2.2.0.7 false Acquisition 0201 - Disclosure - Acquisition true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Acquisition [Abstract] 0 fnfg_AcquisitionAbstract fnfg false na duration Acquisition Abstract. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Acquisition Abstract. false 3 Acquisition 1 us-gaap_BusinessCombinationDisclosureTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div align="left" style="font-family: Helvetica,Arial,sans-serif; margin-left: 0in; ">   <div align="left" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="left"> </div> <div align="left" style="font-size: 10pt; margin-top: 0pt"><b></b><i></i> </div> <div align="left" style="font-size: 10pt; margin-top: 0pt"> </div> <div align="left" style="font-size: 10pt; margin-top: 0pt"> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt"><b><i>Note 1. Acquisition</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt"><b>Harleysville National Corporation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt">On April 9, 2010, the Company acquired all of the outstanding common shares of Harleysville National Corporation (“Harleysville”), the parent company of Harleysville National Bank and Trust Company, and thereby acquired all of Harleysville National Bank’s 83 branch locations across nine Eastern Pennsylvania counties. Under the terms of the merger agreement, Harleysville stockholders received 0.474 shares of First Niagara Financial Group, Inc. common stock in exchange for each share of Harleysville common stock, resulting in us issuing 20.3 million common shares of First Niagara Financial Group, Inc. common stock with an acquisition date fair value of $298.7 million. Also under the terms of the merger agreement, Harleysville employees became 100% vested in any Harleysville stock options they held. These options had a fair value of $1.1 million on the date of acquisition. The merger with Harleysville enabled us to expand into a desirable Eastern Pennsylvania market, improve our core deposit base, and add additional scale in banking operations. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt">The results of Harleysville’s operations are included in our Consolidated Statement of Income from the date of acquisition. In connection with the merger, the consideration paid, the assets acquired, and the liabilities assumed were recorded at fair value on the date of acquisition, as summarized in the following table. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="77%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Consideration paid:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">First Niagara Financial Group, Inc. common stock issued </div></td> <td> </td> <td align="left">$</td> <td align="right">298,747</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Cash in lieu of fractional shares paid to Harleysville stockholders </div></td> <td> </td> <td> </td> <td align="right">41</td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Fair value of Harleysville employee stock options </div></td> <td> </td> <td> </td> <td align="right">1,115</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total consideration paid </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>299,903</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Cash and cash equivalents </div></td> <td> </td> <td align="left">$</td> <td align="right">1,148,704</td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Investment securities available for sale </div></td> <td> </td> <td> </td> <td align="right">945,570</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Loans, net </div></td> <td> </td> <td> </td> <td align="right">2,644,256</td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Federal Home Loan Bank common stock </div></td> <td> </td> <td> </td> <td align="right">42,992</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Bank owned life insurance </div></td> <td> </td> <td> </td> <td align="right">91,042</td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Premises and equipment </div></td> <td> </td> <td> </td> <td align="right">44,511</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Core deposit intangible </div></td> <td> </td> <td> </td> <td align="right">42,200</td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Other assets </div></td> <td> </td> <td> </td> <td align="right">205,692</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Deposits </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,953,333</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Borrowings </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(960,259</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">Other liabilities </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(82,361</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total identifiable net assets </div></td> <td> </td> <td> </td> <td align="right">169,014</td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Goodwill</b> </div></td> <td> </td> <td> </td> <td align="right">130,889</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>299,903</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif; margin-left: 0in; "> <div align="left" style="font-size: 10pt; margin-top: 10pt">The above recognized amounts of loans and other assets, at fair value, are preliminary estimates and are subject to adjustment but are not expected to be materially different than those shown. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt">We estimated the fair value for most loans acquired from Harleysville by utilizing a methodology wherein loans with comparable characteristics were aggregated by type of collateral, remaining maturity, and repricing terms. Cash flows for each pool were estimated using an estimate of future credit losses and an estimated rate of prepayments. Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. To estimate the fair value of the remaining loans, we analyzed the value of the underlying collateral of the loans, assuming the fair values of the loans are derived from the eventual sale of the collateral. The value of the collateral was based on recently completed appraisals adjusted to the valuation date based on recognized industry indices. We discounted these values using market derived rates of return, with consideration given to the period of time and costs associated with the foreclosure and disposition of the collateral. There was no carryover of Harleysville’s allowance for credit losses associated with the loans we acquired as the loans were initially recorded at fair value. Information about the acquired Harleysville loan portfolio as of April 9, 2010 is as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="77%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Contractually required principal and interest at acquisition </div></td> <td> </td> <td align="left">$</td> <td align="right">3,383,245</td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">Contractual cash flows not expected to be collected (nonaccretable discount) </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(326,287</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected cash flows at acquisition </div></td> <td> </td> <td> </td> <td align="right">3,056,958</td> <td> </td> </tr> <tr valign="bottom" style="padding-top: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">Interest component of expected cash flows (accretable discount) </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(412,702</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff; padding-top: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">Fair value of acquired loans </div></td> <td> </td> <td align="left">$</td> <td align="right">2,644,256</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt">The core deposit intangible asset recognized as part of the Harleysville merger is being amortized over its estimated useful life of approximately nine years utilizing an accelerated method. The goodwill, which is not amortized for book purposes, was assigned to our banking segment and is not deductible for tax purposes. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt">The fair value of savings and transaction deposit accounts acquired from Harleysville was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. Certificates of deposit accounts were valued by comparing the contractual cost of the portfolio to an identical portfolio bearing current market rates. The portfolio was segregated into monthly pools. For each pool, the projected cash flows from maturing certificates were then calculated based on contractual rates and prevailing market rates. The valuation adjustment for each pool is equal to the present value of the difference of these two cash flows, discounted at the assumed market rate for a certificate with a corresponding maturity. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt">The fair value of borrowings assumed was determined by estimating projected future cash outflows and discounting them at a market rate of interest. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt">Direct costs related to the acquisition were expensed as incurred. During the six months ended June 30, 2010, we incurred $33.8 million in merger and acquisition integration expenses related to the transaction, including $9.4 million in salaries and benefits, $5.4 million in technology and communications, $1.5 million in occupancy and equipment, $4.0 million in marketing and advertising, $10.2 million in professional services, and $3.3 million in other noninterest expenses. </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif; margin-left: 0in; "> <div align="left" style="font-size: 10pt; margin-top: 10pt">The following table presents unaudited pro forma information as if the acquisition of Harleysville had occurred on both January 1, 2010 and January 1, 2009. This pro forma information gives effect to certain adjustments, including purchase accounting fair value adjustments, amortization of core deposit and other intangibles and related income tax effects. The pro forma information does not necessarily reflect the results of operations that would have occurred had the Company merged with Harleysville at the beginning of 2010. In particular, cost savings and $33.8 million of merger and acquisition integration costs are not reflected in the unaudited pro forma amounts. The unaudited pro forma information for the six months ended June 30, 2009 also does not include any amounts related to the September 2009 National City Bank (“NatCity”) branch acquisition as it did not represent the acquisition of a business which has continuity both before and after the acquisition and for which financial statements are available or relevant. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Actual from</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">Pro forma</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">acquisition date through</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Six months ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">June 30, 2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">June 30, 2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">June 30, 2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">(Pro forma)</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net interest income </div></td> <td> </td> <td align="left">$</td> <td align="right">42,805</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">308,606</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">240,553</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Noninterest income </div></td> <td> </td> <td align="left"> </td> <td align="right">8,360</td> <td> </td> <td> </td> <td align="left"> </td> <td align="right">96,313</td> <td> </td> <td> </td> <td align="left"> </td> <td align="right">95,104</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net income (loss) </div></td> <td> </td> <td> </td> <td align="right">14,988</td> <td> </td> <td> </td> <td> </td> <td align="right">44,002</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(163,984</td> <td nowrap="nowrap">)</td> </tr>  </table> </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock Description of a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. 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