First Niagara Financial Group in Buffalo, N.Y., reported a massive quarterly loss that had a number of large writedowns.
The $38 billion-asset company lost nearly $665 million in the third quarter, compared to a $71.5 million gain a year earlier, after it recorded an $800 million goodwill impairment charge. Management said during a conference call Friday morning that the charge was tied to its declining stock prices and a negative long-term outlook for interest rates, among other things, noting that the charge will not hurt capital levels.
The third quarter also included a $45 million reserve to address "a process issue" tied to certain customer deposit accounts, the company said in its press release. Management also reported a valuation writedown for a real estate property and higher costs incurred to protect customers following the Home Depot data security breach.
Net interest income fell 1.5%, to $273 million. Total loans rose 8%, to $22.8 billion, but the net interest margin compressed by 19 basis points, to 3.21%.
Noninterest income fell 18%, to $75 million. Notably, service charges on deposit accounts fell 25%, to $20.4 million.
Noninterest expenses ballooned to nearly $1.1 billion, including the goodwill impairment charge. Excluding that writedown, operating expenses still rose 28%, to $295 million.