Bank boss out after shares fall

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John R. Koelmel is out as CEO of First Niagara.

First Niagara Financial Group, the Buffalo-based bank that has absorbed Harleysville National Bank, formerly the biggest based in suburban Philadelphia, is searching for a new CEO after John Koelmel, who ran the bank since 2006, departed following yesterday's board meeting.

Koelmel "built a formidable Northeast franchise from what was a sleepy mutual thrift," but he was also blamed for ill-timed borrowing during the debt market turmoil of 2011 and 2012 and the decline in First Niagara shares from a peak of over $15 last year to just over $7 last fall, writes Joseph Fenech, managing director at Sandler O'Neill + Partners LP, New York, in a note to clients. Fenech said he's not expecting major changes in the bank's expansion or business lending strategy.

Shares rose modestly on news of Koelmel's departure, which Matthew Schultheis, analyst at Boenning & Scattergood, West Conshohocken, called "a positive development." He praised acting CEO Gary Crosby, who has a background as a turnaround specialist.

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