After completing four acquisitions in three years and pushing into new geographies, First Niagara Financial Group, Inc. (NASDAQ: FNFG) plans to focus on running the business it has as well as possible. “We’re now equally excited to be in execution mode,” First Niagara President and CEO John Koelmel said during a July 27 conference call […]
After completing four acquisitions in three years and pushing into new geographies, First Niagara Financial Group, Inc. (NASDAQ: FNFG) plans to focus on running the business it has as well as possible.
“We’re now equally excited to be in execution mode,” First Niagara President and CEO John Koelmel said during a July 27 conference call on the banking company’s second-quarter results. “We’re completely focused on maximizing the organic platform we’ve built.”
That will include exploring ways to increase efficiency and reduce costs, he said. As well run as bank leaders believe their business is, the current environment forces them to do even better, Koelmel noted.
First Niagara could look to divest some branches at some point, he added.
For the second quarter, Buffalo–based First Niagara posted a loss to common shareholders of $18.5 million, or 5 cents a share, compared with net income to common shareholders of $13.6 million, or 5 cents a share, a year earlier.
Operating income available to shareholders, which excludes acquisition costs, was $59.1 million for the quarter, down from $71.2 million in the second quarter of 2011.
The bank’s acquisition of 195 HSBC branches in upstate New York, Westchester County, and Connecticut led to more than $135 million in acquisition costs during the earnings period. The costs were in line with First Niagara’s expectation and the one-time charge represents the bulk of the expenses associated with the deal, CFO Gregory Norwood said during the conference call.
The acquisition, which closed in May, made First Niagara a major force in the Syracuse, Utica, and Binghamton markets. Overall, it netted First Niagara 100 new branches, following planned closures and divestitures, and added more than 1,200 new employees to the bank’s work force.
Many of those employees have strong ties in their communities as some date back to Marine Midland Bank, Norwood said.
The branches brought $9.8 billion in deposits and $1.6 billion in loans. First Niagara now has nearly 430 branches with $38 billion in assets, $29 billion in deposits, and about 6,000 employees in New York, Pennsylvania, Connecticut, and Massachusetts.
The bank was able to retain more than 97 percent of the HSBC deposit base and even had a number of customers join up before the deal closed. First Niagara first announced the acquisition in July 2011.
“Many HSBC customers that moved weren’t running away from us,” Koelmel said. “They wanted to get a head start on building a relationship with us.”
In addition to completing the HSBC deal, First Niagara also generated strong loan growth during the second quarter. Average commercial loans rose $429 million for the period, up 17 percent on an annualized basis.
Average total loans increased by $349 million, or 8 percent annualized, from the first quarter, excluding the effect of the HSBC deal.
Norwood also noted that First Niagara’s indirect auto business got off to a strong start with originations of $170 million during the quarter. The bank announced the new auto-lending business earlier this year and now expects $600 million in loan balances in that portfolio by the end of the year.
That’s 15 percent above earlier expectations, Norwood said.
