First Niagara names Crosby CEO
After a nine-month executive search, the board at First Niagara Financial Group named interim President and CEO Gary Crosby to take the reins on a permanent basis on Thursday.
Directors at First Niagara, the Pittsburgh region's fifth-largest bank, wanted to be sure they got it right after the previous CEO had expanded the bank too rapidly, analysts said.
“The board apparently wasn't kidding last March when it said they'd do an extensive search and wanted to explore all their options,” said Daniel Marchon, an analyst at Raymond James & Associates.
First Niagara Bank has 62 branches in Western Pennsylvania and 420 overall in New York, Pennsylvania, Connecticut and Massachusetts.
Crosby succeeded CEO John Koelmel when he abruptly resigned in March. The Buffalo-based bank struggled after an aggressive expansion plan in upstate New York and elsewhere, and its stock suffered.
Koelmel engineered two big deals less than two years after becoming CEO in December 2006. The bank acquired 57 National City branches in the Pittsburgh region for $54 million that were divested by PNC Bank with its take-over of National City. A few months later, First Niagara acquired Harleysville National Corp., a Philadelphia-area financial services company, for $237 million.
But critics say Koelmel overreached with a $1 billion acquisition of 195 HSBC branches, mostly in upstate New York, in early 2012 that they say was overpriced.
First Niagara shares decreased 41 percent over Koelmel's tenure as CEO.
The expansion was “too fast,” said Marchon. Koelmel developed “some credibility problems” with investors after talking up the potential of the expansions “without showing actual results,” said the analyst.
First Niagara stock has rebounded since Crosby, 60, began running the bank. Shares that traded below $8 in January and February are currently trading above $10.
Crosby made it plain First Niagara is not expanding any further and will concentrate on maximizing the “strong positions” in existing markets, said Marchon. In addition, the bank this year has added auto and commercial/industrial loans despite tepid demand.
“From what I've seen, they are now on the right track,” said Marchon.
First Niagara's net income increased 41 percent last quarter from the year earlier. The bank posted a $64 million profit in the second quarter, the first under Crosby, versus an $18 million year-ago loss.
The bank's stock closed Thursday at $10.22, down 57 cents.
In a statement, board Chairman G. Thomas Bowers said Crosby had the background and attributes to “extract value” from the First Niagara franchise and “drive operational excellence and organic growth.”
Before being tapped as the bank's interim chief, Crosby served as executive vice president and chief administrative and operating officer. Prior to joining the bank in July 2009, he held senior management positions in venture capital, banking and manufacturing firms.
According to a securities filing, Crosby will receive $975,000 in annual base salary, an annual incentive award potentially equaling his salary, and a long-term incentive award of as much as $2.5 million.
Crosby was not available for comment.
Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or at email@example.com.
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