FNFG First Niagara Financial Grp. Inc. (MM)

First Niagara Financial Group, Inc. (NASDAQ:FNFG) today reported GAAP net income available to common shareholders of $40.8 million, or $0.11 per diluted share for the first quarter of 2016, compared to $43.3 million, or $0.12 per diluted share, for the quarter ended December 31, 2015. Excluding merger-related costs incurred during the first quarter of 2016, operating net income available to common shareholders was $49.9 million, or $0.14 per diluted share.

“The First Niagara team remains fully committed to keeping our customers at the center of all we do and their efforts are reflected in our first-quarter performance, which is highlighted by continued strong core business fundamentals, particularly loan and deposit growth. Compared to the year-ago quarter, we grew average commercial loans by 5%, delivered 7% growth in average checking account deposit balances, and reported improved credit metrics," said Gary M. Crosby, President and Chief Executive Officer.  “We’re maintaining a strong competitive position while we move forward on our planned merger with KeyCorp.”

“In the first quarter, we delivered on the strong commercial loan pipeline at year-end which translated to an 11% annualized increase in period-end C&I loan balances and 5% QOQ increase on an average basis,” said Gregory W. Norwood, Chief Financial Officer. “Revenue and expenses were largely consistent with typical first quarter seasonal trends. Our originated net charge-offs of just 22 basis points in the first quarter also reflects continued stable asset quality as well as the recovery on an energy credit that was previously charged-off.”

First Quarter Results

In the first quarter of 2016, First Niagara reported GAAP net income available to common shareholders of $40.8 million, or $0.11 per diluted share, compared to $43.3 million, or $0.12 per diluted share in the fourth quarter of 2015. Reported results in the first quarter of 2016 and fourth quarter of 2015 reflect pre-tax merger related and restructuring costs of $13 million and $18 million, respectively. Excluding these items, operating net income available to common shareholders was $49.9 million, or $0.14 per diluted share, compared to $55.3 million, or $0.15 per diluted share in the fourth quarter of 2015.

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

• A $1 million increase in net interest income driven by a 5% annualized increase in average earning assets and two basis point expansion in net interest margin in part driven by higher short-term interest rates, and partially offset by lower net interest income from one less day in the first quarter.
• A $10 million or 12% decrease in noninterest income driven by moderation in capital markets income from strong fourth quarter levels which included a favorable credit valuation adjustment, seasonal declines in deposit service charges and merchant and card fees, lower wealth management income due to lower producer levels and equity market volatility, and lower mortgage banking revenues due to a $1 million repurchase reserve reversal taken in the fourth quarter of 2015.
• A $6 million or 2% decrease in operating noninterest expenses primarily driven by lower technology and professional services spend, partially offset by typical first quarter increases in payroll taxes and other benefits expenses.
• A higher effective tax rate attributable to the expiration of benefits from certain tax credit investments.

In the first quarter of 2015, First Niagara reported GAAP net income available to common shareholders of $43.8 million, or $0.12 per diluted share. Results in the first quarter of 2015 included $18 million of pre-tax restructuring charges. Excluding these nonrecurring items, first quarter 2015 net income available to common shareholders was $54.7 million, or $0.15 per diluted share.

Compared to the first quarter of 2015, the change in operating net income available to common shareholders in the first quarter of 2016 was primarily driven by:

• A 2% increase in net interest income driven by a 3% annualized increase in average earning assets, offset by a seven basis point compression in the net interest margin driven by increases in cost of deposits and borrowings.
• A $10 million increase in provision for loan losses driven by greater reserve build.
• A 4% decrease in noninterest income, driven by lower capital markets, lower commercial lines insurance revenues, and lower wealth management income attributable to market volatility in the first quarter of 2016.
• Modestly lower noninterest expense as an increase in incentive compensation expenses was offset by declines in amortization of intangibles, marketing spend, FDIC assessments and third party professional services expenses.

Operating Results (Non-GAAP)	Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Net interest income	$	267.6		$	266.5		$	263.5		$	263.1		$	262.9
Provision for credit losses		22.5			22.9			19.8			20.8			12.8
Noninterest income		79.1			89.4			83.4			86.6			82.2
Noninterest expense		241.9			247.4			245.4			247.9			243.5
Operating net income		57.4			62.8			60.5			61.0			62.2
Preferred stock dividend		7.5			7.5			7.5			7.5			7.5
Operating net income available to common	$	49.9		$	55.3		$	52.9		$	53.5		$	54.7
Weighted average diluted shares outstanding		354.0			353.8			353.2			352.8			352.6
Operating earnings per diluted share	$	0.14		$	0.15		$	0.15		$	0.15		$	0.15
Reported Results (GAAP)	Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Operating net income before non-op. items	$	57.4		$	62.8		$	60.5		$	61.0		$	62.2
Non-operating items (a)		9.1			12.0			-			-			10.9
Net Income		48.3			50.8			60.5			61.0			51.4
Preferred stock dividend		7.5			7.5			7.5			7.5			7.5
Net income available to common	$	40.8		$	43.3		$	52.9		$	53.5		$	43.8
Weighted average diluted shares outstanding		354.0			353.8			353.2			352.8			352.6
Earnings per diluted share	$	0.11		$	0.12		$	0.15		$	0.15		$	0.12

All amounts in millions except earnings per diluted share.

(a) Q1 2016: Non-operating charges comprised of merger related costs including employee retention expenses, classification of compensation of certain personnel dedicated to merger integration efforts as well as costs related to securing shareholder approval for the merger, net of taxes.

    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.

Loans

Average loans increased 5% annualized from the prior quarter to $24.1 billion, driven primarily by increases in the company’s commercial real estate (CRE), commercial business (C&I), and indirect auto portfolios. On an end-of-period basis, total loans increased 2% annualized from the prior quarter driven by an 11% annualized increase in C&I loans and 12% increase in indirect auto loans.

Average commercial loans, which include commercial business (C&I) and commercial real estate (CRE) loans, increased 7% annualized from prior quarter to $14.7 billion, primarily driven by growth in the company’s New England, Western Pennsylvania, and Tri-State regions.

• Average CRE loans increased 7% annualized from the prior quarter to $8.6 billion driven by new commercial mortgage and construction lending volumes.
• Average C&I loans increased 6% annualized QOQ to $6.1 billion reflecting strong origination activity across the company’s footprint.

Average consumer loans increased 2% annualized from prior quarter to $9.4 billion.

• Average indirect auto loan balances increased 9% annualized or by $51 million to $2.4 billion, as strong new origination activity was partially offset by increased pay-downs. Indirect auto originations during the quarter totaled $314 million. New originations in the first quarter yielded 3.41%, net of dealer reserve, compared to 3.30% on originations in the prior quarter.
• Average residential real estate loans were flat to the prior quarter. 
• Home equity balances increased for the twelfth consecutive quarter to $3.1 billion, or 2% annualized from the prior quarter as new volumes were offset by pay-downs driven by higher customer refinancing activity given low mortgage rates.
• Credit card balances were down $8 million, or 11% annualized due to typical seasonality.

Average Loans	Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Commercial real estate	$	8,625		$	8,476		$	8,277		$	8,257		$	8,263
Commercial business		6,062			5,971			5,972			5,830			5,797
Total commercial		14,687			14,447			14,249			14,087			14,060
Residential real estate		3,346			3,346			3,338			3,326			3,338
Home equity		3,066			3,052			3,001			2,963			2,939
Indirect auto		2,420			2,369			2,293			2,238			2,187
Credit cards		297			305			306			304			311
Other consumer		242			250			255			260			275
Total consumer		9,371			9,322			9,193			9,091			9,050
Total loans	$	24,058		$	23,769		$	23,442		$	23,178		$	23,110

All amounts in millions.

Credit Quality

At March 31, 2016, the allowance for loan losses was $253 million, compared to $242 million at December 31, 2015.  In the first quarter, provision for loan losses totaled $22.5 million, compared to $22.4 million in the prior quarter. Nonperforming assets comprised 0.59% of total assets, essentially flat compared to December 31, 2015.  Information for both the originated and acquired portfolios follows.

	Q1 2016										Q4 2015
$ in millions	Originated			Acquired			Total				Originated			Acquired			Total
Provision for loan losses*	$	22 .5		$	0.0		$	22.5			$	22.4		$	0.0		$	22.4
Net charge-offs		11.4			0.4			11.8				19.1			0.0			19.1
NCOs/ Avg Loans		0.22	%		0.05	%		0.20	%			0.37	%		0.00	%		0.32	%
Total loans**	$	21,362		$	2,817		$	24,178			$	21,101		$	2,937		$	24,038
Allowance	$	247.8		$	5.0		$	252.8			$	236.7		$	5.3		$	242.0
Allowance/Loans		1.16	%		0.18	%		1.05	%			1.12	%		0.18	%		1.01	%
Nonperforming Loans	$	196.7		$	24.9		$	221.5			$	188.2		$	25.3		$	213.6
NPLs/ Loans		0.92	%		0.88	%		0.92	%			0.89	%		0.86	%		0.89	%
Criticized	$	775.9		$	178.5		$	954.5			$	761.6		$	183.2		$	944.8
Criticized as % of Loans		3.63	%		6.34	%		3.95	%			3.61	%		6.24	%		3.93	%
Classified	$	462.9		$	138.6		$	601.5			$	450.7		$	152.2		$	602.9
Classified as % of Loans		2.17	%		4.92	%		2.49	%			2.14	%		5.18	%		2.51	%

(*) Excludes provision for unfunded commitment of $0.5 million in 4Q15; none in 1Q16 (**) Acquired loans net of associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $23 million, compared to $22 million in the fourth quarter of 2015. The current quarter provision included $11 million to cover net charge-offs on originated loans and $11 million to support both $261 million in originated loan growth and reserve  build toward the company’s exposure to scrap metal companies and demolition companies whose profitability is partially dependent on the sale of scrap metal. Originated net charge-offs in the first quarter equaled $11 million or 22 basis points of average originated loans, down from 37 basis points in the fourth quarter of 2015. The decrease in net charge-offs were driven by a recovery on a previously charged-off energy credit as well as moderation from elevated fourth quarter levels which included losses related to two commercial credits.

At March 31, 2016, nonperforming originated loans totaled $197 million, or 0.92% of originated loans, compared to 0.89% at December 31, 2015. The increase was primarily driven by new inflows of a few energy-related commercial credits, as well as a demolition contractor whose profitability is partially dependent on the sale of scrap metal, and offset by pay-downs, charge-offs and resolutions. At March 31, 2016, the allowance for loan losses on originated loans totaled $248 million or 1.16% of such loans, compared to $237 million or 1.12% of such loans at December 31, 2015. The increase in allowance coverage ratio reflects reserve build toward the company’s modest metals exposure.

Acquired loans

There was no provision for losses on acquired loans in both the first quarter of 2016 and the fourth quarter of 2015.  Net charge-offs on the acquired portfolio were $0.4 million, compared to zero in the prior quarter.  At March 31, 2016, the allowance for loan losses on acquired loans totaled $5 million, unchanged from December 31, 2015. Acquired nonperforming loans totaled $25 million, also unchanged from the prior quarter.  At March 31, 2016, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $57 million.

Deposits

Average deposits increased 1% annualized from the prior quarter to $28.9 billion.

• Non-interest checking deposit balances averaged $5.7 billion, decreased 14% annualized from the prior quarter driven by business and municipal deposit balances but were up 4% from the year-ago period.
• Time deposits increased 24% annualized to $3.7 billion, driven by a $144 million increase in brokered certificate of deposit (CD) balances and an $86 million increase in Retail CDs.
• Money market deposit balances were flat from the prior quarter as a $135 million, or 8%, increase in retail money market balances was offset by seasonal declines in municipal money market deposit balances.
• Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking account balances, increased 6% from the year-ago period and decreased 6% annualized from the prior quarter and currently represents 38% of the company’s deposit balances.
• The 2% sequential increase in interest-checking deposit balances was driven by a $74 million increase in retail interest checking balances.
• Average savings balances increased 1% annualized from the prior quarter driven by modestly higher retail balances.

Average Deposits	Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Noninterest-bearing deposits	$	5,666		$	5,868		$	5,661		$	5,427		$	5,430
Savings accounts		3,371			3,364			3,427			3,494			3,432
Interest-bearing checking		5,362			5,333			5,165			5,131			5,001
Money market deposits		10,725			10,719			10,403			10,251			10,132
Certificates of deposit		3,726			3,515			3,962			3,917			3,778
Total deposits	$	28,850		$	28,799		$	28,618		$	28,220		$	27,773

All amounts in millions.

Net Interest Income

First quarter 2016 GAAP net interest income of $268 million increased $1 million from the prior quarter, driven in part by earning asset growth and modest benefit from an increase in short-term interest rates and offset by one less day in the quarter. Reported net interest margin of 3.00% was up 2 basis points from the prior quarter.

• Yields on loans increased 8 basis points to 3.73% primarily reflecting benefit from the recent increase in short-term interest rates.
• Yields on investment securities increased 2 basis points to 2.92%.
• The average cost of interest-bearing deposits increased 2 basis points from the prior quarter to 0.32%.

Net Interest Income (Tax Equivalent)	Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Quarter as Reported	$	272.8		$	271.7		$	268.5		$	268.0		$	267.8
Less: CLO pay-off discount recognition		-			-			(1.2	)		(2.3	)		-
Add: CMO Retroactive premium amortization		-			-			-			1.1			-
Add: CRE prepayment penalties		-			(0.5	)		-			-			-
Less: Early loan payoffs		-			-			-			(1.7	)		-
Less: Other miscellaneous items		(0.6	)		(0.5	)		-			-			-
Sub-Total		(0.6	)		(1.0	)		(1.2	)		(2.9	)		-
Normalized Net Interest Income	$	272.2		$	270.7		$	267.3		$	265.1		$	267.8

All amounts in millions.

Net Interest Margin (Tax Equivalent)	Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Quarter as Reported		3.00	%		2.98	%		2.98	%		3.02	%		3.07	%
Less: CLO pay-off discount recognition		-			-			(0.01	)%		(0.03	)%		-
Add: CMO Retroactive premium amortization		-			-			-			0.01	%		-
Add: CRE prepayment penalties		-			(0.01	)%		-			-			-
Less: Early loan payoffs		-			-			-			(0.02	%)		-
Less: Other miscellaneous items		(0.01	)%		(0.01	)%		-			-			-
Sub-Total		(0.01	)%		(0.02	)%		(0.01	)%		(0.03	)%		-
Normalized Net Interest Margin		2.99	%		2.96	%		2.97	%		2.99	%		3.07	%

Noninterest Income

First quarter 2016 noninterest income of $79 million decreased 12% or $10 million compared to the prior quarter.

• Deposit service charges decreased $1 million or 6% due to typical first quarter seasonality.
• Merchant and card fees decreased $1 million driven by seasonally lower interchange revenues consistent with lower card transaction volumes.
• Wealth management revenue decreased $1 million from prior quarter driven in part by equity market volatility.
• Capital markets income, which includes income from derivatives and syndications, decreased $4 million, primarily driven by an unfavorable quarter-over-quarter change in credit valuation adjustments.
• Mortgage banking revenues were $1 million lower than the prior quarter reflecting a $1 million repurchase reserve reversal recognized in the fourth quarter of 2015. Locked volumes increased QOQ, while gain-on-sale margin remained relatively flat.
• Other noninterest income decreased $2 million from the prior quarter due to lower equity and investment gains as well as a one-time gain from the sale of a low-income housing property recognized in the prior quarter.

Noninterest Income	Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Deposit service charges	$	21.5		$	22.9		$	22.9		$	22.2		$	20.4
Insurance commissions		14.6			14.9			18.3			17.1			15.7
Merchant and card fees		12.3			13.3			13.4			13.3			11.9
Wealth management services		13.6			14.6			14.6			15.7			14.7
Mortgage banking		4.0			4.9			5.1			5.8			4.9
Capital markets income		2.3			6.6			2.6			5.3			4.2
Lending and leasing		4.1			4.2			4.5			4.0			4.4
Bank owned life insurance		3.5			3.3			2.8			3.2			3.6
Other income		3.2			4.7			(0.7	)		0.1			2.6
Total noninterest income	$	79.1		$	89.4		$	83.4		$	86.6		$	82.2

All amounts in millions.

Noninterest Expense

Operating noninterest expenses totaled $242 million in the first quarter of 2016, or 2% lower than fourth quarter 2015 levels. The quarter-over-quarter decrease was primarily driven by lower technology and professional services expenses.

• Salaries and benefits expense of $115 million increased modestly compared to the prior quarter as typical resetting of payroll taxes and other seasonal benefits more than offset lower salaries from lower headcount.
• Occupancy and equipment expense increased 2%, due primarily to lower rental income associated with a property that was sold.
• Technology and communications decreased $3 million, or 7% from prior quarter on lower infrastructure costs and depreciation expense.
• Marketing and advertising spend were $1 million lower compared to fourth quarter levels and consistent with seasonal patterns.
• Professional services fees decreased $3 million from fourth quarter levels driven by pause of certain projects and the associated decline in third party services expenses.
• Other expenses decreased $1 million sequentially driven in part by lower other real estate (ORE) valuation write-downs and other corporate expenses.

Operating Noninterest Expense (Non-GAAP)*	Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Salaries and employee benefits	$	115.0		$	113.1		$	113.8		$	113.6		$	112.0
Occupancy and equipment		26.5			26.0			25.5			26.0			27.3
Technology and communications		35.4			38.2			38.3			36.5			35.1
Marketing and advertising		8.8			9.7			8.4			10.3			9.9
Professional services		12.4			15.4			18.1			16.3			13.1
Amortization of intangibles		3.9			4.0			4.0			5.1			6.2
Federal deposit insurance premiums		10.5			10.4			10.0			11.8			11.2
Other expense		29.4			30.7			27.3			28.4			28.9
Total operating noninterest expense	$	241.9		$	247.4		$	245.4		$	247.9		$	243.5

*All amounts in millions. See appendix for reconciliation of GAAP to Non-GAAP amounts            In the first quarter of 2016, the operating efficiency ratio was 69.8%, compared to 69.5% 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 March 31, 2016, the company’s consolidated Total Risk Based capital and Common Equity Tier 1 capital ratios were 12.1% and 8.6%, respectively, relatively unchanged from December 31, 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, $30 billion in deposits, and approximately 5,300 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)
								2016				2015													2014
							First				Fourth			Third			Second			First				Fourth
							Quarter				Quarter			Quarter			Quarter			Quarter				Quarter
Interest income:
			Loans and leases				$	219,050			$	214,945		$	211,407		$	211,899		$	210,371			$	214,609
			Investment securities and other					89,759				88,825			87,914			86,356			86,280				86,919
				Total interest income				308,809				303,770			299,321			298,255			296,651				301,528
Interest expense:
			Deposits					18,640				17,147			17,040			16,568			15,344				14,295
			Borrowings					22,578				20,074			18,790			18,577			18,363				17,450
				Total interest expense				41,218				37,221			35,830			35,145			33,707				31,745
					Net interest income			267,591				266,549			263,491			263,110			262,944				269,783
Provision for credit losses								22,519				22,900			19,768			20,756			12,765				35,706
					Net interest income after provision			245,072				243,649			243,723			242,354			250,179				234,077
Noninterest income:
			Deposit service charges					21,507				22,919			22,944			22,208			20,389				22,611
			Insurance commissions					14,562				14,920			18,252			17,060			15,714				14,764
			Merchant and card fees					12,329				13,318			13,423			13,317			11,907				13,043
			Wealth management services					13,610				14,567			14,572			15,718			14,650				14,404
			Mortgage banking					3,950				4,894			5,070			5,783			4,887				4,600
			Capital markets income					2,323				6,580			2,608			5,284			4,152				8,312
			Lending and leasing					4,051				4,248			4,487			3,998			4,353				4,567
			Bank owned life insurance					3,540				3,259			2,819			3,160			3,592				3,187
			Other income					3,196				4,696			(732	)		79			2,600				(8,311	)
				Total noninterest income				79,068				89,401			83,443			86,607			82,244				77,177
Noninterest expense:
			Salaries and employee benefits					115,007				113,063			113,794			113,561			111,973				110,985
			Occupancy and equipment					26,466				25,961			25,538			26,021			27,332				28,379
			Technology and communications					35,419				38,232			38,301			36,486			35,061				33,940
			Marketing and advertising					8,821				9,719			8,445			10,297			9,863				11,584
			Professional services					12,401				15,361			18,052			16,321			13,070				16,644
			Amortization of intangibles					3,860				3,972			4,001			5,092			6,205				6,432
			Federal deposit insurance premiums					10,460				10,383			10,026			11,750			11,158				11,911
			Merger and acquisition integration expenses					13,473				14,198			-			-			-				-
			Restructuring charges					-				3,378			-			-			17,517				9,066
			Deposit account remediation					-				-			-			-			-				(23,000	)
			Other expense					29,445				30,728			27,276			28,371			28,859				28,371
				Total noninterest expense				255,352				264,995			245,433			247,899			261,038				234,312
				Income before income tax				68,788				68,055			81,733			81,062			71,385				76,942
Income tax expense								20,481				17,255			21,251			20,052			20,000				7,875
				Net income				48,307				50,800			60,482			61,010			51,385				69,067
Preferred stock dividend								7,547				7,547			7,547			7,547			7,547				7,547
				Net income available to common stockholders			$	40,760			$	43,253		$	52,935		$	53,463		$	43,838			$	61,520
Financial Ratios:
Earnings per basic share							$	0.11			$	0.12		$	0.15		$	0.15			0.12				0.17
Earnings per diluted share							$	0.11			$	0.12		$	0.15		$	0.15			0.12				0.17
Weighted average shares outstanding - basic(1)								351,372				351,306			351,293			351,126			350,741				350,444
Weighted average shares outstanding - diluted(1)								353,965				353,797			353,248			352,791			352,621				352,152
Net revenue(2)							$	346,659			$	355,950		$	346,934		$	349,717		$	345,188			$	346,960
Noninterest income as a percentage of net revenue(2)								22.81	%			25.12	%		24.05	%		24.76	%		23.83	%			22.24	%
Pre-tax, pre-provision income(3)							$	91,307			$	90,955		$	101,501		$	101,818		$	84,150			$	112,648
Pre-tax, pre-provision income per diluted share(3)							$	0.26			$	0.26		$	0.29		$	0.29		$	0.24			$	0.32
Pre-tax, pre-provision return on average assets(3)								0.92	%			0.91	%		1.03	%		1.05	%		0.88	%			1.17	%
Net interest margin(4)								3.00	%			2.98	%		2.98	%		3.02	%		3.07	%			3.11	%
Interest yield on average loans(4)								3.73	%			3.65	%		3.64	%		3.73	%		3.75	%			3.78	%
Rate paid on interest-bearing liabilities								0.56	%			0.51	%		0.50	%		0.49	%		0.48	%			0.45	%
Efficiency ratio								73.7	%			74.4	%		70.7	%		70.9	%		75.6	%			67.5	%
Expenses as a percentage of average loans and deposits								1.9	%			2.0	%		1.9	%		1.9	%		2.1	%			1.8	%
Effective tax rate								29.8	%			25.4	%		26.0	%		24.7	%		28.0	%			10.2	%
Return on average assets(5)								0.49	%			0.51	%		0.61	%		0.63	%		0.54	%			0.72	%
Return on average equity(5)								4.68	%			4.85	%		5.78	%		5.90	%		5.05	%			6.62	%
Return on average tangible equity(3)(5)								7.04	%			7.32	%		8.73	%		8.94	%		7.68	%			10.07	%
Return on average common equity								4.30	%			4.50	%		5.51	%		5.63	%		4.69	%			6.42	%
Return on average tangible common equity(3)								6.77	%			7.10	%		8.72	%		8.94	%		7.48	%			10.24	%
	(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																		3
(in thousands)
								2016				2015													2014
							March 31,				December 31,			September 30,			June 30,			March 31,				December 31,
Cash and cash equivalents							$	382,539			$	672,243		$	420,289		$	527,323		$	387,676			$	420,033
Investment securities:
			Available for sale					5,439,220				5,471,291			5,725,608			5,750,860			5,911,419				5,915,338
			Held to maturity					6,720,817				6,387,689			6,280,049			6,169,838			6,214,561				5,941,621
			FHLB and FRB common stock					375,960				410,452			373,066			379,135			375,090				411,857
				Total investment securities				12,535,997				12,269,432			12,378,723			12,299,833			12,501,070				12,268,816
Loans held for sale								26,592				46,096			51,056			59,816			48,755				39,825
Loans and leases:
			Commercial:
				Real estate				8,625,965				8,652,255			8,365,808			8,312,332			8,287,108				8,204,027
				Business				6,174,753				6,013,217			6,031,358			5,923,524			5,790,980				5,775,413
					Total commercial loans			14,800,718				14,665,472			14,397,166			14,235,856			14,078,088				13,979,440
			Consumer:
				Residential real estate				3,330,533				3,354,639			3,345,701			3,329,799			3,330,216				3,353,081
				Home equity				3,057,154				3,068,962			3,032,618			2,984,872			2,943,844				2,936,123
				Indirect auto				2,464,318				2,393,105			2,330,826			2,256,004			2,200,913				2,166,320
				Credit cards				288,747				310,813			305,779			304,682			301,228				324,113
				Other consumer				236,911				244,935			254,109			257,204			263,985				278,305
					Total consumer loans			9,377,663				9,372,454			9,269,033			9,132,561			9,040,186				9,057,942
				Total loans and leases				24,178,381				24,037,926			23,666,199			23,368,417			23,118,274				23,037,382
			Allowance for loan losses					252,800				242,036			238,700			235,600			231,138				234,251
					Loans and leases, net			23,925,581				23,795,890			23,427,499			23,132,817			22,887,136				22,803,131
Bank owned life insurance								439,084				436,709			434,263			431,335			428,454				426,192
Goodwill and other intangibles								1,392,367				1,396,227			1,400,199			1,404,201			1,410,800				1,417,005
Other assets								1,370,275				1,301,789			1,301,152			1,208,218			1,243,588				1,176,036
Total assets							$	40,072,435			$	39,918,386		$	39,413,181		$	39,063,543		$	38,907,479			$	38,551,038
Deposits:
			Savings accounts				$	3,428,924			$	3,389,728		$	3,359,320		$	3,483,777		$	3,488,441			$	3,451,616
			Interest-bearing checking					5,553,928				5,478,947			5,285,987			5,088,856			5,158,264				5,084,456
			Money market deposits					10,884,350				10,653,792			10,483,721			10,303,873			10,368,358				9,962,220
			Noninterest-bearing deposits					5,739,509				5,834,534			5,813,571			5,549,944			5,500,484				5,407,382
			Certificates of deposit					3,954,033				3,343,878			3,873,521			4,020,367			3,734,226				3,875,563
					Total deposits			29,560,744				28,700,879			28,816,120			28,446,817			28,249,773				27,781,237
Short-term borrowings								3,255,890				4,348,586			4,086,415			4,275,886			4,739,264				5,471,974
Long-term borrowings								2,608,014				2,308,101			1,783,402			1,683,476			1,233,550				733,620
Other liabilities								498,084				434,492			587,867			536,239			559,646				471,449
			Total liabilities					35,922,732				35,792,058			35,273,804			34,942,418			34,782,233				34,458,280
Preferred stockholders' equity								338,002				338,002			338,002			338,002			338,002				338,002
Common stockholders' equity								3,811,701				3,788,326			3,801,375			3,783,123			3,787,244				3,754,756
			Total stockholders' equity					4,149,703				4,126,328			4,139,377			4,121,125			4,125,246				4,092,758
Total liabilities and stockholders' equity							$	40,072,435			$	39,918,386		$	39,413,181		$	39,063,543		$	38,907,479			$	38,551,038
Selected balance sheet information:
Total interest-earning assets(1)							$	36,789,339			$	36,677,134		$	36,099,580		$	35,813,498		$	35,594,208			$	35,310,447
Total interest-bearing liabilities								29,685,139				29,523,032			28,872,365			28,856,235			28,722,103				28,579,449
Net interest-earning assets							$	7,104,200			$	7,154,102		$	7,227,215		$	6,957,263		$	6,872,105			$	6,730,998
Tangible common equity(1)(2)							$	2,419,334			$	2,392,099		$	2,401,176		$	2,378,922		$	2,376,444			$	2,337,751
Unrealized gain (loss) on available for sale securities, net of tax(3)								1,246				(9,577	)		29,877			37,464			68,194				52,244
Total core deposits							$	25,606,711			$	25,357,001		$	24,942,599		$	24,426,450		$	24,515,547			$	23,905,674
Originated loans(4)							$	21,361,753			$	21,101,040		$	20,591,532		$	19,929,719		$	19,528,609			$	19,295,553
Acquired loans(5)								2,873,372				2,998,530			3,138,568			3,517,525			3,681,354				3,834,931
Credit related discount on acquired loans(6)								(56,744	)			(61,644	)		(63,901	)		(78,827	)		(91,689	)			(93,102	)
			Total Loans				$	24,178,381			$	24,037,926		$	23,666,199		$	23,368,417		$	23,118,274			$	23,037,382
(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
					March 31, 2016									December 31, 2015									March 31, 2015
					Average			Interest(1)			Yields			Average			Interest(1)			Yields			Average			Interest(1)			Yields
					Balances						and Rates(1)			Balances						and Rates(1)			Balances						and Rates(1)
Interest-earning assets:
Loans and leases(2)
Commercial:
Real estate					$	8,625		$	79			3.61	%	$	8,476		$	77			3.57	%	$	8,263		$	74			3.60	%
Business						6,062			52			3.42			5,971			50			3.28			5,797			50			3.43
Total commercial loans						14,687			131			3.53			14,447			127			3.45			14,060			124			3.53
Consumer:
Residential real estate						3,346			31			3.65			3,346			31			3.65			3,338			32			3.78
Home equity						3,066			30			3.93			3,052			29			3.80			2,939			28			3.91
Indirect auto						2,420			18			2.91			2,369			17			2.90			2,187			15			2.79
Credit cards						297			9			11.80			305			9			11.45			311			9			11.74
Other consumer						242			4			8.57			250			5			8.50			275			6			8.49
Total consumer loans						9,371			92			3.94			9,322			91			3.88			9,050			90			4.02
			Total loans and leases			24,058			223			3.73			23,769			218			3.65			23,110			214			3.75
Residential MBS						7,864			48			2.43			7,705			47			2.44			7,180			45			2.49
Commercial MBS						997			12			4.68			1,126			12			4.31			1,404			11			3.26
Other investment securities (3)						3,513			30			3.53			3,540			31			3.47			3,554			31			3.52
			Total securities, at amortized cost			12,374			90			2.92			12,371			90			2.90			12,138			87			2.88
Money market and other investments						205			1			1.37			88			1			2.29			158			-			1.01
Total interest-earning assets						36,637		$	314			3.45	%		36,228		$	309			3.38	%		35,406		$	302			3.45	%
Goodwill and other intangibles						1,394									1,398									1,414
Other noninterest-earning assets						1,929									1,951									1,887
Total assets					$	39,960								$	39,577								$	38,707
Interest-bearing liabilities:
Deposits
Savings accounts					$	3,371		$	1			0.09	%	$	3,364		$	1			0.09	%	$	3,432		$	-			0.08	%
Interest-bearing checking						5,362			-			0.03			5,333			-			0.03			5,001			-			0.03
Money market deposits						10,725			9			0.32			10,719			8			0.30			10,132			7			0.26
Certificates of deposit						3,726			9			0.97			3,515			8			0.89			3,778			8			0.84
Total interest bearing deposits						23,184			19			0.32	%		22,931			17			0.30	%		22,343			15			0.28	%
Borrowings
Short-term borrowings						3,815			7			0.72	%		4,014			6			0.56	%		5,125			6			0.46	%
Long-term borrowings						2,416			15			2.62			1,971			14			2.89			1,027			13			4.98
Total borrowings						6,231			22			1.46			5,985			20			1.33			6,152			19			1.21
Total interest-bearing liabilities						29,415		$	41			0.56	%		28,916		$	37			0.51	%		28,495		$	34			0.48	%
Noninterest-bearing deposits						5,666									5,868									5,430
Other noninterest-bearing liabilities						725									640									654
Total liabilities						35,806									35,424									34,579
Total stockholders' equity						4,154									4,153									4,128
Total liabilities and stockholders' equity					$	39,960								$	39,577								$	38,707
Net interest income (FTE)								$	273								$	272								$	268
Taxable Equivalent Adjustment(1)									5									5									5
Total core deposits					$	25,124		$	10			0.15	%	$	25,284		$	9			0.15	%	$	23,995		$	7			0.13	%
Total transactional deposits						11,028			-			0.02	%		11,201			-			0.02	%		10,431			-			0.01	%
Total deposits						28,850			19			0.26	%		28,799			17			0.24	%		27,773			15			0.22	%
Tax equivalent net interest rate spread												2.89	%								2.87	%								2.97	%
Tax equivalent net interest rate margin												3.00	%								2.98	%								3.07	%
(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)
									2016				2015													2014
								First				Fourth			Third			Second			First				Fourth
								Quarter				Quarter			Quarter			Quarter			Quarter				Quarter
Beginning balance								$	242,036			$	238,700		$	235,600		$	231,138		$	234,251			$	222,753
Net loan (charge-offs) recoveries:
			Commercial real estate					$	(254	)		$	(1,476	)	$	(2,686	)	$	(5,525	)	$	(5,825	)		$	(2,008	)
			Commercial business						(3,903	)			(10,441	)		(6,286	)		(3,513	)		(4,178	)			(12,650	)
			Residential real estate						(135	)			(94	)		(230	)		(197	)		(266	)			(476	)
			Home equity						(995	)			(723	)		(1,056	)		(1,367	)		(1,526	)			(1,406	)
			Indirect auto						(2,030	)			(2,122	)		(1,743	)		(1,342	)		(1,226	)			(2,241	)
			Credit cards						(2,654	)			(2,450	)		(2,215	)		(2,522	)		(2,450	)			(2,464	)
			Other consumer						(1,784	)			(1,758	)		(1,952	)		(1,528	)		(1,807	)			(1,457	)
						Total net loan charge-offs		$	(11,755	)		$	(19,064	)	$	(16,168	)	$	(15,994	)	$	(17,278	)		$	(22,702	)
Provision for loan losses									22,519				22,400			19,268			20,456			14,165				34,200
				Ending balance				$	252,800			$	242,036		$	238,700		$	235,600		$	231,138			$	234,251
Supplemental information
Allowance to loans									1.05	%			1.01	%		1.01	%		1.01	%		1.00	%			1.02	%
Allowance for originated loans to originated loans(1)									1.16	%			1.12	%		1.13	%		1.15	%		1.15	%			1.18	%
Net charge-offs (recoveries) to average loans (annualized)
			Commercial real estate						0.01	%			0.07	%		0.13	%		0.27	%		0.29	%			0.10	%
			Commercial business						0.26	%			0.70	%		0.42	%		0.24	%		0.29	%			0.87	%
				Total commercial loans					0.11	%			0.33	%		0.25	%		0.26	%		0.28	%			0.42	%
			Residential real estate						0.02	%			0.01	%		0.03	%		0.02	%		0.03	%			0.06	%
			Home equity						0.13	%			0.09	%		0.14	%		0.18	%		0.21	%			0.19	%
			Indirect auto						0.34	%			0.36	%		0.30	%		0.24	%		0.22	%			0.42	%
			Credit cards						3.57	%			3.21	%		2.90	%		3.32	%		3.16	%			3.13	%
			Other consumer						2.95	%			2.81	%		3.06	%		2.35	%		2.63	%			2.06	%
				Total consumer loans					0.33	%			0.31	%		0.32	%		0.31	%		0.33	%			0.36	%
			Total loans						0.20	%			0.32	%		0.28	%		0.28	%		0.30	%			0.40	%
Net charge-offs (recoveries) of originated loans to average originated loans (annualized)(1)
			Commercial real estate						0.00	%			0.08	%		0.14	%		0.31	%		0.24	%			0.06	%
			Commercial business						0.26	%			0.72	%		0.44	%		0.25	%		0.31	%			0.93	%
				Total commercial loans					0.11	%			0.36	%		0.27	%		0.28	%		0.27	%			0.44	%
			Residential real estate						0.02	%			0.02	%		0.04	%		0.04	%		0.05	%			0.09	%
			Home equity						0.16	%			0.14	%		0.14	%		0.17	%		0.16	%			0.15	%
			Indirect auto						0.34	%			0.36	%		0.30	%		0.24	%		0.22	%			0.42	%
			Credit cards						3.57	%			3.21	%		2.90	%		3.32	%		3.16	%			3.13	%
			Other consumer						2.95	%			2.81	%		3.06	%		2.35	%		2.63	%			2.06	%
				Total consumer loans					0.40	%			0.39	%		0.38	%		0.37	%		0.38	%			0.44	%
			Total loans						0.22	%			0.37	%		0.31	%		0.31	%		0.31	%			0.44	%
Nonperforming loans:
			Originated(1):
			Commercial real estate					$	37,087			$	44,438		$	54,699		$	60,021		$	65,655			$	53,164
			Commercial business						71,999				56,382			45,389			42,979			54,506				45,201
			Residential real estate						30,234				31,513			32,455			32,877			32,791				33,652
			Home equity						35,701				35,561			34,191			27,092			26,163				23,749
			Indirect auto						16,536				15,131			13,795			13,066			13,399				12,616
			Other consumer						5,093				5,201			5,047			4,917			5,065				5,140
				Total originated nonperforming loans					196,650				188,226			185,576			180,952			197,579				173,522
				Total acquired nonperforming loans(2)					24,874				25,335			25,365			26,553			30,236				30,223
					Total nonperforming loans				221,524				213,561			210,941			207,505			227,815				203,745
			Real estate owned						16,457				16,063			18,359			17,397			19,128				20,541
				Total nonperforming assets(3)				$	237,981			$	229,624		$	229,300		$	224,902		$	246,943			$	224,286
Accruing troubled debt restructurings (TDR)								$	63,659			$	62,630		$	60,941		$	64,643		$	64,401			$	67,102
Loans 90 days past due still accruing(4)									57,259				67,718			69,879			78,279			87,213				93,903
Total classified loans(5)									601,539				602,912			591,771			592,148			615,518				609,316
Total criticized loans(6)								$	954,480			$	944,779		$	858,243		$	938,951		$	990,656			$	1,041,050
Total nonperforming loans to loans									0.92	%			0.89	%		0.89	%		0.89	%		0.99	%			0.88	%
Total nonperforming originated loans to originated loans(1)									0.92	%			0.89	%		0.90	%		0.91	%		1.01	%			0.90	%
Total nonperforming assets to loans and real estate owned									0.98	%			0.95	%		0.97	%		0.96	%		1.07	%			0.97	%
Total nonperforming assets to assets									0.59	%			0.58	%		0.58	%		0.58	%		0.63	%			0.58	%
Allowance to nonperforming loans									114.1	%			113.3	%		113.2	%		113.5	%		101.5	%			115.0	%
Originated loans(1)								$	21,361,753			$	21,101,040		$	20,591,532		$	19,929,719		$	19,528,609			$	19,295,553
Acquired loans(7)									2,873,372				2,998,530			3,138,568			3,517,525			3,681,354				3,834,931
Credit related discount on acquired loans(8)									(56,744	)			(61,644	)		(63,901	)		(78,827	)		(91,689	)			(93,102	)
			Total Loans					$	24,178,381			$	24,037,926		$	23,666,199		$	23,368,417		$	23,118,274			$	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, 2015.
(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)
							2016				2015													2014
						March 31,				December 31,			September 30,			June 30,			March 31,				December 31,
First Niagara Financial Group, Inc. capital ratios(1)(2):
			Tier 1 risk based capital				10.12	%			10.08	%		10.05	%		10.03	%		10.02	%			9.81	%
			Total risk based capital				12.09	%			12.01	%		11.97	%		11.96	%		11.95	%			11.75	%
			Common equity tier 1 capital				8.58	%			8.55	%		8.52	%		8.50	%		8.48	%			N/A
			Tier 1 common capital(3)				N/A				N/A			N/A			N/A			N/A				8.20	%
			Leverage				7.55	%			7.62	%		7.66	%		7.60	%		7.56	%			7.50	%
			Equity to assets				10.36	%			10.34	%		10.50	%		10.55	%		10.60	%			10.62	%
			Tangible common equity to tangible assets(3)				6.25	%			6.21	%		6.32	%		6.32	%		6.34	%			6.30	%
			Total risk weighted assets			$	28,809			$	28,881		$	28,716		$	28,445		$	28,152			$	28,186
First Niagara Bank, N.A capital ratios(1)(2):
			Tier 1 risk based capital				10.73	%			10.65	%		10.67	%		10.66	%		10.65	%			10.48	%
			Total risk based capital				11.67	%			11.55	%		11.56	%		11.54	%		11.53	%			11.37	%
			Common equity tier 1 capital				10.73	%			10.65	%		10.67	%		10.66	%		10.65	%		N/A
			Leverage				8.00	%			8.05	%		8.12	%		8.07	%		8.03	%			8.01	%
			Total risk weighted assets			$	28,742			$	28,813		$	28,632		$	28,359		$	28,068			$	28,146
Number of branches							392				392			394			394			394				411
Full time equivalent employees							5,322				5,428			5,397			5,364			5,322				5,572
Share information and per share metrics:
			Common shares outstanding				354,977				354,762			354,788			354,890			353,717				353,388
			Preferred shares outstanding				14,000				14,000			14,000			14,000			14,000				14,000
			Treasury shares				11,025				11,240			11,214			11,112			12,285				12,614
			Market price (NASDAQ: FNFG):			$	9.68			$	10.85		$	10.21		$	9.44		$	8.84			$	8.43
			Book value per common share(4)				10.84				10.78			10.82			10.77			10.80				10.71
			Tangible book value per common share(3)(4)				6.88				6.81			6.84			6.77			6.78				6.67
			Price/Book				89.30	%			100.65	%		94.36	%		87.65	%		81.85	%			78.71	%
			Price/Tangible book(1)				140.70	%			159.32	%		149.27	%		139.44	%		130.38	%			126.39	%
			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				72.73	%			66.67	%		53.33	%		53.33	%		66.67	%			47.06	%
			Dividend yield (annualized)				3.32	%			2.93	%		3.11	%		3.40	%		3.67	%			3.77	%
(1) Represents an estimate as of March 31, 2016.  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)
								2016				2015													2014
							First				Fourth			Third			Second			First				Fourth
							Quarter				Quarter			Quarter			Quarter			Quarter				Quarter
Financial ratios computed on an operating basis(1):
Earnings per basic share							$	0.14			$	0.16		$	0.15		$	0.15		$	0.15			$	0.15
Earnings per diluted share							$	0.14			$	0.15		$	0.15		$	0.15		$	0.15			$	0.15
Weighted average shares outstanding - basic(2)								351,372				351,306			351,293			351,126			350,741				350,444
Weighted average shares outstanding - diluted(2)								353,965				353,797			353,248			352,791			352,621				352,152
Noninterest income as a percentage of net revenue(3)								22.81	%			25.12	%		24.05	%		24.76	%		23.83	%			22.24	%
Pre-tax, pre-provision income								104,780				108,531			101,501			101,818			101,667				98,714
Pre-tax, pre-provision income per diluted share							$	0.30			$	0.31		$	0.29		$	0.29		$	0.29			$	0.28
Pre-tax, pre-provision return on average assets								1.05	%			1.09	%		1.03	%		1.05	%		1.07	%			1.02	%
Net interest margin(4)								3.00	%			2.98	%		2.98	%		3.02	%		3.07	%			3.11	%
Interest yield on average loans(4)								3.73	%			3.65	%		3.64	%		3.73	%		3.75	%			3.78	%
Rate paid on interest-bearing liabilities								0.56	%			0.51	%		0.50	%		0.49	%		0.48	%			0.45	%
Efficiency ratio								69.8	%			69.5	%		70.7	%		70.9	%		70.5	%			71.5	%
Effective tax rate								30.2	%			26.6	%		26.0	%		24.7	%		30.0	%			3.7	%
Return on average assets								0.58	%			0.63	%		0.61	%		0.63	%		0.65	%			0.63	%
Return on average equity								5.56	%			6.00	%		5.78	%		5.90	%		6.12	%			5.82	%
Return on average tangible equity(5)								8.37	%			9.05	%		8.73	%		8.94	%		9.30	%			8.85	%
Return on average common equity								5.26	%			5.75	%		5.51	%		5.63	%		5.85	%			5.54	%
Return on average tangible common equity(6)								8.29	%			9.07	%		8.72	%		8.94	%		9.34	%			8.85	%
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):
			Total noninterest expense on operating basis (Non-GAAP)				$	241,879			$	247,419		$	245,433		$	247,899		$	243,521			$	248,246
				Merger and acquisition integration expenses				13,473				14,198			-			-			-				-
				Restructuring charges				-				3,378			-			-			17,517				9,066
				Deposit account remediation				-				-			-			-			-				(23,000	)
			Total reported noninterest expense (GAAP)				$	255,352			$	264,995		$	245,433		$	247,899		$	261,038			$	234,312
Reconciliation of net operating income to net income(1):
			Net operating income (Non-GAAP)				$	57,448			$	62,813		$	60,482		$	61,010		$	62,246			$	60,697
			Nonoperating income and expenses, net of tax:
				Merger and acquisition integration expenses				9,141				9,919			-			-			-				-
				Restructuring charges				-				2,094			-			-			10,861				6,364
				Deposit account remediation				-				-			-			-			-				(14,734	)
					Total nonoperating expenses, net of tax			9,141				12,013			-			-			10,861				(8,370	)
			Net income (GAAP)				$	48,307			$	50,800		$	60,482		$	61,010		$	51,385			$	69,067
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)				$	49,901			$	55,266		$	52,935		$	53,463		$	54,699			$	53,150
			Nonoperating income and expenses, net of tax:
				Merger and acquisition integration expenses				9,141				9,919			-			-			-				-
				Restructuring charges				-				2,094			-			-			10,861				6,364
				Deposit account remediation				-				-			-			-			-				(14,734	)
					Total nonoperating income and expenses, net of tax			9,141				12,013			-			-			10,861				(8,370	)
			Net income available to common stockholders (GAAP)				$	40,760			$	43,253		$	52,935		$	53,463		$	43,838			$	61,520
Computation of pre-tax,pre-provision income:
			Net interest income				$	267,591			$	266,549		$	263,491		$	263,110		$	262,944			$	269,783
			Noninterest income					79,068				89,401			83,443			86,607			82,244				77,177
			Noninterest expense					(255,352	)			(264,995	)		(245,433	)		(247,899	)		(261,038	)			(234,312	)
			Pre-tax, pre-provision income (GAAP)					91,307				90,955			101,501			101,818			84,150				112,648
			Add back: non-operating noninterest expenses (1)					-				17,576			-			-			17,517				(13,934	)
			Pre-tax, pre-provision income (Non-GAAP)(1)				$	91,307			$	108,531		$	101,501		$	101,818		$	101,667			$	98,714
(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)
						2016				2015													2014
					First				Fourth			Third			Second			First				Fourth
					Quarter				Quarter			Quarter			Quarter			Quarter				Quarter
Computation of Ending Tangible Assets:
	Total assets				$	40,072,435			$	39,918,386		$	39,413,181		$	39,063,543		$	38,907,479			$	38,551,038
	Less: Goodwill and other intangibles					(1,392,367	)			(1,396,227	)		(1,400,199	)		(1,404,201	)		(1,410,800	)			(1,417,005	)
	Tangible assets				$	38,680,068			$	38,522,159		$	38,012,982		$	37,659,342		$	37,496,679			$	37,134,033
Computation of Average Tangible Assets:
	Total assets				$	39,959,615			$	39,576,697		$	39,051,359		$	38,913,219		$	38,706,545			$	38,317,930
	Less: Goodwill and other intangibles					(1,394,178	)			(1,398,122	)		(1,402,138	)		(1,407,946	)		(1,413,765	)			(1,420,119	)
	Tangible assets				$	38,565,437			$	38,178,575		$	37,649,221		$	37,505,273		$	37,292,780			$	36,897,811
Computation of Ending Tangible Equity:
	Total stockholders' equity				$	4,149,703			$	4,126,328		$	4,139,377		$	4,121,125		$	4,125,246			$	4,092,758
	Less: Goodwill and other intangibles					(1,392,367	)			(1,396,227	)		(1,400,199	)		(1,404,201	)		(1,410,800	)			(1,417,005	)
	Tangible equity				$	2,757,336			$	2,730,101		$	2,739,178		$	2,716,924		$	2,714,446			$	2,675,753
Computation of Ending Tangible Common Equity:
	Total stockholders' equity				$	4,149,703			$	4,126,328		$	4,139,377		$	4,121,125		$	4,125,246			$	4,092,758
	Less: Goodwill and other intangibles					(1,392,367	)			(1,396,227	)		(1,400,199	)		(1,404,201	)		(1,410,800	)			(1,417,005	)
	Less: Preferred stockholders' equity					(338,002	)			(338,002	)		(338,002	)		(338,002	)		(338,002	)			(338,002	)
	Tangible common equity				$	2,419,334			$	2,392,099		$	2,401,176		$	2,378,922		$	2,376,444			$	2,337,751
Computation of Average Tangible Equity:
	Total stockholders' equity				$	4,154,033			$	4,152,977		$	4,149,635		$	4,145,334		$	4,127,743			$	4,141,141
	Less: Goodwill and other intangibles					(1,394,178	)			(1,398,122	)		(1,402,138	)		(1,407,946	)		(1,413,765	)			(1,420,119	)
	Tangible equity				$	2,759,855			$	2,754,855		$	2,747,497		$	2,737,388		$	2,713,978			$	2,721,022
Computation of Average Tangible Common Equity:
	Total stockholders' equity				$	4,154,033			$	4,152,977		$	4,149,635		$	4,145,334		$	4,127,743			$	4,141,141
	Less: Goodwill and other intangibles					(1,394,178	)			(1,398,122	)		(1,402,138	)		(1,407,946	)		(1,413,765	)			(1,420,119	)
	Less: Preferred stockholders' equity					(338,002	)			(338,002	)		(338,002	)		(338,002	)		(338,002	)			(338,002	)
	Tangible common equity				$	2,421,853			$	2,416,853		$	2,409,495		$	2,399,386		$	2,375,976			$	2,383,020
Computation of Tier 1 Common Capital:
	Tier 1 capital					N/A				N/A			N/A			N/A			N/A			$	2,764,117
	Less: Qualifying restricted core capital elements					N/A				N/A			N/A			N/A			N/A				(113,785	)
	Less: Perpetual non-cumulative preferred stock					N/A				N/A			N/A			N/A			N/A				(338,002	)
	Tier 1 common capital (Non-GAAP)					N/A				N/A			N/A			N/A			N/A			$	2,312,330

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