First Niagara Sale Unlikely, Analysts Say

March 25, 2013 Updated Mar 25, 2013 at 7:38 AM EDT

By Allissa Kline, Buffalo Business First

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First Niagara Sale Unlikely, Analysts Say

March 25, 2013 Updated Mar 25, 2013 at 7:38 AM EDT

This week's leadership shake-up at First Niagara Financial Group Inc. has generated questions about whether the board of directors is positioning the bank to be acquired.

But two industry analysts don't expect the bank to sell itself, at least not in the near-term. Neither Damon DelMonte of Keefe, Bruyette & Woods Inc. nor Matthew Kelley of Sterne Agee & Leach Inc. anticipate that First Niagara will be sold.

"I don't think selling the bank is what the board wants to do," DelMonte said. "I think they've always looked at themselves as a survivor, as a growing regional player in the Northeast ... I don't think they'd grow the bank to a certain size and then try to sell it."

First Niagara's board of directors announced March 19 that John Koelmel, president and CEO since December 2006, would be replaced immediately by Gary Crosby, executive vice president and chief administrative and operations officer. Industry experts say the sudden change reflects shareholder dissatisfaction, which has been escalating in the wake of the bank's much-criticized acquisition of HSBC Bank USA N.A.'s Upstate New York retail franchise. The deal hasn't been as accretive as initially expected.

The bank's board has formed a search committee to scope out candidates for the top executive post. Kelley of Sterne Agee & Leach Inc. said he expects a new CEO to be named by early summer.

He suggested that candidates may be found at regional banks including Buffalo's M&T Bank or PNC Financial Services Group Inc. of Pittsburgh.