Monday, First Niagara Financial Group, Inc. (FNFG), the holding company of First Niagara Bank, reported a slight decline in profit for the first quarter. On an adjusted basis, profit rose 7.5%, while earnings per share declined 15.8%, yet came in line with market projections. Separately, Lockport, New York-based First Niagara announced a $300 million stock offering, mainly aimed at repayment of the $184 million in preferred stock issued to the U.S. Treasury Department pursuant to the Capital Purchase Program.
The company's net income for the first quarter was $18.74 million, down from $18.81 million a year ago. Net income available to common shareholders fell to $16.07 million or $0.14 per share from $18.81 million or $0.18 per share a year ago.
The first quarter results included a pre-tax noninterest expense comprising settlement of service mark infringement matter of $2.9 million and professional services related to the National City branch acquisition of $1.7 million. Meanwhile, prior year results included pre-tax noninterest expense on severance and real estate write-downs related to the acquisition of Great Lakes Bancorp of $2.0 million.
On a non-GAAP basis, net income rose to $21.5 million from prior year's $20 million, while net income available to common shareholders fell to $18.8 million or $0.16 per share from $20 million or $0.19 per share a year ago.
On average, six analysts polled by Thomson Reuters expected the company to earn $0.16 per share. Analysts' estimates typically exclude special items.
In the preceding fourth quarter, First Niagara's net income was $22.81 million and net income available to common shareholders was $21.62 million or $0.19 per share.
Interest income in the first quarter fell to $105.82 million from last year's $109.99 million, while net interest income rose to $72.63 million from $60.06 million a year ago. Total non interest income for the quarter declined 3% to $28.46 million from $29.27 million in the prior year. Noninterest income as a percentage of net revenue was 28.2%, down from 32.8% last year. Provision for credit losses for the first quarter grew to $8.75 million from $3.10 million last year.
In the fourth quarter, the company's net interest income was $71.71 million and noninterest income was $27.64 million.
Commenting on the results, John Koelmel, president and chief executive officer, said, Our first quarter performance provides further evidence of the increasing power of the First Niagara franchise. We are firing on all cylinders and have carried our momentum into the new year despite the severe economic headwinds. We are continuing to invest wisely in people as well as our priority businesses, which has led to sustained loan growth and increased revenues.
Separately, First Niagara said it expects to offer and sell about $300 million of common stock in an underwritten public offering through Keefe, Bruyette & Woods and Goldman, Sachs & Co. The company's shares will be issued pursuant to a prospectus supplement filed as part of an existing shelf registration statement filed with the Securities and Exchange Commission on Form S-3.
First Niagara noted that the net proceeds from this offering will be used to enhance its capital levels in anticipation of the closing of its previously announced acquisition of 57 Western Pennsylvania branches, $4.2 billion of deposits and $839 million in loans from National City Bank.
The bank also intends the net proceeds to facilitate repayment of the $184 million in preferred stock issued to the U.S. Treasury Department pursuant to the Capital Purchase Program and the related warrant for common stock, and for general corporate purposes. The company noted that the repayment in preferred stock will be done in consultation with the Office of Thrift Supervision.
Last Tuesday, First Niagara announced the signing of a definitive purchase agreement to acquire $4.2 billion of deposits and 57 bank branches in Western Pennsylvania from National City Bank, a subsidiary of PNC Financial Services Group, Inc. (PNC), for a deposit premium of 1.3%. In addition to $3.2 billion in cash, First Niagara will receive about $839 million of performing business and consumer loans as part of the agreement. First Niagara then said it expects the acquisition to close in September 2009 and to be earnings per share accretive by nearly 20% in 2010.
First Niagara said today that it has the option to sell, as said earlier in connection with its Western Pennsylvania branch acquisition, to PNC Financial Services, and if it so elects PNC is obligated to purchase, up to 6.82 million shares of company common stock, not to exceed an aggregate purchase price of $75 million. In addition, the company may elect to sell to National City, and if it so elects National City is obligated to purchase, up to $150 million, less the amount of common stock sold to PNC, of 12% Senior Notes due 2014, which notes are redeemable in whole or in part prior to maturity.
FNFG closed Thursday's regular trading session at $13.50, up $0.91, on a volume of 2 million shares. In the past 52 weeks, shares have been trading in a broad range of $9.48 - $22.38. In the pre-market activity, shares dropped $0.36 or 2.675 to $13.14.
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