Exhibit 99.1
FIRST NIAGARA FINANCIAL GROUP, INC.
REPORTS 20% INCREASE IN 4th QUARTER NET INCOME
Lockport, N.Y. - January 13, 2004 - First Niagara Financial Group, Inc. (NASDAQ:
FNFG), today announced that net income for the quarter ended December 31, 2003
increased 20% to $10.1 million, or $0.15 per diluted share from $8.4 million, or
$0.13 per diluted share for the same period of 2002. On a linked quarter basis,
net income increased 8% from $9.3 million or $0.14 per diluted share for the
2003 third quarter. For the year, net income increased 17% to $36.1 million, or
$0.53 per diluted share, from 2002 earnings of $30.8 million, or $0.47 per
diluted share.
"I am pleased to report record earnings for 2003," stated President and CEO,
Paul J. Kolkmeyer. "It is also the fifth consecutive year that we have been able
to achieve double digit earnings growth. These results are even more gratifying
given the challenges we have faced throughout the year. During 2003 we
organically grew our commercial mortgage and business loan portfolio by 15%
while maintaining strong asset quality, continued our de novo branching strategy
and provided a total return of more than 50% to our shareholders. That was
accomplished while converting to a fully public company, closing and integrating
several acquisitions and rebuilding our senior management team. In addition, we
have been very focused on our pending acquisition of Troy Financial Corporation.
When we close that transaction later this week we will be a statewide
institution with almost $5 billion in assets and positioned for further growth
in 2004."
Net interest income was $28.3 million for the fourth quarter of 2003, a $1.1
million increase from the third quarter of 2003. This improvement resulted from
a 16 basis point increase in the Company's net interest rate spread. The
increase in net interest rate spread was attributable to the Company's active
asset and liability management strategies and reduced mortgage-backed security
premium amortization. The effects of those changes more than offset the impact
of the reduction in loan portfolio yield, which declined due to the historically
low interest rate environment. As a result, the Company's net interest margin
improved 14 basis points to 3.50% for the quarter, compared to 3.36% in the
third quarter of 2003.
Total loans were $2.29 billion at December 31, 2003 compared to $2.31 billion at
September 30, 2003. This slight decrease was primarily attributable to a $16.5
million decline in residential loans, as the Company continued to strategically
lower its reliance on one-to four-family real estate loans. Additionally, the
combined commercial real-estate and business loan portfolios declined $4.1
million during the quarter as a result of lower line of credit utilization by
our business customers and the anticipated completion and subsequent repayment
of two commercial real-estate construction projects. A $2.0 million provision
for credit losses was set aside for the quarter ended December 31, 2003 as
credit quality remained stable and loan loss experience continued at low levels.
Total non-performing assets were approximately $12.9 million at December 31,
2003 and September 30, 2003. Total deposits were $2.36 billion at December 31,
2003 compared to $2.32 billion at September 30, 2003. This increase was across
various product types and reflects the Company's focus on increasing its core
deposit base, in particular non-interest bearing checking accounts.
For the fourth quarter of 2003, the Company had $11.2 million of noninterest
income, which is comparable to the third quarter of 2003 level of $11.4 million.
Increases in insurance services and fees, as well as lending and leasing income
were offset by a decrease in bank-owned life insurance earnings as a result of
death benefit proceeds received in the third quarter of 2003. Additionally, bank
service charges and fee income declined $179 thousand as a result of the
MasterCard/Visa settlement in August 2003.
Noninterest expense for the three months ended December 31, 2003 was $22.7
million versus $22.4 million for the three months ended September 30, 2003. This
increase is attributable to $387 thousand of conversion and travel costs
incurred during the fourth quarter related to the Company's pending acquisition
of Troy Financial Corporation. During the fourth and third quarters of 2003, the
Company also incurred $301 thousand and $447 thousand, respectively, of other
noninterest expense in connection with its CEO transition, and the unexpected
passing of the Company's CEO in August.
The effective tax rate from continuing operations decreased to 31.04% for the
quarter ended December 31, 2003 compared to 35.15% for the quarter ended
September 30, 2003. This decrease was primarily due to adjustments made during
the quarter to finalize the year-end tax calculation. While those adjustments
reduced the 2003 effective rate to 34.16%, the Company anticipates having an
effective tax rate closer to 36% for 2004 as a result of the Troy transaction.
Outlook - "We ended 2003 with 13% EPS growth and look forward to continuing our
successful track-record in 2004," stated Mr. Kolkmeyer. "Our primary objectives
for 2004 will be the efficient integration of Troy Financial Corporation and to
continue our de novo branching and acquisition strategy in both our banking and
financial services businesses. At the same time, we intend to further expand our
loan portfolio and deposit base to include more commercial relationships. With
these initiatives in mind, and considering approximately $1.0 million of after
tax merger related expenses which will be incurred during the first two
quarters, we expect that our 2004 diluted earnings per share growth rate will be
within an 18% to 26% range, which is consistent with our historical growth rate
of approximately 18%."
Profile - First Niagara Financial Group, Inc., through its wholly owned
subsidiary First Niagara Bank, has assets of $3.6 billion and deposits of $2.4
billion. First Niagara Bank is a full-service, community-oriented bank that
provides financial services to individuals, families and businesses through 47
banking centers, a loan production office, several financial services
subsidiaries, and 70 ATMs throughout upstate New York. On August 11, 2003 the
Company announced its intentions to acquire Troy Financial Corporation, a $1.4
billion asset bank located near Albany New York, which is anticipated to close
on January 16, 2004. First Niagara's range of products includes personal and
business checking, savings, business loan and mortgage products, cash management
services, investment alternatives, lease financing and trust services. The
Company offers an expanded product line, which includes commercial and personal
insurance and investment advisory services.
Conference Call - A conference call will be held at 10:00 a.m. (EST) on Tuesday
January 13 to discuss these fourth quarter results, as well as the Company's
strategy and future outlook. Those wishing to participate may dial
1-877-709-8150. A replay of the call will be available until January 18 by
dialing 1-877-660-6853, account number 6340, conference number 85348.
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
Paul J. Kolkmeyer................ President and CEO
John R. Koelmel.................. Chief Financial Officer
Christopher J. Thome............. Reporting and Investor Relations Manager
(716) 625-7645
chris.thome@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
2003 2002
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As of Fourth Third Second First As of Fourth
December 31, Quarter Quarter Quarter Quarter December 31, Quarter
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SELECTED FINANCIAL DATA
(Amounts in thousands)
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Total assets $ 3,589,507 3,589,507 3,533,430 3,561,646 3,603,432 2,934,795 2,934,795
Total interest-earning assets $ 3,262,196 3,262,196 3,196,095 3,250,975 3,293,147 2,676,194 2,676,194
Fed funds and other short-term
investments $ 124,255 124,255 134,482 159,675 392,956 45,167 45,167
Securities, at amortized cost $ 846,450 846,450 753,193 806,552 666,750 625,324 625,324
Loans:
Real estate loans:
One-to four-family $ 945,796 945,796 962,259 983,984 992,949 927,453 927,453
Home equity $ 179,172 179,172 176,136 168,568 167,087 136,986 136,986
Multi-family $ 216,129 216,129 208,041 186,347 171,582 170,357 170,357
Commercial real-estate $ 437,633 437,633 422,770 402,528 377,878 303,136 303,136
Construction $ 90,061 90,061 106,835 116,141 117,324 107,200 107,200
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total real estate loans $ 1,868,791 1,868,791 1,876,041 1,857,568 1,826,820 1,645,132 1,645,132
----------- ----------- ----------- ----------- ----------- ----------- -----------
Commercial business loans $ 215,000 215,000 225,561 221,316 208,137 178,555 178,555
Consumer loans $ 202,371 202,371 200,824 197,087 188,260 169,155 169,155
Net deferred costs and
discounts $ 8,461 8,461 8,336 8,556 7,965 2,591 2,591
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total loans $ 2,294,623 2,294,623 2,310,762 2,284,527 2,231,182 1,995,433 1,995,433
Allowance for credit losses $ 25,420 25,420 25,219 24,781 23,913 20,873 20,873
----------- ----------- ----------- ----------- ----------- ----------- -----------
Loans, net $ 2,269,203 2,269,203 2,285,543 2,259,746 2,207,269 1,974,560 1,974,560
Goodwill and other intangibles $ 114,698 114,698 115,084 107,803 107,048 80,493 80,493
Total interest-bearing
liabilities $ 2,658,510 2,658,510 2,595,908 2,641,372 2,706,561 2,468,396 2,468,396
Deposits:
Interest-bearing deposits:
Savings accounts $ 654,320 654,320 646,284 666,003 688,597 632,894 632,894
Interest-bearing checking $ 538,967 538,967 540,999 540,274 511,941 467,550 467,550
Certificates of deposit $ 991,545 991,545 973,070 982,903 1,054,996 879,246 879,246
Mortgagors' payments held
in escrow $ 15,712 15,712 9,827 16,925 9,317 15,619 15,619
Noninterest-bearing deposits $ 154,672 154,672 149,088 149,134 133,946 134,160 134,160
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deposits $ 2,355,216 2,355,216 2,319,268 2,355,239 2,398,797 2,129,469 2,129,469
Stock subscription proceeds $ -- -- -- -- -- 75,952 75,952
Short-term borrowings $ 87,148 87,148 85,020 67,564 63,980 69,312 69,312
Long-term borrowings $ 370,818 370,818 340,708 367,703 377,730 327,823 327,823
Stockholders' equity $ 728,174 728,174 723,047 718,390 711,646 283,696 283,696
Tangible equity (1) $ 613,476 613,476 607,963 610,587 604,598 203,203 203,203
Fair value adjustment included
in stockholders' equity $ (341) (341) 1,397 3,558 3,333 4,230 4,230
Common shares outstanding 66,326 66,326 66,370 66,228 66,071 25,005 25,005
Total loans serviced for others $ 246,078 246,078 250,082 271,401 289,341 242,871 242,871
2003 2002
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Year Ended Fourth Third Second First Year Ended Fourth
December 31, Quarter Quarter Quarter Quarter December 31, Quarter
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SELECTED AVERAGE BALANCES
(Amounts in thousands)
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Total assets $ 3,531,697 3,545,301 3,540,403 3,579,903 3,460,151 2,852,799 2,872,553
Total interest-earning assets $ 3,226,208 3,228,756 3,230,971 3,280,842 3,163,493 2,597,142 2,614,851
Fed funds and other short-term
investments $ 220,330 137,175 167,878 282,842 295,743 137,639 144,490
Securities, at amortized cost $ 737,703 774,734 759,271 734,489 681,051 513,561 480,747
Loans (2) $ 2,255,703 2,308,146 2,294,650 2,250,864 2,167,176 1,931,288 1,973,358
Goodwill and other intangibles $ 109,207 114,876 112,446 107,631 101,695 80,866 80,639
Interest-bearing liabilities:
Savings accounts $ 662,155 646,954 654,076 676,024 671,930 588,611 627,502
Interest-bearing checking $ 525,346 537,431 550,020 527,440 485,655 507,305 470,735
Certificates of deposit $ 998,428 992,314 966,017 1,021,369 1,014,610 883,867 878,675
Mortgagors' payments held
in escrow $ 16,871 15,364 22,948 16,832 12,237 17,579 15,528
Stock subscription proceeds $ 8,630 N/A N/A N/A 35,000 2,355 9,342
Other borrowed funds $ 431,299 426,005 425,166 436,178 438,047 414,064 409,182
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total interest-bearing
liabilities $ 2,642,729 2,618,068 2,618,227 2,677,843 2,657,479 2,413,781 2,410,964
Interest-bearing deposits $ 2,202,800 2,192,063 2,193,061 2,241,665 2,184,432 1,997,362 1,992,440
Noninterest-bearing deposits $ 138,675 148,596 144,914 132,895 128,000 115,977 127,315
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deposits $ 2,341,475 2,340,659 2,337,975 2,374,560 2,312,432 2,113,339 2,119,755
Stockholders' equity $ 695,914 727,413 719,606 716,980 618,195 274,533 283,087
Tangible equity (1) $ 586,707 612,537 607,160 609,349 516,500 193,667 202,448
Common shares outstanding (3):
Basic 66,111 66,289 66,276 66,126 65,758 64,445 64,647
Diluted 67,754 67,941 68,002 67,722 67,268 65,883 66,194
First Niagara Financial Group, Inc.
Summary of Quarterly Financial Data (Cont'd)
2003 2002
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Year Ended Fourth Third Second First Year Ended Fourth
December, 31 Quarter Quarter Quarter Quarter December 31, Quarter
------------ --------- --------- --------- --------- ------------ ---------
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SELECTED OPERATIONS DATA
(Amounts in thousands)
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Interest income $ 169,959 42,450 41,984 42,602 42,923 167,637 40,654
Interest expense $ 62,544 14,197 14,836 15,976 17,535 76,107 17,103
--------- --------- --------- --------- --------- --------- ---------
Net interest income $ 107,415 28,253 27,148 26,626 25,388 91,530 23,551
Provision for credit losses $ 7,929 2,007 1,757 2,208 1,957 6,824 1,835
--------- --------- --------- --------- --------- --------- ---------
Net interest income after
provision for credit losses $ 99,486 26,246 25,391 24,418 23,431 84,706 21,716
Noninterest income:
Bank service charges and fees $ 16,445 4,110 4,289 4,246 3,800 14,226 3,748
Lending and leasing income $ 3,617 906 853 959 899 5,523 1,771
Insurance services and fees $ 14,765 4,007 3,818 3,631 3,309 12,610 2,846
Bank-owned life insurance
earnings $ 3,502 809 1,141 799 753 2,706 689
Annuity and mutual fund
commissions $ 2,641 517 513 859 752 2,585 660
Investment advisory and
fiduciary services $ 884 209 262 193 220 1,112 232
Gain (loss) from investment
securities available for sale $ 9 51 (24) (2) (16) (1,044) (801)
Gain on sale of banking center $ -- -- -- -- -- 2,429 2,429
Other $ 1,516 544 523 119 330 1,640 391
--------- --------- --------- --------- --------- --------- ---------
Total noninterest income $ 43,379 11,153 11,375 10,804 10,047 41,787 11,965
Noninterest expense:
Salaries and benefits $ 50,377 12,743 13,037 12,025 12,572 45,180 11,595
Occupancy and equipment $ 9,315 2,331 2,284 2,259 2,441 7,526 1,845
Technology and communications $ 9,647 2,397 2,553 2,337 2,360 8,599 2,375
Marketing and advertising $ 3,205 541 810 786 1,068 2,612 768
Amortization of intangibles $ 1,384 378 398 290 318 677 175
Other $ 14,349 4,348 3,338 3,375 3,288 12,737 3,855
--------- --------- --------- --------- --------- --------- ---------
Total noninterest expense $ 88,277 22,738 22,420 21,072 22,047 77,331 20,613
Income from continuing operations
before income taxes $ 54,588 14,661 14,346 14,150 11,431 49,162 13,068
Income taxes from continuing
operations $ 18,646 4,551 5,042 5,073 3,980 18,752 4,735
--------- --------- --------- --------- --------- --------- ---------
Income from continuing
operations $ 35,942 10,110 9,304 9,077 7,451 30,410 8,333
Income (loss) from discontinued
operations, net of tax (4) $ 164 (22) -- 23 163 385 69
--------- --------- --------- --------- --------- --------- ---------
Net income $ 36,106 10,088 9,304 9,100 7,614 30,795 8,402
--------- --------- --------- --------- --------- --------- ---------
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STOCK AND RELATED PER SHARE DATA
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Net income per share (3):
Basic $ 0.55 0.15 0.14 0.14 0.12 0.48 0.13
Diluted $ 0.53 0.15 0.14 0.13 0.11 0.47 0.13
Cash dividends (3) $ 0.22 0.06 0.06 0.05 0.05 0.17 0.05
Dividend payout ratio 40.00% 40.00% 42.86% 35.71% 41.67% 35.42% 38.46%
Dividend yield (annualized) 1.47% 1.59% 1.58% 1.44% 1.73% 1.68% 1.96%
Book value (3) $ 10.98 10.98 10.89 10.85 10.77 4.39 4.39
Tangible book value (1) (3) $ 9.25 9.25 9.16 9.22 9.15 3.14 3.14
Market price (NASDAQ: FNFG) (3):
High $ 16.55 15.64 16.55 14.20 11.92 12.41 12.39
Low $ 10.11 13.85 13.70 11.40 10.11 6.07 10.03
Close $ 14.97 14.97 15.09 13.92 11.75 10.10 10.10
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SELECTED RATIOS
(Annualized)
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Net income:
Return on average assets 1.02% 1.13% 1.04% 1.02% 0.89% 1.08% 1.16%
Return on average equity 5.19% 5.50% 5.13% 5.09% 5.00% 11.22% 11.78%
Return on average tangible
equity (1) 6.15% 6.53% 6.08% 5.99% 5.98% 15.90% 16.47%
Yield on interest-earning assets 5.27% 5.24% 5.18% 5.20% 5.46% 6.45% 6.20%
Rate on interest-bearing
liabilities 2.37% 2.15% 2.25% 2.39% 2.68% 3.15% 2.81%
--------- --------- --------- --------- --------- --------- ---------
Net interest rate spread 2.90% 3.09% 2.93% 2.81% 2.78% 3.30% 3.39%
Net interest margin 3.33% 3.50% 3.36% 3.25% 3.21% 3.52% 3.60%
As a percentage of average assets:
Noninterest income 1.23% 1.25% 1.27% 1.21% 1.18% 1.46% 1.65%
Noninterest expense 2.50% 2.54% 2.51% 2.36% 2.58% 2.71% 2.85%
--------- --------- --------- --------- --------- --------- ---------
Net overhead 1.27% 1.29% 1.24% 1.15% 1.40% 1.25% 1.20%
Efficiency ratio 58.54% 57.70% 58.20% 56.30% 62.22% 58.01% 58.04%
First Niagara Financial Group, Inc.
Summary of Quarterly Financial Data (Cont'd)
2003 2002
--------------------------------------------------------------- ------------------------
As of and for As of and for
the year-ended Fourth Third Second First the year-ended Fourth
December 31, Quarter Quarter Quarter Quarter December 31, Quarter
-------------- -------- -------- -------- -------- -------------- --------
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CAPITAL RATIOS
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Tier 1 risk based capital 17.94% 17.94% 18.59% 18.70% 18.64% 10.27% 10.27%
Total risk based capital 19.04% 19.04% 19.70% 19.80% 19.70% 11.34% 11.34%
Tier 1 (core) capital 11.92% 11.92% 12.48% 12.40% 12.21% 6.54% 6.54%
Tangible capital 11.87% 11.87% 12.42% 12.34% 12.15% 6.54% 6.54%
Equity to assets 20.29% 20.29% 20.46% 20.17% 19.75% 9.67% 9.67%
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ASSET QUALITY DATA
(Amounts in thousands)
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Non-performing loans:
One-to four-family $ 3,905 3,905 3,605 3,395 3,723 4,071 4,071
Home equity $ 401 401 310 467 474 332 332
Commercial real-estate and
multi-family $ 3,878 3,878 2,889 1,614 1,537 1,225 1,225
Consumer $ 538 538 679 1,040 630 652 652
Commercial business $ 3,583 3,583 4,204 3,537 3,572 1,198 1,198
-------- -------- -------- -------- -------- -------- --------
Total non-performing loans $ 12,305 12,305 11,687 10,053 9,936 7,478 7,478
Other non-performing assets $ 543 543 1,196 1,375 1,646 1,423 1,423
-------- -------- -------- -------- -------- -------- --------
Total non-performing assets $ 12,848 12,848 12,883 11,428 11,582 8,901 8,901
Allowance for credit losses $ 25,420 25,420 25,219 24,781 23,913 20,873 20,873
Provision for credit losses $ 7,929 2,007 1,757 2,208 1,957 6,824 1,835
Net loan charge-offs $ 5,383 1,806 1,319 1,340 918 4,678 1,261
Provision for credit losses as a
percentage of net loan
charge-offs 147.30% 111.13% 133.21% 164.78% 213.18% 145.87% 145.52%
Total non-performing assets as a
percentage of total assets 0.36% 0.36% 0.36% 0.32% 0.32% 0.30% 0.30%
Total non-performing loans to
total loans 0.54% 0.54% 0.51% 0.44% 0.45% 0.37% 0.37%
Net charge-offs to average loans
(annualized) 0.24% 0.31% 0.23% 0.24% 0.17% 0.24% 0.25%
Allowance for credit losses to
total loans 1.11% 1.11% 1.09% 1.08% 1.07% 1.05% 1.05%
Allowance for credit losses
to non-performing loans 206.58% 206.58% 215.79% 246.50% 240.67% 279.13% 279.13%
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Personnel FTE 944 944 915 891 897 945 945
Number of banking centers 47 47 46 46 45 38 38
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(1) Excludes goodwill and other intangible assets.
(2) Net of deferred costs and unearned discounts.
(3) All per share data and references to the number of shares outstanding for
purposes of calculating per share amounts have been restated to give
recognition to the 2.58681 exchange ratio applied in the January 17, 2003
conversion.
(4) Effective February 19, 2003, First Niagara Bank sold NOVA Healthcare
Administrators, Inc. its wholly- owned third-party benefit plan
administrator subsidiary. For the periods presented, the Company has
reported the results of operations from NOVA as "Discontinued Operations."
First quarter 2003 amounts include the net gain realized on the sale of
$230,000.