First Niagara Reports Second Quarter 2016 Results

  • Second quarter operating earnings of $0.18 per diluted share
    • Second quarter GAAP earnings of $0.11 per diluted share, including merger-related integration expenses and loss associated with de-risking high-yield energy bond exposure
  • Average loans increased 4% YOY
    • Average commercial loans (CRE and commercial business) up 5% YOY
    • Average consumer loans increased 4% YOY
  • Average transactional deposit balances increased 6% YOY
    • Average interest-bearing checking deposit balances increased 6% YOY
    • Average noninterest-bearing deposit balances increased 5% YOY
  • Originated net charge-offs averaged 0.27% of originated loans, down 4 basis points YOY

BUFFALO, N.Y., July 29, 2016 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (NASDAQ:FNFG) today reported GAAP net income available to common shareholders of $38.9 million, or $0.11 per diluted share for the second quarter of 2016, compared to $40.8 million, or $0.11 per diluted share, for the quarter ended March 31, 2016. Excluding the impact of $7 million in after-tax losses on the sale of the company's entire high-yield energy bond exposure as well as $17 million in after-tax merger-related costs incurred during the second quarter of 2016, operating net income available to common shareholders was $62.7 million, or $0.18 per diluted share.

"Our second quarter performance is more evidence of the strength of our lending and deposit franchises," said Gary M. Crosby, President and Chief Executive Officer. "During the second quarter, our core businesses continued to demonstrate positive momentum, with 5% year-over-year growth in average commercial loans and 6% growth in average transactional deposit balances.  Consistent with our time-tested policy of prudent and disciplined credit underwriting, our commercial and consumer loan portfolios continue to perform well as evidenced by our stable credit metrics. The First Niagara team delivered this solid performance while at the same time staying very focused on preparing for the completion of our merger with KeyCorp. "

"Given an expected prolonged uncertain economic environment, in early June we significantly de-risked our investment securities portfolio by exiting positions in high-yield energy bonds resulting in an after-tax loss of $7 million," said Gregory W. Norwood, Chief Financial Officer.  "Noninterest income, excluding this loss, increased 1% from the first quarter driven by higher insurance commissions, increased derivative and syndication volumes and higher mortgage banking income."

Second Quarter Results

In the second quarter of 2016, First Niagara reported GAAP net income available to common shareholders of $38.9 million, or $0.11 per diluted share, compared to $40.8 million, or $0.11 per diluted share in the first quarter of 2016. Second quarter 2016 results were impacted by $17 million in after-tax merger integration related and restructuring costs as well as $7 million in after-tax losses on the sale of the company's entire high-yield energy bond exposure. In the first quarter of 2016, after-tax merger integration related and restructuring costs totaled $9 million. Excluding these items, operating net income available to common shareholders was $62.7 million, or $0.18 per diluted share in the second quarter of 2016, compared to $49.9 million, or $0.14 per diluted share in the first quarter of 2016.

Compared to the first quarter of 2016, the change in operating net income available to common shareholders was primarily driven by:
  • A $5 million or 2% decrease in net interest income driven primarily by the impact of lower reinvestment rates on cashflows from the investment securities portfolio, and continued mix shift towards non-credit investment securities.
  • An $11 million decrease in provision for credit losses from elevated first quarter levels that included a reserve build towards the company's exposure to scrap metal companies and demolition companies whose profitability is partially dependent on the sale of scrap metal.
  • A $1 million or 1% increase in operating noninterest income driven by higher capital markets income due to higher syndication and derivative volumes, higher insurance commissions, and greater mortgage banking revenues.
  • A $9 million or 4% decrease in operating noninterest expenses primarily driven by lower employee count and the associated impact on compensation and other benefits expenses, lower professional services and marketing spend, lower building maintenance costs and lower OREO expenses.
  • A lower effective tax rate attributable primarily to benefits from certain tax-advantaged investments.

In the second quarter of 2015, First Niagara reported GAAP net income available to common shareholders of $53.5 million, or $0.15 per diluted share. Compared to the second quarter of 2015, the change in operating net income available to common shareholders was primarily driven by:
  • A modest decline of $1 million in net interest income from the year-ago quarter that included $3 million of benefits from discount accretion on payoffs of certain Collateralized Loan Obligations (CLOs) and acquired loans, offset by a 4% increase in average earning asset balances.
  • A $9 million decrease in provision for loan losses driven primarily by lower net charge-offs.
  • An 8% decrease in noninterest income, driven by lower wealth management income, insurance commissions, investment gains and capital markets income.
  • A 6% or $15 million decline in noninterest expense driven primarily by lower third party professional services expenses, lower marketing spend, lower amortization of intangibles and lower compensation and benefits expenses.

Operating Results (Non-GAAP) Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Net interest income $   262.1   $   267.6   $   266.5   $   263.5   $   263.1  
Provision for credit losses   11.9     22.5     22.9     19.8     20.8  
Noninterest income   79.6     79.1     89.4     83.4     86.6  
Noninterest expense   233.0     241.9     247.4     245.4     247.9  
Operating net income   70.3     57.4     62.8     60.5     61.0  
Preferred stock dividend   7.5     7.5     7.5     7.5     7.5  
Operating net income available to common $   62.7   $   49.9   $   55.3   $   52.9   $   53.5  
Weighted average diluted shares outstanding   353.8     354.0     353.8     353.2     352.8  
Operating earnings per diluted share $   0.18   $   0.14   $   0.15   $   0.15   $   0.15  
           
Reported Results (GAAP) Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Operating net income before non-op. items $   70.3   $   57.4   $   62.8   $   60.5   $   61.0  
Non-operating items (a)   23.9     9.1     12.0     -     -  
Net Income   46.4     48.3     50.8     60.5     61.0  
Preferred stock dividend   7.5     7.5     7.5     7.5     7.5  
Net income available to common $   38.9   $   40.8   $   43.3   $   52.9   $   53.5  
Weighted average diluted shares outstanding   353.8     354.0     353.8     353.2     352.8  
Earnings per diluted share $   0.11   $   0.11   $   0.12   $   0.15   $   0.15  
All amounts in millions except earnings per diluted share.

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(a ) Q2 2016: Non-operating charges comprised of merger related costs including employee retention expenses, classification of compensation of certain personnel dedicated to merger integration efforts, professional services and legal fees incurred to support merger integration efforts, and loss on the sale of high-yield energy bond exposure, net of taxes.
  Q1 2016: Non-operating charges comprised of merger related costs including employee retention expenses, classification of compensation of certain personnel dedicated to merger integration efforts as well as costs related to securing shareholder approval for the merger, net of taxes.
  Q4 2015: Non-operating charges primarily comprised of merger related costs including investment banker and other professional services fees, employee retention expenses, classification of compensation of certain personnel dedicated to merger integration efforts as well as third-party professional fees incurred in connection with the overstatement of allowance resulting from mid-level employee misconduct, net of taxes.
   

Loans

Average loans increased 2% annualized from the prior quarter to $24.2 billion, driven primarily by increases in the company's commercial real estate (CRE), commercial business (C&I), and indirect auto portfolios. On an end-of-period basis, total loans increased 3% annualized from the prior quarter driven by a 12% annualized increase in indirect auto loans and 5% increase in commercial real estate loans.

Average commercial loans, which include commercial business (C&I) and commercial real estate (CRE) loans, increased 2% annualized from prior quarter to $14.8 billion, primarily driven by growth in the company's New York, New England, and Western Pennsylvania regions.

  • Average CRE loans increased 2% annualized from the prior quarter to $8.7 billion driven by new commercial mortgage term financing as well as construction lending volumes.
  • Average C&I loans increased 3% annualized QOQ to $6.1 billion reflecting middle market origination activity across the company's footprint, partially offset by pay-downs in the capital markets loan portfolio.

Average consumer loans increased 2% annualized from prior quarter to $9.4 billion.
  • Average indirect auto loan balances increased 13% annualized or by $80 million to $2.5 billion, as strong new origination activity was partially offset by increased pay-downs. Indirect auto originations during the quarter totaled $328 million. New originations in the second quarter yielded 3.50%, net of dealer reserve, compared to 3.41% on originations in the prior quarter.
  • Average residential real estate and home equity loan balances were down modestly from the prior quarter reflecting higher customer refinancing activity given low mortgage interest rates. 
  • Credit card balances were down $9 million, or 12% annualized due to seasonal factors.
Average Loans Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Commercial real estate $   8,664   $   8,625   $   8,476   $   8,277   $   8,257  
Commercial business   6,112     6,062     5,971     5,972     5,830  
Total commercial   14,776     14,687     14,447     14,249     14,087  
Residential real estate   3,338     3,346     3,346     3,338     3,326  
Home equity   3,055     3,066     3,052     3,001     2,963  
Indirect auto   2,500     2,420     2,369     2,293     2,238  
Credit cards   288     297     305     306     304  
Other consumer   233     242     250     255     260  
Total consumer   9,414     9,371     9,322     9,193     9,091  
Total loans $   24,190   $   24,058   $   23,769   $   23,442   $   23,178  
All amounts in millions.
 

Credit Quality

At June 30, 2016, the allowance for loan losses was $253 million, unchanged from March 31, 2016.  In the second quarter, provision for loan losses totaled $12.4 million, compared to $22.5 million in the prior quarter. Nonperforming assets comprised 0.60% of total assets, essentially flat compared to March 31, 2016.  Information for both the originated and acquired portfolios follows.
  Q2 2016   Q1 2016
$ in millions Originated Acquired Total   Originated Acquired Total
Provision for loan losses* $   14.1   $   (1.8 ) $   12.4     $   22.5   $   0.0   $   22.5  
Net charge-offs   14.2     (1.9 )   12.3       11.4     0.4     11.8  
NCOs/ Avg Loans   0.27 %   (0.28 )%   0.20 %     0.22 %   0.05 %   0.20 %
Total loans** $   21,678   $   2,655   $   24,333     $   21,362   $   2,817   $   24,178  
Allowance $   247.7   $   5.1   $   252.8     $   247.8   $   5.0   $   252.8  
Allowance/Loans   1.14 %   0.19 %   1.04 %     1.16 %   0.18 %   1.05 %
Nonperforming Loans $   198.3   $   24.7   $   223.0     $   196.7   $   24.9   $   221.5  
NPLs/ Loans   0.91 %   0.93 %   0.92 %     0.92 %   0.88 %   0.92 %
Criticized $   803.7   $   154.5   $   958.2     $   775.9   $   178.5   $   954.5  
Criticized as % of Loans   3.71 %   5.82 %   3.94 %     3.63 %   6.34 %   3.95 %
Classified $   512.6   $  123.2   $   635.8     $   462.9   $   138.6   $   601.5  
Classified as % of Loans   2.36 %   4.64 %   2.61 %     2.17 %   4.92 %   2.49 %
(*) Excludes provision for unfunded commitment of $(0.5) million in 2Q16 and zero in 1Q16
(**) Acquired loans net of associated credit discount; see accompanying tables for further information
 

Originated loans

The second quarter 2016 provision for loan losses on originated loans totaled $14 million, compared to $23 million in the first quarter of 2016. The decrease in provision expense from the linked quarter was driven by a $7 million reserve release attributable specifically to favorable resolutions and pay-downs in the company's exposure to scrap metal and demolition companies and borrowers that serve the energy sector, and offset by higher net charge-offs. At June 30, 2016, the allowance for loan losses on originated loans totaled $248 million or 1.14% of such loans, compared to $248 million or 1.16% of such loans at March 31, 2016. The decrease in allowance coverage ratio primarily reflects the aforementioned draw-down of reserves previously built toward the company's exposure to borrowers serving the energy sector as well as scrap metal and demolition companies.

Originated net charge-offs in the first quarter equaled $14 million or 27 basis points of average originated loans, compared to 22 basis points in the first quarter of 2016. The sequential increase in net charge-offs was driven in large part by lower commercial recoveries from elevated first quarter levels.

At June 30, 2016, nonperforming originated loans totaled $198 million, or 0.91% of originated loans, largely unchanged from March 31, 2016.

Acquired loans

In the second quarter of 2016, the provision for loan losses related to the acquired loan portfolio was a negative $2 million, compared to zero provision in the prior quarter. The negative provision was consistent with a $2 million net recovery on loans previously charged-off. At June 30, 2016, the allowance for loan losses on acquired loans totaled $5 million, unchanged from March 31, 2016. Acquired nonperforming loans totaled $25 million, also unchanged from the prior quarter.  At June 30, 2016, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $54 million.

Deposits

Average deposits increased 5% annualized from the prior quarter to $29.2 billion.
  • Average non-interest checking deposit balances increased 3% annualized from the prior quarter to $5.7 billion, driven by retail and business deposit balances, particularly in the company's Tri-state markets.
  • Time deposits increased 24% annualized to $3.9 billion, driven primarily by a $182 million increase in retail certificate of deposit (CD) balances across the company's footprint.
  • Money market deposit balances were down 3% annualized from the prior quarter driven by decreases in municipal and business deposit balances.
  • Average transactional deposit balances, which include interest-bearing and noninterest-bearing checking account balances, increased 6% from the year-ago period and 5% annualized from the prior quarter. These balances currently represent 38% of the company's deposit balances, unchanged from the prior quarter.
  • The 7% annualized increase in interest-checking deposit balances was driven by a $102 million increase in retail interest checking balances, primarily in the company's New York and Western Pennsylvania markets.
  • Average savings balances increased 9% annualized from the prior quarter driven by higher retail balances across the company's footprint.
Average Deposits Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Noninterest-bearing deposits $     5,705   $     5,666   $     5,868   $     5,661   $   5,427  
Savings accounts   3,448     3,371     3,364     3,427     3,494  
Interest-bearing checking   5,455     5,362     5,333     5,165     5,131  
Money market deposits   10,632     10,725     10,719     10,403     10,251  
Certificates of deposit   3,948     3,726     3,515     3,962     3,917  
Total deposits $   29,188   $   28,850   $   28,799   $   28,618   $   28,220  
All amounts in millions.
 

Net Interest Income

Second quarter 2016 GAAP net interest income of $262 million decreased $5 million from the prior quarter, driven primarily by the impact of lower reinvestment rates on cashflows from the investment securities portfolio, continued mix shift towards lower yielding non-credit investment securities, and to a lesser extent, higher borrowing costs attributable to higher short-term interest rates. Normalized net interest margin of 2.94% was down 5 basis points from the prior quarter.
  • Yields on loans decreased 1 basis point to 3.72% primarily reflecting a mix shift within loan categories as well as greater mortgage prepayment and refinancing activity.
  • Yields on investment securities decreased 15 basis points to 2.77% reflecting reinvestment of cashflows from residential mortgage-backed securities at lower interest rates and a mix shift toward lower yielding non-credit investment securities, and to a lesser extent, the impact of the sale of high-yield energy bonds.
  • The average cost of interest-bearing deposits increased 2 basis points from the prior quarter to 0.34%.
Net Interest Income (Tax Equivalent) Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Quarter as Reported $     267.4   $     272.8   $    271.7   $   268.5   $   268.0  
Less: CLO pay-off discount recognition   -     -     -     (1.2 )   (2.3 )
Add: CMO Retroactive premium amortization   -     -     -     -     1.1  
Add: CRE prepayment penalties   -     -     (0.5 )   -     -  
Less: Early loan payoffs   -     -     -     -     (1.7 )
Less: Other miscellaneous items   1.4     (0.6 )   (0.5 )   -     -  
Sub-Total   1.4     (0.6 )   (1.0 )   (1.2 )   (2.9 )
Normalized Net Interest Income $   268.8   $   272.2   $   270.7   $   267.3   $   265.1  
All amounts in millions.

Net Interest Margin (Tax Equivalent) Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Quarter as Reported   2.92 %   3.00 %   2.98 %   2.98 %   3.02 %
Less: CLO pay-off discount recognition   -     -     -     (0.01 )%   (0.03 )%
Add: CMO Retroactive premium amortization   -     -     -     -     0.01 %
Add: CRE prepayment penalties   -     -     (0.01 )%   -     -  
Less: Early loan payoffs   -     -     -     -     (0.02 %)
Less: Other miscellaneous items   0.02 %   (0.01 )%   (0.01 )%   -     -  
Sub-Total   0.02 %   (0.01 )%   (0.02 )%   (0.01 )%   (0.03 )%
Normalized Net Interest Margin   2.94 %   2.99 %   2.96 %   2.97 %   2.99 %
                               

Noninterest Income

On a reported basis, second quarter 2016 noninterest income was $69 million and reflected $11 million in pre-tax losses incurred on the sale of the company's entire high-yield energy bond exposure following recent recovery in their prices. Excluding this loss, operating fee income was $80 million, and increased $1 million or 1% from the prior quarter.
  • Deposit service charges increased 2% from the seasonally low levels in the first quarter.
  • Insurance commissions increased $1 million or 8% sequentially, driven in large part by both commercial and personal lines.
  • Merchant and card fees increased $1 million or 7% driven by higher purchase volumes.
  • Wealth management revenue decreased $1 million from prior quarter driven in part by equity market volatility.
  • Capital markets income, which includes income from derivatives and syndications, increased $2 million, primarily driven by robust derivatives and syndication volumes in the quarter.
  • Mortgage banking revenues were $2 million higher than the prior quarter reflecting strong locked volumes driven by low mortgage rates. Locked volumes and gain-on-sale margin increased QOQ.
  • Other noninterest income decreased $5 million from the prior quarter driven by lower investment gains as well as higher amortization of historic tax credit investments.
Operating Noninterest Income (Non-GAAP) Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Deposit service charges $     21.8   $     21.5   $     22.9   $     22.9   $     22.2  
Insurance commissions     15.7       14.6       14.9       18.3       17.1  
Merchant and card fees     13.2       12.3       13.3       13.4       13.3  
Wealth management services     13.0       13.6       14.6       14.6       15.7  
Mortgage banking     5.5       4.0       4.9       5.1       5.8  
Capital markets income     4.3       2.3       6.6       2.6       5.3  
Lending and leasing     4.2       4.1       4.2       4.5       4.0  
Bank owned life insurance     3.2       3.5       3.3       2.8       3.2  
Other income   (1.5 )   3.2     4.7     (0.7 )     0.1  
Total noninterest income $   79.6   $   79.1   $   89.4   $   83.4   $   86.6  
All amounts in millions.
 

Noninterest Expense

Excluding $25 million in merger integration related costs, operating noninterest expenses totaled $233 million in the second quarter of 2016, or 4% lower than first quarter 2016 levels. The quarter-over-quarter decrease was primarily driven by lower employee-related expenses, marketing and professional services expenses and other volume-related costs.
  • Salaries and benefits expense of $112 million declined 2% or $3 million from the prior quarter driven by lower employee count and the associated impact on compensation and other benefits expenses.
  • Occupancy and equipment expenses decreased 4%, due primarily to lower building maintenance expenses.
  • Technology and communications increased 2% from prior quarter due to higher technology outsourcing expenses.
  • Marketing and advertising expenses were $2 million lower compared to first quarter levels, reflecting lower promotional campaigns in the second quarter.
  • Professional services fees decreased $3 million or 21% from first quarter levels and continued to be driven by pause of certain projects and the associated decline in third party services expenses.
  • Other expenses decreased $2 million sequentially driven in part by lower other real estate (ORE) valuation write-downs and other volume-related corporate expenses.
Operating Noninterest Expense (Non-GAAP)* Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Salaries and employee benefits $   112.1   $   115.0   $   113.1   $   113.8   $   113.6  
Occupancy and equipment     25.3       26.5       26.0       25.5       26.0  
Technology and communications     36.3       35.4       38.2       38.3       36.5  
Marketing and advertising     7.1       8.8       9.7       8.4       10.3  
Professional services     9.9       12.4       15.4       18.1       16.3  
Amortization of intangibles     3.2       3.9       4.0       4.0       5.1  
Federal deposit insurance premiums     11.3       10.5       10.4       10.0       11.8  
Other expense     27.8       29.4       30.7       27.3       28.4  
Total operating noninterest expense $   233.0   $   241.9   $   247.4   $   245.4   $   247.9  
*All amounts in millions. See appendix for reconciliation of GAAP to Non-GAAP amounts
 

In the second quarter of 2016, the operating efficiency ratio was 68.2%, compared to 69.8% in the prior quarter.

Capital

Beginning in the first quarter of 2015, all regulatory capital ratios and amounts were calculated under the Basel III standardized transitional approach. At June 30, 2016, the company's consolidated Total Risk Based capital and Common Equity Tier 1 capital ratios were 12.2% and 8.7%, respectively, up from 12.1% and 8.6% at March 31, 2016. 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 390 branches, $40 billion in assets, $29 billion in deposits, and approximately 5,300 employees providing financial services to individuals, families and businesses across New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com. 

Safe Harbor Statement

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; and (6) impact of the pending merger agreement on customers and employees.

 

First Niagara Financial Group, Inc.                        
Income Statement Highlights - Reported Basis                        
(in thousands, except per share amounts)                        
                               
            2016       2015     Six months ended  
           Second   First     Fourth   Third   Second   First     June 30,   June 30,   
           Quarter   Quarter     Quarter   Quarter   Quarter   Quarter      2016     2015    
                               
Interest income:                        
  Loans and leases   $   219,767   $   219,050     $   214,945   $   211,407   $   211,899   $   210,371     $   438,817   $   422,270    
  Investment securities and other        86,381       89,759         88,825       87,914       86,356       86,280         176,140       172,636    
    Total interest income         306,148       308,809         303,770       299,321       298,255       296,651         614,957       594,906    
                               
Interest expense:                        
  Deposits        19,970       18,640         17,147       17,040       16,568       15,344         38,610       31,912    
  Borrowings        24,067       22,578         20,074       18,790       18,577       18,363         46,645       36,940    
    Total interest expense         44,037       41,218         37,221       35,830       35,145       33,707         85,255       68,852    
                               
      Net interest income       262,111       267,591         266,549       263,491       263,110       262,944         529,702       526,054    
Provision for credit losses       11,868       22,519         22,900       19,768       20,756       12,765         34,387       33,521    
      Net interest income after provision       250,243       245,072         243,649       243,723       242,354       250,179         495,315       492,533    
                               
Noninterest income:                        
  Deposit service charges       21,824       21,507         22,919       22,944       22,208       20,389         43,331       42,597    
  Insurance commissions       15,735       14,562         14,920       18,252       17,060       15,714         30,297       32,774    
  Merchant and card fees       13,222       12,329         13,318       13,423       13,317       11,907         25,551       25,224    
  Wealth management services       13,048       13,610         14,567       14,572       15,718       14,650         26,658       30,368    
  Mortgage banking       5,532       3,950         4,894       5,070       5,783       4,887         9,482       10,670    
  Capital markets income       4,342       2,323         6,580       2,608       5,284       4,152         6,665       9,436    
  Lending and leasing        4,230       4,051         4,248       4,487       3,998       4,353         8,281       8,351    
  Bank owned life insurance        3,174       3,540         3,259       2,819       3,160       3,592         6,714       6,752    
  Loss on sale of high yield securities       (11,001 )     -         -       -       -       -         (11,001 )     -    
  Other income       (1,484 )     3,196         4,696       (732 )     79       2,600         1,712       2,679    
    Total noninterest income       68,622       79,068         89,401       83,443       86,607       82,244         147,690       168,851    
                               
Noninterest expense:                        
  Salaries and employee benefits       112,142       115,007         113,063       113,794       113,561       111,973         227,149       225,534    
  Occupancy and equipment       25,338       26,466         25,961       25,538       26,021       27,332         51,804       53,353    
  Technology and communications       36,276       35,419         38,232       38,301       36,486       35,061         71,695       71,547    
  Marketing and advertising       7,099       8,821         9,719       8,445       10,297       9,863         15,920       20,160    
  Professional services       9,858       12,401         15,361       18,052       16,321       13,070         22,259       29,391    
  Amortization of intangibles       3,235       3,860         3,972       4,001       5,092       6,205         7,095       11,297    
  Federal deposit insurance premiums       11,281       10,460         10,383       10,026       11,750       11,158         21,741       22,908    
  Merger and acquisition integration expenses       24,772       13,473         14,198       -        -        -          38,245       -    
  Restructuring charges       -        -          3,378       -        -        17,517         -       17,517    
  Other expense       27,752       29,445         30,728       27,276       28,371       28,859         57,197       57,230    
    Total noninterest expense       257,753       255,352         264,995       245,433       247,899       261,038         513,105       508,937    
                               
    Income before income tax       61,112       68,788         68,055       81,733       81,062       71,385         129,900       152,447    
Income tax expense       14,680       20,481         17,255       21,251       20,052       20,000         35,161       40,052    
    Net income       46,432       48,307         50,800       60,482       61,010       51,385         94,739       112,395    
Preferred stock dividend       7,547       7,547         7,547       7,547       7,547       7,547         15,094       15,094    
    Net income available to common stockholders   $   38,885   $   40,760     $   43,253   $   52,935   $   53,463   $   43,838     $   79,645   $   97,301    
                               
Financial Ratios:                        
Earnings per basic share   $   0.11   $   0.11     $   0.12   $   0.15   $   0.15       0.12     $   0.22       0.27    
Earnings per diluted share   $   0.11   $   0.11     $   0.12   $   0.15   $   0.15       0.12     $   0.22       0.27    
Weighted average shares outstanding - basic (1)       352,134       351,372         351,306       351,293       351,126       350,741       351,753     350,935    
Weighted average shares outstanding - diluted (1)     353,844       353,965         353,797       353,248       352,791       352,621       353,853     352,683    
Net revenue (2)   $   330,733   $ 346,659     $   355,950   $   346,934   $   349,717   $   345,188     $ 677,392   $ 694,905    
Noninterest income as a percentage of net revenue (2)   20.75 %   22.81 %     25.12 %   24.05 %   24.76 %   23.83 %     21.80 %   24.30 %  
Pre-tax, pre-provision income (3)   $ 72,980   $ 91,307     $ 90,955   $ 101,501   $   101,818   $ 84,150     $ 164,287   $ 185,968    
Pre-tax, pre-provision income per diluted share (3)   $   0.21   $   0.26     $   0.26   $   0.29   $   0.29   $   0.24     $   0.46   $   0.53    
Pre-tax, pre-provision return on average assets (3)     0.73 %   0.92 %       0.91 %     1.03 %   1.05 %   0.88 %       0.82 %     0.97 %  
Net interest margin (4)     2.92 %   3.00 %     2.98 %   2.98 %   3.02 %   3.07 %     2.96 %   3.04 %  
Interest yield on average loans (4)     3.72 %   3.73 %     3.65 %   3.64 %   3.73 %   3.75 %     3.73 %   3.74 %  
Rate paid on interest-bearing liabilities     0.60 %   0.56 %     0.51 %   0.50 %   0.49 %   0.48 %     0.58 %   0.49 %  
Efficiency ratio     77.9 %   73.7 %     74.4 %   70.7 %   70.9 %   75.6 %     75.7 %   73.2 %  
Expenses as a percentage of average loans and deposits   1.9 %   1.9 %       2.0 %     1.9 %   1.9 %   2.1 %       1.9 %     2.0 %  
Effective tax rate       24.0 %     29.8 %       25.4 %     26.0 %     24.7 %     28.0 %       27.10 %     26.30 %  
Return on average assets (5)       0.46 %     0.49 %       0.51 %     0.61 %     0.63 %   0.54 %       0.48 %     0.58 %  
Return on average equity (5)       4.47 %     4.68 %       4.85 %     5.78 %     5.90 %   5.05 %       4.57 %     5.48 %  
Return on average tangible equity (3)(5)       6.70 %     7.04 %       7.32 %     8.73 %     8.94 %   7.68 %       6.87 %     8.32 %  
Return on average common equity       4.07 %     4.30 %       4.50 %     5.51 %     5.63 %   4.69 %       4.18 %     5.17 %  
Return on average tangible common equity (3)       6.39 %     6.77 %       7.10 %     8.72 %     8.94 %   7.48 %       6.58 %     8.22 %  
                               
  (1 ) Share count excludes unvested restricted stock shares.                    
  (2 ) Net revenue is comprised of net interest income and noninterest income.  
  (3 ) The tables in this earnings release present the 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)                    
                           
            2016       2015      
          June 30, March 31,    December 31,  September 30, June 30, March 31,    
                           
Cash and cash equivalents   $   420,884   $   382,539     $   672,243   $   420,289   $   527,323   $   387,676      
Investment securities:                    
  Available for sale       5,518,025       5,439,220         5,471,291       5,725,608       5,750,860       5,911,419      
  Held to maturity       6,315,222       6,720,817         6,387,689       6,280,049       6,169,838       6,214,561      
  FHLB and FRB common stock       402,214       375,960         410,452       373,066       379,135       375,090      
    Total investment securities       12,235,461       12,535,997         12,269,432       12,378,723       12,299,833       12,501,070      
Loans held for sale       51,731       26,592         46,096       51,056       59,816       48,755      
Loans and leases:                     
  Commercial:                    
    Real estate       8,730,148       8,625,965         8,652,255       8,365,808       8,312,332       8,287,108      
    Business       6,132,536       6,174,753         6,013,217       6,031,358       5,923,524       5,790,980      
      Total commercial loans       14,862,684       14,800,718         14,665,472       14,397,166       14,235,856       14,078,088      
  Consumer:                    
    Residential real estate       3,358,205       3,330,533         3,354,639       3,345,701       3,329,799       3,330,216      
    Home equity       3,058,824       3,057,154         3,068,962       3,032,618       2,984,872       2,943,844      
    Indirect auto       2,537,259       2,464,318         2,393,105       2,330,826       2,256,004       2,200,913      
    Credit cards       287,139       288,747         310,813       305,779       304,682       301,228      
    Other consumer       229,084       236,911         244,935       254,109       257,204       263,985      
      Total consumer loans       9,470,511       9,377,663         9,372,454       9,269,033       9,132,561       9,040,186      
    Total loans and leases       24,333,195       24,178,381         24,037,926       23,666,199       23,368,417       23,118,274      
  Allowance for loan losses       252,843       252,800         242,036       238,700       235,600       231,138      
      Loans and leases, net       24,080,352       23,925,581         23,795,890       23,427,499       23,132,817       22,887,136      
Bank owned life insurance       441,772       439,084         436,709       434,263       431,335       428,454      
Goodwill and other intangibles       1,389,132       1,392,367         1,396,227       1,400,199       1,404,201       1,410,800      
Other assets       1,372,049       1,370,275         1,301,789       1,301,152       1,208,218       1,243,588      
Total assets   $   39,991,381   $   40,072,435     $   39,918,386   $   39,413,181   $   39,063,543   $   38,907,479      
                           
Deposits:                      
  Savings accounts   $   3,448,312   $   3,428,924     $   3,389,728   $   3,359,320   $   3,483,777   $   3,488,441      
  Interest-bearing checking       5,364,128       5,553,928         5,478,947       5,285,987       5,088,856       5,158,264      
  Money market deposits       10,398,719       10,884,350         10,653,792       10,483,721       10,303,873       10,368,358      
  Noninterest-bearing deposits       5,800,565       5,739,509         5,834,534       5,813,571       5,549,944       5,500,484      
  Certificates of deposit       3,947,762       3,954,033         3,343,878       3,873,521       4,020,367       3,734,226      
      Total deposits       28,959,486       29,560,744         28,700,879       28,816,120       28,446,817       28,249,773      
                           
Short-term borrowings       4,631,269       3,255,890         4,348,586       4,086,415       4,275,886       4,739,264      
Long-term borrowings       1,732,919       2,608,014         2,308,101       1,783,402       1,683,476       1,233,550      
Other liabilities       467,915       498,084         434,492       587,867       536,239       559,646      
  Total liabilities       35,791,589       35,922,732         35,792,058       35,273,804       34,942,418       34,782,233      
Preferred stockholders' equity       338,002       338,002         338,002       338,002       338,002       338,002      
Common stockholders' equity       3,861,790       3,811,701         3,788,326       3,801,375       3,783,123       3,787,244      
  Total stockholders' equity       4,199,792       4,149,703         4,126,328       4,139,377       4,121,125       4,125,246      
Total liabilities and stockholders' equity   $   39,991,381   $   40,072,435     $   39,918,386   $   39,413,181   $   39,063,543   $   38,907,479      
                           
Selected balance sheet information:                    
Total interest-earning assets (1)   $   36,627,110   $   36,789,339     $   36,677,134   $   36,099,580   $   35,813,498   $   35,594,208      
Total interest-bearing liabilities       29,523,109       29,685,139         29,523,032       28,872,365       28,856,235       28,722,103      
Net interest-earning assets   $   7,104,001   $   7,104,200     $   7,154,102   $   7,227,215   $   6,957,263   $   6,872,105      
                           
Tangible common equity (1)(2)   $   2,472,658   $   2,419,334     $   2,392,099   $   2,401,176   $   2,378,922   $   2,376,444      
Unrealized gain (loss) on available for sale securities, net of tax (3)     37,380       1,246         (9,577 )     29,877       37,464       68,194      
                           
Total core deposits   $   25,011,724   $   25,606,711     $   25,357,001   $   24,942,599   $   24,426,450   $   24,515,547      
                           
Originated loans (4)   $   21,678,047   $   21,361,753     $   21,101,040   $   20,591,532   $   19,929,719   $   19,528,609      
Acquired loans (5)       2,709,039       2,873,372         2,998,530       3,138,568       3,517,525       3,681,354      
Credit related discount on acquired loans (6)       (53,891 )     (56,744 )       (61,644 )     (63,901 )     (78,827 )     (91,689 )    
  Total Loans   $   24,333,195   $   24,178,381     $   24,037,926   $   23,666,199   $   23,368,417   $   23,118,274      
                   
  (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 the 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 ) Excludes unamortized unrealized gains recorded in accumulated other comprehensive income related to available for sale securities transferred to held to maturity.  
  (4 ) Originated loans represent total loans excluding acquired loans.          
  (5 ) Carrying value of acquired loans plus the principal not expected to be collected.        
  (6 ) 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   Six months ended  
      June 30, 2016 March 31, 2016 June 30, 2015   June 30, 2016 June 30, 2015  
       Average  Interest (1)  Yields   Average  Interest (1)  Yields   Average  Interest (1)  Yields     Average  Interest (1)  Yields   Average  Interest (1)  Yields   
       Balances     and Rates (1)  Balances     and Rates (1)  Balances     and Rates (1)    Balances     and Rates (1)  Balances     and Rates (1)  
                                       
Interest-earning assets:                                    
Loans and leases (2)                                    
Commercial:                                    
Real estate   $   8,664   $   80     3.63 % $   8,625   $   79     3.61 % $   8,257   $   75     3.61 %   $   8,644   $   158     3.62 % $   8,260   $   150     3.60 %  
Business       6,112       53       3.43        6,062       52       3.42        5,830       52       3.48          6,088       106       3.43        5,813       101       3.46     
Total commercial loans       14,776       133       3.55        14,687       131       3.53        14,087       127       3.56          14,732       264       3.54        14,073       251       3.54     
Consumer:                                    
Residential real estate       3,338       30       3.57        3,346       31       3.65        3,326       31       3.68          3,342       60       3.61        3,332       62       3.73     
Home equity       3,055       30       3.95        3,066       30       3.93        2,963       28       3.86          3,060       60       3.94        2,951       57       3.89     
Indirect auto       2,500       18       2.93        2,420       18       2.91        2,238       15       2.74          2,460       36       2.92        2,213       30       2.77     
Credit cards       288       8       11.52        297       9       11.80        304       9       11.40          293       17       11.66        307       18       11.57     
Other consumer       233       5       8.64        242       4       8.57        260       5       8.49          237       10       8.61        267       11       8.49     
Total consumer loans       9,414       91       3.90        9,371       92       3.94        9,091       88       3.91          9,392       183       3.92        9,070       178       3.96     
  Total loans and leases       24,190       224       3.72        24,058       223       3.73        23,178       215       3.73          24,124       447       3.73        23,143       429       3.74     
Residential MBS       8,361       48       2.32        7,864       48       2.43        7,381       43       2.30          8,112       96       2.37        7,281       87       2.39     
Commercial MBS       870       11       5.11        997       12       4.68        1,311       11       3.42          933       23       4.88        1,357       23       3.34     
Other investment securities (3)       3,328       27       3.28        3,513       30       3.53        3,604       34       3.75          3,421       58       3.41        3,580       65       3.63     
  Total securities, at amortized cost       12,559       86       2.77        12,374       90       2.92        12,296       88       2.85          12,466       177       2.85        12,218       175       2.86     
Money market and other investments       90       1       2.58        205       1       1.37        100       -        1.56          148       1       1.74        129       1       1.22     
Total interest-earning assets       36,839   $   311     3.40 %     36,637   $   314     3.45 %     35,574   $   303     3.42 %       36,738   $   625     3.42 %     35,490   $   605     3.44 %  
Goodwill and other intangibles       1,391           1,394           1,408             1,392           1,411        
Other noninterest-earning assets       2,019           1,929           1,931             1,974           1,909        
                                       
Total assets   $   40,249       $   39,960       $   38,913         $   40,104       $   38,810        
                                       
Interest-bearing liabilities:                                     
Deposits                                    
Savings accounts   $   3,448   $   1     0.10 % $   3,371   $   1     0.09 % $   3,494   $   1     0.09 %   $   3,410   $   2     0.10 % $   3,463   $   1     0.09 %  
Interest-bearing checking       5,455       -        0.03        5,362       -        0.03        5,131       -        0.03          5,408       1       0.03        5,067       1       0.03     
Money market deposits        10,632       9       0.33        10,725       9       0.32        10,251       8       0.29          10,678       17       0.32        10,192       14       0.27     
Certificates of deposit        3,948       10       1.02        3,726       9       0.97        3,917       8       0.82          3,837       19       0.99        3,848       16       0.83     
Total interest bearing deposits       23,483       20     0.34 %     23,184       19     0.32 %     22,793       17     0.29 %       23,333       39     0.33 %     22,570       32     0.29 %  
Borrowings                                    
Short-term borrowings       3,984       8     0.81 %     3,815       7     0.72 %     4,522       5     0.48 %       3,900       15     0.76 %     4,821       11     0.47 %  
Long-term borrowings       2,209       16       2.93        2,416       15       2.62        1,359       13       3.90          2,312       31       2.77        1,194       26       4.36     
Total borrowings        6,193       24       1.56        6,231       22       1.46        5,881       18       1.27          6,212       46       1.51        6,015       37       1.24     
Total interest-bearing liabilities        29,676   $   44     0.60 %     29,415   $   41     0.56 %     28,674   $   35     0.49 %       29,545   $   85     0.58 %     28,585   $   69     0.49 %  
Noninterest-bearing deposits        5,705           5,666           5,427             5,686           5,428        
Other noninterest-bearing liabilities        691           725           667             707           660        
Total liabilities        36,072           35,806           34,768             35,938           34,673        
Total stockholders' equity       4,177           4,154           4,145             4,166           4,137        
Total liabilities and stockholders' equity   $   40,249       $   39,960       $   38,913         $   40,104       $   38,810        
                                       
Net interest income (FTE)     $   267       $   273       $   268         $   540       $   536      
Taxable Equivalent Adjustment (1)         5           5           5             10           10      
                                       
 Total core deposits    $   25,240   $   10     0.16 % $   25,124   $   10     0.15 % $   24,303   $   9     0.14 %   $   25,182   $   20     0.16 % $   24,150   $   16     0.13 %  
 Total transactional deposits        11,160       -      0.02 %     11,028       -      0.02 %     10,558       -      0.01 %       11,094       1     0.02 %     10,495       1     0.01 %  
 Total deposits        29,188       20     0.28 %     28,850       19     0.26 %     28,220       17     0.24 %       29,019       39     0.27 %     27,998       32     0.23 %  
                                       
Tax equivalent net interest rate spread         2.80 %       2.89 %       2.93 %         2.84 %       2.95 %  
Tax equivalent net interest rate margin         2.92 %       3.00 %       3.02 %         2.96 %       3.04 %  
                                       
  (1 ) Tax equivalent interest income is calculated using a 35% tax rate.   
  (2 ) Includes nonaccrual loans.   
  (3 ) Includes debt securities, collateralized loan obligations, asset-backed securities, FHLB and FRB common stock, and other investment securities.   

 
First Niagara Financial Group, Inc.                        
Allowance for Loans and Lease Losses & Asset Quality                     
(in thousands)                        
              2016       2015     Six months ended  
             Second   First     Fourth   Third   Second   First     June 30,   June 30,   
             Quarter   Quarter     Quarter   Quarter   Quarter   Quarter      2016     2015    
                                 
Beginning balance   $   252,800   $   242,036     $   238,700   $   235,600   $   231,138   $   234,251     $   242,036   $   234,251    
Net loan (charge-offs) recoveries:                        
  Commercial real estate   $   1,612   $   (254 )   $   (1,476 ) $   (2,686 ) $   (5,525 ) $   (5,825 )   $   1,358   $   (11,350 )  
  Commercial business       (5,620 )     (3,903 )       (10,441 )     (6,286 )     (3,513 )     (4,178 )       (9,523 )     (7,691 )  
  Residential real estate       (287 )     (135 )       (94 )     (230 )     (197 )     (266 )       (422 )     (463 )  
  Home equity       (1,484 )     (995 )       (723 )     (1,056 )     (1,367 )     (1,526 )       (2,479 )     (2,893 )  
  Indirect auto       (2,043 )     (2,030 )       (2,122 )     (1,743 )     (1,342 )     (1,226 )       (4,073 )     (2,568 )  
  Credit cards       (2,439 )     (2,654 )       (2,450 )     (2,215 )     (2,522 )     (2,450 )       (5,093 )     (4,972 )  
  Other consumer       (2,064 )     (1,784 )       (1,758 )     (1,952 )     (1,528 )     (1,807 )       (3,848 )     (3,335 )  
        Total net loan charge-offs   $   (12,325 ) $   (11,755 )   $   (19,064 ) $   (16,168 ) $   (15,994 ) $   (17,278 )   $   (24,080 ) $   (33,272 )  
Provision for loan losses       12,368       22,519         22,400       19,268       20,456       14,165         34,887       34,621    
    Ending balance   $   252,843   $   252,800     $   242,036   $   238,700   $   235,600   $   231,138     $   252,843   $   235,600    
                                 
Supplemental information                        
Allowance to loans     1.04 %   1.05 %     1.01 %   1.01 %     1.01 %     1.00 %     1.04 %   1.01 %  
Allowance for originated loans to originated loans (1)     1.14 %   1.16 %     1.12 %   1.13 %     1.15 %     1.15 %     1.14 %   1.15 %  
                                 
Net charge-offs (recoveries) to average loans (annualized)                      
  Commercial real estate       (0.07 )%     0.01 %       0.07 %   0.13 %     0.27 %     0.29 %       (0.03 )%   0.27 %  
  Commercial business       0.37 %     0.26 %       0.70 %   0.42 %     0.24 %     0.29 %       0.31 %   0.26 %  
    Total commercial loans       0.11 %     0.11 %       0.33 %   0.25 %     0.26 %     0.28 %       0.11 %   0.27 %  
  Residential real estate       0.03 %     0.02 %       0.01 %   0.03 %     0.02 %     0.03 %       0.03 %   0.03 %  
  Home equity       0.19 %     0.13 %       0.09 %   0.14 %     0.18 %     0.21 %       0.16 %   0.20 %  
  Indirect auto       0.33 %     0.34 %       0.36 %   0.30 %     0.24 %     0.22 %       0.33 %   0.23 %  
  Credit cards       3.39 %     3.57 %       3.21 %   2.90 %     3.32 %     3.16 %       3.48 %   3.24 %  
  Other consumer       3.55 %     2.95 %       2.81 %   3.06 %     2.35 %     2.63 %       3.25 %   2.49 %  
    Total consumer loans       0.36 %     0.33 %       0.31 %   0.32 %     0.31 %     0.33 %       0.34 %   0.31 %  
  Total loans       0.20 %     0.20 %       0.32 %   0.28 %     0.28 %     0.30 %       0.20 %   0.29 %  
                                 
Net charge-offs (recoveries) of originated loans to average originated loans (annualized) (1)                  
  Commercial real estate       0.03 %     0.00 %       0.08 %   0.14 %     0.31 %     0.24 %       0.01 %   0.28 %  
  Commercial business       0.38 %     0.26 %       0.72 %   0.44 %     0.25 %     0.31 %       0.32 %   0.28 %  
    Total commercial loans       0.18 %     0.11 %       0.36 %   0.27 %     0.28 %     0.27 %       0.15 %   0.28 %  
  Residential real estate       0.05 %     0.02 %       0.02 %   0.04 %     0.04 %     0.05 %       0.04 %   0.04 %  
  Home equity       0.23 %     0.16 %       0.14 %   0.14 %     0.17 %     0.16 %       0.20 %   0.16 %  
  Indirect auto       0.33 %     0.34 %       0.36 %   0.30 %     0.24 %     0.22 %       0.33 %   0.23 %  
  Credit cards       3.39 %     3.57 %       3.21 %   2.90 %     3.32 %     3.16 %       3.48 %   3.24 %  
  Other consumer       3.55 %     2.95 %       2.81 %   3.06 %     2.35 %     2.63 %       3.25 %   2.49 %  
    Total consumer loans       0.42 %     0.40 %       0.39 %   0.38 %     0.37 %     0.38 %       0.41 %   0.38 %  
  Total loans       0.27 %     0.22 %       0.37 %   0.31 %     0.31 %     0.31 %       0.24 %   0.31 %  
                                 
Nonperforming loans:                        
  Originated (1):                        
  Commercial real estate   $   47,464   $   37,087     $   44,438   $   54,699   $   60,021   $   65,655     $   47,464   $   60,021    
  Commercial business       64,681       71,999         56,382       45,389       42,979       54,506         64,681       42,979    
  Residential real estate       28,122       30,234         31,513       32,455       32,877       32,791         28,122       32,877    
  Home equity       35,323       35,701         35,561       34,191       27,092       26,163         35,323       27,092    
  Indirect auto       17,582       16,536         15,131       13,795       13,066       13,399         17,582       13,066    
  Other consumer       5,111       5,093         5,201       5,047       4,917       5,065         5,111       4,917    
    Total originated nonperforming loans       198,283       196,650         188,226       185,576       180,952       197,579         198,283       180,952    
    Total acquired nonperforming loans (2)       24,672       24,874         25,335       25,365       26,553       30,236         24,672       26,553    
      Total nonperforming loans       222,955       221,524         213,561       210,941       207,505       227,815         222,955       207,505    
  Real estate owned       18,735       16,457         16,063       18,359       17,397       19,128         18,735       17,397    
    Total nonperforming assets (3)   $   241,690   $   237,981     $   229,624   $   229,300   $   224,902   $   246,943     $   241,690   $   224,902    
                                 
Accruing troubled debt restructurings (TDR)   $   72,175   $   63,659     $   62,630   $   60,941   $   64,643   $   64,401     $   72,175   $   64,643    
Loans 90 days past due still accruing (4)       52,136       57,259         67,718       69,879       78,279       87,213         52,136       78,279    
Total classified loans (5)       635,807       601,539         602,912       591,771       592,148       615,518         635,807       592,148    
Total criticized loans (6)   $   958,231   $   954,480     $   944,779   $   858,243   $   938,951   $   990,656     $   958,231   $   938,951    
                                 
Total nonperforming loans to loans     0.92 %   0.92 %     0.89 %   0.89 %     0.89 %     0.99 %     0.92 %   0.89 %  
Total nonperforming originated loans to originated loans (1)   0.91 %   0.92 %     0.89 %   0.90 %     0.91 %     1.01 %     0.91 %   0.91 %  
Total nonperforming assets to loans and real estate owned   0.99 %   0.98 %     0.95 %   0.97 %     0.96 %     1.07 %     0.99 %   0.96 %  
Total nonperforming assets to assets     0.60 %   0.59 %     0.58 %   0.58 %     0.58 %     0.63 %     0.60 %   0.58 %  
Allowance to nonperforming loans     113.4 %   114.1 %     113.3 %   113.2 %     113.5 %     101.5 %     113.4 %   113.5 %  
                                 
Originated loans (1)   $ 21,678,047   $ 21,361,753     $   21,101,040   $   20,591,532   $   19,929,719   $   19,528,609     $ 21,678,047   $ 19,929,719    
Acquired loans (7)       2,709,039       2,873,372         2,998,530       3,138,568       3,517,525       3,681,354       2,709,039     3,517,525    
Credit related discount on acquired loans (8)       (53,891 )     (56,744 )       (61,644 )     (63,901 )     (78,827 )     (91,689 )       (53,891 )     (78,827 )  
  Total Loans   $ 24,333,195   $ 24,178,381     $ 24,037,926   $   23,666,199   $   23,368,417   $   23,118,274     $ 24,333,195   $ 23,368,417    
                                 
  (1 ) Originated loans represent total loans excluding acquired loans.                     
  (2 ) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing.       
  (3 ) Does not include a $5.5 million nonperforming loan that was classified as held for sale at March 31, 2015, which was sold and for which we received the proceeds on April 2, 2015.      
  (4 ) 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.      
  (5 ) 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 "Asset Quality Review" in our Annual Report on 10-K for the year ended December 31, 2015.      
  (6 ) Criticized loans includes consumer loans when they are 90 days or more past due.  Criticized loans include special mention, substandard, doubtful, and loss.      
  (7 ) Represents the carrying value of acquired loans plus the principal not expected to be collected.              
  (8 ) Represent principal on acquired loans not expected to be collected.                   

 
First Niagara Financial Group, Inc.                  
Key Statistics                  
(Risk weighted assets in millions; share counts in thousands)              
                       
          2016       2015    
        June 30, March 31,   December 31, September 30, June 30, March 31,  
                       
First Niagara Financial Group, Inc. capital ratios:                  
  Tier 1 risk based capital     10.24 %   10.12 %     10.08 %   10.05 %   10.03 %   10.02 %  
  Total risk based capital     12.22 %   12.09 %     12.01 %   11.97 %   11.96 %   11.95 %  
  Common equity tier 1 capital     8.69 %   8.58 %     8.55 %   8.52 %   8.50 %   8.48 %  
  Leverage     7.54 %   7.55 %     7.62 %   7.66 %   7.60 %   7.56 %  
  Equity to assets     10.50 %   10.36 %     10.34 %   10.50 %   10.55 %   10.60 %  
  Tangible common equity to tangible assets (1)     6.41 %   6.25 %     6.21 %   6.32 %   6.32 %   6.34 %  
  Total risk weighted assets   $   28,660   $   28,809     $   28,881   $   28,716   $   28,445   $   28,152    
                       
First Niagara Bank, N.A. capital ratios:                  
  Tier 1 risk based capital     10.86 %   10.73 %     10.65 %   10.67 %   10.66 %   10.65 %  
  Total risk based capital     11.80 %   11.67 %     11.55 %   11.56 %   11.54 %   11.53 %  
  Common equity tier 1 capital     10.86 %   10.73 %     10.65 %   10.67 %   10.66 %   10.65 %  
  Leverage     8.00 %   8.00 %     8.05 %   8.12 %   8.07 %   8.03 %  
  Total risk weighted assets   $   28,591   $   28,742     $   28,813   $   28,632   $   28,359   $   28,068    
                       
Number of branches       392       392         392       394       394       394    
Full time equivalent employees       5,255       5,322         5,428       5,397       5,364       5,322    
                       
Share information and per share metrics:                  
  Common shares outstanding       356,056       354,977         354,762       354,788       354,890       353,717    
  Preferred shares outstanding       14,000       14,000         14,000       14,000       14,000       14,000    
  Treasury shares       9,946       11,025         11,240       11,214       11,112       12,285    
  Market price (NASDAQ: FNFG):   $   9.74   $   9.68     $   10.85   $   10.21   $   9.44   $   8.84    
  Book value per common share (2)       10.95       10.84         10.78       10.82       10.77       10.80    
  Tangible book value per common share (1)(2)       7.01       6.88         6.81       6.84       6.77       6.78    
  Price/Book     88.95 %   89.30 %     100.65 %   94.36 %   87.65 %   81.85 %  
  Price/Tangible book     138.94 %   140.70 %     159.32 %   149.27 %   139.44 %   130.38 %  
  Common stock dividends   $   0.08   $   0.08     $   0.08   $   0.08   $   0.08   $   0.08    
  Preferred stock dividends       0.54       0.54         0.54       0.54       0.54       0.54    
  Dividend payout ratio     72.73 %   72.73 %     66.67 %   53.33 %   53.33 %   66.67 %  
  Dividend yield (annualized)     3.30 %   3.32 %     2.93 %   3.11 %   3.40 %   3.67 %  
                       
  (1 ) 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.  
  (2 ) Share count excludes unvested restricted stock shares.  

 
First Niagara Financial Group, Inc.                        
Appendix A - Non-GAAP Reconciliation                        
(in thousands, except per share amounts)                        
                               
            2016       2015     Six months ended  
           Second   First     Fourth   Third   Second   First     June 30,   June 30,   
           Quarter   Quarter     Quarter   Quarter   Quarter   Quarter      2016     2015    
Financial ratios computed on an operating basis (1) :                        
Earnings per basic share   $   0.18   $   0.14     $   0.16   $   0.15   $   0.15   $   0.15     $   0.32   $   0.31    
Earnings per diluted share   $   0.18   $   0.14     $   0.15   $   0.15   $   0.15   $   0.15     $   0.32   $   0.30    
Weighted average shares outstanding - basic (2)       352,134     351,372       351,306     351,293       351,126     350,741         351,753     350,935    
Weighted average shares outstanding - diluted (2)       353,844     353,965       353,797     353,248       352,791     352,621         353,853     352,683    
Noninterest income as a percentage of net revenue (3)     23.30 %   22.81 %     25.12 %   24.05 %   24.76 %   23.83 %     23.05 %   24.30 %  
Pre-tax, pre-provision income       108,753     104,780       108,531     101,501       101,818     101,667         213,533     203,485    
Pre-tax, pre-provision income per diluted share   $   0.31   $   0.30     $   0.31   $   0.29   $   0.29   $   0.29     $   0.60   $   0.58    
Pre-tax, pre-provision return on average assets     1.09 %   1.05 %     1.09 %   1.03 %   1.05 %   1.07 %     1.07 %   1.06 %  
Net interest margin (4)     2.92 %   3.00 %     2.98 %   2.98 %   3.02 %   3.07 %     2.96 %   3.04 %  
Interest yield on average loans (4)     3.72 %   3.73 %     3.65 %   3.64 %   3.73 %   3.75 %     3.73 %   3.74 %  
Rate paid on interest-bearing liabilities     0.60 %   0.56 %     0.51 %   0.50 %   0.49 %   0.48 %     0.58 %   0.49 %  
Efficiency ratio     68.2 %   69.8 %     69.5 %   70.7 %   70.9 %   70.5 %     69.0 %   70.7 %  
Effective tax rate     27.4 %   30.2 %     26.6 %   26.0 %   24.7 %   30.0 %     28.7 %   27.5 %  
Return on average assets     0.70 %   0.58 %     0.63 %   0.61 %   0.63 %   0.65 %     0.64 %   0.64 %  
Return on average equity     6.77 %   5.56 %     6.00 %   5.78 %   5.90 %   6.12 %     6.17 %   6.01 %  
Return on average tangible equity (5)     10.15 %   8.37 %     9.05 %   8.73 %   8.94 %   9.30 %     9.26 %   9.12 %  
Return on average common equity     6.57 %   5.26 %     5.75 %   5.51 %   5.63 %   5.85 %     5.92 %   5.74