First Niagara Financial Group on Tuesday abruptly replaced its charismatic CEO, John R. Koelmel -- who was responsible for the bank's tremendous growth in recent years -- in a surprising move by its board of directors.
The board's action indicates that frustration with the bank's languishing stock performance and failure to gain traction with its acquisition strategy had reached a boiling point among investors that directors could no longer ignore.
The Buffalo-based banking company, which has grown four-fold through acquisitions under Koelmel's leadership, announced late Tuesday that Koelmel, 60, will leave his position as president and CEO effective immediately. He also stepped off the board in accordance with company bylaws.
In a news release, the bank described the action as a "mutually agreed upon departure" but did not elaborate.
"I highly value the opportunity to have driven First Niagara's rapid growth over the last six years and to position it as one of the top regional banking franchises in the Northeast," Koelmel said in the bank's news release, thanking the bank's 6,000 employees for their support. "I agree with the board that it's in the best interests of the organization under present circumstances to move forward with new leadership."
The board appointed Gary M. Crosby to serve as its interim president and CEO, while a national search is conducted. Crosby, 59, is currently executive vice president and chief administrative and operations officer of the bank.
Chief Banking Officer Daniel Cantara will continue overseeing the businesses that deal directly with customers.
"Enhancing shareholder value through operational excellence, a commitment to the basics of banking and to helping our customers do great things every day is our focus," Crosby said in the release. "At the same time, we remain dedicated to making credit and financial services widely available in our communities, adhering to the risk management principles that have provided us with the exceptional asset quality that has long distinguished First Niagara, providing a workplace where talented employees build rewarding careers and serving as a leading corporate citizen."
The board's independent directors formed a special search committee, headed by board member Nathaniel Woodson, who joined the board with the purchase of Connecticut-based NewAlliance Bancshares in April 2011. The bank said it will retain an executive search firm and "conduct a thorough and expeditious search, considering both internal and external candidates."
"John Koelmel has guided the company's transformation from a local thrift to a leading Northeast banking franchise and led First Niagara during a period of difficult economic conditions and financial industry turmoil," said board Chairman G. Thomas Bowers.
"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."
Neither Koelmel nor Crosby was available to comment Tuesday.
Koelmel, who is negotiating his severance agreement, was traveling for a board meeting of the New York Power Authority, of which he is chairman.
"John is in the process of finalizing his relationship with First Niagara and evaluating his future options. In addition, he is attending to a number of his civic responsibilities," said Terrence M. Connors, Koelmel's attorney. "After the process of separation from the bank has concluded, he will speak publicly about his departure."
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