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buffalonate (63.40)

The Best Run Bank in the Country!



April 14, 2011 – Comments (5) | RELATED TICKERS: FNFG , MTB , PNC

I believe First Niagara Financial Group(FNFG) is the best run bank in the country and I think it is at a great price.  This bank is based out of Buffalo and stayed profitable through the financial crisis.  Not only did it manage that but it also made several acquisitions and has now doubled its bank branches in the last 2 years.  It has recently moved into the Pittsburg market by buying National City branches.  It bought out Harleysville Bank in Philly and is in the process of buying New Alliance Bank in Hartford.  It has a p/e ratio of 19 which seems rich but the CEO says it will grow at a 15% clip going forward and it has dividend yield of 4.6% which makes it cheap in my book.  I think anything under $14 a share for this bank is a great price especially considering how exceptional their management is.  There are about 10 stocks that I know of where you can buy them and never pay attention to them again because you know they will just keep going higher.  This is one of those stocks. The only large banks that I think hold a candle to FNFG is PNC Financial and M&T Bank.  Both are great companies but are twice as large and don't have as much room to run as FNFG.      

5 Comments – Post Your Own

#1) On April 14, 2011 at 3:52 PM, buffalonate (63.40) wrote:

I forgot to mention that Jim Cramer also loves this company.  I think he is a genius when it comes to analyzing stocks other than tech stocks.  Also First Niagara just purchased an insurance firm in Connecticut to go with the bank they are buying there. 

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#2) On April 14, 2011 at 6:09 PM, davejh23 (< 20) wrote:

I've never heard anyone say anything positive about Cramer.  As for FNFG, the yield looks nice...might be worth holding long-term for the dividend increases.  The share price hasn't done much for almost 10 years...maybe their current growth plans will change that.  If not, they'll probably keep hiking the dividend and there will be a split.  Either way, it doesn't look like a bad pick at first glance.

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#3) On April 14, 2011 at 6:55 PM, buffalonate (63.40) wrote:

FNFG does what a good bank should do.  They are very conservative and when the economy turns and other banks are struggling they buy them up for cheap. 

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#4) On April 14, 2011 at 7:37 PM, TMFBlacknGold (87.76) wrote:

I don't want to say you're wrong, but at least hear me out. I have had a horrible experience with First Niagara as a customer. During the financial crisis my bank was National City, then in Pittsburgh. When they went under - as many banks did - their cross town rival PNC Bank (whom I have now) stepped in to buy them out. Fortunately, they weren't allowed to buy all of National City and the Fed shopped around for a new competitor to buy the majority of National City branches (in the Pittsburgh area at least). Enter FNFG.

When I'm not in Pittsburgh I'm a student in Syracuse, NY. So, I applauded the news since I would be around my own personal bank all year round. Unfortuantely, things didn't work out so great. FNFG's website for personal accounts is outdated. Their customer service is choppy at best. They never sent me a debit card despite several requests and over one month of waiting. To make it better, the employees of the old National City don't even like their new employers.

After several months of hassling I decided to switch to PNC. When I went to an FNFG branch in Pittsburgh to close my account the bank assistant asked me the usual questions (Why are you leaving? etc etc). I told them about my experience and the lady looked around and told me she couldn't believe how outdated FNFG's systems were either. And those are the ones controlling the big picture, not just a personal account website.

To FNFG's credit, they were a small bank that seized an opportunity to expand on the national scene. It will take time for them to "catch up" and work out all of the kinks and problems associated with such a transition. I had this experience over one year ago, so perhaps they have made great strides since then. Obviously, they are becoming a major player in the banking sector. One would imagine the only place is up. Hopefully other people have had better experiences with FNFG.

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#5) On April 18, 2011 at 3:44 PM, bluecollarbroker (31.41) wrote:

I own FNFG in real life...My valuation puts it at least at $20 or more in three years time. From where I bought it's basically a 5% yield so, I'm happy waiting. Share buyback and divy raise should be coming soon, as well.

 I agree w/ you...this bank is a big winner long term.

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