5. First Niagara Financial Group

Shares of First Niagara Financial Group ( FNFG) of Buffalo, N.Y., closed at $11.92 Monday, down 13% year-to-date. Based on a quarterly payout of 16 cents, the shares have a dividend yield of 5.37%.

The company on July 31 announced a $1 billion deal to buy 195 branches and $15 billion in deposits in Upstate New York and Connecticut from HSBC ( HBC), which will be paid for with a common equity raise of "approximately $750 million to $800 million in common stock and $350 million to $400 million in debt."

First Niagara estimates that the capital raise will result in a 17% to 18% dilution in common shareholders' stake in the company.

The branch purchase is expected to be completed early next year, and First Niagara expects to divest roughly 100 of the acquired branches, with CEO John Koelmel saying that roughly one third of the acquired branches would be closed, and the rest sold.

First Niagara had $30.9 million in total assets as of June 30, with the balance sheet expanding 51% over the previous year, mainly from its acquisition of NewAlliance of New Haven, Conn., in April.

First Niagara reported second-quarter net income of $13.6 million, or 5 cents a share, compared $20 million, or 10 cents a share, a year earlier. Excluding nonrecurring expenses related to the NewAlliance acquisition, second-quarter operating earnings were $71.2 million, or 25 cents a share, increasing from $44.9 million, or 22 cents a share, a year earlier.

According to SNL, second-quarter pre-provision net revenue was $124.7 million, increasing 53% from a year earlier.

The company reported that its commercial loans grew at an annualized 17% pace during the second quarter and core deposits increased at a 22% pace, not including the NewAlliance acquisition.

The second-quarter net interest margin was a tax-adjusted 3.65% during the second quarter, declining slightly from 3.68% a year earlier. The second-quarter operating ROA was 0.19% according to SNL.

Following the HSBC branch announcement, Matthew Kelly of Sterne Agee reiterated his neutral rating on First Niagara, saying that as the company has aggressively expanded over the past three years, its "forward earnings multiple has compressed along the way and offset a good deal of the EPS benefits of the collective deals." Kelly estimates that the "HSBC branch deal will add roughly $150 million to the earnings power of the company."

The shares trade for 10.2 times the 2012 consensus EPS estimate of $1.17.

The 10 analysts covering First Niagara are evenly split between buy and hold ratings.

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