First Niagara CEO Koelmel Exits as Crosby Is Interim Head
First Niagara Financial Group Inc. (FNFG), the worst performer in the KBW Bank Index (BKX) in the past year, climbed the most in seven months after announcing that Chief Executive Officer John R. Koelmel was stepping down.
First Niagara rose 4.5 percent to $8.82 at 10:14 a.m. in New York, the most since Aug. 3. The shares declined 18 percent in the past 12 months through yesterday, compared with a 14 percent advance in the 24-company index.
Koelmel, 60, will be replaced on an interim basis by Gary M. Crosby, and his departure was “mutually agreed upon,” the Buffalo, New York-based company said yesterday in a statement. In a filing today, the bank deemed the move a termination “for reasons other than for cause.”
“I agree with the board that it’s in the best interests of the organization under present circumstances to move forward with new leadership,” Koelmel said in yesterday’s statement.
Koelmel joined First Niagara in 2004 and served as chief financial officer. He was named CEO in December 2006 and succeeded Paul Kolkmeyer, who departed amid philosophical differences with the board, then-Chairman Robert Weber said in a statement at the time.
Crosby, 59, was the bank’s chief administrative and operations officer since July 2009. Before joining First Niagara, he served as CFO and COO for the Buffalo City School District, according to a regulatory filing.
Koelmel led First Niagara “during a period of difficult economic conditions and financial industry turmoil,” Chairman G. Thomas Bowers said in yesterday’s statement. “The board and I are grateful to John for his leadership through this critical period in our history and for positioning us so that we can focus on enhancing shareholder value through continuing organic growth and the efficient operation of the business we have today.”
When Koelmel became CEO, First Niagara traded at about 2.5 times tangible book value, a measure of how much a firm would theoretically be worth in liquidation, according to data compiled by Bloomberg. That figure has declined to about 1.3 times tangible book since then, the data show.
First Niagara had a good track record as an acquirer during the financial crisis, Joseph Fenech, a Sandler O’Neill & Partners LP analyst, wrote in a January note. The bank’s purchase of about 57 branches from PNC Financial Services Group Inc. in 2009 was “terrific,” and the deal for Harleysville National Corp. announced in 2009 was “very good,” he wrote.
Then in 2011, First Niagara said it would buy upstate New York branches from HSBC Holdings Plc for $900 million. First Niagara didn’t immediately raise capital for the transaction because it hoped to see a rebound in its stock before doing so, Fenech wrote.
Instead, the shares plunged about 25 percent from the time deal was announced in July 2011 until the equity offering on Dec. 6 of that year as the U.S. debt-ceiling debate and European sovereign-debt crisis roiled markets.
“The thinking had to have been that an equity raise at more attractive pricing would soon follow,” Fenech wrote. “The implications of raising capital at a very distressed price several months later obviously changed the entire financial complexion of the transaction.”
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