First Niagara: Financial Winner

By Philip van Doorn - 08/08/12 - 4:17 PM EDT

Tickers in this article: FNFG I:BKX

NEW YORK (TheStreet) -- First Niagara Financial Group was the winner among the largest U.S. financial names on Wednesday, with shares rising over 1% to close at $8.15.

The broad indexes were mixed on light trading volume. One day after Federal Reserve Bank of Boston President Eric Rosengren called on the central bank to take "more substantive action than we have taken to date," to stimulate the economy by increasing and extending its securities purchases, Federal Reserve Bank of Dallas President Richard Fisher said in a Bloomberg TV interview Wednesday that more monetary easing would risk "overburdening" central banks.

After Rep. Spencer Bachus (R-Ala.) -- the Chairman of the House Committee on Financial Services -- last week asked Federal Reserve chairman Ben Bernanke for a 90-day extension to the comment period on federal bank regulators proposed rules to implement Basel III capital rules, the Fed split the difference and on Wednesday announced a 45-day extension, with a new due date of October 22, setting up regulators to finalize the rules before the November elections.

The KBW Bank Index rose slightly to close at 46.53, with all but seven of the 24 index components showing at least small gains.

First Niagara's shares have now declined 2% year-to-date, following a 35% decline during 2011.

Based on a quarterly payout of eight cents, the shares have a dividend yield of 3.93%.

The shares trade for 1.5 times their reported June 30 tangible book value of $5.30, and for 10 times the consensus 2013 EPS estimate of 79 cents. The consensus 2012 EPS estimate is 72 cents.

The Buffalo, N.Y., lender on July 27 reported a second-quarter net loss to common shareholders of $18.5 million, or five cents a share, which included $135 million in expenses and restructuring charges tied to the company's acquisition of 100 branches from HSBC , after First Niagara sold roughly 100 branches.

Excluding the merger and restructuring charges, First Niagara reported operating net income available to common shareholders of $59.1 million, or 17 cents a share.

KBW analyst Damon Delmonte rates First Niagara "Market Perform," with a $9 price target, and said on July 30 that "with the HSBC branch deal completed, FNFG has fully transitioned to a "show me" stock as the management must now demonstrate to the street its ability to successfully operate the newly formed $35b organization."

The analyst estimates that First Niagara will earn 73 cents a share for all of 2012, followed by 2013 EPS of 83 cents.

FNFG data by YCharts