First Niagara Financial Group Inc. (FNFG)

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First Niagara Financial Group Inc. (FNFG)

Q3 2012 Earnings Call

October 19, 2012 10:30 am ET


John Koelmel - Chief Executive Officer

Greg Norwood - Chief Financial Officer


Bob Ramsey - FBR Capital Markets & Co

Dave Rochester - Deutsche Bank Securities

Damon DelMonte - Keefe, Bruyette & Woods

Erika Penala - BofA Merrill Lynch

Tom Alonso - Macquarie Research Equities

Joe Fenech - Sandler O'Neill & Partners L.P.

Matt Kelley - Sterne, Agee & Leach

David Darst - Guggenheim Securities LLC

John Pancari - Evercore Partners



This presentation contains forward-looking information for First Niagara Financial Group Incorporated. Such information constitutes forward looking statement within the meaning of Private Securities Litigation Reform Act of 1995, which involve significant risks and uncertainties. Actual results may differ materially from results discussed on this forward-looking statement.

Welcome and thank you for standing by. All lines have been placed in listen-only mode until the question-and-answer session. Today's call is being recorded. If anyone has any objections, you may disconnect at this time.

I would now like to turn the call over to your host, Mr. John Koelmel, President and Chief Executive Officer. Sir, you may now begin.

John Koelmel

Thank you very much, [Nova] and good morning, everyone.

I am very pleased to report another quarter of solid operating results and very strong business fundamental outcomes. As a matter, how you evaluate the last three months whether it'd be the continuing strength in industry leading commercial loan growth or the number of checking account customers, we continue to acquire with the success of the HSBC transition, and integration of our overall market profile and position, our best-in-class team continues to make it happen across the footprint.

For those that missed our presentation at the Barclays Conference in September, let me again make it very clear, that our organization top to bottom, is 100% focused on running the business we have built with no distractions. And that starts with me. Totally engaged, head down, full time in the business. Leading the charge, employing the hand that we hold today, which is one we very much like to ensure that we make the most of a solid franchise we have built and we do that by, once again, smartly rotating our balance sheet, increasing our focus on fee-generating products services and relationships, driving efficiency gains and continuing to win more customer and community hearts and minds, which in turn enables us to take additional share of wallet in the market.

And while that singular focus has long been the norm for most in the industry, this is the first time in my tenure that the entire organization and team have been 100% focused on running the business of the day. For all of us, it's only about effective and efficient execution of our business plan.

While I am proud of the consistently solid operating results we've delivered over the last few years, I know we need to be even better over the next several to affirm our position as a winner in the sector as the world around us settles down and sorts itself out, which is why we are focused on doing even more with what we already have, pulling more from our talent and relationship-driven business model, increasing the return on our product and service capabilities, and fully leveraging our market profile and position. Be assured we'll do that with pace and consistency in 2013 to provide all of us with a relevant baseline from which we can look ahead to '14, '15 and beyond.

The key to our success always starts with talent and culture. The passion, knowledge and commitment of our team make a real difference for our customers and communities each and every day. And as you are consistently seeing over the last few years a progressively bigger and better team working with an increasingly bigger and better suite of products and services has enabled us to consistently take a bigger and better slice of the customer pie. And now with a full fire power of the entire organization behind them, our team is all more energized to win even more of the daily customer battles to efficiently and effectively grow the business.

I referenced fee income earlier. We need to again push our sources of non-interest income north of 30% of total revenue, we will do that by better executing with the customer base we already have today, further aligning our product and service suite well as our fee structure given today's market realities, sharpening our focus on fee-driven relationships both, in terms of commercial and consumer, better executing other fee-based businesses whether it would be wealth, insurance or private client services.

We are well above that 30% level before our growth spurt. That's a priority focus as we now will be able to leverage a much, much better platform in the years ahead. We've clearly demonstrated over the last five years, our core competency in growing the commercial lending business, all while being smart and disciplined with our underwriting. That's why we are very confident in our ability to once again opportunistically rotate the balance sheet now with even more options and whatever the economic environment.

Our target loan-to-deposit ratio was 95%, and we'll give there in a way that optimizes returns even in this low rate environment, which means overall asset growth is not a top metric for us, much more of our redeploying our already invested dollars to improve returns. We also do need to be more effective and efficient in all that we do, I said in a response to a question in last quarter's call that an efficiency ratio with a fixed handle will never excite me in a positive way and that we haven't lost sight of our promise of a sub-55 ratio when we announced the HSBC transaction last summer. That's still where we're going, operational excellence.

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