Buzz Stock of the Day- First Niagara Financial Group (FNFG)

There are a few bright spots in the battered banking industry.

Our Buzz Stock of the Day — First Niagara Financial Group, Inc. (Nasdaq: FNFG) is one of them.

The Pendleton, Niagara County-based company operates as the holding company of First Niagara Bank, and provides retail and commercial banking, and financial services to individuals, families, and businesses.

We like First Niagara Financial Group because generates operating cash flow, is well capitalized, and seems to be weathering the storm better than a lot of other regional banks.

“They did it the old-fashioned way, got the money first and then decided how to use it,” said Richard Weiss, director of banks and thrifts at Philadelphia-based investment firm Janney Montgomery Scott LLC.

The company’s stock has been pretty resilient as well — down about 17 percent over the past 52-weeks. First Niagara’s competitors including KeyCorp (-67 percent) and M&T Bank Corp. (-44 percent) haven’t been as lucky.

And if today’s announcement by First Niagara is an indication of things to come, we think this regional bank owner could be a good long-term play, as well as a daily Buzz Stock.

The company just announced that it signed a definitive agreement to acquire $4.2 billion of deposits and 57 Western Pennsylvania bank branches from National City Bank, a subsidiary of The PNC Financial Services Group for a deposit premium of 1.3 percent. FNFG said in addition to $3.2 billion in cash, the company will also receive approximately $839 million of performing business and consumer loans. Divestiture of these branches was a regulatory condition of PNC’s purchase of National City in December of 2008.

First Niagara enters the Pittsburgh region as the fourth-largest bank by deposits, acquiring a $3.35 billion share here, and fifth by branches, with 50. It also bought seven branches outside Pittsburgh but in two other metro areas in western Pennsylvania.

This marks the eighth acquisition by First Niagara over the past decade. Not including the western Pennsylvania additions, it currently has more than $9.3 billion in assets, 114 branches, 139 ATMs and 2,000 employees.

“This transaction enables us to strategically expand our franchise, leverage our strong financial position and enhance shareholder value,” First Niagara President and CEO John Koelmel said in a statement.

The acquisition is expected to close in September 2009, and add about 20 percent to the company’s earnings per share in 2010.

Tags: buzz stocks, financials, investing

This entry was posted on Tuesday, April 7th, 2009 at 4:09 pm by admin and is filed under Financial Stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.