First Niagara Financial (FNFG) Tanks on Down Day for Markets

Jacob Harper  |

New York-based regional bank First Niagara Financial ($FNFG) shed a significant amount of value on Jan 24, capping off what has been a sharp correction in the Financial sector on the week.

First Niagara announced earnings before the bell. The results were rather disappointing, with CEO Gary Crosby admitting the company has been “underperforming.” The pessimism extended into forecasts, with First Niagara ratcheting down 2014 expectations below Wall Street projections.

Following the disappointing earnings report, investors dumped shares en masse, pushing the company into “oversold” territory. However, shares continued to dip throughout trading, with the sell-off continuing unabated whilst shares spiraled downward.

While the company met earnings-per-share expectations and quarterly revenue, investors were driven off by two revelations. One, the company lowered guidance going forward, admitting that a large scale restructuring project will cost the bank between $200 and $250 million over the next few years. Two, the bank owned up to underwhelming growth in 2013, admitting the bank did not meet income numbers commiserate with a “top 25 bank” and that “(First Niagara’s) commercial deposits are lower than comparable peers.”

For their fourth quarter 2013 earnings report, First Niagara reported a net gain of $70.1 million million, or $0.20 per share, versus the net profit of $61.1 million, or $0.15 per share, from the same period a year ago. Revenue for the quarter was $370 million, as compared to $375 million from the same quarter the previous year. Analysts were expecting a profit of $0.20 per share on revenues of $363 million.

First Niagara tanked throughout the day on the news, shedding as much as 12 percnet in the single trading day. The company’s stock rebounded slightly before the closing bell, but still logged a 12.09 percent loss to settle at $9.09 a share.

The banking sector logged a down day overall, with the NYSE Financial Index dropping 2.64 percent on Friday after shedding 1.6 percent the day prior.

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