BUFFALO — First Niagara Financial Group, Inc. (NASDAQ: FNFG) generated substantial loan growth in the second quarter across its various product lines and markets, the banking company reported on July 25.

The Buffalo–based parent company of First Niagara Bank N.A. said average total loans increased 7 percent annualized in the second quarter from the first quarter, driven by continued growth in the company’s commercial lending, indirect auto, and home-equity portfolios, its earnings report stated.

Average commercial loans, which include commercial business and commercial real-estate loans, increased to $13.5 billion in the latest quarter, up 8 percent annualized from the previous quarter.

“The key was all the bank’s [target markets] posting strong loan growth, including New York and also all individual product types,” Gregory W. Norwood, First Niagara’s chief financial officer, told the Business Journal News Network in an interview. “We continue to have a well-diversified … approach.”

The bank ended the quarter with a particularly strong June in commercial loans, he added. That included adding new customers and growing balances.

 First Niagara is the fourth largest bank in the 16-county Central New York market ranked by deposit market share.

First Niagara reported that its second-quarter net income increased to $66.2 million, or 19 cents a share, from $63.6 million, or 18 cents, in the year-ago period.

That surpasses the consensus analyst estimate of 18 cents by one cent, according to Capital IQ and Yahoo Finance.

“The penny beat was largely because of better taxes,” Norwood said.

First Niagara saw its effective tax rate decline to 14 percent from 19.6 percent in the previous quarter, reflecting its receipt of state tax credits from prior years.

Other earnings statistics

First Niagara reported that its operating revenue rose by $5 million, or 1.5 percent, in the second quarter compared to the first quarter. Net interest income increased $1 million in the second quarter from the previous quarter, driven by a 6 percent annualized increase in average earning assets and an extra day in the quarter, the banking company said. Those factors were partially offset by a decrease in net interest margin.

The banking company posted a net interest margin of 3.26 percent in the second quarter, compared to 3.33 percent in the first quarter. Noninterest income improved by $4 million, or 5 percent from the prior quarter primarily due to increases in insurance commissions, merchant and card fees, and mortgage banking, First Niagara said.

The provision for loan losses on originated loans totaled $22.1 million in the second quarter, including $8.8 million of additions to the loan-loss reserve to support organic loan growth and $13.2 million to cover net charge-offs during the quarter, according to the earnings report. Net charge-offs equaled 0.30 percent of average originated loans, a decrease of six basis points from 0.36 percent in the first quarter. As of June 30, nonperforming originated loans comprised 0.86 percent of originated loans, compared to 0.82 percent at the end of the prior quarter.

First Niagara said it posted operating expenses of $244 million in the second quarter, down by $5 million from the prior quarter, which included $10 million in restructuring expenses primarily related to branch-staffing realignment and consolidation of branches. Excluding the restructuring expenses in the first quarter, spending increased by $5 million in the current quarter. That was driven by volume-related growth, increased marketing spending, higher FDIC premiums, legal expenses, as well as depreciation, and personnel and consulting expenses related to the banking company’s previously announced strategic investment plan, according to the earnings report.

Deposit growth

First Niagara said it remains focused on growing its core deposit customer base, re-positioning its account mix, and introducing new products and services. It said recent investments in mobile banking and remote deposit capture have further enhanced customers’ ability to transact in the delivery channel of their choice while at the same time lowering the company’s cost to obtain and service such clients. The banking company contends that current and anticipated investments that are part of its strategic investment plan in new digital features and functionalities, such as online account opening, will further enhance customers’ ability to “seamlessly transact across all delivery channels.”

First Niagara reported that average transactional deposit balances, which include interest-bearing and noninterest bearing checking accounts, increased an annualized 12 percent over the prior quarter and currently represent 36 percent of its deposit balances, up from 34 percent a year ago.

Average noninterest-bearing checking deposit balances increased 18 percent annualized compared to the first quarter, driven by seasonal strength in commercial account balances. Interest-bearing checking balances averaged $4.8 billion and increased 7 percent annualized from the prior quarter. That was driven by recent promotional campaigns and resulting strength in checking account sales, particularly in the company’s New York state market, First Niagara reported.

Money-market balances increased 3 percent, reflecting the early results of a promotional deposit campaign. Average time deposits increased 36 percent annualized, led by brokered deposit growth, according to the banking company.

First Niagara says it is a multi-state community-oriented bank with about 410 branches, $39 billion in assets, $27 billion in deposits, and 5,900 employees serving New York, Pennsylvania, Connecticut, and Massachusetts. 

Contact Rombel at arombel@cnybj.com

ITHACA — Tompkins Financial Corp. (NYSE: TMP) reported net income of $13.1 million in the second quarter, up nearly 19 percent from $11 million in the year-ago period.

Diluted earnings per share totaled 87 cents in this year’s second quarter, up 16 percent from 75 cents in the second quarter of 2013. This represents the best second quarter in company history, Tompkins Financial said in an earnings news release issued July 25.

The Ithaca–based banking company reported net income of $25.6 million in the first half of 2014, up nearly 14 percent from $22.5 million reported in the first six months of 2013. Diluted earnings per share rose 11 percent to $1.72 in this year’s first half from $1.55 a share in the same period last year.

“We are very pleased with the earnings growth for both quarter and year to date periods,” Stephen S. Romaine, president and CEO, said in the release. “Growth in loans, securities, and core deposits contributed to improvement in net interest income. Meanwhile, a low level of net charge-offs and reductions in nonperforming asset levels resulted in a modest provision expense for the quarter.”

Tompkins Financial produced net interest income of $40.5 million in the second quarter, up more than 1.7 percent from $39.8 million in the same quarter in 2013. The net interest margin in this year’s second quarter edged down to 3.55 percent from 3.58 percent in the same period in 2013.

The banking company generated noninterest income of $17.7 million in the second quarter of 2014, up 7.1 percent from the year-prior period.

Noninterest income represented 30.4 percent of Tompkins Financial’s total revenue in this year’s second quarter, compared to 29.3 percent in the same quarter in 2013. Fee-based revenue related to wealth management, deposit fees, and card-services fees all increased in the latest quarter from the same period in 2013. However, insurance revenue slipped 1.7 percent in this year’s second quarter compared last year’s second earnings period.

Tompkins Financial incurred noninterest expenses of $38.9 million in the second quarter of 2014, up 3.1 percent from the year-earlier period. The increase primarily resulted from higher salary and wage expenses, the company reported. Non-employee related expenses were relatively unchanged in the latest quarter.

Asset quality
Asset-quality trends improved in nearly all categories during this year’s second quarter, Tompkins Financial reported. Substandard and special-mention loans declined by $70.3 million from the same quarter last year, and by $27.6 million from this year’s first quarter.

The percentage of nonperforming loans and leases to total loans and leases improved to 0.83 percent as of June 30, 2014, compared to 1.28 percent a year earlier. The percentage of nonperforming assets to total assets improved to 0.66 percent, the lowest this percentage has been over the past 21 quarters, Tompkins Financial reported.

The banking company took a provision for loan and lease losses of $67,000 in the second quarter, down sharply from $2.5 million in the second quarter of 2013. Net loan and lease charge-offs totaled $564,000 in the second quarter of 2014, down from $1.7 million in the year-prior period.

Share buyback, dividend    
Tompkins Financial also announced it has authorized the repurchase of up to 400,000 shares of the company’s common stock outstanding.

Purchases may be made on the open market or in privately negotiated transactions over the next 24 months, the banking and financial services company said in a separate news release.

Tompkins Financial also declared a regular quarterly cash dividend of 40 cents a share, payable on Aug. 15, to common shareholders of record on Aug. 4. It’s the same dividend amount that it paid in each of its last three quarters.

Tompkins Financial serves 12 counties in the Central, Western, and Hudson Valley regions of New York state and five counties in Southeastern Pennsylvania. Headquartered in Ithaca, it is parent of Tompkins Trust Company, the Bank of Castile, Mahopac Bank, VIST Bank, Tompkins Insurance Agencies, Inc., and offers wealth-management services through Tompkins Financial Advisors. 

Contact Rombel at arombel@cnybj.com

ELMIRA — The board of directors of Elmira Savings Bank (NASDAQ: ESBK) has appointed Thomas M. Carr as CEO. He has been serving as president and chief operating officer since April, 2013. Carr first joined the bank in June, 2000 as senior vice president and chief financial officer.

Carr succeeds Michael P. Hosey, formerly vice chairman and CEO, who is retiring from the bank after 30 years of service. Hosey has been elected as chairman of Elmira Savings Bank’s board of directors. During his 12 years as CEO, the bank’s assets have grown from $287 million to $517 million, profitability has improved significantly, and the number of branch locations has increased from six to 16, according to a banking company news release.

“Tom has played a major role in the development of a team of management and employees that are deep in talent and highly motivated to offer great service to our customers,” Hosey said of Carr in the release.

Elmira Savings Bank, with $517 million in total assets, is a state-chartered bank with six branches in Chemung County, three offices and a loan center in Tompkins County, two branches in Steuben County, one branch each in Cayuga and Schuyler counties, and one loan center each in Cortland and Broome counties.

Earnings results
Elmira Savings Bank reported that its net income fell 20 percent to $1.1 million in the second quarter, from nearly $1.4 million in the same period in 2013. The decline was the net result of a decrease in noninterest income of $145,000 and an increase in tax expense of $288,000, partially offset by a decline in noninterest expense of $141,000, an uptick in net interest income of $7,000, and a decrease in the provision for loan losses of $10,000. The banking company reported a decline in mortgage loans, due to lower levels of refinancing and purchasing activity across its Southern Tier market area. This has crimped its noninterest income, according to Carr.

Elmira Savings Bank’s net interest margin for the three months ended June 30 was 3.19 percent, compared to 3.24 percent in the second quarter of 2013. The average yield on earning assets was 4.22 percent in this year’s second quarter, down from 4.36 percent a year ago.