First Niagara Reports Third Quarter 2012 Operating Net Income Per Share Of $0.19

Highlights:
  • Non-GAAP Operating Net Income per Share of $0.19, a $0.02 Increase Over the Prior Quarter
  • Net Interest Margin Increases 28 Basis Points to 3.54%
  • Operating Revenues Increase 8%
  • Average Commercial Loans Increase 17% Over the Prior Quarter
  • 11 th Consecutive Quarter of Double Digit Commercial Loan Growth
  • C&I Loans Increase 24%; Commercial Real Estate Loans Increase 14%
  • 15% Commercial Loan Growth in the New York Market; Continued Growth Across All Geographies
  • Fee Income Increases 22%
  • Mortgage Banking Revenues Increase 53% Over Prior Quarter
  • Strength in Capital Markets Activity and Fees Sustained
  • Core Deposit Platform Growth Continues
  • Transactional Deposits Increase to 31% of Total Deposits
  • Checking Account Production per Branch Increases 36% over Prior Year
  • GAAP EPS of $0.14 per Share Includes $29 million of Acquisition and Restructuring Charges

BUFFALO, N.Y., Oct. 19, 2012 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) today announced third quarter 2012 results reflecting continued strength and momentum in its regional banking business. The solid performance continues to be driven by sustained market share gains through new customer acquisition as well as deepening relationships with existing customers and growth in fee income.

"Our team continues to deliver differentiating results and outcomes and strong fundamental performance by helping our customers and communities Do Great Things," said John R. Koelmel, First Niagara President and Chief Executive Officer. "We have worked diligently to put the pieces together by assimilating a strong team and culture, an enviable footprint and franchise and strong ties to our growing base of customers and communities. As we look ahead, our entire organization – from top to bottom – is now singularly focused on running the business we have built and optimally executing our operating plan."

"First Niagara's lending franchise continues to deliver solid and differentiated fundamental performance throughout the continuing low-growth economic environment," said Gregory W. Norwood, Chief Financial Officer. "Our ability and continued success in gaining market share affords us the opportunity to be selective and discerning in credit underwriting. Further, the growth potential in our newer geographies coupled with the greater density in our Upstate New York markets combined with our enhanced fee generation services such as treasury management and online delivery channel are additional levers that will further improve our efficiency and profitability."

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.

On a GAAP basis, First Niagara reported third quarter net income to common shareholders of $50.8 million, or $0.14 per diluted share, compared to a net loss to common shareholders of $18.5 million, or $0.05 per diluted share, in the second quarter of 2012. Reported GAAP results for the third quarter of 2012 include $29.4 million of acquisition and restructuring costs incurred primarily in connection with the HSBC branch acquisition and a $5.3 million gain related to the second quarter MBS sale. 

Operating Results (Non-GAAP) Q3 2012 Q2 2012 Q3 2011
Net interest income $ 269.6 $ 259.0 $ 235.4
Provision for credit losses 22.2 28.1 14.5
Noninterest income 96.9 79.7 68.7
Noninterest expense 237.1 210.4 178.5
Operating net income before non-operating items 74.0 66.6 73.6
Preferred stock dividend 7.5 7.5 --
Operating net income available to common shareholders 66.5 59.1 73.6
Weighted average diluted shares outstanding 349.4 348.9 292.5
Operating earnings per diluted share $ 0.19 $ 0.17 $ 0.25
       
Reported Results (GAAP)      
Operating net income before non-operating items $ 74.0 $ 66.6 $ 73.6
Gain on securities portfolio repositioning (a) 3.5 10.3 --
Non-operating expenses (b) 19.1 87.9 16.7
Net income (loss) 58.4 (10.9) 57.0
Preferred stock dividend 7.5 7.5 --
Net income (loss) available to common shareholders 50.8 (18.5) 57.0
Weighted average diluted shares outstanding 349.4 348.9 292.5
Earnings (loss) per diluted share $ 0.14  $ (0.05)  $ 0.19

All amounts in millions except earnings per diluted share. The Non-GAAP/Operating Results table above summarizes the company's operating results excluding certain non-operating items. For a detailed reconciliation of non-GAAP measures, refer to the attached tables.

(a) Amount is shown net of tax and represents the gains recorded on the sale of $3.1 billion of mortgage-backed securities in the second and third quarters of 2012.

(b) Amounts are shown net of tax and represent expenses related to acquisition, integration, and restructuring. 

Loans

Average total loans increased $540 million, or 13% annualized over the prior quarter, excluding loans acquired from HSBC on May 18. This organic increase from the prior quarter was driven by sustained strength in all commercial loan categories and indirect auto loans.

Average commercial loans increased $463 million, or 17% annualized over the prior quarter, excluding the HSBC impact. Commercial business (C&I) loans averaged $4.5 billion, or a 24% annualized increase over the prior quarter. Commercial real estate loans increased 14% annualized to $6.6 billion. Average other consumer loan balances increased $229 million and was driven by $247 million of indirect auto originations at net yields of approximately 3.5% during the quarter.

Including the impact of the HSBC branch transaction, average loans increased $1.3 billion, or 29% annualized over the prior quarter.

Deposits

The Company's strategic focus on customer acquisition, in particular increasing consumer and business checking balances, resulted in average transactional deposits, which include interest-bearing checking and non-interest bearing balances, increasing to 31% of the company's deposit base, compared to 25% a year ago. New checking account openings per branch increased an annualized 10% over the prior quarter and 36% over the prior year. The New York state franchise was a meaningful contributor at 32% as the increased branch density and positive brand positioning in these markets continues to drive significant new customer acquisitions.

Average noninterest-bearing deposits, excluding accounts acquired through the HSBC branch transaction, increased 17% over the prior quarter. Interest-bearing checking deposits increased 5% over the prior quarter, excluding the impact of the HSBC deposits. These increases were offset by the company's pricing strategy to reduce higher-cost money market and savings balances.

Net Interest Income

Net interest income of $269.6 million increased 4% from the prior quarter reflecting the favorable impacts of debt repayments using low-cost deposits acquired through the HSBC branch transaction as well as lower premium amortization expense on mortgage backed securities. Those benefits were partially offset by net interest income foregone on the sale of $3.1 billion of mortgage backed securities at the end of June. Tax equivalent net interest margin in the third quarter of 2012 was 3.54%, a 28 basis points increase over the prior quarter.

Average earning assets decreased 22% annualized compared to the prior quarter given the sale of the mortgage backed securities. Investment securities averaged $11.2 billion, a $2.8 billion decrease from the prior period. This decrease was offset by the $1.3 billion increase in average loans.

Credit Quality

At September 30, 2012, the allowance for loan losses was $149.9 million compared to $138.5 million at June 30, 2012.  Information for both the originated and acquired portfolios follows. 
     
  Q3 2012 Q2 2012
$ in millions Originated Acquired Total Originated Acquired Total
Provision for loan losses* $ 21.4 $ 0.4 $ 21.8 $ 25.4 $ 2.4 $ 27.8
Net charge-offs 9.1 1.0 10.1 15.1 0.7 15.8
NCOs/ Avg Loans 0.30% 0.06% 0.21% 0.55% 0.04% 0.36%
Total loans** $ 12,232 $ 7,086 $ 19,318 $ 11,392 $ 7,600 $ 18,992
 
(*) Excludes provision for unfunded commitments of $0.4 million and $0.3 million in 3Q12 and 2Q12, respectively
(**) Acquired loans before associated credit discount; see accompanying tables for further information

Originated loans

The provision for loan losses on originated loans totaled $21.4 million, down $4 million from the prior quarter. The company provided $12.3 million in excess of net charge-offs to support the ongoing momentum in originated loans. Net charge-offs decreased significantly to $9.1 million or 30 basis points of average originated loans from $15.1 million or 55 basis points in the prior quarter.

At the end of the third quarter, nonperforming assets to total assets were 0.42%, comparable to the prior quarter. Nonperforming originated loans as a percentage of originated loans decreased slightly to 0.93% at September 30, 2012 and totaled $114.2 million. At September 30, 2012, the allowance for loan losses on originated loans totaled $147.2 million or 1.20% of such loans, compared to $135.2 million or 1.19% of loans at June 30, 2012.

Acquired loans

The provision for losses on acquired loans totaled $0.4 million, compared to $2.4 million in the prior quarter. Net charge-offs on those portfolios totaled $1.0 million during the quarter, compared to $0.7 million in the prior period. At September 30, 2012, the allowance for loan losses on acquired loans totaled $2.7 million, compared to $3.3 million at June 30, 2012. Acquired nonperforming loans totaled $28.2 million, up from $19.4 million at June 30, 2012. At September 30, 2012, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $212 million.

Fee Income

Third quarter 2012 non-GAAP operating noninterest income of $96.9 million increased 22% or $17.2 million compared to the prior quarter. The increase was driven by stronger mortgage banking revenues as well as the full quarter benefit of the HSBC transaction. Deposit service charges increased $5.0 million or 23% over the prior quarter primarily with the benefit of the accounts acquired from HSBC. Mortgage banking revenues increased $3.8 million or 53% over the prior quarter driven by higher gain-on-sale margins as well as sustained strength in origination volumes. Merchant and card fees increased 30% over the prior quarter to $12.0 million reflecting the upside of the credit card accounts acquired from HSBC.

On a GAAP basis, noninterest income totaled $102.2 million, including a $5.3 million gain recognized on the sale of mortgage-backed securities in the second quarter. The gain represents the company's share of the sale proceeds in excess of the floor price set on the date of original sale to a third party.

Noninterest Expense

Third quarter non-GAAP operating noninterest expense was $237.1 million, up $26.7 million, or 13% over the second quarter of 2012. The increase primarily reflects the full quarter cost of operating the acquired HSBC branches.  The non-GAAP operating efficiency ratio increased to 64.7% compared to 62.1% in the prior quarter given the impact of the loss of revenue attributed to the MBS sale.

On a GAAP basis, noninterest expense for the second quarter was $266.5 million, including $29.4 million in acquisition and restructuring expenses primarily associated with the HSBC branch transaction.

Capital

At September 30, 2012, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 11.5% and 7.6%, respectively.  The company remains well above current regulatory guidelines for well-capitalized institutions. 

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 430 branches, approximately $36 billion in assets, $28 billion in deposits, and approximately 6,000 employees providing financial services to individuals, families and businesses across Upstate New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com .

Investor Call

A conference call will be held at 10:30 a.m. Eastern Time on Friday, October 19, 2012 to discuss the company's financial results. Those wishing to participate in the call may dial toll-free 1-888-606-8413 with the passcode: FNFG. Presentation slides will be used during the earnings conference call and is available under the investor relations tab of our website at www.firstniagara.com. A replay of the call will be available until November 2, 2012 by dialing 1-866-353-3016, passcode: 7253. 

Non-GAAP Measures - This news release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). The Company believes that non-GAAP financial measures provide a meaningful comparison of the underlying operational performance of the company, and facilitate investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, the company believes the exclusion of these non-operating items enables management to perform a more effective evaluation and comparison of the company's results and to assess performance in relation to the company's ongoing operations. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP disclosures are used in this news release, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this document.

Forward-Looking Statements - This press release contains forward-looking statements with respect to the financial condition and results of operations of First Niagara Financial Group, Inc. including, without limitations, statements relating to the earnings outlook of the company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in non-performing loans that could result from an economic downturn; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with an increase in commercial real estate and business loans and non-performing loans. 

               
First Niagara Financial Group, Inc.              
Income Statement Highlights -- Reported Basis              
(in thousands, except per share amounts)              
               
  2012 2011 Nine months ended
  Third  Quarter  Second  Quarter  First  Quarter  Fourth  Quarter  Third  Quarter  September 30, 2012 September 30, 2011
               
Interest income:              
Loans and leases  $ 211,767  $ 200,725  $ 189,385  $ 195,434  $ 192,772  $ 601,877  $ 509,230
Investment securities and other   90,101  99,116  101,395  96,472  94,375  290,612  264,171
Total interest income   301,868  299,841  290,780  291,906  287,147  892,489  773,401
               
Interest expense:              
Deposits   18,358  16,391  14,998  21,521  24,771  49,747  61,716
Borrowings   13,905  24,437  33,411  27,872  26,947  71,753  72,951
Total interest expense   32,263  40,828  48,409  49,393  51,718  121,500  134,667
               
Net interest income  269,605  259,013  242,371  242,513  235,429  770,989  638,734
Provision for credit losses  22,200  28,100  20,000  13,400  14,500  70,300  44,707
Net interest income after provision  247,405  230,913  222,371  229,113  220,929  700,689  594,027
               
Noninterest income:              
Deposit service charges  26,422  21,433  17,037  18,049  18,413  64,892  48,095
Insurance commissions  18,764  17,072  16,833  15,440  16,886  52,669  49,685
Merchant and card fees  12,014  9,271  5,528  5,044  8,933  26,813  24,209
Wealth management services  11,069  9,207  9,039  8,179  7,933  29,315  22,550
Mortgage banking  10,974  7,174  5,649  5,279  5,254  23,797  9,903
Capital markets income  6,381  6,831  6,539  2,746  2,687  19,751  5,603
Lending and leasing   3,730  4,245  3,123  3,103  3,399  11,098  8,322
Bank owned life insurance   3,449  3,848  3,387  3,302  2,742  10,684  7,827
Other income  9,400  16,517  2,773  2,543  2,408  28,690  5,430
Total noninterest income  102,203  95,598  69,908  63,685  68,655  267,709  181,624
               
Noninterest expense:              
Salaries and benefits  115,484  104,507  96,477  88,796  89,131  316,468  253,099
Occupancy and equipment  25,694  24,089  22,017  22,580  20,434  71,800  55,583
Technology and communications  28,110  24,434  19,713  18,942  16,634  72,257  43,434
Marketing and advertising  8,954  6,676  6,763  7,724  7,554  22,393  14,126
Professional services  11,193  9,263  8,895  11,669  9,171  29,351  24,348
Amortization of intangibles  14,506  9,839  6,466  6,586  6,896  30,811  18,958
FDIC premiums  8,850  10,552  6,133  6,097  10,301  25,535  22,763
Merger and acquisition integration expenses  29,404  131,460  12,970  6,149  9,008  173,834  92,012
Restructuring charges  --  3,750  2,703  13,496  16,326  6,453  29,038
Other expense  24,347  21,069  18,041  20,132  18,416  63,457  50,801
Total noninterest expense  266,542  345,639  200,178  202,171  203,871  812,359  604,162
               
Income (loss) before income tax  83,066  (19,128)   92,101  90,627  85,713  156,039  171,489
Income tax expense (benefit)  24,682  (8,204)   32,236  32,166  28,732  48,714  56,040
Net income (loss)  58,384  (10,924)   59,865  58,461  56,981  107,325  115,449
Preferred stock dividend  7,547  7,547  5,115   --   --   20,209   -- 
Net income (loss) available to common stockholders  $ 50,837  $ (18,471)   $ 54,750  $ 58,461  $ 56,981  $ 87,116  $ 115,449
               
Financial Ratios:              
Earnings (loss) per basic share  $ 0.15  $ (0.05)   $ 0.16  $ 0.19  $ 0.19  $ 0.25  $ 0.44
Earnings (loss) per diluted share  0.14  (0.05)   0.16  0.19  0.19  0.25  0.44
Weighted average shares outstanding - basic (1)  349,001  348,941  348,823  304,065  292,211  348,956  260,259
Weighted average shares outstanding - diluted (1)  349,371  348,941  349,069  304,341  292,503  349,248  260,689
Net revenue (2)  $ 371,808  $ 354,611  $ 312,279  $ 306,198  $ 304,084  $ 1,038,698  $ 820,358
Noninterest income as a percentage of net revenue (2) 27.49% 26.96% 22.39% 20.80% 22.58% 25.77% 22.14%
Pre-tax, pre-provision income (3)  $ 105,266  $ 8,972  $ 112,101  $ 104,027  $ 100,213  $ 226,339  $ 216,196
Pre-tax, pre-provision income per diluted share (3)  $ 0.30  $ 0.03  $ 0.32  $ 0.34  $ 0.34  $ 0.65  $ 0.83
Pre-tax, pre-provision return on average assets (3) 1.19% 0.10% 1.36% 1.30% 1.28% 0.86% 1.07%
Net interest margin (4) 3.54% 3.26% 3.34% 3.48% 3.48% 3.38% 3.63%
Interest yield on average loans (4) 4.47% 4.59% 4.62% 4.76% 4.73% 4.56% 4.91%
Rate paid on interest-bearing liabilities (4) 0.51% 0.61% 0.79% 0.82% 0.87% 0.63% 0.87%
Efficiency ratio 71.69% 97.47% 64.10% 66.03% 67.04% 78.21% 73.65%
Effective tax rate 29.7% 42.9% 35.0% 35.5% 33.5% 31.2% 32.7%
Return on average assets (5)  0.66 %  (0.12)% 0.73% 0.73% 0.73% 0.41% 0.57%
Return on average equity (5)  4.77 %  (0.90)% 4.96% 5.54% 5.61% 2.95% 4.34%
Return on average tangible equity (3)(5)  10.34 %  (1.64)% 7.90% 9.75% 10.28% 5.40% 7.76%
Return on average common equity  4.46 %  (1.64)% 4.88% 5.63% 5.61% 2.57% 4.34%
Return on average tangible common equity (3)  10.60 %  (3.18)% 8.12% 10.03% 10.28% 5.02% 7.76%
               
(1) Share count excludes unallocated ESOP shares and unvested restricted stock shares.              
(2) Net revenue is comprised of net interest income and noninterest income.              
(3) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(4) Yields and rates calculated on a tax equivalent basis.              
(5) Return used to calculate ratio excludes preferred stock dividend.              
           
First Niagara Financial Group, Inc.          
Period End Balance Sheet          
(in thousands)          
  2012 2011
  September 30, June 30, March 31, December 31,  September 30,
           
Cash and cash equivalents  $ 447,087  $ 488,227  $ 370,380  $ 836,555  $ 332,437
Investment securities:          
Available for sale  10,579,970  9,937,271  12,248,058  9,348,296  8,349,237
Held to maturity  1,387,763  1,463,872  2,503,156  2,669,630  2,830,744
FHLB and FRB common stock  373,311  329,555  499,328  358,159  331,747
Total investment securities  12,341,044  11,730,698  15,250,542  12,376,085  11,511,728
Loans held for sale  117,375  101,596  102,513  94,484  79,820
Loans and leases:           
Commercial:          
Real estate  6,835,971  6,710,009  6,369,098  6,244,381  6,148,988
Business  4,682,154  4,514,537  4,108,363  3,771,649  3,588,733
Total commercial loans  11,518,125  11,224,546  10,477,461  10,016,030  9,737,721
Consumer:          
Residential real estate  3,870,756  4,037,045  3,881,003  4,012,267  4,171,374
Home equity  2,661,429  2,683,236  2,149,135  2,165,988  2,177,772
Indirect auto  419,258  185,774  --  --  --
Credit cards  308,387  304,368  --  --  --
Other consumer  328,571  328,547  283,320  278,298  278,499
Total consumer loans  7,588,401  7,538,970  6,313,458  6,456,553  6,627,645
Total loans and leases  19,106,526  18,763,516  16,790,919  16,472,583  16,365,366
Allowance for loan losses  149,933  138,516  126,746  120,100  112,749
Loans and leases, net  18,956,593  18,625,000  16,664,173  16,352,483  16,252,617
Bank owned life insurance  401,211  397,739  395,944  392,468  416,449
Goodwill and other intangibles  2,626,625  2,631,605  1,796,394  1,803,240  1,812,628
Other assets  983,999  1,130,891  937,859  955,300  803,828
Total assets  $ 35,873,934  $ 35,105,756  $ 35,517,805  $ 32,810,615  $ 31,209,507
           
Deposits:          
Savings accounts  $ 3,941,528  $ 4,103,773  $ 2,554,720  $ 2,621,016  $ 2,641,723
Interest-bearing checking  4,090,322  3,887,568  2,431,672  2,259,576  2,028,052
Money market deposits  10,801,280  10,919,766  7,100,646  7,220,902  7,507,189
Noninterest-bearing deposits  4,658,374  4,774,764  3,200,824  3,335,356  3,095,283
Certificates of deposit  4,206,192  4,211,116  3,741,525  3,968,265  4,351,930
Total deposits  27,697,696  27,896,987  19,029,387  19,405,115  19,624,177
           
Short-term borrowings  1,995,610  958,044  6,353,189  2,208,845  1,156,711
Long-term borrowings  732,339  732,263  4,688,251  5,918,276  5,928,632
Other liabilities  532,868  700,249  571,532  480,201  499,312
Total liabilities  30,958,513  30,287,543  30,642,359  28,012,437  27,208,832
Preferred stockholders' equity  338,002  338,002  338,002  338,002  -- 
Common stockholders' equity  4,577,419  4,480,211  4,537,444  4,460,176  4,000,675
Total stockholders' equity  4,915,421  4,818,213  4,875,446  4,798,178  4,000,675
Total liabilities and stockholders' equity  $ 35,873,934  $ 35,105,756  $ 35,517,805  $ 32,810,615  $ 31,209,507
           
Selected balance sheet information:          
Total interest-earning assets (1)  $ 31,316,470  $ 30,403,035  $ 31,959,556  $ 29,284,139  $ 27,805,974
Total interest-bearing liabilities  25,767,271  24,812,530  26,870,002  24,196,880  23,614,238
Net interest-earning assets  $ 5,549,199  $ 5,590,505  $ 5,089,554  $ 5,087,259  $ 4,191,736
           
Tangible common equity (2)  $ 1,950,794  $ 1,848,606  $ 2,741,050  $ 2,656,936  $ 2,188,047
Unrealized gain on securities, net of tax  204,347  133,430  152,408  105,276  116,666
           
Total core deposits  $ 23,491,504  $ 23,685,871  $ 15,287,862  $ 15,436,850  $ 15,272,247
           
Originated loans (3)  $ 12,232,568  $ 11,392,158  $ 10,517,021  $ 9,876,005  $ 9,425,194
Acquired loans (4)  7,085,839  7,600,213  6,459,798  6,801,689  7,195,250
Credit related discount on acquired loans (5)  (211,881)  (228,855)  (185,900)  (205,111)  (255,078)
Total Loans  $ 19,106,526  $ 18,763,516  $ 16,790,919  $ 16,472,583  $ 16,365,366
           
(1) Includes interest bearing cash and cash equivalents, investment securities at amortized cost, loans held for sale, and total loans and leases.        
(2) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3) Originated loans represent total loans excluding acquired loans.          
(4) Represents the carrying value of acquired loans plus the principal not expected to be collected.          
(5) Represent principal on acquired loans not expected to be collected.          
                             
First Niagara Financial Group, Inc.                            
Average Balance Sheet and Related Tax Equivalent Yields & Rates                      
(in millions)                              
                               
  For the three months ended Nine months ended
  September 30, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
  Average Balances  Interest (1) Yields and Rates (1) Average  Balances Interest (1) Yields and Rates (1) Average Balances Interest (1) Yields and Rates (1) Average Balances Interest (1) Yields and  Rates (1) Average Balances Interest (1) Yields and Rates (1)
                               
Interest-earning assets:                              
Loans and leases (2)                              
Commercial:                              
Real estate  $ 6,783  $ 80 4.60%  $ 6,501  $ 80 4.88%  $ 6,143  $ 82 5.23%  $ 6,529  $ 239 4.81%  $ 5,467  $ 223 5.39%
Business  4,609  45  3.81   4,293  44  4.03   3,424  35  3.95   4,274  129  3.96   3,056  98  4.23 
Total commercial loans  11,392  125  4.28   10,794  124  4.54   9,567  117  4.78   10,803  368  4.48   8,523  321  4.97 
Consumer:                              
Residential real estate  3,962  40  4.03   3,964  40  4.07   4,227  47  4.49   3,957  123  4.13   3,269  113  4.60 
Home equity  2,672  30  4.42   2,412  27  4.42   2,167  25  4.55   2,415  80  4.42   1,908  65  4.56 
Indirect auto  301  3  3.64   84  1  4.16   --  --   --   131  4  3.86   --  --   -- 
Credit cards  308  9  11.31   160  5  11.58   --  --   --   165  14  11.31   --  --   -- 
Other consumer  329  7  8.80   283  6  8.12   277  5  6.81   285  17  8.07   272  14  6.93 
Total consumer loans  7,572  88  4.64   6,903  78  4.55   6,671  77  4.58   6,953  237  4.56   5,449  192  4.71 
Total loans and leases  18,964  213  4.47   17,697  202  4.59   16,238  194  4.73   17,756  605  4.56   13,972  513  4.91 
Residential MBS  5,677  40  2.81   8,982  52  2.35   8,748  73  3.40   7,729  158  2.72   8,111  217  3.57 
Commercial MBS  1,895  19  3.93   1,867  18  3.94   598  5  3.60   1,822  54  3.95   411  12  3.90 
Other investment securities  3,645  29  3.21   3,183  27  3.43   1,594  18  4.44   3,038  76  3.35   1,341  42  4.11 
Total securities, at cost  11,217  88  3.13   14,032  98  2.81   10,940  97  3.56   12,589  288  3.05   9,863  271  3.65 
Money market and other investments  558  5  3.56   818  5  2.20   411  3  2.34   682  13  2.60   333  7  2.81 
Total interest-earning assets   30,739  $ 306 3.96%  32,547  $ 305 3.77%  27,589  $ 294 4.22%  31,027  $ 907 3.90%  24,168  $ 791 4.37%
Goodwill and other intangibles  2,627      2,207      1,828      2,213      1,562    
Other noninterest-earning assets  1,938      1,746      1,566      1,737      1,373    
                               
Total assets   $ 35,304      $ 36,500      $ 30,983      $ 34,977      $ 27,103    
                               
Interest-bearing liabilities:                               
Deposits                              
Savings accounts  $ 4,026  $ 2 0.20%  $ 3,302  $ 1 0.14%  $ 2,699  $ 2 0.25%  $ 3,300  $ 3 0.14%  $ 2,174  $ 4 0.24%
Interest-bearing checking  3,871  1  0.06   3,095  1  0.08   2,025  1  0.13   3,066  2  0.08   1,910  2  0.12 
Money market deposits   10,899  8  0.29   9,125  6  0.28   7,148  11  0.65   9,071  19  0.28   6,197  27  0.58 
Certificates of deposit   4,083  8  0.75   4,019  8  0.83   4,444  11  0.96   3,977  25  0.85   4,022  29  0.97 
Total interest bearing deposits  22,879  19 0.32%  19,541  16 0.34%  16,316  25 0.60%  19,414  50 0.34%  14,303  62 0.58%
Borrowings                              
Short-term borrowings  1,666  1 0.36%  5,046  7 0.55%  1,303  2 0.46%  3,442  15 0.56%  1,550  4 0.38%
Long-term borrowings  732  12  6.74   2,433  18  2.91   6,048  25  1.67   2,825  57  2.70   4,897  69  1.87 
Total borrowings   2,398  13  2.31   7,479  24  1.31   7,351  27  1.45   6,267  72  1.53   6,447  73  1.51 
Total interest-bearing liabilities   25,277  $ 32 0.51%  27,020  $ 41 0.61%  23,667  $ 52 0.87%  25,681  $ 122 0.63%  20,750  $ 135 0.87%
Noninterest-bearing deposits   4,618      3,835      2,857      3,838      2,433    
Other noninterest-bearing liabilities   536      765      431      590      367    
Total liabilities   30,431      31,620      26,955      30,110      23,550    
Total stockholders' equity  4,873      4,880      4,028      4,868      3,553    
Total liabilities and stockholders' equity  $ 35,304      $ 36,500      $ 30,983      $ 34,977      $ 27,103    
                               
Net interest income (FTE)    $ 274      $ 264      $ 242      $ 785      $ 656  
Taxable Equivalent Adjustment (1)    4      5      7      14      17  
                               
 Total core deposits   $ 23,414  $ 11 0.18%  $ 19,357  $ 8 0.17%  $ 14,729  $ 14 0.38%  $ 19,275  $ 24 0.17%  $ 12,714  $ 32 0.34%
 Total deposits   27,497  19 0.27%  23,376  16 0.28%  19,173  25 0.51%  23,252  50 0.29%  16,736  62 0.49%
                               
Tax equivalent net interest rate spread     3.45%     3.16%     3.35%     3.27%     3.50%
Tax equivalent net interest rate margin     3.54%     3.26%     3.48%     3.38%     3.63%
                               
(1) Tax equivalent interest income is calculated based upon a 35% effective tax rate.                  
(2) Includes nonaccrual loans.                            
               
First Niagara Financial Group, Inc.              
Allowance for Loans and Lease Losses & Asset Quality              
(in thousands)              
  2012 2011 Nine months ended
  Third Quarter  Second  Quarter First  Quarter  Fourth Quarter  Third Quarter  September 30, 2012 September 30, 2011
               
Beginning balance  $ 138,516  $ 126,746  $ 120,100  $ 112,749  $ 107,028  $ 120,100  $ 95,354
Net loan (charge-offs) recoveries:              
Commercial real estate  $ (1,791)  $ (2,384)  $ (5,994)  $ 212  $ (5,580)  $ (10,169)  $ (10,373)
Commercial business  (6,077)  (10,958)  (4,143)  (4,665)  (2,123)  (21,178)  (9,953)
Residential real estate  (396)  (155)  (1,120)  (318)  171  (1,671)  (668)
Home equity  (401)  (1,536)  (1,161)  (268)  (223)  (3,098)  (1,833)
Other consumer  (1,406)  (805)  (836)  (796)  (370)  (3,047)  (963)
Total net loan charge-offs  $ (10,071)  $ (15,838)  $ (13,254)  $ (5,835)  $ (8,125)  $ (39,163)  $ (23,790)
Provision for loan losses  21,800  27,803  19,900  13,186  13,846  69,503  41,185
Allowance related to loans sold  (312)   (195)   --   --   --   (507)   -- 
Ending balance  $ 149,933  $ 138,516  $ 126,746  $ 120,100  $ 112,749  $ 149,933  $ 112,749
               
Supplemental information              
Allowance to loans 0.78% 0.74% 0.75% 0.73% 0.69% 0.78% 0.69%
Allowance for originated loans to originated loans (1) 1.20% 1.19% 1.19% 1.20% 1.20% 1.20% 1.20%
               
Net charge-offs to average loans (annualized)              
Commercial real estate 0.11% 0.15% 0.38% -0.01% 0.36% 0.21% 0.25%
Commercial business 0.53% 1.02% 0.42% 0.51% 0.25% 0.66% 0.43%
Total commercial loans 0.28% 0.49% 0.40% 0.18% 0.32% 0.39% 0.32%
Residential real estate 0.04% 0.02% 0.11% 0.03% -0.02% 0.06% 0.03%
Home equity 0.06% 0.25% 0.22% 0.05% 0.04% 0.17% 0.13%
Other consumer 0.60% 0.61% 1.20% 1.14% 0.53% 0.70% 0.47%
Total consumer loans 0.12% 0.15% 0.20% 0.08% 0.03% 0.15% 0.08%
Total loans 0.21% 0.36% 0.32% 0.14% 0.20% 0.29% 0.23%
               
Net charge-offs of originated loans to average originated loans (annualized) (1)              
Commercial real estate 0.12% 0.18% 0.16% -0.05% 0.59% 0.15% 0.37%
Commercial business 0.64% 1.25% 0.54% 0.67% 0.34% 0.82% 0.56%
Total commercial loans 0.36% 0.66% 0.32% 0.25% 0.49% 0.45% 0.45%
Residential real estate 0.09% 0.04% 0.27% 0.08% -0.04% 0.13% 0.05%
Home equity 0.13% 0.51% 0.40% 0.10% 0.08% 0.35% 0.25%
Other consumer 0.59% 0.81% 1.25% 1.51% 0.93% 0.76% 0.90%
Total consumer loans 0.18% 0.28% 0.38% 0.17% 0.06% 0.27% 0.17%
Total loans 0.30% 0.55% 0.34% 0.22% 0.35% 0.40% 0.36%
               
Nonperforming loans:              
Originated:              
Commercial real estate  $ 46,413  $ 46,881  $ 44,749  $ 43,119  $ 41,295  $ 46,413  $ 41,295
Commercial business  37,375  30,714  39,682  20,173  18,839  37,375  18,839
Residential real estate  21,377  23,058  22,021  18,668  15,555  21,377  15,555
Home equity  8,084  8,119  7,071  6,790  5,428  8,084  5,428
Other consumer  938  926  697  1,048  769  938  769
Total originated nonperforming loans  114,187  109,698  114,220  89,798  81,886  114,187  81,886
Total acquired nonperforming loans (2)  28,193  19,374  19,041  --  --  28,193  --
Total nonperforming loans  142,380  129,072  133,261  89,798  81,886  142,380  81,886
Real estate owned  9,669  10,632  7,202  4,482  9,392  9,669  9,392
Total nonperforming assets  $ 152,049  $ 139,704  $ 140,463  $ 94,280  $ 91,278  $ 152,049  $ 91,278
               
Accruing troubled debt restructurings (TDR)  $ 55,732  $ 42,140  $ 42,358  $ 43,888  $ 45,282  $ 45,518  $ 45,282
Loans 90 days past due still accruing (3)  145,323  125,668  116,810  143,237  143,270  145,323  143,270
Total classified loans (4)  693,006  732,762  753,536  748,375  692,961  693,006  692,961
Total criticized loans (5)  $ 990,670  $ 1,030,471  $ 1,044,731  $ 1,144,222  $ 1,268,879  $ 990,670  $ 1,268,879
               
Total nonperforming loans to loans 0.75% 0.69% 0.79% 0.55% 0.50% 0.75% 0.50%
Total nonperforming originated loans to originated loans (1) 0.93% 0.96% 1.09% 0.91% 0.87% 0.93% 0.87%
Total nonperforming assets to loans and real estate owned 0.80% 0.74% 0.84% 0.57% 0.56% 0.80% 0.56%
Total nonperforming assets to assets 0.42% 0.40% 0.40% 0.29% 0.29% 0.42% 0.29%
Allowance to nonperforming loans 105.3% 107.3% 95.1% 133.7% 137.7% 105.3% 137.7%
Texas ratio (6) 14.16% 13.35% 8.97% 8.55% 10.19% 14.16% 10.19%
               
(1) Originated loans represent total loans excluding acquired loans.               
(2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing. The remaining credit discount, recorded at acquisition, is adequate to cover losses on these balances.  
(3) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection. Amounts for the first and second quarter of 2012 have been revised to include matured loans in the process of collection.
(4) Includes consumer loans, which are considered classified when they are 90 days or more past due. Classified loans include substandard, doubtful, and loss, which are consistent with regulatory definitions, and as described in Item 1, "Business", under the heading "Classification of Assets" in our Annual Report on 10-K for the year ended December 31, 2011.
(5) Beginning in the third quarter of 2011, criticized loans include consumer loans when they are 90 days or more past due. Prior to the third quarter of 2011, criticized loans include consumer loans when they are 60 days or more past due. The impact of the change at September 30, 2011 was a reduction of criticized loans by $24 million. Criticized loans include special mention, substandard, doubtful, and loss.
(6) Represents ratio computed using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
               
First Niagara Financial Group, Inc.              
Key Statistics              
(Share counts in thousands)              
               
  2012   2011
  September 30, June 30, March 31,   December 31,    September 30,
               
First Niagara Financial Group, Inc capital ratios:              
Tier 1 risk based capital 9.51% 9.40% 14.66% (1) 15.60% (1) 11.90%
Tier 1 common capital (2) 7.59% 7.41% 12.47% (1) 13.23% (1) 11.29%
Total risk based capital 11.48% 11.37% 16.75% (1) 17.84% (1) 12.56%
Leverage 6.83% 6.32% 9.67% (1) 9.97% (1) 7.42%
Equity to assets 13.70% 13.72% 13.73% (1) 14.62% (1) 12.82%
Tangible common equity to tangible assets (2) 5.87% 5.69% 8.13% (1) 8.57% (1) 7.44%
               
First Niagara Bank, N.A capital ratios:              
Tier 1 risk based capital 10.19% 9.63% 14.69% (1) 14.66% (1) 11.51%
Total risk based capital 10.88% 10.57% 15.66% (1) 16.47% (1) 12.17%
Leverage 7.32% 6.48% 9.69% (1) 9.38% (1) 7.17%
               
Number of branches  432  452  334    333    332
Full time equivalent employees  6,036  6,103  4,753    4,827    4,712
               
Share information and per share metrics:              
Common shares outstanding  352,632  352,665  351,936    351,834    294,898
Preferred shares outstanding  14,000  14,000  14,000    14,000    -- 
Treasury shares  13,370  13,337  14,066    14,168    14,192
Market price (NASDAQ: FNFG):  $ 8.07  $ 7.65  $ 9.84    $ 8.63    $ 9.15
Book value per share (3)  13.11  12.84  13.00    12.79    13.72
Tangible book value per share (2)(3)  5.59  5.30  7.86    7.62    7.50
Price/Book 61.56% 59.58% 75.69%   67.47%   66.69%
Price/Tangible book (2) 144.36% 144.34% 125.19%   113.25%   122.00%
Common stock dividends  $ 0.08  $ 0.08  $ 0.08    $ 0.16    $ 0.16
Preferred stock dividends  0.54  0.54  0.37    --     -- 
Dividend payout ratio 53.33% N/M 50.00%   84.21%   84.21%
Dividend yield (annualized) 3.94% 4.21% 3.27%   7.36%   6.94%
               
N/M Not meaningful              
(1) Ratios reflect the impact of our capital raise completed in December 2011, the proceeds of which were used to consummate the acquisition of branches from HSBC Bank-USA, National Association in May 2012.
(2) The tables in this earnings release present computation of earnings and certain other ratios using non-GAAP financial measures, which we believe provide investors with information that is useful in understanding our financial performance and position. See Appendix A for further detail.
(3) Share count excludes unallocated ESOP shares and unvested restricted stock shares.              
               
First Niagara Financial Group, Inc.              
Appendix A - Non-GAAP Reconciliation              
(in thousands, except per share amounts)              
               
  2012 2011 Nine months ended
  Third  Quarter  Second  Quarter  First  Quarter  Fourth Quarter  Third  Quarter  September 30,  2012 September 30, 2011
Financial ratios computed on an operating basis (1):              
Earnings per basic share  $ 0.19  $ 0.17  $ 0.19  $ 0.24  $ 0.25  $ 0.54  $ 0.75
Earnings per diluted share  0.19  0.17  0.19  0.24  0.25  0.54  0.75
Weighted average shares outstanding - basic (2)  349,001  348,941  348,823  304,065  292,211  348,956  260,259
Weighted average shares outstanding - diluted (2)  349,371  348,941  349,069  304,341  292,503  349,248  260,689
Pre-tax, pre-provision income  129,333  128,287  127,774  123,672  125,547  385,394  337,246
Pre-tax, pre-provision income per diluted share  0.37  0.37  0.37  0.41  0.43  1.10  1.29
Pre-tax, pre-provision return on average assets 1.46% 1.41% 1.55% 1.55% 1.61% 1.47% 1.66%
Net interest margin (3) 3.54% 3.26% 3.34% 3.48% 3.48% 3.38% 3.63%
Interest yield on average loans (3) 4.47% 4.59% 4.62% 4.76% 4.73% 4.56% 4.91%
Rate paid on interest-bearing liabilities (3) 0.51% 0.61% 0.79% 0.82% 0.87% 0.63% 0.87%
Efficiency ratio 64.71% 62.13% 59.08% 59.61% 58.71% 62.12% 58.89%
Effective tax rate 30.9% 33.5% 35.0% 34.7% 33.7% 33.1% 33.5%
Noninterest income as a percentage of net revenue (4) 26.43% 23.53% 22.39% 20.80% 22.58% 24.22% 22.14%
Return on average assets 0.83% 0.73% 0.85% 0.90% 0.94% 0.80% 0.96%
Return on average equity 6.04% 5.49% 5.81% 6.82% 7.25% 5.78% 7.33%
Return on average tangible equity (5) 13.11% 10.03% 9.24% 12.02% 13.28% 10.60% 13.08%
Return on average common equity 5.83% 5.23% 5.79% 6.93% 7.25% 5.62% 7.33%
Return on average tangible common equity (6) 13.86% 10.18% 9.63% 12.36% 13.28% 10.98% 13.08%
               
Reconciliation of noninterest income on operating basis to reported noninterest income (1):              
Total noninterest income on operating basis (Non-GAAP)  $ 96,866  $ 79,703  $ 69,908  $ 63,685  $ 68,655  $ 246,477  $ 181,624
Gain on securities portfolio repositioning  5,337  15,895  --   --   --   21,232  -- 
Total reported noninterest income (GAAP)  102,203  95,598  69,908  63,685  68,655  267,709  181,624
               
Reconciliation of noninterest expense on operating basis to reported noninterest expense (1):              
Total noninterest expense on operating basis (Non-GAAP)  $ 237,138  $ 210,429  $ 184,505  $ 182,526  $ 178,537  $ 632,072  $ 483,112
Merger and acquisition integration expenses  29,404  131,460  12,970  6,149  9,008  173,834  92,012
Restructuring charges  --   3,750  2,703  13,496  16,326  6,453  29,038
Total reported noninterest expense (GAAP)  $ 266,542  $ 345,639  $ 200,178  $ 202,171  $ 203,871  $ 812,359  $ 604,162
               
Reconciliation of net operating income to net income (1):              
Net operating income (Non-GAAP)  $ 74,027  $ 66,630  $ 70,053  $ 72,057  $ 73,645  $ 210,710  $ 194,661
Nonoperating income and expenses, net of tax:              
Gain on securities portfolio repositioning  (3,469)  (10,331)  --  --  --  (13,800)  -- 
Merger and acquisition integration expenses  19,112  85,448  8,431  4,256  5,925  112,991  60,164
Restructuring charges  --   2,437  1,757  9,340  10,739  4,194  19,048
Total nonoperating expenses, net of tax  15,643  77,554  10,188  13,596  16,664  103,385  79,212
Net income (GAAP)  $ 58,384  $ (10,924)   $ 59,865  $ 58,461  $ 56,981  $ 107,325  $ 115,449
               
Reconciliation of net operating income available to common stockholders to net income available to common stockholders (1):              
Net operating income available to common stockholders (Non-GAAP)  $ 66,480  $ 59,083  $ 64,938  $ 72,057  $ 73,645  $ 190,501  $ 194,661
Nonoperating income and expenses, net of tax:              
Gain on securities portfolio repositioning  (3,469)  (10,331)  --   --   --   (13,800)  -- 
Merger and acquisition integration expenses  19,112  85,448  8,431  4,256  5,925  112,991  60,164
Restructuring charges  --   2,437  1,757  9,340  10,739  4,194  19,048
Total nonoperating income and expenses, net of tax  15,643  77,554  10,188  13,596  16,664  103,385  79,212
Net income available to common stockholders (GAAP)  $ 50,837  $ (18,471)   $ 54,750  $ 58,461  $ 56,981  $ 87,116  $ 115,449
               
Computation of pre-tax,pre-provision income:              
Net interest income  $ 269,605  $ 259,013  $ 242,371  $ 242,513  $ 235,429  $ 770,989  $ 638,734
Noninterest income  102,203   95,598   69,908   63,685   68,655   267,709   181,624 
Noninterest expense  (266,542)  (345,639)  (200,178)  (202,171)  (203,871)  (812,359)  (604,162)
Pre-tax, pre-provision income (GAAP)  105,266  8,972  112,101  104,027  100,213  226,339  216,196
Less: non-operating noninterest income (1)  (5,337)  (15,895)  --   --   --   (21,232)  -- 
Add back: non-operating noninterest expenses (1)  29,404  135,210  15,673  19,645  25,334  180,287  121,050
Pre-tax, pre-provision income (Non-GAAP) (1)  $ 129,333  $ 128,287  $ 127,774  $ 123,672  $ 125,547  $ 385,394  $ 337,246
               
(1) Noninterest income and expense on an operating basis, net operating income, and pre-tax, pre-provision income on an operating basis are non-GAAP measures that we believe provide meaningful comparisons of our underlying operational performance and facilitates investors' assessments of business and performance trends in comparison to others in the financial services industry. In addition, we believe exclusion of these nonoperating items enables management to perform a more effective evaluation and comparison of our results and to assess performance in relation to our ongoing operations.
(2) Share count excludes unallocated ESOP shares and unvested restricted stock shares.              
(3) Yields and rates calculated on a tax equivalent basis.              
(4) Net revenue is comprised of net interest income and noninterest income.              
(5) Tangible equity is a non-GAAP measure and excludes goodwill and other intangibles.              
(6) Tangible common equity is a non-GAAP measure and excludes goodwill and other intangibles as well as preferred stock.          
               
First Niagara Financial Group, Inc.              
Appendix A - Non-GAAP Reconciliation (Cont.)              
(in thousands, except per share amounts)              
               
  2012 2011 Nine months ended
  Third Quarter  Second Quarter  First  Quarter  Fourth Quarter  Third Quarter  September 30, 2012 September 30, 2011
Computation of Ending Tangible Common Equity:              
Total stockholders' equity  $ 4,915,421  $ 4,818,213  $ 4,875,446  $ 4,798,178  $ 4,000,675  $ 4,915,421  $ 4,000,675
Less: Goodwill and other intangibles  (2,626,625)   (2,631,605)   (1,796,394)   (1,803,240)   (1,812,628)   (2,626,625)   (1,812,628) 
Less: Preferred stockholders' equity  (338,002)   (338,002)   (338,002)   (338,002)   --   (338,002)  -- 
Tangible common equity  $ 1,950,794  $ 1,848,606  $ 2,741,050  $ 2,656,936  $ 2,188,047  $ 1,950,794  $ 2,188,047
               
Computation of Average Tangible Equity:              
Total stockholders' equity  $ 4,872,605  $ 4,879,791  $ 4,850,276  $ 4,188,800  $ 4,027,572  $ 4,867,576  $ 3,552,559
Less: Goodwill and other intangibles  (2,626,666)   (2,206,682)   (1,800,613)   (1,809,690)   (1,827,820)   (2,212,836)   (1,562,320) 
Tangible equity  $ 2,245,939  $ 2,673,109  $ 3,049,663  $ 2,379,110  $ 2,199,752  $ 2,654,740  $ 1,990,239
               
Computation of Average Tangible Common Equity:              
Total stockholders' equity  $ 4,872,605  $ 4,879,791  $ 4,850,276  $ 4,188,800  $ 4,027,572  $ 4,867,576  $ 3,552,559
Less: Goodwill and other intangibles  (2,626,666)   (2,206,682)   (1,800,613)   (1,809,690)   (1,827,820)   (2,212,836)   (1,562,320) 
Less: Preferred stockholders' equity  (338,002)   (338,002)   (338,002)  (66,226)  --   (338,002)   -- 
Tangible common equity  $ 1,907,937  $ 2,335,107  $ 2,711,661  $ 2,312,884  $ 2,199,752  $ 2,316,738  $ 1,990,239
               
Computation of Texas Ratio:              
Nonperforming Assets  $ 152,049  $ 139,704  $ 140,463  $ 94,280  $ 91,278  $ 152,049  $ 91,278
Loans 90 days past due still accruing (1)  145,323  125,668  116,810  143,237  143,270  145,323  143,270
Sum of nonperforming assets and loans 90 days past due still accruing  $ 297,372  $ 265,372  $ 257,273  $ 237,517  $ 234,548  $ 297,372  $ 234,548
               
Tangible common equity  $ 1,950,794  $ 1,848,606  $ 2,741,050  $ 2,656,936  $ 2,188,047  $ 1,950,794  $ 2,188,047
Allowance for loan loss  149,933  138,516  126,746  120,100  112,749  149,933  112,749
Sum of tangible common equity and allowance for loan loss  $ 2,100,727  $ 1,987,122  $ 2,867,796  $ 2,777,036  $ 2,300,796  $ 2,100,727  $ 2,300,796
               
Sum of nonperforming assets and acquired loans 90 days past due still accruing/Sum of tangible common equity and allowance for loan loss 14.16% 13.35% 8.97% 8.55% 10.19% 14.16% 10.19%
               
Computation of Tier 1 Common Capital:              
Tier 1 capital  $ 2,225,121  $ 2,128,702  $ 3,009,727  $ 2,962,031  $ 2,151,953  $ 2,225,121  $ 2,151,953
Less: Qualifying restricted core capital elements  (111,820)   (111,630)   (111,453)  (111,284)  (111,112)  (111,820)   (111,112) 
Less: Perpetual non-cumulative preferred stock  (338,002)   (338,002)   (338,002)  (338,002)  --   (338,002)   -- 
Tier 1 common capital (Non-GAAP)  $ 1,775,299  $ 1,679,070  $ 2,560,272  $ 2,512,745  $ 2,040,841  $ 1,775,299  $ 2,040,841
               
(1) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card loans, and loans that have matured which are in the process of collection.        
CONTACT:  Investors:          Ram Shankar          Senior Vice President, Investor Relations          (716) 270-8623          ram.shankar@fnfg.com           News Media:          David Lanzillo          Senior Vice President, Corporate Communications          (716) 819-5780          david.lanzillo@fnfg.com

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