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First Niagara Reports Second Quarter 2013 Results

Second Quarter Highlights:

  • Profitable organic growth continues with EPS of $0.18 per share
  • Operating revenues increase 3% QOQ primarily driven by a 7% increase in fee income
  • Strong customer activity drove QOQ increases in most fee income categories
  • Stable net interest margin of 3.36%
  • Organic loan growth continues with average total loans up 8% QOQ
  • Average commercial loans increase 10% QOQ, the bank's 14th consecutive quarter of double-digit commercial loan growth
  • Interest-bearing checking balances increase 11% QOQ
  • Transactional deposits averaged 34% of deposits, up from 30% a year-ago
  • Mobile banking exceeds 100,000 registered customers
  • Strong credit quality maintained
  • NCOs equaled 0.33% of average originated loans, compared to 0.35% in 2012

BUFFALO, N.Y., July 19, 2013 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today reported net income available to common shareholders of $63.6 million or $0.18 per diluted share for the second quarter of 2013 highlighted by organic expansion of commercial and indirect auto lending, continued growth in transactional deposit balances, strong fee income generation and positive operating leverage.

"We continue to drive profitable organic growth across our entire footprint by diversifying and enhancing revenue sources while managing expenses to achieve real operating leverage," said Gary Crosby, Interim President and Chief Executive Officer. "First Niagara's strong business fundamentals are translating into strong financial performance. As we continue our search for a permanent CEO, the entire First Niagara team has not missed a beat and we are all focused on achieving our overall performance goals by expanding and broadening customer relationships for profitable organic growth."

Second Quarter Results

In the second quarter of 2013, First Niagara reported net income available to common shareholders of $63.6 million, or $0.18 per diluted share. In the second quarter of 2012, First Niagara reported a net loss available to common shareholders of $18.5 million, or $0.05 per diluted share, that included $135.2 million in pre-tax acquisition and restructuring expenses incurred primarily in connection with the closing of the HSBC branch acquisition in May 2012. For the first three months of the year, net income to common shareholders was $59.7 million, or $0.17 per diluted share.

Balance sheet growth remained strong as average loans increased 8% annualized compared to the prior quarter. Average commercial loans increased 10% annualized over the prior quarter, the 14th consecutive quarter of double-digit growth. Average consumer loans increased 5% annualized driven by continued growth in indirect auto loan balances, partially offset by a decline in residential mortgage loans. Average interest-bearing checking deposits increased 11% annualized from the prior quarter driven by greater account acquisition activity particularly in the company's New York and New England markets as well as increases in balances held by customers.

Net interest income was up modestly in the second quarter compared to the prior quarter. Net interest margin was 3.36%, as compared to 3.39% in the first quarter of 2013. Noninterest income increased $6.2 million or 7% from the prior quarter primarily due to sequential strength in wealth management fees, deposit service charges, insurance commissions, and merchant and card fees.

The provision for loan losses on originated loans totaled $23.9 million in the second quarter of 2013, including $11.7 million to support loan growth and $12.2 million to cover net charge-offs during the quarter. At June 30, 2013, nonperforming originated loans comprised 1.02% of originated loans, essentially flat to prior quarter. Net charge-offs equaled 33 basis points of average originated loans, compared to 35 basis points in 2012.

Second quarter 2013 expenses of $235.2 million reflected higher incentive and variable compensation tied to strong fee income growth as well as costs related to selective investments in key initiatives and branch consolidations, partially offset by lower amortization of core deposit intangibles.

Reported Results (GAAP) Q2 2013 Q1 2013 Q2 2012
Net interest income $ 269.4 $ 266.1 $ 259.0
Provision for credit losses 25.2 20.2 28.1
Noninterest income 95.5 89.3 95.6
Noninterest expense 235.2 237.7 345.6
Net income (loss) 71.1 67.3 (10.9)
Preferred stock dividend 7.5 7.5 7.5
Net income (loss) available to common shareholders 63.6 59.7 (18.5)
Weighted average diluted shares outstanding 350.4 350.0 348.9
Earnings (loss) per diluted share $ 0.18 $ 0.17 $ (0.05)
All amounts in millions except earnings per diluted share.

"During the second quarter, we continued to generate positive operating leverage driven by stronger than expected fee income growth and our continued focus on managing our expense base to meet our previously disclosed year-end targets," said Gregory W. Norwood, Chief Financial Officer. "During the quarter, we continued to generate loan growth across all our geographies through market share gains and concerted efforts to earn more of our customers' business and used a portion of the cash flows from our investment securities portfolio to partially fund this loan growth."

Loans

Average total loans increased 8% annualized from the linked quarter boosted by a double-digit increase in commercial lending (business and real estate) as well as sustained momentum in the company's indirect auto business. For the 14th consecutive quarter, average commercial loans, which includes commercial business (C&I) and commercial real estate (CRE) loans, increased at a double-digit pace organically, up $310 million, or 10% annualized over the prior quarter.

Average CRE loans increased 11% annualized to $7.4 billion. C&I loans averaged $5.1 billion, representing a 9% annualized increase over the prior quarter. Average commercial loans in the company's Western Pennsylvania, Eastern Pennsylvania and New England markets increased at double-digit annualized growth rates of 25%, 10%, and 13%, respectively. Average commercial loans in the company's New York footprint increased 7% annualized from the prior quarter. Since the acquisition of HSBC branches in May 2012, commercial loans in the company's New York market have increased at a 9% annualized growth rate. The commercial loan pipeline at quarter-end remains strong and consistent with prior quarters.

Average indirect auto loan balances increased $215 million to $927 million. During the second quarter, indirect auto originations totaled $296 million at an average customer FICO score of 745 and yielded 3.2%, net of dealer reserve. During the quarter, the company added an additional 51 dealers to its network. Average residential real estate loans declined by $121 million, or 13% annualized reflecting elevated prepayment levels.

Deposits

The company continued to focus its efforts to grow its core customer base, re-position its account mix and lower deposit costs. Average transaction deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased an annualized 17% over the prior quarter and currently represent 34% of the company's deposit balances, up from 30% a year ago.

The average cost of interest-bearing deposits declined two basis points to 0.23% from 0.25% in the prior quarter. Pricing actions on non-transactional deposit accounts together with a favorable shift in mix of deposits drove the decline in overall cost of interest-bearing deposits.

Average interest-bearing checking deposit balances increased 11% annualized compared to the prior quarter driven by the continued acquisitions of new checking accounts, particularly in the mass affluent household segment as well as higher balances held by customers. Noninterest bearing deposit balances averaged $4.7 billion and increased an annualized 22% over the prior quarter.

Since 2011, the company has consolidated over 60 branches across its regional footprint, while investing in alternative delivery platforms such as online and mobile banking. More than 100,000 customers have registered for mobile banking since its launch in January 2013. In the first half of 2013, the company consolidated nine branches, including five branches in the second quarter. As customers migrate to other banking platforms, First Niagara will continue to optimize its physical branch network.

Net Interest Income

Second quarter 2013 net interest income of $269.4 million increased 1% from the prior quarter. Compared to the prior quarter, the benefits of a 4% annualized increase in average interest-earning assets were partially offset by a 3 basis point decline in the net interest margin. Average loans increased an annualized 8% driven by strong commercial and indirect auto loan growth. Average other interest earning assets declined 3% annualized from the linked quarter.

In the second quarter of 2013, premium amortization on the residential mortgage backed securities portfolio was $11.6 million compared to $12.7 million in the prior quarter. During the quarter, cash flows from the CMO were below the company's expectations from last year due to the increase in mortgage rates. Compared to the first quarter of 2013, the modest benefits from commercial loan prepayments together with a 2 basis point decline in cost of interest bearing deposits were offset by continued compression of loan yields from elevated prepayments and reinvestments at lower spreads.

Credit Quality

At June 30, 2013, the allowance for loan losses was $183.7 million, compared to $172.0 million at March 31, 2013. At June 30, 2013, nonperforming assets to total assets were 0.51%, largely unchanged from the prior quarter. Information for both the originated and acquired portfolios follows.

Q2 2013 Q1 2013
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses* $ 23.9 $ 0.9 $ 24.8 $ 18.9 $ 0.9 $ 19.8
Net charge-offs 12.2 0.9 13.1 9.1 1.2 10.3
NCOs/ Avg Loans 0.33 % 0.06 % 0.26 % 0.27 % 0.08 % 0.21 %
Total loans** $ 15,102 $ 5,581 $ 20,543 $ 14,100 $ 6,084 $ 20,035
(*) Excludes provision for unfunded commitments of $0.4 million each in 2Q13 and 1Q13
(**) Acquired loans before associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $23.9 million, compared to $18.9 million in the prior quarter. This provision included $11.7 million to support sequential originated loan growth of $1.0 billion, compared to $9.8 million in the prior quarter that supported $0.7 billion of originated loan growth. Net charge-offs equaled $12.2 million or 33 basis points of average originated loans in the second quarter of 2013, compared to 35 basis points in 2012.

At June 30, 2013, nonperforming originated loans comprised 1.02% of originated loans and were essentially flat to the prior quarter.

At June 30, 2013, the allowance for loan losses on originated loans totaled $182.5 million or 1.21% of such loans, compared to $170.7 million or 1.21% of loans at March 31, 2013.

Acquired loans

The provision for losses on acquired loans totaled $0.9 million, unchanged from the prior quarter. Net charge-offs on those portfolios totaled $0.9 million during the quarter, compared to $1.2 million in the prior period. At June 30, 2013, the allowance for loan losses on acquired loans totaled $1.3 million and was consistent with March 31, 2013. Acquired nonperforming loans totaled $27.5 million, compared to $27.7 million at the end of the prior quarter. At June 30, 2013, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $141 million.

Fee Income

Second quarter 2013 noninterest income of $95.5 million increased 7% or $6.2 million compared to the prior quarter driven by strong customer activity and sales productivity primarily in the company's wealth management and insurance businesses.

Wealth management revenue increased $2.1 million, or 16% from the first quarter driven by strong annuity sales, increased sales productivity as well as a 7% increase in assets under management. Insurance commissions increased $1.3 million or 8% from the first quarter due to higher renewal premiums. Deposit service charges increased 7% from the prior quarter and were driven by an increase in NSF incidence and collection rates. Merchant and card fees increased 10% driven by higher debit card interchange from strong customer usage. Mortgage banking revenues increased 7% to $6.9 million from $6.4 million in the prior quarter.

Offsetting these increases, capital markets income declined 17% or $1.0 million primarily due to lower derivative product demand during the quarter.

Noninterest Expense

Operating expenses in the second quarter reflected higher than expected incentives and variable compensation expenses related to strong fee income generation as well as additional costs related to branch consolidations.

Second quarter noninterest expenses were $235.2 million, compared to $237.7 million in the prior quarter which included $6.3 million in charges related to executive departures. Compared to the first quarter of 2013, a $4.2 million increase in incentives and variable compensation expenses tied to strong fee income growth was partially offset by a sequential decline in costs associated with employee headcount and benefits. The amortization of intangibles decreased $3.3 million from the prior quarter primarily reflecting the decline in amortization of the HSBC transaction-related core deposit intangible.

The efficiency ratio improved to 64.4% in the second quarter from 65.1% in the prior quarter adjusted to exclude the $6.3 million charge related to executive departures.

Capital

At June 30, 2013, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.3% and 7.7% respectively. The company remains well above current regulatory guidelines for well-capitalized institutions.

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 420 branches, approximately $37 billion in assets, $27 billion in deposits, and approximately 6,000 employees providing financial services to individuals, families and businesses across Upstate New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com.

Investor Call

A conference call will be held at 10:00 a.m. Eastern Time on Friday, July 19, 2013 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-888-664-9857 with the passcode: FNFG. Presentation slides will be used during the earnings conference call and is available under the investor relations tab of our website at www.firstniagara.com. A replay of the call will be available until August 2, 2013 by dialing 1-800-677-4914, passcode: 5269.

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

Forward-Looking Statements - This press release contains forward-looking statements with respect to the financial condition and results of operations of First Niagara Financial Group, Inc. including, without limitations, statements relating to the earnings outlook of the company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in non-performing loans that could result from an economic downturn; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with an increase in commercial real estate and business loans and non-performing loans.

First Niagara Financial Group, Inc.
Income Statement Highlights -- Reported Basis
(in thousands, except per share amounts)
2012 Six months ended
Second First Fourth Third Second First June 30, June 30,
Quarter Quarter Quarter Quarter Quarter Quarter 2013 2012
Interest income:
Loans and leases $ 209,970 $ 206,640 $ 212,035 $ 211,767 $ 200,725 $ 189,385 $ 416,610 $ 390,110
Investment securities and other 88,110 88,961 71,564 90,101 99,116 101,395 177,071 200,511
Total interest income 298,080 295,601 283,599 301,868 299,841 290,780 593,681 590,621
Interest expense:
Deposits 12,967 14,277 16,902 18,358 16,391 14,998 27,244 31,389
Borrowings 15,670 15,194 14,411 13,905 24,437 33,411 30,864 57,848
Total interest expense 28,637 29,471 31,313 32,263 40,828 48,409 58,108 89,237
Net interest income 269,443 266,130 252,286 269,605 259,013 242,371 535,573 501,384
Provision for credit losses 25,200 20,200 22,000 22,200 28,100 20,000 45,400 48,100
Net interest income after provision 244,243 245,930 230,286 247,405 230,913 222,371 490,173 453,284
Noninterest income:
Deposit service charges 26,482 24,800 26,345 26,422 21,433 17,037 51,282 38,470
Insurance commissions 17,692 16,355 15,497 18,764 17,072 16,833 34,047 33,905
Merchant and card fees 12,380 11,298 11,945 12,014 9,271 5,528 23,678 14,799
Wealth management services 14,945 12,845 12,000 11,069 9,207 9,039 27,790 18,246
Mortgage banking 6,882 6,424 8,060 10,974 7,174 5,649 13,306 12,823
Capital markets income 5,002 6,031 7,098 6,381 6,831 6,539 11,033 13,370
Lending and leasing 4,534 3,906 3,739 3,730 4,245 3,123 8,440 7,368
Bank owned life insurance 3,321 3,467 3,021 3,449 3,848 3,387 6,788 7,235
Other income 4,308 4,186 4,116 9,400 16,517 2,773 8,494 19,290
Total noninterest income 95,546 89,312 91,821 102,203 95,598 69,908 184,858 165,506
Noninterest expense:
Salaries and benefits 116,305 115,790 111,026 115,484 104,507 96,477 232,095 200,984
Occupancy and equipment 28,506 28,045 27,609 25,694 24,089 22,017 56,551 46,106
Technology and communications 29,603 27,113 28,257 28,110 24,434 19,713 56,716 44,147
Marketing and advertising 5,450 4,346 9,292 8,954 6,676 6,763 9,796 13,439
Professional services 9,782 9,603 11,163 11,193 9,263 8,895 19,385 18,158
Amortization of intangibles 10,850 14,119 14,224 14,506 9,839 6,466 24,969 16,305
FDIC premiums 9,348 8,901 9,158 8,850 10,552 6,133 18,249 16,685
Merger and acquisition integration expenses -- -- 3,678 29,404 131,460 12,970 -- 144,430
Restructuring charges -- -- -- -- 3,750 2,703 -- 6,453
Other expense 25,326 29,749 24,377 24,347 21,069 18,041 55,075 39,110
Total noninterest expense 235,170 237,666 238,784 266,542 345,639 200,178 472,836 545,817
Income (loss) before income tax 104,619 97,576 83,323 83,066 (19,128) 92,101 202,195 72,973
Income tax expense (benefit) 33,485 30,291 22,226 24,682 (8,204) 32,236 63,776 24,032
Net income (loss) 71,134 67,285 61,097 58,384 (10,924) 59,865 138,419 48,941
Preferred stock dividend 7,547 7,547 7,547 7,547 7,547 5,115 15,094 12,662
Net income (loss) available to common stockholders $ 63,587 $ 59,738 $ 53,550 $ 50,837 $ (18,471) $ 54,750 $ 123,325 $ 36,279
Financial Ratios:
Earnings (loss) per basic share $ 0.18 $ 0.17 $ 0.15 $ 0.15 $ (0.05) $ 0.16 $ 0.35 $ 0.10
Earnings (loss) per diluted share 0.18 0.17 0.15 0.14 (0.05) 0.16 0.35 0.10
Weighted average shares outstanding - basic(1) 349,542 349,278 349,071 349,001 348,941 348,823 349,411 348,882
Weighted average shares outstanding - diluted(1) 350,384 349,999 349,663 349,371 348,941 349,069 350,150 349,147
Net revenue(2) $ 364,989 $ 355,442 $ 344,107 $ 371,808 $ 354,611 $ 312,279 $ 720,431 $ 666,890
Noninterest income as a percentage of net revenue(2) 26.18% 25.13% 26.68% 27.49% 26.96% 22.39% 25.66% 24.82%
Pre-tax, pre-provision income(3) $ 129,819 $ 117,776 $ 105,323 $ 105,266 $ 8,972 $ 112,101 $ 247,595 $ 121,073
Pre-tax, pre-provision income per diluted share(3) $ 0.37 $ 0.34 $ 0.30 $ 0.30 $ 0.03 $ 0.32 $ 0.71 $ 0.35
Pre-tax, pre-provision return on average assets(3) 1.41% 1.30% 1.15% 1.19% 0.10% 1.36% 1.35% 0.70%
Net interest margin(4) 3.36% 3.39% 3.22% 3.54% 3.26% 3.34% 3.38% 3.30%
Interest yield on average loans(4) 4.19% 4.25% 4.39% 4.47% 4.59% 4.62% 4.21% 4.60%
Rate paid on interest-bearing liabilities 0.43% 0.44% 0.48% 0.51% 0.61% 0.79% 0.44% 0.69%
Efficiency ratio 64.43% 66.86% 69.39% 71.69% 97.47% 64.10% 65.63% 81.85%
Effective tax rate 32.0% 31.0% 26.7% 29.7% 42.9% 35.0% 31.5% 32.9%
Return on average assets(5) 0.77 % 0.74 % 0.67% 0.66% (0.12)% 0.73% 0.76% 0.28%
Return on average equity(5) 5.72 % 5.50 % 4.92% 4.77% (0.90)% 4.96% 5.61% 2.02%
Return on average tangible equity(3)(5) 11.75 % 11.62 % 10.45% 10.34% (1.64)% 7.90% 11.69% 3.44%
Return on average common equity 5.48 % 5.24 % 4.62% 4.46% (1.64)% 4.88% 5.36% 1.61%
Return on average tangible common equity(3) 12.21 % 12.05 % 10.72% 10.60% (3.18)% 8.12% 12.13% 2.89%
(1) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(2) Net revenue is comprised of net interest income and noninterest income.
(3) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4) Yields and rates calculated on a tax equivalent basis.
(5) Return used to calculate ratio excludes preferred stock dividend.
First Niagara Financial Group, Inc.
Period End Balance Sheet
(in thousands)
2012
June 30, March 31, December 31, September 30, June 30, March 31,
Cash and cash equivalents $ 552,210 $ 424,176 $ 430,862 $ 447,087 $ 488,227 $ 370,380
Investment securities:
Available for sale 7,916,353 7,876,160 10,993,605 10,579,970 9,937,271 12,248,058
Held to maturity 3,856,960 4,218,687 1,299,806 1,387,763 1,463,872 2,503,156
FHLB and FRB common stock 429,740 401,373 420,277 373,311 329,555 499,328
Total investment securities 12,203,053 12,496,220 12,713,688 12,341,044 11,730,698 15,250,542
Loans held for sale 118,104 126,389 154,745 117,375 101,596 102,513
Loans and leases:
Commercial:
Real estate 7,482,375 7,295,544 7,093,193 6,835,971 6,710,009 6,369,098
Business 5,165,606 5,044,738 4,953,323 4,682,154 4,514,537 4,108,363
Total commercial loans 12,647,981 12,340,282 12,046,516 11,518,125 11,224,546 10,477,461
Consumer:
Residential real estate 3,558,274 3,614,912 3,761,567 3,870,756 4,037,045 3,881,003
Home equity 2,670,672 2,646,645 2,651,891 2,661,429 2,683,236 2,149,135
Indirect auto 1,049,763 818,401 601,456 419,258 185,774 --
Credit cards 303,455 298,310 314,973 308,387 304,368 --
Other consumer 313,037 316,669 333,609 328,571 328,547 283,320
Total consumer loans 7,895,201 7,694,937 7,663,496 7,588,401 7,538,970 6,313,458
Total loans and leases 20,543,182 20,035,219 19,710,012 19,106,526 18,763,516 16,790,919
Allowance for loan losses 183,708 172,002 162,522 149,933 138,516 126,746
Loans and leases, net 20,359,474 19,863,217 19,547,490 18,956,593 18,625,000 16,664,173
Bank owned life insurance 410,182 407,419 404,321 401,211 397,739 395,944
Goodwill and other intangibles 2,557,560 2,567,681 2,617,810 2,626,625 2,631,605 1,796,394
Other assets 949,144 959,459 937,316 983,999 1,130,891 937,859
Total assets $ 37,149,727 $ 36,844,561 $ 36,806,232 $ 35,873,934 $ 35,105,756 $ 35,517,805
Deposits:
Savings accounts $ 3,878,053 $ 3,915,836 $ 3,887,587 $ 3,941,528 $ 4,103,773 $ 2,554,720
Interest-bearing checking 4,499,963 4,534,444 4,450,970 4,090,322 3,887,568 2,431,672
Money market deposits 10,013,996 10,493,243 10,581,137 10,801,280 10,919,766 7,100,646
Noninterest-bearing deposits 4,845,835 4,803,835 4,643,580 4,658,374 4,774,764 3,200,824
Certificates of deposit 3,911,989 3,985,702 4,113,257 4,206,192 4,211,116 3,741,525
Total deposits 27,149,836 27,733,060 27,676,531 27,697,696 27,896,987 19,029,387
Short-term borrowings 3,698,279 2,928,929 2,983,718 1,995,610 958,044 6,353,189
Long-term borrowings 732,598 732,510 732,425 732,339 732,263 4,688,251
Other liabilities 666,270 503,389 487,000 532,868 700,249 571,532
Total liabilities 32,246,983 31,897,888 31,879,674 30,958,513 30,287,543 30,642,359
Preferred stockholders' equity 338,002 338,002 338,002 338,002 338,002 338,002
Common stockholders' equity 4,564,742 4,608,671 4,588,556 4,577,419 4,480,211 4,537,444
Total stockholders' equity 4,902,744 4,946,673 4,926,558 4,915,421 4,818,213 4,875,446
Total liabilities and stockholders' equity $ 37,149,727 $ 36,844,561 $ 36,806,232 $ 35,873,934 $ 35,105,756 $ 35,517,805
Selected balance sheet information:
Total interest-earning assets(1) $ 32,906,363 $ 32,524,313 $ 32,321,964 $ 31,316,470 $ 30,403,035 $ 31,959,556
Total interest-bearing liabilities 26,734,878 26,590,664 26,749,094 25,767,271 24,812,530 26,870,002
Net interest-earning assets $ 6,171,485 $ 5,933,649 $ 5,572,870 $ 5,549,199 $ 5,590,505 $ 5,089,554
Tangible common equity(2) $ 2,007,182 $ 2,040,990 $ 1,970,746 $ 1,950,794 1,848,606 2,741,050
Unrealized gain on securities, net of tax(3) 83,898 160,942 206,733 204,347 133,430 152,408
Total core deposits $ 23,237,847 $ 23,747,358 $ 23,563,274 $ 23,491,504 $ 23,685,871 $ 15,287,862
Originated loans(4) $ 15,102,336 $ 14,100,190 $ 13,372,357 $ 12,232,568 $ 11,392,158 $ 10,517,021
Acquired loans(5) 5,581,651 6,083,912 6,513,636 7,085,839 7,600,213 6,459,798
Credit related discount on acquired loans(6) (140,805) (148,883) (175,981) (211,881) (228,855) (185,900)
Total Loans $ 20,543,182 $ 20,035,219 $ 19,710,012 $ 19,106,526 $ 18,763,516 $ 16,790,919
(1) Includes interest bearing cash and cash equivalents, investment securities at amortized cost, loans held for sale, and total loans and leases.
(2) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3) Unrealized gain at March 31, 2013 excludes $54 million of net pre-tax unrealized gains recorded in accumulated other comprehensive income related to available for sale securities transferred to held to maturity classification as of March 31, 2013.
(4) Originated loans represent total loans excluding acquired loans.
(5) Represents the carrying value of acquired loans plus the principal not expected to be collected.
(6) Represent principal on acquired loans not expected to be collected.
First Niagara Financial Group, Inc.
Average Balance Sheet and Related Tax Equivalent Yields & Rates
(in millions)
For the three months ended Six months ended
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Average Interest(1) Yields Average Interest(1) Yields Average Interest(1) Yields Average Interest(1) Yields Average Interest(1) Yields
Balances and Rates(1) Balances and Rates(1) Balances and Rates(1)(2) Balances and Rates(1) Balances and Rates(1)(2)
Interest-earning assets:
Loans and leases(3)
Commercial:
Real estate $ 7,376 $ 79 4.22% $ 7,179 $ 76 4.25% $ 6,501 $ 80 4.88% $ 7,278 $ 155 4.23% $ 6,400 $ 159 4.93%
Business 5,112 47 3.66 4,999 47 3.74 4,293 44 4.03 5,056 94 3.70 4,104 84 4.05
Total commercial loans 12,488 126 3.99 12,178 123 4.04 10,794 124 4.54 12,334 249 4.02 10,505 244 4.59
Consumer:
Residential real estate 3,570 35 3.94 3,691 37 4.01 3,964 40 4.07 3,631 72 3.98 3,955 83 4.18
Home equity 2,661 28 4.25 2,648 28 4.29 2,412 27 4.42 2,654 56 4.27 2,284 50 4.41
Indirect auto 927 7 3.18 712 6 3.29 84 1 4.16 820 13 3.23 46 1 4.58
Credit cards 302 8 10.96 304 8 10.40 160 5 11.58 303 16 10.68 93 5 11.32
Other consumer 313 7 8.42 328 7 8.17 283 6 8.12 320 13 8.29 263 10 7.61
Total consumer loans 7,773 86 4.41 7,683 85 4.50 6,903 78 4.55 7,728 171 4.45 6,641 149 4.51
Total loans and leases 20,261 212 4.19 19,861 208 4.25 17,697 202 4.59 20,062 419 4.21 17,146 393 4.60
Residential MBS(2) 5,496 33 2.40 5,488 34 2.50 8,982 61 2.72 5,492 67 2.45 8,766 126 2.87
Commercial MBS 1,881 16 3.44 1,914 18 3.78 1,867 18 3.94 1,898 34 3.61 1,785 35 3.96
Other investment securities (4) 4,833 41 3.37 4,822 38 3.19 3,652 31 3.43 4,827 79 3.28 3,165 54 3.41
Total securities, at cost(2) 12,210 90 2.94 12,224 91 2.97 14,501 110 3.05 12,217 181 2.96 13,716 215 3.14
Money market and other investments 171 1 1.85 241 1 1.31 349 1 0.94 206 2 1.53 311 1 0.94
Total interest-earning assets(2) 32,642 $ 302 3.71% 32,326 $ 300 3.76% 32,547 $ 313 3.87% 32,485 $ 602 3.74% 31,173 $ 609 3.93%
Goodwill and other intangibles 2,561 2,609 2,207 2,585 2,004
Other noninterest-earning assets 1,780 1,872 1,746 1,826 1,635
Total assets $ 36,983 $ 36,807 $ 36,500 $ 36,896 $ 34,812
Interest-bearing liabilities:
Deposits
Savings accounts $ 3,897 $ 1 0.11% $ 3,894 $ 1 0.11% $ 3,302 $ 1 0.14% $ 3,896 $ 2 0.11% $ 2,934 $ 1 0.09%
Interest-bearing checking 4,504 -- 0.04 4,379 1 0.05 3,095 1 0.08 4,442 1 0.05 2,660 1 0.09
Money market deposits 10,178 5 0.20 10,643 6 0.23 9,125 6 0.28 10,409 11 0.21 8,147 11 0.28
Certificates of deposit 3,902 6 0.66 4,081 7 0.67 4,019 8 0.83 3,991 13 0.66 3,923 18 0.90
Total interest bearing deposits 22,481 13 0.23% 22,997 14 0.25% 19,541 16 0.34% 22,738 27 0.24% 17,662 31 0.36%
Borrowings
Short-term borrowings 3,536 4 0.41% 3,152 3 0.40% 5,046 7 0.55% 3,345 7 0.40% 4,339 13 0.59%
Long-term borrowings 733 12 6.62 730 12 6.71 2,433 18 2.91 731 24 6.67 3,884 45 2.34
Total borrowings 4,269 16 1.47 3,882 15 1.59 7,479 24 1.31 4,076 31 1.53 8,223 58 1.41
Total interest-bearing liabilities 26,750 $ 29 0.43% 26,879 $ 29 0.44% 27,020 $ 41 0.61% 26,814 $ 58 0.44% 25,885 $ 89 0.69%
Noninterest-bearing deposits 4,711 4,468 3,835 4,591 3,444
Other noninterest-bearing liabilities 533 502 765 517 618
Total liabilities 31,994 31,849 31,620 31,922 29,947
Total stockholders' equity 4,989 4,958 4,880 4,974 4,865
Total liabilities and stockholders' equity $ 36,983 $ 36,807 $ 36,500 $ 36,896 $ 34,812
Net interest income (FTE) $ 274 $ 270 $ 272 $ 544 $ 520
Taxable Equivalent Adjustment(1) 5 4 5 8 11
Total core deposits $ 23,290 $ 6 0.11% $ 23,384 $ 8 0.13% $ 19,357 $ 8 0.17% $ 23,338 $ 14 0.12% $ 17,183 $ 13 0.16%
Total deposits 27,192 13 0.19% 27,465 14 0.21% 23,376 16 0.28% 27,329 27 0.20% 21,106 31 0.30%
Tax equivalent net interest rate spread(2) 3.28% 3.32% 3.26% 3.30% 3.24%
Tax equivalent net interest rate margin(2) 3.36% 3.39% 3.37% 3.38% 3.36%
(1) Tax equivalent interest income is calculated using a 35% tax rate.
(2) Amounts for both the three months and six months ended June 30, 2012 exclude accelerated CMO adjustments of $8 million. The yields, including these adjustments, are:
Three months ended June 30, 2012 Six months ended June 30, 2012
Residential MBS 2.35% 2.68%
Total securities, at cost 2.81% 3.02%
Total interest earning assets 3.77% 3.88%
Tax equivalent net interest rate spread 3.16% 3.19%
Tax equivalent net interest rate margin 3.26% 3.30%
(3) Includes nonaccrual loans.
(4) Includes debt securities, collateralized loan obligations, asset-backed securities, FHLB and FRB common stock, and other investment securities.
First Niagara Financial Group, Inc.
Allowance for Loans and Lease Losses & Asset Quality
(in thousands)
2012 Six months ended
Second First Fourth Third Second First June 30, June 30,
Quarter Quarter Quarter Quarter Quarter Quarter 2013 2012
Beginning balance $ 172,002 $ 162,522 $ 149,933 $ 138,516 $ 126,746 $ 120,100 $ 162,522 $ 120,100
Net loan (charge-offs) recoveries:
Commercial real estate $ (2,817) $ (2,121) $ (1,935) $ (1,791) $ (2,384) $ (5,994) $ (4,938) $ (8,378)
Commercial business (7,175) (4,902) (3,385) (6,077) (10,958) (4,143) (12,077) (15,101)
Residential real estate (291) (427) (658) (396) (155) (1,120) (718) (1,275)
Home equity (905) (613) (673) (401) (1,536) (1,161) (1,518) (2,697)
Other consumer (1,906) (2,257) (2,285) (1,406) (805) (836) (4,163) (1,641)
Total net loan charge-offs $ (13,094) $ (10,320) $ (8,936) $ (10,071) $ (15,838) $ (13,254) $ (23,414) $ (29,092)
Provision for loan losses 24,800 19,800 21,525 21,800 27,803 19,900 44,600 47,703
Allowance related to loans sold -- -- -- (312) (195) -- -- (195)
Ending balance $ 183,708 $ 172,002 $ 162,522 $ 149,933 $ 138,516 $ 126,746 $ 183,708 $ 138,516
Supplemental information
Allowance to loans 0.89% 0.86% 0.82% 0.78% 0.74% 0.75% 0.89% 0.74%
Allowance for originated loans to originated loans(1) 1.21% 1.21% 1.20% 1.20% 1.19% 1.19% 1.21% 1.19%
Net charge-offs to average loans (annualized)
Commercial real estate 0.15% 0.12% 0.11% 0.11% 0.15% 0.38% 0.14% 0.26%
Commercial business 0.56% 0.39% 0.28% 0.53% 1.02% 0.42% 0.48% 0.74%
Total commercial loans 0.32% 0.23% 0.18% 0.28% 0.49% 0.40% 0.28% 0.45%
Residential real estate 0.03% 0.05% 0.07% 0.04% 0.02% 0.11% 0.04% 0.06%
Home equity 0.14% 0.09% 0.10% 0.06% 0.25% 0.22% 0.11% 0.24%
Other consumer 0.49% 0.67% 0.79% 0.60% 0.61% 1.20% 0.58% 1.25%
Total consumer loans 0.16% 0.17% 0.19% 0.12% 0.15% 0.20% 0.17% 0.17%
Total loans 0.26% 0.21% 0.18% 0.21% 0.36% 0.32% 0.23% 0.34%
Net charge-offs of originated loans to average originated loans (annualized)(1)
Commercial real estate 0.14% 0.10% 0.07% 0.12% 0.18% 0.16% 0.12% 0.17%
Commercial business 0.64% 0.45% 0.33% 0.64% 1.25% 0.54% 0.54% 0.98%
Total commercial loans 0.36% 0.26% 0.19% 0.36% 0.66% 0.32% 0.31% 0.52%
Residential real estate 0.07% 0.10% 0.15% 0.09% 0.04% 0.27% 0.08% 0.15%
Home equity 0.26% 0.19% 0.21% 0.13% 0.51% 0.40% 0.22% 0.47%
Other consumer 0.51% 0.64% 0.94% 0.59% 0.81% 1.25% 0.57% 1.24%
Total consumer loans 0.27% 0.28% 0.35% 0.18% 0.28% 0.38% 0.27% 0.34%
Total loans 0.33% 0.27% 0.24% 0.30% 0.55% 0.34% 0.30% 0.46%
Nonperforming loans:
Originated(1):
Commercial real estate $ 59,624 $ 49,953 $ 50,848 $ 46,413 $ 46,881 $ 44,749 $ 59,624 $ 46,881
Commercial business 44,658 47,523 47,066 37,375 30,714 39,682 44,658 30,714
Residential real estate 29,667 28,455 27,192 21,377 23,058 22,021 29,666 23,058
Home equity 14,601 14,270 14,233 8,084 8,119 7,071 14,601 8,119
Other consumer 6,094 5,444 3,737 938 926 697 6,094 926
Total originated nonperforming loans 154,644 145,645 143,076 114,187 109,698 114,220 154,643 109,698
Total acquired nonperforming loans(2) 27,556 27,678 29,648 28,193 19,374 19,041 27,556 19,374
Total nonperforming loans 182,200 173,323 172,724 142,380 129,072 133,261 182,199 129,072
Real estate owned 8,144 10,816 10,114 9,669 10,632 7,202 8,144 10,632
Total nonperforming assets $ 190,344 $ 184,139 $ 182,838 $ 152,049 $ 139,704 $ 140,463 $ 190,343 $ 139,704
Accruing troubled debt restructurings (TDR) $ 69,892 $ 64,311 $ 46,280 $ 55,732 $ 42,140 $ 42,358 $ 69,892 $ 42,140
Loans 90 days past due still accruing(3) 167,560 172,062 171,568 145,323 125,668 116,810 167,560 125,668
Total classified loans(4) 701,104 720,197 708,468 693,006 732,762 753,536 701,104 732,762
Total criticized loans(5) $ 1,012,305 $ 1,044,874 $ 1,002,659 $ 990,670 $ 1,030,471 $ 1,044,731 $ 1,012,305 $ 1,030,471
Total nonperforming loans to loans 0.89% 0.87% 0.88% 0.75% 0.69% 0.79% 0.89% 0.69%
Total nonperforming originated loans to originated loans(1) 1.02% 1.03% 1.07% 0.93% 0.96% 1.09% 1.02% 0.96%
Total nonperforming assets to loans and real estate owned 0.93% 0.92% 0.93% 0.80% 0.74% 0.84% 0.93% 0.74%
Total nonperforming assets to assets 0.51% 0.50% 0.50% 0.42% 0.40% 0.34% 0.51% 0.40%
Allowance to nonperforming loans 100.8% 99.2% 94.1% 105.3% 107.3% 95.1% 100.8% 107.3%
Texas ratio(6) 16.34% 16.10% 16.61% 14.16% 13.35% 8.97% 16.34% 13.35%
Originated loans(1) $ 15,102,336 $ 14,100,190 $ 13,372,357 $ 12,232,568 $ 11,392,158 $ 10,517,021 $ 15,102,336 $ 11,392,158
Acquired loans(7) 5,581,651 6,083,912 6,513,636 7,085,839 7,600,213 6,459,798 5,581,651 7,600,213
Credit related discount on acquired loans(8) (140,805) (148,883) (175,981) (211,881) (228,855) (185,900) (140,805) (228,855)
Total Loans $ 20,543,182 $ 20,035,219 $ 19,710,012 $ 19,106,526 $ 18,763,516 $ 16,790,919 $ 20,543,182 $ 18,763,516
(1) Originated loans represent total loans excluding acquired loans.
(2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing. The remaining credit discount, recorded at acquisition, is adequate to cover losses on these balances.
(3) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.
(4) Includes consumer loans, which are considered classified when they are 90 days or more past due. Classified loans include substandard, doubtful, and loss, which are consistent with regulatory definitions, and as described in Item 1, "Business", under the heading "Asset Quality Review" in our Annual Report on 10-K for the year ended December 31, 2012.
(5) Criticized loans includes consumer loans when they are 90 days or more past due. Criticized loans include special mention, substandard, doubtful, and loss.
(6) Represents ratio computed 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.
(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
(Share counts in thousands)
2012
June 30, March 31, December 31, September 30, June 30, March 31,
First Niagara Financial Group, Inc. capital ratios:
Tier 1 risk based capital 9.41% 9.45% 9.29% 9.51% 9.40% 14.66% (1)
Tier 1 common capital(2) 7.65% 7.64% 7.45% 7.59% 7.41% 12.47% (1)
Total risk based capital 11.34% 11.38% 11.23% 11.48% 11.37% 16.75% (1)
Leverage 7.01% 6.92% 6.75% 6.83% 6.32% 9.67% (1)
Equity to assets 13.20% 13.43% 13.39% 13.70% 13.72% 13.73% (1)
Tangible common equity to tangible assets(2) 5.80% 5.95% 5.77% 5.87% 5.69% 8.13% (1)
First Niagara Bank, N.A capital ratios:
Tier 1 risk based capital 10.08% 10.15% 9.94% 10.19% 9.63% 14.69% (1)
Total risk based capital 10.85% 10.89% 10.66% 10.88% 10.57% 15.66% (1)
Leverage 7.50% 7.43% 7.23% 7.32% 6.48% 9.69% (1)
Number of branches 422 427 430 432 452 334
Full time equivalent employees 5,779 5,875 5,927 6,036 6,103 4,753
Share information and per share metrics:
Common shares outstanding 353,932 353,008 352,621 352,632 352,665 351,936
Preferred shares outstanding 14,000 14,000 14,000 14,000 14,000 14,000
Treasury shares 12,070 12,994 13,381 13,370 13,337 14,066
Market price (NASDAQ: FNFG): $ 10.07 $ 8.86 $ 7.93 $ 8.07 $ 7.65 $ 9.84
Book value per share(3) 13.06 13.19 13.15 13.11 12.84 13.00
Tangible book value per share(2)(3) 5.74 5.84 5.65 5.59 5.30 7.86
Price/Book 77.11% 67.17% 60.30% 61.56% 59.58% 75.69%
Price/Tangible book(2) 175.44% 151.71% 140.35% 144.36% 144.34% 125.19%
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 0.37
Dividend payout ratio 44.44% 47.06% 53.33% 53.33% N/M 50.00%
Dividend yield (annualized) 3.19% 3.66% 4.01% 3.94% 4.21% 3.27%
N/M Not meaningful
(1) Ratios reflect the impact of our capital raise completed in December 2011, the proceeds of which were used to consummate the acquisition of branches from HSBC Bank USA, National Association in May 2012.
(2) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation
(in thousands, except per share amounts)
2012 Six months ended
Second First Fourth Third Second First June 30, June 30,
Quarter Quarter Quarter Quarter Quarter Quarter 2013 2012
Financial ratios computed on an operating basis(1):
Earnings per basic share $ 0.18 $ 0.17 $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.35 $ 0.37
Earnings per diluted share 0.18 0.17 0.19 0.19 0.19 0.19 0.35 0.37
Weighted average shares outstanding - basic(2) 349,542 349,278 349,071 349,001 348,941 348,823 349,411 348,882
Weighted average shares outstanding - diluted(2) 350,384 349,999 349,663 349,371 348,941 349,069 350,150 349,147
Noninterest income as a percentage of net revenue(4) 26.18% 25.13% 25.48% 26.43% 22.96% 22.39% 25.66% 22.69%
Pre-tax, pre-provision income 129,819 117,776 125,281 129,333 136,645 127,774 247,595 264,419
Pre-tax, pre-provision income per diluted share 0.37 0.34 0.36 0.37 0.39 0.37 0.71 0.76
Pre-tax, pre-provision return on average assets 1.41% 1.30% 1.37% 1.46% 1.51% 1.55% 1.35% 1.53%
Net interest margin(3) 3.36% 3.39% 3.42% 3.54% 3.37% 3.34% 3.38% 3.36%
Interest yield on average loans(3) 4.19% 4.25% 4.39% 4.47% 4.59% 4.62% 4.21% 4.60%
Rate paid on interest-bearing liabilities(3) 0.43% 0.44% 0.48% 0.51% 0.61% 0.79% 0.44% 0.69%
Efficiency ratio 64.43% 66.86% 65.24% 64.71% 60.63% 59.08% 65.63% 59.90%
Effective tax rate 32.0% 31.0% 27.0% 30.9% 33.5% 35.0% 31.5% 34.2%
Return on average assets 0.77% 0.74% 0.83% 0.83% 0.80% 0.85% 0.76% 0.82%
Return on average equity 5.72% 5.50% 6.06% 6.04% 5.95% 5.81% 5.61% 5.88%
Return on average tangible equity(5) 11.75% 11.62% 12.89% 13.11% 10.86% 9.24% 11.69% 10.00%
Return on average common equity 5.48% 5.24% 5.86% 5.83% 5.72% 5.79% 5.36% 5.76%
Return on average tangible common equity(6) 12.21% 12.05% 13.57% 13.86% 11.13% 9.63% 12.13% 10.33%
Reconciliation of net interest income on operating basis to reported net interest income(1):
Total net interest income on operating basis (Non-GAAP) $ 269,443 $ 266,130 $ 268,566 $ 269,605 $ 267,371 $ 242,371 $ 535,573 $ 509,742
Additional premium amortization on securities portfolio -- -- (16,280) -- (8,358) -- -- (8,358)
Total reported net interest income (GAAP) 269,443 266,130 252,286 269,605 259,013 242,371 535,573 501,384
Reconciliation of noninterest income on operating basis to reported noninterest income(1):
Total noninterest income on operating basis (Non-GAAP) $ 95,546 $ 89,312 $ 91,821 $ 96,866 $ 79,703 $ 69,908 $ 184,858 $ 149,611
Gain on securities portfolio repositioning -- -- -- 5,337 15,895 -- -- 15,895
Total reported noninterest income (GAAP) 95,546 89,312 91,821 102,203 95,598 69,908 184,858 165,506
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):
Total noninterest expense on operating basis (Non-GAAP) $ 235,170 $ 237,666 $ 235,106 $ 237,138 $ 210,429 $ 184,505 $ 472,836 $ 394,934
Merger and acquisition integration expenses -- -- 3,678 29,404 131,460 12,970 -- 144,430
Restructuring charges -- -- -- -- 3,750 2,703 -- 6,453
Total reported noninterest expense (GAAP) $ 235,170 $ 237,666 $ 238,784 $ 266,542 $ 345,639 $ 200,178 $ 472,836 $ 545,817
Reconciliation of net operating income to net income(1):
Net operating income (Non-GAAP) $ 71,134 $ 67,285 $ 75,358 $ 74,027 $ 72,188 $ 70,053 $ 138,419 $ 142,241
Nonoperating income and expenses, net of tax:
Additional premium amortization on securities portfolio -- -- 11,633 -- 5,558 -- -- 5,558
Gain on securities portfolio repositioning -- -- -- (3,469) (10,331) -- -- (10,331)
Merger and acquisition integration expenses -- -- 2,628 19,112 85,448 8,431 -- 93,879
Restructuring charges -- -- -- -- 2,437 1,757 -- 4,194
Total nonoperating expenses, net of tax -- -- 14,261 15,643 83,112 10,188 -- 93,300
Net income (GAAP) $ 71,134 $ 67,285 $ 61,097 $ 58,384 $ (10,924) $ 59,865 $ 138,419 $ 48,941
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) $ 63,587 $ 59,738 $ 67,811 $ 66,480 $ 64,641 $ 64,938 $ 123,325 $ 129,579
Nonoperating income and expenses, net of tax:
Additional premium amortization on securities portfolio -- -- 11,633 -- 5,558 -- -- 5,558
Gain on securities portfolio repositioning -- -- -- (3,469) (10,331) -- -- (10,331)
Merger and acquisition integration expenses -- -- 2,628 19,112 85,448 8,431 -- 93,879
Restructuring charges -- -- -- -- 2,437 1,757 -- 4,194
Total nonoperating income and expenses, net of tax -- -- 14,261 15,643 83,112 10,188 -- 93,300
Net income available to common stockholders (GAAP) $ 63,587 $ 59,738 $ 53,550 $ 50,837 $ (18,471) $ 54,750 $ 123,325 $ 36,279
Computation of pre-tax, pre-provision income:
Net interest income $ 269,443 $ 266,130 $ 252,286 $ 269,605 $ 259,013 $ 242,371 $ 535,573 $ 501,384
Noninterest income 95,546 89,312 91,821 102,203 95,598 69,908 184,858 165,506
Noninterest expense (235,170) (237,666) (238,784) (266,542) (345,639) (200,178) (472,836) (545,817)
Pre-tax, pre-provision income (GAAP) 129,819 117,776 105,323 105,266 8,972 112,101 247,595 121,073
Add back: non-operating premium amortization -- -- 16,280 -- 8,358 -- -- 8,358
Add back: non-operating noninterest expenses (1) -- -- 3,678 29,404 135,210 15,673 -- 150,883
Less: non-operating noninterest income (1) -- -- -- (5,337) (15,895) -- -- (15,895)
Pre-tax, pre-provision income (Non-GAAP)(1) $ 129,819 $ 117,776 $ 125,281 $ 129,333 $ 136,645 $ 127,774 $ 247,595 $ 264,419
(1) Net interest income, noninterest income and expense on an operating basis, net operating income, and pre-tax, pre-provision income on an operating basis are non-GAAP measures that we believe provide meaningful comparisons of our underlying operational performance and facilitates investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, we believe exclusion of these nonoperating items enables management to perform a more effective evaluation and comparison of our results and to assess performance in relation to our ongoing operations.
(2) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(3) Yields and rates calculated on a tax equivalent basis.
(4) Net revenue is comprised of net interest income and noninterest income.
(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)
2012 Six months ended
Second First Fourth Third Second First June 30, June 30,
Quarter Quarter Quarter Quarter Quarter Quarter 2013 2012
Computation of Ending Tangible Common Equity:
Total stockholders' equity $ 4,902,744 $ 4,946,673 $ 4,926,558 $ 4,915,421 $ 4,818,213 $ 4,875,446 $ 4,902,744 $ 4,928,097
Less: Goodwill and other intangibles (2,557,560) (2,567,681) (2,617,810) (2,626,625) (2,631,605) (1,796,394) (2,557,560) (2,617,809)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $ 2,007,182 $ 2,040,990 $ 1,970,746 $ 1,950,794 $ 1,848,606 $ 2,741,050 $ 2,007,182 $ 1,972,286
Computation of Average Tangible Equity:
Total stockholders' equity $ 4,989,006 $ 4,958,402 $ 4,945,132 $ 4,872,605 $ 4,879,791 $ 4,850,276 $ 4,973,789 $ 4,887,071
Less: Goodwill and other intangibles (2,561,507) (2,609,409) (2,619,322) (2,626,666) (2,206,682) (1,800,613) (2,585,326) (2,315,013)
Tangible equity $ 2,427,499 $ 2,348,993 $ 2,325,810 $ 2,245,939 $ 2,673,109 $ 3,049,663 $ 2,388,463 $ 2,572,058
Computation of Average Tangible Common Equity:
Total stockholders' equity $ 4,989,006 $ 4,958,402 $ 4,945,132 $ 4,872,605 $ 4,879,791 $ 4,850,276 $ 4,973,789 $ 4,887,071
Less: Goodwill and other intangibles (2,561,507) (2,609,409) (2,619,322) (2,626,666) (2,206,682) (1,800,613) (2,585,326) (2,315,013)
Less: Preferred stockholders' equity (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tangible common equity $ 2,089,497 $ 2,010,991 $ 1,987,808 $ 1,907,937 $ 2,335,107 $ 2,711,661 $ 2,050,461 $ 2,234,056
Computation of Texas Ratio:
Nonperforming Assets $ 190,343 $ 184,139 $ 182,838 $ 152,049 $ 139,704 $ 140,463 $ 190,343 $ 182,838
Loans 90 days past due still accruing(1) 167,560 172,062 171,548 145,323 125,668 116,810 167,560 171,548
Sum of nonperforming assets and loans 90 days past due still accruing $ 357,903 $ 356,201 $ 354,386 $ 297,372 $ 265,372 $ 257,273 $ 357,903 $ 354,386
Tangible common equity $ 2,007,182 $ 2,040,990 $ 1,970,746 $ 1,950,794 $ 1,848,606 $ 2,741,050 $ 2,007,182 $ 1,972,286
Allowance for loan losses 183,708 172,002 162,522 149,933 138,516 126,746 183,708 162,522
Sum of tangible common equity and allowance for loan losses $ 2,190,890 $ 2,212,992 $ 2,133,268 $ 2,100,727 $ 1,987,122 $ 2,867,796 $ 2,190,890 $ 2,134,808
Sum of nonperforming assets and acquired loans 90 days past due still accruing/Sum of tangible common equity and allowance for loan losses 16.34% 16.10% 16.61% 14.16% 13.35% 8.97% 16.34% 16.60%
Computation of Tier 1 Common Capital:
Tier 1 capital $ 2,406,473 $ 2,356,763 $ 2,264,679 $ 2,225,121 $ 2,128,702 $ 3,009,727 $ 2,406,473 $ 2,264,679
Less: Qualifying restricted core capital elements (112,449) (112,236) (112,025) (111,820) (111,630) (111,453) (112,449) (112,025)
Less: Perpetual non-cumulative preferred stock (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002) (338,002)
Tier 1 common capital (Non-GAAP) $ 1,956,022 $ 1,906,525 $ 1,814,652 $ 1,775,299 $ 1,679,070 $ 2,560,272 $ 1,956,022 $ 1,814,652
(1) 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.

CONTACT: First Niagara Contacts Investors: Ram Shankar Senior Vice President, Investor Relations (716) 270-8623 ram.shankar@fnfg.com News Media: David Lanzillo Senior Vice President, Corporate Communications (716) 819-5780 david.lanzillo@fnfg.comSource:First Niagara Financial Group, Inc.