First Niagara Financial Group, Inc. (NASDAQ:FNFG)

CAPS Rating: 5 out of 5

The Company provides a range of retail and commercial banking as well as other financial services through its wholly-owned, federally-chartered savings bank subsidiary, First Niagara Bank.


Player Avatar InvestWhatWorks (92.44) Submitted: 1/10/2012 9:09:27 PM : Outperform Start Price: $8.50 FNFG Score: -8.60

First Niagara Financial Group is quickly becoming a regional-baking powerhouse in the Northeastern United States. The Northeast is one of the most affluent regions of the United States, accounting for more than 20% of the country’s Gross Domestic Product.

The Northeast has not suffered as badly as other parts of the country during the recession. Likewise, the Northeast should be one of the regions to recover the quickest. The region’s stability and high-income demographics give First Niagara very strong upside potential.

In 2011, HSBC was looking to divest itself of its non-core assets. Among those assets was 195-branches located in upstate-New York and Connecticut, which First Niagara agreed to acquire. This deal further expands First Niagara’s presence in the US Northeast.

All of the potential-negatives are now in the past for First Niagara. Future acquisitions of the size of the HSBC-deal are very unlikely for the foreseeable future. The dividend was cut in December 2011 to a much more manageable amount. And the bank completed a stock offering; the funds from the offering being used to pay the HSBC-branch acquisition. With all those negatives now behind First Niagara, I pick First Niagara to outperform from this point forward.

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