First Niagara Reports Third Quarter 2015 Results


  • Third quarter GAAP earnings of $0.15 per diluted share
  • Average loans increased 5% annualized QOQ
    • Average C&I loans increased 10% annualized QOQ
    • Indirect Auto and Home Equity drove 4% annualized increase in average consumer loans QOQ
  • Average transactional deposit balances increased 10% annualized QOQ and 7% YOY
    • Average business noninterest-bearing deposit balances increased 26% annualized QOQ and 9% YOY
    • Average noninterest-bearing deposit balances increased 17% annualized QOQ and 8% YOY
  • Strong credit quality maintained
    • Originated net charge-offs averaged 0.31% of total originated loans, unchanged QOQ
    • Criticized loans decreased 9% QOQ

BUFFALO, N.Y., Oct. 23, 2015 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (NASDAQ:FNFG) today reported GAAP net income available to common shareholders of $52.9 million, or $0.15 per diluted share for the third quarter of 2015, compared to $53.5 million, or $0.15 per diluted share, for the quarter ended June 30, 2015.

"In the third quarter of 2015, our business fundamentals were strong, as evidenced by a 10% annualized increase in average transactional deposits and 10% increase in commercial business loans. We also continued to make great progress in implementing our strategic investments, which remain on-time, on-budget and are focused on delivering enhanced products and services, based on customer preferences," said Gary M. Crosby, President and Chief Executive Officer. "As we roll-out these enhancements, I also am very pleased with the customer experience that our team is delivering and the positive brand recognition that it is creating for First Niagara across the markets we serve. In a recent J.D. Power Survey, 92% of our branch customers said that they would be 'likely advocates' of First Niagara as a banking partner to their friends and family – a number that puts us among top financial institutions with best-in-class customer experience."

"Overall third quarter financial results were in line with our expectations and were characterized by stable net interest income, lower operating expenses, strong balance sheet growth and positive credit metrics," said Gregory W. Norwood, Chief Financial Officer. "Through the first nine months of 2015, average loans increased 6% YOY driven by both commercial and consumer balance growth, while average noninterest bearing deposits increased 9% YOY reflecting our increased focus on core deposit acquisitions in our consumer and commercial lines of business."

Third Quarter Results

On a GAAP basis, in the third quarter of 2015, First Niagara reported net income available to common shareholders of $52.9 million, or $0.15 per diluted share, compared to $53.5 million, or $0.15 per diluted share in the second quarter of 2015. The company reported a loss of $927.6 million, or ($2.65) per share, for the quarter ended September 30, 2014.

Compared to the second quarter of 2015, net income available to common shareholders was primarily driven by:

  • A 4% decrease in noninterest income, driven by volatility in capital markets income and wealth management revenues.
  • A $1 million decrease in provision for credit losses driven by favorable asset quality trends and offset by provisioning to support a $0.7 billion increase in originated loan balances.
  • A 1% decrease in noninterest expenses driven by lower marketing spend, lower levels of intangible amortization, and lower FDIC premiums.

Compared to the third quarter of 2014, net income available to common shareholders was primarily driven by:

  • A $1.1 billion non-cash goodwill impairment charge and a $45 million reserve to address a process issue related to certain customer deposit accounts both incurred in the year-ago quarter.
  • 11% increase in noninterest income in the third quarter of 2015 driven by higher deposit service charges, mortgage banking revenues, and lower historic tax credit amortization compared to the year-ago period.
  • $4 million, or 2%, decrease in operating noninterest expense due to lower salaries and benefits from lower headcount and lower occupancy expense as a result of branch consolidations completed in 2015, lower amortization of core deposit intangibles, and lower restructuring expenses.
  • 4% decline in net interest income attributable to lower benefits from discount accretion income on prepayments of certain Collateralized Loan Obligations (CLOs), and
  • A higher effective tax rate of 26% in 2015.
Operating Results (Non-GAAP) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014
Net interest income $ 263.5 $ 263.1 $ 262.9 $ 269.8 $ 273.3
Provision for credit losses 19.8 20.8 12.8 35.7 16.7
Noninterest income 83.4 86.6 82.2 77.2 75.4
Noninterest expense 245.4 247.9 243.5 248.2 249.5
Operating net income 60.5 61.0 62.2 60.7 74.0
Preferred stock dividend 7.5 7.5 7.5 7.5 7.5
Operating net income available to common $ 52.9 $ 53.5 $ 54.7 $ 53.2 $ 66.5
Weighted average diluted shares outstanding 353.2 352.8 352.6 352.2 351.9
Operating earnings per diluted share $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.19
           
Reported Results (GAAP) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014
Operating net income before non-op. items $ 60.5 $ 61.0 $ 62.2 $ 60.7 $ 74.0
Non-operating items (a) -- -- 10.9 (8.4) 994.1
Net Income / (loss) 60.5 61.0 51.4 69.1 (920.0)
Preferred stock dividend 7.5 7.5 7.5 7.5 7.5
Net income / (loss) available to common $ 52.9 $ 53.5 $ 43.8 $ 61.5 $ (927.6)
Weighted average diluted shares outstanding 353.2 352.8 352.6 352.2 350.4
Earnings (loss) per diluted share $ 0.15 $ 0.15 $  0.12 $ 0.17 $ (2.65)
All amounts in millions except earnings per diluted share.          
(a)
 
Q1 2015: Restructuring charges primarily related to staffing realignment, branch consolidations and third-party professional fees incurred in connection with the overstatement of allowance resulting from mid-level employee misconduct, net of taxes.
  Q4 2014: Benefit from reversal of process issue reserve related to certain customer deposit accounts less severance and other restructuring charges related to Organizational Simplification initiative, net of taxes.
  Q3 2014: $1.1 billion non-cash goodwill impairment charge, reserves related to a process issue, and restructuring charges primarily related to branch realignment, net of taxes.

Loans

Average loans increased 5% annualized from the prior quarter to $23.4 billion, driven primarily by increases in the company's commercial business (C&I), indirect auto and home equity loan portfolios. On an end-of-period basis, total loans increased 5% annualized from the prior quarter driven by a 7% annualized increase in C&I loans.

Average commercial loans, which include C&I and commercial real estate (CRE) loans, increased 5% annualized from prior quarter to $14.2 billion, driven by growth primarily in the company's New York, New England, and Tri-State markets.

  • Average C&I loans increased 10% annualized to $6.0 billion, driven primarily by increases in the middle market and asset-based lending segments.
  • CRE loans averaged $8.3 billion and increased 1% annualized from the prior quarter driven by construction lending offset by borrower prepayments.

Average consumer loans increased 4% annualized from prior quarter to $9.2 billion.

  • Average indirect auto loan balances increased 10% annualized or by $55 million to $2.3 billion, as strong new origination activity was partially offset by increased pay-downs. Indirect auto originations during the quarter totaled $300 million. New originations in the third quarter yielded 3.42%, net of dealer reserve, an increase of 58 basis points compared to originations in the year-ago quarter. 
  • Average residential real estate loans increased 1% annualized, driven by greater cross-sales to the Private Client Services Group clients. 
  • Home equity balances increased for the tenth consecutive quarter to $3.0 billion, or 5% annualized from the prior quarter reflecting higher customer draws as well as the benefits of promotional and cross-sell campaigns.
Average Loans Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014
Commercial real estate $ 8,277 $ 8,257 $ 8,263 $ 8,087 $ 7,985
Commercial business 5,972 5,830 5,797 5,791 5,694
Total commercial 14,249 14,087 14,060 13,878 13,679
Residential real estate 3,338 3,326 3,338 3,364 3,351
Home equity 3,001 2,963 2,939 2,912 2,857
Indirect auto 2,293 2,238 2,187 2,132 1,978
Credit cards 306 304 311 314 313
Other consumer 255 260 275 283 287
Total consumer 9,193 9,091 9,050 9,005 8,786
Total loans $ 23,442 $ 23,178 $ 23,110 $ 22,883 $ 22,465
All amounts in millions.          

Credit Quality

At September 30, 2015, the allowance for loan losses was $239 million, compared to $236 million at June 30, 2015. In the third quarter, provision for credit losses totaled $19.8 million, a $1 million decrease from $20.8 million in the prior quarter. Nonperforming assets comprised 0.58% of total assets, unchanged from June 30, 2015. At September 30, 2015, total criticized loans decreased 9% from the prior quarter.

Information for both the originated and acquired portfolios follows.

     
  Q3 2015 Q2 2015
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses* $ 20.7 $ (1.4) $ 19.3 $ 19.5 $ 0.9 $ 20.5
Net charge-offs 15.5 0.6 16.2 15.5 0.5 16.0
NCOs/ Avg Loans 0.31% 0.08% 0.28% 0.31% 0.06% 0.28%
Total loans** $ 20,592 $ 3,075 $ 23,666 $ 19,930 $ 3,438 $ 23,368
(*) Excludes provision for unfunded commitments of $0.5 million and $0.3 million in 3Q15 and 2Q15, respectively
(**) Acquired loans net of associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $21 million, an increase of $1 million from the second quarter of 2015. This increase was in large part driven by provisioning associated with the $0.7 billion increase in period-end originated loans from the prior quarter. Originated net charge-offs in the third quarter equaled $16 million or 31 basis points of average originated loans, and were consistent with the prior quarter.

At September 30, 2015, nonperforming originated loans totaled $186 million, or 0.90% of originated loans, compared to 0.91% at June 30, 2015. At September 30, 2015, the allowance for loan losses on originated loans totaled $233 million or 1.13% of such loans, compared to $228 million or 1.15% of such loans at June 30, 2015, and reflects continued improvements in underlying asset quality metrics.

Acquired loans

The provision for losses on acquired loans totaled a negative $1 million in the third quarter of 2015, driven by pay-downs in acquired loan balances, compared to provision expense of $1 million in the prior quarter. Net charge-offs on the acquired portfolio totaled $0.6 million during the quarter, compared to $0.5 million of net charge-offs in the prior quarter. At September 30, 2015, the allowance for loan losses on acquired loans totaled $5 million, compared to $7 million at June 30, 2015. Acquired nonperforming loans totaled $25 million, a 4% decrease from the prior quarter. Acquired criticized loans decreased 14% from June 30, 2015. At September 30, 2015, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $64 million.

Deposits

Average deposits increased 6% annualized from the prior quarter to $28.6 billion.

  • Non-interest checking deposit balances averaged $5.7 billion, up 17% annualized from the prior quarter and 8% from the year-ago period driven by higher business deposit balances.
  • Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking account balances, increased 10% annualized and currently represent 38% of the company's deposit balances.
  • Money market deposit balances increased 6% annualized, reflecting the benefits of promotional marketing campaigns partially offset by seasonally lower municipal money market balances.
  • Average savings balances decreased 8% annualized from the prior quarter driven by lower consumer balances.
  • Time deposits increased 5% annualized to $4.0 billion, as increases in brokered certificate of deposit balances were partially offset by lower consumer and municipal certificate of deposit balances.
Average Deposits Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014
Noninterest-bearing deposits $  5,661 $ 5,427 $ 5,430 $ 5,485 $ 5,259
Savings accounts 3,427 3,494 3,432 3,447 3,552
Interest-bearing checking 5,165 5,131 5,001 5,049 4,821
Money market deposits 10,403 10,251 10,132 10,037 9,882
Certificates of deposit 3,962 3,917 3,778 3,888 3,970
Total deposits $ 28,618 $ 28,220 $ 27,773 $ 27,906 $ 27,484
All amounts in millions.          

Net Interest Income

Third quarter 2015 GAAP net interest income of $263 million was consistent with the prior quarter, as the benefits of a 2% annualized increase in average earning assets and an extra day in the quarter were offset by an expected four basis point decline in the reported net interest margin. The decrease in net interest margin to 2.98% reflects continued compression of earning asset yields in the current low interest rate and competitive pricing environment, lower discount accretion income on prepayment of CLOs and lower benefits from purchase accounting accretion on acquired loans.

  • Yields on loans decreased 9 basis points to 3.64% reflecting continued pressure on loan yields due to low interest rates and competitive pressures, as well as lower benefits from purchase accounting accretion.
  • Yields on investment securities increased 7 basis points to 2.92% due primarily to lower premium amortization on the residential mortgage-backed securities portfolio.
  • The average cost of interest-bearing deposits remained flat to prior quarter at 0.29%.

Noninterest Income

Third quarter 2015 noninterest income of $83 million decreased 4% or $3 million compared to the prior quarter.

  • Deposit service charges increased 3% from the prior quarter reflecting typical seasonal trends.
  • Insurance commissions increased $1 million or 7% driven primarily by seasonally higher renewal volumes during the third quarter.
  • Merchant and card fees increased 1% driven by higher debit card interchange revenue.
  • Wealth management services decreased $1 million or 7%, reflecting lower levels of variable annuity sales as a result of market volatility during the quarter.
  • Capital markets income, which primarily includes income from derivatives and syndications, decreased $3 million due to market volatility.
  • Mortgage banking revenues were lower from the prior quarter reflecting lower locked volumes partially offset by a modest increase in gain-on-sale margins.
  • Other noninterest income declined $1 million from the prior quarter primarily reflecting lower investment gains.
Noninterest Income Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014
Deposit service charges  $ 22.9  $ 22.2 $ 20.4 $ 22.6 $ 20.4
Insurance commissions  18.3  17.1  15.7  14.8  18.4
Merchant and card fees  13.4  13.3  11.9  13.0  13.0
Wealth management services  14.6  15.7  14.7  14.4  15.4
Mortgage banking  5.1  5.8  4.9  4.6  4.4
Capital markets income  2.6  5.3  4.2  8.3  3.5
Lending and leasing  4.5  4.0  4.4  4.6  3.9
Bank owned life insurance  2.8  3.2  3.6  3.2  3.1
Other income (0.7)  0.1  2.6  (8.3)  (6.6)
Total noninterest income $ 83.4 $ 86.6 $ 82.2 $ 77.2 $ 75.4
All amounts in millions.          

Noninterest Expense

Noninterest expenses totaled $245 million in the third quarter of 2015, or 1% below second quarter 2015 levels. The quarter-over-quarter decrease was primarily driven by lower marketing spend, lower intangible amortization and lower FDIC premiums.

  • Salaries and benefits expense of $114 million was consistent with prior quarter.
  • Occupancy and equipment expense decreased 2%, due primarily to lower rent and depreciation.
  • Technology and communications expenses increased $2 million or 5%, due primarily to higher software and depreciation expenses.
  • Professional services fees increased $2 million due to vendor and other consulting costs.
  • FDIC expenses decreased $2 million reflecting the expiration of the impact of goodwill impairment.
Operating Noninterest Expense (Non-GAAP)* Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014
Salaries and employee benefits $ 113.8 $ 113.6 $ 112.0 $ 111.0 $ 116.2
Occupancy and equipment  25.5  26.0  27.3  28.4  27.5
Technology and communications  38.3  36.5  35.1  33.9  31.5
Marketing and advertising  8.4  10.3  9.9  11.6  7.7
Professional services  18.1  16.3  13.1  16.6  14.0
Amortization of intangibles  4.0  5.1  6.2  6.4  6.5
Federal deposit insurance premiums  10.0  11.8  11.2  11.9  9.6
Other expense  27.3  28.4  28.9  28.4  36.5
Total operating noninterest expense $ 245.4 $ 247.9 $ 243.5 $ 248.2 $ 249.5
*All amounts in millions. See appendix for reconciliation of GAAP to Non-GAAP amounts

In the third quarter of 2015, the efficiency ratio was 70.7%, compared to 70.9% in the prior quarter.

Capital

Beginning in the first quarter of 2015, all regulatory capital ratios and amounts were calculated under the Basel III standardized transitional approach. At September 30, 2015, the company's estimated consolidated Total Risk Based capital and Common Equity Tier 1 capital ratios were 12.0% and 8.5%, respectively, unchanged from June 30, 2015. The company remains well above current regulatory guidelines for well-capitalized institutions. 

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 390 branches, $39 billion in assets, $29 billion in deposits, and approximately 5,400 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 8:30 a.m. Eastern Time on Friday, October 23, 2015 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-877-983-9285 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 December 8, 2015 by dialing 1-800-633-8284, passcode: 21779543.

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; and (6) execution risk associated with the announced investment plan.

First Niagara Financial Group, Inc.
Income Statement Highlights -- Reported Basis
(in thousands, except per share amounts)
                 
  2015 2014 Nine months ended
   Third   Second   First   Fourth   Third   Second   September 30,   September 30, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2015 2014
                 
Interest income:                
Loans and leases  $ 211,407  $ 211,899  $ 210,371  $ 214,609  $ 212,452  $ 210,218  $ 633,677  $ 632,314
Investment securities and other   87,914  86,356  86,280  86,919  91,668  91,566  260,550  273,655
Total interest income   299,321  298,255  296,651  301,528  304,120  301,784  894,227  905,969
                 
Interest expense:                
Deposits   17,040  16,568  15,344  14,295  13,590  13,183  48,952  39,009
Borrowings   18,790  18,577  18,363  17,450  17,251  16,789  55,730  51,122
Total interest expense   35,830  35,145  33,707  31,745  30,841  29,972  104,682  90,131
                 
Net interest income  263,491  263,110  262,944  269,783  273,279  271,812  789,545  815,838
Provision for credit losses  19,768  20,756  12,765  35,706  16,700  19,800  53,289  60,200
Net interest income after provision  243,723  242,354  250,179  234,077  256,579  252,012  736,256  755,638
                 
Noninterest income:                
Deposit service charges  22,944  22,208  20,389  22,611  20,373  23,733  65,541  67,462
Insurance commissions  18,252  17,060  15,714  14,764  18,352  17,343  51,026  51,386
Merchant and card fees  13,423  13,317  11,907  13,043  12,991  12,834  38,647  37,329
Wealth management services  14,572  15,718  14,650  14,404  15,367  15,949  44,940  46,903
Mortgage banking  5,070  5,783  4,887  4,600  4,358  5,241  15,740  12,995
Capital markets income  2,608  5,284  4,152  8,312  3,509  2,917  12,044  10,049
Lending and leasing   4,487  3,998  4,353  4,567  3,914  4,680  12,838  13,326
Bank owned life insurance   2,819  3,160  3,592  3,187  3,080  3,145  9,571  11,630
Other income  (732)  79  2,600  (8,311)  (6,552)  (4,985)  1,947  (18,107)
Total noninterest income  83,443  86,607  82,244  77,177  75,392  80,857  252,294  232,973
                 
Noninterest expense:                
Salaries and employee benefits  113,794  113,561  111,973  110,985  116,245  117,728  339,328  351,913
Occupancy and equipment  25,538  26,021  27,332  28,379  27,450  28,553  78,891  83,879
Technology and communications  38,301  36,486  35,061  33,940  31,465  31,140  109,848  92,950
Marketing and advertising  8,445  10,297  9,863  11,584  7,746  8,439  28,605  23,549
Professional services  18,052  16,321  13,070  16,644  13,988  13,029  47,443  38,940
Amortization of intangibles  4,001  5,092  6,205  6,432  6,521  6,790  15,298  20,820
Federal deposit insurance premiums  10,026  11,750  11,158  11,911  9,579  9,756  32,934  28,190
Restructuring charges  --   --   17,517  9,066  2,364  --   17,517  12,720
Goodwill impairment  --   --   --   --   1,100,000  --   --  1,100,000
Deposit account remediation  --   --   --   (23,000)  45,000  --   --  45,000
Other expense  27,276  28,371  28,859  28,371  36,467  28,680  84,506  91,715
Total noninterest expense  245,433  247,899  261,038  234,312  1,396,825  244,115  754,370  1,889,676
                 
Income (loss) before income tax  81,733  81,062  71,385  76,942  (1,064,854)   88,754  234,180  (901,065)
Income tax expense (benefit)  21,251  20,052  20,000  7,875  (144,808)   12,879  61,303  (117,104)
Net income (loss)  60,482  61,010  51,385  69,067  (920,046)   75,875  172,877  (783,961)
Preferred stock dividend  7,547  7,547  7,547  7,547  7,547  7,547  22,641  22,641 
Net income (loss) available to
common stockholders
 $ 52,935  $ 53,463  $ 43,838  $ 61,520  $ (927,593)   $ 68,328  $ 150,236  $ (806,602)
                 
Financial Ratios:                
Earnings (loss) per basic share  $ 0.15  $ 0.15  $ 0.12  $ 0.17  $ (2.65)   $ 0.19  $ 0.42  $ (2.31)
Earnings (loss) per diluted share  $ 0.15  $ 0.15  $ 0.12  $ 0.17  $ (2.65)   $ 0.19  $ 0.42  (2.31)
Weighted average shares outstanding - basic(1)  351,293  351,126  350,741  350,444  350,381  350,229  351,055  350,174
Weighted average shares outstanding - diluted(1)  353,248  352,791  352,621  352,152  350,381  351,541  352,847  350,174
Net revenue(2)  $ 346,934  $ 349,717  $ 345,188  $ 346,960  $ 348,671  $ 352,669  $ 1,041,839  $ 1,048,811
Noninterest income as a percentage of net revenue(2) 24.05% 24.76% 23.83% 22.24% 21.62% 22.93% 24.22% 22.21%
Pre-tax, pre-provision income (loss)(3)  $ 101,501  $ 101,818  $ 84,150  $ 112,648  $ (1,048,154)  $ 108,554  $ 287,469  $ (840,865)
Pre-tax, pre-provision income per diluted share(3)  $ 0.29  $ 0.29  $ 0.24  $ 0.32  $ (2.99)   $ 0.31  $ 0.81  $ (2.40) 
Pre-tax, pre-provision return on average assets(3) 1.03% 1.05% 0.88%  1.17 %  (10.8)% 1.14%  0.99 %  (2.94)%
Net interest margin(4) 2.98% 3.02% 3.07% 3.11% 3.21% 3.26% 3.02% 3.27%
Interest yield on average loans(4) 3.64% 3.73% 3.75% 3.78% 3.80% 3.89% 3.70% 3.89%
Rate paid on interest-bearing liabilities 0.50% 0.49% 0.48% 0.45% 0.44% 0.44% 0.49% 0.44%
Efficiency ratio 70.7% 70.9% 75.6% 67.5% 400.6% 69.2% 72.4% 180.2%
Expenses as a percentage of average loans and deposits 1.89% 1.93% 2.05% 1.85% 11.19% 1.97% 1.96% 5.13%
Effective tax rate (benefit) 26.0% 24.7% 28.0%  10.2 %  (13.6)% 14.5%  26.2 %  (13.0)%
Return on average assets(5)  0.61 %  0.63 %  0.54 %  0.72 %  (9.46)%  0.80 %  0.59 %  (2.74)%
Return on average equity(5)  5.78 %  5.90 %  5.05 %  6.62 %  (71.57)%  6.01 %  5.58 %  (20.69)%
Return on average tangible equity(3)(5)  8.73 %  8.94 %  7.68 %  10.07 %  (141.16)%  12.01 %  8.46 %  (41.29)%
Return on average common equity  5.51 %  5.63 %  4.69 %  6.42 %  (77.27)%  5.80 %  5.28 %  (22.80)%
Return on average tangible common equity(3)  8.72 %  8.94 %  7.48 %  10.24 %  (163.71)%  12.48 %  8.39 %  (49.00)%
                 
(1) Share count excludes unallocated ESOP shares prior to January 1, 2015 and unvested restricted stock shares.
(2) Net revenue is comprised of net interest income and noninterest income.
(3) The tables in this earnings release present the computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4) Yields and rates calculated on a tax equivalent basis.
(5) Return used to calculate ratio excludes preferred stock dividend.
 
 
First Niagara Financial Group, Inc.
Period End Balance Sheet
(in thousands)
             
  2015 2014
  September 30, June 30, March 31,  December 31,  September 30, June 30,
             
Cash and cash equivalents  $ 420,289  $ 527,323  $ 387,676  $ 420,033  $ 451,313  $ 557,423
Investment securities:            
Available for sale  5,725,608  5,750,860  5,911,419  5,915,338  6,198,140  6,683,914
Held to maturity  6,280,049  6,169,838  6,214,561  5,941,621  5,351,977  4,834,279
FHLB and FRB common stock  373,066  379,135  375,090  411,857  389,870  434,322
Total investment securities  12,378,723  12,299,833  12,501,070  12,268,816  11,939,987  11,952,515
Loans held for sale  51,056  59,816  48,755  39,825  31,245  45,446
Loans and leases:             
Commercial:            
Real estate  8,365,808  8,312,332  8,287,108  8,204,027  8,013,622  7,940,977
Business  6,031,358  5,923,524  5,790,980  5,775,413  5,836,235  5,741,684
Total commercial loans  14,397,166  14,235,856  14,078,088  13,979,440  13,849,857  13,682,661
Consumer:            
Residential real estate  3,345,701  3,329,799  3,330,216  3,353,081  3,360,805  3,358,347
Home equity  3,032,618  2,984,872  2,943,844  2,936,123  2,886,655  2,835,421
Indirect auto  2,330,826  2,256,004  2,200,913  2,166,320  2,073,843  1,871,688
Credit cards  305,779  304,682  301,228  324,113  312,549  311,640
Other consumer  254,109  257,204  263,985  278,305  286,140  286,062
Total consumer loans  9,269,033  9,132,561  9,040,186  9,057,942  8,919,992  8,663,158
Total loans and leases  23,666,199  23,368,417  23,118,274  23,037,382  22,769,849  22,345,819
Allowance for loan losses  238,700  235,600  231,138  234,251  222,753  219,426
Loans and leases, net  23,427,499  23,132,817  22,887,136  22,803,131  22,547,096  22,126,393
Bank owned life insurance  434,263  431,335  428,454  426,192  423,376  420,230
Goodwill and other intangibles  1,400,199  1,404,201  1,410,800  1,417,005  1,423,437  2,528,481
Other assets  1,301,152  1,208,218  1,243,588  1,176,036  1,155,588  997,120
Total assets  $ 39,413,181  $ 39,063,543  $ 38,907,479  $ 38,551,038  $ 37,972,042  $ 38,627,608
             
Deposits:            
Savings accounts  $ 3,359,320  $ 3,483,777  $ 3,488,441  $ 3,451,616  $ 3,458,661  $ 3,626,750
Interest-bearing checking  5,285,987  5,088,856  5,158,264  5,084,456  5,055,458  4,743,684
Money market deposits  10,483,721  10,303,873  10,368,358  9,962,220  9,894,346  9,834,344
Noninterest-bearing deposits  5,813,571  5,549,944  5,500,484  5,407,382  5,308,736  5,284,037
Certificates of deposit  3,873,521  4,020,367  3,734,226  3,875,563  3,952,879  3,955,754
Total deposits  28,816,120  28,446,817  28,249,773  27,781,237  27,670,080  27,444,569
             
Short-term borrowings  4,086,415  4,275,886  4,739,264  5,471,974  4,928,762  4,890,343
Long-term borrowings  1,783,402  1,683,476  1,233,550  733,620  733,684  733,337
Other liabilities  587,867  536,239  559,646  471,449  543,813  477,685
Total liabilities  35,273,804  34,942,418  34,782,233  34,458,280  33,876,339  33,545,934
Preferred stockholders' equity  338,002  338,002  338,002  338,002  338,002  338,002
Common stockholders' equity  3,801,375  3,783,123  3,787,244  3,754,756  3,757,701  4,743,672
Total stockholders' equity  4,139,377  4,121,125  4,125,246  4,092,758  4,095,703  5,081,674
Total liabilities and stockholders' equity  $ 39,413,181  $ 39,063,543  $ 38,907,479  $ 38,551,038  $ 37,972,042  $ 38,627,608
             
Selected balance sheet information:            
Total interest-earning assets(1)  $ 36,099,580  $ 35,813,498  $ 35,594,208  $ 35,310,447  $ 34,720,650  $ 34,305,451
Total interest-bearing liabilities  28,872,365  28,856,235  28,722,103  28,579,449  28,023,790  27,784,211
Net interest-earning assets  $ 7,227,215  $ 6,957,263  $ 6,872,105  $ 6,730,998  $ 6,696,860  $ 6,521,240
             
Tangible common equity(1)(2)  $ 2,401,176  $ 2,378,922  $ 2,376,444  $ 2,337,751  $ 2,334,263  $ 2,215,191
Unrealized gain on available for sale securities, net of tax(3)  29,877  37,464  68,194  52,244  55,052  86,244
             
Total core deposits  $ 24,942,599  $ 24,426,450  $ 24,515,547  $ 23,905,674  $ 23,717,201  $ 23,488,815
             
Originated loans(4)  $ 20,591,532  $ 19,929,719  $ 19,528,609  $ 19,295,553  $ 18,841,896  $ 18,196,302
Acquired loans(5)  3,138,568  3,517,525  3,681,354  3,834,931  4,028,091  4,254,750
Credit related discount on acquired loans(6)  (63,901)  (78,827)  (91,689)  (93,102)  (100,138)  (105,233)
Total Loans  $ 23,666,199  $ 23,368,417  $ 23,118,274  $ 23,037,382  $ 22,769,849  $ 22,345,819
             
(1) Includes interest bearing cash and cash equivalents, investment securities at amortized cost, loans held for sale, and total loans and leases.
(2) The tables in this earnings release present the computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3) Excludes unamortized unrealized gains recorded in accumulated other comprehensive income related to available for sale securities transferred to held to maturity.
(4) Originated loans represent total loans excluding acquired loans.
(5) Carrying value of acquired loans plus the principal not expected to be collected.
(6) Principal on acquired loans not expected to be collected.
 
 
First Niagara Financial Group, Inc.
Average Balance Sheet and Related Tax Equivalent Yields & Rates
(in millions)
  For the three months ended Nine months ended
  September 30, 2015 June 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
       Yields       Yields       Yields       Yields       Yields 
  Average
Balances
Interest(1) and
Rates(1)
 Average
Balances 
Interest(1) and
Rates(1)
Average
Balances 
Interest(1) and
Rates(1)
Average
Balances
Interest(1) and
Rates(1)
 Average
Balances 
Interest(1) and
Rates(1)
                               
Interest-earning assets:                              
Loans and leases(2)                              
Commercial:                              
Real estate  $ 8,277  $ 74 3.52%  $ 8,257  $ 75 3.61%  $ 7,985  $ 74 3.65%  $ 8,266  $ 224 3.58%  $ 7,896  $ 226 3.77%
Business  5,972  50  3.26   5,830  52  3.48   5,694  51  3.51   5,867  151  3.39   5,558  149  3.54 
Total commercial loans  14,249  124  3.41   14,087  127  3.56   13,679  126  3.59   14,133  375  3.50   13,454  375  3.68 
Consumer:                              
Residential real estate  3,338  31  3.70   3,326  31  3.68   3,351  32  3.77   3,334  93  3.72   3,376  97  3.82 
Home equity  3,001  29  3.82   2,963  28  3.86   2,857  29  4.01   2,968  86  3.86   2,805  85  4.07 
Indirect auto  2,293  17  2.86   2,238  15  2.74   1,978  14  2.84   2,240  47  2.80   1,782  38  2.87 
Credit cards  306  9  11.44   304  9  11.40   313  9  11.44   307  26  11.53   312  27  11.50 
Other consumer  255  5  8.57   260  5  8.49   287  6  8.54   263  17  8.52   292  19  8.57 
Total consumer loans  9,193  91  3.91   9,091  88  3.91   8,786  90  4.06   9,112  269  3.95   8,567  266  4.15 
Total loans and leases  23,442  215  3.64   23,178  215  3.73   22,465  215  3.80   23,245  644  3.70   22,021  641  3.89 
Residential MBS  7,478  45  2.40   7,381  43  2.30   6,406  41  2.56   7,347  132  2.40   6,067  121  2.65 
Commercial MBS  1,212  12  3.88   1,311  11  3.42   1,564  13  3.32   1,308  34  3.51   1,623  41  3.35 
Other investment securities (3)  3,518  32  3.68   3,604  34  3.75   3,854  39  4.06   3,559  98  3.65   4,131  117  3.76 
Total securities, at amortized cost  12,208  89  2.92   12,296  88  2.85   11,824  93  3.15   12,214  264  2.88   11,821  278  3.14 
Money market and other investments  109  1  1.92   100  --   1.56   86  1  2.76   122  1  1.43   125  2  1.74 
Total interest-earning assets  35,759  $ 305 3.38%  35,574  $ 303 3.42%  34,375  $ 309 3.57%  35,581  $ 909 3.42%  33,967  $ 920 3.62%
Goodwill and other intangibles  1,402      1,408      2,515      1,408      2,528    
Other noninterest-earning assets  1,890      1,931      1,701      1,903      1,692    
                               
Total assets  $ 39,051      $ 38,913      $ 38,591      $ 38,892      $ 38,187    
                               
Interest-bearing liabilities:                               
Deposits                              
Savings accounts  $ 3,427  $ 1 0.10%  $ 3,494  $ 1 0.09%  $ 3,552  $ 1 0.09%  $ 3,451  $ 2 0.09%  $ 3,612  $ 2 0.09%
Interest-bearing checking  5,165  --   0.03   5,131  --   0.03   4,821  --   0.03   5,100  1  0.03   4,792  1  0.03 
Money market deposits   10,403  8  0.29   10,251  8  0.29   9,882  6  0.23   10,263  22  0.28   9,913  16  0.22 
Certificates of deposit   3,962  8  0.81   3,917  8  0.82   3,970  7  0.67   3,886  24  0.82   3,864  20  0.68 
Total interest bearing deposits  22,957  17 0.29%  22,793  17 0.29%  22,225  14 0.24%  22,700  49 0.29%  22,181  39 0.24%
Borrowings                              
Short-term borrowings  3,953  5 0.50%  4,522  5 0.48%  4,737  5 0.43%  4,529  16 0.48%  4,597  15 0.43%
Long-term borrowings  1,693  14  3.24   1,359  13  3.90   733  12  6.56   1,362  40  3.89   733  36  6.62 
Total borrowings   5,646  19  1.32   5,881  18  1.27   5,470  17  1.25   5,891  56  1.26   5,330  51  1.28 
Total interest-bearing liabilities   28,603  $ 36 0.50%  28,674  $ 35 0.49%  27,695  $ 31 0.44%  28,591  $ 105 0.49%  27,511  $ 90 0.44%
Noninterest-bearing deposits   5,661      5,427      5,259      5,507      5,068    
Other noninterest-bearing liabilities   637      667      536      653      541    
Total liabilities   34,901      34,768      33,490      34,751      33,120    
Total stockholders' equity  4,150      4,145      5,100      4,141      5,067    
Total liabilities and stockholders' equity  $ 39,051      $ 38,913      $ 38,591      $ 38,892      $ 38,187    
                               
Net interest income (FTE)    $ 269      $ 268      $ 278      $ 804      $ 830  
Taxable Equivalent Adjustment(1)    6      5      5      14      14  
                               
 Total core deposits   $ 24,656  $ 9 0.14%  $ 24,303  $ 9 0.14%  $ 23,514  $ 7 0.12%  $ 24,321  $ 25 0.14%  $ 23,385  $ 19 0.11%
 Total transactional deposits   10,826  --  0.01%  10,558  --  0.01%  10,080  --  0.01%  10,607  1 0.01%  9,860  1 0.02%
 Total deposits   28,618  17 0.24%  28,220  17 0.24%  27,484  14 0.20%  28,207  49 0.23%  27,249  39 0.19%
                               
Tax equivalent net interest rate spread     2.88%     2.93%     3.13%     2.93%     3.18%
Tax equivalent net interest rate margin     2.98%     3.02%     3.21%     3.02%     3.27%
                               
(1) Tax equivalent interest income is calculated using a 35% tax rate.
(2) Includes nonaccrual loans.
(3) Includes debt securities, collateralized loan obligations, asset-backed securities, FHLB and FRB common stock, and other investment securities.
 
 
First Niagara Financial Group, Inc.
Allowance for Loans and Lease Losses & Asset Quality
(in thousands)
  2015 2014 Nine months ended
   Third   Second   First   Fourth   Third   Second   September 30,   September 30, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2015 2014
                 
Beginning balance  $ 235,600  $ 231,138  $ 234,251  $ 222,753  $ 219,426  $ 213,937  $ 234,251  $ 209,274
Net loan (charge-offs) recoveries:                
Commercial real estate  $ (2,686)  $ (5,525)  $ (5,825)  $ (2,008)  $ (2,259)  $ (4,885)  $ (14,036)  $ (6,239)
Commercial business  (6,286)  (3,513)  (4,178)  (12,650)  (3,148)  (1,795)  (13,977)  (14,081)
Residential real estate  (230)  (197)  (266)  (476)  (102)  (352)  (693)  (628)
Home equity  (1,056)  (1,367)  (1,526)  (1,406)  (1,131)  (1,294)  (3,949)  (5,470)
Indirect auto  (1,743)  (1,342)  (1,226)  (2,241)  (1,621)  (1,455)  (4,311)  (5,162)
Credit cards  (2,215)  (2,522)  (2,450)  (2,464)  (2,726)  (2,930)  (7,187)  (8,700)
Other consumer  (1,952)  (1,528)  (1,807)  (1,457)  (1,986)  (1,200)  (5,287)  (5,241)
Total net loan charge-offs  $ (16,168)  $ (15,994)  $ (17,278)  $ (22,702)  $ (12,973)  $ (13,911)  $ (49,440)  $ (45,521)
Provision for loan losses  19,268  20,456  14,165  34,200  16,300  19,400  53,889  59,000
 Ending balance  $ 238,700  $ 235,600  $ 231,138  $ 234,251  $ 222,753  $ 219,426  $ 238,700  $ 222,753
                 
Supplemental information                
Allowance to loans 1.01% 1.01% 1.00% 1.02% 0.98%  0.98 % 1.01% 0.98%
Allowance for originated loans to originated loans(1) 1.13% 1.15% 1.15% 1.18% 1.16%  1.18 % 1.13% 1.16%
                 
Net charge-offs (recoveries) to average loans (annualized)              
Commercial real estate  0.13 %  0.27 %  0.29 %  0.10 % 0.11%  0.25 %  0.23 % 0.11%
Commercial business  0.42 %  0.24 %  0.29 %  0.87 % 0.22%  0.13 %  0.32 % 0.34%
Total commercial loans  0.25 %  0.26 %  0.28 %  0.42 % 0.16%  0.20 %  0.26 % 0.20%
Residential real estate  0.03 %  0.02 %  0.03 %  0.06 % 0.01%  0.04 %  0.03 % 0.02%
Home equity  0.14 %  0.18 %  0.21 %  0.19 % 0.16%  0.18 %  0.18 % 0.26%
Indirect auto  0.30 %  0.24 %  0.22 %  0.42 % 0.33%  0.33 %  0.26 % 0.39%
Credit cards  2.90 %  3.32 %  3.16 %  3.13 % 3.49%  3.80 %  3.12 % 3.72%
Other consumer  3.06 %  2.35 %  2.63 %  2.06 % 2.77%  1.65 %  2.68 % 2.39%
Total consumer loans  0.32 %  0.31 %  0.33 %  0.36 % 0.35%  0.34 %  0.31 % 0.39%
Total loans  0.28 %  0.28 %  0.30 %  0.40 % 0.23%  0.25 %  0.28 % 0.28%
                 
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)          
Commercial real estate  0.14 %  0.31 %  0.24 %  0.06 % 0.13%  0.29 %  0.23 % 0.11%
Commercial business  0.44 %  0.25 %  0.31 %  0.93 % 0.24%  0.14 %  0.33 % 0.36%
Total commercial loans  0.27 %  0.28 %  0.27 %  0.44 % 0.18%  0.22 %  0.27 % 0.22%
Residential real estate  0.04 %  0.04 %  0.05 %  0.09 % 0.02%  0.07 %  0.04 % 0.04%
Home equity  0.14 %  0.17 %  0.16 %  0.15 % 0.17%  0.16 %  0.15 % 0.18%
Indirect auto  0.30 %  0.24 %  0.22 %  0.42 % 0.33%  0.33 %  0.26 % 0.39%
Credit cards  2.90 %  3.32 %  3.16 %  3.13 % 3.49%  3.80 %  3.12 % 3.72%
Other consumer  3.06 %  2.35 %  2.63 %  2.06 % 2.77%  1.65 %  2.68 % 2.39%
Total consumer loans  0.38 %  0.37 %  0.38 %  0.44 % 0.45%  0.45 %  0.38 % 0.49%
Total loans  0.31 %  0.31 %  0.31 %  0.44 % 0.27%  0.30 %  0.31 % 0.31%
                 
Nonperforming loans:                
Originated(1):                
Commercial real estate  $ 54,699  $ 60,021  $ 65,655  $ 53,164  $ 57,340  $ 55,945  $ 54,699  $ 57,340
Commercial business  45,389  42,979  54,506  45,201  36,939  32,861  45,389  36,939
Residential real estate  32,455  32,877  32,791  33,652  36,113  33,870  32,455  36,113
Home equity  34,191  27,092  26,163  23,749  23,392  19,429  34,191  23,392
Indirect auto  13,795  13,066  13,399  12,616  11,890  9,821  13,795  11,890
Other consumer  5,047  4,917  5,065  5,140  5,134  5,037  5,047  5,134
Total originated nonperforming loans  185,576  180,952  197,579  173,522  170,808  156,963  185,576  170,808
Total acquired nonperforming loans(2)  25,365  26,553  30,236  30,223  28,611  32,488  25,365  28,611
Total nonperforming loans  210,941  207,505  227,815  203,745  199,419  189,451  210,941  199,419
Real estate owned  18,359  17,397  19,128  20,541  20,261  24,270  18,359  20,261
Total nonperforming assets(3)  $ 229,300  $ 224,902  $ 246,943  $ 224,286  $ 219,680  $ 213,721  $ 229,300  $ 219,680
                 
Accruing troubled debt restructurings (TDR)  $ 60,941  $ 64,643  $ 64,401  $ 67,102  $ 69,199  $ 80,214  $ 60,941  $ 69,199
Loans 90 days past due still accruing(4)  69,879  78,279  87,213  93,903  108,615  112,718  69,879  108,615
Total classified loans(5)  591,771  592,148  615,518  609,316  649,320  661,699  591,771  649,320
Total criticized loans(6)  $ 858,243  $ 938,951  $ 990,656  $ 1,041,050  $ 1,089,851  $ 1,072,133  $ 858,243  $ 1,089,851
                 
Total nonperforming loans to loans 0.89% 0.89% 0.99% 0.88% 0.88%  0.85 % 0.89% 0.88%
Total nonperforming originated loans to originated loans(1) 0.90% 0.91% 1.01% 0.90% 0.91%  0.86 % 0.90% 0.91%
Total nonperforming assets to loans and real estate owned 0.97% 0.96% 1.07% 0.97% 0.96%  0.96 % 0.97% 0.96%
Total nonperforming assets to assets 0.58% 0.58% 0.63% 0.58% 0.58%  0.55 % 0.58% 0.58%
Allowance to nonperforming loans 113.2% 113.5% 101.5% 115.0% 111.7%  115.8 % 113.2% 111.7%
                 
Originated loans(1)  $ 20,591,532  $ 19,929,719  $ 19,528,609  $ 19,295,553  $ 18,841,896  $ 18,196,302  $ 20,591,532  $ 18,841,896
Acquired loans(7)  3,138,568  3,517,525  3,681,354  3,834,931  4,028,091  4,254,750  3,138,568  4,028,091
Credit related discount on acquired loans(8)  (63,901)   (78,827)   (91,689)   (93,102)   (100,138)   (105,233)   (63,901)   (100,138) 
Total Loans  $ 23,666,199  $ 23,368,417  $ 23,118,274  $ 23,037,382  $ 22,769,849  $ 22,345,819  $ 23,666,199  $ 22,769,849
                 
(1) Originated loans represent total loans excluding acquired loans. 
(2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing. 
(3) Does not include a $5.5 million nonperforming loan that was classified as held for sale at March 31, 2015, which was sold and for which we received the proceeds on April 2, 2015.
(4) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.
(5) Includes consumer loans, which are considered classified when they are 90 days or more past due. Classified loans include substandard, doubtful, and loss, which are consistent with regulatory definitions, and as described in Item 1, "Business", under the heading "Asset Quality Review" in our Annual Report on 10-K for the year ended December 31, 2014.
(6) Criticized loans includes consumer loans when they are 90 days or more past due. Criticized loans include special mention, substandard, doubtful, and loss.
(7) Represents the carrying value of acquired loans plus the principal not expected to be collected.
(8) Represent principal on acquired loans not expected to be collected.
 
 
First Niagara Financial Group, Inc.
Key Statistics
(Risk weighted assets in millions; share counts in thousands)
             
  2015 2014
  September 30, June 30, March 31, December 31, September 30, June 30,
             
First Niagara Financial Group, Inc. capital ratios(1)(2):            
Tier 1 risk based capital 10.05% 10.03% 10.02% 9.81% 9.82% 9.58%
Total risk based capital 11.97% 11.96% 11.95% 11.75% 11.75% 11.53%
Common equity tier 1 capital 8.52% 8.50% 8.48%  N/A   N/A   N/A 
Tier 1 common capital(3)  N/A   N/A   N/A  8.20% 8.19% 7.93%
Leverage 7.66% 7.60% 7.56% 7.50% 7.34% 7.34%
Equity to assets 10.50% 10.55% 10.60% 10.62% 10.79% 13.16%
Tangible common equity to tangible assets(3) 6.32% 6.32% 6.34% 6.30% 6.39% 6.14%
Total risk weighted assets  $ 28,717  $ 28,445  $ 28,152  $ 28,186  $ 27,729  $ 27,313
             
First Niagara Bank, N.A capital ratios(1)(2):            
Tier 1 risk based capital 10.67% 10.66% 10.65% 10.48% 10.41% 10.19%
Total risk based capital 11.56% 11.54% 11.53% 11.37% 11.27% 11.05%
Common equity tier 1 capital 10.67% 10.66% 10.65%  N/A   N/A   N/A 
Leverage 8.12% 8.07% 8.03% 8.01% 7.78% 7.80%
Total risk weighted assets  $ 28,633  $ 28,359  $ 28,068  $ 28,146  $ 27,686  $ 27,272
             
Number of branches  394  394  394  411  411  411
Full time equivalent employees  5,397  5,364  5,322  5,572  5,768  5,874
             
Share information and per share metrics:            
Common shares outstanding  354,788  354,890  353,717  353,388  355,423  355,483
Preferred shares outstanding  14,000  14,000  14,000  14,000  14,000  14,000
Treasury shares  11,214  11,112  12,285  12,614  10,579  10,519
Market price (NASDAQ: FNFG):  $ 10.21  $ 9.44  $ 8.84  $ 8.43  $ 8.33  $ 8.74
Book value per common share(4)  10.82  10.77  10.80  10.71  10.72  13.54
Tangible book value per common share(3)(4)  6.84  6.77  6.78  6.67  6.66  6.32
Price/Book 94.36% 87.65% 81.85% 78.71% 77.71% 64.55%
Price/Tangible book(1) 149.27% 139.44% 130.38% 126.39% 125.08% 138.29%
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 53.33% 53.33% 66.67% 47.06% N/M 42.11%
Dividend yield (annualized) 3.11% 3.40% 3.67% 3.77% 3.81% 3.67%
             
N/M Not meaningful.            
(1) Represents an estimate as of September 30, 2015. All preceding quarters represent actual amounts.
(2) Basel III Transitional rules became effective for us on January 1, 2015. Ratios and amounts presented prior to March 31, 2015 are calculated under Basel I rules. As of March 31, 2015, the ratios presented are calculated under the Basel III Standardized Transitional Approach. Common equity tier 1 capital under Basel III replaced Tier 1 common capital under Basel I. Prior to Basel III becoming effective on January 1, 2015, tier 1 common capital under Basel I was a non-GAAP financial measure.
(3) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4) Share count excludes unallocated ESOP shares prior to January 1, 2015 and unvested restricted stock shares.
 
 
First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation
(in thousands, except per share amounts)
                 
  2015 2014 Nine months ended
   Third   Second   First   Fourth   Third   Second   September 30,   September 30, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2015 2014
Financial ratios computed on an operating basis(1):                
Earnings per basic share  $ 0.15  $ 0.15  $ 0.15  $ 0.15  $ 0.19  $ 0.19  $ 0.45  $ 0.55
Earnings per diluted share  $ 0.15  $ 0.15  $ 0.15  $ 0.15  $ 0.19  $ 0.19  $ 0.45  $ 0.55
Weighted average shares outstanding - basic(2)  351,293  351,126  350,741  350,444  350,381  350,229  351,055  350,174
Weighted average shares outstanding - diluted(2)  353,248  352,791  352,621  352,152  351,898  351,541  352,847  351,570
Noninterest income as a percentage of net revenue(3) 24.05% 24.76% 23.83% 22.24% 21.62% 22.93% 24.22% 22.21%
Pre-tax, pre-provision income  101,501  101,818  101,667  98,714  99,210  108,554  304,986  316,855
Pre-tax, pre-provision income per diluted share  $ 0.29  $ 0.29  $ 0.29  $ 0.28  $ 0.28  $ 0.31  $ 0.86  $ 0.90
Pre-tax, pre-provision return on average assets 1.03% 1.05% 1.07% 1.02% 1.02% 1.14% 1.05% 1.11%
Net interest margin(4) 2.98% 3.02% 3.07% 3.11% 3.21% 3.26% 3.02% 3.27%
Interest yield on average loans(4) 3.64% 3.73% 3.75% 3.78% 3.80% 3.89% 3.70% 3.89%
Rate paid on interest-bearing liabilities 0.50% 0.49% 0.48% 0.45% 0.44% 0.44% 0.49% 0.44%
Efficiency ratio 70.7% 70.9% 70.5% 71.5% 71.5% 69.2% 70.7% 69.8%
Effective tax rate 26.0% 24.7% 30.0% 3.7% 10.3% 14.5% 27.0% 14.9%
Return on average assets 0.61% 0.63% 0.65% 0.63% 0.76% 0.80% 0.63% 0.76%
Return on average equity 5.78% 5.90% 6.12% 5.82% 5.76% 6.01% 5.93% 5.76%
Return on average tangible equity(5) 8.73% 8.94% 9.30% 8.85% 11.35% 12.01% 8.99% 11.50%
Return on average common equity 5.51% 5.63% 5.85% 5.54% 5.54% 5.80% 5.66% 5.54%
Return on average tangible common equity(6) 8.72% 8.94% 9.34% 8.85% 11.73% 12.48% 8.99% 11.89%
                 
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):                
Total noninterest expense on operating basis (Non-GAAP)  $ 245,433  $ 247,899  $ 243,521  $ 248,246  $ 249,461  $ 244,115  $ 736,853  $ 731,956
Restructuring charges  --   --   17,517  9,066  2,364  --   17,517  12,720
Goodwill impairment  --   --   --   --   1,100,000  --   --   1,100,000
Deposit account remediation  --   --   --   (23,000)  45,000  --   --   45,000
Total reported noninterest expense (GAAP)  $ 245,433  $ 247,899  $ 261,038  $ 234,312  $ 1,396,825  $ 244,115  $ 754,370  $ 1,889,676
                 
Reconciliation of net operating income to net income(1):                
Net operating income (Non-GAAP)  $ 60,482  $ 61,010  $ 62,246  $ 60,697  $ 74,009  $ 75,875  $ 183,738  $ 218,439
Nonoperating income and expenses, net of tax:                
Restructuring charges  --   --   10,861  6,364  1,555  --   10,861  9,900
Goodwill impairment  --   --   --   --   963,267  --   --   963,267
Deposit account remediation  --   --   --   (14,734)  29,233  --   --   29,233
Total nonoperating expenses, net of tax  --   --   10,861  (8,370)  994,055  --   10,861  1,002,400
Net income (loss) (GAAP)  $ 60,482  $ 61,010  $ 51,385  $ 69,067  $ (920,046)   $ 75,875  $ 172,877  $ (783,961)
                 
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)  $ 52,935  $ 53,463  $ 54,699  $ 53,150  $ 66,462  $ 68,328  $ 161,097  $ 195,798
Nonoperating income and expenses, net of tax:                
Restructuring charges  --   --   10,861  6,364  1,555  --   10,861  9,900
Goodwill impairment  --   --   --   --   963,267  --   --   963,267
Deposit account remediation  --   --   --   (14,734)  29,233  --   --   29,233
Total nonoperating income and expenses, net of tax  --   --   10,861  (8,370)  994,055  --   10,861  1,002,400
Net income (loss) available to common stockholders (GAAP)  $ 52,935  $ 53,463  $ 43,838  $ 61,520  $ (927,593)   $ 68,328  $ 150,236  $ (806,602)
                 
Computation of pre-tax,pre-provision income:                
Net interest income  $ 263,491  $ 263,110  $ 262,944  $ 269,783  $ 273,279  $ 271,812  $ 789,545  $ 815,838
Noninterest income  83,443   86,607   82,244   77,177   75,392   80,857   252,294   232,973 
Noninterest expense  (245,433)  (247,899)  (261,038)  (234,312)  (1,396,825)  (244,115)  (754,370)  (1,889,676)
Pre-tax, pre-provision income (loss) (GAAP)  101,501  101,818  84,150  112,648  (1,048,154)  108,554  287,469  (840,865)
Add back: non-operating noninterest expenses (1)  --   --   17,517  (13,934)  1,147,364  --   17,517  1,157,720
Pre-tax, pre-provision income (Non-GAAP)(1)  $ 101,501  $ 101,818  $ 101,667  $ 98,714  $ 99,210  $ 108,554  $ 304,986  $ 316,855
                 
(1) Noninterest expense on an operating basis, net operating income, and pre-tax, pre-provision income on an operating basis are non-GAAP measures that we believe provide meaningful comparisons of our underlying operational performance and facilitates investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, we believe exclusion of these nonoperating items enables management to perform a more effective evaluation and comparison of our results and to assess performance in relation to our ongoing operations.
(2) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(3) Net revenue is comprised of net interest income and noninterest income.
(4) Yields and rates calculated on a tax equivalent basis.
(5) Tangible equity is a non-GAAP measure and excludes goodwill and other intangibles.
(6) Tangible common equity is a non-GAAP measure and excludes goodwill and other intangibles as well as preferred stock.
 
 
First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation (Cont.)
(in thousands, except per share amounts)
                 
  2015 2014 Nine months ended
   Third   Second   First   Fourth   Third   Second   September 30,   September 30, 
   Quarter   Quarter   Quarter  Quarter  Quarter   Quarter  2015 2014
Computation of Ending Tangible Assets:                
Total assets  $ 39,413,181  $ 39,063,543  $ 38,907,479  $ 38,551,038  $ 37,972,042  $ 38,627,608  $ 39,413,181  $ 37,972,042
Less: Goodwill and other intangibles  (1,400,199)   (1,404,201)   (1,410,800)   (1,417,005)   (1,423,437)   (2,528,481)   (1,400,199)   (1,423,437) 
Tangible assets  $ 38,012,982  $ 37,659,342  $ 37,496,679  $ 37,134,033  $ 36,548,605  $ 36,099,127  $ 38,012,982  $ 36,548,605
                 
Computation of Average Tangible Assets:                
Total assets  $ 39,051,359  $ 38,913,219  $ 38,706,545  $ 38,317,930  $ 38,591,115  $ 38,212,597  $ 38,891,638  $ 38,186,952
Less: Goodwill and other intangibles  (1,402,138)   (1,407,946)   (1,413,765)   (1,420,119)   (2,514,581)   (2,531,612)   (1,407,907)   (2,528,272) 
Tangible assets  $ 37,649,221  $ 37,505,273  $ 37,292,780  $ 36,897,811  $ 36,076,534  $ 35,680,985  $ 37,483,731  $ 35,658,680
                 
Computation of Ending Tangible Equity:                
Total stockholders' equity  $ 4,139,377  $ 4,121,125  $ 4,125,246  $ 4,092,758  $ 4,095,703  $ 5,081,674  $ 4,139,377  $ 4,095,703
Less: Goodwill and other intangibles  (1,400,199)   (1,404,201)   (1,410,800)   (1,417,005)   (1,423,437)   (2,528,481)   (1,400,199)   (1,423,437) 
Tangible equity  $ 2,739,178  $ 2,716,924  $ 2,714,446  $ 2,675,753  $ 2,672,266  $ 2,553,193  $ 2,739,178  $ 2,672,266
                 
Computation of Ending Tangible Common Equity:                
Total stockholders' equity  $ 4,139,377  $ 4,121,125  $ 4,125,246  $ 4,092,758  $ 4,095,703  $ 5,081,674  $ 4,139,377  $ 4,095,703
Less: Goodwill and other intangibles  (1,400,199)   (1,404,201)   (1,410,800)   (1,417,005)   (1,423,437)   (2,528,481)   (1,400,199)   (1,423,437) 
Less: Preferred stockholders' equity  (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)  (338,002)
Tangible common equity  $ 2,401,176  $ 2,378,922  $ 2,376,444  $ 2,337,751  $ 2,334,264  $ 2,215,191  $ 2,401,176  $ 2,334,264
                 
Computation of Average Tangible Equity:                
Total stockholders' equity  $ 4,149,635  $ 4,145,334  $ 4,127,743  $ 4,141,141  $ 5,100,494  $ 5,065,797  $ 4,140,984  $ 5,067,041
Less: Goodwill and other intangibles  (1,402,138)   (1,407,946)   (1,413,765)   (1,420,119)   (2,514,581)   (2,531,612)   (1,407,907)   (2,528,272) 
Tangible equity  $ 2,747,497  $ 2,737,388  $ 2,713,978  $ 2,721,022  $ 2,585,913  $ 2,534,185  $ 2,733,077  $ 2,538,769
                 
Computation of Average Tangible Common Equity:                
Total stockholders' equity  $ 4,149,635  $ 4,145,334  $ 4,127,743  $ 4,141,141  $ 5,100,494  $ 5,065,797  $ 4,140,984  $ 5,067,041
Less: Goodwill and other intangibles  (1,402,138)   (1,407,946)   (1,413,765)   (1,420,119)   (2,514,581)   (2,531,612)   (1,407,907)   (2,528,272) 
Less: Preferred stockholders' equity  (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002) 
Tangible common equity  $ 2,409,495  $ 2,399,386  $ 2,375,976  $ 2,383,020  $ 2,247,911  $ 2,196,183  $ 2,395,075  $ 2,200,767
                 
Computation of Tier 1 Common Capital:                
Tier 1 capital  N/A   N/A   N/A   $ 2,764,117  $ 2,722,685  $ 2,613,584  N/A   $ 2,722,685
Less: Qualifying restricted core capital elements  N/A   N/A   N/A   (113,785)   (113,556)   (113,330)   N/A   (113,556) 
Less: Perpetual non-cumulative preferred stock  N/A   N/A   N/A   (338,002)   (338,002)   (338,002)   N/A   (338,002)
Tier 1 common capital (Non-GAAP)  N/A   N/A   N/A   $ 2,312,330  $ 2,271,127  $ 2,162,252  N/A   $ 2,271,127

            

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