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First Niagara reported a fourth-quarter profit, but the more interesting question was why the Buffalo, N.Y., bank won't fully explain the customer problem that has forced it to set aside more than $20 million.
January 23 -
First Niagara Financial Group raised to $1.1 billion the amount of the goodwill impairment charge it recorded in the third quarter, as the Buffalo, N.Y., company cuts the value of assets acquired since 2009.
November 10 -
The company's $800 million goodwill impairment charge may reflect macroeconomic factors, but also likely resulted from a purchase of HSBC branches two years ago. Other banks are unlikely to face the exact same issues, observers said.
October 24
First Niagara Financial Group restated its fourth-quarter earnings as a result of a new chargeoff tied to a customer in the oil industry and a new provision for losses on a commercial loan.
The Buffalo, N.Y., company lowered its fourth-quarter net income from $70 million to $62 million as a result of the two items; earnings per share were reduced by 3 cents to 17 cents.
The restatement was disclosed in
The two items affecting the $39 billion-asset company's earnings were:
- A $10 million chargeoff related to a "single borrower in the oil and gas industry" after the bank obtained new information about the borrower's ability to repay its loan.
- A $5 million provision for credit losses related to the impairment of a commercial loan that the bank sold this month.
Both developments were discovered after First Niagara issued its fourth-quarter earnings report on Jan. 23.
In a separate issue, First Niagara revised the amount of its allowance for loan losses for all four quarters in 2014. The revision is related to First Niagara's previously reported discovery of "
"The adjustments do not represent cash losses and our reported net chargeoffs have not changed," First Niagara said in its annual report.
First Niagara said it conducted an investigation into the employee's misconduct and into the overstatement, and that it "found no evidence that others within the Company were aware of or participated in the employee misconduct, including senior and executive management. We have also concluded that there was no material error in our previously issued financial statements."
First Niagara had indicated on Feb. 24 that it may need to restate its financial results for previous quarters, as a result of the overstated allowances. First Niagara did not restate any of its prior results because of the overstatement of allowances. The restatement announced on Tuesday in the annual report was only caused by the new chargeoff and the new provision.
First Niagara did not disclose the name or title of the employee involved in the misconduct. The employee has been fired.
