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I AGREE
18 Apr 2011
New York, April 18, 2011 -- Moody's Investors Service downgraded the long-term ratings
of First Niagara Financial Group, Inc. (First Niagara) and
its lead bank, First Niagara Bank, N.A. The
holding company's senior debt rating was lowered to Baa2 from Baa1.
The bank's standalone bank financial strength rating (BFSR) was
lowered to C- from C and its long-term deposit rating was
lowered to Baa1 from A3. The bank's short-term rating
was affirmed at Prime-2. Following the rating action,
the outlook on both entities is stable.
This rating action follows the completion of First Niagara's acquisition
of Connecticut-based NewAlliance Bancshares, Inc.
(NewAlliance) and concludes Moody's review for possible downgrade
that began when the acquisition was announced on August 19, 2010.
RATINGS RATIONALE
Moody's said the downgrade was in response to First Niagara's
continued rapid growth through sizable acquisitions, particularly
in new markets. The rating agency added that it expects First Niagara's
organic loan growth in those new markets to be above average. This
high loan growth increases First Niagara's risk profile, in
Moody's view.
Prior to the NewAlliance announcement in August 2010, Moody's
expected any near-term acquisitions to be more modest in size.
NewAlliance is First Niagara's largest acquisition to date at approximately
$9 billion in assets or 43% of First Niagara's balance
sheet, and follows recent sizable acquisitions in Western and Southeastern
Pennsylvania. First Niagara's asset size has more than tripled
since 2008 as a result of these acquisitions.
The downgrade also incorporates the risk posed by additional acquisitions
in the near term, although management has indicated that these will
likely be smaller institutions within their new Northeast footprint.
Moody's said the stable outlook is supported by First Niagara's
good track record of acquiring and integrating banks and its robust capital
position. Moody's anticipates that First Niagara's capital ratios
will remain strong following the NewAlliance acquisition, which
will allow it to absorb credit costs in the combined portfolios should
economic conditions deteriorate beyond current expectations.
The last rating action on First Niagara was on August 19, 2010,
when Moody's placed the long-term ratings of First Niagara
and its lead bank under review for possible downgrade.
The principal methodologies used in rating this issuer were "Bank Financial
Strength Ratings: Global Methodology" (February 2007), "Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: A Refined
Methodology" (March 2007), and "Moody's Guidelines for Rating Bank
Hybrid Securities and Subordinated Debt (November, 2009),
which can be found at www.moodys.com in the Rating Methodologies
subdirectory under the Research & Ratings tab. Other methodologies
and factors that may have been considered in the process of rating this
issuer can also be found in the Rating Methodologies sub-directory
on Moody's website.
First Niagara Financial Group, Inc., headquartered
in Buffalo, New York, reported assets of $21 billion
at December 31, 2010.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, public information, confidential
and proprietary Moody's Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Downgrades:
..Issuer: First Niagara Bank, N.A.
.... Bank Financial Strength Rating,
Downgraded to C- from C
....OSO Senior Unsecured OSO Rating,
Downgraded to Baa1 from A3
....Senior Unsecured Deposit Rating,
Downgraded to Baa1 from A3
..Issuer: First Niagara Financial Group, Inc.
.... Issuer Rating, Downgraded to Baa2
from Baa1
....Senior Unsecured Regular Bond/Debenture,
Downgraded to Baa2 from Baa1
Outlook Actions:
..Issuer: First Niagara Bank, N.A.
....Outlook, Changed To Stable From
Rating Under Review
..Issuer: First Niagara Financial Group, Inc.
....Outlook, Changed To Stable From
Rating Under Review
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
New York
Robert Young
MD - Financial Institutions
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Joseph Pucella
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's downgrades First Niagara (deposits to Baa1); outlook stable
No Related Data.
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