First Niagara: Financial Winner

NEW YORK (TheStreet) -- First Niagara Financial Group (FNFG) was the winner among the largest U.S. financial names on Friday, with shares rising over 1% to close at $8.26.

The broad indexes all declined, with weak trading volumes heading into the long Memorial Day Weekend, as investors continued to worry over the possible exit of Greece from the euro, and with further negative news from Spain.

The president of Spain's Catalonia region said the region would need assistance from the central government to refinance over 13 billion euro of borrowings. Meanwhile, trading was halted for the shares of Bankia, before the bank's board of directors met to discuss the final amount of government aid the partially nationalized Spanish bank would need.

Standard & Poor's on Friday downgraded for Bankia to a below-investment-grade rating of "BB+," while lowering ratings for four other Spanish banks, while saying that "Spain is entering a double-dip recession that will likely trigger a large increase in the volume of problematic assets that the financial system will accumulate in 2012 and 2013, which in turn will lead banks record high credit provisions."

The KBW Bank Index (I:BKX) declined slightly to close at 44.08.

First Niagara's shares have now declined 4% year-to-date, following 35% decline during 2011.

The shares trade just above tangible book value, according to Thomson Reuters Bank Insight, and for eight times the consensus 2013 earnings estimate of $1.03, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is 88 cents.

First Niagara last week completed its purchase of roughly 200 branches in Upstate New York and Connecticut from HSBC (HBC), and is now divesting about 100 branches.

KBW analyst Damon DelMonte said on Thursday that according to First Niagara's revised numbers, the company acquired -- net of the divestitures -- "$9.8b in deposits, compared to the original estimate of $11b," along with total loans of "$1.6b, compared to the original estimate of roughly $2b," for a "total purchase price" of roughly " $0.9b, versus the original estimate of $1.0b."

Because of the lower purchase price and smaller-than-expected balance sheet expansion, DelMonte estimated that First Niagara's at the end of the second quarter would be $5.43 a share, increasing from the analyst's previous estimate of $5.28.

DelMonte rates First Niagara "Market Perform," with a price target of $10.00, and estimates the company will earn 87 cents a share this year, followed by 2013 EPS of $1.05, although he said on Friday that "our estimates are under review as we attempt to get more clarity from the company with regarding its projected average earning asset level and impact to margin."

Interested in more on First Niagara Financial Group? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.