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First Niagara Reports Fourth Quarter and Full Year 2015 Results

  • Fourth quarter operating earnings of $0.15 per diluted share
    • Full Year 2015 operating earnings of $0.61 per diluted share
  • Fourth quarter GAAP earnings of $0.12 per diluted share, including merger-related and restructuring expenses
    • Full Year 2015 reported GAAP earnings of $0.54 per diluted share
  • Average loans increased 6% annualized QOQ
    • Average commercial loans (CRE and commercial business) up 6% annualized QOQ
    • Indirect Auto and Home Equity loans drove 6% annualized increase in average consumer loans QOQ
  • Average transactional deposit balances increased 14% annualized QOQ
    • Average business noninterest-bearing deposit balances increased 12% annualized QOQ
    • Average noninterest-bearing deposit balances increased 15% annualized QOQ
  • Strong credit quality maintained
    • Originated net charge-offs in 2015 averaged 0.32% of total originated loans, down 2 basis points YOY

BUFFALO, N.Y., Feb. 05, 2016 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (NASDAQ:FNFG) today reported GAAP net income available to common shareholders of $43.3 million, or $0.12 per diluted share for the fourth quarter of 2015, compared to $52.9 million, or $0.15 per diluted share, for the quarter ended September 30, 2015. Excluding merger related and other non-operating items incurred during the fourth quarter of 2015, operating net income available to common shareholders was $55.3 million, or $0.15 per diluted share.

“We closed 2015 with strong core business fundamentals. Our fourth-quarter performance was highlighted by 6% annualized average commercial loan growth, 13% annualized growth in average checking account deposit balances, and stable credit metrics,” said Gary M. Crosby, President and Chief Executive Officer. “As we begin 2016, we remain focused on keeping our customers at the center of all we do and maintaining a strong competitive position. At the same time, the First Niagara team is also engaged with our counterparts at KeyCorp (Key) in integration planning to ensure that our customers move seamlessly over to Key following the legal closing of our merger. This compelling combination of financial institutions truly makes First Niagara and Key better together. Together we will better serve our customers, more efficiently and with a broader set of product features and functionalities. Together we will better serve and support the communities in which we operate and provide many team members with expanded career opportunities as part of a larger, more-diversified organization.”

“Our fourth quarter financial results reflect a 3% sequential increase in operating revenues driven by a 7% increase in noninterest income, stable net interest margin, and strong balance sheet growth,” said Gregory W. Norwood, Chief Financial Officer. “Over the past year, our team has been working diligently to improve the effectiveness of our internal controls and processes to address last year’s material weakness pertaining to the overstatement of the allowance for loan losses. Based on our assessment, this material weakness has been fully remediated.”

Full Year 2015 Results

For the full year ended December 31, 2015, the company reported GAAP net income available to common shareholders of $193 million, or $0.54 per diluted share, compared to a net loss of $745 million, or $(2.13) per share in 2014. GAAP net income for 2015 was impacted by $21 million in pre-tax restructuring charges as well as $14 million in merger-related costs incurred in connection with the company’s merger agreement with KeyCorp that was announced on October 30, 2015. In 2014, GAAP net income was impacted by a pre-tax $1.1 billion non-cash goodwill impairment charge, $22 million in non-operating restructuring expenses and $22 million in reserves to address the previously disclosed process issue related to certain customer deposit accounts. Excluding these charges, non-GAAP operating net income available to common shareholders in 2015 was $0.61 per diluted share, compared to $0.70 per diluted share in 2014. The year-over-year performance reflects lower net interest income driven by the continued impact of reinvestments and re-pricing of assets in the current low interest rate and competitive pricing environment as well as $0.10 per diluted share of reduced benefits from the taxable reorganization of a subsidiary and tax credit investments, partially offset by strong balance sheet growth and lower provision for loan losses.

Average loans increased 5% in 2015, driven by a 5% increase in commercial loans and 6% increase in consumer loan categories. Average transactional deposits, which include interest-bearing and noninterest-bearing checking account balances, increased 7% on a year-over-year basis, driven by an 8% increase in non-interest bearing deposit balances and a 6% increase in interest-checking deposit balances.

Fourth Quarter Results

In the fourth quarter of 2015, First Niagara reported GAAP net income available to common shareholders of $43.3 million, or $0.12 per diluted share, compared to $52.9 million, or $0.15 per diluted share in the third quarter of 2015. Reported results in the fourth quarter of 2015 reflect pre-tax restructuring charges of $3 million and $14 million in merger related costs. Excluding these items, operating net income available to common shareholders was $55.3 million, or $0.15 per diluted share, and consistent with the third quarter of 2015.

Compared to the third quarter of 2015, the change in operating net income available to common shareholders was primarily driven by:

  • A 1% increase in net interest income driven by a 5% annualized increase in average earning assets and greater benefits from prepayment income and purchase accounting accretion.
  • A 7% increase in noninterest income driven by higher capital markets income, lower tax credit amortization, gain from the sale of a low-income housing property, and higher equity and investment gains.
  • A $2 million or 1% increase in operating noninterest expenses primarily driven by higher marketing spend, valuation write-down of a real estate property, and other corporate expenses, partially offset by lower professional services expense.

In the fourth quarter of 2014, First Niagara reported GAAP net income available to common shareholders of $61.5 million, or $0.17 per diluted share. Results in the fourth quarter of 2014 included $9 million of pre-tax restructuring charges and a $23 million benefit from the reversal of reserves related to a previously disclosed process issue related to certain customer deposit accounts. Excluding these nonrecurring items, fourth quarter 2014 net income available to common shareholders was $53.2 million, or $0.15 per diluted share.

Compared to the fourth quarter of 2014, the change in operating net income available to common shareholders in the fourth quarter of 2015 was primarily driven by:

  • A 1% decrease in net interest income driven by continued pressure on loan yields due to low interest rates and competitive pressures throughout 2015.
  • A $13 million decrease in provision for loan losses from elevated levels in the prior year that included a $5 million reserve to cover exposure to borrowers servicing the energy sector and a $5 million impairment on a commercial loan that was sold in March 2015.
  • A 16% increase in noninterest income, driven primarily by lower tax credit amortization.
  • Modestly lower noninterest expense as increases in salaries and benefits expense and technology & communications expenses were offset by declines in most other expense categories.
  • Higher tax rate reflecting lower benefits from the taxable reorganization of a subsidiary and tax credit investments.

Operating Results (Non-GAAP)Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Net interest income$ 266.5 $ 263.5 $ 263.1 $ 262.9 $ 269.8
Provision for credit losses 22.9 19.8 20.8 12.8 35.7
Noninterest income 89.4 83.4 86.6 82.2 77.2
Noninterest expense 247.4 245.4 247.9 243.5 248.2
Operating net income 62.8 60.5 61.0 62.2 60.7
Preferred stock dividend 7.5 7.5 7.5 7.5 7.5
Operating net income available to common$ 55.3 $ 52.9 $ 53.5 $ 54.7 $ 53.2
Weighted average diluted shares outstanding 353.8 353.2 352.8 352.6 352.2
Operating earnings per diluted share$ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.15
Reported Results (GAAP)Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Operating net income before non-op. items$ 62.8 $ 60.5 $ 61.0 $ 62.2 $ 60.7
Non-operating items (a) 12.0 - - 10.9 (8.4)
Net Income 50.8 60.5 61.0 51.4 69.1
Preferred stock dividend 7.5 7.5 7.5 7.5 7.5
Net income available to common$ 43.3 $ 52.9 $ 53.5 $ 43.8 $ 61.5
Weighted average diluted shares outstanding 353.8 353.2 352.8 352.6 352.2
Earnings per diluted share$ 0.12 $ 0.15 $ 0.15 $ 0.12 $ 0.17

All amounts in millions except earnings per diluted share.

(a) Q4 2015: Non-operating charges primarily comprised of merger related costs including investment banker and other professional services fees, employee retention expenses, classification of compensation of certain personnel dedicated to merger integration efforts as well as third-party professional fees incurred in connection with the overstatement of allowance resulting from mid-level employee misconduct, net of taxes.
Q1 2015: Non-operating charges primarily related to staffing realignment, branch consolidations and third-party professional fees incurred in connection with the overstatement of allowance resulting from mid-level employee misconduct, net of taxes.
Q4 2014: Benefit from reversal of process issue reserve related to certain customer deposit accounts less severance and other restructuring charges related to Organizational Simplification initiative, net of taxes.

Loans

Average loans increased 6% annualized from the prior quarter to $23.8 billion, driven primarily by increases in the company’s commercial real estate (CRE), indirect auto and home equity loan portfolios. On an end-of-period basis, total loans increased 6% annualized from the prior quarter driven by a 14% annualized increase in CRE loans.

Average commercial loans, which include commercial business (C&I) and commercial real estate (CRE) loans, increased 6% annualized from prior quarter to $14.4 billion, primarily driven by growth in the company’s Tri-State and New England footprint.

  • Average CRE loans increased 10% annualized from the prior quarter to $8.5 billion driven by commercial mortgage and construction lending offset by borrower prepayments.
  • Average C&I loans averaged $6.0 billion and were flat to the prior quarter reflecting higher pay-down activity.

Average consumer loans increased 6% annualized from prior quarter to $9.3 billion.

  • Average indirect auto loan balances increased 13% annualized or by $76 million to $2.4 billion, as strong new origination activity was partially offset by increased pay-downs. Indirect auto originations during the quarter totaled $295 million. New originations in the fourth quarter yielded 3.30%, net of dealer reserve, compared to 3.42% on originations in the prior quarter.
  • Average residential real estate loans increased 1% annualized.
  • Home equity balances increased for the eleventh consecutive quarter to $3.1 billion, or 7% annualized from the prior quarter reflecting higher customer draws as well as the benefits of promotional and cross-sell campaigns.

Average LoansQ4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Commercial real estate$ 8,476 $ 8,277 $ 8,257 $ 8,263 $ 8,087
Commercial business 5,971 5,972 5,830 5,797 5,791
Total commercial 14,447 14,249 14,087 14,060 13,878
Residential real estate 3,346 3,338 3,326 3,338 3,364
Home equity 3,052 3,001 2,963 2,939 2,912
Indirect auto 2,369 2,293 2,238 2,187 2,132
Credit cards 305 306 304 311 314
Other consumer 250 255 260 275 283
Total consumer 9,322 9,193 9,091 9,050 9,005
Total loans$ 23,769 $ 23,442 $ 23,178 $ 23,110 $ 22,883


All amounts in millions.

Credit Quality

At December 31, 2015, the allowance for loan losses was $242 million, compared to $239 million at September 30, 2015. In the fourth quarter, provision for loan losses totaled $22.4 million, compared to $19.3 million in the prior quarter. Nonperforming assets comprised 0.58% of total assets, unchanged from September 30, 2015.

Information for both the originated and acquired portfolios follows.

Q4 2015 Q3 2015
$ in millionsOriginatedAcquiredTotal OriginatedAcquiredTotal
Provision for loan losses*$ 22.4 $ 0.0 $ 22.4 $ 20.7 $ (1.4)$ 19.3
Net charge-offs 19.1 0.0 19.1 15.5 0.6 16.2
NCOs/ Avg Loans 0.37% 0.00% 0.32% 0.31% 0.08% 0.28%
Total loans**$ 21,101 $ 2,937 $ 24,038 $ 20,592 $ 3,075 $ 23,666
Allowance$ 236.7 $ 5.3 $ 242.0 $ 233.4 $ 5.3 $ 238.7
Allowance/Loans 1.12% 0.18% 1.01% 1.13% 0.17% 1.01%
Nonperforming Loans$ 188.2 $ 25.3 $ 213.6 $ 185.6 $ 25.4 $ 210.9
NPLs/ Loans 0.89% 0.86% 0.89% 0.90% 0.82% 0.89%
Criticized$ 761.6 $ 183.2 $ 944.8 $ 684.9 $ 173.4 $ 858.2
Criticized as % of Loans 3.61% 6.24% 3.93% 3.33% 5.64% 3.62%
Classified$ 450.7 $ 152.2 $ 602.9 $ 449.5 $ 142.2 $ 591.8
Classified as % of Loans 2.14% 5.18% 2.51% 2.18% 4.63% 2.50%

(*) Excludes provision for unfunded commitments $0.5 million each in 4Q15 and 3Q15
(**) Acquired loans net of associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $22 million, compared to $21 million in the third quarter of 2015. Originated net charge-offs in the fourth quarter equaled $19 million or 37 basis points of average originated loans, up from 31 basis points in the third quarter of 2015. The increase in net charge-offs were primarily driven by confirmation of losses on two commercial credits, including one serving the energy sector, that had been previously provided for as of September 30, 2015. In 2015, originated net charge-offs equaled 32 basis points of average loans, down 2 basis points from 34 basis points in 2014.

At December 31, 2015, nonperforming originated loans totaled $188 million, or 0.89% of originated loans, compared to 0.90% at September 30, 2015. At December 31, 2015, the allowance for loan losses on originated loans totaled $237 million or 1.12% of such loans, compared to $233 million or 1.13% of such loans at September 30, 2015. The modest decline in allowance coverage ratio reflects the impact of charge-offs during the fourth quarter that were previously provided for as of September 30, 2015.

Acquired loans

In the fourth quarter of 2015, provision for losses on acquired loans totaled zero, compared to a $1 million recovery in the third quarter of 2015. Net charge-offs on the acquired portfolio were zero, compared to $0.6 million of net charge-offs in the prior quarter. At December 31, 2015, the allowance for loan losses on acquired loans totaled $5 million, unchanged from September 30, 2015. Acquired nonperforming loans totaled $25 million, unchanged from the prior quarter. At December 31, 2015, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $62 million.

Deposits

Average deposits increased 3% annualized from the prior quarter to $28.8 billion.

  • Non-interest checking deposit balances averaged $5.9 billion, up 15% annualized from the prior quarter and 7% from the year-ago period driven by higher business and municipal deposit balances.
  • Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking account balances, increased 14% annualized and currently represents 39% of the company’s deposit balances.
  • The 13% sequential increase in interest-checking deposit balances reflects seasonally strong municipal deposit balances.
  • Money market deposit balances increased 12% annualized, reflecting the benefits of promotional marketing and pricing campaigns and seasonally strong municipal deposit balances.
  • Average savings balances decreased 7% annualized from the prior quarter driven by lower customer balances and seasonality.
  • Time deposits decreased 45% annualized to $3.5 billion, driven by a $414 million decrease in brokered certificate of deposit balances.

Average DepositsQ4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Noninterest-bearing deposits$ 5,868 $ 5,661 $ 5,427 $ 5,430 $ 5,485
Savings accounts 3,364 3,427 3,494 3,432 3,447
Interest-bearing checking 5,333 5,165 5,131 5,001 5,049
Money market deposits 10,719 10,403 10,251 10,132 10,037
Certificates of deposit 3,515 3,962 3,917 3,778 3,888
Total deposits$ 28,799 $ 28,618 $ 28,220 $ 27,773 $ 27,906

All amounts in millions.

Net Interest Income

Fourth quarter 2015 GAAP net interest income of $267 million increased $3 million, or 1%, from the prior quarter, driven in part by earning asset growth and greater benefits from prepayment income and purchase accounting accretion. Reported net interest margin of 2.98% was unchanged sequentially.

  • Yields on loans increased 1 basis point to 3.65% primarily reflecting higher prepayment income and purchase accounting accretion and offset by continued pressure on loan yields due to low interest rates and competitive pressures.
  • Yields on investment securities decreased 2 basis points to 2.90% reflecting lower collateralized loan obligations (CLO) pay-off discount accretion income.
  • The average cost of interest-bearing deposits increased 1 basis point from the prior quarter to 0.30%.

Net Interest Income (Tax Equivalent)Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Quarter as Reported$ 271.7 $ 268.5 $ 268.0 $ 267.8 $ 274.8
Less: CLO pay-off discount recognition - (1.2) (2.3) - (0.7)
Less: Accelerated CMBS prepayment - - - - (0.5)
Add: CMO Retroactive premium amortization - - 1.1 - 1.0
Add: CRE prepayment penalties (0.5) - - - (0.2)
Less: Early loan payoffs - - (1.7) - -
Less: Other miscellaneous items (0.5) - - - -
Sub-Total (1.0) (1.2) (2.9) - (1.4)
Normalized Net Interest Income$ 270.7 $ 267.3 $ 265.1 $ 267.8 $ 273.4

All amounts in millions.

Net Interest Margin (Tax Equivalent)Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Quarter as Reported 2.98% 2.98% 3.02% 3.07% 3.11%
Less: CLO pay-off discount recognition - (0.01)% (0.03)% - (0.01)%
Less: Accelerated CMBS prepayment - - - - (0.01)%
Add: CMO Retroactive premium amortization - - 0.01% - 0.01%
Add: CRE prepayment penalties (0.01)% - - - (0.01)%
Less: Early loan payoffs - - (0.02%) - -
Less: Other miscellaneous items (0.01)% - - - -
Sub-Total (0.02)% (0.01)% (0.03)% - (0.02%)
Normalized Net Interest Margin 2.96% 2.97% 2.99% 3.07% 3.09%


Noninterest Income

Fourth quarter 2015 noninterest income of $89 million increased 7% or $6 million compared to the prior quarter.

  • Deposit service charges and wealth management revenues were largely unchanged from prior quarter.
  • Insurance commissions decreased $3 million driven primarily by seasonally lower renewal volumes during the fourth quarter.
  • Merchant and card fees decreased 1% driven by lower debit card interchange revenues.
  • Capital markets income, which includes income from derivatives and syndications, increased $4 million, primarily driven by strong derivative activity in the fourth quarter as well as the impact of a favorable credit valuation adjustment on interest rate swap assets.
  • Mortgage banking revenues were modestly lower from the prior quarter reflecting lower locked volumes and gain-on-sale margins offset by a $1 million repurchase reserve reversal.
  • Other noninterest income increased $5 million from the prior quarter due to lower tax credit amortization, gain from the sale of a low-income housing property, and higher equity and investment gains.

Noninterest IncomeQ4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Deposit service charges$ 22.9 $ 22.9 $ 22.2 $ 20.4 $ 22.6
Insurance commissions 14.9 18.3 17.1 15.7 14.8
Merchant and card fees 13.3 13.4 13.3 11.9 13.0
Wealth management services 14.6 14.6 15.7 14.7 14.4
Mortgage banking 4.9 5.1 5.8 4.9 4.6
Capital markets income 6.6 2.6 5.3 4.2 8.3
Lending and leasing 4.2 4.5 4.0 4.4 4.6
Bank owned life insurance 3.3 2.8 3.2 3.6 3.2
Other income 4.7 (0.7) 0.1 2.6 (8.3)
Total noninterest income$ 89.4 $ 83.4 $ 86.6 $ 82.2 $ 77.2

All amounts in millions.

Noninterest Expense

Operating noninterest expenses totaled $247 million in the fourth quarter of 2015, or 1% higher than third quarter 2015 levels. The quarter-over-quarter increase was primarily driven by higher marketing spend and higher levels of other noninterest expense.

  • Salaries and benefits expense of $113 million decreased modestly compared to the prior quarter as higher medical costs were offset by lower incentive compensation expenses.
  • Occupancy and equipment expense increased 2%, due primarily to higher rent and building maintenance expenses.
  • Marketing and advertising spend increased $1 million from third quarter levels due to timing of promotional campaigns.
  • Professional services fees decreased $3 million from third quarter levels due primarily to lower spend on vendor and other consulting fees.
  • Other expenses increased $3 million sequentially driven in part by higher other real estate (ORE) valuation write-downs, litigation expenses, and new credit and debit card issuance costs.

Operating Noninterest Expense (Non-GAAP)*Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Salaries and employee benefits$ 113.1 $ 113.8 $ 113.6 $ 112.0 $ 111.0
Occupancy and equipment 26.0 25.5 26.0 27.3 28.4
Technology and communications 38.2 38.3 36.5 35.1 33.9
Marketing and advertising 9.7 8.4 10.3 9.9 11.6
Professional services 15.4 18.1 16.3 13.1 16.6
Amortization of intangibles 4.0 4.0 5.1 6.2 6.4
Federal deposit insurance premiums 10.4 10.0 11.8 11.2 11.9
Other expense 30.7 27.3 28.4 28.9 28.4
Total operating noninterest expense$ 247.4 $ 245.4 $ 247.9 $ 243.5 $ 248.2

*All amounts in millions. See appendix for reconciliation of GAAP to Non-GAAP amounts

In the fourth quarter of 2015, the operating efficiency ratio improved to 69.5%, compared to 70.7% in the prior quarter.

Capital

Beginning in the first quarter of 2015, all regulatory capital ratios and amounts were calculated under the Basel III standardized transitional approach. At December 31, 2015, the company’s consolidated Total Risk Based capital and Common Equity Tier 1 capital ratios were 12.0% and 8.6%, respectively, unchanged from September 30, 2015. The company remains well above current regulatory guidelines for well-capitalized institutions.

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 390 branches, $40 billion in assets, $29 billion in deposits, and approximately 5,400 employees providing financial services to individuals, families and businesses across New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com.

Safe Harbor Statement

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) impact of the pending merger agreement on customers and employees; and (7) ability to consummate the merger transaction with KeyCorp on a timely basis or at all.

First Niagara Financial Group, Inc.
Income Statement Highlights - Reported Basis
(in thousands, except per share amounts)
2015 2014 For year ending
Fourth Third Second First Fourth Third December 31, December 31,
Quarter Quarter Quarter Quarter Quarter Quarter 2015 2014
Interest income:
Loans and leases $ 214,945 $ 211,407 $ 211,899 $ 210,371 $ 214,609 $ 212,452 $ 848,622 $ 846,923
Investment securities and other 88,825 87,914 86,356 86,280 86,919 91,668 349,375 360,574
Total interest income 303,770 299,321 298,255 296,651 301,528 304,120 1,197,997 1,207,497
Interest expense:
Deposits 17,147 17,040 16,568 15,344 14,295 13,590 66,099 53,304
Borrowings 20,074 18,790 18,577 18,363 17,450 17,251 75,804 68,572
Total interest expense 37,221 35,830 35,145 33,707 31,745 30,841 141,903 121,876
Net interest income 266,549 263,491 263,110 262,944 269,783 273,279 1,056,094 1,085,621
Provision for credit losses 22,900 19,768 20,756 12,765 35,706 16,700 76,189 95,906
Net interest income after provision 243,649 243,723 242,354 250,179 234,077 256,579 979,905 989,715
Noninterest income:
Deposit service charges 22,919 22,944 22,208 20,389 22,611 20,373 88,460 90,073
Insurance commissions 14,920 18,252 17,060 15,714 14,764 18,352 65,946 66,150
Merchant and card fees 13,318 13,423 13,317 11,907 13,043 12,991 51,965 50,372
Wealth management services 14,567 14,572 15,718 14,650 14,404 15,367 59,507 61,307
Mortgage banking 4,894 5,070 5,783 4,887 4,600 4,358 20,634 17,595
Capital markets income 6,580 2,608 5,284 4,152 8,312 3,509 18,624 18,361
Lending and leasing 4,248 4,487 3,998 4,353 4,567 3,914 17,086 17,893
Bank owned life insurance 3,259 2,819 3,160 3,592 3,187 3,080 12,830 14,817
Other income 4,696 (732) 79 2,600 (8,311) (6,552) 6,643 (26,418)
Total noninterest income 89,401 83,443 86,607 82,244 77,177 75,392 341,695 310,150
Noninterest expense:
Salaries and employee benefits 113,063 113,794 113,561 111,973 110,985 116,245 452,391 462,898
Occupancy and equipment 25,961 25,538 26,021 27,332 28,379 27,450 104,852 112,258
Technology and communications 38,232 38,301 36,486 35,061 33,940 31,465 148,080 126,890
Marketing and advertising 9,719 8,445 10,297 9,863 11,584 7,746 38,324 35,133
Professional services 15,361 18,052 16,321 13,070 16,644 13,988 62,804 55,584
Amortization of intangibles 3,972 4,001 5,092 6,205 6,432 6,521 19,270 27,252
Federal deposit insurance premiums 10,383 10,026 11,750 11,158 11,911 9,579 43,317 40,101
Restructuring charges 3,378 - - 17,517 9,066 2,364 20,895 21,786
Goodwill impairment - - - - - 1,100,000 - 1,100,000
Deposit account remediation - - - - (23,000) 45,000 - 22,000
Merger and acquisition integration expenses 14,198 - - - - - 14,198 -
Other expense 30,728 27,276 28,371 28,859 28,371 36,467 115,234 120,086
Total noninterest expense 264,995 245,433 247,899 261,038 234,312 1,396,825 1,019,365 2,123,988
Income (loss) before income tax 68,055 81,733 81,062 71,385 76,942 (1,064,854 ) 302,235 (824,123)
Income tax expense (benefit) 17,255 21,251 20,052 20,000 7,875 (144,808) 78,558 (109,229)
Net income (loss) 50,800 60,482 61,010 51,385 69,067 (920,046 ) 223,677 (714,894)
Preferred stock dividend 7,547 7,547 7,547 7,547 7,547 7,547 30,188 30,188
Net income (loss) available to common stockholders $ 43,253 $ 52,935 $ 53,463 $ 43,838 $ 61,520 $ (927,593 ) $ 193,489 $ (745,082)
Financial Ratios:
Earnings (loss) per basic share $0.12 $0.15 $0.15 $0.12 $0.17 $(2.65) $0.55 (2.13)
Earnings (loss) per diluted share $0.12 $0.15 $0.15 $0.12 $0.17 $(2.65) $0.54 (2.13)
Weighted average shares outstanding - basic(1) 351,306 351,293 351,126 350,741 350,444 350,381 351,119 350,237
Weighted average shares outstanding - diluted(1) 353,797 353,248 352,791 352,621 352,152 350,381 353,040 350,237
Net revenue(2) $355,950 $346,934 $349,717 $345,188 $346,960 $348,671 $1,397,789 $1,395,771
Noninterest income as a percentage of net revenue(2) 25.12% 24.05% 24.76% 23.83% 22.24% 21.62% 24.45% 22.22%
Pre-tax, pre-provision income (loss)(3) $90,955 $101,501 $101,818 $84,150 $112,648 $(1,048,154) $378,424 $(728,217)
Pre-tax, pre-provision income per diluted share(3) $0.26 $0.29 $0.29 $0.24 $0.32 $(2.99) $1.07 $(2.08)
Pre-tax, pre-provision return on average assets(3) 0.91% 1.03% 1.05% 0.88% 1.17% (10.8)% 0.97% (1.91)%
Net interest margin(4) 2.98% 2.98% 3.02% 3.07% 3.11% 3.21% 3.01% 3.23%
Interest yield on average loans(4) 3.65% 3.64% 3.73% 3.75% 3.78% 3.80% 3.69% 3.86%
Rate paid on interest-bearing liabilities 0.51% 0.50% 0.49% 0.48% 0.45% 0.44% 0.49% 0.44%
Efficiency ratio 74.45% 70.74% 70.89% 75.62% 67.53% 400.61% 72.93% 152.17%
Expenses as a percentage of average loans and deposits 2.0% 1.9% 1.9% 2.1% 1.8% 11.2% 2.0% 4.3%
Effective tax rate (benefit) 25.40% 26.00% 24.70% 28.00% 10.20% (13.60)% 26.00% (13.30)%
Return on average assets(5) 0.51% 0.61% 0.63% 0.54% 0.72% (9.46)% 0.57% (1.87)%
Return on average equity(5) 4.85% 5.78% 5.90% 5.05% 6.62% (71.57)% 5.40% (14.79)%
Return on average tangible equity(3)(5) 7.32% 8.73% 8.94% 7.68% 10.07% (141.16)% 8.17% (27.66)%
Return on average common equity 4.50% 5.51% 5.63% 4.69% 6.42% (77.27)% 5.08% (16.57)%
Return on average tangible common equity(3) 7.10% 8.72% 8.94% 7.48% 10.24% (163.71)% 8.06% (33.16)%
(1)Share count excludes unallocated ESOP shares prior to January 1, 2015 and unvested restricted stock shares.
(2)Net revenue is comprised of net interest income and noninterest income.
(3)The tables in this earnings release present the computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4)Yields and rates calculated on a tax equivalent basis.
(5)Return used to calculate ratio excludes preferred stock dividend.


First Niagara Financial Group, Inc.
Period End Balance Sheet
(in thousands)
2015 2014
December 31, September 30,June 30,March 31, December 31, September 30,
Cash and cash equivalents $ 672,243 $ 420,289 $ 527,323 $ 387,676 $ 420,033 $ 451,313
Investment securities:
Available for sale 5,471,291 5,725,608 5,750,860 5,911,419 5,915,338 6,198,140
Held to maturity 6,387,689 6,280,049 6,169,838 6,214,561 5,941,621 5,351,977
FHLB and FRB common stock 410,452 373,066 379,135 375,090 411,857 389,870
Total investment securities 12,269,432 12,378,723 12,299,833 12,501,070 12,268,816 11,939,987
Loans held for sale 46,096 51,056 59,816 48,755 39,825 31,245
Loans and leases:
Commercial:
Real estate 8,652,255 8,365,808 8,312,332 8,287,108 8,204,027 8,013,622
Business 6,013,217 6,031,358 5,923,524 5,790,980 5,775,413 5,836,235
Total commercial loans 14,665,472 14,397,166 14,235,856 14,078,088 13,979,440 13,849,857
Consumer:
Residential real estate 3,354,639 3,345,701 3,329,799 3,330,216 3,353,081 3,360,805
Home equity 3,068,962 3,032,618 2,984,872 2,943,844 2,936,123 2,886,655
Indirect auto 2,393,105 2,330,826 2,256,004 2,200,913 2,166,320 2,073,843
Credit cards 310,813 305,779 304,682 301,228 324,113 312,549
Other consumer 244,935 254,109 257,204 263,985 278,305 286,140
Total consumer loans 9,372,454 9,269,033 9,132,561 9,040,186 9,057,942 8,919,992
Total loans and leases 24,037,926 23,666,199 23,368,417 23,118,274 23,037,382 22,769,849
Allowance for loan losses 242,036 238,700 235,600 231,138 234,251 222,753
Loans and leases, net 23,795,890 23,427,499 23,132,817 22,887,136 22,803,131 22,547,096
Bank owned life insurance 436,709 434,263 431,335 428,454 426,192 423,376
Goodwill and other intangibles 1,396,227 1,400,199 1,404,201 1,410,800 1,417,005 1,423,437
Other assets 1,301,789 1,301,152 1,208,218 1,243,588 1,176,036 1,155,588
Total assets $ 39,918,386 $ 39,413,181 $ 39,063,543 $ 38,907,479 $ 38,551,038 $ 37,972,042
Deposits:
Savings accounts $ 3,389,728 $ 3,359,320 $ 3,483,777 $ 3,488,441 $ 3,451,616 $ 3,458,661
Interest-bearing checking 5,478,947 5,285,987 5,088,856 5,158,264 5,084,456 5,055,458
Money market deposits 10,653,792 10,483,721 10,303,873 10,368,358 9,962,220 9,894,346
Noninterest-bearing deposits 5,834,534 5,813,571 5,549,944 5,500,484 5,407,382 5,308,736
Certificates of deposit 3,343,878 3,873,521 4,020,367 3,734,226 3,875,563 3,952,879
Total deposits 28,700,879 28,816,120 28,446,817 28,249,773 27,781,237 27,670,080
Short-term borrowings 4,348,586 4,086,415 4,275,886 4,739,264 5,471,974 4,928,762
Long-term borrowings 2,308,101 1,783,402 1,683,476 1,233,550 733,620 733,684
Other liabilities 434,492 587,867 536,239 559,646 471,449 543,813
Total liabilities 35,792,058 35,273,804 34,942,418 34,782,233 34,458,280 33,876,339
Preferred stockholders' equity 338,002 338,002 338,002 338,002 338,002 338,002
Common stockholders' equity 3,788,326 3,801,375 3,783,123 3,787,244 3,754,756 3,757,701
Total stockholders' equity 4,126,328 4,139,377 4,121,125 4,125,246 4,092,758 4,095,703
Total liabilities and stockholders' equity $ 39,918,386 $ 39,413,181 $ 39,063,543 $ 38,907,479 $ 38,551,038 $ 37,972,042
Selected balance sheet information:
Total interest-earning assets(1) $ 36,677,134 $ 36,099,580 $ 35,813,498 $ 35,594,208 $ 35,310,447 $ 34,720,650
Total interest-bearing liabilities 29,523,032 28,872,365 28,856,235 28,722,103 28,579,449 28,023,790
Net interest-earning assets $ 7,154,102 $ 7,227,215 $ 6,957,263 $ 6,872,105 $ 6,730,998 $ 6,696,860
Tangible common equity(1)(2) $ 2,392,099 $ 2,401,176 $ 2,378,922 $ 2,376,444 $ 2,337,751 $ 2,334,263
Unrealized gain on available for sale securities, net of tax(3) (9,577) 29,877 37,464 68,194 52,244 55,052
Total core deposits $ 25,357,001 $ 24,942,599 $ 24,426,450 $ 24,515,547 $ 23,905,674 $ 23,717,201
Originated loans(4) $ 21,101,040 $ 20,591,532 $ 19,929,719 $ 19,528,609 $ 19,295,553 $ 18,841,896
Acquired loans(5) 2,998,530 3,138,568 3,517,525 3,681,354 3,834,931 4,028,091
Credit related discount on acquired loans(6) (61,644) (63,901) (78,827) (91,689) (93,102) (100,138)
Total Loans $ 24,037,926 $ 23,666,199 $ 23,368,417 $ 23,118,274 $ 23,037,382 $ 22,769,849
(1)Includes interest bearing cash and cash equivalents, investment securities at amortized cost, loans held for sale, and total loans and leases.
(2)The tables in this earnings release present the computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3)Excludes unamortized unrealized gains recorded in accumulated other comprehensive income related to available for sale securities transferred to held to maturity.
(4)Originated loans represent total loans excluding acquired loans.
(5)Carrying value of acquired loans plus the principal not expected to be collected.
(6)Principal on acquired loans not expected to be collected.


First Niagara Financial Group, Inc.
Average Balance Sheet and Related Tax Equivalent Yields & Rates
(in millions)
For the three months ended For year ending
December 31, 2015September 30, 2015December 31, 2014 December 31, 2015December 31, 2014
AverageInterest(1) Yields AverageInterest(1) Yields AverageInterest(1) Yields AverageInterest(1) Yields AverageInterest(1) Yields
Balances
and
Rates(1)
Balances
and
Rates(1)
Balances
and
Rates(1)
Balances
and
Rates(1)
Balances
and
Rates(1)
Interest-earning assets:
Loans and leases(2)
Commercial:
Real estate $ 8,476 $ 77 3.57%$ 8,277 $ 74 3.52%$ 8,087 $ 76 3.68% $ 8,319 $ 302 3.57%$ 7,944 $ 302 3.75%
Business 5,971 50 3.28 5,972 50 3.26 5,791 51 3.43 5,893 201 3.36 5,617 200 3.51
Total commercial loans 14,447 127 3.45 14,249 124 3.41 13,878 127 3.58 14,212 503 3.49 13,561 502 3.65
Consumer:
Residential real estate 3,346 31 3.65 3,338 31 3.70 3,364 32 3.79 3,337 123 3.70 3,373 129 3.81
Home equity 3,052 29 3.80 3,001 29 3.82 2,912 29 3.94 2,989 115 3.85 2,832 114 4.03
Indirect auto 2,369 17 2.90 2,293 17 2.86 2,132 15 2.82 2,272 64 2.82 1,870 53 2.86
Credit cards 305 9 11.45 306 9 11.44 314 9 11.47 306 35 11.51 312 36 11.50
Other consumer 250 5 8.50 255 5 8.57 283 6 8.47 260 22 8.51 290 25 8.55
Total consumer loans 9,322 91 3.88 9,193 91 3.91 9,005 91 4.01 9,164 359 3.93 8,677 357 4.11
Total loans and leases 23,769 218 3.65 23,442 215 3.64 22,883 218 3.78 23,376 862 3.69 22,238 859 3.86
Residential MBS 7,705 47 2.44 7,478 45 2.40 6,892 43 2.51 7,437 179 2.41 6,274 164 2.61
Commercial MBS 1,126 12 4.31 1,212 12 3.88 1,512 13 3.37 1,262 47 3.69 1,595 53 3.35
Other investment securities (3) 3,540 31 3.47 3,518 32 3.68 3,585 32 3.59 3,555 128 3.61 3,994 149 3.72
Total securities, at amortized cost 12,371 90 2.90 12,208 89 2.92 11,989 88 2.94 12,254 354 2.89 11,863 366 3.09
Money market and other investments 88 1 2.29 109 1 1.92 161 - 1.21 114 2 1.60 134 2 1.58
Total interest-earning assets 36,228 $ 309 3.38% 35,759 $ 305 3.38% 35,033 $ 307 3.47% 35,744 $1,218 3.41% 34,235 $1,227 3.58%
Goodwill and other intangibles 1,398 1,402 1,420 1,405 2,249
Other noninterest-earning assets 1,951 1,890 1,865 1,915 1,736
Total assets $39,577 $39,051 $38,318 $39,064 $38,220
Interest-bearing liabilities:
Deposits
Savings accounts $ 3,364 $ 1 0.09%$ 3,427 $ 1 0.10%$ 3,447 $ 1 0.09% $ 3,429 $ 3 0.09%$ 3,571 $ 3 0.09%
Interest-bearing checking 5,333 - 0.03 5,165 - 0.03 5,049 - 0.03 5,159 2 0.03 4,857 2 0.03
Money market deposits 10,719 8 0.30 10,403 8 0.29 10,037 6 0.24 10,378 30 0.29 9,944 22 0.22
Certificates of deposit 3,515 8 0.89 3,962 8 0.81 3,888 7 0.72 3,792 31 0.84 3,870 27 0.69
Total interest bearing deposits 22,931 17 0.30% 22,957 17 0.29% 22,421 14 0.25% 22,758 66 0.29% 22,241 53 0.24%
Borrowings
Short-term borrowings 4,014 6 0.56% 3,953 5 0.50% 4,917 5 0.43% 4,399 22 0.50% 4,678 20 0.43%
Long-term borrowings 1,971 14 2.89 1,693 14 3.24 734 12 6.56 1,515 54 3.56 733 48 6.61
Total borrowings 5,985 20 1.33 5,646 19 1.32 5,651 17 1.23 5,914 76 1.28 5,411 69 1.27
Total interest-bearing liabilities 28,916 $ 37 0.51% 28,603 $ 36 0.50% 28,072 $ 32 0.45% 28,672 $ 142 0.49% 27,653 $ 122 0.44%
Noninterest-bearing deposits 5,868 5,661 5,485 5,598 5,173
Other noninterest-bearing liabilities 640 637 620 650 560
Total liabilities 35,424 34,901 34,177 34,920 33,386
Total stockholders' equity 4,153 4,150 4,141 4,144 4,834
Total liabilities and stockholders' equity $ 39,577 $ 39,051 $ 38,318 $ 39,064 $ 38,220
Net interest income (FTE) $ 272 $ 269 $ 275 $1,076 $1,105
Taxable Equivalent Adjustment(1) 5 6 5 20 19
Total core deposits $25,284 $ 9 0.15%$24,656 $ 9 0.14%$24,018 $ 7 0.12% $24,564 $ 35 0.14%$23,545 $ 27 0.11%
Total transactional deposits 11,201 - 0.02% 10,826 - 0.01% 10,534 - 0.02% 10,757 2 0.01% 10,030 2 0.02%
Total deposits 28,799 17 0.24% 28,618 17 0.24% 27,906 14 0.20% 28,356 66 0.23% 27,414 53 0.19%
Tax equivalent net interest rate spread 2.87% 2.88% 3.02% 2.92% 3.14%
Tax equivalent net interest rate margin 2.98% 2.98% 3.11% 3.01% 3.23%
(1)Tax equivalent interest income is calculated using a 35% tax rate.
(2)Includes nonaccrual loans.
(3)Includes debt securities, collateralized loan obligations, asset-backed securities, FHLB and FRB common stock, and other investment securities.


First Niagara Financial Group, Inc.
Allowance for Loans and Lease Losses & Asset Quality
(in thousands)
2015 2014 For year ending
Fourth Third Second First Fourth Third December 31, December 31,
Quarter Quarter Quarter Quarter Quarter Quarter 2015 2014
Beginning balance $ 238,700 $ 235,600 $ 231,138 $ 234,251 $ 222,753 $ 219,426 $ 234,251 $ 209,274
Net loan (charge-offs) recoveries:
Commercial real estate $ (1,476)$ (2,686)$ (5,525)$ (5,825) $ (2,008)$ (2,259) $ (15,512)$ (8,247)
Commercial business (10,441) (6,286) (3,513) (4,178) (12,650) (3,148) (24,418) (26,731)
Residential real estate (94) (230) (197) (266) (476) (102) (787) (1,104)
Home equity (723) (1,056) (1,367) (1,526) (1,406) (1,131) (4,672) (6,876)
Indirect auto (2,122) (1,743) (1,342) (1,226) (2,241) (1,621) (6,433) (7,403)
Credit cards (2,450) (2,215) (2,522) (2,450) (2,464) (2,726) (9,637) (11,164)
Other consumer (1,758) (1,952) (1,528) (1,807) (1,457) (1,986) (7,045) (6,698)
Total net loan charge-offs $ (19,064)$ (16,168)$ (15,994)$ (17,278) $ (22,702)$ (12,973) $ (68,504)$ (68,223)
Provision for loan losses 22,400 19,268 20,456 14,165 34,200 16,300 76,289 93,200
Ending balance $ 242,036 $ 238,700 $ 235,600 $ 231,138 $ 234,251 $ 222,753 $ 242,036 $ 234,251
Supplemental information
Allowance to loans 1.01% 1.01% 1.01% 1.00% 1.02% 0.98% 1.01% 1.02%
Allowance for originated loans to originated loans(1) 1.12% 1.13% 1.15% 1.15% 1.18% 1.16% 1.12% 1.18%
Net charge-offs (recoveries) to average loans (annualized)
Commercial real estate 0.07% 0.13% 0.27% 0.29% 0.10% 0.11% 0.19% 0.10%
Commercial business 0.70% 0.42% 0.24% 0.29% 0.87% 0.22% 0.41% 0.48%
Total commercial loans 0.33% 0.25% 0.26% 0.28% 0.42% 0.16% 0.28% 0.26%
Residential real estate 0.01% 0.03% 0.02% 0.03% 0.06% 0.01% 0.02% 0.03%
Home equity 0.09% 0.14% 0.18% 0.21% 0.19% 0.16% 0.16% 0.24%
Indirect auto 0.36% 0.30% 0.24% 0.22% 0.42% 0.33% 0.28% 0.40%
Credit cards 3.21% 2.90% 3.32% 3.16% 3.13% 3.49% 3.14% 3.57%
Other consumer 2.81% 3.06% 2.35% 2.63% 2.06% 2.77% 2.71% 2.31%
Total consumer loans 0.31% 0.32% 0.31% 0.33% 0.36% 0.35% 0.31% 0.38%
Total loans 0.32% 0.28% 0.28% 0.30% 0.40% 0.23% 0.29% 0.31%
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)
Commercial real estate 0.08% 0.14% 0.31% 0.24% 0.06% 0.13% 0.19% 0.10%
Commercial business 0.72% 0.44% 0.25% 0.31% 0.93% 0.24% 0.43% 0.51%
Total commercial loans 0.36% 0.27% 0.28% 0.27% 0.44% 0.18% 0.29% 0.28%
Residential real estate 0.02% 0.04% 0.04% 0.05% 0.09% 0.02% 0.04% 0.06%
Home equity 0.14% 0.14% 0.17% 0.16% 0.15% 0.17% 0.15% 0.17%
Indirect auto 0.36% 0.30% 0.24% 0.22% 0.42% 0.33% 0.28% 0.40%
Credit cards 3.21% 2.90% 3.32% 3.16% 3.13% 3.49% 3.14% 3.57%
Other consumer 2.81% 3.06% 2.35% 2.63% 2.06% 2.77% 2.71% 2.31%
Total consumer loans 0.39% 0.38% 0.37% 0.38% 0.44% 0.45% 0.38% 0.48%
Total loans 0.37% 0.31% 0.31% 0.31% 0.44% 0.27% 0.32% 0.34%
Nonperforming loans:
Originated(1):
Commercial real estate $ 44,438 $ 54,699 $ 60,021 $ 65,655 $ 53,164 $ 57,340 $ 44,438 $ 53,164
Commercial business 56,382 45,389 42,979 54,506 45,201 36,939 56,382 45,201
Residential real estate 31,513 32,455 32,877 32,791 33,652 36,113 31,513 33,652
Home equity 35,561 34,191 27,092 26,163 23,749 23,392 35,561 23,749
Indirect auto 15,131 13,795 13,066 13,399 12,616 11,890 15,131 12,616
Other consumer 5,201 5,047 4,917 5,065 5,140 5,134 5,201 5,140
Total originated nonperforming loans 188,226 185,576 180,952 197,579 173,522 170,808 188,226 173,522
Total acquired nonperforming loans(2) 25,335 25,365 26,553 30,236 30,223 28,611 25,335 30,223
Total nonperforming loans 213,561 210,941 207,505 227,815 203,745 199,419 213,561 203,745
Real estate owned 16,063 18,359 17,397 19,128 20,541 20,261 16,063 20,541
Total nonperforming assets(3) $ 229,624 $ 229,300 $ 224,902 $ 246,943 $ 224,286 $ 219,680 $ 229,624 $ 224,286
Accruing troubled debt restructurings (TDR) $ 62,630 $ 60,941 $ 64,643 $ 64,401 $ 67,102 $ 69,199 $ 62,630 $ 67,102
Loans 90 days past due still accruing(4) 67,718 69,879 78,279 87,213 93,903 108,615 67,718 93,903
Total classified loans(5) 602,912 591,771 592,148 615,518 609,316 649,320 602,912 609,316
Total criticized loans(6) $ 944,779 $ 858,243 $ 938,951 $ 990,656 $ 1,041,050 $ 1,089,851 $ 944,779 $ 1,041,050
Total nonperforming loans to loans 0.89% 0.89% 0.89% 0.99% 0.88% 0.88% 0.89% 0.88%
Total nonperforming originated loans to originated loans(1) 0.89% 0.90% 0.91% 1.01% 0.90% 0.91% 0.89% 0.90%
Total nonperforming assets to loans and real estate owned 0.95% 0.97% 0.96% 1.07% 0.97% 0.96% 0.95% 0.97%
Total nonperforming assets to assets 0.58% 0.58% 0.58% 0.63% 0.58% 0.58% 0.58% 0.58%
Allowance to nonperforming loans 113.3% 113.2% 113.5% 101.5% 115.0% 111.7% 113.3% 115.0%
Originated loans(1) $21,101,040 $20,591,532 $19,929,719 $19,528,609 $19,295,553 $18,841,896 $21,101,040 $19,295,553
Acquired loans(7) 2,998,530 3,138,568 3,517,525 3,681,354 3,834,931 4,028,091 2,998,530 3,834,931
Credit related discount on acquired loans(8) (61,644) (63,901) (78,827) (91,689) (93,102) (100,138) (61,644) (93,102)
Total Loans $24,037,926 $23,666,199 $23,368,417 $23,118,274 $23,037,382 $22,769,849 $24,037,926 $23,037,382
(1)Originated loans represent total loans excluding acquired loans.
(2)Nonperforming acquired loans include certain lines of credit that are considered nonaccruing.
(3)Does not include a $5.5 million nonperforming loan that was classified as held for sale at March 31, 2015, which was sold and for which we received the proceeds on April 2, 2015.
(4)Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.
(5)Includes consumer loans, which are considered classified when they are 90 days or more past due. Classified loans include substandard, doubtful, and loss, which are consistent with regulatory definitions, and as described in Item 1, "Business", under the heading "Asset Quality Review" in our Annual Report on 10-K for the year ended December 31, 2014.
(6)Criticized loans includes consumer loans when they are 90 days or more past due. Criticized loans include special mention, substandard, doubtful, and loss.
(7)Represents the carrying value of acquired loans plus the principal not expected to be collected.
(8)Represent principal on acquired loans not expected to be collected.


First Niagara Financial Group, Inc.
Key Statistics
(Risk weighted assets in millions; share counts in thousands)
2015 2014
December 31,September 30,June 30,March 31, December 31,September 30,
First Niagara Financial Group, Inc. capital ratios(1)(2):
Tier 1 risk based capital 10.08% 10.05% 10.03% 10.02% 9.81% 9.82%
Total risk based capital 12.01% 11.97% 11.96% 11.95% 11.75% 11.75%
Common equity tier 1 capital 8.55% 8.52% 8.50% 8.48% N/A N/A
Tier 1 common capital(3) N/A N/A N/A N/A 8.20% 8.19%
Leverage 7.62% 7.66% 7.60% 7.56% 7.50% 7.34%
Equity to assets 10.34% 10.50% 10.55% 10.60% 10.62% 10.79%
Tangible common equity to tangible assets(3) 6.21% 6.32% 6.32% 6.34% 6.30% 6.39%
Total risk weighted assets $ 28,881 $ 28,716 $ 28,445 $ 28,152 $ 28,186 $ 27,729
First Niagara Bank, N.A capital ratios(1)(2):
Tier 1 risk based capital 10.65% 10.67% 10.66% 10.65% 10.48% 10.41%
Total risk based capital 11.55% 11.56% 11.54% 11.53% 11.37% 11.27%
Common equity tier 1 capital 10.65% 10.67% 10.66% 10.65% N/A N/A
Leverage 8.05% 8.12% 8.07% 8.03% 8.01% 7.78%
Total risk weighted assets $ 28,813 $ 28,632 $ 28,359 $ 28,068 $ 28,146 $ 27,686
Number of branches 392 394 394 394 411 411
Full time equivalent employees 5,428 5,397 5,364 5,322 5,572 5,768
Share information and per share metrics:
Common shares outstanding 354,762 354,788 354,890 353,717 353,388 355,423
Preferred shares outstanding 14,000 14,000 14,000 14,000 14,000 14,000
Treasury shares 11,240 11,214 11,112 12,285 12,614 10,579
Market price (NASDAQ: FNFG): $ 10.85 $ 10.21 $ 9.44 $ 8.84 $ 8.43 $ 8.33
Book value per common share(4) 10.78 10.82 10.77 10.80 10.71 10.72
Tangible book value per common share(3)(4) 6.81 6.84 6.77 6.78 6.67 6.66
Price/Book 100.65% 94.36% 87.65% 81.85% 78.71% 77.71%
Price/Tangible book(1) 159.32% 149.27% 139.44% 130.38% 126.39% 125.08%
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 66.67% 53.33% 53.33% 66.67% 47.06% N/M
Dividend yield (annualized) 2.93% 3.11% 3.40% 3.67% 3.77% 3.81%
N/MNot meaningful.
(1)Represents an estimate as of December 31, 2015. All preceding quarters represent actual amounts.
(2)Basel III Transitional rules became effective for us on January 1, 2015. Ratios and amounts presented prior to March 31, 2015 are calculated under Basel I rules. As of March 31, 2015, the ratios presented are calculated under the Basel III Standardized Transitional Approach. Common equity tier 1 capital under Basel III replaced Tier 1 common capital under Basel I. Prior to Basel III becoming effective on January 1, 2015, tier 1 common capital under Basel I was a non-GAAP financial measure.
(3)The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4)Share count excludes unallocated ESOP shares prior to January 1, 2015 and unvested restricted stock shares.


First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation
(in thousands, except per share amounts)
2015 2014 For year ending
Fourth Third Second First Fourth Third December 31, December 31,
Quarter Quarter Quarter Quarter Quarter Quarter 2015 2014
Financial ratios computed on an operating basis(1):
Earnings per basic share $ 0.16 $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.19 $ 0.61 $ 0.71
Earnings per diluted share $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.19 $ 0.61 $ 0.70
Weighted average shares outstanding - basic(2) 351,306 351,293 351,126 350,741 350,444 350,381 351,119 350,237
Weighted average shares outstanding - diluted(2) 353,797 353,248 352,791 352,621 352,152 351,898 353,040 351,750
Noninterest income as a percentage of net revenue(3) 25.12% 24.05% 24.76% 23.83% 22.24% 21.62% 24.45% 22.22%
Pre-tax, pre-provision income 108,531 101,501 101,818 101,667 98,714 99,210 413,517 415,569
Pre-tax, pre-provision income per diluted share $ 0.31 $ 0.29 $ 0.29 $ 0.29 $ 0.28 $ 0.28 $ 1.17 $ 1.18
Pre-tax, pre-provision return on average assets 1.09% 1.03% 1.05% 1.07% 1.02% 1.02% 1.06% 1.09%
Net interest margin(4) 2.98% 2.98% 3.02% 3.07% 3.11% 3.21% 3.01% 3.23%
Interest yield on average loans(4) 3.65% 3.64% 3.73% 3.75% 3.78% 3.80% 3.69% 3.86%
Rate paid on interest-bearing liabilities 0.51% 0.50% 0.49% 0.48% 0.45% 0.44% 0.49% 0.44%
Efficiency ratio 69.5% 70.7% 70.9% 70.5% 71.5% 71.5% 70.4% 70.2%
Effective tax rate 26.6% 26.0% 24.7% 30.0% 3.7% 10.3% 26.9% 12.7%
Return on average assets 0.63% 0.61% 0.63% 0.65% 0.63% 0.76% 0.63% 0.73%
Return on average equity 6.00% 5.78% 5.90% 6.12% 5.82% 5.76% 5.95% 5.77%
Return on average tangible equity(5) 9.05% 8.73% 8.94% 9.30% 8.85% 11.35% 9.00% 10.80%
Return on average common equity 5.75% 5.51% 5.63% 5.85% 5.54% 5.54% 5.68% 5.54%
Return on average tangible common equity(6) 9.07% 8.72% 8.94% 9.34% 8.85% 11.73% 9.01% 11.08%
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):
Total noninterest expense on operating basis (Non-GAAP) $247,419 $245,433 $247,899 $243,521 $248,246 $ 249,461 $ 984,272 $ 980,202
Restructuring charges 3,378 - - 17,517 9,066 2,364 20,895 21,786
Goodwill impairment - - - - - 1,100,000 - 1,100,000
Deposit account remediation - - - - (23,000) 45,000 - 22,000
Merger and acquisition integration expenses 14,198 - - - - - 14,198 -
Total reported noninterest expense (GAAP) $264,995 $245,433 $247,899 $261,038 $234,312 $1,396,825 $1,019,365 $2,123,988
Reconciliation of net operating income to net income(1):
Net operating income (Non-GAAP) $ 62,813 $ 60,482 $ 61,010 $ 62,246 $ 60,697 $ 74,009 $ 246,551 $ 279,136
Nonoperating income and expenses, net of tax:
Restructuring charges 2,094 - - 10,861 6,364 1,555 12,955 16,264
Goodwill impairment - - - - - 963,267 - 963,267
Deposit account remediation - - - - (14,734) 29,233 - 14,499
Merger and acquisition integration expenses 9,919 - - - - - 9,919 -
Total nonoperating expenses, net of tax 12,013 - - 10,861 (8,370) 994,055 22,874 994,030
Net income (loss) (GAAP) $ 50,800 $ 60,482 $ 61,010 $ 51,385 $ 69,067 $ (920,046 ) $ 223,677 $ (714,894)
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) $ 55,266 $ 52,935 $ 53,463 $ 54,699 $ 53,150 $ 66,462 $ 216,363 $ 248,948
Nonoperating income and expenses, net of tax:
Restructuring charges 2,094 - - 10,861 6,364 1,555 12,955 16,264
Goodwill impairment - - - - - 963,267 - 963,267
Deposit account remediation - - - - (14,734) 29,233 - 14,499
Merger and acquisition integration expenses 9,919 - - - - - 9,919 -
Total nonoperating income and expenses, net of tax 12,013 - - 10,861 (8,370) 994,055 22,874 994,030
Net income (loss) available to common stockholders (GAAP) $ 43,253 $ 52,935 $ 53,463 $ 43,838 $ 61,520 $ (927,593 ) $ 193,489 $ (745,082)
Computation of pre-tax,pre-provision income:
Net interest income $266,549 $263,491 $263,110 $262,944 $269,783 $273,279 $1,056,094 $1,085,621
Noninterest income 89,401 83,443 86,607 82,244 77,177 75,392 341,695 310,150
Noninterest expense (264,995) (245,433) (247,899) (261,038) (234,312) (1,396,825) (1,019,365) (2,123,988)
Pre-tax, pre-provision income (loss) (GAAP) 90,955 101,501 101,818 84,150 112,648 (1,048,154) 378,424 (728,217)
Add back: non-operating noninterest expenses (1) 17,576 - - 17,517 (13,934) 1,147,364 35,093 1,143,786
Pre-tax, pre-provision income (Non-GAAP)(1) $108,531 $101,501 $101,818 $101,667 $98,714 $99,210 $413,517 $415,569
(1)Noninterest expense on an operating basis, net operating income, and pre-tax, pre-provision income on an operating basis are non-GAAP measures that we believe provide meaningful comparisons of our underlying operational performance and facilitates investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, we believe exclusion of these nonoperating items enables management to perform a more effective evaluation and comparison of our results and to assess performance in relation to our ongoing operations.
(2)Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(3)Net revenue is comprised of net interest income and noninterest income.
(4)Yields and rates calculated on a tax equivalent basis.
(5)Tangible equity is a non-GAAP measure and excludes goodwill and other intangibles.
(6)Tangible common equity is a non-GAAP measure and excludes goodwill and other intangibles as well as preferred stock.


First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation (Cont.)
(in thousands, except per share amounts)
2015 2014 For year ending
Fourth Third Second First Fourth Third December 31, December 31,
Quarter Quarter Quarter Quarter Quarter Quarter 2015 2014
Computation of Ending Tangible Assets:
Total assets $39,918,386 $39,413,181 $39,063,543 $38,907,479 $38,551,038 $37,972,042 $39,918,386 $38,551,038
Less: Goodwill and other intangibles (1,396,227) (1,400,199) (1,404,201) (1,410,800) (1,417,005) (1,423,437) (1,396,227) (1,417,005)
Tangible assets $38,522,159 $38,012,982 $37,659,342 $37,496,679 $37,134,033 $36,548,605 $38,522,159 $37,134,033
Computation of Average Tangible Assets:
Total assets $39,576,697 $39,051,359 $38,913,219 $38,706,545 $38,317,930 $38,591,115 $39,064,310 $38,219,967
Less: Goodwill and other intangibles (1,398,122) (1,402,138) (1,407,946) (1,413,765) (1,420,119) (2,514,581) (1,405,441) (2,248,958)
Tangible assets $38,178,575 $37,649,221 $37,505,273 $37,292,780 $36,897,811 $36,076,534 $37,658,869 $35,971,009
Computation of Ending Tangible Equity:
Total stockholders' equity $4,126,328 $4,139,377 $4,121,125 $4,125,246 $4,092,758 $4,095,703 $4,126,328 $4,092,758
Less: Goodwill and other intangibles (1,396,227) (1,400,199) (1,404,201) (1,410,800) (1,417,005) (1,423,437) (1,396,227) (1,417,005)
Tangible equity $2,730,101 $2,739,178 $2,716,924 $2,714,446 $2,675,753 $2,672,266 $2,730,101 $2,675,753
Computation of Ending Tangible Common Equity:
Total stockholders' equity $4,126,328 $4,139,377 $4,121,125 $4,125,246 $4,092,758 $4,095,703 $4,126,328 $4,092,758
Less: Goodwill and other intangibles (1,396,227) (1,400,199) (1,404,201) (1,410,800) (1,417,005) (1,423,437) (1,396,227) (1,417,005)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $2,392,099 $2,401,176 $2,378,922 $2,376,444 $2,337,751 $2,334,264 $2,392,099 $2,337,751
Computation of Average Tangible Equity:
Total stockholders' equity $4,152,977 $4,149,635 $4,145,334 $4,127,743 $4,141,141 $5,100,494 $4,144,007 $4,833,663
Less: Goodwill and other intangibles (1,398,122) (1,402,138) (1,407,946) (1,413,765) (1,420,119) (2,514,581) (1,405,441) (2,248,958)
Tangible equity $2,754,855 $2,747,497 $2,737,388 $2,713,978 $2,721,022 $2,585,913 $2,738,566 $2,584,705
Computation of Average Tangible Common Equity:
Total stockholders' equity $4,152,977 $4,149,635 $4,145,334 $4,127,743 $4,141,141 $5,100,494 $4,144,007 $4,833,663
Less: Goodwill and other intangibles (1,398,122) (1,402,138) (1,407,946) (1,413,765) (1,420,119) (2,514,581) (1,405,441) (2,248,958)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $2,416,853 $2,409,495 $2,399,386 $2,375,976 $2,383,020 $2,247,911 $2,400,564 $2,246,703
Computation of Tier 1 Common Capital:
Tier 1 capital N/AN/AN/AN/A $2,764,117 $2,722,685 N/A$2,764,117
Less: Qualifying restricted core capital elements N/AN/AN/AN/A (113,785) (113,556) N/A (113,785)
Less: Perpetual non-cumulative preferred stock N/AN/AN/AN/A (338,002) (338,002) N/A (338,002)
Tier 1 common capital (Non-GAAP) N/AN/AN/AN/A $2,312,330 $2,271,127 N/A$2,312,330

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.