First Niagara Reports Fourth Quarter and Full Year 2015 Results


  • Fourth quarter operating earnings of $0.15 per diluted share
    • Full Year 2015 operating earnings of $0.61 per diluted share
  • Fourth quarter GAAP earnings of $0.12 per diluted share, including merger-related and restructuring expenses
    • Full Year 2015 reported GAAP earnings of $0.54 per diluted share
  • Average loans increased 6% annualized QOQ
    • Average commercial loans (CRE and commercial business) up 6% annualized QOQ
    • Indirect Auto and Home Equity loans drove 6% annualized increase in average consumer loans QOQ
  • Average transactional deposit balances increased 14% annualized QOQ
    • Average business noninterest-bearing deposit balances increased 12% annualized QOQ
    • Average noninterest-bearing deposit balances increased 15% annualized QOQ
  • Strong credit quality maintained
    • Originated net charge-offs in 2015 averaged 0.32% of total originated loans, down 2 basis points YOY

BUFFALO, N.Y., Feb. 05, 2016 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (NASDAQ:FNFG) today reported GAAP net income available to common shareholders of $43.3 million, or $0.12 per diluted share for the fourth quarter of 2015, compared to $52.9 million, or $0.15 per diluted share, for the quarter ended September 30, 2015. Excluding merger related and other non-operating items incurred during the fourth quarter of 2015, operating net income available to common shareholders was $55.3 million, or $0.15 per diluted share.

“We closed 2015 with strong core business fundamentals. Our fourth-quarter performance was highlighted by 6% annualized average commercial loan growth, 13% annualized growth in average checking account deposit balances, and stable credit metrics,” said Gary M. Crosby, President and Chief Executive Officer. “As we begin 2016, we remain focused on keeping our customers at the center of all we do and maintaining a strong competitive position. At the same time, the First Niagara team is also engaged with our counterparts at KeyCorp (Key) in integration planning to ensure that our customers move seamlessly over to Key following the legal closing of our merger. This compelling combination of financial institutions truly makes First Niagara and Key better together. Together we will better serve our customers, more efficiently and with a broader set of product features and functionalities. Together we will better serve and support the communities in which we operate and provide many team members with expanded career opportunities as part of a larger, more-diversified organization.”

“Our fourth quarter financial results reflect a 3% sequential increase in operating revenues driven by a 7% increase in noninterest income, stable net interest margin, and strong balance sheet growth,” said Gregory W. Norwood, Chief Financial Officer. “Over the past year, our team has been working diligently to improve the effectiveness of our internal controls and processes to address last year’s material weakness pertaining to the overstatement of the allowance for loan losses. Based on our assessment, this material weakness has been fully remediated.”

Full Year 2015 Results

For the full year ended December 31, 2015, the company reported GAAP net income available to common shareholders of $193 million, or $0.54 per diluted share, compared to a net loss of $745 million, or $(2.13) per share in 2014.  GAAP net income for 2015 was impacted by $21 million in pre-tax restructuring charges as well as $14 million in merger-related costs incurred in connection with the company’s merger agreement with KeyCorp that was announced on October 30, 2015. In 2014, GAAP net income was impacted by a pre-tax $1.1 billion non-cash goodwill impairment charge, $22 million in non-operating restructuring expenses and $22 million in reserves to address the previously disclosed process issue related to certain customer deposit accounts. Excluding these charges, non-GAAP operating net income available to common shareholders in 2015 was $0.61 per diluted share, compared to $0.70 per diluted share in 2014. The year-over-year performance reflects lower net interest income driven by the continued impact of reinvestments and re-pricing of assets in the current low interest rate and competitive pricing environment as well as $0.10 per diluted share of reduced benefits from the taxable reorganization of a subsidiary and tax credit investments, partially offset by strong balance sheet growth and lower provision for loan losses.

Average loans increased 5% in 2015, driven by a 5% increase in commercial loans and 6% increase in consumer loan categories. Average transactional deposits, which include interest-bearing and noninterest-bearing checking account balances, increased 7% on a year-over-year basis, driven by an 8% increase in non-interest bearing deposit balances and a 6% increase in interest-checking deposit balances.

Fourth Quarter Results

In the fourth quarter of 2015, First Niagara reported GAAP net income available to common shareholders of $43.3 million, or $0.12 per diluted share, compared to $52.9 million, or $0.15 per diluted share in the third quarter of 2015. Reported results in the fourth quarter of 2015 reflect pre-tax restructuring charges of $3 million and $14 million in merger related costs. Excluding these items, operating net income available to common shareholders was $55.3 million, or $0.15 per diluted share, and consistent with the third quarter of 2015.

Compared to the third quarter of 2015, the change in operating net income available to common shareholders was primarily driven by:

  • A 1% increase in net interest income driven by a 5% annualized increase in average earning assets and greater benefits from prepayment income and purchase accounting accretion.
  • A 7% increase in noninterest income driven by higher capital markets income, lower tax credit amortization, gain from the sale of a low-income housing property, and higher equity and investment gains.
  • A $2 million or 1% increase in operating noninterest expenses primarily driven by higher marketing spend, valuation write-down of a real estate property, and other corporate expenses, partially offset by lower professional services expense.

In the fourth quarter of 2014, First Niagara reported GAAP net income available to common shareholders of $61.5 million, or $0.17 per diluted share. Results in the fourth quarter of 2014 included $9 million of pre-tax restructuring charges and a $23 million benefit from the reversal of reserves related to a previously disclosed process issue related to certain customer deposit accounts. Excluding these nonrecurring items, fourth quarter 2014 net income available to common shareholders was $53.2 million, or $0.15 per diluted share.

Compared to the fourth quarter of 2014, the change in operating net income available to common shareholders in the fourth quarter of 2015 was primarily driven by:

  • A 1% decrease in net interest income driven by continued pressure on loan yields due to low interest rates and competitive pressures throughout 2015.
  • A $13 million decrease in provision for loan losses from elevated levels in the prior year that included a $5 million reserve to cover exposure to borrowers servicing the energy sector and a $5 million impairment on a commercial loan that was sold in March 2015.
  • A 16% increase in noninterest income, driven primarily by lower tax credit amortization.
  • Modestly lower noninterest expense as increases in salaries and benefits expense and technology & communications expenses were offset by declines in most other expense categories.
  • Higher tax rate reflecting lower benefits from the taxable reorganization of a subsidiary and tax credit investments.

Operating Results (Non-GAAP)Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Net interest income$  266.5 $  263.5 $  263.1 $   262.9 $  269.8 
Provision for credit losses 22.9  19.8  20.8  12.8  35.7 
Noninterest income 89.4  83.4  86.6  82.2  77.2 
Noninterest expense 247.4  245.4  247.9  243.5  248.2 
Operating net income 62.8  60.5  61.0  62.2  60.7 
Preferred stock dividend 7.5  7.5  7.5  7.5  7.5 
Operating net income available to common$  55.3 $  52.9 $  53.5 $  54.7 $  53.2 
Weighted average diluted shares outstanding 353.8  353.2  352.8  352.6  352.2 
Operating earnings per diluted share$  0.15 $   0.15 $  0.15 $  0.15 $  0.15 
      
Reported Results (GAAP)Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Operating net income before non-op. items$  62.8 $  60.5 $  61.0 $  62.2 $  60.7 
Non-operating items (a) 12.0  -  -  10.9  (8.4)
Net Income 50.8  60.5  61.0  51.4  69.1 
Preferred stock dividend 7.5  7.5  7.5  7.5  7.5 
Net income available to common$  43.3 $  52.9 $  53.5 $  43.8 $  61.5 
Weighted average diluted shares outstanding 353.8  353.2  352.8  352.6  352.2 
Earnings per diluted share$  0.12 $  0.15 $  0.15 $  0.12 $  0.17 

All amounts in millions except earnings per diluted share.

(a) Q4 2015: Non-operating charges primarily comprised of merger related costs including investment banker and other professional services fees, employee retention expenses, classification of compensation of certain personnel dedicated to merger integration efforts as well as third-party professional fees incurred in connection with the overstatement of allowance resulting from mid-level employee misconduct, net of taxes.
Q1 2015: Non-operating 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.

Loans

Average loans increased 6% annualized from the prior quarter to $23.8 billion, driven primarily by increases in the company’s commercial real estate (CRE), indirect auto and home equity loan portfolios. On an end-of-period basis, total loans increased 6% annualized from the prior quarter driven by a 14% annualized increase in CRE loans.

Average commercial loans, which include commercial business (C&I) and commercial real estate (CRE) loans, increased 6% annualized from prior quarter to $14.4 billion, primarily driven by growth in the company’s Tri-State and New England footprint.

  • Average CRE loans increased 10% annualized from the prior quarter to $8.5 billion driven by commercial mortgage and construction lending offset by borrower prepayments.
  • Average C&I loans averaged $6.0 billion and were flat to the prior quarter reflecting higher pay-down activity.

Average consumer loans increased 6% annualized from prior quarter to $9.3 billion.

  • Average indirect auto loan balances increased 13% annualized or by $76 million to $2.4 billion, as strong new origination activity was partially offset by increased pay-downs. Indirect auto originations during the quarter totaled $295 million. New originations in the fourth quarter yielded 3.30%, net of dealer reserve, compared to 3.42% on originations in the prior quarter.
  • Average residential real estate loans increased 1% annualized. 
  • Home equity balances increased for the eleventh consecutive quarter to $3.1 billion, or 7% annualized from the prior quarter reflecting higher customer draws as well as the benefits of promotional and cross-sell campaigns.

Average LoansQ4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Commercial real estate$  8,476 $  8,277 $  8,257 $  8,263 $  8,087 
Commercial business 5,971  5,972  5,830  5,797  5,791 
Total commercial 14,447  14,249  14,087  14,060  13,878 
Residential real estate 3,346  3,338  3,326  3,338  3,364 
Home equity 3,052  3,001  2,963  2,939  2,912 
Indirect auto 2,369  2,293  2,238  2,187  2,132 
Credit cards 305  306  304  311  314 
Other consumer 250  255  260  275  283 
Total consumer 9,322  9,193  9,091  9,050  9,005 
Total loans$  23,769 $  23,442 $  23,178 $  23,110 $  22,883 


All amounts in millions.

Credit Quality

At December 31, 2015, the allowance for loan losses was $242 million, compared to $239 million at September 30, 2015.  In the fourth quarter, provision for loan losses totaled $22.4 million, compared to $19.3 million in the prior quarter. Nonperforming assets comprised 0.58% of total assets, unchanged from September 30, 2015.

Information for both the originated and acquired portfolios follows.

 Q4 2015 Q3 2015
$ in millionsOriginatedAcquiredTotal OriginatedAcquiredTotal
Provision for loan losses*$  22.4 $  0.0 $  22.4  $  20.7 $  (1.4)$  19.3 
Net charge-offs 19.1  0.0  19.1   15.5  0.6  16.2 
NCOs/ Avg Loans 0.37% 0.00% 0.32%  0.31% 0.08% 0.28%
Total loans**$  21,101 $  2,937 $  24,038  $  20,592 $  3,075 $  23,666 
Allowance$  236.7 $  5.3 $  242.0  $  233.4 $  5.3 $  238.7 
Allowance/Loans 1.12% 0.18% 1.01%  1.13% 0.17% 1.01%
Nonperforming Loans$  188.2 $  25.3 $  213.6  $   185.6 $   25.4 $   210.9 
NPLs/ Loans 0.89% 0.86% 0.89%  0.90% 0.82% 0.89%
Criticized$  761.6 $  183.2 $  944.8  $  684.9 $  173.4 $  858.2 
Criticized as % of Loans 3.61% 6.24% 3.93%  3.33% 5.64% 3.62%
Classified$  450.7 $  152.2 $  602.9  $  449.5 $  142.2 $  591.8 
Classified as % of Loans 2.14% 5.18% 2.51%  2.18% 4.63% 2.50%

(*) Excludes provision for unfunded commitments $0.5 million each in 4Q15 and 3Q15
(**) Acquired loans net of associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $22 million, compared to $21 million in the third quarter of 2015. Originated net charge-offs in the fourth quarter equaled $19 million or 37 basis points of average originated loans, up from 31 basis points in the third quarter of 2015. The increase in net charge-offs were primarily driven by confirmation of losses on two commercial credits, including one serving the energy sector, that had been previously provided for as of September 30, 2015. In 2015, originated net charge-offs equaled 32 basis points of average loans, down 2 basis points from 34 basis points in 2014.

At December 31, 2015, nonperforming originated loans totaled $188 million, or 0.89% of originated loans, compared to 0.90% at September 30, 2015.  At December 31, 2015, the allowance for loan losses on originated loans totaled $237 million or 1.12% of such loans, compared to $233 million or 1.13% of such loans at September 30, 2015. The modest decline in allowance coverage ratio reflects the impact of charge-offs during the fourth quarter that were previously provided for as of September 30, 2015.

Acquired loans

In the fourth quarter of 2015, provision for losses on acquired loans totaled zero, compared to a $1 million recovery in the third quarter of 2015.  Net charge-offs on the acquired portfolio were zero, compared to $0.6 million of net charge-offs in the prior quarter.  At December 31, 2015, the allowance for loan losses on acquired loans totaled $5 million, unchanged from September 30, 2015. Acquired nonperforming loans totaled $25 million, unchanged from the prior quarter.  At December 31, 2015, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $62 million.

Deposits

Average deposits increased 3% annualized from the prior quarter to $28.8 billion.

  • Non-interest checking deposit balances averaged $5.9 billion, up 15% annualized from the prior quarter and 7% from the year-ago period driven by higher business and municipal deposit balances.
  • Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking account balances, increased 14% annualized and currently represents 39% of the company’s deposit balances.
  • The 13% sequential increase in interest-checking deposit balances reflects seasonally strong municipal deposit balances.
  • Money market deposit balances increased 12% annualized, reflecting the benefits of promotional marketing and pricing campaigns and seasonally strong municipal deposit balances.
  • Average savings balances decreased 7% annualized from the prior quarter driven by lower customer balances and seasonality.
  • Time deposits decreased 45% annualized to $3.5 billion, driven by a $414 million decrease in brokered certificate of deposit balances.

Average DepositsQ4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Noninterest-bearing deposits$    5,868 $    5,661 $  5,427 $  5,430 $  5,485 
Savings accounts 3,364  3,427  3,494  3,432  3,447 
Interest-bearing checking 5,333  5,165  5,131  5,001  5,049 
Money market deposits 10,719  10,403  10,251  10,132  10,037 
Certificates of deposit 3,515  3,962  3,917  3,778  3,888 
Total deposits$  28,799 $  28,618 $  28,220 $  27,773 $  27,906 

All amounts in millions.

Net Interest Income

Fourth quarter 2015 GAAP net interest income of $267 million increased $3 million, or 1%, from the prior quarter, driven in part by earning asset growth and greater benefits from prepayment income and purchase accounting accretion. Reported net interest margin of 2.98% was unchanged sequentially.

  • Yields on loans increased 1 basis point to 3.65% primarily reflecting higher prepayment income and purchase accounting accretion and offset by continued pressure on loan yields due to low interest rates and competitive pressures.
  • Yields on investment securities decreased 2 basis points to 2.90% reflecting lower collateralized loan obligations (CLO) pay-off discount accretion income.
  • The average cost of interest-bearing deposits increased 1 basis point from the prior quarter to 0.30%.

Net Interest Income (Tax Equivalent)Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Quarter as Reported$   271.7  $  268.5  $  268.0  $  267.8  $  274.8  
Less: CLO pay-off discount recognition -  (1.2) (2.3) -  (0.7)
Less: Accelerated CMBS prepayment -  -  -  -  (0.5)
Add: CMO Retroactive premium amortization -  -  1.1  -  1.0 
Add: CRE prepayment penalties (0.5) -  -  -  (0.2)
Less: Early loan payoffs -  -  (1.7) -  - 
Less: Other miscellaneous items (0.5) -  -  -  - 
Sub-Total (1.0) (1.2) (2.9) -  (1.4)
Normalized Net Interest Income$  270.7 $  267.3 $  265.1 $  267.8 $  273.4 

All amounts in millions.

Net Interest Margin (Tax Equivalent)Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Quarter as Reported 2.98% 2.98% 3.02% 3.07% 3.11%
Less: CLO pay-off discount recognition -  (0.01)% (0.03)% -  (0.01)%
Less: Accelerated CMBS prepayment -  -  -  -  (0.01)%
Add: CMO Retroactive premium amortization -  -  0.01% -  0.01%
Add: CRE prepayment penalties (0.01)% -  -  -  (0.01)%
Less: Early loan payoffs -  -  (0.02%) -  - 
Less: Other miscellaneous items (0.01)% -  -  -  - 
Sub-Total (0.02)% (0.01)% (0.03)% -  (0.02%)
Normalized Net Interest Margin 2.96% 2.97% 2.99% 3.07% 3.09%


Noninterest Income

Fourth quarter 2015 noninterest income of $89 million increased 7% or $6 million compared to the prior quarter.

  • Deposit service charges and wealth management revenues were largely unchanged from prior quarter.
  • Insurance commissions decreased $3 million driven primarily by seasonally lower renewal volumes during the fourth quarter.
  • Merchant and card fees decreased 1% driven by lower debit card interchange revenues.
  • Capital markets income, which includes income from derivatives and syndications, increased $4 million, primarily driven by strong derivative activity in the fourth quarter as well as the impact of a favorable credit valuation adjustment on interest rate swap assets.
  • Mortgage banking revenues were modestly lower from the prior quarter reflecting lower locked volumes and gain-on-sale margins offset by a $1 million repurchase reserve reversal.
  • Other noninterest income increased $5 million from the prior quarter due to lower tax credit amortization, gain from the sale of a low-income housing property, and higher equity and investment gains.

Noninterest IncomeQ4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Deposit service charges$    22.9 $    22.9 $    22.2 $  20.4 $  22.6 
Insurance commissions   14.9    18.3    17.1    15.7    14.8 
Merchant and card fees   13.3    13.4    13.3    11.9    13.0 
Wealth management services   14.6    14.6    15.7    14.7    14.4 
Mortgage banking   4.9    5.1    5.8    4.9    4.6 
Capital markets income   6.6    2.6    5.3    4.2    8.3 
Lending and leasing   4.2    4.5    4.0    4.4    4.6 
Bank owned life insurance   3.3    2.8    3.2    3.6    3.2 
Other income 4.7  (0.7)   0.1    2.6    (8.3)
Total noninterest income$  89.4 $  83.4 $  86.6 $  82.2 $  77.2 

All amounts in millions.

Noninterest Expense

Operating noninterest expenses totaled $247 million in the fourth quarter of 2015, or 1% higher than third quarter 2015 levels. The quarter-over-quarter increase was primarily driven by higher marketing spend and higher levels of other noninterest expense.

  • Salaries and benefits expense of $113 million decreased modestly compared to the prior quarter as higher medical costs were offset by lower incentive compensation expenses.
  • Occupancy and equipment expense increased 2%, due primarily to higher rent and building maintenance expenses.
  • Marketing and advertising spend increased $1 million from third quarter levels due to timing of promotional campaigns.
  • Professional services fees decreased $3 million from third quarter levels due primarily to lower spend on vendor and other consulting fees.
  • Other expenses increased $3 million sequentially driven in part by higher other real estate (ORE) valuation write-downs, litigation expenses, and new credit and debit card issuance costs.

Operating Noninterest Expense (Non-GAAP)*Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014
Salaries and employee benefits$  113.1 $  113.8 $  113.6 $  112.0 $  111.0 
Occupancy and equipment   26.0    25.5    26.0    27.3    28.4 
Technology and communications   38.2    38.3    36.5    35.1    33.9 
Marketing and advertising   9.7    8.4    10.3    9.9    11.6 
Professional services   15.4    18.1    16.3    13.1    16.6 
Amortization of intangibles   4.0    4.0    5.1    6.2    6.4 
Federal deposit insurance premiums   10.4    10.0    11.8    11.2    11.9 
Other expense   30.7    27.3    28.4    28.9    28.4 
Total operating noninterest expense$  247.4  $  245.4  $  247.9  $  243.5  $  248.2  

*All amounts in millions. See appendix for reconciliation of GAAP to Non-GAAP amounts
           
In the fourth quarter of 2015, the operating efficiency ratio improved to 69.5%, compared to 70.7% 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 December 31, 2015, the company’s consolidated Total Risk Based capital and Common Equity Tier 1 capital ratios were 12.0% and 8.6%, respectively, unchanged from September 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, $40 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.

Safe Harbor Statement

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) impact of the pending merger agreement on customers and employees; and (7) ability to consummate the merger transaction with KeyCorp on a timely basis or at all.

          
First Niagara Financial Group, Inc.         
Income Statement Highlights - Reported Basis          
(in thousands, except per share amounts)          
               
      2015   2014  For year ending
      Fourth Third Second First  Fourth Third  December 31, December 31,
      Quarter Quarter Quarter Quarter  Quarter Quarter  2015  2014 
               
Interest income:           
 Loans and leases $  214,945 $  211,407 $  211,899 $  210,371  $  214,609 $  212,452  $  848,622 $  846,923 
 Investment securities and other    88,825    87,914    86,356    86,280     86,919    91,668     349,375    360,574 
  Total interest income     303,770    299,321    298,255    296,651     301,528    304,120     1,197,997    1,207,497 
               
Interest expense:           
 Deposits    17,147    17,040    16,568    15,344     14,295    13,590     66,099    53,304 
 Borrowings    20,074    18,790    18,577    18,363     17,450    17,251     75,804    68,572 
  Total interest expense     37,221    35,830    35,145    33,707     31,745    30,841     141,903    121,876 
               
   Net interest income    266,549    263,491    263,110    262,944     269,783    273,279     1,056,094    1,085,621 
Provision for credit losses    22,900    19,768    20,756    12,765     35,706    16,700     76,189    95,906 
   Net interest income after provision    243,649    243,723    242,354    250,179     234,077    256,579     979,905    989,715 
               
Noninterest income:           
 Deposit service charges    22,919    22,944    22,208    20,389     22,611    20,373     88,460    90,073 
 Insurance commissions    14,920    18,252    17,060    15,714     14,764    18,352     65,946    66,150 
 Merchant and card fees    13,318    13,423    13,317    11,907     13,043    12,991     51,965    50,372 
 Wealth management services    14,567    14,572    15,718    14,650     14,404    15,367     59,507    61,307 
 Mortgage banking    4,894    5,070    5,783    4,887     4,600    4,358     20,634    17,595 
 Capital markets income    6,580    2,608    5,284    4,152     8,312    3,509     18,624    18,361 
 Lending and leasing    4,248    4,487    3,998    4,353     4,567    3,914     17,086    17,893 
 Bank owned life insurance    3,259    2,819    3,160    3,592     3,187    3,080     12,830    14,817 
 Other income    4,696    (732)   79    2,600     (8,311)   (6,552)    6,643    (26,418)
  Total noninterest income    89,401    83,443    86,607    82,244     77,177    75,392     341,695    310,150 
               
Noninterest expense:           
 Salaries and employee benefits    113,063    113,794    113,561    111,973     110,985    116,245     452,391    462,898 
 Occupancy and equipment    25,961    25,538    26,021    27,332     28,379    27,450     104,852    112,258 
 Technology and communications    38,232    38,301    36,486    35,061     33,940    31,465     148,080    126,890 
 Marketing and advertising    9,719    8,445    10,297    9,863     11,584    7,746     38,324    35,133 
 Professional services    15,361    18,052    16,321    13,070     16,644    13,988     62,804    55,584 
 Amortization of intangibles    3,972    4,001    5,092    6,205     6,432    6,521     19,270    27,252 
 Federal deposit insurance premiums    10,383    10,026    11,750    11,158     11,911    9,579     43,317    40,101 
 Restructuring charges    3,378    -     -     17,517     9,066    2,364     20,895    21,786 
 Goodwill impairment    -     -     -     -      -     1,100,000     -    1,100,000 
 Deposit account remediation    -     -     -     -      (23,000)   45,000     -    22,000 
 Merger and acquisition integration expenses    14,198    -     -     -      -     -      14,198    - 
 Other expense    30,728    27,276    28,371    28,859     28,371    36,467     115,234    120,086 
  Total noninterest expense    264,995    245,433    247,899    261,038     234,312    1,396,825     1,019,365    2,123,988 
               
  Income (loss) before income tax    68,055    81,733    81,062    71,385     76,942    (1,064,854 )    302,235    (824,123)
Income tax expense (benefit)    17,255    21,251    20,052    20,000     7,875    (144,808)    78,558    (109,229)
  Net income (loss)    50,800    60,482    61,010    51,385     69,067    (920,046 )    223,677    (714,894)
Preferred stock dividend    7,547    7,547    7,547    7,547     7,547    7,547     30,188    30,188 
  Net income (loss) available to common stockholders $  43,253 $  52,935 $  53,463 $  43,838  $  61,520 $  (927,593 ) $  193,489 $  (745,082)
               
Financial Ratios:           
Earnings (loss) per basic share $0.12 $0.15 $0.15 $0.12  $0.17 $(2.65) $0.55  (2.13)
Earnings (loss) per diluted share $0.12 $0.15 $0.15 $0.12  $0.17 $(2.65) $0.54  (2.13)
Weighted average shares outstanding - basic(1)  351,306  351,293  351,126  350,741   350,444  350,381   351,119  350,237 
Weighted average shares outstanding - diluted(1)  353,797  353,248  352,791  352,621   352,152  350,381   353,040  350,237 
Net revenue(2) $355,950 $346,934 $349,717 $345,188  $346,960 $348,671  $1,397,789 $1,395,771 
Noninterest income as a percentage of net revenue(2) 25.12% 24.05% 24.76% 23.83%  22.24% 21.62%  24.45% 22.22%
Pre-tax, pre-provision income (loss)(3) $90,955 $101,501 $101,818 $84,150  $112,648 $(1,048,154) $378,424 $(728,217)
Pre-tax, pre-provision income per diluted share(3) $0.26 $0.29 $0.29 $0.24  $0.32 $(2.99) $1.07 $(2.08)
Pre-tax, pre-provision return on average assets(3)  0.91% 1.03% 1.05% 0.88%  1.17% (10.8)%  0.97% (1.91)%
Net interest margin(4)  2.98% 2.98% 3.02% 3.07%  3.11% 3.21%  3.01% 3.23%
Interest yield on average loans(4)  3.65% 3.64% 3.73% 3.75%  3.78% 3.80%  3.69% 3.86%
Rate paid on interest-bearing liabilities  0.51% 0.50% 0.49% 0.48%  0.45% 0.44%  0.49% 0.44%
Efficiency ratio  74.45% 70.74% 70.89% 75.62%  67.53% 400.61%  72.93% 152.17%
Expenses as a percentage of average loans and deposits 2.0% 1.9% 1.9% 2.1%  1.8% 11.2%  2.0% 4.3%
Effective tax rate (benefit)  25.40% 26.00% 24.70% 28.00%  10.20% (13.60)%  26.00% (13.30)%
Return on average assets(5)  0.51% 0.61% 0.63% 0.54%  0.72% (9.46)%  0.57% (1.87)%
Return on average equity(5)  4.85% 5.78% 5.90% 5.05%  6.62% (71.57)%  5.40% (14.79)%
Return on average tangible equity(3)(5)  7.32% 8.73% 8.94% 7.68%  10.07% (141.16)%  8.17% (27.66)%
Return on average common equity  4.50% 5.51% 5.63% 4.69%  6.42% (77.27)%  5.08% (16.57)%
Return on average tangible common equity(3)  7.10% 8.72% 8.94% 7.48%  10.24% (163.71)%  8.06% (33.16)%
               
 (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  
     December 31, September 30,June 30,March 31,  December 31, September 30, 
             
Cash and cash equivalents $  672,243 $  420,289 $  527,323 $  387,676  $  420,033 $  451,313  
Investment securities:         
 Available for sale    5,471,291    5,725,608    5,750,860    5,911,419     5,915,338    6,198,140  
 Held to maturity    6,387,689    6,280,049    6,169,838    6,214,561     5,941,621    5,351,977  
 FHLB and FRB common stock    410,452    373,066    379,135    375,090     411,857    389,870  
  Total investment securities    12,269,432    12,378,723    12,299,833    12,501,070     12,268,816    11,939,987  
Loans held for sale    46,096    51,056    59,816    48,755     39,825    31,245  
Loans and leases:          
 Commercial:         
  Real estate    8,652,255    8,365,808    8,312,332    8,287,108     8,204,027    8,013,622  
  Business    6,013,217    6,031,358    5,923,524    5,790,980     5,775,413    5,836,235  
   Total commercial loans    14,665,472    14,397,166    14,235,856    14,078,088     13,979,440    13,849,857  
 Consumer:         
  Residential real estate    3,354,639    3,345,701    3,329,799    3,330,216     3,353,081    3,360,805  
  Home equity    3,068,962    3,032,618    2,984,872    2,943,844     2,936,123    2,886,655  
  Indirect auto    2,393,105    2,330,826    2,256,004    2,200,913     2,166,320    2,073,843  
  Credit cards    310,813    305,779    304,682    301,228     324,113    312,549  
  Other consumer    244,935    254,109    257,204    263,985     278,305    286,140  
   Total consumer loans    9,372,454    9,269,033    9,132,561    9,040,186     9,057,942    8,919,992  
  Total loans and leases    24,037,926    23,666,199    23,368,417    23,118,274     23,037,382    22,769,849  
 Allowance for loan losses    242,036    238,700    235,600    231,138     234,251    222,753  
   Loans and leases, net    23,795,890    23,427,499    23,132,817    22,887,136     22,803,131    22,547,096  
Bank owned life insurance    436,709    434,263    431,335    428,454     426,192    423,376  
Goodwill and other intangibles    1,396,227    1,400,199    1,404,201    1,410,800     1,417,005    1,423,437  
Other assets    1,301,789    1,301,152    1,208,218    1,243,588     1,176,036    1,155,588  
Total assets $  39,918,386 $  39,413,181 $  39,063,543 $  38,907,479  $  38,551,038 $  37,972,042  
             
Deposits:          
 Savings accounts $  3,389,728 $  3,359,320 $  3,483,777 $  3,488,441  $  3,451,616 $  3,458,661  
 Interest-bearing checking    5,478,947    5,285,987    5,088,856    5,158,264     5,084,456    5,055,458  
 Money market deposits    10,653,792    10,483,721    10,303,873    10,368,358     9,962,220    9,894,346  
 Noninterest-bearing deposits    5,834,534    5,813,571    5,549,944    5,500,484     5,407,382    5,308,736  
 Certificates of deposit    3,343,878    3,873,521    4,020,367    3,734,226     3,875,563    3,952,879  
   Total deposits    28,700,879    28,816,120    28,446,817    28,249,773     27,781,237    27,670,080  
             
Short-term borrowings    4,348,586    4,086,415    4,275,886    4,739,264     5,471,974    4,928,762  
Long-term borrowings    2,308,101    1,783,402    1,683,476    1,233,550     733,620    733,684  
Other liabilities    434,492    587,867    536,239    559,646     471,449    543,813  
 Total liabilities    35,792,058    35,273,804    34,942,418    34,782,233     34,458,280    33,876,339  
Preferred stockholders' equity    338,002    338,002    338,002    338,002     338,002    338,002  
Common stockholders' equity    3,788,326    3,801,375    3,783,123    3,787,244     3,754,756    3,757,701  
 Total stockholders' equity    4,126,328    4,139,377    4,121,125    4,125,246     4,092,758    4,095,703  
Total liabilities and stockholders' equity $  39,918,386 $  39,413,181 $  39,063,543 $  38,907,479  $  38,551,038 $  37,972,042  
             
Selected balance sheet information:         
Total interest-earning assets(1) $  36,677,134 $  36,099,580 $  35,813,498 $  35,594,208  $  35,310,447 $  34,720,650  
Total interest-bearing liabilities    29,523,032    28,872,365    28,856,235    28,722,103     28,579,449    28,023,790  
Net interest-earning assets $  7,154,102 $  7,227,215 $  6,957,263 $  6,872,105  $  6,730,998 $  6,696,860  
             
Tangible common equity(1)(2) $  2,392,099 $  2,401,176 $  2,378,922 $  2,376,444  $  2,337,751 $  2,334,263  
Unrealized gain on available for sale securities, net of tax(3)   (9,577)   29,877    37,464    68,194     52,244    55,052  
             
Total core deposits $  25,357,001 $  24,942,599 $  24,426,450 $  24,515,547  $  23,905,674 $  23,717,201  
             
Originated loans(4) $  21,101,040 $  20,591,532 $  19,929,719 $  19,528,609  $  19,295,553 $  18,841,896  
Acquired loans(5)    2,998,530    3,138,568    3,517,525    3,681,354     3,834,931    4,028,091  
Credit related discount on acquired loans(6)    (61,644)   (63,901)   (78,827)   (91,689)    (93,102)   (100,138) 
 Total Loans $  24,037,926 $  23,666,199 $  23,368,417 $  23,118,274  $  23,037,382 $  22,769,849  
          
 (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 For year ending
   December 31, 2015September 30, 2015December 31, 2014 December 31, 2015December 31, 2014
    AverageInterest(1) Yields AverageInterest(1) Yields AverageInterest(1) Yields  AverageInterest(1) Yields AverageInterest(1) Yields
    Balances
 
 and
Rates(1)
 Balances
 
 and
Rates(1)
 Balances
 
 and
Rates(1)
  Balances
 
 and
Rates(1)
 Balances
 
 and
Rates(1)
                   
Interest-earning assets:                 
Loans and leases(2)                 
Commercial:                 
Real estate $  8,476 $  77  3.57%$  8,277 $  74  3.52%$  8,087 $  76  3.68% $  8,319 $  302  3.57%$  7,944 $  302  3.75%
Business   5,971   50   3.28   5,972   50   3.26   5,791   51   3.43    5,893   201   3.36   5,617   200   3.51 
Total commercial loans   14,447   127   3.45   14,249   124   3.41   13,878   127   3.58    14,212   503   3.49   13,561   502   3.65 
Consumer:                 
Residential real estate   3,346   31   3.65   3,338   31   3.70   3,364   32   3.79    3,337   123   3.70   3,373   129   3.81 
Home equity   3,052   29   3.80   3,001   29   3.82   2,912   29   3.94    2,989   115   3.85   2,832   114   4.03 
Indirect auto   2,369   17   2.90   2,293   17   2.86   2,132   15   2.82    2,272   64   2.82   1,870   53   2.86 
Credit cards   305   9   11.45   306   9   11.44   314   9   11.47    306   35   11.51   312   36   11.50 
Other consumer   250   5   8.50   255   5   8.57   283   6   8.47    260   22   8.51   290   25   8.55 
Total consumer loans   9,322   91   3.88   9,193   91   3.91   9,005   91   4.01    9,164   359   3.93   8,677   357   4.11 
 Total loans and leases   23,769   218   3.65   23,442   215   3.64   22,883   218   3.78    23,376   862   3.69   22,238   859   3.86 
Residential MBS   7,705   47   2.44   7,478   45   2.40   6,892   43   2.51    7,437   179   2.41   6,274   164   2.61 
Commercial MBS   1,126   12   4.31   1,212   12   3.88   1,512   13   3.37    1,262   47   3.69   1,595   53   3.35 
Other investment securities (3)   3,540   31   3.47   3,518   32   3.68   3,585   32   3.59    3,555   128   3.61   3,994   149   3.72 
 Total securities, at amortized cost   12,371   90   2.90   12,208   89   2.92   11,989   88   2.94    12,254   354   2.89   11,863   366   3.09 
Money market and other investments   88   1   2.29   109   1   1.92   161   -   1.21    114   2   1.60   134   2   1.58 
Total interest-earning assets   36,228 $  309  3.38%  35,759 $  305  3.38%  35,033 $  307  3.47%   35,744 $1,218  3.41%  34,235 $1,227  3.58%
Goodwill and other intangibles   1,398     1,402     1,420      1,405     2,249   
Other noninterest-earning assets   1,951     1,890     1,865      1,915     1,736   
                   
Total assets $39,577   $39,051   $38,318    $39,064   $38,220   
                   
Interest-bearing liabilities:                 
Deposits                 
Savings accounts $  3,364 $  1  0.09%$  3,427 $  1  0.10%$  3,447 $  1  0.09% $  3,429 $  3  0.09%$  3,571 $  3  0.09%
Interest-bearing checking   5,333   -   0.03   5,165   -   0.03   5,049   -   0.03    5,159   2   0.03   4,857   2   0.03 
Money market deposits   10,719   8   0.30   10,403   8   0.29   10,037   6   0.24    10,378   30   0.29   9,944   22   0.22 
Certificates of deposit   3,515   8   0.89   3,962   8   0.81   3,888   7   0.72    3,792   31   0.84   3,870   27   0.69 
Total interest bearing deposits   22,931   17  0.30%  22,957   17  0.29%  22,421   14  0.25%   22,758   66  0.29%  22,241   53  0.24%
Borrowings                 
Short-term borrowings   4,014   6  0.56%  3,953   5  0.50%  4,917   5  0.43%   4,399   22  0.50%  4,678   20  0.43%
Long-term borrowings   1,971   14   2.89   1,693   14   3.24   734   12   6.56    1,515   54   3.56   733   48   6.61 
Total borrowings   5,985   20   1.33   5,646   19   1.32   5,651   17   1.23    5,914   76   1.28   5,411   69   1.27 
Total interest-bearing liabilities   28,916 $  37  0.51%  28,603 $  36  0.50%  28,072 $  32  0.45%   28,672 $  142  0.49%  27,653 $  122  0.44%
Noninterest-bearing deposits   5,868     5,661     5,485      5,598     5,173   
Other noninterest-bearing liabilities   640     637     620      650     560   
Total liabilities   35,424     34,901     34,177      34,920     33,386   
Total stockholders' equity   4,153     4,150     4,141      4,144     4,834   
Total liabilities and stockholders' equity $  39,577   $  39,051   $  38,318    $  39,064   $  38,220   
                   
Net interest income (FTE)  $  272   $  269   $  275    $1,076   $1,105  
Taxable Equivalent Adjustment(1)    5     6     5      20     19  
                   
 Total core deposits $25,284 $  9  0.15%$24,656 $  9  0.14%$24,018 $  7  0.12% $24,564 $  35  0.14%$23,545 $  27  0.11%
 Total transactional deposits   11,201   -  0.02%  10,826   -  0.01%  10,534   -  0.02%   10,757   2  0.01%  10,030   2  0.02%
 Total deposits   28,799   17  0.24%  28,618   17  0.24%  27,906   14  0.20%   28,356   66  0.23%  27,414   53  0.19%
                   
Tax equivalent net interest rate spread    2.87%   2.88%   3.02%    2.92%   3.14%
Tax equivalent net interest rate margin    2.98%   2.98%   3.11%    3.01%   3.23%
                   
 (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  For year ending
       Fourth  Third  Second  First   Fourth  Third   December 31,  December 31, 
       Quarter  Quarter  Quarter Quarter   Quarter  Quarter   2015  2014 
                
Beginning balance $  238,700 $  235,600 $  231,138 $  234,251  $  222,753 $  219,426  $  234,251 $  209,274 
Net loan (charge-offs) recoveries:           
 Commercial real estate $  (1,476)$  (2,686)$  (5,525)$  (5,825) $  (2,008)$  (2,259) $  (15,512)$  (8,247)
 Commercial business    (10,441)   (6,286)   (3,513)   (4,178)    (12,650)   (3,148)    (24,418)   (26,731)
 Residential real estate    (94)   (230)   (197)   (266)    (476)   (102)    (787)   (1,104)
 Home equity    (723)   (1,056)   (1,367)   (1,526)    (1,406)   (1,131)    (4,672)   (6,876)
 Indirect auto    (2,122)   (1,743)   (1,342)   (1,226)    (2,241)   (1,621)    (6,433)   (7,403)
 Credit cards    (2,450)   (2,215)   (2,522)   (2,450)    (2,464)   (2,726)    (9,637)   (11,164)
 Other consumer    (1,758)   (1,952)   (1,528)   (1,807)    (1,457)   (1,986)    (7,045)   (6,698)
    Total net loan charge-offs $  (19,064)$  (16,168)$  (15,994)$  (17,278) $  (22,702)$  (12,973) $  (68,504)$  (68,223)
Provision for loan losses    22,400    19,268    20,456    14,165     34,200    16,300     76,289    93,200 
  Ending balance $  242,036 $  238,700 $  235,600 $  231,138  $  234,251 $  222,753  $  242,036 $  234,251 
                
Supplemental information           
Allowance to loans  1.01% 1.01% 1.01% 1.00%  1.02% 0.98%  1.01% 1.02%
Allowance for originated loans to originated loans(1)  1.12% 1.13% 1.15% 1.15%  1.18% 1.16%  1.12% 1.18%
                
Net charge-offs (recoveries) to average loans (annualized)          
 Commercial real estate    0.07%   0.13%   0.27%   0.29%    0.10% 0.11%    0.19% 0.10%
 Commercial business    0.70%   0.42%   0.24%   0.29%    0.87% 0.22%    0.41% 0.48%
  Total commercial loans    0.33%   0.25%   0.26%   0.28%    0.42% 0.16%    0.28% 0.26%
 Residential real estate    0.01%   0.03%   0.02%   0.03%    0.06% 0.01%    0.02% 0.03%
 Home equity    0.09%   0.14%   0.18%   0.21%    0.19% 0.16%    0.16% 0.24%
 Indirect auto    0.36%   0.30%   0.24%   0.22%    0.42% 0.33%    0.28% 0.40%
 Credit cards    3.21%   2.90%   3.32%   3.16%    3.13% 3.49%    3.14% 3.57%
 Other consumer    2.81%   3.06%   2.35%   2.63%    2.06% 2.77%    2.71% 2.31%
  Total consumer loans    0.31%   0.32%   0.31%   0.33%    0.36% 0.35%    0.31% 0.38%
 Total loans    0.32%   0.28%   0.28%   0.30%    0.40% 0.23%    0.29% 0.31%
                
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)        
 Commercial real estate    0.08%   0.14%   0.31%   0.24%    0.06% 0.13%    0.19% 0.10%
 Commercial business    0.72%   0.44%   0.25%   0.31%    0.93% 0.24%    0.43% 0.51%
  Total commercial loans    0.36%   0.27%   0.28%   0.27%    0.44% 0.18%    0.29% 0.28%
 Residential real estate    0.02%   0.04%   0.04%   0.05%    0.09% 0.02%    0.04% 0.06%
 Home equity    0.14%   0.14%   0.17%   0.16%    0.15% 0.17%    0.15% 0.17%
 Indirect auto    0.36%   0.30%   0.24%   0.22%    0.42% 0.33%    0.28% 0.40%
 Credit cards    3.21%   2.90%   3.32%   3.16%    3.13% 3.49%    3.14% 3.57%
 Other consumer    2.81%   3.06%   2.35%   2.63%    2.06% 2.77%    2.71% 2.31%
  Total consumer loans    0.39%   0.38%   0.37%   0.38%    0.44% 0.45%    0.38% 0.48%
 Total loans    0.37%   0.31%   0.31%   0.31%    0.44% 0.27%    0.32% 0.34%
                
Nonperforming loans:           
 Originated(1):           
 Commercial real estate $  44,438 $  54,699 $  60,021 $  65,655  $  53,164 $  57,340  $  44,438 $  53,164 
 Commercial business    56,382    45,389    42,979    54,506     45,201    36,939     56,382    45,201 
 Residential real estate    31,513    32,455    32,877    32,791     33,652    36,113     31,513    33,652 
 Home equity    35,561    34,191    27,092    26,163     23,749    23,392     35,561    23,749 
 Indirect auto    15,131    13,795    13,066    13,399     12,616    11,890     15,131    12,616 
 Other consumer    5,201    5,047    4,917    5,065     5,140    5,134     5,201    5,140 
  Total originated nonperforming loans    188,226    185,576    180,952    197,579     173,522    170,808     188,226    173,522 
  Total acquired nonperforming loans(2)    25,335    25,365    26,553    30,236     30,223    28,611     25,335    30,223 
   Total nonperforming loans    213,561    210,941    207,505    227,815     203,745    199,419     213,561    203,745 
 Real estate owned    16,063    18,359    17,397    19,128     20,541    20,261     16,063    20,541 
  Total nonperforming assets(3) $  229,624 $  229,300 $  224,902 $  246,943  $  224,286 $  219,680  $  229,624 $  224,286 
                
Accruing troubled debt restructurings (TDR) $  62,630 $  60,941 $  64,643 $  64,401  $  67,102 $  69,199  $  62,630 $  67,102 
Loans 90 days past due still accruing(4)    67,718    69,879    78,279    87,213     93,903    108,615     67,718    93,903 
Total classified loans(5)    602,912    591,771    592,148    615,518     609,316    649,320     602,912    609,316 
Total criticized loans(6) $  944,779 $  858,243 $  938,951 $  990,656  $  1,041,050 $  1,089,851  $  944,779 $  1,041,050 
                
Total nonperforming loans to loans  0.89% 0.89% 0.89% 0.99%  0.88% 0.88%  0.89% 0.88%
Total nonperforming originated loans to originated loans(1) 0.89% 0.90% 0.91% 1.01%  0.90% 0.91%  0.89% 0.90%
Total nonperforming assets to loans and real estate owned 0.95% 0.97% 0.96% 1.07%  0.97% 0.96%  0.95% 0.97%
Total nonperforming assets to assets  0.58% 0.58% 0.58% 0.63%  0.58% 0.58%  0.58% 0.58%
Allowance to nonperforming loans  113.3% 113.2% 113.5% 101.5%  115.0% 111.7%  113.3% 115.0%
                
Originated loans(1) $21,101,040 $20,591,532 $19,929,719 $19,528,609  $19,295,553 $18,841,896  $21,101,040 $19,295,553 
Acquired loans(7)  2,998,530  3,138,568  3,517,525  3,681,354   3,834,931  4,028,091   2,998,530  3,834,931 
Credit related discount on acquired loans(8)  (61,644) (63,901) (78,827) (91,689)  (93,102) (100,138)  (61,644) (93,102)
 Total Loans $24,037,926 $23,666,199 $23,368,417 $23,118,274  $23,037,382 $22,769,849  $24,037,926 $23,037,382 
                
 (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  
    December 31,September 30,June 30,March 31, December 31,September 30, 
            
First Niagara Financial Group, Inc. capital ratios(1)(2):         
 Tier 1 risk based capital  10.08% 10.05% 10.03% 10.02%  9.81% 9.82% 
 Total risk based capital  12.01% 11.97% 11.96% 11.95%  11.75% 11.75% 
 Common equity tier 1 capital  8.55% 8.52% 8.50% 8.48%  N/A  N/A  
 Tier 1 common capital(3)  N/A  N/A  N/A  N/A   8.20% 8.19% 
 Leverage  7.62% 7.66% 7.60% 7.56%  7.50% 7.34% 
 Equity to assets  10.34% 10.50% 10.55% 10.60%  10.62% 10.79% 
 Tangible common equity to tangible assets(3)  6.21% 6.32% 6.32% 6.34%  6.30% 6.39% 
 Total risk weighted assets $  28,881 $  28,716 $  28,445 $  28,152  $  28,186 $  27,729  
            
First Niagara Bank, N.A capital ratios(1)(2):         
 Tier 1 risk based capital  10.65% 10.67% 10.66% 10.65%  10.48% 10.41% 
 Total risk based capital  11.55% 11.56% 11.54% 11.53%  11.37% 11.27% 
 Common equity tier 1 capital  10.65% 10.67% 10.66% 10.65%  N/A   N/A  
 Leverage  8.05% 8.12% 8.07% 8.03%  8.01% 7.78% 
 Total risk weighted assets $  28,813 $  28,632 $  28,359 $  28,068  $  28,146 $  27,686  
            
Number of branches    392    394    394    394     411    411  
Full time equivalent employees    5,428    5,397    5,364    5,322     5,572    5,768  
            
Share information and per share metrics:         
 Common shares outstanding    354,762    354,788    354,890    353,717     353,388    355,423  
 Preferred shares outstanding    14,000    14,000    14,000    14,000     14,000    14,000  
 Treasury shares    11,240    11,214    11,112    12,285     12,614    10,579  
 Market price (NASDAQ: FNFG): $  10.85 $  10.21 $  9.44 $  8.84  $  8.43 $  8.33  
 Book value per common share(4)    10.78    10.82    10.77    10.80     10.71    10.72  
 Tangible book value per common share(3)(4)    6.81    6.84    6.77    6.78     6.67    6.66  
 Price/Book  100.65% 94.36% 87.65% 81.85%  78.71% 77.71% 
 Price/Tangible book(1)  159.32% 149.27% 139.44% 130.38%  126.39% 125.08% 
 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  66.67% 53.33% 53.33% 66.67%  47.06% N/M  
 Dividend yield (annualized)  2.93% 3.11% 3.40% 3.67%  3.77% 3.81% 
            
N/MNot meaningful.         
 (1)Represents an estimate as of December 31, 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  For year ending
      Fourth  Third  Second  First   Fourth  Third   December 31,  December 31, 
      Quarter  Quarter  Quarter  Quarter   Quarter  Quarter   2015  2014 
Financial ratios computed on an operating basis(1):           
Earnings per basic share $  0.16 $  0.15 $  0.15 $  0.15  $  0.15 $  0.19  $  0.61 $  0.71 
Earnings per diluted share $  0.15 $  0.15 $  0.15 $  0.15  $  0.15 $  0.19  $  0.61 $  0.70 
Weighted average shares outstanding - basic(2)  351,306  351,293  351,126  350,741   350,444    350,381     351,119    350,237 
Weighted average shares outstanding - diluted(2)  353,797  353,248  352,791  352,621   352,152    351,898     353,040    351,750 
Noninterest income as a percentage of net revenue(3)  25.12% 24.05% 24.76% 23.83%  22.24% 21.62%  24.45% 22.22%
Pre-tax, pre-provision income  108,531  101,501  101,818  101,667   98,714  99,210   413,517  415,569 
Pre-tax, pre-provision income per diluted share $  0.31 $  0.29 $  0.29 $  0.29  $  0.28 $  0.28  $  1.17 $  1.18 
Pre-tax, pre-provision return on average assets  1.09% 1.03% 1.05% 1.07%  1.02% 1.02%  1.06% 1.09%
Net interest margin(4)  2.98% 2.98% 3.02% 3.07%  3.11% 3.21%  3.01% 3.23%
Interest yield on average loans(4)  3.65% 3.64% 3.73% 3.75%  3.78% 3.80%  3.69% 3.86%
Rate paid on interest-bearing liabilities  0.51% 0.50% 0.49% 0.48%  0.45% 0.44%  0.49% 0.44%
Efficiency ratio  69.5% 70.7% 70.9% 70.5%  71.5% 71.5%  70.4% 70.2%
Effective tax rate  26.6% 26.0% 24.7% 30.0%  3.7% 10.3%  26.9% 12.7%
Return on average assets  0.63% 0.61% 0.63% 0.65%  0.63% 0.76%  0.63% 0.73%
Return on average equity  6.00% 5.78% 5.90% 6.12%  5.82% 5.76%  5.95% 5.77%
Return on average tangible equity(5)  9.05% 8.73% 8.94% 9.30%  8.85% 11.35%  9.00% 10.80%
Return on average common equity  5.75% 5.51% 5.63% 5.85%  5.54% 5.54%  5.68% 5.54%
Return on average tangible common equity(6)  9.07% 8.72% 8.94% 9.34%  8.85% 11.73%  9.01% 11.08%
               
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):           
 Total noninterest expense on operating basis (Non-GAAP) $247,419 $245,433 $247,899 $243,521  $248,246 $  249,461  $  984,272 $  980,202 
  Restructuring charges    3,378    -     -     17,517     9,066    2,364     20,895    21,786 
  Goodwill impairment   -            1,100,000    -   1,100,000 
  Deposit account remediation    -     -     -     -      (23,000)   45,000     -     22,000 
  Merger and acquisition integration expenses    14,198    -     -     -      -     -      14,198    -  
 Total reported noninterest expense (GAAP) $264,995 $245,433 $247,899 $261,038  $234,312 $1,396,825  $1,019,365 $2,123,988 
               
Reconciliation of net operating income to net income(1):           
 Net operating income (Non-GAAP) $  62,813 $  60,482 $  61,010 $  62,246  $  60,697 $  74,009  $  246,551 $  279,136 
 Nonoperating income and expenses, net of tax:           
  Restructuring charges    2,094    -     -     10,861     6,364    1,555     12,955    16,264 
  Goodwill impairment    -     -     -     -      -     963,267     -     963,267 
  Deposit account remediation    -     -     -     -      (14,734)   29,233     -     14,499 
  Merger and acquisition integration expenses    9,919    -     -     -      -     -      9,919    -  
   Total nonoperating expenses, net of tax    12,013    -     -     10,861     (8,370)   994,055     22,874    994,030 
 Net income (loss) (GAAP) $  50,800 $  60,482 $  61,010 $  51,385  $  69,067 $  (920,046 ) $  223,677 $  (714,894)
               
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) $  55,266 $  52,935 $  53,463 $  54,699  $  53,150 $  66,462  $  216,363 $  248,948 
 Nonoperating income and expenses, net of tax:           
  Restructuring charges    2,094    -     -     10,861     6,364    1,555     12,955    16,264 
  Goodwill impairment    -     -     -     -      -     963,267     -     963,267 
  Deposit account remediation    -     -     -     -      (14,734)   29,233     -     14,499 
  Merger and acquisition integration expenses    9,919    -     -     -      -     -      9,919    -  
   Total nonoperating income and expenses, net of tax    12,013    -     -     10,861     (8,370)   994,055     22,874    994,030 
 Net income (loss) available to common stockholders (GAAP) $  43,253 $  52,935 $  53,463 $  43,838  $  61,520 $  (927,593 ) $  193,489 $  (745,082)
               
Computation of pre-tax,pre-provision income:           
 Net interest income $266,549 $263,491 $263,110 $262,944  $269,783 $273,279  $1,056,094 $1,085,621 
 Noninterest income  89,401  83,443  86,607  82,244   77,177  75,392   341,695  310,150 
 Noninterest expense  (264,995) (245,433) (247,899) (261,038)  (234,312) (1,396,825)  (1,019,365) (2,123,988)
 Pre-tax, pre-provision income (loss) (GAAP)  90,955  101,501  101,818  84,150   112,648  (1,048,154)  378,424  (728,217)
 Add back: non-operating noninterest expenses (1)  17,576  -  -  17,517   (13,934) 1,147,364   35,093  1,143,786 
 Pre-tax, pre-provision income (Non-GAAP)(1) $108,531 $101,501 $101,818 $101,667  $98,714 $99,210  $413,517 $415,569 
               
 (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  For year ending 
      Fourth  Third  Second  First   Fourth  Third   December 31,  December 31,  
     Quarter Quarter  Quarter  Quarter  Quarter Quarter   2015  2014  
Computation of Ending Tangible Assets:            
 Total assets $39,918,386 $39,413,181 $39,063,543 $38,907,479  $38,551,038 $37,972,042  $39,918,386 $38,551,038  
 Less: Goodwill and other intangibles  (1,396,227) (1,400,199) (1,404,201) (1,410,800)  (1,417,005) (1,423,437)  (1,396,227) (1,417,005) 
 Tangible assets $38,522,159 $38,012,982 $37,659,342 $37,496,679  $37,134,033 $36,548,605  $38,522,159 $37,134,033  
                
Computation of Average Tangible Assets:            
 Total assets $39,576,697 $39,051,359 $38,913,219 $38,706,545  $38,317,930 $38,591,115  $39,064,310 $38,219,967  
 Less: Goodwill and other intangibles  (1,398,122) (1,402,138) (1,407,946) (1,413,765)  (1,420,119) (2,514,581)  (1,405,441) (2,248,958) 
 Tangible assets $38,178,575 $37,649,221 $37,505,273 $37,292,780  $36,897,811 $36,076,534  $37,658,869 $35,971,009  
                
Computation of Ending Tangible Equity:            
 Total stockholders' equity $4,126,328 $4,139,377 $4,121,125 $4,125,246  $4,092,758 $4,095,703  $4,126,328 $4,092,758  
 Less: Goodwill and other intangibles  (1,396,227) (1,400,199) (1,404,201) (1,410,800)  (1,417,005) (1,423,437)  (1,396,227) (1,417,005) 
 Tangible equity $2,730,101 $2,739,178 $2,716,924 $2,714,446  $2,675,753 $2,672,266  $2,730,101 $2,675,753  
                
Computation of Ending Tangible Common Equity:            
 Total stockholders' equity $4,126,328 $4,139,377 $4,121,125 $4,125,246  $4,092,758 $4,095,703  $4,126,328 $4,092,758  
 Less: Goodwill and other intangibles  (1,396,227) (1,400,199) (1,404,201) (1,410,800)  (1,417,005) (1,423,437)  (1,396,227) (1,417,005) 
 Less: Preferred stockholders' equity  (338,002) (338,002) (338,002) (338,002)  (338,002) (338,002)  (338,002) (338,002) 
 Tangible common equity $2,392,099 $2,401,176 $2,378,922 $2,376,444  $2,337,751 $2,334,264  $2,392,099 $2,337,751  
                
Computation of Average Tangible Equity:            
 Total stockholders' equity $4,152,977 $4,149,635 $4,145,334 $4,127,743  $4,141,141 $5,100,494  $4,144,007 $4,833,663  
 Less: Goodwill and other intangibles  (1,398,122) (1,402,138) (1,407,946) (1,413,765)  (1,420,119) (2,514,581)  (1,405,441) (2,248,958) 
 Tangible equity $2,754,855 $2,747,497 $2,737,388 $2,713,978  $2,721,022 $2,585,913  $2,738,566 $2,584,705  
                
Computation of Average Tangible Common Equity:            
 Total stockholders' equity $4,152,977 $4,149,635 $4,145,334 $4,127,743  $4,141,141 $5,100,494  $4,144,007 $4,833,663  
 Less: Goodwill and other intangibles  (1,398,122) (1,402,138) (1,407,946) (1,413,765)  (1,420,119) (2,514,581)  (1,405,441) (2,248,958) 
 Less: Preferred stockholders' equity  (338,002) (338,002) (338,002) (338,002)  (338,002) (338,002)  (338,002) (338,002) 
 Tangible common equity $2,416,853 $2,409,495 $2,399,386 $2,375,976  $2,383,020 $2,247,911  $2,400,564 $2,246,703  
                
Computation of Tier 1 Common Capital:            
 Tier 1 capital N/AN/AN/AN/A $2,764,117 $2,722,685  N/A$2,764,117  
 Less: Qualifying restricted core capital elements N/AN/AN/AN/A  (113,785) (113,556) N/A (113,785) 
 Less: Perpetual non-cumulative preferred stock N/AN/AN/AN/A  (338,002) (338,002) N/A (338,002) 
 Tier 1 common capital (Non-GAAP) N/AN/AN/AN/A $2,312,330 $2,271,127  N/A$2,312,330  
                

            

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