First Niagara Reports Fourth Quarter and Full Year 2013 Results

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| Source: First Niagara Financial Group, Inc.

Fourth Quarter and 2013 Highlights:

  • GAAP earnings of $0.20 per diluted share, consistent with the prior quarter
  • Full-Year 2013 earnings of $0.75 per diluted share compared to $0.40 per diluted share in 2012
  • Pre-Tax Pre-Provision income increased 3% QOQ
  • Operating expenses declined to $225 million excluding certain nonrecurring items
  • Net interest margin increased 1 basis point QOQ to 3.41%
  • Fee income declined 2% driven by seasonally lower insurance commissions revenues
  • Organic loan growth continues, with average loans up 9% annualized QOQ
  • Average commercial business and real estate loans increased 7% QOQ
  • Continued momentum in indirect auto loans, which increased by $246 million QOQ
  • Noninterest-bearing checking balances increased 8% annualized QOQ
  • Average core deposits increased 3% QOQ driven by higher customer balances
  • Transactional deposits averaged 36% of deposits, up from 32% a year-ago
  • Strong credit quality maintained
  • NCOs averaged 0.34% of originated loans in 2013, consistent with prior year
  • Nonperforming loans equaled 93 basis points of originated loans at year-end

BUFFALO, N.Y., Jan. 24, 2014 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today reported net income available to common shareholders of $70.1 million or $0.20 per diluted share for the fourth quarter of 2013, highlighted by stable net interest margin, balance sheet growth and positive operating leverage.

"I am proud of all that we accomplished in 2013 despite the industry challenges. We achieved strong organic loan growth and positive operating leverage through disciplined cost management and by leveraging our proven ability to acquire and deepen profitable customer relationships," said Gary M. Crosby, First Niagara President and Chief Executive Officer. "I am thrilled to lead First Niagara through our next phase of evolution as a commercial bank and I firmly believe we can create long-term shareholder value by efficiently attracting, retaining and growing profitable customer relationships. The decisions we make and the actions we take will be, and must be, driven by what is best for our customers, and ultimately, our shareholders."

Fourth Quarter Results

In the fourth quarter of 2013, First Niagara reported net income available to common shareholders of $70.1 million, or $0.20 per diluted share. In the fourth quarter of 2012, First Niagara reported net income available to common shareholders of $53.6 million, or $0.15 per diluted share, which included a $16 million pre-tax accelerated premium amortization charge on the company's Collateralized Mortgage Obligations (CMO) portfolio and $3.7 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 third quarter of 2013, net income available to common shareholders was $71.6 million, or $0.20 per diluted share.

Balance sheet growth remained strong as average loans increased 9% annualized compared to the prior quarter. Average commercial business and real estate loans increased 7% annualized over the prior quarter driven by strong activity in the company's Western Pennsylvania and New England markets. Average consumer loans increased 12% annualized driven by continued growth in indirect auto loan balances, partially offset by a decline in residential mortgage loans. Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking accounts, increased an annualized 14% over the prior quarter and currently represent 36% of the company's deposit balances, up from 32% a year ago.

For the fourth quarter of 2013, the company generated sequential positive operating leverage driven by a $4 million decline in operating expenses. Fourth quarter revenues of $370 million were consistent with the prior quarter. Net interest income increased 1% compared to the prior quarter. Net interest margin was stable at 3.41%. Noninterest income declined $2.1 million or 2% from the prior quarter primarily due to seasonally lower insurance commissions.

The provision for loan losses on originated loans totaled $28.2 million in the fourth quarter of 2013, well in excess of net charge-offs of $17.8 million in the quarter. At December 31, 2013, nonperforming originated loans comprised 0.93% of originated loans, or a 4 basis point increase from the prior quarter. Net charge-offs in 2013 equaled 34 basis points of average originated loans, consistent with 2012.

Reported Results (GAAP) Q4 2013   Q3 2013  Q4 2012
Net interest income $280.3 $277.5 $252.3
Provision for credit losses 32.0 27.6 22.0
Noninterest income 89.3 91.4 91.8
Noninterest expense  227.1 231.2 238.8
Net income 77.7 79.1 61.1
Preferred stock dividend 7.5 7.5 7.5
Net income available to common shareholders $70.1 $71.6 $53.6
Weighted average diluted shares outstanding 350.7 350.9 349.7
Earnings per diluted share $0.20 $0.20 $0.15
       
All amounts in millions except earnings per diluted share. 

"During the fourth quarter, the continued momentum in our commercial loan and indirect auto businesses was moderated by elevated prepayment activity in our commercial real estate portfolio," said Gregory W. Norwood, Chief Financial Officer. "Excluding $2 million in non-recurring charges in the fourth quarter of 2013, we managed our operating expense base and achieved our expense objective through a deliberate focus on reducing inefficiencies."

Full Year 2013 Results

For the full year ended December 31, 2013, the company reported GAAP earnings to common shareholders of $265.1 million, or $0.75 per diluted share, compared to $140.7 million, or $0.40 per diluted share, in 2012. GAAP net income for 2012 included $184.0 million in pre-tax acquisition and restructuring related expenses, $24.6 million in accelerated premium amortization adjustments, and $21.2 million in gains related to the sale of $3.1 billion of mortgage-backed securities in the second quarter of 2012. In 2013, the company incurred a pre-tax $6.3 million charge, or $0.01 per share, related to two executive departures. Excluding this charge, non-GAAP operating net income available to common shareholders in 2013 was $0.76 per diluted share.

Reported Results (GAAP) 2013 2012
Net interest income $1,093.4 $1,023.3
Provision for credit losses 105.0 92.3
Noninterest income 365.6 359.5
Noninterest expense  931.2 1,051.1
Net income 295.3 168.4
Preferred stock dividend 30.2 27.8
Net income available to common shareholders $265.1 $140.7
Weighted average diluted shares outstanding 350.4 349.4
Earnings per diluted share $0.75 $0.40
     
All amounts in millions except earnings per diluted share.   

Loans

Average total loans increased 9% annualized from the prior quarter, driven by continued growth in the company's commercial lending and indirect auto businesses as well as strength in home equity lending. Average commercial loans increased 7% reflecting strength in the company's middle market, business banking and equipment financing lines of businesses. Prepayment activity among investor-backed commercial real estate properties continued to remain elevated driven by the intense competitive landscape as well as the company's decision not to match lending terms that did not meet its established underwriting criteria.

Commercial business (C&I) loans averaged $5.3 billion, representing a 7% annualized increase over the prior quarter. Average commercial real estate (CRE) loans increased 6% annualized to $7.7 billion compared to the third quarter of 2013. Average commercial loans in the company's Western Pennsylvania and New England markets increased at double-digit annualized growth rates of 20% and 11%, respectively.

Average indirect auto loan balances increased $246 million to $1.5 billion. During the fourth quarter, indirect auto originations totaled $317 million at an average customer FICO score of 754 and yielded 3.06%, net of dealer reserve. Home equity balances increased 7% annualized from the prior quarter reflecting the successes of targeted marketing campaigns during the fall. Average residential real estate loans declined by $59 million, or 7% annualized reflecting normal amortization and prepayment of portfolio balances. 

Deposits

The company continued to focus its efforts to grow its core customer base and re-position its account mix while tailoring its retail bank delivery to match evolving customer preferences through investments in alternative delivery channels such as mobile banking. Average transaction deposit balances, which include interest-bearing and noninterest-bearing checking accounts, increased an annualized 14% over the prior quarter and represented 36% of the company's deposit balances, up from 32% a year ago. Transactional deposit balance growth was strong across the company's footprint reflecting an increase in account balances typical with seasonal patterns.

Average interest-bearing checking and noninterest-bearing checking deposit balances increased 21% and 8% annualized, respectively, compared to the prior quarter, driven by seasonal strength in commercial account balances. Money market and time deposit balances declined 2% and 13% annualized, respectively, driven by the company's continued pricing actions. The average cost of interest-bearing deposits of 0.23% was unchanged from the prior quarter.

In response to changing consumer banking behaviors, First Niagara has and continues to take actions including additional investments in enhancing its online, mobile and telephonic banking capabilities for retail and small business customers, while continuing to transform its branch network and in-branch experience. During the first quarter of 2014, the company expects to roll out its remote deposit capture feature that will enable customers to deposit checks and transact using mobile devices.

Net Interest Income

Fourth quarter 2013 net interest income increased 1% from the prior quarter to $280 million and was driven by a 4% annualized increase in average earning assets together with a one basis point improvement in the net interest margin (NIM) to 3.41%. Growth in average earning assets reflected continued strong loan growth which was moderated by lower investment securities balances. Average investment securities declined 6% or $166 million from the prior quarter.

The stable NIM in the fourth quarter of 2013 reflected the benefits of reinvestment of cash flows from lower yielding investment securities into higher yielding loans and securities as well as lower premium amortization on the company's residential mortgage backed securities (RMBS) portfolio. These benefits were partially offset by continued compression of loan yields from prepayments and reinvestments at current market rates.

In the fourth quarter, premium amortization on the RMBS portfolio was $0.3 million, net of a $3.5 million retroactive adjustment to reflect slower prepayment speeds. The premium amortization on the RMBS portfolio in the third quarter of 2013 was $6 million, net of a $1.8 million retroactive adjustment for slower prepayment speeds.

Credit Quality

At December 31, 2013, the allowance for loan losses was $209.3 million, compared to $198.0 million at September 30, 2013. Nonperforming assets to total assets were 0.56%, up three basis points from the prior quarter.

Information for both the originated and acquired portfolios follows.

  Q4 2013 Q3 2013
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses*  $ 28.2  $ 3.4  $ 31.6  $ 25.4  $ 1.8  $ 27.2
Net charge-offs 17.8 2.4 20.3 12.9 0.1 13.0
NCOs/ Avg Loans 0.43% 0.21% 0.38% 0.33% 0.01% 0.25%
Total loans**  $ 16,922  $ 4,643  $ 21,440  $ 16,212  $ 5,007  $ 21,089
             
 (*) Excludes provision for unfunded commitments of $0.4 million each in 4Q13 and 3Q13
(**) Acquired loans before associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $28.2 million, compared to $25.4 million in the prior quarter. The company continued to build its loan loss reserves in the fourth quarter. Such reserve build totaled $10.3 million, compared to $12.5 million in the prior quarter. Net charge-offs equaled $17.8 million or 43 basis points of average originated loans in the fourth quarter of 2013, a 10 basis point increase from the third quarter. The increase from the prior quarter primarily reflects the impact of a $3 million net loan recovery in the third quarter on the pay-off of a previously charged-down loan as well as the full quarter impact of losses on credit card loans in the fourth quarter that were previously charged to the credit mark.

At December 31, 2013, nonperforming originated loans comprised 0.93% of originated loans, compared to 0.89% at September 30, 2013. The increase from the prior quarter reflects two commercial credits that were transferred to non-accrual status.

At December 31, 2013, the allowance for loan losses on originated loans totaled $205.3 million or 1.21% of such loans, compared to $195.0 million or 1.20% of loans at September 30, 2013.

Acquired loans

The provision for losses on acquired loans totaled $3.4 million, up from $1.8 million in the prior quarter. Net charge-offs on those portfolios totaled $2.4 million in the fourth quarter, compared to $0.1 million in the prior quarter. At December 31, 2013, the allowance for loan losses on acquired loans totaled $4.0 million, compared to $3.0 million at September 30, 2013. Acquired nonperforming loans totaled $30.1 million, compared to $30.4 million at the end of the prior quarter. At December 31, 2013, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $125 million.

Fee Income

Fourth quarter 2013 noninterest income of $89.3 million decreased 2% or $2.1 million compared to the prior quarter driven largely by seasonal decreases in deposit service charges and insurance commissions and partially offset by increases in capital markets income and bank owned life insurance.

Insurance commissions declined 14% from the prior quarter to $15.4 million reflecting low policy renewal activity that is typical in the fourth quarter. Deposit service charges decreased 5% from the prior quarter and were primarily driven by a seasonal decrease in non-sufficient-fund (NSF) incidence rates. Mortgage banking revenues improved modestly from the third quarter reflecting higher servicing income. Capital markets revenue increased $1.3 million from the third quarter due to higher derivative fee income. The $2.3 million increase in bank owned life insurance from the prior quarter was primarily driven by a benefit received on an insurance claim in the fourth quarter. Other income decreased $1.9 million from the third quarter driven by lower gains from investment partnerships and tax credit investments.

Noninterest Expense

Fourth quarter noninterest expenses were $227.1 million, 2% lower than the prior quarter. Excluding approximately $2 million in nonrecurring operational losses in the quarter, operating expenses in the fourth quarter of 2013 were $225 million. Salaries and benefit expenses declined by $1.3 million from the prior quarter driven primarily by lower overtime and temporary help expenses. FDIC premium expense declined by $1.9 million from the third quarter due in large part to lower high-risk loan levels and lower insured deposits.

In the fourth quarter of 2013, the efficiency ratio improved to 61.5% from 62.7% in the prior quarter and reflected the positive operating leverage achieved.

Capital

At December 31, 2013, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.5% and 7.9% 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, $38 billion in assets, $27 billion in deposits, and approximately 5,800 employees providing financial services to individuals, families and businesses across New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com.

Investor Call

A conference call will be held at 8:00 a.m. Eastern Time on Friday, January 24, 2014 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-800-369-2136 with the passcode: FNFG. Presentation slides will be used during the earnings conference call and are available under the investor relations tab of our website at www.firstniagara.com. A replay of the call will be available until February 7, 2014 by dialing 1-888-562-4451, passcode: 6712.

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)
                 
  2013 2012 For year ending
   Fourth   Third   Second   First   Fourth   Third   December 31,   December 31, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2013 2012
                 
Interest income:                
Loans and leases  $ 213,778  $ 214,746  $ 209,970  $ 206,640  $ 212,035  $ 211,767  $ 845,134  $ 813,912
Investment securities and other   96,020  91,996  88,110  88,961  71,564  90,101  365,087  362,176
Total interest income   309,798  306,742  298,080  295,601  283,599  301,868  1,210,221  1,176,088
                 
Interest expense:                
Deposits   12,941  12,931  12,967  14,277  16,902  18,358  53,116  66,649
Borrowings   16,579  16,271  15,670  15,194  14,411  13,905  63,714  86,164
Total interest expense   29,520  29,202  28,637  29,471  31,313  32,263  116,830  152,813
Net interest income  280,278  277,540  269,443  266,130  252,286  269,605  1,093,391  1,023,275
Provision for credit losses  32,000  27,600  25,200  20,200  22,000  22,200  105,000  92,300
Net interest income after provision  248,278  249,940  244,243  245,930  230,286  247,405  988,391  930,975
                 
Noninterest income:                
Deposit service charges  25,726  27,115  26,482  24,800  26,345  26,422  104,123  91,237
Insurance commissions  15,431  17,854  17,692  16,355  15,497  18,764  67,332  68,166
Merchant and card fees  12,567  12,464  12,380  11,298  11,945  12,014  48,709  38,758
Wealth management services  15,441  15,189  14,945  12,845  12,000  11,069  58,420  41,315
Mortgage banking  2,754  2,268  6,882  6,424  8,060  10,974  18,328  31,857
Capital markets income  6,310  5,058  5,002  6,031  7,098  6,381  22,401  26,849
Lending and leasing   4,140  4,886  4,534  3,906  3,739  3,730  17,466  14,837
Bank owned life insurance   6,027  3,725  3,321  3,467  3,021  3,449  16,540  13,705
Other income  916  2,863  4,308  4,186  4,116  9,400  12,273  32,806
Total noninterest income  89,312  91,422  95,546  89,312  91,821  102,203  365,592  359,530
                 
Noninterest expense:                
Salaries and benefits  113,754  115,034  116,305  115,790  111,026  115,484  460,883  427,494
Occupancy and equipment  27,420  26,582  28,506  28,045  27,609  25,694  110,553  99,409
Technology and communications  29,483  28,999  29,603  27,113  28,257  28,110  115,198  100,514
Marketing and advertising  4,879  5,822  5,450  4,346  9,292  8,954  20,497  31,685
Professional services  9,314  9,820  9,782  9,603  11,163  11,193  38,519  40,514
Amortization of intangibles  7,562  7,702  10,850  14,119  14,224  14,506  40,233  45,035
FDIC premiums  7,431  9,351  9,348  8,901  9,158  8,850  35,031  34,693
Merger and acquisition integration expenses  --   --   --   --   3,678  29,404  --   177,512
Restructuring charges  --   --   --   --   --   --   --   6,453
Other expense  27,305  27,883  25,326  29,749  24,377  24,347  110,263  87,834
Total noninterest expense  227,148  231,193  235,170  237,666  238,784  266,542  931,177  1,051,143
                 
Income before income tax  110,442  110,169  104,619  97,576  83,323  83,066  422,806  239,362
Income tax expense  32,752  31,026  33,485  30,291  22,226  24,682  127,554  70,940
Net income  77,690  79,143  71,134  67,285  61,097  58,384  295,252  168,422
Preferred stock dividend  7,547  7,547  7,547  7,547  7,547   7,547   30,188   27,756 
Net income available to common stockholders  $ 70,143  $ 71,596  $ 63,587  $ 59,738  $ 53,550  $ 50,837  $ 265,064  $ 140,666
                 
Financial Ratios:                
Earnings per basic share  $ 0.20  $ 0.20  $ 0.18  $ 0.17  $ 0.15  $ 0.15  $ 0.75  $ 0.40
Earnings per diluted share  0.20  0.20  0.18  0.17  0.15  0.14  0.75  0.40
Weighted average shares outstanding - basic(1)  349,718  349,653  349,542  349,278  349,071  349,001  349,549  348,960
Weighted average shares outstanding - diluted(1)  350,699  350,896  350,384  349,999  349,663  349,371  350,381  349,368
Net revenue(2)  $ 369,590  $ 368,962  $ 364,989  $ 355,442  $ 344,107  $ 371,808  $ 1,458,983  $ 1,382,805
Noninterest income as a percentage of net revenue(2) 24.17% 24.78% 26.18% 25.13% 26.68% 27.49% 25.06% 26.00%
Pre-tax, pre-provision income(3)  $ 142,442  $ 137,769  $ 129,819  $ 117,776  $ 105,323  $ 105,266  $ 527,806  $ 331,662
Pre-tax, pre-provision income per diluted share(3)  $ 0.41  $ 0.39  $ 0.37  $ 0.34  $ 0.30  $ 0.30  $ 1.51  $ 0.95
Pre-tax, pre-provision return on average assets(3) 1.51% 1.47% 1.41% 1.30% 1.15% 1.19% 1.42% 0.94%
Net interest margin(4) 3.41% 3.40% 3.36% 3.39% 3.22% 3.54% 3.39% 3.34%
Interest yield on average loans(4) 4.04% 4.14% 4.19% 4.25% 4.39% 4.47% 4.15% 4.51%
Rate paid on interest-bearing liabilities 0.43% 0.43% 0.43% 0.44% 0.48% 0.51% 0.44% 0.59%
Efficiency ratio 61.46% 62.66% 64.43% 66.86% 69.39% 71.69% 63.82% 76.02%
Expenses as a percentage of average loans and deposits 1.89% 1.94% 1.98% 2.01% 2.03% 2.29% 1.96% 2.47%
Effective tax rate 29.7% 28.2% 32.0% 31.0% 26.7% 29.7% 30.2% 29.6%
Return on average assets(5)  0.82 %  0.85 %  0.77 %  0.74 % 0.67% 0.66% 0.80% 0.48%
Return on average equity(5)  6.18 %  6.37 %  5.72 %  5.50 % 4.92% 4.77% 5.95% 3.45%
Return on average tangible equity(3)(5)  12.64 %  13.20 %  11.75 %  11.62 % 10.45% 10.34% 12.31% 6.55%
Return on average common equity  5.99 %  6.18 %  5.48 %  5.24 % 4.62% 4.46% 5.73% 3.09%
Return on average tangible common equity(3)  13.25 %  13.92 %  12.21 %  12.05 % 10.72% 10.60% 12.86% 6.30%
                 
(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)
             
  2013 2012
  December 31,  September 30, June 30, March 31, December 31,  September 30,
             
Cash and cash equivalents  $ 462,927  $ 558,086  $ 552,210  $ 424,176  $ 430,862  $ 447,087
Investment securities:            
Available for sale  7,423,162  7,609,676  7,916,353  7,876,160  10,993,605  10,579,970
Held to maturity  4,042,481  3,841,700  3,856,960  4,218,687  1,299,806  1,387,763
FHLB and FRB common stock  469,217  437,534  429,740  401,373  420,277  373,311
Total investment securities  11,934,860  11,888,910  12,203,053  12,496,220  12,713,688  12,341,044
Loans held for sale  50,137  80,468  118,104  126,389  154,745  117,375
Loans and leases:             
Commercial:            
Real estate  7,777,903  7,697,407  7,482,375  7,295,544  7,093,193  6,835,971
Business  5,290,392  5,204,672  5,165,606  5,044,738  4,953,323  4,682,154
Total commercial loans  13,068,295  12,902,079  12,647,981  12,340,282  12,046,516  11,518,125
Consumer:            
Residential real estate  3,447,997  3,519,233  3,558,274  3,614,912  3,761,567  3,870,756
Home equity  2,752,229  2,706,603  2,670,672  2,646,645  2,651,891  2,661,429
Indirect auto  1,543,983  1,339,449  1,049,763  818,401  601,456  419,258
Credit cards  325,140  311,600  303,455  298,310  314,973  308,387
Other consumer  302,009  310,107  313,037  316,669  333,609  328,571
Total consumer loans  8,371,358  8,186,992  7,895,201  7,694,937  7,663,496  7,588,401
Total loans and leases  21,439,653  21,089,071  20,543,182  20,035,219  19,710,012  19,106,526
Allowance for loan losses  209,274  197,953  183,708  172,002  162,522  149,933
Loans and leases, net  21,230,379  20,891,118  20,359,474  19,863,217  19,547,490  18,956,593
Bank owned life insurance  415,205  413,555  410,182  407,419  404,321  401,211
Goodwill and other intangibles  2,542,783  2,549,931  2,557,560  2,567,681  2,617,810  2,626,625
Other assets  992,071  958,473  949,144  959,459  937,316  983,999
Total assets  $ 37,628,362  $ 37,340,541  $ 37,149,727  $ 36,844,561  $ 36,806,232  $ 35,873,934
             
Deposits:            
Savings accounts  $ 3,666,759  $ 3,695,221  $ 3,878,053  $ 3,915,836  $ 3,887,587  $ 3,941,528
Interest-bearing checking  4,743,829  4,637,807  4,499,963  4,534,444  4,450,970  4,090,322
Money market deposits  9,739,539  9,905,341  10,013,996  10,493,243  10,581,137  10,801,280
Noninterest-bearing deposits  4,865,873  4,968,501  4,845,835  4,803,835  4,643,580  4,658,374
Certificates of deposit  3,649,257  3,762,132  3,911,989  3,985,702  4,113,257  4,206,192
Total deposits  26,665,257  26,969,002  27,149,836  27,733,060  27,676,531  27,697,696
             
Short-term borrowings  4,822,222  4,169,416  3,698,279  2,928,929  2,983,718  1,995,610
Long-term borrowings  733,883  732,547  732,598  732,510  732,425  732,339
Other liabilities  413,647  531,379  666,270  503,389  487,000  532,868
Total liabilities  32,635,009  32,402,344  32,246,983  31,897,888  31,879,674  30,958,513
Preferred stockholders' equity  338,002  338,002  338,002  338,002  338,002  338,002
Common stockholders' equity  4,655,351  4,600,195  4,564,742  4,608,671  4,588,556  4,577,419
Total stockholders' equity  4,993,353  4,938,197  4,902,744  4,946,673  4,926,558  4,915,421
Total liabilities and stockholders' equity  $ 37,628,362  $ 37,340,541  $ 37,149,727  $ 36,844,561  $ 36,806,232  $ 35,873,934
             
Selected balance sheet information:            
Total interest-earning assets(1)  $ 33,396,058  $ 33,039,023  $ 32,906,363  $ 32,524,313  $ 32,321,964  $ 31,316,470
Total interest-bearing liabilities  27,355,489  26,902,465  26,734,878  26,590,664  26,749,094  25,767,271
Net interest-earning assets  $ 6,040,569  $ 6,136,558  $ 6,171,485  $ 5,933,649  $ 5,572,870  $ 5,549,199
             
Tangible common equity(2)  $ 2,112,568  $ 2,050,264  $ 2,007,182  $ 2,040,990  $ 1,970,746  $ 1,950,794
Unrealized gain on available for sale securities, net of tax(3)  63,930  76,686  83,898  160,942  206,733  204,347
             
Total core deposits  $ 23,016,000  $ 23,206,870  $ 23,237,847  $ 23,747,358  $ 23,563,274  $ 23,491,504
             
Originated loans(4)  $ 16,922,161  $ 16,211,505  $ 15,102,336  $ 14,100,190  $ 13,372,357  $ 12,232,568
Acquired loans(5)  4,642,775  5,006,753  5,581,651  6,083,912  6,513,636  7,085,839
Credit related discount on acquired loans(6)  (125,283)  (129,187)  (140,805)  (148,883)  (175,981)  (211,881)
Total Loans  $ 21,439,653  $ 21,089,071  $ 20,543,182  $ 20,035,219  $ 19,710,012  $ 19,106,526
             
(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) Excludes unamortized unrealized gains recorded in accumulated other comprehensive income related to available for sale securities transferred to held to maturity.
(4) Originated loans represent total loans excluding acquired loans.
(5) 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 For year ending
  December 31, 2013   September 30, 2013   December 31, 2012   December 31, 2013   December 31, 2012  
   Average
Balances
 
Interest(1)  Yields
and
Rates(1)
 Average
Balances 
Interest(1)  Yields
and
Rates(1)
 Average
Balances
 
Interest(1)  Yields
and
Rates(1)
 Average
Balances 
Interest(1)  Yields
and
Rates(1)
 Average
Balances 
Interest(1) Yields 
and
Rates(1)(2)
                               
Interest-earning assets:                              
Loans and leases(3)                              
Commercial:                              
Real estate  $ 7,673  $ 79 4.02%  $ 7,551  $ 80 4.16%  $ 6,911  $ 79 4.45%  $ 7,446  $ 314 4.16%  $ 6,625  $ 318 4.72%
Business  5,257  48  3.60   5,163  48  3.64   4,783  47  3.89   5,134  190  3.66   4,402  176  3.94 
Total commercial loans  12,930  127  3.85   12,714  128  3.95   11,694  126  4.22   12,580  504  3.95   11,027  494  4.41 
Consumer:                              
Residential real estate  3,479  34  3.89   3,538  35  3.91   3,819  39  4.05   3,569  141  3.94   3,922  161  4.11 
Home equity  2,732  29  4.15   2,683  28  4.17   2,659  29  4.31   2,681  113  4.21   2,476  109  4.39 
Indirect auto  1,453  11  3.03   1,207  9  3.09   515  5  3.50   1,077  34  3.12   228  8  3.65 
Credit cards  313  9  11.38   309  9  12.02   310  8  10.19   307  34  11.20   202  22  10.88 
Other consumer  307  7  8.66   313  7  8.48   328  7  8.73   315  27  8.43   296  24  8.25 
Total consumer loans  8,284  89  4.27   8,050  88  4.35   7,631  87  4.54   7,949  348  4.38   7,124  324  4.55 
Total loans and leases  21,214  216  4.04   20,764  216  4.14   19,325  213  4.39   20,529  853  4.15   18,151  818  4.51 
Residential MBS(2)  5,502  42  3.07   5,515  37  2.68   5,746  36  2.50   5,500  146  2.66   7,230  202  2.79 
Commercial MBS  1,772  17  3.84   1,810  17  3.68   1,953  18  3.79   1,844  68  3.69   1,855  73  3.91 
Other investment securities (4)  4,505  38  3.40   4,620  40  3.47   4,474  35  3.16   4,694  158  3.36   3,705  123  3.32 
Total securities, at amortized cost(2)  11,779  98  3.31   11,945  94  3.14   12,173  90  2.95   12,038  372  3.09   12,790  397  3.11 
Money market and other investments  189  1  1.38   157  1  2.27   207  1  1.54   189  3  1.65   257  3  1.13 
Total interest-earning assets(2)  33,182  $ 314 3.76%  32,866  $ 311 3.75%  31,705  $ 304 3.81%  32,756  $ 1,228 3.75%  31,198  $ 1,219 3.91%
Goodwill and other intangibles  2,546      2,554      2,619      2,567      2,315    
Other noninterest-earning assets  1,651      1,673      2,005      1,744      1,804    
                               
Total assets   $ 37,379      $ 37,093      $ 36,329      $ 37,067      $ 35,317    
                               
Interest-bearing liabilities:                               
Deposits                              
Savings accounts  $ 3,670  $ 1 0.09%  $ 3,793  $ 1 0.09%  $ 3,898  $ 2 0.18%  $ 3,813  $ 4 0.10%  $ 3,451  $ 5 0.15%
Interest-bearing checking  4,725  --   0.04   4,483  --   0.04   4,181  1  0.07   4,524  2  0.04   3,347  2  0.07 
Money market deposits   9,900  5  0.20   9,959  5  0.20   10,810  7  0.25   10,167  21  0.21   9,506  27  0.28 
Certificates of deposit   3,698  7  0.71   3,824  7  0.69   4,259  8  0.71   3,875  26  0.68   4,048  33  0.81 
Total interest bearing deposits  21,993  13 0.23%  22,059  13 0.23%  23,148  17 0.29%  22,379  53 0.24%  20,352  67 0.33%
Borrowings                              
Short-term borrowings  4,259  4 0.42%  4,014  4 0.41%  2,331  2 0.38%  3,744  15 0.41%  3,163  17 0.53%
Long-term borrowings  732  12  6.56   733  12  6.55   732  12  6.63   732  48  6.61   2,299  69  3.02 
Total borrowings   4,991  17  1.32   4,747  16  1.36   3,063  14  1.87   4,476  64  1.42   5,462  86  1.58 
Total interest-bearing liabilities   26,984  $ 30 0.43%  26,806  $ 29 0.43%  26,211  $ 31 0.48%  26,855  $ 117 0.44%  25,814  $ 153 0.59%
Noninterest-bearing deposits   4,878      4,787      4,645      4,712      4,041    
Other noninterest-bearing liabilities   533      567      528      534      575    
Total liabilities   32,395      32,160      31,384      32,101      30,430    
Total stockholders' equity  4,984      4,933      4,945      4,966      4,887    
Total liabilities and stockholders' equity  $ 37,379      $ 37,093      $ 36,329      $ 37,067      $ 35,317    
                               
Net interest income (FTE)    $ 285      $ 282      $ 273      $ 1,111      $ 1,066  
Taxable Equivalent Adjustment(1)    5      4      4      18      18  
                               
 Total core deposits   $ 23,173  $ 6 0.11%  $ 23,022  $ 6 0.11%  $ 23,534  $ 10 0.16%  $ 23,216  $ 27 0.12%  $ 20,345  $ 34 0.17%
 Total transactional deposits   9,603  --  0.02%  9,270  --  0.02%  8,826  1 0.03%  9,236  2 0.02%  7,388  2 0.03%
 Total deposits   26,871  13 0.19%  26,846  13 0.19%  27,793  17 0.24%  27,091  53 0.20%  24,393  67 0.27%
                               
Tax equivalent net interest rate spread(2)     3.33%     3.32%     3.33%     3.31%     3.32%
Tax equivalent net interest rate margin(2)     3.41%     3.40%     3.42%     3.39%     3.42%
                               
(1) Tax equivalent interest income is calculated using a 35% tax rate.
(2) Amounts for the three and twelve months ended December 31, 2012 exclude accelerated CMO adjustments of $16 million and $25 million, respectively. The yields, including these adjustments, are:
 
  Three months ended
December 31, 2012
Year ending
December 31, 2012
                         
Residential MBS 1.37% 2.45%                          
Total securities, at amortized cost 2.41% 2.91%                          
Total interest-earning assets 3.61% 3.83%                          
Tax equivalent net interest rate spread 3.13% 3.24%                          
Tax equivalent net interest rate margin 3.22% 3.34%                          
 
(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)                
  2013 2012 For year ending
   Fourth   Third   Second   First   Fourth   Third   December 31,   December 31, 
   Quarter   Quarter   Quarter
 
 Quarter   Quarter   Quarter  2013 2012
                 
Beginning balance  $ 197,953  $ 183,708  $ 172,002  $ 162,522  $ 149,933  $ 138,516  $ 162,522  $ 120,100
Net loan (charge-offs) recoveries:                
Commercial real estate  $ (5,764)  $ 1,013  $ (2,817)  $ (2,121)  $ (1,935)  $ (1,791)  $ (9,689)  $ (12,104)
Commercial business  (6,382)  (9,694)  (7,175)  (4,902)  (3,385)  (6,077)  (28,153)  (24,563)
Residential real estate  (168)  (137)  (291)  (427)  (658)  (396)  (1,023)  (2,329)
Home equity  (1,528)  (322)  (905)  (613)  (673)  (401)  (3,368)  (3,771)
Indirect auto  (1,215)  (692)  (552)  (252)  (231)  14  (2,711)  (239)
Credit cards  (3,082)  (1,300)  (194)  (204)  (291)  (149)  (4,780)  (945)
Other consumer  (2,140)  (1,823)  (1,160)  (1,801)  (1,763)  (1,271)  (6,924)  (4,148)
Total net loan charge-offs  $ (20,279)  $ (12,955)  $ (13,094)  $ (10,320)  $ (8,936)  $ (10,071)  $ (56,648)  $ (48,099)
Provision for loan losses  31,600  27,200  24,800  19,800  21,525  21,800  103,400  91,028
Allowance related to loans sold  --   --   --   --   --   (312)  --  (507)
Ending balance  $ 209,274  $ 197,953  $ 183,708  $ 172,002  $ 162,522  $ 149,933  $ 209,274  $ 162,522
                 
Supplemental information                
Allowance to loans 0.98% 0.94% 0.89% 0.86% 0.82% 0.78% 0.98% 0.82%
Allowance for originated loans to originated loans(1) 1.21% 1.20% 1.21% 1.21% 1.20% 1.20% 1.21% 1.20%
                 
Net charge-offs (recoveries) to average loans (annualized)              
Commercial real estate  0.30 %  (0.05)% 0.15% 0.12% 0.11% 0.11% 0.13% 0.18%
Commercial business  0.49 %  0.75 % 0.56% 0.39% 0.28% 0.53% 0.55% 0.56%
Total commercial loans  0.38 %  0.27 % 0.32% 0.23% 0.18% 0.28% 0.30% 0.33%
Residential real estate  0.02 %  0.02 % 0.03% 0.05% 0.07% 0.04% 0.03% 0.06%
Home equity  0.22 %  0.05 % 0.14% 0.09% 0.10% 0.06% 0.13% 0.15%
Indirect auto  0.33 %  0.23 % 0.23% 0.15% 0.18%  0.02 % 0.25% 0.10%
Credit cards  3.93 %  1.68 % 0.26% 0.27% 0.38% 0.19% 1.56% 0.47%
Other consumer  2.79 %  2.01 % 0.88% 1.27% 1.29% 0.89% 2.20% 1.40%
Total consumer loans  0.40 %  0.22 % 0.16% 0.17% 0.19% 0.12% 0.24% 0.16%
Total loans  0.38 %  0.25 % 0.26% 0.21% 0.18% 0.21% 0.28% 0.26%
                 
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)          
Commercial real estate  0.24 %  (0.07)% 0.14% 0.10% 0.07% 0.12% 0.10% 0.13%
Commercial business  0.53 %  0.83 % 0.64% 0.45% 0.33% 0.64% 0.61% 0.68%
Total commercial loans  0.37 %  0.33 % 0.36% 0.26% 0.19% 0.36% 0.33% 0.38%
Residential real estate  0.04 %  0.03 % 0.07% 0.10% 0.15% 0.09% 0.06% 0.14%
Home equity  0.29 %  0.09 % 0.26% 0.19% 0.21% 0.13% 0.21% 0.31%
Indirect auto  0.33 %  0.23 % 0.23% 0.15% 0.18%  0.02 % 0.25% 0.11%
Credit cards  3.93 %  1.68 % 0.26% 0.34% 0.69%  0.61 % 1.56% 1.14%
Other consumer  2.80 %  2.59 % 1.91% 2.44% 1.71% 1.04% 2.65% 1.76%
Total consumer loans  0.56 %  0.33 % 0.27% 0.28% 0.33% 0.18% 0.37% 0.30%
Total loans  0.43 %  0.33 % 0.33% 0.27% 0.24% 0.30% 0.34% 0.35%
                 
Nonperforming loans:                
Originated(1):                
Commercial real estate  $ 53,395  $ 51,302  $ 59,624  $ 49,953  $ 50,848  $ 46,413  $ 53,395  $ 50,848
Commercial business  42,013  35,854  44,658  47,523  47,066  37,375  42,013  47,066
Residential real estate  31,478  31,312  29,667  28,455  27,192  21,377  31,478  27,192
Home equity  18,426  15,709  14,601  14,270  14,233  8,084  18,426  14,233
Indirect auto  6,274  5,129  3,276  2,426  931  99  6,274  931
Other consumer  5,838  5,538  2,818  3,018  2,806  839  5,838  2,806
Total originated nonperforming loans  157,424  144,844  154,644  145,645  143,076  114,187  157,424  143,076
Total acquired nonperforming loans(2)  30,088  30,388  27,556  27,678  29,648  28,193  30,088  29,648
Total nonperforming loans  187,512  175,232  182,200  173,323  172,724  142,380  187,512  172,724
Real estate owned  24,788  24,262  8,144  10,816  10,114  9,669  24,788  10,114
Total nonperforming assets  $ 212,300  $ 199,494  $ 190,344  $ 184,139  $ 182,838  $ 152,049  $ 212,300  $ 182,838
                 
Accruing troubled debt restructurings (TDR)  $ 52,263  $ 69,877  $ 69,892  $ 64,311  $ 46,280  $ 55,732  $ 52,263  $ 46,280
Loans 90 days past due still accruing(3)  113,212  136,248  167,560  172,062  171,568  145,323  113,212  171,568
Total classified loans(4)  663,700  648,235  701,104  720,197  708,468  693,006  663,700  708,468
Total criticized loans(5)  $ 985,019  $ 977,798  $ 1,012,305  $ 1,044,874  $ 1,002,659  $ 990,670  $ 985,019  $ 1,002,659
                 
Total nonperforming loans to loans 0.87% 0.83% 0.89% 0.87% 0.88% 0.75% 0.87% 0.88%
Total nonperforming originated loans to originated loans(1) 0.93% 0.89% 1.02% 1.03% 1.07% 0.93% 0.93% 1.07%
Total nonperforming assets to loans and real estate owned 0.99% 0.94% 0.93% 0.92% 0.93% 0.80% 0.99% 0.93%
Total nonperforming assets to assets 0.56% 0.53% 0.51% 0.50% 0.50% 0.42% 0.56% 0.50%
Allowance to nonperforming loans 111.6% 113.0% 100.8% 99.2% 94.1% 105.3% 111.6% 94.1%
                 
Originated loans(1)  $ 16,922,161  $ 16,211,505  $ 15,102,336  $ 14,100,190  $ 13,372,357  $ 12,232,568  $ 16,922,161  $ 13,372,357
Acquired loans(6)  4,642,775  5,006,753  5,581,651  6,083,912  6,513,636  7,085,839  4,642,775  6,513,636
Credit related discount on acquired loans(7)  (125,283)   (129,187)   (140,805)   (148,883)   (175,981)   (211,881)   (125,283)   (175,981) 
Total Loans  $ 21,439,653  $ 21,089,071  $ 20,543,182  $ 20,035,219  $ 19,710,012  $ 19,106,526  $ 21,439,653  $ 19,710,012
                 
(1) Originated loans represent total loans excluding acquired loans. 
(2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing. 
(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 the carrying value of acquired loans plus the principal not expected to be collected.
(7) Represent principal on acquired loans not expected to be collected.
 
First Niagara Financial Group, Inc.
Key Statistics
(Share counts in thousands)
             
  2013 2012
  December 31,  September 30, June 30, March 31, December 31,  September 30,
             
First Niagara Financial Group, Inc capital ratios:            
Tier 1 risk based capital 9.56% 9.45% 9.41% 9.45% 9.29% 9.51%
Tier 1 common capital(1) 7.86% 7.72% 7.65% 7.64% 7.45% 7.59%
Total risk based capital 11.53% 11.40% 11.35% 11.38% 11.23% 11.48%
Leverage 7.26% 7.14% 7.01% 6.92% 6.75% 6.83%
Equity to assets 13.27% 13.22% 13.20% 13.43% 13.39% 13.70%
Tangible common equity to tangible assets(1) 6.02% 5.89% 5.80% 5.95% 5.77% 5.87%
Total risk weighted assets(2)  $ 26,412  $ 26,078  $ 25,564  $ 24,949  $ 24,379  $ 23,403
             
First Niagara Bank, N.A capital ratios:            
Tier 1 risk based capital 10.15% 10.08% 10.08% 10.15% 9.94% 10.19%
Total risk based capital 10.99% 10.89% 10.85% 10.89% 10.66% 10.88%
Leverage 7.70% 7.61% 7.50% 7.43% 7.23% 7.32%
Total risk weighted assets(2)  $ 26,365  $ 26,038  $ 25,520  $ 24,933  $ 24,379  $ 23,390
             
Number of branches  421  422  422  427  430  432
Full time equivalent employees  5,807  5,788  5,779  5,875  5,927  6,036
             
Share information and per share metrics:            
Common shares outstanding  353,941  353,973  353,932  353,008  352,621  352,632
Preferred shares outstanding  14,000  14,000  14,000  14,000  14,000  14,000
Treasury shares  12,061  12,029  12,070  12,994  13,381  13,370
Market price (Nasdaq:FNFG):  $ 10.62  $ 10.37  $ 10.07  $ 8.86  $ 7.93  $ 8.07
Book value per common share(3)  13.31  13.15  13.06  13.19  13.15  13.11
Tangible book value per common share(1)(3)  6.04  5.86  5.74  5.84  5.65  5.59
Price/Book 79.79% 78.86% 77.11% 67.17% 60.30% 61.56%
Price/Tangible book(1) 175.83% 176.96% 175.44% 151.71% 140.35% 144.36%
Common stock dividends  $ 0.08  $ 0.08  $ 0.08  $ 0.08  $ 0.08  $ 0.08
Preferred stock dividends  0.54  0.54  0.54  0.54  0.54  0.54
Dividend payout ratio 40.00% 40.00% 44.44% 47.06% 53.33% 53.33%
Dividend yield (annualized) 2.99% 3.06% 3.19% 3.66% 4.01% 3.94%
             
(1) 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.
(2) Represents an estimate of total risk weighted assets as of December 31, 2013. All preceding quarters represent actual calculated balances.
(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)
                 
  2013 2012 For year ending
   Fourth   Third   Second   First   Fourth   Third   December 31,   December 31, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2013 2012
Financial ratios computed on an operating basis(1):                
Earnings per basic share  $ 0.20  $ 0.20  $ 0.18  $ 0.17  $ 0.19  $ 0.19  $ 0.75  $ 0.75
Earnings per diluted share  0.20  0.20  0.18  0.17  0.19  0.19  0.75  0.75
Weighted average shares outstanding - basic(2)  349,718  349,653  349,542  349,278  349,071  349,001  349,549  348,960
Weighted average shares outstanding - diluted(2)  350,699  350,896  350,384  349,999  349,663  349,371  350,381  349,368
Noninterest income as a percentage of net revenue(3) 24.17% 24.78% 26.18% 25.13% 25.48% 26.43% 25.06% 24.40%
Pre-tax, pre-provision income  142,442  137,769  129,819  117,776  125,281  129,333  527,806  519,033
Pre-tax, pre-provision income per diluted share  0.41  0.39  0.37  0.34  0.36  0.37  1.51  1.49
Pre-tax, pre-provision return on average assets 1.51% 1.47% 1.41% 1.30% 1.37% 1.46% 1.42% 1.47%
Net interest margin(4) 3.41% 3.40% 3.36% 3.39% 3.42% 3.54% 3.39% 3.42%
Interest yield on average loans(4) 4.04% 4.14% 4.19% 4.25% 4.39% 4.47% 4.15% 4.51%
Rate paid on interest-bearing liabilities(4) 0.43% 0.43% 0.43% 0.44% 0.48% 0.51% 0.44% 0.59%
Efficiency ratio 61.46% 62.66% 64.43% 66.86% 65.24% 64.71% 63.82% 62.56%
Effective tax rate 29.7% 28.2% 32.0% 31.0% 27.0% 30.9% 30.2% 31.7%
Return on average assets 0.82% 0.85% 0.77% 0.74% 0.83% 0.83% 0.80% 0.83%
Return on average equity 6.18% 6.37% 5.72% 5.50% 6.06% 6.04% 5.95% 5.97%
Return on average tangible equity(5) 12.64% 13.20% 11.75% 11.62% 12.89% 13.11% 12.31% 11.34%
Return on average common equity 5.99% 6.18% 5.48% 5.24% 5.86% 5.83% 5.73% 5.80%
Return on average tangible common equity(6) 13.25% 13.92% 12.21% 12.05% 13.57% 13.86% 12.86% 11.81%
                 
Reconciliation of net interest income on operating basis to reported net interest income(1):                
Total net interest income on operating basis (Non-GAAP)  $ 280,278  $ 277,540  $ 269,443  $ 266,130  $ 268,566  $ 269,605  $ 1,093,391  $ 1,047,913
Additional premium amortization on securities portfolio  --   --   --   --   (16,280)  --  --   (24,638)
Total reported net interest income (GAAP)  280,278  277,540  269,443  266,130  252,286  269,605  1,093,391  1,023,275
                 
Reconciliation of noninterest income on operating basis to reported noninterest income(1):                
Total noninterest income on operating basis (Non-GAAP)  $ 89,312  $ 91,422  $ 95,546  $ 89,312  $ 91,821  $ 96,866  $ 365,592  $ 338,298
Gain on securities portfolio repositioning  --   --   --   --   --   5,337  --   21,232
Total reported noninterest income (GAAP)  89,312  91,422  95,546  89,312  91,821  102,203  365,592  359,530
                 
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):                
Total noninterest expense on operating basis (Non-GAAP)  $ 227,148  $ 231,193  $ 235,170  $ 237,666  $ 235,106  $ 237,138  $ 931,177  $ 867,178
Merger and acquisition integration expenses  --   --   --   --   3,678  29,404  --   177,512
Restructuring charges  --   --   --   --   --   --   --   6,453
Total reported noninterest expense (GAAP)  $ 227,148  $ 231,193  $ 235,170  $ 237,666  $ 238,784  $ 266,542  $ 931,177  $ 1,051,143
                 
Reconciliation of net operating income to net income(1):                
Net operating income (Non-GAAP)  $ 77,690  $ 79,143  $ 71,134  $ 67,285  $ 75,358  $ 74,027  $ 295,252  $ 291,626
Nonoperating income and expenses, net of tax:                
Additional premium amortization on securities portfolio  --   --   --   --   11,633  --  --   17,191
Gain on securities portfolio repositioning  --   --   --   --   --  (3,469)  --   (13,800)
Merger and acquisition integration expenses  --   --   --   --   2,628  19,112  --   115,619
Restructuring charges  --   --   --   --   --   --   --   4,194
Total nonoperating expenses, net of tax  --   --   --   --   14,261  15,643  --   123,204
Net income (GAAP)  $ 77,690  $ 79,143  $ 71,134  $ 67,285  $ 61,097  $ 58,384  $ 295,252  $ 168,422
                 
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)  $ 70,143  $ 71,596  $ 63,587  $ 59,738  $ 67,811  $ 66,480  $ 265,064  $ 263,870
Nonoperating income and expenses, net of tax:                
Additional premium amortization on securities portfolio  --   --   --   --   11,633  --   --   17,191
Gain on securities portfolio repositioning  --   --   --   --   --   (3,469)  --   (13,800)
Merger and acquisition integration expenses  --   --   --   --   2,628  19,112  --   115,619
Restructuring charges  --   --   --   --   --   --   --   4,194
Total nonoperating income and expenses, net of tax  --   --   --   --   14,261  15,643  --   123,204
Net income available to common stockholders (GAAP)  $ 70,143  $ 71,596  $ 63,587  $ 59,738  $ 53,550  $ 50,837  $ 265,064  $ 140,666
                 
Computation of pre-tax,pre-provision income:                
Net interest income  $ 280,278  $ 277,540  $ 269,443  $ 266,130  $ 252,286  $ 269,605  $ 1,093,391  $ 1,023,275
Noninterest income  89,312   91,422   95,546   89,312   91,821   102,203   365,592   359,530 
Noninterest expense  (227,148)  (231,193)  (235,170)  (237,666)  (238,784)  (266,542)  (931,177)  (1,051,143)
Pre-tax, pre-provision income (GAAP)  142,442  137,769  129,819  117,776  105,323  105,266  527,806  331,662
Add back: non-operating premium amortization  --   --   --   --   16,280  --   --   24,638
Add back: non-operating noninterest expenses (1)  --   --   --   --   3,678  29,404  --   183,965
Less: non-operating noninterest income (1)  --   --   --   --   --   (5,337)  --   (21,232)
Pre-tax, pre-provision income (Non-GAAP)(1)  $ 142,442  $ 137,769  $ 129,819  $ 117,776  $ 125,281  $ 129,333  $ 527,806  $ 519,033
                 
(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) Net revenue is comprised of net interest income and noninterest income.
(4) Yields and rates calculated on a tax equivalent basis.
(5) Tangible equity is a non-GAAP measure and excludes goodwill and other intangibles.
(6) Tangible common equity is a non-GAAP measure and excludes goodwill and other intangibles as well as preferred stock.
                 
 
First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation (Cont.)
(in thousands, except per share amounts)
                 
  2013 2012 For year ending
   Fourth   Third   Second   First   Fourth   Third   December 31,   December 31, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2013 2012
Computation of Ending Tangible Common Equity:                
Total stockholders' equity  $ 4,993,353  $ 4,938,197  $ 4,902,744  $ 4,946,673  $ 4,926,558  $ 4,915,421  $ 4,993,353  $ 4,928,097
Less: Goodwill and other intangibles  (2,542,783)   (2,549,931)   (2,557,560)   (2,567,681)   (2,617,810)   (2,626,625)   (2,542,783)   (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  $ 2,112,568  $ 2,050,264  $ 2,007,182  $ 2,040,990  $ 1,970,746  $ 1,950,794  $ 2,112,568  $ 1,972,286
                 
Computation of Average Tangible Equity:                
Total stockholders' equity  $ 4,984,003  $ 4,932,949  $ 4,989,006  $ 4,958,402  $ 4,945,132  $ 4,872,605  $ 4,966,069  $ 4,887,071
Less: Goodwill and other intangibles  (2,546,031)   (2,553,647)   (2,561,507)   (2,609,409)   (2,619,322)   (2,626,666)   (2,567,436)   (2,315,013) 
Tangible equity  $ 2,437,972  $ 2,379,302  $ 2,427,499  $ 2,348,993  $ 2,325,810  $ 2,245,939  $ 2,398,633  $ 2,572,058
                 
Computation of Average Tangible Common Equity:                
Total stockholders' equity  $ 4,984,003  $ 4,932,949  $ 4,989,006  $ 4,958,402  $ 4,945,132  $ 4,872,605  $ 4,966,069  $ 4,887,071
Less: Goodwill and other intangibles  (2,546,031)   (2,553,647)   (2,561,507)   (2,609,409)   (2,619,322)   (2,626,666)   (2,567,436)   (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  $ 2,099,970  $ 2,041,300  $ 2,089,497  $ 2,010,991  $ 1,987,808  $ 1,907,937  $ 2,060,631  $ 2,234,056
                 
Computation of Tier 1 Common Capital:                
Tier 1 capital  $ 2,525,656  $ 2,464,801  $ 2,406,473  $ 2,356,763  $ 2,264,679  $ 2,225,121  $ 2,525,656  $ 2,264,679
Less: Qualifying restricted core capital elements  (112,886)   (112,667)   (112,449)   (112,236)   (112,025)  (111,820)  (112,886)   (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)  $ 2,074,768  $ 2,014,132  $ 1,956,022  $ 1,906,525  $ 1,814,652  $ 1,775,299  $ 2,074,768  $ 1,814,652
Investors:
Ram Shankar
Senior Vice President, Investor Relations
(716) 270-8623


News Media:
David Lanzillo
Senior Vice President, Corporate Communications
(716) 819-5780