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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 000-23975
 
 FIRST NIAGARA FINANCIAL GROUP, INC.
  
 Delaware
    
    42-1556195(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)6950 South Transit Road, P.O. Box 514, Lockport, NY
    
    14095-0514(Address of Principal Executive Offices)
    
    (Zip Code)
 (716) 625-7500
 Securities Registered Pursuant to Section 12(b) of the Act:
 Common Stock, par value $0.01 per share
    
    The NASDAQ Stock Market LLC(Title of Class)
    
    (Name of Exchange on which Registered)
 Securities
Registered Pursuant to Section 12(g) of the Act:
 None
 
 þ o
 o þ
 þ o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
    
    Smaller Reporting Company o
 o þ




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##### 



DOCUMENTS INCORPORATED
BY REFERENCE
  Document
    
    PartProxy Statement for
the 2009
   Annual
Meeting of
Stockholders
    
    Part III, Item 10
Directors, Executive Officers and Corporate GovernancePart III, Item 11
Executive CompensationPart III, Item 12
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder MattersPart III, Item 13
Certain Relationships and Related Transactions, and
Director IndependencePart III, Item 14
Principal Accountant Fees and ServicesExhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.8Exhibit 10.9Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32
   2




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##### Table of Contents



TABLE OF CONTENTS
 ITEM
    
    PAGENUMBER
    
    NUMBERPART I1 Business
    
    
    41A Risk Factors
    
    
    181B Unresolved Staff Comments
    
    
    212 Properties
    
    
    213 Legal Proceedings
    
    
    214 Submission of Matters to a Vote of Security Holders
    
    
    21PART II5 Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    226 Selected Financial Data
    
    
    247 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    277A Quantitative and Qualitative Disclosures About Market Risk
    
    
    478 Financial Statements and Supplementary Data
    
    
    509 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    899A Controls and Procedures
    
    
    899B Other Information
    
    
    89PART III10 Directors, Executive Officers, and Corporate Governance
    
    
    9011 Executive Compensation
    
    
    9012 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    9013 Certain Relationships and Related Transactions, and Director Independence
    
    
    9014 Principal Accountant Fees and Services
    
    
    90PART IV15 Exhibits and Financial Statement Schedules
    
    
    91Signatures
    
    
    92
  3




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Unless the context otherwise requires, the terms we, us, and our refer to First
Niagara Financial Group, Inc. and its subsidiaries.
 
 PART I
 
 ITEM 1. Business
 GENERAL
 First Niagara Financial Group, Inc.
   First Niagara Bank
   OTHER INFORMATION
 www.fnfg.com
   4




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FORWARD LOOKING STATEMENTS
   
    
    General economic conditions, either nationally or in our market areas, that are worse than
expected;
    
    Significantly increased competition among depository and other financial institutions;
    
    Inflation and changes in the interest rate environment that reduce our margins or fair
value of financial instruments;
    
    Changes in laws or government regulations affecting financial institutions, including
changes in regulatory fees and capital requirements;
    
    Our ability to enter new markets successfully and capitalize on growth opportunities;
    
    Our ability to successfully integrate acquired entities;
    
    Changes in consumer spending, borrowing and savings habits;
    
    Changes in accounting policies and practices, as may be adopted by the bank regulatory
agencies, taxing authorities and the Financial Accounting Standards Board; and
    
    Changes in our organization, compensation, and benefit plans.
  MARKET AREAS AND COMPETITION
   LENDING ACTIVITIES
  Commercial Real Estate and Multi-family Lending
   5




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Commercial Business Loans
     6




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Residential Real Estate Lending
   
  Home Equity Lending
   7




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Consumer Loans
     Specialized Lending
   Classification of Assets
    8




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Allowance for Credit Losses
    INVESTMENT ACTIVITIES
    9




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WEALTH MANAGEMENT
  SOURCES OF FUNDS
  Deposits
  Borrowed Funds
  FINANCIAL SERVICES
  Risk Management
   Employee Benefits Consulting
   10




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SEGMENT INFORMATION
  SUPERVISION AND REGULATION
  Federal Regulation of Our Savings Bank
 Business Activities
  Capital Requirements
     11




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Loans-to-One-Borrower
  Qualified Thrift Lender Test
   Capital Distributions
   Community Reinvestment Act and Fair Lending Laws
  Transactions with Our Holding Company
    12




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Enforcement
  Standards for Safety and Soundness
  Prompt Corrective Action Regulations
  
    
    Well-capitalized (at least 5% leverage capital, 6% tier 1 risk-based capital and 10% total
risk-based capital);
    
    Adequately capitalized (at least 3% leverage capital, 4% tier 1 risk-based capital and 8%
total risk-based capital)
    
    Undercapitalized (less than 8% total risk-based capital, 4% tier 1 risk-based capital or 3%
leverage capital);
    
    Significantly undercapitalized (less than 6% total risk-based capital, 3% tier 1 risk-based
capital or 3% leverage capital);
    
    Critically undercapitalized (less than 2% tangible capital).
    13




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Insurance of Deposit Accounts
       Prohibitions Against Tying Arrangements
  Federal Home Loan Bank System
  Federal Reserve System
   14




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Privacy Standards
   Holding Company Regulation
   Commercial Bank Regulation
     15




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Other Legislation
 USA PATRIOT Act of 2001
  Sarbanes-Oxley Act
   The Fair and Accurate Credit Transactions (FACT) Act of 2003
  Troubled Assets Relief Program  Capital Purchase Program
   16




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TAXATION
  Method of Accounting
 st
 Corporate Dividends
  Net Operating Loss Carryovers
  Taxable Distributions and Recapture
  State of New York
    Status of Audits by Taxing Authorities
   17




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ITEM 1A. Risk Factors
 Economic Conditions May Adversely Affect Our Liquidity and Financial Condition
  Commercial Real Estate and Business Loans Increase Our Exposure to Credit Risks
   Increases to the Allowance for Credit Losses May Cause Our Earnings to Decrease
    Concentration of Loans in Our Primary Market Area May Increase Risk
   18




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Changes in Interest Rates Could Adversely Affect Our Results of Operations and Financial Condition
    Conditions in Insurance Markets Could Adversely Affect Our Earnings
  Our Ability to Grow May Be Limited if We Cannot Make Acquisitions
  Our Expanding Branch Network May Affect Our Financial Performance
  Strong Competition May Limit Our Growth and Profitability
   19




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We Operate in a Highly Regulated Environment and May Be Adversely Affected by Changes in Laws and
Regulations
  The Soundness of Other Financial Services Institutions May Adversely Affect Our Credit Risk
  Increases in FDIC Insurance Premiums May Cause Our Earnings to Decrease
  Changes In Federal Statutes May Adversely Affect the Terms of our Letter Agreement with the
Treasury
  We May be required to Make a Contribution to Our Pension Plan in 2009
  A Substantial Decline in the Value of our FHLB of New York Common Stock May Adversely Affect Our
Financial Condition
     20




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Certain of Our Intangible Assets May Become Impaired in the Future
  
 ITEM 1B. Unresolved Staff Comments
  
 ITEM 2. Properties
   
 ITEM 3. Legal Proceedings
  First Niagara Insurance Brokers, Inc. v. First Niagara Financial Group, Inc.,
   
 ITEM 4. Submission of Matters to a Vote of Security Holders
   21




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PART II
 
 ITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
     22




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Stock Performance Graph
  FIRST NIAGARA FINANCIAL GROUP, INC.
 
 Period EndedIndex
    
    12/31/03
    
    
    12/31/04
    
    
    12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    12/31/08First Niagara Financial Group, Inc.
    
    
    100.00
    
    
    
    95.32
    
    
    
    101.63
    
    
    
    107.79
    
    
    
    90.88
    
    
    
    127.02NASDAQ Composite
    
    
    100.00
    
    
    
    108.59
    
    
    
    110.08
    
    
    
    120.56
    
    
    
    132.39
    
    
    
    78.72SNL Mid Cap Bank & Thrift
    
    
    100.00
    
    
    
    121.91
    
    
    
    116.23
    
    
    
    126.06
    
    
    
    99.96
    
    
    
    52.62
  23




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ITEM 6. Selected Financial Data
 At or for the year ended December 31,
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(In thousands, except per share amounts)Selected financial condition data:Total assets
    
    $
    9,331,372
    
    
    $
    8,096,228
    
    
    $
    7,945,526
    
    
    $
    8,064,832
    
    
    $
    5,078,374Loans and leases, net
    
    
    6,385,982
    
    
    
    5,654,705
    
    
    
    5,593,512
    
    
    
    5,216,299
    
    
    
    3,215,255Securities available for sale:Mortgage-backed
    
    
    1,232,383
    
    
    
    817,614
    
    
    
    717,601
    
    
    
    867,037
    
    
    
    618,156Other
    
    
    340,718
    
    
    
    399,550
    
    
    
    342,821
    
    
    
    737,851
    
    
    
    551,973Deposits
    
    
    5,943,613
    
    
    
    5,548,984
    
    
    
    5,709,736
    
    
    
    5,479,412
    
    
    
    3,337,682Borrowings
    
    
    1,540,227
    
    
    
    1,094,981
    
    
    
    747,554
    
    
    
    1,096,427
    
    
    
    750,686Stockholders equity
    
    $
    1,727,263
    
    
    $
    1,353,179
    
    
    $
    1,387,197
    
    
    $
    1,374,423
    
    
    $
    928,162Common shares outstanding
    
    
    118,562
    
    
    
    104,770
    
    
    
    110,719
    
    
    
    112,808
    
    
    
    82,318Preferred shares outstanding
    
    
    184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Selected operations data:Interest income
    
    $
    441,138
    
    
    $
    422,772
    
    
    $
    415,830
    
    
    $
    375,217
    
    
    $
    224,578Interest expense
    
    
    172,561
    
    
    
    198,594
    
    
    
    169,349
    
    
    
    125,067
    
    
    
    68,476Net interest income
    
    
    268,577
    
    
    
    224,178
    
    
    
    246,481
    
    
    
    250,150
    
    
    
    156,102Provision for credit losses
    
    
    22,500
    
    
    
    8,500
    
    
    
    6,456
    
    
    
    7,348
    
    
    
    8,442Net interest income after
provision for credit losses
    
    
    246,077
    
    
    
    215,678
    
    
    
    240,025
    
    
    
    242,802
    
    
    
    147,660Noninterest income
    
    
    115,735
    
    
    
    131,811
    
    
    
    111,218
    
    
    
    90,663
    
    
    
    51,866Noninterest expense
    
    
    228,410
    
    
    
    222,466
    
    
    
    211,851
    
    
    
    188,206
    
    
    
    120,850Income before income taxes
    
    
    133,402
    
    
    
    125,023
    
    
    
    139,392
    
    
    
    145,259
    
    
    
    78,676Income taxes
    
    
    44,964
    
    
    
    40,938
    
    
    
    47,533
    
    
    
    52,400
    
    
    
    26,859Net income
    
    
    88,438
    
    
    
    84,085
    
    
    
    91,859
    
    
    
    92,859
    
    
    
    51,817Preferred stock dividend
    
    
    1,022
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accretion of preferred stock discount
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income available to common
stockholders
    
    $
    87,254
    
    
    $
    84,085
    
    
    $
    91,859
    
    
    $
    92,859
    
    
    $
    51,817Stock and related per share data:Earnings per common share:Basic
    
    $
    0.81
    
    
    $
    0.82
    
    
    $
    0.86
    
    
    $
    0.85
    
    
    $
    0.66Diluted
    
    
    0.81
    
    
    
    0.81
    
    
    
    0.85
    
    
    
    0.84
    
    
    
    0.65Cash dividends
    
    
    0.56
    
    
    
    0.54
    
    
    
    0.46
    
    
    
    0.38
    
    
    
    0.30Book value
    
    
    15.02
    
    
    
    13.41
    
    
    
    12.99
    
    
    
    12.65
    
    
    
    11.86Market Price (NASDAQ: FNFG):High
    
    
    22.38
    
    
    
    15.13
    
    
    
    15.43
    
    
    
    15.16
    
    
    
    15.78Low
    
    
    9.98
    
    
    
    11.15
    
    
    
    13.38
    
    
    
    12.05
    
    
    
    11.49Close
    
    $
    16.17
    
    
    $
    12.04
    
    
    $
    14.86
    
    
    $
    14.47
    
    
    $
    13.95
  24




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At or for the year ended December 31,
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(Dollar amounts in thousands)Selected financial ratios and other data:Performance ratios(1):Return on average assets
    
    
    0.99
    %
    
    
    1.05
    %
    
    
    1.14
    %
    
    
    1.18
    %
    
    
    1.05
    %Return on average equity
    
    
    5.99
    
    
    
    6.24
    
    
    
    6.67
    
    
    
    6.76
    
    
    
    5.59Return on average common equity
    
    
    5.99
    
    
    
    6.24
    
    
    
    6.67
    
    
    
    6.76
    
    
    
    5.59Return on average tangible equity(2)
    
    
    12.98
    
    
    
    14.12
    
    
    
    14.75
    
    
    
    14.41
    
    
    
    8.75Return on average tangible common equity(3)
    
    
    13.19
    
    
    
    14.12
    
    
    
    14.75
    
    
    
    14.41
    
    
    
    8.75Net interest rate spread
    
    
    3.19
    
    
    
    2.84
    
    
    
    3.20
    
    
    
    3.46
    
    
    
    3.38Net interest rate margin
    
    
    3.55
    
    
    
    3.33
    
    
    
    3.61
    
    
    
    3.75
    
    
    
    3.66Efficiency ratio
    
    
    59.43
    
    
    
    62.49
    
    
    
    59.23
    
    
    
    55.22
    
    
    
    58.11Dividend payout ratio
    
    
    69.14
    %
    
    
    65.85
    %
    
    
    53.49
    %
    
    
    44.71
    %
    
    
    45.45
    %Capital ratios:Total risk-based capital(4)
    
    
    12.72
    %
    
    
    11.35
    %
    
    
    12.16
    %
    
    
    12.26
    %
    
    
    17.65
    %Tier 1 risk-based capital(4)
    
    
    11.48
    
    
    
    10.10
    
    
    
    10.91
    
    
    
    11.01
    
    
    
    16.40Tier 1 (core) capital(4)
    
    
    8.47
    
    
    
    7.54
    
    
    
    7.73
    
    
    
    7.56
    
    
    
    11.40Tangible capital(4)
    
    
    8.47
    
    
    
    7.54
    
    
    
    7.73
    
    
    
    7.56
    
    
    
    11.40Ratio of stockholders equity to total assets
    
    
    18.51
    
    
    
    16.71
    
    
    
    17.46
    
    
    
    17.04
    
    
    
    18.28Ratio of tangible common stockholders equity to tangible
assets(5)
    
    
    8.96
    %
    
    
    8.21
    %
    
    
    8.88
    %
    
    
    8.40
    %
    
    
    12.31
    %Asset quality:Total nonaccruing loans
    
    $
    46,417
    
    
    $
    28,054
    
    
    $
    15,528
    
    
    $
    21,930
    
    
    $
    12,028Other nonperforming assets
    
    
    2,001
    
    
    
    237
    
    
    
    632
    
    
    
    843
    
    
    
    740Allowance for credit losses
    
    
    77,793
    
    
    
    70,247
    
    
    
    71,913
    
    
    
    72,340
    
    
    
    41,422Net loan charge-offs
    
    $
    17,844
    
    
    $
    10,084
    
    
    $
    6,883
    
    
    $
    7,114
    
    
    $
    7,090Total nonaccruing loans to total loans
    
    
    0.72
    %
    
    
    0.49
    %
    
    
    0.27
    %
    
    
    0.41
    %
    
    
    0.37
    %Total nonperforming assets to total assets
    
    
    0.52
    
    
    
    0.35
    
    
    
    0.20
    
    
    
    0.28
    
    
    
    0.25Allowance for credit losses to nonaccruing loans
    
    
    167.60
    
    
    
    250.40
    
    
    
    463.12
    
    
    
    329.87
    
    
    
    344.38Allowance for credit losses to total loans
    
    
    1.20
    
    
    
    1.23
    
    
    
    1.27
    
    
    
    1.37
    
    
    
    1.27Net charge-offs to average loans
    
    
    0.28
    %
    
    
    0.18
    %
    
    
    0.12
    %
    
    
    0.14
    %
    
    
    0.23
    %Other data:Number of branches
    
    
    114
    
    
    
    110
    
    
    
    119
    
    
    
    118
    
    
    
    71Full time equivalent employees
    
    
    1,909
    
    
    
    1,824
    
    
    
    1,922
    
    
    
    1,984
    
    
    
    1,200
 (1)
    
    Computed using daily averages.(2)
    
    Excludes average goodwill and other intangibles of $794.9 million, $752.5 million,
$754.9 million, $729.8 million, and $335.8 million for 2008, 2007, 2006, 2005, and 2004,
respectively.(3)
    
    Excludes average goodwill, other intangibles, and preferred stock of $814.6
million, $752.5 million, $754.9 million, $729.8 million, and $335.8 million for 2008, 2007,
2006, 2005, and 2004, respectively.(4)
    
    Ratios presented for First Niagara Bank.(5)
    
    Tangible common stockholders equity and tangible assets exclude goodwill and other
intangibles.  25




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2008
    
    
    2007Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    Firstquarter
    
    
    quarter
    
    
    quarter
    
    
    quarter
    
    
    quarter
    
    
    quarter
    
    
    quarter
    
    
    quarter(In thousands, except per share amounts)Selected Quarterly Data:Interest income
    
    $
    109,798
    
    
    $
    109,951
    
    
    $
    111,402
    
    
    $
    109,987
    
    
    $
    107,120
    
    
    $
    106,911
    
    
    $
    105,543
    
    
    $
    103,198Interest expense
    
    
    38,092
    
    
    
    39,751
    
    
    
    44,793
    
    
    
    49,925
    
    
    
    51,913
    
    
    
    51,206
    
    
    
    48,477
    
    
    
    46,998Net Interest income
    
    
    71,706
    
    
    
    70,200
    
    
    
    66,609
    
    
    
    60,062
    
    
    
    55,207
    
    
    
    55,705
    
    
    
    57,066
    
    
    
    56,200Provision for credit losses
    
    
    8,000
    
    
    
    6,500
    
    
    
    4,900
    
    
    
    3,100
    
    
    
    2,500
    
    
    
    2,100
    
    
    
    2,300
    
    
    
    1,600Net interest income after
provision for credit losses
    
    
    63,706
    
    
    
    63,700
    
    
    
    61,709
    
    
    
    56,962
    
    
    
    52,707
    
    
    
    53,605
    
    
    
    54,766
    
    
    
    54,600Noninterest income
    
    
    27,643
    
    
    
    29,189
    
    
    
    29,636
    
    
    
    29,267
    
    
    
    43,825
    (2)
    
    
    29,730
    
    
    
    30,344
    
    
    
    27,912Noninterest expense
    
    
    57,555
    
    
    
    56,754
    
    
    
    56,594
    
    
    
    57,507
    (1)
    
    
    55,587
    (3)
    
    
    51,948
    
    
    
    60,290
    (4)
    
    
    54,641
    (5)Income before Income taxes
    
    
    33,794
    
    
    
    36,135
    
    
    
    34,751
    
    
    
    28,722
    
    
    
    40,945
    
    
    
    31,387
    
    
    
    24,820
    
    
    
    27,871Income taxes
    
    
    10,988
    
    
    
    12,395
    
    
    
    11,672
    
    
    
    9,909
    
    
    
    13,108
    
    
    
    10,284
    
    
    
    8,209
    
    
    
    9,337Net income
    
    
    22,806
    
    
    
    23,740
    
    
    
    23,079
    
    
    
    18,813
    
    
    
    27,837
    
    
    
    21,103
    
    
    
    16,611
    
    
    
    18,534Preferred stock dividend
    
    
    1,022
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accretion of preferred
stock discount
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income available to
common stockholders
    
    $
    21,622
    
    
    $
    23,740
    
    
    $
    23,079
    
    
    $
    18,813
    
    
    $
    27,837
    
    
    $
    21,103
    
    
    $
    16,611
    
    
    $
    18,534Earnings per share:Basic
    
    $
    0.19
    
    
    $
    0.22
    
    
    $
    0.22
    
    
    $
    0.18
    
    
    $
    0.27
    
    
    $
    0.21
    
    
    $
    0.16
    
    
    $
    0.18Diluted
    
    
    0.19
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.18
    
    
    
    0.27
    
    
    
    0.21
    
    
    
    0.16
    
    
    
    0.17Market price (NASDAQ: FNFG):High
    
    
    16.45
    
    
    
    22.38
    
    
    
    15.00
    
    
    
    14.15
    
    
    
    15.13
    
    
    
    14.60
    
    
    
    14.28
    
    
    
    15.07Low
    
    
    11.00
    
    
    
    11.68
    
    
    
    12.60
    
    
    
    9.98
    
    
    
    11.15
    
    
    
    11.49
    
    
    
    12.88
    
    
    
    13.53Close
    
    
    16.17
    
    
    
    15.75
    
    
    
    12.86
    
    
    
    13.59
    
    
    
    12.04
    
    
    
    14.15
    
    
    
    13.10
    
    
    
    13.91Cash dividends
    
    $
    0.14
    
    
    $
    0.14
    
    
    $
    0.14
    
    
    $
    0.14
    
    
    $
    0.14
    
    
    $
    0.14
    
    
    $
    0.13
    
    
    $
    0.13
 (1)
    
    Includes real estate writedowns and integration costs related to the acquisition of
Great Lakes Bancorp, Inc. of $2.2 million(2)
    
    Includes a gain on branch sales of $21.6 million and an investment portfolio
restructuring loss of $5.6 million.(3)
    
    Includes a branch deposit loss of $2.3 million.(4)
    
    Includes real estate property writedowns of $4.8 million and severance and related
costs of $2.7 million.(5)
    
    Includes severance and related costs of $2.4 million.  26




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##### Table of Contents



ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  OVERVIEW
     FINANCIAL OVERVIEW
     27




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   Investment Securities
    28




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##### Table of Contents



Goodwill
   Income Taxes
    29




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##### Table of Contents



ANALYSIS OF FINANCIAL CONDITION
 Lending Activities
 Loan
Portfolio Composition
  2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentCommercial:Real estate
    
    $
    2,211,402
    
    
    
    34.4
    %
    
    $
    1,902,334
    
    
    
    33.5
    %
    
    $
    1,786,384
    
    
    
    31.7
    %
    
    $
    1,647,576
    
    
    
    31.3
    %
    
    $
    1,081,709
    
    
    
    33.3
    %Construction
    
    
    340,564
    
    
    
    5.3
    
    
    
    292,675
    
    
    
    5.1
    
    
    
    248,325
    
    
    
    4.4
    
    
    
    222,907
    
    
    
    4.2
    
    
    
    187,149
    
    
    
    5.8Business
    
    
    940,304
    
    
    
    14.6
    
    
    
    730,029
    
    
    
    12.8
    
    
    
    561,323
    
    
    
    10.0
    
    
    
    473,571
    
    
    
    9.0
    
    
    
    345,520
    
    
    
    10.6Total commercial
    
    
    3,492,270
    
    
    
    54.3
    
    
    
    2,925,038
    
    
    
    51.4
    
    
    
    2,596,032
    
    
    
    46.1
    
    
    
    2,344,054
    
    
    
    44.5
    
    
    
    1,614,378
    
    
    
    49.7Residential real estate
    
    
    1,990,784
    
    
    
    31.0
    
    
    
    1,955,690
    
    
    
    34.3
    
    
    
    2,252,473
    
    
    
    40.0
    
    
    
    2,182,907
    
    
    
    41.4
    
    
    
    1,132,471
    
    
    
    34.9Home equity
    
    
    624,495
    
    
    
    9.7
    
    
    
    503,779
    
    
    
    8.9
    
    
    
    470,714
    
    
    
    8.3
    
    
    
    403,340
    
    
    
    7.7
    
    
    
    247,190
    
    
    
    7.6Other consumer
    
    
    143,989
    
    
    
    2.2
    
    
    
    127,169
    
    
    
    2.2
    
    
    
    163,824
    
    
    
    2.9
    
    
    
    178,732
    
    
    
    3.4
    
    
    
    174,309
    
    
    
    5.4Specialized lending
    
    
    178,916
    
    
    
    2.8
    
    
    
    183,747
    
    
    
    3.2
    
    
    
    155,032
    
    
    
    2.7
    
    
    
    159,759
    
    
    
    3.0
    
    
    
    79,358
    
    
    
    2.4Total loans and leases
    
    
    6,430,454
    
    
    
    100.0
    %
    
    
    5,695,423
    
    
    
    100.0
    %
    
    
    5,638,075
    
    
    
    100.0
    %
    
    
    5,268,792
    
    
    
    100.0
    %
    
    
    3,247,706
    
    
    
    100.0
    %Net deferred costs and unearned
discounts
    
    
    33,321
    
    
    
    
    
    
    
    29,529
    
    
    
    
    
    
    
    27,350
    
    
    
    
    
    
    
    19,847
    
    
    
    
    
    
    
    8,971Allowance for credit losses
    
    
    (77,793
    )
    
    
    
    
    
    
    (70,247
    )
    
    
    
    
    
    
    (71,913
    )
    
    
    
    
    
    
    (72,340
    )
    
    
    
    
    
    
    (41,422
    )Total loans and leases, net
    
    $
    6,385,982
    
    
    
    
    
    
    $
    5,654,705
    
    
    
    
    
    
    $
    5,593,512
    
    
    
    
    
    
    $
    5,216,299
    
    
    
    
    
    
    $
    3,215,255
    30




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##### Table of Contents



Allowance for Credit Losses
  2008
    
    
    2007
    
    
    2006Amount of
    
    
    Percent
    
    
    Amount of
    
    
    Percent
    
    
    Amount of
    
    
    Percentallowance
    
    
    of loans
    
    
    allowance
    
    
    of loans
    
    
    allowance
    
    
    of loansfor credit
    
    
    to total
    
    
    for credit
    
    
    to total
    
    
    for credit
    
    
    to totallosses
    
    
    loans
    
    
    losses
    
    
    loans
    
    
    losses
    
    
    loansCommercial:Real estate and construction
    
    $
    32,789
    
    
    
    39.7
    %
    
    $
    24,886
    
    
    
    38.6
    %
    
    $
    25,434
    
    
    
    36.1
    %Business
    
    
    25,816
    
    
    
    14.6
    
    
    
    19,107
    
    
    
    12.8
    
    
    
    18,209
    
    
    
    10.0Total commercial
    
    
    58,605
    
    
    
    54.3
    
    
    
    43,993
    
    
    
    51.4
    
    
    
    43,643
    
    
    
    46.1Residential real estate
    
    
    1,663
    
    
    
    31.0
    
    
    
    3,384
    
    
    
    34.3
    
    
    
    3,898
    
    
    
    40.0Home equity
    
    
    775
    
    
    
    9.7
    
    
    
    1,344
    
    
    
    8.9
    
    
    
    1,278
    
    
    
    8.3Other consumer
    
    
    2,524
    
    
    
    2.2
    
    
    
    2,974
    
    
    
    2.2
    
    
    
    4,250
    
    
    
    2.9Specialized lending
    
    
    10,138
    
    
    
    2.8
    
    
    
    8,705
    
    
    
    3.2
    
    
    
    7,443
    
    
    
    2.7Unallocated
    
    
    4,088
    
    
    
    
    
    
    
    9,847
    
    
    
    
    
    
    
    11,401
    
    
    
    Total
    
    $
    77,793
    
    
    
    100.0
    %
    
    $
    70,247
    
    
    
    100.0
    %
    
    $
    71,913
    
    
    
    100.0
    %
 2005
    
    
    2004Amount of
    
    
    Percent
    
    
    Amount of
    
    
    Percentallowance
    
    
    of loans
    
    
    allowance
    
    
    of loansfor credit
    
    
    to total
    
    
    for credit
    
    
    to totallosses
    
    
    loans
    
    
    losses
    
    
    loansCommercial:Real estate and construction
    
    $
    26,751
    
    
    
    35.5
    %
    
    $
    12,117
    
    
    
    39.1
    %Business
    
    
    15,644
    
    
    
    9.0
    
    
    
    10,010
    
    
    
    10.6Total commercial
    
    
    42,395
    
    
    
    44.5
    
    
    
    22,127
    
    
    
    49.7Residential real estate
    
    
    4,036
    
    
    
    41.4
    
    
    
    2,196
    
    
    
    34.9Home equity
    
    
    1,667
    
    
    
    7.7
    
    
    
    703
    
    
    
    7.6Other consumer
    
    
    5,299
    
    
    
    3.4
    
    
    
    3,254
    
    
    
    5.4Specialized lending
    
    
    7,892
    
    
    
    3.0
    
    
    
    2,609
    
    
    
    2.4Unallocated
    
    
    11,051
    
    
    
    
    
    
    
    10,533
    
    
    
    Total
    
    $
    72,340
    
    
    
    100.0
    %
    
    $
    41,422
    
    
    
    100.0
    %
    31




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32




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##### Table of Contents



Nonaccruing Loans and Nonperforming Assets
  2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Nonaccruing loans(1):Commercial:Real estate
    
    $
    26,546
    
    
    $
    16,229
    
    
    $
    4,513
    
    
    $
    6,755
    
    
    $
    3,416Business
    
    
    7,411
    
    
    
    3,430
    
    
    
    2,599
    
    
    
    3,171
    
    
    
    1,564Total commercial
    
    
    33,957
    
    
    
    19,659
    
    
    
    7,112
    
    
    
    9,926
    
    
    
    4,980Residential real estate
    
    
    5,516
    
    
    
    3,741
    
    
    
    4,490
    
    
    
    5,911
    
    
    
    4,276Home equity
    
    
    2,076
    
    
    
    849
    
    
    
    819
    
    
    
    567
    
    
    
    519Other consumer
    
    
    514
    
    
    
    885
    
    
    
    1,356
    
    
    
    953
    
    
    
    801Specialized lending
    
    
    4,354
    
    
    
    2,920
    
    
    
    1,751
    
    
    
    4,573
    
    
    
    1,452Total nonaccruing loans
    
    
    46,417
    
    
    
    28,054
    
    
    
    15,528
    
    
    
    21,930
    
    
    
    12,028Real estate owned
    
    
    2,001
    
    
    
    237
    
    
    
    632
    
    
    
    843
    
    
    
    740Total nonperforming assets (2)
    
    $
    48,418
    
    
    $
    28,291
    
    
    $
    16,160
    
    
    $
    22,773
    
    
    $
    12,768Total nonperforming assets as a
percentage of total assets
    
    
    0.52
    %
    
    
    0.35
    %
    
    
    0.20
    %
    
    
    0.28
    %
    
    
    0.25
    %Total nonaccruing loans as a
percentage of total loans
    
    
    0.72
    %
    
    
    0.49
    %
    
    
    0.27
    %
    
    
    0.41
    %
    
    
    0.37
    %
 (1)
    
    We place loans on nonaccrual status when they become 90 days past due or if we have
uncertainty about collecting all interest or principal.(2)
    
    Nonperforming assets do not include $6.9 million, $6.1 million, $4.1 million, $3.1
million, and $2.7 million of performing renegotiated loans that are accruing interest at
December 31, 2008, 2007, 2006, 2005, and 2004 respectively. Investing Activities
 Securities Portfolio
     33




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##### Table of Contents



2008
    
    
    2007
    
    
    2006Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Faircost
    
    
    value
    
    
    cost
    
    
    value
    
    
    cost
    
    
    valueDebt securities:States and political subdivisions
    
    $
    295,639
    
    
    $
    299,747
    
    
    $
    359,153
    
    
    $
    361,360
    
    
    $
    205,298
    
    
    $
    204,373U.S. government agencies
    
    
    29,968
    
    
    
    29,998
    
    
    
    28,817
    
    
    
    28,839
    
    
    
    128,723
    
    
    
    127,530Corporate
    
    
    5,028
    
    
    
    3,440
    
    
    
    3,788
    
    
    
    3,783
    
    
    
    3,830
    
    
    
    3,765Total debt securities
    
    
    330,635
    
    
    
    333,185
    
    
    
    391,758
    
    
    
    393,982
    
    
    
    337,851
    
    
    
    335,668Other
    
    
    5,307
    
    
    
    4,156
    
    
    
    5,307
    
    
    
    5,209
    
    
    
    6,307
    
    
    
    6,380Total debt and other securities
    
    $
    335,942
    
    
    $
    337,341
    
    
    $
    397,065
    
    
    $
    399,191
    
    
    $
    344,158
    
    
    $
    342,048Average remaining life of debt
securities(1)

    1.5 years
    
    
    
    
    
    
    1.5 years
    
    
    
    
    
    
    1.1 yearsMortgage-backed securities:FNMA
    
    $
    146,646
    
    
    $
    149,262
    
    
    $
    106,297
    
    
    $
    106,163
    
    
    $
    184,704
    
    
    $
    178,750FHLMC
    
    
    182,929
    
    
    
    188,838
    
    
    
    230,427
    
    
    
    230,452
    
    
    
    100,999
    
    
    
    98,319GNMA
    
    
    11,711
    
    
    
    11,376
    
    
    
    3,408
    
    
    
    3,491
    
    
    
    4,393
    
    
    
    4,419CMOs
    
    
    913,432
    
    
    
    882,907
    
    
    
    479,647
    
    
    
    477,508
    
    
    
    448,934
    
    
    
    436,113Total mortgage-backed securities
    
    $
    1,254,718
    
    
    $
    1,232,383
    
    
    $
    819,779
    
    
    $
    817,164
    
    
    $
    739,030
    
    
    $
    717,601Average remaining life of mortgage-
backed securities(1)
    
    4.4 years
    
    
    
    
    
    
    5.2 years
    
    
    
    
    
    
    3.1 yearsAsset-backed securities(2)
    
    $
    3,499
    
    
    $
    3,377
    
    
    $
    360
    
    
    $
    359
    
    
    $
    779
    
    
    $
    773Average remaining life of asset-
backed securities(1)
    

    11.1 years
    
    
    

    
    
    
    4.2 years
    
    
    
    
    

    
    0.5 yearsTotal securities available for sale
    
    $
    1,594,159
    
    
    $
    1,573,101
    
    
    $
    1,217,204
    
    
    $
    1,217,164
    
    
    $
    1,083,967
    
    
    $
    1,060,422Average remaining life of investment
securities available for sale(1)
    
    3.8 years
    
    
    
    
    
    
    4.0 years
        
    
    
    
    
    2.5 years
 (1)
    
    Average remaining life does not include other investment securities and is computed
utilizing estimated maturities and prepayment assumptions.(2)
    
    Asset-backed securities are backed by fixed-rate home equity loans, and at December
31, 2008 include a $3.2 million security with a maturity date of January 25, 2031.  34




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##### Table of Contents



Funding Activities
 Deposits
   2008
    
    
    2007
    
    
    2006Weighted
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    
    
    
    
    average
    
    
    
    
    
    
    
    
    
    
    averageAmount
    
    
    Percent
    
    
    rate
    
    
    Amount
    
    
    Percent
    
    
    rate
    
    
    Amount
    
    
    Percent
    
    
    rateCore deposits:Savings
    
    $
    788,767
    
    
    
    13.3
    %
    
    
    0.24
    %
    
    $
    786,759
    
    
    
    14.2
    %
    
    
    0.35
    %
    
    $
    962,482
    
    
    
    16.9
    %
    
    
    0.64
    %Interest-bearing checking
    
    
    485,220
    
    
    
    8.2
    
    
    
    0.17
    
    
    
    468,165
    
    
    
    8.4
    
    
    
    0.37
    
    
    
    521,751
    
    
    
    9.1
    
    
    
    0.55Money market deposit
    
    
    1,940,136
    
    
    
    32.6
    
    
    
    1.47
    
    
    
    1,607,137
    
    
    
    29.0
    
    
    
    3.69
    
    
    
    1,294,834
    
    
    
    22.7
    
    
    
    3.46Noninterest-bearing
    
    
    718,593
    
    
    
    12.1
    
    
    
    
    
    
    
    631,801
    
    
    
    11.4
    
    
    
    
    
    
    
    647,108
    
    
    
    11.3
    
    
    
    Total core deposits
    
    
    3,932,716
    
    
    
    66.2
    
    
    
    0.79
    
    
    
    3,493,862
    
    
    
    63.0
    
    
    
    1.83
    
    
    
    3,426,175
    
    
    
    60.0
    
    
    
    1.57Certificates
    
    
    2,010,897
    
    
    
    33.8
    
    
    
    2.79
    
    
    
    2,055,122
    
    
    
    37.0
    
    
    
    4.34
    
    
    
    2,283,561
    
    
    
    40.0
    
    
    
    4.42Total deposits
    
    $
    5,943,613
    
    
    
    100.0
    %
    
    
    1.47
    %
    
    $
    5,548,984
    
    
    
    100.0
    %
    
    
    2.76
    %
    
    $
    5,709,736
    
    
    
    100.0
    %
    
    
    2.71
    %
  Over
    
    
    Over$100,000
    
    
    $250,000Less than three months
    
    $
    158,406
    
    
    $
    116,292Over three months to six months
    
    
    236,195
    
    
    
    136,002Over six months to 12 months
    
    
    207,406
    
    
    
    94,922Over 12 months
    
    
    61,299
    
    
    
    10,302Total
    
    $
    633,306
    
    
    $
    357,518
  35




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##### Table of Contents



Borrowings
  At or for the year ended December 31,2008
    
    
    2007
    
    
    2006Period-end balance:FHLB advances
    
    $
    1,005,467
    
    
    $
    715,808
    
    
    $
    340,355Repurchase agreements
    
    
    462,418
    
    
    
    379,173
    
    
    
    407,199Other borrowings
    
    
    72,342
    
    
    
    
    
    
    
    Total borrowings
    
    $
    1,540,227
    
    
    $
    1,094,981
    
    
    $
    747,554Maximum balance at any month end:FHLB advances
    
    $
    1,194,195
    
    
    $
    716,243
    
    
    $
    606,253Repurchase agreements
    
    
    462,418
    
    
    
    406,098
    
    
    
    561,291Other borrowings
    
    
    92,315
    
    
    
    20,000
    
    
    
    Average balance:FHLB advances
    
    $
    907,673
    
    
    $
    479,299
    
    
    $
    480,637Repurchase agreements
    
    
    395,030
    
    
    
    367,549
    
    
    
    499,792Other borrowings
    
    
    69,610
    
    
    
    6,448
    
    
    
    Period-end weighted average interest rate:FHLB advances
    
    
    3.63
    %
    
    
    4.57
    %
    
    
    4.65
    %Repurchase agreements
    
    
    3.31
    
    
    
    4.42
    
    
    
    4.36Other
    
    
    2.65
    
    
    
    
    
    
    
    
  Capital Resources
    
  36




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##### Table of Contents



RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008 AND DECEMBER 31, 2007
  Net Interest Income
     
  37




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    Interestoutstanding
    
    
    earned/
    
    
    
    
    
    
    outstanding
    
    
    earned/
    
    
    
    
    
    
    outstanding
    
    
    earned/balance
    
    
    paid
    
    
    Yield/rate
    
    
    balance
    
    
    paid
    
    
    Yield/rate
    
    
    balance
    
    
    paid
    
    
    Yield/rateInterest-earning assets:Loans(1)
    
    $
    6,325,608
    
    
    $
    378,092
    
    
    
    5.97
    %
    
    $
    5,725,938
    
    
    $
    374,330
    
    
    
    6.53
    %
    
    $
    5,524,111
    
    
    $
    361,098
    
    
    
    6.53
    %Mortgage-backed securities(2)
    
    
    946,398
    
    
    
    47,121
    
    
    
    4.98
    
    
    
    760,626
    
    
    
    32,822
    
    
    
    4.32
    
    
    
    813,530
    
    
    
    33,424
    
    
    
    4.11Other investment securities(2)
    
    
    380,786
    
    
    
    18,242
    
    
    
    4.79
    
    
    
    374,595
    
    
    
    18,137
    
    
    
    4.84
    
    
    
    563,661
    
    
    
    23,054
    
    
    
    4.09Money market and other investments
    
    
    82,753
    
    
    
    4,038
    
    
    
    4.88
    
    
    
    53,979
    
    
    
    3,434
    
    
    
    6.36
    
    
    
    71,835
    
    
    
    3,858
    
    
    
    5.37Total interest-earning assets
    
    
    7,735,545
    
    
    $
    447,493
    
    
    
    5.78
    %
    
    
    6,915,138
    
    
    $
    428,723
    
    
    
    6.20
    %
    
    
    6,973,137
    
    
    $
    421,434
    
    
    
    6.04
    %Noninterest-earning assets(3)(4)
    
    
    1,227,596
    
    
    
    
    
    
    
    
    
    
    
    1,082,161
    
    
    
    
    
    
    
    
    
    
    
    1,055,624Total assets
    
    $
    8,963,141
    
    
    
    
    
    
    
    
    
    
    $
    7,997,299
    
    
    
    
    
    
    
    
    
    
    $
    8,028,761Interest-bearing liabilities:Savings deposits
    
    $
    790,707
    
    
    $
    2,198
    
    
    
    0.28
    %
    
    $
    889,398
    
    
    $
    3,918
    
    
    
    0.44
    %
    
    $
    1,057,992
    
    
    $
    6,782
    
    
    
    0.64
    %Checking accounts
    
    
    486,789
    
    
    
    1,378
    
    
    
    0.28
    
    
    
    487,173
    
    
    
    2,043
    
    
    
    0.42
    
    
    
    507,215
    
    
    
    2,505
    
    
    
    0.49Money market deposits
    
    
    1,899,010
    
    
    
    43,573
    
    
    
    2.29
    
    
    
    1,413,178
    
    
    
    52,249
    
    
    
    3.70
    
    
    
    1,200,914
    
    
    
    36,977
    
    
    
    3.08Certificates of deposit
    
    
    2,106,481
    
    
    
    71,534
    
    
    
    3.40
    
    
    
    2,263,933
    
    
    
    101,161
    
    
    
    4.47
    
    
    
    2,202,282
    
    
    
    85,921
    
    
    
    3.90Borrowings
    
    
    1,372,314
    
    
    
    53,878
    
    
    
    3.91
    
    
    
    853,297
    
    
    
    39,223
    
    
    
    4.58
    
    
    
    980,429
    
    
    
    37,164
    
    
    
    3.76Total interest-bearing liabilities
    
    
    6,655,301
    
    
    $
    172,561
    
    
    
    2.59
    %
    
    
    5,906,979
    
    
    $
    198,594
    
    
    
    3.36
    %
    
    
    5,948,833
    
    
    $
    169,349
    
    
    
    2.84
    %Noninterest-bearing deposits
    
    
    687,741
    
    
    
    
    
    
    
    
    
    
    
    627,259
    
    
    
    
    
    
    
    
    
    
    
    591,306Other noninterest-bearing liabilities
    
    
    143,775
    
    
    
    
    
    
    
    
    
    
    
    115,189
    
    
    
    
    
    
    
    
    
    
    
    111,128Total liabilities
    
    
    7,486,817
    
    
    
    
    
    
    
    
    
    
    
    6,649,427
    
    
    
    
    
    
    
    
    
    
    
    6,651,267Stockholders equity(3)
    
    
    1,476,324
    
    
    
    
    
    
    
    
    
    
    
    1,347,872
    
    
    
    
    
    
    
    
    
    
    
    1,377,494Total liabilities and
stockholders equity
    
    $
    8,963,141
    
    
    
    
    
    
    
    
    
    
    $
    7,997,299
    
    
    
    
    
    
    
    
    
    
    $
    8,028,761Net interest income
    
    
    
    
    
    $
    274,932
    
    
    
    
    
    
    
    
    
    
    $
    230,129
    
    
    
    
    
    
    
    
    
    
    $
    252,085Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.19
    %
    
    
    
    
    
    
    
    
    
    
    2.84
    %
    
    
    
    
    
    
    
    
    
    
    3.20
    %Net earning assets
    
    $
    1,080,244
    
    
    
    
    
    
    
    
    
    
    $
    1,008,159
    
    
    
    
    
    
    
    
    
    
    $
    1,024,304Net interest rate margin
    
    
    
    
    
    
    3.55
    %
    
    
    
    
    
    
    
    
    
    
    3.33
    %
    
    
    
    
    
    
    
    
    
    
    3.61
    %Ratio of average interest-earning assets
to average interest-bearing liabilities
    
    
    116.23
    %
    
    
    
    
    
    
    
    
    
    
    117.07
    %
    
    
    
    
    
    
    
    
    
    
    117.22
    %
 (1)
    
    Average outstanding balances are net of deferred costs and premiums and include
nonperforming loans and loans held for sale.(2)
    
    Average outstanding balances are amortized cost.(3)
    
    Average outstanding balances include unrealized gains/losses on securities available
for sale and allowance for credit losses.(4)
    
    Average outstanding balances include bank-owned life insurance, earnings from which
are reflected in noninterest income.  38




---



##### Table of Contents



Rate/Volume Analysis
  2008 vs. 2007
    
    
    2007 vs. 2006Increase/(decrease)
    
    
    Total
    
    
    Increase/(decrease)
    
    
    Totaldue to
    
    
    increase
    
    
    due to
    
    
    increaseVolume
    
    
    Rate
    
    
    (decrease)
    
    
    Volume
    
    
    Rate
    
    
    (decrease)Interest-earning assets:Loans
    
    $
    21,035
    
    
    $
    (17,273
    )
    
    $
    3,762
    
    
    $
    16,074
    
    
    $
    (2,842
    )
    
    $
    13,232Mortgage-backed securities
    
    
    8,773
    
    
    
    5,526
    
    
    
    14,299
    
    
    
    (2,657
    )
    
    
    2,055
    
    
    
    (602
    )Other investment securities
    
    
    298
    
    
    
    (193
    )
    
    
    105
    
    
    
    (8,659
    )
    
    
    3,742
    
    
    
    (4,917
    )Money market and other investments
    
    
    1,507
    
    
    
    (903
    )
    
    
    604
    
    
    
    (812
    )
    
    
    388
    
    
    
    (424
    )Total interest-earning assets
    
    $
    31,613
    
    
    $
    (12,843
    )
    
    $
    18,770
    
    
    $
    3,946
    
    
    $
    3,343
    
    
    $
    7,289Interest-bearing liabilities:Savings deposits
    
    $
    (398
    )
    
    $
    (1,322
    )
    
    $
    (1,720
    )
    
    $
    (967
    )
    
    $
    (1,897
    )
    
    $
    (2,864
    )Checking accounts
    
    
    10
    
    
    
    (675
    )
    
    
    (665
    )
    
    
    40
    
    
    
    (502
    )
    
    
    (462
    )Money market deposits
    
    
    12,347
    
    
    
    (21,023
    )
    
    
    (8,676
    )
    
    
    7,774
    
    
    
    7,498
    
    
    
    15,272Certificates of deposit
    
    
    (6,570
    )
    
    
    (23,057
    )
    
    
    (29,627
    )
    
    
    2,786
    
    
    
    12,454
    
    
    
    15,240Borrowings
    
    
    20,999
    
    
    
    (6,344
    )
    
    
    14,655
    
    
    
    (5,204
    )
    
    
    7,263
    
    
    
    2,059Total interest-bearing liabilities
    
    $
    26,388
    
    
    $
    (52,421
    )
    
    $
    (26,033
    )
    
    $
    4,429
    
    
    $
    24,816
    
    
    $
    29,245Net interest income
    
    $
    5,225
    
    
    $
    39,578
    
    
    $
    44,803
    
    
    $
    (483
    )
    
    $
    (21,473
    )
    
    $
    (21,956
    )
 Provision for Credit Losses
   39




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##### Table of Contents



2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Balance at beginning of year
    
    $
    70,247
    
    
    $
    71,913
    
    
    $
    72,340
    
    
    $
    41,422
    
    
    $
    25,420Charge-offs:Commercial:Real estate
    
    
    5,611
    
    
    
    4,803
    
    
    
    1,422
    
    
    
    1,285
    
    
    
    669Business
    
    
    7,729
    
    
    
    1,607
    
    
    
    1,052
    
    
    
    2,402
    
    
    
    1,504Total commercial
    
    
    13,340
    
    
    
    6,410
    
    
    
    2,474
    
    
    
    3,687
    
    
    
    2,173Residential real estate
    
    
    143
    
    
    
    226
    
    
    
    295
    
    
    
    192
    
    
    
    49Home equity
    
    
    206
    
    
    
    100
    
    
    
    56
    
    
    
    34
    
    
    
    Other consumer
    
    
    2,192
    
    
    
    2,362
    
    
    
    4,565
    
    
    
    3,926
    
    
    
    4,272Specialized lending
    
    
    4,241
    
    
    
    2,803
    
    
    
    2,512
    
    
    
    2,785
    
    
    
    1,732Total charge-offs
    
    
    20,122
    
    
    
    11,901
    
    
    
    9,902
    
    
    
    10,624
    
    
    
    8,226Recoveries:Commercial:Real estate
    
    
    322
    
    
    
    74
    
    
    
    137
    
    
    
    864
    
    
    
    86Business
    
    
    263
    
    
    
    219
    
    
    
    911
    
    
    
    1,283
    
    
    
    231Total commercial
    
    
    585
    
    
    
    293
    
    
    
    1,048
    
    
    
    2,147
    
    
    
    317Residential real estate
    
    
    66
    
    
    
    7
    
    
    
    37
    
    
    
    61
    
    
    
    83Home equity
    
    
    19
    
    
    
    2
    
    
    
    24
    
    
    
    
    
    
    
    Other consumer
    
    
    899
    
    
    
    835
    
    
    
    1,038
    
    
    
    777
    
    
    
    638Specialized lending
    
    
    709
    
    
    
    680
    
    
    
    872
    
    
    
    525
    
    
    
    98Total recoveries
    
    
    2,278
    
    
    
    1,817
    
    
    
    3,019
    
    
    
    3,510
    
    
    
    1,136Net charge-offs
    
    
    17,844
    
    
    
    10,084
    
    
    
    6,883
    
    
    
    7,114
    
    
    
    7,090Provision for credit losses
    
    
    22,500
    
    
    
    8,500
    
    
    
    6,456
    
    
    
    7,348
    
    
    
    8,442Allowance obtained through acquisitions
    
    
    2,890
    
    
    
    
    
    
    
    
    
    
    
    30,684
    
    
    
    14,650Allowance transferred(1)
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    
    
    
    
    Balance at end of year
    
    $
    77,793
    
    
    $
    70,247
    
    
    $
    71,913
    
    
    $
    72,340
    
    
    $
    41,422Ratio of net charge-offs to average
loans outstanding
    
    
    0.28
    %
    
    
    0.18
    %
    
    
    0.12
    %
    
    
    0.14
    %
    
    
    0.23
    %Ratio of allowance for credit losses
to total loans
    
    
    1.20
    %
    
    
    1.23
    %
    
    
    1.27
    %
    
    
    1.37
    %
    
    
    1.27
    %Ratio of allowance for credit losses
to nonaccruing loans
    
    
    168
    %
    
    
    250
    %
    
    
    463
    %
    
    
    330
    %
    
    
    344
    %
 (1)
    
    Amount of allowance for credit losses associated with mortgage loans securitized
during the third quarter of 2007. Noninterest Income
   Noninterest Expenses
   40




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##### Table of Contents



Income Taxes
  RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007 AND DECEMBER 31, 2006
  Net Interest Income
    Provision for Credit Losses
  Noninterest Income
  Noninterest Expenses
  Income Taxes
   41




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
     42




---



##### Table of Contents



Contractual Obligations and Other Commitments
  Less than 1
    
    
    Over 1 to 3
    
    
    Over 3 to 5
    
    
    Over 5year
    
    
    years
    
    
    years
    
    
    years
    
    
    TotalCertificates of deposit
    
    $
    1,710,504
    
    
    $
    262,983
    
    
    $
    30,963
    
    
    $
    6,447
    
    
    $
    2,010,897Borrowings
    
    
    717,464
    
    
    
    547,889
    
    
    
    251,958
    
    
    
    22,916
    
    
    
    1,540,227Commitments to extend credit (1)
    
    
    1,202,937
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,202,937Standby letters of credit (1)
    
    
    98,120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98,120Operating leases
    
    
    5,658
    
    
    
    8,735
    
    
    
    7,933
    
    
    
    25,953
    
    
    
    48,279Purchase obligations
    
    
    3,946
    
    
    
    5,408
    
    
    
    2,400
    
    
    
    1,200
    
    
    
    12,954Partnership Investment commitments
    
    
    250
    
    
    
    60
    
    
    
    382
    
    
    
    1,973
    
    
    
    2,665Total contractual obligations
    
    $
    3,738,879
    
    
    $
    825,075
    
    
    $
    293,636
    
    
    $
    58,489
    
    
    $
    4,916,079
 (1)
    
    We do not expect all of our commitments to extend credit and standby letters of
credit to be funded. Thus, the total commitment amounts do not necessarily represent our
future cash requirements. Our commitments to extend credit include $979.0 million available
under lines of credit, which generally expire unfunded one year from the date of origination. Loan Commitments
      43




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##### Table of Contents



Security Yields, Maturities and Repricing Schedule
  More than one
    
    
    More than fiveOne year or less
    


    
    year to five years
    
    
    years to ten years
    
    
    After ten years
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedCarrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Averagevalue
    
    
    yield
    
    
    value
    
    
    yield
    
    
    value
    
    
    yield
    
    
    value
    
    
    yield
    
    
    value
    
    
    yieldDebt securities:States and political
subdivisions
    
    $
    186,943
    
    
    
    2.97
    %
    
    $
    105,826
    
    
    
    3.69
    %
    
    $
    6,978
    
    
    
    3.68
    %
    
    $
    
    
    
    
    
    %
    
    $
    299,747
    
    
    
    3.24
    %U.S. Government
agencies
    
    
    28,027
    
    
    
    2.92
    
    
    
    
    
    
    
    
    
    
    
    1,971
    
    
    
    5.07
    
    
    
    
    
    
    
    
    
    
    
    29,998
    
    
    
    3.07Corporate
    
    
    1,751
    
    
    
    4.57
    
    
    
    
    
    
    
    
    
    
    
    1,125
    
    
    
    3.24
    
    
    
    564
    
    
    
    5.28
    
    
    
    3,440
    
    
    
    4.25Total debt securities
    
    
    216,721
    
    
    
    2.98
    
    
    
    105,826
    
    
    
    3.69
    
    
    
    10,074
    
    
    
    3.91
    
    
    
    564
    
    
    
    5.28
    
    
    
    333,185
    
    
    
    3.24Mortgage-backed securities:CMOs
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    5.97
    
    
    
    157,829
    
    
    
    4.66
    
    
    
    725,076
    
    
    
    4.66
    
    
    
    882,907
    
    
    
    4.66FNMA
    
    
    154
    
    
    
    3.61
    
    
    
    18,458
    
    
    
    4.23
    
    
    
    30,474
    
    
    
    4.55
    
    
    
    100,176
    
    
    
    4.59
    
    
    
    149,262
    
    
    
    4.53FHLMC
    
    
    6
    
    
    
    6.49
    
    
    
    448
    
    
    
    7.20
    
    
    
    16,441
    
    
    
    4.57
    
    
    
    171,943
    
    
    
    5.31
    
    
    
    188,838
    
    
    
    5.25GNMA
    
    
    20
    
    
    
    6.42
    
    
    
    
    
    
    
    
    
    
    
    413
    
    
    
    8.27
    
    
    
    10,943
    
    
    
    5.44
    
    
    
    11,376
    
    
    
    5.54Total mortgage-backed
securities
    
    
    180
    
    
    
    4.02
    
    
    
    18,908
    
    
    
    4.30
    
    
    
    205,157
    
    
    
    4.64
    
    
    
    1,008,138
    
    
    
    4.78
    
    
    
    1,232,383
    
    
    
    4.75Asset-backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,377
    
    
    
    2.59
    
    
    
    3,377
    
    
    
    2.59Other(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,156
    
    
    
    3.82Total securities available
for sale
    
    $
    216,901
    
    
    
    2.98
    %
    
    $
    124,734
    
    
    
    3.78
    %
    
    $
    215,231
    
    
    
    4.61
    %
    
    $
    1,012,079
    
    
    
    4.77
    %
    
    $
    1,573,101
    
    
    
    4.42
    %
 (1)
    
    Other securities available for sale include investments with no stated maturity date. Loan Maturity and Repricing Schedule
  OneWithin
    
    
    through
    
    
    Afterone
    
    
    five
    
    
    fiveyear
    
    
    years
    
    
    years
    
    
    TotalCommercial:Real estate
    
    $
    742,233
    
    
    
    1,276,864
    
    
    
    192,305
    
    
    
    2,211,402Construction
    
    
    321,450
    
    
    
    18,816
    
    
    
    298
    
    
    
    340,564Business
    
    
    772,423
    
    
    
    150,876
    
    
    
    17,005
    
    
    
    940,304Total commercial
    
    
    1,836,106
    
    
    
    1,446,556
    
    
    
    209,608
    
    
    
    3,492,270Residential real estate
    
    
    326,787
    
    
    
    585,060
    
    
    
    1,078,937
    
    
    
    1,990,784Home equity
    
    
    317,111
    
    
    
    106,379
    
    
    
    201,005
    
    
    
    624,495Other consumer
    
    
    43,271
    
    
    
    59,803
    
    
    
    40,915
    
    
    
    143,989Specialized lending
    
    
    123,379
    
    
    
    55,288
    
    
    
    249
    
    
    
    178,916Total loans and leases
    
    $
    2,646,654
    
    
    
    2,253,086
    
    
    
    1,530,714
    
    
    
    6,430,454
  44




---



##### Table of Contents



Fixed
    
    
    Adjustable
    
    
    TotalCommercial:Real estate
    
    $
    720,663
    
    
    $
    748,506
    
    
    $
    1,469,169Construction
    
    
    11,173
    
    
    
    7,941
    
    
    
    19,114Business
    
    
    163,815
    
    
    
    4,066
    
    
    
    167,881Total commercial
    
    
    895,651
    
    
    
    760,513
    
    
    
    1,656,164Residential real estate
    
    
    1,511,263
    
    
    
    152,734
    
    
    
    1,663,997Home equity
    
    
    307,384
    
    
    
    
    
    
    
    307,384Other consumer
    
    
    100,718
    
    
    
    
    
    
    
    100,718Specialized lending
    
    
    55,537
    
    
    
    
    
    
    
    55,537Total loans and leases
    
    $
    2,870,553
    
    
    $
    913,247
    
    
    $
    3,783,800
 Cash and Cash Equivalents
   FOURTH QUARTER RESULTS
      45




---



##### Table of Contents



IMPACT OF NEW ACCOUNTING STANDARDS
       46




---



##### Table of Contents



ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
     Gap Analysis
   47




---



##### Table of Contents



Less than
    
    
    3-6
    
    
    6 months
    
    
    1-3
    
    
    3-5
    
    
    5-10
    
    
    Over 103 months
    
    
    months
    
    
    To 1 year
    
    
    years
    
    
    years
    
    
    years
    
    
    years
    
    
    TotalInterest-earning assets:Federal funds sold and securities
purchased under resale agreements
    
    
    14,714
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,714Loans (1)
    
    
    1,770,610
    
    
    
    306,609
    
    
    
    540,814
    
    
    
    1,264,946
    
    
    
    989,751
    
    
    
    808,028
    
    
    
    703,279
    
    
    
    6,384,037Mortgage-backed and asset-backed
securities (2)
    
    
    145,946
    
    
    
    99,132
    
    
    
    174,958
    
    
    
    476,133
    
    
    
    196,014
    
    
    
    142,146
    
    
    
    23,888
    
    
    
    1,258,217Other investment securities (2)
    
    
    44,203
    
    
    
    86,764
    
    
    
    80,902
    
    
    
    77,339
    
    
    
    31,639
    
    
    
    9,744
    
    
    
    5,351
    
    
    
    335,942Other interest-earning assets(3)
    
    
    4,053
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,301
    
    
    
    66,354Total interest-earning assets
    
    
    1,979,526
    
    
    
    492,505
    
    
    
    796,674
    
    
    
    1,818,418
    
    
    
    1,217,404
    
    
    
    959,918
    
    
    
    794,819
    
    
    
    8,059,264Interest-bearing liabilities:Savings deposits
    
    
    58,637
    
    
    
    54,278
    
    
    
    96,751
    
    
    
    266,949
    
    
    
    143,893
    
    
    
    132,366
    
    
    
    35,893
    
    
    
    788,767Checking accounts
    
    
    9,862
    
    
    
    9,862
    
    
    
    19,725
    
    
    
    78,899
    
    
    
    56,442
    
    
    
    141,104
    
    
    
    169,326
    
    
    
    485,220Money market deposit accounts
    
    
    185,765
    
    
    
    185,765
    
    
    
    371,531
    
    
    
    1,023,521
    
    
    
    160,203
    
    
    
    13,351
    
    
    
    
    
    
    
    1,940,136Certificate accounts
    
    
    355,555
    
    
    
    694,873
    
    
    
    660,075
    
    
    
    262,984
    
    
    
    30,963
    
    
    
    5,970
    
    
    
    477
    
    
    
    2,010,897Borrowings
    
    
    534,345
    
    
    
    47,988
    
    
    
    149,810
    
    
    
    556,021
    
    
    
    230,892
    
    
    
    21,171
    
    
    
    
    
    
    
    1,540,227Total interest-bearing liabilities
    
    
    1,144,164
    
    
    
    992,766
    
    
    
    1,297,892
    
    
    
    2,188,374
    
    
    
    622,393
    
    
    
    313,962
    
    
    
    205,696
    
    
    
    6,765,247Interest rate sensitivity gap
    
    
    835,362
    
    
    
    (500,261
    )
    
    
    (501,218
    )
    
    
    (369,956
    )
    
    
    595,011
    
    
    
    645,956
    
    
    
    589,123
    
    
    
    1,294,017Cumulative interest rate sensitivity gap
    
    
    835,362
    
    
    
    335,101
    
    
    
    (166,117
    )
    
    
    (536,073
    )
    
    
    58,938
    
    
    
    704,894
    
    
    
    1,294,017Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    173.01
    %
    
    
    49.61
    %
    
    
    61.38
    %
    
    
    83.09
    %
    
    
    195.60
    %
    
    
    305.74
    %
    
    
    386.40
    %
    
    
    119.13
    %Ratio of cumulative gap to total
interest-earning assets
    
    
    10.37
    %
    
    
    4.16
    %
    
    
    (2.06
    %)
    
    
    (6.65
    %)
    
    
    0.73
    %
    
    
    8.75
    %
    
    
    16.06
    %
 (1)
    
    Amounts shown are principal balances net of nonaccruing loans.(2)
    
    Amounts shown are at amortized cost.(3)
    
    Amounts shown include FHLB stock. Net Interest Income Analysis
    48




---



##### Table of Contents



Calculated increase (decrease) at December 31,2008
    
    
    2007Changes in
    
    Net interest
    
    
    
    
    
    
    Net interestinterest rates
    
    income
    
    
    % Change
    
    
    income
    
    
    % Change+200 basis points
    
    $
    (417
    )
    
    
    (0.2
    )%
    
    $
    (5,376
    )
    
    
    (2.4
    )%+100 basis points
    
    
    (112
    )
    
    
    (0.1
    )
    
    
    (2,119
    )
    
    
    (0.9
    )-100 basis points
    
    
    
    (1)
    
    
    
    (1)
    
    
    4,307
    
    
    
    1.9-200 basis points
    
    
    
    (1)
    
    
    
    (1)
    
    
    6,626
    
    
    
    3.0
 (1)
    
    The Federal Reserve benchmark overnight federal funds rate was 0.25% at
December 31, 2008, therefore, the calculation of the effect of the decrease in interest rates
is not measurable.   49




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Managements Report on Internal Control Over Financial Reporting
   /s/ John R. Koelmel
    
    /s/ Michael W. HarringtonJohn R. Koelmel
    
    Michael W. HarringtonPresident and Chief Executive Officer
    
    Chief Financial Officer
  50




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control
- Integrated Framework .
    Internal Control -
Integrated Framework
   
  51




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Fair Value Measurements
 Internal Control  Integrated Framework
  
  52




---



##### Table of Contents



FIRST NIAGARA FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Condition
 December 31,2008
    
    
    2007ASSETSCash and cash equivalents
    
    $
    110,552
    
    
    
    114,991Restricted cash
    
    
    3,999
    
    
    
    Securities available for sale
    
    
    1,573,101
    
    
    
    1,217,164Loans held for sale
    
    
    1,698
    
    
    
    3,278Loans and leases (net of allowance for credit losses of $77,793
and $70,247 in 2008 and 2007)
    
    
    6,384,284
    
    
    
    5,651,427Bank-owned life insurance
    
    
    127,151
    
    
    
    108,875Premises and equipment, net
    
    
    95,978
    
    
    
    88,687Goodwill
    
    
    748,971
    
    
    
    706,924Core deposit and other intangibles, net
    
    
    35,578
    
    
    
    43,147Other assets
    
    
    250,060
    
    
    
    161,735Total assets
    
    $
    9,331,372
    
    
    
    8,096,228LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits
    
    $
    5,943,613
    
    
    
    5,548,984Short-term borrowings
    
    
    717,464
    
    
    
    500,258Long-term borrowings
    
    
    822,763
    
    
    
    594,723Other
    
    
    120,269
    
    
    
    99,084Total liabilities
    
    
    7,604,109
    
    
    
    6,743,049Commitments and contingent liabilities (Note 13)Stockholders equity:Preferred stock, $0.01 par value, 50,000,000 shares authorized;
Series A, cumulative perpetual preferred stock, $1,000 liquidation value,
184,011 shares issued and outstanding in 2008 (Note 14)
    
    
    176,719
    
    
    
    Common stock, $0.01 par value, 250,000,000 shares authorized;
125,419,261 and 120,044,736 shares issued in 2008 and 2007
    
    
    1,254
    
    
    
    1,200Additional paid-in capital
    
    
    1,326,159
    
    
    
    1,244,766Retained earnings
    
    
    369,671
    
    
    
    344,656Accumulated other comprehensive loss
    
    
    (29,429
    )
    
    
    (2,604
    )Common stock held by ESOP, 3,094,365 and 3,323,662 shares
in 2008 and 2007
    
    
    (23,843
    )
    
    
    (25,350
    )Treasury stock, at cost, 6,857,554 and 15,274,479 shares
in 2008 and 2007
    
    
    (93,268
    )
    
    
    (209,489
    )Total stockholders equity
    
    
    1,727,263
    
    
    
    1,353,179Total liabilities and stockholders equity
    
    $
    9,331,372
    
    
    
    8,096,228
   53




---



##### Table of Contents



FIRST NIAGARA FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Income
 Years ended December 31,2008
    
    
    2007
    
    
    2006Interest income:Loans and leases
    
    $
    377,037
    
    
    
    376,123
    
    
    
    360,011Securities available for sale and other investments
    
    
    64,101
    
    
    
    46,649
    
    
    
    55,819Total interest income
    
    
    441,138
    
    
    
    422,772
    
    
    
    415,830Interest expense:Deposits
    
    
    118,683
    
    
    
    159,371
    
    
    
    132,185Borrowings
    
    
    53,878
    
    
    
    39,223
    
    
    
    37,164Total interest expense
    
    
    172,561
    
    
    
    198,594
    
    
    
    169,349Net interest income
    
    
    268,577
    
    
    
    224,178
    
    
    
    246,481Provision for credit losses
    
    
    22,500
    
    
    
    8,500
    
    
    
    6,456Net interest income after provision for credit losses
    
    
    246,077
    
    
    
    215,678
    
    
    
    240,025Noninterest income:Banking services
    
    
    40,082
    
    
    
    39,289
    
    
    
    38,661Insurance and benefits consulting
    
    
    49,733
    
    
    
    51,646
    
    
    
    48,610Wealth management services
    
    
    9,922
    
    
    
    9,494
    
    
    
    7,859Lending and leasing
    
    
    8,783
    
    
    
    8,880
    
    
    
    7,238Gain on sale of branches
    
    
    
    
    
    
    21,564
    
    
    
    (Loss) gain on sale of securities
    
    
    
    
    
    
    (5,395
    )
    
    
    254Gain on sale of manufactured housing loans
    
    
    
    
    
    
    
    
    
    
    2,954Bank owned life insurance
    
    
    5,449
    
    
    
    4,848
    
    
    
    3,162Other
    
    
    1,766
    
    
    
    1,485
    
    
    
    2,480Total noninterest income
    
    
    115,735
    
    
    
    131,811
    
    
    
    111,218Noninterest expense:Salaries and employee benefits
    
    
    134,195
    
    
    
    125,697
    
    
    
    123,795Occupancy and equipment
    
    
    24,915
    
    
    
    28,550
    
    
    
    22,147Technology and communications
    
    
    20,098
    
    
    
    19,456
    
    
    
    20,303Professional services
    
    
    4,736
    
    
    
    4,392
    
    
    
    3,921Marketing and advertising
    
    
    10,679
    
    
    
    8,362
    
    
    
    7,154Amortization of core deposit and other intangibles
    
    
    8,824
    
    
    
    10,433
    
    
    
    11,802Other
    
    
    24,963
    
    
    
    25,576
    
    
    
    22,729Total noninterest expense
    
    
    228,410
    
    
    
    222,466
    
    
    
    211,851Income before income taxes
    
    
    133,402
    
    
    
    125,023
    
    
    
    139,392Income taxes
    
    
    44,964
    
    
    
    40,938
    
    
    
    47,533Net income
    
    
    88,438
    
    
    
    84,085
    
    
    
    91,859Preferred stock dividend
    
    
    1,022
    
    
    
    
    
    
    
    Accretion of preferred stock discount
    
    
    162
    
    
    
    
    
    
    
    Net income available to common stockholders
    
    $
    87,254
    
    
    
    84,085
    
    
    
    91,859Earnings per common share:Basic
    
    $
    0.81
    
    
    
    0.82
    
    
    
    0.86Diluted
    
    
    0.81
    
    
    
    0.81
    
    
    
    0.85Weighted average common shares outstanding:Basic
    
    
    107,531
    
    
    
    102,838
    
    
    
    107,068Diluted
    
    
    108,174
    
    
    
    103,472
    
    
    
    108,027Dividends per common share
    
    $
    0.56
    
    
    
    0.54
    
    
    
    0.46
   54




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##### Table of Contents



FIRST NIAGARA FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
 Years ended December 31,2008
    
    
    2007
    
    
    2006Net income
    
    $
    88,438
    
    
    
    84,085
    
    
    
    91,859Other
comprehensive (loss) income, net of income taxes:Securities available for sale:Net unrealized holding (losses) gains arising during the period
    
    
    (12,692
    )
    
    
    10,884
    
    
    
    4,086Reclassification adjustment for realized losses (gains)
included in net income
    
    
    
    
    
    
    3,242
    
    
    
    (152
    )(12,692
    )
    
    
    14,126
    
    
    
    3,934Net unrealized losses on interest rate swaps, net of income taxes
    
    
    (1,360
    )
    
    
    
    
    
    
    Pension and post-retirement actuarial (loss) gain, net of income taxes
    
    
    (12,773
    )
    
    
    3,147
    
    
    
    (38
    )Total other comprehensive (loss) income
    
    
    (26,825
    )
    
    
    17,273
    
    
    
    3,896Total comprehensive income
    
    $
    61,613
    
    
    
    101,358
    
    
    
    95,755
   55




---



##### Table of Contents



FIRST NIAGARA FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders Equity
 Accumulated
    
    
    Common
    
    
    UnearnedAdditional
    
    
    
    
    
    
    other
    
    
    stock
    
    
    compensation-Preferred
    
    
    Common
    
    
    paid-in
    
    
    Retained
    
    
    comprehensive
    
    
    held by
    
    
    restricted
    
    
    Treasurystock
    
    
    stock
    
    
    capital
    
    
    earnings
    
    
    loss
    
    
    ESOP
    
    
    stock awards
    
    
    stock
    
    
    TotalBalances at January 1, 2006
    
    $
    
    
    
    
    1,200
    
    
    
    1,237,592
    
    
    
    285,202
    
    
    
    (18,330
    )
    
    
    (28,150
    )
    
    
    (3,908
    )
    
    
    (99,183
    )
    
    
    1,374,423Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,859
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,859Total other comprehensive income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,896
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,896Adjustment to initially apply SFAS No. 158,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,443
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,443
    )Tax benefit of stock issuance costs
    
    
    
    
    
    
    
    
    
    
    523
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    523Adoption of SFAS No. 123(R)
    
    
    
    
    
    
    
    
    
    
    (3,908
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,908
    
    
    
    
    
    
    
    Purchase of treasury stock (2,878,600 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,073
    )
    
    
    (40,073
    )ESOP shares released (195,705 shares)
    
    
    
    
    
    
    
    
    
    
    1,111
    
    
    
    
    
    
    
    
    
    
    
    1,334
    
    
    
    
    
    
    
    
    
    
    
    2,445Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    3,766
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,766Net tax benefits related to stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    1,701
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,701Exercise of stock options and restricted
stock activity (833,246 shares)
    
    
    
    
    
    
    
    
    
    
    (2,969
    )
    
    
    (4,882
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,385
    
    
    
    3,534Common stock dividends of $0.46 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,434
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,434
    )Balances at December 31, 2006
    
    $
    
    
    
    
    1,200
    
    
    
    1,237,816
    
    
    
    322,745
    
    
    
    (19,877
    )
    
    
    (26,816
    )
    
    
    
    
    
    
    (127,871
    )
    
    
    1,387,197Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,085
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,085Total other comprehensive income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,273
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,273Purchase of treasury stock (6,964,565 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95,690
    )
    
    
    (95,690
    )ESOP shares released (221,291 shares)
    
    
    
    
    
    
    
    
    
    
    1,544
    
    
    
    
    
    
    
    
    
    
    
    1,466
    
    
    
    
    
    
    
    
    
    
    
    3,010Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    6,288
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,288Net tax benefits related to stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    2,241
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,241Exercise of stock options and restricted
stock activity (1,016,144 shares)
    
    
    
    
    
    
    
    
    
    
    (3,123
    )
    
    
    (6,275
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,072
    
    
    
    4,674Common stock dividends of $0.54 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,899
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,899
    )Balances at December 31, 2007
    
    $
    
    
    
    
    1,200
    
    
    
    1,244,766
    
    
    
    344,656
    
    
    
    (2,604
    )
    
    
    (25,350
    )
    
    
    
    
    
    
    (209,489
    )
    
    
    1,353,179Adoption of SFAS No. 158 measurement
provision, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117
    )Balances at January 1, 2008
    
    
    
    
    
    
    1,200
    
    
    
    1,244,766
    
    
    
    344,539
    
    
    
    (2,604
    )
    
    
    (25,350
    )
    
    
    
    
    
    
    (209,489
    )
    
    
    1,353,062Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,438
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,438Total other comprehensive loss, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,825
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,825
    )Purchase of treasury stock (625,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,795
    )
    
    
    (6,795
    )Common stock issued for the acquisition of
Great Lakes Bancorp, Inc. (5,374,525 shares)
    
    
    
    
    
    
    54
    
    
    
    73,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,782Proceeds from follow-on stock offering, net of
related expenses (8,515,419 shares)
    
    
    
    
    
    
    
    
    
    
    (6,979
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,817
    
    
    
    108,838Preferred stock issued, net of related
expenses (184,011 shares)
    
    
    175,697
    
    
    
    
    
    
    
    (82
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,615Accretion of preferred stock discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (162
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (162
    )Warrant issued (1,906,191 shares)
    
    
    
    
    
    
    
    
    
    
    8,476
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,476ESOP shares released (229,297 shares)
    
    
    
    
    
    
    
    
    
    
    1,683
    
    
    
    
    
    
    
    
    
    
    
    1,507
    
    
    
    
    
    
    
    
    
    
    
    3,190Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    5,633
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,633Net tax benefits related to stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    714
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    714Exercise of stock options and restricted
stock activity (526,506 shares)
    
    
    
    
    
    
    
    
    
    
    (1,780
    )
    
    
    (2,051
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,199
    
    
    
    3,368Cumulative dividends on preferred stock
    
    
    1,022
    
    
    
    
    
    
    
    
    
    
    
    (1,022
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock dividends of $0.56 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60,071
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60,071
    )Balances at December 31, 2008
    
    $
    176,719
    
    
    
    1,254
    
    
    
    1,326,159
    
    
    
    369,671
    
    
    
    (29,429
    )
    
    
    (23,843
    )
    
    
    
    
    
    
    (93,268
    )
    
    
    1,727,263
   56




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##### Table of Contents



FIRST NIAGARA FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
 Years ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    88,438
    
    
    
    84,085
    
    
    
    91,859Adjustments to reconcile net income to net cash
provided by operating activities:Amortization of fees and discounts, net
    
    
    6,566
    
    
    
    5,695
    
    
    
    2,176Provision for credit losses
    
    
    22,500
    
    
    
    8,500
    
    
    
    6,456Depreciation of premises and equipment
    
    
    10,637
    
    
    
    11,763
    
    
    
    12,299Asset writedowns
    
    
    1,590
    
    
    
    4,805
    
    
    
    Amortization of core deposit and other intangibles
    
    
    8,824
    
    
    
    10,433
    
    
    
    11,802Origination of loans held for sale
    
    
    (100,072
    )
    
    
    (91,399
    )
    
    
    (66,366
    )Proceeds from sales of loans held for sale
    
    
    101,821
    
    
    
    91,606
    
    
    
    66,804Gain on sales of loans
    
    
    (169
    )
    
    
    (390
    )
    
    
    (2,665
    )Loss (gain) on sale of securities available for sale
    
    
    
    
    
    
    5,395
    
    
    
    (254
    )Gain on sale of branches
    
    
    
    
    
    
    (21,564
    )
    
    
    ESOP and stock based compensation expense
    
    
    8,823
    
    
    
    9,281
    
    
    
    6,108Deferred income tax expense (benefit)
    
    
    2,911
    
    
    
    (3,895
    )
    
    
    8,431Income from bank owned life insurance
    
    
    (5,489
    )
    
    
    (4,311
    )
    
    
    (3,162
    )Net decrease (increase) in other assets
    
    
    6,972
    
    
    
    (844
    )
    
    
    (2,551
    )Net decrease in other liabilities
    
    
    (15,532
    )
    
    
    (6,493
    )
    
    
    (12,308
    )Net cash provided by operating activities
    
    
    137,820
    
    
    
    102,667
    
    
    
    118,629Cash flows from investing activities:Proceeds from sales of securities available for sale
    
    
    
    
    
    
    194,481
    
    
    
    30,720Proceeds from maturities of securities available for sale
    
    
    431,035
    
    
    
    274,272
    
    
    
    395,018Principal payments received on securities available for sale
    
    
    197,284
    
    
    
    153,457
    
    
    
    198,853Purchases of securities available for sale
    
    
    (797,290
    )
    
    
    (594,923
    )
    
    
    (75,379
    )Loan originations in excess of principal payments
    
    
    (214,148
    )
    
    
    (271,011
    )
    
    
    (406,282
    )Purchase of bank-owned life insurance
    
    
    
    
    
    
    
    
    
    
    (25,000
    )Proceeds from sale of manufactured housing loans
    
    
    
    
    
    
    
    
    
    
    27,667Acquisitions, net of cash and cash equivalents
    
    
    (83,744
    )
    
    
    (10,806
    )
    
    
    Net cash distributed for branch sales
    
    
    
    
    
    
    (93,143
    )
    
    
    Other, net
    
    
    (13,308
    )
    
    
    (26,988
    )
    
    
    (20,154
    )Net cash (used in) provided by investing activities
    
    
    (480,171
    )
    
    
    (374,661
    )
    
    
    125,443Cash flows from financing activities:Net (decrease) increase in deposits
    
    
    (198,871
    )
    
    
    (6,211
    )
    
    
    230,324Repayments of short-term borrowings, net
    
    
    (18,180
    )
    
    
    (28,893
    )
    
    
    (352,771
    )Proceeds from long-term borrowings
    
    
    363,500
    
    
    
    406,100
    
    
    
    84,125Repayments of long-term borrowings
    
    
    (34,868
    )
    
    
    (27,225
    )
    
    
    (74,286
    )Proceeds from exercise of stock options
    
    
    3,715
    
    
    
    4,910
    
    
    
    3,866Excess tax benefit from stock based compensation
    
    
    714
    
    
    
    2,241
    
    
    
    1,701Issuance of preferred stock, net
    
    
    175,453
    
    
    
    
    
    
    
    Issuance of common stock in follow-on stock offering, net
    
    
    108,838
    
    
    
    
    
    
    
    Issuance of common stock warrant
    
    
    8,476
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    (6,795
    )
    
    
    (95,690
    )
    
    
    (40,073
    )Dividends paid on common stock
    
    
    (60,071
    )
    
    
    (55,899
    )
    
    
    (49,434
    )Net cash provided by (used in) financing activities
    
    
    341,911
    
    
    
    199,333
    
    
    
    (196,548
    )Net (decrease) increase in cash and cash equivalents
    
    
    (440
    )
    
    
    (72,661
    )
    
    
    47,524Cash and cash equivalents at beginning of year
    
    
    114,991
    
    
    
    187,652
    
    
    
    140,128Cash and cash equivalents at end of year
    
    $
    114,551
    
    
    
    114,991
    
    
    
    187,652Cash paid during the year for:Income taxes
    
    $
    45,965
    
    
    
    37,204
    
    
    
    40,399Interest expense
    
    
    172,856
    
    
    
    196,493
    
    
    
    170,644Noncash activity:Loans transferred to other real estate owned
    
    $
    4,232
    
    
    
    430
    
    
    
    3,480Loans transferred to held for sale
    
    
    
    
    
    
    
    
    
    
    26,395Loans securitized
    
    
    
    
    
    
    164,284
    
    
    
    Change in funded status of benefit plans
    
    
    (21,337
    )
    
    
    6,811
    
    
    
    6,518Acquisitions and dispositions of noncash assets and liabilities:Assets acquired, net of dispositions
    
    $
    908,466
    
    
    
    11,370
    
    
    
    Liabilities assumed, net of dispositions
    
    
    750,943
    
    
    
    563
    
    
    
    Assets sold in branch sales
    
    
    
    
    
    
    38,638
    
    
    
    Liabilities sold in branch sales
    
    
    
    
    
    
    154,541
    
    
    
    
   57




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##### Table of Contents



FIRST NIAGARA FINANCIAL GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007, and 2006
 Note 1. Summary of Significant Accounting Policies
    Principles of Consolidation
  Cash and Cash Equivalents
  Restricted Cash
  Investment Securities
   Loans and Leases
    58




---



##### Table of Contents



Allowance for Credit Losses
  Premises and Equipment
  Goodwill and Intangible Assets
    59




---



##### Table of Contents



Interest Rate Swaps
  Employee Benefits
    Stock-Based Compensation
  Income Taxes
  Earnings per Share
   60




---



##### Table of Contents



Investment and Fiduciary Services
  Use of Estimates
  New Accounting Standards
        61




---



##### Table of Contents



Note 2. Acquisition
 Greater Buffalo Savings Bank
   Securities available for sale
    
    $
    211,752Loans, net
    
    
    546,927Deferred taxes
    
    
    67,057Goodwill
    
    
    41,769Core deposits and other intangibles
    
    
    879Other assets
    
    
    33,256Total assets acquired
    
    
    901,640Deposits
    
    
    593,252Borrowings
    
    
    137,718Other liabilities
    
    
    19,973Total liabilities assumed
    
    
    750,943Net assets acquired
    
    $
    150,697
        62




---



##### Table of Contents



Note 3. Fair Value Measurements
   Level 1 Inputs
 Level 2 Inputs
 Level 3 Inputs
   Assets and Liabilities Measured at Fair Value on a Recurring Basis
 Securities Available for Sale
    63




---



##### Table of Contents



Interest Rate Swaps
   Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
 Impaired Loans
   64




---



##### Table of Contents



Note 4. Investment Securities
  Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairAt December 31, 2008:
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueDebt securities:States and political subdivisions
    
    $
    295,639
    
    
    
    4,160
    
    
    
    (52
    )
    
    
    299,747U.S. Government agencies
    
    
    29,968
    
    
    
    50
    
    
    
    (20
    )
    
    
    29,998Corporate
    
    
    5,028
    
    
    
    1
    
    
    
    (1,589
    )
    
    
    3,440Total debt securities
    
    
    330,635
    
    
    
    4,211
    
    
    
    (1,661
    )
    
    
    333,185Mortgage-backed securities:Federal National Mortgage Association
    
    
    146,646
    
    
    
    2,916
    
    
    
    (300
    )
    
    
    149,262Federal Home Loan Mortgage Corporation
    
    
    182,929
    
    
    
    5,921
    
    
    
    (12
    )
    
    
    188,838Government National Mortgage Association
    
    
    11,711
    
    
    
    64
    
    
    
    (399
    )
    
    
    11,376Collateralized mortgage obligations:Federal Home Loan Mortgage Corporation
    
    
    446,086
    
    
    
    4,074
    
    
    
    (69
    )
    
    
    450,091Federal National Mortgage Association
    
    
    179,657
    
    
    
    1,398
    
    
    
    (1,194
    )
    
    
    179,861Government National Mortgage Association
    
    
    24,257
    
    
    
    87
    
    
    
    (404
    )
    
    
    23,940Non-Agency issued
    
    
    263,432
    
    
    
    106
    
    
    
    (34,523
    )
    
    
    229,015Total collateralized mortgage obligations
    
    
    913,432
    
    
    
    5,665
    
    
    
    (36,190
    )
    
    
    882,907Total mortgage-backed securities
    
    
    1,254,718
    
    
    
    14,566
    
    
    
    (36,901
    )
    
    
    1,232,383Asset-backed securities
    
    
    3,499
    
    
    
    
    
    
    
    (122
    )
    
    
    3,377Other
    
    
    5,307
    
    
    
    8
    
    
    
    (1,159
    )
    
    
    4,156Total securities available for sale
    
    $
    1,594,159
    
    
    
    18,785
    
    
    
    (39,843
    )
    
    
    1,573,101
 Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairAt December 31, 2007:
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueDebt securities:States and political subdivisions
    
    $
    359,153
    
    
    
    2,339
    
    
    
    (132
    )
    
    
    361,360U.S. Government agencies
    
    
    28,817
    
    
    
    59
    
    
    
    (37
    )
    
    
    28,839Corporate
    
    
    3,788
    
    
    
    2
    
    
    
    (7
    )
    
    
    3,783Total debt securities
    
    
    391,758
    
    
    
    2,400
    
    
    
    (176
    )
    
    
    393,982Mortgage-backed securities:Federal National Mortgage Association
    
    
    106,297
    
    
    
    256
    
    
    
    (390
    )
    
    
    106,163Federal Home Loan Mortgage Corporation
    
    
    230,427
    
    
    
    1,012
    
    
    
    (987
    )
    
    
    230,452Government National Mortgage Association
    
    
    3,408
    
    
    
    93
    
    
    
    (10
    )
    
    
    3,491Collateralized mortgage obligations:Federal Home Loan Mortgage Corporation
    
    
    255,334
    
    
    
    601
    
    
    
    (1,246
    )
    
    
    254,689Federal National Mortgage Association
    
    
    54,441
    
    
    
    249
    
    
    
    (298
    )
    
    
    54,392Non-Agency issued
    
    
    169,872
    
    
    
    415
    
    
    
    (1,860
    )
    
    
    168,427Total collateralized mortgage obligations
    
    
    479,647
    
    
    
    1,265
    
    
    
    (3,404
    )
    
    
    477,508Total mortgage-backed securities
    
    
    819,779
    
    
    
    2,626
    
    
    
    (4,791
    )
    
    
    817,614Asset-backed securities
    
    
    360
    
    
    
    
    
    
    
    (1
    )
    
    
    359Other
    
    
    5,307
    
    
    
    8
    
    
    
    (106
    )
    
    
    5,209Total securities available for sale
    
    $
    1,217,204
    
    
    
    5,034
    
    
    
    (5,074
    )
    
    
    1,217,164
  65




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##### Table of Contents



Less than 12 months
    
    
    12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedAt December 31, 2008:
    
    value
    
    
    losses
    
    
    value
    
    
    losses
    
    
    value
    
    
    lossesDebt securities:States and political subdivisions
    
    $
    6,116
    
    
    
    48
    
    
    
    379
    
    
    
    4
    
    
    
    6,495
    
    
    
    52U.S. Government agencies
    
    
    1,971
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    1,971
    
    
    
    20Corporate
    
    
    1,689
    
    
    
    1,589
    
    
    
    
    
    
    
    
    
    
    
    1,689
    
    
    
    1,589Total debt securities
    
    
    9,776
    
    
    
    1,657
    
    
    
    379
    
    
    
    4
    
    
    
    10,155
    
    
    
    1,661Mortgage-backed securities:Federal National Mortgage Association
    
    
    31,438
    
    
    
    258
    
    
    
    2,282
    
    
    
    42
    
    
    
    33,720
    
    
    
    300Federal Home Loan Mortgage Corporation
    
    
    111
    
    
    
    1
    
    
    
    976
    
    
    
    11
    
    
    
    1,087
    
    
    
    12Government National Mortgage Association
    
    
    9,550
    
    
    
    395
    
    
    
    121
    
    
    
    4
    
    
    
    9,671
    
    
    
    399Collateralized mortgage obligations:Federal Home Loan Mortgage Corporation
    
    
    23,318
    
    
    
    29
    
    
    
    3,863
    
    
    
    40
    
    
    
    27,181
    
    
    
    69Federal National Mortgage Association
    
    
    44,695
    
    
    
    1,192
    
    
    
    702
    
    
    
    2
    
    
    
    45,397
    
    
    
    1,194Government
National Mortgage Association
    
    
    13,193
    
    
    
    404
    
    
    
    
    
    
    
    
    
    
    
    13,193
    
    
    
    404Non-Agency issued
    
    
    201,193
    
    
    
    33,433
    
    
    
    24,954
    
    
    
    1,090
    
    
    
    226,147
    
    
    
    34,523Total collateralized mortgage
obligations
    
    
    282,399
    
    
    
    35,058
    
    
    
    29,519
    
    
    
    1,132
    
    
    
    311,918
    
    
    
    36,190Total mortgage-backed securities
    
    
    323,498
    
    
    
    35,712
    
    
    
    32,898
    
    
    
    1,189
    
    
    
    356,396
    
    
    
    36,901Asset-backed securities
    
    
    3,149
    
    
    
    79
    
    
    
    228
    
    
    
    43
    
    
    
    3,377
    
    
    
    122Other
    
    
    351
    
    
    
    3
    
    
    
    3,297
    
    
    
    1,156
    
    
    
    3,648
    
    
    
    1,159Total securities available
for sale in an unrealized loss position
    
    $
    336,774
    
    
    
    37,451
    
    
    
    36,802
    
    
    
    2,392
    
    
    
    373,576
    
    
    
    39,843
 Less than 12 months
    
    
    12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedAt December 31, 2007:
    
    value
    
    
    losses
    
    
    value
    
    
    losses
    
    
    value
    
    
    lossesDebt securities:States and political subdivisions
    
    $
    3,275
    
    
    
    16
    
    
    
    48,603
    
    
    
    116
    
    
    
    51,878
    
    
    
    132U.S. Government agencies
    
    
    
    
    
    
    
    
    
    
    18,742
    
    
    
    37
    
    
    
    18,742
    
    
    
    37Corporate
    
    
    250
    
    
    
    
    
    
    
    2,046
    
    
    
    7
    
    
    
    2,296
    
    
    
    7Total debt securities
    
    
    3,525
    
    
    
    16
    
    
    
    69,391
    
    
    
    160
    
    
    
    72,916
    
    
    
    176Mortgage-backed securities:Federal National Mortgage Association
    
    
    7,612
    
    
    
    9
    
    
    
    42,956
    
    
    
    381
    
    
    
    50,568
    
    
    
    390Federal Home Loan Mortgage Corporation
    
    
    92,759
    
    
    
    450
    
    
    
    36,816
    
    
    
    537
    
    
    
    129,575
    
    
    
    987Government National Mortgage Association
    
    
    54
    
    
    
    
    
    
    
    1,113
    
    
    
    10
    
    
    
    1,167
    
    
    
    10Collateralized mortgage obligations:Federal Home Loan Mortgage Corporation
    
    
    24,256
    
    
    
    74
    
    
    
    150,792
    
    
    
    1,172
    
    
    
    175,048
    
    
    
    1,246Federal National Mortgage Association
    
    
    1
    
    
    
    
    
    
    
    35,385
    
    
    
    298
    
    
    
    35,386
    
    
    
    298Non-Agency issued
    
    
    23,045
    
    
    
    168
    
    
    
    85,892
    
    
    
    1,692
    
    
    
    108,937
    
    
    
    1,860Total collateralized mortgage
obligations
    
    
    47,302
    
    
    
    242
    
    
    
    272,069
    
    
    
    3,162
    
    
    
    319,371
    
    
    
    3,404Total mortgage-backed securities
    
    
    147,727
    
    
    
    701
    
    
    
    352,954
    
    
    
    4,090
    
    
    
    500,681
    
    
    
    4,791Asset-backed securities
    
    
    359
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    359
    
    
    
    1Other
    
    
    
    
    
    
    
    
    
    
    4,701
    
    
    
    106
    
    
    
    4,701
    
    
    
    106Total securities available
for sale in an unrealized
loss position
    
    $
    151,611
    
    
    
    718
    
    
    
    427,046
    
    
    
    4,356
    
    
    
    578,657
    
    
    
    5,074
  66




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##### Table of Contents



Agency Mortgage-Backed Securities and Collateralized Mortgage Obligations
  Non-Agency Collateralized Mortgage Obligations
  Municipal and Corporate Debt Securities and Other
   2008
    
    
    2007
    
    
    2006Gross realized gains
    
    $
    
    
    
    
    215
    
    
    
    810Gross realized losses
    
    
    
    
    
    
    (5,610
    )
    
    
    (556
    )Net realized (losses) gains
    
    $
    
    
    
    
    (5,395
    )
    
    
    254
  67




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##### Table of Contents



Amortized
    
    
    Faircost
    
    
    valueDebt securities:Within one year
    
    $
    203,541
    
    
    
    204,915After one year through five years
    
    
    107,339
    
    
    
    109,794After five years through ten years
    
    
    15,105
    
    
    
    14,991After ten years
    
    
    4,650
    
    
    
    3,485Total debt securities
    
    
    330,635
    
    
    
    333,185Asset-backed securities
    
    
    3,499
    
    
    
    3,377Mortgage-backed securities
    
    
    1,254,718
    
    
    
    1,232,383Other
    
    
    5,307
    
    
    
    4,156$
    1,594,159
    
    
    
    1,573,101
   Note 5. Loans and Leases
  2008
    
    
    2007Commercial:Real estate
    
    $
    2,211,402
    
    
    
    1,902,334Construction
    
    
    340,564
    
    
    
    292,675Business
    
    
    940,304
    
    
    
    730,029Total commercial
    
    
    3,492,270
    
    
    
    2,925,038Residential real estate
    
    
    1,990,784
    
    
    
    1,955,690Home equity
    
    
    624,495
    
    
    
    503,779Other consumer
    
    
    143,989
    
    
    
    127,169Specialized lending
    
    
    178,916
    
    
    
    183,747Total loans and leases
    
    
    6,430,454
    
    
    
    5,695,423Net deferred costs and unearned discounts
    
    
    33,321
    
    
    
    29,529Allowance for credit losses
    
    
    (77,793
    )
    
    
    (70,247
    )Total loans and leases, net
    
    $
    6,385,982
    
    
    
    5,654,705
  2008
    
    
    2007
    
    
    2006Nonaccrual loans
    
    $
    46,417
    
    
    
    28,054
    
    
    
    15,528Interest income that would have been recorded if loans had
been performing in accordance with original terms
    
    
    847
    
    
    
    654
    
    
    
    124Balance of impaired loans
    
    
    42,512
    
    
    
    22,092
    
    
    
    11,039Allowance relating to impaired loans included in allowance
for credit losses
    
    
    3,768
    
    
    
    4,399
    
    
    
    1,728Aggregate recorded investment of impaired loans with terms
modified through a troubled debt restructuring
    
    
    6,856
    
    
    
    6,052
    
    
    
    4,076
   68




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##### Table of Contents



2008
    
    
    2007
    
    
    2006Loans classified as held for sale included in residential
mortgage loans
    
    $
    1,698
    
    
    
    3,278
    
    
    
    3,091Loans sold during the year
    
    
    101,652
    
    
    
    91,216
    
    
    
    67,093Gains on sale of loans
    
    
    735
    
    
    
    716
    
    
    
    197Mortgages serviced for others
    
    
    568,767
    
    
    
    553,631
    
    
    
    393,831Mortgage servicing asset recorded for loans serviced for others
    
    
    4,295
    
    
    
    4,312
    
    
    
    2,491
   2008
    
    
    2007
    
    
    2006Balance at beginning of year
    
    $
    70,247
    
    
    
    71,913
    
    
    
    72,340Acquired at acquisition date
    
    
    2,890
    
    
    
    
    
    
    
    Provision for credit losses
    
    
    22,500
    
    
    
    8,500
    
    
    
    6,456Charge-offs
    
    
    (20,122
    )
    
    
    (11,901
    )
    
    
    (9,902
    )Recoveries
    
    
    2,278
    
    
    
    1,817
    
    
    
    3,019Balance transferred(1)
    
    
    
    
    
    
    (82
    )
    
    
    Balance at end of year
    
    $
    77,793
    
    
    
    70,247
    
    
    
    71,913
 (1)
    
    Amount of allowance for credit losses associated with mortgage loans securitized during
September 2007. Note 6. Premises and Equipment
  2008
    
    
    2007Land
    
    $
    10,869
    
    
    
    9,920Buildings and leasehold improvements(1)
    
    
    81,809
    
    
    
    78,571Furniture and equipment
    
    
    65,622
    
    
    
    55,098158,300
    
    
    
    143,589Accumulated depreciation
    
    
    (62,322
    )
    
    
    (54,902
    )Premises and equipment, net
    
    $
    95,978
    
    
    
    88,687
 (1)
    
    Included in buildings and leasehold improvements are assets for properties classified as
held-for-sale, which had a carrying value of $3.6 million and $5.1 million at December 31,
2008 and December 31, 2007, respectively.  Note 7. Goodwill and Other Intangible Assets
  Financial
    
    
    ConsolidatedBanking
    
    
    services
    
    
    totalBalances at January 1, 2007
    
    $
    659,186
    
    
    
    38,395
    
    
    
    697,581Acquired (Gernold Agency)
    
    
    
    
    
    
    4,449
    
    
    
    4,449Contingent earn-out
    
    
    
    
    
    
    5,000
    
    
    
    5,000Tax adjustment (FIN 48)
    
    
    (106
    )
    
    
    
    
    
    
    (106
    )Balances at December 31, 2007
    
    
    659,080
    
    
    
    47,844
    
    
    
    706,924Acquired (Great Lakes)
    
    
    41,769
    
    
    
    
    
    
    
    41,769Contingent earn-out
    
    
    
    
    
    
    352
    
    
    
    352Tax adjustment (FIN 48)
    
    
    (74
    )
    
    
    
    
    
    
    (74
    )Balances at December 31, 2008
    
    $
    700,775
    
    
    
    48,196
    
    
    
    748,971
   69




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##### Table of Contents



2008
    
    
    2007Customer lists
    
    $
    33,923
    
    
    
    33,547Accumulated amortization
    
    
    (21,190
    )
    
    
    (17,464
    )Net carrying amount
    
    
    12,733
    
    
    
    16,083Core deposit intangible
    
    
    54,540
    
    
    
    53,661Accumulated amortization
    
    
    (31,695
    )
    
    
    (26,597
    )Net carrying amount
    
    
    22,845
    
    
    
    27,064Total amortizing intangible assets, net
    
    $
    35,578
    
    
    
    43,147
  Note 8. Securitization and Mortgage Servicing Rights
    2008
    
    
    2007Balance at beginning of year
    
    $
    4,312
    
    
    
    2,491Addition of mortgage servicing rights
    
    
    566
    
    
    
    2,166Amortization
    
    
    (583
    )
    
    
    (345
    )Balance at end of year
    
    $
    4,295
    
    
    
    4,312
  Note 9. Other Assets
  2008
    
    
    2007FHLB stock
    
    $
    62,301
    
    
    
    52,242Accrued interest receivable
    
    
    33,255
    
    
    
    32,691Other receivables and prepaid assets
    
    
    17,439
    
    
    
    15,475Net deferred tax assets (see Note 17)
    
    
    97,591
    
    
    
    15,771Real estate and other investments
    
    
    18,675
    
    
    
    17,010Other
    
    
    20,799
    
    
    
    28,546$
    250,060
    
    
    
    161,735
  70




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##### Table of Contents



Note 10. Deposits
  2008
    
    
    2007Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    averageBalance
    
    
    rate
    
    
    Balance
    
    
    rateCore deposits:Savings
    
    $
    788,767
    
    
    
    0.24
    %
    
    $
    786,759
    
    
    
    0.35
    %Interest-bearing checking
    
    
    485,220
    
    
    
    0.17
    
    
    
    468,165
    
    
    
    0.37Money market deposit accounts
    
    
    1,940,136
    
    
    
    1.47
    
    
    
    1,607,137
    
    
    
    3.69Noninterest-bearing
    
    
    718,593
    
    
    
    
    
    
    
    631,801
    
    
    
    Total core deposits
    
    
    3,932,716
    
    
    
    0.79
    
    
    
    3,493,862
    
    
    
    1.83Certificates maturing:Within one year
    
    
    1,710,504
    
    
    
    2.68
    
    
    
    1,891,427
    
    
    
    4.37After one year, through two years
    
    
    226,485
    
    
    
    3.33
    
    
    
    115,851
    
    
    
    3.97After two years, through three years
    
    
    36,498
    
    
    
    3.60
    
    
    
    23,187
    
    
    
    3.75After three years, through four years
    
    
    19,706
    
    
    
    3.64
    
    
    
    13,921
    
    
    
    3.94After four years, through five years
    
    
    11,257
    
    
    
    3.46
    
    
    
    9,134
    
    
    
    3.92After five years
    
    
    6,447
    
    
    
    4.06
    
    
    
    1,602
    
    
    
    3.90Total certificates
    
    
    2,010,897
    
    
    
    2.79
    
    
    
    2,055,122
    
    
    
    4.34Total deposits
    
    $
    5,943,613
    
    
    
    1.47
    %
    
    $
    5,548,984
    
    
    
    2.76
    %
  2008
    
    
    2007
    
    
    2006Certificates
    
    $
    71,534
    
    
    
    101,161
    
    
    
    85,921Money market deposit accounts
    
    
    43,573
    
    
    
    52,249
    
    
    
    36,977Savings
    
    
    2,198
    
    
    
    3,918
    
    
    
    6,782Interest-bearing checking
    
    
    1,378
    
    
    
    2,043
    
    
    
    2,505$
    118,683
    
    
    
    159,371
    
    
    
    132,185
    71




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##### Table of Contents



Note 11. Borrowings
  2008
    
    
    2007Short-term borrowings:FHLB advances
    
    $
    443,454
    
    
    
    259,593Repurchase agreements
    
    
    214,010
    
    
    
    240,665Commercial bank line of credit
    
    
    60,000
    
    
    
    Total short-term borrowings
    
    
    717,464
    
    
    
    500,258Long-term borrowings:FHLB advances
    
    
    562,013
    
    
    
    456,215Repurchase agreements
    
    
    248,408
    
    
    
    138,508Subordinated debentures
    
    
    12,342
    
    
    
    Total long-term borrowings
    
    
    822,763
    
    
    
    594,723Total borrowings
    
    $
    1,540,227
    
    
    
    1,094,981
   2008
    
    
    2007
    
    
    2006FHLB advances
    
    $
    37,715
    
    
    
    22,047
    
    
    
    18,307Repurchase agreements
    
    
    13,486
    
    
    
    16,761
    
    
    
    18,857Other
    
    
    2,677
    
    
    
    415
    
    
    
    $
    53,878
    
    
    
    39,223
    
    
    
    37,164
     72




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##### Table of Contents



2010
    
    $
    315,3592011
    
    
    232,5302012
    
    
    168,3632013
    
    
    83,595Thereafter
    
    
    22,916$
    822,763
  Note 12. Interest Rate Swaps
   Note 13. Commitments and Contingent Liabilities
 Loan Commitments
    2008
    
    
    2007Outstanding commitments to originate loans:Fixed rate
    
    $
    94,330
    
    
    
    139,840Variable rate
    
    
    129,634
    
    
    
    142,768Total commitments outstanding
    
    $
    223,964
    
    
    
    282,608Unused lines of credit
    
    
    1,202,937
    
    
    
    1,127,008Standby letters of credit
    
    
    98,120
    
    
    
    104,837Commitments to sell residential mortgages
    
    
    30,896
    
    
    
    6,112
   73




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##### Table of Contents



Lease Obligations
  Contingent Liabilities
  Note 14. Preferred Stock and Warrant
    Note 15. Capital
 Bank Capital
    74




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##### Table of Contents



To be well-capitalizedMinimum
    
    
    under prompt correctiveActual
    
    
    capital adequacy
    
    
    action provisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioFirst Niagara Bank:December 31, 2008:Tangible capital
    
    $
    717,078
    
    
    
    8.47
    %
    
    $
    127,037
    
    
    
    1.50
    %
    
    
    N/A
    
    
    
    N/ATier 1 (core) capital
    
    
    717,078
    
    
    
    8.47
    
    
    
    338,766
    
    
    
    4.00
    
    
    $
    423,457
    
    
    
    5.00
    %Tier 1 risk-based capital
    
    
    717,078
    
    
    
    11.48
    
    
    
    249,908
    
    
    
    4.00
    
    
    
    374,862
    
    
    
    6.00Total risk-based capital
    
    
    794,872
    
    
    
    12.72
    
    
    
    499,816
    
    
    
    8.00
    
    
    
    624,770
    
    
    
    10.00December 31, 2007:Tangible capital
    
    $
    552,638
    
    
    
    7.54
    %
    
    $
    109,957
    
    
    
    1.50
    %
    
    
    N/A
    
    
    
    N/ATier 1 (core) capital
    
    
    552,638
    
    
    
    7.54
    
    
    
    293,220
    
    
    
    4.00
    
    
    $
    366,525
    
    
    
    5.00
    %Tier 1 risk-based capital
    
    
    552,638
    
    
    
    10.10
    
    
    
    218,878
    
    
    
    4.00
    
    
    
    328,317
    
    
    
    6.00Total risk-based capital
    
    
    621,037
    
    
    
    11.35
    
    
    
    437,756
    
    
    
    8.00
    
    
    
    547,195
    
    
    
    10.00First Niagara Commercial Bank:December 31, 2008:Leverage Ratio
    
    $
    39,988
    
    
    
    6.23
    %
    
    $
    19,256
    
    
    
    3.00
    %
    
    $
    32,094
    
    
    
    5.00
    %Tier 1 risk-based capital
    
    
    39,988
    
    
    
    28.42
    
    
    
    5,629
    
    
    
    4.00
    
    
    
    8,443
    
    
    
    6.00Total risk-based capital
    
    
    39,988
    
    
    
    28.42
    
    
    
    11,257
    
    
    
    8.00
    
    
    
    14,071
    
    
    
    10.00December 31, 2007:Leverage Ratio
    
    $
    37,633
    
    
    
    6.19
    %
    
    $
    18,248
    
    
    
    3.00
    %
    
    $
    30,413
    
    
    
    5.00
    %Tier 1 risk-based capital
    
    
    37,633
    
    
    
    28.78
    
    
    
    5,230
    
    
    
    4.00
    
    
    
    7,845
    
    
    
    6.00Total risk-based capital
    
    
    37,633
    
    
    
    28.78
    
    
    
    10,460
    
    
    
    8.00
    
    
    
    13,075
    
    
    
    10.00
    Consolidated Capital
   75




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##### Table of Contents



Note 16. Stock-Based Compensation
  Stock Option Plans
  Restricted Stock Plan
  Long-Term Performance Plan
    Stock Option Grants
  WeightedNumber
    
    
    averageof
    
    
    exerciseshares
    
    
    priceOutstanding at January 1, 2008
    
    
    2,891
    
    
    $
    12.06Granted
    
    
    466
    
    
    
    11.98Exercised
    
    
    (436
    )
    
    
    9.40Forfeited
    
    
    (76
    )
    
    
    13.52Outstanding at December 31, 2008
    
    
    2,845
    
    
    $
    12.41
  76




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##### Table of Contents



Weighted
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    average
    
    
    
    
    
    
    averageOptions
    
    
    exercise
    
    
    remaining
    
    
    Options
    
    
    exerciseExercise price
    
    outstanding
    
    
    price
    
    
    life (years)
    
    
    exercisable
    
    
    priceDecember 31, 2008:$3.50  $12.02
    
    
    844
    
    
    $
    9.65
    
    
    
    5.8
    
    
    
    427
    
    
    $
    7.39$12.17  $12.91
    
    
    996
    
    
    
    12.85
    
    
    
    6.1
    
    
    
    813
    
    
    
    12.89$13.28  $14.70
    
    
    719
    
    
    
    14.02
    
    
    
    6.2
    
    
    
    456
    
    
    
    13.81$14.83  $16.21
    
    
    286
    
    
    
    15.00
    
    
    
    6.8
    
    
    
    245
    
    
    
    15.03Total
    
    
    2,845
    
    
    
    12.41
    
    
    
    6.1
    
    
    
    1,941
    
    
    
    12.17December 31, 2007:$3.49  $12.87
    
    
    1,059
    
    
    $
    9.18
    
    
    
    4.3
    
    
    
    965
    
    
    $
    8.83$12.91
    
    
    725
    
    
    
    12.91
    
    
    
    7.2
    
    
    
    402
    
    
    
    12.91$13.28  $14.70
    
    
    802
    
    
    
    13.97
    
    
    
    7.3
    
    
    
    393
    
    
    
    13.54$14.83  $16.21
    
    
    305
    
    
    
    14.99
    
    
    
    7.6
    
    
    
    161
    
    
    
    15.09Total
    
    
    2,891
    
    
    
    12.06
    
    
    
    6.2
    
    
    
    1,921
    
    
    
    11.17December 31, 2006:$3.49  $4.87
    
    
    961
    
    
    $
    3.95
    
    
    
    3.2
    
    
    
    960
    
    
    $
    3.95$5.33  $12.91
    
    
    1,749
    
    
    
    12.35
    
    
    
    7.5
    
    
    
    877
    
    
    
    11.81$13.28  $14.95
    
    
    947
    
    
    
    14.07
    
    
    
    7.8
    
    
    
    443
    
    
    
    13.79$15.00  $16.21
    
    
    80
    
    
    
    15.46
    
    
    
    7.1
    
    
    
    42
    
    
    
    15.56Total
    
    
    3,737
    
    
    
    10.69
    
    
    
    6.4
    
    
    
    2,322
    
    
    
    9.00
 WeightedAggregate

    
    
    averageintrinsic
    
    
    remainingDecember 31, 2008
    
    Total shares
    
    
    value(1)
    
    
    contractual termOptions outstanding
    
    
    2,845
    
    
    $
    10,690
    
    
    
    6.1Options currently exercisable
    
    
    1,941
    
    
    
    7,774
    
    
    
    5.1
 (1)
    
    Intrinsic value is the difference between the fair market value of our stock at
December 31, 2008 and the weighted average exercise price of the stock award.   2008
    
    
    2007
    
    
    2006Options granted
    
    
    466
    
    
    
    372
    
    
    
    319Grant date weighted average fair value per share
    
    $
    1.83
    
    
    $
    3.31
    
    
    $
    3.64Grant date weighted average share price
    
    $
    11.98
    
    
    $
    14.50
    
    
    $
    14.79Dividend yield
    
    
    4.68
    %
    
    
    3.59
    %
    
    
    3.23
    %Risk-free interest rate
    
    
    3.13
    %
    
    
    4.71
    %
    
    
    4.76
    %Expected volatility factor
    
    
    24.72
    %
    
    
    26.68
    %
    
    
    27.80
    %Expected life (in years)
    
    
    5.7
    
    
    
    6.2
    
    
    
    6.0
  Restricted Stock Awards
   77




---



##### Table of Contents



WeightedNumber
    
    
    averageof
    
    
    grant dateshares
    
    
    fair valueUnvested at January 1, 2008
    
    
    528
    
    
    $
    14.42Awarded
    
    
    118
    
    
    
    12.17Vested
    
    
    (126
    )
    
    
    13.95Forfeited
    
    
    (24
    )
    
    
    14.43Unvested at December 31, 2008
    
    
    496
    
    
    $
    14.13
  Note 17. Income Taxes
  2008
    
    
    2007
    
    
    2006Income tax expense
    
    $
    44,964
    
    
    
    40,938
    
    
    
    47,533Stockholders equity
    
    
    (18,312
    )
    
    
    9,246
    
    
    
    (2,728
    )
  2008
    
    
    2007
    
    
    2006Current:Federal
    
    $
    37,412
    
    
    
    41,222
    
    
    
    35,855State
    
    
    4,641
    
    
    
    3,611
    
    
    
    3,24742,053
    
    
    
    44,833
    
    
    
    39,102Deferred taxes (benefit):Federal
    
    
    3,022
    
    
    
    (3,392
    )
    
    
    7,896State
    
    
    (111
    )
    
    
    (503
    )
    
    
    5352,911
    
    
    
    (3,895
    )
    
    
    8,431Total income taxes
    
    $
    44,964
    
    
    
    40,938
    
    
    
    47,533
  2008
    
    
    2007
    
    
    2006Expected tax expense
    
    $
    46,691
    
    
    
    43,758
    
    
    
    48,787Increase (decrease) attributable to:State income taxes, net of Federal benefit
    
    
    2,923
    
    
    
    1,529
    
    
    
    2,632Bank owned life insurance income
    
    
    (1,907
    )
    
    
    (1,697
    )
    
    
    (1,107
    )Municipal interest
    
    
    (4,087
    )
    
    
    (3,528
    )
    
    
    (3,232
    )Nondeductible ESOP expense
    
    
    531
    
    
    
    436
    
    
    
    426Amortization of nondeductible intangibles
    
    
    186
    
    
    
    186
    
    
    
    186Other
    
    
    627
    
    
    
    254
    
    
    
    (159
    )Income taxes
    
    $
    44,964
    
    
    
    40,938
    
    
    
    47,533
  78




---



##### Table of Contents



2008
    
    
    2007Deferred tax assets:Financial statement allowance for credit losses
    
    $
    29,742
    
    
    
    26,797SOP 03-3 adjustment
    
    
    755
    
    
    
    185Premises and equipment
    
    
    5,862
    
    
    
    3,115Deferred compensation
    
    
    4,233
    
    
    
    4,212Stock-based compensation
    
    
    3,993
    
    
    
    2,882Pension benefits
    
    
    3,190
    
    
    
    Post-retirement benefit obligation
    
    
    3,478
    
    
    
    3,721Other accrued expenses not currently deductible
    
    
    2,432
    
    
    
    844Unrealized loss on securities available for sale
    
    
    8,342
    
    
    
    16Net operating loss carryforwards acquired
    
    
    55,241
    
    
    
    Tax credit carryforwards acquired
    
    
    3,170
    
    
    
    Other
    
    
    2,026
    
    
    
    740Total gross deferred tax assets
    
    
    122,464
    
    
    
    42,512Valuation allowance
    
    
    
    
    
    
    Net deferred tax assets
    
    
    122,464
    
    
    
    42,512Deferred tax liabilities:Tax return allowance for credit losses, in excess of base
year amount
    
    
    (1,557
    )
    
    
    (2,128
    )Net purchase premium on acquired companies
    
    
    (1,533
    )
    
    
    (3,235
    )Acquired intangibles
    
    
    (11,423
    )
    
    
    (14,538
    )Securitizations
    
    
    (8,948
    )
    
    
    Pension benefits
    
    
    
    
    
    
    (5,522
    )Other
    
    
    (1,412
    )
    
    
    (1,318
    )Total gross deferred tax liabilities
    
    
    (24,873
    )
    
    
    (26,741
    )Net deferred tax asset
    
    $
    97,591
    
    
    
    15,771
      Balance at beginning of year
    
    $
    2,435Additions based on tax positions related to the current year
    
    
    482Additions for tax positions of prior years
    
    
    67Unrecognized tax benefits acquired in a business combination
    
    
    6,906Settlements
    
    
    (439
    )Balance at end of year
    
    $
    9,451
  79




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##### Table of Contents



Note 18. Earnings Per Share
 The following table is a computation of our basic and diluted earnings per share for the years
ended December 31:
 2008
    
    
    2007
    
    
    2006Net income available to common stockholders
    
    $
    87,254
    
    
    
    84,085
    
    
    
    91,859Basic and diluted weighted average shares outstanding:Total shares issued
    
    
    124,758
    
    
    
    120,045
    
    
    
    120,045Unallocated ESOP shares
    
    
    (3,228
    )
    
    
    (3,486
    )
    
    
    (3,682
    )Unvested restricted stock awards
    
    
    (552
    )
    
    
    (554
    )
    
    
    (360
    )Treasury shares
    
    
    (13,447
    )
    
    
    (13,167
    )
    
    
    (8,935
    )Total basic weighted average shares outstanding
    
    
    107,531
    
    
    
    102,838
    
    
    
    107,068Incremental shares from assumed exercise of stock options
    
    
    381
    
    
    
    490
    
    
    
    854Incremental shares from assumed vesting of restricted stock awards
    
    
    262
    
    
    
    144
    
    
    
    105Total diluted weighted average shares outstanding
    
    
    108,174
    
    
    
    103,472
    
    
    
    108,027Basic earnings per share
    
    $
    0.81
    
    
    
    0.82
    
    
    
    0.86Diluted earnings per share
    
    $
    0.81
    
    
    
    0.81
    
    
    
    0.85Anti-dilutive warrants, stock options, and restricted stock awards
excluded from the diluted weighted average common share calculations
    
    
    751
    
    
    
    897
    
    
    
    1,346
 Note 19. Benefit Plans
   Pension Plans
    80




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##### Table of Contents



2008
    
    
    2007Change in projected benefit obligation:Projected benefit obligation at beginning of year
    
    $
    64,114
    
    
    
    68,170Interest cost
    
    
    4,869
    
    
    
    3,818Actuarial loss (gain)
    
    
    6,266
    
    
    
    (3,643
    )Benefits paid
    
    
    (4,794
    )
    
    
    (4,231
    )Projected benefit obligation at end of year
    
    
    70,455
    
    
    
    64,114Change in fair value of plan assets:Fair value of plan assets at beginning of year
    
    
    76,499
    
    
    
    72,723Employer contributions
    
    
    155
    
    
    
    556Actual return on plan assets
    
    
    (11,009
    )
    
    
    7,451Benefits paid
    
    
    (4,756
    )
    
    
    (4,231
    )Fair value of plan assets at end of year
    
    
    60,889
    
    
    
    76,499(Underfunded) overfunded status at year end
    
    $
    (9,566
    )
    
    
    12,385
  2008
    
    
    2007
    
    
    2006Interest cost
    
    $
    3,895
    
    
    
    3,818
    
    
    
    3,740Expected return on plan assets
    
    
    (3,739
    )
    
    
    (4,971
    )
    
    
    (5,643
    )Amortization of unrecognized loss
    
    
    12
    
    
    
    161
    
    
    
    577Amortization of unrecognized prior service liability
    
    
    16
    
    
    
    16
    
    
    
    16Settlement charge
    
    
    
    
    
    
    84
    
    
    
    Net periodic pension cost (income)
    
    $
    184
    
    
    
    (892
    )
    
    
    (1,310
    )Changes in plan assets and benefit obligations recognized in other comprehensive income during 2008
and 2007 are as follows:2008
    
    
    2007Net loss (gain)
    
    $
    21,930
    
    
    
    (6,101
    )Amortization of prior service cost
    
    
    (16
    )
    
    
    (16
    )Total loss (gain) recognized in other comprehensive income
    
    
    21,914
    
    
    
    (6,117
    )Total recognized in net periodic pension cost (income)
and other comprehensive income
    
    $
    22,098
    
    
    
    (7,009
    )
  2008
    
    
    2007
    
    
    2006Projected benefit obligation:Discount rate
    
    
    6.00
    %
    
    
    6.25
    %
    
    
    5.75
    %Net periodic pension cost (income):Discount rate
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    5.25
    %Expected long-term rate of return on plan assets
    
    
    5.00
    %
    
    
    7.00
    %
    
    
    8.00
    %
   81




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##### Table of Contents



2008
    
    
    2007Asset Category:Equity mutual funds
    
    
    55
    %
    
    
    69
    %Bond mutual funds
    
    
    41
    %
    
    
    19
    %Cash
    
    
    4
    %
    
    
    12
    %100
    %
    
    
    100
    %
   2009
    
    $
    3,8082010
    
    
    3,7972011
    
    
    3,7992012
    
    
    3,8372013
    
    
    3,9182014-2018
    
    
    21,615
 Other Post-retirement Benefits
  2008
    
    
    2007Change in accumulated post-retirement benefit obligation:Accumulated post-retirement benefit obligation at beginning of year
    
    $
    9,392
    
    
    
    8,371Interest cost
    
    
    631
    
    
    
    462Actuarial (gain) loss
    
    
    (731
    )
    
    
    1,113Benefits paid
    
    
    (514
    )
    
    
    (554
    )Accumulated post-retirement benefit obligation at end of year
    
    $
    8,778
    
    
    
    9,392Underfunded status at year end
    
    $
    (8,778
    )
    
    
    (9,392
    )
  82




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##### Table of Contents



2008
    
    
    2007
    
    
    2006Interest cost
    
    $
    631
    
    
    
    462
    
    
    
    488Amortization of unrecognized loss
    
    
    112
    
    
    
    15
    
    
    
    159Amortization of unrecognized prior service cost
    
    
    (81
    )
    
    
    (64
    )
    
    
    (64
    )Total periodic post-retirement cost
    
    $
    662
    
    
    
    413
    
    
    
    583Changes in plan assets and benefit obligations recognized in other comprehensive income during 2008
and 2007 are as follows:2008
    
    
    2007Net (gain) loss
    
    $
    (842
    )
    
    
    1,098Amortization of prior service cost
    
    
    81
    
    
    
    64Total (gain) loss recognized in other comprehensive income
    
    
    (761
    )
    
    
    1,162Total recognized in net periodic post-retirement (gain) loss
and other comprehensive income
    
    $
    (99
    )
    
    
    1,575
  2008
    
    
    2007
    
    
    2006Accumulated post-retirement benefit obligation:Discount rate
    
    
    6.00
    %
    
    
    6.25
    %
    
    
    5.75
    %Assumed rate of future compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Total periodic cost:Discount rate
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    5.25
    %Assumed rate of future compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
   2009
    
    $
    6402010
    
    
    6602011
    
    
    6702012
    
    
    6802013
    
    
    6902014-2018
    
    
    3,520
  2008
    
    
    2007Other assets:Fair value of pension plan assets in excess of projected benefit obligation
    
    $
    
    
    
    
    12,385Other liabilities:Projected benefit obligation in excess of fair value of pension plan
    
    
    9,566
    
    
    
    Accumulated post-retirement benefit obligation
    
    
    8,778
    
    
    
    9,392$
    18,344
    
    
    
    9,392Accumulated other comprehensive loss, net of taxes:Pension plans
    
    $
    14,870
    
    
    
    1,638Post-retirement benefit plan
    
    
    484
    
    
    
    943$
    15,354
    
    
    
    2,581
  83




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##### Table of Contents



4 01(k) Plan
  Employee Stock Ownership Plan (ESOP)
  Other Plans
  Note 20. Fair Value of Financial Instruments
  Estimated fairCarrying value
    
    
    valueDecember 31, 2008:Financial assets:Cash and cash equivalents
    
    $
    114,551
    
    
    
    114,551Securities available for sale
    
    
    1,573,101
    
    
    
    1,573,101Loans and leases, net
    
    
    6,385,982
    
    
    
    6,612,111FHLB stock
    
    
    62,301
    
    
    
    62,301Financial liabilities:Deposits
    
    $
    5,943,613
    
    
    
    5,953,692Borrowings
    
    
    1,540,227
    
    
    
    1,589,659December 31, 2007:Financial assets:Cash and cash equivalents
    
    $
    114,991
    
    
    
    114,991Securities available for sale
    
    
    1,217,164
    
    
    
    1,217,164Loans and leases, net
    
    
    5,654,705
    
    
    
    5,870,888FHLB stock
    
    
    52,242
    
    
    
    52,242Financial liabilities:Deposits
    
    $
    5,548,984
    
    
    
    5,547,242Borrowings
    
    
    1,094,981
    
    
    
    1,104,870
  84




---



##### Table of Contents



Cash and Cash Equivalents
  Securities Available for Sale
  Loans and Leases
   FHLB Stock
  Deposits
  Borrowings
  Commitments
   85




---



##### Table of Contents



Note 21. Segment Information
   Financial
    
    
    ConsolidatedBanking
    
    
    Services
    
    
    Total2008:Net interest income
    
    $
    268,576
    
    
    
    1
    
    
    
    268,577Provision for credit losses
    
    
    22,500
    
    
    
    
    
    
    
    22,500Net interest income after provision for credit losses
    
    
    246,076
    
    
    
    1
    
    
    
    246,077Noninterest income
    
    
    65,861
    
    
    
    49,874
    
    
    
    115,735Amortization of core deposit and other intangibles
    
    
    5,126
    
    
    
    3,698
    
    
    
    8,824Other noninterest expense
    
    
    179,963
    
    
    
    39,623
    
    
    
    219,586Income before income taxes
    
    
    126,848
    
    
    
    6,554
    
    
    
    133,402Income tax expense
    
    
    42,135
    
    
    
    2,829
    
    
    
    44,964Net income
    
    $
    84,713
    
    
    
    3,725
    
    
    
    88,4382007:Net interest income
    
    $
    224,166
    
    
    
    12
    
    
    
    224,178Provision for credit losses
    
    
    8,500
    
    
    
    
    
    
    
    8,500Net interest income after provision for credit losses
    
    
    215,666
    
    
    
    12
    
    
    
    215,678Noninterest income
    
    
    80,051
    
    
    
    51,760
    
    
    
    131,811Amortization of core deposit and other intangibles
    
    
    6,262
    
    
    
    4,171
    
    
    
    10,433Other noninterest expense
    
    
    172,979
    
    
    
    39,054
    
    
    
    212,033Income before income taxes
    
    
    116,476
    
    
    
    8,547
    
    
    
    125,023Income tax expense
    
    
    37,632
    
    
    
    3,306
    
    
    
    40,938Net income
    
    $
    78,844
    
    
    
    5,241
    
    
    
    84,0852006:Net interest income
    
    $
    246,229
    
    
    
    252
    
    
    
    246,481Provision for credit losses
    
    
    6,456
    
    
    
    
    
    
    
    6,456Net interest income after provision for credit losses
    
    
    239,773
    
    
    
    252
    
    
    
    240,025Noninterest income
    
    
    62,998
    
    
    
    48,220
    
    
    
    111,218Amortization of core deposit and other intangibles
    
    
    7,569
    
    
    
    4,233
    
    
    
    11,802Other noninterest expense
    
    
    165,826
    
    
    
    34,223
    
    
    
    200,049Income before income taxes
    
    
    129,376
    
    
    
    10,016
    
    
    
    139,392Income tax expense
    
    
    43,504
    
    
    
    4,029
    
    
    
    47,533Net income
    
    $
    85,872
    
    
    
    5,987
    
    
    
    91,859
  86




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##### Table of Contents



Note 22. Condensed Parent Company Only Financial Statements
  Condensed Statements of Condition
    
    2008
    
    
    2007Assets:Cash and cash equivalents
    
    $
    212,391
    
    
    
    11,571Restricted cash
    
    
    3,999
    
    
    
    Investment securities available for sale
    
    
    21,380
    
    
    
    Loan receivable from ESOP
    
    
    27,318
    
    
    
    28,605Investment in subsidiary
    
    
    1,469,696
    
    
    
    1,297,352Deferred taxes
    
    
    54,562
    
    
    
    4,154Other assets
    
    
    17,121
    
    
    
    13,933Total assets
    
    $
    1,806,467
    
    
    
    1,355,615Liabilities and Stockholders Equity:Accounts payable and other liabilities
    
    $
    6,862
    
    
    
    2,436Borrowings
    
    
    72,342
    
    
    
    Stockholders equity
    
    
    1,727,263
    
    
    
    1,353,179Total liabilities and stockholders equity
    
    $
    1,806,467
    
    
    
    1,355,615Condensed Statements of Income
    
    2008
    
    
    2007
    
    
    2006Interest income
    
    $
    2,469
    
    
    
    1,591
    
    
    
    1,648Dividends received from subsidiary
    
    
    56,400
    
    
    
    96,000
    
    
    
    98,900Total interest and dividend income
    
    
    58,869
    
    
    
    97,591
    
    
    
    100,548Interest expense
    
    
    2,620
    
    
    
    415
    
    
    
    Net interest income
    
    
    56,249
    
    
    
    97,176
    
    
    
    100,548Noninterest income
    
    
    107
    
    
    
    384
    
    
    
    62Noninterest expense
    
    
    8,558
    
    
    
    9,452
    
    
    
    7,370Income before income taxes and undisbursed
(overdistributed) income of subsidiary
    
    
    47,798
    
    
    
    88,108
    
    
    
    93,240Income tax benefit
    
    
    (3,733
    )
    
    
    (3,464
    )
    
    
    (2,520
    )Income before undisbursed (overdistributed) income of subsidiary
    
    
    51,531
    
    
    
    91,572
    
    
    
    95,760Undisbursed (overdistributed) income of subsidiary
    
    
    36,907
    
    
    
    (7,487
    )
    
    
    (3,901
    )Net income
    
    
    88,438
    
    
    
    84,085
    
    
    
    91,859Accrued preferred stock dividend
    
    
    1,022
    
    
    
    
    
    
    
    Accretion of preferred stock discount
    
    
    162
    
    
    
    
    
    
    
    Net income available to common stockholders
    
    $
    87,254
    
    
    
    84,085
    
    
    
    91,859
  87




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Condensed Statements of Cash Flows
    
    2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    88,438
    
    
    
    84,085
    
    
    
    91,859Adjustments to reconcile net income to net cash provided
by operating activities:(Undisbursed) overdistributed income of subsidiary
    
    
    (36,907
    )
    
    
    7,487
    
    
    
    3,901Stock based compensation expense
    
    
    5,633
    
    
    
    6,271
    
    
    
    3,614Deferred income tax (benefit) expense
    
    
    5,492
    
    
    
    (1,798
    )
    
    
    (712
    )Decrease (increase) in other assets
    
    
    (1,478
    )
    
    
    864
    
    
    
    (1,702
    )Decrease in other liabilities
    
    
    (916
    )
    
    
    (90
    )
    
    
    (27
    )Net cash provided by operating activities
    
    
    60,262
    
    
    
    96,819
    
    
    
    96,933Cash flows from investing activities:Proceeds from maturities of securities available for sale
    
    
    5,000
    
    
    
    
    
    
    
    Principal payments received on securities available for sale
    
    
    5,870
    
    
    
    
    
    
    
    Purchases of securities available for sale
    
    
    (12,948
    )
    
    
    
    
    
    
    Proceeds from sales of securities available for sale
    
    
    
    
    
    
    1,213
    
    
    
    Acquisitions, net of cash and cash equivalents
    
    
    (52,262
    )
    
    
    
    
    
    
    Repayment of ESOP loan receivable
    
    
    1,287
    
    
    
    1,215
    
    
    
    990Net cash (used in) provided by investing activities
    
    
    (53,053
    )
    
    
    2,428
    
    
    
    990Cash flows from financing activities:Proceeds from short term borrowings, net
    
    
    60,000
    
    
    
    
    
    
    
    Capital contributed to subsidiary
    
    
    (92,006
    )
    
    
    
    
    
    
    Issuance of common stock in follow-on stock offering, net
    
    
    108,838
    
    
    
    
    
    
    
    Issuance of preferred stock, net
    
    
    175,453
    
    
    
    
    
    
    
    Issuance of common stock warrant
    
    
    8,476
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    (6,795
    )
    
    
    (95,690
    )
    
    
    (40,074
    )Proceeds from exercise of stock options
    
    
    3,715
    
    
    
    4,910
    
    
    
    3,866Dividends paid on common stock
    
    
    (60,071
    )
    
    
    (55,899
    )
    
    
    (49,434
    )Net cash provided by (used in) financing activities
    
    
    197,610
    
    
    
    (146,679
    )
    
    
    (85,642
    )Net increase (decrease) in cash and cash equivalents
    
    
    204,819
    
    
    
    (47,432
    )
    
    
    12,281Cash and cash equivalents at beginning of year
    
    
    11,571
    
    
    
    59,003
    
    
    
    46,722Cash and cash equivalents at end of year
    
    $
    216,390
    
    
    
    11,571
    
    
    
    59,003
  88




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Managements Report on Internal Control Over Financial Reporting
 Evaluation of Disclosure Controls and Procedures
 
 ITEM 9B. OTHER INFORMATION
   89




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
   Number of securities to be issued
    
    
    
    
    
    
    Number of securitiesEquity compensation plans
    
    upon exercise of outstanding
    
    
    Weighted average
    
    
    remaining available forapproved by stockholders
    
    options and rights
    
    
    exercise price
    
    
    issuance under the planFirst Niagara Financial Group, Inc.
1999 Stock Option Plan
    
    
    364,071
    
    
    $
    6.74
    
    
    
    12,118First Niagara Financial Group, Inc.
1999 Recognition and Retention Plan
    
    
    84,006
    (1)
    
    Not Applicable
    
    
    
    8,862First Niagara Financial Group, Inc.
Amended and Restated 2002 Long-term
Incentive Stock Benefit Plan
    
    
    2,892,752
    
    
    $
    13.25
    
    
    
    4,239,428Total
    
    
    3,340,829
    
    
    
    
    
    
    
    4,260,408
 (1)
    
    Represents shares that have been granted but have not yet vested. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   90




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    Exhibit Index to Form 10-KExhibit 3.1
    
    Certificate of Incorporation (1)Exhibit 3.2
    
    Certificate of Incorporation (2)Exhibit 3.3
    
    Amended and Restated Bylaws (3)Exhibit 10.1
    
    First Niagara Financial Group, Inc. Amended and Restated Change in Control Agreement with John R.
KoelmelExhibit 10.2
    
    First Niagara Financial Group, Inc. Form of Amended and Restated Change in Control AgreementExhibit 10.3
    
    First Niagara Financial Group, Inc. Amended and Restated CEO Executive Severance PlanExhibit 10.4
    
    First Niagara Financial Group, Inc. Executive Severance Plan (for executive officers other than Mr.
Koelmel)Exhibit 10.5
    
    First Niagara Financial Group, Inc. 1999 Stock Option Plan(4)Exhibit 10.6
    
    First Niagara Financial Group, Inc. 1999 Recognition and Retention Plan(5)Exhibit 10.7
    
    First Niagara Financial Group, Inc. Amended and Restated 2002 Long-Term Incentive Stock Benefit
Plan(4)Exhibit 10.8
    
    Amended and Restated First Niagara Bank and First Niagara Financial Group, Inc. Directors Deferred
Fees PlanExhibit 10.9
    
    First Niagara Financial Group, Inc. Pinnacle Incentive Compensation PlanExhibit 10.10
    
    First Amended and Restated Revolving Credit Promissory Note with Fifth Third Bank (6)Exhibit 10.11
    
    Residential Mortgage Program Agreement with Homestead Funding Corp. (7)Exhibit 10.12
    
    First Niagara Financial Group, Inc. 2005 Long-Term Performance Plan(8)Exhibit 11
    
    Calculations of Basic Earnings Per
Share and Diluted Earnings Per Share (See Note 18 of Notes to
Consolidated Financial Statements)Exhibit 21
    
    Subsidiary of First Niagara Financial Group, Inc. (See Part I, Item 1 of Form 10-K)Exhibit 23
    
    Consent of Independent Registered Public Accounting FirmExhibit 31.1
    
    Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 32
    
    Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 (1)
    
    Incorporated by reference to our Registration Statement on Form S-1, originally
filed with the Securities and Exchange Commission on September 18, 2002.(2)
    
    Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K
filed with the Securities and Exchange Commission on November 25, 2008.(3)
    
    Incorporated by reference to the Current Report on Form 8-K filed with the
Securities and Exchange Commission on January 30, 2009.(4)
    
    Incorporated by reference to our 2005 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 15, 2006.(5)
    
    Incorporated by reference to our Proxy Statement for the 1999 Annual Meeting of
Stockholders filed with the Securities and Exchange Commission on March 31, 1999.(6)
    
    Incorporated by reference to the Current Report on Form 8-K filed with the
Securities and Exchange Commission on January 11, 2008.(7)
    
    Incorporated by reference to our 2004 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 15, 2005 and to the Current Report on 8-K
filed with the Securities and Exchange Commission on December 12, 2008.(8)
    
    Incorporated by reference to the Current Report on Form 8-K filed with the Securities and
Exchange Commission on September 23, 2005.  91




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##### Table of Contents



SIGNATURES
  FIRST NIAGARA FINANCIAL GROUP, INC.Date: February 27, 2009
    By:
    /s/ John R. KoelmelJohn R. KoelmelPresident and Chief Executive Officer  Signatures
    
    Title
    
    Date/s/ John R. Koelmel

John R. Koelmel
    
    Director, President & CEO
    
    February 27, 2009/s/ Michael W. Harrington

Michael W. Harrington
    
    Chief Financial Officer
    
    February 27, 2009/s/ Thomas E. Baker

Thomas E. Baker
    
    Director Director
    
    February 27, 2009/s/ G. Thomas Bowers

G. Thomas Bowers
    
    Director, Chairman
    
    February 27, 2009/s/ Carl A. Florio

Carl A. Florio
    
    Director
    
    February 27, 2009/s/ Daniel J. Hogarty, Jr.

Daniel J. Hogarty, Jr.
    
    Director
    
    February 27, 2009/s/ William H. Jones

William H. Jones
    
    Director
    
    February 27, 2009/s/ Daniel W. Judge

Daniel W. Judge
    
    Director
    
    February 27, 2009/s/ George M. Philip

George M. Philip
    
    Director
    
    February 27, 2009/s/ Sharon D. Randaccio

Sharon D. Randaccio
    
    Director
    
    February 27, 2009/s/ Louise Woerner

Louise Woerner
    
    Director
    
    February 27, 2009/s/ David M. Zebro

David M. Zebro
    
    Director, Vice Chairman
    
    February 27, 2009
  92




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##### Table of Contents



EXHIBIT INDEX
 Exhibit 10.1
    
    First Niagara Financial Group, Inc. Amended and Restated Change in Control Agreement with John R.
KoelmelExhibit 10.2
    
    First Niagara Financial Group, Inc. Form of Amended and Restated Change in Control AgreementExhibit 10.3
    
    First Niagara Financial Group, Inc. Amended and Restated CEO Executive Severance PlanExhibit 10.4
    
    First Niagara Financial Group, Inc. Executive Severance Plan (for executive officers other than Mr.
Koelmel)Exhibit 10.8
    
    Amended and Restated First Niagara Bank and First Niagara Financial Group, Inc. Directors Deferred
Fees PlanExhibit 10.9
    
    First Niagara Financial Group, Inc. Pinnacle Incentive Compensation PlanExhibit 11
    
    Calculations of Basic Earnings Per
Share and Diluted Earnings Per Share (See Note 18 of Notes to
Consolidated Financial Statements)Exhibit 21
    
    Subsidiary of First Niagara Financial Group, Inc. (See Part I, Item 1 of Form 10-K)Exhibit 23
    
    Consent of Independent Registered Public Accounting FirmExhibit 31.1
    
    Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 32
    
    Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
  93