First Niagara Reports Third Quarter 2013 Results

First Niagara Financial Group logo

Third Quarter Highlights:

  • Earnings increased 13% QOQ to $71.6 million, or $0.20 per diluted share
  • Pre-tax Pre-Provision Income Increased 6% QOQ
    -- Net interest margin increased 4 basis points from the second quarter to 3.40%
    -- Fee income declined 4% driven by lower mortgage banking revenues
  • Organic loan growth continues, with average loans up 10% QOQ
    -- Average commercial business and real estate loans increased 7% QOQ
    -- Continued momentum in indirect auto loans, which increased by $280 million
  • Noninterest-bearing checking balances increase 6% QOQ
    -- Transactional deposits averaged 35% of deposits, up from 31% a year-ago
    -- Continued investment in mobile and digital banking to match evolving consumer banking preferences
  • Strong credit quality maintained
    -- NCOs remained flat compared to the prior quarter at 0.33% of average originated loans
    -- Nonperforming originated loans decline 6% QOQ

BUFFALO, N.Y., Oct. 18, 2013 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today reported net income available to common shareholders of $71.6 million or $0.20 per diluted share for the third quarter of 2013, highlighted by strong balance sheet growth, consistent credit quality and positive operating leverage.

"We delivered another quarter of strong earnings despite the challenges presented by the macro-economic and competitive environment," said Gary M. Crosby, Interim President and Chief Executive Officer. "We are very focused on maximizing returns and expect to continue to deliver industry-leading loan growth while maintaining our high underwriting standards. We will continue to diligently invest in opportunities that drive revenue production, achieve operating leverage and enhance risk mitigation capabilities to position us well for the future."

Third Quarter Results

In the third quarter of 2013, First Niagara reported net income available to common shareholders of $71.6 million, or $0.20 per diluted share. In the third quarter of 2012, First Niagara reported net income available to common shareholders of $50.8 million, or $0.14 per diluted share, that included $29.4 million in pre-tax acquisition and restructuring expenses incurred primarily in connection with the closing of the HSBC branch acquisition in May 2012. For the second quarter of 2013, net income to common shareholders was $63.6 million, or $0.18 per diluted share.

Balance sheet growth remained strong as average loans increased 10% annualized compared to the prior quarter. Average commercial business and real estate loans increased 7% annualized over the prior quarter driven by a 9% increase in commercial real estate loans. Average consumer loans increased 14% annualized driven by continued growth in indirect auto loan balances, partially offset by a decline in residential mortgage loans. Average transaction deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased an annualized 2% over the prior quarter and currently represent 35% of the company's deposit balances, up from 31% a year ago.

Operating revenues increased 1% in the third quarter of 2013 compared to the prior quarter. Net interest income increased 3% in the third quarter compared to the prior quarter. Net interest margin was 3.40%, as compared to 3.36% in the second quarter of 2013. Noninterest income decreased $4.1 million or 4% from the prior quarter primarily due to lower mortgage banking revenues.

The provision for loan losses on originated loans totaled $25.4 million in the third quarter of 2013, including $12.5 million to support loan growth and $12.9 million to cover net charge-offs during the quarter. At September 30, 2013, nonperforming originated loans comprised 0.89% of originated loans, which equaled a 13 basis point improvement from the prior quarter. Net charge-offs equaled 33 basis points of average originated loans, consistent with the second quarter.

In the third quarter of 2013, the company continued to generate positive operating leverage, as operating revenues increased 1% and operating expenses decreased 2% relative to the second quarter.

Reported Results (GAAP) Q3 2013 Q2 2013 Q3 2012
Net interest income $277.5 $269.4 $269.6
Provision for credit losses 27.6 25.2 22.2
Noninterest income 91.4 95.5 102.2
Noninterest expense 231.2 235.2 266.5
Net income 79.1 71.1 58.4
Preferred stock dividend 7.5 7.5 7.5
Net income available to common shareholders 71.6 63.6 50.8
Weighted average diluted shares outstanding 350.9 350.4 349.4
Earnings per diluted share $0.20 $0.18 $0.14
All amounts in millions except earnings per diluted share.

"During the third quarter, we continued to generate strong loan growth despite an intensifying competitive landscape, while adhering to our prudent underwriting standards, " said Gregory W. Norwood, Chief Financial Officer. "Net interest income benefitted from the continuation of strong balance sheet growth as well as certain favorable adjustments in our collateralized mortgage obligations book related to the rapid increase in mortgage rates which, in turn, negatively impacted mortgage banking revenues."

Loans

Average total loans increased 10% annualized from the prior quarter, driven by strong growth in the company's commercial lending businesses, particularly commercial real estate (CRE), and as well as sustained momentum in the company's indirect auto business.

Average CRE loans increased 9% annualized to $7.6 billion compared to the second quarter of 2013. Commercial & Industrial (C&I) loans averaged $5.2 billion, representing a 4% annualized increase over the prior quarter. Average commercial loans in the company's New England and Eastern Pennsylvania markets increased at double-digit annualized growth rates of 13% and 10%, respectively.

Average indirect auto loan balances increased $280 million to $1.2 billion. During the third quarter, indirect auto originations totaled $379 million at an average customer FICO score of 753 and yielded 3.1%, net of dealer reserve. Average residential real estate loans declined by $32 million, or 4% annualized reflecting elevated prepayment levels. Home equity balances increased 3% annualized from the prior quarter.

Deposits

The company continued to focus its efforts to grow its core customer base, re-position its account mix and lower its deposit costs. Average transaction deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased an annualized 2% over the prior quarter and currently represent 35% of the company's deposit balances, up from 31% a year ago. The average cost of interest-bearing deposits of 0.23% was unchanged from the prior quarter.

Average noninterest-bearing checking deposits increased 6% annualized compared to the prior quarter, driven by seasonal strength in commercial account balances. Interest-bearing checking balances averaged $4.5 billion and decreased an annualized 2% from the second quarter.

Money market and time deposit balances declined 9% and 8% annualized, respectively, driven by the company's continued pricing actions.

In response to changing consumer banking behaviors, First Niagara continues to invest in enhancing its online, mobile and telephonic banking capabilities for retail and small business customers, while continuing to transform its branch network and in-branch experience.

Net Interest Income

Third quarter 2013 net interest income increased 3% from the prior quarter to $278 million and was driven by a 3% annualized increase in average earning assets together with a four basis points improvement in the net interest margin to 3.40%. Growth in average earning assets reflected continued strong loan growth which was moderated by lower investment securities balances. Average investment securities declined 9% or $264 million from the prior quarter reflecting the planned rotation of such securities into more profitable loans.

The four basis point increase in net interest margin in the third quarter of 2013 reflected the benefits of reinvestment of cash flows from lower-yielding investment securities into higher yielding loans and securities as well as lower premium amortization on the company's residential mortgage backed securities (RMBS) portfolio. These benefits were partially offset by continued compression of loan yields from prepayments and reinvestments at current market rates.

In the third quarter, premium amortization on the RMBS portfolio was $6 million, net of a $1.8 million retrospective adjustment to reflect prepayment speeds that were slower than the company's previous assessment. The premium amortization on the RMBS portfolio in the second quarter of 2013 was $11 million.

Credit Quality

At September 30, 2013, the allowance for loan losses was $198.0 million, compared to $183.7 million at June 30, 2013. Nonperforming assets to total assets were 0.53%, up only modestly from the prior quarter. A decrease in nonperforming originated loans was offset by transfer of three acquired loans that were previously designated as loans 90 days past due but accruing to other real estate owned (OREO) assets.

Information for both the originated and acquired portfolios follows.

Q3 2013 Q2 2013
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses* $ 25.4 $ 1.8 $ 27.2 $ 23.9 $ 0.9 $ 24.8
Net charge-offs 12.9 0.1 13.0 12.2 0.9 13.1
NCOs/ Avg Loans 0.33% 0.01% 0.25% 0.33% 0.06% 0.26%
Total loans** $ 16,212 $ 5,007 $ 21,089 $ 15,102 $ 5,581 $ 20,543
(*) Excludes provision for unfunded commitments of $0.4 million each in 3Q13 and 2Q13
(**) Acquired loans before associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $25.4 million, compared to $23.9 million in the prior quarter. This provision included $12.5 million to support sequential originated loan growth of $1.1 billion, compared to $11.7 million in the prior quarter that supported $1.0 billion of originated loan growth. Net charge-offs equaled $12.9 million or 33 basis points of average originated loans in the third quarter of 2013, consistent with the second quarter.

At September 30, 2013, nonperforming originated loans comprised 0.89% of originated loans, compared to 1.02% at June 30, 2013. Nonperforming originated loan balances declined 6% from the prior quarter in part driven by paydowns.

At September 30, 2013, the allowance for loan losses on originated loans totaled $195.0 million or 1.20% of such loans, compared to $182.5 million or 1.21% of loans at June 30, 2013.

Acquired loans

The provision for losses on acquired loans totaled $1.8 million, up from $0.9 million in the prior quarter. Net charge-offs on those portfolios totaled $0.1 million during the quarter, compared to $0.9 million in the prior period. At September 30, 2013, the allowance for loan losses on acquired loans totaled $3.0 million, compared to $1.3 million at June 30, 2013. Acquired nonperforming loans totaled $30.4 million, compared to $27.6 million at the end of the prior quarter. At September 30, 2013, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $129 million.

Fee Income

Third quarter 2013 noninterest income of $91.4 million decreased 4% or $4.1 million compared to the prior quarter driven exclusively by weakness in mortgage banking gain-on-sale revenues which was partially offset by increases in most other fee income categories.

Mortgage banking revenues declined $4.6 million, or 67%, from the second quarter, driven by decreases in locked application volumes and gain-on-sale margins. Wealth management revenue increased 2% from the second quarter reflecting the continued demand in the market place for fixed annuity products. Deposit service charges increased 2% from the prior quarter and were driven by a seasonal increase in NSF incidence as well as sustained higher collection rates. Insurance commissions and merchant and card fees both increased modestly from the second quarter. Other income decreased $1.4 million from the second quarter.

Noninterest Expense

Third quarter noninterest expenses were $231.2 million, 2% lower than the prior quarter. Salaries and benefit expenses declined by $1.3 million from the prior quarter driven primarily by a decrease in revenue-dependent variable compensation expenses. Occupancy and equipment expenses declined by $1.9 million from the second quarter due in large part to expenses related to consolidation of branches in the prior period. The amortization of intangibles decreased $3.1 million from the prior quarter primarily reflecting the decline in amortization of the HSBC transaction-related core deposit intangible.

In the third quarter of 2013, the efficiency ratio improved to 62.7% from 64.4% in the prior quarter and reflected the positive operating leverage achieved.

Capital

At September 30, 2013, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.4% and 7.7% respectively. The company remains well above current regulatory guidelines for well-capitalized institutions.

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 420 branches, $37 billion in assets, $27 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 10:00 a.m. Eastern Time on Friday, October 18, 2013 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-888-968-3512 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 November 1, 2013 by dialing 1-866-451-8971, passcode: 532337.

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

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

First Niagara Financial Group, Inc.
Income Statement Highlights -- Reported Basis
(in thousands, except per share amounts)
2013 2012 Nine months ended
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
September 30,
2013
September 30,
2012
Interest income:
Loans and leases $ 214,746 $ 209,970 $ 206,640 $ 212,035 $ 211,767 $ 200,725 $ 631,356 $ 601,877
Investment securities and other 91,996 88,110 88,961 71,564 90,101 99,116 269,067 290,612
Total interest income 306,742 298,080 295,601 283,599 301,868 299,841 900,423 892,489
Interest expense:
Deposits 12,931 12,967 14,277 16,902 18,358 16,391 40,175 49,747
Borrowings 16,271 15,670 15,194 14,411 13,905 24,437 47,135 71,753
Total interest expense 29,202 28,637 29,471 31,313 32,263 40,828 87,310 121,500
Net interest income 277,540 269,443 266,130 252,286 269,605 259,013 813,113 770,989
Provision for credit losses 27,600 25,200 20,200 22,000 22,200 28,100 73,000 70,300
Net interest income after provision 249,940 244,243 245,930 230,286 247,405 230,913 740,113 700,689
Noninterest income:
Deposit service charges 27,115 26,482 24,800 26,345 26,422 21,433 78,397 64,892
Insurance commissions 17,854 17,692 16,355 15,497 18,764 17,072 51,901 52,669
Merchant and card fees 12,464 12,380 11,298 11,945 12,014 9,271 36,142 26,813
Wealth management services 15,189 14,945 12,845 12,000 11,069 9,207 42,979 29,315
Mortgage banking 2,268 6,882 6,424 8,060 10,974 7,174 15,574 23,797
Capital markets income 5,058 5,002 6,031 7,098 6,381 6,831 16,091 19,751
Lending and leasing 4,886 4,534 3,906 3,739 3,730 4,245 13,326 11,098
Bank owned life insurance 3,725 3,321 3,467 3,021 3,449 3,848 10,513 10,684
Other income 2,863 4,308 4,186 4,116 9,400 16,517 11,357 28,690
Total noninterest income 91,422 95,546 89,312 91,821 102,203 95,598 276,280 267,709
Noninterest expense:
Salaries and benefits 115,034 116,305 115,790 111,026 115,484 104,507 347,129 316,468
Occupancy and equipment 26,582 28,506 28,045 27,609 25,694 24,089 83,133 71,800
Technology and communications 28,999 29,603 27,113 28,257 28,110 24,434 85,715 72,257
Marketing and advertising 5,822 5,450 4,346 9,292 8,954 6,676 15,618 22,393
Professional services 9,820 9,782 9,603 11,163 11,193 9,263 29,205 29,351
Amortization of intangibles 7,702 10,850 14,119 14,224 14,506 9,839 32,671 30,811
FDIC premiums 9,351 9,348 8,901 9,158 8,850 10,552 27,600 25,535
Merger and acquisition integration expenses -- -- -- 3,678 29,404 131,460 -- 173,834
Restructuring charges -- -- -- -- -- 3,750 -- 6,453
Other expense 27,883 25,326 29,749 24,377 24,347 21,069 82,958 63,457
Total noninterest expense 231,193 235,170 237,666 238,784 266,542 345,639 704,029 812,359
Income (loss) before income tax 110,169 104,619 97,576 83,323 83,066 (19,128) 312,364 156,039
Income tax expense (benefit) 31,026 33,485 30,291 22,226 24,682 (8,204) 94,802 48,714
Net income (loss) 79,143 71,134 67,285 61,097 58,384 (10,924) 217,562 107,325
Preferred stock dividend 7,547 7,547 7,547 7,547 7,547 7,547 22,641 20,209
Net income (loss) available to common stockholders $ 71,596 $ 63,587 $ 59,738 $ 53,550 $ 50,837 $ (18,471) $ 194,921 $ 87,116
Financial Ratios:
Earnings (loss) per basic share $ 0.20 $ 0.18 $ 0.17 $ 0.15 $ 0.15 $ (0.05) $ 0.55 $ 0.25
Earnings (loss) per diluted share 0.20 0.18 0.17 0.15 0.14 (0.05) 0.55 0.25
Weighted average shares outstanding - basic(1) 349,653 349,542 349,278 349,071 349,001 348,941 349,492 348,956
Weighted average shares outstanding - diluted(1) 350,896 350,384 349,999 349,663 349,371 348,941 350,368 349,248
Net revenue(2) $ 368,962 $ 364,989 $ 355,442 $ 344,107 $ 371,808 $ 354,611 $ 1,089,393 $ 1,038,698
Noninterest income as a percentage of net revenue(2) 24.78% 26.18% 25.13% 26.68% 27.49% 26.96% 25.36% 25.77%
Pre-tax, pre-provision income(3) $ 137,769 $ 129,819 $ 117,776 $ 105,323 $ 105,266 $ 8,972 $ 385,364 $ 226,339
Pre-tax, pre-provision income per diluted share(3) $ 0.39 $ 0.37 $ 0.34 $ 0.30 $ 0.30 $ 0.03 $ 1.10 $ 0.65
Pre-tax, pre-provision return on average assets(3) 1.47% 1.41% 1.30% 1.15% 1.19% 0.10% 1.39% 0.86%
Net interest margin(4) 3.40% 3.36% 3.39% 3.22% 3.54% 3.26% 3.39% 3.30%
Interest yield on average loans(4) 4.14% 4.19% 4.25% 4.39% 4.47% 4.59% 4.19% 4.56%
Rate paid on interest-bearing liabilities 0.43% 0.43% 0.44% 0.48% 0.51% 0.61% 0.44% 0.63%
Efficiency ratio 62.66% 64.43% 66.86% 69.39% 71.69% 97.47% 64.63% 78.21%
Expenses as a percentage of average loans and deposits 1.94% 1.98% 2.01% 2.03% 2.29% 3.37% 1.98% 2.64%
Effective tax rate 28.2% 32.0% 31.0% 26.7% 29.7% 42.9% 30.3% 31.2%
Return on average assets(5) 0.85 % 0.77 % 0.74 % 0.67% 0.66% (0.12)% 0.79% 0.41%
Return on average equity(5) 6.37 % 5.72 % 5.50 % 4.92% 4.77% (0.90)% 5.86% 2.95%
Return on average tangible equity(3)(5) 13.20 % 11.75 % 11.62 % 10.45% 10.34% (1.64)% 12.19% 5.40%
Return on average common equity 6.18 % 5.48 % 5.24 % 4.62% 4.46% (1.64)% 5.64% 2.57%
Return on average tangible common equity(3) 13.92 % 12.21 % 12.05 % 10.72% 10.60% (3.18)% 12.73% 5.02%
(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)
2013 2012
September 30, June 30, March 31, December 31, September 30, June 30,
Cash and cash equivalents $ 558,086 $ 552,210 $ 424,176 $ 430,862 $ 447,087 $ 488,227
Investment securities:
Available for sale 7,609,676 7,916,353 7,876,160 10,993,605 10,579,970 9,937,271
Held to maturity 3,841,700 3,856,960 4,218,687 1,299,806 1,387,763 1,463,872
FHLB and FRB common stock 437,534 429,740 401,373 420,277 373,311 329,555
Total investment securities 11,888,910 12,203,053 12,496,220 12,713,688 12,341,044 11,730,698
Loans held for sale 80,468 118,104 126,389 154,745 117,375 101,596
Loans and leases:
Commercial:
Real estate 7,697,407 7,482,375 7,295,544 7,093,193 6,835,971 6,710,009
Business 5,204,672 5,165,606 5,044,738 4,953,323 4,682,154 4,514,537
Total commercial loans 12,902,079 12,647,981 12,340,282 12,046,516 11,518,125 11,224,546
Consumer:
Residential real estate 3,519,233 3,558,274 3,614,912 3,761,567 3,870,756 4,037,045
Home equity 2,706,603 2,670,672 2,646,645 2,651,891 2,661,429 2,683,236
Indirect auto 1,339,449 1,049,763 818,401 601,456 419,258 185,774
Credit cards 311,600 303,455 298,310 314,973 308,387 304,368
Other consumer 310,107 313,037 316,669 333,609 328,571 328,547
Total consumer loans 8,186,992 7,895,201 7,694,937 7,663,496 7,588,401 7,538,970
Total loans and leases 21,089,071 20,543,182 20,035,219 19,710,012 19,106,526 18,763,516
Allowance for loan losses 197,953 183,708 172,002 162,522 149,933 138,516
Loans and leases, net 20,891,118 20,359,474 19,863,217 19,547,490 18,956,593 18,625,000
Bank owned life insurance 413,555 410,182 407,419 404,321 401,211 397,739
Goodwill and other intangibles 2,549,931 2,557,560 2,567,681 2,617,810 2,626,625 2,631,605
Other assets 958,473 949,144 959,459 937,316 983,999 1,130,891
Total assets $ 37,340,541 $ 37,149,727 $ 36,844,561 $ 36,806,232 $ 35,873,934 $ 35,105,756
Deposits:
Savings accounts $ 3,695,221 $ 3,878,053 $ 3,915,836 $ 3,887,587 $ 3,941,528 $ 4,103,773
Interest-bearing checking 4,637,807 4,499,963 4,534,444 4,450,970 4,090,322 3,887,568
Money market deposits 9,905,341 10,013,996 10,493,243 10,581,137 10,801,280 10,919,766
Noninterest-bearing deposits 4,968,501 4,845,835 4,803,835 4,643,580 4,658,374 4,774,764
Certificates of deposit 3,762,132 3,911,989 3,985,702 4,113,257 4,206,192 4,211,116
Total deposits 26,969,002 27,149,836 27,733,060 27,676,531 27,697,696 27,896,987
Short-term borrowings 4,169,416 3,698,279 2,928,929 2,983,718 1,995,610 958,044
Long-term borrowings 732,547 732,598 732,510 732,425 732,339 732,263
Other liabilities 531,379 666,270 503,389 487,000 532,868 700,249
Total liabilities 32,402,344 32,246,983 31,897,888 31,879,674 30,958,513 30,287,543
Preferred stockholders' equity 338,002 338,002 338,002 338,002 338,002 338,002
Common stockholders' equity 4,600,195 4,564,742 4,608,671 4,588,556 4,577,419 4,480,211
Total stockholders' equity 4,938,197 4,902,744 4,946,673 4,926,558 4,915,421 4,818,213
Total liabilities and stockholders' equity $ 37,340,541 $ 37,149,727 $ 36,844,561 $ 36,806,232 $ 35,873,934 $ 35,105,756
Selected balance sheet information:
Total interest-earning assets(1) $ 33,039,023 $ 32,906,363 $ 32,524,313 $ 32,321,964 $ 31,316,470 $ 30,403,035
Total interest-bearing liabilities 26,902,465 26,734,878 26,590,664 26,749,094 25,767,271 24,812,530
Net interest-earning assets $ 6,136,558 $ 6,171,485 $ 5,933,649 $ 5,572,870 $ 5,549,199 $ 5,590,505
Tangible common equity(2) $ 2,050,264 $ 2,007,182 $ 2,040,990 $ 1,970,746 $ 1,950,794 1,848,606
Unrealized gain on available for sale securities, net of tax(3) 76,686 83,898 160,942 206,733 204,347 133,430
Total core deposits $ 23,206,870 $ 23,237,847 $ 23,747,358 $ 23,563,274 $ 23,491,504 $ 23,685,871
Originated loans(4) $ 16,211,505 $ 15,102,336 $ 14,100,190 $ 13,372,357 $ 12,232,568 $ 11,392,158
Acquired loans(5) 5,006,753 5,581,651 6,083,912 6,513,636 7,085,839 7,600,213
Credit related discount on acquired loans(6) (129,187) (140,805) (148,883) (175,981) (211,881) (228,855)
Total Loans $ 21,089,071 $ 20,543,182 $ 20,035,219 $ 19,710,012 $ 19,106,526 $ 18,763,516
(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, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012
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)(2)
Interest-earning assets:
Loans and leases(3)
Commercial:
Real estate $ 7,551 $ 80 4.16% $ 7,376 $ 79 4.22% $ 6,783 $ 80 4.60% $ 7,370 $ 235 4.21% $ 6,529 $ 239 4.81%
Business 5,163 48 3.64 5,112 47 3.66 4,609 45 3.81 5,092 142 3.68 4,274 129 3.96
Total commercial loans 12,714 128 3.95 12,488 126 3.99 11,392 125 4.28 12,462 377 3.99 10,803 368 4.48
Consumer:
Residential real estate 3,538 35 3.91 3,570 35 3.94 3,962 40 4.03 3,599 107 3.95 3,957 123 4.13
Home equity 2,683 28 4.17 2,661 28 4.25 2,672 30 4.42 2,664 84 4.24 2,415 80 4.42
Indirect auto 1,207 9 3.09 927 7 3.18 301 3 3.64 950 23 3.17 131 4 3.86
Credit cards 309 9 12.02 302 8 10.96 308 9 11.31 305 25 11.14 165 14 11.31
Other consumer 313 7 8.48 313 7 8.42 329 7 8.80 318 20 8.36 285 17 8.07
Total consumer loans 8,050 88 4.35 7,773 86 4.41 7,572 88 4.64 7,836 259 4.42 6,953 237 4.56
Total loans and leases 20,764 216 4.14 20,261 212 4.19 18,964 213 4.47 20,298 636 4.19 17,756 605 4.56
Residential MBS(2) 5,515 37 2.68 5,496 33 2.40 5,677 40 2.81 5,500 104 2.53 7,729 166 2.86
Commercial MBS 1,810 17 3.68 1,881 16 3.44 1,895 19 3.93 1,868 51 3.63 1,822 54 3.95
Other investment securities (4) 4,620 40 3.47 4,833 41 3.37 4,002 33 3.35 4,758 119 3.34 3,446 87 3.39
Total securities, at amortized cost(2) 11,945 94 3.14 12,210 90 2.94 11,574 92 3.18 12,126 274 3.02 12,997 307 3.15
Money market and other investments 157 1 2.27 171 1 1.85 201 1 1.39 189 2 1.74 274 2 1.05
Total interest-earning assets(2) 32,866 $ 311 3.75% 32,642 $ 302 3.71% 30,739 $ 306 3.96% 32,613 $ 913 3.74% 31,027 $ 915 3.94%
Goodwill and other intangibles 2,554 2,561 2,627 2,575 2,213
Other noninterest-earning assets 1,673 1,780 1,938 1,774 1,737
Total assets $ 37,093 $ 36,983 $ 35,304 $ 36,962 $ 34,977
Interest-bearing liabilities:
Deposits
Savings accounts $ 3,793 $ 1 0.09% $ 3,897 $ 1 0.11% $ 4,026 $ 2 0.20% $ 3,861 $ 3 0.10% $ 3,300 $ 3 0.14%
Interest-bearing checking 4,483 -- 0.04 4,504 -- 0.04 3,871 1 0.06 4,456 1 0.04 3,066 2 0.08
Money market deposits 9,959 5 0.20 10,178 5 0.20 10,899 8 0.29 10,257 16 0.21 9,071 19 0.28
Certificates of deposit 3,824 7 0.69 3,902 6 0.66 4,083 8 0.75 3,935 20 0.67 3,977 25 0.85
Total interest bearing deposits 22,059 13 0.23% 22,481 13 0.23% 22,879 19 0.32% 22,509 40 0.24% 19,414 50 0.34%
Borrowings
Short-term borrowings 4,014 4 0.41% 3,536 4 0.41% 1,666 1 0.36% 3,570 11 0.41% 3,442 15 0.56%
Long-term borrowings 733 12 6.55 733 12 6.62 732 12 6.74 732 36 6.63 2,825 57 2.70
Total borrowings 4,747 16 1.36 4,269 16 1.47 2,398 13 2.31 4,302 47 1.46 6,267 72 1.53
Total interest-bearing liabilities 26,806 $ 29 0.43% 26,750 $ 29 0.43% 25,277 $ 32 0.51% 26,811 $ 87 0.44% 25,681 $ 122 0.63%
Noninterest-bearing deposits 4,787 4,711 4,618 4,657 3,838
Other noninterest-bearing liabilities 567 533 536 534 590
Total liabilities 32,160 31,994 30,431 32,002 30,109
Total stockholders' equity 4,933 4,989 4,873 4,960 4,868
Total liabilities and stockholders' equity $ 37,093 $ 36,983 $ 35,304 $ 36,962 $ 34,977
Net interest income (FTE) $ 282 $ 274 $ 274 $ 826 $ 793
Taxable Equivalent Adjustment(1) 4 5 4 13 14
Total core deposits $ 23,022 $ 6 0.11% $ 23,290 $ 6 0.11% $ 23,414 $ 11 0.18% $ 23,231 $ 20 0.12% $ 19,275 $ 24 0.17%
Total deposits 26,846 13 0.19% 27,192 13 0.19% 27,497 19 0.27% 27,166 40 0.20% 23,252 50 0.29%
Tax equivalent net interest rate spread(2) 3.32% 3.28% 3.45% 3.30% 3.31%
Tax equivalent net interest rate margin(2) 3.40% 3.36% 3.54% 3.39% 3.42%
(1) Tax equivalent interest income is calculated using a 35% tax rate.
(2) Amounts for the nine months ended September 30, 2012 exclude accelerated CMO adjustments of $8 million. The yields, including these adjustments, are:
Nine months ended
September 30, 2012
Residential MBS 2.72%
Total securities, at amortized cost 3.05%
Total interest-earning assets 3.90%
Tax equivalent net interest rate spread 3.27%
Tax equivalent net interest rate margin 3.38%
(3) Includes nonaccrual loans.
(4) Includes debt securities, collateralized loan obligations, asset-backed securities, FHLB and FRB common stock, and other investment securities.
First Niagara Financial Group, Inc.
Allowance for Loans and Lease Losses & Asset Quality
(in thousands)
2013 2012 Nine months ended
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
September 30,
2013
September 30,
2012
Beginning balance $ 183,708 $ 172,002 $ 162,522 $ 149,933 $ 138,516 $ 126,746 $ 162,522 $ 120,100
Net loan (charge-offs) recoveries:
Commercial real estate $ 1,013 $ (2,817) $ (2,121) $ (1,935) $ (1,791) $ (2,384) $ (3,925) $ (10,169)
Commercial business (9,694) (7,175) (4,902) (3,385) (6,077) (10,958) (21,771) (21,178)
Residential real estate (137) (291) (427) (658) (396) (155) (855) (1,671)
Home equity (322) (905) (613) (673) (401) (1,536) (1,840) (3,098)
Other consumer (3,815) (1,906) (2,257) (2,285) (1,406) (805) (7,978) (3,047)
Total net loan charge-offs $ (12,955) $ (13,094) $ (10,320) $ (8,936) $ (10,071) $ (15,838) $ (36,369) $ (39,163)
Provision for loan losses 27,200 24,800 19,800 21,525 21,800 27,803 71,800 69,503
Allowance related to loans sold -- -- -- -- (312) (195) -- (507)
Ending balance $ 197,953 $ 183,708 $ 172,002 $ 162,522 $ 149,933 $ 138,516 $ 197,953 $ 149,933
Supplemental information
Allowance to loans 0.94% 0.89% 0.86% 0.82% 0.78% 0.74% 0.94% 0.78%
Allowance for originated loans to originated loans(1) 1.20% 1.21% 1.21% 1.20% 1.20% 1.19% 1.20% 1.20%
Net charge-offs (recoveries) to average loans (annualized)
Commercial real estate (0.05)% 0.15% 0.12% 0.11% 0.11% 0.15% 0.07% 0.21%
Commercial business 0.75 % 0.56% 0.39% 0.28% 0.53% 1.02% 0.57% 0.66%
Total commercial loans 0.27 % 0.32% 0.23% 0.18% 0.28% 0.49% 0.27% 0.39%
Residential real estate 0.02 % 0.03% 0.05% 0.07% 0.04% 0.02% 0.03% 0.06%
Home equity 0.05 % 0.14% 0.09% 0.10% 0.06% 0.25% 0.09% 0.17%
Other consumer 0.83 % 0.49% 0.67% 0.79% 0.60% 0.61% 0.68% 0.70%
Total consumer loans 0.22 % 0.16% 0.17% 0.19% 0.12% 0.15% 0.18% 0.15%
Total loans 0.25 % 0.26% 0.21% 0.18% 0.21% 0.36% 0.24% 0.29%
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)
Commercial real estate (0.07)% 0.14% 0.10% 0.07% 0.12% 0.18% 0.05% 0.15%
Commercial business 0.83 % 0.64% 0.45% 0.33% 0.64% 1.25% 0.64% 0.82%
Total commercial loans 0.33 % 0.36% 0.26% 0.19% 0.36% 0.66% 0.32% 0.45%
Residential real estate 0.03 % 0.07% 0.10% 0.15% 0.09% 0.04% 0.06% 0.13%
Home equity 0.09 % 0.26% 0.19% 0.21% 0.13% 0.51% 0.18% 0.35%
Other consumer 0.84 % 0.51% 0.64% 0.94% 0.59% 0.81% 0.68% 0.76%
Total consumer loans 0.33 % 0.27% 0.28% 0.35% 0.18% 0.28% 0.29% 0.27%
Total loans 0.33 % 0.33% 0.27% 0.24% 0.30% 0.55% 0.31% 0.40%
Nonperforming loans:
Originated(1):
Commercial real estate $ 51,302 $ 59,624 $ 49,953 $ 50,848 $ 46,413 $ 46,881 $ 51,302 $ 46,413
Commercial business 35,854 44,658 47,523 47,066 37,375 30,714 35,854 37,375
Residential real estate 31,312 29,667 28,455 27,192 21,377 23,058 31,312 21,377
Home equity 15,709 14,601 14,270 14,233 8,084 8,119 15,709 8,084
Other consumer 10,667 6,094 5,444 3,737 938 926 10,667 938
Total originated nonperforming loans 144,844 154,644 145,645 143,076 114,187 109,698 144,844 114,187
Total acquired nonperforming loans(2) 30,388 27,556 27,678 29,648 28,193 19,374 30,388 28,193
Total nonperforming loans 175,232 182,200 173,323 172,724 142,380 129,072 175,232 142,380
Real estate owned 24,262 8,144 10,816 10,114 9,669 10,632 24,262 9,669
Total nonperforming assets $ 199,494 $ 190,344 $ 184,139 $ 182,838 $ 152,049 $ 139,704 $ 199,494 $ 152,049
Accruing troubled debt restructurings (TDR) $ 69,877 $ 69,892 $ 64,311 $ 46,280 $ 55,732 $ 42,140 $ 69,877 $ 55,732
Loans 90 days past due still accruing(3) 136,248 167,560 172,062 171,568 145,323 125,668 136,248 145,323
Total classified loans(4) 648,235 701,104 720,197 708,468 693,006 732,762 648,235 693,006
Total criticized loans(5) $ 977,798 $ 1,012,305 $ 1,044,874 $ 1,002,659 $ 990,670 $ 1,030,471 $ 977,798 $ 990,670
Total nonperforming loans to loans 0.83% 0.89% 0.87% 0.88% 0.75% 0.69% 0.83% 0.75%
Total nonperforming originated loans to originated loans(1) 0.89% 1.02% 1.03% 1.07% 0.93% 0.96% 0.89% 0.93%
Total nonperforming assets to loans and real estate owned 0.94% 0.93% 0.92% 0.93% 0.80% 0.74% 0.94% 0.80%
Total nonperforming assets to assets 0.53% 0.51% 0.50% 0.50% 0.42% 0.40% 0.53% 0.42%
Allowance to nonperforming loans 113.0% 100.8% 99.2% 94.1% 105.3% 107.3% 113.0% 105.3%
Originated loans(1) $ 16,211,505 $ 15,102,336 $ 14,100,190 $ 13,372,357 $ 12,232,568 $ 11,392,158 $ 16,211,505 $ 12,232,568
Acquired loans(6) 5,006,753 5,581,651 6,083,912 6,513,636 7,085,839 7,600,213 5,006,753 7,085,839
Credit related discount on acquired loans(7) (129,187) (140,805) (148,883) (175,981) (211,881) (228,855) (129,187) (211,881)
Total Loans $ 21,089,071 $ 20,543,182 $ 20,035,219 $ 19,710,012 $ 19,106,526 $ 18,763,516 $ 21,089,071 $ 19,106,526
(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 Qulaity Review" in our Annual Report on 10-K for the year ended December 31, 2012.
(5) Criticized loans includes consumer loans when they are 90 days or more past due. Criticized loans include special mention, substandard, doubtful, and loss.
(6) Represents 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
(Share counts in thousands)
2013 2012
September 30, June 30, March 31, December 31, September 30, June 30,
First Niagara Financial Group, Inc capital ratios:
Tier 1 risk based capital 9.45% 9.41% 9.45% 9.29% 9.51% 9.40%
Tier 1 common capital(1) 7.72% 7.65% 7.64% 7.45% 7.59% 7.41%
Total risk based capital 11.40% 11.35% 11.38% 11.23% 11.48% 11.37%
Leverage 7.14% 7.01% 6.92% 6.75% 6.83% 6.32%
Equity to assets 13.22% 13.20% 13.43% 13.39% 13.70% 13.72%
Tangible common equity to tangible assets(1) 5.89% 5.80% 5.95% 5.77% 5.87% 5.69%
Total risk weighted assets(2) $ 26,078 $ 25,564 $ 24,949 $ 24,379 $ 23,403 $ 22,699
First Niagara Bank, N.A capital ratios:
Tier 1 risk based capital 10.08% 10.08% 10.15% 9.94% 10.19% 9.63%
Total risk based capital 10.89% 10.85% 10.89% 10.66% 10.88% 10.57%
Leverage 7.61% 7.50% 7.43% 7.23% 7.32% 6.48%
Total risk weighted assets(2) $ 26,038 $ 25,520 $ 24,933 $ 24,379 $ 23,390 $ 22,699
Number of branches 422 422 427 430 432 452
Full time equivalent employees 5,788 5,779 5,875 5,927 6,036 6,103
Share information and per share metrics:
Common shares outstanding 353,973 353,932 353,008 352,621 352,632 352,665
Preferred shares outstanding 14,000 14,000 14,000 14,000 14,000 14,000
Treasury shares 12,029 12,070 12,994 13,381 13,370 13,337
Market price (NASDAQ: FNFG): $ 10.37 $ 10.07 $ 8.86 $ 7.93 $ 8.07 $ 7.65
Book value per common share(3) 13.15 13.06 13.19 13.15 13.11 12.84
Tangible book value per common share(1)(3) 5.86 5.74 5.84 5.65 5.59 5.30
Price/Book 78.86% 77.11% 67.17% 60.30% 61.56% 59.58%
Price/Tangible book(1) 176.96% 175.44% 151.71% 140.35% 144.36% 144.34%
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 40.00% 44.44% 47.06% 53.33% 53.33% N/M
Dividend yield (annualized) 3.06% 3.19% 3.66% 4.01% 3.94% 4.21%
N/M Not meaningful
(1) 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.
(2) Represents an estimate of total risk weighted assets as of September 30, 2013. All preceding quarters represent actual calculated balances.
(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)
2013 2012 Nine months ended
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
September 30,
2013
September 30,
2012
Financial ratios computed on an operating basis(1):
Earnings per basic share $ 0.20 $ 0.18 $ 0.17 $ 0.19 $ 0.19 $ 0.19 $ 0.55 $ 0.56
Earnings per diluted share 0.20 0.18 0.17 0.19 0.19 0.19 0.55 0.56
Weighted average shares outstanding - basic(2) 349,653 349,542 349,278 349,071 349,001 348,941 349,492 348,956
Weighted average shares outstanding - diluted(2) 350,896 350,384 349,999 349,663 349,371 348,941 350,368 349,248
Noninterest income as a percentage of net revenue(3) 24.78% 26.18% 25.13% 25.48% 26.43% 22.96% 25.36% 24.03%
Pre-tax, pre-provision income 137,769 129,819 117,776 125,281 129,333 136,645 385,364 393,752
Pre-tax, pre-provision income per diluted share 0.39 0.37 0.34 0.36 0.37 0.39 1.10 1.13
Pre-tax, pre-provision return on average assets 1.47% 1.41% 1.30% 1.37% 1.46% 1.51% 1.39% 1.50%
Net interest margin(4) 3.40% 3.36% 3.39% 3.42% 3.54% 3.37% 3.39% 3.42%
Interest yield on average loans(4) 4.14% 4.19% 4.25% 4.39% 4.47% 4.59% 4.19% 4.56%
Rate paid on interest-bearing liabilities(4) 0.43% 0.43% 0.44% 0.48% 0.51% 0.61% 0.44% 0.63%
Efficiency ratio 62.66% 64.43% 66.86% 65.24% 64.71% 60.63% 64.63% 61.62%
Effective tax rate 28.2% 32.0% 31.0% 27.0% 30.9% 33.5% 30.3% 33.1%
Return on average assets 0.85% 0.77% 0.74% 0.83% 0.83% 0.80% 0.79% 0.83%
Return on average equity 6.37% 5.72% 5.50% 6.06% 6.04% 5.95% 5.86% 5.93%
Return on average tangible equity(5) 13.20% 11.75% 11.62% 12.89% 13.11% 10.86% 12.19% 10.88%
Return on average common equity 6.18% 5.48% 5.24% 5.86% 5.83% 5.72% 5.64% 5.78%
Return on average tangible common equity(6) 13.92% 12.21% 12.05% 13.57% 13.86% 11.13% 12.73% 11.30%
Reconciliation of net interest income on operating basis to reported net interest income(1):
Total net interest income on operating basis (Non-GAAP) $ 277,540 $ 269,443 $ 266,130 $ 268,566 $ 269,605 $ 267,371 $ 813,113 $ 779,347
Additional premium amortization on securities portfolio -- -- -- (16,280) -- (8,358) -- (8,358)
Total reported net interest income (GAAP) 277,540 269,443 266,130 252,286 269,605 259,013 813,113 770,989
Reconciliation of noninterest income on operating basis to reported noninterest income(1):
Total noninterest income on operating basis (Non-GAAP) $ 91,422 $ 95,546 $ 89,312 $ 91,821 $ 96,866 $ 79,703 $ 276,280 $ 246,477
Gain on securities portfolio repositioning -- -- -- -- 5,337 15,895 -- 21,232
Total reported noninterest income (GAAP) 91,422 95,546 89,312 91,821 102,203 95,598 276,280 267,709
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):
Total noninterest expense on operating basis (Non-GAAP) $ 231,193 $ 235,170 $ 237,666 $ 235,106 $ 237,138 $ 210,429 $ 704,029 $ 632,072
Merger and acquisition integration expenses -- -- -- 3,678 29,404 131,460 -- 173,834
Restructuring charges -- -- -- -- -- 3,750 -- 6,453
Total reported noninterest expense (GAAP) $ 231,193 $ 235,170 $ 237,666 $ 238,784 $ 266,542 $ 345,639 $ 704,029 $ 812,359
Reconciliation of net operating income to net income(1):
Net operating income (Non-GAAP) $ 79,143 $ 71,134 $ 67,285 $ 75,358 $ 74,027 $ 72,188 $ 217,562 $ 216,268
Nonoperating income and expenses, net of tax:
Additional premium amortization on securities portfolio -- -- -- 11,633 -- 5,558 -- 5,558
Gain on securities portfolio repositioning -- -- -- -- (3,469) (10,331) -- (13,800)
Merger and acquisition integration expenses -- -- -- 2,628 19,112 85,448 -- 112,991
Restructuring charges -- -- -- -- -- 2,437 -- 4,194
Total nonoperating expenses, net of tax -- -- -- 14,261 15,643 83,112 -- 108,943
Net income (GAAP) $ 79,143 $ 71,134 $ 67,285 $ 61,097 $ 58,384 $ (10,924) $ 217,562 $ 107,325
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) $ 71,596 $ 63,587 $ 59,738 $ 67,811 $ 66,480 $ 64,641 $ 194,921 $ 196,059
Nonoperating income and expenses, net of tax:
Additional premium amortization on securities portfolio -- -- -- 11,633 -- 5,558 -- 5,558
Gain on securities portfolio repositioning -- -- -- -- (3,469) (10,331) -- (13,800)
Merger and acquisition integration expenses -- -- -- 2,628 19,112 85,448 -- 112,991
Restructuring charges -- -- -- -- -- 2,437 -- 4,194
Total nonoperating income and expenses, net of tax -- -- -- 14,261 15,643 83,112 -- 108,943
Net income available to common stockholders (GAAP) $ 71,596 $ 63,587 $ 59,738 $ 53,550 $ 50,837 $ (18,471) $ 194,921 $ 87,116
Computation of pre-tax,pre-provision income:
Net interest income $ 277,540 $ 269,443 $ 266,130 $ 252,286 $ 269,605 $ 259,013 $ 813,113 $ 770,989
Noninterest income 91,422 95,546 89,312 91,821 102,203 95,598 276,280 267,709
Noninterest expense (231,193) (235,170) (237,666) (238,784) (266,542) (345,639) (704,029) (812,359)
Pre-tax, pre-provision income (GAAP) 137,769 129,819 117,776 105,323 105,266 8,972 385,364 226,339
Add back: non-operating premium amortization -- -- -- 16,280 -- 8,358 -- 8,358
Add back: non-operating noninterest expenses (1) -- -- -- 3,678 29,404 135,210 -- 180,287
Less: non-operating noninterest income (1) -- -- -- -- (5,337) (15,895) -- (21,232)
Pre-tax, pre-provision income (Non-GAAP)(1) $ 137,769 $ 129,819 $ 117,776 $ 125,281 $ 129,333 $ 136,645 $ 385,364 $ 393,752
(1) Net interest income, noninterest income and expense on an operating basis, net operating income, and pre-tax, pre-provision income on an operating basis are non-GAAP measures that we believe provide meaningful comparisons of our underlying operational performance and facilitates investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, we believe exclusion of these nonoperating items enables management to perform a more effective evaluation and comparison of our results and to assess performance in relation to our ongoing operations.
(2) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(3) 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)
2013 2012 Nine months ended
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
September 30,
2013
September 30,
2012
Computation of Ending Tangible Common Equity:
Total stockholders' equity $ 4,938,197 $ 4,902,744 $ 4,946,673 $ 4,926,558 $ 4,915,421 $ 4,818,213 $ 4,938,197 $ 4,928,097
Less: Goodwill and other intangibles (2,549,931) (2,557,560) (2,567,681) (2,617,810) (2,626,625) (2,631,605) (2,549,931) (2,617,809)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $ 2,050,264 $ 2,007,182 $ 2,040,990 $ 1,970,746 $ 1,950,794 $ 1,848,606 $ 2,050,264 $ 1,972,286
Computation of Average Tangible Equity:
Total stockholders' equity $ 4,932,949 $ 4,989,006 $ 4,958,402 $ 4,945,132 $ 4,872,605 $ 4,879,791 $ 4,960,026 $ 4,887,071
Less: Goodwill and other intangibles (2,553,647) (2,561,507) (2,609,409) (2,619,322) (2,626,666) (2,206,682) (2,574,650) (2,315,013)
Tangible equity $ 2,379,302 $ 2,427,499 $ 2,348,993 $ 2,325,810 $ 2,245,939 $ 2,673,109 $ 2,385,376 $ 2,572,058
Computation of Average Tangible Common Equity:
Total stockholders' equity $ 4,932,949 $ 4,989,006 $ 4,958,402 $ 4,945,132 $ 4,872,605 $ 4,879,791 $ 4,960,026 $ 4,887,071
Less: Goodwill and other intangibles (2,553,647) (2,561,507) (2,609,409) (2,619,322) (2,626,666) (2,206,682) (2,574,650) (2,315,013)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $ 2,041,300 $ 2,089,497 $ 2,010,991 $ 1,987,808 $ 1,907,937 $ 2,335,107 $ 2,047,374 $ 2,234,056
Computation of Tier 1 Common Capital:
Tier 1 capital $ 2,464,801 $ 2,406,473 $ 2,356,763 $ 2,264,679 $ 2,225,121 $ 2,128,702 $ 2,464,629 $ 2,264,679
Less: Qualifying restricted core capital elements (112,667) (112,449) (112,236) (112,025) (111,820) (111,630) (112,667) (112,025)
Less: Perpetual non-cumulative preferred stock (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tier 1 common capital (Non-GAAP) $ 2,014,132 $ 1,956,022 $ 1,906,525 $ 1,814,652 $ 1,775,299 $ 1,679,070 $ 2,013,960 $ 1,814,652

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

Source:First Niagara Financial Group, Inc.