First Niagara Financial Group Inc. (



Q4 2011 Earnings Call

January 26, 2012 10:00 AM ET


John Koelmel – CEO

Greg Norwood – CFO


Jason O’Donnell – Boenning & Scattergood Securities

Erika Penala – Bank of America Merrill Lynch

David Rochester – Deutsche Bank

John Pancari – Evercore Partners

Aaron Brann – Stifel Nicolaus

Damon DelMonte – KBW

Mathew Kelley – Sterne Agee

Casey Haire – Jefferies & Company

Tom Alonso – Macquarie

Peter Kovaleff – Horowitz & Associates

Bob Ramsey – FBR

David Darst – Guggenheim Securities



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Greetings and welcome to the First Niagara Financial Group 2011 Fourth Quarter Earnings Release. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

This presentation contains forward-looking information for First Niagara Financial Group Inc. Such information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in the forward-looking statements.

It is now my pleasure to introduce your host, John Koelmel, President and CEO for the First Niagara Financial Group. Thank you, Mr. Koelmel, you may begin.

John Koelmel

Thank you very much, Robin, and good morning, everyone. Before Greg Norwood, our CFO, walks you through the results for the quarter, let me start by recapping the outcomes of the last 90 days as well as highlighting our narrowed focus as we look ahead in 2012.

Over the last three months, we had three primary objectives. The first was margin management. Our third quarter actions on deposit pricing coupled with a nimble execution of our investment strategy and another quarter of sector-leading loan growth enabled us to minimize the impacts of the pressures created by a volatile and low interest rate environment, and we again delivered linked-quarter revenue growth.

Second was sustaining the business fundamentals. We further our commitment to continuously take an extra slice of the customer pie with differentiating loan and deposit growth. As you can see our talented team and relationship-based focused on the customer gained even more traction across all of our franchise.

And third was clearing the clouds of uncertainty around the HSBC branch transaction, obviously, worked decisively and creatively to successfully execute our capital and divestiture plans in support of that transaction. And we’re pleased and I would be solely focused on delivering another smooth and seamless conversion for customers and employees next quarter.

What did that mean for the fourth quarter results? Another ad expectation and outcome that was clean and straightforward, solid balance sheet and revenue growth, more best-in-class credit outcomes all while we continue to invest in our business, including the addition of two key leaders, Rich Barry, our new Chief Credit Officer will be working with Kevin O’Bryan in the months ahead to fully transition into that role and Larry Orsini, our new Wealth Management leader who came on board early from HSBC.

Whenever the macroeconomic challenges subside, our disciplined investments in people, process, systems and infrastructure put us in a very strong position to ensure our boat remains in the lead pack as the tide again rises for all.

As for the HSBC branch transaction, over the last few days, we’ve again had the opportunity to meet with the members of their team that will soon be joining us. The (inaudible), excitement and anticipation is tremendous. They’re very much looking forward to the opportunity to be part of our franchise and family, one that is committed to a winning community bank model in Upstate New York, just as they had under the Marine Midland banner for so many years. They also continue to receive very positive feedback from customers in the upstate New York community at large.

In addition to soon having access to the largest branch network across upstate, they know they will be banking with an organization that wins with local decision-making, a very nimble and responsive leadership style and a real sense of responsibility and commitment to every community we serve.

And with the financing in hand and divestiture agreements now in place, our focus is solely on completing the transaction in the second quarter. The outcome will virtually double our branch network across upstate, give us the number one retail market share in the region. And with this transaction in our own backyard, we’ve already hit the ground running and we’ll come out of the conversion with real pace and momentum. No doubt, our team will deliver a real seamless transition for all.

And given that, we’ll have added to the depth, breadth and efficiency of our four-state footprint along with an even lower risk balance sheet and best-in-class team, you can see why we’re very excited about our franchise and competitive positioning.

Let me now provide further clarity about what you’ll hear from us over the next 12 to 24 months. Simply put, it’s all about running the business that will have even more effectively and efficiently. We’re very proud of what we’ve delivered while concurrently staking out a regional footprint over the last three years. It’s time for us to hit the pause button on M&A and ensure we deliver on the promise. It’s all the more imperative given the strength of the headwinds the industry is up against today and we’ll obviously continue to face for the foreseeable future.

Our business plan for this year ensures that we have aligned the right resources in the back of the house to support best-in-class customer sales and service, all while continuing to invest in people, process, systems and infrastructure, albeit with a more measured pace.

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