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First Niagara 4Q net income falls on higher costs

BUFFALO, N.Y. (AP) -- First Niagara Financial Group Inc. said Wednesday its fourth-quarter net income fell more than 8 percent, as higher costs more than offset increases in revenue from loans and deposits.

The holding company for First Niagara Bank earned $53.5 million, or 15 cents per share, down from $58.5 million, or 19 cents per share, in the 2011 fourth quarter. Excluding one-time charges, the company said its adjusted profit was 19 cents per share.

Analysts, on average, expected a profit of 18 cents per share, according to FactSet.

Net interest income rose 4 percent to $252.3 million from $242.5 million in the prior-year quarter, as income from loans and leases increased 8 percent to $212 million, but contributions from investment securities and other sources dropped 26 percent to $71.6 million.

Net interest income combines the interest a bank collects on loans and the interest it pays out to depositors and creditors. It is a measure of the bank's ability to profit from its lending.

Meanwhile, noninterest income, which includes fees, insurance and other services, jumped 44 percent to $91.8 million, as deposit service charges increased 46 percent to $26.3 million and income from merchant and card fees more than doubled to $11.9 million.

Total revenue increased 12 percent to $344.1 million from $306.2 million. Analysts expected $364.7 million.

But noninterest expense rose 18 percent to $238.8 million, as the company's salary and benefit costs rose 25 percent to $111 million and amortization expenses more than doubled to $14.2 million.

First Niagara's provision for loan losses, or the money it set aside to cover soured loans, jumped 64 percent to $22 million.

For the full year, First Niagara earned $140.7 million, or 40 cents per share, down from $173.9 million, or 64 cents per share, in 2011.

First Niagara shares fell 27 cents, or 3.2 percent, to $8.12 in midday trading.