First Niagara Financial Group Inc. climbed the most in almost seven years following reports that the lender is exploring a possible sale or other alternatives.
First Niagara jumped 15 percent to close at $10.26 in New York, the biggest increase since October 2008. The Buffalo, New York-based bank hired JPMorgan Chase & Co. to advise on possible moves, people briefed on the matter said late Tuesday.
The lender, with almost 400 branches in New York, New Jersey, Pennsylvania, Connecticut and Massachusetts, has a market value of almost $3.18 billion, based on the number of shares outstanding at the end of the second quarter. It was the worst-performer in the KBW Bank Index last year before it was removed from the 24-company group.
First Niagara is at an early stage reviewing options and has contacted possible buyers, DealReporter said Tuesday. New York Community Bancorp, Toronto-Dominion Bank and Huntington Bancshares Inc. were among possible suitors, the publication reported.
The lender could garner $10 to $12 a share in a sale, based on valuations of recent bank deals, Evercore Partners Inc. analysts including John Pancari said Wednesday in a note to clients. Matthew Kelley, an analyst at Piper Jaffray & Co., said potential fair value was $11 to $13 a share.
First Niagara has grappled with rising costs, including an increase in reserves to address a “process issue” that affected some deposit accounts, and has said that expenses would climb as it spends money to improve technology systems. Evercore’s Pancari said the bank’s control issues “could disincentivize a buyer from pursuing the deal.”
Dave Lanzillo, a First Niagara spokesman, said “we do not comment on rumors,” while JPMorgan’s Tasha Pelio declined to comment.
Spokesman for Toronto-Dominion, New York Community Bancorp and Huntington also declined to comment.