×

First Niagara Reports First Quarter 2016 Results

  • First quarter operating earnings of $0.14 per diluted share
    • First quarter GAAP earnings of $0.11 per diluted share, including merger-related integration expenses
  • Average loans increased 5% annualized QOQ
    • Average commercial loans (CRE and commercial business) up 7% annualized QOQ
    • Average consumer loans increased 2% annualized QOQ driven by indirect auto loan growth
  • Average deposit balances increased 1% annualized QOQ and 4% YOY
    • Average retail deposit balances increased 8% annualized QOQ and 3% YOY
    • Average retail noninterest-bearing deposit balances increased 18% annualized QOQ and 4% YOY
  • Originated net charge-offs decreased 15 basis points QOQ to 0.22% of average originated loans


BUFFALO, N.Y., April 29, 2016 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (NASDAQ:FNFG) today reported GAAP net income available to common shareholders of $40.8 million, or $0.11 per diluted share for the first quarter of 2016, compared to $43.3 million, or $0.12 per diluted share, for the quarter ended December 31, 2015. Excluding merger-related costs incurred during the first quarter of 2016, operating net income available to common shareholders was $49.9 million, or $0.14 per diluted share.

“The First Niagara team remains fully committed to keeping our customers at the center of all we do and their efforts are reflected in our first-quarter performance, which is highlighted by continued strong core business fundamentals, particularly loan and deposit growth. Compared to the year-ago quarter, we grew average commercial loans by 5%, delivered 7% growth in average checking account deposit balances, and reported improved credit metrics," said Gary M. Crosby, President and Chief Executive Officer. “We’re maintaining a strong competitive position while we move forward on our planned merger with KeyCorp.”

“In the first quarter, we delivered on the strong commercial loan pipeline at year-end which translated to an 11% annualized increase in period-end C&I loan balances and 5% QOQ increase on an average basis,” said Gregory W. Norwood, Chief Financial Officer. “Revenue and expenses were largely consistent with typical first quarter seasonal trends. Our originated net charge-offs of just 22 basis points in the first quarter also reflects continued stable asset quality as well as the recovery on an energy credit that was previously charged-off.”

First Quarter Results

In the first quarter of 2016, First Niagara reported GAAP net income available to common shareholders of $40.8 million, or $0.11 per diluted share, compared to $43.3 million, or $0.12 per diluted share in the fourth quarter of 2015. Reported results in the first quarter of 2016 and fourth quarter of 2015 reflect pre-tax merger related and restructuring costs of $13 million and $18 million, respectively. Excluding these items, operating net income available to common shareholders was $49.9 million, or $0.14 per diluted share, compared to $55.3 million, or $0.15 per diluted share in the fourth quarter of 2015.

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

  • A $1 million increase in net interest income driven by a 5% annualized increase in average earning assets and two basis point expansion in net interest margin in part driven by higher short-term interest rates, and partially offset by lower net interest income from one less day in the first quarter.
  • A $10 million or 12% decrease in noninterest income driven by moderation in capital markets income from strong fourth quarter levels which included a favorable credit valuation adjustment, seasonal declines in deposit service charges and merchant and card fees, lower wealth management income due to lower producer levels and equity market volatility, and lower mortgage banking revenues due to a $1 million repurchase reserve reversal taken in the fourth quarter of 2015.
  • A $6 million or 2% decrease in operating noninterest expenses primarily driven by lower technology and professional services spend, partially offset by typical first quarter increases in payroll taxes and other benefits expenses.
  • A higher effective tax rate attributable to the expiration of benefits from certain tax credit investments.

In the first quarter of 2015, First Niagara reported GAAP net income available to common shareholders of $43.8 million, or $0.12 per diluted share. Results in the first quarter of 2015 included $18 million of pre-tax restructuring charges. Excluding these nonrecurring items, first quarter 2015 net income available to common shareholders was $54.7 million, or $0.15 per diluted share.

Compared to the first quarter of 2015, the change in operating net income available to common shareholders in the first quarter of 2016 was primarily driven by:

  • A 2% increase in net interest income driven by a 3% annualized increase in average earning assets, offset by a seven basis point compression in the net interest margin driven by increases in cost of deposits and borrowings.
  • A $10 million increase in provision for loan losses driven by greater reserve build.
  • A 4% decrease in noninterest income, driven by lower capital markets, lower commercial lines insurance revenues, and lower wealth management income attributable to market volatility in the first quarter of 2016.
  • Modestly lower noninterest expense as an increase in incentive compensation expenses was offset by declines in amortization of intangibles, marketing spend, FDIC assessments and third party professional services expenses.

Operating Results (Non-GAAP)Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015
Net interest income$ 267.6 $ 266.5 $ 263.5 $ 263.1 $ 262.9
Provision for credit losses 22.5 22.9 19.8 20.8 12.8
Noninterest income 79.1 89.4 83.4 86.6 82.2
Noninterest expense 241.9 247.4 245.4 247.9 243.5
Operating net income 57.4 62.8 60.5 61.0 62.2
Preferred stock dividend 7.5 7.5 7.5 7.5 7.5
Operating net income available to common$ 49.9 $ 55.3 $ 52.9 $ 53.5 $ 54.7
Weighted average diluted shares outstanding 354.0 353.8 353.2 352.8 352.6
Operating earnings per diluted share$ 0.14 $ 0.15 $ 0.15 $ 0.15 $ 0.15

Reported Results (GAAP)
Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015
Operating net income before non-op. items$ 57.4 $ 62.8 $ 60.5 $ 61.0 $ 62.2
Non-operating items (a) 9.1 12.0 - - 10.9
Net Income 48.3 50.8 60.5 61.0 51.4
Preferred stock dividend 7.5 7.5 7.5 7.5 7.5
Net income available to common$ 40.8 $ 43.3 $ 52.9 $ 53.5 $ 43.8
Weighted average diluted shares outstanding 354.0 353.8 353.2 352.8 352.6
Earnings per diluted share$ 0.11 $ 0.12 $ 0.15 $ 0.15 $ 0.12

All amounts in millions except earnings per diluted share.

(a) Q1 2016: Non-operating charges comprised of merger related costs including employee retention expenses, classification of compensation of certain personnel dedicated to merger integration efforts as well as costs related to securing shareholder approval for the merger, net of taxes.

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.

Loans

Average loans increased 5% annualized from the prior quarter to $24.1 billion, driven primarily by increases in the company’s commercial real estate (CRE), commercial business (C&I), and indirect auto portfolios. On an end-of-period basis, total loans increased 2% annualized from the prior quarter driven by an 11% annualized increase in C&I loans and 12% increase in indirect auto loans.

Average commercial loans, which include commercial business (C&I) and commercial real estate (CRE) loans, increased 7% annualized from prior quarter to $14.7 billion, primarily driven by growth in the company’s New England, Western Pennsylvania, and Tri-State regions.

  • Average CRE loans increased 7% annualized from the prior quarter to $8.6 billion driven by new commercial mortgage and construction lending volumes.
  • Average C&I loans increased 6% annualized QOQ to $6.1 billion reflecting strong origination activity across the company’s footprint.

Average consumer loans increased 2% annualized from prior quarter to $9.4 billion.

  • Average indirect auto loan balances increased 9% annualized or by $51 million to $2.4 billion, as strong new origination activity was partially offset by increased pay-downs. Indirect auto originations during the quarter totaled $314 million. New originations in the first quarter yielded 3.41%, net of dealer reserve, compared to 3.30% on originations in the prior quarter.
  • Average residential real estate loans were flat to the prior quarter.
  • Home equity balances increased for the twelfth consecutive quarter to $3.1 billion, or 2% annualized from the prior quarter as new volumes were offset by pay-downs driven by higher customer refinancing activity given low mortgage rates.
  • Credit card balances were down $8 million, or 11% annualized due to typical seasonality.

Average LoansQ1 2016Q4 2015Q3 2015Q2 2015Q1 2015
Commercial real estate$ 8,625 $ 8,476 $ 8,277 $ 8,257 $ 8,263
Commercial business 6,062 5,971 5,972 5,830 5,797
Total commercial 14,687 14,447 14,249 14,087 14,060
Residential real estate 3,346 3,346 3,338 3,326 3,338
Home equity 3,066 3,052 3,001 2,963 2,939
Indirect auto 2,420 2,369 2,293 2,238 2,187
Credit cards 297 305 306 304 311
Other consumer 242 250 255 260 275
Total consumer 9,371 9,322 9,193 9,091 9,050
Total loans$ 24,058 $ 23,769 $ 23,442 $ 23,178 $ 23,110

All amounts in millions.

Credit Quality

At March 31, 2016, the allowance for loan losses was $253 million, compared to $242 million at December 31, 2015. In the first quarter, provision for loan losses totaled $22.5 million, compared to $22.4 million in the prior quarter. Nonperforming assets comprised 0.59% of total assets, essentially flat compared to December 31, 2015. Information for both the originated and acquired portfolios follows.

Q1 2016 Q4 2015
$ in millionsOriginatedAcquiredTotal OriginatedAcquiredTotal
Provision for loan losses*$ 22 .5 $ 0.0 $ 22.5 $ 22.4 $ 0.0 $ 22.4
Net charge-offs 11.4 0.4 11.8 19.1 0.0 19.1
NCOs/ Avg Loans 0.22% 0.05% 0.20% 0.37% 0.00% 0.32%
Total loans**$ 21,362 $ 2,817 $ 24,178 $ 21,101 $ 2,937 $ 24,038
Allowance$ 247.8 $ 5.0 $ 252.8 $ 236.7 $ 5.3 $ 242.0
Allowance/Loans 1.16% 0.18% 1.05% 1.12% 0.18% 1.01%
Nonperforming Loans$ 196.7 $ 24.9 $ 221.5 $ 188.2 $ 25.3 $ 213.6
NPLs/ Loans 0.92% 0.88% 0.92% 0.89% 0.86% 0.89%
Criticized$ 775.9 $ 178.5 $ 954.5 $ 761.6 $ 183.2 $ 944.8
Criticized as % of Loans 3.63% 6.34% 3.95% 3.61% 6.24% 3.93%
Classified$ 462.9 $ 138.6 $ 601.5 $ 450.7 $ 152.2 $ 602.9
Classified as % of Loans 2.17% 4.92% 2.49% 2.14% 5.18% 2.51%

(*) Excludes provision for unfunded commitment of $0.5 million in 4Q15; none in 1Q16
(**) Acquired loans net of associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $23 million, compared to $22 million in the fourth quarter of 2015. The current quarter provision included $11 million to cover net charge-offs on originated loans and $11 million to support both $261 million in originated loan growth and reserve build toward the company’s exposure to scrap metal companies and demolition companies whose profitability is partially dependent on the sale of scrap metal. Originated net charge-offs in the first quarter equaled $11 million or 22 basis points of average originated loans, down from 37 basis points in the fourth quarter of 2015. The decrease in net charge-offs were driven by a recovery on a previously charged-off energy credit as well as moderation from elevated fourth quarter levels which included losses related to two commercial credits.

At March 31, 2016, nonperforming originated loans totaled $197 million, or 0.92% of originated loans, compared to 0.89% at December 31, 2015. The increase was primarily driven by new inflows of a few energy-related commercial credits, as well as a demolition contractor whose profitability is partially dependent on the sale of scrap metal, and offset by pay-downs, charge-offs and resolutions. At March 31, 2016, the allowance for loan losses on originated loans totaled $248 million or 1.16% of such loans, compared to $237 million or 1.12% of such loans at December 31, 2015. The increase in allowance coverage ratio reflects reserve build toward the company’s modest metals exposure.

Acquired loans

There was no provision for losses on acquired loans in both the first quarter of 2016 and the fourth quarter of 2015. Net charge-offs on the acquired portfolio were $0.4 million, compared to zero in the prior quarter. At March 31, 2016, the allowance for loan losses on acquired loans totaled $5 million, unchanged from December 31, 2015. Acquired nonperforming loans totaled $25 million, also unchanged from the prior quarter. At March 31, 2016, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $57 million.

Deposits

Average deposits increased 1% annualized from the prior quarter to $28.9 billion.

  • Non-interest checking deposit balances averaged $5.7 billion, decreased 14% annualized from the prior quarter driven by business and municipal deposit balances but were up 4% from the year-ago period.
  • Time deposits increased 24% annualized to $3.7 billion, driven by a $144 million increase in brokered certificate of deposit (CD) balances and an $86 million increase in Retail CDs.
  • Money market deposit balances were flat from the prior quarter as a $135 million, or 8%, increase in retail money market balances was offset by seasonal declines in municipal money market deposit balances.
  • Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking account balances, increased 6% from the year-ago period and decreased 6% annualized from the prior quarter and currently represents 38% of the company’s deposit balances.
  • The 2% sequential increase in interest-checking deposit balances was driven by a $74 million increase in retail interest checking balances.
  • Average savings balances increased 1% annualized from the prior quarter driven by modestly higher retail balances.

Average DepositsQ1 2016Q4 2015Q3 2015Q2 2015Q1 2015
Noninterest-bearing deposits$ 5,666 $ 5,868 $ 5,661 $ 5,427 $ 5,430
Savings accounts 3,371 3,364 3,427 3,494 3,432
Interest-bearing checking 5,362 5,333 5,165 5,131 5,001
Money market deposits 10,725 10,719 10,403 10,251 10,132
Certificates of deposit 3,726 3,515 3,962 3,917 3,778
Total deposits$ 28,850 $ 28,799 $ 28,618 $ 28,220 $ 27,773

All amounts in millions.

Net Interest Income

First quarter 2016 GAAP net interest income of $268 million increased $1 million from the prior quarter, driven in part by earning asset growth and modest benefit from an increase in short-term interest rates and offset by one less day in the quarter. Reported net interest margin of 3.00% was up 2 basis points from the prior quarter.

  • Yields on loans increased 8 basis points to 3.73% primarily reflecting benefit from the recent increase in short-term interest rates.
  • Yields on investment securities increased 2 basis points to 2.92%.
  • The average cost of interest-bearing deposits increased 2 basis points from the prior quarter to 0.32%.

Net Interest Income (Tax Equivalent)Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015
Quarter as Reported $ 272.8 $ 271.7 $ 268.5 $ 268.0 $ 267.8
Less: CLO pay-off discount recognition - - (1.2) (2.3) -
Add: CMO Retroactive premium amortization - - - 1.1 -
Add: CRE prepayment penalties - (0.5) - - -
Less: Early loan payoffs - - - (1.7) -
Less: Other miscellaneous items (0.6) (0.5) - - -
Sub-Total (0.6) (1.0) (1.2) (2.9) -
Normalized Net Interest Income$ 272.2 $ 270.7 $ 267.3 $ 265.1 $ 267.8

All amounts in millions.

Net Interest Margin (Tax Equivalent)Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015
Quarter as Reported 3.00% 2.98% 2.98% 3.02% 3.07%
Less: CLO pay-off discount recognition - - (0.01)% (0.03)% -
Add: CMO Retroactive premium amortization - - - 0.01% -
Add: CRE prepayment penalties - (0.01)% - - -
Less: Early loan payoffs - - - (0.02%) -
Less: Other miscellaneous items (0.01)% (0.01)% - - -
Sub-Total (0.01)% (0.02)% (0.01)% (0.03)% -
Normalized Net Interest Margin 2.99% 2.96% 2.97% 2.99% 3.07%


Noninterest Income

First quarter 2016 noninterest income of $79 million decreased 12% or $10 million compared to the prior quarter.

  • Deposit service charges decreased $1 million or 6% due to typical first quarter seasonality.
  • Merchant and card fees decreased $1 million driven by seasonally lower interchange revenues consistent with lower card transaction volumes.
  • Wealth management revenue decreased $1 million from prior quarter driven in part by equity market volatility.
  • Capital markets income, which includes income from derivatives and syndications, decreased $4 million, primarily driven by an unfavorable quarter-over-quarter change in credit valuation adjustments.
  • Mortgage banking revenues were $1 million lower than the prior quarter reflecting a $1 million repurchase reserve reversal recognized in the fourth quarter of 2015. Locked volumes increased QOQ, while gain-on-sale margin remained relatively flat.
  • Other noninterest income decreased $2 million from the prior quarter due to lower equity and investment gains as well as a one-time gain from the sale of a low-income housing property recognized in the prior quarter.

Noninterest IncomeQ1 2016Q4 2015Q3 2015Q2 2015Q1 2015
Deposit service charges$ 21.5 $ 22.9 $ 22.9 $ 22.2 $ 20.4
Insurance commissions 14.6 14.9 18.3 17.1 15.7
Merchant and card fees 12.3 13.3 13.4 13.3 11.9
Wealth management services 13.6 14.6 14.6 15.7 14.7
Mortgage banking 4.0 4.9 5.1 5.8 4.9
Capital markets income 2.3 6.6 2.6 5.3 4.2
Lending and leasing 4.1 4.2 4.5 4.0 4.4
Bank owned life insurance 3.5 3.3 2.8 3.2 3.6
Other income 3.2 4.7 (0.7) 0.1 2.6
Total noninterest income$ 79.1 $ 89.4 $ 83.4 $ 86.6 $ 82.2

All amounts in millions.

Noninterest Expense

Operating noninterest expenses totaled $242 million in the first quarter of 2016, or 2% lower than fourth quarter 2015 levels. The quarter-over-quarter decrease was primarily driven by lower technology and professional services expenses.

  • Salaries and benefits expense of $115 million increased modestly compared to the prior quarter as typical resetting of payroll taxes and other seasonal benefits more than offset lower salaries from lower headcount.
  • Occupancy and equipment expense increased 2%, due primarily to lower rental income associated with a property that was sold.
  • Technology and communications decreased $3 million, or 7% from prior quarter on lower infrastructure costs and depreciation expense.
  • Marketing and advertising spend were $1 million lower compared to fourth quarter levels and consistent with seasonal patterns.
  • Professional services fees decreased $3 million from fourth quarter levels driven by pause of certain projects and the associated decline in third party services expenses.
  • Other expenses decreased $1 million sequentially driven in part by lower other real estate (ORE) valuation write-downs and other corporate expenses.

Operating Noninterest Expense (Non-GAAP)*Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015
Salaries and employee benefits$ 115.0 $ 113.1 $ 113.8 $ 113.6 $ 112.0
Occupancy and equipment 26.5 26.0 25.5 26.0 27.3
Technology and communications 35.4 38.2 38.3 36.5 35.1
Marketing and advertising 8.8 9.7 8.4 10.3 9.9
Professional services 12.4 15.4 18.1 16.3 13.1
Amortization of intangibles 3.9 4.0 4.0 5.1 6.2
Federal deposit insurance premiums 10.5 10.4 10.0 11.8 11.2
Other expense 29.4 30.7 27.3 28.4 28.9
Total operating noninterest expense$ 241.9 $ 247.4 $ 245.4 $ 247.9 $ 243.5

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

In the first quarter of 2016, the operating efficiency ratio was 69.8%, compared to 69.5% 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 March 31, 2016, the company’s consolidated Total Risk Based capital and Common Equity Tier 1 capital ratios were 12.1% and 8.6%, respectively, relatively unchanged from December 31, 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, $30 billion in deposits, and approximately 5,300 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)
2016 2015 2014
First Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter Quarter
Interest income:
Loans and leases $ 219,050 $ 214,945 $ 211,407 $ 211,899 $ 210,371 $ 214,609
Investment securities and other 89,759 88,825 87,914 86,356 86,280 86,919
Total interest income 308,809 303,770 299,321 298,255 296,651 301,528
Interest expense:
Deposits 18,640 17,147 17,040 16,568 15,344 14,295
Borrowings 22,578 20,074 18,790 18,577 18,363 17,450
Total interest expense 41,218 37,221 35,830 35,145 33,707 31,745
Net interest income 267,591 266,549 263,491 263,110 262,944 269,783
Provision for credit losses 22,519 22,900 19,768 20,756 12,765 35,706
Net interest income after provision 245,072 243,649 243,723 242,354 250,179 234,077
Noninterest income:
Deposit service charges 21,507 22,919 22,944 22,208 20,389 22,611
Insurance commissions 14,562 14,920 18,252 17,060 15,714 14,764
Merchant and card fees 12,329 13,318 13,423 13,317 11,907 13,043
Wealth management services 13,610 14,567 14,572 15,718 14,650 14,404
Mortgage banking 3,950 4,894 5,070 5,783 4,887 4,600
Capital markets income 2,323 6,580 2,608 5,284 4,152 8,312
Lending and leasing 4,051 4,248 4,487 3,998 4,353 4,567
Bank owned life insurance 3,540 3,259 2,819 3,160 3,592 3,187
Other income 3,196 4,696 (732) 79 2,600 (8,311)
Total noninterest income 79,068 89,401 83,443 86,607 82,244 77,177
Noninterest expense:
Salaries and employee benefits 115,007 113,063 113,794 113,561 111,973 110,985
Occupancy and equipment 26,466 25,961 25,538 26,021 27,332 28,379
Technology and communications 35,419 38,232 38,301 36,486 35,061 33,940
Marketing and advertising 8,821 9,719 8,445 10,297 9,863 11,584
Professional services 12,401 15,361 18,052 16,321 13,070 16,644
Amortization of intangibles 3,860 3,972 4,001 5,092 6,205 6,432
Federal deposit insurance premiums 10,460 10,383 10,026 11,750 11,158 11,911
Merger and acquisition integration expenses 13,473 14,198 - - - -
Restructuring charges - 3,378 - - 17,517 9,066
Deposit account remediation - - - - - (23,000)
Other expense 29,445 30,728 27,276 28,371 28,859 28,371
Total noninterest expense 255,352 264,995 245,433 247,899 261,038 234,312
Income before income tax 68,788 68,055 81,733 81,062 71,385 76,942
Income tax expense 20,481 17,255 21,251 20,052 20,000 7,875
Net income 48,307 50,800 60,482 61,010 51,385 69,067
Preferred stock dividend 7,547 7,547 7,547 7,547 7,547 7,547
Net income available to common stockholders $ 40,760 $ 43,253 $ 52,935 $ 53,463 $ 43,838 $ 61,520
Financial Ratios:
Earnings per basic share $ 0.11 $ 0.12 $ 0.15 $ 0.15 0.12 0.17
Earnings per diluted share $ 0.11 $ 0.12 $ 0.15 $ 0.15 0.12 0.17
Weighted average shares outstanding - basic(1) 351,372 351,306 351,293 351,126 350,741 350,444
Weighted average shares outstanding - diluted(1) 353,965 353,797 353,248 352,791 352,621 352,152
Net revenue(2) $ 346,659 $ 355,950 $ 346,934 $ 349,717 $ 345,188 $ 346,960
Noninterest income as a percentage of net revenue(2) 22.81% 25.12% 24.05% 24.76% 23.83% 22.24%
Pre-tax, pre-provision income(3) $ 91,307 $ 90,955 $ 101,501 $ 101,818 $ 84,150 $ 112,648
Pre-tax, pre-provision income per diluted share(3) $ 0.26 $ 0.26 $ 0.29 $ 0.29 $ 0.24 $ 0.32
Pre-tax, pre-provision return on average assets(3) 0.92% 0.91% 1.03% 1.05% 0.88% 1.17%
Net interest margin(4) 3.00% 2.98% 2.98% 3.02% 3.07% 3.11%
Interest yield on average loans(4) 3.73% 3.65% 3.64% 3.73% 3.75% 3.78%
Rate paid on interest-bearing liabilities 0.56% 0.51% 0.50% 0.49% 0.48% 0.45%
Efficiency ratio 73.7% 74.4% 70.7% 70.9% 75.6% 67.5%
Expenses as a percentage of average loans and deposits 1.9% 2.0% 1.9% 1.9% 2.1% 1.8%
Effective tax rate 29.8% 25.4% 26.0% 24.7% 28.0% 10.2%
Return on average assets(5) 0.49% 0.51% 0.61% 0.63% 0.54% 0.72%
Return on average equity(5) 4.68% 4.85% 5.78% 5.90% 5.05% 6.62%
Return on average tangible equity(3)(5) 7.04% 7.32% 8.73% 8.94% 7.68% 10.07%
Return on average common equity 4.30% 4.50% 5.51% 5.63% 4.69% 6.42%
Return on average tangible common equity(3) 6.77% 7.10% 8.72% 8.94% 7.48% 10.24%
(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 3
(in thousands)
2016 2015 2014
March 31, December 31, September 30,June 30,March 31, December 31,
Cash and cash equivalents $ 382,539 $ 672,243 $ 420,289 $ 527,323 $ 387,676 $ 420,033
Investment securities:
Available for sale 5,439,220 5,471,291 5,725,608 5,750,860 5,911,419 5,915,338
Held to maturity 6,720,817 6,387,689 6,280,049 6,169,838 6,214,561 5,941,621
FHLB and FRB common stock 375,960 410,452 373,066 379,135 375,090 411,857
Total investment securities 12,535,997 12,269,432 12,378,723 12,299,833 12,501,070 12,268,816
Loans held for sale 26,592 46,096 51,056 59,816 48,755 39,825
Loans and leases:
Commercial:
Real estate 8,625,965 8,652,255 8,365,808 8,312,332 8,287,108 8,204,027
Business 6,174,753 6,013,217 6,031,358 5,923,524 5,790,980 5,775,413
Total commercial loans 14,800,718 14,665,472 14,397,166 14,235,856 14,078,088 13,979,440
Consumer:
Residential real estate 3,330,533 3,354,639 3,345,701 3,329,799 3,330,216 3,353,081
Home equity 3,057,154 3,068,962 3,032,618 2,984,872 2,943,844 2,936,123
Indirect auto 2,464,318 2,393,105 2,330,826 2,256,004 2,200,913 2,166,320
Credit cards 288,747 310,813 305,779 304,682 301,228 324,113
Other consumer 236,911 244,935 254,109 257,204 263,985 278,305
Total consumer loans 9,377,663 9,372,454 9,269,033 9,132,561 9,040,186 9,057,942
Total loans and leases 24,178,381 24,037,926 23,666,199 23,368,417 23,118,274 23,037,382
Allowance for loan losses 252,800 242,036 238,700 235,600 231,138 234,251
Loans and leases, net 23,925,581 23,795,890 23,427,499 23,132,817 22,887,136 22,803,131
Bank owned life insurance 439,084 436,709 434,263 431,335 428,454 426,192
Goodwill and other intangibles 1,392,367 1,396,227 1,400,199 1,404,201 1,410,800 1,417,005
Other assets 1,370,275 1,301,789 1,301,152 1,208,218 1,243,588 1,176,036
Total assets $ 40,072,435 $ 39,918,386 $ 39,413,181 $ 39,063,543 $ 38,907,479 $ 38,551,038
Deposits:
Savings accounts $ 3,428,924 $ 3,389,728 $ 3,359,320 $ 3,483,777 $ 3,488,441 $ 3,451,616
Interest-bearing checking 5,553,928 5,478,947 5,285,987 5,088,856 5,158,264 5,084,456
Money market deposits 10,884,350 10,653,792 10,483,721 10,303,873 10,368,358 9,962,220
Noninterest-bearing deposits 5,739,509 5,834,534 5,813,571 5,549,944 5,500,484 5,407,382
Certificates of deposit 3,954,033 3,343,878 3,873,521 4,020,367 3,734,226 3,875,563
Total deposits 29,560,744 28,700,879 28,816,120 28,446,817 28,249,773 27,781,237
Short-term borrowings 3,255,890 4,348,586 4,086,415 4,275,886 4,739,264 5,471,974
Long-term borrowings 2,608,014 2,308,101 1,783,402 1,683,476 1,233,550 733,620
Other liabilities 498,084 434,492 587,867 536,239 559,646 471,449
Total liabilities 35,922,732 35,792,058 35,273,804 34,942,418 34,782,233 34,458,280
Preferred stockholders' equity 338,002 338,002 338,002 338,002 338,002 338,002
Common stockholders' equity 3,811,701 3,788,326 3,801,375 3,783,123 3,787,244 3,754,756
Total stockholders' equity 4,149,703 4,126,328 4,139,377 4,121,125 4,125,246 4,092,758
Total liabilities and stockholders' equity $ 40,072,435 $ 39,918,386 $ 39,413,181 $ 39,063,543 $ 38,907,479 $ 38,551,038
Selected balance sheet information:
Total interest-earning assets(1) $ 36,789,339 $ 36,677,134 $ 36,099,580 $ 35,813,498 $ 35,594,208 $ 35,310,447
Total interest-bearing liabilities 29,685,139 29,523,032 28,872,365 28,856,235 28,722,103 28,579,449
Net interest-earning assets $ 7,104,200 $ 7,154,102 $ 7,227,215 $ 6,957,263 $ 6,872,105 $ 6,730,998
Tangible common equity(1)(2) $ 2,419,334 $ 2,392,099 $ 2,401,176 $ 2,378,922 $ 2,376,444 $ 2,337,751
Unrealized gain (loss) on available for sale securities, net of tax(3) 1,246 (9,577) 29,877 37,464 68,194 52,244
Total core deposits $ 25,606,711 $ 25,357,001 $ 24,942,599 $ 24,426,450 $ 24,515,547 $ 23,905,674
Originated loans(4) $ 21,361,753 $ 21,101,040 $ 20,591,532 $ 19,929,719 $ 19,528,609 $ 19,295,553
Acquired loans(5) 2,873,372 2,998,530 3,138,568 3,517,525 3,681,354 3,834,931
Credit related discount on acquired loans(6) (56,744) (61,644) (63,901) (78,827) (91,689) (93,102)
Total Loans $ 24,178,381 $ 24,037,926 $ 23,666,199 $ 23,368,417 $ 23,118,274 $ 23,037,382
(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
March 31, 2016December 31, 2015March 31, 2015
Average Interest(1) Yields Average Interest(1) Yields Average Interest(1) Yields
Balances
and
Rates(1)
Balances
and
Rates(1)
Balances
and
Rates(1)
Interest-earning assets:
Loans and leases(2)
Commercial:
Real estate $ 8,625 $ 79 3.61%$ 8,476 $ 77 3.57%$ 8,263 $ 74 3.60%
Business 6,062 52 3.42 5,971 50 3.28 5,797 50 3.43
Total commercial loans 14,687 131 3.53 14,447 127 3.45 14,060 124 3.53
Consumer:
Residential real estate 3,346 31 3.65 3,346 31 3.65 3,338 32 3.78
Home equity 3,066 30 3.93 3,052 29 3.80 2,939 28 3.91
Indirect auto 2,420 18 2.91 2,369 17 2.90 2,187 15 2.79
Credit cards 297 9 11.80 305 9 11.45 311 9 11.74
Other consumer 242 4 8.57 250 5 8.50 275 6 8.49
Total consumer loans 9,371 92 3.94 9,322 91 3.88 9,050 90 4.02
Total loans and leases 24,058 223 3.73 23,769 218 3.65 23,110 214 3.75
Residential MBS 7,864 48 2.43 7,705 47 2.44 7,180 45 2.49
Commercial MBS 997 12 4.68 1,126 12 4.31 1,404 11 3.26
Other investment securities (3) 3,513 30 3.53 3,540 31 3.47 3,554 31 3.52
Total securities, at amortized cost 12,374 90 2.92 12,371 90 2.90 12,138 87 2.88
Money market and other investments 205 1 1.37 88 1 2.29 158 - 1.01
Total interest-earning assets 36,637 $ 314 3.45% 36,228 $ 309 3.38% 35,406 $ 302 3.45%
Goodwill and other intangibles 1,394 1,398 1,414
Other noninterest-earning assets 1,929 1,951 1,887
Total assets $ 39,960 $ 39,577 $ 38,707
Interest-bearing liabilities:
Deposits
Savings accounts $ 3,371 $ 1 0.09%$ 3,364 $ 1 0.09%$ 3,432 $ - 0.08%
Interest-bearing checking 5,362 - 0.03 5,333 - 0.03 5,001 - 0.03
Money market deposits 10,725 9 0.32 10,719 8 0.30 10,132 7 0.26
Certificates of deposit 3,726 9 0.97 3,515 8 0.89 3,778 8 0.84
Total interest bearing deposits 23,184 19 0.32% 22,931 17 0.30% 22,343 15 0.28%
Borrowings
Short-term borrowings 3,815 7 0.72% 4,014 6 0.56% 5,125 6 0.46%
Long-term borrowings 2,416 15 2.62 1,971 14 2.89 1,027 13 4.98
Total borrowings 6,231 22 1.46 5,985 20 1.33 6,152 19 1.21
Total interest-bearing liabilities 29,415 $ 41 0.56% 28,916 $ 37 0.51% 28,495 $ 34 0.48%
Noninterest-bearing deposits 5,666 5,868 5,430
Other noninterest-bearing liabilities 725 640 654
Total liabilities 35,806 35,424 34,579
Total stockholders' equity 4,154 4,153 4,128
Total liabilities and stockholders' equity $ 39,960 $ 39,577 $ 38,707
Net interest income (FTE) $ 273 $ 272 $ 268
Taxable Equivalent Adjustment(1) 5 5 5
Total core deposits $ 25,124 $ 10 0.15%$ 25,284 $ 9 0.15%$ 23,995 $ 7 0.13%
Total transactional deposits 11,028 - 0.02% 11,201 - 0.02% 10,431 - 0.01%
Total deposits 28,850 19 0.26% 28,799 17 0.24% 27,773 15 0.22%
Tax equivalent net interest rate spread 2.89% 2.87% 2.97%
Tax equivalent net interest rate margin 3.00% 2.98% 3.07%
(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)
2016 2015 2014
First Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter Quarter
Beginning balance $ 242,036 $ 238,700 $ 235,600 $ 231,138 $ 234,251 $ 222,753
Net loan (charge-offs) recoveries:
Commercial real estate $ (254) $ (1,476)$ (2,686)$ (5,525)$ (5,825) $ (2,008)
Commercial business (3,903) (10,441) (6,286) (3,513) (4,178) (12,650)
Residential real estate (135) (94) (230) (197) (266) (476)
Home equity (995) (723) (1,056) (1,367) (1,526) (1,406)
Indirect auto (2,030) (2,122) (1,743) (1,342) (1,226) (2,241)
Credit cards (2,654) (2,450) (2,215) (2,522) (2,450) (2,464)
Other consumer (1,784) (1,758) (1,952) (1,528) (1,807) (1,457)
Total net loan charge-offs $ (11,755) $ (19,064)$ (16,168)$ (15,994)$ (17,278) $ (22,702)
Provision for loan losses 22,519 22,400 19,268 20,456 14,165 34,200
Ending balance $ 252,800 $ 242,036 $ 238,700 $ 235,600 $ 231,138 $ 234,251
Supplemental information
Allowance to loans 1.05% 1.01% 1.01% 1.01% 1.00% 1.02%
Allowance for originated loans to originated loans(1) 1.16% 1.12% 1.13% 1.15% 1.15% 1.18%
Net charge-offs (recoveries) to average loans (annualized)
Commercial real estate 0.01% 0.07% 0.13% 0.27% 0.29% 0.10%
Commercial business 0.26% 0.70% 0.42% 0.24% 0.29% 0.87%
Total commercial loans 0.11% 0.33% 0.25% 0.26% 0.28% 0.42%
Residential real estate 0.02% 0.01% 0.03% 0.02% 0.03% 0.06%
Home equity 0.13% 0.09% 0.14% 0.18% 0.21% 0.19%
Indirect auto 0.34% 0.36% 0.30% 0.24% 0.22% 0.42%
Credit cards 3.57% 3.21% 2.90% 3.32% 3.16% 3.13%
Other consumer 2.95% 2.81% 3.06% 2.35% 2.63% 2.06%
Total consumer loans 0.33% 0.31% 0.32% 0.31% 0.33% 0.36%
Total loans 0.20% 0.32% 0.28% 0.28% 0.30% 0.40%
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)
Commercial real estate 0.00% 0.08% 0.14% 0.31% 0.24% 0.06%
Commercial business 0.26% 0.72% 0.44% 0.25% 0.31% 0.93%
Total commercial loans 0.11% 0.36% 0.27% 0.28% 0.27% 0.44%
Residential real estate 0.02% 0.02% 0.04% 0.04% 0.05% 0.09%
Home equity 0.16% 0.14% 0.14% 0.17% 0.16% 0.15%
Indirect auto 0.34% 0.36% 0.30% 0.24% 0.22% 0.42%
Credit cards 3.57% 3.21% 2.90% 3.32% 3.16% 3.13%
Other consumer 2.95% 2.81% 3.06% 2.35% 2.63% 2.06%
Total consumer loans 0.40% 0.39% 0.38% 0.37% 0.38% 0.44%
Total loans 0.22% 0.37% 0.31% 0.31% 0.31% 0.44%
Nonperforming loans:
Originated(1):
Commercial real estate $ 37,087 $ 44,438 $ 54,699 $ 60,021 $ 65,655 $ 53,164
Commercial business 71,999 56,382 45,389 42,979 54,506 45,201
Residential real estate 30,234 31,513 32,455 32,877 32,791 33,652
Home equity 35,701 35,561 34,191 27,092 26,163 23,749
Indirect auto 16,536 15,131 13,795 13,066 13,399 12,616
Other consumer 5,093 5,201 5,047 4,917 5,065 5,140
Total originated nonperforming loans 196,650 188,226 185,576 180,952 197,579 173,522
Total acquired nonperforming loans(2) 24,874 25,335 25,365 26,553 30,236 30,223
Total nonperforming loans 221,524 213,561 210,941 207,505 227,815 203,745
Real estate owned 16,457 16,063 18,359 17,397 19,128 20,541
Total nonperforming assets(3) $ 237,981 $ 229,624 $ 229,300 $ 224,902 $ 246,943 $ 224,286
Accruing troubled debt restructurings (TDR) $ 63,659 $ 62,630 $ 60,941 $ 64,643 $ 64,401 $ 67,102
Loans 90 days past due still accruing(4) 57,259 67,718 69,879 78,279 87,213 93,903
Total classified loans(5) 601,539 602,912 591,771 592,148 615,518 609,316
Total criticized loans(6) $ 954,480 $ 944,779 $ 858,243 $ 938,951 $ 990,656 $ 1,041,050
Total nonperforming loans to loans 0.92% 0.89% 0.89% 0.89% 0.99% 0.88%
Total nonperforming originated loans to originated loans(1) 0.92% 0.89% 0.90% 0.91% 1.01% 0.90%
Total nonperforming assets to loans and real estate owned 0.98% 0.95% 0.97% 0.96% 1.07% 0.97%
Total nonperforming assets to assets 0.59% 0.58% 0.58% 0.58% 0.63% 0.58%
Allowance to nonperforming loans 114.1% 113.3% 113.2% 113.5% 101.5% 115.0%
Originated loans(1) $ 21,361,753 $ 21,101,040 $ 20,591,532 $ 19,929,719 $ 19,528,609 $ 19,295,553
Acquired loans(7) 2,873,372 2,998,530 3,138,568 3,517,525 3,681,354 3,834,931
Credit related discount on acquired loans(8) (56,744) (61,644) (63,901) (78,827) (91,689) (93,102)
Total Loans $ 24,178,381 $ 24,037,926 $ 23,666,199 $ 23,368,417 $ 23,118,274 $ 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, 2015.
(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)
2016 2015 2014
March 31, December 31,September 30,June 30,March 31, December 31,
First Niagara Financial Group, Inc. capital ratios(1)(2):
Tier 1 risk based capital 10.12% 10.08% 10.05% 10.03% 10.02% 9.81%
Total risk based capital 12.09% 12.01% 11.97% 11.96% 11.95% 11.75%
Common equity tier 1 capital 8.58% 8.55% 8.52% 8.50% 8.48% N/A
Tier 1 common capital(3) N/A N/A N/A N/A N/A 8.20%
Leverage 7.55% 7.62% 7.66% 7.60% 7.56% 7.50%
Equity to assets 10.36% 10.34% 10.50% 10.55% 10.60% 10.62%
Tangible common equity to tangible assets(3) 6.25% 6.21% 6.32% 6.32% 6.34% 6.30%
Total risk weighted assets $ 28,809 $ 28,881 $ 28,716 $ 28,445 $ 28,152 $ 28,186
First Niagara Bank, N.A capital ratios(1)(2):
Tier 1 risk based capital 10.73% 10.65% 10.67% 10.66% 10.65% 10.48%
Total risk based capital 11.67% 11.55% 11.56% 11.54% 11.53% 11.37%
Common equity tier 1 capital 10.73% 10.65% 10.67% 10.66% 10.65% N/A
Leverage 8.00% 8.05% 8.12% 8.07% 8.03% 8.01%
Total risk weighted assets $ 28,742 $ 28,813 $ 28,632 $ 28,359 $ 28,068 $ 28,146
Number of branches 392 392 394 394 394 411
Full time equivalent employees 5,322 5,428 5,397 5,364 5,322 5,572
Share information and per share metrics:
Common shares outstanding 354,977 354,762 354,788 354,890 353,717 353,388
Preferred shares outstanding 14,000 14,000 14,000 14,000 14,000 14,000
Treasury shares 11,025 11,240 11,214 11,112 12,285 12,614
Market price (NASDAQ: FNFG): $ 9.68 $ 10.85 $ 10.21 $ 9.44 $ 8.84 $ 8.43
Book value per common share(4) 10.84 10.78 10.82 10.77 10.80 10.71
Tangible book value per common share(3)(4) 6.88 6.81 6.84 6.77 6.78 6.67
Price/Book 89.30% 100.65% 94.36% 87.65% 81.85% 78.71%
Price/Tangible book(1) 140.70% 159.32% 149.27% 139.44% 130.38% 126.39%
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 72.73% 66.67% 53.33% 53.33% 66.67% 47.06%
Dividend yield (annualized) 3.32% 2.93% 3.11% 3.40% 3.67% 3.77%
(1) Represents an estimate as of March 31, 2016. 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)
2016 2015 2014
First Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter Quarter
Financial ratios computed on an operating basis(1):
Earnings per basic share $ 0.14 $ 0.16 $ 0.15 $ 0.15 $ 0.15 $ 0.15
Earnings per diluted share $ 0.14 $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.15
Weighted average shares outstanding - basic(2) 351,372 351,306 351,293 351,126 350,741 350,444
Weighted average shares outstanding - diluted(2) 353,965 353,797 353,248 352,791 352,621 352,152
Noninterest income as a percentage of net revenue(3) 22.81% 25.12% 24.05% 24.76% 23.83% 22.24%
Pre-tax, pre-provision income 104,780 108,531 101,501 101,818 101,667 98,714
Pre-tax, pre-provision income per diluted share $ 0.30 $ 0.31 $ 0.29 $ 0.29 $ 0.29 $ 0.28
Pre-tax, pre-provision return on average assets 1.05% 1.09% 1.03% 1.05% 1.07% 1.02%
Net interest margin(4) 3.00% 2.98% 2.98% 3.02% 3.07% 3.11%
Interest yield on average loans(4) 3.73% 3.65% 3.64% 3.73% 3.75% 3.78%
Rate paid on interest-bearing liabilities 0.56% 0.51% 0.50% 0.49% 0.48% 0.45%
Efficiency ratio 69.8% 69.5% 70.7% 70.9% 70.5% 71.5%
Effective tax rate 30.2% 26.6% 26.0% 24.7% 30.0% 3.7%
Return on average assets 0.58% 0.63% 0.61% 0.63% 0.65% 0.63%
Return on average equity 5.56% 6.00% 5.78% 5.90% 6.12% 5.82%
Return on average tangible equity(5) 8.37% 9.05% 8.73% 8.94% 9.30% 8.85%
Return on average common equity 5.26% 5.75% 5.51% 5.63% 5.85% 5.54%
Return on average tangible common equity(6) 8.29% 9.07% 8.72% 8.94% 9.34% 8.85%
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):
Total noninterest expense on operating basis (Non-GAAP) $ 241,879 $ 247,419 $ 245,433 $ 247,899 $ 243,521 $ 248,246
Merger and acquisition integration expenses 13,473 14,198 - - - -
Restructuring charges - 3,378 - - 17,517 9,066
Deposit account remediation - - - - - (23,000)
Total reported noninterest expense (GAAP) $ 255,352 $ 264,995 $ 245,433 $ 247,899 $ 261,038 $ 234,312
Reconciliation of net operating income to net income(1):
Net operating income (Non-GAAP) $ 57,448 $ 62,813 $ 60,482 $ 61,010 $ 62,246 $ 60,697
Nonoperating income and expenses, net of tax:
Merger and acquisition integration expenses 9,141 9,919 - - - -
Restructuring charges - 2,094 - - 10,861 6,364
Deposit account remediation - - - - - (14,734)
Total nonoperating expenses, net of tax 9,141 12,013 - - 10,861 (8,370)
Net income (GAAP) $ 48,307 $ 50,800 $ 60,482 $ 61,010 $ 51,385 $ 69,067
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) $ 49,901 $ 55,266 $ 52,935 $ 53,463 $ 54,699 $ 53,150
Nonoperating income and expenses, net of tax:
Merger and acquisition integration expenses 9,141 9,919 - - - -
Restructuring charges - 2,094 - - 10,861 6,364
Deposit account remediation - - - - - (14,734)
Total nonoperating income and expenses, net of tax 9,141 12,013 - - 10,861 (8,370)
Net income available to common stockholders (GAAP) $ 40,760 $ 43,253 $ 52,935 $ 53,463 $ 43,838 $ 61,520
Computation of pre-tax,pre-provision income:
Net interest income $ 267,591 $ 266,549 $ 263,491 $ 263,110 $ 262,944 $ 269,783
Noninterest income 79,068 89,401 83,443 86,607 82,244 77,177
Noninterest expense (255,352) (264,995) (245,433) (247,899) (261,038) (234,312)
Pre-tax, pre-provision income (GAAP) 91,307 90,955 101,501 101,818 84,150 112,648
Add back: non-operating noninterest expenses (1) - 17,576 - - 17,517 (13,934)
Pre-tax, pre-provision income (Non-GAAP)(1) $ 91,307 $ 108,531 $ 101,501 $ 101,818 $ 101,667 $ 98,714
(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)
2016 2015 2014
First Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter Quarter
Computation of Ending Tangible Assets:
Total assets $ 40,072,435 $ 39,918,386 $ 39,413,181 $ 39,063,543 $ 38,907,479 $ 38,551,038
Less: Goodwill and other intangibles (1,392,367) (1,396,227) (1,400,199) (1,404,201) (1,410,800) (1,417,005)
Tangible assets $ 38,680,068 $ 38,522,159 $ 38,012,982 $ 37,659,342 $ 37,496,679 $ 37,134,033
Computation of Average Tangible Assets:
Total assets $ 39,959,615 $ 39,576,697 $ 39,051,359 $ 38,913,219 $ 38,706,545 $ 38,317,930
Less: Goodwill and other intangibles (1,394,178) (1,398,122) (1,402,138) (1,407,946) (1,413,765) (1,420,119)
Tangible assets $ 38,565,437 $ 38,178,575 $ 37,649,221 $ 37,505,273 $ 37,292,780 $ 36,897,811
Computation of Ending Tangible Equity:
Total stockholders' equity $ 4,149,703 $ 4,126,328 $ 4,139,377 $ 4,121,125 $ 4,125,246 $ 4,092,758
Less: Goodwill and other intangibles (1,392,367) (1,396,227) (1,400,199) (1,404,201) (1,410,800) (1,417,005)
Tangible equity $ 2,757,336 $ 2,730,101 $ 2,739,178 $ 2,716,924 $ 2,714,446 $ 2,675,753
Computation of Ending Tangible Common Equity:
Total stockholders' equity $ 4,149,703 $ 4,126,328 $ 4,139,377 $ 4,121,125 $ 4,125,246 $ 4,092,758
Less: Goodwill and other intangibles (1,392,367) (1,396,227) (1,400,199) (1,404,201) (1,410,800) (1,417,005)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $ 2,419,334 $ 2,392,099 $ 2,401,176 $ 2,378,922 $ 2,376,444 $ 2,337,751
Computation of Average Tangible Equity:
Total stockholders' equity $ 4,154,033 $ 4,152,977 $ 4,149,635 $ 4,145,334 $ 4,127,743 $ 4,141,141
Less: Goodwill and other intangibles (1,394,178) (1,398,122) (1,402,138) (1,407,946) (1,413,765) (1,420,119)
Tangible equity $ 2,759,855 $ 2,754,855 $ 2,747,497 $ 2,737,388 $ 2,713,978 $ 2,721,022
Computation of Average Tangible Common Equity:
Total stockholders' equity $ 4,154,033 $ 4,152,977 $ 4,149,635 $ 4,145,334 $ 4,127,743 $ 4,141,141
Less: Goodwill and other intangibles (1,394,178) (1,398,122) (1,402,138) (1,407,946) (1,413,765) (1,420,119)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $ 2,421,853 $ 2,416,853 $ 2,409,495 $ 2,399,386 $ 2,375,976 $ 2,383,020
Computation of Tier 1 Common Capital:
Tier 1 capital N/A N/A N/A N/A N/A $ 2,764,117
Less: Qualifying restricted core capital elements N/A N/A N/A N/A N/A (113,785)
Less: Perpetual non-cumulative preferred stock N/A N/A N/A N/A N/A (338,002)
Tier 1 common capital (Non-GAAP) N/A N/A N/A N/A 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.