First Niagara income up in 3Q

October 21, 2011 Updated Oct 21, 2011 at 5:58 AM EDT

By WKBW News
By Business First by Allissa Kline, Buffalo Business First Reporter

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October 21, 2011 Updated Oct 21, 2011 at 5:58 AM EDT

Net income at First Niagara Financial Group Inc. rose nearly 25 percent during the third quarter of 2011, while earnings per share declined, the bank said Thursday.

For the quarter ending Sept. 30, net income totaled $57 million, or 19 cents per share, the bank reported. That compares to net income of $45.6 million, or 22 cents per share, for the same quarter last year.

"In these challenging times, we are all the more focused on running our business," First Niagara CFO Gregory Norwood said in a prepared release. "Accordingly, we are serving our customers just like we did throughout the 2008 disruption. We also continue to invest in the business, albeit at a more measured pace ... (and) until there is more sustainable economic recovery, it will be all the more important to balance the impact of the current environment with our continuing investment in our longer-term organic growth strategy."

The bank did not provide clarity on its pending acquisition of 195 HSBC Bank USA N.A. branches in Upstate New York, namely because it continues to wait for federal regulatory approval. John Koelmel, First Niagara president and CEO, said his team has completed a series of town hall-style meetings with affected HSBC employees.

"The overall buzz across Upstate New York about the transition has been incredibly positive," Koelmel said during an Thursday morning investor conference call. "But I'm disappointed that we can't give you any clarity about what really matters: divestitures, balance ramifications and capital structure."

Announced in July, the $1 billion deal was originally expected to close in early 2012. First Niagara is waiting on the U.S. Department of Justice before it can move forward with decisions about which HSBC branches to keep, sell and close. The bank has said it will have to conduct another capital raise in the future to support the pending deal. It expects raise $750 million to 800 million before closing along with a debt issuance of $350 million to 400 million.

For the third quarter, net interest income soared from $161.3 million a year ago to $235.4 million at the end of September, representing a 46 percent increase. First Niagara set aside $14.5 million for loan losses, up from $11 million set aside during the third quarter of 2010. Meanwhile, total non-performing assets declined from $102.8 million a year ago to $91.3 million as of Sept. 30.

First Niagara's most recent acquisition, the $1.5 billion agreement to buy NewAlliances Bancshares, added 88 branches in Connecticut and Massachusetts to the bank's footprint. First Niagara now has $30.2 billion in assets, compared to $20.9 billion a year ago. Its deposits total $19.6 billion, up from $13.4 billion last year.

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