First Niagara Financial Group in Buffalo, N.Y., swung from a loss to a third-quarter profit, as it posted growth in business loans and generated more fee income.
The $39.4 billion-asset company reported net income of $52.9 million, or 15 cents per share. A year ago, First Niagara posted a loss of $928 million, or $2.65 per share. The results from the year-ago period included two one-time items; a $1.1 billion goodwill impairment and a $45 million expense for deposit-account remediation.
Net interest income before the loan-loss provision fell 3.6%, to $263.5 million. First Niagara cited lower benefits from discount accretion income, on the prepayment of certain collateralized loan obligations.
Total loans rose 4.3%, to $23.4 billion, on increases is commercial real estate, commercial-and-industrial, home equity and indirect automobile loans.
Fee income rose 10.7%, to $83.4 million, on higher deposit service charges, merchant and card fees, mortgage banking, and loan and lease fees.
Noninterest expense, excluding the two items from a year ago, fell 2.5% to $245.4 million. Lower costs for salaries, occupancy and the amortization of deposit intangibles were offset by higher costs for technology, marketing and professional services.
In September, DealReporter said that First Niagara had hired JPMorgan Chase to explore strategic alternatives, including a possible sale.
Some analysts, during a Friday morning conference call, tried to query First Niagara management for more insight, despite Chief Executive Gary Crosby saying before the question-and-answer session that he wouldn't address the issue.
Casey Haire, an analyst at Jefferies, asked how a potential sale would affect First Niagara's plan to spend between $200 million and $250 million to upgrade its technology.
“I am concerned about how … the news reports are impacting the strategic investment plan, given that this plan requires … getting increased penetration from commercial clients and treasury management,” Haire said.
“These rumors and speculation are always difficult and I'm very pleased with the way we are overcoming the rumors and speculation,” Crosby responded.
Bob Ramsey, an analyst at FBR Capital Markets, tried again later in the call, with a pointed question for Crosby.
“Back in January of 2014, when you took the helm … you said that the best path to increase shareholder value was by mining the franchise of the First Niagara already has, by staying independent and” making the technology investment, Ramsey said.
“I'm just curious if that is still indicative of how you see the best path to shareholder value creation,” Ramsey asked.
“We work very closely with our board and assessing strategies, different strategies, to enhance shareholder value,” Crosby said.