First Niagara Ready for M&A Breather

First Niagara said profit and revenue climbed at a healthy rate last quarter, but the company seems ready to take a breather from M&A as it builds out the franchise organically.
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First Niagara Financial


said profit and revenue climbed sharply last quarter - largely due to recent bank-buying binge - but the company seems ready to take a breather from M&A as it builds out the franchise organically.

The Buffalo, N.Y.-based regional bank also said it would boost its dividend by 7%.

First Niagara reported net income of $45.6 million, or 22 cents per share, more than double the previous quarter and quadruple year-ago earnings. Net interest income of $161 million and fee revenue of $49.5 million also climbed during the September period on both a quarterly and annual bases.

Excluding special items, earnings were a penny above the average analyst estimate of 22 cents per share, according to


. First Niagara stock was flat at $11.77 in recent trading as investors awaited a conference call at 11 a.m.

The bank will pay out a quarterly dividend of 15 cents per-share on Nov. 16 to shareholders of record as of Nov. 2. The dividend represents a 7% hike from the previous quarter.

The improvement in quarterly results were largely due to First Niagara's recent acquisition spree. Since the start of 2009, the bank has purchased a group of former

National City

branches from

PNC Financial Services

(PNC) - Get Report

, as well as

Harleysville National Corp.

and the recently-announced $1.5 billion acquisition of

NewAlliance Bancshares

. The deals have helped expand First Niagara's footprint in Western Pennsylvania, Upstate New York and parts of New England.

"Our strategy of playing offense has proven very advantageous across all markets and business lines," CEO John Koelmel said in a statement.

First Niagara recently transferred from a thrift to a commercial bank - another signal that Koelmel's team has got its sights set on becoming a national franchise. But, after the NewAlliance merger is complete, the company seems ready to halt its deal-making for the time being, and begin building out the franchise at the brick-and-mortar level.

Koelmel said First Niagara's Northeastern footprint "has now been achieved" and management will be "fully focused on mining the rich potential of what we've built."

Koelmel also indicated that First Niagara is exceeding initial performance expectations in Pennsylvania markets. He also said customers have been responding well to new products and services, with First Niagara gaining market share in key areas. CFO Michael Harrington said loans and core deposits have been growing at "a healthy rate."

-- Written by Lauren Tara LaCapra in New York


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