First Niagara Financial Group said Wednesday that it will raise an additional $400 million by selling more shares of the bank's stock in the expansion-minded company's third capital offering within the last year.
The stock sale will bolster the bank's "already well-capitalized" financial position and give it money to pursue additional acquisitions, as well as to expand within its existing markets, the bank said in a news release Wednesday. Proceeds will also be used for "general corporate purposes."
The offering, which is being underwritten and sold by brokerage firms Keefe Bruyette & Woods and Sandler O'Neill & Partners, includes an option for those firms to buy an additional 15 percent, or $60 million, for their clients, for a possible total of $460 million.
The offering has not yet been priced, but the bank's stock traded for $13.09 per share Tuesday. Investors who bought shares in two earlier offerings paid $13.50 a share and $12.25 a share, respectively. The bank's stock closed Wednesday at $12.63 but has traded as high as $16.24 last November and as low as $9.55 in March.
First Niagara President and Chief Executive Officer John R. Koelmel was not available to comment until after the shares have been priced, under standard policy for public stock offerings.
The offering marks the latest in a spurt of capital-raising and expansion activity by First Niagara, the second-largest banking company based in Western New York, after M&T Bank Corp. The bank has 170 branches in upstate New York and Western Pennsylvania, with $13.2 billion in assets.
First Niagara previously raised nearly $500 million in a pair of stock sales over the last year, even after the stock market went bad and many financial services firms fell upon hard times. Specifically, it sold $115 million in stock in October 2008 and stunned the markets by raising $361 million in an oversubscribed offering in late April 2009.
Those stock sales allowed the bank to repay its $184 million investment by the federal government under the Troubled Assets Relief Program, or TARP, becoming one of the first financial institutions nationwide to do so. They also raised the bank's luster on Wall Street. And they provided the funding the bank needed to make a pair of acquisitions in Pennsylvania, pushing First Niagara into the Pittsburgh and suburban Philadelphia markets.
First Niagara acquired 57 branches and 69 ATMs in Western Pennsylvania from PNC Financial Services Group's National City Bank subsidiary early this month, gaining the No. 3 retail deposit market share in Pittsburgh. That deal included 50 offices in the Pittsburgh area, for the fifth-largest branch network, with six more in the Erie area and one in Warren.
In July, First Niagara agreed to pay $237 million to buy and shore up Harleysville National Corp., which will give First Niagara 83 branches and 94 ATMs in nine suburban counties outside Philadelphia.
Also Wednesday, First Niagara reported that its results for July and August were similar to those earlier in the year.
The bank said total commercial loans rose at a 10 percent annual rate, or $65.2 million, since June 30, while mortgages fell by $60 million, or 20 percent annualized, despite $104.2 million in new loans, since the bank sells fixed-rate mortgages. Also, lower-cost core deposits rose by $204.2 million, or 27 percent annualized, and represent three-fourths of all deposits. And the profit margin widened, while capital levels stayed above regulatory minimums.
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