Focused on
Financial Services.

First Niagara's transformation to a full service financial services company over the last three years is the product of a focused strategy to broaden our product line and enhance our wealth and risk management services. Our goal is to fully serve the financial needs of customers in our markets and to capitalize on growing consumer and business demand for one-stop shopping for financial services. The Financial Services Group helps us to meet this demand while providing significant noninterest income and a strong platform for growth.

Organized for growth

Our focus in the last year has been on organizing our financial services product offerings to maximize relationship selling. In 2001, we grouped all of our financial services businesses within one business unit, the First Niagara Financial Services Group, which is organized along the lines of wealth management and risk management. Wealth management covers mutual fund and annuity sales, trust services, and investment advisory services offered through Niagara Investment Advisors. Risk management covers our insurance, risk management advisory services and third party administration businesses. The anchor of First Niagara's risk management business is Warren-Hoffman & Associates, one of the largest insurance brokerages in Upstate New York, which First Niagara acquired in 1999.

Risk management

First Niagara is targeting small-to-middle market businesses through our significant insurance and risk management capabilities. As we look to expand our commercial insurance revenues, the marketing of commercial insurance with business banking services is a natural fit and we have stepped up our efforts to link the marketing of these product offerings. Over the last year, we developed a more coordinated and focused relationship team within our business banking and insurance operations through team-building, training and stronger communication.

On the consumer side, we also offer personal lines of insurance including auto, home, long-term care, and life insurance. Both our customer base and major consumer products - mortgages, home equity and deposit accounts - offer opportunity to identify needs for our insurance products. For example, long-term care insurance is becoming an important risk management tool for the aging population to protect assets and we are effectively positioned to meet this need of our customers.

Wealth management

The target market for our wealth management business is the middle market which we see as an important underserved niche as larger financial institutions are moving toward reserving their one-on-one attention for individuals to those with larger balance accounts. With our corporate focus on personal service and attention, First Niagara is in a strong position to service this niche. To prepare to do that most effectively, we are hiring highly experienced investment professionals, expanding our training programs and upgrading technology. We are also focused on linking the selling of wealth management products to business banking because many of our small commercial lending and insurance customers are business owners with significant investment needs. An important future focus for our wealth management business will be to achieve more scale in both our investment advisory and trust services.