First Niagara 3rd-qtr profit down on restructuring

BUFFALO, N.Y. -- First Niagara Financial Group Inc.'s net income fell 11 percent in the third quarter as the bank took a big charge to cover acquisition and restructuring costs.

The holding company for First Niagara Bank said Friday that the period ended Sept. 30 was its 11th straight quarter of double-digit growth for its commercial loan book.

First Niagara's net income available to common shareholders fell to $50.8 million, or 14 cents per share, from $57 million, or 19 cents per share, in the same period last year.

The main culprit was a $29 million charge related to acquisition and restructuring. First Niagara said last summer that it would buy 195 branches from the British bank HSBC for about $1 billion. First Niagara was forced by regulators to sell dozens of the HSBC branches to satisfy concerns that it would end up with a near-monopoly on retail banking in upstate New York.

The recent quarter's per-share results were also reduced because First Niagara had about 19 percent more shares outstanding than it did last year, which shaved about 3 cents per share.

Net interest income in the third quarter rose to $269.6 million, from $235.4 in the year-ago quarter. Net interest income combines the interest a bank collects on loans and the interest it pays out to depositors and creditors. It is a measure of the bank's ability to profit from its lending.

First Niagara's total loans and leases at the end of the quarter increased to $19.11 billion from $16.37 billion in the third quarter of 2011.

Noninterest income, which includes fees, insurance and other services, leapt to $102.2 million from $68.7 million last year. Capital markets income and fees collected for deposit services both rose strongly. Mortgage banking income more than doubled.

Adjusting for the restructuring charge and other one-time items, net income was 19 cents per share, compared with 25 cents per share a year earlier.

The results were slightly better than analysts had expected. Analysts surveyed by FactSet had projected adjusted earnings of 18 cents per share.

First Niagara Bank provides retail and commercial banking, including deposit products, checking and money orders. It also offers commercial, business and real estate loans; insurance products; and risk management advice.

First Niagara shares fell 14 cents, to $8.14 in afternoon trading. In the past 52 weeks, it has traded between $7.14 and $10.35.