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Company Release - 07/19/2004 08:02 | |
LOCKPORT, N.Y., July 19 /PRNewswire-FirstCall/ -- First Niagara Financial Group, Inc. (Nasdaq: FNFG), today announced that net income for the quarter ended June 30, 2004 increased to $13.0 million, or $0.16 per diluted share from $9.1 million, or $0.13 per diluted share for the same period of 2003. This represents a 43% increase in net income and a 23% increase in diluted earnings per share over the prior year second quarter. On a linked quarter basis, net income increased 9% and diluted earnings per share increased 7% from $11.9 million or $0.15 per diluted share. First Niagara President and CEO Paul J. Kolkmeyer stated, "Second quarter results were very good, reflecting the benefits of our acquisition of Troy Financial Corporation in January of this year, as well as the continuing expansion of our commercial loan portfolio and core deposit base. These core businesses continue to be an area of focus for us and will be key to driving our financial performance in the future. I am also pleased to report that during the quarter, overall credit quality remained strong and we experienced improved results from our wealth and risk management businesses, as we continue to offer our customers relationship based solutions to meet their financial needs." Net interest income increased 6% to $38.9 million for the second quarter of 2004 from $36.6 million for the first quarter of 2004, driven primarily by a combination of commercial loan and core deposit growth. On an annualized basis, commercial real-estate and commercial business loans increased 27% and 15%, respectively, during the quarter, which reflects improving customer demand, increased line usage, as well as the Company's continuing efforts to be the lender of choice for the small and middle market businesses in its service areas. During the quarter, the Company continued to shift its funding mix from higher rate certificates of deposit to lower cost core deposits. This strategy resulted in an annualized increase of 18% in core deposits and was primarily accomplished through a combination of increased marketing and sales efforts throughout the Company's banking center network and commercial business growth. Additionally, deposits benefited from the continued implementation of the Company's de novo expansion strategy, which included the opening of new banking centers in both Erie and Monroe Counties. For the quarter, the Company's net interest rate spread and margin improved slightly over the first quarter of 2004 to 3.30% and 3.57%, respectively. Overall credit quality remained strong as nonperforming loans decreased 18% to $13.3 million or 0.42% of total loans at June 30, 2004 compared to $16.3 million or 0.53% of total loans at March 31, 2004. Although net loan charge-offs increased to $2.4 million for the second quarter of 2004 or 0.32% of average total loans, this increase is attributable to losses related to an indirect automobile leasing relationship. At June 30, 2004, the remaining outstanding loans associated with that relationship totaled $17.9 million and are secured by performing auto leases. Going forward, the Company anticipates that any additional charge-offs in connection with this relationship will be comparable to historical loss rates for those types of loans. Excluding these auto leases, charge-offs during the quarter were consistent with the 2004 first quarter level of 0.14% of average total loans. Year-to-date annualized net loan charge-offs as a percentage of average total loans amounted to 0.23%, which is consistent with the 0.24% for each of the last two years. To compensate for the higher level of charge-offs during the quarter, as well as to provide for the continuing growth in commercial loans, the Company increased its provision for credit losses to $3.1 million compared to $1.8 million for the linked quarter. For the second quarter of 2004, the Company had $13.4 million of noninterest income, which includes the benefits of the former Troy Financial Corporation and the Company's efforts to further its financial services business model throughout its banking center network. These factors resulted in a 17% increase in both banking and wealth management services income. Additionally, risk management revenue for the quarter was consistent with the first quarter of 2004 as the expected impact of lower contingent profit sharing commissions, the majority of which was received during the first quarter of the year, was offset by improved agency commissions. Noninterest income for the quarter also reflects $310 thousand of benefit proceeds received from bank owned life insurance. Noninterest expense for the three months ended June 30, 2004 was $29.8 million versus $28.6 million for the three months ended March 31, 2004. This increase is primarily attributable to having a full quarter of expenses from the former Troy operations and additional marketing expenses related to core deposit and risk management promotions. Additionally, second quarter results include fees and costs incurred related to the Company's strategic planning initiative to enhance financial performance, as well as the Company's annual shareholders meeting and year-end reporting. During the second quarter of 2004, Troy merger and integration expenses were $131 thousand versus $1.3 million of such expenses in the first quarter of 2004. The Company's return on equity for the quarter improved 31 basis points over the first quarter of 2004 as strong operating results were supplemented with common stock repurchases. During the quarter, the Company repurchased 705 thousand of its shares and as of June 30, 2004, had repurchased 1.3 million of the 2.1 million shares authorized under its current buy-back program. The Company anticipates completing this program early in the fourth quarter of this year. Outlook -- "Based upon the results of the first two quarters, as well as the current interest rate environment, we remain comfortable with the current range of analyst estimates of $0.63 to $0.65 per diluted share for 2004," stated Mr. Kolkmeyer. "We now expect our net interest margin will be at the high end of our previously provided 3.50% to 3.60% range for the last two quarters of the year assuming interest rates continue to rise. Additionally, we are on track to exceed our 15% organic commercial loan growth target for 2004. For the remainder of the year, we will focus on preparing for the integration of Hudson River, finalizing our strategic planning blueprint for the future, as well as furthering our capital management strategies. We are confident that these efforts will result in improved financial performance for First Niagara and provide long-term value for our shareholders." Profile -- First Niagara Financial Group, Inc., through its wholly owned subsidiary First Niagara Bank, has assets of $5.0 billion and deposits of $3.3 billion. First Niagara Bank is a full-service, community-oriented bank that provides financial services to individuals, families and businesses through 70 banking centers, a loan production office, several financial services subsidiaries, and 94 ATMs across New York State. On April 2, 2004 the Company announced its intentions to acquire Hudson River Bancorp, Inc., a $2.6 billion asset bank headquartered in Hudson, New York. Conference Call -- A conference call will be held at 11:00 a.m. Eastern Time on Monday July 19, 2004 to discuss these second quarter results, as well as the Company's strategy and future outlook. Those wishing to participate may dial 1-877-709-8150. A replay of the call will be available until July 26, 2004 by dialing 1-877-660-6853, account number 6340, conference number 109784. 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.
Summary of Quarterly Financial Data
2004 2003
--------------------- --------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
--------- ---------- --------- ---------- ---------
SELECTED
FINANCIAL DATA
(Amounts in
thousands)
Total assets $5,025,940 4,979,890 3,589,507 3,533,430 3,561,646
Total interest-
earning assets $4,384,094 4,335,885 3,261,953 3,195,743 3,250,449
Fed funds and
other short-term
investments $ 3,230 32,373 124,255 134,482 159,675
Securities, at
amortized cost $1,214,248 1,232,352 846,450 753,193 806,552
Loans:
Real estate:
Residential $1,162,544 1,154,084 948,877 965,486 987,426
Home equity $ 227,544 221,486 179,282 176,269 168,725
Commercial and
multi-family $1,014,178 970,516 653,976 631,041 589,122
Commercial
construction $ 135,359 107,323 86,154 102,625 111,492
--------- --------- --------- --------- ---------
Total real
estate loans $2,539,625 2,453,409 1,868,289 1,875,421 1,856,765
--------- --------- --------- --------- ---------
Commercial
business $ 417,027 402,261 215,000 225,561 221,316
Consumer $ 193,608 207,834 202,630 201,092 197,364
Net deferred costs
and discounts $ 9,761 10,394 8,704 8,688 9,082
--------- --------- --------- --------- ---------
Total loans $3,160,021 3,073,898 2,294,623 2,310,762 2,284,527
Allowance for
credit losses $ 41,434 40,766 25,420 25,219 24,781
--------- --------- --------- --------- ---------
Loans, net $3,118,587 3,033,132 2,269,203 2,285,543 2,259,746
Goodwill and other
intangibles $ 347,936 348,980 114,698 115,084 107,803
Total interest-
bearing
liabilities $3,741,917 3,711,906 2,642,798 2,586,081 2,624,447
Deposits:
Interest-bearing:
Savings $1,063,799 1,049,151 654,320 646,284 666,003
Checking $ 908,309 869,556 538,967 540,999 540,274
Certificates
of deposit $1,055,993 1,131,373 991,545 973,070 982,903
Noninterest-
bearing $ 290,926 248,970 170,384 158,915 166,059
--------- --------- --------- --------- ---------
Total deposits $3,319,027 3,299,050 2,355,216 2,319,268 2,355,239
Short-term
borrowings $ 196,006 154,383 87,148 85,020 67,564
Long-term
borrowings $ 517,810 507,443 370,818 340,708 367,703
Stockholders'
equity $ 925,750 938,023 728,174 723,047 718,390
Tangible equity (1) $ 577,814 589,043 613,476 607,963 610,587
Fair value
adjustment
included in
stockholders'
equity $ (9,298) 4,011 (341) 1,397 3,558
Common shares
outstanding (2) 79,332 79,712 66,326 66,370 66,228
Total loans
serviced for
others $ 331,927 347,291 246,078 250,082 271,401
CAPITAL
Tier 1 risk
based capital 16.66% 16.94% 17.94% 18.59% 18.70%
Total risk
based capital 17.91% 18.19% 19.04% 19.70% 19.80%
Tier 1 (core) capital 11.37% 11.53% 11.92% 12.48% 12.40%
Tangible capital 11.37% 11.53% 11.87% 12.42% 12.34%
Equity to assets 18.42% 18.84% 20.29% 20.46% 20.17%
Book value per
share (2) $ 11.67 11.77 10.98 10.89 10.85
Tangible book value
per share (1) $ 7.28 7.39 9.25 9.16 9.22
ASSET QUALITY DATA
(Amounts in
thousands)
Non-performing
loans:
Residential $ 4,685 4,410 3,905 3,605 3,395
Home equity $ 484 440 401 310 467
Commercial
real-estate and
multi-family $ 4,612 7,057 3,878 2,889 1,614
Consumer $ 830 594 538 679 1,040
Commercial
business $ 2,712 3,771 3,583 4,204 3,537
--------- --------- --------- --------- ---------
Total
non-performing
loans $ 13,323 16,272 12,305 11,687 10,053
Other non-
performing assets $ 400 563 543 1,196 1,375
--------- --------- --------- --------- ---------
Total non-
performing assets $ 13,723 16,835 12,848 12,883 11,428
Provision for
credit losses $ 3,104 1,750 2,007 1,757 2,208
Net loan
charge-offs $ 2,436 1,054 1,806 1,319 1,340
Net charge-offs
to average
loans (annualized) 0.32% 0.14% 0.31% 0.23% 0.24%
Provision for
credit losses as a
percentage of net
loan charge-offs 127.42% 166.03% 111.13% 133.21% 164.78%
Total non-performing
loans to total loans 0.42% 0.53% 0.54% 0.51% 0.44%
Total non-performing
assets as a
percentage of
total assets 0.27% 0.34% 0.36% 0.36% 0.32%
Allowance for
credit losses to
total loans 1.31% 1.33% 1.11% 1.09% 1.08%
Allowance for credit
losses to non-
performing loans 311.00% 250.53% 206.58% 215.79% 246.50%
Personnel FTE 1,196 1,177 944 915 891
Number of banking
centers 70 68 47 46 46
First Niagara Financial Group, Inc.
Summary of Quarterly Financial Data (Cont'd)
2004
------------------------------------
Year-to Date Second First
June 30, Quarter Quarter
------------- --------- ---------
SELECTED OPERATIONS DATA
(Amounts in thousands)
Interest income $ 108,806 55,750 53,056
Interest expense $ 33,268 16,815 16,453
--------- --------- ---------
Net interest income $ 75,538 38,935 36,603
Provision for credit losses $ 4,854 3,104 1,750
--------- --------- ---------
Net interest income after
provision for credit losses $ 70,684 35,831 34,853
Noninterest income:
Banking services $ 9,144 4,934 4,210
Risk management services $ 8,890 4,442 4,448
Wealth management services $ 2,335 1,261 1,074
Lending and leasing $ 1,852 929 923
Bank-owned life insurance $ 2,075 1,208 867
Net realized gains (losses) on
securities available for sale $ 60 -- 60
Other $ 882 613 269
--------- --------- ---------
Total noninterest income $ 25,238 13,387 11,851
Noninterest expense:
Salaries and benefits $ 31,798 15,915 15,883
Occupancy and equipment $ 6,476 3,120 3,356
Technology and communications $ 5,338 2,772 2,566
Marketing and advertising $ 2,337 1,381 956
Professional services $ 1,768 987 781
Amortization of intangibles $ 2,205 1,164 1,041
Other $ 8,506 4,510 3,996
--------- --------- ---------
Total noninterest expense $ 58,428 29,849 28,579
Income from continuing operations
before income taxes $ 37,494 19,369 18,125
Income taxes from continuing
operations $ 12,566 6,356 6,210
--------- --------- ---------
Income from continuing operations $ 24,928 13,013 11,915
Income (loss) from discontinued
operations, net of tax (3) $ -- -- --
--------- --------- ---------
Net income $ 24,928 13,013 11,915
========= ========= =========
STOCK AND RELATED PER SHARE DATA
Net income per share:
Basic $ 0.32 0.16 0.15
Diluted $ 0.31 0.16 0.15
Cash dividends $ 0.14 0.07 0.07
Dividend payout ratio 43.75% 43.75% 46.67%
Dividend yield (annualized) 2.35% 2.35% 2.06%
Market price (NASDAQ: FNFG):
High $ 15.78 14.13 15.78
Low $ 11.49 11.49 13.32
Close $ 12.00 12.00 13.64
SELECTED RATIOS
(Annualized)
Net income:
Return on average assets 1.03% 1.05% 1.02%
Return on average equity 5.45% 5.60% 5.29%
Return on average
tangible equity (1) 8.41% 8.93% 7.91%
As a percentage of average assets:
Noninterest income 1.05% 1.08% 1.01%
Noninterest expense 2.43% 2.41% 2.44%
--------- --------- ---------
Net overhead 1.38% 1.33% 1.43%
Efficiency ratio 57.98% 57.05% 58.98%
2003
---------------------------------------
Year Ended Fourth Third Second
Dec. 31, Quarter Quarter Quarter
----------- --------- ------- ---------
SELECTED OPERATIONS DATA
(Amounts in thousands)
Interest income $ 169,959 42,450 41,984 42,602
Interest expense $ 62,544 14,197 14,836 15,976
------- ------- ------- -------
Net interest income $ 107,415 28,253 27,148 26,626
Provision for credit losses $ 7,929 2,007 1,757 2,208
------- ------- ------- -------
Net interest income after
provision for credit losses $ 99,486 26,246 25,391 24,418
Noninterest income:
Banking services $ 16,445 4,110 4,289 4,246
Risk management services $ 14,765 4,007 3,818 3,631
Wealth management services $ 3,525 726 775 1,052
Lending and leasing $ 3,617 906 853 959
Bank-owned life insurance $ 3,502 809 1,141 799
Net realized gains (losses) on
securities available for sale $ 9 51 (24) (2)
Other $ 1,516 544 523 119
------- ------- ------- -------
Total noninterest income $ 43,379 11,153 11,375 10,804
Noninterest expense:
Salaries and benefits $ 50,377 12,743 13,037 12,025
Occupancy and equipment $ 9,315 2,331 2,284 2,259
Technology and communications $ 9,647 2,397 2,553 2,337
Marketing and advertising $ 3,205 541 810 786
Professional services $ 2,210 977 461 410
Amortization of intangibles $ 1,384 378 398 290
Other $ 12,139 3,371 2,877 2,965
------- ------- ------- -------
Total noninterest expense $ 88,277 22,738 22,420 21,072
Income from continuing
operations before
income taxes $ 54,588 14,661 14,346 14,150
Income taxes from continuing
operations $ 18,646 4,551 5,042 5,073
------- ------- ------- -------
Income from continuing
operations $ 35,942 10,110 9,304 9,077
Income (loss) from discontinued
operations, net of tax (3) $ 164 (22) -- 23
------- ------- ------- -------
Net income $ 36,106 10,088 9,304 9,100
======= ======= ======= =======
STOCK AND RELATED PER SHARE DATA
Net income per share:
Basic $ 0.55 0.15 0.14 0.14
Diluted $ 0.53 0.15 0.14 0.13
Cash dividends $ 0.22 0.06 0.06 0.05
Dividend payout ratio 40.00% 40.00% 42.86% 35.71%
Dividend yield (annualized) 1.47% 1.59% 1.58% 1.44%
Market price (NASDAQ: FNFG):
High $ 16.55 15.64 16.55 14.20
Low $ 10.11 13.85 13.70 11.40
Close $ 14.97 14.97 15.09 13.92
SELECTED RATIOS
(Annualized)
Net income:
Return on average assets 1.02% 1.13% 1.04% 1.02%
Return on average equity 5.19% 5.50% 5.13% 5.09%
Return on average
tangible equity (1) 6.15% 6.53% 6.08% 5.99%
As a percentage of average assets:
Noninterest income 1.23% 1.25% 1.27% 1.21%
Noninterest expense 2.50% 2.54% 2.51% 2.36%
------- ------- ------- -------
Net overhead 1.27% 1.29% 1.24% 1.15%
Efficiency ratio 58.54% 57.70% 58.20% 56.30%
First Niagara Financial Group, Inc.
Summary of Quarterly Financial Data (Cont'd)
2004
--------------------------------------
Year-to Date Second First
June 30, Quarter Quarter
------------- ---------- ---------
SELECTED AVERAGE BALANCES
(Amounts in thousands)
Total assets $ 4,844,087 4,986,412 4,701,761
Total interest-earning assets $ 4,240,514 4,361,984 4,117,336
Fed funds and other short-term
investments $ 41,648 24,166 59,130
Securities, at amortized cost $ 1,170,879 1,221,772 1,119,987
Loans (4) $ 3,013,831 3,099,987 2,927,675
Goodwill and other intangibles $ 323,917 348,534 299,300
Interest-bearing liabilities:
Savings accounts $ 992,964 1,056,289 929,639
Checking $ 854,935 893,854 816,016
Certificates of deposit $ 1,121,153 1,095,011 1,147,295
Other borrowed funds $ 641,432 672,731 610,134
----------- ----------- -----------
Total interest-bearing
liabilities $ 3,610,484 3,717,885 3,503,084
Interest-bearing deposits $ 2,969,052 3,045,154 2,892,950
Noninterest-bearing deposits $ 252,553 271,090 234,016
----------- ----------- -----------
Total deposits $ 3,221,605 3,316,244 3,126,966
Stockholders' equity $ 919,965 934,769 905,161
Tangible equity (1) $ 596,048 586,235 605,861
Common shares outstanding (2):
Basic 78,501 79,595 77,407
Diluted 79,826 80,731 78,917
SELECTED AVERAGE YIELDS/RATES
Investment securities 2.77% 2.77% 2.78%
Loans 6.16% 6.12% 6.20%
Total interest-earning assets 5.14% 5.12% 5.16%
Savings accounts 0.91% 0.93% 0.88%
Interest-bearing checking 0.87% 0.89% 0.86%
Certificates of deposit 2.22% 2.14% 2.29%
Other borrowed funds 3.99% 3.92% 4.07%
Total interest-bearing liabilities 1.85% 1.82% 1.89%
Net interest rate spread 3.29% 3.30% 3.27%
Net interest rate margin 3.56% 3.57% 3.56%
2003
---------------------------------------------
Year Ended Fourth Third Second
Dec. 31, Quarter Quarter Quarter
------------ --------- --------- ----------
SELECTED AVERAGE BALANCES
(Amounts in thousands)
Total assets $ 3,531,697 3,545,301 3,540,403 3,579,903
Total interest-earning
assets $ 3,226,208 3,228,756 3,230,971 3,280,842
Fed funds and other
short-term investments $ 220,330 137,175 167,878 282,842
Securities, at
amortized cost $ 737,703 774,734 759,271 734,489
Loans (4) $ 2,255,703 2,308,146 2,294,650 2,250,864
Goodwill and other
intangibles $ 109,207 114,876 112,446 107,631
Interest-bearing
liabilities:
Savings accounts $ 670,785 646,954 654,076 676,024
Checking $ 525,346 537,431 550,020 527,440
Certificates of deposit $ 998,428 992,314 966,017 1,021,369
Other borrowed funds $ 431,299 426,005 425,166 436,178
--------- --------- --------- ---------
Total interest-bearing
liabilities $ 2,625,858 2,602,704 2,595,279 2,661,011
Interest-bearing deposits $ 2,194,559 2,176,699 2,170,113 2,224,833
Noninterest-bearing deposits $ 155,546 163,960 167,862 149,727
--------- --------- --------- ---------
Total deposits $ 2,350,105 2,340,659 2,337,975 2,374,560
Stockholders' equity $ 695,914 727,413 719,606 716,980
Tangible equity (1) $ 586,707 612,537 607,160 609,349
Common shares outstanding (2):
Basic 66,111 66,289 66,276 66,126
Diluted 67,754 67,941 68,002 67,722
SELECTED AVERAGE YIELDS/RATES
Investment securities 2.35% 2.76% 2.12% 1.82%
Loans 6.64% 6.37% 6.50% 6.80%
Total interest-earning
assets 5.27% 5.24% 5.18% 5.20%
Savings accounts 1.01% 0.75% 0.84% 0.96%
Interest-bearing checking 0.91% 0.83% 0.85% 0.85%
Certificates of deposit 2.93% 2.61% 2.83% 3.03%
Other borrowed funds 5.04% 4.95% 5.03% 5.07%
Total interest-bearing
liabilities 2.38% 2.16% 2.27% 2.41%
Net interest rate spread 2.89% 3.08% 2.91% 2.79%
Net interest rate margin 3.33% 3.50% 3.36% 3.25%
(1) Excludes goodwill and other intangible assets.
(2) Excludes unallocated ESOP shares and unvested restricted stock shares.
(3) Effective February 19, 2003, First Niagara Bank sold NOVA Healthcare
Administrators, Inc., its wholly-owned third-party benefit plan
administrator subsidiary. For the periods presented, the Company has
reported the results of operations from NOVA as "Discontinued
Operations." First quarter 2003 amounts include the net gain realized
on the sale of $208,000.
(4) Net of deferred costs and unearned discounts.
SOURCE First Niagara Financial Group, Inc.
-0- 07/19/2004
/CONTACT: Paul J. Kolkmeyer, President and CEO, or John R. Koelmel, Chief
Financial Officer, or Christopher J. Thome, Reporting and Investor Relations
Manager, +1-716-625-7645, chris.thome@fnfg.com, or Leslie G. Garrity, Public
Relations and Corporate Communications Manager, +1-716-625-7528,
leslie.garrity@fnfg.com, all of First Niagara Financial Group, Inc./
/Web site: http://www.fnfg.com /
(FNFG)
CO: First Niagara Financial Group, Inc.
ST: New York
IN: FIN
SU: ERN CCA
KJ
-- NYM004 --
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