First Niagara Financial Group Inc. lost $18.5 million, or a nickel a share, in the second quarter because of costs related to the bank’s acquisition of HSBC Bank USA N.A. branches.
The Buffalo-based First Niagara’s net income attributable to shareholders a year ago was $13.6 million, or 5 cents a share.
Excluding special items, First Niagara reported operating net income of $59.1 million, or 17 cents a share, a penny less than Wall Street estimates.
First Niagara spent $135.2 million on costs primarily related to the acquisition of 189 HSBC branches in Upstate New York and six in Connecticut, the bank reported.
It is retaining 103 of the branches, selling 57 branches to KeyBank N.A., Five Star Bank and Community Bank N.A., and consolidating 35 others.
Some 97 percent of the acquired HSBC deposits have been retained, it reported.
Operating income declined by 17 percent from $71.2 million, or 25 cents a share, in the second quarter of 2011.
Average loans increased $349 million, or 8 percent annualized, over the prior quarter, excluding the impact of $1.6 billion in loans acquired from HSBC.
“The positive operating performance driven by our very strong loan and deposit growth continues to differentiate us from our peers,” Chief Financial Officer Gregory Norwood said in a statement.
Income was hurt by a $7.7 million charge-off on an Upstate New York loan, and an increase in charge-offs to $15.1 million in the second quarter from $8.6 million in the first quarter, the bank reported. The provision for credit losses on originated loans totaled $25.4 million.
“We continue to execute and deliver on our core banking strategy by expanding and strengthening relationships with our new and existing customers,” President and CEO John Koelmel said in the statement.
“The fundamentals of our business are stronger than ever, as evidenced by the continuing momentum across each of our operating units and markets.”
(c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.
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