First Niagara Financial Group in Buffalo, N.Y., reported higher quarterly profit after increased commercial and auto lending offset an rise in spending and a decline in fee income.

The $38 billion-asset company's second-quarter net income rose 4.1% from a year earlier, to $66.2 million. At 19 cents a share, its earnings were a penny better than the average estimate of analysts polled by Bloomberg.

Net interest income rose 1%, to $272 million. Commercial loans rose 8.2%, to $13.7 billion, and indirect auto lending rose 78%, to $1.9 billion. The net interest margin narrowed by 10 basis points, to 3.26%.

Noninterest income fell 15%, to $81 million, on lower revenues from mortgage banking and capital markets income.

First Niagara is "on-time and on-budget" with implementation of its previously announced plan to spend $200 million to $250 million to upgrade technology and improve products and services, Gary Crosby, the company's president and chief executive, said in a statement. Noninterest expense rose 3.8%, to $244 million.

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