First Niagara Reports Fourth Quarter and Full Year 2013 Results

First Niagara Financial Group logo

Fourth Quarter and 2013 Highlights:

  • GAAP earnings of $0.20 per diluted share, consistent with the prior quarter
  • Full-Year 2013 earnings of $0.75 per diluted share compared to $0.40 per diluted share in 2012
  • Pre-Tax Pre-Provision income increased 3% QOQ
  • Operating expenses declined to $225 million excluding certain nonrecurring items
  • Net interest margin increased 1 basis point QOQ to 3.41%
  • Fee income declined 2% driven by seasonally lower insurance commissions revenues
  • Organic loan growth continues, with average loans up 9% annualized QOQ
  • Average commercial business and real estate loans increased 7% QOQ
  • Continued momentum in indirect auto loans, which increased by $246 million QOQ
  • Noninterest-bearing checking balances increased 8% annualized QOQ
  • Average core deposits increased 3% QOQ driven by higher customer balances
  • Transactional deposits averaged 36% of deposits, up from 32% a year-ago
  • Strong credit quality maintained
  • NCOs averaged 0.34% of originated loans in 2013, consistent with prior year
  • Nonperforming loans equaled 93 basis points of originated loans at year-end

BUFFALO, N.Y., Jan. 24, 2014 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today reported net income available to common shareholders of $70.1 million or $0.20 per diluted share for the fourth quarter of 2013, highlighted by stable net interest margin, balance sheet growth and positive operating leverage.

"I am proud of all that we accomplished in 2013 despite the industry challenges. We achieved strong organic loan growth and positive operating leverage through disciplined cost management and by leveraging our proven ability to acquire and deepen profitable customer relationships," said Gary M. Crosby, First Niagara President and Chief Executive Officer. "I am thrilled to lead First Niagara through our next phase of evolution as a commercial bank and I firmly believe we can create long-term shareholder value by efficiently attracting, retaining and growing profitable customer relationships. The decisions we make and the actions we take will be, and must be, driven by what is best for our customers, and ultimately, our shareholders."

Fourth Quarter Results

In the fourth quarter of 2013, First Niagara reported net income available to common shareholders of $70.1 million, or $0.20 per diluted share. In the fourth quarter of 2012, First Niagara reported net income available to common shareholders of $53.6 million, or $0.15 per diluted share, which included a $16 million pre-tax accelerated premium amortization charge on the company's Collateralized Mortgage Obligations (CMO) portfolio and $3.7 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 third quarter of 2013, net income available to common shareholders was $71.6 million, or $0.20 per diluted share.

Balance sheet growth remained strong as average loans increased 9% annualized compared to the prior quarter. Average commercial business and real estate loans increased 7% annualized over the prior quarter driven by strong activity in the company's Western Pennsylvania and New England markets. Average consumer loans increased 12% annualized driven by continued growth in indirect auto loan balances, partially offset by a decline in residential mortgage loans. Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking accounts, increased an annualized 14% over the prior quarter and currently represent 36% of the company's deposit balances, up from 32% a year ago.

For the fourth quarter of 2013, the company generated sequential positive operating leverage driven by a $4 million decline in operating expenses. Fourth quarter revenues of $370 million were consistent with the prior quarter. Net interest income increased 1% compared to the prior quarter. Net interest margin was stable at 3.41%. Noninterest income declined $2.1 million or 2% from the prior quarter primarily due to seasonally lower insurance commissions.

The provision for loan losses on originated loans totaled $28.2 million in the fourth quarter of 2013, well in excess of net charge-offs of $17.8 million in the quarter. At December 31, 2013, nonperforming originated loans comprised 0.93% of originated loans, or a 4 basis point increase from the prior quarter. Net charge-offs in 2013 equaled 34 basis points of average originated loans, consistent with 2012.

Reported Results (GAAP) Q4 2013 Q3 2013 Q4 2012
Net interest income $280.3 $277.5 $252.3
Provision for credit losses 32.0 27.6 22.0
Noninterest income 89.3 91.4 91.8
Noninterest expense 227.1 231.2 238.8
Net income 77.7 79.1 61.1
Preferred stock dividend 7.5 7.5 7.5
Net income available to common shareholders $70.1 $71.6 $53.6
Weighted average diluted shares outstanding 350.7 350.9 349.7
Earnings per diluted share $0.20 $0.20 $0.15
All amounts in millions except earnings per diluted share.

"During the fourth quarter, the continued momentum in our commercial loan and indirect auto businesses was moderated by elevated prepayment activity in our commercial real estate portfolio," said Gregory W. Norwood, Chief Financial Officer. "Excluding $2 million in non-recurring charges in the fourth quarter of 2013, we managed our operating expense base and achieved our expense objective through a deliberate focus on reducing inefficiencies."

Full Year 2013 Results

For the full year ended December 31, 2013, the company reported GAAP earnings to common shareholders of $265.1 million, or $0.75 per diluted share, compared to $140.7 million, or $0.40 per diluted share, in 2012. GAAP net income for 2012 included $184.0 million in pre-tax acquisition and restructuring related expenses, $24.6 million in accelerated premium amortization adjustments, and $21.2 million in gains related to the sale of $3.1 billion of mortgage-backed securities in the second quarter of 2012. In 2013, the company incurred a pre-tax $6.3 million charge, or $0.01 per share, related to two executive departures. Excluding this charge, non-GAAP operating net income available to common shareholders in 2013 was $0.76 per diluted share.

Reported Results (GAAP) 2013 2012
Net interest income $1,093.4 $1,023.3
Provision for credit losses 105.0 92.3
Noninterest income 365.6 359.5
Noninterest expense 931.2 1,051.1
Net income 295.3 168.4
Preferred stock dividend 30.2 27.8
Net income available to common shareholders $265.1 $140.7
Weighted average diluted shares outstanding 350.4 349.4
Earnings per diluted share $0.75 $0.40
All amounts in millions except earnings per diluted share.

Loans

Average total loans increased 9% annualized from the prior quarter, driven by continued growth in the company's commercial lending and indirect auto businesses as well as strength in home equity lending. Average commercial loans increased 7% reflecting strength in the company's middle market, business banking and equipment financing lines of businesses. Prepayment activity among investor-backed commercial real estate properties continued to remain elevated driven by the intense competitive landscape as well as the company's decision not to match lending terms that did not meet its established underwriting criteria.

Commercial business (C&I) loans averaged $5.3 billion, representing a 7% annualized increase over the prior quarter. Average commercial real estate (CRE) loans increased 6% annualized to $7.7 billion compared to the third quarter of 2013. Average commercial loans in the company's Western Pennsylvania and New England markets increased at double-digit annualized growth rates of 20% and 11%, respectively.

Average indirect auto loan balances increased $246 million to $1.5 billion. During the fourth quarter, indirect auto originations totaled $317 million at an average customer FICO score of 754 and yielded 3.06%, net of dealer reserve. Home equity balances increased 7% annualized from the prior quarter reflecting the successes of targeted marketing campaigns during the fall. Average residential real estate loans declined by $59 million, or 7% annualized reflecting normal amortization and prepayment of portfolio balances.

Deposits

The company continued to focus its efforts to grow its core customer base and re-position its account mix while tailoring its retail bank delivery to match evolving customer preferences through investments in alternative delivery channels such as mobile banking. Average transaction deposit balances, which include interest-bearing and noninterest-bearing checking accounts, increased an annualized 14% over the prior quarter and represented 36% of the company's deposit balances, up from 32% a year ago. Transactional deposit balance growth was strong across the company's footprint reflecting an increase in account balances typical with seasonal patterns.

Average interest-bearing checking and noninterest-bearing checking deposit balances increased 21% and 8% annualized, respectively, compared to the prior quarter, driven by seasonal strength in commercial account balances. Money market and time deposit balances declined 2% and 13% annualized, respectively, driven by the company's continued pricing actions. The average cost of interest-bearing deposits of 0.23% was unchanged from the prior quarter.

In response to changing consumer banking behaviors, First Niagara has and continues to take actions including additional investments 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. During the first quarter of 2014, the company expects to roll out its remote deposit capture feature that will enable customers to deposit checks and transact using mobile devices.

Net Interest Income

Fourth quarter 2013 net interest income increased 1% from the prior quarter to $280 million and was driven by a 4% annualized increase in average earning assets together with a one basis point improvement in the net interest margin (NIM) to 3.41%. Growth in average earning assets reflected continued strong loan growth which was moderated by lower investment securities balances. Average investment securities declined 6% or $166 million from the prior quarter.

The stable NIM in the fourth 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 fourth quarter, premium amortization on the RMBS portfolio was $0.3 million, net of a $3.5 million retroactive adjustment to reflect slower prepayment speeds. The premium amortization on the RMBS portfolio in the third quarter of 2013 was $6 million, net of a $1.8 million retroactive adjustment for slower prepayment speeds.

Credit Quality

At December 31, 2013, the allowance for loan losses was $209.3 million, compared to $198.0 million at September 30, 2013. Nonperforming assets to total assets were 0.56%, up three basis points from the prior quarter.

Information for both the originated and acquired portfolios follows.

Q4 2013 Q3 2013
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses* $ 28.2 $ 3.4 $ 31.6 $ 25.4 $ 1.8 $ 27.2
Net charge-offs 17.8 2.4 20.3 12.9 0.1 13.0
NCOs/ Avg Loans 0.43% 0.21% 0.38% 0.33% 0.01% 0.25%
Total loans** $ 16,922 $ 4,643 $ 21,440 $ 16,212 $ 5,007 $ 21,089
(*) Excludes provision for unfunded commitments of $0.4 million each in 4Q13 and 3Q13
(**) Acquired loans before associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $28.2 million, compared to $25.4 million in the prior quarter. The company continued to build its loan loss reserves in the fourth quarter. Such reserve build totaled $10.3 million, compared to $12.5 million in the prior quarter. Net charge-offs equaled $17.8 million or 43 basis points of average originated loans in the fourth quarter of 2013, a 10 basis point increase from the third quarter. The increase from the prior quarter primarily reflects the impact of a $3 million net loan recovery in the third quarter on the pay-off of a previously charged-down loan as well as the full quarter impact of losses on credit card loans in the fourth quarter that were previously charged to the credit mark.

At December 31, 2013, nonperforming originated loans comprised 0.93% of originated loans, compared to 0.89% at September 30, 2013. The increase from the prior quarter reflects two commercial credits that were transferred to non-accrual status.

At December 31, 2013, the allowance for loan losses on originated loans totaled $205.3 million or 1.21% of such loans, compared to $195.0 million or 1.20% of loans at September 30, 2013.

Acquired loans

The provision for losses on acquired loans totaled $3.4 million, up from $1.8 million in the prior quarter. Net charge-offs on those portfolios totaled $2.4 million in the fourth quarter, compared to $0.1 million in the prior quarter. At December 31, 2013, the allowance for loan losses on acquired loans totaled $4.0 million, compared to $3.0 million at September 30, 2013. Acquired nonperforming loans totaled $30.1 million, compared to $30.4 million at the end of the prior quarter. At December 31, 2013, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $125 million.

Fee Income

Fourth quarter 2013 noninterest income of $89.3 million decreased 2% or $2.1 million compared to the prior quarter driven largely by seasonal decreases in deposit service charges and insurance commissions and partially offset by increases in capital markets income and bank owned life insurance.

Insurance commissions declined 14% from the prior quarter to $15.4 million reflecting low policy renewal activity that is typical in the fourth quarter. Deposit service charges decreased 5% from the prior quarter and were primarily driven by a seasonal decrease in non-sufficient-fund (NSF) incidence rates. Mortgage banking revenues improved modestly from the third quarter reflecting higher servicing income. Capital markets revenue increased $1.3 million from the third quarter due to higher derivative fee income. The $2.3 million increase in bank owned life insurance from the prior quarter was primarily driven by a benefit received on an insurance claim in the fourth quarter. Other income decreased $1.9 million from the third quarter driven by lower gains from investment partnerships and tax credit investments.

Noninterest Expense

Fourth quarter noninterest expenses were $227.1 million, 2% lower than the prior quarter. Excluding approximately $2 million in nonrecurring operational losses in the quarter, operating expenses in the fourth quarter of 2013 were $225 million. Salaries and benefit expenses declined by $1.3 million from the prior quarter driven primarily by lower overtime and temporary help expenses. FDIC premium expense declined by $1.9 million from the third quarter due in large part to lower high-risk loan levels and lower insured deposits.

In the fourth quarter of 2013, the efficiency ratio improved to 61.5% from 62.7% in the prior quarter and reflected the positive operating leverage achieved.

Capital

At December 31, 2013, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.5% and 7.9% 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, $38 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 8:00 a.m. Eastern Time on Friday, January 24, 2014 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-800-369-2136 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 February 7, 2014 by dialing 1-888-562-4451, passcode: 6712.

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 For year ending
Fourth Third Second First Fourth Third December 31, December 31,
Quarter Quarter Quarter Quarter Quarter Quarter 2013 2012
Interest income:
Loans and leases $ 213,778 $ 214,746 $ 209,970 $ 206,640 $ 212,035 $ 211,767 $ 845,134 $ 813,912
Investment securities and other 96,020 91,996 88,110 88,961 71,564 90,101 365,087 362,176
Total interest income 309,798 306,742 298,080 295,601 283,599 301,868 1,210,221 1,176,088
Interest expense:
Deposits 12,941 12,931 12,967 14,277 16,902 18,358 53,116 66,649
Borrowings 16,579 16,271 15,670 15,194 14,411 13,905 63,714 86,164
Total interest expense 29,520 29,202 28,637 29,471 31,313 32,263 116,830 152,813
Net interest income 280,278 277,540 269,443 266,130 252,286 269,605 1,093,391 1,023,275
Provision for credit losses 32,000 27,600 25,200 20,200 22,000 22,200 105,000 92,300
Net interest income after provision 248,278 249,940 244,243 245,930 230,286 247,405 988,391 930,975
Noninterest income:
Deposit service charges 25,726 27,115 26,482 24,800 26,345 26,422 104,123 91,237
Insurance commissions 15,431 17,854 17,692 16,355 15,497 18,764 67,332 68,166
Merchant and card fees 12,567 12,464 12,380 11,298 11,945 12,014 48,709 38,758
Wealth management services 15,441 15,189 14,945 12,845 12,000 11,069 58,420 41,315
Mortgage banking 2,754 2,268 6,882 6,424 8,060 10,974 18,328 31,857
Capital markets income 6,310 5,058 5,002 6,031 7,098 6,381 22,401 26,849
Lending and leasing 4,140 4,886 4,534 3,906 3,739 3,730 17,466 14,837
Bank owned life insurance 6,027 3,725 3,321 3,467 3,021 3,449 16,540 13,705
Other income 916 2,863 4,308 4,186 4,116 9,400 12,273 32,806
Total noninterest income 89,312 91,422 95,546 89,312 91,821 102,203 365,592 359,530
Noninterest expense:
Salaries and benefits 113,754 115,034 116,305 115,790 111,026 115,484 460,883 427,494
Occupancy and equipment 27,420 26,582 28,506 28,045 27,609 25,694 110,553 99,409
Technology and communications 29,483 28,999 29,603 27,113 28,257 28,110 115,198 100,514
Marketing and advertising 4,879 5,822 5,450 4,346 9,292 8,954 20,497 31,685
Professional services 9,314 9,820 9,782 9,603 11,163 11,193 38,519 40,514
Amortization of intangibles 7,562 7,702 10,850 14,119 14,224 14,506 40,233 45,035
FDIC premiums 7,431 9,351 9,348 8,901 9,158 8,850 35,031 34,693
Merger and acquisition integration expenses -- -- -- -- 3,678 29,404 -- 177,512
Restructuring charges -- -- -- -- -- -- -- 6,453
Other expense 27,305 27,883 25,326 29,749 24,377 24,347 110,263 87,834
Total noninterest expense 227,148 231,193 235,170 237,666 238,784 266,542 931,177 1,051,143
Income before income tax 110,442 110,169 104,619 97,576 83,323 83,066 422,806 239,362
Income tax expense 32,752 31,026 33,485 30,291 22,226 24,682 127,554 70,940
Net income 77,690 79,143 71,134 67,285 61,097 58,384 295,252 168,422
Preferred stock dividend 7,547 7,547 7,547 7,547 7,547 7,547 30,188 27,756
Net income available to common stockholders $ 70,143 $ 71,596 $ 63,587 $ 59,738 $ 53,550 $ 50,837 $ 265,064 $ 140,666
Financial Ratios:
Earnings per basic share $ 0.20 $ 0.20 $ 0.18 $ 0.17 $ 0.15 $ 0.15 $ 0.75 $ 0.40
Earnings per diluted share 0.20 0.20 0.18 0.17 0.15 0.14 0.75 0.40
Weighted average shares outstanding - basic(1) 349,718 349,653 349,542 349,278 349,071 349,001 349,549 348,960
Weighted average shares outstanding - diluted(1) 350,699 350,896 350,384 349,999 349,663 349,371 350,381 349,368
Net revenue(2) $ 369,590 $ 368,962 $ 364,989 $ 355,442 $ 344,107 $ 371,808 $ 1,458,983 $ 1,382,805
Noninterest income as a percentage of net revenue(2) 24.17% 24.78% 26.18% 25.13% 26.68% 27.49% 25.06% 26.00%
Pre-tax, pre-provision income(3) $ 142,442 $ 137,769 $ 129,819 $ 117,776 $ 105,323 $ 105,266 $ 527,806 $ 331,662
Pre-tax, pre-provision income per diluted share(3) $ 0.41 $ 0.39 $ 0.37 $ 0.34 $ 0.30 $ 0.30 $ 1.51 $ 0.95
Pre-tax, pre-provision return on average assets(3) 1.51% 1.47% 1.41% 1.30% 1.15% 1.19% 1.42% 0.94%
Net interest margin(4) 3.41% 3.40% 3.36% 3.39% 3.22% 3.54% 3.39% 3.34%
Interest yield on average loans(4) 4.04% 4.14% 4.19% 4.25% 4.39% 4.47% 4.15% 4.51%
Rate paid on interest-bearing liabilities 0.43% 0.43% 0.43% 0.44% 0.48% 0.51% 0.44% 0.59%
Efficiency ratio 61.46% 62.66% 64.43% 66.86% 69.39% 71.69% 63.82% 76.02%
Expenses as a percentage of average loans and deposits 1.89% 1.94% 1.98% 2.01% 2.03% 2.29% 1.96% 2.47%
Effective tax rate 29.7% 28.2% 32.0% 31.0% 26.7% 29.7% 30.2% 29.6%
Return on average assets(5) 0.82 % 0.85 % 0.77 % 0.74 % 0.67% 0.66% 0.80% 0.48%
Return on average equity(5) 6.18 % 6.37 % 5.72 % 5.50 % 4.92% 4.77% 5.95% 3.45%
Return on average tangible equity(3)(5) 12.64 % 13.20 % 11.75 % 11.62 % 10.45% 10.34% 12.31% 6.55%
Return on average common equity 5.99 % 6.18 % 5.48 % 5.24 % 4.62% 4.46% 5.73% 3.09%
Return on average tangible common equity(3) 13.25 % 13.92 % 12.21 % 12.05 % 10.72% 10.60% 12.86% 6.30%
(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
December 31, September 30, June 30, March 31, December 31, September 30,
Cash and cash equivalents $ 462,927 $ 558,086 $ 552,210 $ 424,176 $ 430,862 $ 447,087
Investment securities:
Available for sale 7,423,162 7,609,676 7,916,353 7,876,160 10,993,605 10,579,970
Held to maturity 4,042,481 3,841,700 3,856,960 4,218,687 1,299,806 1,387,763
FHLB and FRB common stock 469,217 437,534 429,740 401,373 420,277 373,311
Total investment securities 11,934,860 11,888,910 12,203,053 12,496,220 12,713,688 12,341,044
Loans held for sale 50,137 80,468 118,104 126,389 154,745 117,375
Loans and leases:
Commercial:
Real estate 7,777,903 7,697,407 7,482,375 7,295,544 7,093,193 6,835,971
Business 5,290,392 5,204,672 5,165,606 5,044,738 4,953,323 4,682,154
Total commercial loans 13,068,295 12,902,079 12,647,981 12,340,282 12,046,516 11,518,125
Consumer:
Residential real estate 3,447,997 3,519,233 3,558,274 3,614,912 3,761,567 3,870,756
Home equity 2,752,229 2,706,603 2,670,672 2,646,645 2,651,891 2,661,429
Indirect auto 1,543,983 1,339,449 1,049,763 818,401 601,456 419,258
Credit cards 325,140 311,600 303,455 298,310 314,973 308,387
Other consumer 302,009 310,107 313,037 316,669 333,609 328,571
Total consumer loans 8,371,358 8,186,992 7,895,201 7,694,937 7,663,496 7,588,401
Total loans and leases 21,439,653 21,089,071 20,543,182 20,035,219 19,710,012 19,106,526
Allowance for loan losses 209,274 197,953 183,708 172,002 162,522 149,933
Loans and leases, net 21,230,379 20,891,118 20,359,474 19,863,217 19,547,490 18,956,593
Bank owned life insurance 415,205 413,555 410,182 407,419 404,321 401,211
Goodwill and other intangibles 2,542,783 2,549,931 2,557,560 2,567,681 2,617,810 2,626,625
Other assets 992,071 958,473 949,144 959,459 937,316 983,999
Total assets $ 37,628,362 $ 37,340,541 $ 37,149,727 $ 36,844,561 $ 36,806,232 $ 35,873,934
Deposits:
Savings accounts $ 3,666,759 $ 3,695,221 $ 3,878,053 $ 3,915,836 $ 3,887,587 $ 3,941,528
Interest-bearing checking 4,743,829 4,637,807 4,499,963 4,534,444 4,450,970 4,090,322
Money market deposits 9,739,539 9,905,341 10,013,996 10,493,243 10,581,137 10,801,280
Noninterest-bearing deposits 4,865,873 4,968,501 4,845,835 4,803,835 4,643,580 4,658,374
Certificates of deposit 3,649,257 3,762,132 3,911,989 3,985,702 4,113,257 4,206,192
Total deposits 26,665,257 26,969,002 27,149,836 27,733,060 27,676,531 27,697,696
Short-term borrowings 4,822,222 4,169,416 3,698,279 2,928,929 2,983,718 1,995,610
Long-term borrowings 733,883 732,547 732,598 732,510 732,425 732,339
Other liabilities 413,647 531,379 666,270 503,389 487,000 532,868
Total liabilities 32,635,009 32,402,344 32,246,983 31,897,888 31,879,674 30,958,513
Preferred stockholders' equity 338,002 338,002 338,002 338,002 338,002 338,002
Common stockholders' equity 4,655,351 4,600,195 4,564,742 4,608,671 4,588,556 4,577,419
Total stockholders' equity 4,993,353 4,938,197 4,902,744 4,946,673 4,926,558 4,915,421
Total liabilities and stockholders' equity $ 37,628,362 $ 37,340,541 $ 37,149,727 $ 36,844,561 $ 36,806,232 $ 35,873,934
Selected balance sheet information:
Total interest-earning assets(1) $ 33,396,058 $ 33,039,023 $ 32,906,363 $ 32,524,313 $ 32,321,964 $ 31,316,470
Total interest-bearing liabilities 27,355,489 26,902,465 26,734,878 26,590,664 26,749,094 25,767,271
Net interest-earning assets $ 6,040,569 $ 6,136,558 $ 6,171,485 $ 5,933,649 $ 5,572,870 $ 5,549,199
Tangible common equity(2) $ 2,112,568 $ 2,050,264 $ 2,007,182 $ 2,040,990 $ 1,970,746 $ 1,950,794
Unrealized gain on available for sale securities, net of tax(3) 63,930 76,686 83,898 160,942 206,733 204,347
Total core deposits $ 23,016,000 $ 23,206,870 $ 23,237,847 $ 23,747,358 $ 23,563,274 $ 23,491,504
Originated loans(4) $ 16,922,161 $ 16,211,505 $ 15,102,336 $ 14,100,190 $ 13,372,357 $ 12,232,568
Acquired loans(5) 4,642,775 5,006,753 5,581,651 6,083,912 6,513,636 7,085,839
Credit related discount on acquired loans(6) (125,283) (129,187) (140,805) (148,883) (175,981) (211,881)
Total Loans $ 21,439,653 $ 21,089,071 $ 20,543,182 $ 20,035,219 $ 19,710,012 $ 19,106,526
(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 For year ending
December 31, 2013 September 30, 2013 December 31, 2012 December 31, 2013 December 31, 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 $ 7,673 $ 79 4.02% $ 7,551 $ 80 4.16% $ 6,911 $ 79 4.45% $ 7,446 $ 314 4.16% $ 6,625 $ 318 4.72%
Business 5,257 48 3.60 5,163 48 3.64 4,783 47 3.89 5,134 190 3.66 4,402 176 3.94
Total commercial loans 12,930 127 3.85 12,714 128 3.95 11,694 126 4.22 12,580 504 3.95 11,027 494 4.41
Consumer:
Residential real estate 3,479 34 3.89 3,538 35 3.91 3,819 39 4.05 3,569 141 3.94 3,922 161 4.11
Home equity 2,732 29 4.15 2,683 28 4.17 2,659 29 4.31 2,681 113 4.21 2,476 109 4.39
Indirect auto 1,453 11 3.03 1,207 9 3.09 515 5 3.50 1,077 34 3.12 228 8 3.65
Credit cards 313 9 11.38 309 9 12.02 310 8 10.19 307 34 11.20 202 22 10.88
Other consumer 307 7 8.66 313 7 8.48 328 7 8.73 315 27 8.43 296 24 8.25
Total consumer loans 8,284 89 4.27 8,050 88 4.35 7,631 87 4.54 7,949 348 4.38 7,124 324 4.55
Total loans and leases 21,214 216 4.04 20,764 216 4.14 19,325 213 4.39 20,529 853 4.15 18,151 818 4.51
Residential MBS(2) 5,502 42 3.07 5,515 37 2.68 5,746 36 2.50 5,500 146 2.66 7,230 202 2.79
Commercial MBS 1,772 17 3.84 1,810 17 3.68 1,953 18 3.79 1,844 68 3.69 1,855 73 3.91
Other investment securities (4) 4,505 38 3.40 4,620 40 3.47 4,474 35 3.16 4,694 158 3.36 3,705 123 3.32
Total securities, at amortized cost(2) 11,779 98 3.31 11,945 94 3.14 12,173 90 2.95 12,038 372 3.09 12,790 397 3.11
Money market and other investments 189 1 1.38 157 1 2.27 207 1 1.54 189 3 1.65 257 3 1.13
Total interest-earning assets(2) 33,182 $ 314 3.76% 32,866 $ 311 3.75% 31,705 $ 304 3.81% 32,756 $ 1,228 3.75% 31,198 $ 1,219 3.91%
Goodwill and other intangibles 2,546 2,554 2,619 2,567 2,315
Other noninterest-earning assets 1,651 1,673 2,005 1,744 1,804
Total assets $ 37,379 $ 37,093 $ 36,329 $ 37,067 $ 35,317
Interest-bearing liabilities:
Deposits
Savings accounts $ 3,670 $ 1 0.09% $ 3,793 $ 1 0.09% $ 3,898 $ 2 0.18% $ 3,813 $ 4 0.10% $ 3,451 $ 5 0.15%
Interest-bearing checking 4,725 -- 0.04 4,483 -- 0.04 4,181 1 0.07 4,524 2 0.04 3,347 2 0.07
Money market deposits 9,900 5 0.20 9,959 5 0.20 10,810 7 0.25 10,167 21 0.21 9,506 27 0.28
Certificates of deposit 3,698 7 0.71 3,824 7 0.69 4,259 8 0.71 3,875 26 0.68 4,048 33 0.81
Total interest bearing deposits 21,993 13 0.23% 22,059 13 0.23% 23,148 17 0.29% 22,379 53 0.24% 20,352 67 0.33%
Borrowings
Short-term borrowings 4,259 4 0.42% 4,014 4 0.41% 2,331 2 0.38% 3,744 15 0.41% 3,163 17 0.53%
Long-term borrowings 732 12 6.56 733 12 6.55 732 12 6.63 732 48 6.61 2,299 69 3.02
Total borrowings 4,991 17 1.32 4,747 16 1.36 3,063 14 1.87 4,476 64 1.42 5,462 86 1.58
Total interest-bearing liabilities 26,984 $ 30 0.43% 26,806 $ 29 0.43% 26,211 $ 31 0.48% 26,855 $ 117 0.44% 25,814 $ 153 0.59%
Noninterest-bearing deposits 4,878 4,787 4,645 4,712 4,041
Other noninterest-bearing liabilities 533 567 528 534 575
Total liabilities 32,395 32,160 31,384 32,101 30,430
Total stockholders' equity 4,984 4,933 4,945 4,966 4,887
Total liabilities and stockholders' equity $ 37,379 $ 37,093 $ 36,329 $ 37,067 $ 35,317
Net interest income (FTE) $ 285 $ 282 $ 273 $ 1,111 $ 1,066
Taxable Equivalent Adjustment(1) 5 4 4 18 18
Total core deposits $ 23,173 $ 6 0.11% $ 23,022 $ 6 0.11% $ 23,534 $ 10 0.16% $ 23,216 $ 27 0.12% $ 20,345 $ 34 0.17%
Total transactional deposits 9,603 -- 0.02% 9,270 -- 0.02% 8,826 1 0.03% 9,236 2 0.02% 7,388 2 0.03%
Total deposits 26,871 13 0.19% 26,846 13 0.19% 27,793 17 0.24% 27,091 53 0.20% 24,393 67 0.27%
Tax equivalent net interest rate spread(2) 3.33% 3.32% 3.33% 3.31% 3.32%
Tax equivalent net interest rate margin(2) 3.41% 3.40% 3.42% 3.39% 3.42%
(1) Tax equivalent interest income is calculated using a 35% tax rate.
(2) Amounts for the three and twelve months ended December 31, 2012 exclude accelerated CMO adjustments of $16 million and $25 million, respectively. The yields, including these adjustments, are:
Three months ended
December 31, 2012
Year ending
December 31, 2012
Residential MBS 1.37% 2.45%
Total securities, at amortized cost 2.41% 2.91%
Total interest-earning assets 3.61% 3.83%
Tax equivalent net interest rate spread 3.13% 3.24%
Tax equivalent net interest rate margin 3.22% 3.34%
(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 For year ending
Fourth Third Second First Fourth Third December 31, December 31,
Quarter Quarter Quarter
Quarter Quarter Quarter 2013 2012
Beginning balance $ 197,953 $ 183,708 $ 172,002 $ 162,522 $ 149,933 $ 138,516 $ 162,522 $ 120,100
Net loan (charge-offs) recoveries:
Commercial real estate $ (5,764) $ 1,013 $ (2,817) $ (2,121) $ (1,935) $ (1,791) $ (9,689) $ (12,104)
Commercial business (6,382) (9,694) (7,175) (4,902) (3,385) (6,077) (28,153) (24,563)
Residential real estate (168) (137) (291) (427) (658) (396) (1,023) (2,329)
Home equity (1,528) (322) (905) (613) (673) (401) (3,368) (3,771)
Indirect auto (1,215) (692) (552) (252) (231) 14 (2,711) (239)
Credit cards (3,082) (1,300) (194) (204) (291) (149) (4,780) (945)
Other consumer (2,140) (1,823) (1,160) (1,801) (1,763) (1,271) (6,924) (4,148)
Total net loan charge-offs $ (20,279) $ (12,955) $ (13,094) $ (10,320) $ (8,936) $ (10,071) $ (56,648) $ (48,099)
Provision for loan losses 31,600 27,200 24,800 19,800 21,525 21,800 103,400 91,028
Allowance related to loans sold -- -- -- -- -- (312) -- (507)
Ending balance $ 209,274 $ 197,953 $ 183,708 $ 172,002 $ 162,522 $ 149,933 $ 209,274 $ 162,522
Supplemental information
Allowance to loans 0.98% 0.94% 0.89% 0.86% 0.82% 0.78% 0.98% 0.82%
Allowance for originated loans to originated loans(1) 1.21% 1.20% 1.21% 1.21% 1.20% 1.20% 1.21% 1.20%
Net charge-offs (recoveries) to average loans (annualized)
Commercial real estate 0.30 % (0.05)% 0.15% 0.12% 0.11% 0.11% 0.13% 0.18%
Commercial business 0.49 % 0.75 % 0.56% 0.39% 0.28% 0.53% 0.55% 0.56%
Total commercial loans 0.38 % 0.27 % 0.32% 0.23% 0.18% 0.28% 0.30% 0.33%
Residential real estate 0.02 % 0.02 % 0.03% 0.05% 0.07% 0.04% 0.03% 0.06%
Home equity 0.22 % 0.05 % 0.14% 0.09% 0.10% 0.06% 0.13% 0.15%
Indirect auto 0.33 % 0.23 % 0.23% 0.15% 0.18% 0.02 % 0.25% 0.10%
Credit cards 3.93 % 1.68 % 0.26% 0.27% 0.38% 0.19% 1.56% 0.47%
Other consumer 2.79 % 2.01 % 0.88% 1.27% 1.29% 0.89% 2.20% 1.40%
Total consumer loans 0.40 % 0.22 % 0.16% 0.17% 0.19% 0.12% 0.24% 0.16%
Total loans 0.38 % 0.25 % 0.26% 0.21% 0.18% 0.21% 0.28% 0.26%
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)
Commercial real estate 0.24 % (0.07)% 0.14% 0.10% 0.07% 0.12% 0.10% 0.13%
Commercial business 0.53 % 0.83 % 0.64% 0.45% 0.33% 0.64% 0.61% 0.68%
Total commercial loans 0.37 % 0.33 % 0.36% 0.26% 0.19% 0.36% 0.33% 0.38%
Residential real estate 0.04 % 0.03 % 0.07% 0.10% 0.15% 0.09% 0.06% 0.14%
Home equity 0.29 % 0.09 % 0.26% 0.19% 0.21% 0.13% 0.21% 0.31%
Indirect auto 0.33 % 0.23 % 0.23% 0.15% 0.18% 0.02 % 0.25% 0.11%
Credit cards 3.93 % 1.68 % 0.26% 0.34% 0.69% 0.61 % 1.56% 1.14%
Other consumer 2.80 % 2.59 % 1.91% 2.44% 1.71% 1.04% 2.65% 1.76%
Total consumer loans 0.56 % 0.33 % 0.27% 0.28% 0.33% 0.18% 0.37% 0.30%
Total loans 0.43 % 0.33 % 0.33% 0.27% 0.24% 0.30% 0.34% 0.35%
Nonperforming loans:
Originated(1):
Commercial real estate $ 53,395 $ 51,302 $ 59,624 $ 49,953 $ 50,848 $ 46,413 $ 53,395 $ 50,848
Commercial business 42,013 35,854 44,658 47,523 47,066 37,375 42,013 47,066
Residential real estate 31,478 31,312 29,667 28,455 27,192 21,377 31,478 27,192
Home equity 18,426 15,709 14,601 14,270 14,233 8,084 18,426 14,233
Indirect auto 6,274 5,129 3,276 2,426 931 99 6,274 931
Other consumer 5,838 5,538 2,818 3,018 2,806 839 5,838 2,806
Total originated nonperforming loans 157,424 144,844 154,644 145,645 143,076 114,187 157,424 143,076
Total acquired nonperforming loans(2) 30,088 30,388 27,556 27,678 29,648 28,193 30,088 29,648
Total nonperforming loans 187,512 175,232 182,200 173,323 172,724 142,380 187,512 172,724
Real estate owned 24,788 24,262 8,144 10,816 10,114 9,669 24,788 10,114
Total nonperforming assets $ 212,300 $ 199,494 $ 190,344 $ 184,139 $ 182,838 $ 152,049 $ 212,300 $ 182,838
Accruing troubled debt restructurings (TDR) $ 52,263 $ 69,877 $ 69,892 $ 64,311 $ 46,280 $ 55,732 $ 52,263 $ 46,280
Loans 90 days past due still accruing(3) 113,212 136,248 167,560 172,062 171,568 145,323 113,212 171,568
Total classified loans(4) 663,700 648,235 701,104 720,197 708,468 693,006 663,700 708,468
Total criticized loans(5) $ 985,019 $ 977,798 $ 1,012,305 $ 1,044,874 $ 1,002,659 $ 990,670 $ 985,019 $ 1,002,659
Total nonperforming loans to loans 0.87% 0.83% 0.89% 0.87% 0.88% 0.75% 0.87% 0.88%
Total nonperforming originated loans to originated loans(1) 0.93% 0.89% 1.02% 1.03% 1.07% 0.93% 0.93% 1.07%
Total nonperforming assets to loans and real estate owned 0.99% 0.94% 0.93% 0.92% 0.93% 0.80% 0.99% 0.93%
Total nonperforming assets to assets 0.56% 0.53% 0.51% 0.50% 0.50% 0.42% 0.56% 0.50%
Allowance to nonperforming loans 111.6% 113.0% 100.8% 99.2% 94.1% 105.3% 111.6% 94.1%
Originated loans(1) $ 16,922,161 $ 16,211,505 $ 15,102,336 $ 14,100,190 $ 13,372,357 $ 12,232,568 $ 16,922,161 $ 13,372,357
Acquired loans(6) 4,642,775 5,006,753 5,581,651 6,083,912 6,513,636 7,085,839 4,642,775 6,513,636
Credit related discount on acquired loans(7) (125,283) (129,187) (140,805) (148,883) (175,981) (211,881) (125,283) (175,981)
Total Loans $ 21,439,653 $ 21,089,071 $ 20,543,182 $ 20,035,219 $ 19,710,012 $ 19,106,526 $ 21,439,653 $ 19,710,012
(1) Originated loans represent total loans excluding acquired loans.
(2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing.
(3) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.
(4) Includes consumer loans, which are considered classified when they are 90 days or more past due. Classified loans include substandard, doubtful, and loss, which are consistent with regulatory definitions, and as described in Item 1, "Business", under the heading "Asset Quality Review" in our Annual Report on 10-K for the year ended December 31, 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
December 31, September 30, June 30, March 31, December 31, September 30,
First Niagara Financial Group, Inc capital ratios:
Tier 1 risk based capital 9.56% 9.45% 9.41% 9.45% 9.29% 9.51%
Tier 1 common capital(1) 7.86% 7.72% 7.65% 7.64% 7.45% 7.59%
Total risk based capital 11.53% 11.40% 11.35% 11.38% 11.23% 11.48%
Leverage 7.26% 7.14% 7.01% 6.92% 6.75% 6.83%
Equity to assets 13.27% 13.22% 13.20% 13.43% 13.39% 13.70%
Tangible common equity to tangible assets(1) 6.02% 5.89% 5.80% 5.95% 5.77% 5.87%
Total risk weighted assets(2) $ 26,412 $ 26,078 $ 25,564 $ 24,949 $ 24,379 $ 23,403
First Niagara Bank, N.A capital ratios:
Tier 1 risk based capital 10.15% 10.08% 10.08% 10.15% 9.94% 10.19%
Total risk based capital 10.99% 10.89% 10.85% 10.89% 10.66% 10.88%
Leverage 7.70% 7.61% 7.50% 7.43% 7.23% 7.32%
Total risk weighted assets(2) $ 26,365 $ 26,038 $ 25,520 $ 24,933 $ 24,379 $ 23,390
Number of branches 421 422 422 427 430 432
Full time equivalent employees 5,807 5,788 5,779 5,875 5,927 6,036
Share information and per share metrics:
Common shares outstanding 353,941 353,973 353,932 353,008 352,621 352,632
Preferred shares outstanding 14,000 14,000 14,000 14,000 14,000 14,000
Treasury shares 12,061 12,029 12,070 12,994 13,381 13,370
Market price (Nasdaq:FNFG): $ 10.62 $ 10.37 $ 10.07 $ 8.86 $ 7.93 $ 8.07
Book value per common share(3) 13.31 13.15 13.06 13.19 13.15 13.11
Tangible book value per common share(1)(3) 6.04 5.86 5.74 5.84 5.65 5.59
Price/Book 79.79% 78.86% 77.11% 67.17% 60.30% 61.56%
Price/Tangible book(1) 175.83% 176.96% 175.44% 151.71% 140.35% 144.36%
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% 40.00% 44.44% 47.06% 53.33% 53.33%
Dividend yield (annualized) 2.99% 3.06% 3.19% 3.66% 4.01% 3.94%
(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 December 31, 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 For year ending
Fourth Third Second First Fourth Third December 31, December 31,
Quarter Quarter Quarter Quarter Quarter Quarter 2013 2012
Financial ratios computed on an operating basis(1):
Earnings per basic share $ 0.20 $ 0.20 $ 0.18 $ 0.17 $ 0.19 $ 0.19 $ 0.75 $ 0.75
Earnings per diluted share 0.20 0.20 0.18 0.17 0.19 0.19 0.75 0.75
Weighted average shares outstanding - basic(2) 349,718 349,653 349,542 349,278 349,071 349,001 349,549 348,960
Weighted average shares outstanding - diluted(2) 350,699 350,896 350,384 349,999 349,663 349,371 350,381 349,368
Noninterest income as a percentage of net revenue(3) 24.17% 24.78% 26.18% 25.13% 25.48% 26.43% 25.06% 24.40%
Pre-tax, pre-provision income 142,442 137,769 129,819 117,776 125,281 129,333 527,806 519,033
Pre-tax, pre-provision income per diluted share 0.41 0.39 0.37 0.34 0.36 0.37 1.51 1.49
Pre-tax, pre-provision return on average assets 1.51% 1.47% 1.41% 1.30% 1.37% 1.46% 1.42% 1.47%
Net interest margin(4) 3.41% 3.40% 3.36% 3.39% 3.42% 3.54% 3.39% 3.42%
Interest yield on average loans(4) 4.04% 4.14% 4.19% 4.25% 4.39% 4.47% 4.15% 4.51%
Rate paid on interest-bearing liabilities(4) 0.43% 0.43% 0.43% 0.44% 0.48% 0.51% 0.44% 0.59%
Efficiency ratio 61.46% 62.66% 64.43% 66.86% 65.24% 64.71% 63.82% 62.56%
Effective tax rate 29.7% 28.2% 32.0% 31.0% 27.0% 30.9% 30.2% 31.7%
Return on average assets 0.82% 0.85% 0.77% 0.74% 0.83% 0.83% 0.80% 0.83%
Return on average equity 6.18% 6.37% 5.72% 5.50% 6.06% 6.04% 5.95% 5.97%
Return on average tangible equity(5) 12.64% 13.20% 11.75% 11.62% 12.89% 13.11% 12.31% 11.34%
Return on average common equity 5.99% 6.18% 5.48% 5.24% 5.86% 5.83% 5.73% 5.80%
Return on average tangible common equity(6) 13.25% 13.92% 12.21% 12.05% 13.57% 13.86% 12.86% 11.81%
Reconciliation of net interest income on operating basis to reported net interest income(1):
Total net interest income on operating basis (Non-GAAP) $ 280,278 $ 277,540 $ 269,443 $ 266,130 $ 268,566 $ 269,605 $ 1,093,391 $ 1,047,913
Additional premium amortization on securities portfolio -- -- -- -- (16,280) -- -- (24,638)
Total reported net interest income (GAAP) 280,278 277,540 269,443 266,130 252,286 269,605 1,093,391 1,023,275
Reconciliation of noninterest income on operating basis to reported noninterest income(1):
Total noninterest income on operating basis (Non-GAAP) $ 89,312 $ 91,422 $ 95,546 $ 89,312 $ 91,821 $ 96,866 $ 365,592 $ 338,298
Gain on securities portfolio repositioning -- -- -- -- -- 5,337 -- 21,232
Total reported noninterest income (GAAP) 89,312 91,422 95,546 89,312 91,821 102,203 365,592 359,530
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):
Total noninterest expense on operating basis (Non-GAAP) $ 227,148 $ 231,193 $ 235,170 $ 237,666 $ 235,106 $ 237,138 $ 931,177 $ 867,178
Merger and acquisition integration expenses -- -- -- -- 3,678 29,404 -- 177,512
Restructuring charges -- -- -- -- -- -- -- 6,453
Total reported noninterest expense (GAAP) $ 227,148 $ 231,193 $ 235,170 $ 237,666 $ 238,784 $ 266,542 $ 931,177 $ 1,051,143
Reconciliation of net operating income to net income(1):
Net operating income (Non-GAAP) $ 77,690 $ 79,143 $ 71,134 $ 67,285 $ 75,358 $ 74,027 $ 295,252 $ 291,626
Nonoperating income and expenses, net of tax:
Additional premium amortization on securities portfolio -- -- -- -- 11,633 -- -- 17,191
Gain on securities portfolio repositioning -- -- -- -- -- (3,469) -- (13,800)
Merger and acquisition integration expenses -- -- -- -- 2,628 19,112 -- 115,619
Restructuring charges -- -- -- -- -- -- -- 4,194
Total nonoperating expenses, net of tax -- -- -- -- 14,261 15,643 -- 123,204
Net income (GAAP) $ 77,690 $ 79,143 $ 71,134 $ 67,285 $ 61,097 $ 58,384 $ 295,252 $ 168,422
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) $ 70,143 $ 71,596 $ 63,587 $ 59,738 $ 67,811 $ 66,480 $ 265,064 $ 263,870
Nonoperating income and expenses, net of tax:
Additional premium amortization on securities portfolio -- -- -- -- 11,633 -- -- 17,191
Gain on securities portfolio repositioning -- -- -- -- -- (3,469) -- (13,800)
Merger and acquisition integration expenses -- -- -- -- 2,628 19,112 -- 115,619
Restructuring charges -- -- -- -- -- -- -- 4,194
Total nonoperating income and expenses, net of tax -- -- -- -- 14,261 15,643 -- 123,204
Net income available to common stockholders (GAAP) $ 70,143 $ 71,596 $ 63,587 $ 59,738 $ 53,550 $ 50,837 $ 265,064 $ 140,666
Computation of pre-tax,pre-provision income:
Net interest income $ 280,278 $ 277,540 $ 269,443 $ 266,130 $ 252,286 $ 269,605 $ 1,093,391 $ 1,023,275
Noninterest income 89,312 91,422 95,546 89,312 91,821 102,203 365,592 359,530
Noninterest expense (227,148) (231,193) (235,170) (237,666) (238,784) (266,542) (931,177) (1,051,143)
Pre-tax, pre-provision income (GAAP) 142,442 137,769 129,819 117,776 105,323 105,266 527,806 331,662
Add back: non-operating premium amortization -- -- -- -- 16,280 -- -- 24,638
Add back: non-operating noninterest expenses (1) -- -- -- -- 3,678 29,404 -- 183,965
Less: non-operating noninterest income (1) -- -- -- -- -- (5,337) -- (21,232)
Pre-tax, pre-provision income (Non-GAAP)(1) $ 142,442 $ 137,769 $ 129,819 $ 117,776 $ 125,281 $ 129,333 $ 527,806 $ 519,033
(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 For year ending
Fourth Third Second First Fourth Third December 31, December 31,
Quarter Quarter Quarter Quarter Quarter Quarter 2013 2012
Computation of Ending Tangible Common Equity:
Total stockholders' equity $ 4,993,353 $ 4,938,197 $ 4,902,744 $ 4,946,673 $ 4,926,558 $ 4,915,421 $ 4,993,353 $ 4,928,097
Less: Goodwill and other intangibles (2,542,783) (2,549,931) (2,557,560) (2,567,681) (2,617,810) (2,626,625) (2,542,783) (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 $ 2,112,568 $ 2,050,264 $ 2,007,182 $ 2,040,990 $ 1,970,746 $ 1,950,794 $ 2,112,568 $ 1,972,286
Computation of Average Tangible Equity:
Total stockholders' equity $ 4,984,003 $ 4,932,949 $ 4,989,006 $ 4,958,402 $ 4,945,132 $ 4,872,605 $ 4,966,069 $ 4,887,071
Less: Goodwill and other intangibles (2,546,031) (2,553,647) (2,561,507) (2,609,409) (2,619,322) (2,626,666) (2,567,436) (2,315,013)
Tangible equity $ 2,437,972 $ 2,379,302 $ 2,427,499 $ 2,348,993 $ 2,325,810 $ 2,245,939 $ 2,398,633 $ 2,572,058
Computation of Average Tangible Common Equity:
Total stockholders' equity $ 4,984,003 $ 4,932,949 $ 4,989,006 $ 4,958,402 $ 4,945,132 $ 4,872,605 $ 4,966,069 $ 4,887,071
Less: Goodwill and other intangibles (2,546,031) (2,553,647) (2,561,507) (2,609,409) (2,619,322) (2,626,666) (2,567,436) (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 $ 2,099,970 $ 2,041,300 $ 2,089,497 $ 2,010,991 $ 1,987,808 $ 1,907,937 $ 2,060,631 $ 2,234,056
Computation of Tier 1 Common Capital:
Tier 1 capital $ 2,525,656 $ 2,464,801 $ 2,406,473 $ 2,356,763 $ 2,264,679 $ 2,225,121 $ 2,525,656 $ 2,264,679
Less: Qualifying restricted core capital elements (112,886) (112,667) (112,449) (112,236) (112,025) (111,820) (112,886) (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) $ 2,074,768 $ 2,014,132 $ 1,956,022 $ 1,906,525 $ 1,814,652 $ 1,775,299 $ 2,074,768 $ 1,814,652

CONTACT: 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.