First Niagara Reports Fourth Quarter and Full Year 2012 Results

First Niagara Reports Fourth Quarter and Full Year 2012 Results

Fourth Quarter Highlights:

  *Non-GAAP Operating Income of $0.19 per Share, Consistent with the Prior
    Quarter

    *GAAP EPS of $0.15 including CMO premium adjustment ($0.03) and
      restructuring charges ($0.01)

  *Business Trends Continue to be Very Strong

    *12^th consecutive quarter of double digit commercial loan growth
    *Interest-bearing checking balances up 32%
    *Mortgage originations increase 12% to an all-time high
    *Wealth Management fees increase 8%
    *Capital Markets revenue up 11%

  *Net Interest Income Stable, Excluding Impacts of Additional CMO Premium
    Amortization

    *13% increase in average interest earning assets
    *Loan yields decline 8 basis points; deposit rates down 3 basis points

BUFFALO, N.Y., Jan. 23, 2013 (GLOBE NEWSWIRE) -- First Niagara Financial
Group, Inc. (Nasdaq:FNFG) today announced fourth-quarter and full-year 2012
results that reflect strong core business fundamentals and core customer
acquisition across the company's regional banking footprint. Solid operating
performance continues to be driven by sustained market share gains through new
customer acquisition as well as deepening relationships with existing
customers.

"We finished 2012 with our team and franchise in a very solid and stable
position – and most importantly, focused on optimizing our performance and
results in 2013," said John R. Koelmel, First Niagara President and Chief
Executive Officer. "The fundamentals of our business continue to improve as we
more fully leverage the expanded capacities and competencies we now have,
which has created very positive momentum as we start the new year. And while
the impact of our CMO portfolio on fourth quarter results is disappointing, it
doesn't at all diminish the consistent core operating performance we have
again produced.

"As we look ahead to the next twelve months, our focus is to (1) better
position our balance sheet by continuing the strong growth performance of our
commercial and consumer lending teams; (2) ensure we do that while maintaining
best in class credit outcomes; (3) deepen relationships across all business
lines to improve the performance of our fee based businesses and services;
and, (4) be more operationally effective and efficient by controlling costs
and doing more with what we have already invested," continued Mr. Koelmel. "As
I have consistently stated, running our business a little bit better each and
every day is what we are about in 2013."

"Throughout 2012, First Niagara has delivered solid fundamental operating
performance across all geographies enabled by strong traction with our new
products and services," said Gregory W. Norwood, Chief Financial Officer.
"Given the impact of a prolonged low interest rate environment, we will
continue to sharpen our focus to maximize returns by optimizing the franchise
and a commitment to manage expenses aggressively and create positive operating
leverage."

Fourth Quarter Operating Results

In the fourth quarter of 2012, First Niagara reported non-GAAP operating net
income available to common shareholders of $67.8 million, or $0.19 per diluted
share, compared to $66.5 million, or $0.19 per diluted share, in the third
quarter of 2012 and $72.1 million, or $0.24 per diluted share in the fourth
quarter of 2011.

Those results exclude the impacts of the previously disclosed pre-tax
adjustment of $16 million to accelerate premium amortization on its
Collateralized Mortgage Obligations (CMO) portfolio and $3.7 million in
restructuring charges.

Net interest income in the fourth quarter was essentially flat to the prior
quarter. Excluding the impact of a quarter-over-quarter increase in premium
amortization expense, net interest margin declined 8 basis points to 3.46%,
driven by the continued downward re-pricing of loans and securities. However,
those impacts on net interest income were offset by the benefits of a 13%
increase in average interest-earning assets.

Non-interest revenues in the fourth quarter of 2012 decreased $5.0 million
from the prior quarter as a result of seasonal declines in insurance
commissions and lower mortgage banking revenues.

Average commercial loans increased 11% annualized over the prior quarter, the
12th consecutive quarter of double-digit growth as strong commercial business
and commercial real estate loan demand continues across the company's
footprint. Average transactional deposits, which include interest-bearing
checking and non-interest bearing deposit balances, increased 16% annualized
from the prior quarter driven by increases in balances held by customers.

The provision for loan losses on originated loans totaled $21.3 million in the
fourth quarter of 2012, including $13.7 million to support loan growth and
$7.6 million to cover net charge-offs during the quarter. Net charge-offs
equaled 24 basis points of average originated loans, a six basis point
decrease from the prior quarter.

Operating expenses in the fourth quarter of 2012 were $235.1 million,
decreasing $2 million, or 1%, compared to the third quarter. Salaries and
benefits expense declined $4.5 million, or 4%, driven by the company's
workforce optimization initiative in the third quarter.

GAAP Results

On a GAAP basis, First Niagara reported fourth quarter net income to common
shareholders of $53.5 million, or $0.15 per diluted share, compared to income
of $50.8 million, or $0.14 per diluted share, in the third quarter of 2012.
Reported GAAP results for the fourth quarter of 2012 included $3.7 million of
restructuring charges as well as the impact of the $16 million accelerated
premium amortization adjustment.

Operating Results (Non-GAAP)                          Q4 2012 Q3 2012 Q4 2011
Net interest income                                   $ 268.6 $ 269.6 $242.5
Provision for credit losses                           22.0   22.2   13.4
Noninterest income                                    91.8   96.9   63.7
Noninterest expense                                   235.1  237.1  182.5
Operating net income                                  75.4   74.0   72.1
Preferred stock dividend                              7.5    7.5    --
Operating net income available to common shareholders 67.8   66.5   72.1
Weighted average diluted shares outstanding           349.7  349.4  304.3
Operating earnings per diluted share                  $0.19 $0.19 $0.24
                                                                   
Reported Results (GAAP)                                             
Operating net income before non-operating items       $75.4 $74.0 $72.1
CMO premium amortization adjustment (a)               11.6   --    --
Gain on securities portfolio repositioning (b)        --    3.5    --
Non-operating expenses (c)                            2.6    19.1   13.6
Net income                                            61.1   58.4   58.5
Preferred stock dividend                              7.5    7.5    --
Net income available to common shareholders           53.5   50.8   58.5
Weighted average diluted shares outstanding           349.7  349.4  304.3
Earnings per diluted share                            $0.15 $0.14 $0.19


All amounts in millions except earnings per diluted share.The
Non-GAAP/Operating Results table above summarizes the company's operating
results excluding certain non-operating items. For a detailed reconciliation
of non-GAAP measures, refer to the attached tables.

(a) Amount is shown net of tax and represents the retroactive adjustment to
accelerate premium amortization on the CMO portfolio.
(b) Amount is shown net of tax and represents the gains recorded on the sale
of $3.1 billion of mortgage-backed securities in the third quarter of 2012.
(c) Amounts are shown net of tax and represent expenses related to
acquisition, integration, and restructuring.

Full Year Results

For the full year ended December 31, 2012, the company posted non-GAAP
operating earnings of $263.9 million, or $0.75 per diluted share, compared to
$266.7 million, or $0.98 per diluted share, in 2011.The principal reasons for
the decline were foregone interest income on $3.1 billion of mortgage-backed
securities sold in the second quarter of 2012, continued pressures on asset
pricing from the low interest rate environment, and the impacts of common and
preferred shares issued in December 2011 to fund, in advance, the May 18, 2012
purchase of deposits and loans in the HSBC branch transaction.

For the full year 2012, the company posted GAAP net income of $140.7 million,
or $0.40 per diluted share compared to $173.9 million, or $0.64 per diluted
share, in 2011.Included in the calculation of GAAP net income are $184.0
million in pre-tax acquisition and restructuring related expenses, $24.6
million in accelerated premium amortization adjustments, and $21.2 million in
gains related to the sale of $3.1 billion of mortgage-backed securities in the
second quarter of 2012. In 2011, merger and restructuring related expenses
totaled $140.7 million.

Operating Results (Non-GAAP)                         2012       2011
Net interest income                                   $1,047.9 $881.2
Provision for credit losses                           92.3      58.1
Noninterest income                                    338.3     245.3
Noninterest expense                                   867.2     665.6
Net operating income before non-operating items       291.6     266.7
Preferred stock dividend                              27.8      --
Operating net income available to common shareholders 263.9     266.7
Weighted average diluted shares outstanding           349.4     271.6
Operating earnings per diluted share                  $0.75    $0.98
                                                               
Reported Results (GAAP)                                         
Net operating income before non-operating items       $291.6   $266.7
CMO premium amortization adjustment (a)               17.2      --
Gain on securities portfolio repositioning (b)        13.8      --
Non-operating expenses (c)                            119.8     92.8
Net income                                            168.4     173.9
Preferred stock dividend                              27.8      --
Net income available to common shareholders           140.7     173.9
Weighted average diluted shares outstanding           349.4     271.6
Earnings per diluted share                            $0.40    $0.64

All amounts in millions except earnings per diluted share.The
Non-GAAP/Operating Results table above summarizes the company's operating
results excluding certain non-operating items. For a detailed reconciliation
of non-GAAP measures, refer to the attached tables.
                                                    
(a) Amount is shown net of tax and represents the retroactive adjustment to
accelerate premium amortization on the CMO portfolio.
(b) Amount is shown net of tax and represents the gains recorded on the sale
of $3.1 billion of mortgage-backed securities in 2012.
(c) Amounts are shown net of tax and represent expenses related to
acquisition, integration, and restructuring.

Loans

For the twelfth consecutive quarter, average commercial loans increased at a
double-digit pace organically, up $302 million, or 11% annualized over the
prior quarter. Commercial business loans averaged $4.8 billion, representing a
15% annualized increase over the prior quarter. Commercial real estate loans
increased 8% annualized to $6.9 billion. Strength in specialty lending
business lines such as equipment finance, healthcare lending, and capital
markets augmented a robust pace of growth in the company's traditional middle
market and commercial real estate businesses. Commercial loans in the
company's Western and Eastern Pennsylvania and New England markets delivered
double-digit annualized growth rates of 12%, 28%, and 10%, respectively, while
balances in the New York market increased 6% following a strong third quarter.

Average indirect auto loan balances increased $214 million to $515 million.
During the fourth quarter, new originations yielded 3.43%.The company
continues to target and engage new car dealers within its contiguous footprint
to lend and finance primarily used car purchases for high credit quality
customers.

Average residential real estate loans declined by $143 million, or 14%
annualized, from the third quarter reflecting higher prepayments. Average
credit card and other consumer loan balances were unchanged.

Deposits

The company's strategic focus on core customer acquisition continued to allow
it to successfully re-position its account mix and increase low cost deposits.
Average transactional accounts, which include interest-bearing checking and
noninterest-bearing balances, increased to $8.8 billion, up 16% annualized
compared to the prior quarter, with double-digit increases across each
market.These low-cost deposits now represent 32% of the company's deposit
base, compared to 26% a year ago.

Average noninterest-bearing deposits increased 2% annualized while
interest-bearing checking deposits increased 32% annualized over the prior
quarter driven by strong customer engagement that resulted in higher account
balances. These increases were offset by the company's pricing initiatives to
reduce higher-cost money market balances.Average total core deposits,
excluding time deposits, increased to $23.5 billion, or 2% annualized,
compared to the third quarter.

Net Interest Income

Non-GAAP net interest income of $268.6 million was essentially flat to the
prior quarter. The benefits of a 13% annualized increase in average earning
assets were offset by the impacts of continued downward re-pricing pressure on
earning asset yields. On a GAAP basis, net interest income of $252.3 million
included the $16.3 million accelerated premium amortization adjustment related
to the CMO portfolio.

Total premium amortization on the CMO portfolio increased to $30.8 million in
the fourth quarter from $11.1 million in the prior quarter, driven by the
$16.3 million in accelerated CMO premium amortization adjustment. Excluding
the impacts of that increase, net interest margin in the fourth quarter was
3.46%, an eight basis point decline from the third quarter of 2012. Continued
compression of loan yields from prepayments and lower spreads was partially
offset by a three basis point decline in cost of interest bearing deposits.

"After our thorough evaluation of the CMO portfolio, including the substantial
level of prepayments received in recent months as well as those expected to
continue for the foreseeable future, we recorded an adjustment of $16 million
to accelerate the premium amortization," said Mr. Norwood. "With this
adjustment, the remaining premium has been reduced to $74 million, or 1.6% of
par at December 31, 2012, significantly reducing potential future volatility
in our CMO yields."

Credit Quality

At December 31, 2012, the allowance for loan losses was $162.5 million,
compared to $149.9 million at September 30, 2012. Information for both the
originated and acquired portfolios follows.

                                             
                        Q4 2012                        Q3 2012   
$ in millions Originated  Acquired  Total      Originated  Acquired  Total
Provision for $21.3     $0.2    $21.5    $21.4     $0.4    $21.8
loan losses*
Net           7.6        1.3      8.9       9.1        1.0      10.1
charge-offs
NCOs/ Avg     0.24%       0.08%     0.18%      0.30%       0.06%     0.21%
Loans
Total loans** $13,372   $6,514  $19,710  $12,233   $7,086  $19,106
                                                               
(*) Excludes provision for unfunded commitments of $0.5 million and $0.4
million in 4Q12 and 3Q12, respectively
(**) Acquired loans before associated credit discount; see accompanying tables
for further information

Originated loans

The provision for loan losses on originated loans totaled $21.3 million,
unchanged from the prior quarter.This provision included $13.7 million to
support sequential originated loan growth of $1.1 billion and $7.6 million to
cover net charge-offs.Net charge-offs equaled 24 basis points of average
originated loans in the fourth quarter of 2012, a six basis points improvement
from the prior quarter.

At the end of the fourth quarter, nonperforming assets to total assets were
0.50%, and increased eight basis points from the prior quarter. Nonperforming
originated loans as a percentage of originated loans increased to 1.07% at
December 31, 2012 from 0.93% at September 30, 2012. Approximately a third of
the $29 million sequential increase in nonperforming originated loans related
to guidance issued by the Office of the Comptroller of the Currency (OCC) to
place consumer loans discharged in bankruptcy on nonaccrual status. The
remaining increase in commercial nonaccruals was driven primarily by one large
commercial credit in the company's Eastern Pennsylvania market.

At December 31, 2012, the allowance for loan losses on originated loans
totaled $160.9 million or 1.20% of such loans, compared to $147.2 million or
1.20% of loans at September 30, 2012.

Acquired loans

The provision for losses on acquired loans totaled $0.2 million, compared to
$0.4 million in the prior quarter. Net charge-offs on those portfolios totaled
$1.3 million during the quarter, compared to $1.0 million in the prior period.
At December 31, 2012, the allowance for loan losses on acquired loans totaled
$1.6 million, compared to $2.7 million at September 30, 2012. Acquired
nonperforming loans totaled $29.6 million, compared to $28.2 million at the
end of the prior quarter.At December 31, 2012, remaining credit marks
available to absorb losses on a pool-by-pool basis totaled $176 million.

Fee Income

Fourth quarter 2012 non-GAAP operating noninterest income of $91.8 million
decreased 5% or $5.0 million compared to the prior quarter.

Continued strength in derivative swap activity and increased assets under
management in the company's wealth management platform contributed to 11% and
8% sequential increases in capital markets and wealth management fees,
respectively.

These increases were offset by lower mortgage banking revenues as well as
typical fourth quarter declines in insurance fees. Mortgage banking revenues
decreased $2.9 million from the prior quarter driven by lower application
volumes and gain-on-sale margins. However, closed mortgage origination volumes
increased 12% from the prior quarter to an all-time high. During the quarter,
the company opened a third mortgage processing center to expediently meet and
exceed the needs of its customers.

On a GAAP basis, noninterest income of $91.8 million declined $10.4 million
from the prior quarter. Prior quarter results included a $5.3 million gain
recognized on the sale of $3.1 billion in CMOs in the second quarter.

Noninterest Expense

Fourth quarter non-GAAP operating noninterest expenses were $235.1 million,
decreasing $2.0 million, or 1%, compared to the third quarter, driven by the
initial impact of the company's workforce optimization initiative in the third
quarter.The benefit of the resulting $4.5 million decrease in salaries and
benefits was minimized by seasonal increases in occupancy expenses.Excluding
the additional $3.4 million in additional premium amortization recognized in
the fourth quarter, the efficiency ratio of 64.6% was comparable to 64.7% in
the prior quarter.

On a GAAP basis, noninterest expense for the fourth quarter was $238.8
million, including $3.7 million in restructuring charges.

Capital

At December 31, 2012, the company's estimated consolidated Total Risk Based
capital and Tier 1 Common Risk Based capital ratios were 11.2% and 7.5%
respectively. The company remains well above current regulatory guidelines
for well-capitalized institutions.

About First Niagara

First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A.,
is a multi-state community-oriented bank with approximately 430 branches,
approximately $37 billion in assets, $28 billion in deposits, and
approximately 6,000 employees providing financial services to individuals,
families and businesses across Upstate New York, Pennsylvania, Connecticut and
Massachusetts. For more information, visit www.firstniagara.com.

Investor Call

A conference call will be held at 8:30 a.m. Eastern Time on Wednesday, January
23, 2013 to discuss the company's financial results.Those wishing to
participate in the call may dial toll-free 1-888-324-9650 with the passcode:
FNFG.Presentation slides will be used during the earnings conference call and
is available under the investor relations tab of our website at
www.firstniagara.com. A replay of the call will be available until February 6,
2013 by dialing 1-888-566-0438, passcode: 15645.

Non-GAAP Measures - This news release contains financial information
determined by methods other than in accordance with accounting principles
generally accepted in the United States of America (GAAP).The Company
believes that non-GAAP financial measures provide a meaningful comparison of
the underlying operational performance of the company, and facilitate
investors' assessments of business and performance trends in comparison to
others in the financial services industry.In addition, the company believes
the exclusion of these non-operating items enables management to perform a
more effective evaluation and comparison of the company's results and to
assess performance in relation to the company's ongoing operations.These
disclosures should not be viewed as a substitute for financial measures
determined in accordance with GAAP, nor are they necessarily comparable to
non-GAAP performance measures that may be presented by other companies.Where
non-GAAP disclosures are used in this news release, the comparable GAAP
financial measure, as well as the reconciliation to the comparable GAAP
financial measure, can be found in this document.

Forward-Looking Statements - This press release contains forward-looking
statements with respect to the financial condition and results of operations
of First Niagara Financial Group, Inc. including, without limitations,
statements relating to the earnings outlook of the company.These
forward-looking statements involve certain risks and uncertainties.Factors
that may cause actual results to differ materially from those contemplated by
such forward-looking statements include, among others, the following
possibilities: (1) changes in the interest rate environment; (2) competitive
pressure among financial services companies; (3) general economic conditions
including an increase in non-performing loans that could result from an
economic downturn; (4) changes in legislation or regulatory requirements; (5)
difficulties in continuing to improve operating efficiencies; (6) difficulties
in the integration of acquired businesses; and (7) increased risk associated
with an increase in commercial real estate and business loans and
non-performing loans.


First Niagara Financial Group, Inc.
Income Statement Highlights -- Reported Basis
(in thousands, except per share amounts)
                                                                                
                2012                                          2011       For year ending
                Fourth   Third    Second     First    Fourth   December    December
                                                                          31,         31,
                Quarter  Quarter  Quarter    Quarter  Quarter  2012         2011
                                                                                
Interest income:                                                                 
Loans and leases $212,035 $211,767 $200,725   $189,385 $195,434 $813,912   $704,664
Investment
securities and   71,564    90,101    99,116      101,395   96,472    362,176     360,643
other
Total interest   283,599   301,868   299,841     290,780   291,906   1,176,088   1,065,307
income
                                                                                
Interest                                                                         
expense:
Deposits        16,902    18,358    16,391      14,998    21,521    66,649      83,237
Borrowings      14,411    13,905    24,437      33,411    27,872    86,164      100,823
Total interest   31,313    32,263    40,828      48,409    49,393    152,813     184,060
expense
                                                                                
Net interest     252,286   269,605   259,013     242,371   242,513   1,023,275   881,247
income
Provision for    22,000    22,200    28,100      20,000    13,400    92,300      58,107
credit losses
Net interest
income after     230,286   247,405   230,913     222,371   229,113   930,975     823,140
provision
                                                                                
Noninterest                                                                      
income:
Deposit service  26,345    26,422    21,433      17,037    18,049    91,237      66,144
charges
Insurance        15,497    18,764    17,072      16,833    15,440    68,166      65,125
commissions
Merchant and     11,945    12,014    9,271       5,528     5,044     38,758      29,253
card fees
Wealth
management       12,000    11,069    9,207       9,039     8,179     41,315      30,729
services
Mortgage banking 8,060     10,974    7,174       5,649     5,279     31,857      15,182
Capital markets  7,098     6,381     6,831       6,539     2,746     26,849      8,349
income
Lending and      3,739     3,730     4,245       3,123     3,103     14,837      11,425
leasing
Bank owned life  3,021     3,449     3,848       3,387     3,302     13,705      11,129
insurance
Other income     4,116     9,400     16,517      2,773     2,543     32,806      7,973
Total
noninterest      91,821    102,203   95,598      69,908    63,685    359,530     245,309
income
                                                                                
Noninterest                                                                      
expense:
Salaries and     111,026   115,484   104,507     96,477    88,796    427,494     341,895
benefits
Occupancy and    27,609    25,694    24,089      22,017    22,580    99,409      78,163
equipment
Technology and   28,257    28,110    24,434      19,713    18,942    100,514     62,376
communications
Marketing and    9,292     8,954     6,676       6,763     7,724     31,685      21,850
advertising
Professional     11,163    11,193    9,263       8,895     11,669    40,514      36,017
services
Amortization of  14,224    14,506    9,839       6,466     6,586     45,035      25,544
intangibles
FDIC premiums    9,158     8,850     10,552      6,133     6,097     34,693      28,860
Merger and
acquisition      3,678     29,404    131,460     12,970    6,149     177,512     98,161
integration
expenses
Restructuring    --       --       3,750       2,703     13,496    6,453       42,534
charges
Other expense    24,377    24,347    21,069      18,041    20,132    87,834      70,933
Total
noninterest      238,784   266,542   345,639     200,178   202,171   1,051,143   806,333
expense
                                                                                
Income (loss)
before income    83,323    83,066    (19,128)   92,101    90,627    239,362     262,116
tax
Income tax
expense          22,226    24,682    (8,204)    32,236    32,166    70,940      88,206
(benefit)
Net income       61,097    58,384    (10,924)   59,865    58,461    168,422     173,910
(loss)
Preferred stock  7,547     7,547     7,547       5,115    --       27,756     --
dividend
Net income
(loss) available $53,550  $50,837  $(18,471) $54,750  $58,461  $140,666   $173,910
to common
stockholders
                                                                                
Financial                                                                        
Ratios:
Earnings (loss)  $0.15    $0.15    $(0.05)   $0.16    $0.19    $0.40      $0.64
per basic share
Earnings (loss)
per diluted      0.15      0.14      (0.05)     0.16      0.19      0.40        0.64
share
Weighted average
shares           349,071   349,001   348,941     348,823   304,065   348,960     271,301
outstanding -
basic^(1)
Weighted average
shares           349,663   349,371   348,941     349,069   304,341   349,368     271,612
outstanding -
diluted^(1)
Net revenue^(2)  $344,107 $371,808 $354,611   $312,279 $306,198 $1,382,805 $1,126,556
Noninterest
income as a      26.68%     27.49%     26.96%       22.39%     20.80%     26.00%       21.78%
percentage of
net revenue^(2)
Pre-tax,
pre-provision    $105,323 $105,266 $8,972     $112,101 $104,027 $331,662   $320,223
income^(3)
Pre-tax,
pre-provision
income per       $0.30    $0.30    $0.03      $0.32    $0.34    $0.95      $1.18
diluted
share^(3)
Pre-tax,
pre-provision
return on        1.15%      1.19%      0.10%        1.36%      1.30%      0.94%        1.13%
average
assets^(3)
Net interest     3.22%      3.54%      3.26%        3.34%      3.48%      3.42%        3.58%
margin^(4)
Interest yield
on average       4.39%      4.47%      4.59%        4.62%      4.76%      4.51%        4.87%
loans^(4)
Rate paid on
interest-bearing 0.48%      0.51%      0.61%        0.79%      0.82%      0.59%        0.85%
liabilities^(4)
Efficiency ratio 69.39%     71.69%     97.47%       64.10%     66.03%     76.02%       71.58%
Effective tax    26.7%      29.7%      42.9%        35.0%      35.5%      29.6%        33.7%
rate
Return on
average          0.67%     0.66%     (0.12)%     0.73%      0.73%      0.48%        0.62%
assets^(5)
Return on
average          4.92%     4.77%     (0.90)%     4.96%      5.54%      3.45%        4.68%
equity^(5)
Return on
average tangible 10.45%    10.34%    (1.64)%     7.90%      9.75%      6.55%        8.33%
equity^(3)(5)
Return on
average common   4.62%     4.46%     (1.64)%     4.88%      5.63%      3.09%        4.71%
equity
Return on
average tangible 10.72%    10.60%    (3.18)%     8.12%      10.03%     6.30%        8.33%
common
equity^(3)
                                                                                
^(1) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
^(2) Net revenue is comprised of net interest income and noninterest income.
^(3) The tables in this earnings release present computation of earnings and certain other ratios
using non-GAAP financial measures, which we believe provide investors with information that is
useful in understanding our financial performance and position. See Appendix A for further detail.
^(4) Yields and rates calculated on a tax equivalent basis.
^(5) Return used to calculate ratio excludes preferred stock dividend.



First Niagara Financial Group, Inc.
Period End Balance Sheet
(in thousands)
                                                                       
                   2012                                                    2011
                   December 31, September 30, June 30,      March 31,     December 31,
                                                                       
Cash and cash       $430,862    $447,087    $488,227    $370,380    $836,555
equivalents
Investment                                                              
securities:
Available for sale  10,996,102   10,579,970   9,937,271    12,248,058   9,348,296
Held to maturity    1,299,806    1,387,763    1,463,872    2,503,156    2,669,630
FHLB and FRB common 420,277      373,311      329,555      499,328      358,159
stock
Total investment    12,716,185   12,341,044   11,730,698   15,250,542   12,376,085
securities
Loans held for sale 154,745      117,375      101,596      102,513      94,484
Loans and leases:                                                      
Commercial:                                                             
Real estate         7,093,193    6,835,971    6,710,009    6,369,098    6,244,381
Business            4,953,323    4,682,154    4,514,537    4,108,363    3,771,649
Total commercial    12,046,516   11,518,125   11,224,546   10,477,461   10,016,030
loans
Consumer:                                                               
Residential real    3,761,567    3,870,756    4,037,045    3,881,003    4,012,267
estate
Home equity         2,651,891    2,661,429    2,683,236    2,149,135    2,165,988
Indirect auto       601,456      419,258      185,774      --          --
Credit cards        314,973      308,387      304,368      --          --
Other consumer      333,609      328,571      328,547      283,320      278,298
Total consumer      7,663,496    7,588,401    7,538,970    6,313,458    6,456,553
loans
Total loans and     19,710,012   19,106,526   18,763,516   16,790,919   16,472,583
leases
Allowance for loan  162,522      149,933      138,516      126,746      120,100
losses
Loans and leases,   19,547,490   18,956,593   18,625,000   16,664,173   16,352,483
net
Bank owned life     404,321      401,211      397,739      395,944      392,468
insurance
Goodwill and other  2,617,809    2,626,625    2,631,605    1,796,394    1,803,240
intangibles
Other assets        937,317      983,999      1,130,891    937,859      955,300
Total assets        $36,808,729 $35,873,934 $35,105,756 $35,517,805 $32,810,615
                                                                       
Deposits:                                                               
Savings accounts    $3,887,587  $3,941,528  $4,103,773  $2,554,720  $2,621,016
Interest-bearing    4,450,970    4,090,322    3,887,568    2,431,672    2,259,576
checking
Money market        10,581,137   10,801,280   10,919,766   7,100,646    7,220,902
deposits
Noninterest-bearing 4,643,580    4,658,374    4,774,764    3,200,824    3,335,356
deposits
Certificates of     4,113,257    4,206,192    4,211,116    3,741,525    3,968,265
deposit
Total deposits      27,676,531   27,697,696   27,896,987   19,029,387   19,405,115
                                                                       
Short-term          2,983,718    1,995,610    958,044      6,353,189    2,208,845
borrowings
Long-term           732,425      732,339      732,263      4,688,251    5,918,276
borrowings
Other liabilities   487,958      532,868      700,249      571,532      480,201
Total liabilities   31,880,632   30,958,513   30,287,543   30,642,359   28,012,437
Preferred
stockholders'       338,002      338,002      338,002      338,002      338,002
equity
Common
stockholders'       4,590,095    4,577,419    4,480,211    4,537,444    4,460,176
equity
Total stockholders' 4,928,097    4,915,421    4,818,213    4,875,446    4,798,178
equity
Total liabilities
and stockholders'   $36,808,729 $35,873,934 $35,105,756 $35,517,805 $32,810,615
equity
                                                                       
Selected balance                                                        
sheet information:
Total
interest-earning    $32,321,964 $31,316,470 $30,403,035 $31,959,556 $29,284,139
assets^(1)
Total
interest-bearing    26,749,094   25,767,271   24,812,530   26,870,002   24,196,880
liabilities
Net
interest-earning    $5,572,870  $5,549,199  $5,590,505  $5,089,554  $5,087,259
assets
                                                                       
Tangible common     $1,972,286  $1,950,794  $1,848,606  $2,741,050  $2,656,936
equity^(2)
Unrealized gain on
securities, net of  208,271      204,347      133,430      152,408      105,276
tax
                                                                       
Total core deposits $23,563,274 $23,491,504 $23,685,871 $15,287,862 $15,436,850
                                                                       
Originated          $13,372,357 $12,232,568 $11,392,158 $10,517,021 $9,876,005
loans^(3)
Acquired loans^(4)  6,513,636    7,085,839    7,600,213    6,459,798    6,801,689
Credit related
discount on         (175,981)    (211,881)    (228,855)    (185,900)    (205,111)
acquired loans^(5)
Total Loans         $19,710,012 $19,106,526 $18,763,516 $16,790,919 $16,472,583
                                                                       
^(1) Includes interest bearing cash and cash equivalents, investment securities at
amortized cost, loans held for sale, and total loans and leases.
^(2) The tables in this earnings release present computation of earnings and certain
other ratios using non-GAAP financial measures, which we believe provide investors with
information that is useful in understanding our financial performance and position. See
Appendix A for further detail.
^(3) Originated loans represent total loans excluding acquired loans.
^(4) Represents the carrying value of acquired loans plus the principal not expected to
be collected.
^(5) Represent principal on acquired loans not expected to be collected.



First Niagara Financial Group, Inc.
Average Balance Sheet and Related Tax Equivalent Yields & Rates
(in millions)
                   For the three months ended                                                                                For year ending
                   December 31, 2012                   September 30, 2012               December 31, 2011                    December 31, 2012                   December 31, 2011
                    Average                Yields                            Yields                          Yields                            Yields       Average                Yields
                   Balances Interest^(1) and          Average   Interest^(1) and       Average   Interest^(1) and          Average   Interest^(1) and          Balances Interest^(1) and
                                           Rates^(1)(2) Balances               Rates^(1) Balances                Rates^(1)(2) Balances               Rates^(1)(2)                        Rates^(1)
                                                                                                                                                                          
Interest-earning                                                                                                                                                           
assets:
Loans and                                                                                                                                                                  
leases^(3)
Commercial:                                                                                                                                                                
Real estate         $6,911  $79        4.45%        $6,783  $80        4.60%     $6,199  $82         5.19%        $6,625  $318       4.72%        $5,651  $305       5.33%
Business            4,783    47          3.89       4,609    45          3.81    3,663    40           4.24       4,402    176         3.94       3,209    138         4.23
Total commercial    11,694   126         4.22       11,392   125         4.28    9,862    122          4.84       11,027   494         4.41       8,860    443         4.93
loans
Consumer:                                                                                                                                                                  
Residential real    3,819    39          4.05       3,962    40          4.03    4,085    45           4.41       3,922    161         4.11       3,475    158         4.54
estate
Home equity         2,659    29          4.31       2,672    30          4.42    2,166    24           4.48       2,476    109         4.39       1,973    90          4.54
Indirect auto       515      5           3.50       301      3           3.64    --      --          --         228      8           3.65       --      --         --
Credit cards        310      8           10.19      308      9           11.31   --      --          --         202      22          10.88      --      --         --
Other consumer      328      7           8.73       329      7           8.80    279      5            7.12       296      24          8.25       274      19          6.98
Total consumer      7,631    87          4.54       7,572    88          4.64    6,530    75           4.53       7,124    324         4.55       5,721    267         4.66
loans
Total loans and     19,325   213         4.39       18,964   213         4.47    16,392   196          4.76       18,151   818         4.51       14,582   710         4.87
leases
Residential MBS^(2) 5,746    36          2.50       5,677    40          2.81    8,429    68           3.21       7,230    202         2.79       8,191    284         3.47
Commercial MBS      1,953    18          3.79       1,895    19          3.93    1,262    13           4.19       1,855    73          3.91       626      25          4.03
Other investment    4,474    35          3.16       4,002    33          3.35    1,926    19           4.04       3,705    123         3.32       1,680    68          3.97
securities ^(4)
Total securities,   12,173   90          2.95       11,574   92          3.18    11,617   100          3.45       12,790   397         3.11       10,497   377         3.59
at cost^(2)
Money market and    207      1           1.54       201      1           1.41    299      1            0.86       257      3           1.13       132      2           1.33
other investments
Total
interest-earning    31,705   $304       3.81%        30,739   $306       3.96%     28,308   $297        4.17%        31,198   $1,219     3.91%        25,211   $1,089     4.31%
assets^(2)
Goodwill and other  2,619                            2,627                         1,810                             2,315                            1,625                
intangibles
Other
noninterest-earning 2,005                            1,938                         1,578                             1,804                            1,424                
assets
Total assets       $36,329                         $35,304                      $31,696                          $35,317                         $28,260             
                                                                                                                                                                          
Interest-bearing                                                                                                                                                           
liabilities:
Deposits                                                                                                                                                                   
Savings accounts    $3,898  $2         0.18%        $4,026  $2         0.20%     $2,622  $1          0.12%        $3,451  $5         0.15%        $2,287  $5         0.20%
Interest-bearing    4,181    1           0.07       3,871    1           0.06    2,101    1            0.12       3,347    2           0.07       1,958    2           0.12
checking
Money market        10,810   7           0.25       10,899   8           0.29    7,414    10           0.52       9,506    27          0.28       6,504    36          0.56
deposits
Certificates of     4,259    8           0.71       4,083    8           0.75    4,162    10           0.99       4,048    33          0.81       4,057    40          0.98
deposit
Total interest      23,148   17          0.29%        22,879   19          0.32%     16,299   22           0.52%        20,352   67          0.33%        14,806   83          0.56%
bearing deposits
Borrowings                                                                                                                                                                 
Short-term          2,331    2           0.38%        1,666    1           0.36%     1,899    2            0.49%        3,163    17          0.53%        1,638    6           0.40%
borrowings
Long-term           732      12          6.63       732      12          6.74    5,797    26           1.75       2,299    69          3.02       5,124    95          1.84
borrowings
Total borrowings   3,063    14          1.87       2,398    13          2.31    7,696    28           1.44       5,462    86          1.58       6,762    101         1.49
Total
interest-bearing    26,211   $31        0.48%        25,277   $32        0.51%     23,995   $49         0.82%        25,814   $153       0.59%        21,568   $184       0.85%
liabilities
Noninterest-bearing 4,645                            4,618                         3,077                             4,041                            2,595                
deposits
Other
noninterest-bearing 528                              536                           435                               575                              384                  
liabilities
Total liabilities  31,384                           30,431                        27,507                            30,430                           24,547               
Total stockholders' 4,945                            4,873                         4,189                             4,887                            3,713                
equity
Total liabilities
and stockholders'   $36,329                         $35,304                      $31,696                          $35,317                         $28,260             
equity
                                                                                                                                                                          
Net interest income          $273                            $274                         $248                             $1,066                          $904       
(FTE)
Taxable Equivalent           4                                4                             5                                 18                               23          
Adjustment^(1)
                                                                                                                                                                          
Total core         $23,534 $10        0.16%        $23,414 $11        0.18%     $15,214 $12         0.29%        $20,345 $34        0.17%        $13,344 $43        0.33%
deposits
Total deposits    27,793   17          0.24%        27,497   19          0.27%     19,376   22           0.44%        24,393   67          0.27%        17,401   83          0.48%
                                                                                                                                                                          
Tax equivalent net
interest rate                            3.33%                             3.45%                           3.35%                             3.32%                             3.46%
spread^(2)
Tax equivalent net
interest rate                            3.42%                             3.54%                           3.48%                             3.42%                             3.58%
margin^(2)
                                                                                                                                                                          
^(1) Tax equivalent interest income is calculated based upon a 35% effective tax rate.
^(2) Amounts for the three months and year ended December 31, 2012 exclude accelerated CMO adjustments of $16 million and $25 million, respectively.The yields, including these adjustments, are:
                                        Three months ended     Year ended December                                                                                            
                                           December 31, 2012      31, 2012
Residential MBS                          1.37%                  2.45%                                                                                                          
Total securities,                        2.41%                  2.91%                                                                                                          
at cost
Total interest earning assets             3.61%                  3.83%                                                                                                          
Tax equivalent net interest               3.13%                  3.24%                                                                                                          
rate spread
Tax equivalent net interest               3.22%                  3.34%                                                                                                          
rate margin
^(3) Includes nonaccrual loans.
^(4) Includes debt securities, collateralized loan obligations, asset-backed securities, FHLB and FRB common stock, and other investment securities.



First Niagara Financial Group, Inc.
Allowance for Loans and Lease Losses & Asset Quality
(in thousands)
                2012                                               2011         For year ending
                Fourth     Third     Second     First      Fourth     December    December
                                                                                 31,         31,
                Quarter    Quarter   Quarter     Quarter    Quarter    2012         2011
Beginning        $149,933   $138,516  $126,746   $120,100   $112,749   $120,100   $95,354
balance
Net loan
(charge-offs)                                                                           
recoveries:
Commercial real  $(1,935)   $(1,791)  $(2,384)   $(5,994)   $212       $(12,104)  $(10,161)
estate
Commercial       (3,385)     (6,077)    (10,958)    (4,143)     (4,665)     (24,563)    (14,618)
business
Residential real (658)       (396)      (155)       (1,120)     (318)       (2,329)     (986)
estate
Home equity      (673)       (401)      (1,536)     (1,161)     (268)       (3,771)     (2,101)
Other consumer   (2,285)     (1,406)    (805)       (836)       (796)       (5,332)     (1,759)
Total net loan   $(8,936)   $(10,071) $(15,838)  $(13,254)  $(5,835)   $(48,099)  $(29,625)
charge-offs
Provision for    21,525      21,800     27,803      19,900      13,186      91,028      54,371
loan losses
Allowance
related to loans --         (312)     (195)      --         --         (507)      --
sold
Ending balance   $162,522   $149,933  $138,516   $126,746   $120,100   $162,522   $120,100
                                                                                       
Supplemental                                                                            
information
Allowance to     0.82%        0.78%       0.74%        0.75%        0.73%        0.82%        0.73%
loans
Allowance for
originated loans 1.20%        1.20%       1.19%        1.19%        1.20%        1.20%        1.20%
to originated
loans^(1)
                                                                                       
Net charge-offs
to average loans                                                                        
(annualized)
Commercial real  0.11%        0.11%       0.15%        0.38%        -0.01%       0.18%        0.18%
estate
Commercial       0.28%        0.53%       1.02%        0.42%        0.51%        0.56%        0.46%
business
Total commercial 0.18%        0.28%       0.49%        0.40%        0.18%        0.33%        0.28%
loans
Residential real 0.07%        0.04%       0.02%        0.11%        0.03%        0.06%        0.03%
estate
Home equity      0.10%        0.06%       0.25%        0.22%        0.05%        0.15%        0.11%
Other consumer   0.79%        0.60%       0.61%        1.20%        1.14%        0.73%        0.64%
Total consumer   0.19%        0.12%       0.15%        0.20%        0.08%        0.16%        0.08%
loans
Total loans      0.18%        0.21%       0.36%        0.32%        0.14%        0.26%        0.20%
                                                                                       
Net charge-offs
of originated
loans to average                                                                        
originated loans
(annualized)^(1)
Commercial real  0.07%        0.12%       0.18%        0.16%        -0.05%       0.13%        0.26%
estate
Commercial       0.33%        0.64%       1.25%        0.54%        0.67%        0.68%        0.59%
business
Total commercial 0.19%        0.36%       0.66%        0.32%        0.25%        0.38%        0.39%
loans
Residential real 0.15%        0.09%       0.04%        0.27%        0.08%        0.14%        0.06%
estate
Home equity      0.21%        0.13%       0.51%        0.40%        0.10%        0.31%        0.21%
Other consumer   0.94%        0.59%       0.81%        1.25%        1.51%        0.84%        1.02%
Total consumer   0.35%        0.18%       0.28%        0.38%        0.17%        0.30%        0.17%
loans
Total loans      0.24%        0.30%       0.55%        0.34%        0.22%        0.35%        0.32%
                                                                                       
Nonperforming                                                                           
loans:
Originated:                                                                             
Commercial real  $50,848    $46,413   $46,881    $44,749    $43,119    $50,848    $43,119
estate
Commercial       47,076      37,375     30,714      39,682      20,173      47,076      20,173
business
Residential real 27,192      21,377     23,058      22,021      18,668      27,192      18,668
estate
Home equity      14,233      8,084      8,119       7,071       6,790       14,233      6,790
Other consumer   3,737       938        926         697         1,048       3,737       1,048
Total originated
nonperforming    143,086     114,187    109,698     114,220     89,798      143,086     89,798
loans
Total acquired
nonperforming    29,638      28,193     19,374      19,041      --          29,638      --
loans^(2)
Total
nonperforming    172,724     142,380    129,072     133,261     89,798      172,724     89,798
loans
Real estate      10,114      9,669      10,632      7,202       4,482       10,114      4,482
owned
Total
nonperforming    $182,838   $152,049  $139,704   $140,463   $94,280    $182,838   $94,280
assets
                                                                                       
Accruing
troubled debt    $46,280    $55,732   $42,140    $42,358    $43,888    $46,280    $43,888
restructurings
(TDR)
Loans 90 days
past due still   171,548     145,323    125,668     116,810     143,237     171,548     143,237
accruing^(3)
Total classified 708,468    693,006   732,762    753,536    748,375     708,468     748,375
loans^(4)
Total criticized $1,002,659 $990,670  $1,030,471 $1,044,731 $1,144,222 $1,002,659 $1,144,222
loans
                                                                                       
Total
nonperforming    0.88%        0.75%       0.69%        0.79%        0.55%        0.88%        0.55%
loans to loans
Total
nonperforming
originated loans 1.07%        0.93%       0.96%        1.09%        0.91%        1.07%        0.91%
to originated
loans^(1)
Total
nonperforming
assets to loans  0.93%        0.80%       0.74%        0.84%        0.57%        0.93%        0.57%
and real estate
owned
Total
nonperforming    0.50%        0.42%       0.40%        0.40%        0.29%        0.50%        0.29%
assets to assets
Allowance to
nonperforming    94.1%        105.3%      107.3%       95.1%        133.7%       94.1%        133.7%
loans
Texas ratio^(5)  16.60%       14.16%      13.35%       8.97%        8.55%        16.60%       8.55%
                                                                                       
^(1) Originated loans represent total loans excluding acquired loans.
^(2) Nonperforming acquired loans include certain lines of credit that are considered nonaccruing.The
remaining credit discount, recorded at acquisition, is adequate to cover losses on these balances.
^(3) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card
loans, and loans that have matured which are in the process of collection.
^(4) Includes consumer loans, which are considered classified when they are 90 days or more past due.
Classified loans include substandard, doubtful, and loss, which are consistent with regulatory
definitions, and as described in Item 1, "Business", under the heading "Classification of Assets" in our
Annual Report on 10-K for the year ended December 31, 2011.
^(5) Represents ratio computed using non-GAAP financial measures, which we believe provide investors with
information that is useful in understanding our financial performance and position. See Appendix A for
further detail.



First Niagara Financial Group, Inc.
Key Statistics
(Share counts in thousands)
                                                                    
                    2012                                       2011
                    December  September  June 30, March 31,    December 31,
                     31,      30,
                                                                    
First Niagara
Financial Group, Inc                                                 
capital ratios:
Tier 1 risk based    9.29%     9.51%      9.40%    14.66%    (1) 15.60%    (1)
capital
Tier 1 common        7.45%     7.59%      7.41%    12.47%    (1) 13.23%    (1)
capital^(2)
Total risk based     11.23%    11.48%     11.37%   16.75%    (1) 17.84%    (1)
capital
Leverage             6.75%     6.83%      6.32%    9.67%     (1) 9.97%     (1)
Equity to assets     13.39%    13.70%     13.72%   13.73%    (1) 14.62%    (1)
Tangible common
equity to tangible   5.77%     5.87%      5.69%    8.13%     (1) 8.57%     (1)
assets^(2)
                                                                    
First Niagara Bank,                                                  
N.A capital ratios:
Tier 1 risk based    9.94%     10.19%     9.63%    14.69%    (1) 14.66%    (1)
capital
Total risk based     10.66%    10.88%     10.57%   15.66%    (1) 16.47%    (1)
capital
Leverage             7.23%     7.32%      6.48%    9.69%     (1) 9.38%     (1)
                                                                    
Number of branches   430      432       452     334         333      
Full time equivalent 5,927    6,036     6,103   4,753       4,827    
employees
                                                                    
Share information
and per share                                                        
metrics:
Common shares        352,621  352,632   352,665 351,936     351,834  
outstanding
Preferred shares     14,000   14,000    14,000  14,000      14,000   
outstanding
Treasury shares      13,381   13,370    13,337  14,066      14,168   
Market price         $7.93   $8.07    $7.65  $9.84      $8.63   
(NASDAQ: FNFG):
Book value per       13.15    13.11     12.84   13.00       12.79    
share^(3)
Tangible book value  5.65     5.59      5.30    7.86        7.62     
per share^(2)(3)
Price/Book           60.30%    61.56%     59.58%   75.69%       67.47%    
Price/Tangible       140.35%   144.36%    144.34%  125.19%      113.25%   
book^(2)
Common stock         $0.08   $0.08    $0.08  $0.08      $0.16   
dividends
Preferred stock      0.54     0.54      0.54    0.37        --      
dividends
Dividend payout      53.33%    53.33%     N/M      50.00%       84.21%    
ratio
Dividend yield       4.01%     3.94%      4.21%    3.27%        7.36%     
(annualized)
                                                                    
N/M Not meaningful
^(1) Ratios reflect the impact of our capital raise completed in December
2011, the proceeds of which were used to consummate the acquisition of
branches from HSBC Bank-USA, National Association in May 2012.
^(2) The tables in this earnings release present computation of earnings and
certain other ratios using non-GAAP financial measures, which we believe
provide investors with information that is useful in understanding our
financial performance and position. See Appendix A for further detail.
^(3) Share count excludes unallocated ESOP shares and unvested restricted
stock shares.



First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation
(in thousands, except per share amounts)
                                                                                     
                     2012                                          2011       For year ending
                     Fourth   Third    Second     First    Fourth   December    December
                                                                               31,         31,
                     Quarter  Quarter  Quarter    Quarter  Quarter  2012         2011
Financial ratios
computed on an                                                                        
operating basis^(1):
Earnings per basic    $0.19    $0.19    $0.19      $0.19    $0.24    $0.75      $0.98
share
Earnings per diluted  0.19      0.19      0.19        0.19      0.24      0.75        0.98
share
Weighted average
shares outstanding -  349,071   349,001   348,941     348,823   304,065   348,960     271,301
basic^(2)
Weighted average
shares outstanding -  349,663   349,371   348,941     349,069   304,341   349,368     271,612
diluted^(2)
Noninterest income as
a percentage of net   25.48%     26.43%     22.96%       22.39%     20.80%     24.40%       21.78%
revenue^(4)
Pre-tax,              125,281   129,333   136,645     127,774   123,672   519,033     460,918
pre-provision income
Pre-tax,
pre-provision income  0.36      0.37      0.39        0.37      0.41      1.49        1.70
per diluted share
Pre-tax,
pre-provision return  1.37%      1.46%      1.51%        1.55%      1.55%      1.47%        1.63%
on average assets
Net interest          3.42%      3.54%      3.37%        3.34%      3.48%      3.42%        3.58%
margin^(3)
Interest yield on     4.39%      4.47%      4.59%        4.62%      4.76%      4.51%        4.87%
average loans^(3)
Rate paid on
interest-bearing      0.48%      0.51%      0.61%        0.79%      0.82%      0.59%        0.85%
liabilities^(3)
Efficiency ratio      65.24%     64.71%     60.63%       59.08%     59.61%     62.56%       59.09%
Effective tax rate    27.0%      30.9%      33.5%        35.0%      34.7%      31.7%        33.8%
Return on average     0.83%      0.83%      0.80%        0.85%      0.90%      0.83%        0.94%
assets
Return on average     6.06%      6.04%      5.95%        5.81%      6.82%      5.97%        7.18%
equity
Return on average     12.89%     13.11%     10.86%       9.24%      12.02%     11.34%       12.77%
tangible equity^(5)
Return on average     5.86%      5.83%      5.72%        5.79%      6.93%      5.80%        7.22%
common equity
Return on average
tangible common       13.57%     13.86%     11.13%       9.63%      12.36%     11.81%       12.88%
equity^(6)
                                                                                     
Reconciliation of net
interest income on
operating basis to                                                                    
reported net interest
income^(1):
Total net interest
income on operating   $268,566 $269,605 $267,371   $242,371 $242,513 $1,047,913 $881,247
basis (Non-GAAP)
Additional premium
amortization on       (16,280)  --        (8,358)     --        --        (24,638)    --
securities portfolio
Total reported net
interest income       252,286   269,605   259,013     242,371   242,513   1,023,275   881,247
(GAAP)
                                                                                     
Reconciliation of
noninterest income on
operating basis to                                                                    
reported noninterest
income^(1):
Total noninterest
income on operating   $91,821  $96,866  $79,703    $69,908  $63,685  $338,298   $245,309
basis (Non-GAAP)
Gain on securities
portfolio             --        5,337     15,895      --       --       21,232      --
repositioning
Total reported
noninterest income    91,821    102,203   95,598      69,908    63,685    359,530     245,309
(GAAP)
                                                                                     
Reconciliation of
noninterest expense
on operating basis to                                                                 
reported noninterest
expense^(1):
Total noninterest
expense on operating  $235,106 $237,138 $210,429   $184,505 $182,526 $867,178   $665,638
basis (Non-GAAP)
Merger and
acquisition           3,678     29,404    131,460     12,970    6,149     177,512     98,161
integration expenses
Restructuring charges --       --       3,750       2,703     13,496    6,453       42,534
Total reported
noninterest expense   $238,784 $266,542 $345,639   $200,178 $202,171 $1,051,143 $806,333
(GAAP)
                                                                                     
Reconciliation of net
operating income to                                                                   
net income^(1):
Net operating income  $75,358  $74,027  $72,188    $70,053  $72,057  $291,626   $266,718
(Non-GAAP)
Nonoperating income
and expenses, net of                                                                  
tax:
Additional premium
amortization on       11,633    --       5,558       --        --        17,191      --
securities portfolio
Gain on securities
portfolio             --       (3,469)   (10,331)    --        --        (13,800)    --
repositioning
Merger and
acquisition           2,628     19,112    85,448      8,431     4,256     115,619     64,420
integration expenses
Restructuring charges --       --       2,437       1,757     9,340     4,194       28,388
Total nonoperating    14,261    15,643    83,112      10,188    13,596    123,204     92,808
expenses, net of tax
Net income (GAAP)     $61,097  $58,384  $(10,924) $59,865  $58,461  $168,422   $173,910
                                                                                     
Reconciliation of net
operating income
available to common
stockholders to net                                                                   
income available to
common
stockholders^(1):
Net operating income
available to common   $67,811  $66,480  $64,641    $64,938  $72,057  $263,870   $266,718
stockholders
(Non-GAAP)
Nonoperating income
and expenses, net of                                                                  
tax:
Additional premium
amortization on       11,633    --        5,558       --        --        17,191      --
securities portfolio
Gain on securities
portfolio             --       (3,469)   (10,331)    --       --       (13,800)    --
repositioning
Merger and
acquisition           2,628     19,112    85,448      8,431     4,256     115,619     64,420
integration expenses
Restructuring charges --       --       2,437       1,757     9,340     4,194       28,388
Total nonoperating
income and expenses,  14,261    15,643    83,112      10,188    13,596    123,204     92,808
net of tax
Net income available
to common             $53,550  $50,837  $(18,471) $54,750  $58,461  $140,666   $173,910
stockholders (GAAP)
                                                                                     
Computation of
pre-tax,pre-provision                                                                 
income:
Net interest income   $252,286 $269,605 $259,013   $242,371 $242,513 $1,023,275 $881,247
Noninterest income    91,821   102,203  95,598     69,908   63,685   359,530    245,309
Noninterest expense   (238,784) (266,542) (345,639)   (200,178) (202,171) (1,051,143) (806,333)
Pre-tax,
pre-provision income  105,323   105,266   8,972       112,101   104,027   331,662     320,223
(GAAP)
Add back:
non-operating premium 16,280    --       8,358       --       --       24,638      --
amortization
Less: non-operating
noninterest income    --       (5,337)   (15,895)    --       --       (21,232)    --
^(1)
Add back:
non-operating         3,678     29,404    135,210     15,673    19,645    183,965     140,695
noninterest expenses
^(1)
Pre-tax,
pre-provision income  $125,281 $129,333 $136,645   $127,774 $123,672 $519,033   $460,918
(Non-GAAP)^(1)
                                                                                     
^(1) Net interest income, noninterest income and expense on an operating basis, net operating income,
and pre-tax, pre-provision income on an operating basis are non-GAAP measures that we believe provide
meaningful comparisons of our underlying operational performance and facilitates investors'
assessments of business and performance trends in comparison to others in the financial services
industry. In addition, we believe exclusion of these nonoperating items enables management to perform
a more effective evaluation and comparison of our results and to assess performance in relation to our
ongoing operations.
^(2) Share count excludes unallocated ESOP shares and unvested restricted stock shares.
^(3) Yields and rates calculated on a tax equivalent basis.
^(4) Net revenue is comprised of net interest income and noninterest income.
^(5) Tangible equity is a non-GAAP measure and excludes goodwill and other intangibles.
^(6) Tangible common equity is a non-GAAP measure and excludes goodwill and other intangibles as well
as preferred stock.



First Niagara Financial Group, Inc.
Appendix A - Non-GAAP Reconciliation (Cont.)
(in thousands, except per share amounts)
                                                                                      
              2012                                                2011         For year ending
              Fourth     Third      Second     First      Fourth     December    December
                                                                                31,         31,
              Quarter    Quarter    Quarter    Quarter    Quarter    2012         2011
Computation of
Ending                                                                                 
Tangible
Common Equity:
Total
stockholders'  $4,928,097 $4,915,421 $4,818,213 $4,875,446 $4,798,178 $4,928,097 $4,798,178
equity
Less: Goodwill
and other      (2,617,809) (2,626,625) (2,631,605) (1,796,394) (1,803,240) (2,617,809) (1,803,240)
intangibles
Less:
Preferred      (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)
stockholders'
equity
Tangible       $1,972,286 $1,950,794 $1,848,606 $2,741,050 $2,656,936 $1,972,286 $2,656,936
common equity
                                                                                      
Computation of
Average                                                                                
Tangible
Equity:
Total
stockholders'  $4,945,132 $4,872,605 $4,879,791 $4,850,276 $4,188,800 $4,887,071 $3,712,927
equity
Less: Goodwill
and other      (2,619,322) (2,626,666) (2,206,682) (1,800,613) (1,809,690) (2,315,013) (1,624,671)
intangibles
Tangible       $2,325,810 $2,245,939 $2,673,109 $3,049,663 $2,379,110 $2,572,058 $2,088,256
equity
                                                                                      
Computation of
Average                                                                                
Tangible
Common Equity:
Total
stockholders'  $4,945,132 $4,872,605 $4,879,791 $4,850,276 $4,188,800 $4,887,071 $3,712,927
equity
Less: Goodwill
and other      (2,619,322) (2,626,666) (2,206,682) (1,800,613) (1,809,690) (2,315,013) (1,624,671)
intangibles
Less:
Preferred      (338,002)   (338,002)   (338,002)   (338,002)   (66,226)    (338,002)   (16,693)
stockholders'
equity
Tangible       $1,987,808 $1,907,937 $2,335,107 $2,711,661 $2,312,884 $2,234,056 $2,071,563
common equity
                                                                                      
Computation of                                                                         
Texas Ratio:
Nonperforming  $182,838   $152,049   $139,704   $140,463   $94,280    $182,838   $94,280
Assets
Loans 90 days
past due still 171,548     145,323     125,668     116,810     143,237     171,548     143,237
accruing^(1)
Sum of
nonperforming
assets and     $354,386   $297,372   $265,372   $257,273   $237,517   $354,386   $237,517
loans 90 days
past due still
accruing
                                                                                      
Tangible       $1,972,286 $1,950,794 $1,848,606 $2,741,050 $2,656,936 $1,972,286 $2,656,936
common equity
Allowance for  162,522     149,933     138,516     126,746     120,100     162,522     120,100
loan loss
Sum of
tangible
common equity  $2,134,808 $2,100,727 $1,987,122 $2,867,796 $2,777,036 $2,134,808 $2,777,036
and allowance
for loan loss
                                                                                      
Sum of
nonperforming
assets and
acquired loans
90 days past
due still      16.60%       14.16%       13.35%       8.97%        8.55%        16.60%       8.55%
accruing/Sum
of tangible
common equity
and allowance
for loan loss
                                                                                      
Computation of
Tier 1 Common                                                                          
Capital:
Tier 1 capital $2,264,679 $2,225,121 $2,128,702 $3,009,727 $2,962,031 $2,264,679 $2,962,031
Less:
Qualifying
restricted     (112,025)   (111,820)   (111,630)   (111,453)   (111,284)   (112,025)   (111,284)
core capital
elements
Less:
Perpetual
non-cumulative (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)   (338,002)
preferred
stock
Tier 1 common
capital        $1,814,652 $1,775,299 $1,679,070 $2,560,272 $2,512,745 $1,814,652 $2,512,745
(Non-GAAP)
                                                                                      
^(1) Includes acquired loans that were originally recorded at fair value upon acquisition, credit card
loans, and loans that have matured which are in the process of collection.

CONTACT: First Niagara Contacts

         Investors:
         Ram Shankar
         Senior Vice President, Investor Relations
         (716) 270-8623
         ram.shankar@fnfg.com

         News Media:
         David Lanzillo
         Senior Vice President, Corporate Communications
         (716) 819-5780
         david.lanzillo@fnfg.com
 
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