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8-K - FORM 8-K FILING DOCUMENT - FIRST NIAGARA FINANCIAL GROUP INCdocument.htm

EXHIBIT 99.1

First Niagara Reports Record 2011 Results

Operating EPS Increased 13% to $0.98 in 2011, Up From $0.87 in 2010

Fourth Quarter Highlights:

  • Operating non-GAAP EPS of $0.24; GAAP EPS of $0.19
  • 28% annualized increase in commercial and industrial loans
  • Superior credit quality continues to differentiate the franchise
  • Deposit pricing actions support stable net interest margin
  • Successful execution on HSBC branch-related capital and divestiture initiatives

BUFFALO, N.Y., Jan. 26, 2012 (GLOBE NEWSWIRE) -- First Niagara Financial Group, Inc. (Nasdaq:FNFG) capped a successful 2011 by delivering solid results in the fourth quarter and record full-year earnings. Robust organic growth in commercial loans and superior credit quality underscore the continued strength of the company's core business fundamentals. In addition, over the last two months, the company also raised $1.1 billion in new capital and announced planned divestitures related to First Niagara Bank, N.A.'s pending acquisition of 195 branches from HSBC Bank USA, N.A.

Following the completion of the HSBC branch acquisition, expected in the second quarter of 2012, First Niagara will have the number-one retail deposit market share position across Upstate New York, enhancing the company's ability to deliver consistent and strong performance during this prolonged and challenging environment. The acquisition also better positions the company to capitalize on new market opportunities once more robust economic growth returns.

"Throughout 2011, we've delivered solid fundamental results while advancing our strategy to be among the best in the business and a market leader in the communities we serve," said President and Chief Executive Officer John R. Koelmel. "We are off and running in 2012, excited about our soon-to-be-enhanced market position, as we continue to acquire and serve customers and provide support to consumers and businesses across the Northeast. That will, in turn, enable us to deliver solid financial results during another challenging year for the industry. We will carry our momentum forward by continuing to sharpen our focus on operational efficiency and effectiveness, while winning every day with top talent."

Fourth-Quarter and Full Year Results

In the fourth quarter of 2011, First Niagara posted non-GAAP net operating earnings of $72.1 million, or $0.24 per diluted share. Total revenues of $306.2 million grew 3% annualized over the third quarter of 2011, driven by 12% annualized growth in net interest income, partially offset by lower fee income stemming from the October 1 implementation of the Durbin Amendment. Solid operating earnings in the fourth quarter of 2011 reflect growth in average commercial loans of $295 million and average core deposits of $485 million over the third quarter of 2011. Net interest margin was 3.48%, unchanged from the prior quarter as lower deposit costs offset asset spread compression. Non-GAAP operating earnings were $73.6 million, or $0.25 per diluted share, in the third quarter of 2011 and $49.7 million, or $0.24 per diluted share, in the fourth quarter of 2010.

On a reported GAAP basis, fourth quarter 2011 net income was $58.5 million, or $0.19 per diluted share, compared to $57.0 million, or $0.19 per diluted share, in the third quarter of 2011 and $45.9 million, or $0.22 per diluted share, in the fourth quarter of 2010. Reported GAAP net income and EPS during the fourth quarter reflect employee severance and branch closure restructuring costs and, to a lesser extent, merger integration expenses. 

Operating Results (Non-GAAP) Q4 2011 Q3 2011 Q4 2010
Net interest income $ 242.5 $ 235.4 $ 167.5
Provision for credit losses 13.4 14.5 13.5
Noninterest income 63.7 68.7 54.1
Noninterest expense 182.5 178.5 133.4
Net operating income before non-operating items 72.1 73.6 49.7
Weighted average diluted shares outstanding 304.3 292.5 206.2
Operating earnings per diluted share $ 0.24 $ 0.25 $ 0.24
 
Reported Results (GAAP)
     
Net operating income before non-operating items $ 72.1 $ 73.6 $ 49.7
Non-operating items(a) 13.6 16.7 3.8
Net income $ 58.5 $ 57.0 $ 45.9
Weighted average diluted shares outstanding 304.3 292.5 206.2
Earnings per diluted share $ 0.19 $ 0.19 $ 0.22
       
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) Amounts are shown net of tax and represent expenses related to acquisition, integration and restructuring.      

For the full year 2011, the company posted non-GAAP operating earnings of $266.7 million, or $0.98 per diluted share, compared to $174.1 million, or $0.87 per diluted share, in 2010. The 13% increase in operating EPS was driven by strong organic growth and the accretive benefit of recent acquisitions, while reflecting a 35% increase in weighted average shares outstanding. On a GAAP basis, net income for the year amounted to $173.9 million, or $0.64 per diluted share, in 2011 and $140.4 million, or $0.70 per diluted share, in 2010. In 2011, non-operating merger costs stemming from the NewAlliance and pending HSBC branch acquisitions, as well as branch restructuring costs, drove the year-over-year decline in reported GAAP net income per share. 

Operating Results (Non-GAAP) 2011 2010
Net interest income $ 881.2 $ 597.8
Provision for credit losses 58.1 48.6
Noninterest income 245.3 186.6
Noninterest expense 665.6 472.7
Net operating income before non-operating items 266.7 174.1
Weighted average diluted shares outstanding 271.6 200.6
Operating earnings per diluted share $ 0.98 $  0.87
 
Reported Results (GAAP)
   
Net operating income before non-operating items $ 266.7 $ 174.1
Non-operating items(a) 92.8 33.8
Net income $ 173.9 $ 140.4
Weighted average diluted shares outstanding 271.6 200.6
Earnings per diluted share $ 0.64 $ 0.70
     
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) Amounts are shown net of tax and represent expenses related to acquisition, integration and restructuring.    

"We continue to demonstrate our ability to operate an industry leading growth company by posting our eighth consecutive quarter of double-digit organic commercial loan growth," Chief Financial Officer Gregory W. Norwood said.  "Our actions to reduce deposit rates helped support our net interest margin and mitigated the effects of accelerated asset prepayment and re-pricing on our residential mortgage assets.  We will continue to focus on actions to mitigate the headwinds while prudently investing in our people and businesses to position us for continued success in 2012 and to accelerate earnings growth when the economy rebounds."

Strong Commercial Loan Growth Continues

Commercial loans averaged $9.9 billion in the fourth quarter of 2011, an increase of $295 million, or 12% annualized over the prior quarter. Commercial and industrial (C&I) loans averaged $3.7 billion in the fourth quarter of 2011, increasing by $239 million, or 28% annualized over the prior quarter. Even as demand for credit nationally remains soft, First Niagara continues to drive commercial loan growth with its customer-relationship value proposition and its seasoned commercial lending team.

Total loans and leases averaged $16.4 billion in the fourth quarter of 2011, increasing by $154 million, or 4% annualized over the prior quarter. Continued strength in C&I loans was partially offset by elevated prepayment activity in real estate loan categories. Total originations in the fourth-quarter increased to $2.7 billion, a 27% annualized increase from the prior quarter, driven by acceleration of growth in First Niagara's Upstate New York and Eastern Pennsylvania markets, as well as its capital markets business.

Average residential mortgage balances in the fourth quarter were $4.1 billion, a decline of $142 million, or 13% annualized, from the third quarter due to prepayments. Average home equity loans in the fourth quarter were $2.2 billion, unchanged from the prior quarter. 

Superior Credit Quality

Asset quality ratios continued to significantly outperform industry averages and remained consistent with the company's past performance. Fourth quarter 2011 net charge-offs were $5.8 million, representing an annualized 0.14% of average loans, or 0.22% excluding acquired loans. This compares favorably to $8.1 million in the prior quarter, or an annualized 0.20% of average loans, or 0.35% excluding acquired loans. 

The fourth quarter 2011 provision for credit losses was $13.4 million.  As in recent quarters, the loan loss provision exceeded net charge-offs as the company increased its allowance for loans and lease losses consistent with the growth and changing mix of its portfolio.  At December 31, 2011, the allowance totaled $120.1 million, representing 0.73% of total loans, or 1.20% excluding acquired loans.  At September 30, 2011, the allowance totaled $112.7 million, and equaled 0.69% of total loans, or 1.20% excluding acquired loans.  Fair value credit marks further insulate First Niagara's credit exposure, as approximately 40% of total loans on December 31, 2011 were marked to fair value at the time of their acquisition.

At December 31, 2011, nonperforming assets equaled 0.29% of total assets, unchanged from prior quarter. Nonperforming loans were $89.8 million, representing 0.55% of total loans at December 31, 2011, compared to 0.50% of total loans at September 30, 2011.  Excluding acquired loans, nonperforming loans represented 0.91% of total loans at December 31, 2011, compared to 0.87% at the end of the prior quarter.

Strong Core Deposit Growth

Average core deposits of $15.2 billion for the fourth quarter of 2011 increased $485 million, or 13% annualized, over the prior quarter. The company continued to grow organic deposit balances across its entire footprint as it continues to win market share in both its new and legacy markets. Average interest-bearing core deposits grew $265 million and noninterest-bearing deposits grew by $220 million from the prior quarter. Average core deposits as a percentage of total deposits increased to 79% in the fourth quarter.

Average noninterest-bearing checking deposits grew $220 million, or 31% annualized, over the prior quarter.  This increase was driven by the realignment of certain customer balances from legacy interest bearing checking products to noninterest-bearing checking accounts as part of the "You First Checking" campaign launched in the third quarter, strong account acquisition activity, and seasonal strength. Average money market deposits increased 15% annualized over the prior quarter, reflecting the residual effect of the promotional money market campaign launched in June 2011.  End-of-period money market deposits declined $286 million from September 30, 2011.

Deposit Pricing Actions Support Net Interest Margin

Average earning assets grew 10.3% annualized compared to the prior quarter. Net interest income grew $7.1 million, or 12.0% annualized from the prior quarter. Net interest margin in the fourth quarter of 2011 was 3.48%, flat compared to the prior quarter.

Deposit pricing actions taken in August mitigated the impact of asset yield compression from prepayments and refinancing. While earning asset yields declined five basis points compared to the prior quarter, to 4.17%, the cost of interest-bearing deposits declined eight basis points from the prior quarter. Higher yields on loans acquired through the Harleysville National and National City transactions also benefited net interest margin by approximately five basis points.

Noninterest Income Decline Driven by Expected Lower Debit Interchange Fees

Fourth quarter 2011 noninterest income of $63.7 million was down $5.0 million compared to the prior quarter, driven largely by expected declines in banking services fees resulting from the October 1 implementation of the Durbin Amendment. This decline was partially offset by sustained strength in mortgage banking and capital markets revenues.

Noninterest Expense Reflects Prudent Investments

Fourth quarter non-GAAP operating noninterest expense was $182.5 million, up $4.0 million, compared to the third quarter of 2011. The increase in expenses reflects continued investments to support the franchise's growth.  

On a GAAP basis, noninterest expense for the fourth quarter included $13.5 million related to branch restructurings announced in early 2011, as well as employee severance expenses and $6.1 million in merger and acquisition-related expenses. Severance-related expenses of approximately $3.5 million were largely the result of the company's branch staff realignment designed to accelerate its small business and wealth management growth initiatives.

Capital

During the fourth quarter, the company announced that it raised $468 million through an offering of 57 million shares of common stock, $339 million in an offering of 14 million shares of fixed-to-floating rate non-cumulative preferred stock, and $298 million in an offering of 7.25% subordinated debt due 2021 to support the purchase of HSBC branches in Upstate New York and Connecticut. Further, in conjunction with its strategy to accelerate capital accumulation, the company announced its intention to adjust dividends to be paid to common shareholders to $0.08 per quarter, commencing in the first quarter of 2012.

At December 31, 2011, the company's estimated consolidated Total Risk Based capital and Tier 1 Common Risk Based capital ratios were 17.8% and 13.2%, respectively.  First Niagara 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 that currently has approximately $33 billion in assets, $19 billion in deposits, more than 330 branches and 5,000 employees providing financial services to individuals, families and businesses across Upstate New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.fnfg.com.

When First Niagara completes its acquisition of the HSBC branches, expected to occur in the second quarter of 2012, the regional bank will have an enhanced leadership position in the Northeast, with more than 400 locations, $30 billion in total deposits, $38 billion in assets and more than 6,000 employees serving consumers, businesses and communities across New York, Pennsylvania, Connecticut and Massachusetts. The transaction will also provide First Niagara with number-one retail market share across Upstate New York, virtually doubling its number of branches in New York State to more than 200, stretching from Buffalo to Albany and down through the Hudson Valley.

Investor Call

A conference call will be held at 10 a.m. Eastern Time on Thursday, January 26, 2012 to discuss the company's financial results and business strategy. Those wishing to participate in the call may dial toll-free 1-877-709-8150.  Presentation slides will be used during the earnings conference call and is available under the investor relations tab of our website at www.fnfg.com. A replay of the call will be available until February 9, 2012 by dialing 1-877-660-6853, Account 240, ID 386239. 

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)              
               
  2011 2010 For year ending
   Fourth   Third   Second   First   Fourth   December 31,   December 31, 
   Quarter   Quarter   Quarter   Quarter   Quarter  2011 2010
               
Interest income:              
Loans and leases  $ 195,434  $ 192,772  $ 184,341  $ 132,117  $ 133,983  $ 704,664  $ 495,989
Investment securities and other   96,472  94,375  93,029  76,767  71,337  360,643  249,599
Total interest income   291,906  287,147  277,370  208,884  205,320  1,065,307  745,588
               
Interest expense:              
Deposits   21,521  24,771  21,324  15,621  16,825  83,237  71,150
Borrowings   27,872  26,947  25,609  20,395  20,947  100,823  76,684
Total interest expense   49,393  51,718  46,933  36,016  37,772  184,060  147,834
               
Net interest income  242,513  235,429  230,437  172,868  167,548  881,247  597,754
Provision for credit losses  13,400  14,500  17,307  12,900  13,500  58,107  48,631
Net interest income after provision  229,113  220,929  213,130  159,968  154,048  823,140  549,123
               
Noninterest income:              
Banking services  22,079  26,384  24,613  19,006  22,230  92,082  80,773
Insurance commissions  15,440  16,886  17,044  15,755  13,130  65,125  51,634
Wealth management services  8,179  7,933  7,883  6,734  4,940  30,729  19,838
Mortgage banking  5,279  5,254  3,386  1,263  6,052  15,182  12,230
Lending and leasing   3,380  3,582  2,811  3,763  3,850  13,536  11,449
Bank owned life insurance   3,302  2,742  3,055  2,030  1,994  11,129  7,261
Other income  6,026  5,874  2,103  3,523  1,916  17,526  3,430
Total noninterest income  63,685  68,655  60,895  52,074  54,112  245,309  186,615
               
Noninterest expense:              
Salaries and benefits  88,796  89,131  90,192  73,776  65,698  341,895  246,619
Occupancy and equipment  22,580  20,434  18,952  16,197  16,053  78,163  54,964
Technology and communications  18,942  16,634  13,929  12,871  12,877  62,376  45,698
Marketing and advertising  7,724  7,554  3,880  2,692  3,383  21,850  18,388
Professional services  11,669  9,171  9,138  6,039  7,538  36,017  18,528
Amortization of intangibles  6,586  6,896  6,573  5,489  5,447  25,544  19,458
FDIC premiums  6,097  10,301  6,267  6,195  5,871  28,860  18,923
Merger and acquisition integration expenses  6,149  9,008  76,828  6,176  5,905  98,161  49,890
Restructuring charges  13,496  16,326  11,656  1,056  --   42,534  -- 
Other expense  20,132  18,416  17,726  14,659  16,562  70,933  50,860
Total noninterest expense  202,171  203,871  255,141  145,150  139,334  806,333  523,328
               
Income before income taxes  90,627  85,713  18,884  66,892  68,826  262,116  212,410
Income taxes  32,166  28,732  5,334  21,974 22,971   88,206  72,057
Net income  $ 58,461  $ 56,981  $ 13,550  $ 44,918  $ 45,855  $ 173,910  $ 140,353
               
Financial Ratios:              
Earnings per basic share  $ 0.19  $ 0.19  $ 0.05  $ 0.22  $ 0.22  $ 0.64  $ 0.70
Earnings per diluted share  0.19  0.19  0.05  0.22  0.22  0.64  0.70
Weighted average shares outstanding - basic(1)  304,065  292,211  281,496  206,124  205,901  271,301  200,274
Weighted average shares outstanding - diluted(1)  304,341  292,503  282,420  206,644  206,229  271,612  200,596
Pre-tax, pre-provision income(2)  104,027  100,213  36,191  79,792  82,326  320,223  261,041
Pre-tax, pre-provision income per diluted share(2)  0.34  0.34  0.13  0.39  0.40  1.18  1.30
Pre-tax, pre-provision return on average assets(2) 1.30% 1.28% 0.50% 1.53% 1.55% 1.13% 1.38%
Net interest margin(3) 3.48% 3.48% 3.65% 3.80% 3.65% 3.58% 3.64%
Interest yield on average loans(3) 4.76% 4.73% 4.93% 5.12% 5.24% 4.87% 5.32%
Rate paid on interest-bearing liabilities(3) 0.82% 0.87% 0.84% 0.90% 0.93% 0.85% 1.04%
Efficiency ratio 66.03% 67.04% 87.58% 64.53% 62.90% 71.58% 66.72%
Noninterest income as a percentage of net revenue(4) 20.80% 22.58% 20.90% 23.15% 24.40% 21.78% 23.79%
Effective tax rate 35.5% 33.5% 28.2% 32.8% 33.4% 33.7% 33.9%
Return on average assets 0.73% 0.73% 0.19% 0.86% 0.87% 0.62% 0.74%
Return on average equity 5.54% 5.61% 1.42% 6.56% 6.46% 4.68% 5.23%
Return on average tangible equity(2) 9.75% 10.28% 2.59% 10.94% 10.64% 8.33% 8.67%
Return on average common equity 5.63% 5.61% 1.42% 6.56% 6.46% 4.71% 5.23%
Return on average tangible common equity(2) 10.03% 10.28% 2.59% 10.94% 10.64% 8.40% 8.67%
               
(1) Share count excludes unallocated ESOP shares and unvested restricted stock shares.            
(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) Yields and rates calculated on a tax equivalent basis.  
(4) Net revenue is comprised of net interest income and noninterest income.  
           
           
First Niagara Financial Group, Inc.          
Period End Balance Sheet          
(in thousands)          
           
  2011 2010
  December 31,  September 30, June 30, March 31, December 31, 
           
Cash and cash equivalents  $ 836,555  $ 332,437  $ 318,820  $ 220,997  $ 213,820
Investment securities:          
Available for sale  9,348,296  8,349,237  8,219,695  5,424,731  7,289,455
Held to maturity  2,669,630  2,830,744  2,939,933  3,030,320  1,025,724
FHLB and FRB common stock  358,159  331,747  305,241  166,357  183,800
Loans held for sale  94,484  79,820  51,141  26,955  37,977
Loans and leases:           
Commercial:          
Real estate  6,244,381  6,148,988  6,130,301  4,541,739  4,370,857
Business  3,771,649  3,588,733  3,335,330  2,697,274  2,623,079
Total commercial loans  10,016,030  9,737,721  9,465,631  7,239,013  6,993,936
Residential real estate  4,012,267  4,171,374  4,270,811  1,701,544  1,692,198
Home equity  2,165,988  2,177,772  2,160,665  1,507,292  1,524,570
Other consumer  278,298  278,499  272,118  263,394  272,710
Total loans and leases  16,472,583  16,365,366  16,169,225  10,711,243  10,483,414
Allowance for loan losses  120,100  112,749  107,028  100,126  95,354
Loans and leases, net  16,352,483  16,252,617  16,062,197  10,611,117  10,388,060
Bank owned life insurance  392,468  416,449  378,241  232,748  230,718
Premises and equipment  318,101  303,634  292,778  227,136  217,555
Goodwill and other intangibles  1,803,240  1,812,628  1,829,712  1,108,811  1,114,144
Other assets  637,199  500,194  491,888  390,673  382,600
Total assets  $ 32,810,615  $ 31,209,507  $ 30,889,646  $ 21,439,845  $ 21,083,853
           
Deposits:          
Savings accounts  $ 2,621,016  $ 2,641,723  $ 2,767,951  $ 1,271,494  $ 1,235,004
Interest-bearing checking  2,259,576  2,028,052  2,028,645  1,726,379  1,705,537
Money market deposits  7,220,902  7,507,189  6,878,214  5,177,242  4,919,014
Noninterest-bearing deposits  3,335,356  3,095,283  2,738,917  2,050,034  1,989,505
Certificates of deposit  3,968,265  4,351,930  4,486,768  3,230,674  3,299,784
 Total deposits  19,405,115  19,624,177  18,900,495  13,455,823  13,148,844
           
Short-term borrowings  2,208,845  1,156,711  1,466,745  970,262  1,788,566
Long-term borrowings  5,918,276  5,928,632  6,134,181  3,933,791  3,104,908
Other liabilities  480,201  499,312  395,390  304,937  276,465
Total liabilities  28,012,437  27,208,832  26,896,811  18,664,813  18,318,783
Preferred stockholders' equity  338,002  --  --  --  --
Common stockholders' equity  4,460,176  4,000,675  3,992,835  2,775,032  2,765,070
Total stockholders' equity  4,798,178  4,000,675  3,992,835  2,775,032  2,765,070
Total liabilities and stockholders' equity  $ 32,810,615  $ 31,209,507  $ 30,889,646  $ 21,439,845  $ 21,083,853
           
           
Selected balance sheet information:        
Total interest-earning assets(1)  $ 29,284,139  $ 27,805,974  $ 27,560,036  $ 19,278,620  $ 18,922,199
Total interest-bearing liabilities  24,196,880  23,614,238  23,762,504  16,309,842  16,052,813
Net interest-earning assets  $ 5,087,259  $ 4,191,736  $ 3,797,532  $ 2,968,778  $ 2,869,386
           
Tangible equity(2)  $ 2,994,938  $ 2,188,047  $ 2,163,123  $ 1,666,221  $ 1,650,926
Tangible common equity(2)  2,656,936  2,188,047  2,163,123  1,666,221  1,650,926
Unrealized gain on securities, net of tax  105,276  116,666  102,754  63,893  70,690
Total mortgage loans serviced for others  2,071,445  1,922,592  1,834,004  1,572,925  1,554,083
           
Total core deposits  $ 15,436,850  $ 15,272,247  $ 14,413,727  $ 10,225,149  $ 9,849,060
           
Legacy loans(3)  $ 9,876,005  $ 9,425,194  $ 8,859,695  $ 8,210,106  $ 7,833,695
Acquired loans(4)  6,801,689  7,195,250  7,576,334  2,616,387  2,772,158
Credit related discount on acquired loans(5)  (205,111)  (255,078)  (266,804)  (115,250)  (122,439)
Total Loans  $ 16,472,583  $ 16,365,366  $ 16,169,225  $ 10,711,243  $ 10,483,414
           
(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) Legacy 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 For year ending
  December 31, 2011 September 30, 2011 December 31, 2010 December 31, 2011 December 31, 2010
  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  $ 6,199  $ 82 5.19%  $ 6,143  $ 82 5.23%  $ 4,301  $ 61 5.69%  $ 5,651  $ 305 5.33%  $ 3,960  $ 228 5.75%
Business  3,663  40  4.24   3,424  35  3.95   2,448  30  4.86   3,209  138  4.23   2,115  103  4.88 
Total commercial loans  9,862  122  4.84   9,567  117  4.78   6,749  91  5.39   8,860  443  4.93   6,075  331  5.45 
Residential real estate  4,085  45  4.41   4,227  47  4.49   1,762  23  4.93   3,475  158  4.54   1,791  92  5.09 
Home equity  2,166  24  4.48   2,167  25  4.55   1,503  17  4.56   1,973  90  4.54   1,263  59  4.66 
Other consumer  279  5  7.12   277  5  6.81   269  5  7.27   274  19  6.98   247  18  7.40 
Total loans and leases  16,392  196  4.76   16,238  194  4.73   10,283  136  5.24   14,582  710  4.87   9,376  500  5.32 
Mortgage-backed securities  9,691  81  3.34   9,346  79  3.41   7,307  63  3.39   8,817  310  3.51   6,359  222  3.48 
Other investment securities  1,574  16  4.17   1,594  18  4.44   907  8  3.91   1,400  57  4.12   826  30  3.68 
Total securities, at cost  11,265  97  3.45   10,940  97  3.56   8,214  71  3.45   10,217  367  3.60   7,185  252  3.51 
Money market and other investments  651  4  2.27   411  3  2.34   204  2  4.73   412  11  2.60   181  5  2.99 
Total interest-earning assets   28,308  $ 297 4.17%  27,589  $ 294 4.22%  18,701  $ 209 4.45%  25,211  $ 1,088 4.31%  16,742  $ 757 4.52%
Goodwill and other intangibles  1,810      1,828      1,108      1,625      1,064    
Other noninterest-earning assets  1,578      1,566      1,200      1,424      1,056    
                               
Total assets   $ 31,696      $ 30,983      $ 21,009      $ 28,260      $ 18,862    
                               
Interest-bearing liabilities:                               
Deposits                              
Savings accounts  $ 2,622  $ 1 0.12%  $ 2,699  $ 2 0.25%  $ 1,233  $ 1 0.11%  $ 2,287  $ 5 0.20%  $ 1,164  $ 2 0.14%
Interest-bearing checking  2,101  1  0.12   2,025  1  0.13   1,711  1  0.16   1,958  2  0.12   1,541  3  0.19 
Money market deposits   7,414  10  0.52   7,148  11  0.65   4,994  6  0.48   6,504  36  0.56   4,578  28  0.60 
Certificates of deposit   4,162  10  0.99   4,444  11  0.96   3,442  9  1.12   4,057  40  0.98   3,526  38  1.10 
Total interest bearing
deposits
 16,299  22 0.52%  16,316  25 0.60%  11,380  17 0.59%  14,806  83 0.56%  10,809  71 0.66%
Borrowings                              
Short-term borrowings  1,899  2 0.49%  1,303  1 0.45%  1,726  10 2.25%  1,638  6 0.40%  1,453  31 2.13%
Long-term borrowings  5,797  26  1.75   6,048  26  1.67   2,905  11  1.53   5,124  95  1.84   1,977  46  2.31 
Total borrowings   7,696  28  1.44   7,351  27  1.45   4,631  21  1.78   6,762  101  1.49   3,430  77  2.23 
Total interest-bearing liabilities   23,995  $ 49 0.82%  23,667  $ 52 0.87%  16,011  $ 38 0.93%  21,568  $ 184 0.85%  14,239  $ 148 1.04%
Noninterest-bearing deposits   3,077      2,857      1,874      2,595      1,668    
Other noninterest-bearing liabilities   435      431      306      384      272    
Total liabilities   27,507      26,955      18,191      24,547      16,179    
Total stockholders' equity  4,189      4,028      2,818      3,713      2,683    
Total liabilities and stockholders' equity  $ 31,696      $ 30,983      $ 21,009      $ 28,260      $ 18,862    
                               
Net interest income (FTE)    $ 248      $ 242      $ 171      $ 904      $ 609  
Taxable Equivalent Adjustment    5      7      3      23      11  
                               
Total core deposits   $ 15,214  $ 12 0.29%  $ 14,729  $ 14 0.38%  $ 9,812  $ 8 0.29%  $ 13,344  $ 43 0.33%  $ 8,951  $ 33 0.36%
Total deposits   19,376  22 0.44%  19,173  25 0.51%  13,254  17 0.50%  17,401  83 0.48%  12,477  71 0.57%
                               
Tax equivalent net interest rate spread     3.35%     3.35%     3.52%     3.46%     3.48%
Tax equivalent net interest rate margin     3.48%     3.48%     3.65%     3.58%     3.64%
                               
(1) 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)              
  2011 2010 For year ending
   Fourth   Third   Second   First   Fourth   December 31,   December 31, 
   Quarter   Quarter   Quarter  Quarter   Quarter  2011 2010
               
Beginning balance  $ 112,749  $ 107,028  $ 100,126  $ 95,354  $ 94,532  $ 95,354  $ 88,303
Net loan (charge-offs) recoveries:            
Commercial real estate  $ 212  $ (5,580)  $ (2,787)  $ (2,006)  $ (4,765)  $ (10,161)  $ (20,967)
Commercial business  (4,665)  (2,123)  (3,439)  (4,391)  (6,082)  (14,618)  (17,061)
Residential real estate  (318)  171  (177)  (662)  (389)  (986)  (664)
Home equity  (268)  (223)  (829)  (781)  (809)  (2,101)  (1,525)
Other consumer  (796)  (370)  (305)  (288)  (634)  (1,759)  (1,363)
Total net loan charge-offs  $ (5,835)  $ (8,125)  $ (7,537)  $ (8,128)  $ (12,679)  $ (29,625)  $ (41,580)
Provision for loan losses  13,186  13,846  14,439  12,900  13,500  54,371  48,631
Ending balance  $ 120,100  $ 112,749  $ 107,028  $ 100,126  $ 95,354  $ 120,100  $ 95,354
               
Supplemental information              
Allowance to loans 0.73% 0.69% 0.66% 0.93% 0.91% 0.73% 0.91%
Allowance for legacy loans to legacy loans(1)  1.20  1.20  1.21  1.22  1.22  1.20  1.22
Provision to average loans (annualized)  0.32  0.34  0.38  0.49  0.53  0.37  0.52
Provision for legacy loans to average legacy loans(1) (annualized)  0.45  0.60  0.64  0.65  0.71  0.58  0.68
               
Net charge-offs to average loans (annualized)            
Commercial real estate -0.01% 0.36% 0.19% 0.18% 0.44% 0.18% 0.53%
Commercial business 0.51% 0.25% 0.44% 0.67% 0.99% 0.46% 0.81%
Total commercial loans 0.18% 0.32% 0.28% 0.36% 0.64% 0.28% 0.63%
Residential real estate 0.03% -0.02% 0.02% 0.15% 0.09% 0.03% 0.04%
Home equity 0.05% 0.04% 0.16% 0.21% 0.22% 0.11% 0.12%
Other consumer 1.14% 0.53% 0.45% 0.42% 0.94% 0.64% 0.55%
Total consumer loans 0.08% 0.03% 0.09% 0.20% 0.21% 0.08% 0.11%
Total loans 0.14% 0.20% 0.20% 0.31%  0.49% 0.20% 0.44%
               
Net charge-offs of legacy loans to average legacy loans (annualized)(1)        
Commercial real estate -0.05% 0.59% 0.26% 0.23% 0.60% 0.26% 0.69%
Commercial business 0.67% 0.34% 0.54% 0.84% 1.31% 0.59% 1.09%
Total commercial loans 0.25% 0.49% 0.37% 0.46% 0.86% 0.39% 0.83%
Residential real estate 0.08% -0.04% 0.05% 0.18% 0.10% 0.06% 0.04%
Home equity 0.10% 0.08% 0.34% 0.33% 0.37% 0.21% 0.19%
Other consumer 1.51% 0.93% 0.82% 0.76% 1.78% 1.02% 0.99%
Total consumer loans 0.17% 0.06% 0.20% 0.27% 0.29% 0.17% 0.14%
Total loans 0.22% 0.35% 0.32% 0.40% 0.67% 0.32% 0.58%
               
Nonperforming loans:              
Commercial real estate  $ 43,119  $ 41,295  $ 42,881  $ 37,346  $ 44,065  $ 43,119  $ 44,065
Commercial business  20,173  18,839  20,021  24,823  25,819  20,173  25,819
Residential real estate  18,668  15,555  14,484  13,433  14,461  18,668  14,461
Home equity  6,790  5,428  4,748  4,467  4,605  6,790  4,605
Other consumer  1,048  769  379  299  373  1,048  373
Total nonperforming loans  89,798  81,886  82,513  80,368  89,323  89,798  89,323
Real estate owned  4,482  9,392  12,315  6,955  8,647  4,482  8,647
Total nonperforming assets  $ 94,280  $ 91,278  $ 94,828  $ 87,323  $ 97,970  $ 94,280  $ 97,970
               
Accruing troubled debt restructurings (TDR)  $ 43,888  $ 45,282  $ 18,794  $ 27,027  $ 21,607  $ 43,888  $ 21,607
Acquired loans 90 days past due still accruing(2)  143,237  143,270  134,869  62,942  58,097  143,237  58,097
Total classified loans(3)  748,375   692,961   700,813   564,037   481,074   748,375   481,074 
Total criticized loans(4)  $ 1,144,222  $ 1,268,879  $ 1,253,937  $ 972,148  $ 942,941  $ 1,144,222  $ 942,941
               
Total nonperforming loans to loans 0.55% 0.50% 0.51% 0.75% 0.85% 0.55% 0.85%
Total nonperforming loans to legacy loans(1) 0.91% 0.87% 0.93% 0.98% 1.14% 0.91% 1.14%
Total nonperforming assets to loans and real estate owned 0.57% 0.56% 0.58% 0.81% 0.93% 0.57% 0.93%
Total nonperforming assets to assets 0.29% 0.29% 0.31% 0.41% 0.46% 0.29% 0.46%
Allowance to nonperforming loans 133.7% 137.7% 129.7% 124.6% 106.8% 133.7% 106.8%
Texas ratio(5) 8.55% 10.19% 10.12% 8.51% 8.94% 8.55% 8.94%
               
(1) Legacy loans represent total loans excluding acquired loans.            
(2) All such loans represent acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing as we primarily recognize interest income through the accretion of the difference between the carrying value of these loans and their expected cash flows.  
(3) 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, 2010.  
(4) 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.  
(5) 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)            
             
  2011 2010
 
December 31, 
 
September 30,

June 30,

March 31,
December 31, 
             
First Niagara Financial Group, Inc capital ratios:        
Tier 1 risk based capital 15.60%  (1) 11.90% 12.05% 13.32% 13.54%
Tier 1 common capital(2) 13.23%  (1) 11.29% 11.41% 12.56% 12.76%
Total risk based capital 17.84%  (1) 12.56% 12.69% 14.13% 14.35%
Leverage 9.97%  (1) 7.42% 7.81% 8.21% 8.14%
Equity to assets 14.62%  (1) 12.82% 12.93% 12.94% 13.11%
Tangible common equity to tangible assets(2) 8.57%  (1) 7.44% 7.44% 8.20% 8.27%
             
First Niagara Bank, N.A capital ratios:          
Tier 1 risk based capital 14.66%  (1) 11.51% 11.72% 11.23% 11.06%
Total risk based capital 16.47%  (1) 12.17% 12.37% 12.04% 11.86%
Leverage 9.38%  (1) 7.17% 7.58% 6.92% 6.64%
             
Number of branches  333    332  346  257  257
Full time equivalent employees  4,827    4,712  4,751  3,825  3,791
             
Share information and per share metrics:          
Common shares outstanding  351,834    294,898  295,245  209,432  209,112
Treasury shares  14,168    14,192  13,845  5,674  5,994
Book value per share(3)  $ 12.79    $ 13.72  $ 13.68  $ 13.45  $ 13.42
Tangible book value per share(2)(3)  7.62    7.50  7.41  8.08  8.01
Price/Book 67.47%   66.69% 96.49% 100.97% 104.17%
Price/Tangible book(2) 113.25%   122.00% 178.14% 168.07% 174.53%
Cash dividends  $ 0.16  (4)  $ 0.16  $ 0.16  $ 0.16  $ 0.15
Dividend payout ratio 84.21%   84.21% 320.00% 72.73% 68.18%
Dividend yield (annualized) 7.36%   6.94% 4.86% 4.78% 4.26%
             
(1) Ratios reflect the impact of our capital raise completed in December 2011, the proceeds of which will be used to consummate the pending acquisition of branches from HSBC Bank-USA, National Association in 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.  
(4) Represents dividend paid in the fourth quarter to common stockholders. No preferred dividend was paid to preferred stockholders as it is noncumulative and will not receive a dividend until declared. As noted in our press release issued in December 2011, the dividend on common stock was reduced to$0.08 beginning in the first quarter of 2012.  
             
             
First Niagara Financial Group, Inc.            
Appendix A - Non-GAAP Reconciliation            
(in thousands, except per share amounts)            
               
  2011 2010 For year ending
   Fourth   Third   Second   First   Fourth   December 31,   December 31, 
   Quarter   Quarter   Quarter   Quarter   Quarter  2011 2010
Reconciliation of noninterest expense on operating basis to reported noninterest expense(1):              
Total noninterest expense on operating basis (Non-GAAP)  $ 182,526  $ 178,537  $ 166,657  $ 137,918  $ 133,429  $ 665,638  $ 472,684
Salaries and benefits  --   --   --   --   --   --   754
Merger and acquisition integration expenses  6,149  9,008  76,828  6,176  5,905  98,161  49,890
Restructuring charges  13,496  16,326  11,656  1,056  --   42,534  -- 
Total reported noninterest expense (GAAP)  $ 202,171  $ 203,871  $ 255,141  $ 145,150  $ 139,334  $ 806,333  $ 523,328
               
Reconciliation of net operating income to net income(1):          
Net operating income (Non-GAAP)  $ 72,057  $ 73,645  $ 71,242  $ 49,774  $ 49,664  $ 266,718  $ 174,118
Nonoperating expenses, net of tax:            
Salaries and benefits  --   --   --   --   --   --   513
Merger and acquisition integration expenses  4,256  5,925  50,092  4,147  3,809  64,420  33,252
Restructuring charges  9,340  10,739  7,600  709  --   28,388  -- 
Total nonoperating expenses, net of tax  13,596  16,664  57,692  4,856  3,809  92,808  33,765
Net income (GAAP)  $ 58,461  $ 56,981  $ 13,550  $ 44,918  $ 45,855  $ 173,910  $ 140,353
               
Computation of pre-tax,pre-provision income:              
Net interest income  $ 242,513  $ 235,429  $ 230,437  $ 172,868  $ 167,548  $ 881,247  $ 597,754
Noninterest income  63,685   68,655   60,895   52,074   54,112   245,309   186,615 
Noninterest expense  (202,171)  (203,871)  (255,141)  (145,150)  (139,334)  (806,333)  (523,328)
Pre-tax, pre-provision income (GAAP)  104,027  100,213  36,191  79,792  82,326  320,223  261,041
Add back: non-operating noninterest expenses (1)  19,645  25,334  88,484  7,232  5,905  140,695  50,644
Pre-tax, pre-provision income (Non-GAAP)  $ 123,672  $ 125,547  $ 124,675  $ 87,024  $ 88,231  $ 460,918  $ 311,685
               
Financial ratios computed on an operating basis(1):          
Earnings per basic share  $ 0.24  $ 0.25  $ 0.25  $ 0.24  $ 0.24  $ 0.98  $ 0.87
Earnings per diluted share  0.24  0.25  0.25  0.24  0.24  0.98  0.87
Weighted average shares outstanding - basic(2)  304,065  292,211  281,496  206,124  205,901  271,301  200,274
Weighted average shares outstanding - diluted(2)  304,341  292,503  282,420  206,644  206,229  271,612  200,596
Pre-tax, pre-provision income  123,672  125,547  124,675  87,024  88,231  460,918  311,685
Pre-tax, pre-provision income per diluted share  0.41  0.43  0.44  0.42  0.43  1.70  1.55
Pre-tax, pre-provision return on average assets 1.55% 1.61% 1.72% 1.67% 1.67% 1.63% 1.65%
Net interest margin(3) 3.48% 3.48% 3.65% 3.80% 3.65% 3.58% 3.64%
Interest yield on average loans(3) 4.76% 4.73% 4.93% 5.12% 5.24% 4.87% 5.32%
Rate paid on interest-bearing liabilities(3) 0.82% 0.87% 0.84% 0.90% 0.93% 0.85% 1.04%
Efficiency ratio 59.61% 58.71% 57.21% 61.30% 60.20% 59.09% 60.26%
Effective tax rate 34.7% 33.7% 33.6% 32.9% 33.5% 33.8% 33.8%
Noninterest income as a percentage of net revenue(4) 20.80% 22.58% 20.90% 23.10% 24.41% 21.78% 23.79%
Return on average assets 0.90% 0.94% 0.98% 0.96% 0.94% 0.94% 0.92%
Return on average equity 6.82% 7.25% 7.44% 7.27% 6.99% 7.18% 6.49%
Return on average tangible equity 12.02% 13.28% 13.61% 12.12% 11.52% 12.77% 10.75%
Return on average common equity 6.93% 7.25% 7.44% 7.27% 6.99% 7.22% 6.49%
Return on average tangible common equity 12.36% 13.28% 13.61% 12.12% 11.52% 12.88% 10.75%
               
(1) Noninterest expense on an operating basis and net operating income 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.
               
               
First Niagara Financial Group, Inc.              
Appendix A - Non-GAAP Reconciliation (Cont.)              
(in thousands, except per share amounts)              
               
  2011 2010 For year ending
   
Fourth 
 
Third 
 
Second 
 
First 
 
Fourth 
 December 31,   December 31, 
   Quarter   Quarter   Quarter   Quarter   Quarter  2011 2010
Computation of Ending Tangible Assets:              
Total assets  $ 32,810,615  $ 31,209,507  $ 30,889,646  $ 21,439,845  $ 21,083,853  $ 32,810,615  $ 21,083,853
Less: Goodwill and other intangibles  (1,803,240)   (1,812,628)   (1,829,712)   (1,108,811)   (1,114,144)   (1,803,240)   (1,114,144) 
Tangible assets  $ 31,007,375  $ 29,396,879  $ 29,059,934  $ 20,331,034  $ 19,969,709  $ 31,007,375  $ 19,969,709
               
Computation of Ending Tangible Equity:              
Total stockholders' equity  $ 4,798,178  $ 4,000,675  $ 3,992,835  $ 2,775,032  $ 2,765,070  $ 4,798,178  $ 2,765,070
Less: Goodwill and other intangibles  (1,803,240)   (1,812,628)   (1,829,712)   (1,108,811)   (1,114,144)   (1,803,240)   (1,114,144) 
Tangible equity  $ 2,994,938  $ 2,188,047  $ 2,163,123  $ 1,666,221  $ 1,650,926  $ 2,994,938  $ 1,650,926
               
Computation of Ending Tangible Common Equity:              
Total stockholders' equity  $ 4,798,178  $ 4,000,675  $ 3,992,835  $ 2,775,032  $ 2,765,070  $ 4,798,178  $ 2,765,070
Less: Goodwill and other intangibles  (1,803,240)   (1,812,628)   (1,829,712)   (1,108,811)   (1,114,144)   (1,803,240)   (1,114,144) 
Less: Preferred stockholders' equity  (338,002)   --   --   --   --   (338,002)  -- 
Tangible common equity  $ 2,656,936  $ 2,188,047  $ 2,163,123  $ 1,666,221  $ 1,650,926  $ 2,656,936  $ 1,650,926
               
Computation of Average Tangible Equity:              
Total stockholders' equity  $ 4,188,800  $ 4,027,572  $ 3,839,101  $ 2,777,266  $ 2,818,265  $ 3,712,927  $ 2,683,379
Less: Goodwill and other intangibles  (1,809,690)   (1,827,820)   (1,738,948)   (1,112,329)   (1,107,958)   (1,624,671)   (1,063,794) 
Tangible equity  $ 2,379,110  $ 2,199,752  $ 2,100,153  $ 1,664,937  $ 1,710,307  $ 2,088,256  $ 1,619,585
               
Computation of Average Tangible Common Equity:              
Total stockholders' equity  $ 4,188,800  $ 4,027,572  $ 3,839,101  $ 2,777,266  $ 2,818,265  $ 3,712,927  $ 2,683,379
Less: Goodwill and other intangibles  (1,809,690)   (1,827,820)   (1,738,948)   (1,112,329)   (1,107,958)   (1,624,671)   (1,063,794) 
Less: Preferred stockholders' equity  (66,226)   --   --   --   --   (16,693)   -- 
Tangible common equity  $ 2,312,884  $ 2,199,752  $ 2,100,153  $ 1,664,937  $ 1,710,307  $ 2,071,563  $ 1,619,585
               
Computation of Texas Ratio:              
Nonperforming Assets  $ 94,280  $ 91,278  $ 94,828  $ 87,323  $ 97,970  $ 94,280  $ 97,970
Acquired loans 90 days past due still accruing(1)  143,237  143,270  134,869  62,942  58,097  143,237  58,097
Sum of nonperforming assets and acquired loans 90 days past due still accruing  $ 237,517  $ 234,548  $ 229,697  $ 150,265  $ 156,067  $ 237,517  $ 156,067
               
Tangible common equity  $ 2,656,936  $ 2,188,047  $ 2,163,123  $ 1,666,221  $ 1,650,926  $ 2,656,936  $ 1,650,926
Allowance for loan loss  120,100  112,749  107,028  100,126  95,354  120,100  95,354
Sum of tangible common equity and allowance for loan loss  $ 2,777,036  $ 2,300,796  $ 2,270,151  $ 1,766,347  $ 1,746,280  $ 2,777,036  $ 1,746,280
               
Sum of nonperforming assets and acquired loans 90 days past due still accruing/Sum of tangible common equity and allowance for loan loss 8.55% 10.19% 10.12% 8.51% 8.94% 8.55% 8.94%
               
Computation of Tier 1 Common Capital:              
Tier 1 capital  $ 2,962,031  $ 2,151,953  $ 2,118,085  $ 1,632,307  $ 1,601,892  $ 2,962,031  $ 1,601,892
Less: Qualifying restricted core capital elements  (111,284)   (111,112)  (110,920)  (92,944)  (92,899)  (111,284)   (92,899) 
Less: Perpetual non-cumulative preferred stock  (338,002)   --   --   --   --   (338,002)   -- 
Tier 1 common capital (Non-GAAP)  $ 2,512,745  $ 2,040,841  $ 2,007,165  $ 1,539,363  $ 1,508,993  $ 2,512,745  $ 1,508,993
               
(1) All such loans represent acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing as we primarily recognize interest income through the accretion of the difference between the carrying value of these loans and their expected cash flows.
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