Exhibit 99.1
FIRST NIAGARA FINANCIAL GROUP, INC. REPORTS RECORD
NET INCOME FOR THE 2004 1st QUARTER
Lockport, N.Y. - April 20, 2004 - First Niagara Financial Group, Inc. (NASDAQ:
FNFG), today announced that net income for the quarter ended March 31, 2004
increased to $11.9 million, or $0.15 per diluted share from $7.6 million, or
$0.11 per diluted share for the same period of 2003. This represents a 56%
increase in net income and a 36% increase in diluted earnings per share over the
prior year first quarter. On a linked quarter basis, net income increased 18%
from $10.1 million while diluted earnings per share was consistent at $0.15 per
share.
First quarter 2004 results include the operations of the former Troy Financial
Corporation, Inc. That acquisition closed effective January 16, 2004, and
included the issuance of 13.3 million shares of First Niagara stock and cash
payments totaling $155 million. Troy added approximately $760 million of loans,
of which 64% were commercial mortgage and business loans, and approximately $924
million of deposits, 75% of which were core deposits. The Company incurred
approximately $1.3 million of pre-tax merger and integration related expenses
during the quarter, which reduced diluted earnings by $0.01 per share. Merger
and integration expenses related to the Troy acquisition were lower than
originally projected and will be minimal for the remainder of 2004.
"I am pleased to report that through the efforts of many dedicated employees,
the integration of Troy Financial is going very smoothly and is now
substantially complete," stated President and CEO, Paul J. Kolkmeyer. "First
quarter results reflect the addition of Troy's loan portfolio, which had
excellent credit quality, and a balance sheet mix which furthered our strategic
initiatives of increasing commercial loans and core deposits. I am also pleased
that we have not only maintained, but slightly grew the level of deposits
acquired from Troy, which reflects our experience as an effective acquirer and a
strong commitment to customer service. With the recently announced acquisition
of Hudson River Bancorp, we feel that there are even more opportunities to
leverage the Troy acquisition, which gave us a presence in an attractive and
higher growth market in Upstate New York. Once the Hudson River acquisition is
completed, we will have the second largest market share in the 10 county Capital
Region."
Net interest income increased 30% to $36.6 million for the first quarter of 2004
from $28.3 million for the fourth quarter of 2003. This improvement primarily
reflects the shift in funding mix from higher rate certificates of deposit to
lower cost core deposits, as well as the further deployment of short-term assets
to higher yielding investment securities. This change in balance sheet mix
caused our net interest rate spread to increase 19 basis points during the first
quarter and our net interest margin to improve to 3.56%. Excluding the loans
acquired from Troy, the net increase in loans was $17.5 million during the
quarter. This increase was attributable to a $39.6 million, or 17% annualized,
increase in commercial real-estate and business loans, partially mitigated by
the continuing repayment of residential real-estate loans held in portfolio. A
$1.8 million provision for credit losses was made in the 2004 first quarter as
credit quality remained stable and loan loss experience continued at low levels.
The non-performing loans as a percentage of total loans ratio of 0.53% was
consistent with the fourth quarter of 2003 level of 0.54%. Excluding the
accounts acquired from Troy, deposits increased slightly from the December 31,
2003 levels as core deposit growth offset the maturities of higher rate
certificates of deposit.
Mr. Kolkmeyer further stated, "We are pleased with the continuing improvement in
our balance sheet mix and net interest margin. Given the current interest rate
environment and the impact of competitive market pricing on commercial
real-estate and business loans, we expect that our net interest margin will
remain at the current level throughout 2004."
For the first quarter of 2004, the Company had $11.9 million of noninterest
income, compared to $11.2 million for the fourth quarter of 2003. The 2004
quarter benefited from approximately $1.3 million of revenue contributed by
Troy, as well as the receipt of $300 thousand of 2003 contingent profit sharing
insurance commissions, which is typically received during the first two quarters
of the year. These increases were partially offset by lower banking service
charges and fee income, due to the seasonality of that revenue, and lower gains
from the sale of residential mortgage loans. The Company expects that
noninterest income will continue to improve from these levels as the First
Niagara business model is fully implemented throughout its branch network.
Noninterest expense for the three months ended March 31, 2004 was $28.6 million
versus $22.7 million for the three months ended December 31, 2003. This increase
is partially attributable to the $1.3 million of Troy merger and integration
related expenses incurred during the first quarter of 2004, which included
marketing in the Capital region and other expenses associated with the
acquisition. The remainder of this increase can primarily be attributed to the
operating costs associated with the 21 banking centers, increased personnel and
core deposit intangibles acquired from Troy.
Outlook - "Based upon the results of the first quarter, as well as the current
interest rate environment, we are comfortable with the average analyst consensus
estimate of $0.63 per diluted share for 2004," stated Mr. Kolkmeyer. "This would
represent a 19% increase over 2003 and is above our long-term average annual
growth rate target of 15%."
Profile - First Niagara Financial Group, Inc., through its wholly owned
subsidiary First Niagara Bank, has assets of $4.98 billion and deposits of $3.30
billion. First Niagara Bank is a full-service, community-oriented bank that
provides financial services to individuals, families and businesses through 68
banking centers, a loan production office, several financial services
subsidiaries, and 92 ATMs across New York State. On April 2, 2004 the Company
announced its intentions to acquire Hudson River Bancorp, Inc, a $2.6 billion
asset bank headquartered in Hudson, New York.
Conference Call - A conference call will be held at 10:00 a.m. Eastern Time on
Tuesday April 20, 2004 to discuss these first 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 April 26, 2004 by
dialing 1-877-660-6853, account number 6340, conference number 100338.
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
2004 2003
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March 31, December 31, September 30, June 30, March 31,
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SELECTED FINANCIAL DATA
(Amounts in thousands)
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Total assets $4,979,890 3,589,507 3,533,430 3,561,646 3,603,432
Total interest-earning assets $4,335,885 3,261,953 3,195,743 3,250,449 3,292,424
Fed funds and other short-term investments $ 32,373 124,255 134,482 159,675 392,956
Securities, at amortized cost $1,232,352 846,450 753,193 806,552 666,750
Loans:
Real estate:
Residential $1,154,084 948,877 965,486 987,426 997,078
Home equity $ 221,486 179,282 176,269 168,725 167,267
Commercial and multi-family $ 970,516 653,976 631,041 589,122 549,724
Commercial construction $ 107,323 86,154 102,625 111,492 111,736
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Total real estate loans $2,453,409 1,868,289 1,875,421 1,856,765 1,825,805
---------- ---------- ---------- ---------- ----------
Commercial business $ 402,261 215,000 225,561 221,316 208,137
Consumer $ 207,834 202,630 201,092 197,364 188,552
Net deferred costs and discounts $ 10,394 8,704 8,688 9,082 8,688
---------- ---------- ---------- ---------- ----------
Total loans $3,073,898 2,294,623 2,310,762 2,284,527 2,231,182
Allowance for credit losses $ 40,766 25,420 25,219 24,781 23,913
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Loans, net $3,033,132 2,269,203 2,285,543 2,259,746 2,207,269
Goodwill and other intangibles $ 348,980 114,698 115,084 107,803 107,048
Total interest-bearing liabilities $3,711,906 2,642,798 2,586,081 2,624,447 2,697,244
Deposits:
Interest-bearing:
Savings $1,049,151 654,320 646,284 666,003 688,597
Interest-bearing checking $ 869,556 538,967 540,999 540,274 511,941
Certificates of deposit $1,131,373 991,545 973,070 982,903 1,054,996
Noninterest-bearing $ 248,970 170,384 158,915 166,059 143,263
---------- ---------- ---------- ---------- ----------
Total deposits $3,299,050 2,355,216 2,319,268 2,355,239 2,398,797
Short-term borrowings $ 154,383 87,148 85,020 67,564 63,980
Long-term borrowings $ 507,443 370,818 340,708 367,703 377,730
Stockholders' equity $ 938,023 728,174 723,047 718,390 711,646
Tangible equity (1) $ 589,043 613,476 607,963 610,587 604,598
Fair value adjustment included in
stockholders' equity $ 4,011 (341) 1,397 3,558 3,333
Common shares outstanding 79,712 66,326 66,370 66,228 66,071
Total loans serviced for others $ 347,291 246,078 250,082 271,401 289,341
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CAPITAL
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Tier 1 risk based capital 17.33% 17.94% 18.59% 18.70% 18.64%
Total risk based capital 18.58% 19.04% 19.70% 19.80% 19.70%
Tier 1 (core) capital 11.74% 11.92% 12.48% 12.40% 12.21%
Tangible capital 11.39% 11.87% 12.42% 12.34% 12.15%
Equity to assets 18.84% 20.29% 20.46% 20.17% 19.75%
Book value per share $ 11.77 10.98 10.89 10.85 10.77
Tangible book value per share (1) $ 7.39 9.25 9.16 9.22 9.15
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ASSET QUALITY DATA
(Amounts in thousands)
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Non-performing loans:
Residential $ 4,410 3,905 3,605 3,395 3,723
Home equity $ 440 401 310 467 474
Commercial real-estate and multi-family $ 7,057 3,878 2,889 1,614 1,537
Consumer $ 594 538 679 1,040 630
Commercial business $ 3,771 3,583 4,204 3,537 3,572
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Total non-performing loans $ 16,272 12,305 11,687 10,053 9,936
Other non-performing assets $ 563 543 1,196 1,375 1,646
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Total non-performing assets $ 16,835 12,848 12,883 11,428 11,582
Provision for credit losses $ 1,750 2,007 1,757 2,208 1,957
Net loan charge-offs $ 1,054 1,806 1,319 1,340 918
Net charge-offs to average loans (annualized) 0.14% 0.31% 0.23% 0.24% 0.17%
Provision for credit losses as a
percentage of net loan charge-offs 166.03% 111.13% 133.21% 164.78% 213.18%
Total non-performing loans to total loans 0.53% 0.54% 0.51% 0.44% 0.45%
Total non-performing assets as a
percentage of total assets 0.34% 0.36% 0.36% 0.32% 0.32%
Allowance for credit losses to total loans 1.33% 1.11% 1.09% 1.08% 1.07%
Allowance for credit losses
to non-performing loans 250.53% 206.58% 215.79% 246.50% 240.67%
Personnel FTE 1,177 944 915 891 897
Number of banking centers 68 47 46 46 45
First Niagara Financial Group, Inc.
Summary of Quarterly Financial Data (Cont'd)
2004 2003
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First Year Ended Fourth Third Second First
Quarter December 31, Quarter Quarter Quarter Quarter
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SELECTED OPERATIONS DATA
(Amounts in thousands)
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Interest income $53,056 169,959 42,450 41,984 42,602 42,923
Interest expense $16,453 62,544 14,197 14,836 15,976 17,535
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Net interest income $36,603 107,415 28,253 27,148 26,626 25,388
Provision for credit losses $ 1,750 7,929 2,007 1,757 2,208 1,957
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Net interest income after provision for
credit losses $34,853 99,486 26,246 25,391 24,418 23,431
Noninterest income:
Banking services $ 4,210 16,445 4,110 4,289 4,246 3,800
Risk management services $ 4,448 14,765 4,007 3,818 3,631 3,309
Wealth management services $ 1,074 3,525 726 775 1,052 972
Lending and leasing $ 923 3,617 906 853 959 899
Bank-owned life insurance $ 867 3,502 809 1,141 799 753
Net realized gains (losses) on securities
available for sale $ 60 9 51 (24) (2) (16)
Other $ 269 1,516 544 523 119 330
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Total noninterest income $11,851 43,379 11,153 11,375 10,804 10,047
Noninterest expense:
Salaries and benefits $15,883 50,377 12,743 13,037 12,025 12,572
Occupancy and equipment $ 3,356 9,315 2,331 2,284 2,259 2,441
Technology and communications $ 2,566 9,647 2,397 2,553 2,337 2,360
Marketing and advertising $ 956 3,205 541 810 786 1,068
Amortization of intangibles $ 1,041 1,384 378 398 290 318
Other $ 4,777 14,349 4,348 3,338 3,375 3,288
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Total noninterest expense $28,579 88,277 22,738 22,420 21,072 22,047
Income from continuing operations before
income taxes $18,125 54,588 14,661 14,346 14,150 11,431
Income taxes from continuing operations $ 6,210 18,646 4,551 5,042 5,073 3,980
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Income from continuing operations $11,915 35,942 10,110 9,304 9,077 7,451
Income (loss) from discontinued operations,
net of tax (2) $ -- 164 (22) -- 23 163
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Net income $11,915 36,106 10,088 9,304 9,100 7,614
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STOCK AND RELATED PER SHARE DATA
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Net income per share:
Basic $ 0.15 0.55 0.15 0.14 0.14 0.12
Diluted $ 0.15 0.53 0.15 0.14 0.13 0.11
Cash dividends $ 0.07 0.22 0.06 0.06 0.05 0.05
Dividend payout ratio 46.67% 40.00% 40.00% 42.86% 35.71% 41.67%
Dividend yield (annualized) 2.06% 1.47% 1.59% 1.58% 1.44% 1.73%
Market price (NASDAQ: FNFG):
High $ 15.78 16.55 15.64 16.55 14.20 11.92
Low $ 13.32 10.11 13.85 13.70 11.40 10.11
Close $ 13.64 14.97 14.97 15.09 13.92 11.75
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SELECTED RATIOS
(Annualized)
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Net income:
Return on average assets 1.02% 1.02% 1.13% 1.04% 1.02% 0.89%
Return on average equity 5.29% 5.19% 5.50% 5.13% 5.09% 5.00%
Return on average tangible equity (1) 7.91% 6.15% 6.53% 6.08% 5.99% 5.98%
As a percentage of average assets:
Noninterest income 1.01% 1.23% 1.25% 1.27% 1.21% 1.18%
Noninterest expense 2.44% 2.50% 2.54% 2.51% 2.36% 2.58%
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Net overhead 1.43% 1.27% 1.29% 1.24% 1.15% 1.40%
Efficiency ratio 58.98% 58.54% 57.70% 58.20% 56.30% 62.22%
First Niagara Financial Group, Inc.
Summary of Quarterly Financial Data (Cont'd)
2004 2003
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First Year Ended Fourth Third Second First
Quarter December 31, Quarter Quarter Quarter Quarter
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SELECTED AVERAGE BALANCES
(Amounts in thousands)
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Total assets $4,701,761 3,531,697 3,545,301 3,540,403 3,579,903 3,460,151
Total interest-earning assets $4,117,336 3,226,208 3,228,756 3,230,971 3,280,842 3,163,493
Fed funds and other short-term investments $ 59,130 220,330 137,175 167,878 282,842 295,743
Securities, at amortized cost $1,119,987 737,703 774,734 759,271 734,489 681,051
Loans (3) $2,927,675 2,255,703 2,308,146 2,294,650 2,250,864 2,167,176
Goodwill and other intangibles $ 299,300 109,207 114,876 112,446 107,631 101,695
Interest-bearing liabilities:
Savings accounts $ 929,639 670,785 646,954 654,076 676,024 706,930
Interest-bearing checking $ 816,016 525,346 537,431 550,020 527,440 485,655
Certificates of deposit $1,147,295 998,428 992,314 966,017 1,021,369 1,014,610
Other borrowed funds $ 610,134 431,299 426,005 425,166 436,178 438,047
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Total interest-bearing liabilities $3,503,084 2,625,858 2,602,704 2,595,279 2,661,011 2,645,242
Interest-bearing deposits $2,892,950 2,194,559 2,176,699 2,170,113 2,224,833 2,207,195
Noninterest-bearing deposits $ 234,016 155,546 163,960 167,862 149,727 140,237
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Total deposits $3,126,966 2,350,105 2,340,659 2,337,975 2,374,560 2,347,432
Stockholders' equity $ 905,161 695,914 727,413 719,606 716,980 618,195
Tangible equity (1) $ 605,861 586,707 612,537 607,160 609,349 516,500
Common shares outstanding:
Basic 77,407 66,111 66,289 66,276 66,126 65,758
Diluted 78,917 67,754 67,941 68,002 67,722 67,268
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SELECTED AVERAGE YIELDS/RATES
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Investment securities 2.78% 2.35% 2.76% 2.12% 1.82% 2.72%
Loans 6.20% 6.64% 6.37% 6.50% 6.80% 6.90%
Total interest-earning assets 5.16% 5.27% 5.24% 5.18% 5.20% 5.46%
Savings accounts 0.88% 1.01% 0.75% 0.84% 0.96% 1.50%
Interest-bearing checking 0.86% 0.91% 0.83% 0.85% 0.85% 1.12%
Certificates of deposit 2.29% 2.93% 2.61% 2.83% 3.03% 3.24%
Other borrowed funds 4.07% 5.04% 4.95% 5.03% 5.07% 5.11%
Total interest-bearing liabilities 1.89% 2.38% 2.16% 2.27% 2.41% 2.69%
Net interest rate spread 3.27% 2.89% 3.08% 2.91% 2.79% 2.77%
Net interest margin 3.56% 3.33% 3.50% 3.36% 3.25% 3.21%
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(1) Excludes goodwill and other intangible assets.
(2) 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
$208,000.
(3) Net of deferred costs and unearned discounts.