First Niagara Financial's Messy Q3 Gets Mixed Reviews

First Niagara Financial Group Inc. FNFG $800 million third-quarter write-down related to its acquisition spree of the past five years sent investors headed for the exits.

The Buffalo-based bank holding company's shares fell slightly on Monday after a steep decline Friday. In the past three months, First Niagara is off by nearly 20 percent.

Two analysts were divided on the company's prospects Monday, with a downgrade to Sector Perform from RBC, and an upgrade to Outperform from Wells Fargo.

The regional banking company, with $38 billion in assets and about 400 branches in three states, also took $45 million reserve in the third quarter for what it would describe only as "a process issue" related to deposits.

The company said the added reserves don't concern "cyber-security" issues, but "because we are in the early stages of researching this situation estimating the ultimate amount at this time is a little difficult," Chief Executive Gary M. Crosby told analysts Friday

The separate, $800 million non-cash write-down "isn't what the company anticipated at the time of the acquisitions,"Crosby said.

Crosby blamed the write-down on a slower-than-expected economic recovery and a longer-than-expected period of low interest rates.

The $800 million is a "preliminary estimate" that could change when the bank files its quarterly report with the Securities and Exchange Commission around Nov. 10, Crosby said.

The non-cash write-down doesn't affect cash flow, but will require regulatory approval for dividend payments through 2017, the bank said.

The company obtained clearance to declare its regular quarterly dividend Friday, and said it believes it can maintain dividends at current levels.

Excluding charges, First Niagara's second-quarter earning fell more than 11 percent to $0.18 per share, in line with Wall Street's expectations.