First Niagara Financial Group, the Buffalo, N.Y.-area based bank that is buying dozens of former National City branches in this region from PNC Financial Services Group, said net income fell in the second quarter to $20.8 million, or 8 cents per share, down from $23.1 million, or 22 cents, in the same period a year ago.

Excluding special charges, First Niagara earned $25.5 million, or 18 cents per share, beating analysts' consensus estimate of 14 cents.

"Our second-quarter operating performance was very sound," CEO John Koelmel said in a statement yesterday.

The acquisition of 57 National City branches in Western Pennsylvania, set to close Labor Day weekend, is First Niagara's first venture outside its home state of New York, but likely won't be its last, Mr. Koelmel said.

"We think there will be a reasonable number of opportunities for us to further plant our flag and expand our footprint," he said during a conference call with Wall Street analysts. First Niagara has its sights on eastern Pennsylvania and perhaps New England, Mr. Koelmel noted.

He said the bank would "continue to monitor and evaluate the landscape," which he termed a buyer's market.

Nonperforming loans remained stable in the second quarter at $52.3 million, or 0.81 percent of total loans, the bank reported. The provision for credit losses was $8.9 million for the quarter, compared with $8.8 million in the first quarter and $4.9 million in the second quarter last year.

The economy will continue to be challenging, Mr. Koelmel said.

"Our view is this will continue to bounce along the bottom for a while," he said. "But it's not a doom and gloom environment."

Pittsburgh-based PNC, which is keeping about 110 National City branches in Western Pennsylvania, is to report second-quarter results Thursday.

Shares of First Niagara were down 6 cents, or 0.5 percent, to close at $11.70.