First Niagara Financial Group Inc., the lender whose search for a new chief executive officer lasted nine months, fell the most since October after announcing that its interim CEO would take the job permanently.
First Niagara slid 3.6 percent to $10.40 at 11:54 a.m. in New York. Shares of the Buffalo, New York-based firm have increased 31 percent this year, compared with the 32 percent advance in the 24-company KBW Bank Index.
The bank named Gary M. Crosby as president and CEO today, effective immediately. Crosby, 60, was interim head since John R. Koelmel stepped down in March. The stock is underperforming today because investors anticipated First Niagara would appoint someone from outside the bank, according to Barclays Plc.
While Crosby’s “knowledge of the company and internal and external relationships position him to have an immediate impact, we think First Niagara’s shares could face pressure today as the market, in our opinion, was anticipating an external hire,” Matthew Keating, an analyst at Barclays, said in a research note.
Choosing Crosby was the “least risky move,” and while the length of the search suggests he wasn’t the first choice, he’s well-suited for the job, said J. Scott Petty, a regional bank recruiter at Chartwell Partners, whose Dallas-based firm wasn’t involved in the decision.
“The candidates they likely wanted were not interested,” Petty said, adding that compensation and board expectations may have played a role. “They took a good look at people outside the company and they finally concluded that their best choice was right in front of them.”
David Lanzillo, a spokesman for First Niagara, didn’t immediately respond to requests for comment.
Crosby was previously the bank’s chief administrative and operating officer. Before joining First Niagara, he served as chief financial officer for the Buffalo City School District, according to a regulatory filing.
“Following a comprehensive search for an executive with strong organizational and operational experience, who can extract value from the outstanding franchise we’ve assembled, we concluded Gary has the right combination of these attributes,” G. Thomas Bowers, First Niagara’s chairman, said today in a statement.
Koelmel’s departure this year was “mutually agreed,” First Niagara said in March, without elaborating on the reason for his exit. Koelmel joined the firm in 2004 and served as CFO before being named CEO in December 2006.