×

First Niagara Reports Second Quarter 2014 Results

First Niagara Financial Group logo

Second Quarter Highlights:

  • Earnings of $0.19 per diluted share
  • Revenues increased 1.5% QOQ
    • Noninterest income improved 5% QOQ driven by seasonal increases in various categories
    • Net interest income stable as balance sheet growth was offset by margin compression
  • Organic loan growth continues, with average loans up 7% annualized QOQ
    • Average commercial business and real estate loans increased 8% QOQ
    • Momentum in average indirect auto loans continues with $137 million increase
  • Transactional deposits up 12% QOQ driven by higher customer balances and account acquisitions
    • Noninterest-bearing and interest-bearing checking deposit balances increased 18% and 7% QOQ
    • Transactional deposits averaged 36% of deposits, up from 34% a year-ago
  • Strong credit quality maintained
    • NCOs decreased six basis points QOQ to 0.30% of average originated loans

BUFFALO, N.Y., July 25, 2014 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today reported second quarter results, highlighted by continued balance sheet growth, consistent credit quality and sequential noninterest income growth.

"During the second quarter, we continued to deliver strong day-to-day execution in each of our business lines, as evidenced in particular by our strong loan growth, while at the same time advancing our previously announced Strategic Investment Plan to better position First Niagara for superior financial performance," said Gary M. Crosby, President and Chief Executive Officer. "A significant portion of our investments are focused on improving the customer experience by enhancing our product and service offerings and enabling customers to bank seamlessly with us across our branch network as well as digital and other self-service channels. We are on-time and on-budget so far and we have the right resources, people, skills and oversight in place to effectively execute on our strategy to deliver long term value to our shareholders."

"In the second quarter of 2014, average loans increased 7% annualized led by 8% growth in average commercial loans and a 5% increase in average consumer loan balances," said Gregory W. Norwood, Chief Financial Officer. "Fee income rebounded from typical seasonal lows experienced in the first quarter as mortgage banking, insurance commissions, and merchant and card fees experienced sequential growth. As expected, operating expenses increased modestly from the prior quarter."

Second Quarter Results

In the second quarter of 2014, First Niagara reported net income available to common shareholders of $66.2 million, or $0.19 per diluted share. In the first quarter of 2014, First Niagara reported net income available to common shareholders of $51.9 million, or $0.15 per diluted share, which included $8.3 million in after-tax restructuring and severance expenses, or $0.02 per diluted share, incurred primarily in connection with the previously announced branch staffing realignment and consolidation of certain branches completed earlier this year. For the second quarter of 2013, net income available to common shareholders was $63.6 million, or $0.18 per diluted share.

Balance sheet growth remained strong as average loans increased 7% annualized compared to the prior quarter. Average commercial business and real estate loans increased 8% annualized over the prior quarter, while average consumer loans increased 5% annualized driven by continued growth in indirect auto loan balances. Average transactional deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased 12% over the prior year quarter and currently represent 36% of the company's deposit balances, up from 34% a year ago.

Operating revenues increased by $5 million or 1.5% in the second quarter of 2014 compared to the prior quarter. Net interest income increased $1 million in the second quarter compared to the prior quarter driven by the benefits of a 6% annualized increase in average earning assets and an extra day in the quarter which were partially offset by a decrease in net interest margin. Net interest margin was 3.26%, as compared to 3.33% in the first quarter of 2014. Noninterest income improved $4 million or 5% from the prior quarter primarily due to increases in insurance commissions, merchant and card fees, and mortgage banking.

The provision for loan losses on originated loans totaled $22.1 million in the second quarter of 2014, including $8.8 million of additions to the loan loss reserve to support organic loan growth and $13.2 million to cover net charge-offs during the quarter. Net charge-offs equaled 0.30% of average originated loans, a decrease of six basis points from 0.36% in the first quarter. At June 30, 2014, nonperforming originated loans comprised 0.86% of originated loans, compared to 0.82% at the end of the prior quarter.

Operating expenses for second quarter of 2014 were $244 million, a decrease of $5 million from the prior quarter, which included $10 million in restructuring expenses primarily related to branch staffing realignment and consolidation of branches. Excluding the restructuring expenses in the prior quarter, the increase was driven by volume-related growth, increased marketing spend, higher FDIC premiums, legal expenses, as well as depreciation, personnel and consulting expenses related to the previously announced strategic investment plan.

Operating Results (Non-GAAP) Q2 2014 Q1 2014 Q2 2013
Net interest income $ 271.8 $ 270.7 $ 269.4
Provision for credit losses 22.8 24.8 25.2
Noninterest income 80.9 76.7 95.5
Noninterest expense 244.1 238.4 235.2
Operating net income 73.8 67.8 71.1
Preferred stock dividend 7.5 7.5 7.5
Operating net income available to common shareholders $ 66.2 $ 60.2 $ 63.6
Weighted average diluted shares outstanding 351.5 351.4 350.4
Operating earnings per diluted share $ 0.19 $ 0.17 $ 0.18

Reported Results (GAAP)
Operating net income before non-operating items $ 73.8 $ 67.8 $ 71.1
Non-operating expenses (a) -- 8.3 --
Net income 73.8 59.4 71.1
Preferred stock dividend 7.5 7.5 7.5
Net income available to common shareholders $ 66.2 $ 51.9 $ 63.6
Weighted average diluted shares outstanding 351.5 351.4 350.4
Earnings per diluted share $ 0.19 $ 0.15 $ 0.18
All amounts in millions except earnings per diluted share.
(a) Restructuring charges primarily related to branch realignment and consolidations, net of taxes.

Loans

Average total loans increased 7% annualized from the prior quarter, driven by continued growth in the company's commercial lending, indirect auto and home equity portfolios.

Average commercial loans, which include commercial business (C&I) and commercial real estate (CRE) loans, increased to $13.5 billion, or an 8% annualized increase from the prior quarter. Commercial & Industrial (C&I) loans averaged $5.6 billion, or an 11% annualized increase over the prior quarter. Average CRE loans increased 5% annualized to $7.9 billion. Compared to the first quarter of 2014, double-digit increases in average loans in the company's Western Pennsylvania and Tri-State markets contributed to more than half the increase in average commercial loans.

Average indirect auto loan balances increased $137 million to $1.8 billion. During the second quarter, indirect auto originations totaled $368 million at an average customer FICO score of 763 and yielded 2.88%, net of dealer reserve. Average residential real estate loans declined by $55 million, or 6% annualized. Home equity balances increased 6% annualized from the prior quarter reflecting the benefits of promotional and cross-sell campaigns.

Deposits

The company's focus remains on efforts to grow its core deposit customer base, re-position its account mix and introduce new products and services that further enhance its value proposition to customers. Recent investments in mobile banking and remote deposit capture have further enhanced customers' ability to transact in the delivery channel of their choice while at the same time lowering the company's cost to acquire and serve such customers. Current and anticipated investments as part of the company's strategic investment plan in new digital features and functionalities such as online account opening will further enhance customers' ability to seamlessly transact across all delivery channels.

Average transactional deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased an annualized 12% over the prior quarter and currently represent 36% of the company's deposit balances, up from 34% a year ago. The average cost of interest-bearing deposits of 0.24% was one basis point higher than the prior quarter.

Average noninterest-bearing checking deposit balances increased 18% annualized compared to the prior quarter, driven by seasonal strength in commercial account balances. Interest-bearing checking balances averaged $4.8 billion and increased 7% annualized from the prior quarter driven by recent promotional campaigns and resulting strength in checking account sales, particularly in the company's New York market.

Money market balances increased 3% reflecting early results of a promotional deposit campaign. Average time deposits increased 36% annualized driven by brokered deposit growth.

Net Interest Income

Second quarter 2014 net interest income increased $1.1 million from the prior quarter to $271.8 million. The benefits of a 6% annualized increase in average earning assets were partially offset by a seven basis point decline in the net interest margin. Growth in average earning assets reflected continued strong loan growth, particularly commercial loans and indirect auto loans. Average investment securities increased modestly from the prior quarter.

The seven basis point decrease in net interest margin in the second quarter of 2014 reflected continued compression of commercial and consumer loan yields from prepayments and reinvestments at current market rates and to a lesser extent, the impact of one additional day in the quarter.

In the second quarter, premium amortization on the Residential Mortgage Backed Securities (RMBS) portfolio was $5 million. There were no retroactive adjustments in the second quarter related to prepayment speeds on the RMBS portfolio. The premium amortization on the RMBS portfolio in the first quarter of 2014 was $4 million, which included a $1 million retroactive reduction to reflect updated lowering of estimates of future prepayment speeds.

Credit Quality

At June 30, 2014, the allowance for loan losses was $223.5 million, compared to $215.0 million at March 31, 2014. Nonperforming assets to total assets were 0.55%, up three basis points from the prior quarter, driven by an increase in nonperforming originated loans.

Information for both the originated and acquired portfolios follows.

Q2 2014 Q1 2014
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses* $ 22.1 $ 0.3 $ 22.4 $ 21.2 $ 3.2 $ 24.4
Net charge-offs 13.2 0.7 13.9 15.6 3.0 18.6
NCOs/ Avg Loans 0.30% 0.06% 0.25% 0.36% 0.28% 0.34%
Total loans** $ 18,196 $ 4,255 $ 22,346 $ 17,389 $ 4,476 $ 21,751
(*) Excludes provision for unfunded commitments of $0.4 million each in 2Q14 and 1Q14
(**) Acquired loans before associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $22.1 million, compared to $21.2 million in the prior quarter. This provision included $8.8 million of additions to the loan loss reserve to support organic loan growth during the quarter compared to $5.5 million in the prior quarter. Net charge-offs equaled $13.2 million or 30 basis points of average originated loans in the second quarter of 2014, compared to $15.6 million or 36 basis points in the prior quarter.

At June 30, 2014, nonperforming originated loans comprised 0.86% of originated loans, compared to 0.82% at March 31, 2014. The increase was driven primarily by the transfer of two commercial credits to nonaccrual status.

At June 30, 2014, the allowance for loan losses on originated loans totaled $219.7 million or 1.21% of such loans, compared to $210.8 million or 1.21% of such loans at March 31, 2014.

Acquired loans

The provision for losses on acquired loans totaled $0.3 million, down from $3.2 million in the prior quarter. Net charge-offs on those portfolios totaled $0.7 million during the quarter, compared to $3.0 million in the prior period. At June 30, 2014, the allowance for loan losses on acquired loans totaled $3.8 million, compared to $4.2 million at March 31, 2014. Acquired nonperforming loans totaled $32.5 million, compared to $30.6 million at the end of the prior quarter. At June 30, 2014, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $105 million.

Fee Income

Second quarter 2014 noninterest income of $80.9 million increased 5% or $4.1 million compared to the prior quarter driven primarily by increases in mortgage banking revenues, insurance commissions, and merchant and card fees. These seasonal increases were partially offset by decreases in capital markets income and bank owned life insurance.

Mortgage banking revenues improved $1.8 million from the first quarter of 2014, driven by higher gain-on-sale revenues from increased locked mortgage volumes. Consistent with seasonal patterns, insurance commissions increased $1.7 million. Merchant and card fees increased $1.3 million from the prior quarter and were driven by seasonally greater debit and credit card purchase volume activity. Other fee income increased $1.6 million from the prior quarter and was driven by higher investment income. Offsetting these increases, capital markets revenue decreased $0.7 million from the first quarter reflecting lower syndication income. Bank owned life insurance income declined by $2.3 million reflecting normalization from elevated first quarter 2014 levels.

Noninterest Expense

Second quarter noninterest expenses were $244.1 million. Excluding a $10.4 million restructuring charge incurred in the first quarter, operating expenses increased $5.7 million or 2% sequentially. Salaries and benefits expenses were essentially flat compared to the first quarter as lower medical expenses were offset by higher employee headcount. Occupancy and equipment expense increased $0.7 million and was driven by an accelerated write-off of certain leasehold improvements. Technology and communications expense increased $0.8 million from the prior quarter primarily reflecting higher depreciation expenses partially offset by lower technology vendor costs. Marketing and advertising expenses increased $1.1 million from the prior quarter reflecting promotional deposit campaigns. Professional services expenses increased $1.1 million from the prior quarter and reflected higher legal expenses as well as consulting fees incurred in connection with the company's strategic investment plan. The increase in FDIC premium expense reflects the impact of higher construction loan balances which carry a higher assessment.

In the second quarter of 2014, the operating efficiency ratio was 69.2% compared to 68.6% in the prior quarter.

Capital

At June 30, 2014, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.5% and 7.9% respectively. The company remains well above current regulatory guidelines for well-capitalized institutions.

Effective Tax Rate

In the second quarter of 2014, the company's effective tax rate declined to 14.0% from 19.6% in the prior quarter reflecting the receipt of state tax credits from prior years.

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 410 branches, $39 billion in assets, $27 billion in deposits, and 5,900 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, July 25, 2014 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-800-857-5166 with the passcode: FNFG. Presentation slides will be used during the earnings conference call and are available under the investor relations tab of our website at www.firstniagara.com. A replay of the call will be available until September 1, 2014 by dialing 1-888-568-0543, passcode: 5142.

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

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

First Niagara Financial Group, Inc.
Income Statement Highlights -- Reported Basis
(in thousands, except per share amounts)
2014 2013 Six months ended
Second First Fourth Third Second First June 30, June 30,
Quarter Quarter Quarter Quarter Quarter Quarter 2014 2013
Interest income:
Loans and leases $ 210,218 $ 209,644 $ 213,778 $ 214,746 $ 209,970 $ 206,640 $ 419,862 $ 416,610
Investment securities and other 91,566 90,421 96,020 91,996 88,110 88,961 181,987 177,071
Total interest income 301,784 300,065 309,798 306,742 298,080 295,601 601,849 593,681
Interest expense:
Deposits 13,183 12,236 12,941 12,931 12,967 14,277 25,419 27,244
Borrowings 16,789 17,082 16,579 16,271 15,670 15,194 33,871 30,864
Total interest expense 29,972 29,318 29,520 29,202 28,637 29,471 59,290 58,108
Net interest income 271,812 270,747 280,278 277,540 269,443 266,130 542,559 535,573
Provision for credit losses 22,800 24,800 32,000 27,600 25,200 20,200 47,600 45,400
Net interest income after provision 249,012 245,947 248,278 249,940 244,243 245,930 494,959 490,173
Noninterest income:
Deposit service charges 23,733 23,356 25,726 27,115 26,482 24,800 47,089 51,282
Insurance commissions 17,343 15,691 15,431 17,854 17,692 16,355 33,034 34,047
Merchant and card fees 12,834 11,504 12,567 12,464 12,380 11,298 24,338 23,678
Wealth management services 15,949 15,587 15,441 15,189 14,945 12,845 31,536 27,790
Mortgage banking 5,241 3,396 2,754 2,268 6,882 6,424 8,637 13,306
Capital markets income 2,917 3,623 6,310 5,058 5,002 6,031 6,540 11,033
Lending and leasing 4,680 4,732 4,140 4,886 4,534 3,906 9,412 8,440
Bank owned life insurance 3,145 5,405 6,027 3,725 3,321 3,467 8,550 6,788
Other income (4,985) (6,570) 916 2,863 4,308 4,186 (11,555) 8,494
Total noninterest income 80,857 76,724 89,312 91,422 95,546 89,312 157,581 184,858
Noninterest expense:
Salaries and employee benefits 117,728 117,940 113,754 115,034 116,305 115,790 235,668 232,095
Occupancy and equipment 28,553 27,876 27,420 26,582 28,506 28,045 56,429 56,551
Technology and communications 31,140 30,345 29,483 28,999 29,603 27,113 61,485 56,716
Marketing and advertising 8,439 7,364 4,879 5,822 5,450 4,346 15,803 9,796
Professional services 13,029 11,923 9,314 9,820 9,782 9,603 24,952 19,385
Amortization of intangibles 6,790 7,509 7,562 7,702 10,850 14,119 14,299 24,969
Federal deposit insurance premiums 9,756 8,855 7,431 9,351 9,348 8,901 18,611 18,249
Restructuring charges -- 10,356 -- -- -- -- 10,356 --
Other expense 28,680 26,568 27,305 27,883 25,326 29,749 55,248 55,075
Total noninterest expense 244,115 248,736 227,148 231,193 235,170 237,666 492,851 472,836
Income before income tax 85,754 73,935 110,442 110,169 104,619 97,576 159,689 202,195
Income tax expense 11,969 14,491 32,752 31,026 33,485 30,291 26,460 63,776
Net income 73,785 59,444 77,690 79,143 71,134 67,285 133,229 138,419
Preferred stock dividend 7,547 7,547 7,547 7,547 7,547 7,547 15,094 15,094
Net income available to common stockholders $ 66,238 $ 51,897 $ 70,143 $ 71,596 $ 63,587 $ 59,738 $ 118,135 $ 123,325
Financial Ratios:
Earnings per basic share $ 0.19 $ 0.15 $ 0.20 $ 0.20 $ 0.18 $ 0.17 $ 0.34 $ 0.35
Earnings per diluted share 0.19 0.15 0.20 0.20 0.18 0.17 0.34 0.35
Weighted average shares outstanding - basic(1) 350,229 349,906 349,718 349,653 349,542 349,278 350,068 349,411
Weighted average shares outstanding - diluted(1) 351,541 351,408 350,699 350,896 350,384 349,999 351,448 350,150
Net revenue(2) $ 352,669 $ 347,471 $ 369,590 $ 368,962 $ 364,989 $ 355,442 $ 700,140 $ 720,431
Noninterest income as a percentage of net revenue(2) 22.93% 22.08% 24.17% 24.78% 26.18% 25.13% 22.51% 25.66%
Pre-tax, pre-provision income(3) $ 108,554 $ 98,735 $ 142,442 $ 137,769 $ 129,819 $ 117,776 $ 207,289 $ 247,595
Pre-tax, pre-provision income per diluted share(3) $ 0.31 $ 0.28 $ 0.41 $ 0.39 $ 0.37 $ 0.34 $ 0.59 $ 0.71
Pre-tax, pre-provision return on average assets(3) 1.14% 1.06% 1.51% 1.47% 1.41% 1.30% 1.10% 1.35%
Net interest margin(4) 3.26% 3.33% 3.41% 3.40% 3.36% 3.39% 3.30% 3.38%
Interest yield on average loans(4) 3.89% 3.98% 4.04% 4.14% 4.19% 4.25% 3.94% 4.21%
Rate paid on interest-bearing liabilities 0.44% 0.44% 0.43% 0.43% 0.43% 0.44% 0.44% 0.44%
Efficiency ratio 69.22% 71.58% 61.46% 62.66% 64.43% 66.86% 70.39% 65.63%
Expenses as a percentage of average loans and deposits 1.97% 2.06% 1.89% 1.94% 1.98% 2.01% 2.03% 2.01%
Effective tax rate 14.0% 19.6% 29.7% 28.2% 32.0% 31.0% 16.6% 31.5%
Return on average assets(5) 0.77 % 0.64 % 0.82% 0.85% 0.77 % 0.74% 0.71% 0.76%
Return on average equity(5) 5.84 % 4.79 % 6.18% 6.37% 5.72 % 5.50% 5.32% 5.61%
Return on average tangible equity(3)(5) 11.68 % 9.66 % 12.64% 13.20% 11.75 % 11.62% 10.69% 11.69%
Return on average common equity 5.62 % 4.48 % 5.99% 6.18% 5.48 % 5.24% 5.06% 5.36%
Return on average tangible common equity(3) 12.10 % 9.76 % 13.25% 13.92% 12.21 % 12.05% 10.95% 12.13%
(1) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(2) Net revenue is comprised of net interest income and noninterest income.
(3) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4) Yields and rates calculated on a tax equivalent basis.
(5) Return used to calculate ratio excludes preferred stock dividend.
First Niagara Financial Group, Inc.
Period End Balance Sheet
(in thousands)
2014 2013
June 30, March 31, December 31, September 30, June 30, March 31,
Cash and cash equivalents $ 557,423 $ 503,070 $ 462,927 $ 558,086 $ 552,210 $ 424,176
Investment securities:
Available for sale 6,683,914 7,060,237 7,423,162 7,609,676 7,916,353 7,876,160
Held to maturity 4,834,279 4,467,213 4,042,481 3,841,700 3,856,960 4,218,687
FHLB and FRB common stock 434,322 437,550 469,217 437,534 429,740 401,373
Total investment securities 11,952,515 11,965,000 11,934,860 11,888,910 12,203,053 12,496,220
Loans held for sale 45,446 34,465 50,137 80,468 118,104 126,389
Loans and leases:
Commercial:
Real estate 7,940,977 7,867,724 7,777,903 7,697,407 7,482,375 7,295,544
Business 5,741,684 5,470,177 5,290,392 5,204,672 5,165,606 5,044,738
Total commercial loans 13,682,661 13,337,901 13,068,295 12,902,079 12,647,981 12,340,282
Consumer:
Residential real estate 3,358,347 3,389,071 3,447,997 3,519,233 3,558,274 3,614,912
Home equity 2,835,421 2,767,024 2,752,229 2,706,603 2,670,672 2,646,645
Indirect auto 1,871,688 1,655,489 1,543,983 1,339,449 1,049,763 818,401
Credit cards 311,640 305,663 325,140 311,600 303,455 298,310
Other consumer 286,062 295,692 302,009 310,107 313,037 316,669
Total consumer loans 8,663,158 8,412,939 8,371,358 8,186,992 7,895,201 7,694,937
Total loans and leases 22,345,819 21,750,840 21,439,653 21,089,071 20,543,182 20,035,219
Allowance for loan losses 223,526 215,037 209,274 197,953 183,708 172,002
Loans and leases, net 22,122,293 21,535,803 21,230,379 20,891,118 20,359,474 19,863,217
Bank owned life insurance 420,230 417,031 415,205 413,555 410,182 407,419
Goodwill and other intangibles 2,528,481 2,535,271 2,542,783 2,549,931 2,557,560 2,567,681
Other assets 998,364 999,804 992,071 958,473 949,144 959,459
Total assets $ 38,624,752 $ 37,990,444 $ 37,628,362 $ 37,340,541 $ 37,149,727 $ 36,844,561
Deposits:
Savings accounts $ 3,626,750 $ 3,664,765 $ 3,666,759 $ 3,695,221 $ 3,878,053 $ 3,915,836
Interest-bearing checking 4,743,684 4,929,302 4,743,829 4,637,807 4,499,963 4,534,444
Money market deposits 9,834,344 10,106,569 9,739,539 9,905,341 10,013,996 10,493,243
Noninterest-bearing deposits 5,284,037 5,101,681 4,865,873 4,968,501 4,845,835 4,803,835
Certificates of deposit 3,955,754 3,795,438 3,649,257 3,762,132 3,911,989 3,985,702
Total deposits 27,444,569 27,597,755 26,665,257 26,969,002 27,149,836 27,733,060
Short-term borrowings 4,890,343 4,137,496 4,822,222 4,169,416 3,698,279 2,928,929
Long-term borrowings 733,337 733,384 733,883 732,547 732,598 732,510
Other liabilities 477,685 495,590 413,647 531,379 666,270 503,389
Total liabilities 33,545,934 32,964,225 32,635,009 32,402,344 32,246,983 31,897,888
Preferred stockholders' equity 338,002 338,002 338,002 338,002 338,002 338,002
Common stockholders' equity 4,740,816 4,688,217 4,655,351 4,600,195 4,564,742 4,608,671
Total stockholders' equity 5,078,818 5,026,219 4,993,353 4,938,197 4,902,744 4,946,673
Total liabilities and stockholders' equity $ 38,624,752 $ 37,990,444 $ 37,628,362 $ 37,340,541 $ 37,149,727 $ 36,844,561
Selected balance sheet information:
Total interest-earning assets(1) $ 34,305,451 $ 33,684,828 $ 33,396,058 $ 33,039,023 $ 32,906,363 $ 32,524,313
Total interest-bearing liabilities 27,784,211 27,366,955 27,355,489 26,902,465 26,734,878 26,590,664
Net interest-earning assets $ 6,521,240 $ 6,317,873 $ 6,040,569 $ 6,136,558 $ 6,171,485 $ 5,933,649
Tangible common equity(2) $ 2,212,335 $ 2,152,946 $ 2,112,568 $ 2,050,264 $ 2,007,182 $ 2,040,990
Unrealized gain on available for sale securities, net of tax(3) 86,244 72,579 63,930 76,686 83,898 160,942
Total core deposits $ 23,488,815 $ 23,802,317 $ 23,016,000 $ 23,206,870 $ 23,237,847 $ 23,747,358
Originated loans(4) $ 18,196,302 $ 17,388,542 $ 16,922,161 $ 16,211,505 $ 15,102,336 $ 14,100,190
Acquired loans(5) 4,254,750 4,475,593 4,642,775 5,006,753 5,581,651 6,083,912
Credit related discount on acquired loans(6) (105,233) (113,295) (125,283) (129,187) (140,805) (148,883)
Total Loans $ 22,345,819 $ 21,750,840 $ 21,439,653 $ 21,089,071 $ 20,543,182 $ 20,035,219
(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 Six months ended
June 30, 2014 March 31, 2014 June 30, 2013 June 30, 2014 June 30, 2013


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(2)
Commercial:
Real estate $ 7,899 $ 75 3.77% $ 7,801 $ 76 3.89% $ 7,376 $ 79 4.22% $ 7,850 $ 151 3.83% $ 7,278 $ 155 4.23%
Business 5,564 50 3.56 5,413 48 3.56 5,112 47 3.66 5,489 98 3.56 5,056 94 3.70
Total commercial loans 13,463 125 3.68 13,214 124 3.76 12,488 126 3.99 13,339 249 3.72 12,334 249 4.02
Consumer:
Residential real estate 3,361 32 3.80 3,416 33 3.88 3,570 35 3.94 3,389 65 3.84 3,631 72 3.98
Home equity 2,800 28 4.06 2,756 28 4.12 2,661 28 4.25 2,778 56 4.09 2,654 56 4.27
Indirect auto 1,750 12 2.85 1,613 12 2.93 927 7 3.18 1,682 24 2.89 820 13 3.23
Credit cards 308 9 11.44 314 9 11.64 302 8 10.96 311 18 11.54 303 16 10.68
Other consumer 291 6 8.53 300 6 8.64 313 7 8.42 295 13 8.59 320 13 8.29
Total consumer loans 8,510 88 4.13 8,399 88 4.26 7,773 86 4.41 8,455 176 4.20 7,728 171 4.45
Total loans and leases 21,973 213 3.89 21,613 212 3.98 20,261 212 4.19 21,794 425 3.94 20,062 419 4.21
Residential MBS 6,097 41 2.67 5,689 39 2.75 5,496 33 2.40 5,895 80 2.71 5,492 67 2.45
Commercial MBS 1,608 14 3.45 1,697 14 3.28 1,881 16 3.44 1,652 28 3.36 1,898 34 3.61
Other investment securities (3) 4,159 38 3.69 4,388 39 3.55 4,833 41 3.37 4,272 77 3.62 4,827 79 3.28
Total securities, at amortized cost 11,864 93 3.13 11,774 92 3.12 12,210 90 2.94 11,819 185 3.13 12,217 181 2.96
Money market and other investments 165 1 1.27 125 1 1.64 171 1 1.85 145 1 1.43 206 2 1.53
Total interest-earning assets 34,002 $ 307 3.62% 33,512 $ 305 3.69% 32,642 $ 302 3.71% 33,758 $ 611 3.65% 32,485 $ 602 3.74%
Goodwill and other intangibles 2,532 2,539 2,561 2,535 2,585
Other noninterest-earning assets 1,678 1,697 1,780 1,688 1,826
Total assets $ 38,212 $ 37,748 $ 36,983 $ 37,981 $ 36,896
Interest-bearing liabilities:
Deposits
Savings accounts $ 3,654 $ 1 0.09% $ 3,631 $ 1 0.08% $ 3,897 $ 1 0.11% $ 3,643 $ 2 0.08% $ 3,896 $ 2 0.11%
Interest-bearing checking 4,820 -- 0.03 4,735 -- 0.03 4,504 -- 0.04 4,778 1 0.03 4,442 1 0.05
Money market deposits 9,971 5 0.22 9,887 5 0.20 10,178 5 0.20 9,929 10 0.21 10,409 11 0.21
Certificates of deposit 3,971 7 0.66 3,647 6 0.70 3,902 6 0.66 3,810 13 0.68 3,991 13 0.66
Total interest bearing deposits 22,416 13 0.24% 21,900 12 0.23% 22,481 13 0.23% 22,160 25 0.23% 22,738 27 0.24%
Borrowings
Short-term borrowings 4,410 5 0.43% 4,642 5 0.44% 3,536 4 0.41% 4,525 10 0.43% 3,345 7 0.40%
Long-term borrowings 733 12 6.62 734 12 6.69 733 12 6.62 733 24 6.65 731 24 6.67
Total borrowings 5,143 17 1.31 5,376 17 1.29 4,269 16 1.47 5,258 34 1.30 4,076 31 1.53
Total interest-bearing liabilities 27,559 $ 30 0.44% 27,276 $ 29 0.44% 26,750 $ 29 0.43% 27,418 $ 59 0.44% 26,814 $ 58 0.44%
Noninterest-bearing deposits 5,077 4,864 4,711 4,971 4,591
Other noninterest-bearing liabilities 511 574 533 542 517
Total liabilities 33,147 32,714 31,994 32,931 31,922
Total stockholders' equity 5,065 5,034 4,989 5,050 4,974
Total liabilities and stockholders' equity $ 38,212 $ 37,748 $ 36,983 $ 37,981 $ 36,896
Net interest income (FTE) $ 277 $ 275 $ 274 $ 552 $ 544
Taxable Equivalent Adjustment(1) 5 4 5 9 8
Total core deposits $ 23,522 $ 6 0.11% $ 23,117 $ 6 0.10% $ 23,290 $ 6 0.11% $ 23,321 $ 13 0.11% $ 23,338 $ 14 0.12%
Total transactional deposits 9,897 -- 0.01% 9,599 -- 0.02% 9,215 -- 0.02% 9,749 1 0.02% 9,033 1 0.02%
Total deposits 27,493 13 0.19% 26,764 12 0.19% 27,192 13 0.19% 27,131 25 0.19% 27,329 27 0.20%
Tax equivalent net interest rate spread(2) 3.18% 3.25% 3.28% 3.21% 3.30%
Tax equivalent net interest rate margin(2) 3.26% 3.33% 3.36% 3.30% 3.38%
(1) Tax equivalent interest income is calculated using a 35% tax rate.
(2) Includes nonaccrual loans.
(3) Includes debt securities, collateralized loan obligations, asset-backed securities, FHLB and FRB common stock, and other investment securities.
First Niagara Financial Group, Inc.
Allowance for Loans and Lease Losses & Asset Quality
(in thousands)
2014 2013 Six months ended
Second First Fourth Third Second First June 30, June 30,
Quarter Quarter Quarter Quarter Quarter Quarter 2014 2013
Beginning balance $ 215,037 $ 209,274 $ 197,953 $ 183,708 $ 172,002 $ 162,522 $ 209,274 $ 162,522
Net loan (charge-offs) recoveries:
Commercial real estate $ (4,885) $ 905 $ (5,764) $ 1,013 $ (2,817) $ (2,121) $ (3,980) $ (4,938)
Commercial business (1,795) (9,138) (6,382) (9,694) (7,175) (4,902) (10,933) (12,077)
Residential real estate (352) (174) (168) (137) (291) (427) (526) (718)
Home equity (1,294) (3,045) (1,528) (322) (905) (613) (4,339) (1,518)
Indirect auto (1,455) (2,086) (1,215) (692) (552) (252) (3,541) (804)
Credit cards (2,930) (3,044) (3,082) (1,300) (194) (204) (5,974) (398)
Other consumer (1,200) (2,055) (2,140) (1,823) (1,160) (1,801) (3,255) (2,961)
Total net loan charge-offs $ (13,911) $ (18,637) $ (20,279) $ (12,955) $ (13,094) $ (10,320) $ (32,548) $ (23,414)
Provision for loan losses 22,400 24,400 31,600 27,200 24,800 19,800 46,800 44,600
Ending balance $ 223,526 $ 215,037 $ 209,274 $ 197,953 $ 183,708 $ 172,002 $ 223,526 $ 183,708
Supplemental information
Allowance to loans 1.00% 0.99 % 0.98 % 0.94 % 0.89 % 0.86 % 1.00% 0.89%
Allowance for originated loans to originated loans(1) 1.21% 1.21 % 1.21 % 1.20 % 1.21 % 1.21 % 1.21% 1.21%
Net charge-offs (recoveries) to average loans (annualized)
Commercial real estate 0.25% (0.05)% 0.30 % (0.05)% 0.15 % 0.12 % 0.10% 0.14%
Commercial business 0.13% 0.68 % 0.49 % 0.75 % 0.56 % 0.39 % 0.40% 0.48%
Total commercial loans 0.20% 0.25 % 0.38 % 0.27 % 0.32 % 0.23 % 0.22% 0.28%
Residential real estate 0.04% 0.02 % 0.02 % 0.02 % 0.03 % 0.05 % 0.03% 0.04%
Home equity 0.18% 0.44 % 0.22 % 0.05 % 0.14 % 0.09 % 0.31% 0.11%
Indirect auto 0.33% 0.52 % 0.33 % 0.23 % 0.23 % 0.15 % 0.42% 0.20%
Credit cards 3.80% 3.88 % 3.93 % 1.68 % 0.26 % 0.27 % 3.84% 0.26%
Other consumer 1.65% 2.74 % 2.79 % 2.01 % 0.88 % 1.27 % 2.20% 1.85%
Total consumer loans 0.34% 0.50 % 0.40 % 0.22 % 0.16 % 0.17 % 0.42% 0.17%
Total loans 0.25% 0.34 % 0.38 % 0.25 % 0.26 % 0.21 % 0.30% 0.23%
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)
Commercial real estate 0.29% (0.11)% 0.24 % (0.07)% 0.14 % 0.10 % 0.09% 0.12%
Commercial business 0.14% 0.73 % 0.53 % 0.83 % 0.64 % 0.45 % 0.43% 0.54%
Total commercial loans 0.22% 0.26 % 0.37 % 0.33 % 0.36 % 0.26 % 0.24% 0.31%
Residential real estate 0.07% 0.04 % 0.04 % 0.03 % 0.07 % 0.10 % 0.05% 0.08%
Home equity 0.16% 0.21 % 0.29 % 0.09 % 0.26 % 0.19 % 0.19% 0.22%
Indirect auto 0.33% 0.52 % 0.33 % 0.23 % 0.23 % 0.15 % 0.42% 0.19%
Credit cards 3.80% 3.88 % 3.93 % 1.68 % 0.26 % 0.34 % 3.84% 0.30%
Other consumer 1.65% 2.74 % 2.80 % 2.59 % 1.91 % 2.44 % 2.20% 2.17%
Total consumer loans 0.45% 0.57 % 0.56 % 0.33 % 0.27 % 0.28 % 0.51% 0.27%
Total loans 0.30% 0.36 % 0.43 % 0.33 % 0.33 % 0.27 % 0.33% 0.30%
Nonperforming loans:
Originated(1):
Commercial real estate $ 55,945 $ 41,296 $ 53,395 $ 51,302 $ 59,624 $ 49,953 $ 55,945 $ 59,624
Commercial business 32,861 35,335 42,013 35,854 44,658 47,523 32,861 44,658
Residential real estate 33,870 32,736 31,478 31,312 29,667 28,455 33,870 29,667
Home equity 19,429 19,516 18,426 15,709 14,601 14,270 19,429 14,601
Indirect auto 9,821 7,943 6,274 5,129 3,276 2,426 9,821 3,276
Other consumer 5,037 5,216 5,838 5,538 2,818 3,018 5,037 2,818
Total originated nonperforming loans 156,963 142,042 157,424 144,844 154,644 145,645 156,963 154,644
Total acquired nonperforming loans(2) 32,488 30,617 30,088 30,388 27,556 27,678 32,488 27,556
Total nonperforming loans 189,451 172,659 187,512 175,232 182,200 173,323 189,451 182,200
Real estate owned 24,270 25,466 24,788 24,262 8,144 10,816 24,270 8,144
Total nonperforming assets $ 213,721 $ 198,125 $ 212,300 $ 199,494 $ 190,344 $ 184,139 $ 213,721 $ 190,344
Accruing troubled debt restructurings (TDR) $ 80,214 $ 56,038 $ 52,263 $ 69,877 $ 69,892 $ 64,311 $ 80,214 $ 69,892
Loans 90 days past due still accruing(3) 112,718 119,134 113,212 136,248 167,560 172,062 112,718 167,560
Total classified loans(4) 661,699 667,327 663,700 648,235 701,104 720,197 661,699 701,104
Total criticized loans(5) $ 1,072,133 $ 1,075,523 $ 985,019 $ 977,798 $ 1,012,305 $ 1,044,874 $ 1,072,133 $ 1,012,305
Total nonperforming loans to loans 0.85% 0.79 % 0.87 % 0.83 % 0.89 % 0.87 % 0.85% 0.89%
Total nonperforming originated loans to originated loans(1) 0.86% 0.82 % 0.93 % 0.89 % 1.02 % 1.03 % 0.86% 1.02%
Total nonperforming assets to loans and real estate owned 0.96% 0.91 % 0.99 % 0.94 % 0.93 % 0.92 % 0.96% 0.93%
Total nonperforming assets to assets 0.55% 0.52 % 0.56 % 0.53 % 0.51 % 0.50 % 0.55% 0.51%
Allowance to nonperforming loans 118.0% 124.5 % 111.6 % 113.0 % 100.8 % 99.2 % 118.0% 100.8%
Originated loans(1) $ 18,196,302 $ 17,388,542 $ 16,922,161 $ 16,211,505 $ 15,102,336 $ 14,100,190 $ 18,196,302 $ 15,102,336
Acquired loans(6) 4,254,750 4,475,593 4,642,775 5,006,753 5,581,651 6,083,912 4,254,750 5,581,651
Credit related discount on acquired loans(7) (105,233) (113,295) (125,283) (129,187) (140,805) (148,883) (105,233) (140,805)
Total Loans $ 22,345,819 $ 21,750,840 $ 21,439,653 $ 21,089,071 $ 20,543,182 $ 20,035,219 $ 22,345,819 $ 20,543,182
(1) Originated loans represent total loans excluding acquired loans.
(2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing.
(3) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.
(4) Includes consumer loans, which are considered classified when they are 90 days or more past due. Classified loans include substandard, doubtful, and loss, which are consistent with regulatory definitions, and as described in Item 1, "Business", under the heading "Asset Quality Review" in our Annual Report on 10-K for the year ended December 31, 2013.
(5) Criticized loans includes consumer loans when they are 90 days or more past due. Criticized loans include special mention, substandard, doubtful, and loss.
(6) Represents the carrying value of acquired loans plus the principal not expected to be collected.
(7) Represent principal on acquired loans not expected to be collected.
First Niagara Financial Group, Inc.
Key Statistics
(Risk weighted assets in millions; share counts in thousands)
2014 2013
June 30, March 31, December 31, September 30, June 30, March 31,
First Niagara Financial Group, Inc. capital ratios:
Tier 1 risk based capital 9.57% 9.62% 9.56% 9.45% 9.41% 9.45%
Tier 1 common capital(1) 7.92% 7.92% 7.86% 7.72% 7.65% 7.64%
Total risk based capital 11.53% 11.60% 11.53% 11.40% 11.35% 11.38%
Leverage 7.33% 7.28% 7.26% 7.14% 7.01% 6.92%
Equity to assets 13.15% 13.23% 13.27% 13.22% 13.20% 13.43%
Tangible common equity to tangible assets(1) 6.13% 6.07% 6.02% 5.89% 5.80% 5.95%
Total risk weighted assets(2) $ 27,314 $ 26,639 $ 26,412 $ 26,078 $ 25,564 $ 24,949
First Niagara Bank, N.A capital ratios:
Tier 1 risk based capital 10.18% 10.22% 10.15% 10.08% 10.08% 10.15%
Total risk based capital 11.05% 11.08% 10.99% 10.89% 10.85% 10.89%
Leverage 7.79% 7.74% 7.70% 7.61% 7.50% 7.43%
Total risk weighted assets(2) $ 27,273 $ 26,597 $ 26,365 $ 26,037 $ 25,520 $ 24,933
Number of branches 411 411 421 422 422 427
Full time equivalent employees 5,874 5,750 5,807 5,788 5,779 5,875
Share information and per share metrics:
Common shares outstanding 355,483 354,127 353,941 353,973 353,932 353,008
Preferred shares outstanding 14,000 14,000 14,000 14,000 14,000 14,000
Treasury shares 10,519 11,875 12,061 12,029 12,070 12,994
Market price (NASDAQ: FNFG): $ 8.74 $ 9.45 $ 10.62 $ 10.37 $ 10.07 $ 8.86
Book value per common share(3) 13.53 13.40 13.31 13.15 13.06 13.19
Tangible book value per common share(1)(3) 6.31 6.15 6.04 5.86 5.74 5.84
Price/Book 64.60% 70.52% 79.79% 78.86% 77.11% 67.17%
Price/Tangible book(1) 138.51% 153.66% 175.83% 176.96% 175.44% 151.71%
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 42.11% 53.33% 40.00% 40.00% 44.44% 47.06%
Dividend yield (annualized) 3.67% 3.43% 2.99% 3.06% 3.19% 3.66%
(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 June 30, 2014. 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)
2014 2013 Six months ended
Second First Fourth Third Second First June 30, June 30,
Quarter Quarter Quarter Quarter Quarter Quarter 2014 2013
Financial ratios computed on an operating basis(1):
Earnings per basic share $ 0.19 $ 0.17 $ 0.20 $ 0.20 $ 0.18 $ 0.17 $ 0.36 $ 0.35
Earnings per diluted share 0.19 0.17 0.20 0.20 0.18 0.17 0.36 0.35
Weighted average shares outstanding - basic(2) 350,229 349,906 349,718 349,653 349,542 349,278 350,068 349,411
Weighted average shares outstanding - diluted(2) 351,541 351,408 350,699 350,896 350,384 349,999 351,448 350,150
Noninterest income as a percentage of net revenue(3) 22.93% 22.08% 24.17% 24.78% 26.18% 25.13% 22.51% 25.66%
Pre-tax, pre-provision income 108,554 109,091 142,442 137,769 129,819 117,776 217,645 247,595
Pre-tax, pre-provision income per diluted share 0.31 0.31 0.41 0.39 0.37 0.34 0.62 0.71
Pre-tax, pre-provision return on average assets 1.14% 1.17% 1.51% 1.47% 1.41% 1.30% 1.16% 1.35%
Net interest margin(4) 3.26% 3.33% 3.41% 3.40% 3.36% 3.39% 3.30% 3.38%
Interest yield on average loans(4) 3.89% 3.98% 4.04% 4.14% 4.19% 4.25% 3.94% 4.21%
Rate paid on interest-bearing liabilities 0.44% 0.44% 0.43% 0.43% 0.43% 0.44% 0.44% 0.44%
Efficiency ratio 69.22% 68.60% 61.46% 62.66% 64.43% 66.86% 68.91% 65.63%
Effective tax rate 14.0% 19.6% 29.7% 28.2% 32.0% 31.0% 16.7% 31.5%
Return on average assets 0.77% 0.73% 0.82% 0.85% 0.77% 0.74% 0.75% 0.76%
Return on average equity 5.84% 5.46% 6.18% 6.37% 5.72% 5.50% 5.65% 5.61%
Return on average tangible equity(5) 11.68% 11.02% 12.64% 13.20% 11.75% 11.62% 11.35% 11.69%
Return on average common equity 5.62% 5.20% 5.99% 6.18% 5.48% 5.24% 5.41% 5.36%
Return on average tangible common equity(6) 12.10% 11.33% 13.25% 13.92% 12.21% 12.05% 11.72% 12.13%
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):
Total noninterest expense on operating basis (Non-GAAP) $ 244,115 $ 238,380 $ 227,148 $ 231,193 $ 235,170 $ 237,666 $ 482,495 $ 472,836
Restructuring charges -- 10,356 -- -- -- -- 10,356 --
Total reported noninterest expense (GAAP) $ 244,115 $ 248,736 $ 227,148 $ 231,193 $ 235,170 $ 237,666 $ 492,851 $ 472,836
Reconciliation of net operating income to net income(1):
Net operating income (Non-GAAP) $ 73,785 $ 67,789 $ 77,690 $ 79,143 $ 71,134 $ 67,285 $ 141,574 $ 138,419
Nonoperating income and expenses, net of tax:
Restructuring charges -- 8,345 -- -- -- -- 8,345 --
Total nonoperating expenses, net of tax -- 8,345 -- -- -- -- 8,345 --
Net income (GAAP) $ 73,785 $ 59,444 $ 77,690 $ 79,143 $ 71,134 $ 67,285 $ 133,229 $ 138,419
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) $ 66,238 $ 60,242 $ 70,143 $ 71,596 $ 63,587 $ 59,738 $ 126,480 $ 123,325
Nonoperating income and expenses, net of tax:
Restructuring charges -- 8,345 -- -- -- -- 8,345 --
Total nonoperating income and expenses, net of tax -- 8,345 -- -- -- -- 8,345 --
Net income available to common stockholders (GAAP) $ 66,238 $ 51,897 $ 70,143 $ 71,596 $ 63,587 $ 59,738 $ 118,135 $ 123,325
Computation of pre-tax, pre-provision income:
Net interest income $ 271,812 $ 270,747 $ 280,278 $ 277,540 $ 269,443 $ 266,130 $ 542,559 $ 535,573
Noninterest income 80,857 76,724 89,312 91,422 95,546 89,312 157,581 184,858
Noninterest expense (244,115) (248,736) (227,148) (231,193) (235,170) (237,666) (492,851) (472,836)
Pre-tax, pre-provision income (GAAP) 108,554 98,735 142,442 137,769 129,819 117,776 207,289 247,595
Add back: non-operating noninterest expenses (1) -- 10,356 -- -- -- -- 10,356 --
Pre-tax, pre-provision income (Non-GAAP)(1) $ 108,554 $ 109,091 $ 142,442 $ 137,769 $ 129,819 $ 117,776 $ 217,645 $ 247,595
(1) Noninterest expense on an operating basis, net operating income, and pre-tax, pre-provision income on an operating basis are non-GAAP measures that we believe provide meaningful comparisons of our underlying operational performance and facilitates investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, we believe exclusion of these nonoperating items enables management to perform a more effective evaluation and comparison of our results and to assess performance in relation to our ongoing operations.
(2) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(3) Net revenue is comprised of net interest income and noninterest income.
(4) Yields and rates calculated on a tax equivalent basis.
(5) Tangible equity is a non-GAAP measure and excludes goodwill and other intangibles.
(6) Tangible common equity is a non-GAAP measure and excludes goodwill and other intangibles as well as preferred stock.
First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation (Cont.)
(in thousands, except per share amounts)
2014 2013 Six months ended
Second First Fourth Third Second First June 30, June 30,
Quarter Quarter Quarter Quarter Quarter Quarter 2014 2013
Computation of Ending Tangible Assets:
Total assets $ 38,624,752 $ 37,990,444 $ 37,628,362 $ 37,340,541 $ 37,149,727 $ 36,844,561 $ 38,624,752 $ 37,149,727
Less: Goodwill and other intangibles (2,528,481) (2,535,271) (2,542,783) (2,549,931) (2,557,560) (2,567,681) (2,528,481) (2,557,560)
Tangible assets $ 36,096,271 $ 35,455,173 $ 35,085,579 $ 34,790,610 $ 34,592,167 $ 34,276,880 $ 36,096,271 $ 34,592,167
Computation of Average Tangible Assets:
Total assets $ 38,211,808 $ 37,747,869 $ 37,378,780 $ 37,093,236 $ 36,982,893 $ 36,807,221 $ 37,981,120 $ 36,895,542
Less: Goodwill and other intangibles (2,531,612) (2,538,891) (2,546,031) (2,553,647) (2,561,507) (2,609,409) (2,535,232) (2,585,326)
Tangible assets $ 35,680,196 $ 35,208,978 $ 34,832,749 $ 34,539,589 $ 34,421,386 $ 34,197,812 $ 35,445,888 $ 34,310,216
Computation of Ending Tangible Equity:
Total stockholders' equity $ 5,078,818 $ 5,026,219 $ 4,993,353 $ 4,938,197 $ 4,902,744 $ 4,946,673 $ 5,078,818 $ 4,902,744
Less: Goodwill and other intangibles (2,528,481) (2,535,271) (2,542,783) (2,549,931) (2,557,560) (2,567,681) (2,528,481) (2,557,560)
Tangible equity $ 2,550,337 $ 2,490,948 $ 2,450,570 $ 2,388,266 $ 2,345,184 $ 2,378,992 $ 2,550,337 $ 2,345,184
Computation of Ending Tangible Common Equity:
Total stockholders' equity $ 5,078,818 $ 5,026,219 $ 4,993,353 $ 4,938,197 $ 4,902,744 $ 4,946,673 $ 5,078,818 $ 4,902,744
Less: Goodwill and other intangibles (2,528,481) (2,535,271) (2,542,783) (2,549,931) (2,557,560) (2,567,681) (2,528,481) (2,557,560)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $ 2,212,335 $ 2,152,946 $ 2,112,568 $ 2,050,264 $ 2,007,182 $ 2,040,990 $ 2,212,335 $ 2,007,182
Computation of Average Tangible Equity:
Total stockholders' equity $ 5,065,008 $ 5,034,093 $ 4,984,003 $ 4,932,949 $ 4,989,006 $ 4,958,402 $ 5,049,636 $ 4,973,789
Less: Goodwill and other intangibles (2,531,612) (2,538,891) (2,546,031) (2,553,647) (2,561,507) (2,609,409) (2,535,232) (2,585,326)
Tangible equity $ 2,533,396 $ 2,495,202 $ 2,437,972 $ 2,379,302 $ 2,427,499 $ 2,348,993 $ 2,514,404 $ 2,388,463
Computation of Average Tangible Common Equity:
Total stockholders' equity $ 5,065,008 $ 5,034,093 $ 4,984,003 $ 4,932,949 $ 4,989,006 $ 4,958,402 $ 5,049,636 $ 4,973,789
Less: Goodwill and other intangibles (2,531,612) (2,538,891) (2,546,031) (2,553,647) (2,561,507) (2,609,409) (2,535,232) (2,585,326)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $ 2,195,394 $ 2,157,200 $ 2,099,970 $ 2,041,300 $ 2,089,497 $ 2,010,991 $ 2,176,402 $ 2,050,461
Computation of Tier 1 Common Capital:
Tier 1 capital $ 2,613,584 $ 2,562,261 $ 2,525,656 $ 2,464,801 $ 2,406,473 $ 2,356,763 $ 2,613,584 $ 2,406,473
Less: Qualifying restricted core capital elements (113,330) (113,107) (112,886) (112,667) (112,449) (112,236) (113,330) (112,449)
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) $ 2,162,252 $ 2,111,152 $ 2,074,768 $ 2,014,132 $ 1,956,022 $ 1,906,525 $ 2,162,252 $ 1,956,022

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.