Third Quarter Performance
In the third quarter of 2012, First Niagara reported non-GAAP operating net income available to common shareholders of $66.5 million, or $0.19 per diluted share, compared to $0.17 per share in the second quarter of 2012 and $0.25 per diluted share in the third quarter of 2011. The decline in earnings per share from the year ago period was driven in large part by the June 2012 sale of $3.1 billion in mortgage backed securities (MBS) associated with the investment portfolio repositioning.
Total operating revenues of $366.5 million increased $27.8 million, or 8% over the second quarter of 2012. Net interest income was up $10.6 million, or 4%, from the prior quarter. Net interest margin increased by 28 basis points to 3.54% in the third quarter of 2012. Those increases include the benefits of the full quarter impact of the HSBC branch transaction and lower premium amortization on mortgage backed security prepayments partially offset by the loss of net interest income resulting from the June MBS sale.
Non-GAAP operating noninterest income increased 22% from the prior quarter primarily driven by the benefits of the HSBC branch acquisition and strong mortgage banking revenues.Excluding loans acquired from HSBC, average commercial loans increased $463 million for the quarter, up 17% annualized over the prior three-month period, marking the eleventh consecutive quarter of organic double-digit average commercial portfolio growth. Indirect auto loan originations totaled $247 million in the third quarter, an increase of $76 million over the prior quarter, as that business unit continues to deliver profitable growth across its expanding dealer network. The provision for credit losses totaled $22.2 million during the third quarter of 2012, including $12.1 million to support loan growth and $10.1 million to cover net charge-offs. Net charge-offs equaled 30 basis points of average originated loans in the third quarter of 2012 compared to 55 basis points in the prior quarter.