First Niagara Profit Soars on Accretive Pennsylvania Deals

First Niagara Financial Group Inc. in Buffalo, N.Y., said Thursday that its third-quarter earnings quadrupled from a year earlier, to $45.6 million, aided by two Pennsylvania acquisitions.

The $21 billion-asset First Niagara, which announced a $1.5 billion deal to buy NewAlliance Bancshares of New Haven, Conn., in August, purchased former National City Corp. branches from PNC Financial Services Group Inc. in September 2009 and closed a deal for Harleysville National Corp. in April.

"The reception to our products and services in the newer markets has been terrific," John Koelmel, the company's chief executive, said in a press release. "As a result, we expect to exceed our initial performance expectations in both western and eastern Pennsylvania."

The company's net income more than doubled, from $20 million in the previous quarter, and earnings per diluted share rose 22% from a year earlier — to 23 cents a share from 19 cents — despite a 40% increase in the number of average weighted shares. First Niagara said the increase reflected the immediately accretive benefit of the recent acquisitions and its productive use of capital.

Since September 2008, First Niagara has raised $1 billion through three common stock offerings, boosting its total risk-based capital ratio to 15.1% at Sept. 30, from 11.1% two years earlier. Koelmel said the excess capital allowed the company to increase its dividend to 15 cents a share, from 14 cents.

In an interview, Koelmel sought to put to rest what he called "unfounded speculation" that the company is a serial acquirer. He said recent plans to expand into New England with the NewAlliance deal should not be a surprise. "We're working the sandbox that we framed years back and are pleased and proud that we've been able to fill it in," he said.

Net interest income grew 63% from a year earlier, to $161 million, a result of higher loan balances. Net loans and leases have grown 40.6% since September 2009, to $10 billion. Its commercial loan portfolio grew 42% from a year earlier, to $6.5 billion.

The benefits of loan growth, however, have been partly muted for First Niagara by a persistent decline in its residential loan portfolio, the company said.

First Niagara's provision for loan losses was flat, at $11 million, given the potential for continuing weak economic conditions, it said. Net chargeoffs totaled $6.8 million, a 32% decline from the previous quarter.