First Niagara Financial (FNFG) 8-K First Niagara Financial Group Reports 2008 Results

FIRST NIAGARA FINANCIAL GROUP REPORTS 2008 RESULTS

Lockport, N.Y. – January 29, 2009

-First Niagara closes strong 2008 with solid fourth quarter performance

- 2008 operating earnings rose by 9% over the prior year

- Interest margin maintained at cyclical high

        - Local market focus drives continued loan growth

        - Capital strength positions First Niagara for continued growth and success

First Niagara Financial Group, Inc. (NASDAQ: FNFG), today announced 2008 operating net income rose by 9% to $89.8 million or $0.83 per diluted share from $82.3 million or $0.80 per diluted share from the prior year.  Reported (GAAP) net income rose by 5% to $88.4 million or $0.81 per diluted share from $84.1 million or $0.81 per diluted share from the prior year.

Full Year Results

Operating Results (Non-GAAP)	2008			2007
Net interest income	$	268.6		$	224.2
Provision for credit losses		22.5			8.5
Noninterest income		115.7			115.9
Noninterest expense		226.2			210.3
Net income		89.8			82.3
Earnings per diluted share(a)	$	0.83		$	0.80
Reported Results(GAAP)
Nonrecurring items(b)	$	(2.0	)	$	3.7
Net income		88.4			84.1
Earnings per diluted share (c)	$	0.81		$	0.81

All amounts in millions except earnings per diluted share.  The Non-GAAP/Operating Results table above summarizes the Company’s operating results excluding certain non-recurring items.

(a) Excludes the impact of $1.2 million of preferred stock dividends and accretion of related discount.

(b) 2008 - -Q1: Noninterest expense – real estate write-downs and severance related to the acquisition of Greater Buffalo Savings Bank of $2.0 million.  2007 -Q4 2007: Noninterest income -gain on branch sales of $21.5 million and investment portfolio restructuring loss of $5.6 million, Noninterest expense - branch deposit loss of $2.3 million, 2007-Q2: Noninterest expense - real estate write-downs and severance costs of $7.5 million related to prior year’s performance improvement initiative.  2007-Q1: Noninterest expense - severance and related costs of $2.4 million.  The Company believes these non-GAAP financial measures provide a meaningful comparison of the underlying operational performance of the Company, and facilitate investors’ assessments of business and performance trends in comparison to others in the financial services industry.  In addition, the Company believes the exclusion of these items enables management to perform a more effective evaluation and comparison of the Company’s results and to assess performance in relation to the Company’s ongoing operations.

(c) Includes the impact of $1.2 million of preferred stock dividends and accretion of related discount.

John R. Koelmel, President and CEO said “2008 marked a year of great achievement for First Niagara, as we advanced the franchise in many important ways.  Our business lines are tightly focused around their competitive strengths.  Our employees are energized as never before to attract and serve customers with distinction, and we are doing the job for our shareholders with superior returns and financial performance. We continue to successfully navigate through the incredibly challenging environment and have stepped up to meet the credit needs in our market. In fact, we’ve supported even more individual and business customers last year by lending almost $3.0 billion across Upstate New York, a substantial increase of 18% over 2007.  Our capital strength and long-standing credit discipline leave us much better positioned than most to deal with the prevailing economic uncertainties.   We’re geared up and ready to move the Company forward by capitalizing on opportunities that will enhance the path we’re on toward long-term success.”

Quarterly Results

Operating Results (Non-GAAP)		Q4 2008		Q3 2008		Q4 2007
Net interest income	$	71.7	$	70.2	$	55.2
Provision for credit losses		8.0		6.5		2.5
Noninterest income		27.6		29.2		27.9
Noninterest expense		57.5		56.8		53.3
Net income		22.8		23.7		19.6
Earnings per diluted share(d)	$	0.20	$	0.22	$	0.19
Reported Results(GAAP)
Nonrecurring(e)	$	0.0	$	0.0	$	13.6
Net income		22.8		23.7		27.8
Earnings per diluted share(f))	$	0.19	$	0.22	$	0.27

All amounts in millions except earnings per diluted share.  

(d) Excludes the impact of $1.2 million of preferred stock dividends and accretion of related discount.

(e) 2007 -Q4 2007: Noninterest income - -gain on branch sales of $21.5 million and investment portfolio restructuring loss of $5.6 million, Noninterest expense - branch deposit loss of $2.3 million

(f) Includes the impact of $1.2 million of preferred stock dividends and accretion of related discount.

Chief Financial Officer, Michael W. Harrington, added, “Our solid fourth quarter results include nearly $800 million in new loan advances, higher net interest income, stable credit quality despite the further deterioration of economic conditions and a continued lack of any oversized exposure to troubled securities in our investment portfolio.   We maintained our net interest margin as we continued to reduce funding costs by following our disciplined deposit pricing strategy.  We are mindful, however, that recessionary pressures are increasing in all markets and that we, as well as others, will face a very challenging environment in 2009.  Given our strong performance and capital position, we are nonetheless confident in our ability to further our growth agenda while we weather the continuing economic storm.”

(Loan and deposit balance comparisons to 2007 exclude the effect of the February 2008 Greater Buffalo Savings Bank acquisition.)

Loans

Originations of new loans and lines of credit totaled $785 million in the fourth quarter.  For 2008, total loan and line advances reached $2.9 billion and were up a robust 18% from 2007.   Commercial loan average balances for 2008 grew by $405 million or 14% over the previous year.  Commercial business loans were up by 24%, surpassing a very strong 2007 growth rate of 23%.  Commercial real estate also posted a double digit increase for the year with average loan balances higher by 11%. Commercial loan average balances in the fourth quarter increased by an annualized 7% over the linked quarter.  While this rate of growth is below early 2008 levels due to the economic slow down, the business loan pipeline activity has remained solid. Home equity average balances increased by $37 million or 7% for the full year and grew by 11% annualized over the linked quarter due to increased line usage from existing customers as well as new relationships added during recent marketing campaigns. Despite originating over $200 million in new residential loans, mortgage balances steadily declined throughout 2008 and averaged $325 million or 14% below the prior year due to ongoing consumer preference for long-term, fixed rate products which the Company does not hold in its portfolio.

Credit Quality

During the fourth quarter nonperforming loans grew modestly by $1.7 million over the linked quarter to $46.4 million and increased by $18.4 million for 2008.  At year end, nonperforming loans were 0.72% of total loans compared to 0.49% at the prior year end.  Net charge-offs in the fourth quarter rose by $3.9 million over the linked quarter to $7.9 million or 0.49% of average loans with the increase attributable to several business loans and denotes a quicker deterioration of the Upstate New York economy than previously experienced.  Full year 2008 net chargeoffs increased to 0.28% of average loans compared to 0.18% in the prior year which is primarily reflective of the weakening economy as well as the ongoing maturation of our steadily growing commercial loan portfolios. The provision for credit losses was $8.0 million for the quarter, compared to $6.5 million in the linked quarter and $2.5 million a year ago.  At December 31, 2008, the allowance for credit losses represented 1.20% of total loans and 168% of nonperforming loans.

Deposits

Average core deposit balances rose by 7% in 2008.  This increase was primarily due to the expansion of municipal money market deposit relationships across the state and the increased emphasis placed on growing business checking balances. Core deposits now comprise 66% of total deposits, an increase from 63% a year earlier.  Total deposits declined by 3% on average for the full year due to the substantial drop in higher cost CD balances resulting from the Company’s year-long focus on pricing discipline and profitable relationships. Average deposit balances in the fourth quarter were $108 million below the linked quarter totals primarily due to declines in CD and savings balances with CD runoff slowing considerably during the fourth quarter as the majority of this portfolio re-priced earlier in 2008.

Net Interest Income

Net interest income for 2008 grew substantially by $44.4 million, or 20% above 2007 to $268.6 million and benefited from the continued reduction in funding costs, strong loan growth, and the February acquisition of Greater Buffalo Savings Bank.  The 2008 yield on interest bearing liabilities of 2.59% declined to its lowest level since 2005 as the Company continued to improve its funding mix by replacing higher yielding CD balances with lower priced core deposits and wholesale borrowings.  The net impact of these factors drove a 22 basis points increase in the tax equivalent net interest margin to 3.55% for 2008, the highest annual level in three years. The fourth quarter tax equivalent net interest margin of 3.68% remained unchanged from the linked quarter.

Noninterest Income

Operating (Non-GAAP) noninterest income for 2008 of $115.7 million was stable from the prior year as the industry-wide softening in insurance renewal rates was offset by higher deposit related banking service fees and a 5% increase in wealth management fees. Noninterest income for the current quarter was $27.6 million or $1.5 million below third quarter levels reflecting the ongoing challenges in the insurance market and reduced demand for broker sold investment securities.

Noninterest Expense

Operating (Non-GAAP) noninterest expense in 2008 of $226.2 million was 8% above the prior year predominately due to the absorption of Greater Buffalo Savings Bank staff along with general salary and benefit inflation.  Marketing costs increased by 26% primarily due to the Company’s aggressive statewide advertising campaign which has been successful in generating new business and increasing brand awareness. The continued disciplined management of the expense base helped to improve the efficiency ratio from 62% in 2007 to 59% in 2008, the lowest level in three years.  Noninterest expense for the current quarter increased by $0.8 million or 1% from the prior quarter as lower employee health care costs for 2008, recognized in the fourth quarter, were more than offset by higher marketing and seasonal branch maintenance costs.

Capital Management

The tangible equity ratio at December 31, 2008 was 11.03%, a substantial increase from last year’s level of 8.21%. During the fourth quarter of 2008, the Company successfully raised $115 million of private equity by issuing 8.5 million shares of common stock in a public offering. Also in the fourth quarter, the Company participated in the U.S. Treasury’s Capital Purchase Program (CPP) raising an additional $184 million of capital. The preferred dividends related to the securities issued to the Treasury amounted to $1.2 million in the fourth quarter. No shares of the Company’s stock were repurchased since the first quarter of 2008.

On January 27, 2009, the Board of Directors declared a quarterly dividend of fourteen cents ($0.14) per share on outstanding FNFG common stock, consistent with the prior quarter and prior year levels. The dividend is payable on February 24, 2009 to stockholders of record on February 10, 2009.

Profile - - First Niagara Financial Group, Inc., through its wholly owned subsidiary First Niagara Bank, has assets of $9.3 billion and deposits of $5.9 billion. First Niagara Bank is a full-service, community-focused bank that provides financial services to individuals, families and businesses through 114 branches and four Regional Market Centers across Upstate New York. For more information, visit www.fnfg.com.

Conference Call – A conference call will be held at 11 a.m. Eastern Time on Thursday, January 29, 2009 to discuss the Company’s financial results and business strategy.  Those wishing to participate in the call may dial toll-free 1-877-709-8150.  A replay of the call will be available until February 12, 2009 by dialing 1-877-660-6853, account number 240, ID number 308813.

Forward-Looking Statements - This press release contains forward-looking statements with respect to the financial condition and results of operations of First Niagara Financial Group, Inc. including, without limitations, statements relating to the earnings outlook of the Company.  These forward-looking statements involve certain risks and uncertainties.  Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in non-performing loans that could result from an economic downturn; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with an increase in commercial real-estate and business loans and non-performing loans.

Officer Contacts
John R. Koelmel	President and Chief Executive Officer
Michael W. Harrington	Chief Financial Officer
Anthony M. Alessi	Investor Relations Manager
	(716) 625-7692
	tony.alessi@fnfg.com
Leslie G. Garrity	Public Relations and Corporate Communications Manager
	(716) 625-7528
	leslie.garrity@fnfg.com

First Niagara Financial Group, Inc.

Summary of Quarterly Financial Data

	2008												2007
	December 31,			September 30,			June 30,			March 31,			December 31,			September 30,			June 30,			March 31,
SELECTED FINANCIAL DATA
(Amounts in thousands)
Securities available for sale	$	1,573,101			1,250,074			1,289,738			1,414,774			1,217,164			1,262,193			1,070,842			1,095,012
Loans and leases:
Commercial:
Real estate	$	2,551,966			2,489,601			2,468,932			2,388,769			2,195,009			2,150,885			2,098,245			2,065,472
Business	$	940,304			914,452			906,810			863,152			730,029			667,512			651,758			611,064
Total commercial loans	$	3,492,270			3,404,053			3,375,742			3,251,921			2,925,038			2,818,397			2,750,003			2,676,536
Residential real estate	$	1,990,784			2,038,351			2,094,813			2,149,363			1,955,690			1,998,411			2,190,984			2,224,704
Home equity	$	624,495			607,800			589,846			564,164			503,779			507,834			498,200			472,714
Other consumer	$	143,989			152,640			162,603			173,264			127,169			135,697			134,282			151,885
Specialized lending	$	178,916			184,739			181,683			174,476			183,747			188,684			186,856			163,319
Net deferred costs and discounts	$	33,321			33,895			34,106			34,980			29,529			29,531			29,962			27,747
Total loans and leases	$	6,463,775			6,421,478			6,438,793			6,348,168			5,724,952			5,678,554			5,790,287			5,716,905
Allowance for credit losses	$	77,793			77,664			75,128			74,283			70,247			70,970			71,102			71,051
Loans and leases, net	$	6,385,982			6,343,814			6,363,665			6,273,885			5,654,705			5,607,584			5,719,185			5,645,854
Goodwill and other intangibles	$	784,549			803,914			806,327			808,262			750,071			753,336			750,732			753,296
Total assets	$	9,331,372			9,008,383			9,074,502			9,067,701			8,096,228			8,114,960			8,020,806			7,982,589
Total interest-earning assets	$	8,136,806			7,782,496			7,825,324			7,813,212			6,994,022			7,007,391			6,938,584			6,903,315
Deposits:
Savings	$	788,767			778,794			811,160			795,464			786,759			844,576			906,852			936,496
Interest-bearing checking	$	485,220			521,206			505,656			509,121			468,165			499,058			502,925			511,169
Money market deposits	$	1,940,136			1,915,122			1,974,430			1,885,113			1,607,137			1,437,272			1,372,358			1,394,016
Noninterest-bearing	$	718,593			693,424			728,839			680,397			631,801			658,012			656,195			623,504
Certificates	$	2,010,897			1,908,174			2,138,148			2,367,176			2,055,122			2,266,535			2,317,116			2,333,891
Total deposits	$	5,943,613			5,816,720			6,158,233			6,237,271			5,548,984			5,705,453			5,755,446			5,799,076
Borrowings	$	1,540,227			1,603,777			1,363,379			1,265,521			1,094,981			947,055			797,574			716,463
Total interest-bearing liabilities	$	6,765,247			6,727,073			6,792,773			6,822,395			6,012,164			5,994,496			5,896,825			5,892,035
Net interest-earning assets	$	1,371,559			1,055,423			1,032,551			990,817			981,858			1,012,895			1,041,759			1,011,280
Stockholders' equity	$	1,727,263			1,441,022			1,431,352			1,432,632			1,353,179			1,332,313			1,329,063			1,353,792
Tangible equity (1)	$	942,714			637,108			625,025			624,370			603,108			578,977			578,331			600,496
Securities available for sale fair value
adjustment included in stockholders' equity	$	(12,716	)		(11,132	)		(6,011	)		5,853			(24	)		(10,039	)		(15,433	)		(11,161	)
Common shares outstanding		118,562			109,992			109,722			109,703			104,770			105,371			106,209			108,120
Treasury shares		6,858			15,427			15,697			15,718			15,274			14,674			13,835			11,925
Total loans serviced for others	$	568,767			568,750			570,614			571,707			553,631			554,934			392,597			398,166
CAPITAL
First Niagara Bank:
Tier 1 risk based capital		11.48	%		10.05	%		10.08	%		9.84	%		10.10	%		10.40	%		10.36	%		10.69	%
Total risk based capital		12.72	%		11.30	%		11.30	%		11.06	%		11.35	%		11.65	%		11.61	%		11.94	%
Tier 1 (core) capital		8.47	%		7.58	%		7.61	%		7.29	%		7.54	%		7.68	%		7.73	%		7.75	%
Tangible equity		8.47	%		7.58	%		7.61	%		7.29	%		7.54	%		7.68	%		7.73	%		7.75	%
Consolidated:
Equity to assets		18.51	%		16.00	%		15.77	%		15.80	%		16.71	%		16.42	%		16.57	%		16.96	%
Tangible equity to tangible assets (1)		11.03	%		7.77	%		7.56	%		7.56	%		8.21	%		7.86	%		7.95	%		8.31	%
Book value per share (2)	$	15.02			13.55			13.51			13.54			13.41			13.14			13.01			13.02
Tangible book value per share (1)(2)	$	8.20			5.99			5.90			5.90			5.98			5.71			5.66			5.77
ASSET QUALITY DATA
(Amounts in thousands)
Nonperforming loans:
Commercial real estate	$	26,546			28,884			20,456			19,921			16,229			18,169			9,869			6,937
Commercial business	$	7,411			4,274			4,095			3,518			3,430			2,718			5,546			5,653
Residential real estate	$	5,516			5,167			4,957			5,113			3,741			3,836			4,425			3,713
Home equity	$	2,076			1,541			927			1,180			849			545			836			1,088
Other consumer	$	514			627			528			832			885			1,307			1,232			1,816
Specialized lending	$	4,354			4,205			3,430			2,872			2,920			2,596			2,283			1,880
Total nonperforming loans	$	46,417			44,698			34,393			33,436			28,054			29,171			24,191			21,087
Real estate owned	$	2,001			2,782			1,414			976			237			244			169			553
Total nonperforming assets	$	48,418			47,480			35,807			34,412			28,291			29,415			24,360			21,640
Net loan charge-offs	$	7,871			3,964			4,055			1,954			3,223			2,150			2,249			2,462
Net charge-offs to average loans (annualized)		0.49	%		0.25	%		0.26	%		0.13	%		0.22	%		0.15	%		0.16	%		0.18	%
Provision for credit losses	$	8,000			6,500			4,900			3,100			2,500			2,100			2,300			1,600
Provision for credit losses as a
percentage of average loans (annualized)		0.49	%		0.40	%		0.31	%		0.21	%		0.17	%		0.14	%		0.16	%		0.11	%
Total nonperforming loans to total loans		0.72	%		0.70	%		0.53	%		0.53	%		0.49	%		0.51	%		0.42	%		0.37	%
Total nonperforming assets as a
percentage of total assets		0.52	%		0.53	%		0.39	%		0.38	%		0.35	%		0.36	%		0.30	%		0.27	%
Allowance for credit losses to total loans		1.20	%		1.21	%		1.17	%		1.17	%		1.23	%		1.25	%		1.23	%		1.24	%
Allowance for credit losses
to nonperforming loans		167.6	%		173.8	%		218.4	%		222.2	%		250.4	%		243.3	%		293.9	%		336.9	%
Personnel FTE		1,909			1,910			1,892			1,903			1,824			1,840			1,884			1,915
Number of branches		114			114			114			115			110			120			121			119

First Niagara Financial Group, Inc.

Summary of Quarterly Financial Data (Cont'd)

	2008															2007
	Year Ended															Year Ended
	December 31			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			December 31,			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
SELECTED OPERATIONS DATA
(Amounts in thousands)
Interest income	$	441,138			109,798			109,951			111,402			109,987			422,772			107,120			106,911			105,543			103,198
Interest expense	$	172,561			38,092			39,751			44,793			49,925			198,594			51,913			51,206			48,477			46,998
Net interest income	$	268,577			71,706			70,200			66,609			60,062			224,178			55,207			55,705			57,066			56,200
Provision for credit losses	$	22,500			8,000			6,500			4,900			3,100			8,500			2,500			2,100			2,300			1,600
Net interest income after provision for credit losses	$	246,077			63,706			63,700			61,709			56,962			215,678			52,707			53,605			54,766			54,600
Noninterest income:
Banking services	$	40,082			10,427			10,390			9,955			9,310			39,289			10,112			10,071			10,111			8,995
Insurance and benefits consulting	$	49,733			11,540			12,302			13,129			12,762			51,646			11,563			13,345			13,722			13,016
Wealth management services	$	9,922			2,159			2,686			2,860			2,217			9,494			2,247			2,412			2,632			2,203
Lending and leasing	$	8,783			2,079			2,224			2,225			2,255			8,880			2,604			2,191			2,181			1,904
Bank owned life insurance	$	5,449			1,723			1,294			1,255			1,177			4,848			1,088			1,144			1,561			1,055
Other	$	1,766			(285	)		293			212			1,546			17,654			16,211			567			137			739
Total noninterest income	$	115,735			27,643			29,189			29,636			29,267			131,811			43,825			29,730			30,344			27,912
Noninterest expense:
Salaries and benefits	$	134,195			33,018			33,914			33,844			33,419			125,697			30,269			30,159			32,377			32,892
Occupancy and equipment	$	24,915			6,199			5,744			5,812			7,160			28,550			5,540			5,544			11,484			5,982
Technology and communications	$	20,098			5,188			4,971			4,932			5,007			19,456			4,942			4,770			4,905			4,839
Marketing and advertising	$	10,679			3,076			2,639			2,462			2,502			8,362			2,632			2,121			1,921			1,688
Professional services	$	4,736			1,678			1,061			925			1,072			4,392			1,182			1,243			1,158			809
Amortization of intangibles	$	8,824			2,218			2,146			2,209			2,251			10,433			2,533			2,570			2,639			2,691
Other	$	24,963			6,178			6,279			6,410			6,096			25,576			8,489			5,541			5,806			5,740
Total noninterest expense	$	228,410			57,555			56,754			56,594			57,507			222,466			55,587			51,948			60,290			54,641
Income before income taxes	$	133,402			33,794			36,135			34,751			28,722			125,023			40,945			31,387			24,820			27,871
Income taxes	$	44,964			10,988			12,395			11,672			9,909			40,938			13,108			10,284			8,209			9,337
Net income	$	88,438			22,806			23,740			23,079			18,813			84,085			27,837			21,103			16,611			18,534
Preferred stock dividend and accretion	$	1,184			1,184			-			-			-			-			-			-			-			-
Net income available to common stockholders	$	87,254			21,622			23,740			23,079			18,813			84,085			27,837			21,103			16,611			18,534
STOCK AND RELATED PER SHARE DATA
Earnings per share:
Basic	$	0.81			0.19			0.22			0.22			0.18			0.82			0.27			0.21			0.16			0.18
Diluted	$	0.81			0.19			0.22			0.22			0.18			0.81			0.27			0.21			0.16			0.17
Cash dividends	$	0.56			0.14			0.14			0.14			0.14			0.54			0.14			0.14			0.13			0.13
Dividend payout ratio		69.14	%		73.68	%		63.64	%		63.64	%		77.78	%		65.85	%		51.85	%		66.67	%		81.25	%		72.22	%
Dividend yield (annualized)		3.46	%		3.44	%		3.54	%		4.38	%		4.14	%		4.49	%		4.61	%		3.93	%		3.98	%		3.79	%
Market price (NASDAQ: FNFG):
High	$	22.38			16.45			22.38			15.00			14.15			15.13			15.13			14.60			14.28			15.07
Low	$	9.98			11.00			11.68			12.60			9.98			11.15			11.15			11.49			12.88			13.53
Close	$	16.17			16.17			15.75			12.86			13.59			12.04			12.04			14.15			13.10			13.91
SELECTED RATIOS
Net income (annualized):
Return on average assets		0.97	%		0.94	%		1.05	%		1.02	%		0.88	%		1.05	%		1.36	%		1.04	%		0.84	%		0.95	%
Return on average equity		5.91	%		5.26	%		6.57	%		6.46	%		5.42	%		6.24	%		8.26	%		6.31	%		4.93	%		5.47	%
Return on average tangible equity (1)		12.80	%		10.34	%		14.92	%		14.75	%		12.01	%		14.12	%		18.87	%		14.56	%		11.09	%		12.10	%
Noninterest income as a percentage of net revenue		30.11	%		27.82	%		29.37	%		30.79	%		32.76	%		37.03	%		44.25	%		34.80	%		34.71	%		33.18	%
Efficiency ratio - Consolidated		59.4	%		57.9	%		57.1	%		58.8	%		64.4	%		62.5	%		56.1	%		60.8	%		69.0	%		65.0	%
- Banking segment (3)		55.3	%		52.6	%		52.2	%		54.2	%		59.8	%		58.6	%		50.6	%		57.0	%		68.6	%		61.7	%
Net loan charge-offs		17,844			7,871			3,964			4,055			1,954			10,084			3,223			2,150			2,249			2,462
Net charge-offs to average loans (annualized)		0.28	%		0.49	%		0.25	%		0.26	%		0.13	%		0.18	%		0.22	%		0.15	%		0.16	%		0.18	%
Provision for credit losses as a
percentage of average loans (annualized)		0.36	%		0.49	%		0.40	%		0.31	%		0.21	%		0.15	%		0.17	%		0.14	%		0.16	%		0.11	%

First Niagara Financial Group, Inc.

Summary of Quarterly Financial Data (Cont'd)

	2008															2007
	Year Ended															Year Ended
	December 31			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			December 31,			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
SELECTED AVERAGE BALANCES
(Amounts in thousands)
Securities, at amortized cost	$	1,327,183			1,398,235			1,265,630			1,335,744			1,309,020			1,135,221			1,251,346			1,112,741			1,089,189			1,086,037
Loans (4)
Commercial:
Real estate	$	2,432,981			2,517,850			2,477,054			2,434,075			2,301,529			2,101,431			2,185,998			2,112,119			2,068,315			2,037,544
Business	$	880,222			928,052			906,773			890,154			795,092			639,580			692,448			652,751			631,884			579,853
Total commercial loans	$	3,313,203			3,445,902			3,383,827			3,324,229			3,096,621			2,741,011			2,878,446			2,764,870			2,700,199			2,617,397
Residential	$	2,074,277			2,023,596			2,078,863			2,131,922			2,063,235			2,158,696			1,986,546			2,179,767			2,217,959			2,253,212
Home equity	$	589,721			626,031			608,610			581,834			541,804			498,039			514,655			509,747			490,616			476,591
Other consumer	$	161,096			153,188			161,074			173,426			156,784			145,501			135,524			136,990			144,449			165,462
Specialized lending	$	187,311			189,244			189,867			183,469			186,616			182,691			194,919			194,143			180,100			161,104
Total loans	$	6,325,608			6,437,961			6,422,241			6,394,880			6,045,060			5,725,938			5,710,090			5,785,517			5,733,323			5,673,766
Total interest-earning assets	$	7,735,545			7,939,383			7,768,427			7,805,792			7,425,978			6,915,138			7,021,393			6,952,003			6,872,508			6,811,941
Goodwill and other intangibles	$	794,915			802,275			804,886			807,034			765,275			752,462			751,955			752,422			752,007			753,483
Total assets	$	8,963,141			9,148,625			8,991,899			9,115,902			8,593,783			7,997,299			8,116,588			8,044,675			7,940,621			7,884,237
Interest-bearing liabilities:
Savings accounts	$	790,707			772,359			802,900			804,834			782,804			889,398			813,084			881,145			921,747			943,137
Checking	$	486,789			486,166			498,065			494,395			468,411			487,173			476,721			482,838			492,312			497,094
Money market deposits	$	1,899,010			1,944,965			1,963,454			1,932,942			1,753,468			1,413,178			1,581,043			1,393,680			1,369,121			1,306,061
Certificates of deposit	$	2,106,481			1,958,090			1,985,925			2,249,847			2,235,016			2,263,933			2,168,218			2,286,634			2,311,348			2,290,626
Borrowed funds	$	1,372,314			1,526,141			1,444,923			1,309,847			1,205,857			853,297			986,725			889,375			764,987			769,314
Total interest-bearing liabilities	$	6,655,301			6,687,721			6,695,267			6,791,865			6,445,556			5,906,979			6,025,791			5,933,672			5,859,515			5,806,232
Noninterest-bearing deposits	$	687,741			707,300			726,852			688,403			627,762			627,259			644,680			657,366			616,537			589,517
Total deposits	$	5,970,728			5,868,880			5,977,196			6,170,421			5,867,461			5,680,941			5,683,746			5,701,663			5,711,065			5,626,435
Total liabilities	$	7,486,817			7,514,116			7,554,117			7,679,743			7,198,252			6,649,427			6,779,481			6,717,283			6,587,797			6,509,433
Net interest-earning assets	$	1,080,244			1,251,662			1,073,160			1,013,927			980,422			1,008,159			995,602			1,018,331			1,012,993			1,005,709
Stockholders' equity	$	1,476,324			1,634,510			1,437,782			1,436,159			1,395,531			1,347,872			1,337,107			1,327,392			1,352,824			1,374,804
Tangible equity (1)	$	681,409			832,235			632,896			629,125			630,256			595,410			585,152			574,970			600,817			621,321
Common shares outstanding (2):
Basic		107,531			114,870			106,075			105,884			103,230			102,838			101,274			101,472			103,373			105,294
Diluted		108,174			115,626			106,795			106,523			103,641			103,472			101,757			102,059			104,031			106,004
SELECTED AVERAGE YIELDS/RATES
(Tax equivalent basis)
Securities, at amortized cost		4.92	%		4.72	%		4.95	%		5.04	%		5.00	%		4.49	%		4.72	%		4.54	%		4.40	%		4.26	%
Loans
Commercial:
Real estate		6.27	%		6.21	%		6.15	%		6.27	%		6.48	%		6.80	%		6.73	%		6.80	%		6.84	%		6.85	%
Business		5.65	%		5.07	%		5.52	%		5.64	%		6.50	%		7.59	%		7.26	%		7.73	%		7.70	%		7.69	%
Total commercial loans		6.11	%		5.90	%		5.98	%		6.10	%		6.48	%		6.99	%		6.86	%		7.02	%		7.04	%		7.04	%
Residential		5.55	%		5.54	%		5.53	%		5.52	%		5.60	%		5.61	%		5.62	%		5.61	%		5.57	%		5.62	%
Home equity		5.86	%		5.53	%		5.65	%		5.84	%		6.50	%		6.95	%		6.85	%		6.96	%		7.00	%		7.00	%
Other consumer		7.46	%		7.68	%		7.44	%		7.25	%		7.49	%		7.66	%		7.81	%		7.91	%		7.55	%		7.42	%
Specialized lending		7.41	%		6.85	%		7.20	%		7.72	%		7.89	%		8.61	%		8.16	%		8.22	%		9.67	%		8.45	%
Total loans		5.97	%		5.82	%		5.88	%		5.96	%		6.25	%		6.53	%		6.49	%		6.54	%		6.57	%		6.52	%
Total interest-earning assets		5.78	%		5.59	%		5.72	%		5.81	%		6.03	%		6.20	%		6.18	%		6.22	%		6.22	%		6.16	%
Savings accounts		0.28	%		0.25	%		0.26	%		0.27	%		0.33	%		0.44	%		0.35	%		0.35	%		0.43	%		0.62	%
Interest-bearing checking		0.28	%		0.23	%		0.27	%		0.30	%		0.33	%		0.42	%		0.40	%		0.37	%		0.37	%		0.53	%
Money market deposits		2.29	%		1.91	%		2.10	%		2.27	%		2.98	%		3.70	%		3.79	%		3.76	%		3.65	%		3.56	%
Certificates of deposit		3.40	%		2.82	%		2.95	%		3.55	%		4.16	%		4.47	%		4.39	%		4.51	%		4.53	%		4.44	%
Borrowed funds		3.91	%		3.67	%		3.78	%		4.02	%		4.26	%		4.58	%		4.65	%		4.78	%		4.44	%		4.38	%
Total interest-bearing liabilities		2.59	%		2.26	%		2.36	%		2.65	%		3.11	%		3.36	%		3.41	%		3.42	%		3.32	%		3.28	%
Tax equivalent net interest rate spread		3.19	%		3.33	%		3.36	%		3.16	%		2.92	%		2.84	%		2.77	%		2.80	%		2.90	%		2.88	%
Tax equivalent net interest rate margin		3.55	%		3.68	%		3.68	%		3.50	%		3.33	%		3.33	%		3.25	%		3.30	%		3.40	%		3.37	%

(1)	Excludes goodwill and other intangible assets.
(2)	Excludes unallocated ESOP shares and unvested restricted stock shares.
(3)	Includes operating results for the banking activities segment as defined in the Company's quarterly and annual reports.
(4)	Includes nonaccrual loans.