First Niagara 1Q net income up 80 percent

BUFFALO, N.Y.

First Niagara Financial Group Inc. said profit rose nearly 80 percent in the first quarter as interest income growth more than compensated for higher loan-loss provisions.

The company reported net income of $28.9 million, or 16 cents per share, compared with $16.1 million, or 14 cents per share a year ago.

The results included acquisition expenses and other one-time costs.

Excluding those items, the company earned $32.6 million, or 18 cents per share, meeting the estimate of analysts surveyed by Thomson Reuters.

Shares fell 29 cents, or 2 percent to $14.30, in afternoon trading. They've traded between $10.73 and $14.88 in the past year.

The company said interest income rose to $144.5 million from $105.8 million the year before. Interest expense fell to $30.3 million from $33.2 million and the provision for loan losses rose to $13.1 million from $8.8 million.

Non-interest income grew nearly 30 percent to $36.9 million, but was offset by expenses in that category, which grew 48 percent to $93.2 million.

The ratio of nonperforming loans to total loans rose to 1.05 percent from 0.81 percent a year ago.

Loan charge-offs, those written off as uncollectable, rose to $11.9 million from $6.9 million a year earlier.

The loan charge-offs ratio rose to 0.66 percent from 0.44 percent in the year before quarter.

The company said two commercial loans primarily drove the nonperforming loan figures higher.

Net charge-offs were higher for the quarter as a result of a decision to liquidate at a substantial discount the second of two loans that had been on non-accrual for the last two quarters.

Recent improvements in the economy, however, have increased loan demand, the company said in a statement.

"Strong loan demand in both our Upstate New York and Western Pennsylvania markets helped drive double-digit increases in the commercial loan and home equity portfolios," said Chief Financial Officer Michael W. Harrington.

The company completed the acquisition of Pennsylvania-based Harleysville National Corp. on April 9, bringing its total assets to $20 billion and expanding its reach to 255 branches.