Second Quarter Highlights:
- Performance of Acquired HSBC Branches Ahead of Expectations
- Retail Deposit Retention to date of 97% Better than Anticipated
- Strong Deposit and Loan Activity
- Lending Franchise Continues to Outperform
- 17% Commercial Loan Growth
- Indirect Auto Originations Total $170 million
- Core Deposit Platform Growth Continues
- Retail Checking Account Balances up 20%, Excluding Acquired Balances
-
Sustained Strength in Capital Markets and Mortgage Banking Revenues
- GAAP Loss of $0.05 per Share Includes $135 million of HSBC Branch Acquisition and Restructuring Charges
BUFFALO, N.Y., July 27, 2012 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today announced second quarter 2012 results reflecting the continuing strong fundamentals of its regional banking business, as well as better than expected initial outcomes from the recently acquired and converted HSBC branches across New York State and Connecticut.
"We continue to execute and deliver on our core banking strategy by expanding and strengthening relationships with our new and existing customers," said John R. Koelmel, First Niagara President and Chief Executive Officer. "The fundamentals of our business are stronger than ever as evidenced by the continuing momentum across each of our operating units and markets. And with the benefit of the very successful conversion in May of the former HSBC branches across New York and Connecticut, our team continues to play offense very effectively with our differentiating customer-centric approach in each of our markets."
HSBC Branch Acquisition Update
On May 18, 2012, the company acquired $9.8 billion in deposits and $1.6 billion in loans through the HSBC branch transaction. The company successfully transferred 1.2 million loan and deposit accounts in converting nearly 500,000 households over that weekend, while also transforming the 100 acquired branches and welcoming 1,200 new team members. The company also completed the planned sale of 57 branches to KeyBank, Community Bank Systems and Five Star. The sale of seven remaining branches will be completed later in this quarter.
Customer retention has been strong, with more than 97% of the converted deposit balances retained to date. The overall cost of the acquired retail deposits averaged 31 basis points. To date, the pace of new checking account production at acquired branches is running 20% above established branches. In addition, customers acquired in the transaction transferred more products and services per household compared to the legacy company relationships.
Retail, small business, and consumer finance lending activity at the new branches was also strong. In the small business segment, the on-boarding of 20 new relationship managers has resulted in a $90 million, or 50% increase in the pipeline in that segment.
Second Quarter Performance
In the second quarter of 2012, First Niagara posted non-GAAP operating net income available to common shareholders of $59.1 million, or $0.17 per diluted share, compared to $0.19 per share in the first quarter of 2012.
Total operating revenues of $338.7 million, which do not include the previously announced $15.9 million gain recorded on the sale of mortgage-backed securities, increased $26.4 million, or 8% over the first quarter of 2012. Net interest income was up $16.6 million, or 7%, from the prior quarter. Those increases include the benefits of the loans and deposits acquired through the HSBC branch transaction. Net interest margin was 3.26%, an eight basis point decline from the prior quarter, principally as a result of $14 million of additional premium amortization on mortgage-backed securities. Excluding the incremental premium amortization, the second quarter net interest margin was 3.43%.
Excluding loans acquired from HSBC, average commercial loans increased $429 million for the quarter, up 17% annualized over the prior three-month period. That is the tenth consecutive quarter of double-digit average commercial portfolio growth. Indirect auto loan originations totaled $170 million in the second quarter, as that new business unit begins to create significant momentum across its dealer network. Noninterest income increased 14% from the prior quarter driven by impacts of the HSBC branch acquisition as well as continued strength in both mortgage banking and capital markets businesses.
The provision for credit losses on originated loans totaled $25.4 million, including $10.3 million to support loan growth and $15.1 million to cover net charge-offs of 55 basis points of originated loans. The total provision for credit losses was $28.1 million for the quarter, including $2.4 million related to acquired loans.
On a GAAP basis, First Niagara reported a second quarter loss to common shareholders of $18.5 million, or $0.05 per diluted share, compared to net income to common shareholders of $54.8 million, or $0.16 per diluted share, in the first quarter of 2012. Reported GAAP results for the second quarter of 2012 include the $15.9 million gain on securities portfolio sale completed at the end of the quarter as well as $135.2 million of acquisition and restructuring costs incurred primarily in connection with the HSBC branch acquisition.
"The positive operating performance driven by our very strong loan and deposit growth continues to differentiate us from peers," said Gregory W. Norwood, Chief Financial Officer. "While the benefits of those increasingly solid fundamentals were somewhat diminished by the impacts of the mortgage-backed security premium amortization and a large commercial loan charge-off during the quarter, we continue to be focused on fully capitalizing on our organic commercial customer growth opportunities, including our new indirect auto capabilities and enhanced credit card product. We will continue to focus on acquiring core retail and business checking accounts and deepening the product and service relationships with our customers to further drive profitable growth during this prolonged low- rate environment."
Operating Results (Non-GAAP) | Q2 2012 | Q1 2012 | Q2 2011 |
Net interest income | $ 259.0 | $ 242.4 | $ 230.4 |
Provision for credit losses | 28.1 | 20.0 | 17.3 |
Noninterest income | 79.7 | 69.9 | 60.9 |
Noninterest expense | 210.4 | 184.5 | 166.7 |
Operating net income before non-operating items | 66.6 | 70.1 | 71.2 |
Preferred stock dividend | 7.5 | 5.1 | -- |
Operating net income available to common shareholders | 59.1 | 64.9 | 71.2 |
Weighted average diluted shares outstanding | 348.9 | 349.1 | 282.4 |
Operating earnings per diluted share | $ 0.17 | $ 0.19 | $ 0.25 |
Reported Results (GAAP) |
|||
Operating net income before non-operating items | $ 66.6 | $ 70.1 | $ 71.2 |
Gain on securities portfolio repositioning (a) | 10.3 | 0.0 | 0.0 |
Non-operating expenses (b) | 87.9 | 10.2 | 57.7 |
Net income (loss) | (10.9) | 59.9 | 13.6 |
Preferred stock dividend | 7.5 | 5.1 | -- |
Net income (loss) available to common shareholders | (18.5) | 54.8 | 13.6 |
Weighted average diluted shares outstanding | 348.9 | 349.1 | 282.4 |
Earnings (loss) per diluted share | $ (0.05) | $ 0.16 | $ 0.05 |
All amounts in millions except earnings per diluted share. The Non-GAAP/Operating Results table above summarizes the company's operating results excluding certain non-operating items. For a detailed reconciliation of non-GAAP measures, refer to the attached tables. | |||
(a) Amount is shown net of tax and represents gain recorded on the sale of $3.1 billion of mortgage-backed securities | |||
(b) Amounts are shown net of tax and represent expenses related to acquisition, integration and restructuring. |
Loans
Average loans increased $349 million, or 8% annualized over the prior quarter, excluding the impact of loans acquired from HSBC. The organic increase from the prior quarter was driven by sustained strength in commercial loan categories and strong momentum in the Company's indirect auto origination business.
Average commercial loans increased $429 million, or 17% annualized, excluding the impact of loans acquired from HSBC. Commercial business (C&I) loans averaged $4.2 billion, or a 30% annualized increase over the prior quarter, excluding loans acquired from HSBC. Commercial real estate loans, excluding acquired loans, increased 9% annualized to $6.4 billion. Quarter-over-quarter organic growth of 94% in other consumer loans was driven by $170 million of indirect auto originations at yields of approximately 3.5%.
Deposits
Core consumer and business checking deposit balances and customer acquisition trends continued the strong momentum from the first quarter. Excluding the acquired HSBC accounts, new checking account openings increased 15% over the prior quarter and 38% over the prior year. The company's New York franchise was the leading contributor to the increase in new checking accounts from the prior quarter driven in part by the disruption in the market.
Excluding balances acquired through the HSBC branch transaction, average deposit balances were unchanged from prior quarter as growth in interest-bearing checking deposit balances and noninterest bearing deposits was offset by planned run-off of certificate of deposits. Average core deposit balances, excluding deposits acquired through the HSBC branch transaction, increased an annualized 2% over the prior quarter. Excluding the acquired HSBC balances, retail checking deposit balances increased 20% annualized over the prior quarter driven by continued new customer acquisition and balance growth on existing accounts. The quarter-over-quarter growth in retail checking balances included increases of 45% and 28% annualized in Western and Eastern New York, respectively. Average noninterest bearing deposits, excluding acquired HSBC deposits, increased 12% annualized over the prior quarter.
Net Interest Income
Average earning assets increased 37% annualized compared to the prior quarter, including investment securities purchased in anticipation of the HSBC branch transaction, the benefits of continued strong commercial loan growth, and the impact of $1.6 billion in branch-based loans acquired from HSBC. Investment securities averaged $14.0 billion, an increase of 48% annualized from the prior quarter.
Net interest income of $259.0 million increased 7% from the prior quarter, given the beneficial impacts of the increase in earning assets and the repayment of higher-cost borrowings. Those benefits were partially offset by $14 million in additional premium amortization on mortgage-backed securities which reduced the quarters' net interest margin by 17 basis points. As a result, tax equivalent net interest margin in the second quarter of 2012 was 3.26%, or eight basis points lower than the prior quarter.
Credit Quality
At June 30, 2012, the allowance for loan losses was $138.5 million, an increase from $126.7 million at March 31, 2012. Information for both the originated and acquired portfolios follows.
Q2 2012 | Q1 2012 | |||||
$ in millions | Originated | Acquired | Total | Originated | Acquired | Total |
Provision for loan losses | $ 25.4 | $ 2.4 | $ 27.8 | $ 15.5 | $ 4.4 | $ 19.9 |
Net charge-offs | 15.1 | 0.7 | 15.8 | 8.6 | 4.7 | 13.3 |
NCOs/ Avg Loans | 0.55% | 0.04% | 0.36% | 0.34% | 0.29% | 0.32% |
Total loans* | $ 11,392 | $ 7,600 | $ 18,992 | $ 10,517 | $ 6,460 | $ 16,977 |
(*) Acquired loans before associated credit discount; see accompanying tables for further information |
Originated loans
The provision for credit losses on originated loans totaled $25.4 million, up from $15.5 million in the prior quarter. As in recent quarters, the company provisioned well in excess of net charge-offs to support continued momentum in originated loan growth. For the second quarter, the provision in excess of net charge-offs was $10.3 million.
Net charge-offs increased to $15.1 million or 55 basis points of average originated loans from $8.6 million or 34 basis points in the prior quarter. The sequential increase resulted from a $7.7 million charge-off on one large commercial credit based in Upstate New York. Excluding that loan, net charge-offs for the quarter were 27 basis points of the originated portfolio.
At the end of the second quarter, nonperforming assets to total assets were 0.40%, unchanged from the prior quarter. Nonperforming loans as a percentage of originated loans decreased 13 basis points to 0.96% at June 30, 2012 and totaled $109.7 million. At June 30, 2012, the allowance for loan losses on originated loans totaled $135.2 million or 1.19% of such loans, compared to $125.1 million or 1.19% of loans at March 31, 2012.
Acquired loans
The provision for losses on acquired loans totaled $2.4 million, compared to $4.4 million in the prior quarter. Net charge-offs during the quarter on those portfolios totaled $0.7 million, compared to $4.7 million in the prior period. The provision in excess of net charge-offs provides for losses expected on certain pools of acquired loans. Acquired nonperforming loans totaled $19.3 million, up only slightly from $19.0 million at March 31, 2012. At June 30, 2012, remaining credit marks available to absorb losses on a pool-by-pool basis totaled approximately $229 million.
Fee Income
Second quarter 2012 operating noninterest income of $79.7 million increased $9.8 million, or 14%, compared to the prior quarter. Mortgage banking revenues increased $1.5 million or 27% over the prior quarter driven by higher gain-on-sale margins as well as stronger volumes that were positively impacted by the HSBC transaction. Sustained strength in capital markets income reflects the continued value of the Company's more robust commercial product capabilities.
On a GAAP basis, other noninterest income included a $15.9 million gain recorded on the sale of $3.1 billion of mortgage-backed securities at the end of June.
Noninterest Expense
Second quarter non-GAAP operating noninterest expense was $210.4 million, up $25.9 million from the first quarter of 2012. The increase reflects the partial-quarter cost of operating the acquired HSBC branches and higher FDIC premium expenses related to the HSBC branch transaction. Excluding this impact, operating expenses declined modestly from the prior quarter due to a decline in seasonal compensation expenses. The non-GAAP operating efficiency ratio was 62.1% compared to 59.1% in the prior quarter.
On a GAAP basis, noninterest expense for the second quarter was $345.6 million, including $135.2 million in HSBC branch acquisition and restructuring expenses, which were in line with expectations.
Capital
At June 30, 2012, the Company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.4% and 7.4%, respectively, reflecting the addition of approximately $850 million in intangible assets from the HSBC branch transaction. First Niagara 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 nearly 430 branches, approximately $35 billion in assets, $28 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 8:30 a.m. Eastern Time on Friday, July 27, 2012 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-888-606-8413 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 10, 2012 by dialing 1-866-373-1990, passcode: 9263.
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 | 2011 | Six months ended | |||||
Second | First | Fourth | Third | Second | June 30, | June 30, | |
Quarter | Quarter | Quarter | Quarter | Quarter | 2012 | 2011 | |
Interest income: | |||||||
Loans and leases | $ 200,725 | $ 189,385 | $ 195,434 | $ 192,772 | $ 184,341 | $ 390,110 | $ 316,458 |
Investment securities and other | 99,116 | 101,395 | 96,472 | 94,375 | 93,029 | 200,511 | 169,796 |
Total interest income | 299,841 | 290,780 | 291,906 | 287,147 | 277,370 | 590,621 | 486,254 |
Interest expense: | |||||||
Deposits | 16,391 | 14,998 | 21,521 | 24,771 | 21,324 | 31,389 | 36,945 |
Borrowings | 24,437 | 33,411 | 27,872 | 26,947 | 25,609 | 57,848 | 46,004 |
Total interest expense | 40,828 | 48,409 | 49,393 | 51,718 | 46,933 | 89,237 | 82,949 |
Net interest income | 259,013 | 242,371 | 242,513 | 235,429 | 230,437 | 501,384 | 403,305 |
Provision for credit losses | 28,100 | 20,000 | 13,400 | 14,500 | 17,307 | 48,100 | 30,207 |
Net interest income after provision | 230,913 | 222,371 | 229,113 | 220,929 | 213,130 | 453,284 | 373,098 |
Noninterest income: | |||||||
Banking services | 27,823 | 21,593 | 22,079 | 26,384 | 24,613 | 49,416 | 43,619 |
Insurance commissions | 17,072 | 16,833 | 15,440 | 16,886 | 17,044 | 33,905 | 32,799 |
Wealth management services | 9,207 | 9,039 | 8,179 | 7,933 | 7,883 | 18,246 | 14,617 |
Mortgage banking | 7,174 | 5,649 | 5,279 | 5,254 | 3,386 | 12,823 | 4,649 |
Lending and leasing | 4,245 | 3,123 | 3,103 | 3,399 | 2,811 | 7,368 | 4,923 |
Bank owned life insurance | 3,848 | 3,387 | 3,302 | 2,742 | 3,055 | 7,235 | 5,085 |
Capital markets income | 6,831 | 6,539 | 2,746 | 2,687 | 655 | 13,370 | 2,916 |
Other income | 19,398 | 3,745 | 3,557 | 3,370 | 1,448 | 23,143 | 4,361 |
Total noninterest income | 95,598 | 69,908 | 63,685 | 68,655 | 60,895 | 165,506 | 112,969 |
Noninterest expense: | |||||||
Salaries and benefits | 104,507 | 96,477 | 88,796 | 89,131 | 90,192 | 200,984 | 163,968 |
Occupancy and equipment | 24,089 | 22,017 | 22,580 | 20,434 | 18,952 | 46,106 | 35,149 |
Technology and communications | 24,434 | 19,713 | 18,942 | 16,634 | 13,929 | 44,147 | 26,800 |
Marketing and advertising | 6,676 | 6,763 | 7,724 | 7,554 | 3,880 | 13,439 | 6,572 |
Professional services | 9,263 | 8,895 | 11,669 | 9,171 | 9,138 | 18,158 | 15,177 |
Amortization of intangibles | 9,839 | 6,466 | 6,586 | 6,896 | 6,573 | 16,305 | 12,062 |
FDIC premiums | 10,552 | 6,133 | 6,097 | 10,301 | 6,267 | 16,685 | 12,462 |
Merger and acquisition integration expenses | 131,460 | 12,970 | 6,149 | 9,008 | 76,828 | 144,430 | 83,004 |
Restructuring charges | 3,750 | 2,703 | 13,496 | 16,326 | 11,656 | 6,453 | 12,712 |
Other expense | 21,069 | 18,041 | 20,132 | 18,416 | 17,726 | 39,110 | 32,385 |
Total noninterest expense | 345,639 | 200,178 | 202,171 | 203,871 | 255,141 | 545,817 | 400,291 |
Income (loss) before income taxes | (19,128) | 92,101 | 90,627 | 85,713 | 18,884 | 72,973 | 85,776 |
Income taxes | (8,204) | 32,236 | 32,166 | 28,732 | 5,334 | 24,032 | 27,308 |
Net income (loss) | (10,924) | 59,865 | 58,461 | 56,981 | 13,550 | 48,941 | 58,468 |
Preferred stock dividend | 7,547 | 5,115 | -- | -- | -- | 12,662 | -- |
Net income (loss) available to common stockholders | $ (18,471) | $ 54,750 | $ 58,461 | $ 56,981 | $ 13,550 | $ 36,279 | $ 58,468 |
Financial Ratios: | |||||||
Earnings (loss) per basic share | $ (0.05) | $ 0.16 | $ 0.19 | $ 0.19 | $ 0.05 | $ 0.10 | $ 0.24 |
Earnings (loss) per diluted share | (0.05) | 0.16 | 0.19 | 0.19 | 0.05 | 0.10 | 0.24 |
Weighted average shares outstanding - basic(1) | 348,941 | 348,823 | 304,065 | 292,211 | 281,496 | 348,882 | 244,018 |
Weighted average shares outstanding - diluted(1) | 348,941 | 349,069 | 304,341 | 292,503 | 282,420 | 349,147 | 244,914 |
Net revenue(2) | $ 354,611 | $ 312,279 | $ 306,198 | $ 304,084 | $ 291,332 | $ 666,890 | $ 516,274 |
Noninterest income as a percentage of net revenue(2) | 26.96% | 22.39% | 20.80% | 22.58% | 20.90% | 24.82% | 21.88% |
Pre-tax, pre-provision income(3) | 8,972 | 112,101 | 104,027 | 100,213 | 36,191 | 121,073 | 115,983 |
Pre-tax, pre-provision income per diluted share(3) | 0.03 | 0.32 | 0.34 | 0.34 | 0.13 | 0.35 | 0.47 |
Pre-tax, pre-provision return on average assets(3) | 0.10% | 1.36% | 1.30% | 1.28% | 0.50% | 0.70% | 0.93% |
Net interest margin(4) | 3.26% | 3.34% | 3.48% | 3.48% | 3.65% | 3.30% | 3.72% |
Interest yield on average loans(4) | 4.59% | 4.62% | 4.76% | 4.73% | 4.93% | 4.60% | 5.02% |
Rate paid on interest-bearing liabilities(4) | 0.61% | 0.79% | 0.82% | 0.87% | 0.84% | 0.69% | 0.87% |
Efficiency ratio | 97.47% | 64.10% | 66.03% | 67.04% | 87.58% | 81.85% | 77.53% |
Effective tax rate | 42.9% | 35.0% | 35.5% | 33.5% | 28.2% | 32.9% | 31.8% |
Return on average assets(5) | (0.12)% | 0.73% | 0.73% | 0.73% | 0.19% | 0.28% | 0.47% |
Return on average equity(5) | (0.90)% | 4.96% | 5.54% | 5.61% | 1.42% | 2.02% | 3.56% |
Return on average tangible equity(3)(5) | (1.64)% | 7.90% | 9.75% | 10.28% | 2.59% | 3.44% | 6.26% |
Return on average common equity | (1.64)% | 4.88% | 5.63% | 5.61% | 1.42% | 1.61% | 3.56% |
Return on average tangible common equity(3) | (3.18)% | 8.12% | 10.03% | 10.28% | 2.59% | 2.89% | 6.26% |
(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 | 2011 | ||||
June 30, | March 31, | December 31, | September 30, | June 30, | |
Cash and cash equivalents | $ 488,227 | $ 370,380 | $ 836,555 | $ 332,437 | $ 318,820 |
Investment securities: | |||||
Available for sale | 9,937,271 | 12,248,058 | 9,348,296 | 8,349,237 | 8,219,695 |
Held to maturity | 1,463,872 | 2,503,156 | 2,669,630 | 2,830,744 | 2,939,933 |
FHLB and FRB common stock | 329,555 | 499,328 | 358,159 | 331,747 | 305,241 |
Loans held for sale | 101,596 | 102,513 | 94,484 | 79,820 | 51,141 |
Loans and leases: | |||||
Commercial: | |||||
Real estate | 6,710,009 | 6,369,098 | 6,244,381 | 6,148,988 | 6,130,301 |
Business | 4,514,537 | 4,108,363 | 3,771,649 | 3,588,733 | 3,335,330 |
Total commercial loans | 11,224,546 | 10,477,461 | 10,016,030 | 9,737,721 | 9,465,631 |
Residential real estate | 4,037,045 | 3,881,003 | 4,012,267 | 4,171,374 | 4,270,811 |
Home equity | 2,683,236 | 2,149,135 | 2,165,988 | 2,177,772 | 2,160,665 |
Other consumer | 818,689 | 283,320 | 278,298 | 278,499 | 272,118 |
Total loans and leases | 18,763,516 | 16,790,919 | 16,472,583 | 16,365,366 | 16,169,225 |
Allowance for loan losses | 138,516 | 126,746 | 120,100 | 112,749 | 107,028 |
Loans and leases, net | 18,625,000 | 16,664,173 | 16,352,483 | 16,252,617 | 16,062,197 |
Bank owned life insurance | 397,739 | 395,944 | 392,468 | 416,449 | 378,241 |
Premises and equipment | 380,611 | 330,590 | 318,101 | 303,634 | 292,778 |
Goodwill and other intangibles | 2,631,605 | 1,796,394 | 1,803,240 | 1,812,628 | 1,829,712 |
Other assets | 750,280 | 607,269 | 637,199 | 500,194 | 491,888 |
Total assets | $ 35,105,756 | $ 35,517,805 | $ 32,810,615 | $ 31,209,507 | $ 30,889,646 |
Deposits: | |||||
Savings accounts | $ 4,103,773 | $ 2,554,720 | $ 2,621,016 | $ 2,641,723 | $ 2,767,951 |
Interest-bearing checking | 3,887,568 | 2,431,672 | 2,259,576 | 2,028,052 | 2,028,645 |
Money market deposits | 10,919,766 | 7,100,646 | 7,220,902 | 7,507,189 | 6,878,214 |
Noninterest-bearing deposits | 4,774,764 | 3,200,824 | 3,335,356 | 3,095,283 | 2,738,917 |
Certificates of deposit | 4,211,116 | 3,741,525 | 3,968,265 | 4,351,930 | 4,486,768 |
Total deposits | 27,896,987 | 19,029,387 | 19,405,115 | 19,624,177 | 18,900,495 |
Short-term borrowings | 958,044 | 6,353,189 | 2,208,845 | 1,156,711 | 1,466,745 |
Long-term borrowings | 732,263 | 4,688,251 | 5,918,276 | 5,928,632 | 6,134,181 |
Other liabilities | 700,249 | 571,532 | 480,201 | 499,312 | 395,390 |
Total liabilities | 30,287,543 | 30,642,359 | 28,012,437 | 27,208,832 | 26,896,811 |
Preferred stockholders' equity | 338,002 | 338,002 | 338,002 | -- | -- |
Common stockholders' equity | 4,480,211 | 4,537,444 | 4,460,176 | 4,000,675 | 3,992,835 |
Total stockholders' equity | 4,818,213 | 4,875,446 | 4,798,178 | 4,000,675 | 3,992,835 |
Total liabilities and stockholders' equity | $ 35,105,756 | $ 35,517,805 | $ 32,810,615 | $ 31,209,507 | $ 30,889,646 |
Selected balance sheet information: | |||||
Total interest-earning assets(1) | $ 30,403,035 | $ 31,959,556 | $ 29,284,139 | $ 27,805,974 | $ 27,560,036 |
Total interest-bearing liabilities | 24,812,530 | 26,870,002 | 24,196,880 | 23,614,238 | 23,762,504 |
Net interest-earning assets | $ 5,590,505 | $ 5,089,554 | $ 5,087,259 | $ 4,191,736 | $ 3,797,532 |
Tangible equity(2) | $ 2,186,608 | $ 3,079,052 | $ 2,994,938 | $ 2,188,047 | $ 2,163,123 |
Tangible common equity(2) | 1,848,606 | 2,741,050 | 2,656,936 | 2,188,047 | 2,163,123 |
Unrealized gain on securities, net of tax | 133,430 | 152,408 | 105,276 | 116,666 | 102,754 |
Total mortgage loans serviced for others | 2,453,285 | 2,241,708 | 2,071,445 | 1,922,592 | 1,834,004 |
Total core deposits | $ 23,685,871 | $ 15,287,862 | $ 15,436,850 | $ 15,272,247 | $ 14,413,727 |
Originated loans(3) | $ 11,392,158 | $ 10,517,021 | $ 9,876,005 | $ 9,425,194 | $ 8,859,695 |
Acquired loans(4) | 7,600,213 | 6,459,798 | 6,801,689 | 7,195,250 | 7,576,334 |
Credit related discount on acquired loans(5) | (228,855) | (185,900) | (205,111) | (255,078) | (266,804) |
Total Loans | $ 18,763,516 | $ 16,790,919 | $ 16,472,583 | $ 16,365,366 | $ 16,169,225 |
(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) Originated loans represent total loans excluding acquired loans. | |||||
(4) Represents the carrying value of acquired loans plus the principal not expected to be collected. | |||||
(5) 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, 2012 | March 31, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||
Average | Interest(1) | Yields | Average | Interest(1) | Yields | Average | Interest(1) | Yields | Average | Interest(1) | Yields | Average | Interest(1) | Yields | |
Balances | and | Balances | and | Balances | and | Balances | and | Balances | and | ||||||
Rates(1) | Rates(1) | Rates(1) | Rates(1) | Rates(1) | |||||||||||
Interest-earning assets: | |||||||||||||||
Loans and leases(2) | |||||||||||||||
Commercial: | |||||||||||||||
Real estate | $ 6,501 | $ 80 | 4.88% | $ 6,300 | $ 79 | 4.98% | $ 5,807 | $ 79 | 5.42% | $ 6,400 | $ 159 | 4.93% | $ 5,122 | $ 141 | 5.48% |
Business | 4,293 | 44 | 4.03 | 3,915 | 41 | 4.08 | 3,120 | 34 | 4.30 | 4,104 | 84 | 4.05 | 2,869 | 63 | 4.39 |
Total commercial loans | 10,794 | 124 | 4.54 | 10,215 | 120 | 4.63 | 8,927 | 113 | 5.03 | 10,505 | 244 | 4.59 | 7,992 | 205 | 5.09 |
Residential real estate | 3,964 | 40 | 4.07 | 3,945 | 42 | 4.28 | 3,848 | 44 | 4.56 | 3,955 | 83 | 4.18 | 2,782 | 65 | 4.70 |
Home equity | 2,412 | 27 | 4.42 | 2,157 | 24 | 4.40 | 2,039 | 23 | 4.58 | 2,284 | 50 | 4.41 | 1,777 | 40 | 4.56 |
Other consumer | 527 | 11 | 8.54 | 278 | 5 | 7.34 | 270 | 5 | 7.10 | 402 | 16 | 8.13 | 270 | 9 | 6.99 |
Total loans and leases | 17,697 | 202 | 4.59 | 16,595 | 191 | 4.62 | 15,085 | 185 | 4.93 | 17,146 | 393 | 4.60 | 12,820 | 319 | 5.02 |
Mortgage-backed securities | 10,848 | 71 | 2.62 | 10,254 | 82 | 3.19 | 9,041 | 81 | 3.58 | 10,551 | 153 | 2.90 | 8,104 | 149 | 3.68 |
Other investment securities | 3,184 | 27 | 3.43 | 2,278 | 20 | 3.48 | 1,473 | 14 | 3.88 | 2,731 | 47 | 3.45 | 1,212 | 24 | 3.90 |
Total securities, at cost | 14,032 | 98 | 2.81 | 12,532 | 102 | 3.24 | 10,514 | 95 | 3.63 | 13,282 | 200 | 3.01 | 9,316 | 173 | 3.71 |
Money market and other investments | 818 | 5 | 2.20 | 673 | 3 | 2.28 | 355 | 3 | 2.58 | 745 | 8 | 2.23 | 293 | 5 | 3.15 |
Total interest-earning assets | 32,547 | $ 305 | 3.77% | 29,800 | $ 296 | 3.99% | 25,953 | $ 283 | 4.37% | 31,173 | $ 601 | 3.88% | 22,428 | $ 497 | 4.47% |
Goodwill and other intangibles | 2,207 | 1,801 | 1,739 | 2,004 | 1,427 | ||||||||||
Other noninterest-earning assets | 1,746 | 1,523 | 1,405 | 1,635 | 1,275 | ||||||||||
Total assets | $ 36,500 | $ 33,124 | $ 29,097 | $ 34,812 | $ 25,130 | ||||||||||
Interest-bearing liabilities: | |||||||||||||||
Deposits | |||||||||||||||
Savings accounts | $ 3,302 | $ 1 | 0.14% | $ 2,566 | $ -- | 0.03% | $ 2,555 | $ 2 | 0.29% | $ 2,934 | $ 1 | 0.09% | $ 1,907 | $ 2 | 0.23% |
Interest-bearing checking | 3,095 | 1 | 0.08 | 2,224 | 1 | 0.10 | 2,027 | 1 | 0.13 | 2,660 | 1 | 0.09 | 1,851 | 1 | 0.12 |
Money market deposits | 9,125 | 6 | 0.28 | 7,167 | 5 | 0.28 | 6,407 | 9 | 0.58 | 8,147 | 11 | 0.28 | 5,713 | 15 | 0.54 |
Certificates of deposit | 4,019 | 8 | 0.83 | 3,827 | 9 | 0.98 | 4,355 | 9 | 0.88 | 3,923 | 18 | 0.90 | 3,807 | 18 | 0.98 |
Total interest bearing deposits | 19,541 | 16 | 0.34% | 15,784 | 15 | 0.38% | 15,344 | 21 | 0.56% | 17,662 | 31 | 0.36% | 13,279 | 37 | 0.56% |
Borrowings | |||||||||||||||
Short-term borrowings | 5,046 | 7 | 0.55% | 3,632 | 6 | 0.65% | 1,454 | 2 | 0.41% | 4,339 | 13 | 0.59% | 1,675 | 3 | 0.32% |
Long-term borrowings | 2,433 | 18 | 2.91 | 5,334 | 27 | 2.07 | 5,529 | 24 | 1.75 | 3,884 | 45 | 2.34 | 4,312 | 43 | 2.03 |
Total borrowings | 7,479 | 24 | 1.31 | 8,966 | 33 | 1.50 | 6,983 | 26 | 1.47 | 8,223 | 58 | 1.41 | 5,988 | 46 | 1.55 |
Total interest-bearing liabilities | 27,020 | $ 41 | 0.61% | 24,750 | $ 48 | 0.79% | 22,327 | $ 47 | 0.84% | 25,885 | $ 89 | 0.69% | 19,267 | $ 83 | 0.87% |
Noninterest-bearing deposits | 3,835 | 3,053 | 2,542 | 3,444 | 2,217 | ||||||||||
Other noninterest-bearing liabilities | 765 | 471 | 389 | 618 | 335 | ||||||||||
Total liabilities | 31,620 | 28,274 | 25,258 | 29,947 | 21,819 | ||||||||||
Total stockholders' equity | 4,880 | 4,850 | 3,839 | 4,865 | 3,311 | ||||||||||
Total liabilities and stockholders' equity | $ 36,500 | $ 33,124 | $ 29,097 | $ 34,812 | $ 25,130 | ||||||||||
Net interest income (FTE) | $ 264 | $ 248 | $ 236 | $ 512 | $ 414 | ||||||||||
Taxable Equivalent Adjustment(1) | 5 | 6 | 6 | 11 | 11 | ||||||||||
Total core deposits | $ 19,357 | $ 8 | 0.17% | $ 15,010 | $ 6 | 0.15% | $ 13,531 | $ 12 | 0.35% | $ 17,183 | $ 13 | 0.16% | $ 11,689 | $ 18 | 0.32% |
Total deposits | 23,376 | 16 | 0.28% | 18,837 | 15 | 0.32% | 17,886 | 21 | 0.48% | 21,106 | 31 | 0.30% | 15,496 | 37 | 0.48% |
Tax equivalent net interest rate spread | 3.16% | 3.20% | 3.53% | 3.19% | 3.60% | ||||||||||
Tax equivalent net interest rate margin | 3.26% | 3.34% | 3.65% | 3.30% | 3.72% | ||||||||||
(1) Tax equivalent interest income is calculated based upon a 35% effective tax rate. | |||||||||||||||
(2) Includes nonaccrual loans. | |||||||||||||||
First Niagara Financial Group, Inc. | |||||||
Allowance for Loans and Lease Losses & Asset Quality | |||||||
(in thousands) | |||||||
2012 | 2011 | Six months ended | |||||
Second | First | Fourth | Third | Second | June 30, | June 30, | |
Quarter | Quarter | Quarter | Quarter | Quarter | 2012 | 2011 | |
Beginning balance | $ 126,746 | $ 120,100 | $ 112,749 | $ 107,028 | $ 100,126 | $ 120,100 | $ 95,354 |
Net loan (charge-offs) recoveries: | |||||||
Commercial real estate | $ (2,384) | $ (5,994) | $ 212 | $ (5,580) | $ (2,787) | $ (8,378) | $ (4,793) |
Commercial business | (10,958) | (4,143) | (4,665) | (2,123) | (3,439) | (15,101) | (7,830) |
Residential real estate | (155) | (1,120) | (318) | 171 | (177) | (1,275) | (839) |
Home equity | (1,536) | (1,161) | (268) | (223) | (829) | (2,697) | (1,610) |
Other consumer | (805) | (836) | (796) | (370) | (305) | (1,641) | (593) |
Total net loan charge-offs | $ (15,838) | $ (13,254) | $ (5,835) | $ (8,125) | $ (7,537) | $ (29,092) | $ (15,665) |
Provision for loan losses | 27,803 | 19,900 | 13,186 | 13,846 | 14,439 | 47,703 | 27,339 |
Allowance related to loans sold | (195) | -- | -- | -- | -- | (195) | -- |
Ending balance | $ 138,516 | $ 126,746 | $ 120,100 | $ 112,749 | $ 107,028 | $ 138,516 | $ 107,028 |
Supplemental information | |||||||
Allowance to loans | 0.74% | 0.75% | 0.73% | 0.69% | 0.66% | 0.74% | 0.66% |
Allowance for originated loans to originated loans(1) | 1.19 | 1.19 | 1.20 | 1.20 | 1.21 | 1.19 | 1.21 |
Provision to average loans (annualized) | 0.63 | 0.48 | 0.32 | 0.34 | 0.38 | 0.56 | 0.43 |
Provision for originated loans to average originated loans(1) (annualized) | 0.93 | 0.61 | 0.45 | 0.60 | 0.64 | 0.77 | 0.66 |
Net charge-offs to average loans (annualized) | |||||||
Commercial real estate | 0.15% | 0.38% | -0.01% | 0.36% | 0.19% | 0.26% | 0.19% |
Commercial business | 1.02% | 0.42% | 0.51% | 0.25% | 0.44% | 0.74% | 0.55% |
Total commercial loans | 0.49% | 0.40% | 0.18% | 0.32% | 0.28% | 0.45% | 0.32% |
Residential real estate | 0.02% | 0.11% | 0.03% | -0.02% | 0.02% | 0.06% | 0.06% |
Home equity | 0.25% | 0.22% | 0.05% | 0.04% | 0.16% | 0.24% | 0.18% |
Other consumer | 0.61% | 1.20% | 1.14% | 0.53% | 0.45% | 0.82% | 0.44% |
Total consumer loans | 0.15% | 0.20% | 0.08% | 0.03% | 0.09% | 0.17% | 0.13% |
Total loans | 0.36% | 0.32% | 0.14% | 0.20% | 0.20% | 0.34% | 0.24% |
Net charge-offs of originated loans to average originated loans (annualized)(1) | |||||||
Commercial real estate | 0.18% | 0.16% | -0.05% | 0.59% | 0.26% | 0.17% | 0.24% |
Commercial business | 1.25% | 0.54% | 0.67% | 0.34% | 0.54% | 0.92% | 0.69% |
Total commercial loans | 0.66% | 0.32% | 0.25% | 0.49% | 0.37% | 0.50% | 0.41% |
Residential real estate | 0.04% | 0.27% | 0.08% | -0.04% | 0.05% | 0.15% | 0.11% |
Home equity | 0.51% | 0.40% | 0.10% | 0.08% | 0.34% | 0.46% | 0.34% |
Other consumer | 0.81% | 1.25% | 1.51% | 0.93% | 0.82% | 0.99% | 0.79% |
Total consumer loans | 0.28% | 0.38% | 0.17% | 0.06% | 0.20% | 0.33% | 0.23% |
Total loans | 0.55% | 0.34% | 0.22% | 0.35% | 0.32% | 0.45% | 0.36% |
Nonperforming loans: | |||||||
Commercial real estate | $ 46,881 | $ 44,749 | $ 43,119 | $ 41,295 | 42,881 | $ 46,881 | $ 42,881 |
Commercial business | 35,690 | 44,547 | 20,173 | 18,839 | 20,021 | 35,690 | 20,021 |
Residential real estate | 23,058 | 22,021 | 18,668 | 15,555 | 14,484 | 23,058 | 14,484 |
Home equity | 22,161 | 20,983 | 6,790 | 5,428 | 4,748 | 22,161 | 4,748 |
Other consumer | 1,282 | 961 | 1,048 | 769 | 379 | 1,282 | 379 |
Total nonperforming loans | 129,072 | 133,261 | 89,798 | 81,886 | 82,513 | 129,072 | 82,513 |
Real estate owned | 10,632 | 7,202 | 4,482 | 9,392 | 12,315 | 10,632 | 12,315 |
Total nonperforming assets | $ 139,704 | $ 140,463 | $ 94,280 | $ 91,278 | $ 94,828 | $ 139,704 | $ 94,828 |
Accruing troubled debt restructurings (TDR) | $ 42,140 | $ 42,358 | $ 43,888 | $ 45,282 | $ 18,794 | $ 42,140 | $ 18,794 |
Acquired loans 90 days past due still accruing(2) | 125,668 | 116,810 | 143,237 | 143,270 | 134,869 | 125,668 | 134,869 |
Nonperforming acquired loans(3) | 19,374 | 19,042 | -- | -- | -- | 19,374 | -- |
Total classified loans(4) | 732,762 | 753,536 | 748,375 | 692,961 | 700,813 | 732,762 | 700,813 |
Total criticized loans(5) | $ 1,030,471 | $ 1,044,731 | $ 1,144,222 | $ 1,268,879 | $ 1,253,937 | $ 1,030,471 | $ 1,253,937 |
Total nonperforming loans to loans | 0.69% | 0.79% | 0.55% | 0.50% | 0.51% | 0.69% | 0.51% |
Total nonperforming originated loans to originated loans(1) | 0.96% | 1.09% | 0.91% | 0.87% | 0.93% | 0.96% | 0.93% |
Total nonperforming assets to loans and real estate owned | 0.74% | 0.84% | 0.57% | 0.56% | 0.58% | 0.74% | 0.58% |
Total nonperforming assets to assets | 0.40% | 0.40% | 0.29% | 0.29% | 0.31% | 0.40% | 0.31% |
Allowance to nonperforming loans | 107.3% | 95.1% | 133.7% | 137.7% | 129.7% | 107.3% | 129.7% |
Texas ratio(6) | 13.35% | 8.97% | 8.55% | 10.19% | 10.12% | 13.35% | 10.12% |
(1) Originated loans represent total loans excluding acquired loans. | |||||||
(2) All such loans represent acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing as we primarily recognize interest income through the accretion of the difference between the carrying value of these loans and their expected cash flows. | |||||||
(3) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing. The remaining credit discount, recorded at acquisition, remains adequate to cover losses on these balances. | |||||||
(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 "Classification of Assets" in our Annual Report on 10-K for the year ended December 31, 2011. | |||||||
(5) Beginning in the third quarter of 2011, criticized loans include consumer loans when they are 90 days or more past due. Prior to the third quarter of 2011, criticized loans include consumer loans when they are 60 days or more past due. The impact of the change at September 30, 2011 was a reduction of criticized loans by $24 million. 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. | |||||||
First Niagara Financial Group, Inc. | |||||||
Key Statistics | |||||||
(Share counts in thousands) | |||||||
2012 | 2011 | ||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||
First Niagara Financial Group, Inc capital ratios: | |||||||
Tier 1 risk based capital | 9.40% | 14.66% | (1) | 15.60% | (1) | 11.90% | 12.05% |
Tier 1 common capital(2) | 7.41% | 12.47% | (1) | 13.23% | (1) | 11.29% | 11.41% |
Total risk based capital | 11.37% | 16.75% | (1) | 17.84% | (1) | 12.56% | 12.69% |
Leverage | 6.32% | 9.67% | (1) | 9.97% | (1) | 7.42% | 7.81% |
Equity to assets | 13.72% | 13.73% | (1) | 14.62% | (1) | 12.82% | 12.93% |
Tangible common equity to tangible assets(2) | 5.69% | 8.13% | (1) | 8.57% | (1) | 7.44% | 7.44% |
First Niagara Bank, N.A capital ratios: | |||||||
Tier 1 risk based capital | 9.63% | 14.69% | (1) | 14.66% | (1) | 11.51% | 11.72% |
Total risk based capital | 10.57% | 15.66% | (1) | 16.47% | (1) | 12.17% | 12.37% |
Leverage | 6.48% | 9.69% | (1) | 9.38% | (1) | 7.17% | 7.58% |
Number of branches | 452 | 334 | 333 | 332 | 346 | ||
Full time equivalent employees | 6,103 | 4,753 | 4,827 | 4,712 | 4,751 | ||
Share information and per share metrics: | |||||||
Common shares outstanding | 352,665 | 351,936 | 351,834 | 294,898 | 295,245 | ||
Preferred shares outstanding | 14,000 | 14,000 | 14,000 | -- | -- | ||
Treasury shares | 13,337 | 14,066 | 14,168 | 14,192 | 13,845 | ||
Book value per share(3) | $ 12.84 | $ 13.00 | $ 12.79 | $ 13.72 | $ 13.68 | ||
Tangible book value per share(2)(3) | 5.30 | 7.86 | 7.62 | 7.50 | 7.41 | ||
Price/Book | 59.58% | 75.69% | 67.47% | 66.69% | 96.49% | ||
Price/Tangible book(2) | 144.34% | 125.19% | 113.25% | 122.00% | 178.14% | ||
Common stock dividends | $ 0.08 | $ 0.08 | $ 0.16 | $ 0.16 | $ 0.16 | ||
Preferred stock dividends | 0.54 | 0.37 | -- | -- | -- | ||
Dividend payout ratio | N/M | 50.00% | 84.21% | 84.21% | N/M | ||
Dividend yield (annualized) | 4.21% | 3.27% | 7.36% | 6.94% | 4.86% | ||
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 | 2011 | Six months ended | |||||
Second | First | Fourth | Third | Second | June 30, | June 30, | |
Quarter | Quarter | Quarter | Quarter | Quarter | 2012 | 2011 | |
Reconciliation of noninterest income on operating basis to reported noninterest income(1): | |||||||
Total noninterest income on operating basis (Non-GAAP) | $ 79,703 | $ 69,908 | $ 63,685 | $ 68,655 | $ 60,895 | $ 149,611 | $ 112,969 |
Gain on securities portfolio repositioning | 15,895 | -- | -- | -- | -- | 15,895 | -- |
Total reported noninterest income (GAAP) | 95,598 | 69,908 | 63,685 | 68,655 | 60,895 | 165,506 | 112,969 |
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1): | |||||||
Total noninterest expense on operating basis (Non-GAAP) | $ 210,429 | $ 184,505 | $ 182,526 | $ 178,537 | $ 166,657 | $ 394,934 | $ 304,575 |
Merger and acquisition integration expenses | 131,460 | 12,970 | 6,149 | 9,008 | 76,828 | 144,430 | 83,004 |
Restructuring charges | 3,750 | 2,703 | 13,496 | 16,326 | 11,656 | 6,453 | 12,712 |
Total reported noninterest expense (GAAP) | $ 345,639 | $ 200,178 | $ 202,171 | $ 203,871 | $ 255,141 | $ 545,817 | $ 400,291 |
Reconciliation of net operating income to net income(1): | |||||||
Net operating income (Non-GAAP) | $ 66,630 | $ 70,053 | $ 72,057 | $ 73,645 | $ 71,242 | $ 136,683 | $ 121,016 |
Nonoperating income and expenses, net of tax: | |||||||
Gain on securities portfolio repositioning | (10,331) | -- | -- | -- | -- | (10,331) | -- |
Merger and acquisition integration expenses | 85,448 | 8,431 | 4,256 | 5,925 | 50,092 | 93,879 | 54,239 |
Restructuring charges | 2,437 | 1,757 | 9,340 | 10,739 | 7,600 | 4,194 | 8,309 |
Total nonoperating expenses, net of tax | 77,554 | 10,188 | 13,596 | 16,664 | 57,692 | 87,742 | 62,548 |
Net income (GAAP) | $ (10,924) | $ 59,865 | $ 58,461 | $ 56,981 | $ 13,550 | $ 48,941 | $ 58,468 |
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) | $ 59,083 | $ 64,938 | $ 72,057 | $ 73,645 | $ 71,242 | $ 124,021 | $ 121,016 |
Nonoperating income and expenses, net of tax: | |||||||
Gain on securities portfolio repositioning | (10,331) | -- | -- | -- | -- | (10,331) | -- |
Merger and acquisition integration expenses | 85,448 | 8,431 | 4,256 | 5,925 | 50,092 | 93,879 | 54,239 |
Restructuring charges | 2,437 | 1,757 | 9,340 | 10,739 | 7,600 | 4,194 | 8,309 |
Total nonoperating income and expenses, net of tax | 77,554 | 10,188 | 13,596 | 16,664 | 57,692 | 87,742 | 62,548 |
Net income available to common stockholders (GAAP) | $ (18,471) | $ 54,750 | $ 58,461 | $ 56,981 | $ 13,550 | $ 36,279 | $ 58,468 |
Computation of pre-tax,pre-provision income: | |||||||
Net interest income | $ 259,013 | $ 242,371 | $ 242,513 | $ 235,429 | $ 230,437 | $ 501,384 | $ 403,305 |
Noninterest income | 95,598 | 69,908 | 63,685 | 68,655 | 60,895 | 165,506 | 112,969 |
Noninterest expense | (345,639) | (200,178) | (202,171) | (203,871) | (255,141) | (545,817) | (400,291) |
Pre-tax, pre-provision income (GAAP) | 8,972 | 112,101 | 104,027 | 100,213 | 36,191 | 121,073 | 115,983 |
Less: non-operating noninterest income (1) | (15,895) | -- | -- | -- | -- | (15,895) | -- |
Add back: non-operating noninterest expenses (1) | 135,210 | 15,673 | 19,645 | 25,334 | 88,484 | 150,883 | 95,716 |
Pre-tax, pre-provision income (Non-GAAP)(1) | $ 128,287 | $ 127,774 | $ 123,672 | $ 125,547 | $ 124,675 | $ 256,061 | $ 211,699 |
Financial ratios computed on an operating basis(1): | |||||||
Earnings per basic share | $ 0.17 | $ 0.19 | $ 0.24 | $ 0.25 | $ 0.25 | $ 0.35 | $ 0.49 |
Earnings per diluted share | 0.17 | 0.19 | 0.24 | 0.25 | 0.25 | 0.35 | 0.49 |
Weighted average shares outstanding - basic(2) | 348,941 | 348,823 | 304,065 | 292,211 | 281,496 | 348,882 | 244,018 |
Weighted average shares outstanding - diluted(2) | 348,941 | 349,069 | 304,341 | 292,503 | 282,420 | 349,147 | 244,914 |
Pre-tax, pre-provision income | 128,287 | 127,774 | 123,672 | 125,547 | 124,675 | 256,061 | 211,699 |
Pre-tax, pre-provision income per diluted share | 0.37 | 0.37 | 0.41 | 0.43 | 0.44 | 0.73 | 0.86 |
Pre-tax, pre-provision return on average assets | 1.41% | 1.55% | 1.55% | 1.61% | 1.72% | 1.48% | 1.70% |
Net interest margin(3) | 3.26% | 3.34% | 3.48% | 3.48% | 3.65% | 3.30% | 3.72% |
Interest yield on average loans(3) | 4.59% | 4.62% | 4.76% | 4.73% | 4.93% | 4.60% | 5.02% |
Rate paid on interest-bearing liabilities(3) | 0.61% | 0.79% | 0.82% | 0.87% | 0.84% | 0.69% | 0.87% |
Efficiency ratio | 62.13% | 59.08% | 59.61% | 58.71% | 57.21% | 60.67% | 58.99% |
Effective tax rate | 33.5% | 35.0% | 34.7% | 33.7% | 33.6% | 34.3% | 33.3% |
Noninterest income as a percentage of net revenue(4) | 23.53% | 22.39% | 20.80% | 22.58% | 20.90% | 22.98% | 21.88% |
Return on average assets | 0.73% | 0.85% | 0.90% | 0.94% | 0.98% | 0.79% | 0.97% |
Return on average equity | 5.49% | 5.81% | 6.82% | 7.25% | 7.44% | 5.65% | 7.37% |
Return on average tangible equity(5) | 10.03% | 9.24% | 12.02% | 13.28% | 13.61% | 9.61% | 12.95% |
Return on average common equity | 5.23% | 5.79% | 6.93% | 7.25% | 7.44% | 5.51% | 7.37% |
Return on average tangible common equity(6) | 10.18% | 9.63% | 12.36% | 13.28% | 13.61% | 9.88% | 12.95% |
(1) 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 | 2011 | Six months ended | |||||
Second | First | Fourth | Third | Second | June 30, | June 30, | |
Quarter | Quarter | Quarter | Quarter | Quarter | 2012 | 2011 | |
Computation of Ending Tangible Assets: | |||||||
Total assets | $ 35,105,756 | $ 35,517,805 | $ 32,810,615 | $ 31,209,507 | $ 30,889,646 | $ 35,105,756 | $ 30,889,646 |
Less: Goodwill and other intangibles | (2,631,605) | (1,796,394) | (1,803,240) | (1,812,628) | (1,829,712) | (2,631,605) | (1,829,712) |
Tangible assets | $ 32,474,151 | $ 33,721,411 | $ 31,007,375 | $ 29,396,879 | $ 29,059,934 | $ 32,474,151 | $ 29,059,934 |
Computation of Ending Tangible Equity: | |||||||
Total stockholders' equity | $ 4,818,213 | $ 4,875,446 | $ 4,798,178 | $ 4,000,675 | $ 3,992,835 | $ 4,818,213 | $ 3,992,835 |
Less: Goodwill and other intangibles | (2,631,605) | (1,796,394) | (1,803,240) | (1,812,628) | (1,829,712) | (2,631,605) | (1,829,712) |
Tangible equity | $ 2,186,608 | $ 3,079,052 | $ 2,994,938 | $ 2,188,047 | $ 2,163,123 | $ 2,186,608 | $ 2,163,123 |
Computation of Ending Tangible Common Equity: | |||||||
Total stockholders' equity | $ 4,818,213 | $ 4,875,446 | $ 4,798,178 | $ 4,000,675 | $ 3,992,835 | $ 4,818,213 | $ 3,992,835 |
Less: Goodwill and other intangibles | (2,631,605) | (1,796,394) | (1,803,240) | (1,812,628) | (1,829,712) | (2,631,605) | (1,829,712) |
Less: Preferred stockholders' equity | (338,002) | (338,002) | (338,002) | -- | -- | (338,002) | -- |
Tangible common equity | $ 1,848,606 | $ 2,741,050 | $ 2,656,936 | $ 2,188,047 | $ 2,163,123 | $ 1,848,606 | $ 2,163,123 |
Computation of Average Tangible Equity: | |||||||
Total stockholders' equity | $ 4,879,791 | $ 4,850,276 | $ 4,188,800 | $ 4,027,572 | $ 3,839,101 | $ 4,865,033 | $ 3,311,117 |
Less: Goodwill and other intangibles | (2,206,682) | (1,800,613) | (1,809,690) | (1,827,820) | (1,738,948) | (2,003,648) | (1,427,369) |
Tangible equity | $ 2,673,109 | $ 3,049,663 | $ 2,379,110 | $ 2,199,752 | $ 2,100,153 | $ 2,861,385 | $ 1,883,748 |
Computation of Average Tangible Common Equity: | |||||||
Total stockholders' equity | $ 4,879,791 | $ 4,850,276 | $ 4,188,800 | $ 4,027,572 | $ 3,839,101 | $ 4,865,033 | $ 3,311,117 |
Less: Goodwill and other intangibles | (2,206,682) | (1,800,613) | (1,809,690) | (1,827,820) | (1,738,948) | (2,003,648) | (1,427,369) |
Less: Preferred stockholders' equity | (338,002) | (338,002) | (66,226) | -- | -- | (338,002) | -- |
Tangible common equity | $ 2,335,107 | $ 2,711,661 | $ 2,312,884 | $ 2,199,752 | $ 2,100,153 | $ 2,523,383 | $ 1,883,748 |
Computation of Texas Ratio: | |||||||
Nonperforming Assets | $ 139,704 | $ 140,463 | $ 94,280 | $ 91,278 | $ 94,828 | $ 139,704 | $ 94,828 |
Acquired loans 90 days past due still accruing(1) | 125,668 | 116,810 | 143,237 | 143,270 | 134,869 | 125,668 | 134,869 |
Sum of nonperforming assets and acquired loans 90 days past due still accruing | $ 265,372 | $ 257,273 | $ 237,517 | $ 234,548 | $ 229,697 | $ 265,372 | $ 229,697 |
Tangible common equity | $ 1,848,606 | $ 2,741,050 | $ 2,656,936 | $ 2,188,047 | $ 2,163,123 | $ 1,848,606 | $ 2,163,123 |
Allowance for loan loss | 138,516 | 126,746 | 120,100 | 112,749 | 107,028 | 138,516 | 107,028 |
Sum of tangible common equity and allowance for loan loss | $ 1,987,122 | $ 2,867,796 | $ 2,777,036 | $ 2,300,796 | $ 2,270,151 | $ 1,987,122 | $ 2,270,151 |
Sum of nonperforming assets and acquired loans 90 days past due still accruing/Sum of tangible common equity and allowance for loan loss | 13.35% | 8.97% | 8.55% | 10.19% | 10.12% | 13.35% | 10.12% |
Computation of Tier 1 Common Capital: | |||||||
Tier 1 capital | $ 2,128,702 | $ 3,009,727 | $ 2,962,031 | $ 2,151,953 | $ 2,118,085 | $ 2,128,702 | $ 2,118,085 |
Less: Qualifying restricted core capital elements | (111,630) | (111,453) | (111,284) | (111,112) | (110,920) | (111,630) | (110,920) |
Less: Perpetual non-cumulative preferred stock | (338,002) | (338,002) | (338,002) | -- | -- | (338,002) | -- |
Tier 1 common capital (Non-GAAP) | $ 1,679,070 | $ 2,560,272 | $ 2,512,745 | $ 2,040,841 | $ 2,007,165 | $ 1,679,070 | $ 2,007,165 |
(1) All such loans represent acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing as we primarily recognize interest income through the accretion of the difference between the carrying value of these loans and their expected cash flows. |