Yesterday, the stock price of First Niagara Financial Group Inc. (NASDAQ:FNFG) surged more than 14% today on news that the Buffalo-based bank engaged JPMorgan to direct it on a possible sale. The company is exploring a sale of the entity or other opportunities, as per the people asked on the matter. Also, FNFG shares gained in extended trading.
The update
First Niagara, located in Buffalo, New York, engaged JPMorgan Chase & Co. to direct on possible measures, the people mentioned, stating not to be identified as the discussions are private. The entity has a market worth of nearly $3.18 billion, depending on the count of outstanding shares at the end of the second quarter this fiscal.
The company has almost 400 branches in New Jersey, Pennsylvania, New York State, Massachusetts and Connecticut. It was the worst performer in the leading KBW Bank Index in 2014 before it was eliminated from the 24-company group. Yesterday the stock climbed 14.51% to close the day at $10.26.
The buzz
DealReporter stated earlier that First Niagara Financial Group Inc. (NASDAQ:FNFG) had contacted prospective buyers. New York Community Bancorp, Huntington Bancshares Inc. and Toronto-Dominion Bank were among possible buyers. The bank has grappled with mounting costs, including a jump in reserves to resolve a process issue that adversely affected some accounts, and has stated that expenses would rise as it spends funds to enhance technology systems. However, the bank said that they don’t comment on rumors.
Almost 390 branches of First Niagara’s are based in the Northeast, making it an excellent acquisition target for numerous larger banks in the area. Also, the bank has an impressive mix of low-cost client deposits. First Niagara last revealed having deposits of $28.2 billion, which cost the bank, an average of 0.23% annually. It provides any acquirer firm the number 2 position in its core segment of Buffalo, New York, where it has deposit market share of as much as 26%.
