- Georgia
Numerous banks are expected to say they trimmed expenses yet again when they report fourth-quarter results in the coming weeks. But that trend may ebb soon as many executives are forced to spend on technology and to expand their businesses.
January 12 -
More banks are deciding to invest millions in mobile banking, video tellers and core-processing upgrades after avoiding capital spending for a long time. They says it's a good move for the long term, but some will take heat from investors and other critics in the short run.
March 26 -
First Niagara Financial Group CEO John Koelmel discusses his deal to sell 37 branches in New York to KeyCorp, his plans to sell more branches and his argument that its bigger deal with HSBC will pay off.
January 13
First Niagara Financial Group in Buffalo, N.Y., earned a profit in the fourth quarter, will lay off more employees and is taking steps to tackle its many problems. But....
Overshadowing all that may be the big mystery that executives keep prolonging: what's so secret about the customer problem that has caused the bank to set aside tens of millions of dollars?
Described by the $39 billion-asset First Niagara as a "process issue on certain customer deposit accounts," the company initially said it would establish a reserve of $45 million to deal with it. On Friday, the reserve figure was lowered to $22 million.
What still wasn't said is what exactly happened.
"I can't share all of it with you at this point, but know that we are a lot more certain around that issue today than we were 90 days ago," Chief Executive Gary Crosby said in a response to an analyst's question about when, or if, First Niagara would offer a full explanation.
First Niagara has said what the issue isn't. Crosby previously said it's not related to cybersecurity, a data breach, fraud or First Niagara's prior acquisitions, and he reiterated those comments on Friday.
Crosby also said First Niagara submitted a remediation plan to regulators, but he declined to say when regulators might approve it. Greg Norwood, the chief financial officer, declined to speculate if the reserve could be cut lower than $22 million. "I don't want to get ahead of our skis, but the confidence we have [in that figure] is very high," Norwood said in an interview.
Separate from the process issue, First Niagara said fourth-quarter net income fell 0.2% to $70 million, or 20 cents per share, from a year earlier. That met the average estimate of analysts polled by Bloomberg.
Net interest income fell 2.7% to $302 million, largely because of lower one-time income accretion from prepayments of certain collateralized loan obligations. The net interest margin fell 30 basis points to 3.11%.
First Niagara echoed comments earlier this week from
Fee income fell 14%, to $77 million, on lower deposit service charges and a decline in the value of bank-owned life insurance.
To show that the company is trying to get a handle on its expenses, Crosby estimated that full-year salary and benefit expenses will be lower this year than in either 2014 or 2013. Some of the savings will come through the elimination of 240 jobs, up from a
Additionally, Crosby realigned the bank's management structure, eliminating retail deposit and consumer lending product divisions, and
First Niagara also may have put another issue behind it. In the third quarter, it