NEW YORK (TheStreet) -- First Niagara Financial Group (FNFG) stock is decreasing by 2.81% to $10.53 on heavy volume in midday trading on Thursday, amid reports that the company is in advanced talks to merge with KeyCorp (KEY). 

An agreement could be announced as soon as tomorrow, Reuters reports. It is expected to be at a slim premium to First Niagara's market capitalization of $3.85 billion as of Wednesday's close.

The deal would be one of the biggest bank mergers during a year that is on pace to set a record for the greatest amount of bank deals since the financial crisis, according to the Wall Street Journal. 

Regional banks such as First Niagara and KeyCorp have been struggling with low interest rates and high regulatory costs, the Journal notes. 

About 8.18 million shares of First Niagara have been traded so far today, more than double company's average trading volume of roughly 3.94 million shares a day.

Separately, TheStreet Ratings team rates FIRST NIAGARA FINANCIAL GRP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate FIRST NIAGARA FINANCIAL GRP (FNFG) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, expanding profit margins, solid stock price performance and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FNFG's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 0.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 106.5% when compared to the same quarter one year prior, rising from -$926.01 million to $60.48 million.
  • The gross profit margin for FIRST NIAGARA FINANCIAL GRP is currently very high, coming in at 85.47%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.80% trails the industry average.
  • Powered by its strong earnings growth of 105.63% and other important driving factors, this stock has surged by 26.06% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • FIRST NIAGARA FINANCIAL GRP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FIRST NIAGARA FINANCIAL GRP swung to a loss, reporting -$2.12 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus -$2.12).
  • You can view the full analysis from the report here: FNFG