The market has seen steep losses this year, but First Niagara Financial Group is coming out of 2008 with impressive gains. The parent of First Niagara, a regional bank in New York state, is up more than 30 percent year-to-date.
“We’ve been consistent, (and) we’ve been strong and steady in the marketplace throughout these very challenging and unpredictable times,” said John Koelmel, CEO of First Niagara.
“We’re up 6,000 or 7,000 new customers, so it’s not just the level of activity," he added. "It’s the fact that new customers are coming in the door and that we’re able to attract and grow our business and our portfolio.”
Koelmel says his company's primary competition is major international and regional banks. Their troubles have worked to First Niagara's advantage.
“They’re pulling back, so their customers, many of whom are very credit-worthy good borrowers, are looking for viable alternatives," he said. "We’re a consistent alternative, and that’s how we’ve always tried to position ourselves."
First Niagara raised $115 million on its own as of Oct. 1, 2008, but the company has also borrowed $184 million from the U.S. Treasury’s Troubled Asset Relief Program (TARP) fund to remain competitive. Koelmel says the Treasury money will be used to expand and grow First Niagara and not to fill in holes in the company’s balance sheet.
“When the government came forward with its program, frankly for us it was simple math and economics: 5 percent capital is too good a deal to pass up," said Koelmel. "We didn’t want to let our cost of capital suffer compared to the competition, and I’m confident we can leverage that and continue to grow.”
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