First Niagara Financial Group Inc. in Buffalo said Tuesday that its second-quarter net income fell 32.3% from the same period last year, to $13.6 million, primarily on costs related to its $1.5 billion acquisition of NewAlliance Bancshares and other items.
Excluding merger-related costs, however, First Niagara earned $71.2 million in the quarter, up 59% year over year. Its operating earnings of 25 cents per diluted share beating consensus analysts estimates by a penny, according to Thomson Reuters.
First Niagara acquired the $9 billion-asset NewAlliance of New Haven, Conn., in April. The deal increased its assets by roughly 41% and added more than 90 branches in Connecticut and Massachusetts.
First Niagara's noninterest expense in the second quarter rose 61.3%, to $255.1 million from a year earlier. Of that total, $88.5 million was related to the NewAlliance acquisition. Other noninterest expenses in the quarter were associated with closing and consolidating branch offices and "leveraging the company’s scale in back-office services."
First Niagara also increased its provision for loan losses by 57.3%, to $17.3 million. The total exceeded net chargeoffs, but the company said in a statement that it is "consistent with the growth and changing mix of its loan portfolio." Its commercial loans in the second quarter grew 47.8%, to $9.5 billion, from a year earlier.