BUFFALO, N.Y. (AP) -- First Niagara Financial Group Inc.'s stock climbed more than 4 percent Wednesday as the regional bank announced that President and CEO John R. Koelmel is leaving the company.
THE SPARK: First Niagara Financial, the holding company for First Niagara Bank, said late Tuesday that Koelmel's departure was mutually agreed-upon decision, and Gary M. Crosby was named interim president and CEO.
Koelmel also served as a director. First Niagara said that his board seat has expired with his exit from the company, and that he won't stand for re-election at its annual shareholders meeting on April 24.
The 59-year-old Crosby currently serves as the regional bank's executive vice president, chief administrative officer and chief operations officer.
First Niagara said that it has created a special committee of independent directors to start a search for a permanent replacement. Both internal and external candidates will be considered.
THE BIG PICTURE: In January First Niagara reported that its fourth-quarter net income fell more than 8 percent due to higher costs, but its adjusted earnings per share topped Wall Street's expectations by a penny. Net interest income — the interest collected on loans and the interest paid out to depositors and creditors — and noninterest income — fees, insurance and other services — both rose, but the company's provision for loan losses, or the money set aside to cover soured loans, jumped 64 percent year over year. The Buffalo, N.Y., company has about 430 bank branches in upstate New York, Pennsylvania, Connecticut and Massachusetts.
First Niagara is expected to report its first-quarter earnings results in April.
THE ANALYSIS: Matthew Schultheis of Boenning & Scattergood said in a client note that he believes Koelmel's departure is a good thing for the company. The analyst said that First Niagara's total footing rose significantly under Koelmel's leadership, but that the stock price was basically halved. Koelmel joined the company as chief financial officer in January 2004 and was named president and CEO in 2007.
"We believe Mr. Koelmel had lost creditability with institutional investors," he wrote.
Schultheis said that Crosby should do fine in his new role, as he appeared to do well when he oversaw First Niagara expand its infrastructure and processes.
Still, the analyst said that the company faces significant challenges, and that "the board would be well served to look for a bank CEO with experience at an institution that was a project."
Schultheis reaffirmed an "Outperform" rating and $10 price target.
SHARE ACTION: First Niagara's stock added 35 cents, or 4.1 percent, to $8.79 in Wednesday midday trading. Shares have traded in a 52-week range of $7.08 to $10.35 over the last year. For the year to date, the stock is up 11 percent.
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