,128      5,066      4,137      5,050    
Total liabilities and stockholders' equity  $ 38,913      $ 38,707      $ 38,213      $ 38,810      $ 37,982    
                               
Net interest income (FTE)    $ 268      $ 268      $ 277      $ 536      $ 552  
Taxable Equivalent Adjustment(1)    5      5      5      10      9  
                               
  Total core deposits   $ 24,303  $ 9 0.14%  $ 23,995  $ 7 0.13%  $ 23,522  $ 6 0.11%  $ 24,150  $ 16 0.13%  $ 23,321  $ 13 0.11%
  Total transactional deposits   10,558  --  0.01%  10,431  --  0.01%  9,897  --  0.01%  10,495  1 0.01%  9,749  1 0.02%
  Total deposits   28,220  17 0.24%  27,773  15 0.22%  27,493  13 0.19%  27,998  32 0.23%  27,131  25 0.19%
                               
Tax equivalent net interest rate spread     2.93%     2.97%     3.18%     2.95%     3.21%
Tax equivalent net interest rate margin     3.02%     3.07%     3.26%     3.04%     3.30%
                               
(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)
  2015 2014 Six months ended
  Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
June 30,
2015
June 30,
2014
Beginning balance  $ 231,138  $ 234,251  $ 222,753  $ 219,426  $ 213,937  $ 209,274  $ 234,251  $ 209,274
Net loan (charge-offs) recoveries:                
Commercial real estate  $ (5,525)  $ (5,825)  $ (2,008)  $ (2,259)  $ (4,885)  $ 905  $ (11,350)  $ (3,980)
Commercial business  (3,513)  (4,178)  (12,650)  (3,148)  (1,795)  (9,138)  (7,691)  (10,933)
Residential real estate  (197)  (266)  (476)  (102)  (352)  (174)  (463)  (526)
Home equity  (1,367)  (1,526)  (1,406)  (1,131)  (1,294)  (3,045)  (2,893)  (4,339)
Indirect auto  (1,342)  (1,226)  (2,241)  (1,621)  (1,455)  (2,086)  (2,568)  (3,541)
Credit cards  (2,522)  (2,450)  (2,464)  (2,726)  (2,930)  (3,044)  (4,972)  (5,974)
Other consumer  (1,528)  (1,807)  (1,457)  (1,986)  (1,200)  (2,055)  (3,335)  (3,255)
Total net loan charge-offs  $ (15,994)  $ (17,278)  $ (22,702)  $ (12,973)  $ (13,911)  $ (18,637)  $ (33,272)  $ (32,548)
Provision for loan losses  20,456  14,165  34,200  16,300  19,400  23,300  34,621  42,700
Ending balance  $ 235,600  $ 231,138  $ 234,251  $ 222,753  $ 219,426  $ 213,937  $ 235,600  $ 219,426
                 
Supplemental information                
Allowance to loans 1.01% 1.00% 1.02% 0.98%  0.98 %  0.98 % 1.01% 0.98%
Allowance for originated loans to originated loans(1) 1.15% 1.15% 1.18% 1.16%  1.18 %  1.21 % 1.15% 1.18%
                 
Net charge-offs (recoveries) to average loans (annualized)      
Commercial real estate  0.27 %  0.29 %  0.10 % 0.11%  0.25 %  (0.05)%  0.27 % 0.10%
Commercial business  0.24 %  0.29 %  0.87 % 0.22%  0.13 %  0.68 %  0.26 % 0.40%
Total commercial loans  0.26 %  0.28 %  0.42 % 0.16%  0.20 %  0.25 %  0.27 % 0.22%
Residential real estate  0.02 %  0.03 %  0.06 % 0.01%  0.04 %  0.02 %  0.03 % 0.03%
Home equity  0.18 %  0.21 %  0.19 % 0.16%  0.18 %  0.44 %  0.20 % 0.31%
Indirect auto  0.24 %  0.22 %  0.42 % 0.33%  0.33 %  0.52 %  0.23 % 0.42%
Credit cards  3.32 %  3.16 %  3.13 % 3.49%  3.80 %  3.88 %  3.24 % 3.84%
Other consumer  2.35 %  2.63 %  2.06 % 2.77%  1.65 %  2.74 %  2.49 % 2.20%
Total consumer loans  0.31 %  0.33 %  0.36 % 0.35%  0.34 %  0.50 %  0.31 % 0.42%
Total loans  0.28 %  0.30 %  0.40 % 0.23%  0.25 %  0.34 %  0.29 % 0.30%
                 
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)      
Commercial real estate  0.31 %  0.24 %  0.06 % 0.13%  0.29 %  (0.11)%  0.28 % 0.09%
Commercial business  0.25 %  0.31 %  0.93 % 0.24%  0.14 %  0.73 %  0.28 % 0.43%
Total commercial loans  0.28 %  0.27 %  0.44 % 0.18%  0.22 %  0.26 %  0.28 % 0.24%
Residential real estate  0.04 %  0.05 %  0.09 % 0.02%  0.07 %  0.04 %  0.04 % 0.05%
Home equity  0.17 %  0.16 %  0.15 % 0.17%  0.16 %  0.21 %  0.16 % 0.19%
Indirect auto  0.24 %  0.22 %  0.42 % 0.33%  0.33 %  0.52 %  0.23 % 0.42%
Credit cards  3.32 %  3.16 %  3.13 % 3.49%  3.80 %  3.88 %  3.24 % 3.84%
Other consumer  2.35 %  2.63 %  2.06 % 2.77%  1.65 %  2.74 %  2.49 % 2.20%
Total consumer loans  0.37 %  0.38 %  0.44 % 0.45%  0.45 %  0.57 %  0.38 % 0.51%
Total loans  0.31 %  0.31 %  0.44 % 0.27%  0.30 %  0.36 %  0.31 % 0.33%
                 
Nonperforming loans:                
Originated(1):                
Commercial real estate  $ 60,021  $ 65,655  $ 53,164  $ 57,340  $ 55,945  $ 41,296  $ 60,021  $ 55,945
Commercial business  42,979  54,506  45,201  36,939  32,861  35,335  42,979  32,861
Residential real estate  32,877  32,791  33,652  36,113  33,870  32,736  32,877  33,870
Home equity  27,092  26,163  23,749  23,392  19,429  19,516  27,092  19,429
Indirect auto  13,066  13,399  12,616  11,890  9,821  7,943  13,066  9,821
Other consumer  4,917  5,065  5,140  5,134  5,037  5,216  4,917  5,037
Total originated nonperforming loans  180,952  197,579  173,522  170,808  156,963  142,042  180,952  156,963
Total acquired nonperforming loans(2)  26,553  30,236  30,223  28,611  32,488  30,617  26,553  32,488
Total nonperforming loans  207,505  227,815  203,745  199,419  189,451  172,659  207,505  189,451
Real estate owned  17,397  19,128  20,541  20,261  24,270  25,466  17,397  24,270
Total nonperforming assets(3)  $ 224,902  $ 246,943  $ 224,286  $ 219,680  $ 213,721  $ 198,125  $ 224,902  $ 213,721
                 
Accruing troubled debt restructurings (TDR)  $ 64,643  $ 64,401  $ 67,102  $ 69,199  $ 80,214  $ 56,038  $ 64,643  $ 80,214
Loans 90 days past due still accruing(4)  78,279  87,213  93,903  108,615  112,718  119,134  78,279  112,718
Total classified loans(5)  592,148  615,518  609,316  649,320  661,699  667,327  592,148  661,699
Total criticized loans(6)  $ 938,951  $ 990,656  $ 1,041,050  $ 1,089,851  $ 1,072,133  $ 1,075,523  $ 915,160  $ 1,072,133
                 
Total nonperforming loans to loans 0.89% 0.99% 0.88% 0.88%  0.85 %  0.79 % 0.89% 0.85%
Total nonperforming originated loans to originated
loans(1)
0.91% 1.01% 0.90% 0.91%  0.86 %  0.82 % 0.91% 0.86%
Total nonperforming assets to loans and real estate owned 0.96% 1.07% 0.97% 0.96%  0.96 %  0.91 % 0.96% 0.96%
Total nonperforming assets to assets 0.58% 0.63% 0.58% 0.58%  0.55 %  0.52 % 0.58% 0.55%
Allowance to nonperforming loans 113.5% 101.5% 115.0% 111.7%  115.8 %  123.9 % 113.5% 115.8%
                 
Originated loans(1)  $ 19,929,719  $ 19,528,609  $ 19,295,553  $ 18,841,896  $ 18,196,302  $ 17,388,542  $ 19,929,719  $ 18,196,302
Acquired loans(7)  3,517,525  3,681,354  3,834,931  4,028,091  4,254,750  4,475,593  3,517,525  4,254,750
Credit related discount on acquired loans(8)  (78,827)  (91,689)  (93,102)  (100,138)  (105,233)  (113,295)  (78,827)  (105,233)
Total Loans  $ 23,368,417  $ 23,118,274  $ 23,037,382  $ 22,769,849  $ 22,345,819  $ 21,750,840  $ 23,368,417  $ 22,345,819
                 
(1)  Originated loans represent total loans excluding acquired loans.
(2)  Nonperforming acquired loans include certain lines of credit that are considered nonaccruing.
(3)  Does not include a $5.5 million nonperforming loan that was classified as held for sale at March 31, 2015, which was sold and for which we received the proceeds on April 2, 2015.
(4)  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.
(5)  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, 2014.
(6)  Criticized loans includes consumer loans when they are 90 days or more past due. Criticized loans include special mention, substandard, doubtful, and loss.
(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
(Risk weighted assets in millions; share counts in thousands)
             
  2015 2014
  June 30, March 31, December 31, September 30, June 30, March 31,
First Niagara Financial Group, Inc. capital ratios(1)(2):            
Tier 1 risk based capital 10.03% 10.02% 9.81% 9.82% 9.58% 9.62%
Total risk based capital 11.96% 11.95% 11.75% 11.75% 11.53% 11.60%
Common equity tier 1 capital 8.50% 8.48%  N/A   N/A   N/A   N/A 
Tier 1 common capital(3)  N/A   N/A  8.20% 8.19% 7.93% 7.93%
Leverage 7.60% 7.56% 7.50% 7.34% 7.34% 7.28%
Equity to assets 10.55% 10.60% 10.62% 10.79% 13.16% 13.23%
Tangible common equity to tangible assets(3) 6.32% 6.34% 6.30% 6.39% 6.14% 6.07%
Total risk weighted assets  $ 28,445  $ 28,153  $ 28,186  $ 27,729  $ 27,313  $ 26,638
             
First Niagara Bank, N.A capital ratios(1)(2):            
Tier 1 risk based capital 10.66% 10.65% 10.48% 10.41% 10.19% 10.23%
Total risk based capital 11.54% 11.53% 11.37% 11.27% 11.05% 11.08%
Common equity tier 1 capital 10.66% 10.65%  N/A   N/A   N/A   N/A 
Leverage 8.07% 8.03% 8.01% 7.78% 7.80% 7.74%
Total risk weighted assets  $ 28,359  $ 28,068  $ 28,146  $ 27,686  $ 27,272  $ 26,595
             
Number of branches  394  394  411  411  411  411
Full time equivalent employees  5,364  5,322  5,572  5,768  5,874  5,750
             
Share information and per share metrics:            
Common shares outstanding  354,890  353,717  353,388  355,423  355,483  354,127
Preferred shares outstanding  14,000  14,000  14,000  14,000  14,000  14,000
Treasury shares  11,112  12,285  12,614  10,579  10,519  11,875
Market price (NASDAQ: FNFG):  $ 9.44  $ 8.84  $ 8.43  $ 8.33  $ 8.74  $ 9.45
Book value per common share(4)  10.77  10.80  10.71  10.72  13.54  13.40
Tangible book value per common share(3)(4)  6.77  6.78  6.67  6.66  6.32  6.15
Price/Book 87.65% 81.85% 78.71% 77.71% 64.55% 70.52%
Price/Tangible book(1) 139.44% 130.38% 126.39% 125.08% 138.29% 153.66%
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 53.33% 66.67% 47.06% N/M 42.11% 53.33%
Dividend yield (annualized) 3.40% 3.67% 3.77% 3.81% 3.67% 3.43%
             
N/M  Not meaningful.
(1)    Represents an estimate as of June 30, 2015. All preceding quarters represent actual amounts.
(2)    Basel III Transitional rules became effective for us on January 1, 2015. Ratios and amounts presented prior to March 31, 2015 are calculated under Basel I rules. As of March 31, 2015, the ratios presented are calculated under the Basel III Standardized Transitional Approach. Common equity tier 1 capital under Basel III replaced Tier 1 common capital under Basel I. Prior to Basel III becoming effective on January 1, 2015, tier 1 common capital under Basel I was a non-GAAP financial measure.
(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)    Share count excludes unallocated ESOP shares prior to January 1, 2015 and unvested restricted stock shares.
 
 
First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation
(in thousands, except per share amounts)
                 
  2015 2014 Six months ended
  Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
June 30,
2015
June 30,
2014
Financial ratios computed on an operating basis(1):      
Earnings per basic share  $ 0.15  $ 0.15  $ 0.15  $ 0.19  $ 0.19  $ 0.17  $ 0.31  $ 0.37
Earnings per diluted share  $ 0.15  $ 0.15  $ 0.15  $ 0.19  $ 0.19  $ 0.17  $ 0.30  $ 0.37
Weighted average shares outstanding - basic(2)  351,126  350,741  350,444  350,381  350,229  349,906  350,935  350,068
Weighted average shares outstanding - diluted(2)  352,791  352,621  352,152  351,898  351,541  351,408  352,683  351,448
Noninterest income as a percentage of net revenue(3) 24.76% 23.83% 22.24% 21.62% 22.93% 22.08% 24.30% 22.51%
Pre-tax, pre-provision income  101,818  101,667  98,714  99,210  108,554  109,091  203,485  217,645
Pre-tax, pre-provision income per diluted share  $ 0.29  $ 0.29  $ 0.28  $ 0.28  $ 0.31  $ 0.31  $ 0.58  $ 0.62
Pre-tax, pre-provision return on average assets 1.05% 1.07% 1.02% 1.02% 1.14% 1.17% 1.06% 1.16%
Net interest margin(4) 3.02% 3.07% 3.11% 3.21% 3.26% 3.33% 3.04% 3.30%
Interest yield on average loans(4) 3.73% 3.75% 3.78% 3.80% 3.89% 3.98% 3.74% 3.94%
Rate paid on interest-bearing liabilities 0.49% 0.48% 0.45% 0.44% 0.44% 0.44% 0.49% 0.44%
Efficiency ratio 70.9% 70.5% 71.5% 71.5% 69.2% 68.6% 70.7% 68.9%
Effective tax rate 24.7% 30.0% 3.7% 10.3% 14.5% 19.7% 27.5% 17.1%
Return on average assets 0.63% 0.65% 0.63% 0.76% 0.80% 0.74% 0.64% 0.77%
Return on average equity 5.90% 6.12% 5.82% 5.76% 6.01% 5.52% 6.01% 5.77%
Return on average tangible equity(5) 8.94% 9.30% 8.85% 11.35% 12.01% 11.14% 9.12% 11.58%
Return on average common equity 5.63% 5.85% 5.54% 5.54% 5.80% 5.27% 5.74% 5.54%
Return on average tangible common equity(6) 8.94% 9.34% 8.85% 11.73% 12.48% 11.47% 9.13% 11.98%
                 
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):
Total noninterest expense on operating basis (Non-GAAP)  $ 247,899  $ 243,521  $ 248,246  $ 249,461  $ 244,115  $ 238,380  $ 491,420  $ 482,495
Restructuring charges  --   17,517  9,066  2,364  --   10,356  17,517  10,356
Goodwill impairment  --   --   --   1,100,000  --   --  --   --
Deposit account remediation  --   --   (23,000)  45,000  --   --  --   --
Total reported noninterest expense (GAAP)  $ 247,899  $ 261,038  $ 234,312  $ 1,396,825  $ 244,115  $ 248,736  $ 508,937  $ 492,851
                 
Reconciliation of net operating income to net income(1):
Net operating income (Non-GAAP)  $ 61,010  $ 62,246  $ 60,697  $ 74,009  $ 75,875  $ 68,555  $ 123,256  $ 144,430
Nonoperating income and expenses, net of tax:                
Restructuring charges  --   10,861  6,364  1,555  --   8,345  10,861  8,345
Goodwill impairment  --   --   --   963,267  --   --  --   --
Deposit account remediation  --   --   (14,734)  29,233  --   --  --   --
Total nonoperating expenses, net of tax  --   10,861  (8,370)  994,055  --   8,345  10,861  8,345
Net income (loss) (GAAP)  $ 61,010  $ 51,385  $ 69,067  $ (920,046)  $ 75,875  $ 60,210  $ 112,395  $ 136,085
                 
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)
 $ 53,463  $ 54,699  $ 53,150  $ 66,462  $ 68,328  $ 61,008  $ 108,162  $ 129,336
Nonoperating income and expenses, net of tax:                
Restructuring charges  --   10,861  6,364  1,555  --   8,345  10,861  8,345
Goodwill impairment  --   --   --   963,267  --   --  --   --
Deposit account remediation  --   --   (14,734)  29,233  --   --  --   -- 
Total nonoperating income and expenses, net of tax  --   10,861  (8,370)  994,055  --   8,345  10,861  8,345
Net income (loss) available to common stockholders (GAAP)  $ 53,463  $ 43,838  $ 61,520  $ (927,593)  $ 68,328  $ 52,663  $ 97,301  $ 120,991
                 
Computation of pre-tax,pre-provision income:
Net interest income  $ 263,110  $ 262,944  $ 269,783  $ 273,279  $ 271,812  $ 270,747  $ 526,054  $ 542,559
Noninterest income  86,607  82,244  77,177  75,392  80,857  76,724  168,851  157,581
Noninterest expense  (247,899)  (261,038)  (234,312)  (1,396,825)  (244,115)  (248,736)  (508,937)  (492,851)
Pre-tax, pre-provision income (loss) (GAAP)  101,818  84,150  112,648  (1,048,154)  108,554  98,735  185,968  207,289
Add back: non-operating noninterest expenses (1)  --   17,517  (13,934)  1,147,364  --   10,356  17,517  10,356
Pre-tax, pre-provision income (Non-GAAP)(1)  $ 101,818  $ 101,667  $ 98,714  $ 99,210  $ 108,554  $ 109,091  $ 203,485  $ 217,645
                 
(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)
                 
  2015 2014 Six months ended
  Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
June 30,
2015
June 30,
2014
Computation of Ending Tangible Assets:                
Total assets  $ 39,063,543  $ 38,907,479  $ 38,551,038  $ 37,972,042  $ 38,627,608  $ 37,991,209  $ 39,063,543  $ 38,627,608
Less: Goodwill and other intangibles  (1,404,201)  (1,410,800)  (1,417,005)  (1,423,437)  (2,528,481)  (2,535,271)  (1,404,201)  (2,528,481)
Tangible assets  $ 37,659,342  $ 37,496,679  $ 37,134,033  $ 36,548,605  $ 36,099,127  $ 35,455,938  $ 37,659,342  $ 36,099,127
                 
Computation of Average Tangible Assets:                
Total assets  $ 38,913,219  $ 38,706,545  $ 38,317,930  $ 38,591,115  $ 38,212,597  $ 37,378,587  $ 38,810,454  $ 37,981,521
Less: Goodwill and other intangibles  (1,407,946)  (1,413,765)  (1,420,119)  (2,514,581)  (2,531,612)  (2,546,031)  (1,410,840)  (2,535,232)
Tangible assets  $ 37,505,273  $ 37,292,780  $ 36,897,811  $ 36,076,534  $ 35,680,985  $ 34,832,556  $ 37,399,614  $ 35,446,289
                 
Computation of Ending Tangible Equity:                
Total stockholders' equity  $ 4,121,125  $ 4,125,246  $ 4,092,758  $ 4,095,702  $ 5,081,674  $ 5,026,985  $ 4,121,125  $ 5,081,674
Less: Goodwill and other intangibles  (1,404,201)  (1,410,800)  (1,417,005)  (1,423,437)  (2,528,481)  (2,535,271)  (1,404,201)  (2,528,481)
Tangible equity  $ 2,716,924  $ 2,714,446  $ 2,675,753  $ 2,672,265  $ 2,553,193  $ 2,491,714  $ 2,716,924  $ 2,553,193
                 
Computation of Ending Tangible Common Equity:                
Total stockholders' equity  $ 4,121,125  $ 4,125,246  $ 4,092,758  $ 4,095,702  $ 5,081,674  $ 5,026,985  $ 4,121,125  $ 5,081,674
Less: Goodwill and other intangibles  (1,404,201)  (1,410,800)  (1,417,005)  (1,423,437)  (2,528,481)  (2,535,271)  (1,404,201)  (2,528,481)
Less: Preferred stockholders' equity  (338,002)  (338,002)  (338,002)  (338,002)  (338,002)  (338,002)  (338,002)  (338,002)
Tangible common equity  $ 2,378,922  $ 2,376,444  $ 2,337,751  $ 2,334,263  $ 2,215,191  $ 2,153,712  $ 2,378,922  $ 2,215,191
                 
Computation of Average Tangible Equity:                
Total stockholders' equity  $ 4,145,334  $ 4,127,743  $ 4,141,141  $ 5,100,494  $ 5,065,797  $ 5,034,093  $ 4,136,587  $ 5,050,037
Less: Goodwill and other intangibles  (1,407,946)  (1,413,765)  (1,420,119)  (2,514,581)  (2,531,612)  (2,538,891)  (1,410,840)  (2,535,232)
Tangible equity  $ 2,737,388  $ 2,713,978  $ 2,721,022  $ 2,585,913  $ 2,534,185  $ 2,495,202  $ 2,725,747  $ 2,514,805
                 
Computation of Average Tangible Common Equity:                  
Total stockholders' equity  $ 4,145,334  $ 4,127,743  $ 4,141,141  $ 5,100,494  $ 5,065,797  $ 5,034,093  $ 4,136,587  $ 5,050,037
Less: Goodwill and other intangibles  (1,407,946)  (1,413,765)  (1,420,119)  (2,514,581)  (2,531,612)  (2,538,891)  (1,410,840)  (2,535,232)
Less: Preferred stockholders' equity  (338,002)  (338,002)  (338,002)  (338,002)  (338,002)  (338,002)  (338,002)  (338,002)
Tangible common equity  $ 2,399,386  $ 2,375,976  $ 2,383,020  $ 2,247,911  $ 2,196,183  $ 2,157,200  $ 2,387,745  $ 2,176,803
                 
Computation of Tier 1 Common Capital:                
Tier 1 capital  N/A  N/A  $ 2,764,117  $ 2,722,685  $ 2,613,584  $ 2,562,261  N/A  $ 2,613,584
Less: Qualifying restricted core capital elements  N/A  N/A  (113,785)  (113,556)  (113,330)  (113,107)  N/A  (113,330)
Less: Perpetual non-cumulative preferred stock  N/A  N/A  (338,002)  (338,002)  (338,002)  (338,002)  N/A  (338,002)
Tier 1 common capital (Non-GAAP)  N/A  N/A  $ 2,312,330  $ 2,271,127  $ 2,162,252  $ 2,111,152  N/A  $ 2,162,252
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

First Niagara Financial Group logo

NEXT ARTICLE

More From BioPortfolio on "First Niagara Reports Second Quarter 2015 Results"

Advertisement
Quick Search
Advertisement
Advertisement

 

Relevant Topic

Cardiology
Cardiology is a specialty of internal medicine.  Cardiac electrophysiology : Study of the electrical properties and conduction diseases of the heart. Echocardiography : The use of ultrasound to study the mechanical function/physics of the h...