EX-99 2 newsrelease.htm PRESS RELEASE First Niagara Reports Third Quarter 2014 Results

EXHIBIT 99.1

First Niagara Reports Third Quarter 2014 Results

Conference Call Rescheduled to 8 a.m. Eastern Time

Third Quarter Highlights:

  • GAAP net loss available to common shareholders per share of $1.90.
  • Operating earnings of $63.3 million or $0.18 per diluted share before the impact of two items:
    • Non-cash pre-tax goodwill impairment charge of $800 million
    • Non-cash goodwill impairment is an accounting loss and does not impact future profitability
    • $45 million reserves to address a process issue related to certain customer deposit accounts
  • Average loans increased 9% annualized QOQ, driven by both commercial and consumer loan categories
    • Average commercial business (C&I) loans increased 9% QOQ
    • Average consumer loans increased 13% QOQ led by indirect auto and home equity balances
  • Transactional deposit balances increased 7% QOQ driven by higher customer balances
    • Noninterest-bearing deposits increased 14% QOQ driven by commercial deposits
    • Transactional deposit balances averaged 37% of deposits, up from 35% a year-ago
  • Strong credit quality maintained
    • NCOs decreased three basis points QOQ to 0.27% of average originated loans

BUFFALO, N.Y., Oct. 24, 2014 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today reported a third quarter net loss available to common shareholders of $665 million, equal to $1.90 per share. Results included a non-cash goodwill impairment charge of $800 million, as well as a pretax $45 million reserve to address a process issue related to certain customer deposit accounts. Excluding these charges, operating net income available to common shareholders was $63.3 million, or $0.18 per diluted share, compared to net income available to common shareholders of $71.6 million, or $0.20 per diluted share in the third quarter of 2013.

"In the third quarter, despite the continued uncertainty in the macro-economic environment, we delivered very strong 9% average loan growth and remain on target as we continue to make good progress with the execution of our strategic investment plan," said Gary M. Crosby, President and Chief Executive Officer. "However, I am disappointed that two items that impacted our reported results distracted from such solid business fundamentals in the third quarter. In the third quarter, we recorded a non-cash goodwill impairment charge that drove the net loss in the quarter. It is important for customers and our shareholders to note that this is a non-cash accounting charge and has no impact on our daily operations, our ability to continue to serve customers, or our future profitability, and does not negatively impact key regulatory and tangible equity ratios. Based on current market-driven assumptions, we concluded that the goodwill was impaired and recognized an $800 million charge."

Mr. Crosby continued, "Additionally, we recently identified a process issue related to certain customer deposit accounts. First Niagara is conducting an internal review to determine the potential impact on our customers. Customers should be confident that their account balance information accurately reflects the funds on deposit with us.  Based on the results of the review, we will develop a comprehensive corrective action plan, including customer remediation where appropriate. In accordance with applicable accounting guidance, we established a reserve of $45 million in the third quarter for this matter."

"In the third quarter of 2014, our already strong credit quality improved further with the net charge-off ratio declining to 27 basis points, down 3 basis points from the low levels in the prior quarter," said Gregory W. Norwood, Chief Financial Officer. "Higher-than-normal expenses, which are not expected to continue, included a valuation write-down of a real estate property, costs incurred to protect our customers following the Home Depot data security breach, and higher state franchise taxes and totaled approximately $7 million. These higher than expected expenses were offset by a lower than expected tax rate in the third quarter."

Third Quarter Results

In the third quarter of 2014, First Niagara reported GAAP net loss available to common shareholders of $665 million, equal to $1.90 per share. Results for the quarter included a non-cash pre-tax charge of $800 million to record the non-cash impairment of goodwill, a $45 million pre-tax reserve to address a process issue related to certain customer deposit accounts, and $2 million in pre-tax restructuring expenses incurred primarily in connection with a previously announced branch staffing realignment.

Excluding these charges, operating net income available to common shareholders was $63.3 million, or $0.18 per diluted share. In the second quarter of 2014, First Niagara reported net income available to common shareholders of $66.2 million, or $0.19 per diluted share. For the third quarter of 2013, net income available to common shareholders was $71.6 million, or $0.20 per diluted share. There were no restructuring expenses in the prior comparable periods.

Balance sheet growth remained strong as average loans increased 9% annualized compared to the prior quarter. Average commercial business and real estate loans increased 6% annualized over the prior quarter, while average consumer loans increased 13% annualized driven by continued increases in indirect auto and home equity balances. Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking accounts, increased 7% over the prior year quarter and currently represent 37% of the company's deposit balances, up from 35% a year ago.

Operating revenues of $349 million decreased 1% from the prior quarter. Net interest income increased $1 million in the third quarter compared to the prior quarter as the benefits of a 4% annualized increase in average earning assets, the impact of an additional day in the quarter, and income accretion from prepayments of certain collateralized loan obligations (CLOs) were partially offset by a decrease in net interest margin. Net interest margin was 3.21%, as compared to 3.26% in the prior quarter. Noninterest income decreased $5 million or 7% from the prior quarter.

The provision for loan losses on originated loans totaled $20 million in the third quarter of 2014, and reflected $7 million of additions to the loan loss reserve to support organic loan growth and $13 million to cover net charge-offs during the quarter. Net charge-offs equaled 0.27% of average originated loans, a decrease of three basis points from 0.30% in the second quarter. At September 30, 2014, nonperforming originated loans comprised 0.91% of originated loans, compared to 0.86% at the end of the prior quarter.

In the third quarter, operating expenses excluding the non-cash goodwill impairment charge, the reserve to address a process issue related to certain customer deposit accounts, and other restructuring expenses were $249 million, an increase of $5 million from the prior quarter. The increase was driven by $7 million of elevated charges related to the valuation write-down of a real estate property, state franchise taxes, and expenses incurred to protect First Niagara customers in response to the widely publicized Home Depot data security breach that impacted debit and credit card holders and banks across North America. These increases were partially offset by lower compensation expense as well as lower leasehold depreciation costs from elevated second quarter levels.

Operating Results (Non-GAAP) Q3 2014 Q2 2014 Q3 2013  
Net interest income $ 273.3 $ 271.8 $ 277.5  
Provision for credit losses 21.2 22.8 27.6  
Noninterest income 75.4 80.9 91.4  
Noninterest expense 249.5 244.1 231.2  
Operating net income 70.9 73.8 79.1  
Preferred stock dividend 7.5 7.5 7.5  
Operating net income available to common shareholders $ 63.3 $ 66.2 71.6  
Weighted average diluted shares outstanding 351.9 351.5 350.9  
Operating earnings per diluted share $ 0.18 $ 0.19 $ 0.20   
         
Reported Results (GAAP)        
Operating net income before non-operating items $ 70.9 $ 73.8 $ 79.1  
Non-operating expenses (a) 728.1 -- --  
Net Income / (loss) (657.2) 73.8 79.1  
Preferred stock dividend 7.5 7.5 7.5  
Net income / (loss) available to common shareholders $ (664.8) $ 66.2 $ 71.6  
Weighted average diluted shares outstanding 350.4 351.5 350.9  
Earnings per diluted share $ (1.90)  $ 0.19  $ 0.20  
   
All amounts in millions except earnings per diluted share.  
(a) $800 million non-cash goodwill impairment charge, reserves related to a process issue, and restructuring charges primarily related to branch realignment, net of taxes.  

Loans

Average total loans increased 9% annualized from the prior quarter, driven by continued growth in the company's commercial lending, indirect auto and home equity portfolios.

Average commercial loans, which include commercial business (C&I) and commercial real estate (CRE) loans, increased to $13.7 billion, or a 6% annualized increase from the prior quarter. C&I loans averaged $5.7 billion, or a 9% annualized increase over the prior quarter. Average CRE loans increased 4% annualized to $8.0 billion. Compared to the second quarter of 2014, the company's New York and Tri-State markets contributed 80% of the increase in average commercial loans.

Average indirect auto loan balances increased $228 million to $2.0 billion. During the third quarter, indirect auto originations totaled $376 million at an average customer FICO score of 768 and yielded 2.84%, net of dealer reserve. Average residential real estate loans declined by $10 million, or 1% annualized. Home equity balances increased 8% annualized from the prior quarter reflecting higher customer draws and the benefits of promotional and cross-sell campaigns.

Deposits

The company's focus remains on efforts to grow its core deposit customer base, re-position its account mix and introduce new products and services that further enhance its value proposition to customers. Recent investments in mobile banking and remote deposit capture have further enhanced customers' ability to transact in the delivery channel of their choice while at the same time lowering the company's cost to acquire and serve such customers. Current and anticipated investments as part of the company's strategic investment plan in new digital features and improved functionalities such as online account opening will further enhance customers' ability to do business with First Niagara across all of the bank's delivery channels.

Average transactional deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased an annualized 7% over the prior quarter and currently represent 37% of the company's deposit balances, up from 35% a year ago. The average cost of interest-bearing deposits of 0.24% was unchanged from the prior quarter.

Average noninterest-bearing checking deposit balances increased 14% annualized compared to the prior quarter, driven by seasonal increases in commercial deposits. Interest-bearing checking balances averaged $4.8 billion and were essentially flat to the prior quarter.

Money market deposit balances decreased 4% reflecting normal seasonal trends in municipal deposit balances. Time deposits averaged $4.0 billion and were unchanged from the prior quarter.

Net Interest Income

Third quarter 2014 net interest income increased $1 million from the prior quarter to $273 million. The benefits of a 4% annualized increase in average earning assets, an additional day in the quarter and income accretion from CLO prepayments were partially offset by a 5-basis point decline in the net interest margin. Growth in average earning assets reflected continued strong loan growth, particularly commercial, indirect auto and home equity categories. Average investment securities decreased modestly from the prior quarter.

The 5-basis point decrease in net interest margin in the third quarter of 2014 reflected continued compression of commercial and consumer loan yields in the current low interest rate environment and to a lesser extent, the impact of one additional day in the quarter. Average commercial and consumer loan yields declined 9 and 7 basis points, respectively, from the prior quarter.

Credit Quality

At September 30, 2014, the allowance for loan losses was $231 million, compared to $224 million at June 30, 2014. Nonperforming assets to total assets were 0.57%, compared to 0.55% at the end of the prior quarter.

Information for both the originated and acquired portfolios follows. 

  Q3 2014 Q2 2014 
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses* $ 19.6 $ 1.2 $ 20.8 $ 22.1 $ 0.3 $ 22.4
Net charge-offs 12.5 0.5 13.0 13.2 0.7 13.9
NCOs/ Avg Loans 0.27% 0.05% 0.23% 0.30% 0.06% 0.25%
Total loans** $ 18,842 $ 4,028 $ 22,770 $ 18,196 $ 4,255 $ 22,346
 
(*) Excludes provision for unfunded commitments of $0.4 million each in 3Q14 and 2Q14
(**) Acquired loans before associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $20 million, compared to $22 million in the prior quarter. This provision included $7 million of additions to the loan loss reserve to support organic loan growth during the quarter compared to $9 million in the prior quarter. Net charge-offs equaled $13 million or 27 basis points of average originated loans in the third quarter of 2014, compared to $13 million or 30 basis points in the prior quarter.

At September 30, 2014, nonperforming originated loans comprised 0.91% of originated loans, compared to 0.86% at June 30, 2014 driven primarily by increases in consumer nonperforming loans. The increase in consumer nonperforming loans primarily related to the continuing impact of last year's regulatory guidance related to consumer bankruptcies as well as normal seasoning of the indirect auto loan portfolio.

At September 30, 2014, the allowance for loan losses on originated loans totaled $227 million or 1.20% of such loans, compared to $220 million or 1.21% of such loans at June 30, 2014.

Acquired loans

The provision for losses on acquired loans totaled $1 million, compared to $0.3 million in the prior quarter. Net charge-offs on those portfolios totaled $0.5 million during the quarter, compared to $0.7 million in the prior period. At September 30, 2014, the allowance for loan losses on acquired loans totaled $5 million, compared to $4 million at June 30, 2014. Acquired nonperforming loans totaled $29 million, compared to $32 million at the end of the prior quarter. At September 30, 2014, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $100 million.

Fee Income

Third quarter 2014 noninterest income of $75 million decreased 7% or $5 million compared to the prior quarter driven by reductions across most fee income categories and partially offset by increases in insurance commissions and capital markets income.

Insurance commissions increased $1 million or 6% reflecting income recognized on higher renewal activity during the quarter. Higher syndication fee income drove the $1 million increase in capital markets income in the third quarter.

Deposit service charges decreased $3 million or 14% from the prior quarter. Mortgage banking revenues declined $1 million from the second quarter of 2014, driven by lower gain-on-sale revenues. Lending and leasing fees declined $1 million in the third quarter due in part to lower gain on SBA loan sales. Wealth management services income declined $1 million from the prior quarter as lower interest rates and increased supply of attractively priced longer-tenure certificate of deposit products resulted in lower demand and margins on annuity products. Other fee income decreased $2 million from the prior quarter and was driven by lower investment income.

Noninterest Expense

Including the $800 million non-cash goodwill impairment charge, third quarter noninterest expenses were $1.1 billion. Third quarter expenses also included a $45 million reserve to address a process issue related to certain customer deposit accounts, and $2 million in restructuring and severance expenses incurred primarily in connection with a previously announced branch staffing realignment. Excluding these items, adjusted operating expenses of $249 million increased $5 million or 2% sequentially.

This sequential increase included approximately $7 million of elevated other expenses, including:

  • $3 million in valuation write-down on a single other real estate owned (OREO) property,
  • $2 million related to higher state franchise taxes, and
  • $2 million in losses and expenses incurred in protecting First Niagara customers in response to the widely publicized Home Depot data security breach that impacted debit and credit card holders across North America

Salaries and benefits expenses declined $1 million from the prior quarter in large part due to lower payroll taxes and incentive compensation expense. Occupancy and equipment expense decreased $1 million and was driven by a moderation in depreciation costs following an accelerated write-off of certain leasehold improvements recognized in the prior quarter.

In the third quarter of 2014, the operating efficiency ratio was 71.6% compared to 69.2% in the prior quarter.

Capital

At September 30, 2014, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.5% and 7.9% respectively, and were unchanged from June 30, 2014. The company remains well above current regulatory guidelines for well-capitalized institutions. 

Effective Tax Rate

The provision for income taxes in the third quarter of 2014 was a benefit of $112 million, resulting in an effective tax rate benefit of 15%.  The effective tax rate was 14% in the prior quarter, resulting in income tax expense of $12 million.  The third quarter's effective tax rate benefit reflects the impact of the goodwill impairment charge, of which only a portion was tax deductible.  On an operating basis, the effective tax rate for the third quarter of 2014 was 9%, reflecting the benefit of previously disclosed tax strategies and other items.

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with 411 branches, $38 billion in assets, $28 billion in deposits, and approximately 5,800 employees providing financial services to individuals, families and businesses across New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com.

Investor Call

A conference call will be held at 8:00 a.m. Eastern Time on Friday, October 24, 2014 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-800-857-5166 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 1, 2014 by dialing 1-800-925-4513, passcode: 1024.

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) execution risk associated with the announced investment plan; (7) regulatory approval to continue payment of common and preferred dividends.

First Niagara Financial Group, Inc.
Income Statement Highlights - Reported Basis
(in thousands, except per share amounts)
                 
  2014 2013 Nine months ended
   Third   Second   First   Fourth   Third   Second   September 30,   September 30, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2014 2013
Interest income:                
Loans and leases  $ 212,452  $ 210,218  $ 209,644  $ 213,778  $ 214,746  $ 209,970  $ 632,314  $ 631,356
Investment securities and other   91,668  91,566  90,421  96,020  91,996  88,110  273,655  269,067
Total interest income   304,120  301,784  300,065  309,798  306,742  298,080  905,969  900,423
                 
Interest expense:                
Deposits   13,590  13,183  12,236  12,941  12,931  12,967  39,009  40,175
Borrowings   17,251  16,789  17,082  16,579  16,271  15,670  51,122  47,135
Total interest expense   30,841  29,972  29,318  29,520  29,202  28,637  90,131  87,310
                 
Net interest income  273,279  271,812  270,747  280,278  277,540  269,443  815,838  813,113
Provision for credit losses  21,200  22,800  24,800  32,000  27,600  25,200  68,800  73,000
Net interest income after provision  252,079  249,012  245,947  248,278  249,940  244,243  747,038  740,113
                 
Noninterest income:                
Deposit service charges  20,373  23,733  23,356  25,726  27,115  26,482  67,462  78,397
Insurance commissions  18,352  17,343  15,691  15,431  17,854  17,692  51,386  51,901
Merchant and card fees  12,991  12,834  11,504  12,567  12,464  12,380  37,329  36,142
Wealth management services  15,367  15,949  15,587  15,441  15,189  14,945  46,903  42,979
Mortgage banking  4,358  5,241  3,396  2,754  2,268  6,882  12,995  15,574
Capital markets income  3,509  2,917  3,623  6,310  5,058  5,002  10,049  16,091
Lending and leasing   3,914  4,680  4,732  4,140  4,886  4,534  13,326  13,326
Bank owned life insurance   3,080  3,145  5,405  6,027  3,725  3,321  11,630  10,513
Other income  (6,552)  (4,985)  (6,570)  916  2,863  4,308  (18,107)  11,357
Total noninterest income  75,392  80,857  76,724  89,312  91,422  95,546  232,973  276,280
                 
Noninterest expense:                
Salaries and employee benefits  116,245  117,728  117,940  113,754  115,034  116,305  351,913  347,129
Occupancy and equipment  27,450  28,553  27,876  27,420  26,582  28,506  83,879  83,133
Technology and communications  31,465  31,140  30,345  29,483  28,999  29,603  92,950  85,715
Marketing and advertising  7,746  8,439  7,364  4,879  5,822  5,450  23,549  15,618
Professional services  13,988  13,029  11,923  9,314  9,820  9,782  38,940  29,205
Amortization of intangibles  6,521  6,790  7,509  7,562  7,702  10,850  20,820  32,671
Federal deposit insurance premiums  9,579  9,756  8,855  7,431  9,351  9,348  28,190  27,600
Restructuring charges  2,364  --   10,356  --   --   --   12,720  -- 
Goodwill impairment  800,000  --   --   --   --   --   800,000  -- 
Deposit account remediation  45,000  --   --   --   --   --   45,000  -- 
Other expense  36,467  28,680  26,568  27,305  27,883  25,326  91,715  82,958
Total noninterest expense  1,096,825  244,115  248,736  227,148  231,193  235,170  1,589,676  704,029
                 
Income (loss) before income tax  (769,354)   85,754  73,935  110,442  110,169  104,619  (609,665)   312,364
Income tax expense (benefit)  (112,120)   11,969  14,491  32,752  31,026  33,485  (85,660)   94,802
Net income (loss)  (657,234)   73,785  59,444  77,690  79,143  71,134  (524,005)   217,562
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  $ (664,781)   $ 66,238  $ 51,897  $ 70,143  $ 71,596  $ 63,587  $ (546,646)   $ 194,921
                 
Financial Ratios:                
Earnings (loss) per basic share  $ (1.90)   $ 0.19  $ 0.15  $ 0.20  $ 0.20  $ 0.18  $ (1.56)   $ 0.55
Earnings (loss) per diluted share  (1.90)   0.19  0.15  0.20  0.20  0.18  (1.56)   0.55
Weighted average shares outstanding - basic(1)  350,381  350,229  349,906  349,718  349,653  349,542  350,174  349,492
Weighted average shares outstanding - diluted(1)  350,381  351,541  351,408  350,699  350,896  350,384  350,174  350,368
Net revenue(2)  $ 348,671  $ 352,669  $ 347,471  $ 369,590  $ 368,962  $ 364,989  $ 1,048,811  $ 1,089,393
Noninterest income as a percentage of net revenue(2) 21.62% 22.93% 22.08% 24.17% 24.78% 26.18% 22.21% 25.36%
Pre-tax, pre-provision income (loss)(3)  $ (748,154)   $ 108,554  $ 98,735  $ 142,442  $ 137,769  $ 129,819  $ (540,865)   $ 385,364
Pre-tax, pre-provision income per diluted share(3)  $ (2.14)   $ 0.31  $ 0.28  $ 0.41  $ 0.39  $ 0.37  $ (1.54)   $ 1.10
Pre-tax, pre-provision return on average assets(3)  (7.69)% 1.14% 1.06% 1.51% 1.47% 1.41%  (1.89)% 1.39%
Net interest margin(4) 3.21% 3.26% 3.33% 3.41% 3.40% 3.36% 3.27% 3.39%
Interest yield on average loans(4) 3.80% 3.89% 3.98% 4.04% 4.14% 4.19% 3.89% 4.19%
Rate paid on interest-bearing liabilities 0.44% 0.44% 0.44% 0.43% 0.43% 0.43% 0.44% 0.44%
Efficiency ratio 314.57% 69.22% 71.58% 61.46% 62.66% 64.43% 151.57% 64.63%
Expenses as a percentage of average loans and deposits 8.78% 1.97% 2.06% 1.89% 1.94% 1.98% 4.31% 1.98%
Effective tax rate (benefit) (14.6)% 14.0% 19.6% 29.7% 28.2% 32.0% (14.1)% 30.3%
Return on average assets(5)  (6.76)%  0.77 %  0.64 % 0.82% 0.85%  0.77 %  (1.83)% 0.79%
Return on average equity(5)  (51.12)%  5.84 %  4.79 % 6.18% 6.37%  5.72 %  (13.83)% 5.86%
Return on average tangible equity(3)(5)  (100.96)%  11.68 %  9.66 % 12.64% 13.20%  11.75 %  (27.61)% 12.19%
Return on average common equity  (55.38)%  5.62 %  4.48 % 5.99% 6.18%  5.48 %  (15.46)% 5.64%
Return on average tangible common equity(3)  (117.50)%  12.10 %  9.76 % 13.25% 13.92%  12.21 %  (33.23)% 12.73%
                 
(1) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
(2) Net revenue is comprised of net interest income and noninterest income.
(3) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4) Yields and rates calculated on a tax equivalent basis.
(5) Return used to calculate ratio excludes preferred stock dividend.
 
 
First Niagara Financial Group, Inc.
Period End Balance Sheet
(in thousands)
             
  2014 2013
  September 30, June 30, March 31, December 31,  September 30, June 30,
Cash and cash equivalents  $ 451,313  $ 557,423  $ 503,070  $ 462,927  $ 558,086  $ 552,210
Investment securities:            
Available for sale  6,198,140  6,683,914  7,060,237  7,423,162  7,609,676  7,916,353
Held to maturity  5,351,977  4,834,279  4,467,213  4,042,481  3,841,700  3,856,960
FHLB and FRB common stock  389,870  434,322  437,550  469,217  437,534  429,740
Total investment securities  11,939,987  11,952,515  11,965,000  11,934,860  11,888,910  12,203,053
Loans held for sale  31,245  45,446  34,465  50,137  80,468  118,104
Loans and leases:             
Commercial:            
Real estate  8,013,622  7,940,977  7,867,724  7,777,903  7,697,407  7,482,375
Business  5,836,235  5,741,684  5,470,177  5,290,392  5,204,672  5,165,606
Total commercial loans  13,849,857  13,682,661  13,337,901  13,068,295  12,902,079  12,647,981
Consumer:            
Residential real estate  3,360,805  3,358,347  3,389,071  3,447,997  3,519,233  3,558,274
Home equity  2,886,655  2,835,421  2,767,024  2,752,229  2,706,603  2,670,672
Indirect auto  2,073,843  1,871,688  1,655,489  1,543,983  1,339,449  1,049,763
Credit cards  312,549  311,640  305,663  325,140  311,600  303,455
Other consumer  286,140  286,062  295,692  302,009  310,107  313,037
Total consumer loans  8,919,991  8,663,158  8,412,939  8,371,358  8,186,992  7,895,201
Total loans and leases  22,769,849  22,345,819  21,750,840  21,439,653  21,089,071  20,543,182
Allowance for loan losses  231,353  223,526  215,037  209,274  197,953  183,708
Loans and leases, net  22,538,496  22,122,293  21,535,803  21,230,379  20,891,118  20,359,474
Bank owned life insurance  423,376  420,230  417,031  415,205  413,555  410,182
Goodwill and other intangibles  1,723,437  2,528,481  2,535,271  2,542,783  2,549,931  2,557,560
Other assets  1,124,145  998,364  999,804  992,071  958,473  949,144
Total assets  $ 38,231,999  $ 38,624,752  $ 37,990,444  $ 37,628,362  $ 37,340,541  $ 37,149,727
             
Deposits:            
Savings accounts  $ 3,458,661  $ 3,626,750  $ 3,664,765  $ 3,666,759  $ 3,695,221  $ 3,878,053
Interest-bearing checking  5,055,458  4,743,684  4,929,302  4,743,829  4,637,807  4,499,963
Money market deposits  9,894,346  9,834,344  10,106,569  9,739,539  9,905,341  10,013,996
Noninterest-bearing deposits  5,308,736  5,284,037  5,101,681  4,865,873  4,968,501  4,845,835
Certificates of deposit  3,952,879  3,955,754  3,795,438  3,649,257  3,762,132  3,911,989
Total deposits  27,670,080  27,444,569  27,597,755  26,665,257  26,969,002  27,149,836
             
Short-term borrowings  4,928,762  4,890,343  4,137,496  4,822,222  4,169,416  3,698,279
Long-term borrowings  733,684  733,337  733,384  733,883  732,547  732,598
Other liabilities  543,813  477,685  495,590  413,647  531,379  666,270
Total liabilities  33,876,339  33,545,934  32,964,225  32,635,009  32,402,344  32,246,983
Preferred stockholders' equity  338,002  338,002  338,002  338,002  338,002  338,002
Common stockholders' equity  4,017,658  4,740,816  4,688,217  4,655,351  4,600,195  4,564,742
Total stockholders' equity  4,355,660  5,078,818  5,026,219  4,993,353  4,938,197  4,902,744
Total liabilities and stockholders' equity  $ 38,231,999  $ 38,624,752  $ 37,990,444  $ 37,628,362  $ 37,340,541  $ 37,149,727
             
Selected balance sheet information:            
Total interest-earning assets(1)  $ 34,720,650  $ 34,305,451  $ 33,684,828  $ 33,396,058  $ 33,039,023  $ 32,906,363
Total interest-bearing liabilities  28,023,790  27,784,211  27,366,955  27,355,489  26,902,465  26,734,878
Net interest-earning assets  $ 6,696,860  $ 6,521,240  $ 6,317,873  $ 6,040,569  $ 6,136,558  $ 6,171,485
             
Tangible common equity(2)  $ 2,294,221  $ 2,212,335  $ 2,152,946  $ 2,112,568  $ 2,050,264  $ 2,007,182
Unrealized gain on available for sale securities, net of tax(3)  56,142  86,244  72,579  63,930  76,686  83,898
             
Total core deposits  $ 23,717,201  $ 23,488,815  $ 23,802,317  $ 23,016,000  $ 23,206,870  $ 23,237,847
             
Originated loans(4)  $ 18,841,896  $ 18,196,302  $ 17,388,542  $ 16,922,161  $ 16,211,505  $ 15,102,336
Acquired loans(5)  4,028,091  4,254,750  4,475,593  4,642,775  5,006,753  5,581,651
Credit related discount on acquired loans(6)  (100,138)  (105,233)  (113,295)  (125,283)  (129,187)  (140,805)
Total Loans  $ 22,769,849  $ 22,345,819  $ 21,750,840  $ 21,439,653  $ 21,089,071  $ 20,543,182
             
(1) Includes interest bearing cash and cash equivalents, investment securities at amortized cost, loans held for sale, and total loans and leases.
(2) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3) Excludes unamortized unrealized gains recorded in accumulated other comprehensive income related to available for sale securities transferred to held to maturity.
(4) Originated loans represent total loans excluding acquired loans.
(5) Represents the carrying value of acquired loans plus the principal not expected to be collected.
(6) Represent principal on acquired loans not expected to be collected.
 
 
First Niagara Financial Group, Inc.
Average Balance Sheet and Related Tax Equivalent Yields & Rates
(in millions)
  For the three months ended Nine months ended
  September 30, 2014 June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
   Average  Interest(1)  Yields   Average  Interest(1)  Yields   Average  Interest(1)  Yields   Average  Interest(1)  Yields   Average  Interest(1)  Yields 
   Balances
 		   and
Rates(1)		  Balances
 		   and
Rates(1)		  Balances
 		   and
Rates(1)		  Balances
 		   and
Rates(1)		  Balances
 		   and
Rates(1)(2)
Interest-earning assets:                              
Loans and leases(2)                              
Commercial:                              
Real estate  $ 7,985  $ 74 3.65%  $ 7,899  $ 75 3.77%  $ 7,551  $ 80 4.16%  $ 7,896  $ 226 3.77%  $ 7,370  $ 235 4.21%
Business  5,694  51  3.51   5,564  50  3.56   5,163  48  3.64   5,558  149  3.54   5,092  142  3.68 
Total commercial loans  13,679  126  3.59   13,463  125  3.68   12,714  128  3.95   13,454  375  3.68   12,462  377  3.99 
Consumer:                              
Residential real estate  3,351  32  3.77   3,361  32  3.80   3,538  35  3.91   3,376  97  3.82   3,599  107  3.95 
Home equity  2,857  29  4.01   2,800  28  4.06   2,683  28  4.17   2,805  85  4.07   2,664  84  4.24 
Indirect auto  1,978  14  2.84   1,750  12  2.85   1,207  9  3.09   1,782  38  2.87   950  23  3.17 
Credit cards  313  9  11.44   308  9  11.44   309  9  12.02   312  27  11.50   305  25  11.14 
Other consumer  287  6  8.54   291  6  8.53   313  7  8.48   292  19  8.57   318  20  8.36 
Total consumer loans  8,786  90  4.06   8,510  88  4.13   8,050  88  4.35   8,567  266  4.15   7,836  259  4.42 
Total loans and leases  22,465  215  3.80   21,973  213  3.89   20,764  216  4.14   22,020  641  3.89   20,298  636  4.19 
Residential MBS  6,405  41  2.56   6,097  41  2.67   5,515  37  2.68   6,067  121  2.65   5,500  104  2.53 
Commercial MBS  1,564  13  3.32   1,608  14  3.45   1,810  17  3.68   1,623  41  3.35   1,868  51  3.63 
Other investment securities (3)  3,854  39  4.06   4,159  38  3.69   4,620  40  3.47   4,131  117  3.76   4,758  119  3.34 
Total securities, at amortized cost  11,824  93  3.15   11,864  93  3.13   11,945  94  3.14   11,821  278  3.14   12,126  274  3.02 
Money market and other investments  86  1  2.76   165  1  1.27   157  1  2.27   125  2  1.74   189  2  1.74 
Total interest-earning assets  34,375  $ 309 3.57%  34,002  $ 307 3.62%  32,866  $ 311 3.75%  33,966  $ 920 3.62%  32,613  $ 913 3.74%
Goodwill and other intangibles  2,518      2,532      2,554      2,529      2,575    
Other noninterest-earning assets  1,698      1,678      1,673      1,691      1,774    
                               
Total assets  $ 38,591      $ 38,212      $ 37,093      $ 38,187      $ 36,962    
                               
Interest-bearing liabilities:                               
Deposits                              
Savings accounts  $ 3,552  $ 1 0.09%  $ 3,654  $ 1 0.09%  $ 3,793  $ 1 0.09%  $ 3,612  $ 2 0.09%  $ 3,861  $ 3 0.10%
Interest-bearing checking  4,821  --   0.03   4,820  --   0.03   4,483  --   0.04   4,792  1  0.03   4,456  1  0.04 
Money market deposits   9,882  6  0.23   9,971  5  0.22   9,959  5  0.20   9,913  16  0.22   10,257  16  0.21 
Certificates of deposit   3,969  7  0.67   3,971  7  0.66   3,824  7  0.69   3,864  20  0.68   3,935  20  0.67 
Total interest bearing deposits  22,225  14 0.24%  22,416  13 0.24%  22,059  13 0.23%  22,182  39 0.24%  22,509  40 0.24%
Borrowings                              
Short-term borrowings  4,737  5 0.43%  4,410  5 0.43%  4,014  4 0.41%  4,596  15 0.43%  3,570  11 0.41%
Long-term borrowings  733  12  6.56   733  12  6.62   733  12  6.55   733  36  6.62   732  36  6.63 
Total borrowings   5,470  17  1.25   5,143  17  1.31   4,747  16  1.36   5,330  51  1.28   4,302  47  1.46 
Total interest-bearing liabilities   27,695  $ 31 0.44%  27,559  $ 30 0.44%  26,806  $ 29 0.43%  27,511  $ 90 0.44%  26,811  $ 87 0.44%
Noninterest-bearing deposits   5,260      5,077      4,787      5,068      4,657    
Other noninterest-bearing liabilities   536      511      567      540      534    
Total liabilities   33,491      33,147      32,160      33,120      32,002    
Total stockholders' equity  5,100      5,065      4,933      5,067      4,960    
Total liabilities and stockholders' equity  $ 38,591      $ 38,212      $ 37,093      $ 38,187      $ 36,962    
                               
Net interest income (FTE)    $ 278      $ 277      $ 282      $ 830      $ 826  
Taxable Equivalent Adjustment(1)    5      5      4      14      13  
                               
 Total core deposits   $ 23,515  $ 7 0.12%  $ 23,522  $ 6 0.11%  $ 23,022  $ 6 0.11%  $ 23,386  $ 19 0.11%  $ 23,231  $ 20 0.12%
 Total transactional deposits   10,081  --  0.01%  9,897  --  0.01%  9,270  --  0.02%  9,860  1 0.02%  9,113  1 0.02%
 Total deposits   27,484  14 0.20%  27,493  13 0.19%  26,846  13 0.19%  27,250  39 0.19%  27,166  40 0.20%
                               
Tax equivalent net interest rate spread(2)     3.13%     3.18%     3.32%     3.18%     3.30%
Tax equivalent net interest rate margin(2)     3.21%     3.26%     3.40%     3.27%     3.39%
                               
(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)
  2014 2013 Nine months ended
   Third   Second   First  Fourth   Third   Second   September 30,   September 30, 
   Quarter   Quarter  Quarter   Quarter   Quarter   Quarter  2014 2013
Beginning balance  $ 223,526  $ 215,037  $ 209,274  $ 197,953  $ 183,708  $ 172,002  $ 209,274  $ 162,522
Net loan (charge-offs) recoveries:                
Commercial real estate  $ (2,259)  $ (4,885)  $ 905  $ (5,764)  $ 1,013  $ (2,817)  $ (6,239)  $ (3,925)
Commercial business  (3,148)  (1,795)  (9,138)  (6,382)  (9,694)  (7,175)  (14,081)  (21,771)
Residential real estate  (102)  (352)  (174)  (168)  (137)  (291)  (628)  (855)
Home equity  (1,131)  (1,294)  (3,045)  (1,528)  (322)  (905)  (5,470)  (1,840)
Indirect auto  (1,621)  (1,455)  (2,086)  (1,215)  (692)  (552)  (5,162)  (1,496)
Credit cards  (2,726)  (2,930)  (3,044)  (3,082)  (1,300)  (194)  (8,700)  (1,698)
Other consumer  (1,986)  (1,200)  (2,055)  (2,140)  (1,823)  (1,160)  (5,241)  (4,784)
Total net loan charge-offs  $ (12,973)  $ (13,911)  $ (18,637)  $ (20,279)  $ (12,955)  $ (13,094)  $ (45,521)  $ (36,369)
Provision for loan losses  20,800  22,400  24,400  31,600  27,200  24,800  67,600  71,800
Ending balance  $ 231,353  $ 223,526  $ 215,037  $ 209,274  $ 197,953  $ 183,708  $ 231,353  $ 197,953
                 
Supplemental information                
Allowance to loans 1.02% 1.00%  0.99 %  0.98 %  0.94 %  0.89 % 1.02% 0.94%
Allowance for originated loans to originated loans(1) 1.20% 1.21%  1.21 %  1.21 %  1.20 %  1.21 % 1.20% 1.20%
                 
Net charge-offs (recoveries) to average loans (annualized)                
Commercial real estate  0.11 % 0.25%  (0.05)%  0.30 %  (0.05)%  0.15 % 0.11% 0.07%
Commercial business  0.22 % 0.13%  0.68 %  0.49 %  0.75 %  0.56 % 0.34% 0.57%
Total commercial loans  0.16 % 0.20%  0.25 %  0.38 %  0.27 %  0.32 % 0.20% 0.27%
Residential real estate  0.01 % 0.04%  0.02 %  0.02 %  0.02 %  0.03 % 0.02% 0.03%
Home equity  0.16 % 0.18%  0.44 %  0.22 %  0.05 %  0.14 % 0.26% 0.09%
Indirect auto  0.33 % 0.33%  0.52 %  0.33 %  0.23 %  0.23 % 0.39% 0.21%
Credit cards  3.49 % 3.80%  3.88 %  3.93 %  1.68 %  0.26 % 3.72% 0.74%
Other consumer  2.77 % 1.65%  2.74 %  2.79 %  2.01 %  0.88 % 2.39% 2.01%
Total consumer loans  0.35 % 0.34%  0.50 %  0.40 %  0.22 %  0.16 % 0.39% 0.18%
Total loans  0.23 % 0.25%  0.34 %  0.38 %  0.25 %  0.26 % 0.28% 0.24%
                 
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)                
Commercial real estate  0.13 % 0.29%  (0.11)%  0.24 %  (0.07)%  0.14 % 0.11% 0.05%
Commercial business  0.24 % 0.14%  0.73 %  0.53 %  0.83 %  0.64 % 0.36% 0.64%
Total commercial loans  0.18 % 0.22%  0.26 %  0.37 %  0.33 %  0.36 % 0.22% 0.32%
Residential real estate  0.02 % 0.07%  0.04 %  0.04 %  0.03 %  0.07 % 0.04% 0.06%
Home equity  0.17 % 0.16%  0.21 %  0.29 %  0.09 %  0.26 % 0.18% 0.18%
Indirect auto  0.33 % 0.33%  0.52 %  0.33 %  0.23 %  0.23 % 0.39% 0.21%
Credit cards  3.49 % 3.80%  3.88 %  3.93 %  1.68 %  0.26 % 3.72% 0.81%
Other consumer  2.77 % 1.65%  2.74 %  2.80 %  2.59 %  1.91 % 2.39% 2.33%
Total consumer loans  0.45 % 0.45%  0.57 %  0.56 %  0.33 %  0.27 % 0.49% 0.29%
Total loans  0.27 % 0.30%  0.36 %  0.43 %  0.33 %  0.33 % 0.31% 0.31%
                 
Nonperforming loans:                
Originated(1):             　  
Commercial real estate  $ 57,340  $ 55,945  $ 41,296  $ 53,395  $ 51,302  $ 59,624  $ 57,340  $ 51,302
Commercial business  36,939  32,861  35,335  42,013  35,854  44,658  36,938  35,854
Residential real estate  36,113  33,870  32,736  31,478  31,312  29,667  36,113  31,312
Home equity  23,392  19,429  19,516  18,426  15,709  14,601  23,392  15,709
Indirect auto  11,890  9,821  7,943  6,274  5,129  3,276  11,890  5,129
Other consumer  5,134  5,037  5,216  5,838  5,538  2,818  5,134  5,538
Total originated nonperforming loans  170,808  156,963  142,042  157,424  144,844  154,644  170,807  144,844
Total acquired nonperforming loans(2)  28,611  32,488  30,617  30,088  30,388  27,556  28,611  30,388
Total nonperforming loans  199,419  189,451  172,659  187,512  175,232  182,200  199,418  175,232
Real estate owned  20,261  24,270  25,466  24,788  24,262  8,144  20,261  24,262
Total nonperforming assets  $ 219,680  $ 213,721  $ 198,125  $ 212,300  $ 199,494  $ 190,344  $ 219,679  $ 199,494
                 
Accruing troubled debt restructurings (TDR)  $ 69,199  $ 80,214  $ 56,038  $ 52,263  $ 69,877  $ 69,892  $ 69,199  $ 69,877
Loans 90 days past due still accruing(3)  108,615  112,718  119,134  113,212  136,248  167,560  108,615  136,248
Total classified loans(4)  649,320  661,699  667,327  663,700  648,235  701,104  649,320  648,235
Total criticized loans(5)  $ 1,089,851  $ 1,072,133  $ 1,075,523  $ 985,019  $ 977,798  $ 1,012,305  $ 1,089,851  $ 977,798
                 
Total nonperforming loans to loans 0.88% 0.85%  0.79 %  0.87 %  0.83 %  0.89 % 0.88% 0.83%
Total nonperforming originated loans to originated loans(1) 0.91% 0.86%  0.82 %  0.93 %  0.89 %  1.02 % 0.91% 0.89%
Total nonperforming assets to loans and real estate owned 0.96% 0.96%  0.91 %  0.99 %  0.94 %  0.93 % 0.96% 0.94%
Total nonperforming assets to assets 0.57% 0.55%  0.52 %  0.56 %  0.53 %  0.51 % 0.57% 0.53%
Allowance to nonperforming loans 116.0% 118.0%  124.5 %  111.6 %  113.0 %  100.8 % 116.0% 113.0%
                 
Originated loans(1)  $ 18,841,896  $ 18,196,302  $ 17,388,542  $ 16,922,161  $ 16,211,505  $ 15,102,336  $ 18,841,896  $ 16,211,505
Acquired loans(6)  4,028,091  4,254,750  4,475,593  4,642,775  5,006,753  5,581,651  4,028,091  5,006,753
Credit related discount on acquired loans(7)  (100,138)   (105,233)   (113,295)   (125,283)   (129,187)   (140,805)   (100,138)   (129,187) 
Total Loans  $ 22,769,849  $ 22,345,819  $ 21,750,840  $ 21,439,653  $ 21,089,071  $ 20,543,182  $ 22,769,849  $ 21,089,071
                 
(1) Originated loans represent total loans excluding acquired loans. 
(2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing. 
(3) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.
(4) Includes consumer loans, which are considered classified when they are 90 days or more past due. Classified loans include substandard, doubtful, and loss, which are consistent with regulatory definitions, and as described in Item 1, "Business", under the heading "Asset Quality Review" in our Annual Report on 10-K for the year ended December 31, 2013.
(5) Criticized loans includes consumer loans when they are 90 days or more past due. Criticized loans include special mention, substandard, doubtful, and loss.
(6) Represents the carrying value of acquired loans plus the principal not expected to be collected.
(7) Represent principal on acquired loans not expected to be collected.
 
 
First Niagara Financial Group, Inc.
Key Statistics
(Risk weighted assets in millions; share counts in thousands)
             
  2014 2013
  September 30, June 30, March 31, December 31,  September 30, June 30,
First Niagara Financial Group, Inc. capital ratios(1):            
Tier 1 risk based capital 9.52% 9.57% 9.62% 9.56% 9.45% 9.41%
Tier 1 common capital(2) 7.89% 7.92% 7.92% 7.86% 7.72% 7.65%
Total risk based capital 11.49% 11.53% 11.60% 11.53% 11.40% 11.35%
Leverage 7.16% 7.33% 7.28% 7.26% 7.14% 7.01%
Equity to assets 11.39% 13.15% 13.23% 13.27% 13.22% 13.20%
Tangible common equity to tangible assets(2) 6.28% 6.13% 6.07% 6.02% 5.89% 5.80%
Total risk weighted assets  $ 27,647  $ 27,314  $ 26,639  $ 26,412  $ 26,078  $ 25,564
             
First Niagara Bank, N.A capital ratios(1):            
Tier 1 risk based capital 10.12% 10.18% 10.22% 10.15% 10.08% 10.08%
Total risk based capital 11.01% 11.05% 11.08% 10.99% 10.89% 10.85%
Leverage 7.61% 7.79% 7.74% 7.70% 7.61% 7.50%
Total risk weighted assets  $ 27,605  $ 27,273  $ 26,597  $ 26,365  $ 26,037  $ 25,520
             
Number of branches  411  411  411  421  422  422
Full time equivalent employees  5,768  5,874  5,750  5,807  5,788  5,779
             
Share information and per share metrics:            
Common shares outstanding  355,423  355,483  354,127  353,941  353,973  353,932
Preferred shares outstanding  14,000  14,000  14,000  14,000  14,000  14,000
Treasury shares  10,579  10,519  11,875  12,061  12,029  12,070
Market price (NASDAQ: FNFG):  $ 8.33  $ 8.74  $ 9.45  $ 10.62  $ 10.37  $ 10.07
Book value per common share(3)  11.46  13.53  13.40  13.31  13.15  13.06
Tangible book value per common share(2)(3)  6.55  6.31  6.15  6.04  5.86  5.74
Price/Book 72.69% 64.60% 70.52% 79.79% 78.86% 77.11%
Price/Tangible book(2) 127.18% 138.51% 153.66% 175.83% 176.96% 175.44%
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 N/M 42.11% 53.33% 40.00% 40.00% 44.44%
Dividend yield (annualized) 3.81% 3.67% 3.43% 2.99% 3.06% 3.19%
             
N/M Not meaningful
(1) Represents an estimate as of September 30, 2014. All preceding quarters represent actual amounts.
(2) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
 
 
First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation
(in thousands, except per share amounts)
                 
  2014 2013 Nine months ended
   Third   Second   First   Fourth   Third   Second   September 30,   September 30, 
   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  2014 2013
Financial ratios computed on an operating basis(1):                
Earnings per basic share  $ 0.18  $ 0.19  $ 0.17  $ 0.20  $ 0.20  $ 0.18  $ 0.54  $ 0.55
Earnings per diluted share  0.18  0.19  0.17  0.20  0.20  0.18  0.54  0.55
Weighted average shares outstanding - basic(2)  350,381  350,229  349,906  349,718  349,653  349,542  350,174  349,492
Weighted average shares outstanding - diluted(2)  351,898  351,541  351,408  350,699  350,896  350,384  351,570  350,368
Noninterest income as a percentage of net revenue(3) 21.62% 22.93% 22.08% 24.17% 24.78% 26.18% 22.21% 25.36%
Pre-tax, pre-provision income  99,210  108,554  109,091  142,442  137,769  129,819  316,855  385,364
Pre-tax, pre-provision income per diluted share  0.28  0.31  0.31  0.41  0.39  0.37  0.90  1.10
Pre-tax, pre-provision return on average assets 1.02% 1.14% 1.17% 1.51% 1.47% 1.41% 1.11% 1.39%
Net interest margin(4) 3.21% 3.26% 3.33% 3.41% 3.40% 3.36% 3.27% 3.39%
Interest yield on average loans(4) 3.80% 3.89% 3.98% 4.04% 4.14% 4.19% 3.89% 4.19%
Rate paid on interest-bearing liabilities 0.44% 0.44% 0.44% 0.43% 0.43% 0.43% 0.44% 0.44%
Efficiency ratio 71.55% 69.22% 68.60% 61.46% 62.66% 64.43% 69.79% 64.63%
Effective tax rate 9.1% 14.0% 19.6% 29.7% 28.2% 32.0% 14.4% 30.3%
Return on average assets 0.73% 0.77% 0.73% 0.82% 0.85% 0.77% 0.74% 0.79%
Return on average equity 5.51% 5.84% 5.46% 6.18% 6.37% 5.72% 5.61% 5.86%
Return on average tangible equity(5) 10.89% 11.68% 11.02% 12.64% 13.20% 11.75% 11.19% 12.19%
Return on average common equity 5.28% 5.62% 5.20% 5.99% 6.18% 5.48% 5.37% 5.64%
Return on average tangible common equity(6) 11.19% 12.10% 11.33% 13.25% 13.92% 12.21% 11.54% 12.73%
                 
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):                
Total noninterest expense on operating basis (Non-GAAP)  $ 249,461  $ 244,115  $ 238,380  $ 227,148  $ 231,193  $ 235,170  $ 731,956  $ 704,029
Restructuring charges  2,364  --   10,356  --   --   --   12,720  -- 
Goodwill impairment  800,000  --   --   --  --   --   800,000  -- 
Deposit account remediation  45,000  --   --   --   --   --   45,000  -- 
Total reported noninterest expense (GAAP)  $ 1,096,825  $ 244,115  $ 248,736  $ 227,148  $ 231,193  $ 235,170  $ 1,589,676  $ 704,029
                 
Reconciliation of net operating income to net income(1):                
Net operating income (Non-GAAP)  $ 70,875  $ 73,785  $ 67,789  $ 77,690  $ 79,143  $ 71,134  $ 212,449  $ 217,562
Nonoperating income and expenses, net of tax:                
Restructuring charges  1,557  --   8,345  --   --   --   9,902  -- 
Goodwill impairment  697,319  --   --   --   --   --   697,319  -- 
Deposit account remediation  29,233  --   --   --   --   --   29,233  -- 
Total nonoperating expenses, net of tax  728,109  --   8,345  --   --   --   736,454  -- 
Net income (loss) (GAAP)  $ (657,234)   $ 73,785  $ 59,444  $ 77,690  $ 79,143  $ 71,134  $ (524,005)  $ 217,562
                 
Reconciliation of net operating income available to common stockholders to net income available to common stockholders(1):                
Net operating income available to common stockholders (Non-GAAP)  $ 63,328  $ 66,238  $ 60,242  $ 70,143  $ 71,596  $ 63,587  $ 189,808  $ 194,921
Nonoperating income and expenses, net of tax:                
Restructuring charges  1,557  --   8,345  --  --   --  9,902  -- 
Goodwill impairment  697,319  --   --   --  --  --  697,319  -- 
Deposit account remediation  29,233  --   --   --  --   --  29,233  -- 
Total nonoperating income and expenses, net of tax  728,109  --   8,345  --  --  --  736,454  -- 
Net income (loss) available to common stockholders (GAAP)  $ (664,781)   $ 66,238  $ 51,897  $ 70,143  $ 71,596  $ 63,587  $ (546,646)  $ 194,921
                 
Computation of pre-tax,pre-provision income:                
Net interest income  $ 273,279  $ 271,812  $ 270,747  $ 280,278  $ 277,540  $ 269,443  $ 815,838  $ 813,113
Noninterest income  75,392   80,857   76,724   89,312   91,422   95,546   232,973   276,280 
Noninterest expense  (1,096,825)  (244,115)  (248,736)  (227,148)  (231,193)  (235,170)  (1,589,676)  (704,029)
Pre-tax, pre-provision income (loss) (GAAP)  (748,154)  108,554  98,735  142,442  137,769  129,819  (540,865)  385,364
Add back: non-operating noninterest expenses (1)  847,364  --   10,356  --   --   --   857,720  -- 
Pre-tax, pre-provision income (Non-GAAP)(1)  $ 99,210  $ 108,554  $ 109,091  $ 142,442  $ 137,769  $ 129,819  $ 316,855  $ 385,364
                 
(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)
                 
  2014 2013 Nine months ended
   Third   Second   First   Fourth   Third   Second   September 30,   September 30, 
  Quarter  Quarter   Quarter   Quarter   Quarter   Quarter  2014 2013
Computation of Ending Tangible Assets:                
Total assets  $ 38,231,999  $ 38,624,752  $ 37,990,444  $ 37,628,362  $ 37,340,541  $ 37,149,727  $ 38,231,999  $ 37,340,541
Less: Goodwill and other intangibles  (1,723,437)   (2,528,481)   (2,535,271)   (2,542,783)   (2,549,931)   (2,557,560)   (1,723,437)   (2,549,931) 
Tangible assets  $ 36,508,562  $ 36,096,271  $ 35,455,173  $ 35,085,579  $ 34,790,610  $ 34,592,167  $ 36,508,562  $ 34,790,610
                 
Computation of Average Tangible Assets:                
Total assets  $ 38,591,116  $ 38,211,808  $ 38,211,808  $ 37,378,780  $ 37,093,236  $ 36,982,893  $ 38,186,687  $ 36,962,164
Less: Goodwill and other intangibles  (2,517,841)   (2,531,612)   (2,531,612)   (2,546,031)   (2,553,647)   (2,561,507)   (2,529,371)   (2,574,650) 
Tangible assets  $ 36,073,275  $ 35,680,196  $ 35,680,196  $ 34,832,749  $ 34,539,589  $ 34,421,386  $ 35,657,316  $ 34,387,514
                 
Computation of Ending Tangible Equity:                
Total stockholders' equity  $ 4,355,660  $ 5,078,818  $ 5,026,219  $ 4,993,353  $ 4,938,197  $ 4,902,744  $ 4,355,660  $ 4,938,197
Less: Goodwill and other intangibles  (1,723,437)   (2,528,481)   (2,535,271)   (2,542,783)   (2,549,931)   (2,557,560)   (1,723,437)   (2,549,931) 
Tangible equity  $ 2,632,223  $ 2,550,337  $ 2,490,948  $ 2,450,570  $ 2,388,266  $ 2,345,184  $ 2,632,223  $ 2,388,266
                 
Computation of Ending Tangible Common Equity:                
Total stockholders' equity  $ 4,355,660  $ 5,078,818  $ 5,026,219  $ 4,993,353  $ 4,938,197  $ 4,902,744  $ 4,355,660  $ 4,938,197
Less: Goodwill and other intangibles  (1,723,437)   (2,528,481)   (2,535,271)   (2,542,783)   (2,549,931)   (2,557,560)   (1,723,437)   (2,549,931) 
Less: Preferred stockholders' equity  (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)  (338,002)
Tangible common equity  $ 2,294,221  $ 2,212,335  $ 2,152,946  $ 2,112,568  $ 2,050,264  $ 2,007,182  $ 2,294,221  $ 2,050,264
                 
Computation of Average Tangible Equity:                
Total stockholders' equity  $ 5,100,494  $ 5,065,008  $ 5,034,093  $ 4,984,003  $ 4,932,949  $ 4,989,006  $ 5,066,774  $ 4,960,026
Less: Goodwill and other intangibles  (2,517,841)   (2,531,612)   (2,538,891)   (2,546,031)   (2,553,647)   (2,561,507)   (2,529,371)   (2,574,650) 
Tangible equity  $ 2,582,653  $ 2,533,396  $ 2,495,202  $ 2,437,972  $ 2,379,302  $ 2,427,499  $ 2,537,403  $ 2,385,376
                 
Computation of Average Tangible Common Equity:                
Total stockholders' equity  $ 5,100,494  $ 5,065,008  $ 5,034,093  $ 4,984,003  $ 4,932,949  $ 4,989,006  $ 5,066,774  $ 4,960,026
Less: Goodwill and other intangibles  (2,517,841)   (2,531,612)   (2,538,891)   (2,546,031)   (2,553,647)   (2,561,507)   (2,529,371)   (2,574,650) 
Less: Preferred stockholders' equity  (338,002)   (338,002)   (338,002)   (338,002)  (338,002)  (338,002)  (338,002)   (338,002)
Tangible common equity  $ 2,244,651  $ 2,195,394  $ 2,157,200  $ 2,099,970  $ 2,041,300  $ 2,089,497  $ 2,199,401  $ 2,047,374
                 
Computation of Tier 1 Common Capital:                
Tier 1 capital  $ 2,632,177  $ 2,613,584  $ 2,562,261  $ 2,525,656  $ 2,464,801  $ 2,406,473  $ 2,632,177  $ 2,464,801
Less: Qualifying restricted core capital elements  (113,556)   (113,330)   (113,107)   (112,886)  (112,667)  (112,449)  (113,556)   (112,667) 
Less: Perpetual non-cumulative preferred stock  (338,002)   (338,002)   (338,002)   (338,002)  (338,002)  (338,002)  (338,002)   (338,002)
Tier 1 common capital (Non-GAAP)  $ 2,180,619  $ 2,162,252  $ 2,111,152  $ 2,074,768  $ 2,014,132  $ 1,956,022  $ 2,180,619  $ 2,014,132 
CONTACT: First Niagara Contacts

         Investors:
         Ram Shankar
         Senior Vice President, Investor Relations
         (716) 270-8623
         ram.shankar@fnfg.com

         News Media:
         David Lanzillo
         Senior Vice President, Corporate Communications
         (716) 819-5780
         david.lanzillo@fnfg.com