<PAGE>
Exhibit 99
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Financial Statements and Schedule
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE>
Exhibit 99 (continued)
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Index
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits
as of December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Plan
Benefits for the years ended December 31, 1999 and 1998 3
Notes to Financial Statements 4
Schedule
1 Schedule of Assets Held for Investment Purposes
as of December 31, 1999 8
<PAGE>
Exhibit 99 (continued)
Independent Auditors' Report
The Compensation Committee of
First Niagara Bank:
We have audited the accompanying statements of net assets available for plan
benefits of First Niagara Bank 401(k) Plan as of December 31, 1999 and 1998, and
the related statements of changes in net assets available for plan benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of First
Niagara Bank 401(k) Plan as of December 31, 1999 and 1998, and the changes in
net assets available for plan benefits for the years then ended, in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. Supplemental schedule 1 is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
June 16, 2000
<PAGE>
Exhibit 99 (continued)
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Investments:
Group annuity contract with insurance company $ 5,902,054 4,418,987
First Niagara Financial Group, Inc. common stock 2,277,855 2,342,534
--------------- ---------------
Total investments 8,179,909 6,761,521
Dividends receivable -- 6,693
--------------- ---------------
Net assets available for plan benefits $ 8,179,909 6,768,214
=============== ===============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
Exhibit 99 (continued)
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Contributions:
Employer $ 282,543 254,285
Employee 970,239 946,341
--------------- ---------------
1,252,782 1,200,626
--------------- ---------------
Investment income:
Interest and dividends 79,593 81,101
Net appreciation in fair value of investments, including
realized gains and losses on sales 354,060 848,441
--------------- ---------------
433,653 929,542
--------------- ---------------
Total contributions and investment income 1,686,435 2,130,168
Distributions to participants (253,345) (287,910)
Administrative expenses (21,395) (13,967)
--------------- ---------------
Net increase 1,411,695 1,828,291
Net assets available for plan benefits:
Beginning of year 6,768,214 4,939,923
--------------- ---------------
End of year $ 8,179,909 6,768,214
=============== ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Exhibit 99 (continued)
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Notes to Financial Statements
December 31, 1999 and 1998
(1) Description of Plan
The following description of the First Niagara Bank 401(k) Plan (formerly
Lockport Savings Bank 401(k) Plan) is provided for general information
purposes only. Participants should refer to the Plan document for more
complete information.
(a) General
The Plan is a defined contribution plan covering all employees of
First Niagara Bank (the Bank), a wholly-owned subsidiary of First
Niagara Financial Group, Inc. (FNFG) (formerly known as Niagara
Bancorp, Inc. (NBCP)), except employees of Warren-Hoffman & Associates
Inc. and NOVA Healthcare Administrators, Inc. (subsidiaries of the
Bank) who are covered by a separate plan. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
(b) Eligibility
Employees are eligible to participate in the Plan when they reach age
21 and have completed one year of service during which they worked at
least 1,000 hours.
(c) Contributions
Participants may make contributions to the Plan in the form of salary
reductions of up to 15% of their total compensation. The Bank makes
matching contributions of 50% of employee contributions, up to a
maximum of 6% of the employee's total compensation. Participant
contributions are limited by the maximum allowable contribution under
the Internal Revenue Code.
(d) Participants' Accounts
Each participant's account is credited with contributions and a pro
rata share of investment income.
(e) Vesting
Participant and employer matching contributions immediately vest 100%
to the participant.
4 (Continued)
<PAGE>
Exhibit 99 (continued)
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Notes to Financial Statements
December 31, 1999 and 1998
(f) Distributions
Participants or their beneficiaries are entitled to their entire
account balance upon death, disability or retirement, payable in a
single sum or in an annuity.
(g) Administrative Expenses
Costs of administering the Plan, except recordkeeping expenses, are
borne principally by the Bank.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared on the
accrual basis of accounting.
Effective January 1, 1999, the Plan adopted the American Institute of
Certified Public Accountants' Statement of Position (SOP) 99-3,
Accounting for and Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters. The SOP was issued in
September 1999 and eliminates the requirement for a defined
contribution plan to disclose individual fund information for a plan's
participant-directed investment programs. SOP 99-3 does not change the
method of accounting for such investment programs. Disclosure of 1998
information has been reclassified to conform to the 1999 presentation.
(b) Investments
The Guaranteed Interest Account is carried at fair value, which
approximates contract value (original investment plus accrued
interest). Investments in the pooled separate accounts of the
Principal Mutual Life Insurance Company (Principal) are carried at
fair value based on the fair values of the underlying assets.
Investments in common stock are valued based on quoted market prices.
Investment income includes unrealized appreciation or depreciation in
the value of the investments. Investment transactions are recorded on
the trade date.
(c) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of net assets available
for plan benefits and changes therein. Actual results could differ
from those estimates.
5 (Continued)
<PAGE>
Exhibit 99 (continued)
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Notes to Financial Statements
December 31, 1999 and 1998
(3) Investments
Contributions to the Plan are invested under a group annuity contract with
Principal. Plan participants may allocate their funds among one or more of
the following investment accounts under the contract:
. Guaranteed Interest - A general investment account comprised of
guaranteed interest contracts maturing at various dates through
December 31, 2001.
. U.S. Stock - A pooled separate account which is comprised of
equity securities.
. Money Market - A pooled separate account which is comprised of
commercial paper, U.S. government and agency securities and other
short-term interest-bearing securities.
. Bond and Mortgage - A pooled separate account which is comprised
of intermediate-term commercial mortgages and mortgage-backed
securities.
. Large Cap Stock Index - A pooled separate account which is
comprised of the stocks included in the Standard & Poor's 500
Stock Index.
. Small Company Blend - A pooled separate account which is
comprised of equity securities of small to medium capitalized
domestic companies.
In addition, Plan participants may also allocate their contributions to the
purchase of FNFG common stock.
Individual investments that comprise 5% or more of the Plan's net assets
available for plan benefits at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Principal Mutual Life Insurance Company:
Guaranteed Interest Account $ 1,163,720 1,168,585
U.S. Stock Account 2,055,846 1,699,519
Large Cap Stock Index Account 1,921,782 1,144,243
FNFG common stock 2,277,855 2,342,534
=============== ===============
</TABLE>
6 (Continued)
<PAGE>
Exhibit 99 (continued)
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Notes to Financial Statements
December 31, 1999 and 1998
(4) Federal Income Taxes
The Plan has received a favorable determination letter from the Internal
Revenue Service dated July 24, 1998 covering the Plan as amended through
January 27, 1998. The Plan has been since amended two times through
December 21, 1999. The Plan Sponsor does not believe that these amendments
will adversely affect the tax status of the Plan. The Plan's management has
represented that the Plan has been operated in accordance with its terms.
Accordingly, there is no provision for income taxes in these financial
statements due to the applicable exemptions under Sections 401 and 501 of
the Internal Revenue Code.
(5) Plan Termination
Although it has not expressed any intent to do so, the Bank has the right
to discontinue its matching contribution at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of a termination of
the Plan, participants will be entitled to the entire amount of their
account at the date of such termination.
(6) Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of investment income reported in the
financial statements to Form 5500 for the year ended December 31, 1999:
Investment income per the financial statements $ 433,653
Dividends receivable at December 31, 1998 6,693
-------------
Investment income per Form 5500 $ 440,346
=============
Dividend income is recognized on the ex-dividend date for financial
reporting purposes and upon receipt for Form 5500 purposes.
7
<PAGE>
Exhibit 99 (continued)
Schedule 1
FIRST NIAGARA BANK
401(k) PLAN
(Formerly Lockport Savings Bank 401(k) Plan)
Schedule of Assets Held for Investment Purposes
December 31, 1999
<TABLE>
<CAPTION>
Current
Identity of issue Description Value
----------------------------------------- ------------------------------------------ -----------------
<S> <C> <C>
Group annuity contract with Principal
Mutual Life Insurance Company:*
Guaranteed Interest Account Guaranteed interest contracts
maturing at various dates through
December 31, 2001 $ 1,163,720
U.S. Stock Account Pooled separate account investing
in equity securities 2,055,846
Money Market Account Pooled separate account investing
in money market instruments 277,801
Bond and Mortgage Account Pooled separate account investing
in fixed income securities 256,273
Large Cap Stock Index Account Pooled separate account investing
in corporate stocks 1,921,782
Small Company Blend Account Pooled separate account investing
in corporate stocks of small to
medium capitalized companies 226,632
First Niagara Financial Group, Inc. Employer securities
common stock* 2,277,855
-----------------
$ 8,179,909
=================
</TABLE>
*Person named is a party-in-interest.
8
