Some new business areas should help drive continued growth at First Niagara Financial Group, Inc. (NASDAQ: FNFG), executives said recently. The Buffalo–based banking company recently added indirect auto lending to its suite of services and hired 40 new small-business bankers. First Niagara is seeing some growth in loan demand as business leaders are expecting better […]
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Some new business areas should help drive continued growth at First Niagara Financial Group, Inc. (NASDAQ: FNFG), executives said recently.
The Buffalo–based banking company recently added indirect auto lending to its suite of services and hired 40 new small-business bankers. First Niagara is seeing some growth in loan demand as business leaders are expecting better times ahead, CFO Gregory Norwood said during an April 19 conference call to discuss the company’s first-quarter results with analysts and investors.
However, according to a recent survey from First Niagara, only one-third of business leaders expect to use a financial institution for financing their needs, Norwood noted.
“While there is some growth in the economy, from a lending perspective, the total pie will not be getting much bigger,” he said.
Adding the auto business brings First Niagara the only consumer lending area that is showing growth, he added. The bank was also able to add two experienced, successful teams for the business that know First Niagara’s markets.
The bank is working with a base of 500 dealers currently. That total should grow to 1,500 by 2014, Norwood said. By the end of 2012, First Niagara’s auto-lending business should generate $500 million in loan balances.
The new push on small-business lending should help the bank by providing low-cost deposit growth and through cross selling of other products and services, Norwood said. First Niagara is on target for business-checking account growth of 5 percent and expects to double its small-business lending this year, he added.
Niches in health-care lending and equipment financing will bolster loan growth as well, Norwood said.
Average commercial loans rose $353 million for the first quarter, a 14 percent annualized increase from the previous period. First Niagara’s loans and leases at the end of the first quarter totaled nearly $16.8 billion, up from $16.5 billion in the fourth quarter of 2011 and $10.7 billion a year earlier.
For the first quarter, net income available to common shareholders totaled $54.8 million, up from $44.9 million a year earlier. The banking company earned 16 cents a share for the period, down from 22 cents a share a year earlier. Operating income, which excludes acquisition costs and restructuring charges, totaled $70.1 million, up from $49.8 million.
First Niagara remains on track for a May closing of its planned acquisition of 195 HSBC Bank branches in upstate New York, Westchester County, and Connecticut, President and CEO John Koelmel said. The deal will make First Niagara a major force in the Syracuse, Utica, and Binghamton markets.
When the deal is complete, First Niagara will have nearly 430 branches, $30 billion in deposits, $38 billion in assets, and more than 6,000 employees in New York, Pennsylvania, Connecticut, and Massachusetts.
The acquisition will virtually double First Niagara’s New York branch network to more than 200 locations and add more than 1,200 employees to its work force.
“It deepens the upstate New York footprint that’s been the foundation of our success,” Koelmel said of the HSBC deal.
First Niagara’s net interest income totaled $242.4 million for the first quarter, down slightly from $242.5 million in the previous quarter and up from $172.9 million a year earlier. Noninterest income was $69.9 million, up from $63.7 million in the fourth quarter of 2011 and $52.1 million in the first quarter last year.
Noninterest expenses fell slightly to $200.2 million from $202.2 million in the previous quarter. Noninterest expenses totaled $145.2 million in the first quarter of 2011.
Deposits at the end of the quarter totaled about $19 billion, down from $19.4 billion at the end of December. Deposits at the end of the first quarter in 2011 totaled $13.5 billion.
First Niagara reported its profit results before the open of trading on April 19. The company’s stock price fell from $9.21 to $9.19 to $9.07 to $8.83, or 4.1 percent total, in the first three trading days after the earnings announcement.
