Focused on
Customers.

Creating a uniquely positive customer experience is critical to how First Niagara approaches our business. Our focus on the customer covers all sides of the First Niagara customer experience: service, products and convenience. The importance we place on the customer is also reinforced in our corporate value statement "We believe that providing superior customer service is the reason why we exist" and in First Niagara's marketing platform, "Our First Priority is You."

Service and relationships

First Niagara sees providing an exceptional level of customer service as a key part of building long-term, brand-loyal customer relationships and to creating powerful and positive "word-of-mouth" marketing in our communities. In 2002, we are focused on deepening our customer relationships to generate additional internal growth from our franchise. This cost-effective approach takes our skill at forming lasting, mutually beneficial customer relationships and broadens it by expanding the relationship-based products offered across all our business lines and by targeted offerings of value-added promotions to customers.

Value-added products and expertise

The offering of value-added products and expertise that uniquely address customer needs is an important way we differentiate First Niagara in our markets. The bi-weekly mortgage has been a standout product for First Niagara since its introduction in 1991. In 2000, we expanded the bi-weekly mortgage to our home equity product line. From a customer perspective, the product has significant appeal because it enables homeowners to accelerate equity build-up and repayment of their loan and save substantially on interest costs over the life of the loan. From the company's perspective, we like the bi-weekly mortgage because it reduces the average life of fixed-rate mortgage loans, adds the core consumer product relationship (checking account), and ensures timely payments through its automatic withdrawal for payment feature. First Niagara's relationship product enhancements introduced in 2001 include "Totally Free Checking" and the expansion of our business banking product line to full service with the addition of cash management services. Value-added products such as these contributed to our $67.0 million increase in core (non-time) deposits during the year.

Because customers look to us for sound financial advice, we also invest significantly in our people to ensure that our front-line banking center, financial services and telephone banking staff have the knowledge to effectively deliver this service. Additionally, because we acquired established, highly respected insurance, investment advisory and equipment leasing firms, we are able to provide First Niagara customers the benefit of proven expertise and experience in our expanded offering of financial services. In business banking, the expertise of First Niagara's team of highly experienced relationship managers combined with local decision-making, gives smaller business owners access to a level of knowledge and attention that larger banks typically reserve for their major customers.

Convenience and flexibility

Making it easy to do business with First Niagara is another way we differentiate ourselves in the marketplace. On the consumer side of our business, we continue to expand our network of banking centers while also enhancing our offering of convenient, lower-cost alternatives. These options include online banking capabilities, in-store banking centers and ATMs located in convenient locations throughout our market area. The thinking behind this approach is to expand our footprint in the market in the most cost-effective way while also enhancing customer convenience. On the commercial side of our banking business, our ability to be flexible on terms and pricing, and a true commitment and responsiveness to the small and middle market, has enabled us to develop a solid niche in commercial lending in our major markets.