First Niagara CFO: No current plans to consolidate more branches

Following first-quarter earnings that were reduced by charges related to recent branch closures, First Niagara Financial Group’s chief financial officer, tells The Business Journal News Network, the banking company is not planning to close any more branches at this time.

“We don’t have any current plans to consolidate more branches,” Gregory W. Norwood, CFO, says in an interview.

First Niagara (NASDAQ: FNFG) on April 24 reported that its first-quarter net income declined 13 percent from the year-ago period, amid restructuring costs to close branch offices.

The Buffalo–based parent company of First Niagara Bank N.A. generated net income available to common shareholders of $51.9 million, or 15 cents a share, in the first quarter, which included $8.3 million in after-tax restructuring and severance expenses related to branch closures and staffing moves.

That’s down from $59.7 million, or 17 cents, in the first quarter of 2013, which included $4.3 million in after-tax charges related to executive departures.

Excluding restructuring charges, First Niagara produced operating earnings of 17 cents a share in this year’s first quarter, which was in line with analysts’ consensus estimates, according to Yahoo Finance data, citing the estimates of 12 stock analysts.

First Niagara, the fourth largest bank in the 16 county Central New York market ranked by deposit market share, closed 10 branches companywide in the first quarter. They included two Southern Tier offices — one each in Owego and Conklin. First Niagara also shuttered five branches in Pennsylvania and three in Western New York. The moves came in response to customers’ increased use of its online, mobile, and telephone-banking options, the banking company says.

In all, First Niagara has consolidated 70 branches since 2011, according to a document it presented to investors on April 24.

“What customers want to do in branches is changing. We will continue to look at the physical footprint [of the branch network] as well as what people want in branches,” Norwood says.

First Niagara said in its earnings report that the first quarter was highlighted by continued balance-sheet growth, steady credit quality, and stable core net interest margin.

Average loans increased 8 percent annualized compared to the prior quarter. Average commercial business and real-estate loans rose 9 percent annualized over the previous earnings period.

First Niagara generated “really strong loan production, maybe stronger than even I anticipated,” Norwood says. “And it’s what I would say is high-quality loan growth.”

Norwood notes that the bank didn’t depend on making large loans to generate its growth.

The largest loan First Niagara made in the quarter was only $12 million, he says, adding that the average loan was probably “high single digits” in millions of dollars.

When asked how well the banking company’s Central New York operation is performing, Norwood says, “We still have a significant presence in that market — 700 to 800 employees. The entire Upstate market has performed very well for us, [producing] high single-digit [percentage] revenue growth.”

First Niagara issued its earnings report before the open of trading on April 24. In the three trading days that followed, its stock price fell by 3.4 percent from $9.25 to $8.94, as of the close on April 28. Year to date, the stock was down almost 16 percent.

Going forward, analysts are expecting First Niagara to generate earnings per share of 18 cents on revenue of about $360 million in the second quarter, ending June 30, according to Yahoo Finance data.

First Niagara says it’s a multi-state community-oriented bank with 411 branches, $38 billion in assets, $28 billion in deposits, and about 5,800 employees serving New York, Pennsylvania, Connecticut, and Massachusetts. 

Contact Rombel at arombel@cnybj.com