First Niagara Financial Group Inc.
) reported first-quarter 2014 operating earnings of 17 cents per
share, in line with the Zacks Consensus Estimate as well as the
year-ago figure. Since the earnings announcement on Apr 24,
shares of First Niagara fell 1.7%, reflecting negative response
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The company's results benefited from higher net interest income,
offset by a fall in non-interest income, rise in provision for
credit losses and higher non-interest expenses. The company'
healthy capital position was a positive. However, continuous
deterioration in asset quality was the downside.
Net income available to common stockholders was $51.9 million,
down 13.1% from the prior-year quarter.
Quarter in Detail
Total revenue was $376.8 million, down 2.1% from the year-ago
quarter. The fall was due to lower non-interest income. However,
revenues surpassed the Zacks Consensus Estimate of $363.0
Net interest income increased 2.0% year over year to $270.7
million, mainly due to a fall in interest expense and higher
interest income. Further, net interest margin was 3.33% in the
quarter, down 6 basis points year over year.
Non-interest income came in at $76.7 million, down 14.1% year
over year. The decline was mainly due to a significant fall in
mortgage banking, capital markets and other income.
Non-interest expense totaled $248.7 million, up 4.7% from the
prior-year quarter. The rise was owing to increase in salaries
and benefits, technology and communications costs, marketing and
advertising expenses as well as professional services fees, along
with inclusion of merger and acquisition integration expenses.
Credit quality continued to deteriorate in the reported quarter.
Provision for credit losses increased 22.8% year over year to
$24.8 million. Net charge-offs were $18.6 million, up
substantially as well as year over year.
The ratio of allowance to loans was 0.99%, up from 0.86% in the
prior-year quarter. The ratio of net charge-offs to total loans
was 0.36%, as against 0.34% in the year-ago quarter.
First Niagara's capital ratios were healthy in the said quarter.
As of Mar 31, 2014, its Tier 1 risk based capital ratio was
9.62%, up from 9.45% as of Mar 31, 2013. Tier 1 common capital
ratio was 7.92% versus 7.64% in the year-ago quarter. Further,
leverage ratio was 7.28%, up from 6.92% as of Mar 31, 2013.
We believe that First Niagara's robust capital position will aid
its financials going forward. We are also encouraged by the rise
in loans. However, lower revenues will keep bottom line under
Moreover, an unsettled economy, the persistent low interest rate
environment and stringent regulations remain concerns.
Currently, First Niagara carries a Zacks Rank #3 (Hold).
Performance of Other Banks
Washington Federal Inc.
) fiscal second-quarter 2014 earnings of 38 cents per share came
in line with the Zacks Consensus Estimate.
People's United Financial Inc.
) reported first-quarter 2014 operating earnings per share of 19
cents, which missed the Zacks Consensus Estimate by a penny.
Heritage Financial Corp.
) is slated to report first-quarter 2014 earnings on Apr 29.